EXHIBIT 10.1
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TAX SHARING AGREEMENT
This Tax Sharing Agreement (this "Agreement") is entered into as of the
16th day of February 2005 by and among IWO Holdings, Inc., a Delaware
corporation ("IWO Holdings") and its subsidiaries, Independent Wireless One
Corporation, a Delaware corporation ("IWO Corp.") and Independent Wireless One
Leased Realty Corporation, a Delaware corporation ("IWO Realty" and collectively
with IWO Holding and IWO Corp., "IWO"), and US Unwired Inc., a Louisiana
corporation ("US Unwired"). The parties hereto may be collectively referred to
herein as the "Parties" and each individually as a "Party".
RECITALS:
WHEREAS, on April 1, 2002, US Unwired indirectly acquired all of the
outstanding shares of IWO; and
WHEREAS, US Unwired joins in the filing of a consolidated federal
income tax return and certain state and local consolidated, combined, unitary or
similar group tax returns with IWO (the "US Unwired Group"); and
WHEREAS, IWO has filed a voluntary petition for relief under chapter 11
of the U.S. Bankruptcy Code ("Chapter 11") in the United States Bankruptcy Court
for the District of Delaware (the "Court") and will seek to reorganize its
liabilities, business and affairs in accordance with Chapter 11 and, in that
regard, IWO has filed a "Joint Plan of Reorganization" (together with any
subsequent amendments, the "Plan") with the Court; and
WHEREAS, subject to confirmation of the Plan and satisfaction of
certain conditions as provided by the Plan, IWO's business and affairs shall be
reorganized on the Effective Date (as defined in the Plan), when the Plan shall
be substantially consummated; and
WHEREAS, upon consummation of the Plan, US Unwired shall cease to own
any interest, directly or indirectly, in IWO; and
WHEREAS, IWO and US Unwired each deem it to be in their mutual interest
and to their mutual advantage to enter into this Agreement in order to (i)
allocate equitably consolidated income tax liabilities of the US Unwired Group
(if any) between IWO and the remaining members of the US Unwired Group and (ii)
clarify the Parties' mutual responsibilities with respect to taxes;
NOW, THEREFORE, in consideration of the mutual promises and
undertakings set forth herein, the Parties, intending to be legally bound, agree
as follows:
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1. DEFINITIONS. For purposes of this Agreement:
A. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
B. "Consolidated Tax Returns" shall mean (i) all consolidated
federal income Tax Returns of US Unwired that include or are required to include
IWO for all taxable periods (or portions thereof) of IWO ending on or prior to
the Effective Date, and (ii) where applicable and consistent with past practice,
all other consolidated, combined or unitary Tax Returns of, or which include, US
Unwired or any of its subsidiaries and that include or are required to include
IWO for all taxable periods (or portions thereof) ending on or prior to the
Effective Date;
C. "Consolidated Taxes" shall mean all taxes for which
Consolidated Tax Returns are filed or required to be filed, together with any
related interest, penalties, fines, additions to tax or additional amounts
imposed by any taxing authority, including, without limitation, any liability
for the payment of any such amounts as a result of being a member of the same
affiliated, consolidated, combined, unitary or other similar group;
D. "Final Determination" shall mean any determination within
the meaning of section 1313(a) of the Code and any of the events specified in
section 6213(b) or (d) of the Code (and applying similar principles for state
and local purposes).
E. "Tax Returns" shall mean any return (including any
information return), report, statement, schedule, notice, form, estimate,
declaration of estimated tax or similar statement or document relating to or
required to be filed with any taxing authority in connection with the
determination, assessment, collection or payment of any tax, including, where
permitted or required, combined consolidated or unitary forms.
F. "Separate Tax Return Liability" of IWO or the remainder of
the US Unwired Group, as the case may be, shall be computed as if such subgroup
was a single member of the US Unwired Group with any separate return
calculations computed as if the members of the subgroup filed a separate
consolidated federal income tax return, and using the same elections and
accounting methods as are used in determining the actual tax liability of the US
Unwired Group.
2. PREPARATION OF TAX RETURNS; PAYMENT OF TAXES.
A. (i) US Unwired shall include IWO in all Consolidated Tax
Returns. All Consolidated Tax Returns shall be prepared by US Unwired in a
manner consistent with past practice, unless a past practice has been finally
determined to be incorrect by the applicable taxing authority or a contrary
treatment is required by applicable tax laws (or the judicial or administrative
interpretations thereof). US Unwired will deliver to IWO, for review, each such
Consolidated Tax Return at least forty-five (45) days prior to the due date for
filing such Consolidated Tax Return,
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including extensions. US Unwired and IWO shall attempt in good faith mutually to
resolve any disagreements regarding Consolidated Tax Returns in accordance with
Section 5 hereof, which shall be binding on the Parties. IWO shall pay to US
Unwired or the appropriate taxing authority the portion of the Consolidated
Taxes, if any, attributable to IWO with respect to the Consolidated Tax Returns
in accordance with section 2.A(ii). All Consolidated Taxes shall be paid by US
Unwired (less any portion paid directly by IWO to the appropriate taxing
authority).
(ii) The Consolidated Taxes with respect to any
Consolidated Tax Return shall be allocated between IWO and US Unwired (on behalf
of the remaining members of the US Unwired Group) as follows: There shall be
allocated to IWO that portion of the Consolidated Taxes which the Separate
Return Tax Liability of IWO bears to the sum of the such liability and the
Separate Return Tax Liability for the remainder of the US Unwired Group,
computed in accordance with section 1552(a)(2) of the Code and Treas. Reg.
ss.1.1552-1(a)(2). The remainder of the Consolidated Taxes shall be allocated to
US Unwired (on behalf of the remaining members of the US Unwired Group).
B. For federal income tax purposes, and with respect to all
other taxes, and to the extent permitted by applicable law, the taxable year of
IWO shall end as of the close of business on the Effective Date. IWO and US
Unwired shall not take any position inconsistent with the preceding sentence on
any Tax Return. If applicable law does not permit IWO to close its taxable year
as of the close of business on the Effective Date, then the portion of the
Consolidated Taxes, if any, attributable to IWO for any Tax Return shall be
allocated to IWO in accordance with the provisions of Section 2.A(ii) herein.
Any allocation of income or deductions required to determine any Consolidated
Taxes (or Separate Tax Return Liability) attributable to any period beginning
before and ending after the Effective Date shall be made by means of an interim
closing of the books and records of IWO in accordance with, or utilizing
principles consistent with, Treasury Regulation ss. 1.1502-76(b)(2)(i) as of the
Effective Date; PROVIDED, that exemptions, allowances or deductions that are
calculated on an annual basis (including, but not limited to, depreciation and
amortization deductions) shall be allocated between the period ending on the
Effective Date and the period after the Effective Date in proportion to the
number of days in each such period.
C. Any refunds or overpayment credits of Consolidated Taxes
related to the operations of IWO for any taxable period and paid by IWO shall be
for the account of IWO, other than if due to the incurrence of any item of
deduction or credit by a member of the US Unwired Group other than IWO. Any
other refunds or credits of Consolidated Taxes shall be for the account of US
Unwired.
D. IWO shall pay the amount of any Consolidated Taxes allocated
to it pursuant to Section 2 hereof to US Unwired (or directly to the applicable
taxing authority, with appropriate designation) no later than five (5) business
days prior to the due date of such Consolidated Taxes. If a dispute arises (and
is not resolved five (5) business days prior to the filing of the Tax Return) as
to the Tax Return or the amount that IWO owes to US Unwired, IWO shall pay the
amount that US Unwired believes is
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owing to US Unwired, and US Unwired and IWO shall resolve their dispute in
accordance with Section 5 hereof. Within five (5) business days following
resolution of the dispute, the appropriate Party shall pay to the other Party
any amount determined to be due to the other Party upon final resolution of the
dispute.
E. IWO and US Unwired agree to furnish or cause to be furnished
to each other, and each at their own expense, as promptly as practicable, such
information (including access to books and records) and assistance, including
making employees available on a mutually convenient basis to provide additional
information and explanations of any material provided, relating to IWO as is
reasonably necessary for the filing of any Tax Return, for the preparation for
any audit, and for the prosecution or defense of any claim, suit or proceeding
relating to any adjustment or proposed adjustment with respect to taxes. Each
Party shall retain in its possession, and shall provide the other Party
reasonable access to (including the right to make copies of), such supporting
books and records and any other materials that such Party may specify with
respect to matters relating to taxes for any taxable period ending on or prior
to the Effective Date.
F. The portion of any consolidated net operating losses,
consolidated net capital losses, consolidated unused investment credits,
consolidated unused foreign tax credits or consolidated excess charitable
contributions (as such terms are used in Treasury Regulation ss. 1.1502-79)
allocable to IWO upon IWO's departure from the US Unwired Group shall be
determined in accordance with Treasury Regulation ss. 1.1502-79 and after
application of Treasury Regulation ss. 1.1502-28T. US Unwired shall calculate
the amount so allocated and provide such calculation to IWO (on a
member-by-member basis) as soon as possible; but in any case estimates shall be
provided to IWO at least 45 days prior to the due date of IWO's federal income
tax return for its first taxable year following the Effective Date. IWO will
have the right to raise reasonable objections to such calculation (including
subsequent revisions thereto) within twenty (20) days after its receipt thereof,
in which event US Unwired and IWO shall attempt in good faith mutually to
resolve any disagreements regarding this Section 2.F. in accordance with Section
5 hereof, which shall be binding on the Parties. The Parties shall prepare and
file all Tax Returns consistently with such calculations and the application of
Treas. Reg ss. 1.1502-28T. US Unwired shall cooperate with IWO in making any
elections as may be reasonably necessary to permit IWO to utilize any tax
attributes allocable to it in taxable periods following the Effective Date;
provided that US Unwired shall not be required to make any election that would
have an adverse impact on US Unwired.
3. ADJUSTMENTS TO CONSOLIDATED TAX LIABILITY
A. If, pursuant to a Final Determination, the filing of an
amended tax return or a claim for refund, a change or adjustment is made to
items reported on a Consolidated Tax Return, then the amount of the payments
required to be made pursuant to Section 2 shall be recomputed after giving
effect to such change(s) and adjustment(s). Such recomputation may result in an
additional payment of Consolidated Taxes due from IWO to US Unwired (or directly
to the applicable taxing authority, with
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appropriate designation), or from US Unwired to IWO (with any related interest,
net of any tax imposed on US Unwired in respect of such interest), as
appropriate. Such payment shall be due not later than (i) five (5) business days
before the due date for any additional payment of tax by US Unwired, (ii) five
(5) business days after the receipt of a refund by US Unwired, or (iii) five (5)
business days after the occurrence of the event giving rise to the recomputation
if such event will not result in the payment of additional tax (such as due to
subsequent year carrybacks) or the receipt of a refund (such as where the amount
is offset or credited against other taxes) by US Unwired. The Parties recognize
that the resulting tax liability of IWO or US Unwired as recomputed is not
necessarily its final tax liability and that there may be additional
recomputations. Payments by US Unwired to IWO under this Section 3A shall not
exceed the amount of prior payments under this Agreement by IWO to US Unwired.
B. If there is any change of or adjustment to any item
relating to the computation of payments under this Agreement of a type not
provided for in Section 3.A above (such as a recomputation of amounts due
hereunder to reflect a carryback of an item of loss or credit, or a correction
of any erroneous calculation previously made hereunder), then the Parties hereto
shall make such payments to each other in such manner and at such time as shall
be determined in accordance with the principles of Section 3.A of this
Agreement.
4. TAX AUDITS
A. US Unwired shall have the right to control any audit or
administrative or court proceeding relating to Consolidated Taxes for taxable
periods of IWO which end on or before the Effective Date and to employ counsel
of its choice at its expense, but IWO shall have the right to participate in
such audit or proceeding at its own expense.
B. US Unwired and IWO jointly shall represent the interests of
IWO in any audit or administrative or court proceeding relating to Consolidated
Taxes for any taxable period of IWO which includes (but does not begin or end
on) the Effective Date.
C. IWO shall have the sole right to represent the interests of
IWO in all audits or administrative or court proceedings relating to taxes not
related to a Consolidated Taxes.
D. The Parties agree to cooperate with each other in connection
with the defense, negotiation or settlement of any proceeding. US Unwired agrees
not to settle or resolve any audit or proceeding solely concerning IWO without
the consent of IWO, which consent shall not be unreasonably withheld.
E. Any disputes regarding the conduct, settlement or resolution
of any audit or proceeding shall be resolved pursuant to Section
5 hereof.
5. DISPUTE RESOLUTION. In the event that US Unwired or IWO
disputes the application or interpretation of any provision of Sections 2,
3 or 4 hereof, or
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the amount or calculation of Taxes, if any, owed by such Party thereunder, such
Party shall deliver to the other a statement setting forth, in reasonable
detail, the nature of and dollar amount of any disagreement so asserted. The
Parties shall attempt in good faith to resolve such dispute within fifteen (15)
days following the commencement of such dispute. If the Parties are unable to
resolve such dispute within such twenty (20) day period, the dispute shall be
resolved by a mutually acceptable accounting expert or firm employing
independent public accountants (the "Accounting Referee"). The Accounting
Referee shall determine, only with respect to the specific disagreements
submitted in writing by US Unwired and IWO, the manner in which such item or
items in dispute should be resolved; PROVIDED, HOWEVER, that the dollar amount
of any such item or items shall be determined within the range of dollar amounts
proposed by US Unwired, on the one hand, and IWO, on the other hand. The
Accounting Referee shall be directed to make such determination promptly, but in
no event later than twenty (20) days after acceptance of its appointment. Any
finding by the Accounting Referee shall be a reasoned award stating the findings
of fact and conclusions of law (if any) on which it is based, shall be final and
binding upon the Parties and shall be the sole and exclusive remedy between the
Parties regarding the disputed items so presented. The fees and expenses of the
Accounting Referee shall be shared by US Unwired and IWO in proportion to each
party's respective liability for Taxes which are the subject of the dispute as
determined by the Accounting Referee, and the Parties shall otherwise bear their
own expenses incurred in any dispute resolution pursuant to this Section 5.
6. NOTICES. Any notice, request, or demand required or permitted
to be provided under this Agreement, in order to be effective, shall be in
writing (including, without express or implied limitation, by facsimile
transmission), and, unless otherwise expressly provided herein, shall be deemed
to have been duly given or made when actually delivered or, in the case of
notice by facsimile transmission, when received and telephonically confirmed,
addressed as follows:
If to IWO: IWO Holdings, Inc.
00 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
If to US Unwired: US Unwired Inc.
000 Xxxxxxxxx Xxxxx
Xxxx Xxxxxxx, XX 00000
7. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF LOUISIANA, WITHOUT GIVING EFFECT
TO THE PROVISIONS, POLICIES OR PRINCIPLES THEREOF RELATING TO CONFLICT OF LAWS.
8. WAIVER OF JURY TRIAL. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE TO A JURY TRIAL WITH RESPECT TO ANY CAUSE OF ACTION RELATING
TO THIS AGREEMENT.
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9. CERTAIN RULES OF CONSTRUCTION. The Parties hereto hereby agree
that the provisions of this Agreement have been negotiated by sophisticated
parties. No provision of this Agreement shall be interpreted in favor of, or
against, any Party hereto by reason of the extent to which such Party or its
counsel participated in the drafting thereof or by reason of the extent to which
any such provision is inconsistent with any prior draft hereof or thereof or by
reason of any fiduciary or other relationship between the Parties.
10. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
of the Parties with respect to the subject matter hereof and supersedes all
prior oral and written agreements relating to the subject matter of this
Agreement.
11. NO THIRD-PARTY BENEFICIARIES. The Parties acknowledge that this
Agreement is not intended to make any persons or entities third-party
beneficiaries of this Agreement.
12. NO WAIVER FOR FAILURE TO ACT. A failure or a delay by a Party to
this Agreement in exercising any right under this Agreement will not constitute
a waiver of the right. In addition, a single or partial exercise of a right
under this Agreement will not constitute a waiver of any other right relating to
this Agreement.
13. MODIFICATIONS AND AMENDMENTS. This Agreement may not be altered,
modified, or amended, except by a written agreement signed by all the Parties
including the Party sought to be charged with such alteration, modification, or
amendment.
14. ADDITIONAL INSTRUMENTS AND ACTS. The Parties agree to execute any
additional instruments and to perform any additional acts that may become
necessary to effectuate the purposes of this Agreement.
15. CAPTIONS AND HEADINGS. Captions and headings in this Agreement
are employed for convenience of reference and shall not affect the construction
of any provision.
16. COUNTERPARTS. This Agreement may be signed in several
counterparts, each of which shall be deemed an original.
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IN WITNESS WHEREOF, the Parties hereto, being duly authorized, have
duly executed this Agreement as a binding contract as of the day and year first
above written.
IWO HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Secretary
INDEPENDENT WIRELESS ONE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Secretary
INDEPENDENT WIRELESS ONE LEASED
REALTY CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Secretary
US UNWIRED INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Secretary
