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EXHIBIT 10.2
PARTNERSHIP AGREEMENT OF
COX PIONEER PARTNERSHIP
December 31, 1996
December 13, 1996
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PARTNERSHIP AGREEMENT OF
COX PIONEER PARTNERSHIP
TABLE OF CONTENTS
SECTION 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
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SECTION 2 THE PARTNERSHIP AND ITS BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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2.1 Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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2.2 Partnership Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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2.3 Term of the Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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2.4 Purposes of the Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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2.5 Authority of the Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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2.6 Principal Office and Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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2.7 Foreign Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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2.8 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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SECTION 3 PARTNERSHIP CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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3.1 Capital Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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3.2 Loans by Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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3.3 Disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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3.4 Withdrawal of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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SECTION 4 MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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4.1 Management Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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4.2 Meetings of the Management Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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4.3 Power and Authority of the Management Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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4.4 Rights, Powers, and Duties of the Managing Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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4.5 Limitations on Authority of the Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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4.6 Authority, Responsibilities, and Fiduciary Obligations of the Partners. . . . . . . . . . . . . . . . . . . 16
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4.7 Compensation of Managing Partner and Reimbursement of Expenses . . . . . . . . . . . . . . . . . . . . . . 17
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4.8 Tax Matters Partner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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4.9 Permitted Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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4.10 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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SECTION 5 CASH DISTRIBUTIONS; ALLOCATIONS OF PROFITS AND LOSSES 19
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5.1 Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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5.2 Allocations of Net Profit and Net Loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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5.3 Special Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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5.4 Curative Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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5.5 Special Allocations Relating to Certain Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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5.6 Other Allocation Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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5.7 Section 704(c) Allocations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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SECTION 6 ASSIGNMENT, TRANSFER, OR SALE OF INTERESTS IN PARTNERSHIP . . . . . . . . . . . . . . . . . . . 23
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6.1 Transfer of the Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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6.2 Withdrawal of Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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6.3 Admission of Additional Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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SECTION 7 DISSOLUTION AND TERMINATION OF THE PARTNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . 23
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7.1 Events of Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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7.2 Actions on Dissolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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SECTION 8 BOOKS, RECORDS, AND RETURNS; TAX YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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8.1 Books of Account and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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8.2 Accounting Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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8.3 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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8.4 Deposit of Partnership Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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SECTION 9 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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9.1 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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9.2 Pronouns, Singular and Plural Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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9.3 Further Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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9.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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9.5 Agreement Binding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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9.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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9.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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9.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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9.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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9.10 No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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PARTNERSHIP AGREEMENT OF
COX PIONEER PARTNERSHIP
This PARTNERSHIP AGREEMENT of Cox Pioneer Partnership is entered into
as of December 31, 1996, by and between Xxx Communications Pioneer, Inc., a
Delaware corporation ("CCI Pioneer"), and CEI Pioneer, Inc., a Delaware
corporation ("CEI Pioneer").
RECITAL
The Partners desire to enter into this Agreement to provide for the
formation and organization of a general partnership to be known as "Cox Pioneer
Partnership," the allocation of profits and losses, cash flow, and other
proceeds of the Partnership between the Partners, the respective rights,
obligations, and interests of the Partners to each other and to the
Partnership, and certain other matters.
AGREEMENT
In consideration of the foregoing and of the mutual covenants and
agreements set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be bound legally, agree as follows:
SECTION 1 DEFINITIONS.
The following terms, as used in this Agreement, shall have the
meanings set forth in this Section:
"Act" means the Uniform Partnership Law of the State of Delaware.
"Agreement" means this Partnership Agreement, as it may be amended,
restated, modified, or supplemented from time to time in accordance with its
terms.
"Capital Account" means an account to be maintained for each Partner
in accordance with the Code, which, subject to any contrary requirements of the
Code, shall equal the sum of (i) the amount of money contributed by such
Partner to the Partnership, if any; (ii) the fair market value without regard
to Code Section 7701(g) of property, if any, contributed by such Partner to the
Partnership (net of liabilities that are secured by such contributed property
or that the Partnership or the other Partner is considered to assume or take
subject to under Code Section 752); (iii) allocations to the Partner of Net
Profit pursuant to Section 5; and (iv) other additions made in accordance with
the Code; decreased by (i) the amount of cash distributed to such Partner by
the Partnership; (ii) allocations to the Partner of Net Loss pursuant to
Section 5; (iii) the fair market value without regard to Code Section 7701(g)
of property distributed to such Partner by the Partnership (net of liabilities
that are secured by such distributed property or that such Partner is
considered to assume or take subject to under Code Section 752); and (iv) other
deductions made in accordance with the Code. The Partners' respective Capital
Accounts shall
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be determined and maintained at all times in accordance with all the provisions
of Treasury Regulation Section 1.704-1(b)(2)(iv).
"Capital Contribution" means, for each Partner, the amount of money,
and the fair market value of any other property (net of liabilities assumed or
taken subject to by the Partnership), contributed by such Partner to the
Partnership pursuant to this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any subsequent federal law of similar import, and, to the extent
applicable, the Treasury Regulations.
"Depreciation" means, for each fiscal period, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable with
respect to an asset for such fiscal period, 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 fiscal period, Depreciation shall be
determined in the manner described in Regulations Section
1.704-1(b)(2)(iv)(g)(3) or Regulations Section 1.704-3(d)(2), whichever is
applicable.
"FCC" means the Federal Communications Commission.
"Fiscal Year" means the Partnership's fiscal year.
"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 agreed to by the Partners;
(ii) The Gross Asset Values of all Partnership assets shall
be adjusted to equal their respective gross fair market values, as agreed to by
the Partners, as of the following times: (a) the acquisition of an additional
interest in the Partnership by either Partner in exchange for more than a de
minimis Capital Contribution; (b) the distribution by the Partnership to either
Partner of more than a de minimis amount of Partnership property as
consideration for an interest in the Partnership; and (c) the liquidation of
the Partnership within the meaning of Treasury Regulation Section
1.704-1(b)(2)(ii)(g); provided, however, that adjustments pursuant to clauses
(a) and (b) above shall be made only if the Managing Partner determines that
such adjustments are necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership;
(iii) The Gross Asset Value of any Partnership asset
distributed to either Partner shall be the gross fair market value of such
asset on the date of distribution, as agreed to by the Partners; and
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(iv) The Gross Asset Value 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 Treasury Regulation Section 1.704-1(b)(2)(iv)(m) and
Section 5.3(e); provided, however, that Gross Asset Value shall not be adjusted
pursuant to this paragraph (iv) to the extent that an adjustment was made
pursuant to paragraph (ii) of this definition in connection with a transaction
that would otherwise have resulted in an adjustment pursuant to this paragraph
(iv).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to paragraph (i), (ii), or (iv) of this definition, the Gross Asset
Value of such asset shall thereafter be adjusted by the Depreciation taken into
account with respect to such asset for purposes of computing Net Profit and Net
Loss.
"License Contribution Date" means the date on which the PCS License is
to be contributed to the Partnership pursuant to Section 2.2(a) of the
PioneerCo Agreement.
"Management Committee" means the committee appointed in accordance
with the provisions of Section 4.1 hereof.
"Managing Partner" means the Managing Partner designated pursuant to
Section 4.4(a).
"Net Profit and Net Loss" means, for each Fiscal Year or other period,
an amount equal to the Partnership's taxable income or loss for such Fiscal
Year or other period, 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:
(i) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Net Profit or Net
Loss shall be added to such taxable income or loss;
(ii) Code Section 705(a)(2)(B) expenditures of the
Partnership, which are not otherwise taken into account in computing Net Profit
or Net Loss, shall be subtracted from such taxable income or loss;
(iii) If the Gross Asset Value of any Partnership asset is
adjusted pursuant to paragraph (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 Net Profit or
Net Loss;
(iv) Gain or loss resulting from any disposition of
Partnership property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed
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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 Fiscal Year or
other period;
(vi) To the extent an adjustment to the adjusted tax basis of
any Partnership asset pursuant to Code Section 734(b) or 743(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 in the Partnership, the amount of
such adjustment to the 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) from the disposition of the asset, and such gain or loss
shall be taken into account for purposes of computing Net Profit and Net Loss;
(vii) Notwithstanding anything to the contrary in the
definition of the terms "Net Profit" and "Net Loss," any items that are
specially allocated pursuant to Section 5.3, Section 5.4, Section 5.5, Section
5.6, or Section 5.7 of this Agreement shall not be taken into account in
computing Net Profit or Net Loss; and
(viii) For purposes of this Agreement, any deduction for a
loss on a sale or exchange of Partnership property that is disallowed to the
Partnership under Code Section 267(a)(1) or 707(b) shall be treated as a Code
Section 705(a)(2)(B) expenditure.
"Nonrecourse Deductions" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(i). The amount of Nonrecourse Deductions shall
be determined pursuant to Treasury Regulation Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Treasury
Regulation Sections 1.704-2(b)(3) and 1.752-1(a)(2).
"Partner" means each of the signatories hereto in their respective
capacities as partners of the Partnership.
"Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Treasury Regulation Section 1.704-2(i)(2). The amount of Partner Nonrecourse
Debt Minimum Gain shall be determined in accordance with Treasury Regulation
Section 1.704-2(i)(3).
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"Partner Nonrecourse Deductions" has the meaning set forth in Treasury
Regulation Sections 1.704-2(i)(1) and 1.704-2(i)(2). The amount of Nonrecourse
Deductions shall be determined pursuant to Treasury Regulation Section
1.704-2(i)(2).
"Partnership" means the partnership created by the Partners pursuant
to this Agreement.
"Partnership Minimum Gain" has the meaning set forth in Treasury
Regulation Sections 1.704-2(b)(2) and 1.704-2(d). The amount of Partnership
Minimum Gain shall be determined in accordance with Treasury Regulation Section
1.704-2(d).
"PCS License" means the 00 XXx "X" xxxxx broadband PCS license for the
Los Angeles-San Diego MTA that is held by Xxx Communications, Inc. on the date
of this Agreement.
"Percentage Interest" means, with respect to CCI Pioneer, a fraction,
expressed as a percentage, equal to 40/51, and, with respect to CEI Pioneer, a
fraction, expressed as a percentage, equal to 11/51.
"Person" means an individual, corporation, association, partnership,
joint venture, trust, estate, limited liability company, limited liability
partnership, or other entity or organization.
"PioneerCo" means Xxx Communications PCS, L.P., a limited partnership
to be formed by the Partnership and Sprint Spectrum Holding Company, L.P., for
the purpose of owning and operating a personal communications system in the Los
Angeles-San Diego MTA using the PCS License.
"PioneerCo Agreement" means the Agreement of Limited Partnership of
PioneerCo, to be entered into by the Partnership and Sprint Spectrum Holding
Company, L.P. (formerly known as MajorCo, L.P.), as it may be amended from time
to time.
"Regulatory Allocations" is defined in Section 5.4.
"Subsidiary" means, with reference to the Partnership, any Person
controlled directly or indirectly by the Partnership and, with reference to any
other Person, any Person that is a "Subsidiary" of such Person for purposes of
the PioneerCo Agreement.
"System Assets" means all tangible and intangible assets owned by any
of Cox California PCS, Inc., PCS Leasing Co., Inc., Xxx Communications, Inc.,
or any other Subsidiary of Xxx Communications, Inc. that are held for use in
the development of a PCS system in the Los Angeles MTA under the PCS License,
including any technology rights and the other assets to be identified on
Schedule 1.10 to the PioneerCo Agreement, but excluding the PCS License.
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"Treasury Regulations" means the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
SECTION 2 THE PARTNERSHIP AND ITS BUSINESS.
2.1 Formation. The Partners hereby form the Partnership as a general
partnership pursuant to the provisions of the Act. Except as provided in this
Agreement, all rights, liabilities, and obligations of the Partners, both as
between themselves and with respect to Persons not parties to this Agreement,
shall be as provided in the Act, and this Agreement shall be construed in
accordance with the provisions of the Act. To the extent that the rights or
obligations of either Partner are different by reason of any provision of this
Agreement than they would be in the absence of such provision, this Agreement
shall, to the extent permitted by the Act, control.
2.2 Partnership Name. The name of the Partnership shall be "Cox
Pioneer Partnership." The business of the Partnership may be conducted under
that name or, upon compliance with applicable laws, any other name that the
Management Committee deems appropriate or advisable. The Managing Partner
shall file any assumed name certificates and similar filings, and any
amendments thereto, that it considers appropriate or advisable.
2.3 Term of the Partnership. The term of the Partnership shall
commence on the date of this Agreement and shall continue until December 31,
2046 or until earlier terminated in accordance with Section 7.
2.4 Purposes of the Partnership. The purposes of the Partnership
shall be (a) to acquire an equity interest in PioneerCo and to be a general
partner, a limited partner, or both a general partner and a limited partner in
PioneerCo, as provided in the PioneerCo Agreement; (b) to acquire, own, and
dispose of interests in PioneerCo and to exercise all rights and powers
incident thereto; (c) to engage in the business, through PioneerCo, of
acquiring, owning, constructing, maintaining, operating, promoting, selling,
disposing, and otherwise developing a personal communications system in the Los
Angeles-San Diego MTA using the PCS License; (d) to acquire an equity interest
in Sprint Spectrum Holding Company, L.P., a Delaware limited partnership (or in
any successor-in-interest to Sprint Spectrum Holding Company, L.P.), upon the
disposition by the Partnership of its interest in PioneerCo as contemplated by
Section 13.6 of the PioneerCo Agreement, and to exercise all rights and powers
incident thereto; and (e) to do any other lawful things necessary, appropriate,
or advisable in connection with those activities.
2.5 Authority of the Partnership. The Partnership shall be empowered
and authorized to do all lawful acts and things necessary, appropriate, proper,
advisable, incidental to, or convenient for the furtherance and accomplishment
of its purposes. In particular, the Partnership shall be empowered and
authorized, for itself or on behalf of any Subsidiary of the Partnership:
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(a) to construct, operate, maintain, improve, expand, buy,
own, sell, convey, assign, mortgage, refinance, rent, or lease real or personal
property, which may be held in the name of the Partnership or any Subsidiary of
the Partnership, in the name of the Managing Partner as nominee or trustee for
the beneficial owner of the property, or in any other manner that the Management
Committee deems to be in the best interests of the Partnership or any Subsidiary
of the Partnership, so long as all such property is properly reflected on the
books of the Partnership and any Subsidiary of the Partnership;
(b) to enter into, perform, and carry out contracts and
agreements of any kind necessary to, in connection with, or incidental to
accomplishing the purposes of the Partnership;
(c) to borrow money and issue evidences of indebtedness in
furtherance of the purposes of the Partnership and to secure any such
indebtedness by mortgage, security interest, or other lien;
(d) to maintain and operate the assets of the Partnership and
any Subsidiary of the Partnership;
(e) to negotiate for and conclude agreements for the sale,
exchange, or other disposition of any property of the Partnership or of any
Subsidiary of the Partnership, or for the purchase or lease of additional
property of the Partnership or any Subsidiary of the Partnership;
(f) to hire and compensate employees, agents, independent
contractors, attorneys, and accountants; and
(g) to bring and defend actions in law and equity.
2.6 Principal Office and Other Offices. The principal office of the
Partnership shall be located at 0000 Xxxx Xxxxx Xxxxx, X.X., Xxxxxxx, Xxxxxxx
00000. The Partnership may maintain any other offices at any other places that
the Management Committee deems advisable. The Partnership may, upon compliance
with the applicable provisions of the Act, change its principal office from
time to time in the discretion of the Management Committee.
2.7 Foreign Qualification. The Managing Partner shall take all
necessary actions to cause the Partnership to be authorized to conduct business
legally in all appropriate jurisdictions.
2.8 Fiscal Year. The Fiscal Year of the Partnership shall be the
calendar year. The Partnership shall have the same Fiscal Year for income tax
purposes and for financial and partnership accounting purposes.
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SECTION 3 PARTNERSHIP CAPITAL.
3.1 Capital Contributions.
(a) Contribution of PCS License.
(i) CCI Pioneer agrees to contribute to the
Partnership, on the License Contribution Date, an undivided fractional interest
in the PCS License equal to $404,883,238 divided by $422,530,297. Concurrently
with the contribution required to be made by CCI Pioneer pursuant to this
Section 3.1(a)(i), CCI Pioneer, as Managing Partner of the Partnership, shall
cause the Partnership to contribute to PioneerCo the undivided fractional
interest in the PCS License that is contributed to it by CCI Pioneer.
(ii) The Partners agree that (A) the gross fair
market value of the PCS License equals $422,530,297, (B) the fair market value
of the Capital Contribution to be made by CCI Pioneer pursuant to Section
3.1(a)(i) equals $404,883,238 less the total payment obligations assumed by the
Partnership pursuant to Section 3.1(e) (other than any payment obligation
representing interest on any payments that are permitted to be deferred by the
FCC), and (C) the fair market value and the initial Gross Asset Value of the
undivided fractional interest in the PCS License that is contributed by CCI
Pioneer pursuant to Section 3.1(a)(i) equals $404,883,238.
(b) System Assets and Interim Funding Loans.
(i) If PioneerCo assumes the FCC Payment Obligations
(as defined in the PioneerCo Agreement) pursuant to Section 2.2(a)(iv) of the
PioneerCo Agreement and the License Contribution Date precedes a purchase and
sale of the System Assets pursuant to the System Assets Sales Agreement (as
defined in the PioneerCo Agreement), then, on the License Contribution Date,
CCI Pioneer shall contribute to the Partnership the System Assets.
Concurrently with the contribution required to be made by CCI Pioneer pursuant
to this Section 3.1(b)(i), CCI Pioneer, as Managing Partner of the Partnership,
shall cause the Partnership to contribute the System Assets to PioneerCo. The
Partners agree that the gross fair market value and the aggregate initial Gross
Asset Value of the System Assets shall be determined as provided in the
PioneerCo Agreement.
(ii) If PioneerCo assumes the FCC Payment
Obligations (as defined in the PioneerCo Agreement) pursuant to Section
2.2(a)(iv) of the PioneerCo Agreement, then CCI Pioneer shall acquire and shall
contribute to the Partnership on the License Contribution Date all rights of
each Interim Lender (as defined in the PioneerCo Agreement) as of the License
Contribution Date to any payment of principal or interest with respect to the
Interim Funding Loans (as defined in the PioneerCo Agreement), other than
Interim Funding Loans required to be repaid pursuant to Section 2.9(c) of the
PioneerCo Agreement. A contribution of Interim Funding Loans pursuant to this
Section 3.1(b)(ii) shall be deemed to be a contribution of money
- 8 - December 13, 1996
12
in an amount equal to the outstanding principal amount and accrued unpaid
interest with respect to such Interim Funding Loans on the date of their
contribution to the Partnership.
(c) Required Cash Contributions and Interest Payments.
(i) The Partners agree to make additional cash
Capital Contributions for the purpose of (A) funding the obligations of the
Partnership to satisfy the payment obligations to the FCC that are assumed by
the Partnership pursuant to Section 3.1(e), and (B) to make capital
contributions to PioneerCo in accordance with the PioneerCo Agreement, in each
case in the respective amounts determined under Section 3.1(c)(ii), at any time
and from time to time upon written notice from the Managing Partner. The
Managing Partner's notice shall:
(A) specify the respective amounts of the
Capital Contributions to be made by the Partners, which shall be determined
under Section 3.1(c)(ii); and
(B) specify a date (not fewer than five
business days following the delivery of the notice to the Partners) on which
the Capital Contributions shall be made.
(ii) The respective amounts of the Capital
Contributions to be made by the Partners shall be determined in accordance with
the following provisions:
(A) All Capital Contributions pursuant to
this Section 3.1(c) shall be made by CEI Pioneer until the aggregate amount of
Capital Contributions made by CEI Pioneer pursuant to this Section 3.1(c)
equals 11/40 of the sum of (1) the fair market value of the undivided
fractional interest in the PCS License contributed by CCI Pioneer pursuant to
Section 3.1(a)(i) (as determined pursuant to Section 3.1(a)(ii)) plus (2) the
aggregate initial Gross Asset Value of any System Assets contributed pursuant
to Section 3.1(b)(i) plus (3) the outstanding principal amount and accrued
unpaid interest with respect to any Interim Funding Loans that are contributed
to the Partnership pursuant to Section 3.1(b)(ii), determined as of the date of
their contribution to the Partnership.
(B) After CEI Pioneer has made all Capital
Contributions required to be made by it pursuant to Section 3.1(c)(ii)(A), all
additional Capital Contributions pursuant to this Section 3.1(c) shall be made
by CCI Pioneer and CEI Pioneer in proportion to their respective Percentage
Interests.
(iii) CEI Pioneer agrees to pay to the Partnership,
concurrently with any Capital Contribution by CEI Pioneer pursuant to Section
3.1(c)(ii)(A), interest on the amount of such Capital Contribution, computed at
the rate of 7.25%, compounded quarterly, from the later of (A) the first date
on which interest began to accrue on the obligation of Xxx Communications, Inc.
to pay the FCC for the PCS License or (B) March 1, 1996, until the date such
Capital Contribution is made. Except as otherwise required under the Code or
applicable Treasury Regulations, any interest payment pursuant to this Section
3.1(c)(iii) shall not constitute a Capital Contribution for purposes of this
Agreement. For purposes of this Section 3.1(c)(iii),
- 9 - December 13, 1996
13
the first date on which interest began to accrue on the obligation of Xxx
Communications, Inc. to pay the FCC for the PCS License shall be determined
from the amount of interest ultimately assessed against Xxx Communications,
Inc. and required to be paid to the FCC regardless of the date specified for
the commencement of such accrual in any FCC order.
(d) Additional Capital Contributions. Except as provided
above, there shall be no assessments for additional Capital Contributions by
the Partners to the Partnership, and neither Partner shall be required to make
any Capital Contributions to the Partnership in addition to the Capital
Contributions to be made by it pursuant to Section 3.1(a), Section 3.1(b)(i),
Section 3.1(b)(ii), and Section 3.1(c).
(e) Assumption of Liabilities. Upon the contribution by CCI
Pioneer of an undivided fractional interest in the PCS License pursuant to
Section 3.1(a)(i), the Partnership shall assume, and shall undertake to pay,
satisfy and discharge, all payment obligations of Xxx Communications, Inc. to
the FCC that were imposed as a condition to the issuance of the PCS License to
Xxx Communications, Inc. (including any obligation to pay interest on any
payments that are permitted to be deferred by the FCC).
(f) Manner of Effecting Contributions. All Capital
Contributions pursuant to this Agreement shall be made in a manner that
conforms with the provisions of the PioneerCo Agreement, which contemplates,
among other things, a direct conveyance to PioneerCo by Xxx Communications,
Inc. of the PCS License.
3.2 Loans by Partners. Either Partner may lend funds to the
Partnership on terms and conditions agreed to by the Management Committee and
the lending Partner. Except as otherwise provided in this Agreement or as
agreed to by the Partners, any advance of funds to the Partnership by a Partner
shall be treated as a loan and not as a Capital Contribution.
3.3 Disbursements. The Partnership shall pay all costs and expenses
of the Partnership business, including financing costs and related expenses,
investment expenses, real estate taxes and other carrying charges, stamp taxes,
stock taxes, all costs of construction of improvements on Partnership property
or leaseholds, management, leasing, and loan placement fees, and operating
expenses, and including all reasonable costs and expenses incurred by or on
behalf of the Partnership by the Partners. The Partnership may set aside funds
for any items that are proper Partnership purposes, including operating
expenses, debt service, capital improvements, replacements, repairs,
amortization, other capital requirements, and liabilities, contingent or
otherwise, of the Partnership or any Subsidiary of the Partnership, in each
case as determined by the Management Committee.
3.4 Withdrawal of Contributions. Neither Partner shall have the
right to withdraw from the Partnership or to demand a return of any part of its
Capital Contribution during the term of the Partnership, and any return of the
Capital Contribution of either Partner shall be made solely from the assets of
the Partnership and only in accordance with the terms of this Agreement. No
interest shall be paid to either Partner with respect to its Capital
Contribution to the Partnership.
- 10 - December 13, 1996
14
The Partners expressly acknowledge that certain provisions of this Agreement
that may preclude a Partner from realizing appreciation in the value of
Partnership assets are essential to protect the Partners' mutual interests in
the Partnership assets; accordingly, the Partners hereby waive any right they
otherwise would have to seek a partition or judicial liquidation of the
Partnership or any comparable action.
SECTION 4 MANAGEMENT.
4.1 Management Committee.
(a) The Partners, together, shall be responsible for the
management and operations of the Partnership and shall have all powers
necessary to manage and control the Partnership and to conduct its business and
all powers possessed by general partners under the Act. The Partnership shall
be managed by the Partners jointly through a Management Committee and, except
as expressly provided for in this Agreement, each Partner agrees not to
exercise individually any of the powers described in the preceding sentence
other than at the direction of or pursuant to authority delegated to it by the
Management Committee. The Management Committee shall consist of four members.
Each Partner shall be entitled to designate two members of the Management
Committee. Each Partner shall be entitled to designate one or more alternates
to each member of the Management Committee designated by it.
(b) Each member of the Management Committee shall be entitled
to one vote with respect to all matters that come before the Management
Committee. All actions of the Management Committee shall require the
affirmative vote at a meeting of a majority of the total number of members of
the Management Committee or, if the Management Committee is acting without a
meeting, the unanimous written consent of the members of the Management
Committee.
(c) Each Partner shall have the right, exercisable upon
written notice to the other Partner, to remove any member of the Management
Committee (or any alternate) designated by such Partner pursuant to this
Section 4.1. A Partner that removes a member of the Management Committee shall
promptly designate a successor member by giving notice of such designation to
the other Partner. If, as a result of death, disability, retirement,
resignation, or removal there exists any vacancy on the Management Committee,
the Partner entitled to designate the person whose, death, disability,
retirement, resignation, or removal resulted in such vacancy shall designate
another individual to fill such capacity and to serve as a member of the
Management Committee.
(d) Each Partner agrees that each member of the Management
Committee designated by such Partner shall have the authority to execute any
document and take any other action on behalf of such Partner pursuant to the
terms of this Agreement. Any action taken, and any document executed, by a
member of the Management Committee designated by a Partner shall be binding
upon such Partner, and neither the Partnership nor the other Partner shall be
- 11 - December 13, 1996
15
obligated to inquire as to the authority of a member of the Management
Committee to take any action or execute any document on behalf of the
designating Partner.
4.2 Meetings of the Management Committee.
(a) Meetings of the Management Committee shall be held from
time to time at the request of either Partner, at a time (within ten business
days after the request therefor) and place determined by the Managing Partner.
The Managing Partner shall give each Partner at least five business days notice
of the time and place of any meeting of the Management Committee. Attendance
of a member designated by a Partner at a meeting of the Management Committee
shall constitute waiver of notice of such meeting by the designating Partner,
unless such Partner objects in writing at or prior to such meeting.
(b) The Management Committee may take any action without a
meeting if a written consent to such action is signed by each member of the
Management Committee and such written consent is filed with the records of the
Partnership. The members of the Management Committee may participate in a
meeting by means of conference telephone or similar communications equipment by
means of which all members participating in the meeting can hear each other,
and participation in such a meeting shall constitute presence in person by any
such member at such meeting.
(c) Minutes of each meeting of the Management Committee shall
be prepared by the Managing Partner and circulated to the Partners.
4.3 Power and Authority of the Management Committee. The Management
Committee shall have full and complete charge of the day-to-day affairs of the
Partnership and the management and control of the Partnership's business.
Notwithstanding the foregoing, except as otherwise provided in this Agreement,
the Management Committee may delegate all or any portion of the management of
the day-to-day affairs of the Partnership and its business to the Managing
Partner, to any other Person selected by the Management Committee, and to the
employees of the Partnership (or any Subsidiary of the Partnership).
4.4 Rights, Powers, and Duties of the Managing Partner.
(a) Designation and Removal. CCI Pioneer shall be the
Managing Partner until it resigns as Managing Partner or is removed as Managing
Partner pursuant to this Agreement. CCI Pioneer may be removed as Managing
Partner, at the election of CEI Pioneer, if CCI Pioneer has engaged in willful
misconduct, recklessness, or negligence in exercising the duties,
responsibilities, powers, and authority assigned to it by this Agreement or
delegated to it by the Management Committee. If CCI Pioneer resigns as
Managing Partner or is removed as Managing Partner pursuant to this Agreement,
CEI Pioneer shall be the Managing Partner.
(b) Powers in General. The Managing Partner shall have the
powers and authority assigned to it in this Agreement and any additional powers
and authority that may be
- 12 - December 13, 1996
16
delegated to it from time to time by the Management Committee. The Managing
Partner shall act at all times in accordance with the decisions and directions
of the Management Committee. Except as otherwise provided in this Agreement,
and subject to any limitations that may be imposed by the Management Committee,
the Managing Partner shall have the power to bind the Partnership through the
exercise of the powers granted to it hereunder or delegated to it by the
Management Committee, to the extent consistent with the terms of this
Agreement, and shall have the power, on behalf of the Partnership or any
Subsidiary of the Partnership (without regard to the term of the Partnership),
to:
(i) acquire by purchase, lease, or otherwise any
real or personal property;
(ii) operate, maintain, finance, improve, construct,
own, grant options with respect to, sell, convey, assign, mortgage, and lease
real and personal property;
(iii) sell or exchange all or any part of the
property and assets of the Partnership for property, cash, or on terms, or any
combination thereof;
(iv) execute and modify leases and other agreements
(including leases and agreements for terms extending beyond the term of the
Partnership or of any Subsidiary of the Partnership), and execute and modify
options, licenses, or agreements with respect to any of the assets or the
business of the Partnership;
(v) obtain loans for the Partnership and secure the
same by mortgaging, assigning for security purposes, pledging, or otherwise
hypothecating all or any part of the property and assets of the Partnership
(and in connection therewith to place record title to any such property or
assets in the name or names of a nominee or nominees);
(vi) prepay in whole or in part, refinance, recast,
increase, decrease, modify, amend, restate, or extend any such mortgage,
security assignment, pledge, or other security instrument, and in connection
therewith to execute and deliver, for and on behalf of the Partnership, any
extensions, renewals, or modifications thereof, any new mortgage, security
assignment, pledge, or other security instrument in lieu thereof;
(vii) draw, make, accept, endorse, sign, and deliver
any notes, drafts, or other negotiable instruments or commercial paper;
(viii) establish, maintain, and draw upon checking,
savings, and other accounts in the name of the Partnership or any Subsidiary of
the Partnership in such banks or other financial institutions as the Managing
Partner may from time to time select;
(ix) employ, fix the compensation of, oversee, and
discharge agents and employees of the Partnership and of any Subsidiary of the
Partnership as the Managing Partner shall deem advisable in the operation and
management of the business of the Partnership,
- 13 - December 13, 1996
17
including but not limited to such accountants, attorneys, architects,
consultants, engineers, and appraisers, on such terms and for such
compensation, as the Managing Partner shall determine;
(x) compromise any claim or liability due to the
Partnership;
(xi) execute, acknowledge, verify, and file any and
all certificates, documents, and instruments that the Managing Partner
considers necessary or desirable to permit the Partnership to conduct business
in any state in which the Managing Partner deems advisable; and
(xii) do any or all of the foregoing, discretionary
or otherwise, through agents selected by the Managing Partner and compensated
or uncompensated by the Partnership.
(c) Duties of the Managing Partner. The Managing Partner
shall have the duties and responsibilities assigned to it in this Agreement and
any additional duties and responsibilities that may be assigned to it from time
to time by the Management Committee. The Managing Partner, on behalf of and at
the expense of the Partnership, shall perform duties as follows:
(i) take all steps and do all things within its
powers that are reasonable and necessary in connection with the management and
operations of the Partnership;
(ii) promote the success of the business of the
Partnership;
(iii) file and publish all certificates, statements,
and instruments, and all amendments thereto, that are required by law for the
formation, continuation, and operation of the Partnership and for the
qualification of the Partnership to do business in any other jurisdiction;
(iv) pay any uncontested taxes, charges, and
assessments that are levied, assessed, or imposed upon the Partnership or its
property, as they become due;
(v) discharge in good faith the duties and
obligations of the Partnership under any agreement, contract, or other document
to which it is a party;
(vi) maintain complete and accurate books of account
of the Partnership's affairs and all other records required to be maintained by
the Partnership at the Partnership's principal office;
(vii) inform the other Partner concerning the
operations of the Partnership; and
(viii) retain the services of accountants or legal
counsel as required for the Partnership.
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18
(d) Third Parties. No Person dealing with the Managing
Partner shall be required to inquire into the necessity or expediency of any
act taken by the Managing Partner or be obligated or privileged to inquire into
the authority of the Managing Partner to perform any such act. Every contract,
agreement, or other instrument executed by the Managing Partner shall be
conclusive evidence in favor of any Person relying thereon or claiming
thereunder that (i) the Partnership was in existence at the time of the
execution and delivery thereof, (ii) such instrument was duly executed in
accordance with the terms and provisions of this Agreement and is binding upon
the Partnership, and (iii) the Managing Partner was duly authorized and
empowered to execute and deliver such instrument in the name and on behalf of
the Partnership.
4.5 Limitations on Authority of the Partners. Notwithstanding any
other provision of this Agreement, neither Partner shall have any authority to
cause the Partnership do any of the following, except with the prior approval
of the Management Committee:
(a) sell or otherwise dispose of, or agree to sell or
otherwise dispose of, (i) any assets of the Partnership or any Subsidiary of
the Partnership other than in the ordinary course of business of the
Partnership or any Subsidiary of the Partnership or (ii) all or substantially
all the assets of the Partnership (except, in either case, in a liquidating
sale upon dissolution of the Partnership in accordance with this Agreement and
except, in either case, for the disposition of the Partnership's interest in
PioneerCo to Sprint Spectrum Holding Company, L.P., a Delaware limited
partnership (or to any successor-in-interest to Sprint Spectrum Holding
Company, L.P.), in exchange for an equity interest therein as contemplated by
Section 13.6 of the PioneerCo Agreement, or do any other act that would make it
impossible to carry on the business of the Partnership except upon the
dissolution of the Partnership in accordance with this Agreement;
(b) merge or consolidate with any other Person;
(c) confess a judgment against the Partnership, or make,
execute, or deliver any assignment for the benefit of creditors;
(d) possess Partnership property, or assign any rights in
specific Partnership property, for other than a Partnership purpose, or
otherwise use any funds or assets of the Partnership other than for the benefit
of the Partnership;
(e) for so long as the Partnership is the Managing Partner of
PioneerCo, adopt any Budget or Business Plan for PioneerCo (or any amendment to
any Budget or Business Plan for PioneerCo) pursuant to Section 5.2(b) of the
PioneerCo Agreement or submit to the Non-Managing Partner of PioneerCo any
Proposed Budget, Proposed Business Plan, or Proposed Change pursuant to Section
5.2(c) of the PioneerCo Agreement;
(f) establish any business, strategic, or financial plan for
the Partnership or approve any annual budget for the Partnership;
- 15 - December 13, 1996
19
(g) cause or permit PioneerCo to take any action that, under
the terms of the PioneerCo Agreement, requires the consent or approval of any
limited partner of PioneerCo; or
(h) amend the PioneerCo Agreement in any material respect or
waive any material right of the Partnership under the PioneerCo Agreement.
4.6 Authority, Responsibilities, and Fiduciary Obligations of the
Partners.
(a) Scope of Partners' Authority. Neither Partner shall have
any authority to execute any contract or other agreement, application, or other
document on behalf of the Partnership or any Subsidiary of the Partnership, or
otherwise to act for, or assume any obligation or responsibility on behalf of,
the Partnership or any Subsidiary of the Partnership, unless such action has
been approved by the Management Committee in accordance with this Section 4 or
responsibility for such action has been delegated to such Partner by the
Management Committee in accordance with this Section 4. Each Partner shall
have authority to execute such contracts or other agreements, applications, or
other documents on behalf of the Partnership, or otherwise to act for, or
assume any obligation or responsibility on behalf of, the Partnership, if such
action has been approved by the Management Committee in accordance with this
Section 4 or responsibility for such action has been delegated to such Partner
by the Management Committee in accordance with this Section 4.
(b) Responsibilities and Fiduciary Obligations of the
Partners.
(i) Conduct of Partnership Business. Each Partner
shall be required to devote to the conduct of the business of the Partnership
only as much time and attention as it deems necessary to accomplish the
purposes and to conduct properly the business of the Partnership. The Partners
agree that day-to-day operation, management, and supervision of the assets and
business of the Partnership may be delegated by the Management Committee to the
Managing Partner, to other Persons selected by the Management Committee, and to
the employees of the Partnership (or any Subsidiary of the Partnership), and by
the Managing Partner to other Persons selected by the Managing Partner and to
the employees of the Partnership (or any Subsidiary of the Partnership).
(ii) Fiduciary Obligations. A Partner shall be
liable under this Agreement for personal benefits improperly received, willful
misconduct, recklessness, and gross negligence with respect to the business of
the Partnership, but shall not be liable for errors in judgment or for any acts
or omissions that do not constitute the improper receipt of personal benefits,
willful misconduct, recklessness, or gross negligence with respect to the
business of the Partnership. The Managing Partner shall not be liable for the
negligence, whether of omission or commission, dishonesty, or bad faith of any
employee or agent of the Partnership selected and supervised by the Managing
Partner with reasonable care. Any act or omission of the Managing Partner, if
done in reliance upon the advice of legal counsel or public accountants
selected with the exercise of reasonable care by the Managing Partner, shall be
conclusively presumed not to
- 16 - December 13, 1996
20
constitute the improper receipt of personal benefits, willful misconduct,
recklessness, or gross negligence with respect to the business of the
Partnership.
4.7 Compensation of Managing Partner and Reimbursement of Expenses.
The Managing Partner shall not be paid any compensation from the Partnership
for its services rendered to the Partnership. The Partnership shall reimburse
the Managing Partner and any agent or representative of the Managing Partner
for all costs and expenses incurred by them that are directly attributable to
the business of the Partnership. The Partnership shall, promptly after the
date hereof, reimburse the Managing Partner, and any agent or representative of
the Managing Partner, for all costs and expenses incurred (whether incurred
before or after the formation of the Partnership) in connection with the
formation and organization of the Partnership.
4.8 Tax Matters Partner.
(a) Designation. The Managing Partner is designated the "tax
matters partner" in accordance with Code Section 6231(a)(7).
(b) Authority. The Managing Partner shall have all powers
necessary to perform fully as tax matters partner, including the power to
retain attorneys and accountants of its choice. The Managing Partner, as the
tax matters partner, is authorized to represent the Partnership before taxing
authorities and courts in tax matters affecting the Partnership and the
Partners in their capacity as Partners and is entitled to take any actions on
behalf of the Partnership in any such tax proceedings that it, in its
reasonable business judgment, deems to be in the best interests of the
Partnership.
(c) Duties. To the extent and in the same manner as provided
by applicable law, the Managing Partner, as tax matters partner, (i) shall
furnish the name, address, Percentage Interest, and taxpayer identification
number of each Partner to the Secretary of the Treasury or its delegate, and
(ii) shall keep each Partner informed of any administrative and judicial
proceedings for the adjustment at the Partnership level of any items required
to be taken into account by a Partner for income tax purposes. The Managing
Partner shall give notice to each Partner of a Partnership audit.
(d) Expenses and Indemnification. The Managing Partner shall
be entitled to be reimbursed by the Partnership for all costs and expenses
incurred by it in connection with any administrative or judicial proceeding
with respect to any tax matter involving the Partnership or the Partners in
their capacity as Partners and to be indemnified by the Partnership (solely out
of Partnership assets) with respect to any action brought against it in
connection with any judgment in or settlement of any such proceeding.
4.9 Permitted Transactions.
(a) Other Businesses. Either Partner, and any partner,
affiliate, agent, or representative of either Partner, may engage in or possess
an interest in other business ventures
- 17 - December 13, 1996
21
of any nature or description, independently or with others, whether currently
existing or hereafter created and whether or not competitive with or advanced
by the business of the Partnership. Neither the Partnership nor the other
Partner shall have any rights in or to the income or profits derived therefrom,
nor shall either Partner have any obligation to the other Partner with respect
to any such enterprise or related transaction.
(b) Dealings with Partnership. The Partnership may, in the
sole discretion of the Managing Partner, contract with any Person (including
either Partner or any Person affiliated with either Partner or in which either
Partner may be interested) for the performance of any services that may
reasonably be required to carry on the business of the Partnership, and any
such Person dealing with the Partnership, whether as an independent contractor,
agent, employee, or otherwise, may receive from others or from the Partnership
profits, compensation, commissions, or other income incident to such dealings.
4.10 Indemnification.
(a) In any threatened, pending, or completed claim, action,
suit, or proceeding to which either Partner was or is a party or is threatened
to be made a party by reason of its activities on behalf of the Partnership,
the Partnership shall indemnify and hold harmless such Partner against losses,
damages, expenses (including attorneys' and accountants' fees), judgments, and
amounts paid in settlement actually and reasonably incurred in connection with
such claim, action, suit, or proceeding, except that neither Partner shall be
indemnified for actions constituting the improper receipt of personal benefits,
willful misconduct, recklessness, or gross negligence with respect to the
business of the Partnership. To the extent either Partner has been successful
on the merits or otherwise in defense of any other action, suit, or proceeding
to which it was or is a party or is threatened to be made a party by reason of
the fact that it was or is a Partner of the Partnership, or in defense of any
claim, issue, or matter in connection therewith, the Partnership shall
indemnify such Partner and hold it harmless against the expenses (including
attorneys' and accountants' fees) actually incurred by such Partner in
connection therewith.
(b) Expenses (including attorneys' and accountants' fees)
incurred in defending a civil or criminal claim, action, suit, or proceeding
shall be paid by the Partnership in advance of the final disposition of the
matter upon receipt of an undertaking by or on behalf of the Partner to repay
such amount if such Partner is ultimately determined not to be entitled to
indemnity.
(c) To the fullest extent permitted by law, the Partnership
shall indemnify the Managing Partner and its agents and representatives for the
defense of any action brought in the name of the Partnership to procure a
judgment in its favor by the other Partner if and to the extent that
indemnification is permitted by the Act and the actions of the Managing
Partner, agent, or representative are not found to constitute the improper
receipt of personal benefits, willful misconduct, recklessness, or gross
negligence with respect to the business of the Partnership.
- 18 - December 13, 1996
22
(d) Each Partner shall look solely to the assets of the
Partnership for return of the Partner's investment, and if the property of the
Partnership remaining after the discharge of the debts and liabilities of the
Partnership is insufficient to return a Partner's investment, the Partner shall
have no recourse against the other Partner, except as expressly provided in
this Agreement.
(e) For purposes of this Section 4.10, the termination of any
action, suit, or proceeding by judgment, order, settlement, or otherwise
adverse to either Partner shall not, of itself, create a presumption that the
conduct of such Partner constitutes the improper receipt of personal benefits,
willful misconduct, recklessness, or gross negligence with respect to the
business of the Partnership.
SECTION 5 CASH DISTRIBUTIONS; ALLOCATIONS OF PROFITS AND
LOSSES.
5.1 Distributions.
(a) Distributions Prior to Liquidation. Except as provided
in Section 5.1(b), all cash of the Partnership available for distribution shall
be distributed at such times and in such amounts as the Management Committee
shall determine. All distributions of cash pursuant to this Section 5.1(a)
shall be allocated between the Partners in proportion to their Percentage
Interests.
(b) Net Proceeds on Liquidation. Upon the liquidation of the
Partnership within the meaning of Treasury Regulation Section
1.704-1(b)(2)(ii)(g), after payment of, or adequate provision for, the debts
and obligations of the Partnership, the remaining assets of the Partnership
shall be distributed (or deemed distributed in the event of a termination under
Code Section 708(b)(1)(B)) to the Partners (after giving effect to all
contributions, distributions, allocations, and other Capital Account
adjustments for all taxable years, including the year during which such
liquidation occurs) in the same proportion that each Partner's positive Capital
Account balance bears to the aggregate of all positive Capital Account balances
of the Partners in compliance with Treasury Regulation Section
1.704-1(b)(2)(ii)(b)(2).
(c) Withholding. All amounts withheld pursuant to the Code
or any provision of any state or local tax law with respect to any distribution
to the Partners shall be treated as amounts distributed to Partners pursuant to
Section 5.1 for all purposes of this Agreement.
5.2 Allocations of Net Profit and Net Loss.
(a) Allocations Prior to Liquidation. Except as otherwise
provided in this Agreement, Net Profit and Net Loss for each Fiscal Year (or
portion thereof) shall be allocated between the Partners in proportion to their
Percentage Interests.
- 19 - December 13, 1996
23
(b) Allocations upon Liquidation.
(i) Except as otherwise provided in this Agreement,
Net Profit in connection with the sale of all or substantially all the assets
of the Partnership or the liquidation of the Partnership shall be allocated as
follows:
(A) First, to the Partners having deficit
balances in their Capital Accounts to the extent of, and in proportion to,
those deficits;
(B) Second, so as to cause the ratio of the
credit balance in each Partner's Capital Account to the credit balances in all
Partners' Capital Accounts to equal such Partner's Percentage Interest; and
(C) Thereafter, to all Partners in
proportion to their Percentage Interests.
(ii) Except as otherwise provided in this Agreement,
Net Loss in connection with the sale of all or substantially all the assets of
the Partnership or the liquidation of the Partnership shall be allocated to the
Partners so as to cause the ratio of the credit balance in each Partner's
Capital Account to the credit balances in all Partners' Capital Accounts to
equal such Partner's Percentage Interest.
5.3 Special Allocations. The following special allocations shall be
made in the following order:
(a) Minimum Gain Chargeback. Except as otherwise provided in
Treasury Regulation Section 1.704-2(f), notwithstanding any other provision of
this Section 5, if there is a net decrease in Partnership Minimum Gain during
any Fiscal Year, each Partner shall be specially allocated items of Partnership
income and gain for such Fiscal Year (and, if necessary, subsequent Fiscal
Years) in an amount equal to such Partner's share of the net decrease in
Partnership Minimum Gain, determined in accordance with Treasury Regulation
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 Treasury Regulation Sections 1.704-2(f)(6) and 1.704-2(j)(2).
This Section 5.3(a) is intended to comply with the minimum gain chargeback
requirement in Treasury Regulation Section 1.704-2(f) and shall be interpreted
consistently therewith.
(b) Partner Minimum Gain Chargeback. Except as otherwise
provided in Treasury Regulation Section 1.704-2(i)(4), notwithstanding any
other provision of this Section 5, if there is a net decrease in Partner
Nonrecourse Debt Minimum Gain attributable to a Partner Nonrecourse Debt during
any Fiscal Year, each Partner who has a share of the Partner Nonrecourse Debt
Minimum Gain attributable to such Partner Nonrecourse Debt, determined
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24
in accordance with Treasury Regulation Section 1.704-2(i)(5), shall be
specially allocated items of Partnership income and gain for such Fiscal Year
(and, if necessary, subsequent Fiscal 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
Treasury Regulation 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
allocated shall be determined in accordance with Treasury Regulation Sections
1.704-2(i)(4) and 1.704-2(j)(2). This Section 5.3(b) is intended to comply
with the minimum gain chargeback requirement in Treasury Regulation Section
1.704-2(i)(4) and shall be interpreted consistently therewith.
(c) Nonrecourse Deductions. Nonrecourse Deductions for any
Fiscal Year or other period shall be specially allocated between the Partners
in proportion to their Percentage Interests.
(d) Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Fiscal Year or other period 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 Treasury Regulation Section 1.704-2(i).
(e) Code Section 754 Adjustment. 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 Treasury Regulation
Section 1.704-1(b)(2)(iv)(m)(2) or Section 1.704-1(b)(2)(iv)(m)(4), to be taken
into account in determining Capital Accounts as a result of a distribution to a
Partner in complete liquidation of its interest, the amount of such adjustment
to the 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 specifically allocated to the Partners in
accordance with their interests in the Partnership if Treasury Regulation
Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Partners to whom such
distribution was made if Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(4)
applies.
5.4 Curative Allocations. The allocations set forth in Section 5.3
(other than Section 5.3(e)) (the "Regulatory Allocations") are intended to
comply with certain requirements of the Treasury Regulations. The Partners
intend 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
5.4. Therefore, notwithstanding any other provision of this Section 5 (other
than the Regulatory Allocations), the Managing Partner shall make such
offsetting special allocations of Partnership income, gain, loss, or deduction
in whatever manner it determines appropriate so that, after such offsetting
allocations are made, each Partner's Capital Account balance is, to the extent
possible, equal to the Capital Account balance such Partner would have had if
the Regulatory Allocations were not part of this Agreement and all Partnership
items were allocated pursuant to Section 5.2. In exercising its discretion
under this Section 5.4, the Managing Partner shall take into account
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25
any future Regulatory Allocations under Sections 5.3(a) and 5.3(b) that,
although not yet made, are likely to offset Regulatory Allocations made under
Sections 5.3(c) and 5.3(d).
5.5 Special Allocations Relating to Certain Interest. The Partners
intend that the interest payable by CEI Pioneer pursuant to Section 3.1(c)(iii)
shall be treated as interest and not as a Capital Contribution and shall be
deductible by CEI Pioneer for federal income tax purposes (and shall constitute
income to the Partnership). The Partners further intend that any interest
payable by the Partnership to the FCC pursuant to its assumption of certain
liabilities of Xxx Communications, Inc. pursuant to Section 3.1(e) shall be
deductible by the Partnership for federal income tax purposes and shall not be
a deduction of Xxx Communications, Inc. If any other treatment shall be
required under the Code or applicable Treasury Regulations, then the Managing
Partner shall make such offsetting allocations of Partnership income, gain,
loss, or deduction in whatever manner it determines appropriate so that, after
such allocations are made, each Partner is, as nearly as possible, in the same
economic position it would have been in if the interest payable by CEI Pioneer
pursuant to Section 3.1(c)(iii) had been treated as described in the first
sentence of this Section 5.5 and the interest payable by the Partnership to the
FCC pursuant to Section 3.1(e) had been treated as set forth in the second
sentence of this Section 5.5.
5.6 Other Allocation Rules.
(a) Solely for purposes of determining a Partner's
proportionate share of the "excess nonrecourse liabilities" of the Partnership
within the meaning of Treasury Regulation Section 1.752-3(a)(3), the Partners'
interests in Partnership profits are equal to their respective Percentage
Interests.
(b) To the extent permitted by Treasury Regulation Sections
1.704-2(h) and 1.704-2(i)(6), the Managing Partner shall endeavor not to treat
distributions as having been made from the proceeds of a Nonrecourse Liability
or a Partner Nonrecourse Debt.
(c) If any fees or other payments deducted for federal income
tax purposes by the Partnership are recharacterized by a final determination of
the Internal Revenue Service as nondeductible distributions to either Partner,
then, notwithstanding all other allocation provisions (other than the
Regulatory Allocations), gross income shall be allocated to such Partner (for
each Fiscal Year in which such recharacterization occurs) in an amount equal to
the fees or payments recharacterized.
(d) All items of Partnership income, gain, loss, deduction,
and any other allocations not otherwise provided for shall be allocated between
the Partners in the same manner as they share Net Profits or Net Losses, as the
case may be, for the year.
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26
5.7 Section 704(c) Allocations.
(a) In accordance with Code Section 704(c) and the Treasury
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 between the Partners so as to take account of any
variation between the adjusted basis of such property to the Partnership for
federal income tax purposes and its initial Gross Asset Value.
(b) If the Gross Asset Value of any Partnership asset is
adjusted pursuant to paragraph (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 Treasury Regulations
thereunder.
(c) Any elections or other decisions relating to such
allocations shall be made by the Managing Partner in any manner that reasonably
reflects the purpose and intention of this Agreement. Allocations pursuant to
this Section 5.7 are solely for purposes of federal, state, and local taxes and
shall not affect, or in any way be taken into account in computing, either
Partner's Capital Account or share of Net Profit, Net Loss, other items, or
distributions pursuant to any provision of this Agreement.
SECTION 6 ASSIGNMENT, TRANSFER, OR SALE OF INTERESTS IN
PARTNERSHIP.
6.1 Transfer of the Partnership Interests. Neither Partner shall
sell, assign, pledge, or otherwise encumber or transfer all or any part of its
interest in the Partnership to any Person, without the consent of the other
Partner, and any attempt to do so shall be null and void.
6.2 Withdrawal of Partner. Each Partner agrees not to withdraw from
the Partnership without the prior consent of the other Partner. For purposes
of this Section 6.2, the term "withdrawal" shall include the bankruptcy of a
Partner for purposes of Section 1531 of the Act.
6.3 Admission of Additional Partners. Additional Partners may be
admitted to the Partnership on such terms and conditions as shall be agreed to
by all the Partners.
SECTION 7 DISSOLUTION AND TERMINATION OF THE PARTNERSHIP.
7.1 Events of Dissolution. The Partnership shall dissolve upon the
earliest to occur of:
(a) subject to any restriction in any agreement to which the
Partnership is a party, an election to dissolve the Partnership made by all
Partners;
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27
(b) the sale, exchange, involuntary conversion, or other
disposition or transfer of all or substantially all the assets of the
Partnership (other than the disposition or transfer of the Partnership's
interest in PioneerCo to Sprint Spectrum Holding Company, L.P., a Delaware
limited partnership (or to any successor-in-interest to Sprint Spectrum Holding
Company, L.P.), in exchange for an equity interest therein as contemplated by
Section 13.6 of the PioneerCo Agreement;
(c) the occurrence of any event described in Section 1531 of
the Act;
(d) the happening of any event that, under applicable law,
causes the dissolution of a general partnership; or
(e) the expiration of the term of the Partnership.
7.2 Actions on Dissolution.
(a) Liquidator. Upon the dissolution of the Partnership, the
Managing Partner, or, if the Managing Partner is unable to do so or if the
Managing Partner wrongfully caused the dissolution of the Partnership, the
other Partner, shall act as liquidator to wind up the Partnership. The
liquidator shall have full power and authority to sell, assign, and encumber
any of the Partnership's assets and to wind up and liquidate the affairs of the
Partnership in an orderly and businesslike manner.
(b) Application of Proceeds. The proceeds of liquidation
shall be applied first to the payment of the debts and liabilities of the
Partnership (including any loans to the Partnership made by either Partner),
then to the expenses of liquidation, and then to the establishment of any
reserves that the liquidator deems necessary for potential or contingent
liabilities of the Partnership. Remaining proceeds shall be distributed to the
Partners as provided in Section 5.1(b).
(c) Distribution in Kind. If the liquidator determines that
the Partners would be materially adversely affected by a liquidation of the
Partnership's assets, the liquidator may distribute all or a portion of the
Partnership's assets in kind to the Partners, if the Partners so agree.
(d) Deferral of Liquidation. If the liquidator determines
that an immediate sale of part or all of the Partnership's assets would cause
undue loss to the Partners, the liquidator may, to avoid the loss, defer the
liquidation of, and withhold from distribution for a reasonable time, any
assets of the Partnership except those necessary to satisfy debts and
liabilities of the Partnership (other than debts or liabilities to the
Partners).
(e) Final Accounting. Upon the dissolution and winding up of
the Partnership, a proper accounting shall be made from the date of the last
previous accounting to the date of winding up.
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28
(f) Statement of Liquidation. Within a reasonable time
following the completion of the liquidation of the Partnership, the liquidator
shall submit a statement (which need not be audited) to each Partner setting
forth the assets and liabilities of the Partnership as of the date of
liquidation and the amount of the distribution to each Partner pursuant to
Section 5.1(b).
(g) Effect of Withdrawal of Partner. The withdrawal of
either Partner (including the bankruptcy of a Partner for purposes of Section
1531 of the Act) shall not alter the allocations and distributions to be made
to the Partners pursuant to this Agreement.
(h) Termination of Partnership. Upon the completion of the
distribution of Partnership assets and the proceeds of liquidation as provided
in this Section 7.2, the Partnership shall be terminated.
SECTION 8 BOOKS, RECORDS, AND RETURNS; TAX YEAR.
8.1 Books of Account and Records. The Partnership's books and
records, including a register showing the names and addresses of the Partners,
a copy of this Agreement, and any other records required to be maintained by
the Act, shall be maintained at the principal office of the Partnership at the
location specified in Section 2.6. All such books and records shall be
available for inspection and copying by the Partners or their duly authorized
representatives during ordinary business hours. The Managing Partner shall
keep accurate books and records of the operation of the Partnership that shall
reflect all transactions and be appropriate and adequate for the Partnership's
business and for carrying out the provisions of this Agreement.
8.2 Accounting Reports. Within 120 days after the end of each Fiscal
Year of the Partnership, the Managing Partner shall cause to be furnished to
the Partners a report of the activities of the Partnership for the preceding
Fiscal Year, financial statements for the Fiscal Year (which need not be
audited) consisting of a balance sheet, a statement of income and expense, and
a statement of cash flows, all prepared in accordance with generally accepted
accounting principles consistently applied, except as the financial statements
shall otherwise specify.
8.3 Tax Returns. The Managing Partner shall cause the Partnership's
tax returns to be prepared and filed. Within 90 days after the end of each
Fiscal Year of the Partnership, the Managing Partner shall cause to be
furnished to each Partner a statement, to be used in the preparation of the
Partner's income tax returns, showing the amounts of any Profits and Losses,
tax credits, and gains allocable to the Partner for the Fiscal Year, and the
amount of any distributions made to the Partner by the Partnership during the
Fiscal Year.
8.4 Deposit of Partnership Funds. All revenues, assessments, loan
proceeds, and other receipts of the Partnership shall be maintained on deposit
in interest-bearing and non-interest bearing accounts and other investments as
the Managing Partner deems appropriate. Any interest or other income generated
by the Partnership's deposits or investments will be for the
- 25 - December 13, 1996
29
Partnership's account. Partnership funds from any of the various sources
mentioned above may be commingled with other Partnership funds, and may be
withdrawn, expended, and distributed as authorized by this Agreement. The
Partnership shall not commingle Partnership funds with the separate funds of
the Partners, their affiliates, or any other Person.
SECTION 9 MISCELLANEOUS.
9.1 Captions. All section captions contained in this Agreement are
for convenience only and shall not be deemed part of this Agreement.
9.2 Pronouns, Singular and Plural Form. All pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, and
neuter as the identity of the Person or Persons referred to may require, and
all words shall include the singular or plural as the context or the identity
of Persons may require.
9.3 Further Action. The parties shall execute and deliver all
documents, provide all information, and take, or forbear from, all actions that
may be necessary or appropriate to achieve the purposes of this Agreement.
9.4 Entire Agreement. This Agreement contains the entire
understanding between the parties and supersedes any prior understandings and
agreements between them regarding the subject matter of this Agreement.
9.5 Agreement Binding. This Agreement shall be binding upon the
successors and assigns of the parties. No provision of this Agreement may be
waived except by a written instrument specifically waiving such provision and
executed by the party to be charged with such waiver. No provision of this
Agreement may be amended or modified except by a written instrument executed by
all of the parties.
9.6 Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be in
writing and shall be deemed to have been duly delivered and received (a) on the
date of personal delivery, or (b) on the date of receipt (as shown on the
return receipt) if mailed by registered or certified mail, postage prepaid and
return receipt requested, or if sent by courier service, with all charges
prepaid, in each case addressed to the Partner at the last address furnished by
the Partner to the other Partner by notice pursuant to this Section 9.6.
Nothing in this Section 9.6 shall preclude the delivery of notices by
appropriate means other than those described above, including facsimile.
9.7 Severability. If any provision or part of any provision of this
Agreement is invalid or unenforceable in any respect, such provision or part of
any provision shall be ineffective to the extent of such invalidity or
unenforceability only, without in any way affecting the remaining parts of such
provision or the remaining provision of this Agreement.
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30
9.8 Counterparts. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
9.9 Governing Law. This Agreement shall be governed, construed, and
enforced in accordance with the laws of the State of Delaware (without regard
to the choice of law provisions thereof).
9.10 No Third-Party Beneficiaries. This Agreement is not intended
to, and shall not be construed to, create any right enforceable by any Person
not a party hereto, including any creditor of the Partnership or of either of
the Partners.
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31
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
XXX COMMUNICATIONS PIONEER, INC.
By: /s/ XXXXX X. XXXXXXX
----------------------------------------
Name: XXXXX X. XXXXXXX
--------------------------------------
Title: VP
-------------------------------------
CEI PIONEER, INC.
By: /s/ XXXXX X. XXXXXXX
----------------------------------------
Name: XXXXX X. XXXXXXX
--------------------------------------
Title: VP
-------------------------------------
- 28 - December 13, 1996
