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EXHIBIT 10.12
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
of
ALASKA NATIVE WIRELESS, L.L.C.
among
AT&T WIRELESS PCS INTERESTS, LLC,
AT&T WIRELESS SERVICES, INC.,
COUNCIL TREE ALASKA NATIVE WIRELESS, L.L.C.
and
THE OTHER SIGNATORIES HERETO
Dated as of February 8, 2001
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TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS AND ORGANIZATION...................................................................2
Section 1.1. Definitions.................................................................2
Section 1.2. Formation..................................................................15
Section 1.3. Name.......................................................................15
Section 1.4. Principal Place of Business................................................16
Section 1.5. Registered Office; Registered Agent........................................16
Section 1.6. Term.......................................................................16
Section 1.7. Purpose and Powers.........................................................16
Section 1.8. Filings....................................................................16
Section 1.9. Sole Agreement.............................................................16
ARTICLE 2 CAPITALIZATION................................................................................16
Section 2.1. Capital Accounts...........................................................16
Section 2.2. Capital Contributions......................................................18
Section 2.3. No Withdrawals.............................................................20
Section 2.4. No Interest................................................................21
ARTICLE 3 DISTRIBUTIONS.................................................................................21
Section 3.1. Non-Liquidating Distributions..............................................21
Section 3.2. Liquidating Distributions..................................................21
ARTICLE 4 ALLOCATIONS...................................................................................21
Section 4.1. Profits....................................................................21
Section 4.2. Losses.....................................................................21
Section 4.3. Special Allocations........................................................22
Section 4.4. Curative Allocations.......................................................23
Section 4.5. Special Allocations in the Event of Company Audit Adjustments..............23
Section 4.6. Allocation of Credits......................................................24
Section 4.7. Tax Allocations............................................................25
Section 4.8. Change in Members' Interests...............................................25
ARTICLE 5 ACCOUNTING AND RECORDS........................................................................25
Section 5.1. Fiscal Year................................................................25
Section 5.2. Method of Accounting.......................................................25
Section 5.3. Books and Records; Inspection..............................................26
Section 5.4. Financial Statements.......................................................26
Section 5.5. Taxation...................................................................26
ARTICLE 6 MANAGEMENT....................................................................................30
Section 6.1. Manager....................................................................30
Section 6.2. Removal of Manager.........................................................30
Section 6.3. Supermajority Approval Rights..............................................31
Section 6.4. Business Plans and Budgets.................................................31
Section 6.5. Provisions Relating to Additional Members..................................32
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ARTICLE 7 TRANSFER RESTRICTIONS.........................................................................32
Section 7.1. Restrictions...............................................................32
Section 7.2. Exceptions.................................................................33
Section 7.3. Right of First Refusal.....................................................34
Section 7.4. Tag-Along Right............................................................36
Section 7.5. Substituted Members........................................................36
Section 7.6. Invalid Transfers Void.....................................................37
Section 7.7. Determination of Fair Market Value.........................................37
Section 7.8. Acceptance of Prior Acts...................................................37
ARTICLE 8 OFFER TO SELL LICENSES........................................................................38
Section 8.1. Offer to Sell..............................................................38
Section 8.2. Purchase Price.............................................................38
Section 8.3. Closing....................................................................39
Section 8.4. Distribution to Members....................................................39
ARTICLE 9 PUT RIGHT.....................................................................................39
Section 9.1. Put Right..................................................................39
Section 9.2. Put Exercise...............................................................40
Section 9.3. Put Price..................................................................40
Section 9.4. Put Closing................................................................41
Section 9.5. Payment....................................................................41
Section 9.6. Allocation of Bidding Credits..............................................43
Section 9.7. New LLC....................................................................44
Section 9.8. Terminated Auction Purchase................................................44
ARTICLE 10 REGISTRATION RIGHT...........................................................................46
Section 10.1. Registration Right.........................................................46
Section 10.2. Right to Purchase - Preliminary Range......................................46
Section 10.3. Right to Purchase - IPO Price..............................................46
Section 10.4. Right to Defer the Offering................................................47
Section 10.5. Registration Expenses......................................................47
Section 10.6. Registration Procedures....................................................47
ARTICLE 11 OTHER AGREEMENTS.............................................................................50
Section 11.1. Exclusivity................................................................50
Section 11.2. Confidentiality............................................................51
Section 11.3. Arbitration................................................................52
ARTICLE 12 REPRESENTATIONS AND COVENANTS................................................................53
Section 12.1. Representations of the Members.............................................53
Section 12.2. Covenants of the Members...................................................54
Section 12.3. Representations and Covenants of Members Other Than AWS....................55
Section 12.4. Termination by AWS.........................................................55
ARTICLE 13 EXCULPATION AND INDEMNIFICATION..............................................................56
Section 13.1. No Personal Liability......................................................56
Section 13.2. Indemnification by Company.................................................57
Section 13.3. Notice and Defense of Claims...............................................57
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ARTICLE 14 DISSOLUTION AND TERMINATION..................................................................58
Section 14.1. No Withdrawal..............................................................58
Section 14.2. Dissolution................................................................59
Section 14.3. Procedures Upon Dissolution................................................59
Section 14.4. Deficit Capital Accounts...................................................60
Section 14.5. Termination................................................................60
ARTICLE 15 MISCELLANEOUS................................................................................60
Section 15.1. Entire Agreement...........................................................60
Section 15.2. Amendment; Waiver..........................................................60
Section 15.3. Successors and Assigns.....................................................61
Section 15.4. No Third Party Beneficiaries...............................................61
Section 15.5. Disposition of Interests...................................................61
Section 15.6. Survival of Rights and Duties..............................................61
Section 15.7. Governing Law..............................................................62
Section 15.8. Specific Performance.......................................................62
Section 15.9. Remedies Cumulative........................................................62
Section 15.10. Further Assurances.........................................................62
Section 15.11. Expenses...................................................................62
Section 15.12. Notices....................................................................63
Section 15.13. Severability...............................................................64
Section 15.14. Reformation................................................................64
Section 15.15. Independent Contractors....................................................65
Section 15.16. No Right to Partition......................................................65
Section 15.17. Waiver of Immunity.........................................................65
Section 15.18. Construction...............................................................65
Section 15.19. Counterparts...............................................................65
Section 15.20. Headings...................................................................66
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, dated as of
February 8, 2001, among AT&T Wireless PCS Interests, LLC, a Delaware limited
liability company ("AWS Sub"), AT&T Wireless Services, Inc., a Delaware
corporation ("AWS"), Council Tree Alaska Native Wireless, L.L.C., a Delaware
limited liability company ("CTC"), and Alaska Native Wireless, L.L.C., a
Delaware limited liability company (the "Company"). This Agreement is also being
executed and delivered by Edge Wireless Ventures, LLC, an Oregon limited
liability company ("Edge"), which will become a Member if and when it makes make
a capital contribution to the Company pursuant to Section 2.2(c).
WHEREAS, the Federal Communications Commission (the "FCC") has
conducted an auction of licenses to provide broadband personal communications
services ("PCS") using spectrum in the broadband PCS C block (1895-1910
MHz/1975-1990 MHz) and the broadband PCS F block (1890-1895 MHz/1970-1975 MHz)
in various Basic Trading Areas in the United States, which auction was
designated by the FCC as Auction Number 35 (the "Auction");
WHEREAS, Congress has directed the FCC to promote economic opportunity
and competition by disseminating licenses among a wide variety of applicants,
including small businesses and businesses owned by members of minority groups,
and to ensure that small businesses and businesses owned by members of minority
groups are given the opportunity to participate in the provision of
spectrum-based services;
WHEREAS, the FCC has undertaken to xxxxxx the provision of
telecommunications services by and to Native Americans, particularly on Native
American tribal lands where telecommunications services subscribership is
frequently below national standards;
WHEREAS, CTC includes a consortium of Alaska Native Regional
Corporations comprised of more than 40,000 Alaska Native shareholders, which
consortium desires to participate in the provision of spectrum-based services to
secure economic opportunity for its shareholders, to develop telecommunications
industry expertise for and on behalf of its shareholders, and to promote the
delivery of telecommunications services to Native American tribal lands;
WHEREAS, in pursuit of these goals, CTC desires to participate in the
Auction in partnership with a recognized telecommunications industry leader;
WHEREAS, AWS desires to work with CTC in pursuit of these goals;
WHEREAS, CTC and AWS Sub have entered into a Limited Liability Company
Agreement, dated as of November 3, 2000 (the "Initial LLC Agreement"), relating
to the Company;
WHEREAS, CTC and AWS Sub wish to amend and restate the Initial LLC
Agreement in its entirety as hereinafter set forth;
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WHEREAS, the Members wish AWS (and AWS is willing) to become a party to
this Agreement in order to evidence its agreement to perform its obligations
hereunder;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, it is hereby agreed, and the Initial LLC Agreement is hereby
amended and restated in its entirety, as follows:
ARTICLE 1
DEFINITIONS AND ORGANIZATION
Section 1.1. Definitions
Capitalized terms used in this Agreement without other definition
shall, unless expressly stated otherwise, have the meanings specified in this
Section 1.1.
"Act" means the Delaware Limited Liability Company Act, as amended from
time to time.
"Additional Members" means, collectively, Edge, if it makes a capital
contribution to the Company pursuant to Section 2.2(c), and its successors and
Permitted Transferees.
"Adjusted Bidding Credits" means the excess of (i) the aggregate amount
of Bidding Credits over (ii) the aggregate amount of Bidding Credits, if any,
that are forfeited by the Company pursuant to applicable FCC Rules as a result
of any action or omission of CTC in its capacity as Manager or otherwise. Any
dispute over the cause of any such forfeiture shall be submitted to arbitration
in accordance with Section 11.3. If the arbitrators determine that both CTC and
AWS Sub are at fault with respect to any such forfeiture, the CTC Portion of the
Adjusted Bidding Credits shall, notwithstanding the allocation set forth in
Schedule 1, be modified by the arbitrators to reflect the relative fault of CTC
and AWS Sub.
"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
Reg.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
Reg.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 Reg. Section
1.704-1(b)(2)(ii)(d) and shall be interpreted and applied consistently
therewith.
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"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; provided, that the
Members shall be deemed not to be Affiliates of the Company for purposes of this
Agreement.
"Agents" is defined in Section 11.2.
"Agreement" means this Limited Liability Company Agreement, as amended,
modified, supplemented or restated from time to time.
"Alaska Native Corporation" means each of ASRC Wireless Services, Inc.,
a wholly owned Subsidiary of ASRC; Sealaska Telecommunications, LLC, a wholly
owned Subsidiary of Sealaska Corporation; and Xxxxx Communications, Inc., a
wholly owned Subsidiary of Xxxxx Limited.
"Appraiser" is defined in Section 7.7.
"ASRC" means Arctic Slope Regional Corporation, an Alaska corporation.
"Auction" is defined in the preamble.
"Auction Benefits" means the eligibility of the Company to hold any of
the licenses won in the Auction or the ability of the Company to realize the
Bidding Credits and other financial benefits that it derives from its status as
a Qualified Person.
"AWP" means AT&T Wireless PCS, LLC, a Delaware limited liability
company.
"AWS" is defined in the preamble.
"AWS Sub" is defined in the preamble.
"AWS Territory" means, collectively, (i) the territories where AWS or
its Affiliates or other "attributable entities" hold licenses to provide
broadband PCS or other wireless communications services and (ii) the territories
served by Persons with whom AWS or its Affiliates have any exclusivity and/or
preferential roaming arrangements with respect to the provision of wireless
communications services; provided, that the territories described in clauses (i)
and (ii) above shall be considered part of the AWS Territory for purposes of
this Agreement only to the extent that, and from and after such time as, such
territories have been identified with reasonable specificity in public filings
by AWS (or its Affiliates) or CTC shall have received written notice from AWS
identifying such territories (it being understood that AWS may deliver such
notices at any time and from to time). The term "attributable entities" means
Persons in which AWS or its Affiliates have, or have the right or the
obligation, whether upon the occurrence of a contingency or otherwise, to
acquire, an "attributable interest" (as defined in any applicable FCC rules).
"Bankruptcy" means with respect to any Person:
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(i) the filing by such Person of a voluntary petition seeking
liquidation, dissolution, reorganization, rearrangement, readjustment
or similar relief, in any form, of its debts under Title 11 of the
United States Code (or corresponding provisions of future laws) or any
other bankruptcy or insolvency law, or such Person's filing an answer
consenting to, or acquiescing in any such petition, or the adjudication
of such Person as a bankrupt or insolvent;
(ii) the making by such Person of any assignment for the
benefit of its creditors or any similar action for the benefit of
creditors, or the admission by such Person in writing of its inability
to pay its debts as they mature;
(iii) the expiration of 60 days after the filing of an
involuntary petition under Title 11 of the United States Code (or
corresponding provisions of future laws), an application for the
appointment of a receiver for the assets of such Person, or an
involuntary petition seeking liquidation, dissolution, reorganization,
rearrangement or readjustment of its debts or similar relief under any
bankruptcy or insolvency law, provided that the same shall not have
been vacated, set aside or stayed within such 60 day period;
(iv) the giving of notice by such Person to any Governmental
Authority of insolvency or pending insolvency or suspension or pending
suspension of operations;
(v) the appointment (or such Person's seeking or acquiescing
to such appointment) of any trustee, receiver, conservator or
liquidator of such Person of all or any substantial part of its
properties; or
(vi) the entry of an order for relief against such Person
under Title 11 of the United States Code (or corresponding provisions
of future laws) or any other bankruptcy or insolvency law.
The foregoing is intended to supersede and replace the events listed in
Section 18-304(a) of the Act.
"Bidding Credit" means, with respect to any open license won by the
Company in the Auction, an amount equal to the excess of the gross winning bid
for such license over the net winning bid for such license.
"Bidding Protocol" means the Bidding Protocol and Joint Bidding
Arrangement, dated as of November 6, 2000, among CTC, AWS, AWP, AWS Sub and the
Company.
"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;
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(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 Reg.
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 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 Reg. Section 1.704-1(b)(2)(iv) and shall be interpreted
and applied consistently therewith.
"Business" means the business of (a) acquiring licenses in the Auction
(and such other FCC licenses as the Members shall mutually agree) and (b) the
deployment of such licenses in a manner consistent with applicable law and FCC
Rules, whether by (i) owning, constructing and operating systems to provide
mobile wireless telecommunications services, that may evolve to 3G-based
systems, (ii) entering into one or more joint venture, lease or other agreements
or (iii) any other means, in any case using technology fully compatible and
interoperable with the technology or technologies employed by AWS and its
Affiliates from time to time (without limiting the vendors from whom the
equipment comprising such systems may be acquired) solely within the Company
Territory (the "Company Communications Services"), which may, but need not
necessarily, also include (c) providing in connection with such Company
Communications Services, solely within the Company Territory, Telecommunications
Services incidental or ancillary to such Company Communications Services
provided to end-users of such Company
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Communications Services (including, by way of example, bundling additional
Telecommunications Services with Company Communications Services), (d) marketing
and offering the services and features described in clauses (b) and (c) within
the Company Territory, including advertising such services and features using
broadcast and other media, so long as such advertising extends beyond the
Company Territory only when and to the extent necessary to reach customers and
potential customers in the Company Territory and (e) any other activities upon
which the Members may mutually agree.
"Business Plan" means the Five-Year Business Plan and each annual
business plan adopted in accordance with Section 6.4.
"Capital Account" is defined in Section 2.1(a).
"Cash Equity Investors" means Madison Dearborn Capital Partners III,
L.P. and CTANW Investor, L.L.C., Catalyst Investors, L.P., Catalyst Investors
Advisors Fund, L.P. and Xxxxxxx X. Xxxxxxx and their respective successors and
Permitted Transferees.
"Change of Control of ASRC" means (i) any circumstance, event or
transaction following which any 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 "beneficial owner" (as such term is used in Rules 13d-3, 13d-5 or 16a-1
under the Exchange Act) of at least 50.1% of the Voting Securities of ASRC or
50.1% of the outstanding Equity Interests of ASRC (on a fully diluted basis,
treating Equity Interests of ASRC 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 to
control ASRC; or (ii) the sale or other disposition of all or substantially all
of ASRC's stock, business or assets (including through a merger or otherwise).
"Change of Control of Edge" means (i) any circumstance, event or
transaction following which any Person or Persons, whether or not constituting a
group (as such term is used in Sections 13(d) and 14(d) of the Exchange Act and
the regulations thereunder), other than (A) Xxxxx Xxxxx are the "beneficial
owners" (as such term is used in Rules 13d-3, 13d-5 or 16a-1 under the Exchange
Act) of at least 50.1% of the Voting Securities of Edge (or New Edge) or
otherwise has the power to control Edge (or New Edge) or (B) one or more members
of Edge Holding on the date hereof are the "beneficial owners" (as such term is
used in Rules 13d-3, 13d-5 or 16a-1 under the Exchange Act) of at least 50.1% of
the outstanding Equity Interests of Edge (or New Edge) on a fully diluted basis,
treating Equity Interests of Edge (or New Edge) issuable upon the conversion,
exchange or exercise of convertible or exchangeable securities, or other rights
to acquire Equity Interests, as issued and outstanding or (ii)the sale or other
disposition of all or substantially all of the stock, business or assets
(including through a merger or otherwise) of Edge.
"Claim" is defined in Section 13.3(a).
"CMRS" is defined in Section 12.3(a)(i)
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Company" is defined in the preamble.
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"Company Communications Services" is defined in the definition of
"Business."
"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 Reg. Section 1.704-2(d) or incomplete with respect
to such regulation, Company Minimum Gain shall be computed in accordance with
such regulation.
"Company Securities" means debt securities, convertible securities or
equity securities of the Company.
"Company Territory" means the territory covered by the licenses won by
the Company in the Auction or thereafter acquired by the Company.
"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
telecommunications 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 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.
"CTC" is defined in the preamble.
"CTC Members" means CTC and its Permitted Transferees.
"CTC Portion" means an amount equal to the portion of the Adjusted
Bidding Credits allocable to CTC in accordance with Schedule 1.
"Date of Payment" is defined in Section 9.3(a)(ii).
"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
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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
Manager.
"Edge" is defined in the preamble.
"Edge Holding" means Edge Wireless Holding Co., LLC.
"Edge Portion" means an amount equal to the product of the CTC Portion
multiplied by a fraction whose numerator is equal to the aggregate amount of
capital contributed to the Company by Edge pursuant to Section 2.2(c)(iv) plus
(so long as the Management Agreement shall not have been terminated by the
Company pursuant to Section 8.2(b)(ii) thereof) $7,500,000 and whose denominator
is equal to the aggregate amount of capital contributed to the Company by CTC
pursuant to Section 2.2(b) and Section 2.2(c)(i).
"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.
"Exempt Amount" means an aggregate amount equal to 16% of the total
amount of the net winning bids paid by the Company for open licenses in the
Auction.
"Exempt Open License" means each open license sold by the Company
pursuant to ARTICLE 8 until the aggregate consideration paid by the Company in
the Auction for such open license and each other open license sold by the
Company pursuant to ARTICLE 8 exceeds the Exempt Amount; provided, that if only
a portion of the consideration paid by the Company for an open license is
necessary to reach such threshold, then the purchase price of such open license
for purposes of ARTICLE 8 shall be determined pursuant to Section 8.2(a) with
respect to such portion of the consideration and pursuant to Section 8.2(b) with
respect to the balance of the consideration.
"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 Title 47 of the Code of Federal Regulations, as the same may be
modified or amended from time to time hereafter, together with all orders and
public notices of the FCC.
"Five-Year Business Plan" is defined in Section 6.4(a).
"GAAP" means generally accepted accounting principles as used by the
Financial Accounting Standards Board and/or the American Institute of Certified
Public Accountants.
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"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.
"Indemnified Person" is defined in Section 13.1(b).
"Initial Application Date" means November 6, 2000.
"Initial Grant Date" means, with respect to any license, the date on
which such license is granted by the FCC as set forth on the face of such
license.
"Interest" means the interest of a Member (or a Permitted Transferee of
a Member pursuant to ARTICLE 7 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.
"IPO Price" is defined in Section 10.3.
"license" means a license issued by the FCC authorizing the licensee to
construct and operate radio transmitting facilities. Unless otherwise indicated,
references to licenses in this Agreement shall refer to licenses to provide
broadband PCS.
"License Payment" is defined in Section 2.2(c).
"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 14.3(b).
"Management Agreement" means the Management Agreement between the
Company and the Management Company, as the same may be amended in accordance
therewith.
"Management Company" is defined in the Management Agreement.
"Manager" means CTC for so long as it serves as the "manager" of the
Company (within the meaning of the Act) in accordance with the provisions of
this Agreement and, thereafter, any manager of the Company duly appointed in
accordance with the terms hereof.
"Marketable Securities" means securities (i) issued by an issuer with a
public float equal to or greater than $2 billion; (ii) that are of a class of
securities listed on a major national or international stock exchange; (iii)
that constitute, in the aggregate, not more than 3.5% of the outstanding
securities of such class; (iv) that are or were issued to the Members that
exercised the Put in a transaction registered under the Securities Act, or the
resale of which by such Members is registered under the Securities Act, and are
otherwise freely tradable by such Members without
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restriction under applicable federal and state securities laws; and (v) that may
reasonably be expected at the time of delivery to be sold in an orderly fashion
within five business days thereafter (it being understood that the condition set
forth in this clause (v) shall be satisfied if one or more underwriters of
nationally recognized standing selected and compensated by AWS Sub agree to
place such securities within such period).
"Member" means, initially, AWS Sub and CTC as long as they have not
ceased to be Members, 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, in such Person's capacity as a
member (within the meaning of the Act) of the Company.
"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 Reg. Section 1.704-2(i).
"Member Nonrecourse Debt" has the meaning ascribed to the term "partner
nonrecourse debt" in Treasury Reg. Section 1.704-2(b)(4), and generally means
any 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 Reg. 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.
"New Edge" is defined in Section 7.2(c).
"New LLC" is defined in Section 9.7.
"Newco" is defined in Section 10.1.
"Nonrecourse Deductions" has the meaning set forth in Treasury Reg.
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 Reg. Section 1.704-2(c), of any distributions during
the fiscal year of proceeds of a nonrecourse liability, as defined in Treasury
Reg. Section 1.704-2(b)(3), that are allocable to an increase in Company Minimum
Gain.
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"Offer" is defined in Section 7.3(a).
"Offer Notice" is defined in Section 7.3(a).
"Offered Interests" is defined in Section 7.3(a).
"Offering" is defined in Section 10.1.
"Offeror" is defined in Section 7.3(a).
"open license" means a license designated as such in the Public Notice.
"Operating Agreement" means the Operating Agreement (if any) between
the Company and AWS, as the same may be amended in accordance therewith.
"PCS" means the Personal Communications Services principally regulated
under Part 24 of the FCC Rules.
"Percentage Interest" means, with respect to a Member, the percentage
determined by dividing the aggregate unreturned contributions to the equity
capital of the Company made by such Member by the aggregate unreturned
contributions to the equity capital of the Company made by all Members.
"Permitted Transferee" means, with respect to a Member, a direct or
indirect wholly owned Subsidiary of such Member, and a direct or indirect wholly
owned Subsidiary of a Person of which such Member is a direct or indirect wholly
owned Subsidiary.
"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.
"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;
(ii) any expenditures of the Company described in Section
705(a)(2)(B) of the Code or treated as such pursuant to Treasury
Reg.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;
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(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) gain or loss resulting from the disposition of any Company
asset with respect to which gain or loss is recognized for federal
income tax purposes shall be computed with reference to the Book of
Value of the asset disposed of, notwithstanding that the adjusted basis
of such asset differs from the Book Value of such asset;
(vi) 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 Reg. Section 1.704-1(b)(2)(iv)(m)(4), to be taken
into account in determining Capital Accounts as a result of a
distribution other than in liquidation of a 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
such taxable income or loss shall not be deemed to include items of
income, gain, loss, or deduction allocated pursuant to Section 2.1(c)(iv) (to
comply with Treasury Regulations under Section 704(b) of the Code), Section 4.3,
Section 4.4 or Section 4.5.
"Public Notice" means Public Notice, DA 00-2259 (October 5, 2000),
issued by the FCC.
"Put" is defined in Section 9.1.
"Put Period" means the 30-day period following the Reference Date,
provided, that if the FCC Rules restricting the free transferability of C or F
block PCS licenses or interests therein expire on a date that occurs prior to
the Reference Date, then CTC or AWS Sub may in its discretion notify the other
Members of the earlier date on which the Put Period shall commence, but in any
event not earlier than 60 days following receipt of such notice.
"Put Price" is defined in Section 9.1.
"Qualified Person" means a Person that qualifies as an "entrepreneur"
and a "very small business" under FCC Rules applicable to the licenses available
in the Auction.
"Reference Date" means the fifth anniversary of the first Initial Grant
Date.
"Related Agreements" means the Bidding Protocol, the letter agreement,
dated November 6, 2000, among the Company, AWS and Edge, the Management
Agreement, the Operating Agreement and the Trademark License Agreement.
"Replacement Date" is defined in Section 9.5(c)(ii).
"Restricted Territory" means the Company Territory and the AWS
Territory.
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"Rollover Debt" is defined in Section 9.5(c)(ii).
"RoFR Closing" is defined in Section 7.3(b).
"SEC" means the Securities and Exchange Commission or any successor
commission or agency having similar powers.
"Securities Act" means the Securities Act of 1933, as amended.
"Sellers" is defined in Section 7.3(a).
"Significant Breach" means (1) fraud, embezzlement or any other conduct
by the Manager constituting a criminal or other material violation of law, (2)
negligence (which has a material negative impact on the Company), or any
knowingly dishonest act, or knowing bad faith or willful misconduct, by the
Manager in the performance of its obligations under this Agreement, or of the
Company's obligations under any Related Agreement or any other material
agreement to which the Company is a party, (3) voluntary or involuntary
insolvency or Bankruptcy of the Manager, or (4) any action or omission by the
Company (including any violation of or failure to comply with FCC Rules) not
caused by AWS or AWS Sub that is reasonably likely to materially impair the
ability of the Company to realize the Auction Benefits or result in the
revocation or non-renewal of any license.
"Significant Matter" means any of the following:
(1) any offering, issuance, repurchase or reclassification of Interests
or other Equity Interests or securities (including warrants, options or other
rights convertible into or exchangeable for securities or ownership interests in
the Company or any of its Subsidiaries) by the Company or any of its
Subsidiaries, except for issuances of Interests to one or more Members so long
as the other Members have the right to participate in such issuances pro rata in
accordance with their respective Percentage Interests;
(2) any agreement or arrangement, written or oral, to which the Company
or any of its Subsidiaries is a party, involving a payment or liability that is
greater than $1 million individually or (during any 12-month period) $2 million
in the aggregate (other than any such agreements or arrangements approved in any
duly adopted budget then in effect);
(3) the incurrence, directly or indirectly (for example, by way of
guarantee), by the Company or any of its Subsidiaries of indebtedness in excess
of $1 million (other than any such indebtedness approved in any duly adopted
budget then in effect);
(4) the merger, combination or consolidation of the Company or any of
its Subsidiaries with or into any Person other than the Company or a wholly
owned Subsidiary of the Company, regardless of whether the Company or any such
Subsidiary is the survivor in any such merger, combination or consolidation; the
initiation of any Bankruptcy proceeding, liquidation, dissolution or winding up
of the Company or any of its Subsidiaries (other than the liquidation of a
wholly owned Subsidiary of the Company into the Company or another wholly owned
Subsidiary of the Company); or the sale of all or substantially all of the
assets of the Company and its Subsidiaries taken as a whole;
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(5) the acquisition of any significant portion of assets from another
Person; and the formation of any partnership or joint venture involving the
Company or any of its Subsidiaries;
(6) changes in the Company's business purpose as defined in Section
1.7;
(7) any agreement or arrangement, written or oral, with an Affiliate of
the Company involving a payment or liability that is greater than $100,000;
(8) (x) any material change in any budget or business plan then in
effect, (y) any action that is materially inconsistent with the Five-Year
Business Plan or (z) expenditures (or commitments to make expenditures) that,
individually or in the aggregate, deviate more than 10% from the annual budget
or business plan then in effect;
(9) distributions by the Company (other than distributions of the
proceeds from sales of Exempt Open Licenses in accordance with Section 8.4);
(10) appointment or termination of the Company's independent
accountants or other outside tax advisor, material changes in tax or accounting
methods or elections, or taking any tax position or making any tax election on
behalf of the Company;
(11) the authorization or adoption of any amendment to the certificate
of formation, limited liability company agreement or any other constituent
document (including the exhibits and attachments thereto) of the Company or any
of its Subsidiaries;
(12) any agreement or arrangement, written or oral, to pay any
director, officer, employee or agent of the Company or any of its Subsidiaries
of $200,000 or more per annum to any officer or employee;
(13) appointment of a replacement Management Company upon termination
of the Management Agreement;
(14) any agreement or commitment by the Company or any of its
Subsidiaries not to (x) compete with any other Person, (y) solicit any other
Person's business or customers or (z) solicit or hire any other Person's
employees;
(15) acquisition or disposition of any FCC license or any interest
therein, including any leasehold interest or security interest;
(16) the renewal or termination of any agreement (including the Related
Agreements) entered into by the Company in connection with the capitalization of
the Company pursuant to Section 2.2(c) other than in accordance with the terms
thereof; and
(17) entering into any agreement or commitment to do any of the
foregoing.
"Subsidiary" of any Person means any other Person with respect to which
either (i) more than 50% of the interests having ordinary voting power to elect
a majority of the directors or individuals having similar functions of such
other Person (irrespective of whether at the time interests of any other class
or classes of such Person shall or might have voting power upon the
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occurrence of any contingency), or (ii) more than 50% of the Equity Interests of
such other Person is at the time directly or indirectly owned or controlled by
such Person, by such Person and one or more of its other Subsidiaries or by one
or more of such Person's other Subsidiaries.
"Substandard Performance" means a material deviation by the Company
from any Business Plan and budget then in effect (unless such material deviation
is approved pursuant to Section 6.3), or any material failure by the Company to
perform in accordance with performance standards customary in the wireless
telecommunications industry for similarly situated companies, unless such
deviation or failure, as the case may be, is cured within 30 days following
notice thereof by Members holding at least 20% of the Percentage Interests or,
if such deviation or failure cannot be cured within 30 days, then within 90 days
as long as the Manager is diligently acting in good faith to cure such deviation
or failure as soon as reasonably practicable.
"Tax Matters Partner" is defined in Section 5.5(d).
"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.
"Trademark License Agreement" means the Trademark License Agreement (if
any) between the Company and AT&T Corp., as the same may be amended in
accordance therewith.
"Transfer" means any direct or indirect transfer, sale, assignment,
pledge, encumbrance, tender, or otherwise grant, creation or suffrage of a Lien
in or upon, giving, placement in trust or otherwise (including transfers by
testamentary or intestate succession) disposing of by operation of law or any
derivative transaction, including, without limitation, any short sale, collar,
hedging or other derivative transaction that has the effect of materially
changing the economic benefits and risks of ownership. A Change of Control of
ASRC will be considered a Transfer of the Interests held by CTC; provided, that
a change of control of AT&T Corp. or of AWS shall in no event be considered a
transfer by AWS Sub of its Interests.
"Treasury Reg." means regulations issued by the United States
Department of the Treasury pursuant to the Code.
"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.
Section 1.2. Formation
The Company was formed as a Delaware limited liability company by
filing a certificate of formation under the Act on October 30, 2000. The
certificate of formation is in all respects approved and the Members hereby
agree to continue the Company.
Section 1.3. Name
The name of the Company shall be Alaska Native Wireless, L.L.C.
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Section 1.4. Principal Place of Business
The Company's principal office and place of business shall be located
at 000 Xxxxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxx 00000-0000.
Section 1.5. Registered Office; Registered Agent
The address of the registered office of the Company in the State of
Delaware shall be c/o Corporation Service Company, 0000 Xxxxxxxxxxx Xxxx, Xxxxx
000, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000 or such other address as the
Manager 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 Xxxxxxxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000.
Section 1.6. Term
The term of the Company commenced on October 30, 2000 and, unless
terminated in accordance with this Agreement, shall be perpetual.
Section 1.7. Purpose and Powers
The purposes of the Company are to establish and conduct the Business
and to do any and all things reasonably necessary or advisable in connection
therewith. 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.
Section 1.8. Filings
The Manager 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 Manager may deem necessary or advisable for the operation of the Company and
to enable the Company to conduct business in each applicable jurisdiction.
Section 1.9. Sole Agreement
The Members intend that their obligations to each other with respect to
the Company and the scope of the Company's activities be as set forth in this
Agreement, 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 herein.
ARTICLE 2
CAPITALIZATION
Section 2.1. Capital Accounts
(a) Establishment. A separate capital account ("Capital Account") is
hereby established for each Member as of the date hereof.
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(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;
(C) such Member's distributive share of Profits and items of
income and gain allocated to such Member pursuant to Section
2.1(c)(iv) or ARTICLE 4;
(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;
(C) such Member's distributive share of Losses and items of
loss or deduction allocated to such Member pursuant to Section
2.1(c)(iv) or ARTICLE 4;
(D) any negative adjustment to such Capital Account by reason
of an adjustment to the Book Value of Company assets;
(E) any amount charged to the Capital Account of such Member
pursuant to Section 5.5(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.
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(ii) Adjustment for Conversion of Company Securities.
Notwithstanding anything herein to the contrary, upon any conversion of
Company Securities, the Capital Account of the holder thereof shall be
adjusted as of the date of conversion, and the portion of the Capital
Account of such holder attributable to such conversion shall be
determined by multiplying (A) the aggregate amount of all Capital
Accounts after giving effect to such conversion by (B) the percentage
of all the Interests after giving effect to such conversion represented
by the Interest of such holder issuable upon such conversion.
(iii) 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.
(iv) 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
Reg. 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.
Section 2.2. Capital Contributions
(a) Initial Contributions
CTC and AWS Sub have contributed $601 and $399, respectively, in cash
to the capital of the Company.
(b) Upfront Payment
On November 24, 2000, CTC contributed $10,000,000 in cash to the
capital of the Company, and AWS caused AWS Sub to provide $228,817,900 in cash
to the Company by contributing $6,638,935 in cash to the capital of the Company
and purchasing for cash $222,178,965 of Company Securities, consisting of
$33,361,065 of convertible Company Securities and $188,817,900 of subordinated
debt. The Company used such proceeds to make the upfront payment necessary to
permit the Company to bid on all licenses available in the Auction.
(c) Down Payment and Final Payment
At such time as the down payment on the licenses won by the Company in
the Auction is due, and at such time as the balance of the purchase price of
such licenses is due (each, a "License Payment"):
(i) CTC will contribute cash to the capital of the Company, up
to a maximum amount of $252,500,000, which, together with any prior
capital contributions by CTC and subject to clause (iv) below, shall
represent (A) 60.1% of the equity capitalization of
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the Company and (B) 50% of the total capitalization of the Company
(assuming the total capitalization of the Company is less than or equal
to $525,000,000). Therefore, CTC shall have contributed an aggregate of
$262,500,000 to the capital of the Company at such time as the
Company's total capitalization (including equity and Company
Securities) is $525,000,000.
(ii) If the aggregate amount paid by the Company for licenses
in the Auction (the "total purchase price") is less than $525,000,000,
then (x) CTC shall have the right to make capital contributions to the
Company equal in the aggregate to 50% of the total purchase price and,
at the election of AWS Sub, the Company shall redeem a principal amount
of Company Securities such that AWS Sub shall have made capital
contributions, and/or purchased Company Securities, equal in the
aggregate to 50% of the total purchase price, and (y) CTC shall also
have the right to make 50% of additional capital contributions to the
Company, up to a maximum of $262,500,000 in the aggregate together with
any prior capital contributions by CTC, and AWS shall have the right to
make the remaining 50% of additional capital contributions to the
Company, as and to the extent that the Members agree that the Company
needs such additional amounts for capital expenditures, operating
expenses and/or working capital needs in light of other financing
available to the Company.
(iii) AWS will cause AWS Sub to provide the balance of such
License Payment by (A) contributing cash to the capital of the Company,
up to a maximum amount (together with any prior capital contributions
by AWS Sub) of $174,272,047, which (subject to clause (iv) below) shall
represent 39.9% of the equity capitalization of the Company together
with any prior capital contributions by AWS Sub and (B) purchasing
Company Securities for cash, up to a maximum amount (together with any
prior purchases of Company Securities by AWS Sub) of $625,727,953. The
parties intend that AWS Sub shall have invested a total of $800,000,000
in the Company at such time as CTC and AWS Sub shall have capitalized
the Company with an aggregate of $1,062,500,000 in cash in the form of
equity and with the purchase of Company Securities.
(iv) At such time as the first License Payment is due, Edge
will have the right, but not the obligation, to contribute cash to the
capital of the Company, up to a maximum amount of $7,500,000, in which
event the percentage of the equity capitalization of the Company held
by the Members other than the CTC Members will be reduced accordingly.
AWS and CTC agree that no capital contribution by Edge shall affect,
diminish or delay in any respect the obligations of CTC or AWS to
provide the Company with capital pursuant to this Section 2.2(c). If
Edge does not make a capital contribution to the Company pursuant to
this paragraph, then Edge shall automatically cease to be a party to
this Agreement.
(v) After giving effect to the capital contributions made
pursuant to clauses (i), (ii) and (iii) above, the Percentage Interests
of CTC and AWS will be 60.1% and 39.9%, respectively. In the event of
any conversion of Company Securities in accordance with their terms, or
additional capital contributions by the Members in accordance with this
Agreement, the Percentage Interests of the Members will be adjusted as
appropriate.
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In the event of any capital contribution by Edge in accordance with
clause (iv) above, the Percentage Interests of the Members other than
the CTC Members will be adjusted as appropriate.
(d) Obligation to Make Capital Contributions
CTC acknowledges that its agreement to make its capital contributions
is subject only to the terms and conditions of this Agreement and is otherwise
irrevocable and unconditional, and that the damages that would be suffered by
AWS as a result of CTC's failing to make such capital contributions when due are
impossible to determine. Accordingly, AWS may terminate this Agreement in the
event that CTC fails to make its initial or any additional capital contribution
to the Company when and if due, and CTC agrees that following any such
termination it shall pay AWS on demand the sum of $50,000,000 (together with
interest thereon at the rate of 18% per annum from the time of demand until
paid) as liquidated damages; provided, that if CTC is liable for liquidated
damages under Section 12.4, CTC shall not also be liable for liquidated damages
under this Section 2.2(d). Such liquidated damages and termination shall be the
sole and exclusive remedy of AWS and AWS Sub for such breach by CTC. Upon any
such termination of this Agreement, the Company (or, in the event the Company
does not have adequate capital, AWS) shall refund the capital contributions of
CTC in redemption of CTC's Interests; provided, that if AWS makes a demand for
liquidated damages under this paragraph, the Company will deposit in escrow
$50,000,000 of the capital contributions made by CTC (or, if less, the total
amount of capital contributions made by CTC). If CTC disputes such demand within
ten days thereof, the dispute will be resolved in accordance with Section 11.3,
and the Company will disburse the escrowed funds as instructed by the
arbitrators; if CTC does not dispute such demand within such ten-day period, the
Company will disburse the escrowed funds to AWS on the next business day
thereafter. CTC shall have the right to require that AWS specifically perform
its obligation to make its capital contribution and to purchase Company
Securities in accordance herewith.
(e) Company Securities
Prior to the Reference Date, the Company shall not issue Company
Securities convertible into Interests to AWS or any of its Affiliates if, after
giving effect to the conversion of all convertible Company Securities held by
AWS and its Affiliates, the CTC Members would collectively hold less than 20% of
the Percentage Interests. The terms of the Company Securities shall provide,
among other things, that if AWS defaults in its obligation to pay the Put Price
pursuant to Section 9.5, such Company Securities shall automatically be
converted into instruments that are junior to the Interests held by the CTC
Members and the Additional Members.
Section 2.3. 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.
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Section 2.4. 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 3
DISTRIBUTIONS
Section 3.1. Non-Liquidating Distributions
Subject to Section 6.3, non-liquidating distributions shall be made in
accordance with the Members' respective Percentage Interests.
Section 3.2. 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 14.3(d).
ARTICLE 4
ALLOCATIONS
Section 4.1. Profits
After giving effect to the special allocations set forth in Section 4.2
through Section 4.5, Profits with respect to any fiscal year shall be allocated
to the Members in the following order:
(a) First, 95% to AWS Sub and 5% to the other Members (in accordance
with their respective Percentage Interests) to the extent of Losses allocated to
the Members under Section 4.2 over Profits previously allocated to the Members
under this Section 4.1(a); and
(b) Thereafter, in accordance with their respective Percentage
Interests.
Section 4.2. Losses
(a) General Rule. After giving effect to the special allocations set
forth in Section 4.3 through Section 4.5 and, subject to Section 4.2(b), 95% of
the Losses with respect to any fiscal year shall be allocated to AWS Sub and 5%
of the Losses with respect to any fiscal year shall be allocated to the other
Members (in accordance with their respective Percentage 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 Percentage Interests, to the extent possible until
such Members become subject to this limitation; and any remaining amount, to the
Members, ratably based on their Percentage Interests, unless otherwise required
by the Code or Treasury Regulations.
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Section 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) Minimum Gain Chargeback
Notwithstanding any other provision of this ARTICLE 4, if there is a
net decrease in Company Minimum Gain during any fiscal year, each Member shall,
subject to the exceptions provided in Treasury Reg. 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 Reg. 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 Reg. Sections 1.704-2(i)(6) and 1.704-2(i)(2). To the extent
that this Section 4.3(a) is inconsistent with Treasury Reg. Section 1.704-2(f),
the Minimum Gain Chargeback provided for herein shall be applied and interpreted
in accordance with such Treasury Regulation.
(b) 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, 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 Reg.
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 Reg. 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 Reg. Sections
1.704-2(i)(4) and 1.704-2(i)(2). To the extent that this Section 4.3(b) is
inconsistent with Treasury Reg. Section 1.704-2(i), the Member Minimum Gain
chargeback provided for herein shall be applied and interpreted in accordance
with such regulation.
(c) Qualified Income Offset
Notwithstanding anything herein to the contrary, but only if required
by Treasury Reg. 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 Percentage Interests, if, for any fiscal
year, a Member unexpectedly receives an adjustment, allocation or distribution
described in Treasury Reg. 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(c) is
intended to comply with Treasury Reg. Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
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(d) Nonrecourse Deductions
Nonrecourse Deductions shall be allocated 95% to AWS Sub and 5% to the
other Members (in accordance with their respective Percentage 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 Reg. Section 1.704-2(i).
Section 4.4. Curative Allocations
The allocations set forth in Section 4.3(a) 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 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 Manager 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 Manager determines is appropriate so that after such
offsetting special allocations are made 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.
Section 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
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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 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.
Section 4.6. Allocation of Credits
All tax credits shall be allocated among the Members in accordance with
their respective Percentage Interests or in accordance with applicable
provisions of the Code or Treasury Regulations to the extent any such provision
is inconsistent with such allocation.
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Section 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 Reg. 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 Manager shall agree
upon the allocation method to be applied with respect to that property under
Treasury Reg. Section 1.704-3.
(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 Reg. Section 1.704-3. All decisions regarding the
choice of allocation method under Treasury Reg. Section 1.704-3 with respect to
revalued Company assets shall be made by the Members.
Section 4.8. Change in Members' Interests
In the event there is any change in the Members' respective Percentage
Interests during any fiscal year, Profits, Losses, Nonrecourse Deductions and
other items shall be allocated among the Members in accordance with their
respective Percentage 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 Manager.
ARTICLE 5
ACCOUNTING AND RECORDS
Section 5.1. Fiscal Year
The fiscal year of the Company shall be the year ending December 31.
Section 5.2. 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 5 and as required by Section 704 of the Code and
the Treasury Regulations promulgated thereunder.
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Section 5.3. Books and Records; Inspection
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 Manager may delegate to a third party 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. All
records and documents described in Section 5.3 shall be open to inspection and
copying by any of the Members or their representatives or agents, subject to
Section 11.2, confidentiality restrictions, at any reasonable time during normal
business hours.
Section 5.4. Financial Statements
Within 60 days after the end of each fiscal year, and 45 days after the
end of each calendar quarter, and 20 days after the end of each calendar month,
the Manager shall cause to be furnished to each Member financial statements with
respect to such fiscal year or quarter or month 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 such Member may
reasonably request to permit each Member to prepare its annual and quarterly
financial reports. The annual financial statements of the Company shall, be
audited (which audit shall be conducted in accordance with GAAP and SEC
Regulation S-X) and certified by Ernst & Young LLP, subject to Section 6.3. 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 and operating information as the Manager reasonably determines or the
Members reasonably request.
Section 5.5. 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);
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(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 Reg.Section1-7701 ("Check the Box Regulations").
(ii) Code Section 754 Election. The Manager 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
(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 90 days following the close of each fiscal year. Final
returns shall be filed within 180 days of year end. The Company will
pay for all reasonable out-of-pocket expenses (including accounting
fees, if any) in connection with such preparation (it being understood
that the Tax Matters Partner shall not receive any compensation from
the Company for preparing such returns). 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
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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 and 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 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. The Manager 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 each Member whose financial interest in such matter exceeds $100,000
individually or in the aggregate. 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 timely filing all elections
made by the Company. The Tax Matters Partner shall deliver to each Member and
the Manager 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 Manager 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 (it being understood
that the Tax Matters Partner shall not receive any
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compensation from the Company for acting in such capacity). Except as provided
in ARTICLE 13, 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 Section 5.5(c) and Section 5.5(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. 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 over-withholding 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 Percentage Interests or otherwise receive a
distribution of an equivalent amount.
(iv) In the event of any under-withholding 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.
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(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.
(vi) Upon the request of any Member, the Company shall make
any filings, applications or elections to obtain any available
exemption from, or any available refund of, any withholding or similar
taxes imposed by any non-U.S. (whether sovereign or local) taxing
authority with respect to amounts distributable or items of income
allocable to such Member hereunder. Such Member shall cooperate with
the Company in making any such filings, applications or elections to
the extent the Company reasonably determines that such cooperation is
necessary or desirable. Notwithstanding the foregoing, if such Member
must make any such filings, applications or elections directly, the
Company, at the request of such Member, shall provide such information
and take such other action as may reasonably be necessary to complete
or make such filings, applications or elections.
ARTICLE 6
MANAGEMENT
Section 6.1. Manager
The Manager at all times shall exercise control over the Company in
compliance with FCC Rules. The Manager shall, subject to the terms of this
Agreement, have the exclusive right and power to manage, operate and control the
Company and to make all decisions necessary or appropriate to carry on the
business and affairs of the Company, including the authority to appoint,
promote, demote and terminate executives who oversee the day-to-day activities
of the Company. In addition to the specific rights and powers herein granted to
the Manager, the Manager shall possess and enjoy and may exercise all the rights
and powers of a manager within the meaning of Section 18-101(10) of the Act,
subject to the limitations of this Agreement, including the full and exclusive
power and authority to act for and to bind the Company. In addition to any other
rights and powers that the Manager may possess, the Manager shall have all
specific rights and powers required or appropriate for the day-to-day management
of the Company's business, which shall be managed by experienced professionals
in accordance with the standards of first-rate operators of wireless
communications companies. Except as determined by the Manager 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.
Section 6.2. Removal of Manager
(a) Removal of Manager
Subject to FCC approval if required, CTC shall be removed as the
Manager, and the management of the Company shall be transferred to a successor
Manager in accordance with Section 6.2(b) and Section 6.2(c), (i) if CTC is
unwilling or unable to serve as the Manager, or would not be considered a
Qualified Person if CTC itself were the applicant or licensee, as the case may
be, in respect of the licenses bid for or held by the Company at any time prior
to the
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Reference Date, or commits a Significant Breach at any time, or (ii) in the
event of Substandard Performance by the Company at any time after the Reference
Date.
(b) Successor Manager
In the event that CTC is removed as the Manager pursuant to Section
6.2(a), the management of the Company shall be transferred to a successor
Manager, which shall (i) be, if then required in order for the Company to retain
the Auction Benefits, a Qualified Person, (ii) not be a competitor or an
Affiliate of a competitor of AWS or its Affiliates and (iii) be subject to the
prior approval of AWS, which approval shall not be unreasonably withheld. CTC
(or, if it fails to do so, the other Members by affirmative vote of a majority
of Percentage Interests not held by CTC) shall designate the successor Manager
within five business days after notice from any other Member that one or more of
the events specified in Section 6.2(a) has occurred. CTC shall take whatever
steps are commercially reasonable to assist the successor Manager in assuming
the management of the Company including, without limitation, transferring to the
successor Manager all historical financial, tax, accounting and other data in
the possession of CTC, and giving such consents, assigning such permits and
executing such instruments as may be necessary to vest in the successor Manager
those rights that were necessary for CTC to perform its obligations. The parties
acknowledge and agree that, in order to attract and retain an appropriate
successor Manager, the holders of a majority of the Percentage Interests not
held by CTC may determine to cause the Company to issue Interests (or otherwise
grant an equity interest or the equivalent) to such successor Manager, and that
any such issuance or grant will be dilutive to the Members including CTC.
(c) Dispute Resolution
Any dispute over the removal of the Manager pursuant to Section 6.2(a)
shall be resolved by arbitration in accordance with Section 11.3, provided, that
(i) the arbitrators shall be instructed to render their decision within 30 days
after the commencement of any such proceeding and (ii) AWS shall pay (A) the
fees and expenses of the arbitrators in connection with such proceeding and (B)
if the arbitrators rule in favor of the Manager, the reasonable out-of-pocket
fees and expenses of the Manager in connection with such proceeding.
Section 6.3. Supermajority Approval Rights
All Significant Matters shall require the prior written approval of AWS
Sub; provided, that the approval of AWS Sub in the case of clause (13)
(appointment of a replacement Management Company) of the definition of
Significant Matters shall not be unreasonably withheld.
Section 6.4. Business Plans and Budgets
(a) Five-Year Business Plan
As soon as practicable after the execution of this Agreement, CTC and
AWS Sub will agree on a five-year high-level business plan (the "Five-Year
Business Plan"), which shall include business forecasts, appropriate
explanations of the Manager's proposed strategy, with details of assumptions
used, and in addition will set forth the general goals and parameters for the
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Company's business and operations consistent with good business practice in the
wireless telecommunications industry.
(b) Annual Business Plans and Budgets
The Manager shall, after consultation with AWS Sub, prepare and adopt a
detailed annual business plan and detailed annual budget. Drafts of each annual
business plan and budget will be distributed to AWS Sub for its review and
comment no later than 30 days following the adoption of the Five-Year Business
Plan (in the case of the initial annual business plan and budget) and no later
than 30 days prior to the end of each fiscal year of the Company (in the case of
each subsequent annual business plan and budget). Each such annual business plan
will set forth the business and operational parameters and objectives for such
year, including appropriate explanations of the Manager's proposed strategy.
Each such budget shall include a detailed breakdown of the following, together
with the details of the material assumptions used: (i) monthly revenue,
operating expenses and interest expenses; (ii) quarterly capital expenditures
and cash flow; (iii) balance sheet and income statement; and (iv) expected
funding requirements and the proposed methods of meeting such requirements. Each
annual business plan and annual budget shall be consistent with the Five-Year
Business Plan then in effect.
(c) No Other Business Plans or Budgets
No business plans or budgets shall be adopted except in accordance with
the provisions of this Section 6.4.
Section 6.5. Provisions Relating to Additional Members
Notwithstanding anything herein to the contrary, neither the Additional
Members nor their respective successors or Permitted Transferees shall have any
voting rights as Members of the Company or otherwise in respect of their
Interests, nor shall they have any right to participate in the management of the
Company or in any decisions, elections or other determinations by the Members,
except as expressly set forth herein.
ARTICLE 7
TRANSFER RESTRICTIONS
No Member may Transfer all or any part of its Interests, including
interests in any of its Subsidiaries that directly or indirectly own Interests,
except in compliance with the following provisions of this ARTICLE 7.
Section 7.1. Restrictions
(a) Transfers by Certain Members
Except as expressly hereinafter set forth, without the consent of AWS
Sub, the Members other than AWS Sub may not Transfer their Interests for seven
years after the Initial Grant Date other than to their respective Permitted
Transferees. Following the seventh anniversary of the Initial Grant Date, the
Members other than AWS Sub shall, subject to Section 7.2 and the other
provisions of this ARTICLE 7, have the right to Transfer their Interests to any
Person; provided,
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that unless AWS and AWS Sub have defaulted in their obligation to pay the Put
Price pursuant to Section 9.5, (i) the CTC Members may not Transfer their
Interests to any Person unless all (but not less than all) of their collective
Interests are transferred to such Person contemporaneously and (ii) Edge may not
Transfer its Interests to any Person unless all (but not less than all) of its
Interests are transferred to such Person contemporaneously.
(b) No Transfer of Right to Manage
The right to manage the Company pursuant to this Agreement shall not be
transferable with the Interests of CTC without the prior written consent of AWS
Sub. Accordingly, if CTC transfers 25% or more of its Interests, and AWS Sub
elects not to exercise its right of first refusal pursuant to Section 7.3(a),
then, subject to FCC approval, the right to manage the Company shall be
transferred to a successor Manager, which shall (x) be, if then required in
order for the Company to retain the Auction Benefits, a Qualified Person, (y)
not be a competitor or an Affiliate of a competitor of AWS or its Affiliates and
(z) be subject to the prior approval of AWS Sub, which approval shall not be
unreasonably withheld.
(c) No Transfers to Competitors
So long as AWS Sub owns an Interest, the Members other than AWS Sub may
not transfer any or all of their Interests to a competitor of AWS Sub or its
Affiliates, or an Affiliate of any such competitor, without AWS Sub's prior
consent.
(d) Certain Indirect Transfers
Transfers (or issuances) of Equity Interests of any Person that
directly or indirectly owns Equity Interests in a Member shall be considered a
transfer by such Member of its Interests in the Company if the Fair Market Value
of such Interests is 25% or more of the Fair Market Value of (x) such Person or
(y) the Equity Interests being transferred or issued; provided, that transfers
or issuances of Equity Interests issued by AT&T Corp. or AWS shall in no event
be considered a transfer by AWS Sub of its Interests.
Section 7.2. Exceptions
(a) Transfers by Members of CTC
The provisions of Section 7.1 shall not apply to (i) the Cash Equity
Investors, except with respect to transfers of their interests in CTC, whether
held directly by the Cash Equity Investors or through one or more intermediaries
(it being understood that this exception is intended to restrict transfers
effected by the Cash Equity Investors themselves and their Subsidiaries, rather
than transfers effected by direct and indirect owners of interests in the Cash
Equity Investors), and (ii) transfers or issuances of the Equity Interests of
the Alaska Native Corporations, unless such transfer results in a Change of
Control of ASRC or would impair the ability of the Company to realize the
Auction Benefits.
(b) Transfers by AWS Members
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Notwithstanding anything herein to the contrary, but subject to the
provisions of Section 15.3, the restrictions set forth in Section 7.1 shall not
apply to (A) transfers of Interests in the Company held by AWS Sub (or its
Permitted Transferees) to any direct or indirect wholly owned Subsidiary of AT&T
Corp. or of AWS or (B) transfers of direct or indirect interests in AWS Sub to
any direct or indirect wholly owned Subsidiary of AT&T Corp. or of AWS.
(c) Transfers by Edge
The provisions of Section 7.1 shall not apply to transfers or issuances
of the Equity Interests of Edge Holding, or to the transfer of all (but not less
than all) of the Interests held by Edge to a new entity ("New Edge"), unless
such transfer, issuance or distribution (i) is to a competitor or an Affiliate
of a competitor of AWS or its Affiliates, (ii) results in a Change of Control of
Edge or (iii) would impair the ability of the Company to realize the Auction
Benefits.
(d) Pledges by Certain Members
(i) The members of CTC may pledge their Equity Interests in
CTC to secure loans the proceeds of which are used to fund their
capital contributions to CTC to the extent necessary for CTC to obtain
the capital required to be contributed to the Company hereunder,
provided, that any such pledge and its terms (A) shall be subject to
the prior approval of AWS Sub, which shall not be unreasonably
withheld, and (B) shall in no event permit the lender to take any
action that would impair the Company's eligibility to hold any of the
licenses won in the Auction or that could result in the Company's
losing any Auction Benefits.
(ii) Edge may pledge its Interests to a bank, or other
financial institution of nationally recognized standing, provided, that
any such pledge and its terms (A) shall be subject to the prior
approval of AWS Sub, which shall not be unreasonably withheld, and
which shall be granted if the pledge provides AWS Sub or its Affiliates
with a right of first refusal (satisfactory to AWS Sub in its
reasonable discretion) with respect to any sale or other disposition of
Interests by the lender upon a foreclosure and is otherwise on
customary terms, and (B) shall in no event permit the lender to take
any action that would impair the Company's eligibility to hold any of
the licenses won in the Auction or that could result in the Company's
losing any Auction Benefits.
Section 7.3. Right of First Refusal
(a) Notice and Exercise of Right
If, following the expiration of the seven-year period referred to in
Section 7.1(a), any Members other than AWS Sub (the "Sellers") receive and wish
to accept a bona fide written offer (the "Offer") from a bona fide third party
who is not a Permitted Transferee (the "Offeror") to purchase all or (except as
otherwise provided below) any portion of their Interests (the "Offered
Interests"), then the Sellers shall give notice of such Offer (the "Offer
Notice") to AWS Sub, which notice shall identify the Offeror, enclose a copy of
the Offer, and irrevocably offer to AWS Sub the right to purchase the Offered
Interests at the same purchase price, which must be payable in cash, and on the
other terms and conditions as specified in the Offer (if the Offered Interests
are the only assets being sold) or for cash at their Fair Market Value (if the
Offered
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Interests are being Transferred in such transaction or series of related
transactions with other assets or for consideration other than cash); provided,
that AWS Sub 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; provided, further, that unless AWS and AWS Sub shall have
defaulted in their obligation to pay the Put Price pursuant to Section 9.5, the
Offered Interests must constitute all (but not less than all) of the Interests
of the Sellers. AWS Sub may exercise its right to purchase the Offered Interests
by notifying the Sellers in writing of its 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 7.7 or otherwise.
(b) Closing of Purchase
If AWS Sub duly elects 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 AWS Sub, but in no event later than 30 days following the
exercise by AWS Sub of its election to purchase; provided, that if governmental
or regulatory approval is required for AWS Sub to consummate its purchase and
has not been obtained, the RoFR Closing with respect to such purchase may be
deferred until no later than 30 days following the finality of the order
granting such approval, unless finality is waived by AWS Sub.
(c) Representations at Closing
At any RoFR Closing, the Sellers shall represent and warrant in writing
to AWS Sub 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 any law, order or material agreement or instrument
binding upon them or their assets; and the Sellers shall deliver to AWS Sub such
customary instruments of assignment with respect to the Offered Interests as may
be reasonably requested by AWS Sub.
(d) Sale to Third Party
Subject to Section 7.2(b), if AWS Sub fails to exercise its 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 a price,
and on other terms and conditions, no less favorable than those specified in the
Offer Notice and otherwise in accordance with this ARTICLE 7. If such sale is
not consummated within 90 days after the expiration of the applicable time
periods specified in paragraph (b) above, subject to extension for up to an
additional 360 days as shall be necessary to obtain any required governmental or
regulatory approval, such right to sell shall lapse and Transfers of the Offered
Interests shall again be subject to the provisions of this Section 7.3.
(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. The Sellers and the Offeror shall execute such documents as AWS Sub
may reasonably request to evidence such assumption. Notwithstanding the
foregoing, the Sellers shall
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not be relieved of any of their obligations under this Agreement or any Related
Agreement arising prior to such sale, to the extent such obligations shall not
be discharged by the third party.
Section 7.4. Tag-Along Right
In lieu of exercising its rights under Section 7.3, AWS Sub may, within
30 days following receipt of any Offer Notice, elect to participate in such sale
by including therein all (but not less than all) of its Interests in the
Company. Such sale, if any, shall be made on the same terms and conditions as
the sale described in the Offer Notice (except that in the sole discretion of
AWS Sub, provided that AWS and AWS Sub shall not have defaulted in their
obligation to pay the Put Price pursuant to Section 9.5, instead of receiving
the same consideration payable to the Sellers, the consideration payable to AWS
Sub shall be a cash amount equal to the Fair Market Value of its Interests to be
transferred) and the Sellers may not consummate their sale unless such sale, if
any, by AWS Sub is consummated simultaneously in accordance with the terms
hereof. If AWS Sub fails to elect to participate in such sale and such sale is
not consummated within the applicable time periods specified above in Section
7.3, the restrictions provided for in this Section 7.4 shall again become
effective, and no transfer of Interests may be made thereafter by the Sellers
other than in accordance with this ARTICLE 7.
Section 7.5. Substituted Members
Prior to any Transfer of Interests by a Member, the transferor shall
deliver to other Members a notice setting forth the identity of the transferee,
and shall provide such other information as the other Members 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 15.3. In connection with any
Transfer of an Interest or any portion thereof (other than pursuant to ARTICLE
9), and any admission of an assignee as a Member, the Member making such
Transfer and the assignee shall furnish the Manager, and a majority in
Percentage Interest of the non-transferring Members, with such documents
regarding the Transfer as the Manager may reasonably request (in form and
substance satisfactory to the Manager), including a copy of the Transfer
instrument, a ratification by the assignee of this Agreement (if the assignee is
to be admitted as a Member), a legal opinion that the Transfer complies with
applicable federal and state securities laws, a legal opinion that the Transfer
will not result in the Company's termination under Section 708 of the Code
(unless the Member making such Transfer and the assignee agree, by execution and
delivery of a written instrument, in form and substance reasonably satisfactory
to the Manager and a majority in Percentage Interest of the non-transferring
Members, to indemnify the Company and the other Members with respect to any
liabilities, obligations, damages, losses, costs and expenses, including but not
limited to reasonable attorneys' fees and court costs, arising out of such a
termination of the Company resulting from such transfer) and a legal opinion
that the Transfer will not violate the FCC Rules (including adversely affecting
the status of the Company in the Auction as an entrepreneur and very small
business under the relevant FCC Rules) or this
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Agreement. In connection with any Transfer (other than pursuant to ARTICLE 9),
the Company will, at the request of the Member making such Transfer and at such
Member's sole expense, use commercially reasonable efforts to cause to be made
any filing required by the FCC.
Section 7.6. Invalid Transfers Void
Any purported Transfer of an Interest or any part thereof not in
compliance with the provisions of this ARTICLE 7 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 non-complying Transfer.
Section 7.7. 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 accordance with this
Section 7.7. For purposes of this Section 7.7, 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 AWS Sub shall attempt in good faith to agree on
the Fair Market Value. If the Sellers and AWS Sub fail within 15 days thereafter
to agree thereon, each of the Sellers and AWS Sub 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 AWS
Sub by mutual agreement shall also appoint a third Appraiser. If after
appointment of the two Appraisers, the Sellers and AWS Sub are 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 7.2 shall not be applicable until the date of
delivery of such determination to AWS Sub. 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 AWS Sub and other
costs separately incurred by AWS Sub shall be borne by AWS Sub; and (z) the
costs of the third Appraiser, if any, shall be shared equally by the Sellers and
AWS Sub.
Section 7.8. Acceptance of Prior Acts
Any Permitted Transferee or other Person who becomes a Member of the
Company, accepts, ratifies and agrees to be bound by all actions duly taken
pursuant to the terms and provisions of this Agreement by the Company prior to
the date it became a Member and, without limiting the generality of the
foregoing, specifically ratifies and approves all agreements and
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other instruments as may have been executed and delivered on behalf of the
Company prior to the said date and which are in force and effect on said date.
ARTICLE 8
OFFER TO SELL LICENSES
Section 8.1. Offer to Sell
Within 15 days after each of the first, second, third, fourth and fifth
anniversaries of the first Initial Grant Date, the Manager may, by notice to AWS
Sub, cause the Company to make an irrevocable offer to sell to AWS Sub each of
the open licenses then held by the Company. AWS Sub may elect to accept such
offer in whole or in part in its discretion by notice given to the Company
within 15 days after receipt of the Company's offer; provided, that if any
penalties or interest might be payable to the FCC on account of the transfer of
any such open license, AWS Sub's deadline for accepting the Company's offer
shall be extended until such time as the amount of such penalties or interest
may be determined by AWS Sub.
Section 8.2. Purchase Price
(a) Exempt Open Licenses
(i) Subject to the definition of Exempt Open License, the
purchase price for each Exempt Open License shall be equal to the sum
of (A) the net winning bid paid by the Company for such open license in
the Auction; plus (B) an amount equal to a 24.7% per annum return on
the amount specified in clause (A) above, from and including the dates
on which CTC and the Additional Members made their capital
contributions with respect to such open license (as determined in
accordance with clause (ii) below) until but not including the date on
which the purchase price is paid, calculated on the basis of the actual
number of days elapsed in such periods and compounded annually; plus
(iii) the aggregate amount of any penalties or interest which the
Company may be required to pay to the FCC on account of the sale of
such open license.
(ii) For purposes of calculating the 24.7% per annum return in
clause (i) above: (A) the aggregate amount of capital contributions
made by each applicable Member shall be allocated between the open
licenses and the closed licenses won by the Company in the Auction, pro
rata on the basis of their respective net winning bids (the amount
allocated to the open licenses is referred to herein as the "open
license portion"); (B) the open license portion of each applicable
Member shall be allocated among all of the open licenses, pro rata on
the basis of their respective net winning bids; and (C) the amount of
the open license portion of each applicable Member allocated to each
open license shall be further allocated among the dates on which
capital contributions were made by such Member, pro rata on the basis
of the amounts of such capital contributions. The allocations described
in the foregoing sentence shall be determined by CTC and AWS Sub and
set forth in Schedule 3 on or prior to the Initial Grant Date.
(b) Other Open Licenses
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Subject to the definition of Exempt Open License, the purchase price
for each open license that is not an Exempt Open License shall be equal to the
sum of (i) the net winning bid paid by the Company for such open license in the
Auction; plus (ii) the aggregate amount of any penalties or interest which the
Company may be required to pay to the FCC on account of the sale of such open
license.
Section 8.3. Closing
AWS Sub shall pay the purchase price of any open license, against
delivery of customary documentation effecting the transfer of such license to
AWS Sub free and clear of Liens, at a closing to be held within five business
days following the acceptance of the Company's offer by AWS Sub or, if FCC or
other Governmental Authority approval is required in connection with such sale,
within two business days after the last such approval is obtained by a
preliminary order or decision from the FCC or other Governmental Authority
(whether or not any appeal or request for reconsideration or review of such
order is pending, or whether the time for filing any such appeal or request for
reconsideration or review, or for any such sua sponte action by the FCC or other
Governmental Authority with similar effect, has expired).
Section 8.4. Distribution to Members
It is the intent of the parties that, upon the consummation of any sale
of Exempt Open Licenses pursuant to this ARTICLE 8, the CTC Members and the
Additional Members shall receive an amount equal to their pro rata share,
determined in accordance with their respective Percentage Interests (on a fully
diluted basis taking into account the conversion of all Company Securities), of
the net proceeds from such sale (excluding for this purpose any amount set forth
in clause (iii) of Section 8.2(a)). The parties acknowledge that the amount of
such sale proceeds that may be distributed to the CTC Members and the Additional
Members by the Company is likely to be limited by the terms of the Company's
indebtedness. Accordingly, AWS shall have the right and the obligation to make
up any deficiency, provided, that the manner in which AWS does so (whether by a
direct payment to the CTC Members and the Additional Members, or a capital
contribution or advance to the Company that is distributed to the CTC Members
and the Additional Members, or otherwise) shall be determined by AWS in its sole
discretion so long as the economic rights of the CTC Members and the Additional
Members are not adversely affected.
ARTICLE 9
PUT RIGHT
Section 9.1. Put Right
During the Put Period, CTC shall have the right (the "Put") to require
AWS to purchase all (but not less than all) of the collective Interests held by
the CTC Members and the Additional Members at a purchase price (the "Put Price")
determined in accordance with Section 9.3 and subject to the other terms and
conditions set forth in this ARTICLE 9.
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Section 9.2. Put Exercise
CTC may exercise the Put, on behalf of itself and the CTC Members and
the Additional Members, if any, by delivering a notice of exercise to AWS during
the Put Period. Any such election shall be irrevocable as to all of the CTC
Members and the Additional Members. No Member other than CTC shall have any
right to exercise the Put. If CTC exercises the Put, it shall (i) within five
business days thereafter file with the FCC an appropriate application for
transfer of control of the licenses held by the Company and, if the Put Period
begins prior to the Reference Date, an appropriate certification that the
minimum build-out of the licenses held by the Company has been completed, (ii)
resign as Manager, such resignation to be effective on the closing of the Put
following FCC approval thereof, in which event CTC shall cooperate with AWS Sub
in identifying a successor manager of the Company, and (iii) take, or cause to
be taken, all actions and do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the Put (including without limitation the making of all filings
necessary under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, provided that AWS Sub shall reimburse CTC for the filing fee payable in
connection with any such filings).
Section 9.3. Put Price
(a) After Reference Date
If the Put is exercised on or after the Reference Date, then the Put
Price shall be equal to:
(i) the sum of all cash contributions made by the CTC Members
and the Additional Members to the capital of the Company (up to a
maximum of $262,500,000 in the case of the CTC Members and $7,500,000
in the case of Edge) not allocable to the licenses (if any) that are
transferred to the New LLC as contemplated by Section 9.7 (it being
understood that, for purposes of this Section 9.3, and notwithstanding
Section 2.2(c)(ii), all capital contributions to the Company made by
the CTC Members and the Additional Members shall be allocated to the
licenses acquired by the Company in the Auction on a pro rata basis in
accordance with their respective purchase prices); plus
(ii) an amount equal to a 24.7% per annum return on the
contributions described in Section 9.3(a)(i), from and including the
respective dates on which such contributions were made until but not
including the date on which the Put Price is paid (the "Date of
Payment") (except that if CTC exercises the Put after the first day of
the Put Period, no return shall accrue on the contributions described
in Section 9.3(a)(i) from and including the second day of the Put
Period until but not including the date on which CTC exercises the
Put), calculated on the basis of the actual number of days elapsed in
such periods and compounded annually;
provided, that if (i) any open licenses won by the Company in
the Auction shall have been sold by the Company pursuant to
ARTICLE 8 and (ii) any portion of the proceeds from such sales
shall have been distributed or paid to the CTC Members and the
Additional Members pursuant to Section 8.4, then the Put Price
shall be reduced by the aggregate amounts so distributed or
paid plus, in the case
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of distributions or payments to the CTC Members and the
Additional Members of their pro rata share (based on their
equity percentage on a fully diluted basis taking into account
the conversion of all Company Securities) of the proceeds from
such sales not to exceed the Exempt Amount, an amount equal to
a 24.7% per annum return on such distributions or payments
from and including the date made until the Date of Payment,
calculated on the basis of the actual number of days elapsed
in such periods and compounded annually; plus
(iii) the amount of any Adjusted Bidding Credits to which the
CTC Members and the Additional Members are entitled pursuant to Section
9.6.
(b) Before Reference Date
If the Put is exercised prior to the Reference Date, then the Put Price
shall be equal to:
(i) the Put Price that the CTC Members and the Additional
Members would have received under Section 9.3(a)(i) and Section
9.3(a)(ii), including the proviso thereto, calculated as if the Put
Price were paid on the Reference Date, discounted at the rate of 5% per
annum from the Reference Date to the Date of Payment; plus
(ii) the amount of any Adjusted Bidding Credits to which the
CTC Members and the Additional Members are entitled pursuant to Section 9.6.
Section 9.4. Put Closing
Except as otherwise provided in Section 9.5(d), AWS shall, or shall
cause AWS Sub or (subject to Section 15.3) another designee, to pay the Put
Price, against delivery of customary documentation (including without limitation
representations regarding the Interests being transferred in substantially the
form of the representations required to be delivered pursuant to Section 7.3(c))
effecting the transfer of the Interests to AWS or AWS Sub or such designee, as
the case may be, free and clear of Liens, at a closing to be held within five
business days following the exercise of the Put by CTC or, if FCC approval is
required in connection with the Put, within two business days after such
approval is obtained by a preliminary order or decision from the FCC (whether or
not any appeal or request for reconsideration or review of such order is
pending, or whether the time for filing any such appeal or request for
reconsideration or review, or for any such sua sponte action by the FCC with
similar effect, has expired), but in no event later than one year following the
exercise of the Put by CTC. Upon closing of the Put, the Members other than AWS
shall automatically cease to be (i) Members of the Company and (ii) parties to
this Agreement, in each case without any further action required of the parties
hereto.
Section 9.5. Payment
(a) Consideration
The Put Price may be paid in cash or in Marketable Securities or any
combination thereof. If paid in Marketable Securities, the CTC Members and the
Additional Members shall use commercially reasonable efforts to sell such
securities as soon as reasonably practicable and in any event within ten
business days after receipt thereof, and the CTC Members and the
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Additional Members shall provide such information as may be reasonably requested
by the AWS in order to confirm the amount of the sales proceeds. If the net
proceeds received by the CTC Members or the Additional Members, as the case may
be, upon the sale of such Marketable Securities during such ten-day period
exceeds the Put Price allocable to such party, then the CTC Members or the
Additional Members, as applicable, shall pay to AWS such excess and if the net
proceeds received by the CTC Members or the Additional Members, as the case may
be, upon the sale of such Marketable Securities is less than the Put Price
allocable to such party, then AWS shall pay the deficiency to the CTC Members or
the Additional Members, as applicable, in either case upon demand made within
three business days following the expiration of such ten-day period.
(b) Obligation to Pay
The obligation of AWS to pay the Put Price at the closing of the Put
shall not be subject to any set-off or offset of whatsoever nature, and AWS
shall make such payment regardless of the value of the assets held by the
Company or any breach or claim of breach of any provision by CTC or any
Additional Member (it being understood that AWS shall have all of its other
rights and remedies available at law or in equity with respect to any such
breach), or other circumstances or occurrences, including bankruptcy,
insolvency, liquidation or winding up of CTC or any Additional Member or any
other agreement among or between the Members or the parties to this Agreement.
In addition, AWS shall make such payment whether or not the Company is or has
been declared bankrupt and whether or not any Interests then exist (provided,
that in such event the CTC Members and the Additional Members shall have
assigned to AWS Sub as of the Date of Payment, by execution of documentation
reasonably satisfactory to AWS Sub, all of the rights and interests derived from
such Interests that no longer exist). CTC shall not make any distribution to its
members pending any good faith claims existing on the Date of the Payment by AWS
or AWS Sub against CTC or its Affiliates until the earlier of completion of
arbitration of such claims pursuant to Section 11.3 or one year after the
closing of the Put; provided, that the amount CTC shall refrain from
distributing shall be limited to the aggregate amount of any such claims. No
Additional Member shall make any distribution to its members pending any good
faith claims existing on the Date of the Payment by AWS or AWS Sub against such
Additional Member or its Affiliates until the earlier of completion of
arbitration of such claims pursuant to Section 11.3 or one year after the
closing of the Put; provided, that the amount such Additional Member shall
refrain from distributing shall be limited to the aggregate amount of any such
claims.
(c) Senior Obligation
(i) The Put shall be a senior obligation of AWS and shall rank
pari passu in right of payment with all other senior obligations of AWS
(it being understood that, except as provided below, inter-company
obligations shall rank junior for purposes of this Section 9.5).
(ii) Notwithstanding clause (i) above:
(A) Prior to the Replacement Date, the Put may be
subordinated to up to $10 billion of inter-company obligations
of AWS to AT&T Corp. and/or its Affiliates ("Rollover Debt").
Prior to the Replacement Date, the Put shall at all
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times either (1) rank pari passu in right of payment with all
senior obligations of AWS other than $10 billion of Rollover
Debt or (2) be secured by an irrevocable letter of credit in
favor of CTC and the Additional Members, from a national
financial institution reasonably acceptable to CTC, securing
the maximum amount payable under the Put if the Put Price were
paid on the date which is six months after the Reference Date
(it being understood that the election between alternatives
(1) and (2) shall be in the discretion of AWS). "Replacement
Date" means the date that is (x) nine months following the
Initial Grant Date or (y) if later, the date that is three
months following the completion of the spinoff of AWS from
AT&T Corp. but in no event more than 12 months following the
Initial Grant Date.
(B) From and after the Replacement Date, the Put
shall at all times either (1) rank pari passu in right of
payment with all senior obligations of AWS or (2) be secured
by an irrevocable letter of credit in favor of CTC and the
Additional Members, from a national financial institution
reasonably acceptable to CTC, securing the maximum amount
payable under the Put if the Put Price were paid on the date
which is six months after the Reference Date (it being
understood that the election between alternatives (1) and (2)
shall be in the discretion of AWS).
(iii) The Put shall be unsecured; provided, that to the extent
that any senior obligations of AWS are secured, the Put with respect to
that portion of the Interests held indirectly by Alaska Native
Corporations shall share ratably in such security, i.e., such portion
of the Put shall rank pari passu with all senior secured obligations of
AWS and AWS will grant for the benefit of such Alaska Native
Corporations a pro rata Lien in any such collateral on terms and
subject to conditions that are substantially similar to the terms and
conditions of the Liens in such collateral granted to senior lenders of
AWS.
(d) Prepayment of Put Price
If CTC exercises the Put, AWS may in its sole discretion make, or cause
AWS Sub to make, an advance payment to CTC and the Additional Members of any
portion of the Put Price as AWS may determine, and in such event the 24.7% per
annum return shall cease to accrue on the amount of such advance payment on the
date such advance payment is made. CTC and the Additional Members shall take all
actions reasonably requested by AWS Sub, consistent with FCC Rules, to
accomplish the closing of the Put as promptly as practicable. In all events, CTC
and the Additional Members shall continue to comply with the covenants set forth
in Section 12.2(a) and Section 12.2(b). Without limiting the generality of the
foregoing, each of CTC and the Additional Members agrees that, if FCC approval
of the Put is not obtained within one year after the Put is exercised, CTC and
the Additional Members will take such other actions as may be reasonably
requested by AWS to accomplish the foregoing objectives, including without
limitation transferring the Interests to a third party upon FCC approval
therefor.
Section 9.6. Allocation of Bidding Credits
At the Date of Payment, AWS shall, or shall cause AWS Sub to, pay (i)
CTC an amount equal to the CTC Portion and (ii) Edge an amount equal to the Edge
Portion; provided, that if the
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Company fails to make the offer to sell its open licenses to AWS pursuant to
Section 8.1 on any date specified therein, AWS shall have no obligation to pay
and the CTC Members and the Additional Members shall have no right to receive
any of the Adjusted Bidding Credits unvested at any time within 30 days prior to
such date (i.e., bidding credits that would have been forfeited under applicable
FCC Rules if the Company had made the applicable offer, and AWS Sub had accepted
such offer in whole and such purchase and sale had been completed, within 30
days prior to such date).
Section 9.7. New LLC
If, at the time of exercise of the Put, the FCC Rules restricting the
free transferability of C or F block PCS licenses or interests therein still
apply to some (but not all) of the licenses then held by the Company, the
Members shall form a new Delaware limited liability company (the "New LLC"),
under the terms and conditions described in this Section 9.7, and shall
transfer, subject to the consent of the FCC, to the New LLC all of such licenses
(and all corresponding assets, liabilities, capital accounts and rights). The
New LLC shall be governed by a limited liability company agreement that is
identical to this Agreement as then in effect. The New LLC will have the benefit
of any and all contracts relating to the licenses transferred to the New LLC.
Section 9.8. Terminated Auction Purchase
(a) Licenses Are Not Granted or Are Revoked
Notwithstanding the foregoing provisions of this ARTICLE 9, if after
completion of the Auction the winning bid for any license won by the Company is
rejected or the award of any license to the Company is rescinded or revoked as
the result of action by the FCC or by any court or other Governmental Authority,
then:
(i) except as otherwise provided in clause (ii) below, to the
extent that any upfront payment or other License Payment for such
license is refunded by the FCC within a year following the date on
which CTC made the capital contribution in respect of such License, (1)
except as provided below, the Company will return to the Members the
respective amounts of capital provided by them in respect of such
license and (2) AWS will pay to CTC and the Additional Members an
amount equal to a 24.7% per annum return on the amount (up to a maximum
of $262,500,000 in the case of the CTC Members and $7,500,000 in the
case of Edge) of such capital provided by them from the date of their
respective capital contributions through the date that such return is
paid to them; and
(ii) to the extent that any upfront payment or other License
Payment for such license is refunded by the FCC after a year following
the date on which CTC made such capital contribution, or within a year
of such date if such license is granted and subsequently rescinded or
revoked, (1) except as provided below, the Company will return to the
Members the respective amounts of capital provided by them in respect
of such license and (2) AWS will pay to CTC and the Additional Members
an amount equal to a 24.7% per annum return on the amount (up to a
maximum of $262,500,000 in the case of the CTC Members and $7,500,000
in the case of Edge) of such capital provided by them from the date of
their respective capital contributions through
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(A) the first anniversary of such capital
contribution if such payment is refunded within 12 months
following the date of its capital contribution,
(B) the 18-month anniversary of such capital
contribution if such payment is refunded on or after the first
anniversary and before the 18-month anniversary of the date of
its capital contribution,
(C) the second anniversary of such capital
contribution if such payment is refunded on or after the
18-month anniversary and before the second anniversary of the
date of its capital contribution,
(D) the third anniversary of such capital
contribution if such payment is refunded on or after the
second anniversary and before the third anniversary of the
date of its capital contribution,
(E) the fourth anniversary of such capital
contribution if such payment is refunded on or after the third
anniversary and before the fourth anniversary of the date of
its capital contribution, and
(F) the fifth anniversary of such capital
contribution if such payment is refunded on or after the
fourth anniversary and before the fifth anniversary of the
date of its capital contribution;
provided, that if the winning bid for any license won by the Company is
rejected, or the award of any license to the Company is rescinded or revoked, as
the result of a breach by CTC of its representations or covenants in Section
12.1(i), Section 12.2(c) and Section 12.3, then CTC and the Additional Members
shall be entitled only to a return of the amount of capital contributed by CTC
and the Additional Members to the Company in respect of such license.
(iii) Notwithstanding the foregoing provisions of this Section
9.8(a), if after giving effect to any such rejection, rescission or
revocation of licenses, the aggregate amount of capital deployed by the
Company is at least $525,000,000, no capital shall be returned to CTC
or any Additional Member and the provisions of Section 9.1 through
Section 9.7 (inclusive) shall continue to apply to all of the capital
contributed to the Company by the CTC Members and the Additional
Members.
(b) Threatened Revocation of Licenses
If the award of any license won by the Company in the Auction is
challenged in a proceeding brought before the FCC or any court of competent
jurisdiction within 15 months after the date on which CTC contributed capital to
the Company that was used to fund the upfront fee or other License Payment in
respect of such license, AWS will offer CTC the opportunity to recover the
portion of any such amount allocable to the contributions made by the Cash
Equity Investors by selling a corresponding portion of its Interests. If CTC
elects within 30 days of such offer to sell such Interests, the purchase price
shall be equal to CTC's portion of the aggregate amount (up to a maximum of
$262,500,000) of any upfront fee or other License Payment in respect of the
relevant licenses plus a 24.7% per annum return on such aggregate amount from
the date(s) of the corresponding capital contributions through the date that
such return is paid to
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CTC. If CTC does not elect to sell such Interests, the provisions of
subparagraph (a) above shall apply to any license that is the subject of any
such proceeding, and if the challenge to the award of any license won by the
Company in the Auction is upheld as the result of a breach by CTC of its
representations or covenants herein, then CTC shall be entitled only to a return
of the amount of capital contributed by CTC to the Company in respect of such
license (and CTC shall promptly remit to AWS any excess received by CTC to which
it is not entitled, and which excess CTC agrees not to distribute to its members
pending the resolution of such challenge).
(c) Calculation of Return
The 24.7% per annum return in this Section 9.8 shall be calculated in
accordance with the provisions of Section 8.2(a)(ii).
ARTICLE 10
REGISTRATION RIGHT
Section 10.1. Registration Right
On a single occasion during the 180-day period following the ninth
anniversary of the Initial Grant Date, the CTC Members may elect to cause the
Company (i) to convert to a corporation ("Newco") and (ii) subject to the
following provisions of this ARTICLE 10, to register for sale in an underwritten
public offering (the "Offering") shares of capital stock of Newco issued to such
Members upon conversion, so long as the anticipated gross proceeds to the CTC
Members from the Offering are greater than $100,000,000 in the aggregate. If the
CTC Members make such election, the Members and the Company shall promptly take
such steps as may be necessary or desirable to effectuate the provisions of this
ARTICLE 10.
Section 10.2. Right to Purchase - Preliminary Range
The underwriters of the Offering (who shall be selected by the CTC
Members and shall be reasonably acceptable to AWS Sub) will, within 30 days
after delivery of such election, in good faith establish a preliminary range for
the price to the public in the Offering. AWS Sub may elect to purchase all, but
not less than all, of the Interests of the Company (i.e., prior to the
conversion into Newco) then held by the Members other than AWS Sub, at a price
equal to the lesser of (i) 80% of the midpoint of the preliminary range and (ii)
an amount equal to the Put Price (excluding any Adjusted Bidding Credits) as of
the Reference Date plus simple interest on such amount at a rate of 15% per
annum from the Reference Date until paid. If AWS Sub fails to make such
election, the Offering will proceed.
Section 10.3. Right to Purchase - IPO Price
If the final price per share at which shares of capital stock of Newco
are to be offered to the public (the "IPO Price") is lower than the midpoint of
the preliminary range by $1.00 or more, AWS Sub may elect, within 24 hours after
the determination of the IPO Price (during which time the registration statement
will not become effective), to purchase all, but not less than all, of the
Interests of the Company (i.e., prior to the conversion into Newco) then held by
the Members other than AWS Sub, at a price equal to the lesser of (i) 80% of the
IPO Price and (ii) an amount equal to the Put Price (excluding any Adjusted
Bidding Credits) as of the Reference
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Date plus simple interest on such amount at a rate of 15% per annum from the
Reference Date until paid. If AWS fails to make such election, the Members other
than AWS Sub will (subject to Section 10.4) have 90 days to complete the
Offering.
Section 10.4. Right to Defer the Offering
If AWS Sub determines that a registration pursuant to this ARTICLE 10
would interfere with any pending or contemplated material acquisition,
disposition, financing or other material transaction involving the Company or
AWS or any of its Affiliates or would require the Company to disclose material
information that would otherwise not be disclosed at such time (and such
disclosure would be prejudicial to the Company), the Company will defer such
registration at the request of AWS; provided, that the aggregate of all such
deferrals shall not exceed 180 days in any 360-day period.
Section 10.5. Registration Expenses
Except as hereinafter provided, all expenses incident to the Company's
performance of or compliance with this ARTICLE 10 will be borne by the Company.
In addition, the Company shall pay or reimburse the Members participating in the
Offering (the "Participating Members") for the reasonable fees and expenses of
one attorney to the Participating Members selected by CTC incurred in connection
with a registration pursuant to this ARTICLE 10. Except as provided in the
immediately preceding sentence, each Participating Member shall bear the costs
and expenses of any underwriters' discounts and commissions or other fees,
brokerage fees or transfer taxes relating to the Interests in the Company or
shares of capital stock of Newco sold by such Member, and the fees and expenses
of any other attorneys, accountants or other representatives retained by such
Member.
Section 10.6. Registration Procedures
If Newco is required to effect the Offering, Newco will, as promptly as
reasonably practicable:
(a) prepare and file with the SEC a registration statement on an
appropriate form, and thereafter use its reasonable best efforts to cause such
registration statement to become effective and to remain effective and file with
the Commission such amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement until the lesser of (i) such time as all of such
securities have been disposed of in accordance with the intended methods of
disposition by the Participating Members set forth in such registration
statement and (ii) 90 days; provided that Newco will, at least ten business days
prior to filing a registration statement or prospectus or any amendment or
supplement thereto, furnish to each Participating Member copies of such
registration statement or prospectus (or amendment or supplement) as proposed to
be filed (including, upon the request of any Participating Member, documents to
be incorporated by reference therein) which documents will be subject to the
reasonable review and comments of such Participating Member (and its attorneys)
during such ten-business day period and Newco will not file any registration
statement, any prospectus or any amendment or supplement thereto (or any such
documents incorporated by reference) containing
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any statements with respect to such Participating Member to which such
Participating Member shall reasonably object in writing;
(b) furnish to each Participating Member and to any underwriter
such number of conformed copies of such registration statement and of each such
amendment and supplement thereto (in each case including all exhibits), the
prospectus contained in such registration statement (including each preliminary
prospectus and any summary prospectus) and any other prospectus filed under Rule
424 or Rule 430A under the Securities Act, in conformity with the requirements
of the Securities Act, documents incorporated by reference in such registration
statement, amendment, supplement or prospectus and such other documents (in each
case including all exhibits), as a Participating Member or underwriter may
reasonably request;
(c) after the filing of the registration statement, promptly notify
each Participating Member of the effectiveness thereof and of any stop order
issued or threatened by the Commission and take all reasonable actions required
to prevent the entry of such stop order or to remove it if entered and promptly
notify such Participating Member of such lifting or withdrawal of such order;
(d) use its reasonable best efforts to register or qualify all
shares held by the Participating Members and other securities covered by such
registration statement under such other securities or blue sky laws of such
jurisdictions as the Participating Members holding a majority of the shares to
be included in such registration or the underwriter shall reasonably request, to
keep such registration or qualification in effect for so long as such
registration statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable the Participating Members to
consummate the disposition in such jurisdictions of the securities owned by such
Participating Members, except that Newco shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this Section
10.6(d) be obligated to be so qualified, to subject itself to taxation in any
such jurisdiction or to consent to general service of process in any such
jurisdiction;
(e) use its reasonable best efforts to cause all shares covered by
such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the
Participating Members to consummate the disposition of such shares;
(f) furnish to each Participating Member and to each underwriter,
if any, a signed counterpart of: (i) an opinion of counsel for Newco addressed
to such Participating Member and underwriter on which opinion both the
Participating Members and such underwriter are entitled to rely and (ii) a
"comfort" letter signed by the independent public accountants who have certified
Newco's financial statements included in such registration statement, each in
customary form and covering such matters of the type customarily covered by
opinions or comfort letters, as the case may be, as the managing underwriter
therefor reasonably request. Newco will use its commercially reasonable efforts
to have such comfort letters addressed to each Participating Member;
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(g) immediately notify each Participating Member at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, upon discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made, and as promptly as practicable under the circumstances prepare and furnish
to such Participating Member a reasonable number of copies of any supplement to
or amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made;
(h) make available for inspection by any Participating Member, any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other professional retained by any
such Participating Member or underwriter (collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and properties of
Newco (collectively, the "Records") as shall be reasonably necessary to enable
them to exercise their due diligence responsibility, and shall cause Newco's
officers, directors and employees to supply all information reasonably requested
by any Inspectors in connection with such registration statement. Each such
Participating Member agrees that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be disclosed or used by
it as the basis for any market transactions in the securities of Newco or its
Affiliates unless and until such information is made generally available to the
public. Each such Participating Member further agrees that it will, upon
learning that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to Newco and allow Newco, at its expense, to undertake
appropriate action to prevent disclosure of the Records deemed confidential;
(i) use its reasonable best efforts to list all shares covered by
such registration statement on any securities exchange or quotation system on
which any of Newco's shares are then listed or traded; and
(j) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement or
such other document that shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder.
Newco may require each Participating Member to promptly furnish to
Newco, as a condition precedent to including such Participating Member's shares
in the Offering, such written information regarding such Participating Member
and the distribution of such securities as Newco may from time to time
reasonably request in writing.
Each Participating Member agrees that upon receipt of any notice from
Newco of the happening of any event of the kind described in Section 10.6(g),
such Participating Member will forthwith discontinue such Participating Member's
disposition of shares pursuant to the registration statement relating to such
shares until such Participating Member's receipt of the
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copies of the supplemented or amended prospectus contemplated by Section 10.6(g)
and, if so directed by Newco, will deliver to Newco (at Newco's expense) all
copies, other than permanent file copies, then in such Participating Member's
possession, of the prospectus and any amendments or supplements thereto relating
to such shares current at the time of receipt of such notice. In the event Newco
shall give such notice, Newco shall extend the period during which the
effectiveness of such registration statement shall be maintained by the number
of days during the period from and including the date of the giving of notice
pursuant to Section 10.6(g) to the date when Newco shall make available to the
Participating Members a prospectus supplemented or amended to conform with the
requirements of Section 10.6(g).
ARTICLE 11
OTHER AGREEMENTS
Section 11.1. Exclusivity
(a) AWS
Neither AWS nor any Affiliates that it controls shall participate
directly or indirectly in the Auction (including by providing debt or equity
financing or other assistance to a bidder) except as a Member of the Company;
provided, that AWS and its Affiliates may participate directly or indirectly in
the Auction either individually or with others so long as a substantial majority
of the amount that AWS has committed (or will commit) to deploy to purchase
licenses in the Auction shall be committed to be deployed through the Company
with the objective of CTC being able to invest $262,500,000; provided, that
neither AWS nor its Affiliates shall be in violation of this covenant if under
FCC Rules such entity is deemed to be an "applicant" or "bidder" in the Auction
(as such terms are defined in Section 1.2105(c)(6)(i) of the FCC Rules) solely
by reason of its equity ownership in, or the right to designate directors or
officers (or individuals with similar functions) of, another participant in the
Auction.
(b) CTC
Neither CTC nor any Affiliates that it controls shall participate
directly or indirectly in the Auction (including by providing debt or equity
financing or other assistance to a bidder) except as a Member of the Company. So
long as they hold Interests and thereafter until they have certified to the
other Members as to the return or destruction of any Confidential Information of
the Company pursuant to Section 11.2, neither CTC nor any Affiliates that it
controls shall (except as set forth on Schedule 2) directly or indirectly own
FCC licenses to provide wireless voice or data telephony in the Restricted
Territory, or "attributable interests" (as defined in any applicable FCC Rules)
in such licenses, or otherwise compete with the Company in the Restricted
Territory; provided, that (1) CTC and its Affiliates may, subject to the
provisions of Section 11.2, participate in, and acquire licenses in, the FCC's
auction of licenses in the 747-762 and 777-792 MHz band (Auction No. 31); (2)
this provision shall not require CTC or its Affiliates to divest themselves of
FCC licenses set forth on Schedule 2 or FCC licenses acquired in any geographic
territory (outside the Company Territory) prior to the time that such territory
becomes part of the AWS Territory; and (3) CTC and its Affiliates may own up to
three percent of the equity securities of a public company or, if less, that
number of shares which, combined with other rights granted to CTC or such
Affiliate, do not give CTC or such Affiliate the right to designate a member of
the board of directors of such company.
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(c) Cash Equity Investors
The Cash Equity Investors shall not be subject to the provisions of
this Section 11.1.
Section 11.2. Confidentiality
(a) Non-Disclosure
Each party agrees that it will, and will cause each of its Affiliates,
and each of its and their respective partners, members, managers, shareholders,
directors, officers, employees and agents (collectively, "Agents") to use its
best efforts to maintain the confidentiality of all non-public information
disclosed to it by the other party or the definitive agreements contemplated
herein or through its interest in the Company or the operation of its business
or the use or ownership of its assets, by limiting internal disclosure of any
such information to those who have an actual need to know such information in
connection with the Auction or the transactions contemplated hereby, and will
not, without the prior written consent of the disclosing party, use such
information other than in connection with the transactions contemplated herein,
provided, however, that the confidentiality obligations in this paragraph do not
apply to information that (i) was or becomes available to the public through no
action by the receiving party or (ii) was or becomes available to such receiving
party on a non-confidential basis.
(b) Exceptions
Notwithstanding paragraph (a) above, any party may disclose the
existence and terms of this Agreement and the transactions contemplated hereby
(i) to federal and state regulatory agencies in connection with applications for
approval of such transactions (or, in the case of any regulated Affiliate of a
Member, in connection with audits by the applicable regulatory authorities),
(ii) to financial institutions in connection with financings of the transactions
contemplated hereby and (iii) if counsel for any party advises that a press
release or public disclosure is required by law or the applicable rules of any
stock exchange, then the parties shall use their best efforts to cause a
mutually acceptable press release to be issued, and in all events the party
required to make such disclosure will be free to do so; provided in each case
that confidential treatment is requested from any such person to whom such
information is disclosed and the other parties hereto are notified
contemporaneously of such disclosure; provided, further, that the parties
acknowledge that the Bidding Protocol constitutes valuable trade secrets of the
Company and is extremely sensitive and confidential, and will not be disclosed
by the parties unless disclosure is compelled by regulatory or other legal
process and then only upon adequate prior notice to the other party, which party
shall have an opportunity to seek an appropriate protective order, and such
disclosure will be made only to the extent necessary to comply with the
requirements of the regulatory or legal process under which it is so compelled.
(c) Damages
If AWS or CTC violates the provisions of this Section 11.2 in a manner
that has a material adverse effect on the transactions contemplated by this
Agreement, then AWS or CTC, as the case may be, shall be liable to the other for
$2,000,000 in liquidated damages.
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Section 11.3. Arbitration
(a) Arbitration
Any controversy or claim arising out of or relating to this Agreement,
or the breach thereof, shall be settled by arbitration administered by the
American Arbitration Association in accordance with its Commercial Arbitration
Rules, and judgment on the award rendered by the arbitrators may be entered in
any court having jurisdiction thereof. Within 15 days after the commencement of
arbitration, each party shall select one person to act as arbitrator and the two
selected shall select a third arbitrator within 10 days of their appointment. If
the arbitrators selected by the parties are unable or fail to agree upon the
third arbitrator, the third arbitrator shall be selected by the American
Arbitration Association. The place of arbitration shall be San Francisco,
California or such other place (outside the States of Alaska and Washington) as
the parties may agree. The arbitrators shall be knowledgeable in the wireless
telecommunications industry and public auctions of FCC licenses.
(b) Interim Relief
Either party may apply to the arbitrators seeking injunctive relief
until the arbitration award is rendered or the controversy is otherwise
resolved. Either party also may, without waiving any remedy under this
agreement, seek from any court having jurisdiction any interim or provisional
relief that is necessary to protect the rights or property of that party,
pending the establishment of the arbitral tribunal (or pending the arbitral
tribunal's determination of the merits of the controversy).
(c) Discovery
Consistent with the expedited nature of arbitration, each party will,
upon the written request of the other party, promptly provide the other with
copies of documents relevant to the issues raised by any claim or counterclaim
on which the producing party may rely in support of or in opposition to any
claim or defense. Any dispute regarding discovery, or the relevance or scope
thereof, shall be determined by the arbitrators, which determination shall be
conclusive. All discovery shall be completed within 45 days following the
appointment of the arbitrators.
(d) Depositions
At the request of a party, the arbitrators shall have the discretion to
order examination by deposition of witnesses to the extent the arbitrators deems
such additional discovery relevant and appropriate. Depositions shall be limited
to a maximum of three per party and shall be held within 20 days of the making
of a request. Each deposition shall be limited to a maximum of four hours
duration. All objections are reserved for the arbitration hearing except for
objections based on privilege and proprietary or Confidential Information.
(e) Award
The award shall be made within 90 days of the filing of the notice of
intention to arbitrate, and the arbitrators shall agree to comply with this
schedule before accepting
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appointment. However, this time limit may be extended by agreement of the
parties and the arbitrators if necessary.
ARTICLE 12
REPRESENTATIONS AND COVENANTS
Section 12.1. Representations of the Members
Each of the Members represents and warrants as follows:
(a) It is a corporation or limited liability company, as the case
may be, duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, and has the requisite power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted and as proposed to be conducted.
(b) It has the requisite power and authority to execute, deliver
and perform this Agreement and the Related Agreements to which it is a party and
each other instrument, document, certificate and agreement required or
contemplated to be executed, delivered and performed by it hereunder.
(c) It is duly qualified to do business in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary.
(d) Its execution and delivery of this Agreement and the Related
Agreements to which it is a party and its consummation of the transactions
contemplated hereunder and thereunder have been duly and validly authorized by
its Board of Directors (or equivalent body) and no other proceedings on its part
which have not been taken are necessary to authorize this Agreement or such
Related Agreements or to consummate such transactions.
(e) This Agreement and the Related Agreements to which it is a
party have each been duly executed and delivered by it and constitute its valid
and binding obligations, enforceable against it in accordance with their
respective terms, except as such enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally.
(f) Neither its execution, delivery and performance of this
Agreement, nor its consummation of the transactions contemplated hereunder or
under the Related Agreements to which it is a party, will (i) conflict with, or
result in a breach or violation of, any provision of its constituent documents;
(ii) constitute, with or without the giving of notice or passage of time or
both, a breach, violation or default, create a Lien, or give rise to any right
of termination, modification, cancellation, prepayment or acceleration, under
(A) any law or license or (B) any note, bond, mortgage, indenture, lease,
agreement or other instrument, in each case which is applicable to or binding
upon it or any of its assets; or (iii) require any consent which has not already
been obtained.
(g) There is no (i) action, claim, proceeding, investigation or
controversy pending or, to its knowledge, threatened against it or any of its
properties or assets, or (ii) judgment, order,
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award or consent decree outstanding against or affecting it, in either event
that could have an adverse effect on its ability to consummate the transactions
contemplated under this Agreement or to fulfill its obligations hereunder.
(h) It has, and will have on each date it is required to make a
capital contribution under this Agreement, cash available to it in an amount
sufficient to fully fund such capital contribution.
(i) Neither it nor any of its attributable interest holders are
"former defaulters" as defined in the Public Notice.
Section 12.2. Covenants of the Members
(a) Each Member shall at all times (i) observe all corporate or
limited liability company formalities, as the case may be, including the
maintenance of current minute books, (ii) maintain, separate from any other
Person, its own separate and distinct books of account, bank accounts and
corporate or limited liability company records, (iii) maintain separate
financial statements and cause its financial statements to be prepared and
maintained in accordance with GAAP in a manner that indicates the separate
existence of such Member and its assets and liabilities, (iv) pay all its
liabilities out of its own funds (including the salaries of its own employees),
(v) maintain and use its own separate stationary, invoices and checks, (vi) in
all dealings with the public or third parties identify itself and conduct its
own business under its own name as a separate and distinct legal entity rather
than as a division of its parent, (vii) maintain an arm's-length relationship
with its Affiliates and (viii) independently make decisions with respect to its
business and daily operations.
(b) No Member shall (i) pledge its assets for the benefit of any
other Person, (ii) commingle its assets with those of any other Person, (iii)
assume or guarantee the liabilities or obligations of any other Person or
otherwise hold out its credit as being available or able to satisfy the
Indebtedness, liabilities or obligations of any other Person, (iv) acquire
obligations or securities of, or make loans or advances to, any of its
Affiliates, (v) permit there to be a complete identity of its managers and
officers with the managers and officers of any of its Affiliates, (vi) incur any
indebtedness, liabilities or obligations relating to the operation of its
business or (vii) engage in any business activities other than holding and
managing its Interests.
(c) Each Member will (i) take all actions necessary for the Company
to timely apply and qualify to participate as a bidder in the Auction; (ii)
timely furnish, and will cause its Affiliates to timely furnish, such
information as may be required to be provided, under FCC Rules, in or in
connection with the Company's short-form application to participate in the
Auction and post-Auction long-form application and associated filings; (iii) not
participate, and will cause Affiliates that it controls (i.e., Affiliates that
AWS controls in the case of AWS Sub and Affiliates that CTC controls in the case
of CTC) to refrain from participating, directly or indirectly, in the Auction or
in or in connection with any other actual or potential bidder in the Auction, to
the extent such action would disqualify, restrict or limit the Company from
participating fully in the Auction or otherwise would violate any applicable FCC
Rule; (iv) for the purposes of fulfilling its intention to comply fully with the
FCC's prohibition of collusion, adopt and implement "Chinese Wall" and other
similar precautionary measures to ensure that,
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except as permitted under FCC Rules, (A) no information concerning the substance
of any Company bid or bidding strategy is disclosed to another applicant (as
those terms are defined in Section 1.2105(c) of the FCC's Rules) during the time
in which the prohibition of collusion is in effect for the Auction and (B)
neither the Company nor any member of the Auction Committee, during the time in
which the prohibition of collusion is in effect for the Auction, has access to
information that is learned by any Member in the conduct of its routine
business, that could indirectly reveal the bids or bidding strategy of another
applicant.
Section 12.3. Representations and Covenants of Members Other Than AWS
(a) Each of CTC and the Additional Members hereby represents and
covenants as to itself that:
(i) on the date the Company files its long form application
for licenses won in the Auction and for so long thereafter as may be
required under FCC Rules, except as set forth on Schedule 2, neither it
nor its members (and, in the case of CTC, the Alaska Native
Corporations and any Affiliates that they control) will have an
attributable interest (as defined in the relevant FCC Rules) in a
license for Commercial Mobile Radio Services ("CMRS") spectrum that
would cause (A) the Company to be unable to be the licensee of the full
amount of CMRS spectrum allowed under the FCC Rules or would render the
Company ineligible in any other respect to hold any of the licenses won
in the Auction or (B) AWS or any of its Affiliates to be unable to be
the licensee of any license for CMRS held by AWS or any of its
Affiliates on the date the Company files its long form application and
in each case such Member agrees that if it or any of its members does
have such an attributable interest, it shall promptly take steps,
consistent with the FCC Rules, to enable (x) the Company to hold any of
the licenses won in the Auction and (y) AWS or its Affiliates to hold
any license for CMRS held on the date the Company files its long form
application); and
(ii) for so long as may be required under FCC Rules, it would
qualify as an "entrepreneur" and a "very small business" under the
terms of FCC Rules in effect on the Initial Application Date, including
but not limited to Sections 1.2110(b)(1), 24.709(a), and 24.720(b) of
the FCC Rules, as those rules are clarified in the FCC's Public Notice,
DA 00-2038, dated September 6, 2000, and Public Notice, DA 00-2259,
dated October 5, 2000, if CTC itself were the applicant or the
licensee, as the case may be.
(b) CTC shall not permit the amendment, modification or waiver of
any provision of its certificate of formation or limited liability company
agreement, nor shall CTC enter into any agreement, arrangement or understanding
with any Person, that could reasonably be expected to (i) result in a breach or
default of any representation or covenant of CTC contained in this Agreement or
(ii) have an adverse effect on the interest of AWS Sub in the Company or the
rights and benefits of AWS Sub or AWS under this Agreement.
Section 12.4. Termination by AWS
(a) AWS may terminate this Agreement if CTC (i) is not in
compliance with the representation set forth in Section 12.3(a)(i) or (ii) fails
to qualify as of the Initial Application Date as required under Section
12.3(a)(ii), unless CTC remedies such non-compliance or failure
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in time for the Company to participate in the Auction in accordance with this
Agreement and CTC compensates AWS or the Company, as the case may be, for any
adverse consequences resulting therefrom.
(b) If CTC fails to qualify as of the Initial Application Date as
required under Section 12.3(a)(ii), and such failure has not resulted from a
change in applicable FCC Rules (including the promulgation of an order or
similar action by the FCC), and AWS terminates this Agreement, then CTC agrees
that it shall pay AWS on demand the sum of $50,000,000 (together with interest
thereon at 18% per annum from the time of demand until paid) as liquidated
damages. Upon any such termination of this Agreement, the Company (or, in the
event the Company does not have adequate capital, AWS) shall refund the capital
contributions of CTC and the Additional Members in redemption of their
respective Interests; provided, that if AWS makes a demand for liquidated
damages under this paragraph (b), the Company will deposit in escrow $50,000,000
of the capital contributions made by CTC (or, if less, the total amount of
capital contributions made by CTC). If CTC disputes such demand within ten days
thereof, the dispute will be resolved in accordance with Section 11.3, and the
Company will disburse the escrowed funds as instructed by the arbitrators; if
CTC does not dispute such demand within such ten-day period, the Company will
disburse the escrowed funds to AWS on the next business day thereafter. Such
liquidated damages shall be the sole and exclusive remedy of AWS and AWS Sub for
such failure.
(c) If CTC's failure to so qualify results from a change in
applicable FCC Rules (including the promulgation of an order or similar action
by the FCC), then the parties shall promptly take reasonable steps to enable CTC
to so qualify, provided, that the relative economic and other rights and
benefits expected to be derived by the parties hereunder are preserved.
ARTICLE 13
EXCULPATION AND INDEMNIFICATION
Section 13.1. 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 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
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in accordance with the advice or opinion of such counsel, accountants or other
experts, provided that they shall have been selected with reasonable care.
Section 13.2. 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 13.2 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.
Section 13.3. 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 13.2, the Indemnified
Person shall give prompt written notice of such Claim to the Company, which may
assume the defense thereof, 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 13.2 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
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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 13, 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 13.
(e) Contribution. Notwithstanding any of the foregoing to the
contrary, the provisions of this ARTICLE 13 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 13 to the fullest extent permitted by
law; provided, that if and to the extent that the Company's indemnification
obligation under this ARTICLE 13 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, non-appealable judgment by a
court of competent jurisdiction to have resulted from the Indemnified Person's
gross negligence or willful misconduct.
ARTICLE 14
DISSOLUTION AND TERMINATION
Section 14.1. No Withdrawal
Except as expressly provided in this Agreement or as otherwise provided
by law, (a) 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 and (b) CTC shall have no right, and CTC hereby agrees not to, resign or
withdraw as the Manager.
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Section 14.2. Dissolution
The Company shall be dissolved upon the written determination of the
Manager to dissolve the Company, if approved by AWS Sub as provided in Section
5.3, but only on the effective date of dissolution specified by the Manager in
such determination.
Section 14.3. 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 14.3. 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 Manager or such other Person as may be
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
14.3. 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 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.
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(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).
Section 14.4. Deficit Capital Accounts
If the Company is "liquidated" within the meaning of Treasury Reg.
Section 1.704-1(b)(2)(ii)(g), (a) distributions shall be made pursuant to this
ARTICLE 14 to the Members who have positive Capital Accounts in compliance with
Treasury Reg. Section 1.704-1(b)(2)(ii)(b)(2), and (b) if AWS Sub has a deficit
balance in its Capital Account (after giving effect to all contributions,
distributions, and allocations for all years, including the year during which
such liquidation occurs), AWS Sub shall contribute to the capital of the Company
the amount necessary to restore such deficit balance to zero. Notwithstanding
the foregoing, AWS Sub shall not be obligated to contribute an amount in excess
of 95% of the capital contributed by the Members other than AWS Sub.
Section 14.5. 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.
ARTICLE 15
MISCELLANEOUS
Section 15.1. 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 (including the Formation Agreement,
dated as of November 3, 2000, as amended and restated as of November 22, 2000,
among CTC, AWS and AWS Sub) and understandings (written or oral) relating to
such subject matter.
Section 15.2. Amendment; Waiver
Neither this Agreement nor any provision hereof may be amended or
modified except in a writing signed by CTC and AWS Sub; provided, that this
Agreement may not be amended or modified in a manner that would have a material
adverse effect on the economic benefits of any Additional Member hereunder
without the prior written 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
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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.
Section 15.3. Successors and Assigns
This Agreement may not be assigned without the prior written consent of
all the parties hereto and any assignment without such prior written consent
shall be null and void and without force or effect; provided, that AWS Sub may
assign its Interests and this Agreement in whole or in part to (i) any direct or
indirect wholly owned Subsidiary of AWS or AT&T Corp. (it being understood and
agreed that no such assignment shall relieve AWS of its liability and
obligations with respect to the Put or any other financial obligation of AWS
hereunder) and (ii) a Person designated by AWS, provided, that the admission of
such Person shall be subject to the prior approval of CTC, not to be
unreasonably withheld, and shall not materially impair the transactions
contemplated hereby. In the event of an assignment by AWS Sub to a Person as
contemplated by clause (ii) above, the rights and responsibilities of AWS and
AWS Sub hereunder will be allocated to such Person as appropriate, subject to
the prior approval, not to be unreasonably withheld, of CTC (it being understood
and agreed that, unless otherwise agreed by CTC, no such assignment shall
relieve AWS of its liability and obligations with respect to the Put or any
other financial obligation of AWS hereunder). The parties further agree that
after the Auction, the Manager may, after consultation with the Management
Company, and subject to FCC Rules, exchange one or more of the Company's
licenses for licenses held or other assets owned by third parties, in which
event the provisions of this Agreement and the definitive agreements
contemplated hereby that pertain to such licenses shall be modified by the
parties as appropriate.
Section 15.4. 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 13) the Persons entitled to indemnification pursuant
to ARTICLE 13, may exercise any right or enforce any obligation hereunder.
Section 15.5. 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 15.6.
Section 15.6. Survival of Rights and Duties
Termination of this Agreement for any reason, and any Member ceasing to
be a Member or a party to this Agreement for any reason, shall not relieve any
Member of any liability which at the time of termination or cessation has
already accrued to such Member or which thereafter may accrue in respect of any
act or omission prior to such termination or cessation, nor shall any
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such termination or cessation affect in any way the 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 or cessation hereof.
The provisions of Section 2.2(d), Section 11.2, Section 11.3, Section 12.4(b),
ARTICLE 13, ARTICLE 14 and ARTICLE 15 shall survive any termination of this
Agreement and any Member ceasing to be a Member or a party to this Agreement for
any reason.
Section 15.7. 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.
Section 15.8. 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 prevent violation hereof and, to the extent
permitted by applicable law, each Member waives any objection to the imposition
of such relief.
Section 15.9. 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.
Section 15.10. 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.
Section 15.11. Expenses
The Company shall pay directly, or shall reimburse the Members for, the
costs and expenses the Members incur for the benefit of the Company in
connection with the Company's participation in the Auction (e.g., the cost of
bidding facilities and related computer hardware and software). In addition, at
the closing of the acquisition of licenses won in the Auction, the Company shall
reimburse CTC and AWS Sub for costs and expenses associated with the
transactions contemplated by this Agreement that are incurred by them at or
prior to such closing, as follows: (i) to CTC, up to $12 million and (ii) to AWS
Sub, up to $7 million, provided that the Company shall be obligated to pay the
amounts referred to in this Section 15.11 only at or after such closing.
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Section 15.12. 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 CTC, to:
c/o ASRC Wireless Services, Inc.
000 Xxxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxx
Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
If to AWS Sub, to:
c/o AT&T Wireless Services, Inc.
0000 000xx Xxxxxx, XX
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxxxxx Xxxxxx Xxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
If to Edge, to:
000 X.X. Xxxxxxxx, Xxxxx 0000
Xxxx, Xxxxxx 00000
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Attention: Xxxxx X. Xxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxxx
0000 Xxxxxxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
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.
Section 15.13. Severability
Subject to Section 15.14, 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.
Section 15.14. Reformation
(a) If the FCC should (i) change any FCC Rule in a manner that
would adversely affect the enforceability of this Agreement, (ii) directly or
indirectly reject or take action to challenge the enforceability of this
Agreement or (iii) take any other steps whatsoever, on its own initiative or by
petition from another person, to challenge or deny the transactions contemplated
hereby, then the parties shall promptly consult with each other and negotiate in
good faith to reform and amend this Agreement so as to eliminate or amend to
make unobjectionable any portion that is the subject of any FCC action,
provided, that the relative economic and other rights and benefits expected to
be derived by the parties hereunder are preserved. Neither party shall take any
action that is reasonably likely to contribute to such FCC action.
(b) If the parties are unable to agree, within ten days after they
begin to consult with each other, on the terms of any reformation of this
Agreement, either party may submit the dispute to arbitration pursuant to
Section 11.3, provided, that each party shall prepare a form of amendment to
this Agreement, and the arbitrators shall be instructed to resolve the dispute
within five days (and without discovery) by selecting the form of amendment,
without modification, that they determine is most consistent with the intent of
the parties as expressed herein, and is consistent with applicable FCC Rules;
provided, that the negotiation pursuant to clause (i) above and the arbitration
pursuant to this clause (ii) shall in all events be conducted within any
deadlines imposed by the FCC.
(c) If the FCC should determine that a portion of this Agreement,
after having been reformed pursuant to paragraph (a) or (b) above, continues to
violate FCC Rules, then such provisions shall be null and void and the remainder
of this Agreement shall continue in full force
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and effect, provided, that the relative economic and other rights and benefits
expected to be derived by the parties hereunder are preserved.
Section 15.15. 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.
Section 15.16. 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.
Section 15.17. Waiver of Immunity
To the extent that CTC or its members (or their respective affiliates)
may now or hereafter be entitled to any immunity (including, but not limited to,
sovereign immunity) from jurisdiction of any court or other tribunal (including,
but not limited to, the American Arbitration Association) or from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its rights or other assets, CTC hereby waives, on behalf of itself and its
members (and their respective affiliates), and agrees not to plead or claim,
such immunity in respect of its obligations under this Agreement, or any other
agreement, document or instrument executed and delivered in connection herewith,
and, without limiting the generality of the foregoing, agrees that the waivers
set forth in this paragraph shall have the fullest possible scope and are
intended to be irrevocable.
Section 15.18. 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.
Section 15.19. 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.
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Section 15.20. Headings
All section headings and the recitals herein are for convenience of
reference only and are not part of this Agreement, and no construction or
reference shall be derived therefrom.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MEMBERS:
AT&T WIRELESS PCS INTERESTS, LLC
By AT&T WIRELESS SERVICES, INC.
Its Manager
By: /s/ Xxxxxx Xxxxxx Jr.
______________________________
Name: Xxxxxx Xxxxxx Jr.
Title: Vice President
COUNCIL TREE ALASKA NATIVE WIRELESS, L.L.C.
By ASRC WIRELESS SERVICES, INC.,
Its Managing Member
By: /s/ Xxxxxx Xxxxx
______________________________
Name: Xxxxxx Xxxxx
Title: President
COMPANY:
ALASKA NATIVE WIRELESS, L.L.C.
By COUNCIL TREE ALASKA NATIVE WIRELESS, L.L.C.
Its Manager
By ASRC WIRELESS SERVICES, INC.,
Its Managing Member
By: /s/ Xxxxxx Xxxxx
______________________________
Name: Xxxxxx Xxxxx
Title: President
72
AT&T WIRELESS SERVICES, INC.
By: /s/ Xxxxxx Xxxxxx Jr.
______________________________
Name: Xxxxxx Xxxxxx Jr.
Title: Vice President
EDGE WIRELESS VENTURES, LLC
By: /s/ Xxxxx X. Xxxxx
______________________________
Name: Xxxxx X. Xxxxx
Title: CEO
