Memorandum of Understanding
Memorandum of Understanding, dated as of November 6, 2000, by and between
AT&T Wireless Services, Inc., a Delaware corporation ("AWS"), and Xxxxxx
Communications Corporation, an Oklahoma corporation ("Xxxxxx").
WHEREAS, Xxxxxx and AWS have entered into a joint venture known as American
Cellular Corporation, which operates cellular telecommunications systems in
parts of the states of Minnesota, Wisconsin, Kentucky, Ohio, West Virginia,
Pennsylvania and New York;
WHEREAS, Xxxxxx and AWS each desire to expand its involvement with the
other by forming another joint venture that will design, construct, own and
operate wireless telecommunications systems using PCS licenses issued by the
Federal Communications Commission (the "FCC") in the markets listed on Schedule
I hereto (the "JV Markets") if Xxxxxx (through its subsidiary, DCC PCS, Inc.)
acquires PCS licenses for one or more of the JV Markets in the FCC C & F Block
Auction scheduled to commence December 12, 2000 (the "FCC Re-auction").
NOW, THEREFORE, the parties agree as follows:
1. Formation of JV Company; Purpose. Each of Xxxxxx and AWS shall jointly
form a limited liability company under the laws of the State of Delaware which
shall be the joint venture company (the "JV Company"). The purpose of the JV
Company shall be to provide voice and data services in the JV Markets in
accordance with the standards set forth herein and to be set forth in the
limited liability company agreement of the JV Company.
2. Equity Capitalization. In exchange for equity interests in the JV
Company, (i) Xxxxxx shall contribute PCS licenses of at least 10 MHz covering
one or more of the JV Markets acquired in the FCC Re-auction and (ii) AWS shall
contribute PCS licenses of at least 10 MHz for each of the JV Markets
contributed by Xxxxxx. The relative value of the contributions made by each
party shall be determined by mutual agreement of the parties at the time such
contributions are made. Subsequent transfers of all equity interests shall be
subject to customary limitations and rights of first refusal and tag-along
rights, all to be specified in the limited liability company agreement of the JV
Company described in Section 5(a) below. It is expressly understood by the
parties that nothing contained herein will require DCC PCS, Inc. or Xxxxxx to
bid on or otherwise attempt to acquire any license in the JV Markets.
3. FCC Compliance; Governance. The parties anticipate that Xxxxxx will
retain both de jure and de facto control of JV Company through its ownership of
at least 50% of the voting interests in JV Company. Each of Xxxxxx and AWS
acknowledge and agree that the ownership, management, governance and operations
of the JV Company shall be such as to comply with all applicable rules and
regulations of the FCC, including the rules governing de jure and de facto
control of licenses won in
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"closed auctions" in the FCC Re-auction. Each of Xxxxxx and AWS further
acknowledge and agree that, subject to applicable FCC rules, AWS shall be
provided with customary minority investor covenants, all to be specified in the
limited liability company agreement of the JV Company described in Section 5(a)
below.
4. Interoperability; Quality Standards.
(a) Any wireless communications system constructed or operated by the JV
Company (i) will be designed to operate on the basis of (x) the present and
future TDMA standard set by the Telecommunications Industry Association
(currently IS-136) or (y) such other standard (including without limitation
"3G") as may be designated by AWS from time to time, subject to the approval of
Xxxxxx, such approval not to be unreasonably withheld and (ii) will be fully
interoperable with the wireless communications system of AWS and its affiliates
(for so long as such system of AWS and its Affiliates is based on such a TDMA or
other standard).
(b) Any wireless communications system constructed or operated by the JV
Company shall meet the same quality standards applicable to wireless
communications systems that are owned or operated by AWS and its affiliates, as
such standards shall be specified by AWS in its reasonable discretion from time
to time, subject to the approval of Xxxxxx, such approval not to be unreasonably
withheld.
5. Limited Liability Company Agreement; Other Operating Agreements.
(a) In the event that DCC PCS, Inc. is the winning bidder in the FCC
Re-auction for any licenses in the JV Markets, then promptly following the FCC's
deadline for making the downpayment on such licenses, Xxxxxx and AWS shall
negotiate in good faith and enter into the limited liability company agreement
of the JV Company, containing the terms specified herein and such other terms as
shall be mutually agreed to by the parties.
(b) Concurrently with the negotiation and entering into of the limited
liability company agreement of the JV Company, each of Xxxxxx and AWS shall
negotiate, and shall cause the JV Company to negotiate, in good faith the
following agreements:
(i) a branding agreement relating to the use by the JV Company of the
"AT&T" brand or such other brand as shall be mutually agreed to by the
parties;
(ii) a management agreement providing for the management of the
business and operation of the JV Company by Xxxxxx, at all times subject to
the ultimate control of the JV Company;
(iii) a roaming agreement permitting each of Xxxxxx and AWS to roam on
the JV Company's system. Terms of this agreement will include a minimum
ten-year term. Pricing shall be fair and reasonable and determined
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giving consideration to spectrum, network construction and operating costs
incurred by the JV Company; and
(iv) such other operating agreements as each of Xxxxxx and AWS shall
deem to be necessary or desirable.
(c) To the extent permitted under applicable FCC law, the roaming agreement
specified in 5(b)(iii) above and each other operating agreement entered into
pursuant to 5(b)(iv) above, shall afford each of Xxxxxx and AWS, as applicable,
preferential access, pricing and other conditions with respect to the JV
Company's system.
6. Exit. Upon the expiration of all FCC-imposed limitations on
transferability of the licenses contributed to the JV Company to AWS alone, a
one-year put period shall commence permitting Xxxxxx to sell its interests in
the JV Company to AWS, which AWS shall be obligated to purchase in exchange for
an amount and on the terms to be specified in the limited liability company
agreement of the JV Company described in Section 5(a) above.
7. Change of Control. In the event of a change of control of Xxxxxx (other
than in favor of AWS), AWS (or a designee thereof) shall have a right to
purchase from Xxxxxx all of its interests in the JV Company for an amount and on
terms to be mutually agreed upon in the limited liability company agreement of
the JV Company described in Section 5(a) above.
8. Termination. This Memorandum of Understanding and the obligations
hereunder shall terminate upon the earlier of the full execution of the
definitive documents described under Section 5 hereof and the first anniversary
of the date hereof.
9. Confidentiality. Each of Xxxxxx and AWS, on behalf of itself and its
affiliates, agrees that it will use its best efforts to maintain the
confidentiality of all non-public information disclosed to it by the other or
obtained as a result of negotiating or entering into this MOU or the definitive
agreements contemplated herein and will not, without the prior written consent
of the disclosing party, use such information other than in connection with the
transactions contemplated herein, provided, however, that the foregoing
confidentiality obligations do not apply to information that (i) was or becomes
available to the public through no action by the receiving party or, (ii) was or
becomes available to such receiving party on a non-confidential basis or (iii)
in the reasonable opinion of legal counsel, must be disclosed pursuant to legal
requirements, provided that prior to any such disclosure the disclosing party
shall submit the proposed disclosure to the non-disclosing party, who shall have
an opportunity to narrow the scope thereof to the extent permitted under
applicable law.
Further, other than in connection with legal requirements, neither party
hereto shall disclose to any third party (other than professional advisers
retained by such party who have been advised of and agreed to be bound by the
provisions of this Section 9) the
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parties hereto, the contents hereof or the transactions contemplated hereby. All
press releases or other public statements regarding this term sheet or the
transactions contemplated hereby must be mutually agreed to by each of the
parties hereto.
10. Governing Law. This Memorandum of Understanding shall be governed by
and construed in accordance with the internal laws of the State of New York,
without regard to its conflict-of-laws principles.
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IN WITNESS WHEREOF, the parties hereto have executed this Memorandum of
Understanding as of the date first above written.
AT&T WIRELESS SERVICES, INC.
By:
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Name:
Title:
XXXXXX COMMUNICATIONS CORPORATION
By:
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Name:
Title:
SCHEDULE I
JV Markets
