LIMITED LIABILITY COMPANY AGREEMENT
OF
WIRELESS ONE OF NORTH CAROLINA, L.L.C.
THIS LIMITED LIABILITY COMPANY AGREEMENT is entered into as
of October 10, 1995, by and among CT Wireless Cable, Inc., a
North Carolina corporation (together with its permitted
successors or assigns, "CTWC"), Wireless One, Inc., a Delaware
corporation (together with its permitted successors or assigns,
"W/O"), and O. Gene Gabbard ("Gabbard") (CTWC, W/O, and Gabbard
sometimes are referred to herein individually as a "Member" and
collectively as the "Members").
WHEREAS, a Certificate of Formation (the "Certificate") to
form the LLC has been filed with the office of the Secretary of
the State of Delaware;
NOW, THEREFORE, in consideration of the foregoing, and of
the covenants and agreements hereinafter set forth, it is hereby
agreed as follows:
ARTICLE I
CERTAIN DEFINITIONS
Unless the context otherwise specifies or requires,
capitalized terms used herein which are not otherwise defined in
the text of this Agreement shall have the respective meanings
assigned thereto in ADDENDUM I, attached hereto and incorporated
herein by reference, for all purposes of this Agreement (such
definitions to be equally applicable to both the singular and the
plural forms of the terms defined). Unless otherwise specified,
all references herein to Articles or Sections are to Articles or
Sections of this Agreement.
ARTICLE II
FORMATION; NAME; PLACE OF BUSINESS
2.1. Formation of LLC; Certificate of Formation
The Members of the LLC hereby:
(a) approve and ratify the filing of the Certificate with
the Recording Office and confirm and agree to their status as
Members of the LLC;
(b) execute this Agreement for the purpose of continuing
the existence of the LLC and establishing the rights, duties, and
relationship of the Members; and
(c) agree that if the laws of any jurisdiction in which the
LLC transacts business so require, the Management Committee or
appropriate officers or other authorized representatives of the
LLC also shall file, with the appropriate office in that
jurisdiction, any documents necessary for the LLC to qualify to
transact business under such laws; and agree and obligate
themselves to execute, acknowledge, and cause to be filed for
record, in the place or places and manner prescribed by law, any
amendments to the Certificate as may be required, either by the
Delaware LLC Act, by the laws of any jurisdiction in which the
LLC transacts business, or by this Agreement, to reflect changes
in the information contained therein or otherwise to comply with
the requirements of law for the continuation, preservation, and
operation of the LLC as a limited liability company under the
Delaware LLC Act.
2.2. Name of LLC
The name under which the LLC shall conduct its business is
"Wireless One of North Carolina, L.L.C." W/O hereby authorizes
the LLC to use the name "Wireless One of North Carolina" in the
connection with the operations and purposes of the LLC
contemplated by this Agreement, PROVIDED, HOWEVER, that, as among
the LLC and all Members, W/O will retain ownership of, and the
exclusive right to use, the name "Wireless One" and any
derivative thereof within the areas of the LLC s business
operations, except for use by the LLC in such areas in the
conduct of its business, and outside such areas; and PROVIDED
FURTHER, that upon dissolution of the LLC, W/O will once again
have the exclusive right to use the name "Wireless One" and any
derivative thereof within the states of North Carolina and South
Carolina and all other places as among the LLC and all Members.
The business of the LLC may be conducted under any other name
permitted by the Delaware LLC Act that is deemed necessary or
desirable by the Management Committee. The Management Committee
or appropriate officers or other authorized representatives of
the LLC promptly shall execute, file, and record any assumed or
fictitious name certificates required by the laws of the State of
Delaware or any state in which the LLC conducts business.
2.3. Place of Business
The location of the principal place of business of the LLC
shall be 5551 Corporate Boulevard, Suite 2K, Baton Rouge,
Louisiana 70808. The Management Committee hereafter may change
the principal place of business of the LLC to such other place or
places within the United States as the Management Committee may
from time to time determine. If necessary, the Members shall
amend the Certificate in accordance with the applicable
requirements of the Delaware LLC Act. The Management Committee
may establish and maintain such other offices and additional
places of business of the LLC, either within or without the State
of Delaware, as it deems appropriate.
2.4. Registered Office and Registered Agent
The street address of the initial registered office of the
LLC shall be 1013 Centre Road, Wilmington, Delaware 19805, and
the LLC's registered agent at such address shall be Corporation
Service Company.
ARTICLE III
PURPOSES AND POWERS OF LLC
3.1. Purposes
The purposes of the LLC shall be:
(a) to develop and operate one or more wireless cable
systems in the state of North Carolina and in the markets
encompassing Greenville, South Carolina and Spartanburg, South
Carolina, and immediately adjoining areas;
(b) the enter into lease agreements with educational
organizations for the use of ITFS wireless cable channels;
(c) to bid for, purchase or otherwise acquire the use of
licenses for commercial wireless cable channels (together, the
ITFS and commercial wireless cable channels are referred to as
the "Channels");
(d) to develop and operate wireless cable systems utilizing
such Channels in one or more markets (such systems collectively
are referred to herein as the "Systems");
(e) to sell or otherwise dispose of such Channels and
Systems;
(f) to operate and manage the business of the LLC and to
take any action necessary or appropriate in connection therewith;
and
(g) to enter into any lawful transaction and engage in any
lawful activities in furtherance of the foregoing purposes and as
may be necessary, incidental or convenient to carry out the
business of the LLC as contemplated by this Agreement.
3.2. Powers
The LLC shall have the power to do any and all acts and
things necessary, appropriate, advisable, or convenient for the
furtherance and accomplishment of the purposes of the LLC,
including, without limitation, to engage in any kind of activity
and to enter into and perform obligations of any kind necessary
to or in connection with, or incidental to, the accomplishment of
the purposes of the LLC, so long as said activities and
obligations may be lawfully engaged in or performed by a limited
liability company under the Delaware LLC Act.
ARTICLE IV
TERM OF LLC
The LLC commenced on the date upon which the Certificate was
duly filed with the Recording Office and shall continue until the
Termination Date, unless dissolved and liquidated before the
Termination Date in accordance with the provisions of ARTICLE X.
ARTICLE V
CAPITAL
5.1. Capital Contributions; Initial LLC Interests
5.1.1. Initial Capital Contributions
Concurrently with the execution of this Agreement or on such
later date as may be agreed to by all of the Members, each Member
shall make an initial Capital Contribution in the amount set
forth opposite its name on SCHEDULE A. Each Member initially
shall own an LLC Interest representing the Percentage Interest
set forth opposite such Member's name in SCHEDULE A. SCHEDULE A
shall be amended from time to time by the Management Committee to
the extent necessary to reflect accurately any additional Capital
Contributions, the admission of additional Members, the issuance
of additional LLC Interests, or similar events making an
amendment to SCHEDULE A necessary or appropriate in the judgment
of the Management Committee.
5.1.2. Additional Capital Contributions
The Members shall make additional Capital Contributions in
proportion to their respective Percentage Interests in such
additional amounts (i) as may be required by an approved Budget,
(ii) as may be required to pay any duly authorized contractual
obligations of the LLC (including, without limitation, interest
and principal payments under debt instruments), which amounts
were not provided for in the Budget, or for the payment of any
operating deficits, in each case which are immediately due and
payable, and for which the LLC otherwise lacks sufficient funds
to pay, or (iii) as the Members may otherwise agree. Such
additional Capital Contributions shall be paid (A) in the case of
clause (i) or clause (ii), within ten (10) business days
following request therefor by the Management Committee, provided
such request is reasonably related to the time the LLC
contractual obligations referred to in clause (ii) are due and
payable, or (B) in the case of clause (iii), on the date agreed
upon by the Members. The Members shall not be required to make
any Capital Contributions to the LLC other than as set forth in
this SECTION 5.1.
5.2. Failure to Make Required Capital Contributions
If at any time or times any Member shall fail to timely make
any Capital Contribution which such Member is obligated to make
under SECTION 5.1., and such failure shall continue for a period
of thirty (30) business days after notice of such failure from
the President or any non-defaulting Member (the "Cure Period"),
the rights and remedies set forth in this SECTION 5.2. shall
apply. A Member that fails to cure its default within the Cure
Period shall be a "Defaulting Member." The failure to make a
required Capital Contribution by a Member shall be an "Event of
Default." If any Member is a Defaulting Member as to any
required Capital Contribution, each other Member that is not then
a Defaulting Member shall be a "Non-Defaulting Member."
5.2.1. Loan by Non-Defaulting Members to Defaulting
Member
The President shall give prompt notice to each
Non-Defaulting Member in the event any Member becomes a
Defaulting Member. Each Non-Defaulting Member may (but shall not
be obligated to) advance all or any part of the portion of the
Capital Contribution which the Defaulting Member(s) failed to
make (the "Default Amount") to the LLC on behalf of the
Defaulting Member and treat such amount as a loan (a "Default
Loan") from the Non-Defaulting Member to the Defaulting
Member(s). If more than one Non-Defaulting Member wishes to make
such a Default Loan, such Non-Defaulting Members shall make such
Default Loans in amounts proportionate to their respective
Percentage Interests or in such other amounts as such
Non-Defaulting Members agree; PROVIDED, HOWEVER, that if the
Defaulting Member is Gabbard, then CTWC (if it is a
Non-Defaulting Member) shall have the first option to make a
Default Loan equal to the full amount of the Default Amount of
Gabbard, and if CTWC elects not to make such Default Loan, the
other Non-Defaulting Members shall have the right to make such
Default Loan. Each Non-Defaulting Member that desires to make
such a Default Loan shall give notice thereof to the Defaulting
Member upon the Non-Defaulting Member's payment of the Default
Amount to the LLC. Unless the Non-Defaulting Members otherwise
agree, each such Default Loan shall be made within ten (10)
calendar days after the last day of the Cure Period, and each
Default Loan shall be due and payable on the first business day
that is thirty (30) days after it was made by the Non-Defaulting
Member in question (the "Default Date"). Any Default Loan shall
bear interest on the unpaid principal amount thereof from time to
time remaining from the date advanced until repaid, at the
Default Rate. Any Default Loan shall be secured by a lien and a
security interest in the Defaulting Member s LLC Interest, and if
suit or other proceedings in any court shall be instituted for
collection of a Default Loan or enforcement of the lien and
security interest securing payment of same, the Defaulting Member
also shall be liable for all costs of court and reasonable
attorneys' fees and costs thereby incurred, payment of which
shall likewise be secured by said security interest and lien.
(a) If any Member shall fail to make any Capital
Contribution which such Member is required to make under SECTION
5.1., whether or not a Default Loan is made, the portion of such
additional Capital Contribution made by each Non-Defaulting
Member pursuant to SECTION 5.1. shall be treated as a loan to the
LLC from such Non-Defaulting Member, and the amount (if any)
advanced to the LLC on behalf of the Defaulting Member by each
Non-Defaulting Member pursuant to SECTION 5.2.1. shall be treated
as a loan to the LLC from the Defaulting Member, unless and until
such amounts are converted into Capital Contributions pursuant to
SECTION 5.2.1.(b) (any such loans to the LLC by a Non-Defaulting
Member or on behalf of the Defaulting Member are hereafter
referred to as "Capital Advances"). Any Capital Advances shall
accrue interest at the Default Rate.
(b) The outstanding principal amount of any Capital Advance
shall be converted into a Capital Contribution upon the
occurrence of any of the following:
(i) In the event any Non-Defaulting Member has elected
to make a Default Loan to the Defaulting Member and the
Defaulting Member repays the outstanding principal amount of all
such Default Loans made to it, together with the accrued interest
thereon, prior to the Default Date, the Defaulting Member and the
Non-Defaulting Members shall be treated as having made Capital
Contributions equal to the outstanding principal amount of the
Capital Advances each is treated as having made under SECTION
5.2.1.(a), provided, that any accrued but unpaid interest with
respect to such Capital Advances shall be paid to each Member in
proportion to such amounts by the LLC out of the first available
receipts of the LLC.
(ii) In the event no Non-Defaulting Member has elected
to make a Default Loan to the Defaulting Member and the
Defaulting Member pays the Default Amount to the LLC prior to the
date on which a Default Loan, if it had been made, would have
been due in accordance with SECTION 5.2.1. (the "Deemed Default
Date"), the Defaulting Member shall be treated as having made a
Capital Contribution equal to the amount of such payment and each
Non-Defaulting Member shall be treated as having made a Capital
Contribution equal to the principal amount of its Capital
Advance; provided, that any accrued but unpaid interest with
respect to such Capital Advance shall be paid to the
Non-Defaulting Members by the LLC out of the first available
receipts of the LLC.
(iii) In the event the Defaulting Member either fails
to repay the full amount of any Default Loan plus all interest
accrued thereon prior to the Default Date (if a Non-Defaulting
Member has elected to make a Default Loan to the Defaulting
Member) or fails to pay the Default Amount to the LLC in
accordance with SECTION 5.2.1. prior to the Deemed Default Date
(if no Non-Defaulting Member has elected to make a Default Loan
to the Defaulting Member), at any time during the ninety (90) day
period beginning with the Default Date each Non-Defaulting Member
may (but shall not be obligated to) elect to treat the
outstanding amount of the Capital Advances made by such
Non-Defaulting Member and the Defaulting Member s Capital
Advances, together with all accrued but unpaid interest thereon,
as Capital Contributions by the Non-Defaulting Member(s) as of
the date of such election.
(c) In the event the Non-Defaulting Member elects to
convert the Capital Advances of the Non-Defaulting Member and the
Defaulting Member s Capital Advances to Capital Contributions
pursuant to SECTION 5.2.1.(b)(iii), as of the date such Capital
Advances are treated as having been so converted (i) the
Percentage Interest of each Member shall be adjusted to equal the
quotient (expressed as a percentage) of (x) the total amount of
Capital Contributions made by such Member (including the
principal amount of any Capital Advances treated as Capital
Contributions of such Member pursuant to SECTION 5.2.1.(b)),
divided by (y) the total amount of Capital Contributions made or
deemed made by the Members pursuant to SECTIONS 5.1. and
5.2.1.(b) (including the Capital Advances converted to Capital
Contributions thereunder).
(d) The making of a Capital Advance on behalf of a
Defaulting Member shall not cure the default by the Defaulting
Member which gave rise to such Capital Advance, and a Member that
becomes a Defaulting Member under SECTION 5.2.1. shall continue
to be a Defaulting Member until all Capital Advances have been
either repaid in full, with all accrued interest, or converted
into Capital Contributions pursuant to SECTION 5.2.1.(b). When a
Defaulting Member shall have repaid the principal of and interest
on a Default Loan in full (to the extent that such Default Loan
has not been converted into a Capital Contribution pursuant to
SECTION 5.2.1.(b)), together with any costs and fees payable by
the Defaulting Member in connection therewith, the Defaulting
Member shall be deemed to have made a Capital Contribution to the
LLC equal to the principal amount of the Default Loan so repaid.
A Default Loan may be prepaid without penalty or premium at any
time prior to it being converted into a Capital Contribution
pursuant to the terms of SECTION 5.2.1.(b).
(e) If a Non-Defaulting Member converts a Default Loan into
a Capital Contribution pursuant to SECTION 5.2.1.(b), no
subsequent payment or tender of payment of the amount so
converted or contributed shall affect the Members' Percentage
Interests as recalculated in accordance with SECTION 5.2.1.(c).
5.2.2. Other Remedies
In addition to the Default Loan procedure set forth in
SECTION 5.2.1., any Non-Defaulting Member may exercise any one or
more of the following remedies:
(a) institute suit in any court of competent
jurisdiction to obtain (i) specific performance of the
obligations of a Defaulting Member under this Agreement, (ii)
reimbursement for all costs of court and reasonable attorneys'
fees thereby incurred and (iii) damages, if any, resulting to the
LLC or such Non-Defaulting Member from such default by a
Defaulting Member plus interest thereon at the Default Rate from
the date incurred until the date paid; PROVIDED, HOWEVER, that
except as he may otherwise agree, Gabbard in no event shall be
personally liable for his failure to make any Capital
Contributions in excess of Fifty Thousand Dollars ($50,000) in
the aggregate; or
(b) elect to dissolve and terminate the LLC; PROVIDED that,
if any Non-Defaulting Member has made a Default Loan to such
Defaulting Member, then such election must be made by all
Non-Defaulting Members making any such Default Loan.
5.3. Capital Accounts
A separate Capital Account shall be established and
maintained for each Member in accordance with the Tax Allocations
Addendum attached hereto as ADDENDUM II and incorporated herein
by reference.
5.4. Negative Capital Accounts
Except to the extent the Members are required or elect to
make contributions to the capital of the LLC under SECTION 5.1.
or SECTION 5.9., or SECTION 5.10., no Member shall be required to
pay to the LLC or to any other Member any deficit or negative
balance which may exist from time to time in such Member's
Capital Account.
5.5. No Interest on Capital Contributions or Capital
Accounts
No Member shall be entitled to receive any interest on its
Capital Contributions or its outstanding Capital Account balance.
5.6. Advances to LLC
In addition to any Default Loans that may be made pursuant
to SECTION 5.2.1., a Member may advance funds to the LLC in
excess of the amounts required hereunder to be contributed by it
to the capital of the LLC in any amount and on terms upon which
the Member and the Management Committee may agree. Any such
advances by a Member shall not result in any increase in the
amount of such Member's Capital Account or entitle it to any
increase in its LLC Interest. The amounts of such advances shall
be debts of the LLC to such Member and shall be payable or
collectible only out of the LLC Assets in accordance with terms
and conditions agreed upon by the Member and the Management
Committee.
5.7. Liability of Members and the Management Committee
Except as otherwise provided in the Delaware LLC Act, the
debts, obligations and liabilities of the LLC, whether arising in
contract, tort or otherwise, shall be solely the debts,
obligations and liabilities of the LLC, and none of the Members
or the Management Committee members shall be obligated personally
for any such debt, obligation or liability of the LLC solely by
reason of being a Member or a Management Committee member. The
failure of the LLC to observe any formalities or requirements
relating to the exercise of its powers or management of its
business or affairs under the Delaware LLC Act or this Agreement
shall not be grounds for imposing personal liability on any
Member or Management Committee member for liabilities of the LLC.
5.8. Return of Capital
Except upon the dissolution of the LLC or as may be
specifically provided in this Agreement, no Member shall have the
right to demand or to receive the return of all or any part of
its Capital Account or its Capital Contributions to the LLC.
5.9. Issuance of Additional LLC Interests
The LLC from time to time may issue to Members or other
Persons (who shall execute and deliver such documents as the
Management Committee deems necessary or appropriate to evidence
such Persons' agreement to be admitted as Members and be bound by
the terms and conditions of the Certificate and this Agreement)
additional LLC Interests, with such designations, preferences and
relative, participating, optional, voting or other special
rights, powers and duties, including rights, powers and duties
senior to the then-existing LLC Interests, and for such
consideration, all as shall be determined by the Management
Committee subject to Delaware law, including, without limitation,
(i) the allocations of items of LLC income, gain, loss, deduction
and credit to each such class of LLC Interests; (ii) the rights
of each such class of LLC Interests to share in LLC
distributions; and (iii) the rights of each such class of LLC
Interests upon dissolution and liquidation of the LLC.
5.10. Rights to Subscribe to Additional Issuances
In the event the Management Committee decides to cause the
LLC to issue additional LLC Interests, each Member shall be
offered the first opportunity to subscribe for such additional
issuance of LLC Interests, on the same terms and conditions as
the Management Committee proposes to issue such LLC Interests, in
the proportion that such Member s Percentage Interest bears to
the aggregate Percentage Interests then held by all Members (the
Member s "Pro Rata Share"). The Management Committee shall
deliver a written notice to each Member at least 30 days in
advance of the proposed issuance of LLC Interests, stating the
number and class of LLC Interests proposed to be issued, the
proposed subscription price, and the manner in which such Member
may exercise its rights to subscribe to such LLC Interests. Such
Member may exercise its rights to subscribe to such LLC Interests
by delivering a notice to that effect to the LLC and each other
Members within 10 days after the delivery of such notice by the
LLC and complying with the procedures for subscription specified
by the LLC in the notice to Members. If any Member does not
elect to purchase its full Pro Rata Share of the offered LLC
Interests, the LLC shall offer the Members that have elected to
purchase their full Pro Rata Shares of such LLC Interests the
opportunity to increase the number of such LLC Interests they
wish to subscribe for by their Pro Rata Shares of the
unsubscribed portion of such LLC Interests. This process shall
be repeated as often as necessary until either the Members have
subscribed for all of the LLC Interests offered or no Member is
willing to subscribe for additional LLC Interests.
ARTICLE VI
ALLOCATION OF PROFITS AND LOSSES;
DISTRIBUTIONS
6.1. Allocation of Net Income or Net Loss
The Net Income or Net Loss, other items of income, gains,
losses, deductions and credits, and the taxable income, gains,
losses, deductions and credits of the LLC, if any, for each
Fiscal Year (or portion thereof) shall be allocated to the
Members as provided in the Tax Allocations Addendum.
6.2. Allocation of Income and Loss With Respect to LLC
Interests Transferred
If any LLC Interest is transferred during any Fiscal Year in
accordance with this Agreement, the Net Income or Net Loss (and
other items referred to in SECTION 6.1.) attributable to such LLC
Interest for such Fiscal Year shall be allocated between the
transferor and the transferee by closing the books of the LLC as
of the effective date of transfer.
6.3. Distributions
For each Fiscal Quarter of the LLC, the Management Committee
shall determine the amount, if any, of cash of the LLC that the
Management Committee reasonably determines is not required by the
LLC to pay expenses (including any payments to W/O pursuant to
the Services Agreement), to pay future obligations of the LLC, or
for working capital, capital expenditure or other reserves
established by the Management Committee, and is available for
distribution to the Members ("Available Cash Flow"), and shall
cause the LLC to distribute such Available Cash Flow to the
Members, pro rata, in proportion to their Percentage Interests,
subject to any applicable limitations under Delaware law.
ARTICLE VII
MEMBERS AND MANAGEMENT
7.1. Members
7.1.1. Meetings
The Members shall meet at least once each Fiscal Year at
such place, on such date and at such time as may be fixed by the
Management Committee (unless such meeting shall be waived by all
of the Members). Special meetings of the Members may be called
by the Chairman of the Management Committee or President, and
shall be called by the Chairman of the Management Committee,
President, or Secretary upon the request of any member of the
Management Committee or the request of any Member owning an LLC
Interest representing a Percentage Interest of more than twenty
percent (20%) upon ten (10) days' notice to all Members in
writing or by telephone or facsimile. No business shall be taken
at a special meeting that is not stated in the notice of the
meeting. Meetings may be held by telephone or any other
communication by means of which all participating Members can
simultaneously hear each other during the meeting.
7.1.2. Quorum
No action may be taken at a meeting of the Members unless a
quorum consisting of Members owning LLC Interests representing
Percentage Interests of more than fifty percent (50%), in the
aggregate, is present in person or by proxy.
7.1.3. Action by Written Consent
Any action to be taken by the Members may be taken without a
meeting if a written consent setting forth the action so taken is
signed by Members having voting power to cast not less than the
minimum number of votes necessary to take the action if taken at
a meeting of Members. All Members who do not participate in
taking the action by written consent shall be given written
notice thereof by the Secretary of the LLC promptly after such
action has been taken.
7.1.4. Required Vote; Voting Rights
To be approved, any action requiring or properly submitted
for approval by the Members must be approved by a Majority of the
Members.
7.1.5. Waivers of Notice
Whenever the giving of any notice is required by statute or
this Agreement, a waiver thereof, in writing and delivered to the
LLC signed by the person or persons entitled to said notice,
whether before or after the event as to which such notice is
required, shall be deemed equivalent to notice. Attendance of a
Member at a meeting or execution of a written consent to any
action shall constitute a waiver of notice of such meeting or
action.
7.2. Management of the LLC by the Management Committee
Subject to this Agreement and the Delaware LLC Act, the
Members hereby unanimously agree that the responsibility for
management of the business and affairs of the LLC shall be vested
in the Management Committee, and that the Management Committee
(acting on behalf of the LLC) shall have all right, power, and
authority, to manage, operate and control the business and
affairs of the LLC and to do or cause to be done any and all
acts, at the expense of the LLC, deemed by the Management
Committee to be necessary or appropriate to effectuate the
purposes of the LLC. Except as otherwise expressly provided in
this Agreement or as may be approved by the Management Committee,
no Member shall have any authority, right, or power to bind the
LLC, or to manage or control, or to participate in the management
or control of, the business and affairs of the LLC in any manner
whatsoever. Without limiting the generality of the foregoing,
the specific responsibilities of the Management Committee
("Management Committee Decisions") shall include:
(a) approving the Initial Business Plan and any
changes or amendments thereto;
(b) the sale, merger or other disposition of the LLC;
(c) the sale of all or substantially all of any
System;
(d) admitting any new Members to the LLC or causing
the LLC to issue additional LLC Interests;
(e) entering into a joint venture or other entity as
contemplated by SECTION 7.12.;
(f) decisions on behalf of the LLC relating to the
Services Agreement, including without limitation
whether to extend, modify, or terminate the
Services Agreement;
(g) removal/appointment of the Chairman, President and
Treasurer;
(h) hiring and terminating management employees of the
LLC;
(i) making all technology decisions;
(j) submitting bids for, acquiring and selling or
otherwise disposing of Channels and Systems;
(k) determining the terms of any Channel acquisition
(including the terms of any bids for Channel
licenses that are offered in an auction sale and
lease agreements and any extensions or
modifications thereof);
(l) service offerings and marketing strategy;
(m) location of transmitters;
(n) admitting additional participants in any markets;
(o) commencing or terminating any significant
litigation on behalf of the LLC;
(p) selecting or replacing the firm of certified
public accountants which shall prepare the
financial statements and information of the LLC as
provided in SECTION 8.3.;
(q) entering into resale agreements and/or joint
ventures with local telephone companies or other
entities as contemplated by SECTION 7.6.,
including determining the terms and conditions of
such arrangements;
(r) approving any Budget as provided in SECTION
8.8.2.;
(s) approving incurring any indebtedness of the LLC;
and
(t) any other item expressly delegated to the
Management Committee under this Agreement.
7.2.1. Composition
CTWC and W/O shall be entitled to appoint two (2) Management
Committee members, and Gabbard shall be entitled to appoint one
(1) Management Committee member. The number and method of
appointment of Management Committee members may be changed only
by agreement of all of the Members; PROVIDED, HOWEVER, that in
the event Gabbard transfers his LLC Interest to CTWC (but not to
its designee) in accordance with this Agreement, Gabbard s right
to appoint a member of the Management Committee shall terminate,
and the number of members of the Management Committee shall be
reduced to four (4). W/O hereby appoints Hans Sternberg and Sean
Reilly to serve as initial Management Committee members, CTWC
hereby appoints Michael Coltrane and Barry Rubens to serve as
initial Management Committee members, and Gabbard hereby appoints
himself to serve as an initial Management Committee member.
CTWC, W/O, or Gabbard, as the case may be, by written notice to
the LLC and to the other Members, may remove any of its appointed
Management Committee members at any time and from time to time,
and for any reason or for no reason, and may designate an
individual to serve as a successor Management Committee member in
the event of the death, resignation or removal of a Management
Committee member appointed by such Member. Each Person appointed
to serve as a Management Committee member pursuant to this
SECTION 7.2.1. shall so serve until a successor Management
Committee member is appointed as provided hereunder or until such
Person s earlier death, resignation, or removal.
7.2.2. MEETINGS
The Management Committee shall meet at least once each
calendar quarter at the principal offices of the LLC or at such
other place and time as may be fixed from time to time by the
Management Committee (unless such meeting shall be waived by all
of the Management Committee members). Regular meetings of the
Management Committee may be held upon not less than ten (10)
days' notice to all Management Committee members in writing or by
telephone or facsimile transmission. Special meetings of the
Management Committee may be called by the Chairman of the
Management Committee or President, and shall be called by the
Chairman of the Management Committee, President or Secretary upon
the request of any Member owning an LLC Interest representing a
Percentage Interest of more than twenty percent (20%), upon three
(3) days' notice to all Management Committee members in writing
or by telephone or facsimile transmission. Meetings may be held
by telephone or any other communication by means of which all
participating directors can simultaneously hear each other during
the meeting.
7.2.3. Quorum
No action may be taken at a meeting of the Management
Committee unless a quorum consisting of Management Committee
members representing a majority of the total voting interests of
all Management Committee members are present in person or by
proxy.
7.2.4. Required Vote; Voting Rights
Each member of the Management Committee shall be entitled to
vote with respect to all matters submitted to the Management
Committee for approval, except with respect to a determination to
grant indemnification pursuant to SECTION 7.14.1. hereof, in
which event a Management Committee member seeking indemnification
hereunder shall have no vote with respect to indemnification of
such member. Except as otherwise expressly provided in this
Agreement, any action or approval by the Management Committee
must be approved by the Majority Vote of the Management Committee
members; PROVIDED, HOWEVER, that any decision to be made or
action to be taken by the Company pursuant to Section 4.2(d) of
the Services Agreement shall require the approval of a Majority
Vote of the members other than those members appointed by W/O.
The voting interest of each member or members, collectively, of
the Management Committee appointed by any Member shall be equal
to the Percentage Interest of such Member. For example, the two
members of the Management Committee appointed by W/O collectively
shall have a voting interest equal to W/O s Percentage Interest;
the two members of the Management Committee appointed by CTWC
collectively shall have a voting interest equal to CTWC s
Percentage Interest; and the member of the Management Committee
appointed by Gabbard shall have a voting interest equal to
Gabbard s Percentage Interest. If both of the Management
Committee members appointed by a Member participate in a vote or
action, their voting interests shall be equally divided among
them. If only one of such members participates, such member
shall be entitled to exercise the entire voting interest on
behalf of both such members.
Notwithstanding the foregoing, any of the following matters
shall require the affirmative Supermajority Vote of the
Management Committee members:
(a) the sale, merger or other disposition of the LLC;
(b) the sale of all or substantially all of any
System;
(c) admitting any new Members to the LLC or causing
the LLC to issue additional LLC Interests; and
(d) entering into a joint venture or other entity as
contemplated by SECTION 7.12.
7.2.5. Action by Written Consent
Any action to be taken by the Management Committee may be
taken without a meeting if consents in writing setting forth the
action so taken are signed by all of the Management Committee
members.
7.2.6. Deadlock on a Material Decision; Distribution on
Dissolution
(a) The Management Committee members shall attempt in good
faith to resolve any disagreements among them. In the event that
the Management Committee is unable to reach agreement as to any
issue, any member of the Management Committee may request
non-binding mediation in an attempt to reach an agreement as to
such issue. Such mediation shall be effected by a qualified
mediator, mutually acceptable to the members of the Management
Committee, who has significant relevant experience in the
telecommunications field and familiarity with the wireless cable
field. In the event that the Management Committee is unable to
reach agreement on any "Material Decision" at any time after the
date that is three (3) years after the date of this Agreement, or
at any time with respect to a termination of the Services
Agreement, then unless and until such disagreement is resolved,
each Member at any time shall have the right, by written notice
thereof to the other Members, to cause the dissolution of the LLC
and the distribution of its assets in accordance with this
SECTION 7.2.6. For purposes of this SECTION 7.2.6., the term
"Material Decision" shall mean any decision as to: (i) whether
the LLC should assume direct responsibility for the day-to-day
management of the LLC s Systems; (ii) the sale of all or
substantially all of the LLC s assets; (iii) a merger in which
the LLC is not the surviving entity; (iv) a public offering of
the interests in the LLC; and (v) any of the Management Committee
Decisions set forth in SECTION 7.2 of this Agreement.
(b) In the event of a dissolution of the LLC, the assets of
the LLC relating to the geographic markets to which the LLC s
assets relate shall be allocated among the Members, pro rata,
based on the fair market value of such assets and the Members
respective Percentage Interests (determined as set forth below);
PROVIDED, HOWEVER, that CTWC shall have the right to purchase
from Gabbard any assets allocated to Gabbard for a cash purchase
price equal to the fair market value of such assets (determined
as set forth below). To the extent it is not practicable (due to
differences in the fair market values of the assets relating to
the different markets) to distribute solely assets in kind on a
pro rata basis, the amount necessary to make the distributions
pro rata shall be settled in cash of the LLC or, if necessary,
cash contributed by one or more Members.
(c) The Members shall attempt to mutually agree on the fair
market value of the assets relating to each geographic market.
If the Members are unable to reach an agreement within thirty
(30) days as to the fair market value of the assets relating to
any market or as to a method for determining such value, then the
fair market value shall be determined by appraisal under the
following valuation procedure. The Members shall attempt in good
faith, within fifteen (15) days after demand for appraisal, to
mutually agree on a single appraiser. If the Members fail to
agree on such single appraiser within the fifteen (15) day
period, then each Member owning an LLC Interest representing a
Percentage Interest of more than twenty percent (20%) shall,
within fifteen (15) days thereafter, choose one appraiser. If
more than one appraiser is so designated, then an additional
appraiser shall be selected promptly by the appraisers so
designated. Each appraiser must be a qualified person having
significant experience appraising interests in partnerships or
limited liability companies that invest in wireless cable
television operations. If the two appraisers so selected shall
be unable to agree on an additional appraiser within ten (10)
days, an additional appraiser shall be selected by the American
Arbitration Association to serve as herein provided. Should any
of such Members fail or refuse to appoint an appraiser within
such fifteen (15) day period, then the single appraiser appointed
by the other shall have the right to decide alone and such
appraiser s decision shall be final and binding upon the Members.
In the event that any appraiser shall be unable to act, a new
appraiser shall be appointed within ten (10) days after such
inability occurs, such appointment to be made in the same manner
as hereinabove provided for the appointment of the appraiser who
is unable to act. The appraisers shall determine the fair market
value of the assets relating to each market and deliver a written
statement of the same to the Members within sixty (60) days after
the last appraiser has been engaged. For purposes of this
SECTION 7.2.6., the fair market value of the assets relating to
each market shall be (i) the valuation jointly determined by the
three appraisers, or (ii) if the three appraisers are unable to
agree upon a valuation, then each of the appraisers shall make
its own determination and the fair market value shall be
determined as follows:
(i) if the lowest valuation is not less than 90
percent of the middle valuation and the highest
valuation is not greater than 110 percent of the middle
valuation, the fair market value shall equal the
average of the values determined by the three
appraisers;
(ii) if the lowest valuation is less than 90 percent of
the middle valuation and the highest valuation is more
than 110 percent of the middle valuation, the low and
the high valuations shall be disregarded and the middle
valuation shall be the fair market value; or
(iii) if either the lowest valuation is less than
90% of the middle valuation or the highest valuation is
more than 110% of the middle valuation (but not both),
then the fair market value shall equal the average of
the two valuations which are closest in amount.
(d) In determining the fair market value of the assets
relating to each geographic market hereunder, there shall be
taken into consideration the effect on value of the proximity of
the assets to be distributed to other wireless cable channels or
systems owned or to be distributed to the recipient Members.
(e) CTWC shall have the right to designate the assets it
shall receive pursuant to this SECTION 7.2.6.; PROVIDED, that its
designation shall be taken into account determining the fair
market values of the assets to be distributed as provided in
SECTION 7.2.6.(d) and its designation shall not increase its pro
rata share of the assets to be distributed.
(f) The cost of all appraisals prepared in accordance with
this SECTION 7.2.6. shall be borne by the LLC.
7.2.7. Committees
The Management Committee from time to time may appoint one
or more other committees to perform any functions or conduct any
activities that the Management Committee has the right, power,
and authority to perform or conduct, subject to the voting
requirements of SECTION 7.2.4.
7.2.8. Services Agreement
On the date of this Agreement, the LLC is entering into a
services agreement ('Services Agreement") with W/O in
substantially the form attached hereto as EXHIBIT A, pursuant to
which W/O will provide certain management and engineering
services to the LLC, subject to the supervision and control of
the Management Committee; PROVIDED, HOWEVER, that if the
Management Committee determines that it is in the best interests
of the LLC to do so, the LLC shall assume responsibility for
directly providing all or certain of such services; and PROVIDED
FURTHER, that any Member owning an LLC Interest representing a
Percentage Interest of more than twenty percent (20%) shall have
the unilateral right to cause the LLC to terminate such Services
Agreement for "cause", as defined in the Management Agreement.
Any dispute concerning termination for "cause" shall be settled
by binding arbitration.
7.3. Failure to Buildout System
Notwithstanding the provisions of SECTION 7.2., the decision
to construct a System for a particular market shall be reserved
to the Members. Once the LLC has acquired the right to use at
least sixteen (16) Channels in a given market (the "Subject
Market"), if the Members fail to agree to construct the System
for such Subject Market, any Member voting against the buildout
(an "Opposing Member") shall have ninety (90) days in which to
obtain a bona fide third party offer to purchase for cash all
(but not less than all) of the LLC s Channels and related assets
for such Subject Market. Any Member voting in favor of the
buildout (the "Approving Members") shall have the right to match
such offer for a period of thirty (30) days after the date on
which the Opposing Member provides the Approving Members with
written notice of the third party offer, which notice shall
include a copy of the third party offer. If no Approving Member
matches such offer, the Channels in such Subject Market (and the
LLC s other assets relating to such Subject Market, if any) shall
be sold to the third party pursuant to the terms of the third
party offer. If no third party offer is obtained, the Approving
Members shall have the right to purchase such Channels and other
assets at their appraised value, determined in accordance with
the appraisal procedures set forth in SECTION 7.2.6. If more
than one Approving Member wishes to purchase such Channels and
other assets, the Approving Members shall make such purchase pro
rata in proportion to their respective Percentage Interests or as
they otherwise may agree. If the Approving Members fail to
purchase such Channels and other assets at their appraised value,
the LLC shall continue to offer such Channels and other assets
for sale to third parties but shall not, without the consent of a
Majority of the Members, undertake the buildout of the System
utilizing such Channels except to the extent legally required in
order to maintain the LLC s ownership of such Channels.
7.4. Failure to Acquire Channels
If the LLC fails to acquire at least sixteen (16) Channels
in a market by the date that is three (3) years from the date the
LLC first obtains a Channel for that market, each Member shall
have the right to obtain a written bona fide third party offer to
purchase for cash all (but not less than all) of the LLC s
Channels and related assets for that market. Once a Member
obtains a written bona fide third party offer ("Offer"), such
Member ("Offering Member") shall provide the other Members with
written notice ("Notice") of the Offer, which Notice shall
include a copy of the Offer. The other Members shall have the
right to match the Offer for a period of thirty (30) days after
the date on which such Member receives Notice of the Offer. If
the other Members fail to match such offer, the LLC s Channels
and related assets shall be sold to the third party pursuant to
the terms of the Offer. If more than one of the other Members
wishes to purchase the Channels and related assets , such members
shall make such purchase pro rata in proportion to their
respective Percentage Interests or as they otherwise may agree.
7.5. Restrictions on Sale of LLC and Assets of LLC
Notwithstanding the provisions of SECTION 7.2., there shall
not be a sale of the LLC or substantially all of the assets of
the LLC, a merger in which the LLC is not the surviving entity,
or a public offering of interests in the LLC for the period
beginning on the date of this Agreement and ending on the date
that is three years from the date of this Agreement without the
agreement of all Members.
7.6. Opportunities for Local Telephone Companies to Resell
Services
The Members contemplate that the LLC will offer to local
telephone companies providing services in the geographic markets
in which the LLC has Systems an opportunity to purchase
programming and other service offerings from the LLC on
commercially reasonable terms and conditions and to resell such
offerings under their own brand names within such markets, on a
non-exclusive basis.
7.7. Officers
7.7.1. Chairman of the Management Committee
The Management Committee may elect a Person to serve as its
chairman (the "Chairman of the Management Committee") to preside
over all meetings of Members and the Management Committee and to
exercise such other powers and authority as the Management
Committee from time to time may prescribe. O. Gene Gabbard is
hereby appointed the initial Chairman of the Management
Committee.
7.7.2. President
The Management Committee shall appoint a president of the
LLC (the "President"). Hans Sternberg is hereby appointed to be
the initial President. The President shall be the chief
executive officer of the LLC and shall be primarily responsible
for the management of the business and financial affairs of the
LLC. The President shall have full authority over the day-to-day
general management and direction of the business and operations
of the LLC, except with respect to matters requiring approval of
the Management Committee or approval of the Members and subject
to being overruled by the Management Committee. The President
may sign and execute in the name of the LLC, without specific
authorization by the Management Committee, deeds, mortgages,
bonds, contracts or other instruments, except in cases where
approval of the same has been expressly delegated by the
Management Committee or by this Agreement to some other officer
or agent of the LLC or shall be required by law otherwise to be
signed or executed. Third parties dealing with the LLC shall be
entitled to rely conclusively upon the power and authority of the
President as set forth herein.
7.7.3. Vice Presidents
The Management Committee may appoint one or more vice
presidents of the LLC (each a "Vice President"). Each Vice
President shall have such duties and responsibilities as shall be
delegated to them by the Management Committee and the President
and shall perform the duties and exercise powers of the President
in the absence or unavailability of the President.
7.7.4. Secretary
The Management Committee shall appoint a secretary of the
LLC (the "Secretary"). Sean Reilly is hereby appointed to be the
initial Secretary. The Secretary, at the direction of the
President, shall prepare and distribute to the Management
Committee members an agenda in advance of each meeting of the
Management Committee and shall prepare and distribute promptly to
each Management Committee member written minutes of all meetings
of the Management Committee. The Secretary shall also be
responsible for preparing and distributing to the Management
Committee members any notices received by the LLC or otherwise
called for by this Agreement to be given by the LLC. The
Secretary shall perform such other duties as may be specified by
the President.
7.7.5. Treasurer
The Management Committee shall appoint a treasurer of the
LLC (the "Treasurer"). Barry Rubens is hereby appointed to be
the initial Treasurer. The Treasurer shall have charge of the
funds of the LLC. The Treasurer shall keep full and accurate
accounts of all receipts and disbursements of the LLC in books
belonging to the LLC and shall deposit all monies and other
valuable effects in the name and to the credit of the LLC in such
depositories as may be designated by the President. The
Treasurer shall disburse the funds of the LLC as may be ordered
by the President, and shall render to the President, whenever he
may require it, an account of all his transactions undertaken as
Treasurer and an account of the business and financial position
of the LLC. The Treasurer shall perform such other duties as may
be specified by the President.
7.7.6. Other Officers
The Management Committee may appoint such other officers of
the LLC upon terms and conditions the Management Committee deems
necessary and appropriate. Any officer shall hold his or her
respective office unless and until such officer is removed by the
President or the Management Committee. Any two offices may be
held by the same person, except that in no event shall the
President and the Secretary be the same person.
7.7.7. Removal of Officers; Vacancies
The Chairman of the Management Committee, President and
Treasurer may be removed with or without cause, at any time, by
the Management Committee. All other officers of the LLC may be
removed at any time, with or without cause, by the Management
Committee or by the President. Vacancies in the offices of
Chairman of the Management Committee, President and Treasurer
shall be filled by the Management Committee; vacancies in all
other offices shall be filled by the Management Committee or the
President.
7.7.8. Third Party Reliance
Third parties dealing with the LLC shall be entitled to rely
conclusively upon the power and authority of the officers of the
LLC as set forth herein.
7.8. Fiduciary Relationship
No Management Committee member or officer shall be liable to
the LLC or its Members for monetary damages for breach of
fiduciary duty as a Management Committee member or officer or
otherwise liable, responsible or accountable to the LLC or its
Members for monetary damages or otherwise for any acts performed,
or for any failure to act; PROVIDED, HOWEVER, that this provision
shall not eliminate or limit the liability of a Management
Committee member or officer (i) for any breach of the Management
Committee member's or officer's duty of loyalty to the LLC or its
Members, (ii) for acts or omissions which involve intentional
misconduct or a knowing violation of law, or (iii) for any
transaction from which the Management Committee member or officer
received any improper personal benefit.
7.9. Compensation of Management Committee; Officers
Management Committee members, as such, shall not receive any
stated salary for their services but shall be reimbursed by the
LLC for the actual costs of travel and accommodations incurred by
them in attending each regular or special meeting of the
Management Committee; provided that nothing herein contained
shall be construed to preclude any Management Committee member
from serving the LLC in any other capacity and receiving
compensation therefor. The compensation of officers shall be
determined by the Management Committee.
7.10. Reimbursement
All expenses incurred with respect to the organization,
operation, and management of the LLC shall be borne by the LLC.
The Management Committee members and officers shall be entitled
to reimbursement from the LLC for direct expenses allocable to
the organization, operation, and management of the LLC.
7.11. Other Activities of Members and Affiliates
Subject to any specific agreement herein to the contrary,
any Member or any Affiliate thereof may have other business
interests or may engage in other business ventures of any nature
or description whatsoever, whether currently existing or
hereafter created and may compete, directly or indirectly, with
the business of the LLC; PROVIDED, HOWEVER, that during the term
of this Agreement, neither W/O nor CTWC, nor in each case its
Parent or any subsidiary of its Parent, may purchase or operate
Channels or Systems operating from transmitters, located in the
Greenville, South Carolina market, the Spartanburg, South
Carolina market, or any geographic market located in the state of
North Carolina other than through another limited liability
company or other entity the original owners of which include each
of the Members or one or more of their Affiliates. No Member or
Affiliate thereof shall incur any liability to the LLC as a
result of such Member's or such Affiliate's pursuit of such other
permitted business interests, ventures and competitive activity,
and neither the LLC nor the other Members, by virtue of their
interests in the LLC, shall have any right to participate in such
other permitted business ventures or to receive or share in any
income or profits derived therefrom.
7.12. Right to Enter into Sub-Ventures
The Members acknowledge and agree that the LLC shall be
permitted to enter into agreements to form separate limited
liability companies or other arrangements with other local
communications companies or other persons or entities with
respect to the Systems for particular Markets.
7.13. Certain Transactions
The LLC is expressly permitted in the normal course of its
business to enter into transactions with any Members or with any
Affiliate of any Member provided that the price and other terms
of such transaction are not less favorable to the LLC than those
generally prevailing with respect to comparable transactions
between unrelated parties. The LLC is specifically authorized to
enter into the Services Agreement with W/O. For so long as it is
the Manager of any of the Systems, W/O agrees and covenants to
keep each Member owning an LLC Interest representing a Percentage
Interest of more than twenty percent (20%) fully informed with
respect to the services being provided to the LLC pursuant to the
Services Agreement and W/O agrees to consult with such Members as
to all significant matters relating to the provision of such
services. Furthermore, the LLC is specifically authorized to
enter into resale agreements with local telephone companies as
approved by the Management Committee pursuant to SECTION 7.2.
7.14. Indemnification of the Members, Management
Committee Members, Officers and any Affiliate
7.14.1. Indemnity
The LLC shall indemnify and hold harmless any Member,
Management Committee member, officer, and Affiliate thereof, or
their respective partners, officers, employees and agents
(individually, in each case, an "Indemnitee"), to the fullest
extent permitted by law from and against any and all losses,
claims, demands, costs, damages, liabilities (joint or several),
expenses of any nature (including attorneys' fees and
disbursements), judgments, fines, settlements, and other amounts
arising from any and all claims, demands, actions, suits, or
proceedings, whether civil, criminal, administrative or
investigative, in which the Indemnitee may be involved, or
threatened to be involved as a party or otherwise, arising out of
or incidental to the business or activities of or relating to the
LLC, regardless of whether the Indemnitee continues to be a
Member, a Management Committee member, an officer, or Affiliate
thereof, or their respective partners, officers, employees and
agents, at the time any such liability or expense is paid or
incurred; PROVIDED, HOWEVER, that this provision shall not
eliminate or limit the liability of an Indemnitee (i) for any
breach of the Indemnitee's duty of loyalty to the LLC or its
Members or (ii) for acts or omissions which involve intentional
misconduct or a knowing violation of law.
7.14.2. EXPENSES
Prior to the final disposition of a claim, demand, action,
suit, or proceeding subject to this SECTION 7.14., upon the
request of the Indemnitee, the LLC from time to time shall
advance to the Indemnitee amounts equal to the expenses incurred
by the Indemnitee in defending such claim, demand, action, suit,
or proceeding, provided that the LLC receives an undertaking by
or on behalf of the Indemnitee to repay the amount of such
advances, if it shall be determined in a judicial proceeding or a
binding arbitration that such Indemnitee is not entitled to be
indemnified as authorized in this SECTION 7.14.
7.14.3. OTHER RIGHTS
The indemnification provided by this SECTION 7.14. shall be
in addition to any other rights to which an Indemnitee may be
entitled under any agreement, vote of the Members, as a matter of
law or equity, or otherwise, both as to an action in the
Indemnitee's capacity as a Member, a Management Committee member,
an officer, or any Affiliate thereof, or their respective
partners, officers, employees and agents, and as to an action in
another capacity, and shall continue as to an Indemnitee who has
ceased to serve in such capacity and shall inure to the benefit
of the heirs, successors, assigns, and administrators of the
Indemnitee.
7.14.4. Insurance
The LLC may purchase and maintain insurance on behalf of the
Management Committee, officers, and such other Persons as the
Management Committee shall determine against any liability that
may be asserted against or expense that may be incurred by such
Persons in connection with the offering of interests in the LLC
or the business or activities of the LLC, regardless of whether
the LLC would have the power to indemnify such Persons against
such liability under the provisions of this Agreement.
7.14.5. Interest in Transaction
An Indemnitee shall not be denied indemnification in whole
or in part under this SECTION 7.14. or otherwise by reason of the
fact that the Indemnitee had an interest in the transaction with
respect to which the indemnification applies if the transaction
was otherwise permitted or not expressly prohibited by the terms
of this Agreement and does not constitute a breach of the
Indemnitee s duty of loyalty to the LLC or its Members.
7.14.6. Benefit
The provisions of this SECTION 7.14. are for the benefit of
the Indemnitees, their heirs, successors, assigns and
administrators and shall not be deemed to create any rights for
the benefit of any other Persons.
7.15. Amendment of this Agreement
Amendments to SCHEDULE A to reflect actions taken pursuant
to SECTION 5.9. may be made by the Management Committee or the
President. Any other amendment or modification to this Agreement
may be made only upon the written consent of all Members.
7.16. Effect of Change of Control of W/O
In the event there is a Change of Control with respect to
W/O as a result of which the LLC or its Members incur any loss or
expense by reason of a mandatory repayment or loss of any
financial incentive granted by the U.S. government (or any agency
thereof) at the time the LLC acquired a license for any Channel,
then W/O shall be required to bear all such loss or expense.
ARTICLE VIII
BANK ACCOUNTS; BOOKS AND RECORDS;
STATEMENTS; TAXES; FISCAL YEAR; ANNUAL BUDGET
8.1. Bank Accounts
All funds of the LLC shall be deposited in its name in such
checking and savings accounts, time deposits or certificates of
deposit, or other accounts at such banks as shall be designated
by the Management Committee. The Management Committee or the
officers of the LLC shall arrange for the appropriate conduct of
such account or accounts.
8.2. Books and Records
The Management Committee shall keep, or cause to be kept,
accurate, full and complete books and accounts showing assets,
liabilities, income, operations, transactions and the financial
condition of the LLC. Such books and accounts shall be prepared
on the cash or accrual basis of accounting, as determined by the
Management Committee. Any Member, or its respective designee,
shall have access thereto at any reasonable time during regular
business hours and shall have the right to copy said records at
its expense.
8.3. Financial Statements and Information
All financial statements prepared pursuant to this SECTION
8.3. shall present fairly the financial position and operating
results of the LLC and shall be prepared by a firm of certified
public accountants selected by the Management Committee, as
provided in SECTION 7.2., in accordance with generally accepted
accounting principles, as provided in SECTION 8.2., for each
Fiscal Year of the LLC during the term of this Agreement.
8.3.1. Quarterly Financial Statements
Within forty-five (45) days after the end of each quarterly
period (the "Fiscal Quarter") of each Fiscal Year, commencing
with the first full Fiscal Quarter after the date of this
Agreement, the Management Committee shall prepare and submit or
cause to be prepared and submitted to the Members an unaudited
statement of profit and loss for the LLC for such Fiscal Quarter
and an unaudited balance sheet of the LLC dated as of the end of
such Fiscal Quarter, in each case prepared in accordance with
generally accepted accounting principles consistently applied.
8.3.2. Annual Financial Statements
Within one hundred twenty (120) days after the end of each
Fiscal Year during the term of this Agreement, the Management
Committee shall prepare and submit or cause to be prepared and
submitted to the Members (i) an audited balance sheet, together
with audited statements of profit and loss, Members' equity and
changes in financial position for the LLC during such Fiscal
Year; (ii) a report of the activities of the LLC during the
Fiscal Year; (iii) a report summarizing any fees and other
remuneration paid by the LLC for such Fiscal Year to any Member
or any Affiliate thereof; and (iv) an audited statement showing
any amounts distributed to the Members in respect of such Fiscal
Year.
8.3.3. Other Reports
The Management Committee shall provide to the Members such
other reports and information concerning the business and affairs
of the LLC as may be required by the Delaware LLC Act or by any
other law or regulation of any regulatory body applicable to the
LLC.
8.4. Accounting Decisions
All decisions as to accounting matters, except as
specifically provided to the contrary herein, shall be made by
the Management Committee.
8.5. Where Maintained
The books, accounts and records of the LLC at all times
shall be maintained at the LLC's principal office or such other
place of business as the officers may determine.
8.6. Tax Returns; Tax Matters Partner
8.6.1. Tax Returns
The President or the Treasurer, at the expense of the LLC,
shall cause all tax returns to be timely filed with the
applicable government authorities. The President or the
Treasurer, at the expense of the LLC, shall cause to be prepared
and delivered to the Members, in a timely fashion after the end
of each Fiscal Year and at the expense of the LLC, copies of all
federal, state and local income tax returns for the LLC for such
Fiscal Year, one copy of which shall be filed with the
appropriate tax authorities. The Members agree to take all steps
necessary to insure that the LLC will be characterized as a
partnership for federal, state and local tax purposes.
8.6.2. Tax Matters Partner.
The Management Committee from time to time shall appoint a
Person (who shall be a Member) to act as the "tax matters
partner" of the LLC, as provided in the Regulations pursuant to
section 6231 of the Code, and may replace the Person so
designated. Each Member hereby approves of such designation and
agrees to execute, certify, acknowledge, deliver, swear to, file,
and record at the appropriate public offices such documents as
may be deemed necessary or appropriate to evidence such approval.
8.6.3. Obligation to IRS
To the extent and in the manner provided by applicable Code
sections and the Regulations thereunder, the tax matters partner
shall furnish the name, address, profits interest, and taxpayer
identification number of each Member (or assignee) to the IRS.
8.6.4. Obligations to Members
To the extent and in the manner provided by applicable Code
sections and the Regulations thereunder, the tax matters partner
shall inform each Member of all administrative or judicial
proceedings for the adjustment of LLC items required to be taken
into account by a Member for income tax purposes (such
administrative proceedings being referred to as a "tax audit" and
such judicial proceedings being referred to as "judicial
review"). In addition, upon receipt by the tax matters partner
of any written notice, request, inquiry, or statement of a
material nature from the IRS in connection with an examination of
the LLC involving a potential income tax liability for any of the
Members, the tax matters partner shall promptly send each Member
a copy of the documents so received. In the event the tax
matters partner intends to respond in writing to any such
documents received from the IRS, the tax matters partner shall
provide a copy of its proposed response to all Members at least
ten (10) days before such response is to be submitted to the IRS
and shall consider in good faith any comments received from the
Members with respect to such proposed response.
8.6.5. Authority of Tax Matters Partner
The tax matters partner is authorized:
(a) in the event that a notice of a final administrative
adjustment at the LLC level of any item required to be taken into
account by a Member for tax purposes (a "final adjustment") is
mailed to the tax matters partner, to seek judicial review of
such final adjustment, including the filing of a petition for
readjustment with the Tax Court or the United States Claims
Court, or the filing of a complaint for refund with the District
Court of the United States for the district in which the LLC's
principal place of business is located;
(b) to intervene in any action brought by any other Member
for judicial review of a final adjustment;
(c) to file a request for an administrative adjustment with
the IRS at any time and, if any part of such request is not
allowed by the IRS, to file an appropriate pleading (petition or
complaint) for judicial review with respect to such request;
(d) to enter into an agreement with the IRS to extend the
period for assessing any tax which is attributable to any item
required to be taken into account by a Member for tax purposes,
or an item affected by such item; and
(e) to take any other action on behalf of the Members or
the LLC in connection with any tax audit or judicial review
proceeding to the extent permitted by applicable law or
regulations.
8.7. Fiscal Year
The fiscal year of the LLC for financial, accounting,
Federal, state and local income tax purposes initially shall be
the calendar year (the "Fiscal Year"). The Management Committee
shall have authority to change the beginning and ending dates of
the Fiscal Year if the Management Committee deems such change to
be necessary or appropriate.
8.8. Annual Budget
8.8.1. Distribution of Annual Budgets
Prior to the commencement of each new Fiscal Year, W/O shall
prepare and distribute to the members of the Management Committee
a proposed Budget for such Fiscal Year, which shall set forth in
detail for the LLC and each of the Systems the anticipated
expenditures, aggregate annual operating expenses and revenues of
the LLC, a capital budget, and any required Capital Contributions
or other financing with respect to such Fiscal Year.
8.8.2. Budget Subject to Approval
The Management Committee shall have the right to approve the
Budget submitted to it pursuant to SECTION 8.8.1. If the
Management Committee approves the proposed Budget, then such
proposed Budget shall become the operative Budget for the Fiscal
Year to which it relates. If the Management Committee does not
approve the proposed Budget, then W/O shall submit a revised
proposed Budget to the members of the Management Committee within
thirty (30) days after such disapproval. The Management
Committee and W/O shall attempt in good faith to reach agreement
on such revised proposed Budget. During any Fiscal Year (or
portion thereof) in which no Budget is in effect because it has
been disapproved by the Management Committee, or has not yet been
approved by the Management Committee, then the operative Budget
for such Fiscal Year shall be deemed to include (a) all
liabilities or obligations of the LLC that were previously
incurred or committed to by or on behalf of the LLC in good faith
and that become due and payable during such Fiscal Year, (b) all
liabilities or obligations that the Management Committee, in good
faith, believes should be incurred or committed to by or on
behalf of the LLC for the operation of its business or the
carrying out of the purposes of the LLC during such Fiscal Year
and (c) all other operating expenses in an amount equal to up to
one hundred ten percent (110%) of the operating expenses set
forth in the most recently approved Budget for any prior Fiscal
Year. Any operative budget for a Fiscal Year (or portion
thereof) in which no budget is in effect because a Budget has
been disapproved by the Management Committee, or has not yet been
approved by the Management Committee, shall be superseded by the
Budget, if any, ultimately approved by the Management Committee
for such Fiscal Year.
ARTICLE IX
TRANSFER OF LLC INTERESTS AND
THE WITHDRAWAL OF MEMBERS
9.1. Definition
The term "transfer," when used in this ARTICLE IX with
respect to LLC Interests, shall include any sale, assignment,
gift, pledge, hypothecation, mortgage, exchange, or other
disposition, except that such term shall not include any pledge,
mortgage, or hypothecation of or granting of a security interest
in LLC Interests in connection with any financing obtained on
behalf of the LLC.
9.2. No Unauthorized Transfers; Prohibition During Initial
Three Years
No LLC Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in
this ARTICLE IX. Any transfer or purported transfer of any LLC
Interest not made in accordance with this ARTICLE IX shall be
void AB INITIO. Furthermore, no transfer of any LLC Interest
shall be permitted during the period commencing on the date of
this Agreement and ending on the date that is three years from
the date of this Agreement ("Restricted Period"). After such
Restricted Period, a Member may transfer all or a portion of its
LLC Interest, subject to the provisions of this ARTICLE IX;
PROVIDED, HOWEVER, that all transfers must be in accordance with
Federal Communications Commission rules and regulations. Subject
to SECTION 9.7, each Member shall have the right to transfer all,
but not less than all, of its LLC Interest to an Affiliate of
such Member, CTWC shall have the right to make transfers of
portions of its LLC Interest to local communications companies
located in markets where the LLC has or intends to construct or
acquire Systems, and Gabbard shall have the right to transfer its
LLC Interest to CTWC.
9.3. Right of First Offer
Before any Member shall transfer all or any portion of its
LLC Interest (other than a transfer pursuant to the last sentence
of SECTION 9.2., which transfer shall not be subject to this
SECTION 9.3.), such Member (the "Offeror") shall offer to sell
such portion of its LLC Interest to the other Members (the
"Offeree"), by a written offer notice to the Offeree (the "Offer
Notice") which shall state that it is an offer to sell the
Offeror s LLC Interest and set forth the offering price for such
LLC Interest, which price shall be payable in cash, PROVIDED,
HOWEVER, that if the Offeror is Gabbard, CTWC shall have the
exclusive first opportunity to exercise the rights of an Offeree
pursuant to this SECTION 9.3. and SECTION 9.4. prior to any other
Member being offered such opportunity.
9.4. Election Procedure
Each Offeree shall have twenty (20) days after receiving
such offer notice (the "Offeree s Election Period") within which
to elect to purchase all (but not less than all) of the Offeror s
LLC Interest. Such election shall be made by a written notice of
election given to the Offeror. Any Offeree may assign its right
to purchase hereunder to one or more other Persons; PROVIDED,
HOWEVER, that the right of the Offeree(s) to make such purchase
is conditioned upon the Offeree(s) and/or any other such Persons
collectively purchasing the Offeror s entire LLC Interest which
is being offered. In the event that more than one Offeree elects
to purchase the Offeror s LLC Interest, such Offerees shall
purchase the LLC Interest pror its Members incur any loss or
expense by reason of a mandatory repayment or loss o rata in
proportion to their respective Percentage Interests or as they
otherwise may agree.
9.5. Closing
The closing date of any purchase by the Offeree(s) (and any
other Person participating in the purchase pursuant to SECTION
9.4.) shall be twenty (20) days after expiration of the Offeree s
Election Period (or if not a business day, then on the next
business day thereafter), or such other date as is mutually
agreed by the Offeror and the Offeree(s). At the closing of such
purchase, upon payment of the offering price for such LLC
Interest by the Persons purchasing such LLC Interest pursuant to
the terms hereof, the Offeror shall deliver evidence of the
transfer of the LLC Interest to such Person(s) in valid form for
transfer with appropriate duly executed assignments, powers or
endorsements, bearing any necessary documentary stamps and
accompanied by such certificates of authority, tax releases,
consents to transfer or other instruments or evidences of the
good title of the Offeror to the LLC Interest as may be
reasonably required by such Person(s).
9.6. Sale Period
If the Offerees shall fail to elect to purchase the entire
LLC Interest that the Offeror wishes to transfer pursuant to the
terms of any Offer Notice, or at any time shall notify the
Offeror of their election not to purchase all of such LLC
Interest, or shall elect to purchase but fail to close the
purchase on the closing date, then the Offeror shall be free for
a period of 90 days thereafter to sell all, but not less than
all, of its LLC Interest specified in such Offer Notice to one or
more third parties on terms and conditions no less favorable to
the Offeror than those contained in the Offer Notice; PROVIDED,
HOWEVER, that such LLC Interest shall remain subject to this
Agreement; and PROVIDED FURTHER, that if the Offeror sells such
LLC Interest to more than one third party, such parties and the
selling Member (if it remains a Member) shall be treated as a
single Person for the purposes of this Agreement. If the Offeror
fails to sell such LLC Interest within such 90-day period, all
rights of the Offeror to transfer such LLC Interest free of the
obligation to first offer to sell such LLC Interest to the other
Members as provided herein shall terminate.
9.7. Substituted Members and General Transfer Restrictions
9.7.1. Substituted Members
Notwithstanding anything in this Agreement to the contrary,
any transferee of an LLC Interest or portion thereof that is not
already a Member shall become a substituted Member only upon (i)
the express written consent of all non-transferring Members in
their sole and absolute discretion, and (ii) the transferee
agreeing to be bound by all the terms and conditions of the
Certificate and this Agreement as then in effect. Unless and
until a transferee is admitted as a substituted Member, the
transferee shall have no right to exercise any of the powers,
rights, and privileges of a Member hereunder and shall possess
only the economic rights set forth in SECTION 9.9. A Member who
has transferred its entire LLC Interest in accordance with this
Agreement to a transferee who is admitted as a substituted Member
hereunder shall cease to be a Member upon the effective date of
such admission and thereafter shall have no further powers,
rights, and privileges as a Member hereunder except as provided
in SECTION 6.2. and SECTION 7.14.
9.7.2. General Transfer Restrictions
Notwithstanding anything in this Agreement to the contrary,
no Member may transfer all or any portion of its LLC Interest
unless such transfer will not (and, upon the request of any
Member, the Member desiring to transfer its LLC Interest provides
an opinion of counsel in form and substance satisfactory to the
requesting Member that such transfer will not) (i) violate any
applicable federal or state securities laws or regulations; (ii)
subject the LLC to registration as an investment company or
election to be regulated as a "business development company"
under the Investment Company Act of 1940; (iii) require any
Member or any of its Affiliates to register as an investment
advisor under the Investment Advisers Act of 1940; (iv) cause the
LLC to be treated as an association taxable as a corporation for
federal income tax purposes, either as a "publicly traded
partnership" under Section 7704 of the Code or otherwise; (v)
cause the LLC or any Member to be treated as a fiduciary under
ERISA; or (vi) cause the LLC to suffer any other adverse
consequences under federal or state laws or regulations.
9.8. Dealings with LLC
The LLC, each Member, the Management Committee, the officers
and any other Person or Persons having business with the LLC need
deal only with Members who are admitted as Members or as
substituted Members of the LLC, and they shall not be required to
deal with any other Person by reason of transfer by a Member or
by reason of the death of a Member, except as otherwise provided
in this Agreement. In the absence of the substitution (as
provided herein) of a Member for a transferring or a deceased
Member, any payment to a Member or to a Member's executors or
administrators shall absolve the LLC and the Management Committee
of all liability to any other Persons who may be interested in
such payment by reason of an assignment by, or the death of, such
Member.
9.9. Transferee of Economic Interest
The transferee of all or any portion of an LLC Interest in
accordance with this Agreement that is not already a Member shall
acquire only the transferor Member s economic rights to receive
distributions from the LLC and an allocable share of the LLC s
income, gain and loss with respect to the transferred LLC
Interest unless and until the transferee is admitted as a
substituted Member in accordance with SECTION 9.7.
9.10. Purchase Option on the Happening of Certain Events
9.10.1. Option to Purchase
In the event of the happening of any of the following
events:
(a) a Member is dissolved or terminated or, in the
case of Gabbard, dies or is adjudged legally incompetent;
(b) a Member is adjudicated bankrupt or a Member's
interest is assigned for the benefit of creditors, levied upon,
attached, subjected to a charging order or proposed to be sold in
a foreclosure or by execution or under any power of sale
contained in a note or other instrument or granted by operation
of law or court order; or
(c) a Member's interest becomes subject to liquidation
as a result of a Member's filing a petition for involuntary
dissolution of the LLC;
then, notwithstanding any other provision of this ARTICLE IX, if
the LLC continues, the remaining Members shall have the option to
purchase, at a price determined in accordance with SECTION
9.10.2., all (but not less than all) of such Member s LLC
Interest. Such option shall be exercised by written notice to
the Member or the Member's legal representative or successor,
(each of which may be referred to herein as the "offeror"), as
the case may be, within sixty (60) days after the date of the
event giving rise to the option occurs or, if later, the date
that the LLC receives actual notice that such event has occurred.
If more than one of the remaining Members elects to purchase the
affected LLC Interest, such Members shall purchase the affected
LLC Interest pro rata in proportion to their respective
Percentage Interests or as they otherwise may agree; PROVIDED,
HOWEVER, that if the affected LLC Interest is that of Gabbard,
then (i) CTWC (or its designee) shall have the exclusive first
opportunity to purchase the affected LLC Interest hereunder, and
(ii) in the event CTWC or its designee so purchases the entire
LLC Interest of Gabbard, then notwithstanding any other provision
of this Agreement or the Delaware LLC Act to the contrary, the
LLC shall continue in existence and shall not be dissolved solely
as a result of the event giving rise to such purchase unless, as
a result of such purchase, (x) the LLC or its Members would incur
any loss or expense by reason of a mandatory repayment or loss of
any financial incentive granted by the U.S. government (or any
agency thereof) at the time the LLC acquired a license for any
Channel, (y) CTWC fails to provide or arrange for substitute
financing on terms and conditions not less favorable to the LLC,
in any material respect, and to reimburse the LLC and the other
Members in respect of all losses and expenses described in clause
(x) above (to the extent such losses and expenses would exceed
the amount of any such losses and expenses that the LLC or its
Members would incur if the LLC were to dissolve in accordance
with SECTION 7.2.6.) no later than the date that is thirty (30)
days after the date of such purchase of Gabbard s LLC Interest,
and (z) no later than the date that is sixty (60) days after the
date of such purchase of Gabbard s LLC Interest, W/O provides
written notice to CTWC of W/O s election to dissolve the LLC. If
the remaining Members do not elect to purchase the affected LLC
Interest pursuant to SECTION 9.10.1., then the affected LLC
Interest may be held by the offeror, subject to the terms of this
Agreement.
9.10.2. Purchase Price
The Members shall attempt to mutually agree on the fair
market value of the affected LLC Interest. If the Members are
unable to reach an agreement within ninety (90) days, then the
fair market value shall be determined by appraisal under the
following valuation procedure. The Members shall attempt in good
faith, within fifteen (15) days after demand for appraisal, to
mutually agree on a single appraiser. If the Members fail to
agree on such single appraiser within the fifteen (15) day
period, then the selling Member, on the one hand, and the
purchasing Member(s), on the other hand, each shall, within
fifteen (15) days thereafter, choose one appraiser. The third
appraiser shall be selected by the two appraisers so designated.
Each appraiser must be a qualified person having significant
experience appraising interests in partnerships or limited
liability companies that invest in wireless cable television
operations. If the two appraisers so selected shall be unable to
agree on a third appraiser within ten (10) days, the third
appraiser shall be selected by the American Arbitration
Association to serve as herein provided. Should either of the
Members fail or refuse to appoint an appraiser within such
fifteen (15) day period, then the single appraiser shall have the
right to decide alone and such appraiser s decision shall be
final and binding upon the Members. In the event that any
appraiser shall be unable to act, a new appraiser shall be
appointed within ten (10) days after such inability occurs, such
appointment to be made in the same manner as hereinabove provided
for the appointment of the appraiser who is unable to act. The
appraisers shall determine the fair market value of the affected
Interest and deliver a written statement of the same to the
Members within sixty (60) days after the last appraiser has been
engaged. For purposes of this SECTION 9.10.2., such fair market
value shall be (i) the valuation jointly determined by the three
appraisers, or (ii) if the three appraisers are unable to agree
upon a valuation, then each of the appraisers shall make its own
determination and the fair market value shall be determined as
follows:
(a) if the lowest valuation is not less than 90 percent of
the middle valuation and the highest valuation is not greater
than 110 percent of the middle valuation, the fair market value
shall equal the average of the values determined by the three
appraisers;
(b) if the lowest valuation is less than 90 percent of the
middle valuation and the highest valuation is more than 110
percent of the middle valuation, the low and the high valuations
shall be disregarded and the middle valuation shall be the fair
market value; or
(c) if either the lowest valuation is less than 90% of the
middle valuation or the highest valuation is more than 110% of
the middle valuation (but not both), then the fair market value
shall equal the average of the two valuations which are closest
in amount.
The cost of all appraisals prepared in accordance with this
SECTION 9.10.2. shall be borne pro rata by the purchasing
Member(s).
9.11. No Right to Withdraw
Subject to SECTIONS 7.2.6., 9.10, AND 9.12., a Member shall
not have any right (but shall have the power) to resign, retire
or otherwise withdraw from the LLC without the express written
consent of all the other Members.
9.12. Sale Right of New Member
Notwithstanding any provision of this Agreement to the
contrary, but subject to SECTION 9.7., at any time after a date
that is five (5) years from the date the LLC first obtains a
license for Channels through competitive bidding, Gabbard shall
have the right, at its option, to require CTWC (or its designee)
to purchase for cash all, but not less than all, of Gabbard s LLC
Interest. Such option shall be exercised by written notice to
CTWC. CTWC and Gabbard shall attempt to mutually agree on the
fair market value of Gabbard s LLC Interest. If CTWC and Gabbard
are unable to reach an agreement within ninety (90) days, then
the fair market value shall be determined by appraisal under the
following valuation procedure. The CTWC and Gabbard shall
attempt in good faith, within fifteen (15) days after demand for
appraisal, to mutually agree on a single appraiser. If the CTWC
and Gabbard fail to agree on such single appraiser within the
fifteen (15) day period, then CTWC and Gabbard each shall, within
fifteen (15) days thereafter, choose one appraiser. The third
appraiser shall be selected by the two appraisers so designated.
Each appraiser must be a qualified person having significant
experience appraising interests in partnerships or limited
liability companies that invest in wireless cable television
operations. If the two appraisers so selected shall be unable to
agree on a third appraiser within ten (10) days, the third
appraiser shall be selected by the American Arbitration
Association to serve as herein provided. Should either of CTWC
or Gabbard fail or refuse to appoint an appraiser within such
fifteen (15) day period, then the single appraiser shall have the
right to decide alone and such appraiser s decision shall be
final and binding upon CTWC and Gabbard. In the event that any
appraiser shall be unable to act, a new appraiser shall be
appointed within ten (10) days after such inability occurs, such
appointment to be made in the same manner as hereinabove provided
for the appointment of the appraiser who is unable to act. The
appraisers shall determine the fair market value of Gabbard s LLC
Interest and deliver a written statement of the same to the CTWC
and Gabbard within sixty (60) days after the last appraiser has
been engaged. For purposes of this SECTION 9.12., such fair
market value shall be (i) the valuation jointly determined by the
three appraisers, or (ii) if the three appraisers are unable to
agree upon a valuation, then each of the appraisers shall make
its own determination and the fair market value shall be
determined as follows:
(a) if the lowest valuation is not less than 90 percent of
the middle valuation and the highest valuation is not greater
than 110 percent of the middle valuation, the fair market value
shall equal the average of the values determined by the three
appraisers;
(b) if the lowest valuation is less than 90 percent of the
middle valuation and the highest valuation is more than 110
percent of the middle valuation, the low and the high valuations
shall be disregarded and the middle valuation shall be the fair
market value; or
(c) if either the lowest valuation is less than 90% of the
middle valuation or the highest valuation is more than 110% of
the middle valuation (but not both), then the fair market value
shall equal the average of the two valuations which are closest
in amount.
The cost of all appraisals prepared in accordance with this
SECTION 9.12. shall be borne by the LLC.
ARTICLE X
DISSOLUTION AND LIQUIDATION
10.1. Events Causing Dissolution
Unless the Members elect to continue the existence and
operation of the LLC pursuant to SECTION 10.2., the LLC shall be
dissolved and its affairs wound up upon the occurrence of any of
the following events:
(a) the consent in writing to dissolve and wind up the
affairs of the LLC by all of the Members;
(b) an election by any Member in the event of a deadlock on
any Material Decision under SECTION 7.2.6. or pursuant to SECTION
5.2.2.(C);
(c) the Bankruptcy (as hereinafter defined) of a Member;
(d) upon a Change of Control of a Member and the election
by each remaining Member owning an LLC Interest representing a
Percentage Interest of more than twenty percent (20%);
(e) the Termination Date;
(f) the sale or other disposition (voluntarily or
involuntarily) by the LLC of all or substantially all of the LLC
Assets and the collection of all amounts derived from any such
sale or other disposition, including all amounts payable to the
LLC under any promissory notes or other evidences of
indebtedness taken by the LLC (unless the Management Committee
shall elect to distribute such indebtedness to the Members in
liquidation), and the satisfaction of contingent liabilities of
the LLC in connection with such sale or other disposition;
(g) the occurrence of any event that, under the Delaware
LLC Act, would cause the dissolution of the LLC or that would
make it unlawful for the business of the LLC to be continued; and
(h) at the election of W/O pursuant to clause (ii)(z) of
SECTION 9.10.1.
For the purpose of this Agreement, the term "Bankruptcy"
shall mean, and the Member shall be deemed "Bankrupt" upon, (i)
the entry of a decree or order for relief of the Member by a
court of competent jurisdiction in any involuntary case involving
the Member under any bankruptcy, insolvency, or other similar law
nor or hereafter in effect; (ii) the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator, or other
similar agent for the Member or for any substantial part of the
Member's assets or property; (iii) the ordering of the winding up
or liquidation of the Member's affairs; (iv) the filing with
respect to the Member of a petition in any such involuntary
bankruptcy case, which petition remains undismissed for a period
of ninety (90) days or which is dismissed or suspended pursuant
to Section 305 of the Federal Bankruptcy Code (or any
corresponding provision of any future United States bankruptcy
law); (v) the commencement by the Member of a voluntary case
under any bankruptcy, insolvency, or other similar law nor or
hereafter in effect; (vi) the consent by the Member to the entry
of an order for relief in an involuntary case under any such law
or the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator, or other
similar agent for the Member or for any substantial part of the
Member's assets or property; (vii) the making by the Member of
any general assignment for the benefit of creditors; or (viii)
the failure by the Member generally to pay its debts as such
debts become due.
10.2. Right to Continue Business of the LLC
Upon an event described in SECTIONS 10.1.(c), 10.1.(e), or
10.1.(g) (but not an event described in SECTION 10.1.(g) that
makes it unlawful for the business of the LLC to be continued or
for the LLC to continue to be a limited liability company under
the Delaware LLC Act), except as otherwise provided in this
Agreement, the LLC thereafter shall be dissolved and liquidated
unless, within ninety (90) days after the event described in any
of such Sections, an election to continue the business of the LLC
shall be made in writing by all of the remaining Members. If
such an election to continue the LLC is made, then the LLC shall
continue until another event causing dissolution in accordance
with this ARTICLE X shall occur (whereupon this SECTION 10.2
shall once again be applicable).
10.3. Cancellation of Certificate
Upon the dissolution and the completion of winding up of the
LLC, the Certificate shall be canceled in accordance with the
provisions of Section 18-203 of the Delaware LLC Act.
10.4. Distributions Upon Dissolution
Subject to SECTION 7.2.6., SECTION 10.2. and SECTION 9.10.,
upon the dissolution of the LLC, the Management Committee (or any
other person or entity responsible for winding up the affairs of
the LLC) shall proceed without any unnecessary delay to pay or
make due provision for the payment of all debts, liabilities and
obligations of the LLC. The Management Committee (or any other
person or entity responsible for winding up the affairs of the
LLC) shall distribute any assets of the LLC remaining after the
payment of all debts, liabilities and obligations of the LLC
(including, without limitation, all amounts owing to a Member
under this Agreement or under any agreement between the LLC and a
Member entered into by the Member other than in its capacity as a
Member in the LLC), the payment of expenses of liquidation of the
LLC, and the establishment of a reasonable reserve in an amount
estimated by the Management Committee to be sufficient to pay any
amounts reasonably anticipated to be required to be paid by the
LLC, which shall be distributed to the Members first, pro rata,
in proportion to the positive balances, if any, in their
respective Capital Accounts until such Capital Accounts are
reduced to zero sums, and second, the remaining LLC Assets, if
any, shall be distributed to the Members, pro rata, in accordance
with their respective Percentage Interests; PROVIDED, HOWEVER,
that the Management Committee (or any other person or entity
responsible for winding up the affairs of the LLC) shall make all
reasonable efforts (consistent with the requirement that
distributions be made pro rata, as aforesaid, in aggregate
amount) when distributing any assets of the LLC to the Members,
to distribute such assets in accordance with SECTION 7.2.6.; and
PROVIDED FURTHER, that CTWC, at its election, may purchase from
Gabbard the entire interest of Gabbard in the assets to be
distributed to Gabbard hereunder, for a cash purchase price equal
to the net fair market value of such assets, as determined by the
Management Committee for purposes of making the distributions
hereunder.
10.5. Reasonable Time for Winding Up
A reasonable time shall be allowed for the orderly winding
up of the business and affairs of the LLC and the liquidation of
its assets pursuant to SECTION 10.4. in order to minimize any
losses otherwise attendant upon such a winding up.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Additional Actions and Documents
Each Member hereby agrees to take or cause to be taken such
further actions, to execute, acknowledge, deliver and file or
cause to be executed, acknowledged, delivered and filed such
further documents and instruments, and to use best efforts to
obtain such consents, as may be necessary or as may be reasonably
requested in order fully to effectuate the purposes, terms and
conditions of this Agreement, whether before, at or after the
closing of the transactions contemplated by this Agreement.
11.2. Notices
All notices, demands, requests or other communications which
may be or are required to be given, served, or sent by a Member
pursuant to this Agreement shall be in writing and shall be hand
delivered (including delivery by courier), mailed by first-class,
registered or certified mail, return receipt requested, postage
prepaid, or transmitted by telegram, telex or facsimile
transmission, addressed as set forth on SCHEDULE A attached
hereto. Each Member may designate by notice in writing a new
address to which any notice, demand, request or communication may
thereafter be so given, served or sent. Each notice, demand,
request or communication which shall be delivered, mailed or
transmitted in the manner described above shall be deemed
sufficiently given, served, sent or received for all purposes at
such time as it is delivered to the addressee (with an affidavit
of personal delivery, the return receipt, the delivery receipt,
or (with respect to a telex) the answer back being deemed
conclusive evidence of such delivery) or at such time as delivery
is refused by the addressee upon presentation.
11.3. Expenses
Except as otherwise expressly provided in this Agreement or
the Services Agreement, each Member shall each pay its own
expenses (including its own legal fees and expenses) in
connection with the preparation, negotiation and execution of
this Agreement and in their roles as Members of the LLC.
11.4. Severability
The invalidity of any one or more provisions hereof or of
any other agreement or instrument given pursuant to or in
connection with this Agreement shall not affect the remaining
portions of this Agreement or any such other agreement or
instrument or any part thereof, all of which are inserted
conditionally on their being held valid in law; and in the event
that one or more of the provisions contained herein or therein
should be invalid, or should operate to render this Agreement or
any such other agreement or instrument invalid, this Agreement
and such other agreements and instruments shall be construed as
if such invalid provisions had not been inserted.
11.5. Survival
It is the express intention and agreement of the Members
that all covenants, agreements, statements, representations,
warranties and indemnities made in this Agreement shall survive
the execution and delivery of this Agreement.
11.6. Waivers
Neither the waiver by a Member of a breach of or a default
under any of the provisions of this Agreement, nor the failure of
a Member, on one or more occasions, to enforce any of the
provisions of this Agreement or to exercise any right, remedy or
privilege hereunder, shall thereafter be construed as a waiver of
any subsequent breach or default of a similar nature, or as a
waiver of any such provisions, rights, remedies or privileges
hereunder.
11.7. Exercise of Rights
No failure or delay on the part of a Member or the LLC in
exercising any right, power or privilege hereunder and no course
of dealing between the Members or between a Member and the LLC
shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The rights and remedies
herein expressly provided are cumulative and not exclusive of any
other rights or remedies which a Member or the LLC would
otherwise have at law or in equity or otherwise.
11.8. Binding Effect
Subject to any provisions hereof restricting assignment,
this Agreement shall be binding upon and shall inure to the
benefit of the Members and their respective successors and
assigns.
11.9. Limitation on Benefits of this Agreement
Subject to SECTION 7.14. and SECTION 8.6.5., it is the
explicit intention of the Members that no person or entity other
than the Members and the LLC is or shall be entitled to bring any
action to enforce any provision of this Agreement against any
Member or the LLC, and that the covenants, undertakings and
agreements set forth in this Agreement shall be solely for the
benefit of, and shall be enforceable only by, the Members (or
their respective successors and assigns as permitted hereunder)
and the LLC.
11.10. Entire Agreement
This Agreement (including the Addenda and Schedules hereto)
and the Services Agreement contain the entire agreement between
the Members with respect to the transactions contemplated herein,
and supersede all prior oral or written agreements, commitments
or understandings with respect to the matters provided for herein
and therein.
11.11. Pronouns
All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine, neuter, singular or plural, as
the identity of the person or entity may require.
11.12. Headings
Article, Section and subsection headings contained in this
Agreement are inserted for convenience of reference only, shall
not be deemed to be a part of this Agreement for any purpose, and
shall not in any way define or affect the meaning, construction
or scope of any of the provisions hereof.
11.13. Governing Law
This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, shall be
governed by and construed in accordance with the laws of the
State of Delaware (but not including the choice of law rules
thereof).
11.14. Execution in Counterparts
To facilitate execution, this Agreement may be executed in
as many counterparts as may be required; and it shall not be
necessary that the signatures of, or on behalf of, each party, or
that the signatures of all persons required to bind any party,
appear on each counterpart; but it shall be sufficient that the
signature of, or on behalf of, each party, or that the signatures
of the persons required to bind any party, appear on one or more
of the counterparts. All counterparts shall collectively
constitute a single agreement. It shall not be necessary in
making proof of this Agreement to produce or account for more
than a number of counterparts containing the respective
signatures of, or on behalf of, all of the parties hereto.
IN WITNESS WHEREOF, the undersigned have duly executed this
Limited Liability Company Agreement, or have caused this Limited
Liability Company Agreement to be duly executed on their behalf,
as of the day and year first hereinabove set forth.
CT WIRELESS CABLE, INC.
By:/s/ MICHAEL R. COLTRANE
Title: President
WIRELESS ONE, INC.
By:/s/ H. G. STERNBERG
Title: Chairman
/s/ O. GENE GABBARD
O. GENE GABBARD
SCHEDULE A
INITIAL CAPITAL PERCENTAGE
MEMBER'S NAME AND ADDRESS CONTRIBUTION INTEREST
CT WIRELESS CABLE, INC. $240,000 48%
69 CABARRUS AVENUE EAST
CONCORD, NORTH CAROLINA 28025
WIRELESS ONE, INC. $250,000 50%
5551 CORPORATE BOULEVARD
SUITE 2K
BATON ROUGE, LOUISIANA 70808
O. GENE GABBARD $10,000 2%
102 MARSEILLE PLACE
CARY, NORTH CAROLINA 27511
LIMITED LIABILITY COMPANY AGREEMENT
OF
WIRELESS ONE OF NORTH CAROLINA, L.L.C.
TABLE OF CONTENTS
PAGE
ARTICLE I CERTAIN DEFINITIONS.............................1
ARTICLE II FORMATION; NAME; PLACE OF BUSINESS..............1
2.1. Formation of LLC; Certificate of Formation......1
2.2. Name of LLC.....................................2
2.3. Place of Business...............................2
2.4. Registered Office and Registered Agent..........3
ARTICLE III PURPOSES AND POWERS OF LLC......................3
3.1. Purposes........................................3
3.2. Powers..........................................3
ARTICLE IV TERM OF LLC.....................................4
ARTICLE V CAPITAL.........................................4
5.1. Capital Contributions; Initial LLC Interests....4
5.1.1. Initial Capital Contributions.........4
5.1.2. Additional Capital Contributions......5
5.2. Failure to Make Required Capital Contributions..5
5.2.1. Loan by Non-Defaulting Members to
Defaulting Member.....................5
5.2.2. Other Remedies........................8
5.3. Capital Accounts................................8
5.4. Negative Capital Accounts.......................8
5.5. No Interest on Capital Contributions or Capital
Accounts........................................8
5.6. Advances to LLC.................................9
5.7. Liability of Members and the Management
Committee.......................................9
5.8. Return of Capital...............................9
5.9. Issuance of Additional LLC Interests............9
5.10. Rights to Subscribe to Additional Issuances....10
ARTICLE VI ALLOCATION OF PROFITS AND LOSSES;
DISTRIBUTIONS..................................10
6.1. Allocation of Net Income or Net Loss...........10
6.2. Allocation of Income and Loss With Respect to
LLC Interests Transferred.....................10
6.3. Distributions..................................11
ARTICLE VII MEMBERS AND MANAGEMENT.........................11
7.1. Members........................................11
7.1.1. Meetings.............................11
7.1.2. Quorum...............................11
7.1.3. Action by Written Consent............12
7.1.4. Required Vote; Voting Rights.........12
7.1.5. Waivers of Notice....................12
7.2. Management of the LLC by the Management
Committee......................................12
7.2.1. Composition..........................14
7.2.2. Meetings.............................14
7.2.3. Quorum...............................15
7.2.4. Required Vote; Voting Rights.........15
7.2.5. Action by Written Consent............16
7.2.6. Deadlock on a Material Decision;
Distribution on Dissolution..........16
7.2.7. Committees...........................18
7.2.8. Services Agreement...................18
7.3. Failure to Buildout System.....................18
7.4. Failure to Acquire Channels....................19
7.5. Restrictions on Sale of LLC and Assets of LLC..19
7.6. Opportunities for Local Telephone Companies to
Resell Services................................19
7.7. Officers.......................................20
7.7.1. Chairman of the Management Committee.20
7.7.2. President............................20
7.7.3. Vice Presidents......................21
7.7.4. Secretary............................21
7.7.5. Treasurer............................21
7.7.6. Other Officers.......................21
7.7.7. Removal of Officers; Vacancies.......22
7.7.8. Third Party Reliance.................22
7.8. Fiduciary Relationship.........................22
7.9. Compensation of Management Committee; Officers.22
7.10. Reimbursement..................................22
7.11. Other Activities of Members and Affiliates.....23
7.12. Right to Enter into Sub-Ventures...............23
7.13. Certain Transactions...........................23
7.14. Indemnification of the Members, Management
Committee Members, Officers and any Affiliate.24
7.14.1. Indemnity............................24
7.14.2. Expenses.............................24
7.14.3. Other Rights.........................24
7.14.4. Insurance............................25
7.14.5. Interest in Transaction..............25
7.14.6. Benefit..............................25
7.15. Amendment of this Agreement....................25
7.16. Effect of Change of Control of W/O.............25
ARTICLE VIII BANK ACCOUNTS; BOOKS AND RECORDS; STATEMENTS;
TAXES; FISCAL YEAR; ANNUAL BUDGET..............26
8.1. Bank Accounts..................................26
8.2. Books and Records..............................26
8.3. Financial Statements and Information...........26
8.3.1. Quarterly Financial Statements.......26
8.3.2. Annual Financial Statements..........27
8.3.3. Other Reports........................27
8.4. Accounting Decisions...........................27
8.5. Where Maintained...............................27
8.6. Tax Returns; Tax Matters Partner...............27
8.6.1. Tax Returns..........................27
8.6.2. Tax Matters Partner..................28
8.6.3. Obligation to IRS....................28
8.6.4. Obligations to Members...............28
8.6.5. Authority of Tax Matters Partner.....29
8.7. Fiscal Year....................................29
8.8. Annual Budget..................................29
8.8.1. Distribution of Annual Budgets.......29
8.8.2. Budget Subject to Approval...........31
ARTICLE IX TRANSFER OF LLC INTERESTS AND THE WITHDRAWAL OF
MEMBERS........................................31
9.1. Definition.....................................31
9.2. No Unauthorized Transfers; Prohibition During
Initial Three Years...........................31
9.3. Right of First Offer...........................32
9.4. Election Procedure.............................32
9.5. Closing........................................32
9.6. Sale Period....................................33
9.7. Substituted Members and General Transfer
Restrictions...................................33
9.7.1. Substituted Members..................33
9.7.2. General Transfer Restrictions........34
9.8. Dealings with LLC..............................34
9.9. Transferee of Economic Interest................34
9.10. Purchase Option on the Happening of Certain
Events ........................................34
9.10.1. Option to Purchase...................35
9.10.2. Purchase Price.......................36
9.11. No Right to Withdraw...........................37
9.12. Sale Right of New Member.......................37
ARTICLE X DISSOLUTION AND LIQUIDATION....................38
10.1. Events Causing Dissolution.....................38
10.2. Right to Continue Business of the LLC..........40
10.3. Cancellation of Certificate....................40
10.4. Distributions Upon Dissolution.................40
10.5. Reasonable Time for Winding Up.................41
ARTICLE XI MISCELLANEOUS PROVISIONS.......................41
11.1. Additional Actions and Documents...............41
11.2. Notices........................................41
11.3. Expenses.......................................42
11.4. Severability...................................42
11.5. Survival.......................................42
11.6. Waivers........................................42
11.7. Exercise of Rights.............................42
11.8. Binding Effect.................................43
11.9. Limitation on Benefits of this Agreement.......43
11.10. Entire Agreement...............................43
11.11. Pronouns.......................................43
11.12. Headings.......................................43
11.13. Governing Law..................................43
11.14. Execution in Counterparts......................44
SCHEDULE A MEMBERS' NAMES AND ADDRESSES; LLC INTERESTS; AND
CAPITAL CONTRIBUTIONS
ADDENDUM I DEFINITIONS
ADDENDUM II TAX ALLOCATIONS ADDENDUM
EXHIBIT A SERVICES AGREEMENT WITH WIRELESS ONE, INC.
THE LIMITED LIABILITY COMPANY INTERESTS EVIDENCED BY THIS
AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR UNDER APPLICABLE STATE
SECURITIES LAWS (THE "STATE ACTS"), AND MAY BE OFFERED OR SOLD
ONLY (1) UPON REGISTRATION OF THE LIMITED LIABILITY COMPANY
INTERESTS UNDER THE ACT AND THE STATE ACTS OR PURSUANT TO AN
EXEMPTION THEREFROM, AND (2) AFTER COMPLIANCE WITH ALL
RESTRICTIONS ON TRANSFER OF LIMITED LIABILITY COMPANY INTERESTS
IMPOSED BY THIS AGREEMENT, INCLUDING (WITHOUT LIMITATION) THE
PROVISIONS OF ARTICLE IX.
* * * * *
LIMITED LIABILITY COMPANY AGREEMENT
OF
WIRELESS ONE OF NORTH CAROLINA, L.L.C.
ADDENDUM I
DEFINITIONS
AFFILIATE: When used with reference to a specified Person,
means (i) any Person that directly or indirectly through one or
more intermediaries controls or is controlled by or is under
common control with the specified Person, (ii) any Person that is
an officer or director of, general partner in or trustee of, or
serves in a similar capacity with respect to, the specified
Person or of which the specified Person is an officer, director,
general partner or trustee, or with respect to which the
specified Person serves in a similar capacity, (iii) any Person
for which an officer or director of, general partner in or
trustee of, or individual serving in a similar capacity with
respect to, the specified Person serves in any such capacity, and
(iv) any relative or spouse of the specified Person who makes his
or her home with that of the specified Person. As used in this
definition of "Affiliate", the term "control" means the
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.
AGREEMENT: This Limited Liability Company Agreement, as it
may be further amended or supplemented from time to time.
APPROVING MEMBER: As defined in SECTION 7.3.
BANKRUPTCY: As defined in SECTION 10.1.
BUDGET: A budget for the operations of the LLC, including
anticipated revenues, expenses, capital expenditures, and
required Capital Contributions, which is approved by the
Management Committee in accordance with SECTION 8.8.
BUSINESS DAY: Monday through Friday of each week, except
that a legal holiday recognized as such by the Government of the
United States shall not be regarded as a Business Day.
CAPITAL ACCOUNT: The capital account established and
maintained for each Member pursuant to the Tax Allocations
Addendum in ADDENDUM II attached hereto.
CAPITAL CONTRIBUTION: Any property (including cash)
contributed to the LLC by or on behalf of a Member.
CERTIFICATE: The Certificate of Formation of the LLC, dated
as of October 5, 1995, and any and all amendments thereto, filed
on behalf of the LLC with the Recording Office as required under
the Delaware LLC Act.
CHANGE OF CONTROL: As to any Member that is not an
individual, any capital reorganization, reclassification or
recapitalization of a Member or a Member s Parent s capital stock
or other voting equity interests or any transfer of its capital
stock or other voting equity interests in one or a series of
related transfers, or any merger or consolidation with or into
any other entity as a result of which reorganization,
reclassification, recapitalization, transfer, consolidation or
merger a person or group of related persons not controlling,
controlled by or under common control with such Member or such
Member s Parent as of the date of this Agreement acquires common
stock or other equity interests representing more than fifty
percent (50%) of the total voting power of all common stock or
other common equity interests of such Member or such Member s
Parent or any successor thereto.
CHANNELS: As defined in SECTION 3.1.
CODE: The Internal Revenue Code of 1986, as in effect and
hereafter amended, and, unless the context otherwise requires,
applicable regulations thereunder. Any reference herein to a
specific section or sections of the Code shall be deemed to
include a reference to any corresponding provision of future law.
CURE PERIOD: As defined in SECTION 5.2.
DEFAULT AMOUNT: As defined in SECTION 5.2.1.
DEFAULT DATE: As defined in SECTION 5.2.1.
DEFAULT RATE: An interest rate of 12% per annum, which
shall be compounded monthly.
DEFAULT LOAN: As defined in SECTION 5.2.1.
DEFAULTING MEMBER: As defined in SECTION 5.2.
DELAWARE LLC ACT: The Delaware Limited Liability Company
Act, as amended.
EVENT OF DEFAULT: As defined in SECTION 5.2.
FISCAL YEAR: As defined in SECTION 8.7.
INDEMNITEE: As defined in SECTION 7.14.1.
INITIAL BUSINESS PLAN: The initial plan for the conduct of
the business of the LLC to be approved by the Management
Committee no later than December 31, 1995, which sets forth,
among other matters, a schedule of the Members anticipated
Capital Contributions and bidding limits for the Channels.
ITFS: Instructional Television Fixed Service.
LLC: As defined in the preamble.
LLC ASSETS: All assets and property, whether tangible or
intangible and whether real, personal, or mixed, at any time
owned by or held for the benefit of the LLC.
LLC INTEREST: As to any Member, all of the interest of that
Member in the LLC, including, without limitation, such Member's
(i) right to a distributive share of the income, gain, losses and
deductions of the LLC in accordance with this Agreement, and (ii)
right to a distributive share of LLC Assets.
MAJORITY OF THE MEMBERS: The affirmative vote of Members
that collectively hold Percentage Interests of at least eighty
percent (80%).
MAJORITY VOTE: The affirmative vote of Management Committee
members representing a majority of the total voting interests of
all Management Committee members entitled to vote with respect to
a particular action or decision, whether or not present in person
or by proxy at the time any such vote is taken.
MANAGEMENT COMMITTEE: The group of Persons appointed by the
Members pursuant to SECTION 7.2. who are vested with the
responsibility and authority for management of the business and
affairs of the LLC.
MATERIAL DECISION: As defined in SECTION 7.2.6.
MEMBER: The signatories to this Agreement or any other
Person who in the future shall execute and deliver this
Agreement, or other documents as the Management Committee deems
necessary or appropriate to evidence such Person's agreement to
be admitted as a Member and be bound by the terms and conditions
of the Certificate and this Agreement, and who shall be admitted
to the LLC as a new or substitute Member pursuant to the
provisions hereof.
NET INCOME OR NET LOSS: As defined in the Tax Allocations
Addendum.
NON-DEFAULTING MEMBER: As defined in SECTION 5.2.
OFFER NOTICE: As defined in SECTION 9.3.
OFFEREE: As defined in SECTION 9.3.
OFFEREE S ELECTION PERIOD: As defined in SECTION 9.4.
OFFEROR: As defined in SECTION 9.3.
OPPOSING MEMBER: As defined in SECTION 7.3.
PARENT: An entity that owns, directly or through one or
more other entities, 50% or more of the voting power with respect
to a Member.
PERCENTAGE INTEREST: A Member s ownership interest in the
LLC by virtue of its LLC Interest expressed as a percentage of
the ownership interests of all Members.
PERSON: Any individual, corporation, association,
partnership, limited liability company, joint venture, trust,
estate, or other entity or organization.
RECORDING OFFICE: The office of the Secretary of State of
the State of Delaware.
SERVICES AGREEMENT: As defined in SECTION 7.2.8.
SUBJECT MARKET: As defined in SECTION 7.3.
SUPERMAJORITY VOTE. The affirmative vote of Management
Committee members representing eighty percent (80%) of the total
voting interests of all Management Committee members entitled to
vote with respect to a particular action or decision, whether or
not present in person or by proxy at the time any such vote is
taken.
SYSTEMS: As defined in SECTION 3.1.
TAX ALLOCATIONS ADDENDUM: The Addendum attached to the
Agreement as ADDENDUM II and incorporated herein by reference.
TERMINATION DATE: June 30, 2094.
ADDENDUM II
TAX ALLOCATIONS ADDENDUM
1. Purpose.
This Tax Allocations Addendum (the "ADDENDUM") is
attached to, and constitutes a part of, the Limited Liability
Company Agreement of Wireless One of North Carolina, L.L.C. (the
"LLC"), as it may be amended from time to time (the "AGREEMENT"),
for the purpose of setting forth the rules governing the
maintenance of the Capital Accounts required to be maintained for
each Member under the Agreement and the rules governing the
allocation of the LLC's items of Net Income and Net Loss, other
items of income, gain, loss, deduction and credit, and taxable
income, gain, loss, deduction, and credit. This Addendum is to
be construed and applied to the extent practicable in a manner
consistent with the Members' agreement with respect to LLC
distributions as set forth in Article VI of the Agreement.
2. Certain Definitions.
Unless otherwise provided in this Addendum, all
capitalized terms used in this Addendum shall have the meanings
assigned to them in other provisions of the Agreement. In
addition, the following terms shall have the meanings indicated:
ADDENDUM: This Tax Allocations Addendum, as it may be
amended from time to time.
ADJUSTED BASIS: The basis for determining gain or loss
for federal income tax purposes from the sale or other
disposition of property, as defined in section 1011 of the Code.
ADJUSTED CAPITAL ACCOUNT BALANCE: The balance in a
Member's Capital Account after crediting to that account the
Member's current share of minimum gain as determined in
Regulations sections 1.704-2(g)(1) and 1.704-2(i)(5). This
definition of "Adjusted Capital Account Balance" and the
provisions in section 4 of this Addendum that contain the term
"Adjusted Capital Account Balance" are intended to take into
account, in determining a Member's Capital Account balance prior
to liquidation, such Member's share, if any, of future expected
recapture of deductions attributable to nonrecourse debt.
CARRYING VALUE: With respect to any asset, the asset's
Adjusted Basis, except as follows:
(a) the initial Carrying Value of any asset
contributed (or deemed contributed) to the LLC shall be such
asset's fair market value at the time of such contribution;
(b) upon adjustment of the Members' Capital Accounts
pursuant to section 3(d) of this Addendum, the Carrying Values of
all LLC assets shall be adjusted to equal their respective fair
market values at the time of such adjustment;
(c) any adjustments to the Adjusted Basis of any asset
of the LLC pursuant to section 734 or 743 of the Code shall not
be taken into account in determining such asset's Carrying Value;
and
(d) if the Carrying Value of any asset has been
determined pursuant to paragraph (a), (b) or (c) above, such
Carrying Value shall thereafter be adjusted in the same manner as
would the asset's Adjusted Basis, except that depreciation,
amortization or other cost recovery deductions shall be computed
based on the asset's Carrying Value as so determined, and not on
the asset's Adjusted Basis.
EXCESS DEFICIT BALANCE: The deficit balance, if any,
in a Member's Capital Account as of the end of a Fiscal Year
determined, solely for purposes of this definition of "Excess
Deficit Balance", by CREDITING the Member's Capital Account with
the amount of any deficit balance in such Capital Account that
the Member is obligated to restore or is treated as obligated to
restore pursuant to Regulations sections 1.704-1(b)(2)(ii)(B)(3)
and 1.704-1(b)(2)(ii)(C) or is deemed to be obligated to restore
pursuant to the penultimate sentences of Regulations sections
1.704-2(g)(1) and 1.704-2(i)(5) (determined after taking into
account any Nonrecourse Deductions or recapture of Nonrecourse
Deductions, as provided in section 4.3(a) of this Addendum, for
such year), and by DEBITING the Member's Capital Account with any
adjustment, allocation, or distribution described in paragraph
(4), (5), or (6) of Regulations section 1.704-1(b)(2)(ii)(D).
This definition of "Excess Deficit Balance" and the provisions in
section 4 of this Addendum that contain the term "Excess Deficit
Balance" are intended to deal with the theoretical but unlikely
circumstances in which Capital Accounts could, but for the
inclusion of such provisions in this Addendum, be driven negative
without economic significance.
FISCAL YEAR: The fiscal year of the LLC under the
Agreement.
NET INCOME and NET LOSS: For a period as determined
for federal income tax purposes, the taxable income or loss,
respectively, computed with the following adjustments:
(a) items of gain, loss and deduction relating to LLC
assets shall be computed based on the Carrying Values of the
LLC's assets rather than upon the assets' Adjusted Bases, and in
the case of depreciation, amortization or other cost recovery
deductions, computed using the same method and useful life used
by the LLC in computing such deductions for federal income tax
purposes;
(b) tax-exempt income of the LLC shall be treated, for
purposes of this definition only, as gross income;
(c) expenditures of the LLC described in section
705(a)(2)(B) of the Code or treated as such expenditures pursuant
to Regulations section 1.704-1(b)(2)(iv)(I) shall be treated, for
purposes of this definition only, as deductible expenses; and
(d) notwithstanding any other provision of this
definition, any items which are specially allocated pursuant to
section 4.3 of this Addendum shall not be taken into account in
computing Net Income or Net Loss.
NONRECOURSE DEDUCTION: A deduction of the LLC
described in Regulations sections 1.704-2(c) and (j)(1)(ii).
REGULATIONS: The regulations issued by the United
States Department of the Treasury under the Code as now in effect
and as they may be amended from time to time, and any successor
regulations.
3. Maintenance of Capital Accounts.
(a) The Management Committee shall maintain Capital
Accounts for each Member in accordance with the rules set forth
in Regulations sections 1.704-1(b)(2)(iv) and 1.704-2.
Consistent with such Regulations, the Capital Account of each
Member shall be credited with:
(i) the amount of cash and the fair market value
of any property (net of liabilities secured by such property,
which liabilities are assumed or taken subject to by the LLC)
contributed to the LLC by such Member; and
(ii) all Net Income and other specially allocated
items of income and gain of the LLC allocated to such Member
pursuant to section 4 of this Addendum; and shall be debited with
the sum of:
(iii) all Net Losses and other specially
allocated items of loss or deduction of the LLC allocated to such
Member pursuant to section 4 of this Addendum; and
(iv) all cash and the fair market value of any
property (net of liabilities secured by such property, which
liabilities are assumed or taken subject to by such Member)
distributed by the LLC to such Member pursuant to SECTION 6.3. or
SECTION 10.4. of the Agreement.
Any references in this Addendum or in the Agreement to the
Capital Account of a Member shall be deemed to refer to such
Capital Account as the same may be credited or debited from time
to time as set forth above.
(b) Immediately prior to decreasing a Member's Capital
Account to reflect any distribution of an LLC Asset to it (other
than cash) (including a deemed liquidating distribution under
section 708 of the Code), all Members' Capital Accounts shall be
adjusted to reflect the manner in which the unrealized income,
gain, loss and deduction inherent in such LLC Asset (that has not
been reflected in the Capital Accounts previously) would be
allocated among the Members if there were a taxable disposition
of such LLC Asset for its fair market value (but not for less
than the amount of any nonrecourse indebtedness secured by such
LLC Asset).
(c) A Member shall be considered to have only one
Capital Account.
(d) The Management Committee may increase or decrease
the Capital Account balances of the Members to reflect a
revaluation of LLC Assets on the LLC's books to the extent
required or permitted by the Regulations; provided, however, that
if any adjustment to the Capital Account balances made pursuant
to this section 3(d) of this Addendum must be based on the fair
market value of the LLC Assets as determined by the Management
Committee (provided that no LLC asset shall be valued at an
amount less than any nonrecourse indebtedness to which such LLC
asset is subject on the date of adjustment) and must reflect the
manner in which the unrealized income, gain, loss, or deduction
inherent in such LLC Assets (that has not been reflected in a
Capital Account previously) would be allocated among the Members
if there were a taxable disposition of such LLC Assets for such
fair market value on that date.
(e) Any permitted transferee of an interest in the LLC
shall succeed to the Capital Account relating to the interest
transferred.
(f) Except as otherwise provided in this Addendum or
the Agreement, whenever it is necessary to determine the Capital
Account of any Member, the Capital Account of such Member shall
be determined after giving effect to all allocations pursuant to
Section 4 of this Addendum and all actual or deemed contributions
and distributions made prior to the time as of which such
determination is to be made.
4. Allocations.
4.1 NET INCOME. Subject to Section 4.3 of this Addendum,
the Net Income of the LLC, if any, for each Fiscal Year (or
portion thereof) shall be allocated as follows and in the
following order of priority:
(i) FIRST: to the extent of, and in proportion
to, the amounts (if any) necessary to cause the Members' Adjusted
Capital Account Balances to be the same ratio to one another as
the Members' LLC Interests are to each other; and
(ii) SECOND: the balance of such Net Income (if
any) shall be allocated to the Members in proportion to their
respective LLC Interests.
4.2 NET LOSS. Subject to Section 4.3 of this Addendum, the
Net Loss of the LLC, if any, for each Fiscal Year (or portion
thereof) shall be allocated to the Members as follows and in the
following order of priority:
(i) FIRST: to the extent of, and in proportion
to, the Members' positive Adjusted Capital Account Balances; and
(ii) SECOND: the balance of such Net Loss (if
any) shall be allocated to the Members in proportion to their
respective LLC Interests.
4.3 SPECIAL ALLOCATION RULES. The following allocation
rules shall apply notwithstanding the provisions of Sections 4.1
and 4.2 of this Addendum, and the provisions of Sections 4.1 and
4.2 of this Addendum shall be applied only after giving effect to
the following rules.
(a) Nonrecourse Deductions for a Fiscal Year shall be
allocated to the Members in the same manner as Net Loss is
allocated pursuant to section 4.2 of this Addendum. In
accordance with Regulations sections 1.704-2(f), (g) and (j),
upon the recapture (or other reversal) of Nonrecourse Deductions,
items of income or gain of the LLC shall be allocated to the
Members in proportion to the amount of such Nonrecourse
Deductions previously allocated to them pursuant to the preceding
sentence (and not previously recaptured pursuant to this
sentence). With respect to a liability (or portion thereof) of
the LLC that is considered nonrecourse for purposes of
Regulations section 1.1001-2 but with respect to which a Member
bears (or is deemed to bear) the economic risk of loss under
Regulations section 1.752-2, deductions associated with such
liability (and the recapture or other reversal of such
deductions) shall be allocated in accordance with Regulations
section 1.704-2(i) and (j).
(b) For purposes of determining a Member's
proportionate share of the "excess nonrecourse liabilities" of
the LLC within the meaning of Regulations section 1.752-3(a)(3),
the respective interests of the Members in LLC profits shall be
equal to their respective LLC Interests.
(c) In the event a Member receives with respect to a
Fiscal Year an adjustment, allocation, or distribution described
in subparagraphs (4), (5), or (6) of Regulations section
1.704-1(b)(2)(ii)(D) that causes or increases an Excess Deficit
Balance in such Member's Capital Account, such Member shall be
specially allocated for such Fiscal Year (and, if necessary, in
subsequent Fiscal Years) items of income and gain in an amount
and manner sufficient to eliminate such Excess Deficit Balance as
promptly as possible. Items to be so allocated shall be
determined and the allocations made as provided in Regulations
section 1.704-1(b)(2)(ii)(D).
(d) No Net Loss or LLC deductions for any Fiscal Year
shall be allocated to any Member to the extent such allocation
would cause or increase an Excess Deficit Balance in such
Member's Capital Account.
(e) In the event that any fees, interest, or other
amounts paid to a Member or affiliate of a Member pursuant to the
Agreement, or any agreement between the LLC and the Member or
affiliate providing for the payment of such amounts, and deducted
by the LLC, whether in reliance on sections 162, 163, 707(a),
and/or 707(c) of the Code or otherwise, on its federal income tax
return for the Fiscal Year in or with respect to which such
amounts are claimed, are disallowed as deductions to the LLC and
are treated as LLC distributions, then:
(i) the Net Income or Net Loss, as the case may
be, for the Fiscal Year in or with respect to which such
deduction was claimed shall be increased or decreased, as the
case may be, by the amount of such deduction that is so
disallowed and treated as an LLC distribution; and
(ii) there shall be allocated to the Member who
received (or whose affiliate received) such payments, prior to
the allocations pursuant to Sections 4.1 and 4.2 of this
Addendum, an amount of gross income of the LLC for the Fiscal
Year in or with respect to which such claimed deduction was
disallowed equal to the amount of such deduction that is so
disallowed and treated as an LLC distribution.
(f) If there is a net decrease in "partnership minimum
gain" (within the meaning of Regulations section 1.704-2(d)) for
a Fiscal Year, there shall be allocated to each Member items of
income and gain for such Fiscal Year equal to that Member s share
of the net decrease in partnership minimum gain (within the
meaning of Regulations section 1.704-2(g)(2)), subject to the
exceptions set forth in Regulations section 1.704-2(f)(2), (3)
and (5). If the application of this minimum gain chargeback
requirement would cause a distortion in the economic arrangement
among the Members, the LLC shall request a waiver of the
requirement pursuant to Regulations section 1.704-2(f)(4). This
provision is intended to be a "minimum gain chargeback" provision
as described in Regulations section 1.704-2(f) and shall be
interpreted and applied in accordance with such section.
(g) If there is a net decrease in "partner nonrecourse
debt minimum gain" (within the meaning of Regulations section
1.704-2(i)(3)) for a Fiscal Year, then in addition to the amounts
allocated in accordance with Section 4.3 (g) of this Addendum, if
any, there shall be allocated to each Member with a share of such
"partner nonrecourse debt minimum gain"(determined in accordance
with Regulations section 1.704-2(i)(5)) as of the beginning of
the Fiscal Year items of income and gain for such Fiscal Year
(and, if necessary, for subsequent Fiscal Years) equal to that
Member s share of the net decrease in partner nonrecourse debt
minimum gain, subject to the exceptions set forth in Regulations
section 1.704-2(i)(4). If the application of this minimum gain
chargeback requirement would cause a distortion in the economic
arrangement among the Members, the LLC shall request a waiver of
the requirement pursuant to Regulations sections 1.704-2(f)(4)
and 1.704-2(i)(4). This provision is intended to be a
"chargeback of partner nonrecourse debt minimum gain" provision
as described in Regulations section 1.704-2(i)(4) and shall be
interpreted and applied in accordance with such section.
4.4 TAX ALLOCATIONS
(a) For federal income and applicable state tax
purposes, all items of taxable income, gain, loss and deduction
of the LLC shall be allocated to the Members in the same manner
as are Net Income, Net Loss and items of income, gain, loss and
deduction pursuant to Sections 4.1, 4.2 and 4.3 of this Addendum,
and items of credit shall be allocated to the Members, generally
in the same manner as items of Net Income, Net Loss and items of
income, gain, loss and deduction, as provided in Regulations
section 1.704-1(b)(4)(ii); PROVIDED, HOWEVER, that the character
of any income recognized pursuant to section 1245 or 1250 of the
Code and any investment credit recapture recognized pursuant to
section 47 of the Code shall be allocated among the Members in
the same proportions as the cost recovery deductions and
investment credits giving rise to such income or recapture were
allocated among such members and their respective predecessors in
interest; and PROVIDED FURTHER, that if the Carrying Value of any
LLC Asset differs from its Adjusted Basis, then items of taxable
income, gain, loss and deduction shall be allocated among the
Members in a manner that takes account of both the amount and
character of such difference and that is consistent with section
704(c) of the Code and the Regulations thereunder and Regulations
sections 1.704-1(b)(2)(iv)(F), (b)(2)(iv)(G) and (b)(4)(i).
(b) In making the tax allocations provided for in
section 4.4(a) of this Addendum, appropriate adjustments shall be
made as necessary to take into account the effects of any
election pursuant to Section 754 of the Code.
4.5 WITHHOLDING TAXES
(a) The LLC shall be entitled to withhold or cause to
be withheld from any Member's distributions from the LLC such
amounts on account of taxes or similar charges, if any, as are
required by applicable law. Each Member shall furnish to the LLC
from time to time all such information as is required by
applicable law or otherwise reasonably requested by the LLC
(including certificates in the form prescribed by the Code or
Regulations or applicable state, local or foreign law) to permit
the LLC to ascertain whether and in what amount withholding is
required in respect of such Member.
(b) If the LLC itself pays any tax (including
penalties or interest) or similar charge on behalf of any Member
(other than by withholding from a distribution) or pays any
amount (including any tax, penalty, or interest) in respect of
any failure to withhold from any Member as required by applicable
law, such Member shall on demand reimburse the LLC for the amount
of such payment plus interest thereon (accruing from the date
such payment was made by the LLC) at a floating rate per annum
(which shall change from time to time in accordance with the
Prime Rate specified below, as the Prime Rate changes) equal to
the lesser of (i) the highest lawful rate of interest or (ii) the
prime rate of interest (as established by Citibank, N.A. in New
York, New York, from time to time, regardless of whether such
rate is designated by such bank as its "prime" rate, "reference"
rate, "base" rate, or some other nomenclature) (the "PRIME RATE")
plus 2%. The LLC shall have a security interest in the LLC
Interest of any Member who owes money to it pursuant to this
Section 4.5(b) of this Addendum and, in addition to all other
rights and remedies of the LLC with respect to such security
interest or otherwise available at law or in equity, the LLC
shall have the right to offset, or cause to be offset, against
any such Member's distributions under the Agreement or this
Addendum all amounts owed by such Member to the LLC pursuant to
this Section 4.5(b) of this Addendum.
(c) Any amounts withheld or offset by the LLC in
accordance with Section 4.5(a) or 4.5(b) of this Addendum shall
nevertheless, for purposes of the Agreement and this Addendum be
deemed to have been distributed to the Member in respect of which
they are withheld.
5. SECTION 754 ELECTION
The Tax Matters Partner shall cause the LLC to file an
election under Section 754 of the Code to provide for an
adjustment to the Adjusted Basis of LLC Assets if requested to by
a Member in connection with the disposition of an LLC interest by
that Member.
6. COMPLIANCE WITH SECTION 704(B)
The provisions in this Addendum and Agreement
pertaining to allocations and adjustments of the Capital Accounts
are intended to comply with Code Section 704(b) and the
regulations thereunder. The Members or Tax Matters Partner,
whichever the case may be, shall make appropriate modifications
when needed to comply with this Code section or the Regulations
thereunder, to the extent such modifications would not result in
any material modification of the economic arrangement of the
Members as reflected in the allocation, distribution and
liquidation provisions of Section 4 of this Addendum and SECTIONS
6.3. and 10.4. of the Agreement.
7. ISSUANCES TO NEW MEMBERS
The Members acknowledge that the provisions of this Tax
Allocations Addendum may require amendment in the event of an
issuance of an LLC Interest to a new Member.