Exhibit 3.4
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SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
of
ACC ACQUISITION LLC
between
AT&T WIRELESS SERVICES JV CO.
and
XXXXXX XX COMPANY
Dated as of February 25, 2000
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TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS 1
ARTICLE 2 ORGANIZATION 17
2.1 Name 17
2.2 Principal Place of Business 17
2.3 Registered Office; Registered Agent 18
2.4 Term 18
2.5 Purpose and Powers 18
2.6 Filings 18
2.7 Sole Agreement 18
ARTICLE 3 CAPITALIZATION 18
3.1 Capital Accounts 18
3.2 Capital Contributions 20
3.3 No Withdrawals 21
ARTICLE 4 PROFITS AND LOSSES 21
4.1 Profits 21
4.2 Limitation on Losses 21
4.3 Special Allocations 21
4.4 Curative Allocations 22
4.5 Allocation of Credits 23
4.6 Tax Allocations 24
4.7 Change in Members Interests 25
ARTICLE 5 DISTRIBUTIONS 25
5,1 Distributable Cash 25
5.2 Liquidating Distributions 25
ARTICLE 6 ACCOUNTING AND RECORDS 25
6.1 Fiscal Year 26
6.2 Method of Accounting 26
6.3 Books and Records; Inspection 26
6.4 Financial 26
6 5 Taxation 27
ARTICLE 7 MANAGEMENT 31
7.1 Management 31
7.2 Meetings of Management Committee 32
7.3 Actions by Management Committee 33
ARTICLE 8 OPERATING AGREEMENTS AND OTHER COVENANTS 34
8.1 Limited Exclusivity 34
8.2 Roaming Preference 35
8.3 Resale and Agency Agreements 36
8 4 Long Distance 37
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8.5 Equipment Discounts 37
8.6 Roaming Agreements 37
8.7 Certain Restrictions 38
8.8 Other Business; Duties; Etc 38
8.9 Confidentiality 38
8.10 Conversion to Corporation 39
8.11 Dispute Resolution 40
8.12 Disqualifying Transaction 42
ARTICLE 9 TRANSFER RESTRICTIONS; EXIT RIGHTS; CHANGE OF CONTROL OF DCC 42
9.1 General Restrictions on Transfers 42
9.2 Right of First Refusal 44
9.3 Tag-Along Right 45
9.4 Indirect Transfers 46
9.5 Substituted 47
9.6 Invalid Transfers Void 47
9.7 Determination of Fair Market Value 47
9.8 Change of Control of DCC 48
9.9 Buy-Sell Procedure 49
9.10 IPO 51
ARTICLE 10 DISSOLUTION AND TERMINATION 51
10.1 No Withdrawal 51
10.2 Dissolution 51
10.3 Procedures Upon Dissolution 51
10.4 Termination 52
ARTICLE 11 EXCULPATION AND INDEMNIFICATION 53
11.1 No Personal Liability 53
11.2 Indemnification by Company 53
11.3 Notice and Defense of Claims 53
ARTICLE 12 MISCELLANEOUS 55
12.1 Entire Agreement 55
12.2 Amendment; Waiver 55
12.3 Specific Performance 56
12.4 Remedies Cumulative 56
12.5 Successors and Assigns 56
12.6 No Third Party Beneficiaries 56
12.7 Further Assurances 53
12.8 Notices 56
12.9 Governing Law 57
12.10 Severability 57
12.11 Independent Contractors 57
12.12 Disposition of Interests 58
12.13 Survival of Rights and Duties 58
12.15 Construction 58
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12.16 No Right to Partition 58
12.17 De Facto and De Jure Transfers of Control 59
SCHEDULES AND EXHIBITS
Schedule I -- Core Service Features
Schedule II -- Xxxxxx Group
Schedule III -- Territory
Schedule 8.1(a)(iv) -- Tritel Licenses
Schedule 8.1(a)(v) -- AT&T Licenses
Schedule 9.4 -- JWC Investors
Exhibit A -- Significant Matters
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SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT,
dated as of February 25, 2000, by and between AT&T Wireless Services JV Co. a
Delaware corporation ("AWS Sub") and a 100% Subsidiary of AWS Wireless
Services, Inc. a Delaware corporation ("AWS"), and Xxxxxx XX Company. an
Oklahoma corporation ("DCC Sub") and a 100% Subsidiary of Xxxxxx
Communications Corporation, an Oklahoma corporation ("DCC").
WHEREAS, AWS Sub and DCC Sub are party to the Operating Agreement of
ACC Acquisition LLC dated as of October 4, 1999, as amended and restated as
of January 31 2000 (the "Original Agreement"); and
WHEREAS, AWS Sub and DCC Sub desire to amend and restate the
Original Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
covenants herein contained. it is hereby agreed, and the Original Agreement
is hereby amended and restated, as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement without other definition
shall, unless expressly stated otherwise have the meanings specified in this
Article 1.
"80% Subsidiary" of a Person or group (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act and the regulations thereunder)
means any Subsidiary that is controlled by such Person or group, and at least
80% of whose voting power and at least 80% of whose economic interests are
owned directly by such Person or group or by an 80% Subsidiary of such Person
or group.
"100% Subsidiary" of a Person or group (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act and the regulations thereunder)
means any Subsidiary that is controlled by such Person or group, and 100% of
whose voting power and 100% of whose economic interests are owned directly by
such Person or group or by a 100% Subsidiary of such Person or group.
"Act" means the Delaware Limited Liability Company Act, as amended
from time to time.
"Adjusted Capital Account Deficit" means, with respect to any
Member, the deficit balance, if any, in such Member's Capital Account as of
the end of the relevant fiscal year, after giving effect to the following
adjustments:
(i) such Capital Account shall be deemed to be increased by
any amounts which such Member is obligated to restore to the Company
(pursuant to this Agreement or otherwise) or is deemed to be obligated
to restore pursuant to the second to last sentence of Treasury
Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5) (relating to
allocations attributable to nonrecourse debt); and
(ii) such Capital Account shall be deemed to be decreased by
the items described in Treasury Regulation Sections 1.704-
1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted and applied consistently
therewith.
"Adopted Service Features" means the Core Service Features and
additional service features that are adopted by the Company in accordance with
the terms of this Agreement.
"Affiliate" means, with respect to any Person, any other Person that,
either directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such Person.
"Affiliate Group" means each of the AWS Affiliate Group and the DCC
Affiliate Group.
"Agents" is defined in Section 8.9(a).
"Agreement" means this Amended and Restated Limited Liability
Company Agreement, as amended, modified, supplemented or restated from time
to time.
"Appraiser" is defined in Section 9.7.
"AT&T" means AT&T Corp.
"AT&T PCS" means AT&T Wireless PCS. LLC.
"AWS" is defined in the first paragraph hereof.
"AWS Affiliate Group" means (a) AWS Sub, so long as AWS Sub is an
80% Subsidiary of AWS. (b) AWS and any Subsidiary of AWS so long as such
Subsidiary is an 805 Subsidiary of AWS and (c) AT&T and any Subsidiary of
AT&T so long as such Subsidiary is an 80% Subsidiary of AT&T.
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"AWS Member Group" means Members that are members of the AWS
Affiliate Group and their Private Transferees.
"AWS Sub" is defined in the first paragraph hereof.
"Book Value" means, with respect to any asset of the Company the
asset's adjusted basis as of the relevant date for federal income tax
purposes except as follows:
(i) the initial Book Value of any asset contributed by a
Member to the Company shall be the Fair Market Value of such asset, as
determined by the contributing Member and the Company with the
concurrence of the Members other than the contributing Member;
(ii) the Book Values of all Company assets (including intangible
assets such as goodwill) shall be adjusted to equal their respective Fair
Market Values (as adjusted by Section 7701(g) of the Code) as of the
following times:
(A) the acquisition of an additional Interest by any new or
existing Member in exchange for more than a de minimis capital
contribution;
(B) the distribution by the Company to a Member of more than a
de minimis amount of money or other Company property as consideration
for an interest in the Company; and
(C) the termination of the Company for federal income tax
purposes pursuant to Section 708(b) of the Code;
(iii) the Book Value of any Company asset distributed to any Member
shall be the Fair Market Value of such asset (as adjusted by Section
7701(g) of the Code) on the date of distribution;
(iv) if the Book Value of an asset has been determined or adjusted
pursuant to clause (i) or clause (ii) above, such Book Value shall
thereafter be adjusted by the Depreciation taken into account with respect
to such asset for purposes of computing Profits and Losses, and other items
allocated pursuant to Article 4; and
(v) the Book Value of Company assets shall be increased or decreased,
as appropriate, to reflect any adjustments to the adjusted tax bases of
such assets pursuant to Sections 734(b) or 743(b) of the Code, but only to
the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Treasury Regulation Section 1.704-
1(b)(2)(iv)(m) and clause (v) of the definition of "Profits" and "Losses"
set forth below; provided, however, that Book values shall not be adjusted
pursuant to this clause (v) to the extent that an adjustment pursuant to
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clause (ii) or (iii) hereof is required in connection with a transaction
that would otherwise result in an adjustment pursuant to this clause (v).
The foregoing definition of Book Value is intended to comply with the
provisions of Treasury Regulation Section 1.704-1(b)(2)(iv) and shall be
interpreted and applied consistently therewith.
"Business" means the business of (a) owning, constructing and
operating systems to provide Company Communications Services, solely within
the Territory, (b) providing to end-users and resellers Company
Communications Services available on such systems, (c) providing in
connection with such Company Communications Services, solely within the
Territory, the Adopted Service Features and (subject to the immediately
following sentence) Telecommunications Services incidental or ancillary to
such Company Communications Services provided to end-users of such Company
Communications Services (including, by way of example, bundling additional
Telecommunications Services with Company Communications Services), and (d)
marketing and offering the services and features described in clauses (b) and
(c) within the Territory, including advertising such services and features
using broadcast and other media, so long as such advertising extends beyond
the Territory only when and to the extent necessary to reach customers and
potential customers in the Territory. The activities described in clauses (a)
and (b) shall be the indispensable requisite, and primary business, of the
Company and, to the extent the Company provides Telecommunications Services
incidental or ancillary thereto, the Company and its Subsidiaries shall be
only the agent or reseller for the provider thereof and shall not own or
lease the facilities used to provide such services, except that the Company
may own or lease facilities that, in the aggregate, do not have a purchase
price to the Company and its Subsidiaries in excess of $10 million, and the
Company may be a facilities-based provider of services using such facilities.
"Buyers" is defined in Section 9.2(a).
"Buy-Sell Procedure" is defined in Section 9.9(a).
"Capital Account" is defined in Section 3.1(a).
"Cellular System" means a wireless communications system constructed
and operated in a Metropolitan Statistical Area or Rural Statistical Area as
defined by the FCC (or any territorial designations or subdivision thereof
authorized by the FCC) exclusively using frequencies in the 800 MHz band
allocated for the Cellular Radiotelephone Service under Part 22 of the FCC
Rules. pursuant to a License therefor issued by the FCC.
"Change of Control of DCC" means:
(i) at any time as Voting Securities of DCC (excluding shares of Class
B Common Stock owned beneficially by members of the Xxxxxx Group) having at
least a majority of the voting power of the Voting Securities of DCC then
outstanding (on
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a fully diluted basis, treating Equity Interests of DCC issuable upon the
conversion, exchange or exercise of convertible or exchangeable securities,
or other rights to acquire Equity Interests, as issued and outstanding) are
not listed for trading on a national securities exchange or quoted on
the NASDAQ National Market System, any circumstance, event or transaction
following which
(A) the members of the Xxxxxx Group cease to be the exclusive
"beneficial owners" (as such term is used in Rules 13d-3, 13d-5 or
16a-1 under the Exchange Act), of at least a majority of the
outstanding Equity Interests of DCC (on a fully diluted basis, treating
Equity Interests of DCC issuable upon the conversion, exchange or
exercise of convertible or exchangeable securities, or other rights to
acquire Equity Interests, as issued and outstanding) or
(B) Xxxxxxx X. Xxxxxx or (in the event of the death or
Disability of Xxxxxxx X. Xxxxxx) the members of the Xxxxxx Group cease
to have, directly or indirectly, the exclusive right to vote Voting
Securities of DCC having at least a majority of the voting power of the
Voting Securities of DCC then outstanding;
(ii) so long as Voting Securities of DCC (excluding shares of Class B
Common Stock owned beneficially by members of the Xxxxxx Group) having at
least a majority of the voting power of the Voting Securities of DCC then
outstanding (on a fully diluted basis, treating Equity Interests of DCC
issuable upon the conversion, exchange or exercise of convertible or
exchangeable securities, or other rights to acquire Equity Interests, as
issued and outstanding) are listed for trading on a national securities
exchange or quoted on the NASDAQ National Market System, any circumstance,
event or transaction following which
(A) the members of the Xxxxxx Group cease to be the exclusive
"beneficial owners" (as such term is used in Rules 13d-3, 13d-5 or
16a-1 under the Exchange Act) of at least 35% of the outstanding Equity
Interests of DCC (on a fully diluted basis, treating Equity Interests
of DCC issuable upon the conversion, exchange or exercise of
convertible or exchangeable securities, or other rights to acquire
Equity Interests, as issued and outstanding) or
(B) Xxxxxxx X. Xxxxxx or (in the event of the death or
Disability of Xxxxxxx X. Xxxxxx) the members of the Xxxxxx Group cease
to have, directly or indirectly, the exclusive right to vote Voting
Securities of DCC having at least 35% of the voting power of the Voting
Securities of DCC then outstanding; or
(C) another Person or group (as such term is used in Sections
13(d) and 14(d) of the Exchange Act and the regulations thereunder) is
the
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"beneficial owner" (as such term is used in Rules 13d-3, 13d-5 or 16a-1
under the Exchange Act) of at least 35% of the Voting Securities
of DCC or 35% of the outstanding Equity Interests of DCC (on a fully
diluted basis, treating Equity Interests of DCC issuable upon the
conversion, exchange or exercise of convertible or exchangeable
securities, or other rights to acquire Equity Interests, as issued and
outstanding) or otherwise has the power, acting alone, to control DCC;
or
(iii) the sale of all or substantially all of DCC's stock, business or
assets (including through a merger or otherwise).
"Claim" is defined in Section 11.3(a).
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Company" means ACC Acquisition LLC.
"Company Communications Services" means Commercial Mobile Radio
Services regulated under FCC Rules Subpart H of Part 22, Subpart E of Part
24, and Part 20 in effect as of the Effective Date.
"Company Minimum Gain" means the aggregate of the amounts of gain,
if any, determined for each nonrecourse liability of the Company, that would
be realized by the Company for federal income tax purposes if it disposed of
the Company property subject to such liability in a taxable transaction in
full satisfaction thereof and for no other consideration. To the extent the
foregoing is inconsistent with Treasury Regulation Section 1.704-2(d) or
incomplete with respect to such regulation, Company Minimum Gain shall be
computed in accordance with such regulation.
"Confidential Information" means all documents and information
(including without limitation, commercial information and information with
respect to customers and proprietary technologies or processes and the design
and development of new products or services) concerning the Company, the
Cellular Systems and PCS Systems in which the Company has an ownership
interest, the Members or their Affiliates furnished to a Member or any of its
Affiliates in connection with the transactions leading up to and contemplated
by this Agreement and the other Related Agreements and the operation of the
Company which is (i) not otherwise in the public domain, (ii) not otherwise
in the rightful possession of such Member (or Affiliate) from third parties
having no obligation of confidentiality to the other Member or the Company
and (iii) not required to be disclosed by such Member, its Affiliates or
Agents pursuant to federal, state or local law.
"control," "controlled" and "controlling" shall mean possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of Voting
Securities, by contract or otherwise
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"Core Service Features" means the service features set forth on
Schedule 1.
"Corporation" is defined in Section 8.10(a).
"DCC" is defined in the first paragraph hereof.
"DCC Affiliate Group" means (a) DCC Sub so long as it is an 80%
Subsidiary of DCC and DCC is a member of the DCC Affiliate Group, (b) any
Parent of DCC Sub so long as such Parent is an 80% Subsidiary of DCC and DCC
is a member of the DCC Affiliate Group, (c) DCC so long as a Change of
Control of DCC has not occurred, (d) any Parent of DCC so long as such Parent
is an 80% Subsidiary of the Xxxxxx Group and (e) the Xxxxxx Group. Logix
Communications is not a member of the DCC Affiliate Group.
"DCCLP" means Xxxxxx XX Limited Partnership, an Oklahoma limited
partnership.
"DCC Member Group" means Members that are members of the DCC
Affiliate Group and their Private Transferees.
"DCC Sub" is defined in the first paragraph hereof.
"Depreciation" means, for each fiscal year or part thereof, an
amount equal to the depreciation, amortization, or other cost recovery
deduction allowable for federal income tax purposes with respect to an asset
for such year or other period, except that if the Book value of an asset
differs from its adjusted basis for federal income tax purposes at the
beginning of such year, Depreciation shall be an amount which bears the same
ratio to such Book value as the federal income tax depreciation, amortization
or other cost recovery deduction for such year bears to such adjusted tax
basis; provided that if the federal income tax depreciation, amortization or
other cost recovery deduction for such year is zero, Depreciation shall be
determined with reference to such Book Value using any reasonable method
selected by the Management Committee, subject to any applicable legal
regulations.
"Disability" means, with respect to Xxxxxxx X. Xxxxxx, that he is
disabled in accordance with the provisions of the long-term disability
insurance policies of DCC applicable to him or, in the absence of any such
policies, that he is unable, for 180 consecutive days or 270 total days, in
any 360-day period, to exercise his material duties as Chief Executive
Officer of DCC.
"Dispute" is defined in Section 8.11(a).
"Dispute Notice" is defined in Section 8.11(c).
"Disqualifying Transaction" means a merger, consolidation, asset
acquisition or disposition. or other business combination involving AT&T (or
its Affiliates) and another
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Person, which other Person (together with its Affiliates but before giving
effect to such merger, consolidation, asset acquisition or disposition or
other business combination) (a) derives annual aggregate revenues in excess
of $5 billion from the provision of Telecommunication Services (based on its
most recently ended fiscal year for which such information is available), (b)
derives less than one-third of its annual aggregate revenues from the
provision of wireless Telecommunications Services (based on its most recently
ended fiscal year for which such information is available), (c) owns Licenses
issued by the FCC which authorize it to offer (and does offer) Mobile
Wireless Services serving more than 25% of the Pops within the Territory, and
(d) with respect to which AWS Sub has given written notice to the Company and
the other Members specifying that such merger, consolidation, asset
acquisition or disposition or other business combination shall be a
Disqualifying Transaction for purposes of this Agreement and the transactions
contemplated hereby.
"Distributable Cash" means, as of the end of any fiscal period, the
amount of the cash and cash equivalents held by the Company and its
Subsidiaries available for distribution to the Members, as determined by the
Management Committee in accordance with sound business practice.
"Xxxxxx Family" means, collectively, the Immediate Families of
Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx and Xxxxx Xxxxxx.
"Xxxxxx Group" means, collectively, the Persons set forth on
Schedule II and members of the Xxxxxx Family.
"Xxxxxx IPO" means an initial public offering of common stock of DCC
pursuant to an effective registration statement under the Securities Act, the
aggregate gross proceeds from which public offering equals or exceeds $50.0
million.
"Economic Interest" means the percentage interest of a Member (or a
permitted assignee of a Member pursuant to Article 9 which has not been
admitted as a Member of the Company) in the aggregate distributions by the
Company, and the aggregate allocations by the Company of Profits, Losses,
income, gain, loss, deduction or credit or any similar item, and all other
rights and interests of a Member of the Company that are not Voting
Interests. The term "Economic Interest" specifically excludes a Voting
Interest.
"Effective Date" means the Closing Date under the Agreement and Plan
of Merger,. dated as of October 5. 1999, among the Company, ACC Acquisition
Co and American Cellular Corporation.
"Equity Interests" means capital stock, partnership interests.
limited liability company interests or other ownership or beneficial
interests of any Person.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Fair Market Value" means, with respect to any asset, as of the date
of determination, the cash price at which a willing seller would sell and a
willing buyer would buy such asset in a transaction negotiated at arm's
length, each being apprised of and considering all relevant facts,
circumstances and factors, and neither acting under compulsion, with the
parties being unaffiliated third parties acting without time constraints.
"FCC" means the Federal Communications Commission or any successor
agency or entity performing substantially the same functions.
"FCC Rules" means the rules and regulations established by the FCC
codified in Section 47 of the Code of Federal Regulations, as the same may be
modified or amended from time to time hereafter.
"Final Order" means an action by the FCC or any state regulatory
agency granting its approval for the transfer of control of the Company as to
which (i) no request for stay by the FCC or state regulatory action is
pending, no such stay is in effect, and, if any deadline for filing any such
request is designated by statute, rule or regulation, such deadline has
passed; (ii) no petition for rehearing or reconsideration or application for
review of the action is pending before the FCC or any state regulatory
agency, and the time for filing any such petitions or applications has
passed; (iii) neither the FCC nor any state regulatory agency has the action
under reconsideration on its own motion and the time for such reconsideration
has passed; and (iv) no appeal to a court, or request for stay by a court, of
the action of the FCC or state regulatory agency is pending or in effect,
and, if any deadline for filing any such appeal or request is designated by
statute, rule or regulation, it has passed.
"GAAP" means generally accepted accounting principles as used by the
Financial Accounting Standards Board and/or the American Institute of
Certified Public Accountants.
"Governmental Authority" means a national, state, provincial,
county, city, local or other governmental or regulatory body or authority,
whether domestic or foreign.
"Immediate Family" means, with respect to any Person, such Person's
spouse, parents, spouse's parents, siblings, children, stepchildren, adopted
children and grandchildren.
"Included Interests" is defined in Section 9.3(a).
"Indemnified Person" is defined in Section 11.1(b).
"Indirect Transfer" means, with respect to Interests in the Company
owned by a Member that is a member of an Affiliate Group, a Transfer of
Equity Interests in a Person that owns directly or indirectly Equity
Interests in such Member.
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"Initial Economic Interests" means the Economic Interests acquired
by AWS Sub and DCC Sub on the Effective Date.
"Interest" means the Economic Interest and the Voting Interest of a
Member, and includes the entire legal and equitable ownership interest of a
Member in the Company.
"IPO" means the initial underwritten public offering of the
Company's equity securities pursuant to an effective registration statement
under the Securities Act.
"License" means, with respect to a PCS System or Cellular System,
all permits, licenses, waivers, and authorizations (including, without
limitation, licenses issued by the FCC) that are necessary to conduct the
operations of such system in the manner in which such operations are
currently contemplated, or may in the future be contemplated by the licensee
to be conducted.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest, right of first refusal or right of others therein,
or encumbrance of any nature whatsoever in respect of such asset.
"Liquidator" is defined in Section 10.3(b).
"Logix Communications" means Logix Communications Enterprises, Inc.
"Management Agreement means the Management Agreement, dated as of
the date hereof, between the Company and Xxxxxx Cellular Systems, Inc., as
the same may be amended in accordance herewith and therewith.
"Management Committee" is defined in Section 7.1.
"Member" means, initially, AWS Sub and DCC Sub as long as they have
not ceased to be Members hereunder, and any Person who, at the time of the
reference thereto. has been admitted to the Company as a Member in accordance
with the terms of this Agreement and has not ceased to be a Member hereunder,
in such Person's capacity as a member (within the meaning of the Act) of the
Company.
"Member Group" means each of the AWS Member Group and the DCC Member
Group.
"Member Minimum Gain" means an amount, with respect to each Member
nonrecourse debt, equal to the Company Minimum Gain that would result if such
Member nonrecourse debt were treated as a nonrecourse liability, determined
in accordance with Treasury Regulation Section 1.704-2(i).
"Member Nonrecourse Debt" has the meaning ascribed to the term
"partner nonrecourse debt" in Treasury Regulation Section 1.704- 2(b)(4), and
generally means any
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nonrecourse debt of the Company for which any Member bears the economic risk
of loss (such as a nonrecourse loan to the Company by a Member or certain
Affiliates of a Member).
"Member Nonrecourse Deduction" has the meaning ascribed to the term
"partner nonrecourse deduction" in Treasury Regulation Section 1.704-2(i)(2).
The amount of the Member Nonrecourse Deductions with respect to a Member
Nonrecourse Debt for a Company fiscal year equals the net increase, if any,
in the amount of Member Minimum Gain attributable to such Member Nonrecourse
Debt during that fiscal year, reduced (but not below zero) by the aggregate
amount of any distributions during that fiscal year to the Member that bears
the economic risk of loss for such Member Nonrecourse Debt to the extent such
distributions are from the proceeds of such Member Nonrecourse Debt and are
allocable to an increase in Member Minimum Gain attributable to such Member
Nonrecourse Debt.
"Mobile Wireless Services" shall mean mobile wireless Company
Communications Services (including the transmission of voice, data, image or
other messages or content) provided solely within the Territory, initiated or
terminated using TDMA or analog cellular technology and on frequencies in the
800 MHz band authorized for the Cellular Radiotelephone Service under Part 22
of the FCC Rules or in the 1900 MHz band authorized for the Personal
Communications Services under Part 24 of the FCC Rules, to or from subscriber
equipment that is capable of usage during routine movement throughout the
area covered by a cell site and routine handing-off between cell sites, and
is either intended for such usage or is temporarily fixed to a specific
location on a short-term basis (e.g.. a bank of wireless telephones
temporarily installed during a special event of limited duration). Without
limiting the foregoing, Mobile Wireless Services shall include wireless
office services if such services comply with this definition. Mobile Wireless
Services shall also include the transmissions between the Company's cell
sites and the Company's switch or switches in the Territory, the handing-off
of transmissions at the Company's switch or switches for termination by other
carriers, and the receiving of transmissions for the Company's customers
handed-off at the Company's switch or switches which were originated on the
system or systems of other carriers, in each case for the purpose of
facilitating Mobile Wireless Services described in the first sentence.
"Nonrecourse Deductions" has the meaning set forth in Treasury
Regulation Section 1.704-2(c). The amount of Nonrecourse Deductions for a
fiscal year equals the net increase, if any, in the amount of Company Minimum
Gain during that fiscal year, reduced (but not below zero) by any Nonrecourse
Distributions during such year.
"Nonrecourse Distributions" means the aggregate amount, as
determined in accordance with Treasury Regulation Section 1.704-2(c), of any
distributions during the fiscal year of proceeds of a nonrecourse liability,
as defined in Treasury Regulation Section 1.704(h)(3), that are allocable to
an increase in Company Minimum Gain.
"Offer" is defined in Section 9.2(a).
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"Offer Notice" is defined in Section 9.2(a).
"Offered Interests" is defined in Section 9.2(a).
"Offeror" is defined in Section 9.2(a).
"Operating Agreement" means the Operating Agreement, dated as of the
date hereof; among the Company, AWS and DCC, as the same may be amended in
accordance herewith and therewith.
"Parent" means, with respect to a specified entity, a Person or
group of which the specified entity is a Subsidiary.
"PCS" means the Personal Communications Services regulated under
Part 24 of the FCC Rules.
"PCS System" means a wireless communications system constructed and
operated in a Basic Trading Area or Major Trading Area as defined by
Xxxx-XxXxxxx and modified by the FCC (or any territorial designations or
subdivision thereof authorized by the FCC) exclusively using frequencies in
the 1900 MHz band allocated for the broadband Personal Communications Service
under Part 24 of the FCC Rules, pursuant to a License there for issued by the
FCC.
"Person" means any individual, corporation, partnership, firm, joint
venture, limited liability company, limited liability partnership,
association, joint stock company, trust, estate, incorporated or
unincorporated organization, Governmental Authority or other entity.
"Pops" means with respect to any licensed area, the residents of
such area based on the most recent publication by Equifax Marketing Decision
Systems, Inc. or any other publication as determined by the Management
Committee.
"Private Transferee" means a Person that acquires Economic Interests
from a Member in compliance with this Agreement, other than pursuant to a
broadly distributed underwritten registered public offering or Rule 144 under
the Securities Act, and that is not a member of an Affiliate Group
immediately prior to such acquisition.
"Profits" and "Losses" means, for each fiscal year or part thereof;
the Company's taxable income or loss for such year determined in accordance
with Section 703(a) of the Code (for this purpose. all items of income, gain,
loss and deduction required to be stated separately pursuant to Section
703(a)(1) of the Code shall be included in taxable income or loss) with the
following adjustments:
(i) any income of the Company that is exempt from federal income
tax shall be added to such taxable income or loss;
12
(ii) any expenditures of the Company described in Section
705(a)(2)(B) of the Code or treated as such pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(i) shall be subtracted from such
taxable income or loss;
(iii) in lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable
income or loss, Depreciation for such fiscal year shall be taken into
account;
(iv) if the Book Value of any Company asset is adjusted pursuant
to clause (ii) or clause (iii) of the definition of Book Value, the
amount of such adjustment shall be taken into account as gain or loss
from the disposition of such asset for purposes of computing Profits
or Losses;
(v) to the extent an adjustment to the adjusted tax basis of any
Company asset under Section 734(b) of the Code is required, pursuant
to Treasury Regulation Section 1.704(b)(2)(iv)(m)(4), to be taken into
account in determining Capital Accounts as a result of a distribution
other than in liquidation of a Member's interest in the Company, the
amount of such adjustment shall be treated as an item of gain (if the
adjustment increases the adjusted tax basis of the asset) or an item
of loss (if the adjustment decreases the adjusted tax basis of the
asset) from the disposition of such asset and shall be taken into
account for purposes of computing Profits and Losses: and
(vi) such taxable income or loss shall not be deemed to include
items of income, gain, loss, or deduction allocated pursuant to
Section 3.1(c)(iii) (to comply with Treasury Regulations under Section
704(b) of the Code), Section 4.3, Section 4.4 or Section 4.5.
"Prohibited Transferee" means any Person or group (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act and the regulations
thereunder) or Affiliate thereof(other than AWS and its Affiliates) that (a)
is one of the five largest providers of wireless Telecommunications Services
(based on revenue derived from the provision of such wireless
Telecommunications Services during the most recent fiscal year preceding the
applicable Transfer for which such information is available) in the United
States or a company whose annual gross revenues from Telecommunications
Services (during the most recent fiscal year for which such information is
available) exceed $2 billion or (b) provides Company Communications Services
in service areas in the United States covering more than five million Pops.
"Qualified Member" means each of (i) the members of the AWS Member
Group that are members of the AWS Affiliate Group, so long as the AWS Member
Group is a Qualified Member Group and (ii) the members of the DCC Member
Group that are members of the DCC Affiliate Group, so long as the DCC Member
Group is a Qualified Member Group.
13
"Qualified Member Group" means each of(i) the AWS Member Group as
long as members of the AWS Affiliate Group that are members of the AWS Member
Group retain in the aggregate 100% of the Voting Interests, and at least 80%
of the Economic Interests, that AWS Sub acquired on the Effective Date and
(ii) the DCC Member Group as long as members of the DCC Affiliate Group that
are members of the DCC Member Group retain in the aggregate 100% of the
Voting Interests, and at least 80% of the Economic Interests, that DCC Sub
acquired on the Effective Date.
"Related Agreements" means the Long Distance Agreement, the
Operating Agreement, any Resale Agreement and the Management Agreement.
"Representative" is defined in Section 7.1(a).
"Resale Agreement" means a Resale Agreement, if any, entered into
between the Company and DCC pursuant to Section 8.1(a).
"Response" is defined in Section 8.11(c).
"RoFR Closing" is defined in Section 9.2(b).
"Section 9.9(a) Notice" is defined in Section 9.9(a).
"Section 9.9(b) Notice" is defined in Section 9.9(b).
"Section 9.9(c) Notice" is defined in Section 9.9(c).
"Section 9.10 Election" is defined in Section 9.10.
"Securities Act" means the Securities Act of 1933, as amended.
"Sellers" is defined in Section 9.2(a).
"Selling Group" is defined in Section 9.2(a).
"Senior Party Representatives" is defined in Section 8.11(b).
"Significant Matter" means subject to Section 9.8(a)(iii) any of
the following:
(1) The sale, transfer, assignment or other disposition of any
material portion of the assets of the Company or any of its Subsidiaries
other than in the ordinary course of business;
(2) The merger, combination or consolidation of the Company or any of
its Subsidiaries with or into any entity other than the Company or a wholly
owned Subsidiary of the Company regardless of whether the Company or any
such
14
Subsidiary is the surviving entity in any such merger, combination or
consolidation; the acquisition of any businesses or assets for
consideration in excess of $1,000,000 by the Company; the formation of any
partnership or joint venture involving the Company; or the liquidation,
dissolution or winding up of the Company or any of its Subsidiaries (other
than the liquidation of a 100% Subsidiary of the Company into the Company
or another 100% Subsidiary of the Company);
(3) Any offering or issuance of securities or ownership interests in
the Company or any of its Subsidiaries, including, without limitation,
warrants, options or other rights convertible into or exchangeable for
securities or ownership interests in the Company or any of its
Subsidiaries, or the declaration of any dividends thereon;
(4) The repurchase by the Company or any of its Subsidiaries of any
securities or ownership interests in the Company or any of its
Subsidiaries, including, without limitation, warrants, options or other
rights convertible into or exchangeable for securities or ownership
interests in the Company or any of its Subsidiaries;
(5) The authorization or adoption of any amendment to the certificate
of formation, limited liability company agreement or any other constituent
document of the Company or any of its Subsidiaries, or the conversion of
the Company to a corporation (other than pursuant to an election to effect
an IPO in accordance with Section 8.10);
(6) If the Company is not managed by an Affiliate of DCC, the hiring
or termination of any executive officer of the Company;
(7) The approval of, or material amendment to, the initial three-year
budget. and any annual or other operating or capital budget, of the Company
or any of its Subsidiaries;
(8) The incurrence by the Company or any of its Subsidiaries, whether
directly or indirectly, of any indebtedness for borrowed money or capital
leases in any calendar quarter in excess of $1,000,000 unless specifically
provided for in any budget approved by the Management Committee;
(9) Any agreement or arrangement, written or oral, to pay any
director, officer, agent or employee of the Company or any of its
Subsidiaries $200,000 or more on an annual basis: or any loan, lease,
contract or other transaction with any employee of the Company or any of
its Subsidiaries with an annual salary in excess of $200,000, or with any
Representative or officer of the Company or any member of any such Person's
Immediate Family, unless specifically provided for in any budget approved
by the Management Committee;
15
(10) The making of, or commitment to make, any capital expenditures
involving a payment or liability in any one year of $1,000,000 or more in
the aggregate by the Company or any of its Subsidiaries, in each case other
than as provided for in any budget approved by the Management Committee;
(11) The initiation of any bankruptcy proceeding, dissolution or
liquidation of the Company or any of its Subsidiaries;
(12) Any agreement or commitment by the Company or any of its
Subsidiaries (w) not to compete with any other Person, (x) not to solicit
any other Person's business or customers, (y) not to solicit or hire any
other Person's employees, or (z) to use any other Person's trademarks or
services marks in its business, or to license or otherwise make available
any of its trademarks or service marks to any other Person for any purpose;
(13) The provision by the Company or any of its Subsidiaries of
Company Communications Services that are not Mobile Wireless Services;
(14) The assertion by the Company of a position with respect to any
material matter, or the disagreement by the Company with a position taken
with respect to any material matter by a Member or any other Person, before
the FCC or any other Governmental Authority, a self-regulatory body, any
industry organization or in any other public forum;
(15) The acquisition or disposition of any License issued by the FCC;
(16) Except as otherwise provided herein or therein, any amendment,
modification, renewal or termination of any of the Related Agreements; and
(17) The entering into any contract, agreement or commitment to do any
of the foregoing.
"Specified Restrictions" is defined in Section 9.4.
"Subsidiary" means, with respect to any Person, a corporation or
other entity of which 50% or more of the voting power of the voting
Securities or equity interests is owned, directly or indirectly, by such
Person.
"Tax Matters Partner" is defined in Section 6.5(d).
"TDMA" means the North American Time Division Multiple Access
standard set by the Telecommunications Industry Association, IS- 54/136, and
any standard that is based upon, or is an upgrade from, or is a successor to,
such standard, and is adopted by AWS Sub and its Affiliates in a majority of
their network nodes.
16
"TDMA Quality Standards" means the quality standards applicable to
PCS Systems and Cellular Systems that utilize TDMA and that are owned and
operated by AT&T and its Affiliates, which will be set forth in a schedule to
the Operating Agreement, as the same may be amended from time to time,
provided any such amended standards shall become effective 120 days after
notice thereof is given to the Company and DCC.
"Telecommunications Services" means the offering of
telecommunications services for a fee directly to the public, or to such
classes of users as to be effectively available directly to the public,
regardless of the facilities used. The term "telecommunications" means the
transmission, between or among points specified by the user of information of
the user's choosing.
"Territory" means, subject to Section 8.12, the geographic
territory set forth on Schedule III hereto.
"Transfer" means assign, bequeath, convey, create or suffer to
exist a Lien upon, encumber, gift, grant, hypothecate, issue, mortgage, place
in trust, pledge, sell, transfer or otherwise dispose of, in each case
whether directly or indirectly, voluntarily or involuntarily (including by
testamentary or intestate succession), by operation of law or otherwise.
"Treasury Regulations" means regulations issued by the United
States Department of the Treasury pursuant to the Code.
"Voting Interest" means the right of a Member to exercise
governance rights with regard to the Company (including the right to appoint
Representatives to the Member Committee). The term "Voting Interest"
specifically excludes Economic Interest.
"Voting Securities" means equity securities of a Person having the
right to vote generally in the election of the directors (or persons
performing equivalent functions) of such Person.
ARTICLE 2
ORGANIZATION
2.1 NAME. The name of the Company shall be ACC Acquisition LLC. The
name of the Company may be changed front time to time by the Management
Committee with notice to the Members.
2.2 PRINCIPAL PLACE OF BUSINESS. The Company's principal office and
place of business shall be located in Oklahoma City, Oklahoma. The principal
office and place of business may be changed from time to time. and other
offices and places of business may be established from time to time, both
within and without the State of Delaware by the Management Committee with
notice to the Members.
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2.3 REGISTERED OFFICE; REGISTERED AGENT. The address of the
registered office of the Company in the State of Oklahoma shall be 00000
Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxxxxx Xxxx, Xxxxxxxx 00000 or such other address
as the Management Committee may determine. The registered agent for service
of process on the Company in the State of Oklahoma shall be Xxxxxxx X.
Xxxxxx, or such other agent as the Management Committee may determine. The
name and address of the registered agent for service of process on the
Company in the State of Delaware shall be Corporation Service Company, 0000
Xxxxxx Xxxx. Xxxxxxxxxx, Xxxxxxxx 00000.
2.4 TERM. The term of the Company commenced on September 15, 1999
and, unless terminated in accordance with this Agreement, shall be perpetual.
2.5 PURPOSE AND POWERS.
(a) The purposes of the Company are to (i) establish and conduct the
Business; (ii) enter into the Related Agreements to which the Company is a
party; and (iii) do any and all things reasonably necessary or advisable in
connection with the foregoing. The Company shall have the power and authority
to take any and all actions necessary or advisable to or for the furtherance
of said purposes.
(b) The foregoing provisions of this Section 2.5 shall not be
construed to authorize the Company to, and the Company shall not, and the
Members agree that the Company shall not, engage in any activities other than
the foregoing (and in particular expand or change the scope of the Business
beyond that contemplated by the definition thereof) without the consent of
the Management Committee.
2.6 FILINGS. The Management Committee shall cause to be executed,
filed and published all such certificates, notices, statements or other
instruments, and amendments thereto under the laws of the State of Delaware
and other applicable jurisdictions as the Management Committee may deem
necessary or advisable for the operation of the Company.
2.7 SOLE AGREEMENT. The parties intend that their obligations to
each other with respect to the Company and the scope of their joint
enterprise be as set forth in this Agreement and the Related Agreements, and
that no further authority to bind the other or the Company or any liabilities
to each other or any third party be inferred from the relationships described
in such agreements.
ARTICLE 3
CAPITALIZATION
3.1 CAPITAL ACCOUNTS.
(a) ESTABLISHMENT. A separate capital account ("Capital Account") is
18
hereby established for each Member as of the Effective Date.
(b) GENERAL RULES FOR ADJUSTMENT OF CAPITAL ACCOUNTS. The Capital
Account of each Member shall be:
(i) increased by:
(A) the aggregate amount of such Member's cash contributions to the
Company;
(B) the initial Book Value of property contributed by such Member to
the Company, net of liabilities secured by such property that the
Company is considered to assume or take subject to Section 752 of
the Code and the Treasury Regulations promulgated thereunder;
(C) such Member's distributive share of Profits and items of income
and gain allocated to such Member pursuant to Section 3.1(c)(iii)
or Section 4.3;
(D) any positive adjustment to such Capital Account by reason of an
adjustment to the Book Value of the Company assets; and
(E) the amount of Company liabilities assumed by such Member or which
are secured by any property distributed to such Member; and
(ii) decreased by:
(A) cash distributions to such Member from the Company;
(B) the Book Value of property distributed in kind to such Member, net
of liabilities secured by such property that such Member is
deemed to assume or take subject to Section 752 of the Code and
the Treasury Regulations promulgated thereunder;
(C) such Member's distributive share of Losses and items of loss or
deduction allocated to such Member pursuant to Section 3.1(c)(iii)
or Section 4.3;
(D) any negative adjustment to such Capital Account by reason of an
adjustment to the Book value of Company assets:
19
(E) any amount charged to the Capital Account of such Member pursuant
to Section 6.5(e); and
(F) the amount of any liabilities of such Member assumed by the
Company or which are secured by property contributed by such
Member to the Company.
(c) SPECIAL RULES.
(i) TIME OF ADJUSTMENT FOR CAPITAL CONTRIBUTIONS. For purposes of computing
the balance in a Member's Capital Account, no credit shall be given for any
capital contribution which such Member is obligated to make until such
contribution is actually made.
(ii) CAPITAL ACCOUNT FOR TRANSFERRED INTEREST. If any Interest in the
Company or part thereof is Transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the Capital Account of the
transferor to the extent it relates to the Transferred Interest.
(iii) INTENT TO COMPLY WITH TREASURY REGULATIONS. The foregoing provisions
and the other provisions of this Agreement relating to the maintenance of
Capital Accounts are intended to comply with Treasury Regulation Section
1.704-1(b), and shall be interpreted and applied in a manner consistent with
such regulation. To the extent the provisions of this Agreement are
inconsistent with such regulation or are incomplete with respect thereto, the
Capital Accounts of the Members shall be maintained in accordance with such
regulation except to the extent that doing so would materially distort the
timing or amount of an allocation or distribution to a Member.
3.2 CAPITAL CONTRIBUTIONS.
(a) On the Effective Date. each of AWS Sub and DCC Sub shall
contribute $372.5 million in cash to the capital of the Company, and the
Company shall accept such capital contributions. After giving effect to such
capital contributions. AWS Sub and DCC Sub shall each own 50% of the Economic
Interests and 50% of the Voting Interests.
(b) No Member shall be required or permitted to make any additional
capital contributions to the Company without the unanimous approval of the
Management Committee.
3.3 NO WITHDRAWALS. Except as expressly set forth herein, no Member
shall be entitled to withdraw any portion of its capital contribution or
Capital Account balance.
20
3.4 NO INTEREST. Except as expressly set forth herein, no Member
shall be entitled to receive any interest on its capital contribution or
Capital Account balance.
ARTICLE 4
PROFITS AND LOSSES
4.1 PROFITS. Except as provided in Sections 4.2 through 4,5,
Profits and Losses with respect to any fiscal year shall be allocated to the
Members in accordance with their respective Economic Interests.
4.2 LOSSES.
(a) GENERAL RULE. After giving effect to the special allocations
set forth in Section 4.3 and 4.4, subject to Section 4.2.(b), Losses with
respect to any fiscal year shall be allocated to the Members in accordance
with their respective Economic Interests.
(b) LIMITATION ON LOSSES. Losses allocated to any Member pursuant
to Section 4.1 with respect to any fiscal year shall not exceed the maximum
amount of Losses that may be so allocated without causing such Member to have
an Adjusted Capital Account Deficit at the end of such fiscal year. All
Losses in excess of the limitation set forth in this Section 4.2 shall be
allocated; first, to the Members that will not be subject to this limitation,
ratably based on the aggregate of their Economic Interests, to the extent
possible until such Members become subject to this limitation; and any
remaining amount, to the Members, ratably based on their Economic Interests,
unless otherwise required by the Code or Treasury Regulations. To the extent
that any Member receives an allocation of Losses pursuant to this Section
4.2, such Member shall receive a priority allocation of Profits (prior to an
allocation of Profit made pursuant to Section 4.1) in the reverse order of
such Loss allocations in order to reverse the effect of this Section 4.2.
4.3 SPECIAL ALLOCATIONS. The following special allocations shall be
made for any fiscal year of the Company in the following order of priority;
(a) QUALIFIED INCOME OFFSET. Notwithstanding anything herein to the
contrary, but only if required by Treasury Regulation Section 1.704-1(b) in
order for the allocations provided for herein to be considered to have
substantial economic effect or to be deemed to be in accordance with the
Member's Economic Interests, if, for any fiscal year a Member unexpectedly
receives an adjustment, allocation or distribution described in Treasury
Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) and such adjustment,
allocation or distribution causes or increases an Adjusted Capital Account
Deficit with respect to such Member, then, before any other allocations are
made, such Member shall be allocated items of income and gain (consisting of
a pro rata portion of each item of Company income, including gross income and
gain) in the amount and manner sufficient to eliminate such Adjusted Capital
Account Deficit as quickly as possible. This Section 4.3(a) is intended
21
to comply with Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
(b) MINIMUM GAIN CHARGEBACK. Notwithstanding any other provision of
this Article 3, if there is a net decrease in Company Minimum Gain during any
fiscal year, each Member shall, subject to the exceptions provided in
Treasury Regulation Section 1.704-2(f). be specially allocated items of
income and gain for such fiscal year (and, if necessary, subsequent fiscal
years) equal to such Member's share of the net decrease in Company Minimum
Gain within the meaning of Treasury Regulation Section 1.704-2(g)(2).
Allocations pursuant to the previous sentence shall be made in proportion to
the respective amounts required to be allocated to each Member pursuant
thereto. The items to be so allocated shall be determined in accordance with
Treasury Regulation Sections 1.704- 2(6) and 1.704-2(i)(2). To the extent
that this Section 4.3(b) is inconsistent with Treasury Regulation Section
1.704-2(f), the Minimum Gain Chargeback provided for herein shall be applied
and interpreted in accordance with such Treasury Regulation.
(c) MEMBER MINIMUM GAIN CHARGEBACK. If there is a net decrease in
Member Minimum Gain attributable to a Member Nonrecourse Debt during any
Company fiscal year, within the meaning of Treasury Regulation Sections
1.704-2(i)(3) and 1.704-2(k), each Member that, as of the beginning of such
year, has a share of the Member Minimum Gain attributable to such Member
Nonrecourse Debt, determined in accordance with Treasury Regulation Section
1.704- 2(i)(5), shall be specially allocated items of income and gain for
such fiscal year (and, if necessary, subsequent fiscal years) in an amount
equal to such Member's share of the net decrease in Member Nonrecourse Debt
determined in accordance with Treasury Regulation Section 1.704-2(i)(4).
Allocations pursuant to the previous sentence shall be made in proportion to
the respective amounts required to be allocated to each Member pursuant
thereto. The items to be so allocated shall be determined in accordance with
Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(i)(2). To the extent
that this Section 4.3(c) is inconsistent with Treasury Regulation Section
1.704-2(i), the Member Minimum Gain chargeback provided for herein shall be
applied and interpreted in accordance with such regulation.
(d) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions shall be
allocated to the Members in accordance with their respective Economic
Interests.
(e) MEMBER NONRECOURSE DEDUCTIONS. Any Member Nonrecourse
Deductions for any fiscal year or other period shall be allocated to the
Member that bears the economic risk of loss with respect to the Member
Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable
in accordance with Treasury Regulation Section 1.704-2(i).
4.4 CURATIVE ALLOCATIONS. The allocations set forth in Sections
4.3(a) through 4.3(e) are intended to comply with certain regulatory
requirements under Section 704(b) of the Code. The Members intend that, to
the extent possible, all allocations made pursuant to such Sections will,
over the term of the Company, be offset either with
22
other allocations pursuant to Section 4.3 or with special allocations of
other items of Company income, gain, loss, or deduction pursuant to this
Section 4.4. Accordingly, the Management Committee is hereby authorized and
directed to make offsetting allocations of Company income, gain, loss or
deduction under this Section 4.4 in whatever manner the Management Committee
determines is appropriate so that after such offsetting special allocations
are made (and taking into account the reasonably anticipated future
allocations of income and gain pursuant to Section 4.3(b) and Section 4.3(c))
the Capital Accounts of the Members are, to the extent possible, equal to the
Capital Accounts each would have if the provisions of Section 4.3 were not
contained in this Agreement and all income, gain, loss and deduction of the
Company were instead allocated pursuant to Section 4.1 and Section 4.2.
4.5 SPECIAL ALLOCATIONS IN THE EVENT OF COMPANY AUDIT ADJUSTMENTS.
Notwithstanding the allocation provisions of Section 4.1 and Section 4.2, and
prior to making any of the allocations specified in Section 4.3, the
following special allocations shall be made in the following order and in a
manner, taking into consideration any tiered partnership structure that the
Company may be part of, that reflects the relative economic interests of each
Member in the Company:
(a) If for any fiscal year of the Company, the Company or any
Affiliate of the Company is deemed to have additional income for tax purposes
as a result of a redetermination by a taxing authority of an item of income,
gain, loss or deduction that is attributable to a loan transaction, the
provision of services, or the grant of a license or sublicense in intangible
property by the Company or any Affiliate of the Company, to or involving any
Member or Affiliate of any Member, such additional income shall be allocated
to the Member involved in such loan transaction or that received such
services, license or sublicense (or the Member whose Affiliate was involved
in such loan transaction or received such services, license or sublicense)
and any related deemed cash distribution shall be treated as having been made
to the same Member.
(b) If for any fiscal year of the Company, the Company or any
Affiliate of the Company is deemed to have a reduction in income for tax
purposes as a result of a redetermination by a taxing authority of an item of
income, gain, loss or deduction that is attributable to a loan transaction,
the provision of services, or the grant of a license or sublicense in
intangible property by the Company or any Affiliate of the Company, to or
involving any Member or Affiliate of any Member, such reduction in income
shall be allocated to the Member involved in such loan transaction or that
received such services, license or sublicense (or the Member whose Affiliate
was involved in such loan transaction or received such services, license or
sublicense) and any related deemed cash contribution shall be treated as
having been made by the sane Member.
(c) If for any taxable period of a Member, such Member or any
Affiliate of the Member is deemed to have additional income for tax purposes
as a result of a redetermination by a taxing authority of an item of income,
gain, loss or deduction attributable to a loan transaction, the provision of
services, or the grant of a license or sublicense in intangible property by
such Member or any Affiliate of such Member, to or
23
involving the Company or any Affiliate of the Company, any increase in the
amount of a Company deduction associated with such redetermination of such
Member's or any Affiliate of such Member's income shall be allocated (in the
appropriate fiscal year) to the Member involved in such loan transaction or
that provided such services, license or sublicense (either directly or
through an Affiliate), and any related deemed cash contribution shall be
treated as having been made by the same Member.
(d) If for any taxable period of a Member, such Member or any
Affiliate of the Member is deemed to have a reduction in income for tax
purposes as a result of a redetermination by a taxing authority of an item of
income, gain, loss or deduction attributable to a loan transaction, the
provision of services, or the grant of a license or sublicense in intangible
property by such Member or any Affiliate of such Member, to or involving the
Company or any Affiliate of the Company, any reduction in the amount of a
Company deduction associated with such redetermination of such Member's or
any Affiliate of such Member's income shall be allocated (in the appropriate
fiscal year) to the Member involved in such loan transaction or that provided
such services, license or sub license (either directly or through an
Affiliate), and any related deemed cash distribution shall be treated as
having been made to the same Member.
(e) A redetermination by a taxing authority shall only be given
effect for purposes of this Section 4.5 if such redetermination is (i) a
decision, judgment, decree or other order by any court of competent
jurisdiction, which has become final and is either no longer subject to
appeal or for which a determination not to appeal has been made; (ii) a
closing agreement made under Section 7121 of the Code or any comparable
foreign, state, local or other income tax statute; (iii) a final disposition
by a taxing authority of a claim for refund; or (iv) any other written
agreement made with respect to a tax redetermination the execution of which
is final and prohibits the taxing authority, relevant Member (or any
Affiliate of such Members) or the Company (or any Affiliate of the Company)
from seeking any further legal or administrative remedies with respect to
such tax redetermination.
4.6 ALLOCATION OF CREDITS. All tax credits shall be allocated among
the Members in accordance with their respective Interests or in accordance
with applicable provisions of the Code or Treasury Regulations to the extent
any such provision is inconsistent with such allocation.
4.7 TAX ALLOCATIONS.
(a) CONTRIBUTED PROPERTY. In the event any property is contributed
to the capital of the Company, income, gain, loss and deduction with respect
to such property shall be allocated solely for tax purposes among the Members
in accordance with Section 704(c) of the Code and Treasury Regulation Section
1.704-3 so as to take account of any variation between the adjusted basis of
such property to the Company for federal income tax purposes and its initial
Book Value. Prior to the contribution of any property to the Company that has
a fair Market Value that differs from its adjusted tax basis in the hands of
the contributing Member on the date of contribution, the contributing Member
and the Management
24
Committee shall agree upon the allocation method to be applied with respect
to that property under Treasury Regulation Section 1.704-3, which allocation
method shall be set forth on attached Schedule 4.7, as amended from time to
time.
(b) REVALUED PROPERTY. If the Company assets are revalued as set
forth in the definition of "Book Value," subsequent allocations of income,
gain, loss and deduction with respect to revalued Company assets shall take
into account any variation between the adjusted basis of such assets for
federal income tax purposes and their adjusted value in the same manner as
under Section 704(c) of the Code and in compliance with Treasury Regulation
Section 1.704-3. All decisions regarding the choice of allocation method
under Treasury Regulation Section 1.704-3 with respect to revalued Company
assets shall be made by the Management Committee.
4.8 CHANGE IN MEMBER'S INTERESTS. In the event there is any change
in the Members' respective Economic Interests during any fiscal year,
Profits, Losses, Nonrecourse Deductions and other items shall be allocated
among the Members in accordance with their respective Economic Interests from
time to time during such fiscal year in accordance with Section 706 of the
Code, using any convention permitted by law and selected by the Management
Committee.
ARTICLE 5
DISTRIBUTIONS
5.1 DISTRIBUTABLE CASH. It shall be the policy of the Company, and
the Members shall direct their respective Representatives on the Management
Committee to cause the Company, to distribute Distributable Cash to the
Members quarterly. Any distributions of such Distributable Cash shall be made
to the Members in accordance with their respective Economic Interests.
Notwithstanding the foregoing or any other provision of this Agreement to the
contrary, the Company, and the Members, Management Committee and
Representatives on behalf of the Company, shall not be required to make any
distribution to any Member on account of such Member's interest in the
Company if such distribution would violate the Act or other applicable law.
5.2 LIQUIDATING DISTRIBUTIONS. Distributions to the Members of cash
or property in connection with a dissolution of the Company shall be made in
accordance with the Capital Account balances of the Members. as provided in
Section 10.3(d)(ii).
5.3 OTHER DISTRIBUTIONS. No Member shall be entitled to receive and
distribution from the Company without the consent of the Management Committee
or as otherwise provided in Section 5.1 or 10.3(d).
ARTICLE 6
ACCOUNTING AND RECORDS
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6.1 FISCAL YEAR. The fiscal year of the Company shall be the year
ending December 31.
6.2 METHOD OF ACCOUNTING. Unless otherwise provided herein, the
Company books of account shall be maintained in accordance with GAAP; provided
that for purposes of making allocations with respect to items of Company
income, gain, deduction, loss and credit to the Members, such items shall be
allocated to the Members' Capital Accounts pursuant to Article 4 and as
required by Section 704 of the Code and the Treasury Regulations promulgated
thereunder.
6.3 BOOKS AND RECORDS; INSPECTION.
(a) BOOKS OF ACCOUNT AND RECORDS. Proper and complete records and
books of accounts of the Company business for tax and financial purposes,
including all such transactions and other matters as are usually entered into
records and books of account maintained by Persons engaged in businesses of
like character or as are required by law, shall be kept by the Company at the
Company's principal office and place of business. The Management Committee may
delegate to a third party or any Member the duty to maintain and oversee the
preparation and maintenance of such records and books of account. Books and
records maintained for financial purposes shall be maintained in accordance
with GAAP, and books and records maintained for tax purposes shall be
maintained in accordance with the Code and applicable Treasury Regulations.
(b) INSPECTION. All records and documents described in Section
6.3(a) shall be open to inspection and copying by any of the Members or their
Representatives or agents, subject to applicable confidentiality restrictions,
at any reasonable time during normal business hours. Notwithstanding anything
in the Act or this Agreement to the contrary, the Members and the
Representatives shall not have the right to keep confidential from any other
Member or Representative, in their capacities as such, any information of the
Company.
6.4 FINANCIAL STATEMENTS. Within 90 days after the end of each
fiscal year, and 60 days after the end of each calendar quarter, the
Management Committee shall cause to be furnished to each Member financial
statements with respect to such fiscal year or quarter of the Company,
consisting of (i) a balance sheet showing the Company's financial position as
of the end of such fiscal year or quarter, (ii) supporting profit and loss
statements (iii) a statement of cash flows for such year or quarter and (iv)
Member's Capital Accounts, provided that prior to such dates the Company shall
provide to each Member on a timely basis such financial information as may be
required to permit each Member Group to prepare its annual and quarterly
financial reports. The annual financial statements of the Company shall,
unless the Members determine otherwise by unanimous consent, be audited (which
audit shall be conducted in accordance with GAAP) and certified by an
independent firm of certified public accountants selected by the Management
Committee or the Members (which firm may be the firm regularly engaged by any
one or more of the Members). The Members hereby designate and appoint the firm
of Xxxxxx Xxxxxxxx, LLP as the Company's
26
independent public accountants, such designation and appointment to remain
effective until terminated by the Management Committee and appointment of
replacement independent public accountants. Each Member shall receive a copy
of all material financial reports and notices delivered by the Company to any
third party pursuant to any other agreement. The Company shall also produce
and distribute to all Members monthly revenue, operating expense and capital
expenditure reports and such other financial statements as the Management
Committee reasonably determines.
6.5 TAXATION.
(a) STATUS OF THE COMPANY. The Members acknowledge that this
Agreement creates a partnership for federal income tax purposes. Furthermore,
the Members hereby agree not to elect to be excluded from the application of
Subchapter K of Chapter 1 of Subtitle A of the Code or any similar state
statute.
(b) TAX ELECTIONS AND REPORTING.
(i) GENERALLY. The Company shall make the following elections and take
the following positions under United States income tax laws and
Treasury Regulations and any similar state laws and regulations:
(A) Adopt the year ending December 31 as the annual
accounting period (unless otherwise required by
the Code and Treasury Regulations);
(B) Adopt the accrual method of accounting;
(C) Insofar as permissible, report the Company's tax
attributes and results using principles consistent with
those assumed in connection with entering into this
Agreement; and
(D) Have the Company treated as a partnership for federal
income tax purposes in a manner consistent with Treasury
Regulation Section 1-7701 ("Check the Box Regulations").
(ii) CODE SECTION 754 ELECTION. The Management Committee shall, upon
the written request of any Member, cause the Company to file an election
under Section 754 of the Code and the Treasury Regulations promulgated
thereunder to adjust the basis of the Company's assets under Section 734(b)
or 743(b) of the Code and a corresponding election under the applicable
sections of state and local law.
(c) COMPANY TAX RETURNS.
27
(i) The Tax Matters Partner will prepare or cause to be prepared all
required domestic and foreign tax returns and information returns of the
Company, drafts of which shall be furnished to the Members within 120 days
following the close of each fiscal year. Such returns will be prepared at
no charge to the Company, except for all reasonable out-of-pocket expenses
(including accounting fees, if any). Either Member may, at its own expense,
engage a third party to review the tax returns and information returns
prepared by the Tax Matters Partner pursuant to the preceding sentence. The
Tax Matters Partner shall not file any such return without the approval of
any Member that constitutes a "notice partner" (as defined in Section
6231(a)(8) of the Code) of the Company, which approval shall not be
unreasonably withheld. Such "notice partner" member shall be deemed to have
given such approval if such Member does not indicate its written objection
(which may be delivered by facsimile) to the Tax Matters Partner within 45
days of the date that such Member receives a draft of such return. If a
"notice partner" Member does not approve of any proposed filing of a return
by the Tax Matters Partner, such Member and the Tax Matters Member shall
seek, in good faith, to resolve their disagreement. If a "notice partner"
Member and the Tax Matters Partner cannot resolve their disagreement within
10 days of receipt of such written notice by the Tax Matters Partner,
either of such Member or the Tax Matters Partner may request, in writing
with a copy sent to the other party, that the disagreement be resolved by
the Company's independent public accountants and the independent public
accountants shall be instructed to resolve the dispute in such manner as
they believe will maximize. in the aggregate, the U.S. federal, state and
local income tax advantages and will minimize, in the aggregate, the U.S.
federal, state, and local income tax detriments, available to the Company's
Members. The independent public accountants shall provide their written
resolution of the disagreement to both the "notice partner" Member and the
Tax Matters Partner within 15 days from the date that the independent
public accountants were requested to resolve such disagreement. Any and all
other tax returns shall be prepared in a manner directed by the Tax Matters
Partner consistent with the terms of this Agreement. Each Member shall
provide such information, if any, as may be reasonably requested by the
Company for purposes of preparing such tax and information returns.
(ii) The Tax Matters Partner shall furnish a copy of all filed
domestic foreign tax returns and information returns for the Company to
each of the Members. In addition, upon reasonable written notice provided
to the Company by a Member (and as otherwise required by law), the Company
shall furnish such Member. on a timely basis, with all information relating
to the Company required to be reported in any U.S. federal, state or local
tax return of such Member, including a report indicating such Member's
allocable share for U.S. federal income tax purposes of the Company's
income, gain, credits, losses and deductions.
(iii) The Members agree that the Company shall be treated as a
partnership for U.S federal income tax purposes. The Members agree to (A)
approve electing
28
partnership status with respect to the Company with the U.S. Internal
Revenue Service and such other state and local taxing authorities as may
be appropriate and to cooperate in providing all consents, signatures,
documents and such other information as may be required with respect
thereto; and (B) report all "partnership items" (as defined in Section
6231(a)(3) of the Code) of the Company consistent with such classification
of the Company for U.S. federal, state and local tax purposes and with the
returns filed by the Company; provided, however, that if any Member intends
to file a notice of inconsistent treatment under Section 6222(b) of the
Code, such Member shall at least 30 days prior to the filing of such
notice, notify in writing the other Members of such intent and such
Member's intended treatment of the item which is (or may be) inconsistent
with the treatment of that item by the Company.
(d) TAX AUDITS. DCC Sub, so long as it is a Qualified Member (or,
from and after a Change of Control of DCC, AWS Sub, so long as it is a
Qualified Member) shall be the "tax matters partner" of the Company, as that
term is defined in Section 6231(a)(7) of the Code (the "Tax Matters Partner"),
with all of the rights, duties and powers provided for in sections 6221
through 6232, inclusive, of the Code, provided that the Tax Matters Partner
shall not pay or agree to pay any audit assessment, or any amount in
settlement or compromise of any litigation, in respect of income tax liability
of the Members attributable to the Interests in the Company, in excess of
$500,000 in any one instance or series of related instances, unless approved
by the Management Committee. The Tax Matters Partner, as an authorized
representative of the Company, shall direct the defense of any tax claims made
by the Internal Revenue Service or any other taxing jurisdiction to the extent
that such claims relate to adjustment of Company items at the Company level
and, in connection therewith, shall retain and cause the Company to pay the
fees and expenses of counsel and other advisors chosen by the Tax Matters
Partner. The Tax Matters Partner shall also be responsible for filing a timely
election on Form 8832 and for timely filing for all other elections made by
the Company. The Tax Matters Partner shall deliver to each Member and the
Management Committee a semi-annual report on the status of all tax audits and
open tax years relating to the Company, and shall consult with and keep all
Members and the Management Committee advised of all significant developments
in such matters coming to the attention of the Tax Matters Partner. All
reasonable expenses of the Tax Matters Partner and its Affiliates (including
reasonable internal time charges and reasonable disbursements) and other
reasonable fees and expenses in connection with such defense shall be borne by
the Company. Except as provided in Article 11, neither the Tax Matters Partner
nor the Company shall be liable for any additional tax, interest or penalties
payable by a Member or any costs of separate counsel chosen by such Member to
represent the Member with respect to any aspect of such defense. The Tax
Matters Partner shall take any steps necessary pursuant to Section 6223(a) to
designate AWS Sub as a "notice partner" (as defined in Section 0231(a)(8) of
the Code). In addition, nothing in this Agreement is intended to waive any
rights, including rights to participate in administrative and judicial
proceedings, that a Member may have under Section 6221 through 6233 of the
Code. Notwithstanding any other provisions of this Agreement, the provisions
of Sections 6.5(c) and 6.5(d) shall survive the dissolution of the Company or
the termination of any Member's interest in the Company and shall remain
binding on all Members for a period of time necessary to resolve with the U.S.
29
Internal Revenue Service or any applicable state or local taxing authority all
matters (including litigation) regarding the U.S. Federal, state and local
income taxation, as the case may be, of the Company or any Member with respect
to the Company.
(e) WITHHOLDING.
(i) The Company shall comply with all withholding requirements under
U.S. federal, state, local and foreign tax laws and shall remit amounts
withheld to, and file required forms with, the applicable taxing
authorities. To the extent that the Company withholds and pays over any
amounts to any taxing authority with respect to distributions or
allocations to any,Member, the amount withheld shall be charged to the
Capital Account of such Member. The Company shall notify each of the
Members of any withholding with respect to such Member, designating such
Member's allocable share of such withholding tax. The Members hereby
agree that they will not claim a credit in excess of the amount in such
notice.
(ii) In the event of any claimed overwithholding by the Company, the
Member shall have no rights against the Company or any other Member.
Anything in the previous sentence to the contrary notwithstanding, if
the Company is required to take any action in order to secure a refund
or credit for the benefit of a Member in respect of any amount
withheld by it, it will take any such action including. without
limitation, applying for such refund on behalf of the Member and
paying it over to such Member.
(iii) Except in the case of withholding pursuant to Section 1446
of the Code, if any amount required to be withheld was not withheld from
actual distributions made to a Member, the Company shall require the
Member to which the withholding was credited to reimburse the Company for
such withholding; in the case of withholding pursuant to Section 1446 of
the Code, no such reimbursement will be necessary as long as the other
Members are subject to withholding in amounts proportionate to their
Economic Interests in the Company or otherwise receive a distribution of
an equivalent amount.
(iv) In the event of any underwithholding by the Company, each
Member agrees to indemnify and hold harmless the Company and the Tax
Matters Member from and against any liability, including interest and
penalties, with respect thereto.
(v) Each Member agrees to furnish the Company with any
representations and forms as shall reasonably be requested by the Company
to assist the Company in determining the extent of, and in fulfilling,
the Company's withholding obligations.
30
ARTICLE 7
MANAGEMENT
7.1 MANAGEMENT COMMITTEE. The property, business and affairs of the
Company shall be managed by or under the direction of a Management Committee
(the "Management Committee"). In addition to the powers and authorities by
this Agreement expressly conferred upon it, the Management Committee may
exercise all such powers of the Company and do all such lawful acts and things
as are not by statute or by this Agreement directed or required to be
exercised or done by the Members. Except as determined by the Management
Committee pursuant to this Article 7 or otherwise pursuant to this Agreement,
no Member or Representative shall have any right or authority to take any
action on behalf of the Company with respect to third parties or to bind the
Company.
(a) NUMBER OF REPRESENTATIVES. The Management Committee shall
consist of four individuals (each, a "Representative"). So long as the AWS
Member Group is a Qualified Member Group, except as otherwise provided in
Section 8.12, AWS Sub (or another Member designated by a majority in Voting
Interests of the AWS Member Group) shall have the right to appoint two
Representatives, each of whom shall be employees of AWS or its Affiliates. So
long as the DCC Member Group is a Qualified Member Group, except as otherwise
provided in Section 9.8(a)(ii), DCC Sub (or another Member designated by a
majority in Voting Interests of the DCC Member Group) shall have the right to
appoint two Representatives, each of whom shall be employees of DCC or its
Affiliates. If a Member Group loses the right to appoint two Representatives,
the size of the Management Committee shall be reduced to two members, who
shall be appointed by the other Member Group. The Representatives shall not be
"managers" of the Company as such term is used in the Act.
(b) INITIAL REPRESENTATIVES. The initial Representatives are:
DCC Member Group Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxxxxx
AWS Member Group: Xxx Xxxxx
Xxx Xxxxxxxxx
(c) VACANCIES. Each Representative shall hold office until death,
resignation or removal, with or without cause, by the Member Group which
appointed such Representative. If a vacancy occurs on the Management
Committee, the Member Group that appointed the vacating Representative shall
(so long as such Member Group has not lost the right to appoint too
Representatives pursuant to Section 7.1(a)) appoint such Representative's
successor.
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7.2 MEETINGS OF MANAGEMENT COMMITTEE.
(a) REGULAR MEETINGS. The Management Committee shall meet at least
four times per year. Such meetings shall be held on such dates and at such
times and places as may be determined by the Representatives.
(b) SPECIAL MEETINGS. A special meeting of the Management Committee
or the Members shall be held at the request of any Representative. Such
meeting shall be held on the date and at the time and place set forth in the
notice of meeting.
(c) TELEPHONIC MEETINGS. Any meeting of the Management Committee or
the Members may be held by conference telephone call or through similar
communications equipment by means of which all persons participating in the
meeting can hear and be heard by each other. Participation in such a
telephonic meeting shall constitute presence in person at such meeting.
(d) NOTICES. Notices of regular meetings and special meetings of the
Management Committee or the Members may be given by any Representative, and
shall state the date, hour and purpose of the meeting. All such notices shall
be accompanied by an agenda for the meetings, as well as (to the extent
practicable) the texts of all resolutions proposed to be adopted at such
meetings. No item may be discussed if not on the agenda unless a quorum is
present and the Representatives present waive notice of the additional
item(s). Notice of a regular or special meeting shall be given by facsimile,
confirmed by certified mail, return receipt requested not less than 14 days
(in the case of a regular meeting) or 72 hours (in the case of a special
meeting) before the date of the meeting to each Representative at the
facsimile number and address provided by the Representative to the Company
from time to time. Any Representative may waive, as to such Representative
only, in writing, the requirements for notice before, at or after a meeting.
Any Representative who attends a meeting without objecting at the meeting to
the Company's failure to comply with the notice requirements in respect of
such meeting shall be deemed to have waived such requirements.
(e) QUORUM. At each meeting of the Management Committee or the
Members, the presence in person or by telephone of at least one Representative
of each Member Group shall be necessary to constitute a quorum for the
transaction of business.
(f) WRITTEN CONSENTS. Any action required or permitted to be taken at
a meeting of the Management Committee or the Members may be taken without a
meeting, but upon the requisite notice as provided in paragraph (d) above, if
the requisite Representatives of each Member Group consent thereto in writing,
and if a complete and correct copy of such consent is promptly delivered to
all the Representatives of each Member Group following the execution of any
such consent.
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7.3 ACTIONS BY MANAGEMENT COMMITTEE.
(a) SCOPE OF AUTHORITY. The Management Committee shall have full
power and authority to direct and control the business and affairs of the
Company except as otherwise required by applicable law, and subject to the
right of the Management Committee to delegate such power and authority to
Persons responsible for day-to-day operation of the Company (it being
understood that authority to undertake Significant Matters prior to approval
by the Management Committee shall not be so delegated).
(b) ACTIONS REQUIRING MANAGEMENT COMMITTEE APPROVAL. Without
limiting the generality of the foregoing, the following actions shall require
approval of the Management Committee:
(i) approving any Significant Matter;
(ii) approving or taking any action for which the approval or action
of the Company is required under the Related Agreements, except as the
Management Committee may otherwise delegate in accordance with paragraph (a)
above; and
(iii) approving any other matter that the Management Committee
determines shall require its approval as such items may be set forth on
Schedule 7.3(b) from time to time.
(c) APPROVAL REQUIREMENTS.
(i) Except as otherwise specifically provided herein, consent or
approval of the Management Committee shall mean the affirmative vote of a
majority of the Representatives voting at a duly held meeting of the
Management Committee; provided, that with respect to any Significant Matter,
consent or approval of the Management Committee shall mean the affirmative
vote of all existing Representatives; provided, however, that the Management
Agreement may be terminated, and the Manager removed and replaced, only in
accordance with the terms thereof;
(ii) Each Representative shall be entitled to one vote on all
matters submitted to a vote of the Management Committee, provided, that if
one or more Representatives are absent or not appointed because of a vacancy
on the Management Committee or otherwise, then any other Representative of
such absent Representative's Member Group present at the meeting shall have
the right to cast the votes of such absent Representative(s).
(iii) The Company shall provide each Representative with (A)
adequate notice (in light of the time frame in which approval is sought) of
the substance of any matter requiring the approval of the Management
Committee in order to afford such Representative sufficient time to review
such matter and the Company's analysis thereof and (B) an opportunity to
consult with the management of the Company
33
regarding such matter and possible alternatives prior to the meeting
at which approval is sought; provided, that any alleged noncompliance
with the provisions of this paragraph (iii) shall not affect the validity
of any consent or approval pursuant to paragraphs (i) and (ii) above.
(d) INITIAL BUDGET. The budget for the Company's first three years
of operations shall be approved by the Management Committee simultaneously
with the execution of this Agreement or promptly thereafter.
(e) ANNUAL BUDGETS. The Management Committee shall adopt an annual
budget for the operations of the Company, which budget shall be in at least as
much detail and cover the same matters as the initial budget. The proposed
budget shall be presented to the Management Committee no later than 60 days
prior to the commencement of the fiscal year of the Company to which it
pertains. Any annual budget adopted by the Management Committee that covers
any period covered by the initial three-year budget shall replace the initial
three-year budget with respect to such period.
ARTICLE 8
OPERATING AGREEMENTS AND OTHER COVENANTS
8.1 LIMITED EXCLUSIVITY.
(a) Except as provided in connection with a Disqualifying
Transaction, so long as the Company continues to meet the TDMA Quality
Standards in all material respects in all of its markets, AT&T will not, and
will not cause its Affiliates to, construct, own or acquire a controlling
interest in, or manage a communications system which provides Mobile Wireless
Services in the Territory, in each case within five years after the Effective
Date, except that AT&T and its Affiliates may:
(i) resell, or act as the Company's agent for, Company Communications
Services provided by the Company in accordance with a Resale Agreement (or
any other agreement between AWS Sub and its Affiliates, on the one hand, and
the Company, on the other hand), and provide Company Communications Services
to its own customers under the Operating Agreement (including AWS Sub and
its Affiliates providing local numbers in the Territory or otherwise
providing numbers and service to residents of the Territory), including
bundling any such Company Communications Services with other
Telecommunications Services marketed, offered and provided or resold by AWS
Sub or any of its Affiliates:
(ii) provide or resell wireless Telecommunications Services to or from
specific locations (such as buildings or office complexes), even if the
subscriber equipment used in connection with such service may be capable of
routine movement within a limited area (such as a building or office
complex), and even if such subscriber equipment may be capable of obtaining
other Telecommunications
34
Services beyond such limited area (which other services may include routine
movement beyond such limited area) and hand-off between the service to such
specific locations and such other Telecommunications Services; provided,
however that if AT&T or any of its Affiliates sells such Mobile Wireless
Services subscriber equipment as part of such offering such equipment shall
be capable of use in obtaining (but not necessarily on an exclusive basis)
Company Communications Services;
(iii) continue to act as an agent for other Mobile Wireless Services
carriers in the Territory solely for existing national account customers who
are served by that carrier and request that they continue to receive service
from that carrier;
(iv) acquire a controlling interest in Tritel, Inc. or its successors
or assigns; provided, that at the time of such acquisition Tritel, Inc. (or
its successors or assigns) do not hold Licenses issued by the FCC covering
service areas within the Territory other than Licenses in the service areas
covered by the Licenses held by Tritel, Inc. on the Effective Date that are
listed on Schedule 8.1(a)(iv); and provided, further, that AT&T and its
Affiliates will continue to be obligated to comply with their obligations
under Section 8.2; and
(v) take such action as may be necessary or advisable to
comply only to the extent required with the construction requirements of 47
CFR 24.203 in respect of the PCS licenses listed on Schedule 8.1(a)(v), and
the Company shall cooperate with AT&T and its Affiliates, at their request
and expense, in connection therewith.
(b) To the extent the "other Telecommunications Services" referred
to in Section 8.1(a)(ii) are classified as Mobile Wireless Services, neither
AT&T nor any of its Affiliates or any AT&T licensee may provide or resell, or
act as agent for any Person offering, such Mobile Wireless Services except
Mobile Wireless Services provided by the Company in accordance with the terms
of Section 8.1(a)(i) or pursuant to roaming arrangements which comply with
Section 8.2. Nothing herein shall be construed to limit in any respect any
advertising and promotional and similar activities by AT&T or its Affiliates.
(c) The agreements set forth in this Section 8.1 will terminate five
years after the Effective Date, unless the parties agree to extend such
arrangements on mutually acceptable terms.
8.2 ROAMING PREFERENCE.
(a) For five years following the Effective Date, with respect to the
markets operated in the Territory, each of the Company and (except as provided
in connection with a Disqualifying Transaction) AT&T shall, and shall cause
each of its Affiliates to, in its and such Affiliates capacity as Home
Carrier: (i) program and direct its authorized dealers to program the
subscriber equipment provided by it or such authorized dealers to its
customers, at the time it is provided to such customers (to the extent such
programming is
35
technologically feasible) so that the Company or AT&T, as the case may be, and
such Affiliates, in its and such Affiliates' capacity as Serving Carrier, is
the preferred provider of roaming service in such markets, and (ii) refrain,
and direct its authorized dealers to refrain, from inducing any of its
customers to change or, except at such customer's request in the event the
quality of the Company's services do not meet the TDMA Quality Standards, from
changing the programming described in clause (i) above.
(b) For five years following the Effective Date, with respect to the
markets operated in the Territory, each of the Company and DCC shall, and
shall cause each of its Affiliates (other than Logix Communications) to, in
its and such Affiliates capacity as Home Carrier; (i) program and direct its
authorized dealers to program the subscriber equipment provided by it or such
authorized dealers to its customers, at the time it is provided to such
customers (to the extent such programming is technologically feasible) so that
the Company or DCC, as the case may be, and such Affiliates, in its and such
Affiliates capacity as Serving Carrier, is the preferred provider of roaming
service in such markets, and (ii) refrain, and direct its authorized dealers
to refrain, from inducing any of its customers to change or, except at such
customer's request in the event the quality of the Company's services do not
meet the TDMA Quality Standards, from changing the programming described in
clause (i) above.
(c) As used in this Section 8.2, the terms "Affiliate," "Home Carrier"
and "Serving Carrier" shall have the meanings ascribed thereto in the Operating
Agreement.
(d) The agreements set forth in this Section 8.2 will terminate five
years after the Effective Date, unless the parties agree to extend such
arrangements on mutually acceptable terms.
8.3 RESALE AND AGENCY AGREEMENTS.
(a) From time to time, upon the request of AWS Sub, the Company
shall enter into a Resale Agreement relating to the Territory with AWS Sub and
any of its Affiliates and, with respect to any geographic area within the
Territory, one other Person designated by AWS Sub, provided such other Person
is licensed to provide Telecommunications Services in such geographic area
under the service marks used by AWS and qualifies as a reseller under any
generally applicable standards the Company establishes for its resellers from
time to time. and upon the request of AWS, the Company shall enter into ad
agency agreement authorizing AWS Sub and any of its Affiliates and, with
respect to any geographic area within the Territory, one other Person
designated by AWS Sub, provided such other Person is licensed to provide
Telecommunications Services in such geographic area under the service marks
used by AWS and qualifies as an agent under any generally applicable standards
the Company establishes for its agents from time to time. Any such agency
agreements shall provide that the Company shall pay the agent a commission at
the rate then generally offered to the Company's agents and shall otherwise be
on commercially reasonable terms. At no time shall there be more than one
Person (other than
36
AWS Sub and its Affiliates) designated by AT&T as a reseller or an agent with
respect to any geographic area within the Territory.
(b) It is the intention of the parties that, in light of AWS Sub's
equity interest in the Company and the other arrangements between AWS Sub and
its Affiliates and the Company (including the roaming revenues anticipated to
be earned by the Company from subscribers of AWS Sub and its Affiliates), the
rates, terms and conditions of Service (as defined in the Resale Agreement)
provided by the Company pursuant to the Resale Agreement or any other
agreement between AWS Sub or such other reseller and the Company shall be at
least as favorable to AWS Sub or such other reseller, taken as a whole, as the
rates, terms and conditions of Service, taken as a whole, provided by the
Company to any other Customer (as defined in the Resale Agreement) and, to the
extent permitted by applicable law, such rates, terms and conditions shall be
superior to those provided to any other Customer. Without limiting the
foregoing, the rate plans offered by the Company pursuant to any Resale
Agreement shall be designed to result in the average actual rate per minute
paid by the Reseller (as defined in the Resale Agreement) for Service being at
least 25% below the weighted average actual rate per minute billed by the
Company to its retail subscribers for access and air time, but excluding
revenues for features, taxes, toll or other non-rate items. The Company and
Reseller shall negotiate commercially reasonable reductions to such resale
rate based upon increased volume commitments (including roaming charges
incurred by subscribers of AT&T and its Affiliates).
8.4 LONG DISTANCE SERVICE. To the extent permitted by law, AT&T will
be the Company's preferred provider of long distance service for so long as
the roaming arrangement described in Section 8.2(a) remains in effect. The
Company will purchase all of its long distance service, both for its own needs
and for resale to its customers, from AT&T, and AT&T will provide the Company
with long distance service at the best rates for which the Company qualifies
consistent with AT&T's practice with similarly situated customers, provided,
that at the time a long distance agreement is entered into, the rates are
commercially reasonable and reasonably competitive. Long distance service may
be purchased for the Company from AT&T by Logix Communications as long as such
service is made available to the Company at rates no higher than the rates
offered to the Company by AT&T directly.
8.5 EQUIPMENT DISCOUNTS. If reasonably requested by the Company, AWS
will, and will cause its 100% Subsidiaries to, use commercially reasonable
efforts to assist representatives of the Company in obtaining discounts from
any AWS vendor with whom the Company is negotiating for the purchase of
subscriber or infrastructure equipment AWS shall not be required to take any
such action that AWS determines in its sole discretion is adverse to its
interests.
8.6 ROAMING AGREEMENTS. AWS will, and will cause its 100% Subsidiaries
to, use all commercially reasonable efforts to enable the Company to become a
party to the roaming agreements between AWS and its Affiliates and operators of
other wireless systems or, subject to the Company agreeing to the obligations
thereunder, entitled
37
to the rights and benefits of AWS under such roaming agreements. AWS shall not
be required to take any such action that AWS determines in its sole discretion
is adverse to its interests.
8.7 CERTAIN RESTRICTIONS. DCC and its Affiliates will not offer
Telecommunications Services in the Territory except that a special purpose
Subsidiary of DCC with separate management, facilities and financing from DCC
and the Company may construct, in or acquire a controlling interest in, or
manage a communications system which provides Telecommunications Services that
are not Company Communications Services.
8.8 OTHER BUSINESS; DUTIES; ETC.
(a) Except as otherwise expressly set forth in this Agreement, the
Members and any Person affiliated with any of the Members may engage in or
possess an interest in other business ventures in which the Company is not a
party, and may engage in any other activities, of every kind and description
(whether or not competitive with the business of the Company or otherwise
affecting the Company), independently or with others in which the Company is
not a party, and shall owe no duty or liability to the Company, its Members or
their Affiliates in connection therewith except as expressly set forth in this
Agreement.
(b) To the extent that, at law or in equity, any Member or any
Affiliate of a Member, or any director, officer, stockholder, employee, agent
or representative of a Member or such Affiliate, would have duties (including
fiduciary duties) and liabilities to the Company or the Members arising out of
this Agreement that are different from or in addition to those expressly
provided in this Agreement, all rights of the other Members arising out of
such duties and liabilities are hereby waived and no such Person shall be
liable to the Company or to any Member for its good faith reliance on the
provisions of this Agreement.
(c) Notwithstanding any provision to the contrary in this Agreement.
to the fullest extent permitted by law, each Representative shall be deemed
the agent of the Member Group which appointed such Person a Representative,
and such Representative shall not be deemed an agent or a sub-agent of the
Company or the other Members or Member Groups and shall have no duty
(fiduciary or otherwise) to the Company or the other Members or Member Groups.
8.9 CONFIDENTIALITY.
(a) Each Member shall, and shall cause each of its Affiliates, and
each of its and their respective partners, members, managers, shareholders,
directors, officers, employees and agents (collectively, "Agents") to keep
secret and retain in strictest confidence and not use for any purpose except
as contemplated by this Agreement any and all Confidential Information
relating to the Company or any Member and shall not disclose such information,
and shall cause its Agents not to disclose such information, to anyone
38
except (x) such Member's Affiliates or Agents who have a need to know such
information in connection with the matters contemplated by this Agreement and
(y) other Persons (such as lenders to the Company or a Member) who have a bona
fide business reason for obtaining such information in connection with their
dealings with the Company or such Member and who agree in writing to keep in
confidence all Confidential Information in accordance with the terms of this
Section. The obligations under this Section shall survive the termination of
this Agreement for a period of three years (or, if earlier, as to any Person,
three years following the date such Person ceases to be a Member). The
foregoing provisions of this Section were negotiated in good faith by the
parties hereto and the parties hereto agree that such provisions are
reasonable and are not more restrictive than is necessary to protect the
legitimate interests of the Members and the Company.
(b) The obligations set forth in paragraph (a) above shall be
inoperative with respect to Confidential Information that (i) is or becomes
generally available to the public other than as a result of disclosure by the
receiving party or its Agents, (ii) was available to the receiving party on a
non-confidential basis prior to its disclosure to the receiving party or (iii)
becomes available to the receiving party or its agents, provided that such
source is not known by the receiving party to be bound by a confidentiality
agreement with the providing party or its Agents.
(c) To the fullest extent permitted by law, if a Member or any of
its Affiliates or Agents breaches or threatens to commit a breach of this
Section, the other Members and the Company shall have the right to have this
Section specifically enforced by any court having jurisdiction, it being
acknowledged and agreed that money damages will not provide an adequate remedy
to such other Members or the Company. Nothing in this Section shall be
construed to limit the right of any Member or the Company to collect money
damages in the event of a breach of this Section; nor to limit the right of
any Member to report the financial condition and results of operations of the
Company to its shareholders, bondholders or to regulatory authorities to the
extent required by law, regulation or the terms of existing instruments.
(d) Anything else in this Agreement or the Related Agreements
notwithstanding, each Member shall have the right to disclose any information,
including Confidential Information of the other Member or such other Member's
Affiliates, in any filing with any regulatory agency, court or other
governmental authority to the extent that the disclosing Member determines in
good faith that it is required by law or regulation, provided that any such
disclosure shall be as limited in scope as possible and shall only be made
after giving the other Member as much notice as practicable of such required
disclosure and an opportunity to contest such disclosure if possible.
8.10 CONVERSION TO CORPORATION.
(a) CONVERSION. The Company will be converted to a corporation (the
"Corporation") in connection with an IPO if the Management Committee so
determines or
39
(notwithstanding Section 7.3) if a Qualified Member Group so elects under
Section 9.10. The Members will cooperate to minimize any adverse tax
consequences of such conversion.
(b) CONVERSION OF INTERESTS. Upon a conversion of the Company to a
corporation, the Interests of the Qualified Members will be converted into
Class R Common Shares of the Corporation entitling the holders thereof to ten
votes per share. The Interests of other Members will be converted into Class A
Common Shares of the Corporation entitling the holders thereof to one vote per
share. The certificate of incorporation of the Corporation will provide that
(i) Class B Common Shares that are Transferred to, or held by, Persons that
are not Qualified Members will convert automatically into Class A Common
Shares, (ii) Class B Common Shares will be convertible at any time at the
option of the holder into Class A Common Shares and (iii) if permitted by the
exchange on which shares of the Corporation are listed for trading, Class A
Common Shares held by a Qualified Member will be convertible at any time at
the option of the holder into Class B Common Shares.
(c) STOCKHOLDERS AGREEMENT. Upon a conversion of the Company to a
corporation, the Members will enter into a stockholders agreement containing,
to the extent then applicable, substantially the same terms as this Agreement,
provided, that the stockholders agreement will provide for each Qualified
Member to have registration rights that are substantially similar to the
registration rights set forth in Article 4 to the Stockholder and Investor
Rights Agreement, dated as of January 31, 2000, among DCC and the Persons
listed on Schedule I thereto.
8.11 DISPUTE RESOLUTION.
(a) If a dispute arises out of or relating to this Agreement or the
Related Agreements or the transactions contemplated hereby or thereby, or the
construction, interpretation, performance, breach, termination, enforceability
or validity thereof; whether such claim is based on rights, privileges or
interests recognized by or based upon contract, tort, fraud,
misrepresentation, statute, common law or any other legal or equitable theory,
and whether such claim existed prior to or arises on or after the date hereof
(a "Dispute"), the dispute resolution processes set forth in this Section 8.11
shall govern the resolution of such dispute.
(b) If a Dispute cannot be resolved by the executives having primary
managerial responsibility for the matter to which the Dispute pertains, the
parties shall attempt in good faith to resolve such Dispute promptly by
negotiation between executives who have authority to settle the Dispute and
who are at the level of the executives who have negotiated this Agreement
("Senior Party Representatives").
(c) A party may provide any other party notice (a "Dispute Notice")
of any DispUte that has not been resolved in the normal course of business,
within ten business days after delivery of the Dispute Notice, the receiving
party shall submit to each other party a response (the "Response"). The
Dispute Notice and the Response shall each include (a) a statement setting
forth the position of the party providing such notice and a summary of
40
arguments supporting such position, and (b) the name and title of such party's
Senior Party Representative and any other Persons who will accompany the
Senior Party Representative at the meeting at which the parties will attempt
to settle the Dispute. Within 30 business days after delivery, of the Dispute
Notice, the Senior Party; Representatives of the parties shall meet at a
mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary; to attempt to resolve the Dispute. All reasonable requests for
information made by one party to another will be honored.
(d) If the Dispute has not been resolved within 50 business days
after delivery of the Dispute Notice, or if the parties fail to meet within 30
business days after delivery of the Dispute Notice, any party may initiate
arbitration of the Dispute as provided below. If no party initiates
arbitration within 60 business days after delivery of the Dispute Notice, then
the parties shall automatically be released from any and all liability for the
Dispute.
(e) All negotiations pursuant to this section shall be treated as
compromise and settlement negotiations. Nothing said or disclosed, nor any
document produced, in the course of such negotiations that is not otherwise
independently discoverable shall be offered or received as evidence or used
for impeachment or for any other purpose in any current or future arbitration.
The parties agree that all communications and negotiations between the parties
during the dispute resolution process, any settlements agreed upon during the
dispute resolution process and any information regarding the other party
obtained during the dispute resolution process (that are not already public
knowledge) are confidential and may be disclosed only to employees and agents
of the parties who shall have a "need to know" the information and who shall
have been made aware of the confidentiality obligations set forth in this
Section 8.11, unless the party is required by law to disclose such information.
(f) If the Dispute is not resolved as provided in paragraphs (b)
through (d) above, then any party may initiate arbitration proceedings by
providing each other party notice of such initiation of arbitration. The
Dispute shall then be settled by arbitration in accordance with the CPR
Non-Administered Arbitration Rules in effect on the date hereof; by a panel of
three arbitrators. Each Party shall select one of the three arbitrators and
the two arbitrators so chosen shall select the third arbitrator. The
arbitrators shall be governed by the United States Arbitration Act, 9 U.S.C.
Sections 1-16, and judgment upon the award rendered by the arbitrators may be
entered by any court having jurisdiction thereof. The place of arbitration
shall be chosen by the three arbitrators. The arbitrators shall be empowered
to award only damages that are recoverable under the provisions of Article 11,
and each party hereby irrevocably waives any right to recover any other
damages with respect to any Dispute. The arbitrators shall not order pre-
hearing discovery of documents of the taking of depositions, although the
arbitrators may compel the attendance of witnesses and the production of
documents at the hearing to the extent permitted by the CPR Non-Administered
Arbitration Rules.
(g) If a party does not provide a Dispute Notice within one year
following the time the party first knows of the existence of the acts or
omissions that give rise to the
41
Dispute, the party shall be forever estopped from asserting the Dispute
against any other party.
(h) The reasonable out-of-pocket costs (including reasonable
attorneys fees and expenses) of the prevailing party and the fees of the
arbitrators in any arbitration proceeding pursuant to this Section 8.11 shall
be paid by the other party. The arbitrators shall determine which party is the
prevailing party for purposes of this paragraph, and shall include such
determination in their award. If the arbitrators determine that neither party
is the prevailing party for purposes of this paragraph, then each party shall
bear its own costs and expenses, including attorneys' fees and expenses, and
the parties shall share equally the fees of the arbitrators.
(i) Notwithstanding the foregoing, nothing in this Agreement shall
preclude the parties from seeking injunctive or other equitable relief from a
court with regard to any breach of this Agreement or the Related Agreements.
8.12 DISQUALIFYING TRANSACTION. Upon a Disqualifying Transaction,
AWS may terminate, with respect to all or any portion of the Territory, the
obligations of AT&T and its Affiliates contained in Sections 8.1, 8.2, 8.5 and
8.6, in which event the Voting Interests then held by the AWS Member Group
shall, subject to FCC approval if necessary, immediately and automatically
cease to exist and, accordingly, the AWS Member Group shall no longer be
entitled (x) to exercise governance rights with respect to the Company
(including the right to appoint Representatives to the Management Committee)
except as required by applicable law or (y) to receive information concerning
the Company except for annual and quarterly financial statements pursuant to
Section 6.4. In such event, upon at least 90 days written notice to AWS given
within 90 days after termination by AWS of the obligations contained in
Sections 8.1 and 8.2, the Company will have the right to terminate the
Operating Agreement with respect to the same portion of the Territory.
ARTICLE 9
TRANSFER RESTRICTIONS; EXIT RIGHTS;
CHANGE OF CONTROL OF DCC
The provisions of Sections 9.1 through 9.4 shall apply to direct
Transfers of Interests by the Members and Indirect Transfers of Interests by
Persons (including Members) that beneficially own Equity Interests in the
Members.
9.1 GENERAL RESTRICTIONS ON TRANSFERS.
(a) PRIOR TO THE THIRD ANNIVERSARY OF THE EFFECTIVE DATE. Prior to
the third anniversary of the Effective Date, Members may not Transfer Voting
Interests or Economic Interests except to other Qualified Members or members
of their respective Affiliate Groups, nor shall Indirect Transfers of
Interests be permitted except in accordance with the provisions of Section 9.4.
42
(b) AFTER THE THIRD ANNIVERSARY OF THE EFFECTIVE DATE. On and after
the third anniversary of the Effective Date, Indirect Transfers of Interests
shall not be permitted except in accordance with the provisions of Section
9.4, and
(i) Members may not Transfer Voting Interests except to other
Qualified Members or members of their respective Affiliate Groups. Any
Transfer permitted by the preceding sentence shall not be subject to the
right of first refusal set forth in Section 9.2 or the tag-along right set
forth in Section 9.3.
(ii) Members of the AWS Member Group may Transfer in the aggregate up
to 20% of the Economic Interests acquired by AWS Sub on the Effective Date
to Persons that are not members of the AWS Affiliate Group or the DCC
Affiliate Group. Members of the DCC Member Group may Transfer in the
aggregate up to 20% of the Economic Interests acquired by DCC Sub on the
Effective Date to Persons that are not members of the DCC Affiliate Group or
the AWS Affiliate Group. Any Transfer permitted by the two preceding
sentences shall not be subject to the right of first refusal set forth in
Section 9.2, but shall be subject to the tag-along right set forth in
Section 9.3.
(iii) If members of the AWS Member Group Transfer in the
aggregate more than 200% of the Economic Interests acquired by AWS Sub on
the Effective Date to Persons that are not members of the AWS Affiliate
Group or the DCC Affiliate Group, or members of the DCC Member Group
Transfer in the aggregate more than 20% of the Economic Interests acquired
by DCC Sub on the Effective Date to Persons that are not members of the DCC
Affiliate Group or the AWS Affiliate Group, the Voting Interests then held
by the AWS Member Group or the DCC Member Group, as the case may be, shall
immediately and automatically cease to exist and, accordingly, Members that
are members of the AWS Member Group or the DCC Member Group, as the case may
be, shall no longer be entitled (x) to exercise governance rights with
respect to the Company (including the right to appoint Representatives to
the Management Committee) except as required by applicable law or (y) to
receive information concerning the Company except for annual and quarterly
financial statements under Section 6.4. Any Transfer (or portion thereof) by
a Member of any Member Group, after giving effect to which the 20% threshold
described in the preceding sentence is crossed, and any subsequent Transfer
by a Member of such Member Group, shall be subject to the right of first
refusal set forth in Section 9.2 and the tag-along right set forth in
Section 9.3.
(iv) Members may not Transfer Voting Interests or Economic Interests
to a Prohibited Transferee except (after the IPO) pursuant to broadly
distributed underwritten registered public offerings and Rule 144 under the
Securities Act.
(c) OTHER ENCUMBRANCES ON INTERESTS. Notwithstanding anything to
the contrary in this Agreement or the Act. a Member may not pledge,
hypothecate or otherwise encumber all or any portion of its Interests.
43
9.2 RIGHT OF FIRST REFUSAL.
(a) NOTICE AND EXERCISE OF RIGHT. Subject to the limitations of
Section 9.1(a), if
(i) members of a Member Group (the "Sellers") receive and wish to
accept a written offer (the "Offer") from a bona fide third party (the
"Offeror") to purchase some or all of their Economic Interests (the "Offered
Interests").
(ii) the consummation of such purchase would result (together
with any prior Transfers) in the Member Group to which the Sellers belong
ceasing to be a Qualified Member Group, or this Section 9.2 otherwise
expressly applies pursuant to the terms of this Agreement, and
(iii) the other Member Group is a Qualified Member Group (it being
understood that if the other Member Group is not then a Qualified Member
Group, the Sellers shall not be obligated to comply with the provisions of
this Section 9.2 or Section 9.3),
then the Sellers shall give notice of such Offer (the "Offer Notice") to the
members of the other Member Group (the "Buyers"), which notice shall identify
the Offeror, enclose a copy of the Offer, and irrevocably offer to the Buyers
the right to purchase (pro rata in accordance with their respective Interests
unless the Buyers otherwise agree) the Offered Interests on the same economic
terms and conditions as specified in the Offer (if they are the only assets
being sold and are being sold for cash) or for cash at their Fair Market
Value (if they are being Transferred in such transaction or series of related
transactions with other assets or for consideration other than cash),
provided, that the Buyers shall be entitled to pay for the Offered Interests
with instruments of indebtedness to the extent the Offer contemplates the
delivery of instruments of indebtedness. The Buyers may exercise their right
to purchase the Offered Interests by notifying the Sellers in writing of
their election to purchase within 21 days after the later of(x) delivery of
the Offer Notice and (y) any determination of Fair Market value pursuant to
Section 9.4(c) or otherwise.
(b) CLOSING OF PURCHASE. If the Buyers duly elect to purchase the
Offered Interests, the closing of such purchase (the "RoFR Closing") shall
take place on a date agreed to by the Sellers and the Buyers, but in no event
later than 30 days following the exercise by the Buyers of their election to
purchase; provided, that if governmental or regulatory approval is required
for any Buyer to consummate its purchase and has not been obtained. the RoFR
Closing with respect to such purchase may be deferred until such approval is
obtained
(c) REPRESENTATIONS AT CLOSING. At any RoFR Closing, the Sellers
shall represent and warrant in writing to the Buyers only that the Sellers
(i) are the sole beneficial and record owners of the Offered Interests and
have good and marketable title thereto free and clear of all Liens (other
than restrictions imposed pursuant to this Agreement) and (ii) have full
power and authority to sell the Offered Interests without conflict with the
terms of
44
any law, order or material agreement or instrument binding upon them or their
assets; and the Sellers shall deliver to the Buyers such customary
instruments of assignment with respect to the Offered Interests as may be
reasonably requested by the Buyers.
(d) SALE TO THIRD PARTY. If the Buyers fail to exercise their right
to purchase the Offered Interests, the Sellers may accept the Offer and sell
the Offered Interests to the Offeror; provided, that such sale shall be at
the same price and on the same terms and conditions as specified in the Offer
Notice and otherwise in accordance with Section 9.5. If such sale is not
consummated within 90 days after the expiration of the applicable time
periods specified in paragraph (b) above, such right to sell shall lapse and
Transfers of the Offered Interests shall again be subject to the provisions
of this Section 9.2.
(e) ASSUMPTION OF AGREEMENTS. At any closing with respect to a sale
to a third party, the Offeror shall execute a counterpart to this Agreement
and any Related Agreements to which the Sellers or their Affiliates are party
and shall be bound by the provisions of and assume the obligations of the
Sellers under all such Agreements, provided, that the Management Agreement
shall not be assigned or assumed except in accordance with its terms. The
Sellers and the Offeror shall execute such documents as the Buyers may
reasonably request to evidence such assumption.
(f) PUBLIC SALES. Sales of Interests after the IPO pursuant to
registered public offerings and Rule 144 under the Securities Act shall be
subject to this Section 9.2.
9.3 TAG-ALONG RIGHT.
(a) NOTICE AND EXERCISE OF RIGHT. In lieu of exercising its rights
under Section 9.2, or as otherwise expressly provided herein, the Buyers may,
within 21 days after receipt of any Offer Notice, elect by notice to the
Sellers to include their Economic Interests (the "Included Interests") in
such sale on a pro rata basis with the Sellers. Any such sale of Included
Interests shall be made on the same economic terms and conditions as
specified in the Offer (if they are the only assets being sold and are being
sold for cash) or for cash at their Fair Market Value (if they are being
Transferred in such transaction or series of related transactions with other
assets or for consideration other than cash), and the Sellers may not
consummate their sale unless the sale of Included Interests (if any) by the
Buyers is consummated simultaneously in accordance with the terms hereof. If
the Buyers do not elect to participate in such sale, and such sale is not
consummated within the applicable time periods specified in Section 9.2(d),
the restrictions contained in this Section 9.3 shall again become effective,
and Economic Interests may not be Transferred thereafter except in accordance
with this Article 9.
(b) REPRESENTATIONS AT CLOSING. At the closing of any Transfer of
Included Interests pursuant to this Section 9.3, (i) the participating Buyers
shall not be required to make any representations and warranties with respect
to the Company or the Business other than those that the Sellers make to the
purchaser, nor shall the Buyers be required to make any non-compete,
non-solicit or similar covenants in connection with such Transfer, and (ii)
45
the participating Buyers shall deliver to the purchaser such customary
instruments of assignment with respect to the Included Interests as may be
reasonably requested by the purchaser.
(c) PUBLIC SALES. Sales of Interests after the IPO pursuant to
registered public offerings and Rule 144 under the Securities Act shall not
be subject to this Section 9.3.
9.4 INDIRECT TRANSFERS. Subject to Section 9.8, the provisions of
Sections 9.1, 9.2, 9.3, 9.5, 9.6 and 9.7 (the "Specified Restrictions") shall
apply to Indirect Transfers of Interests to the same extent that they apply
to direct Transfers of Interests except as otherwise provided in this Section
9.4 or elsewhere in this Agreement.
(a) PERCENTAGE TRANSFERRED. A Transfer of any percentage of the
Equity Interests in a member of any Affiliate Group shall be deemed to be a
Transfer by the applicable Member Group of the same percentage of Economic
Interests in the Company. For example, the Transfer of 30% of the capital
stock of AWS Sub or DCC Sub shall be deemed to be the Transfer of 30% of the
Economic Interests in the Company by the AWS Member Group or the DCC Member
Group, respectively. Notwithstanding the foregoing, if at the time of any
Indirect Transfer involving a member of any Affiliate Group, the percentage
of the Equity Interests in such member being Transferred exceeds the
percentage of Economic Interests in the Company then held by the applicable
Member Group, such Indirect Transfer shall be deemed to be a Transfer by such
Member Group of the percentage of Economic Interests in the Company then held
by such Member Group. For example, the Transfer of 60% of the capital stock
of AWS Sub or DCC Sub at a time when they each hold 50% of the Economic
Interests in the Company shall be deemed to be a Transfer of 50% of the
Economic Interests in the Company by the AWS Member Group or the DCC Member
Group, respectively.
(b) INDIRECT TRANSFERS WITHIN AN AFFILIATE GROUP. The Specified
Restrictions shall not apply to Transfers of Equity Interests in a member of
any Affiliate Group if immediately after giving effect to such Transfer such
Person remains a member of such Affiliate Group, unless such Transfer has
substantially the same economic effect as a Transfer of Interests in the
Company to a Person that is not a member of such Affiliate Group.
(c) INDIRECT TRANSFERS INVOLVING DCC. So long as the Interests in
the Company beneficially owned by DCC do not account for 50% or more of the
value of DCC, the Specified Restrictions shall not apply to Transfers of
Equity Interests in DCC or any Parent of DCC, provided, that such Transfers
are not designed to circumvent the transfer restrictions contained herein;
and provided, further, that the Specified Restrictions shall apply, in
accordance with Section 9.8, to any Transfer resulting in a Change of Control
of DCC. Notwithstanding Section 9.1(c), DCCLP may pledge capital stock of DCC
to secure indebtedness owing to Bank of America, N.A. under instruments of
indebtedness in effect on the Effective Date, as such instruments may be
amended or replaced from time to time.
46
(d) INDIRECT TRANSFERS INVOLVING AT&T. The Specified Restrictions
shall not apply to (i) Transfers of Equity Interests in AWS, (ii) Transfers
of Equity Interests in AT&T or (iii) Transfers of Equity Interests by any
direct or indirect shareholder of AWS or AT&T; provided, that such Transfers
are not designed to circumvent the transfer restrictions contained herein.
(e) INDIRECT TRANSFERS INVOLVING JWC. Notwithstanding anything in
this Agreement to the contrary, the Specified Restrictions shall not apply to
Transfers of Equity Interests in DCC by X.X. Childs Equity Partners, II, L.P.
(and its affiliated funds and co-investors listed on Schedule 9.4).
9.5 SUBSTITUTED MEMBERS. Prior to any Transfer of Interests by a
member of any Member Group, the transferor shall deliver to the members of
the other Member Group a notice setting forth the identity of the transferee
and (if applicable) stating that such transferee is a member of the
transferor's Affiliate Group, and shall provide such other information as the
members of the other Member Group may reasonably request in connection with
such Transfer. The transferee shall be admitted as a Member upon execution of
a counterpart to this Agreement evidencing its agreement to be bound hereby.
Upon the admission of any such transferee as a Member, the transferring
Member or Members shall be relieved of any obligation arising under this
Agreement subsequent to such Transfer with respect to the Interests being
transferred (provided that the transferee shall assume all such obligations),
and if the transferring Member no longer holds any Interests, the
transferring Member shall be relieved of its obligations arising under this
Agreement to the extent provided in Section 12.12.
9.6 INVALID TRANSFERS VOID. Any purported Transfer of an Interest
or any part thereof not in compliance with the provisions of this Article 9
shall be void and of no force or effect and the transferring Member shall be
liable to the other Members and the Company for all liabilities, obligations,
damages, losses, costs and expenses (including but not limited to reasonable
attorneys' fees and court costs) arising out of such noncomplying Transfer.
9.7 DETERMINATION OF FAIR MARKET VALUE. The Fair Market Value of
Interests to be transferred or other property received pursuant to this
Agreement shall be determined in the following manner:
For purposes of this Section 9.7. Sellers owning a majority of the
applicable Offered Interests shall have the right to act on behalf of the
Sellers within 15 days after the delivery of the notice requiring such
determination, the Sellers and the Buyers shall attempt in good faith to
agree on the Fair Market Value. If the Sellers and the Buyers fail within 15
days thereafter to agree thereon, each of the Sellers and the Buyers shall
deliver a notice to the other appointing as its appraiser ("Appraiser") an
independent accounting or investment banking firm of nationally recognized
standing. The Sellers and Buyers by mutual agreement shall also appoint a
third Appraiser. If after appointment of the two Appraisers, the Sellers and
Buyers are
47
unable to agree upon a third Appraiser, such appointment shall be made
within fifteen days of the request by the American Arbitration Association,
or any organization successor thereto, from a panel of arbitrators having
experience in the appraisal of the type of property then the subject of
appraisal. The decisions of the three Appraisers so appointed and chosen
shall be given within 30 days after the selection of such third Appraiser.
If the determination of one Appraiser differs from the middle determination
by more than twice the amount by which the other determination differs from
the middle determination, then the determination of such Appraiser shall
be excluded, the remaining two determinations shall be averaged and such
average shall be binding and conclusive on the parties; otherwise the
average of all three determinations shall be binding and conclusive. The
Sellers' obligation to provide an Offer Notice pursuant to Section 9.2(a)
shall not be applicable until the date of delivery of such determination
to the Buyers. The costs of conducting any Appraisal Procedure shall be
borne as follows: (x) the costs of the Appraiser designated by the Sellers
and other costs separately incurred by the Sellers shall be borne by
the Sellers; (y) the costs of the Appraiser designated by the Buyers and
other costs separately incurred by the Buyers shall be borne by the Buyers;
and (z) the costs of the third Appraiser, if any, shall be shared equally by
the Sellers and the Buyers.
9.8 CHANGE OF CONTROL OF DCC. Notwithstanding anything in this Agreement
to the contrary:
(a) PROHIBITED TRANSFEREE, ETC. If there is a Change of Control of
DCC in which a Prohibited Transferee (alone or as part of a "group" as such
term is used in Sections 13(d) and 14(d) of the Exchange Act and the
regulations thereunder) or, prior to the second anniversary of the Effective
Date, a Person that is not a Prohibited Transferee (alone or as part of a
"group" as such term is used in Sections 13(d) and 14(d) of the Exchange Act
and the regulations thereunder) acquires control of DCC, and either the
Company is a limited liability company and the AWS Member Group is a
Qualified Member Group, or the Company has converted to a corporation and
members of the AWS Affiliate Group retain in the aggregate capital stock in
such corporation representing at least 50% of the Economic Interests that AWS
Sub acquired on the Effective Date, then
(i) If it does not elect to exercise its rights under Section 9.2 or
9.3. the AWS Member Group may initiate the Buy- Sell Procedure (except that
the AWS Member Group shall have the right but not the obligation to require
that DCC propose the cash purchase price for all of the Interests of the AWS
Member Group) for 90 days after the second anniversary of the Effective
Date.
(ii) from and after the effective date of such Change of Control of DCC,
the DCC Member Group shall lose the right to appoint one of its two
Representatives to the Management Committee (and such Representative shall
forthwith resign or be deemed removed as such) and the AWS Member Group
shall thereupon have the right to appoint three of the four Representatives
and
48
(iii) from and after the effective date of such Change of Control of
DCC, subject to Section 9.1(b)(iii), the Significant Matters that the DCC
Member Group will have the right to approve shall be those set forth on
Exhibit A.
(b) STATUS OF CONTROL PERSON. Except as otherwise provided in this
Section 9.8, any Person referred to in paragraph (a) above that acquires
control of DCC shall be treated as the Xxxxxx Group for all purposes of this
Agreement, and if the DCC Member Group was a Qualified Member Group
immediately prior to the time of the Change of Control of DCC, and for so
long thereafter as it qualifies as such hereunder, it shall also be
considered a Qualified Member Group immediately after the Change of Control.
9.9 BUY-SELL PROCEDURE.
(a) AFTER THE FIFTH ANNIVERSARY OF THE EFFECTIVE DATE. After the
fifth anniversary of the Effective Date, whether or not an IPO has occurred,
a Member Group may initiate a buy-sell procedure (the "Buy-Sell Procedure")
by giving the other Member Group a notice referring to this Section 9.9(a)
(the "Section 9.9(a) Notice"), which notice shall specify a cash purchase
price per Interest or per share, as applicable, for all of the Interests in
the Company then held by the other Member Group, and contain an irrevocable
offer to purchase such Interests, and to sell all of the Interests in the
Company then held by the initiating Member Group, at such price. The
non-initiating Member Group may exercise its right to purchase or sell by
notifying the initiating Member Group of its election within 90 days after
delivery of the Section 9.9(a) Notice; provided, that the DCC Member Group
may not initiate the Buy-Sell Procedure, or elect to buy in the event that
the AWS Member Group initiates the Buy-Sell Procedure, without concurrently
providing to the AWS Member Group a firm commitment, including a "material
adverse change" condition (which may include a condition relating to
disruption of the financial markets), reasonably acceptable to the AWS Member
Group, from a financial institution reasonably acceptable to the AWS Member
Group. to underwrite the purchase price. The closing of any such purchase and
sale will occur within 90 days after the end of such 90-day period, subject
to extension for obtaining by Final Order any regulatory approvals.
(b) IN CONNECTION WITH OVERLAP IN SERVICE COVERAGE. The AWS Member
Group may initiate the Buy-Sell Procedure at any time if (x) the Company is
then offering, in service areas covering 15% or more of the Company's Pops,
Company Communications Services that are not Mobile Wireless Services and (y)
AWS or its Affiliates are then offering, or have a good faith intention to
begin offering and have taken material steps towards offering, in such
service areas, Telecommunications Services that could reasonably be
considered by subscribers to be equivalent to, or a substitute for, such
Company Communications Services that are not Mobile Wireless Services. Such
right will be exercisable by giving the DCC Member Group a notice referring
to this Section 9.9(b) (the "Section 9.9(b) Notice") and signed by a senior
executive officer of AWS, which notice shall (x) describe in reasonable
detail the competing services that AWS or its Affiliates are then offering or
intending in good faith to offer and the steps they have taken towards
offering such services. (y) specify a cash purchase price per Interest or per
share, as applicable, for all
49
of the Interests in the Company then held by the DCC Member Group, and (z)
contain an irrevocable offer to purchase such Interests, and to sell all of
the Interests in the Company then held by the AWS Member Group, at such
price. The DCC Member Group may exercise its right to purchase or sell by
notifying the AWS Member Group of its election within 90 days after delivery
of the Section 9.9(b) Notice; provided, that the DCC Member Group may not
elect to purchase without concurrently providing to the AWS Member Group a
firm commitment, including a "material adverse change" condition (which may
include a condition relating to disruption of the financial markets),
reasonably acceptable to the AWS Member Group, from a financial institution
reasonably acceptable to the AWS Member Group, to underwrite the purchase
price. The closing of any such purchase and sale will occur within 90 days
after the end of such 90-day period, subject to extension for regulatory
approvals.
(c) IN THE EVENT OF CHANGE OF CONTROL OF DCC. If, in connection with
a Change of Control of DCC, the AWS Member Group does not elect to exercise
its right to initiate the Buy-Sell Procedure pursuant to Section 9.8(a)(i),
if applicable, or its right of first refusal or tag-along right under Section
9.2 or 9.3, then, at any time during the 90-day period beginning on the later
of the second anniversary of the Effective Date and 90 days following the
expiration of the last of such rights, the DCC Member Group will have the
right to initiate the Buy-Sell Procedure by giving the AWS Member Group a
notice referring to this Section 9.9(c) (the "Section 9.9(c) Notice"), which
notice shall specify a cash purchase price per Interest or per share, as
applicable, for all of the Equity Interests in the Company then held by the
AWS Member Group, and contain an irrevocable offer to purchase such Equity
Interests. and to sell all of the Equity Interests in the Company then held
by the DCC Member Group, at such price; provided, that the DCC Member Group
may not initiate the Buy-Sell Procedure without concurrently providing to AWS
Member Group a firm commitment, including a "material adverse change"
condition (which may include a condition relating to disruption of the
financial markets), reasonably acceptable to the AWS Member Group, from a
financial institution reasonably acceptable to the AWS Member Group, to
underwrite the purchase price. The AWS Member Group may exercise its right to
purchase or sell by notifying the DCC Member Group of its election within 90
days after delivery of the Section 9.9(c) Notice. The closing of any such
purchase and sale will occur within 90 days after the end of such 90-day
period, subject to extension for regulatory approvals.
(d) REPRESENTATIONS AT CLOSING. At the closing of any purchase and
sale pursuant to the Buy-Sell Procedure. the selling Member Group shall
represent and warrant in writing to the non-selling Member Group that the
selling Members (i) are the sole beneficial and record owners of tie
Interests being sold and have good and marketable title thereto free and
clear of all Liens (other than restrictions imposed pursuant to this
Agreement) and (ii) have full power and authority to sell the Interests being
sold without conflict with the terms of any law, order or material agreement
or instrument binding upon them or their assets; and the selling Members
shall deliver to the non-selling Member Group such customary instruments of
assignment with respect to the Interests being sold as may be reasonably
requested by the non-selling Member Group.
50
(e) TERMINATION OF AGREEMENT. Upon the consummation of a purchase and
sale transaction pursuant to the Buy-Sell Procedure, the Management Agreement
and the agreements set forth in Sections 8.1, 8.2, 8.5 and 8.6 will terminate
immediately, and the Operating Agreement will terminate on the later of (a)
the tenth anniversary of the Effective Date and (b) the second anniversary of
the consummation of such purchase and sale transaction.
9.10 IPO DEMAND. After the fifth anniversary of the Effective Date.
any Qualified Member Group may by notice to the Company and the other
Qualified Member Group (if any) elect (the "Section 9.10 Election") to
require the Company to convert to a corporation in accordance with Section
8.10 and to effect an IPO of not less than 10% nor more than 20% of the
Corporation's Class A Common Stock, underwritten by an underwriter selected
by the Management Committee, and otherwise conducted in accordance with the
registration procedures referred to in Section 8.10(c); provided, that the
non-electing Qualified Member Group (if any) may (i) defer the Section 9.10
Election for up to 180 days on one occasion during any 12-month period and
(ii) preempt the Section 9.10 Election by initiating the Buy-Sell Procedure
within 30 days after such Election is made, provided, that the DCC Member
Group may not initiate the Buy-Sell Procedure, or elect to buy in the event
that the AWS Member Group initiates the Buy-Sell Procedure, without
concurrently providing to AWS Member Group a firm commitment, including a
"material adverse change" condition (which may include a condition relating
to disruption of the financial markets), reasonably acceptable to AWS Member
Group, from a financial institution reasonably acceptable to AWS Member
Group to underwrite the purchase price.
ARTICLE 10
DISSOLUTION AND TERMINATION
10.1 NO WITHDRAWAL. Except as expressly provided in this Agreement
or as otherwise provided by law, no Member shall have the right, and each
Member hereby agrees not, to dissolve, terminate or liquidate the Company, or
to resign or withdraw as a Member.
10.2 DISSOLUTION. The Company shall be dissolved upon the written
determination of the Management Committee to dissolve the Company, but only
on the effective date of dissolution specified by the Management Committee in
such determination.
10.3 PROCEDURES UPON DISSOLUTION.
(a) GENERAL. In the event the Company dissolves it shall commence
winding up pursuant to the appropriate provisions of the Act and the
procedures set forth in this Section 10.3. Notwithstanding the dissolution of
the Company, until the winding up of the Company's affairs is completed, the
business of the Company and the affairs of the Members, as such, shall
continue to be governed by this Agreement.
(b) CONTROL OF WINDING UP. The winding up of the Company shall be
conducted under the direction of the Management Committee or such other
Person as may be
51
designated by a court of competent jurisdiction (herein sometimes referred to
as the "Liquidator"); provided that any Member whose breach of this Agreement
shall have caused the dissolution of the Company (and the Representatives
appointed by such Member) shall not participate in the control of the winding
up of the Company; and provided further, that if the dissolution is caused by
entry of a decree of judicial dissolution, the winding up shall be carried
out in accordance with such decree.
(c) MANNER OF WINDING UP. The Company shall engage in no further
business following dissolution other than that necessary for the orderly
winding up of business and distribution of assets. The Company's maintenance
of offices shall not be deemed a continuation of business for purposes of
this Section 10.3. Upon dissolution of the Company, the Liquidator shall,
subject to paragraph (a) above, first attempt to distribute assets in kind if
it can obtain the consent of each of the Members and, to the extent
necessary, the creditors of the Company. If such consent is not obtained, the
Liquidator shall sell the Company or all the Company's property in such
manner and on such terms as it deems fit, consistent with its fiduciary
responsibility and having due regard to the activity and condition of.the
relevant market and general financial and economic conditions. Each Member
shall share Profits, Losses and other items after the dissolution of the
Company and during the period of winding up in the same manner as described
in Article 4.
(d) APPLICATION OF.ASSETS. Upon dissolution of the Company, the
Company's assets (which shall, after the sale or sales referenced in
paragraph (c) above, consist of the proceeds thereof) shall be applied as
follows:
(i) CREDITORS. To creditors, including Members and Representatives who
are creditors, to the extent otherwise permitted by law, in satisfaction of
liabilities of the Company (whether by payment or the reasonable provision
for the payment thereof). Any reserves set up by the Liquidator may be paid
over by the Liquidator to an escrow agent or trustee, to be held in escrow
or trust for the purpose of paying any such contingent or unforeseen
liabilities or obligations, and, at the expiration of such period as the
Liquidator may deem advisable. such reserves shall be distributed to the
Members or their assigns in the manner set forth in paragraph (ii) below.
(ii) MEMBERS. By the end of the taxable year in which the liquidation
occurs (or, if later, within 90 days after the date of such liquidation), to
the Members in proportion to the positive balances of their respective
Capital Accounts, as determined after taking into account all Capital
Account adjustments for the taxable year during which the liquidation occurs
(other than those made pursuant to this paragraph.
10.4 TERMINATION. Upon completion of the winding up of the Company
and the distribution of all Company assets, the Company's affairs shall
terminate and the Members shall cause to be executed and filed any and all
documents required by the Act to effect the termination of the Company.
52
ARTICLE 11
EXCULPATION AND INDEMNIFICATION
11.1 NO PERSONAL LIABILITY.
(a) Except as otherwise provided by the Act, the debts, obligations
and liabilities of the Company, whether arising in contract, tort or
otherwise, shall be solely the debts, obligations and liabilities of the
Company, and no Indemnified Person (as defined in paragraph (b) below) shall
be obligated personally for any such debt, obligation or liability of the
Company solely by reason of being an indemnified Person.
(b) No Representative, Member or its Affiliates, or any of their
respective shareholders, directors, officers, employees, agents, members,
managers, or partners (each, an "Indemnified Person") shall be liable,
responsible or accountable in damages or otherwise to the Company or to any
other Indemnified Person for any act or omission performed or omitted by an
Indemnified Person in connection with the transactions contemplated hereby,
whether for mistake of judgment or negligence or other action or inaction,
unless such action or omission constitutes willful misconduct, gross
negligence or bad faith. Each Indemnified Person may consult with counsel,
accountants and other experts in respect of the affairs of the Company and
such Indemnified Person shall be fully protected and justified in any action
or inaction which is taken in good faith in accordance with the advice or
opinion of such counsel, accountants or other experts, provided that they
shall have been selected with reasonable care.
11.2 INDEMNIFICATION BY COMPANY. To the maximum extent permitted by
applicable law, the Company shall protect, indemnify, defend and hold
harmless each Indemnified Person for any acts or omissions performed or
omitted by an Indemnified Person (in its capacity as such) unless such action
or omission constituted willful misconduct, gross negligence or bad faith.
The indemnification authorized under this Section shall include payment on
demand (with appropriate evidence of the amounts claimed) of reasonable
attorneys' fees and other expenses incurred in connection with, or in
settlement of, any legal proceedings between the Indemnified Person and a
third party and the removal of any Liens affecting any property of the
Indemnified Person. Such indemnification rights shall be in addition to airy
and all rights. remedies and recourse to which any Indemnified Person shall
be entitled, whether or not pursuant to the provisions of this Agreement, at
law or in equity. The indemnities provided for in this Section 11.2 shall be
recoverable only from the assets of the Company, and there shall be no
recourse to any Member or other Person for the payment of such indemnities.
11.3 NOTICE AND DEFENSE OF CLAIMS.
(a) NOTICE OF CLAIM. If any action, claim or proceeding ("Claim")
shall be brought or asserted against any Indemnified Person in respect of
which indemnity may be sought from the Company under Section 11.2. the
Indemnified Person shall give prompt written notice of such Claim to the
Company, which may assume the defense thereof,
53
including the employment of counsel reasonably satisfactory to the
Indemnified Person and the payment of all of such counsel's fees and
expenses; provided that any delay or failure to so notify the Company shall
relieve the Company of its obligations hereunder only to the extent, if at
all, that it is prejudiced by reason of such delay or failure. Any such
notice shall refer to Section 11.2 and describe in reasonable detail the
facts and circumstances of the Claim being asserted.
(b) DEFENSE BY THE COMPANY. In the event that the Company undertakes
the defense of the Claim, the Company will keep the Indemnified Person
advised as to all material developments in connection with any Claim,
including, but not limited to, promptly furnishing the Indemnified Person
with copies of all material documents filed or served in connection
therewith. The Indemnified Person shall have the right to employ one separate
firm per jurisdiction with respect to any of the foregoing Claims and to
participate in the defense thereof, but the fees and expenses of such firm
shall be at the expense of the Indemnified Person unless both the Indemnified
Person and the Company are named as parties and representation by the same
counsel is inappropriate due to actual differing; interests between them;
provided that under no circumstances shall the Company be liable for the fees
and expenses of more than one law firm per jurisdiction in any of the
foregoing Claims for the Indemnified Persons, taken collectively and not
separately. The Company may, without the Indemnified Person's consent, settle
or compromise any Claim or consent to the entry of any judgment if such
settlement, compromise or judgment involves only the payment of money damages
by the Company (which payment is made or adequately provided for at the time
of such settlement, compromise or judgment) or provides for the unconditional
release by the claimant or plaintiff of the Indemnified Person and its
Affiliates from all liability in respect of such Claim and does not impose
injunctive relief against any of them. The Indemnified Person shall provide
reasonable assistance to the Company in the defense of the Claim. As between
the Company, on the one hand, and the Indemnified Persons, on the other hand,
any matter that is not agreed to unanimously by; the Indemnified Persons
shall be determined by the Indemnified Person that is a party to this
Agreement.
(c) DEFENSE BY THE INDEMNIFIED PERSON. In the event that the
Company, within 20 business days after receiving written notice of any such
Claim, fails to assume the defense thereof, the Indemnified Person shall have
the right, subject to the right of the Company thereafter to assume such
defense pursuant to the provisions of this Article 11, to undertake the
defense, compromise or settlement of such Claim for the account of the
Company.
(d) ADVANCEMENT OF EXPENSES. Unless the Indemnifying Party shall
have assumed the defense of any Claim pursuant to paragraph (b) above, the
Company shall advance to the Indemnified Person any of its reasonable
attorneys' fees and other costs and expenses incurred in connection with the
defense of any such Claim. Each Indemnified Person shall agree in writing
prior to any such advancement, that in the event he or it receives any such
advance, such Indemnified Person shall reimburse the Company for such fees,
costs, and expenses to the extent that it shall be determined that he or it
was not entitled to indemnification under this Article 11.
54
(e) CONTRIBUTION. Notwithstanding any of the foregoing to the
contrary, the provisions of this Article 11 shall not be construed so as to
provide for the indemnification of any Indemnified Person for any liability
to the extent (but only to the extent) that such indemnification would be in
violation of applicable law or to the extent such liability may not be
waived, modified, or limited under applicable law, but shall be construed so
as to effectuate the provisions of this Article 11 to the fullest extent
permitted by law; provided, that if and to the extent that the Company's
indemnification obligation under this Article 11 is unenforceable for any
reason, the Company hereby agrees to make the maximum contribution
permissible under applicable law to the payment and satisfaction of the
losses of the Indemnified Person, except to the extent such losses are found
in a final, nonappealable judgment by a court of competent jurisdiction to
have resulted from the Indemnified Person's gross negligence or willful
misconduct.
ARTICLE 12
MISCELLANEOUS
12.1 ENTIRE AGREEMENT. This Agreement and the Related Agreements,
together with any schedules and exhibits hereto and thereto, contain the
entire agreement and understanding of the Members relating to the subject
matter hereof and supersede all prior negotiations, proposals, offers,
agreements and understandings (written or oral) relating to such subject
matter, including the letter agreement and term sheet attached thereto dated
October 5, 1999 among AWS, DCC and DCCLP.
12.2 AMENDMENT; WAIVER. Neither this Agreement nor any provision
hereof may be amended or modified except in a writing signed by each of the
Qualified Members, PROVIDED, that any amendment or modification that
adversely affects a non-Qualified Member shall require the consent of such
Member. No failure or delay of any Member in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce any such right or power, preclude any other further exercise
thereof or the exercise of any other right or power. No waiver by any Member
of any departure by any other Member from any provision of this Agreement
shall be effective unless the same shall be in a writing signed by the Member
against which enforcement of such waiver or consent is sought, and then such
waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given. No notice or similar
communication by any Member to another shall entitle such other Member to any
other or further notice or similar communication in similar or other
circumstances, except as specifically provided herein.
12.3 SPECIFIC PERFORMANCE, The Members acknowledge that money
damages may not be an adequate remedy for violations of this Agreement and
that any Member may. in its sole discretion, in an arbitration or a court of
competent jurisdiction, to the extent permitted hereunder. apply for specific
performance or injunctive or other relief as such arbitration or court may
deem just and proper in order to enforce this Agreement or to
55
prevent violation hereof and, to the extent permitted by applicable law, each
Member waives any objection to the imposition of such relief;
12.4 REMEDIES CUMULATIVE. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall, unless otherwise specifically provided herein, be cumulative
and not alternative, and the exercise or beginning of the exercise of any
right, power or remedy thereof by a Member shall not preclude the
simultaneous or later exercise of any other such right, power or remedy by
such Member.
12.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of the Members and their respective successors
and permitted assigns. No Member may assign its rights or delegate its duties
under this Agreement without the written consent of the other Members except
to the extent expressly provided in this Agreement.
12.6 NO THIRD PARTY BENEFICIARIES. This Agreement is entered into
solely for the benefit of the Members and no Person other than the Members,
their respective successors and permitted assigns, their Affiliates to the
extent expressly provided herein, and (to the extent provided in Article 11)
the Persons entitled to indemnification pursuant to Article 11, may exercise
any right or enforce any obligation hereunder.
12.7 FURTHER ASSURANCES. Each Member will execute and deliver such
further documents and take such further actions as any other Member may
reasonably request consistent with the provisions hereof in order to effect
the intent and purposes of this Agreement.
12.8 NOTICES. All notices or other communications hereunder shall be
in writing and shall be deemed to have been duly given or made (i) upon
delivery if delivered personally (by courier service or otherwise) or (ii)
upon confirmation of dispatch if sent by facsimile transmission (which
confirmation shall be sufficient if shown on the journal produced by the
facsimile machine used for such transmission), and all legal process with
regard hereto shall be validly served when served in accordance with
applicable law, in each case to the applicable addresses set forth below (or
such other address a the recipient may specify in accordance with this
Section):
If to a Member or Representative of the DCC Member Group, to such
Member or Representative:
c/x Xxxxxx Communications Corporation
00000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxx, XX 00000
Attn. General Counsel
Fax (000) 000-0000
56
with a copy to:
Xxxxxxx & Xxxxxx, LLP
0000 XxxxXxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
If to a Member or Representative of the AWS Member
Group, to such Member or Representative:
c/o AT&T Wireless Services, Inc.
0000 000xx Xxxxxx, XX
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
Fax: (000) 000-0000
with a copy to:
AT&T Wireless Services, Inc.
0000 000xx Xxxxxx, XX
Xxxxxxx, XX 00000
Attn: General Counsel
Fax: (000) 000-0000
If to any other Member, to the address of such Person for notices set forth
in the records of the Company.
12.9 GOVERNMENT LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware,
without regard to principles of conflicts of law.
12.10 SEVERABILITY. If any term of this Agreement or the application
thereof to any Member or any circumstance shall be held invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such term to the other Members or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by
applicable law, so long as the economic and legal substance of this Agreement
and the actions contemplated hereby is not affected in any manner adverse to
any Member.
12.11 INDEPENDENT CONTRACTORS. The Members arc independent
contractors, and this Agreement does not create a partnership or agency
relationship between the Members, or any other relationship between the
Members except as expressly set forth herein. No Member shall have any right
or authority to assume, create or incur any liability or obligation. express
or implied, in the name or on behalf of any other Member.
57
12.12 DISPOSITION OF INTERESTS. Upon the sale or other disposition by
a Person of all its Interests in the Company, following which such Person and
Affiliate thereof is no longer a Member of the Company, this Agreement shall
terminate as to such Member and its Affiliates except as provided in Section
12.13.
12.13 SURVIVAL OF RIGHTS AND DUTIES. Termination of this Agreement
for any reason shall not relieve any Member of any liability which at the
time of termination has already accrued to such Member or which thereafter
may accrue in respect of any act or omission prior to such termination, nor
shall any such termination affect in any way the other Related Agreements or
the survival of any right, duty or obligation of any Member which is
expressly stated elsewhere in this Agreement to survive termination hereof;
Sections 8.3, 8.9 and 8.11 and Articles 11 and 12 shall survive any
termination of this Agreement, including any termination pursuant to Section
12.12 in connection with the consummation of a purchase and sale transaction
pursuant to the Buy-Sell Procedure.
12.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one instrument.
12.15 CONSTRUCTION. Each of the parties hereto acknowledges that it
has reviewed this Agreement and that the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any
amendments hereto. The captions used herein are for convenience of reference
only and shall not affect the interpretation or construction hereof; All
pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine. neuter, singular or plural as the context may require.
Unless otherwise specified, (a) the terms "hereof;" "herein" and similar
terms refer to this Agreement as a whole, (b) references herein to Articles
or Sections refer to articles or sections of this Agreement and (c) the word
"including" connotes the words including without limitation" unless the
context requires otherwise.
12.16 NO RIGHT TO PARTITION. No Member shall have the right to bring
an action for partition against the Company. Each of the Members hereby
irrevocably waives any and all rights which it may have to maintain an action
to partition Company property or to compel any sale or transfer thereof;
12.17 DE FACTO AND DE JURE TRANSFERS OF CONTROL. Notwithstanding
anything to the contrary contained herein, to the extent that, by reason of
any action taken or proposed to be taken, by or on behalf of a Member or any
Member Group (including any actions taken in accordance with the provisions
of Articles 7, 8, or 9 of this Agreement), there would be a de jure or de
facto transfer of control of the Company, (a) if such transfer of control
requires prior notice to, or the prior approval of, the FCC, then no such
action shall be taken unless and until the FCC has approved such transfer of
control, and in such case, the Member proposing to take (or whose Member
Group is proposing to take) such action shall be responsible for assuring
that all required notifications or applications to the FCC have been
58
filed, and all required consents from the FCC have been obtained, before such
transfer of control is made; and (b) if such transfer of control requires
notification to the FCC after it has occurred, the Member taking such action
(or whose Member Group has taken such action) shall be responsible for
assuring that all required notifications to the FCC have been filed. In any
such event, the responsible Member shall assure that all required
applications an/or notifications are timely filed and are accurate and
complete in all material respects, and such Member shall execute and file any
such applications or notifications on behalf of the Company.
[SIGNATURE PAGE FOLLOWS]
59
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
AT&T WIRELESS SERVICES JV CO.
By: /s/ Xxx Xxxxx
---------------------------
Name: Xxx Xxxxx
Title: VP
XXXXXX XX COMPANY
By: /s/ Xxxxx X. Knoozihuizen
---------------------------
Name: Xxxxx X. Knoozihuizen
Title: VP and Chief
Financial Officer
Agreed and accepted with respect
to Sections 8.1, 8.2, 8.3 and 8.4 only:
AT&T CORP.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
60
AMENDED AND RESTATED SUPPLEMENTAL AGREEMENT
Amended and Restated Supplemental Agreement, dated as of February
25, 2000, among AT&T Wireless Services, Inc., a Delaware corporation ("AWS"),
Xxxxxx Communications Corporation, an Oklahoma corporation ("DCC"), Xxxxxx XX
Limited Partnership and the other signatories here to, Capitalized terms used
but not defined herein have the meanings given to such terms in the LLC
Agreement referred to below.
Whereas, AT&T Wireless Services JV Co., a Delaware corporation ("AWS
Sub") and a wholly owned subsidiary of AWS, and Xxxxxx XX Company, an
Oklahoma corporation ("DCC Sub") and a wholly owned subsidiary of DCC, are
entering into a Second Amended and Restated Limited Liability Company
Agreement, dated as of the date hereof (the "LLC Agreement"), relating to ACC
Acquisition LLC, a Delaware limited liability company (the "Company"); and
Whereas, the parties hereto entered into a Supplemental Agreement,
dated as of January 31, 2000 (the "Original Agreement"), and are entering
into this Agreement as a material inducement to the execution and delivery of
the LLC Agreement by AWS Sub and DCC cub.
Now, therefore, in consideration of the mutual promises hereinafter
set forth, the parties hereby agree, and the Original Agreement is hereby
amended and restated in its entirety, as follows:
1. TRANSFER RESTRICTIONS. The parties hereby acknowledge the
restrictions on Transfers of Interests in the Company set forth in Article 9
of the LLC Agreement, including but not limited to the restrictions on
Indirect Transfers set forth in Section 9.4 thereof, and agree to be bound by
such provisions to the same extent as if they had executed the LLC Agreement.
2. NOTICE OF TRANSFER. Prior to any Indirect Transfer of Interests
by a party hereto, the transferor shall, if the Specified Restrictions apply
to such Transfer pursuant to Section 9.4 of the LLC Agreement, deliver to the
other parties hereto a notice setting forth the identity of the transferee
and (if applicable) stating that such transferee is a number of the
transferor's Affiliate Group, and shall provide such other information as the
other parties hereto may reasonably request in connection with such Transfer.
Concurrently with any such Indirect Transfer, the transferor shall cause the
transferee to execute, and distribute to the other parties hereto, a
counterpart to this Agreement evidencing the transferee's agreement to be
bound hereby.
3. MISCELLANEOUS. This agreement (i) together with the LLC Agreement
contains the entire agreement among the parties hereto as to the subject
matter set forth in paragraph 1 above, (ii) shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without
giving effect to Delaware's conflict of law rules and (iii) may be executed
in any number of counterparts, all of which when taken together shall
constitute one and the same instrument and any of the parties hereto may
execute this letter agreement by signing any such counterpart.
[SIGNATURE PAGES TO FOLLOW]
In witness whereof, the parties have executed this Agreement as of the
date first above written.
AT&T WIRELESS SERVICES, INC.
By: /s/ Xxx Xxxxx
--------------------------------
Name: Xxx Xxxxx
Title: Vice President
XXXXXX COMMUNICATIONS CORPORATION
By: /s/ Xxxxxxx Xxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxx
Title: CEO and Chairman
XXXXXX XX LIMITED PARTNERSHIP
By RLD, Inc., Its General Partner
By: /s/ Xxxxxxx Xxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxx
Title: President
R.L.D, Inc
By: /s/ Xxxxxxx Xxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxx
Title: President
