1
EXHIBIT 99.1
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
MAJORCO, L.P.,
A DELAWARE LIMITED PARTNERSHIP
dated as of January 31, 1996
among
SPRINT SPECTRUM, L.P.
TCI NETWORK SERVICES
COMCAST TELEPHONY SERVICES
and
COX TELEPHONY PARTNERSHIP
2
TABLE OF CONTENTS
SECTION 1. THE PARTNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Continuation of the Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Principal Executive Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Filings; Agent for Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8 Payments of Individual Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.9 Independent Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.10 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.11 Additional Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
1.12 Terms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2. PARTNERS' CAPITAL CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.1 Percentage Interests; Preservation of Percentages of Interests Held as General Partners and as Limited
Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.2 Partners' Original Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.3 Additional Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.4 Failure to Contribute Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.5 Other Additional Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
2.6 Partnership Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
2.7 Partner Loans; Other Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
2.8 Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 3. ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.1 Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.2 Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3.3 Special Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3.4 Curative Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
3.5 Loss Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
3.6 Other Allocation Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
3.7 Tax Allocations: Code Section 704(C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 4. DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
4.1 Available Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
4.2 Tax Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
4.3 Amounts Withheld . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 5. MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.1 Authority of the Partnership Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.2 Business Plan and Annual Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.3 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
5.4 Limitation of Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
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5.5 Liability of Partners, Representatives and Partnership Employees . . . . . . . . . . . . . . . . . . . . 60
5.6 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
5.7 Temporary Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
5.8 Deadlocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
5.9 Conversion to Corporate Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 6. PARTNERSHIP OPPORTUNITIES; CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
6.1 Competitive Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
6.2 Enforceability and Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.3 General Exceptions to Section 6.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.4 Comcast Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
6.5 Freedom of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
6.6 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 7. ROLE OF EXCLUSIVE LIMITED PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
7.1 Rights or Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
7.2 Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 8. TRANSACTIONS WITH PARTNERS; OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.1 Sprint Cellular . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.2 Sprint Brand Licensing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
8.3 Marketing; Branding of Partnership Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
8.4 Preferred Provider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
8.5 MFJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
8.6 Interested Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
8.7 Access to Technical Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
8.8 Parent Undertaking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
8.9 Certain Additional Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
8.10 PioneerCo Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
8.11 Foreign Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
8.12 Product Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
8.13 Provision of Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
8.14 Comcast Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
8.15 Purchasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
8.16 Advertising Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 9. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
9.1 Representations and Warranties by Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
9.2 Representation and Warranty of Sprint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 10. ACCOUNTING, BOOKS AND RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
10.1 Accounting, Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
10.2 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
10.3 Tax Returns and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
10.4 Proprietary Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
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SECTION 11. ADVERSE ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
11.1 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
11.2 Adverse Act Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
11.3 Net Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
11.4 Gross Appraised Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
11.5 Extension of Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
SECTION 12. DISPOSITIONS OF INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
12.1 Restriction on Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
12.2 Permitted Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
12.3 Conditions to Permitted Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
12.4 Right of First Refusal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
12.5 Tagalong Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
12.6 Offer and Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
12.7 Right of First Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
12.8 Prohibited Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
12.9 Representations Regarding Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
12.10 Distributions and Allocations in Respect of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
SECTION 13. CONVERSION OF INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
13.1 Termination of Status as General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
13.2 Restoration of Status as General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
SECTION 14. DISSOLUTION AND WINDING UP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
14.1 Liquidating Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
14.2 Winding Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
14.3 Compliance With Certain Requirements of
Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
14.4 Deemed Distribution and Recontribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
14.5 Rights of Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
14.6 Notice of Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
14.7 Buy/Sell Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
SECTION 15. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
15.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
15.2 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
15.3 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
15.4 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
15.5 Table of Contents; Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
15.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
15.7 Incorporation by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
15.8 Further Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
15.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
15.10 Waiver of Action for Partition; No Xxxx For . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
15.11 Counterpart Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
15.12 Sole and Absolute Discretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
15.13 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
15.14 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
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15.15 Limitation on Rights of Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
15.16 Waivers; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
15.17 Jurisdiction; Consent to Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
15.18 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
15.19 No Right of Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
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SCHEDULES
Schedule Number
-------- ------
Excluded Businesses; Non-Exclusive Services and Wireless Exclusive Services . . . . . . . 1.10(a)
Sprint Cellular Service Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10(b)
Initial Percentage Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Notice Addresses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2
Simple Majority Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(i)
Required Majority Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(j)
Unanimous Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(k)
Unanimous Partner Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(l)
Temporary Investments Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7
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EXHIBITS
Exhibit Number
------- ------
Form of Amended and Restated Parent Undertaking . . . . . . . . . . . . . . . . . . . . . 1.10(a)
Form of Parents Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10(b)
Form of Default Loan Promissory Note . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4(c)(ii)
Form of Partner Loan Promissory Note . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7
Form of Amended and Restated Sprint Trademark License Agreement . . . . . . . . . . . . . 8.2
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
MAJORCO, L.P.,
A DELAWARE LIMITED PARTNERSHIP
This AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP is entered
into as of the 31st day of January, 1996, by and among Sprint Spectrum, L.P., a
Delaware limited partnership ("Sprint"), TCI Network Services, a Delaware
general partnership ("TCI"), Comcast Telephony Services, a Delaware general
partnership ("Comcast"), and Cox Telephony Partnership, a Delaware general
partnership ("Cox"), each as a General Partner and a Limited Partner, pursuant
to the provisions of the Delaware Revised Uniform Limited Partnership Act, on
the following terms and conditions:
WHEREAS, Sprint, TCI, Comcast and Cox entered into that certain
Agreement of Limited Partnership of MajorCo, L.P., dated as of March 28, 1995
(as amended by that certain First Amendment to Agreement of Limited Partnership
dated as of August 31, 1995, the "Prior Partnership Agreement"), providing for
the formation of the Partnership by the filing of a Certificate of Limited
Partnership with the Secretary of State of Delaware;
WHEREAS, Sprint, TCI, Comcast and Cox wish to further amend the Prior
Partnership Agreement and to restate the Prior Partnership Agreement, as so
amended, in its entirety; and
WHEREAS, Sprint, TCI, Comcast and Cox wish to continue the Partnership
upon the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements contained herein, and in order to set forth the respective
rights, obligations, and interests of the parties to one another, the parties,
intending to be legally bound, hereby agree as follows:
SECTION 1. THE PARTNERSHIP
1.1 Continuation of the Partnership.
The Partnership was formed on March 28, 1995. The Partners hereby
agree to continue the Partnership as a limited partnership pursuant to the
provisions of the Act and upon the terms and conditions set forth in this
Agreement. This Agreement completely amends, restates and supersedes the Prior
Partnership Agreement.
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1.2 Name.
The name of the Partnership shall be MajorCo, L.P., and all business
of the Partnership shall be conducted in such name or, in the discretion of the
Partnership Board, under any other names (but excluding a name that includes
the name of a Partner unless such Partner has consented thereto).
1.3 Purpose.
(a) Subject to, and upon the terms and conditions of this
Agreement, the purposes of the Partnership shall be to engage in the Wireless
Business and in the provision of Non-Exclusive Services, either directly or
through one or more Subsidiaries, and to perform such activities in the
furtherance of such Wireless Business and provision of Non-Exclusive Services
as may be approved from time to time by the Partnership Board. Without a
Unanimous Partner Vote, the Partnership shall not engage in any other business,
including any of the Excluded Businesses. Notwithstanding the preceding
sentence, the Partners acknowledge that (i) pursuant to the Prior Partnership
Agreement, the Partnership conducted certain activities relating to the
provision of wireline telecommunications services, (ii) such activities will be
terminated in an orderly manner as soon as practicable following the date of
this Agreement, but in no event earlier than the end of such period as the
Partnership Board may determine is needed to ensure an orderly disposition by
the Partnership of any assets or rights relating exclusively to such activities
and (iii) any assets or other rights relating exclusively to such activities
that are owned by the Partnership shall be disposed of in such a manner as
determined by a Unanimous Vote of the Partnership Board.
(b) The Partnership shall have all the powers now or
hereafter conferred by the laws of the State of Delaware on limited
partnerships formed under the Act and, subject to the limitations of this
Agreement, may do any and all lawful acts or things that are necessary,
appropriate, incidental or convenient for the furtherance and accomplishment of
the purposes of the Partnership. Without limiting the generality of the
foregoing, and subject to the terms of this Agreement, the Partnership may
enter into, deliver and perform all contracts, agreements and other
undertakings and engage in all activities and transactions as may be necessary
or appropriate to carry out its purposes and conduct its business.
1.4 Principal Executive Office.
The principal executive office of the Partnership shall be located in
such place as determined by the Partnership Board, and the Partnership Board
may change the location of the principal executive office of the Partnership to
any other place within or without the State of Delaware upon ten (10) Business
Days prior notice to each of the Partners, provided that such principal
executive office shall be located in the United States. The
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Partnership Board may establish and maintain such additional offices and places
of business of the Partnership, within or without the State of Delaware, as it
deems appropriate.
1.5 Term.
The term of the Partnership commenced on the date the certificate of
limited partnership described in Section 17-201 of the Act (the "Certificate")
was filed in the office of the Secretary of State of Delaware in accordance
with the Act and shall continue until the winding up and liquidation of the
Partnership and its business is completed following a Liquidating Event, as
provided in Section 14.
1.6 Filings; Agent for Service of Process.
(a) The General Partners caused the Certificate to be
filed in the office of the Secretary of State of Delaware in accordance with
the Act. The Partnership Board shall take any and all other actions reasonably
necessary to perfect and maintain the status of the Partnership as a limited
partnership under the laws of Delaware. The General Partners shall cause
amendments to the Certificate to be filed whenever required by the Act. The
Partners shall be provided with copies of each document filed or recorded as
contemplated by this Section 1.6 promptly following the filing or recording
thereof.
(b) The General Partners shall execute and cause to be
filed original or amended Certificates and shall take any and all other actions
as may be reasonably necessary to perfect and maintain the status of the
Partnership as a limited partnership or similar type of entity under the laws
of any other states or jurisdictions in which the Partnership engages in
business.
(c) The registered agent for service of process on the
Partnership shall be The Corporation Trust Company or any successor as
appointed by the Partnership Board in accordance with the Act. The registered
office of the Partnership in the State of Delaware is located at Corporation
Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
1.7 Title to Property.
No Partner shall have any ownership interest in its individual name or
right in any real or personal property owned, directly or indirectly, by the
Partnership, and each Partner's Interest shall be personal property for all
purposes. The Partnership shall hold all of its real and personal property in
the name of the Partnership or its nominee and not in the name of any Partner.
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1.8 Payments of Individual Obligations.
The Partnership's credit and assets shall be used solely for the
benefit of the Partnership, and no asset of the Partnership shall be
Transferred or encumbered for, or in payment of, any individual obligation of
any Partner.
1.9 Independent Activities.
Each Partner and any of its Affiliates shall be required to devote
only such time to the affairs of the Partnership as such Partner determines in
its sole discretion may be necessary to manage and operate the Partnership to
the extent contemplated by this Agreement, and each such Person, except as
expressly provided herein, shall be free to serve any other Person or
enterprise in any capacity that it may deem appropriate in its discretion.
1.10 Definitions.
Capitalized words and phrases used in this Agreement have the
following meanings:
"Accountants" means, as of any time, such firm of nationally
recognized independent certified public accountants that, as of such time, has
been appointed by the Partnership Board as the accountants for the Partnership.
"Act" means the Delaware Revised Uniform Limited Partnership
Act, as set forth in Del. Code Xxx. tit. 6, Sections 17-101 to 17-1109.
"Additional Capital Contributions" means, with respect to each
Partner, the Capital Contributions made by such Partner pursuant to Section 2.3
of the Prior Partnership Agreement on or after January 1, 1996 and prior to the
date of this Agreement, and the Capital Contributions made by such Partner
pursuant to Sections 2.3 (except as otherwise provided in Sections 2.3(a)(i)
and (ii)), 2.4, 2.5 and 8.10, but excluding Special Contributions, reduced in
each case by the amount of any liabilities of such Partner assumed by the
Partnership in connection with such Capital Contribution or any Nonrecourse
Liabilities of such Partner that are secured by any property contributed by
such Partner as a part of such Capital Contribution. In the event all or a
portion of an Interest is Transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the Additional Capital Contributions
of the transferor to the extent they relate to the Transferred Interest.
"Additional Contribution Agreement" means a contribution
agreement the terms of which have been approved by the Unanimous Vote of the
Partnership Board pursuant to which a Partner makes an Additional Capital
Contribution to the Partnership pursuant to Section 2.5.
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"Additional Contribution Notice" means a written notice given
to all Partners, which shall (i) state the Additional Contribution Amount being
requested of all Partners and each Partner's proportionate share thereof
determined as provided in Section 2.3(b)(i) (or, in the case of a required
Additional Capital Contribution in respect of a Declined Accelerated
Contribution, as provided in Section 2.3(b)(ii)(B)), (ii) if applicable, state
that the Additional Capital Contribution being requested is a Second Tranche
Call, (iii) specify in reasonable detail the purposes for which the Additional
Contribution Amount is required, (iv) identify a date (the "Contribution
Date"), not more than forty-five (45) days nor less than thirty (30) days after
the date of such notice, upon which the Additional Capital Contributions are to
be made, (v) specify the account of the Partnership to which the contribution
is to be made and (vi) if the Additional Capital Contribution is being
requested at such time as the aggregate amount of Original Capital
Contributions and Additional Capital Contributions (including the Additional
Capital Contribution being requested) made or requested to be made in
accordance with this Agreement (excluding any PioneerCo Contribution) exceeds
Five Billion Dollars ($5,000,000,000), state the Base Value, the estimated
Gross Appraised Value and the estimated aggregate Adjusted Net Equity of all
Partners as of the applicable Contribution Date.
"Adjusted Capital Account Deficit" means, with respect to any
Exclusive Limited Partner, the deficit balance, if any, in such Exclusive
Limited Partner's Capital Account as of the end of the relevant Allocation
Year, after giving effect to the following adjustments:
(i) Credit to such Capital Account any amounts
which such Exclusive Limited Partner is obligated to restore pursuant to any
provision of this Agreement or is deemed to be obligated to restore pursuant to
the penultimate sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and
(ii) Debit to such Capital Account the items
described in Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704- 1(b)(2)(ii)(d) of the Regulations
and shall be interpreted consistently therewith.
"Adverse Act" means, with respect to any Partner, any of the
following:
(i) Such Partner becomes a Defaulting Partner;
(ii) Such Partner Disposes of all or any part of
its Interest except as required or permitted by this Agreement; provided,
however, that no Adverse Act shall be considered to have occurred until thirty
(30) days following the involuntary
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encumbrance of all or any part of such Interest if during such thirty (30) day
period the affected Partner acts diligently to, and prior to the end of such
thirty (30) day period does, remove any such encumbrance, including effecting
the posting of a bond to prevent foreclosure where necessary;
(iii) Such Partner has committed a material breach
of any material covenant contained in this Agreement (other than as otherwise
expressly enumerated in this definition) or a material default on any material
obligation provided for in this Agreement (other than as otherwise expressly
enumerated in this definition) and such breach or default continues for thirty
(30) days after the date written notice thereof has been given to such Partner
by any General Partner (with a copy to the Partnership Board and each other
Partner); provided that if such breach or default is not a failure to pay money
and is of such a nature that it cannot reasonably be cured within such thirty
(30) day period, but is curable and such Partner in good faith begins efforts
to cure it within such thirty (30) day period and continues diligently to do
so, such Partner shall have a reasonable additional period thereafter to effect
the cure (which shall not exceed an additional ninety (90) days unless
otherwise approved by the Partnership Board by Required Majority Vote); and
provided further that if, within thirty (30) days after the date written notice
of such breach or default has been given to such Partner, such Partner delivers
written notice (the "Contest Notice") to the Partnership Board and all other
Partners that it contests such notice of breach or default, such breach or
default shall not constitute an Adverse Act unless and until (and assuming that
such breach or default has not theretofore been cured in full and that any
applicable cure period has expired) (A) the disinterested Representatives
determine in good faith by Required Majority Vote that such Partner has
committed such a breach or default or (B) there is a Final Determination that
such Partner's actions or failures to act constituted such a breach or default;
and provided further that this clause (iii) shall not apply in the event of a
breach of Section 8.5 hereof, which breach shall constitute an Adverse Act (if
at all) pursuant to clause (vii) below;
(iv) The Bankruptcy of such Partner or the
occurrence of any other event which would permit a trustee or receiver to
acquire control of the affairs or assets of such Partner;
(v) The occurrence of a Change in Control of such
Partner without the unanimous written consent of the other General Partners;
(vi) An IXC Transaction has occurred with respect
to such Partner;
(vii) The occurrence of any event with respect to
such Partner (A) that causes such Partner or the Partnership or any of its
Subsidiaries to become a BOC or (B) that causes the Partnership or any of its
Subsidiaries to become a BOC Affiliated
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Enterprise or an entity subject to any restriction or limitation under Section
II of the MFJ, provided, however, that (a) the circumstances that constitute an
Adverse Act under clause (B) above must have a material adverse effect on the
business, assets, liabilities, results of operations, financial condition or
prospects of the Partnership and its Subsidiaries and (b) no Adverse Act shall
be considered to have occurred if such Partner has taken actions which have
cured the circumstances that would otherwise have constituted an Adverse Act
under clause (A) or (B), as applicable, of this clause (vii) within ninety (90)
days following the date written notice of the occurrence of such event has been
given to such Partner by any General Partner (with a copy to the Partnership
Board and each other Partner); and provided further that if, within ninety (90)
days after the date written notice of such occurrence has been given to such
Partner, such Partner delivers a Contest Notice to the Partnership Board and
all other Partners that it contests such occurrence (or contests whether such
occurrence constitutes an Adverse Act under this clause (vii)), such occurrence
shall not constitute an Adverse Act unless and until (and assuming that such
circumstances have not theretofore been cured in full and that the applicable
cure period has expired) (a) the disinterested Representatives determine in
good faith by Required Majority Vote that such occurrence constitutes an
Adverse Act under this clause (vii) or (b) there is a Final Determination that
such occurrence constitutes an Adverse Act under this clause (vii); or
(viii) Such Partner otherwise causes a dissolution
of the Partnership in contravention of the terms of this Agreement (other than
solely by reason of the Bankruptcy of such Partner).
An "Adverse Partner" is any Partner with respect to which an
Adverse Act has occurred.
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly through one or more intermediaries controls,
is controlled by, or is under common control with such Person. For purposes of
this definition, the term "controls" (including its correlative meanings
"controlled by" and "under common control with") shall mean the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise. Notwithstanding the foregoing, (i)
neither the Partnership nor MinorCo, nor any Person controlled by the
Partnership or MinorCo (including WirelessCo), shall be deemed to be an
Affiliate of any Partner or of any Affiliate of any Partner and (ii) no Partner
or any Affiliate thereof shall be deemed to be an Affiliate of any other
Partner or any Affiliate thereof solely by virtue of the ownership by such
Partner or any of its Affiliates of any equity interest in the Partnership,
MinorCo or PhillieCo.
"Agreed Value" means the agreed upon value of a Capital
Contribution by a Partner of the Property identified below, determined as
provided below:
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(i) with respect to the Property included in the
Original Capital Contribution of such Partner, the amount set forth next to
such Partner's name in Schedule 2.2 to the Prior Partnership Agreement;
(ii) with respect to the License Contribution by
Cox, $17,647,059; and
(iii) with respect to the Omaha License, an amount
equal to the sum of (A) $995,564.00, together with interest at the rate of
13.4% per annum computed from November 17, 1994 through the date that the Omaha
License is contributed to the Partnership pursuant to Section 2.3(a)(ii) plus
(B) $4,062,400.00, together with interest at the rate of 13.4% per annum
computed from June 30, 1995 through the date that the Omaha License is
contributed to the Partnership pursuant to Section 2.3(a)(ii).
"Agreement" or "Partnership Agreement" means this Amended and
Restated Agreement of Limited Partnership, including all Schedules hereto, as
amended from time to time.
"Allocation Year" means (i) the period commencing on the date
of the Prior Partnership Agreement and ending on December 31, 1995, (ii) any
subsequent twelve (12) month period commencing on January 1 and ending on
December 31, or (iii) any portion of the period described in clauses (i) or
(ii) for which the Partnership is required to allocate Profits, Losses, and
other items of Partnership income, gain, loss or deduction pursuant to Section
3.
"Available Cash" means as of any date the cash of the
Partnership as of such date less such portion thereof as the Partnership Board
determines to reserve for Partnership expenses, debt payments, capital
improvements, replacements, and contingencies.
"Bankruptcy" means, with respect to any Person, a "Voluntary
Bankruptcy" or an "Involuntary Bankruptcy." A "Voluntary Bankruptcy" means,
with respect to any Person, the inability of such Person generally to pay its
debts as such debts become due (other than any obligation of such Person to
make capital contributions under this Agreement), or an admission in writing by
such Person of its inability to pay its debts generally or a general assignment
by such Person for the benefit of creditors; the filing of any petition or
answer by such Person seeking to adjudicate it bankrupt or insolvent, or
seeking for itself any liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of such Person or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking, consenting to, or acquiescing in the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for such Person or for any substantial part of its property; or
corporate action taken by such Person to authorize any of the actions set forth
above. An "Involuntary Bankruptcy" means, with respect to any Person, without
the consent or acquiescence of such
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Person, the entering of an order for relief or approving a petition for relief
or reorganization or any other petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or other
similar relief under any present or future bankruptcy, insolvency or similar
statute, law or regulation, or the filing of any such petition against such
Person which petition shall not be dismissed within ninety (90) days, or,
without the consent or acquiescence of such Person, the entering of an order
appointing a trustee, custodian, receiver or liquidator of such Person or of
all or any substantial part of the property of such Person which order shall
not be dismissed within sixty (60) days.
"BOC" means a "BOC" or one of the "Xxxx Operating Companies"
as defined in Section IV.C of the MFJ.
"BOC Affiliated Enterprise" has the same meaning as the term
"affiliated enterprise" as used with respect to "BOC" or "Xxxx Operating
Companies" in Section II.D of the MFJ.
"BTA" means a Basic Trading Area, as defined in the FCC rules
to be codified at 47 C.F.R. Section 24.13.
"Business Day" means a day of the year on which banks are not
required or authorized to close in the State of New York.
"Cable Partners" means Comcast, Cox and/or TCI, as the context
may require.
"Cable Subsidiary" has the meaning set forth in the form of
Parents Agreement attached as Exhibit 1.10(b).
"Capital Account" means, with respect to any Partner, the
Capital Account maintained for such Partner in accordance with the following
provisions:
(i) To each Partner's Capital Account there shall
be credited such Partner's Capital Contributions, such Partner's distributive
share of Profits and any items in the nature of income or gain which are
specially allocated pursuant to Section 3.3 or Section 3.4, and the amount of
any Partnership liabilities which are assumed by such Partner or secured by any
Property distributed to such Partner as permitted by this Agreement.
(ii) To each Partner's Capital Account there shall
be debited the amount of cash and the Gross Asset Value of any Property
distributed or deemed to be distributed to such Partner pursuant to any
provision of this Agreement, such Partner's distributive share of Losses and
any items in the nature of expenses or losses which are specially allocated
pursuant to Section 3.3 or Section 3.4, and the amount of any liabilities of
such Partner assumed by the Partnership or any Nonrecourse Liabilities of such
Partner that are secured by any Property contributed by such Partner to the
Partnership.
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(iii) In the event all or a portion of an Interest
is Transferred in accordance with the terms of this Agreement, the transferee
shall succeed to the Capital Account of the transferor to the extent it relates
to the Transferred Interest.
(iv) In determining the amount of any liability
for purposes of the definitions of "Additional Capital Contributions" and
"Original Capital Contribution" and subparagraphs (i) and (ii) of this
definition of "Capital Account," there shall be taken into account Code Section
752(c) and any other applicable provisions of the Code and Regulations.
The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Regulations
Section 1.704-1(b), and shall be interpreted and applied in a manner consistent
with such Regulations. In the event the Partnership Board determines that it
is prudent to modify the manner in which the Capital Accounts, or any debits or
credits thereto (including debits or credits relating to liabilities which are
secured by contributed or distributed property or which are assumed by the
Partnership or any Partner), are computed in order to comply with such
Regulations, the Partnership Board may make such modification, provided that it
is not likely to have a material effect on the amounts distributable to any
Partner pursuant to Section 14 upon the dissolution and winding up of the
Partnership. The Partnership Board also shall (i) make any adjustments that
are necessary or appropriate to maintain equality between the Capital Accounts
of the Partners and the amount of Partnership capital reflected on the
Partnership's balance sheet, as computed for book purposes, in accordance with
Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section 1.704-1(b). Any such decision
or action permitted to be taken by the Partnership Board under this paragraph
shall require the Unanimous Vote of the Partnership Board.
"Capital Commitment" of any Partner means (i) with respect to
the first Fiscal Year in the Initial Two- Year Period, an amount equal to the
product of (A) such Partner's initial Percentage Interest and (B) the Planned
Capital Amount for such Fiscal Year, and (ii) with respect to the last Fiscal
Year in the Initial Two-Year Period, an amount equal to the excess, if any, of
(A) the product of (1) such Partner's initial Percentage Interest and (2) the
sum of (a) the Planned Capital Amount for such Fiscal Year plus (b) any Prior
Year's Carryforward, over (B) that portion of the cumulative Accelerated
Contribution Amounts requested of and made by such Partner in the first Fiscal
Year in the Initial Two-Year Period that the Partnership Board has determined
pursuant to Section 2.3(b)(i) shall be applied to reduce the Planned Capital
Amount for such last Fiscal Year. In the event all or a portion of an Interest
is Transferred in accordance with this
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Agreement, the transferee shall succeed to the Capital Commitment of the
transferor to the extent it relates to the Transferred Interest and has not
been called in full.
"Capital Contribution" means, with respect to any Partner, the
amount of money and the Gross Asset Value at the time of contribution of any
Property (other than money) contributed to the Partnership with respect to the
Interest held by such Partner (including any contribution expressly excluded
from the definition of Additional Capital Contribution). The principal amount
of a promissory note which is not readily traded on an established securities
market and which is contributed to the Partnership by the maker of the note (or
a Partner related to the maker of the note within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(c)) shall not be included in the Capital Account of
any Partner until the Partnership makes a taxable disposition of the note or
until (and to the extent) principal payments are made on the note, all in
accordance with Regulations Section 1.704-1(b)(2)(iv)(d)(2).
"Carrier" has the meaning set forth in the definition of "IXC"
below.
"Change in Control" means, with respect to any Partner that
has a Parent other than itself, such Partner's ceasing to be a Subsidiary of
its Parent other than in connection with a Permitted Transaction.
"Chief Executive Officer" means the chief executive officer of
the Partnership, including any interim chief executive officer.
"Code" means the Internal Revenue Code of 1986.
"Comcast Parent" means Comcast Corporation, a Pennsylvania
corporation and any successor (by merger, consolidation, Transfer or otherwise)
to all or substantially all of its business and assets.
"Consumer Price Index" means the Consumer Price Index "All
Urban Consumers: U.S. city average, all items" (1982-1984 = 100) published by
the Bureau of Labor Statistics of the United States Department of Labor, or any
equivalent successor or substitute index selected by the Partnership Board and
published by the Bureau of Labor Statistics or a successor or substitute
governmental agency selected by the Partnership Board.
"Contest Notice" has the meaning set forth in clause (iii) of
the definition of "Adverse Act."
"Contribution Date" has the meaning set forth in the
definition of "Additional Contribution Notice."
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"Controlled Affiliate" of any Person means the Parent of such
Person and each Subsidiary of such Parent. As used in Sections 6, 8.5, 8.9 and
8.11 the term "Controlled Affiliate" shall also include any Affiliate of a
Person that such Person or its Parent can directly or indirectly unilaterally
cause to take or refrain from taking any of the actions required, prohibited or
otherwise restricted by such Section, whether through ownership of voting
securities, contractually or otherwise. As used in Sections 2.4, 5.1(c), 11.2,
12.4 and 12.5 the term "Controlled Affiliate" shall also include any Affiliate
of a Person that such Person or its Parent can directly or indirectly
unilaterally cause to take or refrain from taking any action regarding the
Partnership, whether through ownership of voting securities, contractually or
otherwise.
"Cox Parent" means Xxx Communications, Inc., a Delaware
corporation, and any successor (by merger, consolidation, Transfer or
otherwise) to all or substantially all of its business and assets.
"Cox Pioneer Partnership" means a general partnership to be
formed by a Subsidiary of Cox Parent and a Subsidiary of Xxx Enterprises, Inc.,
a Delaware corporation.
"Cox Pioneer Preference License" means the 00 XXx "X" xxxxx
PCS license granted to Cox Parent on December 14, 1994, for the MTA
encompassing Los Angeles and San Diego, California, which MTA is identified in
the FCC Public Notice regarding the PCS Auction as Market No. M-2 (Report No.
AUC-94-04, Auction No. 4).
"Cut-Off Time" means the earlier to occur of (i) the end of
the last Fiscal Year covered by the Initial Business Plan and (ii) such time as
the aggregate amount of Original Capital Contributions and Additional Capital
Contributions made or requested to be made (excluding any PioneerCo
Contribution) first equals or exceeds the Total Mandatory Contributions.
"Debt" means (i) any indebtedness for borrowed money or
deferred purchase price of property whether or not evidenced by a note, bond,
or other debt instrument, (ii) obligations to pay money as lessee under capital
leases, (iii) obligations to pay money secured by any mortgage, pledge,
security interest, encumbrance, lien or charge of any kind existing on any
asset owned or held by the Partnership whether or not the Partnership has
assumed or become liable for the obligations secured thereby, (iv) any
obligation under any interest rate swap agreement (the principal amount of such
obligation shall be deemed to be the notional principal amount on which such
swap is based), and (v) obligations under direct or indirect guarantees of
(including obligations (contingent or otherwise) to assure a creditor against
loss in respect of) indebtedness or obligations of the kinds referred to in
clauses (i), (ii), (iii) and (iv) above, provided that Debt shall not include
obligations in respect of any accounts
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payable that are incurred in the ordinary course of the Partnership's business
and are not delinquent or are being contested in good faith by appropriate
proceedings.
"Depreciation" means, for each Allocation Year, an amount
equal to the depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such Allocation Year, except that if the
Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such Allocation Year, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the federal income tax depreciation, amortization, or other cost
recovery deduction for such Allocation Year bears to such beginning adjusted
tax basis; provided, that if the adjusted basis for federal income tax purposes
of an asset at the beginning of such Allocation Year is zero, Depreciation
shall be determined with reference to such beginning Gross Asset Value using
any reasonable method selected by the Partnership Board; and provided, further,
that, consistent with Section 3.7, Depreciation with respect to Subsidiary
Partnership Property shall not be determined with regard to the distributive
share of depreciation expense directly or indirectly allocated to the
Partnership by the Subsidiary Partnership, but shall be computed with respect
to the initial Gross Asset Value of the Subsidiary Partnership interest
contributed to the Partnership as if such Subsidiary Partnership Property (or
the equivalent percentage thereof) were owned directly by the Partnership and
were contributed by the Partners who contributed the Subsidiary Partnership
interests.
"Dispose" (including its correlative meanings, "Disposed of",
"Disposition" and "Disposed"), with respect to any Interest means to Transfer,
pledge, hypothecate or otherwise dispose of such Interest, in whole or in part,
voluntarily or involuntarily, except by operation of law in connection with a
merger, consolidation or other business combination of the Partnership and
except that such term shall not include any pledge or hypothecation of, or
granting of a security interest in, an Interest that is approved by the
Partnership Board in connection with any financing obtained on behalf of the
Partnership.
"Excluded Businesses" has the meaning set forth in Schedule
1.10(a).
"Exclusive Limited Partner" means any Limited Partner that is
not also a General Partner.
"FCC" means the Federal Communications Commission.
"Final Determination" means (i) a determination set forth in a
binding settlement agreement between the Partnership and the Partner alleged to
have committed the Adverse Act, which has been approved by a Required Majority
Vote of the Partnership Board pursuant to Section 8.6 or (ii) a final judicial
determination, not subject to further appeal, by a court of competent
jurisdiction.
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"Fiscal Year" means (i) the period commencing on the date of
the Prior Partnership Agreement and ending on December 31, 1995, (ii) any
subsequent twelve (12) month period commencing on January 1, and ending on
December 31, or (iii) the period commencing on the immediately preceding
January 1 and ending on the date on which all Property is distributed to the
Partners pursuant to Section 14.2.
"GAAP" means generally accepted accounting principles in
effect in the United States of America from time to time.
"General Partner" means any Person who (i) is referred to as
such in the first paragraph of this Agreement or has become a General Partner
pursuant to the terms of this Agreement, and (ii) has not, at any given time,
ceased to be a General Partner pursuant to the terms of this Agreement.
"General Partners" means all such Persons.
"Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be the gross fair market
value of such asset, as determined by the contributing Partner and the
Partnership Board in accordance with Section 8.6, provided that the initial
Gross Asset Value of the Property contributed by the Partners pursuant to
Section 2.2 or either of clauses (i) or (ii) of Section 2.3(a) shall be the sum
of (1) the Agreed Value of such Property plus (2) the amount of any liabilities
of the contributing Partner assumed by the Partnership in connection with such
contribution or any Nonrecourse Liabilities of such Partner that are secured by
the contributed Property;
(ii) The Gross Asset Value of all Partnership
assets shall be adjusted to equal their gross fair market value, as determined
by the Partnership Board, as of the following times: (A) the acquisition of an
Interest by any new Partner in exchange for more than a de minimis Capital
Contribution; (B) the distribution by the Partnership to a Partner of more than
a de minimis amount of Property as consideration for an Interest; (C) the
liquidation of the Partnership within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g); (D) the conversion of a General Partner to an Exclusive
Limited Partner if, and only if, in the judgment of the Partnership Board, such
adjustment would either cause the Person who is being converted to an Exclusive
Limited Partner to have a deficit balance in its Capital Account or increase
the amount of such a deficit balance; and (E) the adjustment of the Percentage
Interests of the Partners pursuant to Section 2.4(d)(ii);
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(iii) The Gross Asset Value of any Partnership
asset distributed to any Partner shall be adjusted to equal the gross fair
market value of such asset on the date of distribution as determined by the
distributee and the Partnership Board in accordance with Section 8.6;
(iv) The Gross Asset Values of Partnership assets
shall be increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or Code Section 743(b),
but only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Regulation Section
1.704-1(b)(2)(iv)(m) and subparagraph (vi) of the definition of "Profits" and
"Losses" and Section 3.3(g); provided, however, that Gross Asset Values shall
not be adjusted pursuant to this subparagraph (iv) to the extent that an
adjustment pursuant to subparagraph (ii) hereof is made in connection with a
transaction that would otherwise result in an adjustment pursuant to this
subparagraph (iv); and
(v) If Gross Asset Value is required to be
determined for the purpose of Section 11.2 or 14.7, Gross Asset Value shall be
determined in the manner set forth in such Sections.
If the Gross Asset Value of an asset has been determined or
adjusted pursuant to clause (i), (ii) or (iv) of this definition, such Gross
Asset Value shall thereafter be adjusted by the Depreciation taken into account
with respect to such asset for purposes of computing Profits and Losses.
"Hypothetical Federal Income Tax Amount" means for any Fiscal
Year the product of (A) the daily weighted average highest marginal federal
income tax rate applicable to domestic corporations in effect for such Fiscal
Year expressed as a percentage and (B) the excess, if any, of (i) the
cumulative amount of taxable income and gain reported by the Partnership on its
Internal Revenue Service Forms 1065 over its life determined as of the end of
such Fiscal Year, over (ii) the larger of zero (0) or the cumulative amount of
taxable income and gain reported by the Partnership on its Internal Revenue
Service Forms 1065 over its life determined as of the beginning of such Fiscal
Year.
"Initial Two-Year Period" means the period from January 1,
1996 through December 31, 1997.
"Intermediate Subsidiary" means, with respect to any Parent of
a Partner, a Subsidiary of such Parent that holds a direct or indirect equity
interest in such Partner.
"Interest" means, as to any Partner, all of the interests of
such Partner in the Partnership, including any and all benefits to which the
holder of an interest in the Partnership may be entitled as provided in this
Agreement and under the Act, together with all obligations of such Partner to
comply with the terms and provisions of this Agreement.
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"IXC" means each of AT&T Corp., MCI Communications Corporation
and British Telecommunications plc (each, a "Carrier"), each successor to the
long distance telecommunications business of any of the foregoing entities and
each respective Affiliate of each such Carrier or successor.
"IXC Transaction" means, with respect to any Partner, that (i)
an IXC has become the beneficial owner of an equity interest in such Partner or
an equity interest in any Intermediate Subsidiary (other than a Publicly Held
Intermediate Subsidiary) of the Parent of such Partner, (ii) an IXC has become
the beneficial owner of securities representing fifteen percent (15%) or more
of the voting power of the outstanding voting securities of the Parent of such
Partner or any Publicly Held Intermediate Subsidiary of such Parent, and, if
such Parent or Publicly Held Intermediate Subsidiary is subject to a State
Statute or has a shareholder rights plan, such Parent or Publicly Held
Intermediate Subsidiary or the board of directors or other governing body of
such Parent or Publicly Held Intermediate Subsidiary has approved such
beneficial ownership or otherwise has taken action to waive any applicable
restrictions with respect to such ownership or the exercise by the IXC of its
rights arising from such ownership under such State Statute or shareholder
rights plan, (iii) an IXC has become the beneficial owner of securities
representing twenty-five percent (25%) or more of the voting power of the
outstanding voting securities of any such Parent or Publicly Held Intermediate
Subsidiary, provided that, if such IXC is an Affiliate of a Carrier, such
Affiliate has identified a Carrier as a Person controlling such Affiliate
either (a) pursuant to General Instruction C to Schedule 13D, in a Schedule 13D
(filed with the Securities and Exchange Commission in accordance with Section
13(d) of the Securities Exchange Act of 1934) or (b) pursuant to General
Instruction C to Schedule 14D-1, in a Schedule 14D-1 (filed with the Securities
and Exchange Commission in accordance with Section 14(d) of the Securities
Exchange Act of 1934), (iv) any such Parent or Publicly Held Intermediate
Subsidiary has sold or issued beneficial ownership in any equity interest in
such Parent or Publicly Held Intermediate Subsidiary to an IXC or granted to an
IXC any rights with respect to the governance of such Parent or Publicly Held
Intermediate Subsidiary that are not possessed generally by the owners of
outstanding equity interests in such Parent or Publicly Held Intermediate
Subsidiary; or (v) such Partner has otherwise become an Affiliate of an IXC.
Solely for the purposes of this definition the terms "beneficial owner" and
"beneficial ownership" shall have the same meaning as in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended.
"Joint Venture Formation Agreement" means the Second Amended
and Restated Joint Venture Formation Agreement of even date herewith among each
of the Parents providing for the formation of PioneerCo and certain other
matters.
"LEC" means a local exchange carrier.
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"Limited Partner" means any Person (i) who is referred to as
such in the first paragraph of this Agreement or who has become a Limited
Partner pursuant to the terms of this Agreement, and (ii) who, at any given
time, holds an Interest. "Limited Partners" means all such Persons.
"Local Joint Venture" means any joint venture or other entity
formed by, or any agreement or arrangement entered into between or among, as
applicable, Sprint or its Controlled Affiliates and one or more Cable Partners
or their respective Controlled Affiliates for purposes of providing or offering
local wireline telecommunications services under the Sprint Brand as
contemplated under a Parents Agreement.
"Mandatory Contribution" of any Partner means an amount equal
to the product of (i) such Partner's initial Percentage Interest times (ii) the
Total Mandatory Contributions.
"MFJ" means the Modification of Final Judgment agreed to by
the American Telephone and Telegraph Company and the U.S. Department of Justice
and approved by the U.S. District Court for the District of Columbia on August
24, 1982, as reported in United States v. Western Electric Company, Inc., et
al., 552 F. Supp. 131 (D.D.C. 1982), aff'd sub nom Maryland v. Xxxxxx Xxxxxx,
000 X.X. 0000 (1983) and any subsequent orders or amendments issued in
connection therewith. Any reference in this Agreement to Section II of the MFJ
shall also include any subsequent statute, rule, regulation, order or decree
which modifies or supersedes Section II of the MFJ (or any material portion
thereof) and imposes any restriction(s) substantially similar to any of the
material restrictions imposed by Section II of the MFJ.
"Minimum Ownership Requirement" means, with respect to (i) any
Original Partner, as of any date, that the ratio (expressed as a percentage) of
such Original Partner's Percentage Interest to the aggregate Percentage
Interests of all Original Partners is at least eight percent (8%) or (ii) any
Partner not an Original Partner, as of any date, that such Partner's Percentage
Interest is at least eight percent (8%).
"MinorCo" means MinorCo, L.P., the Delaware limited
partnership formed by the Partners for the purpose of holding a limited
partnership interest in WirelessCo and one or more other Subsidiaries of the
Partnership.
"MinorCo Interest" means, as to any Partner, all of the
interests of such Partner in MinorCo, including any and all benefits to which
the holder of an interest in MinorCo may be entitled as provided in the
partnership agreement of MinorCo and under the Act, together with all
obligations of such Partner to comply with the terms and provisions of the
partnership agreement of MinorCo.
"MSA" means a Metropolitan Statistical Area, as determined by
the U.S. Department of Commerce.
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"MTA" means a Major Trading Area as defined in FCC rules to be
codified at 47 C.F.R. Section 24.13.
"Non-Exclusive Services" has the meaning set forth in Schedule
1.10(a) hereto.
"Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(b)(1) of the Regulations.
"Nonrecourse Liability" has the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
"Omaha License" means the 30 MHz PCS license acquired by Cox
Parent in the PCS Auction for the MTA encompassing Omaha, Nebraska, which MTA
is identified in the FCC Public Notice regarding the PCS Auction as Market No.
M-45 (Report No. AUC-94-04, Auction No. 4).
"Original Capital Contribution" means, with respect to each
Partner, the Capital Contributions made by such Partner prior to January 1,
1996. In the event all or a portion of an Interest is Transferred in
accordance with the terms of this Agreement, the transferee shall succeed to
the Original Capital Contribution of the transferor to the extent it relates to
the Transferred Interest.
"Original Partners" means collectively Comcast, Cox, TCI and
Sprint and any successors or transferees thereof to the extent such successors
or transferees acquired their Interest in accordance with this Agreement.
"Parent" means, except as otherwise provided below with
respect to a Permitted Transaction, (i) with respect to Cox (and its Controlled
Affiliates), Cox Parent, (ii) with respect to Comcast (and its Controlled
Affiliates), Comcast Parent, (iii) with respect to TCI (and its Controlled
Affiliates), TCI Parent and (iv) with respect to Sprint (and its Controlled
Affiliates), Sprint Parent. With respect to any other Person hereafter
admitted to the Partnership as a Partner, the Parent with respect to such
Partner shall be the Person identified as such in a Schedule to be attached to
this Agreement in connection with the admission of such Partner. In the event
of a Permitted Transaction, the new Parent of the applicable Partner
immediately following such Permitted Transaction will be the ultimate parent
entity (as determined in accordance with the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 and the rules and regulations promulgated thereunder
(the "HSR Act")) of such Partner (or such Partner if it is its own ultimate
parent entity); provided that if such ultimate parent entity is not a Publicly
Held Person then the next highest corporate entity in the ownership chain from
such ultimate parent entity to and including such Partner which is a Publicly
Held Person shall be deemed to be the new Parent. If there is no intermediate
Publicly Held Person, the Parent shall be the highest entity in the ownership
chain from the ultimate parent entity to and including such Partner which is
not an individual.
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For purposes of the definition of Controlled Affiliate, the Parent of a Person
that is neither a Partner nor a Controlled Affiliate of a Partner is the
ultimate parent entity (as determined in accordance with the HSR Act) of such
Person.
"Parent Undertaking" means a written instrument in
substantially the form of Exhibit 1.10(a) executed simultaneously with the
execution of this Agreement by each Parent of a Partner.
"Parents Agreement" means, individually and collectively, the
separate agreements between Sprint Parent and each of TCI Parent, Comcast
Parent and Cox Parent, substantially in the form of Exhibit 1.10(b), executed
simultaneously with the execution and delivery of this Agreement.
"Partner Nonrecourse Debt" has the meaning set forth in
Section 1.704-2(b)(4) of the Regulations.
"Partner Nonrecourse Debt Minimum Gain" means an amount, with
respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain
that would result if such Partner Nonrecourse Debt were treated as a
Nonrecourse Liability, determined in accordance with Section 1.704-2(i)(3) of
the Regulations.
"Partner Nonrecourse Deductions" has the meaning set forth in
Sections 1.704-2(i)(1) and 1.704-2(i)(2) of the Regulations.
"Partners" means all General Partners and all Limited
Partners. "Partner" means any one of the Partners.
"Partnership" means the partnership formed pursuant to that
certain Agreement of Limited Partnership of MajorCo, L.P. dated as of March 28,
1995, and continued pursuant to this Agreement, and the partnership continuing
the business of this Partnership in the event of dissolution as herein
provided.
"Partnership Board" means the committee of Representatives
that will have the authority and powers set forth in Section 5.1.
"Partnership Minimum Gain" has the meaning set forth in
Sections 1.704-2(b)(2) and 1.704-2(d) of the Regulations.
"PCS" means a radio communications system authorized under the
rules for broadband personal communications services designated as Subpart E of
Part 24 of the FCC's rules, including the network, marketing, distribution,
sales, customer interface and operations functions relating thereto.
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"PCS Auction" means the series of simultaneous multiple round
auctions for broadband PCS licenses to be conducted by the FCC under the
authority of Section 309(j) of the Communications Act of 1934, 47 U.S.C.
Section 309(j) (1993), in accordance with the rules promulgated thereunder by
the FCC.
"Percentage Interest" means, with respect to any Partner as of
any relevant date, the ratio (expressed as a percentage) of the sum of such
Partner's Original Capital Contribution and aggregate Additional Capital
Contributions as of such date to the sum of the aggregate Original Capital
Contributions and Additional Capital Contributions of all Partners as of such
date; provided, however, that if any Partner fails for any reason to make its
Requested Contribution or any Preemptive Contribution after such time as the
aggregate amount of Original Capital Contributions and Additional Capital
Contributions made or requested to be made in accordance with this Agreement
(including any Additional Capital Contribution then being made or requested,
but excluding any PioneerCo Contribution) first equals Five Billion Dollars
($5,000,000,000), then effective as of the Contribution Date for such Requested
Contribution or, with respect to any Preemptive Contribution, the applicable
PioneerCo Contribution Date, and at all times thereafter, the Percentage
Interest of each Partner shall be determined in accordance with Section
2.4(d)(ii). Additional Capital Contributions of Premium Dollars pursuant to
Section 2.4(a)(v) shall be valued at their Premium Dollar value for purposes of
calculating Percentage Interests. Such Capital Contributions will be
determined after giving effect to all Capital Contributions made prior to and
on the date as of which the determination of Percentage Interests is made,
subject to the provisions regarding the adjustment of Percentage Interests set
forth in Section 2.4(d). In the event all or any portion of an Interest is
Transferred in accordance with the terms of this Agreement, the transferee
shall succeed to the Percentage Interest of the transferor to the extent it
relates to the Transferred Interest. In the case of an adjustment of Gross
Asset Value pursuant to clause (ii) of the definition of such term or an
adjustment of Percentage Interests pursuant to Section 2.4(d)(ii), any
references in Section 3 to "Percentage Interest" shall be deemed to refer to
the Percentage Interests of the Partners as of the day immediately preceding
the date of any such adjustment.
"Permitted Brand" means a trademark, trade name, service xxxx
and/or logo of a Cable Partner, Teleport or their respective Controlled
Affiliates, other than any trademark, trade name, service xxxx or logo of any
RBOC or IXC (as each such term is defined in the form of Parents Agreement
attached as Exhibit 1.10(b)).
"Permitted Transaction" with respect to a Partner means a
transaction or series of related transactions in which (i) such Partner ceases
to be a Subsidiary of its Parent or such Partner Transfers its Interest to a
Person that is not a Controlled Affiliate of such Partner and (ii) the new
Parent of such Partner (or such Partner if it is its own Parent) or the Parent
of the
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transferee of the Interest after giving effect to such transaction, or the last
transaction in a series of related transactions, owns, directly and indirectly
through its Controlled Affiliates, all or a Substantial Portion of the cable
television system assets (in the case of a Cable Partner) or long distance
telecommunications business assets (in the case of Sprint) owned by the Parent
of such Partner, directly and indirectly through its Controlled Affiliates,
immediately prior to the commencement of such transaction or series of
transactions. As used herein, "Substantial Portion" means (x) in the case of a
Cable Partner, cable television systems serving 75% or more of the aggregate
number of basic subscribers served by cable television systems in the United
States of America (including its territories and possessions other than Puerto
Rico) owned by the Parent of such Cable Partner, directly and indirectly
through its Controlled Affiliates, and (y) in the case of Sprint, long distance
telecommunications business assets serving 75% or more of the aggregate number
of customers served by the long distance telecommunications business in the
United States of America (including its territories and possessions other than
Puerto Rico) owned by the Parent of Sprint, directly and indirectly through its
Controlled Affiliates.
"Person" means any individual, partnership, corporation,
trust, or other entity.
"PioneerCo" means the Delaware limited partnership to be
formed by Cox Pioneer Partnership and WirelessCo to own the Cox Pioneer
Preference License and to operate a Wireless Business in connection therewith.
"PioneerCo Contribution" means a Capital Contribution of all
or any portion of Cox Pioneer Partnership's interest in PioneerCo as
contemplated under Section 8.10.
"PioneerCo Contribution Date" means a date on which a
PioneerCo Contribution is made.
"PioneerCo Partnership Agreement" means the Agreement of
Limited Partnership of PioneerCo to be entered into between WirelessCo and Cox
Pioneer Partnership.
"Planned Capital Amount" means, with respect to the first
Fiscal Year in the Initial Two-Year Period, $1,131,000,000, and with respect to
the last Fiscal Year in the Initial Two-Year Period, $767,000,000, as such
amount may be revised by the Unanimous Vote of the Partnership Board or reduced
pursuant to Section 2.3(b)(i).
"Premium Call" means a Second Tranche Call that has been
converted by a Simple Majority Vote of the Partnership Board to a Premium Call
pursuant to Section 2.4(a)(v).
"Premium Call Contribution Date" has the meaning set forth in
the definition of "Premium Call Notice."
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"Premium Call Notice" means a written notice given to all
Partners, which shall state (i) the amount of the Second Tranche Call
originally requested in the corresponding Additional Contribution Notice, (ii)
that such Second Tranche Call has been converted to a Premium Call, (iii) the
Premium Dollar amount for each dollar to be contributed in response to the
Premium Call Notice, (iv) the date upon which the Premium Call contributions
are to be made (the "Premium Call Contribution Date"), which date shall not be
more than forty-five (45) days nor less than thirty (30) days after the date of
such notice and (v) the account of the Partnership to which such contribution
is to be made.
"Premium Dollar" means, except as otherwise provided in
Section 2.4(a)(v), each dollar contributed by a Partner in response to a
Premium Call Notice or a Premium Call Shortfall Notice, each of which dollars
will be valued for the purposes of calculating Percentage Interests at an
amount equal to (i) one dollar ($1.00) divided by (ii) the quotient of (x) the
aggregate Adjusted Net Equity of all Partners (provided that for purposes of
determining Adjusted Net Equity pursuant to this definition, Gross Appraised
Value shall be determined by a Simple Majority Vote of the Partnership Board in
connection with the giving of a Premium Call Notice) divided by (y) the
aggregate amount of the Original Capital Contributions and Additional Capital
Contributions made to the Partnership prior to the date of the Premium Call
Notice.
"Prime Rate" means the rate announced from time to time by
Citibank, N.A. as its prime rate.
"Prior Year's Carryforward" means the amount by which the
aggregate amount of Additional Capital Contributions actually requested of the
Partners pursuant to Section 2.3(b)(i) with Contribution Dates during the first
Fiscal Year in the Initial Two-Year Period was less than the Planned Capital
Amount during such Fiscal Year.
"Profits" and "Losses" means, for each Allocation Year, an
amount equal to the Partnership's taxable income or loss for such Allocation
Year, determined in accordance with Code Section 703(a) (for this purpose, all
items of income, gain, loss, or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income or
loss), with the following adjustments (without duplication):
(i) Any income of the Partnership that is exempt
from federal income tax and not otherwise taken into account in computing
Profits or Losses pursuant to this definition of "Profits" and "Losses" shall
be added to such taxable income or loss;
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(ii) Any expenditures of the Partnership described
in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not
otherwise taken into account in computing Profits or Losses pursuant to this
definition of "Profits" and "Losses," shall be subtracted from such taxable
income or loss;
(iii) In the event the Gross Asset Value of any
Partnership asset is adjusted pursuant to subparagraph (ii) or (iii) of the
definition of Gross Asset Value, the amount of such adjustment shall be taken
into account as gain or loss from the disposition of such asset for purposes of
computing Profits or Losses;
(iv) Gain or loss resulting from any disposition
of Property with respect to which gain or loss is recognized for federal income
tax purposes shall be computed by reference to the Gross Asset Value of the
Property disposed of, notwithstanding that the adjusted tax basis of such
Property differs from its Gross Asset Value;
(v) In lieu of the depreciation, amortization,
and other cost recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for such
Allocation Year, computed in accordance with the definition of Depreciation;
(vi) To the extent an adjustment to the adjusted
tax basis of any Partnership asset pursuant to Code Section 734(b) is required
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into
account in determining Capital Accounts as a result of a distribution other
than in liquidation of a Partner's Interest, the amount of such adjustment
shall be treated as an item of gain (if the adjustment increases the basis of
the asset) or loss (if the adjustment decreases the basis of the asset) from
the disposition of the asset and shall be taken into account for purposes of
computing Profits or Losses; and
(vii) Notwithstanding any other provision of this
definition of "Profits" or "Losses," any items which are specially allocated
pursuant to Section 3.3 or Section 3.4 shall not be taken into account in
computing Profits or Losses.
The amounts of the items of Partnership income, gain, loss or deduction
available to be specially allocated pursuant to Sections 3.3 and 3.4 shall be
determined by applying rules analogous to those set forth in this definition of
"Profits" and "Losses."
"Property" means all real and personal property acquired by
the Partnership and any improvements thereto, and shall include both tangible
and intangible property.
"Publicly Held" means, with respect to any Person, that such
Person has a class of equity securities registered under Section 12(b) or 12(g)
of the Securities Exchange Act of 1934.
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"Publicly Held Intermediate Subsidiary" means, with respect to
any Parent of a Partner, an Intermediate Subsidiary of such Parent that is
Publicly Held.
"Regulations" means the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code.
"Representative" means an individual designated by a General
Partner as a member of the Partnership Board.
"Second Tranche Call" means the first Eight Hundred Million
Dollars ($800,000,000) of Additional Capital Contributions requested in
accordance with Section 2.3(b) after the Cut-Off Time; provided that in no
event may a Second Tranche Call be made after December 31, 2002.
"Sprint Brand" means the trademark "Sprint" together with the
related "Diamond" logo.
"Sprint Cellular Service Area" means the areas serviced as of
October 24, 1994 by the cellular operations of Controlled Affiliates of Sprint,
as listed in Schedule 1.10(b).
"Sprint Communications" means Sprint Communications Company,
L.P., a Delaware limited partnership.
"Sprint Parent" means Sprint Corporation, a Kansas
corporation, and any successor (by merger, consolidation, Transfer or
otherwise) to all or substantially all of its business and assets.
"State Statutes" means any business combination statute,
anti-takeover statute, fair price statute, control share acquisition statute or
any other state statute or regulation that contains any similar prohibition,
limitation, obligation, restriction or other provision adopted and in effect in
the jurisdiction of organization of a Person that affects the rights of any
other Person that acquires a specified percentage ownership interest in such
Person without the consent or approval of the board of directors or other
governing body of such other Person, and, includes (i) with respect to Cox
Parent and TCI Parent, Section 203 of the Delaware General Corporation Law;
(ii) with respect to Comcast Parent, Subchapters E, F and G of Chapter 25 of
the Pennsylvania Business Corporation Law of 1988; and (iii) with respect to
Sprint Parent, Sections 17-12,100 and 17-1286 through 1298, et seq. of the
Kansas Corporations Statute.
"Subsidiary" of any Person as of any relevant date means a
corporation, company or other entity (i) more than fifty percent (50%) of whose
outstanding shares or equity securities are, as of such date, owned or
controlled, directly or indirectly through one or more Subsidiaries, by such
Person, and the shares or securities so owned entitle such Person and/or its
Subsidiaries to elect at least a majority of the members of the board of
directors or other managing authority of such corporation, company or other
entity
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notwithstanding the vote of the holders of the remaining shares or equity
securities so entitled to vote or (ii) which does not have outstanding shares
or securities, as may be the case in a partnership, joint venture or
unincorporated association, but more than fifty percent (50%) of whose
ownership interest is, as of such date, owned or controlled, directly or
indirectly through one or more Subsidiaries, by such Person, and in which the
ownership interest so owned entitles such Person and/or Subsidiaries to make
the decisions for such corporation, company or other entity.
"Subsidiary Partnership Property" means all property, other
than interests in other Subsidiary Partnerships, held by any Subsidiary
Partnership on the date on which the interests in such Subsidiary Partnership
are contributed to the Partnership.
"Substantial Portion" has the meaning set forth in the
definition of "Permitted Transaction."
"TCI Parent" means Tele-Communications, Inc., a Delaware
corporation, and any successor (by merger, consolidation, Transfer or
otherwise) to all or substantially all of its business and assets.
"Technical Information" means all technical information,
regardless of form and however transmitted and shall include, among other
forms, computer software, including computer program code, and system and user
documentation, drawings, illustrations, diagrams, reports, designs,
specifications, formulae, know-how, procedural protocols and methods and
manuals.
"Technical Information Rights" means all intellectual property
rights which protect or cover Technical Information.
"Teleport" means Teleport Communications Group Inc., a
Delaware corporation, TCG Partners, a New York general partnership, and their
respective Controlled Affiliates, as well as each local joint venture that is
managed by any of the foregoing entities and in which the foregoing entities
collectively own an equity interest of at least thirty percent (30%), and any
successor (by merger, consolidation, Transfer or otherwise) to all or
substantially all of the business and assets of any of the foregoing.
"Total Mandatory Contributions" of the Partners means an
amount equal to the sum of $4.2 billion plus the Agreed Values of the License
Contribution and the Omaha License.
"Trading Day" means, with respect to any security, a day on
which the principal national securities exchange on which such security is
listed or admitted to trading, or the Nasdaq Stock Market, such security is
listed or admitted to trading thereon, is open for the transaction of business
(unless such trading shall have been suspended for the entire day) or, if such
security is
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not listed or admitted to trading on any national securities exchange or the
Nasdaq Stock Market, any day other than a Business Day.
"Transfer" means, as a noun, any sale, exchange assignment or
transfer and, as a verb, to sell, exchange, assign or transfer.
"Voluntary Bankruptcy" has the meaning set forth in the
definition of "Bankruptcy."
"Voting Percentage Interest" means, as of any date and with
respect to any Partner that as of such date is entitled to designate one or
more members of the Partnership Board, the ratio (expressed as a percentage) of
such Partner's Percentage Interest to the aggregate Percentage Interests of all
Partners that are entitled to designate one or more members of the Partnership
Board.
"Wireless Affiliate" means any Person that is an affiliate of
the Partnership's Wireless Business by entering into an Affiliation Agreement
with WirelessCo.
"Wireless Business" means the business of providing Wireless
Exclusive Services.
"WirelessCo" means WirelessCo, L.P., the Delaware limited
partnership formed by the Partners pursuant to that certain Agreement of
Limited Partnership dated as of October 24, 1994, as amended and restated as of
March 28, 1995 to cause WirelessCo to become a Subsidiary of the Partnership.
"Wireless Exclusive Services" has the meaning set forth in
Schedule 1.10(a).
1.11 Additional Definitions.
Defined Term Defined in
------------ ----------
"1933 Act" Section 5.9(a)
"Accelerated Contribution Amount" Section 2.3(b)(i)
"Accepting Offerees" Section 12.4(d)
"Accepting Partner Note" Section 12.7(e)
"Accepting Partners" Section 12.7(e)
"Additional Contribution Amount" Section 2.3(b)(i)
"Adjusted Net Equity" Section 2.4(d)(ii)
"Adjusted Percentage Interest" Section 2.4(a)(iv)
"Affiliation Agreement" Section 6.1(d)
"Agents" Section 6.6(a)
"Aggregate Contributions" Section 2.4(d)(iv)
"Annual Budget" Section 5.2(c)
"Approved Business Plan" Section 5.2(c)
"Attribution Cap" Section 8.11(a)(v)
"Base Value" Section 2.4(d)(iii)(A)
"Bidding Partner" Section 14.7(e)
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"Blocking Limited Partner" Section 5.1(l)(ii)
"Brief" Section 5.8(a)(ii)
"Business Plan" Section 5.2(a)
"Business-Related Information" Section 8.12(b)
"Buy-Sell Price" Section 11.2(a)
"Cable Services" Section 8.3(b)
"Certificate" Section 1.5
"Comcast Area" Section 6.4(g)
"Competitive Activity" Section 6.1(a)
"Confidential Information" Section 6.6(a)
"Contributing Partner" Section 2.4(a)(ii)
"Control Notice" Section 12.5(b)
"Control Offer" Section 12.5(b)
"Control Offer Period" Section 12.5(b)
"Controlling Partner" Section 12.5(b)
"Covered Licensee" Section 8.11(a)(ii)
"Cure Date" Section 2.4(c)(iii)
"Damages" Section 11.1(a)
"Deadlock Event" Section 5.8(b)
"Declining Partner" Section 2.4(a)(i)
"Declined Accelerated Contribution" Section 2.3(b)(ii)(B)
"Default Budget" Section 5.2(d)
"Default Loan" Section 2.4(c)(ii)
"Default Loan Notice" Section 2.4(c)(ii)
"Defaulting Partner" Section 2.4(c)(i)
"Delinquent Partner" Section 2.4(b)
"Designated Matters" Section 8.14
"Election Notice" Section 11.2(a)
"Election Period" Section 11.2(b)
"Excess Contribution Amount" Section 2.3(b)(i)
"extension period" Section 12.6(f)
and 12.7(e)
"Firm Offer" Section 12.4(b)
"Firm Offer Commencement Notice" Section 12.6(c)
"First Appraiser" Section 11.4
"First Offer Period" Section 12.7(c)
"First Offer Sale Notice" Section 12.7(e)
"First Public Appraiser" Section 12.6(a)
"Floating Rate" Section 2.4(f)
"Foreign Ownership Restriction" Section 8.11(a)(i)
"Foreign Ownership Safe Harbor" Section 8.11(a)(iv)
"Foreign Ownership Threshold" Section 8.11(a)(iii)
"Free to Sell Period" Section 12.4(f)
"Funding Commitment" Section 2.4(a)(ii)
"General Partner Percentage Interests" Section 2.1
"Grace Period" Section 2.4(b)
"Gross Appraised Value" Section 11.4
"In-Territory Customers" Section 6.4(e)
"In-Territory Distributors" Section 6.4(e)
"Initial Business Plan" Section 5.2(a)
"Initial Offer" Section 14.7(e)
"Initial Participating Partner" Section 8.12(c)
"Initiating Partner" Section 8.12(b)
"Interested Person" Section 8.6
"Issuance Items" Section 3.3(h)
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"Lending Commitment" Section 2.4(c)(ii)
"Lending Partner" Section 2.4(c)(ii)
"License Contribution" Section 2.3(a)(i)
"Liquidating Events" Section 14.1(a)
"Limited Partner Percentage Interests" Section 2.1
"Loan Date" Section 2.4(c)(ii)
"Make-up Amount" Section 2.4(c)(iii)
"MajorCorp" Section 12.6(a)
"MajorCorp Stock" Section 12.6(a)
"Market Value" Section 12.7(g)
"Mediator" Section 5.8(a)(ii)
"Minimum Offering Amount" Section 12.6(a)
"Minimum Secondary Offering Amount" Section 12.7(b)
"Net Equity" Section 11.3
"Net Equity Notice" Section 11.3
"Nextel" Section 6.4(f)
"Non-Adverse Partners" Section 11.1(a)
"Non-Selling Partners" Section 12.7(a)
"Notice Partner" Section 12.6(a)
"Offer" Section 6.1(c)
"Offered Interest" Section 12.4
"Offerees" Section 12.4(b)
"Offer Notice" Section 12.4(b)
"Offer Period" Section 12.4(c)
"Offer Price" Section 12.4(a)
"Offer Statement" Section 14.7(b)
"Ownership Restrictions" Section 8.11
"Overlap Cellular Area" Section 8.1
"Partner Loan" Section 2.7
"Partnership's Businesses" Section 6.4(b)
"Partnership Services" Section 8.3(b)
"Partnership Technical Information" Section 8.7
"Paying Partner" Section 2.4(a)(ii)
"Payment Default" Section 2.4(c)(i)
"Penalty Amount" Section 2.4(b)
"Permitted Period" Section 12.7(f)
"Permitted Transfer" Section 12.2
"PhillieCo" Section 6.3(e)
"PMCI Shares" Section 6.4(f)
"PMV Notice" Section 12.6(b)
"Preemptive Contribution" Section 2.3(c)
"Premium Call Shortfall Notice" Section 2.4(a)(v)
"Premium Call Paying Partner" Section 2.4(a)(v)
"Prior Partnership Agreement" Recitals
"Proposed Budget" Section 5.2(c)
"Proposed Business Plan" Section 5.2(c)
"Proprietary Technical Information" Section 8.12(b)
"Public Appraiser" Section 12.6(a)
"Public Market Value" Section 12.6(b)
"Public Offering" Section 5.9(c)
"purchase commitment" Section 11.2(b), 12.4(d),
12.6(e) and 12.7(d)
"Purchase Notice" Section 11.2(b)
"Purchase Offer" Section 12.4(a)
"Purchaser" Section 12.4(a)
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"Purchasing Partner" Section 11.2(b)
"Receiving Party" Section 6.6(a)
"Registered Offering" Section 12.7
"Registering Partner" Section 12.6(c)
"Registration Accepting Offerees" Section 12.6(e)
"Registration Firm Offer" Section 12.6(c)
"Registration Interest" Section 12.6(a)
"Registration Note" Section 12.6(f)
"Registration Notice" Section 12.6(a)
"Registration Offer" Section 12.7(b)
"Registration Offer Period" Section 12.6(d)
"Registration Offerees" Section 12.6(c)
"Registration Sale Notice" Section 12.6(f)
"Regulatory Allocations" Section 3.4
"Related Group" Section 5.1(c)
"Representative" Section 5.1(c)
"Requested Contribution" Section 2.3(b)(i)
"Requested Premium Call Contribution" Section 2.4(a)(v)
"Required Majority Vote" Section 5.1(j)
"Restricted Area" Section 8.14
"Restricted Time" Section 8.14
"Restricted Party" Section 6.6(a)
"Sale Notice" Section 12.4(e)
"Rule 144 Notice" Section 12.7(a)
"Rule 144 Offer" Section 12.7(a)
"Rule 144 Sale" Section 12.7
"Second Appraiser" Section 11.4
"Secondary Registration Notice" Section 12.7(b)
"Second Public Appraiser" Section 12.6(a)
"Section 5.1 Election Period" Section 5.1(l)(ii)
"Seller" Section 12.4
"Selling Partner" Section 12.7
"Senior Credit Agreement" Section 2.7
"Shortfall" Section 2.4(a)(ii)
"Shortfall Notice" Section 2.4(a)(ii)
"Simple Majority Vote Section 5.1(i)
"Special Contribution" Section 2.4(b)
"Sprint Cellular Business" Section 8.1
"Sprint LD" Section 8.3(b)
"Sprint LD Services" Section 8.3(b)
"Subsidiary Partnership" Section 3.7
"Tagalong Notice" Section 12.5(a)
"Tagalong Offer" Section 12.5(a)
"Tagalong Period" Section 12.5(a)
"Tagalong Purchaser" Section 12.5(a)
"Tagalong Transaction" Section 12.5(a)
"Tax Matters Partner" Section 10.3(a)
"Tendering Offeree" Section 12.6(f)
"Tendering Partner" Section 12.7(e)
"Third Appraiser" Section 12.4
"Third Party Provider" Section 8.14
"Timely Partner" Section 2.4(b)
"Trademark License" Section 8.2
"Transferring Partner" Section 12.5(a)
"Unanimous Partner Vote" Section 5.1(l)(i)
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"Unanimous Vote" Section 5.1(k)
"Unfunded Shortfall" Section 2.3(b)(ii)(B)
"Unpaid Amount" Section 2.4(b)
"Unreturned Capital" Section 11.2(a)
1.12 Terms Generally.
The definitions in Section 1.10 and elsewhere in this Agreement shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation."
The words "herein", "hereof" and "hereunder" and words of similar import refer
to this Agreement (including the Schedules) in its entirety and not to any part
hereof unless the context shall otherwise require. All references herein to
Articles, Sections, Exhibits and Schedules shall be deemed references to
Articles and Sections of, and Exhibits and Schedules to, this Agreement unless
the context shall otherwise require. Unless the context shall otherwise
require, any references to any agreement or other instrument or statute or
regulation are to it as amended and supplemented from time to time (and, in the
case of a statute or regulation, to any corresponding provisions of successor
statutes or regulations). Any reference in this Agreement to a "day" or number
of "days" (without the explicit qualification of "Business") shall be
interpreted as a reference to a calendar day or number of calendar days. If
any action or notice is to be taken or given on or by a particular calendar
day, and such calendar day is not a Business Day, then such action or notice
shall be deferred until, or may be taken or given on, the next Business Day.
SECTION 2. PARTNERS' CAPITAL CONTRIBUTIONS
2.1 Percentage Interests; Preservation of Percentages of Interests
Held as General Partners and as Limited Partners.
The initial Percentage Interest of each Partner as of the date of this
Agreement is set forth on Schedule 2.1 and represents the sum of the "General
Partner Percentage Interest" and "Limited Partner Percentage Interest" of such
Partner as set forth in such Schedule 2.1. Except as expressly provided in
this Agreement, or as may result from a Transfer of Interests required or
permitted by this Agreement, the Percentage Interest of a Partner shall not be
subject to increase or decrease without such Partner's prior consent. For
purposes of this Agreement, each Partner is treated as though it holds a single
Interest, even though such Partner (unless and until it becomes an Exclusive
Limited Partner) holds ninety-nine percent (99.0%) of its Interest as a General
Partner and one percent (1.0%) of its Interest as a Limited Partner. Each
Partner, unless and until it becomes an Exclusive Limited Partner, will hold
ninety-nine percent (99.0%) of its Interest as a General
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Partner and one percent (1.0%) of its Interest as a Limited Partner and the
amount of any Capital Contributions made by a Partner pursuant to Section 2 and
any allocations and distributions to a Partner pursuant to Section 3 or Section
4 shall, except as otherwise provided therein, be allocated ninety-nine percent
(99.0%) to the Interest held by the Partner as a General Partner and one
percent (1.0%) to the Interest held by the Partner as a Limited Partner. In
the event that a Partner Transfers all or any portion of its Interest pursuant
to this Agreement, ninety-nine percent (99.0%) of the aggregate Interest so
acquired by any Person shall be treated as attributable to the Interest held by
the transferring Partner as a General Partner and one percent (1.0%) of the
aggregate Interest so acquired shall be treated as attributable to the Interest
held by the transferring Partner as a Limited Partner. In the event that the
Interest of a Partner is otherwise increased or decreased pursuant to this
Agreement, the amount of the increase or decrease, as the case may be, shall be
allocated ninety-nine percent (99.0%) to the Interest held by such Partner as a
General Partner and one percent (1.0%) to the Interest held by such Partner as
a Limited Partner.
2.2 Partners' Original Capital Contributions.
The Original Capital Contribution of each Partner consists of the
contributions of cash and Property made by such Partner pursuant to the terms
of the Prior Partnership Agreement prior to January 1, 1996.
2.3 Additional Capital Contributions.
(a) Contributions of Certain Property by Cox.
(i) License Contribution by Xxx. Xxx shall
contribute to the Partnership an undivided fractional interest in the Cox
Pioneer Preference License and certain associated assets (the "License
Contribution"), which the Partnership in turn shall contribute through its
Subsidiaries to the capital of PioneerCo. Such contribution shall be made
concurrently with the contribution by Cox Pioneer Partnership to PioneerCo of
the remaining undivided fractional interest in the Cox Pioneer Preference
License and such associated assets, which shall be made at the date and time
provided in, and in accordance with, the PioneerCo Partnership Agreement. For
purposes hereof, such contributions to the Partnership and then to PioneerCo
may be effected through the direct conveyance by Cox Parent of the Cox Pioneer
Preference License to PioneerCo. The Agreed Value of the License Contribution
shall be credited against the next Additional Capital Contribution to be made
in cash by Cox under this Agreement to the same extent as if Cox had
contributed cash in the amount of such Agreed Value, and until so credited the
License Contribution shall not constitute an Additional Capital Contribution
for purposes of this Agreement.
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(ii) Omaha License Contribution by Cox. As soon
as practicable (taking into account any FCC approval that may be required in
connection with such contribution) following the divestiture by Sprint and its
Controlled Affiliates of their ownership interests in the Sprint Cellular
Businesses, Cox shall contribute the Omaha License to the Partnership. The
Agreed Value of the Omaha License shall be credited against the next Additional
Capital Contribution to be made in cash by Cox under this Agreement to the same
extent as if Cox had contributed cash in the amount of such Agreed Value, and
until so credited the contribution of the Omaha License shall not constitute an
Additional Capital Contribution for purposes of this Agreement.
(b) Additional Capital Contributions of Cash.
(i) Additional Cash Contributions Generally.
Subject to the limitations of this Agreement, the Partnership Board (or the
Chief Executive Officer pursuant to (x) the authority to be granted in each
Annual Budget to make requests for Additional Capital Contributions in the
amounts, during the periods and subject to the limitations set forth therein,
and (y) such authority as may be delegated to the Chief Executive Officer from
time to time by the Partnership Board (which delegation may occur only by a
vote of the members of the Partnership Board required to take the action so
delegated)) may in accordance with the following procedures request the
Partners to make Additional Capital Contributions to the Partnership in cash
from time to time to fund the cash needs of the Partnership in conformity with
the Annual Budget then in effect, as it may be modified from time to time in
accordance with this Agreement. The aggregate amount of the Additional Capital
Contributions requested pursuant to this Section 2.3(b)(i) to be made as of any
Contribution Date (the "Additional Contribution Amount") (A) shall be set forth
in an Additional Contribution Notice given to each Partner, (B) shall not
exceed the amount reasonably anticipated by the Partnership Board to be
required to fund the cash needs of the Partnership for the ensuing six (6)
months or such shorter period as may be determined by the Partnership Board,
and (C) when added to the Additional Contribution Amounts stated in all prior
Additional Contribution Notices with Contribution Dates in the then-current
Fiscal Year, (I) shall not exceed the cumulative amount of Additional Capital
Contributions contemplated to be required of the Partners during such Fiscal
Year as set forth in the Annual Budget for such Fiscal Year unless otherwise
approved by a Required Majority Vote of the Partnership Board, and (II) if such
Fiscal Year falls within the Initial Two-Year Period, also shall not exceed,
unless otherwise approved by a Unanimous Vote of the Partnership Board, (a)
with respect to the first Fiscal Year in the Initial Two-Year Period, the
product of (1) 150% times (2) the Planned Capital Amount for such Fiscal Year,
and (b) with respect to the last Fiscal Year in the Initial Two-Year Period,
the sum of (1) the product of (x) 150% times (y) the Planned Capital Amount for
such Fiscal Year (provided that the amount determined in accordance with this
clause (y) will be decreased by any portion thereof the payment of which the
Partnership Board has previously
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determined as provided below to accelerate into the first Fiscal Year in the
Initial Two-Year Period), plus (2) 100% of any Prior Year's Carryforward. For
purposes of this Agreement, amounts contributed on or after January 1, 1996
pursuant to Section 2.3 of the Prior Partnership Agreement shall be deemed to
be Additional Capital Contributions made pursuant to an Additional Contribution
Notice under this Section 2.3(b)(i).
To the extent that the cumulative Additional Contribution Amounts
stated in Additional Contribution Notices pursuant to this Section 2.3(b)(i)
with Contribution Dates in any given Fiscal Year in the Initial Two-Year Period
exceed (i) with respect to the first Fiscal Year in the Initial Two-Year
Period, the Planned Capital Amount for such Fiscal Year and (ii) with respect
to the last Fiscal Year in the Initial Two-Year Period, the sum of (A) the
Planned Capital Amount for such Fiscal Year plus (B) any Prior Year's
Carryforward minus (C) any portion of such Planned Capital Amount that was
accelerated to the prior Fiscal Year, such excess shall constitute an "Excess
Contribution Amount." The Partnership Board may by Required Majority Vote
designate any Excess Contribution Amount with a Contribution Date in the first
Fiscal Year of the Initial Two-Year Period as an "Accelerated Contribution
Amount." The amount of any Excess Contribution Amount that the Partnership
Board may designate as an Accelerated Contribution Amount pursuant to the
preceding sentence shall not exceed the Planned Capital Amount for the last
Fiscal Year in the Initial Two-Year Period (after giving effect to any
reduction to such Planned Capital Amount pursuant to the following sentence
with respect to any prior Excess Contribution Amount). Any Accelerated
Contribution Amount will be applied to reduce the Planned Capital Amount for
the last Fiscal Year in the Initial Two-Year Period.
The amount of the Additional Capital Contribution requested of any
Partner pursuant to this Section 2.3(b)(i) in an Additional Contribution Notice
(the "Requested Contribution") shall be equal to (i) with respect to Requested
Contributions with Contribution Dates during any Fiscal Year in the Initial
Two-Year Period, that amount which represents the same percentage of the
Additional Contribution Amount specified in such Additional Contribution Notice
as such Partner's initial Percentage Interest and (ii) with respect to
Requested Contributions with Contribution Dates during any Fiscal Year after
the end of the Initial Two-Year Period, that amount which represents the same
percentage of the Additional Contribution Amount specified in such Additional
Contribution Notice as such Partner's Percentage Interest as of the date of
such Additional Contribution Notice; provided that if the aggregate amount of
the Original Capital Contributions and Additional Capital Contributions made or
requested to be made (excluding any PioneerCo Contribution) prior to the end of
the Initial Two-Year Period is less than the Total Mandatory Contributions,
then the Requested Contributions of each Partner shall continue to be the same
percentage of the Additional Contribution Amounts as such Partner's initial
Percentage Interest until the Cut-Off Time.
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(ii) Mandatory Additional Capital Contributions.
(A) No Partner may decline to make any its
Requested Contributions unless, and then only to the extent that, (I)
with respect to Requested Contributions with Contribution Dates during any
Fiscal Year in the Initial Two-Year Period, the amount of the Requested
Contribution of such Partner, when added to the sum of (a) the cumulative
amount of all Requested Contributions theretofore requested of and made by such
Partner during the same Fiscal Year plus (b) the amount of any Preemptive
Contribution made by such Partner during the same Fiscal Year, would exceed the
sum of (x) such Partner's Capital Commitment with respect to such Fiscal Year
and (y) the product of such Partner's initial Percentage Interest times any
Excess Contribution Amount for such Fiscal Year if and to the extent that such
Partner's Representative(s) voted for approval of the Annual Budget pursuant to
which the Excess Contribution Amount is being requested or voted in favor of
requesting (or delegating to the Chief Executive Officer the authority to
request) such Excess Contribution Amount, and (II) with respect to Requested
Contributions with Contribution Dates during any Fiscal Year after the Initial
Two-Year Period, none of such Partner's Representative(s) voted for approval of
the Annual Budget that provides for the Additional Contribution Amount being
requested and none of such Partner's Representatives voted in favor of
requesting (or delegating to the Chief Executive Officer the authority to
request) such Additional Contribution Amount or such Partner was an Exclusive
Limited Partner at the time of such vote. Notwithstanding the preceding
sentence, a Partner will not be entitled to decline to make any Requested
Contribution with a Contribution Date during the last Fiscal Year in the
Initial Two-Year Period or in any Fiscal Year thereafter covered by the Initial
Business Plan except to the extent such Requested Contribution, when added to
the aggregate amount of Original Capital Contributions and Additional Capital
Contributions made or requested to be made by such Partner (excluding any
PioneerCo Contribution) prior to the Contribution Date of such Requested
Contribution, exceeds such Partner's Mandatory Contribution.
(B) Subject to Section 2.3(b)(ii)(A), if a
Partner was a Declining Partner with respect to an Accelerated Contribution
Amount (with respect to any such Partner, its "Declined Accelerated
Contribution"), then, to the extent that there is a Shortfall in connection
with a Requested Contribution with a Contribution Date during the last Fiscal
Year in the Initial Two-Year Period that is not fully allocated to one or more
Contributing Partners pursuant to Section 2.4(a) (an "Unfunded Shortfall"),
such Partner shall be required to make an Additional Capital Contribution to
the Partnership up to an amount equal to such Partner's initial Percentage
Interest of the portion of the Planned Capital Amount set forth in the Initial
Business Plan for such last Fiscal Year that was accelerated to the prior
Fiscal Year (but only to the extent of such Declined Accelerated Contribution
and, if there is more than one such Partner, pro rata in proportion to the
aggregate amounts of the previously unfunded
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Declined Accelerated Contributions of each such Partner). Any such required
Additional Capital Contribution shall be contributed by such Partner within ten
(10) days of notice to such Partner by the Chief Executive Officer that there
exists an Unfunded Shortfall with respect to which such Partner is required to
make an Additional Capital Contribution pursuant to the preceding sentence,
which notice shall set forth the amount of the Additional Capital Contribution
required of such Partner and the applicable Contribution Date and shall
otherwise constitute an Additional Contribution Notice for purposes of this
Agreement.
(c) Additional Contributions Related to PioneerCo
Preemptive Rights. Each of the Partners (other than Cox) may make Additional
Capital Contributions to the Partnership as and to the extent permitted by
Section 8.10 (each a "Preemptive Contribution").
2.4 Failure to Contribute Capital.
(a) Declining Partners.
(i) Any Partner that is entitled to decline to
make a Requested Contribution as provided in Section 2.3(b)(ii) may do so by
notice given to the Chief Executive Officer (with a copy to the Partnership
Board) within fifteen (15) days of the date the applicable Additional
Contribution Notice was given (any such Partner that timely exercises such
right is herein referred to as a "Declining Partner").
(ii) If any Partner is a Declining Partner with
respect to an Additional Contribution Notice and the Partnership Board does not
give a Premium Call Notice pursuant to Section 2.4(a)(v), the Chief Executive
Officer shall, within five (5) days after the date notice was required to be
received under Section 2.4(a)(i), give a notice (a "Shortfall Notice") to each
Partner that made its Requested Contribution in full (each a "Paying Partner")
requesting the Paying Partners to make Additional Capital Contributions in an
aggregate amount equal to the amount not contributed by the Declining
Partner(s) in response to such Additional Contribution Notice (the
"Shortfall"). Each Paying Partner that is willing to commit to fund all or any
portion of the Shortfall (each a "Contributing Partner") shall so notify the
Chief Executive Officer and each other Paying Partner within ten (10) days
after the date the Shortfall Notice was given, setting forth the maximum amount
of the Shortfall, up to one hundred percent (100%) thereof, that such
Contributing Partner is willing to fund (the "Funding Commitment"). Except as
otherwise provided in Section 2.4(a)(iii), if the aggregate Funding Commitments
are less than or equal to one hundred percent (100%) of the Shortfall, each
Contributing Partner shall be entitled to make an Additional Capital
Contribution to the Partnership in response to a Shortfall Notice in an amount
equal to its Funding Commitment. If the aggregate Funding Commitments made by
the Contributing Partners exceed one hundred percent (100%) of the Shortfall,
then except as otherwise provided in Section 2.4(a)(iii), each Contributing
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Partner shall be entitled to contribute an amount equal to the same percentage
of the Shortfall as such Contributing Partner's Percentage Interest represents
of the total Percentage Interests of the Contributing Partners (in each case
before giving effect to any adjustments to the Percentage Interests to be made
in connection with the Additional Contribution Notice with respect to which the
Shortfall occurred), provided that, if any Contributing Partner's Funding
Commitment was for an amount less than its proportionate share of the Shortfall
as so determined, the portion of the Shortfall not so committed to be funded
shall, except as otherwise provided in Section 2.4(a)(iii), continue to be
allocated proportionally, in the manner provided above in this sentence, among
the other Contributing Partners until each has been allocated by such process
of apportionment an amount equal to its Funding Commitment or until the entire
Shortfall has been allocated among the Contributing Partners. The amount of
the Additional Capital Contribution to be made by each Contributing Partner in
response to the Shortfall Notice as determined in accordance with this Section
2.4(a)(ii) shall be specified in a notice delivered by the Chief Executive
Officer to the Contributing Partners and shall, within ten (10) days after the
date of such notice, be paid to the account of the Partnership designated in
the Shortfall Notice.
(iii) Except as otherwise provided in Section
2.4(a)(iv), if the Declining Partner is a Cable Partner and no Cable Partner's
Percentage Interest, when added to the Percentage Interests of all Controlled
Affiliates of such Partner, is equal to or greater than Sprint's Percentage
Interest, when added to the Percentage Interests of all Controlled Affiliates
of Sprint (in each case determined without regard to any Additional Capital
Contribution made by any Partner pursuant to the Additional Contribution Notice
with respect to which the Shortfall occurred), the Shortfall shall be allocated
first among those of the Contributing Partners that are Cable Partners in the
manner provided in Section 2.4(a)(ii) as though Sprint were not a Contributing
Partner, and if and to the extent that the aggregate Funding Commitments made
by such Cable Partners are less than one hundred percent (100%) of the
Shortfall, the balance of the Shortfall up to Sprint's Funding Commitment shall
be allocated to Sprint.
(iv) The Shortfall shall be allocated among the
Cable Partners in the manner set forth in Section 2.4(a)(iii) until any Cable
Partner would have a Percentage Interest, when added to the Percentage
Interests of all Controlled Affiliates of such Partner, that is equal to
Sprint's Percentage Interest, when added to the Percentage Interests of all
Controlled Affiliates of Sprint, calculated in each case after giving effect to
the adjustments to the Percentage Interests to be made in connection with the
Additional Contribution Notice with respect to which the Shortfall occurred
assuming that the Additional Capital Contributions to be made pursuant to this
Section 2.4(a) were made up to the aggregate amount that would yield such
result (as to each Partner, its "Adjusted Percentage Interest"). Any portion
of
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the Shortfall not yet allocated shall continue to be allocated proportionately
among all of the Contributing Partners (including Sprint, if applicable) in the
manner provided in Section 2.4(a)(ii) without regard to Section 2.4(a)(iii),
but substituting the Adjusted Percentage Interests of the Contributing Partners
for the Percentage Interests that would otherwise be used to determine such
allocation, until each has been allocated by such process an amount equal to
its Funding Commitment or until the entire Shortfall has been allocated among
the Contributing Partners.
(v) Notwithstanding the foregoing, if (A) any
Partner is a Declining Partner with respect to an Additional Contribution
Notice that requests a Second Tranche Call and (B) the Partnership Board
determines by Simple Majority Vote that the aggregate Adjusted Net Equity of
all Partners (provided that for purposes of determining Adjusted Net Equity
pursuant to this Section 2.4(a)(v), Gross Appraised Value shall be determined
by a Simple Majority Vote of the Partnership Board) is less than the aggregate
amount of Original Capital Contributions and Additional Capital Contributions
made to the Partnership through the date of the applicable Additional
Contribution Notice (but excluding the amount set forth in the Additional
Contribution Notice), the Partnership Board may elect to convert such Second
Tranche Call to a Premium Call by giving a Premium Call Notice (which shall
supercede such Additional Contribution Notice) to each Partner within five (5)
days after the date notice was required to be received from the Declining
Partner under Section 2.4(a)(i). Each Partner, including the Declining
Partner, shall have the right to make an Additional Capital Contribution in
response to a Premium Call in an amount which represents the same percentage of
the amount of the Second Tranche Call requested in the Premium Call Notice as
such Partner's Percentage Interest as of the date of such Premium Call Notice
(the "Requested Premium Call Contribution"). If each Partner makes its
Requested Premium Call Contribution, the amounts so contributed will not be
treated as Premium Dollars. If any Partner fails to make its Requested Premium
Call Contribution, then all amounts contributed pursuant to this Section
2.4(a)(v) with respect to such Premium Call shall be treated as Premium
Dollars. In addition, if any Partner fails to make its Requested Premium Call
Contribution, the Chief Executive Officer shall, within five (5) days after the
Premium Call Contribution Date, give a notice (a "Premium Call Shortfall
Notice") to each Partner that made its Requested Premium Call Contribution in
full (each a "Premium Call Paying Partner") requesting the Premium Call Paying
Partners to make Additional Capital Contributions in an aggregate amount equal
to the amount not contributed by the Declining Partner (the "Premium Call
Shortfall"). The amount of the Premium Call Shortfall that each Premium Call
Paying Partner shall be entitled to make to the Partnership in response to a
Premium Call Shortfall Notice shall be determined in the same manner as
provided in Sections 2.4(a)(ii), (iii) and (iv) for the determination of the
amount of the Additional Capital Contribution that each Contributing Partner is
entitled to make in response to a Shortfall Notice. The amount of the Premium
Call Shortfall to be made by each Premium Call
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Paying Partner in response to the Premium Call Shortfall Notice as so
determined shall be specified in a notice delivered by the Chief Executive
Officer to the Premium Call Paying Partners and shall, within ten (10) days
after the date of such notice, be paid to the account of the Partnership
designated in the Premium Call Shortfall Notice and all amounts so paid shall
be treated as Premium Dollars. Any Partner that fails to make a contribution
in response to a Premium Call Notice shall not be treated as a Delinquent
Partner or a Defaulting Partner.
(b) Delinquent Partners. In the event that any Partner
other than a Declining Partner (a "Delinquent Partner") fails to make all or
any portion of its Requested Contribution on or before the related Contribution
Date, an additional amount shall accrue as a penalty with respect to such
unpaid amount (the "Unpaid Amount") at the applicable Floating Rate from and
including the Contribution Date until the Unpaid Amount and the full amount of
the penalty accrued thereon (as of any date of determination, the "Penalty
Amount") are paid as provided in this Section 2.4 or the failure to pay the
same results in such Partner becoming a Defaulting Partner. If the Delinquent
Partner pays the Unpaid Amount to the Partnership at any time during the period
ending at the close of business on the tenth (10th) day following the related
Contribution Date (the "Grace Period"), the Delinquent Partner shall, at the
time of such payment, pay to each other Partner, if any, that made its
Requested Contribution in full on or before the related Contribution Date and
has no uncured Payment Defaults (each a "Timely Partner"), a pro rata portion
of the Penalty Amount (based on the percentage that the amount of each Timely
Partners' Requested Contribution represents of the total amount of the Timely
Partner's Requested Contributions), but in no event more than the amount that
such Timely Partner would have earned as interest on the amount of its
Requested Contribution, from and including the Contribution Date to the date
the Delinquent Partner pays the Unpaid Amount to the Partnership, if the Timely
Partner had made a loan in such amount to the Partnership with interest at the
Floating Rate applicable during the Grace Period. The balance of the Penalty
Amount, if any, shall be paid by the Delinquent Partner to the Partnership and
the amount so paid shall be deemed to be a "Special Contribution" by the
Delinquent Partner to the capital of the Partnership. The portion of the
Penalty Amount paid to the Timely Partners shall not, for any purpose, be
deemed to be a Capital Contribution.
(c) Defaulting Partners.
(i) If a Delinquent Partner fails to pay the
Unpaid Amount together with the Penalty Amount to the Partnership or the Timely
Partners as provided in Section 2.4(b) on or before the expiration of the Grace
Period, such failure shall constitute a "Payment Default" and, if such Payment
Default is not thereafter cured in full as provided in Section 2.4(c)(iii), the
Delinquent Partner shall for all purposes hereof be considered a "Defaulting
Partner" with the effect described herein.
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(ii) If a Payment Default occurs, the Chief
Executive Officer shall, within five (5) days after the expiration of the
related Grace Period, give a notice (a "Default Loan Notice") to each Partner
that was a Paying Partner with respect to such Additional Contribution Notice
requesting the Paying Partners to make loans (each a "Default Loan") to the
Partnership in an aggregate amount equal to the Unpaid Amount. Each Paying
Partner that is willing to commit to make a Default Loan (each a "Lending
Partner") shall so notify the Chief Executive Officer and each other Paying
Partner within ten (10) days after the date the Default Loan Notice was given,
setting forth the maximum portion of the Unpaid Amount, up to one hundred
percent (100%) thereof, that such Lending Partner is willing to lend to the
Partnership (the "Lending Commitment"). The amount of the Default Loan that
each Lending Partner shall be entitled to make to the Partnership in response
to a Default Loan Notice shall be determined in the same manner as provided in
Section 2.4(a) for the determination of the amount of the Additional Capital
Contribution that each Contributing Partner is entitled to make in response to
a Shortfall Notice. The amount of the Default Loan to be made by each Lending
Partner in response to the Default Loan Notice as so determined shall be
specified in a notice delivered by the Chief Executive Officer to the Lending
Partners and within ten (10) days of the date of such notice shall be paid to
the account of the Partnership designated in the Default Loan Notice. Each
Default Loan shall bear interest from the date made (the "Loan Date") until
paid in full or contributed to the Partnership as provided in this Section 2.4
at the Floating Rate applicable following the Grace Period and shall be
evidenced by a promissory note of the Partnership in the form of Exhibit
2.4(c)(ii) (with any changes thereto requested by any lender under any Senior
Credit Agreement and consented to by the Lending Partner, which consent shall
not be unreasonably withheld).
(iii) A Delinquent Partner may cure its Payment
Default at any time prior to the close of business on the ninetieth (90th) day
following the Loan Date (the "Cure Date") by transferring to an account of the
Partnership designated by the Chief Executive Officer cash in an amount equal
to the sum of the Unpaid Amount and the Penalty Amount accrued thereon to the
date of such transfer (the "Make-up Amount"). The portion of the Make-up
Amount equal to the Penalty Amount shall be deemed to be a Special Contribution
by the Delinquent Partner to the Partnership and the balance thereof shall
constitute an Additional Capital Contribution by the Delinquent Partner to the
Partnership. The Chief Executive Officer shall cause the Partnership to apply
the funds so received from the Delinquent Partner to the payment in full of the
unpaid principal of and accrued interest on each Default Loan in accordance
with the terms of the note evidencing the same.
(iv) If a Delinquent Partner has not timely cured
its Payment Default in full in accordance with Section 2.4(c)(iii), then the
Lending Partners shall contribute their respective Default Loans to the
Partnership effective as of the
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day following the Cure Date and surrender the notes evidencing the same to the
Partnership for cancellation. The unpaid principal amount of a Lending
Partner's Default Loan through the Cure Date shall constitute an Additional
Capital Contribution (and the accrued interest on such Default Loan shall
constitute a Special Contribution) by the Lending Partner to the Partnership as
of the effective date of such contribution.
(d) Adjustments to Percentage Interests. The Percentage
Interests of the Partners shall be adjusted in accordance with this Section
2.4(d). The Partnership Board shall provide notice of each adjustment to all
Partners and Schedule 2.1 shall be revised to reflect such adjustment.
(i) Except as otherwise provided in clause (ii)
of this Section 2.4(d), the Percentage Interests of the Partners shall be
adjusted in accordance with the definition of "Percentage Interest" to give
effect to Additional Capital Contributions made (or deemed to be made) pursuant
to Section 2.3, Section 2.5 (if applicable) and this Section 2.4, provided that
if there are any Declining Partners or Delinquent Partners with respect to any
Additional Contribution Notice, the determination of the amount of the
adjustment of the Percentage Interests for Additional Capital Contributions
made in response to such notice will be deferred until the later of the last
day for the making of Additional Capital Contributions in connection with any
Shortfall and the expiration of the Grace Period, provided, however, that such
adjustment, whenever determined, shall be effective as of the Contribution
Date. The Percentage Interests of the Partners will be further adjusted as and
when Additional Capital Contributions, if any, are made as contemplated by
clause (iii) or (iv), as applicable, of Section 2.4(c).
(ii) If any Partner fails for any reason (x) to
make its Requested Contribution with respect to an Additional Contribution
Notice that requests Additional Capital Contributions in an amount that, when
added to the aggregate amount of Original Capital Contributions and Additional
Capital Contributions made or requested to be made in accordance with this
Agreement (excluding any PioneerCo Contribution), would exceed Five Billion
Dollars ($5,000,000,000), or (y) to make a Preemptive Contribution at such time
as the aggregate amount of Original Capital Contributions and Additional
Capital Contributions made or requested to be made in accordance with this
Agreement (excluding any PioneerCo Contribution but including all Preemptive
Contributions made or to be made in connection with the PioneerCo Contribution
with respect to which such Partner failed to make its Preemptive Contribution)
exceed Five Billion Dollars ($5,000,000,000), the Percentage Interests of the
Partners shall be adjusted and thereafter determined in accordance with this
Section 2.4(d)(ii). Such determination shall be made on the later of the last
day for the making of Additional Capital Contributions in connection with any
Shortfall and the tenth (10th) day following the applicable Contribution Date
(or, with respect to a Preemptive Contribution, such other date as may be
determined by the Partnership Board in
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connection with the related PioneerCo Contribution) and shall be effective as
of the Contribution Date (or, with respect to a Preemptive Contribution, the
applicable PioneerCo Contribution Date). The adjusted Percentage Interest of a
Partner shall be equal to a fraction (expressed as a percentage) the numerator
of which shall be the sum of (A) the Adjusted Net Equity of such Partner plus
(B) either (1) with respect to a Requested Contribution, the Additional Capital
Contribution made by such Partner with respect to such Additional Contribution
Notice (including any Additional Capital Contributions made by such Partner in
connection with any Shortfall) or (2) with respect to a Preemptive
Contribution, the Preemptive Contribution or PioneerCo Contribution made by
such Partner, as applicable, and the denominator of which shall be the sum of
(C) the aggregate Adjusted Net Equity of all Partners plus (D) either (i) with
respect to a Requested Contribution, the aggregate Additional Capital
Contributions made by all Partners with respect to such Additional Contribution
Notice (including any Additional Capital Contributions made in connection with
any Shortfall) or (2) with respect to a Preemptive Contribution, the aggregate
Preemptive Contributions made by all Partners and the PioneerCo Contribution to
which such Preemptive Contributions relate. The "Adjusted Net Equity" of a
Partner shall be the amount that would be distributed as of the applicable
Contribution Date or PioneerCo Contribution Date to such Partner in liquidation
of the Partnership pursuant to Section 14.2(a)(iii) if (I) all of the
Partnership's business and assets (including its partnership interests in
WirelessCo, but excluding the amounts of any Additional Capital Contributions
made pursuant to such Additional Contribution Notice or, with respect to a
Preemptive Contribution, the Preemptive Contributions and PioneerCo
Contribution to which such Preemptive Contribution relates) were sold
substantially as an entirety for Gross Appraised Value (determined in
accordance with Section 2.4(d)(iii)), (II) Profits and Losses and items
specially allocated in accordance with Sections 3.3 and 3.4 for the Allocation
Year ending on the date of such determination, including any gain or loss
resulting from the deemed sale described in clause (I), were allocated in
accordance with Section 3, (III) the Partnership paid its accrued, but unpaid,
liabilities and established reserves pursuant to Section 14.2 for the payment
of reasonably anticipated contingent or unknown liabilities and (IV) the
Partnership distributed the remaining proceeds to the Partners in liquidation,
all as of such Contribution Date or applicable PioneerCo Contribution Date.
(iii) (A) Except as otherwise will be provided
in the PioneerCo Partnership Agreement to reflect the principles set forth in
Item 8(c) of Exhibit 1.1(b) to the Joint Venture Formation Agreement, whenever
Adjusted Net Equity is required to be determined pursuant to Section
2.4(d)(ii), Gross Appraised Value shall be determined by the Partnership Board
by a Simple Majority Vote based upon the most recent determination of Gross
Appraised Value (the "Base Value") pursuant to Section 2.4(d)(iii)(B). In
making its determination of Gross Appraised Value pursuant to this Section
2.4(d)(iii)(A), the Partnership
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Board shall adjust the Base Value for any Capital Contributions by and
distributions to the Partners and for the operating results and other
transactions of the Partnership from the date as of which the Base Value was
determined to the applicable Contribution Date.
(B) Gross Appraised Value shall be
determined as of December 31 of the Fiscal Year immediately preceding the
Fiscal Year in which the amount of Additional Capital Contributions
contemplated under the Annual Budget (or Default Budget, if applicable) for the
forthcoming Fiscal Year, when added to the aggregate amount of Original Capital
Contributions and Additional Capital Contributions theretofore made or
requested to be made in accordance with this Agreement (excluding any PioneerCo
Contribution), would exceed Five Billion Dollars ($5,000,000,000), and
thereafter shall be determined as of December 31 of each Fiscal Year. Gross
Appraised Value shall be determined as provided in Section 11.4, and the
General Partner that (together with its Controlled Affiliates) holds the
largest Voting Percentage Interest shall designate the First Appraiser not less
than twenty (20) days prior to the date as of which Gross Appraised Value is to
be determined, and the General Partner that (together with its Controlled
Affiliates) holds the smallest Voting Percentage Interest shall appoint the
Second Appraiser within ten (10) Business Days of receiving notice of the
appointment of the First Appraiser. The Partnership Board shall, by Simple
Majority Vote, estimate Gross Appraised Value and the Adjusted Net Equity of
the Partners from time to time as necessary to comply with the notice
requirement set forth in clause (vi) of the definition of Additional
Contribution Notice.
(iv) If any Requested Contributions are requested
to be made or any PioneerCo Contribution is made at such time as the aggregate
amount of Original Capital Contributions and Additional Capital Contributions
previously made in accordance with this Agreement (excluding all PioneerCo
Contributions) (collectively, the "Aggregate Contributions") is less than Five
Billion Dollars ($5,000,000,000), but the aggregate amount of such Requested
Contributions or the aggregate amount of Preemptive Contributions permitted to
be made pursuant to Section 2.3(c) in response to such PioneerCo Contribution,
as applicable, when added to the Aggregate Contributions, exceeds Five Billion
Dollars ($5,000,000,000), then any adjustment of the Percentage Interests of
the Partners pursuant to this Section 2.4(d) shall be determined (A) with
respect to that portion of the amount of such Requested Contributions or
Preemptive Contributions, as applicable, that, when added to the Aggregate
Contributions equals Five Billion Dollars ($5,000,000,000), in accordance with
Section 2.4(d)(i), and (B) with respect to that portion of the amount of such
Requested Contributions or Preemptive Contributions, as applicable, that, when
added to the Aggregate Contributions exceeds Five Billion Dollars
($5,000,000,000), in accordance with Section 2.4(d)(ii).
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(e) Paying Partners. A Paying Partner that declines to
make a Funding Commitment or Lending Commitment as contemplated by this Section
2.4 shall not be deemed to be a Delinquent Partner or Defaulting Partner as a
result thereof, nor shall the failure to make such a commitment constitute a
Payment Default with respect to such Partner.
(f) Floating Rate. Subject to the last two sentences of
Section 2.7(b), the term "Floating Rate" means the rate per annum (computed on
the basis of the actual number of days elapsed in a year of 365 or 366 days, as
applicable), compounded monthly, equal to the greater of (i) the Prime Rate
(adjusted as and when changes in the Prime Rate occur) plus (x) during the
Grace Period, two percent (2%) and (y) following the Grace Period, five percent
(5%), and (ii) the rate per annum applicable to borrowings by the Partnership
under its principal credit facility, if any, or, if a choice of rates is then
available to the Partnership, the highest such rate (in either case adjusted as
and when changes in such applicable rate occur) plus, following the Grace
Period, two percent (2%).
2.5 Other Additional Capital Contributions.
Each Partner may contribute from time to time such additional cash or
other Property as the Partnership Board may approve by Unanimous Vote or as may
be expressly contemplated by this Agreement, provided that any Capital
Contribution of Property (other than cash or any PioneerCo Contribution) made
pursuant to this Section 2.5 shall be subject to the terms and provisions of an
Additional Contribution Agreement.
2.6 Partnership Funds.
The funds of the Partnership shall be deposited in such bank accounts
or invested in such investments as shall be designated by the Partnership
Board. Partnership funds shall not be commingled with those of any Person
other than any Subsidiary of the Partnership in which the Partnership and
MinorCo own, in the aggregate, directly or indirectly, one hundred percent
(100%) of the outstanding equity interests, without a Unanimous Vote of the
Partnership Board. The Partnership shall not lend or advance funds to, or
guarantee any obligation of, a Partner or any Affiliate thereof without the
prior written consent of all Partners.
2.7 Partner Loans; Other Borrowings.
(a) Partner Loans. In order to satisfy the Partnership's
financial needs, the Partnership may, if so approved by the requisite vote of
the Partnership Board, borrow from (i) banks, lending institutions or other
unrelated third parties, and may pledge Partnership properties or the
production of income therefrom to secure and provide for the repayment of such
loans and (ii) any Partner or an Affiliate of a Partner. Loans made by a
Partner or an Affiliate of a Partner (a "Partner Loan") shall be
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evidenced by a promissory note of the Partnership in the form attached as
Exhibit 2.7 and, subject to the last two sentences of Section 2.7(b), shall
bear interest payable quarterly from the date made until paid in full at a rate
per annum to be determined by the Partnership Board that is no less favorable
to the Partnership than if the loan had been made by an independent third
party. Unless a Partner declines to make such loan or is a Defaulting Partner
or a Partner subject to Bankruptcy, Partner Loans shall be made pro rata in
accordance with the respective Percentage Interests of the Partners (or in such
other proportion as the Partnership Board may approve by Unanimous Vote).
(b) Terms of Partner Loans. Unless otherwise determined
by the Partnership Board, all Partner Loans and Default Loans shall be
unsecured and the promissory notes evidencing the same shall be non-negotiable
and, except as otherwise provided in this Section 2.7 or Section 12.3(c),
nontransferable. Repayment of the principal amount of and accrued interest on
all Partner Loans and Default Loans shall be subordinated to the repayment of
the principal of and accrued interest on any indebtedness of the Partnership to
third party lenders to the extent required by the applicable provisions of the
instruments creating such indebtedness to third party lenders ("Senior Credit
Agreements"). All amounts required to be paid in accordance with the terms of
such notes and all amounts permitted to be prepaid shall be applied to the
notes held by the Partners in accordance with the order of payment contemplated
by Section 14.2(b)(ii) and (iii). Subject to the terms of applicable Senior
Credit Agreements, Partner Loans shall be repaid to the Partners at such times
as the Partnership has sufficient funds to permit such repayment without
jeopardizing the Partnership's ability to meet its other obligations on a
timely basis. Nothing contained in this Agreement or in any promissory note
issued by the Partnership hereunder shall require the Partnership or any
Partner to pay interest or any amount as a penalty at a rate exceeding the
maximum amount of interest permitted to be collected from time to time under
applicable usury laws. If the amount of interest or of such penalty payable by
the Partnership or any Partner on any date would exceed the maximum permissible
amount, it shall be automatically reduced to such amount, and interest or the
amount of the penalty for any subsequent period, to the extent less than that
permitted by applicable usury laws, shall, to that extent, be increased by the
amount of such reduction.
(c) Purchase of Partner Loans. An election by a Partner
to purchase all or any portion of another Partner's Interest pursuant to
Sections 5.1, 6.4(f), 11, 12.4, 12.5, 12.6 or 14.7 shall also constitute an
election to purchase an equivalent portion of any outstanding Partner Loans
held by such selling Partner, and each purchasing Partner shall be obligated to
purchase a percentage of such Partner Loans equal to the percentage of the
selling Partner's Interest such purchasing Partner is obligated to purchase for
a price equal to the same percentage of the outstanding principal and accrued
and unpaid interest on such Partner Loans through the date of the closing of
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such purchase (except in the case of a Transfer pursuant to Section 12.4, in
which case the terms of the Purchase Offer shall apply).
2.8 Other Matters.
(a) No Partner shall have the right to demand or, except
as otherwise provided in Sections 4.1 and 14.2, receive a return of all or any
part of its Capital Account or its Capital Contributions or withdraw from the
Partnership without the consent of all Partners. Under circumstances requiring
a return of all or any part of its Capital Account or Capital Contributions, no
Partner shall have the right to receive Property other than cash.
(b) Subject to Sections 5.4 and 14.3, the Exclusive
Limited Partners shall not be liable for the debts, liabilities, contracts or
any other obligations of the Partnership. Except as otherwise provided by any
other agreements among the Partners or mandatory provisions of applicable state
law, an Exclusive Limited Partner shall be liable only to make Capital
Contributions to the extent required by Sections 2.3, 2.5 and 14.3 and shall
not be required to lend any funds to the Partnership or, after such Capital
Contributions have been made, to make any additional Capital Contributions to
the Partnership.
(c) No Partner shall have any personal liability for the
repayment of any Capital Contributions of any other Partner.
(d) No Partner shall be entitled to receive interest on
its Capital Contributions or Capital Account except as otherwise specifically
provided in this Agreement.
SECTION 3. ALLOCATIONS
3.1 Profits.
After giving effect to the special allocations set forth in Sections
3.3 and 3.4, Profits for any Allocation Year shall be allocated in the
following order and priority:
(a) First, one hundred percent (100%) to the Partners, in
proportion to, and to the extent of, an amount equal to the excess, if any, of
(i) the cumulative Losses allocated to each such Partner pursuant to Section
3.5 for all prior Allocation Years, over (ii) the cumulative Profits allocated
to such Partner pursuant to this Section 3.1(a) for all prior Allocation Years;
(b) Second, one hundred percent (100%) to the Partners,
in proportion to, and to the extent of, an amount equal to the excess, if any,
of (i) the cumulative Losses allocated to each such Partner pursuant to Section
3.2(c) for all prior Allocation Years, over (ii) the cumulative Profits
allocated to such Partner pursuant to this Section 3.1(b) for all prior
Allocation Years;
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(c) Third, to the extent such Profits arise during or
after the Allocation Year in which all or substantially all of the
Partnership's assets are disposed of (or revalued pursuant to clause (ii) of
the definition of Gross Asset Value), to the Partners in such ratios and
amounts as may be necessary to cause the balances in their Capital Accounts to
be as nearly as practicable in the same ratio as their respective Percentage
Interests; and
(d) The balance, if any, among the Partners in proportion
to their Percentage Interests.
3.2 Losses.
After giving effect to the special allocations set forth in Sections
3.3 and 3.4, and subject to Section 3.5, Losses for any Allocation Year shall
be allocated in the following order and priority:
(a) First, one hundred percent (100%) to the Partners, in
proportion to, and to the extent of, the excess, if any, of (i) the cumulative
Profits allocated to each such Partner pursuant to Section 3.1(d) for all prior
Allocation Years, over (ii) the cumulative Losses allocated to such Partner
pursuant to this Section 3.2(a) for all prior Allocation Years;
(b) Second, to the extent such Losses arise during or
after the Allocation Year in which all or substantially all of the
Partnership's assets are disposed of, to the Partners in such ratio and amounts
as may be necessary to cause the balances in their Capital Accounts to be as
nearly as practicable in the same ratio as their respective Percentage
Interests; and
(c) The balance, if any, among the Partners in proportion
to their Percentage Interests.
3.3 Special Allocations.
The following special allocations shall be made in the following
order:
(a) Minimum Gain Chargeback. Except as otherwise
provided in Section 1.704-2(f) of the Regulations, notwithstanding any other
provision of this Section 3, if there is a net decrease in Partnership Minimum
Gain during any Allocation Year, each Partner shall be specially allocated
items of Partnership income and gain for such Allocation Year (and, if
necessary, subsequent Allocation Years) in an amount equal to such Partner's
share of the net decrease in Partnership Minimum Gain, determined in accordance
with Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Sections 1.704-2(f)(6) and 1.704-2(j)(2) of
the Regulations. This Section 3.3(a) is intended
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to comply with the minimum gain chargeback requirement in Section 1.704-2(f) of
the Regulations and shall be interpreted consistently therewith.
(b) Partner Minimum Gain Chargeback. Except as otherwise
provided in Section 1.704-2(i)(4) of the Regulations, notwithstanding any other
provision of this Section 3, if there is a net decrease in Partner Nonrecourse
Debt Minimum Gain attributable to a Partner Nonrecourse Debt during any
Allocation Year, each Partner who has a share of the Partner Nonrecourse Debt
Minimum Gain attributable to such Partner Nonrecourse Debt, determined in
accordance with Section 1.704-2(i)(5) of the Regulations, shall be specially
allocated items of Partnership income and gain for such Allocation Year (and,
if necessary, subsequent Allocation Years) in an amount equal to such Partner's
share of the net decrease in Partner Nonrecourse Debt Minimum Gain attributable
to such Partner Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated to each
Partner pursuant thereto. The items to be so allocated shall be determined in
accordance with Sections 1.704-2(i)(4) and 1.704-2(j)(2) of the Regulations.
This Section 3.3(b) is intended to comply with the minimum gain chargeback
requirement in Section 1.704-2(i)(4) of the Regulations and shall be
interpreted consistently therewith.
(c) Qualified Income Offset. In the event any Exclusive
Limited Partner unexpectedly receives any adjustments, allocations, or
distributions described in Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6) of the Regulations, items of
Partnership income and gain shall be specially allocated to each such Exclusive
Limited Partner in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, the Adjusted Capital Account Deficit of such
Exclusive Limited Partner as quickly as possible, provided that an allocation
pursuant to this Section 3.3(c) shall be made only if and to the extent that
such Exclusive Limited Partner would have an Adjusted Capital Account Deficit
after all other allocations provided for in this Section 3 have been
tentatively made as if this Section 3.3(c) were not in the Agreement.
(d) Gross Income Allocation. In the event any Exclusive
Limited Partner has a deficit Capital Account at the end of any Allocation Year
which is in excess of the sum of (i) the amount such Exclusive Limited Partner
is obligated to restore pursuant to any provision of this Agreement, and (ii)
the amount such Exclusive Limited Partner is deemed to be obligated to restore
pursuant to the penultimate sentences of Sections 1.704-2(g)(1) and
1.704-2(i)(5) of the Regulations, each such Exclusive Limited Partner shall be
specially allocated items of Partnership income and gain in the amount of such
excess as quickly as possible, provided that an allocation pursuant to this
Section 3.3(d) shall be made only if and to the extent that such
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Exclusive Limited Partner would have a deficit Capital Account in excess of
such sum after all other allocations provided for in this Section 3 have been
made as if Section 3.3(c) and this Section 3.3(d) were not in the Agreement.
(e) Nonrecourse Deductions. Nonrecourse Deductions for
any Allocation Year shall be specially allocated among the Partners in
proportion to their Percentage Interests.
(f) Partner Nonrecourse Deductions. Any Partner
Nonrecourse Deductions for any Allocation Year shall be specially allocated to
the Partner who bears the economic risk of loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable
in accordance with Regulations Section 1.704-2(i)(1).
(g) Section 754 Adjustments. To the extent an adjustment
to the adjusted tax basis of any Partnership asset pursuant to Code Section
734(b) or Code Section 743(b) is required pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(2) or 1.704-1(b)(2)(iv)(m)(4) to be taken into account in
determining Capital Accounts as the result of a distribution to a Partner in
complete liquidation of its Interest, the amount of such adjustment to Capital
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis) and such
gain or loss shall be specially allocated to the Partners in accordance with
their interests in the Partnership in the event Regulations Section
1.704-1(b)(2)(iv)(m)(2) applies, or to the Partner to whom such distribution
was made in the event Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.
(h) Special Interest Allocation. In the event that the
Partnership makes any payment in respect of interest accrued on any Default
Loan in any Allocation Year, the deduction attributable to such payment shall
be specially allocated to the Delinquent Partner with respect to which such
Default Loan was made.
3.4 Curative Allocations.
The allocations set forth in Sections 3.3(a), 3.3(b), 3.3(c), 3.3(d),
3.3(e), 3.3(f), 3.3(g) and 3.5 (the "Regulatory Allocations") are intended to
comply with certain requirements of the Regulations. It is the intent of the
Partners that, to the extent possible, all Regulatory Allocations shall be
offset either with other Regulatory Allocations or with special allocations of
other items of Partnership income, gain, loss or deduction pursuant to this
Section 3.4. Therefore, notwithstanding any other provision of this Section 3
(other than the Regulatory Allocations), the Partnership Board shall make such
offsetting special allocations of Partnership income, gain, loss or deduction
in whatever manner it determines appropriate so that, after such offsetting
allocations are made, each Partner's Capital Account balance is, to the extent
possible, equal to the Capital Account
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balance such Partner would have had if the Regulatory Allocations were not part
of the Agreement and all Partnership items were allocated pursuant to Sections
3.1, 3.2 and 3.3(h). In exercising its discretion under this Section 3.4, the
Partnership Board shall take into account future Regulatory Allocations under
Sections 3.3(a) and 3.3(b) that, although not yet made, are likely to offset
other Regulatory Allocations previously made under Section 3.3(e) and 3.3(f).
3.5 Loss Limitation.
The Losses allocated pursuant to Section 3.2 shall not exceed the
maximum amount of Losses that can be so allocated without causing (or
increasing the amount of) any Exclusive Limited Partner to have an Adjusted
Capital Account Deficit at the end of any Allocation Year. All Losses in
excess of such limitation shall be allocated to the Partners who are not
Exclusive Limited Partners in proportion to their Percentage Interests.
3.6 Other Allocation Rules.
(a) For purposes of determining the Profits, Losses, or
any other items allocable to any period, Profits, Losses, and any such other
items shall be determined on a daily, monthly, or other basis, as determined by
a Required Majority Vote of the Partnership Board using any permissible method
under Code Section 706 and the Regulations thereunder.
(b) The Partners are aware of the income tax consequences
of the allocations made by this Section 3 and hereby agree to be bound by the
provisions of this Section 3 in reporting their shares of Partnership income
and loss for income tax purposes.
(c) Solely for purposes of determining a Partner's
proportionate share of the "excess nonrecourse liabilities" of the Partnership
within the meaning of Section 1.752-3(a)(3) of the Regulations, the Partners'
interests in Partnership profits are in proportion to their Percentage
Interests.
(d) To the extent permitted by Section 1.704-2(h)(3) of
the Regulations, the Partnership Board shall endeavor to treat distributions of
cash as having been made from the proceeds of a Nonrecourse Liability or a
Partner Nonrecourse Debt only to the extent that such distributions would cause
or increase an Adjusted Capital Account Deficit for any Exclusive Limited
Partner.
3.7 Tax Allocations: Code Section 704(c).
In accordance with Code Section 704(c) and the Regulations thereunder,
income, gain, loss, and deduction with respect to any property contributed to
the capital of the Partnership shall, solely for tax purposes, be allocated
among the Partners so as to take account of any variation between the adjusted
basis of such property to the Partnership for federal income tax purposes and
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its initial Gross Asset Value using the traditional method with curative
allocations as described in Section 1.704-3 of the Regulations, applied as
necessary in any reasonable manner not expressly precluded by Section 1.704-3
of the Regulations. In making such allocations, Section 704(c) shall be
applied as if the Partnership's proportionate share of the assets owned by any
partnership, interests in which are contributed to the Partnership ("Subsidiary
Partnership"), were owned directly by the Partnership and were contributed by
the Partners who contributed the Subsidiary Partnership interests.
In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to subparagraph (ii) of the definition of Gross Asset Value,
subsequent allocations of income, gain, loss, and deduction with respect to
such asset shall take account of any variation between the adjusted basis of
such asset for federal income tax purposes and its Gross Asset Value in the
same manner as under Code Section 704(c) and the Regulations thereunder.
Any elections or other decisions relating to such allocations shall be
made by the Partnership Board in any manner that reasonably reflects the
purpose and intention of this Agreement. Allocations pursuant to this Section
3.7 are solely for purposes of federal, state, and local taxes and shall not
affect, or in any way be taken into account in computing, any Partner's Capital
Account or share of Profits, Losses, other items, or distributions pursuant to
any provision of this Agreement.
SECTION 4. DISTRIBUTIONS
4.1 Available Cash.
From time to time the Partnership Board by a Required Majority Vote
may determine to distribute Available Cash to the Partners. Except as
otherwise provided in Section 14.2, Available Cash, if any, shall be
distributed to the Partners in proportion to their respective Percentage
Interests in such amounts and at such times as the Partnership Board shall
determine by Required Majority Vote. Prior to making any cash distributions to
the Partners pursuant to this Section 4.1, the Partnership shall have paid in
full all Partner Loans (in accordance with the order of payment contemplated by
Section 14.2(b)).
4.2 Tax Distributions.
(a) Subject to Section 4.2(b), Available Cash shall be
distributed to the Partners in proportion to their Percentage Interests within
one hundred thirty-five (135) days after the end of each Fiscal Year of the
Partnership in an aggregate amount equal to the Hypothetical Federal Income Tax
Amount for such Fiscal Year.
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(b) Prior to making any cash distributions to the
Partners pursuant to Section 4.2(a), the Partnership shall have paid in full
all Partner Loans (in accordance with the order of payment contemplated by
Section 14.2(b)).
4.3 Amounts Withheld.
All amounts withheld pursuant to the Code or any provision of any
state or local tax law from any payment or distribution to a Partner shall be
treated as amounts paid or distributed to such Partner pursuant to this Section
4 for all purposes under this Agreement. The Partnership is authorized to
withhold from payments and distributions to any Partner and to pay over to any
federal, state, or local government any amounts required to be so withheld
pursuant to the Code or any provisions of any other federal, state, or local
law.
SECTION 5. MANAGEMENT
5.1 Authority of the Partnership Board.
(a) General Authority. Subject to the limitations and
restrictions set forth in this Agreement, the General Partners shall conduct
the business and affairs of the Partnership, and all powers of the Partnership,
except those specifically reserved to the Partners by the Act or this
Agreement, are hereby granted to and vested in the General Partners, which
shall conduct such business and exercise such powers through their
Representatives on the Partnership Board.
(b) Delegation. The Partnership Board shall have the
power to delegate authority to such officers, employees, agents and
representatives of the Partnership as it may from time to time deem
appropriate. Any delegation of authority to take any action must be approved
in the same manner as would be required for the Partnership Board to approve
such action directly.
(c) Number and Term of Office. The Partnership Board
initially shall have six voting members, one of which shall be designated by
each Cable Partner and three of which shall be designated by Sprint. The Chief
Executive Officer shall be a non-voting member of the Partnership Board.
During the term of this Agreement, except as otherwise provided below, each
General Partner shall be entitled to designate one Representative to the
Partnership Board, provided that (i) for so long as Sprint is entitled to
representation on the Partnership Board (except as otherwise provided below),
Sprint shall be entitled to designate three Representatives to the Partnership
Board; provided, however, that at any time any other Partner holds a greater
Voting Percentage Interest than Sprint (except as otherwise provided below),
Sprint shall be entitled to designate only two Representatives to the
Partnership Board; and provided, further, that at any time any other Partner
holds a greater Voting Percentage Interest than Sprint and Sprint's Percentage
Interest
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is less than twenty percent (20%), Sprint shall be entitled to designate only
one Representative to the Partnership Board, and (ii) those Partners, if any,
that are Controlled Affiliates of the same Parent (a "Related Group") shall
collectively be entitled to designate only the largest number of
Representatives as is entitled to be designated by any single member of the
Related Group, which Representative(s) shall be designated by the Partner that
has the largest Percentage Interest of the Partners in the Related Group. Any
Partner whose Percentage Interest, together with the Percentage Interest(s) of
each other Partner, if any, that is a member of the same Related Group, is, in
the aggregate, less than the Minimum Ownership Requirement shall, for so long
as its Percentage Interest or the aggregate Percentage Interest of its Related
Group, as applicable, is less than the Minimum Ownership Requirement, not be
entitled to designate a Representative to the Partnership Board, and the
Representative of such Partner or Related Group, as applicable, shall
immediately cease to be a member of the Partnership Board, without any further
act by the affected Partner.
Any Partner who becomes an Adverse Partner shall immediately forfeit
the right to designate a member of the Partnership Board, and the
Representative(s) of the affected Partner shall immediately cease to be a
member of the Partnership Board, without any further act by the affected
Partner; provided that if a Partner becomes an Adverse Partner as the result of
the occurrence of an Adverse Act described in clause (iii), (iv), (vi) or (vii)
of the definition of such term in Section 1.10, such Partner will regain (or
its transferee will be entitled to, as applicable) the right to designate a
Representative on the Partnership Board (if otherwise so entitled thereto under
this Agreement) if (i) in the case of a Partner that is an Adverse Partner
other than as a result of the occurrence of an Adverse Act described in clause
(iii) of the definition of such term in Section 1.10, such Partner Transfers
its Interest in compliance with Section 12 to a Person that is not an Adverse
Partner and does not become an Adverse Partner as a result of such Transfer,
(ii) in the case of a Partner that is an Adverse Partner as a consequence of
the occurrence of an Adverse Act described in clause (iii) of the definition of
such term in Section 1.10, there is a Final Determination that such Partner's
actions or failure to act did not constitute such an Adverse Act, (iii) in the
case of a Partner that is an Adverse Partner as a consequence of Bankruptcy,
such Partner ceases to be in a state of Bankruptcy, (iv) in the case of a
Partner that is an Adverse Partner as a consequence of the occurrence of any
IXC Transaction, such Partner ceases to have the relationship with the IXC
which caused such IXC Transaction to occur, or (v) in the case of a Partner
that is an Adverse Partner as a consequence of the occurrence of an event
described in clause (vii) of the definition of the term "Adverse Act" in
Section 1.10, such Partner takes actions that eliminate the circumstances that
constituted such an Adverse Act within the meaning of such clause (vii). The
membership of the Partnership Board shall be increased or decreased from time
to time in accordance with the foregoing provisions of this Section 5.1(c).
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Each Representative shall hold office at the pleasure of the Partner
that designated such Representative. Any Partner may at any time, and from
time to time, by written notice to the other Partners remove any or all of the
Representatives designated by such Partner, with or without cause, and appoint
substitute Representatives to serve in their stead. Each Partner shall be
entitled to name one or more alternate Representatives to serve in the place of
any Representative appointed by such Partner should any such Representative not
be able to attend a meeting or meetings or any portion thereof, including in
the case of a Representative of Comcast not being able to attend a meeting to
the extent required in order to comply with the provisions of Section 8.14.
Each such alternate shall be deemed to be a Representative hereunder with
respect to any action taken at such meeting or meetings or any portion thereof.
Each Partner shall bear the costs incurred by each Representative or alternate
designated by it to serve on the Partnership Board, and no Representative or
alternate shall be entitled to compensation from the Partnership for serving in
such capacity.
The written notice of a Partner's appointment of a Representative or
alternate shall in each case set forth such Representative's or alternate's
business and residence addresses and business telephone number. Each Partner
shall promptly give written notice to the other Partners of any change in the
business or residence address or business telephone number of any of its
Representatives. Each Partner shall cause its Representatives on the
Partnership Board to comply with the terms of this Agreement. In the absence
of prior written notice to the contrary, any action taken by a Representative
of a Partner shall be deemed to have been duly authorized by the Partner that
appointed such Representative.
(d) Vacancy. In the event any Representative dies or is
unwilling or unable to serve as such or is removed from office by the Partner
that designated him or her, such Partner shall promptly designate a successor
to such Representative.
(e) Place of Meeting/Action by Written Consent. The
Partnership Board may hold its meetings at such place or places within or
outside the State of Delaware as the Partnership Board may from time to time
determine or as may be designated in the notice calling the meeting. If a
meeting place is not so designated, the meeting shall be held at the
Partnership's principal office. Notwithstanding anything to the contrary in
this Section 5.1, the Partnership Board may take without a meeting any action
contemplated to be taken by the Partnership Board under this Agreement if such
action is approved by the unanimous written consent of a Representative of each
of the Partners then entitled to designate a Representative to the Partnership
Board (which may be executed in counterparts). The Partnership Board may meet
in person or by means of conference telephone or similar communications
equipment. Each Representative shall have the right to participate in any
meeting by means of conference telephone or similar communications equipment.
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(f) Regular Meetings. The Partnership Board shall hold
regular meetings no less frequently than quarterly and shall establish meeting
times, dates and places and requisite notice requirements and adopt rules or
procedures consistent with the terms of this Agreement. At such meetings the
members of the Partnership Board shall transact such business as may properly
be brought before the meeting.
(g) Special Meetings. Special meetings of the
Partnership Board may be called by any Representative. Notice of each such
meeting shall be given to each member of the Partnership Board by telephone,
telecopy, telegram or similar method (in which case notice shall be given at
least twenty-four (24) hours before the time of the meeting) or sent by
first-class mail (in which case notice shall be given at least five (5) days
before the meeting), unless a longer notice period is established by the
Partnership Board. Each such notice shall state (i) the time, date, place
(which shall be at the principal office of the Partnership unless otherwise
agreed to by all Representatives) or other means of conducting such meeting and
(ii) the purpose of the meeting to be so held. Any Representative may waive
notice of any meeting in writing before, at or after such meeting. The
attendance of a Representative at a meeting shall constitute a waiver of notice
of such meeting, except when a Representative attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting was
not properly called.
(h) Voting. The Representative(s) of each General
Partner or of the General Partners in a Related Group shall together have
voting power equal to the Voting Percentage Interest held by such General
Partner or the aggregate Voting Percentage Interest of the General Partners in
such Related Group, as applicable, as in effect from time to time. If a
General Partner or a Related Group designates only one Representative, such
Representative shall be entitled to vote the entire voting power held by such
General Partner or the General Partners in such Related Group, as applicable.
If a General Partner or Related Group designates more than one Representative,
such Representatives shall vote the entire voting power of such General Partner
or the General Partners in such Related Group as a single unit. None of the
Partners (other than the Partners in a Related Group) shall enter into any
agreements with any other Partner or such other Partner's Controlled Affiliates
regarding the voting of their Interests or such other Partner's Representatives
on the Partnership Board.
(i) Simple Majority Vote. No action may be taken by the
Partnership in connection with any of the matters listed on Schedule 5.1(i)
without the prior approval of the Partnership Board, at a duly called meeting,
of Representatives with voting power of more than fifty percent (50%) of the
Voting Percentage Interests of all Partners whose Representatives are not
required by Section 8.6 or any other express provision of this Agreement to
abstain from such vote (a "Simple Majority Vote").
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(j) Required Majority Vote. Except as provided in
Section 5.1(i) or 5.1(k) or as otherwise expressly provided in this Agreement,
all actions required or permitted to be taken by the Partnership Board
(including the matters listed on Schedule 5.1(j)) must be approved by the
affirmative vote, at a duly called meeting, of Representatives with voting
power of seventy-five percent (75%) or more of the Voting Percentage Interests
of all Partners whose Representatives are not required by Section 8.6 or any
other express provision of this Agreement to abstain from such vote (a
"Required Majority Vote").
(k) Unanimous Vote (Partnership Board). No action may be
taken by the Partnership in connection with any of the matters listed on
Schedule 5.1(k) without the prior approval of the Partnership Board by the
unanimous vote of all of the Representatives who are not required to abstain
from the vote with respect to the particular matter as provided for in Section
8.6 of this Agreement or any other express provision of this Agreement, whether
or not present at a Partnership Board meeting (a "Unanimous Vote").
(l) Unanimous Decisions (Partners).
(i) No action may be taken by the Partnership in
connection with any of the matters listed on Schedule 5.1(l) without the prior
consent of all of the Partners (including Exclusive Limited Partners) other
than any Partner required to abstain from the vote with respect to a particular
matter by Section 8.6 or any other express provision of this Agreement (a
"Unanimous Partner Vote").
(ii) If any matter listed on Schedule 5.1(l) or
otherwise required by this Agreement to be approved by the unanimous consent of
the Partners is not approved solely as a result of the failure of one or more
Exclusive Limited Partners to consent to such action (each, a "Blocking Limited
Partner"), the remaining Partners (other than any Exclusive Limited Partner)
may purchase all but not less than all of the respective Interests of the
Blocking Limited Partner(s) pursuant to this Section 5.1(l)(ii) if the
Partnership Board elects to initiate the procedures in this Section. For a
period ending at 11:59 p.m. (local time at the Partnership's principal office)
on the thirtieth (30th) day following the date on which such Blocking Limited
Partner failed to consent to such matter, the Partnership Board may elect to
cause the Net Equity of the Blocking Limited Partner's Interest to be
determined in accordance with Section 11.3. For purposes of such determination
of Net Equity, the Partnership Board shall designate the First Appraiser as
required by Section 11.4 and the Blocking Limited Partner shall designate the
Second Appraiser within ten (10) days of receiving notice of the First
Appraiser. For a period ending at 11:59 p.m. (local time at the Partnership's
principal office) on the thirtieth (30th) day following the date on which
notice of the Net Equity of the Blocking Limited Partner's Interest is given
pursuant to Section 11.3 (the "Section 5.1 Election Period"), except as
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otherwise provided in Section 11.2(b), each of the Partners (other than any
Exclusive Limited Partner) may elect to purchase all or any portion of the
Interest of the Blocking Limited Partner. Such elections shall be made, and
the purchase of the Blocking Limited Partner's Interest shall occur, in the
manner and pursuant to the procedures set forth in Section 11.2 as if the
Blocking Limited Partner were an Adverse Partner and the Election Period
referred to in Section 11.2 was the Section 5.1 Election Period; provided that
the Buy-Sell Price of the Blocking Limited Partner's Interest shall be equal to
the Net Equity thereof. Notwithstanding the foregoing, the Blocking Limited
Partner will not be subject to the buy-out provisions of this Section
5.1(l)(ii) if the matter to which the Blocking Limited Partner refused to
consent would, if approved, have adversely affected the rights and obligations
under this Agreement of such Blocking Limited Partner or the Exclusive Limited
Partners (taken as a group) in a manner different from the other Partners.
(m) Proxies; Minutes. Each Representative entitled to
vote at a meeting of the Partnership Board may authorize another Person to act
for him by proxy; provided that such proxy must be signed by the Representative
and shall be revocable by such Representative any time prior to such meeting.
Minutes of each meeting of the Partnership Board shall be prepared by the Chief
Executive Officer or his or her designee and circulated to the Representatives.
Written consents to any action taken by the Partnership Board shall be filed
with the minutes.
5.2 Business Plan and Annual Budget.
(a) At the January 11, 1996 meeting of the Partnership
Board, the Partners adopted by Unanimous Partner Vote (i) a business plan
("Business Plan") of the Partnership and its Subsidiaries covering the Fiscal
Year ending December 31, 1996 and the succeeding Fiscal Years through the
Fiscal Year ending December 31, 1999, which the Partners hereby agree is the
"Initial Business Plan" for all purposes under this Agreement, and (ii) the
Annual Budget for the Fiscal Year ending December 31, 1996. The Partners
contemplate the Partnership's achieving a capital structure in which debt
(including Partner Loans) represents an equal or greater proportion of the
Partnership's total capitalization than the aggregate Original Capital
Contributions and Additional Capital Contributions and, unless otherwise
approved by Required Majority Vote, the first Proposed Business Plan presented
to the Partnership Board for approval subsequent to the Initial Business Plan
will set forth the means by which the Partnership proposes to achieve such
capital structure.
(b) Nothing contained in the Initial Business Plan (or
any subsequent Business Plan) shall be binding upon the Partners or the
Partnership, except to the extent specifically set forth in the applicable
provisions of this Agreement. Notwithstanding anything to the contrary set
forth in the Initial Business Plan (or any subsequent Business Plan) or this
Agreement, in the event of any conflict or inconsistency between the Initial
Business Plan
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(or any subsequent Business Plan) and this Agreement, such conflict or
inconsistency shall be resolved in favor of the applicable terms and provisions
of this Agreement to the extent required to give full effect to such applicable
terms and provisions. For example, by voting to approve the Initial Business
Plan (or any subsequent Business Plan), a Partner will not have thereby agreed
that any assumption or set of assumptions contained in the Initial Business
Plan (or any subsequent Business Plan) (i) is the basis for any agreement by or
among the Partners and/or the Partnership (or any of their respective
Affiliates), (ii) cannot be changed (to the extent any such change would not
thereby become inconsistent with the applicable terms and provisions of this
Agreement), or (iii) is binding with respect to any transaction or other course
of dealing or otherwise between the Partnership and such Partner or between or
among any of the Partners other than as specifically set forth in this
Agreement.
(c) The Chief Executive Officer shall submit annually to
the Partnership Board at least ninety (90) days prior to the start of each
Fiscal Year after the Fiscal Year ending December 31, 1996, (i) a proposed
capital expenditure and operating budget (the "Proposed Budget") for the
forthcoming Fiscal Year including an income statement prepared on an accrual
basis which shall show in reasonable detail the revenues and expenses projected
for the business of the Partnership and its Subsidiaries for the forthcoming
Fiscal Year and a cash flow statement which shall show in reasonable detail the
receipts and disbursements projected for the business of the Partnership and
its Subsidiaries for the forthcoming Fiscal Year and the amount of any
corresponding cash deficiency or surplus, and the projected Additional Capital
Contributions, if any, and any contemplated borrowings of the Partnership and
its Subsidiaries and (ii) a proposed revised Business Plan ("Proposed Business
Plan") for the Fiscal Year covered by the Proposed Budget and the succeeding
four Fiscal Years. Such Proposed Budget and Proposed Business Plan shall be
prepared on a basis consistent with the Partnership's audited financial
statements. If such Proposed Budget or such Proposed Business Plan is approved
by the Partnership Board, then such Proposed Budget or such Proposed Business
Plan, as the case may be, shall be considered approved and shall constitute the
"Annual Budget" or the "Approved Business Plan," as the case may be, for all
purposes of this Agreement and shall supersede any previously approved Annual
Budget or Approved Business Plan, as the case may be. Except as provided in
Schedule 5.1(k), the approval of each Proposed Budget and Proposed Business
Plan and action by the Partnership or any of its Subsidiaries constituting any
material deviation from any Annual Budget or Approved Business Plan shall
require the Required Majority Vote of the Partnership Board. No Approved
Business Plan or Annual Budget shall be inconsistent with the provisions of
this Agreement, nor shall this Agreement be deemed amended by any provision of
an Approved Business Plan or Annual Budget. If a Proposed Budget or Proposed
Business Plan is not approved by the Required Majority Vote of the Partnership
Board, then the General Partners shall cause their Representatives to cooperate
in good faith and confer with the
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Chief Executive Officer and other senior officers of the Partnership for the
purpose of attempting to arrive at a Proposed Budget or Proposed Business Plan,
as the case may be, that can secure the approval of the Partnership Board.
(d) If, notwithstanding the foregoing procedures, on
January 1 of any Fiscal Year no Proposed Budget has been approved by the
Partnership Board for such Fiscal Year, then the Annual Budget for the prior
Fiscal Year, adjusted (without duplication) to reflect increases or decreases
resulting from the following events, shall govern until such time as the
Partnership Board approves a new Proposed Budget:
(i) the operation of escalation or de-escalation
provisions in contracts in effect at the time of approval of the prior Fiscal
Year's Annual Budget solely as a result of the passage of time or the
occurrence of events beyond the control of the Partnership to the extent such
contracts are still in effect;
(ii) elections made in any prior Fiscal Year under
contracts contemplated by the Annual Budget for the prior Fiscal Year
regardless of which party to such contracts made such elections;
(iii) increases or decreases in expenses
attributable to the annualized effect of employee additions or reductions
during the prior Fiscal Year contemplated by the Annual Budget for the prior
Fiscal Year;
(iv) changes in interest expense attributable to
any loans made to or retired by the Partnership or its Subsidiaries (including
Partner Loans);
(v) increases in overhead expenses in an amount
equal to the total of overhead expenses reflected in the Annual Budget for the
prior Fiscal Year multiplied by the increase in the Consumer Price Index for
the prior year, but in no event more than five percent (5%);
(vi) the anticipated incurrence of costs during
such Fiscal Year for any legal, accounting and other professional fees or
disbursements in connection with events or changes not contemplated at the time
of preparation of the Proposed Budget for the prior Fiscal Year;
(vii) the continuation of the effects of a decision
made by the Partnership Board or the Partners in the prior Fiscal Year with
respect to any of the matters referred to on Schedules 5.1(j), 5.1(k) or 5.1(l)
that are not reflected in the Annual Budget for the prior Fiscal Year; and
(viii) decreases in expense attributable to
non-recurring items reflected in the prior Fiscal Year's Annual Budget.
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Any budget established pursuant to this Section 5.2(d) is herein
referred to as a "Default Budget."
(e) If a Proposed Business Plan is submitted for approval
pursuant to this Section 5.2 and is not approved by the requisite vote of the
Partnership Board, the Business Plan most recently approved by the Partnership
Board pursuant to Section 5.2(c) shall remain in effect as the Approved
Business Plan; provided, that, if a Proposed Budget is approved pursuant to
Section 5.2(c) (and the corresponding Proposed Business Plan is not so
approved), the Approved Business Plan then in effect shall be deemed to be
amended so that the Fiscal Year therein corresponding to the Fiscal Year for
which such Annual Budget has been approved shall be consistent with such Annual
Budget.
(f) The day-to-day business and operations of the
Partnership and its Subsidiaries shall be conducted in accordance with the
Approved Business Plan and the Annual Budget (or Default Budget) then in effect
and the policies, strategies and standards established by the Partnership
Board. The Partnership Board and the officers and employees of the Partnership
and its Subsidiaries shall implement the Annual Budget and Approved Business
Plan.
5.3 Employees.
The Partnership Board will appoint the senior management of the
Partnership and its Subsidiaries and will establish policies and guidelines for
the hiring of employees by the Partnership and its Subsidiaries. The
Partnership Board may adopt appropriate management incentive plans and employee
benefit plans.
5.4 Limitation of Agency.
The Partners agree not to exercise any authority to act for or to
assume any obligation or responsibility on behalf of the Partnership or any of
its Subsidiaries except (i) as approved by the Partnership Board by Required
Majority Vote, (ii) as approved by written agreement among the General Partners
and (iii) as expressly provided herein. No Partner shall have any authority to
act for or to assume any obligations or responsibility on behalf of another
Partner under this Agreement except (i) as approved by written agreement among
the Partners and (ii) as expressly provided herein. Subject to Section 5.6, in
addition to the other remedies specified herein, each Partner agrees to
indemnify and hold the Partnership and the other Partners harmless from and
against any claim, demand, loss, damage, liability or expense (including
reasonable attorneys' fees and disbursements and amounts paid in settlement,
but excluding any indirect, special or consequential damages) incurred by or
against such other Partners or the Partnership and arising out of or resulting
from any action taken by the indemnifying Partner in violation of this Section
5.4.
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5.5 Liability of Partners, Representatives and Partnership
Employees.
No Partner, former Partner or Representative or former Representative,
no Affiliate of any thereof, no partner, shareholder, director, officer,
employee or agent of any of the foregoing, nor any officer or employee of the
Partnership, shall be liable in damages for any act or failure to act in such
Person's capacity as a Partner or Representative or otherwise on behalf of the
Partnership or any of its Subsidiaries unless such act or omission constituted
bad faith, gross negligence, fraud or willful misconduct of such Person or a
violation by such Person of this Agreement or an agreement between such Person
and the Partnership or a Subsidiary thereof. Subject to Section 5.6, each
Partner, former Partner, Representative and former Representative, each
Affiliate of any thereof, each partner, shareholder, director, officer,
employee and agent of any of the foregoing, and each officer and employee of
the Partnership, shall be indemnified and held harmless by the Partnership, its
receiver or trustee from and against any liability for damages and expenses,
including reasonable attorneys' fees and disbursements and amounts paid in
settlement, resulting from any threatened, pending or completed action, suit or
proceeding relating to or arising out of such Person's acts or omissions in
such Person's capacity as a Partner or Representative or (except as provided in
Section 5.4) otherwise involving such Person's activities on behalf of the
Partnership or any of its Subsidiaries, except to the extent that such damages
or expenses result from the bad faith, gross negligence, fraud or willful
misconduct of such Person or a violation by such Person of this Agreement or an
agreement between such Person and the Partnership or any of its Subsidiaries.
Any indemnity by the Partnership, its receiver or trustee under this Section
5.5 shall be provided out of and to the extent of Partnership Property only.
5.6 Indemnification.
Any Person asserting a right to indemnification under Section 5.4 or
5.5 shall so notify the Partnership or the other Partners, as the case may be,
in writing. If the facts giving rise to such indemnification shall involve any
actual or threatened claim or demand by or against a third party, the
indemnified Person shall give such notice promptly (but the failure to so
notify shall not relieve the indemnifying Person from any liability which it
otherwise may have to such indemnified Person hereunder except to the extent
the indemnifying Person is actually prejudiced by such failure to notify). The
indemnifying Person shall be entitled to control the defense or prosecution of
such claim or demand in the name of the indemnified Person, with counsel
satisfactory to the indemnified Person, if it notifies the indemnified Person
in writing of its intention to do so within twenty (20) days of its receipt of
such notice, without prejudice, however, to the right of the indemnified Person
to participate therein through counsel of its own choosing, which participation
shall be at the indemnified Person's expense unless (i) the indemnified Person
shall have been advised by its counsel that use of the same
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counsel to represent both the indemnifying Person and the indemnified Person
would present a conflict of interest (which shall be deemed to include any case
where there may be a legal defense or claim available to the indemnified Person
which is different from or additional to those available to the indemnifying
Person), in which case the indemnifying Person shall not have the right to
direct the defense of such action on behalf of the indemnified Person, or (ii)
the indemnifying Person shall fail vigorously to defend or prosecute such claim
or demand within a reasonable time. Whether or not the indemnifying Person
chooses to defend or prosecute such claim, the Partners shall cooperate in the
prosecution or defense of such claim and shall furnish such records,
information and testimony and attend such conferences, discovery proceedings,
hearings, trials and appeals as may reasonably be requested in connection
therewith. The indemnifying Person may not control the defense of any claim or
demand that involves any material risk of the sale, forfeiture or loss of, or
the creation of any lien (other than a judgment lien) on, any material property
of the indemnified Person or could entail a risk of criminal liability to the
indemnified Person, without the consent of such indemnified Person.
The indemnified Person shall not settle or permit the settlement of
any claim or action for which it is entitled to indemnification without the
prior written consent of the indemnifying Person (which shall not be
unreasonably withheld), unless the indemnifying Person shall have been entitled
to assume the defense thereof pursuant to this Section 5.6 but failed to do so
after the notice and in the manner provided in the preceding paragraph.
The indemnifying Person may not without the consent of the indemnified
Person agree to any settlement (i) that requires such indemnified Person to
make any payment that is not indemnified hereunder, (ii) does not grant a
general release to such indemnified Person with respect to the matters
underlying such claim or action, or (iii) that involves the sale, forfeiture or
loss of, or the creation of any lien on, any material property of such
indemnified Person. Nothing contained in this Section 5.6 is intended to
authorize the indemnifying Person, in connection with any defense or settlement
as to which it has assumed control, to take or refrain from taking, without the
consent of the indemnified Person, any action which would reasonably be
expected to materially impair the indemnification of such indemnified Person
hereunder or would require such indemnified Person to take or refrain from
taking any action or to make any public statement, which such indemnified
Person reasonably considers to materially adversely affect its interests.
Upon the request of any indemnified Person, the indemnifying Person
shall use reasonable efforts to keep such indemnified Person reasonably
apprised of the status of those aspects of such defense controlled by the
indemnifying Person and shall provide such information with respect thereto as
such indemnified Person may reasonably request. If the defense is controlled
by the
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indemnified Person, such indemnified Person, upon the request of the
indemnifying Person, shall use reasonable efforts to keep the indemnifying
Person reasonably apprised of the status of those aspects of such defense
controlled by such indemnified Person and shall provide such information with
respect thereto as the indemnifying Person may reasonably request.
5.7 Temporary Investments.
All Property in the form of cash not otherwise invested shall be
deposited for the benefit of the Partnership in one or more accounts of the
Partnership, WirelessCo or any other Subsidiary of the Partnership in which the
Partnership and MinorCo own, in the aggregate, directly or indirectly, one
hundred percent (100%) of the outstanding equity interests, maintained in such
financial institutions as the Partnership Board shall determine, or shall be
invested in accordance with the guidelines set forth in Schedule 5.7 hereto
(which guidelines may be modified from time to time by the Partnership Board),
or shall be left in escrow, and withdrawals shall be made only for Partnership
purposes on such signature or signatures as the Partnership Board may determine
from time to time.
5.8 Deadlocks.
(a) Escalation Procedures. Upon the occurrence of a
Deadlock Event, the General Partners shall first use their good faith efforts
to resolve such matter in a mutually satisfactory manner. If, after such
efforts have continued for twenty (20) days, no mutually satisfactory solution
has been reached, the General Partners shall resolve the Deadlock Event as
provided herein:
(i) The General Partners shall (at the insistence
of any of them) refer the matter to the chief executive officers of their
respective Parents for resolution.
(ii) Should the chief executive officers of the
Parents fail to resolve the matter within ten (10) days after it is referred to
them, each General Partner (or any group of General Partners electing to act
together) shall prepare a brief (a "Brief"), which includes a summary of the
issue, its proposed resolution of the issue and considerations in support of
such proposed resolution, not later than ten (10) days following the failure of
the chief executive officers to resolve such dispute, and such Briefs shall be
submitted to such reputable and experienced mediation service as is selected by
the Partnership Board by Required Majority Vote or, failing such selection, by
the Chief Executive Officer (the "Mediator"). During a period of twenty (20)
days, the Mediator and the General Partners shall attempt to reach a resolution
of the Deadlock Event.
(iii) In the event that after such twenty (20) day
period (or such longer period as the Partnership Board may approve by Required
Majority Vote), the General Partners are still unable
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to reach resolution of the Deadlock Event (such resolution to be evidenced by
the requisite vote of the Partnership Board with respect to the underlying
matters), the Deadlock Event shall constitute a Liquidating Event as provided
in Section 14.1(a)(iii) unless the Partnership Board determines by Required
Majority Vote not to dissolve.
(b) Deadlock Event. A "Deadlock Event" shall be deemed
to have occurred if (i) after failing to approve a Proposed Budget or Proposed
Business Plan for one Fiscal Year, the Partnership Board has failed to approve
a Proposed Budget or Proposed Business Plan for the next succeeding Fiscal Year
prior to the commencement of such succeeding Fiscal Year, or (ii) the position
of Chief Executive Officer is vacant for a period of more than sixty (60) days
after at least two Partners with an aggregate of at least thirty-three percent
(33%) of the Voting Percentage Interests have proposed a candidate to fill such
vacancy.
5.9 Conversion to Corporate Form.
(a) Procedures. In the event that (i) the Partnership
Board shall determine by Required Majority Vote (or such other vote as may be
required by Item B. of Schedule 5.1(j)) that it is desirable or helpful for the
business of the Partnership to be conducted in a corporate rather than in a
partnership form (for the purposes of conducting a public offering or
otherwise) or (ii) conversion to corporate form is required pursuant to an
election made by a Registering Partner under Section 12.6(c), the Partnership
Board shall incorporate the Partnership in Delaware. In connection with any
incorporation of the Partnership pursuant to the preceding sentence, the
Partnership and MinorCo shall be consolidated and the Partners shall receive,
in exchange for their Interests and MinorCo Interests, shares of capital stock
of such corporation having the same relative economic interests and other
rights as such Partners hold in the Partnership as set forth in this Agreement,
subject in each case to (i) any modifications required solely as a result of
the conversion to corporate form and (ii) modifications to the provisions of
Section 5.1 to conform to the provisions relating to actions of stockholders
and a board of directors set forth in the Delaware General Corporation Law;
provided, that the relative number of representatives on the board of directors
and relative voting power of the outstanding equity interests of such
corporation of each General Partner shall be as nearly as practicable in
proportion to the relative Voting Percentage Interests of the General Partners
immediately prior to such incorporation. For purposes of the preceding
sentence, each Partner's relative economic interest in the Partnership shall
equal such Partner's Net Equity as compared to the Net Equity of all of the
Partners, as determined in accordance with Section 11.3 except that the
Partnership Board shall by Required Majority Vote select a single Appraiser to
determine Gross Appraised Value. At the time of such conversion, the Partners
shall enter into a stockholders' agreement providing for (i) rights of first
refusal and other restrictions on Transfer equivalent to those set forth in
Sections 12.1 through 12.5 and Section 12.7, provided that (x)
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the restrictions on Transfer set forth in Sections 12.1 through 12.4 shall not
apply, following the initial Public Offering by the corporate successor to the
Partnership, to sales in broadly disseminated Public Offerings or sales in
accordance with Rule 144 under the Securities Act of 1933 (the "1933 Act") or
Rule 145 under the 1933 Act (in accordance with the applicable provisions of
Rule 144) (or any successor to either of such Rules), in a transaction that
satisfies the manner of sale requirements of Rule 144 or Rule 145 (whether or
not applicable to such sale) and (y) the restrictions on Transfer set forth in
Section 12.5 shall not apply following the initial Public Offering by the
corporate successor to the Partnership; and (ii) an agreement to vote all
shares of capital stock held by them with respect to the election of directors
of the corporation so as to duplicate as closely as possible the management
structure of the Partnership as set forth in Section 5.1, modified as
contemplated by the second sentence of this Section 5.9(a).
(b) Registration Rights. Upon conversion to corporate
form, the corporate successor to the Partnership shall grant to each of the
Partners certain rights to require such successor to register under the 1933
Act the shares of capital stock received by the Partners in exchange for their
Interests. Such rights shall be as approved by the Required Majority Vote of
the Partnership Board, provided that the registration rights of each Partner
shall be identical on a proportionate basis and, if the conversion to corporate
form was required by Section 12.6(g), shall consist of not less than two demand
registrations on customary terms and subject to customary conditions.
(c) Preemptive Rights. Each Partner shall have
preemptive rights, exercisable in accordance with procedures to be established
by the Partnership Board in connection with and following the conversion of the
Partnership to corporate form, to purchase equity securities proposed to be
issued from time to time by a corporate successor to the Partnership or its
successor; provided, however, that no Partner shall have any such preemptive
right with respect to any equity securities which, by a vote of the board of
directors of such corporate successor that is equivalent to a Required Majority
Vote, have been approved for issuance by such corporate successor in connection
with (i) a Public Offering or (ii) any acquisition (including by way of merger
or consolidation) by the corporate successor of the equity interests or assets
of another entity that is not a Partner or its Affiliate in a transaction
pursuant to which the purchase price is paid by delivery of such equity
securities to the seller. A "Public Offering" means an offering of the
securities of the corporate successor to the Partnership pursuant to a
registration statement on a form applicable to the sale of securities to the
general public (including an offering by a Registering Partner pursuant to a
registration statement as contemplated under Section 12.6(g)).
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SECTION 6. PARTNERSHIP OPPORTUNITIES; CONFIDENTIALITY
6.1 Competitive Activities.
(a) In General. For so long as any Person is a Partner,
neither such Person nor any of its Controlled Affiliates shall engage in any
Competitive Activity in the United States of America (including its territories
and possessions other than Puerto Rico) except (i) through the Partnership and
its Subsidiaries, (ii) subject to Section 6.1(d), as provided in Section 6.1(b)
or 6.1(c), (iii) as permitted or contemplated under Section 8.3, or (iv) as
permitted by Section 6.1(f), 6.3, 6.4 or 8.1. The term "Competitive Activity"
means to bid on, acquire or, directly or indirectly, own, manage, operate,
join, control or finance, or participate in the management, operation, control
or financing of, or be connected as a principal, agent, representative,
consultant, beneficial owner of an interest in any Person, or otherwise with,
or use or permit its name to be used in connection with, any business or
enterprise which (i) engages in the bidding for or acquisition of any Wireless
Business license or engages in any Wireless Business, or (ii) provides, offers,
promotes or brands services that are within the Wireless Exclusive Services.
(b) Bidding for Wireless Business Licenses. Except as
permitted by Section 6.4, no Partner nor any of its Controlled Affiliates shall
bid in the PCS Auction for any Wireless Business licenses unless (i) the
Partnership Board consents to such bid following consultation by such Partner
with the Representatives of the other Partners; or (ii) (A) WirelessCo has
entered a bid or bids for such license, but a third-party bid has been entered
which equals or exceeds the maximum amount that WirelessCo has determined to
bid for such license, (B) if a vote was taken, such Partner's Representative(s)
voted in favor of WirelessCo's increasing the amount it would bid for such
license, and (C) WirelessCo has determined not to increase its bid in response
to such third party bid. This Section 6.1(b) will not permit a Partner or its
Affiliate to bid for or acquire a Wireless Business license if the bidding for
or acquisition of such license by a Partner or its Affiliate would otherwise
violate (or cause the Partnership or any of the other Partners or their
respective Affiliates to be in violation of) the FCC's rules or orders relating
to Wireless Business license cross-ownership, license attribution standards,
and/or spectrum attribution or aggregation requirements, including Sections
20.6, 24.204 and 24.229(c) of the FCC's rules to be codified at 47 C.F.R.
Sections 20.6, 24.204 and 24.229(c).
(c) Engaging in Wireless Businesses. If any Partner or
any of its Controlled Affiliates proposes to engage in any Competitive Activity
other than as permitted by Section 6.1(b) (or through a Wireless Business
license acquired as permitted by Section 6.1(b)), 6.3, 6.4 or 8.1, then such
Partner shall first offer to the Partnership the opportunity for the
Partnership or any of its Subsidiaries to engage, in lieu of such Partner and
its
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Affiliates, in such Competitive Activity (whether by acquiring such interest
itself or itself providing, offering, promoting or branding such services) (the
"Offer"), which Offer shall be made in writing and shall set forth in
reasonable detail the nature and scope of the activity proposed to be engaged
in, including all material terms of any proposed acquisition. The Partnership,
for itself or any of its Subsidiaries (by Required Majority Vote of the
Partnership Board pursuant to Section 8.6), shall have thirty (30) days from
receipt of the Offer to accept or reject it. If the Partnership does not
accept (for itself or any of its Subsidiaries), the Offer within such thirty
(30) day period, it shall be deemed to have rejected the Offer, and the
offering Partner or its Controlled Affiliate shall be permitted to engage in
such Competitive Activity on terms no more favorable to such Partner or its
Controlled Affiliate than those described in the Offer. If the Partnership,
for itself or any of its Subsidiaries, accepts the Offer, the offering Partner
and its Controlled Affiliates shall not pursue such opportunity to engage in
such Competitive Activity; provided, however, that if the Partnership or such
Subsidiary, as applicable, does not within a commercially reasonable period of
time after such acceptance take reasonable steps to pursue such opportunity,
other than as a result of a violation of this Agreement or wrongful acts or bad
faith on the part of the offering Partner or its Controlled Affiliates, then
the offering Partner or its Controlled Affiliate shall be permitted to pursue
such opportunity on terms no more favorable to the offering Partner or its
Controlled Affiliate than the terms of the Offer. If the offering Partner or
its Controlled Affiliate does not take reasonable steps to pursue such
opportunity contemplated by the Offer within a reasonable period of time after
acquiring the right to do so in accordance with the foregoing provisions of
this Section 6.1(c) (including, in the case of an acquisition, by entering into
a definitive agreement (subject solely to obtaining the requisite regulatory
approvals and other customary closing conditions) with respect to such
acquisition within one hundred twenty (120) days thereafter), then it shall
lose its right to pursue such opportunity and thereafter be required to reoffer
the opportunity to the Partnership in accordance with, and shall otherwise
comply with, this Section 6.1(c). Notwithstanding the foregoing, a Partner
shall not be permitted to present an Offer to the Partnership (or, except for
Competitive Activities relating to an Offer previously rejected by the
Partnership, otherwise engage in any Competitive Activity in reliance on this
Section 6.1(c)) in any license area (or portion thereof) in which the
Partnership or any of its Subsidiaries is otherwise offering, promoting or
branding Wireless Exclusive Services (or in which the Partnership or any of its
Subsidiaries plans to offer, promote or brand Wireless Exclusive Services
pursuant to or as set forth in the Initial Business Plan or Approved Business
Plan then in effect, as applicable, or pursuant to any Wireless Business
license acquired by the Partnership or an Affiliation Agreement entered into
with the holder of a Wireless Business license subsequent to the approval of
such Initial
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Business Plan or Approved Business Plan, as applicable), including pursuant to
an Affiliation Agreement, without a Unanimous Vote of the Partnership Board
pursuant to Section 8.6.
(d) Wireless Business Affiliation Agreements. (i) Any
Partner or Controlled Affiliate thereof that acquires or owns a Wireless
Business license, or directly engages in a Wireless Business, as permitted by
the exceptions provided by Sections 6.1(b), 6.1(c), 6.3(e), 6.3(h) and 8.1 to
the prohibitions on Competitive Activities contained in Section 6.1(a), shall,
subject to applicable law, as a condition to the availability of such
exceptions, offer to enter into an affiliation agreement with respect to such
Wireless Business with WirelessCo on terms and conditions comparable to those
which WirelessCo offers to other affiliated Wireless Businesses in similar
situations (or if no such agreement then exists, such terms and conditions
shall include a provision for competitive pricing), under which such Wireless
Business will provide its services to the public as an affiliate of
WirelessCo's business (as entered into with a Partner or its Controlled
Affiliate or any other Person, an "Affiliation Agreement"). The Partnership
Board may waive compliance with all or any part of this Section 6.1(d) with
respect to any transaction by Required Majority Vote of the Partnership Board
pursuant to Section 8.6.
(ii) Each Partner and its Controlled Affiliates
shall also use all commercially reasonable efforts to cause any Affiliate of
such Partner which acquires or owns a Wireless Business license, or otherwise
engages in any Wireless Business, and provides services within the Wireless
Exclusive Services, to (if WirelessCo so desires) enter into an Affiliation
Agreement with WirelessCo.
(e) Geographic Restrictions on Wireless Business. Unless
approved by a Unanimous Partner Vote, the Partnership and its Subsidiaries will
not engage in any Competitive Activities in the Philadelphia, Charlotte,
Cleveland, El Paso, Jacksonville, Knoxville, Omaha or Richmond MTAs, including
bidding for or acquiring any PCS licenses therein; provided that, to the extent
permitted by law, the Partnership and its Subsidiaries may (or, as provided in
Sections 6.3(e) and 8.1, shall) enter into Affiliation Agreements with Persons
engaged in Competitive Activities in such MTAs; and provided further, that the
Partnership and its Subsidiaries may engage in Competitive Activities in any
MTA (other than Philadelphia) listed in this Section 6.1(e) from and after the
time that Sprint and its Controlled Affiliates have divested of their ownership
interests in any of the Sprint Cellular Businesses in such MTA.
(f) Unrestricted Activities. Nothing in this Section 6
shall prevent any Person from (i) providing any Non-Exclusive Services or
engaging in any Excluded Business or (ii) complying with any applicable laws,
rules or regulations, including those requiring that any facilities be made
available to any other Person.
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6.2 Enforceability and Enforcement.
(a) The Partners acknowledge and agree that the time,
scope, geographic area and other provisions of Section 6.1 have been
specifically negotiated by sophisticated parties and agree that such time,
scope, geographic area, and other provisions are reasonable under the
circumstances. If, despite this express agreement of the Partners, a court
should hold any portion of Section 6.1 to be unenforceable for any reason, the
maximum restrictions of time, scope and geographic area reasonable under the
circumstances, as determined by the court, will be substituted for the
restrictions held to be unenforceable.
(b) The Partnership shall be entitled to preliminary and
permanent injunctive relief, without the necessity of proving actual damages or
posting any bond or other security, to prevent any breach of Section 6.1, which
rights shall be cumulative and in addition to any other rights or remedies to
which the Partnership may be entitled.
6.3 General Exceptions to Section 6.1.
The restrictions set forth in Section 6.1 on Competitive Activities
shall not be construed to prohibit any of the following actions by a Partner
and its Controlled Affiliates, except to the extent any such action would cause
the Partnership (including the ownership of its assets and the conduct of its
business) to be in violation of any law or regulation or otherwise result in
any restriction or other limitation on the Partnership's and its Subsidiaries'
ownership of their respective assets or conduct of their respective businesses:
(a) The acquisition or ownership of any debt or equity
securities of a Publicly Held Person, provided that such securities (i) were
not acquired from the issuer thereof in a private placement or similar
transaction, (ii) do not represent more than five percent (5%) of the aggregate
voting power of the outstanding capital stock of any Person that engages in a
Competitive Activity (assuming the conversion, exercise or exchange of all such
securities held by such Partner or its Controlled Affiliates that are
convertible, exercisable or exchangeable into or for voting stock) and (iii) in
the case of debt securities, entitle the holder to receive only interest or
other returns that are fixed, or vary by reference to an index or formula that
is not based on the value or results of operations of such Person;
(b) The acquisition (through merger, consolidation,
purchase of stock or assets, or otherwise) of a Person or an interest in a
Person, which engages (directly or indirectly through an Affiliate that is
controlled by such Person) in any Competitive Activity if either (i) such
acquisition results from a foreclosure or equivalent action with respect to
debt securities permitted to be held under Section 6.3(a) or (ii) the
Competitive Activity does not constitute the principal activity, in terms of
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revenues or fair market value, of the businesses acquired in such acquisition
or conducted by the Person in which such interest is acquired, provided, in
each case, that such Partner or Controlled Affiliate divests itself of the
Competitive Activity or interest therein as soon as is practicable, but in no
event later than twenty-four (24) months, after the acquisition unless the
Partnership Board approves the entering into of an Affiliation Agreement with
respect to such Competitive Activity pursuant to Section 8.6;
(c) The continued holding of an equity interest in a
Person that commences a Competitive Activity following the acquisition of such
equity interest if neither the Partner nor its Controlled Affiliate has any
responsibility or control over the conduct of such Competitive Activity, does
not permit its name to be used in connection with such Competitive Activity and
uses all commercially reasonable efforts, including voting its equity interest,
to cause such Person either (i) to cease such Competitive Activity or (ii) to
offer to enter into an Affiliation Agreement with the Partnership and its
Subsidiaries;
(d) The conduct of any Competitive Activity that is a
necessary component of or an incidental part of the conduct of any Excluded
Business by a Partner or its Controlled Affiliates or the entering into of an
arrangement with an independent third party for the provision of any services
included in the Wireless Exclusive Services which is a necessary component of
or an incidental part of the conduct of such Excluded Business, so long as, in
each case, such Partner or Controlled Affiliate shall first use all
commercially reasonable efforts to negotiate agreements with the Partnership or
one of its Subsidiaries, which are reasonable in the independent judgment of
both parties, pursuant to which the Partnership or such Subsidiary would
provide such services included in the Wireless Exclusive Services on terms no
less favorable to the Partner or such Controlled Affiliate than such Partner or
Controlled Affiliate could obtain from an independent third party or could
provide itself;
(e) The ownership and operation by (i) a partnership of
Sprint, TCI and Cox and/or their respective Affiliates of a PCS license and an
associated Wireless Business in the Philadelphia MTA ("PhillieCo"), (ii) Cox or
its Affiliate of a PCS License and an associated Wireless Business in the Omaha
MTA and (iii) any of Cox, Comcast and TCI or their Affiliates (acting singly or
jointly through a partnership or other entity) of a PCS license and an
associated Wireless Business in any of the Charlotte, Cleveland, El Paso,
Jacksonville, Knoxville and Richmond MTAs, provided in each case that, subject
to applicable law, such owners or entities holding the licenses enter into
Affiliation Agreements with the Partnership and its Subsidiaries; and provided
further, that (x) the exception provided in clause (ii) of this Section 6.3(e)
shall terminate at such time as Cox is obligated to contribute the Omaha
License to the Partnership pursuant to Section 2.3(a)(ii) and (y) except for
any Competitive Activities conducted in the MTAs listed in clause (iii) of this
Section 6.3(e) pursuant to an
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agreement entered into or PCS license acquired during the period beginning on
July 1, 1996 and ending on the date that Sprint and its Controlled Affiliates
have divested of their ownership interests in the Sprint Cellular Businesses,
the exception provided in such clause (iii) shall terminate at such time as
Sprint and its Controlled Affiliates have divested of their ownership interests
in the Sprint Cellular Businesses;
(f) The conduct of any Competitive Activity involving the
provision of any product or service that is an ancillary value-added addition
to a Wireless Business and which does not itself require an FCC license
(including operator services, location services and weather, sports and other
information services);
(g) The ownership and operation by Sprint's Controlled
Affiliates of their cellular businesses within the Sprint Cellular Service Area
until such time as Sprint and its Controlled Affiliates have divested of their
ownership interests in the Sprint Cellular Businesses; provided that the
entities succeeding to the Sprint Cellular Businesses shall be entitled to use
the Sprint Brand for a period not to exceed one (1) year following the closing
of such divestiture;
(h) The ownership and operation by Cox or its Affiliate
of PioneerCo, so long as PioneerCo, subject to applicable law, enters into an
Affiliation Agreement with the Partnership prior to offering or providing any
Wireless Exclusive Services;
(i) The continuing ownership by an Affiliate of Sprint of
its current ownership interest in Iridium and the provision of any services by
Iridium so long as Iridium is not an Affiliate of Sprint;
(j) The ownership by a Controlled Affiliate of Comcast of
any ownership interest in Nextel and the provision of any services by Nextel,
subject to Section 6.4(f) of this Agreement;
(k) The continuing ownership by a Controlled Affiliate of
TCI of its current ownership interest in Nextel and the provision of any
services by Nextel so long as Nextel is not an Affiliate of TCI;
(l) The continuing ownership by a Controlled Affiliate of
TCI of its current ownership interest in MTS Limited Partnership ("MTS") and
the provision of any services by MTS so long as MTS is not an Affiliate of TCI;
(m) The continuing ownership by a Controlled Affiliate of
TCI of its current ownership interest in General Communication Inc. ("GCI") and
the provision of any services by GCI so long as GCI is not an Affiliate of TCI;
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(n) The continuing ownership by a Controlled Affiliate of
TCI of its current ownership interest in Western Tele-Communications, Inc.
("WTCI") and the conduct by WTCI of its current business;
(o) The continuing ownership and operation by Sprint's
Controlled Affiliates of their IMTS (mobile radio telephony service) and paging
businesses as such businesses currently are being conducted, so long as the
aggregate annual revenue derived from the operation of such businesses does not
exceed $15,000,000;
(p) The provision by a Partner and its Controlled
Affiliates of Wireless Exclusive Services on a resale basis in geographic areas
where neither the Partnership nor any of its Subsidiaries or Wireless
Affiliates is then providing, offering, promoting or branding Wireless
Exclusive Services and either (i) with respect to Sprint, a Controlled
Affiliate of Sprint owns a LEC property as of the date of this Agreement in
such geographic area or (ii) in the reasonable judgment of such Partner, such
Partner or its Controlled Affiliate must offer in such geographic area Wireless
Exclusive Services in a package with other products and services of such
Partner or its Controlled Affiliates in order to compete with an actual or
anticipated initiative by a service provider that is not a Controlled Affiliate
of such Partner; provided in each case that such Partner or its Controlled
Affiliate must (x) first offer, or cause to be offered, to the Partnership the
opportunity to be the provider of such Wireless Exclusive Services on terms no
less favorable to the Partnership than those made available to such Partner or
its Controlled Affiliate and (y) use its commercially reasonable efforts to
insure that any provision of such Wireless Exclusive Services is in accordance
with the Partnership's technical requirements in a manner that would facilitate
the transition of such business to the Partnership. At such time as the
Partnership commences providing, offering, promoting or branding Wireless
Exclusive Services within such geographic area, such Partner shall, promptly
following its receipt of written notice from the Partnership, offer, or cause
its Controlled Affiliate to offer, to Transfer to the Partnership such
Partner's or its Controlled Affiliate's business of providing Wireless
Exclusive Services in such geographic area, and (at the Partnership's option)
to Transfer, lease or otherwise make available (at the election of such Partner
or its Controlled Affiliate) to the Partnership the assets that are utilized in
the provision of such Wireless Exclusive Services, such offer in each case to
be at a price equal to the costs that the Partnership would incur to achieve a
like business, including the costs associated with the creation or acquisition
of the customer base of such business and the replacement cost of any assets so
Transferred, leased or otherwise made available;
(q) Prior to the termination of a Parents Agreement, the
offering, promotion and branding by the Cable Partner whose Parent is a party
to such Parents Agreement and its Controlled Affiliates of the Partnership's
Wireless Exclusive Services under a Permitted Brand at such times and in such
geographic areas as to
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which Section 2(a)(i) of such Parents Agreement has ceased to be applicable to
the Parent of such Cable Partner pursuant to Section 4(b) or 4(c) of such
Parents Agreement;
(r) Following the termination of a Parents Agreement, the
offering, promotion and branding by the Cable Partner whose Parent is a party
to such Parents Agreement and its Controlled Affiliates of the Partnership's
Wireless Exclusive Services under a Permitted Brand in any geographic area
where (i) neither such Cable Partner, its Controlled Affiliates nor any Local
Joint Venture between such Cable Partner or its Controlled Affiliate and Sprint
or its Controlled Affiliate is providing Local Telephony Services (as defined
in the Parents Agreement) under the Sprint Brand and (ii) Sprint Parent has not
provided or caused to be provided to such Cable Partner or its applicable
Controlled Affiliate on competitive economic terms Long Distance Telephony
Services (as defined in the Parents Agreement) under the Sprint Brand to offer
and promote, and package with other products and services to offer and promote,
to its customers, and for which it is authorized to act as a non-exclusive
sales agent in that geographic area; and
(s) The offering or promotion on a sales agency basis of
any product or service offered by any Wireless Affiliate pursuant to or in
accordance with an Affiliation Agreement.
Notwithstanding anything to the contrary in this Section 6, any investment fund
in which a Partner or any of its Affiliates has an investment (including
pension funds) that invests funds on behalf of and has a fiduciary duty to
third party investors shall be permitted to engage in or invest in entities
engaged in any activity whatsoever; provided that, neither such Partner nor any
of its Controlled Affiliates, directly or indirectly, exercises any management
or operational control whatsoever in any such entity engaging in a Wireless
Business.
6.4 Comcast Exceptions.
The restrictions set forth in Section 6.1 shall not apply with
respect to the following:
(a) Subject to the limitations set forth in this Section
6.4, Comcast and its Controlled Affiliates may engage in any Competitive
Activities with respect to any Wireless Business in the Comcast Area.
(b) Comcast and its Controlled Affiliates may participate
in a bid for and/or acquire any interest in a 10 MHz PCS license only in any of
the BTAs in the Philadelphia MTA or the Allentown, Pennsylvania BTA. Comcast
and its Controlled Affiliates may acquire any interest in a 10 MHz PCS license
in any of the following cellular license areas in New Jersey: Hunterdon
County, Middlesex County, Monmouth County and Ocean County; provided, that at
the time of such acquisition Comcast and its Controlled Affiliates own a
controlling interest in a cellular
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license for such area and further provided, that the license area of such 10
MHz license shall not extend beyond such area in other than an immaterial
manner. In the event Comcast and its Controlled Affiliates own a controlling
interest in any such 10 MHz PCS license, then Comcast and its Controlled
Affiliates will, to the extent permitted by applicable law, provide for their
customers receiving services under any such 10 MHz PCS license to receive
roaming services from any of WirelessCo's or its Affiliate's businesses
providing services under any PCS license (the "Partnership's Businesses"),
subject to the conditions that (i) such roaming is technically feasible, (ii)
such roaming is at competitive rates and on other terms and conditions
reasonably acceptable to Comcast and its Controlled Affiliates, (iii) the
Partnership's Businesses support the features and services provided by Comcast
and its Controlled Affiliates to their customers and (iv) subject to the same
conditions, the Partnership's Businesses will provide for their customers to
receive reciprocal roaming services from Comcast and its Controlled Affiliates
in the areas described above at such times as neither PhillieCo nor WirelessCo
owns or has an affiliation with respect to a Wireless Business license for such
areas. Notwithstanding the foregoing, if the ownership by Comcast or any of
its Controlled Affiliates of any 10 MHz PCS license outside of the Philadelphia
MTA (A) causes WirelessCo (including the ownership of its assets and the
conduct of its business) to be in violation of any law or regulation or
otherwise results in any restriction or other limitation on WirelessCo's
ownership of its assets or conduct of its business or (B) in any way impairs,
prevents or delays the ability of WirelessCo to bid for or acquire a Wireless
Business license in any license area in which WirelessCo plans to engage in a
Competitive Activity pursuant to or as set forth in the Initial Business Plan
or its then-current Approved Business Plan, Comcast and its Controlled
Affiliates will be prohibited from making such acquisition or, if such
acquisition has already occurred, will cure the circumstances described above
(including, if required, by divesting its ownership of the 10 MHz PCS license)
within a commercially reasonable period of time after its receipt of notice
from WirelessCo of the existence of such circumstances; provided that, in the
event of such divestiture, Comcast and its Controlled Affiliates will have the
right to resell service in such area provided such resale shall occur using
WirelessCo's facilities if they are available and it is technically feasible to
do so.
(c) The Partnership will, at the request of Comcast and
Affiliates and to the extent permitted by applicable law, (i) provide for
customers receiving Wireless Business services from Comcast and its Controlled
Affiliates in the Comcast Area, to receive roaming services in areas outside of
the Comcast Area at competitive rates and on commercially reasonable terms and
conditions where the Partnership Businesses own or have an affiliation with
respect to a Wireless Business license, subject to the condition that such
roaming is technically feasible; (ii) provide Comcast and its Controlled
Affiliates' Wireless Businesses in the Comcast Area with SS7 interconnection to
the Partnership's
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facilities on commercially reasonable terms and conditions and (iii) in the
event the Partnership or its Subsidiaries allow or are required by law to allow
resale of their Wireless Exclusive Services in any part of the Comcast Area,
allow Comcast and its Controlled Affiliates to resell such services in such
part of the Comcast Area on commercially reasonable terms and conditions.
(d) Comcast and its Controlled Affiliates may engage in
any Competitive Activities with respect to any Wireless Business in the
Kankakee, Illinois RSA cellular license area as well as the cellular license
area served by Indiana Cellular Holdings, Inc., Harrisburg Cellular Telephone
Company, Aurora/Elgin Cellular Telephone Company, Inc. and Joliet Cellular
Telephone Company, Inc.; provided that such Competitive Activities are confined
to the geographic territories of the cellular licenses currently held by such
businesses.
(e) Comcast and its Controlled Affiliates may participate
in regional marketing activities within the Comcast Area for the purpose of:
(i) selling to its "In-Territory Customers" (as defined below) wireless
services within the Washington, D.C., New York and Philadelphia MTAs; and (ii)
obtaining distribution from its "In-Territory Distributors" (as defined below)
of wireless services within the Washington, D.C., New York and Philadelphia
MTAs; provided that (A) Comcast and its Controlled Affiliates do not maintain
or deploy any sales personnel, sales office or other direct sales presence, or
otherwise advertise or promote the Comcast brand or any other brand, in either
the New York MTA or the Washington, D.C. MTA outside of the Comcast Area, (B)
Comcast and its Controlled Affiliates do not own or lease any wireless
transmission facilities outside of the Comcast Area in connection therewith and
(C) in obtaining the distribution contemplated by Section 6.4(e)(ii), Comcast
and its Controlled Affiliates subcontract the provision of wireless services
outside the Comcast Area to a third party provider only if such services cannot
be subcontracted to WirelessCo without material adverse consequences for
Comcast's and its Controlled Affiliates' ability to participate in such
regional marketing activities. For the purposes hereof, an "In-Territory
Customer" is a customer that has a business location in the Comcast Area and
places the order for the services described above through Comcast and its
Controlled Affiliates in the Comcast Area. For the purposes hereof, an
"In-Territory Distributor" is a distributor that has a business location in the
Comcast Area and requires a regional contract be entered into by Comcast and
its Controlled Affiliates in the Comcast Area. For purposes of this Section
6.4(e), the term "Comcast Area" shall include any area in which Comcast and its
Controlled Affiliates at such time own a controlling interest in a PCS license
which was permitted to be acquired under Section 6.4(b).
(f) Comcast and its Controlled Affiliates may hold an
interest in Nextel Communications, Inc. ("Nextel"), provided that (i) none of
Comcast's or its Controlled Affiliates' Agents participate in or are present at
any discussions, or receive any
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information, regarding Nextel's PCS bidding strategies; and (ii) at the
election of Comcast, no later than October 24, 1995, either (A) Comcast and its
Controlled Affiliates shall own securities representing less than 5.4% of the
voting power and equity of all of the outstanding capital stock of Nextel, (B)
no Agent of Comcast or any of its Controlled Affiliates shall be a director or
officer of Nextel, and no director of Nextel shall be an appointee of Comcast
or its Controlled Affiliates pursuant to any contractual right of Comcast and
its Controlled Affiliates to appoint any director of Nextel, or (C) Comcast
shall elect to become an Exclusive Limited Partner as of such date by giving
written notice of such election to the Partnership; provided, however, that if
Comcast and its Controlled Affiliates (x) fail to satisfy either of clauses (A)
or (B) above at any time after October 24, 1995 or (y) acquire any additional
common stock or other voting securities (or securities convertible into or
exchangeable for common stock or other voting securities) of Nextel (as to (y)
only, other than common stock acquired as a result of (I) the exercise of its
stock option to acquire 25,000,000 shares and warrant to acquire 230,000
shares, (II) the consummation of its sale of the assets of Philadelphia Mobile
Communications, Inc. to Nextel (the "PMCI Shares") or (III) the exercise by
Comcast and its Controlled Affiliates of purchase rights to maintain, in the
event of certain future share issuances by Nextel, the then current percentage
ownership of Comcast and its Controlled Affiliates in Nextel assuming the
exercise of such stock option and warrant in full and the receipt of the PMCI
Shares (which percentage shall in no event exceed 15%), granted under that
certain Stock Purchase Agreement dated as of September 14, 1992, among Comcast
Parent, Comcast FCI, Inc. and Fleet Call, Inc., as amended; provided, that as a
result of any such purchases pursuant to clauses (I), (II) and (III), Comcast
and its Controlled Affiliates do not own 10% or more of the common stock of
Nextel (determined in accordance with Rule 13d-3 under the Securities Exchange
Act of 1934)), then Comcast will automatically (without any action required to
be taken by the Partnership or any Partner) become an Exclusive Limited
Partner. Notwithstanding the second proviso in the preceding sentence, if (1)
such acquisition is the result of the exercise by Comcast and its Controlled
Affiliates of such purchase rights and as a result thereof Comcast and its
Controlled Affiliates own 10% or more of the common stock of Nextel as so
determined, (2) Comcast and its Controlled Affiliates exercise any available
registration rights within thirty (30) days following the acquisition of common
stock pursuant to the exercise of such purchase rights and otherwise seek to
Transfer such common stock as soon as practicable, and (3) an amount of Nextel
common stock is Transferred within two hundred forty (240) days following the
date of such acquisition such that thereafter Comcast and its Controlled
Affiliates do not own 10% or more thereof as so determined, then Comcast will
automatically (without any action required by the Partnership or any Partner)
be returned to the status of General Partner if it satisfies either of clauses
(A) or (B) above and is not otherwise required to be an Exclusive Limited
Partner under this Section 6.4(f). If at any time following the date hereof
Comcast and its
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Controlled Affiliates own more than 31% of the common stock of Nextel on a
fully diluted basis (provided that at such time Nextel has a total market
capitalization of at least $2,000,000,000), or own 50% or more of the common
stock of Nextel on a fully-diluted basis (regardless of Nextel's total market
capitalization), Comcast shall provide written notice to the Partnership and to
each other Partner of the acquisition of such ownership interest (or the
occurrence of any event causing Comcast and its Controlled Affiliates to exceed
such ownership threshold) within five (5) days of such acquisition (or the
occurrence of such event). The other Partners will have the option,
exercisable within ninety (90) days of the date of such notice, to purchase the
Interest of Comcast for a purchase price equal to the Net Equity thereof for
cash at a closing to be held no later than ninety (90) days from the date such
option is exercised. Such purchase shall occur in accordance with the
procedures set forth in Section 11 as if Comcast were an "Adverse Partner" and
each of the other Partners were a "Purchasing Partner.
(g) The term "Comcast Area" means (i) the following
cellular license areas (or portions thereof) in New Jersey: Hunterdon NJ1 RSA,
New Brunswick MSA, Long Branch MSA, Trenton MSA, Allentown, PA MSA,
Philadelphia MSA, Ocean NJ2 RSA, Atlantic City MSA, Vineland-Millville MSA, and
Wilmington, DE MSA; (ii) Delaware; (iii) Maryland RSA2; (iv) counties in
Pennsylvania in which Comcast and its Controlled Affiliates engaged in the
cellular business as of October 24, 1994, and all counties in Pennsylvania
contiguous thereto; (v) the Philadelphia MTA; and (vi) minor overlaps into any
territory adjoining any of the areas included in (i) - (v) required to
efficiently provide services in such area.
(h) The obligations under Section 6.1(d) shall not apply
to Comcast and its Controlled Affiliates with respect to any Competitive
Activities permitted pursuant to this Section 6.4.
(i) Comcast and its Controlled Affiliates may co-brand or
package any Wireless Exclusive Services permitted to be provided pursuant to
this Section 6.4 together with their cable television offerings; provided that
in such event the only brand name(s) which may be used for any such Wireless
Exclusive Services are any of the following, any combination thereof or any
variants thereof substantially similar thereto: Comcast, Comcast Cellular,
Comcast Metrophone, Metrophone, Comcast Cellular One and Cellular One, which
Comcast represents are currently utilized by its cellular business in the
Comcast Area as of the date hereof; provided further, however, that Comcast may
request that the Partnership approve the use by Comcast and its Controlled
Affiliates of another brand name (other than that of an inter-exchange
carrier), in which case the Partnership's consent to the use thereof will not
be unreasonably withheld.
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6.5 Freedom of Action.
Except as set forth in this Section 6, no Partner or Affiliate shall
have any obligation not to (i) engage in the same or similar activities or
lines of business as the Partnership or its Subsidiaries or develop or market
any products or services that compete, directly or indirectly, with those of
the Partnership or its Subsidiaries, (ii) invest or own any interest publicly
or privately in, or develop a business relationship with, any Person engaged in
the same or similar activities or lines of business as, or otherwise in
competition with, the Partnership or its Subsidiaries, (iii) do business with
any client or customer of the Partnership or its Subsidiaries, or (iv) employ
or otherwise engage a former officer or employee of the Partnership or its
Subsidiaries.
6.6 Confidentiality.
(a) Maintenance of Confidentiality. Each Partner and its
Controlled Affiliates and the Partnership (each a "Restricted Party"), shall
cause their respective officers and directors (in their capacity as such) to,
and shall take all reasonable measures to cause their respective employees,
attorneys, accountants, consultants and other agents and advisors
(collectively, and together with their respective officers and directors,
"Agents") to, keep secret and maintain in confidence all confidential and
proprietary information and data of the Partnership and the other Partners or
their Affiliates disclosed to it (in each case, a "Receiving Party") in
connection with the formation of the Partnership and the conduct of the
Partnership's business and in connection with the transactions contemplated by
the Joint Venture Formation Agreement (the "Confidential Information") and
shall not, shall cause their respective officers and directors not to, and
shall take all reasonable measures to cause their respective other Agents not
to, disclose Confidential Information to any Person other than the Partners,
their Controlled Affiliates and their respective Agents that need to know such
Confidential Information, or the Partnership. Each Partner further agrees that
it shall not use the Confidential Information for any purpose other than
monitoring and evaluating its investment, determining and performing its
obligations and exercising its rights under this Agreement. The Partnership
and each Partner shall take all reasonable measures necessary to prevent any
unauthorized disclosure of the Confidential Information by any of their
respective Controlled Affiliates or any of their respective Agents. The
measures taken by a Restricted Party to protect Confidential Information shall
not be deemed unreasonable if the measures taken are at least as strong as the
measures taken by the disclosing party to protect such Confidential
Information.
(b) Permitted Disclosures. Nothing herein shall prevent
any Restricted Party or its Agents from using, disclosing, or authorizing the
disclosure of Confidential Information it receives in the course of the
business of the Partnership which:
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(i) has been published or is in the public
domain, or which subsequently comes into the public domain, through no
fault of the Receiving Party;
(ii) prior to receipt hereunder (or under that
certain Agreement for Use and Non-Disclosure of Proprietary
Information, dated as of May 4, 1994, among Affiliates of the
Partners) was properly within the legitimate possession of the
Receiving Party or, subsequent to receipt hereunder (or under such
agreement), is lawfully received from a third party having rights
therein without restriction of the third party's right to disseminate
the Confidential Information and without notice of any restriction
against its further disclosure;
(iii) is independently developed by the Receiving
Party through Persons who have not had, either directly or indirectly,
access to or knowledge of such Confidential Information;
(iv) is disclosed to a third party with the
written approval of the party originally disclosing such information,
provided that such Confidential Information shall cease to be
confidential and proprietary information covered by this Agreement
only to the extent of the disclosure so consented to;
(v) subject to the Receiving Party's compliance
with paragraph (d) below, is required to be produced under order of a
court of competent jurisdiction or other similar requirements of a
governmental agency, provided that such Confidential Information to
the extent covered by a protective order or its equivalent shall
otherwise continue to be Confidential Information required to be held
confidential for purposes of this Agreement; or
(vi) subject to the Receiving Party's compliance
with paragraph (d) below, is required to be disclosed by applicable
law or a stock exchange or association on which such Receiving Party's
securities (or those of its Affiliate) are listed.
(c) Notwithstanding this Section 6.6, any Partner may
provide Confidential Information (i) to other Persons considering the
acquisition (whether directly or indirectly) of all or a portion of such
Partner's Interest in the Partnership pursuant to Section 12 of this Agreement,
(ii) to other Persons considering the consummation of a Permitted Transaction
with respect to such Person or (iii) to any financial institution in connection
with borrowings from such financial institution by such Partner or any of its
Controlled Affiliates, so long as prior to any such disclosure such other
Person or financial institution executes a
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confidentiality agreement that provides protection substantially equivalent to
the protection provided the Partners and the Partnership in this Section 6.6.
(d) In the event that any Receiving Party (i) must
disclose Confidential Information in order to comply with applicable law or the
requirements of a stock exchange or association on which such Receiving Party's
securities or those of its Affiliates are listed or (ii) becomes legally
compelled (by oral questions, interrogatories, requests for information or
documents, subpoenas, civil investigative demands or otherwise) to disclose any
Confidential Information, the Receiving Party shall provide the disclosing
party with prompt written notice so that in the case of clause (i), the
disclosing party can work with the Receiving Party to limit the disclosure to
the greatest extent possible consistent with legal obligations, or in the case
of clause (ii), the disclosing party may seek a protective order or other
appropriate remedy or waive compliance with the provisions of this Agreement.
In the case of clause (ii), (A) if the disclosing party is unable to obtain a
protective order or other appropriate remedy, or if the disclosing party so
directs, the Receiving Party shall, and shall cause its employees to, exercise
all commercially reasonable efforts to obtain a protective order or other
appropriate remedy at the disclosing party's reasonable expense, and (B)
failing the entry of a protective order or other appropriate remedy or receipt
of a waiver hereunder, the Receiving Party shall furnish only that portion of
the Confidential Information which it is advised by opinion of its counsel is
legally required to be furnished and shall exercise all commercially reasonable
efforts to obtain reliable assurance that confidential treatment shall be
accorded such Confidential Information, it being understood that such
reasonable efforts shall be at the cost and expense of the disclosing party
whose Confidential Information has been sought.
(e) Any press release concerning the business, affairs
and operation of the Partnership shall be approved in advance by a Required
Majority Vote of the Partnership Board.
(f) The obligations under this Section 6.6 shall survive
for a period of two (2) years from (i) as to all Partners and their respective
Controlled Affiliates, the termination of the Partnership and (ii) as to any
Partner and its Controlled Affiliates, such Partner's withdrawal therefrom (or
otherwise ceasing to be a Partner); provided that such obligations shall
continue indefinitely with respect to any trade secret or similar information
which is proprietary to the Partnership and provides the Partnership with an
advantage over its competitors.
(g) All references in this Section 6.6 to the Partnership
shall, unless the context otherwise requires, be deemed to refer also to each
Subsidiary of the Partnership.
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SECTION 7. ROLE OF EXCLUSIVE LIMITED PARTNERS
7.1 Rights or Powers.
The Exclusive Limited Partners shall not have any right or power to
take part in the management or control of the Partnership or its business and
affairs or to act for or bind the Partnership in any way.
7.2 Voting Rights.
The Exclusive Limited Partners shall have the right to vote only on
the matters specifically reserved for the vote or approval of Partners
(including the Exclusive Limited Partners) set forth in this Agreement,
including those matters listed on Schedule 5.1(l).
SECTION 8. TRANSACTIONS WITH PARTNERS; OTHER AGREEMENTS
8.1 Sprint Cellular.
In the event (i) WirelessCo is the winning bidder in the PCS Auction
for a PCS license with respect to a license area and at such time Sprint and
its Controlled Affiliates have an ownership interest in a cellular business or
businesses (a "Sprint Cellular Business") having a service area which is
included within such license area in whole or in part (an "Overlap Cellular
Area") or (ii) WirelessCo has decided, at any time prior to September 28, 1997,
to acquire a PCS license in a license area which includes an Overlap Cellular
Area; and as a result of Sprint's ownership interest in a Sprint Cellular
Business WirelessCo would not be awarded on an unconditional basis (in the
event of clause (i) above) or be permitted to acquire (in the event of clause
(ii) above) such PCS license under FCC rules and regulations relating to CMRS
spectrum cap limitations, then Sprint agrees that it will divest such portion
of such Sprint Cellular Business, within the time period provided by FCC rules
in the event of clause (i) above, and as soon as commercially reasonable (e.g.,
to avoid "fire sale" prices) in the event of clause (ii) above, or take any
other action as is necessary, so that WirelessCo will not be impaired from
holding or acquiring such PCS license. Nothing herein prevents one or more
Partners from acquiring such PCS license if Sprint is unable to divest the
overlap property in a timely manner, provided that, subject to applicable law,
such Partner or Partners enter into an Affiliation Agreement with the
Partnership and its Subsidiaries. This Section 8.1 shall not require Sprint to
divest, or take any other action with respect to, any of the Sprint Cellular
Businesses in the Charlotte, Cleveland, El Paso, Jacksonville, Knoxville, Omaha
or Richmond MTAs.
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8.2 Sprint Brand Licensing Agreement.
Simultaneously with the execution and delivery of this Agreement, the
Partnership and Sprint Communications have entered into an Amended and Restated
Trademark License Agreement, a copy of which is attached hereto as Exhibit 8.2
(the "Trademark License").
8.3 Marketing; Branding of Partnership Services.
(a) Marketing Channels. The Partnership Services will be
marketed directly by the Partnership and through its marketing channels, which
will include Sprint LD, the Cable Subsidiaries and other Controlled Affiliates
of the Cable Partners, and Wireless Affiliates. The Partnership may enter into
sales agency agreements with others, including (if and to the extent permitted
by the original agency agreement) sub-agency agreements for Sprint LD Services
and Cable Services; provided, however, that such appointment shall be subject
to all of the terms and conditions of the original agency agreement (including
performance and quality standards), and the appointing agent shall be
responsible for ensuring compliance by its distributors and sub-agents with
such terms and conditions.
(b) Sales Agency. Sprint LD, the Cable Subsidiaries and
other Controlled Affiliates of the Cable Partners (except for Cable
Subsidiaries and other Controlled Affiliates of Comcast with respect to the
Comcast Area) will be non-exclusive commission sales agents for the
Partnership's Wireless Exclusive Services and Non-Exclusive Services
("Partnership Services") pursuant to agency agreements that conform to the
provisions of this Section 8.3 and are otherwise in form and substance
reasonably satisfactory to the parties thereto. The agency agreements will
provide that all Partnership Services will be made available to each of Sprint
LD and the Cable Subsidiaries and other Controlled Affiliates of the Cable
Partners to offer, promote and package.
The Partnership will be a non-exclusive commission sales agent for
such long distance services of Sprint and its Affiliates (other than Sprint
Cellular and any LEC properties owned by Controlled Affiliates of Sprint)
(collectively, "Sprint LD") as Sprint LD may agree to make available to the
Partnership ("Sprint LD Services") and for such services offered by a Cable
Subsidiary or other Controlled Affiliate of a Cable Partner in the areas served
by its local cable system as such Cable Subsidiary (or Controlled Affiliate)
may agree to make available to the Partnership ("Cable Services"), in each case
pursuant to agency agreements that conform to the provisions of this Section
8.3 and are otherwise in form and substance reasonably satisfactory to the
parties thereto.
Subject to Section 8.3(a), Sprint LD will be a sub-agent of the
Partnership for Cable Services, and the Cable Subsidiaries and other Controlled
Affiliates of the Cable Partners will be sub-agents of the Partnership for
Sprint LD Services, in each case
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only if and to the extent that such sub-agency is permitted by the original
agency agreement relating to such services. The Partnership will establish the
commission structure and level for its sub-agents, provided that sub-agents
that are Partners or their Controlled Affiliates will be paid commissions on a
pass-through basis without deduction by the Partnership.
No Partner or Controlled Affiliate thereof shall be required (i) to
make any of its product or service offerings available to the Partnership to
offer or promote pursuant to the first sentence of the second paragraph of this
Section 8.3(b), (ii) to authorize the Partnership to include any product or
service offerings that are made available by such Partner or Controlled
Affiliate in a bilateral package with any Partnership Services or in a
multilateral package with Partnership Services and product or service offerings
of any other Partner or its Controlled Affiliates, or (iii) to authorize the
Partnership to appoint any distributors or sub-agents for any product or
service offerings that such Partner or its Controlled Affiliates make available
to the Partnership, whether as a condition of its appointment as an agent for
Partnership Services or otherwise.
The sales agency agreements referenced to in this Section 8.3(b) will
include appropriate customer and territorial restrictions. Sprint LD and the
Cable Subsidiaries and other Controlled Affiliates of the Cable Partners will
retain the "retail margins" on the sales of their respective services by the
Partnership, and will pay a sales commission to the Partnership.
(c) Commissions. Commissions payable to the Partnership
under sales agency agreements for Sprint LD Services and for Cable Services and
commissions payable to Sprint LD and the Cable Subsidiaries and other
Controlled Affiliates of the Cable Partners under sales agency agreements for
Partnership Services will be not less favorable to the agent than those for
comparable agency arrangements (considering churn, marketing support provided
by agent, etc.) of the relevant principal with third parties, irrespective of
volume. The Partners acknowledge that commission arrangements between Cable
Subsidiaries and other Controlled Affiliates of the Cable Partners and owners
of multiple dwelling units, shared tenant services companies and the like are
not comparable agency arrangements for this purpose. Commissions will be paid
on the basis of net customer growth (i.e., after taking into account churn) and
in the case of a sale to an existing customer will only be paid on the basis of
incremental sales revenue from such customer resulting from such sale, if any.
(d) Exclusivity. The Partnership will require as a
condition to its appointment of Sprint LD, each Cable Subsidiary or other
Controlled Affiliate of the Cable Partners and each Wireless Affiliate as sales
agents for the Partnership Services, that Sprint LD, such Cable Subsidiary or
other Controlled Affiliate of the Cable Partners and such Wireless Affiliate
agree that, except as permitted under Section 6, it will not offer, promote or
package any Wireless Exclusive Services other than the
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Partnership Services and, in the case of a Wireless Affiliate, the products and
services of such Wireless Affiliate, during the term of such agency.
(e) Brand. The Partnership Services will be offered,
promoted and packaged solely under the Licensed Xxxx (as defined in the Sprint
Trademark License Agreement attached as Exhibit 8.2), except that the foregoing
shall not preclude (i) the inclusion of Partnership Services bearing the
Licensed Xxxx (or, if permitted under clause (ii), a Permitted Brand) in a
package with any products or services offered, promoted or packaged by a Cable
Subsidiary or other Controlled Affiliate of a Cable Partner (whether such
package is offered by any of the foregoing or by any of their respective
sub-agents or distributors) that bear a xxxx or brand other than the Licensed
Xxxx or (ii) to the extent expressly permitted by Sections 6.3(q) and 6.3(r),
the offering, promoting and packaging of Partnership Services under a Permitted
Brand.
(f) Right to Market Own Products. Nothing in this
Section 8.3 shall govern or restrict the right of Sprint LD or any Cable
Subsidiary or other Controlled Affiliate of a Cable Partner to market, sell or
distribute its own products or services.
8.4 Preferred Provider.
The Partnership and its Subsidiaries shall contract with each Partner,
its Affiliates and third parties, as appropriate, on a negotiated arms-length
basis, for services they may require, which may include billing and information
systems and marketing and sales services. The Partnership and its Subsidiaries
may in the normal course of their respective businesses enter into transactions
with the Partners and their respective Affiliates, provided that the
Partnership Board by the requisite vote pursuant to Section 8.6 has determined
that the price and other terms of such transactions are fair to the Partnership
and its Subsidiaries and that the price and other terms of such transaction are
not less favorable to the Partnership and its Subsidiaries than those generally
prevailing with respect to comparable transactions involving non-Affiliates of
Partners. Subject to the foregoing, the Partnership Board, acting in
accordance with Section 8.6, may in its discretion elect from time to time to
provide rights of first opportunity to various Partners or their Affiliates to
provide services to the Partnership and its Subsidiaries; provided that the
Partnership Board shall have adopted, by Unanimous Vote, procedures (including
conflict avoidance procedures) relating generally to such right of first
opportunity arrangements, and the provision of such rights and all matters
related to the exercise thereof shall be subject to and effected in a manner
consistent with such procedures. The Partnership and its Subsidiaries are
expressly authorized to enter into the agreements expressly referred to in this
Section 8.
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8.5 MFJ.
Each Partner agrees that neither it nor any of its Controlled
Affiliates shall take any action that (i) causes such Partner or the
Partnership to become a BOC or (ii) causes the Partnership to become a BOC
Affiliated Enterprise or an entity subject to any restriction or limitation
under Section II of the MFJ, if, in the case of clause (ii) above, the results
referred to in such clause (ii) would have a material adverse effect on the
business, assets, liabilities, results of operations, financial condition or
prospects of the Partnership and its Subsidiaries.
8.6 Interested Party Transactions.
Any contract, agreement, relationship or transaction between the
Partnership or any of its Subsidiaries, on the one hand, and any Partner or any
Person in which a Partner (or any of its Controlled Affiliates) has a direct or
indirect material financial interest (other than the Partnership, MinorCo,
PhillieCo and their respective Subsidiaries) or which has a direct or indirect
material financial interest in such Partner (provided that a Person shall not
be deemed to have such an interest solely as a result of its ownership of less
than 10% (by value) of the outstanding economic interests in a Publicly Held
Parent of a Partner (or a Publicly Held Intermediate Subsidiary of such
Parent)) (each, an "Interested Person") on the other hand, shall be approved
and all decisions with respect thereto (including a decision to accept or
reject an Offer pursuant to Section 6.1(c), the determination to amend,
terminate or abandon any such contract or agreement, whether there has been a
breach thereof and whether to exercise, waive or release any rights of the
Partnership with respect thereto) shall be made (after full disclosure by the
interested Partner of all material facts relating to such matter) by the
Partnership Board (with the Representatives of the interested Partner(s) absent
from the deliberations and abstaining from the vote with respect thereto) by
the requisite affirmative vote of the Representatives of the disinterested
General Partners. For purposes of the foregoing, a disinterested General
Partner is a General Partner that is not a party to, and does not have an
Interested Person that is a party to, the contract, agreement, relationship or
transaction in question.
8.7 Access to Technical Information.
Subject to the provisions of Sections 6 and 10.4 of this Agreement and
to applicable confidentiality restrictions, the Partnership and its
Subsidiaries shall grant to each Partner and its Controlled Affiliates access
to Technical Information of the Partnership and its Subsidiaries ("Partnership
Technical Information"). Such access shall be granted at such reasonable times
and locations and on such other reasonable terms as the Partnership Board may
approve by Required Majority Vote pursuant to Section 8.6. Subject to Section
6, the Partnership and its Subsidiaries shall grant to any such Partner or its
Controlled Affiliate a license to use any Partnership Technical Information
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to which it is granted access pursuant to this Section 8.7 (and to make copies
thereof at such Partner's expense), which license shall provide for royalties
and fees and other terms and conditions that are generally prevailing with
respect to comparable transactions involving unrelated third parties and are at
least as favorable to such Partner or its Controlled Affiliate as those
generally prevailing with respect to comparable licenses (if any) granted to
non- Affiliates of Partners; provided that, except as expressly provided in
Section 8.12, the Partnership shall not grant any Partner or its Controlled
Affiliates access to any Proprietary Technical Information. The rights of
access granted pursuant to this Section 8.7 shall be subject to the
pre-existing rights of any third party to such Partnership Technical
Information.
8.8 Parent Undertaking.
Simultaneously with the execution and delivery of this Agreement, each
Parent has executed and delivered to the Partnership and the other Partners a
Parent Undertaking.
8.9 Certain Additional Covenants.
(a) Each Cable Partner agrees that for so long as such
Cable Partner is a Partner during the Term (as defined in the Parents
Agreement) of the Parents Agreement to which the Parent of such Cable Partner
is a party, neither it nor any of its Controlled Affiliates will engage in any
transaction or series of related transactions, other than a Permitted
Transaction, in which cable television system assets owned directly or
indirectly by the Parent of such Partner are Transferred if, after giving
effect to such transaction or the last transaction in such series of related
transactions, the number of basic subscribers served by the cable television
systems in the United States of America (including its territories and
possessions other than Puerto Rico) owned by the Parent of such Partner,
directly and indirectly through its Controlled Affiliates, is equal to
twenty-five percent (25%) or less of the number of basic subscribers served by
the cable television systems in the United States of America (including its
territories and possessions other than Puerto Rico) owned by the Parent of such
Partner, directly and indirectly through its Controlled Affiliates, before
giving effect to such transaction or the first transaction in such series of
related transactions.
(b) Sprint agrees that for so long as Sprint is a Partner
during the Term (as defined in the Parents Agreement) of any Parents Agreement,
neither it nor any of its Controlled Affiliates will engage in any transaction
or series of related transactions, other than a Permitted Transaction, in which
long distance telecommunications business assets owned directly or indirectly
by Sprint Parent are Transferred if, after giving effect to such transaction or
the last transaction in such series of related transactions, the number of
customers served by the long distance telecommunications business in the United
States of America (including its territories and possessions other than
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Puerto Rico) owned by Sprint Parent, directly and indirectly through its
Controlled Affiliates, is equal to twenty-five percent (25%) or less of the
number of customers served by the long distance telecommunications business in
the United States of America (including its territories and possessions other
than Puerto Rico) owned by Sprint Parent, directly and indirectly through its
Controlled Affiliates, before giving effect to such transaction or the first
transaction in such series of related transactions.
8.10 PioneerCo Preemptive Rights.
The PioneerCo Partnership Agreement will provide that Cox Pioneer
Partnership and the Partnership (or a Subsidiary of the Partnership) will have
certain put and call rights that may result in the acquisition by the
Partnership of Cox Pioneer Partnership's interest in PioneerCo in exchange for
an additional Interest in the Partnership. At the time of such exchange, each
of the Partners (other than Cox) will be permitted to make Additional Capital
Contributions in cash up to the amount necessary to permit such Partner to
avoid any reduction in its Percentage Interest as a consequence of such
exchange (assuming that all such other Partners were to exercise such right).
8.11 Foreign Ownership.
(a) Certain Definitions and Concepts. For purposes of
this Section 8.11:
(i) "Foreign Ownership Restriction" means any
federal law or regulation restricting the amount of ownership or voting control
that may be held by non-citizens of the United States in holders of licenses or
other authorizations issued by the FCC or in Persons controlling such holders
(including 47 U.S.C. Section 310(b) and the rules and regulations promulgated
thereunder by the FCC).
(ii) "Covered Licensee" means any of the
Partnership or any Subsidiary thereof that holds any license or other
authorization issued by the FCC or that controls the holder of any license or
other authorization for purposes of any Foreign Ownership Restriction.
(iii) "Foreign Ownership Threshold" means, with
respect to any Covered Licensee, the maximum amount of foreign ownership or
foreign voting control of such Covered Licensee that is permitted by any
Foreign Ownership Restriction applicable to such Covered Licensee, less the
amount of foreign ownership or foreign voting control of such Covered Licensee
that is attributable from any Person other than a Partner.
(iv) "Foreign Ownership Safe Harbor" means, with
respect to any Covered Licensee, ninety percent (90%) of the Foreign Ownership
Threshold of such Covered Licensee.
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(v) Except as provided in clause (vi) of this
Section 8.11(a), a Partner's "Attribution Cap" equals, with respect to the
Foreign Ownership Threshold of any Covered Licensee:
(A) in the case of Sprint, the product
of the Percentage Interest of Sprint times twenty-eight percent (28%), and
(B) in the case of any Cable Partner,
the product of (x) the Foreign Ownership Threshold of such Covered Licensee
minus Sprint's Attribution Cap times (y) the Percentage Interest of such Cable
Partner divided by the aggregate Percentage Interests of all Cable Partners.
(vi) Notwithstanding clause (v) of this Section
8.11(a), if (A) the proposed transaction among Deutsche Telekom, France Telecom
and Sprint Parent providing for the purchase by Deutsche Telekom and France
Telecom of certain shares of stock of Sprint Parent is abandoned without the
consummation of all of the stock purchases contemplated thereby and (B)
definitive agreements with respect to a similar alternative transaction with a
non-citizen of the United States have not been entered into by Sprint Parent
prior to March 28, 1997 or such transaction has not been consummated prior to
March 28, 1998, then, with respect to any Covered Licensee, each Partner's
Attribution Cap shall equal the product of the Percentage Interest of such
Partner times the Foreign Ownership Threshold of such Covered Licensee.
(vii) Notwithstanding clause (v) of this Section
8.11(a), if the Foreign Ownership Threshold with respect to any Covered
Licensee exceeds 28%, each Partner's Attribution Cap shall equal the product of
the such Partner's Percentage Interest times the Foreign Ownership Threshold of
such Covered Licensee.
(b) Covenant Regarding Foreign Ownership. Subject to
Section 8.11(c), no Partner shall cause or permit the amount of foreign
ownership or foreign voting control attributable to any Covered Licensee from
such Partner and its Controlled Affiliates (determined in accordance with the
method of attribution prescribed in the applicable Foreign Ownership
Restrictions) to exceed the Attribution Cap of such Partner applicable to such
Covered Licensee, increased by any portion of any other Partner's applicable
Attribution Cap that such other Partner has authorized such Partner to use for
purposes of determining compliance with this Section 8.11(b), and decreased by
any portion of such Partner's applicable Attribution Cap that such Partner has
authorized any other Partner to use for purposes of determining compliance with
this Section 8.11(b).
(c) Right to Cure Potential Violations. So long as a
Partner and its Controlled Affiliates are using their respective commercially
reasonable efforts to cause the amount of foreign ownership and foreign voting
control attributable to each Covered Licensee from such Partner and its
Controlled Affiliates to be
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reduced below the maximum amount permitted by Section 8.11(b) (without regard
to this Section 8.11(c)), such Partner shall not be deemed to be in violation
of its covenant in Section 8.11(b) until the earlier of:
(i) such time as the aggregate amount of foreign
ownership or foreign voting control attributable to any Covered Licensee
(including the foreign ownership and foreign voting control attributable from
such Partner and its Controlled Affiliates) exceeds the Foreign Ownership Safe
Harbor, or
(ii) thirty (30) days after such Partner receives
written notice from any other Partner that such other Partner or any of its
Controlled Affiliates desires to engage in any transaction permitted by section
8.11(b) that, if consummated, would cause the aggregate amount of foreign
ownership or foreign voting control attributable to any Covered Licensee to
exceed the Foreign Ownership Safe Harbor if the foreign ownership attributable
to such Covered Licensee from such Partner and its Controlled Affiliates
continued to exceed the maximum amount permitted by Section 8.11(b).
(d) Authorization to Use the Attribution Cap of Another
Partner. Any authorization by one Partner to another Partner of the right to
use any portion of the authorizing Partner's applicable Attribution Cap for
purposes of determining compliance with Section 8.11(b) shall be evidenced by a
written instrument delivered by the authorizing Partner to the Partnership and
each other Partner.
8.12 Product Integration.
(a) The Partnership shall undertake to architect and
design its systems, platforms, networks and products in a manner that
facilitates seamless integration of the Partnership's Wireless Exclusive
Services with the telecommunications products and services offered by the
Partnership and its Subsidiaries, each Partner and its Controlled Affiliates,
Teleport and any Local Joint Venture. The adoption of all budgets, plans and
procedures by the Partnership regarding the planning, design and development
activities of the Partnership with respect to the architecture and design of
all systems, platforms, networks and products shall require a Required Majority
Vote of the Partnership Board, and each Partner shall have the right to
participate fully in such planning, design and development activities and shall
have access to and rights to use all Partnership Technical Information relating
to such activities in accordance with Section 8.7 (except to the extent
otherwise provided in Sections 8.12(b), (c) and (d) below with respect to any
Proprietary Technical Information).
(b) Following July 31, 1996, each Partner shall have the
right to cause the Partnership to undertake, in cooperation with such Partner
and at such Partner's cost and expense, the development of Technical
Information that such Partner reasonably believes is necessary to integrate the
Partnership's Wireless
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Exclusive Services with the wireline telecommunications products and services
of (x) Sprint and its Controlled Affiliates, if such Partner is Sprint, (y)
such Partner and its Controlled Affiliates and/or Teleport, if such Partner is
a Cable Partner, or (z) any Local Joint Venture in which such Partner or its
Controlled Affiliate has an interest (or to which such Partner or its
Controlled Affiliate is a party) ("Proprietary Technical Information");
provided, that such undertaking by the Partnership shall not materially
interfere with the Partnership's ongoing planning, design and development
activities and any such integration shall not adversely impact in any material
respect the operating characteristics of the Partnership's existing systems,
platforms, networks or products. The Partner causing the Partnership to
develop any such Proprietary Technical Information (the "Initiating Partner")
shall have the irrevocable, royalty-free exclusive right and license to make
(or have made), use, sell, copy, modify and sublicense such Proprietary
Technical Information; provided, that (i) the Initiating Partner shall have no
such exclusive right as to any pre- existing Partnership Technical Information
used in the development of any such Proprietary Technical Information, (ii) if
(A) the Initiating Partner is Sprint, each other Partner that has, or has a
Controlled Affiliate that has, entered a Local Joint Venture with Sprint or a
Controlled Affiliate of Sprint, or (B) the Initiating Partner is a Cable
Partner, each other Cable Partner and, if Sprint or a Controlled Affiliate of
Sprint has entered a Local Joint Venture with such Initiating Partner or a
Controlled Affiliate of such Initiating Partner, Sprint, shall be entitled to
participate in the development of Proprietary Technical Information in
cooperation with the Initiating Partner (except that neither Sprint (if a Cable
Partner is the Initiating Partner) nor any of the Cable Partners (if Sprint is
the Initiating Partner) shall be entitled to participate in the development of
any Proprietary Technical Information integrating the Partnership's Wireless
Exclusive Services with telecommunications products and services designed
primarily for non-residential customers ("Business-Related Information")), and
(iii) if one or more other Partners participates in the development of any
Proprietary Technical Information pursuant to clause (ii) above, the Initiating
Partner and each such other Partner shall have the exclusive (other than as
among the Initiating Partner and each such other Partner) irrevocable,
royalty-free right and license to make (or have made), use, sell, copy, modify
and sublicense such Proprietary Technical Information; however, in such case,
no Initiating Partner or such other Partner having the foregoing rights as to
any such Proprietary Technical Information developed pursuant to this Section
8.12(b) shall sublicense or otherwise grant rights with respect to such
Proprietary Technical Information to any Person other than such Partner and its
Controlled Affiliates, the Partnership and its Subsidiaries, any Local Joint
Venture in which the Initiating Partner (or its Controlled Affiliate) or such
other Partner (or its Controlled Affiliate) that participated in the
development of such Proprietary Technical Information has an interest (or to
which any of the foregoing is otherwise a party), and Teleport (if a Cable
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Partner is the Initiating Partner) (provided that the restrictions set forth in
this clause (iii) shall apply only to the use of such Proprietary Technical
Information in connection with the provision of telecommunications products and
services to customers located in the United States and its territories, other
than Puerto Rico). Subject to Section 8.12(c), the costs and expenses incurred
in the development of Proprietary Technical Information shall be borne by the
Initiating Partner and each such other Partner that elects to participate in
the development of such Proprietary Technical Information ratably in proportion
to their respective Percentage Interests.
(c) To the extent that following the development of any
Business-Related Information, the Initiating Partner or any of its Controlled
Affiliates uses or licenses or permits a sub-license (or otherwise grants any
right) for the use of all or any portion of such Business-Related Information
for an application thereof to a telecommunications product or service for
residential customers to any material extent (other than the provision by a
non-residential customer of access to any such product or service solely for
business purposes, provided that such product or service is not offered,
promoted or packaged to residential customers), the Initiating Partner shall
promptly notify each other Partner that would have been entitled to participate
in such development but for the restriction on its right to participate in the
development of Business-Related Information contained in the second sentence of
Section 8.12(b), and each such other Partner shall be entitled to an
irrevocable right and license to make (or have made), use, sell, copy, modify
or sub-license any such portion of such Business-Related Information (but
subject to the restriction in clause (iii) of the proviso in the second
sentence of Section 8.12(b) above), subject to the payment by such Partner of a
pro rata portion of the development costs and expenses attributable to the
development of such portion of such Business-Related Information used for such
application for residential customers (which shall be borne by the Initiating
Partner, any other Partner initially participating in the development of such
Business-Related Information (an "Initial Participating Partner"), and any
Partner(s) exercising rights under this paragraph ratably in proportion to
their respective Percentage Interests). Such payment shall be made as a direct
reimbursement to the Initiating Partner and each Initial Participating Partner
of the applicable portion of the development costs and expenses previously paid
to the Partnership by the Initiating Partner and the Initial Participating
Partner.
(d) In connection with the proposed development of any
Proprietary Technical Information, the applicable Partners and the Partnership
shall agree in writing to processes and procedures related to such development
and the actual scope of use, ownership, license and sub-license rights with
respect to such Proprietary Technical Information (including the nature and
extent of any pre-existing Partnership Technical Information to be used in the
development of such Proprietary Technical Information), which in any such case
shall be consistent with this Section 8.12,
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unless otherwise agreed by the applicable Partners and the Partnership. If, in
connection with any development pursuant to Section 8.12, any Partner or the
Partnership develops or invents any technology or other intellectual property
giving rise to any patent rights, subject to the other provisions of this
Section 8.12, common law principles relating to the ownership of and rights to
use patentable inventions shall govern the ownership of and rights to use such
technology or other intellectual property, unless otherwise agreed by the
parties participating in the development of such technology or other
intellectual property. Notwithstanding anything in this Agreement to the
contrary, without such Partner's prior written consent, no licenses, either
express or implied, are granted to the Partnership, any other Partner or any
other entity for any Proprietary Technical Information or other Technical
Information Rights owned or solely developed by a Partner.
8.13 Provision of Services.
To the extent permitted by applicable law, each Partner agrees that it
and its Controlled Affiliates shall use all commercially reasonable efforts to
cause its local cable television and/or telephone operations to provide
appropriate services to WirelessCo in all its owned and operated markets as
well as markets operating under an Affiliation Agreement with WirelessCo,
including any Affiliation Agreement with PioneerCo. Such services may include
antenna sites and/or strand mounting of RF and transmission equipment owned by
WirelessCo or any Affiliate thereof and transmission facilities between cell
sites and designated switching locations. Services may also include provision
of primary power, standby power and maintenance. Pricing of the foregoing
services will be negotiated at a local level and is expected to reflect all
relevant costs plus a reasonable return. Notwithstanding the foregoing,
Comcast will not be required to provide any services to WirelessCo under this
Section 8.13 in any territories in which Comcast or its Controlled Affiliates
operate Wireless Businesses in the Comcast Area.
8.14 Comcast Representative.
Notwithstanding any other provision of this Agreement, for such time
(the "Restricted Time") as Comcast or any of its Controlled Affiliates engages
in any Competitive Activity in any portion of the Comcast Area, Comcast agrees
to cause any Representative of Comcast who participates in Designated Matters
(as defined below) not to (i) be involved in any Competitive Activities engaged
in by Comcast or its Controlled Affiliates in the Restricted Area (as defined
below) and (ii) disclose or discuss the Designated Matters with any Agent of
Comcast that is involved in Competitive Activities in the Restricted Area.
During the Restricted Time, each Partner (other than Comcast) and its
Controlled Affiliates and the Partnership and its Subsidiaries shall not, shall
cause their respective officers and directors (in their capacity as such) not
to, and shall take all reasonable measures to cause their respective other
Agents not to, disclose
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any information (including any financial projections, budgets or other
operating or business plans) regarding the provision, by the Partnership and
its Subsidiaries or by any Third Party Provider (as defined below) of Wireless
Exclusive Services in any portion of the Comcast Area, to Comcast or any of its
Controlled Affiliates or Agents other than such Representative of Comcast. As
used herein, "Designated Matters" means the participation in any discussions
regarding, the obtaining of any information or the casting of any votes, in
each case with respect to any matter concerning the provision by the
Partnership or its Subsidiaries of Wireless Exclusive Services in a portion
(the "Restricted Area") of the Comcast Area (including the terms of any
Affiliation Agreement with any Person providing such Wireless Exclusive
Services (a "Third Party Provider")).
8.15 Purchasing.
The Partners and their respective Controlled Affiliates will cooperate
with each other in a commercially reasonable manner to structure arrangements
whereby the Partners, their respective Controlled Affiliates, and the
Partnership and its Subsidiaries would, to the extent permitted by applicable
law and regulation, coordinate their respective buying efforts from third party
vendors in a manner such that the benefits of such coordinated efforts would be
available to the Partnership and its Subsidiaries, each Partner and each
Partner's respective Controlled Affiliates in making such purchases of
equipment and materials as may be required for (i) the accomplishment of the
purposes of the Partnership and its Subsidiaries and (ii) the operations of the
permitted businesses of any Partner or its Controlled Affiliates.
8.16 Advertising Reimbursement.
On December 31, 1996, if by such date Sprint and the Cable Partners
have not entered into an agreement regarding Teleport as contemplated under
Section 3(b) of the Parents Agreements between Sprint and each Parent of the
Cable Partners in the form executed and delivered as of the date hereof, Sprint
will pay to each of the Cable Partners an amount, together with interest
thereon at the rate of six percent (6%) per annum from and including February
1, 1996 until the date on which such amount is paid, in cash equal to the sum
of (A) the value of the advertising availability previously made available to
the Partnership by such Partner and its Controlled Affiliates at no charge
pursuant to Section 9.13(b) of the Prior Partnership Agreement and (B) an
amount equal to such Cable Partner's Percentage Interest times the value of the
advertising availability previously purchased by the Partnership and its
Subsidiaries pursuant to Section 9.13(b) of the Prior Partnership Agreement.
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SECTION 9. REPRESENTATIONS AND WARRANTIES
9.1 Representations and Warranties by Partners.
Each Partner hereby represents and warrants that as of the date
hereof:
(a) Due Incorporation or Formation; Authorization of
Agreement. Such Partner is a corporation duly organized or a partnership duly
formed, validly existing and, if applicable, in good standing under the laws of
the jurisdiction of its incorporation or formation and has the corporate or
partnership power and authority to own its property and carry on its business
as owned and carried on at the date hereof and as contemplated hereby. Such
Partner is duly licensed or qualified to do business and, if applicable, in
good standing in each of the jurisdictions in which the failure to be so
licensed or qualified would have a material adverse effect on its financial
condition or its ability to perform its obligations hereunder. Such Partner
has the corporate or partnership power and authority to execute and deliver
this Agreement and to perform its obligations hereunder and the execution,
delivery and performance of this Agreement have been duly authorized by all
necessary corporate or partnership action. Assuming the due execution and
delivery by the other parties hereto, this Agreement constitutes the legal,
valid and binding obligation of such Partner enforceable against such Partner
in accordance with its terms, subject as to enforceability to limits imposed by
bankruptcy, insolvency or similar laws affecting creditors' rights generally
and the availability of equitable remedies.
(b) No Conflict with Restrictions; No Default. Neither
the execution, delivery and performance of this Agreement nor the consummation
by such Partner of the transactions contemplated hereby (i) will conflict with,
violate or result in a breach of any of the terms, conditions or provisions of
any law, regulation, order, writ, injunction, decree, determination or award of
any court, any governmental department, board, agency or instrumentality,
domestic or foreign, or any arbitrator, applicable to such Partner or any of
its Controlled Affiliates, (ii) will conflict with, violate, result in a breach
of or constitute a default under any of the terms, conditions or provisions of
the articles of incorporation, bylaws or partnership agreement of such Partner
or any of its Controlled Affiliates or of any material agreement or instrument
to which such Partner or any of its Controlled Affiliates is a party or by
which such Partner or any of its Controlled Affiliates is or may be bound or to
which any of its material properties or assets is subject (other than any such
conflict, violation, breach or default that has been validly and
unconditionally waived), (iii) will conflict with, violate, result in a breach
of, constitute a default under (whether with notice or lapse of time or both),
accelerate or permit the acceleration of the performance required by, give to
others any material interests or rights or require any consent, authorization
or approval under any indenture, mortgage, lease
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agreement or instrument to which such Partner or any of its Controlled
Affiliates is a party or by which such Partner or any of its Controlled
Affiliates is or may be bound, or (iv) will result in the creation or
imposition of any lien upon any of the material properties or assets of such
Partner or any of its Controlled Affiliates, which in any such case could
reasonably be expected to have a material adverse effect on the Partnership or
to materially impair such Partner's ability to perform its obligations under
this Agreement or to have a material adverse effect on the consolidated
financial condition of such Partner or its Parent.
(c) Governmental Authorizations. Any registration,
declaration or filing with, or consent, approval, license, permit or other
authorization or order by, any governmental or regulatory authority, domestic
or foreign, that is required to be obtained by such Partner in connection with
the valid execution, delivery, acceptance and performance by such Partner under
this Agreement or the consummation by such Partner of any transaction
contemplated hereby has been or will be completed, made or obtained, except for
any FCC or other regulatory approvals, licenses, permits or other
authorizations required to be obtained by the Partnership in connection with
the acquisition and ownership of Wireless Business licenses relating to PCS.
(d) Litigation. There are no actions, suits, proceedings
or investigations pending or, to the knowledge of such Partner or its Parent,
threatened against or affecting such Partner or any of its Controlled
Affiliates or any of their properties, assets or businesses in any court or
before or by any governmental department, board, agency or instrumentality,
domestic or foreign, or any arbitrator which could, if adversely determined
(or, in the case of an investigation could lead to any action, suit or
proceeding, which if adversely determined could), reasonably be expected to
materially impair such Partner's ability to perform its obligations under this
Agreement or to have a material adverse effect on the consolidated financial
condition of such Partner or its Parent; and such Partner or any of its
Controlled Affiliates has not received any currently effective notice of any
default, and such Partner or any of its Controlled Affiliates is not in
default, under any applicable order, writ, injunction, decree, permit,
determination or award of any court, any governmental department, board, agency
or instrumentality, domestic or foreign, or any arbitrator, which default could
reasonably be expected to materially impair such Partner's ability to perform
its obligations under this Agreement or to have a material adverse effect on
the consolidated financial condition of such Partner or its Parent.
(e) MFJ. Such Partner is not a BOC, a BOC Affiliated
Enterprise or an entity subject to any restrictions under Section II of the
MFJ.
(f) Subsidiaries. Such Partner is a direct or indirect
wholly owned Subsidiary of its Parent.
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9.2 Representation and Warranty of Sprint.
Sprint hereby represents and warrants that as of the date hereof
Sprint Communications is the primary entity through which Sprint Parent
conducts its long distance telecommunications business in the United States of
America (including its territories and possessions other than Puerto Rico).
SECTION 10. ACCOUNTING, BOOKS AND RECORDS
10.1 Accounting, Books and Records.
The Partnership shall maintain at its principal office separate books
of account for the Partnership which (i) shall fully and accurately reflect all
transactions of the Partnership, all costs and expenses incurred, all charges
made, all credits made and received, and all income derived in connection with
the conduct of the Partnership and the operation of its business in accordance
with GAAP or, to the extent inconsistent therewith, in accordance with this
Agreement and (ii) shall include all documents and other materials with respect
to the Partnership's business as are usually entered and maintained by persons
engaged in similar businesses. The Partnership and its Subsidiaries shall use
the accrual method of accounting in preparation of their annual reports and for
tax purposes and shall keep their books and records accordingly. Subject to
Section 10.4, any Partner or its designated representative shall have the
right, at any reasonable time and for any lawful purpose related to the affairs
of the Partnership and its Subsidiaries or the investment in the Partnership
and its Subsidiaries by such Partner, (i) to have access to and to inspect and
copy the contents of such books or records, (ii) to visit the facilities of the
Partnership and its Subsidiaries and (iii) to discuss the affairs of the
Partnership and its Subsidiaries with their respective officers, employees,
attorneys, accountants, customers and suppliers. Neither the Partnership nor
its Subsidiaries shall charge such Partner for such examination and each
Partner shall bear its own expenses in connection with any examination made for
any such Partner's account.
10.2 Reports.
(a) In General. The chief financial officer of the
Partnership shall be responsible for the preparation of financial reports of
the Partnership and the coordination of financial matters of the Partnership
with the Accountants.
(b) Periodic and Other Reports. The Partnership shall
cause to be delivered to each Partner the financial statements listed in
clauses (i) through (iii) below, prepared, in each case, in accordance with
GAAP (and, if required by any Partner for purposes of reporting under the
Securities Exchange Act of 1934, Regulation S-X), and such other reports as any
Partner may reasonably request from time to time, provided that, if the
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Partnership Board so determines within thirty (30) days thereof, such other
reports shall be provided at such requesting Partner's sole cost and expense.
Such financial statements shall be accompanied by an analysis, in reasonable
detail, of the variance between the financial condition and results of
operations reported therein and the corresponding amounts for the applicable
period or periods in the Approved Business Plan. The monthly and quarterly
financial statements referred to in clauses (ii) and (iii) below may be subject
to normal year-end audit adjustments.
(i) As soon as practicable following the end of
each Fiscal Year (and in any event not later than seventy-five (75)
days after the end of such Fiscal Year) and at such time as
distributions are made to the Partners pursuant to Section 14.2
following the occurrence of a Liquidating Event, a consolidated
balance sheet of the Partnership and its Subsidiaries as of the end of
such Fiscal Year and the related statements of operations, Partners'
Capital Accounts and changes therein, and cash flows for such Fiscal
Year, together with appropriate notes to such financial statements and
supporting schedules, all of which shall be audited and certified by
the Accountants, and in each case, to the extent the Partnership was
in existence, setting forth in comparative form the corresponding
figures for the immediately preceding Fiscal Year (in the case of the
balance sheet) and the two (2) immediately preceding Fiscal Years (in
the case of the statements).
(ii) As soon as practicable following the end of
each of the first three calendar quarters of each Fiscal Year (and in
any event not later than forty (40) days after the end of each such
calendar quarter), a consolidated balance sheet of the Partnership as
of the end of such calendar quarter and the related consolidated
statements of operations, Partners' Capital Accounts and changes
therein, and cash flows for such calendar quarter and for the Fiscal
Year to date, in each case, to the extent the Partnership was in
existence, setting forth in comparative form the corresponding figures
for the prior Fiscal Year's calendar quarter and interim period
corresponding to the calendar quarter and interim period just
completed.
(iii) As soon as practicable following the end of
each of the first two calendar months of each calendar quarter (and in
any event not later than thirty (30) days after the end of such
calendar month), a consolidated balance sheet as of the end of such
month and consolidated statements of operations for the interim period
through such month and the monthly period then ended, setting forth in
comparative form the corresponding figures from the Business Plan for
such month and the interim period through such month.
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The quarterly or monthly statements described in clauses (ii) and
(iii) above shall be accompanied by a written certification of the chief
financial officer of the Partnership that such statements have been prepared in
accordance with GAAP or this Agreement, as the case may be.
10.3 Tax Returns and Information.
(a) Sprint, acting in its capacity as a General Partner,
shall act as the "Tax Matters Partner" of the Partnership within the meaning of
Section 6231(a)(7) of the Code (and in any similar capacity under applicable
state or local law) (the "Tax Matters Partner"). If Sprint shall cease to be a
General Partner, then the Partner with the greatest Voting Percentage Interest,
acting in its capacity as a General Partner, shall thereafter act as the Tax
Matters Partner. The Tax Matters Partner shall take reasonable action to cause
each other Partner to be treated as a "notice partner" within the meaning of
Section 6231(a)(9) of the Code. All reasonable expenses incurred by a Partner
while acting in its capacity as Tax Matters Partner shall be paid or reimbursed
by the Partnership. Each Partner shall be given at least five (5) Business
Days advance notice from the Tax Matters Partner of the time and place of, and
shall have the right to participate (and the Partnership and the Tax Matters
Partner shall take such action as may be necessary to cause the tax matters
partner of any Subsidiary to extend to the Partners the right to participate)
in (i) any material aspect of any administrative proceeding relating to the
determination of partnership items at the Partnership level (or at the level of
any Subsidiary thereof) and (ii) any material discussions with the Internal
Revenue Service relating to the allocations pursuant to Section 3 of this
Agreement or pursuant to the partnership agreement of any Subsidiary. The Tax
Matters Partner shall not, and the Partnership shall not permit the tax matters
partner of any Subsidiary to, initiate any action or proceeding in any court,
extend any statute of limitations, or take any other action contemplated by
Sections 6222 through 6232 of the Code that would legally bind any other
Partner, the Partnership or any Subsidiary without approval of the Partnership
Board by a Required Majority Vote. The Tax Matters Partner shall from time to
time upon request of any other Partner confer, and cause the Partnership's and
any Subsidiary's tax attorneys and Accountants to confer, with such other
Partner and its attorneys and accountants on any matters relating to a
Partnership or Subsidiary tax return or any tax election.
(b) The Tax Matters Partner shall cause all federal,
state, local and other tax returns and reports (including amended returns)
required to be filed by the Partnership or any Subsidiary thereof to be
prepared and timely filed with the appropriate authorities and shall cause all
income or franchise tax returns or reports required to be filed by the
Partnership or any Subsidiary thereof to be sent to each Partner for review at
least fifteen (15) Business Days prior to filing. Unless otherwise determined
by the Partnership Board, all such income or franchise tax returns
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of the Partnership shall be prepared by the Accountants. The cost of
preparation of any returns by the Accountants or other outside preparers shall
be borne by the Partnership or the applicable Subsidiary, as the case may be.
In the event of a Transfer of all or part of an Interest, the Tax Matters
Partner shall at the request of the transferee cause the Partnership to elect,
pursuant to Section 754 of the Code, to adjust the basis of the Partnership's
property (and the Partnership shall cause the tax matters partner of any
Subsidiary to make a corresponding Section 754 election with respect to such
Subsidiary's property); provided, however, that such transferee shall reimburse
the Partnership and any Subsidiary promptly for all costs associated with such
basis adjustment, including bookkeeping, appraisal and other similar costs.
Except as otherwise expressly provided herein, all other elections required or
permitted to be made by the Partnership or any Subsidiary under the Code (or
applicable state or local tax law) shall be made in such manner as may be
determined by the Partnership Board to be in the best interests of the Partners
as a group.
(c) The Tax Matters Partner shall cause to be provided to
each Partner as soon as possible after the close of each Fiscal Year (and, in
any event, no later than one hundred thirty-five (135) days after the end of
each Fiscal Year), a schedule setting forth such Partner's distributive share
of the Partnership's income, gain, loss, deduction and credit as determined for
federal income tax purposes and any other information relating to the
Partnership that is reasonably required by such Partner to prepare its own
federal, state, local and other tax returns. At any time after such schedule
and information have been provided, upon at least two (2) Business Days' notice
from a Partner, the Tax Matters Partner shall also provide each Partner with a
reasonable opportunity during ordinary business hours to review and make copies
of all work papers related to such schedule and information or to any return
prepared under paragraph (b) above. The Tax Matters Partner shall also cause
to be provided to each Partner, at the time that the quarterly financial
statements are required to be delivered pursuant to Section 10.2(b)(ii) above,
an estimate of each Partner's share of all items of income, gain, loss,
deduction and credit of the Partnership for the calendar quarter just completed
and for the Fiscal Year to date for federal income tax purposes.
10.4 Proprietary Information.
Notwithstanding anything to the contrary in this Section 10, an
Exclusive Limited Partner shall only have access to such information regarding
the Partnership as is required by applicable law and shall not have access for
such time as the Partnership Board deems reasonable to such information
relating to the Partnership's business which the Partnership Board reasonably
believes to be in the nature of trade secrets or other information the
disclosure of which the Partnership Board in good faith believes is not in the
best interest of the Partnership or could
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damage the Partnership or its business or which the Partnership is required by
law or by agreement with a third party to keep confidential.
SECTION 11. ADVERSE ACT
11.1 Remedies.
(a) If an Adverse Act has occurred with respect to any
Partner, (x) in the case of an Adverse Act specified in clause (vii) of the
definition of such term in Section 1.10, any General Partner may elect or (y)
in the case of any other Adverse Act, the Partnership Board (with the
Representatives of the affected Partner abstaining) may elect:
(i) to cause the Partnership to commence the
procedures specified in Section 11.2 for the purchase of the Adverse
Partner's Interest; or
(ii) to cause the Partnership to seek to enjoin
such Adverse Act or to obtain specific performance of the Adverse
Partner's obligations or Damages (as defined and subject to the
limitations specified below) in respect of such Adverse Act.
Notwithstanding anything to the contrary contained in this Section 11, (x) none
of the remedies specified above (nor any other provision of this Section 11)
shall apply to an Adverse Act specified in clause (vi) of the definition of
such term in Section 1.10, (y) the remedies specified in clause (ii) shall not
be available to the Partners with respect to an Adverse Act specified in clause
(vii) of such definition unless the circumstances under which such event arose
also constituted a breach by the Adverse Partner of the covenant contained in
Section 8.5 of this Agreement, and (z) the remedy specified in clause (i) above
and the right to seek Damages under clause (ii) above may not be pursued and
Section 11.1(b) will not apply to an Adverse Act specified in clause (iii) of
the definition of such term until such time as there is a Final Determination
that the Partner's actions or failure to act constituted an Adverse Act, if the
affected Partner timely delivered a Contest Notice.
In the event of an Adverse Act specified in any clause of the
definition of such term in Section 1.10 other than clause (vii), the vote of
the Partnership Board required to elect to exercise a remedy specified in
clause (i) or (ii) of the first sentence of this Section 11.1(a) shall be the
Required Majority Vote of Representatives of the Partners that are not actual
or alleged Adverse Partners (the "Non-Adverse Partners"), provided that in the
event more than one (1) Partner is alleged to be an Adverse Partner, such vote
shall be taken separately with respect to each alleged Adverse Partner
excluding from such vote only the Partner(s) that is alleged to be an Adverse
Partner as a result of the specific facts or circumstances with respect to
which such
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vote is being taken. The election to pursue a remedy specified in clause (i)
or (ii) of the first sentence of this Section 11.1(a) with respect to an
Adverse Act for which such remedy is available may be exercised by notice given
to the Adverse Partner (x) in the case of an Adverse Act specified in clause
(i) of the definition of the term "Adverse Act" in Section 1.10, within ninety
(90) days after the occurrence of such Adverse Act or (y) in the case of any
other Adverse Act, within ninety (90) days after the Partnership Board or the
Partner making such election, as the case may be, obtains actual knowledge of
the occurrence of such Adverse Act, including, if applicable, that any cure
period has expired; provided that, if an election pursuant to clause (ii) of
the first sentence of this Section 11.1(a) is made to seek an injunction,
specific performance or other equitable relief, an action seeking such relief
is commenced promptly thereafter and a final judgment in such action is
rendered denying such equitable remedy and no election was made pursuant to
clause (i) of the first sentence of this Section 11.1(a), then, by notice given
within ten (10) days after such final judgment is rendered, the Partnership
Board may elect to pursue the remedy specified in clause (i) of the first
sentence of this Section 11.1(a) unless (x) prior to the giving of such notice,
the Adverse Partner has cured in full (or caused to be cured in full) the
Adverse Act in question (other than an Adverse Act specified in clause (i) of
the definition of such term in Section 1.10, which may only be cured with the
Unanimous Vote of, and on the terms prescribed by, the Partnership Board) and
no other Adverse Act with respect to such Partner has occurred and is
continuing or (y) the final judgment denying equitable relief specifically held
that there was no Adverse Act.
The foregoing remedies shall not be deemed to be mutually exclusive,
and, subject to the requirements of this Section 11.1(a) regarding the timing
of the election of such remedies, selection or resort to any thereof shall not
preclude selection or resort to the others. The resort to any remedy pursuant
to this Section 11.1(a) shall not for any purpose be deemed to be a waiver of
any other available remedy. Except as provided in Section 11.1(b), the failure
to elect to pursue a remedy within the time periods provided in the preceding
paragraph shall be conclusively presumed to be a waiver of the remedies
provided in this Section 11 with respect to the subject Adverse Act.
Unless resort to such remedy has been waived as set forth in the
immediately preceding paragraph, the Partnership shall be entitled to recover
from the Adverse Partner in an appropriate proceeding any and all damages,
losses and expenses (including reasonable attorneys' fees and disbursements)
(collectively, "Damages") suffered or incurred by the Partnership as a result
of such Adverse Act; provided that the Partnership shall not have or assert any
claim against the Adverse Partner for punitive Damages or for indirect, special
or consequential Damages suffered or incurred by the Partnership as a result of
an Adverse Act; and provided further, that if an election is made pursuant to
clause (i) of the first sentence of this Section 11.1(a), the amount the
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Partnership may recover in any action for Damages shall be reduced by an amount
equal to the difference, if any, between the Net Equity of the Adverse
Partner's Interest determined in accordance with Section 11.2(a) and the
applicable Buy- Sell Price.
(b) If the Partnership is dissolved pursuant to Section
14.1(a) at any time as a result of a Liquidating Event that occurs prior to a
remedy having been elected pursuant to Section 11.1(a) with respect to any
Adverse Partner, the time periods for such election shall thereupon expire and
the Partnership Board shall deduct from any amounts to be paid to such Adverse
Partner that amount which it reasonably estimates to be sufficient to
compensate the Non-Adverse Partners for Damages incurred by them as a result of
the Adverse Act (subject to the limitations of Section 11.1(a)) and shall pay
the same to the Non-Adverse Partners.
11.2 Adverse Act Purchase.
(a) Determination of Net Equity of Adverse Partner's
Interest. If the Partnership Board or any General Partner makes an election
pursuant to Section 11.1(a)(i) to commence the purchase procedures set forth in
this Section 11.2, the Net Equity of the Adverse Partner's Interest shall be
determined in accordance with this Section 11 as of the last day of the
calendar quarter immediately preceding the calendar quarter in which notice of
such election (the "Election Notice") was given to the Adverse Partner, and the
Adverse Partner shall be obligated to sell to the Purchasing Partners, if any,
all but not less than all of the Adverse Partner's Interest in accordance with
this Section 11.2 at a purchase price (the "Buy-Sell Price") equal to (A) in
the case of any Adverse Act (other than (1) an Adverse Act identified in clause
(i) of the definition of such term that occurs prior to the Cut-Off Time, (2)
an Adverse Act identified in clause (iv) of the definition of such term or (3)
unless such Adverse Act occurred in connection with any breach by such Partner
of its obligations under Section 8.5, an Adverse Act identified in clause (vii)
of the definition of such term), ninety percent (90%) of the Net Equity thereof
as so determined, (B) in the case of an Adverse Act specified in clause (iv)
or, unless such Adverse Act occurred in connection with any breach by such
Partner of its obligations under Section 8.5, clause (vii) of the definition of
such term in Section 1.10, the Net Equity thereof, and (C) in the case of an
Adverse Act specified in clause (i) of the definition of such term in Section
1.10 that occurred prior to the Cut-Off Time, the lesser of (A) ninety percent
(90%) of the Net Equity thereof as so determined or (B) eighty percent (80%) of
the remainder of (1) the sum of such Adverse Partner's Original Capital
Contribution and aggregate Additional Capital Contributions minus (2) the
cumulative distributions made to such Partner pursuant to Section 4
("Unreturned Capital"), with the amount of such Unreturned Capital determined
as of the date on which the Adverse Partner's Interest is purchased. Such
Election Notice shall designate the First Appraiser as required by Section 11.4
and the Adverse
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Partner shall appoint the Second Appraiser within ten (10) Business Days of
receiving such notice designating the First Appraiser.
(b) Election to Purchase Interest of Adverse Partner.
For a period ending at 11:59 p.m. (local time at the Partnership's principal
office) on the thirtieth (30th) day following the day on which notice of the
Adverse Partner's Net Equity is given pursuant to Section 11.3 (the "Election
Period"), except as otherwise provided in Section 11.2(b)(i), each of the
Partners (other than the Adverse Partner and any Exclusive Limited Partner) may
elect, by notice to the Adverse Partner and each other Partner (the "Purchase
Notice"), to purchase all or any portion of the Adverse Partner's Interest,
which notice shall state the maximum Percentage Interest that such Partner (a
"Purchasing Partner") is willing to purchase (each a "purchase commitment").
If the aggregate purchase commitments made by the Purchasing Partners are equal
to at least one hundred percent (100%) of the Adverse Partner's Interest, then
subject to the following sentence, each Purchasing Partner shall be obligated
to purchase, and the Adverse Partner shall be obligated to sell to such
Purchasing Partner, that portion of the Adverse Partner's Interest that
corresponds to the ratio of the Percentage Interest of such Purchasing Partner
to the aggregate Percentage Interests of the Purchasing Partners, provided
that, if any Purchasing Partner's purchase commitment was for an amount less
than its proportionate share of the Adverse Partner's Interest as so
determined, then the portion of the Adverse Partner's Interest not so committed
to be purchased shall continue to be allocated proportionally in the manner
provided above in this sentence among the other Purchasing Partners until each
has been allocated, by such process of apportionment, a percentage of the
Adverse Partner's Interest equal to the maximum percentage such Purchasing
Partner committed to purchase or until the Adverse Partner's entire Interest
has been allocated among the Purchasing Partners. In the event that the other
Partners do not elect to purchase the entire Interest of the Adverse Partner,
the Adverse Partner shall be under no obligation to sell any portion of its
Interest to any Partner.
(i) Except as otherwise provided in Section
11.2(b)(ii), if an Adverse Partner is a Cable Partner and no Cable Partner's
Percentage Interest, when added to the Percentage Interests of all Controlled
Affiliates of such Partner, is equal to or greater than Sprint's Percentage
Interest when added to the Percentage Interests of all Controlled Affiliates of
Sprint, then the Adverse Partner's Interest shall be allocated first among
those of the Purchasing Partners that are Cable Partners as though Sprint were
not a Purchasing Partner and if and to the extent that the aggregate purchase
commitments made by such Cable Partners are less than one hundred percent
(100%) of the Adverse Partner's Interest, the balance of the Adverse Partner's
Interest up to Sprint's purchase commitment shall be allocated to Sprint.
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(ii) The Adverse Partner's Interest shall be
allocated among the Cable Partners in the manner set forth in Section
11.2(b)(i) until any Cable Partner would have a Percentage Interest, when added
to the Percentage Interests of all Controlled Affiliates of such Partner, equal
to Sprint's Percentage Interest, when added to the Percentage Interests of all
Controlled Affiliates of Sprint, calculated in each case after giving effect to
the adjustments to the Percentage Interests to be made in connection with the
purchases of the Adverse Partner's Interest by the Cable Partners in accordance
with Section 11.2(b)(i) assuming that such purchases were made up to the amount
that would yield such result (as to each Partner, its "Adjusted Percentage
Interest"). Any portion of the Adverse Partner's Interest not yet allocated
shall continue to be allocated proportionately among all Purchasing Partners
(including Sprint, if applicable) in the manner set forth in this Section
11.2(b) without regard to Section 11.2(b)(i), but substituting the Adjusted
Percentage Interests of the Purchasing Partners for the Percentage Interests
that would otherwise be used to determine such allocation until each has been
allocated an amount equal to its purchase commitment or until the Adverse
Partner's entire Interest has been allocated among the Purchasing Partners.
(c) Terms of Purchase; Closing. Unless the Purchasing
Partners and the Adverse Partner otherwise agree, the closing of the purchase
and sale of the Adverse Partner's Interest, MinorCo Interest (as required by
Section 12.3(d)) and Partner Loans (as required by Section 12.3(c)) shall occur
at the principal office of the Partnership at 10:00 a.m. (local time at the
place of the closing) on the first Business Day occurring on or after the
thirtieth (30th) day following the last day of the Election Period (subject to
Section 11.5). At the closing, each Purchasing Partner shall pay to the
Adverse Partner, by cash or other immediately available funds, that portion of
the purchase price for the Adverse Partner's Interest, MinorCo Interest and
Partner Loans for which such Purchasing Partner is liable (determined in the
case of the MinorCo Interest and Partner Loans in accordance with Section 12.3)
and the Adverse Partner shall deliver to each Purchasing Partner good title,
free and clear of any liens, claims, encumbrances, security interests or
options (other than those created by this Agreement and those securing
financing obtained by the Partnership), to the portion of the Adverse Partner's
Interest, MinorCo Interest and Partner Loans thus purchased. Each Purchasing
Partner shall be liable to the Adverse Partner only for its allocable portion
of the purchase price for the Adverse Partner's Interest, MinorCo Interest and
Partner Loans.
At the closing, the Partners shall execute such documents and
instruments of conveyance as may be necessary or appropriate to effectuate the
transactions contemplated hereby, including the Transfer of the Adverse
Partner's Interest, MinorCo Interest and Partner Loans to the Purchasing
Partner and the assumption by each Purchasing Partner of the Adverse Partner's
obligations with respect to the portion of the Adverse Partner's Interest
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Transferred to such Purchasing Partner. The Partnership and each Partner shall
bear its own costs of such Transfer and closing, including attorneys' fees and
filing fees. The cost of determining Net Equity shall be borne one-half by the
Adverse Partner and one-half by the Partnership and the amount borne by the
Partnership shall be treated as an expense of the Partnership for purposes of
such determination.
In the event that any Purchasing Partner shall fail to perform its
obligation to purchase hereunder on the scheduled closing date, and no other
Purchasing Partner elects to purchase the portion of the Adverse Partner's
Interest, MinorCo Interest and Partner Loans thus not purchased (such election
to be made by notice given to the Adverse Partner within five (5) Business Days
thereafter), the Adverse Partner will not be obligated to sell any portion of
its Interest, MinorCo Interest or Partner Loans to any Purchasing Partner. If
one or more of the other Purchasing Partners timely elects to purchase such
portion of the Adverse Partner's Interest, MinorCo Interest and Partner Loans,
such Purchasing Partner(s) shall be provided an additional fifteen (15) days
from the previously scheduled closing date in which to tender payment therefor.
11.3 Net Equity.
The "Net Equity" of a Partner's Interest, as of any day, shall be the
amount that would be distributed to such Partner in liquidation of the
Partnership pursuant to Section 14.2(a)(iii) if (i) all of the Partnership's
business and assets (including its partnership interests in WirelessCo) were
sold substantially as an entirety for Gross Appraised Value, (ii) Profits and
Losses and items specially allocated in accordance with Sections 3.3 and 3.4
for the Allocation Year ending on the date that Net Equity is determined,
including any gain or loss resulting from the deemed sale described in clause
(i), were allocated in accordance with Section 3, (iii) the Partnership paid
its accrued, but unpaid, liabilities and established reserves pursuant to
Section 14.2 for the payment of reasonably anticipated contingent or unknown
liabilities, and (iv) the Partnership distributed the remaining proceeds to the
Partners in liquidation, all as of such day, provided that in determining such
Net Equity, no reserve for contingent or unknown liabilities shall be taken
into account if such Partner (or its successor in interest) (other than a
Partner that is an Adverse Partner as a result of Bankruptcy) agrees to
indemnify the Partnership and all other Partners for that portion of any such
reserve as would be treated as having been withheld pursuant to Section 14.3
from the distribution such Partner would have received pursuant to Section 14.2
if no such reserve were established.
The Net Equity of a Partner's Interest shall be determined, without
audit or certification, from the books and records of the Partnership by the
Accountants. The Net Equity of a Partner's Interest shall be determined within
thirty (30) days of the day upon which the Accountants are apprised in writing
of the Gross
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Appraised Value, and the amount of such Net Equity shall be disclosed to the
Partnership and each of the Partners by written notice ("Net Equity Notice").
The Net Equity determination of the Accountants shall be final and binding in
the absence of a showing of manifest error.
11.4 Gross Appraised Value.
"Gross Appraised Value," as of any day, means the price at which a
willing seller would sell, and a willing buyer would buy, the business and
assets of the Partnership (including the Partnership interests in WirelessCo),
free and clear of all liens and encumbrances, substantially as an entirety and
as a going concern in a single arm's-length transaction for cash, without time
constraints and without being under any compulsion to buy or sell.
Each provision of this Agreement that requires a determination of
Gross Appraised Value (other than Sections 2.4(a)(v) and 2.4(d)(iii) and the
definition of "Premium Dollar" in Section 1.10) also provides the manner and
time for the appointment of two (2) appraisers (the "First Appraiser" and the
"Second Appraiser"). If the Second Appraiser is not timely designated, the
determination of the Gross Appraised Value shall be made by the First
Appraiser. The First Appraiser, or each of the First Appraiser and the Second
Appraiser if the Second Appraiser is timely designated, shall submit its
determination of the Gross Appraised Value to the Partnership, the Partners and
the Accountants within forty- five (45) days of the date of its selection (or
the selection of the Second Appraiser, as applicable). If there are two (2)
Appraisers and their respective determinations of the Gross Appraised Value
vary by less than ten percent (10%) of the higher determination, the Gross
Appraised Value shall be the average of the two determinations. If such
determinations vary by ten percent (10%) or more of the higher determination,
the two Appraisers shall promptly designate a third appraiser (the "Third
Appraiser"). Neither the Partnership nor any Partner shall provide, and the
First Appraiser and Second Appraiser shall be instructed not to provide, any
information to the Third Appraiser as to the determinations of the First
Appraiser and the Second Appraiser or otherwise influence such Third
Appraiser's determination in any way. The Third Appraiser shall submit its
determination of the Gross Appraised Value to the Partnership, the Partners and
the Accountants within forty-five (45) days of the date of its selection. The
Gross Appraised Value shall be equal to the average of the two closest of the
three determinations, provided that, if the difference between the highest and
middle determinations is no more than one hundred and five percent (105%) and
no less than ninety-five percent (95%) of the difference between the middle and
lowest determinations, then the Gross Appraised Value shall be equal to the
middle determination. The determination of the Gross Appraised Value in
accordance with this Section 11.4 shall be final and binding on the Partnership
and each Partner. If any Appraiser is only able to provide a range in which
Gross Appraised Value would exist, the
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average of the highest and lowest value in such range shall be deemed to be
such Appraiser's determination of the Gross Appraised Value. Each Appraiser
selected pursuant to the provisions of this Section 11.4 shall be an investment
banking firm or other qualified Person with prior experience in appraising
businesses comparable to the business of the Partnership and that is not an
Interested Person with respect to any Partner.
11.5 Extension of Time.
If any Transfer of a Partner's Interest in accordance with this
Section 11 or Sections 5.1(l)(ii), 12 or 14.7 requires the consent, approval,
waiver, or authorization of any government department, board, bureau,
commission, agency or instrumentality as a condition to the lawful and valid
Transfer of such Partner's Interest to the proposed transferee thereof, then
each of the time periods provided in this Section 11 or Sections 5.1(l)(ii), 12
or 14.7, as applicable, for the closing of such Transfer shall be suspended for
the period of time during which any such consent, approval, waiver, or
authorization is being diligently pursued; provided, however, that in no event
shall the suspension of any time period pursuant to this Section 11.5 extend
for more than three hundred sixty-five (365) days other than in the case of a
purchase of an Adverse Partner's Interest. Each Partner agrees to use its
diligent efforts to obtain, or to assist the affected Partner or the
Partnership Board in obtaining, any such consent, approval, waiver, or
authorization and shall cooperate and use its diligent efforts to respond as
promptly as practicable to all inquiries received by it, by the affected
Partner or by the Partnership Board from any government department, board,
bureau, commission, agency or instrumentality for initial or additional
information or documentation in connection therewith.
SECTION 12. DISPOSITIONS OF INTERESTS
12.1 Restriction on Dispositions.
Except as otherwise permitted by this Agreement, no Partner shall
Dispose of all or any portion of its Interest.
12.2 Permitted Transfers.
Subject to the conditions and restrictions set forth in Section 12.3,
a Partner may at any time Transfer all or any portion of its Interest (a) to
any Controlled Affiliate of such Partner, (b) in connection with a Permitted
Transaction involving such Partner, (c) to the administrator or trustee of such
Partner to whom such Interest is Transferred in an Involuntary Bankruptcy, (d)
pursuant to and in compliance with Section 5.1(l)(ii), 6.4(f), 11.2, 12.4,
12.5, 12.6, 12.7 or 14.7 or (e) with the prior written consent of the other
Partners (each a "Permitted Transfer").
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After any Permitted Transfer, the Transferred Interest shall continue
to be subject to all the provisions of this Agreement, including the provisions
of this Section 12 with respect to the Disposition of Interests. Except in the
case of a Transfer of a Partner's entire Interest made in compliance herewith,
no Partner shall withdraw from the Partnership, except upon the Unanimous Vote
of the Partnership Board. The withdrawal of a Partner, whether or not
permitted, shall not relieve the withdrawing Partner of its obligations under
Section 5.4 or 6.6 and shall not relieve such Partner or any of its Affiliates
of its obligations under, or result in a termination of or otherwise affect,
any agreement between the Partnership and such Partner or Affiliate then in
effect, except to the extent provided therein.
12.3 Conditions to Permitted Transfers.
A Transfer shall not be treated as a Permitted Transfer unless and
until the following conditions are satisfied:
(a) Except in the case of a Transfer involuntarily by
operation of law, the transferor and transferee shall execute and deliver to
the Partnership such documents as may be necessary or appropriate in the
opinion of counsel to the Partnership to effect such Transfer. In the case of
a Transfer of an Interest involuntarily by operation of law, the Transfer shall
be confirmed by presentation to the Partnership of legal evidence of such
Transfer, in form and substance satisfactory to counsel to the Partnership. In
all cases, the Partnership shall be reimbursed by the transferor and/or
transferee for all costs and expenses that it reasonably incurs in connection
with such Transfer (including reasonable attorneys' fees and expenses, but
excluding the portion of the costs of determining Net Equity that are to be
borne by the Partnership as provided in Section 11.2(b));
(b) Except in the case of a Transfer involuntarily by
operation of law, the transferee of an Interest (other than, with respect to
clauses (A) and (B) below, a transferee that was a Partner prior to the
Transfer) shall, by written instrument in form and substance reasonably
satisfactory to the Partnership Board (and, in the case of clause (C) below,
the transferor Partner), (A) make representations and warranties to the
nontransferring Partners equivalent to those set forth in Section 9.1, (B)
accept and adopt the terms and provisions of this Agreement, including this
Section 12, and (C) assume the obligations of the transferor Partner under this
Agreement with respect to the Transferred Interest. The transferor Partner
shall be released from all such assumed obligations except (x) as otherwise
provided in Section 6 in the case of a Transfer to a Controlled Affiliate, (y)
those obligations or liabilities of the transferor Partner arising out of a
breach of this Agreement or pursuant to Section 5.4 or 6.6 and (z) in the case
of a Transfer to any Person other than a Partner or any of its Controlled
Affiliates, those obligations or liabilities of the transferor Partner based on
events occurring, arising or maturing prior to the date of Transfer;
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(c) Except in the case of a Transfer involuntarily by
operation of law, the transferor of any Interest and its Affiliates will be
obligated to sell to the transferee, and the transferee will be obligated to
buy from the transferor and its Affiliates, a percentage of the Partner Loans
(if any) held directly or indirectly by the transferor or an Affiliate thereof
equal to the percentage of the transferor's Interest being Transferred to the
transferee. If the transferee is a Partner or a Controlled Affiliate thereof,
the terms of such purchase will be as provided in Section 2.7. In connection
with any such purchase of Partner Loans, the transferee shall surrender to the
Partnership the promissory note or notes evidencing such Partner Loans in
exchange for the issuance by the Partnership of a new promissory note made
payable to the order of the transferee in a principal amount equal to the
outstanding balance of such Partner Loans and otherwise having the same terms
as the promissory note surrendered therefor;
(d) Except in the case of a Transfer involuntarily by
operation of law, the transferor of an Interest will be obligated to sell to
the transferee, and the transferee will be obligated to buy from the
transferor, a portion of the MinorCo Interest owned by the transferor
representing the same percentage of the transferor's MinorCo Interest as the
percentage of the transferor's Interest being Transferred to the transferee.
Election by a Partner to purchase all or any portion of another Partner's
Interest pursuant to Section 5.1(l)(ii), 6.4(f), 11, 12.4, 12.5, 12.6 or 14.7
shall also constitute an election to purchase an equivalent portion of the
transferor's MinorCo Interest, and each purchasing Partner shall be obligated
to purchase a portion of such MinorCo Interest equal to the percentage of the
transferor's Interest such purchasing Partner is obligated to purchase for a
price equal to the "Net Equity" of the transferor's MinorCo Interest
(determined as provided in Section 11.3 as if all references therein and in any
defined term used therein to the Partnership were deemed references to MinorCo
and all references to Section 14 contained therein were deemed references to
the corresponding provisions of the Agreement of Limited Partnership of MinorCo
dated as of March 28, 1995) (except in the case of a Transfer pursuant to
Section 12.4, in which case the terms of the Purchase Offer shall apply, and
except in the case of a Transfer pursuant to Section 12.6, in which case the
Public Market Value shall apply);
(e) Except in the case of a Transfer involuntarily by
operation of law, if required by the Partnership Board, the transferee shall
deliver to the Partnership an opinion, satisfactory in form and substance to
the Partnership Board, of counsel reasonably satisfactory to the Partnership
Board to the effect that the Transfer of the Interest is in compliance with
applicable state and Federal securities laws;
(f) Except in the case of a Transfer involuntarily by
operation of law, if required by the Partnership Board, the transferee (other
than a transferee that was a Partner prior to
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the Transfer) shall deliver to the Partnership evidence of the authority of
such Person to become a Partner and to be bound by all of the terms and
conditions of this Agreement, and the transferee and transferor shall each
execute and deliver such other instruments as the Partnership Board reasonably
deems necessary or appropriate to effect, and as a condition to, such Transfer,
including amendments to the Certificate or any other instrument filed with the
State of Delaware or any other state or governmental agency;
(g) Unless otherwise approved by the Partnership Board
(with the Representatives of the transferor General Partner abstaining), no
Transfer of an Interest shall be made except upon terms which would not, in the
opinion of counsel chosen by and mutually acceptable to the Partnership Board
and the transferor Partner, result in the termination of the Partnership within
the meaning of Section 708 of the Code or cause the application of the rules of
Sections 168(g)(1)(B) and 168(h) of the Code or similar rules to apply to the
Partnership. If the immediate Transfer of such Interest would, in the opinion
of such counsel, cause a termination within the meaning of Section 708 of the
Code, then if, in the opinion of such counsel, the following action would not
precipitate such termination, the transferor Partner shall be entitled (or
required, as the case may be) (i) immediately to Transfer only that portion of
its Interest as may, in the opinion of counsel to the Partnership, be
Transferred without causing such a termination and (ii) to enter into an
agreement to Transfer the remainder of its Interest, in one or more Transfers,
at the earliest date or dates on which such Transfer or Transfers may be
effected without causing such termination. The purchase price for the Interest
shall be allocated between the immediate Transfer and the deferred Transfer or
Transfers pro rata on the basis of the percentage of the aggregate Interest
being Transferred, each portion to be payable when the respective Transfer is
consummated, unless otherwise agreed by the parties to the Transfer. In the
case of a Transfer by one Partner to another Partner, the deferred purchase
price shall be deposited in an interest-bearing escrow account unless another
method of securing the payment thereof is agreed upon by the transferor Partner
and the transferee Partner(s). In determining whether a particular proposed
Transfer will result in a termination of the Partnership, counsel to the
Partnership shall take into account the existence of prior written commitments
to Transfer made pursuant to this Agreement and such commitments shall always
be given precedence over subsequent proposed Transfers. Each Partner agrees
that, solely for purposes of this Section 12.3(g), any Transfer of an ownership
interest in a Partner that has the same effect as a Transfer of such Partner's
Interest for purposes of determining whether the Partnership has been
terminated within the meaning of Section 708 of the Code shall be treated as a
Transfer of such Partner's Interest. Each Partner shall notify the Partnership
and each other Partner in writing not less than five (5) days prior to any
Transfer of an ownership interest in such Partner to which this Section 12.3(g)
applies. No Partner shall be deemed to have breached this Section 12.3(g) to
the extent that such Partner's failure to comply with
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the foregoing provisions in connection with a Transfer of an ownership interest
in such Partner resulted solely from the failure of any other Partner to comply
with the notice obligation set forth in the preceding sentence;
(h) The transferor or transferee shall furnish the
Partnership with the transferee's taxpayer identification number, sufficient
information to determine the transferee's initial tax basis in the Interest
Transferred, and any other information reasonably necessary to permit the
Partnership to file all required federal and state tax returns and other
legally required information statements or returns. Without limiting the
generality of the foregoing, the Partnership shall not be required to make any
distribution otherwise provided for in this Agreement with respect to any
Transferred Interest until it has received such information;
(i) Except in the case of a Transfer of an Interest
involuntarily by operation of law, if the transferor is a General Partner, the
transferor and transferee shall provide the Partnership with an opinion of
counsel, which opinion of counsel shall be reasonably satisfactory to the other
Partners, to the effect that such Transfer will not cause the Partnership to
become taxable as a corporation for federal income tax purposes; and
(j) If the Parent of a transferee is not the same Person
as the Parent of the transferring Partner, then the Parent of the transferee
(other than a transferee Partner) shall execute and deliver to the Partnership
and the other Parents a Parent Undertaking. If a Partner ceases to be a
Controlled Affiliate of its former Parent as a result of a Permitted
Transaction, then the new Parent of such Partner shall execute and deliver a
Parent Undertaking to the Partnership and the other Parents.
Upon completion of any Permitted Transfer and compliance with the
provisions of this Section 12.3, the transferee of the Interest (if not already
a Partner) shall be admitted as a Partner without any further action.
12.4 Right of First Refusal.
After March 1, 2000, a Partner may Transfer all or any portion of its
Interest (the "Offered Interest") if (i) such Partner (the "Seller") first
offers to sell the Offered Interest pursuant to the terms of this Section 12.4,
and (ii) the Transfer of the Offered Interest to the Purchaser (as defined
below) would not cause an Adverse Act under clause (vii) of the definition
thereof.
(a) Limitation on Transfers. No Transfer may be made
under this Section 12.4 unless the Seller has received a bona fide written
offer (the "Purchase Offer") from a Person (including another Partner) who is
not a Controlled Affiliate of such Partner (the "Purchaser") to purchase the
Offered Interest for a purchase price (the "Offer Price") denominated and
payable in United States
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dollars at closing, which offer shall be in writing signed by the Purchaser and
shall be irrevocable for a period ending no sooner than the Business Day
following the end of the Offer Period, as hereinafter defined.
(b) Offer Notice. Prior to accepting the Purchase Offer,
the Seller shall give to the Partnership and each other Partner other than any
Exclusive Limited Partner written notice (the "Offer Notice") which shall
include a copy of the Purchase Offer and an offer (the "Firm Offer") to sell
the Offered Interest to the other Partners (the "Offerees") for the Offer
Price, payable according to the same terms as (or on more favorable terms than)
those contained in the Purchase Offer, provided that the Firm Offer shall be
made without regard to the requirement of any xxxxxxx money or similar deposit
required of the Purchaser prior to closing. If the Person making the Purchase
Offer is not an entity that is subject to the periodic reporting requirements
of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, the
Seller shall also provide any information concerning the ownership of the
Person making the Purchase Offer that may be reasonably requested by any other
Partner, to the extent such information is available to the Seller.
(c) Offer Period. The Firm Offer shall be irrevocable
for a period (the "Offer Period") ending at 11:59 P.M., local time at the
Partnership's principal place of business, on the sixtieth (60th) day following
the day of the Offer Notice.
(d) Acceptance of Firm Offer. At any time during the
Offer Period, any Offeree may accept the Firm Offer as to all or any portion of
the Offered Interest, by giving written notice of such acceptance to the Seller
and each other Offeree, which notice shall indicate the maximum Percentage
Interest that such Offeree is willing to purchase (the "purchase commitment").
If the aggregate purchase commitments made by Offerees accepting the Firm Offer
("Accepting Offerees") are equal to at least one hundred percent (100%) of the
Offered Interest, then, except as otherwise provided in Section 12.4(d)(i),
each Accepting Offeree shall be obligated to purchase, and the Seller shall be
obligated to sell to such Accepting Offeree that portion of the Offered
Interest that corresponds to the ratio of the Percentage Interest of such
Accepting Offeree to the aggregate Percentage Interests of the Accepting
Offerees, provided that if any Accepting Offeree's purchase commitment was for
an amount less than its proportionate share of the Offered Interest as so
determined, then the portion of the Offered Interest not so committed to be
purchased shall continue to be allocated proportionally in the manner provided
above in this sentence among the other Accepting Offerees until each has been
allocated, by such process of apportionment, a percentage of the Offered
Interest equal to the maximum percentage such Accepting Offeree committed to
purchase or until the entire Offered Interest has been allocated among the
Accepting Offerees. If Offerees do not accept the Firm Offer as to all of the
Offered Interest during the Offer Period, the Firm Offer shall be deemed to be
rejected in its entirety.
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(i) Except as otherwise provided in Section
12.4(d)(ii), if a Seller is a Cable Partner and no Cable Partner's Percentage
Interest, when added to the Percentage Interests of all Controlled Affiliates
of such Partner, is equal to or greater than Sprint's Percentage Interest, when
added to the Percentage Interests of all Controlled Affiliates of Sprint, then
the Offered Interest shall be allocated first among those of the Accepting
Offerees that are Cable Partners as though Sprint were not an Accepting Offeree
and if and to the extent that the aggregate purchase commitments made by such
Cable Partners are less than one hundred percent (100%) of the Offered
Interest, the balance of the Offered Interest up to Sprint's purchase
commitment shall be allocated to Sprint.
(ii) The Offered Interest shall be allocated among
the Cable Partners in the manner set forth in Section 12.4(d)(i) until any
Cable Partner would have a Percentage Interest, when added to the Percentage
Interests of all Controlled Affiliates of such Partner, that is equal to
Sprint's Percentage Interest, when added to the Percentage Interests of all
Controlled Affiliates of Sprint, calculated in each case after giving effect to
the adjustments to Percentage Interests to be made in connection with the
purchase of the Offered Interest by the Cable Partners in accordance with
Section 12.4(d)(i) assuming that such purchase was made up to the amount that
would yield such result (as to each Partner, its "Adjusted Percentage
Interest"). Any portion of the Offered Interest not yet allocated shall
continue to be allocated proportionately among all Accepting Offerees
(including Sprint, if applicable) in the manner set forth in this Section
12.4(d) without regard to Section 12.4(d)(i), but substituting the Adjusted
Percentage Interests of the Offerees for the Percentage Interests that would
otherwise be used to determine such allocation, until each has been allocated
an amount equal to its purchase commitment or until the entire Offered Interest
has been allocated among the Accepting Offerees.
(e) Closing of Purchase Pursuant to Firm Offer. If all
of the Offered Interest has been subscribed for in accordance with the terms of
Section 12.4(d), the Seller shall give notice to such effect (the "Sale
Notice") to all Offerees within five days after the end of the Offer Period.
Unless the Accepting Offerees and the Seller otherwise agree, the closing of
any purchase pursuant to this Section 12.4 shall be held at the principal
office of the Seller at 10:00 a.m. (local time at the place of closing) on the
first Business Day on or after the thirtieth (30th) day following the date on
which the Sale Notice is given (subject to Section 11.5). At the closing, each
Accepting Offeree shall pay to the Seller, by cash or other immediately
available funds, that portion of the purchase price for the Offered Interest,
MinorCo Interest and Partner Loans of the Seller for which such Accepting
Offeree is liable, and the Seller shall deliver to each Accepting Offeree good
title, free and clear of any liens, claims, encumbrances, security interests or
options (other than those created by this Agreement and those securing
financing obtained by the Partnership), to the portion of the Offered Interest,
MinorCo
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Interest and Partner Loans thus purchased. Each Accepting Offeree shall be
liable to the Seller only for its allocable portion of the purchase price for
the Offered Interest, MinorCo Interest and Partner Loans.
At the closing, the Partners shall execute such documents and
instruments of conveyance as may be necessary or appropriate to effectuate the
transactions contemplated hereby, including the Transfer of the Offered
Interest, MinorCo Interest and Partner Loans of the Seller to the Accepting
Offerees and the assumption by each Accepting Offeree of the Seller's
obligations with respect to the portion of the Seller's Interest and MinorCo
Interest Transferred to such Accepting Offerees. Each Partner and the
Partnership shall bear its own costs of such Transfer and closing, including
attorneys' fees and filing fees.
(f) Sale Pursuant to Purchase Offer If Firm Offer
Rejected. If the Firm Offer is not accepted in the manner hereinabove
provided, or the Accepting Offerees fail to close the purchase on the closing
date, then in either such event, but subject to the last sentence of this
Section 12.4(f) and subject to Section 12.3, the Seller shall be free for the
period described below (the "Free to Sell Period") to sell the Offered Interest
to the Purchaser upon terms and conditions that are the same as, or more
favorable to the Seller than, those contained in the Purchase Offer (including
at the same or greater price). The Free to Sell Period shall be the applicable
of (i) if the Firm Offer is not accepted, sixty (60) days after the last day of
the Offer Period (subject to Section 11.5) or (ii) if the Firm Offer is
accepted but the purchase is not closed, sixty (60) days (subject to Section
11.5) after the scheduled closing date, provided that if the last sentence of
this Section 12.4(f) becomes applicable, then such sixty (60) day period shall
be measured from the fifth (5th) Business Day after the previously scheduled
closing date or, if applicable, from the subsequently scheduled closing date
contemplated by such sentence (assuming the required purchase elections are
made). If the Offered Interest is not so sold within the Free to Sell Period,
the Seller's right to Transfer its Interest shall again be subject to the
foregoing restrictions. Notwithstanding the foregoing, if more than one
Offeree elected to purchase the Offered Interest and at least one Accepting
Offeree tendered its proportionate share of the purchase price therefor at the
closing but any other Accepting Offeree failed to make such tender, then any
tendering Accepting Offeree may elect, by notice given to the Seller within
five (5) Business Days thereafter, to purchase the portion of the Offered
Interest for which payment was not tendered (provided that, after giving effect
to such election, the entire Offered Interest is being purchased) and shall be
provided an additional fifteen (15) days from the previously scheduled closing
date in which to tender payment therefor.
(g) Restrictions on Notice. No notice initiating the
procedures contemplated by this Section 12.4 may be given by any Partner while
any notice, purchase or Transfer is pending under Section 11 or this Section
12.4 or after a Liquidating Event has
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occurred. No notice initiating the procedures contemplated by this Section
12.4 may be given by an Adverse Partner nor any Delinquent Partner prior to the
applicable Cure Date unless such Partner has cured the underlying Payment
Default, and no Seller shall be required to offer any portion of its Interest
to an Adverse Partner during the period that the Partnership is pursuing any
remedy specified in Section 11.1 with respect to such Adverse Partner. No
Partner may accept a Purchase Offer during any period that, as provided above,
such Partner may not give the notice initiating the procedures contemplated by
this Section 12.4 or thereafter until it has given such notice and otherwise
complied with the provisions of this Section 12.4.
12.5 Tagalong Rights.
(a) Direct Transfers. In the event that (i) a Partner
proposes to Transfer its Interest (as part of a single transaction or any
series of related transactions) to any Person other than a Controlled Affiliate
of such Partner after March 1, 2000, and such Transfer would cause the proposed
transferee (a "Tagalong Purchaser") and its Controlled Affiliates to own more
than fifty-five percent (55%) of the Percentage Interests (a "Tagalong
Transaction") and (ii) the Firm Offer is not accepted in the manner provided in
Section 12.4, the Tagalong Transaction shall not be permitted hereunder unless
the Tagalong Purchaser offers to purchase the entire Interest of any other
Partner that desires to sell its Interest to the Tagalong Purchaser at the same
price per each one percent (1%) Percentage Interest and on the same terms and
conditions as the Tagalong Purchaser has offered to the Partner proposing to
make such Transfer (the "Transferring Partner"). If such Transfer occurs as
part of a series of related transactions, the price and terms shall be the
price and terms most favorable to the Transferring Partner for which any
portion of the Interest of the Transferring Partner is Transferred as part of
such series of transactions. Prior to effecting any Tagalong Transaction, the
Transferring Partner shall deliver to each other Partner a binding, irrevocable
offer (the "Tagalong Offer") by the Tagalong Purchaser to purchase the entire
Interest of the other Partners at the same price per each one percent (1%)
Percentage Interest and on the same terms and conditions as the Tagalong
Purchaser has offered to the Transferring Partner (the "Tagalong Notice"). The
"Tagalong Offer" shall be irrevocable for a period (the "Tagalong Period")
ending at 11:59 p.m., local time at the Partnership's principal place of
business, (x) with respect to a Tagalong Purchaser that is an existing Partner
or a Controlled Affiliate of an existing Partner, on the one hundred eightieth
(180th) day following the date of the Tagalong Notice and (y) with respect to
any other Tagalong Purchaser, on the first anniversary of the date of the
Tagalong Notice. At any time during the Tagalong Period, any Partner may
accept the Tagalong Offer as to the entire amount of its Interest by giving
written notice of such acceptance to the Tagalong Purchaser.
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(b) Indirect Transfers. Within five (5) days of the
Parent of any Partner (such Partner, a "Controlling Partner") acquiring,
indirectly, Interests in the Partnership (other than through such Controlling
Partner's acquisition of additional Interests), causing such Parent to own,
directly and indirectly through its Controlled Affiliates, more than fifty-five
percent (55%) of the Percentage Interests, such Controlling Partner shall give
to each other Partner written notice of such acquisition (a "Control Notice"),
which shall include an offer (the "Control Offer") by the Controlling Partner
to purchase the entire Interest of each other Partner at a price equal to the
Net Equity thereof (as determined pursuant to Section 11.3) and shall designate
a First Appraiser (as required by Section 11.4). The Representatives of the
other General Partners shall by Required Majority Vote pursuant to Section 8.6
appoint the Second Appraiser within ten (10) Business Days following the date
the Control Notice was given. The Control Offer shall be irrevocable for a
period (the "Control Offer Period") ending at 11:59 p.m., local time at the
Partnership's principal place of business, on the one hundred eightieth (180th)
day following the date of the Net Equity Notice. At any time during the
Control Offer Period, any Partner may accept the Control Offer as to the entire
amount of its Interest by giving written notice of such acceptance to the
Controlling Partner. The costs of determining the Net Equity shall be borne
one-half by the Controlling Partner and one-half by the Partners that accept
the Control Offer (pro rata based on their respective Percentage Interests) or,
if no Partner accepts the Control Offer, then such costs shall be borne
entirely by the Partnership.
(c) Limitations on Acceptance of Offers. No Adverse
Partner may accept a Tagalong Offer or a Control Offer during any period that
an election may be made to pursue the remedies specified in Section 11.1(a)
against such Partner and, if an election pursuant to clause (i) of the first
sentence thereof to purchase the Adverse Partner's Interest is made, pending
the closing of the purchase thereof, unless, in any such case, such Adverse
Partner agrees that the purchase price for its Interest under this Section 12.5
will not be greater than the price at which its Interest could then be
purchased under Section 11.
(d) Closing Matters. Unless the Tagalong Purchaser or
the Controlling Partner, as the case may be, on the one hand, and the Partners
accepting the Tagalong Offer or the Control Offer, as the case may be, on the
other hand, otherwise agree, the closing of the purchase and sale of Interests
pursuant to this Section 12.5 shall occur at the principal office of the
Partnership at 10:00 a.m. (local time at the place of the closing) on the first
Business Day occurring on or after the sixtieth (60th) day following the
expiration of the Tagalong Period or the Control Offer Period, as applicable,
subject to Section 11.5. At the closing, the Tagalong Purchaser or Controlling
Partner shall pay to the Partners who have accepted the applicable offer, by
cash or other immediately available funds, the purchase price for the
Interests, MinorCo Interests and Partner Loans being Transferred,
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and the Partners selling their Interests, MinorCo Interests and Partner Loans
shall deliver to the Tagalong Purchaser or Controlling Partner, as applicable,
good title, free and clear of any liens, claims, encumbrances, security
interest or options (other than those created by this Agreement and those
securing financing obtained by the Partnership), to the Interest, MinorCo
Interest and Partner Loans thus purchased.
At the closing, the Partners shall execute such documents and
instruments of conveyance as may be necessary or appropriate to effectuate the
transactions contemplated hereby, including the Transfer of the Interests,
MinorCo Interests and Partner Loans to the Tagalong Purchaser or Controlling
Partner, as applicable, and the assumption by the Tagalong Purchaser or
Controlling Partner, as applicable, of the obligations with respect to the
Interests and MinorCo Interests so Transferred. Each Partner and the
Partnership shall bear its own costs of such Transfer and closing, including
attorneys' fees and filing fees.
12.6 Offer and Registration Rights.
(a) Registration Notice. At any time on or after August
1, 2003 and on or before September 30, 2003 and during the corresponding
two-month periods of each calendar year thereafter, any Partner or group of
Partners (individually, a "Notice Partner" and collectively the "Notice
Partners"), by notice (a "Registration Notice") given to the Partnership Board
and each other Partner, may request that the Partnership convert to corporate
form pursuant to Section 5.9 and that the corporate successor to the
Partnership ("MajorCorp") register under the 1933 Act for resale by the Notice
Partner(s) all or a portion of the shares of common stock ("MajorCorp Stock")
that would be issued in exchange for such Notice Partner's Interest and MinorCo
Interest upon such conversion to corporate form. Each Registration Notice
shall (i) identify the Notice Partner(s) giving the Registration Notice, (ii)
specify the percentage (or respective percentages) of the MajorCorp Stock to be
issued in exchange for the Interest(s) (and MinorCo Interest(s)) of the Notice
Partner(s) upon such conversion of the Partnership that such Notice Partner(s)
desire to have registered for resale (as to each Notice Partner, subject to
increase as provided in Section 12.6(c), its "Registration Interest"), (iii)
identify the Public Appraiser selected by the Notice Partner(s) to make the
determination of Public Market Value and the Minimum Offering Amount (the
"First Public Appraiser") and (iv) set forth the First Public Appraiser's
estimate of the Minimum Offering Amount. If, during the period specified above
of any calendar year, one or more Registration Notices are timely given as
provided above, then each Partner that did not timely give a Registration
Notice will have until October 15th of the same calendar year to give a
Registration Notice, which Registration Notice shall contain only the
information required to be set forth in a Registration Notice by clauses (i)
and (ii) of the second sentence of this Section 12.6(a), and a Partner giving
such a Registration Notice shall be deemed to concur in the selection of the
First Public Appraiser made in the initial
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Registration Notice given during the applicable calendar year. All
Registration Notices shall be deemed void if the aggregate Registration
Interests specified in such Registration Notices are less than the Minimum
Offering Amount. If a Registration Notice has been timely given in any
calendar year and is not deemed void pursuant to the previous sentence, then by
October 31st of such year, the Partnership Board shall inform the Partners of
its selection of a Public Appraiser (the "Second Public Appraiser"); provided
that if the Partnership Board has not timely designated the Second Public
Appraiser, then the Second Public Appraiser shall be the Public Appraiser
proposed to the Partnership Board by the General Partner (other than any Notice
Partner) that (together with its Controlled Affiliates) holds the largest
Voting Percentage Interest. For purposes of this Section 12.6 and Section
12.7, a "Public Appraiser" must be an investment banking firm of national
reputation, must not be an Interested Person with respect to any Partner, and
must be one of the ten leading investment banking firms based on aggregate
proceeds of public offerings of common stock in the United States for which it
acted as a managing underwriter during the preceding two full calendar years.
"Minimum Offering Amount" means the percentage (which shall not be less than
one percent (1%)) of the total equity of MajorCorp that the First Public
Appraiser and Second Public Appraiser jointly determine would be necessary to
effect a viable initial public offering and to result in a sufficient public
float for MajorCorp Stock to be actively traded and to satisfy the applicable
listing requirements for the Nasdaq National Market or The New York Stock
Exchange and any applicable market capitalization requirements for use of the
shortest form of registration statement (excluding Form S-4 and Form S-8) then
available for the registration of a primary offering by an issuer of common
stock under the 1933 Act (which form currently is Form S-3) assuming the
satisfaction of all other requirements, including any duration of public
reporting requirements.
(b) Determination of Public Market Value. The "Public
Market Value" of the Registration Interests of the Notice Partners shall equal
the aggregate cash proceeds, net of underwriters' fees, discounts and
commissions and other selling expenses customarily borne by selling
stockholders, that would be received by the Notice Partners from the sale in an
underwritten public offering registered under the 1933 Act of the MajorCorp
Stock issued in exchange for such Registration Interests if such offering were
carried out in an orderly manner over a period not exceeding eighteen (18)
months (excluding any changes in value of MajorCorp over such time, but
otherwise considering all factors that the Public Appraisers may deem
relevant). In determining the Public Market Value of the Registration
Interests, the Public Appraisers shall assume the conversion of the Partnership
to a corporation in accordance with Section 5.9 and the consolidation of the
assets of MinorCo with the Partnership in connection therewith. The Public
Market Value of the Registration Interests will be determined in accordance
with the procedures set forth in the second paragraph of Section 11.4,
substituting the term "Public Market Value" for the term "Gross Appraised
Value", the
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term "First Public Appraiser" for the term "First Appraiser" and the term
"Second Public Appraiser" for the term "Second Appraiser." The Public
Appraisers shall agree on the Minimum Offering Amount. The fees and expenses
of the Public Appraisers in making such determination will be paid by the
Partnership. Within five (5) days after the final determination of Public
Market Value, the Public Appraisers shall provide written notice (the "PMV
Notice") of such Public Market Value and the Minimum Offering Amount to each
Notice Partner and each other Partner. The Public Market Value of each Notice
Partner's Registration Interest shall be its allocable share of the Public
Market Value of the Registration Interests.
(c) Offer. By notice given to the Partnership and each
other Partner (other than any Exclusive Limited Partner) within thirty (30)
days after the date of the PMV Notice, any Notice Partner (any such Notice
Partner to then be referred to as a "Registering Partner") may make an offer
(the "Registration Firm Offer") to sell to the other Partners (including any
Notice Partner who has not given a Registration Firm Offer within the thirty
(30) day period for the delivery of such Registration Firm Offer but excluding
any other Registering Partner and any Exclusive Limited Partner) (the
"Registration Offerees") its Registration Interest for the Public Market Value
of such Registration Interest. If the Partnership receives (i) Registration
Firm Offers from all of the Notice Partners prior to the expiration of such
thirty (30) day period or (ii) Registration Firm Offers from at least one
Notice Partner on or before the thirtieth (30th) day after the date of the PMV
Notice, the Partnership shall promptly give notice (the "Firm Offer
Commencement Notice") to each Partner stating that such Registration Firm
Offers have been delivered as of the date of such Firm Offer Commencement
Notice. If the aggregate amount of Registration Interest(s) for which
Registration Firm Offers are given is less than the Minimum Offering Amount,
then each Registering Partner shall have the right to increase the Registration
Interest so offered by it by the amount by which the aggregate Registration
Interest(s) for which Registration Firm Offer(s) have previously been given is
less than the Minimum Offering Amount (which right as among the Registering
Partners shall be apportioned pro rata based upon the relative Registration
Interests of the Registering Partners unless otherwise agreed), by giving
notice to the Partnership Board and each other Partner amending its
Registration Firm Offer to effect such increase by the tenth (10th) day
following the date of the Firm Offer Commencement Notice; provided, that in
such event the Firm Offer Commencement Notice shall be deemed to have been
given as of the end of such ten (10) day period. If, as of the end of such ten
(10) day period, the aggregate Registration Interest(s) so offered pursuant to
the Registration Firm Offer(s), as so amended, are less than the Minimum
Offering Amount, then all of such Registration Firm Offers shall be deemed to
have been rejected and withdrawn.
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(d) Registration Offer Period. Subject to the last
sentence of Section 12.6(c), each Registration Firm Offer shall be irrevocable
for a period (the "Registration Offer Period") ending at 11:59 p.m., local time
at the Partnership's principal place of business, on the thirtieth (30th) day
following the date of the Firm Offer Commencement Notice; provided that if, as
of the end of such period, at least one but fewer than all of the Registration
Offerees have accepted the Registration Firm Offer pursuant to Section 12.6(e),
the Registration Offer Period shall be extended for an additional fifteen (15)
days and any remaining Registration Offeree(s) shall have the right to accept
the Registration Firm Offer during such fifteen (15) day period.
(e) Acceptance of Registration Firm Offer. At any time
during the Registration Offer Period (as extended by Section 12.6(d), if
applicable), any Registration Offeree may accept the Registration Firm Offer as
to all or any portion of the Registration Interest(s) covered thereby, by
giving notice of such acceptance to each Partner (other than any Exclusive
Limited Partner) which notice shall indicate the maximum percentage of the
Registration Interest of each Registering Partner that such Registration
Offeree is willing to purchase (the "purchase commitment"); provided that if
more than one Registration Interest is being offered, such Registration Offeree
must accept the Registration Firm Offer as to the same percentage of the
Registration Interest of each such Registering Partner. If the aggregate
purchase commitments made by Registration Offerees accepting the Registration
Firm Offer(s) ("Registration Accepting Offerees") exceed one hundred percent
(100%) of each Registration Interest, then, each Registration Accepting Offeree
shall purchase, and each Registering Partner shall sell to such Registration
Accepting Offeree, that portion of such Registering Partner's Registration
Interest that corresponds to the ratio of the Percentage Interest of such
Registration Accepting Offeree to the aggregate Percentage Interests of all
Registration Accepting Offerees; provided that if any Registration Accepting
Offeree's purchase commitment was for an amount less than its proportionate
share of the applicable Registration Interest as so determined, then the
portion of the Registration Interest not so committed to be purchased by such
Registration Accepting Offeree shall continue to be allocated proportionally in
the manner provided above in this sentence among the other Registration
Accepting Offerees until each has been allocated, by such process of
apportionment, a percentage of the Registration Interest equal to the maximum
percentage such Registration Accepting Offeree committed to purchase or until
the entire amount of each Registration Interest has been allocated among the
Registration Accepting Offerees. Notwithstanding any purported acceptance of a
Registration Firm Offer, all Registration Firm Offers shall be deemed to be
rejected by all such Registration Accepting Offerees in their entirety if the
portion not accepted is in the aggregate greater than zero but less than the
Minimum Offering Amount; provided that all Registration Firm Offers will not be
deemed rejected in their entirety if, within ten (10) days after the expiration
of the Registration Offer Period, the Registration Accepting Offerees
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increase or decrease their purchase commitments, by giving notice to the
Partnership Board and each other Partner amending their respective purchase
commitments to the extent required to effect any such increase or decrease, as
applicable, such that the amount accepted for purchase by the Registration
Accepting Offerees constitutes all of the Registration Interest(s) or the
amount not accepted equals or exceeds the Minimum Offering Amount.
(f) Closing of Purchase Pursuant to Registration Firm
Offer. If the Registration Firm Offer(s) have been accepted in whole or in
part in accordance with the terms of Section 12.6(e), the Registering
Partner(s) shall give notice to such effect (the "Registration Sale Notice") to
all Registration Offerees within five (5) days after the end of the
Registration Offer Period. Unless the Registration Accepting Offerees and the
Registering Partner(s) otherwise agree, the closing of any purchase pursuant to
this Section 12.6 shall be held at the principal office of the Partnership at
10:00 a.m. (local time at the place of closing) on the first Business Day on or
after the thirtieth (30th) day following the date on which such Registration
Sale Notice is given (subject to Section 11.5). At the closing, each
Registration Accepting Offeree shall (i) pay to each Registering Partner an
amount in cash or other immediately available funds equal to at least one-third
of that portion of the purchase price for the applicable portion of the
Registration Interest and Partner Loans of the Registering Partner for which
such Registration Accepting Offeree is liable and (ii) issue to each
Registering Partner a promissory note (the "Registration Note") of the
Registration Accepting Offeree or its Controlled Affiliate in a principal
amount equal to the remaining portion of the purchase price for the applicable
portion of the Registration Interest and Partner Loans of the Registering
Partner for which such Registration Accepting Offeree is liable, and the
Registering Partner shall deliver to each Registration Accepting Offeree good
title, free and clear of any liens, claims, encumbrances, security interests or
options (other than those created by this Agreement and those securing
financing obtained by the Partnership), to the applicable portion of the
Registration Interest and Partner Loans thus purchased. The principal amount
of the Registration Note shall be payable in two equal annual installments
beginning on the first anniversary of the closing date under this Section
12.6(f), and shall bear interest, payable quarterly, in arrears at the rate
specified below from the closing date until the principal amount thereof and
all accrued interest thereon is paid in full. The Registration Note will
contain customary terms, conditions and remedies, including an increased rate
of interest payable after a default in the payment of principal and/or
interest. The interest rate on the Registration Note shall be determined in
connection with the closing and shall be the average of the interest rates
determined independently by the First Public Appraiser and the Second Public
Appraiser as the rate that would be necessary to cause publicly traded
securities with terms, conditions and remedies comparable to the Registration
Note to trade at face value on a fully distributed basis. Each Registration
Accepting Offeree shall be liable to each Registering Partner only for its
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allocable portion of the purchase price for the Registration Interest and
corresponding portion of such Registering Partner's Partner Loans.
At the closing, the Partners shall execute such documents and
instruments of conveyance as may be necessary or appropriate to effectuate the
transactions contemplated hereby, including the Transfer of an allocable
portion of the Registration Interest and Partner Loans of each Registering
Partner to each of the Registration Accepting Offerees and the assumption by
each Registration Accepting Offeree of each Registering Partner's obligations
with respect to such portion of the Registering Partner's Registration Interest
Transferred to such Registration Accepting Offeree. Each Partner and the
Partnership shall bear its own costs of such Transfer and closing, including
attorneys' fees and filing fees.
In the event that any Registration Accepting Offeree shall fail to
perform its obligation to purchase hereunder on the scheduled closing date and
any other Registration Accepting Offeree(s) were prepared to perform their
respective obligations at the closing on such date (each a "Tendering
Offeree"), then the Tendering Offerees shall be entitled to elect by notice
given to the Partnership Board, the Registering Partner(s) and each other
Tendering Offeree within ten (10) days after the originally scheduled closing
date (the "extension period") to increase or decrease their purchase
commitments such that the amount accepted for purchase by the Tendering
Offerees constitutes all of the Registration Interest(s) or the amount not
accepted equals or exceeds the applicable Minimum Offering Amount, and the
closing of the purchase of the Registration Interest(s) shall be delayed until
the date determined in accordance with the following sentence; provided,
however, that the Registering Partner(s) will not be obligated to sell any
portion of their Registration Interest(s) or Partner Loans if the amount of the
Registration Interest(s) not accepted for purchase after giving effect to such
elections is greater than zero but less than the applicable Minimum Offering
Amount. If, after giving effect to all elections timely made in accordance
with the preceding sentence, the Registering Partner(s) would be required to
sell all or any portion of their Registration Interest(s), then the closing of
the purchase of such Registration Interest(s) and Partner Loans shall be held
(i) on the first Business Day following the expiration of the extension period
if no Tendering Offeree has timely elected to increase its purchase commitment
or (ii) on the fifth (5th) Business Day following the expiration of the
extension period if any Tendering Offeree has timely elected to increase its
purchase commitment. If, pursuant to this paragraph, (x) any Tendering Offeree
decreases its purchase commitment or (y) the Registering Partner(s) are not
obligated to sell any portion of their Registration Interest(s) to any
Tendering Offeree, the eighteen (18) month period described in the last two
sentences of Section 12.6(g) shall be extended to account for the number of
days elapsed between the last day of the applicable Registration Offer Period
and the end of the extension period.
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(g) Registration. If the Registration Firm Offer(s) in
the aggregate are for Registration Interest(s) that in the aggregate are equal
to or greater than the Minimum Offering Amount and are not accepted with
respect to all of the Registration Interest(s) in the manner provided in
Section 12.6(e), (i) the Partners will cause the Partnership to be converted to
corporate form in accordance with Section 5.9 no later than the effective date
of the registration contemplated hereunder and will cause the Partnership and
MajorCorp to register the shares of MajorCorp Stock to be received by such
Registering Partner in exchange for its Registration Interest (other than any
portion of such Registration Interest purchased by the Registration Accepting
Offerees pursuant to Sections 12.6(e) and (f)) for sale under the 1933 Act (and
any applicable state securities laws) in accordance with the offering
contemplated hereunder and (ii) subject to such registration, the Registering
Partner will sell such shares to the public in a broadly disseminated firm
commitment underwritten offering subject to customary cutbacks on a pro rata
basis. MajorCorp shall select the managing underwriter for such offering
subject to the approval of the Registering Partner(s) which approval shall not
be unreasonably withheld. To effectuate such offers, MajorCorp and the
Registering Partner(s) will enter into an underwriting agreement with such
managing underwriter on terms and conditions customary for underwriting
agreements in a firm commitment underwritten secondary offering. If the first
sentence of this Section 12.6(g) applies to any Registration Firm Offer and for
any reason the Partnership has not converted to corporate form in accordance
with Section 5.9 within eighteen (18) months from the expiration of the
Registration Offer Period, such Registering Partner's right to Transfer its
Registration Interest shall again be subject to the restrictions set forth in
this Section 12.6. If any shares of MajorCorp Stock registered and offered
pursuant to this Section 12.6(g) are not sold within eighteen (18) months from
the expiration of the Registration Offer Period, any Transfer of such shares
will be subject to the provisions of the stockholders' agreement contemplated
under Section 5.9(a).
(h) Restrictions on Notice. Subject to the provisions of
Section 12.6(a), no notice initiating the procedures contemplated by this
Section 12.6 may be given by any Partner while the Partnership is undertaking
to effect the registration of MajorCorp Stock pursuant to the exercise by any
Partner of its rights under this Section 12.6 in a prior year or after a
Liquidating Event has occurred. No notice initiating the procedures
contemplated by this Section 12.6 may be given by an Adverse Partner, and no
Registering Partner shall be required to offer any portion of its Interest to
an Adverse Partner during the period that the Partnership is pursuing any
remedy specified in Section 11.1 with respect to such Adverse Partner.
(i) Right of First Refusal/Tagalong Rights. The
provisions of Sections 12.4 and 12.5 shall not apply to the purchase and sale
of a Registration Interest pursuant to this Section 12.6.
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12.7 Right of First Offer.
If the Partnership is converted to corporate form pursuant to Section
12.6(g), the stockholders' agreement contemplated under Section 5.9(a) shall
incorporate the provisions of this Section 12.7, mutatis mutandis. Any Partner
(a "Selling Partner") that proposes to sell its shares of MajorCorp Stock (i)
in accordance with Rule 144 under the 1933 Act or Rule 145 under the 1933 Act
(in accordance with the applicable provisions of Rule 144) (or any successor to
either of such Rules), in a transaction that satisfies the manner of sale
requirements of Rule 144 or Rule 145 (whether or not applicable to such sale)
(a "Rule 144 Sale"), or (ii) in a broadly disseminated Public Offering pursuant
to a registration statement filed under the 1933 Act (a "Registered Offering"),
must first comply with the requirements of this Section 12.7.
(a) Open Market Sales. Prior to any sale or disposition
by a Selling Partner of any of its shares of MajorCorp Stock in a Rule 144
Sale, such Selling Partner shall give notice (a "Rule 144 Notice") to the Board
of Directors of MajorCorp and each other Partner (excluding any Partner that
was an Exclusive Limited Partner at the time the Partnership converted to
corporate form, the "Non-Selling Partners") of the number of shares of
MajorCorp Stock proposed to be sold and the intended manner of disposition.
The Rule 144 Notice shall constitute an irrevocable offer (a "Rule 144 Offer")
by such Selling Partner to the Non-Selling Partners to sell the number of
shares of MajorCorp Stock so proposed to be sold at a price equal to the Market
Value of such shares determined as provided in Section 12.7(g).
(b) Registered Offerings. If, pursuant to the
registration rights agreement contemplated under Section 5.9(b) or otherwise, a
Selling Partner intends to sell any of its shares of MajorCorp Stock in a
Registered Offering, such Selling Partner shall first give notice to each
Non-Selling Partner (the "Secondary Registration Notice"). The Secondary
Registration Notice shall (i) specify the number of shares of MajorCorp Stock
proposed to be so registered, (ii) identify the Public Appraiser selected by
such Selling Partner to make the determination of the Minimum Secondary
Offering Amount, which Public Appraiser shall be reasonably acceptable to
MajorCorp, (iii) set forth the Public Appraiser's determination of the Minimum
Secondary Offering Amount (or state that such Selling Partner has elected to
waive the Minimum Secondary Offering Amount limitations set forth in the
following sentence and in Sections 12.7(d) and 12.7(e)), and (iv) set forth the
intended method of distribution. The shares of MajorCorp Stock so specified in
the Secondary Registration Notice shall not be less than the Minimum Secondary
Offering Amount (if any) specified in such Secondary Registration Notice. The
Secondary Registration Notice shall constitute an irrevocable offer (a
"Registration Offer") by such Selling Partner to each Non-Selling Partner to
sell such number of shares of MajorCorp Stock so proposed to be registered at a
price equal to the Market Value of such shares determined in accordance with
Section 12.7(g). "Minimum Secondary Offering Amount" means the
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number of shares of MajorCorp Stock that the Public Appraiser selected by the
Selling Partner determines would be necessary to effect a viable secondary
public offering of the MajorCorp Stock considering all relevant factors,
including the intended method of distribution set forth in the Secondary
Registration Notice. Two or more Selling Partner(s) may jointly give a
Secondary Registration Notice.
(c) First Offer Period. A Rule 144 Offer or a
Registration Offer, as applicable, shall be irrevocable for a period (the
"First Offer Period") commencing on the date of delivery by the Selling Partner
of the applicable notice to the Non-Selling Partners and ending at 11:59 p.m.,
local time at MajorCorp's principal place of business, (i) with respect to a
Rule 144 Offer, on the fifth (5th) full Trading Day following the date of the
Rule 144 Notice, and (ii) with respect to a Registration Offer, on the
twentieth (20th) full Trading Day following the date of the Secondary
Registration Notice.
(d) Acceptance of Offers. At any time during the
applicable First Offer Period, any Non-Selling Partner may accept a Rule 144
Offer or Registration Offer, as applicable, as to all or any portion of the
shares of MajorCorp Stock covered by such Rule 144 Offer or Registration Offer,
as applicable, by giving notice of such acceptance to the applicable Selling
Partner and each other Non-Selling Partner, which notice shall indicate the
maximum number of shares of MajorCorp Stock that such Non-Selling Partner is
willing to purchase (the "purchase commitment") and, with respect to a
Registration Offer in which the aggregate Market Value of the shares of
MajorCorp Stock proposed to be registered exceeds $150,000,000, if applicable,
identify the Public Appraiser selected by such Non-Selling Partner to determine
the interest rate of the Accepting Partner Note. If the aggregate purchase
commitments made by Non-Selling Partners accepting a Rule 144 Offer or
Registration Offer, as applicable ("Accepting Partners"), exceed the number of
shares of MajorCorp Stock covered by such Rule 144 Offer or Registration Offer,
as applicable, then each Accepting Partner shall purchase, and the Selling
Partner shall sell to such Accepting Partner, that portion of the number of
shares of MajorCorp Stock covered by such Rule 144 Offer or Registration Offer,
as applicable, that corresponds to the ratio of the Percentage Interest of such
Accepting Partner to the aggregate Percentage Interests of all Accepting
Partners; provided that if any Accepting Partner's purchase commitment was for
an amount less than its proportionate share of the number of shares of
MajorCorp Stock as so determined, then the number of shares of MajorCorp Stock
not so committed to be purchased shall continue to be allocated proportionally
in the manner provided above in this sentence among the other Accepting
Partners until each has been allocated, by such process of apportionment, a
number of shares of MajorCorp Stock equal to the maximum number of shares such
Accepting Partner committed to purchase or until all of the shares of MajorCorp
Stock covered by such Rule 144 Offer or Registration Offer, as applicable, have
been allocated among the Accepting Partners. Notwithstanding any purported
acceptance of a
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Registration Offer, the Registration Offer shall be deemed to be rejected by
all such Accepting Partners in their entirety if the portion not accepted is in
the aggregate greater than zero but less than the Minimum Secondary Offering
Amount; provided that such Registration Offer will be deemed accepted if,
within ten (10) days after the expiration of the First Offer Period, the
Accepting Partners increase or decrease their purchase commitments, by giving
notice to the Board of Directors of MajorCorp and each other Partner amending
their respective purchase commitments to the extent required to effect any such
increase or decrease, as applicable, such that the amount accepted for purchase
by the Accepting Partners constitutes all of the shares of MajorCorp Stock
covered by such Registration Offer or the amount not accepted equals or exceeds
the Minimum Secondary Offering Amount.
(e) Closing of Purchase Pursuant to First Offer. If the
Rule 144 Offer or Registration Offer, as applicable has been accepted in whole
or in part in accordance with the terms of Section 12.7(d), the Selling Partner
shall give notice to such effect (the "First Offer Sale Notice") to all
Non-Selling Partners within five (5) days after the end of the applicable First
Offer Period. Unless the Accepting Partners and the Selling Partner otherwise
agree, the closing of any purchase pursuant to this Section 12.7 shall be held
at the principal office of MajorCorp at 10:00 a.m. (local time at the place of
closing) on the first Business Day on or after (x) with respect to a Rule 144
Offer, the fifth (5th) Business Day following the date on which the First Offer
Sale Notice is given, and (y) with respect to a Registration Offer, the
thirtieth (30th) day following the date on which the First Offer Sale Notice is
given. At the closing, each Accepting Partner shall (i) with respect to a Rule
144 Offer, pay to the Selling Partner an amount in cash or other immediately
available funds equal to that portion of the purchase price for the shares of
MajorCorp Stock of the Selling Partner for which such Accepting Partner is
liable, and (ii) with respect to a Registration Offer, (A) if the aggregate
Market Value of the shares of MajorCorp Stock covered by the applicable
Registration Offer exceeds $150,000,000, (1) pay to the Selling Partner an
amount in cash or other immediately available funds equal to at least one-third
of that portion of the purchase price for the shares of MajorCorp Stock of the
Selling Partner for which such Accepting Partner is liable and (2) issue to the
Selling Partner a promissory note (an "Accepting Partner Note") of such
Non-Selling Partner or its Controlled Affiliate in a principal amount equal to
the remaining portion of the purchase price for the shares of MajorCorp Stock
of the Selling Partner for which such Accepting Partner is liable, or (B) if
the aggregate Market Value of the shares of MajorCorp Stock covered by the
applicable Registration Offer is equal to or less than $150,000,000, pay to the
Selling Partner an amount in cash or other immediately available funds equal to
that portion of the purchase price for the shares of MajorCorp Stock of the
Selling Partner for which such Accepting Partner is liable, and the Selling
Partner shall deliver to each Accepting Partner good title, free and clear of
any liens, claims, encumbrances, security
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interests or options (other than those created by any stockholders' agreement
contemplated under Section 5.9(a)) to the shares of MajorCorp Stock thus
purchased. The principal amount of each Accepting Partner Note shall be
payable in two equal annual installments beginning on the first anniversary of
the closing date under this Section 12.7(e), and shall bear interest, payable
quarterly, in arrears at the rate specified below from the closing date until
the principal amount thereof and all accrued interest thereon is paid in full.
The Accepting Partner Note will contain customary terms, conditions and
remedies, including an increased rate of interest payable after a default in
the payment of principal and/or interest. The interest rate on the Accepting
Partner Note shall be determined in connection with the closing and shall be
the average of the interest rates determined independently by the Public
Appraiser selected by the Selling Partner and the Public Appraiser selected by
the applicable Accepting Partner as the rate that would be necessary to cause
publicly traded securities with terms, conditions and remedies comparable to
the Accepting Partner Note to trade at face value on a fully distributed basis.
Each Accepting Partner shall be liable to the Selling Partner only for its
allocable portion of the purchase price for the shares of MajorCorp Stock
purchased hereunder. The provisions of the stockholders' agreement
contemplated under Section 5.9(a) will incorporate provisions comparable to
this Section 12.7 and additional appropriate provisions that will address the
Partners' relative rights and obligations in the event the circumstances
described in Section 11.5 prevent the Accepting Partners from purchasing any
shares of MajorCorp Stock offered by a Selling Partner hereunder within the
time periods specified in this Section 12.7(e).
At the closing, the Partners and MajorCorp shall execute such
documents and instruments of conveyance as may be necessary or appropriate to
effectuate the transactions contemplated hereby, including the Transfer of the
shares of MajorCorp Stock of the Selling Partner to the Accepting Partners.
Each Partner and MajorCorp shall bear its own costs of such Transfer and
closing, including attorneys' fees and filing fees.
In the event that any Accepting Partner shall fail to perform its
obligation to purchase hereunder on the scheduled closing date and any other
Accepting Partner(s) were prepared to perform their respective obligations at
the closing on such date (each a "Tendering Partner"), then the Tendering
Partners shall be entitled to elect by notice given to the Board of Directors
of MajorCorp, the Selling Partner(s) and each other Tendering Partner within
ten (10) days after the originally scheduled closing date (the "extension
period") to increase or decrease their purchase commitments such that the
amount accepted for purchase by the Tendering Partners constitutes all of the
shares of MajorCorp Stock offered or the amount not accepted equals or exceeds
the applicable Minimum Secondary Offering Amount, and the closing of the
purchase of the shares of MajorCorp Stock shall be delayed until the date
determined in accordance with the following sentence; provided, however, that
the Selling Partner(s) will not
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be obligated to sell any portion of their shares of MajorCorp Stock if the
amount of the shares of MajorCorp Stock not accepted for purchase after giving
effect to such elections is greater than zero but less than the applicable
Minimum Secondary Offering Amount. If, after giving effect to all elections
timely made in accordance with the preceding sentence, the Selling Partner(s)
would be required to sell all or any portion of their shares of MajorCorp
Stock, then the closing of the purchase of such shares of MajorCorp Stock shall
be held (i) on the first Business Day following the expiration of the extension
period if no Tendering Partner has timely elected to increase its purchase
commitment or (ii) on the fifth (5th) Business Day following the expiration of
the extension period if any Tendering Partner has timely elected to increase
its purchase commitment.
(f) Sale if First Offer Rejected. Any shares of
MajorCorp Stock not purchased in the manner provided in this Section 12.7
(including any shares that are not purchased because of the failure of the
Accepting Partners to close any purchase in accordance with Section 12.7(e)),
but subject to the last sentence of this Section 12.7(f), may be sold during
the period described below (the "Permitted Period") in the manner described in
the Rule 144 Notice or pursuant to the intended method of distribution set
forth in the Secondary Registration Notice, as applicable. Except as otherwise
provided in the following sentence, the Permitted Period shall be the
applicable of (i) with respect to shares of MajorCorp Stock covered by a Rule
144 Notice, twenty (20) full Trading Days after the last day of the applicable
First Offer Period, or (ii) with respect to shares of MajorCorp Stock covered
by a Secondary Registration Notice, one hundred eighty (180) days after the
last day of the applicable First Offer Period (in each case commencing on the
first day following the applicable First Offer Period), provided that such
180-day period may be extended for an additional period of up to ninety (90)
days if at the end of such 180-day period the Selling Partner has caused a
registration statement to be filed by MajorCorp with the Securities and
Exchange Commission relating to such Registered Offering and is actively
pursuing the consummation of such Registered Offering in good faith.
Notwithstanding the foregoing, if, pursuant to the third paragraph of Section
12.7(e), (x) any Tendering Partner decreases its purchase commitment or (y) the
Selling Partner is not obligated to sell any portion of its shares of MajorCorp
Stock to any Tendering Partner, the Permitted Period shall be extended to
account for the number of days elapsed between the last day of the applicable
First Offer Period and the end of the extension period under Section 12.7(e).
Any such shares of MajorCorp Stock not sold within the applicable Permitted
Period shall again be subject to the restrictions set forth in this Section
12.7.
(g) Market Value. The "Market Value" of any shares of
MajorCorp Stock purchased pursuant to this Section 12.7 shall be (i) with
respect to shares of MajorCorp Stock offered pursuant to a Rule 144 Offer, an
amount equal to the product of (A) the number of shares of MajorCorp Stock
offered times (B) the average of the
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last reported sales prices, regular way, for the five (5) full Trading Days
preceding the date of the Rule 144 Notice as reported on the principal national
securities exchange on which MajorCorp Stock is listed or admitted for trading
or, if MajorCorp Stock is not listed or admitted for trading on any national
securities exchange, on the Nasdaq National Market or (ii) with respect to
shares of MajorCorp Stock offered pursuant to a Registration Offer, the product
of (A) the number of shares of MajorCorp Stock offered times (B) the average of
the last reported sales prices, regular way, for the twenty (20) full Trading
Days preceding the date of the Secondary Registration Notice as reported on the
principal national securities exchange on which MajorCorp Stock is listed or
admitted for trading or, if MajorCorp Stock is not listed or admitted for
trading on any national securities exchange, on the Nasdaq National Market.
12.8 Prohibited Dispositions.
Any purported Disposition of all or any part of an Interest that is
not a Permitted Transfer shall be null and void and of no force or effect
whatever; provided that, if the Partnership is required to recognize a
Disposition that is not a Permitted Transfer (or if the Partnership Board, in
its sole discretion, elects to recognize a Disposition that is not a Permitted
Transfer), the Interest Disposed of shall be strictly limited to the
transferor's rights to allocations and distributions as provided by this
Agreement with respect to the Transferred Interest, which allocations and
distributions may be applied (without limiting any other legal or equitable
rights of the Partnership) to satisfy any debts, obligations, or liabilities
for damages that the transferor or transferee of such Interest may have to the
Partnership.
12.9 Representations Regarding Transfers.
Each Partner hereby represents and warrants to the Partnership and the
other Partners that such Partner's acquisition of Interests hereunder is made
as principal for such Partner's own account and not for resale or distribution
of such Interests.
12.10 Distributions and Allocations in Respect of Transferred
Interests.
If any Interest is Transferred during any Fiscal Year in compliance
with the provisions of this Section 12, Profits, Losses, each item thereof, and
all other items attributable to the Transferred Interest for such Fiscal Year
shall be divided and allocated between the transferor and the transferee by
taking into account their varying Percentage Interests during the Fiscal Year
in accordance with Code Section 706(d), using any conventions permitted by law
and selected by the Partnership Board. All distributions on or before the date
of such Transfer shall be made to the transferor, and all distributions
thereafter shall be made to the transferee. Solely for purposes of making such
allocations and distributions, the Partnership shall recognize such Transfer
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not later than the end of the calendar month during which it is given notice of
such Transfer, provided that, if the Partnership is given notice of a Transfer
at least ten (10) Business Days prior to the Transfer, the Partnership shall
recognize such Transfer as of the date of such Transfer, and provided further
that if the Partnership does not receive a notice stating the date such
Interest was Transferred and such other information as the Partnership Board
may reasonably require within thirty (30) days after the end of the Fiscal Year
during which the Transfer occurs, then all such items shall be allocated, and
all distributions shall be made, to the Person who, according to the books and
records of the Partnership, was the owner of the Interest on the last day of
such Fiscal Year. Neither the Partnership nor the Partnership Board shall
incur any liability for making allocations and distributions in accordance with
the provisions of this Section 12.10, whether or not the Partnership Board or
the Partnership has knowledge of any Transfer of ownership of any Interest.
SECTION 13. CONVERSION OF INTERESTS
13.1 Termination of Status as General Partner.
(a) A General Partner shall cease to be a General Partner
upon the first to occur of (i) the Transfer of such Partner's entire Interest
as a Partner in a Permitted Transfer (in which event the transferee of such
Interest shall be admitted as a successor General Partner and a Limited Partner
upon compliance with Section 12.3), (ii) the Unanimous Vote of the Partnership
Board to approve a request by such General Partner to withdraw, (iii) any
Adverse Act with respect to such Partner, (iv) such Partner's failure to
satisfy the Minimum Ownership Requirement or (v) in the case of Comcast only,
the occurrence of any of the events described in Section 6.4(f) that cause
Comcast to become an Exclusive Limited Partner. In the event a Person ceases
to be a General Partner pursuant to clauses (ii), (iii), (iv) or (v), the
Interest of such Person as a General Partner shall automatically and without
any further action by the Partners be converted into an Interest solely as a
Limited Partner, and such Partner shall thereafter be an Exclusive Limited
Partner.
(b) The Partners intend that the Partnership not dissolve
as a result of the cessation of any Person's status as a General Partner;
provided, however, that if it is determined by a court of competent
jurisdiction that the Partnership has dissolved, the provisions of Section 14.1
shall govern.
13.2 Restoration of Status as General Partner.
An Exclusive Limited Partner whose rights to representation on the
Partnership Board have been restored as provided in Section 5.1(c) shall be
restored to the status of a General Partner and its Interest shall thereafter
be deemed held in part as a General Partner and in part as a Limited Partner as
provided in Section
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2.1. If Comcast becomes an Exclusive Limited Partner pursuant to Section
6.4(f), it shall not be entitled to be restored to the status of General
Partner except as expressly provided in such Section.
SECTION 14. DISSOLUTION AND WINDING UP
14.1 Liquidating events.
(a) In General. Subject to Section 14.1(b), the
Partnership shall dissolve and commence winding up and liquidating upon the
first to occur of any of the following ("Liquidating Events"):
(i) The sale of all or substantially all of the
Property;
(ii) A Unanimous Vote of the Partnership Board to
dissolve, wind up, and liquidate the Partnership in accordance with Section
5.1;
(iii) The failure of the General Partners to
resolve a Deadlock Event as provided in Section 5.8(a)(iii) unless the
Partnership Board determines by Required Majority Vote not to dissolve; and
(iv) The withdrawal of a General Partner, the
assignment by a General Partner of its entire Interest or any other event that
causes a General Partner to cease to be a general partner under the Act,
provided that any such event shall not constitute a Liquidating Event if the
Partnership is continued pursuant to this Section 14.1.
The Partners hereby agree that, notwithstanding any provision of the Act or the
Delaware Uniform Partnership Act, the Partnership shall not dissolve prior to
the occurrence of a Liquidating Event. Upon the occurrence of any event set
forth in Section 14.1(a)(iv), the Partnership shall not be dissolved or
required to be wound up if (x) at the time of such event there is at least one
remaining General Partner, or (y) if there is not at least one remaining
General Partner, within ninety (90) days after such event all remaining
Partners agree in writing to continue the business of the Partnership and to
the appointment, effective as of the date of such event, of one or more
additional General Partners.
(b) Special Rules. The events described in Sections
14.1(a)(ii), 14.1(a)(iii) or 14.1(a)(iv) shall not constitute Liquidating
Events until such time as the Partnership is otherwise required to dissolve,
and commence winding up and liquidating, in accordance with Section 14.7.
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14.2 Winding Up.
(a) Upon the occurrence of a Liquidating Event, the
Partnership shall continue solely for the purposes of winding up its affairs in
an orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Partners and neither the Partnership Board nor any Partner shall
take any action that is inconsistent with, or not appropriate for, the winding
up of the Partnership's business and affairs. To the extent not inconsistent
with the foregoing, this Agreement shall continue in full force and effect
until such time as the Partnership's Property has been distributed pursuant to
this Section 14.2 and the Certificate has been cancelled in accordance with the
Act. The Partnership Board shall be responsible for overseeing the winding up
and dissolution of the Partnership, shall take full account of the
Partnership's liabilities and Property, shall cause the Partnership's Property
to be liquidated as promptly as is consistent with obtaining the fair value
thereof, and shall cause the proceeds therefrom, to the extent sufficient
therefor, to be applied and distributed in the following order:
(i) First, to the payment of all of the
Partnership's debts and liabilities (other than Partner Loans) to creditors
other than the Partners and to the payment of the expenses of liquidation;
(ii) Second, to the payment of all Partner Loans
and all of the Partnership's debts and liabilities to the Partners in the
following order and priority:
(A) first, to the payment of all debts
and liabilities owed to any Partner other than in respect of Partner Loans;
(B) second, to the payment of all
accrued and unpaid interest on Partner Loans, such interest to be paid to each
Partner and its Affiliates (considered as a group) pro rata in proportion to
the interest owed to each such group; and
(C) third, to the payment of the unpaid
principal amount of all Partner Loans, such principal to be paid to each
Partner and its Affiliates (considered as a group) pro rata in proportion to
the outstanding principal owed to each such group; and
(iii) The balance, if any, to the Partners in
accordance with their Capital Accounts, after giving effect to all
contributions, distributions, and allocations for all periods.
(b) In the discretion of the Partnership Board, a portion
of the distributions that would otherwise be made to the Partners pursuant to
this Section 14.2 may be:
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(i) distributed to a trust established for the
benefit of the Partners for the purposes of liquidating Partnership assets,
collecting amounts owed to the Partnership, and paying any contingent or
unforeseen liabilities or obligations of the Partnership or of the General
Partners arising out of or in connection with the Partnership. The assets of
any such trust shall be distributed to the Partners from time to time, in the
reasonable discretion of the Partnership Board in the same proportions as the
amount distributed to such trust by the Partnership would otherwise have been
distributed to the Partners pursuant to Section 14.2; or
(ii) withheld to provide a reasonable reserve for
Partnership liabilities (contingent or otherwise) and to reflect the unrealized
portion of any installment obligations owed to the Partnership, provided that
such withheld amounts shall be distributed to the Partners as soon as
practicable.
Each Partner and each of its Affiliates (as to Partner Loans only) agrees that
by accepting the provisions of this Section 14.2 setting forth the priority of
the distribution of the assets of the Partnership to be made upon its
liquidation, such Partner or Affiliate expressly waives any right which it, as
a creditor of the Partnership, might otherwise have under the Act to receive
distributions of assets pari passu with the other creditors of the Partnership
in connection with a distribution of assets of the Partnership in satisfaction
of any liability of the Partnership, and hereby subordinates to said creditors
any such right.
14.3 Compliance With Certain Requirements of Regulations; Deficit
Capital Accounts.
In the event the Partnership is "liquidated" within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), (a) distributions shall be made
pursuant to this Section 14 to the Partners who have positive Capital Accounts
in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2), and (b) if any
Partner's Capital Account has any deficit balance (after giving effect to all
contributions, distributions, and allocations for all taxable years, including
the year during which such liquidation occurs), such Partner shall contribute
to the capital of the Partnership the amount necessary to restore such deficit
balance to zero in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(3);
provided, however, that the obligation of an Exclusive Limited Partner to
contribute capital pursuant to this sentence shall be limited to the amount of
the deficit balance, if any, that existed in such Exclusive Limited Partner's
Capital Account at the time it became an Exclusive Limited Partner (taking into
account for this purpose any revaluation of Partnership assets pursuant to
subparagraph (ii)(D) of the definition of Gross Asset Value made as a result of
such Partner's becoming an Exclusive Limited Partner).
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14.4 Deemed Distribution and Recontribution.
Notwithstanding any other provision of this Section 14, in the event
the Partnership is liquidated within the meaning of Section
1.704-1(b)(2)(ii)(g) of the Regulations but no Liquidating Event has occurred,
the Property shall not be liquidated, the Partnership's liabilities shall not
be paid or discharged, and the Partnership's affairs shall not be wound up.
Instead, solely for federal income tax purposes, the Partnership shall be
deemed to have distributed the Property in kind to the Partners, who shall be
deemed to have assumed and taken subject to all Partnership liabilities, all in
accordance with their respective Capital Accounts and, if any Partner's Capital
Account has a deficit balance that such Partner would be required to restore
pursuant to Section 14.3 (after giving effect to all contributions,
distributions, and allocations for all Fiscal Years, including the Fiscal Year
during which such liquidation occurs), such Partner shall contribute to the
capital of the Partnership the amount necessary to restore such deficit balance
to zero in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(3).
Immediately thereafter, the Partners shall be deemed to have recontributed the
Property to the Partnership, which shall be deemed to have assumed and taken
subject to all such liabilities.
14.5 Rights of Partners.
Except as otherwise provided in this Agreement, (a) each Partner shall
look solely to the assets of the Partnership for the return of its Capital
Contributions and shall have no right or power to demand or receive property
other than cash from the Partnership, and (b) no Partner shall have priority
over any other Partner as to the return of its Capital Contributions,
distributions, or allocations. If, after the Partnership ceases to exist as a
legal entity, a Partner is required to make a payment to any Person on account
of any activity carried on by the Partnership, such paying Partner shall be
entitled to reimbursement from each other Partner consistent with the manner in
which the economic detriment of such payment would have been borne had the
amount been paid by the Partnership immediately prior to its cessation.
14.6 Notice of Dissolution.
In the event a Liquidating Event occurs or an event described in
Section 14.1(a)(iv) occurs that would, but for provisions of Section 14.1,
result in a dissolution of the Partnership, the Partnership Board shall, within
thirty (30) days thereafter, provide written notice thereof to each of the
Partners.
14.7 Buy/Sell Arrangements.
(a) As soon as practicable after the occurrence of an
event described in Section 14.1(a)(ii), 14.1(a)(iii) or, subject to the proviso
contained therein, Section 14.1(a)(iv), the Net Equity of the Interests shall
be determined in accordance with
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Section 11.3 and notice of such determination shall be delivered to each
Partner. For purposes of such determination of Net Equity pursuant to this
Section 14.7(a), the General Partner that (together with its Controlled
Affiliates) holds the largest Voting Percentage Interest shall designate the
First Appraiser as required by Section 11.4 within thirty (30) days after an
occurrence of the applicable Liquidating Event, and the General Partner that
(together with its Controlled Affiliates) holds the smallest Voting Percentage
Interest shall appoint the Second Appraiser within ten (10) Business Days of
receiving notice of the appointment of the First Appraiser.
(b) Prior to 5:00 p.m. (local time at the principal
office of the Partnership) on the first Business Day on or after the thirtieth
(30th) day following its receipt of notice of the determination of Net Equity
pursuant to Section 14.7(a), each General Partner (individually or together
with one or more other General Partners) must submit sealed statements (the
"Offer Statement") to the Chief Executive Officer notifying the Chief Executive
Officer in writing either (i) that such General Partner or group of General
Partners offers to sell all of its Interest(s), or (ii) that such General
Partner or group of General Partners offers to buy all of the other Partners'
Interests. Except as provided in Section 14.7(g), each Exclusive Limited
Partner shall be automatically deemed to have offered to sell its Interest
hereunder and shall for all purposes under this Section 14.7 be treated as a
General Partner that has offered to sell its Interest. The Chief Executive
Officer shall provide a copy of each Offer Statement to each of the Partners
within five (5) days following the last day for submission of the Offer
Statements.
(c) If the Offer Statements indicate that one General
Partner or group of General Partners wishes to buy and all of the other
Partners wish to sell, the Net Equity of the Interests shall thereupon be the
price at which the Interests will be sold.
(d) If the Offer Statements indicate that all Partners
wish to sell their Interests, the Partnership shall dissolve, and commence
winding up and liquidating in accordance with Section 14.2.
(e) If the Offer Statements indicate that more than one
General Partner or group of General Partners wishes to purchase the other
Partners' Interests, then the General Partners or groups of General Partners
wishing to purchase (each General Partner or group of Partners, a "Bidding
Partner") shall begin the bidding process described below and the highest
bidder (determined as the amount bid per each one percent (1%) Percentage
Interest in the Partnership) shall buy all the other Partners' Interests. Each
of the Bidding Partners may make an initial offer (an "Initial Offer") to
purchase the Interests of the other Partners, which offer may not be less than
the Net Equity of the Interests to be purchased and shall be made within
fifteen (15) days of the last day for submission of the Offer Statements. If
no Bidding Partner makes an Initial Offer by 5:00 p.m. (local time at the
principal
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office of the Partnership) on the last day of such fifteen (15) day period, the
Partnership shall dissolve, and commence winding up and liquidating in
accordance with Section 14.2. If only one Bidding Partner timely makes an
Initial Offer, such offer shall thereupon be the price at which all other
Partners' Interests shall be sold to such Bidding Partner. If more than one
Bidding Partner timely makes an Initial Offer, each such Bidding Partner must
respond within fifteen (15) days of the last day of the 15-day period for
submitting such Initial Offers either by accepting the highest of such Initial
Offers or delivering a counteroffer to purchase the Interests of the other
Partners. A counteroffer must be at least one percent (1%) higher than the
prior offer of which the Bidding Partner has received notice. The bidding
process shall continue until all Bidding Partners have either responded by
accepting the highest immediate prior offer or failed to make a timely
response, in which case the highest immediate prior offer shall be deemed
accepted. An acceptance of an offer shall, if the bidding process thereafter
continues, be deemed to be an acceptance of the highest succeeding
counteroffer. For purposes of this Section 14.7, all offers, acceptances and
counteroffers must be in writing, in a form which is firm and binding and
delivered to the Chief Executive Officer at the principal office of the
Partnership (who shall promptly notify each other Partner of the identity of
the bidder and the amount of such bid); all offers must be responded to within
fifteen (15) days of the last day of the immediately preceding 15-day period
for submitting offers. If no response to an offer or counteroffer is received
by 5:00 p.m. (local time at the principal office of the Partnership) on the
last day of such fifteen (15) day period, the highest immediate prior offer
shall be deemed to be accepted.
(f) The closing of the purchase and sale of each selling
Partner's Interest, MinorCo Interest and Partner Loans shall occur at the
principal office of the Partnership at 10:00 a.m. (local time at the place of
the closing) on the first Business Day occurring on or after the thirtieth
(30th) day following the date of the final determination of the purchase price
pursuant to Section 14.7(e) (subject to Section 11.5). At the closing, the
purchasing Partner(s) shall pay to each selling Partner, by cash or other
immediately available funds, the purchase price for such selling Partners'
Interest, MinorCo Interest and Partner Loans, and the selling Partner shall
deliver to the purchasing Partner(s) good title, free and clear of any liens,
claims, encumbrances, security interests or options (other than those created
by this Agreement and those securing financing obtained by the Partnership), to
the selling Partner's Interest, MinorCo Interest and Partner Loans thus
purchased.
At the closing, the Partners shall execute such documents and
instruments of conveyance as may be necessary or appropriate to effectuate the
transactions contemplated hereby, including the Transfer of the Interests,
MinorCo Interests and Partner Loans of the selling Partner(s) to the purchasing
Partner(s) and the assumption by each purchasing Partner of the selling
Partner's obligations with respect to the selling Partner's Interest
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Transferred to the purchasing Partner(s). Each Partner shall bear its own
costs of such Transfer and closing, including attorneys' fees and filing fees.
The costs of determining Net Equity shall be borne by the Partners (pro rata
based on their respective Percentage Interests as of the occurrence of the
Liquidating Event).
(g) Solely for the purposes of this Section 14.7, Comcast
will have the same rights and obligations as a General Partner hereunder even
if it has become an Exclusive Limited Partner under Section 6.4(f) so long as
Comcast would not otherwise then be an Exclusive Limited Partner under Section
13.1(a).
SECTION 15. MISCELLANEOUS
15.1 Notices.
Any notice, payment, demand, or communication required or permitted to
be given by any provision of this Agreement shall be in writing and mailed
(certified or registered mail, postage prepaid, return receipt requested) or
sent by hand or overnight courier, or by facsimile (with acknowledgment
received), charges prepaid and addressed as follows, or to such other address
or number as such Person may from time to time specify by notice to the
Partners:
(a) If to the Partnership, to the address or number set
forth on Schedule 2.2;
(b) If to a Partner or its designated Representative(s),
to the address or number set forth in Schedule 2.2; and
(c) If to the Partnership Board, to the Partnership and
to each General Partner and its designated Representative(s).
Any Person may from time to time specify a different address by notice to the
Partnership and the Partners. All notices and other communications given to a
Person in accordance with the provisions of this Agreement shall be deemed to
have been given and received (i) four (4) Business Days after the same are sent
by certified or registered mail, postage prepaid, return receipt requested,
(ii) when delivered by hand or transmitted by facsimile (with acknowledgment
received and, in the case of a facsimile only, a copy of such notice is sent no
later than the next Business Day by a reliable overnight courier service, with
acknowledgment of receipt) or (iii) one (1) Business Day after the same are
sent by a reliable overnight courier service, with acknowledgment of receipt.
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15.2 Binding Effect.
Except as otherwise provided in this Agreement, this Agreement shall
be binding upon and inure to the benefit of the Partners and their respective
successors, transferees, and assigns.
15.3 Construction.
This Agreement shall be construed simply according to its fair meaning
and not strictly for or against any Partner.
15.4 Time.
Time is of the essence with respect to this Agreement.
15.5 Table of Contents; Headings.
The table of contents and section and other headings contained in this
Agreement are for reference purposes only and are not intended to describe,
interpret, define or limit the scope, extent or intent of this Agreement.
15.6 Severability.
Every provision of this Agreement is intended to be severable. If any
term or provision hereof is illegal, invalid or unenforceable for any reason
whatsoever, that term or provision will be enforced to the maximum extent
permissible so as to effect the intent of the Partners, and such illegality,
invalidity or unenforceability shall not affect the validity or legality of the
remainder of this Agreement. If necessary to effect the intent of the
Partners, the Partners will negotiate in good faith to amend this Agreement to
replace the unenforceable language with enforceable language which as closely
as possible reflects such intent.
15.7 Incorporation by Reference.
Every exhibit and other appendix (other than schedules) attached to
this Agreement and referred to herein is not incorporated in this Agreement by
reference unless this Agreement expressly otherwise provides.
15.8 Further Action.
Each Partner, upon the reasonable request of the Partnership Board,
agrees to perform all further acts and execute, acknowledge, and deliver any
documents which may be reasonably necessary, appropriate, or desirable to carry
out the intent and purposes of this Agreement.
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15.9 Governing Law.
The internal laws of the State of Delaware (without regard to
principles of conflict of law) shall govern the validity of this Agreement, the
construction of its terms, and the interpretation of the rights and duties of
the Partners.
15.10 Waiver of Action for Partition; No Xxxx For Partnership
Accounting.
Each Partner irrevocably waives any right that it may have to maintain
any action for partition with respect to any of the Property; provided that the
foregoing shall not be construed to apply to any action by a Partner for the
enforcement of its rights under this Agreement. Each Partner waives its right
to seek a court decree of dissolution (other than a dissolution in accordance
with Section 14) or to seek appointment of a court receiver for the Partnership
as now or hereafter permitted under applicable law. To the fullest extent
permitted by law, each Partner covenants that it will not (except with the
consent of the Partnership Board) file a xxxx for Partnership accounting.
15.11 Counterpart Execution.
This Agreement may be executed in any number of counterparts with the
same effect as if all the Partners had signed the same document. All
counterparts shall be construed together and shall constitute one agreement.
15.12 Sole and Absolute Discretion.
Except as otherwise provided in this Agreement, all actions which the
Partnership Board may take and all determinations which the Partnership Board
may make pursuant to this Agreement may be taken and made at the sole and
absolute discretion of the Partnership Board.
15.13 Specific Performance.
Each Partner agrees with the other Partners that the other Partners
would be irreparably damaged if any of the provisions of this Agreement are not
performed in accordance with their specific terms and that monetary damages
would not provide an adequate remedy in such event. Accordingly, in addition
to any other remedy to which the nonbreaching Partners may be entitled, at law
or in equity, the nonbreaching Partners shall be entitled to injunctive relief
to prevent breaches of this Agreement and specifically to enforce the terms and
provisions hereof.
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15.14 Entire Agreement.
The provisions of this Agreement set forth the entire agreement and
understanding between the Partners as to the subject matter hereof and
supersede all prior agreements, oral or written, and other communications
between the Partners relating to the subject matter hereof.
15.15 Limitation on Rights of Others.
Nothing in this Agreement, whether express or implied, shall be
construed to give any Person other than the Partners any legal or equitable
right, remedy or claim under or in respect of this Agreement.
15.16 Waivers; Remedies.
The observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively) by the party or parties entitled to enforce such term, but any
such waiver shall be effective only if in a writing signed by the party or
parties against which such waiver is to be asserted. Except as otherwise
provided herein, no failure or delay of any Partner in exercising any power or
right under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.
15.17 Jurisdiction; Consent to Service of Process.
(a) Each Partner hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court sitting in the County of New York or any Federal court of
the United States of America sitting in the Southern District of New York, and
any appellate court from any such court, in any suit, action or proceeding
arising out of or relating to the Partnership or this Agreement, or for
recognition or enforcement of any judgment, and each Partner hereby irrevocably
and unconditionally agrees that all claims in respect of any such suit, action
or proceeding may be heard and determined in such New York State court or, to
the extent permitted by law, in such Federal court.
(b) Each Partner hereby irrevocably and unconditionally
waives, to the fullest extent it may legally do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to the Partnership or this Agreement in any New York
State court sitting in the County of New York or any Federal court sitting in
the Southern District of New York. Each Partner hereby irrevocably waives, to
the fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such suit, action or
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proceeding in any such court and further waives the right to object, with
respect to such suit, action or proceeding, that such court does not have
jurisdiction over such Partner.
(c) Each Partner irrevocably consents to service of
process in the manner provided for the giving of notices pursuant to this
Agreement, provided that such service shall be deemed to have been given only
when actually received by such Partner. Nothing in this Agreement shall affect
the right of a party to serve process in any other manner permitted by law.
15.18 Waiver of Jury Trial.
Each Partner waives, to the fullest extent permitted by applicable
law, any right it may have to a trial by jury in respect of any action, suit or
proceeding arising out of or relating to the Partnership or this Agreement.
15.19 No Right of Set-Off.
No Partner shall be entitled to offset against any of its financial
obligations to the Partnership under this Agreement, any obligation owed to it
or any of its Affiliates by any other Partner or any of such other Partner's
Affiliates.
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IN WITNESS WHEREOF, the parties have entered into this Amended and
Restated Agreement of Limited Partnership of MajorCo, L.P. as of the date first
above set forth.
SPRINT SPECTRUM, L.P.
By: US Telecom, Inc.,
Its General Partner
By:
-------------------------------
Title:
---------------------------
TCI NETWORK SERVICES
By: TCI Network, Inc.,
Its General Partner
By:
-------------------------------
Title:
---------------------------
COMCAST TELEPHONY SERVICES
By: Comcast Telephony Services, Inc.,
Its General Partner
By:
-------------------------------
Title:
---------------------------
THIS IS A SIGNATURE PAGE TO THE AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF MAJORCO, L.P.
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COX TELEPHONY PARTNERSHIP
By: Xxx Communications Wireless, Inc.,
Its Managing General Partner
By:
-------------------------------
Title:
---------------------------
THIS IS A SIGNATURE PAGE TO THE AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF MAJORCO, L.P.
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Schedule 1.10(a)
WIRELESS EXCLUSIVE SERVICES; NON-EXCLUSIVE
SERVICES; EXCLUDED BUSINESSES
The scope of the Partnership will be Wireless Exclusive Services,
which, except as contemplated or permitted by Section 6 of the Partnership
Agreement, the Partners and their respective Controlled Affiliates will engage
in solely through the Partnership and its Subsidiaries, and Non-Exclusive
Services, in which both the Partnership and its Subsidiaries and the Partners
and their respective Controlled Affiliates may engage. All references to the
Partnership in this Schedule 1.10(a) shall include the Partnership and its
Subsidiaries.
I. WIRELESS EXCLUSIVE SERVICES
"Wireless Exclusive Services" shall mean all wireless communications
services that use radio spectrum for cellular, PCS, ESMR, paging, mobile
telecommunications and any other voice or data wireless services, whether fixed
or mobile, conducted in the United States of America, including all territories
and possessions thereof except for Puerto Rico, but shall not include the
provision of video wireless services, the provision of satellite or broadband
microwave transmission services, the Non-Exclusive Services and the Excluded
Businesses.
The Wireless Exclusive Services are not restricted by form (e.g.,
analog or digital), method of origination (e.g., voice, data, telemetry, etc.),
or the content transmitted by the customer.
Wireless Exclusive Services will be provided by the Partnership only
within Wireless Local Service Areas except as permitted by Section III.1. of
this Schedule 1.10(a).
II. NON-EXCLUSIVE SERVICES
The following services, to the extent such services relate to or are
provided in connection with Wireless Exclusive Services, are also within the
scope of the Partnership's business but are not subject to the provisions of
Section 6.1 of the Partnership Agreement. Consequently the Partners and their
respective Controlled Affiliates are permitted to provide such services outside
of the Partnership:
1. Incidental services to the other services of the
Partnership including billing services and the
installation, maintenance, repair, sale or lease of
customer premises equipment or customer controlled
equipment.
2. 500 Services.
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3. Meeting services, such as video or other
teleconferencing in which the provider does not
create nor resell the content of such service.
4. Server-based content services customarily provided by
local exchange telephone companies, initially
consisting of directory assistance, operator service,
time, temperature and similar information services
that are voice only and TDD relay. The Partners may
(by Unanimous Vote of the Partnership Board) revise
such list of server-based content services from time
to time to reflect additional services customarily
offered by local exchange telephone companies.
5. Incidental data services to support signaling,
billing and system diagnostics and management for
audio/video connectivity.
6. Incidental audio/video content (e.g., logos, customer
service, sales), as determined by a Unanimous Vote of
the Partnership Board, that are directly related to
the provision of video telephony.
7. Enhanced services such as voice mail, e-mail,
facsimile store and forward.
8. Video telephony enhanced services, such as video
mail, store and forward, and customer service, but
excluding any such enhanced service that is an
Excluded Business (including, without limitation,
under any of clauses 3., 4. or 5. of Section III of
this Schedule 1.10(a)).
9. Construction and lease or sale of telecommunications
facilities to others.
10. The provision of products or services that are
ancillary value-added additions to a Wireless
Exclusive Service and which does not itself require
an FCC license (including, but not limited to,
operator services, location services and weather,
sports and other information services).
III. EXCLUDED BUSINESSES
Notwithstanding anything contained in Section I or II above, each of
the following (each an "Excluded Business") shall be excluded from the scope of
the Partnership's business and the Partnership shall not engage in any of the
Excluded Businesses without a Unanimous Partner Vote:
1. Wireless calls originating in a Wireless Local
Service Area and terminating outside of such Wireless
Local Service Area except:
a. If Wireless calls are generally subject to
Equal Access but the
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Partnership is permitted to provide and
transport Wireless calls on its
interconnected wireless network without
regard to Equal Access boundaries, then the
Partnership may provide and transport such
Wireless calls using its interconnected
wireless network.
b. If Wireless calls are not generally subject
to Equal Access, the Partnership is permitted
to provide such inter-Wireless Local Service
Area call within the boundaries of an
extended calling area offering if the
transport required for the Partnership to
provide the inter-Wireless Local Service Area
portion of the call is provided by Sprint
Parent and its Controlled Affiliates pursuant
to Section 8.4 of the Partnership Agreement
(Preferred Provider); provided, however, to
the extent that Sprint Parent and its
Controlled Affiliates fail to provide to the
Partnership such inter-Wireless Local Service
Area transport pursuant to Section 8.4 of the
Partnership Agreement at a price equal to the
lower of (i) the best unit price at which
comparable transport services are then being
made available by Sprint Parent and its
Controlled Affiliates to unaffiliated third
parties irrespective of volume, or (ii) the
price at which the Partnership could obtain
such transport services from an unaffiliated
third party provider then the Partnership
shall be entitled to obtain such transport
services from an unaffiliated third party
provider on terms no less favorable to the
Partnership than the terms offered to the
Partnership by Sprint Parent and its
Controlled Affiliates. Thus, the parties
intend that if the Partnership has two
Wireless Local Service Areas and calls
between such areas are not subject to Equal
Access, then the Partnership may acquire
interconnection between such areas in
accordance with the preceding sentence (and
thereby provide such inter-Wireless Local
Service Area calls). Consequently the
Partnership could provide an extended calling
area, but the facilities of Sprint Parent
(or, if applicable, such third party
provider) and its Controlled Affiliates would
be used for the transport required for the
Partnership to provide the inter-Wireless
Local Service Area portion of the calls
between the Wireless Local Service Areas.
2. Intentionally omitted.
3. The provision of entertainment and, except to the
limited extent permitted under Non-Exclusive
Services, other content-based services.
4. The provision or transport of wireline services using
unidirectional transmission capacity.
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5. The provision or transport of wireline services using
unequal bidirectional transmission capacity.
6. The self provisioning of transport of intra-Wireless
Local Service Area 75 Mile Plus Calls, whether by
dedicated or switched facilities, unless such
transport can be accomplished at costs less than the
prices available from Sprint under Section 8.4 of the
Partnership Agreement.
IV. DEFINITIONS
As used in this Exhibit:
1. The term "Equal Access" shall mean a requirement
imposed by law or regulation whereby an end user is
granted the right to designate the interexchange
carrier of the end user's choice on a presubscribed
basis for calls traveling outside a local service
area within which the Partnership is not otherwise
obligated to provide the end user with a choice of
interexchange carriers.
2. The term "ESMR" means any commercial mobile radio
service, and the resale of such service, authorized
under the rules for Specialized Mobile Radio services
designated under Subpart S of Part 90 of the FCC's
rules in effect on the date hereof, including the
networking, marketing, distribution, sales, customer
interface and operations functions relating thereto.
3. The term "LATA" means a Local Access and Transport
Area established pursuant to the criteria set forth
in Section 4(g) of the MFJ, as approved in United
States v. Western Electric Company, Inc., et. al, 569
F. Supp. 990 (D.D.C. 1983), and as amended by
subsequent orders, regardless of whether the LATA
boundaries continue to be applied in future
governmental regulation of the wireline
telecommunications industry. In the event of the
cessation of use of LATA boundaries by a
telecommunications governmental regulation or court
order, then the LATA boundaries in effect at the time
of cessation of such use shall be deemed to be the
LATA boundaries for purposes of this Agreement.
4. The term "PCS" means any radio communications service
authorized under the rules for personal
communications services designated as Subpart E of
Part 24 of the FCC's rules in effect on the date
hereof, or any revision thereto or successor thereof
which may be in effect from time to time, including
the network, marketing, distribution, sales, customer
interface and operations functions relating thereto.
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5. The term "Rate Center" means a point within a
geographic area designated by the Partnership as the
Rate Center and shall be used for measuring distances
to and from such geographic area. Each geographic
area shall have one Rate Center. The Rate Center
shall be near the geographic center of the geographic
area.
6. The term "75 Mile Plus Calls" means calls between end
users whose Rate Centers are greater than 75 miles
apart.
7. The term "Wireless" means telecommunications made
through radio spectrum for cellular, PCS, ESMR,
paging and mobile telecommunications.
8. The term "Wireless Local Service Area" shall mean
the following:
a. If Partnership Wireless calls are subject to
Equal Access then the service area in which
calls are not subject to Equal Access, but if
such service area would be smaller than a
LATA, then such Wireless Local Service Area
will be the LATA.
b. If Partnership Wireless calls are not subject
to Equal Access then the service area in
which the Partnership can complete calls on
an interconnected wireless network. The
interconnected wireless network shall consist
of the wireless switches and the dedicated
connections between such switches which the
Partnership may use to complete calls. The
Wireless Local Service Area may be expanded
if the initial Wireless Local Service Areas
place the Partnership at a competitive
disadvantage.
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SCHEDULE 2.1
INITIAL PERCENTAGE INTERESTS
INITIAL
PARTNER PERCENTAGE INTEREST
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Sprint 40%
TCI 30%
Comcast 15%
Cox 15%
