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SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
of
ACC ACQUISITION LLC
between
AT&T WIRELESS SERVICES JV CO.
and
XXXXXX XX COMPANY
Dated as of February 25, 2000
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SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY
AGREEMENT, dated as of February 25, 2000, by and between AT&T Wireless
Services JV Co., a Delaware corporation ("AWS Sub") and a 100% Subsidiary of
AWS Wireless Services, Inc., a Delaware corporation ("AWS"), and Xxxxxx XX
Company, an Oklahoma corporation ("DCC Sub") and a 100% Subsidiary of Xxxxxx
Communications Corporation, an Oklahoma corporation ("DCC").
WHEREAS, AWS Sub and DCC Sub are party to the Operating
Agreement of ACC Acquisition LLC dated as of October 4, 1999, as amended and
restated as of January 31, 2000 (the "Original Agreement"); and
WHEREAS, AWS Sub and DCC Sub desire to amend and restate the
Original Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
covenants herein contained, it is hereby agreed, and the Original Agreement is
hereby amended and restated, as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement without other
definition shall, unless expressly stated otherwise, have the meanings
specified in this Article 1.
"80% Subsidiary" of a Person or group (as such term is used
in Sections 13(d) and 14(d) of the Exchange Act and the regulations
thereunder) means any Subsidiary that is controlled by such Person or group,
and at least 80% of whose voting power and at least 80% of whose economic
interests are owned directly by such Person or group or by an 80% Subsidiary
of such Person or group.
"100% Subsidiary" of a Person or group (as such term is used
in Sections 13(d) and 14(d) of the Exchange Act and the regulations
thereunder) means any Subsidiary that is controlled by such Person or group,
and 100% of whose voting power and 100% of whose economic interests are owned
directly by such Person or group or by a 100% Subsidiary of such Person or
group.
"Act" means the Delaware Limited Liability Company Act, as
amended from time to time.
"Adjusted Capital Account Deficit" means, with respect to
any Member, the deficit balance, if any, in such Member's Capital Account as
of the end of the relevant fiscal year, after giving effect to the following
adjustments:
(i) such Capital Account shall be deemed to be
increased by any amounts which such Member is obligated to restore to
the Company (pursuant to this Agreement or otherwise) or is deemed to
be obligated to restore pursuant to the second to last sentence of
Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5) (relating
to allocations attributable to nonrecourse debt); and
(ii) such Capital Account shall be deemed to be
decreased by the items described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of Adjusted Capital Account Deficit
is intended to comply with the provisions of Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted and applied consistently
therewith.
"Adopted Service Features" means the Core Service Features
and additional service features that are adopted by the Company in accordance
with the terms of this Agreement.
"Affiliate" means, with respect to any Person, any other
Person that, either directly or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with such Person.
"Affiliate Group" means each of the AWS Affiliate Group and
the DCC Affiliate Group.
"Agents" is defined in Section 8.9(a).
"Agreement" means this Amended and Restated Limited
Liability Company Agreement, as amended, modified, supplemented or restated
from time to time.
"Appraiser" is defined in Section 9.7.
"AT&T" means AT&T Corp.
"AT&T PCS" means AT&T Wireless PCS, LLC.
"AWS" is defined in the first paragraph hereof.
"AWS Affiliate Group" means (a) AWS Sub, so long as AWS Sub
is an 80% Subsidiary of AWS, (b) AWS and any Subsidiary of AWS so long as such
Subsidiary is an 80% Subsidiary of AWS and (c) AT&T and any Subsidiary of AT&T
so long as such Subsidiary is an 80% Subsidiary of AT&T.
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"AWS Member Group" means Members that are members of the AWS
Affiliate Group and their Private Transferees.
"AWS Sub" is defined in the first paragraph hereof.
"Book Value" means, with respect to any asset of the Company,
the asset's adjusted basis as of the relevant date for federal income tax
purposes except as follows:
(i) the initial Book Value of any asset contributed by a
Member to the Company shall be the Fair Market Value of such asset, as
determined by the contributing Member and the Company with the
concurrence of the Members other than the contributing Member;
(ii) the Book Values of all Company assets (including
intangible assets such as goodwill) shall be adjusted to equal their
respective Fair Market Values (as adjusted by Section 7701(g) of the
Code) as of the following times:
(A) the acquisition of an additional Interest by any
new or existing Member in exchange for more than a de minimis
capital contribution;
(B) the distribution by the Company to a Member of
more than a de minimis amount of money or other Company
property as consideration for an interest in the Company; and
(C) the termination of the Company for federal income
tax purposes pursuant to Section 708(b) of the Code;
(iii) the Book Value of any Company asset distributed to any
Member shall be the Fair Market Value of such asset (as adjusted by
Section 7701(g) of the Code) on the date of distribution;
(iv) if the Book Value of an asset has been determined or
adjusted pursuant to clause (i) or clause (ii) above, such Book Value
shall thereafter be adjusted by the Depreciation taken into account
with respect to such asset for purposes of computing Profits and
Losses, and other items allocated pursuant to Article 4; and
(v) the Book Value of Company assets shall be increased or
decreased, as appropriate, to reflect any adjustments to the adjusted
tax bases of such assets pursuant to Sections 734(b) or 743(b) of the
Code, 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 clause (v) of the
definition of "Profits" and "Losses" set forth below; provided,
however, that Book Values shall not be adjusted pursuant to this
clause (v) to the extent that an adjustment pursuant to
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clause (ii) or (iii) hereof is required in connection with a
transaction that would otherwise result in an adjustment pursuant to
this clause (v).
The foregoing definition of Book Value is intended to comply
with the provisions of Treasury Regulation Section 1.704-1(b)(2)(iv) and shall
be interpreted and applied consistently therewith.
"Business" means the business of (a) owning, constructing
and operating systems to provide Company Communications Services, solely
within the Territory, (b) providing to end-users and resellers Company
Communications Services available on such systems, (c) providing in connection
with such Company Communications Services, solely within the Territory, the
Adopted Service Features and (subject to the immediately following sentence)
Telecommunications Services incidental or ancillary to such Company
Communications Services provided to end-users of such Company Communications
Services (including, by way of example, bundling additional Telecommunications
Services with Company Communications Services), and (d) marketing and offering
the services and features described in clauses (b) and (c) within the
Territory, including advertising such services and features using broadcast
and other media, so long as such advertising extends beyond the Territory only
when and to the extent necessary to reach customers and potential customers in
the Territory. The activities described in clauses (a) and (b) shall be the
indispensable requisite, and primary business, of the Company and, to the
extent the Company provides Telecommunications Services incidental or
ancillary thereto, the Company and its Subsidiaries shall be only the agent or
reseller for the provider thereof and shall not own or lease the facilities
used to provide such services, except that the Company may own or lease
facilities that, in the aggregate, do not have a purchase price to the Company
and its Subsidiaries in excess of $10 million, and the Company may be a
facilities-based provider of services using such facilities.
"Buyers" is defined in Section 9.2(a).
"Buy-Sell Procedure" is defined in Section 9.9(a).
"Capital Account" is defined in Section 3.1(a).
"Cellular System" means a wireless communications system
constructed and operated in a Metropolitan Statistical Area or Rural
Statistical Area as defined by the FCC (or any territorial designations or
subdivision thereof authorized by the FCC) exclusively using frequencies in
the 800 MHz band allocated for the Cellular Radiotelephone Service under Part
22 of the FCC Rules, pursuant to a License therefor issued by the FCC.
"Change of Control of DCC" means:
(i) at any time as Voting Securities of DCC (excluding
shares of Class B Common Stock owned beneficially by members of the
Xxxxxx Group) having at least a majority of the voting power of the
Voting Securities of DCC then outstanding (on
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a fully diluted basis, treating Equity Interests of DCC issuable upon
the conversion, exchange or exercise of convertible or exchangeable
securities, or other rights to acquire Equity Interests, as issued
and outstanding) are not listed for trading on a national securities
exchange or quoted on the NASDAQ National Market System, any
circumstance, event or transaction following which
(A) the members of the Xxxxxx Group cease to be the
exclusive "beneficial owners" (as such term is used in Rules
13d-3, 13d-5 or 16a-1 under the Exchange Act), of at least a
majority of the outstanding Equity Interests of DCC (on a
fully diluted basis, treating Equity Interests of DCC
issuable upon the conversion, exchange or exercise of
convertible or exchangeable securities, or other rights to
acquire Equity Interests, as issued and outstanding) or
(B) Xxxxxxx X. Xxxxxx or (in the event of the death
or Disability of Xxxxxxx X. Xxxxxx) the members of the Xxxxxx
Group cease to have, directly or indirectly, the exclusive
right to vote Voting Securities of DCC having at least a
majority of the voting power of the Voting Securities of DCC
then outstanding;
(ii) so long as Voting Securities of DCC (excluding shares
of Class B Common Stock owned beneficially by members of the Xxxxxx
Group) having at least a majority of the voting power of the Voting
Securities of DCC then outstanding (on a fully diluted basis,
treating Equity Interests of DCC issuable upon the conversion,
exchange or exercise of convertible or exchangeable securities, or
other rights to acquire Equity Interests, as issued and outstanding)
are listed for trading on a national securities exchange or quoted on
the NASDAQ National Market System, any circumstance, event or
transaction following which
(A) the members of the Xxxxxx Group cease to be the
exclusive "beneficial owners" (as such term is used in Rules
13d-3, 13d-5 or 16a-1 under the Exchange Act) of at least 35%
of the outstanding Equity Interests of DCC (on a fully
diluted basis, treating Equity Interests of DCC issuable
upon the conversion, exchange or exercise of convertible or
exchangeable securities, or other rights to acquire Equity
Interests, as issued and outstanding) or
(B) Xxxxxxx X. Xxxxxx or (in the event of the death
or Disability of Xxxxxxx X. Xxxxxx) the members of the Xxxxxx
Group, cease to have, directly or indirectly, the exclusive
right to vote Voting Securities of DCC having at least 35% of
the voting power of the Voting Securities of DCC then
outstanding, or
(C) another Person or group (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act and the
regulations thereunder) is the
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"beneficial owner" (as such term is used in Rules 13d-3,
13d-5 or 16a-1 under the Exchange Act) of at least 35% of
the Voting Securities of DCC or 35% of the outstanding
Equity Interests of DCC (on a fully diluted basis, treating
Equity Interests of DCC issuable upon the conversion,
exchange or exercise of convertible or exchangeable
securities, or other rights to acquire Equity Interests, as
issued and outstanding) or otherwise has the power, acting
alone, to control DCC; or
(iii) the sale of all or substantially all of DCC's stock,
business or assets (including through a merger or otherwise).
"Claim" is defined in Section 11.3(a).
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Company" means ACC Acquisition LLC.
"Company Communications Services" means Commercial Mobile
Radio Services regulated under FCC Rules Subpart H of Part 22, Subpart E of
Part 24, and Part 20 in effect as of the Effective Date.
"Company Minimum Gain" means the aggregate of the amounts of
gain, if any, determined for each nonrecourse liability of the Company, that
would be realized by the Company for federal income tax purposes if it
disposed of the Company property subject to such liability in a taxable
transaction in full satisfaction thereof and for no other consideration. To
the extent the foregoing is inconsistent with Treasury Regulation Section
1.704-2(d) or incomplete with respect to such regulation, Company Minimum Gain
shall be computed in accordance with such regulation.
"Confidential Information" means all documents and
information (including without limitation, commercial information and
information with respect to customers and proprietary technologies or
processes and the design and development of new products or services)
concerning the Company, the Cellular Systems and PCS Systems in which the
Company has an ownership interest, the Members or their Affiliates furnished
to a Member or any of its Affiliates in connection with the transactions
leading up to and contemplated by this Agreement and the other Related
Agreements and the operation of the Company which is (i) not otherwise in the
public domain, (ii) not otherwise in the rightful possession of such Member
(or Affiliate) from third parties having no obligation of confidentiality to
the other Member or the Company and (iii) not required to be disclosed by such
Member, its Affiliates or Agents pursuant to federal, state or local law.
"control," "controlled" and "controlling" shall mean
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of Voting Securities, by contract or otherwise.
6
"Core Service Features" means the service features set forth
on Schedule I.
"Corporation" is defined in Section 8.10(a).
"DCC" is defined in the first paragraph hereof.
"DCC Affiliate Group" means (a) DCC Sub so long as it is an
80% Subsidiary of DCC and DCC is a member of the DCC Affiliate Group, (b) any
Parent of DCC Sub so long as such Parent is an 80% Subsidiary of DCC and DCC
is a member of the DCC Affiliate Group, (c) DCC so long as a Change of Control
of DCC has not occurred, (d) any Parent of DCC so long as such Parent is an
80% Subsidiary of the Xxxxxx Group and (e) the Xxxxxx Group. Logix
Communications is not a member of the DCC Affiliate Group.
"DCCLP" means Xxxxxx XX Limited Partnership, an Oklahoma
limited partnership.
"DCC Member Group" means Members that are members of the DCC
Affiliate Group and their Private Transferees.
"DCC Sub" is defined in the first paragraph hereof.
"Depreciation" means, for each fiscal year or part thereof,
an amount equal to the depreciation, amortization, or other cost recovery
deduction allowable for federal income tax purposes with respect to an asset
for such year or other period, except that if the Book Value of an asset
differs from its adjusted basis for federal income tax purposes at the
beginning of such year, Depreciation shall be an amount which bears the same
ratio to such Book Value as the federal income tax depreciation, amortization
or other cost recovery deduction for such year bears to such adjusted tax
basis; provided that if the federal income tax depreciation, amortization or
other cost recovery deduction for such year is zero, Depreciation shall be
determined with reference to such Book Value using any reasonable method
selected by the Management Committee, subject to any applicable legal
regulations.
"Disability" means, with respect to Xxxxxxx X. Xxxxxx, that
he is disabled in accordance with the provisions of the long-term disability
insurance policies of DCC applicable to him or, in the absence of any such
policies, that he is unable, for 180 consecutive days, or 270 total days, in
any 360-day period, to exercise his material duties as Chief Executive Officer
of DCC.
"Dispute" is defined in Section 8.11(a).
"Dispute Notice" is defined in Section 8.11(c).
"Disqualifying Transaction" means a merger, consolidation,
asset acquisition or disposition, or other business combination involving AT&T
(or its Affiliates) and another
7
Person, which other Person (together with its Affiliates but before giving
effect to such merger, consolidation, asset acquisition or disposition or
other business combination) (a) derives annual aggregate revenues in excess of
$5 billion from the provision of Telecommunication Services (based on its most
recently ended fiscal year for which such information is available), (b)
derives less than one-third of its annual aggregate revenues from the
provision of wireless Telecommunications Services (based on its most recently
ended fiscal year for which such information is available), (c) owns Licenses
issued by the FCC which authorize it to offer (and does offer) Mobile Wireless
Services serving more than 25% of the Pops within the Territory, and (d) with
respect to which AWS Sub has given written notice to the Company and the other
Members specifying that such merger, consolidation, asset acquisition or
disposition or other business combination shall be a Disqualifying Transaction
for purposes of this Agreement and the transactions contemplated hereby.
"Distributable Cash" means, as of the end of any fiscal
period, the amount of the cash and cash equivalents held by the Company and
its Subsidiaries available for distribution to the Members, as determined by
the Management Committee in accordance with sound business practice.
"Xxxxxx Family" means, collectively, the Immediate Families
of Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx and Xxxxx Xxxxxx.
"Xxxxxx Group" means, collectively, the Persons set forth on
Schedule II and members of the Xxxxxx Family.
"Xxxxxx IPO" means an initial public offering of common stock
of DCC pursuant to an effective registration statement under the Securities Act,
the aggregate gross proceeds from which public offering equals or exceeds $50.0
million.
"Economic Interest" means the percentage interest of a
Member (or a permitted assignee of a Member pursuant to Article 9 which has
not been admitted as a Member of the Company) in the aggregate distributions
by the Company, and the aggregate allocations by the Company of Profits,
Losses, income, gain, loss, deduction or credit or any similar item, and all
other rights and interests of a Member of the Company that are not Voting
Interests. The term "Economic Interest" specifically excludes a Voting
Interest.
"Effective Date" means the Closing Date under the Agreement
and Plan of Merger, dated as of October 5, 1999, among the Company, ACC
Acquisition Co. and American Cellular Corporation.
"Equity Interests" means capital stock, partnership
interests, limited liability company interests or other ownership or
beneficial interests of any Person.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
8
"Fair Market Value" means, with respect to any asset, as of
the date of determination, the cash price at which a willing seller would sell
and a willing buyer would buy such asset in a transaction negotiated at arm's
length, each being apprised of and considering all relevant facts,
circumstances and factors, and neither acting under compulsion, with the
parties being unaffiliated third parties acting without time constraints.
"FCC" means the Federal Communications Commission or any
successor agency or entity performing substantially the same functions.
"FCC Rules" means the rules and regulations established by
the FCC codified in Section 47 of the Code of Federal Regulations, as the same
may be modified or amended from time to time hereafter.
"Final Order" means an action by the FCC or any state
regulatory agency granting its approval for the transfer of control of the
Company as to which (i) no request for stay by the FCC or state regulatory
action is pending, no such stay is in effect, and, if any deadline for filing
any such request is designated by statute, rule or regulation, such deadline
has passed; (ii) no petition for rehearing or reconsideration or application
for review of the action is pending before the FCC or any state regulatory
agency, and the time for filing any such petitions or applications has passed;
(iii) neither the FCC nor any state regulatory agency has the action under
reconsideration on its own motion and the time for such reconsideration has
passed; and (iv) no appeal to a court, or request for stay by a court, of the
action of the FCC or state regulatory agency is pending or in effect, and, if
any deadline for filing any such appeal or request is designated by statute,
rule or regulation, it has passed.
"GAAP" means generally accepted accounting principles as
used by the Financial Accounting Standards Board and/or the American Institute
of Certified Public Accountants.
"Governmental Authority" means a national, state,
provincial, county, city, local or other governmental or regulatory body or
authority, whether domestic or foreign.
"Immediate Family" means, with respect to any Person, such
Person's spouse, parents, spouse's parents, siblings, children, stepchildren,
adopted children and grandchildren.
"Included Interests" is defined in Section 9.3(a).
"Indemnified Person" is defined in Section 11.1(b).
"Indirect Transfer" means, with respect to Interests in the
Company owned by a Member that is a member of an Affiliate Group, a Transfer
of Equity Interests in a Person that owns directly or indirectly Equity
Interests in such Member.
9
"Initial Economic Interests" means the Economic Interests
acquired by AWS Sub and DCC Sub on the Effective Date.
"Interest" means the Economic Interest and the Voting
Interest of a Member, and includes the entire legal and equitable ownership
interest of a Member in the Company.
"IPO" means the initial underwritten public offering of the
Company's equity securities pursuant to an effective registration statement
under the Securities Act.
"License" means, with respect to a PCS System or Cellular
System, all permits, licenses, waivers, and authorizations (including,
without limitation, licenses issued by the FCC) that are necessary to conduct
the operations of such system in the manner in which such operations are
currently contemplated, or may in the future be contemplated by the licensee
to be conducted.
"Lien" means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest, right of first refusal or right of
others therein, or encumbrance of any nature whatsoever in respect of such
asset.
"Liquidator" is defined in Section 10.3(b).
"Logix Communications" means Logix Communications
Enterprises, Inc.
"Management Agreement" means the Management Agreement,
dated as of the date hereof, between the Company and Xxxxxx Cellular Systems,
Inc., as the same may be amended in accordance herewith and therewith.
"Management Committee" is defined in Section 7.1.
"Member" means, initially, AWS Sub and DCC Sub as long as
they have not ceased to be Members hereunder, and any Person who, at the time
of the reference thereto, has been admitted to the Company as a Member in
accordance with the terms of this Agreement and has not ceased to be a Member
hereunder, in such Person's capacity as a member (within the meaning of the
Act) of the Company.
"Member Group" means each of the AWS Member Group and the
DCC Member Group.
"Member Minimum Gain" means an amount, with respect to each
Member nonrecourse debt, equal to the Company Minimum Gain that would result
if such Member nonrecourse debt were treated as a nonrecourse liability,
determined in accordance with Treasury Regulation Section 1.704-2(i).
"Member Nonrecourse Debt" has the meaning ascribed to the
term "partner nonrecourse debt" in Treasury Regulation Section 1.704-2(b)(4),
and generally means any
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nonrecourse debt of the Company for which any Member bears the economic risk
of loss (such as a nonrecourse loan to the Company by a Member or certain
Affiliates of a Member).
"Member Nonrecourse Deduction" has the meaning ascribed to
the term "partner nonrecourse deduction" in Treasury Regulation Section
1.704-2(i)(2). The amount of the Member Nonrecourse Deductions with respect
to a Member Nonrecourse Debt for a Company fiscal year equals the net
increase, if any, in the amount of Member Minimum Gain attributable to such
Member Nonrecourse Debt during that fiscal year, reduced (but not below zero)
by the aggregate amount of any distributions during that fiscal year to the
Member that bears the economic risk of loss for such Member Nonrecourse Debt
to the extent such distributions are from the proceeds of such Member
Nonrecourse Debt and are allocable to an increase in Member Minimum Gain
attributable to such Member Nonrecourse Debt.
"Mobile Wireless Services" shall mean mobile wireless
Company Communications Services (including the transmission of voice, data,
image or other messages or content) provided solely within the Territory,
initiated or terminated using TDMA or analog cellular technology and on
frequencies in the 800 MHz band authorized for the Cellular Radiotelephone
Service under Part 22 of the FCC Rules or in the 1900 MHz band authorized for
the Personal Communications Services under Part 24 of the FCC Rules, to or
from subscriber equipment that is capable of usage during routine movement
throughout the area covered by a cell site and routine handing-off between
cell sites, and is either intended for such usage or is temporarily fixed to
a specific location on a short-term basis (e.g., a bank of wireless
telephones temporarily installed during a special event of limited duration).
Without limiting the foregoing, Mobile Wireless Services shall include
wireless office services if such services comply with this definition. Mobile
Wireless Services shall also include the transmissions between the Company's
cell sites and the Company's switch or switches in the Territory, the
handing-off of transmissions at the Company's switch or switches for
termination by other carriers, and the receiving of transmissions for the
Company's customers handed-off at the Company's switch or switches which were
originated on the system or systems of other carriers, in each case for the
purpose of facilitating Mobile Wireless Services described in the first
sentence.
"Nonrecourse Deductions" has the meaning set forth in
Treasury Regulation Section 1.704-2(c). The amount of Nonrecourse Deductions
for a fiscal year equals the net increase, if any, in the amount of Company
Minimum Gain during that fiscal year, reduced (but not below zero) by any
Nonrecourse Distributions during such year.
"Nonrecourse Distributions" means the aggregate amount, as
determined in accordance with Treasury Regulation Section 1.704-2(c), of any
distributions during the fiscal year of proceeds of a nonrecourse liability,
as defined in Treasury Regulation Section 1.704(b)(3), that are allocable to
an increase in Company Minimum Gain.
"Offer" is defined in Section 9.2(a).
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"Offer Notice" is defined in Section 9.2(a).
"Offered Interests" is defined in Section 9.2(a).
"Offeror" is defined in Section 9.2(a).
"Operating Agreement" means the Operating Agreement, dated
as of the date hereof, among the Company, AWS and DCC, as the same may be
amended in accordance herewith and therewith.
"Parent" means, with respect to a specified entity, a Person
or group of which the specified entity is a Subsidiary.
"PCS" means the Personal Communications Services regulated
under Part 24 of the FCC Rules.
"PCS System" means a wireless communications system
constructed and operated in a Basic Trading Area or Major Trading Area as
defined by Xxxx-XxXxxxx and modified by the FCC (or any territorial
designations or subdivision thereof authorized by the FCC) exclusively using
frequencies in the 1900 MHz band allocated for the broadband Personal
Communications Service under Part 24 of the FCC Rules, pursuant to a License
therefor issued by the FCC.
"Person" means any individual, corporation, partnership,
firm, joint venture, limited liability company, limited liability
partnership, association, joint stock company, trust, estate, incorporated or
unincorporated organization, Governmental Authority or other entity.
"Pops" means with respect to any licensed area, the
residents of such area based on the most recent publication by Equifax
Marketing Decision Systems, Inc. or any other publication as determined by
the Management Committee.
"Private Transferee" means a Person that acquires Economic
Interests from a Member in compliance with this Agreement, other than
pursuant to a broadly distributed underwritten registered public offering
or Rule 144 under the Securities Act, and that is not a member of an
Affiliate Group immediately prior to such acquisition.
"Profits" and "Losses" means, for each fiscal year or part
thereof, the Company's taxable income or loss for such year determined in
accordance with Section 703(a) of the Code (for this purpose, all items of
income, gain, loss and deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss)
with the following adjustments:
(i) any income of the Company that is exempt from
federal income tax shall be added to such taxable income or loss;
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(ii) any expenditures of the Company described in
Section 705(a)(2)(B) of the Code or treated as such pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(i) shall be subtracted
from such taxable income or loss;
(iii) in lieu of the depreciation, amortization and
other cost recovery deductions taken into account in computing such
taxable income or loss, Depreciation for such fiscal year shall be
taken into account;
(iv) if the Book Value of any Company asset is
adjusted pursuant to clause (ii) or clause (iii) of the definition of
Book Value, the amount of such adjustment shall be taken into account
as gain or loss from the disposition of such asset for purposes of
computing Profits or Losses;
(v) to the extent an adjustment to the adjusted tax
basis of any Company asset under Section 734(b) of the Code is
required, pursuant to Treasury Regulation Section 1.704(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 Member's interest in the
Company, the amount of such adjustment shall be treated as an item of
gain (if the adjustment increases the adjusted tax basis of the asset)
or an item of loss (if the adjustment decreases the adjusted tax basis
of the asset) from the disposition of such asset and shall be taken
into account for purposes of computing Profits and Losses; and
(vi) such taxable income or loss shall not be deemed
to include items of income, gain, loss, or deduction allocated pursuant
to Section 3.1(c)(iii) (to comply with Treasury Regulations under
Section 704(b) of the Code), Section 4.3, Section 4.4 or Section 4.5.
"Prohibited Transferee" means any Person or group (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act and the
regulations thereunder) or Affiliate thereof (other than AWS and its
Affiliates) that (a) is one of the five largest providers of wireless
Telecommunications Services (based on revenue derived from the provision of
such wireless Telecommunications Services during the most recent fiscal year
preceding the applicable Transfer for which such information is available) in
the United States or a company whose annual gross revenues from
Telecommunications Services (during the most recent fiscal year for which
such information is available) exceed $2 billion or (b) provides Company
Communications Services in service areas in the United States covering more
than five million Pops.
"Qualified Member" means each of (i) the members of the AWS
Member Group that are members of the AWS Affiliate Group, so long as the AWS
Member Group is a Qualified Member Group and (ii) the members of the DCC
Member Group that are members of the DCC Affiliate Group, so long as the DCC
Member Group is a Qualified Member Group.
13
"Qualified Member Group" means each of (i) the AWS Member
Group as long as members of the AWS Affiliate Group that are members of the
AWS Member Group retain in the aggregate 100% of the Voting Interests, and at
least 80% of the Economic Interests, that AWS Sub acquired on the Effective
Date and (ii) the DCC Member Group as long as members of the DCC Affiliate
Group that are members of the DCC Member Group retain in the aggregate 100%
of the Voting Interests, and at least 80% of the Economic Interests, that DCC
Sub acquired on the Effective Date.
"Related Agreements" means the Long Distance Agreement, the
Operating Agreement, any Resale Agreement and the Management Agreement.
"Representative" is defined in Section 7.1(a).
"Resale Agreement" means a Resale Agreement, if any,
entered into between the Company and DCC pursuant to Section 8.1(a).
"Response" is defined in Section 8.11(c).
"RoFR Closing" is defined in Section 9.2(b).
"Section 9.9(a) Notice" is defined in Section 9.9(a).
"Section 9.9(b) Notice" is defined in Section 9.9(b).
"Section 9.9(c) Notice" is defined in Section 9.9(c).
"Section 9.10 Election" is defined in Section 9.10.
"Securities Act" means the Securities Act of 1933, as amended.
"Sellers" is defined in Section 9.2(a).
"Selling Group" is defined in Section 9.2(a).
"Senior Party Representatives" is defined in Section 8.11(b).
"Significant Matter" means, subject to Section 9.8(a)(iii),
any of the following:
(1) The sale, transfer, assignment or other disposition of any
material portion of the assets of the Company or any of its
Subsidiaries other than in the ordinary course of business;
(2) The merger, combination or consolidation of the Company or
any of its Subsidiaries with or into any entity other than the Company
or a wholly owned Subsidiary of the Company, regardless of whether the
Company or any such
14
Subsidiary is the surviving entity in any such merger, combination or
consolidation; the acquisition of any businesses or assets for
consideration in excess of $1,000,000 by the Company; the formation
of any partnership or joint venture involving the Company; or the
liquidation, dissolution or winding up of the Company or any of its
Subsidiaries (other than the liquidation of a 100% Subsidiary of the
Company into the Company or another 100% Subsidiary of the Company);
(3) Any offering or issuance of securities or ownership
interests in the Company or any of its Subsidiaries, including, without
limitation, warrants, options or other rights convertible into or
exchangeable for securities or ownership interests in the Company or
any of its Subsidiaries, or the declaration of any dividends thereon;
(4) The repurchase by the Company or any of its Subsidiaries
of any securities or ownership interests in the Company or any of its
Subsidiaries, including, without limitation, warrants, options or other
rights convertible into or exchangeable for securities or ownership
interests in the Company or any of its Subsidiaries;
(5) The authorization or adoption of any amendment to the
certificate of formation, limited liability company agreement or any
other constituent document of the Company or any of its Subsidiaries,
or the conversion of the Company to a corporation (other than pursuant
to an election to effect an IPO in accordance with Section 8.10);
(6) If the Company is not managed by an Affiliate of DCC, the
hiring or termination of any executive officer of the Company;
(7) The approval of, or material amendment to, the initial
three-year budget, and any annual or other operating or capital budget,
of the Company or any of its Subsidiaries;
(8) The incurrence by the Company or any of its Subsidiaries,
whether directly or indirectly, of any indebtedness for borrowed money
or capital leases in any calendar quarter in excess of $1,000,000
unless specifically provided for in any budget approved by the
Management Committee;
(9) Any agreement or arrangement, written or oral, to pay any
director, officer, agent or employee of the Company or any of its
Subsidiaries $200,000 or more on an annual basis; or any loan, lease,
contract or other transaction with any employee of the Company or any
of its Subsidiaries with an annual salary in excess of $200,000, or
with any Representative or officer of the Company or any member of any
such Person's Immediate Family, unless specifically provided for in any
budget approved by the Management Committee;
15
(10) The making of, or commitment to make, any capital
expenditures involving a payment or liability in any one year of
$1,000,000 or more in the aggregate by the Company or any of its
Subsidiaries, in each case other than as provided for in any budget
approved by the Management Committee;
(11) The initiation of any bankruptcy proceeding, dissolution
or liquidation of the Company or any of its Subsidiaries;
(12) Any agreement or commitment by the Company or any of its
Subsidiaries (w) not to compete with any other Person, (x) not to
solicit any other Person's business or customers, (y) not to solicit or
hire any other Person's employees, or (z) to use any other Person's
trademarks or services marks in its business, or to license or
otherwise make available any of its trademarks or service marks to any
other Person for any purpose;
(13) The provision by the Company or any of its Subsidiaries
of Company Communications Services that are not Mobile Wireless
Services;
(14) The assertion by the Company of a position with respect
to any material matter, or the disagreement by the Company with a
position taken with respect to any material matter by a Member or any
other Person, before the FCC or any other Governmental Authority, a
self-regulatory body, any industry organization or in any other public
forum;
(15) The acquisition or disposition of any License issued by
the FCC;
(16) Except as otherwise provided herein or therein, any
amendment, modification, renewal or termination of any of the Related
Agreements; and
(17) The entering into any contract, agreement or commitment
to do any of the foregoing.
"Specified Restrictions" is defined in Section 9.4.
"Subsidiary" means, with respect to any Person, a
corporation or other entity of which 50% or more of the voting power of the
Voting Securities or equity interests is owned, directly or indirectly, by
such Person.
"Tax Matters Partner" is defined in Section 6.5(d).
"TDMA" means the North American Time Division Multiple
Access standard set by the Telecommunications Industry Association,
IS-54/136, and any standard that is based upon, or is an upgrade from, or is
a successor to, such standard, and is adopted by AWS Sub and its Affiliates
in a majority of their network nodes.
16
"TDMA Quality Standards" means the quality standards
applicable to PCS Systems and Cellular Systems that utilize TDMA and that are
owned and operated by AT&T and its Affiliates, which will be set forth in a
schedule to the Operating Agreement, as the same may be amended from time to
time, provided any such amended standards shall become effective 120 days
after notice thereof is given to the Company and DCC.
"Telecommunications Services" means the offering of
telecommunications services for a fee directly to the public, or to such
classes of users as to be effectively available directly to the public,
regardless of the facilities used. The term "telecommunications" means the
transmission, between or among points specified by the user of information of
the user's choosing.
"Territory" means, subject to Section 8.12, the geographic
territory set forth on Schedule III hereto.
"Transfer" means assign, bequeath, convey, create or suffer
to exist a Lien upon, encumber, gift, grant, hypothecate, issue, mortgage,
place in trust, pledge, sell, transfer or otherwise dispose of, in each case
whether directly or indirectly, voluntarily or involuntarily (including by
testamentary or intestate succession), by operation of law or otherwise.
"Treasury Regulations" means regulations issued by the
United States Department of the Treasury pursuant to the Code.
"Voting Interest" means the right of a Member to exercise
governance rights with regard to the Company (including the right to appoint
Representatives to the Member Committee). The term "Voting Interest"
specifically excludes Economic Interest.
"Voting Securities" means equity securities of a Person
having the right to vote generally in the election of the directors (or
persons performing equivalent functions) of such Person.
ARTICLE 2
ORGANIZATION
2.1 NAME. The name of the Company shall be ACC
Acquisition LLC. The name of the Company may be changed from time to time by
the Management Committee with notice to the Members.
2.2 PRINCIPAL PLACE OF BUSINESS. The Company's principal
office and place of business shall be located in Oklahoma City, Oklahoma. The
principal office and place of business may be changed from time to time, and
other offices and places of business may be established from time to time,
both within and without the State of Delaware, by the Management Committee
with notice to the Members.
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2.3 REGISTERED OFFICE; REGISTERED AGENT. The address of
the registered office of the Company in the State of Oklahoma shall be 00000
Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxxxxx Xxxx, Xxxxxxxx 00000 or such other address
as the Management Committee may determine. The registered agent for service
of process on the Company in the State of Oklahoma shall be Xxxxxxx X.
Xxxxxx, or such other agent as the Management Committee may determine. The
name and address of the registered agent for service of process on the
Company in the State of Delaware shall be Corporation Service Company, 0000
Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
2.4 TERM. The term of the Company commenced on September
15, 1999 and, unless terminated in accordance with this Agreement, shall be
perpetual.
2.5 PURPOSE AND POWERS.
(a) The purposes of the Company are to (i) establish and
conduct the Business; (ii) enter into the Related Agreements to which the
Company is a party; and (iii) do any and all things reasonably necessary or
advisable in connection with the foregoing. The Company shall have the power and
authority to take any and all actions necessary or advisable to or for the
furtherance of said purposes.
(b) The foregoing provisions of this Section 2.5 shall
not be construed to authorize the Company to, and the Company shall not, and
the Members agree that the Company shall not, engage in any activities other
than the foregoing (and in particular expand or change the scope of the
Business beyond that contemplated by the definition thereof) without the
consent of the Management Committee.
2.6 FILINGS. The Management Committee shall cause to be
executed, filed and published all such certificates, notices, statements or
other instruments, and amendments thereto under the laws of the State of
Delaware and other applicable jurisdictions as the Management Committee may
deem necessary or advisable for the operation of the Company.
2.7 SOLE AGREEMENT. The parties intend that their
obligations to each other with respect to the Company and the scope of their
joint enterprise be as set forth in this Agreement and the Related
Agreements, and that no further authority to bind the other or the Company or
any liabilities to each other or any third party be inferred from the
relationships described in such agreements.
ARTICLE 3
CAPITALIZATION
3.1 CAPITAL ACCOUNTS.
(a) ESTABLISHMENT. A separate capital account ("Capital
Account") is
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hereby established for each Member as of the Effective Date.
(b) GENERAL RULES FOR ADJUSTMENT OF CAPITAL ACCOUNTS. The
Capital Account of each Member shall be:
(i) increased by:
(A) the aggregate amount of such Member's cash
contributions to the Company;
(B) the initial Book Value of property
contributed by such Member to the Company,
net of liabilities secured by such property
that the Company is considered to assume or
take subject to Section 752 of the Code and
the Treasury Regulations promulgated
thereunder;
(C) such Member's distributive share of Profits
and items of income and gain allocated to
such Member pursuant to Section 3.1(c)(iii)
or Section 4.3;
(D) any positive adjustment to such Capital
Account by reason of an adjustment to the
Book Value of the Company assets; and
(E) the amount of Company liabilities assumed by
such Member or which are secured by any
property distributed to such Member; and
(ii) decreased by:
(A) cash distributions to such Member from the
Company;
(B) the Book Value of property distributed in
kind to such Member, net of liabilities
secured by such property that such Member is
deemed to assume or take subject to Section
752 of the Code and the Treasury Regulations
promulgated thereunder;
(C) such Member's distributive share of Losses
and items of loss or deduction allocated to
such Member pursuant to Section 3.1(c)(iii)
or Section 4.3 ;
(D) any negative adjustment to such Capital
Account by reason of an adjustment to the
Book Value of Company assets;
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(E) any amount charged to the Capital Account of
such Member pursuant to Section 6.5(e); and
(F) the amount of any liabilities of such Member
assumed by the Company or which are secured
by property contributed by such Member to
the Company.
(c) SPECIAL RULES.
(i) TIME OF ADJUSTMENT FOR CAPITAL CONTRIBUTIONS. For
purposes of computing the balance in a Member's Capital Account, no
credit shall be given for any capital contribution which such Member
is obligated to make until such contribution is actually made.
(ii) CAPITAL ACCOUNT FOR TRANSFERRED INTEREST. If any
Interest in the Company or part thereof is Transferred in accordance
with the terms of this Agreement, the transferee shall succeed to the
Capital Account of the transferor to the extent it relates to the
Transferred Interest.
(iii) INTENT TO COMPLY WITH TREASURY REGULATIONS. The
foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply
with Treasury Regulation Section 1.704-1(b), and shall be interpreted
and applied in a manner consistent with such regulation. To the extent
the provisions of this Agreement are inconsistent with such regulation
or are incomplete with respect thereto, the Capital Accounts of the
Members shall be maintained in accordance with such regulation except
to the extent that doing so would materially distort the timing or
amount of an allocation or distribution to a Member.
3.2 CAPITAL CONTRIBUTIONS.
(a) On the Effective Date, each of AWS Sub and DCC Sub
shall contribute $372.5 million in cash to the capital of the Company, and
the Company shall accept such capital contributions. After giving effect to
such capital contributions, AWS Sub and DCC Sub shall each own 50% of the
Economic Interests and 50% of the Voting Interests.
(b) No Member shall be required or permitted to make any
additional capital contributions to the Company without the unanimous
approval of the Management Committee.
3.3 NO WITHDRAWALS. Except as expressly set forth herein,
no Member shall be entitled to withdraw any portion of its capital
contribution or Capital Account balance.
20
3.4 NO INTEREST. Except as expressly set forth herein, no
Member shall be entitled to receive any interest on its capital contribution or
Capital Account balance.
ARTICLE 4
PROFITS AND LOSSES
4.1 PROFITS. Except as provided in Sections 4.2 through
4.5, Profits and Losses with respect to any fiscal year shall be allocated to
the Members in accordance with their respective Economic Interests.
4.2 LOSSES.
(a) GENERAL RULE. After giving effect to the special
allocations set forth in Section 4.3 and 4.4, subject to Section 4.2.(b), Losses
with respect to any fiscal year shall be allocated to the Members in accordance
with their respective Economic Interests.
(b) LIMITATION ON LOSSES. Losses allocated to any Member
pursuant to Section 4.1 with respect to any fiscal year shall not exceed the
maximum amount of Losses that may be so allocated without causing such Member to
have an Adjusted Capital Account Deficit at the end of such fiscal year. All
Losses in excess of the limitation set forth in this Section 4.2 shall be
allocated: first, to the Members that will not be subject to this limitation,
ratably based on the aggregate of their Economic Interests, to the extent
possible until such Members become subject to this limitation; and any remaining
amount, to the Members, ratably based on their Economic Interests, unless
otherwise required by the Code or Treasury Regulations. To the extent that any
Member receives an allocation of Losses pursuant to this Section 4.2, such
Member shall receive a priority allocation of Profits (prior to an allocation of
Profit made pursuant to Section 4.1) in the reverse order of such Loss
allocations in order to reverse the effect of this Section 4.2.
4.3 SPECIAL ALLOCATIONS. The following special
allocations shall be made for any fiscal year of the Company in the following
order of priority:
(a) QUALIFIED INCOME OFFSET. Notwithstanding anything
herein to the contrary, but only if required by Treasury Regulation Section
1.704-1(b) in order for the allocations provided for herein to be considered
to have substantial economic effect or to be deemed to be in accordance with
the Member's Economic Interests, if, for any fiscal year, a Member
unexpectedly receives an adjustment, allocation or distribution described in
Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), and such
adjustment, allocation or distribution causes or increases an Adjusted
Capital Account Deficit with respect to such Member, then, before any other
allocations are made, such Member shall be allocated items of income and gain
(consisting of a pro rata portion of each item of Company income, including
gross income and gain) in the amount and manner sufficient to eliminate such
Adjusted Capital Account Deficit as quickly as possible. This Section 4.3(a)
is intended
21
to comply with Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
(b) MINIMUM GAIN CHARGEBACK. Notwithstanding any other
provision of this Article 3, if there is a net decrease in Company Minimum Gain
during any fiscal year, each Member shall, subject to the exceptions provided in
Treasury Regulation Section 1.704-2(f), be specially allocated items of income
and gain for such fiscal year (and, if necessary, subsequent fiscal years) equal
to such Member's share of the net decrease in Company Minimum Gain within the
meaning of Treasury Regulation Section 1.704-2(g)(2). Allocations pursuant to
the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Member pursuant thereto. The items to be so
allocated shall be determined in accordance with Treasury Regulation Sections
1.704-2(6) and 1.704-2(i)(2). To the extent that this Section 4.3(b) is
inconsistent with Treasury Regulation Section 1.704-2(f), the Minimum Gain
Chargeback provided for herein shall be applied and interpreted in accordance
with such Treasury Regulation.
(c) MEMBER MINIMUM GAIN CHARGEBACK. If there is a net
decrease in Member Minimum Gain attributable to a Member Nonrecourse Debt
during any Company fiscal year, within the meaning of Treasury Regulation
Sections 1.704-2(i)(3) and 1.704-2(k), each Member that, as of the beginning
of such year, has a share of the Member Minimum Gain attributable to such
Member Nonrecourse Debt, determined in accordance with Treasury Regulation
Section 1.704-2(i)(5), shall be specially allocated items of income and gain
for such fiscal year (and, if necessary, subsequent fiscal years) in an
amount equal to such Member's share of the net decrease in Member 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 Member pursuant
thereto. The items to be so allocated shall be determined in accordance with
Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(i)(2). To the extent
that this Section 4.3(c) is inconsistent with Treasury Regulation Section
1.704-2(i), the Member Minimum Gain chargeback provided for herein shall be
applied and interpreted in accordance with such regulation.
(d) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions shall
be allocated to the Members in accordance with their respective Economic
Interests.
(e) MEMBER NONRECOURSE DEDUCTIONS. Any Member Nonrecourse
Deductions for any fiscal year or other period shall be allocated to the
Member that bears the economic risk of loss with respect to the Member
Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable
in accordance with Treasury Regulation Section 1.704-2(i).
4.4 CURATIVE ALLOCATIONS. The allocations set forth in
Sections 4.3(a) through 4.3(e) are intended to comply with certain regulatory
requirements under Section 704(b) of the Code. The Members intend that, to the
extent possible, all allocations made pursuant to such Sections will, over the
term of the Company, be offset either with
22
other allocations pursuant to Section 4.3 or with special allocations of
other items of Company income, gain, loss, or deduction pursuant to this
Section 4.4. Accordingly, the Management Committee is hereby authorized and
directed to make offsetting allocations of Company income, gain, loss or
deduction under this Section 4.4 in whatever manner the Management Committee
determines is appropriate so that after such offsetting special allocations
are made (and taking into account the reasonably anticipated future
allocations of income and gain pursuant to Section 4.3(b) and Section 4.3(c))
the Capital Accounts of the Members are, to the extent possible, equal to the
Capital Accounts each would have if the provisions of Section 4.3 were not
contained in this Agreement and all income, gain, loss and deduction of the
Company were instead allocated pursuant to Section 4.1 and Section 4.2.
4.5 SPECIAL ALLOCATIONS IN THE EVENT OF COMPANY AUDIT
ADJUSTMENTS. Notwithstanding the allocation provisions of Section 4.1 and
Section 4.2, and prior to making any of the allocations specified in Section
4.3, the following special allocations shall be made in the following order
and in a manner, taking into consideration any tiered partnership structure
that the Company may be part of, that reflects the relative economic
interests of each Member in the Company:
(a) If for any fiscal year of the Company, the Company or
any Affiliate of the Company is deemed to have additional income for tax
purposes as a result of a redetermination by a taxing authority of an item of
income, gain, loss or deduction that is attributable to a loan transaction,
the provision of services, or the grant of a license or sublicense in
intangible property by the Company or any Affiliate of the Company, to or
involving any Member or Affiliate of any Member, such additional income shall
be allocated to the Member involved in such loan transaction or that received
such services, license or sublicense (or the Member whose Affiliate was
involved in such loan transaction or received such services, license or
sublicense) and any related deemed cash distribution shall be treated as
having been made to the same Member.
(b) If for any fiscal year of the Company, the Company or
any Affiliate of the Company is deemed to have a reduction in income for tax
purposes as a result of a redetermination by a taxing authority of an item of
income, gain, loss or deduction that is attributable to a loan transaction,
the provision of services, or the grant of a license or sublicense in
intangible property by the Company or any Affiliate of the Company, to or
involving any Member or Affiliate of any Member, such reduction in income
shall be allocated to the Member involved in such loan transaction or that
received such services, license or sublicense (or the Member whose Affiliate
was involved in such loan transaction or received such services, license or
sublicense) and any related deemed cash contribution shall be treated as
having been made by the same Member.
(c) If for any taxable period of a Member, such Member or
any Affiliate of the Member is deemed to have additional income for tax
purposes as a result of a redetermination by a taxing authority of an item of
income, gain, loss or deduction attributable to a loan transaction, the
provision of services, or the grant of a license or sublicense in intangible
property by such Member or any Affiliate of such Member, to or
23
involving the Company or any Affiliate of the Company, any increase in the
amount of a Company deduction associated with such redetermination of such
Member's or any Affiliate of such Member's income shall be allocated (in the
appropriate fiscal year) to the Member involved in such loan transaction or
that provided such services, license or sublicense (either directly or
through an Affiliate), and any related deemed cash contribution shall be
treated as having been made by the same Member.
(d) If for any taxable period of a Member, such Member or
any Affiliate of the Member is deemed to have a reduction in income for tax
purposes as a result of a redetermination by a taxing authority of an item of
income, gain, loss or deduction attributable to a loan transaction, the
provision of services, or the grant of a license or sublicense in intangible
property by such Member or any Affiliate of such Member, to or involving the
Company or any Affiliate of the Company, any reduction in the amount of a
Company deduction associated with such redetermination of such Member's or
any Affiliate of such Member's income shall be allocated (in the appropriate
fiscal year) to the Member involved in such loan transaction or that provided
such services, license or sublicense (either directly or through an
Affiliate), and any related deemed cash distribution shall be treated as
having been made to the same Member.
(e) A redetermination by a taxing authority shall only be
given effect for purposes of this Section 4.5 if such redetermination is (i)
a decision, judgment, decree or other order by any court of competent
jurisdiction, which has become final and is either no longer subject to
appeal or for which a determination not to appeal has been made; (ii) a
closing agreement made under Section 7121 of the Code or any comparable
foreign, state, local or other income tax statute; (iii) a final disposition
by a taxing authority of a claim for refund; or (iv) any other written
agreement made with respect to a tax redetermination the execution of which
is final and prohibits the taxing authority, relevant Member (or any
Affiliate of such Members) or the Company (or any Affiliate of the Company)
from seeking any further legal or administrative remedies with respect to
such tax redetermination.
4.6 ALLOCATION OF CREDITS. All tax credits shall be
allocated among the Members in accordance with their respective Interests or
in accordance with applicable provisions of the Code or Treasury Regulations
to the extent any such provision is inconsistent with such allocation.
4.7 TAX ALLOCATIONS.
(a) CONTRIBUTED PROPERTY. In the event any property is
contributed to the capital of the Company, income, gain, loss and deduction with
respect to such property shall be allocated solely for tax purposes among the
Members in accordance with Section 704(c) of the Code and Treasury Regulation
Section 1.704-3 so as to take account of any variation between the adjusted
basis of such property to the Company for federal income tax purposes and its
initial Book Value. Prior to the contribution of any property to the Company
that has a Fair Market Value that differs from its adjusted tax basis in the
hands of the contributing Member on the date of contribution, the contributing
Member and the Management
24
Committee shall agree upon the allocation method to be applied with respect
to that property under Treasury Regulation Section 1.704-3, which allocation
method shall be set forth on attached Schedule 4.7, as amended from time to
time.
(b) REVALUED PROPERTY. If the Company assets are revalued
as set forth in the definition of "Book Value," subsequent allocations of
income, gain, loss and deduction with respect to revalued Company assets
shall take into account any variation between the adjusted basis of such
assets for federal income tax purposes and their adjusted value in the same
manner as under Section 704(c) of the Code and in compliance with Treasury
Regulation Section 1.704-3. All decisions regarding the choice of allocation
method under Treasury Regulation Section 1.704-3 with respect to revalued
Company assets shall be made by the Management Committee.
4.8 CHANGE IN MEMBER'S INTERESTS. In the event there is any
change in the Members' respective Economic Interests during any fiscal year,
Profits, Losses, Nonrecourse Deductions and other items shall be allocated among
the Members in accordance with their respective Economic Interests from time to
time during such fiscal year in accordance with Section 706 of the Code, using
any convention permitted by law and selected by the Management Committee.
ARTICLE 5
DISTRIBUTIONS
5.1 DISTRIBUTABLE CASH. It shall be the policy of the
Company, and the Members shall direct their respective Representatives on the
Management Committee to cause the Company, to distribute Distributable Cash
to the Members quarterly. Any distributions of such Distributable Cash shall
be made to the Members in accordance with their respective Economic
Interests. Notwithstanding the foregoing or any other provision of this
Agreement to the contrary, the Company, and the Members, Management Committee
and Representatives on behalf of the Company, shall not be required to make
any distribution to any Member on account of such Member's interest in the
Company if such distribution would violate the Act or other applicable law.
5.2 LIQUIDATING DISTRIBUTIONS. Distributions to the
Members of cash or property in connection with a dissolution of the Company
shall be made in accordance with the Capital Account balances of the Members,
as provided in Section 10.3(d)(ii).
5.3 OTHER DISTRIBUTIONS. No Member shall be entitled to
receive any distribution from the Company without the consent of the
Management Committee or as otherwise provided in Section 5.1 or 10.3(d).
ARTICLE 6
ACCOUNTING AND RECORDS
25
6.1 FISCAL YEAR. The fiscal year of the Company shall be
the year ending December 31.
6.2 METHOD OF ACCOUNTING. Unless otherwise provided
herein, the Company books of account shall be maintained in accordance with
GAAP; provided that for purposes of making allocations with respect to items
of Company income, gain, deduction, loss and credit to the Members, such
items shall be allocated to the Members' Capital Accounts pursuant to Article
4 and as required by Section 704 of the Code and the Treasury Regulations
promulgated thereunder.
6.3 BOOKS AND RECORDS; INSPECTION.
(a) BOOKS OF ACCOUNT AND RECORDS. Proper and complete
records and books of accounts of the Company business for tax and financial
purposes, including all such transactions and other matters as are usually
entered into records and books of account maintained by Persons engaged in
businesses of like character or as are required by law, shall be kept by the
Company at the Company's principal office and place of business. The
Management Committee may delegate to a third party or any Member the duty to
maintain and oversee the preparation and maintenance of such records and
books of account. Books and records maintained for financial purposes shall
be maintained in accordance with GAAP, and books and records maintained for
tax purposes shall be maintained in accordance with the Code and applicable
Treasury Regulations.
(b) INSPECTION. All records and documents described in
Section 6.3(a) shall be open to inspection and copying by any of the Members
or their Representatives or agents, subject to applicable confidentiality
restrictions, at any reasonable time during normal business hours.
Notwithstanding anything in the Act or this Agreement to the contrary, the
Members and the Representatives shall not have the right to keep confidential
from any other Member or Representative, in their capacities as such, any
information of the Company.
6.4 FINANCIAL STATEMENTS. Within 90 days after the end of
each fiscal year, and 60 days after the end of each calendar quarter, the
Management Committee shall cause to be furnished to each Member financial
statements with respect to such fiscal year or quarter of the Company,
consisting of (i) a balance sheet showing the Company's financial position as
of the end of such fiscal year or quarter, (ii) supporting profit and loss
statements, (iii) a statement of cash flows for such year or quarter and (iv)
Member's Capital Accounts, provided that prior to such dates the Company
shall provide to each Member on a timely basis such financial information as
may be required to permit each Member Group to prepare its annual and
quarterly financial reports. The annual financial statements of the Company
shall, unless the Members determine otherwise by unanimous consent, be
audited (which audit shall be conducted in accordance with GAAP) and
certified by an independent firm of certified public accountants selected by
the Management Committee or the Members (which firm may be the firm regularly
engaged by any one or more of the Members). The Members hereby designate and
appoint the firm of Xxxxxx Xxxxxxxx, LLP as the Company's
26
independent public accountants, such designation and appointment to remain
effective until terminated by the Management Committee and appointment of
replacement independent public accountants. Each Member shall receive a copy
of all material financial reports and notices delivered by the Company to any
third party pursuant to any other agreement. The Company shall also produce
and distribute to all Members monthly revenue, operating expense and capital
expenditure reports and such other financial statements as the Management
Committee reasonably determines.
6.5 TAXATION.
(a) STATUS OF THE COMPANY. The Members acknowledge that
this Agreement creates a partnership for federal income tax purposes.
Furthermore, the Members hereby agree not to elect to be excluded from the
application of Subchapter K of Chapter 1 of Subtitle A of the Code or any
similar state statute.
(b) TAX ELECTIONS AND REPORTING.
(i) GENERALLY. The Company shall make the following
elections and take the following positions under United States income
tax laws and Treasury Regulations and any similar state laws and
regulations:
(A) Adopt the year ending December 31 as the
annual accounting period (unless otherwise
required by the Code and Treasury
Regulations);
(B) Adopt the accrual method of accounting;
(C) Insofar as permissible, report the Company's
tax attributes and results using principles
consistent with those assumed in connection
with entering into this Agreement; and
(D) Have the Company treated as a partnership
for federal income tax purposes in a manner
consistent with Treasury Regulation Section
1-7701 ("Check the Box Regulations").
(ii) CODE SECTION 754 ELECTION. The Management Committee
shall, upon the written request of any Member, cause the Company to
file an election under Section 754 of the Code and the Treasury
Regulations promulgated thereunder to adjust the basis of the Company's
assets under Section 734(b) or 743(b) of the Code and a corresponding
election under the applicable sections of state and local law.
(c) COMPANY TAX RETURNS.
27
(i) The Tax Matters Partner will prepare or cause to be
prepared all required domestic and foreign tax returns and information
returns of the Company, drafts of which shall be furnished to the
Members within 120 days following the close of each fiscal year. Such
returns will be prepared at no charge to the Company, except for all
reasonable out-of-pocket expenses (including accounting fees, if any).
Either Member may, at its own expense, engage a third party to review
the tax returns and information returns prepared by the Tax Matters
Partner pursuant to the preceding sentence. The Tax Matters Partner
shall not file any such return without the approval of any Member that
constitutes a "notice partner" (as defined in Section 6231(a)(8) of the
Code) of the Company, which approval shall not be unreasonably
withheld. Such "notice partner" member shall be deemed to have given
such approval if such Member does not indicate its written objection
(which may be delivered by facsimile) to the Tax Matters Partner within
45 days of the date that such Member receives a draft of such return.
If a "notice partner" Member does not approve of any proposed filing of
a return by the Tax Matters Partner, such Member and the Tax Matters
Member shall seek, in good faith, to resolve their disagreement. If a
"notice partner" Member and the Tax Matters Partner cannot resolve
their disagreement within 10 days of receipt of such written notice by
the Tax Matters Partner, either of such Member or the Tax Matters
Partner may request, in writing with a copy sent to the other party,
that the disagreement be resolved by the Company's independent public
accountants and the independent public accountants shall be instructed
to resolve the dispute in such manner as they believe will maximize, in
the aggregate, the U.S. federal, state and local income tax advantages
and will minimize, in the aggregate, the U.S. federal, state, and local
income tax detriments, available to the Company's Members. The
independent public accountants shall provide their written resolution
of the disagreement to both the "notice partner" Member and the Tax
Matters Partner within 15 days from the date that the independent
public accountants were requested to resolve such disagreement. Any and
all other tax returns shall be prepared in a manner directed by the Tax
Matters Partner consistent with the terms of this Agreement. Each
Member shall provide such information, if any, as may be reasonably
requested by the Company for purposes of preparing such tax and
information returns.
(ii) The Tax Matters Partner shall furnish a copy of all
filed domestic foreign tax returns and information returns for the
Company to each of the Members. In addition, upon reasonable written
notice provided to the Company by a Member (and as otherwise required
by law), the Company shall furnish such Member, on a timely basis, with
all information relating to the Company required to be reported in any
U.S. federal, state or local tax return of such Member, including a
report indicating such Member's allocable share for U.S. federal income
tax purposes of the Company's income, gain, credits, losses and
deductions.
(iii) The Members agree that the Company shall be treated as a
partnership for U.S. federal income tax purposes. The Members agree to
(A) approve electing
28
partnership status with respect to the Company with the U.S. Internal
Revenue Service and such other state and local taxing authorities as
may be appropriate and to cooperate in providing all consents,
signatures, documents and such other information as may be required
with respect thereto; and (B) report all "partnership items" (as
defined in Section 6231(a)(3) of the Code) of the Company consistent
with such classification of the Company for U.S. federal, state and
local tax purposes and with the returns filed by the Company; provided,
however, that if any Member intends to file a notice of inconsistent
treatment under Section 6222(b) of the Code, such Member shall at least
30 days prior to the filing of such notice, notify in writing the other
Members of such intent and such Member's intended treatment of the item
which is (or may be) inconsistent with the treatment of that item by
the Company.
(d) TAX AUDITS. DCC Sub, so long as it is a Qualified
Member (or, from and after a Change of Control of DCC, AWS Sub, so long as it
is a Qualified Member) shall be the "tax matters partner" of the Company, as
that term is defined in Section 6231(a)(7) of the Code (the "Tax Matters
Partner"), with all of the rights, duties and powers provided for in sections
6221 through 6232, inclusive, of the Code, provided that the Tax Matters
Partner shall not pay or agree to pay any audit assessment, or any amount in
settlement or compromise of any litigation, in respect of income tax
liability of the Members attributable to the Interests in the Company, in
excess of $500,000 in any one instance or series of related instances, unless
approved by the Management Committee. The Tax Matters Partner, as an
authorized representative of the Company, shall direct the defense of any tax
claims made by the Internal Revenue Service or any other taxing jurisdiction
to the extent that such claims relate to adjustment of Company items at the
Company level and, in connection therewith, shall retain and cause the
Company to pay the fees and expenses of counsel and other advisors chosen by
the Tax Matters Partner. The Tax Matters Partner shall also be responsible
for filing a timely election on Form 8832 and for timely filing for all other
elections made by the Company. The Tax Matters Partner shall deliver to each
Member and the Management Committee a semi-annual report on the status of all
tax audits and open tax years relating to the Company, and shall consult with
and keep all Members and the Management Committee advised of all significant
developments in such matters coming to the attention of the Tax Matters
Partner. All reasonable expenses of the Tax Matters Partner and its
Affiliates (including reasonable internal time charges and reasonable
disbursements) and other reasonable fees and expenses in connection with such
defense shall be borne by the Company. Except as provided in Article 11,
neither the Tax Matters Partner nor the Company shall be liable for any
additional tax, interest or penalties payable by a Member or any costs of
separate counsel chosen by such Member to represent the Member with respect
to any aspect of such defense. The Tax Matters Partner shall take any steps
necessary pursuant to Section 6223(a) to designate AWS Sub as a "notice
partner" (as defined in Section 6231(a)(8) of the Code). In addition, nothing
in this Agreement is intended to waive any rights, including rights to
participate in administrative and judicial proceedings, that a Member may
have under Section 6221 through 6233 of the Code. Notwithstanding any other
provisions of this Agreement, the provisions of Sections 6.5(c) and 6.5(d)
shall survive the dissolution of the Company or the termination of any
Member's interest in the Company and shall remain binding on all Members for
a period of time necessary to resolve with the U.S.
29
Internal Revenue Service or any applicable state or local taxing authority
all matters (including litigation) regarding the U.S. Federal, state and
local income taxation, as the case may be, of the Company or any Member with
respect to the Company.
(e) WITHHOLDING.
(i) The Company shall comply with all withholding
requirements under U.S. federal, state, local and foreign tax laws
and shall remit amounts withheld to, and file required forms with,
the applicable taxing authorities. To the extent that the Company
withholds and pays over any amounts to any taxing authority with
respect to distributions or allocations to any Member, the amount
withheld shall be charged to the Capital Account of such Member. The
Company shall notify each of the Members of any withholding with
respect to such Member, designating such Member's allocable share of
such withholding tax. The Members hereby agree that they will not
claim a credit in excess of the amount in such notice.
(ii) In the event of any claimed overwithholding by the
Company, the Member shall have no rights against the Company or any
other Member. Anything in the previous sentence to the contrary
notwithstanding, if the Company is required to take any action in order
to secure a refund or credit for the benefit of a Member in respect of
any amount withheld by it, it will take any such action including,
without limitation, applying for such refund on behalf of the Member
and paying it over to such Member.
(iii) Except in the case of withholding pursuant to Section
1446 of the Code, if any amount required to be withheld was not
withheld from actual distributions made to a Member, the Company shall
require the Member to which the withholding was credited to reimburse
the Company for such withholding; in the case of withholding pursuant
to Section 1446 of the Code, no such reimbursement will be necessary as
long as the other Members are subject to withholding in amounts
proportionate to their Economic Interests in the Company or otherwise
receive a distribution of an equivalent amount.
(iv) In the event of any underwithholding by the Company,
each Member agrees to indemnify and hold harmless the Company and
the Tax Matters Member from and against any liability, including
interest and penalties, with respect thereto.
(v) Each Member agrees to furnish the Company with any
representations and forms as shall reasonably be requested by the
Company to assist the Company in determining the extent of, and in
fulfilling, the Company's withholding obligations.
30
ARTICLE 7
MANAGEMENT
7.1 MANAGEMENT COMMITTEE. The property, business and affairs
of the Company shall be managed by or under the direction of a Management
Committee (the "Management Committee"). In addition to the powers and
authorities by this Agreement expressly conferred upon it, the Management
Committee may exercise all such powers of the Company and do all such lawful
acts and things as are not by statute or by this Agreement directed or required
to be exercised or done by the Members. Except as determined by the Management
Committee pursuant to this Article 7 or otherwise pursuant to this Agreement, no
Member or Representative shall have any right or authority to take any action on
behalf of the Company with respect to third parties or to bind the Company.
(a) NUMBER OF REPRESENTATIVES. The Management Committee
shall consist of four individuals (each, a "Representative"). So long as the
AWS Member Group is a Qualified Member Group, except as otherwise provided in
Section 8.12, AWS Sub (or another Member designated by a majority in Voting
Interests of the AWS Member Group) shall have the right to appoint two
Representatives, each of whom shall be employees of AWS or its Affiliates. So
long as the DCC Member Group is a Qualified Member Group, except as otherwise
provided in Section 9.8(a)(ii), DCC Sub (or another Member designated by a
majority in Voting Interests of the DCC Member Group) shall have the right to
appoint two Representatives, each of whom shall be employees of DCC or its
Affiliates. If a Member Group loses the right to appoint two Representatives,
the size of the Management Committee shall be reduced to two members, who
shall be appointed by the other Member Group. The Representatives shall not
be "managers" of the Company as such term is used in the Act.
(b) INITIAL REPRESENTATIVES. The initial Representatives
are:
DCC Member Group: Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxxxxx
AWS Member Group: Xxx Xxxxx
Xxx Xxxxxxxxx
(c) VACANCIES. Each Representative shall hold office until
death, resignation or removal, with or without cause, by the Member Group which
appointed such Representative. If a vacancy occurs on the Management Committee,
the Member Group that appointed the vacating Representative shall (so long as
such Member Group has not lost the right to appoint two Representatives pursuant
to Section 7.1(a)) appoint such Representative's successor.
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7.2 MEETINGS OF MANAGEMENT COMMITTEE.
(a) REGULAR MEETINGS. The Management Committee shall meet at
least four times per year. Such meetings shall be held on such dates and at such
times and places as may be determined by the Representatives.
(b) SPECIAL MEETINGS. A special meeting of the Management
Committee or the Members shall be held at the request of any Representative.
Such meeting shall be held on the date and at the time and place set forth in
the notice of meeting.
(c) TELEPHONIC MEETINGS. Any meeting of the Management
Committee or the Members may be held by conference telephone call or through
similar communications equipment by means of which all persons participating in
the meeting can hear and be heard by each other. Participation in such a
telephonic meeting shall constitute presence in person at such meeting.
(d) NOTICES. Notices of regular meetings and special
meetings of the Management Committee or the Members may be given by any
Representative, and shall state the date, hour and purpose of the meeting.
All such notices shall be accompanied by an agenda for the meetings, as well
as (to the extent practicable) the texts of all resolutions proposed to be
adopted at such meetings. No item may be discussed if not on the agenda
unless a quorum is present and the Representatives present waive notice of
the additional item(s). Notice of a regular or special meeting shall be given
by facsimile, confirmed by certified mail, return receipt requested not less
than 14 days (in the case of a regular meeting) or 72 hours (in the case of a
special meeting) before the date of the meeting to each Representative at the
facsimile number and address provided by the Representative to the Company
from time to time. Any Representative may waive, as to such Representative
only, in writing, the requirements for notice before, at or after a meeting.
Any Representative who attends a meeting without objecting at the meeting to
the Company's failure to comply with the notice requirements in respect of
such meeting shall be deemed to have waived such requirements.
(e) QUORUM. At each meeting of the Management Committee
or the Members, the presence in person or by telephone of at least one
Representative of each Member Group shall be necessary to constitute a quorum
for the transaction of business.
(f) WRITTEN CONSENTS. Any action required or permitted to
be taken at a meeting of the Management Committee or the Members may be taken
without a meeting, but upon the requisite notice as provided in paragraph (d)
above, if the requisite Representatives of each Member Group consent thereto in
writing, and if a complete and correct copy of such consent is promptly
delivered to all the Representatives of each Member Group following the
execution of any such consent.
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7.3 ACTIONS BY MANAGEMENT COMMITTEE.
(a) SCOPE OF AUTHORITY. The Management Committee shall have
full power and authority to direct and control the business and affairs of the
Company except as otherwise required by applicable law, and subject to the right
of the Management Committee to delegate such power and authority to Persons
responsible for day-to-day operation of the Company (it being understood that
authority to undertake Significant Matters prior to approval by the Management
Committee shall not be so delegated).
(b) ACTIONS REQUIRING MANAGEMENT COMMITTEE APPROVAL. Without
limiting the generality of the foregoing, the following actions shall require
approval of the Management Committee:
(i) approving any Significant Matter;
(ii) approving or taking any action for which the approval or
action of the Company is required under the Related Agreements, except
as the Management Committee may otherwise delegate in accordance with
paragraph (a) above; and
(iii) approving any other matter that the Management Committee
determines shall require its approval as such items may be set forth on
Schedule 7.3(b) from time to time.
(c) APPROVAL REQUIREMENTS.
(i) Except as otherwise specifically provided herein,
consent or approval of the Management Committee shall mean the
affirmative vote of a majority of the Representatives voting at a
duly held meeting of the Management Committee; provided, that with
respect to any Significant Matter, consent or approval of the
Management Committee shall mean the affirmative vote of all existing
Representatives; provided, however, that the Management Agreement may
be terminated, and the Manager removed and replaced, only in accordance
with the terms thereof.
(ii) Each Representative shall be entitled to one vote on all
matters submitted to a vote of the Management Committee; provided, that
if one or more Representatives are absent or not appointed because of a
vacancy on the Management Committee or otherwise, then any other
Representative of such absent Representative's Member Group present at
the meeting shall have the right to cast the votes of such absent
Representative(s).
(iii) The Company shall provide each Representative with (A)
adequate notice (in light of the time frame in which approval is
sought) of the substance of any matter requiring the approval of the
Management Committee in order to afford such Representative sufficient
time to review such matter and the Company's analysis thereof and (B)
an opportunity to consult with the management of the Company
33
regarding such matter and possible alternatives prior to the meeting
at which approval is sought; provided, that any alleged noncompliance
with the provisions of this paragraph (iii) shall not affect the
validity of any consent or approval pursuant to paragraphs (i) and
(ii) above.
(d) INITIAL BUDGET. The budget for the Company's first three
years of operations shall be approved by the Management Committee simultaneously
with the execution of this Agreement or promptly thereafter.
(e) ANNUAL BUDGETS. The Management Committee shall adopt an
annual budget for the operations of the Company, which budget shall be in at
least as much detail and cover the same matters as the initial budget. The
proposed budget shall be presented to the Management Committee no later than 60
days prior to the commencement of the fiscal year of the Company to which it
pertains. Any annual budget adopted by the Management Committee that covers any
period covered by the initial three-year budget shall replace the initial
three-year budget with respect to such period.
ARTICLE 8
OPERATING AGREEMENTS AND OTHER COVENANTS
8.1 LIMITED EXCLUSIVITY.
(a) Except as provided in connection with a Disqualifying
Transaction, so long as the Company continues to meet the TDMA Quality Standards
in all material respects in all of its markets, AT&T will not, and will not
cause its Affiliates to, construct, own or acquire a controlling interest in, or
manage a communications system which provides Mobile Wireless Services in the
Territory, in each case within five years after the Effective Date, except that
AT&T and its Affiliates may:
(i) resell, or act as the Company's agent for, Company
Communications Services provided by the Company in accordance with a
Resale Agreement (or any other agreement between AWS Sub and its
Affiliates, on the one hand, and the Company, on the other hand), and
provide Company Communications Services to its own customers under the
Operating Agreement (including AWS Sub and its Affiliates providing
local numbers in the Territory or otherwise providing numbers and
service to residents of the Territory), including bundling any such
Company Communications Services with other Telecommunications Services
marketed, offered and provided or resold by AWS Sub or any of its
Affiliates;
(ii) provide or resell wireless Telecommunications Services
to or from specific locations (such as buildings or office
complexes), even if the subscriber equipment used in connection with
such service may be capable of routine movement within a limited
area (such as a building or office complex), and even if such
subscriber equipment may be capable of obtaining other
Telecommunications
34
Services beyond such limited area (which other services may include
routine movement beyond such limited area) and hand-off between the
service to such specific locations and such other Telecommunications
Services; provided, however, that if AT&T or any of its Affiliates
sells such Mobile Wireless Services subscriber equipment as part of
such offering such equipment shall be capable of use in obtaining
(but not necessarily on an exclusive basis) Company Communications
Services;
(iii) continue to act as an agent for other Mobile Wireless
Services carriers in the Territory solely for existing national account
customers who are served by that carrier and request that they continue
to receive service from that carrier;
(iv) acquire a controlling interest in Tritel, Inc. or its
successors or assigns; provided, that at the time of such acquisition
Tritel, Inc. (or its successors or assigns) do not hold Licenses issued
by the FCC covering service areas within the Territory other than
Licenses in the service areas covered by the Licenses held by Tritel,
Inc. on the Effective Date that are listed on Schedule 8.1(a)(iv); and
provided, further, that AT&T and its Affiliates will continue to be
obligated to comply with their obligations under Section 8.2; and
(v) take such action as may be necessary or advisable to
comply only to the extent required with the construction requirements
of 47 CFR 24.203 in respect of the PCS licenses listed on Schedule
8.1(a)(v), and the Company shall cooperate with AT&T and its
Affiliates, at their request and expense, in connection therewith.
(b) To the extent the "other Telecommunications Services"
referred to in Section 8.1(a)(ii) are classified as Mobile Wireless Services,
neither AT&T nor any of its Affiliates or any AT&T licensee may provide or
resell, or act as agent for any Person offering, such Mobile Wireless Services
except Mobile Wireless Services provided by the Company in accordance with the
terms of Section 8.1(a)(i) or pursuant to roaming arrangements which comply with
Section 8.2. Nothing herein shall be construed to limit in any respect any
advertising and promotional and similar activities by AT&T or its Affiliates.
(c) The agreements set forth in this Section 8.1 will
terminate five years after the Effective Date, unless the parties agree to
extend such arrangements on mutually acceptable terms.
8.2 ROAMING PREFERENCE.
(a) For five years following the Effective Date, with
respect to the markets operated in the Territory, each of the Company and
(except as provided in connection with a Disqualifying Transaction) AT&T
shall, and shall cause each of its Affiliates to, in its and such Affiliates'
capacity as Home Carrier: (i) program and direct its authorized dealers to
program the subscriber equipment provided by it or such authorized dealers to
its customers, at the time it is provided to such customers (to the extent
such programming is
35
technologically feasible) so that the Company or AT&T, as the case may be, and
such Affiliates, in its and such Affiliates' capacity as Serving Carrier, is the
preferred provider of roaming service in such markets, and (ii) refrain, and
direct its authorized dealers to refrain, from inducing any of its customers to
change or, except at such customer's request in the event the quality of the
Company's services do not meet the TDMA Quality Standards, from changing the
programming described in clause (i) above.
(b) For five years following the Effective Date, with
respect to the markets operated in the Territory, each of the Company and DCC
shall, and shall cause each of its Affiliates (other than Logix
Communications) to, in its and such Affiliates' capacity as Home Carrier: (i)
program and direct its authorized dealers to program the subscriber equipment
provided by it or such authorized dealers to its customers, at the time it is
provided to such customers (to the extent such programming is technologically
feasible) so that the Company or DCC, as the case may be, and such
Affiliates, in its and such Affiliates' capacity as Serving Carrier, is the
preferred provider of roaming service in such markets, and (ii) refrain, and
direct its authorized dealers to refrain, from inducing any of its customers
to change or, except at such customer's request in the event the quality of
the Company's services do not meet the TDMA Quality Standards, from changing
the programming described in clause (i) above.
(c) As used in this Section 8.2, the terms "Affiliate,"
"Home Carrier" and "Serving Carrier" shall have the meanings ascribed thereto
in the Operating Agreement.
(d) The agreements set forth in this Section 8.2 will
terminate five years after the Effective Date, unless the parties agree to
extend such arrangements on mutually acceptable terms.
8.3 RESALE AND AGENCY AGREEMENTS.
(a) From time to time, upon the request of AWS Sub, the
Company shall enter into a Resale Agreement relating to the Territory with AWS
Sub and any of its Affiliates and, with respect to any geographic area within
the Territory, one other Person designated by AWS Sub, provided such other
Person is licensed to provide Telecommunications Services in such geographic
area under the service marks used by AWS and qualifies as a reseller under any
generally applicable standards the Company establishes for its resellers from
time to time, and upon the request of AWS, the Company shall enter into an
agency agreement authorizing AWS Sub and any of its Affiliates and, with respect
to any geographic area within the Territory, one other Person designated by AWS
Sub, provided such other Person is licensed to provide Telecommunications
Services in such geographic area under the service marks used by AWS and
qualifies as an agent under any generally applicable standards the Company
establishes for its agents from time to time. Any such agency agreements shall
provide that the Company shall pay the agent a commission at the rate then
generally offered to the Company's agents and shall otherwise be on commercially
reasonable terms. At no time shall there be more than one Person (other than
36
AWS Sub and its Affiliates) designated by AT&T as a reseller or an agent with
respect to any geographic area within the Territory.
(b) It is the intention of the parties that, in light of AWS
Sub's equity interest in the Company and the other arrangements between AWS Sub
and its Affiliates and the Company (including the roaming revenues anticipated
to be earned by the Company from subscribers of AWS Sub and its Affiliates), the
rates, terms and conditions of Service (as defined in the Resale Agreement)
provided by the Company pursuant to the Resale Agreement or any other agreement
between AWS Sub or such other reseller and the Company shall be at least as
favorable to AWS Sub or such other reseller, taken as a whole, as the rates,
terms and conditions of Service, taken as a whole, provided by the Company to
any other Customer (as defined in the Resale Agreement) and, to the extent
permitted by applicable law, such rates, terms and conditions shall be superior
to those provided to any other Customer. Without limiting the foregoing, the
rate plans offered by the Company pursuant to any Resale Agreement shall be
designed to result in the average actual rate per minute paid by the Reseller
(as defined in the Resale Agreement) for Service being at least 25% below the
weighted average actual rate per minute billed by the Company to its retail
subscribers for access and air time, but excluding revenues for features, taxes,
toll or other non-rate items. The Company and Reseller shall negotiate
commercially reasonable reductions to such resale rate based upon increased
volume commitments (including roaming charges incurred by subscribers of AT&T
and its Affiliates).
8.4 LONG DISTANCE SERVICE. To the extent permitted by law,
AT&T will be the Company's preferred provider of long distance service for so
long as the roaming arrangement described in Section 8.2(a) remains in effect.
The Company will purchase all of its long distance service, both for its own
needs and for resale to its customers, from AT&T, and AT&T will provide the
Company with long distance service at the best rates for which the Company
qualifies consistent with AT&T's practice with similarly situated customers,
provided, that at the time a long distance agreement is entered into, the rates
are commercially reasonable and reasonably competitive. Long distance service
may be purchased for the Company from AT&T by Logix Communications as long as
such service is made available to the Company at rates no higher than the rates
offered to the Company by AT&T directly.
8.5 EQUIPMENT DISCOUNTS. If reasonably requested by the
Company, AWS will, and will cause its 100% Subsidiaries to, use commercially
reasonable efforts to assist representatives of the Company in obtaining
discounts from any AWS vendor with whom the Company is negotiating for the
purchase of subscriber or infrastructure equipment. AWS shall not be required to
take any such action that AWS determines in its sole discretion is adverse to
its interests.
8.6 ROAMING AGREEMENTS. AWS will, and will cause its 100%
Subsidiaries to, use all commercially reasonable efforts to enable the Company
to become a party to the roaming agreements between AWS and its Affiliates and
operators of other wireless systems or, subject to the Company agreeing to the
obligations thereunder, entitled
37
to the rights and benefits of AWS under such roaming agreements. AWS shall
not be required to take any such action that AWS determines in its sole
discretion is adverse to its interests.
8.7 CERTAIN RESTRICTIONS. DCC and its Affiliates will not
offer Telecommunications Services in the Territory except that a special purpose
Subsidiary of DCC with separate management, facilities and financing from DCC
and the Company may construct, own or acquire a controlling interest in, or
manage a communications system which provides Telecommunications Services that
are not Company Communications Services.
8.8 OTHER BUSINESS; DUTIES; ETC.
(a) Except as otherwise expressly set forth in this
Agreement, the Members and any Person affiliated with any of the Members may
engage in or possess an interest in other business ventures in which the
Company is not a party, and may engage in any other activities, of every kind
and description (whether or not competitive with the business of the Company
or otherwise affecting the Company), independently or with others in which
the Company is not a party, and shall owe no duty or liability to the
Company, its Members or their Affiliates in connection therewith except as
expressly set forth in this Agreement.
(b) To the extent that, at law or in equity, any Member
or any Affiliate of a Member, or any director, officer, stockholder,
employee, agent or representative of a Member or such Affiliate, would have
duties (including fiduciary duties) and liabilities to the Company or the
Members arising out of this Agreement that are different from or in addition
to those expressly provided in this Agreement, all rights of the other
Members arising out of such duties and liabilities are hereby waived and no
such Person shall be liable to the Company or to any Member for its good
faith reliance on the provisions of this Agreement.
(c) Notwithstanding any provision to the contrary in this
Agreement, to the fullest extent permitted by law, each Representative shall be
deemed the agent of the Member Group which appointed such Person a
Representative, and such Representative shall not be deemed an agent or a
sub-agent of the Company or the other Members or Member Groups and shall have no
duty (fiduciary or otherwise) to the Company or the other Members or Member
Groups.
8.9 CONFIDENTIALITY.
(a) Each Member shall, and shall cause each of its
Affiliates, and each of its and their respective partners, members, managers,
shareholders, directors, officers, employees and agents (collectively,
"Agents") to keep secret and retain in strictest confidence and not use for
any purpose except as contemplated by this Agreement any and all Confidential
Information relating to the Company or any Member and shall not disclose such
information, and shall cause its Agents not to disclose such information, to
anyone
38
except (x) such Member's Affiliates or Agents who have a need to know such
information in connection with the matters contemplated by this Agreement and
(y) other Persons (such as lenders to the Company or a Member) who have a
bona fide business reason for obtaining such information in connection with
their dealings with the Company or such Member and who agree in writing to
keep in confidence all Confidential Information in accordance with the terms
of this Section. The obligations under this Section shall survive the
termination of this Agreement for a period of three years (or, if earlier, as
to any Person, three years following the date such Person ceases to be a
Member). The foregoing provisions of this Section were negotiated in good
faith by the parties hereto and the parties hereto agree that such provisions
are reasonable and are not more restrictive than is necessary to protect the
legitimate interests of the Members and the Company.
(b) The obligations set forth in paragraph (a) above
shall be inoperative with respect to Confidential Information that (i) is or
becomes generally available to the public other than as a result of
disclosure by the receiving party or its Agents, (ii) was available to the
receiving party on a non-confidential basis prior to its disclosure to the
receiving party or (iii) becomes available to the receiving party or its
agents, provided that such source is not known by the receiving party to be
bound by a confidentiality agreement with the providing party or its Agents.
(c) To the fullest extent permitted by law, if a Member
or any of its Affiliates or Agents breaches or threatens to commit a breach
of this Section, the other Members and the Company shall have the right to
have this Section specifically enforced by any court having jurisdiction, it
being acknowledged and agreed that money damages will not provide an adequate
remedy to such other Members or the Company. Nothing in this Section shall be
construed to limit the right of any Member or the Company to collect money
damages in the event of a breach of this Section; nor to limit the right of
any Member to report the financial condition and results of operations of the
Company to its shareholders, bondholders or to regulatory authorities to the
extent required by law, regulation or the terms of existing instruments.
(d) Anything else in this Agreement or the Related
Agreements notwithstanding, each Member shall have the right to disclose any
information, including Confidential Information of the other Member or such
other Member's Affiliates, in any filing with any regulatory agency, court or
other governmental authority to the extent that the disclosing Member
determines in good faith that it is required by law or regulation, provided
that any such disclosure shall be as limited in scope as possible and shall
only be made after giving the other Member as much notice as practicable of
such required disclosure and an opportunity to contest such disclosure if
possible.
8.10 CONVERSION TO CORPORATION.
(a) CONVERSION. The Company will be converted to a
corporation (the "Corporation") in connection with an IPO if the Management
Committee so determines or
39
(notwithstanding Section 7.3) if a Qualified Member Group so elects under
Section 9.10. The Members will cooperate to minimize any adverse tax
consequences of such conversion.
(b) CONVERSION OF INTERESTS. Upon a conversion of the
Company to a corporation, the Interests of the Qualified Members will be
converted into Class B Common Shares of the Corporation entitling the holders
thereof to ten votes per share. The Interests of other Members will be
converted into Class A Common Shares of the Corporation entitling the holders
thereof to one vote per share. The certificate of incorporation of the
Corporation will provide that (i) Class B Common Shares that are Transferred
to, or held by, Persons that are not Qualified Members will convert
automatically into Class A Common Shares, (ii) Class B Common Shares will be
convertible at any time at the option of the holder into Class A Common
Shares and (iii) if permitted by the exchange on which shares of the
Corporation are listed for trading, Class A Common Shares held by a Qualified
Member will be convertible at any time at the option of the holder into Class
B Common Shares.
(c) STOCKHOLDERS AGREEMENT. Upon a conversion of the Company
to a corporation, the Members will enter into a stockholders agreement
containing, to the extent then applicable, substantially the same terms as this
Agreement, provided, that the stockholders agreement will provide for each
Qualified Member to have registration rights that are substantially similar to
the registration rights set forth in Article 4 to the Stockholder and Investor
Rights Agreement, dated as of January 31, 2000, among DCC and the Persons listed
on Schedule I thereto.
8.11 DISPUTE RESOLUTION.
(a) If a dispute arises out of or relating to this Agreement
or the Related Agreements, or the transactions contemplated hereby or thereby,
or the construction, interpretation, performance, breach, termination,
enforceability or validity thereof, whether such claim is based on rights,
privileges or interests recognized by or based upon contract, tort, fraud,
misrepresentation, statute, common law or any other legal or equitable theory,
and whether such claim existed prior to or arises on or after the date hereof (a
"Dispute"), the dispute resolution processes set forth in this Section 8.11
shall govern the resolution of such dispute.
(b) If a Dispute cannot be resolved by the executives having
primary managerial responsibility for the matter to which the Dispute pertains,
the parties shall attempt in good faith to resolve such Dispute promptly by
negotiation between executives who have authority to settle the Dispute and who
are at the level of the executives who have negotiated this Agreement ("Senior
Party Representatives").
(c) A party may provide any other party notice (a "Dispute
Notice") of any Dispute that has not been resolved in the normal course of
business. Within ten business days after delivery of the Dispute Notice, the
receiving party shall submit to each other party a response (the "Response").
The Dispute Notice and the Response shall each include (a) a statement setting
forth the position of the party providing such notice and a summary of
40
arguments supporting such position, and (b) the name and title of such
party's Senior Party Representative and any other Persons who will accompany
the Senior Party Representative at the meeting at which the parties will
attempt to settle the Dispute. Within 30 business days after delivery of the
Dispute Notice, the Senior Party Representatives of the parties shall meet at
a mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary, to attempt to resolve the Dispute. All reasonable
requests for information made by one party to another will be honored.
(d) If the Dispute has not been resolved within 50 business
days after delivery of the Dispute Notice, or if the parties fail to meet within
30 business days after delivery of the Dispute Notice, any party may initiate
arbitration of the Dispute as provided below. If no party initiates arbitration
within 60 business days after delivery of the Dispute Notice, then the parties
shall automatically be released from any and all liability for the Dispute.
(e) All negotiations pursuant to this section shall be
treated as compromise and settlement negotiations. Nothing said or disclosed,
nor any document produced, in the course of such negotiations that is not
otherwise independently discoverable shall be offered or received as evidence
or used for impeachment or for any other purpose in any current or future
arbitration. The parties agree that all communications and negotiations
between the parties during the dispute resolution process, any settlements
agreed upon during the dispute resolution process and any information
regarding the other party obtained during the dispute resolution process
(that are not already public knowledge) are confidential and may be disclosed
only to employees and agents of the parties who shall have a "need to know"
the information and who shall have been made aware of the confidentiality
obligations set forth in this Section 8.11, unless the party is required by
law to disclose such information.
(f) If the Dispute is not resolved as provided in
paragraphs (b) through (d) above, then any party may initiate arbitration
proceedings by providing each other party notice of such initiation of
arbitration. The Dispute shall then be settled by arbitration in accordance
with the CPR Non-Administered Arbitration Rules in effect on the date hereof,
by a panel of three arbitrators. Each Party shall select one of the three
arbitrators and the two arbitrators so chosen shall select the third
arbitrator. The arbitrators shall be governed by the United States
Arbitration Act, 9 U.S.C. Sections 1-16, and judgment upon the award rendered
by the arbitrators may be entered by any court having jurisdiction thereof.
The place of arbitration shall be chosen by the three arbitrators. The
arbitrators shall be empowered to award only damages that are recoverable
under the provisions of Article 11, and each party hereby irrevocably waives
any right to recover any other damages with respect to any Dispute. The
arbitrators shall not order pre-hearing discovery of documents or the taking
of depositions, although the arbitrators may compel the attendance of
witnesses and the production of documents at the hearing to the extent
permitted by the CPR Non-Administered Arbitration Rules.
(g) If a party does not provide a Dispute Notice within
one year following the time the party first knows of the existence of the
acts or omissions that give rise to the
41
Dispute, the party shall be forever estopped from asserting the Dispute
against any other party.
(h) The reasonable out-of-pocket costs (including reasonable
attorneys' fees and expenses) of the prevailing party and the fees of the
arbitrators in any arbitration proceeding pursuant to this Section 8.11 shall be
paid by the other party. The arbitrators shall determine which party is the
prevailing party for purposes of this paragraph, and shall include such
determination in their award. If the arbitrators determine that neither party is
the prevailing party for purposes of this paragraph, then each party shall bear
its own costs and expenses, including attorneys' fees and expenses, and the
parties shall share equally the fees of the arbitrators.
(i) Notwithstanding the foregoing, nothing in this Agreement
shall preclude the parties from seeking injunctive or other equitable relief
from a court with regard to any breach of this Agreement or the Related
Agreements.
8.12 DISQUALIFYING TRANSACTION. Upon a Disqualifying
Transaction, AWS may terminate, with respect to all or any portion of the
Territory, the obligations of AT&T and its Affiliates contained in Sections 8.1,
8.2, 8.5 and 8.6, in which event the Voting Interests then held by the AWS
Member Group shall, subject to FCC approval if necessary, immediately and
automatically cease to exist and, accordingly, the AWS Member Group shall no
longer be entitled (x) to exercise governance rights with respect to the Company
(including the right to appoint Representatives to the Management Committee)
except as required by applicable law or (y) to receive information concerning
the Company except for annual and quarterly financial statements pursuant to
Section 6.4. In such event, upon at least 90 days' written notice to AWS given
within 90 days after termination by AWS of the obligations contained in Sections
8.1 and 8.2, the Company will have the right to terminate the Operating
Agreement with respect to the same portion of the Territory.
ARTICLE 9
TRANSFER RESTRICTIONS; EXIT RIGHTS;
CHANGE OF CONTROL OF DCC
The provisions of Sections 9.1 through 9.4 shall apply to direct
Transfers of Interests by the Members and Indirect Transfers of Interests by
Persons (including Members) that beneficially own Equity Interests in the
Members.
9.1 GENERAL RESTRICTIONS ON TRANSFERS.
(a) PRIOR TO THE THIRD ANNIVERSARY OF THE EFFECTIVE DATE.
Prior to the third anniversary of the Effective Date, Members may not Transfer
Voting Interests or Economic Interests except to other Qualified Members or
members of their respective Affiliate Groups, nor shall Indirect Transfers of
Interests be permitted except in accordance with the provisions of Section 9.4.
42
(b) AFTER THE THIRD ANNIVERSARY OF THE EFFECTIVE DATE. On
and after the third anniversary of the Effective Date, Indirect Transfers of
Interests shall not be permitted except in accordance with the provisions of
Section 9.4, and
(i) Members may not Transfer Voting Interests except to
other Qualified Members or members of their respective Affiliate
Groups. Any Transfer permitted by the preceding sentence shall not
be subject to the right of first refusal set forth in Section 9.2 or
the tag-along right set forth in Section 9.3.
(ii) Members of the AWS Member Group may Transfer in the
aggregate up to 20% of the Economic Interests acquired by AWS Sub on
the Effective Date to Persons that are not members of the AWS Affiliate
Group or the DCC Affiliate Group. Members of the DCC Member Group may
Transfer in the aggregate up to 20% of the Economic Interests acquired
by DCC Sub on the Effective Date to Persons that are not members of the
DCC Affiliate Group or the AWS Affiliate Group. Any Transfer permitted
by the two preceding sentences shall not be subject to the right of
first refusal set forth in Section 9.2, but shall be subject to the
tag-along right set forth in Section 9.3.
(iii) If members of the AWS Member Group Transfer in the
aggregate more than 20% of the Economic Interests acquired by AWS Sub
on the Effective Date to Persons that are not members of the AWS
Affiliate Group or the DCC Affiliate Group, or members of the DCC
Member Group Transfer in the aggregate more than 20% of the Economic
Interests acquired by DCC Sub on the Effective Date to Persons that are
not members of the DCC Affiliate Group or the AWS Affiliate Group, the
Voting Interests then held by the AWS Member Group or the DCC Member
Group, as the case may be, shall immediately and automatically cease to
exist and, accordingly, Members that are members of the AWS Member
Group or the DCC Member Group, as the case may be, shall no longer be
entitled (x) to exercise governance rights with respect to the Company
(including the right to appoint Representatives to the Management
Committee) except as required by applicable law or (y) to receive
information concerning the Company except for annual and quarterly
financial statements under Section 6.4. Any Transfer (or portion
thereof) by a Member of any Member Group, after giving effect to which
the 20% threshold described in the preceding sentence is crossed, and
any subsequent Transfer by a Member of such Member Group, shall be
subject to the right of first refusal set forth in Section 9.2 and the
tag-along right set forth in Section 9.3.
(iv) Members may not Transfer Voting Interests or Economic
Interests to a Prohibited Transferee except (after the IPO) pursuant to
broadly distributed underwritten registered public offerings and Rule
144 under the Securities Act.
(c) OTHER ENCUMBRANCES ON INTERESTS. Notwithstanding
anything to the contrary in this Agreement or the Act, a Member may not pledge,
hypothecate or otherwise encumber all or any portion of its Interests.
43
9.2 RIGHT OF FIRST REFUSAL.
(a) NOTICE AND EXERCISE OF RIGHT. Subject to the limitations
of Section 9.1(a), if
(i) members of a Member Group (the "Sellers") receive and
wish to accept a written offer (the "Offer") from a bona fide third
party (the "Offeror") to purchase some or all of their Economic
Interests (the "Offered Interests"),
(ii) the consummation of such purchase would result (together
with any prior Transfers) in the Member Group to which the Sellers
belong ceasing to be a Qualified Member Group, or this Section 9.2
otherwise expressly applies pursuant to the terms of this Agreement,
and
(iii) the other Member Group is a Qualified Member Group (it
being understood that if the other Member Group is not then a Qualified
Member Group, the Sellers shall not be obligated to comply with the
provisions of this Section 9.2 or Section 9.3),
then the Sellers shall give notice of such Offer (the "Offer Notice") to the
members of the other Member Group (the "Buyers"), which notice shall identify
the Offeror, enclose a copy of the Offer, and irrevocably offer to the Buyers
the right to purchase (pro rata in accordance with their respective Interests
unless the Buyers otherwise agree) the Offered Interests on the same economic
terms and conditions as specified in the Offer (if they are the only assets
being sold and are being sold for cash) or for cash at their Fair Market Value
(if they are being Transferred in such transaction or series of related
transactions with other assets or for consideration other than cash), provided,
that the Buyers shall be entitled to pay for the Offered Interests with
instruments of indebtedness to the extent the Offer contemplates the delivery of
instruments of indebtedness. The Buyers may exercise their right to purchase the
Offered Interests by notifying the Sellers in writing of their election to
purchase within 21 days after the later of (x) delivery of the Offer Notice and
(y) any determination of Fair Market Value pursuant to Section 9.4(c) or
otherwise.
(b) CLOSING OF PURCHASE. If the Buyers duly elect to
purchase the Offered Interests, the closing of such purchase (the "RoFR
Closing") shall take place on a date agreed to by the Sellers and the Buyers,
but in no event later than 30 days following the exercise by the Buyers of
their election to purchase; provided, that if governmental or regulatory
approval is required for any Buyer to consummate its purchase and has not
been obtained, the RoFR Closing with respect to such purchase may be deferred
until such approval is obtained.
(c) REPRESENTATIONS AT CLOSING. At any RoFR Closing, the
Sellers shall represent and warrant in writing to the Buyers only that the
Sellers (i) are the sole beneficial and record owners of the Offered Interests
and have good and marketable title thereto free and clear of all Liens (other
than restrictions imposed pursuant to this Agreement) and (ii) have full power
and authority to sell the Offered Interests without conflict with the terms of
44
any law, order or material agreement or instrument binding upon them or their
assets; and the Sellers shall deliver to the Buyers such customary instruments
of assignment with respect to the Offered Interests as may be reasonably
requested by the Buyers.
(d) SALE TO THIRD PARTY. If the Buyers fail to exercise
their right to purchase the Offered Interests, the Sellers may accept the
Offer and sell the Offered Interests to the Offeror; provided, that such sale
shall be at the same price and on the same terms and conditions as specified
in the Offer Notice and otherwise in accordance with Section 9.5. If such
sale is not consummated within 90 days after the expiration of the applicable
time periods specified in paragraph (b) above, such right to sell shall lapse
and Transfers of the Offered Interests shall again be subject to the
provisions of this Section 9.2.
(e) ASSUMPTION OF AGREEMENTS. At any closing with respect
to a sale to a third party, the Offeror shall execute a counterpart to this
Agreement and any Related Agreements to which the Sellers or their Affiliates
are party and shall be bound by the provisions of and assume the obligations
of the Sellers under all such Agreements, provided, that the Management
Agreement shall not be assigned or assumed except in accordance with its
terms. The Sellers and the Offeror shall execute such documents as the Buyers
may reasonably request to evidence such assumption.
(f) PUBLIC SALES. Sales of Interests after the IPO
pursuant to registered public offerings and Rule 144 under the Securities Act
shall be subject to this Section 9.2.
9.3 TAG-ALONG RIGHT.
(a) NOTICE AND EXERCISE OF RIGHT. In lieu of exercising its
rights under Section 9.2, or as otherwise expressly provided herein, the Buyers
may, within 21 days after receipt of any Offer Notice, elect by notice to the
Sellers to include their Economic Interests (the "Included Interests") in such
sale on a pro rata basis with the Sellers. Any such sale of Included Interests
shall be made on the same economic terms and conditions as specified in the
Offer (if they are the only assets being sold and are being sold for cash) or
for cash at their Fair Market Value (if they are being Transferred in such
transaction or series of related transactions with other assets or for
consideration other than cash), and the Sellers may not consummate their sale
unless the sale of Included Interests (if any) by the Buyers is consummated
simultaneously in accordance with the terms hereof. If the Buyers do not elect
to participate in such sale, and such sale is not consummated within the
applicable time periods specified in Section 9.2(d), the restrictions contained
in this Section 9.3 shall again become effective, and Economic Interests may not
be Transferred thereafter except in accordance with this Article 9.
(b) REPRESENTATIONS AT CLOSING. At the closing of any
Transfer of Included Interests pursuant to this Section 9.3, (i) the
participating Buyers shall not be required to make any representations and
warranties with respect to the Company or the Business other than those that
the Sellers make to the purchaser, nor shall the Buyers be required to make
any non-compete, non-solicit or similar covenants in connection with such
Transfer, and (ii)
45
the participating Buyers shall deliver to the purchaser such customary
instruments of assignment with respect to the Included Interests as may be
reasonably requested by the purchaser.
(c) PUBLIC SALES. Sales of Interests after the IPO
pursuant to registered public offerings and Rule 144 under the Securities Act
shall not be subject to this Section 9.3.
9.4 INDIRECT TRANSFERS. Subject to Section 9.8, the
provisions of Sections 9.1, 9.2, 9.3, 9.5, 9.6 and 9.7 (the "Specified
Restrictions") shall apply to Indirect Transfers of Interests to the same
extent that they apply to direct Transfers of Interests except as otherwise
provided in this Section 9.4 or elsewhere in this Agreement.
(a) PERCENTAGE TRANSFERRED. A Transfer of any percentage of
the Equity Interests in a member of any Affiliate Group shall be deemed to be a
Transfer by the applicable Member Group of the same percentage of Economic
Interests in the Company. For example, the Transfer of 30% of the capital stock
of AWS Sub or DCC Sub shall be deemed to be the Transfer of 30% of the Economic
Interests in the Company by the AWS Member Group or the DCC Member Group,
respectively. Notwithstanding the foregoing, if at the time of any Indirect
Transfer involving a member of any Affiliate Group, the percentage of the Equity
Interests in such member being Transferred exceeds the percentage of Economic
Interests in the Company then held by the applicable Member Group, such Indirect
Transfer shall be deemed to be a Transfer by such Member Group of the percentage
of Economic Interests in the Company then held by such Member Group. For
example, the Transfer of 60% of the capital stock of AWS Sub or DCC Sub at a
time when they each hold 50% of the Economic Interests in the Company shall be
deemed to be a Transfer of 50% of the Economic Interests in the Company by the
AWS Member Group or the DCC Member Group, respectively.
(b) INDIRECT TRANSFERS WITHIN AN AFFILIATE GROUP. The
Specified Restrictions shall not apply to Transfers of Equity Interests in a
member of any Affiliate Group if immediately after giving effect to such
Transfer such Person remains a member of such Affiliate Group, unless such
Transfer has substantially the same economic effect as a Transfer of Interests
in the Company to a Person that is not a member of such Affiliate Group.
(c) INDIRECT TRANSFERS INVOLVING DCC. So long as the
Interests in the Company beneficially owned by DCC do not account for 50% or
more of the value of DCC, the Specified Restrictions shall not apply to
Transfers of Equity Interests in DCC or any Parent of DCC; provided, that
such Transfers are not designed to circumvent the transfer restrictions
contained herein; and provided, further, that the Specified Restrictions
shall apply, in accordance with Section 9.8, to any Transfer resulting in a
Change of Control of DCC. Notwithstanding Section 9.1(c), DCCLP may pledge
capital stock of DCC to secure indebtedness owing to Bank of America, N.A.
under instruments of indebtedness in effect on the Effective Date, as such
instruments may be amended or replaced from time to time.
46
(d) INDIRECT TRANSFERS INVOLVING AT&T. The Specified
Restrictions shall not apply to (i) Transfers of Equity Interests in AWS, (ii)
Transfers of Equity Interests in AT&T or (iii) Transfers of Equity Interests by
any direct or indirect shareholder of AWS or AT&T; provided, that such Transfers
are not designed to circumvent the transfer restrictions contained herein.
(e) INDIRECT TRANSFERS INVOLVING JWC. Notwithstanding
anything in this Agreement to the contrary, the Specified Restrictions shall
not apply to Transfers of Equity Interests in DCC by X.X. Childs Equity
Partners, II, L.P. (and its affiliated funds and co-investors listed on
Schedule 9.4).
9.5 SUBSTITUTED MEMBERS. Prior to any Transfer of
Interests by a member of any Member Group, the transferor shall deliver to
the members of the other Member Group a notice setting forth the identity of
the transferee and (if applicable) stating that such transferee is a member
of the transferor's Affiliate Group, and shall provide such other information
as the members of the other Member Group may reasonably request in connection
with such Transfer. The transferee shall be admitted as a Member upon
execution of a counterpart to this Agreement evidencing its agreement to be
bound hereby. Upon the admission of any such transferee as a Member, the
transferring Member or Members shall be relieved of any obligation arising
under this Agreement subsequent to such Transfer with respect to the
Interests being transferred (provided that the transferee shall assume all
such obligations), and if the transferring Member no longer holds any
Interests, the transferring Member shall be relieved of its obligations
arising under this Agreement to the extent provided in Section 12.12.
9.6 INVALID TRANSFERS VOID. Any purported Transfer of an
Interest or any part thereof not in compliance with the provisions of this
Article 9 shall be void and of no force or effect and the transferring Member
shall be liable to the other Members and the Company for all liabilities,
obligations, damages, losses, costs and expenses (including but not limited to
reasonable attorneys' fees and court costs) arising out of such noncomplying
Transfer.
9.7 DETERMINATION OF FAIR MARKET VALUE. The Fair Market
Value of Interests to be transferred or other property received pursuant to
this Agreement shall be determined in the following manner:
For purposes of this Section 9.7, Sellers owning a majority of
the applicable Offered Interests shall have the right to act on behalf
of the Sellers. Within 15 days after the delivery of the notice
requiring such determination, the Sellers and the Buyers shall attempt
in good faith to agree on the Fair Market Value. If the Sellers and the
Buyers fail within 15 days thereafter to agree thereon, each of the
Sellers and the Buyers shall deliver a notice to the other appointing
as its appraiser ("Appraiser") an independent accounting or investment
banking firm of nationally recognized standing. The Sellers and Buyers
by mutual agreement shall also appoint a third Appraiser. If after
appointment of the two Appraisers, the Sellers and Buyers are
47
unable to agree upon a third Appraiser, such appointment shall be
made within fifteen days of the request by the American Arbitration
Association, or any organization successor thereto, from a panel of
arbitrators having experience in the appraisal of the type of
property then the subject of appraisal. The decisions of the three
Appraisers so appointed and chosen shall be given within 30 days
after the selection of such third Appraiser. If the determination of
one Appraiser differs from the middle determination by more than
twice the amount by which the other determination differs from the
middle determination, then the determination of such Appraiser shall
be excluded, the remaining two determinations shall be averaged and
such average shall be binding and conclusive on the parties;
otherwise the average of all three determinations shall be binding
and conclusive. The Sellers' obligation to provide an Offer Notice
pursuant to Section 9.2(a) shall not be applicable until the date of
delivery of such determination to the Buyers. The costs of
conducting any Appraisal Procedure shall be borne as follows: (x)
the costs of the Appraiser designated by the Sellers and other costs
separately incurred by the Sellers shall be borne by the Sellers;
(y) the costs of the Appraiser designated by the Buyers and other
costs separately incurred by the Buyers shall be borne by the
Buyers; and (z) the costs of the third Appraiser, if any, shall be
shared equally by the Sellers and the Buyers.
9.8 CHANGE OF CONTROL OF DCC. Notwithstanding anything in
this Agreement to the contrary:
(a) PROHIBITED TRANSFEREE, ETC. If there is a Change of
Control of DCC in which a Prohibited Transferee (alone or as part of a "group"
as such term is used in Sections 13(d) and 14(d) of the Exchange Act and the
regulations thereunder) or, prior to the second anniversary of the Effective
Date, a Person that is not a Prohibited Transferee (alone or as part of a
"group" as such term is used in Sections 13(d) and 14(d) of the Exchange Act and
the regulations thereunder) acquires control of DCC, and either the Company is a
limited liability company and the AWS Member Group is a Qualified Member Group,
or the Company has converted to a corporation and members of the AWS Affiliate
Group retain in the aggregate capital stock in such corporation representing at
least 50% of the Economic Interests that AWS Sub acquired on the Effective Date,
then
(i) If it does not elect to exercise its rights under
Section 9.2 or 9.3, the AWS Member Group may initiate the Buy-Sell
Procedure (except that the AWS Member Group shall have the right but
not the obligation to require that DCC propose the cash purchase
price for all of the Interests of the AWS Member Group) for 90 days
after the second anniversary of the Effective Date,
(ii) from and after the effective date of such Change of
Control of DCC, the DCC Member Group shall lose the right to appoint
one of its two Representatives to the Management Committee (and such
Representative shall forthwith resign or be deemed removed as such) and
the AWS Member Group shall thereupon have the right to appoint three of
the four Representatives, and
48
(iii) from and after the effective date of such Change of
Control of DCC, subject to Section 9.1(b)(iii), the Significant Matters
that the DCC Member Group will have the right to approve shall be those
set forth on Exhibit A.
(b) STATUS OF CONTROL PERSON. Except as otherwise provided
in this Section 9.8, any Person referred to in paragraph (a) above that acquires
control of DCC shall be treated as the Xxxxxx Group for all purposes of this
Agreement, and if the DCC Member Group was a Qualified Member Group immediately
prior to the time of the Change of Control of DCC, and for so long thereafter as
it qualifies as such hereunder, it shall also be considered a Qualified Member
Group immediately after the Change of Control.
9.9 BUY-SELL PROCEDURE.
(a) AFTER THE FIFTH ANNIVERSARY OF THE EFFECTIVE DATE. After
the fifth anniversary of the Effective Date, whether or not an IPO has occurred,
a Member Group may initiate a buy-sell procedure (the "Buy-Sell Procedure") by
giving the other Member Group a notice referring to this Section 9.9(a) (the
"Section 9.9(a) Notice"), which notice shall specify a cash purchase price per
Interest or per share, as applicable, for all of the Interests in the Company
then held by the other Member Group, and contain an irrevocable offer to
purchase such Interests, and to sell all of the Interests in the Company then
held by the initiating Member Group, at such price. The non-initiating Member
Group may exercise its right to purchase or sell by notifying the initiating
Member Group of its election within 90 days after delivery of the Section 9.9(a)
Notice; provided, that the DCC Member Group may not initiate the Buy-Sell
Procedure, or elect to buy in the event that the AWS Member Group initiates the
Buy-Sell Procedure, without concurrently providing to the AWS Member Group a
firm commitment, including a "material adverse change" condition (which may
include a condition relating to disruption of the financial markets), reasonably
acceptable to the AWS Member Group, from a financial institution reasonably
acceptable to the AWS Member Group, to underwrite the purchase price. The
closing of any such purchase and sale will occur within 90 days after the end of
such 90-day period, subject to extension for obtaining by Final Order any
regulatory approvals.
(b) IN CONNECTION WITH OVERLAP IN SERVICE COVERAGE. The AWS
Member Group may initiate the Buy-Sell Procedure at any time if (x) the Company
is then offering, in service areas covering 15% or more of the Company's Pops,
Company Communications Services that are not Mobile Wireless Services and (y)
AWS or its Affiliates are then offering, or have a good faith intention to begin
offering and have taken material steps towards offering, in such service areas,
Telecommunications Services that could reasonably be considered by subscribers
to be equivalent to, or a substitute for, such Company Communications Services
that are not Mobile Wireless Services. Such right will be exercisable by giving
the DCC Member Group a notice referring to this Section 9.9(b) (the "Section
9.9(b) Notice") and signed by a senior executive officer of AWS, which notice
shall (x) describe in reasonable detail the competing services that AWS or its
Affiliates are then offering or intending in good faith to offer and the steps
they have taken towards offering such services, (y) specify a cash purchase
price per Interest or per share, as applicable, for all
49
of the Interests in the Company then held by the DCC Member Group, and (z)
contain an irrevocable offer to purchase such Interests, and to sell all of
the Interests in the Company then held by the AWS Member Group, at such
price. The DCC Member Group may exercise its right to purchase or sell by
notifying the AWS Member Group of its election within 90 days after delivery
of the Section 9.9(b) Notice; provided, that the DCC Member Group may not
elect to purchase without concurrently providing to the AWS Member Group a
firm commitment, including a "material adverse change" condition (which may
include a condition relating to disruption of the financial markets),
reasonably acceptable to the AWS Member Group, from a financial institution
reasonably acceptable to the AWS Member Group, to underwrite the purchase
price. The closing of any such purchase and sale will occur within 90 days
after the end of such 90-day period, subject to extension for regulatory
approvals.
(c) IN THE EVENT OF CHANGE OF CONTROL OF DCC. If, in
connection with a Change of Control of DCC, the AWS Member Group does not elect
to exercise its right to initiate the Buy-Sell Procedure pursuant to Section
9.8(a)(i), if applicable, or its right of first refusal or tag-along right under
Section 9.2 or 9.3, then, at any time during the 90-day period beginning on the
later of the second anniversary of the Effective Date and 90 days following the
expiration of the last of such rights, the DCC Member Group will have the right
to initiate the Buy-Sell Procedure by giving the AWS Member Group a notice
referring to this Section 9.9(c) (the "Section 9.9(c) Notice"), which notice
shall specify a cash purchase price per Interest or per share, as applicable,
for all of the Equity Interests in the Company then held by the AWS Member
Group, and contain an irrevocable offer to purchase such Equity Interests, and
to sell all of the Equity Interests in the Company then held by the DCC Member
Group, at such price; provided, that the DCC Member Group may not initiate the
Buy-Sell Procedure without concurrently providing to AWS Member Group a firm
commitment, including a "material adverse change" condition (which may include a
condition relating to disruption of the financial markets), reasonably
acceptable to the AWS Member Group, from a financial institution reasonably
acceptable to the AWS Member Group, to underwrite the purchase price. The AWS
Member Group may exercise its right to purchase or sell by notifying the DCC
Member Group of its election within 90 days after delivery of the Section 9.9(c)
Notice. The closing of any such purchase and sale will occur within 90 days
after the end of such 90-day period, subject to extension for regulatory
approvals.
(d) REPRESENTATIONS AT CLOSING. At the closing of any
purchase and sale pursuant to the Buy-Sell Procedure, the selling Member Group
shall represent and warrant in writing to the non-selling Member Group that the
selling Members (i) are the sole beneficial and record owners of the Interests
being sold and have good and marketable title thereto free and clear of all
Liens (other than restrictions imposed pursuant to this Agreement) and (ii) have
full power and authority to sell the Interests being sold without conflict with
the terms of any law, order or material agreement or instrument binding upon
them or their assets; and the selling Members shall deliver to the non-selling
Member Group such customary instruments of assignment with respect to the
Interests being sold as may be reasonably requested by the non-selling Member
Group.
50
(e) TERMINATION OF AGREEMENT. Upon the consummation of a
purchase and sale transaction pursuant to the Buy-Sell Procedure, the Management
Agreement and the agreements set forth in Sections 8.1, 8.2, 8.5 and 8.6 will
terminate immediately, and the Operating Agreement will terminate on the later
of (a) the tenth anniversary of the Effective Date and (b) the second
anniversary of the consummation of such purchase and sale transaction.
9.10 IPO DEMAND. After the fifth anniversary of the Effective
Date, any Qualified Member Group may by notice to the Company and the other
Qualified Member Group (if any) elect (the "Section 9.10 Election") to require
the Company to convert to a corporation in accordance with Section 8.10 and to
effect an IPO of not less than 10% nor more than 20% of the Corporation's Class
A Common Stock, underwritten by an underwriter selected by the Management
Committee, and otherwise conducted in accordance with the registration
procedures referred to in Section 8.10(c); provided, that the non-electing
Qualified Member Group (if any) may (i) defer the Section 9.10 Election for up
to 180 days on one occasion during any 12-month period and (ii) preempt the
Section 9.10 Election by initiating the Buy-Sell Procedure within 30 days after
such Election is made, provided, that the DCC Member Group may not initiate the
Buy-Sell Procedure, or elect to buy in the event that the AWS Member Group
initiates the Buy-Sell Procedure, without concurrently providing to AWS Member
Group a firm commitment, including a "material adverse change" condition (which
may include a condition relating to disruption of the financial markets),
reasonably acceptable to AWS Member Group, from a financial institution
reasonably acceptable to AWS Member Group, to underwrite the purchase price.
ARTICLE 10
DISSOLUTION AND TERMINATION
10.1 NO WITHDRAWAL. Except as expressly provided in this
Agreement or as otherwise provided by law, no Member shall have the right, and
each Member hereby agrees not, to dissolve, terminate or liquidate the Company,
or to resign or withdraw as a Member.
10.2 DISSOLUTION. The Company shall be dissolved upon the
written determination of the Management Committee to dissolve the Company, but
only on the effective date of dissolution specified by the Management Committee
in such determination.
10.3 PROCEDURES UPON DISSOLUTION.
(a) GENERAL. In the event the Company dissolves it shall
commence winding up pursuant to the appropriate provisions of the Act and the
procedures set forth in this Section 10.3. Notwithstanding the dissolution of
the Company, until the winding up of the Company's affairs is completed, the
business of the Company and the affairs of the Members, as such, shall continue
to be governed by this Agreement.
(b) CONTROL OF WINDING UP. The winding up of the Company
shall be conducted under the direction of the Management Committee or such other
Person as may be
51
designated by a court of competent jurisdiction (herein sometimes referred to
as the "Liquidator"); provided that any Member whose breach of this Agreement
shall have caused the dissolution of the Company (and the Representatives
appointed by such Member) shall not participate in the control of the winding
up of the Company; and provided further, that if the dissolution is caused by
entry of a decree of judicial dissolution, the winding up shall be carried
out in accordance with such decree.
(c) MANNER OF WINDING UP. The Company shall engage in no
further business following dissolution other than that necessary for the orderly
winding up of business and distribution of assets. The Company's maintenance of
offices shall not be deemed a continuation of business for purposes of this
Section 10.3. Upon dissolution of the Company, the Liquidator shall, subject to
paragraph (a) above, first attempt to distribute assets in kind if it can obtain
the consent of each of the Members and, to the extent necessary, the creditors
of the Company. If such consent is not obtained, the Liquidator shall sell the
Company or all the Company's property in such manner and on such terms as it
deems fit, consistent with its fiduciary responsibility and having due regard to
the activity and condition of the relevant market and general financial and
economic conditions. Each Member shall share Profits, Losses and other items
after the dissolution of the Company and during the period of winding up in the
same manner as described in Article 4.
(d) APPLICATION OF ASSETS. Upon dissolution of the Company,
the Company's assets (which shall, after the sale or sales referenced in
paragraph (c) above, consist of the proceeds thereof) shall be applied as
follows:
(i) CREDITORS. To creditors, including Members and
Representatives who are creditors, to the extent otherwise permitted by
law, in satisfaction of liabilities of the Company (whether by payment
or the reasonable provision for the payment thereof). Any reserves set
up by the Liquidator may be paid over by the Liquidator to an escrow
agent or trustee, to be held in escrow or trust for the purpose of
paying any such contingent or unforeseen liabilities or obligations,
and, at the expiration of such period as the Liquidator may deem
advisable, such reserves shall be distributed to the Members or their
assigns in the manner set forth in paragraph (ii) below.
(ii) MEMBERS. By the end of the taxable year in which the
liquidation occurs (or, if later, within 90 days after the date of such
liquidation), to the Members in proportion to the positive balances of
their respective Capital Accounts, as determined after taking into
account all Capital Account adjustments for the taxable year during
which the liquidation occurs (other than those made pursuant to this
paragraph).
10.4 TERMINATION. Upon completion of the winding up of the
Company and the distribution of all Company assets, the Company's affairs shall
terminate and the Members shall cause to be executed and filed any and all
documents required by the Act to effect the termination of the Company.
52
ARTICLE 11
EXCULPATION AND INDEMNIFICATION
11.1 NO PERSONAL LIABILITY.
(a) Except as otherwise provided by the Act, the debts,
obligations and liabilities of the Company, whether arising in contract, tort or
otherwise, shall be solely the debts, obligations and liabilities of the
Company, and no Indemnified Person (as defined in paragraph (b) below) shall be
obligated personally for any such debt, obligation or liability of the Company
solely by reason of being an Indemnified Person.
(b) No Representative, Member or its Affiliates, or any of
their respective shareholders, directors, officers, employees, agents, members,
managers, or partners (each, an "Indemnified Person") shall be liable,
responsible or accountable in damages or otherwise to the Company or to any
other Indemnified Person for any act or omission performed or omitted by an
Indemnified Person in connection with the transactions contemplated hereby,
whether for mistake of judgment or negligence or other action or inaction,
unless such action or omission constitutes willful misconduct, gross negligence
or bad faith. Each Indemnified Person may consult with counsel, accountants and
other experts in respect of the affairs of the Company and such Indemnified
Person shall be fully protected and justified in any action or inaction which is
taken in good faith in accordance with the advice or opinion of such counsel,
accountants or other experts, provided that they shall have been selected with
reasonable care.
11.2 INDEMNIFICATION BY COMPANY. To the maximum extent
permitted by applicable law, the Company shall protect, indemnify, defend and
hold harmless each Indemnified Person for any acts or omissions performed or
omitted by an Indemnified Person (in its capacity as such) unless such action or
omission constituted willful misconduct, gross negligence or bad faith. The
indemnification authorized under this Section shall include payment on demand
(with appropriate evidence of the amounts claimed) of reasonable attorneys' fees
and other expenses incurred in connection with, or in settlement of, any legal
proceedings between the Indemnified Person and a third party and the removal of
any Liens affecting any property of the Indemnified Person. Such indemnification
rights shall be in addition to any and all rights, remedies and recourse to
which any Indemnified Person shall be entitled, whether or not pursuant to the
provisions of this Agreement, at law or in equity. The indemnities provided for
in this Section 11.2 shall be recoverable only from the assets of the Company,
and there shall be no recourse to any Member or other Person for the payment of
such indemnities.
11.3 NOTICE AND DEFENSE OF CLAIMS.
(a) NOTICE OF CLAIM. If any action, claim or proceeding
("Claim") shall be brought or asserted against any Indemnified Person in respect
of which indemnity may be sought from the Company under Section 11.2, the
Indemnified Person shall give prompt written notice of such Claim to the
Company, which may assume the defense thereof,
53
including the employment of counsel reasonably satisfactory to the
Indemnified Person and the payment of all of such counsel's fees and
expenses; provided that any delay or failure to so notify the Company shall
relieve the Company of its obligations hereunder only to the extent, if at
all, that it is prejudiced by reason of such delay or failure. Any such
notice shall refer to Section 11.2 and describe in reasonable detail the
facts and circumstances of the Claim being asserted.
(b) DEFENSE BY THE COMPANY. In the event that the Company
undertakes the defense of the Claim, the Company will keep the Indemnified
Person advised as to all material developments in connection with any Claim,
including, but not limited to, promptly furnishing the Indemnified Person with
copies of all material documents filed or served in connection therewith. The
Indemnified Person shall have the right to employ one separate firm per
jurisdiction with respect to any of the foregoing Claims and to participate in
the defense thereof, but the fees and expenses of such firm shall be at the
expense of the Indemnified Person unless both the Indemnified Person and the
Company are named as parties and representation by the same counsel is
inappropriate due to actual differing interests between them; provided that
under no circumstances shall the Company be liable for the fees and expenses of
more than one law firm per jurisdiction in any of the foregoing Claims for the
Indemnified Persons, taken collectively and not separately. The Company may,
without the Indemnified Person's consent, settle or compromise any Claim or
consent to the entry of any judgment if such settlement, compromise or judgment
involves only the payment of money damages by the Company (which payment is made
or adequately provided for at the time of such settlement, compromise or
judgment) or provides for the unconditional release by the claimant or plaintiff
of the Indemnified Person and its Affiliates from all liability in respect of
such Claim and does not impose injunctive relief against any of them. The
Indemnified Person shall provide reasonable assistance to the Company in the
defense of the Claim. As between the Company, on the one hand, and the
Indemnified Persons, on the other hand, any matter that is not agreed to
unanimously by the Indemnified Persons shall be determined by the Indemnified
Person that is a party to this Agreement.
(c) DEFENSE BY THE INDEMNIFIED PERSON. In the event that the
Company, within 20 business days after receiving written notice of any such
Claim, fails to assume the defense thereof, the Indemnified Person shall have
the right, subject to the right of the Company thereafter to assume such defense
pursuant to the provisions of this Article 11, to undertake the defense,
compromise or settlement of such Claim for the account of the Company.
(d) ADVANCEMENT OF EXPENSES. Unless the Indemnifying Party
shall have assumed the defense of any Claim pursuant to paragraph (b) above, the
Company shall advance to the Indemnified Person any of its reasonable attorneys'
fees and other costs and expenses incurred in connection with the defense of any
such Claim. Each Indemnified Person shall agree in writing prior to any such
advancement, that in the event he or it receives any such advance, such
Indemnified Person shall reimburse the Company for such fees, costs, and
expenses to the extent that it shall be determined that he or it was not
entitled to indemnification under this Article 11.
54
(e) CONTRIBUTION. Notwithstanding any of the foregoing to
the contrary, the provisions of this Article 11 shall not be construed so as to
provide for the indemnification of any Indemnified Person for any liability to
the extent (but only to the extent) that such indemnification would be in
violation of applicable law or to the extent such liability may not be waived,
modified, or limited under applicable law, but shall be construed so as to
effectuate the provisions of this Article 11 to the fullest extent permitted by
law; provided, that if and to the extent that the Company's indemnification
obligation under this Article 11 is unenforceable for any reason, the Company
hereby agrees to make the maximum contribution permissible under applicable law
to the payment and satisfaction of the losses of the Indemnified Person, except
to the extent such losses are found in a final, nonappealable judgment by a
court of competent jurisdiction to have resulted from the Indemnified Person's
gross negligence or willful misconduct.
ARTICLE 12
MISCELLANEOUS
12.1 ENTIRE AGREEMENT. This Agreement and the Related
Agreements, together with any schedules and exhibits hereto and thereto, contain
the entire agreement and understanding of the Members relating to the subject
matter hereof and supersede all prior negotiations, proposals, offers,
agreements and understandings (written or oral) relating to such subject matter,
including the letter agreement and term sheet attached thereto dated October 5,
1999 among AWS, DCC and DCCLP.
12.2 AMENDMENT; WAIVER. Neither this Agreement nor any
provision hereof may be amended or modified except in a writing signed by each
of the Qualified Members; PROVIDED, that any amendment or modification that
adversely affects a non-Qualified Member shall require the consent of such
Member. No failure or delay of any Member in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce any such right or power, preclude any other further exercise
thereof or the exercise of any other right or power. No waiver by any Member of
any departure by any other Member from any provision of this Agreement shall be
effective unless the same shall be in a writing signed by the Member against
which enforcement of such waiver or consent is sought, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice or similar communication by any Member
to another shall entitle such other Member to any other or further notice or
similar communication in similar or other circumstances, except as specifically
provided herein.
12.3 SPECIFIC PERFORMANCE. The Members acknowledge that
money damages may not be an adequate remedy for violations of this Agreement
and that any Member may, in its sole discretion, in an arbitration or a court
of competent jurisdiction, to the extent permitted hereunder, apply for
specific performance or injunctive or other relief as such arbitration or
court may deem just and proper in order to enforce this Agreement or to
55
prevent violation hereof and, to the extent permitted by applicable law, each
Member waives any objection to the imposition of such relief.
12.4 REMEDIES CUMULATIVE. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall, unless otherwise specifically provided herein, be cumulative
and not alternative, and the exercise or beginning of the exercise of any right,
power or remedy thereof by a Member shall not preclude the simultaneous or later
exercise of any other such right, power or remedy by such Member.
12.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the Members and their respective
successors and permitted assigns. No Member may assign its rights or delegate
its duties under this Agreement without the written consent of the other Members
except to the extent expressly provided in this Agreement.
12.6 NO THIRD PARTY BENEFICIARIES. This Agreement is entered
into solely for the benefit of the Members and no Person other than the Members,
their respective successors and permitted assigns, their Affiliates to the
extent expressly provided herein, and (to the extent provided in Article 11) the
Persons entitled to indemnification pursuant to Article 11, may exercise any
right or enforce any obligation hereunder.
12.7 FURTHER ASSURANCES. Each Member will execute and
deliver such further documents and take such further actions as any other
Member may reasonably request consistent with the provisions hereof in order
to effect the intent and purposes of this Agreement.
12.8 NOTICES. All notices or other communications hereunder
shall be in writing and shall be deemed to have been duly given or made (i) upon
delivery if delivered personally (by courier service or otherwise) or (ii) upon
confirmation of dispatch if sent by facsimile transmission (which confirmation
shall be sufficient if shown on the journal produced by the facsimile machine
used for such transmission), and all legal process with regard hereto shall be
validly served when served in accordance with applicable law, in each case to
the applicable addresses set forth below (or such other address as the recipient
may specify in accordance with this Section):
If to a Member or Representative of the DCC Member Group, to
such Member or Representative:
c/x Xxxxxx Communications Corporation
00000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxx, XX 00000
Attn: General Counsel
Fax: (000) 000-0000
56
with a copy to:
Xxxxxxx & Xxxxxx, LLP
0000 XxxxXxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
If to a Member or Representative of the AWS Member Group, to
such Member or Representative:
c/o AT&T Wireless Services, Inc.
0000 000xx Xxxxxx, XX
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
Fax: (000) 000-0000
with a copy to:
AT&T Wireless Services, Inc.
0000 000xx Xxxxxx, XX
Xxxxxxx, XX 00000
Attn: General Counsel
Fax: (000) 000-0000
If to any other Member, to the address of such Person for notices set forth in
the records of the Company.
12.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware, without
regard to principles of conflicts of law.
12.10 SEVERABILITY. If any term of this Agreement or the
application thereof to any Member or any circumstance shall be held invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such term to the other Members or circumstances shall not be affected thereby
and shall be enforced to the greatest extent permitted by applicable law, so
long as the economic and legal substance of this Agreement and the actions
contemplated hereby is not affected in any manner adverse to any Member.
12.11 INDEPENDENT CONTRACTORS. The Members are independent
contractors, and this Agreement does not create a partnership or agency
relationship between the Members, or any other relationship between the Members
except as expressly set forth herein. No Member shall have any right or
authority to assume, create or incur any liability or obligation, express or
implied, in the name or on behalf of any other Member.
57
12.12 DISPOSITION OF INTERESTS. Upon the sale or other
disposition by a Person of all its Interests in the Company, following which
such Person and Affiliate thereof is no longer a Member of the Company, this
Agreement shall terminate as to such Member and its Affiliates except as
provided in Section 12.13.
12.13 SURVIVAL OF RIGHTS AND DUTIES. Termination of this
Agreement for any reason shall not relieve any Member of any liability which at
the time of termination has already accrued to such Member or which thereafter
may accrue in respect of any act or omission prior to such termination, nor
shall any such termination affect in any way the other Related Agreements or the
survival of any right, duty or obligation of any Member which is expressly
stated elsewhere in this Agreement to survive termination hereof. Sections 8.3,
8.9 and 8.11 and Articles 11 and 12 shall survive any termination of this
Agreement, including any termination pursuant to Section 12.12 in connection
with the consummation of a purchase and sale transaction pursuant to the
Buy-Sell Procedure.
12.14 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one instrument.
12.15 CONSTRUCTION. Each of the parties hereto acknowledges
that it has reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments
hereto. The captions used herein are for convenience of reference only and shall
not affect the interpretation or construction hereof. All pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural as the context may require. Unless otherwise specified, (a)
the terms "hereof," "herein" and similar terms refer to this Agreement as a
whole, (b) references herein to Articles or Sections refer to articles or
sections of this Agreement and (c) the word "including" connotes the words
"including without limitation" unless the context requires otherwise.
12.16 NO RIGHT TO PARTITION. No Member shall have the
right to bring an action for partition against the Company. Each of the
Members hereby irrevocably waives any and all rights which it may have to
maintain an action to partition Company property or to compel any sale or
transfer thereof.
12.17 DE FACTO AND DE JURE TRANSFERS OF CONTROL.
Notwithstanding anything to the contrary contained herein, to the extent that,
by reason of any action taken or proposed to be taken, by or on behalf of a
Member or any Member Group (including any actions taken in accordance with the
provisions of Articles 7, 8, or 9 of this Agreement), there would be a de jure
or de facto transfer of control of the Company, (a) if such transfer of control
requires prior notice to, or the prior approval of, the FCC, then no such action
shall be taken unless and until the FCC has approved such transfer of control,
and in such case, the Member proposing to take (or whose Member Group is
proposing to take) such action shall be responsible for assuring that all
required notifications or applications to the FCC have been
58
filed, and all required consents from the FCC have been obtained, before such
transfer of control is made; and (b) if such transfer of control requires
notification to the FCC after it has occurred, the Member taking such action
(or whose Member Group has taken such action) shall be responsible for
assuring that all required notifications to the FCC have been filed. In any
such event, the responsible Member shall assure that all required
applications and/or notifications are timely filed and are accurate and
complete in all material respects, and such Member shall execute and file any
such applications or notifications on behalf of the Company.
[SIGNATURE PAGE FOLLOWS]
59
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
AT&T WIRELESS SERVICES JV CO.
By: /s/ Xxx Xxxxx
----------------------------------
Name: Xxx Xxxxx
Title: Vice President
XXXXXX XX COMPANY
By: /s/ Xxxxx X. Xxxxxxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
Title: V.P. and Chief Financial
Officer
Agreed and accepted with respect
to Sections 8.1, 8.2, 8.3 and 8.4 only:
AT&T CORP.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
60
TABLE OF CONTENTS
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Page
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ARTICLE 1 DEFINITIONS............................................................................................1
ARTICLE 2 ORGANIZATION..........................................................................................17
2.1 Name..............................................................................................17
2.2 Principal Place of Business.......................................................................17
2.3 Registered Office; Registered Agent...............................................................18
2.4 Term..............................................................................................18
2.5 Purpose and Powers................................................................................18
2.6 Filings...........................................................................................18
2.7 Sole Agreement....................................................................................18
ARTICLE 3 CAPITALIZATION........................................................................................18
3.1 Capital Accounts..................................................................................18
3.2 Capital Contributions.............................................................................20
3.3 No Withdrawals....................................................................................21
ARTICLE 4 PROFITS AND LOSSES....................................................................................21
4.1 Profits...........................................................................................21
4.2 Limitation on Losses..............................................................................21
4.3 Special Allocations...............................................................................21
4.4 Curative Allocations..............................................................................22
4.5 Allocation of Credits.............................................................................23
4.6 Tax Allocations...................................................................................24
4.7 Change in Member's Interests......................................................................25
ARTICLE 5 DISTRIBUTIONS.........................................................................................25
5.1 Distributable Cash................................................................................25
5.2 Liquidating Distributions.........................................................................25
ARTICLE 6 ACCOUNTING AND RECORDS................................................................................25
6.1 Fiscal Year.......................................................................................26
6.2 Method of Accounting..............................................................................26
6.3 Books and Records; Inspection.....................................................................26
6.4 Financial.........................................................................................26
6.5 Taxation..........................................................................................27
ARTICLE 7 MANAGEMENT............................................................................................31
7.1 Management........................................................................................31
7.2 Meetings of Management Committee..................................................................32
7.3 Actions by Management Committee...................................................................33
ARTICLE 8 OPERATING AGREEMENTS AND OTHER COVENANTS..............................................................34
8.1 Limited Exclusivity...............................................................................34
8.2 Roaming Preference................................................................................35
8.3 Resale and Agency Agreements......................................................................36
8.4 Long Distance.....................................................................................37
i
8.5 Equipment Discounts...............................................................................37
8.6 Roaming Agreements................................................................................37
8.7 Certain Restrictions..............................................................................38
8.8 Other Business; Duties; Etc.......................................................................38
8.9 Confidentiality...................................................................................38
8.10 Conversion to Corporation.........................................................................39
8.11 Dispute Resolution................................................................................40
8.12 Disqualifying Transaction.........................................................................42
ARTICLE 9 TRANSFER RESTRICTIONS; EXIT RIGHTS; CHANGE OF CONTROL OF DCC..........................................42
9.1 General Restrictions on Transfers.................................................................42
9.2 Right of First Refusal............................................................................44
9.3 Tag-Along Right...................................................................................45
9.4 Indirect Transfers................................................................................46
9.5 Substituted.......................................................................................47
9.6 Invalid Transfers Void............................................................................47
9.7 Determination of Fair Market Value................................................................47
9.8 Change of Control of DCC..........................................................................48
9.9 Buy-Sell Procedure................................................................................49
9.10 IPO...............................................................................................51
ARTICLE 10 DISSOLUTION AND TERMINATION..........................................................................51
10.1 No Withdrawal.....................................................................................51
10.2 Dissolution.......................................................................................51
10.3 Procedures Upon Dissolution.......................................................................51
10.4 Termination.......................................................................................52
ARTICLE 11 EXCULPATION AND INDEMNIFICATION......................................................................53
11.1 No Personal Liability.............................................................................53
11.2 Indemnification by Company........................................................................53
11.3 Notice and Defense of Claims......................................................................53
ARTICLE 12 MISCELLANEOUS........................................................................................55
12.1 Entire Agreement..................................................................................55
12.2 Amendment; Waiver.................................................................................55
12.3 Specific Performance..............................................................................56
12.4 Remedies Cumulative...............................................................................56
12.5 Successors and Assigns............................................................................56
12.6 No Third Party Beneficiaries......................................................................56
12.7 Further Assurances................................................................................56
12.8 Notices...........................................................................................56
12.9 Governing Law.....................................................................................57
12.10 Severability......................................................................................57
12.11 Independent Contractors...........................................................................57
12.12 Disposition of Interests..........................................................................58
12.13 Survival of Rights and Duties.....................................................................58
12.15 Construction......................................................................................58
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12.16 No Right to Partition.............................................................................58
12.17 De Facto and De Jure Transfers of Control.........................................................59
SCHEDULES AND EXHIBITS
----------------------
Schedule I -- Core Service Features
Schedule II -- Xxxxxx Group
Schedule III -- Territory
Schedule 8.1(a)(iv) -- Tritel Licenses
Schedule 8.1(a)(v) -- AT&T Licenses
Schedule 9.4 -- JWC Investors
Exhibit A -- Significant Matters
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