================================================================================
CELLCO PARTNERSHIP
AMENDED AND RESTATED PARTNERSHIP AGREEMENT
AMONG
THE XXXX ATLANTIC GROUP
AND
THE VODAFONE GROUP
================================================================================
TABLE OF CONTENTS
Page
ARTICLE I - GENERAL PROVISIONS.................................................1
Section 1.1 Certain Definitions.................................1
Section 1.2 The Company; Partnership Agreement..................9
Section 1.3 Company Name; Place of Business; Registered Office
and Agent...........................................9
Section 1.4 Term...............................................10
Section 1.5 Business of the Company............................10
Section 1.6 Taxed as Partnership...............................10
Section 1.7 Fiscal Year........................................10
Section 1.8 Partition; Title to Company Property...............10
Section 1.9 Partnership Interests Uncertificated; Nature of
Partners' Interests................................11
Section 1.10 Business Transactions of Partner, Affiliate,
Representative or Alternate with the Company.......11
Section 1.11 Capacity of the Partners...........................11
ARTICLE II - PARTNERS.........................................................11
Section 2.1 Partners as of Effective Date......................11
Section 2.2 Admission of New Partners..........................11
Section 2.3 Meetings of the Partners...........................12
Section 2.4 Record Date........................................12
Section 2.5 Quorum.............................................12
Section 2.6 Voting Rights of Partners..........................13
Section 2.7 Manner of Acting...................................13
Section 2.8 Consent in Lieu of Meeting.........................13
Section 2.9 Relationship of the Partners.......................13
ARTICLE III - MANAGEMENT OF THE COMPANY.......................................14
Section 3.1 Power and Authority of Partners....................14
Section 3.2 Power and Authority of Representatives.............15
Section 3.3 Composition of Board of Representatives............15
Section 3.4 Procedural Matters Regarding the Board of
Representatives....................................16
Section 3.5 Officers...........................................18
Section 3.6 Financial Targets..................................19
ARTICLE IV - APPROVAL OF CERTAIN MATTERS......................................19
Section 4.1 Approval of Certain Matters........................19
ARTICLE V - EXCULPATION AND INDEMNIFICATION...................................21
Section 5.1 Duties of Representatives..........................21
Section 5.2 Exculpation........................................22
Section 5.3 Reliance on Reports and Information by Partner,
Representative, Alternate or Officer............22
Section 5.4 Outside Activities.................................22
Section 5.5 Indemnification by the Company.....................26
i
Section 5.6 Proceedings Initiated by Indemnified
Representatives....................................27
Section 5.7 Advancing Expenses.................................27
Section 5.8 Payment of Indemnification.........................28
Section 5.9 Arbitration........................................28
Section 5.10 Contribution.......................................28
Section 5.11 Mandatory Indemnification of Partners and Officers.28
Section 5.12 Contract Rights; Amendment or Repeal...............29
Section 5.13 Scope of Article...................................29
Section 5.14 Reliance on Provisions.............................29
ARTICLE VI - CAPITAL ACCOUNTS.................................................29
Section 6.1 Capital Contributions..............................29
Section 6.2 Liability for Contribution.........................29
Section 6.3 Capital Accounts...................................30
Section 6.4 No Interest on or Return of Capital................30
Section 6.5 Partnership Interest...............................30
Section 6.6 Allocations of Profits and Losses Generally........30
Section 6.7 Allocations Under Regulations......................30
Section 6.8 Other Allocations..................................31
ARTICLE VII - DISTRIBUTIONS...................................................33
Section 7.1 Distributions......................................33
Section 7.2 Limitations on Distributions.......................35
Section 7.3 Amounts of Tax Paid or Withheld....................36
Section 7.4 Distribution in Kind...............................36
ARTICLE VIII - TRANSFERABILITY................................................36
Section 8.1 Restriction on Transfers...........................36
Section 8.2 Transfers of Partnership Interests to Affiliates...37
Section 8.3 Transfers of Partnership Interests Other than to
Affiliates.........................................37
Section 8.4 Transfers to Restricted Entities...................40
Section 8.5 Invalid Transfers Void.............................40
Section 8.6 Change in Ownership; Spin-Off......................41
Section 8.7 Effect of Transfer.................................41
ARTICLE IX - DISSOLUTION AND TERMINATION......................................42
Section 9.1 Dissolution........................................42
Section 9.2 Events of Bankruptcy of Partner....................42
Section 9.3 Dissociation of Partners...........................43
Section 9.4 Winding Up.........................................43
Section 9.5 Distribution of Assets.............................43
ARTICLE X - BOOKS; REPORTS TO PARTNERS; TAX ELECTIONS.........................45
Section 10.1 Books and Records..................................45
Section 10.2 Reports............................................45
Section 10.3 Tax Matters Partner................................47
Section 10.4 Tax Elections......................................47
Section 10.5 Allocation of Certain Company Debt for Tax
Purposes...........................................47
ii
ARTICLE XI - MISCELLANEOUS....................................................48
Section 11.1 Binding Effect.....................................48
Section 11.2 Entire Agreement...................................48
Section 11.3 Amendments.........................................48
Section 11.4 Governing Law......................................48
Section 11.5 Notices to Partners................................48
Section 11.6 Bank Accounts......................................49
Section 11.7 Headings...........................................49
Section 11.8 Pronouns...........................................49
Section 11.9 Waivers............................................50
Section 11.10 No Third Party Beneficiaries.......................50
Section 11.11 Interpretation.....................................50
Section 11.12 Further Assurances.................................50
Section 11.13 Counterparts.......................................50
Section 11.14 Illegality and Severability........................50
Section 11.15 Confidentiality....................................50
SCHEDULE A-1 AND A-2 - PARTNERS; AGREED VALUES OF COMPANY ASSETS;
RESTATED CAPITAL ACCOUNTS OF THE PARTNERS
SCHEDULE B - LIST OF INITIAL REPRESENTATIVES AND ALTERNATES
SCHEDULE C - INITIAL OFFICERS
SCHEDULE D - INITIAL FINANCIAL TARGETS
SCHEDULE E - LIST OF RESTRICTED ENTITIES
iii
CELLCO PARTNERSHIP
AMENDED AND RESTATED PARTNERSHIP AGREEMENT
THIS AMENDED AND RESTATED PARTNERSHIP AGREEMENT is made and entered into
as of April 3, 2000, (the "Effective Date") by and among the members of the
Xxxx Atlantic Group set forth on Schedule A-1 (the "Initial Xxxx Atlantic
Partners"), and the members of the Vodafone Group set forth on Schedule A-2
(the "Initial Vodafone Partners").
BACKGROUND
A. Metro Mobile Transport, Inc., NYNEX PCS Inc. and Cellco Management
Corporation entered into a Partnership Agreement of Cellco Partnership dated as
of October 4, 1994 (the "1994 Partnership Agreement") pursuant to which they
formed Cellco Partnership as a general partnership (the "Company") governed by
the Delaware Uniform Partnership Law, Title 6 of the Delaware Code section 1501,
et seq., as amended (the "DelUPL") and the 1994 Partnership Agreement.
X. Xxxx Atlantic Cellular Holdings, L.P., NYNEX PCS Inc., New York
Cellular Geographic Service Area, Inc. and Cellco Management Corporation
entered into an Amended and Restated Partnership Agreement of Cellco
Partnership dated as of July 1, 1995 (the "1995 Partnership Agreement")
pursuant to which they amended and restated the 1994 Partnership Agreement in
its entirety, with the result that the Company was a general partnership
governed by the DelUPL and the 1995 Partnership Agreement.
C. The parties hereto, being all of the Partners as of the Effective Date,
desire to amend and restate the 1995 Partnership Agreement in its entirety
pursuant to the provisions of this Partnership Agreement to, among other things
(i) reflect the admission of the Initial Vodafone Partners to the Company in
connection with the transactions contemplated by the Alliance Agreement
(defined below), and (ii) reflect the Partners' election that from and after
the Effective Date the Company be a general partnership governed by the
Delaware Revised Uniform Partnership Act, Title 6 of the Delaware Code,
Sections section 15-101, et seq. (as the same may be amended from time to time,
the "Act") and this Partnership Agreement. Such election is made by the Partners
pursuant to Section 15-1206(c) of the Act.
ARTICLE I
GENERAL PROVISIONS
Section 1.1 Certain Definitions. As used in this Partnership Agreement,
the following terms have the respective meanings assigned to them below (such
terms as well as other terms defined elsewhere in this Partnership Agreement
shall be equally applicable to both the singular and plural forms of the
defined terms):
"AAA" is defined in Section 5.9(a) of this Partnership Agreement.
1
"Act" is defined in the Background Section of this Partnership Agreement.
"Adjusted Net Income" is defined in Section 7.1(c) of this Partnership
Agreement.
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with, such
Person; and for purposes of the foregoing, "control" means (i) the ownership of
more than 50% of the voting securities or other voting interests of another
Person, or (ii) the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting shares, by contract or otherwise.
"Affiliate Transferee" is defined in Section 8.2(b) of this Partnership
Agreement.
"Agreed Value" means, with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows:
(a) The initial Agreed Value of any asset contributed by a Partner to the
Company shall be the gross Fair Market Value of such asset as set forth in
Schedule A to this Partnership Agreement. The Partners agree that, on the
Stage I Closing Date, Schedule A shall be prepared in accordance with the
guidelines described on Exhibit 1 hereto on the basis of the best
information reasonably available to the Partners at such time. The
Partners agree that Schedule A will be appropriately adjusted as soon as
practicable after the Stage II Closing Date, but in no event later than
October 31, 2000, to reflect the final agreement of the Partners as to the
initial Agreed Values of the Company's assets.
(b) The Agreed Values of all Company assets shall be adjusted to equal
their respective gross Fair Market Values (taking IRC Section 7701(g) into
account) as of the following times: (i) the acquisition of an additional
interest in the Company by any new or existing Partner in exchange for
more than a de minimis capital contribution; (ii) the distribution by the
Company to a Partner of more than a de minimis amount of Company property
as consideration for an interest in the Company; (iii) the liquidation of
the Company within the meaning of Treasury Regulation Section
1.704-1(b)(2)(ii)(g); (iv) the dissolution of the Company in accordance
with Article 9 of this Partnership Agreement; and (v) at such other times
as the Tax Matters Partner shall reasonably determine necessary or
advisable in order to comply with Treasury Regulation Sections 1.704-1(b)
and 1.704-2; provided that the adjustments described in clauses (i) and
(ii) of this paragraph shall be made only if the Tax Matters Partner
reasonably determines that such adjustment is necessary or appropriate to
reflect the relative economic interests of the Partners in the Company.
(c) The Agreed Value of any Company asset distributed to any Partner shall
be the gross Fair Market Value (taking IRC Section 7701(g) into account)
of such asset on the date of distribution; and
2
(d) The Agreed Values of Company assets shall be increased (or decreased)
to reflect any adjustments to the adjusted basis of such assets pursuant
to IRC Section 732(d), IRC Section 734(b) or IRC Section 743(b), but only
to the extent that such adjustments are taken into account in determining
capital accounts pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(m); provided, however, that Agreed Values shall not be
adjusted pursuant to this clause (d) to the extent that an adjustment
pursuant to clause (b) of this definition is made in connection with a
transaction that would otherwise result in an adjustment pursuant to this
clause (d).
If the Agreed Value of an asset has been determined or adjusted pursuant to
this definition of Agreed Value, such Agreed Value shall thereafter be adjusted
by the Depreciation with respect to such asset taken into account in computing
Profits and Losses.
"Alliance Agreement" means the U.S. Wireless Alliance Agreement dated as
of September 21, 1999 between Xxxx Atlantic and Vodafone, as amended by the
Amendment to U.S. Wireless Alliance Agreement dated as of April 3, 2000 (the
"Omnibus Amendment").
"Alternate" is defined in Section 3.3(b) of this Partnership Agreement.
"Arbitrator" is defined in Section 6.8(a) of this Partnership Agreement.
"Xxxx Atlantic" means Xxxx Atlantic Corporation, a Delaware corporation.
"Xxxx Atlantic Group" means the subsidiaries of Xxxx Atlantic set forth in
Schedule A-1 and Affiliates of Xxxx Atlantic who become Partners.
"Xxxx Atlantic Designated Partner" means that member of the Xxxx Atlantic
Group designated as such by Xxxx Atlantic from time to time. The initial Xxxx
Atlantic Designated Partner shall be NYNEX PCS Inc.
"Board of Representatives" means the Board of Representatives of the
Company.
"Broadband PCS Frequency Band" means the frequency bands 1850-1910 MHz and
1930-1990 MHz (total of 120 MHz).
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to close.
"Capital Account" means, with respect to any Partner, the Capital Account
maintained for such Partner in accordance with the following provisions:
(i) To each Partner's Capital Account there shall be credited such
Partner's Capital Contributions, such Partner's distributive share of Profits
and any items in the nature of income or gain which are specially allocated
pursuant to Section 6.7 or Sections 6.8(c), (d) and (e) hereof, and the amount
of any Company liabilities assumed by such Partner or which are secured by any
property distributed to such Partner.
3
(ii) To each Partner's Capital Account there shall be debited the amount
of cash and the Agreed Value of any property distributed to such Partner
pursuant to any provision of this Agreement, such Partner's distributive share
of Losses and any items in the nature of expenses or losses which are specially
allocated pursuant to Section 6.7 or Sections 6.8(c), (d) and (e) hereof, and
the amount of any liabilities of such Partner assumed by the Company or which
are secured by any property contributed by such Partner to the Company.
(iii) In the event all or a portion of an interest in the Company is
transferred in accordance with the terms of this Partnership Agreement, the
transferee shall succeed to the Capital Account of the transferor to the extent
it relates to the transferred interest.
The foregoing provisions and the other provisions of this Partnership Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Treasury Regulation Section 1.704-1(b), and shall be interpreted and applied in
a manner consistent with such Regulations.
"Capital Contribution" means the amount in cash and the Agreed Value of
property contributed to the capital of the Company, whenever made. A loan by a
Partner to the Company shall not be considered a Capital Contribution.
"Cellular Frequency Band" means the frequency bands 824-849 MHz and
869-894 MHz (total of 50 MHz).
"Change in Ownership" is defined in Section 8.6(a) of this Partnership
Agreement.
"Communications Act" means the Communications Act of 1934, as amended.
"Company" means "Cellco Partnership," a Delaware general partnership.
"Company Business" is defined in Section 1.5 of this Partnership
Agreement.
"Confidential Information" is defined in Section 11.15(a) of this
Partnership Agreement.
"Control Entity" is defined in Section 8.6(a) of this Partnership
Agreement.
"DelUPL" is defined in the Background Section of this
Agreement.
"Depreciation" means, for any relevant period, an amount equal to the
depreciation, amortization or other cost recovery deduction allowable with
respect to an asset for such year or other relevant period, except that if the
Agreed Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such year, Depreciation shall be an amount which
bears the same ratio to such beginning Agreed Value as the federal income tax
depreciation, amortization or other cost recovery deduction for such year bears
to such beginning adjusted tax basis (except as otherwise required under
Treasury Regulation Section 1.704-3(d)); provided, however, that if the federal
income tax depreciation, amortization or other cost recovery deduction for such
year is zero, Depreciation shall be determined with reference to such beginning
Agreed Value using any reasonable method selected by the Tax Matters Partner.
"Disclosing Party" is defined in Section 11.15(b) of this Partnership
Agreement.
4
"Distributable Amount" is defined in Section 7.1(c) of this Partnership
Agreement.
"Entity" means any corporation, firm, unincorporated organization,
association, partnership, limited liability company, business trust, joint
stock company, joint venture or other organization, entity or business.
"Exit Transferee" is defined in Section 8.3(d) of this Partnership
Agreement.
"Fair Market Value" means, with respect to any asset, as of the date of
determination, the cash price at which a willing seller would sell, and a
willing buyer would buy, each being apprised of all relevant facts and neither
acting under compulsion, such asset in an arms-length negotiated transaction
with an unaffiliated third party without time constraints, as conclusively
determined by a majority of the Board of Representatives in good faith and
subject to their duties set forth in Section 5.1, except with respect to
matters governed by Article VIII or Section 9.5(b) or for purposes of computing
Agreed Values, which shall be determined in accordance with the provisions of
Section 9.5(b).
"FCC" means the Federal Communications Commission, or any successor
governmental authority.
"Fiscal Year" is defined in Section 1.7 of this Partnership Agreement.
"GAAP" means United States generally accepted accounting principles
applied consistent with past practice.
"Included Affiliate" means, as to any Partner, any Wholly-Owned Subsidiary
of such Partner and any Affiliate Transferee to whom such Partner transfers a
Partnership Interest pursuant to Section 8.2(b)(ii).
"Initial Financial Performance Targets" is defined in Section 3.6(a) of
this Partnership Agreement.
"Indebtedness" is defined in Section 7.1(c) of this Partnership Agreement.
"Investment Agreement" means the Investment Agreement dated as of April 3,
2000, among Xxxx Atlantic, Vodafone and the Company.
"IRC" means the Internal Revenue Code of 1986, as amended.
"Liquidating Trustee" is defined in Section 9.4(a) of this Partnership
Agreement.
"Material Transaction" is defined in Section 4.1(e) of this Partnership
Agreement.
"Measurement Date" is defined in Section 7.1(c) of this Partnership
Agreement.
"Measurement Partnership Interest" is defined in Section 5.4(e) of this
Partnership Agreement.
5
"Minimum Xxxx Atlantic Percentage Interest for Non-Competition" is defined
in Section 5.4(e) of this Partnership Agreement.
"Net Indebtedness" is defined in Section 7.1(c) of this Partnership
Agreement.
"1995 Partnership Agreement" is defined in the Background Section of this
Partnership Agreement.
"1994 Partnership Agreement" is defined in the Background Section of this
Partnership Agreement.
"Non-Transferring Partner" is defined in Section 8.3(b) of this
Partnership Agreement.
"Officers" shall be those individuals determined to be Officers by the
Board of Representatives pursuant to Section 3.5 of this Partnership Agreement.
"Original Appraisers" is defined in Section 9.5(b) of this Partnership
Agreement.
"Parent Entity" means Vodafone, Xxxx Atlantic and their respective
successors.
"Partners" means the Initial Xxxx Atlantic Partners, the Initial Vodafone
Partners, and such other Persons who are admitted to the Company in the future
in accordance with the terms of this Partnership Agreement and shall have
agreed to be bound hereby; and "Partner" means any one of the Partners.
"Partnership Agreement" means this Amended and Restated Partnership
Agreement, as it may be amended or restated from time to time.
"Partnership Interest" means, with respect to each Partner, the entire
ownership interests and rights of such Partner (expressed as a percentage) in
the Company. The sum of the Partnership Interests for all Partners shall equal
100 percent.
"Person" means any natural person or Entity.
"Profits" and "Losses" mean, for each fiscal year, an amount equal to the
Company's taxable income or loss for such fiscal year, determined in accordance
with IRC Section 703(a). For the purpose of this definition, all items of
income, gain, loss or deduction required to be stated separately pursuant to
IRC Section 703(a)(1) shall be included in taxable income or loss with the
following adjustments:
(a) Any income of the Company that is exempt from federal income tax and
not otherwise taken into account in computing Profits or Losses pursuant
to this definition shall be added to such taxable income or loss;
(b) Any expenditures of the Company described in IRC Section 705(a)(2)(B)
or treated as IRC Section 705(a)(2)(B) expenditures pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into
6
account in computing Profits or Losses pursuant to this definition shall
be subtracted from such taxable income or loss.
(c) If the Agreed Value of any Company asset is adjusted pursuant to
clause (b) or clause (c) of the definition of Agreed Value above, the
amount of such adjustment shall be taken into account as gain or loss from
the disposition of such asset for purposes of computing Profits or Losses;
(d) Gain or loss resulting from any disposition of Company property with
respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Agreed Value of the
property disposed of, notwithstanding that the adjusted tax basis of such
property differs from its Agreed Value;
(e) In lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such fiscal year or
other relevant period;
(f) To the extent an adjustment to the adjusted tax basis of any Company
asset pursuant to IRC Section 734(b) is required, pursuant to Treasury
Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in
determining Capital Accounts as a result of a distribution other than in
liquidation of a Partner's interest in the Company, the amount of such
adjustment shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases
such basis) from the disposition of such asset and shall be taken into
account for purposes of computing Profits or Losses; and
(g) Notwithstanding any other provision of this definition, any items
which are specially allocated pursuant to Section 6.7 and Sections 6.8(c),
(d) and (e) hereof shall not be taken into account in computing Profits or
Losses.
"Qualified Investment Banking Firm" is defined in Section 9.5(b) of this
Partnership Agreement.
"Receiving Party" is defined in Section 11.15(b) of this Partnership
Agreement.
"Representatives" means the members of the Board of Representatives.
"Resolving Appraiser" is defined in Section 9.5(b) of this Partnership
Agreement.
"Second Arbitrator" is defined in Section 6.8(a) of this Partnership.
"Section 704(c) Assets" is defined in Section 6.8(a) of this Partnership
Agreement.
"Significant Officer" means any of the Chief Financial Officer, Chief
Operating Officer, Chief Marketing Officer or Chief Technology Officer of the
Company.
7
"Six-Month EBITDA" is defined in Section 7.1(c) of this Partnership
Agreement.
"Six-Month Interest Expense" is defined in Section 7.1(c) of this
Partnership Agreement.
"Stage I Closing Date" is defined in the Alliance Agreement.
"Stage II Closing Date" is defined in the Alliance Agreement.
"Subject Entity" is defined in Section 5.4(c) of this Partnership
Agreement.
"Target Debt Level for the Company" is defined in Section 7.1(c) of this
Partnership Agreement.
"Tax Distributions" is defined in Section 7.1(b) of this Partnership
Agreement.
"Tax Matters Partner" is defined in Section 10.3 of this Partnership
Agreement.
"Tax Rate" means 40%.
"Third Arbitrator" is defined in Section 6.8(a) of this Partnership
Agreement.
"Transaction" is defined in Section 5.4(c) of this Partnership Agreement.
"Transfer Notice" is defined in Section 8.3(b) of this Partnership
Agreement.
"Transferring Partner" is defined in Section 8.1 of this Partnership
Agreement.
"Treasury Regulations" include temporary and final regulations promulgated
under the IRC in effect as of the date of this Partnership Agreement and the
corresponding sections of any regulations subsequently issued that amend or
supersede such regulations.
"Unaffiliated Entity" is defined in Section 8.6(a) of this Partnership
Agreement.
"United States of America" means the fifty states and the District of
Columbia comprising the United States of America, excluding all territories and
possessions of the United States of America.
"Updated Financial Performance Targets" is defined in Section 3.6(b) of
this Partnership Agreement.
"Vodafone" means Vodafone AirTouch plc, an English corporation.
"Vodafone Designated Officer" is defined in Section 3.5(b) of this
Partnership Agreement.
8
"Vodafone Group" means the subsidiaries of Vodafone set forth in Schedule
A-2 and Affiliates of Vodafone who become Partners.
"Vodafone Designated Partner" means that member of the Vodafone Group
designated as such by Vodafone from time to time. The initial Vodafone
Designated Partner shall be JV Partnerco, LLC.
"WCS Frequency Band" means the frequency bands 2305-2320 MHz and 2345-2360
MHz (total of 30 MHz).
"Wholly-Owned Subsidiary" means any Entity that is directly or indirectly
wholly-owned by Vodafone or Xxxx Atlantic, as the context requires.
"Wholly-Owned Subsidiary Transferee" is defined in Section 8.2(a) of this
Partnership Agreement.
Section 1.2 The Company; Partnership Agreement. The Partners hereby elect
that from and after the Effective Date the Company be a general partnership
governed by the Act and this Partnership Agreement. Such election is made by
the Partners pursuant to Section 15-1206(c) of the Act. The Partnership
Interests of the Partners in the Company, and the rights and obligations of the
Partners with respect thereto and the Company, are subject to all of the
provisions of this Partnership Agreement and, to the extent not inconsistent
with this Partnership Agreement, the provisions of the Act. The Company is a
general partnership managed by its Board of Representatives. Promptly following
the execution hereof, and from time to time thereafter, the Partners shall, if
requested by the Board of Representatives, execute and file or cause to be
executed and filed (i) all certificates and statements contemplated by the Act
that are approved by the Board of Representatives and are consistent with the
provisions of this Partnership Agreement, and (ii) all other necessary
certificates and documents, and shall make all other such filings and
recordings, and shall do all other acts as may be necessary or appropriate from
time to time to give effect to this Partnership Agreement.
Section 1.3 Company Name; Place of Business; Registered Office and Agent.
(a) The Company shall do business under the name "Cellco Partnership" or
such other name as the Board of Representatives may determine from time to
time. Such name shall be the exclusive property of the Company, and no Partner
shall have any right to use, and each Partner agrees not to use, such name
other than on behalf of the Company except as may be permitted from time to
time by the Board of Representatives. The Board of Representatives shall
promptly notify the Partners of any change of name of the Company. The Partners
from time to time shall execute and file or cause to be executed and filed all
necessary assumed or fictitious business name statements as may be required by
law for the operation of the Company in all jurisdictions where the Company
does business.
(b) The Company's principal place of business will be at such location as
the Board of Representatives may from time to time designate. The Company may
also have offices at such other places within or outside of the State of
Delaware as the Board of Representatives may from time to time determine. Each
Partner shall execute, acknowledge, swear to, and deliver all certificates and
other instruments conforming with this Partnership Agreement that are necessary
or appropriate from time to time to qualify, continue and terminate the Company
as a foreign partnership in all such jurisdictions in which the Company may
conduct business.
(c) If the Board of Representatives determines to file a statement of
partnership existence under Section 15-303 of the Act, the Board of
Representatives shall, in connection therewith, determine a registered office
for the Company in the State of Delaware and a registered agent for service of
9
process on the Company in the State of Delaware, as required under Sections
15-303 and 15-111 of the Act. The registered office and the registered agent of
the Company may be changed from time to time by action of the Board of
Representatives by filing notice of such change with the Secretary of State of
the State of Delaware. The Board of Representatives will promptly notify the
Partners of the determination of a registered office and registered agent, and
any change of the registered office or registered agent.
Section 1.4 Term. The term of the Company as a partnership commenced as of
October 4, 1994, the effective date of the 1994 Partnership Agreement, and
shall have perpetual existence until the Company is dissolved pursuant to the
provisions of this Partnership Agreement or applicable law.
Section 1.5 Business of the Company. The purpose of the Company is to
acquire, own, operate and maintain, with the goal of maximizing its long-term
value, a wireless communications network which provides a full range of
wireless voice and data services throughout the United States of America
(including, without limitation, wireless Internet access and long distance
resale), to the extent that such services are commercially economic or are
competitively necessary for the Company to provide (the "Company Business"), to
engage in any business that is necessary, appropriate or incidental to the
foregoing, and to engage in any additional activity for which general
partnerships may be formed under the Act and which is approved in accordance
with the provisions of Section 4.1 of this Partnership Agreement. The Company
shall possess and may exercise all the powers and privileges now or hereafter
granted by the Act or by any other law or by this Partnership Agreement,
together with any powers incidental thereto, so far as such powers and
privileges are necessary or convenient to the conduct, protection, benefit,
promotion or attainment of the business, purposes or activities of the Company.
Section 1.6 Taxed as Partnership. The Partners intend that the Company
shall be taxed as a partnership for federal, state and local tax purposes.
Section 1.7 Fiscal Year. Except as otherwise provided in IRC Section 706,
the "Fiscal Year" of the Company shall be the period commencing on January 1 in
any year and ending on December 31 in such year.
Section 1.8 Partition; Title to Company Property.
(a) No Partner, nor any successor-in-interest to any Partner, shall have
the right to have the property of the Company partitioned, or to file a
complaint or institute any proceeding at law or in equity to have the property
of the Company partitioned, and each Partner, on behalf of itself and its
successors, representatives and assigns, hereby irrevocably waives any such
right. It is the intention of the Partners that, during the term of this
Partnership Agreement, the rights and obligations of the Partners and their
successors-in-interest, as among themselves, shall be governed by the
provisions of this Partnership Agreement, and that the rights and obligations
of any Partner or successor-in-interest to any Partner shall be subject to the
limitations, restrictions and other provisions of this Partnership Agreement.
(b) All property owned by the Company, whether real or personal, tangible
or intangible, shall be deemed to be owned by the Company, and no Partner
individually shall have any interest in such property. Title to all such
property may be held in the name of the Company or a designee, which designee
may be a Partner or an Affiliate of a Partner.
Section 1.9 Partnership Interests Uncertificated; Nature of Partners'
Interests. The Partnership Interests of the Partners in the Company shall not
be certificated. The interests of the Partners in the Company will be personal
property for all purposes. All property owned by the Company, whether real or
10
personal, tangible or intangible, will be owned by the Company as an entity,
and no Partner, individually, will have any ownership of such property.
Section 1.10 Business Transactions of Partner, Affiliate, Representative
or Alternate with the Company. Subject to Sections 4.1(e) and 5.4, a Partner,
Affiliate of a Partner, Representative or Alternate may lend money to, borrow
money from, act as a surety, guarantor or endorser for, guarantee or assume one
or more obligations of, provide collateral for, provide services to, receive
services from, and transact any and all other business with the Company, and,
subject to other applicable law, with respect to any such matter, a Partner,
Affiliate of a Partner, Representative or Alternate shall have the same rights
and obligations as a Person who is not a Partner, Affiliate of a Partner,
Representative or Alternate; provided, however, that so long as the Vodafone
Designated Partner is entitled to the approval rights contained in Section 4.1,
any such transaction, agreement or arrangement shall be on terms not less
favorable to the Company than the Company would reasonably expect to obtain in
a similar transaction, agreement or arrangement with an unrelated party.
Without limiting the foregoing, to the extent permitted under Section 5.4, a
Partner or any Affiliate thereof may purchase from the Company services which
are to be resold or bundled by such Partner or Affiliate so long as any such
transaction is on terms not less favorable to the Company than the Company
would reasonably expect to obtain in a similar transaction with an unrelated
party and, notwithstanding the size of any such transaction or any provisions
of this Partnership Agreement to the contrary, such transaction shall not be
deemed to be a Material Transaction and therefore shall not be subject to
Section 4.1(e) below. So long as the Vodafone Designated Partner is entitled to
the approval rights contained in Section 4.1, at the next regularly scheduled
meeting of the Board of Representatives following the consummation or entering
into thereof, the Officers shall provide the Representatives with a summary of
the terms of any transaction, agreement or arrangement (or series of related
transactions, agreements or arrangements) between the Company and a Partner or
any Affiliate thereof, or any Representative or Alternate (other than one
designated by the Vodafone Designated Partner) which has a value of greater
than $5,000,000.
Section 1.11 Capacity of the Partners. No Partner shall have any authority
to act for, or to assume any obligation or responsibility on behalf of, any
other Partner or the Company, except as expressly provided in this Agreement or
as authorized by the Board of Representatives.
ARTICLE II
PARTNERS
Section 2.1 Partners as of Effective Date. The Initial Vodafone Partners
are hereby admitted to the Company as a Partner of the Company effective as of
the Effective Date. As of the Effective Date, the Partners are set forth on
Schedule A and each such Partner shall have the Partnership Interests set forth
opposite its name on Schedule A. Notwithstanding the fact that the Initial
Vodafone Partners are admitted to the Company, an existing partnership, as of
the Effective Date, the Initial Vodafone Partners are and shall be personally
liable for any obligation of the Company incurred prior to the Effective Date
subject to the rights and obligations of Vodafone under Article IX of the
Alliance Agreement.
Section 2.2 Admission of New Partners. From and after the Effective Date,
a Person acquiring an interest in the Company is admitted as a Partner upon the
satisfaction of all requirements in this Partnership Agreement.
11
Section 2.3 Meetings of the Partners.
(a) Meetings of the Partners, for any purpose or purposes, unless
otherwise prescribed by statute, may be called by any Partner by giving written
notice thereof to each Partner of record entitled to vote at the meeting at
least ten (10) Business Days prior to the day named for the meeting. Each
notice of meeting shall specify the place, day and hour of the meeting. Neither
the business to be transacted at, nor the purpose of, a meeting need be
specified in the waiver of notice of the meeting. If no place is designated,
the place of meeting shall be the principal office of the Company.
(b) Whenever any written notice of a meeting of the Partners is required
to be given under this Partnership Agreement, a waiver thereof in writing,
signed by the Partner entitled to the notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of the notice.
(d) Attendance by a Partner at a meeting shall constitute a waiver of any
required notice of such meeting by such Partner, except when such Partner
attends such meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the meeting is not
properly called or convened.
(e) Partners may, to the extent permitted by applicable law, rule or
regulation, participate in a meeting of the Partners by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation shall
constitute presence in person at such meeting, except where a Partner
participates in the meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business on the ground that
the meeting is not properly called or convened.
Section 2.4 Record Date. For the purpose of determining Partners entitled
to notice of, or to vote at, any meeting of Partners or any adjournment of the
meeting, or Partners entitled to receive payment of any distribution, or to
make a determination of Partners for any other purpose, the date on which
notice of the meeting is mailed or the date on which the resolution declaring
the distribution or relating to such other purpose is adopted, as the case may
be, shall be the record date for the determination of Partners. Only Partners
of record on the date fixed shall be so entitled, notwithstanding any permitted
transfer of a Partner's Partnership Interest after any record date fixed as
provided in this Section. When a determination of Partners entitled to vote at
any meeting of Partners has been made as provided in this Section, the
determination shall apply to any adjournment of the meeting.
Section 2.5 Quorum. A meeting of Partners of the Company duly called shall
not be organized for the transaction of business unless a quorum is present.
The presence of each Partner, represented in person or by proxy, shall
constitute a quorum at any meeting of Partners; provided, however, that if
notice of a meeting is provided to the Partners, and such notice describes the
business to be considered, the actions to be taken and the matters to be voted
on at the meeting in reasonable detail, and insufficient Partners attend the
meeting to constitute a quorum, the meeting may be adjourned by those Partners
attending such meeting for a period not to exceed twenty (20) days. Such
meeting may be reconvened by providing notice of the reconvened meeting to the
Partners no less than ten (10) days prior to the date of the meeting specifying
that the business to be considered, the actions to be taken and the matters to
be voted upon are those set forth in the notice of the original adjourned
meeting. If, at the reconvened meeting, a quorum of Partners is not present, a
majority of the Partners present and voting will constitute a quorum for
purposes of the reconvened meeting; provided, however that such Partners may
only consider the business, take the actions or vote upon the matters set forth
12
in the notice of the original meeting. At an adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally noticed. The Partners
present at a duly organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal during the meeting of Partners
whose absence would cause less than a quorum.
Notwithstanding the foregoing or any other provision in this Partnership
Agreement, no Partner shall have any power or authority to do or perform any
act with respect to any of the matters set forth in Section 4.1 of this
Partnership Agreement unless such matter has been approved in accordance with
the provisions of Section 4.1.
Section 2.6 Voting Rights of Partners. Except as otherwise provided in
this Partnership Agreement, including, without limitation, Sections 3.2 and 4.1
hereof, every Partner of the Company shall be entitled to a percentage of the
total votes equal to that Partner's then current Partnership Interest.
Section 2.7 Manner of Acting. Except as otherwise provided in the Act or
this Partnership Agreement, including, without limitation, Sections 3.2 and 4.1
hereof, whenever any Company action is to be taken by vote of the Partners of
the Company, it shall be authorized upon receiving the affirmative vote of
Partners entitled to vote who own a majority of the Partnership Interests then
held by Partners.
Section 2.8 Consent in Lieu of Meeting. Any action required or permitted
to be taken at a meeting of the Partners may be taken without a meeting if,
prior or subsequent to the action, written consents describing the action to be
taken are signed by the minimum number of Partners that would be necessary to
authorize the action at a meeting at which all Partners entitled to vote
thereon were present and voting; provided that, prior to any such written
consent becoming effective, such written consent has been provided to all
Partners entitled to vote, and the Partners shall have ten (10) days to review
such consent prior to such written consent becoming effective (unless otherwise
agreed to by all Partners, respectively). The consents shall be filed with the
Officers. Prompt notice of the taking of Company action without a meeting by
less than unanimous written consent shall be given to those Partners who have
not consented in writing.
Section 2.9 Relationship of the Partners.
(a) The relationship of the Partners shall be limited solely to the
purpose and scope of the Company as expressed in this Partnership Agreement.
This Partnership Agreement shall not constitute the appointment of any party to
this Partnership Agreement as the legal representative or agent of any other
party to this Partnership Agreement. No party to this Partnership Agreement
shall have any right or authority to assume, create or incur any liability or
any obligation of any kind, express or implied, against or in the name of or on
behalf of any other party to this Partnership Agreement. Except as may be
specifically provided in this Partnership Agreement, the Alliance Agreement or
the Investment Agreement, neither the Company nor any party to this Partnership
Agreement shall assume or be responsible for any liability or obligation of any
nature of, or any liability or obligation that arises from any act or omission
to act of, any other party to this Partnership Agreement however or whenever
arising.
(b) Except as expressly set forth in Section 5.4 of this Partnership
Agreement, nothing contained in this Partnership Agreement shall be deemed to
restrict or limit in any way the carrying on (directly or indirectly) of
separate businesses or activities by any Partner now or in the future, even if
13
such businesses or activities are competitive with the Company, and neither the
Partnership nor the other Partners shall, by virtue of this Partnership
Agreement, have any interest or rights in or to such other businesses or
activities or any profits, liabilities or obligations with respect thereto. No
Partner or any of its Affiliates or any of their respective officers,
directors, employees or former employees shall have any obligation, or be
liable, to the Company or any other Partner pursuant to this Partnership
Agreement for or arising out of the conduct described in this Section, for
exercising, performing or observing or failing to exercise, perform or observe,
any of such Partner's rights or obligations under this Partnership Agreement,
the Alliance Agreement or the Investment Agreement, for exercising or failing
to exercise its rights as a Partner or, solely by reason of such conduct, for
breach of any fiduciary or other duty to the Company or any Partner, except in
each case for a breach of Sections 3.1, 5.1 or 5.4 or any other express
provisions of this Partnership Agreement. The Partners acknowledge that the
right of each Partner to designate Representatives or Alternates does not mean
that the actions of such Representatives or Alternates, as such, constitute the
exercise, performance or observation, or failure to exercise, perform or
observe, such Partner's designation right. In the event that a Partner, any of
its Affiliates or any of their respective officers, directors, employees or
former employees acquires knowledge of a potential transaction, agreement,
arrangement or other matter which may be a corporate opportunity for both the
Company and the Partner or such Affiliate, or any of their respective officers,
directors, employees or former employees (and, as to such Partner or Affiliate,
is an opportunity that such Partner or Affiliate would be permitted to pursue
and acquire pursuant to Section 5.4 of this Partnership Agreement), (i) neither
the Partner nor such Affiliate, officers, directors, employees or former
employees shall have any duty to communicate or offer such corporate
opportunity to the Company, (ii) neither the Partner nor such Affiliate,
officers, directors, employees or former employees shall be liable to the
Company for breach of any fiduciary or other duty, as a Partner or otherwise,
by reason of the fact that the Partner or such Affiliate, officers, directors,
employees or former employees pursue or acquire such corporate opportunity or
fail to communicate such corporate opportunity or information regarding such
corporate opportunity to the Company, and (iii) neither the Partner nor such
Affiliate, officers, directors, employees or former employees shall be
obligated to account to the Company or any other Partner for any property,
profit or benefit derived from such opportunity. The foregoing exculpation,
however, shall not be deemed to apply to any action by a Representative as such
in determining whether the Company independently should pursue or acquire such
business opportunity.
ARTICLE III
MANAGEMENT OF THE COMPANY
Section 3.1 Power and Authority of Partners. No Partner shall take any
action in the name of or on behalf of the Company, including without limitation
assuming any obligation or responsibility on behalf of the Company, unless such
action, and the taking thereof by such Partner, shall have been expressly
authorized by the Board of Representatives or shall be expressly and
specifically authorized by this Agreement. The standard of conduct applicable
to the Tax Matters Partner when acting in such capacity shall be the same
standard as is applicable to Representatives pursuant to Section 5.1, and in
applying such standard to the Tax Matters Partner, the actions of the Tax
Matters Partner, as such, shall not be deemed to be the implementation of any
right of such Partner provided under the express provisions of this Partnership
Agreement or any other Transaction Document (as defined in the Alliance
Agreement). Except as set forth in the immediately preceding sentence, the
Partners, in their capacity as such, shall have no authority or right to act on
behalf of or bind the Company in connection with any matter.
14
Section 3.2 Power and Authority of Representatives.
(a) The business and affairs of the Company shall be managed by or under
the direction of the Board of Representatives, except as may otherwise be
provided in this Agreement. The Board of Representatives shall have the power
on behalf and in the name of the Company to carry out any and all objects and
purposes of the Company contemplated by this Partnership Agreement and to
perform all acts which they may deem necessary, advisable or appropriate in
connection therewith.
(b) The Partners agree that all determinations, decisions and actions made
or taken by the Board of Representatives (or their designee(s)) shall be
conclusive and absolutely binding upon the Company, the Partners (but only in
their capacity as such) and their respective successors, assigns and personal
representatives; provided, however, that the foregoing shall not affect the
rights of the Company or any Partner with respect to any matter involving a
breach by a Representative of Section 5.1 of this Partnership Agreement.
(c) Subject to the express provisions of this Partnership Agreement,
including, without limitation, Section 5.1, the Board of Representatives shall
function in a manner comparable to that of a board of directors of a publicly
traded, Delaware corporation.
Section 3.3 Composition of Board of Representatives.
(a) General. The Board of Representatives shall consist of seven (7)
Representatives. Except as provided in the next sentence, a majority of the
Partnership Interests then held by Partners shall elect Representatives.
Notwithstanding the foregoing, however, (i) for so long as Vodafone holds,
directly or through one or more Included Affiliates, a Partnership Interest of
at least 20%, the Vodafone Designated Partner shall have the right to designate
three (3) Representatives (unless the Xxxx Atlantic Group shall have ceased to
hold the Partnership Interest described in clause (iii) below in which case the
first sentence of this paragraph shall apply), (ii) for so long as the Xxxx
Atlantic Group holds, directly or through one or more Included Affiliates, a
Partnership Interest of at least 20%, the Xxxx Atlantic Designated Partner
shall have the right to designate four (4) Representatives (subject to the
following clause (iii)), and (iii) if Vodafone ceases to hold, directly or
through one or more Included Affiliates, a Partnership Interest of at least
20%, for so long as the Xxxx Atlantic Group holds, directly or through one or
more Included Affiliates, a Partnership Interest of at least 20%, the Xxxx
Atlantic Designated Partner shall have the right to designate seven (7)
Representatives. Other than as set forth in Section 4.1, whenever any Company
action is to be taken by a vote of the Board of Representatives, it shall be
authorized upon receiving the affirmative vote of a majority of the
Representatives (or Alternates) present and voting at a duly constituted
meeting of the Board of Representatives at which a quorum is present. Each
Representative (or his/her Alternate) present at a duly constituted meeting of
the Board of Representatives at which a quorum is present shall be entitled to
cast one vote.
(b) Representatives and Alternates. Each Partner shall also have the right
to designate one (1) alternate to each Representative designated by such
Partner pursuant to the third sentence of Section 3.3(a) (each, an
"Alternate"). In the event a Representative is unable to attend a meeting of
the Board of Representatives or otherwise participate in any action to be taken
by the Board of Representatives, or with respect to any meeting or matter acted
upon at a meeting or any other action to be taken by the Board of
Representatives, if directed by the Partner who designated the Representative,
the Alternate named by the applicable Partner for such Representative may, and
if directed by such Partner shall, act and vote in place of such
Representative.
15
(c) Initial Representatives and Alternates. The initial Representatives
and Alternates of each Partner are set forth on Schedule B.
(d) Removal; Resignation; Vacancies. Except as otherwise provided in this
Partnership Agreement, a designated Representative on the Board of
Representatives shall hold office at the pleasure of the Partner which
designated such Representative pursuant to the third sentence of Section
3.3(a). Any such Partner shall have the right, in its sole discretion, at any
time, exercisable by written notice to the other Partners and to the Board of
Representatives, to remove (with or without cause) its Representative or an
Alternate on the Board of Representatives and to designate a new Representative
or Alternate. Subject to applicable law, rule or regulation, no Representative
or Alternate may be removed except by the Partner designating the same. Any
Representative on the Board of Representatives may resign at any time by giving
written notice to the Partner which designated such Representative and to the
Board of Representatives. Such resignation shall take effect on the date shown
on or specified in such notice or, if such notice is not dated and the date of
resignation is not specified in such notice, on the date of the receipt of such
notice by the Board of Representatives. No acceptance of such resignation shall
be necessary to make it effective. Any vacancy on any Board of Representatives
shall be filled only by the Partner whose Representative has caused the vacancy
by giving written notice to the Board of Representatives and to each other
Partner, and each of the Partners agrees, as necessary, to cause its designated
Representatives on the Board of Representatives to vote, for any person so
nominated by the Partner whose Representative has caused such vacancy.
(e) Compensation. No person shall be entitled to any fee, remuneration or
compensation (except for reimbursement of properly authorized expenses in
accordance with such procedures as may be established by the Board of
Representatives) in connection with their service as a Representative or
Alternate.
(f) Committees. The Board of Representatives shall not be entitled to
appoint any committees thereof which do not include at least one of the
Representatives designated by the Vodafone Designated Partner without the
affirmative vote of at least one of the Representatives designated by the
Vodafone Designated Partner. In appointing any such committee, the Board of
Representatives shall delegate only specific (and not general) authority to
such committee.
Section 3.4 Procedural Matters Regarding the Board of Representatives.
(a) Meeting Agendas. The Chairman of the Board of Representatives shall be
designated from time to time by the affirmative vote of a majority of the
Representatives. Such Chairman shall prepare or direct the preparation of the
agenda for, and preside over, meetings of the Board of Representatives. The
Chairman shall deliver such agenda to each Representative at least five (5)
Business Days prior to the giving of notice of a regular or special meeting,
and any Representative may add items to such agenda.
(b) Timing; Notice. The Board of Representatives shall meet at least once
every three (3) months at such places and at such times as the Chairman of the
Board of Representatives may from time to time determine. Special meetings of
the Board of Representatives may be called by any Representative and shall be
held at such place as may be determined by the Chairman of the Board of
Representatives. Written notice of the time and place of each regular and
special meeting of the Board of Representatives shall be given by or at the
direction of the Chairman of the Board of Representatives to each
Representative, in the case of a regular or a special meeting at least five (5)
Business Days before such meeting. The required notice to any Representative
16
may be waived by such Representative in writing. Attendance by a Representative
at a meeting shall constitute a waiver of any required notice of such meeting
by such Representative, except when such Representative attends such meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not properly called or
convened.
(c) Quorum. The presence of Representatives (or Alternates) representing
greater than 50% of the Representatives on the Board of Representatives
(including at least one Representative (or Alternate) designated by the
Vodafone Designated Partner, so long as the Vodafone Designated Partner has the
right to designate Representatives under this Partnership Agreement) shall be
required to constitute a quorum for the transaction of any business by the
Board of Representatives. The acts of a majority of the Representatives (or
Alternates) present and voting at a meeting at which a quorum is present shall
be the acts of the Representatives (or Alternates); provided, however, that if
notice of a meeting is provided to the Representatives and Alternates, and such
notice describes the business to be considered, the actions to be taken and the
matters to be voted on at the meeting in reasonable detail, and insufficient
Representatives or Alternates attend the meeting to constitute a quorum, the
meeting may be adjourned by those Representatives or Alternates attending such
meeting for a period not to exceed twenty (20) days. Such meeting may be
reconvened by providing notice of the reconvened meeting to the Representatives
and Alternates no less than two (2) Business Days prior to the date of the
meeting specifying that the business to be considered, the actions to be taken
and the matters to be voted upon are those set forth in the notice of the
original adjourned meeting. If, at the reconvened meeting, a quorum of
Representatives or Alternates is not present, a majority of the Representatives
and Alternates present and voting will constitute a quorum for purposes of the
reconvened meeting; provided, however, that such Representatives and Alternates
may only consider the business, take the actions or vote upon the matters set
forth in the notice of the original meeting.
Notwithstanding the foregoing, or any other provision in this Partnership
Agreement, no Representative, Alternate or Officer shall have any power or
authority to do or perform any act with respect to any of the matters set forth
in Section 4.1 of this Partnership Agreement unless such matter has been
approved in accordance with the provisions of Section 4.1.
(d) Attendance by Telephone, Etc. Representatives on the Board of
Representatives may, to the extent permitted by applicable law, rules or
regulations, participate in a meeting of the Board of Representatives by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting, except where
a Representative participates in the meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
on the ground that the meeting is not properly called or convened.
(e) Action by Written Consent. To the extent permitted by applicable law,
rules or regulations, any action required or permitted to be taken at a meeting
of the Board of Representatives may be taken without a meeting if a written
consent, setting forth the action so taken, is signed by the number of
Representatives on the Board of Representatives which is necessary to approve
the action at a meeting duly called and held by the Board of Representatives
and is filed with the minutes of the proceedings of the Board of
Representatives. Each request for written consent of the Representatives shall
be given to each of the Representatives as far in advance of its intended
circulation as is reasonably practicable under the circumstances, but, for so
long as the Vodafone Designated Partner has the right to designate
Representatives under the Partnership Agreement, in no event less than 48 hours
prior thereto unless such requirement is waived (which waiver may be oral) by a
Representative designated by the Vodafone Designated Partner. In the absence of
such waiver, the Chairman during such period shall afford any Representative
17
designated by the Vodafone Designated Partner a reasonable opportunity to
present his views regarding the action to be taken. Any request for written
consent shall describe in reasonable detail the subject matter to be addressed.
In choosing to act by written consent rather than at a meeting, the
Representatives shall give due consideration to the statement of principle
contained in Section 3.2(a). Any consent shall have the same force and effect
as a vote of the Representatives on the Board of Representatives at a meeting
of the Board of Representatives duly called and held at which a quorum was
present. Prompt notice of the taking of Company action without a meeting by
less than unanimous written consent shall be given to those Representatives who
have not consented in writing.
Section 3.5 Officers.
(a) There shall be such number of Officers as may be determined from time
to time by the Board of Representatives so long as there are at least two (2)
Officers. Each Officer of the Company shall be a natural person of full age who
need not be a resident of the State of Delaware. The Board of Representatives
shall have the right to confer upon any Officer such titles as the Board deems
appropriate, including, but not limited to, Chief Executive Officer, Chief
Financial Officer, Chief Operating Officer, President, Vice President,
Secretary, Treasurer, Chief Marketing Officer, and Chief Technology Officer,
and subject to the limitations set forth in Section 4.1 of this Partnership
Agreement, delegate specifically defined duties to the Officers. Any delegation
of authority by the Board of Representatives to an Officer, to take any action,
including to bind the Company, must be approved in the same manner as would be
required for the Board of Representatives to directly approve such action.
Notwithstanding the foregoing or any other provision of this Partnership
Agreement or of the Act to the contrary, no Officer of the Company shall have
the power or authority to do or perform any act with respect to any of the
matters set forth in Section 4.1 of this Partnership Agreement unless such
matter has been approved in accordance with the provisions of Section 4.1.
(b) The Board of Representatives shall have the right, in its sole and
absolute discretion, to appoint, remove (with or without cause) and replace the
Officers of the Company and to define the duties and responsibilities of the
Officers; provided, however, that for so long as the Vodafone Group holds,
directly or through one or more Wholly-Owned Subsidiaries, a Partnership
Interest of at least 20%, the Representatives designated by the Vodafone
Designated Partner shall have the right to appoint one Significant Officer,
with the Board of Representatives determining which of the Significant Officer
positions such appointee by the Vodafone Designated Partner from time to time
shall hold (the "Vodafone Designated Officer"). The Board of Representatives
shall promptly give each Partner notice of the designation of any new Officer
except the Vodafone Designated Officer. The Vodafone Designated Partner shall
promptly give the Chairman of the Board of Representatives notice of the
designation of any new Vodafone Designated Officer. Each Officer shall hold
office until a successor has been designated by the Board of Representatives
(or by the Vodafone Designated Partner with respect to the Vodafone Designated
Officer) and qualified or until his or her earlier death, resignation or
removal. The initial Officers are set forth on Schedule C attached hereto.
(c) An Officer of the Company may resign at any time by giving written
notice to the Board of Representatives. The resignation of a Officer shall be
effective upon receipt of such notice or at such later time as shall be
specified in the notice. Unless otherwise specified in the notice, the
acceptance of the resignation shall not be necessary to make such resignation
effective.
(d) The salaries of the Officers shall be fixed from time to time by the
Board of Representatives or by such Officer as may be designated by resolution
of the Board of Representatives. The salaries or other compensation of any
other employees and other agents shall be fixed from time to time by the Board
18
of Representatives or by such Officer as may be designated by resolution of the
Board of Representatives.
Section 3.6 Financial Targets.
(a) In accordance with Section 5.9 of the Alliance Agreement, not later
than the 90th day after the Effective Date, Xxxx Atlantic and Vodafone will
agree upon financial performance targets for the first two (2) Fiscal Years of
the Company following the Effective Date which shall then be attached to this
Partnership Agreement as Schedule D (the "Initial Financial Performance
Targets").
(b) At least twenty (20) days prior the end of the first and each
subsequent Fiscal Year, the Officers shall present to the Board of
Representatives and the Board of Representatives shall review, consider and
adopt financial performance targets for the following two (2) Fiscal Years of
the Company (the "Updated Financial Performance Targets").
(c) The Board of Representatives shall meet with appropriate Officers at
least once every three (3) months to discuss the Company's actual financial
performance compared with the Initial Financial Performance Targets or the
Updated Financial Performance Targets, as applicable, as the same may have been
adjusted by the Board of Representatives, and whether any adjustment should be
made to the Initial Financial Performance Targets or the Updated Financial
Performance Targets, as applicable, including, without limitation, any
adjustment to reflect the performance of any other national provider of
wireless voice and data services.
(d) The Company shall cooperate, at Vodafone's expense, in making such
adjustments as are necessary to translate the Company's Initial Financial
Performance Targets and the Updated Financial Performance Targets from a GAAP
to a U.K. GAAP basis and Vodafone accounting basis.
(e) The provisions of this Section 3.6 shall terminate on the date that
Vodafone ceases to hold, directly or through one or more Wholly-Owned
Subsidiaries, a Partnership Interest of at least 20%.
ARTICLE IV
APPROVAL OF CERTAIN MATTERS
Section 4.1 Approval of Certain Matters. Notwithstanding any provision of
this Partnership Agreement or the Act to the contrary, for so long as Vodafone
holds, directly or through one or more Included Affiliates, a Partnership
Interest of at least 20%, the following matters require the approval by at
least two (2) Representatives appointed by the Xxxx Atlantic Designated Partner
and two (2) Representatives appointed by the Vodafone Designated Partner, at a
meeting of the Board of Representatives or by written consent, and neither the
Board of Representatives nor the Officers shall have power or authority to do
or perform any act with respect to any of the following matters without such
approvals or consents given in accordance with the provisions of this
Partnership Agreement:
19
(a) Conduct of Business. The engagement by the Company in any line of
business or activity other than the Company Business or any other business that
is necessary, appropriate or incidental thereto.
(b) Bankruptcy. The voluntary dissolution or liquidation of the Company,
the making by the Company of a voluntary assignment for the benefit of
creditors, the filing of a petition in bankruptcy by the Company, the Company
petitioning or applying to any tribunal for any receiver or trustee, the
Company commencing any proceeding relating to itself under any bankruptcy,
reorganization, readjustment of debt, dissolution or liquidation law or statute
of any jurisdiction, the Company indicating its consent to, approval of or
acquiescence in any such proceeding and failing to use its best efforts to have
discharged the appointment of any receiver of or trustee for the Company or any
substantial part of their respective properties.
(c) Preservation of Existence. Any action contrary to the preservation and
maintenance of the Company's existence, rights, franchises and privileges as a
general partnership under the laws of the State of Delaware.
(d) Acquisition or Disposition of Assets. Any acquisition or disposition
of assets, properties or rights, in each case net of liabilities, of the
Company in one transaction or a series of related transactions which in the
aggregate have a Fair Market Value in excess of 20% of the Fair Market Value of
all of the net assets on a consolidated basis of the Company.
(e) Dealings with Affiliates. Except pursuant to the express provisions of
the Alliance Agreement, the Investment Agreement, this Partnership Agreement
(including, without limitation, Section 1.10) or any other Transaction
Document, the entering into by the Company of any transaction, agreement or
arrangement (or series of related transactions, agreements or arrangements)
with a Partner or Affiliate of a Partner relating to:
(i) the purchase of products or services having a value of greater
than $15,000,000 (other than corporate central services, such as
legal, treasury and accounting);
(ii) intercompany loans or investments of greater than $10,000,000,
other than ordinary course cash management operations for
balances of not more than $25,000,000;
(iii) acquisitions or dispositions of assets having a value in excess
of $10,000,000; or
(iv) any other transaction, agreement or arrangement involving
aggregate consideration having a value of greater than
$10,000,000 or having a term in excess of five (5) years.
Any transaction, agreement or arrangement (or series of related transactions,
agreements or arrangements) of a type described in the preceding sentence is
referred to in this Partnership Agreement as a "Material Transaction." The
foregoing shall not be deemed to limit in any manner the right of any Partner
or any of its Affiliates from performing or exercising its rights under the
express provisions of the Alliance Agreement, the Investment Agreement, this
Partnership Agreement or any other Transaction Document.
20
(f) Issuance of Partnership Interests. (i) The authorization or issuance
of any Partnership Interests in, or the admission of any Partners to, the
Company, other than to members of the Xxxx Atlantic Group, members of the
Vodafone Group, or their respective permitted transferees in accordance with
the provisions of the Alliance Agreement, the Investment Agreement or this
Partnership Agreement; or (ii) any merger, consolidation or similar business
transaction unless (A) it would be an acquisition by the Company not subject to
(d) above or which is approved in accordance with the requirements of (d)
above, and (B) does not include any Partnership Interests among the
consideration to be paid.
(g) Repurchase of Partnership Interests. The redemption or repurchase by
the Company of any Partnership Interests in the Company, other than pursuant to
the express provisions of the Alliance Agreement, the Investment Agreement or
this Partnership Agreement.
(h) Modification of Partnership Agreement; Permitted Modification of
Distribution Policies. Any amendment or modification of this Partnership
Agreement, except for any amendment or modification of the provisions of
Section 7.1(c) of this Partnership Agreement from or after the fifth (5th)
anniversary of the Stage I Closing Date.
(i) Additional Capital Calls. Any capital contributions to the Company by
any Partner other than such Partner's initial capital contribution.
(k) Independent Certified Public Accountants. The selection (including the
initial selection) of, or any decision to remove, the Company's independent
certified public accountants, if such accountants are Xxxx Atlantic's principal
independent certified public accountants for auditing Xxxx Atlantic's
consolidated financial statements.
ARTICLE V
EXCULPATION AND INDEMNIFICATION
Section 5.1 Duties of Representatives. Subject to the last sentence of
this Section 5.1, each Representative and Alternate shall owe such duty of
loyalty and due care to the Company as is required of a director of a Delaware
corporation under applicable Delaware law, shall discharge his duties in good
faith with the care an ordinary prudent person in like position would exercise
under similar circumstances and in a manner he reasonably believes to be in the
best interests of the Company, and in so acting shall enjoy each and every
protection afforded to the directors of a Delaware corporation under applicable
Delaware law, including without limitation those afforded by the business
judgment rule and the presumptions afforded thereby and the limitation on
personal liability to the maximum extent permitted by Section 102(b) of the
Delaware General Corporation Law as if the provisions thereof were set forth in
this Partnership Agreement, it being understood, however, that to the extent
that any Representative or Alternate is acting, as such, to implement any of
the rights of the Partner (or Affiliate of the Partner) which appointed him,
which rights are provided under the express provisions of this Partnership
Agreement or any other Transaction Document, then the foregoing standards of
conduct shall not apply to such Representative or Alternate in so acting. The
parties understand that the right of each party to designate Representatives or
Alternates does not mean that the actions of such Representatives or
Alternates, as such, constitute implementation of such designation right which
would have the effect of making inapplicable the foregoing standards of
conduct. In determining whether a Representative or Alternate has breached his
21
duty of loyalty (a) the party making the claim shall have the burden of proof,
(b) the standard of proof shall be the preponderance of the evidence, and (c)
the standard of conduct shall be whether such person acted in a manner which he
reasonably believed to be in the best interest of the Company, without any
presumption being applied that such person's conduct was or was not proper.
Section 5.2 Exculpation. No Partner, Officer, Representative, Alternate or
officer of the Company shall be liable to the Company or to any Partner for any
losses, claims, damages or liabilities arising from, related to, or in
connection with, this Partnership Agreement or the business or affairs of the
Company, except for any losses, claims, damages or liabilities as are
determined by final judgment of a court of competent jurisdiction to have
resulted from such Partner, Officer, Representative, Alternate or officer's
gross negligence, reckless conduct, intentional misconduct, knowing violation
of law, or breach of the provisions of Section 5.1 or any of the other
provisions of this Partnership Agreement. To the extent that, at law or in
equity, any Partner, Officer, Representative, Alternate or officer has duties
(including fiduciary duties) and liabilities relating thereto to the Company or
to any Partner, such Partner, Officer, Representative, Alternate or officer
acting in connection with this Partnership Agreement or the business or affairs
of the Company shall not be liable to the Company or to any Partner, Officer,
Representative, Alternate or officer for his, her or its good faith conduct in
accordance with the provisions of this Partnership Agreement or any approval or
authorization granted by the Company or any Partner, Officer, Representative,
Alternate or officer. The provisions of this Partnership Agreement, to the
extent that they restrict the duties and liabilities of any Partner, Officer,
Representative, Alternate or officer otherwise existing at law or in equity,
are agreed by the Partners to replace such other duties and liabilities of such
Partner, Officer, Representative, Alternate or officer.
Section 5.3 Reliance on Reports and Information by Partner,
Representative, Alternate or Officer. A Partner, Representative, Alternate or
Officer of the Company shall be fully protected in relying in good faith upon
the records of the Company and upon such information, opinions, reports or
statements presented to the Company by any of its other Officers, Partners,
Representatives, Alternates, employees or committees of the Company, or by any
other Person, as to matters the Partner, Representative, Alternate or Officer
reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of
the Company, including information, opinions, reports or statements as to the
value and amount of the assets, liabilities, profits or losses of the Company
or any other facts pertinent to the existence and amount of assets from which
distributions to Partners might properly be paid.
Section 5.4 Outside Activities.
(a) Except as otherwise expressly provided in this Section 5.4, any
Partner or Affiliate thereof may engage, directly or indirectly, in or possess
any interest in any other business venture of any nature independently or with
others, and neither the Company nor any other Partner shall have any right by
virtue of this Partnership Agreement in or to such venture or in or to any
income or profits derived therefrom.
(b) Subject to the provisions of this Section 5.4, from and after the
Effective Date, no Partner or any Affiliate thereof shall engage in the
provision of mobile telecommunications services (whether directly or as a
reseller thereof, including through bundling) in the United States of America,
including, without limitation, mobile "3rd Generation" services delivered over
any wireless spectrum.
(c) Nothing contained in this Section 5.4 shall prohibit or otherwise
restrict:
22
(i) Fixed "wireless local loop" or any other fixed wireless
telecommunications business engaged in by a Partner or its
Affiliates as an adjunct to its wireline service offering;
(ii) Any fixed wireless high speed data service;
(iii) Any fixed wireless video service;
(iv) Any satellite communications service;
(v) Any wireless business opportunity that is rejected by the Board
of Representatives of the Company as long as each of the
Representatives designated by the Partner that desires to pursue
such opportunity (itself or through an Affiliate) (the
"Non-Objecting Partner") present at the meeting at which such
business opportunity was rejected voted in favor of its pursuit;
provided, however; that if the Non-Objecting Partner pursues
such business opportunity, the other Partners may compete in the
pursuit of such business opportunity.
(vi) Any wireless activity engaged in by an Entity in which a Partner
owns less than 40% of the total equity and with respect to which
such Partner does not have more than protective rights within
the meaning of EITF 96-16;
(vii) Any investment in any Entity to the extent that it does not
exceed at any time 10% of the total issued and outstanding
equity of such Entity except as a result of redemption or
repurchases of equity or any similar transaction by such Entity
or any recapitalization of the Entity;
(viii) Any wireless business acquired by Xxxx Atlantic or Vodafone,
or their respective Affiliates, as part of a larger business
combination where the wireless business does not represent more
than 40% of the total value of the acquired business; provided,
however, that following the consummation of such acquisition,
the acquiring party (Xxxx Atlantic or Vodafone) shall consult in
good faith with the Company and the other party (Vodafone or
Xxxx Atlantic) concerning the feasibility of, and potential
terms and conditions for, contributing the acquired wireless
business to the Company, provided that the acquiring party has
no obligation to contribute such acquired wireless business to
the Company and if the acquiring party determines not make such
a contribution, then the acquiring party shall be entitled to
sell all or any part of such wireless business to any other
Person as it shall determine or to retain and engage in any part
of such acquired wireless business as it may determine, all in
its sole and absolute discretion;
(ix) Any merger, acquisition, consolidation, recapitalization, sale
of assets or other significant corporate transaction (a
"Transaction") to which either Xxxx Atlantic or Vodafone (each a
"Subject Entity") is a party pursuant to which (A) any Person or
group (as defined for purposes of Regulation 13D under the
Exchange Act) acquires 30% or more of the outstanding voting
securities of the Subject Entity; (B) fewer than a majority of
the directors of any successor Entity surviving the Transaction
on the date three months following consummation of the
23
Transaction shall be directors who held such office prior to the
Transaction ("Original Directors") or were nominated for such
office by a majority of the Original Directors; or (C) the
holders of the outstanding voting securities of the Subject
Entity prior to the Transaction shall hold less than 50% of the
voting securities of the Subject Entity or any successor Entity
surviving such Transaction;
(x) Any Partner from owning or acquiring any business, assets or
Entity that would otherwise be restricted by Section 5.4(b) but
are scheduled in the Alliance Agreement, included in the Xxxx
Atlantic Conveyed Assets at the Stage II Closing or are Xxxx
Atlantic Excluded Assets (the foregoing terms are defined in the
Alliance Agreement);
(xi) A Partner or any of its Affiliates from selling Company mobile
telecommunications services as an agent of the Company; or
(xii) A Partner or any of its Affiliates from selling Company mobile
telecommunications services on a "bundled" basis with other
products or services provided that: (A) any such bundle includes
wireline telecommunications services; (B) the agreement or
arrangement between the Partner or Affiliate and the Company for
the purchase of such Company mobile telecommunications services
or a then-effective agreement or arrangement provides the
Company with the opportunity to purchase wireline
telecommunications services from the Partner or any of its
Affiliates; and (C) if the value of the services to be received
pursuant to the agreement or arrangement is greater than
$10,000,000 (whether in a single or series of related agreements
or arrangements) then the applicable Partner shall have given
Xxxx Atlantic Designated Partner or the Vodafone Designated
Partner written notice at least five (5) days before the
agreement or arrangement is implemented.
For purposes of this Section, the word "fixed," when used to describe a
business or service shall mean:
(i) the system providing such business or service is not capable of
"handoffs" between cells or between systems; provided, however that
(ii) if the system providing such business or service utilizes any of
the PCS Frequency Band, the Broadband PCS Frequency Band, the WCS Band or
any of the frequency bands allocated by the FCC for 3rd Generation
services, the system can only provide service to a user in a single,
unique cell, i.e. a user can never move outside of that unique cell and
receive the service; and, provided, further, that
(iii) any spectrum described in the preceding clause (ii) must have
been purchased by the Partner or Affiliate subsequent to the earlier date
to occur of the Stage II Closing Date or the first anniversary of the
Stage I Closing Date.
Notwithstanding the foregoing, however, if any radio spectrum used to
provide or operate a business, service or activity in which any Partner could
participate on the Effective Date without violating Section 5.4(b) is
subsequently re-allocated to or defined as a 3rd Generation spectrum, such
Member shall continue to be permitted to own, operate and participate in such
business, service or activity notwithstanding such re-allocation or definition.
24
(d) Each Partner specifically acknowledges and agrees that the remedy at
law for any breach of this Section 5.4 will be inadequate and that any other
Partner, in addition to any other relief available to them, shall be entitled
to temporary or permanent injunctive relief without the necessity of proving
actual damages.
(e) This Section 5.4 shall terminate as to all Partners upon the earliest
of (i) the date that the Partnership Interests held by the Xxxx Atlantic Group
decreases to less than the applicable Minimum Xxxx Atlantic Percentage Interest
for Non-Competition (defined below), (ii) the Partnership Interests held by
Vodafone directly or through one or more Included Affiliates decrease to less
than 20%, or (iii) on the Non-Competition Scheduled Expiration Date (defined
below). As used herein:
(A) "Minimum Xxxx Atlantic Percentage Interest for Non-Competition"
means:
(1) During the period ending on the earlier to occur of the Stage II
Closing or the first anniversary of the Stage I Closing Date, 25%;
(2) After consummation of the Stage II Closing, 40%; or
(3) If the Stage II Closing has not been consummated on or before the
first anniversary of the Stage I Closing Date, then after such
anniversary the amount, not to exceed 40%, which is the greater of
(x) 25% or (y) the sum of 25% plus the product determined by
multiplying the amount by which Xxxx Atlantic's Measurement
Partnership Interest from time to time exceeds 33% by a fraction, the
numerator of which is 15 and the denominator of which is 17.5. As
used herein, the term "Xxxx Atlantic's Measurement Partnership
Interest" means the Partnership Interests then held by the Xxxx
Atlantic Group or, if greater, the greatest Partnership Interests
held by the Xxxx Atlantic Group during the period commencing on the
first anniversary of the Stage I Closing Date and ending on the last
day of the 18th calendar month after the Stage I Closing Date.
(B) "Non-Competition Scheduled Expiration Date" means the fifth (5th)
anniversary of the earlier date to occur of the Stage II Closing Date or
the first (1st) anniversary of the Stage I Closing Date, subject to
extension as follows:
(1) if on the fourth (4th) anniversary of the earlier date to occur
of the Stage II Closing Date or the first (1st) anniversary of the
Stage I Closing Date, the Partnership Interests held by Vodafone
directly or through one or more Included Affiliates total at least
25%, the Non-Competition Scheduled Expiration Date shall be extended
by one (1) year and will be the sixth (6th) anniversary of the
earlier date to occur of the Stage II Closing Date or the first
anniversary of the Stage I Closing Date; and
(2) if on the fifth (5th) or any subsequent anniversary of the
earlier date to occur of the Stage II Closing Date or the first (1st)
25
anniversary of the Stage I Closing Date, the Partnership Interests
held by Vodafone directly or through one or more Included Affiliates
total at least 25%, the then applicable Non-Competition Scheduled
Expiration Date shall be extended by one (1) year (i.e., with respect
to the extension that would occur on such fifth (5th) anniversary,
the extended Non-Competition Scheduled Expiration Date would be the
seventh (7th) anniversary of the earlier date to occur of the Stage
II Closing Date or the first anniversary of the Stage I Closing Date,
and so on).
Section 5.5 Indemnification by the Company.
(a) The Company shall indemnify an indemnified representative, defined
herein, against any liability incurred in connection with any proceeding in
which the indemnified representative may be involved as a party or otherwise,
as and when incurred, by reason of the fact that such Person is or was serving
in an indemnified capacity, including, without limitation, liabilities
resulting from any actual or alleged breach or neglect of duty, error,
misstatement or misleading statement, negligence, or act giving rise to
liability, except:
(1) where such indemnification is expressly prohibited by applicable
law;
(2) where the conduct of the indemnified representative has been
finally determined:
(A) to constitute gross negligence, bad faith, reckless conduct,
intentional misconduct or a knowing violation of law, sufficient in
the circumstances to bar indemnification against liabilities arising
from the conduct;
(B) to constitute a breach of Section 5.1 of this Partnership
Agreement; or
(C) to have been an action other than an action in which the
indemnified representative acted in good faith and in a manner the
indemnified representative reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to
believe the indemnified representative's conduct was unlawful.
(D) to be based upon or attributable to the receipt by the
indemnified representative from the Company of a personal benefit to
which the indemnified representative is not legally entitled; or
(3) to the extent such indemnification has been finally determined in
a final adjudication to be otherwise unlawful.
26
(b) If an indemnified representative is entitled to indemnification in
respect of a portion, but not all, of any liabilities to which such Person may
be subject, the Company shall indemnify such indemnified representative to the
maximum extent for such portion of the liabilities.
(c) The termination of a proceeding by judgment, order, settlement or
conviction or upon a plea of nolo contendere or its equivalent shall not of
itself create a presumption that the indemnified representative is not entitled
to indemnification.
(d) Definitions. For purposes of this Section:
(1) "indemnified capacity" means any and all past, present and future
service by an indemnified representative in one or more capacities as a
Partner, Officer, Representative, Alternate or authorized agent of the
Company;
(2) "indemnified representative" means any and all Partners,
Officers, Representatives, Alternates and authorized agents of the Company
and any other Person designated as an indemnified representative by the
mutual consent of the Xxxx Atlantic Designated Partner and the Vodafone
Designated Partner, given in accordance with the provisions of this
Partnership Agreement;
(3) "liability" means any damage, judgment, amount paid in
settlement, fine, penalty, punitive damages, excise tax assessed with
respect to an employee benefit plan, or cost or expense of any nature
(including, without limitation, attorneys' fees and disbursements); and
(4) "proceeding" means any threatened, pending or completed action,
suit, appeal or other proceeding of any nature, whether civil, criminal,
administrative or investigative, whether formal or informal, and whether
brought by or in the right of the Company, a class of its Partners or
security holders or otherwise.
Section 5.6 Proceedings Initiated by Indemnified Representatives.
Notwithstanding any other provision of this Article, the Company shall not
indemnify under this Article an indemnified representative for any liability
incurred in a proceeding initiated (which shall not be deemed to include
counterclaims or affirmative defenses) or participated in as an intervenor or
amicus curiae by the Person seeking indemnification unless such initiation of
or participation in the proceeding is authorized, either before or after its
commencement, by the unanimous consent of the Board of Representatives. This
Section does not apply to reimbursement of expenses incurred in successfully
prosecuting or defending the rights of an indemnified representative granted by
or pursuant to this Article.
Section 5.7 Advancing Expenses. Unless otherwise determined by the Board
of Representatives acting in accordance with Section 5.1, the Company shall pay
the expenses (including reasonable attorneys' fees and disbursements) incurred
in good faith by an indemnified representative in advance of the final
disposition of a proceeding described in Section 5.5 or the initiation of or
participation in which is authorized pursuant to Section 5.6 upon receipt of an
undertaking by or on behalf of the indemnified representative to repay the
amount if it is ultimately determined that such Person is not entitled to be
indemnified by the Company pursuant to this Article. The financial ability of
an indemnified representative to repay an advance shall not be a prerequisite
to the making of such advance.
27
Section 5.8 Payment of Indemnification. An indemnified
representative shall be entitled to indemnification within thirty (30) days
after a written request for indemnification has been delivered to the Chairman
of the Board of Representatives.
Section 5.9 Arbitration.
(a) Any dispute related to the right to indemnification, contribution or
advancement of expenses as provided under this Article, except with respect to
indemnification for liabilities arising under the Securities Act of 1933, as
amended, that the Company has undertaken to submit to a court for adjudication,
shall be decided only by arbitration in New York, New York in accordance with
the commercial arbitration rules then in effect of the American Arbitration
Association ("AAA"), before a panel of three independent arbitrators, one of
whom shall be selected by the Company, the second of whom shall be selected by
the indemnified representative and the third of whom shall be selected by the
other two arbitrators. In the absence of the AAA, or if for any reason
arbitration under the arbitration rules of the AAA cannot be initiated, and if
one of the parties fails or refuses to select an arbitrator or the arbitrators
selected by the Company and the indemnified representative cannot agree on the
selection of the third arbitrator within thirty (30) days after such time as
the Company and the indemnified representative have each been notified of the
selection of the other's arbitrator, the necessary arbitrator or arbitrators
shall be selected by the presiding judge of the court of general jurisdiction
in such metropolitan area.
(b) Each arbitrator selected as provided in this Section is required to be
or have been an Officer, director or executive officer of a corporation or
other Entity whose equity securities were listed during at least one (1) year
of such service on the New York Stock Exchange or the American Stock Exchange
or quoted on the National Association of Securities Dealers Automated
Quotations System.
(c) The party or parties challenging the right of an indemnified
representative to the benefits of this Article shall have the burden of proof.
(d) The Company shall reimburse an indemnified representative for the
expenses (including reasonable attorneys' fees and disbursements) incurred in
successfully prosecuting or defending such arbitration.
(e) Any award entered by the arbitrators shall be final, binding and
nonappealable and judgment may be entered thereon by any party in accordance
with applicable law in any court of competent jurisdiction, except that the
Company shall be entitled to interpose as a defense in any such judicial
enforcement proceeding any prior final judicial determination adverse to the
indemnified representative under Section 5.5 in a proceeding not directly
involving indemnification under this Article. This arbitration provision shall
be specifically enforceable.
Section 5.10 Contribution. If the indemnification provided for in this
Article or otherwise is unavailable for any reason (other than clause (2) of
Section 5.5) in respect of any liability or portion thereof, the Company shall
contribute to the liabilities to which the indemnified representative may be
subject in such proportion as is appropriate to reflect the intent of this
Article.
Section 5.11 Mandatory Indemnification of Partners and Officers. To the
extent that an indemnified representative of the Company has been successful on
the merits or otherwise in defense of any proceeding or in defense of any
claim, issue or matter therein, such Person shall, to the fullest event
28
provided by law, be indemnified against expenses (including attorneys' fees and
disbursements) actually and reasonably incurred by such Person in connection
therewith.
Section 5.12 Contract Rights; Amendment or Repeal. All rights under this
Article shall be deemed a contract between the Company and the indemnified
representative pursuant to which the Company and each indemnified
representative intend to be legally bound. Any repeal, amendment or
modification hereof shall be prospective only and shall not affect any rights
or obligations then existing.
Section 5.13 Scope of Article. The rights granted by this Article
shall not be deemed exclusive of any other rights to which those seeking
indemnification, contribution or advancement of expenses may be entitled under
any statute, agreement, vote of disinterested Partners or disinterested
Representatives or Alternates, both as to action in an indemnified capacity and
as to action in any other capacity. The indemnification, contribution and
advancement of expenses provided by or granted pursuant to this Article shall
continue as to a Person who has ceased to be an indemnified representative in
respect of matters arising prior to such time, and shall inure to the benefit
of the heirs, executors, administrators, personal representatives, successors
and permitted assigns of such a Person.
Section 5.14 Reliance on Provisions. Each Person who shall act as an
indemnified representative of the Company shall be deemed to be doing so in
reliance upon the rights of indemnification, contribution and advancement of
expenses provided by this Article V.
ARTICLE VI
CAPITAL ACCOUNTS
Section 6.1 Capital Contributions.
(a) The Capital Contributions to be made by the Partners shall be made in
cash and/or property. The initial capital contributions of each Partner are set
forth in the Alliance Agreement.
(b) No Partner shall be obligated to make any capital contributions to the
Company, except as provided in the Alliance Agreement or as may be approved in
accordance with the provisions of Section 4.1 of this Partnership Agreement.
(c) No Partner shall be permitted to make any capital contributions to the
Company unless mutually agreed by the Xxxx Atlantic Designated Partner and the
Vodafone Designated Partner.
Section 6.2 Liability for Contribution.
(a) A Partner of the Company is obligated to the Company to perform any
promise to contribute cash or property or to perform services, even if the
Partner is unable to perform because of death, disability or any other reason.
If a Partner does not make the required contribution of property or services,
the Partner is obligated at the option of the Company to contribute cash equal
to that portion of the agreed value (as stated in the records of the Company)
of the contribution that has not been made. The foregoing option shall be in
addition to, and not in lieu of, any other rights, including the right to
specific performance, that the Company may have against such Partner under
applicable law.
29
(b) The obligation of a Partner of the Company to make a contribution or
return money or other property paid or distributed in violation of the Act may
be compromised only by consent of all the Partners. Notwithstanding the
compromise, a creditor of the Company who extends credit, after entering into
this Partnership Agreement or an amendment hereof which, in either case,
reflects the obligation, and before the amendment hereof to reflect the
compromise, may enforce the original obligation to the extent that, in
extending credit, the creditor reasonably relied on the obligation of a Partner
to make a contribution or return. A conditional obligation of a Partner to make
a contribution or return money or other property to the Company may not be
enforced unless the conditions of the obligation have been satisfied or waived
as to or by such Partner. Conditional obligations include contributions payable
upon a discretionary call of the Company prior to the time the call occurs.
Section 6.3 Capital Accounts. A separate Capital Account will be
maintained for each Partner. Notwithstanding any other provision hereof, the
Company shall determine and adjust the Capital Accounts in accordance with the
rules of Treasury Regulation Section 1.704-1(b)(2)(iv). As a consequence of the
contributions made pursuant to the Alliance Agreement, the Capital Accounts
were restated pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(f). The
Capital Accounts of the Partners as restated are reflected on Schedule A. No
Partner shall have any liability to restore all or any portion of a deficit
balance in the Partner's Capital Account.
Section 6.4 No Interest on or Return of Capital. No Partner shall be
entitled to interest on any Capital Contribution or Capital Account. No Partner
shall have the right to demand or receive the return of all or any part of any
Capital Contribution or Capital Account except as may be expressly provided
herein, and no Partner shall be personally liable for the return of the Capital
Contributions of any other Partner.
Section 6.5 Partnership Interest. The Partnership Interests of the
Partners are as set forth on Schedule A. Partnership Interests will be varied
only as specifically agreed by the parties pursuant to the Alliance Agreement,
the Investment Agreement and this Partnership Agreement and will not be
affected by allocations of Profits and Losses or other changes in Partners'
Capital Accounts. The Partnership Interests shall be updated by the agreement
of the Partners to reflect any adjustment of Partnership Interests, set forth
on a revised Schedule A and filed with the records of the Company.
Section 6.6 Allocations of Profits and Losses Generally. After the
allocations in Section 6.7, at the end of each Fiscal Year (or shorter period
if necessary or longer period if agreed by all of the Partners), Profits and
Losses shall be allocated as follows:
(a) Profits. Profits shall be allocated to the Partners in proportion to
their respective Partnership Interests.
(b) Losses. Losses shall be allocated to the Partners in proportion to
their respective Partnership Interests.
Section 6.7 Allocations Under Regulations.
(a) Company Nonrecourse Deductions. Loss attributable (under Treasury
Regulation Section 1.704-2(c)) to "partnership nonrecourse liabilities' (within
the meaning of Treasury Regulation Section 1.704-2(b)(1)) shall be allocated
among the Partners in the same proportion as their respective Partnership
Interests.
30
(b) Partner Nonrecourse Deductions. Loss attributable (under Treasury
Regulation Section 1.704-2(i)(2)) to "partner nonrecourse debt" (within the
meaning of Treasury Regulation Section 1.704-2(b)(4)) shall be allocated, in
accordance with Treasury Regulation Section 1.704-2(i)(1), to the Partner who
bears the economic risk of loss with respect to the debt to which the Loss is
attributable.
(c) Minimum Gain Chargeback. Each Partner will be allocated Profits at
such times and in such amounts as necessary to satisfy the minimum gain
chargeback requirements of Treasury Regulation Sections 1.704-2(f) and
1.704-2(i)(4).
(d) Qualified Income Offset. Losses and items of income and gain shall be
specially allocated when and to the extent required to satisfy the "qualified
income offset" requirement within the meaning of Treasury Regulation Section
1.704-1(b)(2)(ii)(d).
(e) Recourse Debt. Items of loss and deduction attributable to "recourse
debt" within the meaning of Treasury Regulation Section 1.752-1 (but excluding
"partner nonrecourse debt"), with respect to which not all of the Partners bear
the economic risk of loss, shall be allocated solely to the Partners who bear
the economic risk with respect to such debt, and as amongst such Partners, in
proportion to their respective share of the risk of loss attributable to such
debt.
Section 6.8 Other Allocations.
(a) Allocations when Agreed Value Differs from Tax Basis. When the Agreed
Value of a Company asset is different from its adjusted tax basis for income
tax purposes, then, solely for federal, state and local income tax purposes and
not for purposes of computing Capital Accounts, income, gain, loss, deduction
and credit with respect to such assets ("Section 704(c) Assets") shall be
allocated among the Partners to take this difference into account in accordance
with the principles of IRC Section 704(c), as set forth herein and in the
Treasury Regulations thereunder and under IRC Section 704(b). The allocations
eliminating the differences between Agreed Value and adjusted tax basis of the
Section 704(c) Assets shall be made using any method as permitted under
Treasury Regulations Section 1.704-3, provided that such method produces the
most fair result to the Partners taking all of the facts and circumstances and
agreements into account (including fiduciary obligations and the calculation of
the distribution under Section 7.1(a)). Notwithstanding the preceding sentence,
with respect to the assets held by Central Iowa Cellular, Inc. or its successor
in interest consisting of a 24% general partnership interest in the Des Moines
MSA General Partnership, and all assets related thereto, the Company shall use
the traditional method of making IRC Section 704(c) allocations (as defined in
Treasury Regulations Section 1.704-3(b)), provided that the designation of the
traditional method for such assets shall not create any presumption for
purposes of making the determination required by the preceding sentence or
subsequent sentences of this section. If the Xxxx Atlantic Designated Partner
and the Vodafone Designated Partner cannot agree as to which method produces
the most fair result to them, then an independent arbitrator who is a
recognized expert in the field of partnership taxation shall be chosen in the
following manner to decide which method produces the most fair result (an
"Arbitrator"). The Xxxx Atlantic Designated Partner shall in good faith choose
an Arbitrator that it believes is independent. If the Vodafone Designated
Partner accepts the Arbitrator, then the Xxxx Atlantic Group and the Vodafone
Group shall be bound by the decision of the Arbitrator. If the Vodafone
Designated Partner, in its reasonable discretion, rejects the Arbitrator, then
the Vodafone Designated Partner shall in good faith choose a second Arbitrator
31
that it believes is independent (the "Second Arbitrator"). If the Xxxx Atlantic
Designated Partner accepts the Second Arbitrator, then the Xxxx Atlantic Group
and the Vodafone Group shall be bound by the decision of such Second
Arbitrator. If the Xxxx Atlantic Designated Partner, in its reasonable
discretion, rejects the Second Arbitrator, then the Arbitrator and the Second
Arbitrator shall choose a third Arbitrator (the "Third Arbitrator"). The
Partners shall be bound by the decision of the Third Arbitrator. The Xxxx
Atlantic Designated Partner and the Vodafone Designated Partner shall use their
best efforts to agree as to the method of allocation, or the resolution of any
dispute with respect thereto (in either case, as described in this Section
6.8(a)) prior to the Effective Date.
(b) Change in Partner's Interest.
(1) If during any fiscal year of the Company there is a change in any
Partner's Partnership Interest, then for purposes of complying with IRC Section
706(d), the determination of Company items allocable to any period shall be
made by using the closing of the books method.
(2) The Partners agree to be bound by the provisions of this Section
6.8(b) in reporting their shares of Company income, gain, loss, and deduction
for tax purposes.
(c) Gross Income Allocation and Make-Whole Distributions. In any Fiscal
Year in which a distribution to a Partner is required under Section 2.6.2 of
the Alliance Agreement or under Section 7.1(a), or pursuant to the terms of the
Indemnity Agreement described in Section 2.5.5 of the Alliance Agreement, the
amount of such distribution shall equal the amount distributable pursuant to
such provision divided by 0.6 (if not already grossed-up), and an amount of
gross income equal to the amount so distributed shall be allocated to the
Partner entitled to receive such distribution.
(d) Curative Allocations. The allocations set forth in Sections 6.7(a),
6.7(b), 6.7(c), 6.7(d) and 6.7(e) hereof (the "Regulatory Allocations") are
intended to comply with certain requirements of the Treasury Regulations. It is
the intent of the Partners that, to the extent possible, all Regulatory
Allocations shall be offset either with other Regulatory Allocations or with
special allocations of other items of Treasury income, gain, loss or deduction
pursuant to this Section 6.8(d). Therefore, notwithstanding any other provision
of this Section 6 (other than the Regulatory Allocations) the offsetting
special allocations of Company income, gain, loss or deduction shall be made so
that, after such offsetting allocations are made, each Partner's Capital
Account balance is, to the extent possible, equal to the Capital Account
balance such Partner would have had if the Regulatory Allocations were not part
of the Agreement and all Treasury items were allocated pursuant to Sections
6.6. In exercising its discretion under this Section 6.8(d), future Regulatory
Allocations under Section 6.7(d), that, although not yet made, are likely to
offset other Regulatory Allocations previously made under Section 6.7(a) and
6.7(b) shall be taken into account.
(e) Allocations Resulting from Tower Monetizations. In order for the
Partners' Capital Accounts to appropriately reflect the agreement of the
Partners contained in the Omnibus Amendment, with respect to the towers held by
the Company that are eligible to be disposed of in a Compliant Tower
Monetization (as defined in the Omnibus Amendment) (the "Towers"), the Capital
Accounts shall be maintained consistently with the principles described on
Exhibit 2 hereto, provided that to the extent the principles described on
Exhibit 2 are inconsistent with the agreement of the Partners contained in the
Omnibus Amendment, the Omnibus Amendment shall control.
(f) Stock Option Deduction Allocation. Any tax deduction to which the
Partnership becomes entitled that is attributable to stock options granted by
32
Vodafone shall be allocated entirely to Vodafone. After giving effect to the
transactions that give rise to the tax deductions described in the preceding
sentence (including all allocations and deemed contributions), there should be
no net change to the Capital Accounts of the Vodafone Partners.
(g) Other Allocations. Except as otherwise provided in this Agreement, all
items of Company income, gain, loss, deduction and any other allocations not
otherwise provided for shall be divided among the Partners in the same
proportions as they share Profits or Losses, as the case may be, for the Fiscal
Year.
Section 6.9 Allocations and Distributions Among Members of a Group. Except
as otherwise provided herein, all allocations hereunder to a Group and all
distributions hereunder to a Group shall be made among or between the members
of such Group pro rata in proportion to their respective Percentage Interests.
Notwithstanding the foregoing, to the extent not inconsistent with Treasury
Regulations section 1.704-1(b), Percentage Interests of members of a Group for
purposes of making allocations or distributions may be allocated among the
members of such Group as the members of such Group may agree as among
themselves.
ARTICLE VII
DISTRIBUTIONS
Section 7.1 Distributions.
(a) Dispositions of Section 704(c) Assets. If the Company disposes of a
Section 704(c) Asset, the Company shall distribute to any Partner who
recognizes gain under IRC Section 704(c) as a result of such disposition the
difference between (i) the amount of such Section 704(c) gain and (ii) in the
event that the Company has chosen to use the remedial method or the traditional
method with curative allocations pursuant to Section 6.8, the present value
(using a discount rate of 10% per annum) of future offsetting remedial
allocations or curative allocations, if any, that would have been made to such
Partner with respect to such asset if such asset had not been disposed of.
(b) Tax Distributions. The Company shall distribute to the Partners in
accordance with the Partners' Partnership Interests as promptly as practicable
(and in any event within forty-five (45) days) after the end of each fiscal
quarter an amount equal to the product of the Tax Rate and the amount of
Profits for such fiscal quarter ("Tax Distributions").
(c) Additional Distributions.
(i) The provisions of this Section 7.1(c) shall be applicable until
the earlier date to occur of (x) the fifth anniversary of the Effective
Date or (y) the date that Vodafone ceases to hold, directly or through one
or more Included Affiliates, a Partnership Interest of at least 20%; and
from and after such date the provisions of this Section 7.1(c) shall have
no further force or effect.
(ii) As used in this Section 7.1(c), the following terms
shall have the respective meanings assigned to them below:
(A) "Adjusted Net Income" means, with respect to each six-month
period that is the subject of the determination of Adjusted Net
Income, GAAP earnings (before deduction of income tax) from
33
continuing operations of the Company and its consolidated
subsidiaries, and increased by amortization expense for such
six-month period related to the amortization of intangible assets of
the Company arising out of transactions contemplated by the Alliance
Agreement. For such purposes, earnings from operations shall not
include income earned from a Compliant Tower Monetization.
(B) "Distributable Amount" means, with respect to each six-month
period that is the subject of the determination of the Distributable
Amount, an amount equal to (i) 70% of the Adjusted Net Income for
such six-month period less (ii) the amount of Tax Distributions made
during such six-month period, unless a distribution by the Company to
its Partners of such amount would result in the Company not being in
compliance with the then current Target Debt Level for the Company,
in which case the Distributable Amount for the subject six-month
period shall be an amount equal to the maximum portion of the
Adjusted Net Income of the Company for the subject six-month period
that could be distributed by the Company to its Partners with the
result that the Company would be in compliance with the Target Debt
Level for the Company; provided, however, that up until the fifth
anniversary of the earlier date to occur of the Stage II Closing Date
or the first anniversary of the Stage I Closing Date, the foregoing
limitation on the amount of the Distributable Amount shall not apply
as long as a Monetization Imbalance as defined in the Investment
Agreement has occurred and is continuing.
(C) "Measurement Date" means for any date a distribution is made
pursuant to this Section 7.1(c), the last day of the period with
respect to which such distribution is made.
(D) "Six-Month EBITDA" means (x) the net income of the Company
and its consolidated subsidiaries adjusted to exclude (i) gains and
losses from unusual or extraordinary items, (ii) interest income and
(iii) the amount of any restoration of any charge to, or other
reserve against, revenues taken during any prior period, in each case
for such period, plus (y) to the extent deducted in determining such
net income, the income and other taxes (whether or not deferred),
Interest Expense, bank fees and expenses, depreciation, amortization
and other non-cash charges to income of the Company and its
consolidated subsidiaries, all as determined in accordance with GAAP
for the six-month period ending on the Measurement Date immediately
preceding the date of determination.
(E) "Indebtedness" means, as of any date, without duplication,
with respect to the Company and its consolidated subsidiaries, (i)
all obligations for borrowed money, (ii) all obligations evidenced by
bonds, debentures, notes or other similar instruments, (iii) all
obligations under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and, for
purposes of this definition, the amount of such obligations at any
date shall be the capitalized amount of such obligations at such
date, determined in accordance with GAAP, (iv) all obligations issued
or assumed as the deferred purchase price of property (other than
accounts payable and accrued expenses incurred in the ordinary course
of business), (v) all obligations for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar
credit transaction, (vi) guarantees and other contingent obligations
in respect of Indebtedness referred to in clauses (i) through (v)
above and clause (viii) below, (vii) all obligations of any other
Person of the type referred to in clauses (i) through (vi) which are
secured by any lien on any property or asset of the Company or any of
its consolidated subsidiaries, the amount of such obligation being
deemed to be the lesser of the Fair Market Value of such property or
asset or the amount of the obligation so secured, and (viii) all
obligations under currency agreements and interest swap agreements.
(F) "Net Indebtedness" means, as of any date, (i) the amount of
outstanding Indebtedness of the Company and its consolidated
34
subsidiaries as of such date, minus (ii) the amount of cash and cash
equivalents of the Company and its consolidated subsidiaries as of
such date minus (iii) loans by the Company and its consolidated
subsidiaries to its Partners or Affiliates thereof as of such date.
(G) "Six-Month Interest Expense" means, for the six-month period
ending on the Measurement Date immediately preceding the date of
determination, all interest on Indebtedness of the Company and its
consolidated subsidiaries accrued, whether or not actually paid, less
interest income of the Company and its consolidated subsidiaries
accrued, whether or not actually received, during such period.
(H) "Target Debt Level for the Company" means that for the
six-month period ending on the Measurement Date:
(i) the ratio of Six-Month EBITDA for the six-month period ending on
the Measurement Date to Six-Month Interest Expense for such period
(expressed as the quotient determined by dividing Six-Month EBITDA for
such period by Six-Month Interest Expense for such period) is not less
than 5 unless a lower ratio is approved from time to time by the Officers;
and
(ii) the ratio of Net Indebtedness as of the Measurement Date to 200%
of Six-Month EBITDA for the six-month period ending on the Measurement
Date (expressed as the quotient determined by dividing Net Indebtedness as
of the Measurement Date by 200% of Six-Month EBITDA for such period) is
not more than 2.5 unless a higher ratio is approved from time to time by
the Officers.
(iii) As promptly as practicable after the end of the second and
fourth fiscal quarter of each Fiscal Year, but in no event later than the
45th day following such fiscal quarter, the Officers shall calculate the
Adjusted Net Income and the Distributable Amount for the six-month period
ending on the last day of such fiscal quarter. The Company within 10 days
after such calculation shall then distribute to the Partners the
Distributable Amount for such six-month period in accordance with their
then current Partnership Interests.
(d) Subsequent Distribution Policies. It is the expectation of the parties
to this Partnership Agreement that from and after the termination of Section
7.1(c) pursuant to the provisions of clause (i) thereof, the Company shall
continue to have a distribution policy which will provide for distributions at
a level as determined from time to time by the Board of Representatives, which
in making such determination shall take into account relevant facts and
circumstances including, without limitation, the financial performance and
capital requirements of the Company. Except as provided in Section 6.9, all
such distributions pursuant to this Section 7.1(d) shall be made in accordance
with the Partners' then current Partnership Interests.
Section 7.2 Limitations on Distributions.
(a) The Company shall not make a distribution to a Partner to the extent
that at the time of the distribution, after giving effect to the distribution,
all liabilities of the Company, other than liabilities to Partners on account
of their interests in the Company and liabilities for which the recourse of
creditors is limited to specified property of the Company, exceed the fair
value of the assets of the Company, except that the fair value of property that
is subject to a liability for which the recourse of creditors is limited shall
be included in the assets of the Company only to the extent that the fair value
of that property exceeds that liability.
35
(b) A Partner who receives a distribution in violation of subsection (a),
and who knew at the time of the distribution that the distribution violated
subsection (a), shall be liable to the Company for the amount of the
distribution. A Partner who receives a distribution in violation of subsection
(a) and who did not know at the time of the distribution that the distribution
violated subsection (a), shall not be liable to the Company for the amount of
the distribution. Subject to subsection (c), this subsection shall not affect
any obligation or liability of a Partner under other applicable law for the
amount of a distribution.
(c) A Partner who receives a distribution from the Company shall
have no liability under this Section, the Act or other applicable law for the
amount of the distribution after the expiration of three (3) years from the
date of the distribution unless an action to recover the distribution from such
Partner is commenced prior to the expiration of the said three (3) year period
and an adjudication of liability against such Partner is made in the action.
Section 7.3 Amounts of Tax Paid or Withheld. All amounts paid or withheld
pursuant to the IRC or any provision of any state or local tax law with respect
to any Partner shall be treated as amounts distributed to the Partner pursuant
to this Article for all purposes under this Partnership Agreement.
Section 7.4 Distribution in Kind. Except as otherwise agreed to by all of
the Partners, the Company shall not distribute any assets in kind, except
pursuant to a dissolution in accordance with Article IX.
ARTICLE VIII
TRANSFERABILITY
Section 8.1 Restriction on Transfers. Except in accordance with the
provisions of this Article VIII, the Alliance Agreement or the Investment
Agreement, no Partner shall have the right, directly or indirectly, to sell,
assign or transfer (other than by pledge, hypothecation, mortgage or similar
encumbrance), voluntarily, involuntarily or by operation of law (any such
transaction being referred to as a "transfer" under this Article VIII), any of
the Partnership Interest (including, without limitation any of the economic
interest associated therewith) in the Company held by such Partner.
Notwithstanding any provision to the contrary in this Article VIII or the
Investment Agreement, prior to the earlier date to occur of the Stage II
Closing Date or the first anniversary of the Stage I Closing Date, no Partner
shall have the right to transfer any of the Partnership Interest in the Company
held by such Partner, except to a Wholly-Owned Subsidiary of such Partner made
in accordance with the provisions of Section 8.2(a) below or to an Affiliate of
such Partner pursuant to Section 8.2(b) below. A Partner who makes or desires
to make a transfer of any of the Partnership Interest held by such Partner
pursuant to this Article VIII is referred to herein as a "Transferring
Partner."
36
Section 8.2 Transfers of Partnership Interests to Affiliates.
(a) Any Partner shall have the right, without the consent of the other
Partners, to transfer ownership of all or any part of its Partnership Interest
either in accordance with the provisions of the Investment Agreement, or to a
Wholly-Owned Subsidiary (a "Wholly-Owned Subsidiary Transferee"). In the event
of any such transfer, the transferee shall be entitled to the rights and
privileges set forth in this Partnership Agreement and, if to a Wholly-Owned
Subsidiary Transferee, the Investment Agreement, and shall be bound and
obligated by the provisions hereof and thereof and shall, by a binding written
instrument which shall be enforceable by the Company and the other Partners,
assume all obligations and liabilities hereunder of the Transferring Partner.
(b) In addition to transfers described in Section 8.2(a) above, any
Partner shall have the right, without the consent of the other Partners, (i) to
transfer a 10% or greater Partnership Interest to any of its Affiliates who are
not Wholly-Owned Subsidiaries but with respect to which the Transferring
Partner owns more than 50% of the common equity or equivalent securities and
voting interests of such Affiliate (each an "Affiliate Transferee"); and (ii)
to make up to three transfers of less than a 10% Partnership Interest to an
Affiliate Transferee; provided, however, the aggregate Partnership Interest so
transferred by a Partner pursuant to this clause (ii) shall not exceed 10%. In
the event of any such transfer(s), an Affiliate Transferee shall be bound and
obligated by the provisions of this Partnership Agreement and shall, by a
binding written instrument which shall be enforceable by the Company and the
other Partners, assume all obligations and liabilities hereunder of the
Transferring Partner, but an Affiliate Transferee other than an Included
Affiliate shall not be entitled to Vodafone's rights set forth in Sections 3.3,
3.5(a) or 4.1 of this Partnership Agreement or in the Investment Agreement
(other than Section 6.2 of the Investment Agreement).
Section 8.3 Transfers of Partnership Interests Other than to Affiliates.
(a) As long as Vodafone, directly or through one or more
Wholly-Owned Subsidiaries, owns a 30% Partnership Interest, Vodafone shall have
an option to purchase any Transferred Interest of Xxxx Atlantic, its Affiliates
or successors if, as a result of such transfer or series of related transfers,
a third party would succeed to Xxxx Atlantic's and its Affiliates'
Representative designation rights set forth in Article III hereof, or Xxxx
Atlantic, such Affiliate or such successor would become unable to report their
earnings and results of operations of the Company on a consolidated basis in
the same manner and to the same extent as Xxxx Atlantic or such Affiliate did
immediately prior to the transfer. The purchase price and conditions of any
such sale shall be determined in the same manner as set forth below in
subparagraph (b). Vodafone shall also pay such Transferring Partner a premium
of 2% of the purchase price. Vodafone shall have no rights of first refusal on
any transfer or sale of any Partnership Interest of Xxxx Atlantic or its
Affiliates except as set forth in this subparagraph (a).
(b) In addition to any transfers permitted by Section 8.2 and 8.3 (a), but
subject to the terms of this Section 8.3 and Sections 8.4, 8.5, 8.6 and 8.7
below, any Partner may transfer a 10% or greater Partnership Interest to any
single Person.
(1) Except for transfers pursuant to Sections 8.2 and 8.3(a)
above, and 8.6 below, in the event that any Transferring Partner,
other than a member of the Xxxx Atlantic Group, has received a bona
fide written offer, which such Transferring Partner is willing to
accept, for the Transferring Partner to sell all or any 10% or
greater Partnership Interest (the "Transferred Interest"), to any
Person, the Transferring Partner shall deliver a written notice (the
37
"Transfer Notice") to each of the other Partners holding, directly or
through one or more Wholly-Owned Subsidiaries, at least a 20%
Partnership Interest, excluding any Partner who is an Affiliate of
the Transferring Partner (the "Non-Transferring Partners") stating
the Transferring Partner's intent to sell the Transferred Interest
pursuant to the bona fide offer. The Transfer Notice shall (i)
specify the purchase price for and other material terms with respect
to the sale of the Transferred Interest, (ii) identify the proposed
purchaser of the Transferred Interest, (iii) specify the date
scheduled for the transfer (which date shall not be less than 120
days from the date the Transfer Notice is delivered), (iv) contain a
statement that the offer has been accepted pending compliance with
the right of first refusal set forth herein and receipt of required
regulatory and other approvals, and (v) shall have attached thereto a
copy of the written offer containing all of the terms and conditions
on which the Transferred Interest is to be sold.
(2) First, Xxxx Atlantic or any designee of Xxxx Atlantic (the
"Xxxx Atlantic Purchasers") shall have the exclusive option to
purchase all (but not less than all) of the Transferred Interest on
terms and conditions substantially the same in all material respects
as, and at the same price, set forth in the written offer delivered
pursuant to subsection (b)(1); provided that if such terms and
conditions include any non-cash assets or any non-financial
requirements which would be impracticable for the Non-Transferring
Partners to satisfy, then the Xxxx Atlantic Purchasers shall not be
required to satisfy such terms, conditions and requirements and the
purchase price for the Transferred Interest will be equal to the Fair
Market Value of the Transferred Interest (determined in accordance
with the mechanisms set forth in Section 9.5(b) below) in cash.
Provided, further, any exercise of the option set forth in this
subsection must have an after-tax value to the Transferring Partner
equivalent to any transfer pursuant to the original bona fide written
offer. The Xxxx Atlantic Purchasers shall notify the Company, the
Transferring Partner and each of the other Non-Transferring Partners
of its intention to exercise or not to exercise the Xxxx Atlantic
Purchasers' purchase rights hereunder within 30 days of receipt by
Xxxx Atlantic of a Transfer Notice (the "Xxxx Atlantic Election
Notice").
(3) If the Xxxx Atlantic Purchasers do not exercise their option
described in subsection (b)(2), then thereafter, the other
Non-Transferring Partners shall have the option to purchase all (but
not less than all) of the Transferred Interest on terms and
conditions substantially the same in all material respects as, and at
the same price, set forth in the written offer delivered pursuant to
subsection (b)(1); provided that if such terms and conditions include
any non-cash assets or any non-financial requirements which would be
impracticable for the Non-Transferring Partners to satisfy, then the
Non-Transferring Partners shall not be required to satisfy such
terms, conditions and requirements and the purchase price for the
Transferred Interest will be equal to the Fair Market Value of the
Transferred Interest (determined in accordance with the mechanisms
set forth in Section 9.5(b) below) in cash. Provided further, any
exercise of the option set forth in this subsection must have an
after-tax value to the Transferring Partner equivalent to any
transfer pursuant to the original bona fide written offer.
(4) Each of the Non-Transferring Partners shall initially be
entitled to purchase that fraction of the Transferred Interest equal
to its Partnership Interest (as a percentage) divided by the
Partnership Interests (as a percentage) of all of the
Non-Transferring Partners. If any of the Non-Transferring Partners
declines to exercise its right to purchase the Transferred Interest
hereunder, the other Non-Transferring Partners electing to exercise
that right shall be entitled to purchase that portion of the
Transferred Interest that has been declined by the other
Non-Transferring Partners in amounts determined pursuant to
reapplication of the principles set forth in the immediately
preceding sentence, excluding from consideration the Partnership
Interests of any declining Non-Transferring Partner. Each
Non-Transferring Partner shall notify the Company and each of the
other Non-Transferring Partners of its intention to exercise or not
to exercise its purchase rights hereunder within 15 days of receipt
by it of the Xxxx Atlantic Election Notice. Subsequent written
notifications, if necessary, of such exercising Non-Transferring
38
Partners'elections with respect to that portion of the Transferred
Interest which has been declined by any Non-Transferring Partner
shall be required within ten days after receipt by the exercising
Non-Transferring Partners of such notifications by the Company or the
declining Non-Transferring Partner. No portion of a Transferred
Interest may be purchased by any of the Non-Transferring Partners
unless all the Transferred Interest is purchased by one or more
Non-Transferring Partners.
(5) In the event that the Xxxx Atlantic Purchasers or one or
more of the Non-Transferring Partners shall have duly elected to
purchase the Transferred Interest (the "Electing Partners"), the
Electing Partners and the Transferring Partner shall diligently
pursue obtaining all regulatory approvals and use reasonable efforts
to consummate the closing of the purchase of the Transferred Interest
as soon as practicable and in any event within one year from receipt
of the Transfer Notice; provided that, if such closing does not occur
within such one-year period due to the failure of the Electing
Partners and the Transferring Partner to receive any required
regulatory approvals, the Electing Partners' right to close such sale
may be extended, upon the unanimous decision to do so by all of the
all of the Electing Partners, until such regulatory approvals are
received, but in no event for a period of greater than one additional
year. In the event of a failure of the Xxxx Atlantic Purchasers or
the Non-Transferring Partners to elect to purchase all of the
Transferred Interest or a failure of the Electing Partners to
consummate such purchase in accordance herewith, the Transferring
Partner will be free, at any time within 120 days from the date the
Electing Partners elect not to exercise their purchase rights
hereunder or from the date the time periods specified in this
subsection (b) for such election have expired (in the case of a
failure to elect to purchase), subject, in each such case, to
extension for up to an additional one year to the extent necessary to
receive any material required regulatory approvals, to consummate the
sale of the Transferred Interest to the purchaser at a price and upon
terms and conditions no more favorable to the purchaser than those
specified in the Transfer Notice; provided that the purchaser shall
assume all of the liabilities and obligations of the Transferring
Partner under this Partnership Agreement by a binding written
instrument which shall be enforceable by the Company and the other
Partners.
(c) A Transferring Partner shall not be relieved of any of its obligations
arising under this Partnership Agreement prior to such transfer. The
Transferring Partner and each transferee shall execute such documents as the
Non-Transferring Partners shall reasonably request to evidence the Transfer and
the assumption and continuing obligations referred to in this Section 8.3.
(d) Notwithstanding any provision of this Partnership Agreement to the
contrary, a transferee of at least a 25% Partnership Interest of Vodafone and
its Wholly-Owned Subsidiaries shall be entitled, if so designated by Vodafone,
to all of the rights of Vodafone, the Vodafone Group and the Vodafone
Designated Partner set forth in this Partnership Agreement. Notwithstanding any
provision of this Partnership Agreement to the contrary, any transferee of at
least a 20% Partnership Interest of Xxxx Atlantic and its Wholly-Owned
Subsidiaries shall, if so designated by Xxxx Atlantic, be entitled to receive
all of the rights of Xxxx Atlantic, the Xxxx Atlantic Group and the Xxxx
Atlantic Designated Partner set forth in this Partnership Agreement. Any
transferee of Vodafone and its Wholly-Owned Subsidiaries or Xxxx Atlantic and
its Wholly-Owned Subsidiaries under this Section 8.3(d) is referred to herein
as an "Exit Transferee". An Exit Transferee shall be deemed for all purposes of
this Partnership Agreement, including Section 3.3(a), on and after such
transfer to be Vodafone or Xxxx Atlantic, as the case may be.
(e) Notwithstanding anything contained in this Partnership Agreement to
the contrary, and except for Wholly-Owned Subsidiary Transferees and Exit
Transferees of members of the Vodafone Group, transferees of the Vodafone
Group's Partnership Interests (including any Unaffiliated Entity effecting a
Change in Ownership under Section 8.6 below) shall not be entitled to
39
Vodafone's or its Affiliates' rights set forth in Sections 3.3, 3.5(a), 3.6 and
4.1 of this Partnership Agreement or in the Investment Agreement (other than
Section 6.2 of the Investment Agreement). Notwithstanding anything contained in
this Partnership Agreement to the contrary, and except for Wholly-Owned
Subsidiary Transferees and Exit Transferees of members of the Xxxx Atlantic
Group, transferees of the Xxxx Atlantic Group's Partnership Interests
(including any Unaffiliated Entity effecting a Change in Ownership under
Section 8.6 below) shall not be entitled to Xxxx Atlantic's or its Affiliates'
rights set forth in Sections 3.3, 3.5(a) and 3.6 of this Partnership Agreement
(f) At the request of a Partner, the Company will provide prospective
purchasers of such Partner's Partnership Interest with reasonable access to
financial, operating and other information of the Company, subject to customary
confidentiality arrangements. Each Partner shall cooperate with, and shall in
no way oppose, the closing of any transfer which is in compliance with this
Article VIII.
Section 8.4 Transfers to Restricted Entities. Notwithstanding any
provision to the contrary in this Article VIII or elsewhere in this Partnership
Agreement, (i) neither Xxxx Atlantic nor any of its Wholly-Owned Subsidiary
Transferees, Affiliate Transferees or other permitted transferees, or any
subsequent transferees of any of them, shall, directly or indirectly, transfer
any of the right, title or interest in any Partnership Interest to any of the
Entities listed under the heading "Xxxx Atlantic Restricted Entities" on
Schedule E hereto, and (ii) neither Vodafone nor any of its Wholly-Owned
Subsidiary Transferees, Affiliate Transferees or other permitted transferees,
or any subsequent transferees of any of them, shall, directly or indirectly,
transfer any of the right, title or interest in any Partnership Interest to any
of the Entities listed under the heading "Vodafone Restricted Entities" on
Schedule E hereto. The foregoing shall not prohibit any Parent Entity from
entering into any merger, consolidation, acquisition or other similar business
transaction with any of the Entities listed on Schedule E.
Section 8.5 Invalid Transfers Void. Notwithstanding anything contained
herein to the contrary, no transfer of a Partnership Interest may be made if
such transfer (i) would violate the then applicable federal or state securities
laws or rules and regulations of the Securities and Exchange Commission, state
securities commissions, the Communications Act of 1934, or rules and
regulations of the FCC and any other government agencies with jurisdiction over
such transfer or (ii) would affect the Company's existence or qualification
under the Act. In the event a transfer of a Partnership Interest is otherwise
permitted hereunder, notwithstanding any provision hereof, no Partner shall
transfer all or any portion of such Partner's Partnership Interest unless and
until such Partner, upon the request of the Company, delivers to the Company an
opinion of counsel, addressed to the Company, reasonably satisfactory to the
Company, to the effect that (1) such Partnership Interest has been registered
under the Securities Act and any applicable state securities laws, or that the
proposed transfer of such Partnership Interest is exempt from any registration
requirements imposed by such laws and that the proposed transfer does not
violate any other applicable requirements of federal or state securities laws
and (2) that such transfer will not result in the Company being taxed as a
corporation or as an association taxable as a corporation. Such opinion shall
not be deemed delivered until the Company confirms to such Partner that such
opinion is acceptable, which confirmation will not be unreasonably withheld.
Any purported transfer of any Partnership Interest or any part thereof not in
compliance with this Article VIII or the Investment Agreement shall be void and
of no force or effect and the Transferring Partner shall be liable to the other
Partners and the Company for all liabilities, obligations, damages, losses,
costs and expenses (including reasonable attorneys' fees and court costs)
arising as a result of such noncomplying transfer.
40
Section 8.6 Change in Ownership; Spin-Off.
(a) For purposes of this Agreement, a "Change in Ownership" of a Partner
shall be deemed to have occurred when (i) any Person that is not a Parent
Entity of such Partner or a Wholly Owned Subsidiary of such Parent Entity (an
"Unaffiliated Entity"), shall acquire (whether by merger, consolidation, sale,
assignment, lease, transfer or otherwise, in one transaction or series of
related transactions), or otherwise beneficially own or control 50% or more of
the outstanding voting power of such Partner or any Entity (other than the
Parent Entity of such Partner unless the fair market value of the Partnership
Interests held directly or indirectly by such Parent Entity represent more than
90% of the fair market value of the Parent Entity) which, directly or
indirectly, through the ownership of one or more majority-owned successive
subsidiary entities, owns more than 50% of the outstanding voting power of or
controls such Partner (a "Control Entity"), (ii) an Unaffiliated Entity, or
group or persons acting in concert therewith, shall acquire the power to direct
or cause the direction of the management and policies of such Partner or a
Control Entity thereof, (iii) the Parent Entity of such Partner shall otherwise
cease to beneficially own or control a majority of the voting power of any
Partner or a Control Entity thereof.
(b) Any Change in Ownership of a Partner shall be deemed for all purposes
hereof to be a proposed transfer of the Partnership Interest of such Partner
and such Partnership Interest shall be deemed to be a Transferred Interest, the
transfer of which shall be subject to all of the terms and conditions set forth
in Sections 8.1, 8.3, 8.4 and 8.5 hereof, except that the purchase price of
which shall be the Fair Market Value (determined in accordance with the
mechanisms set forth in Section 9.5(b) below) of the Partnership Interest of
the Partner experiencing a Change of Ownership. In the event that the
Transferred Interest is not purchased pursuant to the preceding sentence, any
Unaffiliated Entity effecting such Change in Ownership, shall, by a binding
written instrument which shall be enforceable by the Company and the other
Partners, assume all obligations and liabilities hereunder of the Partner which
is the subject of such Change in Ownership.
(c) A spin-off of an Entity to not less than all of its stockholders by a
Partner or its Affiliates, or a split-off offered to all of its stockholders by
a Partner or its Affiliates of an Entity as a result of which no Person
acquires 30% or more of the stock of an Entity, the assets of which include all
or a portion of the Partnership Interests of a Partner and its Affiliates will
not be deemed to be a transfer or Change of Ownership subject to the
restrictions set forth in this Article VIII if, at the time such spin-off or
split-off is consummated, the Fair Market Value of the Partnership Interests
included in such assets does not represent more than 75% of the Fair Market
Value of all of the assets of such Entity.
Section 8.7 Effect of Transfer.
(a) In addition to satisfaction of Section 4.1 above, no assignee or
transferee of all or part of a Partnership Interest in the Company shall be
admitted as a Partner, unless and until:
(1) the assignee or transferee has executed an instrument reasonably
satisfactory to the Officers accepting and adopting the provisions of this
Partnership Agreement;
(2) the assignee or transferee has paid all reasonable expenses of
the Company requested to be paid by the Officers in connection with the
admission of such assignee or transferee as a Partner; and
(3) such assignment or transfer shall be reflected in a revised
Schedule A to this Partnership Agreement.
41
(b) A Person who is a permitted assignee or transferee of an interest in
the Company transferred in compliance with the provisions of this Article VIII
shall be admitted to the Company as a Partner and shall receive an interest in
the Company without making a contribution or being obligated to make a
contribution to the Company and shall thereupon be bound by the provisions of
this Partnership Agreement.
ARTICLE IX
DISSOLUTION AND TERMINATION
Section 9.1 Dissolution. The Company shall be dissolved only upon the
occurrence of any of the following events:
(a) By the written consent of all Partners;
(b) Upon the occurrence of any of the events set forth in Sections
15-801(4), (5) or (6) of the Act; or
(c) At the time there are not at least two (2) Partners.
Section 9.2 Events of Bankruptcy of Partner. Without limiting the
generality of Section 9.1, the occurrence of any of the events set forth in
this Section 9.2, with respect to any Partner, shall not result in the
dissociation of the Partner or the dissolution of the Company. Such Partner
shall cease to be a Partner of the Company, but shall, however, retain its
interest in allocations and distributions, upon the happening of any of the
following bankruptcy events:
(a) A Partner takes any of the following actions:
(1) Makes an assignment for the benefit of creditors.
(2) Files a voluntary petition in bankruptcy.
(3) Is adjudged a bankrupt or insolvent, or has entered against the
Partner an order for relief, in any bankruptcy or insolvency proceeding.
(4) Files a petition or answer seeking for the Partner any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation.
(5) Files an answer or other pleading admitting or failing to contest
the material allegations of a petition filed against the Partner in any
proceeding of this nature.
(6) Seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator of the Partner or of all or any substantial part of
the properties of the Partner.
42
(b) One hundred twenty (120) days after the commencement of any proceeding
against the Partner seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute, law
or regulation, if the proceeding has not been dismissed, or if within ninety
(90) days after the appointment without the consent or acquiescence of the
Partner, of a trustee, receiver or liquidator of the Partner or of all or any
substantial part of the properties of the Partner, the appointment is not
vacated or stayed, or within ninety (90) days after the expiration of any such
stay, the appointment is not vacated.
Section 9.3 Dissociation of Partners. No Partner shall have the right to
dissociate from the Company. However, if despite such prohibition a Partner
gives the Company notice (which must be in writing) of its desire to dissociate
from the Company pursuant to its right under Sections 15-601(1) and 15-602(a)
of the Act, upon the Company's receipt of such written notice from such
Partner, such Partner shall be dissociated from the Company, and such
dissociation shall be deemed wrongful under the Act. The dissociation of a
Partner shall not result in the dissolution of the Company, except as provided
in Section 15-801(2). Notwithstanding anything to the contrary in this
Partnership Agreement or the Act, the Company shall have the right, but not the
obligation, to purchase a dissociated Partner's Partnership Interest in
accordance with provisions of Section 15-701 of the Act. With respect to the
Partners who are parties to the Investment Agreement, the rights provided to
such Partners in the Investment Agreement are the exclusive rights of such
Partners with respect to matters governed by Section 15-701 of the Act and have
no other rights under such Section 15-701.
Section 9.4 Winding Up.
(a) Upon the dissolution of the Company, the Representatives shall wind up
the affairs of the Company or may appoint any Person, including a Partner, to
do so (the "Liquidating Trustee").
(b) Upon dissolution of the Company, the Persons winding up the affairs of
the Company may, in the name of, and for and on behalf of, the Company,
prosecute and defend suits, whether civil, criminal or administrative,
gradually settle and close the business of the Company, dispose of and convey
the property of the Company, discharge or make reasonable provision for the
liabilities and obligations of the Company, including all contingent,
conditional or unmatured liabilities and obligations, and distribute to the
Partners any remaining assets of the Company in accordance with Section 9.5
below, all without affecting the liability of Partners and Officers and without
imposing liability on a Liquidating Trustee.
(c) Dissolution of the Company shall be concluded in the time period
specified in Treasury Regulation Section 1.704-1(b)(2)(ii)(g).
Section 9.5 Distribution of Assets.
(a) In the event of a dissolution of the Company, upon the winding up of
the Company, any assets of the Company remaining after the application of
Section 9.5(b) shall be distributed as follows:
(1) First, to creditors, including Partners and Officers who are
creditors, to the extent otherwise permitted by law, in satisfaction of
liabilities of the Company (whether by payment or the making of reasonable
provision for payment thereof) other than liabilities for which reasonable
provision for payment has been made; and
43
(2) Then, to the Partners in proportion to their positive Capital
Accounts balances.
(b) Distributions shall be made, either in cash or in kind, or any mix
thereof, as determined in good faith by the Board of Representatives based
upon, among other things requests made by the Partners, with any assets
distributed in kind being valued for this purpose at their Fair Market Value as
determined pursuant to this Section 9.5(b). Solely for purposes of Article
VIII, this Section 9.5 and for purposes of computing Agreed Values, "Fair
Market Value" of the subject assets shall be determined as follows: (i) the
Partners shall initially negotiate in good faith to determine the Fair Market
Value and (ii) if the Partners fail to agree on the Fair Market Value within
thirty (30) days after the applicable event, the Fair Market Value of the
subject assets shall be determined pursuant to the appraisal process described
below:
(1) Not later than five (5) days after the expiration of the
aforesaid thirty (30) day period, each Partner shall each select an
appraiser (which may or may not be a Qualified Investment Banking Firm (as
hereinafter defined)) and shall give the other Partners notice of such
selection. Each of such appraisers (the "Original Appraisers") shall
determine the Fair Market Value of the subject assets at the time such
appraiser renders its written appraisal.
(2) Each Original Appraiser shall deliver its written appraisal to
the party retaining such Original Appraiser within twenty (20) days
following the date of the selection of the Original Appraisers. Such
written appraisals shall be exchanged by the Partners at the offices of
Xxxxxx, Xxxxx & Xxxxxxx LLP, 101 Park Avenue, New York, New York, or such
other place as the parties shall designate, at 10:00 a.m. local time on
the twenty-first (21st) day following the date of the selection of the
Original Appraisers. In the event that the Original Appraisers agree on
the Fair Market Value, the Fair Market Value of the subject assets for
purposes of this Section 9.5 shall be such agreed-upon amount. In the
event that the Original Appraisers do not agree on the Fair Market Value,
(i) if any two of the valuations differ by 10% or less, the Fair Market
Value of the subject assets shall be the mean of the two valuations, and
(ii) if no two valuations differ by 10% or less, the Original Appraisers
shall elect a Qualified Investment Banking Firm (the "Resolving
Appraiser") which shall independently calculate the Fair Market Value
within fifteen (15) days of such election. If the Original Appraisers
cannot agree upon a Resolving Appraiser within five (5) days following the
end of the twenty (20) day period referred to above, then the Resolving
Appraiser shall be a Qualified Investment Banking Firm appointed by the
AAA. No Partner nor any of the Original Appraisers shall provide the
Resolving Appraiser, directly or indirectly, with a copy of the written
appraisal of any of the Original Appraisers, an oral or written summary
thereof, or the valuation determined by any of the Original Appraisers,
either orally or in writing. The valuation of the Resolving Appraiser will
be compared with the valuations of the Original Appraisers, and the mean
of (i) the valuation of the Original Appraiser that is closest to the
valuation of the Resolving Appraiser and (ii) the valuation of the
Resolving Appraiser, shall be the Fair Market Value of the subject assets
for purposes of this Section 9.5.
(3) The Company shall give to the Original Appraisers and the
Resolving Appraiser free and full access to and the right to inspect,
during normal business hours, all of the relevant assets, books and
records of the Company and shall permit them to consult with the Officers
for the purpose of such appraisers making their valuations hereunder.
(4) As used herein, the term "Qualified Investment Banking Firm"
means any firm engaged in providing corporate finance, merger and
acquisition, and business valuation services and deriving revenues
therefrom of at least $25 million during its last completed fiscal year,
44
but excluding, however, any firms which received more than $250,000 in
fees during the preceding twenty-four (24) calendar months from any
Partner or their respective Affiliates and any firms selected by any
Partner.
ARTICLE X
BOOKS; REPORTS TO PARTNERS; TAX ELECTIONS
Section 10.1 Books and Records.
(a) The Company shall maintain or cause to be maintained proper and
complete books and records in which shall be entered fully and accurately all
transactions and other matters relating to the Company's business in the detail
and completeness customary and usual for businesses of the type engaged in by
the Company. The Company's financial statements shall be kept on the accrual
basis and in accordance with Xxxx Atlantic's accounting policies and procedures
(as they may be modified from time to time) and GAAP. The Company's financial
statements shall be audited annually by independent certified public
accountants selected by the Board of Representatives. The fact that such
independent certified public accountants may audit the financial statements of
one or more of the Partners or their Affiliates shall not disqualify such
accountants from auditing the Company's financial statements.
(b) At a minimum, the Company shall keep such books and records as may be
required by the Act and such other books and records as are customary and usual
for businesses of the type engaged in by the Company.
(c) Each Partner or its duly authorized representatives shall have the
right, during normal business hours, to inspect and copy the Company's books
and records at the requesting Partner's expense. The Company will, at the
request of any Partner, provide copies of all loan documentation by which the
Company or its assets are bound.
(d) Xxxx Atlantic and its Wholly-Owned Subsidiaries that are Partners, and
Vodafone and its Wholly-Owned Subsidiaries that are Partners shall have the
right to cause the Company to take all actions necessary to afford, at such
Partner's expense, such Partner's independent public accountants access to the
Company's books, records, Officers, employees and agents to the full extent
reasonably determined by such Partner's independent public accountants to be
necessary in order to perform customary internal auditing functions. In
addition, the internal auditors of each such Partner shall have full right of
access to the Company's books, records, Officers, employees and agents to the
full extent reasonably determined by such Partner's internal auditors to be
necessary in order to perform their audit or review of such Partner's financial
statements; provided, however, that in exercising such right, such internal
auditors to the extent reasonably practicable shall coordinate their visits
with those by internal auditors of other Partners. In connection with any
significant corporate transaction involving a Partner or its Affiliates, the
Company will provide the other party to such transaction with the access
described in Section 8.3(f) subject to the conditions described therein.
Section 10.2 Reports.
(a) Annual Statements. As soon as practicable following the end of each
Fiscal Year, but in any event within sixty (60) days after the end of the
Fiscal Year, the Company shall cause to be prepared and delivered to its
Partners, the audited statement of income and statement of cash flows for such
45
Fiscal Year, Capital Account statements, audited balance sheet as of the end of
such fiscal year, and accompanying notes to financial statements for the
Company, on a consolidated basis, prepared in accordance with GAAP and Company
accounting practices.
(b) Quarterly Statements. As soon as practicable following the end of each
fiscal quarter, but in any event within thirty (30) days after the end of such
quarter, the Company shall cause to be prepared and delivered to its Partners,
an unaudited statement of income and statement of cash flows for such quarter
and an unaudited balance sheet as of the end of such quarter on a consolidated
basis, prepared in accordance with GAAP and Company accounting practices.
(c) Monthly Statements. So long as Vodafone holds, directly or through one
or more Included Affiliates, a Partnership Interest of at least 5%, (i) as soon
as possible following the end of each calendar month in each Fiscal Year, but
in any event within fourteen (14) Business Days after the end of such month,
the Company shall cause to be prepared and delivered to Vodafone an unaudited
statement of income and statement of cash flows for such month and an unaudited
balance sheet as of the end of such month on a consolidated basis, prepared in
accordance with GAAP and Company accounting practices, and (ii) the Company
shall provide Vodafone with a monthly report of significant operating and
financial statistics including number of subscribers, subscriber churn
statistics, minutes of use, average revenues per subscriber, acquisition costs
and capital expenditure efficiency statistics and such additional statistics
and information as may be approved from time to time by the Board of
Representatives for internal use by the Company.
(d) Additional Financial Information. The provisions of this Section
10.2(d) shall be applicable so long as Vodafone holds, directly or through one
or more Included Affiliates, a Partnership Interest of at least 5%. The Company
shall provide for Vodafone audited year-end and other unaudited financial
statements and other financial information as of such date and for such
periods, as are necessary in the determination of Vodafone in order for it to
satisfy its own regulatory and internal financial reporting requirements as
well as credit rating agency presentations and, to the extent that such
information is not competitively sensitive in the reasonable judgment of the
Board of Representatives, investor or analyst presentations. The Company shall
cooperate with Vodafone, at Vodafone's expense, to assist Vodafone and its
auditors in translating Partnership financial statements from GAAP to a U.K.
generally accepted accounting principles ("U.K. GAAP") basis and a Vodafone
accounting policy basis or to prepare any U.K. GAAP financial statements. The
Company will prepare an operating budget and an outlook plan for the two Fiscal
Years following the budget year not less than annually, and will provide copies
of such budget and outlook plan to Vodafone as soon as is reasonably
practicable and in any event prior to the commencement of the Fiscal Year of
the Company to which the budget relates, and the Company will periodically
provide to Vodafone updates and revisions of such operating budget and outlook
plan and actual-to-budget comparisons.
(e) Tax Information. Each Partner may request from the Company any
information reasonably necessary for the Partner to complete its income tax
returns or compute estimated tax payments. To the extent such request does not
impose an undue burden on the Company, the Company shall, within a reasonable
period of time following the request, provide such information to the
requesting Partner.
46
Section 10.3 Tax Matters Partner.
(a) The Xxxx Atlantic Designated Partner is hereby appointed and shall
serve as the tax matters partner of the Company (the "Tax Matters Partner")
within the meaning of IRC Section 6231(a)(7) for so long as it is not the
subject of a bankruptcy event as defined in Section 9.2 and otherwise is
entitled to act as the Tax Matters Partner. The Tax Matters Partner may file a
designation of itself as such with the Internal Revenue Service. The Tax
Matters Partner shall (i) furnish to each Partner affected by an audit of the
Company income tax returns a copy of each notice or other communication
received from the IRS or applicable state authority, (ii) keep such Partner
informed of any administrative or judicial proceeding, as required by Section
6223(g) of the Code, and (iii) allow such Partner an opportunity to participate
in all such administrative and judicial proceedings. The Tax Matters Partner
shall take such action as may be reasonably necessary to constitute such
Partner a "notice partner" within the meaning of Section 6231(a)(8) of the
Code, provided that such Partner provides the Tax Matters Partner with the
information that is necessary to take such action.
(b) The Company shall not be obligated to pay any fees or other
compensation to the Tax Matters Partner in its capacity as such. However, the
Company shall reimburse the expenses (including reasonable attorneys' and other
professional fees) incurred by the Tax Matters Partner in such capacity. Each
Partner who elects to participate in Company administrative tax proceedings
shall be responsible for its own expenses incurred in connection with such
participation. In addition, the cost of any adjustments to a Partner and the
cost of any resulting audits or adjustments of a Partner's tax return shall be
borne solely by the affected Partner.
(c) The Company shall to the fullest extent permitted by law indemnify and
hold harmless the Tax Matters Partner from and against any loss, liability,
damage, cost or expense (including reasonable attorneys' fees) sustained or
incurred as a result of any act or decision concerning Company tax matters and
within the scope of such Partner's responsibilities as Tax Matters Partner, so
long as such act or decision was not the result of gross negligence, fraud, bad
faith, reckless disregard or willful misconduct by the Tax Matters Partner. The
Tax Matters Partner shall be entitled to rely on the advice of legal counsel as
to the nature and scope of its responsibilities and authority as Tax Matters
Partner, and any act or omission of the Tax Matters Partner pursuant to such
advice shall in no event subject the Tax Matters Partner to liability to the
Company or any Partner.
Section 10.4 Tax Elections. The Company will elect to amortize
organizational costs. The Company will file an election under IRC Section 754,
if it has not already done so, in accordance with applicable Treasury
Regulations, to cause the basis of the Company's property to be adjusted for
federal income tax purposes as provided by IRC Section 734 and IRC Section 743.
Section 10.5 Allocation of Certain Company Debt for Tax Purposes.
Notwithstanding any provision in this Partnership Agreement or in the Alliance
Agreement, with respect to all or any portion (at Xxxx Atlantic's option) of
the Company's debt in existence prior to the Effective Date and any other debt
assumed by the Company from Xxxx Atlantic prior to the Effective Date, and Xxxx
Atlantic (or an Affiliate of Xxxx Atlantic) will agree to indemnify and hold
harmless each member of the Vodafone Group and any Affiliate thereof against
any loss incurred by such party that exceeds the amount of the loss such party
would have incurred if the Company were a limited partnership and each member
of the Vodafone Group were a limited partner. This section is intended to
permit Xxxx Atlantic to ensure that a certain amount of debt (as determined by
Xxxx Atlantic) is allocated to members of the Xxxx Atlantic Group for purposes
of IRC Section 752. In addition, for a five year period the Company and the
Partners will take all steps necessary to ensure that any debt assumed or taken
47
subject to by the Company from each member of the Vodafone Group shall be
allocated to such entity for purposes of IRC Section 752. For these purposes,
with respect to nonrecourse debt (within the meaning of Treas. Reg.
ss.1.752-1(a)) if any, the Partners agree to utilize, if necessary to satisfy
the preceding sentence, Prop. Treas. Reg. ss.1.752-3(a)(3) and ss.1.752-3(b) or
final regulations that allow for similar allocations of nonrecourse debt. In
addition, the Company shall be permitted to pay off principal with respect to
such debt only if such payment is made from proceeds of other indebtedness
which is allocated to such entity, in similar amounts, for purposes of IRC
Section 752.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Binding Effect. This Partnership Agreement shall be binding
upon any Person who executes this Partnership Agreement or any permitted
transferee or permitted assignee of an interest in the Company.
Section 11.2 Entire Agreement. This Partnership Agreement, the Alliance
Agreement, the Investment Agreement and the other agreements entered into by
Xxxx Atlantic (or any Affiliate thereof) and Vodafone (or any Affiliate
thereof) in connection with the Alliance Agreement contain the entire agreement
of the parties hereto with respect to the subject matter hereof and supersede
all prior understandings and agreements of the parties with respect thereto.
Section 11.3 Amendments. This Partnership Agreement may not be amended
except by the written agreement of all of the Partners.
Section 11.4 Governing Law. The laws of the State of Delaware shall govern
the validity, interpretation, construction, performance, and enforcement of
this Partnership Agreement, excluding the choice of laws provisions of the
State of Delaware.
Section 11.5 Notices to Partners. Except as otherwise provided in this
Partnership Agreement, any notice, demand or communication to a Partner
required or permitted to be given by any provision of this Partnership
Agreement shall be deemed to have been sufficiently given or served for all
purposes if delivered personally or sent by facsimile transmission or overnight
express to the Partner the same is directed or, if sent by registered or
certified mail, postage and charges prepaid, addressed to the Partner as
follows, in the case of the Initial Xxxx Atlantic Partners and the Initial
Vodafone Partners, and with respect to any subsequently admitted Partner, to
the notice address that such Partner provides to the Company (the Company shall
then provide each of the other Partners with a copy of such notice):
(a) If to the Initial Xxxx Atlantic Partners:
c/x Xxxx Atlantic Corporation
1095 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Vice President and General Counsel
Fax No.: (000) 000-0000
with required copies to:
Xxxx Atlantic Network Services, Inc.
0000 Xxxx Xxxxxx, 00X
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxx,
General Attorney - Mergers and Acquisitions
Fax No.: (000) 000-0000
48
and
Xxxxxx, Xxxxx & Bockius LLP
000 Xxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Attention: N. Xxxxxxx Xxxxxxx
Fax No.: (000) 000-0000
(b) If to the Initial Vodafone Partners:
Vodafone PLC
Xxx Xxxxxxxxx
0-0 Xxxxxx Xxxx
Xxxxxxx
Xxxxxxxxx XX000 JX
England
Attention: Xxxxxxx Xxxxx
Fax No.: 000-00-0000-000-000
with a required copy to:
Pillsbury Madison & Sutro LLP
00 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxxxxx III
Fax No.: (000) 000-0000
Section 11.6 Bank Accounts. The Company shall maintain
appropriate accounts at one or more financial institutions for all funds of the
Company. Such accounts shall be used solely for the business of the Company.
Withdrawal from such accounts shall be made only upon the signature of those
persons authorized by the Board of Representatives.
Section 11.7 Headings. The titles of the Articles and the headings of the
Sections of this Partnership Agreement are for convenience of reference only
and are not to be considered in construing the terms and provisions of this
Partnership Agreement.
Section 11.8 Pronouns. All pronouns shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the person
or persons, firm or corporation may require in the context thereof.
49
Section 11.9 Waivers. The failure of any party to seek redress
for violation of or to insist upon the strict performance of any covenant or
condition of this Partnership Agreement shall not prevent a subsequent act,
that would have originally constituted a violation, from having the effect of
an original violation.
Section 11.10 No Third Party Beneficiaries. None of the provisions of this
Partnership Agreement shall be for the benefit of or enforceable by any Person
other than the parties to this Partnership Agreement, persons expressly
identified in this Agreement as having rights hereunder, and their respective
permitted successors and permitted transferees and assigns and the Persons
entitled to the benefits of Article V of this Partnership Agreement.
Section 11.11 Interpretation. It is the intention of the Partners that,
during the term of this Partnership Agreement, the rights and obligations of
the Partners and their successors-in-interest shall be governed by the terms of
this Agreement, and that the right of any Partner or successor-in-interest to
assign, transfer, sell or otherwise dispose of any interest in the Company
shall be subject to limitations and restrictions of this Partnership Agreement.
Section 11.12 Further Assurances. Each Partner shall execute all such
certificates and other documents and shall do all such other acts as the
Officers deem appropriate to comply with the requirements of law for the
formation of the Company and to comply with any laws, rules, regulations and
third-party requests relating to the acquisition, operation or holding of the
property of the Company.
Section 11.13 Counterparts. This Partnership Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument. This Partnership
Agreement shall become effective when each party to this Partnership Agreement
shall have received a counterpart hereof signed by the other party to this
Partnership Agreement.
Section 11.14 Illegality and Severability. If application of any one or
more of the provisions of this Partnership Agreement shall be unlawful under
applicable law and regulations, then the parties will attempt in good faith to
make such alternative arrangements as may be legally permissible and which
carry out as nearly as practicable the terms of this Partnership Agreement.
Should any portion of this Partnership Agreement be deemed unenforceable by a
court of competent jurisdiction, the remaining portion hereof shall remain
unaffected and be interpreted as if such unenforceable portions were initially
deleted.
Section 11.15 Confidentiality.
(a) Maintenance of Confidentiality. Each of the Partners shall, during the
term of this Agreement and at all times thereafter, maintain in confidence all
confidential and proprietary information and data of the Company and the other
Partners or its Affiliates disclosed to it (the "Confidential Information").
Each of the Partners further agrees that it shall not use the Confidential
Information during the term of this Agreement or at any time thereafter for any
purpose other than the performance of its obligations or the exercise of its
rights under this Agreement. The Company and each Partner shall take all
reasonable measures necessary to prevent any unauthorized disclosure of the
Confidential Information by any of their Affiliates and their respective
officers, directors, employees, agents or consultants.
50
(b) Permitted Disclosures. Nothing herein shall prevent the Company, any
Partner, or any employee, agent or consultant of the Company or any Partner (in
such capacity, the "Receiving Party") from using, disclosing, or authorizing
the disclosure of any information it receives in the course of the business of
the Company from the Company or another Partner (in such capacity, the
"Disclosing Partner") which:
(i) becomes publicly available without default hereunder by the Receiving
Party;
(ii) is lawfully acquired by the Receiving Party, without restriction on
use or disclosure, from a source not under any obligation to the
Disclosing Party regarding disclosure of such information;
(iii) is in the possession of the Receiving Party, without restriction on
use or disclosure, in written or other recorded form at the time of
its disclosure hereunder;
(iv) is disclosed without restriction on use or disclosure to any third
party by or with the permission of the Disclosing Party;
(v) the Receiving Party believes in good faith to be required by Law (as
defined in the Alliance Agreement) or by the terms of any listing
agreement with a securities exchange, provided that the receiving
party consults with the other Partners to the extent reasonably
practicable prior to making such disclosure.
(vi) is determined by a Partner in its reasonable judgment to be necessary
or desirable in connection with rating agency, equity investment,
business combination, corporate financing and related activities,
subject to customary confidentiality arrangements; or
(vii) as provided in Section 8.3(f).
IN WITNESS WHEREOF, the undersigned Partners, intending to be legally
bound, have executed this Partnership Agreement as of the date first above
written.
XXXX ATLANTIC CELLULAR HOLDINGS, L.P.
By: Metro Mobile CTS of
Charlotte, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title:
NYNEX PCS INC.
By: /s/ S. Xxxx Xxxxxx
----------------------------------
Name: S. Xxxx Xxxxxx
Title:
PCSCO PARTNERSHIP
By: Xxxx Atlantic Personal
Communications, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title:
PCS NUCLEUS L.P.
By: /s/ Xxxx Xxxxx
----------------------------------
Name: Xxxx Xxxxx
Title:
JV PARTNERCO, LLC
By: /s/ Xxxx Xxxxx
----------------------------------
Name: Xxxx Xxxxx
Title:
AIRTOUCH PAGING
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
