Exhibit 2.01
LIMITED PARTNERSHIP AGREEMENT
-----------------------------
D&E WIRELESS, INC.
&
OMNIPOINT VENTURE PARTNER I, LLC
OMNIPOINT HOLDINGS, INC.
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LIMITED PARTNERSHIP AGREEMENT
This LIMITED PARTNERSHIP AGREEMENT (the "Agreement") is made this 14th day
of November 1997 (the "Closing Date"), by and among D&E WIRELESS, INC., a
Pennsylvania corporation ("D&E") and OMNIPOINT VENTURE PARTNER I, LLC, a
Delaware corporation ("Omnipoint") (each a "General Partner" and collectively
the "General Partners"); and D&E and OMNIPOINT HOLDINGS, INC., a Delaware
corporation ("Omnipoint LP") (each a "Limited Partner" and collectively, the
"Limited Partners"). The General Partners and the Limited Partners are sometimes
collectively referred to as the "Partners" and individually as a "Partner."
RECITALS:
WHEREAS, Omnipoint, a wholly-owned indirect subsidiary of Omnipoint
Corporation, and its Affiliates are in the business of developing, operating and
managing Personal Communications Services ("PCS") systems and have certain
rights to operate PCS systems in the following Pennsylvania Basic Trading Areas
("BTAs"): York-Hanover, Harrisburg, Lancaster and Reading (the "Designated
BTAs");
WHEREAS, D&E, a wholly-owned subsidiary of D&E Communications, Inc., is a
Pennsylvania corporation with certain rights to operate PCS systems in the
following Designated BTAs: York-Hanover, Harrisburg and Lancaster;
WHEREAS, D&E, Omnipoint, and Omnipoint LP desire to create a limited
partnership (the "Venture") for the purpose of developing, managing and
operating PCS systems in the Designated BTAs, engaging in any other business
activities to which the General Partners mutually agree, and engaging in any and
all activities incident thereto.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the mutual
covenants and agreements contained herein, D&E, Omnipoint, and Omnipoint LP
hereby agree as follows:
ARTICLE I
GENERAL PROVISIONS
Section 1.1 Formation of Limited Partnership. The Partners hereby form and
establish the Venture as a limited partnership under the terms and provisions
(of this Agreement and the provisions of the Revised Uniform Limited Partnership
Act of the State of Delaware (the "Act") as of the date first above written, for
the limited purposes and upon the terms and conditions set forth in this
Agreement. The rights and liabilities of the Partners shall be as provided in
this Agreement and the Act.
Section 1.2 Name of the Venture. The name of the Venture shall be
"D&E/Omnipoint Wireless Joint Venture, L.P.," or such other name as the General
Partners from time to time may designate, and all business of the Venture shall
be conducted solely in such name, and all assets
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of the Venture shall be held in such name. The General Partners shall cause
to be filed on behalf of the Venture such partnership or assumed or fictitious
name certificate or certificates as may from time to time be required by law.
Section 1.3 General Partners. The names and addresses of the General
Partners of the Venture are (i) D&E Wireless, Inc., 0000 Xxxxxx Xxxx, Xxxxxxx,
Xxxxxxxxxxxx 00000; and (ii) Omnipoint Venture Partners I, Inc., 00 Xxxx Xxxxx,
Xxxxx Xxxxxx, Xxx Xxxxxx 00000.
Section 1.4 Limited Partners. The names and addresses of the Limited
Partners of the Venture are (i) D&E Wireless, Inc., 0000 Xxxxxx Xxxx, Xxxxxxx,
Xxxxxxxxxxxx 00000; and (ii) Omnipoint [Limited Partner], Inc., 00 Xxxx Xxxxx,
Xxxxx Xxxxxx, Xxx Xxxxxx 00000.
Section 1.5 Business of the Venture. The business of the Venture shall be
to develop, install, manage, and operate: (i) a GSM-PCS 1900 system (or other
PCS systems as unanimously approved by the Partner Members of the Management
Committee) in the Designated BTAs; and (ii) a wireless local loop system; both
in accordance with the Initial Business Plan attached hereto as Schedule C, and
to engage in any and all activities incident thereto. Except as otherwise
provided in this Agreement or as mutually agreed by the General Partners, the
Venture shall not engage in any other activity or business and no Partner shall
have any authority to hold itself out as a general agent of the other Partner in
any other business or activity, unless mutually agreed by the General Partners.
In furtherance of its business, the Venture shall have and may exercise all the
powers now or hereafter conferred by the laws of the State of Delaware on
partnerships formed under the laws of that state, and shall do any and all
things related or incidental to its business as fully as natural persons might
or could do under the laws of said state.
Section 1.6 Place of Business of the Venture. The principal place of
business of the Venture is located at 0000 Xxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxx
00000. The General Partners may, at any time and from time to time, upon mutual
consent, change the location of the Venture's principal place of business, and
may establish such additional place or places of business of the Venture as they
may from time to time determine.
Section 1.7 Title to Venture Property. All property owned by the Venture,
whether real or personal, tangible or intangible, shall be deemed to be owned by
the Venture as an entity, and no Partner, individually, shall have any ownership
interest in such property.
Section 1.8 No Payments of Individual Obligations. The Partners shall use
the Venture's credit and assets solely for the benefit of the Venture. No asset
of the Venture shall be transferred or encumbered for or in payment of any
individual obligation of a Partner.
Section 1.9 Filing of Certificates. The General Partners shall file and
record all certificates, notices, statements or other instruments required by
law with respect to the formation of, or conduct of business by, the Venture in
all jurisdictions, where the Venture may elect to do business.
Section 1.10 Definitions. As used herein:
"Accountants" has the meaning set forth in Section 6. 1.
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"Affiliate" means a person which directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, the person specified.
"Affiliated Partner" of a Partner means any other Partner that is also
an Affiliate of such Partner.
"Annual Budget and Business Plan" has the meaning set forth in Section
8.7(b).
"BTAs" has the meaning set forth in the recitals.
"Chief Executive Officer" has the meaning set forth in Section 8.7(a).
"Closing Date" has the meaning set forth in the preamble.
"Code" has the meaning set forth in Section 2.3.
"Confidential Information" has the meaning set forth in Section 7.1.
"Debt Consideration" has the meaning set forth in Section 16.2(g).
"Defaulting Partner" has the meaning set forth in Section 17.2(a).
"Defaulting Partners" has the meaning set forth in Section 17.2(c).
"Designated BTAs" has the meaning set forth in the recitals.
"Developments" means all inventions, know-how, improvements,
discoveries, methods, developments, software, and works of authorship, whether
or not patentable and whether or not copyrightable, and all intellectual
property, including but not limited to patents, copyrights, trade secrets and
trademarks, and all books, schematics and records related thereto which are or
were created, made, authored, conceived, reduced to practice by the Venture or
at or under the Venture's direction, whether jointly or with others.
"Disclosing Partner" has the meaning set forth in Section 7.1.
"Dispute" has the meaning set forth in Section 18.1.
"Distributable Cash" has the meaning set forth in Section 4.1.
"Encumbrances" has the meaning set forth in Section 16.2(d).
"Event of Default" has the meaning set forth in Section 17.2(a).
"Executive Officer" has the meaning set forth in Section 8.7(d).
"Fair Market Value" means, with respect to any property or asset, the
dollar value of the property or asset determined (i) by mutual agreement of the
General Partners, or (ii) if the General Partners cannot so agree within 20 days
after one General Partner first proposes in
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writing to the other General Partner that Fair Market Value be
determined, by two independent Appraisers, one selected by each General Partner,
provided, that if a General Partner fails to appoint an Appraiser within 10 days
following the expiration of such 20-day period, Fair Market Value shall be
determined by the Appraiser selected by the other General Partner. If two
Appraisers are selected, each Appraiser shall submit to the General Partners
their respective appraisals within 30 days after their selection and the Fair
Market Value shall be the average of the two appraisals, provided, however, that
if any discrepancy between the dollar value of the appraisals exceeds 10% of the
higher appraisal and the General Partners do not agree on a settlement of the
discrepancy within 10 days after receipt of the appraisals, then a third
Appraiser mutually selected by the General Partners (or if they cannot so
select, then selected by the first two Appraisers), shall be afforded access to
the first two appraisals. The third Appraiser shall select one of the appraisals
of the first two Appraisers, which selection shall constitute a final
determination of Fair Market Value of the property or asset and shall be binding
upon the Partners. The fees of each of the first two Appraisers shall be borne
by the General Partner that selected it and the fees of the third Appraiser, if
any, shall be borne equally by the General Partners.
"General Partner" and "General Partners" each have the meaning set forth
in the preamble.
"Improvements" means any information, whether or not patentable,
developed or acquired by the Venture or a Partner during the Term of the Venture
for use in connection with the business of the Venture.
"Indemnified Party" has the meaning set forth in Section 19.4.
"Indemnifying Party" has the meaning set forth in Section 19.4.
"Initial Capital Contributions" has the meaning set forth in Section
2.1.
"Initial Term" has the meaning set forth in Section 15.1.
"Insolvency Event" has the meaning set forth in Section 17.1.
"Insolvent Partner" has the meaning set forth in Section 17.1.
"Insolvent Partners" has the meaning set forth in Section 17.1.
"Limited Partner" and "Limited Partners" each have the meaning set forth
in the preamble.
"Liquidating Partner" has the meaning set forth in Section 20.1(a).
"Major Accounts" has the meaning set forth in Section 11.1.
"Major Competitors" has the meaning set forth in Section 16.5.
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"Management Committee" has the meaning set forth in Section 8.1(a).
"Marks" means all trademarks, service marks and trade names of either of
the General Partners or the Venture.
"Marks License Agreements" has the meaning set forth in Section 12.2.
"Members" has the meaning set forth in Section 8.1(c).
"Neutral Member" has the meaning set forth in Section 8.1(c).
"Noncontributing Partner" has the meaning set forth in Section 5.3.
"Nondefaulting Partner" has the meaning set forth in Section 17.2(a).
"Nonterminating Partner" has the meaning set forth in Section 15.3.
"Notice of Default" has the meaning set forth in Section 17.2(a).
"Notice of Election" has the meaning set forth in Section 16.2(b).
"Notice of Intent to Purchase" has the meaning set forth in Section
13.5(b).
"Notice of Proposed Transfer" has the meaning set forth in Section
16.2(a).
"Offered Price" has the meaning set forth in Section 16.3(a).
"Offeree Notice" has the meaning set forth in Section 16.3(a).
"Offeree Partner" has the meaning set forth in Section 16.3(a).
"Offeree Partners" has the meaning set forth in Section 16.3(a).
"Offering Partner" has the meaning set forth in Section 16.3(a).
"Offering Partners" has the meaning set forth in Section 16.3(a).
"Optional Loans" has the meaning set forth in Section 5.2.
"Other Indemnified Persons" has the meaning set forth in Section
19.2(a).
"Partner" and "Partners" each have the meaning set forth in the
preamble.
"PCS" has the meaning set forth in the recitals.
"Percentage Interests" has the meaning set forth in Section 2.6.
"Person" means an individual, a partnership, a joint venture, a
corporation, a trust, an estate, an unincorporated organization or a government
or any department or agency thereof.
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"Pro Rata Basis," when used with respect to the sale of all or any part
of the Partners' interests in the Venture pursuant to Section 16.2(b)(i), shall
mean that each Partner shall sell to the Proposed Purchaser a portion of its
interest in the Venture. The sum of such portions shall equal the interest that
the Proposing Partner proposed in its Notice of Proposed Transfer. The
percentage that each such portion bears to the total interest being conveyed
shall equal the percentage that such Partner's interest in the Venture bears to
the sum of the Partners' interests in the Venture.
"Property Value" has the meaning set forth in Section 16.2(g).
"Proposed Purchaser" has the meaning set forth in Section 16.2(a).
"Proposed Transfer" has the meaning set forth in Section 16.2(a).
"Proposing Partner" has the meaning set forth in Section 16.2(a).
"Purchase Price" has the meaning set forth in Section 16.2(a).
"Recipient" has the meaning set forth in Section 7.1.
"Remaining Partner" has the meaning set forth in Section 16.2(a).
"Rules" has the meaning set forth in Section 18.3.
"Service and Lease Agreements" has the meaning set forth in Section
14.1.
"Solvent Partner" has the meaning set forth in Section 17.1(d).
"Spectrum Purchaser" has the meaning set forth in Section 13.5(a).
"Spectrum Value" has the meaning set forth in Section 13.5(b).
"Subsequent Term" has the meaning set forth in Section 15.2.
"Tax Matters Partner" has the meaning set forth in Section 6.7(a).
"Term" has the meaning set forth in Section 15.2.
"Terminating Partner" has the meaning set forth in Section 15.3.
"Unaffiliated General Partner" means the General Partner that is not an
Affiliate.
"Venture" has the meaning set forth in the recitals.
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ARTICLE II
CAPITAL CONTRIBUTIONS
Section 2.1 Initial Capital Contributions. Each Partner shall make certain
initial cash and in-kind contributions to the Venture (the "Initial Capital
Contributions"). Within 30 days of the date hereof, the Management Committee
shall agree upon the amounts and nature of such Initial Capital Contributions,
and shall set forth such Initial Capital Contributions, and the nature thereof,
on a schedule which shall be attached hereto as Schedule A. All Initial Capital
Contributions shall be paid in full or conveyed within 30 days of the date the
Management Committee reaches agreement pursuant to the previous sentence. As of
the date of this Agreement, the Initial Capital Contributions represent the
total capital of the Venture.
Section 2.2 Contribution of PCS Licenses.
(a) Each License Holder (as defined below), subject to FCC approval as
provided in Section 13.1, will assign and contribute as part of each Partner's
initial capital contribution to the Venture, all of its PCS licenses in the
Designated BTAs, excluding the C-Block PCS licenses (which shall be contributed
in accordance with Section 2.2(b)).
(b) After any final date for making elections under the FCC C-Block
Order (as defined in Section 13.1), which date will no longer be subject to any
further administrative or judicial challenge or appeal (the "C-Block
Determination Date"), each License Holder will assign and contribute its
remaining C-Block PCS licenses in the Designated BTAs, if any, on the basis of
the terms set forth in Article 13.
(c) All PCS licenses subsequently acquired by any Partner or its
Affiliates in the Designated BTAs will be promptly contributed to the Venture,
subject to FCC rules and regulations.
(d) The PCS license contributions will be credited as in-kind capital
contributions to the capital account of the affiliated General Partner of each
License Holder, and will be valued on the basis of the cash paid, as of the date
of such contribution, by the License Holder to the FCC for each such license.
Upon each round of PCS license contributions, as set forth in subsections (a),
(b) and (c), above, to the extent that the value of one General Partner's PCS
license capital contribution is smaller than that of the other General Partner,
such General Partner (or such General Partner's Affiliated Limited Partner)
shall contribute an amount in cash to the Venture equal to the difference
between the value of its PCS license capital contribution and the value of the
PCS license capital contribution of the other General Partner. Subsequent to the
contributions required pursuant to this Section 2.2 (or failure to make such
contributions), all Partners' Percentage Interests in the Venture shall be
adjusted proportionately based on: (i) the Initial Capital Contribution of each
Partner; plus (ii) all contributions made by each General Partner pursuant to
Section 5.3; plus (iii) the value of all PCS licenses contributed pursuant to
this Section 2.2; plus (iv) any cash contributed pursuant to this Section 2.2.
In the event of a transfer of an interest in the Partnership to an Affiliate,
the contributions of the transferor shall be deemed to have been made by the
transferee to the extent of the transferred interest.
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Section 2.3 Tax Treatment of Contributed Property. Upon agreement as to the
amount and nature of the Initial Capital Contributions, the Management Committee
shall prepare, and attach hereto, Schedule B which shall show, for certain items
of property to be conveyed to the Venture as in-kind contributions, the basis of
those items for federal income tax purposes in the hands of the respective
Partners who are to contribute such property. Income, gain, loss, and deduction
with respect to any property contributed to the capital of the Venture shall,
for tax purposes (but not for purposes of maintaining the Partners' respective
Capital Accounts), be allocated among the Partners so as to take account of any
variation between the adjusted basis of such property to the Venture for federal
income tax purposes and its fair market value in accordance with Section 704(c)
of the Internal Revenue Code of 1986, as amended (the "Code") and the Treasury
Regulations thereunder. The determination of the method under Treasury
Regulations ss. 1.704-3 for making Section 704(c) allocations with respect to
contributed property shall be made by the Management Committee in consultation
with the accountants to the Venture.
Section 2.4 Further Contributions; Withdrawals; Return of Capital. The
Partners shall not be required to contribute additional capital or loan any
funds to the Venture, except as expressly provided in Article V hereof. Except
as specifically provided herein, no Partner may contribute capital to, or
withdraw capital from, the Venture. To the extent any cash which any Partner is
entitled to receive pursuant to any provision of this Agreement would constitute
a return of capital, each of the Partners consents to the withdrawal of such
capital. Under circumstances requiring a return of any capital, no Partner shall
have the right to receive property other than cash, except as provided in
Section 20.3 hereof.
Section 2.5 No Interest. No interest shall be paid on the Initial Capital
Contribution to the Venture by any Partner.
Section 2.6 Percentage Interests. The respective percentage interests (the
"Percentage Interests") of the Partners shall initially be as follows:
General Partners:
-----------------
D&E 1%
Omnipoint 49%
Limited Partners:
-----------------
D&E 49%
Omnipoint 1%
Such Percentage Interests may be adjusted as set forth in Section 2.2(d) or 5.3
hereof. The provisions of this Section shall not give a Partner an interest in
any amount credited to the capital account of any other Partner.
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Section 2.7 Failure to Make Initial Capital Contributions. If any
General Partner fails to pay or convey its Initial Capital Contribution at the
time and in the form and amount required by Section 2.1, Schedule A, and the
other provisions of this Agreement, the Venture shall immediately dissolve and
the Partners who have paid or conveyed all or any portion of their Initial
Capital Contribution shall be entitled to a return of the cash and in-kind
contributions made, unless the General Partners shall have entered into a
written agreement requiring an alternative procedure for continuing the Venture,
in which case the alternative procedure shall be followed.
ARTICLE III
ALLOCATION OF PROFITS AND LOSSES
Section 3.1 Profits and Losses. The Partners shall share profits and losses
in the proportion of their respective Percentage Interests in the Venture.
Except as otherwise provided herein or in Section 2.3, for federal income tax
purposes, each item of income, gain, loss deduction or credit entering into the
computation of the Venture's taxable income shall be allocated in the same
proportion as profits and losses are allocated. In the event the book value of
any asset of the Venture is adjusted upon: (a) acquisition of an interest in the
Venture by any Person in exchange for a Capital Contribution or (b) any non-pro
rata distribution to Partners of Venture property other than cash, subsequent
allocation of income, gain, loss, and deduction with respect to such asset shall
take account of any variation between the adjusted basis of such asset for
federal income tax purposes and its book value in the same manner as for
allocations with respect to contributed property under Code Section 704(c) and
the Treasury Regulations thereunder.
Section 3.2 Capital Accounts. A Partner's capital account shall be
credited with (i) its contributions to the capital of the Venture and (ii) its
allocable share of Venture income and gains, and shall be debited with (i) its
allocable share of Venture deductions and losses and (ii) the amount of any
distributions to such Partner. Capital accounts shall be maintained in
accordance with Treasury Regulation 1.704-1(b) or any successor regulation.
Section 3.3 General. The respective Percentage Interests of the Partners
shall remain as set forth above unless adjusted pursuant to Section 2.2(d) or
5.3 hereof or by an assignment of an interest in the Venture authorized by the
terms of this Agreement.
ARTICLE IV
DISTRIBUTIONS
Section 4.1 Distributable Cash. The term "Distributable Cash" as used
herein with respect to any period shall mean all cash revenues and funds
received by the Venture in such period, (a) including funds released from
reserves which the Management Committee determines are no longer needed, but (b)
excluding funds received as capital contributions, the proceeds of any financing
obtained by or additional equity investment in the Venture, and the proceeds of
any investment of such capital contributions and financing, less the sum of the
following which are not paid from sources referred to in (b), above: (i) all
amounts expended by the Venture in the
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course of business operations pursuant to this Agreement in such period,
including, without limitation, expenditures by the Venture for the development,
installation, management, and operation of a GSM-PCS 1900 system (or other PCS
systems as unanimously approved by the Partner Members of the Management
Committee) as contemplated by this Agreement and any principal and interest
payments to third parties on loans obtained pursuant to Section 5.1 and (ii)
such working capital and cash reserves or other amounts as the Management
Committee reasonably determines to be necessary for the Venture's operation.
Section 4.2 Distribution of Distributable Cash. Distributable Cash for
each fiscal quarter shall be distributed within 30 days after the end of such
quarter, in the following order of priority:
(a) To the General Partners to repay amounts lent by them to the Venture
pursuant to Section 5.2 hereof, any such payments to be made on a pro rata basis
to the General Partners, based on the amounts of their respective loans
outstanding at that time, and to be applied first against accrued interest.
(b) To the extent any Distributable Cash remains after distribution
pursuant to Section 4.2(a), among the Partners in the same proportion as their
then current Percentage Interests in the Venture.
ARTICLE V
ADDITIONAL CAPITAL REQUIREMENTS
Section 5.1 Priority for Additional Capital for the Venture. In the event
that the Management Committee determines that the Partners' Initial Capital
Contributions are insufficient to meet the Venture's costs, expenses,
obligations, liabilities and charges, or to make any expenditure authorized by
this Agreement, the Management Committee may pursue and obtain additional funds
for the Venture, assuming reasonable terms and conditions, as determined by the
Management Committee, in the following order of priority.
(a) Third party loans without recourse to the General Partners;
(b) Loans by either or both of the General Partners, pursuant to Section
5.2 hereof, without recourse to the other General Partner;
(c) Third party loans with recourse to the General Partners;
(d) Calls for additional capital contributions by the Partners pursuant
to Section 5.3 hereof; and
(e) Equity investment in the Venture by third parties, provided such
investment is mutually agreed to by the General Partners.
Section 5.2 Loans by General Partners to the Venture. In the event that
the Management Committee determines, pursuant to Section 5.1, that borrowing
from the General Partners is the most appropriate source of additional required
capital, the Management Committee may require
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each General Partner to advance up to $1 million per year to the Venture
in the form of loans in proportion to their Percentage Interests upon such
reasonable and identical terms and conditions as the Management Committee
determines; provided, however, that neither General Partner shall be required to
advance funds to the Venture to the extent that the aggregate principal owed by
the Venture to such General Partner from time to time exceeds $5 million. The
Management Committee may also request that the General Partners loan amounts
over and above the $1 million required loan amount ("Optional Loans"). All
Optional Loans to the Venture by a General Partner must be approved by the other
General Partner. Both General Partners shall have the initial opportunity to
participate in any such loan on the same basic terms and in proportion to their
then current Percentage Interests in the Venture. Such loans shall be repayable
solely out of assets of the Venture, in accordance with the provisions of
Sections 4.2 and 20.3 hereof, and no General Partner shall have any personal
liability on account thereof, nor shall there be any recourse to such General
Partner's assets.
Section 5.3 Additional Capital Contributions. In the event that the
Management Committee determines, pursuant to Section 5.1, that additional
capital contributions from the Partners is the most appropriate source of
additional required capital, the Management Committee may require each General
Partner and its respective Affiliated Partners to contribute additional capital
to the Venture in proportion to their then current aggregate respective
Percentage Interests in the Partnership (but allocated between such General
Partners and their respective Affiliated Partners in such proportion as they, in
their sole discretion, so determine). To the extent that a General Partner and
its Affiliated Partners (in the aggregate) fail to make all or part of their
proportionate contribution within 120 days (or such other term as the Management
Committee may set from time to time, but not less than 90 days) of the request
from the Management Committee (a "Noncontributing Partner"), the other General
Partner and its Affiliated Partners shall have the right, but not the
obligation, to contribute, within 30 days, additional funds to the Venture to
make up all or part of the deficiency of the Noncontributing Partner. Upon the
receipt by the Partnership of the capital contributions required under this
Section 5.3, including the satisfaction of any deficiency, the Partnership
Interest of each Partner will be adjusted in proportion to: (i) the Initial
Capital Contribution of each Partner; plus (ii) all contributions made by each
Partner pursuant to this Section 5.3; plus (iii) the value of all PCS licenses
contributed pursuant to Section 2.2; plus (iv) any cash contributed pursuant to
Section 2.2. Except as otherwise provided in this Article 5 and in Section 2.2,
no loan, loans, gifts or other contributions made by a Partner to the Venture
shall increase such Partner's Interest. In the event of a transfer of an
interest in the Partnership to an Affiliate, the contributions of the transferor
shall be deemed to have been made by the transferee to the extent of the
transferred interest.
ARTICLE VI
ACCOUNTING AND RECORDS
Section 6.1 Books and Records. The Venture shall keep at its principal
office separate books of account for the Venture which shall show a true and
accurate record of all costs and expenses incurred, all charges made, all
credits made and received and all income derived in connection with the
operation of the Venture business in accordance with generally accepted
accounting
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principles consistently applied and sufficient to obtain an unqualified
opinion from the Venture's independent public accountants (the "Accountants") as
to the Venture's financial position and results of operations. Such books shall
be kept on an accrual basis in accordance with the accounting methods followed
by the Venture for federal income tax purposes. Each General Partner shall, at
its sole expense, have the right, at any time without notice to the other, to
examine, copy and audit the Venture's books and records during normal business
hours.
Section 6.2 Reports.
(a) The Venture shall cause to be prepared and delivered to each General
Partner and each Member of the Management Committee the following reports within
90 days following the last day of each fiscal year:
(i) a balance sheet as of the end of the Venture's fiscal year and
statements of income, Partners' equity and changes in financial position for the
year then ended, each of which shall be audited by the Accountants;
(ii) a general description of the activities of the Venture during
the year then ended;
(iii) a report of any material transactions between the Venture and
the General Partners or any of their Affiliates, including fees or compensation
paid by the Venture and the products supplied and services performed by the
General Partners or any such Affiliate for such fees or compensation; and
(iv) an annual safety review.
(b) The Venture shall cause to be prepared and delivered to each General
Partner and each Member of the Management Committee the following reports within
60 days following the last day of each quarter:
(i) a report containing a balance sheet and statement of income for
the quarter then ended, each of which may be unaudited but which shall
be certified by the chief financial officer of the Venture as fairly presenting
the financial position and results of operations of the Venture during the
period covered by the report and as having been prepared in accordance with
generally accepted accounting principles applied on a basis substantially
consistent with that of the Venture's audited financial statements;
(ii) a report containing a description of any material event
regarding the business of the Venture during the quarter then ended;
(iii) an engineering summary (base station, switch and related
infrastructure deployment);
(iv) an operations plan (order fulfillment, billing, customer care &
other support operations);
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(v) a marketing plan review (pricing and advertising strategy and
feature and product development);
(vi) business and budget review (assessment of actual versus budgeted
costs and revenues);
(c) The Venture shall cause to be prepared and delivered to each General
Partner and each Member of the Management Committee the following financial
summary reports within 10 days following the last day of each month:
(i) human resources-related business risks and exposures;
(ii) profit and loss;
(iii) sources and uses of cash;
(iv) major liabilities;
(v) major contracts; and
(vi) other major business risks.
(d) Within 60 days of the end of each fiscal year, the Venture, will
cause to be delivered to each Partner all information necessary for the
preparation of such Partner's Federal income tax returns, including a statement
showing such Partner's share of income, gains, losses, deductions and credits
for such year for Federal income tax purposes and the amount of any distribution
made to or for the account of such Partner pursuant to this Agreement.
Section 6.3 Fiscal Year. The fiscal year of the Venture shall be the
calendar year. As used in this Agreement, a fiscal year shall include any
partial fiscal year at the beginning and end of the Term of the Venture.
Section 6.4 Bank Accounts. The Venture shall maintain one or more
accounts in a bank (or banks) which is a member of the Federal Deposit Insurance
Corporation, which accounts shall be used for the payment of the expenditures
incurred in connection with the business of the Venture, and in which shall be
deposited any and all cash receipts. All such amounts shall be and remain the
property of the Venture, and shall be received, held and disbursed by the
Venture for the purposes specified in this Agreement. There shall not be
deposited in any of said accounts any funds other than funds belonging to the
Venture, and no other funds shall in any way be commingled with such funds.
Section 6.5 Tax Returns. The Venture shall cause income tax and
informational returns for the Venture to be prepared and timely filed with the
appropriate authorities.
Section 6.6 Tax Elections.
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(a) The Venture may elect to adjust the basis of the assets of the
Venture for Federal income tax purposes in accordance with Section 754 of the
Code in the event of a distribution of Venture property as described in Section
734 of the Code or a transfer by any Partner of its interest in the Venture as
described in Section 743 of the Code.
(b) The Venture shall also, from time to time, make such other tax
elections as it deems necessary or desirable to carry out the business of the
Venture or the purposes of this Agreement.
Section 6.7 Tax Matters Partner.
(a) D&E is hereby designated as the "Tax Matters Partner" of the Venture
for Federal income tax purposes. The Tax Matters Partner shall have and perform
all of the duties required under the Code, including the following duties: (i)
furnish the name, address, current Percentage Interest in the Venture, and
taxpayer identification number of each Partner to the IRS; and (ii) within 15
calendar days after the receipt of any correspondence or communication relating
to the Venture or a Partner from the IRS, the Tax Matters Partner shall forward
to each Partner a photocopy of all such correspondence or communication(s). The
Tax Matters Partner shall, within 15 calendar days thereafter, advise each
Partner in writing of the substance and form of any conversation or
communication held with any representative of the IRS.
(b) The Tax Matters Partner shall not without the prior written consent
of the other Partners: (i) extend the statute of limitations for assessing or
computing any tax liability against the Venture (or the amount or character of
any Venture tax items); (ii) settle any audit with the IRS concerning the
adjustment or readjustment of any Venture tax item(s); (iii) file a request for
an administrative adjustment with the IRS at any time or file a petition for
judicial review with respect to any IRS adjustment; (iv) initiate or settle any
judicial review or action concerning the amount or character of any Venture tax
item(s); or (v) take any other action not expressly permitted by this Section on
behalf of the Ventures or the Venture in connection with any administrative or
judicial tax proceeding.
(c) The Venture shall indemnify and reimburse the Tax Matters Partner
for all expenses, including legal and accounting fees, claims, liabilities,
losses and damages incurred in connection with any administrative or judicial
proceeding with respect to the tax liability of the Partners, provided, however,
that the Tax Matters Partner will not be entitled to indemnification if its
conduct otherwise giving rise to a right of indemnification constituted fraud,
gross negligence, willful misconduct or breach of fiduciary duty. The payment of
all such expenses shall be made before any distributions are made of
Distributable Cash. If the assets of the Venture are insufficient to reimburse
such expenses, claims, liabilities, losses and damages, the other Partners shall
be obligated to contribute to the shortfall pro rata in accordance with their
Percentage Interest in the Venture.
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ARTICLE VII
CONFIDENTIAL INFORMATION & NONCOMPETITION
Section 7.1 Confidential Information. In the course of negotiations prior
to execution of this Agreement, or in the course of the Term of the Venture,
each Partner (a "Disclosing Partner") may have made or may make available to the
Venture or the other Partners, directly or to their Affiliates, agents or
employees (each a "Recipient"), certain information, including, without
limitation, information relating to the Disclosing Partner's research,
development, product design, engineering data, specifications, processes,
production operations or techniques, planning, purchasing, accounting, finance,
selling, marketing, market research, promotional plans, customers, suppliers,
and other information of a similar nature (collectively, "Confidential
Information"), which may include designs, specifications and know-how, in which
the Disclosing Partner or its respective suppliers or subcontractors have
proprietary interests. Confidential Information shall remain the property of the
Disclosing Partner; and the Recipient shall ensure that such Confidential
Information, except as permitted by this Section 7. 1, shall be held in the
strictest confidence and shall be used by the Recipient only in the performance
of its obligations under this Agreement and other agreements contemplated
hereunder. This obligation shall survive termination of this Agreement
indefinitely, but shall not apply to Confidential Information disclosed by the
Recipient to a third party to the extent that such Confidential Information:
(a) at the time of disclosure is part of the public knowledge or
literature and readily accessible to such third party, provided that any
combination of features shall not be deemed within this exception merely because
individual features are part of the public knowledge or literature and readily
accessible to such third party, but only if the combination itself and its
principle of operation are part of the public knowledge or literature and
readily accessible to such third party;
(b) is required by law to be disclosed;
(c) is required by any vendor, supplier or consultant to the Venture in
order to "carry out the purpose of their engagement; provided that, the
Recipient disclosing such Confidential Information: (i) uses its best efforts to
provide reasonable notice of such disclosure to the Disclosing Partner; and (ii)
obtains the written obligation of such third party in a form satisfactory to the
Disclosing Partner prior to disclosing such information that all of the
provisions of this Article 7 shall apply with equal force and effect to such
third party;
(d) was lawfully in the possession of the Recipient prior to its
disclosure by the Disclosing Partner, as evidenced by the Recipients' written
materials; or
(e) has been lawfully obtained by the Recipient from a third party or
third parties who were not in breach of any nondisclosure obligation to the
Disclosing Partner.
Section 7.2 Return of Confidential Information. Upon termination of this
Agreement, each Recipient shall return to the Disclosing Partner all
Confidential Information disclosed to
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such Recipient, and all magnetic, computer-resident, photostatic, or
other copies or derivatives thereof
Section 7.3 Noncompetition. During the Term of the Venture, no Partner
or any Affiliate of a Partner shall directly or indirectly compete with, retain
or acquire an ownership interest in, or engage in, any business that competes
with the Venture in providing wireless services within the 1900 Mhz band in the
Designated BTAs. For three years after the dissolution of the Venture, unless
dissolved by mutual agreement of the General Partners, no Partner effecting such
dissolution shall establish any business that provides wireless services within
the 1900 Mhz band in the Designated BTAs. If, during the Term of the Venture, a
Partner is presented with a business opportunity involving the provision of
wireless services within the 1900 Mhz band in the Designated BTAs, such Partner
shall first offer such business opportunity to the Venture, and shall only
pursue such opportunity upon a determination that the Venture is not willing or
is unable to participate in such opportunity.
Section 7.4 Equitable Relief. It is further understood and agreed that
money damages would not be a sufficient remedy for any breach of this Section 7
and that the non-breaching Partner(s), subject to applicable law, shall be
entitled to equitable relief, including temporary and permanent injunctions,
against any actual or threatened breach of this Section 7, without the need to
post any bond or other security and without having to demonstrate special or
unique damages. Such remedies shall not be deemed to be the exclusive remedies
for a breach of this Section 7, but shall be in addition to all other remedies
available at law or equity to the non-Breaching Partner(s). In the event of
litigation relating to this Section 7, if a court of competent jurisdiction
determines in a final, nonappealable order that a Partner has breached a
provision of this Section 7, then such Partner shall be liable and pay to the
non-breaching Partner(s) the reasonable legal fees such non-breaching Partner(s)
incurred in connection with such litigation, including any appeal therefrom.
ARTICLE VIII
MANAGEMENT OF VENTURE
Section 8.1 Management Committee.
(a) To provide for the management of the Venture, the General Partners
hereby establish a management committee (the "Management Committee"). Except as
reserved to the General Partners in this Agreement, the business and affairs of
the Venture shall be managed under the direction of the Management Committee,
and the Management Committee shall have all power and authority to manage, and
direct the management and the business and affairs of, the Venture. Any power
not specifically delineated in this Agreement, or delegated by the Management
Committee pursuant to a policy of delegation adopted by the Management
Committee, shall remain with the Management Committee. Approval by or action
taken by the Management Committee in accordance with the Agreement shall
constitute approval or action by the Venture and shall be binding on the General
Partners. The Management Committee shall manage the Venture in a manner
consistent with maximizing the long-term value of the Venture.
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(b) The Management Committee shall initially consist of four members,
two of whom shall be appointed by D&E and two of whom shall be appointed by
Omnipoint (the "Partner Members"). At any time, D&E shall have the power to
remove (with or without cause), the Partner Members appointed by D&E, and
Omnipoint shall have the power to remove (with or without cause) the Partner
Members appointed by Omnipoint, in either case, by delivering written notice of
such removal to the Venture and the other General Partner.
(c) In the event of a deadlock among the Partner Members that is not
resolved within 30 days, a fifth member (the "Neutral Member") shall be
appointed to the Management Committee (the Neutral Member and the Partner
Members are hereinafter collectively and individually sometimes referred to as
"Members"). The Neutral Member shall be independent of any Partner and shall be
appointed upon a unanimous vote of the Partner Members, provided however, that
if the Venture Members do not agree on the appointment of the Neutral Member
within 60 days after the deadlock arises, the D&E Partner Members and the
Omnipoint Partner Members shall each appoint a third party respectively, and
such third parties shall select the Neutral Member. The Neutral Member may be
removed (with or without cause) by a unanimous vote of the Partner Members.
(d) In the event of an adjustment of the Partners' Percentage Interests
pursuant to Section 5.3 resulting in either D&E and its Affiliated Partner(s) or
Omnipoint and its Affiliated Partner(s) having an aggregate Percentage Interest
of 60 percent or greater, D&E or the Omnipoint, as the case may be, shall have
the right to appoint a third Partner Member to replace the Neutral Member on the
Management Committee, and the provisions of this Agreement relating to the
Neutral Member shall be of no further force or effect so long as the aggregate
Percentage Interest of D&E and its Affiliated Partner(s) or Omnipoint and its
Affiliated Partners, as the case may be, continues to be 60 percent or greater.
(e) Each Member will have a fiduciary responsibility to act in good
faith on behalf and in the best interests of the Venture. Each Member shall
serve for a term of two (2) years, which may be renewed for successive terms, or
until: (i) in the case of the Partner Members, such Member's successor is
designated by the General Partner that appointed such Member; (ii) in the case
of the Neutral Member, the Partner Members unanimously appoint such Neutral
Member's successor; or (iii) such Member's earlier resignation, removal, death,
or inability to serve. Any Member may resign at any time upon written notice to
the Venture and the General Partners. Vacancies among the Partner Members shall
be filled by the General Partner that appointed the Partner Member previously
holding the position which is then vacant. Any vacancy in the position of the
Neutral Member shall be filled by a unanimous vote of the Partner Members,
provided however, that if the Venture Members do not agree on the appointment of
a Neutral Member within 30 days after the vacancy arises, the D&E Partner
Members and the Omnipoint Partner Members shall each appoint a third party
respectively, and such third parties shall select the Neutral Member.
Appointment of a Member shall be effective upon receipt of notice by the Venture
and the General Partner(s) from the General Partner or Partner Members taking
such action.
Section 8.2 Notice of Management Committee Meetings, Location, Waiver of
Notice. Regular meetings of the Management Committee shall be held at least once
per quarter at the
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offices of the Venture or at such other times and places as may be fixed
by the Management Committee, and may be held without further notice. Special
meetings of the Management Committee may be called by the Chief Executive
Officer or by any two Partner Members upon seven (7) days' prior written notice,
which notice shall identify the purpose of the special meeting or the business
to be transacted; provided that the failure to identify specifically an action
to be taken or business to be transacted shall not invalidate any action taken
or any business transacted at a special meeting. Notice of meeting may be waived
before a meeting by a written waiver of notice signed by the Member entitled to
notice. A Member's attendance at a meeting shall constitute waiver of notice
unless the Member states at the beginning of the meeting his objection to the
transaction of business because the meeting was not lawfully called or convened.
Section 8.3 Quorum, Approvals; Proxies, Written Action. The presence, in
person, by proxy, or by telephone conference call (with all parties able to hear
and speak to all other parties), of all Partner Members shall be required for
the transaction of business at a Management Committee meeting. A vote of three
Members present, in person or by proxy, at a duly constituted meeting shall
govern all of the Management Committee's actions and constitute approval of the
Management Committee. Each Member may vote by delivering his proxy to another
Member. The Management Committee may act without a meeting if the action taken
is approved in advance in writing by the unanimous consent of all Members of the
Management Committee. The Management Committee shall cause written minutes to be
prepared of all action taken by the Management Committee and shall cause a copy
thereof to be delivered to each Member within 15 days thereafter.
Section 8.4 Authority of the Management Committee. Unless otherwise
agreed to in writing by the General Partners, the Management Committee, by its
own action or by action of a subcommittee of the Management Committee, but not
by delegation to officers or other employees of the Venture, shall, in addition
to any other power granted to it in this Agreement, have the right, power and
authority to take the following actions and no such action will be taken without
the approval of the Management Committee.
(a) making overall policy decision with respect to the business and
affairs of the "Venture;
(b) approving the Annual Budget and Business Plan, and related Marketing
Plan, for the Venture, and any material amendments and supplements thereto;
(c) approving the Strategic Plan for the Venture;
(d) approving any capital expense line item deviation from the Annual
Budget in excess of $250,000 or expense line item in excess of $100,000;
(e) except for contracts entered into pursuant to guidelines to be
established by the Management Committee, approving any contract, agreement or
commitment with a value in excess of $250,000 or a term longer than five (5)
years (or a group of related contracts, agreements or commitments with an
aggregate value in excess of $250,000).
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(f) approving the choice of bank depositories, and approving
arrangements relating to the signatories on bank accounts;
(g) approving the choice of the Venture's attorneys, independent
accountants, and any other consultants, where it is contemplated that such
consultants will provide services with a value in excess of $50,000, or for a
period longer than six (6) months;
(h) approving all contracts that are proposed to be entered into between
the Venture and any Partner or Affiliate, except those contracts specifically
mentioned in Articles 13 and 14 of this Agreement, with an aggregate value in
excess of $100,000;
(i) approving any change of the Venture's fiscal year;
(j) approving all distributions to the Partners;
(k) approving the conveyance, sale, transfer, assignment, pledge,
encumbrance, or disposal of, or the granting of a security interest in, any
assets of the Venture valued in excess of $100,000;
(l) approving the entry of the Venture, into any other partnership or
joint venture,
(m) except as provided in Section 5.2, the incurring of indebtedness by
the Venture in an amount in excess of $100,000
(n) the loaning of any sum or any other extension of credit by the
Venture to any Person in an amount in excess of $50,000 (or, with respect to
customers of the Venture, in an amount in excess of $250,000), or for a period
in excess of six (6) months;
(o) the guarantee by the Venture of any indebtedness of any other Person
in any amount in excess of $100,000 or for a period in excess of six (6) months,
or the guarantee of any contractual obligations of any other Person with a value
in excess of $100,000 or for a period in excess of six (6) months;
(p) except for base station site leases entered into pursuant to
guidelines to be established by the Management Committee, the entrance by the
Venture into any real estate lease with a value in excess of $250,000 or a term
in excess of ten (10) years, or the acquisition by the Venture of any real
estate with a value in excess of $100,000;
(q) the authorization of any Partner to act for or to assume any
obligation or responsibility on behalf of the Venture;
(r) the employment, appointment and removal of any Executive Officer and
any Venture employee who will be involved in the day-to-day management of the
business of the Venture and who will receive salary and bonus in excess of 75%
of the then current Chief Executive Officer's salary and bonus;
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(s) any change in accounting principles used by the Venture, except to
the extent required by generally accepted accounting principles;
(t) approving any tax elections of the Venture;
(u) the conduct of litigation to which the Venture is a party;
(v) approving the acquisition of any business or a business division
from any Person whether by asset purchase, stock purchase, merger or other
business combination;
(w) approving the acquisition of any assets by the Venture, other than
in the normal course of business, the fair market value of which may reasonably
be expected to exceed $100,000;
(x) making any legal or regulatory filings, or taking any position on
behalf of the Venture before any state or federal body, or any relevant
nongovernmental or quasi-governmental body; and
(y) approving and executing the Service and Lease Agreements to be
entered into pursuant to Article 14.
The actions noted in Subsections (b), (h), (k), (1), (n), (v), (w), and (y) of
this Section 8.4 shall require unanimous approval of the Partner Members;
provided, however, that with respect to Subsection (b), approval shall not be
unreasonably withheld with respect to those portions of the Annual Budget and
Business Plan and related Marketing Plan that relate to the normal operations of
the Venture.
Section 8.5 Subcommittees. The Management Committee may designate one or
more subcommittees. Each subcommittee shall be composed of such number of
Members as the Management Committee may determine, provided there is included an
equal number of subcommittee members appointed by each General Partner. Any
subcommittee, to the extent provided by the Management Committee, shall have and
may exercise all the power and authority of the Management Committee.
Section 8.6 No Individual Authority. Except as otherwise expressly
provided in this Agreement, no Partner, acting alone, shall have any authority
to act for, or undertake or assume any obligation or responsibility on behalf
of, any other Partner or the Venture.
Section 8.7 Executive Officers.
(a) The Partner Members of the Management Committee shall unanimously
agree on and appoint a chief executive officer (the "Chief Executive Officer").
In the event of the Chief Executive Officer's death, retirement, resignation,
termination, or inability to serve, a successor Chief Executive Officer shall be
unanimously appointed by the Partner Members. Subject to the control of the
Management Committee and, within the scope of their authority, any committees
thereof, the Chief Executive Officer shall: (a) have general and active
management of all the business, property and affairs of the Venture, (b) see
that all orders and resolutions of
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the Management Committee and the committees thereof are carried into
effect, (c) effectuate the business plan of the Venture as set forth in the
Annual Budget and Business Plan, (d) appoint and remove subordinate officers,
employees and agents, other than those appointed, approved or elected by the
Management Committee, as the business of the Venture may require, (e) act as the
duly authorized representative of the Venture in all matters, and in that
capacity, execute agreements and other contracts on behalf of the Venture,
except where the Management Committee has formally designated some other person
or group to act, and (f) in general perform all the usual duties incident to the
office of Chief Executive and such other duties as may be assigned to such
person by the Management Committee.
(b) The Chief Executive Officer shall prepare, and submit to the
Management Committee for its approval, as soon as practicable after the date
hereof, a business plan for the operation of the Venture from the date hereof
until December 31, 1997 (the "Initial Business Plan"), which, upon such
approval, shall be attached to this Agreement as Schedule C. Furthermore, the
Chief Executive Officer shall prepare, and submit to the Management Committee
for its approval, as soon as practicable after the date hereof, for the fiscal
year ending December 31, 1998, and at least sixty (60) days prior to the
commencement of each subsequent fiscal year, an annual budget and business plan
(the "Annual, Budget and Business Plan") for the Venture for such fiscal year.
Each Annual Budget and Business Plan approved by the Management Committee shall
remain operative until amended by the Management Committee or a successor Annual
Budget and Business Plan has been approved by the Management Committee. The
Chief Executive Officer shall conduct day-to-day affairs of the Venture in
accordance with the approved Annual Budget and Business Plan. The Chief
Executive Officer shall additionally make all decisions for the Venture which
are not reserved to the Management Committee or the General Partners pursuant to
this Agreement.
(c) The Chief Executive Officer shall be directly responsible for
reasonably achieving the requirements, goals and objectives of the Annual Budget
and Business Plan. The Chief Executive Officer will be subject to immediate
dismissal for any fraud, criminal, or unlawful conduct. The Management Committee
retains the right to terminate the Chief Executive Officer for non-performance,
unprofessional conduct or insubordination on the basis of only two (2) Member
votes, such two Members to constitute a quorum for the limited purposes of this
subsection. Termination of the Chief Executive Officer for any other reason
shall require the vote of a majority of the Members of the Management Committee.
(d) The Chief Executive Officer shall appoint a Chief Financial Officer,
a Senior Executive for Sales and Marketing, and a Senior Executive for
Engineering and Operations (together with the Chief Executive Officer, each an
"Executive Officer") with such duties as may be established by the Management
Committee. Except as provided in subsection (c) above, the Management Committee
shall have the power to terminate any Executive Officer on the basis of a
majority vote.
Section 8.8 Interactions with Other PCS Carriers. No Executive Officer
shall discuss or interact with other PCS wireless service providers for the
purpose of discussing additional collaborative efforts--not including
discussions regarding day-to-day operating issues, but including discussions
regarding mergers, acquisitions, or sales of assets of the Venture--without
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first obtaining the prior approval of the Management Committee. Upon such
approval by the Management Committee and prior to beginning such discussions,
the Venture shall provide formal written notice to the General Partners of such
approved and proposed action.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
Section 9.1 Representations and Warranties by D&E. D&E, along with its
Affiliates, represents and warrants to, and covenants with, Omnipoint, as
follows:
(a) D&E is a corporation duly organized and validly existing under the
law of the Commonwealth of Pennsylvania and is a corporation in good standing in
such jurisdiction. D&E is qualified to do business and in good standing as
foreign corporation in any other jurisdiction where the failure to be so
qualified or in good standing would have a material adverse impact on the
business or financial condition of the Venture.
(b) D&E has the full right, power and authority to enter into this
Agreement and will at all times have the full power and authority to perform its
obligations under this Agreement. This Agreement has been duly authorized,
executed and delivered by it, and this Agreement constitutes its valid and
binding obligation, enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other loss
affecting creditors' rights generally, or equitable principles, whether applied
in a proceeding in equity or law.
(c) D&E is not a party to any contract or other arrangement of any
nature that will materially interfere with its full, due and complete
performance, of this Agreement. D&E further covenants that it will not at any
time become a party to any contract or other arrangement of any nature that will
materially interfere with its full, due and complete performance of this
Agreement.
(d) D&E is not in violation of any existing law, be it state or federal,
by entering into and undertaking the performance of this Agreement.
(e) There is no litigation or proceeding pending nor, to the best of
D&E's knowledge and belief, is any investigation pending or litigation,
proceeding, or investigation threatened involving D&E or any of its Affiliates,
which could, if adversely determined, materially and adversely affect the
operation or financial condition of the Venture or the performance of D&E's
obligations under this Agreement.
(f) D&E has full rights in, and complete and unencumbered title to, the
assets conveyed by it to the Venture in accordance with Section 2.1.
(g) D&E or its Affiliates has full and valid legal rights in all FCC
licenses and other contractual rights that it is contributing to the Venture in
accordance with Section 2.2.
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(h) D&E is granting to the Venture, pursuant to Section 12.1, a
perpetual, royalty-free license to use the Xxxx "PCS One" in the territory
covered by the Designated BTAs.
Section 9.2 Representations and Warranties by Omnipoint. Omnipoint
represents and warrants to, and covenants with, D&E, as follows:
(a) Omnipoint is a corporation duly organized and validly existing under
the law of the State of Delaware and is a corporation in good standing in such
jurisdiction. Omnipoint is qualified to do business and in good standing as a
foreign corporation in any other Jurisdiction where the failure to be so
qualified or in good standing would have a material adverse impact on the
business or financial condition of the Venture.
(b) Omnipoint has the full right, power and authority to enter into this
Agreement and will at all times have the full power and authority to perform its
obligations under this Agreement. This Agreement has been duly authorized,
executed and delivered by it, and this Agreement constitutes its valid and
binding obligation, enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other loss
affecting creditors' rights generally, or equitable principles, whether applied
in a proceeding in equity or law.
(c) Omnipoint is not a party to any contract or other arrangement of any
nature that will materially interfere with its full, due and complete
performance of this Agreement. Omnipoint further covenants that it will not at
any time become a party to any contract or other arrangement of any nature that
will materially interfere with its full, due and complete performance of this
Agreement.
(d) Omnipoint is not in violation of any existing law, be it state or
federal, by entering into and undertaking the performance of this Agreement.
(e) There is no litigation or proceeding pending nor, to the best of
Omnipoint's knowledge and belief, is any investigation pending or litigation,
proceeding, or investigation threatened involving Omnipoint or any of its
Affiliates, which could, if adversely determined, materially and adversely
affect the operation or financial condition of the Venture or the performance of
Omnipoint's obligations under this Agreement.
(f) Omnipoint has full rights in, and complete and unencumbered title
to, the assets conveyed by it to the Venture in accordance with Section 2.1.
(g) Omnipoint or its Affiliates has full and valid legal rights in all
FCC licenses and other contractual rights that it is contributing to the Venture
in accordance with Section 2.2.
(h) The Venture has the right, under certain existing contracts between
Omnipoint (including its Affiliates) and its vendors, to purchase equipment for
the Venture on the same pricing terms as are available to Omnipoint (and its
Affiliates) under such contracts.
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ARTICLE X
INFRASTRUCTURE
Section 10.1 Mobile Technology Standard. The Venture will develop, install,
manage and operate a GSM-PCS 1900 system in the Designated BTAs. The Venture
shall operate solely using GSM technology, as defined by the European.
Telecommunications Standards Institute, for mobile PCS services, provided,
however, that the Management Committee, upon unanimous agreement of the Partner
Members (all such Members present and voting), may select a different PCS
technology for all or part of the Venture's mobile PCS services.
Section 10.2 Fixed Technology Standard. The Venture intends to design,
construct and operate a wireless local loop system. The Management Committee
will determine the timing, scope and technology to be used for the wireless
local loop system, giving fair consideration to Omnipoint's IS-661 technology or
an Omnipoint replacement technology.
Section 10.3 Equipment Purchase. The Venture will obtain equipment for
the build-out of the GSM-PCS 1900 system through purchase under the terms,
conditions and prices contained in those certain contracts between Omnipoint
(including its Affiliates) and its vendors, provided, however, that the Venture
may alternatively obtain equipment from any vendor providing a more attractive
proposal on the basis of economic terms and strategic considerations, as
determined by the Management Committee.
Section 10.4 Compatibility. The Venture will ensure continuity of PCS
services between the Designated BTAs and all other service areas covered by any
of the Partners. The Venture will continue to use commercially reasonable
efforts to upgrade its switching software and/or hardware, as necessary, in
order to maintain feature and service compatibility with the broader networks of
the Partners and to provide the effect of a seamless GSM network. All such
upgrade costs shall be borne by the Venture.
Section 10.5 Roaming and Features. The Executive Officers of the Venture
will establish a "home rate" calling area and service price in Pennsylvania.
After that "home rate" has been established, Omnipoint, or its appropriate
Affiliate, will enter into a roaming agreement with the Venture to provide
mutual roaming terms between the Venture's Designated BTAs and other Omnipoint
markets at competitive rates. The Venture and Omnipoint, or its Affiliate, will
use reasonable best efforts to create service packages that ensure continuity of
feature sets across eastern Pennsylvania.
Section 10.6 Developments. All rights, title and interest in and to all
Developments shall be held by the Venture, provided, however, that each of D&E
and Omnipoint shall have a perpetual royalty-free license to use such
Developments for their respective individual benefit.
Section 10.7 Future Contracts. Omnipoint (including its Affiliates), in
negotiations with vendors with regard to future equipment purchase contracts on
behalf of Omnipoint or its Affiliates, will use reasonable efforts to cause the
Venture to be included within the definition of "affiliates" which will have the
rights and benefits of Omnipoint (including its Affiliates) to
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contract with vendors to purchase equipment for the Venture on the same
pricing terms as are available to Omnipoint (and its Affiliates) under such
contracts.
ARTICLE XI
MARKETING
Section 11.1 Major Accounts.
(a) The General Partners acknowledge that each may have opportunities to
attract certain subscribers (e.g., corporations, governmental entities, etc.)
that utilize PCS communications services across multiple BTAs (both inside and
outside the Designated BTAs) and therefore prefer to purchase PCS services on a
centralized basis ("Major Accounts"). To the extent such customers require PCS
services within the Designated BTAs, the Venture will honor the terms of the
Major Account and will cooperate with the General Partner obtaining the account
for purposes of servicing such Major Account.
(b) Each General Partner shall establish and specify, after giving
reasonable consideration to the recommendations of the Venture, the specific
methods and procedures for providing products and services to such General
Partner's Major Accounts.
(c) The General Partner bringing a Major Account shall be responsible
for providing, directly or indirectly, or coordinating the provision of,
products and services with respect to Major Account subscribers.
(d) Where a Major Account has been identified by a General Partner, the
Venture shall not permit its employees, agents, or representatives to solicit or
enter into any contract, agreement or other arrangement to provide products and
services to such Major Account without coordinating with the major account
representatives of the General Partner bringing such Major Account.
Section 11.2 Advertising.
(a) Omnipoint may, from time to time, implement or participate in
advertising programs that directly or indirectly promote the network on a
regional basis. Such regional advertising may include, but shall not be limited
to: (1) newspaper, magazine and written periodical advertising; (2) radio
scripts, tape recordings and audio advertising; (3) television scripts,
videotape recording and electronic advertising; (4) telephone directories; (5)
billboards, in-store point of purchase or other display advertising ; (6) flyers
or similar advertising; and (7) direct mail materials.
(b) The Venture shall reimburse Omnipoint for such regional advertising
on the basis of the allocable share of the expenses incurred by Omnipoint in
connection with the production and placement of regional advertising. Such
allocation shall, on a case-by-case basis, be based on the tangible benefits
that Omnipoint and D&E reasonably expect to accrue to the Venture as a result of
such regional advertising. Omnipoint shall advise the Chief Executive Officer of
the Venture of the Venture's allocable cost of such advertising at least 60 days
prior to
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the date such costs are incurred. Notwithstanding the first sentence of
this Section 11.2(b), the Venture shall not be required to reimburse Omnipoint
for its allocable share of the cost of such advertising (i) if the Management
Committee determines that it does not want to incur such costs at least 30 days
prior to the date that such costs are to be incurred, or (ii) if the amount of
such allocable costs exceeds the amount specified for such advertising in the
Venture's Annual Budget and Business Plan.
ARTICLE XII
MARKS
Section 12.1 Venture Marks. D&E will diligently pursue the perfection of
its full and valid legal rights in, and the beneficial ownership of, the Xxxx
"PCS One", including federal trademark registration. D&E hereby grants to the
Venture an exclusive, royalty-free license to use the Xxxx "PCS One" in the
territory covered by the Designated BTAs (the "PCS One Trademark License") for
the Term of the Venture. D&E hereby agrees to indemnify the Venture and
Omnipoint for any liability that the Venture or Omnipoint incurs to any
third-party as a result of any action, suit or claim by such third-party in
connection with the Venture's use of the trademark "PCS One", and to indemnify
the Venture and Omnipoint for any costs and expenses (including court costs and
reasonable fees of attorneys and other professionals) in connection therewith.
All rights, title and interest in and to any Developments, including any Marks
developed by the Venture, shall be held by the Venture, provided, however, that
each of D&E and Omnipoint shall have a perpetual royalty-free license to use
such Developments for their respective individual benefit.
Section 12.2 Marks License Agreements. Simultaneously with the execution
of this Agreement, Omnipoint, on behalf of itself and its appropriate
Affiliate(s), shall execute, and shall cause its Members of the Management
Committee to vote that the Venture execute, a license agreement providing the
Venture with a royalty-free license for the term of this Agreement to certain of
Omnipoint's Marks (the "Marks License Agreement") for the limited purposes of
co-branding such Marks with the Marks of the Venture. Such co-branding of Marks,
i.e., "Omnipoint", "D&E Communications" and "PCS One" shall be based on
appropriate advertising decisions that ensure the Marks are properly sized and
recognizable. The co-branded Marks will be used for all sales and marketing of
the Venture, including, without limitation: (i) service branding, (ii) customer
care, (iii) product (subscriber unit) packaging, (iv) advertising and (v)
promotional materials. Nothing contained herein or in the Marks License
Agreement shall be construed as an assignment or grant from Omnipoint to D&E of
any right, title or interest in or to any of Omnipoint's Marks, it being
understood that all rights relating to them are reserved by Omnipoint.
Section 12.3 Discontinuance of Use Upon Termination. Upon termination of
this Agreement, the Venture shall cease to use, and shall not thereafter use,
the Omnipoint Marks, or any confusingly similar designations.
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ARTICLE XIII
PCS LICENSES
Section 13.1 FCC C-Block License Matters. The General Partners acknowledge
that the FCC adopted a "Second Report and Order", dated September 25, 1997 (WT
Docket No. 97-82; FCC 97-342; released October 16, 1997), establishing certain
disaggregation, amnesty and prepayment options for C-Block PCS license holders.
The "Second Report and Order," as such may be amended, supplemented or
superseded from time to time, is herein referred to as the "FCC C-Block Order."
The parties recognize that the FCC's potential future actions regarding the FCC
C-Block Order create uncertainty as to the options that the parties may have
with respect to the C-Block PCS licenses held through their respective
affiliates both within and outside the Designated BTAs. This Section articulates
certain goals for the Venture and the parties relative to the C-Block licenses
held in the Designated BTAs in this period of uncertainty, recognizing that
certain options that may be in the best interests of either General Partner and
their respective Affiliates under the FCC C-Block Order may impact the Venture.
(a) Evaluation of Options. The General Partners, in consultation with
each other, will evaluate the options available to the Venture and the General
Partners (including their respective Affiliates) under the FCC C-Block Order.
Each General Partner (or its Affiliates) may determine the actions that will be
taken with respect to their C-Block FCC licenses, provided that such actions
with respect to the PCS licenses in the Designated BTAs shall be in the best
interests of the Venture. In evaluating the options under the FCC C-Block Order
to determine what action, if any, is in the best interest of the Venture, it
shall be the goal of the parties to reduce the overall cost of the C-Block FCC
licenses to the Venture while at the same time assuring that the Venture will
have sufficient spectrum (initially not less than 10 Mhz, but with a view of
attaining at least 20 Mhz in each Designated BTA (excluding Reading, where the
goal will be to obtain at least 15 Mhz)) to permit the efficient and effective
operation of the PCS system in the Designated BTAs. The option chosen may be
based upon a risk/reward analysis of the available options, including the option
of returning a license in a Designated BTA to the FCC, coupled with the prospect
of re-acquiring such license, in accordance with FCC rules. and regulations, in
a subsequent re-auction of such license.
(b) No Action Required Outside Designated BTAs. Notwithstanding any
other provision of this Agreement, neither General Partner (or its Affiliates)
shall be required to take any action with respect to a license in a Designated
BTA that would compel it to take any action under the FCC C-Block Order with
respect to any license in a BTA outside the Designated BTAs.
(c) Action Compelled in Designated BTAs. Notwithstanding any other
provision of this Agreement, the Omnipoint General Partner (or its Affiliates)
may take the same action with respect to its PCS license in a Designated BTA as
it chooses to take with respect to its C-Block license in the Philadelphia BTA
if so required by such choice under the FCC C-Block Order; provided, that if the
Omnipoint General Partner (or its Affiliates) take action in accordance with
this sentence which causes it to be required to return all or part of a license
in a Designated BTA, the Omnipoint Affiliated Partners will continue to devote
all resources and support to the Venture as contemplated by the Annual Budget
and Business Plan for the Venture,
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including, but not limited to (if so determined by the Management Committee)
participating through the Venture, in accordance with FCC rules and
regulations, in re-bidding for purchasing and/or leasing in the name of the
Venture any Designated BTA license returned under this sentence; and provided
further, that if the D&E General Partner determines-in its reasonable good faith
judgment that after such action, the Venture is not reasonably likely (through
re-bidding, lease or other purchase) to be able to obtain 20 Mhz (15 Mhz in
Reading) of spectrum in each designated BTA, the D&E General Partner may elect
to terminate the Venture without liability to any partner and the Omnipoint
General Partner shall pay the D&E General Partner to cover the D&E General
Partner's expenses in pursuing the Venture.
(d) Assignment of PCS Licenses to the Venture. At the time indicated
below, in accordance with and pursuant to Section 2.2, and subject to the
receipt of any required FCC Approvals (as defined below), each License Holder
shall assign and contribute to the Venture the PCS licenses for the Designated
BTAs then held or thereafter acquired by it. Each License Holder shall use its
diligent good faith best efforts to obtain any required FCC Approvals for such
assignment:
(i) D/E/F-Block Licenses. Upon execution of this Agreement, each
D/E/F-Block License Holder will promptly file with the FCC a request for
authority (an "Approval") to assign its D/E/F-Block PCS licenses in the
Designated BTAs to the Venture. Each License Holder shall use its diligent good
faith best efforts to obtain the required FCC Approvals for such assignment.
Upon obtaining such Approvals, the D/E/F-Block licenses in the Designated BTAs
will be contributed to the Venture upon the terms and conditions set forth in
this Agreement.
(ii) C-Block Licenses. After the C-Block Determination Date (as
defined in Section 2.2), each C-Block License Holder will promptly file
with the FCC a request for authority to assign its remaining C-Block PCS
licenses in the Designated BTAs to the Venture. Upon obtaining such Approvals,
the C-Block licenses in the Designated BTAs will be contributed to the Venture
upon the terms and conditions set forth in this Agreement.
(e) Subsequent Acquisition of Licenses in Designated BTAs. To the extent
determined to be appropriate by the Management Committee, and subject to FCC
rules and regulations, the Venture and/or the General Partners will participate
in the FCC re-auction of C-Block licenses with respect to licenses in the
Designated BTAs and, subject to FCC rules and regulations, any frequencies
acquired in the Designated BTAs by D&E, Omnipoint or any of their respective
Affiliates will be contributed to the Venture upon the terms and conditions set
forth in this Agreement. In addition, any PCS license in the Designated BTAs
subsequently acquired or otherwise obtained by D&E, Omnipoint or their
respective Affiliates at any time during the term of this Agreement will also be
contributed to the Venture upon the terms and conditions set forth in this
Agreement, subject to FCC rules and regulations.
Section 13.2 Interim Operations, FCC Approvals.
(a) Management Agreements. Prior to the use by the Venture of any PCS
license in a Designated BTA for commercial purposes, the Partner or Affiliate
holding such PCS
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license (a "License Holder") will enter into a management agreement, on
terms to be mutually agreed between such License Holder and the Venture, with
the Venture pursuant to which the Venture will manage the operation of the PCS
system in the Designated BTA until an Approval (as defined below) has been
obtained from the FCC. The management agreement will provide that the License
Holder shall maintain control over each license in accordance with FCC rules,
regulations and requirements and that the License Holder may terminate the
management agreement at any time with or without cause, provided that if a
Partner terminates the management agreement without cause then that Partner
shall pay the Venture a termination fee equal to the greater of $1M or 2 times
the management fee under the management agreement. The management agreement with
respect to any PCS license will terminate upon obtaining the Approval to assign
such license to the Venture.
(b) Interim Use of Spectrum. Until the C-Block Determination Date, the
Venture will use its best efforts to operate its PCS system in the Designated
BTAs by using the D/E/F-Block licenses being managed by or assigned to the
Venture. The parties acknowledge that initial operations of the PCS system by
the Venture will initially require use of at least a portion of the C-Block
spectrum until certain microwave signals can be relocated off the D/E/F-Block
spectrum. The Management Committee will cause the Venture to use its best
efforts to expedite the relocation of such microwave signals.
Section 13.3 Purchase of Spectrum. During the six month period beginning
on January 1, 2003 ("Purchase Period"), each General Partner shall have the
right to purchase ("Purchase Right") from the Venture up to 20 Mhz of spectrum
(in units of 10 Mhz) in each Designated BTA, provided that after any such
purchase the Venture shall own not less than 20 Mhz of spectrum in each
Designated BTA. A General Partner must exercise its Purchase Right by giving,
Purchase Right by giving notice of its election to make such purchase (a
"Purchase Notice") to the Venture and the other General Partner during the
Purchase Period. The Purchase Notice shall set forth the amount of spectrum that
the General Partner desires to purchase in each Designated BTA. If both General
Partners desires to purchase spectrum in any Designated BTA such that after such
purchase, the Venture would own less than 20 Mhz of spectrum in that Designated
BTA, then each General Partner shall have the right to purchase an equal amount
of spectrum in that Designated BTA, and the Purchase Notice shall be deemed to
be modified accordingly.
Section 13.4 Payment of the Spectrum Purchase Price. A General Partner that
exercises its Purchase Right pursuant to Section 13.3 shall, in consideration
for the spectrum being purchased, pay to the Venture an amount of cash equal to
the Fair Market Value of such spectrum (the "Spectrum Purchase Price")--i.e.,
such Fair Market Value shall be equal to the value of such spectrum to the
Venture and shall reflect the reduction in the value of the Venture resulting
from the purchase of such spectrum taking into account the potential future
use(s) of such spectrum by the Venture. (If both General Partners are purchasing
spectrum in a Designated BTA, then any reduction in the value of the Venture
resulting from such purchases shall be divided proportionately between the
spectrum being purchased by each General Partner). The spectrum Purchase Price
shall be paid at a closing held on the later of 20 days after the determination
thereof or receipt of any required regulatory approvals.
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Section 13.5 Renewal of Licenses. To the extent permitted by the FCC,
the Venture shall renew each of the PCS licenses in the Designated BTAs at the
end of their respective terms.
ARTICLE XIV
SERVICE AND LEASE AGREEMENTS
Section 14.1 Service and Lease Agreements. Within 30 days following the
execution of this Agreement, each of the General Partners, on behalf of itself
and its appropriate Affiliate(s), shall enter into agreements with the Venture
for the provision of certain services and site leases to the Venture (the
"Service and Lease Agreements") on such terms and conditions as may be approved
by the Management Committee. All Service and Lease Agreements shall provide for
payments based upon the lower of (i) the costs incurred (including reasonably
allocated overhead, but excluding profits) by the General Partner or Affiliate
in providing the services required under the Service and Lease Agreement; or
(ii) the costs of such services as may be reasonably obtained from unrelated
entities in arms-length transactions. All Service and Lease Agreements entered
into by a particular General Partner will be encompassed in a single master
Service and Lease Agreement between such General Partner and the Venture.
Section 14.2 D&E Service and Lease Agreements. D&E shall, on behalf of
itself and its appropriate Affiliate(s), enter into a master Service and Lease
Agreement with the Venture covering the following areas:
(a) Engineering services, including, without limitation, full
installation, maintenance and storage of the switching system and terms for the
leasing of space for the switch at the current D&E network operating control
center;
(b) Accounting and finance services, including, without limitation,
taxation assessments, vehicle fleet management and facilities maintenance, and
any other activities traditional considered part of the "corporate controller"
function;
(c) Human resources administration;
(d) Marketing and public relations services;
(e) Lease of certain D&E facilities, property, buildings and structures
for the placement of base stations and antennas;
(f) License operating agreements, as more fully set forth in Section 13;
and
(g) provision for loan of executives and skilled specialist workers to
the Venture addressing salary and benefit matters for all such employees.
Section 14.3 Omnipoint Service and Lease Agreements. Omnipoint shall, on
behalf of itself and its appropriate Affiliate(s), enter into a master Service
and Lease Agreement with the Venture covering the following areas:
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(a) Customer care service, including, without limitation, utilization of
the Omnipoint customer service system;
(b) Engineering services, including, without limitation, provision of
engineering talent in the areas of base station installation, radio frequency
design, system integration and optimization;
(c) Billing services;
(d) Marketing and public relations services;
(e) Interconnection and telecom services, including, without limitation,
utilization of existing agreements with providers of long distance services,
operator services, 911 and 411 services and local and regional interconnection
services;
(f) License operating agreements, as more fully set forth in Article 13;
and
(g) provision for loan of executives and skilled specialist workers to
the Venture addressing salary and benefit matters for all such employees.
Section 14.4 Other Transactions with Partners. Including, but not
limited to, those "Service and Lease Agreements described in this Article 14,
any transaction between the Venture and a Partner or Affiliate shall be no less
favorable to the Venture than would be the case with unrelated entities in
arms-length transactions.
ARTICLE XV
TERM
Section 15.1 Initial Term of the Venture. The Venture shall commence upon
the Closing Date and shall continue for a period of ten (10) years (the "Initial
Term"), unless earlier dissolved or terminated pursuant to statute or any
provision of this Agreement.
Section 15.2 Extension of Venture. Upon mutual agreement of the General
Partners--such agreement to be reached at least 180 days prior to the end of the
Initial Term and any Subsequent Term (as defined below)--the Venture shall be
extended for an additional ten (10) years (individually, a "Subsequent Term" and
collectively with the Initial Term and any other Subsequent Terms, the "Term").
Section 15.3 Sale of Interest. Notwithstanding anything to the contrary
contained herein, if, at the end of the Initial Term or any Subsequent Term,
either General Partner determines not to extend the Venture pursuant to Section
15.2 (the "Terminating Partner"), it shall provide written notice to the other
General Partner (the "Nonterminating Partner") at least 180 days prior to the
end of such Initial Term or Subsequent Term. Upon receipt of such notice, the
Nonterminating Partner shall have the right to purchase the Percentage Interests
of the Terminating Partner and its Affiliated Partner(s) for the Fair Market
Value of such interests.
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Section 15.4 Sale of Venture. If, at the end of the Initial Term or any
Subsequent Term, either General Partner determines not to extend the Venture
pursuant to Section 15.2 and the Nonterminating Partner does not purchase the
interest of the Terminating Partner pursuant to Section 15.3, the General
Partners, to the extent mutually agreeable to both, may determine to sell the
entire Venture to a third party.
Section 15.5 Termination of Venture. If, at the end of the Initial Term
or any Subsequent Term, either General Partner determines not to extend the
Venture pursuant to Section 15.2, the Nonterminating Partner does not purchase
the interest of the Terminating Partner pursuant to Section 15.3, and no
mutually agreeable sale of the Venture can be effectuated pursuant to Section
15.4, the Venture shall be dissolved and terminated, the provisions of Article
20 shall apply, and the Nonterminating Partner shall be the Liquidating Partner.
If both General Partners agreed not to extend the Venture pursuant to Section
15.2, the Liquidating Partner shall be determined pursuant to Section 20.1(b).
ARTICLE XVI
ASSIGNMENT AND RIGHTS TO: SALE OF INTEREST
Section 16.1 Consent Required. Except as provided in Sections 13, 16.2 and
16.3, without the prior written consent of the Unaffiliated General Partner
(which may be withheld for any or no reason), no Partner, nor any assignee or
successor in interest of any Partner, shall (voluntarily or involuntarily) sell,
assign, give, pledge, hypothecate, encumber or otherwise transfer all or any
part of its interest in the Venture or the assets of the Venture. To the extent
that a Partner wishes to pledge, hypothecate or encumber all or part of its
interest in the Venture, a condition of such pledge, hypothecation, or
encumbrance shall be the inclusion of a right of first refusal for the
Unaffiliated General Partner to purchase the interest in the event of
foreclosure of the pledging Partner. Notwithstanding the foregoing, any Partner
may sell or assign its interest in the Venture to an Affiliate.
Section 16.2 Notice of Proposed Transfer.
(a) At any time after June 30, 1999, any Partner (the "Proposing
Partner") may propose to sell, assign, or otherwise transfer (a "Proposed
Transfer") all or any part of its interest in the Venture to a nonaffiliated
third party (a "Proposed Purchaser") by submitting a written notice (a "Notice
of Proposed Transfer") to the Unaffiliated General Partner (the "Remaining
Partner") describing the material terms and conditions of the Proposed Transfer
in reasonable detail, including, without limitation, the proposed purchase price
(the "Purchase Price"), the amount and kind of consideration to be paid, and the
identity of the Proposed Purchaser. Such material terms and conditions shall be
confirmed in writing by the Proposed Purchaser.
(b) The Remaining Partner shall have the right, exercisable by written
notice (the "Notice of Election") to the Proposing Partner within 60 days of
receipt of the Notice of Proposed Transfer, to elect to:
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(i) require that its interest in the Venture, plus the interests of
its Affiliated Partner(s), be sold to the Proposed Purchaser on a Pro Rata Basis
with the sale of the Proposing Partner's interest, and on the same terms and
conditions specified in the Notice of Proposed Transfer with respect to the
Proposing Partner's interest in the Venture; or
(ii) purchase the Proposing Partner's entire interest in the Venture
on the same terms and conditions specified in the Notice of Proposed
Transfer; or
(iii) neither sell its interest in the Venture nor purchase the
Proposing Partner's interest in the Venture.
The failure to deliver a Notice of Election within the required time period
shall be deemed an election by the Remaining Partner of clause (iii) above.
(c) If the Remaining Partner elects clause (i) of Section 16.2(b) above,
(i) the Proposing Partner shall promptly, acting in good faith, seek to cause
the Proposed Purchaser to purchase its interest and the interests of the
Remaining Partner and its Affiliated Partners in the Venture on a Pro Rata
Basis, and (ii) the Proposing Partner may transfer its interest in the Venture
only if the Proposed Purchaser purchases, within 60 days of the Notice of
Election, both its interest and the interests of the Remaining Partner and its
Affiliated Partners in the Venture on a Pro Rata Basis and on the terms and
conditions specified in the Notice of Proposed Transfer.
(d) If the Remaining Partner elects clause (ii) of Section 16.2(b)
above, the relevant Partners shall, within 30 days after receipt of the Notice
of Election, execute such documents and instruments reasonably acceptable to
such Partners required to consummate the contemplated transaction on the terms
and conditions specified in the Notice of Proposed Transfer (subject to Section
16.2(g) below) and the closing of such purchase shall take place as soon as
practicable thereafter, but in any case within 30 days following the date on
which any government regulatory approvals required for the consummation of the
transaction have been obtained or otherwise satisfied. Except as set forth in
Section 16.2(i), at such closing, the Proposing Partner shall, and hereby
covenants to, transfer its interest in the Venture to the Remaining Partner free
and clear of any and all liens, mortgages, pledges, security interests or other
restrictions or encumbrances ("Encumbrances") other than Encumbrances arising
out of Venture financing.
(e) If the Remaining Partner elects clause (iii) of Section 16.2(b)
above, the Proposing Partner may transfer its interest in the Venture within 60
days after receipt of the Notice of Election, but only on the terms and
conditions, and only to the Proposed Purchaser, specified in the Notice of
Proposed Transfer, provided, however, that an election of clause (iii) of
Section 16.3(b) above shall not constitute approval by the Remaining Partners of
a transfer to a Major Competitor pursuant to Section 16.5 below.
(f) After the expiration of the time periods for the closing of a
purchase or transfer set forth in Sections 16.2(c), (d) and (e) above, no
Partner may sell, assign or otherwise transfer its interest in the Venture
except by submitting another Notice of Proposed Transfer and following the
procedures set forth in this Section 16.2.
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(g) In the event the Purchase Price specified in the Notice of Proposed
Transfer includes any property (including, without limitation, notes or other
evidences of indebtedness (collectively, "Debt Consideration")) other than cash,
such Purchase Price shall be deemed to be the amount of any cash included in the
Purchase Price plus the fair market dollar value of such other property. The
fair market dollar value of such other property (the "Property Value") shall be
determined in good faith by the Proposing Partner and set forth in the Notice of
Proposed Transfer. If, within 10 days after receipt of the Notice of Proposed
Transfer, the Remaining Partner questions such determination, then the Fair
Market Value, as defined herein, of such other property shall be determined and
shall constitute the Property Value. If the Remaining Partner advises the
Proposing Partner that it questions the Proposing Partner determination of
Property Value, the 60 day period referred to in Section 16.2(b) shall not
commence until the determination of the Property Value.
(h) Any consideration to be paid by the Remaining Partner to the
Proposing Partner pursuant to an election under clause (ii) of Section 16.2(b)
shall be paid as follows, at the option of the Remaining Partner:
(i) (x) in cash in an amount equal to the cash and the Property Value
(as determined in Subsection (g) above) included in the Purchase Price, or (y)
in the event the Purchase Price includes Debt Consideration, in cash in an
amount equal to the cash and the Property Value (as determined in Subsection (g)
above) included in the Purchase Price, minus the face amount of any Debt
Consideration included in the Purchase Price, plus a debt obligation of the
Remaining Partner equivalent as to face amount, interest rate and other material
terms of the Debt Consideration included in the Purchase Price (the aggregate
cash to be paid under (x) or (y) above, as the case may be, shall be referred to
as the "Remaining Partner's Purchase Price"); or
(ii) in four equal annual installments, the first of which being
payable at the closing, with each installment equal to one-fourth of the
Remaining Partner's Purchase Price, plus (a) interest at a rate per annum equal
to the prevailing prime rate as of the date of closing as published in the Wall
Street Journal, such interest to be prepaid at the closing or (b) interest at a
rate per annum equal to the prevailing prime rate from. time to time as
published in the Wall Street Journal plus 1.5 percent, such interest to be
payable in arrears at the time of each installment payment.
(i) If the Remaining Partner elects clause (ii) of Section 16.2(h)
above, the Remaining Partner shall also grant the Proposing Partner a security
interest in the portion of the Venture to be purchased from the Proposing
Partner by the Remaining Partner.
(k) No Partner shall be entitled to exercise any of its rights under
this Section 16.2 after receipt of an Offeree notice in accordance with Section
16.3 hereof.
Section 16.3 Right to Purchase and Sell. At any time after June 30,
1999, each General Partner (the "Offering Partner") shall have the right,
exercisable from time to time by written notice to the other General Partner, to
purchase the interest of the other General Partner (the "Offeree Partner"), plus
the interests of its Affiliated Partner(s) (together with the Offeree Partner,
referred to as the "Offeree Partners"), in the Venture, at a price fixed by the
Offering
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Partner (the "Offered Price"). Within 45 days following the giving of such
notice, the Offeree Partners shall have. the right, exercisable by
written notice to the Offering Partner (the " Offeree Notice"), to (i) accept
the Offering Partner's offer to purchase their interest in the Venture at the
Offered Price or (ii) purchase the interest of the Offering Partner, plus the
-interests of the Offering Partner's Affiliated Partners (together with the
Offering Partner, referred as the "Offering Partners"), in the Venture based on
the Offered Price, adjusted as necessary based on any difference between the
actual Percentage Interests of the Offeree Partners and the Offering Partners.
Within 90 days of the Offeree Notice, the relevant Partners shall execute such
documents and instruments reasonably acceptable to the Partners required to
consummate the contemplated transaction. The closing of such transaction shall
take place within 30 days following the date on which any government regulatory
approvals required for consummation of the transaction have been obtained or
otherwise satisfied. Should the Offeree Partners elect to sell their interest
pursuant to (i) above, at the closing of such transaction, the Offeree Partners
shall, and hereby covenant to, transfer their respective interests in the
Venture to the Offering Partner free and clear of any and all Encumbrances other
than Encumbrances arising out of Venture financing. Should the Offeree Partners
elect to purchase the Offering Partners' interest pursuant to (ii) above, at the
closing of such transaction, the Offering Partners shall, and hereby covenant
to, transfer their interest in the Venture to the Offeree Partners free and
clear of any and all Encumbrances other than Encumbrances arising out of Venture
financing.
Section 16.4 Assumption by Assignee. Any assignment of all or a portion
of an interest in the Venture permitted under this Article 16 shall be in
writing, and shall be an assignment and transfer of all the assignor's rights
and obligations hereunder with respect to such interest or portion thereof, and
the assignee shall expressly agree in writing to be, bound by all of the terms
of this Agreement and assume and agree to perform all of the assignor's
agreements and obligations hereunder with respect to such interest or portion
thereof existing or arising at the time of and subsequent to such assignment.
Upon any such permitted assignment of all or a portion of the assignor's
interest, the assignor shall be relieved of its agreements and obligations
hereunder with respect to such interest or portion thereof arising after such
assignment. An executed duplicate copy of each such assignment of an interest in
the Venture and assumption of a Partner's obligations shall be delivered to the
other Partners and to the Venture. Upon such delivery, the assignee shall be
admitted to the Venture as a Limited Partner if the assignor is a Limited
Partner or as a General Partner if the assignor is a General Partner.
Section 16.5 Major Competitors. The Executive Officers shall prepare, on
a biennial basis, a list of major competitors in the wireless and wireline
telecommunications industry (the "Major Competitors"). If any of the Partners
desires to sell, assign, or otherwise transfer all or any part of its Interest
in the Venture to a Major Competitor, such sale, assignment or transfer must be
reviewed and approved by the Unaffiliated General Partner.
Section 16.6 Allocation. Upon the transfer of a Partner's interest or
portion thereof in the Venture, the distributive share of all items of income,
gain, loss, deduction or credit associated with that interest or portion thereof
for the taxable year, in which, the transfer occurs shall be allocated between
the transferor and the transferee according to the relative number of days in
the year before and after the date the transfer is recognized by the Venture.
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Section 16.7 No Transfer in Violation of Law. No transfer of an interest
in the Venture pursuant to this Article 16 shall be permitted if such transfer
would violate federal or state securities laws or any other laws.
Section 16.8 Other Assignment Void. Any purported assignment or transfer
of an interest in the Venture not permitted by this Article 16 shall be null and
void and have no effect whatsoever.
ARTICLE XVII
DEFAULTS
Section 17.1 Insolvency. In the event:
(a) a receiver, liquidator, assignee, custodian, trustee, conservator,
sequestrator (or other similar official) shall take possession of a General
Partner or any substantial part of its property without its consent, or a court
having jurisdiction in the premises shall enter a decree or order for relief in
respect of a General Partner in an involuntary case under any applicable
bankruptcy, insolvency, moratorium or other similar law now or hereafter in
effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
conservator, sequestrator (or other similar official) of such General Partner or
for any substantial part of its property, or ordering the winding-up or
liquidation of its affairs and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or
(b) a General Partner shall commence a voluntary case under any
applicable bankruptcy, insolvency, moratorium or other similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
conservator, sequestrator (or other similar official) of such General Partner or
of any substantial part of its property, or shall make any general assignment
for the benefit of creditors, or shall take any corporate action in furtherance
of any of the foregoing; or
(c) a General Partner shall admit in writing its inability to pay its
debts as they mature, or
(d) a General Partner shall give notice to any governmental body of
insolvency or pending insolvency, or suspension or pending suspension of
operations; then, in any such event (an "Insolvency Event"), the other General
Partner (the "Solvent Partner") shall (i) have the right to cause the
determination of Fair Market Value and purchase the interest of the first
General Partner (the "Insolvent Partner") in the Venture, plus the interests of
the Insolvent Partner's Affiliated Partners (together with the Insolvent
Partner, referred to as the "Insolvent Partners") at a price equal to eighty
percent (80%) of the Fair Market Value of such interests, or (ii) at the option
of the Solvent Partner, cause a dissolution of the Venture and the Solvent
Partner shall be the Liquidating Partner (as described in Article 20). The
Partners agree that damages resulting from an Insolvency Event are impossible to
measure- therefore the Partners further agree that the reduction in the purchase
price for the Insolvent Partners' interest
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in the Venture set forth in clause (i) above constitutes the Partners'
best estimate of any such damages and is not a penalty. The rights of the
Solvent Partner shall become exercisable as of the date of any such event and
shall be exercised, if at all, within 60 days after (x) the determination of
Fair Market Value in the case of clause (i) above, or (y) the Solvent Partner
receives notice of such event in the case of clause (ii) above. The fees of any
and all Appraisers used to determine the Fair Market Value under this Section
17.1 shall be borne by the Insolvent Partners.
Section 17.2 Breach of Covenants, Failure to Perform Obligations.
(a) If any Partner fails to perform any of its obligations or covenants
or breaches any of its representations hereunder (an "Event of Default"), then
the Unaffiliated General Partner (the "Nondefaulting Partner") shall have the
right to give such Partner (the "Defaulting Partner") a notice of default
("Notice of Default"). The Notice of Default shall set forth the nature of the
obligations, covenants or representations which the Defaulting Partner has not
performed or breached.
(b) If within the 30 day period following receipt of the Notice of
Default, the Defaulting Partner in good faith commences to perform such
obligations and cure such default, and thereafter prosecutes to completion with
diligence and continuity the curing thereof and cures such default within a
reasonable time, then it shall be deemed that the Notice of Default was not
given and the Defaulting Partner shall lose no rights hereunder. If, within such
30 day period, the Defaulting Partner does not commence in good faith the curing
of such default or does not thereafter prosecute to completion with diligence
and continuity the curing thereof, then the Nondefaulting Partner shall have the
rights set forth in Section 17.2(c) below.
(c) If any default is not cured as set forth in Section 17.2(b), then
the Nondefaulting Partner which gave the Notice of Default shall have the right
to (i) cause the determination of Fair Market Value and purchase the interest of
the Defaulting Partner in the Venture, plus the interests of the other Partners
that are Affiliates of the Defaulting Partner (together with the Defaulting
Partner, referred to as the "Defaulting Partners") at a price equal to eighty
percent (80%) of the Fair Market Value of such interest, or (ii) at the option
of the Nondefaulting Partner, terminate this Agreement by giving the Defaulting
Partners written notice thereof whereupon such default may be treated by such
Nondefaulting Partner as a dissolution of the Venture, and such Nondefaulting
Partner shall be the Liquidating Partner (as described in Article 20). The
Partners agree that damages resulting from an Event of Default are impossible to
measure; therefore the Partners further agree that the reduction in the purchase
price for the Defaulting Partners' interests in the Venture set forth in clause
(i) above constitutes the Partners' best estimate of any such damages and is not
a penalty. The rights of the Nondefaulting Partner shall become exercisable upon
the expiration of the 30 day period referred to in Section 17.2(b), or a
reasonable time thereafter as determined in the judgment of the Nondefaulting
Partner if a cure has not been completed, and shall be exercised, if at all,
within 60 days after (x) the determination of Fair Market Value in the case of
clause (i) above, or (y) the expiration of such 30 day period or reasonable time
thereafter, as the case may be, in the case of clause (ii) above. The fees of
any and all Appraisers used to determine the Fair Market Value under this
Section 17.2 shall be borne by the Defaulting Partners.
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(d) Failure by a Nondefaulting Partner to give any Notice of Default as
specified herein, or any failure to insist upon strict performance of any of the
terms of this Agreement, shall not constitute a waiver of any such breach or any
of the terms of this Agreement. No breach shall be waived and no duty to be
performed shall be altered or modified except by written instrument. One or more
waivers or failures to give Notice of Default shall not be considered as a
waiver of a subsequent or continuing breach of the same covenant.
Section 17.3 Not Exclusive Remedy. The rights granted in Section 17.1
and Section 17.2 above shall not be deemed an exclusive remedy of a
Nondefaulting Partner or a Solvent Partner, but all other rights and remedies,
legal and equitable, shall be available to it.
ARTICLE XVIII
RESOLUTION OF DISPUTES
Section 18.1 Disputes. The Partners will use good faith reasonable best
efforts to resolve any dispute, controversy or difference of opinion (including
any disagreement concerning the validity, enforceability, or interpretation of
this Agreement) arising out of or in relation to this Agreement or any of the
ancillary agreements (collectively, a "Dispute") through amicable and good faith
negotiations and, to the extent that the Venture is a party to any Dispute
arising out of any of the ancillary agreements, each General Partner shall cause
the Venture to do the same.
Section 18.2 Mediation. If a Dispute exists between or among the
Partners, and such Dispute cannot be resolved by good faith negotiation pursuant
to Section 18.1, either General Partner may elect to submit the disagreement to
mediation under the Commercial Mediation Rules of the American Arbitration
Association. If a General Partner so elects, the other Partners shall submit to
mediation. The mediator shall not have authority to impose a settlement upon the
Partners, but will attempt to help them reach a satisfactory resolution of the
Dispute. The mediator shall end the mediation whenever, in his judgment, further
efforts at mediation would not contribute to a resolution of the submitted
Dispute, but in no event shall mediation continue for a period longer than 60
days.
Section 18.3 Arbitration. Any Dispute which cannot be resolved through
good faith negotiations within 30 days, or by mediation within the time allotted
pursuant to Section 18.2, (other than a Dispute which may be considered in court
as contemplated by Section 7.4) shall be submitted to, and determined by, final
and binding arbitration. Each General Partner agrees to take such actions as
necessary to submit all such Disputes to arbitration, including submitting in
each specific instance to arbitration with respect to each Dispute for which the
other General Partner seeks resolution through arbitration. Failure to take such
actions within a reasonable period of time shall constitute a breach of this
Agreement and remedies may thereupon be sought in any court of appropriate
jurisdiction. Such arbitration shall proceed in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then pertaining (the
"Rules"), insofar as such Rules are not inconsistent with the provisions
expressly set forth in this Agreement, unless the General Partners mutually
agree otherwise, and pursuant to the following procedures and conditions:
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(a) Notice of the demand for arbitration shall be filed in writing with
the other General Partner or the Venture, as appropriate, and with the American
Arbitration Association. Each party to the arbitration shall appoint an
arbitrator, and those two party-appointed arbitrators shall appoint a third
neutral arbitrator within 10 days. If the party-appointed arbitrators fail to
appoint a third, neutral arbitrator within 10 days, such third, neutral
arbitrator shall be appointed by the American Arbitration Association. in
accordance with the Rules. A determination by a majority of the panel shall be
binding on the parties to the arbitration.
(b) Reasonable discovery shall be allowed in arbitration.
(c) All proceedings before the arbitrators shall be held in
Philadelphia, Pennsylvania. The governing law shall be as specified in Section
22.1 hereof.
(d) The costs and fees of the arbitration, including attorneys' fees,
shall be allocated by the arbitrators, except as provided for in Section
20.1(b).
(e) The award rendered by the arbitrators shall be final and judgment
may be entered in accordance with applicable law and in any court having
jurisdiction thereof.
(f) To the extent possible, such arbitration proceedings shall not
interrupt the smooth performance and execution of all other aspects of this
Agreement and the Ancillary Agreements, unless otherwise mutually agreed by the
General Partners.
(g) The provisions of this Agreement shall be considered a complete
defense to any suit, action, or proceeding instituted in any federal, state, or
local court or before any administrative tribunal with respect to any Dispute
arising during the term of this Agreement.
(h) The arbitration provisions of this Agreement shall, with respect to
all Disputes arising during the term of this Agreement, survive the termination
or expiration of this Agreement.
(i) Nothing herein contained shall be deemed to give the arbitrators any
authority, power, or right to alter, change, amend, modify, add to or subtract
from any of the provisions of this Agreement.
ARTICLE XIX
INSURANCE AND INDEMNIFICATION
Section 19.1 Insurance. The Venture shall purchase and maintain for the
term of this Agreement, relevant business and general liability insurance
covering all actions of, by, on behalf of, or related to, the Venture. The
insurance will name the Venture, each Partner, the Affiliates of each Partner,
and their respective officers, directors, employees, representatives and agents
as insured parties.
Section 19.2 Indemnification by the Venture.
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(a) The Venture shall indemnify, defend and hold harmless each Partner
(including those who have been, but no longer are, Partners) and its employees,
officers, directors and agents (the "Other Indemnified Persons") from and
against all loss, cost, liability and expense which may be imposed upon or
reasonably incurred by such Partner or Other Indemnified Persons, including
reasonable attorneys' fees and disbursements and reasonable settlement payments,
in connection with any claim, action, suit or proceeding or threat thereof, made
or instituted in which such Partner or Other Indemnified Persons may be involved
or be made a party by reason of such Partner being, or having been in the past,
a Partner, or by reason of any action alleged to have been taken or omitted by
such Partner in such capacity, or by such Other Indemnified Persons acting on
behalf of such Partner or the Venture, if such Partner or Other Indemnified
Persons were acting in good faith and with reasonable care in what it (or he)
reasonable believed to be its (or his) scope of authority set forth in this
Agreement and in the best interests of the Venture.
(b) The Venture shall indemnify, defend and hold harmless each Partner
(including those who have been, but no longer are, Partners) and the Other
Indemnified Persons from and against all loss, cost, liability and expense which
may be imposed upon or reasonably incurred by such Partner or Other Indemnified
Persons, including reasonable attorneys' fees and disbursements and reasonable
settlement payments, in connection with any claim, action, suit or proceeding or
threat thereof, made or instituted in which such Partner or Other Indemnified
Person may be involved or be made a party because and to the extent that such
Partner or Other Indemnified Persons have guaranteed to a third party the
performance of any obligation of the Venture; provided such guarantee was
requested by the Venture in accordance with Section 8.4(q).
(c) Nothing in this Section 19.2 shall be construed to require the
Venture to reimburse, defend, indemnify or hold harmless any Partner, Affiliate,
or other Person with respect to any loss, cost, liability or expense in any
circumstance in which a Partner is required by this Agreement or otherwise to
pay damages to, reimburse, defend, indemnify or hold harmless any other Partner
or the Venture.
Section 19.3 Indemnification by a Partner. Each Partner shall indemnify,
defend and hold harmless the Venture and each other Partner (including those who
have been, but no longer are, Partners) and its Other Indemnified Persons from
and against all loss, cost, liability and expense which may be imposed upon or
reasonably incurred by the Venture or the other Partners or Other Indemnified
Persons, including reasonable attorneys' fees and disbursements and reasonable
settlement payments, in connection with any claim, action, suit or proceeding or
threat thereof, made or instituted in which the Venture, the other Partners or
Other Indemnified Persons may be involved or be made a party by reason of a
breach of such Partner's representations or covenants.
Section 19.4 Procedure for Defense. Promptly after receipt by a person
or entity indemnified under any express provision of this Agreement (the
"Indemnified Party") of notice of the commencement of any action against the
Indemnified Party, such Indemnified Party shall give notice to the person or
persons or entity or entities obligated to indemnify the Indemnified Party
pursuant to the express provisions of this Agreement (the "Indemnifying Party"),
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the Indemnifying Party shall be entitled to participate in the defense of the
action and, to the extent that it may elect in its discretion by written notice
to the Indemnified Party, to assume the control and defense and/or settlement of
such action; provided; however, that (i) both the Indemnifying Party and the
Indemnified Party must consent and agree to any settlement of any such action,
except that if the Indemnifying Party has reached a bona fide settlement
agreement with the plaintiff(s) in any such action and the Indemnified Party
does not con-sent to such settlement agreement, then the dollar amount specified
in the settlement agreement shall act as an absolute maximum limit on the
indemnification obligation of the Indemnifying Party, and (ii) if the defendants
in any such action include both the Indemnifying Party and the Indemnified Party
and if the Indemnified Party shall have reasonably concluded that there are
legal defenses available to it which are in conflict with those available to the
Indemnifying Party, then the Indemnified Party shall have the right to select
separate counsel to assert such legal defenses and otherwise to participate in
the defense of such action on its own behalf, and the fees and disbursements of
such separate counsel shall be included in the amount which the Indemnified
Party is entitled to recover under the terms and subject to the conditions of
this Agreement.
ARTICLE XX
DISSOLUTION
Section 20.1 Negation of Right to Dissolve by Will of Partner.
(a) Except as set forth in Sections 17.1, 17.2 and 20.1(b) below, no
Partner shall have the right to terminate this Agreement or dissolve the Venture
by its express will or by withdrawal without the express written consent of each
of the other Partners. Without limiting any other rights or remedies (in equity
or at law) available to a Partner, upon any dissolution occurring in
contravention of this Agreement caused by the express will or withdrawal of a
Partner, the Unaffiliated General Partner shall be the liquidating Partner (the
"Liquidating Partner").
(b) The Venture shall continue until dissolved and terminated pursuant
to the terms of this Agreement. The Venture shall dissolve (i) at any time upon
the terms and conditions set forth in Section 17.1 and 17.2, (ii) at the end of
the Term of the Venture, or (iii) at any time upon the unanimous agreement of
the General Partners and the approval of the Management Committee. In the event
of dissolution in accordance with Sections 17.1 and 17.2, the Partner identified
in such Sections as the Solvent Partner or Nondefaulting Partner respectively
shall act to liquidate the Venture on behalf of the Partners and will have the
rights and duties of a Liquidating Partner. In the event of dissolution upon
agreement of the General Partners, including an agreement between the General
Partners pursuant to Section 15.5 not to extend the term of the Venture, the
Chief Executive Officer, subject to the direction and approval of the Management
Committee, will have the rights and duties of a Liquidating Partner; provided
that if the Chief Executive Officer is unable or unwilling to so act, the
Venture shall be liquidated by a Person chosen by the Management Committee;
provided further, that if, pursuant to the provisions of this sentence, the
Management Committee is unable to agree upon the terms and conditions of the
winding up and sale of the business and assets of the Venture, such terms and
conditions shall be determined by arbitration in accordance with Section 18.3.
The Partners
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hereby agree to be bound by any determination of the arbitrators in such
arbitration. The Venture shall bear all costs and expenses relating to any
arbitration proceeding conducted pursuant to this Section 20.1.
Section 20.2 Winding Up of the Venture. Upon dissolution of the Venture,
the Venture's business shall be wound up and all its assets distributed in
liquidation, provided, however, that the Partners acknowledge and agree that, in
the event of a dissolution of the Venture, the business of the Venture shall be
operated in the normal course of events during the winding up period (except for
sales of assets or the business, or parts thereof, as approved by the
Liquidating Partner). Upon dissolution, the Venture shall continue to act
through the Management Committee and Chief Executive Officer as provided in
Article 8 hereof, subject to the rights and duties of the Liquidating Partner.
Section 20.3 Sale of the Business by Liquidating Partner. During the
winding up process as set forth above, the Liquidating Partner shall wind up the
Venture in a manner that seeks to maximize the value of the distribution to the
Partners pursuant to Section 20.6, and in that regard the Liquidating Partner
may (i) offer the business and the assets of the Venture for sale, in whole or
in part, as promptly as shall be practicable and with reasonable diligence, and
upon sale to distribute the proceeds of sale as provided in Section 20.6 below,
(ii) decide to liquidate all assets of the Venture, (iii) make certain in-kind
distributions to the Partners as part of the liquidation process, or (iv) do any
combination of the foregoing. Any offer for sale of the business and the assets
of the Venture shall be conducted in a manner customary for the sale of
businesses of the type engaged in by the Venture, on such terms and conditions
as the Liquidating Partner deems appropriate in order to maximize the proceeds
of such sale. During the pendency of such offer, any Partner shall be entitled
to participate in the bidding for the business (or any part thereof).
Section 20.4 Offset for Damages. In the event of dissolution in
violation of the first sentence of Subsection 20.1(a), the Liquidating Partner
shall be entitled to deduct from the amount payable under Section 20.6 to the
Partner that violated such provision the amount of damages incurred by the
Venture and the Liquidating Partner, excluding consequential damages (including
but not limited to lost profits), and such amount shall be paid to the
Liquidating Partner. The provisions of this Section 20.4 shall be effectuated by
a special allocation of any loss incurred by the Venture pursuant to the
preceding sentence to the capital account of the violating Partner. To the
extent the provisions of this paragraph cause or increase a deficit in any
Partner's capital account, such Partner shall be required to restore to the
Venture the amount of such deficit (or such increase in its deficit) within 30
days after dissolution of the Venture.
Section 20.5 Distributions of Cash, Allocations. Upon the dissolution of
the Venture for any reason, during the period of liquidation and until
termination of the Venture, the Partners shall continue to receive cash and/or
other property and to share profits and losses for all tax and other purposes as
provided elsewhere in this Agreement.
Section 20.6 Distribution of Proceeds of Liquidation. Regardless of the
capital and undistributed earnings accounts of the Partners or their shares of
profits and losses or their respective rights to receive distributions, the
proceeds from liquidation shall be applied and distributed in the following
order of priority:
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(a) First to the payment of (i) debts and liability of the Venture,
except loans or advances that may have been made by any of the General Partners
to the Venture pursuant to Section 5.2, and (ii) expenses of liquidation;
(b) Then to the setting up of any reserves which the Liquidating Partner
may deem necessary for any contingent or unforeseen liabilities or obligations
of the Venture or of the Partners out of or in connection with the Venture. Said
reserves may be paid over by the Partners to a bank or trust company acceptable
to the Liquidating Partner as escrow to be held by it for the purpose of
disbursing such reserves in payment of any of the aforementioned liabilities or
obligations, and at the expiration of such period as the Liquidating Partner
shall deem advisable, distributing the balance, if any, thereafter remaining, in
the manner hereinafter provided;
(c) Then to the repayment of any other loans that may have been made by
any of the General Partners to the Venture pursuant to Section 5.2; and
(d) Then any balance remaining shall be distributed to the Partners in
accordance with the respective positive capital account balances and Section
20.4 hereof, provided, however, that if the liquidation of the Venture occurs
pursuant to Section 17.1 or Section 17.2, then the distribution to be made to
the Insolvent Partners or the Defaulting Partners shall be reduced by twenty
percent (20%) and the distribution to be made to the Solvent Partner or
Nondefaulting Partner shall be increased by the amount of that reduction. The
Partners agree that damages resulting from liquidating pursuant to the
occurrence of an Event of Default under Sections 17.1 or 17.2 are impossible to
measure; therefore the Partners further agree that the distribution to be made
under this Section 20.6(d) to the Insolvent Partners or the Defaulting Partners
following liquidation pursuant to Sections 17.1 or 17.2 constitutes the
Partners' best estimate of any such damages and is not a penalty. Except as
provided in Section 20.4 or as otherwise provided by law, no Partner shall be
obliged to restore any negative balance in its capital account.
Section 20.7 Orderly Liquidation. A reasonable time shall be allowed for
the orderly liquidation of the assets of the Venture and the discharge of
liabilities to creditors so as to enable the Partners to minimize the losses
normally attendant upon a liquidation.
Section 20.8 Financial Statements. During the period of winding up, the
Venture's then independent certified public accountants shall prepare and
furnish to each of the Partners, until complete liquidation is accomplished, all
the financial statements provided for in Section 6.2.
ARTICLE XXI
NOTICES
Section 21.1 Notices. No notice or other communication hereunder shall be
sufficient to affect any rights, remedies or obligations of any party hereto
unless such notice or communication is in writing and delivered to the person or
persons whose rights, remedies or obligations are affected, except that any such
written notice or communication which is hand delivered, delivered by prepaid
overnight courier service or mailed by prepaid certified mail, return receipt
requested,
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addressed to the respective and appropriate party as follows (or to
such other address as the parties may indicate in writing in accordance with
this Section):
If to D&E to: D&E Wireless, Inc.
0000 Xxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
If to Omnipoint to: Omnipoint Venture Partner I, LLC
c/o Omnipoint Communications, Legal & Regulatory
00 Xxxx Xxxxx
Xxxxx Xxxxxx, Xxx Xxxxxx 00000
If to Omnipoint LP: Omnipoint Holdings, Inc.
c/o Omnipoint Communications, Legal & Regulatory
00 Xxxx Xxxxx
Xxxxx Xxxxxx, Xxx Xxxxxx 00000
If to the Venture to: D&E/Omnipoint Wireless Joint Venture, L.P.
0000 Xxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
shall be deemed sufficient upon hand delivery, one day after deposit with such
overnight courier service, or three days after such mailing, as the case may be.
Section 21.2 Copies. A copy of any notice, service of process or other
document in the nature thereof relating to the Venture, received by any Partner
from anyone other than another Partner shall be delivered by the receiving
Partner to the other Partners as soon as practicable.
ARTICLE XXII
MISCELLANEOUS
Section 22.1 Governing Law; Ownership. Except as is expressly herein
stipulated to the contrary, the rights and obligations of the Partners and the
administration and termination of the Venture shall be governed by the
provisions of the Revised Uniform Limited Partnership Act of the State of
Delaware. The validity, performance, and all matters relating to the
interpretation and effect of this Agreement shall be governed by the internal
law in effect in the State of Delaware, without regard to principles of law
(such as "conflicts of law") that might make the law of some other jurisdiction
applicable. The interest of each Partner in the Venture shall be personal
property for all purposes. All real and other property owned by the Venture
shall be deemed owned by the Venture as a partnership and no Partner,
individually, shall have any individual ownership rights in and to such
property.
Section 22.2 Additional Documents and Acts. In connection with this
Agreement, as well as all transactions contemplated by this Agreement, each
Partner agrees to execute and deliver such additional documents and instruments,
and to perform such additional acts, as may be necessary or appropriate to
effectuate, carry out and perform all of the terms, provisions and
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conditions of this Agreement, and all such transactions All approvals of
either party hereunder shall be in writing.
Section 22.3 Service; Jurisdiction. Each of the Partners agrees to (a)
their revocable designation of the Secretary of State of the State of Delaware
as its agent upon whom process against it may be served, and (b) personal
jurisdiction in any action brought in any court, federal or state, within the
State of Delaware having subject matter jurisdiction arising under this
Agreement.
Section 22.4 Pronouns. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person or persons may require.
Section 22.5 Entire Agreement. This instrument contains all of the
understandings and agreements of whatsoever kind and nature existing between the
parties hereto with respect to this Agreement and the rights, interests,
understandings, agreements and obligations of the respective parties pertaining
to the Venture.
Section 22.6 References of this Agreement. Numbered or lettered
articles, sections and subsections herein contained refer to articles, sections
and subsections of this Agreement unless otherwise expressly stated.
Section 22.7 Headings. All headings herein are inserted only for
convenience and ease of reference and are not to be considered in the
construction or interpretation of any provision of this Agreement.
Section 22.8 Binding Effect. Except as herein otherwise expressly
stipulated to the contrary, this Agreement shall be binding upon and inure to
the benefit of the parties signatory hereto, and their respective successors and
permitted assigns, and each and every successor to any Partner, whether such
successor acquires such interest by way of purchase, foreclosure, or by any
other method, shall hold such interest subject to all of the terms and
provisions of this Agreement.
Section 22.9 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and each of which shall
constitute one and the same Agreement.
Section 22.10 Amendments. This Agreement may not be amended, altered or
modified except by a written instrument signed by each of the Partners.
{Signatures on next page}
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IN WITNESS WHEREOF, the Partners have executed this Agreement as of the
14th day of November, 1997.
"GENERAL PARTNERS"
D&E WIRELESS, INC.,
a Pennsylvania corporation
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
OMNIPOINT VENTURE PARTNER I, LLC,
a Delaware corporation
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------
"LIMITED PARTNERS"
D&E WIRELESS, INC.,
a Pennsylvania corporation
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
OMNIPOINT HOLDINGS, INC.,
a Delaware corporation
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------
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SCHEDULE A
INITIAL CAPITAL CONTRIBUTIONS
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SCHEDULE B
TAX BASIS OF CONTRIBUTED PROPERTY
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SCHEDULE C
INITIAL BUSINESS PLAN
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