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EXHIBIT 10.27
EXECUTION COPY
TAX SHARING AGREEMENT
Agreement dated this 17th day of February, 1998, by and among Western
Wireless Corporation, a Washington corporation ("WWC"), Western PCS Corporation,
a Delaware corporation ("Western PCS") and Xxxxxxxxx Telecommunications PCS
(USA) Limited, a British Virgin Islands corporation (the "Investor") (the
"Agreement").
WHEREAS, WWC is the common parent of an affiliated group of corporations
that files a consolidated federal income tax return (the "WWC Affiliated
Group");
WHEREAS, prior to the date hereof, WWC owned all of the outstanding
stock of Western PCS;
WHEREAS, as of the date hereof, Investor will acquire from Western PCS
19.9 percent of the outstanding common stock of Western PCS (the "Purchase");
and
WHEREAS, WWC, Western PCS and Investor desire to establish an
arrangement whereby the income tax liabilities of Western PCS and its direct and
indirect subsidiaries (the "Western PCS Group") will be determined and paid by
WWC and rebilled to Western PCS for settlement, and the Western PCS Group will
be compensated by WWC for the use of certain Western PCS Group net operating
losses and other tax attributes;
NOW, THEREFORE, WWC, Western PCS and Investor agree as follows:
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ARTICLE I
1.01 Preparation and Filing of Tax Returns by WWC. WWC shall prepare
and timely file, or shall cause the preparation and timely filing of, all
federal, state, and other income tax returns ("Tax Returns") of the Western PCS
Group. With respect to the tax treatment of items affecting the Western PCS
Group, such Tax Returns shall be prepared (in the absence of a material change
in law or circumstance) in a manner that is consistent with past practices,
elections, accounting methods, conventions, and principles of taxation used for
the most recent taxable periods for which Tax Returns involving similar items
have been filed prior to the Purchase.
1.02 Payment of Taxes by WWC. Subject to Sections 1.05 and 1.08 and
any rights of offset that WWC may have under this Agreement, WWC shall pay, or
cause to be paid, all income taxes, interest, and penalties due with respect to
income earned or recognized by the Western PCS Group.
1.03 Determination of Income Taxes of the Western PCS Group. WWC
shall determine and allocate to each member of the Western PCS Group its income
taxes and related penalties and interest as if it were a separate and
independent taxpayer. For purposes of this determination, WWC shall not give
effect to any federal net operating loss carryover or carryback that would be
available to any member of the Western PCS Group. The computations shall be
prepared from year to year (in the absence of a material change in law or
circumstance) in a manner consistent with past practices, elections, accounting
methods, conventions, and principles of taxation used for the most recent
taxable periods for which Tax Returns involving similar items have been filed
prior to the Purchase. In the event that the WWC Affiliated Group files its
consolidated federal income Tax Return on the basis of the alternative minimum
tax, each
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member of the Western PCS Group will be allocated tax by WWC based on its tax
calculated on a stand-alone basis. Items relating to intercompany transactions
shall be treated as provided under Treasury Reg. Section 1.1502-13.
WWC shall consult with Western PCS and Investor in the determination of
the Western PCS Group members' allocated income tax liabilities and shall afford
Western PCS and Investor reasonable opportunity to review such determinations by
making such determinations available to Western PCS and Investor. Not later than
the later of (i) 15 days after receipt of such determinations by Western PCS and
Investor and (ii) 15 days before the filing due date of the relevant Tax Return,
Investor or Western PCS shall notify WWC of any determinations or allocations
with which Investor or Western PCS disagrees, including a reasonably detailed
explanation of such disagreement. The parties shall act in good faith to resolve
such disagreement and if they cannot reach a resolution, the matter shall be
referred to an independent accounting firm acceptable to all parties, whose
resolution of the matter shall be binding on the parties.
In addition to the other principles and policies set forth in this
Agreement, the parties have agreed that the determination and allocation of
taxes under this Section shall be computed on the basis that (i) the merger of
Western PCS III Corporation into Western PCS II Corporation during 1997 was a
qualifying tax-free reorganization under Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code") and (ii) any tax liability arising as a
result of any future spin-off by Western PCS of any direct or indirect
subsidiary of Western PCS shall not be allocated to any member of the Western
PCS Group.
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WWC and Western PCS shall cooperate to effectively monitor any "excess
loss accounts" (as defined in Treasury Reg. Section 1.1502-19) anywhere within
the Western PCS Group. Prior to any event (including, but not limited to, debt
cancellations and deconsolidation events) which may trigger recapture of income
due to any excess loss account, WWC and Western PCS shall cooperate and use all
commercially reasonably efforts to eliminate such excess loss account recapture
or otherwise avoid or minimize the impact thereof.
1.04 Determinations by WWC in Accordance with Allocation Policy
Objectives. In the event that it may be unclear as to the result of the
application of Section 1.03 to specific situations which may arise and which are
not expressly addressed in Section 1.03, the allocation of taxes by WWC to the
members of the Western PCS Group shall be made using the following tax
allocation policy objective as a guide: the tax allocation policy is meant to
fairly allocate federal, state, and local tax liabilities (without regard to
federal net operating loss carryovers or carrybacks, except as provided in
Sections 1.06 and 1.07) to the members of the Western PCS Group as if each such
corporation filed its Tax Return and paid its tax on a separate company basis.
1.05 Payment of Allocated Taxes. Subject to Sections 1.06 and 1.08,
Western PCS shall pay to WWC on behalf of each of the members of the Western PCS
Group, within 30 days after the later of (i) the receipt of the determinations
referred to in Section 1.03 and (ii) the filing of the relevant Tax Return, the
tax liability allocated to such member pursuant to Section 1.03, except for
payments relating to disputed items under Section 1.03, which payments shall be
made within 30 days after the resolution thereof. The tax liability of the WWC
Affiliated Group, less the amount of tax liability
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allocated to the members of the Western PCS Group, shall be the sole
responsibility of WWC and the other members of the WWC Affiliated Group,
excluding the members of the Western PCS Group. The foregoing sentence shall not
affect any right to indemnification that WWC or other members of its Affiliated
Group may have from any person who is not a member of the WWC Affiliated Group
for any taxes (including penalties and interest thereon and expenses related
thereto) that are the responsibility of WWC. Western PCS may offset its
obligation to make payments to WWC under this Section against WWC's obligations
to make payments to Western PCS under the provisions of this Agreement.
1.06 Treatment of Post-1997 Net Operating Losses and Other Tax
Attributes. (a) If for any taxable year beginning on or after January 1, 1998,
any member of the Western PCS Group has a net operating loss (computed without
regard to any net operating loss carryover or carryback from any period) or
generates any other tax attribute (e.g., a credit) that reduces the federal
consolidated tax liability of the WWC Affiliated Group (excluding the Western
PCS Group) for the year in which such loss is incurred or such attribute is
generated, the amount of the net operating loss or tax attribute producing such
reduction in tax liability shall be treated as follows: (i) first, to the extent
of losses or attributes referred to in Section 1.12 (generally, Western PCS
Group Pre-1997 Losses), as reducing the amount of such losses or attributes;
(ii) then, to the extent of losses referred to in Section 1.07 (Western PCS
Group 1997 Losses), as reducing the amount of such losses; and (iii) thereafter,
as a utilization of a current year loss or attribute; all as further described
below in this Section.
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(b) With respect to the losses referred to in Section
1.06(a)(ii), WWC shall make such payment as provided in Section 1.07 by
treating such amount as a "1997 Reimbursable Loss".
(c) With respect to the losses and attributes referred to in
Section 1.06(a)(iii) above, the aggregate total of such losses and
attributes shall be maintained in a deferred account (the "Western PCS
Deferred Account") until the date upon which the Western PCS Group
members (i) cease to file a consolidated federal income Tax Return with
WWC, or (ii) cease to have any net operating loss carryovers computed on
a stand-alone basis (taking into account the provisions of this Section
1.06 and computed as of the end of a taxable year). If the Western PCS
Group members cease to file a consolidated federal income Tax Return
with WWC, WWC shall pay to Western PCS within 30 days following the date
of such deconsolidation an amount equal to the present value of the
aggregate balance of such Western PCS Deferred Account determined by
mutual agreement among WWC, Western PCS and Investor based on (i) the
maximum federal income tax rate for corporations applicable for the year
during which the deconsolidation becomes effective, (ii) reasonable
projections for the Western PCS Group with regard to the anticipated
timing of the utilization by it of such losses and
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attributes and (iii) a commercially reasonable discount rate. If there
is a dispute between WWC, Western PCS and Investor with regard to the
preceding calculation, the matter shall be referred to an independent
accounting firm acceptable to all parties, whose resolution of the
matter shall be binding on the parties. In no event shall payment of any
disputed amount be required to be made prior to 30 days following
resolution of such dispute. If, prior to any time that the Western PCS
Group members cease to file a consolidated federal income tax return
with WWC, the Western PCS Group members cease to have any net operating
loss carryovers computed on a stand-alone basis (taking into account the
provisions of this Section 1.06 and computed as of the end of a taxable
year), WWC shall pay to Western PCS an amount equal to the difference
between (A) the sum of the Western PCS Group members' federal income tax
liabilities determined as if each such member were a separate and
independent taxpayer, and (B) the sum of the Western PCS Group members'
federal income tax liabilities determined as if each such member were a
separate and independent taxpayer and had available to it a part of the
net operating losses and other attributes in the Western PCS Deferred
Account proportionate to its taxable income. Thereafter, such
calculation shall be performed annually (or until the Western PCS Group
members cease to file a consolidated federal income tax
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return with WWC), and the amount in the Western PCS Deferred Account
shall be reduced by the amount of the net operating losses and other
attributes utilized in determining the federal income tax liabilities of
the Western PCS Group members in (B).
(d) The principles of Section 1.06(c) shall apply equally to
years in which the WWC Affiliated Group (excluding the members of the
Western PCS Group) has a net operating loss (computed without regard to
any net operating loss carryover or carryback from any period) or other
tax attribute which reduces the tax liability of the Western PCS Group.
The deferred account of the WWC Affiliated Group (excluding members of
the Western PCS Group) (the "WWC Deferred Account") shall be increased
for all such current year losses and other attributes referred to in
this Section 1.06(d). No member of the Western PCS Group shall be
required to make any payment pursuant to Section 1.05 for any taxable
year to the extent that such payment which otherwise would be required
under Section 1.05 is attributable to any amount added for that taxable
year to such WWC Deferred Account.
(e) WWC and Western PCS may each offset their obligations to
make payments pursuant to Section 1.06(c) and (d) against the other
party's obligations to make such payments.
(f) If for any taxable year beginning on or after January 1,
1998, any member of the Western PCS Group has a net
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operating loss (computed without regard to any net operating loss
carryover or carryback from any period) or generates any other tax
attribute (e.g., a credit) that reduces the federal consolidated tax
liability of the WWC Affiliated Group, for any year other than the year
in which such loss is incurred or such attribute is generated, below the
amount that would have been payable if such Western PCS Group member had
not incurred such loss or generated such attribute, WWC shall pay the
amount of the tax reduction so computed to Western PCS within 30 days
after the filing of the consolidated federal income Tax Return that
reflects such tax reduction or, if such tax reduction is due to the
carryback of an item and refund of earlier payment, within 30 days after
the receipt by WWC of such refund payment. WWC may offset its obligation
to make payments to Western PCS under this Section 1.06(f) against
Western PCS's obligations to make payments to WWC under the provisions
of this Agreement.
(g) The principles of Section 1.06 shall be applied on the
basis that, if any member of the WWC Affiliated Group has a net
operating loss (computed without regard to any net operating loss
carryover or carryback) or generates any other tax attribute for any
taxable year beginning on or after January 1, 1998, such net operating
loss or tax attribute shall be used first to reduce the federal tax
liability for such year of the other members
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of the Western PCS Group or WWC Affiliated Group (excluding the Western
PCS Group members) of which such member having such net operating loss
or tax attribute is a member.
1.07 Reimbursement for the Use of Western PCS Group 1997 Net
Operating Losses. If for the 1997 taxable year any member of the Western PCS
Group has a net operating loss (computed without regard to any net operating
loss carryover or carryback from any period) that reduces the federal
consolidated tax liability of the WWC Affiliated Group for any year below the
amount that would have been payable if such Western PCS Group member had not
incurred such loss (such net operating loss a "1997 Reimbursable Loss"), WWC
shall pay to Western PCS the amount of such tax reduction, computed as specified
in the next sentence. The amount of the tax reduction shall be an amount equal
to $20 million times a fraction, the numerator of which shall be the amount of
the Western PCS Group members' 1997 Reimbursable Losses utilized for the year of
tax reduction, and the denominator of which shall be the total amount of the
Western PCS Group members' 1997 net operating losses (computed without regard to
any net operating loss carryover or carryback from any period). In no event
shall (i) the total payments made by WWC to Western PCS under this Section
exceed $20 million or (ii) the payment for any particular year exceed the amount
of the tax reduction referred to in the first sentence of this Section 1.07. Any
payment by WWC required under this Section 1.07 shall be paid to Western PCS
within 30 days of WWC's filing of the consolidated federal income Tax Return
that reflects such tax reduction as determined under this Section. WWC may
offset its obligation to make payments to Western PCS
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under this Section against Western PCS's obligations to make payments to WWC
under the provisions of this Agreement.
The amount of losses and payments referred to in this Section 1.07 shall
be reduced by the losses and payments determined in Section 1.06(b).
In any case where WWC would be required to make a payment under Section
1.06(f) but for the existence of a Western PCS Group member 1997 net operating
loss (computed without regard to any net operating loss carryover or carryback
from any period), the WWC Affiliated Group's federal consolidated tax liability
shall be deemed to be reduced first by the 1997 loss and WWC shall make a
payment to Western PCS under this Section 1.07 accordingly.
1.08 Interim Estimated Payments. Within 30 days after each request by
WWC, Western PCS shall advance to WWC amounts computed consistently with
Sections 1.03, 1.04 and 1.06 necessary to reimburse WWC for the portion of any
estimated federal income tax payments attributable to the inclusion of the
members of the Western PCS Group in the WWC consolidated federal income Tax
Return. Any amounts so paid in any year shall operate to reduce the amount
payable to WWC following the end of such year pursuant to Section 1.05 above,
and any excess of payments made by Western PCS pursuant to this Section 1.08
shall promptly be refunded by WWC to Western PCS. Conversely, within 30 days
after the due date of any estimated federal income tax payments, WWC shall
advance to Western PCS amounts computed consistently with Sections 1.06 and 1.07
(and only if a current payment would be required pursuant to Sections 1.06 and
1.07) necessary to reimburse Western PCS for the reduction in estimated federal
income tax payments attributable to the inclusion of the
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Western PCS Group in the WWC consolidated federal income Tax Return. Any amounts
so paid in any year shall operate to reduce the amount payable to Western PCS
following the end of such year pursuant to Sections 1.06 and 1.07, and any
excess of payments made by WWC pursuant to this Section 1.08 shall promptly be
refunded to WWC by Western PCS.
1.09 State and Local Combined Reporting. In the event that any
Western PCS Group member, on the one hand, and WWC or any other member of the
WWC Affiliated Group (other than a member of the Western PCS Group), on the
other hand, compute their state or local income, franchise, net worth or similar
tax liabilities in any jurisdiction on a combined, consolidated or unitary
basis, this Agreement shall apply to such corporations with respect to such
taxes to the fullest extent possible, taking into account any differences
between the federal consolidated return system and the state or local combined,
consolidated or unitary return system.
1.10 Conduct of Tax Audits and Disputes; Tax Adjustments. Except as
otherwise provided in this Section 1.10, WWC and its duly appointed
representatives shall have the right on behalf of all members of the Western PCS
Group to supervise or otherwise coordinate any tax examination process and to
negotiate, resolve, settle, and contest any asserted tax deficiencies or assert
and prosecute any claim for tax refund. WWC shall consult with Western PCS and
Investor in connection with such matters as relate to the Western PCS Group,
shall give Investor a reasonable opportunity to participate therein (provided
that WWC shall retain ultimate control of such matters), and shall promptly
provide to Western PCS and Investor all information relating to such matters
received by WWC or its representatives, including providing copies of all
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notices, assessments, or similar documents within 15 days of receipt. WWC shall
not agree to any audit adjustment or deficiency, settle any issue or amount,
resolve any issue, contest any claim, or take any other action in any legal
proceeding that pertains to the Western PCS Group except in good faith and based
on the merits thereof and without regard to any other audit adjustment,
deficiency, issue, amount, claim or proceeding relating to the WWC Affiliated
Group (excluding the Western PCS Group).
In the event of any adjustment to the Tax Returns of any member of the
Western PCS Group as filed (by reason of an amended return, claim for refund, or
an audit by the Internal Revenue Service or other tax authority), the liability
of each member of the Western PCS Group hereunder shall be redetermined to give
effect to any such adjustment as if it had been made as part of the original
determination and allocation of tax liability. Appropriate payments between WWC
and Western PCS shall be made in respect of any such adjustment in accordance
with the foregoing provisions of this Agreement within 30 days after any
payments are made or refunds are received as a result of the adjustment or, in
the case of contested proceedings, within 30 days after a final determination of
the contest. Similar principles shall apply to the other members of the WWC
Affiliated Group.
1.11 Payment for Western PCS Group Post-1996 Losses and Other Tax
Attributes Retained by WWC. In the event the Western PCS Group members cease to
file a consolidated federal income Tax Return with WWC, WWC shall make a lump
sum payment to Western PCS, according to the provisions of the following
paragraph, within 30 days of the date that the Western PCS Group members leave
the WWC Affiliated Group, in compensation for any unused net operating losses
and other tax attributes
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arising after 1996 that are attributable to the Western PCS Group and that are
retained by WWC.
To the extent that Western PCS Group 1997 net operating losses are
retained by WWC at such time, WWC shall pay to Western PCS the remaining unpaid
balance of the $20 million due to Western PCS from WWC as provided in Section
1.07, determined as if the amount of such retained losses were treated as "1997
Reimbursable Losses." In no event shall any payment to Western PCS under this
Section in respect of net operating losses attributable to the Western PCS Group
arising in 1997 exceed $20 million. To the extent that Western PCS Group
post-1997 net operating losses or other attributes are retained by WWC at such
time, WWC shall pay to Western PCS an amount equal to the present value of such
retained net operating losses and other attributes determined by mutual
agreement among WWC, Western PCS and Investor based on (i) the maximum federal
income tax rate for corporations applicable for the year during which the
deconsolidation becomes effective, (ii) reasonable projections for the Western
PCS Group with regard to the anticipated timing of the utilization by it of such
losses and other attributes and (iii) a commercially reasonable discount rate.
If there is a dispute among WWC, Western PCS and Investor with regard to the
preceding calculation, the matter shall be referred to an independent accounting
firm acceptable to all parties, whose resolution of the matter shall be binding
on the parties. In no event shall payment of any disputed amount be required to
be made prior to 30 days following resolution of such dispute.
1.12 Payment for Western PCS Group Pre-1997 Losses and WWC Group
(Excluding Western PCS Group) Post-1997 Losses and Other Attributes Retained
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by Western PCS. In the event the Western PCS Group members cease to file a
consolidated federal income Tax Return with WWC, Western PCS shall make a lump
sum payment to WWC, at the time the Western PCS Group members leave the WWC
Affiliated Group, in consideration for (i) any unused net operating losses
arising before 1997 that are attributable to the Western PCS Group and that are
retained by the Western PCS Group members and (ii) any unused net operating
losses or other tax attributes arising after 1996 that are attributable to
members of the WWC Affiliated Group, other than members of the Western PCS
Group, and that are retained by Western PCS Group members. The amount of the
payment in respect of losses referred to in clause (i) of the preceding sentence
shall be equal to $20 million times a fraction, the numerator of which shall be
the retained losses in clause (i), and the denominator of which shall be the
total amount of the net operating losses arising before 1997 that are
attributable to the Western PCS Group as of the date of this Agreement. To the
extent that such losses and attributes referred to in clause (ii) above are
retained by Western PCS at such time, Western PCS shall pay to WWC an amount
equal to the present value of such retained net operating losses and attributes
determined by mutual agreement among WWC, Western PCS and Investor based on (i)
the maximum federal income tax rate for corporations applicable for the year
during which the deconsolidation becomes effective, (ii) reasonable projections
for the WWC Affiliated Group (excluding the Western PCS Group) with regard to
the anticipated timing of the utilization by it of such losses and attributes
and (iii) a commercially reasonable discount rate. If there is a dispute among
WWC, Western PCS and Investor with regard to the preceding calculation, the
matter shall be referred to an independent accounting firm acceptable to all
parties, whose resolution of the matter shall
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be binding on the parties. In no event shall payment of any disputed amount be
required to be made prior to 30 days following resolution of such dispute.
For purposes of determining the amount of any payment to be made
pursuant to this Section 1.12, the amount of pre-1997 losses and WWC Affiliated
Group (excluding Western PCS Group) post-1997 losses and other attributes
retained by the Western PCS Group members shall be reduced by losses and
attributes as provided in clause (i) of Section 1.06(a).
1.13 Ownership Change Loss Limitations. If a change of ownership (as
determined under Section 382 of the Code) occurs with respect to WWC which
causes the limitations of Section 382 to be applicable to any net operating loss
(including carryforward losses) of any member of the Western PCS Group, WWC
shall, at any time that the Western PCS Group (or any member thereof) ceases to
file a consolidated federal income Tax Return with WWC, allocate to the Western
PCS Group (or relevant member thereof) an equitable portion of any allowance for
limited use of NOLs that remains available. Such allocation shall be determined
based upon the proportion that the net operating losses (including carryforward
net operating losses) of each member of the WWC Affiliated Group represents of
the total of such losses (inclusive of such carryforward losses) of the entire
WWC Affiliated Group as of the date of the deconsolidation.
1.14 Indemnification of the Western PCS Group. WWC shall indemnify
and hold the Western PCS Group members harmless from and against all federal,
state, local, foreign and other taxes and penalties and interest related thereto
due or payable by WWC or any member of the WWC Affiliated Group (other than
taxes,
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penalties and interest allocable to members of the Western PCS Group pursuant to
Sections 1.01 through 1.10 of this Agreement and taxes, penalties and interest
of the members of the Western PCS Group where such items are not otherwise
subject to the provisions of the Agreement). If, upon receipt by WWC of a notice
of indemnification claim by Western PCS from Western PCS or Investor hereunder,
WWC disputes such claim, WWC shall notify Western PCS and Investor of its
disagreement and the basis therefor within 30 days of receipt of the notice of
claim. The parties shall act in good faith to resolve such disagreement and if
they cannot reach a resolution, the matter shall be referred to an independent
accounting firm acceptable to all parties, whose resolution of the matter shall
be binding on the parties. Any indemnification payment required hereunder shall
be paid within 30 days after the indemnifying party receives notice of such
required payment from the indemnified party or, if disputed, within 30 days
after the resolution of such dispute as provided in the preceding sentence. The
indemnifying party shall also pay the reasonable attorney's fees and other costs
incurred by the indemnified party with respect to the payment of such taxes and
other amounts and the pursuit of the indemnification claim.
1.15 Indemnification of WWC. Western PCS shall indemnify and hold WWC
and all members of its Affiliated Group (other than the members of the Western
PCS Group) harmless from and against all federal, state, local, foreign and
other taxes and penalties and interest related thereto allocable to any member
of the Western PCS Group pursuant to Sections 1.01 through 1.10 of this
Agreement and taxes, penalties and interest of the members of the Western PCS
Group where such items are not otherwise subject to the provisions of the
Agreement. Any indemnification claim by WWC shall be
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delivered to both Western PCS and Investor. If, upon receipt by Western PCS and
Investor of a notice of indemnification claim by WWC hereunder, Western PCS or
Investor disputes such claim, Western PCS or Investor shall notify WWC of its
disagreement and the basis therefor within 30 days of receipt of the notice of
claim. The parties shall act in good faith to resolve such disagreement and if
they cannot reach a resolution, the matter shall be referred to an independent
accounting firm acceptable to all parties, whose resolution of the matter shall
be binding on the parties. Any indemnification payment required hereunder shall
be paid within 30 days after the indemnifying party receives notice of such
required payment from the indemnified party or, if disputed, within 30 days of
the resolution of such dispute as provided in the preceding sentence. The
indemnifying party shall also pay the reasonable attorney's fees and other costs
incurred by the indemnified party with respect to the payment of such taxes and
other amounts and the pursuit of the indemnification claim.
1.16 Portion of Taxable Year. Whenever it is necessary under this
Agreement to determine liability for taxes for a portion of a taxable year or
period that begins before and ends after the Western PCS Group members cease to
file a consolidated federal income Tax Return with WWC, the determination shall
be made by assuming that each of the relevant corporations had a taxable year
which ended at the close of the date on which such corporations cease to file a
consolidated federal income Tax Return with WWC, except that exemptions,
allowances or deductions that are calculated on an annual basis, such as the
deduction for depreciation, shall be apportioned on a time basis.
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1.17 Payment Gross-up. Any payment required to be made under this
Agreement after the Western PCS Group members cease to file a consolidated
federal income Tax Return with WWC shall be increased so that the net amount
retained by the corporation to which payment is due, after deduction of any tax
due thereon, shall be equal to the amount otherwise due. All parties agree to
report payments to each other hereunder as non-includable and non-deductible to
the extent permitted under applicable law.
1.18 Net Payments. Notwithstanding any provisions within this
Agreement permitting a party to offset amounts it owes to another party
hereunder by amounts such other party owes to it, no party may offset amounts
currently due and payable to another party by any amounts in the WWC Deferred
Account or the Western PCS Deferred Account (as such terms are defined in
Section 1.06) unless such amounts have become currently due and payable.
ARTICLE II
2.01 Limitation to Consolidated Return Years. The obligations of the
parties hereunder shall relate solely to taxes, net operating losses and tax
attributes arising during taxable years for which the Western PCS Group members
file a consolidated federal income Tax Return with WWC, except that if, in a
taxable year in which the Western PCS Group no longer files a consolidated
federal income Tax Return with WWC, the Western PCS Group generates a net
operating loss or other tax attribute which it carries back to a year in which
the Western PCS Group did file a consolidated federal income Tax Return with
WWC, WWC shall promptly apply for a refund upon notice of such carryback to WWC
and, upon receipt of such refund, shall promptly pay to Western PCS the amount
of the refund. Western PCS shall pay and indemnify WWC for all out-
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of-pocket expenses including outside accountant's fees, attorney's fees and
reasonable overhead allocation incurred by WWC in making such refund claim and
WWC shall be entitled to offset any such expenses against the amount of any
refund received.
2.02 Expenses. Except as otherwise stated herein, all costs and
expenses incurred in connection with this Agreement and transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
2.03 Entire Agreement. This Agreement contains the entire agreement
among the parties and supersedes all prior agreements, arrangements, and
understandings relating to the subject matter hereof. There are no written or
oral agreements, understandings, representations or warranties between or among
the parties other than those set forth or referred to in this Agreement.
2.04 Section Headings. The Section and paragraph headings contained
in this Agreement are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.
2.05 Notices. All notices, consents, requests, instructions,
approvals and other communications provided for herein and all legal process in
regard hereto shall be validly given when made, or served if in writing when
delivered personally (by courier service or otherwise), when delivered by
telecopy and confirmed by returned telecopy, addressed as follows, or, in each
case, to such other address as may be specified by a party in writing to another
party:
(a) if to WWC, to it at:
Western Wireless Corporation
0000 XX Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxx 00000
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Attention: Xxxxxx Xxxxxxx
Facsimile No.: 000-000-0000
with copies (which shall not constitute notice) to:
Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile No.: 000-000-0000
and
Xxxxx, Day, Xxxxxx & Xxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile No.: 000-000-0000
(b) if to Western PCS, to it at:
Western PCS Corporation
0000 XX Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Facsimile No.: 000-000-0000
with copies (which shall not constitute notice) to:
Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile No.: 000-000-0000
and
Xxxxx, Day, Xxxxxx & Xxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile No.: 000-000-0000
(c) if to Investor, to it at:
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Xxxxxxxxx Telecommunications PCS (USA) Limited
00xx Xxxxx, Xxxxxxxxx Xxxxx
00 Xxxxxxxx Xxxx
Xxxx Xxxx
Attention: Xx. Xxxxx Xxxx
Facsimile No.: 852-2128-1778
with a copy (which shall not constitute notice) to:
Xxxxx Xxxxxxxxxx LLP
Suite 3907
Asia Pacific Finance Xxxxx
Xxxxxxxx Xxxxx, 0 Xxxxxx Xxxx
Xxxxxxx Xxxx Xxxx
Attention: Xxxx X. Xxxxxx
Facsimile No.: 000-0000-0000
2.06 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without reference to the
choice of law principles thereof.
2.07 Illegality. In case any provision in this Agreement shall be
invalid, illegal or unenforceable the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby,
unless such remaining provisions are inconsistent with the policy objectives set
forth in Section 1.04.
2.08 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that no member of the Western PCS Group may assign
any of its rights or obligations under this Agreement without the prior written
consent of WWC.
2.09 Arbitration. Except where dispute resolution procedures are
expressly provided within this Agreement (e.g., Sections 1.06, 1.11 and 1.12),
in the event of any dispute between WWC and Western PCS arising out of this
Agreement, such dispute shall be submitted to arbitration in accordance (mutatis
mutandis) with the
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terms and procedures set forth in Section 13(k) of the Western PCS Shareholders
Agreement among WWC, the Investor and Western PCS dated February 17, 1998 (the
"Shareholders Agreement"). The Investor shall have the right to participate in
any pending arbitration and to consolidate any such arbitration with any
arbitration which may be pending under the Shareholders Agreement and which
relates to a dispute which involves in a material way substantially similar
issues.
IN WITNESS WHEREOF, this Agreement has been signed on behalf of each of
the parties on the day set forth above.
WESTERN WIRELESS CORPORATION
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------
Title: Vice Chairman
Chief Financial Officer
WESTERN PCS CORPORATION
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Title: Chief Executive Officer
XXXXXXXXX TELECOMMUNICATIONS PCS
(USA) LIMITED
By: /s/ Khoo Chek Ngee
-------------------------------------
Title: Director
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