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EXHIBIT 10.2
Draft 9/30/95
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PCS NUCLEUS, L.P.
AMENDED AND RESTATED
AGREEMENT OF
LIMITED PARTNERSHIP
DATED AS OF SEPTEMBER 30, 1995
BETWEEN
AIRTOUCH PCS HOLDING, INC.
AND
U S WEST PCS HOLDINGS, INC.
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TABLE OF CONTENTS
(Not part of the Agreement)
Section Page
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ARTICLE 1 GENERAL PROVISIONS.......................................... 1
1.1. Formation and Continuation of the Partnership.................... 1
1.2. Name ............................................................ 2
1.3. Principal Place of Business...................................... 2
1.4. Registered Office; Agent for Service of Process.................. 2
1.5. Business of the Partnership...................................... 2
1.6. Term of the Partnership.......................................... 3
1.7. Qualification of Other Jurisdictions............................. 3
1.8. Definitions...................................................... 4
ARTICLE 2 MANAGEMENT.................................................. 11
2.1. Partnership Committee........................................... 11
2.2. Partnership Committee Meetings.................................. 11
2.3. Voting.......................................................... 12
2.4. No Compensation................................................. 14
2.5. Acts by Partners................................................ 14
2.6. Procedures in the Event of a Dispute............................ 15
2.7. President-PCS................................................... 15
2.8. Business Plan................................................... 15
2.9. Budget Approval................................................. 15
2.10. Employees and Employee Benefits................................. 16
2.11. Access to Books of Account...................................... 16
2.12. Confidential Information........................................ 16
2.13. Duty of Partners to Cooperate................................... 18
2.14. Agreements with Partnership or Owned Systems.................... 18
ARTICLE 3 CERTAIN AGREEMENTS REGARDING OPERATIONS OF THE
PARTNERSHIP AND THE PCS OWNED SYSTEMS..... 19
3.1. General; Fiduciary Obligations................................... 19
3.2. License Agreements............................................... 20
3.3. Services Agreement............................................... 20
3.4. PCS Owned Systems................................................ 20
3.5. System Budget Approval........................................... 20
3.6. System Business Plans............................................ 20
3.7. Management Reports............................................... 21
3.8. Financial Statements............................................. 21
ARTICLE 4 CAPITAL CONTRIBUTIONS, WITHDRAWALS AND CAPITAL ACCOUNTS..... 21
4.1. Capital Accounts................................................. 21
4.2. Initial Contributions of Capital................................. 22
4.3. Additional Contributions by Partners............................. 23
4.4. Partner Obligations.............................................. 24
4.5. Withdrawals of Capital Accounts.................................. 24
4.6. Interest on Capital Accounts..................................... 24
4.7. Revaluation of Partnership Assets................................ 24
4.8. Redetermination of Percentage Interests.......................... 25
ARTICLE 5 ALLOCATIONS AND DISTRIBUTIONS............................... 27
5.1. Profits and Losses............................................... 27
5.2. Distributions.................................................... 31
ARTICLE 6 TAX MATTERS AND REPORTS; ACCOUNTING......................... 32
6.1. Filing of Tax Returns............................................ 32
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Section Page
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6.2. Tax Matters Partner.............................................. 32
6.3. Tax Reports to Current and Former Partners....................... 32
6.4. Accounting Records; Independent Audit............................ 33
6.5. Fiscal Year...................................................... 33
6.6. Tax Accounting Method............................................ 33
6.7. Withholding...................................................... 33
6.8. Tax Elections.................................................... 33
6.9. Prior Tax Information............................................ 34
ARTICLE 7 INDEMNIFICATION AND EXCULPATION; CERTAIN AGREEMENTS......... 34
7.1. Indemnification of the Partners.................................. 34
7.2. Exculpation...................................................... 35
7.3. Restrictions on Partners......................................... 35
7.4. Outside Activities............................................... 35
7.5. Duties of Partners............................................... 36
ARTICLE 8 TERMINATION AND DISSOLUTION................................. 37
8.1. Events of Dissolution............................................ 37
8.2. Bankruptcy of a General Partner.................................. 37
8.3. Order of Dissolution............................................. 38
8.4. Orderly Winding Up............................................... 39
8.5. Dissolution Election............................................. 39
8.6. Obligation to Restore Deficit Balance............................ 40
8.7. Termination of Partnership....................................... 40
ARTICLE 9 ADMISSION OF ADDITIONAL PARTNERS............................ 40
9.1. Admission Procedures............................................. 40
ARTICLE 10 TRANSFER OR ENCUMBRANCE OF INTEREST......................... 41
10.1. Restriction on Transfer or Encumbrance.......................... 41
10.2. Transfer of Partnership Interest to a Wholly Owned
Affiliate................................................... 41
10.3. Partnership's Redemption Option................................. 41
10.4. Spin-off Not Deemed to be a Transfer............................ 42
10.5. Invalid Transfers Void.......................................... 42
10.6. Change in Ownership............................................. 42
10.7. Proportional Transfers of WMC Interest.......................... 42
ARTICLE 11 REGULATORY MATTERS.......................................... 42
11.1. MFJ Compliance.................................................. 43
ARTICLE 12 MISCELLANEOUS............................................... 44
12.1. Notices......................................................... 44
12.2. Governing Law, etc.............................................. 45
12.3. Amendments...................................................... 45
12.4. Entire Agreement................................................ 46
12.5. Waiver of Partition............................................. 46
12.6. Consents........................................................ 46
12.7. Successors...................................................... 46
12.8. Counterparts.................................................... 46
12.9. Severability.................................................... 46
12.10. Survival........................................................ 46
12.11. Arbitration..................................................... 46
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PCS NUCLEUS, L.P.
AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of PCS
NUCLEUS, L.P. (the "Partnership") is entered into and effective as of September
30, 1995, by and between AirTouch PCS Holding, Inc., a Delaware corporation
("ATPH"), and U S West PCS Holdings, Inc., a Colorado corporation ("USWPH"),
each of which shall be both a general partner and a limited partner as set forth
herein (collectively, the "Partners").
WHEREAS, the Partners or certain of their Affiliates (as hereinafter
defined) are parties to an Amended and Restated Joint Venture Organization
Agreement of even date herewith;
WHEREAS, regional and national markets are developing in the wireless
communications business, and it is becoming increasingly important to increase
the scale and scope of services offered to compete effectively in such markets;
WHEREAS, the Partners have therefore concluded that it will be in their
best interests, and the best interests of the public, to form the Partnership
for the purpose of acquiring, owning, operating, managing, maintaining and
constructing PCS Systems (as hereinafter defined) and, in furtherance thereof,
ATPH and USWPH wish to become partners in the Partnership (as hereinafter
defined);
NOW, THEREFORE, in consideration of the promises, mutual covenants and
agreements herein contained and in order to set forth the respective rights,
obligations and interests of the Partners to one another and to the Partnership,
the Partners hereby agree as follows:
ARTICLE 1
GENERAL PROVISIONS
1.1. Formation and Continuation of the Partnership. The Partnership was
heretofore formed under the laws of the State of Delaware on July 25, 1994
pursuant to an agreement of limited partnership, by and between AirTouch
Communications, a California corporation, and USW, dated as of July 25, 1994
(the "Original Partnership Agreement"). The Partners hereby amend and restate
the Original Partnership Agreement in its entirety, and the Partnership shall
continue without dissolution or interruption as a limited partnership pursuant
to the Delaware Revised Uniform Limited Partnership Act, as it may be amended
from time to time (the "Act"), and this Agreement. Except as provided in this
Agreement, the rights, duties, liabilities and obligations of the Partners and
the administration, dissolution, winding up and termination of the Partnership
shall be governed by the Act.
1.2. Name. The name of the Partnership shall be: PCS Nucleus, L.P.
The name of the Partnership may be changed by the Partnership Committee.
1.3. Principal Place of Business. The principal place of business of
the Partnership shall be c/o AirTouch Communications, Inc., 0000 Xxx Xxxx,
Xxxxxx Xxxxx, Xxxxxxxxxx 00000. The principal place of business of the
Partnership may be changed by the Partnership Committee.
1.4. Registered Office; Agent for Service of Process. The address of
the Partnership's registered office in the State of Delaware is c/o The
Corporation Trust Company, Corporation Trust Center, 0000 Xxxxxx Xxxxxx,
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Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000. The agent for service of process
at such address for the Partnership in the State of Delaware is The Corporation
Trust Company. Agents for service of process of the Partnership may be changed
by the Partnership Committee.
1.5. Business of the Partnership.
(a) The purpose of the Partnership is to acquire, own, lease, operate,
manage and maintain PCS Systems or interests in PCS Systems; to provide the
services which may from time to time be offered, and to engage in the resale of
wireless voice and data communications services, utilizing the frequencies
allocated by the FCC for PCS Systems; to make and prosecute any and all
applications for or renewals of licenses for PCS Systems; to design, construct
and develop PCS Systems; and to engage in other businesses utilizing, to the
extent of cell xxxxx, xxxxxx telephone switching offices, computer programs or
other aspects specific to PCS Systems, the Partnership's then existing business
infrastructure or communications network (the "Partnership Business"). In
connection therewith and subject thereto, the Partnership shall have the power:
(i) to enter into leases for, or purchase properties necessary for, antennae,
base stations and office sites; (ii) to construct improvements in, furnish and
equip the sites; (iii) to acquire or lease all equipment, supplies and services
necessary for the design, development, construction, ownership, operation,
management and maintenance of PCS Systems; (iv) to borrow or raise money
necessary for the acquisition, design, development, construction, ownership,
operation, management and maintenance of PCS Systems; (v) to use any
contributions from the Partners for such purposes; (vi) to execute any documents
required in connection with the foregoing; (vii) to do any and all acts and
things which may be necessary, incidental or convenient to carry on the
Partnership Business as contemplated by this Agreement; and (viii) to take any
other action permissible under the Act in connection with the Partnership
Business. The Partnership may engage in any business other than the Partnership
Business as the Partnership Committee may determine. Notwithstanding anything to
the contrary herein, the Partnership shall not acquire, own, lease, operate,
manage or maintain PCS Systems outside of the 00 xxxxxx xx xxx Xxxxxx Xxxxxx,
the District of Columbia, Puerto Rico, the Gulf of Mexico and Guam.
(b) Subject to the terms of this Agreement, the Partnership may
enter into, deliver and perform all contracts, agreements and other
undertakings and engage in all activities and transactions as may be
necessary or appropriate to carry out the foregoing purposes. Without
limiting the foregoing, the Partnership may, subject to the terms of this
Agreement:
(i) enter into license agreements, service contracts or other
contractual relationships with WMC;
(ii) acquire, sell, lease, exchange, transfer, assign, encumber,
pledge or mortgage securities and assets in PCS Systems (or licenses or
permits therefor) or otherwise exercise all rights, powers, privileges
and other incidents of ownership or possession with respect to such
securities and assets;
(iii) borrow or raise money and secure the payment of any
obligations of the Partnership by mortgage upon, or pledge or
hypothecation of, all or any part of the assets of the Partnership;
(iv) engage personnel, whether part-time or full-time, to do such
acts as are necessary or advisable in connection with the maintenance,
operation and administration of the Partnership and its investments
(avoiding redundancies with the staff and operations of WMC); and
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(v) engage attorneys, independent accountants, investment bankers,
consultants or such other Persons as are necessary or advisable.
(c) Notwithstanding the foregoing, the Partnership will not, directly
or indirectly, engage in any act that would put the Partnership, or any Partner,
in violation of the MFJ. For example, the Partnership will not engage in any
activity that would constitute the provision of interexchange (interLATA)
telecommunications service, the provision of telecommunications equipment, or
the manufacture of a telecommunications product (all as defined by the MFJ, the
Decree Court, or both), unless any such activity has been the subject of a
waiver or other legislative or court relief, or the MFJ otherwise ceases to
apply to the activities of the Partnership.
1.6. Term of the Partnership. The term of the Partnership shall
commence on the date the Certificate of Limited Partnership of the Partnership
is filed in the office of the Secretary of State of the State of Delaware, and
shall continue through the 99th anniversary thereof, unless earlier dissolved as
provided in Section 8.1. The existence of the Partnership as a separate legal
entity shall continue until the cancellation of the Partnership's Certificate of
Limited Partnership.
1.7. Qualification of Other Jurisdictions. The General Partners shall
cause the Partnership to be qualified, formed, or registered under assumed or
fictitious name statutes or similar laws in any jurisdiction in which the
Partnership owns property or engages in activities if such qualification,
formation or registration is necessary to permit the Partnership lawfully to own
property and engage in the Partnership's business or transact business. The
General Partners shall execute, file and publish all such certificates, notices,
statements or other instruments necessary to permit the Partnership to engage in
the Partnership's business as a limited partnership in all jurisdictions where
the Partnership elects to engage in or do business.
1.8. Definitions. (a) For purposes of this Agreement the following
terms have the following meanings (unless indicated otherwise, all Article
and Section references are to Articles and Sections in this Agreement, and
all Schedule references are to Schedules to this Agreement):
"Additional Partner" means any additional Person admitted to the
Partnership pursuant to Article 9.
"Adjusted Capital Contributions" means, for each Partner, the
cumulative amount of such Partner's contributions to the Partnership which for
purposes of this definition shall be equal to the sum of (i) the amount of cash
and the Fair Market Value of any other property, plus (ii) such Partner's share
of the cumulative amount of Adjusted Revaluation Gain plus (iii) 7.5% of the
cumulative amount of such Partner's Make-Up Contributions which relate to
another Partner's Defaulted Contributions, less (iv) such Partner's share of the
cumulative amount of Adjusted Revaluation Loss, less (v) 7.5% of such Partner's
Defaulted Contributions. "Adjusted Capital Contributions" shall also be reduced
by (or, if appropriate, shall not include) the amount of cash and the Fair
Market Value of any property (determined in accordance with Section 4.9 as of
the date of distribution) distributed by the Partnership to such Partner in
redemption of a portion (but not all) of such Partner's interest in the
Partnership (including any distribution pursuant to Section 5.2(d) hereof).
"Adjusted Revaluation Gain" or "Adjusted Revaluation Loss" means,
respectively, the Revaluation Gain or Revaluation Loss, as the case may be, with
respect to an asset being revalued which would have arisen had the basis used in
computing Revaluation Gain or Revaluation Loss been equal to the Capital Account
book basis of such asset immediately following the later of its contribution or
acquisition or any immediately preceding revaluation under Section 4.7 hereof.
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"Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, controls, is controlled by or is under common control with
the Person specified; provided, however, that (i) the Partnership shall not be
deemed to be an Affiliate of ATPH, USWPH or any of their respective Affiliates,
(ii) any wireline cable television company in which USW and its Affiliates do
not have an ownership interest in excess of 50% shall not be considered an
Affiliate of USW, and (iii) Cellular Communications, Inc. ("CCI"), a Delaware
corporation, shall not be considered an Affiliate of ATI until such time, if
ever, as ATI shall be entitled to exercise full discretion with respect to
voting the shares of common stock of CCI beneficially owned by ATI (other than
shares of common stock of CCI beneficially owned by ATI by virtue of its
ownership of the Class A Preference Stock of CCI). For purposes of this
definition, the term "control" (including the terms "controlling," "controlled
by" and "under common control with") of a Person means the possession, direct or
indirect, of the power to (i) vote in excess of 50% of the Voting Stock of such
Person, or (ii) direct or cause the direction of the management and policies of
such Person, whether by contract or otherwise.
"Agreement" means this Agreement of Limited Partnership of the
Partnership, as it may be amended, supplemented or restated from time to time.
"Appraiser" means any of the First Appraiser, the Second Appraiser and
the Third Appraiser as defined in Section 4.9 hereof.
"Appraiser's Certificate" means a certificate prepared by an Appraiser,
executed on behalf of an Appraiser by a duly authorized officer thereof, and
setting forth such Appraiser's opinion as to the Fair Market Value of an asset.
"ATI" means AirTouch Communications, Inc., a Delaware corporation.
"Attributed Entity" means, with respect to any Partner, any Person
whose ownership of Systems (or licenses or permits therefor) would be
attributable, in whole or in part, to such Partner under applicable FCC
regulations.
"Bankruptcy" of a Partner means (i) the filing by such Partner of a
voluntary petition seeking liquidation, reorganization, arrangement or
readjustment, in any form, of its debts under Title 11 of the United States Code
(or corresponding provisions of future laws) or any other bankruptcy or
insolvency law, or such Partner's filing an answer consenting to or acquiescing
in any such petition, (ii) the making by such Partner of any assignment for the
benefit of its creditors or the admission by such Partner in writing of its
inability to pay its debts as they mature or (iii) the expiration of 60 days
after the filing of an involuntary petition under Title 11 of the United States
Code (or corresponding provisions of future laws), an application for the
appointment of a receiver for the assets of such Partner, or an involuntary
petition seeking liquidation, reorganization, arrangements, composition,
dissolution or readjustment of its debts or similar relief under any bankruptcy
or insolvency law; provided that the same shall not have been vacated, set aside
or stayed within such 60-day period.
"Bankruptcy Code" means the United States Bankruptcy Code of 1978, as
amended.
"Budget" means a one-year revenue, expense and capital expenditure
budget for the Partnership, as it may be amended from time to time in accordance
with the terms of this Agreement.
"Business Plan" means a five-year business plan for the Partnership, as
it may be amended from time to time in accordance with the terms of this
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Agreement, which shall include (i) an annual operating budget for each year
contemplated in the business plan; (ii) a five-year financial plan for the
Partnership; and (iii) a general description of the key underlying assumptions
and key strategies.
"Capital Account" means the capital account maintained by the
Partnership for each Partner as described in Section 4.1.
"CECO" means the Civil Enforcement Consent Order entered by the Decree
Court on February 2, 1989.
"CECO Decree Committee" means the committee created by USW pursuant to
the CECO for the review of USW's business activities.
"Change of Control" has the meaning set forth in the Amended and
Restated Investment Agreement dated as of September 30, 1995, by and between ATI
and USW, as amended, modified or supplemented from time to time.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means all confidential documents and
information (including, without limitation, confidential commercial information
and information with respect to customers and proprietary technologies or
processes and the design and development of new products or services) concerning
the Partnership, WMC, the PCS Owned Systems, other PCS Systems in which the
Partnership has an ownership interest, the Partners or their Affiliates
furnished to a Partner in connection with the transactions leading up to and
contemplated by this Agreement and the operation of the Partnership, WMC, the
PCS Owned Systems, or other PCS Systems in which the Partnership has an
ownership interest or their respective businesses, except to the extent that
such information can be shown to have been (a) generally available to the public
other than as a result of a breach of the provisions of Section 2.12 of this
Agreement; (b) already in the possession of the receiving Person or its
Representatives (as such term is defined in Section 2.12 hereof) without
restriction and prior to any disclosure in connection with the Partnership or
pursuant to any of the terms of this Agreement; (c) lawfully disclosed to the
receiving Person or its Representatives by a third party who is free lawfully to
disclose the same; or (d) independently developed by the receiving Person
without use of any Confidential Information obtained in connection with the
transactions leading up to and contemplated by this Agreement and the operation
of the Partnership, WMC, the PCS Owned Systems and other PCS Systems in which
the Partnership has an ownership interest, or their respective businesses.
"Decree Court" means the court having original jurisdiction over MFJ
waivers.
"Defaulted Contributions" means, for each Partner, the cumulative
amount of any capital contributions required to be made under Section 4.3(a),
which have not been made by such Partner prior to expiration of the 15-day grace
period provided for in Section 4.3(b), regardless of whether such amounts are
thereafter contributed; provided that such capital contributions had been
specifically identified as to use (i) in a Budget approved pursuant to Section
2.9(a), (ii) in a Budget for the following year approved pursuant to Section
2.9(b) or (iii) by other action of the Partnership Committee.
"Effective Date" means July 25, 1994.
"EO" means the Enforcement Order entered by the Decree Court on
February 15, 1991.
"Fair Market Value" means, with respect to any asset, as of the date of
determination, the cash price at which a willing seller would sell, and a
willing buyer would buy, each being apprised of all relevant facts and
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neither acting under compulsion, such asset in an arm's-length negotiated
transaction with an unaffiliated third party without time constraints.
"FCC" means the Federal Communications Commission or any successor
agency or entity performing substantially the same functions.
"GAAP" means generally accepted accounting principles.
"General Partner" means each of ATPH and USWPH, and includes any Person
who becomes an Additional General Partner of the Partnership or a Substitute
General Partner of the Partnership pursuant to the provisions of this Agreement.
"General Partner Percentage Interest" means, with respect to any
Partner, the Percentage Interest of such Partner as a General Partner of the
Partnership. The initial General Partner Percentage Interest of each
Partner is set forth on Schedule 1.
"License Agreement" means an agreement to be entered into by the
Partnership and WMC as contemplated by Section 3.2 hereof and incorporating such
terms and conditions as may be approved by WMC, taking into account the terms
and conditions set forth in Exhibit A to the WMC Agreement and all other
relevant facts and circumstances.
"Limited Partner" means each of ATPH and USWPH, and includes any Person
admitted as an Additional Limited Partner of the Partnership or a Substitute
Limited Partner of the Partnership pursuant to the provisions of this Agreement.
"Limited Partner Percentage Interest" means, with respect to any
Partner, the Percentage Interest of such Partner as a limited partner of the
Partnership. The initial Limited Partner Percentage Interest of each
Partner is set forth on Schedule 1.
"Make-Up Contributions" means, for each Partner, the amount of any
capital contribution made by such Partner which such Partner is permitted, but
not required, to make under Section 4.3(b) upon failure of another Partner to
make a required capital contribution.
"MFJ" means the Modification of Final Judgment entered in United
States v. AT&T, 552 F. Supp. 131 (D.D.C. 1982), and as subsequently modified
from time to time, or any legislative scheme embodying substantially similar
restrictions.
"MFJ Compliance Committee" means the committee created by USW pursuant
to the EO for the review of USW's business practices.
"MFJ Restricted Activity" means an activity or business the undertaking
of which by the Partnership would cause the Partnership, or any Partner, to be
in violation of the MFJ.
"Net Operating Available Cash" means at the time of determination, (a)
all cash and cash equivalents on hand in the Partnership, less (b) the Forecast
Cash Requirements, if any, of the Partnership, as determined by the Partnership
Committee in a manner consistent with an Approved Budget. For purposes of this
definition, "Forecast Cash Requirements" means, for the four-month period
following the date of determination, the excess, if any, of (a) forecast capital
expenditures, capital contributions to other entities and other investments,
acquisitions, cash income tax payments and debt service (including principal and
interest) requirements and other non-cash credits to income, plus forecast cash
reserves for future operations or other requirements, over (b) forecast net
income of the Partnership, plus the sum of forecast depreciation, amortization,
interest expenses, income tax expenses and other non-cash charges to income, in
each case to the extent deducted in determining such net income, plus or minus
forecast
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changes in working capital, plus the forecast cash proceeds of dispositions of
assets (net of expenses), plus an amount equal to the forecast net proceeds of
debt financings.
"Organization Agreement" means the Amended and Restated Joint Venture
Organization Agreement, dated as of September 30, 1995, between USW and ATI, as
amended, modified or supplemented from time to time.
"Organizational Expenses" shall mean organizational expenses as defined
under Code Section 709 of the Internal Revenue Code.
"Parent Entity" means, ATI or USW and their respective successors and
assigns, whether by means of merger, spinoff in accordance with Section
10.4. hereof or otherwise.
"Partner" means ATI or USW and any Additional or Substitute General
Partner or Limited Partner of the Partnership. ATPH and USWPH shall be admitted
as Partners of the Partnership on the date hereof. A Person who is not admitted
on the date hereof as a partner of the Partnership shall be deemed admitted as a
Partner upon satisfaction of the requirements of Section 9.1 of this Agreement
upon execution by or on behalf of such Person of this Agreement or a counterpart
hereof.
"Partnership Interest" means, for each Partner separately, all of the
Partner's interest in, and rights and obligations in connection with, the
Partnership whether as a General Partner or Limited Partner.
"PCS" means those commercial mobile radio services offered by a PCS
System.
"PCS Owned System" means any PCS System (a) in which the Partnership
owns, directly or indirectly, an equity interest, or which is leased by the
Partnership, and (b) with respect to which the Partnership possesses, directly
or indirectly, the power to direct or cause the direction of the management and
policies of such Person, whether by contract or otherwise.
"PCS Service" means the provision of any commercial mobile radio
service by a PCS System, including the resale of such service.
"PCS System" means a radio communications system authorized under the
rules for broadband personal communications services designated as Subpart E of
Part 24 of the FCC's rules in effect on the Effective Date, or any revision
thereto or successor thereof which may be in effect from time to time, including
the network, marketing, distribution, sales, customer interface and operations
functions relating thereto, or any business or enterprise which resells PCS
services.
"Percentage Interest" means, for each Partner, the quotient obtained by
dividing (i) such Partner's Adjusted Capital Contributions by (ii) the aggregate
Adjusted Capital Contributions for all Partners, as adjusted from time to time
pursuant to Section 4.8 hereof. The initial General Partner and Limited Partner
Percentage Interests of the Partners are set forth on Schedule 1
"Person" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, estate, unincorporated
organization, governmental or regulatory body or other entity.
"Primeco" means PCS Primeco, L.P., a Delaware limited partnership.
"Primeco Agreement" means the Agreement of Limited Partnership of PCS
Primeco, L.P. dated as of October 20, 1994, between PCS Co. and this
Partnership, as amended, modified or supplemented from time to time.
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"Prime Rate" means the rate announced, from time to time, by Bank of
America NT&SA at its home office as its prime rate.
"Revaluation Gain" means the amount of gain which would have been
realized had there been a taxable disposition of any Partnership asset being
revalued under Section 4.7 for an amount of cash equal to such asset's then Fair
Market Value, determined in accordance with the provisions of Section 4.9
hereof.
"Revaluation Loss" means the amount of loss which would have been
realized had there been a taxable disposition of any Partnership asset being
revalued under Section 4.7 for an amount of cash equal to such asset's then Fair
Market Value, determined in accordance with the provisions of Section 4.9
hereof.
"Services Agreement" means an agreement to be entered into by the
Partnership and WMC as contemplated by Section 3.2 hereof and incorporating such
terms and conditions as may be approved by WMC, taking into account the terms
and conditions of the Phase I Services Agreement (as defined in the WMC
Agreement) and all other relevant facts and circumstances.
"Substitute Partner" means any Person admitted to the Partnership
pursuant to Article 10.
"System" means a Cellular System (as defined in the WMC Partnership
Agreement), an ESMR System (as defined in the WMC Partnership Agreement), or a
PCS System, or any business or enterprise which resells to Cellular, ESMR an PCS
Services (each as defined in the WMC Partnership Agreement) provided by any of
the foregoing.
"Tax Matters Partner" means the Tax Matters Partner of the Partnership
as referred to in Section 6.2.
"Taxes" means all taxes, charges, fees, levies or other assessments
imposed by any taxing authority, including, but not limited to, income, gross
receipts, excise, property, sales, use, transfer, payroll, license, ad valorem,
value added, withholding, social security, national insurance (or other similar
contributions or payments), franchise, estimated, severance and stamp taxes
(including any interest, fines, penalties or additions attributable to, or
imposed on or with respect to, any such taxes, charges, fees, levies or other
assessments) and "Tax Return" means any return, report, information return or
other document (including any related or supporting information) with respect to
Taxes.
"USW" means U S WEST, Inc., a Colorado corporation.
"Voting Stock" means capital stock issued by a corporation, or
comparable interests in any other Person, the holders of which are ordinarily
entitled to vote for the election of directors (or Persons performing similar
functions) of such Person.
"Wholly Owned Affiliate" means, as to any Person, an Affiliate of such
person all of the equity interests of which are owned, directly or indirectly,
by a Partner, by another Wholly Owned Affiliate of such Person or by the Parent
Entity thereof.
"Wireless Assets" means, with respect to any Partner, all of such
Partner's interests in WMC, such Partner's Phase II Assets and Scheduled Phase
II Related Assets (each as defined in the WMC Partnership Agreement) and the
Partnership.
"WMC" means WMC Partners, L.P., a Delaware limited partnership, or any
successor thereto.
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"WMC Partnership Agreement" means the Amended and Restated WMC
Partners, L.P. Agreement of Limited Partnership, dated as of September 30, 1995,
among members of the ATI Group and members of USW Group, as amended, modified or
supplemented from time to time.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
---- -------
Approved Budget 2.9(a)
Approved Business Plan 2.8(a)
Act 1.1
Affiliate Transferee 10.2(a)
Default Fees 4.3(b)
Indemnified Party 7.1
Late Fees 4.3(a)
LEC Affiliates 2.3(d)
Member 2.1(a)
Partial Interest 10.2(b)
Partnership Business 1.5(a)
Partnership Committee 2.1(a)
Related Party Agreement 2.14(a)
ARTICLE 2
MANAGEMENT
2.1. Partnership Committee.
(a) The partnership committee of the Partnership (the "Partnership
Committee") shall be composed of three individuals appointed by each General
Partner (collectively the "Members" and individually a "Member"), or such lesser
number of Members as may be determined by a vote of the Members representing
each General Partner; provided that any Affiliate Transferees pursuant to
Section 10.2 shall not be entitled separately to designate Members. Each Member
shall be an officer or employee of a Partner or an Affiliate thereof.
(b) Effective upon the giving of notice thereof to the other Partners,
any General Partner may, at any time, in its sole discretion, replace any or all
of its appointed Members with other individuals and may designate one or more
alternates for any or all of its Members. Each Member shall serve on the
Partnership Committee until his successor is appointed, or until his earlier
death, resignation or removal. Effective upon a General Partner ceasing to be a
general partner of the Partnership, the Members representing such General
Partner on the Partnership Committee shall cease to be Members.
(c) Except as otherwise required by the Act, no vote or approval by any
Limited Partner shall be required under this Agreement for the taking of an
action, including without limitation the amendment of this Agreement, and the
Percentage Interest of any Limited Partner who is not also a General Partner
shall not be included in any calculation of a Partner's Percentage Interest
entitled to vote on any matter.
(d) The Partnership Committee shall cause the Partnership to fulfill
the Partnership's obligations under this Agreement, the License Agreement, the
Services Agreement and the Organization Agreement, and to enforce all rights of
the Partnership under this Agreement, any License Agreement, any Services
Agreement and the Organization Agreement.
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2.2. Partnership Committee Meetings.
(a) The Partnership Committee shall hold regular meetings (at least
quarterly) at such time and place as shall be determined by the Partnership
Committee (or by the Chairman of the Partnership Committee). Special meetings of
the Partnership Committee may be called at any time by any General Partner by
delivering a notice of meeting in accordance with Section 2.2(g) hereof. Each
General Partner shall be limited to calling two special meetings per year.
(b) The Chairman of the Partnership Committee shall be appointed by the
Partnership Committee from time to time. The Chairman shall establish the
agendas for, and regulate the proceedings of, meetings of the Partnership
Committee, but must include on such agendas matters requested by any General
Partner in writing received at least two business days in advance of any
meeting.
(c) Members may participate in a meeting of the Partnership Committee
by conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting.
(d) Any action required or permitted to be taken at any meeting of the
Partnership Committee may be taken without a meeting upon the unanimous written
consent of the Members representing each General Partner.
(e) The Partnership Committee shall appoint a Secretary from time to
time. The Secretary shall keep written minutes of all Partnership Committee
meetings. A duplicate copy of such minutes shall be provided to the Chairman of
the Partnership Committee and to each Member.
(f) A Member shall have the right to designate an alternate to attend
meetings of the Partnership Committee, in stead and in place of such Member, and
to exercise all of the functions of such Member. Any such alternate shall be an
officer or employee of a Partner or an Affiliate thereof. Any such alternate
shall be deemed to be a Member for all purposes hereunder until such designation
is revoked.
(g) Notice of each regular meeting and each special meeting of the
Partnership Committee shall be given to each Member at least three business days
before such meeting. Notices of special meetings shall contain a description, in
reasonable detail, of the items of business to be conducted at such meeting and
no business other than those items (unless expressly agreed to by Members
representing each of the General Partners whose Members are entitled to vote
thereon) may be conducted at such special meeting. The notice provisions of this
Section 2.2(g) shall be waived upon either the signing of a written waiver
thereof or attendance at a meeting by Members representing each General Partner.
2.3. Voting.
(a) On any matter on which a vote of the Partnership Committee is
taken, the Members representing a General Partner, if more than one Member has
been designated and is present at a meeting, shall vote the entire Percentage
Interest of such Partner (whether as a general partner or a limited partner of
the Partnership) as a single bloc. Any action that may be taken by the
Partnership Committee shall require the affirmative vote of Members representing
each of the General Partners entitled to vote thereon; provided that in the
event that all Members representing any General Partner shall abstain from the
vote on any matter (because of a conflict of interest or for any other reason),
the outcome of such vote shall be determined by the affirmative vote of Members
representing the other General Partners entitled to vote on such matter, and
such vote shall constitute the act of the Partnership Committee with respect to
such matter. A quorum of any
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meeting of the Partnership Committee shall require the presence of at least one
Member representing each General Partner entitled to vote thereon.
(b) Except as reserved herein for, or otherwise delegated to, the
General Partners or the President-PCS, the Partnership Committee shall have
authority and discretion to act on behalf of the Partnership on all matters that
a board of directors of a Delaware corporation would have, including, without
limitation, on the matters set forth elsewhere herein and with respect to the
following matters:
(i) any amendment of this Agreement;
(ii) a determination to engage in any business other than the
Partnership Business;
(iii) except as provided in Article 10, the admission of any
Additional General and Limited Partners to the Partnership;
(iv) the dissolution or liquidation of the Partnership;
(v) a merger or consolidation of the Partnership with or into
another Person, or the sale of all or substantially all of the
Partnership's assets;
(vi) the approval of Budgets and Business Plans, and material
amendments or revisions thereto;
(vii) a determination to require additional capital contributions
within any fiscal year; provided that capital contributions
specifically identified in an Approved Budget shall not require a
further vote of the Partnership Committee pursuant to this clause
(vii);
(viii) except as provided in Section 2.14(b) hereof or as
contemplated by an Approved Budget, the entering into of any
Related Party Agreement;
(ix) the authorization of the incurrence by the Partnership of
indebtedness for borrowed money not otherwise specifically identified
in an Approved Budget;
(x) the authorization of any acquisition or disposition of assets
not otherwise specifically identified in an Approved Budget;
(xi) determinations of PCS auction strategy, including the
identification of target PCS markets and bidding ranges;
(xii) the delegation of powers and authority of the Partnership
Committee to the President-PCS; and
(xiii) any distribution to the Partners of Partnership assets,
other than Net Operating Available Cash or distributions of Special
System Assets pursuant to Section 5.2(d), not otherwise contemplated in
an Approved Budget.
Each Partner, by execution of this Agreement, agrees to, consents to, and
acknowledges the delegation of powers and authority to the Members of the
Partnership Committee, and to the actions and decisions of such Members within
the scope of such Members' authority as provided herein and in accordance with
the License Agreement and Services Agreement.
(c) The Partnership Committee shall receive such reports and
information from the President-PCS as are usually provided to the board of
directors of a publicly held Delaware corporation.
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(d)(i) Notwithstanding the foregoing, Members of the Partnership
Committee designated by USWPH shall not be entitled to participate in
discussions of or votes of the Partnership Committee specifically relating to
the Partnership's then existing or planned operations in any market served by a
local exchange carrier Affiliate of USW (a "LEC Affiliate"), if such existing or
planned operations of the Partnership could reasonably be expected to compete or
conflict with, in any material respect, the then existing or planned wireless
communications operations owned or conducted by USW's LEC Affiliates in such
market. Nothing in this Section 2.3(d) shall restrict the manner in which
Members designated by USWPH shall participate in deliberations, discussions or
votes of the Partnership Committee with respect to the Budget or Business Plan
of the Partnership; provided that such Members shall act in good faith and in
the best interests of the Partnership without regard to any such competitive
considerations. USW agrees that no Member designated by USWPH shall participate
in decisions regarding the existing or planned wireless communications
operations of USW's LEC Affiliates, whether through the furnishing of advice or
information or otherwise, it being understood that certain Members designated by
USWPH may have ultimate responsibility for those who participate in such
decisions (and that such Members shall not be deemed to have participated in
such decision solely by virtue of having such ultimate responsibility).
(ii) Without limitation of the obligations of USWPH under Section 2.12,
neither USWPH nor any Members appointed by USWPH shall provide to any LEC
Affiliate operating data or financial or other information with respect to the
Partnership's existing or planned operations in the local exchange markets of
such LEC Affiliate.
2.4. No Compensation. No Member shall be compensated for his
services as a member of the Partnership Committee from the assets of the
Partnership, nor shall such Member be reimbursed by the Partnership for out-
of-pocket expenses incurred in connection therewith.
2.5. Acts by Partners. Other than actions of the Tax Matters Partner
pursuant to Sections 6.1 and 6.2 hereof, no Partner shall take, or commit the
Partnership to take, any action, either in its own name in respect of the
Partnership or in the name of the Partnership, without the prior approval of the
Partnership Committee.
2.6. Procedures in the Event of a Dispute.
(a) In cases where the Members are unable to reach agreement on the
matters specified in Section 2.3(b)(vi) or (xi) above, the dispute shall be
resolved in the following manner:
(i) First, the General Partners shall refer the disputed matter to
the Chairmen of their respective publicly held Parent Entities in an
attempt to reach a resolution; and
(ii) Second, if the Chairmen are unable to resolve a disputed
matter within 60 days after the referral to them of a dispute (or such
longer period of time as to which the Chairmen mutually agree in
writing), the dispute shall be submitted to the respective Boards of
Directors of the General Partners' publicly held Parent Entities in an
attempt to reach a resolution.
2.7. President-PCS.
The President-PCS shall have authority and discretion comparable to
that of a chief executive officer of a publicly held Delaware corporation of
similar size to direct and control the business and affairs of the Partnership,
including its day-to-day operations, in a manner consistent with the Approved
Business Plan and the Approved Budget, and in accordance with
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any License Agreement and Services Agreement in effect from time to time (and
the directives of WMC thereunder). The President-PCS shall be an employee (who
may be seconded to WMC from USW or ATI) and executive officer of WMC and shall
report to the President of WMC. The President of WMC shall have the exclusive
authority to appoint and remove the President-PCS. Each Partner, by execution of
this Agreement, agrees to, consents to, and acknowledges the delegation of
powers and authority to the President-PCS and to WMC hereunder and pursuant to
any License and Services Agreements, and to the actions and decisions of the
President-PCS and WMC within the scope of such authority.
2.8. Business Plan. The President-PCS shall submit to the Partnership
Committee a Business Plan for the Partnership, not less frequently than
annually, at least 60 days prior to the start of the first fiscal year covered
by such Business Plan. Each Business Plan shall be consistent with any License
Agreement and Services Agreement in effect from time to time (and the directives
of WMC thereunder). Each such Business Plan shall be considered at the first
meeting of the Partnership Committee following its submission and shall be
subject to the approval of the Partnership Committee. Any such Business Plan (or
any amendment thereto) which is approved by the Partnership Committee shall be
considered approved for all purposes of this Agreement until amended or replaced
(an "Approved Business Plan").
2.9. Budget Approval.
(a) The President-PCS shall include in his submission of the Business
Plan a Budget in respect of the Partnership for the next fiscal year, including
an income statement, balance sheet and capital budget
prepared on an accrual basis for the Partnership for the forthcoming fiscal year
and a cash flow statement which shall show in reasonable detail the receipts and
disbursements (including without limitation, the anticipated distributions)
projected for the Partnership for the forthcoming fiscal year and the amount of
any corresponding cash deficiency or surplus, and the amount and due dates of
all required capital contributions, if any. Each such Budget shall be prepared
on a basis consistent with the Partnership's financial statements prepared in
accordance with the provisions of Section 6.4 hereof and the Approved Business
Plan. Each such Budget shall be consistent with any License Agreement and
Services Agreement in effect from time to time (and the directives of WMC
thereunder). If requested by any Member, the President-PCS shall promptly meet
with the Partnership Committee for the purpose of discussing such Budget. Each
such Budget shall be considered at the first meeting of the Partnership
Committee following submission thereof. Any such Budget (or any amendment
thereto) which is approved by the Partnership Committee shall be considered
approved for all purposes of this Agreement until amended or replaced (an
"Approved Budget").
(b) If for any fiscal year no new Budget is agreed upon by the
Partnership Committee, then for such fiscal year the Partnership shall be
managed in a manner consistent with the forecasts for such fiscal year included
in the then Approved Business Plan (such forecasts, as they relate to either of
the two years following a year in which a Budget has been approved pursuant to
Section 2.9(a), being deemed to be for all purposes of this Agreement an
Approved Budget), as adjusted by the President-PCS to reflect the Partnership's
contractual obligations for such year and other changes resulting from the
passage of time or the occurrence of events beyond the control of the
Partnership.
2.10. Employees and Employee Benefits. The compensation program,
benefit plans and personnel policies of the Partnership shall be in
accordance with an agreement to be entered into by and among USW, ATI and
the Partnership.
2.11. Access to Books of Account. Notwithstanding any other provision
of this Agreement, each Partner shall have the right at all
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reasonable times during usual business hours to audit, examine, and make copies
or extracts of or from the complete books of account of the Partnership,
including but not limited to the books and records maintained in accordance with
Section 6.4 and all other books and records of the Partnership. Such right may
be exercised through any agent or employee of such Partner designated by it or
by independent certified public accountants or counsel designated by such
Partner. Each Partner shall bear all expenses incurred in any examination made
for such Partner's account.
2.12. Confidential Information.
(a) Each Partner shall, and shall cause each of its Affiliates, and its
and their respective partners, shareholders, directors, officers, employees and
agents (collectively, "Representatives") to, keep secret and retain in strictest
confidence, except as provided in subsection (c) hereof, any and all
Confidential Information and shall not distribute, disseminate or disclose such
Confidential Information, and shall cause its Representatives not to distribute,
disseminate or disclose such Confidential Informa- tion, except to (i) the
Partnership, WMC or any PCS Owned System and their respective agents, (ii) any
lender to the Partnership, WMC or any PCS Owned System, (iii) any Partner, WMC
or any of their respective Affiliates or other Representatives on a "need to
know" basis in connection with the transactions leading up to and contemplated
by this Agreement and the operation of the Partnership, WMC, the PCS Owned
Systems and their respective businesses, or (iv) any other Person that agrees in
writing to keep in confidence such Confidential Information in accordance with
the terms of this Section 2.12, and such Partner disclosing Confidential
Information pursuant to this Section 2.12 shall use, and shall cause its
Affiliates and other Representatives to use, such Confidential Information only
for the benefit of the Partnership in conducting the Partnership Business or for
any other specific purposes for which it was disclosed to such party; provided
that the disclosure of financial statements of, or other information relating
to, the Partnership shall not be deemed to be the disclosure of Confidential
Information (i) to the extent that any Partner is required by law or GAAP to
disclose such financial statements or other information or (ii) to the extent
that in order to sustain a position taken for tax purposes, any Partner deems it
necessary and appropriate to disclose such financial statements or other
information. All Confidential Information disclosed in connection with the
Partnership or pursuant to this Agreement shall remain the property of the
Person whose property it was prior to such disclosure.
(b) No Confidential Information regarding the plans or operations of
any Partner or any Affiliate thereof received or acquired by or disclosed to any
unaffiliated Partner or Affiliate thereof in the course of the conduct of
Partnership Business, or otherwise as a result of the existence of the
Partnership, may be used by such unaffiliated Partner or Affiliate thereof for
any purpose other than for the benefit of the Partnership in conducting the
Partnership Business. The Partnership and each Partner shall have the
affirmative obligation to take all necessary steps to prevent the disclosure to
any Partner or Affiliate thereof of information regarding the plans or
operations of such Partner and its Affiliates in markets and areas in which any
other Partner and the unaffiliated Partner and their respective Affiliates
compete in the provision of telecommunications services.
(c) In the event that a Partner or anyone to whom a Partner transmits
any Confidential Information becomes legally compelled (by oral questions,
interrogatories, requests for information or documents, subpoena, investigative
demand or similar process) to disclose any of the Confidential Information, such
Partner will use its best efforts to provide the other Partners and the
Partnership with prompt written notice prior to disclosure (not less than 24
hours) so that the other Partners and the Partnership or WMC may seek a
protective order or other appropriate remedy and/or waive compliance with the
provisions of this Agreement. In the event that such protective order or other
remedy is not obtained, or that the Partnership,
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WMC and the other Partners waive compliance with the provisions of this Section
2.12, the Partner or Person who is compelled to disclose such Confidential
Information will furnish only that portion of the Confidential Information which
(based on the advice of counsel) it is legally required to disclose and will
exercise its best efforts to obtain reliable assurance that protective treatment
will be accorded the Confidential Information.
(d) Each Partner who ceases to be such will, and will cause its
Affiliates and representatives to, maintain the confidentiality required by this
Section 2.12 and to destroy or return upon request, all documents and other
materials, and all copies thereof, obtained by such Partner or on its behalf
from any of the Partnership, WMC or the other Partners or any of their
Affiliates in connection with the transactions leading up to and contemplated by
this Agreement and the operation of the Partnership, WMC, and the PCS Owned
Systems or their respective businesses that are subject to such confidentiality
obligations. The obligations under this Section 2.12 shall survive the
termination of the Partnership for a period of five years.
(e) To the fullest extent permitted by law, if a Partner or any of its
Affiliates or Representatives breaches, or threatens to commit a breach of, this
Section 2.12, the other Partners and the Partnership shall have the right and
remedy to have this Section 2.12 specifically enforced by any pursuant to the
provisions of the Arbitration Agreement referred to in Section 12.11, it being
acknowledged and agreed that money damages will not provide an adequate remedy
to such other Partners or the Partnership. Nothing in this Section 2.12 shall be
construed to limit the right of any Partner or the Partnership to collect money
damages in the event of breach of this Section 2.12.
2.13. Duty of Partners to Cooperate. Each Partner will, to the extent
permitted by applicable law and consistent with this Agreement, furnish such
information, execute such applications and similar documents as are required by
governmental authorities, and take such other action reasonably requested by the
Partnership Committee and as may be necessary or reasonably desirable in
connection with the business of the Partnership.
2.14. Agreements with Partnership or Owned Systems.
(a) Any Partner or any Affiliate thereof may enter into and maintain in
effect any contract, agreement, transaction or relationship between such Partner
or Affiliate and the Partnership or any PCS Owned System (a "Related Party
Agreement") on terms and conditions approved by the Partnership Committee (by
vote of Members representing each General Partner other than the Partner
interested in such Related Party Agreement) and may derive and retain profits
therefrom.
(b) Notwithstanding the foregoing, each General Partner and each Member
of the Partnership hereby approves, and authorizes the Partnership to enter
into:
(i) Related Party Agreements with ATI or any Affiliate thereof
which provides paging or vehicle location services, relating to (A)
co-location of technical site leases (which leases individually do not
provide for annual rental payments in excess of $4,000), (B) sales
office leases (which leases individually do not provide for annual
rentals in excess of $400,000), and (C) other Related Party Agreements
relating to paging terminal and cellular switching equipment, joint
mailing and other co-marketing efforts, the aggregate annual
consideration under which does not exceed $1 million and the terms and
conditions of which are no less favorable than could be obtained from a
third party;
(ii) Related Party Agreements with any LEC Affiliate of USW or
any wireline cable television company in which USW has an
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ownership interest related to the purchase of PCS Services from the PCS
Owned Systems for resale in such LEC Affiliate's localexchange markets
or such wireline cable television company's franchise markets, as the
case may be; provided that such agreements provide for reasonable
notice of cancellation. As long as USW or an Affiliate thereof remains
a General Partner, the pricing of such services shall be on terms no
less favorable than those offered to any third party (for like types
and volumes of service); provided that if the Partnership provides
services of comparable quality and scope as those available from third
parties, such LEC Affiliate or such wireline cable television company,
as the case may be, shall have entered into an agreement with the
Partnership (or WMC or the Licensed or Owned Systems, as defined in the
WMC Partnership Agreement) to purchase its entire requirements of
wireless communications services in such markets from the Partnership,
WMC or the Licensed or Owned Systems; and
(iii) Related Party Agreements with ATI or any Affiliate
thereof related to the purchase of satellite communications services
provided by the Globalstar satellite communications venture which
agreements may provide that Globalstar will be the exclusive provider
of satellite communications services to the Partnership; provided that
the Partnership shall be entitled to purchase such services at a price
and on terms no less favorable than those offered by Globalstar to any
third party (for like volumes and types of service).
2.15. Insurance and Risk Management. The property and casualty
insurance program for the Partnership shall be integrated into the ATI insurance
program providing customary business insurance coverage as of the Effective
Date. Each Partner hereby consents and agrees that the Partnership shall
compensate ATI for a proportional allocation to the Partnership for insurance
premiums, casualty loss funding pools, and related expenses.
ARTICLE 3
CERTAIN AGREEMENTS REGARDING OPERATIONS OF THE
PARTNERSHIP AND THE PCS OWNED SYSTEMS
3.1. General; Fiduciary Obligations. The Partnership shall manage the
operations of the PCS Owned Systems in accordance with the respective budgets
and business plans for such PCS Systems then in effect, any License and Services
Agreements in effect from time to time (and the directives of WMC thereunder)
and the applicable terms of this Agreement. The Partners acknowledge that the
Partnership may have fiduciary obligations to and from other Persons in
connection with the Partnership's interest in any PCS Owned System. Each of the
Partnership Committee and the Partners shall use all reasonable efforts to cause
the Partnership to comply with all such fiduciary obligations, and the
obligations of the Partnership, the Partnership Committee and the Partners
hereunder are subject in all respects to such fiduciary obligations.
3.2. License Agreements. Within 10 days after the adoption of a form of
License Agreement by WMC pursuant to the WMC Partnership Agreement, the
Partnership shall enter into a License Agreement with WMC, in the form approved
by WMC. The Partnership shall amend such agreement from time to time to reflect
such changes therein as may be approved by WMC.
3.3. Services Agreement. Within 10 days after the adoption of a form of
Services Agreement by WMC pursuant to the WMC Partnership Agreement, the
Partnership shall enter into a Services Agreement with WMC, in the form
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approved by WMC. The Partnership shall amend such agreement from time to time to
reflect such changes therein as may be approved by WMC.
3.4. PCS Owned Systems.
(a) The President-PCS shall have full power and authority to take all
action necessary to effect the appointment or removal of the general manager or,
if applicable, the regional manager or other person with equivalent management
responsibility ("System Manager") of the Partnership's interest in any PCS Owned
System.
(b) Each System Manager shall manage the day-to-day operations of the
applicable PCS Owned System in accordance with any partnership agreement or
other organizational documents of the applicable PCS Owned System so long as
they are in existence and the budget and business plans then in effect for such
PCS Owned System, subject to the control, supervision and oversight of the
President-PCS.
3.5. System Budget Approval.
(a) The System Manager for each PCS Owned System shall submit annually
to the President-PCS a system budget in respect of such PCS Owned System
("System Budget") for the next fiscal year at such time and in such format as
may be determined from time to time, by the President-PCS. If requested by the
President-PCS, the System Manager shall promptly meet with the President-PCS for
the purpose of discussing such System Budget. Each System Budget shall be
consistent with any License Agreement and Services Agreement in effect from time
to time (and the directives of WMC thereunder).
(b) The Partnership shall neither take nor cause to be taken any action
to approve or implement a System Budget (or any amendment thereof or
modification thereto) until such System Budget (or amendment or modification)
shall have been approved by the President-PCS.
3.6. System Business Plans.
(a) The System Manager for each PCS Owned System shall submit to the
President-PCS a business plan in respect of such PCS Owned System (a "System
Business Plan") at such time and in such format as may be determined from time
to time by the President-PCS. Each System Business Plan shall be consistent with
any License Agreement and Services Agreement in effect from time to time (and
the directives of WMC thereunder).
(b) The Partnership shall neither take nor cause to be taken any action
to approve or implement a System Business Plan, until such System Business Plan
(or amendment or modification) shall have been approved by the President-PCS.
3.7. Management Reports. The System Manager for each PCS Owned System
shall prepare and distribute, or cause to be prepared and distributed, promptly
such reports and other information in respect of such PCS Owned System as the
President-PCS reasonably may request.
3.8. Financial Statements.
(a) Annual Statements. As soon as practicable following the end of each
fiscal year, but in any event within 45 days after the end of the fiscal year,
the System Manager for each PCS Owned System shall cause to be prepared and
delivered to the President-PCS unaudited statements of income (loss) in respect
of such PCS Owned System, and statements of cash flows for such fiscal year, and
an unaudited balance sheet of such PCS Owned System, in each case, consistent
with Partnership accounting practices.
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(b) Quarterly Statements. As soon as possible following the end of each
fiscal quarter, but in any event within 20 days after the end of each quarter,
the System Manager for each PCS Owned System shall prepare, or cause to be
prepared, and deliver to the President-PCS an unaudited statement of income
(loss) in respect of such PCS Owned System and an unaudited statement of cash
flows for such fiscal quarter, and an unaudited balance sheet of such PCS Owned
System as of the end of such fiscal quarter, in each case, consistent with
Partnership accounting practices.
ARTICLE 4
CAPITAL CONTRIBUTIONS, WITHDRAWALS AND CAPITAL ACCOUNTS
4.1. Capital Accounts.
(a) The Partnership shall maintain for each Partner a separate capital
account (a "Capital Account") in accordance with the capital accounting rules of
section 704(b) of the Code and the Income Tax Regulations thereunder (including
particularly section 1.704-1(b)(2)(iv) of the Income Tax Regulations).
(b) In general, under such capital accounting rules (but subject to any
contrary requirements of the Code and the Income Tax Regulations thereunder), a
Partner's Capital Account shall be (i) increased by the amount of money
(including Make-Up Contributions) and the Fair Market Value (determined in
accordance with Section 4.9 hereof) of other property (net of liabilities
secured by such contributed property that the Partnership is considered to take
subject to or assume under section 752 of the Code) contributed by the Partner
to the Partnership (including the amount of any Organizational Expenses of the
Partnership paid or accrued by such Partner) and allocations to the Partner of
Partnership income and gain (or items thereof), including income and gains
exempt from tax, and (ii) decreased by the amount of money and the Fair Market
Value (determined in accordance with Section 4.9 hereof) of other property
distributed (net of liabilities secured by such distributed property that such
Partner is considered to take subject to or assume under section 752 of the
Code) to the Partner by the Partnership and allocations to the Partner of
Partnership loss and deduction (or items thereof), including Partnership
expenditures not deductible in computing its taxable income and not properly
chargeable to capital account.
(c) Where section 704(c) of the Code applies to Partnership property,
each Partner's Capital Account shall be adjusted in accordance with paragraph
(b)(2)(iv)(g) of section 1.704-1 of the Income Tax Regulations as to allocations
to the Partners of depreciation, depletion, amortization and gain or loss, as
computed for book purposes with respect to such property.
(d) When Partnership property is distributed in kind (whether in
connection with dissolution and liquidation of the Partnership or otherwise),
the Capital Accounts of the Partners first shall be adjusted to reflect the
manner in which the unrealized income, gain, loss or deduction inherent in such
property (that has not previously been charged to Capital Accounts) would be
allocated among the Partners if there were a taxable disposition of such
property for its Fair Market Value (determined in accordance with Section 4.9
hereof and taking into account section 7701(g) of the Code) and such income,
gain, loss or deduction had been recognized for federal income tax purposes
immediately upon such distribution or the event requiring such revaluation.
(e) Upon a revaluation of any Partnership assets pursuant to Section
4.7 hereof, the Capital Accounts of the Partners will be adjusted as provided in
Section 4.7(d).
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(f) The Tax Matters Partner shall direct the Partnership's accountant
to make all necessary adjustments in each Partner's Capital Account as required
by the rules of section 704(b) of the Code and the Income Tax Regulations
thereunder.
4.2. Initial Contributions of Capital.
(a) On the Effective Date, each Partner shall make the contributions to
the capital of the Partnership set forth opposite such Partner's name on
Schedule 1 hereto.
(b) Upon the dissolution of Primeco in accordance with Article 10 of
the Primeco Agreement, each Partner will promptly contribute to the capital of
the Partnership any SLP Interests (as defined in the Primeco Agreement) held by
such Partner or any Affiliate thereof.
4.3. Additional Contributions by Partners.
(a) In the event that (i) a capital contribution is required by the
terms of an Approved Business Plan or an Approved Budget or (ii) the Partnership
Committee determines that an additional capital contribution, payable in cash or
other property (or combination thereof), is necessary or advisable, each Partner
will be notified in writing by the Partnership, at least 25 days prior to the
date on which such capital contribution is payable (the "Due Date"), of the
amount of the capital contribution required from each of them, on a pro rata
basis, determined in accordance with such Partner's respective Percentage
Interest, and the Due Date for such capital contribution. Each such capital
contribution shall be payable in cash unless otherwise determined by vote of the
Partnership Committee. Such contributions, when made by a Partner, shall be
credited to such Partner's Capital Account. In the event that any Partner fails
to make such a capital contribution on or before the Due Date thereof, but
wishes to make such contribution on or before the fifth day immediately
following such Due Date (a "Late Amount"), such Partner shall be entitled to
contribute such Late Amount during such five-day period and have such Late
Amount credited to its Capital Account; provided that in addition to the payment
of such Late Amount, such Partner must also pay at such time a late fee equal to
the interest that would have accrued on the unpaid portion of such Late Amount
from the Due Date to the date of payment, calculated at a per annum rate of the
Prime Rate plus 2% (a "Late Fee"), which Late Fee shall not be credited in whole
to the Partner's Capital Account, but shall be treated as income and allocated
among the Partners proportionately in accordance with their Percentage
Interests.
(b) In the event that a Partner fails to make a required capital
contribution on or prior to the expiration of five days after the Due Date
thereof (a "Defaulting Partner"), any one or more of the other Partners, who are
not Affiliate Transferees of the Defaulting Partner (the "Non-Defaulting
Partners"), within 30 days following the mailing of notice from the Partnership
that payment from the Defaulting Partner has not been made, may pay some or all
of the contribution which the Defaulting Partner failed to make to the capital
of the Partnership (a "Default Amount"). In the event that more than one
Non-Defaulting Partner elects to contribute a Default Amount so that the
aggregate amount to be contributed by Non-Defaulting Partners would exceed the
full Default Amount, each of such Non-Defaulting Partners shall be entitled to
contribute a portion of the Default Amount that is equal to such Non-Defaulting
Partner's Percentage Interest divided by the Percentage Interests of all
Non-Defaulting Partners electing to contribute such Default Amount. Thereafter,
to the extent that such Default Amount remains unpaid and the Partnership shall
not have funded such Default Amount through a subsequent capital call, the
Defaulting Partner shall have the right to contribute such unpaid portion of
such Default Amount and have such previously unpaid Default Amount credited to
its Capital Account; provided that such contribution is accompanied by the
payment of a fee in an amount equal to the interest that would have accrued on
the unpaid portion
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of such Default Amount from the Due Date to the date of such payment, calculated
at a per annum rate of the Prime Rate plus 2% (a "Default Fee"), which Default
Fee shall not be credited in whole to the Partner's Capital Account, but shall
be treated as income and allocated among the Partners proportionately in
accordance with their Percentage Interests.
(c) If the Defaulting Partner fails to contribute a Default Amount
which relates to a Defaulted Contribution and such Default Amount has not been
paid in full by one or more of the Non-Defaulting Partners, the NonDefaulting
Partner or Partners may by a vote of the Members representing a majority of the
Percentage Interests of the Non-Defaulting Partners, elect to cause the
Partnership to initiate and maintain an action against the Defaulting Partner
for such unpaid Defaulted Contribution and to pursue any available remedy,
including but not limited to seeking payment by the Defaulting Partner of such
Default Amount or the unpaid portion thereof and damages incurred by the
Partnership in connection therewith. The Defaulting Partner's Capital Account
shall be increased by an amount equal to that portion of the Default Amount
recovered in any action maintained in accordance with the immediately preceding
sentence. The costs of any action commenced by the Partnership pursuant to this
Section 4.3(c) shall be paid by the Partnership and shall be reimbursed by the
Defaulting Partner to the Partnership and to the extent not paid will be
deducted from such Defaulting Partner's Capital Account and Adjusted Capital
Contributions.
4.4. Partner Obligations. No Partner shall have any obligation to
restore any portion of any deficit balance in such Partner's Capital
Account, whether upon liquidation of its interest in the Partnership,
liquidation of the Partnership or otherwise.
4.5. Withdrawals of Capital Accounts. No Partner shall be entitled
to withdraw any amount from its Capital Account prior to dissolution of the
Partnership.
4.6. Interest on Capital Accounts. No interest or compensation shall
be paid on or with respect to the Capital Account or capital contributions
of any of the Partners, except as otherwise expressly provided herein.
4.7. Revaluation of Partnership Assets.
(a) The assets of the Partnership shall be revalued in accordance with
Section 4.9 to their then Fair Market Values as of the date of and immediately
prior to (i) the acquisition of an additional interest in the Partnership
(including adjustments to Percentage Interests arising as a result of a failure
of any Partner to make a required capital contribution pursuant to Section 4.3
hereof) by any new or existing Partner in exchange for more than a de minimis
capital contribution to the Partnership, (ii) the distribution by the
Partnership of more than a de minimis amount of property as consideration for
the redemption of a portion (but not all) of a Partner's interest in the
Partnership and (iii) the liquidation of a Partner's entire interest in the
Partnership, or immediately prior to the distribution of Partnership assets in
liquidation of the Partnership within the meaning of Income Tax Regulations
section 1.704-1(b)(2)(ii)(g); provided, however, that no revaluation shall occur
if the Partnership Committee reasonably determines that a revaluation would not
materially affect the Capital Accounts of the Partners or that the cost of such
revaluation would be disproportionate to any benefit to be derived by the
Partners from such revaluation.
(b) Immediately prior to the distribution of any asset by the
Partnership, the Partnership Committee shall revalue such asset to its then Fair
Market Value.
(c) Any Revaluation Gain or Revaluation Loss arising from a revaluation
of any Partnership asset pursuant to this Section 4.7 shall respectively be
credited to or debited from the Partners' Capital Accounts
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in accordance with their respective Percentage Interests immediately prior to
the event giving rise to such revaluation.
4.8. Redetermination of Percentage Interests. The respective Percentage
Interests of each of the Partners shall be redetermined immediately after any
event giving rise to a change in any Partner's Adjusted Capital Contributions.
If a Partner is both a General Partner and a Limited Partner such adjustment
shall be made to both the General Partner and the Limited Partner Percentage
Interests of such Partner as both a General Partner and a Limited Partner pro
rata in proportion to such interests.
4.9. Determination of Fair Market Value. The Fair Market Value, as of
the date of determination, of any asset shall be determined (a) by mutual
agreement of the General Partners or (b) if no such agreement is reached within
ten days of the relevant date of determination, as follows:
(i) Selection of Appraisers. Each of (A) the Partner who is
either contributing an asset to the Partnership, receiving an asset as
a distribution from the Partnership or transferring an asset which is
being valued hereunder (or, if there is no such Partner, ATPH) (the
"Asset Partner") and (B) the other General Partners shall designate by
written notice to the Partnership and each General Partner a firm of
recognized national standing familiar with appraisal techniques
applicable to assets of the type being evaluated to serve as an
Appraiser pursuant to this Section 4.9 (the firms designated by the
Asset Partner and the other General Partners being referred to herein
as the "First Appraiser" and the "Second Appraiser," respectively)
within five business days after the failure to reach agreement in
accordance with the terms of clause (a) above. In the event that either
the Asset Partner or the other General Partners fails to designate its
or their Appraiser within the foregoing time period, the other shall
have the right to designate such Appraiser by notifying the failing
party or parties in writing of such designation (and the Appraiser so
designated shall be the First Appraiser or the Second Appraiser, as the
case may be).
(ii) Evaluation Procedures. Each Appraiser shall be directed
to determine the Fair Market Value of the asset. Each Appraiser will
also be directed to deliver an Appraiser's Certificate to each General
Partner on or before the 30th day after their respective designation
(the "Certificate Date"), upon the conclusion of its evaluation, and
each Appraiser's Certificate once delivered may not be retracted or
modified in any respect. Each Appraiser will keep confidential all
information disclosed by the Partnership in the course of conducting
its evaluation, and, to that end, will execute such customary
documentation as the Partnership may reasonably request with respect to
such confidentiality obligation. The General Partners will cooperate in
causing the Partnership to provide each Appraiser with such information
within the Partnership's possession that may be reasonably requested in
writing by the Appraiser for purposes of its evaluation hereunder. The
Appraisers shall consult with each other in the course of conducting
their respective evaluations. Each General Partner shall have full
access to each Appraiser's work papers. Each Appraiser will be directed
to comply with the provisions of this Section 4.9, and to that end each
party will provide to its respective Appraiser a complete and correct
copy of this Section 4.9 (and the definitions of capitalized terms used
in this Section 4.9 that are defined elsewhere in this Agreement).
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(iii) Fair Market Determination. The Fair Market Value of any
asset shall be determined on the basis of the Appraisers' Certificates
in accordance with the provisions of this subparagraph (iii). The
higher of the values set forth on the Appraisers' Certificates is
hereinafter referred to as the "Higher Value" and the lower of such
values is hereinafter referred to as the "Lower Value". If the Higher
Value is not more than 110% of the Lower Value, the Fair Market Value
will be the arithmetic average of such two Values. If the Higher Value
is more than 110% of the Lower Value, a third appraiser shall be
selected in accordance with the provisions of subparagraph (iv) below,
and the Fair Market Value will be determined in accordance with the
provisions of subparagraph (v) below.
(iv) Selection of and Procedure for Third Appraiser. If the
Higher Value is more than 110% of the Lower Value, within seven days
thereafter the First Appraiser and the Second Appraiser shall agree
upon and jointly designate a third firm of recognized national standing
familiar with appraisal techniques applicable to assets of the type
being evaluated to serve as an appraiser pursuant to this Section 4.9
(the "Third Appraiser"), by written notice to each General Partner. The
General Partners shall direct the Third Appraiser to determine the Fair
Market Value of the asset (the "Third Value") in accordance with the
provisions of subparagraph (ii) above, and to deliver to the General
Partners an Appraiser's Certificate on or before the 30th day after the
designation of such Appraiser hereunder. The Third Appraiser will be
directed to comply with the provisions of this Section 4.9, and to that
end the parties will provide to the Third Appraiser a complete and
correct copy of this Section 4.9 (and the definitions of capitalized
terms used in this Section 4.9 that are defined elsewhere in this
Agreement).
(v) Alternative Determination of Fair Market. Upon the
delivery of the Appraiser's Certificate of the Third Appraiser,
the Fair Market Value will be determined as provided in this
subparagraph (v). The Fair Market Value will be (w) the Lower
Value, if the Third Value is less than the Lower Value, (x) the Higher
Value, if the Third Value is greater than the Higher Value, (y) the
arithmetic average of the Third Value and the other Value (Lower or
Higher) that is closer to the Third Value if the Third Value falls
within the range between (and including) the Lower Value and the Higher
Value and (z) the Third Value, if the Lower Value and the Higher Value
are equally close to the Third Value.
(vi) Costs. Each of the Asset Partner and the other General
Partners will bear the cost of the Appraiser designated by it or on its
behalf. If the Higher Value is not more than 115% of the Lower Value,
or if the Higher Value and the Lower Value are equally close to the
Third Value, each of the Asset Partner and the other General Partners
shall bear 50% of the cost of the Third Appraiser, if any; otherwise,
the party whose Appraiser's determination of Fair Market Value is
further away from the Third Value shall bear the entire cost of the
Third Appraiser. The General Partners agree to pay when due the fees
and expenses of the Appraisers in accordance with the foregoing
provisions.
(vii) Conclusive Determination. To the fullest extent provided
by law, the determination of the Fair Market Value made pursuant to
this Section 4.9 shall be final and binding on the Partnership and the
Partners hereto, and such determination shall not be appealable to or
reviewable by any court or arbitrator; provided that the foregoing
shall not limit a
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Partner's rights to seek arbitration of the obligations of the other
Partners and the Partnership hereunder.
ARTICLE 5
ALLOCATIONS AND DISTRIBUTIONS
5.1. Profits and Losses. A Partner's distributive share of income,
gain, loss, deduction or credit (or items thereof) as shown on the annual
federal income tax return prepared by the Partnership's accountants or as
finally determined by the Internal Revenue Service or the courts, and as
modified by the capital accounting rules of section 704(b) of the Code and the
Income Tax Regulations thereunder as implemented by Section 4.1 hereof, as
applicable, shall be determined as provided in this Article 5.
(a) Except as otherwise provided in this Section 5.1, profits and
losses of the Partnership shall be allocated among the Partners proportionately
in accordance with their Percentage Interests.
(b) Solely for tax purposes, in determining each Partner's allocable
share of the taxable income or loss of the Partnership, depreciation, depletion,
amortization and gain or loss with respect to any contributed property, or with
respect to revalued property where Partnership property is revalued pursuant to
Section 4.7 hereof, shall be allocated to the Partners under any method
allowable under section 704(c) of the Code and the applicable Income Tax
Regulations thereunder. The Partnership Committee shall decide which such method
shall be utilized by the Partnership with respect to its property; provided,
however, that if the Partnership Committee fails to act in a timely manner, the
Partnership shall utilize the method set forth in section 1.704-3(c) of the
Income Tax Regulations (the traditional method with curative allocations).
(c) Minimum Gain Chargeback. Notwithstanding anything to the contrary
in this Article 5, if there is a net decrease in Partnership Minimum Gain or
Partner Nonrecourse Debt Minimum Gain (as such terms are defined in sections
1.704-2(b) and 1.704-2(i)(2), respectively, of the Income Tax Regulations)
during a Partnership taxable year, then each Partner shall be allocated items of
Partnership income and gain for such year (and, if necessary, for subsequent
years), to the extent required by, and in the manner provided in, section
1.704-2 of the Income Tax Regulations.
This provision is intended to be a "minimum gain chargeback" within the
meaning of sections 1.704-2(f) and 1.704-2(i)(4) of the Income Tax Regulations
and shall be interpreted and implemented as therein provided.
(d) Qualified Income Offset. Subject to the provisions of Section
5.1(c), but otherwise notwithstanding anything to the contrary in this Article
5, if any Partner's capital account has a deficit balance in excess of such
Partner's obligation to restore its capital account balance, computed in
accordance with the rules of paragraph (b)(2)(ii)(d) of section 1.704-1 of the
Income Tax Regulations (including such Partner's share of Partnership Minimum
Gain and Partner Nonrecourse Debt Minimum Gain as provided in section 1.704-2(g)
and 2(i)(5) of the Income Tax Regulations), then sufficient amounts of income
and gain (consisting of a pro rata portion of each item of Partnership income,
including gross income, and gain for such year) shall be allocated to such
Partner in an amount and manner sufficient to eliminate such deficit as quickly
as possible. This provision is intended to be a "qualified income offset" within
the meaning of section 1.704-1(b)(2)(ii)(d) of the Income Tax Regulations and
shall be interpreted and implemented as therein provided.
(e) Subject to the provisions of section 704(c) of the Code and
Sections 5.1(b) through (d) hereof, gain recognized (or deemed recognized under
the provisions hereof) upon the sale or other disposition of
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Partnership property, which is treated as depreciation recapture, shall be
allocated to the Partner who was entitled to deduct such depreciation.
(f) Except as otherwise provided in Section 5.1(k), if and to the
extent any Partner is deemed to recognize income as a result of any loans
described herein pursuant to the rules of sections 1272, 1273, 1274, 7872 or 482
of the Code, or any similar provision now or hereafter in effect, or any other
item of imputed income, any corresponding resulting deduction of the Partnership
shall be allocated to the Partner who is charged with the income. Subject to the
provisions of section 704(c) of the Code and Sections 5.1(b) through (d) hereof,
if and to the extent the Partnership is deemed to recognize income as a result
of any loans described herein pursuant to the rules of sections 1272, 1273,
1274, 7872 or 482 of the Code, or any similar provision now or hereafter in
effect, or any other item of imputed income, such income shall be allocated to
the Partner who is entitled to any corresponding resulting deduction.
(g) Organizational Expenses of the Partnership, if contributed by a
Partner, shall be allocated to such Partner.
(h) Except as otherwise required by law, tax credits shall be allocated
among the Partners pro rata in accordance with the manner in which Partnership
profits are allocated to the Partners under this Article 5, as of the time the
credit property is placed in service or if no property is involved, as of the
time the credit is earned. Recapture of any tax credit required by the Code
shall be allocated to the Partners in the same proportion in which such tax
credit was allocated.
(i) Except as provided in Sections 5.1(f) and (h) hereof or as
otherwise required by law, if the Partnership Interests of the Partners are
changed herein during any taxable year, all items to be allocated to the
Partners for such entire taxable year shall be prorated on the basis of the
portion of such taxable year which precedes each such change and the portion of
such taxable year on and after each such change according to the number of days
in each such portion, and the items so allocated for each such portion shall be
allocated to the Partners in the manner in which such items are allocated as
provided in this Article 5 during each such portion of the taxable year in
question; provided that, if the transferor and the transferee of an interest in
the Partnership (i) shall both have given the Partnership written notice within
15 days of the end of such taxable year of the Partnership stating their
agreement that such division and allocation shall be made on some other basis
permitted by Code section 706(d) and (ii) shall have agreed to reimburse the
Partnership for any incremental accounting fees and other expenses incurred by
the Partnership in utilizing such other basis for such division and allocation,
then such other basis permitted by Code section 706(d) shall be used.
(j) Any special allocation of income or gain pursuant to Section 5.1(c)
or 5.1(d) hereof shall be taken into account in computing subsequent allocations
of income and gain pursuant to this Article 5 so that the net amount of all such
allocations to each Partner shall, to the extent possible, be equal to the net
amount that would have been allocated to each such Partner pursuant to the
provisions of this Article 5 if such special allocations of income or gain under
Section 5.1(c) or 5.1(d) hereof had not occurred.
(k) Losses.
(i) Items of deduction and loss attributable to recourse
liabilities of the Partnership (within the meaning of section
1.752-1(a)(1) of the Income Tax Regulations but excluding Partner
nonrecourse debt within the meaning of section 1.704- 2(b)(4) of the
Income Tax Regulations) shall be allocated among the Partners in
accordance with the ratio in which the Partners
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share the economic risk of loss (within the meaning of section 1.752-2
of the Income Tax Regulations) for such liabilities.
(ii) Items of deduction and loss attributable to Partner
nonrecourse debt within the meaning of section 1.704-2(b)(4) of the
Income Tax Regulations shall be allocated to the Partners bearing the
economic risk of loss with respect to such debt in accordance with
section 1.704-2(i) of the Income Tax Regulations.
(iii) Items of deduction and loss attributable to Partnership
nonrecourse liabilities within the meaning of section 1.704-2(b)(1) of
the Income Tax Regulations shall be allocated among the Partners
proportionately in accordance with their respective Percentage
Interests.
(iv) All other items of operating net loss ("Net Loss") shall
be allocated among the Partners, proportionately in accordance with
their Percentage Interests, except that Net Loss shall not be allocated
to any Partner to the extent it would create a deficit balance in
excess of such Partner's obligation to restore its capital account
balance, computed in accordance with the rules of Section
1.704-1(b)(2)(ii)(d) of the Income Tax Regulations (including such
Partner's share of Partnership Minimum Gain and Partner Nonrecourse
Debt Minimum Gain as provided in section 1.704-2(g) and 2(i)(5) of the
Income Tax Regulations). Any Net Loss which cannot be allocated to a
Partner because of the limitation set forth in the previous sentence
shall be allocated first to the other Partners to the extent such other
Partners would not be subject to such limitation and second any
remaining amount to the Partners in the manner required by the Code and
the Income Tax Regulations.
(l) Subject to the provisions of Sections 5.1(c) through (k), items of
income and gain shall be allocated to the Partners in the following priority:
(i) First, if allocations of Net Loss have been made to the
Partners under Section 5.1(k)(iv), then in the amount of, and
proportionate to, the amount of such Net Loss.
(ii) Second, to those Partners who have had items of loss or
deduction allocated to them under Section 5.1(k)(i), in the amount of,
and proportionate to, the amount of such items of loss or deduction.
(iii) Third, so as to bring the relationship of the credit balance
in each Partner's Capital Account (computed in the same manner as
provided in Section 5.1(k)(iv)), as nearly as possible, in accord with
their Percentage Interests.
(iv) Thereafter, the balance among the Partners in proportion to
their relative Percentage Interests.
5.2. Distributions.
(a) As promptly as practicable after the end of each month, but in no
event later than the end of the following month, all Net Operating Available
Cash of the Partnership (as determined based on the Partnership's financial
statements for such month) shall be distributed to the Partners. Other
distributions, whether in cash or in kind, shall be made to the Partners at such
times and in such amounts as shall be determined by the Partnership Committee.
The amount of any in-kind distribution shall be the distributed property's then
Fair Market Value. The Partnership shall take all reasonable actions to cause
each PCS Owned System to distribute all Net Operating
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Available Cash of such PCS Owned System on a monthly basis to the extent
permissible under the governing documents for such PCS Owned Systems.
(b) Except as provided in Sections 5.2(c) or (d), distributions shall
be made among the Partners in accordance with their respective Percentage
Interests at the time of such distribution.
(c) Upon liquidation of the Partnership, within the meaning of Income
Tax Regulations section 1.704-1(b)(2)(ii)(g), distributions shall be made among
the Partners as provided in Section 8.3.
(d) (i) If upon the liquidation of Primeco in accordance with Article
10 of the Primeco Agreement, the Partnership receives as part of a liquidating
distribution the assets, liabilities and business operations of any Special
System (as defined in the Primeco Agreement), then the Partnership Committee may
elect, at any time within the six-month period commencing upon the Partnership's
receipt of such liquidating distribution, to distribute the assets, liabilities
and business operations of such Special System ("Special System Assets") among
the Partner(s) that had previously made a capital contribution to the
Partnership pursuant to Section 4.2(b) of a SLP Interest with respect to such
Special System (the "Contributing Partners").
(ii) The Fair Market Value of the Special System Assets distributed
pursuant to this Section 5.2(d) shall be deemed to be equal to the product of
(x) the Fair Market Value of the SLP Interests with respect to such Special
System at the time of their contribution to the Partnership by the Contributing
Partners, multiplied by (y) 100% divided by the aggregate SLP Percentage
Interest (as defined in the Primeco Agreement) represented by such SLP
Interests.
(iii) Any such distribution of Special System Assets shall be made
among the Contributing Partners pro rata in proportion to the SLP Percentage
Interests associated with the SLP Interests contributed to the Partnership by
each Contributing Partner.
(iv) At the election of WMC, the Contributing Partners receiving a
distribution of Special System Assets pursuant to this Section 5.2(d) shall
cause the related Special System to enter into a License Agreement and Services
Agreement with WMC.
(e) Any other provision of this Agreement to the contrary notwith-
standing, no distribution shall be made by the Partnership, or on behalf of
the Partnership which would violate Section 17-607(a) of the Act, which would
render the Partnership insolvent or which is prohibited by the terms of any
Partnership indebtedness.
(f) All matters not expressly provided for by the terms of Article 5 or
elsewhere in this Agreement concerning the valuation of securities and other
assets of the Partnership, the allocation of profits and losses and items
thereof (including credits) among the Partners and accounting procedures shall
be reasonably determined by the Partnership Committee, whose determination shall
be final and conclusive as to all of the Partners.
ARTICLE 6
TAX MATTERS AND REPORTS; ACCOUNTING
6.1. Filing of Tax Returns. The Tax Matters Partner shall prepare
and file, or cause the accountants of the Partnership to prepare and file,
all Tax Returns for each tax year of the Partnership.
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6.2. Tax Matters Partner.
(a) The Tax Matters Partner of the Partnership within the meaning of
section 6231(a)(7) of the Code shall be ATPH. Unless otherwise expressly
provided herein, the Tax Matters Partner is authorized to take any action that
it determines to be necessary or appropriate with respect to all tax matters.
(b) The Tax Matters Partner shall promptly advise the other Partners of
all audits or other actions by the Internal Revenue Service and shall furnish to
the Partnership and to each Partner a copy of each notice or other communication
received by the Tax Matters Partner from the Internal Revenue Service except
such notice or communication sent directly to the Partners by the Internal
Revenue Service. All expenses incurred by the Tax Matters Partner in its
capacity as such shall be expenses of the Partnership and shall be paid by the
Partnership.
(c) To the fullest extent permitted by law, the Partnership shall
indemnify Partners on an after-tax basis against any liabilities incurred while
acting as the Tax Matters Partner of the Partnership but only to the extent such
Partner acts within the scope of its authority as Tax Matters Partner under this
Agreement. The Tax Matters Partner shall not be indemnified against any
liability regarding Partnership tax matters arising by reason of the willful
misconduct, bad faith, gross negligence or reckless disregard of the duties of
the Tax Matters Partner.
6.3. Tax Reports to Current and Former Partners. After the end of each
fiscal year, the Tax Matters Partner shall, in a timely manner, prepare and
mail, or cause its accountants to prepare and mail, to each Partner and, to the
extent necessary, to each former Partner (or its legal representatives), a
report setting forth in sufficient detail such information as is required to be
furnished to partners by law (e.g., section 6031(b) of the Code and the Income
Tax Regulations thereunder) and as shall enable such Partner or former Partner
(or its legal representatives) to prepare their respective federal and state
income tax or informational returns in accordance with the laws, rules and
regulations then prevailing.
6.4. Accounting Records; Independent Audit. Complete books and records
accurately reflecting the accounts, business, transactions and partners of the
Partnership and each PCS System in which it has an interest shall be maintained
and kept by the Partnership at the Partnership's principal place of business.
The accounting records of the Partnership shall be maintained to assure
preparation of the financial statements in accordance with GAAP. The accounting
records of the Partnership shall be audited by certified public accountants
selected by the Partnership Committee and shall contain proportional accounting
information with respect to the Partnership's interest in any PCS Owned System.
6.5. Fiscal Year. Except as may otherwise be required by the federal
tax laws, the fiscal year of the Partnership for both financial and tax
reporting purposes shall end on December 31.
6.6. Tax Accounting Method. The books and accounts of the Partnership
shall be maintained using the accrual method of accounting for tax purposes.
Those documents relating to allocations of items of partnership income, gain,
loss, deduction or credit and Capital Accounts shall be kept under federal
income tax accounting principles as provided herein.
6.7. Withholding. Notwithstanding any other provision of this
Agreement, the Tax Matters Partner is authorized to take any action that it
determines to be necessary or appropriate to cause the Partnership to comply
with any Federal, state and local withholding requirement with respect to any
allocation, payment or distribution by the Partnership to any Partner or other
Person. All amounts withheld to satisfy any Federal, state or local
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withholding requirement with respect to a Partner shall be treated as
distributions to such Partner. If any such withholding requirement with respect
to any Partner exceeds the amount distributable to such Partner under this
Agreement, or if any such withholding requirement was not satisfied with respect
to any amount previously allocated or distributed to such Partner, such Partner
and any successor or assignee with respect to such Partner's interest in the
Partnership hereby, to the fullest extent permitted by law, indemnifies and
agrees to hold harmless the Partners and the Partnership for such excess amount
or such withholding requirement, as the case may be.
6.8. Tax Elections. Upon the request of a transferee of a Partnership
Interest or a distributee of a Partnership distribution, the Partnership will
make the election under section 754 of the Code in accordance with applicable
Income Tax Regulations thereunder for the first fiscal year in which such
election could apply, unless the Tax Matters Partner agrees at the time for
filing the Partnership tax information return not to make such election. The
Partnership may seek to revoke such election (if made) if agreed to by the Tax
Matters Partner. In addition to the foregoing, the Tax Matters Partner shall, in
its sole discretion, determine whether to make any other available tax elections
and select any other appropriate tax accounting methods and conventions for any
purpose under this Agreement.
6.9. Prior Tax Information. Each Partner agrees to deliver to the
Partnership all relevant information regarding Taxes that the Partnership will
require in order to comply with its own tax accounting and reporting
requirements, including without limitation schedules setting forth the fair
market value and tax basis of each asset that may from time to time be
contributed by a Partner to the Partnership; provided, however, that no Partner
shall be required to disclose the income tax returns of itself or any of its
Affiliates.
ARTICLE 7
INDEMNIFICATION AND EXCULPATION; CERTAIN AGREEMENTS
7.1. Indemnification of the Partners. The Partnership shall indemnify
and hold harmless the Members, the Partners and their Affiliates, and their
respective partners, shareholders, directors, officers, employees and agents
and/or the legal representatives of any of them, and each other Person who may
incur liability as a Partner or otherwise in connection with the management or
ownership of the Partnership or any entity in which the Partnership has an
interest (each, an "Indemnified Party"), against all liabilities and expenses
(including amounts paid in satisfaction of judgments, in compromise, as fines
and penalties, and as counsel fees) reasonably incurred by him or it in
connection with the investigation, defense or disposition of any action, suit or
other proceeding, whether civil or criminal, in which any Indemnified Party may
be involved or with which he or it may be threatened, while a Partner or serving
in such other capacity or thereafter, by reason of its being or having been a
Partner, or by serving in such other capacity, except with respect to any matter
which constitutes willful misconduct, bad faith, gross negligence or reckless
disregard of the duties of his office, or criminal intent. The Partnership shall
have the right to approve any counsel selected by any Indemnified Party and to
approve the terms of any proposed settlement. The Partnership shall advance to
any Indemnified Party or Partner reasonable attorneys' fees and other costs and
expenses incurred in connection with the defense of any such action or
proceeding. Each Partner hereby agrees, and each other Indemnified Party shall
agree in writing prior to any such advancement, that in the event he or it
receives any such advance, such Indemnified Party shall reimburse the
Partnership for such fees, costs and expenses to the extent that it shall be
determined that he or it was not entitled to indemnification under this Section.
The rights accruing to a Partner and
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each other Indemnified Party under this Section 7.1 shall not exclude any other
right to which it or they may be lawfully entitled; provided that any right of
indemnity or reimbursement granted in this Section 7.1 or to which any
Indemnified Party may be otherwise entitled may only be satisfied out of the
assets of the Partnership, and no Partner and no withdrawn Partner shall be
personally liable with respect to any such claim for indemnity or reimbursement.
Notwithstanding any of the foregoing to the contrary, the provisions of this
Section 7.1 shall not be construed so as to provide for the indemnification of a
Partner or any other Indemnified Party for any liability to the extent (but only
to the extent) that such indemnification would be in violation of applicable law
or such liability may not be waived, modified or limited under applicable law,
but shall be construed so as to effectuate the provisions of this Section 7.1 to
the fullest extent permitted by law.
7.2. Exculpation. Any Member, any Partnership employee, any Partner and
any Affiliate thereof and their respective partners, shareholders, directors,
officers, employees, or agents and/or the legal representatives of any of them
shall not be liable to any Partner or the Partnership for mistakes of judgment
or for action or inaction which such Member, Partner, Affiliate, partner,
shareholder, director, officer, employee, agent or legal representative
reasonably believed to be in or not opposed to the best interests of Partnership
unless such action or inaction constitutes willful misconduct, bad faith, gross
negligence or reckless disregard of his or its duties and, with respect to any
criminal action, such party reasonably believes his conduct was lawful. Each
Partner may (on its own behalf or on the behalf of any Member designated by such
Partner, any Affiliates of such Partner or their respective partners,
shareholders, directors, officers, employees or agents and/or legal
representatives of any of them), consult with counsel, accountants and other
experts in respect of the Partnership affairs and such Person shall be fully
protected and justified in any action or inaction which is taken in accordance
with the advice or opinion of such counsel, accountants or other experts;
provided that they shall have been selected with reasonable care.
Notwithstanding any of the foregoing to the contrary, the provisions of this
Section 7.2 shall not be construed so as to relieve (or attempt to relieve) a
Partner or any other Person of any liability, to the extent (but only to the
extent) that such liability may not be waived, modified or limited under
applicable law, but shall be construed so as to effectuate the provisions of
this Section 7.2 to the fullest extent permitted by law.
7.3. Restrictions on Partners. No Partner may, without the prior
written consent of all of the other Partners:
(i) confess a judgment against the Partnership;
(ii) make any agreement on behalf of any other Partner;
(iii) except to the extent permitted by Article 8 hereof, withdraw
as a Partner, dissolve, terminate, liquidate or wind up the affairs of
the Partnership; or
(iv) use or possess Partnership property except for a Partnership
purpose, except as provided under contractual arrangement.
7.4. Outside Activities.
(a) Except as otherwise expressly provided in this Section 7.4, any
Partner or Affiliate thereof may engage in or possess any interest in any other
business venture of any nature independently or with others, and neither the
Partnership nor any other Partner shall have any right by virtue of this
Agreement in or to such venture or in or to any income or profits derived
therefrom.
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(b) Except for Systems (or licenses or permits therefor) acquired in
accordance with Section 7.4 of the WMC Partnership Agreement, no Partner or any
Affiliate thereof may, directly or indirectly, acquire an ownership interest in
any System (or license or permit therefor).
(c) Except as permitted by Section 7.4 of the WMC Partnership
Agreement, no Partner will, and each Partner will not permit any Affiliate to,
directly or indirectly, engage in the business of providing PCS, Cellular or
ESMR Services (as defined in the WMC Partnership Agreement).
(d) Each Partner shall use its reasonable efforts to cause each of its
Attributed Entities to abide by restrictions contained in this Section 7.4 and
to comply with the terms set forth herein.
(e) This Agreement shall not be deemed to create any duties other than
as expressly provided for herein or imposed by applicable law, nor shall its
existence be deemed to alter the legal duties and obligations that any Partner
or any Affiliate has to the other Partners or their Affiliates as to matters
outside the scope of the Agreement, including, without limitation, those
concerning the terms and conditions of interconnection services. Each of the
Partners and its Affiliates acknowledge their respective right to compete
vigorously with the other Partners and their Affiliates in markets or areas in
which they are otherwise competitors in the offering of telecommunications
services.
(f) Each Partner (whether or not such Partner shall have withdrawn as a
General Partner from the Partnership in violation of Section 8.1) shall remain
subject to the provisions of this Section 7.4 for a period of one year from the
date such Partner and its Affiliates cease to have aggregate General Partner and
Limited Partner Percentage Interests equal to or exceeding 5%. If a General
Partner withdraws from the Partnership in violation of Section 8.1, then the
Limited Partner Percentage Interest of such Partner for purposes of this Section
7.4(f), shall be deemed to be increased by the General Partner Percentage
Interest at the time of such withdrawal.
7.5. Duties of Partners. The fiduciary duties of Partners or Members
of the Partnership Committee shall not restrict any Partner or Affiliate or
any Member of the Partnership Committee from:
(i) engaging in conduct permitted by Section 7.4;
(ii) taking any action in any capacity other than that of a Partner
or Member of the Partnership Committee, respectively; or
(iii) acting to prevent the Partnership from engaging in an
activity that is outside the scope of the Partnership Business;
whether or not such Partner, Affiliate or Member of the Partnership Committee is
motivated in whole or in part by a desire to further the interests of a Person
other than the Partnership.
ARTICLE 8
TERMINATION AND DISSOLUTION
8.1. Events of Dissolution.
(a) The Partnership shall be dissolved upon (i) expiration of the term
of the Partnership specified in Section 1.6 hereof, (ii) the Bankruptcy of a
General Partner under the circumstances described in Section 8.2(b), (iii) the
withdrawal of a General Partner, the filing of a certificate of dissolution, or
its equivalent, for a General Partner or the revocation of
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its charter and the expiration of 90 days after the date of notice to a General
Partner of revocation without a reinstatement of its charter, or the occurrence
of any other event that results in a General Partner ceasing to be a general
partner of the Partnership as required under the Act; provided, the Partnership
shall not be dissolved and required to be wound up in connection with any of the
events specified in this clause (iii) if (A) at the time of the occurrence of
such event there is at least one remaining General Partner of the Partnership
who is hereby authorized to and does carry on the business of the Partnership
without dissolution, or (B) within 90 days after the occurrence of such event, a
majority in interest of the remaining Partners (or such greater percentage in
interest as is required by the Act) agree in writing to continue the business of
the Partnership and to the appointment, effective as of the date of such event,
of one or more additional general partners of the Partnership, (iv) the transfer
or sale of all or substantially all of the assets of the Partnership, (v) the
entry of a decree of judicial dissolution pursuant to Section 17-802 of the Act,
(vi) the unanimous written consent of the Partners, and (vii) the termination of
the Organization Agreement in accordance with the provisions of Article 7
thereof.
(b) Without the unanimous written consent of the Partners, each Partner
agrees not to withdraw as a Partner or do anything that would otherwise dissolve
the Partnership (except as permitted by the terms of Article 10).
Notwithstanding the foregoing, if a General Partner withdraws from the
Partnership, upon such withdrawal, (i) the general partner interests in the
Partnership of such Partner shall automatically be deemed to become limited
partner interests in the Partnership and (ii) such Partner shall have no right
to participate in the management of the Partnership Business and affairs of the
Partnership, including the right to designate Members of the Partnership
Committee.
8.2. Bankruptcy of a General Partner.
(a) If the Bankruptcy of a General Partner occurs and at such time
there is at least one other General Partner, such remaining General Partner or
General Partners are hereby authorized to carry on the business of the
Partnership without dissolution, and the Partnership Interests of the General
Partner in Bankruptcy (the "Bankrupt Partner") shall automatically be deemed to
become limited partner interests in the Partnership, and such Bankrupt Partner
shall cease to be a General Partner and continue to be, or become, a Limited
Partner having (i) no right to participate in the management of the Partnership
Business and affairs of the Partnership, including no right to designate Members
to the Partnership Committee, and (ii) the same interest in all items of income,
gain, loss, deduction or credit of the Partnership to the same extent as if such
Bankruptcy had not occurred. The Partnership shall continue to be governed by
the terms of this Agreement, the Partnership Business and the property of the
Partnership shall continue to be owned by the Partnership, and the Partnership
Business shall otherwise continue unaffected by such Bankruptcy. Upon the
occurrence of the Bankruptcy of any General Partner, (i) the Bankrupt Partner
and the other Partners shall execute such documents as may be necessary or
appropriate to carry out the provisions of this Section 8.2 and (ii) the other
Partners are, without necessity of any further action or documentation, hereby
appointed attorneys-in-fact of the Bankrupt Partner for the purpose of carrying
out the provisions of this Section 8.2 and taking any action and executing any
documents which such Partners may deem necessary or advisable to accomplish the
purposes hereof, such appointment being irrevocable and coupled with an
interest.
(b) If the Bankruptcy of a General Partner occurs and at such time the
Bankrupt Partner is the only General Partner, the Partnership shall be dissolved
unless within 90 days after such Bankruptcy occurs, the other Partners agree in
writing to continue the business of the Partnership and to appoint, effective as
of the date of such Bankruptcy, one or more additional General Partners. In the
event that the other Partners make such an
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election, the Partnership Business shall be carried on by such newly appointed
General Partner(s) and the Bankrupt Partner shall have its general partnership
interest in the Partnership converted into a limited partner interest in the
Partnership and continue to be, or becomes a Limited Partner subject to the
provisions of Section 8.2.
(c) In the event any General Partner shall become a "debtor" as defined
in the Bankruptcy Code in any case commenced thereunder and at any time during
the pendency of such case there shall be appointed (i) a trustee with respect to
the Bankrupt Partner under section 701, 702 or 1104 of the Bankruptcy Code (or
any successor provisions thereto), or (ii) an examiner having expanded powers
beyond those specifically enumerated in section 1104(b) of the Bankruptcy Code,
then the other Partners may, at any time thereafter, so long as such condition
exists, elect to dissolve the Partnership, in which event the affairs of the
Partnership shall be wound up as provided in this Article 8.
8.3. Order of Dissolution. In settling accounts upon winding up and
liquidation of the Partnership, the assets of the Partnership shall be applied
and distributed as expeditiously as possible in the following order not later
than the end of the taxable year of the liquidation (i.e., the date upon which
the Partnership ceases to be a going concern as provided in Income Tax
Regulation section 1.704-1(b)(2)(ii)(g) or if later, within 90 days after the
date of such liquidation):
(a) to pay (or make reasonable provision for the payment of) all
creditors of the Partnership, including to the extent permitted by law Partners
or their Affiliates who are creditors, in satisfaction of liabilities of the
Partnership in the order of priority provided by law, including expenses
relating to the dissolution and winding up of the affairs of the Partnership
(including, without limitation, expenses of selling assets of the Partnership,
discharging the liabilities of the Partnership, distributing the assets of the
Partnership and terminating the Partnership as a limited partnership in
accordance with this Agreement and the Act); and
(b) to the Partners in proportion to their respective positive Capital
Account balances, as those balances are determined after all adjustments to such
Capital Accounts as required by this Agreement for all periods immediately prior
to such distribution.
8.4. Orderly Winding Up. Notwithstanding anything to the contrary in
Sections 8.1, 8.2 and 8.3, but subject to Section 8.5 and the order of priority
in Section 8.3, upon winding up and liquidation, if required to maximize the
proceeds of liquidation, the Partnership Committee may, upon unanimous approval,
transfer the assets of the Partnership to a liquidating trustee or trustees.
8.5. Dissolution Election. Notwithstanding the terms of any provision
of Section 8.3(b) to the contrary, but subject to Section 17- 804(a)(1) of the
Act, any Partner may elect upon the occurrence of any of the events of
dissolution specified in Section 8.1, by written notice to the Partnership any
time prior to actual distribution, to require that the Partnership distribute
the assets of the Partnership upon dissolution and winding up as follows:
(i) First, the Partners shall attempt to reach agreement on
the Fair Market Value and distribution among the Partners of each of
the non-cash assets of the Partnership and liabilities related thereto,
subject always to distributions being made in accordance with Capital
Accounts as provided in Section 8.3(b), with such distributed assets
being valued at their Fair Market Value. To the extent that the
Partners are unable to reach agreement on the Fair Market Value and
distribution among the Partners of certain of such non-cash assets and
liabilities, the Chairman of the Partnership Committee not later than
20 days
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after an event of dissolution set forth in Section 8.1 shall implement
the following internal auction procedures. For a period of up to ten
days, the Chairman shall entertain bids by the Partners for such
non-cash assets and related liabilities, either singly (a "Single Bid")
or as a whole (an "Aggregate Bid"). The Chairman will only entertain
bids which exceed the previous Single Bid for any non-cash asset and
related liabilities or the previous Aggregate Bid for all such non-cash
assets and related liabilities by at least one percent (a "Qualifying
Bid"). The Chairman will promptly make each bid submitted by any
Partner available to each other Partner. If during any 24-hour period
within the ten-day period specified above, the Chairman does not
receive a Qualifying Single Bid with respect to any non-cash asset or
related liabilities or a Qualifying Aggregate Bid, the Chairman shall
not entertain any further Single Bids with respect to such non-cash
asset or any further Aggregate Bids, as the case may be. At the
conclusion of such bidding period, the highest Single Bid by any
Partner for each non-cash asset and related liabilities or, if an
Aggregate Bid for such non-cash assets and related liabilities, which
exceeds the sum of the Single Bids, is received such Aggregate Bid,
shall constitute the Fair Market Value of such non-cash assets and
related liabilities. The Partnership shall thereafter pay any amounts
referred to in Section 8.3(a) (except to the extent any such
liabilities are to be assumed by any Partner), and the non-cash assets
and liabilities valued pursuant to the previous sentence shall be
distributed to the Partner who specified the highest Fair Market Value
therefor (and shall be debited against its Capital Account balance),
and the remaining non-cash assets, if any, and liabilities shall be
distributed in the manner agreed upon by the Partners; provided that if
the distributions pursuant to this sentence would result in any Partner
receiving more than its positive Capital Account balance (an "Excess
Distribution"), assets with a Fair Market Value equal to the Excess
Distribution shall instead be distributed among the other Partners in
accordance with Capital Account balances (such assets as selected by
such other Partners) and immediately thereafter sold for cash to the
Partner who would have otherwise received the Excess Distribution in
the absence of this proviso, which cash shall be paid simultaneously
with the liquidating distributions; and
(ii) All other remaining assets shall be distributed to the
Partners in accordance with Section 8.3(b) hereof..
8.6. Obligation to Restore Deficit Balance. No Partner shall be liable
for the return of the capital contributions of any other Partner, nor shall any
Partner be required to have any obligation to restore a deficit balance in its
Capital Account on winding up, liquidation and termination of the Partnership
except to the extent required by the Act.
8.7. Termination of Partnership. The Partnership shall terminate when
all of the assets of the Partnership, after payment of or due provision for all
debts, liabilities and obligations of the Partnership, shall have been
distributed to the Partners in the manner provided for in Article 8, and the
Certificate of Limited Partnership of the Partnership shall be canceled in the
manner required by the Act.
ARTICLE 9
ADMISSION OF ADDITIONAL PARTNERS
9.1. Admission Procedures. With the approval of the Partnership
Committee, the Partnership may admit additional Persons as both a General
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Partner or a Limited Partner subject to the condition that the proposed
Additional Partner shall execute and deliver to the Partnership an agreement by
which it (i) shall become a party to this Agreement and (ii) shall make
representations and warranties to the Partnership with respect to itself
substantially similar to those set forth in the Organization Agreement and
relating to such additional matters as the Partnership Committee may request.
ARTICLE 10
TRANSFER OR ENCUMBRANCE OF INTEREST
10.1. Restriction on Transfer or Encumbrance. No Partner may assign,
sell, transfer or otherwise dispose of (any such transaction being referred to
in this Article 10 as a "transfer"), pledge, hypothecate, grant a security
interest in or otherwise encumber, its Partnership Interest, except (i) to the
WMC in accordance with the provisions of the Organization Agreement, (ii) to ATI
or any Affiliate thereof in connection with an investment by such Partner in
ATI, (iii) to ATI in accordance with Section 10.8 of the WMC Partnership
Agreement or (iv) otherwise in accordance with the terms of Section 10.2.
10.2. Transfer of Partnership Interest to a Wholly Owned Affiliate.
(a) Any Partner may, without the consent of the other Partners,
transfer ownership of all or any part of its Partnership Interest to a Wholly
Owned Affiliate (any Affiliate to which a transfer is permitted under this
Section 10.2 being referred to herein as an "Affiliate Transferee"). An
Affiliate Transferee shall be admitted as both a Substitute General Partner and
a Substitute Limited Partner at the time such Affiliate Transferee executes (i)
this Agreement or a counterpart to this Agreement, which evidences such
Affiliate Transferee's agreement to be bound to the terms and conditions of this
Agreement, (ii) the Amended and Restated Investment Agreement, of even date
herewith, by and between ATI and USW and (iii) the Amended and Restated
Agreement of Exchange, of even date herewith, by and between ATI and USW.
(b) A transfer of less than all of a Partner's Partnership Interest (a
"Partial Interest") pursuant to this Section 10.2 shall be deemed to constitute
a transfer of both the General Partner and Limited Partner Percentage Interests
of such Partner pro rata in proportion to the portion of such Partner's entire
Partnership Interest transferred.
(c) If at any time, any Partner and any Affiliate Transferees thereof
cease to own in the aggregate at least 20% of the aggregate Percentage Interests
(without giving effect to any dilution of ownership which results from the
admission of Additional Partners), (i) the interests of such Partner and any
Affiliate Transferees thereof as a General Partner shall automatically be deemed
to become interests as a Limited Partner and (ii) such Partner and any Affiliate
Transferees thereof shall have no right to participate in the management of the
Partnership Business and affairs of the Partnership, including no right to
designate Members of the Partnership Committee.
10.3. Partnership's Redemption Option. If, at any time, the aggregate
Percentage Interests of any Partner and its Affiliate Transferees are less than
5%, the Partnership shall have the option to redeem such Partner's and its
Affiliate Transferees' Partnership Interests at a purchase price equal to the
Fair Market Value of such Partnership Interests as determined pursuant to
Section 4.9.
10.4. Spin-off Not Deemed to be a Transfer. A tax-free spin-off
qualifying under section 355 of the Code, by a Partner to the shareholders of
its publicly held Parent Entity, of an entity the assets of which include
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all, but not less than all, of such Partner's Wireless Assets will not be deemed
to be a transfer or Change in Ownership (as hereinafter defined) if effected in
accordance with Section 10.5 of the WMC Partnership Agreement.
10.5. Invalid Transfers Void. Any purported transfer of any Partnership
Interest or any part thereof not in compliance with this Article 10 shall be
void and of no force or effect and the transferring Partner shall be liable to
the other Partners and the Partnership for all liabilities, obligations,
damages, losses, costs and expenses (including reasonable attorneys' fees and
court costs) arising as a result of such noncomplying transfer.
10.6. Change in Ownership.
(a) For purposes of this Agreement, a "Change in Ownership" of a
Partner shall be deemed to have occurred when (i) any Person, other than a
publicly held Parent Entity of such Partner or a Wholly Owned Affiliate of such
Parent Entity (an "Unaffiliated Entity"), shall acquire (whether by merger,
consolidation, sale, assignment, lease, transfer or otherwise, in one
transaction or series of related transactions), or otherwise beneficially own or
control 50% or more of the outstanding Voting Stock of any Partner or any entity
(other than a publicly held Parent Entity) which, directly or indirectly,
through ownership of one or more majority-owned successive subsidiary entities,
owns more than 50% of the outstanding Voting Stock in or controls such Partner
(a "Control Entity"), (ii) an Unaffiliated Entity, or group of persons acting in
concert therewith, shall acquire the power to direct or cause the direction of
the management and policies of such Partner or a Control Entity thereof, or
(iii) the publicly held Parent Entity of such Partner shall otherwise cease to
beneficially own or control a majority of the outstanding Voting Stock of any
Partner or a Control Entity thereof.
(b) Any Change in Ownership of Partner shall be deemed for all purposes
hereof to be a proposed transfer of the Partnership Interest of such Partner.
10.7. Proportional Transfers of WMC Interest. No Partner may effect a
transfer of its interest in the Partnership without transferring a partnership
interest in the WMC representing the same proportion of its Percentage Interest
in the WMC as the proportion of the Percentage Interest in the Partnership being
transferred, and any such attempted transfer shall be null and void and of no
effect.
ARTICLE 11
REGULATORY MATTERS
11.1. MFJ Compliance.
(a) USWPH agrees that USW will pursue, in conjunction with the Regional
Xxxx Operating Companies ("BOCs") within the meaning of the MFJ, the "Motion of
the Xxxx Companies for a Modification of Section II of the Decree to Permit Them
to Provide Cellular and Other Wireless Services Across LATA Boundaries," filed
with the Decree Court on June 20, 1994. If the Decree Court were to deny the
BOCs' motion or if the Decree Court or Department of Justice were to take the
position that the relief requested in the motion does not apply to PCS Service,
USW will request a waiver for the benefit of the Partnership that would enable
the Partnership to provide PCS Service free of restrictions on BOCs in the MFJ.
In addition, USW will request a waiver for the benefit of the Partnership, any
PCS Owned System or USW, as appropriate, if the waiver is: (i) to permit the
Partnership or, any PCS Owned System or USW, as appropriate, to offer the same
services as those set forth in any waiver request which USW or an affiliate has
pending or which USW, any of its affiliates, or any BOC has obtained for its
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cellular businesses, including businesses incidental thereto; (ii) based on
relevant facts which are comparable to those set forth in any such waiver USW,
an affiliate thereof or a BOC has pending or has obtained, as the case may be,
and (iii) with respect to the Partnership or any PCS Owned System, within the
scope of the Partnership Business. Except as described above, neither USW nor
any affiliate thereof shall be obliged to request any waiver for the benefit of
the Partnership.
(b) Unless and until the Decree Court, the Department of Justice, or
USW's CECO Decree Committee or the MFJ Compliance Committee shall issue a
written opinion that the MFJ does not apply to the Partnership, the Partnership
will conform to the requirements and prohibitions of the MFJ. As long as USW or
any Affiliate holds any ownership interest in the Partnership, the Partnership
will not engage in any MFJ Restricted Activities. ATI or any Affiliate thereof
will have the option to engage in MFJ Restricted Activities, specifically
including the provision of interexchange (interLATA) telecommunications services
(it being understood that such services may be provided by the WMC if it is
thereafter permitted to do so, as provided in Section 7.4(d)(ix) of the WMC
Partnership Agreement) and engage in any business practice and enter into any
transaction in which the Partnership does not engage by reason of the MFJ.
Except as provided in the preceding sentence, the provisions of this Section
11.1 shall take precedence, in the event of any conflict, over any other
provision of this Agreement.
(c) Unless and until the Decree Court, the Department of Justice, or
USW's CECO Decree Committee shall issue a written opinion that the CECO does not
apply to the Partnership, the Partnership will conform to the requirements and
prohibitions of the CECO. Unless and until the Decree Court, the Department of
Justice, or USW's MFJ Compliance Committee shall issue a written opinion that
the EO does not apply to the Partnership, the Partnership will conform to the
requirements and prohibitions of the EO. In conforming to the requirements and
prohibitions of the CECO and EO, the Partnership will utilize the procedures
established by USW for compliance with them. At the request of the Partnership,
USW will provide training, instruction and assistance to the Partnership in
matters associated with CECO and EO compliance.
(d) If, as a result of this Agreement, any MFJ Concerns (as defined in
Article 12 of the WMC Partnership Agreement) are raised concerning the Partners
or activities of this Partnership or the Partners in WMC and/or ATI or USW, the
parties will adopt for purposes of this Agreement, the restructuring provisions
of Sections 12.1(b)-(d) of the WMC Partnership Agreement, as if fully set forth
herein.
ARTICLE 12
MISCELLANEOUS
12.1. Notices. All notices, requests, demands or other communications
required by or otherwise with respect to this Agreement shall be in writing and
shall be deemed to have been duly given to any party (i) when delivered
personally (by courier service or otherwise), (ii) when delivered by telecopy
and confirmed by return telecopy, (iii) on the business day after the date sent
by a nationally recognized overnight courier service, or (iv) seven days after
being mailed by first-class, registered or certified mail, postage prepaid and
return receipt requested, in each case to the applicable addresses set forth
below:
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If to USWPH:
U S West, Inc.
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attn: President
Telecopy: (000) 000-0000
With copies to:
U S West, Inc.
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attn: General Counsel
Telecopy: (000) 000-0000
If to ATPH:
AirTouch Communications, Inc.
0000 Xxx Xxxx
Xxxxxx Xxxxx, XX 00000
Attn: C. Xxx Xxx, President and
Chief Operating Officer
Telecopy: (000) 000-0000
With copies to:
AirTouch Communications, Inc.
Xxx Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Senior Vice President-Legal and
External Affairs
Telecopy: (000) 000-0000
and
Pillsbury Madison & Sutro
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxxxxx X. Xxxxxxxx III, Esq.
Telecopy: (000) 000-0000
or to such other address or telecopy number as any party may have furnished to
the other parties in writing in accordance with this Section 12.1.
12.2. Governing Law, etc.
(a) This Agreement has been executed and delivered in the State of
Delaware and shall, in all respects be governed by, interpreted, and construed
in accordance with the laws of the State of Delaware, all rights and remedies of
the Partners in respect thereof being governed by such laws.
(b) Each Partner hereby irrevocably appoints The Corporation Trust
Company, at its office in Wilmington, Delaware, United States of America, its
lawful agent and attorney to accept and acknowledge service of any and all
process against it in any action, suit or proceeding arising in connection with
this Agreement and upon whom such process may be served, with the same effect as
if such party were a resident of the State of Delaware and had been lawfully
served with such process in such jurisdiction, and waives all claim of error by
reason of such service; provided that in the case of any service upon such agent
and attorney, the party effecting such service shall also deliver a copy thereof
to the other party at the address and in the manner specified in Section 12.1.
In the event that such agent and attorney resigns or otherwise becomes incapable
of acting as such, such party will appoint a successor agent and attorney in
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Wilmington, Delaware, reasonably satisfactory to the other party, with like
powers.
(c) The choice of law provisions of this Article 12 have been
negotiated in good faith and agreed upon by the parties hereto and are
reasonable especially considering that this Agreement is subject to and conforms
with the Act. All Partners, by their execution of this Agreement, expressly
agree, to the fullest extent permitted by law, not to challenge the choice of
law provisions contained in this Article 12.
12.3. Amendments. This Agreement may be modified or amended only by
an instrument in writing signed by each Partner, and, as so modified and
amended, shall inure to the benefit of all of the Partners.
12.4. Entire Agreement. Except to the extent other agreements are
specifically referred to herein, this Agreement and the other agreements of the
Partners or their Affiliates entered into on the Effective Date or the date
hereof constitute the entire agreement between the Partners with respect to the
matters covered hereby and thereby and supersede all other agreements,
understandings, offers and negotiations, oral or written that are prior to the
date hereof.
12.5. Waiver of Partition. Each Partner hereby irrevocably waives
any and all rights that it may have to maintain an action for partition of
any of the Partnership's property.
12.6. Consents. All consents, agreements and approvals required or
permitted by this Agreement shall be in writing and a signed copy thereof
shall be filed and kept with the books of the Partnership.
12.7. Successors. Subject to Section 10.1, all rights and duties of
the Partners hereunder shall inure to the benefit of and be binding upon
their respective successors and assigns.
12.8. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument.
12.9. Severability. Each provision of this Agreement shall be
considered severable and if for any reason any provision which is not essential
to the effectuation of the basic purposes of the Agreement is determined by a
court of competent jurisdiction to be invalid or unenforceable and contrary to
existing or future applicable law, such invalidity shall not impair the
operation of or affect those provisions of this Agreement which are valid. In
that case, this Agreement shall be construed so as to limit any term or
provision so as to make it enforceable or valid within the requirements of any
applicable law, and in the event such term or provision cannot be so limited,
this Agreement shall be construed to omit such invalid or unenforceable
provisions.
12.10. Survival. All indemnities and reimbursement obligations made
pursuant to this Agreement shall survive dissolution and liquidation of the
Partnership until expiration of the longest applicable statute of limitations
(including extensions and waivers) with respect to the matter for which a party
would be entitled to be indemnified or reimbursed, as the case may be.
12.11. Arbitration. Each partner hereby acknowledges that this
Agreement is subject to the Arbitration Agreement of the partners which is being
entered into of even date herewith, and the Arbitration Agreement will govern
the resolution of disputes relating to this Agreement in accordance with its
terms. Each Additional Partner or Substitute Partner shall execute the
Arbitration Agreement or a counterpart to the Arbitration Agreement on or prior
to its admission to the Partnership.
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12.12. No Third Party Beneficiaries. Nothing contained in this
Agreement is intended to, or shall, confer upon any Person other than the
parties hereto any rights or remedies hereunder.
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IN WITNESS WHEREOF, the Partners have executed this Partnership
Agreement as of the date first hereinabove written.
U S WEST PCS HOLDINGS, INC.
By:
---------------------------
Name:
Title:
AIRTOUCH PCS HOLDING, INC.
By:
---------------------------
Name:
Title:
44
SCHEDULE 1
Percentage Interests
--------------------
Partner General Partner Limited Partner Total
------- --------------- --------------- -----
AirTouch PCS Holding, Inc. 10.1% 39.9% 50.0%
US West PCS Holdings, Inc. 10.1% 39.9% 50.0%
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