AGREEMENT TO FORM LIMITED PARTNERSHIP
AGREEMENT, dated September 30, 1997 (the "Agreement"), by and among WESTERN PCS I IOWA CORPORATION, a Delaware corporation having its principal office at 2001 NW Sammamish Road, Issaquah, Washington 98027 ("WWC"), INS WIRELESS, INC., an Iowa corporation having its principal office at 4201 Corporate Drive, West Des Moines, Iowa 50266 ("INS") (WWC and INS shall be referred to herein sometimes individually as a "Partner" and collectively as the "Partners"), WESTERN PCS I CORPORATION, a Delaware corporation having its principal office at 2001 N.W. Sammamish Road, Issaquah, Washington 98027 ("WWC Parent") and IOWA NETWORK SERVICES, INC., an Iowa corporation having its principal office at 4201 Corporate Drive, West Des Moines, Iowa 50266 ("INS Parent").
W I T N E S S E T H:
WHEREAS, the parties hereto desire to form a limited partnership to build and operate a PCS network covering certain major metropolitan areas in Iowa and to build and operate a PCS network along the major interstate and state highways linking such areas (all of which activities shall be referred to herein as the "Business"); and
WHEREAS, the parties hereto desire that such limited partnership be formed as soon as practicable; and
WHEREAS, the parties hereto desire to state their respective rights and obligations with respect to the limited partnership.
NOW, THEREFORE, in consideration of the premises and the mutual covenants, conditions and promises hereinafter set forth, the parties hereby agree as follows:
ARTICLE 1
FORMATION OF LIMITED PARTNERSHIP;
APPROVAL DATE
1.1 Formation of Limited Partnership. Subject to the terms and conditions hereof and in reliance upon the representations, warranties, covenants and agreements herein contained, within ten (10) Business Days (as hereinafter defined) after the date hereof, WWC and INS will (a) form a Delaware limited partnership to be named "Iowa Wireless Services, L.P." (the "Partnership"), in accordance with the Revised Uniform Limited Partnership Act of the State of Delaware (the "Act") and in that regard will file with the Secretary of State of the State of Delaware a Certificate of Limited Partnership in substantially the form of Exhibit 1.1(a) attached hereto, and (b) enter into a limited partnership agreement in the form attached hereto as Exhibit 1.1(b) (the "Partnership Agreement") governing the Partnership. As more particularly set forth in the Partnership Agreement, and subject to the conditions set forth herein, within ten (10) Business Days after the Approval Date (as hereinafter defined) the Partners are required to make certain Required Capital Contributions (as such term is defined in the Partnership Agreement) to
2 the Partnership. The date on which such initial Required Capital Contributions are made to the Partnership shall be referred to herein as the "Closing Date."
1.2 Approval Date. The "Approval Date" shall be the day on which all Federal Communications Commission ("FCC") and state regulatory approvals (if any) necessary in order to consummate lawfully the transactions contemplated hereby have been received and shall have become Final Orders (as hereinafter defined) (such FCC and state regulatory approvals shall be hereinafter referred to as the "Regulatory Approvals"). As used herein the term "Business Day" shall mean any day other than a Saturday, Sunday or a legal holiday in New York, New York or in Seattle, Washington, or any other day on which commercial banks are authorized by law or governmental decree to close. "Final Order" means an action or decision as to which: (i) no request for a stay is pending, no stay is in effect, and any deadline for filing such request that may be designated by statute or regulation has passed; (ii) no petition for rehearing or reconsideration or application for review is pending and the time for filing any such petition or application has passed; (iii) the FCC, public utility commission or public service commission (or comparable bodies exercising jurisdiction over the parties) does not have the action or decision under reconsideration on its own motion and the time for initiating such reconsideration has passed; and (iv) no appeal is pending or in effect and any deadline for filing any such appeal that may be designated by statute or rule has passed.
ARTICLE 2
COVENANTS AND AGREEMENTS
2.1 Governmental Filings. Each of INS, INS Parent, WWC and WWC Parent covenant and agree from and after the execution and delivery of this Agreement to and including the Closing Date as follows:
(a) It is understood that the consummation of the transactions contemplated hereby is subject to prior approval of the FCC and may be subject to the prior approval of one or more state regulatory commissions. The parties shall use their best efforts to file with the FCC and any relevant state agency or agencies, as soon as practicable following the date hereof and in no event later than thirty (30) Business Days from the date hereof, a joint application requesting the approval of the FCC and, if applicable, the relevant state agency or agencies, to the transactions contemplated hereby and by the Partnership Agreement. Each of the parties hereto shall diligently take or cooperate in the taking of all steps which are necessary or appropriate to expedite the prosecution and favorable consideration of such applications. The parties covenant and agree to undertake all actions reasonably requested by the FCC or any other regulatory authority and to file such material as shall be necessary or required to obtain any necessary waivers or other authority from the FCC or such state agency or agencies in connection with the foregoing applications.
(b) Within thirty (30) Business Days after the date of execution hereof, WWC
-2- 3 and INS shall file, or cause to be filed any and all reports or notifications which are required to be filed under any Federal law or administrative regulations.
2.2 Covenants of INS and INS Parent. Each of INS and INS Parent, jointly and severally, covenants and agrees from and after the execution and delivery of this Agreement, which covenants shall survive the Closing Date, as follows:
(a) Consummate Transactions. Each of INS and INS Parent shall use all commercially reasonable efforts to cause the transactions contemplated by this Agreement to be consummated in accordance with the terms hereof, and, without limiting the generality of the foregoing, use all commercially reasonable efforts to obtain all necessary approvals, consents, permits, licenses and other authorizations required in connection with this Agreement and the transactions contemplated hereby of third parties including all governmental authorities and agencies such as the FCC and any state public utilities or public service commission, and to make all filings with and give all notices to third parties which may be necessary or reasonably required of INS or INS Parent in order to consummate the transactions contemplated hereby.
(b) Approvals, Consents. Each of INS and INS Parent shall obtain and maintain in full force and effect all approvals, consents, permits, licenses and other authorizations from all appropriate Federal, state and local governmental agencies or authorities necessary or required for the consummation of the transactions contemplated hereby. The parties shall consult with one another as to the general approach to be taken with any governmental authority or agency with respect to obtaining any necessary consent of such governmental agency or authority to the transactions contemplated hereby, and each of the parties shall keep each other party reasonably informed as to the status of any such communications with any governmental authority or agency. Neither INS nor INS Parent shall, with respect to the Business or the assets used or to be used in connection with the Business, make any material commitments (other than those typical in the wireless telephone industry) relating to any approval, consent, permit or license to any governmental authority or agency without the prior written consent of WWC and WWC Parent.
(c) RTFC Loan. INS Parent has filed an application and all other necessary documents, and each of INS and INS Parent agrees to diligently pursue and use its best efforts, to obtain a loan in the principal amount of $20,000,000 from the Rural Telephone Finance Cooperative (the "RTFC") on rates, terms and conditions prevailing at the time of the application.
(d) Notice of Claims. Each of INS and INS Parent shall give written notice to WWC and WWC Parent promptly upon the commencement of any action, investigation, arbitration or proceeding (including any proceeding before any governmental agency), or promptly upon obtaining knowledge of any facts giving rise to a threat of any such action, investigation, arbitration or proceeding, which would, if adversely determined, materially and adversely affect (i) the ability of any of the parties hereto to consummate the transactions contemplated hereby or (ii) the business, prospects or financial condition of the Business or the
-3- 4 assets to be used in connection with the operation of the Business.
(e) Certain Actions. Neither INS nor INS Parent shall take any action or refrain from taking any action which would materially interfere with or preclude the consummation of the transactions contemplated by this Agreement, result in any of the representations and warranties of any party hereto contained herein being incorrect or incomplete in any material respect, or result in any of the conditions to any party's obligations to consummate the transactions contemplated by this Agreement as set forth in Section 4.1 hereof being unsatisfied in accordance with the terms hereof.
(f) Notice of Breaches. Each of INS and INS Parent shall, promptly after obtaining knowledge of the occurrence of, or the impending or threatened occurrence of, any event which would cause or constitute a breach of any warranties, representations, covenants or agreements of INS or INS Parent, give notice in writing to WWC and WWC Parent of such event or occurrence or impending or threatened event or occurrence and use its diligent efforts to prevent or promptly to remedy such breach.
(g) Notification of Change. Each of INS and INS Parent shall advise WWC and WWC Parent promptly in writing of (i) any event, condition or state of facts, including any action, suit or proceeding, which has had or would have a material adverse effect on the business or financial condition of INS, INS Parent or the Partnership, on the Business, on the assets used or to be used in connection with the operation of the Business or on the transactions contemplated by this Agreement or (ii) the commencement of any action, suit or proceeding which seeks to enjoin the consummation of the transactions contemplated hereby.
2.3 Covenants of WWC and WWC Parent. Each of WWC and WWC Parent, jointly and severally, covenants and agrees from and after the execution and delivery of this Agreement, which covenants shall survive the Closing Date, as follows:
(a) Consummate Transactions. Each of WWC and WWC Parent shall use all commercially reasonable efforts to cause the transactions contemplated by this Agreement to be consummated in accordance with the terms hereof, and, without limiting the generality of the foregoing, use all commercially reasonable efforts to obtain all necessary approvals, consents, permits, licenses and other authorizations required in connection with this Agreement and the transactions contemplated hereby of third parties including all governmental authorities and agencies such as the FCC and any state public utilities or public service commission, and to make all filings with and give all notices to third parties which may be necessary or reasonably required of WWC or WWC Parent in order to consummate the transactions contemplated hereby.
(b) Approvals, Consents. Each of WWC and WWC Parent shall obtain and maintain in full force and effect all approvals, consents, permits, licenses and other authorizations from all appropriate Federal, state and local governmental agencies or authorities necessary or required for the consummation of the transactions contemplated hereby. The parties
-4- 5 shall consult with one another as to the general approach to be taken with any governmental authority or agency with respect to obtaining any necessary consent of such governmental agency or authority to the transactions contemplated hereby, and each of the parties shall keep each other party reasonably informed as to the status of any such communications with any governmental authority or agency. Neither WWC nor WWC Parent shall, with respect to the Business or the assets used or to be used in connection with the Business, make any material commitments (other than those typical in the wireless telephone industry) relating to any approval, consent, permit or license to any governmental authority or agency without the prior written consent of INS and INS Parent.
(c) Notice of Claims. Each of WWC and WWC Parent shall give written notice to INS and INS Parent promptly upon the commencement of any action, investigation, arbitration or proceeding (including any proceeding before any governmental agency), or promptly upon obtaining knowledge of any facts giving rise to a threat of any such action, investigation, arbitration or proceeding, which would, if adversely determined, materially and adversely affect (i) the ability of any of the parties hereto to consummate the transactions contemplated hereby or (ii) the business, prospects or financial condition of the Business or the assets to be used in connection with the operation of the Business.
(d) Certain Actions. Neither WWC nor WWC Parent shall take any action or refrain from taking any action which would materially interfere with or preclude the consummation of the transactions contemplated by this Agreement, result in any of the representations and warranties of any party hereto contained herein being incorrect or incomplete in any material respect, or result in any of the conditions to any party's obligations to consummate the transactions contemplated by this Agreement as set forth in Section 4.2 hereof being unsatisfied in accordance with the terms hereof.
(e) Notice of Breaches. Each of WWC and WWC Parent shall, promptly after obtaining knowledge of the occurrence of, or the impending or threatened occurrence of, any event which would cause or constitute a breach of any warranties, representations, covenants or agreements of WWC or WWC Parent, give notice in writing to INS and INS Parent of such event or occurrence or impending or threatened event or occurrence and use its diligent efforts to prevent or promptly to remedy such breach.
(f) Notification of Change. Each of WWC and WWC Parent shall advise INS and INS Parent promptly in writing of (i) any event, condition or state of facts, including any action, suit or proceeding, which has had or would have a material adverse effect on the business or financial condition of WWC, WWC Parent or the Partnership, on the Business, on the assets used or to be used in connection with the operation of the Business or on the transactions contemplated by this Agreement or (ii) the commencement of any action, suit or proceeding which seeks to enjoin the consummation of the transactions contemplated hereby.
(g) Repayment of Loans to Partnership. Pursuant to Section 3.5(b) of the
-5- 6 Partnership Agreement, INS shall make non-interest-bearing loans (the "Funding Loans") in an aggregate amount of up to $500,000 to operate the Partnership prior to the Closing Date, in accordance with the terms of the Partnership Agreement. In the event WWC fails, in breach of its obligations hereunder, to make its Required Capital Contribution pursuant to Section 3.1(a) of the Partnership Agreement, and as a consequence of such failure the Partnership is terminated, WWC shall pay INS cash in the amount of 38% of (i) the outstanding principal amount of the Funding Loans minus (ii) the amount of cash and the fair market value of other assets held by the Partnership at the time of its termination. In no event shall WWC's payment to INS pursuant to the terms of this Section 2.3(g) exceed $190,000. Neither WWC nor WWC Parent, nor any of their Affiliates, shall have any other obligation to the Partnership or to INS with respect to the Funding Loans.
2.4 F Block Build-out. INS Parent has advised WWC and WWC Parent that it is anticipated that Iowa L.P. 136 will transfer to INS Parent the F Block PCS licenses for BTA 105, Davenport, Iowa -Moline, Illinois, BTA 205, Iowa City, Iowa and BTA 70, Cedar Rapids, Iowa (the "Iowa 136 Licenses"). INS Parent anticipates that, if and when the Iowa 136 Licenses are transferred to INS Parent, the PCS Networks (as such term is defined in the Partnership Agreement) may also be used by INS Parent (without any obligation of the Partnership to modify, redesign or expand the PCS Networks or expend any costs therefor) to satisfy a portion of INS Parent's build-out requirements relating to the Iowa 136 Licenses. If the PCS Networks as constructed cover a geographic area that could also satisfy a portion of the build-out requirements of the Iowa 136 Licenses (without any obligation of the Partnership to modify, redesign or expand the PCS Networks or expend any costs therefor), then the parties agree to permit INS Parent to utilize the PCS Networks for the limited purpose of satisfying such portion of the build-out requirements relating to the Iowa 136 Licenses; provided, however, that (a) the Partnership shall not be required to revise its system design, expand or improve the PCS Networks or otherwise have any obligation in connection with such satisfaction of such portion of the build-out requirements of the Iowa 136 Licenses; (b) the Partnership shall not be required to expend any additional amounts or incur any additional liabilities as a result of such satisfaction of such portion of the build-out requirements of the Iowa 136 Licenses; (c) neither INS nor INS Parent shall share in any of the revenues of the Partnership or have any additional rights under this Agreement or the Partnership Agreement as a result of such satisfaction of such portion of the build-out requirements of the Iowa 136 Licenses beyond those revenues and rights to which it would otherwise by entitled under this Agreement and the Partnership Agreement; (d) WWC and WWC Parent shall have received a satisfactory opinion of counsel to the effect that such satisfaction of such portion of the build-out requirements of the Iowa 136 Licenses shall not have any material adverse effect on the Partnership or its licenses or on WWC, WWC Parent and their respective Affiliates (as hereinafter defined) or shareholders or equity owners or any of their respective licenses or businesses, nor will such satisfaction of such portion of the build-out requirements of the Iowa 136 Licenses impose any additional obligations, liabilities or restrictions upon the Partnership or its licenses or on WWC, WWC Parent, their respective Affiliates or shareholders or equity owners or any of their respective licenses or businesses; (e) the terms and conditions of any switch-sharing, frequency sharing or other similar arrangements
-6- 7 shall be on arms-length terms and conditions and shall be subject to approval by WWC and WWC Parent; (f) INS and INS Parent shall, jointly and severally, agree to indemnify and hold harmless the Partnership, WWC, WWC Parent and their respective Affiliates from and against any and all additional costs or liabilities arising as a result of the use by INS Parent of the PCS Networks to satisfy such portion of the build-out requirements of the Iowa 136 Licenses; and (g) such utilization of the PCS Networks by INS Parent shall not in any way interfere with or adversely affect the services provided by the PCS Networks to the Partnership's subscribers and other customers. Any waiver, amendment or deviation from the terms of this Section 2.4 shall be subject to approval by WWC and WWC Parent. Notwithstanding the foregoing, if INS or INS Parent requests the Partnership to make any reasonable modifications or expansions to the PCS Networks so that INS Parent may use the PCS Networks to satisfy a portion of the build out requirements of the Iowa 136 Licenses and INS and INS Parent jointly and severally agree to be directly responsible for all costs of such modifications or expansions, and if, in the reasonable judgment of WWC Parent and the Partnership, such modifications or expansions will not affect the services provided by the PCS Networks to the Partnership's subscribers and other customers, and will not expose the Partnership, or its Partners, to additional liabilities, then the Partnership shall permit such modifications or expansions at the sole cost and expense of INS and INS Parent.
2.5 Retained Spectrum Build-out. WWC Parent has advised INS and INS Parent that WWC Parent anticipates that the PCS Networks may also be used by WWC Parent (without any obligation of the Partnership to modify, redesign or expand the PCS Networks or expend any costs therefor) to satisfy a portion of WWC Parent's build-out requirements relating to the PCS spectrum retained by WWC Parent in the Territory (as defined in the Partnership Agreement) and in the Des Moines BTA and not being contributed to the Partnership (the "Retained Spectrum"). If the PCS Networks as constructed cover a geographic area that could also satisfy a portion of the build-out requirements of the Retained Spectrum (without requiring any modification, redesign or expansion of the PCS Networks), then the parties agree to permit WWC Parent to utilize the PCS Networks for the limited purpose of satisfying such portion of the build-out requirements relating to the Retained Spectrum; provided, however, that (a) the Partnership shall not be required to revise its system design, expand or improve the PCS Networks or otherwise have any obligation in connection with such satisfaction of such portion of the build-out requirements of the Retained Spectrum; (b) the Partnership shall not be required to expend any additional amounts or incur any additional liabilities as a result of such satisfaction of such portion of the build-out requirements of the Retained Spectrum; (c) Neither WWC nor WWC Parent shall share in any of the revenues of the Partnership or have any additional rights under this Agreement or the Partnership Agreement as a result of such satisfaction of such portion of the build-out requirements of the Retained Spectrum beyond those to which it would otherwise be entitled under this Agreement and the Partnership Agreement; (d) INS and INS Parent shall have received a satisfactory opinion of counsel to the effect that such satisfaction of such portion of the build-out requirements of the Retained Spectrum shall not have any material adverse effect on the Partnership or its licenses or on INS, INS Parent or their respective Affiliates or shareholders or equity owners or any of their respective licenses or businesses, nor will such
-7- 8 satisfaction of such portion of the build-out requirements of the Retained Spectrum impose any additional obligations, liabilities or restrictions upon the Partnership or its licenses or on INS, INS Parent and their respective Affiliates or shareholders or equity owners or any of their respective licenses or businesses; (e) the terms and conditions of any switch-sharing, frequency sharing or other similar arrangements shall be on arms-length terms and conditions and shall be subject to approval by INS and INS Parent; (f) WWC and WWC Parent shall, jointly and severally, agree to indemnify and hold harmless the Partnership, INS, INS Parent and their respective Affiliates from and against any and all additional costs or liabilities arising as a result of the use by WWC Parent of the PCS Networks to satisfy such portion of the build-out requirements of the Retained Spectrum; and (g) such utilization of the PCS Networks by WWC Parent shall not in any way interfere with or adversely affect the services provided by the PCS Networks to the Partnership's subscribers and other customers. Any waiver, amendment or deviation from the terms of this Section 2.5 shall be subject to approval by INS and its Parent. Notwithstanding the foregoing, if WWC or WWC Parent
