<PAGE> 1
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: April 6, 1995
Date of Earliest Event Reported: March 28, 1995
TELE-COMMUNICATIONS, INC.
AND
TCI COMMUNICATIONS, INC.
----------------------------------------------------------
(Exact name of Registrants as specified in their charters)
State of Delaware
----------------------------------------------
(State or other jurisdiction of incorporation)
0-20421 and 0-5550 84-1260157 and 84-0588868
- ------------------------- -------------------------------------
(Commission File Numbers) (I.R.S. Employer Identification Nos.)
5619 DTC Parkway
Englewood, Colorado 80111
- ---------------------------------------- ------------------------------
(Address of principal executive offices) (Zip Code)
Registrants' telephone number, including area code: (303) 267-5500
<PAGE> 2
ITEM 5. OTHER EVENTS.
During 1994, subsidiaries of Tele-Communications, Inc. ("TCI" or the
"Company"), Comcast Corporation ("Comcast"), Cox Communications, Inc. ("Cox")
and Sprint Corporation ("Sprint") formed a partnership ("WirelessCo") to engage
in the business of providing wireless communications services on a nationwide
basis. Through WirelessCo, the partners have been participating in auctions
("PCS Auctions") of broadband personal communications services ("PCS") licenses
being conducted by the Federal Communications Commission ("FCC"). In the first
round auction, which concluded during the first quarter of 1995, WirelessCo was
the winning bidder for PSC licenses for 29 markets, including New York, San
Francisco-Oakland-San Jose, Detroit, Dallas-Fort Worth, Boston-Providence,
Minneapolis-St. Paul and Miami-Fort Lauderdale. The aggregate license cost for
these licenses is approximately $2.1 billion.
WirelessCo has also invested in American PSC, L.P. ("APC"), which
holds a PCS license granted under the FCC's pioneer preference program for the
Washington-Baltimore market. WirelessCo acquired its 49% limited partnership
interest in APC for $23 million and has agreed to make capital contributions to
APC equal to 49/51 of the cost of APC's PCS license. Additional capital
contributions may be required in the event APC is unable to finance the full
cost of its PCS license. WirelessCo may also be required to finance the
build-out expenditures for APC's PCS system. Cox, which holds a pioneer
preference PCS license for the Los Angeles-San Diego market, and WirelessCo
have also agreed on the general terms and conditions upon which Cox (with a 60%
interest) and WirelessCo (with a 40% interest) would form a partnership to hold
and develop a PCS system using the Los Angeles-San Diego license. APC and the
Cox partnership would affiliate their PCS systems with WirelessCo and be part
of WirelessCo's nationwide integrated network, offering wireless communications
services under the "Sprint" brand. The Company owns a 30% interest in
WirelessCo.
During 1994, subsidiaries of Cox, Sprint and the Company also formed a
separate partnership ("PhillieCo"), in which the Company owns a 35.3% interest.
PhillieCo was the winning bidder in the first round auction for a PCS license
for the Philadelphia market at a license cost of $85 million. To the extent
permitted by law, the PCS system to be constructed by PhillieCo would also be
affiliated with WirelessCo's nationwide network.
WirelessCo may bid in subsequent rounds of the PCS Auctions and may
invest in, affiliate with or acquire licenses from other successful bidders.
The capital that WirelessCo will require to fund the construction of the PCS
systems, in addition to the license costs and investments described above, will
be substantial.
At the end of the first quarter of 1995, subsidiaries of the Company,
Comcast, Cox and Sprint formed two new partnerships, of which the principal
partnership is MajorCo, L.P. ("MajorCo"), to which they contributed their
respective interests in WirelessCo and through which they formed another
partnership, NewTelco, L.P. ("NewTelco") to engage in the business of providing
local wireline communications services to residences and businesses on a
nationwide basis. NewTelco will serve its customers primarily through the
cable television facilities of cable television operators that affiliate with
NewTelco in exchange for agreed-upon compensation. The modification of
existing regulations and laws governing the local telephony market will be
necessary in order for NewTelco to provide its proposed services on a
competitive basis in most states. Subject to agreement upon a schedule for
upgrading its cable television facilities in selected markets and certain other
matters, the Company has agreed to affiliate certain of its cable systems with
NewTelco. The capital required for the upgrade of the Company's cable
facilities for the provision of telephony services is expected to be
substantial.
<PAGE> 3
Subsidiaries of the Company, Cox and Comcast, together with
Continental Cablevision, Inc. ("Continental"), own Teleport Communications
Group, Inc. and TCG Partners (collectively, "TCG"), which is one of the largest
competitive access providers in the United States in terms of route miles. The
Company, Cox and Comcast have entered into an agreement with MajorCo and
NewTelco to contribute their interests in TCG and its affiliated entities to
NewTelco. The Company currently owns an approximate 29.9% interest in TCG.
The closing of this contribution is subject to the satisfaction of certain
conditions, including the receipt of necessary regulatory and other consents
and approvals. In addition, the Company, Comcast and Cox intend to negotiate
with Continental, which owns a 20% interest in TCG, regarding their acquisition
of Continental's TCG interest. If such agreement cannot be reached, they will
need to obtain Continental's consent to certain aspects of their agreement with
Sprint.
Subject to agreement upon an initial business plan, the MajorCo
partners have committed to make cash capital contributions to MajorCo of $4.0
to $4.4 billion in the aggregate over a three- to five-year period, which
amount includes the approximately $500 million already contributed by the
partners to WirelessCo. The partners intend for MajorCo and its subsidiary
partnerships to be the exclusive vehicles through which they engage in the
wireless and wireline telephony service businesses, subject to certain
exceptions.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements
None.
(b) Pro Forma Financial Information
None.
(c) Exhibits
(10) Amended and Restated Joint Venture Formation Agreement dated
as of March 28, 1995 by and between Sprint Corporation,
Tele-Communications, Inc., Comcast Corporation and Cox
Communications, Inc.*
(10) Agreement of Limited Partnership of MajorCo, L.P., dated as of
March 28, 1995, among Sprint Spectrum, L.P., TCI Network
Services, Comcast Telephony Services and Cox Telephony
Partnership.*
_________________________
* The Agreement contains indexes identifying the items, including exhibits
and schedules, annexed thereto. A copy of any omitted item will be
furnished supplementally to the Commission upon request.
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrants have duly caused this report to be signed on their behalf by the
undersigned hereunto duly authorized.
Date: April 6, 1995
TELE-COMMUNICATIONS, INC.
(Registrant)
By: /s/ Stephen M. Brett
Stephen M. Brett
Executive Vice President and
Secretary
TCI COMMUNICATIONS, INC.
(Registrant)
By: /s/ Stephen M. Brett
Stephen M. Brett
Senior Vice President and
General Counsel
<PAGE> 5
EXHIBIT INDEX
The following exhibits are filed herewith or incorporated by reference herein
(according to the number assigned to them in Item 601 of Regulation S-K), as
noted:
Exhibits
(10) Amended and Restated Joint Venture Formation Agreement dated
as of March 28, 1995 by and between Sprint Corporation,
Tele-Communications, Inc., Comcast Corporation and Cox
Communications, Inc.*
(10) Agreement of Limited Partnership of MajorCo, L.P., dated as of
March 28, 1995, among Sprint Spectrum, L.P., TCI Network
Services, Comcast Telephony Services and Cox Telephony
Partnership.*
_________________________
* The Agreement contains indexes identifying the items, including exhibits
and schedules, annexed thereto. A copy of any omitted item will be
furnished supplementally to the Commission upon request.
<PAGE> 1
AMENDED AND RESTATED
JOINT VENTURE FORMATION AGREEMENT
dated as of March 28, 1995
by and between
SPRINT CORPORATION
TELE-COMMUNICATIONS, INC.
COMCAST CORPORATION
and
COX COMMUNICATIONS, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Additional Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3 Terms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2. LOCAL CABLE OPERATOR AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3. FORMATION OF PIONEERCO; CERTAIN AGREEMENTS OF THE
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Formation of PioneerCo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Effectuation of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4. CERTAIN AGREEMENTS OF COX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.1 Maintenance of LA Pioneer Preference License . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Advice of Changes; Government Filings; Petitions to
Deny . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 5. CONDITIONS TO THE PIONEERCO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 6. THE PIONEERCO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.1 PioneerCo Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.2 Bring-Down Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.3 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 7. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 8. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.1 Due Incorporation or Formation; Authorization of
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.2 No Conflict; No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.3 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.4 Finders Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 9. REPRESENTATIONS AND WARRANTIES OF COX
REGARDING THE LA PIONEER PREFERENCE LICENSE . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.1 LA Pioneer Preference License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.2 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.3 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 10. EFFECT OF REPRESENTATIONS,
</TABLE>
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<TABLE>
<S> <C>
WARRANTIES AND COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11.2 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11.3 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11.4 Table of Contents; Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.6 Incorporation by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.7 Further Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.9 Counterpart Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.10 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.11 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
11.12 Parties in Interest; Limitation on Rights of
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
11.13 Waivers; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
11.14 Jurisdiction; Consent to Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . 16
11.15 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
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<TABLE>
<S> <C>
EXHIBITS
Exhibit 1.1(a) PioneerCo Affiliation Agreement Term Sheet
Exhibit 1.1(b) PioneerCo Term Sheet
Exhibit 2 Local Cable Operator Agreement Term Sheet
SCHEDULES
Schedule 9.3 Litigation
Schedule 11.1 Addresses of the Parties for Notices
</TABLE>
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<PAGE> 5
This AMENDED AND RESTATED JOINT VENTURE FORMATION AGREEMENT (the
"Agreement") is entered into as of the 28th day of March, 1995, among SPRINT
CORPORATION, a Kansas corporation ("Sprint"), TELE-COMMUNICATIONS, INC., a
Delaware corporation ("TCI"), COMCAST CORPORATION, a Pennsylvania corporation
("Comcast"), and COX COMMUNICATIONS, INC. (formerly known as Cox Cable
Communications, Inc.), a Delaware corporation ("Cox").
W I T N E S S E T H:
WHEREAS, Sprint, TCI, Comcast and Cox entered into that certain Joint
Venture Formation Agreement, dated as of October 24, 1994 (the "Prior
Agreement"), pursuant to which the parties agreed to form certain entities to
(i) provide national wireless telecommunications services, including the
acquisition and development of PCS licenses, (ii) provide nationwide
competitive local telecommunications services and (iii) develop a PCS wireless
system in the Los Angeles MTA through a separate partnership, and to take
certain actions relating to the foregoing;
WHEREAS, as a result of the formation of WirelessCo, L.P., a Delaware
limited partnership ("WirelessCo"), on October 24, 1994, and the formation of
MajorCo, L.P., a Delaware limited partnership ("MajorCo"), and NewTelco, L.P.,
a Delaware limited partnership ("NewTelco"), on the date of this Agreement, the
parties have satisfied certain of their obligations under the Prior Agreement;
and
WHEREAS, in connection with the formation of MajorCo the parties
desire to amend and restate the Prior Agreement in order to affirm and
memorialize their respective remaining obligations under the Prior Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements herein contained, and in order to set forth the respective
rights, obligations and interests of the Parties and their Affiliates to one
another, the Parties, intending to be bound, agree as follows:
SECTION 1. DEFINITIONS
1.1 Definitions.
Capitalized words and phrases used in this Agreement have the
following meanings:
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly through one or more intermediaries controls,
is controlled by, or is under common control with such Person. For purposes of
this definition, the terms "controls," "is controlled by" or "is under common
control
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<PAGE> 6
with" shall mean the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a person or entity,
whether through the ownership of voting securities, by contract or otherwise.
"Agreement" means this Amended and Restated Joint Venture
Formation Agreement.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Comcast" means Comcast Corporation, a Pennsylvania
corporation.
"Cox" means Cox Communications, Inc. (formerly known as Cox
Cable Communications, Inc.), a Delaware corporation.
"Cox Pioneer Partner" means, at the election of Cox, either
(i) Cox Pioneer Partnership, a general partnership to be formed by a Subsidiary
of Cox and a Subsidiary of Cox Enterprises, or (ii) a Subsidiary of Cox.
"Entity" means any firm, corporation, company, partnership,
group, trust, joint venture, association, Governmental Authority or other legal
entity or organization.
"FCC" means the Federal Communications Commission or any
successor agency or entity performing substantially the same functions.
"Governmental Authority" means any foreign, federal, state or
local court, administrative agency, board, bureau or commission or other
governmental department, authority or instrumentality.
"LA Pioneer Preference License" means the 30 MHz "A" block PCS
license granted to Cox on December 14, 1994, for the MTA encompassing Los
Angeles and San Diego, California, which MTA is identified in the FCC Public
Notice regarding the PCS Auction as Market No. M-2 (Report No. AUC-94-04,
Auction No. 4).
"License" means any license, ordinance, authorization, permit,
certificate, variance, exemption, order, franchise or approval, issued or
granted by a Governmental Authority, domestic or foreign.
"Lien" means any lien, pledge, claim, encumbrance, mortgage or
security interest in real or personal property.
"MajorCo" has the meaning set forth in the preamble to this
Agreement.
"MajorCo Partnership Agreement" means the Agreement of Limited
Partnership of MajorCo, L.P., of even date herewith.
"Material Adverse Effect" means, with respect to any
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Person, a material adverse effect on the business, assets, liabilities,
results of operations or condition (financial or otherwise) of such Person and
its Subsidiaries, taken as a whole, or, with respect to a Party only, on the
ability of such Party to perform its obligations in any material respect under
this Agreement.
"NewTelco" has the meaning set forth in the preamble to this
Agreement.
"Parties" means Comcast, Cox, Sprint and TCI, and "Party"
means Comcast, Cox, Sprint or TCI, as the context may require.
"PCS Auction" means the series of simultaneous multiple round
auctions for broadband PCS licenses to be conducted by the FCC under the
authority of Section 309(j) of the Communications Act, 47 U.S.C. Section
309(j) (1993), in accordance with the rules promulgated thereunder by the FCC.
"Permitted Lien" means (a) a statutory Lien not yet due or
payable or (b) a Lien that does not materially detract from the value, or
interfere with the use of, the assets subject thereto or affected thereby or
otherwise materially impair the business operations being conducted or proposed
to be conducted with such assets.
"Person" means any individual or Entity.
"PioneerCo" means a Delaware limited partnership proposed to
be formed by WirelessCo and Cox Pioneer Partner for the purpose of holding and
developing a PCS system using the LA Pioneer Preference License.
"PioneerCo Affiliation Agreement Term Sheet" means the term
sheet attached hereto as Exhibit 1.1(a).
"PioneerCo Partnership Agreement" means the agreement of
limited partnership of PioneerCo contemplated by the PioneerCo Term Sheet.
"PioneerCo Term Sheet" means the term sheet attached hereto as
Exhibit 1.1(b).
"Sprint" means Sprint Corporation, a Kansas corporation.
"Sprint Brand" means the trademark "Sprint" together with the
related "Diamond" logo.
"Strategic Venture" means any Entity or alliance, joint
arrangements, undertakings, investments or other understandings.
"Subsidiary" of any Person means an Entity (i) of which
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more than fifty percent (50%) of the outstanding shares or securities are owned
or controlled, directly or indirectly through one or more Subsidiaries, by such
Person, and the shares or securities so owned entitle such Person and/or
Subsidiaries to elect at least a majority of the members of the board of
directors or other managing authority of such Entity or (ii) which does not
have outstanding shares or securities, as may be the case in a partnership,
joint venture or unincorporated association, but of which more than fifty
percent (50%) (by value) of the ownership interest is owned or controlled,
directly or indirectly through one or more Subsidiaries, by such Person, and in
which the ownership interest so owned entitles such Person and/or Subsidiaries
to make the decisions for such Entity, provided, in each case, that such Entity
shall be deemed to be a Subsidiary only so long as such ownership or control
exists.
"TCI" means Tele-Communications, Inc., a Delaware corporation.
"Wireless Business" has the meaning given such term in the
MajorCo Partnership Agreement.
"WirelessCo" has the meaning set forth in the preamble to this
Agreement.
1.2 Additional Definitions.
<TABLE>
<CAPTION>
Defined Term Defined in
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<S> <C>
"Adverse Proceedings" Section 4.1
"Agents" Section 3.3(a)
"Closing Dates" Section 6.3
"Cox Enterprises" Section 4.1
"PioneerCo Closing" Section 6.1
"PioneerCo Closing Date" Section 6.1
"PioneerCo Termination Date" Section 7
"Proposal" Section 3.3(a)
"Representatives" Section 3.3(a)
</TABLE>
1.3 Terms Generally.
The definitions in Section 1.1 and those contained elsewhere in this
Agreement shall apply equally to both the singular and plural forms of the
terms defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase
"without limitation". Any reference to "this Agreement" shall include the
Exhibits and Schedules hereto. The words "herein", "hereof" and "hereunder"
and words of similar import refer to this Agreement (including the Exhibits and
Schedules) in its entirety and not to any part hereof unless the context shall
otherwise require. All references herein to Sections, Exhibits and Schedules
shall be deemed references to Sections of, and Exhibits and Schedules to, this
Agreement unless the context shall otherwise require. Unless the context shall
otherwise require, any references to any
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<PAGE> 9
agreement or other instrument or statute or regulation are to it as amended and
supplemented from time to time (and, in the case of a statute or regulation, to
any corresponding provisions of successor statutes or regulations). Any
reference in this Agreement to a "day" or number of "days" shall be interpreted
as a reference to a calendar day or number of calendar days. If any action or
notice is to be taken or given on or by a particular calendar day, and such
calendar day is not a business day then such action or notice shall be deferred
until, or may be taken or given on, the next business day.
SECTION 2. LOCAL CABLE OPERATOR AGREEMENT
Following the execution and delivery of this Agreement, the Parties
will negotiate in good faith and use all commercially reasonable efforts to
agree upon a form of agreement to be entered into between NewTelco and certain
owners of cable systems (including Cable Subsidiaries (as defined in the
MajorCo Partnership Agreement)) relating to the use of facilities by NewTelco
for the provision of certain wireline services. The terms of such agreement
(and certain obligations of the Parties and their respective Subsidiaries with
respect thereto) shall be substantially as set forth on Exhibit 2 hereto (the
"Local Operator Agreement Term Sheet"), with such amendments and additions
thereto as shall be agreed upon by the Parties.
SECTION 3. FORMATION OF PIONEERCO;
CERTAIN AGREEMENTS OF THE PARTIES
3.1 Formation of PioneerCo.
Subject to the satisfaction of the conditions set forth in Section 5
hereof and to the Parties' mutual agreement as to the definitive terms and
conditions of the applicable agreements as provided in this Agreement, the
Parties agree to cause PioneerCo to be formed by the execution and delivery by
the applicable parties of the PioneerCo Partnership Agreement and the other
agreements contemplated by the PioneerCo Term Sheet and the PioneerCo
Affiliation Agreement Term Sheet to be executed and delivered in connection
therewith and the consummation of the transactions contemplated thereby to
occur on the PioneerCo Closing Date.
3.2 Effectuation of Agreements.
For a period commencing on the date of this Agreement and ending on
the earlier to occur of the PioneerCo Termination Date or the PioneerCo Closing
Date, except as expressly contemplated or permitted hereby (or by the PioneerCo
Term Sheet) or to the extent that all other Parties shall otherwise consent in
writing, which consent shall not be unreasonably withheld:
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<PAGE> 10
(a) Effectuation of Agreements. Each of the Parties
agrees to negotiate in good faith and, subject to the Parties' mutual agreement
as to the definitive terms and conditions thereof and to the other applicable
conditions set forth in Section 5, to cause Cox Pioneer Partner (in the case of
Cox) or WirelessCo (in the case of each Party) to enter into the PioneerCo
Partnership Agreement, which shall incorporate terms substantially similar to
those contemplated by the PioneerCo Term Sheet and each of the other agreements
contemplated in such term sheet, in each case with such modifications and
additions as the Parties may mutually agree, and, subject to the execution and
delivery of the PioneerCo Partnership Agreement by each of WirelessCo and Cox
Pioneer Partner, Cox will cause the LA Pioneer Preference License to be
contributed to PioneerCo in accordance with the terms and conditions set forth
in the PioneerCo Partnership Agreement and the MajorCo Partnership Agreement.
The Parties acknowledge that the term sheets attached hereto are not exhaustive
and that additional provisions which are not inconsistent with the terms set
forth in such term sheets will be required, and the Parties agree to negotiate
in good faith with respect to such additional provisions. In addition, subject
to the foregoing and to applicable fiduciary duties, each of the Parties
otherwise will use all commercially reasonable efforts to take, or cause to be
taken, all other actions, and to do, or cause to be done, all other things
necessary, proper or advisable to carry out its obligations under this
Agreement and to consummate and make effective the transactions contemplated
hereby, including the following:
(i) as soon as practicable following the
execution of this Agreement, to make all applications and filings and to
use all commercially reasonable efforts to obtain all other
authorizations and consents required to be obtained by the Parties on
or before the PioneerCo Closing Date to enable the Parties to
consummate the transactions contemplated by this Agreement;OP
(ii) in the event any changes in the structure or
the terms of the transactions contemplated by this Agreement are required
in order to facilitate obtaining the authorizations and consents required
in connection with the consummation of such transactions, to take all
commercially reasonable steps necessary to accommodate such changes to
the extent they would not adversely affect the Parties' rights or
obligations hereunder or have an adverse effect on the proposed business
or prospects of PioneerCo or such Party's proposed investment therein;
and
(iii) in the event any claim, action, suit,
investigation or other proceeding by any Governmental Authority or other
Person is commenced which questions the validity or legality of any of
the transactions contemplated hereby or any injunction or other order is
issued in any such proceeding, to cooperate with the other Parties
regarding the defense of such proceedings and the removal of any such
impediment to the consummation of such transactions
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<PAGE> 11
and to use all commercially reasonable efforts to have such injunction or
other order dissolved.
(b) Advice of Changes; Government Filings. Each Party
shall confer on a regular and frequent basis with the other Parties and
promptly advise the other Parties orally and in writing of any change or event
having, or which, insofar as can reasonably be foreseen, could have, a Material
Adverse Effect on such Party. Each Party shall promptly provide the other
Parties (or their counsel) with copies of all filings made by such Party with
any Governmental Authority in connection with this Agreement and the
transactions contemplated hereby.
(c) No Action. No Party shall, nor shall it permit any
of its Subsidiaries to, take or agree or commit to take any action that would
or reasonably might be expected to result in a Material Adverse Effect on such
Party.
3.3 Exclusivity.
(a) General. For a period commencing on the date of this
Agreement and ending on the earlier to occur of the PioneerCo Termination Date
or the PioneerCo Closing Date:
(i) Each of the Parties agrees to, shall cause
its Subsidiaries and the officers, directors and employees of
such Party and its Subsidiaries (collectively, the "Agents")
to, and shall use its best efforts to cause its attorneys,
accountants, investment bankers and other representatives
acting on its behalf (collectively, the "Representatives") to,
refrain from participating in any discussions with any other
Person or group with a view toward the creation of any
Strategic Venture (other than PioneerCo), which would
interfere with or be inconsistent with the ability of
WirelessCo and Cox Pioneer Partner to enter into the PioneerCo
Partnership Agreement, or the ability of the Parties to cause
the consummation of the transactions contemplated by the
PioneerCo Term Sheet on a basis consistent with the intent and
purpose of this Agreement and the discussions among the
Parties (a "Proposal"); and
(ii) Each of the Parties hereto will not, will
cause its Subsidiaries and Agents not to, and will use its best efforts to
cause its Representatives not to, directly or indirectly, (i) solicit, initiate
or knowingly encourage the initiation of inquiries or proposals or offers from
any Person or group as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, concerning a Proposal, or (ii) provide any confidential
information to, or otherwise cooperate with or assist or participate in any
effort by, any such Person or group relating to a Proposal.
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<PAGE> 12
(b) Third Party Discussions. Nothing contained herein
shall limit or restrict the rights of any Party (or its respective
Affiliates, Agents and Representatives) to continue to engage in
discussions or negotiations relating to the transactions contemplated
by this Agreement or the PioneerCo Term Sheet.
SECTION 4. CERTAIN AGREEMENTS OF COX
Cox hereby covenants and agrees that from the date hereof
until the earlier to occur of the PioneerCo Termination Date or the
PioneerCo Closing (except as expressly contemplated or permitted by
this Agreement or to the extent that the other Parties shall otherwise
consent in writing, which consent shall not be unreasonably withheld):
4.1 Maintenance of LA Pioneer Preference License.
Cox shall take or cause to be taken and do or cause to be done all
commercially reasonable actions necessary, proper or advisable under applicable
law to maintain the LA Pioneer Preference Licence and shall cooperate fully
with the FCC in connection with any conditions or obligations on the part of
Cox to retain the LA Pioneer Preference License; provided, however, that Cox
shall not be required to accept a condition that imposes any undue burden or
restriction or take any action that would have a Material Adverse Effect on Cox
or Cox Enterprises, Inc., a Delaware corporation ("Cox Enterprises"). Such
actions shall include preparing and pursuing all necessary regulatory filings,
submissions, approvals and waivers. In the event that any claim, action, suit,
investigation or other proceeding by any Governmental Authority or other Person
is commenced that questions the validity or legality of the right of Cox to
hold and utilize the LA Pioneer Preference License or that limits in any way
the rights of Cox under the LA Pioneer Preference License or seeks damages in
conjunction therewith (collectively, "Adverse Proceedings"), and, if an
injunction or other order is issued in any such Adverse Proceeding, Cox shall
use all commercially reasonable efforts to have such injunction or other order
dissolved, and to cooperate regarding the removal of any such other impediment
to the right of Cox to hold and utilize the LA Pioneer Preference License;
provided, however, that Cox shall not be required to take any action that would
have a Material Adverse Effect on Cox or Cox Enterprises.
4.2 Advice of Changes; Government Filings; Petitions to Deny.
Cox shall promptly advise MajorCo orally and in writing of any change
or event known to Cox having, or which insofar as can reasonably be foreseen,
could have a material adverse effect on the ability of Cox to retain the LA
Pioneer Preference License. Cox shall promptly provide MajorCo with copies of
all filings made by it or any Affiliate of Cox with any Governmental Authority
in connection with the LA Pioneer Preference License.
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<PAGE> 13
Cox shall promptly provide MajorCo with copies of all petitions to deny or
similar petitions filed with the FCC or any other Governmental Authority by any
Person challenging or questioning the right of Cox or any Affiliate of Cox to
hold or utilize the LA Pioneer Preference License or otherwise in connection
with this Agreement and the transactions contemplated hereby.
SECTION 5. CONDITIONS TO THE PIONEERCO CLOSING
The obligations of each of the Parties under this Agreement to be
performed or complied with at the PioneerCo Closing are subject to the
satisfaction, on or prior to the PioneerCo Closing Date, of the following
conditions, compliance with which or the occurrence of which may be waived in
whole or in part in writing by each of the Parties:
(a) PioneerCo Partnership Agreement and Related
Agreements. (i) The Parties shall have mutually agreed as to the definitive
terms of the PioneerCo Partnership Agreement and each of the other agreements
contemplated thereby to be executed and delivered in connection therewith, and
(ii) each of the parties to the PioneerCo Partnership Agreement shall have
entered into the PioneerCo Partnership Agreement and each of the parties to the
other agreements contemplated thereby to be executed and delivered in
connection therewith shall have entered into such other agreements.
(b) Representations and Warranties. The representations
and warranties of each of the Parties contained in Sections 8 and 9 of this
Agreement shall be true and correct in all material respects as of the
PioneerCo Closing Date as if made as of such date.
(c) Covenants. Each of the Parties shall have performed
and satisfied in all material respects the agreements, covenants and conditions
of this Agreement to be performed or satisfied by it at or prior to the
PioneerCo Closing.
(d) Approvals. The Parties shall have received all
material consents, approvals and Licenses of any Governmental Authority
required in connection with the consummation of the transactions to be effected
at the PioneerCo Closing.
(e) Absence of Injunctions. No preliminary or permanent
injunction or other order, decree or ruling issued by a Governmental Authority,
nor any statute, rule, regulation or executive order promulgated or enacted by
any Governmental Authority shall be in effect, in any case that enjoins or
delays in any material respect the consummation of the transactions to be
effected at the PioneerCo Closing or imposes any material restrictions or
requirements thereon or on any of the Parties in connection therewith.
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<PAGE> 14
(f) Holder of the LA Pioneer Preference License. Cox
shall be the authorized legal holder of the LA Pioneer Preference License, free
and clear of all Liens (except for any Liens relating to Cox's deferred payment
obligations).
(g) Legal Opinion. WirelessCo shall have received an
opinion from Dow, Lohnes & Albertson, or other recognized legal counsel
acceptable to WirelessCo, that the LA Pioneer Preference License will
constitute an "amortizable section 197 intangible" amortizable by PioneerCo for
federal income tax purposes pursuant to section 197(a) of the Code.
SECTION 6. THE PIONEERCO CLOSING
6.1 PioneerCo Closing.
The execution of the PioneerCo Partnership Agreement (and of each of
the agreements contemplated thereby to be executed in connection therewith) and
the consummation of the transactions contemplated thereby to occur at the time
of such execution (the "PioneerCo Closing"), shall take place at the offices of
King & Spalding, 191 Peachtree Street, Atlanta, Georgia, or such other location
as the Parties may agree, within five (5) days following the satisfaction of
the conditions contained in clause (i) of Section 5(a) and in Section 5(d) (the
"PioneerCo Closing Date"), assuming that the other conditions to closing set
forth in Section 5 are satisfied or are effectively waived as of the PioneerCo
Closing Date.
6.2 Bring-Down Certificates.
(a) Closing. On the PioneerCo Closing Date, Cox shall
provide to each other Party a certificate dated the PioneerCo Closing Date
certifying that the representations and warranties made by Cox contained in
Section 9 are true and correct in all material respects as of the PioneerCo
Closing Date and that the covenants and conditions to be performed or satisfied
by Cox contained in Sections 4 and 5, respectively, at or prior to the
PioneerCo Closing Date have been so performed or satisfied in all material
respects.
(b) No Effect. The delivery of the certificates required
by this Section 6.2 shall in no way diminish the representations, warranties
and covenants made in this Agreement.
6.3 Costs and Expenses.
Each Party shall pay all costs and expenses incurred by it in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the PioneerCo Partnership Agreement, and of each of the
agreements contemplated to be executed in connection therewith, including all
fees and out-of-pocket expenses of counsel for such Party with respect thereto.
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<PAGE> 15
SECTION 7. TERMINATION
The obligations of the Parties hereunder with respect to the PioneerCo
Closing shall terminate as of the date (the "PioneerCo Termination Date") of
the earlier to occur of (i) the unanimous written consent of the Parties or
(ii) the dissolution of MajorCo in accordance with Section 15.1 of the MajorCo
Partnership Agreement.
SECTION 8. REPRESENTATIONS AND WARRANTIES
REGARDING THE PARTIES
Each Party hereby represents and warrants to the other Parties that:
8.1 Due Incorporation or Formation; Authorization of Agreements.
Such Party is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
the corporate power and authority to own its property and carry on its business
as owned and carried on at the date hereof. Such Party is duly licensed or
qualified to do business and in good standing in each jurisdiction in which the
failure to be so licensed or qualified would have a Material Adverse Effect on
such Party. Such Party has the corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution, delivery and performance
of this Agreement by such Party have been duly authorized by all necessary
corporate action. This Agreement constitutes the legal, valid and binding
obligation of such Party, enforceable in accordance with its terms, subject as
to enforceability to limits imposed by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and the availability of equitable
remedies.
8.2 No Conflict; No Default.
Neither the execution, delivery and performance of this Agreement nor
the consummation by such Party of the transactions contemplated hereby (i) will
conflict with, violate or result in a breach of any of the terms, conditions or
provisions of any law, regulation, order, writ, injunction, decree,
determination or award of any Governmental Authority or any arbitrator,
applicable to such Party or any of its Subsidiaries, (ii) will conflict with,
violate, result in a breach of or constitute a default under any of the terms,
conditions or provisions of the certificate or articles of incorporation or
bylaws of such Party or any of its Subsidiaries or of any material agreement or
instrument to which such Party or any of its Subsidiaries is a party or by
which such Party or any of its Subsidiaries is or may
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<PAGE> 16
be bound or to which any of its material properties or assets is subject, (iii)
will conflict with, violate, result in a breach of, constitute a default under
(whether with notice or lapse of time or both), accelerate or permit the
acceleration of the performance required by, give to others any interests or
rights or require any consent, authorization or approval under any indenture,
mortgage, lease agreement or instrument to which such Party or any of its
Subsidiaries is a party or by which such Party or any of its Subsidiaries is or
may be bound or (iv) will result in the creation or imposition of any Lien upon
any of the material properties or assets of such Party or any of its
Subsidiaries, other than Permitted Liens, which in any such case could
reasonably be expected to have a Material Adverse Effect on such Party.
8.3 Litigation.
There are no actions, suits, proceedings or investigations pending or,
to the knowledge of such Party, threatened against or affecting such Party or
any of its properties, assets or businesses in any court or before or by any
Governmental Authority, or any arbitrator which could, if adversely determined
(or, in the case of an investigation, could lead to any action, suit or
proceeding, which if adversely determined could) reasonably be expected to have
a Material Adverse Effect on such Party, and such Party has not received any
currently effective notice of any default, and such Party is not in default
under any applicable order, writ, injunction, decree, permit, determination or
award of any Governmental Authority or any arbitrator which could reasonably be
expected to have a Material Adverse Effect on such Party.
8.4 Finders Fees.
There is no investment banker, broker or finder that has been retained
by or is authorized to act on behalf of such Party who might be entitled to any
fee or commission from any other Party, MajorCo or any of its Subsidiaries, or
PioneerCo upon consummation of the transactions contemplated by this Agreement.
SECTION 9. REPRESENTATIONS AND WARRANTIES OF
COX REGARDING THE LA PIONEER PREFERENCE LICENSE
Cox hereby represents and warrants to each of the other Parties as
follows:
9.1 LA Pioneer Preference License.
Cox has satisfied all terms and conditions required to be satisfied on
or before the date hereof imposed by the FCC, by any other Governmental
Authority, or by federal law as of the date hereof as a condition of the award
of the LA Pioneer Preference License, including the FCC's pioneers' preference
rules as
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<PAGE> 17
codified at 47 C.F.R. Sections 1.402, 1.403 and 5.207 (1993); orders issued in
Federal Communications Commission dockets ET Docket No. 93-266, GEN Docket No.
90-314 and GEN Docket No. 90-217; and conditions imposed as of the date hereof
in response to Cox's application for authority to provide broadband PCS service
on frequency block "A" of the Los Angeles-San Diego MTA.
9.2 Compliance with Laws.
Cox has not made any untrue statement of fact, or omitted to disclose
any facts, to the FCC or any other Governmental Authority or taken or failed to
take any action, which misstatements, omissions, actions or failures to act,
individually or in the aggregate, subject or could reasonably be expected to
subject Cox to the forfeiture of its right to hold and utilize the LA Pioneer
Preference License.
9.3 Litigation.
Except as set forth on Schedule 9.3, there are no actions, suits,
proceedings or investigations pending or, to the knowledge of Cox, threatened
against or affecting Cox in, before or by any Governmental Authority or any
arbitrator which could, if adversely determined (or, in the case of an
investigation could lead to any action, suit or proceeding, which if adversely
determined could) reasonably be expected to affect the right of Cox to hold and
utilize the LA Pioneer Preference License; and Cox has not received any
currently effective notice of any default, and Cox is not in default, under any
applicable order, writ, injunction, decree, permit, determination or award of
any Governmental Authority or any arbitrator which could reasonably be expected
to affect the right of Cox to hold and utilize the LA Pioneer Preference
License.
9.4 Title to the LA Pioneer Preference License.
Subject to the outcome of the proceedings described in Schedule 9.3,
the LA Pioneer Preference License has been issued to Cox and Cox is the
authorized legal holder thereof, free and clear of all Liens (except for any
Liens relating to Cox's deferred payment obligations), and, subject to receipt
of any required regulatory approvals, Cox is entitled to transfer or assign the
LA Pioneer Preference License to PioneerCo as contemplated under the PioneerCo
Term Sheet.
9.5 Cox Enterprises.
Cox is a Subsidiary of Cox Enterprises.
SECTION 10. EFFECT OF REPRESENTATIONS,
WARRANTIES AND COVENANTS
All representations and warranties made in this Agreement
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<PAGE> 18
and all statements contained in any Exhibit, Schedule or certificate or other
agreement or instrument delivered or to be delivered by or on behalf of the
Parties in connection with the transactions contemplated hereby (including
pursuant to Section 6.2) shall be deemed representations and warranties
hereunder. All such representations and warranties shall survive until the
earlier to occur of the PioneerCo Termination Date or the PioneerCo Closing
Date, but not thereafter.
SECTION 11. MISCELLANEOUS
11.1 Notices.
Any notice, payment, demand, or communication required or permitted to
be given by any provision of this Agreement shall be in writing and mailed
(certified or registered mail, postage prepaid, return receipt requested) or
sent by hand or overnight courier, or by facsimile (with acknowledgment
received by overnight courier), charges prepaid and addressed to the address
set forth on Schedule 11.1, or to such other address as such Person may from
time to time specify by notice to the Parties. Any Party may from time to time
specify a different address by notice to the other Parties. Any such notice
shall be deemed to be delivered, given, and received for all purposes as of the
date so delivered.
11.2 Construction.
This Agreement shall be construed simply according to its fair meaning
and not strictly for or against any Party.
11.3 Time.
Time is of the essence with respect to this Agreement.
11.4 Table of Contents; Headings.
The table of contents and section and other headings contained in this
Agreement are for reference purposes only and are not intended to describe,
interpret, define, or limit the scope, extent, or intent of this Agreement or
any provision hereof.
11.5 Severability.
Every provision of this Agreement is intended to be severable. If any
term or provision hereof is illegal, invalid or unenforceable for any reason
whatsoever, that term or provision will be enforced to the maximum extent
permissible so as to effect the intent of the Parties, and such illegality,
invalidity or unenforceability shall not affect the validity or legality of the
remainder of this Agreement. If necessary to effect the intent of the Parties,
the Parties will negotiate in good faith to amend this Agreement to replace the
unenforceable language with enforceable language which as closely as possible
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<PAGE> 19
reflects such intent.
11.6 Incorporation by Reference.
Every Exhibit and Schedule attached to this Agreement and referred to
herein is not incorporated in this Agreement by reference unless this Agreement
expressly otherwise provides.
11.7 Further Action.
Each Party, upon the reasonable request of any other Party, agrees to
perform all further acts and execute, acknowledge, and deliver any documents
which may be reasonably necessary, appropriate, or desirable to carry out the
intent and purposes of this Agreement.
11.8 Governing Law.
The internal laws of the State of New York (without regard to
principles of conflict of law) shall govern the validity of this Agreement, the
construction of its terms, and the interpretation of the rights and duties of
the Parties.
11.9 Counterpart Execution.
This Agreement may be executed in any number of counterparts with the
same effect as if all the Parties had signed the same document. All
counterparts shall be construed together and shall constitute one agreement.
11.10 Specific Performance.
Each Party agrees with the other Parties that the other Parties would
be irreparably damaged if any of the provisions of this Agreement are not
performed in accordance with their specific terms and that monetary damages
would not provide an adequate remedy in such event. Accordingly, it is agreed
that, in addition to any other remedy to which the nonbreaching Parties may be
entitled, at law or in equity, the nonbreaching Parties shall be entitled to
injunctive relief to prevent breaches of the provisions of this Agreement and
specifically to enforce the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
subject matter jurisdiction thereof.
11.11 Entire Agreement.
The provisions of this Agreement, including the Exhibits and Schedules
hereto, set forth the entire agreement and understanding between the Parties as
to the subject matter hereof and supersede all prior agreements, oral or
written, and other communications between the Parties relating to the subject
matter hereof.
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<PAGE> 20
11.12 Parties in Interest; Limitation on Rights of Others.
Except as otherwise provided herein, the terms of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Nothing in this Agreement, whether express
or implied, shall be construed to give any Person other than the Parties any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any covenants, conditions or provisions contained herein. No Party may
assign any of its rights and obligations hereunder to any person without the
prior written consent of the other Parties, except to the transferee of such
Party's Subsidiary's entire interest in MajorCo in connection with a Permitted
Transaction (as defined in the MajorCo Partnership Agreement).
11.13 Waivers; Remedies.
The observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively) by the Party or Parties entitled to enforce such term, but any
such waiver shall be effective only if in a writing signed by the Party or
Parties against which such waiver is to be asserted. Except as otherwise
provided herein, no failure or delay of any Party in exercising any power or
right under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.
11.14 Jurisdiction; Consent to Service of Process.
(a) Each Party hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court sitting in the County of New York or any Federal court of
the United States of America sitting in the Southern District of New York, and
any appellate court from any such court, in any suit, action or proceeding
arising out of or relating to this Agreement, or for recognition or enforcement
of any judgment, and each Party hereby irrevocably and unconditionally agrees
that all claims in respect of any such suit, action or proceeding may be heard
and determined in such New York State court or, to the extent permitted by law,
in such Federal court.
(b) Each Party hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement in any
New York State court sitting in the County of New York or any Federal court
sitting in the Southern District of New York. Each Party hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such suit, action or proceeding in any such court
and further waives the right to
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<PAGE> 21
object, with respect to such suit, action or proceeding, that such court does
not have jurisdiction over such Party.
(c) Each Party irrevocably consents to service of process
in the manner provided for the giving of notices pursuant to this Agreement.
Nothing in this Agreement shall affect the right of a Party to serve process in
any other manner permitted by law.
11.15 Waiver of Jury Trial.
Each Party waives, to the fullest extent permitted by applicable law,
any right it may have to a trial by jury in respect of any action, suit or
proceeding arising out of or relating to this Agreement.
[SIGNATURES FOLLOW ON A SEPARATE PAGE]
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<PAGE> 22
IN WITNESS WHEREOF, the Parties have entered into this Amended and
Restated Joint Venture Formation Agreement as of the date first above set
forth.
SPRINT CORPORATION
By:________________________________
Title:_____________________________
TELE-COMMUNICATIONS, INC.
By:________________________________
Title:_____________________________
COMCAST CORPORATION
By:________________________________
Title:_____________________________
COX COMMUNICATIONS, INC.
By:________________________________
Title:_____________________________
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<PAGE> 1
AGREEMENT OF LIMITED PARTNERSHIP
OF
MAJORCO, L.P.,
A DELAWARE LIMITED PARTNERSHIP
dated as of March 28, 1995
among
SPRINT SPECTRUM, L.P.
TCI NETWORK SERVICES
COMCAST TELEPHONY SERVICES
and
COX TELEPHONY PARTNERSHIP
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1. THE PARTNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Formation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Principal Executive Office. . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Filings; Agent for Service of Process. . . . . . . . . . . . . . . . . . 2
1.7 Title to Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8 Payments of Individual Obligations. . . . . . . . . . . . . . . . . . . . 3
1.9 Independent Activities. . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.10 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.11 Additional Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 32
1.12 Terms Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 2. PARTNERS' CAPITAL CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . 35
2.1 Percentage Interests; Preservation of Percentages of
Interests Held as General Partners and as Limited
Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.2 Partners' Original Capital Contributions. . . . . . . . . . . . . . . . . 36
2.3 Additional Capital Contributions. . . . . . . . . . . . . . . . . . . . . 36
2.4 Failure to Contribute Capital. . . . . . . . . . . . . . . . . . . . . . 47
2.5 Other Additional Capital Contributions. . . . . . . . . . . . . . . . . . 53
2.6 Partnership Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
2.7 Partner Loans; Other Borrowings. . . . . . . . . . . . . . . . . . . . . 53
2.8 Obligations Under Contribution Agreement. . . . . . . . . . . . . . . . 56
2.9 Other Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 3. ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
3.1 Profits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
3.2 Losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
3.3 Special Allocations. . . . . . . . . . . . . . . . . . . . . . . . . . . 58
3.4 Curative Allocations. . . . . . . . . . . . . . . . . . . . . . . . . . . 61
3.5 Loss Limitation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
3.6 Other Allocation Rules. . . . . . . . . . . . . . . . . . . . . . . . . . 62
3.7 Tax Allocations: Code Section 704(c). . . . . . . . . . . . . . . . . . 62
SECTION 4. DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
4.1 Available Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
4.2 Tax Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
4.3 Amounts Withheld. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
SECTION 5. MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
5.1 Authority of the Management Committee. . . . . . . . . . . . . . . . . . 64
5.2 Business Plan and Annual Budget. . . . . . . . . . . . . . . . . . . . . 70
5.3 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
5.4 Limitation of Agency. . . . . . . . . . . . . . . . . . . . . . . . . . . 74
5.5 Liability of Partners, Representatives and
Partnership Employees. . . . . . . . . . . . . . . . . . . . . . . . . . 75
5.6 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
5.7 Temporary Investments. . . . . . . . . . . . . . . . . . . . . . . . . . 77
5.8 Deadlocks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
5.9 Conversion to Corporate Form. . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 6. PARTNERSHIP OPPORTUNITIES; CONFIDENTIALITY . . . . . . . . . . . . . . 81
6.1 Competitive Activities. . . . . . . . . . . . . . . . . . . . . . . . . . 81
6.2 Enforceability and Enforcement. . . . . . . . . . . . . . . . . . . . . . 84
6.3 General Exceptions to Section 6.1. . . . . . . . . . . . . . . . . . . . 84
6.4 Comcast Exceptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
6.5 Overlaps. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
6.6 Freedom of Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
6.7 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
SECTION 7. LOCAL OPERATOR AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . 101
SECTION 8. ROLE OF EXCLUSIVE LIMITED PARTNERS . . . . . . . . . . . . . . . . . . 101
8.1 Rights or Powers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
8.2 Voting Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
SECTION 9. TRANSACTIONS WITH PARTNERS; OTHER AGREEMENTS . . . . . . . . . . . . . 102
9.1 Sprint Cellular. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
9.2 Sprint Brand Licensing Agreement. . . . . . . . . . . . . . . . . . . . . 103
9.3 Joint Marketing Agreement. . . . . . . . . . . . . . . . . . . . . . . . 103
9.4 Services Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
9.5 Preferred Provider. . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
9.6 MFJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
9.7 Interested Party Transactions. . . . . . . . . . . . . . . . . . . . . . 105
9.8 Access to Technical Information . . . . . . . . . . . . . . . . . . . . . 105
9.9 Parent Undertaking. . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
9.10 Certain Additional Covenants. . . . . . . . . . . . . . . . . . . . . . 106
9.11 PioneerCo Preemptive Rights. . . . . . . . . . . . . . . . . . . . . . . 107
9.12 Foreign Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
9.13 Advertising Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
9.14 Provision of Services. . . . . . . . . . . . . . . . . . . . . . . . . . 111
</TABLE>
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<TABLE>
<S> <C>
9.15 Comcast Representative. . . . . . . . . . . . . . . . . . . . . . . . . 111
9.16 Purchasing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
SECTION 10. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . 112
10.1 Representations and Warranties by Partners. . . . . . . . . . . . . . . 112
10.2 Representation and Warranty of Sprint. . . . . . . . . . . . . . . . . . 114
SECTION 11. ACCOUNTING, BOOKS AND RECORDS . . . . . . . . . . . . . . . . . . . . 114
11.1 Accounting, Books and Records. . . . . . . . . . . . . . . . . . . . . . 114
11.2 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
11.3 Tax Returns and Information. . . . . . . . . . . . . . . . . . . . . . . 117
11.4 Proprietary Information. . . . . . . . . . . . . . . . . . . . . . . . . 118
SECTION 12. ADVERSE ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
12.1 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
12.2 Adverse Act Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . 121
12.3 Net Equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
12.4 Gross Appraised Value. . . . . . . . . . . . . . . . . . . . . . . . . . 125
12.5 Extension of Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
SECTION 13. DISPOSITIONS OF INTERESTS . . . . . . . . . . . . . . . . . . . . . . 126
13.1 Restriction on Dispositions. . . . . . . . . . . . . . . . . . . . . . . 126
13.2 Permitted Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . 127
13.3 Conditions to Permitted Transfers. . . . . . . . . . . . . . . . . . . . 127
13.4 Right of First Refusal. . . . . . . . . . . . . . . . . . . . . . . . . 130
13.5 Tagalong Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
13.6 Partner Put Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . 136
13.7 Put/Call of Preferred Interests. . . . . . . . . . . . . . . . . . . . . 139
13.8 Prohibited Dispositions. . . . . . . . . . . . . . . . . . . . . . . . . 140
13.9 Representations Regarding Transfers. . . . . . . . . . . . . . . . . . . 140
13.10 Distributions and Allocations in Respect of . . . . . . . . . . . . . . 140
SECTION 14. CONVERSION OF INTERESTS . . . . . . . . . . . . . . . . . . . . . . . 141
14.1 Termination of Status as General Partner. . . . . . . . . . . . . . . . 141
14.2 Restoration of Status as General Partner. . . . . . . . . . . . . . . . 142
SECTION 15. DISSOLUTION AND WINDING UP . . . . . . . . . . . . . . . . . . . . . 142
15.1 Liquidating Events. . . . . . . . . . . . . . . . . . . . . . . . . . . 142
15.2 Winding Up. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
15.3 Compliance With Certain Requirements of
Regulations; Deficit Capital Accounts. . . . . . . . . . . . . . . . . 144
</TABLE>
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<TABLE>
<S> <C>
15.4 Deemed Distribution and Recontribution. . . . . . . . . . . . . . . . . 145
15.5 Rights of Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . 145
15.6 Notice of Dissolution. . . . . . . . . . . . . . . . . . . . . . . . . . 146
15.7 Buy/Sell Arrangements. . . . . . . . . . . . . . . . . . . . . . . . . . 146
SECTION 16. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
16.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
16.2 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
16.3 Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
16.4 Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
16.5 Table of Contents; Headings. . . . . . . . . . . . . . . . . . . . . . . 149
16.6 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
16.7 Incorporation by Reference. . . . . . . . . . . . . . . . . . . . . . . 150
16.8 Further Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
16.9 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
16.10 Waiver of Action for Partition; No Bill For
Partnership Accounting. . . . . . . . . . . . . . . . . . . . . . . . . 150
16.11 Counterpart Execution. . . . . . . . . . . . . . . . . . . . . . . . . 151
16.12 Sole and Absolute Discretion. . . . . . . . . . . . . . . . . . . . . . 151
16.13 Specific Performance. . . . . . . . . . . . . . . . . . . . . . . . . . 151
16.14 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
16.15 Limitation on Rights of Others. . . . . . . . . . . . . . . . . . . . . 151
16.16 Waivers; Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . 151
16.17 Jurisdiction; Consent to Service of Process. . . . . . . . . . . . . . 152
16.18 Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . . . . . 152
16.19 No Right of Set-Off. . . . . . . . . . . . . . . . . . . . . . . . . . 152
</TABLE>
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SCHEDULES
<TABLE>
<CAPTION>
Schedules Number
- --------- ------
<S> <C>
Current Sprint LEC Territories . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10(a)
Excluded Businesses; Exclusive and Non-Exclusive
Services; 75 Mile Plus Calls . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10(b)
Other CAP Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10(c)
Sprint Cellular Service Area . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10(d)
Initial Percentage Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Original Capital Contributions; Notice Addresses . . . . . . . . . . . . . . . . . 2.2
Special Sprint Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3(c)
Simple Majority Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(i)
Required Majority Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(j)
Unanimous Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(k)
Unanimous Partner Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(l)
Temporary Investments Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . 5.7
Existing Overlap Territories . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5(a)
Permitted Additional Sprint LEC MSAs . . . . . . . . . . . . . . . . . . . . . . . 6.5(f)
</TABLE>
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EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number
- ------- ------
<S> <C>
Form of Parent Undertaking . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10(a)
Form of Default Loan Promissory Note . . . . . . . . . . . . . . . . . . . . . . . 2.4(c)(ii)
Form of Partner Loan Promissory Note . . . . . . . . . . . . . . . . . . . . . . . 2.7
Form of Assignment and Acceptance Agreement . . . . . . . . . . . . . . . . . . . . 9.2(a)(i)
Form of Sprint Trademark License Agreement . . . . . . . . . . . . . . . . . . . . 9.2(a)(ii)
Form of Sprint Teleport Trademark License Agreement . . . . . . . . . . . . . . . . 9.2(b)
Key Principles of Joint Marketing Agreement . . . . . . . . . . . . . . . . . . . . 9.3
Key Principles of Services Agreement . . . . . . . . . . . . . . . . . . . . . . . 9.4
</TABLE>
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<PAGE> 8
AGREEMENT OF LIMITED PARTNERSHIP
OF
MAJORCO, L.P.,
A DELAWARE LIMITED PARTNERSHIP
This AGREEMENT OF LIMITED PARTNERSHIP is entered into as of the 28th
day of March, 1995, by and among Sprint Spectrum, L.P., a Delaware limited
partnership ("Sprint"), TCI Network Services, a Delaware general partnership
("TCI"), Comcast Telephony Services, a Delaware general partnership
("Comcast"), and Cox Telephony Partnership, a Delaware general partnership
("Cox"), each as a General Partner and a Limited Partner, pursuant to the
provisions of the Delaware Revised Uniform Limited Partnership Act, on the
following terms and conditions:
SECTION 1. THE PARTNERSHIP
1.1 Formation.
The Partners hereby form the Partnership as a limited partnership
pursuant to the provisions of the Act for the purposes and upon the terms and
conditions set forth in this Agreement.
1.2 Name.
The name of the Partnership shall be MajorCo, L.P, and all business of
the Partnership shall be conducted in such name or, in the discretion of the
Management Committee, under any other names (but excluding a name that includes
the name of a Partner unless such Partner has consented thereto).
1.3 Purpose.
(a) Subject to, and upon the terms and conditions of this
Agreement, the purposes of the Partnership shall be to engage in the Wireless
Business and the Wireline Business and in the provision of Non-Exclusive
Services, either directly or through one or more
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<PAGE> 9
Subsidiaries, and to perform such activities in the furtherance of such
Wireless Business and Wireline Business and provision of Non-Exclusive Services
as may be approved from time to time by the Management Committee. Without a
Unanimous Partner Vote, the Partnership shall not engage in any other business,
including any of the Excluded Businesses.
(b) The Partnership shall have all the powers now or
hereafter conferred by the laws of the State of Delaware on limited
partnerships formed under the Act and, subject to the limitations of this
Agreement, may do any and all lawful acts or things that are necessary,
appropriate, incidental or convenient for the furtherance and accomplishment of
the purposes of the Partnership. Without limiting the generality of the
foregoing, and subject to the terms of this Agreement, the Partnership may
enter into, deliver and perform all contracts, agreements and other
undertakings and engage in all activities and transactions as may be necessary
or appropriate to carry out its purposes and conduct its business.
1.4 Principal Executive Office.
The principal executive office of the Partnership shall be located in
such place as determined by the Management Committee, and the Management
Committee may change the location of the principal executive office of the
Partnership to any other place within or without the State of Delaware upon ten
(10) Business Days prior notice to each of the Partners, provided that such
principal executive office shall be located in the United States. The
Management Committee may establish and maintain such additional offices and
places of business of the Partnership, within or without the State of Delaware,
as it deems appropriate.
1.5 Term.
The term of the Partnership shall commence on the date the certificate
of limited partnership described in Section 17-201 of the Act (the
"Certificate") is filed in the office of the Secretary of State of Delaware in
accordance with the Act and shall continue until the winding up and liquidation
of the Partnership and its business is completed following a Liquidating Event,
as provided in Section 15.
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<PAGE> 10
1.6 Filings; Agent for Service of Process.
(a) Promptly following the execution of this Agreement, the
General Partners shall cause the Certificate to be filed in the office of the
Secretary of State of Delaware in accordance with the Act. The Management
Committee shall take any and all other actions reasonably necessary to perfect
and maintain the status of the Partnership as a limited partnership under the
laws of Delaware. The General Partners shall cause amendments to the
Certificate to be filed whenever required by the Act. The Partners shall be
provided with copies of each document filed or recorded as contemplated by this
Section 1.6 promptly following the filing or recording thereof.
(b) The General Partners shall execute and cause to be filed
original or amended Certificates and shall take any and all other actions as
may be reasonably necessary to perfect and maintain the status of the
Partnership as a limited partnership or similar type of entity under the laws
of any other states or jurisdictions in which the Partnership engages in
business.
(c) The registered agent for service of process on the
Partnership shall be The Corporation Trust Company or any successor as
appointed by the Management Committee in accordance with the Act. The
registered office of the Partnership in the State of Delaware is located at
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801.
1.7 Title to Property.
No Partner shall have any ownership interest in its individual name or
right in any real or personal property owned, directly or indirectly, by the
Partnership, and each Partner's Interest and Preferred Interest (if any) shall
be personal property for all purposes. The Partnership shall hold all of its
real and personal property in the name of the Partnership or its nominee and
not in the name of any Partner.
1.8 Payments of Individual Obligations.
The Partnership's credit and assets shall be used solely for the
benefit of the Partnership, and no asset of the Partnership shall be
Transferred or encumbered for, or in payment of, any individual obligation of
any Partner.
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<PAGE> 11
1.9 Independent Activities.
Each Partner and any of its Affiliates shall be required to
devote only such time to the affairs of the Partnership as such Partner
determines in its sole discretion may be necessary to manage and operate the
Partnership to the extent contemplated by this Agreement, and each such Person,
except as expressly provided herein, shall be free to serve any other Person or
enterprise in any capacity that it may deem appropriate in its discretion.
1.10 Definitions.
Capitalized words and phrases used in this Agreement have the
following meanings:
"Accountants" means, as of any time, such firm of nationally
recognized independent certified public accountants that, as of such time, has
been appointed by the Management Committee as the accountants for the
Partnership.
"Act" means the Delaware Revised Uniform Limited Partnership
Act, as set forth in Del. Code Ann. tit. 6, Sections 17-101 to 17-1109.
"Additional Capital Contributions" means, with respect to each
Partner, the Capital Contributions made by such Partner pursuant to Sections
2.3 (except as otherwise provided in Section 2.3(a)(i)), 2.4, 2.5 and 9.11, but
excluding Special Contributions, Special Sprint Contributions, and that portion
of the Cox Teleport Assets contributed by Cox having an Agreed Value equal to
the Excess Value, reduced in each case by the amount of any liabilities of such
Partner assumed by the Partnership in connection with such Capital Contribution
or any Nonrecourse Liabilities of such Partner that are secured by any property
contributed by such Partner as a part of such Capital Contribution; provided,
however, that no such reduction shall be made in the case of the contribution
of Property pursuant to Section 2.3(a)(ii) or (iii) or the contribution of any
other Property having an Agreed Value if (in the case of such other Property
only) such liabilities already have been taken into account in arriving at such
Agreed Value. In the event all or a portion of an Interest or Preferred
Interest is Transferred in accordance with the terms of this Agreement, the
transferee shall succeed to the Additional Capital Contributions of the
transferor to the extent they relate to the Transferred Interest or Preferred
Interest.
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<PAGE> 12
"Additional Contribution Agreement" means a contribution
agreement the terms of which have been approved by the Unanimous Vote of the
Management Committee pursuant to which a Partner makes an Additional Capital
Contribution to the Partnership pursuant to Section 2.5.
"Additional Contribution Notice" means a written notice given
to all Partners, which shall (i) state the Additional Contribution Amount being
requested of all Partners and each Partner's proportionate share thereof
determined as provided in Section 2.3(b)(i) (or, in the case of a required
Additional Capital Contribution in respect of a Declined Accelerated
Contribution, as provided in Section 2.3(b)(iii)(B)), (ii) if applicable, state
that the Additional Capital Contribution being requested is a Second Tranche
Call, (iii) specify in reasonable detail the purposes for which the Additional
Contribution Amount is required, (iv) identify a date (the "Contribution
Date"), not more than forty-five (45) days nor less than thirty (30) days after
the date of such notice, upon which the Additional Capital Contributions are to
be made and (v) specify the account of the Partnership to which the
contribution is to be made; provided that any Additional Contribution Notice
with respect to any portion of the Auction Commitment of the Partners may
require the Additional Capital Contribution to be made on a date that is less
than thirty (30) days, but not less than two (2) days, after the date of such
notice.
"Additional Markets" means, as of any relevant date, those
geographic areas that are reserved for eventual roll-out by NewTelco but that
are not scheduled for roll-out during the period covered by the Master Roll-Out
Schedule then in effect. The initial list of geographic areas to be reserved
as Additional Markets shall be adopted by Unanimous Partner Vote in connection
with the adoption of the Initial Business Plan. Such list may be amended from
time to time by the vote of the Management Committee required at such time
pursuant to Schedules 5.1(j) and 5.1(k) for the adoption of the Annual Budget
and Approved Business Plan.
"Adjusted Capital Account Deficit" means, with respect to any
Exclusive Limited Partner, the deficit balance, if any, in such Exclusive
Limited Partner's Capital Account as of the end of the relevant Allocation
Year, after giving effect to the following adjustments:
(i) Credit to such Capital Account any amounts which
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<PAGE> 13
such Exclusive Limited Partner is obligated to restore pursuant to any
provision of this Agreement or is deemed to be obligated to restore pursuant to
the penultimate sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and
(ii) Debit to such Capital Account the items
described in Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704- 1(b)(2)(ii)(d) of the Regulations
and shall be interpreted consistently therewith.
"Adverse Act" means, with respect to any Partner, any of the
following:
(i) Such Partner becomes a Defaulting Partner;
(ii) Such Partner Disposes of all or any part of
its Interest or Preferred Interest except as required or permitted by this
Agreement; provided, however, that no Adverse Act shall be considered to have
occurred until thirty (30) days following the involuntary encumbrance of all or
any part of such Interest or Preferred Interest if during such thirty (30) day
period the affected Partner acts diligently to, and prior to the end of such
thirty (30) day period does, remove any such encumbrance, including effecting
the posting of a bond to prevent foreclosure where necessary;
(iii) Such Partner has committed a material breach
of any material covenant contained in this Agreement (other than as otherwise
expressly enumerated in this definition) or a material default on any material
obligation provided for in this Agreement (other than as otherwise expressly
enumerated in this definition) and such breach or default continues for thirty
(30) days after the date written notice thereof has been given to such Partner
by any General Partner (with a copy to the Management Committee and each other
Partner); provided that if such breach or default is not a failure to pay money
and is of such a nature that it cannot reasonably be cured within such thirty
(30) day period, but is curable and such Partner in good faith begins efforts
to cure it within such thirty (30) day period and continues diligently to do
so, such Partner shall have a reasonable additional period thereafter to effect
the cure (which shall not exceed an additional ninety (90) days unless
otherwise approved by the Management Committee by Required Majority Vote); and
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<PAGE> 14
provided further that if, within thirty (30) days after the date written
notice of such breach or default has been given to such Partner, such Partner
delivers written notice (the "Contest Notice") to the Management Committee and
all other Partners that it contests such notice of breach or default, such
breach or default shall not constitute an Adverse Act unless and until (and
assuming that such breach or default has not theretofore been cured in full and
that any applicable cure period has expired) (A) the disinterested
Representatives determine in good faith by Required Majority Vote that such
Partner has committed such a breach or default or (B) there is a Final
Determination that such Partner's actions or failures to act constituted such a
breach or default; and provided further that this clause (iii) shall not apply
in the event of a breach of Section 9.6 hereof, which breach shall constitute
an Adverse Act (if at all) pursuant to clause (vii) below;
(iv) The Bankruptcy of such Partner or the
occurrence of any other event which would permit a trustee or receiver to
acquirecontrol of the affairs or assets of such Partner;
(v) The occurrence of a Change in Control of such
Partner without the unanimous written consent of the other General Partners;
(vi) An IXC Transaction has occurred with respect
to such Partner;
(vii) The occurrence of any event with respect to
such Partner (A) that causes such Partner or the Partnership or any of its
Subsidiaries to become a BOC or (B) that causes the Partnership or any of its
Subsidiaries to become a BOC Affiliated Enterprise or an entity subject to any
restriction or limitation under Section II of the MFJ, provided, however, that
(a) in the case of an event specified in clause (B) above, such event must have
a material adverse effect on the business, assets, liabilities, results of
operations, financial condition or prospects of the Partnership and its
Subsidiaries and (b) no Adverse Act shall be considered to have occurred if
such Partner has taken actions which have cured the event that would otherwise
have constituted an Adverse Act under clause (A) or (B), as applicable, of this
clause (vii) within ninety (90) days following the date written notice of the
occurrence of such event has been given to such Partner by any General Partner
(with a copy to the Management Committee and each other Partner); and provided
further that if, within ninety (90) days after the date written notice of such
occurrence has been given
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<PAGE> 15
to such Partner, such Partner delivers a Contest Notice to the Management
Committee and all other Partners that it contests such occurrence (or contests
whether such occurrence constitutes an Adverse Act under this clause (vii)),
such occurrence shall not constitute an Adverse Act unless and until (and
assuming that such event has not theretofore been cured in full and that the
applicable cure period has expired) (A) the disinterested Representatives
determine in good faith by Required Majority Vote that such occurrence
constitutes an Adverse Act under this clause (vii) or (B) there is a Final
Determination that such occurrence constitutes an Adverse Act under this clause
(vii);
(viii) Such Partner otherwise causes a dissolution
of the Partnership in contravention of the terms of this Agreement (other than
solely by reason of the Bankruptcy of such Partner); or
(ix) In the case of any Cable Partner, such Cable
Partner fails to make any payment to the Partnership required to be made by
such Cable Partner pursuant to Section 11.4 of the Teleport Contribution
Agreement within ten (10) days following its receipt of written notice from any
other General Partner that it has failed tosatisfy its obligations under such
Section.
An "Adverse Partner" is any Partner with respect to which an
Adverse Act has occurred.
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly through one or more intermediaries controls,
is controlled by, or is under common control with such Person. For purposes of
this definition, the term "controls" (including its correlative meanings
"controlled by" and "under common control with") shall mean the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise. Notwithstanding the foregoing, (i)
neither the Partnership nor MinorCo, nor any Person controlled by the
Partnership or MinorCo (including WirelessCo and NewTelco), shall be deemed to
be an Affiliate of any Partner or of any Affiliate of any Partner and (ii) no
Partner or any Affiliate thereof shall be deemed to be an Affiliate of any
other Partner or any Affiliate thereof solely by virtue of the ownership by
such Partner or any of its Affiliates of any equity interest in the
Partnership, MinorCo, PhillieCo or OverlapCo.
"Agreed Value" means the agreed upon value of a Capital
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Contribution by a Partner of the Property identified below, determined as
provided below:
(i) with respect to the Original Capital
Contributions, the amount set forth next to such Partner's name on Schedule
2.2;
(ii) with respect to the Additional Capital
Contributions by Sprint referred to in Sections 2.3(a)(iv)(A) and (B), $0 and
$14,000,000, respectively;
(iii) with respect to the Additional Capital
Contribution by a Cable Partner of any Comcast Teleport Assets, Cox Teleport
Assets or TCI Teleport Assets, as the case may be, the amount determined in
accordance with Section 2.5(b) of the Teleport Contribution Agreement,
provided that the Agreed Value of any such Property shall be subject to
adjustment as provided in Section 2.8;
(iv) with respect to the Additional Capital
Contribution by a Cable Partner of any of its Other CAP Businesses, the amount
determined in accordance with the applicable Other CAP Business Contribution
Agreement; and
(v) with respect to the License Contribution by
Cox, $17,647,059.
"Agreement" or "Partnership Agreement" means this Agreement of
Limited Partnership, including all Schedules hereto, as amended from time to
time.
"Allocation Year" means (i) the period commencing on the date
of this Agreement and ending on December 31, 1995, (ii) any subsequent twelve
(12) month period commencing on January 1 and ending on December 31, or (iii)
any portion of the period described in clauses (i) or (ii) for which the
Partnership is required to allocate Profits, Losses, and other items of
Partnership income, gain, loss or deduction pursuant to Section 3.
"Auction Commitment" of any Partner means an amount equal to
the product of (i) such Partner's initial Percentage Interest as of the date of
this Agreement and (ii) the aggregate maximum amount of the Additional Capital
Contributions specified in the WirelessCo Management Committee Resolution
(whether or not specified in the WirelessCo Management Committee Resolution as
required to be
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immediately available or to be secured by the Letters of Credit) to be used for
(a) WirelessCo's maximum budgeted expenditure in the PCS Auction for the
payment of the purchase price for PCS Licenses awarded to it, (b) capital
contributions to be paid in cash by WirelessCo to PioneerCo under the
partnership agreement of PioneerCo during the Auction Period in connection with
the formation of PioneerCo and the contribution of the Cox Pioneer Preference
License to PioneerCo and capital contributions to be paid in cash during the
Auction Period to other partnerships formed to hold pioneer preference licenses
in connection with the formation of such partnerships and the payment of the
purchase price for such licenses, (c) capital contributions to be paid in cash
by WirelessCo during the Auction Period for investments in or with entities
that are eligible to bid for PCS licenses in frequency blocks "C" and "F" in
connection with the formation of such entities and the payment of the purchase
price for such licenses and (d) incidental expenses relating to the foregoing;
provided, that the amount specified in this clause (ii) shall be increased if
and to the extent that the Management Committee by Unanimous Vote approves an
increase in the aggregate amount of such Additional Capital Contributions, and
shall be reduced following the PCS Auction as and to the extent contemplated by
the Wireless Strategic Plan to reflect the results of the PCS Auction. In the
event all or a portion of an Interest is Transferred in accordance with the
terms of this Agreement, the transferee shall succeed to the Auction
Commitment of the transferor to the extent it relates to the Transferred
Interestand has not been called in full.
"Auction Period" means the period from October 24, 1994 to the
effective date of the Initial Business Plan.
"Available Cash" means as of any date the cash of the
Partnership as of such date less such portion thereof as the Management
Committee determines to reserve for Partnership expenses, debt payments,
capital improvements, replacements, and contingencies.
"Bankruptcy" means, with respect to any Person, a "Voluntary
Bankruptcy" or an "Involuntary Bankruptcy." A "Voluntary Bankruptcy" means,
with respect to any Person, the inability of such Person generally to pay its
debts as such debts become due (other than any obligation of such Person to
make capital contributions under this Agreement), or an admission in writing by
such Person of its inability to pay its debts generally or a general assignment
by such Person for the benefit of creditors; the filing of any petition or
answer by such Person seeking to adjudicate it bankrupt or insolvent, or
seeking for
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<PAGE> 18
itself any liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of such Person or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking, consenting to, or acquiescing in the entry of an order for relief or
the appointment of a receiver, trustee, custodian or other similar official for
such Person or for any substantial part of its property; or corporate action
taken by such Person to authorize any of the actions set forth above. An
"Involuntary Bankruptcy" means, with respect to any Person, without the consent
or acquiescence of such Person, the entering of an order for relief or
approving a petition for relief or reorganization or any other petition seeking
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or other similar relief under any present or future bankruptcy,
insolvency or similar statute, law or regulation, or the filing of any such
petition against such Person which petition shall not be dismissed within
ninety (90) days, or, without the consent or acquiescence of such Person, the
entering of an order appointing a trustee, custodian, receiver or liquidator of
such Person or of all or any substantial part of the property of such Person
which order shall not be dismissed within sixty (60) days.
"BOC" means a "BOC" or one of the "Bell Operating Companies"
as defined in Section IV.C of the MFJ.
"BOC Affiliated Enterprise" has the same meaning as the term
"affiliated enterprise" as used with respect to "BOC" or "BellOperating
Companies" in Section II.D of the MFJ.
"BTA" means a Basic Trading Area, as defined in the FCC rules
to be codified at 47 C.F.R. Section 24.13.
"Business Day" means a day of the year on which banks are not
required or authorized to close in the State of New York.
"Cable Affiliate" means, with respect to any Partner, any
Affiliate of such Partner (other than a Cable Subsidiary) that owns a cable
television system.
"Cable Partners" means Comcast, Cox and/or TCI, as the context
may require.
"Cable Subsidiary" means, with respect to any Partner, (i) any
Controlled Affiliate of such Partner that owns a cable television
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system and (ii) any Person that such Partner or its Controlled Affiliates has a
unilateral right to cause to enter into a Local Operator Agreement with respect
to cable television systems owned by such Person.
"Capital Account" means, with respect to any Partner, the
Capital Account maintained for such Partner in accordance with the following
provisions:
(i) To each Partner's Capital Account there shall
be credited such Partner's Capital Contributions, such Partner's distributive
share of Profits and any items in the nature of income or gain which are
specially allocated pursuant to Section 3.3 or Section 3.4, and the amount of
any Partnership liabilities which are assumed by such Partner or secured by any
Property distributed to such Partner as permitted by this Agreement.
(ii) To each Partner's Capital Account there shall
be debited the amount of cash and the Gross Asset Value of any Property
distributed or deemed to be distributed to such Partner pursuant to any
provision of this Agreement, such Partner's distributive share of Losses and
any items in the nature of expenses or losses which are specially allocated
pursuant to Section 3.3 or Section 3.4, and the amount of any liabilities of
such Partner assumed by the Partnership or any Nonrecourse Liabilities of such
Partner that are secured by any Property contributed by such Partner to the
Partnership (including Property contributed pursuant to Sections 2.3(a)(ii) and
(iii)); provided that the debit for liabilities in connection with the
contribution of Property pursuant to such Sections shall not exceedthe amount
added to the Agreed Value of such Property to derive the Gross Asset Value
thereof pursuant to clause (i)(A) of the definition of such term.
(iii) In the event all or a portion of an Interest
or a Preferred Interest is Transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the Capital Account of the
transferor to the extent it relates to the Transferred Interest or Preferred
Interest.
(iv) In determining the amount of any liability
for purposes of the definitions of "Additional Capital Contributions" and
"Original Capital Contribution" and subparagraphs (i) and (ii) of this
definition of "Capital Account," there shall be taken into account Code Section
752(c) and any other applicable provisions of the Code
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and Regulations.
The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Regulations
Section 1.704-1(b), and shall be interpreted and applied in a manner consistent
with such Regulations. In the event the Management Committee determines that
it is prudent to modify the manner in which the Capital Accounts, or any debits
or credits thereto (including debits or credits relating to liabilities which
are secured by contributed or distributed property or which are assumed by the
Partnership or any Partner), are computed in order to comply with such
Regulations, the Management Committee may make such modification, provided that
it is not likely to have a material effect on the amounts distributable to any
Partner pursuant to Section 15 upon the dissolution and winding up of the
Partnership. The Management Committee also shall (i) make any adjustments that
are necessary or appropriate to maintain equality between the Capital Accounts
of the Partners and the amount of Partnership capital reflected on the
Partnership's balance sheet, as computed for book purposes, in accordance with
Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section 1.704-1(b). Any such decision
or action permitted to be taken by the Management Committee under this
paragraph shall require the Unanimous Vote of the Management Committee.
"Capital Commitment" of any Partner means with respect to any
Fiscal Year included in the Initial Three-Year Period, an amount equal to the
excess, if any, of (i) the product of (A) such Partner's initial Percentage
Interest and (B) the sum of (1) the excess of (x) the Planned Capital Amount
for such Fiscal Year (including, withrespect to the first Fiscal Year in the
Initial Three-Year Period, the Post-Auction Requirements) over (y) the
aggregate amount of Equalizing Contributions requested pursuant to Section
2.3(a)(v) to be made by the Partners in such Fiscal Year (and/or in a prior
Fiscal Year included in the Initial Three-Year Period to the extent not
previously applied pursuant to this clause (y) to reduce the Capital
Commitments of the Partners for any prior Fiscal Year) plus (2) the Prior
Years' Carryforward, over (ii) that portion of the cumulative Accelerated
Contribution Amounts requested of and made by such Partner in all prior Fiscal
Years that the Management Committee has determined pursuant to Section 2.3(b)
shall be applied to reduce the Planned Capital Amount for such Fiscal Year. In
the event all or a portion of an Interest is Transferred in accordance with
this Agreement, the
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transferee shall succeed to the Capital Commitment of the transferor to the
extent it relates to the Transferred Interest and has not been called in full.
"Capital Contribution" means, with respect to any Partner, the
amount of money and the Gross Asset Value at the time of contribution of any
Property (other than money) contributed to the Partnership with respect to the
Interest and Preferred Interest (if any) held by such Partner (including any
contribution expressly excluded from the definition of Additional Capital
Contribution). The principal amount of a promissory note which is not readily
traded on an established securities market and which is contributed to the
Partnership by the maker of the note (or a Partner related to the maker of the
note within the meaning of Regulations Section 1.704-1(b)(2)(ii)(c)) shall not
be included in the Capital Account of any Partner until the Partnership makes a
taxable disposition of the note or until (and to the extent) principal payments
are made on the note, all in accordance with Regulations Section
1.704-1(b)(2)(iv)(d)(2).
"Carrier" has the meaning set forth in the definition of "IXC"
below.
"Certified Facilities" has the meaning ascribed to such term
in Exhibit 2 to the Joint Venture Formation Agreement.
"Certified Households Passed" means Households Passed by
Certified Facilities.
"Change in Control" means, with respect to any Partner that
has a Parent other than itself, such Partner's ceasing to be a Subsidiary of
its Parent other than in connection with a Permitted Transaction.
"Chief Executive Officer" means the chief executive officer of
the Partnership, including any interim chief executive officer.
"Code" means the Internal Revenue Code of 1986.
"Comcast Parent" means Comcast Corporation, a Pennsylvania
corporation and any successor (by merger, consolidation, Transfer or otherwise)
to all or substantially all of its business and assets.
"Comcast Teleport Assets" has the meaning ascribed to such
term in the Teleport Contribution Agreement.
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"Committed Serving Areas" means, with respect to any Partner,
those of the Scheduled Serving Areas of such Partner that are scheduled in the
Initial Master Roll-out Schedule to be certified for service prior to December
31, 1997. The Committed Serving Areas of all Partners in the aggregate shall
include at least ten million (10,000,000) Households Passed.
"Consumer Price Index" means the Consumer Price Index "All
Urban Consumers: U.S. city average, all items" (1982-1984 = 100) published by
the Bureau of Labor Statistics of the United States Department of Labor, or any
equivalent successor or substitute index selected by the Management Committee
and published by the Bureau of Labor Statistics or a successor or substitute
governmental agency selected by the Management Committee.
"Contest Notice" has the meaning set forth in clause (iii) of
the definition of "Adverse Act."
"Contribution Date" has the meaning set forth in the
definition of "Additional Contribution Notice."
"Controlled Affiliate" of any Person means the Parent of such
Person and each Subsidiary of such Parent. As used in Sections 6, 9.6, 9.10
and 9.12 the term "Controlled Affiliate" shall also include any Affiliate of a
Person that such Person or its Parent can directly or indirectly unilaterally
cause to take or refrain from taking any of the actions required, prohibited or
otherwise restricted by such Section, whether through ownership of voting
securities, contractually or otherwise. As used in Sections 2.4, 5.1(c), 12.2,
13.4, 13.5 and 13.6, the term "Controlled Affiliate" shall also include any
Affiliate of a Person that such Person or its Parent can directly or indirectly
unilaterally cause to take or refrain from taking any action regarding the
Partnership, whether through ownership of voting securities, contractually or
otherwise.
"Cox Parent" means Cox Communications, Inc., a Delaware
corporation, and any successor (by merger, consolidation, Transfer or
otherwise) to all or substantially all of its business and assets.
"Cox Pioneer Preference License" means the 30 MHz "A" block
PCS license granted to Cox Parent on December 14, 1994, for the MTA
encompassing Los Angeles and San Diego, California, which MTA is identified in
the FCC Public Notice regarding the PCS Auction as
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Market No. M-2 (Report No. AUC-94-04, Auction No. 4).
"Cox Teleport Assets" has the meaning ascribed to such term in
the Teleport Contribution Agreement.
"Current Sprint LEC Territories" means the service areas of
the Incumbent Sprint LECs as of October 24, 1994, as set forth in Schedule
1.10(a) hereto.
"Cut-Off Time" means the earlier to occur of (i) the end of
the last Fiscal Year covered by the Initial Business Plan and (ii) such time as
the aggregate amount of Original Capital Contributions and Additional Capital
Contributions made or requested to be made plus the remaining balance (if any)
in the Excess Value Account first equals or exceeds the Total Mandatory
Contributions.
"Debt" means (i) any indebtedness for borrowed money or
deferred purchase price of property whether or not evidenced by a note, bond,
or other debt instrument, (ii) obligations to pay money as lessee under capital
leases, (iii) obligations to pay money secured by any mortgage, pledge,
security interest, encumbrance, lien or charge of any kind existing on any
asset owned or held by the Partnership whether or not the Partnership has
assumed or become liable for the obligations secured thereby, (iv) any
obligation under any interest rate swap agreement (the principal amount of such
obligation shall be deemed to be the notional principal amount on which such
swap is based), and (v) obligations under direct or indirect guarantees of
(including obligations (contingent or otherwise) to assure a creditor against
loss in respect of) indebtedness or obligations of the kinds referred to in
clauses (i), (ii), (iii) and (iv) above, provided that Debt shall not include
obligations in respect of any accounts payable that are incurred in the
ordinary course of the Partnership's business and are not delinquent or are
being contested in good faith by appropriate proceedings.
"Depreciation" means, for each Allocation Year, an amount
equal to the depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such Allocation Year,except that if the
Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such Allocation Year, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the federal income tax depreciation, amortization, or other cost
recovery deduction for such Allocation Year bears to such beginning adjusted
tax basis;
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provided, that if the adjusted basis for federal income tax purposes of an
asset at the beginning of such Allocation Year is zero, Depreciation shall be
determined with reference to such beginning Gross Asset Value using any
reasonable method selected by the Management Committee; and provided, further,
that, consistent with Section 3.7, Depreciation with respect to Subsidiary
Partnership Property shall not be determined with regard to the distributive
share of depreciation expense directly or indirectly allocated to the
Partnership by the Subsidiary Partnership, but shall be computed with respect
to the initial Gross Asset Value of the Subsidiary Partnership interest
contributed to the Partnership as if such Subsidiary Partnership Property (or
the equivalent percentage thereof) were owned directly by the Partnership and
were contributed by the Partners who contributed the Subsidiary Partnership
interests.
"Dispose" (including its correlative meanings, "Disposed of",
"Disposition" and "Disposed"), with respect to any Interest or Preferred
Interest means to Transfer, pledge, hypothecate or otherwise dispose of such
Interest or Preferred Interest, in whole or in part, voluntarily or
involuntarily, except by operation of law in connection with a merger,
consolidation or other business combination of the Partnership and except that
such term shall not include any pledge or hypothecation of, or granting of a
security interest in, an Interest or Preferred Interest that is approved by the
Management Committee in connection with any financing obtained on behalf of the
Partnership.
"Excess Value" means the excess, if any, of (i) the sum of (A)
the Agreed Value of the Cox Teleport Assets contributed pursuant to Section
2.3(a)(ii) on the First Closing Date, plus (B) the aggregate amount of the
Original Capital Contribution and all other Additional Capital Contributions
made by Cox prior to and on the First Closing Date, over (ii) the product of
(A) 15/85ths times (B) the aggregate amount of the Original Capital
Contributions and Additional Capital Contributions made by the Partners other
than Cox prior to and on the First Closing Date (including all Additional
Capital Contributions made, or deemed made on the First Closing Date after
giving effect to Section 2.3(a)(v)(F), by the Partners other than Cox pursuant
to Section 2.3(a)(v)).
"Excess Value Account" means, with respect to any
PreferredInterest as of any date of determination, an amount equal to the
excess, if any, of (i) the portion of the Excess Value relating to such
Preferred Interest over (ii) the sum of (A) the cumulative amount of such
Excess Value that has been satisfied by the contribution of a
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portion of such Preferred Interest pursuant to Section 2.3(b)(iv), (B) the
cumulative amount of distributions with respect to such Preferred Interest
pursuant to Section 4.1(b) through such date and (C) the cumulative amount of
consideration paid by the Partnership in exchange for a portion of such
Preferred Interest pursuant to Section 13.7 that is considered to be
attributable to the Excess Value Account. In the event all or a portion of a
Preferred Interest is Transferred in accordance with this Agreement, the
transferee shall succeed to the Excess Value Account of the transferor to the
extent it relates to the Transferred Preferred Interest.
"Excluded Businesses" has the meaning set forth in Schedule
1.10(b) hereto.
"Exclusive Limited Partner" means any Limited Partner that is
not also a General Partner.
"Exclusive Services" means the Wireline Exclusive Services and
the Wireless Exclusive Services.
"FCC" means the Federal Communications Commission.
"Final Determination" means (i) a determination set forth in a
binding settlement agreement between the Partnership and the Partner alleged to
have committed the Adverse Act, which has been approved by a Required Majority
Vote of the Management Committee pursuant to Section 9.7 or (ii) a final
judicial determination, not subject to further appeal, by a court of competent
jurisdiction.
"First Closing Date" has the meaning ascribed to such term in
the Teleport Contribution Agreement.
"Fiscal Year" means (i) the period commencing on the date of
this Agreement and ending on December 31, 1995, (ii) any subsequent twelve (12)
month period commencing on January 1, and ending on December 31, or (iii) the
period commencing on the immediately preceding January 1 and ending on the date
on which all Property is distributed to the Partners pursuant to Section 15.2.
When used in connection with the Initial Business Plan or the Initial
Three-Year Period, "Fiscal Year" also means the period commencing on the
effective date of the Initial Business Plan and ending on December 31, 1995.
"GAAP" means generally accepted accounting principles in
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effect in the United States of America from time to time.
"General Partner" means any Person who (i) is referred to as
such in the first paragraph of this Agreement or has become a General Partner
pursuant to the terms of this Agreement, and (ii) has not, at any given time,
ceased to be a General Partner pursuant to the terms of this Agreement.
"General Partners" means all such Persons.
"Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be the gross fair market
value of such asset, as determined by the contributing Partner and the
Management Committee in accordance with Section 9.7, provided that the initial
Gross Asset Value of:
(A) the Property contributed by the
Partners pursuant to Section 2.2 or any of clauses (i) through (iv) of Section
2.3(a) shall be the sum of (1) the Agreed Value of such Property plus (2) the
amount of any liabilities of the contributing Partner assumed by the
Partnership in connection with such contribution or any Nonrecourse Liabilities
of such Partner that are secured by the contributed Property;
(B) a Sprint/TCI Loan contributed by
Sprint or TCI shall be determined as provided in Section 2.3(b)(v); and
(C) a Preferred Interest contributed
pursuant to Section 2.3(b)(iv) shall be determined as provided in Section
2.3(b)(iv).
(ii) The Gross Asset Value of all Partnership
assets shall be adjusted to equal their gross fair market value, as determined
by the Management Committee, as of the following times: (A) the acquisition of
an Interest by any new Partner in exchange for more than a de minimis Capital
Contribution; (B) the distribution by the Partnership to a Partner of more than
a de minimis amount of Property as consideration for an Interest; (C) the
liquidation of the Partnership within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g); and (D) the conversion of a General Partner to an
Exclusive Limited Partner if, and only if, in the judgment of the Management
Committee, such adjustment would either cause the Person
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<PAGE> 27
who is being converted to an Exclusive Limited Partner to have adeficit balance
in its Capital Account or increase the amount of such a deficit balance;
(iii) The Gross Asset Value of any Partnership
asset distributed to any Partner shall be adjusted to equal the gross fair
market value of such asset on the date of distribution as determined by the
distributee and the Management Committee in accordance with Section 9.7.
(iv) The Gross Asset Values of Partnership assets
shall be increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or Code Section 743(b),
but only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Regulation Section 1.704-
1(b)(2)(iv)(m) and subparagraph (vi) of the definition of "Profits" and
"Losses" and Section 3.3(g); provided, however, that Gross Asset Values shall
not be adjusted pursuant to this subparagraph (iv) to the extent that an
adjustment pursuant to subparagraph (ii) hereof is made in connection with a
transaction that would otherwise result in an adjustment pursuant to this
subparagraph (iv); and
(v) If Gross Asset Value is required to be
determined for the purpose of Section 12.2 or 15.7, Gross Asset Value shall be
determined in the manner set forth in such Sections.
If the Gross Asset Value of an asset has been determined or
adjusted pursuant to subparagraph (i), (ii) or (iv) hereof, such Gross Asset
Value shall thereafter be adjusted by the Depreciation taken into account with
respect to such asset for purposes of computing Profits and Losses.
"Households" means, with respect to any area, the aggregate
number of residential dwelling units (whether or not occupied) in such area, it
being understood that each residential unit (whether or not occupied) in a
multiple dwelling unit shall be counted as one Household.
"Households Passed" means, with respect to any geographic
area, the aggregate number of Households in such area that either (i) are
capable, as of the time of such determination, of receiving CATV Service by
means of an existing Customer Drop or other similar connection or (ii) could
legally (assuming the owner consented to receipt of CATV Service) receive CATV
Service subject only to the
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installation of a Customer Drop no more than two hundred (200) feet in length.
For purposes of this definition, the terms "Customer Drop" and "CATV Services"
will have the respective meanings ascribed to suchterms in the form of Local
Operator Agreement adopted prior to or in connection with the adoption of the
Initial Business Plan.
"Hypothetical Federal Income Tax Amount" means for any Fiscal
Year the product of (A) the daily weighted average highest marginal federal
income tax rate applicable to domestic corporations in effect for such Fiscal
Year expressed as a percentage and (B) the excess, if any, of (i) the
cumulative amount of taxable income and gain reported by the Partnership on its
Internal Revenue Service Forms 1065 over its life determined as of the end of
such Fiscal Year, over (ii) the larger of zero (0) or the cumulative amount of
taxable income and gain reported by the Partnership on its Internal Revenue
Service Forms 1065 over its life determined as of the beginning of such Fiscal
Year.
"Incumbent Cable Partner Cable Systems" means those cable
television systems owned by a Cable Partner or an Affiliate of a Cable Partner
as of October 24, 1994 or that have been or will be acquired by a Cable Partner
or an Affiliate of a Cable Partner subsequent to October 24, 1994 in a
transaction that was disclosed in a press release or similar public
announcement prior to October 24, 1994.
"Incumbent Sprint LECs" means those LECs owned by an Affiliate
of Sprint as of October 24, 1994.
"Initial Markets" means, as of any relevant date, those
geographic areas (as identified in the Master Roll- Out Schedule) (i) in which
roll-out has occurred or (ii) that are scheduled for roll-out by NewTelco
during the period covered by the Master Roll-Out Schedule then in effect.
"Initial Master Roll-Out Schedule" means the Master Roll-Out
Schedule that is adopted by a Unanimous Partner Vote as part of the Initial
Business Plan and covers the period from the effective date of the Initial
Business Plan through December 31, 1999.
"Initial Three-Year Period" means the period from the
effective date of the Initial Business Plan through December 31, 1997.
"Intermediate Subsidiary" means, with respect to any Parent of
a Partner, a Subsidiary of such Parent that holds a direct or
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indirect equity interest in such Partner.
"Interest" means, as to any Partner, all of the interests
(other than any Preferred Interest) of such Partner in the Partnership,
including any and all benefits to which the holder of aninterest in the
Partnership may be entitled as provided in this Agreement and under the Act,
together with all obligations of such Partner to comply with the terms and
provisions of this Agreement.
"IXC" means each of AT&T Corp., MCI Communications Corporation
and British Telecommunications plc (each, a "Carrier") and each of their
respective Affiliates.
"IXC Transaction" means, with respect to any Partner, that (i)
an IXC has become the beneficial owner of an equity interest in such Partner or
an equity interest in any Intermediate Subsidiary (other than a Publicly Held
Intermediate Subsidiary) of the Parent of such Partner, (ii) an IXC has become
the beneficial owner of securities representing fifteen percent (15%) or more
of the voting power of the outstanding voting securities of the Parent of such
Partner or any Publicly Held Intermediate Subsidiary of such Parent, and, if
such Parent or Publicly Held Intermediate Subsidiary is subject to a State
Statute or has a shareholder rights plan, such Parent or Publicly Held
Intermediate Subsidiary or the board of directors or other governing body of
such Parent or Publicly Held Intermediate Subsidiary has approved such
beneficial ownership or otherwise has taken action to waive any applicable
restrictions with respect to such ownership or the exercise by the IXC of its
rights arising from such ownership under such State Statute or shareholder
rights plan, (iii) an IXC has become the beneficial owner of securities
representing twenty-five percent (25%) or more of the voting power of the
outstanding voting securities of any such Parent or Publicly Held Intermediate
Subsidiary, provided that, if such IXC is an Affiliate of a Carrier, such
Affiliate has identified a Carrier as a Person controlling such Affiliate
either (a) pursuant to General Instruction C to Schedule 13D, in a Schedule 13D
(filed with the Securities and Exchange Commission in accordance with Section
13(d) of the Securities Exchange Act of 1934) or (b) pursuant to General
Instruction C to Schedule 14D-1, in a Schedule 14D-1 (filed with the Securities
and Exchange Commission in accordance with Section 14(d) of the Securities
Exchange Act of 1934), (iv) any such Parent or Publicly Held Intermediate
Subsidiary has sold or issued beneficial ownership in any equity interest in
such Parent or Publicly Held Intermediate Subsidiary to an IXC or granted to an
IXC any rights with respect to
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the governance of such Parent or Publicly Held Intermediate Subsidiary that are
not possessed generally by the owners of outstanding equity interests in such
Parent or Publicly Held Intermediate Subsidiary; or (v) such Partner has
otherwise become an Affiliate of an IXC. Solely for the purposes of this
definition the terms "beneficial owner" and "beneficial ownership" shall have
the same meaning as in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended.
"Joint Venture Formation Agreement" means the Amended and
Restated Joint Venture Formation Agreement of even date herewith among each of
the Parents providing for the formation of PioneerCo and certain other actions.
"LEC" means a local exchange carrier.
"Limited Partner" means any Person (i) who is referred to as
such in the first paragraph of this Agreement or who has become a Limited
Partner pursuant to the terms of this Agreement, and (ii) who, at any given
time, holds an Interest or Preferred Interest. "Limited Partners" means all
such Persons.
"Local Operator" means, with respect to any relevant
geographic area, a Person (including any Cable Subsidiary or Cable Affiliate)
that owns a cable television system in such geographic area.
"Local Operator Agreement" means, with respect to Cable
Subsidiaries, the form of agreement to be entered into by NewTelco and Cable
Subsidiaries that is adopted by a Unanimous Partner Vote prior to or in
connection with the adoption of the Initial Business Plan as provided in
Section 5.2(a), and with respect to all other Local Operators, an agreement
between NewTelco and a Local Operator in the form approved by a Required
Majority Vote of the Management Committee (together with any changes to such
form that are approved by the Chief Executive Officer pursuant to authority
delegated by the Management Committee), in each case setting forth the terms of
the relationship between NewTelco and such Local Operator (including a Cable
Subsidiary) with respect to NewTelco's use of the Local Operator Facilities of
such Local Operator.
"Local Operator Facilities" has the meaning ascribed to such
term in Exhibit 2 to the Joint Venture Formation Agreement.
"Management Committee" means the committee that will have
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the authority and powers set forth in Section 5.1.
"Mandatory Contribution" of any Partner means an amount equal
to the product of (i) such Partner's initial Percentage Interest times (ii) the
Total Mandatory Contributions.
"Master Roll-Out Schedule" means, as of any relevant date, the
schedule included in the Approved Business Plan then in effect for the roll-out
of Wireline Exclusive Services by NewTelco in the geographic areas identified
in such schedule during the five-yearperiod covered by such schedule, as such
schedule may be amended from time to time by the vote of the Management
Committee required at such time pursuant to Schedules 5.1(j) and 5.1(k) for the
adoption of the Annual Budget and Approved Business Plan; provided that no such
amendment shall affect the rights or obligations of a Local Operator under a
Local Operator Agreement in effect at the time of such amendment without the
consent of such Local Operator, unless otherwise provided in such Local
Operator Agreement.
"MFJ" means the Modification of Final Judgment agreed to by
the American Telephone and Telegraph Company and the U.S. Department of Justice
and approved by the U.S. District Court for the District of Columbia on August
24, 1982, as reported in United States v. Western Electric Company, Inc., et
al., 552 F. Supp. 131 (D.D.C. 1982), aff'd sub nom Maryland v. United States,
460 U.S. 1001 (1983) and any subsequent orders or amendments issued in
connection therewith. Any reference in this Agreement to Section II of the MFJ
shall also include any subsequent statute, rule, regulation, order or decree
which modifies or supersedes Section II of the MFJ (or any material portion
thereof) and imposes any restriction(s) substantially similar to any of the
material restrictions imposed by Section II of the MFJ.
"Minimum Ownership Requirement" means, with respect to (i) any
Original Partner, as of any date, that the ratio (expressed as a percentage) of
such Original Partner's Percentage Interest to the aggregate Percentage
Interests of all Original Partners is at least eight percent (8%) or (ii) any
Partner not an Original Partner, as of any date, that such Partner's Percentage
Interest is at least eight percent (8%).
"MinorCo" means MinorCo, L.P., the Delaware limited
partnership formed simultaneously herewith by the Partners for the purpose of
holding a limited partnership interest in NewTelco, WirelessCo and one or more
other Subsidiaries of the Partnership.
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"MinorCo Interest" means, as to any Partner, all of the
interests of such Partner in MinorCo, including any and all benefits to which
the holder of an interest in MinorCo may be entitled as provided in the
partnership agreement of MinorCo and under the Act, together with all
obligations of such Partner to comply with the terms and provisions of the
partnership agreement of MinorCo.
"MSA" means a Metropolitan Statistical Area, as determined by
the U.S. Department of Commerce.
"MTA" means a Major Trading Area as defined in FCC rules tobe
codified at 47 C.F.R. Section 24.13.
"NewTelco" means NewTelco, L.P., a Delaware limited
partnership formed by the Partnership and MinorCo simultaneously with the
execution hereof to conduct the Wireline Business of the Partnership.
"Non-Exclusive Services" has the meaning set forth in Schedule
1.10(b) hereto.
"Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(b)(1) of the Regulations.
"Nonrecourse Liability" has the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
"Original Capital Contribution" means, with respect to each
Partner, the Capital Contribution to be made by such Partner pursuant to
Section 2.2. In the event all or a portion of an Interest is Transferred in
accordance with the terms of this Agreement, the transferee shall succeed to
the Original Capital Contribution of the transferor to the extent it relates to
the Transferred Interest.
"Original Partners" means collectively Cox, Comcast, TCI and
Sprint and any successors or transferees thereof to the extent such successors
or transferees acquired their Interest in accordance with this Agreement.
"Other CAP Businesses" means the alternative access businesses
in which any of the Cable Partners or their respective Controlled Affiliates
owns an interest (other than through TCG Inc., TCG Partners and their
respective Affiliates), as specifically
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identified with respect to each Cable Partner on Schedule 1.10(c) hereto.
"Other CAP Business Contribution Agreements" means the
agreements to be negotiated in good faith and entered into among each Cable
Partner, the Partnership and NewTelco, pursuant to which each such Cable
Partner will contribute to the Partnership the Other CAP Businesses owned by
such Cable Partner and its Controlled Affiliates.
"Parent" means, except as otherwise provided below with
respect to a Permitted Transaction, (i) with respect to Cox (and its Controlled
Affiliates), Cox Parent, (ii) with respect to Comcast (and its Controlled
Affiliates), Comcast Parent, (iii) with respect to TCI (and its Controlled
Affiliates), TCI Parent and (iv) with respect toSprint (and its Controlled
Affiliates), Sprint Parent. With respect to any other Person hereafter
admitted to the Partnership as a Partner, the Parent with respect to such
Partner shall be the Person identified as such in a Schedule to be attached to
this Agreement in connection with the admission of such Partner. In the event
of a Permitted Transaction, the new Parent of the applicable Partner
immediately following such Permitted Transaction will be the ultimate parent
entity (as determined in accordance with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the rules and regulations promulgated thereunder
(the "HSR Act")) of such Partner (or such Partner if it is its own ultimate
parent entity); provided that if such ultimate parent entity is not a Publicly
Held Person then the next highest corporate entity in the ownership chain from
such ultimate parent entity to and including such Partner which is a Publicly
Held Person shall be deemed to be the new Parent. If there is no intermediate
Publicly Held Person, the Parent shall be the highest entity in the ownership
chain from the ultimate parent entity to and including such Partner which is
not an individual. For purposes of the definition of Controlled Affiliate, the
Parent of a Person that is neither a Partner nor a Controlled Affiliate of a
Partner is the ultimate parent entity (as determined in accordance with the HSR
Act) of such Person.
"Parents' Undertaking" means a written instrument in
substantially the form of Exhibit 1.10(a) executed simultaneously with the
execution of this Agreement by each Parent of a Partner.
"Partner Nonrecourse Debt" has the meaning set forth in
Section 1.704-2(b)(4) of the Regulations.
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"Partner Nonrecourse Debt Minimum Gain" means an amount, with
respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain
that would result if such Partner Nonrecourse Debt were treated as a
Nonrecourse Liability, determined in accordance with Section 1.704-2(i)(3) of
the Regulations.
"Partner Nonrecourse Deductions" has the meaning set forth in
Sections 1.704-2(i)(1) and 1.704-2(i)(2) of the Regulations.
"Partners" means all General Partners and all Limited
Partners. "Partner" means any one of the Partners.
"Partnership" means the partnership formed pursuant to this
Agreement and the partnership continuing the business of this Partnership in
the event of dissolution as herein provided.
"Partnership Minimum Gain" has the meaning set forth in
Sections 1.704-2(b)(2) and 1.704-2(d) of the Regulations.
"PCS" means a radio communications system authorized under the
rules for broadband personal communications services designated as Subpart E of
Part 24 of the FCC's rules, including the network, marketing, distribution,
sales, customer interface and operations functions relating thereto.
"PCS Auction" means the series of simultaneous multiple round
auctions for broadband PCS licenses to be conducted by the FCC under the
authority of Section 309(j) of the Communications Act of 1934, 47 U.S.C.
Section 309(j) (1993), in accordance with the rules promulgated thereunder by
the FCC.
"Percentage Interest" means, with respect to any Partner as of
any relevant date, the ratio (expressed as a percentage) of the sum of such
Partner's Original Capital Contribution and aggregate Additional Capital
Contributions as of such date to the sum of the aggregate Original Capital
Contributions and Additional Capital Contributions of all Partners as of such
date. Additional Capital Contributions of Premium Dollars pursuant to Section
2.4(a)(v) shall be valued at their Premium Dollar value for purposes of
calculating Percentage Interests. Such Capital Contributions will be
determined after giving effect to all Capital Contributions made prior to and
on the date as of which the determination of Percentage Interests is made,
subject to the provisions regarding the adjustment of Percentage Interests set
forth in Section 2.4(d). In the event all or any
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portion of an Interest is Transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the Percentage Interest of the
transferor to the extent it relates to the Transferred Interest.
"Permitted Transaction" with respect to a Partner means a
transaction or series of related transactions in which (i) such Partner ceases
to be a Subsidiary of its Parent or such Partner Transfers its Interest to a
Person that is not a Controlled Affiliate of such Partner and (ii) the new
Parent of such Partner (or such Partner if it is its own Parent) or the Parent
of the transferee of the Interest after giving effect to such transaction, or
the last transaction in a series of related transactions, owns, directly and
indirectly through its Controlled Affiliates, all or a Substantial Portion of
the cable television system assets (in the case of a Cable Partner) or long
distance telecommunications business assets (in the case of Sprint) owned by
the Parent of such Partner, directly and indirectly through its Controlled
Affiliates, immediately prior to thecommencement of such transaction or series
of transactions. As used herein, "Substantial Portion" means (x) in the case
of a Cable Partner, cable television systems serving 75% or more of the
aggregate number of basic subscribers served by cable television systems in the
United States of America (including its territories and possessions other than
Puerto Rico) owned by the Parent of such Cable Partner, directly and indirectly
through its Controlled Affiliates, and (y) in the case of Sprint, long distance
telecommunications business assets serving 75% or more of the aggregate number
of customers served by the long distance telecommunications business in the
United States of America (including its territories and possessions other than
Puerto Rico) owned by the Parent of Sprint, directly and indirectly through its
Controlled Affiliates.
"Person" means any individual, partnership, corporation,
trust, or other entity.
"PioneerCo" means the Delaware limited partnership to be
formed between WirelessCo and an Affiliate of Cox to own the Cox Pioneer
Preference License and to operate a Wireless Business in connection therewith.
"PioneerCo Partnership Agreement" means the Agreement of
Limited Partnership of PioneerCo to be entered into between WirelessCo and an
Affiliate of Cox.
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"Planned Capital Amount" means for any Fiscal Year during the
Initial Three-Year Period the aggregate amount of Additional Capital
Contributions (other than Capital Contributions of Property pursuant to Section
2.3(a)(i), (ii), (iii) or (iv)) contemplated to be required of the Partners
during such Fiscal Year as set forth in the Initial Business Plan, as such
amount may be revised by the Unanimous Vote of the Management Committee or
reduced pursuant to Section 2.3(b)(i)(B).
"Preferred Interest" means the interest (and any portion
thereof) as a Limited Partner to be received by Cox pursuant to Section
2.3(a)(ii) in exchange for its Capital Contribution of that portion of the Cox
Teleport Assets contributed on the First Closing Date having an Agreed Value
equal to the Excess Value, and with respect to which each holder thereof is
entitled to the preferential and other rights specified in this Agreement until
such time as the Preferred Return Account and Excess Value Account relating to
the Preferred Interest held by such holder are reduced to zero, at which time
such Preferred Interest will, without further action by the parties, be
extinguished.
"Preferred Return" means, with respect to each Preferred
Interest as of any date of determination, a sum equal to six percent (6%) per
annum, determined on the basis of a year of 365 or 366 days, as the case may
be, for the actual number of days elapsed in the period for which such
Preferred Return is being determined, cumulative and compounded quarterly as of
the end of each calendar quarter to the extent not (i) distributed with respect
to such Preferred Interest pursuant to Section 4.1(a), (ii) treated as
satisfied by the contribution of all or a portion of such Preferred Interest
pursuant to Section 2.3(b)(iv), or (iii) considered as received in exchange for
all or a portion of such Preferred Interest pursuant to Section 13.7, of the
average daily balance of the Excess Value Account relating to such Preferred
Interest from time to time during the period to which such Preferred Return
relates, commencing on the First Closing Date.
"Preferred Return Account" means, with respect to each
Preferred Interest as of any date of determination, an amount equal to the
excess, if any, of (i) the cumulative amount of Preferred Return accrued with
respect to such Preferred Interest through such date minus (ii) the sum of (A)
the cumulative amount of distributions made with respect to such Preferred
Interest pursuant to Section 4.1(a) through such date, (B) the cumulative
amount of the Preferred Return with respect to such Preferred Interest that has
been satisfied
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through such date by the contribution of all or a portion of such Preferred
Interest pursuant to Section 2.3(b)(iv) and (C) the cumulative amount of
consideration paid by the Partnership through such date in exchange for all or
a portion of such Preferred Interest pursuant to Section 13.7 that is
considered to be attributable to such Preferred Return. In the event all or a
portion of a Preferred Interest is Transferred in accordance with this
Agreement, the transferee will succeed to the Preferred Return Account of the
transferor to the extent it relates to the Transferred Preferred Interest.
"Premium Call" means a Second Tranche Call that has been
converted by a Simple Majority Vote of the Management Committee to a Premium
Call pursuant to Section 2.4(a)(v).
"Premium Call Contribution Date" has the meaning set forth in
the definition of "Premium Call Notice."
"Premium Call Notice" means a written notice given to all
Partners, which shall state (i) the amount of the Second Tranche Call
originally requested in the corresponding Additional Contribution Notice, (ii)
that such Second Tranche Call has been converted to a Premium Call, (iii) the
Premium Dollar amount for each dollar to becontributed in response to the
Premium Call Notice, (iv) the date upon which the Premium Call contributions
are to be made (the "Premium Call Contribution Date"), which date shall not be
more than forty-five (45) days nor less than thirty (30) days after the date of
such notice and (v) the account of the Partnership to which such contribution
is to be made.
"Premium Dollar" means, except as otherwise provided in
Section 2.4(a)(v), each dollar contributed (whether in cash or by contribution
of a Preferred Interest or the Sprint/TCI Loans) by a Partner in response to a
Premium Call Notice or a Premium Call Shortfall Notice, each of which dollars
will be valued for the purposes of calculating Percentage Interests at an
amount equal to (i) one dollar ($1.00) divided by (ii) the quotient of (x) the
fair market value of the Partnership (which fair market value shall be reduced
by the sum of the balances of the Excess Value Account and the Preferred Return
Account at that time) as determined by a Simple Majority Vote of the Management
Committee in connection with the giving of a Premium Call Notice divided by (y)
the aggregate amount of the Original Capital Contributions, Additional Capital
Contributions and Special Sprint Contributions made to the Partnership prior to
the
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date of the Premium Call Notice.
"Prime Rate" means the rate announced from time to time by
Citibank, N.A. as its prime rate.
"Prior Years' Carryforward", with respect to any Fiscal Year,
means the amount by which the aggregate amount of Additional Capital
Contributions actually requested of the Partners pursuant to Section 2.3(b)
with Contribution Dates during the Fiscal Year(s) in the Initial Three-Year
Period prior to such Fiscal Year (disregarding for such purposes any Additional
Capital Contribution representing an Excess Contribution Amount during such
prior Fiscal Year(s) (other than an Accelerated Contribution Amount from one
such prior Fiscal Year to another such prior Fiscal Year)) was less than the
Planned Capital Amount during such prior Fiscal Year(s).
"Profits" and "Losses" means, for each Allocation Year, an
amount equal to the Partnership's taxable income or loss for such Allocation
Year, determined in accordance with Code Section 703(a) (for this purpose, all
items of income, gain, loss, or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income or
loss), with the following adjustments (without duplication):
(i) Any income of the Partnership that is exempt
fromfederal income tax and not otherwise taken into account in computing
Profits or Losses pursuant to this definition of "Profits" and "Losses" shall
be added to such taxable income or loss;
(ii) Any expenditures of the Partnership described
in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not
otherwise taken into account in computing Profits or Losses pursuant to this
definition of "Profits" and "Losses," shall be subtracted from such taxable
income or loss;
(iii) In the event the Gross Asset Value of any
Partnership asset is adjusted pursuant to subparagraph (ii) or (iii) of the
definition of Gross Asset Value, the amount of such adjustment shall be taken
into account as gain or loss from the disposition of such asset for purposes of
computing Profits or Losses;
(iv) Gain or loss resulting from any disposition
of Property with respect to which gain or loss is recognized for federal
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income tax purposes shall be computed by reference to the Gross Asset Value of
the Property disposed of, notwithstanding that the adjusted tax basis of such
Property differs from its Gross Asset Value;
(v) In lieu of the depreciation, amortization,
and other cost recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for such
Allocation Year, computed in accordance with the definition of Depreciation;
(vi) To the extent an adjustment to the adjusted
tax basis of any Partnership asset pursuant to Code Section 734(b) is required
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into
account in determining Capital Accounts as a result of a distribution other
than in liquidation of a Partner's Interest, the amount of such adjustment
shall be treated as an item of gain (if the adjustment increases the basis of
the asset) or loss (if the adjustment decreases the basis of the asset) from
the disposition of the asset and shall be taken into account for purposes of
computing Profits or Losses; and
(vii) Notwithstanding any other provision of this
definition of "Profits" or "Losses," any items which are specially allocated
pursuant to Section 3.3 or Section 3.4 shall not be taken into account in
computing Profits or Losses.
The amounts of the items of Partnership income, gain, loss ordeduction
available to be specially allocated pursuant to Sections 3.3 and 3.4 shall be
determined by applying rules analogous to those set forth in this definition of
"Profits" and "Losses."
"Property" means all real and personal property acquired by
the Partnership and any improvements thereto, and shall include both tangible
and intangible property.
"Publicly Held" means, with respect to any Person, that such
Person has a class of equity securities registered under Section 12(b) or 12(g)
of the Securities Exchange Act of 1934.
"Publicly Held Intermediate Subsidiary" means, with respect to
any Parent of a Partner, an Intermediate Subsidiary of such Parent that is
Publicly Held.
"Regulations" means the Income Tax Regulations, including
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Temporary Regulations, promulgated under the Code.
"Representative" means an individual designated by a General
Partner as a member of the Management Committee.
"Roll-out" or "roll-out" means, with respect to any particular
geographic area, the commencement of the offering by NewTelco of Wireline
Exclusive Services in such area following the performance by NewTelco and the
applicable Local Operator of their respective obligations under the applicable
Local Operator Agreement (including the purchase and installation of switches
and certain other network transmission equipment and the upgrading of Local
Operator Facilities) as are necessary to permit NewTelco to commence the
provision of Wireline Exclusive Services in such area.
"Scheduled Serving Areas" means, with respect to any Partner,
those geographic areas served by cable television systems owned by Cable
Subsidiaries of such Partner, which areas are located in the Initial Markets
and scheduled in the Initial Master Roll-Out Schedule to be certified for
service prior to December 31, 1999.
"Second Tranche Call" means the first Two Billion Dollars
($2,000,000,000) of Additional Capital Contributions requested in accordance
with Section 2.3(a) or 2.3(b) after the Cut-Off Time; provided that in no event
may a Second Tranche Call be made after December 31, 2002.
"Serving Area" has the meaning ascribed to such term in
Exhibit 2 to the Joint Venture Formation Agreement.
"75 Mile Plus Calls" has the meaning set forth in Schedule
1.10(b) hereto.
"Specifications and Standards" means the technical
specifications, service quality standards, capacity requirements and other
technical standards for the Wireline Business of the Partnership and its
Subsidiaries as are adopted by a Unanimous Partner Vote prior to or in
connection with the adoption of the Initial Business Plan as provided in
Section 5.2(a), as such may be amended from time-to-time by the vote of the
Management Committee required at such time pursuant to Schedules 5.1(j) and
5.1(k) for the adoption of the Annual Budget and Approved Business Plan;
provided that no such amendment shall affect the rights or obligations of a
Local Operator under a Local Operator Agreement in effect at the time of such
amendment without the
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consent of such Local Operator, unless otherwise provided in such Local
Operator Agreement.
"Sprint Brand" means the trademark "Sprint" together with the
related "Diamond" logo.
"Sprint Cellular Service Area" means the areas serviced as of
October 24, 1994 by the cellular operations of Controlled Affiliates of Sprint,
as listed in Schedule 1.10(d).
"Sprint Communications" means Sprint Communications Company,
L.P., a Delaware limited partnership.
"Sprint Parent" means Sprint Corporation, a Kansas
corporation, and any successor (by merger, consolidation, Transfer or
otherwise) to all or substantially all of its business and assets.
"State Statutes" means any business combination statute,
anti-takeover statute, fair price statute, control share acquisition statute or
any other state statute or regulation that contains any similar prohibition,
limitation, obligation, restriction or other provision adopted and in effect in
the jurisdiction of organization of a Person that affects the rights of any
other Person that acquires a specified percentage ownership interest in such
Person without the consent or approval of the board of directors or other
governing body of such other Person, and, includes (i) with respect to Cox
Parent and TCI Parent, Section 203 of the Delaware General Corporation Law;
(ii) with respect to Comcast Parent, Subchapters E, F and G of Chapter 25 of
the Pennsylvania Business Corporation Law of 1988; and (iii) with respect to
Sprint Parent, Sections 17- 12,100 and 17-1286 through 1298, et seq. of the
Kansas Corporations Statute.
"Subsidiary" of any Person as of any relevant date means a
corporation, company or other entity (i) more than fifty percent (50%) of whose
outstanding shares or equity securities are, as of such date, owned or
controlled, directly or indirectly through one or more Subsidiaries, by such
Person, and the shares or securities so owned entitle such Person and/or its
Subsidiaries to elect at least a majority of the members of the board of
directors or other managing authority of such corporation, company or other
entity notwithstanding the vote of the holders of the remaining shares or
equity securities so entitled to vote or (ii) which does not have outstanding
shares or securities, as may be the case in a partnership, joint venture or
unincorporated association, but more than fifty percent (50%) of whose
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ownership interest is, as of such date, owned or controlled, directly or
indirectly through one or more Subsidiaries, by such Person, and in which the
ownership interest so owned entitles such Person and/or Subsidiaries to make
the decisions for such corporation, company or other entity.
"Subsidiary Partnership Property" means all property, other
than interests in other Subsidiary Partnerships, held by any Subsidiary
Partnership on the date on which the interests in such Subsidiary Partnership
are contributed to the Partnership.
"TCG Inc." means Teleport Communications Group Inc., a
Delaware corporation.
"TCG Partners" means TCG Partners, a New York general
partnership.
"TCI Parent" means Tele-Communications, Inc., a Delaware
corporation, and any successor (by merger, consolidation, Transfer or
otherwise) to all or substantially all of its business and assets.
"TCI Teleport Assets" has the meaning ascribed to such term in
the Teleport Contribution Agreement.
"Technical Information" means all technical information,
regardless of form and however transmitted and shall include, among other
forms, computer software, including computer program code, and system and user
documentation, drawings, illustrations, diagrams, reports, designs,
specifications, formulae, know-how, procedural protocols and methods and
manuals.
"Technical Information Rights" means all intellectual property
rights which protect or cover Technical Information.
"Teleport Contribution Agreement" means that certain
Contribution Agreement among Comcast, Cox, TCI, the Partnership and NewTelco
entered into as of the date hereof with respect to the contribution of the
Comcast Teleport Assets, Cox Teleport Assets and TCI Teleport Assets to the
Partnership.
"Total Mandatory Contributions" of the Partners means an
amount equal to the sum of $4.39 billion, plus the Agreed Value of the
Additional Capital Contributions of Property required to be made pursuant to
clauses (i), (ii), (iii) and (iv) of Section 2.3(a), plus
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the Excess Value; provided that unless and until the First Closing Date
occurs, the Total Mandatory Contributions of the Partners shall be $3.99
billion plus the Agreed Value of the License Contribution.
"Transfer" means, as a noun, any sale, exchange assignment or
transfer and, as a verb, to sell, exchange, assign or transfer.
"Voluntary Bankruptcy" has the meaning set forth in the
definition of "Bankruptcy".
"Voting Percentage Interest" means, as of any date and with
respect to any Partner that as of such date is entitled to designate one or
more members of the Management Committee, the ratio (expressed as a percentage)
of such Partner's Percentage Interest to the aggregate Percentage Interests of
all Partners that are entitled to designate one or more members of the
Management Committee.
"Wireless Business" means the business of providing Wireless
Exclusive Services.
"WirelessCo" means WirelessCo, L.P., the Delaware limited
partnership formed by the Partners pursuant to that certain Agreement of
Limited Partnership dated as of October 24, 1994, as amended and restated as of
the date hereof to cause WirelessCo to become a Subsidiary of the Partnership.
"WirelessCo Management Committee Resolution" means the
resolution of the management committee of WirelessCo adopted by written consent
on October 24, 1994 that approved (among other things) the aggregate Auction
Commitment.
"Wireless Exclusive Services" has the meaning set forth in
Schedule 1.10(b) hereto.
"Wireless Strategic Plan" means the strategic plan adopted by
the Partners prior to the date hereof for the development andoperation of the
Wireless Business of the Partnership, including the bidding strategy of
WirelessCo in the PCS Auction.
"Wireline Business" means the business of providing Wireline
Exclusive Services.
"Wireline Exclusive Services" has the meaning set forth in
Schedule 1.10(b) hereto.
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1.11 Additional Definitions.
<TABLE>
<CAPTION>
Defined Term Defined in
------------ ----------
<S> <C>
"1933 Act" Section 5.9(a)
"Accelerated Contribution Amount" Section 2.3(b)(i)
"Accepting Offerees" Section 13.4(d)
"Additional Benchmarks" Section 5.2(d)
"Additional Contribution Amount" Section 2.3(b)(i)
"Additional Purchase Commitment" Section 13.6(c)(i)
"Adjusted Percentage Interest" Section 2.4(a)(iv)
"Affiliate Territories" Section 6.5(g)
"Affiliation Agreement" Section 6.1(d)
"Agents" Section 6.7(a)
"Annual Budget" Section 5.2(e)
"Applicable Federal Rate" Section 4.1(a)
"Approved Business Plan" Section 5.2(e)
"Attribution Cap" Section 9.12(a)(v)
"Benchmarks" Section 5.2(a)
"Bidding Partner" Section 15.7(e)
"Blocking Limited Partner" Section 5.1(l)(ii)
"Brief" Section 5.8(a)(ii)
"Business Plan" Section 5.2(a)
"Buying Partner" Section 13.6(c)(i)
"Buy-Sell Price" Section 12.2(a)
"Cable Buying Partner" Section 13.6(c)(ii)
"Certificate" Section 1.5
"Comcast Area" Section 6.4(g)
"Competitive Activity" Section 6.1(a)
"Confidential Information" Section 6.7(a)
"Contributing Partner" Section 2.4(a)(ii)
"Control Notice" Section 13.5(b)
"Control Offer" Section 13.5(b)
"Control Offer Period" Section 13.5(b)
"Controlling Partner" Section 13.5(b)
"Covered Licensee" Section 9.12(a)(ii)
"Cure Date" Section 2.4(c)(iii)
"Damages" Section 12.1(a)
"Deadlock Event" Section 5.8(b)
"Declining Partner" Section 2.4(a)(i)
"Declined Accelerated Contribution" Section 2.3(b)(iii)(B)
"Default Budget" Section 5.2(f)
"Default Loan" Section 2.4(c)(ii)
</TABLE>
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<PAGE> 45
<TABLE>
<S> <C>
"Default Loan Notice" Section 2.4(c)(ii)
"Defaulting Partner" Section 2.4(c)(i)
"Delinquent Partner" Section 2.4(b)
"Designated Matters" Section 9.15
"Determination Date" Section 5.2(a)
"Election Notice" Section 12.2(a)
"Election Period" Section 12.2(b)
"Equalizing Contribution" Section 2.3(a)(v)
"Equalizing Contribution Adjustment
Date" Section 2.3(a)(v)(F)
"Equalizing Contribution Adjustment
Notice" Section 2.3(a)(v)(F)
"Equalizing Contribution Date" Section 2.3(a)(v)
"Equalizing Contribution Notice" Section 2.3(a)(v)
"Estimated Equalizing Contribution" Section 2.3(a)(v)(F)
"Estimated Gross Contribution Amount" Section 2.3(a)(v)(D)
"Excess Contribution Amount" Section 2.3(b)(i)
"Existing Overlap Territory" Section 6.5(a)
"Firm Offer" Section 13.4(b)
"First Appraiser" Section 12.4
"Floating Rate" Section 2.4(f)
"Foreign Ownership Restriction" Section 9.12(a)(i)
"Foreign Ownership Safe Harbor" Section 9.12(a)(iv)
"Foreign Ownership Threshold" Section 9.12(a)(iii)
"Free to Sell Period" Section 13.4(f)
"Funding Commitment" Section 2.4(a)(ii)
"General Partner Percentage Interests" Section 2.1
"Grace Period" Section 2.4(b)
"Gross Appraised Value" Section 12.4
"Gross Contribution Amount" Section 2.3(a)(v)
"Grossed-Up Contribution" Section 2.3(a)(v)
"In-Territory Customers" Section 6.4(e)
"In-Territory Distributors" Section 6.4(e)
"Incidental Acquisition Section 6.5(g)
"Initial Business Plan" Section 5.2(a)
"Initial Offer" Section 15.7(e)
"Interested Person" Section 9.7
"Issuance Items" Section 3.3(h)
"Lending Commitment" Section 2.4(c)(ii)
"Lending Partner" Section 2.4(c)(ii)
"Letter of Credit" Section 2.3(b)(ii)(B)
"License Contribution" Section 2.3(a)(i)
"Liquidating Events" Section 15.1(a)
"Limited Partner Percentage Interests" Section 2.1
</TABLE>
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<PAGE> 46
<TABLE>
<S> <C>
"Loan Date" Section 2.4(c)(ii)
"Local Joint Ventures" Section 6.3(o)
"Lock-out Period" Section 6.1(c)
"Make-up Amount" Section 2.4(c)(iii)
"Mediator" Section 5.8(a)(ii)
"MFS" Section 6.4(j)
"MFS Lease" Section 6.4(j)
"MHL" Section 6.3(o)
"Net Equity" Section 12.3
"Net Equity Notice" Section 12.3
"Nextel" Section 6.4(f)
"Nextel Purchase Agreement" Section 6.4(f)
"Non-Adverse Partners" Section 12.1(a)
"Offer" Section 6.1(c)
"Offered Interest" Section 13.4
"Offerees" Section 13.4(b)
"Offer Notice" Section 13.4(b)
"Offer Period" Section 13.4(c)
"Offer Price" Section 13.4(a)
"Offer Statement" Section 15.7(b)
"Other Pennsylvania Company" Section 6.4(g)
"Ownership Restrictions" Section 9.12
"Overlap Cellular Area" Section 9.1(b)
"OverlapCo" Section 6.5(d)
"Partner Loan" Section 2.7
"Partnership's Businesses" Section 6.4(b)
"Paying Partner" Section 2.4(a)(ii)
"Payment Default" Section 2.4(c)(i)
"Penalty Amount" Section 2.4(b)
"Permitted Transfer" Section 13.2
"PhillieCo" Section 6.3(e)
"Post-Auction Requirements" Section 2.3(b)(i)
"Preferred Buyout Notice" Section 13.7
"Premium Call Shortfall Notice" Section 2.4(a)(v)
"Premium Call Paying Partner" Section 2.4(a)(v)
"Proposed Budget" Section 5.2(e)
"Proposed Business Plan" Section 5.2(e)
"purchase commitment" Section 12.2(b)
and 13.4(d)
"Public Offering" Section 5.9(c)
"Purchase Notice" Section 12.2(b)
"Purchase Offer" Section 13.4(a)
"Purchaser" Section 13.4(a)
"Purchasing Partner" Section 12.2(b)
</TABLE>
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<TABLE>
<S> <C>
"Put Notice" Section 13.6(b)(i)
"Receiving Party" Section 6.7(a)
"Regulatory Allocations" Section 3.4
"Related Group" Section 5.1(c)
"Representative" Section 5.1(c)
"Requested Contribution" Section 2.3(b)(i)
"Requested Premium Call Contribution" Section 2.4(a)(v)
"Required Majority Vote" Section 5.1(j)
"Restricted Area" Section 9.15
"Restricted Time" Section 9.15
"Restricted Party" Section 6.7(a)
"Sale Notice" Section 13.4(e)
"Second Appraiser" Section 12.4
"Section 5.1 Election Period" Section 5.1(l)(ii)
"Seller" Section 13.4
"Selling Partners" Section 13.6(c)(i)
"Senior Credit Agreement" Section 2.7
"Shortfall" Section 2.4(a)(ii)
"Shortfall Notice" Section 2.4(a)(ii)
"Simple Majority Vote Section 5.1(i)
"Special Contribution" Section 2.4(b)
"Special Sprint Contribution" Section 2.3(c)
"Sprint Cellular Business" Section 9.1(b)
"Sprint Obligation" Section 13.6(c)(ii)
"Sprint/TCI Loans" Section 2.7(d)
"Subsidiary Partnership" Section 3.7
"Substantial Portion" Section 1.10
"Tagalong Notice" Section 13.5(a)
"Tagalong Offer" Section 13.5(a)
"Tagalong Period" Section 13.5(a)
"Tagalong Purchaser" Section 13.5(a)
"Tagalong Transaction" Section 13.5(a)
"Tax Matters Partner" Section 11.3(a)
"Teleport Trademark License" Section 9.2(b)
"Third Appraiser" Section 13.4
"Third Party Provider" Section 9.15
"Timely Partner" Section 2.4(b)
"Trademark License" Section 9.2(a)
"Transferring Partner" Section 13.5(a)
"Unanimous Partner Vote" Section 5.1(l)(i)
"Unanimous Vote" Section 5.1(k)
"Unfunded Shortfall" Section 2.3(b)(iii)(B)
"Unpaid Amount" Section 2.4(b)
"Unreturned Capital" Section 12.2(a)
</TABLE>
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<TABLE>
<S> <C>
"UTLD" Section 9.4
</TABLE>
1.12 Terms Generally.
The definitions in Section 1.10 and elsewhere in this Agreement shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
The words "herein", "hereof" and "hereunder" and words of similar import refer
to this Agreement (including the Schedules) in its entirety and not to any part
hereof unless the context shall otherwise require. All references herein to
Articles, Sections, Exhibits and Schedules shall be deemed references to
Articles and Sections of, and Exhibits and Schedules to, this Agreement unless
the context shall otherwise require. Unless the context shall otherwise
require, any references to any agreement or other instrument or statute or
regulation are to it as amended and supplemented from time to time (and, in the
case of a statute or regulation, to any corresponding provisions of successor
statutes or regulations). Any reference in this Agreement to a "day" or number
of "days" (without the explicit qualification of "Business") shall be
interpreted as a reference to a calendar day or number of calendar days. If
any action or notice is to be taken or given on or by a particular calendar
day, and such calendar day is not a Business Day, then such action or notice
shall be deferred until, or may be taken or given on, the next Business Day.
SECTION 2. PARTNERS' CAPITAL CONTRIBUTIONS
2.1 Percentage Interests; Preservation of Percentages of Interests
Held as General Partners and as Limited Partners.
The initial Percentage Interest (which relates solely to Interests and
not to the Preferred Interests) of each Partner as of the date of this
Agreement is set forth on Schedule 2.1 and represents the sum of the "General
Partner Percentage Interest" and "Limited Partner Percentage Interest" of such
Partner as set forth in such Schedule 2.1. Except as expressly provided in
this Agreement, or as may result from a Transfer of Interests required or
permitted by this Agreement, the Percentage Interest of a Partner shall not be
subject to increase or decrease without such Partner's prior consent. For
purposes of this Agreement, each Partner is treated as though it holds
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a single Interest, even though such Partner (unless and until it becomes an
Exclusive Limited Partner) holds ninety-nine percent(99.0%) of its Interest as
a General Partner and one percent (1.0%) of its Interest as a Limited Partner.
Each Partner, unless and until it becomes an Exclusive Limited Partner, will
hold ninety-nine percent (99.0%) of its Interest as a General Partner and one
percent (1.0%) of its Interest as a Limited Partner and the amount of any
Capital Contributions made by a Partner pursuant to Section 2 and any
allocations and distributions to a Partner pursuant to Section 3 or Section 4
shall, except as otherwise provided therein, be allocated ninety-nine percent
(99.0%) to the Interest held by the Partner as a General Partner and one
percent (1.0%) to the Interest held by the Partner as a Limited Partner. In
the event that a Partner Transfers all or any portion of its Interest pursuant
to this Agreement, ninety-nine percent (99.0%) of the aggregate Interest so
acquired by any Person shall be treated as attributable to the Interest held by
the transferring Partner as a General Partner and one percent (1.0%) of the
aggregate Interest so acquired shall be treated as attributable to the Interest
held by the transferring Partner as a Limited Partner. In the event that the
Interest of a Partner is otherwise increased or decreased pursuant to this
Agreement, the amount of the increase or decrease, as the case may be, shall be
allocated ninety- nine percent (99.0%) to the Interest held by such Partner as
a General Partner and one percent (1.0%) to the Interest held by such Partner
as a Limited Partner.
2.2 Partners' Original Capital Contributions.
Simultaneously with the execution and delivery of this Agreement, the
Partners shall make their respective Original Capital Contributions by each
contributing to the Partnership that portion of their respective interests in
WirelessCo equal to a fraction (expressed as a percentage), the numerator of
which is the remainder of (A) the total contributions made by such Partner to
WirelessCo minus (B) such Partner's initial Percentage Interest times $5
million, and the denominator of which is the total contributions made by such
Partner to WirelessCo. The name, address and Agreed Value of the Original
Capital Contribution of each of the Partners are set forth on Schedule 2.2.
2.3 Additional Capital Contributions.
(a) Additional Capital Contributions of Property;
Equalizing Contributions. The Partners shall make the Additional
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Capital Contributions of Property set forth in clauses (i) through (iv) of this
Section 2.3(a) and the Equalizing Contributions required by clause (v) of this
Section 2.3(a).
(i) Contribution of Certain Property by Cox. Cox
shall contribute to the Partnership an undivided fractional interest in the Cox
Pioneer Preference License and certain associated assets (the "License
Contribution"), which the Partnership in turn shall contribute through its
Subsidiaries to the capital of PioneerCo. Such contribution shall be made
concurrently with the contribution by Cox Communications Pioneer, Inc. to
PioneerCo of the remaining undivided fractional interest in the Cox Pioneer
Preference License and such associated assets, which shall be made at the date
and time provided in, and in accordance with, the PioneerCo Partnership
Agreement. For purposes hereof, such contributions to the Partnership and then
to PioneerCo may be effected through the direct conveyance by Cox Parent of the
Cox Pioneer Preference License to PioneerCo. The Agreed Value of the License
Contribution shall be credited against the next Additional Capital Contribution
to be made in cash by Cox under this Agreement to the same extent as if Cox had
contributed cash in the amount of such Agreed Value, and until so credited the
License Contribution shall not constitute an Additional Capital Contribution
for purposes of this Agreement.
(ii) Contribution of Teleport Assets. Subject to
the terms and conditions of the Teleport Contribution Agreement, Comcast, Cox
and TCI shall contribute the Comcast Teleport Assets, Cox Teleport Assets and
TCI Teleport Assets, respectively, to the Partnership, which Assets the
Partnership in turn shall contribute to the capital of NewTelco. For purposes
hereof, such contributions to the Partnership and then to NewTelco may be
effected through the direct conveyance by Comcast, Cox and TCI of the Comcast
Teleport Assets, Cox Teleport Assets and TCI Teleport Assets, respectively, to
NewTelco. If the contribution of the Cox Teleport Assets on the First Closing
Date (or such portion thereof that is contributed on such date) gives rise to
any Excess Value, Cox will receive a Preferred Interest in exchange for such
Excess Value. Excess Value, if any, shall be finally determined as of the
First Closing Date in accordance with Section 2.3(a)(v)(F) without regard to
any Additional Capital Contributions pursuant to this Section 2.3(a)(ii) that
are made subsequent to the First Closing Date and any adjustments to Agreed
Value or any amounts that subsequently are contributed pursuant to Section
2.8(a). For purposes of this Agreement, that portion of the Cox Teleport
Assets contributed by Cox on the First Closing Date
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having an Agreed Value equal to the Excess Value shall not be treated as an
Additional Capital Contribution by Cox.
(iii) Contribution of Other CAP Businesses. Each
Cable Partner holding an interest in an Other CAP Business (directly or through
a Controlled Affiliate) and the Partnership shall negotiate ingood faith the
price (which the Partners intend to be fair market value) and other terms
pursuant to which such Other CAP Business shall be contributed to NewTelco. If
such Cable Partner and the Partnership are unable to agree upon the price at
which such Other CAP Business shall be contributed to NewTelco, such price
shall be equal to the product of (A) such Cable Partner's ownership interest
(expressed as a percentage) in such Other CAP Business times (b) the "Gross
Appraised Value" of such Other CAP Business determined as provided in Section
12.4 as if all references therein to the Partnership were deemed references to
such Other CAP Business. In such event, the Cable Partner holding an interest
in such Other CAP Business shall appoint the First Appraiser and the
Representatives of the other Partners shall appoint the Second Appraiser by
Required Majority Vote pursuant to Section 9.7. The Other CAP Business
Contribution Agreements relating to the Other CAP Businesses owned by Cox and
its Controlled Affiliates shall provide that, until such time as NewTelco has
commenced providing Wireline Exclusive Services in the geographic area serviced
by any such Other CAP Business, Cox and its Controlled Affiliates will continue
to manage the business of such Other CAP Business in exchange for a management
fee and other payments to be mutually agreed upon by Cox and the Partnership.
Subject to the execution of an Other CAP Business Contribution Agreement and
upon the terms and conditions set forth therein, each Cable Partner shall
contribute to NewTelco the Other CAP Businesses owned by such Cable Partner and
its Controlled Affiliates.
(iv) Contribution of Certain Property by Sprint.
(A) Trademark License. Simultaneously
with the execution and delivery of this Agreement, Sprint shall contribute to
the Partnership certain property associated with the Trademark License.
(B) Teleport Trademark License. On the
First Closing Date, Sprint shall contribute to the Partnership certain
additional property associated with the Teleport Trademark License.
(v) Equalizing Contributions.
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(A) Equalizing Contribution Notice. At
least five (5) Business Days prior to the closing date for a contribution of
Property pursuant to Section 2.3(a)(ii) or (iii) (the "Equalizing Contribution
Date"), the Chief Executive Officer shall give written notice (an "Equalizing
Contribution Notice") to each Partner, which notice shall (I) set forth the
Equalizing Contribution Date, (II) set forth the Estimated Gross Contribution
Amount of the AdditionalCapital Contributions to be made on the Equalizing
Contribution Date determined as provided below and each Partner's proportionate
share thereof determined as provided in this Section 2.3(a)(v), (III) state
with respect to each Partner, as applicable, the portion of the Additional
Capital Contribution to be made by such Partner with respect to such Equalizing
Contribution Date in Property pursuant to clause (ii), (iii) or (iv) of this
Section 2.3(a) and the portion to be made in cash or other Property determined
as provided in this clause (v) of Section 2.3(a), and (IV) specify the account
of the Partnership to which any Equalizing Contributions in cash are to be
made.
(B) Form of Equalizing Contributions.
With respect to each Equalizing Contribution Date, each Partner shall be
obligated to make an Additional Capital Contribution in an amount equal to the
product of the initial Percentage Interest of such Partner as set forth in
Schedule 2.1 times the Gross Contribution Amount for such Equalizing
Contribution Date, which contribution shall be made (I) if such Partner was
scheduled to contribute Property pursuant to clauses (ii) or (iii) of this
Section 2.3(a) on such Equalizing Contribution Date, through the contribution
of such Property to the extent of the Agreed Value thereof (which, in the case
of Cox, shall not include the Excess Value), (II) in the case of Sprint, if
such Equalizing Contribution Date is the First Closing Date, through the
contribution of the Property referred to in Section 2.3(a)(iv)(B) to the extent
of the Agreed Value thereof, and (III) otherwise through the contribution of
cash, the crediting of the License Contribution as contemplated by the last
sentence of Section 2.3(a)(i) or the contribution of the Preferred Interest or
Sprint/TCI Loans, as permitted or required by Sections 2.3(b)(iv) and (v),
respectively (the amounts contributed pursuant to this clause (III), as
adjusted in the manner provided in Section 2.3(a)(v)(F), being referred to as
the "Equalizing Contributions"). Any Partner that fails to make all or any
part of the Equalizing Contribution so requested of it in accordance with
Section 2.3(a)(v)(F) shall be deemed a Delinquent Partner and, if applicable, a
Defaulting Partner
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under Section 2.4(b) and 2.4(c) and otherwise under this Agreement.
(C) Gross Contribution Amount. The
"Gross Contribution Amount" shall be:
(I) with respect to the Equalizing
Contribution Date that is the First Closing Date, the greater of the Grossed-Up
Contribution of TCI for such Equalizing Contribution Date or the Grossed-Up
Contribution of Comcast for such Equalizing Contribution Date; and
(II) with respect to any other
Equalizing Contribution Date, the greatest of the Grossed-Up Contribution of
TCI for such Equalizing Contribution Date, the Grossed-Up Contribution of
Comcast for such Equalizing Contribution Date, or the Grossed-Up Contribution
of Cox for such Equalizing Contribution Date.
(D) Estimated Gross Contribution Amount.
The "Estimated Gross Contribution Amount" with respect to any Equalizing
Contribution Date shall be equal to an estimate of the Gross Contribution
Amount for such Equalizing Contribution Date determined by substituting for the
Agreed Value of any Property to be contributed by any Partner on such
Equalizing Contribution Date pursuant to Section 2.3(a)(ii) or (iii) the
estimate of the Agreed Value of such Property set forth in the notice delivered
to the Partnership pursuant to Section 2.6 of the Teleport Contribution
Agreement or any comparable provision of an Other CAP Business Contribution
Agreement.
(E) Grossed-Up Contribution. The
"Grossed-Up Contribution" of any Partner for any Equalizing Contribution Date
shall equal the Agreed Value of all Property scheduled to be contributed by
such Partner on such Equalizing Contribution Date pursuant to clauses (ii) and
(iii) of this Section 2.3(a) divided by the initial Percentage Interest of such
Partner as set forth in Schedule 2.1.
(F) Contribution of Equalizing
Contribution Amount. On the Equalizing Contribution Date, each Partner shall
contribute cash or other Property to the Partnership equal to the amount of the
Equalizing Contribution that such Partner would be required to make in
accordance with clause (III) of Section 2.3(a)(v)(B) if the Gross Contribution
Amount for such Equalizing Contribution Date were equal to the Estimated Gross
Contribution Amount (the "Estimated Equalizing Contribution"). As soon as the
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Agreed Values of all Property contributed on an Equalizing Contribution Date
pursuant to clauses (ii) and (iii) of this Section 2.3(a) are fully determined
pursuant to Section 2.6 of the Teleport Contribution Agreement or any
comparable provision of an Other CAP Business Contribution Agreement, the Chief
Executive Officer promptly shall cause the Gross Contribution Amount to be
calculated using such Agreed Values and shall determine the amount of
Additional Capital Contributions to be made by the Partners with respect to
such Equalizing Contribution Date pursuant to clause (III) of Section
2.3(a)(v)(B). Within ten (10) Business Days following the date that such
Agreed Values are finally determined, the Chief Executive Officer shall give
written notice (an "Equalizing Contribution Adjustment Notice") to each
Partner, which notice shall(I) set forth the date on which the Additional
Capital Contributions, cash reimbursements to the Partners or adjustment to
Excess Value necessary to give effect to the Gross Contribution Amount shall be
made pursuant to this Section 2.3(a)(v)(F) (the "Equalizing Contribution
Adjustment Date") and (II) set forth the Gross Contribution Amount and each
Partner's proportionate share thereof determined as provided in this Section
2.3(a)(v). On the Equalizing Contribution Adjustment Date, (x) with respect to
any Partner whose Estimated Equalizing Contribution exceeds its Equalizing
Contribution, the Partnership shall make a cash reimbursement to such Partner
in an amount equal to such excess, (y) with respect to any Partner whose
Equalizing Contribution exceeds its Estimated Equalizing Contribution, such
Partner shall make an Additional Capital Contribution (in cash or other
Property as permitted with respect to an Equalizing Contribution Date pursuant
to Section 2.3(a)(v)(B)) in an amount equal to such excess, and (z) with
respect to Cox, the Excess Value shall be finally determined taking into
account any difference between the Gross Contribution Amount and the Estimated
Gross Contribution Amount. Any Additional Capital Contributions, cash
reimbursements to Partners, or adjustments to the Excess Value made pursuant to
this Section 2.3(a)(v)(F) shall be deemed to have occurred as of the Equalizing
Contribution Date.
(b) Additional Capital Contributions of Cash and
Preferred Interests.
(i) Additional Cash Contributions Generally. In
addition to the authority to request Equalizing Contributions pursuant to
Section 2.3(a)(v), but subject to the limitations of this Agreement, the
Management Committee (or the Chief Executive Officer pursuant to (x) the
express provisions of Section 2.3(b)(ii)(C), (y)
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the authority to be granted in each Annual Budget to make requests for
Additional Capital Contributions in the amounts, during the periods and subject
to the limitations set forth therein, and (z) such authority as may be
delegated to the Chief Executive Officer from time to time by the Management
Committee (which delegation may occur only by a vote of the members of the
Management Committee required to take the action so delegated)) may in
accordance with the following procedures request the Partners to make
Additional Capital Contributions to the Partnership in cash from time to time
to fund (i) in the case of Additional Capital Contributions requested during
the Auction Period, the expenditures described in the definition of Auction
Commitment in Section 1.10 and the cash needs of the Partnership for operating
expenses as determined by the Required Majority Vote of the Management
Committee (subject to the limitation set forth in clause (A) of this Section
2.3(b)(i)) and (ii) in thecase of Additional Capital Contributions requested
following the Auction Period, the cash needs of the Partnership in conformity
with the Annual Budget then in effect, as it may be modified from time to time
in accordance with this Agreement; provided that the Planned Capital Amount
reflected in the Annual Budget for the first Fiscal Year of the Initial
Three-Year Period shall include that portion of the Auction Commitment that has
not been contributed to the Partnership as of the end of the Auction Period and
that the Management Committee determines will be required during such first
Fiscal Year for the purposes specified in the definition of Auction Commitment
(the "Post-Auction Requirements"). The aggregate amount of the Additional
Capital Contributions requested pursuant to this Section 2.3(b) to be made as
of any Contribution Date (the "Additional Contribution Amount") shall be set
forth in an Additional Contribution Notice given to each Partner, shall not
exceed the amount reasonably anticipated by the Management Committee to be
required to fund the cash needs of the Partnership for the ensuing six (6)
months or such shorter period as may be determined by the Management Committee,
and
(A) during the Auction Period, the
Additional Contribution Amount, when added to the aggregate amount of the
Original Capital Contributions of the Partners and the Additional Contribution
Amounts stated in all prior Additional Contribution Notices, shall not exceed
the cumulative amount of Additional Capital Contributions contemplated to be
required of the Partners pursuant to the WirelessCo Management Committee
Resolution, unless otherwise approved by the Unanimous Vote of the Management
Committee, and
(B) during each Fiscal Year commencing
with the
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first Fiscal Year in the Initial Three-Year Period, the Additional Contribution
Amount, when added to the Additional Contribution Amounts stated in all prior
Additional Contribution Notices with Contribution Dates in the then-current
Fiscal Year, (x) shall not exceed the cumulative amount of Additional Capital
Contributions contemplated to be required of the Partners during such Fiscal
Year as set forth in the Annual Budget for such Fiscal Year (including, with
respect to the first Fiscal Year in the Initial Three-Year Period, any
Post-Auction Requirements) unless otherwise approved by the Required Majority
Vote of the Management Committee and (y) if such Fiscal Year falls within the
Initial Three-Year Period, also shall not exceed, unless otherwise approved by
the Unanimous Vote of the Management Committee, the sum of (A) the product of
(1) 150% times (2) the Planned Capital Amount for such Fiscal Year minus (for
the first Fiscal Year of the Initial Three-Year Period) any Post-Auction
Requirements; provided, that the amount determined in accordance with this
clause (2) will be decreased by any portion thereof the payment of which the
Management Committeehas previously determined as provided below to accelerate
into any prior Fiscal Year, (B) 100% of the Prior Years' Carryforward and (C)
for the first Fiscal Year of the Initial Three-Year Period, any Post-Auction
Requirements; provided, that for the last Fiscal Year of the Initial Three-Year
Period Additional Contribution Notices for Additional Capital Contributions in
excess of the maximum amount established by clause (y) above may be approved by
a Required Majority Vote of the Management Committee to the extent that the
aggregate amount of the Original Capital Contributions and Additional Capital
Contributions made or requested to be made by the Partners prior to the
Contribution Date set forth in any such Additional Contribution Notice do not
exceed the Total Mandatory Contributions.
To the extent that the cumulative Additional Contribution
Amounts stated in Additional Contribution Notices pursuant to this Section
2.3(b) with Contribution Dates in any given Fiscal Year within the Initial
Three-Year Period exceed the sum of the Planned Capital Amount for such Fiscal
Year plus the Prior Years' Carryforward (minus any portion of such Planned
Capital Amount that was accelerated to a prior Fiscal Year), such excess shall
constitute an "Excess Contribution Amount" and, if determined by a Required
Majority Vote of the Management Committee, an "Accelerated Contribution
Amount". The amount of any Excess Contribution Amount that the Management
Committee may designate as an Accelerated Contribution Amount pursuant to the
preceding sentence shall not exceed the sum of the Planned Capital Amounts for
each Fiscal Year in the Initial Three-Year Period after the Fiscal Year in
which the Contribution Date stated in the
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Additional Contribution Notice for such Excess Contribution Amount occurs
(after giving effect to any reduction to such Planned Capital Amounts pursuant
to the following sentence with respect to any prior Excess Contribution
Amount). The Accelerated Contribution Amount in any Fiscal Year will be
applied to reduce the Planned Capital Amount set forth in the Initial Business
Plan for subsequent Fiscal Years in the Initial Three-Year Period in such order
of priority as the Management Committee may determine in connection with its
determination that an Excess Contribution Amount shall constitute an
Accelerated Contribution Amount.
The amount of the Additional Capital Contribution requested of
any Partner pursuant to this Section 2.3(b) in an Additional Contribution
Notice (the "Requested Contribution") shall be equal to (i) with respect to
Requested Contributions with Contribution Dates during the Auction Period or
during any Fiscal Year in the Initial Three-Year Period, that amount which
represents the same percentage of the Additional Contribution Amount specified
in such Additional Contribution Notice as such Partner's initial Percentage
Interest and(ii) with respect to Requested Contributions with Contribution
Dates during any Fiscal Year after the end of the Initial Three-Year Period,
that amount which represents the same percentage of the Additional Contribution
Amount specified in such Additional Contribution Notice as such Partner's
Percentage Interest as of the date of such Additional Contribution Notice;
provided that if the aggregate amount of the Original Capital Contributions and
Additional Capital Contributions made or requested to be made (including
pursuant to Section 2.3(a)) prior to the end of the Initial Three-Year Period
is less than the Total Mandatory Contributions, then the Requested
Contributions of each Partner shall continue to be the same percentage of the
Additional Contribution Amounts as such Partner's initial Percentage Interest
until the Cut-Off Time.
(ii) Mandatory Additional Capital Contributions
During the Auction Period.
(A) A Partner may not decline to make
any of its Requested Contributions with Contribution Dates in the Auction
Period.
(B) Prior to the date hereof, each
Partner or a Controlled Affiliate thereof provided WirelessCo with irrevocable
letters of credit (collectively, "Letter of Credit") in the amount of a
specified portion of the Auction Commitment, which may be drawn by the Chief
Executive Officer on behalf of the Partnership to fund such
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Partner's Auction Commitment solely in accordance with Section 2.3(b)(ii)(C).
Within two (2) Business Days after a Partner makes a Requested Contribution in
accordance with Section 2.3(b)(ii)(C), the Chief Executive Officer shall notify
the issuing bank or banks of such Partner's Letter of Credit of the payment of
the Requested Contribution and shall instruct such bank or banks to reduce the
amount of the Letter of Credit by an amount equal to the Requested Contribution
made by such Partner. In addition, the Chief Executive Officer shall, as
directed by the Management Committee, instruct the issuing bank or banks of
each Partner's Letter of Credit to reduce the amount thereof as may be
appropriate to reflect the results of the PCS Auction. If the Auction
Commitment has not been fully contributed prior to August 31, 1995 (the
Original Capital Contributions constituting contributions of the Auction
Commitment for purposes of this Agreement), each Partner shall by September 15,
1995, extend the term of its Letter of Credit in the amount of such Partner's
Auction Commitment (as reduced pursuant to the second and third sentences of
this paragraph) until December 31, 1995, unless otherwise determined by a
Required Majority Vote of the Management Committee.
(C) To the extent necessary to satisfy
on atimely basis in accordance with the FCC's rules all (1) obligations of
WirelessCo with respect to the payment of the purchase price for PCS licenses
for frequency blocks "A" and "B" awarded to it in the PCS Auction or (2)
obligations of WirelessCo to make capital contributions under the PioneerCo
Partnership Agreement during the Auction Period in connection with the
formation of PioneerCo and the contribution of the Cox Pioneer Preference
License to PioneerCo and obligations of WirelessCo pursuant to partnership
agreements or related agreements to make capital contributions to other
entities that are awarded pioneer preference licenses in connection with the
formation of such entities and the payment of the purchase price for such
licenses, in either case as contemplated by and in accordance with the Wireless
Strategic Plan, the Chief Executive Officer is expressly authorized, without
any requirement of action by the Management Committee, to give an Additional
Contribution Notice to the Partners with respect to the Additional Capital
Contributions required to be made by the Partnership to WirelessCo to enable
WirelessCo to fund such payment obligations and commitments subject, however,
to the limitations of Section 2.3(b)(i). If any Partner (i) fails to make its
Requested Contribution as set forth in such Additional Contribution Notice or
(ii) gives written authorization to the Chief Executive Officer to draw on its
Letter of Credit in connection with such Additional Contribution Notice and the
applicable Letter of Credit permits a draw
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to be made in such circumstances, in either case on or before the Contribution
Date, the Chief Executive Officer is expressly authorized to draw on such
Partner's Letter of Credit to the extent of such failure or written
authorization.
(iii) Mandatory Additional Capital Contributions
After the Auction Period.
(A) No Partner may decline to make any of its
Requested Contributions with Contribution Dates after the Auction Period
unless, and then only to the extent that, (1) with respect to Requested
Contributions with Contribution Dates during any Fiscal Year in the Initial
Three-Year Period, the amount of the Requested Contribution of such Partner,
when added to the cumulative amount of all Requested Contributions theretofore
requested of and made by such Partner during the same Fiscal Year, would exceed
the sum of (x) such Partner's Capital Commitment with respect to such Fiscal
Year and (y) the product of such Partner's initial Percentage Interest times
any Excess Contribution Amount for such Fiscal Year if and to the extent that
such Partner's Representative(s) voted for approval of the Annual Budget
pursuant to which the Excess Contribution Amount is being requested or voted in
favor of requesting (or delegating to the Chief Executive Officer the authority
to request) such ExcessContribution Amount, and (2) with respect to Requested
Contributions with Contribution Dates during any Fiscal Year after the Initial
Three-Year Period, none of such Partner's Representative(s) voted for approval
of the Annual Budget that provides for the Additional Contribution Amount being
requested and none of such Partner's Representatives voted in favor of
requesting (or delegating to the Chief Executive Officer the authority to
request) such Additional Contribution Amount or such Partner was an Exclusive
Limited Partner at the time of such vote. Notwithstanding the preceding
sentence, a Partner will not be entitled to decline to make any Requested
Contribution with a Contribution Date during the last Fiscal Year of the
Initial Three-Year Period or in any Fiscal Year thereafter covered by the
Initial Business Plan except to the extent such Requested Contribution, when
added to the aggregate amount of Original Capital Contributions and Additional
Capital Contributions made or requested to be made by such Partner prior to the
Contribution Date of such Requested Contribution, exceeds such Partner's
Mandatory Contribution.
(B) Subject to Section 2.3(b)(iii)(A), if a
Partner was a Declining Partner with respect to an Accelerated Contribution
Amount with a Contribution Date during a Fiscal Year in the Initial Three-Year
Period (with respect to any such Partner, its "Declined Accelerated
Contribution"), then, to the extent that there is a Shortfall in connection
with a Requested Contribution with a Contribution Date during a subsequent
Fiscal Year in
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the Initial Three-Year Period that is not fully allocated to one or more
Contributing Partners pursuant to Section 2.4(a) (an "Unfunded Shortfall"),
such Partner shall be required to make an Additional Capital Contribution to
the Partnership up to an amount equal to such Partner's initial Percentage
Interest of the portion of the Planned Capital Amount set forth in the Initial
Business Plan for such subsequent Fiscal Year that was accelerated to a prior
Fiscal Year (but only to the extent of such Declined Accelerated Contribution
and, if there is more than one such Partner, pro rata in proportion to the
aggregate amounts of the previously unfunded Declined Accelerated Contributions
of each such Partner). Any such required Additional Capital Contribution shall
be contributed by such Partner within ten (10) days of notice to such Partner
by the Chief Executive Officer that there exists an Unfunded Shortfall with
respect to which such Partner is required to make an Additional Capital
Contribution pursuant to the preceding sentence, which notice shall set forth
the amount of the Additional Capital Contribution required of such Partner and
the applicable Contribution Date and shall otherwise constitute an Additional
Contribution Notice for purposes of this Agreement.
(iv) Contribution of Preferred Interest. Cox may
elect to satisfy any request for Additional Capital Contributions pursuant to
an Additional Contribution Notice or Equalizing Contribution Notice by
contributing all or a portion of the Preferred Interest to the Partnership.
The Management Committee also may require Cox to make the election provided for
in the preceding sentence by stating in the Additional Contribution Notice or
Equalizing Contribution Notice given to Cox that its Requested Contribution or
Equalizing Contribution shall be satisfied, in whole or in part, as the case
may be, by the contribution of all or a portion of the Preferred Interest to
the Partnership; provided that the Management Committee may not require Cox to
make such election until the License Contribution has been credited in its
entirety pursuant to the last sentence of Section 2.3(a)(i) against Additional
Capital Contributions to be made by Cox. Any contribution of all or any
portion of the Preferred Interest made pursuant to this Section 2.3(b)(iv)
shall constitute an Additional Capital Contribution. The value of the
Preferred Interest as of any relevant date for purposes of this Agreement shall
be equal to the sum of the then outstanding balance of (A) the Preferred Return
Account
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and (B) the Excess Value Account; provided that the value of any portion of a
Preferred Interest shall be increased as provided in Section 2.4(a)(v) for
purposes of calculating Percentage Interests to the extent such portion of the
Preferred Interest is treated as a contribution of Premium Dollars. If less
than the full value of the Preferred Interest is being contributed as of any
date, then the amount contributed shall be applied, first, to reduce the then
outstanding balance of the Preferred Return Account until such Account equals
zero and, next, to reduce the then outstanding balance of the Excess Value
Account.
(v) Contribution of Sprint/TCI Loans. On the
First Closing Date, and on each Contribution Date and Equalizing Contribution
Date after (i) the First Closing Date or (ii) the termination of the Teleport
Contribution Agreement, Sprint and TCI each shall be required to contribute to
the Partnership Sprint/TCI Loans having a value equal to the lesser of (A) the
amount of the Equalizing Contribution or Requested Contribution required to be
made by Sprint or TCI, respectively, on such date and (B) the total value of
the Sprint/TCI Loans then held by Sprint or TCI, respectively. Any
contribution of all or a portion of the Sprint/TCI Loans made pursuant to this
Section 2.3(b)(v) shall constitute an Additional Capital Contribution in an
amount equal to the value of the Sprint/TCI Loans so contributed. The value of
a Sprint/TCI Loan as of any relevant date for purposes of this Agreement shall
be equal to the principal balance thereof and the accrued and unpaid interest
thereon as of such date; provided that the value of any portion of a Sprint/TCI
Loanshall be increased as provided in Section 2.4(a)(v) for purposes of
calculating Percentage Interests to the extent that such portion of a
Sprint/TCI Loan is treated as a contribution of Premium Dollars. If less than
the full value of a Sprint/TCI Loan is being contributed as of any date, then
the amount contributed shall be applied first to reduce the accrued and unpaid
interest on such Sprint/TCI Loan and then to reduce the principal balance
thereof.
(c) Special Sprint Contribution. Sprint shall make a
Capital Contribution of cash to the Partnership (each a "Special Sprint
Contribution") on the last Business Day of each month (which shall constitute
the Contribution Date for the Special Sprint Contribution) in an amount and in
the manner provided in Schedule 2.3(c) hereto. Sprint will be deemed a
Delinquent Partner and (if applicable) a Defaulting Partner under Sections
2.4(b) and 2.4(c) and otherwise under this Agreement if it fails to make any
Special Sprint Contribution within the time period described or in the
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manner contemplated in Schedule 2.3(c). The amount of the Special Sprint
Contribution shall be in addition to (and shall not be applied against or
reduce) Sprint's Capital Commitment, Mandatory Contribution or any of the other
obligations of Sprint to make Additional Capital Contributions pursuant to
Sections 2.3(a) and (b).
(d) Additional Contributions Related to PioneerCo
Preemptive Rights. Each of the Partners (other than Cox) may make Additional
Capital Contributions to the Partnership as and to the extent permitted by
Section 9.11.
2.4 Failure to Contribute Capital.
(a) Declining Partners.
(i) Any Partner that is entitled to decline to
make a Requested Contribution as provided in Section 2.3(b)(iii) may do so by
notice given to the Chief Executive Officer (with a copy to the Management
Committee) within fifteen (15) days of the date the applicable Additional
Contribution Notice was given (any such Partner that timely exercises such
right is herein referred to as a "Declining Partner").
(ii) If any Partner is a Declining Partner with
respect to an Additional Contribution Notice and the Management Committee does
not give a Premium Call Notice pursuant to Section 2.4(a)(v), the Chief
Executive Officer shall, within five (5) days after the date notice was
required to be received under Section 2.4(a)(i), give a notice (a "Shortfall
Notice") to each Partner that made its RequestedContribution in full (each a
"Paying Partner") requesting the Paying Partners to make Additional Capital
Contributions in an aggregate amount equal to the amount not contributed by the
Declining Partner(s) in response to such Additional Contribution Notice (the
"Shortfall"). Each Paying Partner that is willing to commit to fund all or any
portion of the Shortfall (each a "Contributing Partner") shall so notify the
Chief Executive Officer and each other Paying Partner within ten (10) days
after the date the Shortfall Notice was given, setting forth the maximum
amount of the Shortfall, up to one hundred percent (100%) thereof, that such
Contributing Partner is willing to fund (the "Funding Commitment"). Except as
otherwise provided in Section 2.4(a)(iii), if the aggregate Funding Commitments
are less than or equal to one hundred percent (100%) of the Shortfall, each
Contributing Partner shall be entitled to make an Additional Capital
Contribution to the Partnership in response to a Shortfall Notice in
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an amount equal to its Funding Commitment. If the aggregate Funding
Commitments made by the Contributing Partners exceed one hundred percent (100%)
of the Shortfall, then except as otherwise provided in Section 2.4(a)(iii),
each Contributing Partner shall be entitled to contribute an amount equal to
the same percentage of the Shortfall as such Contributing Partner's Percentage
Interest represents of the total Percentage Interests of the Contributing
Partners (in each case before giving effect to any adjustments to the
Percentage Interests to be made in connection with the Additional Contribution
Notice with respect to which the Shortfall occurred), provided that, if any
Contributing Partner's Funding Commitment was for an amount less than its
proportionate share of the Shortfall as so determined, the portion of the
Shortfall not so committed to be funded shall, except as otherwise provided in
Section 2.4(a)(iii), continue to be allocated proportionally, in the manner
provided above in this sentence, among the other Contributing Partners until
each has been allocated by such process of apportionment an amount equal to its
Funding Commitment or until the entire Shortfall has been allocated among the
Contributing Partners. The amount of the Additional Capital Contribution to be
made by each Contributing Partner in response to the Shortfall Notice as
determined in accordance with this Section 2.4(a)(ii) shall be specified in a
notice delivered by the Chief Executive Officer to the Contributing Partners
and shall, within ten (10) days after the date of such notice, be paid to the
account of the Partnership designated in the Shortfall Notice.
(iii) Except as otherwise provided in Section
2.4(a)(iv), if the Declining Partner is a Cable Partner and no Cable Partner's
Percentage Interest, when added to the Percentage Interests of all Controlled
Affiliates of such Partner, is equal to or greater than Sprint's Percentage
Interest, when added to the PercentageInterests of all Controlled Affiliates of
Sprint (in each case determined without regard to any Additional Capital
Contribution made by any Partner pursuant to the Additional Contribution Notice
with respect to which the Shortfall occurred), the Shortfall shall be allocated
first among those of the Contributing Partners that are Cable Partners in the
manner provided in Section 2.4(a)(ii) as though Sprint were not a Contributing
Partner, and if and to the extent that the aggregate Funding Commitments made
by such Cable Partners are less than one hundred percent (100%) of the
Shortfall, the balance of the Shortfall up to Sprint's Funding Commitment shall
be allocated to Sprint.
(iv) The Shortfall shall be allocated among the
Cable
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Partners in the manner set forth in Section 2.4(a)(iii) until any Cable Partner
would have a Percentage Interest, when added to the Percentage Interests of all
Controlled Affiliates of such Partner, that is equal to Sprint's Percentage
Interest, when added to the Percentage Interests of all Controlled Affiliates
of Sprint, calculated in each case after giving effect to the adjustments to
the Percentage Interests to be made in connection with the Additional
Contribution Notice with respect to which the Shortfall occurred assuming that
the Additional Capital Contributions to be made pursuant to this Section 2.4(a)
were made up to the aggregate amount that would yield such result (as to each
Partner, its "Adjusted Percentage Interest"). Any portion of the Shortfall not
yet allocated shall continue to be allocated proportionately among all of the
Contributing Partners (including Sprint, if applicable) in the manner provided
in Section 2.4(a)(ii) without regard to Section 2.4(a)(iii), but substituting
the Adjusted Percentage Interests of the Contributing Partners for the
Percentage Interests that would otherwise be used to determine such allocation,
until each has been allocated by such process an amount equal to its Funding
Commitment or until the entire Shortfall has been allocated among the
Contributing Partners.
(v) Notwithstanding the foregoing, if (A) any
Partner is a Declining Partner with respect to an Additional Contribution
Notice that requests a Second Tranche Call and (B) the Management Committee
determines by Simple Majority Vote that the fair market value (which fair
market value shall be reduced by the sum of the balances of the Excess Value
Account and the Preferred Return Account at such time) of the Partnership is
less than the aggregate amount of Original Capital Contributions, Additional
Capital Contributions and Special Sprint Contributions made to the Partnership
through the date of the applicable Additional Contribution Notice (but
excluding the amount set forth in the Additional Contribution Notice), the
Management Committee may elect to convert such Second Tranche Call toa Premium
Call by giving a Premium Call Notice (which shall supercede such Additional
Contribution Notice) to each Partner within five (5) days after the date notice
was required to be received from the Declining Partner under Section 2.4(a)(i).
Each Partner, including the Declining Partner, shall have the right to make an
Additional Capital Contribution in response to a Premium Call in an amount
which represents the same percentage of the amount of the Second Tranche Call
requested in the Premium Call Notice as such Partner's Percentage Interest as
of the date of such Premium Call Notice (the "Requested Premium Call
Contribution"). If each Partner makes its Requested Premium Call Contribution,
the amounts so contributed will not be
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treated as Premium Dollars. If any Partner fails to make its Requested Premium
Call Contribution, then all amounts contributed pursuant to this Section
2.4(a)(v) with respect to such Premium Call shall be treated as Premium
Dollars. In addition, if any Partner fails to make its Requested Premium Call
Contribution, the Chief Executive Officer shall, within five (5) days after the
Premium Call Contribution Date, give a notice (a "Premium Call Shortfall
Notice") to each Partner that made its Requested Premium Call Contribution in
full (each a "Premium Call Paying Partner") requesting the Premium Call Paying
Partners to make Additional Capital Contributions in an aggregate amount equal
to the amount not contributed by the Declining Partner (the "Premium Call
Shortfall"). The amount of the Premium Call Shortfall that each Premium Call
Paying Partner shall be entitled to make to the Partnership in response to a
Premium Call Shortfall Notice shall be determined in the same manner as
provided in Sections 2.4(a)(ii), (iii) and (iv) for the determination of the
amount of the Additional Capital Contribution that each Contributing Partner is
entitled to make in response to a Shortfall Notice. The amount of the Premium
Call Shortfall to be made by each Premium Call Paying Partner in response to
the Premium Call Shortfall Notice as so determined shall be specified in a
notice delivered by the Chief Executive Officer to the Premium Call Paying
Partners and shall, within ten (10) days after the date of such notice, be paid
to the account of the Partnership designated in the Premium Call Shortfall
Notice and all amounts so paid shall be treated as Premium Dollars. Any
Partner that fails to make a contribution in response to a Premium Call Notice
shall not be treated as a Delinquent Partner or a Defaulting Partner.
(b) Delinquent Partners. In the event that any Partner
other than a Declining Partner (a "Delinquent Partner") fails to make all or
any portion of its Requested Contribution, Special Sprint Contribution or
Equalizing Contribution on or before the related Contribution Date or
Equalizing Contribution Date, an additional amount shall accrue as a penalty
with respect to such unpaid amount (the "Unpaid Amount") at the applicable
Floating Rate from andincluding the Contribution Date or Equalizing
Contribution Date until the Unpaid Amount and the full amount of the penalty
accrued thereon (as of any date of determination, the "Penalty Amount") are
paid as provided in this Section 2.4 or the failure to pay the same results in
such Partner becoming a Defaulting Partner. If the Delinquent Partner pays the
Unpaid Amount to the Partnership at any time during the period ending at the
close of business on the tenth (10th) day following the related Contribution
Date or Equalizing Contribution Date (the "Grace Period"), the Delinquent
Partner shall, at the time
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of such payment, in the case of a Delinquent Partner with respect to a
Requested Contribution, pay to each other Partner, if any, that made its
Requested Contribution in full on or before the related Contribution Date and
has no uncured Payment Defaults (each a "Timely Partner"), a pro rata portion
of the Penalty Amount (based on the percentage that the amount of each Timely
Partners' Requested Contribution represents of the total amount of the Timely
Partner's Requested Contributions), but in no event more than the amount that
such Timely Partner would have earned as interest on the amount of its
Requested Contribution, from and including the Contribution Date to the date
the Delinquent Partner pays the Unpaid Amount to the Partnership, if the Timely
Partner had made a loan in such amount to the Partnership with interest at the
Floating Rate applicable during the Grace Period. The balance of the Penalty
Amount, if any, in the case of a Delinquent Partner with respect to a
Requested Contribution, and all of the Penalty Amount in the case of any other
Delinquent Partner, shall be paid by the Delinquent Partner to the Partnership
and the amount so paid shall be deemed to be a "Special Contribution" by the
Delinquent Partner to the capital of the Partnership. The portion of the
Penalty Amount paid to the Timely Partners shall not, for any purpose, be
deemed to be a Capital Contribution.
(c) Defaulting Partners.
(i) If a Delinquent Partner fails to pay the
Unpaid Amount together with the Penalty Amount to the Partnership or the Timely
Partners as provided in Section 2.4(b) on or before the expiration of the Grace
Period, such failure shall constitute a "Payment Default" and, if such Payment
Default is not thereafter cured in full as provided in Section 2.4(c)(iii), the
Delinquent Partner shall for all purposes hereof be considered a "Defaulting
Partner" with the effect described herein.
(ii) If a Payment Default occurs, the Chief
Executive Officer shall, within five (5) days after the expiration of the
related Grace Period, give a notice (a "Default Loan Notice") to eachPartner
that, in the case of a Payment Default with respect to a Requested
Contribution, was a Paying Partner with respect to such Additional Contribution
Notice and, in the case of any other Payment Default, to all Partners other
than the Delinquent Partner and any Exclusive Limited Partner, requesting such
Partners to make loans (each a "Default Loan") to the Partnership in an
aggregate amount equal to the Unpaid Amount. Each such Partner that is willing
to
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commit to make a Default Loan (each a "Lending Partner") shall so notify the
Chief Executive Officer and each other such Partner within ten (10) days after
the date the Default Loan Notice was given, setting forth the maximum portion
of the Unpaid Amount, up to one hundred percent (100%) thereof, that such
Lending Partner is willing to lend to the Partnership (the "Lending
Commitment"). The amount of the Default Loan that each Lending Partner shall
be entitled to make to the Partnership in response to a Default Loan Notice
shall be determined in the same manner as provided in Section 2.4(a) for the
determination of the amount of the Additional Capital Contribution that each
Contributing Partner is entitled to make in response to a Shortfall Notice.
The amount of the Default Loan to be made by each Lending Partner in response
to the Default Loan Notice as so determined shall be specified in a notice
delivered by the Chief Executive Officer to the Lending Partners and within ten
(10) days of the date of such notice shall be paid to the account of the
Partnership designated in the Default Loan Notice. Each Default Loan shall
bear interest from the date made (the "Loan Date") until paid in full or
contributed to the Partnership as provided in this Section 2.4 at the Floating
Rate applicable following the Grace Period and shall be evidenced by a
promissory note of the Partnership in the form of Exhibit 2.4(c)(ii) hereto
(with any changes thereto requested by any lender under any Senior Credit
Agreement and consented to by the Lending Partner, which consent shall not be
unreasonably withheld).
(iii) A Delinquent Partner may cure its Payment
Default at any time prior to the close of business on the ninetieth (90th) day
following the Loan Date (the "Cure Date") by transferring to an account of the
Partnership designated by the Chief Executive Officer cash in an amount equal
to the sum of the Unpaid Amount and the Penalty Amount accrued thereon to the
date of such transfer (the "Make-up Amount"). The portion of the Make-up
Amount equal to the Penalty Amount shall be deemed to be a Special Contribution
by the Delinquent Partner to the Partnership and the balance thereof shall
constitute an Additional Capital Contribution or Special Sprint Contribution,
as applicable, by the Delinquent Partner to the Partnership. The Chief
Executive Officer shall cause the Partnership to apply the funds so received
from the Delinquent Partner to the payment in full of the unpaid principal of
and accrued interest oneach Default Loan in accordance with the terms of the
note evidencing the same.
(iv) If a Delinquent Partner has not timely cured
its Payment Default in full in accordance with Section 2.4(c)(iii), then
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the Lending Partners shall contribute their respective Default Loans to the
Partnership effective as of the day following the Cure Date and surrender the
notes evidencing the same to the Partnership for cancellation. The unpaid
principal amount of a Lending Partner's Default Loan through the Cure Date
shall constitute an Additional Capital Contribution (and the accrued interest
on such Default Loan shall constitute a Special Contribution) by the Lending
Partner to the Partnership as of the effective date of such contribution.
(d) Adjustments to Percentage Interests. The Percentage
Interests of the Partners shall be adjusted in accordance with the definition
of "Percentage Interest" to give effect to Additional Capital Contributions
made pursuant to Section 2.3, Section 2.5 (if applicable) and this Section 2.4,
provided that if there are any Declining Partners or Delinquent Partners with
respect to any Additional Contribution Notice or Equalizing Contribution
Notice, the determination of the amount of the adjustment of the Percentage
Interests for Additional Capital Contributions made in response to such notice
will be deferred until the later of the last day for the making of Additional
Capital Contributions in connection with any Shortfall and the expiration of
the Grace Period, provided, however, that such adjustment, whenever determined,
shall be effective as of the Contribution Date or Equalizing Contribution Date.
The Percentage Interests of the Partners will be further adjusted as and when
Additional Capital Contributions, if any, are made as contemplated by clause
(iii) or (iv), as applicable, of Section 2.4(c). The Management Committee
shall provide notice of each adjustment to all Partners and Schedule 2.1 shall
be revised to reflect such adjustment.
(e) Paying Partners. A Paying Partner that declines to
make a Funding Commitment or Lending Commitment as contemplated by this Section
2.4 shall not be deemed to be a Delinquent Partner or Defaulting Partner as a
result thereof, nor shall the failure to make such a commitment constitute a
Payment Default with respect to such Partner.
(f) Floating Rate. Subject to the last two sentences of
Section 2.7(b), the term "Floating Rate" means the rate per annum (computed on
the basis of the actual number of days elapsed in a year of 365 or 366 days, as
applicable), compounded monthly, equal to the greater of (i) the Prime Rate
(adjusted as and when changes in thePrime Rate occur) plus (x) during the Grace
Period, two percent (2%) and (y) following the Grace Period, five percent (5%),
and (ii) the rate per annum applicable to borrowings by the Partnership under
its
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principal credit facility, if any, or, if a choice of rates is then available
to the Partnership, the highest such rate (in either case adjusted as and when
changes in such applicable rate occur) plus, following the Grace Period, two
percent (2%).
2.5 Other Additional Capital Contributions.
Each Partner may contribute from time to time such additional cash or
other Property as the Management Committee may approve by Unanimous Vote or as
may be expressly contemplated by this Agreement, provided that any Capital
Contribution of Property (other than cash) made pursuant to this Section 2.5
shall be subject to the terms and provisions of an Additional Contribution
Agreement.
2.6 Partnership Funds.
The funds of the Partnership shall be deposited in such bank accounts
or invested in such investments as shall be designated by the Management
Committee. Partnership funds shall not be commingled with those of any Person
other than any Subsidiary of the Partnership in which the Partnership and
MinorCo own, in the aggregate, directly or indirectly, one hundred percent
(100%) of the outstanding equity interests, without a Unanimous Vote of the
Management Committee. The Partnership shall not lend or advance funds to, or
guarantee any obligation of, a Partner or any Affiliate thereof without the
prior written consent of all Partners.
2.7 Partner Loans; Other Borrowings.
(a) Partner Loans. In order to satisfy the Partnership's
financial needs, the Partnership may, if so approved by the requisite vote of
the Management Committee, borrow from (i) banks, lending institutions or other
unrelated third parties, and may pledge Partnership properties or the
production of income therefrom to secure and provide for the repayment of such
loans and (ii) any Partner or an Affiliate of a Partner. Loans made by a
Partner or an Affiliate of a Partner (a "Partner Loan") shall be evidenced by a
promissory note of the Partnership in the form attached hereto as Exhibit 2.7
and, subject to the last two sentences of Section 2.7(b), shall bear interest
payable quarterly from the date made until paid in full at a rate per annum to
be determined by the Management Committee that is no less favorable to the
Partnership than if the loan had been made by an independent third party.
Unless a Partner declines to make such loanor is a Defaulting Partner or a
Partner subject to Bankruptcy, Partner
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Loans shall be made pro rata in accordance with the respective Percentage
Interests of the Partners (or in such other proportion as the Management
Committee may approve by Unanimous Vote).
(b) Terms of Partner Loans. Unless otherwise determined
by the Management Committee, all Partner Loans and Default Loans shall be
unsecured and the promissory notes evidencing the same shall be non-negotiable
and, except as otherwise provided in this Section 2.7 or Section 13.3(c),
nontransferable. Repayment of the principal amount of and accrued interest on
all Partner Loans and Default Loans shall be subordinated to the repayment of
the principal of and accrued interest on any indebtedness of the Partnership to
third party lenders to the extent required by the applicable provisions of the
instruments creating such indebtedness to third party lenders ("Senior Credit
Agreements"). All amounts required to be paid in accordance with the terms of
such notes and all amounts permitted to be prepaid shall be applied to the
notes held by the Partners in accordance with the order of payment contemplated
by Section 15.2(b)(ii) and (iii). Subject to the terms of applicable Senior
Credit Agreements, Partner Loans shall be repaid to the Partners at such times
as the Partnership has sufficient funds to permit such repayment without
jeopardizing the Partnership's ability to meet its other obligations on a
timely basis. Nothing contained in this Agreement or in any promissory note
issued by the Partnership hereunder shall require the Partnership or any
Partner to pay interest or any amount as a penalty at a rate exceeding the
maximum amount of interest permitted to be collected from time to time under
applicable usury laws. If the amount of interest or of such penalty payable by
the Partnership or any Partner on any date would exceed the maximum permissible
amount, it shall be automatically reduced to such amount, and interest or the
amount of the penalty for any subsequent period, to the extent less than that
permitted by applicable usury laws, shall, to that extent, be increased by the
amount of such reduction.
(c) Purchase of Partner Loans. An election by a Partner
to purchase all or any portion of another Partner's Interest pursuant to
Sections 5.1, 6.4(f), 12, 13.4, 13.5, 13.6 or 15.7 shall also constitute an
election to purchase an equivalent portion of any outstanding Partner Loans
held by such selling Partner, and each purchasing Partner shall be obligated to
purchase a percentage of such Partner Loans equal to the percentage of the
selling Partner's Interest such purchasing Partner is obligated to purchase
for a price equal to the same percentage of the outstanding principal and
accrued and unpaid interest on such Partner Loans through the date of the
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closing of such purchase (except in the case of a Transfer pursuant toSection
13.4, in which case the terms of the Purchase Offer shall apply).
(d) Sprint/TCI Loans. Sprint will make loans to the
Partnership in an aggregate principal amount not exceeding $250 million and TCI
will make loans to the Partnership in an aggregate principal amount not
exceeding $50 million (the "Sprint/TCI Loans"), in each case to be used by the
Partnership and its Subsidiaries to finance the transactions described in the
definition of "Auction Commitment." The Sprint/TCI Loans shall be in addition
to the Auction Commitment of Sprint and TCI. The Sprint/TCI Loans will be
advanced by Sprint and TCI to the Partnership within ten (10) days following
receipt of notice from the Chief Executive Officer instructing Sprint and TCI
to advance the Sprint/TCI Loans; provided that no such notice may be delivered
by the Chief Executive Officer prior to the date on which the aggregate amount
of the Original Capital Contributions and Additional Capital Contributions
(other than contributions of Property pursuant to clauses (i), (ii), (iii) or
(iv) of Section 2.3(a)) previously requested to be made by the Partners exceeds
the aggregate amount of the Letters of Credit of all Partners. Each such
advance shall be made pro rata by Sprint and TCI based on their respective
aggregate commitments with respect to the Sprint/TCI Loans. Simple interest
shall accrue on the Sprint/TCI Loans at the rate of ten percent (10%) per
annum, and accrued interest shall be payable by the Partnership to Sprint and
TCI on the last Business Day of each calendar quarter.
Upon any termination of the Teleport Contribution Agreement,
the Sprint/TCI Loans shall be converted to demand loans as of such date. The
Sprint/TCI Loans (and the accrued and unpaid interest thereon) shall be payable
in full by the Partnership on the thirtieth (30th) day following notice by
Sprint or TCI, as the case may be, to the Partnership and the Management
Committee of a demand for payment. The Partners agree to cause their
Representatives on the Management Committee to vote in favor of requesting
Additional Capital Contributions pursuant to Section 2.3(b) in such amounts and
at such times as are necessary to permit the Partnership to satisfy its
obligations under this paragraph.
Except to the extent that the terms of the Sprint/TCI Loans
described in this Section 2.7(d) expressly vary from the other provisions of
this Section 2.7 with respect to Partner Loans, the Sprint/TCI Loans shall for
all purposes be treated as Partner Loans
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under this Agreement, and all references to Sprint or TCI relating to the
Sprint/TCI Loans in this Section 2 shall include any permitted transferee of
their respective Interests under Section 13.2.
2.8 Obligations Under Contribution Agreement.
(a) Any payment required to be made by a Cable Partner to
the Partnership pursuant to Section 11.4 of the Teleport Contribution Agreement
shall be treated for income tax purposes and for all purposes of this Agreement
as an Additional Capital Contribution to the Partnership by such Cable Partner
so long as such Cable Partner or an Affiliate thereof is a Partner in the
Partnership at the time of payment. The Agreed Value of the Property with
respect to which such payment was made (i.e., the Comcast Teleport Assets, the
Cox Teleport Assets or the TCI Teleport Assets, as the case may be) shall be
deemed to have been simultaneously reduced in the amount of such payment.
(b) In the event that the stock of TCG Inc. owned by
Continental Teleport, Inc. remains outstanding after the First Closing Date,
(i) the Agreed Value of each share of the stock of TCG Inc. that is included in
each of the Comcast Teleport Assets, the Cox Teleport Assets and the TCI
Teleport Assets shall be increased by the quotient of (A) $4,200,000 divided by
(B) the aggregate number of shares of TCG Inc. stock included in the Comcast
Teleport Assets, the Cox Teleport Assets and the TCI Teleport Assets as of the
First Closing Date, and (ii) the Aggregate Base Value (as defined in the
Teleport Contribution Agreement) shall be increased by $4,200,000.
2.9 Other Matters.
(a) No Partner shall have the right to demand or, except
as otherwise provided in Sections 4.1 and 15.2, receive a return of all or any
part of its Capital Account or its Capital Contributions or withdraw from the
Partnership without the consent of all Partners. Under circumstances requiring
a return of all or any part of its Capital Account or Capital Contributions, no
Partner shall have the right to receive Property other than cash.
(b) Subject to Sections 5.4 and 15.3, the Exclusive
Limited Partners shall not be liable for the debts, liabilities, contracts or
any other obligations of the Partnership. Except as otherwise provided by any
other agreements among the Partners or mandatory provisions of applicable state
law, an Exclusive Limited Partner shall be liable only to make Capital
Contributions to the extent required by
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Sections 2.2, 2.3, 2.5 and 15.3 and shall not be required to lend any funds to
the Partnership or, after such Capital Contributions have been made, to make
any additional Capital Contributions to the Partnership.
(c) No Partner shall have any personal liability for
therepayment of any Capital Contributions of any other Partner.
(d) No Partner shall be entitled to receive interest on
its Capital Contributions or Capital Account except as otherwise specifically
provided in this Agreement.
SECTION 3. ALLOCATIONS
3.1 Profits.
After giving effect to the special allocations set forth in Sections
3.3 and 3.4, Profits for any Allocation Year shall be allocated in the
following order and priority:
(a) First, to the Partners holding the Preferred
Interests (whether or not such Preferred Interests have been contributed to the
Partnership in whole or in part pursuant to Section 2.3(b)(iv) prior to the end
of such Allocation Year) in proportion to their respective Preferred Interests,
up to an amount equal to the excess, if any, of (i) the cumulative Losses
allocated with respect to such Preferred Interests pursuant to Section 3.2(d)
for all prior Allocation Years, over (ii) the cumulative Profits allocated with
respect to such Preferred Interests pursuant to this Section 3.1(a) for all
prior Allocation Years;
(b) Second, to the Partners holding the Preferred
Interests (whether or not such Preferred Interests have been contributed to the
Partnership in whole or in part pursuant to Section 2.3(b)(iv) prior to the end
of such Allocation Year) in proportion to their respective Preferred Interests,
up to an amount equal to the excess, if any, of (i) the cumulative Preferred
Return attributable to such Preferred Interests through the last day of such
Allocation Year over (ii) the cumulative Profits allocated with respect to such
Preferred Interests pursuant to this Section 3.1(b) for all prior Allocation
Years;
(c) Third, one hundred percent (100%) to the Partners, in
proportion to, and to the extent of, an amount equal to the excess, if
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any, of (i) the cumulative Losses allocated to each such Partner pursuant to
Section 3.5 for all prior Allocation Years, over (ii) the cumulative Profits
allocated to such Partner pursuant to this Section 3.1(c) for all prior
Allocation Years;
(d) Fourth, one hundred percent (100%) to the Partners,
in proportion to, and to the extent of, an amount equal to the excess, if any,
of (i) the cumulative Losses allocated to each such Partnerpursuant to Section
3.2(e) for all prior Allocation Years, over (ii) the cumulative Profits
allocated to such Partner pursuant to this Section 3.1(d) for all prior
Allocation Years;
(e) Fifth, to the extent such Profits arise during or
after the Allocation Year in which all or substantially all of the
Partnership's assets are disposed of, to the Partners in such ratios and
amounts as may be necessary to cause the balances in their Capital Accounts to
be as nearly as practicable in the same ratio as their respective Percentage
Interests; provided, however, that for purposes of this allocation the balance
in the Capital Account of each Partner holding a Preferred Interest shall be
deemed to be reduced by the sum of the then outstanding balance of the Excess
Value Account and the Preferred Return Account with respect to such Preferred
Interest; and
(f) The balance, if any, among the Partners in proportion
to their Percentage Interests.
3.2 Losses.
After giving effect to the special allocations set forth in Sections
3.3 and 3.4, and subject to Section 3.5, Losses for any Allocation Year shall
be allocated in the following order and priority:
(a) First, one hundred percent (100%) to the Partners, in
proportion to, and to the extent of, the excess, if any, of (i) the cumulative
Profits allocated to each such Partner pursuant to Section 3.1(f) for all prior
Allocation Years, over (ii) the cumulative Losses allocated to such Partner
pursuant to this Section 3.2(a) for all prior Allocation Years;
(b) Second, to the extent such Losses arise during or
after the Allocation Year in which all or substantially all of the
Partnership's assets are disposed of, to the Partners in such ratio and amounts
as may be necessary to cause the balances in their Capital
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Accounts to be as nearly as practicable in the same ratio as their respective
Percentage Interests; provided, however, that for purposes of this allocation
the balance in the Capital Account of each Partner holding a Preferred Interest
shall be deemed to be reduced by the sum of the then outstanding balance of the
Excess Value Account and the Preferred Return Account with respect to such
Preferred Interest;
(c) Third, to the Partners in proportion to and to the
extent of the positive balances in their respective Capital Accounts; provided,
however, that for purposes of this allocation the balance inthe Capital Account
of each Partner holding a Preferred Interest shall be deemed to be reduced by
the sum of the then outstanding balances of the Excess Value Account and the
Preferred Return Account with respect to such Preferred Interest;
(d) Fourth, to the Partners holding the Preferred
Interests in proportion to their respective Preferred Interests, until their
respective Capital Accounts are equal to zero; and
(e) The balance, if any, among the Partners in proportion
to their Percentage Interests.
3.3 Special Allocations.
The following special allocations shall be made in the following order:
(a) Minimum Gain Chargeback. Except as otherwise
provided in Section 1.704-2(f) of the Regulations, notwithstanding any other
provision of this Section 3, if there is a net decrease in Partnership Minimum
Gain during any Allocation Year, each Partner shall be specially allocated
items of Partnership income and gain for such Allocation Year (and, if
necessary, subsequent Allocation Years) in an amount equal to such Partner's
share of the net decrease in Partnership Minimum Gain, determined in accordance
with Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Sections 1.704-2(f)(6) and 1.704-2(j)(2) of
the Regulations. This Section 3.3(a) is intended to comply with the minimum
gain chargeback requirement in Section 1.704-2(f) of the Regulations and shall
be interpreted consistently therewith.
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(b) Partner Minimum Gain Chargeback. Except as otherwise
provided in Section 1.704-2(i)(4) of the Regulations, notwithstanding any other
provision of this Section 3, if there is a net decrease in Partner Nonrecourse
Debt Minimum Gain attributable to a Partner Nonrecourse Debt during any
Allocation Year, each Partner who has a share of the Partner Nonrecourse Debt
Minimum Gain attributable to such Partner Nonrecourse Debt, determined in
accordance with Section 1.704-2(i)(5) of the Regulations, shall be specially
allocated items of Partnership income and gain for such Allocation Year (and,
if necessary, subsequent Allocation Years) in an amount equal to such Partner's
share of the net decrease in Partner Nonrecourse Debt Minimum Gain attributable
to such Partner Nonrecourse Debt, determinedin accordance with Regulations
Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated to each
Partner pursuant thereto. The items to be so allocated shall be determined in
accordance with Sections 1.704-2(i)(4) and 1.704-2(j)(2) of the Regulations.
This Section 3.3(b) is intended to comply with the minimum gain chargeback
requirement in Section 1.704-2(i)(4) of the Regulations and shall be
interpreted consistently therewith.
(c) Qualified Income Offset. In the event any Exclusive
Limited Partner unexpectedly receives any adjustments, allocations, or
distributions described in Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5) or 1.704- 1(b)(2)(ii)(d)(6) of the Regulations, items
of Partnership income and gain shall be specially allocated to each such
Exclusive Limited Partner in an amount and manner sufficient to eliminate, to
the extent required by the Regulations, the Adjusted Capital Account Deficit of
such Exclusive Limited Partner as quickly as possible, provided that an
allocation pursuant to this Section 3.3(c) shall be made only if and to the
extent that such Exclusive Limited Partner would have an Adjusted Capital
Account Deficit after all other allocations provided for in this Section 3
have been tentatively made as if this Section 3.3(c) were not in the Agreement.
(d) Gross Income Allocation. In the event any Exclusive
Limited Partner has a deficit Capital Account at the end of any Allocation Year
which is in excess of the sum of (i) the amount such Exclusive Limited Partner
is obligated to restore pursuant to any provision of this Agreement, and (ii)
the amount such Exclusive Limited Partner is deemed to be obligated to restore
pursuant to the penultimate sentences of Sections 1.704-2(g)(1) and
1.704-2(i)(5) of the Regulations, each such Exclusive Limited Partner shall be
specially allocated items of Partnership income and gain in the amount
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of such excess as quickly as possible, provided that an allocation pursuant to
this Section 3.3(d) shall be made only if and to the extent that such Exclusive
Limited Partner would have a deficit Capital Account in excess of such sum
after all other allocations provided for in this Section 3 have been made as if
Section 3.3(c) and this Section 3.3(d) were not in the Agreement.
(e) Nonrecourse Deductions. Nonrecourse Deductions for
any Allocation Year shall be specially allocated among the Partners in
proportion to their Percentage Interests.
(f) Partner Nonrecourse Deductions. Any Partner
Nonrecourse Deductions for any Allocation Year shall be specially allocated to
the Partner who bears the economic risk of loss withrespect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable
in accordance with Regulations Section 1.704-2(i)(1).
(g) Section 754 Adjustments. To the extent an adjustment
to the adjusted tax basis of any Partnership asset pursuant to Code Section
734(b) or Code Section 743(b) is required pursuant to Regulations Section
1.704- 1(b)(2)(iv)(m)(2) or 1.704-1(b)(2)(iv)(m)(4) to be taken into account in
determining Capital Accounts as the result of a distribution to a Partner in
complete liquidation of its Interest, the amount of such adjustment to Capital
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis) and such
gain or loss shall be specially allocated to the Partners in accordance with
their interests in the Partnership in the event Regulations Section
1.704-1(b)(2)(iv)(m)(2) applies, or to the Partner to whom such distribution
was made in the event Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.
(h) Special Interest Allocation. In the event that the
Partnership makes any payment in respect of interest accrued on any Default
Loan in any Allocation Year, the deduction attributable to such payment shall
be specially allocated to the Delinquent Partner with respect to which such
Default Loan was made.
(i) Special Gross Deduction Allocation. In each
Allocation Year gross deductions shall be specially allocated to Sprint in an
amount equal to the excess, if any, of (i) the cumulative amount of Special
Sprint Contributions made by Sprint to the Partnership during the current and
all prior Allocation Years (other than any such
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Special Sprint Contributions that are reimbursed to Sprint), over (ii) the
cumulative amount of gross deductions specially allocated to Sprint for all
prior Allocation Years.
(j) Special Income Allocation. In each Allocation Year,
gross income shall be specially allocated to Sprint in an amount equal to the
excess of (i) the cumulative amount of interest payments distributed pursuant
to Schedule 2.3(c) to Sprint during the current and all prior Allocation Years
over (ii) the cumulative amount of gross income specially allocated to Sprint
pursuant to this Section 3.3(j) for all prior Allocation Years.
3.4 Curative Allocations.
The allocations set forth in Sections 3.3(a), 3.3(b), 3.3(c), 3.3(d),
3.3(e), 3.3(f), 3.3(g) and 3.5 (the "Regulatory Allocations")are intended to
comply with certain requirements of the Regulations. It is the intent of the
Partners that, to the extent possible, all Regulatory Allocations shall be
offset either with other Regulatory Allocations or with special allocations of
other items of Partnership income, gain, loss or deduction pursuant to this
Section 3.4. Therefore, notwithstanding any other provision of this Section 3
(other than the Regulatory Allocations), the Management Committee shall make
such offsetting special allocations of Partnership income, gain, loss or
deduction in whatever manner it determines appropriate so that, after such
offsetting allocations are made, each Partner's Capital Account balance is, to
the extent possible, equal to the Capital Account balance such Partner would
have had if the Regulatory Allocations were not part of the Agreement and all
Partnership items were allocated pursuant to Sections 3.1, 3.2, 3.3(h), 3.3(i)
and 3.3(j). In exercising its discretion under this Section 3.4, the
Management Committee shall take into account future Regulatory Allocations
under Sections 3.3(a) and 3.3(b) that, although not yet made, are likely to
offset other Regulatory Allocations previously made under Section 3.3(e) and
3.3(f).
3.5 Loss Limitation.
The Losses allocated pursuant to Section 3.2 shall not exceed the
maximum amount of Losses that can be so allocated without causing (or
increasing the amount of) any Exclusive Limited Partner to have an Adjusted
Capital Account Deficit at the end of any Allocation Year. All Losses in
excess of such limitation shall be allocated to the Partners who are not
Exclusive Limited Partners in proportion to their
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Percentage Interests.
3.6 Other Allocation Rules.
(a) For purposes of determining the Profits, Losses, or
any other items allocable to any period, Profits, Losses, and any such other
items shall be determined on a daily, monthly, or other basis, as determined by
a Required Majority Vote of the Management Committee using any permissible
method under Code Section 706 and the Regulations thereunder.
(b) The Partners are aware of the income tax consequences
of the allocations made by this Section 3 and hereby agree to be bound by the
provisions of this Section 3 in reporting their shares of Partnership income
and loss for income tax purposes.
(c) Solely for purposes of determining a Partner's
proportionate share of the "excess nonrecourse liabilities" of thePartnership
within the meaning of Section 1.752-3(a)(3) of the Regulations, the Partners'
interests in Partnership profits are in proportion to their Percentage
Interests.
(d) To the extent permitted by Section 1.704-2(h)(3) of
the Regulations, the Management Committee shall endeavor to treat distributions
of cash as having been made from the proceeds of a Nonrecourse Liability or a
Partner Nonrecourse Debt only to the extent that such distributions would cause
or increase an Adjusted Capital Account Deficit for any Exclusive Limited
Partner.
3.7 Tax Allocations: Code Section 704(c).
In accordance with Code Section 704(c) and the Regulations thereunder,
income, gain, loss, and deduction with respect to any property contributed to
the capital of the Partnership shall, solely for tax purposes, be allocated
among the Partners so as to take account of any variation between the adjusted
basis of such property to the Partnership for federal income tax purposes and
its initial Gross Asset Value using the traditional method with curative
allocations as described in Section 1.704-3 of the Regulations, applied as
necessary in any reasonable manner not expressly precluded by Section 1.704-3
of the Regulations. In making such allocations, Section 704(c) shall be
applied as if the Partnership's proportionate share of the assets owned by any
partnership, interests in which (other than indirect interests owned through
TCG Inc.) are contributed
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to the Partnership ("Subsidiary Partnership"), were owned directly by the
Partnership and were contributed by the Partners who contributed the Subsidiary
Partnership interests.
In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to subparagraph (ii) of the definition of Gross Asset Value,
subsequent allocations of income, gain, loss, and deduction with respect to
such asset shall take account of any variation between the adjusted basis of
such asset for federal income tax purposes and its Gross Asset Value in the
same manner as under Code Section 704(c) and the Regulations thereunder.
Any elections or other decisions relating to such allocations shall be
made by the Management Committee in any manner that reasonably reflects the
purpose and intention of this Agreement. Allocations pursuant to this Section
3.7 are solely for purposes of federal, state, and local taxes and shall not
affect, or in any way be taken into account in computing, any Partner's Capital
Account or share of Profits, Losses, other items, or distributions pursuant to
any provision of this Agreement.
SECTION 4. DISTRIBUTIONS
4.1 Available Cash.
From time to time the Management Committee by a Required
Majority Vote may determine Available Cash. Except as otherwise provided in
Section 15.2, Available Cash, if any, shall be distributed in such amounts and
at such times as the Management Committee shall determine by Required Majority
Vote in the following order and priority:
(a) First, one hundred percent (100%) to the Partners
holding the Preferred Interests in proportion to, and to the extent of, the
then-current balances of the Preferred Return Accounts attributable to their
respective Preferred Interests, which distribution shall be applied first to
the current quarter's accrual of the Preferred Return, provided that
distributions pursuant to this Section 4.1(a) during each of the first two (2)
years after the First Closing Date shall not exceed in the aggregate an amount
equal to the product of (i) the Excess Value times (ii) 150% of the highest
"Applicable Federal Rate" (as such term is defined in the Code) in effect on
such date;
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(b) Second, one hundred percent (100%) to the Partners
holding the Preferred Interests in proportion to, and to the extent of, the
then-current balances of the Excess Value Accounts attributable to their
respective Preferred Interests, provided that no distributions shall be made
pursuant to this Section 4.1(b) during the first two (2) years after the First
Closing Date; and
(c) Third, among the Partners in proportion to their
respective Percentage Interests. Prior to making any cash distributions to the
Partners pursuant to this Section 4.1(c), (i) the Partnership shall have paid
in full all Partner Loans (in accordance with the order of payment contemplated
by Section 15.2(b)) and (ii) the balances of the Excess Value Accounts and the
Preferred Return Accounts attributable to the Preferred Interests shall each
have been reduced to zero.
4.2 Tax Distributions.
(a) Subject to Section 4.2(b), Available Cash shall be
distributed to the Partners in proportion to their Percentage Interests within
one hundred thirty-five (135) days after the end of each Fiscal Year of the
Partnership in an aggregate amount equal tothe Hypothetical Federal Income Tax
Amount for such Fiscal Year.
(b) Prior to making any cash distributions to the Partners
pursuant to Section 4.2(a), (i) the Partnership shall have paid in full all
Partner Loans (in accordance with the order of payment contemplated by Section
15.2(b)) and (ii) the balances of the Excess Value Accounts and the Preferred
Return Accounts attributable to the Preferred Interests shall each have been
reduced to zero.
4.3 Amounts Withheld.
All amounts withheld pursuant to the Code or any provision of any
state or local tax law from any payment or distribution to a Partner shall be
treated as amounts paid or distributed to such Partner pursuant to this Section
4 for all purposes under this Agreement. The Partnership is authorized to
withhold from payments and distributions to any Partner and to pay over to any
federal, state, or local government any amounts required to be so withheld
pursuant to the Code or any provisions of any other federal, state, or local
law.
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SECTION 5. MANAGEMENT
5.1 Authority of the Management Committee.
(a) General Authority. Subject to the limitations and
restrictions set forth in this Agreement, the General Partners shall conduct
the business and affairs of the Partnership, and all powers of the Partnership,
except those specifically reserved to the Partners by the Act or this
Agreement, are hereby granted to and vested in the General Partners, which
shall conduct such business and exercise such powers through their
Representatives on the Management Committee.
(b) Delegation. The Management 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 Management Committee to approve
such action directly.
(c) Number and Term of Office. The Management Committee
initially shall have six voting members, one of which shall be designated by
each Cable Partner and three of which shall be designated by Sprint. Each
General Partner shall give written notice to the other General Partners on or
prior to the date hereof of the Person(s) selected to be its initial
Representative(s). The ChiefExecutive Officer shall be a non-voting member of
the Management Committee. During the term of this Agreement, except as
otherwise provided below, each General Partner shall be entitled to designate
one Representative to the Management Committee, provided that (i) for so long
as Sprint is entitled to representation on the Management Committee (except as
otherwise provided below), Sprint shall be entitled to designate three
Representatives to the Management Committee; provided, however, that at any
time any other Partner holds a greater Voting Percentage Interest than Sprint
(except as otherwise provided below), Sprint shall be entitled to designate
only two Representatives to the Management Committee; and provided, further,
that at any time any other Partner holds a greater Voting Percentage Interest
than Sprint and Sprint's Percentage Interest is less than twenty percent (20%),
Sprint shall be entitled to designate only one Representative to the Management
Committee, and (ii) those Partners, if any, that are Controlled Affiliates of
the same Parent (a "Related Group") shall collectively be entitled to designate
only the largest number of Representatives as is entitled to be designated by
any single member of the Related Group, which Representative(s) shall be
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designated by the Partner that has the largest Percentage Interest of the
Partners in the Related Group. Any Partner whose Percentage Interest, together
with the Percentage Interest(s) of each other Partner, if any, that is a member
of the same Related Group, is, in the aggregate, less than the Minimum
Ownership Requirement shall, for so long as its Percentage Interest or the
aggregate Percentage Interest of its Related Group, as applicable, is less than
the Minimum Ownership Requirement, not be entitled to designate a
Representative to the Management Committee, and the Representative of such
Partner or Related Group, as applicable, shall immediately cease to be a member
of the Management Committee, without any further act by the affected Partner.
Any Partner who becomes an Adverse Partner shall immediately forfeit
the right to designate a member of the Management Committee, and the
Representative(s) of the affected Partner shall immediately cease to be a
member of the Management Committee, without any further act by the affected
Partner; provided that if a Partner becomes an Adverse Partner as the result of
the occurrence of an Adverse Act described in clause (iii), (iv), (vi) or (vii)
of the definition of such term in Section 1.10, such Partner will regain (or
its transferee will be entitled to, as applicable) the right to designate a
Representative on the Management Committee (if otherwise so entitled thereto
under this Agreement) if (i) in the case of a Partner that is an Adverse
Partner other than as a result of the occurrence of an Adverse Act described in
clause (iii) of the definition of such term in Section 1.10, such Partner
Transfers its Interest in compliancewith Section 13 to a Person that is not an
Adverse Partner and does not become an Adverse Partner as a result of such
Transfer, (ii) in the case of a Partner that is an Adverse Partner as a
consequence of the occurrence of an Adverse Act described in clause (iii) of
the definition of such term in Section 1.10, there is a Final Determination
that such Partner's actions or failure to act did not constitute such an
Adverse Act, (iii) in the case of a Partner that is an Adverse Partner as a
consequence of Bankruptcy, such Partner ceases to be in a state of Bankruptcy,
(iv) in the case of a Partner that is an Adverse Partner as a consequence of
the occurrence of any IXC Transaction, such Partner ceases to have the
relationship with the IXC which caused such IXC Transaction to occur, or (v) in
the case of a Partner that is an Adverse Partner as a consequence of the
occurrence of an event described in clause (vii) of the definition of the term
"Adverse Act" in Section 1.10, such Partner takes actions that eliminate the
circumstances that constituted such an Adverse Act within the meaning of such
clause (vii). The membership of the
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Management Committee shall be increased or decreased from time to time in
accordance with the foregoing provisions of this Section 5.1(c).
Each Representative shall hold office at the pleasure of the
Partner that designated such Representative. Any Partner may at any time, and
from time to time, by written notice to the other Partners remove any or all of
the Representatives designated by such Partner, with or without cause, and
appoint substitute Representatives to serve in their stead. Each Partner shall
be entitled to name one or more alternate Representatives to serve in the place
of any Representative appointed by such Partner should any such Representative
not be able to attend a meeting or meetings or any portion thereof, including
in the case of a Representative of Comcast not being able to attend a meeting
to the extent required in order to comply with the provisions of Section 9.15.
Each such alternate shall be deemed to be a Representative hereunder with
respect to any action taken at such meeting or meetings or any portion thereof.
Each Partner shall bear the costs incurred by each Representative or alternate
designated by it to serve on the Management Committee, and no Representative or
alternate shall be entitled to compensation from the Partnership for serving in
such capacity.
The written notice of a Partner's appointment of a
Representative or alternate shall in each case set forth such Representative's
or alternate's business and residence addresses and business telephone number.
Each Partner shall promptly give written notice to the other Partners of any
change in the business or residence address or business telephone number of any
of its Representatives. Each Partner shall cause its Representatives on
theManagement Committee to comply with the terms of this Agreement. In the
absence of prior written notice to the contrary, any action taken by a
Representative of a Partner shall be deemed to have been duly authorized by the
Partner that appointed such Representative.
(d) Vacancy. In the event any Representative dies or is
unwilling or unable to serve as such or is removed from office by the Partner
that designated him or her, such Partner shall promptly designate a successor
to such Representative.
(e) Place of Meeting/Action by Written Consent. The
Management Committee may hold its meetings at such place or places within or
outside the State of Delaware as the Management 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
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meeting shall be held at the Partnership's principal office. Notwithstanding
anything to the contrary in this Section 5.1, the Management Committee may take
without a meeting any action contemplated to be taken by the Management
Committee under this Agreement if such action is approved by the unanimous
written consent of a Representative of each of the Partners (which may be
executed in counterparts). The initial meeting of the Management Committee
shall take place on such date and at such time and place as the Partners shall
agree. The Management Committee may meet in person or by means of conference
telephone or similar communications equipment. Each Representative shall have
the right to participate in any meeting by means of conference telephone or
similar communications equipment.
(f) Regular Meetings. The Management Committee shall
hold regular meetings no less frequently than quarterly and shall establish
meeting times, dates and places and requisite notice requirements and adopt
rules or procedures consistent with the terms of this Agreement. At such
meetings the members of the Management Committee shall transact such business
as may properly be brought before the meeting.
(g) Special Meetings. Special meetings of the Management
Committee may be called by any Representative. Notice of each such meeting
shall be given to each member of the Management Committee by telephone,
telecopy, telegram or similar method (in which case notice shall be given at
least twenty-four (24) hours before the time of the meeting) or sent by
first-class mail (in which case notice shall be given at least five (5) days
before the meeting), unless a longer notice period is established by the
Management Committee. Each such notice shall state (i) the time, date, place
(which shall be at the principal office of the Partnership unless otherwise
agreed to by all Representatives) or other means of conducting such meeting
and(ii) the purpose of the meeting to be so held. Any Representative may waive
notice of any meeting in writing before, at or after such meeting. The
attendance of a Representative at a meeting shall constitute a waiver of notice
of such meeting, except when a Representative attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting was
not properly called.
(h) Voting. The Representative(s) of each General
Partner or of the General Partners in a Related Group shall together have
voting power equal to the Voting Percentage Interest held by such General
Partner or the aggregate Voting Percentage Interest of the General Partners in
such Related Group, as applicable, as in effect
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from time to time. If a General Partner or a Related Group designates only one
Representative, such Representative shall be entitled to vote the entire voting
power held by such General Partner or the General Partners in such Related
Group, as applicable. If a General Partner or Related Group designates more
than one Representative, such Representatives shall vote the entire voting
power of such General Partner or the General Partners in such Related Group as
a single unit. None of the Partners (other than the Partners in a Related
Group) shall enter into any agreements with any other Partner or such other
Partner's Controlled Affiliates regarding the voting of their Interests or such
other Partner's Representatives on the Management Committee.
(i) Simple Majority Vote. No action may be taken by the
Partnership in connection with any of the matters listed on Schedule 5.1(i)
without the prior approval of the Management Committee, at a duly called
meeting, of Representatives with voting power of more than fifty percent (50%)
of the Voting Percentage Interests of all Partners whose Representatives are
not required by Section 9.7 or any other express provision of this Agreement to
abstain from such vote (a "Simple Majority Vote").
(j) Required Majority Vote. Except as provided in
Section 5.1(i) or 5.1(k) or as otherwise expressly provided in this Agreement,
all actions required or permitted to be taken by the Management Committee
(including the matters listed on Schedule 5.1(j)) must be approved by the
affirmative vote, at a duly called meeting, of Representatives with voting
power of seventy-five percent (75%) or more of the Voting Percentage Interests
of all Partners whose Representatives are not required by Section 9.7 or any
other express provision of this Agreement to abstain from such vote (a
"Required Majority Vote").
(k) Unanimous Vote (Management Committee). No action may
be taken by the Partnership in connection with any of the matters listed on
Schedule 5.1(k) without the prior approval of the Management Committee by the
unanimous vote of all of the Representatives who are not required to abstain
from the vote with respect to the particular matter as provided for in Section
9.7 of this Agreement or any other express provision of this Agreement, whether
or not present at a Management Committee meeting (a "Unanimous Vote").
(l) Unanimous Decisions (Partners).
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(i) No action may be taken by the Partnership in
connection with any of the matters listed on Schedule 5.1(l) without the prior
consent of all of the Partners (including Exclusive Limited Partners) other
than any Partner required to abstain from the vote with respect to a particular
matter by Section 9.7 or any other express provision of this Agreement (a
"Unanimous Partner Vote").
(ii) If any matter listed on Schedule 5.1(l) or
otherwise required by this Agreement to be approved by the unanimous consent of
the Partners is not approved solely as a result of the failure of one or more
Exclusive Limited Partners to consent to such action (each, a "Blocking Limited
Partner"), the remaining Partners (other than any Exclusive Limited Partner)
may purchase all but not less than all of the respective Interests (and
Preferred Interests, if applicable) of the Blocking Limited Partner(s) pursuant
to this Section 5.1(l)(ii) if the Management Committee elects to initiate the
procedures in this Section. For a period ending at 11:59 p.m. (local time at
the Partnership's principal office) on the thirtieth (30th) day following the
date on which such Blocking Limited Partner failed to consent to such matter,
the Management Committee may elect to cause the Net Equity of the Blocking
Limited Partner's Interest (and Preferred Interest, if applicable) to be
determined in accordance with Section 12.3. For purposes of such determination
of Net Equity, the Management Committee shall designate the First Appraiser as
required by Section 12.4 and the Blocking Limited Partner shall designate the
Second Appraiser within ten (10) days of receiving notice of the First
Appraiser. For a period ending at 11:59 p.m. (local time at the Partnership's
principal office) on the thirtieth (30th) day following the date on which
notice of the Net Equity of the Blocking Limited Partner's Interest (and
Preferred Interest, if applicable) is given pursuant to Section 12.3 (the
"Section 5.1 Election Period"), except as otherwise provided in Section
12.2(b), each of the Partners (other than any Exclusive Limited Partner) may
elect to purchase all or any portion of the Interest (and Preferred Interest,
if applicable) of the Blocking Limited Partner. Such elections shall be made,
and thepurchase of the Blocking Limited Partner's Interest (and Preferred
Interest, if applicable) shall occur, in the manner and pursuant to the
procedures set forth in Section 12.2 as if the Blocking Limited Partner were an
Adverse Partner and the Election Period referred to in Section 12.2 was the
Section 5.1 Election Period; provided that the Buy-Sell Price of the Blocking
Limited Partner's Interest (and Preferred Interest, if applicable) shall be
equal to the Net Equity thereof. Notwithstanding the foregoing, the Blocking
Limited Partner will not be subject to the buy-out provisions of this Section
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5.1(l)(ii) if the matter to which the Blocking Limited Partner refused to
consent would, if approved, have adversely affected the rights and obligations
under this Agreement of such Blocking Limited Partner or the Exclusive Limited
Partners (taken as a group) in a manner different from the other Partners.
(m) Preferred Interest Class Vote. Any amendment to this
Agreement that will adversely affect the powers, preferences or special rights
of the holder of a Preferred Interest under this Agreement must be approved by
the prior consent of the Partner holding such Preferred Interest. The holders
of Preferred Interests shall have no other voting or approval rights in their
capacity as such with respect to actions to be taken by the Partnership and its
Subsidiaries.
(n) Proxies; Minutes. Each Representative entitled to
vote at a meeting of the Management Committee may authorize another Person to
act for him by proxy; provided that such proxy must be signed by the
Representative and shall be revocable by such Representative any time prior to
such meeting. Minutes of each meeting of the Management Committee shall be
prepared by the Chief Executive Officer or his or her designee and circulated
to the Representatives. Written consents to any action taken by the Management
Committee shall be filed with the minutes.
5.2 Business Plan and Annual Budget.
(a) As soon as practicable, but in no event later than
the earlier to occur of (i) September 1, 1995, and (ii) forty-five (45) days
following the completion of the PCS Auction relating to frequency blocks "A"
through "F" (the "Determination Date"), the General Partners shall, and shall
cause their respective Representatives to, use all commercially reasonable
efforts and cooperate in good faith to adopt a business plan ("Business Plan")
of the Partnership and its Subsidiaries covering the balance of the Fiscal Year
ending December 31, 1995 and the succeeding Fiscal Years through the Fiscal
Year ending December 31, 1999 (such initial Business Plan, ifapproved, being
referred to herein as the "Initial Business Plan"). The Initial Business Plan
will include (among other things) (i) capital expenditure and operating budgets
for each Fiscal Year covered thereby, (ii) a schedule of Additional Capital
Contributions (other than Additional Capital Contributions of Property and
Equalizing Contributions pursuant to Section 2.3(a)) anticipated to be
requested of the Partners during each Fiscal Year covered thereby, including
the
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Planned Capital Amount for each Fiscal Year during the Initial Three-Year
Period, based on the assumptions (or varying sets of assumptions) upon which
the Initial Business Plan was prepared (which shall be stated therein) and
depending, if applicable, on the achievement of any milestones specified
therein, (iii) the projected results to be achieved by NewTelco on or prior to
each of September 30, 1996, 1997, 1998 and 1999 with respect to (A) residential
penetration rates and (B) monthly revenue per residential subscriber
(collectively, the "Benchmarks"), (iv) the Initial Markets, (v) the Initial
Master Roll-Out Schedule (including the Scheduled Serving Areas (which shall be
selected on the basis of the location of cable television systems owned by
Cable Subsidiaries in markets (A) that overlap or otherwise correlate with
markets in which WirelessCo holds a PCS license or is affiliated with a license
holder, (B) that have a favorable regulatory environment for alternative
telephony providers, (C) in which the cable television systems owned by Cable
Subsidiaries serve a majority of the Households Passed and (D) that can
efficiently be clustered with other markets included within the Scheduled
Serving Areas) and the Committed Serving Areas; provided that a Cable Partner
shall be entitled to substitute cable television systems in which its Parent
directly or indirectly owns an interest (other than a Cable Subsidiary) for a
cable television system included in the Committed Serving Areas if (x) the
Local Operator of any such substitute cable television system executes and
delivers a Local Operator Agreement in the form of the Local Operator Agreement
then being executed and delivered by Cable Subsidiaries (for which purposes
such Local Operator shall be deemed to be a "Cable Subsidiary" so long as a
Cable Partner's Parent owns any equity interest in such Local Operator) and (y)
such substitute cable television system is the equivalent of the cable
television system for which it is substituted in terms of priority of roll-out
in the then current Master Roll-Out Schedule of the respective markets in which
such systems are located and in terms of the numbers of Households Passed by
such systems; provided further that no such substitution shall be permitted if
it would result in the Committed Serving Areas containing fewer than 10,000,000
Households Passed), (vi) the Specifications and Standards (if not previously
adopted by a Unanimous Partner Vote), and (vii) the final form of Local
Operator Agreement (if not previously adopted by a Unanimous Partner Vote). In
adopting the Initial Business Plan, the Partnersshall endeavor to agree upon
procedures pursuant to which a Cable Partner will be permitted to substitute
cable television systems owned by its Cable Subsidiaries for cable television
systems that are included in the Scheduled Serving Areas identified in the
Initial Business Plan. The Initial Business Plan shall contemplate the
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Partnership's achieving a capital structure with approximately equal
proportions of debt and equity (including Partner Loans) and will set forth the
means by which the Partnership proposes to achieve such capital structure.
(b) In connection with the adoption of the Initial
Business Plan, each Cable Partner shall represent and warrant to each other
Partner and to the Partnership that none of the cable television systems in the
Committed Serving Areas are owned by a Cable Subsidiary of such Cable Partner
that, because of applicable legal and fiduciary obligations, such Cable Partner
would not be able to unilaterally cause to enter into a Local Operator
Agreement. In addition, each Cable Partner agrees that it will not take any
action between the date of the adoption of the Initial Business Plan and the
execution of a Local Operator Agreement by a Cable Subsidiary of such Cable
Partner with respect to any Committed Serving Areas that gives rise to any
fiduciary or legal restriction on the ability of such Cable Partner to cause
such Cable Subsidiary to enter into a Local Operator Agreement.
(c) The adoption of the Initial Business Plan shall
require a Unanimous Partner Vote. Pending the adoption of the Initial Business
Plan, the General Partners will, and shall cause their respective
Representatives to, use all commercially reasonable efforts to adopt interim
operating plans and procedures to permit the Partnership and its Subsidiaries
to commence the provision of Wireline Exclusive Services and Wireless
Exclusive Services at the earliest possible date, including the identification
of certain markets for the initial roll-out of Wireline Exclusive Services.
The adoption of such interim operating plans and procedures shall require a
Unanimous Partner Vote.
(d) The Approved Business Plan covering Fiscal Year 1998
and the four succeeding Fiscal Years shall also set forth projected results to
be achieved by NewTelco by September 30, 2002 with respect to (i) residential
penetration rates and (ii) monthly revenue per residential subscriber
(collectively, the "Additional Benchmarks"). The Additional Benchmarks shall
be determined on a basis consistent with that used in determining the
Benchmarks and taking into account the Partnership's results of operations
through the date of approval of such Approved Business Plan. If there is no
Approved Business Plan for such period, the Additional Benchmarks shall be
determined byprojecting to September 30, 2002 the Benchmarks for the last
Fiscal Year in which Benchmarks were established, based upon the annual rate of
change in the Benchmarks for the period from September 30 of the
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year prior to such last Fiscal Year through September 30 of such last Fiscal
Year.
(e) The Chief Executive Officer shall submit annually to
the Management Committee at least ninety (90) days prior to the start of each
Fiscal Year after the Fiscal Year ending December 31, 1995, (i) a proposed
capital expenditure and operating budget (the "Proposed Budget") for the
forthcoming Fiscal Year including an income statement prepared on an accrual
basis which shall show in reasonable detail the revenues and expenses projected
for the business of the Partnership and its Subsidiaries for the forthcoming
Fiscal Year and a cash flow statement which shall show in reasonable detail the
receipts and disbursements projected for the business of the Partnership and
its Subsidiaries for the forthcoming Fiscal Year and the amount of any
corresponding cash deficiency or surplus, and the required Additional Capital
Contributions, if any, and any contemplated borrowings of the Partnership and
its Subsidiaries and (ii) a proposed revised Business Plan ("Proposed Business
Plan") for the Fiscal Year covered by the Proposed Budget and the succeeding
four Fiscal Years in substantially the same or greater detail as the Initial
Business Plan and containing such additional categories of information as may
be appropriate to reflect the progress of the development of the business of
the Partnership and its Subsidiaries. Such Proposed Budget and Proposed
Business Plan shall be prepared on a basis consistent with the Partnership's
audited financial statements. If such Proposed Budget or such Proposed
Business Plan is approved by the Management Committee, then such Proposed
Budget or such Proposed Business Plan, as the case may be, shall be considered
approved and shall constitute the "Annual Budget" or the "Approved Business
Plan," as the case may be, for all purposes of this Agreement and shall
supersede any previously approved Annual Budget or Approved Business Plan, as
the case may be. Except as provided on Schedule 5.1(k), the approval of each
Proposed Budget and Proposed Business Plan and action by the Partnership or any
of its Subsidiaries constituting any material deviation from any Annual Budget
or Approved Business Plan shall require the Required Majority Vote of the
Management Committee. No Approved Business Plan or Annual Budget shall be
inconsistent with the provisions of this Agreement, nor shall this Agreement be
deemed amended by any provision of an Approved Business Plan or Annual Budget.
If a Proposed Budget or Proposed Business Plan is not approved by the Required
Majority Vote of the Management Committee, then the General Partners shall
cause their Representatives to cooperate in good faith and confer with the
Chief Executive Officerand other senior officers of the Partnership for the
purpose of
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attempting to arrive at a Proposed Budget or Proposed Business Plan, as the
case may be, that can secure the approval of the Management Committee.
(f) If, notwithstanding the foregoing procedures, on
January 1 of any Fiscal Year no Proposed Budget has been approved by the
Management Committee for such Fiscal Year, then the Annual Budget for the prior
Fiscal Year, adjusted (without duplication) to reflect increases or decreases
resulting from the following events, shall govern until such time as the
Management Committee approves a new Proposed Budget:
(i) the operation of escalation or de-escalation
provisions in contracts in effect at the time of approval of the prior Fiscal
Year's Annual Budget solely as a result of the passage of time or the
occurrence of events beyond the control of the Partnership to the extent such
contracts are still in effect;
(ii) elections made in any prior Fiscal Year under
contracts contemplated by the Annual Budget for the prior Fiscal Year
regardless of which party to such contracts made such elections;
(iii) increases or decreases in expenses
attributable to the annualized effect of employee additions or reductions
during the prior Fiscal Year contemplated by the Annual Budget for the prior
Fiscal Year;
(iv) changes in interest expense attributable to
any loans made to or retired by the Partnership or its Subsidiaries (including
Partner Loans);
(v) increases in overhead expenses in an amount
equal to the total of overhead expenses reflected in the Annual Budget for the
prior Fiscal Year multiplied by the increase in the Consumer Price Index for
the prior year, but in no event more than five percent (5%);
(vi) the anticipated incurrence of costs during
such Fiscal Year for any legal, accounting and other professional fees or
disbursements in connection with events or changes not contemplated at the time
of preparation of the Proposed Budget for the prior Fiscal Year;
(vii) the continuation of the effects of a decision
made by the Management Committee or the Partners in the prior Fiscal Year
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with respect to any of the matters referred to on Schedules 5.1(j),5.1(k) or
5.1(l) that are not reflected in the Annual Budget for the prior Fiscal Year;
and
(viii) decreases in expense attributable to
non-recurring items reflected in the prior Fiscal Year's Annual Budget.
Any budget established pursuant to this Section 5.2(f) is herein
referred to as a "Default Budget."
(g) If a Proposed Business Plan is submitted for approval
pursuant to this Section 5.2 and is not approved by the requisite vote of the
Management Committee, the Business Plan most recently approved by the
Management Committee pursuant to Section 5.2(e) shall remain in effect as the
Approved Business Plan; provided, that, if a Proposed Budget is approved
pursuant to Section 5.2(e) (and the corresponding Proposed Business Plan is not
so approved), the Approved Business Plan then in effect shall be deemed to be
amended so that the Fiscal Year therein corresponding to the Fiscal Year for
which such Annual Budget has been approved shall be consistent with such Annual
Budget.
(h) The day-to-day business and operations of the
Partnership and its Subsidiaries shall be conducted in accordance with the
Approved Business Plan and the Annual Budget (or Default Budget) then in effect
and the policies, strategies and standards established by the Management
Committee. The Management Committee and the officers and employees of the
Partnership and its Subsidiaries shall implement the Annual Budget and Approved
Business Plan.
5.3 Employees.
The Management Committee will appoint the senior management of the
Partnership and its Subsidiaries and will establish policies and guidelines for
the hiring of employees by the Partnership and its Subsidiaries. The
Management Committee may adopt appropriate management incentive plans and
employee benefit plans.
5.4 Limitation of Agency.
The Partners agree not to exercise any authority to act for or to
assume any obligation or responsibility on behalf of the Partnership or any of
its Subsidiaries except (i) as approved by the Management Committee by
Required Majority Vote, (ii) as approved by written agreement among the General
Partners and (iii) as expressly provided
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herein. No Partner shall have any authority to act for or to assume any
obligations or responsibility on behalf of another Partner under this Agreement
except (i) as approved by written agreement among thePartners and (ii) as
expressly provided herein. Subject to Section 5.6, in addition to the other
remedies specified herein, each Partner agrees to indemnify and hold the
Partnership and the other Partners harmless from and against any claim, demand,
loss, damage, liability or expense (including reasonable attorneys' fees and
disbursements and amounts paid in settlement, but excluding any indirect,
special or consequential damages) incurred by or against such other Partners or
the Partnership and arising out of or resulting from any action taken by the
indemnifying Partner in violation of this Section 5.4.
5.5 Liability of Partners, Representatives and Partnership
Employees.
No Partner, former Partner or Representative or former Representative,
no Affiliate of any thereof, no partner, shareholder, director, officer,
employee or agent of any of the foregoing, nor any officer or employee of the
Partnership, shall be liable in damages for any act or failure to act in such
Person's capacity as a Partner or Representative or otherwise on behalf of the
Partnership or any of its Subsidiaries unless such act or omission constituted
bad faith, gross negligence, fraud or willful misconduct of such Person or a
violation by such Person of this Agreement or an agreement between such Person
and the Partnership or a Subsidiary thereof. Subject to Section 5.6, each
Partner, former Partner, Representative and former Representative, each
Affiliate of any thereof, each partner, shareholder, director, officer,
employee and agent of any of the foregoing, and each officer and employee of
the Partnership, shall be indemnified and held harmless by the Partnership, its
receiver or trustee from and against any liability for damages and expenses,
including reasonable attorneys' fees and disbursements and amounts paid in
settlement, resulting from any threatened, pending or completed action, suit or
proceeding relating to or arising out of such Person's acts or omissions in
such Person's capacity as a Partner or Representative or (except as provided in
Section 5.4) otherwise involving such Person's activities on behalf of the
Partnership or any of its Subsidiaries, except to the extent that such damages
or expenses result from the bad faith, gross negligence, fraud or willful
misconduct of such Person or a violation by such Person of this Agreement or an
agreement between such Person and the Partnership or any of its Subsidiaries.
Any indemnity by the Partnership, its receiver or trustee under this Section
5.5 shall be provided out of
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and to the extent of Partnership Property only.
5.6 Indemnification.
Any Person asserting a right to indemnification under Section 5.4or
5.5 shall so notify the Partnership or the other Partners, as the case may be,
in writing. If the facts giving rise to such indemnification shall involve any
actual or threatened claim or demand by or against a third party, the
indemnified Person shall give such notice promptly (but the failure to so
notify shall not relieve the indemnifying Person from any liability which it
otherwise may have to such indemnified Person hereunder except to the extent
the indemnifying Person is actually prejudiced by such failure to notify). The
indemnifying Person shall be entitled to control the defense or prosecution of
such claim or demand in the name of the indemnified Person, with counsel
satisfactory to the indemnified Person, if it notifies the indemnified Person
in writing of its intention to do so within twenty (20) days of its receipt of
such notice, without prejudice, however, to the right of the indemnified Person
to participate therein through counsel of its own choosing, which participation
shall be at the indemnified Person's expense unless (i) the indemnified Person
shall have been advised by its counsel that use of the same counsel to
represent both the indemnifying Person and the indemnified Person would present
a conflict of interest (which shall be deemed to include any case where there
may be a legal defense or claim available to the indemnified Person which is
different from or additional to those available to the indemnifying Person), in
which case the indemnifying Person shall not have the right to direct the
defense of such action on behalf of the indemnified Person, or (ii) the
indemnifying Person shall fail vigorously to defend or prosecute such claim or
demand within a reasonable time. Whether or not the indemnifying Person
chooses to defend or prosecute such claim, the Partners shall cooperate in the
prosecution or defense of such claim and shall furnish such records,
information and testimony and attend such conferences, discovery proceedings,
hearings, trials and appeals as may reasonably be requested in connection
therewith. The indemnifying Person may not control the defense of any claim or
demand that involves any material risk of the sale, forfeiture or loss of, or
the creation of any lien (other than a judgment lien) on, any material property
of the indemnified Person or could entail a risk of criminal liability to the
indemnified Person, without the consent of such indemnified Person.
The indemnified Person shall not settle or permit the settlement
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of any claim or action for which it is entitled to indemnification without the
prior written consent of the indemnifying Person (which shall not be
unreasonably withheld), unless the indemnifying Person shall have been entitled
to assume the defense thereof pursuant to this Section but failed to do so
after the notice and in the manner provided in the preceding paragraph.
The indemnifying Person may not without the consent of the indemnified
Person agree to any settlement (i) that requires such indemnified Person to
make any payment that is not indemnified hereunder, (ii) does not grant a
general release to such indemnified Person with respect to the matters
underlying such claim or action, or (iii) that involves the sale, forfeiture or
loss of, or the creation of any lien on, any material property of such
indemnified Person. Nothing contained in this Section 5.6 is intended to
authorize the indemnifying Person, in connection with any defense or settlement
as to which it has assumed control, to take or refrain from taking, without the
consent of the indemnified Person, any action which would reasonably be
expected to materially impair the indemnification of such indemnified Person
hereunder or would require such indemnified Person to take or refrain from
taking any action or to make any public statement, which such indemnified
Person reasonably considers to materially adversely affect its interests.
Upon the request of any indemnified Person, the indemnifying Person
shall use reasonable efforts to keep such indemnified Person reasonably
apprised of the status of those aspects of such defense controlled by the
indemnifying Person and shall provide such information with respect thereto as
such indemnified Person may reasonably request. If the defense is controlled
by the indemnified Person, such indemnified Person, upon the request of the
indemnifying Person, shall use reasonable efforts to keep the indemnifying
Person reasonably apprised of the status of those aspects of such defense
controlled by such indemnified Person and shall provide such information with
respect thereto as the indemnifying Person may reasonably request.
5.7 Temporary Investments.
All Property in the form of cash not otherwise invested shall be
deposited for the benefit of the Partnership in one or more accounts of the
Partnership, NewTelco, WirelessCo or any other Subsidiary of the Partnership in
which the Partnership and MinorCo own, in the aggregate, directly or
indirectly, one hundred percent (100%) of the
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outstanding equity interests, maintained in such financial institutions as the
Management Committee shall determine, or shall be invested in accordance with
the guidelines set forth in Schedule 5.7 hereto (which guidelines may be
modified from time to time by the Management Committee), or shall be left in
escrow, and withdrawals shall be made only for Partnership purposes on such
signature or signatures as the Management Committee may determine from time to
time.
5.8 Deadlocks.
(a) Escalation Procedures. Upon the occurrence of a
Deadlock Event, the General Partners shall first use their good faith efforts
to resolve such matter in a mutually satisfactory manner. If, after such
efforts have continued for twenty (20) days, no mutually satisfactory solution
has been reached, the General Partners shall resolve the Deadlock Event as
provided herein:
(i) The General Partners shall (at the insistence
of any of them) refer the matter to the chief executive officers of their
respective Parents for resolution.
(ii) Should the chief executive officers of the
Parents fail to resolve the matter within ten (10) days after it is referred to
them, each General Partner (or any group of General Partners electing to act
together) shall prepare a brief (a "Brief"), which includes a summary of the
issue, its proposed resolution of the issue and considerations in support of
such proposed resolution, not later than ten (10) days following the failure of
the chief executive officers to resolve such dispute, and such Briefs shall be
submitted to such reputable and experienced mediation service as is selected by
the Management Committee by Required Majority Vote or, failing such selection,
by the Chief Executive Officer (the "Mediator"). During a period of twenty
(20) days, the Mediator and the General Partners shall attempt to reach a
resolution of the Deadlock Event.
(iii) In the event that after such twenty (20) day
period (or such longer period as the Management Committee may approve by
Required Majority Vote (or, in the case of a Deadlock Event under Section
5.8(b)(iv) or 5.8(b)(v), by Unanimous Vote)), the General Partners are still
unable to reach resolution of the Deadlock Event (such resolution to be
evidenced by the requisite vote of the Management Committee with respect to the
underlying matters), the Deadlock Event shall constitute a Liquidating Event as
provided in
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Section 15.1(a)(iii) unless the Management Committee determines by Required
Majority Vote (or, in the case of a Deadlock Event under Section 5.8(b)(iv) or
5.8(b)(v), by Unanimous Vote) not to dissolve.
(b) Deadlock Event. A "Deadlock Event" shall be deemed
to have occurred if (i) after failing to approve a Proposed Budget or Proposed
Business Plan for one Fiscal Year, the Management Committee has failed to
approve a Proposed Budget or Proposed Business Plan for the next succeeding
Fiscal Year prior to the commencement of such succeeding Fiscal Year, (ii) the
position of Chief Executive Officer is vacant for a period of more than sixty
(60) days after at least twoPartners with an aggregate of at least thirty-three
percent (33%) of the Voting Percentage Interests have proposed a candidate to
fill such vacancy, (iii) as of September 30 of any Fiscal Year covered by the
Initial Business Plan (excluding the Fiscal Year ending December 31, 1995) (A)
NewTelco has failed to achieve at least eighty-five percent (85%) of either of
the Benchmarks specified to be achieved as of such date in the Initial Business
Plan (or such amended Benchmarks as may be approved by the requisite vote of
the Management Committee pursuant to Section 5.1(j) or (k)) and (B) the
Proposed Budget and Proposed Business Plan for the immediately succeeding
Fiscal Year have not been approved by a Required Majority Vote of the
Management Committee by January 1 of such succeeding Fiscal Year, (iv) as of
September 30 of any Fiscal Year covered by the Initial Business Plan (excluding
the Fiscal Year ending December 31, 1995) (A) NewTelco has failed to achieve at
least seventy-five percent (75%) of either of the Benchmarks specified to be
achieved as of such date in the Initial Business Plan (or such amended
Benchmarks as may be approved by the requisite vote of the Management Committee
pursuant to Section 5.1(j) or (k)) and (B) the Proposed Budget and Proposed
Business Plan for the immediately succeeding Fiscal Year have not been approved
by a Unanimous Vote of the Management Committee by January 1 of such succeeding
Fiscal Year, or (v) as of September 30, 2002, (A) NewTelco has failed to
achieve at least fifty percent (50%) of either of the Additional Benchmarks
adopted pursuant to Section 5.2(d) (or such amended Additional Benchmarks as
may be approved by the Unanimous Vote of the Management Committee) and (B) the
Proposed Budget and Proposed Business Plan for the Fiscal Year ending December
31, 2003 have not been approved by a Unanimous Vote of the Management Committee
by January 1, 2003.
(c) Failure to Satisfy Benchmarks. On or prior to
October 31, 1996, 1997, 1998, 1999 and 2002, the chief financial officer of the
Partnership shall deliver to each Partner a certificate
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signed by the chief financial officer indicating the Partnership's performance
relative to the Benchmarks or the Additional Benchmarks (as applicable) as of
September 30 of such year. The determination of the chief financial officer as
to the Partnership's performance with respect to the Benchmarks and the
Additional Benchmarks shall be final and binding on the Partners unless a
Partner delivers written notice to the other Partners and the Partnership
within fifteen (15) days following its receipt of the chief financial officer's
certificate indicating that such Partner objects to the determinations of the
chief financial officer. In such event, the Partnership shall request the
Accountants to determine whether the Benchmarks or the Additional Benchmarks
have been achieved. The Accountants shall be instructed to deliver written
notice of their determination to each of the Partnersand the Partnership no
later than December 15 of such year, and the Partnership shall bear the costs
and expenses of the Accountants in making such determination. The
determination of the Accountants shall be final and binding on the Partners and
the Partnership.
5.9 Conversion to Corporate Form.
(a) Procedures. In the event that the Management Committee
shall determine by Required Majority Vote (or such other vote as may be
required by Item B. of Schedule 5.1(j)) that it is desirable or helpful for the
business of the Partnership to be conducted in a corporate rather than in a
partnership form (for the purposes of conducting a public offering or
otherwise), the Management Committee shall have the power to incorporate the
Partnership in Delaware. In connection with any such incorporation of the
Partnership, the Partners shall receive, in exchange for their Interests and
any Preferred Interest, shares of capital stock of such corporation having the
same relative economic interests and other rights as such Partners hold in the
Partnership as set forth in this Agreement, subject in each case to (i) any
modifications required solely as a result of the conversion to corporate form
and (ii) modifications to the provisions of Section 5.1 to conform to the
provisions relating to actions of stockholders and a board of directors set
forth in the Delaware General Corporation Law; provided, that the relative
number of representatives on the board of directors and relative voting power
of the outstanding equity interests of such corporation of each General Partner
shall be as nearly as practicable in proportion to the relative Voting
Percentage Interests of the General Partners immediately prior to such
incorporation. For purposes of the preceding sentence, each Partner's relative
economic interest in the Partnership shall equal such Partner's Net Equity as
compared to the
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Net Equity of all of the Partners, as determined in accordance with Section
12.3 except that the Management Committee shall by Required Majority Vote
select a single Appraiser to determine Gross Appraised Value. At the time of
such conversion, the Partners shall enter into a stockholders' agreement
providing for (i) rights of first refusal and other restrictions on Transfer
equivalent to those set forth in Sections 13.1 through 13.4; provided that such
restrictions shall not apply, following the initial Public Offering by the
corporate successor to the Partnership, to sales in broadly disseminated Public
Offerings or sales in accordance with Rule 144 under the Securities Act of 1933
(the "1933 Act"), including the manner of sale required by Rule 144 (whether or
not applicable to such sale) and (ii) an agreement to vote all shares of
capital stock held by them with respect to the election of directors of the
corporation so as to duplicate as closely as possible the management structure
of thePartnership as set forth in Section 5.1, modified as contemplated by the
second sentence of this Section 5.9(a).
(b) Registration Rights. Upon conversion to corporate form,
the corporate successor to the Partnership shall grant to each of the Partners
certain rights to require such successor to register under the 1933 Act the
shares of capital stock received by the Partners in exchange for their
Interests and Preferred Interest. Such rights shall be as approved by the
Required Majority Vote of the Management Committee, provided that the
registration rights of each Partner shall be identical on a proportionate
basis.
(c) Preemptive Rights. Each Partner shall have preemptive
rights, exercisable in accordance with procedures to be established by the
Management Committee in connection with and following the conversion of the
Partnership to corporate form, to purchase equity securities proposed to be
issued from time to time by a corporate successor to the Partnership or its
successor; provided, however, that no Partner shall have any such preemptive
right with respect to any equity securities which, by a vote of the board of
directors of such corporate successor that is equivalent to a Required Majority
Vote, have been approved for issuance by such corporate successor in connection
with (i) a Public Offering or (ii) any acquisition (including by way of merger
or consolidation) by the corporate successor of the equity interests or assets
of another entity that is not a Partner or its Affiliate in a transaction
pursuant to which the purchase price is paid by delivery of such equity
securities to the seller. A "Public Offering" means an offering by the
corporate successor pursuant to a registration statement on a form applicable
to
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the sale of securities to the general public.
SECTION 6. PARTNERSHIP OPPORTUNITIES; CONFIDENTIALITY
6.1 Competitive Activities.
(a) In General. For so long as any Person is a Partner,
neither such Person nor any of its Controlled Affiliates shall engage in any
Competitive Activity in the United States of America (including its territories
and possessions other than Puerto Rico) except (i) through the Partnership and
its Subsidiaries, (ii) pursuant to a Local Operator Agreement or as
contemplated or permitted thereby, (iii) following the expiration of the term
of a Local Operator Agreement with respect to a Serving Area or during any
renewal term that is non-exclusive with respect to a Serving Area, the
provision of Wireline Exclusive Services in such Serving Area or, following the
terminationof a Local Operator Agreement, the provision of Wireline Exclusive
Services in all Serving Areas covered by such Local Operator Agreement, (iv)
subject to Section 6.1(d), as provided in Section 6.1(b) or 6.1(c), or (v) as
permitted by Section 6.1(f), 6.3, 6.4, 6.5 or 9.1(b), or under Exhibit 2 to the
Joint Venture Formation Agreement. The term "Competitive Activity" means to
bid on, acquire or, directly or indirectly, own, manage, operate, join, control
or finance, or participate in the management, operation, control or financing
of, or be connected as a principal, agent, representative, consultant,
beneficial owner of an interest in any Person, or otherwise with, or use or
permit its name to be used in connection with, any business or enterprise which
(i) engages in the bidding for or acquisition of any Wireless Business license
or engages in any Wireless Business or Wireline Business, or (ii) provides,
offers, promotes or brands services that are within the Exclusive Services.
(b) Bidding for Wireless Business Licenses. Except as
permitted by Section 6.4, no Partner nor any of its Controlled Affiliates shall
bid in the PCS Auction for any Wireless Business licenses unless (i) the
Management Committee consents to such bid following consultation by such
Partner with the Representatives of the other Partners; or (ii) (A) WirelessCo
has entered a bid or bids for such license, but a third-party bid has been
entered which equals or exceeds the maximum amount that WirelessCo has
determined to bid for such license, (B) if a vote was taken, such Partner's
Representative(s) voted in favor of WirelessCo's increasing the amount it would
bid for such license, and (C) WirelessCo has determined not
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to increase its bid in response to such third party bid. The purchase price of
a license purchased by or on behalf of a Partner pursuant to this Section
6.1(b) shall be in addition to (and not credited against) such Partner's
Auction Commitment. This Section 6.1(b) will not permit a Partner or its
Affiliate to bid for or acquire a Wireless Business license if the bidding for
or acquisition of such license by a Partner or its Affiliate would otherwise
violate (or cause the Partnership or any of the other Partners or their
respective Affiliates to be in violation of) the FCC's rules or orders relating
to Wireless Business license cross-ownership, license attribution standards,
and/or spectrum attribution or aggregation requirements, including Sections
20.6, 24.204 and 24.229(c) of the FCC's rules to be codified at 47 C.F.R.
Sections 20.6, 24.204 and 24.229(c).
(c) Engaging in Competitive Wireless Activities. If any
Partner or any of its Controlled Affiliates proposes to engage in any
Competitive Activity involving Wireless Exclusive Services other than as
permitted by Section 6.1(b) (or through a Wireless Business license acquired as
permitted by Section 6.1(b)), 6.3, 6.4, 6.5 or 9.1(b),then such Partner shall
first offer to the Partnership the opportunity for the Partnership or any of
its Subsidiaries to engage, in lieu of such Partner and its Affiliates, in such
Competitive Activity (whether by acquiring such interest itself or itself
offering, promoting or branding such services) (the "Offer"), which Offer shall
be made in writing and shall set forth in reasonable detail the nature and
scope of the activity proposed to be engaged in, including all material terms
of any proposed acquisition. The Partnership, for itself or any of its
Subsidiaries (by Required Majority Vote of the Management Committee pursuant to
Section 9.7), shall have thirty (30) days from receipt of the Offer to accept
or reject it. If the Partnership does not accept (for itself or any of its
Subsidiaries), the Offer within such thirty (30) day period, it shall be deemed
to have rejected the Offer, and the offering Partner or its
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Controlled Affiliate shall be permitted to engage in such Competitive Activity
on terms no more favorable to such Partner or its Affiliate than those
described in the Offer. If the Partnership, for itself or any of its
Subsidiaries, accepts the Offer, the offering Partner and its Controlled
Affiliates shall not pursue such opportunity to engage in such Competitive
Activity; provided, however, that if the Partnership or such Subsidiary, as
applicable, does not within a commercially reasonable period of time after such
acceptance take reasonable steps to pursue such opportunity, other than as a
result of a violation of this Agreement or wrongful acts or bad faith on the
part of the offering Partner or its Controlled Affiliates, then the offering
Partner or its Controlled Affiliate shall be permitted to pursue such
opportunity on terms no more favorable to the offering Partner than those terms
described in the Offer. If the offering Partner or its Controlled Affiliate
does not take reasonable steps to pursue such opportunity contemplated by the
Offer within a reasonable period of time after acquiring the right to do so in
accordance with the foregoing provisions of this Section 6.1(c) (including, in
the case of an acquisition, by entering into a definitive agreement (subject
solely to obtaining the requisite regulatory approvals and other customary
closing conditions) with respect to such acquisition within one hundred twenty
(120) days thereafter), then it shall lose its right to pursue such opportunity
and thereafter be required to reoffer the opportunity to do so to the
Partnership in accordance with, and shall otherwise comply with, this Section
6.1(c). Notwithstanding the foregoing, a Partner shall not be permitted to
present an Offer to the Partnership (or otherwise engage in any Competitive
Activity involving Wireless Exclusive Services in reliance on this Section
6.1(c)) (i) involving any Wireless Business other than PCS until one year
following the completion of the PCS Auction (the "Lock-out Period"), or (ii) in
any license area in which the Partnership or any of its Subsidiaries is
otherwise engaged in the Wireless Business (includingpursuant to an Affiliation
Agreement), in any such case without a Unanimous Vote of the Management
Committee pursuant to Section 9.7.
(d) Wireless Business Affiliation Agreements. (i) Any
Partner or Controlled Affiliate thereof that acquires or owns a Wireless
Business license, or directly engages in a Wireless Business, as permitted by
the exceptions provided by Sections 6.1(b), 6.1(c), 6.3(e), 6.3(h) and 9.1(b)
to the prohibitions on Competitive Activities contained in Section 6.1(a),
shall, subject to applicable law, as a condition to the availability of such
exceptions, offer to enter into an affiliation agreement with respect to such
Wireless Business with WirelessCo on terms and conditions comparable to those
which WirelessCo offers to other affiliated Wireless Businesses in similar
situations (or if no such agreement then exists, such terms and conditions
shall include a provision for competitive pricing), under which such Wireless
Business will provide its services to the public as an affiliate of
WirelessCo's business (as entered into with a Partner or its Controlled
Affiliate or any other Person, an "Affiliation Agreement"). The Management
Committee may waive compliance with all or any part of this Section 6.1(d) with
respect to any transaction by Required Majority Vote of the Management
Committee pursuant to Section 9.7.
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(ii) Each Partner and its Controlled Affiliates
shall also use all commercially reasonable efforts to cause any Affiliate of
such Partner which acquires or owns a Wireless Business license, or otherwise
engages in any Wireless Business, and provides services within the Exclusive
Services, to (if WirelessCo so desires) enter into an Affiliation Agreement
with WirelessCo.
(e) Geographic Restrictions on Wireless Business. Unless
approved by a Unanimous Partner Vote, the Partnership and its Subsidiaries will
not engage in any Competitive Activities involving the Wireless Business or any
Wireless Exclusive Services in the Philadelphia, Charlotte, Cleveland, El Paso,
Jacksonville, Knoxville, Omaha or Richmond MTAs, including bidding for or
acquiring any PCS licenses therein; provided that, to the extent permitted by
law, the Partnership and its Subsidiaries may (or, as provided in Sections
6.3(e) and 9.1(b), shall) enter into Affiliation Agreements with Persons
engaged in Competitive Activities in such MTAs.
(f) Unrestricted Activities. Nothing in this Section 6
shall prevent any Person from (i) providing any Non-Exclusive Services or
engaging in any Excluded Business or (ii) complying with any applicable laws,
rules or regulations, including those requiring that any facilities be made
available to any other Person.
6.2 Enforceability and Enforcement.
(a) The Partners acknowledge and agree that the time,
scope, geographic area and other provisions of Section 6.1 have been
specifically negotiated by sophisticated parties and agree that such time,
scope, geographic area, and other provisions are reasonable under the
circumstances. If, despite this express agreement of the Partners, a court
should hold any portion of Section 6.1 to be unenforceable for any reason, the
maximum restrictions of time, scope and geographic area reasonable under the
circumstances, as determined by the court, will be substituted for the
restrictions held to be unenforceable.
(b) The Partnership shall be entitled to preliminary and
permanent injunctive relief, without the necessity of proving actual damages or
posting any bond or other security, to prevent any breach of Section 6.1, which
rights shall be cumulative and in addition to any other rights or remedies to
which the Partnership may be entitled.
6.3 General Exceptions to Section 6.1.
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The restrictions set forth in Section 6.1 on Competitive Activities
shall not be construed to prohibit any of the following actions by a Partner
and its Controlled Affiliates except to the extent any such action would (i)
cause the Partnership (including the ownership of its assets and the conduct of
its business) to be in violation of any law or regulation or otherwise result
in any restriction or other limitation on the Partnership's and its
Subsidiaries' ownership of their respective assets or conduct of their
respective businesses or (ii) in any way impair, prevent or delay the ability
of WirelessCo to bid for or acquire or invest in (or enter into an Affiliation
Agreement with) a Person holding a Wireless Business license during the
Lock-out Period in any license area in which WirelessCo plans to engage in a
Competitive Activity pursuant to or as set forth in the Wireless Strategic
Plan:
(a) The acquisition or ownership of any debt or equity
securities of a Publicly Held Person, provided that such securities (i) were
not acquired from the issuer thereof in a private placement or similar
transaction, (ii) do not represent more than five percent (5%) of the aggregate
voting power of the outstanding capital stock of any Person that engages in a
Competitive Activity (assuming the conversion, exercise or exchange of all such
securities held by such Partner or its Controlled Affiliates that are
convertible, exercisable or exchangeable into or for voting stock) and (iii) in
the case of debt securities, entitle the holder to receive only interest or
otherreturns that are fixed, or vary by reference to an index or formula that
is not based on the value or results of operations of such Person;
(b) The acquisition (through merger, consolidation,
purchase of stock or assets, or otherwise) of a Person or an interest in a
Person, which engages (directly or indirectly through an Affiliate that is
controlled by such Person) in any Competitive Activity if either (i) such
acquisition results from a foreclosure or equivalent action with respect to
debt securities permitted to be held under Section 6.3(a) or (ii) the
Competitive Activity does not constitute the principal activity, in terms of
revenues or fair market value, of the businesses acquired in such acquisition
or conducted by the Person in which such interest is acquired, provided, in
each case, that such Partner or Controlled Affiliate divests itself of the
Competitive Activity or interest therein as soon as is practicable, but in no
event later than twenty-four (24) months, after the acquisition unless the
Management Committee approves the entering into
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of an Affiliation Agreement with respect to such Competitive Activity pursuant
to Section 9.7;
(c) The continued holding of an equity interest in a Person
that commences a Competitive Activity following the acquisition of such equity
interest if neither the Partner nor its Controlled Affiliate has any
responsibility or control over the conduct of such Competitive Activity, does
not permit its name to be used in connection with such Competitive Activity and
uses all commercially reasonable efforts, including voting its equity interest,
to cause such Person either (i) to cease such Competitive Activity or (ii) to
offer to enter into an Affiliation Agreement with the Partnership and its
Subsidiaries;
(d) The conduct of any Competitive Activity that is a
necessary component of or an incidental part of the conduct of any Excluded
Business by a Partner or its Controlled Affiliates or the entering into of an
arrangement with an independent third party for the provision of any services
included in the Exclusive Services which is a necessary component of or an
incidental part of the conduct of such Excluded Business, so long as, in each
case, such Partner or Controlled Affiliate shall first use all commercially
reasonable efforts to negotiate agreements with the Partnership or one of its
Subsidiaries, which are reasonable in the independent judgment of both
parties, pursuant to which the Partnership or such Subsidiary would provide
such services included in the Exclusive Services on terms no less favorable to
the Partner or such Controlled Affiliate than such Partner or Controlled
Affiliate could obtain from anindependent third party or could provide itself;
(e) The ownership and operation by (i) a partnership of
Sprint, TCI and Cox and/or their respective Affiliates of a PCS license and an
associated Wireless Business in the Philadelphia MTA ("PhillieCo") and (ii) any
of Cox, Comcast and TCI or their Affiliates (acting singly or jointly through a
partnership or other entity) of a PCS License and an associated Wireless
Business in any of the Charlotte, Cleveland, El Paso, Jacksonville, Knoxville,
Omaha and Richmond MTAs, provided in each case that, subject to applicable law,
such owners or entities holding the licenses enter into Affiliation Agreements
with the Partnership and its Subsidiaries;
(f) The conduct of any Competitive Activity involving the
Wireless Business or any Wireless Exclusive Services involving the provision of
any product or service that is an ancillary value-added
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addition to a Wireless Business and which does not itself require an FCC
license (including operator services, location services and weather, sports and
other information services);
(g) The ownership and operation by Sprint's Controlled
Affiliates of their cellular businesses within the Sprint Cellular Service
Area;
(h) The ownership and operation by Cox or its Affiliate
of PioneerCo, so long as PioneerCo, subject to applicable law, enters into an
Affiliation Agreement with the Partnership;
(i) The continuing ownership by an Affiliate of Sprint of
its current ownership interest in Iridium or the provision of any services by
Iridium so long as Iridium is not an Affiliate of Sprint;
(j) The ownership by a Controlled Affiliate of Comcast of
any ownership interest in Nextel and the provision of any services by Nextel,
subject to Section 6.4(f) of this Agreement;
(k) The continuing ownership by a Controlled Affiliate of
TCI of its current ownership interest in American Mobile Systems ("AMS") or any
ownership interest in Nextel into which TCI's AMS interest may be converted or
exchanged or the provision of any services by AMS or by Nextel so long as
Nextel is not an Affiliate of TCI; provided, however, that if AMS is an
Affiliate of TCI at any time more than one year following the end of any fiscal
year of AMS in which (i) AMS's revenue derived from Exclusive Services exceeds
$15,000,000 or (ii) AMS engages in the business of providing any Exclusive
Service other than SMR or ESMR (as such terms are defined inSchedule 1.10(b)),
then TCI will automatically (without any action required to be taken by the
Partnership or any Partner) become an Exclusive Limited Partner; provided
further if TCI becomes an Exclusive Limited Partner pursuant to this Section
6.3(k), TCI will automatically (without any action required by the Partnership
or any Partner) be returned to the status of General Partner if AMS ceases to
be an Affiliate of TCI;
(l) The continuing ownership by a Controlled Affiliate of
TCI of its current ownership interest in MTS Limited Partnership ("MTS") or the
provision of any services by MTS so long as MTS is not an Affiliate of TCI;
(m) The continuing ownership by a Controlled Affiliate of
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TCI of its current ownership interest in General Communication Inc. ("GCI") or
the provision of any services by GCI so long as GCI is not an Affiliate of TCI;
(n) The continuing ownership by a Controlled Affiliate of
TCI of its current ownership interest in Western Tele-Communications, Inc.
("WTCI") or the conduct by WTCI of its current business;
(o) Subject to the terms of the Teleport Contribution
Agreement, the continuing ownership by the Cable Partners or their respective
Controlled Affiliates of the Comcast Teleport Assets, Cox Teleport Assets and
TCI Teleport Assets or the provision by any of TCG Inc., TCG Partners or the
"Local Joint Ventures" (as defined in the Teleport Contribution Agreement) of
Wireline Exclusive Services in the areas where such entities currently operate
or commence operations after the date hereof as permitted by the Teleport
Contribution Agreement, provided that neither TCG Inc. or TCG Partners, nor
their respective Subsidiaries or the Local Joint Ventures is offering or
providing Wireline Exclusive Services to residential customers while such
ownership continues, except in connection with certain trials of the provision
of Wireline Exclusive Services to residential customers conducted in
conjunction with the Partnership or NewTelco;
(p) The provision and transport of Wireline Exclusive
Services by LEC properties owned by Controlled Affiliates of Sprint in the
Current Sprint LEC Territory or in areas serviced by LEC properties
subsequently acquired by Controlled Affiliates of Sprint in compliance with
Section 6.5(f);
(q) The provision by Sprint's Controlled Affiliates of
"dial around" calling (e.g., dial 10333) calls; provided that in the case of a
"dial around" 0+ or 1+ call originated on a NewTelco-subscribed line that is
not a 75 Mile Plus Call, Sprint or its Controlled Affiliate shall bill the call
and forward to NewTelco revenue equal to the lesser of (i) the amount that
NewTelco would have charged for such call if it had been carried over
NewTelco's facilities or (ii) the amount charged by Sprint for such call, in
each case reduced by Sprint's costs of providing and billing such call;
(r) The provision by Sprint's Controlled Affiliates of
any calls that are not 75 Mile Plus Calls and are originated by a non-NewTelco
customer;
(s) The choice by Sprint's Controlled Affiliates of the
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method of termination for 75 Mile Plus Calls terminated to a non-NewTelco
customer;
(t) The provision and transport by Sprint's Controlled
Affiliates of intra-LATA calls that are not 75 Mile Plus Calls if (but only for
so long as) the calls cannot be carried over facilities owned by NewTelco or
provided by Local Operators to NewTelco or leased by NewTelco from others
(including Affiliates of Sprint) or if NewTelco chooses not to provide or
transport such calls;
(u) The provision by any Controlled Affiliate of a Cable
Partner of Wireline Exclusive Services through a cable television system of
such Controlled Affiliate so long as the revenues attributable to the provision
of such Wireline Exclusive Services using the facilities of such cable
television system do not constitute in any Fiscal Year more than one percent
(1%) of the total revenues of such cable television system for such Fiscal
Year; provided that at such time as NewTelco commences providing Wireline
Exclusive Services within the territory served by such cable television system,
the Partner whose Controlled Affiliate is providing such Wireline Exclusive
Services pursuant to this Section 6.3(u) shall cause such Controlled Affiliate,
promptly following the receipt of written notice from NewTelco, to offer to
Transfer to NewTelco such Controlled Affiliate's business of providing Wireline
Exclusive Services in such territory, and to Transfer, lease or otherwise make
available (at the election of such Controlled Affiliate) to NewTelco the assets
of such Controlled Affiliate that are utilized in the provision of Wireline
Exclusive Services in such territory, such offer in each case to be on
commercially reasonable terms. If NewTelco has not accepted such offer and
NewTelco and such Controlled Affiliate have not agreed on alternative terms
within sixty (60) days following NewTelco's receipt of such offer, such
Controlled Affiliate shall be entitled to continue to conduct its business of
providing Wireline Exclusive Services in such territory, subject to the
limitation on revenues set forth in thefirst sentence of this Section 6.3(u);
and
(v) Subject to the terms of any applicable Other CAP
Business Contribution Agreement, the continuing ownership by a Cable Partner or
its Controlled Affiliates of an Other CAP Business or the provision by any of
such Other CAP Businesses of Wireline Exclusive Services in the areas where
such entities currently operate or commence operations after the date hereof as
permitted by the applicable Other CAP Business Contribution Agreement, which
areas, in the case of the Other CAP Businesses owned by Controlled Affiliates
of
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Comcast, shall consist of the following: (A) in the case of Comcast CAP of
Philadelphia, Inc. and its majority-owned subsidiary Eastern TeleLogic
Corporation, the areas within the scope of Exhibit B (a copy of which
previously has been provided to the Partners) to the Stockholders' Agreement
for Eastern TeleLogic Corporation dated November 5, 1992, and (B) in the case
of M H Lightnet, Inc. ("MHL"), to the extent of the areas located in Essex,
Hudson, Middlesex, Morris, Somerset and Union Counties, New Jersey, that are
south of US Interstate 80.
Notwithstanding anything to the contrary in this Section 6, any investment fund
in which a Partner or any of its Affiliates has an investment (including
pension funds) that invests funds on behalf of and has a fiduciary duty to
third party investors shall be permitted to engage in or invest in entities
engaged in any activity whatsoever; provided that, neither such Partner nor any
of its Controlled Affiliates, directly or indirectly, exercises any management
or operational control whatsoever in any such entity engaging in a Wireless
Business or Wireline Business.
6.4 Comcast Exceptions.
The restrictions set forth in Section 6.1 shall not apply with
respect to the following:
(a) Subject to the limitations set forth in this Section
6.4, Comcast and its Controlled Affiliates may engage in any Competitive
Activities with respect to any Wireless Business in the Comcast Area.
(b) Comcast and its Controlled Affiliates may participate
in a bid for and/or acquire any interest in a 10 MHz PCS license only in any of
the BTAs in the Philadelphia MTA or the Allentown, Pennsylvania BTA. Comcast
and its Controlled Affiliates may acquire any interest in a 10 MHz PCS license
in any of the following cellular license areas in New Jersey: Hunterdon
County, Middlesex County,Monmouth County and Ocean County; provided, that at
the time of such acquisition Comcast and its Controlled Affiliates own a
controlling interest in a cellular license for such area and further provided,
that the license area of such 10 MHz license shall not extend beyond such area
in other than an immaterial manner. In the event Comcast and its Controlled
Affiliates own a controlling interest in any such 10 MHz PCS license, then
Comcast and its Controlled Affiliates will, to the extent permitted by
applicable law, provide for their customers
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receiving services under any such 10 MHz PCS license to receive roaming
services from any of WirelessCo's or its Affiliate's businesses providing
services under any PCS license (the "Partnership's Businesses"), subject to the
conditions that (i) such roaming is technically feasible, (ii) such roaming is
at competitive rates and on other terms and conditions reasonably acceptable to
Comcast and its Controlled Affiliates, (iii) the Partnership's Businesses
support the features and services provided by Comcast and its Controlled
Affiliates to their customers and (iv) subject to the same conditions, the
Partnership's Businesses will provide for their customers to receive reciprocal
roaming services from Comcast and its Controlled Affiliates in the areas
described above at such times as neither PhillieCo nor WirelessCo owns or has
an affiliation with respect to a Wireless Business license for such areas.
Notwithstanding the foregoing, if the ownership by Comcast or any of its
Controlled Affiliates of any 10 MHz PCS license outside of the Philadelphia MTA
(A) causes WirelessCo (including the ownership of its assets and the conduct of
its business) to be in violation of any law or regulation or otherwise results
in any restriction or other limitation on WirelessCo's ownership of its assets
or conduct of its business or (B) in any way impairs, prevents or delays the
ability of WirelessCo to bid for or acquire a Wireless Business license in any
license area in which WirelessCo plans to engage in a Competitive Activity
pursuant to or as set forth in the Wireless Strategic Plan or its then-current
Approved Business Plan, Comcast and its Controlled Affiliates will be
prohibited from making such acquisition or, if such acquisition has already
occurred, will cure the circumstances described above (including, if required,
by divesting its ownership of the 10 MHz PCS license) within a commercially
reasonable period of time after its receipt of notice from WirelessCo of the
existence of such circumstances; provided that, in the event of such
divestiture, Comcast and its Controlled Affiliates will have the right to
resell service in such area provided such resale shall occur using WirelessCo's
facilities if they are available and it is technically feasible to do so.
(c) Comcast and its Controlled Affiliates may engage in
any Competitive Activities utilizing its currently held SMR assets withinthe
territory covered by its current SMR licenses.
(d) Comcast and its Controlled Affiliates may engage in
any Competitive Activities with respect to any Wireless Business in the
Kankakee, Illinois RSA cellular license area as well as the cellular license
area served by Indiana Cellular Holdings, Inc., Harrisburg
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Cellular Telephone Company, Aurora/Elgin Cellular Telephone Company, Inc. and
Joliet Cellular Telephone Company, Inc.; provided that such Competitive
Activities are confined to the geographic territories of the cellular licenses
currently held by such businesses.
(e) Comcast and its Controlled Affiliates may participate
in regional marketing activities within the Comcast Area for the purpose of:
(i) selling to its "In-Territory Customers" (as defined below) wireless
services within the Washington, D.C., New York and Philadelphia MTAs; and (ii)
obtaining distribution from its "In-Territory Distributors" (as defined below)
of wireless services within the Washington, D.C., New York and Philadelphia
MTAs; provided that (A) Comcast and its Controlled Affiliates do not maintain
or deploy any sales personnel, sales office or other direct sales presence, or
otherwise advertise or promote the Comcast brand or any other brand, in either
the New York MTA or the Washington, D.C. MTA outside of the Comcast Area, (B)
Comcast and its Controlled Affiliates do not own or lease any wireless
transmission facilities outside of the Comcast Area in connection therewith and
(C) in obtaining the distribution contemplated by Section 6.4(e)(ii), Comcast
and its Controlled Affiliates subcontract the provision of wireless services
outside the Comcast Area to a third party provider only if such services cannot
be subcontracted to WirelessCo without material adverse consequences for
Comcast's and its Controlled Affiliates' ability to participate in such
regional marketing activities. For the purposes hereof, an "In-Territory
Customer" is a customer that has a business location in the Comcast Area and
places the order for the services described above through Comcast and its
Controlled Affiliates in the Comcast Area. For the purposes hereof, an "In-
Territory Distributor" is a distributor that has a business location in the
Comcast Area and requires a regional contract be entered into by Comcast and
its Controlled Affiliates in the Comcast Area. For purposes of this Section
6.4(e), the term "Comcast Area" shall include any area in which Comcast and its
Controlled Affiliates at such time own a controlling interest in a PCS license
which was permitted to be acquired under Section 6.4(b).
(f) Comcast and its Controlled Affiliates may hold an
interest in Nextel Communications, Inc. ("Nextel"), provided that (i) none of
Comcast's or its Controlled Affiliates' Agents participatein or are present at
any discussions, or receive any information, regarding Nextel's PCS bidding
strategies; and (ii) at the election of Comcast, no later than October 24,
1995, either (A) Comcast and its Controlled Affiliates shall own securities
representing less than 5.4%
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of the voting power and equity of all of the outstanding capital stock of
Nextel, (B) no Agent of Comcast or any of its Controlled Affiliates shall be a
director or officer of Nextel, and no director of Nextel shall be an appointee
of Comcast or its Controlled Affiliates pursuant to any contractual right of
Comcast and its Controlled Affiliates to appoint any director of Nextel, or (C)
Comcast shall elect to become an Exclusive Limited Partner as of such date by
giving written notice of such election to the Partnership; provided, however,
that if Comcast and its Controlled Affiliates (x) fail to satisfy either of
clauses (A) or (B) above at any time after October 24, 1995 or (y) acquire any
additional common stock or other voting securities (or securities convertible
into or exchangeable for common stock or voting securities) of Nextel (as to
(y) only, other than as a result of (I) the exercise of its existing stock
option to acquire 25,000,000 shares and warrants to acquire 230,000 shares (in
each case as in effect as of October 24, 1994) and (II) the consummation of its
required purchase obligation in the original amount of $50,000,000 under that
certain Stock Purchase Agreement dated as of September 14, 1992, among Comcast
Parent, Comcast FCI, Inc. and Fleet Call, Inc., as amended by that certain
Amendment to Stock Purchase Agreement dated as of January 31, 1995 among
Comcast Parent, Comcast FCI, Inc. and Nextel (as the successor to Fleet Call,
Inc.) (the "Nextel Purchase Agreement")) then Comcast will automatically
(without any action required to be taken by the Partnership or any Partner)
become an Exclusive Limited Partner. Notwithstanding the preceding sentence,
if (1) such acquisition is the result of the exercise by Comcast and its
Controlled Affiliates of preemptive rights granted under the Nextel Purchase
Agreement, (2) Comcast and its Controlled Affiliates exercise any available
registration rights within ten (10) days following such exercise of preemptive
rights or (if no registration rights are available) otherwise seek to Transfer
such common stock as soon as practicable, and (3) all of the Nextel common
stock so acquired is Transferred to a non-Affiliate of Comcast and its
Controlled Affiliates within two hundred forty (240) days of the date of
acquisition thereof, then Comcast will automatically (without any action
required by the Partnership or any Partner) be returned to the status of
General Partner if it satisfies either of clauses (A) or (B) above and is not
otherwise required to be an Exclusive Limited Partner under this Section
6.4(f). If Comcast has become an Exclusive Limited Partner pursuant to this
Section 6.4(f) and has on or before October 24, 1995, presented the Partnership
in writing with a plan providing for the disposition of an ownership interest
in Nextel suchthat following such disposition Comcast and its Controlled
Affiliates will satisfy the requirements of clause (A) above, then comcast will
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automatically (without any action required by the Partnership or any Partner)
be returned to the status of General Partner at such time as such plan (or a
substantially similar plan) is consummated if such consummation occurs prior to
October 24, 1996 and if Comcast is not otherwise required to be an Exclusive
Limited Partner under this Section 6.4(f). If at any time following the date
hereof Comcast and its Controlled Affiliates own more than 31% of the common
stock of Nextel on a fully diluted basis (provided that at such time Nextel has
a total market capitalization of at least $2,000,000,000), or own 50% or more
of the common stock of Nextel on a fully-diluted basis (regardless of Nextel's
total market capitalization), Comcast shall provide written notice to the
Partnership and to each other Partner of the acquisition of such ownership
interest (or the occurrence of any event causing Comcast and its Controlled
Affiliates to exceed such ownership threshold) within five (5) days of such
acquisition (or the occurrence of such event). The other Partners will have
the option, exercisable within ninety (90) days of the date of such notice, to
purchase the Interest of Comcast at its Net Equity Value for cash at a closing
to be held no later than ninety (90) days from the date such option is
exercised. Such purchase shall occur in accordance with the procedures set
forth in Section 12 as if Comcast is an "Adverse Partner" and each of the other
Partners is a "Purchasing Partner."
(g) The term "Comcast Area" means (i) the following
cellular license areas (or portions thereof) in New Jersey: Hunterdon NJ1 RSA,
New Brunswick MSA, Long Branch MSA, Trenton MSA, Allentown, PA MSA,
Philadelphia MSA, Ocean NJ2 RSA, Atlantic City MSA, Vineland-Millville MSA, and
Wilmington, DE MSA; (ii) Delaware; (iii) Maryland RSA2; (iv) counties in
Pennsylvania in which Comcast and its Controlled Affiliates engaged in the
cellular business as of October 24, 1994, and all counties in Pennsylvania
contiguous thereto; (v) the Philadelphia MTA; and (vi) minor overlaps into any
territory adjoining any of the areas included in (i) - (v) required to
efficiently provide services in such area.
(h) The obligations under Section 6.1(d) shall not apply
to Comcast and its Controlled Affiliates with respect to any Competitive
Activities permitted pursuant to this Section 6.4.
(i) Comcast and its Controlled Affiliates may co-brand or
package any Wireless Exclusive Services permitted to be provided pursuant to
this Section 6.4 together with their cable television offerings; provided that
in such event the only brand name(s) which may be used for any such Wireless
Exclusive Services are any of the
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following, any combination thereof or any variants thereof substantially
similar thereto: Comcast, Comcast Cellular, Comcast Metrophone, Metrophone,
Comcast Cellular One and Cellular One, which Comcast represents are currently
utilized by its cellular business in the Comcast Area as of the date hereof;
provided further, however, that Comcast may request that the Partnership
approve the use by Comcast and its Controlled Affiliates of another brand name
(other than that of an inter-exchange carrier), in which case the Partnership's
consent to the use thereof will not be unreasonably withheld.
(j) Comcast and its Controlled Affiliates may perform their
respective obligations under the Facilities Lease Agreement between
Metropolitan Fiber Systems of New Jersey, Inc. ("MFS") and MHL dated June 30,
1993 (the "MFS Lease"), and under the terms of any agreement with MFS pursuant
to which Comcast and its Controlled Affiliates obtain the right to Transfer,
lease or otherwise make available to NewTelco (pursuant to an Other CAP
Business Contribution Agreement) the assets or the use of the assets of the
Other CAP Business of MHL now subject to the MFS Lease; provided that any such
agreement shall not expand the obligations of Comcast and its Controlled
Affiliates as they now exist under the MFS Lease unless approved by the
Management Committee.
6.5 Overlaps.
(a) General. That portion of any Current Sprint LEC
Territory that is overlapped by an Incumbent Cable Partner Cable System as of
October 24, 1994 is referred to herein as an "Existing Overlap Territory".
Schedule 6.5(a) (which is not intended to be binding or to alter in any way the
determination of the actual Existing Overlap Territory) provides an
illustration of the Existing Overlap Territories. The Partners will attempt to
resolve such overlaps as provided in this Section 6.5.
(b) Key Market. Sprint will use its commercially
reasonable efforts to attempt to resolve the overlap in a key market that has
been agreed upon by the Partners by effecting or causing its Controlled
Affiliates to effect a swap of the LEC properties of Sprint and its Controlled
Affiliates in such market for LEC properties in markets that are not serviced
by Incumbent Cable Partner Systems or by taking other commercially reasonable
actions.
(c) Other Markets. Sprint and the Cable Partners will
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discuss in good faith the resolution of conflicts in Existing Overlap
Territories in other markets. Actions to be considered by Sprint andthe
affected Cable Partner shall include (i) swapping conflicted LEC properties for
LEC properties in markets that are not serviced by Incumbent Cable Partner
Cable Systems, (ii) swapping conflicted cable television systems for cable
television systems in markets that are outside the Current Sprint LEC
Territories and (iii) taking other commercially reasonable actions to remove
the conflict. In addition, to the extent permitted by law, Sprint and the
affected Cable Partner will consider jointly providing through their respective
Controlled Affiliates a broadband network for cable television and wireline
telephone systems in conflicted territories.
(d) OverlapCo. Unless and until Sprint and the Cable
Partners are able to resolve by mutual agreement any conflicts in an Existing
Overlap Territory, NewTelco will not be permitted to provide any Wireline
Exclusive Services or Non-Exclusive Services to end users in such Existing
Overlap Territory. If such conflict has not been resolved to the mutual
satisfaction of Sprint and the affected Cable Partner within one hundred eighty
(180) days following the execution of this Agreement with respect to any
Existing Overlap Territory, one or more of the Cable Partners may (directly or
through one or more partnerships consisting only of Cable Partners and their
Controlled Affiliates), at any time thereafter commence the provision of
Wireline Exclusive Services in such Existing Overlap Territory and accept the
rights and benefits contemplated by this Section 6.5(d) (each such business
providing such services that has notified NewTelco of its acceptance of such
rights and benefits being hereinafter referred to as "OverlapCo" unless and
until it thereafter notifies NewTelco that it has ceased accepting such rights
and benefits). Any Partner or Partners establishing OverlapCo shall within
five (5) days following the formation of OverlapCo give notice thereof to the
Management Committee and the other Partners. Each OverlapCo will provide
services only within the Existing Overlap Territory for which it is formed and
such adjacent non-overlap territories as Sprint and the Cable Partners agree
are necessary on a market-by-market basis so that the service area of OverlapCo
is of sufficient size for commercial operation.
OverlapCo will be permitted to contract with the operator of
the Incumbent Cable Partner System in the Existing Overlap Territory to develop
Local Operator Facilities and to provide the types of services within the
Existing Overlap Territory that are contemplated to be provided by Local
Operators under the Local Operator Agreements.
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OverlapCo will operate under a brand (other than the Sprint Brand) that it may
develop or acquire. The Incumbent Sprint LEC will operate under the Sprint
Brand in the Existing Overlap Territory.
At the request of OverlapCo, NewTelco will enter into a
support agreement with OverlapCo pursuant to which OverlapCo will have the
right to acquire from NewTelco any or all of the products and services offered
by NewTelco and otherwise receive support from NewTelco on the terms provided
in such support agreement (which in any event shall be no less favorable to
OverlapCo than the terms on which the Incumbent Sprint LEC is acquiring
products and services, if any, from NewTelco). If any such support agreement
is entered into with OverlapCo, the Incumbent Sprint LEC in the Existing
Overlap Territory shall have the right, with respect to products and services
that it is acquiring or may in the future acquire from NewTelco, to acquire
such products and services on a contract basis on terms no less favorable than
the terms on which such products and services are provided to OverlapCo. The
Partners will cooperate in good faith to ensure that, to the maximum extent
possible in compliance with applicable law and regulation, NewTelco may provide
products and services to OverlapCo and the Incumbent Sprint LEC as contemplated
hereby.
OverlapCo and the Incumbent Sprint LEC each will act as a
nonexclusive distribution agent for products and services of WirelessCo. The
terms of each such distribution agency agreement shall be substantially
similar, except that OverlapCo may provide WirelessCo products and services
under the Sprint Brand as well as under any other brand that OverlapCo may
develop or acquire. WirelessCo may distribute its products and services
directly in the Existing Overlap Territories.
(e) Non-Cable Partner Markets. The Incumbent Sprint LECs
may continue to operate free of the restrictions of this Agreement in those
portions of the Current Sprint LEC Territory that are not Existing Overlap
Territories (the "Non-Overlap Areas"). NewTelco will not provide any Wireline
Exclusive Services or Non-Exclusive Services to end users in the Non-Overlap
Areas. WirelessCo may distribute its services and products in the Non-Overlap
Areas, and the Incumbent Sprint LECs will be nonexclusive agents for the
distribution of WirelessCo products and services in the Non-Overlap Areas.
If the Incumbent Sprint LEC determines to replace its existing
plant in the Non-Overlap Areas with a broadband network and to offer cable
television programming, the Cable Partners will provide
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strategic and technical advice and other consulting services to Sprint on terms
reasonably satisfactory to each party, with the intent of permitting the
Incumbent Sprint LEC to compete as effectively as possible in the cable
television business. The service fee to be paid for such services will be
negotiated in good faith by Sprint and the Cable Partners taking into account
all relevant costs to the CablePartners of providing such services.
The Incumbent Sprint LECs operating in the Non-Overlap Areas
will have the right to acquire any or all of the products and services offered
by NewTelco on a contract basis at arms'-length rates.
(f) Acquisition of Additional LECs. Sprint and its
Controlled Affiliates will not acquire (and, since October 24, 1994, have not
acquired) additional LEC properties (including by way of expansion of the
Current Sprint LEC Territories) other than (i) LEC properties that service
Households located entirely within the MSAs identified on Schedule 6.5(f) and
(ii) LEC properties that service Households located entirely in any non-MSA
area; provided in each case that such acquisitions will be permitted only if
the acquired LEC properties do not overlap a territory (x) in which NewTelco is
then operating or which is subject to a Local Operator Agreement between
NewTelco and the operator of the cable television system in such territory
(whether or not operations have commenced) or (y) in which a Cable Partner or
its Affiliates owns a cable television system if such Cable Partner or
Affiliate is scheduled, in accordance with the then-current Master Roll-Out
Schedule, to enter into a Local Operator Agreement with NewTelco, or with
respect to which such Cable Partner or Affiliate has requested an accelerated
roll-out in accordance with Exhibit 2 to the Joint Venture Formation Agreement.
If Sprint or its Controlled Affiliates acquire additional LEC properties in
accordance with this Section 6.5(f), the Cable Partners and their Controlled
Affiliates may provide Wireline Exclusive Services through OverlapCo or
pursuant to Section 6.5(h) in the territories served by such LEC properties.
(g) Acquisition of Additional Cable Properties. Unless
they comply with the provisions of this Section 6.5(g), neither the Cable
Partners nor any of their Controlled Affiliates will (i) prior to October 24,
1997, acquire any cable television system that serves more than five percent
(5%) of the Households in any of the Cincinnati, Ohio, Rochester, New York, or
Lincoln, Nebraska MSAs or (ii) acquire any cable television system (other than
an Incumbent Cable Partner Cable System) the Households Passed by which on the
date
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of such acquisition would cause (together with the Households Passed by all
other cable television systems then owned by such Cable Partner and its
Controlled Affiliates in such state, other than Households Passed located in
the Existing Overlap Territories and in the Affiliate Territories) an overlap
of more than five percent (5%) of the Households serviced (as calculated by
Sprint as of the end of each calendar year in accordance with the requirements
of Form M (or any successor form) required to be filed by Tier 1 LECs pursuant
to 47C.F.R. Part 43, which calculation shall be set forth in a written notice
delivered to each Cable Partner within five (5) Business Days of the date that
the Sprint LECs file Form M with the FCC) in any state by an Incumbent Sprint
LEC (or group of Incumbent Sprint LECs in states where multiple Sprint LECs
provide service) then owned by Sprint and its Controlled Affiliates or by any
LEC (or LECs) then owned by Sprint and its Controlled Affiliates that was
acquired by Sprint and its Controlled Affiliates prior to such time in
compliance with Section 6.5(f). In the case of any acquisition not otherwise
permitted by this Section 6.5(g), the Cable Partner making or whose Controlled
Affiliate is making such acquisition will use all commercially reasonable
efforts to divest or cause such Controlled Affiliate to divest as promptly as
practicable that portion of the acquired cable properties that exceeds the
"five percent (5%)" limit in the applicable of clause (i) or (ii) of the first
sentence of this Section 6.5(g). Such divestiture may be delayed to the extent
necessary to comply with applicable laws and regulations or to avoid materially
adverse tax consequences; provided that the Cable Partner must use all
commercially reasonable efforts to obtain promptly any consents and approvals
necessary for such divestiture to comply with applicable laws and regulations;
and provided further, any delay attributable to the avoidance of materially
adverse tax consequences shall not continue for longer than the earlier to
occur of (i) the expiration of such time period as is necessary to avoid such
material adverse tax consequences and (ii) the first Business Day following the
fifth anniversary of the Cable Partner's acquisition of such property.
If an overlap is created by the acquisition of cable
properties by a Cable Partner or its Controlled Affiliates in a territory
referred to in the first sentence of this Section 6.5(g), but the applicable
cable properties are not required by the immediately preceding paragraph to be
divested, if a governmental agency or court requires divestiture by Sprint or
its Controlled Affiliate or by the Cable Partner or its Controlled Affiliate of
one of the properties giving rise to such overlap, the Cable Partner making the
acquisition will be responsible for taking actions
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necessary to satisfy the requirements of such governmental agency or court,
including (if necessary) divesting the conflicted cable television system.
If an overlap is created by the acquisition of cable
properties by a Cable Partner in a territory referred to in the first sentence
of this Section 6.5(g), and the Cable Partner is not required to divest such
cable properties pursuant to the first paragraph of this Section 6.5(g), (i)
the provisions of Section 6.5(e) (including the rights accorded to the
Incumbent Sprint LEC) shall apply to suchconflicted areas to the same extent as
if it were a Non-Overlap Area, and (ii) no Cable Partner nor any of its
Controlled Affiliates will be permitted to provide Exclusive Wireline Services
or Non-Exclusive Services through OverlapCo or NewTelco in the conflicted area.
The acquisition by a Cable Partner or its Controlled Affiliates after
October 24, 1994 of additional equity interests in a Local Operator in which it
owned an equity interest as of October 24, 1994, shall not be construed for
purposes of this Section 6.5(g) to be an acquisition of a cable television
system; provided, however, that if such an acquisition causes such Local
Operator to become a Controlled Affiliate of such Cable Partner, (i) such
acquisition shall be deemed for purposes of this Section 6.5(g) to be an
acquisition of a cable television system to the extent of any expansion by
acquisition of additional cable television systems of the geographic area
serviced by the cable television system(s) owned by such Local Operator beyond
the geographic area serviced by such cable television system(s) as of October
24, 1994 (the "Affiliate Territories"), and (ii) thereafter, any acquisition of
a cable television system by such Local Operator shall be subject to the
limitations set forth in this Section 6.5(g).
(h) Non-OverlapCo Markets. If a conflict with respect to
an Existing Overlap Territory has not been resolved by mutual agreement of
Sprint and the Cable Partners in accordance with Section 6.5(d), and Wireline
Exclusive Services are not then being provided in such Existing Overlap
Territory by an OverlapCo, the Cable Partner or its Affiliate that operates the
Incumbent Cable Partner Cable System in such Existing Overlap Territory may
provide Wireline Exclusive Services in such Existing Overlap Territory free of
the restrictions of this Agreement, but shall not be entitled to any of the
rights or benefits available to OverlapCo under this Agreement.
6.6 Freedom of Action.
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Except as set forth in this Section 6, no Partner or Affiliate shall
have any obligation not to (i) engage in the same or similar activities or
lines of business as the Partnership or its Subsidiaries or develop or market
any products or services that compete, directly or indirectly, with those of
the Partnership or its Subsidiaries, (ii) invest or own any interest publicly
or privately in, or develop a business relationship with, any Person engaged in
the same or similar activities or lines of business as, or otherwise in
competition with, the Partnership or its Subsidiaries, (iii) do business with
any client or customer of the Partnership or its Subsidiaries, or (iv) employ
or otherwise engage a former officer or employee of the Partnership or its
Subsidiaries.
6.7 Confidentiality.
(a) Maintenance of Confidentiality. Each Partner and its
Controlled Affiliates and the Partnership (each a "Restricted Party"), shall
cause their respective officers and directors (in their capacity as such) to,
and shall take all reasonable measures to cause their respective employees,
attorneys, accountants, consultants and other agents and advisors
(collectively, and together with their respective officers and directors,
"Agents") to, keep secret and maintain in confidence all confidential and
proprietary information and data of the Partnership and the other Partners or
their Affiliates disclosed to it (in each case, a "Receiving Party") in
connection with the formation of the Partnership and the conduct of the
Partnership's business and in connection with the transactions contemplated by
the Joint Venture Formation Agreement (the "Confidential Information") and
shall not, shall cause their respective officers and directors not to, and
shall take all reasonable measures to cause their respective other Agents not
to, disclose Confidential Information to any Person other than the Partners,
their Controlled Affiliates and their respective Agents that need to know such
Confidential Information, or the Partnership. Each Partner further agrees that
it shall not use the Confidential Information for any purpose other than
monitoring and evaluating its investment, determining and performing its
obligations and exercising its rights under this Agreement. The Partnership
and each Partner shall take all reasonable measures necessary to prevent any
unauthorized disclosure of the Confidential Information by any of their
respective Controlled Affiliates or any of their respective Agents. The
measures taken by a Restricted Party to protect Confidential Information shall
not be deemed unreasonable if the measures taken are at least as strong as the
measures taken by the disclosing party to protect such Confidential
Information.
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(b) Permitted Disclosures. Nothing herein shall prevent any
Restricted Party or its Agents from using, disclosing, or authorizing the
disclosure of Confidential Information it receives in the course of the
business of the Partnership which:
(i) has been published or is in the public
domain, or which subsequently comes into the public domain, through no fault of
the Receiving Party;
(ii) prior to receipt hereunder (or under that
certain Agreement for Use and Non-Disclosure of Proprietary Information, dated
as of May 4, 1994, among Affiliates of the Partners) was properly within the
legitimate possession of the Receiving Party or, subsequent to receipt
hereunder (or under such agreement), is lawfully received from a third party
having rights therein without restriction ofthe third party's right to
disseminate the Confidential Information and without notice of any restriction
against its further disclosure;
(iii) is independently developed by the Receiving
Party through Persons who have not had, either directly or indirectly, access
to or knowledge of such Confidential Information;
(iv) is disclosed to a third party with the
written approval of the party originally disclosing such information, provided
that such Confidential Information shall cease to be confidential and
proprietary information covered by this Agreement only to the extent of the
disclosure so consented to;
(v) subject to the Receiving Party's compliance
with paragraph (d) below, is required to be produced under order of a court of
competent jurisdiction or other similar requirements of a governmental agency,
provided that such Confidential Information to the extent covered by a
protective order or its equivalent shall otherwise continue to be Confidential
Information required to be held confidential for purposes of this Agreement; or
(vi) subject to the Receiving Party's compliance
with paragraph (d) below, is required to be disclosed by applicable law or a
stock exchange or association on which such Receiving Party's securities (or
those of its Affiliate) are listed.
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(c) Notwithstanding this Section 6.7, any Partner may
provide Confidential Information (i) to other Persons considering the
acquisition (whether directly or indirectly) of all or a portion of such
Partner's Interest in the Partnership pursuant to Section 13 of this Agreement,
(ii) to other Persons considering the consummation of a Permitted Transaction
with respect to such Person or (iii) to any financial institution in connection
with borrowings from such financial institution by such Partner or any of its
Controlled Affiliates, so long as prior to any such disclosure such other
Person or financial institution executes a confidentiality agreement that
provides protection substantially equivalent to the protection provided the
Partners and the Partnership in this Section 6.7.
(d) In the event that any Receiving Party (i) must
disclose Confidential Information in order to comply with applicable law or the
requirements of a stock exchange or association on which such Receiving Party's
securities or those of its Affiliates are listed or (ii) becomes legally
compelled (by oral questions, interrogatories, requests for information or
documents, subpoenas, civil investigativedemands or otherwise) to disclose any
Confidential Information, the Receiving Party shall provide the disclosing
party with prompt written notice so that in the case of clause (i), the
disclosing party can work with the Receiving Party to limit the disclosure to
the greatest extent possible consistent with legal obligations, or in the case
of clause (ii), the disclosing party may seek a protective order or other
appropriate remedy or waive compliance with the provisions of this Agreement.
In the case of clause (ii), (A) if the disclosing party is unable to obtain a
protective order or other appropriate remedy, or if the disclosing party so
directs, the Receiving Party shall, and shall cause its employees to, exercise
all commercially reasonable efforts to obtain a protective order or other
appropriate remedy at the disclosing party's reasonable expense, and (B)
failing the entry of a protective order or other appropriate remedy or receipt
of a waiver hereunder, the Receiving Party shall furnish only that portion of
the Confidential Information which it is advised by opinion of its counsel is
legally required to be furnished and shall exercise all commercially reasonable
efforts to obtain reliable assurance that confidential treatment shall be
accorded such Confidential Information, it being understood that such
reasonable efforts shall be at the cost and expense of the disclosing party
whose Confidential Information has been sought.
(e) Any press release concerning the formation and
operation of the Partnership shall be approved in advance by a
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Required Majority Vote of the Management Committee.
(f) The obligations under this Section 6.7 shall survive
for a period of two (2) years from (i) as to all Partners and their respective
Controlled Affiliates, the termination of the Partnership and (ii) as to any
Partner and its Controlled Affiliates, such Partner's withdrawal therefrom (or
otherwise ceasing to be a Partner); provided that such obligations shall
continue indefinitely with respect to any trade secret or similar information
which is proprietary to the Partnership and provides the Partnership with an
advantage over its competitors.
(g) All references in this Section 6.7 to the Partnership
shall, unless the context otherwise requires, be deemed to refer also to each
Subsidiary of the Partnership.
SECTION 7. LOCAL OPERATOR AGREEMENT
Promptly following the adoption of the form of Local Operator
Agreement to be entered into by Cable Subsidiaries in accordance withSection
5.2(a), the Partners will amend this Section 7 to set forth the obligations of
the Partners with respect to certain matters addressed in Exhibit 2 to the
Joint Venture Formation Agreement, including (i) the obligations of Cable
Subsidiaries to enter into Local Operator Agreements, (ii) the right of first
opportunity to be accorded to Local Operators to develop facilities for use by
NewTelco, (iii) the servicing of large business customers and (iv) the right of
the Cable Partners to accelerate the provision of Wireline Exclusive Services
in certain geographic areas.
SECTION 8. ROLE OF EXCLUSIVE LIMITED PARTNERS
8.1 Rights or Powers.
The Exclusive Limited Partners shall not have any right or power to
take part in the management or control of the Partnership or its business and
affairs or to act for or bind the Partnership in any way.
8.2 Voting Rights.
The Exclusive Limited Partners shall have the right to vote only on
the matters specifically reserved for the vote or approval of
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Partners (including the Exclusive Limited Partners) set forth in this
Agreement, including those matters listed on Schedule 5.1(l) hereto.
SECTION 9. TRANSACTIONS WITH PARTNERS; OTHER AGREEMENTS
9.1 Sprint Cellular.
(a) The Partners shall negotiate in good faith terms
pursuant to which Sprint will make available or Transfer to WirelessCo certain
assets, expertise and services relating to its cellular operations, including
certain senior level management and technical expertise from its cellular
headquarters and regional operations, as well as other core employees and
capabilities such as administrative services and intellectual property.
(b) In the event (i) WirelessCo is the winning bidder in the
PCS Auction for a PCS license with respect to a license area and Sprint and its
Controlled Affiliates have an ownership interest in a cellular business or
businesses (a "Sprint Cellular Business") having a service area which is
included within such license area in whole or in part (an "Overlap Cellular
Area") or (ii) WirelessCo has decided, within thirty (30) months from the date
of this Agreement, to acquirea PCS license in a license area which includes an
Overlap Cellular Area; and as a result of Sprint's ownership interest in a
Sprint Cellular Business WirelessCo would not be awarded on an unconditional
basis (in the event of clause (i) above) or be permitted to acquire (in the
event of clause (ii) above) such PCS license under FCC rules and regulations
relating to CMRS spectrum cap limitations, then Sprint agrees that it will
divest such portion of such Sprint Cellular Business, within the time period
provided by FCC rules in the event of clause (i) above, and as soon as
commercially reasonable (e.g., to avoid "fire sale" prices) in the event of
clause (ii) above, or take any other action as is necessary, so that WirelessCo
will not be impaired from holding or acquiring such PCS license. Nothing
herein prevents one or more Partners from acquiring such PCS license if Sprint
is unable to divest the overlap property in a timely manner, provided that,
subject to applicable law, such Partner or Partners enter into an Affiliation
Agreement with the Partnership and its Subsidiaries. This Section 9.1(b) shall
not require Sprint to divest, or take any other action with respect to, any of
the Sprint Cellular Businesses in the Charlotte, Cleveland, El Paso,
Jacksonville, Knoxville, Omaha or Richmond MTAs.
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9.2 Sprint Brand Licensing Agreement.
(a) Simultaneously with the execution of this Agreement, the
Partnership and Sprint have entered into an assignment and acceptance agreement
in the form attached as Exhibit 9.2(a)(i), pursuant to which the Partnership
and its Subsidiaries will assume the rights and obligations of Sprint under the
trademark license agreement between Sprint Communications and Sprint, a copy of
which is attached hereto as Exhibit 9.2(a)(ii) (the "Trademark License").
Pursuant to such assignment and acceptance agreement, the Partnership and its
Subsidiaries will be provided with a national brand license to market their
respective national Wireline and Wireless Businesses (excluding Wireline
Businesses relating to the Comcast Teleport Assets, Cox Teleport Assets and TCI
Teleport Assets).
(b) On the First Closing Date, the Partnership and Sprint
will enter into an assignment and acceptance agreement in form attached as
Exhibit 9.2(a)(i), pursuant to which the Partnership and its Subsidiaries will
assume the rights and obligations of Sprint under the trademark license
agreement between Sprint Communications and a Controlled Affiliate of Sprint,
the terms of which are set forth on Exhibit 9.2(b) (the "Teleport Trademark
License"). Pursuant to such assignment and acceptance agreement, the
Partnership and its Subsidiaries will be provided with a national brand license
to market their Wireline Businesses relating to the Comcast Teleport Assets,
CoxTeleport Assets and TCI Teleport Assets.
9.3 Joint Marketing Agreement.
Following the execution of this Agreement, each Partner agrees to (i)
negotiate in good faith regarding the definitive terms of a joint marketing
agreement among the Partnership, WirelessCo, NewTelco, each of the Partners and
certain of their Affiliates reflecting the principles set forth on Exhibit 9.3,
with such modifications and additions as the Partners shall negotiate in good
faith and (ii) subject to the agreement of the Partners as to such definitive
documentation, use all commercially reasonable efforts to cause such agreement
to be executed and delivered as promptly as practicable following the execution
of this Agreement.
9.4 Services Agreement.
Following the execution of this Agreement, each Partner agrees to (i)
negotiate in good faith regarding the definitive terms of a
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services agreement to be entered into between the Partnership and Sprint Parent
and its Controlled Affiliates (which services agreement shall provide for,
among other things, the provision by Sprint Parent and its Controlled
Affiliates of certain network services to the Partnership and its Subsidiaries
and for the purchase by Sprint Parent and its Controlled Affiliates (excluding
United Telephone Long Distance ("UTLD") travel card calls, UTLD third party
billed calls, UTLD collect calls and UTLD 800 service) of certain local access
requirements from NewTelco) reflecting the principles set forth on Exhibit 9.4,
with such modifications and additions as the Partners shall negotiate in good
faith and (ii) subject to the agreement of the Partners as to such definitive
documentation, use all commercially reasonable efforts to cause such agreement
to be executed and delivered as promptly as practicable following the execution
of this Agreement.
9.5 Preferred Provider.
The Partnership and its Subsidiaries shall contract with each Partner,
its Affiliates and third parties, as appropriate, on a negotiated arms-length
basis, for services they may require, which may include billing and information
systems and marketing and sales services. The Partnership and its Subsidiaries
may in the normal course of their respective businesses enter into transactions
with the Partners and their respective Affiliates, provided that the Management
Committee by the requisite vote pursuant to Section 9.7 has determined that the
price and other terms of such transactions are fair to thePartnership and its
Subsidiaries and that the price and other terms of such transaction are not
less favorable to the Partnership and its Subsidiaries than those generally
prevailing with respect to comparable transactions involving non- Affiliates of
Partners. Subject to the foregoing, the Management Committee, acting in
accordance with Section 9.7, may in its discretion elect from time to time to
provide rights of first opportunity to various Partners or their Affiliates to
provide services to the Partnership and its Subsidiaries; provided that the
Management Committee shall have adopted, by Unanimous Vote, procedures
(including conflict avoidance procedures) relating generally to such right of
first opportunity arrangements, and the provision of such rights and all
matters related to the exercise thereof shall be subject to and effected in a
manner consistent with such procedures. The Partnership and its Subsidiaries
are expressly authorized to enter into the agreements expressly referred to in
this Section 9.
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9.6 MFJ
Each Partner agrees that neither it nor any of its Controlled
Affiliates shall take any action which (i) causes such Partner or the
Partnership to become a BOC or (ii) which causes the Partnership to become a
BOC Affiliated Enterprise or an entity subject to any restriction or limitation
under Section II of the MFJ if, in the case of an event specified in clause
(ii) above, such event would have a material adverse effect on the business,
assets, liabilities, results or operations, financial condition or prospects of
the Partnership and its Subsidiaries.
9.7 Interested Party Transactions.
Any contract, agreement, relationship or transaction between the
Partnership or any of its Subsidiaries, on the one hand, and any Partner or any
Person in which a Partner (or any of its Controlled Affiliates) has a direct or
indirect material financial interest (other than the Partnership, MinorCo,
PhillieCo and their respective Subsidiaries) or which has a direct or indirect
material financial interest in such Partner (provided that a Person shall not
be deemed to have such an interest solely as a result of its ownership of less
than 10% (by value) of the outstanding economic interests in a Publicly Held
Parent of a Partner (or a Publicly Held Intermediate Subsidiary of such
Parent)) (each, an "Interested Person") on the other hand, shall be approved
and all decisions with respect thereto (including a decision to accept or
reject an Offer pursuant to Section 6.1(c), the determination to amend,
terminate or abandon any such contract or agreement, whether there has been a
breach thereofand whether to exercise, waive or release any rights of the
Partnership with respect thereto) shall be made (after full disclosure by the
interested Partner of all material facts relating to such matter) by the
Management Committee (with the Representatives of the interested Partner(s)
absent from the deliberations and abstaining from the vote with respect
thereto) by the requisite affirmative vote of the Representatives of the
disinterested General Partners. Each of the Cable Partners shall be deemed to
be an interested Partner with respect to any action to be taken by the
Partnership or NewTelco under the Teleport Contribution Agreement, including
any election, decision or other action by the Partnership or NewTelco relating
to the exercise of its rights under Article XI thereof. For purposes of the
foregoing, a disinterested General Partner is a General Partner that is not a
party to, and does not have an Interested Person that is a party to, the
contract, agreement, relationship or transaction in
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question; provided that Sprint shall for all purposes be deemed a disinterested
General Partner with respect to any election, decision or other action by the
Partnership or NewTelco under the Teleport Contribution Agreement.
9.8 Access to Technical Information
Subject to the provisions of Sections 6 and 11.4 of this Agreement and
to applicable confidentiality restrictions, the Partnership and its
Subsidiaries shall grant to each Partner and its Controlled Affiliates access
to Technical Information. Such access shall be granted at such reasonable
times and locations and on such other reasonable terms as the Management
Committee may approve by Required Majority Vote pursuant to Section 9.7.
Subject to Section 6, the Partnership and its Subsidiaries shall grant to any
such Partner or its Controlled Affiliate a license to use any Technical
Information Rights to which it is granted access pursuant to this Section 9.8,
which license shall provide for royalties and fees and other terms and
conditions that are generally prevailing with respect to comparable
transactions involving unrelated third parties and are at least as favorable
to such Partner or its Controlled Affiliate as those generally prevailing with
respect to comparable licenses (if any) granted to non-Affiliates of Partners.
9.9 Parent Undertaking.
Simultaneously with the execution of this Agreement, each Parent has
executed and delivered to the Partnership and the other Partners a Parent
Undertaking.
9.10 Certain Additional Covenants.
(a) Each Cable Partner agrees that for so long prior to
October 24, 1999, as it is a Partner, neither it nor any of its Controlled
Affiliates will engage in any transaction or series of related transactions,
other than a Permitted Transaction, in which cable television system assets
owned directly or indirectly by the Parent of such Partner are Transferred if,
after giving effect to such transaction or the last transaction in such series
of related transactions, the number of basic subscribers served by the cable
television systems in the United States of America (including its territories
and possessions other than Puerto Rico) owned by the Parent of such Partner,
directly and indirectly through its Controlled Affiliates, is equal to
twenty-five percent (25%) or less of the
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number of basic subscribers served by the cable television systems in the
United States of America (including its territories and possessions other than
Puerto Rico) owned by the Parent of such Partner, directly and indirectly
through its Controlled Affiliates, before giving effect to such transaction or
the first transaction in such series of related transactions.
(b) Sprint agrees that for so long prior to October 24,
1999, as it is a Partner, neither it nor any of its Controlled Affiliates will
engage in any transaction or series of related transactions, other than a
Permitted Transaction, in which long distance telecommunications business
assets owned directly or indirectly by Sprint Parent are Transferred if, after
giving effect to such transaction or the last transaction in such series of
related transactions, the number of customers served by the long distance
telecommunications business in the United States of America (including its
territories and possessions other than Puerto Rico) owned by Sprint Parent,
directly and indirectly through its Controlled Affiliates, is equal to
twenty-five percent (25%) or less of the number of customers served by the long
distance telecommunications business in the United States of America (including
its territories and possessions other than Puerto Rico) owned by Sprint Parent,
directly and indirectly through its Controlled Affiliates, before giving effect
to such transaction or the first transaction in such series of related
transactions.
9.11 PioneerCo Preemptive Rights.
The PioneerCo Partnership Agreement will provide that an Affiliate of
Cox and the Partnership (or a Subsidiary of the Partnership) will have certain
put and call rights that may result in the acquisition by the Partnership of
such Cox Affiliate's interest in PioneerCo in exchange for an additional
Interest in the Partnership. At the time of such exchange, each of the Partners
(other than Cox) will be permitted to make Additional Capital Contributions in
cash up to the amount necessary to permit such Partner to avoid any reduction
in its Percentage Interest as a consequence of such exchange (assuming that all
such other Partners were to exercise such right).
9.12 Foreign Ownership.
(a) Certain Definitions and Concepts. For purposes of
this Section 9.12:
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(i) "Foreign Ownership Restriction" means any
federal law or regulation restricting the amount of ownership or voting control
that may be held by non-citizens of the United States in holders of licenses or
other authorizations issued by the FCC or in Persons controlling such holders
(including 47 U.S.C. Section 310(b) and the rules and regulations promulgated
thereunder by the FCC).
(ii) "Covered Licensee" means any of the
Partnership or any Subsidiary thereof that holds any license or other
authorization issued by the FCC or that controls the holder of any license or
other authorization for purposes of any Foreign Ownership Restriction.
(iii) "Foreign Ownership Threshold" means, with
respect to any Covered Licensee, the maximum amount of foreign ownership or
foreign voting control of such Covered Licensee that is permitted by any
Foreign Ownership Restriction applicable to such Covered Licensee, less the
amount of foreign ownership or foreign voting control of such Covered Licensee
that is attributable from any Person other than a Partner.
(iv) "Foreign Ownership Safe Harbor" means, with
respect to any Covered Licensee, ninety percent (90%) of the Foreign Ownership
Threshold of such Covered Licensee.
(v) Except as provided in clause (vi) of this
Section 9.12(a), a Partner's "Attribution Cap" equals, with respect to the
Foreign Ownership Threshold of any Covered Licensee:
(A) in the case of Sprint, the product
of the Percentage Interest of Sprint times twenty-eight percent (28%), and
(B) in the case of any Cable Partner,
the product of (x) the Foreign Ownership Threshold of such Covered Licensee
minus Sprint's Attribution Cap times (y) the Percentage Interest of such Cable
Partner divided by the aggregate Percentage Interests of allCable Partners.
(vi) Notwithstanding clause (v) of this Section
9.12(a), if (A) the proposed transaction among Deutsche Telekom, France Telecom
and Sprint Parent providing for the purchase by Deutsche Telekom and France
Telecom of certain shares of stock of Sprint Parent is abandoned without the
consummation of all of the stock purchases contemplated thereby and (B)
definitive agreements with respect to a similar alternative transaction with a
non-citizen
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of the United States have not been entered into by Sprint Parent prior to the
second anniversary hereof or such transaction has not been consummated prior to
the third anniversary hereof, then, with respect to any Covered Licensee, each
Partner's Attribution Cap shall equal the product of the Percentage Interest of
such Partner times the Foreign Ownership Threshold of such Covered Licensee.
(b) Covenant Regarding Foreign Ownership. Subject to
Section 9.12(c), no Partner shall cause or permit the amount of foreign
ownership or foreign voting control attributable to any Covered Licensee from
such Partner and its Controlled Affiliates (determined in accordance with the
method of attribution prescribed in the applicable Foreign Ownership
Restrictions) to exceed the Attribution Cap of such Partner applicable to such
Covered Licensee, increased by any portion of any other Partner's applicable
Attribution Cap that such other Partner has authorized such Partner to use for
purposes of determining compliance with this Section 9.12(b), and decreased by
any portion of such Partner's applicable Attribution Cap that such Partner has
authorized any other Partner to use for purposes of determining compliance with
this Section 9.12(b).
(c) Right to Cure Potential Violations. So long as a
Partner and its Controlled Affiliates are using their respective commercially
reasonable efforts to cause the amount of foreign ownership and foreign voting
control attributable to each Covered Licensee from such Partner and its
Controlled Affiliates to be reduced below the maximum amount permitted by
Section 9.12(b) (without regard to this Section 9.12(c)), such Partner shall
not be deemed to be in violation of its covenant in Section 9.12(b) until the
earlier of:
(i) such time as the aggregate amount of foreign
ownership or foreign voting control attributable to any Covered Licensee
(including the foreign ownership and foreign voting control attributable from
such Partner and its Controlled Affiliates) exceeds the Foreign Ownership Safe
Harbor, or
(ii) thirty (30) days after such Partner
receiveswritten notice from any other Partner that such other Partner or any of
its Controlled Affiliates desires to engage in any transaction permitted by
section 9.12(b) that, if consummated, would cause the aggregate amount of
foreign ownership or foreign voting control attributable to any Covered
Licensee to exceed the Foreign Ownership Safe Harbor if the foreign ownership
attributable to such Covered Licensee from such Partner and its Controlled
Affiliates continued to
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exceed the maximum amount permitted by Section 9.12(b).
(d) Authorization to Use the Attribution Cap of Another
Partner. Any authorization by one Partner to another Partner of the right to
use any portion of the authorizing Partner's applicable Attribution Cap for
purposes of determining compliance with Section 9.12(b) shall be evidenced by a
written instrument delivered by the authorizing Partner to the Partnership and
each other Partner.
9.13 Advertising Fund.
(a) As and when reasonably determined by the Chief
Executive Officer following the adoption of the Initial Business Plan (or as
authorized by a Unanimous Vote of the Management Committee prior to such time),
the Partnership and its Subsidiaries will purchase from the Cable Partners and
their respective Cable Subsidiaries advertising availability on the cable
television systems of such Cable Subsidiaries having an aggregate value of
$12,500,000. To the extent reasonably practicable, such purchases will be made
from each Cable Partner and its Cable Subsidiaries in the same ratio as the
initial Percentage Interest of such Cable Partner bears to the aggregate
initial Percentage Interests of all of the Cable Partners. Following the
completion of the purchases of advertising availability pursuant to Section
9.13(a), each of the Cable Partners shall make available to the Partnership and
its Subsidiaries (from time to time as may be reasonably requested by the Chief
Executive Officer and subject to availability) at no charge advertising
availability on the cable television systems of the Cable Partners and their
Cable Subsidiaries having an aggregate value of $12,500,000, with the aggregate
value of the advertising availability provided by each Cable Partner and its
Cable Subsidiaries to equal the aggregate value of the advertising availability
purchased from the Cable Subsidiaries of such Cable Partner pursuant to this
Section 9.13(a). The advertising availability obtained by the Partnership and
its Subsidiaries under this Section 9.13(a) shall be utilized for the
advertisement of Sprint-branded products and services offered by the
Partnership and its Subsidiaries.
(b) As and when reasonably determined by Sprint
Parentfollowing the date hereof, the Partnership and its Subsidiaries will
purchase from the Cable Partners and their respective Cable Subsidiaries
advertising availability on the cable television systems of such Cable
Subsidiaries having an aggregate value of $12,500,000. To the extent
reasonably practicable, such purchases will be made from
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each Cable Partner and its Cable Subsidiaries in the same ratio as the initial
Percentage Interest of such Cable Partner bears to the aggregate initial
Percentage Interests of all of the Cable Partners. Following the completion of
the purchases of advertising availability pursuant to this Section 9.13(b),
each of the Cable Partners shall make available to the Partnership and its
Subsidiaries (from time to time as may be reasonably determined by Sprint
Parent and subject to availability) at no charge advertising availability on
the cable television systems of the Cable Partners and their Cable Subsidiaries
having an aggregate value of $12,500,000, with the aggregate value of the
advertising availability provided by each Cable Partner and its Cable
Subsidiaries to equal the aggregate value of the advertising availability
purchased from the Cable Subsidiaries of such Cable Partner pursuant to this
Section 9.13(b). The advertising availability obtained by the Partnership and
its Subsidiaries under this Section 9.13(b) shall be utilized as and when
directed by Sprint Parent in its reasonable discretion, subject to availability
for the advertisement of long distance telecommunications services offered by
Sprint and its Controlled Affiliates, and Sprint Parent shall determine the
content of such advertising.
(c) The value of the advertising availability purchased
by and contributed to the Partnership under this Section 9.13 shall be
determined based on the rates generally made available by the Cable
Subsidiaries to advertisers purchasing similar advertising volumes in the time
slots and markets made available to the Partnership and Sprint Parent. The
Partners agree that the purchases and contributions of advertising availability
shall be completed prior to December 31, 1999.
(d) The contribution by the Cable Partners and the Cable
Subsidiaries of advertising availability under this Section 9.13 (i) shall not
be treated as a Capital Contribution and shall not affect the Capital Accounts
of the Cable Partners and (ii) shall be in addition to (and shall not be
applied against or reduce) the Cable Partners' Capital Commitment, Mandatory
Contribution or any other obligation of the Cable Partners to make Additional
Capital Contributions pursuant to Sections 2.3(a) and (b).
(e) If the Teleport Contribution Agreement is terminated
pursuant to Article X thereof, (i) the obligation of the Partnershipand its
Subsidiaries to purchase any additional advertising availability from the Cable
Partners and their respective Cable Subsidiaries and the obligation of the
Cable Partners and the Cable
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Subsidiaries to make available any additional advertising availability at no
charge, in each case pursuant to Section 9.13(b), shall terminate and (ii)
within thirty (30) days following such termination, Sprint shall pay to each of
the Cable Partners an amount in cash equal to the sum of (A) the value of the
advertising availability previously made available by such Cable Partner to
the Partnership at no charge pursuant to Section 9.13(b) and (B) a percentage
equal to such Cable Partner's Percentage Interest of the value of the
advertising availability previously purchased by the Partnership and its
Subsidiaries pursuant to Section 9.13(b).
9.14 Provision of Services.
To the extent permitted by applicable law, each Partner agrees that it
and its Controlled Affiliates shall use all commercially reasonable efforts to
cause its local cable television and/or telephone operations to provide
appropriate services to WirelessCo in all its owned and operated markets as
well as markets operating under an Affiliation Agreement with WirelessCo,
including any Affiliation Agreement with PioneerCo. Such services may include
antenna sites and/or strand mounting of RF and transmission equipment owned by
WirelessCo or any Affiliate thereof and transmission facilities between cell
sites and designated switching locations. Services may also include provision
of primary power, standby power and maintenance. Pricing of the foregoing
services will be negotiated at a local level and is expected to reflect all
relevant costs plus a reasonable return. Notwithstanding the foregoing,
Comcast will not be required to provide any services to WirelessCo under this
Section 9.14 in any territories in which Comcast or its Controlled Affiliates
operate Wireless Businesses in the Comcast Area.
9.15 Comcast Representative.
Notwithstanding any other provision of this Agreement, for such time
(the "Restricted Time") as Comcast or any of its Controlled Affiliates engages
in any Competitive Activity in any portion of the Comcast Area, Comcast agrees
to cause any Representative of Comcast who participates in Designated Matters
(as defined below) not to (i) be involved in any Competitive Activities engaged
in by Comcast or its Controlled Affiliates in the Restricted Area (as defined
below) and (ii) disclose or discuss the Designated Matters with any Agent of
Comcast that is involved in Competitive Activities in the Restricted Area.
During the Restricted Time, each Partner (other than Comcast)and its Controlled
Affiliates and the Partnership and its Subsidiaries
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shall not, shall cause their respective officers and directors (in their
capacity as such) not to, and shall take all reasonable measures to cause their
respective other Agents not to, disclose any information (including any
financial projections, budgets or other operating or business plans) regarding
the provision, by the Partnership and its Subsidiaries or by any Third Party
Provider (as defined below) of Wireless Exclusive Services in any portion of
the Comcast Area, to Comcast or any of its Controlled Affiliates or Agents
other than such Representative of Comcast. As used herein, "Designated
Matters" means the participation in any discussions regarding, the obtaining of
any information or the casting of any votes, in each case with respect to any
matter concerning the provision by the Partnership or its Subsidiaries of
Wireless Exclusive Services in a portion (the "Restricted Area") of the Comcast
Area (including the terms of any Affiliation Agreement with any Person
providing such Wireless Exclusive Services (a "Third Party Provider")).
9.16 Purchasing.
The Partners and their respective Controlled Affiliates will cooperate
with each other in a commercially reasonable manner to structure arrangements
whereby the Partners, their respective Controlled Affiliates, and the
Partnership and its Subsidiaries would, to the extent permitted by applicable
law and regulation, coordinate their respective buying efforts from third party
vendors in a manner such that the benefits of such coordinated efforts would be
available to the Partnership and its Subsidiaries, each Partner and each
Partner's respective Controlled Affiliates in making such purchases of
equipment and materials as may be required for (i) the accomplishment of the
purposes of the Partnership and its Subsidiaries, including equipment and
materials that a Partner or its Controlled Affiliates may require in order to
upgrade its facilities for the transport of Wireline Exclusive Services by
NewTelco as contemplated by the Local Operator Agreements, and (ii) the
operations of the permitted businesses of any Partner or its Controlled
Affiliates.
SECTION 10. REPRESENTATIONS AND WARRANTIES
10.1 Representations and Warranties by Partners.
Each Partner hereby represents and warrants that as of the date hereof:
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(a) Due Incorporation or Formation; Authorization of
Agreement. Such Partner is a corporation duly organized or a partnership duly
formed, validly existing and, if applicable, in good standing under the laws of
the jurisdiction of its incorporation or formation and has the corporate or
partnership power and authority to own its property and carry on its business
as owned and carried on at the date hereof and as contemplated hereby. Such
Partner is duly licensed or qualified to do business and, if applicable, in
good standing in each of the jurisdictions in which the failure to be so
licensed or qualified would have a material adverse effect on its financial
condition or its ability to perform its obligations hereunder. Such Partner
has the corporate or partnership power and authority to execute and deliver
this Agreement and to perform its obligations hereunder and the execution,
delivery and performance of this Agreement have been duly authorized by all
necessary corporate or partnership action. Assuming the due execution and
delivery by the other parties hereto, this Agreement constitutes the legal,
valid and binding obligation of such Partner enforceable against such Partner
in accordance with its terms, subject as to enforceability to limits imposed by
bankruptcy, insolvency or similar laws affecting creditors' rights generally
and the availability of equitable remedies.
(b) No Conflict with Restrictions; No Default. Neither the
execution, delivery and performance of this Agreement nor the consummation by
such Partner of the transactions contemplated hereby (i) will conflict with,
violate or result in a breach of any of the terms, conditions or provisions of
any law, regulation, order, writ, injunction, decree, determination or award of
any court, any governmental department, board, agency or instrumentality,
domestic or foreign, or any arbitrator, applicable to such Partner or any of
its Controlled Affiliates, (ii) will conflict with, violate, result in a breach
of or constitute a default under any of the terms, conditions or provisions of
the articles of incorporation, bylaws or partnership agreement of such Partner
or any of its Controlled Affiliates or of any material agreement or instrument
to which such Partner or any of its Controlled Affiliates is a party or by
which such Partner or any of its Controlled Affiliates is or may be bound or to
which any of its material properties or assets is subject (other than any such
conflict, violation, breach or default that has been validly and
unconditionally waived), (iii) will conflict with, violate, result in a breach
of, constitute a default under (whether with notice or lapse of time or both),
accelerate or permit the acceleration of the performance required by, give to
others any material interests or
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rights or require any consent, authorization or approval under any indenture,
mortgage, lease agreement or instrument to which such Partner or any of its
Controlled Affiliates is a party or by whichsuch Partner or any of its
Controlled Affiliates is or may be bound, or (iv) will result in the creation
or imposition of any lien upon any of the material properties or assets of such
Partner or any of its Controlled Affiliates, which in any such case could
reasonably be expected to have a material adverse effect on the Partnership or
to materially impair such Partner's ability to perform its obligations under
this Agreement or to have a material adverse effect on the consolidated
financial condition of such Partner or its Parent.
(c) Governmental Authorizations. Any registration,
declaration or filing with, or consent, approval, license, permit or other
authorization or order by, any governmental or regulatory authority, domestic
or foreign, that is required to be obtained by such Partner in connection with
the valid execution, delivery, acceptance and performance by such Partner under
this Agreement or the consummation by such Partner of any transaction
contemplated hereby has been or will be completed, made or obtained, except for
any FCC or other regulatory approvals, licenses, permits or other
authorizations required to be obtained by the Partnership in connection with
the acquisition and ownership of Wireless Business licenses relating to PCS,
and except for required consents, approvals, licenses, permits or other
authorizations contemplated by the Teleport Contribution Agreement and Other
CAP Business Contribution Agreements.
(d) Litigation. There are no actions, suits, proceedings or
investigations pending or, to the knowledge of such Partner or its Parent,
threatened against or affecting such Partner or any of its Controlled
Affiliates or any of their properties, assets or businesses in any court or
before or by any governmental department, board, agency or instrumentality,
domestic or foreign, or any arbitrator which could, if adversely determined
(or, in the case of an investigation could lead to any action, suit or
proceeding, which if adversely determined could), reasonably be expected to
materially impair such Partner's ability to perform its obligations under this
Agreement or to have a material adverse effect on the consolidated financial
condition of such Partner or its Parent; and such Partner or any of its
Controlled Affiliates has not received any currently effective notice of any
default, and such Partner or any of its Controlled Affiliates is not in
default, under any applicable order, writ, injunction, decree, permit,
determination or award of any court, any governmental department, board, agency
or instrumentality,
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domestic or foreign, or any arbitrator, which default could reasonably be
expected to materially impair such Partner's ability to perform its obligations
under this Agreement or to have a material adverse effect on the consolidated
financial condition of such Partner or its Parent.
(e) MFJ. Such Partner is not a BOC, a BOC Affiliated
Enterprise or an entity subject to any restrictions under Section II of the
MFJ.
(f) Subsidiaries. Such Partner is a direct or indirect
wholly owned Subsidiary of its Parent.
10.2 Representation and Warranty of Sprint.
Sprint hereby represents and warrants that as of the date hereof
Sprint Communications is the primary entity through which Sprint Parent
conducts its long distance telecommunications business in the United States of
America (including its territories and possessions other than Puerto Rico).
SECTION 11. ACCOUNTING, BOOKS AND RECORDS
11.1 Accounting, Books and Records.
The Partnership shall maintain at its principal office separate books
of account for the Partnership which (i) shall fully and accurately reflect all
transactions of the Partnership, all costs and expenses incurred, all charges
made, all credits made and received, and all income derived in connection with
the conduct of the Partnership and the operation of its business in accordance
with GAAP or, to the extent inconsistent therewith, in accordance with this
Agreement and (ii) shall include all documents and other materials with respect
to the Partnership's business as are usually entered and maintained by persons
engaged in similar businesses. The Partnership and its Subsidiaries shall use
the accrual method of accounting in preparation of their annual reports and for
tax purposes and shall keep their books and records accordingly. Subject to
Section 11.4, any Partner or its designated representative shall have the
right, at any reasonable time and for any lawful purpose related to the affairs
of the Partnership and its Subsidiaries or the investment in the Partnership
and its Subsidiaries by such Partner, (i) to have access to and to inspect and
copy the contents of such books or records, (ii) to visit the facilities of the
Partnership and its Subsidiaries
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and (iii) to discuss the affairs of the Partnership and its Subsidiaries with
their respective officers, employees, attorneys, accountants, customers and
suppliers. Neither the Partnership nor its Subsidiaries shall charge such
Partner for such examination and each Partner shall bear its own expenses in
connection with any examination made for any such Partner's account.
11.2 Reports.
(a) In General. The chief financial officer of the
Partnership shall be responsible for the preparation of financial reports of
the Partnership and the coordination of financial matters of the Partnership
with the Accountants.
(b) Periodic and Other Reports. The Partnership shall
cause to be delivered to each Partner the financial statements listed in
clauses (i) through (iii) below, prepared, in each case, in accordance with
GAAP (and, if required by any Partner for purposes of reporting under the
Securities Exchange Act of 1934, Regulation S-X), and such other reports as any
Partner may reasonably request from time to time, provided that, if the
Management Committee so determines within thirty (30) days thereof, such other
reports shall be provided at such requesting Partner's sole cost and expense.
Such financial statements shall be accompanied by an analysis, in reasonable
detail, of the variance between the financial condition and results of
operations reported therein and the corresponding amounts for the applicable
period or periods in the Approved Business Plan. The monthly and quarterly
financial statements referred to in clauses (ii) and (iii) below may be subject
to normal year-end audit adjustments.
(i) As soon as practicable following the end of
each Fiscal Year (and in any event not later than seventy-five (75)
days after the end of such Fiscal Year) and at such time as
distributions are made to the Partners pursuant to Section 15.2
following the occurrence of a Liquidating Event, a consolidated
balance sheet of the Partnership and its Subsidiaries as of the end of
such Fiscal Year and the related statements of operations, Partners'
Capital Accounts and changes therein, and cash flows for such Fiscal
Year, together with appropriate notes to such financial statements and
supporting schedules, all of which shall be audited and certified by
the Accountants, and in each case, to the extent the Partnership was
in existence, setting forth in comparative form the corresponding
figures for the immediately preceding Fiscal Year (in the case of the
balance sheet) and the
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two (2) immediately preceding Fiscal Years (in the case of the
statements).
(ii) As soon as practicable following the end of
each of the first three calendar quarters of each Fiscal Year (and in
any event not later than forty (40) days after the end of each such
calendar quarter), a consolidated balance sheet of the Partnership as
of the end of such calendar quarter and the related consolidated
statements of operations, Partners' Capital Accounts and changes
therein, andcash flows for such calendar quarter and for the Fiscal
Year to date, in each case, to the extent the Partnership was in
existence, setting forth in comparative form the corresponding figures
for the prior Fiscal Year's calendar quarter and interim period
corresponding to the calendar quarter and interim period just
completed.
(iii) As soon as practicable following the end of
each of the first two calendar months of each calendar quarter (and in
any event not later than thirty (30) days after the end of such
calendar month), a consolidated balance sheet as of the end of such
month and consolidated statements of operations for the interim period
through such month and the monthly period then ended, setting forth in
comparative form the corresponding figures from the Business Plan for
such month and the interim period through such month.
(iv) At such times and in such detail as may be
determined by the Management Committee or if required by any Partner
in order for such Partner and its Parent to comply with their
reporting obligations under the Securities Exchange Act of 1934 or
under any other applicable law, separate financial statements for
WirelessCo and NewTelco, including information reflecting NewTelco's
performance with respect to the Benchmarks and the Additional
Benchmarks.
The quarterly or monthly statements described in clauses (ii) and
(iii) above shall be accompanied by a written certification of the chief
financial officer of the Partnership that such statements have been prepared in
accordance with GAAP or this Agreement, as the case may be.
11.3 Tax Returns and Information.
(a) Sprint, acting in its capacity as a General Partner,
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shall act as the "Tax Matters Partner" of the Partnership within the meaning of
Section 6231(a)(7) of the Code (and in any similar capacity under applicable
state or local law) (the "Tax Matters Partner"). If Sprint shall cease to be a
General Partner, then the Partner with the greatest Voting Percentage Interest,
acting in its capacity as a General Partner, shall thereafter act as the Tax
Matters Partner. The Tax Matters Partner shall take reasonable action to cause
each other Partner to be treated as a "notice partner" within the meaning of
Section 6231(a)(9) of the Code. All reasonable expenses incurred by a Partner
while acting in its capacity as Tax Matters Partner shall be paid or reimbursed
by the Partnership. Each Partner shall be given at least five (5) Business
Days advance notice from the Tax MattersPartner of the time and place of, and
shall have the right to participate (and the Partnership and the Tax Matters
Partner shall take such action as may be necessary to cause the tax matters
partner of any Subsidiary to extend to the Partners the right to participate)
in (i) any material aspect of any administrative proceeding relating to the
determination of partnership items at the Partnership level (or at the level of
any Subsidiary thereof) and (ii) any material discussions with the Internal
Revenue Service relating to the allocations pursuant to Section 3 of this
Agreement or pursuant to the partnership agreement of any Subsidiary. The Tax
Matters Partner shall not, and the Partnership shall not permit the tax matters
partner of any Subsidiary to, initiate any action or proceeding in any court,
extend any statute of limitations, or take any other action contemplated by
Sections 6222 through 6232 of the Code that would legally bind any other
Partner, the Partnership or any Subsidiary without approval of the Management
Committee by a Required Majority Vote. The Tax Matters Partner shall from time
to time upon request of any other Partner confer, and cause the Partnership's
and any Subsidiary's tax attorneys and Accountants to confer, with such other
Partner and its attorneys and accountants on any matters relating to a
Partnership or Subsidiary tax return or any tax election.
(b) The Tax Matters Partner shall cause all federal,
state, local and other tax returns and reports (including amended returns)
required to be filed by the Partnership or any Subsidiary thereof to be
prepared and timely filed with the appropriate authorities and shall cause all
income or franchise tax returns or reports required to be filed by the
Partnership or any Subsidiary thereof to be sent to each Partner for review at
least fifteen (15) Business Days prior to filing. Unless otherwise determined
by the Management Committee, all such income or franchise tax returns of the
Partnership shall be prepared by the Accountants. The cost of preparation of
any returns
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by the Accountants or other outside preparers shall be borne by the Partnership
or the applicable Subsidiary, as the case may be. In the event of a Transfer
of all or part of an Interest, the Tax Matters Partner shall at the request of
the transferee cause the Partnership to elect, pursuant to Section 754 of the
Code, to adjust the basis of the Partnership's property (and the Partnership
shall cause the tax matters partner of any Subsidiary to make a corresponding
Section 754 election with respect to such Subsidiary's property); provided,
however, that such transferee shall reimburse the Partnership and any
Subsidiary promptly for all costs associated with such basis adjustment,
including bookkeeping, appraisal and other similar costs. Except as otherwise
expressly provided herein, all other elections required or permitted to be made
by the Partnership or any Subsidiary under the Code (or applicable state or
local tax law) shall be made insuch manner as may be determined by the
Management Committee to be in the best interests of the Partners as a group.
(c) The Tax Matters Partner shall cause to be provided to
each Partner as soon as possible after the close of each Fiscal Year (and, in
any event, no later than one hundred thirty-five (135) days after the end of
each Fiscal Year), a schedule setting forth such Partner's distributive share
of the Partnership's income, gain, loss, deduction and credit as determined for
federal income tax purposes and any other information relating to the
Partnership that is reasonably required by such Partner to prepare its own
federal, state, local and other tax returns. At any time after such schedule
and information have been provided, upon at least two (2) Business Days' notice
from a Partner, the Tax Matters Partner shall also provide each Partner with a
reasonable opportunity during ordinary business hours to review and make copies
of all work papers related to such schedule and information or to any return
prepared under paragraph (b) above. The Tax Matters Partner shall also cause
to be provided to each Partner, at the time that the quarterly financial
statements are required to be delivered pursuant to Section 11.2(b)(ii) above,
an estimate of each Partner's share of all items of income, gain, loss,
deduction and credit of the Partnership for the calendar quarter just completed
and for the Fiscal Year to date for federal income tax purposes.
11.4 Proprietary Information.
Notwithstanding anything to the contrary in this Section 11, an
Exclusive Limited Partner shall only have access to such information regarding
the Partnership as is required by applicable law and shall not have access for
such time as the Management Committee deems
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reasonable to such information relating to the Partnership's business which the
Management Committee reasonably believes to be in the nature of trade secrets
or other information the disclosure of which the Management Committee in good
faith believes is not in the best interest of the Partnership or could damage
the Partnership or its business or which the Partnership is required by law or
by agreement with a third party to keep confidential.
SECTION 12. ADVERSE ACT
12.1 Remedies.
(a) If an Adverse Act has occurred with respect to any
Partner, (x) in the case of an Adverse Act specified in clause (vii) of the
definition of such term in Section 1.10, any GeneralPartner may elect or (y) in
the case of any other Adverse Act, the Management Committee (with the
Representatives of the affected Partner abstaining) may elect:
(i) to cause the Partnership to commence the procedures
specified in Section 12.2 for the purchase of the Adverse Partner's
Interest (and such Adverse Partner's Preferred Interest, if
applicable); or
(ii) to cause the Partnership to seek to enjoin such
Adverse Act or to obtain specific performance of the Adverse Partner's
obligations or Damages (as defined and subject to the limitations
specified below) in respect of such Adverse Act.
Notwithstanding anything to the contrary contained in this Section 12, (x) none
of the remedies specified above (nor any other provision of this Section 12)
shall apply to an Adverse Act specified in clause (vi) of the definition of
such term in Section 1.10, (y) the remedies specified in clause (ii) shall not
be available to the Partners with respect to an Adverse Act specified in clause
(vii) of such definition unless the circumstances under which such event arose
also constituted a breach by the Adverse Partner of the covenant contained in
Section 9.6 of this Agreement, and (z) the remedy specified in clause (i) above
and the right to seek Damages under clause (ii) above may not be pursued and
Section 12.1(b) will not apply to an Adverse Act specified in clause (iii) of
the definition of such term until such time as there is a Final Determination
that the Partner's actions or failure to act constituted an Adverse Act, if the
affected Partner
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timely delivered a Contest Notice.
In the event of an Adverse Act specified in any clause of the
definition of such term in Section 1.10 other than clause (vii), the vote of
the Management Committee required to elect to exercise a remedy specified in
clause (i) or (ii) of the first sentence of this Section 12.1(a) shall be the
Required Majority Vote of Representatives of the Partners that are not actual
or alleged Adverse Partners (the "Non-Adverse Partners"), provided that in the
event more than one (1) Partner is alleged to be an Adverse Partner, such vote
shall be taken separately with respect to each alleged Adverse Partner
excluding from such vote only the Partner(s) that is alleged to be an Adverse
Partner as a result of the specific facts or circumstances with respect to
which such vote is being taken. The election to pursue a remedy specified in
clause (i) or (ii) of the first sentence of this Section 12.1(a) with respect
to an Adverse Act for which such remedy is available may be exercised by notice
given to the Adverse Partner (x) in the case of an Adverse Act specified in
clause (i) or (ix) ofthe definition of the term "Adverse Act" in Section 1.10,
within ninety (90) days after the occurrence of such Adverse Act or (y) in the
case of any other Adverse Act, within ninety (90) days after the Management
Committee or the Partner making such election, as the case may be, obtains
actual knowledge of the occurrence of such Adverse Act, including, if
applicable, that any cure period has expired; provided that, if an election
pursuant to clause (ii) of the first sentence of this Section 12.1(a) is made
to seek an injunction, specific performance or other equitable relief, an
action seeking such relief is commenced promptly thereafter and a final
judgment in such action is rendered denying such equitable remedy and no
election was made pursuant to clause (i) of the first sentence of this Section
12.1(a), then, by notice given within ten (10) days after such final judgment
is rendered, the Management Committee may elect to pursue the remedy specified
in clause (i) of the first sentence of this Section 12.1(a) unless (x) prior to
the giving of such notice, the Adverse Partner has cured in full (or caused to
be cured in full) the Adverse Act in question (other than an Adverse Act
specified in clause (i) or (ix) of the definition of such term in Section 1.10,
which may only be cured with the Unanimous Vote of, and on the terms prescribed
by, the Management Committee) and no other Adverse Act with respect to such
Partner has occurred and is continuing or (y) the final judgment denying
equitable relief specifically held that there was no Adverse Act.
The foregoing remedies shall not be deemed to be mutually
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exclusive, and, subject to the requirements of this Section 12.1(a) regarding
the timing of the election of such remedies, selection or resort to any thereof
shall not preclude selection or resort to the others. The resort to any remedy
pursuant to this Section 12.1(a) shall not for any purpose be deemed to be a
waiver of any other available remedy. Except as provided in Section 12.1(b),
the failure to elect to pursue a remedy within the time periods provided in the
preceding paragraph shall be conclusively presumed to be a waiver of the
remedies provided in this Section 12 with respect to the subject Adverse Act.
Unless resort to such remedy has been waived as set forth in the
immediately preceding paragraph, the Partnership shall be entitled to recover
from the Adverse Partner in an appropriate proceeding any and all damages,
losses and expenses (including reasonable attorneys' fees and disbursements)
(collectively, "Damages") suffered or incurred by the Partnership as a result
of such Adverse Act; provided that the Partnership shall not have or assert any
claim against the Adverse Partner for punitive Damages or for indirect, special
or consequential Damages suffered or incurred by the Partnership as a result of
anAdverse Act; and provided further, that if an election is made pursuant to
clause (i) of the first sentence of this Section 12.1(a), the amount the
Partnership may recover in any action for Damages shall be reduced by an amount
equal to the difference, if any, between the Net Equity of the Adverse
Partner's Interest (and its Preferred Interest, if applicable) determined in
accordance with Section 12.2(a) and the applicable Buy-Sell Price.
(b) If the Partnership is dissolved pursuant to Section
15.1(a) at any time as a result of a Liquidating Event that occurs prior to a
remedy having been elected pursuant to Section 12.1(a) with respect to any
Adverse Partner, the time periods for such election shall thereupon expire and
the Management Committee shall deduct from any amounts to be paid to such
Adverse Partner that amount which it reasonably estimates to be sufficient to
compensate the Non-Adverse Partners for Damages incurred by them as a result of
the Adverse Act (subject to the limitations of Section 12.1(a)) and shall pay
the same to the Non-Adverse Partners.
12.2 Adverse Act Purchase.
(a) Determination of Net Equity of Adverse Partner's
Interest. If the Management Committee or any General Partner makes an election
pursuant to Section 12.1(a)(i) to commence the purchase
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procedures set forth in this Section 12.2, the Net Equity of the Adverse
Partner's Interest (and its Preferred Interest, if applicable) shall be
determined in accordance with this Section 12 as of the last day of the
calendar quarter immediately preceding the calendar quarter in which notice of
such election (the "Election Notice") was given to the Adverse Partner, and the
Adverse Partner shall be obligated to sell to the Purchasing Partners, if any,
all but not less than all of the Adverse Partner's Interest (and Preferred
Interest, if applicable) in accordance with this Section 12.2 at a purchase
price (the "Buy- Sell Price") equal to (A) in the case of any Adverse Act
(other than (1) an Adverse Act identified in clause (i) of the definition of
such term that occurs prior to the Cut-Off Time, (2) an Adverse Act identified
in clause (iv) of the definition of such term or (3) unless such Adverse Act
occurred in connection with any breach by such Partner of its obligations under
Section 9.6, an Adverse Act identified in clause (vii) of the definition of
such term), ninety percent (90%) of the Net Equity thereof as so determined,
(B) in the case of an Adverse Act specified in clause (iv) or, unless such
Adverse Act occurred in connection with any breach by such Partner of its
obligations under Section 9.6, clause (vii) of the definition of such term in
Section 1.10, the Net Equity thereof and (C) in the case of an Adverse Act
specified in clause (i) of the definition of suchterm in Section 1.10 that
occurred prior to the Cut-Off Time, the lesser of (A) ninety percent (90%) of
the Net Equity thereof as so determined or (B) eighty percent (80%) of the
remainder of (1) the sum of such Adverse Partner's Original Capital
Contribution and aggregate Additional Capital Contributions minus (2) the
cumulative distributions made to such Partner pursuant to Section 4
("Unreturned Capital"), with the amount of such Unreturned Capital determined
as of the date on which the Adverse Partner's Interest (and Preferred Interest,
if applicable) is purchased. Such Election Notice shall designate the First
Appraiser as required by Section 12.4 and the Adverse Partner shall appoint the
Second Appraiser within ten (10) Business Days of receiving such notice
designating the First Appraiser.
(b) Election to Purchase Interest of Adverse Partner. For a
period ending at 11:59 p.m. (local time at the Partnership's principal office)
on the thirtieth (30th) day following the day on which notice of the Adverse
Partner's Net Equity is given pursuant to Section 12.3 (the "Election Period"),
except as otherwise provided in Section 12.2(b)(i), each of the Partners (other
than the Adverse Partner and any Exclusive Limited Partner) may elect, by
notice to the Adverse Partner and each other Partner (the "Purchase Notice"),
to
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purchase all or any portion of the Adverse Partner's Interest (and a
proportionate share of such Adverse Partner's Preferred Interest, if
applicable), which notice shall state the maximum Percentage Interest that such
Partner (a "Purchasing Partner") is willing to purchase (each a "purchase
commitment"). If the aggregate purchase commitments made by the Purchasing
Partners are equal to at least one hundred percent (100%) of the Adverse
Partner's Interest, then subject to the following sentence, each Purchasing
Partner shall be obligated to purchase, and the Adverse Partner shall be
obligated to sell to such Purchasing Partner, that portion of the Adverse
Partner's Interest (and Preferred Interest, if applicable) that corresponds to
the ratio of the Percentage Interest of such Purchasing Partner to the
aggregate Percentage Interests of the Purchasing Partners, provided that, if
any Purchasing Partner's purchase commitment was for an amount less than its
proportionate share of the Adverse Partner's Interest (and Preferred Interest,
if applicable) as so determined, then the portion of the Adverse Partner's
Interest (and Preferred Interest, if applicable) not so committed to be
purchased shall continue to be allocated proportionally in the manner provided
above in this sentence among the other Purchasing Partners until each has been
allocated, by such process of apportionment, a percentage of the Adverse
Partner's Interest (and Preferred Interest, if applicable) equal to the maximum
percentage such Purchasing Partner committed to purchase or until the Adverse
Partner's entire Interest (and Preferred Interest, ifapplicable) has been
allocated among the Purchasing Partners. In the event that the other Partners
do not elect to purchase the entire Interest of the Adverse Partner, the
Adverse Partner shall be under no obligation to sell any portion of its
Interest (or Preferred Interest, if applicable) to any Partner.
(i) Except as otherwise provided in Section
12.2(b)(ii), if an Adverse Partner is a Cable Partner and no Cable Partner's
Percentage Interest, when added to the Percentage Interests of all Controlled
Affiliates of such Partner, is equal to or greater than Sprint's Percentage
Interest when added to the Percentage Interests of all Controlled Affiliates of
Sprint, then the Adverse Partner's Interest (and Preferred Interest, if
applicable) shall be allocated first among those of the Purchasing Partners
that are Cable Partners as though Sprint were not a Purchasing Partner and if
and to the extent that the aggregate purchase commitments made by such Cable
Partners are less than one hundred percent (100%) of the Adverse Partner's
Interest, the balance of the Adverse Partner's Interest (and Preferred
Interest, if applicable) up to Sprint's purchase commitment shall be allocated
to Sprint.
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(ii) The Adverse Partner's Interest (and Preferred
Interest, if applicable) shall be allocated among the Cable Partners in the
manner set forth in Section 12.2(b)(i) until any Cable Partner would have a
Percentage Interest, when added to the Percentage Interests of all Controlled
Affiliates of such Partner, equal to Sprint's Percentage Interest, when added
to the Percentage Interests of all Controlled Affiliates of Sprint, calculated
in each case after giving effect to the adjustments to the Percentage Interests
to be made in connection with the purchases of the Adverse Partner's Interest
by the Cable Partners in accordance with Section 12.2(b)(i) assuming that such
purchases were made up to the amount that would yield such result (as to each
Partner, its "Adjusted Percentage Interest"). Any portion of the Adverse
Partner's Interest (and Preferred Interest, if applicable) not yet allocated
shall continue to be allocated proportionately among all Purchasing Partners
(including Sprint, if applicable) in the manner set forth in this Section
12.2(b) without regard to Section 12.2(b)(i), but substituting the Adjusted
Percentage Interests of the Purchasing Partners for the Percentage Interests
that would otherwise be used to determine such allocation until each has been
allocated an amount equal to its purchase commitment or until the Adverse
Partner's entire Interest (and Preferred Interest, if applicable) has been
allocated among the Purchasing Partners.
(c) Terms of Purchase; Closing. Unless the Purchasing
Partners and the Adverse Partner otherwise agree, the closing of the purchase
and sale of the Adverse Partner's Interest (and Preferred Interest, if
applicable), MinorCo Interest (as required by Section 13.3(d)) and Partner
Loans (as required by Section 13.3(c)) shall occur at the principal office of
the Partnership at 10:00 a.m. (local time at the place of the closing) on the
first Business Day occurring on or after the thirtieth (30th) day following the
last day of the Election Period (subject to Section 12.5). At the closing,
each Purchasing Partner shall pay to the Adverse Partner, by cash or other
immediately available funds, that portion of the purchase price for the Adverse
Partner's Interest (and Preferred Interest, if applicable), MinorCo Interest
and Partner Loans for which such Purchasing Partner is liable (determined in
the case of the MinorCo Interest and Partner Loans in accordance with Section
13.3) and the Adverse Partner shall deliver to each Purchasing Partner good
title, free and clear of any liens, claims, encumbrances, security interests or
options (other than those created by this Agreement and those securing
financing obtained by the Partnership), to the portion of the
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Adverse Partner's Interest (and Preferred Interest, if applicable), MinorCo
Interest and Partner Loans thus purchased. Each Purchasing Partner shall be
liable to the Adverse Partner only for its individual portion of the purchase
price for the Adverse Partner's Interest (and Preferred Interest, if
applicable), MinorCo Interest and Partner Loans.
At the closing, the Partners shall execute such documents and
instruments of conveyance as may be necessary or appropriate to effectuate the
transactions contemplated hereby, including the Transfer of the Adverse
Partner's Interest (and Preferred Interest, if applicable), MinorCo Interest
and Partner Loans to the Purchasing Partner and the assumption by each
Purchasing Partner of the Adverse Partner's obligations with respect to the
portion of the Adverse Partner's Interest (and Preferred Interest, if
applicable) Transferred to such Purchasing Partner. The Partnership and each
Partner shall bear its own costs of such Transfer and closing, including
attorneys' fees and filing fees. The cost of determining Net Equity shall be
borne one-half by the Adverse Partner and one-half by the Partnership and the
amount borne by the Partnership shall be treated as an expense of the
Partnership for purposes of such determination.
In the event that any Purchasing Partner shall fail to perform its
obligation to purchase hereunder on the scheduled closing date, and no other
Purchasing Partner elects to purchase the portion of the Adverse Partner's
Interest (and Preferred Interest, if applicable), MinorCo Interest and Partner
Loans thus not purchased (such election to be made by notice given to the
Adverse Partner within five (5)Business Days thereafter), the Adverse Partner
will not be obligated to sell any portion of its Interest (or Preferred
Interest, if applicable), MinorCo Interest or Partner Loans to any Purchasing
Partner. If one or more of the other Purchasing Partners timely elects to
purchase such portion of the Adverse Partner's Interest (and Preferred
Interest, if applicable), MinorCo Interest and Partner Loans, such Purchasing
Partner(s) shall be provided an additional fifteen (15) days from the
previously scheduled closing date in which to tender payment therefor.
12.3 Net Equity.
The "Net Equity" of a Partner's Interest (and its Preferred Interest,
if applicable), as of any day, shall be the amount that would be distributed to
such Partner in liquidation of the Partnership pursuant to Section 15 if (i)
all of the Partnership's business and
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assets (including its partnership interests in NewTelco and WirelessCo) were
sold substantially as an entirety for Gross Appraised Value, (ii) the
Partnership paid its accrued, but unpaid, liabilities and established reserves
pursuant to Section 15.2 for the payment of reasonably anticipated contingent
or unknown liabilities and (iii) the Partnership distributed the remaining
proceeds to the Partners in liquidation, all as of such day, provided that in
determining such Net Equity, no reserve for contingent or unknown liabilities
shall be taken into account if such Partner (or its successor in interest)
(other than a Partner that is an Adverse Partner as a result of Bankruptcy)
agrees to indemnify the Partnership and all other Partners for that portion of
any such reserve as would be treated as having been withheld pursuant to
Section 15.3 from the distribution such Partner would have received pursuant to
Section 15.2 if no such reserve were established.
The Net Equity of a Partner's Interest (and its Preferred Interest, if
applicable) shall be determined, without audit or certification, from the books
and records of the Partnership by the Accountants. The Net Equity of a
Partner's Interest (and its Preferred Interest, if applicable) shall be
determined within thirty (30) days of the day upon which the Accountants are
apprised in writing of the Gross Appraised Value, and the amount of such Net
Equity shall be disclosed to the Partnership and each of the Partners by
written notice ("Net Equity Notice"). The Net Equity determination of the
Accountants shall be final and binding in the absence of a showing of manifest
error.
12.4 Gross Appraised Value.
"Gross Appraised Value," as of any day, means the price at which a
willing seller would sell, and a willing buyer would buy, the business and
assets of the Partnership (including the Partnership interests in NewTelco and
WirelessCo), free and clear of all liens and encumbrances, substantially as an
entirety and as a going concern in a single arm's-length transaction for cash,
without time constraints and without being under any compulsion to buy or sell.
Each provision of this Agreement that requires a determination of
Gross Appraised Value also provides the manner and time for the appointment of
two (2) appraisers (the "First Appraiser" and the "Second Appraiser"). If the
Second Appraiser is not timely designated, the determination of the Gross
Appraised Value shall be made by the First Appraiser. The First Appraiser, or
each of the
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First Appraiser and the Second Appraiser if the Second Appraiser is timely
designated, shall submit its determination of the Gross Appraised Value to the
Partnership, the Partners and the Accountants within forty-five (45) days of
the date of its selection (or the selection of the Second Appraiser, as
applicable). If there are two (2) Appraisers and their respective
determinations of the Gross Appraised Value vary by less than ten percent (10%)
of the higher determination, the Gross Appraised Value shall be the average of
the two determinations. If such determinations vary by ten percent (10%) or
more of the higher determination, the two Appraisers shall promptly designate a
third appraiser (the "Third Appraiser"). Neither the Partnership nor any
Partner shall provide, and the First Appraiser and Second Appraiser shall be
instructed not to provide, any information to the Third Appraiser as to the
determinations of the First Appraiser and the Second Appraiser or otherwise
influence such Third Appraiser's determination in any way. The Third Appraiser
shall submit its determination of the Gross Appraised Value to the Partnership,
the Partners and the Accountants within forty-five (45) days of the date of its
selection. The Gross Appraised Value shall be equal to the average of the two
closest of the three determinations, provided that, if the difference between
the highest and middle determinations is no more than one hundred and five
percent (105%) and no less than ninety-five percent (95%) of the difference
between the middle and lowest determinations, then the Gross Appraised Value
shall be equal to the middle determination. The determination of the Gross
Appraised Value in accordance with the foregoing procedure shall be final and
binding on the Partnership and each Partner. If any Appraiser is only able to
provide a range in which Gross Appraised Value would exist, the average of the
highest and lowest value in such range shall be deemed to be such Appraiser's
determination of the Gross Appraised Value. Each Appraiser selected pursuant
to the provisions of this Section 12.4 shall be an investment banking firm or
other qualifiedPerson with prior experience in appraising businesses comparable
to the business of the Partnership and that is not an Interested Person with
respect to any Partner.
12.5 Extension of Time.
If any Transfer of a Partner's Interest or Preferred Interest in
accordance with this Section 12 or Sections 5.1(l)(ii), 13 or 15.7 requires the
consent, approval, waiver, or authorization of any government department,
board, bureau, commission, agency or instrumentality as a condition to the
lawful and valid Transfer of such Partner's Interest or Preferred Interest to
the proposed transferee
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thereof, then each of the time periods provided in this Section 12 or Sections
5.1(l)(ii), 13 or 15.7, as applicable, for the closing of such Transfer shall
be suspended for the period of time during which any such consent, approval,
waiver, or authorization is being diligently pursued; provided, however, that
in no event shall the suspension of any time period pursuant to this Section
12.5 extend for more than three hundred sixty-five (365) days other than in the
case of a purchase of an Adverse Partner's Interest (and Preferred Interest, if
applicable). Each Partner agrees to use its diligent efforts to obtain, or to
assist the affected Partner or the Management Committee in obtaining, any such
consent, approval, waiver, or authorization and shall cooperate and use its
diligent efforts to respond as promptly as practicable to all inquiries
received by it, by the affected Partner or by the Management Committee from any
government department, board, bureau, commission, agency or instrumentality for
initial or additional information or documentation in connection therewith.
SECTION 13. DISPOSITIONS OF INTERESTS
13.1 Restriction on Dispositions.
Except as otherwise permitted by this Agreement, no Partner shall
Dispose of all or any portion of its Interest or Preferred Interest.
13.2 Permitted Transfers.
Subject to the conditions and restrictions set forth in Section 13.3,
a Partner may at any time Transfer all or any portion of its Interest or
Preferred Interest (a) to any Controlled Affiliate of such Partner, (b) in
connection with a Permitted Transaction involving such Partner, (c) to the
administrator or trustee of such Partner to whom such Interest or Preferred
Interest is Transferred in an InvoluntaryBankruptcy, (d) pursuant to and in
compliance with Section 5.1(l)(ii), 6.4(f), 12.2, 13.4, 13.5, 13.6 or 15.7 or
(e) with the prior written consent of the other Partners (each a "Permitted
Transfer").
After any Permitted Transfer, the Transferred Interest or Preferred
Interest shall continue to be subject to all the provisions of this Agreement,
including the provisions of this Section 13 with respect to the Disposition of
Interests and Preferred Interests. Except in the case of a Transfer of a
Partner's entire Interest (and Preferred Interest, if applicable) made in
compliance herewith, no
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Partner shall withdraw from the Partnership, except upon the Unanimous Vote of
the Management Committee. The withdrawal of a Partner, whether or not
permitted, shall not relieve the withdrawing Partner of its obligations under
Section 5.4 or 6.7 and shall not relieve such Partner or any of its Affiliates
of its obligations under, or result in a termination of or otherwise affect,
any agreement between the Partnership and such Partner or Affiliate then in
effect, except to the extent provided therein.
13.3 Conditions to Permitted Transfers.
A Transfer shall not be treated as a Permitted Transfer unless and
until the following conditions are satisfied:
(a) Except in the case of a Transfer involuntarily by
operation of law, the transferor and transferee shall execute and deliver to
the Partnership such documents as may be necessary or appropriate in the
opinion of counsel to the Partnership to effect such Transfer. In the case of
a Transfer of an Interest or Preferred Interest involuntarily by operation of
law, the Transfer shall be confirmed by presentation to the Partnership of
legal evidence of such Transfer, in form and substance satisfactory to counsel
to the Partnership. In all cases, the Partnership shall be reimbursed by the
transferor and/or transferee for all costs and expenses that it reasonably
incurs in connection with such Transfer (including reasonable attorneys' fees
and expenses, but excluding the portion of the costs of determining Net Equity
that are to be borne by the Partnership as provided in Section 12.2(b));
(b) Except in the case of a Transfer involuntarily by
operation of law, the transferee of an Interest or Preferred Interest (other
than, with respect to clauses (A) and (B) below, a transferee that was a
Partner prior to the Transfer) shall, by written instrument in form and
substance reasonably satisfactory to the Management Committee (and, in the case
of clause (C) below, the transferor Partner), (A) make representations and
warranties to thenontransferring Partners equivalent to those set forth in
Section 10.1, (B) accept and adopt the terms and provisions of this Agreement,
including this Section 13, and (C) assume the obligations of the transferor
Partner under this Agreement with respect to the Transferred Interest or
Preferred Interest, as applicable. The transferor Partner shall be released
from all such assumed obligations except (x) as otherwise provided in Section 6
in the case of a Transfer to a Controlled Affiliate, (y) those obligations or
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liabilities of the transferor Partner arising out of a breach of this Agreement
or pursuant to Section 5.4 or 6.7 and (z) in the case of a Transfer to any
Person other than a Partner or any of its Controlled Affiliates, those
obligations or liabilities of the transferor Partner based on events occurring,
arising or maturing prior to the date of Transfer;
(c) Except in the case of a Transfer involuntarily by
operation of law, the transferor of any Interest and its Affiliates will be
obligated to sell to the transferee, and the transferee will be obligated to
buy from the transferor and its Affiliates, a percentage of the Partner Loans
(if any) held directly or indirectly by the transferor or an Affiliate thereof
equal to the percentage of the transferor's Interest being Transferred to the
transferee. If the transferee is a Partner or a Controlled Affiliate thereof,
the terms of such purchase will be as provided in Section 2.7. In connection
with any such purchase of Partner Loans, the transferee shall surrender to the
Partnership the promissory note or notes evidencing such Partner Loans in
exchange for the issuance by the Partnership of a new promissory note made
payable to the order of the transferee in a principal amount equal to the
outstanding balance of such Partner Loans and otherwise having the same terms
as the promissory note surrendered therefor;
(d) Except in the case of a Transfer involuntarily by
operation of law, the transferor of an Interest will be obligated to sell to
the transferee, and the transferee will be obligated to buy from the
transferor, a portion of the MinorCo Interest owned by the transferor
representing the same percentage of the transferor's MinorCo Interest as the
percentage of the transferor's Interest being Transferred to the transferee.
Election by a Partner to purchase all or any portion of another Partner's
Interest pursuant to Section 5.1(l)(ii), 6.4(f) 12, 13.4, 13.5 or 15.7 shall
also constitute an election to purchase an equivalent portion of the
transferor's MinorCo Interest, and each purchasing Partner shall be obligated
to purchase a portion of such MinorCo Interest equal to the percentage of the
transferor's Interest such purchasing Partner is obligated to purchase for a
price equal to the "Net Equity" of the transferor's MinorCoInterest (determined
as provided in Section 12.3 as if all references therein and in any defined
term used therein to the Partnership were deemed references to MinorCo and all
references to Section 15 contained therein were deemed references to the
corresponding provisions of the Agreement of Limited Partnership of MinorCo
dated as of the date hereof) (except in the case of a Transfer pursuant to
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Section 13.4, in which case the terms of the Purchase Offer shall apply);
(e) Except in the case of a Transfer involuntarily by
operation of law, if required by the Management Committee, the transferee shall
deliver to the Partnership an opinion, satisfactory in form and substance to
the Management Committee, of counsel reasonably satisfactory to the Management
Committee to the effect that the Transfer of the Interest or Preferred Interest
is in compliance with applicable state and Federal securities laws;
(f) Except in the case of a Transfer involuntarily by
operation of law, if required by the Management Committee, the transferee
(other than a transferee that was a Partner prior to the Transfer) shall
deliver to the Partnership evidence of the authority of such Person to become a
Partner and to be bound by all of the terms and conditions of this Agreement,
and the transferee and transferor shall each execute and deliver such other
instruments as the Management Committee reasonably deems necessary or
appropriate to effect, and as a condition to, such Transfer, including
amendments to the Certificate or any other instrument filed with the State of
Delaware or any other state or governmental agency;
(g) Unless otherwise approved by the Management Committee
(with the Representatives of the transferor General Partner abstaining), no
Transfer of an Interest or Preferred Interest shall be made except upon terms
which would not, in the opinion of counsel chosen by and mutually acceptable to
the Management Committee and the transferor Partner, result in the termination
of the Partnership within the meaning of Section 708 of the Code or cause the
application of the rules of Sections 168(g)(1)(B) and 168(h) of the Code or
similar rules to apply to the Partnership. If the immediate Transfer of such
Interest or Preferred Interest would, in the opinion of such counsel, cause a
termination within the meaning of Section 708 of the Code, then if, in the
opinion of such counsel, the following action would not precipitate such
termination, the transferor Partner shall be entitled (or required, as the case
may be) (i) immediately to Transfer only that portion of its Interest or
Preferred Interest as may, in the opinion of counsel to the Partnership, be
Transferred without causing such a termination and (ii) to enter into an
agreementto Transfer the remainder of its Interest or Preferred Interest, in
one or more Transfers, at the earliest date or dates on which such Transfer or
Transfers may be effected without causing such termination. The purchase price
for the Interest or Preferred
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Interest shall be allocated between the immediate Transfer and the deferred
Transfer or Transfers pro rata on the basis of the percentage of the aggregate
Interest or Preferred Interest being Transferred, each portion to be payable
when the respective Transfer is consummated, unless otherwise agreed by the
parties to the Transfer. In the case of a Transfer by one Partner to another
Partner, the deferred purchase price shall be deposited in an interest-bearing
escrow account unless another method of securing the payment thereof is agreed
upon by the transferor Partner and the transferee Partner(s). In determining
whether a particular proposed Transfer will result in a termination of the
Partnership, counsel to the Partnership shall take into account the existence
of prior written commitments to Transfer made pursuant to this Agreement and
such commitments shall always be given precedence over subsequent proposed
Transfers;
(h) The transferor or transferee shall furnish the
Partnership with the transferee's taxpayer identification number, sufficient
information to determine the transferee's initial tax basis in the Interest or
Preferred Interest Transferred, and any other information reasonably necessary
to permit the Partnership to file all required federal and state tax returns
and other legally required information statements or returns. Without limiting
the generality of the foregoing, the Partnership shall not be required to make
any distribution otherwise provided for in this Agreement with respect to any
Transferred Interest or Preferred Interest until it has received such
information;
(i) Except in the case of a Transfer of an Interest or
Preferred Interest involuntarily by operation of law, if the transferor is a
General Partner, the transferor and transferee shall provide the Partnership
with an opinion of counsel, which opinion of counsel shall be reasonably
satisfactory to the other Partners, to the effect that such Transfer will not
cause the Partnership to become taxable as a corporation for federal income tax
purposes; and
(j) If the Parent of a transferee is not the same Person as
the Parent of the transferring Partner, then the Parent of the transferee
(other than a transferee Partner) shall execute and deliver to the Partnership
and the other Parents a Parents' Undertaking. If a Partner ceases to be a
Controlled Affiliate of its former Parent as a result of a Permitted
Transaction, then the new Parent of such Partnershall execute and deliver a
Parents' Undertaking to the Partnership and the other Parents.
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Upon completion of any Permitted Transfer and compliance with the
provisions of this Section 13.3, the transferee of the Interest or Preferred
Interest (if not already a Partner) shall be admitted as a Partner without any
further action.
13.4 Right of First Refusal.
After March 1, 2000, a Partner may Transfer all or any portion of its
Interest (the "Offered Interest") if (i) such Partner (the "Seller") first
offers to sell the Offered Interest pursuant to the terms of this Section 13.4,
and (ii) the Transfer of the Offered Interest to the Purchaser (as defined
below) would not cause an Adverse Act under clause (vii) of the definition
thereof.
(a) Limitation on Transfers. No Transfer may be made under
this Section 13.4 unless the Seller has received a bona fide written offer (the
"Purchase Offer") from a Person (including another Partner) who is not a
Controlled Affiliate of such Partner (the "Purchaser") to purchase the Offered
Interest for a purchase price (the "Offer Price") denominated and payable in
United States dollars at closing, which offer shall be in writing signed by the
Purchaser and shall be irrevocable for a period ending no sooner than the
Business Day following the end of the Offer Period, as hereinafter defined.
(b) Offer Notice. Prior to accepting the Purchase Offer, the
Seller shall give to the Partnership and each other Partner other than any
Exclusive Limited Partner written notice (the "Offer Notice") which shall
include a copy of the Purchase Offer and an offer (the "Firm Offer") to sell
the Offered Interest to the other Partners (the "Offerees") for the Offer
Price, payable according to the same terms as (or on more favorable terms than)
those contained in the Purchase Offer, provided that the Firm Offer shall be
made without regard to the requirement of any earnest money or similar deposit
required of the Purchaser prior to closing. If the Person making the Purchase
Offer is not an entity that is subject to the periodic reporting requirements
of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, the
Seller shall also provide any information concerning the ownership of the
Person making the Purchase Offer that may be reasonably requested by any other
Partner, to the extent such information is available to the Seller.
(c) Offer Period. The Firm Offer shall be irrevocable for a
period (the "Offer Period") ending at 11:59 P.M., local time at the
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Partnership's principal place of business, on the sixtieth (60th) day following
the day of the Offer Notice.
(d) Acceptance of Firm Offer. At any time during the Offer
Period, any Offeree may accept the Firm Offer as to all or any portion of the
Offered Interest, by giving written notice of such acceptance to the Seller and
each other Offeree, which notice shall indicate the maximum Percentage Interest
that such Offeree is willing to purchase (the "purchase commitment"). If the
aggregate purchase commitments made by Offerees accepting the Firm Offer
("Accepting Offerees") are equal to at least one hundred percent (100%) of the
Offered Interest, then, except as otherwise provided in Section 13.4(d)(i),
each Accepting Offeree shall be obligated to purchase, and the Seller shall be
obligated to sell to such Accepting Offeree that portion of the Offered
Interest that corresponds to the ratio of the Percentage Interest of such
Accepting Offeree to the aggregate Percentage Interests of the Accepting
Offerees, provided that if any Accepting Offeree's purchase commitment was for
an amount less than its proportionate share of the Offered Interest as so
determined, then the portion of the Offered Interest not so committed to be
purchased shall continue to be allocated proportionally in the manner provided
above in this sentence among the other Accepting Offerees until each has been
allocated, by such process of apportionment, a percentage of the Offered
Interest equal to the maximum percentage such Accepting Offeree committed to
purchase or until the entire Offered Interest has been allocated among the
Accepting Offerees. If Offerees do not accept the Firm Offer as to all of the
Offered Interest during the Offer Period, the Firm Offer shall be deemed to be
rejected in its entirety.
(i) Except as otherwise provided in Section
13.4(d)(ii), if a Seller is a Cable Partner and no Cable Partner's Percentage
Interest, when added to the Percentage Interests of all Controlled Affiliates
of such Partner, is equal to or greater than Sprint's Percentage Interest, when
added to the Percentage Interests of all Controlled Affiliates of Sprint, then
the Offered Interest shall be allocated first among those of the Accepting
Offerees that are Cable Partners as though Sprint were not an Accepting Offeree
and if and to the extent that the aggregate purchase commitments made by such
Cable Partners are less than one hundred percent (100%) of the Offered
Interest, the balance of the Offered Interest up to Sprint's purchase
commitment shall be allocated to Sprint.
(ii) The Offered Interest shall be allocated among
the
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Cable Partners in the manner set forth in Section 13.4(d)(i) until any Cable
Partner would have a Percentage Interest, when added to thePercentage Interests
of all Controlled Affiliates of such Partner, that is equal to Sprint's
Percentage Interest, when added to the Percentage Interests of all Controlled
Affiliates of Sprint, calculated in each case after giving effect to the
adjustments to Percentage Interests to be made in connection with the purchase
of the Offered Interest by the Cable Partners in accordance with Section
13.4(d)(i) assuming that such purchase was made up to the amount that would
yield such result (as to each Partner, its "Adjusted Percentage Interest").
Any portion of the Offered Interest not yet allocated shall continue to be
allocated proportionately among all Accepting Offerees (including Sprint, if
applicable) in the manner set forth in this Section 13.4(d) without regard to
Section 13.4(d)(i), but substituting the Adjusted Percentage Interests of the
Offerees for the Percentage Interests that would otherwise be used to determine
such allocation, until each has been allocated an amount equal to its purchase
commitment or until the entire Offered Interest has been allocated among the
Accepting Offerees.
(e) Closing of Purchase Pursuant to Firm Offer. If all of
the Offered Interest has been subscribed for in accordance with the terms of
Section 13.4(d), the Seller shall give notice to such effect (the "Sale
Notice") to all Offerees within five days after the end of the Offer Period.
Unless the Accepting Offerees and the Seller otherwise agree, the closing of
any purchase pursuant to this Section 13.4 shall be held at the principal
office of the Seller at 10:00 a.m. (local time at the place of closing) on the
first Business Day on or after the thirtieth (30th) day following the date on
which the Sale Notice is given (subject to Section 12.5). At the closing, each
Accepting Offeree shall pay to the Seller, by cash or other immediately
available funds, that portion of the purchase price for the Offered Interest,
MinorCo Interest and Partner Loans of the Seller for which such Accepting
Offeree is liable, and the Seller shall deliver to each Accepting Offeree good
title, free and clear of any liens, claims, encumbrances, security interests or
options (other than those created by this Agreement and those securing
financing obtained by the Partnership), to the portion of the Offered Interest,
MinorCo Interest and Partner Loans thus purchased. Each Accepting Offeree
shall be liable to the Seller only for its individual portion of the purchase
price for the Offered Interest, MinorCo Interest and Partner Loans.
At the closing, the Partners shall execute such documents and
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instruments of conveyance as may be necessary or appropriate to effectuate the
transactions contemplated hereby, including the Transfer of the Offered
Interest, MinorCo Interest and Partner Loans of the Seller to the Accepting
Offerees and the assumption by eachAccepting Offeree of the Seller's
obligations with respect to the portion of the Seller's Interest and MinorCo
Interest Transferred to such Accepting Offerees. Each Partner and the
Partnership shall bear its own costs of such Transfer and closing, including
attorneys' fees and filing fees.
(f) Sale Pursuant to Purchase Offer If Firm Offer Rejected.
If the Firm Offer is not accepted in the manner hereinabove provided, or the
Accepting Offerees fail to close the purchase on the closing date, then in
either such event, but subject to the last sentence of this Section 13.4(f) and
subject to Section 13.3, the Seller shall be free for the period described
below (the "Free to Sell Period") to sell the Offered Interest to the Purchaser
upon terms and conditions that are the same as, or more favorable to the Seller
than, those contained in the Purchase Offer (including at the same or greater
price). The Free to Sell Period shall be the applicable of (i) if the Firm
Offer is not accepted, sixty (60) days after the last day of the Offer Period
(subject to Section 12.5) or (ii) if the Firm Offer is accepted but the
purchase is not closed, sixty (60) days (subject to Section 12.5) after the
scheduled closing date, provided that if the last sentence of this Section
13.4(f) becomes applicable, then such sixty (60) day period shall be measured
from the fifth (5th) Business Day after the previously scheduled closing date
or, if applicable, from the subsequently scheduled closing date contemplated by
such sentence (assuming the required purchase elections are made). If the
Offered Interest is not so sold within the Free to Sell Period, the Seller's
right to Transfer its Interest shall again be subject to the foregoing
restrictions. Notwithstanding the foregoing, if more than one Offeree elected
to purchase the Offered Interest and at least one Accepting Offeree tendered
its proportionate share of the purchase price therefor at the closing but any
other Accepting Offeree failed to make such tender, then any tendering
Accepting Offeree may elect, by notice given to the Seller within five (5)
Business Days thereafter, to purchase the portion of the Offered Interest for
which payment was not tendered (provided that, after giving effect to such
election, the entire Offered Interest is being purchased) and shall be provided
an additional fifteen (15) days from the previously scheduled closing date in
which to tender payment therefor.
(g) Restrictions on Notice. No notice initiating the
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procedures contemplated by this Section 13.4 may be given by any Partner while
any notice, purchase or Transfer is pending under Section 12 or this Section
13.4 or after a Liquidating Event has occurred. No notice initiating the
procedures contemplated by this Section 13.4 may be given by an Adverse Partner
nor any Delinquent Partner prior to the applicable Cure Date unless such
Partner hascured the underlying Payment Default, and no Seller shall be
required to offer any portion of its Interest to an Adverse Partner during the
period that the Partnership is pursuing any remedy specified in Section 12.1
with respect to such Adverse Partner. No Partner may accept a Purchase Offer
during any period that, as provided above, such Partner may not give the notice
initiating the procedures contemplated by this Section 13.4 or thereafter until
it has given such notice and otherwise complied with the provisions of this
Section 13.4.
13.5 Tagalong Rights.
(a) Direct Transfers. In the event that (i) a Partner
proposes to Transfer its Interest (as part of a single transaction or any
series of related transactions) to any Person other than a Controlled Affiliate
of such Partner after March 1, 2000, and such Transfer would cause the proposed
transferee (a "Tagalong Purchaser") and its Controlled Affiliates to own more
than fifty-five percent (55%) of the Percentage Interests (a "Tagalong
Transaction") and (ii) the Firm Offer is not accepted in the manner provided in
Section 13.4, the Tagalong Transaction shall not be permitted hereunder unless
the Tagalong Purchaser offers to purchase the entire Interest of any other
Partner that desires to sell its Interest to the Tagalong Purchaser at the same
price per each one percent (1%) Percentage Interest and on the same terms and
conditions as the Tagalong Purchaser has offered to the Partner proposing to
make such Transfer (the "Transferring Partner"). If such Transfer occurs as
part of a series of related transactions, the price and terms shall be the
price and terms most favorable to the Transferring Partner for which any
portion of the Interest of the Transferring Partner is Transferred as part of
such series of transactions. Prior to effecting any Tagalong Transaction, the
Transferring Partner shall deliver to each other Partner a binding, irrevocable
offer (the "Tagalong Offer") by the Tagalong Purchaser to purchase the entire
Interest of the other Partners at the same price per each one percent (1%)
Percentage Interest and on the same terms and conditions as the Tagalong
Purchaser has offered to the Transferring Partner (the "Tagalong Notice").
The "Tagalong Offer" shall be irrevocable for a period (the
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"Tagalong Period") ending at 11:59 p.m., local time at the Partnership's
principal place of business, (x) with respect to a Tagalong Purchaser that is
an existing Partner or a Controlled Affiliate of an existing Partner, on the
one hundred eightieth (180th) day following the date of the Tagalong Notice and
(y) with respect to any other Tagalong Purchaser, on the first anniversary of
the date of the Tagalong Notice. At any time during the Tagalong Period, any
Partner may accept the Tagalong Offer as to the entire amount of itsInterest by
giving written notice of such acceptance to the Tagalong Purchaser.
(b) Indirect Transfers. Within five (5) days of the Parent
of any Partner (such Partner, a "Controlling Partner") acquiring, indirectly,
Interests in the Partnership (other than through such Controlling Partner's
acquisition of additional Interests), causing such Parent to own, directly and
indirectly through its Controlled Affiliates, more than fifty- five percent
(55%) of the Percentage Interests, such Controlling Partner shall give to each
other Partner written notice of such acquisition (a "Control Notice"), which
shall include an offer (the "Control Offer") by the Controlling Partner to
purchase the entire Interest of each other Partner at a price equal to the Net
Equity thereof (as determined pursuant to Section 12.3) and shall designate a
First Appraiser (as required by Section 12.4). The Representatives of the
other General Partners shall by Required Majority Vote pursuant to Section 9.7
appoint the Second Appraiser within ten (10) Business Days following the date
the Control Notice was given. The Control Offer shall be irrevocable for a
period (the "Control Offer Period") ending at 11:59 p.m., local time at the
Partnership's principal place of business, on the one hundred eightieth (180th)
day following the date of the Net Equity Notice. At any time during the
Control Offer Period, any Partner may accept the Control Offer as to the entire
amount of its Interest by giving written notice of such acceptance to the
Controlling Partner. The costs of determining the Net Equity shall be borne
one-half by the Controlling Partner and one-half by the Partners that accept
the Control Offer (pro rata based on their respective Percentage Interests) or,
if no Partner accepts the Control Offer, then such costs shall be borne
entirely by the Partnership.
(c) Limitations on Acceptance of Offers. No Adverse Partner
may accept a Tagalong Offer or a Control Offer during any period that an
election may be made to pursue the remedies specified in 12.1(a) against such
Partner and, if an election pursuant to clause (i) of the first sentence
thereof to purchase the Adverse Partner's
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Interest is made, pending the closing of the purchase thereof, unless, in any
such case, such Adverse Partner agrees that the purchase price for its Interest
under this Section 13.5 will not be greater than the price at which its
Interest could then be purchased under Section 12.
(d) Closing Matters. Unless the Tagalong Purchaser or the
Controlling Partner, as the case may be, on the one hand, and the Partners
accepting the Tagalong Offer or the Control Offer, as the case may be, on the
other hand, otherwise agree, the closing of the purchase and sale of Interests
pursuant to this Section 13.5 shalloccur at the principal office of the
Partnership at 10:00 a.m. (local time at the place of the closing) on the first
Business Day occurring on or after the sixtieth (60th) day following the
expiration of the Tagalong Period or the Control Offer Period, as applicable,
subject to Section 12.5. At the closing, the Tagalong Purchaser or Controlling
Partner shall pay to the Partners who have accepted the applicable offer, by
cash or other immediately available funds, the purchase price for the
Interests, MinorCo Interests and Partner Loans being Transferred, and the
Partners selling their Interests, MinorCo Interests and Partner Loans shall
deliver to the Tagalong Purchaser or Controlling Partner, as applicable, good
title, free and clear of any liens, claims, encumbrances, security interest or
options (other than those created by this Agreement and those securing
financing obtained by the Partnership), to the Interest, MinorCo Interest and
Partner Loans thus purchased.
At the closing, the Partners shall execute such documents and
instruments of conveyance as may be necessary or appropriate to effectuate the
transactions contemplated hereby, including the Transfer of the Interests,
MinorCo Interests and Partner Loans to the Tagalong Purchaser or Controlling
Partner, as applicable, and the assumption by the Tagalong Purchaser or
Controlling Partner, as applicable, of the obligations with respect to the
Interests and MinorCo Interests so Transferred. Each Partner and the
Partnership shall bear its own costs of such Transfer and closing, including
attorneys' fees and filing fees.
13.6 Partner Put Rights.
(a) Determination of Net Equity of Partners' Interests. If the
Initial Business Plan has not been agreed upon by the Partners by the
Determination Date, any Partner may cause the Net Equity of each Partner's
Interest to be determined as of the Determination Date in accordance with
Section 12.3 by giving notice to the Management
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Committee and each other Partner of its desire to have Net Equity so
determined. In such event, the initiating Partner shall appoint the First
Appraiser and the Representatives of the other Partners shall appoint the
Second Appraiser by Required Majority Vote pursuant to Section 9.7.
(b) Put Procedure.
(i) Within thirty (30) days of delivery of the
Net Equity Notice, any Partner may elect to put its entire Interest to all
other Partners not electing to put their Interests pursuant to this Section
13.6(b) by giving written notice of its election (a "PutNotice") to each other
Partner and the Management Committee; provided that a Put Notice may not be
given after the Initial Business Plan has been adopted by a Unanimous Partner
Vote.
(ii) Within fifteen (15) days of the expiration of
the deadline for delivering a Put Notice pursuant to Section 13.6(b)(i), each
Partner who did not deliver a Put Notice pursuant to Section 13.6(b)(i) may
elect to put its entire Interest to all other Partners who do not elect to put
their Interests pursuant to this Section 13.6(b) by delivering a Put Notice to
each other Partner and the Management Committee.
(iii) The procedure set forth in Section
13.6(b)(ii) shall be repeated until either (A) all Partners have delivered a
Put Notice, in which case a Liquidating Event will occur pursuant to Section
15.1(a)(iv), or (B) a period during which one or more Partners may deliver a
Put Notice expires without any Partner delivering a Put Notice, in which case
each Partner that has not delivered a Put Notice will be obligated to purchase
the Interest of each Partner that has delivered a Put Notice pursuant to the
procedures set forth in Section 13.6(c). An election by a Partner to put its
Interest by delivery of a Put Notice is binding and irrevocable.
(c) Purchase of Put Interests.
(i) Except as otherwise provided in Section
13.6(c)(ii), each General Partner not electing to put its Interest pursuant to
Section 13.6(b) (a "Buying Partner") shall purchase a pro rata share (based on
the relative Percentage Interests of the Buying Partners) of the aggregate
Interests of the Partners that delivered Put Notices pursuant to Section
13.6(b) (the "Selling Partners"). The purchase price of each Selling Partner's
Interest
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purchased pursuant to this Section 13.6(c) shall be equal to the lesser of (i)
the Net Equity of such Interest or (ii) the sum of the Agreed Values of the
Original Capital Contribution, Additional Capital Contributions and (if
applicable) License Contribution made by the Selling Partner.
(ii) Except as otherwise provided in Section
13.6(c)(iii), if any Selling Partner is a Cable Partner, Sprint is a Buying
Partner, and no Cable Partner that is a Buying Partner has a Percentage
Interest that, when added to the Percentage Interests of all Controlled
Affiliates of such Partner, is equal to or greater than Sprint's Percentage
Interest, when added to the Percentage Interests of all Controlled Affiliates
of Sprint, then each Cable Partner that is a Buying Partner (a "Cable Buying
Partner") may elect by writtennotice to all other Partners to purchase all or
any portion of the Selling Partners' Interests that would, without regard to
this Section 13.6(c)(ii), have been purchased by Sprint (the "Sprint
Obligation"), which notice shall state the maximum share of the Sprint
Obligation that such Cable Buying Partner is willing to purchase (each an
"Additional Purchase Commitment"). If the aggregate Additional Purchase
Commitments are equal to at least one hundred percent (100%) of the Sprint
Obligation, each Cable Buying Partner shall, except as otherwise provided in
Section 13.6(c)(iii), be obligated to purchase that portion of the Sprint
Obligation that corresponds to the ratio of the Percentage Interest of such
Cable Buying Partner to the aggregate Percentage Interests of the Cable Buying
Partners, provided that, if any Cable Buying Partner's Additional Purchase
Commitment was for an amount less than its proportionate share of the Sprint
Obligation as so determined, then the portion of the Sprint Obligation not so
committed to be purchased shall continue to be allocated proportionally in the
manner provided above in this sentence among the other Cable Buying Partners
until each has been allocated, by such process of apportionment, a percentage
of the Sprint Obligation equal to the maximum percentage such Cable Buying
Partner committed to purchase or until the entire Sprint Obligation has been
allocated among the Cable Buying Partners. If and to the extent that the
aggregate amount of the Additional Purchase Commitments are less than one
hundred percent (100%) of the Sprint Obligation, the balance of the Sprint
Obligation shall be allocated to Sprint.
(iii) The Sprint Obligation shall be allocated
among the Cable Buying Partners in the manner set forth in Section 13.6(c)(ii),
if applicable, until any Cable Buying Partner would have a Percentage Interest,
when added to the Percentage Interests of all Controlled
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Affiliates of such Partner, that is equal to Sprint's Percentage Interest, when
added to the Percentage Interests of all Controlled Affiliates of Sprint,
calculated in each case after giving effect to the adjustments to the
Percentage Interests to be made in connection with the purchases of the Selling
Partners' Interests in accordance with the foregoing provisions of this Section
13.6(c) assuming that the purchases to be made pursuant to the Sprint
Obligation by the Cable Buying Partners and Sprint were made up to the
aggregate amount that would yield such result (as to each Partner, its
"Adjusted Percentage Interest"). Any portion of the Sprint Obligation that
would not be allocated to the Cable Buying Partners in accordance with the
preceding sentence shall be allocated proportionately among all Buying Partners
(including Sprint, if applicable) in the manner set forth in Section 13.6(c)(i)
without regard to Section 13.6(c)(ii), but substituting the Adjusted Percentage
Interests of the Buying Partners for the Percentage Interests that would
otherwise be used to determinesuch allocation until the entire amount of the
Sprint Obligation has been allocated among the Buying Partners.
(d) Terms of Purchase; Closing. Unless the Buying
Partners and the Selling Partners otherwise agree, the closing of the purchase
and sale of each Selling Partner's Interest, MinorCo Interest and Partner Loans
shall occur at the principal office of the Partnership at 10:00 a.m. (local
time at the place of the closing) on the first Business Day occurring on or
after the ninetieth (90th) day following the date of the final Put Notice
(subject to Section 12.5) or such earlier date as the Buying and Selling
Partners may agree. At the closing, each Buying Partner shall pay to each
Selling Partner, by cash or other immediately available funds, that portion of
the purchase price of such Selling Partner's Interest, MinorCo Interest and
Partner Loans for which such Buying Partner is liable, and each Selling Partner
shall deliver to each Buying Partner good title, free and clear of any liens,
claims, encumbrances, security interests or options (other than those created
by this Agreement and those securing financing obtained by the Partnership), to
the portion of such Selling Partner's Interest, MinorCo Interest and Partner
Loans thus purchased. Each Buying Partner shall be liable to such Selling
Partner only for its individual portion of the purchase price for such Selling
Partner's Interest, MinorCo Interest and Partner Loans.
At the closing, the Partners shall execute such documents and
instruments of conveyance as may be necessary or appropriate to effectuate the
transactions contemplated hereby, including the Transfer of the Interest,
MinorCo Interest and Partner Loans of the
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Selling Partners to the Buying Partners and the assumption by such Buying
Partner of each Selling Partner's obligations with respect to the portion of
such Selling Partner's Interest and MinorCo Interest Transferred to such Buying
Partner. Each Partner and the Partnership shall bear its own costs of such
Transfer and closing, including attorneys' fees and filing fees. The costs of
determining Net Equity shall be borne by the Partnership, if no Partner or all
Partners deliver a Put Notice, and otherwise one-half by the Selling Partners
and one-half by the Buying Partners (in each case pro rata among the members of
each group based on their respective Percentage Interests).
13.7 Put/Call of Preferred Interests.
The Partnership shall have the right to redeem all or any part of the
Preferred Interests (and in the case of a partial redemption of Preferred
Interests held by more than one Person, such redemption shall be made pro rata
in accordance with the relative interests of such holders in the aggregate
Preferred Interests outstanding at thetime of such redemption, except as
otherwise agreed to by the holders of the Preferred Interests), and each holder
of a Preferred Interest shall have the right to require the Partnership to
redeem all or any part of the Preferred Interest held by such holder, at any
time after March 1, 2000, at a price equal to the sum of the outstanding
balance of (i) the Excess Value Account and (ii) the Preferred Return Account
as of the date of redemption, attributable to the portion of the Preferred
Interests being redeemed. Such right may be exercised by the Partnership or
any holder by giving notice (the "Preferred Buyout Notice") to the other and to
the Management Committee at any time following such date, which notice shall
specify the portion of the Preferred Interests to be redeemed by the
Partnership. The Partnership's purchase of the Preferred Interests shall occur
at the principal office of the Partnership on a date designated by the
Partnership within thirty (30) days following the giving of the Preferred
Buyout Notice. At the closing, the Partnership shall pay to each holder, by
cash or other immediately available funds, an amount equal to the sum of the
outstanding balance of (i) the Excess Value Account and (ii) the Preferred
Return Account attributable to the portion of such holder's Preferred Interest
being redeemed, and each holder shall deliver to the Partnership good title,
free and clear of any liens, claims, encumbrances, security interests or
options, to such Preferred Interest. Any Preferred Interest that has been
redeemed by the Partnership pursuant to this Section 13.7 shall, after such
redemption, be cancelled by the Partnership and shall not be available for
reissuance.
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13.8 Prohibited Dispositions.
Any purported Disposition of all or any part of an Interest or
Preferred Interest that is not a Permitted Transfer shall be null and void and
of no force or effect whatever; provided that, if the Partnership is required
to recognize a Disposition that is not a Permitted Transfer (or if the
Management Committee, in its sole discretion, elects to recognize a Disposition
that is not a Permitted Transfer), the Interest or Preferred Interest Disposed
of shall be strictly limited to the transferor's rights to allocations and
distributions as provided by this Agreement with respect to the Transferred
Interest or Preferred Interest, which allocations and distributions may be
applied (without limiting any other legal or equitable rights of the
Partnership) to satisfy any debts, obligations, or liabilities for damages that
the transferor or transferee of such Interest or Preferred Interest may have to
the Partnership.
13.9 Representations Regarding Transfers.
Each Partner hereby represents and warrants to the Partnership and the
other Partners that such Partner's acquisition of Interests or Preferred
Interests hereunder is made as principal for such Partner's own account and not
for resale or distribution of such Interests or Preferred Interests.
13.10 Distributions and Allocations in Respect of
Transferred Interests.
If any Interest or Preferred Interest is Transferred during any Fiscal
Year in compliance with the provisions of this Section 13, Profits, Losses,
each item thereof, and all other items attributable to the Transferred Interest
or Preferred Interest for such Fiscal Year shall be divided and allocated
between the transferor and the transferee by taking into account, with respect
to a Transferred Interest, their varying Percentage Interests and, with respect
to a Transferred Preferred Interest, their varying interests in the aggregate
Preferred Interests, during the Fiscal Year in accordance with Code Section
706(d), using any conventions permitted by law and selected by the Management
Committee. All distributions on or before the date of such Transfer shall be
made to the transferor, and all distributions thereafter shall be made to the
transferee. Solely for purposes of making such allocations and distributions,
the Partnership
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shall recognize such Transfer not later than the end of the calendar month
during which it is given notice of such Transfer, provided that, if the
Partnership is given notice of a Transfer at least ten (10) Business Days prior
to the Transfer, the Partnership shall recognize such Transfer as of the date
of such Transfer, and provided further that if the Partnership does not receive
a notice stating the date such Interest or Preferred Interest was Transferred
and such other information as the Management Committee may reasonably require
within thirty (30) days after the end of the Fiscal Year during which the
Transfer occurs, then all such items shall be allocated, and all distributions
shall be made, to the Person who, according to the books and records of the
Partnership, was the owner of the Interest or Preferred Interest on the last
day of such Fiscal Year. Neither the Partnership nor the Management Committee
shall incur any liability for making allocations and distributions in
accordance with the provisions of this Section 13.9, whether or not the
Management Committee or the Partnership has knowledge of any Transfer of
ownership of any Interest or Preferred Interest.
SECTION 14. CONVERSION OF INTERESTS
14.1 Termination of Status as General Partner.
(a) A General Partner shall cease to be a General Partner
upon the first to occur of (i) the Transfer of such Partner's entire Interest
as a Partner in a Permitted Transfer (in which event the transferee of such
Interest shall be admitted as a successor General Partner and a Limited Partner
upon compliance with Section 13.3), (ii) the Unanimous Vote of the Management
Committee to approve a request by such General Partner to withdraw, (iii) any
Adverse Act with respect to such Partner, (iv) such Partner's failure to
satisfy the Minimum Ownership Requirement or (v) in the case of Comcast only,
the occurrence of any of the events described in Section 6.4(f) that cause
Comcast to become an Exclusive Limited Partner. In the event a Person ceases
to be a General Partner pursuant to clauses (ii), (iii), (iv) or (v), the
Interest of such Person as a General Partner shall automatically and without
any further action by the Partners be converted into an Interest solely as a
Limited Partner, and such Partner shall thereafter be an Exclusive Limited
Partner.
(b) The Partners intend that the Partnership not dissolve as
a result of the cessation of any Person's status as a General Partner;
provided, however, that if it is determined by a court of
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competent jurisdiction that the Partnership has dissolved, the provisions of
Section 15.1 shall govern.
14.2 Restoration of Status as General Partner.
An Exclusive Limited Partner whose rights to representation on the
Management Committee have been restored as provided in Section 5.1(c) shall be
restored to the status of a General Partner and its Interest shall thereafter
be deemed held in part as a General Partner and in part as a Limited Partner as
provided in Section 2.1. If Comcast becomes an Exclusive Limited Partner
pursuant to Section 6.4(f), it shall not be entitled to be restored to the
status of General Partner except as expressly provided in such Section.
SECTION 15. DISSOLUTION AND WINDING UP
15.1 Liquidating Events.
(a) In General. Subject to Section 15.1(b), the Partnership
shall dissolve and commence winding up and liquidating upon the first to occur
of any of the following ("Liquidating Events"):
(i) The sale of all or substantially all of the
Property;
(ii) A Unanimous Vote of the Management Committee
to dissolve, wind up, and liquidate the Partnership in accordance with Section
5.1;
(iii) The failure of the General Partners to
resolve a Deadlock Event as provided in Section 5.8(a)(iii) unless the
Management Committee determines by Required Majority Vote or Unanimous Vote (as
required by Section 5.8(a)(iii)) not to dissolve; and
(iv) The withdrawal of a General Partner, the
assignment by a General Partner of its entire Interest or any other event that
causes a General Partner to cease to be a general partner under the Act,
provided that any such event shall not constitute a Liquidating Event if the
Partnership is continued pursuant to this Section 15.1.
The Partners hereby agree that, notwithstanding any provision of the
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Act or the Delaware Uniform Partnership Act, the Partnership shall not dissolve
prior to the occurrence of a Liquidating Event. Upon the occurrence of any
event set forth in Section 15.1(a)(iv), the Partnership shall not be dissolved
or required to be wound up if (x) at the time of such event there is at least
one remaining General Partner and that General Partner carries on the business
of the Partnership (any such remaining General Partner being hereby authorized
to carry on the business of the Partnership), or (y) within ninety (90) days
after such event all remaining Partners agree in writing to continue the
business of the Partnership and to the appointment, effective as of the date of
such event, of one or more additional General Partners.
(b) Special Rules. The events described in Sections
15.1(a)(ii), 15.1(a)(iii) or 15.1(a)(iv) shall not constitute Liquidating
Events until such time as the Partnership is otherwise required to dissolve,
and commence winding up and liquidating, in accordance with Section 15.7.
15.2 Winding Up.
(a) Upon the occurrence of a Liquidating Event, the
Partnership shall continue solely for the purposes of winding up its affairs in
an orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Partners and neither the Management Committee nor any Partner
shall take any action that is inconsistent with, or not appropriate for, the
winding up of the Partnership's business and affairs. To the extent not
inconsistent with the foregoing, this Agreement shall continue in full force
and effectuntil such time as the Partnership's Property has been distributed
pursuant to this Section 15.2 and the Certificate has been cancelled in
accordance with the Act. The Management Committee shall be responsible for
overseeing the winding up and dissolution of the Partnership, shall take full
account of the Partnership's liabilities and Property, shall cause the
Partnership's Property to be liquidated as promptly as is consistent with
obtaining the fair value thereof, and shall cause the proceeds therefrom, to
the extent sufficient therefor, to be applied and distributed in the following
order:
(i) First, to the payment of all of the
Partnership's debts and liabilities (other than Partner Loans) to creditors
other than the Partners and to the payment of the expenses of liquidation;
(ii) Second, to the payment of all Partner Loans and
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all of the Partnership's debts and liabilities to the Partners in the following
order and priority:
(A) first, to the payment of all debts
and liabilities owed to any Partner other than in respect of Partner Loans;
(B) second, to the payment of all
accrued and unpaid interest on Partner Loans, such interest to be paid to each
Partner and its Affiliates (considered as a group) pro rata in proportion to
the interest owed to each such group; and
(C) third, to the payment of the unpaid
principal amount of all Partner Loans, such principal to be paid to each
Partner and its Affiliates (considered as a group) pro rata in proportion to
the outstanding principal owed to each such group; and
(iii) The balance, if any, to the Partners in
accordance with their Capital Accounts, after giving effect to all
contributions, distributions, and allocations for all periods.
(b) In the discretion of the Management Committee, a portion
of the distributions that would otherwise be made to the Partners pursuant to
this Section 15.2 may be:
(i) distributed to a trust established for the
benefit of the Partners for the purposes of liquidating Partnership assets,
collecting amounts owed to the Partnership, and paying any contingent or
unforeseen liabilities or obligations of the Partnership or of the General
Partners arising out of or in connection with the Partnership. The assets of
any such trust shall be distributed to the Partners fromtime to time, in the
reasonable discretion of the Management 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 Section 15.2; or
(ii) withheld to provide a reasonable reserve for
Partnership liabilities (contingent or otherwise) and to reflect the unrealized
portion of any installment obligations owed to the Partnership, provided that
such withheld amounts shall be distributed to the Partners as soon as
practicable.
Each Partner and each of its Affiliates (as to Partner Loans only) agrees that
by accepting the provisions of this Section 15.2 setting
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forth the priority of the distribution of the assets of the Partnership to be
made upon its liquidation, such Partner or Affiliate expressly waives any right
which it, as a creditor of the Partnership, might otherwise have under the Act
to receive distributions of assets pari passu with the other creditors of the
Partnership in connection with a distribution of assets of the Partnership in
satisfaction of any liability of the Partnership, and hereby subordinates to
said creditors any such right.
15.3 Compliance With Certain Requirements of Regulations;
Deficit Capital Accounts.
In the event the Partnership is "liquidated" within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), (a) distributions shall be made
pursuant to this Section 15 to the Partners who have positive Capital Accounts
in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2), and (b) if any
Partner's Capital Account has any deficit balance (after giving effect to all
contributions, distributions, and allocations for all taxable years, including
the year during which such liquidation occurs), such Partner shall contribute
to the capital of the Partnership the amount necessary to restore such deficit
balance to zero in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(3);
provided, however, that the obligation of an Exclusive Limited Partner to
contribute capital pursuant to this sentence shall be limited to the amount of
the deficit balance, if any, that existed in such Exclusive Limited Partner's
Capital Account at the time it became an Exclusive Limited Partner (taking into
account for this purpose any revaluation of Partnership assets pursuant to
subparagraph (ii)(D) of the definition of Gross Asset Value made as a result of
such Partner's becoming an Exclusive Limited Partner).
15.4 Deemed Distribution and Recontribution.
Notwithstanding any other provision of this Section 15, in the event
the Partnership is liquidated within the meaning of Section
1.704-1(b)(2)(ii)(g) of the Regulations but no Liquidating Event has occurred,
the Property shall not be liquidated, the Partnership's liabilities shall not
be paid or discharged, and the Partnership's affairs shall not be wound up.
Instead, solely for federal income tax purposes, the Partnership shall be
deemed to have distributed the Property in kind to the Partners, who shall be
deemed to have assumed and taken subject to all Partnership liabilities, all in
accordance with their respective Capital Accounts and, if any Partner's Capital
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Account has a deficit balance that such Partner would be required to restore
pursuant to Section 15.3 (after giving effect to all contributions,
distributions, and allocations for all Fiscal Years, including the Fiscal Year
during which such liquidation occurs), such Partner shall contribute to the
capital of the Partnership the amount necessary to restore such deficit balance
to zero in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(3).
Immediately thereafter, the Partners shall be deemed to have recontributed the
Property to the Partnership, which shall be deemed to have assumed and taken
subject to all such liabilities.
15.5 Rights of Partners.
Except as otherwise provided in this Agreement, (a) each Partner shall
look solely to the assets of the Partnership for the return of its Capital
Contributions and shall have no right or power to demand or receive property
other than cash from the Partnership, and (b) no Partner shall have priority
over any other Partner as to the return of its Capital Contributions,
distributions, or allocations. If, after the Partnership ceases to exist as a
legal entity, a Partner is required to make a payment to any Person on account
of any activity carried on by the Partnership, such paying Partner shall be
entitled to reimbursement from each other Partner consistent with the manner in
which the economic detriment of such payment would have been borne had the
amount been paid by the Partnership immediately prior to its cessation.
15.6 Notice of Dissolution.
In the event a Liquidating Event occurs or an event described in
Section 15.1(a)(iv) occurs that would, but for provisions of Section 15.1,
result in a dissolution of the Partnership, the Management Committee shall,
within thirty (30) days thereafter, provide written notice thereof to each of
the Partners.
15.7 Buy/Sell Arrangements.
(a) As soon as practicable after the occurrence of an
event described in Section 15.1(a)(ii), 15.1(a)(iii) or, subject to the proviso
contained therein, Section 15.1(a)(iv), the Net Equity of the Interests (and
Preferred Interests, if applicable) shall be determined in accordance with
Section 12.3 and notice of such determination shall be delivered to each
Partner. For purposes of such determination of Net Equity pursuant to this
Section 15.7(a), the General Partner that
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(together with its Controlled Affiliates) holds the largest Voting Percentage
Interest shall designate the First Appraiser as required by Section 12.4 within
thirty (30) days after an occurrence of the applicable Liquidating Event, and
the General Partner that (together with its Controlled Affiliates) holds the
smallest Voting Percentage Interest shall appoint the Second Appraiser within
ten (10) Business Days of receiving notice of the appointment of the First
Appraiser.
(b) Prior to 5:00 p.m. (local time at the principal
office of the Partnership) on the first Business Day on or after the thirtieth
(30th) day following its receipt of notice of the determination of Net Equity
pursuant to Section 15.7(a), each General Partner (individually or together
with one or more other General Partners) must submit sealed statements (the
"Offer Statement") to the Chief Executive Officer notifying the Chief Executive
Officer in writing either (i) that such General Partner or group of General
Partners offers to sell all of its Interest(s) (and Preferred Interest(s), if
applicable), or (ii) that such General Partner or group of General Partners
offers to buy all of the other Partners' Interests (and Preferred Interests, if
applicable). Except as provided in Section 15.7(g), each Exclusive Limited
Partner shall be automatically deemed to have offered to sell its Interest (and
Preferred Interest, if applicable) hereunder and shall for all purposes under
this Section 15.7 be treated as a General Partner that has offered to sell its
Interest (and Preferred Interest, if applicable). The Chief Executive Officer
shall provide a copy of each Offer Statement to each of the Partners within
five (5) days following the last day for submission of the Offer Statements.
(c) If the Offer Statements indicate that one General
Partner or group of General Partners wishes to buy and all of the other
Partners wish to sell, the Net Equity of the Interests (and Preferred
Interests, if applicable) shall thereupon be the price at which the Interests
(and Preferred Interests, if applicable) will be sold.
(d) If the Offer Statements indicate that all Partners
wish to sell their Interests, the Partnership shall dissolve, and commence
winding up and liquidating in accordance with Section 15.2.
(e) If the Offer Statements indicate that more than one
General Partner or group of General Partners wishes to purchase the other
Partners' Interests (and Preferred Interests, if applicable), then the General
Partners or groups of General Partners wishing to
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purchase (each General Partner or group of Partners, a "Bidding Partner") shall
begin the bidding process described below and the highest bidder (determined as
the amount bid per each one percent (1%) Percentage Interest in the
Partnership) shall buy all the other Partners' Interests (and Preferred
Interests, if applicable). Each of the Bidding Partners may make an initial
offer (an "Initial Offer") to purchase the Interests of the other Partners,
which offer may not be less than the Net Equity of the Interests to be
purchased and shall be made within fifteen (15) days of the last day for
submission of the Offer Statements. If no Bidding Partner makes an Initial
Offer by 5:00 p.m. (local time at the principal office of the Partnership) on
the last day of such fifteen (15) day period, the Partnership shall dissolve,
and commence winding up and liquidating in accordance with Section 15.2. If
only one Bidding Partner timely makes an Initial Offer, such offer shall
thereupon be the price at which all other Partners' Interests shall be sold to
such Bidding Partner. If more than one Bidding Partner timely makes an Initial
Offer, each such Bidding Partner must respond within fifteen (15) days of the
last day of the 15-day period for submitting such Initial Offers either by
accepting the highest of such Initial Offers or delivering a counteroffer to
purchase the Interests of the other Partners. A counteroffer must be at least
one percent (1%) higher than the prior offer of which the Bidding Partner has
received notice. The bidding process shall continue until all Bidding Partners
have either responded by accepting the highest immediate prior offer or failed
to make a timely response, in which case the highest immediate prior offer
shall be deemed accepted. An acceptance of an offer shall, if the bidding
process thereafter continues, be deemed to be an acceptance of the highest
succeeding counteroffer. For purposes of this Section 15.7, all offers,
acceptances and counteroffers must be in writing, in a form which is firm and
binding and delivered to the Chief Executive Officer at the principal office of
the Partnership (who shall promptly notify each other Partner of the identity
of the bidder and the amount of such bid); all offers must be responded to
within fifteen (15) days of the last day of the immediately preceding 15-day
period for submitting offers. If no response to an offer or counteroffer is
received by 5:00 p.m. (local time at the principal office of the Partnership)
on the last day of such fifteen (15) day period, the highest immediate prior
offer shall be deemed to be accepted. The purchase price for any Preferred
Interest required to be purchased by the Bidding Partner submitting the highest
offer pursuant to this Section 15.7(e) shall be equal to the Net Equity ofsuch
Preferred Interest.
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(f) The closing of the purchase and sale of each selling
Partner's Interest (and Preferred Interest, if applicable), MinorCo Interest
and Partner Loans shall occur at the principal office of the Partnership at
10:00 a.m. (local time at the place of the closing) on the first Business Day
occurring on or after the thirtieth (30th) day following the date of the final
determination of the purchase price pursuant to Section 15.7(e) (subject to
Section 12.5). At the closing, the purchasing Partner(s) shall pay to each
selling Partner, by cash or other immediately available funds, the purchase
price for such selling Partners' Interest (and Preferred Interest, if
applicable), MinorCo Interest and Partner Loans, and the selling Partner shall
deliver to the purchasing Partner(s) good title, free and clear of any liens,
claims, encumbrances, security interests or options (other than those created
by this Agreement and those securing financing obtained by the Partnership), to
the selling Partner's Interest (and Preferred Interest, if applicable), MinorCo
Interest and Partner Loans thus purchased.
At the closing, the Partners shall execute such documents and
instruments of conveyance as may be necessary or appropriate to effectuate the
transactions contemplated hereby, including the Transfer of the Interests (and
Preferred Interests, if applicable), MinorCo Interests and Partner Loans of the
selling Partner(s) to the purchasing Partner(s) and the assumption by each
purchasing Partner of the selling Partner's obligations with respect to the
selling Partner's Interest (and Preferred Interest, if applicable) Transferred
to the purchasing Partner(s). Each Partner shall bear its own costs of such
Transfer and closing, including attorneys' fees and filing fees. The costs of
determining Net Equity shall be borne by the Partners (pro rata based on their
respective Percentage Interests as of the occurrence of the Liquidating Event).
(g) Solely for the purposes of this Section 15.7, Comcast
will have the same rights and obligations as a General Partner hereunder even
if it has become an Exclusive Limited Partner under Section 6.4(f) so long as
Comcast would not otherwise then be an Exclusive Limited Partner under Section
14.1(a).
SECTION 16. MISCELLANEOUS
16.1 Notices.
Any notice, payment, demand, or communication required or
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permitted to be given by any provision of this Agreement shall be in writing
and mailed (certified or registered mail, postage prepaid, return receipt
requested) or sent by hand or overnight courier, or by facsimile (with
acknowledgment received), charges prepaid and addressed as follows, or to such
other address or number as such Person may from time to time specify by notice
to the Partners:
(a) If to the Partnership, to the address or number set forth
on Schedule 2.2;
(b) If to a Partner or its designated Representative(s), to
the address or number set forth in Schedule 2.2; and
(c) If to the Management Committee, to the Partnership
and to each General Partner and its designated Representative(s).
Any Person may from time to time specify a different address by notice to the
Partnership and the Partners. All notices and other communications given to a
Person in accordance with the provisions of this Agreement shall be deemed to
have been given and received (i) four (4) Business Days after the same are sent
by certified or registered mail, postage prepaid, return receipt requested,
(ii) when delivered by hand or transmitted by facsimile (with acknowledgment
received and, in the case of a facsimile only, a copy of such notice is sent no
later than the next Business Day by a reliable overnight courier service, with
acknowledgment of receipt) or (iii) one (1) Business Day after the same are
sent by a reliable overnight courier service, with acknowledgment of receipt.
16.2 Binding Effect.
Except as otherwise provided in this Agreement, this Agreement shall
be binding upon and inure to the benefit of the Partners and their respective
successors, transferees, and assigns.
16.3 Construction.
This Agreement shall be construed simply according to its fair meaning
and not strictly for or against any Partner.
16.4 Time.
Time is of the essence with respect to this Agreement.
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16.5 Table of Contents; Headings.
The table of contents and section and other headings contained in this
Agreement are for reference purposes only and are not intended to describe,
interpret, define or limit the scope, extent or intent of this Agreement.
16.6 Severability.
Every provision of this Agreement is intended to be severable. If any
term or provision hereof is illegal, invalid or unenforceable for any reason
whatsoever, that term or provision will be enforced to the maximum extent
permissible so as to effect the intent of the Partners, and such illegality,
invalidity or unenforceability shall not affect the validity or legality of the
remainder of this Agreement. If necessary to effect the intent of the
Partners, the Partners will negotiate in good faith to amend this Agreement to
replace the unenforceable language with enforceable language which as closely
as possible reflects such intent.
16.7 Incorporation by Reference.
Every exhibit and other appendix (other than schedules) attached to
this Agreement and referred to herein is not incorporated in this Agreement by
reference unless this Agreement expressly otherwise provides.
16.8 Further Action.
Each Partner, upon the reasonable request of the Management Committee,
agrees to perform all further acts and execute, acknowledge, and deliver any
documents which may be reasonably necessary, appropriate, or desirable to carry
out the intent and purposes of this Agreement.
16.9 Governing Law.
The internal laws of the State of Delaware (without regard to
principles of conflict of law) shall govern the validity of this Agreement, the
construction of its terms, and the interpretation of the rights and duties of
the Partners.
16.10 Waiver of Action for Partition; No Bill For Partnership
Accounting.
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Each Partner irrevocably waives any right that it may have to maintain
any action for partition with respect to any of the Property; provided that the
foregoing shall not be construed to apply to anyaction by a Partner for the
enforcement of its rights under this Agreement. Each Partner waives its right
to seek a court decree of dissolution (other than a dissolution in accordance
with Section 15) or to seek appointment of a court receiver for the Partnership
as now or hereafter permitted under applicable law. To the fullest extent
permitted by law, each Partner covenants that it will not (except with the
consent of the Management Committee) file a bill for Partnership accounting.
16.11 Counterpart Execution.
This Agreement may be executed in any number of counterparts with the
same effect as if all the Partners had signed the same document. All
counterparts shall be construed together and shall constitute one agreement.
16.12 Sole and Absolute Discretion.
Except as otherwise provided in this Agreement, all actions which the
Management Committee may take and all determinations which the Management
Committee may make pursuant to this Agreement may be taken and made at the sole
and absolute discretion of the Management Committee.
16.13 Specific Performance.
Each Partner agrees with the other Partners that the other Partners
would be irreparably damaged if any of the provisions of this Agreement are not
performed in accordance with their specific terms and that monetary damages
would not provide an adequate remedy in such event. Accordingly, in addition
to any other remedy to which the nonbreaching Partners may be entitled, at law
or in equity, the nonbreaching Partners shall be entitled to injunctive relief
to prevent breaches of this Agreement and specifically to enforce the terms and
provisions hereof.
16.14 Entire Agreement.
The provisions of this Agreement set forth the entire agreement and
understanding between the Partners as to the subject matter hereof
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and supersede all prior agreements, oral or written, and other communications
between the Partners relating to the subject matter hereof.
16.15 Limitation on Rights of Others.
Nothing in this Agreement, whether express or implied, shall be
construed to give any Person other than the Partners any legal or equitable
right, remedy or claim under or in respect of this Agreement.
16.16 Waivers; Remedies.
The observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively) by the party or parties entitled to enforce such term, but any
such waiver shall be effective only if in a writing signed by the party or
parties against which such waiver is to be asserted. Except as otherwise
provided herein, no failure or delay of any Partner in exercising any power or
right under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.
16.17 Jurisdiction; Consent to Service of Process.
(a) Each Partner hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court sitting in the County of New York or any Federal court of
the United States of America sitting in the Southern District of New York, and
any appellate court from any such court, in any suit, action or proceeding
arising out of or relating to the Partnership or this Agreement, or for
recognition or enforcement of any judgment, and each Partner hereby irrevocably
and unconditionally agrees that all claims in respect of any such suit, action
or proceeding may be heard and determined in such New York State court or, to
the extent permitted by law, in such Federal court.
(b) Each Partner hereby irrevocably and unconditionally
waives, to the fullest extent it may legally do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to the Partnership or
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this Agreement in any New York State court sitting in the County of New York or
any Federal court sitting in the Southern District of New York. Each Partner
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such suit, action or proceeding
in any such court and further waives the right to object, with respect to such
suit, action or proceeding, that such court does not have jurisdiction over
such Partner.
(c) Each Partner irrevocably consents to service of
process in the manner provided for the giving of notices pursuant to this
Agreement, provided that such service shall be deemed to have been given only
when actually received by such Partner. Nothing in this Agreement shall affect
the right of a party to serve process in any other manner permitted by law.
16.18 Waiver of Jury Trial.
Each Partner waives, to the fullest extent permitted by applicable
law, any right it may have to a trial by jury in respect of any action, suit or
proceeding arising out of or relating to the Partnership or this Agreement.
16.19 No Right of Set-Off.
No Partner shall be entitled to offset against any of its financial
obligations to the Partnership under this Agreement, any obligation owed to it
or any of its Affiliates by any other Partner or any of such other Partner's
Affiliates.
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IN WITNESS WHEREOF, the parties have entered into this Agreement of
Limited Partnership of MajorCo, L.P. as of the date first above set forth.
SPRINT SPECTRUM, L.P.
By: US Telecom, Inc.,
Its General Partner
By: ____________________________
Title: _______________________
TCI NETWORK SERVICES
By: TCI Network, Inc.,
Its General Partner
By: ____________________________
Title: _______________________
COMCAST TELEPHONY SERVICES
By: Comcast Telephony Services, Inc., Its
General Partner
By: ____________________________
Title: _______________________
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THIS IS A SIGNATURE PAGE TO THE AGREEMENT OF
LIMITED PARTNERSHIP OF MAJORCO, L.P.
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COX TELEPHONY PARTNERSHIP
By: Cox Communications Wireless, Inc.,
Its Managing General Partner
By:________________________________
Title:_______________________
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THIS IS A SIGNATURE PAGE TO THE AGREEMENT OF
LIMITED PARTNERSHIP OF MAJORCO, L.P.
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