Exhibit 10(i)(4)
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OPERATING AGREEMENT
of
CINCINNATI XXXX WIRELESS, LLC
between
AT&T WIRELESS PCS INC.
and
CINCINNATI XXXX WIRELESS COMPANY
Dated as of December 31, 1998
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OPERATING AGREEMENT OF
CINCINNATI XXXX WIRELESS, LLC
OPERATING AGREEMENT, dated as of December 31, 1998 (the "Effective
Date"), by and between AT&T Wireless PCS Inc., a Delaware corporation ("AT&T
PCS"), and an indirect wholly owned subsidiary of AT&T Corp., a New York
corporation ("AT&T"), and Cincinnati Xxxx Wireless Company, an Ohio corporation
("CBW"), and a wholly owned subsidiary of Cincinnati Xxxx Inc., an Ohio
corporation ("CBI").
WHEREAS, AT&T and CBI have a long standing business relationship
covering the provision of various goods and services by one party to the other
party, and AT&T and CBI may expand their relationship to include developing and
marketing a wide range of telecommunications related services (including local,
long distance and bundled services), both within and outside the Cincinnati,
Ohio area; and
WHEREAS, it is becoming increasingly important to provide 7wireless
communications services in the Territory (as hereinafter defined) and to
integrate such services with similar services on a national basis;
WHEREAS, AT&T PCS and CBW have concluded that it will be in their best
interests, and the best interests of the public, to form the Company (as
hereinafter defined) for the purpose of acquiring, owning, operating, managing,
maintaining, and constructing for profit a PCS System (as hereinafter defined)
in the Territory which shall conduct its operations under the "Approved Licensee
Marks" together with the "Licensed Marks" as set forth in the Network Membership
License Agreement executed by the Company and AT&T (so long as such Network
Membership License Agreement remains in effect), and, in furtherance thereof,
AT&T PCS and CBW wish to become Members (as hereinafter defined) in the Company;
WHEREAS, AT&T and its Affiliates have a nationwide wireless
telecommunications presence which can provide the Company with substantial
benefits and efficiencies of experience and resources through the arrangements
described herein and, it is the intention of the parties that the Company's PCS
System be operated as part of the AT&T national mobile wireless network; and
WHEREAS, CBW and its Affiliates have a presence in the Territory which
can provide the Company with substantial benefits and efficiencies of experience
and resources through the arrangements described herein.
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NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, it is hereby agreed as follows:
ARTICLE 1
GENERAL
1.1 Name. The name of the Company shall be Cincinnati Xxxx Wireless,
LLC.
1.2 Principal Place of Business. The Company's principal office and
place of business shall be located in greater Cincinnati, Ohio. The principal
office and place of business may be changed from time to time, and other offices
and places of business may be established from time to time, by the Member
Committee with notice to the Members.
1.3 Term. The term of the Company commenced on the Effective Date and
shall be perpetual.
1.4 Purpose and Powers.
(a) The purposes of the Company ("Purpose") are to:
(i) establish and conduct the Business;
(ii) enter into the Related Agreements to which the Company is a
party; and
(iii) do all things reasonably necessary or advisable in
connection with the above.
(b) (i) The Company shall have the power and authority to take any and
all actions necessary or advisable to or for the furtherance of the Purpose.
(ii) The Company and CBW on behalf of the Company, may enter into
the Related Agreements to which the Company is a party (and any other key
agreements the Company will execute at the closing) without any further act,
vote or approval of any Member or any Representative or the Member Committee
notwithstanding any other provision of this Agreement, the Act or other
applicable law. CBW is hereby authorized to enter into on behalf of the Company
the documents described in the immediately preceding sentence but such
authorization shall not be deemed a restriction on the power of the Member
Committee to authorize any other Person to enter into other documents on behalf
of the Company in accordance with this Agreement.
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(c) The foregoing provisions of this Section 1.4 shall not be
construed to authorize the Company to, and the Company shall not, and the
Members agree that the Company shall not, engage in any activities other than
the foregoing (and in particular expanding or changing the scope of the Business
beyond that contemplated by the definition thereof) without the consent of each
of the Members, which they may withhold in their sole discretion.
1.5 Filings. The Member Committee shall cause to be executed, filed
and published all such certificates, notices, statements or other instruments,
and amendments thereto under the laws of the State of Ohio and other applicable
jurisdictions as the Member Committee may deem necessary or advisable for the
operation of the Company and CBW, acting alone, shall be an authorized person
for the purpose of executing any such certificates, notices, statements or other
instruments. Notwithstanding the foregoing or any other provision of this
Agreement, the parties hereto authorize, ratify and direct CBW, as an authorized
person to execute, deliver and file the original articles of organization of the
Company with the office of the Secretary of State of the State of Ohio.
1.6 Sole Agreement. The parties intend that their obligations to each
other and the scope of their joint enterprise be as set forth in this Agreement
and the Related Agreements, and that no further authority to bind the other or
the Company or any liabilities to each other or any third party be inferred from
the relationships described in such agreements.
1.7 Definitions. Capitalized terms used in this Agreement without
other definition shall, unless expressly stated otherwise, have the meanings
specified in this Section 1.7.
"Act" means the Ohio Limited Liability Company Act, as amended from
time to time.
"Adjusted Capital Account Deficit" means, with respect to any Member,
the deficit balance, if any, in such Member's Capital Account as of the end of
the relevant fiscal year, after giving effect to the following adjustments:
(i) such Capital Account shall be deemed to be increased by any
amounts which such Member is obligated to restore to the Company (pursuant
to this Agreement or otherwise) or is deemed to be obligated to restore
pursuant to the second to last sentences of Treasury Regulation sections
1.704-2(g)(1) and 1.704-2(i)(5) (relating to allocations attributable to
nonrecourse debt); and
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(ii) such Capital Account shall be deemed to be decreased by the items
described in Treasury Regulation sections 1.704-1(b)(2)(ii)(d)(4), (5)
and (6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Treasury Regulation section 1.704-1(b)(2)(ii)(d)
and shall be interpreted and applied consistently therewith.
"Adopted Service Features" means the features set forth on Schedule
6.12 and additional service features that are adopted by the Company's PCS
System in accordance with the terms of Section 6.12.
"Affiliate" means, when used with reference to a specified Person, (i)
any Person that directly or indirectly controls or is controlled by or is under
common control with the specified Person, and (ii) any Person that is an officer
or director of, a general partner in or a trustee of, or serves in a similar
capacity with respect to, the specified Person or any Person described in clause
(i) or of which the specified Person or any Person described in clause (i) is a
director, officer, general partner or trustee, or with respect to which the
specified Person or any Person described in clause (i) serves in a similar
capacity; provided, that the Company shall be deemed not to be an Affiliate of
any of the Members or any of their respective Affiliates, and none of the AT&T
PCS Member Group shall be deemed to be an Affiliate of any of the CBW Member
Group. For purposes of this definition, the term "control" (including the terms
"controlling," "controlled by" and "under common control with") of a Person
means the possession, direct or indirect, of the power to (i) vote 50% or more
of the voting securities of such Person or (ii) direct or cause the direction of
the management and policies of such Person, whether by contract or otherwise.
"Agreement" means this Operating Agreement, as amended, modified,
supplemented or restated from time to time.
"Agents" is defined in Section 6.6.
"AT&T" is defined in the first paragraph hereof.
"AT&T PCS" is defined in the first paragraph hereof.
"AT&T PCS Member Group" means AT&T PCS and its Affiliates and any
other Persons that are admitted as Members in accordance with Article 7 upon the
transfer of an Interest or portion thereof originally owned by a Member of the
AT&T PCS Member Group.
"Bankruptcy" means with respect to any Member:
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(i) the filing by such Member of a voluntary petition seeking
liquidation, dissolution, reorganization, rearrangement or readjustment, 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
Member's filing an answer consenting to, or acquiescing in any such petition;
(ii) the making by such Member of any assignment for the benefit of
its creditors, or the admission by such Member in writing of its inability to
pay its debts as they mature;
(iii) the expiration of 120 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 Member, 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 120 day period; or
(iv) the entry of an order for relief against such Member under Title
11 of the United States Bankruptcy Code.
The foregoing is intended to supersede and replace the events listed in Section
1705.15(c) of the Act.
"Book Value" means, with respect to any asset of the Company, the asset's
adjusted basis as of the relevant date for federal income tax purposes except as
follows:
(i) the initial Book Value of any asset contributed by a Member to the
Company shall be the Fair Market Value of such asset, as determined by the
contributing Member and the Company with the concurrence of the Members other
than the contributing Member;
(ii) the Book Values of all Company assets (including intangible
assets such as goodwill) shall be adjusted to equal their respective Fair Market
Values as 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
other than pursuant to Section 2.2(c)(i);
(B) the distribution by the Company to a Member of more than a de
minimis amount of Company property other than money, whether in
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liquidation of the Company or otherwise, or a distribution in complete
liquidation of the Interest of a Member; provided that in connection with a
distribution other than in liquidation of the Company, only the Book Value of
the distributed asset shall be adjusted if the Member Committee determines that
such adjustment will be sufficient to reflect the relative Interests of the
Members; and
(C) the termination of the Company for federal income tax
purposes pursuant to Code section 708(b);
(iii) the Book Value of any Company asset distributed to any Member
shall be the Fair Market Value of such asset 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
Section 3.3.
The foregoing definition of Book Value is intended to comply with the provisions
of Treasury Regulation section 1.704-1(b)(2)(iv) and shall be interpreted and
applied consistently therewith.
"Business" means the business of (a) owning, constructing and
operating a system to provide Company Communications Services, using the PCS
frequencies licensed to the Company for Commercial Mobile Radio Services and
contributed to the Company by AT&T PCS pursuant to Section 2.2, in the
Territory, (b) marketing and providing such Services to resellers and end-users
solely within the Territory, (c) providing in connection with such Company
Communications Services, the Adopted Service Features as well as other mobile
and portable communications services in the Territory and local exchange
services provided by CBI and its Affiliates, in each case obtained by the
Company as a reseller or provided by others but combined in a joint offering by
the Company with its Company Communications Services and, with the consent of
all of the Representatives on the Member Committee, providing other voice,
messaging and data communications services and (d) owning and operating retail
stores that offer for sale such services and related equipment. The activities
described in clauses (a) and (b) shall be the indispensable requisite, and
primary business, of the Company.
"Capital Account" is defined in Section 2.1(a).
"CBI" is defined in the first paragraph hereof.
"CBI Cellular Interest" and "CBI Cellular Interest Trust" have the
meanings assigned such terms in the Organizational Agreement.
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"CBW" is defined in the first paragraph hereof.
"CBW Member Group" means CBW and its Affiliates and any other Persons
that are admitted as Members in accordance with Article 7 upon the transfer of
an Interest or portion thereof originally owned by a Member of the CBW Member
Group.
"Claim" is defined in Section 9.3(a).
"Closing" is defined in Section 7.3(d).
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Company" means Cincinnati Xxxx Wireless, LLC.
"Company Communications Services" shall mean mobile wireless
telecommunications services (including the transmission of voice, data, image or
other messages or content) provided solely within the Territory, initiated or
terminated using TDMA and frequencies licensed by the FCC, to or from subscriber
equipment that is capable of usage during routine movement throughout the area
covered by a cell site and routine handing-off between cell sites, and is either
intended for such usage or is temporarily fixed to a specific location on a
short-term basis (e.g., a bank of wireless telephones temporarily installed
during a special event of limited duration). Company Communications Services
shall also include the transmissions between the Company's cell sites and the
Company's switch or switches in the Territory, handing-off transmissions at the
Company's switch or switches for termination by other carriers, and receiving
transmissions to the Company's customers handed-off at the Company's switch or
switches.
"Company Minimum Gain" means the aggregate of the amounts of gain, if
any, determined for each nonrecourse liability of the Company, that would be
realized by the Company for federal income tax purposes if it disposed of the
Company property subject to such liability in a taxable transaction in full
satisfaction thereof and for no other consideration. To the extent the foregoing
is inconsistent with Treasury Regulation section 1.704-2(d) or incomplete with
respect to such regulation, Company Minimum Gain shall be computed in accordance
with such regulation.
"Confidential Information" means all documents and information
(including without limitation, commercial information and information with
respect
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to customers and proprietary technologies or processes and the design and
development of new products or services) concerning the Company, the PCS Systems
in which the Company has an ownership interest, the Members or their Affiliates
furnished to a Member or its Affiliate in connection with the transactions
leading up to and contemplated by this Agreement and the other Related
Agreements and the operation of the Company which is (i) not otherwise in the
public domain, (ii) not otherwise in the rightful possession of such Member (or
Affiliate) from third parties having no obligation of confidentiality to the
other Member or the Company and (iii) not required to be disclosed by such
Member, its Affiliates or agents pursuant to Federal, state or local law.
"Conflict Transaction" means (a) any transaction or agreement between
the Company, on the one hand, and any Member Group or its Affiliates on the
other hand, (b) any other matter involving the Company with respect to which a
Member Group or its Affiliates may have interests that differ in a material
respect from the interests of the Company (because of other activities of such
Member Group or Affiliates, or otherwise), including, without limitation, (x)
transfer pricing, (y) cost and profit sharing, and (z) the allocation of
revenues and costs to the Company's products and services when offered in
combination with other products or services provided by any Member Group or its
Affiliates or the setting of the price, terms and conditions of the sale of the
Company's products and services when such sale depends on the customer's
separate purchase or separate use of products or services provided by any Member
Group or its Affiliates, provided that the exercise of rights under Section 6.8
shall not constitute Conflict Transactions and (c) any other matter in which the
Company is treated in a manner materially less favorable than any other business
unit controlled directly or indirectly by CBI or an affiliate of CBI.
"Deemed Compliance Period" shall have the meaning assigned in the
Network Membership License Agreement.
"Depreciation" means, for each fiscal year or part thereof, an amount
equal to the depreciation, amortization, or other cost recovery deduction
allowable for federal income tax purposes with respect to an asset for such year
or other period, except that if the Book Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such year,
Depreciation shall be an amount which bears the same ratio to such Book Value as
the federal income tax depreciation, amortization or other cost recovery
deduction for such year bears to such adjusted tax basis; provided that if the
federal income tax depreciation, amortization or other cost recovery deduction
for such year is zero, Depreciation shall be determined with reference to such
Book Value using any reasonable method selected by the Member Committee, subject
to any applicable legal regulations.
"Disallowed Transferee" means until the 10th anniversary hereof, any
of the five largest United States interexchange carriers in terms of
interexchange revenue, which, for the first five years of this Agreement, shall
be deemed to include
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MCI/Worldcom, Sprint, Frontier, Excel and LCI and their successors, and until
the 3rd anniversary hereof, any Regional Xxxx Operating Company, or SNET, or in
any such case, any of their respective Affiliates, successors or assigns.
"Distributable Cash" means, as of the end of any fiscal period, the
excess of the cash and cash equivalents held by the Company and its Subsidiaries
over the aggregate amount of any reserves established by the Member Committee
(in accordance with sound business practice) to fund the Company's reasonably
anticipated cash requirements.
"Effective Date" means 11:59:59 pm (Eastern Standard Time) of the date
set forth in the first paragraph of this Agreement.
"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, each being apprised of all relevant facts and neither
acting under compulsion, such asset in an arm's-length negotiated transaction
with an unaffiliated third party without time constraints. Without limiting the
foregoing, the Fair Market Value of any Interest shall be the Fair Market Value
of the Company as a whole multiplied by the percentage Interest in the Company
such Interest represents.
"FCC" means the Federal Communications Commission or any successor
agency or entity performing substantially the same functions.
"GAAP" means generally accepted accounting principles as used by the
Financial Accounting Standards Board and/or the American Institute of Certified
Public Accountants.
"Governmental Authority" means a national, state, provincial, county,
city, local or other governmental or regulatory body or authority, whether
domestic or foreign.
"Indemnified Person" is defined in Section 9.1(b).
"Interest" means the entire legal and equitable ownership interest of
a Member in the Company, including the percentage interest of a Member (or a
permitted assignee 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 to which such Member (or its permitted
assignee) is entitled, and the right of a Member to exercise governance rights
with regard to the Company (including the right to appoint Representatives to
the Member Committee).
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"License" means with respect to the PCS System, all final permits,
licenses, waivers, and authorizations (including, without limitation, licenses
issued by the FCC) that are necessary to conduct the operations of such PCS
System in the manner in which such operations are currently contemplated, or may
in the future be contemplated by the Company, to be conducted.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest, right of first refusal or right of others therein, or
encumbrance of any nature whatsoever in respect of such asset.
"Liquidator" is defined in Section 8.3(b).
"Majority in Interest" means, with respect to any matter, any
combination of Members whose aggregate Interests are greater than 50% of the
aggregate Interests of those Members entitled to vote or otherwise make any
determination in respect of such matter.
"Managing Member" means AT&T PCS in the case of the AT&T PCS Member
Group and CBW in the case of the CBW Member Group, or such other Members that
from time to time may be designated by the Members of the AT&T PCS Member Group
or CBW Member Group, respectively. Such Persons shall not constitute "managers"
(within the meaning of the Act) of the Company.
"Member" means, initially, AT&T PCS, CBW and/or any Person who, at the
time of the reference thereto, has been admitted to the Company as a Member in
accordance with the terms of this Agreement and has not ceased to be a Member
hereunder, in such Person's capacity as a member (within the meaning of the Act)
of the Company.
"Member Committee" is defined in Section 6.1.
"Member Group" means the AT&T PCS Member Group and/or the CBW Member
Group.
"Member Minimum Gain" means an amount, with respect to each Member
nonrecourse debt, equal to the Company Minimum Gain that would result if such
Member nonrecourse debt were treated as a nonrecourse liability, determined in
accordance with Treasury Regulation section 1.704-2(i).
"Member Nonrecourse Debt" has the meaning ascribed to the term
"partner nonrecourse debt" in Treasury Regulation section 1.704-2(b)(4), and
generally means any 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).
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"Member Nonrecourse Deduction" has the meaning ascribed to the term
"partner nonrecourse deduction" in Treasury Regulation section 1.704-2(i)(2).
The amount of the Member Nonrecourse Deductions with respect to a Member
Nonrecourse Debt for a Company fiscal year equals the net increase, if any, in
the amount of Member Minimum Gain attributable to such Member Nonrecourse Debt
during that fiscal year, reduced (but not below zero) by the aggregate amount of
any distributions during that fiscal year to the Member that bears the economic
risk of loss for such Member Nonrecourse Debt to the extent such distributions
are from the proceeds of such Member Nonrecourse Debt and are allocable to an
increase in Member Minimum Gain attributable to such Member Nonrecourse Debt.
"Midwest Region" means Illinois, Indiana, Kentucky, Michigan and Ohio.
"Network Membership License Agreement" means the Network Membership
License Agreement, dated the date hereof, between AT&T and the Company and any
successor agreement entered into between AT&T and the Company.
"Nonrecourse Deductions" has the meaning set forth in Treasury
Regulation section 1.704-2(c). The amount of Nonrecourse Deductions for a fiscal
year equals the net increase, if any, in the amount of Company Minimum Gain
during that fiscal year, reduced (but not below zero) by any Nonrecourse
Distributions during such year.
"Nonrecourse Distributions" means the aggregate amount, as determined
in accordance with Treasury Regulation section 1.704-2(c), of any distributions
during the fiscal year of proceeds of a nonrecourse liability, as defined in
Treasury Regulation section 1.704(b)(3), that are allocable to an increase in
Company Minimum Gain.
"Offer" is defined in Section 7.3(a).
"Offer Notice" is defined in Section 7.3(b).
"Offered Interest" is defined in Section 7.3(a).
"Offeror" is defined in Section 7.3(a).
"Organizational Agreement" means the Organizational Agreement, dated
February 2, 1998 between AT&T PCS and CBI, as amended from time to time.
"PCS" shall mean personal communications services as defined by 47 CFR
24.
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"PCS System" shall mean the transmitters and related equipment
required for the provision of Company Communications Services, as defined by 47
CFR 24 (provided that no use of this term shall be interpreted to grant to the
Company ownership of or control over any assets owned by AT&T PCS or its
Affiliates other than the assets among the Cincinnati PCS Assets and
Liabilities).
"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
Code section 703(a) (for this purpose, all items of income, gain, loss and
deduction required to be stated separately pursuant to Code section 703(a)(1)
shall be included in taxable income or loss) with the following adjustments:
(i) any income of the 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 Code section
705(a)(2)(B) or treated as such pursuant to Treasury Regulation section
1.704-1(b)(2)(iv)(i) shall be subtracted from such taxable income or loss;
(iii) in lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable income or
loss, Depreciation for such fiscal year shall be taken into account;
(iv) if the Book Value of any Company asset is adjusted pursuant to
clause (ii) or clause (iii) of the definition of Book Value, the amount of
such adjustment shall be taken into account as gain or loss from the
disposition of such asset for purposes of computing Profits or Losses; and
(v) 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)(iii) (to comply with Treasury Regulation under Code section 704(b)),
Section 3.3 or Section 3.4.
"Related Agreements" means this Agreement, the Organizational
Agreement ; the Interim Management Agreement entered into between AT&T Wireless
PCS Inc., and Cincinnati Xxxx Wireless Company, on February 2, 1998; and the
Cellular Business Interest Trust entered into by Cincinnati Xxxx Inc. on April
1, 1998; and the following other agreements (entered into by any two or more of
the following parties: AT&T Corp., AT&T Wireless PCS Inc., AT&T Wireless
Services,
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Inc., Cincinnati Xxxx Inc., Cincinnati Xxxx Wireless Company and/or Cincinnati
Xxxx Wireless, LLC) and known as either the Assignment and Assumption Agreement,
the CBI Service Xxxx License Agreement, Data Connection Agreement, the Interim
Services Master Agreement, the Letter of Agreement for the Provision of Long
Distance Voice and Data Services, the Indemnification Agreement, the
Intercarrier Roamer Service Agreement, the National Account Carrier Agreement,
the Network Management Agreement, the Non-Disclosure Agreement, the Resale
Agreement, the Roaming Administration Service Agreement and all other agreements
entered into on or prior to the Closing Date in connection with the transactions
contemplated by this Agreement and the Organizational Agreement.
"Representative" is defined in Section 6.1(a).
"Section 7.2 Transferee" is defined in Section 7.2.
"Selling Group" is defined in Section 7.3(a).
"Significant Event" means any of the following:
(i) any Super Majority Event;
(ii) adoption of any budget, subsequent business plan, marketing plan,
financial plan, operational plan, technical plan, Company communication
plan, strategic plan or any other material plan, policy, or strategy which
is expected to affect the operations of the Company;
(iii) proposed mergers with or acquisitions of other businesses or
entities;
(iv) hiring or firing of any key personnel for the Company's Business;
(v) approval of material contracts;
(vi) commencing or prosecuting any material claim in a judicial
proceeding or arbitration forum, or settling any such claim against the
Company;
(vii) approval of additional calls for capital contributions;
(viii) any transaction or series of transactions or other activities
which, if carried out, could reasonably be expected to include in the range
of possible results financial performance of the Company materially
diverging from the then current budget or business or other plan of the
Company; or
(ix) incurrence of indebtedness for borrowed money.
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"Subsidiary" means, any Person, or any other Person of which at least
50% of equity interests are owned, directly or indirectly, through one or more
intermediaries, or both, by such Person.
"Super Majority Event" means any of the following:
(i) sale, lease, conveyance, license, exchange, transfer or other
disposition of all or substantially all of the Company's assets or of any
asset that can be reasonably expected to have a material adverse impact on
the Business or the ability of the Company to provide Company
Communications Services;
(ii) a merger or consolidation of the Company with another Person or
direct or indirect purchase or acquisition of another Person;
(iii) substantial elimination of retail distribution by the Company of
its services;
(iv) approval of capital expenditures, capital loan commitments or
other expenditures in excess of $5 million annually in the aggregate not
previously approved by the Member Committee as part of the Company's
current budget or business plan;
(v) Conflict Transactions involving (x) transactions in excess of
$250,000 in a single transaction or series of related transactions, (y) the
matters described in clause (b)(z) of the definition of Conflict
Transaction in excess of $250,000 of revenue in a calendar year, or (z) any
matter in which CBW is required by applicable law or regulation to charge
an amount for services in excess of the lesser of the amount set forth in
clauses (x) or (y) of Section 6.11(c)(iv) to the extent such transactions
in the aggregate exceed $250,000 in a given calendar year. The Company will
provide the Member Committee a detailed list of all such transactions;
(vi) issuance by the Company of any Interests to any Person, other
than Members who are Wholly-Owned Subsidiaries of AT&T or CBI;
(vii) appointment of an investment banking firm or accounting firm in
accordance with Sections 2.2(b)(iv) and 7.7 hereof;
(viii) amendment or voluntary termination by the Company of any
Related Agreement;
(ix) any decision that the Company's financial statements for any
fiscal year shall not be audited;
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(x) expanding or changing the scope of the Business;
(xi) effecting any transaction, agreement or arrangement which has or
could reasonably be expected to have the effect of materially impairing or
materially limiting the ability of (x) subscribers to cellular Systems and PCS
systems in which AT&T PCS or its Affiliates have an ownership interest to
utilize the Company's PCS System for roaming, or (y) AT&T PCS or its Affiliates
to resell wireless service on the Company's PCS System, provided that the
foregoing shall not be construed to require the Company to make the election
described in Section 6.12(g); or
(xii) a binding agreement to do any of the foregoing.
"Tax Matters Partner" is defined in Section 5.5(d).
"TDMA " shall mean the North American Time Division Multiple Access
standard set by the Cellular Telecommunications Industry Association, IS-54/136,
and any standard that is based upon, or is an upgrade from, or is a successor
to, such standard, if and only if such new or upgraded standard is (i) adopted
by AT&T PCS and its Affiliates in markets representing a majority of the
population they serve in the Midwest Region, (ii) technologically compatible in
all material respects with the standard then being used in such region
(including without limitation for the purpose of facilitating roaming, hand-off
and automatic call delivery between systems), and the User Interface in PCS
Systems using such new or upgraded standard will not differ from the User
Interface in such region in a manner that would be material to customers, or
(iii) is approved in writing by AT&T.
"Territory" means the Cincinnati and Dayton Basic Trading Area as
defined in FCC rules at 47 CFR Section 24.202.
"Treasury Regulations" means regulations issued by the Treasury
Department pursuant to the Code.
"User Interface" shall mean the process, functional commands, and look
and feel by which a mobile wireless telecommunications service subscriber
operates and utilizes the mobile wireless telecommunications services and
service features provided by a PCS system, including the sequence and detail of
specific commands or service codes, the detailed operation and response of
subscriber equipment to the sequence of keys pressed to effect subscriber
equipment function, the response of subscriber equipment to the activation of
these keys or signals or data from the PCS system, the manner in which
information is displayed on the screen of subscriber equipment, and the use of
announcement tones and messages.
15
"Wholly Owned Subsidiary" means, as to any Person, a Subsidiary all of
the equity interests of which are owned, directly or indirectly, through one or
more intermediaries, or both, by such Person.
1.8 Registered Office; Registered Agent. The address of the registered
office of the Company in the State of Ohio shall be 000 X. Xxxxxx Xxxxxx,
Xxxx,000-0000 Xxxxxxxxxx, XX 00000 or such other address as the Member Committee
may determine. The registered agent for service of process on the Company in the
State of Ohio shall be Corporation Service Company, or such other agent as the
Member Committee may determine.
ARTICLE 2
CAPITALIZATION
2.1 Capital Accounts.
(a) Establishment. A separate capital account ("Capital Account") is
hereby established for each Member as of the Effective Date.
(b) General Rules for Adjustment of Capital Accounts. The Capital
Account of each Member shall be:
(i) increased by:
(A) the aggregate amount of such Member's cash contributions
to the Company;
(B) the initial Book Value of property contributed by such
Member to the Company, net of liabilities secured by such property
that the Company is considered to assume or take subject to under Code
section 752 and Treasury Regulations thereunder; and
(C) such Member's distributive share of Profits and items of
income and gain allocated to such Member pursuant to Section
2.1(c)(iii) or Section 3.3; and
(ii) decreased by:
(A) cash distributions to such Member from the Company;
(B) the Book Value of property distributed in kind to
16
such Member, net of liabilities secured by such property that such
Member is deemed to assume or take subject to under Code section 752
and Treasury Regulations thereunder; and
(C) such Member's distributive share of Losses and items of
loss or deduction allocated to such Member pursuant to Section
2.1(c)(iii) or Section 3.3.
(c) Special Rules.
(i) Time of Adjustment for Capital Contributions. For purposes of
computing the balance in a Member's Capital Account, no credit shall be
given for any capital contribution which such Member is obligated to make
until such contribution is actually made.
(ii) Capital Account for Transferred Interest. If any Interest in
the Company or part thereof is transferred in accordance with the terms of
this Agreement, the transferee shall succeed to the Capital Account of the
transferor to the extent it relates to the transferred Interest.
(iii) Intent to Comply with Treasury Regulations. The foregoing
provisions and the other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Treasury
Regulation section 1.704-1(b), and shall be interpreted and applied in a
manner consistent with such regulation. To the extent such provisions 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.
2.2 Capital Contributions.
(a) On the date hereof, (i) AT&T PCS is contributing to the Company
all right, title and interest in and to 20 MHz of its A Block FCC Radio Station
Authorization to provide Commercial Mobile Radio Services in the Territory
bearing call sign (prior to contribution) KNLF 235 and the Cincinnati PCS Assets
and Liabilities (as hereinafter defined), which the Members have agreed have a
combined value of $26.4 million plus an accretion thereon at the rate of 10% per
annum from February 2, 1998 through the date hereof; (ii) CBW is contributing to
the Company an amount in cash equal to $105.6 million plus an accretion thereon
at the rate of 10% per annum from February 2, 1998 through the date hereof and
the CBW Assets and
17
Liabilities (as hereinafter defined), and (iii) the Company is accepting such
contributions and assuming the Cincinnati PCS Assets and Liabilities and the CBW
Assets and Liabilities (as hereinafter defined).
(A) As used herein, "Cincinnati PCS Assets and Liabilities"
means all of the assets acquired and liabilities incurred by AT&T PCS or its
Affiliates through and including the date hereof solely in connection with the
Business proposed to be conducted by the Company (other than the costs of
negotiation and execution of this Agreement and the Related Agreements), but not
including (i) the excluded assets and (ii) those assets and liabilities which
relate to the Business proposed to be conducted by the Company but which also
relate to or are involved in the continuing business of AT&T PCS or its
Affiliates. Such liabilities include three promissory notes, each of which were
issued by AT&T PCS to AT&T Wireless Services, Inc. and are being assumed by the
Company, bear interest at the rate of 10% per annum from and after February 2,
1998, and are payable on demand: (x) one for $78 million, (y) one for $27.6
million, and (z) one in the amount, by which the total amount invested by AT&T
PCS and its Affiliates through and including the date hereof and relating
directly to the Business proposed to be conducted by the Company (including
capital expenditures, out-of-pocket operating expenses and cost allocations less
revenues and excluding the cost of the Radio Station Authorization itself and
the costs of negotiation and execution of this Agreement and the Related
Agreements) exceeds $78 million (the "Third Note Amount").
(B) The parties acknowledge that, for the purposes of
determining the outstanding principal balance of the Third Note as of the date
hereof, AT&T PCS has made a good faith estimate of the Third Note Amount. AT&T
PCS shall have ninety (90) days from the date hereof to submit to the Company
and CBI an adjustment to its estimate of the Third Note Amount. AT&T PCS shall
permit the Company and CBI's outside auditors to perform an audit of the
adjusted Third Note Amount. Following the conclusion of such audit, the Parties
shall determine the Third Note Amount and the parties shall make such
adjustments as may be appropriate including interest on such adjustments,
provided that if the Parties are unable to agree thereon, the matter shall be
resolved pursuant to Section 6.10.
(C) As used herein, the "CBW Assets and Liabilities" means
all of the assets acquired and liabilities incurred by CBW or its Affiliates
through and including the date hereof solely in connection with the Business
proposed to be conducted by the Company (other than the costs of negotiation and
execution of this Agreement and the Related Agreements), but not including those
assets and liabilities which relate to the Business proposed to be conducted by
the Company but which also relate to or are involved in the continuing business
of CBW or its Affiliates. Such liabilities include a promissory note (the
"Fourth Note") which will bear interest at a rate of 10% per annum from and
after February 2, 1998, is payable
18
on demand, and will be in the amount invested by CBW or its Affiliates through
and including the date hereof and relating directly to the Business proposed to
be conducted by the Company ("Fourth Note Amount").
(D) The parties acknowledge that, for purposes of
determining the outstanding principal balance of the Fourth Note as of the date
hereof, CBW has made a good faith estimate of the Fourth Note Amount. CBW shall
have ninety (90) days after the date hereof to submit to the Company and AT&T
PCS an adjustment to its estimate of the Fourth Note Amount. CBW shall permit
Company and AT&T PCS' outside auditors to perform an audit of the adjusted
Fourth Note Amount. Following the conclusion of such audit, the Parties shall
determine the Fourth Note Amount and the Parties shall make such adjustments as
may be appropriate including interest on such adjustments, provided that if the
Parties are unable to agree thereon, the matter shall be resolved pursuant to
Section 6.10.
(b) (i) After the initial capital contributions described in paragraph
(a) above and until the second anniversary of the date hereof, the capital
requirements of the Company shall be funded by borrowing by the Company,
provided that if the Company is not able to borrow at rates not more than 2% per
annum higher than the higher of the rates available to AT&T or CBI, the Member
Committee shall have the right to call for additional capital contributions
unless AT&T agrees to participate (in proportion to its Interest) with CBI in
such guarantees or other security arrangements as may be required to enable the
Company to borrow at such rates. Thereafter, the Member Committee shall have the
right to call for additional borrowing or capital contributions (which call
shall be a condition to any Member's obligation to make any such additional
capital contribution). Such calls for capital contributions shall insofar as
practicable be in accordance with the Company's annual budget for the applicable
year, and shall be made no less than 60 days prior to the due date for any
contributions. Each Member Group shall have the right, but not the obligation,
to make its pro rata portion of any such capital contribution by delivering
written notice of its irrevocable determination to do so to the Company within
30 days of the written decision of the Member Committee to call for such capital
contribution or, if later, within 10 days of the Fair Market Value
determination. If any Member Group does not deliver such notice to the Company
or make such contribution, the other Member Group shall have the right to fund
all or part of the amount called for by the Member Committee as it determines in
its sole discretion. Such contributions, when made by a Member, shall be
credited to such Member's Capital Account as of the date paid.
(ii) Except as otherwise provided herein or as agreed by the
Members, all capital contributions shall be made by each Member pro rata in
proportion to its respective Interest and shall be made in exchange for
additional Interests representing a percentage interest in the Company equal to
a fraction, the numerator of which is the amount of such capital contribution
and the denominator of which is the Fair Market Value of the Company determined
after giving effect to such contribution; and the existing Interests shall be
reduced pro rata by the amount of
19
such additional Interests.
(iii) After giving effect to the capital contributions described
in Section 2.2(a) above, the Interest of the AT&T PCS Member Group shall be
19.9% and the Interest of the CBW Member Group shall be 80.1%, and so long as
each Member Group timely makes its pro rata contributions in accordance with
each capital call, the Interests of each Member Group shall remain at such
levels thereafter.
(iv) Whenever in connection with capital contributions to be made
pursuant to this Section 2.2 it is necessary to determine the Fair Market Value
of the Company, absent agreement by all Member Groups, Fair Market Value shall
be determined as follows: Each Member Group shall advise the other Member Groups
of its estimate of Fair Market Value no later than 10 days after the
determination by the Member Committee that further capital contributions are
necessary, and the Member Groups shall attempt in good faith to agree on such
Fair Market Value within five business days thereafter. If they are unable to do
so, the Member Committee shall appoint as promptly as practicable an investment
banking firm or accounting firm of recognized national standing to determine
such Fair Market Value and shall instruct such firm to make such determination
as promptly as practicable. Such determination shall be set forth in a writing
delivered to the Member Groups and shall be final and binding on the Member
Groups except in the case of fraud or manifest error. Within 10 days thereafter
each Member Group shall have the right to elect, by irrevocable notice given to
the other Members, to contribute its pro rata share of such required capital
contributions (or a greater share if any other Member Group elects not to
participate).
(c) In the event that a Member fails to make a capital contribution on
or prior to the due date required by the Member Committee (each date being
referred to hereafter as the "Due Date", and such defaulting Member being
referred to hereafter as a "Non-Contributing Member"), any one or more of the
other Members (the "Contributing Members") shall, by a vote of the Members who
hold a majority of the Interests of the Contributing Members, elect one of the
following alternatives:
(i) the Contributing Members may make the capital contribution or
payment required to have been made by both them and the Non-Contributing Member,
and such contribution shall be made in exchange for additional Interests,
representing a percentage interest in the Company equal to a fraction, the
numerator of which is the amount of such capital contribution or payment, as the
case may be, and the denominator of which is the lesser of (x) Book Value of the
Company's assets minus the Company's liabilities or (y) the Fair Market Value of
the Company (for purposes of clause (x) or clause (y), such amount to include,
in the case of a capital contribution, the amount of such contribution, and in
any case any other
20
capital contribution being made contemporaneously therewith) and the existing
Interests shall be reduced pro rata by the amount of such additional Interests;
or
(ii) the Contributing Members may instead (x) withdraw their
capital contribution, in which event the Company shall promptly return any such
contributions to such Members and, pending such return, the amount of such
contribution shall be deemed to be a demand loan from such Members to the
Company bearing interest at the rate of interest as described on Schedule 2.2
hereto, (y) convert such capital contribution into a loan in exchange for the
issuance to the Contributing Members of the Company's Senior Secured Notes on
the terms and conditions set forth on Schedule 2.2 and/or (z) loan the Company
an amount equal to the entire amount required to be contributed by the
Non-Contributing Members on the same terms as such Senior Secured Notes. Upon
such election, the Non-Contributing Member shall no longer have any right to
make such capital contribution or payment.
(d) No Member shall have the right to make any capital contributions
to the Company without the prior written consent of the Member Committee and
unless the opportunity to make such contribution has been extended to all
Members on the same terms.
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.
2.4 No Interest on Capital Account Balances. Except as expressly set
forth herein, no Member shall be entitled to receive any interest on its Capital
Account balance.
2.5 No Third Party Beneficiaries. The provisions of this Article 2 are
intended solely to benefit the Members and, to the fullest extent permitted by
applicable law, shall not be construed as conferring any benefit upon any
creditor of the Company (and no such creditor shall be a third party beneficiary
of this Agreement), and no Member shall have any duty or obligation to any
creditor of the Company to make up any capital contributions to the Company and
no Representative, Member or Member Committee shall have any duty or obligation
to any creditor of the Company to issue any call for capital pursuant to this
Article 2.
ARTICLE 3
PROFITS AND LOSSES
3.1 Profits. After giving effect to the special allocations set forth
in Section 3.3 and Section 3.4, Profits with respect to any fiscal year shall be
allocated to
21
the Members:
(a) First, to the extent of the excess of Losses allocated to them
pursuant to Section 3.2(b)(i) over Profits previously allocated to them under
this Section 3.1(a), in reverse order of such allocations; and
(b) The balance, in accordance with their respective Interests.
3.2 Losses.
(a) General Rule. After giving effect to the special allocations set
forth in Section 3.3 and Section 3.4, subject to Section 3.2(b), Losses with
respect to any fiscal year shall be allocated to the Members in accordance with
their respective Interests.
(b) Limitation. Losses allocated to any Member pursuant to Section
3.2(a) 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 3.2(b) shall be allocated: first, to
the Members that will not be subject to this limitation, ratably based on the
aggregate of their Interests, to the extent possible until such Members become
subject to this limitation; and any remaining amount, to the Members, ratably
based on their Interests, unless otherwise required by the Code or Treasury
Regulations.
3.3 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 3, if there is a net decrease in Company Minimum Gain during any
fiscal year, each Member shall, subject to the exceptions provided in Treasury
Regulation section 1.704-2(f), be specially allocated items of income and gain
for such fiscal year (and, if necessary, subsequent fiscal years) equal to such
Member's share of the net decrease in Company Minimum Gain within the meaning of
Treasury Regulation section 1.704-2(g)(2). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Member pursuant thereto. The items to be so allocated shall be
determined in accordance with Treasury Regulation Sections 1.704-2(6) and
1.704-2(i)(2). To the extent that this Section 3.3(a) is inconsistent with
Treasury Regulation Section 1.704-2(f), the Minimum Gain Chargeback provided for
herein shall be applied and interpreted in accordance with such Treasury
Regulation.
(b) Member Minimum Gain Chargeback. If there is a net decrease in
Member Minimum Gain attributable to a Member Nonrecourse Debt during any
22
Company fiscal year, within the meaning of Treasury Regulation sections
1.704-2(i)(3) and 1.704-2(k), each Member that, as of the beginning of such
year, has a share of the Member Minimum Gain attributable to such Member
Nonrecourse Debt, determined in accordance with Treasury Regulation section
1.704-2(i)(5), shall be specially allocated items of income and gain for such
fiscal year (and, if necessary, subsequent fiscal years) in an amount equal to
such Member's share of the net decrease in Member Nonrecourse Debt determined in
accordance with Treasury Regulation section 1.704-2(i)(4). Allocations pursuant
to the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Member pursuant thereto. The items to be so
allocated shall be determined in accordance with Treasury Regulation section
1.704-2(i)(4) and 1.704-2(i)(2). To the extent that this Section 3.3(b) is
inconsistent with Treasury Regulation section 1.704-2(i), the Member Minimum
Gain chargeback provided for herein shall be applied and interpreted in
accordance with such regulation.
(c) Qualified Income Offset. Subject to Section 3.3(a) and Section
3.3(b), notwithstanding anything herein to the contrary, but only if required by
Treasury Regulation section 1.704-1(b) in order for the allocations provided for
herein to be considered to have substantial economic effect or to be deemed to
be in accordance with the Member's Interests, if, for any fiscal year, a Member
unexpectedly receives an adjustment, allocation or distribution described in
Treasury Regulation sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), and such
adjustment, allocation or distribution causes or increases an Adjusted Capital
Account Deficit, 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 3.3(a) is
intended to comply with Treasury Regulation section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith.
(d) Nonrecourse Deductions. Nonrecourse Deductions shall be allocated
to the Members in accordance with their respective 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 which such
Member Nonrecourse Deductions are attributable in accordance with Treasury
Regulation section 1.704-2(i).
3.4 Curative Allocations. The allocations set forth in Sections 3.3(a)
through 3.3(e) are intended to comply with certain regulatory requirements under
Code Section 704(b). 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 3.3 or with special
allocations of other items of Company income, gain, loss, or deduction pursuant
to this Section
23
3.4. Accordingly, the Member Committee is hereby authorized and directed to make
offsetting allocations of Company income, gain, loss or deduction under this
Section 3.4 in whatever manner the Member Committee determines is appropriate so
that after such offsetting special allocations are made (and taking into account
the reasonably anticipated future allocations of income and gain pursuant to
Section 3.3(a) and Section 3.3(b)) the Capital Accounts of the Members are, to
the extent possible, equal to the Capital Accounts each would have if the
provisions of Section 3.3 were not contained in this Agreement and all income,
gain, loss and deduction of the Company were instead allocated pursuant to
Section 3.1 and Section 3.2.
3.5 Allocation of Credits. All tax credits shall be allocated among
the Members in accordance with their respective Interests or in accordance with
applicable provisions of the Code or Treasury Regulations to the extent any such
provision is inconsistent with such allocation.
3.6 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 Code section 704(c) and Treasury Regulation section 1.704-3 so
as to take account of any variation between the adjusted basis of such property
to the Company for federal income tax purposes and its initial Book Value. In
the event there is a 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
Member Committee shall agree on or before February 28, 1999, to apply pursuant
to Treasury Regulation section 1.704-3, the traditional method with curative
allocations or the remedial allocation method with respect to that property.
Such allocation method(s) shall be set forth on attached Schedule 3.6, as
amended from time to time.
(b) Revalued Property. If the Company assets are revalued as set forth
in the definition of "Book Value", subsequent allocations of income, gain, loss
and deduction with respect to revalued Company assets shall take into account
any variation between the adjusted basis of such assets for federal income tax
purposes and their adjusted value in the same manner as under Code section
704(c) and in compliance with Treasury Regulation section 1.704-3. All decisions
regarding the choice of allocation method under Treasury Regulation section
1.704-3 with respect to revalued Company assets shall be made by the Member
Committee, and reflected on Schedule 3.6, as amended from time to time.
(c) Effect. Allocations pursuant to this Section 3.6 are solely for
purposes of federal, state and local taxes and shall not affect, or in any way
be taken into account, in computing any Member's Capital Account or share of
Profits, Losses
24
or other items or distributions pursuant to any provision of this Agreement.
(d) Conformity of Reporting. The Members are aware of the income tax
consequences of the allocations made by this Section 3.6 and hereby agree to be
bound by the provisions of this Section 3.6 in reporting their shares of Company
gain, income, loss, deduction credits and other items for income tax purposes,
except in the case of fraud or manifest error.
3.7 Change in Member's Interests. In the event there is any change in
the Members' respective Interests during any fiscal year, Profits, Losses,
Nonrecourse Deductions and other items shall be allocated among the Members in
accordance with their respective Interests from time to time during such fiscal
year in accordance with Code section 706, using any convention permitted by law
and selected by the Member Committee.
ARTICLE 4
DISTRIBUTIONS
4.1 Distributable Cash. It shall be the policy of the Company, and the
Members shall direct their respective Representatives on the Member Committee to
cause the Company, to distribute Distributable Cash to the Members quarterly.
Any distributions of such Distributable Cash shall be made to the Members in
accordance with their respective Interests. Notwithstanding the foregoing or any
other provision of this Agreement to the contrary, the Company, and the Members,
Member Committee and Representatives on behalf of the Company, shall not be
required to make any distribution to any Member on account of such Member's
interest in the Company if such distribution would violate the Act or other
applicable law.
4.2 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 8.3(d)(ii).
4.3 Other Distributions. No Member shall be entitled to receive any
distribution from the Company without the consent of the Member Committee or as
otherwise provided in Section 4.1 or 8.3(d).
25
ARTICLE 5
ACCOUNTING AND RECORDS
5.1 Fiscal Year. The fiscal year of the Company shall be the year
ending December 31.
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 and distributions hereunder (including
distributions upon dissolution of the Company in accordance with Capital Account
balances as required by Section 8.3(d)(ii)), the relevant items shall be
determined in accordance with federal income tax accounting principles utilizing
the accrual method of accounting, with adjustments required by Treasury
Regulation section 1.704-1(b) to properly maintain Capital Accounts. Each Member
acknowledges that the Capital Account balances of the Members for the purposes
described in the preceding sentence are not computed in accordance with GAAP and
accordingly that any GAAP financial statements for the Company do not reflect
their true Capital Account balances.
5.3 Books and Records; Inspection.
(a) Books of Account and Records. Proper and complete records and
books of accounts of the Company business for tax and financial purposes,
including all such transactions and other matters as are usually entered into
records and books of account maintained by Persons engaged in businesses of like
character or as are required by law, shall be kept by the Company at the
Company's principal office and place of business. The Member Committee may
delegate to a third party or any Member the duty to maintain and oversee the
preparation and maintenance of such records and books of account. Books and
records maintained for financial purposes shall be maintained in accordance with
GAAP, and books and records maintained for tax purposes shall be maintained in
accordance with the Code and applicable Treasury Regulations.
(b) Inspection. All records and documents described in Section 5.3(a)
shall be open to inspection and copying by any of the Members or their
Representatives at any reasonable time during business hours. Notwithstanding
anything in the Act (including Section 1705.22 of the Act) or this Agreement to
the contrary, the Members and the Representatives shall not have the right to
keep confidential from any other Member or Representative, in their capacities
as such, any information of the Company.
5.4 Financial Statements. Within 120 days after the end of each fiscal
26
year, and 60 days after the end of each calendar quarter, the Member Committee
shall cause to be furnished to each Member financial statements with respect to
such fiscal year or quarter of the Company, consisting of (i) a balance sheet
showing the Company's financial position as of the end of such fiscal year or
quarter, (ii) supporting profit and loss statements, (iii) a statement of cash
flows for such year or quarter and (iv) Member's Capital Accounts, provided that
prior to such dates the Company shall provide to each Member on a timely basis
such financial information as may be required to permit each Member Group to
prepare its annual and quarterly financial reports. The annual financial
statements of the Company shall, unless the Members determine otherwise by
unanimous consent, be audited (which audit shall be conducted in accordance with
GAAP) and certified by an independent firm of certified public accountants
selected by the Member Committee or the Members (which firm may be the firm
regularly engaged by any one or more of the Members). The Members hereby
designate and appoint the firm of Pricewaterhouse, Coopers LLP as the Company's
independent public accountants, such designation and appointment to remain
effective until terminated by the Member Committee and appointment of
replacement independent public accountants. Each Member shall receive a copy of
all material financial reports and notices delivered by the Company to any third
party pursuant to any other agreement. The Company shall also produce and
distribute to all Members monthly revenue, operating expense and capital
expenditure reports and such other financial statements as the Member Committee
reasonably determines.
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);
(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
27
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
Regulations Section 1-7701 ("Check the Box Regulations").
(ii) Code Section 754 Election. The Member Committee shall,
upon the written request of any Member, cause the Company to file an election
under Code section 754 and the Treasury Regulations thereunder to adjust the
basis of the Company's assets under Code section 734(b) or 743(b) and a
corresponding election under the applicable sections of state and local law.
(c) Company Tax Returns. The Tax Matters Partner will prepare or cause
to be prepared the domestic and foreign tax returns and information returns for
the Company at no charge to the Company, except for all reasonable out-of-pocket
expenses (including accounting fees, if any). Either Member may, at its own
expense, engage a third party to review the tax returns and information returns
prepared by the Tax Matters Partner pursuant to the preceding sentence. Any and
all other tax returns shall be prepared in a manner directed by the Tax Matters
Partner consistent with the terms of this Agreement. Each Member shall provide
such information, if any, as may be reasonably requested by the Company for
purposes of preparing such tax and information returns including, without
limitation, the adjusted tax basis for Federal income tax purposes of the assets
contributed by AT&T PCS pursuant to Section 2.2(a). The Company shall use its
best efforts to (i) cause copies of all tax returns to be submitted to each
Member 30 days before the date due, including extensions and (ii) deliver to
each Member within 90 days after the end of each taxable year any additional
information in the possession of the Company that the Members may require for
the preparation of their own income tax returns.
(d) Tax Audits. CBW shall be the "tax matters partner," as that term
is defined in Code section 6231(a)(7) (the "Tax Matters Partner") with all of
the rights, duties and powers provided for in sections 6221 through 6232,
inclusive, of the Code, provided that the Tax Matters Partner shall not pay or
agree to pay any audit assessment, or any amount in settlement or compromise of
any litigation, in respect of income tax liability of the Members attributable
to the Interests in the Company, in excess of $500,000 in any one instance or
series of related instances, unless approved by the Member Committee. The Tax
Matters Partner, as an authorized representative of the Company, shall direct
the defense of any tax claims made by the Internal Revenue Service or any other
taxing jurisdiction to the extent that such claims relate to adjustment of
Company items at the Company level and, in connection therewith, shall retain
and cause the Company to pay the fees and expenses of counsel and other advisors
chosen by the Tax Matters Partner. The Tax Matters Partner shall also be
responsible for filing a timely election of form 8832 and for timely filing for
all other
28
elections made by the Company. The Tax Matters Partner shall deliver to each
Member and the Member Committee a semi-annual report on the status of all tax
audits and open tax years relating to the Company, and shall consult with and
keep all Members and the Member Committee advised of all significant
developments in such matters coming to the attention of the Tax Matters Partner.
All reasonable expenses of the Tax Matters Partner and its Affiliates (including
reasonable internal time charges and reasonable disbursements) and other
reasonable fees and expenses in connection with such defense shall be borne by
the Company. Except as provided in Article 9, 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 challenge.
ARTICLE 6
MANAGEMENT
6.1 Member Committee. The property, business and affairs of the
Company shall be managed by or under the direction of a Member Committee (the
"Member Committee"). In addition to the powers and authorities by this Agreement
expressly conferred upon it, the Member Committee may exercise all such powers
of the Company and do all such lawful acts and things as are not by statute or
by this Agreement directed or required to be exercised or done by the Members.
Except as determined by the Member Committee pursuant to this Article 6 or
otherwise pursuant to this Agreement, no Member or Representative shall have any
right or authority to take any action on behalf of the Company with respect to
third parties or to bind the Company.
(a) Number of Representatives. The Member Committee shall consist of
five individuals (each, a "Representative"), with the AT&T PCS Member Group
having the right to appoint two Representatives, each of whom shall be employees
of AT&T or its Affiliates and the CBW Member Group having the right to appoint
three Representatives, each of whom shall be employees of CBW or its Affiliates.
The Representatives shall not be "managers" of the Company as such term is used
in the Act.
(b) Initial Representatives. The initial Representatives of the Member
Committee are:
29
CBW Member Group:
Xxxx X. Xxxxxxx
Xxxxxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxxx
AT&T PCS Member Group:
Xxxxx Xxxxxx
Xxxx Xxxxxxx
(c) Vacancies. Each Representative shall hold office until death,
resignation or removal at the pleasure of the Member Group which appointed such
Representative. If a vacancy occurs on the Member Committee, the Managing Member
of the Member Group that appointed the vacating Representative shall appoint
such Representative's successor.
(d) Chairman. A Representative of the CBW Member Group shall be
Chairman of the Member Committee. In the event of a Chairman's death,
resignation or removal, the CBW Member Group shall appoint his successor.
(e) Selection of Company Employees. The Member Committee may also
employ and retain such Persons as may be necessary or appropriate for the
conduct of the Company's business (subject to the supervision and control of the
Member Committee), including employees and agents who may be designated as
officers with titles including but not limited to "chief executive officer,"
"president," "vice president," "treasurer," "secretary," "general manager,"
"director" and "chief financial officer," as and to the extent authorized by the
Member Committee. The selection and hiring of the general manager of the
Company's operations shall require the consent of AT&T PCS which consent shall
not be unreasonably withheld. The salary and benefits of such general manager
shall be comparable to the salary and benefits of general managers of similar
PCS or cellular markets.
6.2 Meeting Requirements.
(a) Regular Meetings. The Member Committee shall meet no less
frequently than four times each calendar year in Cincinnati, Ohio, or such other
place within or outside of Ohio agreed to by a Majority in Interest of the
Members on a date and at a time and place established by the consent of a
Majority in Interest of the Members.
(b) Special Meetings. A special meeting of the Member Committee or the
Members shall be held at the request of any Member. The location of such meeting
shall be in Cincinnati, Ohio, or such other place within or outside of Ohio
agreed to by a Majority in Interest of the Members.
30
(c) Telephonic Meetings. Any meeting of the Member Committee or the
Members may be held by conference telephone call or through similar
communications equipment by means of which all persons participating in the
meeting can hear and be heard by each other. Participation in a telephonic
meeting held pursuant to this Section 6.2(c) shall constitute presence in person
at such meeting.
(d) Notices. Notices of regular meetings and special meetings of the
Member Committee or the Members may be given by any Representative or Member, as
the case may be, and shall state the date, hour and purpose of the meeting. All
such notices shall be accompanied by an agenda for the meetings, as well as (to
the extent practicable) the texts of all resolutions proposed to be adopted at
such meetings. No item may be discussed if not on the agenda unless a quorum is
present and the Representatives present waive notice of the additional item(s).
Notice of a regular or special meeting shall be given by facsimile, confirmed by
certified mail, return receipt requested not less than 14 days (in the case of a
regular meeting) or 72 hours (in the case of a special meeting) before the date
of the meeting to each Representative at the facsimile number and address
provided by the Representative to the Company from time to time. Any
Representative may waive, as to such Representative only, in writing, the
requirements for notice before, at or after a meeting.
(e) Quorum. At each meeting of the Member Committee or the Members,
the presence in person or by telephone of at least one Representative of each
Member Group shall be necessary to constitute a quorum for the transaction of
business.
(f) Written Consents. Any action required or permitted to be taken at
a meeting of the Member Committee or the Members may be taken without a meeting,
but upon the requisite notice as provided in paragraph (d) above, if the
requisite Representatives of each Member Group consent thereto in writing, and
if a complete and correct copy of such consent is promptly delivered to all the
Representatives of each Member Group following the execution of any such
consent.
6.3 Actions by Member Committee.
(a) Scope of Authority. The Member Committee shall have full power and
authority to direct and control the business affairs of the Company except with
respect to those matters reserved specifically to the Members in Section 6.4,
and subject to the right of the Member Committee to delegate such power and
authority to Persons responsible for day-to-day operation of the Company (it
being understood that authority to undertake Significant Events prior to
approval by the Member Committee shall not be so delegated).
(b) Actions Requiring Member Committee Approval. Without
31
limiting the generality of the foregoing, the following actions require approval
of the Member Committee:
(i) approving any Significant Event; and
(ii) approving or taking any action for which the approval or
action of the Company is required under the Related Agreements, except as
the Member Committee may otherwise delegate in accordance with Section
6.3(a) above, and
(iii) approving any other matter that a majority of the Members
or the Member Committee determine shall require its approval.
(c) Approval Requirements.
(i) Consent or approval of the Member Committee shall mean the
affirmative vote of a majority of the Representatives voting at a duly held
meeting of the Member Committee; provided that with respect to any Super
Majority Event, for so long as the AT&T PCS Member Group either (x) holds
an Interest of at least 15% or (y) has not sold, assigned or otherwise
transferred any of its Interest, consent or approval of the Member
Committee shall mean the affirmative vote of at least two-thirds of all
existing Representatives and provided further that in the event any
proposed resolution or other action is not concurred in by at least one
Representative of each Member Group, any Representative of the dissenting
Member Group may require that, if practicable, final action on such
resolution or other matter be postponed until the next meeting of the
Member Committee. At any subsequent meeting at which such matter is
considered, any vote on such resolution or other matter shall be final.
(ii) Each Representative shall be entitled to one vote on all
matters submitted to a vote of the Member Committee; provided that if one
or more Representatives are absent or not appointed because of a vacancy on
the Member Committee or otherwise, then any other Representative of such
absent Representative's Member Group present at the meeting shall have the
right to cast the votes of such absent Representatives.
(iii) The Company shall provide each Representative of each
Member Group with (A) adequate notice (in light of the time frame in which
approval is sought) of the substance of any matter requiring the approval
of the Member Committee in order to afford such Representative sufficient
time
32
to review such matter and the Company's analysis thereof and (B) an
opportunity to consult with the management of the Company regarding such
matter and possible alternatives prior to the meeting at which approval is
sought; provided that any alleged noncompliance with the provisions of this
paragraph (iii) shall not affect the validity of any consent or approval
pursuant to paragraphs (i) and (ii) above.
(d) Initial Budget. The budget for the Company's first year of
operations shall be approved by the Members simultaneously with the execution of
this Agreement.
(e) Subsequent Budgets. The Member Committee shall adopt an annual
budget for the operations of the Company, which budget shall be in at least as
much detail and cover the same matters as the initial budget. The proposed
budget shall be presented to the Member Committee no later than 60 days prior to
the commencement of each fiscal year of the Company.
(f) Five-Year Budget. The projected budget for the Company's first
five years of operations shall also be approved by the Members simultaneously
with the execution of this Agreement. The parties acknowledge that such matters
are inherently uncertain and that this budget shall not be construed as a
representation or warranty as to future performance.
6.4 Actions by Members. Notwithstanding any other provision in this
Agreement to the contrary, the following actions require the prior written
approval of all Members: (i) dissolution of the Company in accordance with
Section 8.2(b), or (ii) amendment of this Agreement.
6.5 Sale of Services. Without limiting the provision of Section 6.7,
no Member or its Affiliates shall be entitled to obtain services from the
Company on terms or conditions which are more favorable to such Member or such
Affiliate than those upon which such services are offered to the other Members
and their Affiliates.
6.6 Confidentiality.
(a) Each Member shall, and shall cause each of its Affiliates, and
each of its and their respective partners, members, managers, shareholders,
directors, officers, employees and agents (collectively, "Agents") to, keep
secret and retain in strictest confidence, and not use for any purpose except as
contemplated by this Agreement, any and all Confidential Information relating to
the Company or any Member and shall not disclose such information, and shall
cause its Agents not to disclose such information, to anyone except (x) such
Member's Affiliates or Agents who have a need to know such information in
connection with the matters contemplated by this Agreement, and (y) other
Persons (such as lenders to a Member) who have a bona fide business reason for
obtaining such information in connection
33
with their dealings with such Member and who agree in writing to keep in
confidence all Confidential Information in accordance with the terms of this
Section 6.6. The obligations under this Section 6.6 shall survive the
termination of this Agreement for a period of three years (or, if earlier, as to
any Person, three years following the date such Person ceases to be a Member).
The foregoing provisions of this Section 6.6 were negotiated in good faith by
the parties hereto and the parties hereto agree that such provisions are
reasonable and are not more restrictive than is necessary to protect the
legitimate interests of the Members and the Company.
(b) The obligations set forth in Section 6.6(a) shall be inoperative
with respect to Confidential Information that (i) is or becomes generally
available to the public other than as a result of disclosure by the receiving
party or its Agents, (ii) was available to the receiving party on a
non-confidential basis prior to its disclosure to the receiving party (iii)
becomes available to the receiving party or its agents, provided that such
source is not known by the receiving party to be bound by a confidentiality
agreement with the providing party or the providing party's Agents or (iv)
consists of financial and operating results of the Company which are set forth
on Schedule 6.6, as the same may be amended from time to time by the Parties
hereto, or which are required to be reported pursuant to SEC requirements (e.g.
segment reporting requirements). To the extent that any Confidential Information
is disclosed CBW will promptly inform AWS of such disclosure.
(c) To the fullest extent permitted by law, if a Member or any of its
Affiliates or Agents breaches or threatens to commit a breach of this Section
6.6, the other Members and the Company shall have the right to have this Section
6.6 specifically enforced by any court having jurisdiction, it being
acknowledged and agreed that money damages will not provide an adequate remedy
to such other Members or the Company. Nothing in this Section 6.6 shall be
construed to limit the right of any Member or the Company to collect money
damages in the event of a breach of this Section 6.6; nor to limit the right of
any Member to report the financial condition and results of operations of the
Company to its shareholders, bondholders or to regulatory authorities to the
extent required by law, regulation or the terms of existing instruments.
(d) Anything else in this Agreement or the other Related Agreements
notwithstanding, each Member shall have the right to disclose any information,
including Confidential Information of the other Member or such other Member's
Affiliate(s), in any filing with any regulatory agency, court or other
governmental authority to the extent that the disclosing Member determines in
good faith that it is required by law or regulation, provided that any such
disclosure shall be as limited in scope as possible and shall only be made after
giving the other Member as much notice as practicable of such required
disclosure and an opportunity to contest such disclosure if possible.
34
6.7 Conflict Transactions. The Members recognize that due to the wide
range of communications activities that AT&T PCS and CBW, and their respective
Affiliates engage in, and the presence in Cincinnati of CBW and its Affiliates,
there will be numerous occasions of Conflict Transactions. All Conflict
Transactions, regardless of whether approved by the Member Committee, shall be
on terms no less favorable to the Company than would be available to the Company
in an arm's length transaction with an unrelated party and the Company shall not
engage in any such Transaction if it would not have engaged in it with such an
unrelated party.
6.8 Other Business; Duties; Etc.
(a) The Members and any Person affiliated with any of the Members may
engage in or possess an interest in other business ventures in which the Company
is not a party, and may engage in any other activities, of every kind and
description, (whether or not competitive with the business of the Company or
otherwise affecting the Company), independently or with others in which the
Company is not a party, and shall owe no duty or liability to the Company, its
Members or their Affiliates in connection therewith except as expressly set
forth in this Agreement, except that (other than as set forth in the following
sentence) neither CBI nor AT&T shall directly or indirectly have any ownership
interest (other than interests representing less than 5% of the equity of any
such business) in or operate any business providing Company Communications
Services in the Territory except through the Company, provided that the
foregoing limitation as to ownership interests shall not be applicable to AT&T
or its Affiliates if the Network Membership License Agreement is not in effect
and shall not be applicable to CBI or its Affiliates if the CBI Service Xxxx
License Agreement is not in effect. Notwithstanding the foregoing, (i) either
CBI or AT&T may have an ownership or other interest in or operate a business
which provides (either exclusively or together with other services not
prohibited hereby) wireless telecommunications services to or from specific
locations (such as buildings, office complexes or campus environment), even if
the subscriber equipment used in connection with such service may be capable of
routine movement within a limited area (such as a building , office complex or
campus environment), and even if such subscriber equipment may be capable of
obtaining other telecommunications services beyond such limited area (which
other services may include routine movement beyond such limited area) and
hand-off between the service to such specific location and such other
telecommunications services, (ii) an Affiliate of CBW may continue to own the
CBI Cellular Interest, provided that such interest remains non-voting, neither
CBW nor any Person employed by or performing any services for the Company, or
otherwise having access to any non- public information relating to the Company,
has any access
35
to non-public information regarding the operations or performance of such entity
and the CBI Cellular Interest Trust (or an alternative arrangement, if any, that
accomplishes the goals of the CBI Cellular Interest Trust to the satisfaction of
the FCC) remains in effect and (iii) AT&T and its Affiliates may resell or act
as agent for Company Communications Services provided by the Company. For
purposes of the foregoing, satellite-based services and terrestrial-based
services using in the aggregate less than 1 MHz of spectrum shall not be
considered Company Communications Services. To the extent any Party or its
Affiliate provides services described in clause (i) above, such Party shall
cause the "other telecommunications services" described in such clause to be, to
the extent reasonably and commercially practicable, Company Communications
Services provided by the Company.
(b) To the extent that, at law or in equity, any Member or any
Affiliate of a Member, or any director, officer, stockholder, employee, agent or
representative of a Member or such Affiliate, would have duties (including
fiduciary duties) and liabilities to the Company or the Members different from
or in addition to those provided in this Agreement, all rights of the other
Members arising out of such duties and liabilities are hereby waived and no such
Person shall be liable to the Company or to any Member for its good faith
reliance on the provisions of this Agreement.
(c) Notwithstanding any provision to the contrary in this Agreement,
to the fullest extent permitted by law, each Representative shall be deemed the
agent of the Member Group which appointed such Person a Representative, and such
Representative shall not be deemed an agent or a sub-agent of the Company or the
other Members or Member Groups and shall have no duty (fiduciary or otherwise)
to the Company or the other Members or Member Groups.
(d) None of the provisions of Section 6.7 or 6.8 shall in any way be
construed to permit any Member to carry out fraudulent or illegal acts or to
excuse such Member from any liability in connection therewith.
6.9 Preferred Provider. Except as otherwise provided in any Related
Agreement and except as set forth in paragraph 6.12(f) below, when the Company
offers or provides Company Communications Services and does not itself develop
one or more telecommunications services or products that are necessary in order
to provide Company Communications Services or constitute components of, or are
offered or provided in combination with, Company Communications Services
(including, by way of example, equipment or voicemail), but instead procures
such services or products, or when the Company desires to procure an amount of
other services or products in excess of $250,000 (or $50,000 in the case of
communications transport) of a nature that any Member notifies the Company it is
in the business of providing, the Company shall either request that the Members
(directly or through an Affiliate designated by any Member) supply such service
or
36
product or seek competitive bids to supply such service or product. If the
Company seeks competitive bids, it shall permit the Members to bid (on behalf of
itself or any Affiliate designated by them). The Company shall take into account
when evaluating potential providers the goal of the Company to coordinate
technical specifications, functional capabilities, roaming and call handoff with
Affiliates of AT&T PCS and to maximize the benefit to the Company of the related
business and technical expertise of CBW and its Affiliates. Each of the Members
shall be afforded the opportunity to match the best bid received from any such
third party. Nothing in this Section shall require the Company to purchase
products or services from a Member (or its Affiliates) on an exclusive basis to
the extent that reasonable business judgment dictates that such products or
services be obtained from a variety of sources or to the extent that such
purchase would put the Company at a competitive disadvantage within its service
areas.
6.10 Dispute Resolution.
(a) Except as otherwise provided in Section 6.6, it is the intent of
the Members and their respective Affiliates to resolve disputes concerning
matters arising under this Agreement and the other Related Agreements amicably
to the greatest extent practicable. Accordingly, all disputes arising under any
of such Agreements shall be resolved in accordance with the procedures set forth
in this Section 6.10.
(b) Each Member Group shall designate an individual to serve as such
Group's primary representative with respect to the matters arising under this
Section 6.10 (such individual being referred to as the "First-Tier Executive").
The First-Tier Executive of each Member Group is as follows:
AT&T PCS General Manager or President of the Are
Member Group: a that includes the Territory
CBW Member
Group Xxxx X. Xxxxxxx
(c) Each Member Group shall also designate an individual, who shall be
a Senior Vice President or higher officer of the respective corporations named
below to seek to resolve disputes if the First Tier Executives are unable to do
so. (Such individual is referred to herein as the "Second-Tier Executive.") The
Second-Tier Executive of each Member Group is as follows:
37
AT&T PCS Chief Financial Officer,
Member Group: AT&T Wireless Services, Inc.
CBW Chief Financial Officer
Member Group: Xxxxx X. Xxxxxx
(d) Each Member Group shall also designate an individual, who shall be
an Executive Vice President or higher officer of the respective corporations
named above to seek to resolve disputes if the First-Tier and Second-Tier
Executives are unable to do so. (Such individual is referred to herein as the
"Third-Tier Executive.") The Third-Tier Executive of each Member Group is as
follows:
AT&T PCS President,
Member Group: AT&T Wireless Services, Inc.
CBW Chief Operating Officer
Member Group: Xxxxxxx X. Xxxxxxxxxxx
(e) Each Member Group shall at all times maintain a First-Tier
Executive, Second-Tier Executive, and Third-Tier Executive, and shall designate
a replacement as promptly as practicable by notice to the other Member Group in
the event of the resignation or other termination of the Executive then serving.
(f) In the case of a dispute arising under this Agreement or any other
Related Agreement which the parties are otherwise unable to resolve, upon notice
at any time from any party, the First-Tier Executives shall make a good faith
effort to resolve the dispute as promptly as practicable. If they are unable to
do so within ten days (or such longer period of time as they may agree), they
shall refer the dispute for attempted resolution to the Second and then the
Third-Tier Executives, each of whom shall within 20 days thereafter (or such
longer period of time as they may agree) seek to resolve the dispute.
(g) If the dispute is not resolved to the satisfaction of each of the
parties to such dispute following completion of the procedures set forth above,
each of such parties acknowledges that such dispute shall then be subject to
binding arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association ("AAA"), to the fullest extent such Rules are
permitted by, and to the extent not inconsistent with, applicable law
(including, without limitation, Ohio law) and the rules set forth below, which
shall be controlling to the extent they differ from such rules of the AAA. The
arbitration shall be held in Cincinnati, Ohio. The arbitrator shall have
experience in the subject matter involved in the dispute. The arbitrator shall
not have any material past or present family, business or other
38
relationship with any party, Affiliate, director or officer thereof, or any
"associate" (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as
amended) of any such party, Affiliate, director or officer. Each party shall
have the right to discovery in the same scope and substance as would be
permitted under the Federal Rules of Civil Procedure. The arbitrator shall have
the authority to order specific performance or other equitable relief as part of
his decision regarding any dispute. The arbitrator shall be instructed to abide
by statutory and case law and render a detailed, written decision explaining the
basis for the conclusion reached, including citations to relevant precedents,
within six months after his appointment. The decision of the arbitrator shall be
enforceable by a court of competent jurisdiction.
(h) Notwithstanding the provisions of paragraph (g) above, either
party may seek interim or provisional relief, in the form of a temporary
restraining order, preliminary injunction or other interim equitable relief
concerning any dispute arising under this Agreement or any other Related
Agreement in the United States District Court for the Southern District of Ohio
or the Court of Common Pleas, Xxxxxxxx County, State of Ohio, provided, that
once an arbitrator has been selected pursuant to paragraph (g) above, the
continuation, termination, amendment or modification of the interim or
provisional relief shall be determined by the arbitrator and, after such
determination the order seeking such interim or provisional relief shall be
dismissed by the stipulation of both parties. In the event that the parties fail
to stipulate to the dismissal of the action, the parties hereby agree that the
arbitrator may submit a stipulation dismissing the action. The arbitrator may
conduct any hearings or order any discovery he or she deems necessary to
properly review the interim or provisional relief. This paragraph (h) shall be
specifically enforceable by the parties.
6.11 Participation by Members and their Affiliates. It is contemplated
that the Company may contract with AT&T PCS or CBW and their respective
Affiliates to perform the functions required for the construction, management or
operation of the Business, provided however, that CBW or its designees shall
have the exclusive authority to perform the construction, maintenance or
operations on or in any facility that constitutes any portion of CBW's or its
Affiliates' property. All such performance by such Members and their Affiliates
shall be subject to the following terms and conditions, except insofar as the
parties have otherwise agreed to the terms of compensation for or the other
terms of such performance and without duplication of any reimbursement or
compensation provided for in any other agreement:
(a) General. Subject to the foregoing and oversight, review and
ultimate control and approval by the Company, AT&T PCS, CBW or any such
Affiliate, as the case may be, shall select the persons who shall perform all
construction, management or operational services and may elect to rely upon
their
39
own employees or may engage independent contractors. Similarly, AT&T PCS, CBW or
any such Affiliate may provide or contract with an Affiliate to provide goods or
services or may obtain the same from an unrelated third party.
(b) Reimbursement; Cost Allocations.
(i) The Member or its Affiliate providing services (the
"Providing Party") shall be reimbursed for all out-of-pocket expenses
("Out-of-Pocket Expenses") reasonably incurred by the Providing Party in the
direct performance of its responsibilities, including the costs and expenditures
of any independent contractors employed by them on the Company's behalf in
fulfilling its responsibilities hereunder.
(ii) The Providing Party shall also be reimbursed for the cost of
services directly allocable to the Business and performed directly for the
benefit of the Company by its non-senior management employees ("Cost
Allocations"). Such costs shall be calculated at hourly rates determined on the
basis of each individual employee's annual salary and bonus plus an additional
percentage of those amounts to cover administrative overhead and other expenses
associated with such employees in the amount demonstrated by the provider of
such services.
(c) Limitations.
(i) Reimbursement shall only be permitted for expenditures in
respect of the functions described on Schedule 6.11, as the same may be amended
from time to time by the Parties hereto. Functions not appearing on such
Schedule shall, unless otherwise agreed to by the Parties, not be eligible for
reimbursement.
(ii) In determining any amounts for which the Providing Party is
entitled to reimbursement hereunder, the Providing Party shall pass through all
discounts, rebates, incentives and other savings.
(iii) Cost Allocations by the Providing Party shall be calculated
in a way no less favorable to the Company than the Providing Party employs from
time to time for making allocations among its other business units. Upon notice
from any Member, the Providing Party shall cause to be furnished to such Member
an accounting of any Cost Allocations made to the Company, certified by the
Providing Party's outside auditors. The requesting Member shall be responsible
for paying the outside auditors costs of certifying the Cost Allocations.
(iv) Unless CBW or any of its Affiliates is required by
applicable law or regulation to charge otherwise, the Company shall not be
charged an amount for any services performed hereunder in excess of the lesser
of (x) (A) the amount
40
allocated by Affiliates of AT&T PCS for comparable services in markets managed
by AT&T PCS and its Affiliates or (B) if such Affiliates do not allocate such
costs, then the costs incurred directly by comparable markets managed by AT&T
PCS and its Affiliates with respect to such services, or (y) the amount at which
such services would be available in an arm's length transaction with an
unrelated third party.
(d) Payments. Following the date hereof, within 30 days after the
close of the first full calendar quarter and for each quarter thereafter during
the term of this Agreement, the Providing Party shall provide the Company with a
statement setting forth in reasonable detail the Out-of-Pocket Expenses and Cost
Allocations incurred during that quarter. The Company shall pay for such items
within 30 days of the receipt of the statement.
(e) Disputes. If any Member disputes the amount of reimbursement
claimed by the Providing Party, such Member shall so notify the Providing Party
in writing, and if the matter cannot be resolved informally between the Parties,
either AT&T PCS or CBW may submit the dispute for resolution pursuant to Section
6.10.
(f) Books and Records. Reasonable documentation of expenses and cost
allocations under this Section 6.11 shall be provided to the Company in all
cases. The Company, AT&T PCS, CBW, and their Affiliates shall keep or cause to
be kept accounts and complete books and records with respect to the provision of
services to the Company, showing all related costs, expenditures and
allocations, and any and all other records necessary, convenient or incidental
to recording the financial aspects of the provision of services to the Company,
including the calculation of Cost Allocations and Out-of-Pocket Expenses
pursuant to the foregoing. The Company shall have access, at all reasonable
times during normal business hours, to the books and records maintained by AT&T
PCS, CBW or their Affiliates pursuant to the foregoing and shall be entitled to
make any copies of such records as it deems appropriate. Each Member shall have
similar access to, and the right to make copies of the books and records of the
Company, and of AT&T PCS, CBW and their Affiliates, regarding the foregoing.
Upon notice from any Member, the Providing Party shall cause to be furnished to
such Member an accounting of any Cost Allocations made to the Company, certified
by the Providing Party's outside auditors.
(g) Other Sources. If AT&T PCS questions in good faith whether the
amount CBW or its Affiliates charges the Company for any services performed
hereunder exceeds the lesser of the amounts set forth in clauses (c)(iv)(x) or
(y) (irrespective of whether a greater amount is required by applicable law or
regulation), the Company shall either demonstrate to the reasonable satisfaction
of AT&T PCS that the charges do not so exceed such lesser amount, or are
otherwise not available to the Company at a lower cost, or the Company shall
obtain such services from another
41
source.
6.12 System Requirements.
(a) Construction. The Company hereby agrees to construct a PCS System
using the most current version of TDMA IS-136 technology to provide Company
Communications Services covering the Territory on a schedule no less rapid than
is set forth in the minimum build-out-plan, set forth on Schedule 6.12(a),
including, without limitation, the components set forth on such Schedule. Such
System shall be technologically compatible in all material respects with AT&T's
PCS systems (including without limitation for the purpose of facilitating
roaming and hand-off between Systems), and will to the extent technologically
feasible implement the same User Interface as such Systems, with the intention
that the User Interface in the Company's System will not differ from the User
Interface in AT&T's PCS systems in a manner that would be material to customers.
The Company will notify AT&T PCS of any variance in its PCS System from time to
time from the standards applied by Affiliates of AT&T PCS in their Systems.
(b) Build Out Requirement. The Company and AT&T PCS hereby agree that
the Company shall assume and be obligated to satisfy the construction
requirements (the "Construction Requirements") set forth in 47 CFR 24.203 with
respect to both the portion of the A Block FCC Radio Station Authorization
bearing (prior to contribution) call sign KNLF 235 retained by AT&T PCS and the
portion contributed to the Company pursuant to Section 2.2 to the extent such
obligations can be satisfied through construction within the Territory, provided
by June 23, 2003, the coverage Construction Requirements which must be satisfied
by June 23, 2005 have not been satisfied and the Company's PCS system covers
ninety percent (90%) of the population within the Territory, AT&T Wireless PCS
agrees to work with the Company to satisfy the Construction Requirements,
provided further that (i) the Company's coverage must remain at ninety percent
(90%) on June 23, 2005, (ii) AT&T PCS will bear the cost of construction outside
the Territory, although the Company agrees to use good faith efforts to assist
AT&T PCS or its Affiliates in these construction efforts and, if requested by
AT&T PCS or its Affiliates negotiate in good faith with them to manage the
system constructed outside the Territory and (iii) if the parties agree it is in
their best interest to further construct within the Territory, they shall
negotiate in good faith an equitable allocation of the cost of that
construction.
(c) Microwave Relocation. The Company will arrange for all necessary
microwave relocation in connection with its License and pay, assume or (if
applicable) reimburse AT&T PCS or its Affiliates for any obligation to pay any
42
reasonable costs incurred by it or AT&T PCS in connection with any such
microwave relocation. AT&T PCS shall bear its own costs for microwave relocation
in connection with the portion of the A Block FCC Radio Station Authorization
bearing (prior to contribution) call sign KNLF 235 retained by AT&T PCS.
(d) Service Features. The Company's PCS System will offer the features
set forth in Schedule 6.12(d). The Company's PCS System will also offer, at the
written request of AT&T PCS, additional service features that AT&T PCS has
notified the Company it will provide in its PCS Systems. Any such additional
features shall be adopted within one hundred twenty (120) days after the request
by AT&T PCS. The provision of this Section 6.12 shall not be construed to limit
the features the Company may offer, provided such offering does not interfere
with the offering of features required in this paragraph (d).
(e) Quality Standards. The Company shall cause its PCS System to
comply with the TDMA quality standards set forth on Schedule 6.12(e) (the "TDMA
Quality Standards") at a level of compliance at least equal to the average level
of compliance of AT&T's PCS Systems, taking into account, among other things,
the relative stage of development thereof. In the event that the Company fails
to achieve such level of compliance, the Company shall not be deemed to be in
breach of this provision if such non-compliance is cured within thirty (30) days
of notice thereof or, if such breach is not capable of being cured within such
thirty (30) day period, within one hundred eighty (180) days of such notice,
provided the Company is using its best efforts to cure such breach as soon as
reasonably practicable. The foregoing provisions of this paragraph (e) shall not
be applicable during any Deemed Compliance Period. The Company will test (or
arrange for the testing of ) a portion of its System comprising at least
one-third of the Territory each month (on a rotating basis designed to test each
area within the Territory at least one time per calendar quarter) for the
purpose of determining its level of conformity to the TDMA Quality Standards.
(f) Interexchange Services. The Company shall not market, offer,
provide or resell interexchange services, except interexchange services procured
from AT&T Corp., or an Affiliate thereof designated by AT&T Corp. The rates,
terms and conditions provided by AT&T Corp. shall be in the aggregate at least
as favorable to the Company as those provided by AT&T Corp. to any other
comparable wireless customer, and to the extent permitted by applicable law,
superior to those provided to any other wireless customer. Upon specific request
of any customer, the Company may permit such customer to utilize the services of
Cincinnati Xxxx Long Distance Inc. provided the total number of customers using
such service does not exceed 5% of the Company's customers, or another
interexchange carrier, provided neither the Company nor CBW or any of its
Affiliates other than Cincinnati Xxxx Long Distance, Inc. shall receive any
payment, profit or compensation in connection with the
43
provision of such services.
(g) Substitute Technology. If at any time during the term of this
Agreement AT&T PCS and its Affiliates determine to discontinue use of TDMA in
their PCS or cellular systems serving a majority of the Midwest region of the
United States, (i) the Company will have the right to cease to use TDMA and may
adopt the new technology adopted by AT&T PCS and its Affiliates in such region
and, if it exercises such right, all references to TDMA herein and in the
License Agreement shall be automatically deemed to be modified by substituting a
reference to such new technology, and (ii) the obligations of AT&T PCS and its
Affiliates pursuant to Section 6.8 shall terminate and be of no further force or
effect, unless within sixty (60) days of notice by AT&T PCS to the Company
specifying that AT&T PCS and its Affiliates have so determined to discontinue
use of TDMA, the Company agrees to implement, and complete the implementation
of, on a reasonable schedule the new technology adopted by AT&T PCS and its
Affiliates.
6.13 Interconnection. CBI and its Affiliates shall, from time to time,
enter into interconnection agreements with the Company on such terms and
conditions at least as favorable to the Company as the terms and conditions
offered to any other provider of telecommunications services.
6.14 Resale, Agency Agreements.
(a) From time to time, upon the request of AT&T PCS, the Company shall
enter into a Resale Agreement, substantially in the form of the Resale Agreement
entered into by the Company and AT&T PCS at the time of execution of this
Agreement, with AT&T PCS and any of its Affiliates and, with respect to any
geographic area within the Territory, one other Person designated by AT&T PCS,
provided such other Person is licensed to provide telecommunications services in
such geographic area under the service marks used by AT&T Corp. and such other
Person qualifies as a reseller under any generally applicable standards the
Company establishes for its resellers from time to time and provided further
that the Company shall not be required to enter into such a Resale Agreement
with any such other Person in any geographic area at any time during which the
Business Markets Services Agreement or the Consumer Market Service Agreement,
each executed in 1998 between AT&T, CBI and Cincinnati Xxxx Telephone Company
remains in full force and effect with respect to such area without any amendment
thereto that materially changes the original scope or intent of either
agreement. In addition, from time to time, upon the request of AT&T PCS, the
Company shall enter into an agency agreement authorizing AT&T PCS and any of its
Affiliates and, with respect to any geographic area within the Territory one
other Person designated by AT&T PCS to serve as an agent for the Company's
services, provided such other Person is licensed to provide telecommunications
services in such geographic area under the service
44
marks used by AT&T Corp. and such other Person qualifies as an agent under any
generally applicable standards the Company establishes for its agents from time
to time and provided further that the Company shall not be required to enter
into such an agency agreement with any such Person in any geographic area at any
time during which the Business Markets Service Agreement or the Consumer Markets
Service Agreement, each executed in 1998 between AT&T, CBI and Cincinnati Xxxx
Telephone Company remains in full force and effect with respect to such area
without any amendment thereto that materially changes the original scope or
intent of either agreement. Any such agency agreements shall provide that the
Company shall pay the agent a commission at the rate then generally offered to
the Company's agents and shall otherwise be on commercially reasonable terms.
(b) It is the intention of the parties that, in light of AT&T PCS's
equity interest in the Company and the other arrangements between AT&T PCS and
its Affiliates and the Company (including the roaming charges anticipated to be
incurred by subscribers of AT&T PCS and its Affiliates), the rates, terms and
conditions of Service (as defined in the Resale Agreement) provided by the
Company shall be at least as favorable to AT&T PCS or such other reseller, taken
as a whole, as the rates, terms and conditions of Service, taken as a whole
provided by the Company to any other Customer (as defined in the Resale
Agreement) and, to the extent permitted by applicable law, rates, terms and
conditions superior to those provided to any other Customer. Without limiting
the foregoing, the rate plans offered by the Company pursuant to any Resale
Agreement shall be designed to result in the average actual rate per minute paid
by the Reseller for Service being at least 25% below the average actual rate per
minute billed by the Company to its subscribers for access and air time, but
excluding revenues for features, taxes, toll or other non-rate items. The
Company and Reseller shall negotiate commercially reasonable reductions to such
resale rate based upon increased volume commitment (including roaming charges
incurred by subscribers of AT&T PCS and its Affiliates).
(c) Neither CBI nor any of its Affiliates shall be authorized by the
Company to resell the Company's services without the consent of AT&T PCS, except
that Cincinnati Xxxx Long Distance Inc. (as long as it remains wholly owned
directly or indirectly by CBI) may be authorized as a reseller without such
consent.
6.15 Co-Location. The Company agrees to permit on commercially
reasonable terms AT&T PCS and its Affiliates to install, operate and maintain
cell site equipment owned or used by AT&T PCS and its Affiliates in their
respective businesses on the towers, buildings and other locations at which the
Company's cell site equipment is installed, operated and maintained (or, if such
towers, buildings or locations are leased to provide for AT&T PCS or its
Affiliates to have such right). All costs of co-location, including additional
lease options or other co-location provisions, shall be borne by AT&T PCS.
45
6.16 Attribution of Interests. The Parties acknowledge under
applicable FCC rules and regulations as currently in effect, the Company may be
deemed to be attributed ownership of licenses for Commercial Mobile Radio
Services ("CMRS"), or interests therein, held by each of the parties and their
Affiliates. Currently, there is a 45 MHz limitation on the amount of spectrum as
to which the Company is entitled to hold licenses covering the same geographic
location either directly or through such attribution. The Company holds directly
a license covering 20 MHz of spectrum serving the territory pursuant to the
contribution made by AT&T PCS under Section 2.2(a). In addition, AT&T PCS or its
Affiliates hold a license covering an additional 10 MHz of spectrum serving the
Territory (i.e., FCC Radio Station Authorizations to provide CMRS bearing call
signs KNLF ________ and KNLF ________), and CBW and its Affiliates hold a
license covering 10 MHz of spectrum serving the Cincinnati MTA (i.e., FCC Radio
Station Authorizations to provide CMRS bearing call sign KNLF ________). CBW and
its Affiliates also are the beneficiaries of the CBI Cellular Interest Trust,
which holds a 45.067% interest in a license covering 25 MHz of spectrum serving
the territory. Accordingly, throughout the entire Territory, the Company may be
attributed licenses covering 40 MHz of spectrum, 5 MHz less than permitted under
applicable rules and regulations. The CBI Cellular Interest is not attributable
to the Company as a result of the CBI Cellular Interest Trust. Each of the
parties agree that it will take no action or acquire, directly or indirectly,
any further interests in any license to provide CMRS serving any part of the
Territory unless, after giving effect to such action or such acquisition and any
changes in the foregoing occurring after the date hereof, the Company will
remain in compliance with all applicable rules and regulations regarding
ownership, directly or by attribution, of spectrum. Without limiting the
foregoing, CBI will maintain in full force and effect the CBI Cellular Interest
Trust (or an alternative arrangement, if any, that accomplishes the goals of the
CBI Cellular Interest Trust to the satisfaction of the FCC) unless and until
such time, if any, that it sells, transfers, or otherwise disposes of the CBI
Cellular Interest in such manner as will cause ownership of such interest to no
longer be attributed to the Company pursuant to applicable law or regulation.
ARTICLE 7
TRANSFER OR ENCUMBRANCE OF INTEREST
7.1 Restriction on Transfer or Encumbrance. No Interest may be
assigned, sold, transferred or otherwise disposed of, whether voluntarily or
involuntarily (any such transaction being referred to in this Article 7 as a
"transfer"), or pledged, hypothecated or otherwise encumbered, whether
voluntarily or involuntarily, in whole or in part except in accordance with the
terms of this Article 7 or as otherwise specifically provided in this Agreement.
46
7.2 Transfer of Member's Interest to a Subsidiary. Subject to Section
7.3(g), a Member of the AT&T PCS Member Group may transfer all or any part of
its Interest to any Wholly-Owned Subsidiary of AT&T, and a member of the CBW
Member Group may transfer all or any part of its Interest to any Wholly-Owned
Subsidiary of CBI (any Person to which a transfer is permitted under this
Section 7.2 being referred to herein as a "Section 7.2 Transferee"); provided
that prior to any such transfer, the transferring Member shall deliver to the
other Members a notice setting forth the identity of the transferee and stating
that such transferee complies with the condition above, and shall provide such
other information as the other Members may reasonably request in connection
therewith. Subject to Section 7.3(g), a Section 7.2 Transferee shall be admitted
as a Member at the time such Person executes this Agreement or a counterpart to
this Agreement, which evidences such Person's agreement to be bound by the terms
and conditions of this Agreement. The transferring Member shall promptly deliver
this Agreement or such counterpart as so executed to the other Members.
7.3 Other Transfers; Right of First Refusal. Except as set forth in
the following sentence, a Member Group may transfer all (but not less than all)
of its Members' Interests to any Person other than a Section 7.2 Transferee, but
only subject to and to the extent permitted by the terms of this Section 7.3 and
Section 7.4. No Member Group may transfer any of its Members' Interests, or any
capital stock or other equity interests in a Person that directly or indirectly
owns capital stock or equity interests in a Person that owns the Interests, to a
Disallowed Transferee unless such transfer is pursuant to an Unrelated Sale
subject to the last sentence of Section 7.3(a).
(a) Offer and Right to Sell. Commencing 12 months after the Effective
Date, a Member Group (the "Selling Group") shall have the right to sell all or
part of its Members' Interests (the "Offered Interest") pursuant to an offer
(the "Offer") by a bona fide third party (the "Offeror"), provided that the
Selling Group first gives the other Member Group a right of first refusal to
purchase its Interest for the Fair Market Value of the consideration being
offered, as set forth herein. In the event that the proposed transfer by a
Selling Group is in connection with a transaction or group of related
transactions to which such Selling Group is a party, and the Fair Market Value
of such Selling Group's Interests proposed to be transferred is less than 25% of
the aggregate Fair Market Value of the assets proposed to be transferred by such
Selling Group (or its Wholly Owned Subsidiaries, or any Person of which it is a
Wholly Owned Subsidiary) in such transaction or group of substantially
simultaneous related transactions as a whole (an "Unrelated Sale"), except as
provided in the next sentence, then the offer with respect thereto shall not be
deemed an Offer for purposes hereof and the provisions of Sections 7.3 and 7.4
shall not be applicable thereto. If the Unrelated Sale is to a Disallowed
Transferee, the provisions of Section 7.4 shall remain applicable and Section
7.3 shall be applicable to the Offered Interest only and the Selling Group shall
irrevocably offer the other Member Group the right to
47
purchase the Offered Interest as provided in paragraph (b) below.
(b) Notice. The Selling Group shall give written notice of any Offer
(the "Offer Notice") to the other Member Group, which notice shall identify the
Offeror, enclose a complete and correct copy of the Offer and irrevocably offer
such Member Group the right, (except as provided in paragraph (a) above), to
purchase the Offered Interest on the same terms and conditions as specified in
the Offer (if it is the only asset being sold) or at its Fair Market Value (if
the Interest is being transferred in such transaction or group of substantially
simultaneous related transactions with other assets).
(c) Election to Purchase. Within 21 days following receipt of the
Offer Notice, such Member Group shall have the right to elect to purchase the
assets specified by the Selling Group in the Offer Notice (the "ROFR Assets").
Such election shall be made by delivery of a written notice to the Selling
Group.
(d) Timing; Assignment of Rights. In the event that such Member Group
has duly elected to purchase the ROFR Assets, the closing (the "Closing") of
such purchase shall take place on a date agreed to by the Selling Group and such
Member Group, but in no event later than 30 days following the exercise by such
Member Group of its election to purchase in accordance with subsection (c)
above; provided that if governmental or regulatory approval is required for such
Member Group to consummate its purchase and has not been obtained, the Closing
may be deferred until no later than 90 days following such exercise. If such
governmental or regulatory approval has not then been obtained, unless the
Selling Group and the other Member Group have agreed to extend such time period,
the Selling Group may complete the sale of the ROFR Assets (either alone or
together with other assets if it so elects) as provided in paragraph (f) below.
(e) Representations at Closing. At a Closing pursuant to this Section
7.3, the Selling Group shall represent and warrant in writing to the purchasing
Member Group that (i) the Selling Group is the sole beneficial and record owner
of the ROFR Assets and has good and marketable title thereto free and clear of
all Liens (other than restrictions imposed pursuant to this Agreement) and (ii)
the Selling Group has the full power and authority to sell such ROFR Assets
without conflict with the terms of any material agreement, law, order or
instrument binding upon it; and the Selling Group shall deliver such customary
instruments of assignment with respect to such ROFR Assets as reasonably
requested by the purchasing Member Group.
(f) Sale to Third Party.
48
(i) If a Member Group has failed to exercise its right to
purchase the Offered Interest (or has failed to consummate such purchase)
within the applicable time periods specified above in this Section 7.3, the
Selling Group may accept the Offer and sell the Offered Interest to the
Offeror; provided that such sale shall be at the same price and on the same
terms and conditions as specified in the Offer Notice; and provided further
that such sale shall have been approved pursuant to the requirements of
Section 7.3(g). If the sale by the Selling Group to the Offeror is not
consummated within 90 days, such right to sell shall lapse and the Selling
Group shall not thereafter transfer its Interest except in accordance with
the provisions of this Section 7.3, provided, however, that if governmental
or regulatory approval is required for the consummation of such
transaction, the Closing may be deferred until not more than 180 days
subsequent to the expiration of the time periods specified above in this
Section 7.3.
(ii) At the closing of any sale of an Interest to a third party
pursuant to this Section 7.3, such third party shall execute this Agreement
or a counterpart to this Agreement and any Related Agreements to which
Members of the Selling Group (or Affiliates thereof) are party and shall be
bound by the provisions of and assume the obligations of the Selling Group
under all such Agreements. The Selling Group shall not be relieved of any
of its obligations under this Agreement arising prior to such sale, to the
extent such obligations shall not be discharged by the third party, but the
Selling Group shall be relieved of any obligations under this Agreement
arising subsequent to such sale with respect to the Interest being
transferred; nothing herein shall be construed to relieve any Member of the
Selling Group of any obligations under any Related Agreement. The Selling
Group and the third party shall execute such documents as the other Member
Groups shall reasonably request to evidence such assumption and continuing
obligations. Any sale to a third party pursuant to this Section 7.3 may be
structured as two or more transfers of part of the Interest being sold,
which taken together effectuate a transfer of the entire Interest, all of
which shall be consummated within 15 months from the date of closing of the
first of such transfers.
(g) Substituted Members. Any transfer pursuant to Section 7.2, 7.3 or
7.4 must be approved in writing by a Majority in Interest of the Members (which
approval may not be withheld if the proposed transferee is a financially capable
person) prior to any such transfer, and no such transferee shall become a Member
without such approval. Upon the admission of any such transferee as a Member,
the transferring Member or the Selling Group shall be relieved of any obligation
arising under this Agreement subsequent to such transfer with respect to the
Interest being
49
transferred, and if the transferring Member no longer holds any Interest, the
transferring Member shall be relieved of all obligations arising under this
Agreement except for its obligations under Section 6.6 or with respect to any
breach of this Agreement arising prior to such transfer.
7.4 Tag-Along Right; Put.
(a) In lieu of exercising its rights under Section 7.3, the AT&T PCS
Member Group may, within 21 days following receipt of any Offer Notice, elect to
participate in such sale by including therein its Interests in the Company,
provided, however, that in the event the Offer Notice does not contain an offer
to purchase the Interests of all the Member Groups, the total consideration set
forth in the Offer Notice shall be applied pro rata to the Interests of the
participating Member Groups and the Selling Group and each such Member Group
shall transfer to such offeror such pro rata share. Each 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 AT&T PCS instead of
receiving the same consideration payable to the Selling Group, the consideration
payable to the AT&T PCS Member Group shall be a cash amount equal to the Fair
Market Value of its Interests to be transferred, unless the only asset being
sold by the Selling Group or its Affiliates in such transaction is its Interest,
in which case the consideration payable to the AT&T PCS Member Group shall be a
cash amount equal to the Fair Market Value of the consideration which would
otherwise be payable to the AT&T PCS Member Group in such transaction) and the
CBW Member Group may not consummate its sale unless such sale, if any, by the
AT&T PCS Member Group is consummated simultaneously in accordance with the terms
hereof. If the AT&T PCS Member Group 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 CBW Member Group other than in accordance with this Article 7.
(b) At the closing of any Transfer pursuant to paragraph (a) of this
Section 7.4, the AT&T PCS Member Group shall make the representations and
warranties and deliver instruments of assignment with respect to its Interests
as required to be made and delivered by the CBW Member Group with respect to its
Interest pursuant to Section 7.3(e).
(c) Commencing on the eighth anniversary of the date hereof, and at
any time thereafter, or if at any time the Member Committee shall call for
additional capital contributions (unless such capital call shall have been
approved by the Representatives of the AT&T PCS Member Group), and upon the
written demand of AT&T PCS, CBW shall purchase all the Interests of the AT&T PCS
Member Group for a cash purchase price, payable in immediately available funds,
equal to the Fair
50
Market Value of such Interests. Any such demand by AT&T PCS shall be in writing
and shall specify a closing date not less than 30 nor more than 60 days
following the date of determination of such Fair Market Value. At such closing,
AT&T PCS shall represent and warrant that the AT&T PCS Member Group has good and
marketable title to the Interests being sold, free and clear of all Liens.
7.5 Other Transfers. A transfer of a majority of the capital stock or
other equity interests in the Person that owns Interests or in a Person that
directly or indirectly owns a majority of the capital stock or other equity
interests in the Person that owns the Interests shall be deemed to be a transfer
of the Interests, subject to the provisions of Sections 7.1, 7.3 and 7.4 hereof
if and to the extent applicable by virtue of the provisions of Section 7.3 (a).
In such event, the Person making the transfer shall be deemed to be the Selling
Group as referred to therein and the capital stock or equity interests proposed
to be transferred shall be deemed to be the Offered Interest; however, the
provisions of Section 7.3(f)(ii) and Section 7.3(g) shall not be applicable.
7.6 Invalid Transfers Void. Any purported transfer of an Interest or
any part thereof not in compliance with the foregoing 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 noncomplying transfer.
7.7 Certain Determinations.
For purposes of Sections 7.3 and 7.4, the Fair Market Value of
Interests to be transferred or other property received and with respect to the
25% threshold referred to in Section 7.3(a), shall be determined in the
following manner:
Within fifteen days after the delivery of the notice requiring
such determination, the Members shall attempt in good faith to agree on the
Fair Market Value, and if the parties fail within fifteen days thereafter
to agree thereon, they shall deliver a notice to the other appointing as
its appraiser ("Appraiser") an independent accounting or investment banking
firm of nationally recognized standing. The parties by mutual agreement
shall also appoint a third Appraiser. If after appointment of the two
Appraisers, the parties 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
51
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 Members; otherwise the
average of all three determinations shall be binding and conclusive. The
Selling Group's obligation to provide an Offer Notice pursuant to Section
7.3(b) shall not be applicable until the date of delivery of such
determination to all Members. The costs of conducting any Appraisal
Procedure shall be borne as follows: (x) the costs of the Appraiser
designated by each Member Group shall be borne by that Group; (y) other
costs separately incurred shall be borne separately by the Member which
incurred such costs; and (z) the costs of the third Appraiser, if any,
shall be shared by all participating Members.
7.8 Other Encumbrances on a Member's Interest. Notwithstanding
anything to the contrary in this Agreement or the Act, a Member may not (a)
directly pledge, hypothecate or otherwise encumber all or any portion of its
Interest, without the consent of all Members or (b) pledge, hypothecate or
otherwise encumber its interest in any entity which owns all or any portion of
its Interest unless the pledgee of such interest acknowledges the restrictions
on transfer of Interests set forth in this Article 7. A pledge, hypothecation or
other encumbrance of all of a Member's Interest shall not cause such Member to
cease to be a member of the Company.
ARTICLE 8
DISSOLUTION AND TERMINATION
8.1 No Termination. Except as expressly provided in this Agreement or
as otherwise provided by law, no Member shall have the right, and each Member
hereby agrees not, to dissolve, terminate or liquidate the Company, or to resign
or withdraw as a Member.
8.2 Events of Dissolution. The Company shall be dissolved upon the
first to occur of the following:
(a) the agreement in writing of all of the Members to dissolve the
Company, but only on the effective date of dissolution specified by such Members
in such agreement;
(b) the Bankruptcy or dissolution of a Member, or the occurrence of
any other event which terminates the continued membership of a Member as a
matter of law, unless within 90 days after notification to the other Members of
the
52
occurrence of any such event, all remaining Members agree in writing to continue
the business of the Company;
(c) the election by a Majority in Interest of the Members within 90
days after the sale, exchange, condemnation or involuntary transfer of all or
substantially all of the assets of the Company; or
(d) any other event requiring the dissolution of the Company pursuant
to this Agreement or the Act, provided that AT&T PCS shall not seek judicial
dissolution of the Company based upon failure of the Member Committee to approve
a Super Majority Event.
8.3 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 8.3. 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 Member Committee 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 8.3.
Upon dissolution of the Company, the Liquidator shall, subject to Section
8.3(a), 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 3.
53
(d) Application of Assets. Upon dissolution of the Company, the
Company's assets (which shall, after the sale or sales referenced in Section
8.3(c), consist of the proceeds thereof) shall be applied as follows:
(i) Creditors. To creditors, including Members and
Representatives who are creditors, to the extent otherwise permitted by
law, in satisfaction of liabilities of the Company (whether by payment or
the reasonable provision for the payment thereof). Any reserves set up by
the Liquidator may be paid over by the Liquidator to an escrow agent or
trustee, to be held in escrow or trust for the purpose of paying any such
contingent or unforeseen liabilities or obligations, and, at the expiration
of such period as the Liquidator may deem advisable, such reserves shall be
distributed to the Members or their assigns in the manner set forth in
Section 8.3(d)(ii).
(ii) Members. By the end of the taxable year in which the
liquidation occurs (or, if later, within ninety (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 Section
8.3(d)(ii)).
8.4 Termination. Upon completion of the winding up of the Company and
the distribution of all Company assets, the Company's affairs shall terminate
and the Members shall cause to be executed and filed any and all documents
required by the Act to effect the termination of the Company.
ARTICLE 9
LIABILITY AND INDEMNIFICATION
9.1 No Personal Liability.
(a) Except as otherwise provided by the Act, the debts, obligations
and liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company, and no
Indemnified Person (as defined in paragraph (b) below) shall be obligated
personally for any such debt, obligation or liability of the Company solely by
reason of being an Indemnified Person.
(b) No Representative, Member or its Affiliates, or any of their
54
respective shareholders, directors, officers, employees, agents, members,
managers, or partners (each, an "Indemnified Person") shall be liable,
responsible or accountable in damages or otherwise to the Company or to any
other Indemnified Person for any act or omission performed or omitted by an
Indemnified Person in connection with the transactions contemplated hereby,
whether for mistake of judgment or negligence or other action or inaction,
unless such action or omission constitutes willful misconduct, gross negligence
or bad faith. Each Indemnified Person may consult with counsel, accountants and
other experts in respect of the affairs of the Company and such Indemnified
Person shall be fully protected and justified in any action or inaction which is
taken in good faith in accordance with the advice or opinion of such counsel,
accountants or other experts, provided that they shall have been selected with
reasonable care.
9.2 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 9.2 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 9.2 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.
9.3 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 under Section 9.2 from the Company, 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 (i) describe in reasonable detail the facts and circumstances with respect
to the Claim being asserted and (ii) refer to Section 9.2.
55
(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 to 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 in any
of the foregoing Claims and to participate in the defense thereof, but the fees
and expenses of such firm shall be at the expense of the Indemnified Person
unless both the Indemnified Person and the Company are named as parties and
representation by the same counsel is inappropriate due to actual differing
interests between them; provided that under no circumstances shall the Company
be liable for the fees and expenses of more than one law firm per jurisdiction
in any of the foregoing Claims for the Indemnified Persons, taken collectively
and not separately. The Company may, without the Indemnified Person's consent,
settle or compromise any Claim or consent to the entry of any judgment if such
settlement, compromise or judgment involves only the payment of money damages by
the Company (which payment is made or adequately provided for at the time of
such settlement, compromise or judgment) or provides for the unconditional
release by the claimant or plaintiff of the Indemnified Person and its
Affiliates from all liability in respect of such Claim and does not impose
injunctive relief against any of them. The Indemnified Person shall provide
reasonable assistance to the Company in the defense of the Claim. As between the
Company, on the one hand, and the Indemnified Persons, on the other hand, any
matter that is not agreed to unanimously by the Indemnified Persons shall be
determined by the Indemnified Person that is a party to this Agreement.
(c) Defense by the Indemnified Person. In the event that the Company,
within 20 business days after receiving written notice of any such Claim, fails
to assume the defense thereof, the Indemnified Person shall have the right,
subject to the right of the Company thereafter to assume such defense pursuant
to the provisions of this Article 9, 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 9.
56
(e) Contribution. Notwithstanding any of the foregoing to the
contrary, the provisions of this Article 9 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 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 9 to the fullest extent permitted by law; provided,
that if and to the extent that the Company's indemnification obligation under
this Article 9 is unenforceable for any reason, the Company hereby agrees to
make the maximum contribution permissible under applicable law to the payment
and satisfaction of the losses of the Indemnified Person, except to the extent
such losses are found in a final, nonappealable judgment by a court of competent
jurisdiction to have resulted from the Indemnified Person's gross negligence or
willful misconduct.
9.4 Directors' and Officers' Insurance. The Company shall provide
appropriate directors' and officers' insurance to the extent such insurance is
available to the Company on commercially reasonable terms.
ARTICLE 10
MISCELLANEOUS
10.1 Entire Agreement. This Agreement and the other Related
Agreements, together with any schedules and exhibits hereto and thereto, contain
the entire agreement and understanding of the Members relating to the subject
matter hereof and supersede all prior negotiations, proposals, offers,
agreements and understandings (written or oral) relating to such subject matter.
10.2 Amendment; Waiver. Neither this Agreement nor any provision
hereof may be amended or modified except in a writing signed by the Member
against which enforcement of such amendment or modification is sought. 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
57
waiver by any Member of any departure by any other Member from any provision of
this Agreement shall be effective unless the same shall be in a writing signed
by the Member against which enforcement of such waiver or consent is sought, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which it was given. No notice or similar
communication by any Member to another shall entitle such other Member to any
other or further notice or similar communication in similar or other
circumstances, except as specifically provided herein.
10.3 Specific Performance. The Members acknowledge that money damages
may not be an adequate remedy for violations of this Agreement and that any
Member may, in its sole discretion, in an arbitration or a court of competent
jurisdiction to the extent permitted hereunder, apply for specific performance
or injunctive or other relief as such arbitration or court may deem just and
proper in order to enforce this Agreement or to prevent violation hereof and, to
the extent permitted by applicable law, each Member waives any objection to the
imposition of such relief.
10.4 Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall, unless otherwise specifically provided herein, be cumulative and
not alternative, and the exercise or beginning of the exercise of any thereof by
a Member shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such Member.
10.5 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the Members and their respective successors and
permitted assigns. No Member may assign its rights or delegate its duties under
this Agreement without the written consent of the other Members except to the
extent expressly provided in this Agreement.
10.6 No Third Party Beneficiaries. This Agreement is entered into
solely for the benefit of the Members and no Person other than the Members,
their respective successors and permitted assigns, and (to the extent provided
in Article 9) the Persons entitled to indemnification pursuant to Article 9, may
exercise any right or enforce any obligation hereunder.
10.7 Further Assurances. Each Member will execute and deliver such
further documents and take such further actions as any other Member may
reasonably request consistent with the provisions hereof in order to effect the
intent and purposes of this Agreement.
58
10.8 Notices. All notices or other communications hereunder shall be
in writing and shall be deemed to have been duly given or made (i) upon delivery
if delivered personally (by courier service or otherwise), (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 (iii) three days after being mailed by
first-class mail, postage prepaid and return receipt requested, and all legal
process with regard hereto shall be validly served when served in accordance
with applicable law, in each case to the applicable addresses set forth below
(or such other address as the recipient may specify in accordance with this
Section):
If to a Member or Representative of the CBW Member Group, to such Member or
Representative:
c/o Cincinnati Xxxx Wireless Company
000 X. Xxxxxx Xxxxxx, 000-0000
Xxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
Fax: 000-000-0000
with a copy to:
Cincinnati Xxxx Inc.
000 X. Xxxxxx Xxxxxx, 000-000
Xxxxxxxxxx, XX 00000
Attn: General Counsel
Fax: (000) 000-0000
If to a Member or Representative of the AT&T PCS Member Group, to such Member or
Representative:
c/o AT&T Wireless Services, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxx, Esq.
Fax: (000) 000-0000
with a copy to:
59
AT&T Wireless Services, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: General Counsel
Fax: (000) 000-0000
10.9 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Ohio, without regard to
principles of conflicts of law.
10.10 Severability. If any term of this Agreement or the application
thereof to any Member or any circumstance shall be held invalid or unenforceable
to any extent, the remainder of this Agreement and the application of such term
to the other Members or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by applicable law, so long as the
economic and legal substance of this Agreement and the transactions contemplated
hereby is not affected in any manner adverse to any Member.
10.11 Independent Contractors. The Members are independent
contractors, and this Agreement does not create a partnership or agency
relationship between the Members, or any other relationship between the Members
except as expressly set forth herein. No Member shall have any right or
authority to assume, create or incur any liability or obligation, express or
implied, in the name or on behalf of any other Member.
10.12 Disposition of Interests. Upon the sale or other disposition by
a Person of all its Interests in the Company, following which such Person and
Affiliate thereof is no longer a Member of the Company, this Agreement shall
terminate as to such Member and its Affiliates except as provided in Section
10.13 below.
10.13 Survival of Rights and Duties. Termination of this Agreement for
any reason shall not relieve any Member of any liability which at the time of
termination has already accrued to such Member or which thereafter may accrue in
respect of any act or omission prior to such termination, nor shall any such
termination affect in any way the other Related Agreements or the survival of
any right, duty or obligation of any Member which is expressly stated elsewhere
in this Agreement to survive termination hereof. Sections 6.6, 6.10 and 6.11 and
Articles 9 and 10 shall survive any termination of this Agreement.
10.14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument.
10.15 Construction. The captions used herein are for convenience of
60
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.
10.16 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
CINCINNATI XXXX WIRELESS COMPANY
By___________________________
Name:
Title:
61
AT&T WIRELESS PCS INC.
By___________________________
Name: Xxxx X. Xxxxxx
Title: Vice President
Agreed to for purposes of Sections 6.13, 6.14, 6.15, 6.16 and 7.5:
CINCINNATI XXXX INC.
By________________________
Name:
Title:
Accepted and Agreed:
CINCINNATI XXXX WIRELESS, LLC
By_________________________
Name:
Title:
62
Schedule 2.2: Principal Terms of Senior Secured Notes
Maturity Date: Five years from date of advance (or, if earlier, the
maturity date of any Senior Notes already outstanding
at time of advance), subject to required prepayments
described below
Interest: Payable quarterly, at a rate equal to the
rate per annum (based on a year of 365/6 and
actual days elapsed), announced from time to
time by Chemical Bank at its headquarters
office in New York City as its Prime Rate plus two and
one-half percent (plus an additional two percent in the
case of overdue amounts)
Ranking: Senior to all indebtedness of the Company other than
"Existing Senior Indebtedness" (existing indebtedness
the terms of which do not permit more senior debt)
Collateral: First priority security interest in all assets of the
Company, subject only to the terms of Existing Senior
Indebtedness
Prepayment: The following amounts shall be applied to prepayment
of the Notes:
(i) Distributable Cash otherwise distributable to
the Members pursuant to Article 4 of the
Operating Agreement;
(ii) Proceeds of any transfer or encumbrance of
the Non-Contributing Member's Interest pursuant
to Article 7 of the Operating Agreement
Default Remedies: Upon default by the Company under the Notes,
the Contributing Member may elect any of the
following remedies, or any other remedies
available at law or in equity:
(i) foreclosure on the collateral;
(ii) conversion of the outstanding
balance of the Notes into additional
Interests, at then-current fair
market value as determined by
third-party appraisal; or
63
(iii) sale of the Company in a
commercially reasonable manner,
where the Contributing Member (but
not the Non-Contributing Member) may
be a purchaser
Other Terms: Commercially reasonable covenants and other terms
and conditions
Documentation: Commercially reasonable documentation carrying out the
foregoing terms, to be prepared by the Contributing
Member.
64
SCHEDULE 6.6
Financial & Operating Results Disclosure Items
Business Metrics:
Number of Subscribers
Subscriber Additions
Average Subscribers
POPs
Cumulative Penetration
Penetration Gain in Period
Revenues/Subscribers/Month
Capital Expenditures
Churn
Acquisition Cost Per Subscriber
Financial Information:
Revenues
Operating Income/(Loss)
EBITDA
Overall Dilutive Effect of the Investment
65
SCHEDULE 6.11
COST ALLOCATIONS
CUSTOMER CARE
BILLING AND COLLECTION
INFORMATION SERVICES
MARKETING
SALES
FINANCE AND ACCOUNTING
ADMINISTRATION
RETAIL STORE OPERATIONS
LEGAL
EXTERNAL AFFAIRS AND REGULATORY AFFAIRS
TRAINING
TAXES
RISK MANAGEMENT
BUSINESS DEVELOPMENT
CASH MANAGEMENT/TREASURY
INTERNAL AUDIT
66
SCHEDULE 6.12(a)
MINIMUM BUILDOUT SCHEDULE
PHASE 1 The buildout as approved by the Company through 1998.
Buildout core metro areas and suburbs of Cincinnati and Dayton
Ohio
PHASE II Within two years of closing of the Operating Agreement:
Key secondary cities and connecting highway corridors as
defined by marketing and competitive situation to include:
Highway 52 from Cincinnati to the BTA border
Interstate 70 and 75 from Dayton to the BTA border
Xxxxxxx 00 and 71 from Cincinnati to the BTA border
67
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 -- GENERAL.................................................................... 2
1.1 Name...................................................................... 2
1.2 Principal Place of Business............................................... 2
1.3 Term...................................................................... 2
1.4 Purpose and Powers........................................................ 2
1.5 Filings................................................................... 3
1.6 Sole Agreement............................................................ 3
1.7 Definitions............................................................... 3
1.8 Registered Office; Registered Agent....................................... 16
ARTICLE 2 -- CAPITALIZATION............................................................. 16
2.1 Capital Accounts.......................................................... 16
(a) Establishment.................................................... 16
(b) General Rules for Adjustment of Capital Accounts................. 16
(c) Special Rules.................................................... 17
2.2 Capital Contributions..................................................... 17
2.3 No Withdrawals............................................................ 20
2.4 No Interest on Capital Account Balances................................... 21
2.5 No Third Party Beneficiaries.............................................. 21
ARTICLE 3 -- PROFITS AND LOSSES......................................................... 21
3.1 Profits................................................................... 21
3.2 Losses.................................................................... 21
(a) General Rule..................................................... 21
(b) Limitation....................................................... 21
3.3 Special Allocations....................................................... 22
(a) Minimum Gain Chargeback.......................................... 22
(b) Member Minimum Gain Chargeback................................... 22
(c) Qualified Income Offset.......................................... 22
(d) Nonrecourse Deductions........................................... 23
(e) Member Nonrecourse Deductions.................................... 23
3.4 Curative Allocations...................................................... 23
3.5 Allocation of Credits..................................................... 23
3.6 Tax Allocations........................................................... 23
(a) Contributed Property............................................. 23
(b) Revalued Property................................................ 24
(c) Effect........................................................... 24
68
(d) Conformity of Reporting........................................... 24
3.7 Change in Member's Interests............................................... 24
ARTICLE 4 -- DISTRIBUTIONS............................................................... 24
4.1 Distributable Cash......................................................... 24
4.2 Liquidating Distributions.................................................. 25
4.3 Other Distributions........................................................ 25
ARTICLE 5 -- ACCOUNTING AND RECORDS...................................................... 25
5.1 Fiscal Year................................................................ 25
5.2 Method of Accounting....................................................... 25
5.3 Books and Records; Inspection.............................................. 25
(a) Books of Account and Records...................................... 25
(b) Inspection........................................................ 26
5.4 Financial Statements....................................................... 26
5.5 Taxation................................................................... 27
(a) Status of the Company............................................. 27
(b) Tax Elections and Reporting....................................... 27
(c) Company Tax Returns............................................... 27
(d) Tax Audits........................................................ 28
ARTICLE 6 -- MANAGEMENT.................................................................. 28
6.1 Member Committee........................................................... 28
(a) Number of Representatives......................................... 29
(b) Initial Representatives........................................... 29
(c) Vacancies......................................................... 29
(d) Chairman.......................................................... 29
(e) Selection of Company Employees.................................... 29
6.2 Meeting Requirements....................................................... 30
(a) Regular Meetings.................................................. 30
(b) Special Meetings.................................................. 30
(c) Telephonic Meetings............................................... 30
(d) Notices........................................................... 30
(e) Quorum............................................................ 31
(f) Written Consents.................................................. 31
6.3 Actions by Member Committee................................................ 31
(a) Scope of Authority................................................ 31
(b) Actions Requiring Member Committee Approval....................... 31
(c) Approval Requirements............................................. 31
(d) Initial Budget.................................................... 32
(e) Subsequent Budgets................................................ 32
(f) Five-Year Budget.................................................. 32
6.4 Actions by Members......................................................... 33
6.5 Sale of Services........................................................... 33
69
6.6 Confidentiality............................................................. 33
6.7 Conflict Transactions....................................................... 34
6.8 Other Business; Duties; Etc................................................. 34
6.9 Preferred Provider.......................................................... 36
6.10 Dispute Resolution......................................................... 36
6.11 Participation by Members and their Affiliates.............................. 39
(a) General............................................................ 39
(b) Reimbursement; Cost Allocations.................................... 39
(c) Limitations........................................................ 40
(d) Payments........................................................... 40
(e) Disputes........................................................... 40
(f) Books and Records................................................. 41
(g) Other Sources...................................................... 41
6.12 System Requirements........................................................ 41
(a) Construction....................................................... 41
(b) Build Out Requirement.............................................. 42
(c) Microwave Relocation............................................... 42
(d) Service Features................................................... 42
(e) Quality Standards.................................................. 42
(f) Interexchange Services............................................. 43
(g) Substitute Technology.............................................. 43
6.13 Interconnection............................................................ 43
6.14 Resale, Agency Agreements.................................................. 43
6.15 Co-Location................................................................ 45
6.16 Attribution of Interests................................................... 45
ARTICLE 7 -- TRANSFER OR ENCUMBRANCE OF INTEREST.......................................... 46
7.1 Restriction on Transfer or Encumbrance...................................... 46
7.2 Transfer of Member's Interest to a Subsidiary............................... 46
7.3 Other Transfers; Right of First Refusal..................................... 46
(a) Offer and Right to Sell............................................ 47
(b) Notice............................................................. 47
(c) Election to Purchase............................................... 47
(d) Timing; Assignment of Rights....................................... 47
(e) Representations at Closing......................................... 48
(f) Sale to Third Party................................................ 48
(g) Substituted Members................................................ 49
7.4 Tag-Along Right; Put........................................................ 49
7.5 Other Transfers............................................................. 50
7.6 Invalid Transfers Void...................................................... 50
7.7 Certain Determinations...................................................... 51
7.8 Other Encumbrances on a Member's Interest................................... 51
70
ARTICLE 8 -- DISSOLUTION AND TERMINATION.................................................. 52
8.1 No Termination.............................................................. 52
8.2 Events of Dissolution....................................................... 52
8.3 Procedures Upon Dissolution................................................. 52
(a) General............................................................ 52
(b) Control of Winding Up.............................................. 53
(c) Manner of Winding Up............................................... 53
(d) Application of Assets.............................................. 53
8.4 Termination................................................................. 54
ARTICLE 9 -- LIABILITY AND INDEMNIFICATION................................................ 54
9.1 No Personal Liability....................................................... 54
9.2 Indemnification by Company.................................................. 54
9.3 Notice and Defense of Claims................................................ 55
(a) Notice of Claim.................................................... 55
(b) Defense by the Company............................................. 55
(c) Defense by the Indemnified Person................................. 56
(d) Advancement of Expenses............................................ 56
(e) Contribution....................................................... 56
9.4 Directors' and Officers' Insurance.......................................... 57
ARTICLE 10 -- MISCELLANEOUS............................................................... 57
10.1 Entire Agreement........................................................... 57
10.2 Amendment; Waiver.......................................................... 57
10.3 Specific Performance....................................................... 57
10.4 Remedies Cumulative........................................................ 57
10.5 Successors and Assigns..................................................... 58
10.6 No Third Party Beneficiaries............................................... 58
10.7 Further Assurances......................................................... 58
10.8 Notices.................................................................... 58
10.9 Governing Law.............................................................. 59
10.10 Severability............................................................... 59
10.11 Independent Contractors.................................................... 59
10.12 Disposition of Interests................................................... 60
10.13 Survival of Rights and Duties.............................................. 60
10.14 Counterparts............................................................... 60
10.15 Construction............................................................... 60
10.16 No Right to Partition...................................................... 61
71
SCHEDULES
Schedule 2.2 Principal Terms of Senior Secured Notes
Schedule 3.6 Allocation Method
Schedule 6.6 Financial & Operating Results Disclosure Items
Schedule 6.11 Cost Allocations
Schedule 6.12 Minimum Buildout Schedule
Schedule 6.12(d) Service Features
Schedule 6.12(e) Quality & Reporting Standards
72
