EXHIBIT 3.69
Execution Draft: June 30, 2000
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
VALOR TELECOMMUNICATIONS SOUTHWEST, LLC
Dated as of September 3, 1999
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
VALOR TELECOMMUNICATIONS SOUTHWEST, LLC
TABLE OF CONTENTS
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ARTICLE I THE COMPANY - FORMATION AND PURPOSES .................................................... 2
1.1 Formation and Continuation ........................................... 2
1.2 Name ................................................................. 2
1.3 Principal Office ..................................................... 2
1.4 Effective Date; Duration ............................................. 3
1.5 Fiscal Year .......................................................... 3
1.6 Purposes ............................................................. 3
1.7 Organizational Expenses .............................................. 3
1.8 Seal of the Company .................................................. 3
ARTICLE II MANAGEMENT AND OPERATION OF THE COMPANY ................................................ 4
2.1 Power and Authority of Members ....................................... 4
2.2 Power and Authority of Managers and Directors ........................ 4
2.3 Members .............................................................. 4
2.4 Directors; Number, Appointment, Removal, Qualifications, Etc.......... 7
2.5 Board Meetings ....................................................... 8
2.6 Managers; Number, Appointment, Removal, Qualifications, Etc........... 8
2.7 Managers; Meetings; Committees and Delegation ........................ 9
2.8 Officers ............................................................. 12
2.9 Liability of Members, Directors, and Managers ........................ 14
2.10 Certain Duties and Liabilities of Directors, Managers and Officers ... 14
2.11 Reliance by Third Parties ............................................ 15
2.12 Books and Records .................................................... 15
2.13 Indemnification ...................................................... 15
2.14 Corporate Opportunity ................................................ 18
2.15 Certain Voting Arrangements Relating to the Company .................. 19
2.16 Certain Policies ..................................................... 21
ARTICLE III CAPITAL CONTRIBUTIONS, ALLOCATIONS AND DISTRIBUTIONS .................................. 21
3.1 Form of Contribution ................................................ 21
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3.2 Non-Cash Contributions by the Members ...................................... 21
3.3 Cash Contributions by the Members; ......................................... 21
3.4 Determination of Book Value of Company Assets .............................. 23
3.5 Withdrawal of Capital; Limitation on Distributions ......................... 24
3.6 Capital Accounts; Allocations of Net Profits and Net Losses ................ 24
3.7 Special Allocations ........................................................ 26
3.8 Subordinated Debt Members; New Members ..................................... 28
3.9 Adjustments to Capital Commitments and Interests Upon the Occurrence of
Certain Events ............................................................. 28
3.10 Distributions .............................................................. 29
3.11 Withholding ............................................................... 30
3.12 Tax Matters Partner ........................................................ 30
ARTICLE IV INTERESTS AND OTHER SECURITIES ............................................................. 31
4.1 Preferred and Common Interests ............................................. 31
4.2 Preferred Interests ........................................................ 31
4.3 Class A Common Interests.................................................... 33
4.4 Class B Common Interests ................................................... 34
4.5 Priority of Payments Upon Liquidation; Certain Restrictions ................ 35
4.6 Certain Notices ............................................................ 35
4.7 Issuance of Interests Upon the Admission of Additional Members.............. 36
4.8 Fractional Interests ....................................................... 36
ARTICLE V DISSOLUTION AND WINDING-UP .................................................................. 37
5.1 Dissolution ................................................................ 37
5.2 Resignation of Members ..................................................... 37
5.3 Winding-Up ................................................................. 37
ARTICLE VI RESTRICTIONS ON TRANSFER; CERTAIN SALE AND PREEMPTIVE RIGHTS ............................... 38
6.1 General; Tag-Along Rights .................................................. 38
6.2 Right of First Refusal ..................................................... 39
6.3 Permitted Transfers ........................................................ 40
6.4 Preemptive Rights .......................................................... 41
6.5 Sale of the Business; Drag-Along Rights; Etc ............................... 41
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ARTICLE VII ADMISSION OF NEW MEMBERS ..................................... 43
7.1 Admission of New Members ........................ 43
7.2 Transferees and Assignees ....................... 44
ARTICLE VIII CERTAIN AGREEMENTS .......................................... 44
8.1 Mergers, Etc..................................... 44
8.2 Public Offering ................................. 46
8.3 Provisions Relating to Subsidiaries.............. 47
ARTICLE IX CERTAIN DEFINITIONS ........................................... 48
ARTICLE X MISCELLANEOUS PROVISIONS ....................................... 55
10.1 Entire Agreement ................................ 55
10.2 Amendment ....................................... 55
10.3 Duration of Certain Agreements .................. 56
10.4 Interpretation .................................. 56
10.5 Severability .................................... 56
10.6 Burden and Benefit Upon Successors .............. 56
10.7 Further Assurances .............................. 56
10.8 Counterparts .................................... 56
10.9 Waiver .......................................... 56
TESTIMONIUM .............................................................. 55
SCHEDULE I Description of Initial Capital Contribution
SCHEDULE II Additional Members
SCHEDULE III Capitalization
ANNEX A Board of Directors
ANNEX B Board of Managers
ANNEX C Initial Officers
ANNEX D Matters Requiring Approval by Special Vote
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
VALOR TELECOMMUNICATIONS SOUTHWEST, LLC
a Delaware limited liability company
Amended and Restated Limited Liability Company Agreement (this
"Agreement"), dated as of September 3, 1999, of Valor Telecommunications
Southwest, LLC (formerly dba Southwest Communications, LLC), a Delaware limited
liability company (the "Company"), among (i) Valor Telecommunications, LLC
(formerly dba Communications, LLC), as the initial member of the Company (the
"Initial Member"), (ii) the persons and entities named in Part 2 of Schedule II
hereto (the "Additional Members") and (iii) the entities named in Part 3 of
Schedule II hereto (the "Subordinated Debt Members" and, together with the
Initial Member and the Additional Members, the "Members", which term shall
include any other persons or entities admitted as substitute or additional
Members after the date of this Agreement, and shall exclude any persons who
cease to be Members), amending and restating the Memorandum of Limited Liability
Company Agreement of dba Southwest Communications, LLC, dated as of August 11,
1999 (the "Original Agreement"), by the Initial Member.
The Company was formed on August 11, 1999 by the Initial Member as a
sole member limited liability company pursuant to the Delaware Limited Liability
Company Act (the "Delaware Act"), Del. Code ▇▇▇. tit. 6 Sections 18-101 et seq.
Pursuant to the Original Agreement, the Initial Member contributed to the
Company the amount set forth opposite its name on Schedule I hereto in the
column labeled "Description of Initial Capital Contribution" (the Initial
Member's "Initial Investment"). The Members desire to amend and restate the
Original Agreement to provide for (i) the purchase for cash and in exchange for
its membership interest attributable to its Initial Investment by the Initial
Member of the Class A Common Interests, the Preferred Interests and the Class B
Common Interests (as such terms are hereinafter defined) of the Company set
forth opposite the name of the Initial Member on part 1 of Schedule III hereto,
(ii) the purchase for cash by each of the Additional Members of the Class A
Common Interests of the Company set forth opposite the name of such Additional
Member on part 2 of Schedule III hereto, (iii) the acquisition by each
Subordinated Debt Member in consideration of the commitment to provide the
subordinated debt financing of the number of Class B Common Interests and
Preferred Interests set forth opposite such Member's name on said Schedule III
in the columns labeled "Minimum Number of Class B Common Interests" and "Minimum
Number of Preferred Interests", respectively and (iv) to the extent such
financing is consummated in whole or in part, the purchase for cash by each
Subordinated Debt Member of the additional Class B
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Common Interests and Preferred Interests up to the aggregate amounts set forth
opposite such Member's name on said Schedule III in the columns labeled "Maximum
Number of Class B Common Interests" and "Maximum Number of Preferred Interests",
respectively, all in accordance with the terms of this Agreement and (x) in the
case of the Initial Member and the Additional Members, the Subscription
Agreement dated as of the date hereof (the "Subscription Agreement") among the
Initial Member, the Additional Members and the Company and (y) in the case of
the Subordinated Debt Members, the Securities Purchase Agreement to be entered
into by the Subordinated Debt Members and the Company (the "Subordinated Debt
Agreement").
Capitalized terms used herein have the meanings ascribed to them in
Article IX hereof
ARTICLE I
THE COMPANY - FORMATION AND PURPOSES
1.1 Formation and Continuation.
(a) The Members hereby execute this Agreement for the purpose of
setting forth the rights and obligations of the Members and to continue the
business of the Company. The Certificate of Formation of the Company (the
"Certificate of Formation") was duly executed and filed with the Delaware
Secretary of State pursuant to the Delaware Act on August 11, 1999.
(b) Each Member confirms and agrees to such Member's status as a
Member and subscribes for the acquisition of the Interests described herein upon
the terms and conditions set forth in this Agreement and the Subscription
Agreement.
(c) The Members hereby execute and adopt this Agreement as a limited
liability company agreement of the Company pursuant to Section 18-201 of the
Delaware Act.
1.2 Name.
The name of the Company shall be "Valor Telecommunications
Southwest, LLC".
1.3 Principal Office.
The principal office of the Company shall be located at ▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇. The location of the principal
office may be changed to such other place and the Company may have such other
offices wherever located as the Managers may from time to time determine.
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The Company shall have and maintain a registered office in the State
of Delaware, which shall be located in the City of Dover. The Company shall also
have a registered agent for service of process on the Company in the State of
Delaware, and the registered agent in Delaware initially shall be United States
Corporation Service Company, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1.4 Effective Date; Duration.
This Agreement shall take effect upon the execution and delivery of
this Agreement by the parties hereto and shall continue until terminated in
accordance with Article V. The term of the Company commenced on August 11, 1999,
the date upon which the Certificate of Formation of the Company was duly filed
and recorded in the office of the Secretary of State of the State of Delaware.
1.5 Fiscal Year. The fiscal year of the Company shall be the
calendar year.
1.6 Purposes.
The Company has been formed for the purposes of (i) acquiring,
holding, exercising all rights, powers, privileges and other incidents of
ownership or possession with respect to, and selling or otherwise disposing of
for value, assets of companies or equity interests in companies conducting local
telephone exchange operations in (A) New Mexico, Texas and Oklahoma (each of
said local telephone exchange operations being referred to as an "Original
Telephone Business") and (B) in such other areas of the United States as may be
determined by the Managers in accordance with this Agreement, including, without
limitation, limited liability companies, limited partnerships or other entities
to be formed to conduct such operations as successors in interest to GTE
Southwest Incorporated or other sellers of local telephone exchange operations
or related businesses, and one or more additional entities to be organized and
operated from time to time by the Company or such limited liability company,
limited partnership or other entity at the discretion of the Managers, (ii)
carrying on any other lawful business, purpose or activity permitted to be
carried on by limited liability companies under the Delaware Act, and (iii)
possessing and exercising all the powers and privileges granted by Section
18-106(b) of the Delaware Act so far as necessary or convenient to the
attainment of the purposes set forth in the foregoing clauses (i) and (ii).
1.7 Organizational Expenses. The Company shall be solely responsible
for the expenses of organizing the Company.
1.8 Seal of the Company. The Managers may adopt a seal, alter such
seal at its pleasure and authorize it to be used by causing it or a facsimile to
be affixed or impressed or reproduced in any other manner.
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ARTICLE II
MANAGEMENT AND OPERATION OF THE COMPANY
2.1 Power and Authority of Members. Except when a vote of the
Members is required as provided in Section 2.7 (b)(iii), the Members shall
manage the Company only through their designated Managers on the Board of
Managers of the Company (the "Managers"). In addition, the Members shall
designate and elect Directors to serve on the Board of Directors of the Company
(the "Board") which shall consult with and advise the Managers and conduct
reviews of the performance of the Company at the semi-annual meetings of the
Board, all as provided in this Agreement. Subject as aforesaid, the Members, in
their capacity as such, shall have no authority or right to act on behalf of or
bind the Company in connection with any matter.
2.2 Power and Authority of Managers and Directors. The business and
affairs of the Company shall be managed by or under the direction of the
Managers, except as may be otherwise provided in this Agreement. The Managers
shall have the power on behalf and in the name of the Company to carry out any
and all of the objects and purposes of the Company contemplated by Section 1.6
and to perform all acts which the Managers may deem necessary or advisable in
connection therewith. The Members agree that, subject to the terms of this
Agreement, all determinations, decisions and actions made or taken by the
Managers (or their designee(s)) shall be conclusive and absolutely binding upon
the Company, the Members (but only in their capacity as such) and their
respective successors, assigns and personal representatives. The Board shall
conduct semi-annual reviews of the performance of the Company as provided herein
and, in connection therewith, shall provide advice to the Managers at that time.
2.3 Members.
(a) Names and Addresses of Members. The name and present mailing
address of each Member are set forth on Schedule II hereto.
(b) Rights and Obligations; Classes of Members.
(i) Each Member shall have the rights, powers, duties and
obligations provided herein for a Member.
(ii) The Members shall be divided into separate classes,
depending upon the class of Interests held by them, holders of Class A
Common Interests being referred to herein as "Class A Common Members",
holders of Class B Common Interests being referred to herein as "Class B
Common Members" and together with the Class A Common Member, the "Common
Members" and holders of Preferred Interests being referred to herein as
"Preferred Members".
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(c) Annual Meetings. An annual meeting of the Members shall be held
each year within 120 days after the close of the immediately preceding fiscal
year of the Company for the purpose of electing Directors and Managers and
conducting such other proper business as may be required by law or this
Agreement to come before the meeting. The date, time and place of the annual
meeting shall be determined by the Managers; provided, however that such annual
meeting shall be held at the same time and place as one of the two meetings of
the Board required to be held as provided in Section 2.5.
(d) Special Meetings. Special meetings of Members shall be called
for the purpose of filling any vacancy created by the resignation or removal of
any Director or Manager or as otherwise required by law or this Agreement and
may be held at such time and place, within or without the State of Delaware, as
shall be stated in a notice of meeting or in a duly executed waiver of notice
thereof. Such meetings shall be called by vote of the Managers, the Chairman or
the Chief Executive Officer or by the holders of not less than a majority of the
Common Interests outstanding.
(e) Place of Meetings. The Managers may designate any place, either
within or outside of the State of Delaware, as the place of meeting for any
annual meeting or for any special meeting called by the Managers. If no
designation is made, or if a special meeting be otherwise called, the place of
meeting shall be the principal executive office of the Company.
(f) Notice. Whenever Members or any Class of Members are required or
permitted to take action at a meeting, written or printed notice stating the
place, date, time, and, in the case of special meetings, the purpose or purposes
of such meeting, shall be given to each Member entitled to vote at such meeting
and to each Manager and Director not less than five nor more than 30 days before
the date of the meeting. All such notices shall be delivered, either personally,
by overnight courier service, by mail or, if any Member has notified the Company
in writing of an electronic mail address that may be used for such purpose, by
electronic mail, by or at the direction of the Managers, the Chairman, the Chief
Executive Officer, or the Secretary. If sent by overnight courier service, such
notice shall be deemed to be delivered on the day when delivered to such
service; if mailed, such notice shall be deemed to be delivered two days after
the date when deposited in the United States mail, first-class mail postage
prepaid, addressed to the Member at his, her or its address as the same appears
on the records of the Company; and if sent by electronic mail, such notice shall
be deemed to be delivered on the day when sent to the electronic mail address
last notified by the Member to the Company as aforesaid. Attendance of a person
at a meeting shall constitute a waiver of notice of such meeting, except when
the person attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened.
(g) Quorum. The holders of (i) a majority of the Class A Common
Interests and (ii) a majority of the Class B Common Interests, present in person
or represented by proxy, shall constitute a quorum at all meetings of the
Members, and the holders of a majority of the
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Interests of any Class, present in person or represented by proxy, shall
constitute a quorum at all meetings of such Class. If a quorum is not present,
the holders of a majority of the Interests present in person or represented by
proxy at the meeting may adjourn the meeting to another time and/or place. When
a quorum is once present to commence a meeting of Members, or any Class of
Members, the quorum shall not be broken by the subsequent withdrawal of any
Members or their proxies, unless the requisite Members whose affirmative vote
with respect to any particular matter is required to vote on such matters shall
not be present at the time such vote is to be taken.
(h) Adjourned Meetings. If at any meeting of Members or any Class of
Members there shall be less than a quorum present, a majority of the Members
present in person or by proxy, may adjourn the meeting from time to time until a
quorum with respect to such matter shall be present. When a meeting is adjourned
to another time and place, notice of the adjourned meeting shall be given to
each Member entitled to vote at the original meeting of the adjourned meeting in
the manner provided for the calling of special meetings set forth in Section
2.3(f). At the adjourned meeting the Company may transact any business that
might have been transacted at the original meeting.
(i) Vote Required. When a quorum is present at a meeting of all
Members, the affirmative vote of the holders of a majority of the Class A Common
Interests present in person or represented by proxy at a duly called meeting and
entitled to vote on the subject matter shall be the act of the Members, unless
the question is one upon which by express provisions of an applicable law or of
this Agreement a different vote is required, in which case such express
provision shall govern and control the decision of such question. Where a
separate vote by Class is required, the affirmative vote of the majority of
Interests of such Class present in person or represented by proxy at the meeting
of such Class shall be the act of such Class, unless the question is one upon
which by express provisions of an applicable law or of this Agreement a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
(j) Action by Written Consent. Unless otherwise provided in the
Delaware Act, any action required to be taken at any annual or special meeting
of Members, or at any meeting of any Class of Members, or any action that may be
taken at any annual or special meeting of such Members or Class of Members, may
be taken without a meeting, without prior notice and without a vote, if a
consent or consents in writing, setting forth the action so taken and bearing
the dates of signature of the Members who signed the consent or consents, shall
be signed by the holders of not less than the minimum Interests or Class of
Interests that would be necessary to authorize or take such action at a meeting
at which all Interests entitled to vote thereon were present and voted and shall
be delivered to the Company by delivery to the Company's principal place of
business, or an officer or agent of the Company having custody of the book or
books in which proceedings of meetings of the Members are recorded. If action is
so taken without a meeting by less than unanimous written consent of the Members
or of any Class, a copy of such written consent shall be delivered promptly to
all Members or all Members of such Class, who
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have not consented in writing. Any action taken pursuant to such written consent
or consents of the Members or any Class of Members shall have the same force and
effect as if taken by the Members at a meeting of the Members or such Class.
(k) Record Dates. For purposes of determining the Members entitled
to notice of or to vote at a meeting of Members or any Class of Members or to
give approvals without a meeting as provided in Section 2.3(j), the Managers may
set a record date, which shall not be less than two nor more than 60 days before
(i) the date of the meeting or (ii) in the event that approvals are sought
without a meeting, the date by which Members are requested in writing by the
Managers to give such approvals.
(1) Conference Participation. The Members may participate in and act
at any meeting of such Members or any Class of Members through the use of a
conference telephone or other communications equipment by means of which all
persons participating in the meeting can hear each other, and participating in
the meeting pursuant to this Section 2.3(1) shall constitute presence in person
at the meeting.
2.4 Directors; Number, Appointment, Removal, Qualifications, Etc.
(a) Board of Directors. The number of Directors shall be such number
as shall be determined from time to time by the Members in accordance herewith
but shall not be less than thirteen (13) nor more than twenty-three (23) and
initially shall be nineteen (19). Up to twelve (12) Directors (the "Class A
Directors") shall be designated by Majority Vote of the Class A Common Members,
and up to eleven (11) Directors (the "Class B Directors") shall be designated by
Majority Vote of the Class B Common Members. The persons listed in Part 1 of
Annex A hereto are hereby designated by the Class A Common Members as the
initial Class A Directors of the Company and the persons listed in Part 2 of
said Annex A are hereby designated by the Class B Common Members as the initial
Class B Directors. The business address of each Director is set forth below such
Director's name in said Annex A.
(b) Removal and Resignation. Subject as set forth in Section 2.15,
any one or more Directors may be removed, with or without cause, at any time, in
the case of any Class A Director, by Majority Vote of the Class A Common
Members, and in the case of any Class B Director, by Majority Vote of the Class
B Common Members, in each case, acting (i) in person or by proxy at a meeting of
Class A Common Members or Class B Common Members, as the case may be, or (ii) by
a consent in writing in the manner contemplated in Section 2.3(j), and the
vacancy or vacancies in the Board caused by any such removal may be filled in
the manner provided in Section 2.4(a) with respect to any Class A Director or
Class B Director who shall have so ceased to be a Director. Any Director of the
Company may resign at any time by giving written notice to the Chairman, the
Chief Executive Officer or the Secretary of the Company. The resignation of any
Director shall take effect upon receipt of notice thereof or at such later time
as shall be specified in such notice; and, unless otherwise specified therein,
the acceptance of
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such resignation shall not be necessary to make it effective. Any vacancy or
vacancies in the Board caused by any such resignation may be filled in the
manner provided in Section 2.4(a) with respect to any Class A Director or Class
B Director who shall have so ceased to be a Director.
2.5 Board Meetings. Two regular meetings of the Board shall be held
each year at such place, within or without the State of Delaware, as shall from
time to time be determined by the Managers. Notice of regular meetings of the
Board shall be given by the Chairman, the Chief Executive Officer or the
Managers at not less than five nor more than thirty (30) days before the date on
which the meeting is to be held setting forth the place, date and time of such
meeting. All such notices shall be delivered, either personally, by overnight
courier service, by mail or, if any Director has notified the Company in writing
of an electronic mail address that may be used for such purpose, by electronic
mail, by or at the direction of the Managers, the Chairman, the Chief Executive
Officer, or the Secretary. If sent by overnight courier service, such notice
shall be deemed to be delivered on the day when delivered to such service; if
mailed, such notice shall be deemed to be delivered two days after the date when
deposited in the United States mail, first-class mail postage prepaid, addressed
to the Director at his, her or its address as the same appears on the records of
the Company; and if sent by electronic mail, such notice shall be deemed to be
delivered on the day when sent to the electronic mail address last notified by
the Director to the Company as aforesaid.
2.6 Managers; Number, Appointment, Removal, Qualifications, Etc.
(a) Board of Managers. The number of Managers shall be nine (9).
Four Managers (the "Class A Managers") shall be designated by Majority Vote of
the Class A Common Members, four Managers (the "Class B Managers") shall be
designated by Majority Vote of the Class B Common Members and one Manager (the
"Independent Manager") shall be designated by Majority Vote of the Class B
Common Members, but such designation shall not be effective unless such designee
shall have been approved by Majority Vote of the Class A Common Members. The
persons named in Part 1 of Annex B hereto are hereby designated by the Class A
Common Members as the initial Class A Managers of the Company, the persons named
in Part 2 of said Annex B are hereby designated by the Class B Common Members as
the initial Class B Managers, and the person named in Part 3 of said Annex B is
hereby designated by the Class B Common Members and approved by the Class A
Common Members as the Independent Manager. The business address of each Manager
is set forth opposite such Manager's name on said Annex B. Managers appointed
pursuant to this Agreement shall be managers for purposes of the Delaware Act.
(b) Alternate Managers.
(i) Subject as set forth in Section 2.15, an alternate Class A
Manager may be appointed by Majority Vote of the Class A Common Members to
act for and fulfill the obligations of any Class A Manager in the event
that such Class A Manager is unable to
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attend any meeting of the Managers or any committee thereof. Any such
alternates shall be specified in writing by such Class A Common Members to
the Secretary of the Company. Any appointment of an alternate Class A
Manager may be changed by Majority Vote of the Class A Common Members.
(ii) Subject as set forth in Section 2.15, an alternate Class
B Manager may be appointed by Majority Vote of the Class B Common Members
to act for and fulfill the obligations of any Class B Manager in the event
that such Manager is unable to attend any meeting of the Managers or any
committee thereof. Any such alternates shall be specified in writing by
such Class B Common Members to the Secretary of the Company. Any
appointment of an alternate Class B Manager may be changed by Majority
Vote of the Class B Common Members.
(c) Removal and Resignation. Subject as set forth in Section 2.15,
any one or more Managers may be removed, with or without cause, at any time, in
the case of any Class A Manager, by Majority Vote of the Class A Common Members,
and in the case of any Class B Manager or the Independent Manager, by Majority
Vote of the Class B Common Members, acting, in each case (i) in person or by
proxy at a meeting of Class A Common Members or Class B Common Members, as the
case may be, or (ii) by a consent in writing in the manner contemplated in
Section 2.3(j). Any Manager of the Company may resign at any time by giving
written notice to the Chairman, the Chief Executive Officer or the Secretary of
the Company. The resignation of any Manager shall take effect upon receipt of
notice thereof or at such later time as shall be specified in such notice; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective. Any vacancy or vacancies in the Managers
caused by any such removal or resignation may be filled in the manner provided
in Section 2.6(a) with respect to any Class A Manager, Class B Manager or the
Independent Manager who shall have so ceased to be a Manager.
2.7 Managers; Meetings; Committees and Delegation.
(a) Regular and Special Meetings. Regular meetings of the Managers
may be held at such place, within or without the State of Delaware, as shall
from time to time be determined by the Managers, but shall be held not less than
four times per year. After there has been such determination, and notice thereof
has once been given to each Manager as hereinafter provided for special
meetings, regular meetings may be held without further notice being given.
Special meetings of the Managers shall be held whenever called by the Chairman,
the Chief Executive Officer or by at least three of the Managers. Notice of each
such meeting shall be mailed or sent by overnight courier service to each
Manager addressed to such Manager at his or her residence or usual place of
business, at least five days before the date on which the meeting is to be held,
or shall be sent to such Manager at such place by telecopier or delivered
personally or by telephone, or if any Manager has notified the Company in
writing of an electronic mail address that may be used for such purpose, sent by
electronic mailed to such Manager, not later than five
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days (or, in the case of meetings held by telephone, one day) before the day on
which such meeting is to be held. Each such notice shall state the time and
place of the meeting and, as may be required, the purposes thereof. Notice of
any meeting of the Managers need not be given to any Manager if such Manager
shall sign a written waiver thereof either before or after the time stated
therein for such meeting, or if such Manager shall be present at the meeting.
Unless limited by law, this Agreement or the terms of the notice thereof, any
and all business may be transacted at any meeting without the notice thereof
having specifically identified the matters to be acted upon.
(b) Quorum and Manner of Acting; Special Vote; Deadlock.
(i) Unless otherwise provided by law or this Agreement, the
presence of Managers constituting a majority of the Managers then in
office shall be necessary to constitute a quorum for the transaction of
business, unless the requisite Managers whose affirmative vote with
respect to any particular matter is required to vote on such matters shall
not be present. In the absence of a quorum, a majority of the Managers
present may adjourn the meeting from time to time until a quorum shall be
present. Notice of any adjourned meeting shall be given in the manner
provided in Section 2.7(a). At all duly convened meetings of Managers, a
quorum being present and acting throughout, all matters shall be decided
by the affirmative vote of a majority of the Managers present, except as
otherwise required by law or by this Agreement, including, without
limitation, by the following clause (ii) of this Section 2.7(b).
(ii) Notwithstanding anything to the contrary in this
Agreement, whenever the Managers are required to decide upon or approve
any action or matter concerning the Company that is referred to, set forth
or described on Annex D hereto, such decision or approval shall require
the affirmative vote (a "Special Vote") of (x) a majority of the Managers
taken at a duly convened meeting of Managers at which quorum is present
and acting throughout as provided in clause (i) above, or by written
consent as provided in Section 2.7(f), and (y) a Majority Vote of the
Class B Common Members, taken at a duly convened meeting of the Class B
Common Members at which quorum is present and acting throughout as
provided in Section 2.3(i) or by written consent as provided in Section
2.3(j).
(iii) In the event that a Deadlock shall occur relating to any
matter under consideration or to be considered by the Managers, such
matter shall be referred to a special meeting of the Members, called for
such purpose by the Chairman or other authorized person in the manner
provided in Section 2.3(d) and Section 2.3(f), or a written consent of
Members shall be circulated by the Company, at which meeting of Members or
pursuant to which written consent, such matter shall be resolved by
Majority Vote of the Common Interests, voting together as a single Class.
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(c) Committees. The Managers may designate one or more committees,
each committee to consist of two or more of the Managers, which to the extent
provided in the resolution designating any such committee shall have and may
exercise the powers of the Managers in the management and affairs of the Company
except as otherwise limited by law; provided, however, that no such committee of
the Managers that is not designated by Special Vote of the Managers may exercise
any power or authority of the Managers that requires a Special Vote hereunder.
The Managers may designate one or more Managers as alternate members of any such
committee, who may replace any absent or disqualified Manager at any meeting of
such committee. Such committee or committees shall have such name or names as
may be determined from time to time by resolution adopted by the Managers. Each
committee of Managers may fix its own rules of procedure and shall hold its
meetings as provided by such rules, except as may otherwise be provided by the
resolution of the Managers designating such committee. Unless otherwise provided
in such resolution, the presence of at least a majority of the members of the
committee shall be necessary to constitute a quorum.
(d) Conference Participation. Managers and any committee thereof may
participate in and act at any meeting of Managers or committee through the use
of a conference telephone or other communications equipment by means of which
all persons participating in the meeting can hear each other, and participation
in the meeting pursuant to this Section 2.7(d) shall constitute presence in
person at the meeting.
(e) Waiver of Notice and Presumption of Assent. Any Manager or any
member of a committee of the Managers who is present at a meeting shall be
conclusively presumed to have waived notice of such meeting except when such
Manager attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such Manager shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the Secretary of the Company
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to any member who voted in favor of such action.
(f) Action by Written Consent. Unless otherwise restricted by this
Agreement or the Delaware Act, any action required or permitted to be taken at
any meeting of the Managers, or of any committee thereof, may be taken without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken bearing the dates of signature of the Managers who signed the
consent or consents, shall be signed by not less than the minimum number of
Managers that would be necessary to authorize or take such action at a duly
convened meeting of the Managers at which all the Managers then in office were
present and acting throughout and shall be delivered to the Company by delivery
to the Company's principal place of business, or an officer or agent of the
Company having custody of the book or books in which proceedings of meetings of
the Managers are recorded. If action is so taken without a meeting by less than
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unanimous written consent, a copy of such written consent shall be delivered
promptly to all Managers who have not consented in writing. Any action taken
pursuant to such written consent or consents of the Managers shall have the same
force and effect as if taken by the Managers at a meeting thereof.
2.8 Officers.
(a) Establishment, Nomination and Election. The officers of the
Company shall be elected by the Managers and shall consist of a Chairman, a
Chief Executive Officer, a President, a Secretary and a Treasurer, and may, at
the discretion of the Managers, also consist of one or more Vice Presidents,
Assistant Secretaries, Assistant Treasurers and such other officers and
assistant officers as may be deemed necessary or desirable by the Managers. One
person may hold, and perform the duties of, any two or more of said offices. In
their discretion, the Managers may choose not to fill any office for any period
as they may deem advisable, except that the offices of Chairman, Chief Executive
Officer, Secretary and Treasurer shall be filled as expeditiously as possible.
The initial officers of the Company are set forth in Annex C.
(b) Election and Term of Office. The officers of the Company shall
be elected annually by the Managers at the annual meeting thereof Each such
officer shall hold office until his or her successor shall have been elected and
shall qualify, or until his or her earlier death, resignation or removal.
(c) Removal. Subject to the terms of any employment agreement
between the Company and any officer of the Company, any officer may be removed,
either with or without cause, at any time, by the Managers at any regular
meeting of the Managers, or at any special meeting of the Managers called for
that purpose, at which a quorum is present.
(d) Resignations. Any officer may resign at any time by giving
written notice to the Chairman, the President, the Secretary or the Managers.
Any such resignation shall take effect upon receipt of such notice or at any
later time specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
(e) Vacancies. A vacancy in any office may be filled for the
unexpired portion of the term in the manner prescribed in this Agreement for
election or appointment to such office for such term.
(f) Chairman. The Chairman shall preside at all meetings of the
Managers, the Board and the Members. The Chairman shall perform such other
duties as may be prescribed by the Managers or provided in this Agreement.
(g) Chief Executive Officer. The Chief Executive Officer shall serve
as the chief executive officer of the Company and shall in general supervise all
the business affairs of the
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Company, subject to the powers of the Chairman and the Managers. In the absence
of the Chairman, the Chief Executive Officer shall preside at meetings of the
Board, the Managers and the Members and shall have such other powers and perform
such other duties consistent with such position as may be prescribed by the
Managers or provided in this Agreement.
(h) President. The President shall, subject to the powers of the
Managers, the Chairman and the Chief Executive Officer, have such general charge
of the business, affairs and property of the Company, and such control over its
officers, agents and employees as shall be assigned to him or her by the
Managers, the Chairman or the Chief Executive Officer; and shall see that all
orders and resolutions of the Managers the Chairman and the Chief Executive
Officer are carried into effect. Subject as aforesaid, the President shall
execute bonds, mortgages and other contracts requiring a seal, under the seal of
the Company, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the Managers, the Chairman or the Chief Executive Officer
to some other officer or agent of the Company.
(i) Vice President. Each Vice President shall have such powers and
shall perform such duties as shall be assigned to him or her by the Chairman,
the Chief Executive Officer, the President or the Managers.
(j) Treasurer. The Treasurer shall have charge and custody of, and
be responsible for, all funds and securities of the Company. The Treasurer shall
exhibit at all reason-able times the Company's books of account and records to
any of the Managers or Directors upon application during business hours at the
office of the Company where such books and records shall be kept; when requested
by the Managers, the Treasurer shall render a statement of the condition of the
finances of the Company at any meeting of the Managers, the Board or at the
annual meeting of Members; the Treasurer shall receive, and give receipt for,
moneys due and payable to the Company from any source whatsoever; and in
general, the Treasurer shall perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him or
her by the President or the Managers. The Treasurer shall give such bond, if
any, for the faithful discharge of the Treasurer's duties as the Managers may
require.
(k) Secretary. The Secretary, if present, shall act as secretary at
all meetings of the Board, the Managers and the Members and keep the minutes
thereof in a book or books to be provided for that purpose; the Secretary shall
see that all notices required to be given by the Company are duly given and
served; the Secretary shall have charge of the records of Interests in the
Company. The Secretary shall see that all reports, statements and other
documents required by law are properly kept and filed, and in general the
Secretary shall perform all the duties incident to the office of Secretary and
such other duties as from time to time may be assigned to the Secretary by the
President or the Managers.
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(l) Other Officers, Assistant Officers and Agents. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in this Agreement, shall have such authority and perform such
duties as may from time to time be prescribed by Special Vote of the Managers.
(m) Compensation. Compensation of all officers shall be fixed by
Special Vote of the Managers or a duly authorized Committee thereof, and no
officer shall be prevented from receiving such compensation by virtue of his or
her also being a Manager or a Director of the Company.
(n) Absence or Disability of Officers. In the case of the absence or
disability of any officer of the Company and of any person hereby authorized to
act in such officer's place during such officer's absence or disability, the
Managers may by Special Vote delegate the powers and duties of such officer to
any other officer or to any Manager, or to any other person whom it may select.
2.9 Liability of Members, Directors, and Managers. No Member,
Director or Manager shall have any liability under this Agreement except as
provided in Section 2.10 or elsewhere herein or as required by the Delaware Act.
Except as required by the Delaware Act, the debts, obligations and liabilities
of the Company, whether arising in contract, tort or otherwise (including
without limitation those arising as member, owner or shareholder of another
company, partnership or entity), shall be solely the debts, obligations and
liabilities of the Company, and no Member, Director or Manager shall be
obligated personally for any such debt, obligation or liability of the Company
solely by reason of being a Member or acting as a Director or a Manager of the
Company. No Member, Director or Manager shall be liable for any debts,
obligations and liabilities, whether arising in contract, tort or otherwise, of
any other Member, Director or Manager.
2.10 Certain Duties and Liabilities of Directors, Managers and
Officers.
(a) Duties of Directors. It is acknowledged and agreed that the
Directors shall act only in an advisory role to the Company, as provided in
Section 2.1. Accordingly, except as otherwise specifically provided in this
Agreement, the Directors, in their capacity as such, shall have no express or
implied duties or obligations to the Company or to the Members except the duty
not to disclose the confidential information of the Company.
(b) Duties of Managers and Officers. Except as otherwise
specifically provided in this Agreement, the duties and obligations owed to the
Company and to the Members by the Managers and officers of the Company shall be
the same as the respective duties and obligations owed to a corporation
organized under the Delaware General Corporation Law by its directors and
officers. No person shall be personally liable to the Company or its Members for
monetary damages for breach of fiduciary duty as a Manager; provided, however,
that the
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foregoing shall not eliminate or limit the liability of a Manager (i) for any
breach of the Manager's duty of loyalty to the Company or its Members (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under the circumstances described in Section 174
of the Delaware General Corporation Law or (iv) for any transaction from which
the Manager derived an improper personal benefit. If the Delaware General
Corporation Law is subsequently amended to further eliminate or limit the
liability of a director of a corporation then a Manager of the Company, in
addition to the circumstances in which a Manager is not personally liable as set
forth in the preceding sentence, shall not be liable to the fullest extent
permitted by the amended Delaware General Corporation Law as if such Manager was
subject thereto.
(c) Limitations on Liability of Directors, Managers and Officers. To
the extent that any Director, Manager or officer has duties (including fiduciary
duties) and liabilities relating thereto to the Company or to a Member (i) any
such Director, Manager or officer acting under this Agreement shall not be
liable to the Company or to any other Member for the Director's, Manager's or
officer's good faith reliance on the provisions of this Agreement, the records
of the Company and such information, opinions, reports or statements presented
to the Company by any of the Company's officers or employees, or committees of
the Managers or the Board, or by any other person as to matters the Director,
Manager or officer reasonably believes are within such other person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Company, and (ii) the Director's , Manager's or officer's
duties and liabilities are restricted by the provisions of this Agreement to the
extent that such provisions restrict the duties and liabilities of the
Directors, Managers or officers otherwise existing at law or in equity.
2.11 Reliance by Third Parties. Persons dealing with the Company are
entitled to rely conclusively upon the power and authority of the Directors,
Managers and officers as herein set forth. Persons dealing with the Company are
entitled to rely conclusively upon a certificate of any Secretary or Assistant
Secretary as to the incumbency of any Director, Manager, officer or other
personnel of the Company.
2.12 Books and Records. The Company shall keep (i) correct and
complete books and records of account, (ii) minutes of the proceedings of
meetings of the Members, the Board and the Managers and any committee thereof,
and (iii) a current list of the Directors, Managers and officers and their
residence addresses; and the Company shall also keep at its principal executive
office a record containing the names and addresses of all Members, the total
Interests held by each Member, the number thereof that are Class A Common
Interests, Preferred Interests and Class B Common Interests, and the dates when
they respectively became the owners of record thereof (the "Members' Interest
Register"). Any of the foregoing books, minutes or records may be in written
form or in any other form capable of being converted into written form within a
reasonable time.
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2.13 Indemnification.
(a) Third Party Actions, Suits and Proceedings. Each person who was
or is made a party or is threatened to be made a party to or is involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Company), by
reason of the fact that he or she, or a person of whom he or she is the legal
representative, is or was a Director, Manager or officer of the Company, or is
or was serving at the request of the Company as a manager, director, officer,
employee, fiduciary or agent of another limited liability company or of a
corporation, partnership, joint venture, trust or other enterprise (hereinafter,
a "proceeding"), shall be indemnified and held harmless by the Company against
all expenses (including attorneys' fees) judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe such person's conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which such
person reasonably believed to be in or not opposed to the best interests of the
Company, or, with respect to any criminal action or proceeding that the person
had reasonable cause to believe that his or her conduct was unlawful.
(b) Actions by the Company. The Company shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Company to procure
a judgment in its favor by reason of the fact that such person, or a person of
whom he or she is the legal representative, is or was a Director, Manager or
officer of the Company, or is or was serving at the request of the Company as a
manager or director, officer, employee, fiduciary or agent of another limited
liability company or of a corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
Company and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Company unless and only to the extent that the Court of Chancery
of the State of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
(c) Procedure for Indemnification. Any indemnification of a
Director, Manager or officer of the Company under Section 2.13(a) or 2.13(b) or
advance of expenses under Section 2.13(f) shall be made promptly, and in any
event within 30 days, upon the written request of the Director, Manager or
officer. If a determination by the Company that the Director,
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Manager or officer is entitled to indemnification pursuant to this Section 2.13
is required, and the Company fails to respond within 90 days to a written
request for indemnity, the Company shall be deemed to have approved the request.
If the Company denies a written request for indemnification or advancing of
expenses, in whole or in part, or if payment in full pursuant to such request is
not made within 30 days, the right to indemnification or advances as granted by
this Section 2.13 shall be enforceable by the Director, Manager or officer in
any court of competent jurisdiction. Such person's costs and expenses incurred
in connection with successfully establishing his or her right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the Company. It shall be a defense to any such action (other than
an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any, has been tendered to the Company) that the claimant has not met the
standards of conduct that would make it permissible under the Delaware General
Corporate Law if the Company were a corporation for the Company to indemnify the
claimant for the amount claimed, but the burden of such defense shall be on the
Company. Neither the failure of the Company (including its Managers or
independent legal counsel or Members) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the standard of conduct set forth
for a director or officer of a corporation in the Delaware General Corporate
Law, nor an actual determination by the Company (including its Managers,
independent legal counsel or Members) that the claimant has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
(d) Rights Non-exclusive. The rights to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section 2.13 shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of this Agreement, agreement, vote of Members or disinterested
Directors, Managers or otherwise.
(e) Insurance. The Company shall purchase and maintain insurance, to
the extent such insurance is available to the Company at a reasonable cost, on
its own behalf and on behalf of any person who is or was a Director, Manager,
officer, employee, fiduciary or agent of the Company or was serving at the
request of the Company as a manager, officer, employee or agent of another
limited liability company, corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity, whether or not the Company would have the
power to indemnify such person against such liability under this Section 2.13.
(f) Expenses. Expenses incurred by any person described in Sections
2.13(a) or 2.13(b) in defending a proceeding shall be paid by the Company in
advance of such proceeding's final disposition upon receipt of an undertaking by
or on behalf of the Director, Manager or officer to repay such amount if it
shall ultimately be determined that he or she is not
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entitled to be indemnified by the Company. Such expenses incurred by other
employees and agents may be so paid upon such terms and conditions, if any, as
the Managers deem appropriate.
(g) Employees and Agents. Persons who are not covered by the
foregoing provisions of this Section 2.13 and who are or were Members, employees
or agents of the Company, or who are or were serving at the request of the
Company as employees or agents of another limited liability company,
corporation, partnership, joint venture, trust or other enterprise, may be
indemnified to the extent authorized at any time or from time to time by the
Managers.
(h) Contract Rights. The provisions of this Section 2.13 shall be
deemed to be a contract right between the Company and each Director, Manager or
officer who serves in any such capacity at any time while this Section 2.13 and
the Relevant provisions of the Idaho Act or other applicable law are in effect,
and any repeal or modification of this Section 2.13 or any such law shall not
affect any rights or obligations then existing with respect to any state of
facts or proceeding then existing. The indemnification and other rights provided
for in this Section 2.13 shall inure to the benefit of the heirs, executors and
administrators of any person entitled to such indemnification. Except as
provided in Section 2.13(c) hereof, the Company shall indemnify any such person
seeking indemnification in connection with a proceeding initiated by such person
only if such proceeding was authorized by the Managers.
(i) Merger or Consolidation; Other Enterprises. For purposes of this
Section 2.13, references to "the Company" shall include, in addition to the
resulting company, any constituent company (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
managers, directors, officers, employees or agents, so that any person who is or
was a manager, director, officer, employee or agent of such constituent company,
or is or was serving at the request of such constituent company as a director,
officer, employee or agent of another company, partnership, joint venture, trust
or other enterprise, shall stand in the same position under this Section 2.13
with respect to the resulting or surviving company as he or she would have with
respect to such constituent company if its separate existence had continued. For
purposes of this Section 2.13, references to "other enterprises" shall include
employee benefit plans; references to "fines" shall include any excise taxes
assessed on a person with respect to any employee benefit plan; and references
to "serving at the request of the Company" shall include any service as a
manager, director, officer, employee or agent of the Company that imposes duties
on, or involves services by, such manager, director, officer, employee or agent
with respect to an employee benefit plan, its participants or beneficiaries; and
a person who acted in good faith and in a manner such person reasonably believed
to be in the interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to the best
interests of the Company" as referred to in this Section 2.13.
2.14 Corporate Opportunity. (a) No Director or Manager of the
Company shall be in breach of his or her duty of loyalty to the Company solely
by reason of having pursued a
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business opportunity that has come to him or her without first offering such
business opportunity to the Company, unless such business opportunity (i) has
come to the attention of such Director or Manager as a result of his or her
access to the confidential information belonging to the Company or (ii) is a
business opportunity described in paragraph (b) below.
(b) Included within clause (ii) of Section 2.14(a) above, shall be
any opportunity to acquire wireline assets located in any of the states of
Arizona, Arkansas, Colorado, Kansas, Louisiana, Missouri, New Mexico, Oklahoma,
Texas or Utah, from SBC Communications, Inc, GTE Southwest Incorporated, US
West, Inc. or any of their respective Affiliates.
(c) Notwithstanding the foregoing, a business opportunity shall
cease to be a corporate opportunity of the Company at any time after the Company
has determined not to pursue such business opportunity, whereupon the Director
or Manager that introduced such Corporate Opportunity to the Company shall be
entitled to treat such business opportunity as his or her own.
2.15 Certain Voting Arrangements Relating to the Company.
(a) General.
Notwithstanding anything to the contrary contained in this Article
II, for so long as (i) the Initial Member holds not less than 25% or (ii) the
Additional Investors as a group hold not less than 25% of the Common Interests
of the Company, in each case, acquired by them pursuant to the Subscription
Agreement, each of the Members and the Company agrees to comply with the
provisions of this Section 2.15.
(b) Number and Election of Directors.
At each annual or special meeting called for such purpose, and
whenever the Members of the Company act by written consent with respect to
election of Directors, each of the Members agrees to vote or otherwise give such
Member's consent in respect of all Common Interests and other equity securities
of the Company (whether now or hereafter acquired) owned by such Member or as to
which such Member is entitled to vote, and the Company shall take all necessary
and desirable actions within its control, in order to cause:
(i) the authorized number of Directors to be established and remain
at twenty-three (23)
(ii) the election as Directors of:
(A) twelve individuals designated by the Class A Common Members; and
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(B) up to eleven individuals designated by the Class B Common
Members;
all of which individuals shall hold office, subject to their earlier
removal in accordance with clause (iii) below, this Agreement and the
Delaware Act, until their respective successors shall have been elected
and shall have qualified;
(iii) the removal from the Board (with or without cause) of
any representative designated hereunder by the person or persons entitled
to make such designation hereunder, upon such person's or persons' written
request for removal as to its or their designee; and
(iv) upon any vacancy in the Board as a result of any
individual elected as provided in clause (ii) above ceasing to be a
Director, whether by resignation or otherwise, the election to the Board
of an individual designated by the Class Common A Members or the Class B
Common Members, as the case may be, who designated the individual who
shall have so ceased to be a Director
(c) Number and Election of Managers.
At each annual or special meeting called for such purpose, and
whenever the Members of the Company act by written consent with respect to
election of Managers, each of the Members agrees to vote or otherwise give such
Member's consent in respect of all Common Interests and other equity securities
of the Company (whether now or hereafter acquired) owned by such Member or as to
which such Member is entitled to vote, and the Company shall take all necessary
and desirable actions within its control, in order to cause:
(i) the authorized number of Managers to be established and
remain at nine;
(ii) the election as Managers of:
(A) four individuals designated by Majority Vote of the Class
A Common Members;
(B) four individuals designated by Majority Vote of the Class
B Common Members; and
(C) one individual designated by Majority Vote of the Class B
Common Members that shall have been approved by Majority Vote of the Class A
Common Members;
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all of which individuals shall hold office, subject to their earlier
removal in accordance with clause (iii) below, this Agreement and the
Delaware Act, until their respective successors shall have been elected
and shall have qualified;
(iii) the removal as a Manager (with or without cause) of any
representative designated hereunder by the person or persons entitled to
make such designation hereunder, upon such person's or persons' written
request for removal as to their designee; and
(iv) upon any vacancy among the Managers as a result of any
individual elected as provided in clause (ii) above ceasing to be a
Manager, whether by resignation or otherwise, the election as a Manager of
an individual designated by the Class A Common Members or the Class B
Common Members, as the case may be, who designated the individual who
shall have so ceased to be a Manager, subject, in the case of the
Independent Manager, as set forth in Section 2.15(c)(ii)(C).
2.16 Certain Policies. It is the intention of the Company to afford
equal employment opportunities to all prospective employees of the Company and,
at the same time, to promote the hiring of minority employees and the retention
of minority-owned businesses. It is the express policy of the Company,
consistent with the Company's need to employ qualified individuals in its
business, to reflect in its hiring the diversity of the population in the
communities in which the Company operates from time to time, to apply this
policy in the conduct of all its employment practices, and otherwise to operate
its business in accordance with applicable law.
ARTICLE III
CAPITAL CONTRIBUTIONS,
ALLOCATIONS AND DISTRIBUTIONS
3.1 Form of Contribution. The contribution with respect to each
Member of the Company may, as determined by the Managers in their discretion, be
made in cash or other legal consideration.
3.2 Non-Cash Contributions by the Members.
(a) The Initial Member. The Initial Member is making a Capital
Contribution of its membership interest in the Company attributable to its
Initial Investment on the date hereof In addition, the Initial Member has agreed
to MAKE a Capital Contribution in cash as set forth in Section 3.3.
(b) The Subordinated Debt Members. Each Subordinated Debt Member is
making a Capital Contribution of its commitment to provide subordinated debt
financing to the
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Company in exchange for the number of Class B Common Interests and Preferred
Interests set forth opposite its name on part 2 of Schedule III hereto under the
headings "Minimum Number of Class B Common Interests" and "Minimum Number of
Preferred Interests", respectively. In addition, each Subordinated Debt Member
may make a Capital Contribution in cash as set forth in Section 3.3.
3.3 Cash Contributions by the Members; Payment of Capital
Contributions; Capital Commitment Calls.
(a) General. Each Member (other than the Subordinated Debt Members)
has agreed to make a Capital Contribution in cash to the Company in the
aggregate amount set forth opposite such Member's name on part 1 of Schedule III
hereto in the column labeled "Capital Commitment" in consideration of the number
of Class A Common Interests, Class B Common Interests and Preferred Interests
being purchased by such Member set forth opposite the name of such Member on
said Schedule III, in each case in accordance with the terms of this Agreement
and the Subscription Agreement. Each Subordinated Debt Member has agreed to make
a Capital Contribution in cash to the Company equal to $1.00 for each Class B
Common Interest and each Preferred Interest purchased for cash by such Member,
in each case in accordance with the terms of this Agreement and the Subordinated
Debt Agreement.
(b) Class A Common Members. In addition to the Capital Contribution
made by the Initial Member in the form of its membership interests attributable
to its Initial Investment as set forth on Schedule I, on or before the date of
the first "Closing" to occur under any agreement to acquire an Original
Telephone Business (each, an "Acquisition Closing Date"), each Class A Common
Member shall contribute to the Company as payment in full of such Member's
Capital Contribution in respect of such Member's Class A Common Interests, the
amount, if any, set forth opposite such Member's name on Schedule III hereto
under the column labeled "Initial Class A Common Cash Contribution".
(c) Subordinated Debt Members. On the date on which the Company
closes any subordinated debt financing provided by the Subordinated Debt Members
each Subordinated Debt Member hereby agrees to make payment in full to the
Company of such Member's Capital Contribution with respect to the Class B Common
Interests and/or Preferred Interests issuable to such Member on such date.
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(d) Other Members. Each Member (other than the Subordinated Debt
Members) that holds Class B Common Interests and/or Preferred Interests hereby
agrees to make payments to the Company in respect of such Member's Capital
Contribution with respect thereto payable from time to time in such amounts as
the Managers may determine in their sole discretion to be necessary for the
continued operation of the Company and its subsidiaries (including, without
limitation, in connection with the funding of expenses incurred prior to the
first Acquisition Closing Date (the "Pre-operating Expenses")) up to the maximum
amount of such Member's Remaining Capital Commitment at such time; provided,
however, that the obligation to make such payments in respect of such Member's
Capital Contribution (i) shall be subject to the conditions specified in the
Subscription Agreement and (ii) shall not exceed in aggregate $18.7 million with
respect to Pre-operating Expenses. Any obligation to make payments in respect of
such Member's Capital Contribution under this Section 3.3(d) shall be on a pro
rata basis, with each such Member being required to pay an amount equal to the
product of (A) the total additional capital required, multiplied by (B) a
fraction, the numerator of which shall be such Member's Capital Commitment with
respect to Class B Common Interests and Preferred Interests and the denominator
of which shall be the total Capital Commitments with respect to all Class B
Common Interests and Preferred Interests held by such Members. Any payment made
in respect of such Member's Capital Contribution pursuant to this Section 3.3(d)
shall be allocated pro rata between such Member's Remaining Capital Commitment
allocable to its Class B Common Interests and Preferred Interests, respectively.
3.4 Determination of Book Value of Company Assets.
(a) Book Value. Except as set forth below, the Book Value of any
Company asset shall be its adjusted basis for federal income tax purposes.
(b) Initial Book Value. The Initial Book Value of any assets
contributed by a Member to the Company shall be the gross fair market value of
such assets at the time of such contribution.
(c) Adjustments. The Book Values of all of the Company's assets
shall be adjusted by the Company to equal their respective gross fair market
values, as determined by the Managers, as of the following times: (i) the
admission of a new Member to the Company or the acquisition by an existing
Member of an additional Interest in the Company from the Company; (ii) the
distribution by the Company of money or property to a retiring or continuing
Member in consideration for all or a portion of such Member's Interests in the
Company; (iii) the liquidation of the Company; and (iv) such other times as
determined by the Managers in its reasonable discretion.
(d) Depreciation and Amortization. The Book Value of a Company asset
shall be adjusted (i) for the depreciation and amortization of such asset taken
into account in
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computing Net Profits and Net Losses and (ii) for Company expenditures and
transactions that increase or decrease the asset's federal income tax basis.
3.5 Withdrawal of Capital; Limitation on Distributions. No Member
shall be entitled to withdraw any part of its Capital Contribution to, or to
receive any distribution from the Company except as provided in Article IV and
Section 3.10 hereof No Member shall be entitled to demand or receive (i) except
as otherwise permitted herein, interest on its Capital Contribution or (ii) any
property from the Company other than cash.
3.6 Capital Accounts; Allocations of Net Profits and Net Losses.
(a) Additions to Capital Accounts. There shall be established and
maintained for each Member on the books of the Company as of the date hereof a
capital account ("Capital Account") which shall initially equal the amount of
their Initial Cash Contribution. Each Member's Capital Account shall be
increased by:
(i) Company; the amount of any money contributed by such
Member to the
(ii) the fair market value of any property contributed by such
Member to the Company;
(iii) the amount of Net Profits or items thereof allocated to
such Member under Section 3.6(b)(i); and
(iv) the amount of any Company liabilities assumed by such
Member (or taken subject to) if property is distributed to such
Member by the Company; and shall be decreased by:
(v) the amount of any money distributed to such Member by the
Company;
(vi) the fair market value of any property distributed to such
Member by the Company;
(vii) the amount of Net Losses or items thereof allocated to
such Member under Section 3.6(b)(ii); and
(viii) the amount of any Member liabilities assumed by the
Company (or taken subject to) if property is contributed to the
Company by such Member.
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The Capital Accounts shall be adjusted by all other adjustments required by
Treasury Regulations ss. 1.704-1(b)(2)(iv). The foregoing provisions and the
other provisions of this Agreement relating to the maintenance of Capital
Accounts are intended to comply with Treasury Regulations under Section 704(b)
of the Code and, to the extent not inconsistent with the provisions of this
Agreement, shall be interpreted and applied in a manner consistent with such
Treasury Regulations.
(b) Allocation of Net Profits and Net Losses.
(i) Allocation of Net Profits. Net Profits and items thereof
shall be allocated among the Members in the following order and following
priority:
(A) First, to eliminate any Net Losses, and in reverse order
of any Net Losses allocated under Section 3 .6(b)(ii);
(B) Second, to holders of Preferred Interests in an equal
amount in respect of each such Interest to the extent that any Preferred
Appreciation Amount shall have accrued on such Interests pursuant to
Section 4.2(b)(ii) hereof,
(C) Third, to holders of Class A Common Interests and Class B
Common Interests in an equal amount in respect of each such Interest.
(ii) Allocation of Net Losses. Net Losses and items thereof
shall be allocated among the Members in the following order and following
priority:
(A) First, to holders of Class A Common Interests and Class B
Common Interests in an equal amount in respect of each such Interest until
all Net Profits allocated under Section 3 .6(b)(i)(C) have been
eliminated;
(B) Second, to holders of Class A Common Interests and Class B
Common Interests in proportion to the amount of their Capital Accounts
attributable to such Common Interest, until the amount of the Capital
Accounts attributable to such Class A Common Interests and Class B Common
Interests has been eliminated;
(C) Third, to holders of Preferred Interests in an equal
amounts in respect of each such Interest until all Net Profits allocated
under Section 3.6(b)(i)(B) have been eliminated;
(D) Fourth, to holders of Preferred Interests in proportion to
the amount of their Capital Accounts attributable to such Preferred
Interests, until the amount of such Capital Accounts attributable to such
Preferred Interests has been eliminated;
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(E) Fifth, to holders of Class A Common Interests and Class B
Common Interests in an equal amount to each such Interest.
(c) Tax Allocations; Book/Tax Differences. For federal income tax
purposes, Net Profit and Net Loss and any items thereof shall be allocated among
the Members during any Fiscal Year in accordance with the allocations of the
corresponding items for Capital Account purposes under Section 3.6(b), provided,
however, that if the Book Value of a Company asset differs from its tax basis
for federal income tax purposes, then solely for purposes of computing the
relevant tax and not for purposes of computing Capital Account balances, income,
gain, loss, deduction and credit shall be allocated among the Members under the
traditional method without curative allocations under Treasury Regulation
Section 1.704-3(b).
3.7 Special Allocations. Notwithstanding the general allocation
rules set forth in Section 3.6, the following special allocation rules (the
"Regulatory Allocations") shall apply under the circumstances described therein:
(a) Deficit Capital Account and Nonrecourse Debt Rules. The special
rules in this Section 3.7(a) apply, in the following order, to take into account
the possibility that one or more Members will have a deficit Capital Account
balance for which such Member is not economically responsible (or deemed
responsible under the Treasury Regulations) and the effect of the Company or any
entity taxed as a partnership in which the Company has an ownership interest
incurring nonrecourse debt.
(i) Minimum Gain Chargeback. If there is a net decrease in
"partnership minimum gain" during any year, to be determined in accordance
with Treasury Regulations Section 1.704 2, including the
tiered-partnership rules of Treasury Regulations Section 1.704-2(k), each
Member shall be allocated items of income and gain for such year equal to
such Member's share of the net decrease in partnership minimum gain within
the meaning of Treasury Regulations Section 1.704-2(g)(2), except to the
extent not required by Treasury Regulations Section 1.704-2(f). To the
extent that this Section 3.7(a)(i) is inconsistent with Treasury
Regulations Section 1.704-2(f) or 1.704-2(k) or incomplete with respect to
such regulations, the minimum gain chargeback provided for herein shall be
applied and interpreted in accordance with such regulations.
(ii) Member Non-Recourse Debt Minimum Gain Chargeback. If
there is a net decrease in "partner nonrecourse debt minimum gain" during
any year, within the meaning of Treasury Regulations Section
1.704-2(i)(2), each Member who has a share of the partner nonrecourse debt
minimum gain attributable to such partner nonrecourse debt, determined in
accordance with Treasury Regulations Section 1.704-2(i)(5), shall be
allocated items of income and gain for such year (and, if necessary,
subsequent years) equal to such Member's share of the net decrease in
partner nonrecourse debt minimum gain. This allocation will be made in
accordance with Treasury Regulations Section 1.704-2(i)(4) and
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Section 1.704-2(f)(5). To the extent that this Section 3.7(a)(ii) is
inconsistent with Treasury Regulation Section 1.704-2(i) or Section
1.704-2(k) or incomplete with respect to such regulations, the partner
nonrecourse debt minimum gain chargeback provided for herein shall be
applied and interpreted in accordance with such regulations.
(iii) Deficit Capital Account Chargeback and Qualified Income
Offset. If any Member has a deficit balance in its Capital Account in
excess of such Member's share of "partnership minimum gain" and "partner
non-recourse debt minimum gain" at the end of any year as defined in the
Treasury Regulations, including a deficit balance for such Member caused
or increased by an adjustment, allocation or distribution described in
Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), such
Member shall be allocated items of income and gain (consisting of a pro
rata portion of each item of Company income, including gross income and
gain) in an amount and manner sufficient to eliminate such deficit balance
in its Capital Account as quickly as possible to the extent required by
Treasury Regulations Section 1.704-2(b)(2)(ii). This Section 3 .7(a)(iii)
is intended to constitute a "qualified income offset" pursuant to Treasury
Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
(iv) Partner Nonrecourse Deductions. Any "partner nonrecourse
deductions" (as defined in Treasury Regulations Section 1.704-2) for any
year or other period shall be allocated to the Member who bears the
economic risk of loss with respect to the partner nonrecourse debt to
which such partner nonrecourse deductions are attributable in accordance
with Treasury Regulations Section 1.704-2(i) or 1.704-2(k).
(v) Curative Allocations. The Regulatory Allocations described
in this Section 3.7(a) may not be consistent with the manner in which the
Members intend to divide Net Profits, Net Losses and similar items.
Accordingly, Net Profits, Net Losses and other items will be reallocated
among the Members (in the same Fiscal Year and to the extent necessary, in
subsequent Fiscal Years) in a manner consistent with Treasury Regulations
Section 1.704-1(b) and 1.704.2 so as to prevent the Regulatory Allocations
from distorting the manner in which Net Profits, Net Losses and other
items are intended to be allocated among the Members pursuant to Section
3.6 and in making such reallocations, account shall be taken of future
Regulatory Allocations that will in all likelihood occur.
(vi) Section 754 Adjustments. To the extent an adjustment to
the adjusted tax basis of any Company asset pursuant to Section 734(b) or
743(b) of the Code is required, pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall be
treated as an item of Net Profit (if the adjustment increases the basis of
the asset) or Net Loss (if the adjustment decreases such basis) and such
item shall be specially allocated to the Members in a manner consistent
with the manner in which their
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Capital Accounts are required Lo be adjusted pursuant to such section of
the Treasury Regulations.
(b) Change in Member's Interest. If there is a change in any
Member's share of the Company's Net Profits, Net Losses or other items during
any year, allocations among the Members shall be made in accordance with their
Interests in the Company from time to time during such year in accordance with
Section 706 of the Code, using the closing-of-the-books method or any other
reasonable method allowable by law that is selected by the Tax Matters Partner
in its reasonable discretion.
(c) Nonrecourse Debt Sharing. For purposes of this Agreement, the
Members shall be deemed to be allocated nonrecourse deductions, within the
meaning of Treasury Regulations Section 1.704-2(b)(1), in accordance with their
Applicable Percentages. Solely for purposes of determining a Member's
proportionate share of the "excess nonrecourse liabilities" of the Company
within the meaning of Treasury Regulations Section 1.752-3(a)(3), each Member's
interest in the profits of the Company shall be deemed to equal the Applicable
Percentage of such Member.
3.8 Subordinated Debt Members; New Members. Upon payment by the
Subordinated Debt Members of their Capital Contribution from time to time as
provided in Section 3.3(c), Schedule III shall be amended to reflect the Capital
Commitment of such Member. Upon the admission of any additional Member to the
Company pursuant to Section 7.1, Schedule III shall be amended to reflect the
Capital Commitment of such Member or the allocation to such Member of such
portions of (i) the Capital Commitments of the Members theretofore admitted to
the Company and (ii) the Interests held by such Members as shall be agreed to by
the Managers. The Capital Commitments of the Members in the amounts set forth on
Schedule III, as amended in accordance herewith, shall be deemed for the
purposes of this Agreement as the respective Capital Commitments of the Members.
3.9 Adjustments to Capital Commitments and Interests Upon the
Occurrence of Certain Events.
(a) Each of the Members acknowledges and agrees that the Capital
Commitments of the Members and the number of Class B Common Interests and
Preferred Interests being acquired by the Initial Member has been determined on
the basis of the anticipated capital requirements of the Company in connection
with the purchase of the Original Telephone Businesses by one or more
subsidiaries of the Company. In the event that for any reason one or more of the
Original Telephone Businesses is not acquired by the Company or one or more of
its subsidiaries, the Capital Commitments of the holders of Class B Common
Interests and/or Preferred Interests (other than the Subordinated Debt Members)
shall be proportionately reduced to reflect such reduction in the capital
requirements of the Company and its subsidiaries.
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(b) In the event that the Capital Commitments of the Members are
decreased under the circumstances contemplated by paragraph (a) above and the
number of Class B Common Interests issued in respect thereof is reduced as a
result thereof, the number of Class A Common Interests issued to the Class A
Common Members shall, after giving effect to such decrease in the number of
Class B Common Interests, also be proportionately reduced, without any change in
any Class A Common Member's aggregate Capital Commitment with respect to such
Member's Class A Common Interests, such that the total number of outstanding
Class A Common Interests shall, after giving effect to such reduction, be equal
to 23.53% of the aggregate number of issued and outstanding Common Interests
held by the Initial Member and the Class A Common Members.
(c) Any such reduction in the number of outstanding Class A Common
Interests contemplated by paragraph (b) above shall (i) be allocated ratably
among the Class A Common Members, based upon the number of Class A Common
Interests held by each of them immediately prior to the date of such reduction
and (ii) result in a corresponding increase in (1) the Capital Commitment of the
Class A Common Members with respect to each Class A Common Interest held by them
and (2) the Class A Common Capital Amount (as hereinafter defined) of each Class
A Common Interest, in each case, determined by dividing (x) the aggregate
Capital Commitment or aggregate Capital Contribution that shall have been made,
as the case may be, with respect to all Class A Common Interests held by any
Class A Common Member immediately prior to such reduction, by (y) the number of
Class A Common Interests held by such Class A Common Member immediately
thereafter.
3.10 Distributions.
(a) Distributions Made in Same Manner as Payment Following
Liquidation Events. Distributions shall be made at such time and in such amounts
as determined by the Managers and shall be made among the Members on the same
basis as set forth in Article IV with respect to payments following a
Liquidation Event or, in the case of a redemption of Preferred Interests, with
respect to payments to be made upon such redemption.
(b) Special Tax Distributions. Notwithstanding any other provision
of this Section 3.10, if the Company has net taxable income for federal income
tax purposes for any taxable year of the Company, then the Company shall first
distribute at least an amount of cash (a "Tax Distribution") to each Member
which, when combined with all other distributions to such Member in the current
and all preceding taxable years of the Company, equals the product of (A) the
highest combined federal, state and local income tax rate applicable to a
resident of New York City at the time of such Tax Distribution (assuming the
full deductibility for federal tax purposes of any state and local income taxes)
and (B) the excess, if any, of (i) the aggregate net taxable income allocated to
such Member under this Agreement in the current and all preceding taxable years
of the Company over (ii) the aggregate net taxable loss allocated to such Member
under this Agreement in all preceding taxable years of the Company.
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(c) Restoration of Funds. Except as otherwise provided by law, no
Member shall be required to restore to the Company any funds properly
distributed to it pursuant to Sections 3.12(a) and (b).
3.11 Withholding. The Company shall comply with withholding
requirements under U.S. federal, state and local law and shall remit amounts
withheld to and file required forms with applicable jurisdictions. To the extent
that the Company is required to withhold and pay over any amounts to any
authority with respect to distributions or allocations to any Member, the amount
withheld shall be deemed to be a distribution in the amount of the withholding
to the Member. To the fullest extent permitted by law, in the event of any
claimed over-withholding, Members shall be limited to an action against the
applicable jurisdiction. If the amount to be withheld was not withheld from
actual distributions, the Company may reduce subsequent distributions by the
amount of such withholding. Each Member, by its acceptance of an Interest in the
Company, shall be deemed to agree to furnish the Company with any
representations and forms as shall reasonably be requested by the Company to
assist it in determining the extent of, and in fulfilling, its withholding
obligations.
3.12 Tax Matters Partner.
(a) The Initial Member shall be the tax matters partner (the "Tax
Matters Partner") of the Company and, as such, shall assume all the rights and
duties of a Tax Matters Partner as set forth in the Code and in the Treasury
Regulations promulgated thereunder. The Tax Matters Partner agrees to act as a
liaison between the Company and the IRS in connection with all administrative
and judicial proceedings involving tax controversies regarding the Company.
(b) The Tax Matters Partner agrees that it shall not, without the
consent of the Managers (i) settle any significant claims by the IRS against the
Company, or (ii) initiate judicial proceedings contesting adverse determinations
by the IRS against the Company.
(c) The Tax Matters Partner shall not be required to take any action
or incur any expenses for the prosecution of any administrative or judicial
remedies in its capacity as Tax Matters Partner unless the Members agree on a
method of sharing expenses incurred in connection with the prosecution of such
remedies. As long as the Tax Matters Partner is not grossly negligent and acts
in good faith pursuant to instructions it receives from the Members, the Tax
Matters Partner shall be fully protected in acting as such and the Company shall
indemnify and hold harmless the Tax Matters Partner from and against any and all
expenses incurred by the Tax. Matters Partner in connection with any activities
or undertakings taken by it in its capacity as the Tax Matters Partner. The Tax
Matters Partner shall take such action as may be reasonably necessary to
constitute the other Members as "notice partners" within the meaning of Section
6231(a)(8) of the Code.
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ARTICLE IV
INTERESTS AND OTHER SECURITIES
4.1 Preferred and Common Interests.
(a) Classes of Interests. The Interests in the Company shall be
divided into three classes: Preferred Interests (the "Preferred Interests"),
Class A Common Interests (the "Class A Common Interests") and Class B Common
Interests (the "Class B Common Interests" and, collectively with the Preferred
Interests and the Class A Common Interests, the "Interests"). Interests may, at
the discretion of the Managers, be represented by certificates evidencing any
number of whole Preferred Interests, Class A Common Interests or Class B Common
Interests, as the case may be. The total number of Interests which the Company
has the authority to issue is 700,000,000 Preferred Interests, 18,798,916 Class
A Common Interests, and 500,000,000 Class B Common Interests.
(b) Option Plan; Reservation of Class B Common Interests. The
Company shall reserve 9,000,000 Class B Common Interests for issuance to
employees of the Company and its subsidiaries pursuant to any one or more option
plans approved by the Managers for adoption from time to time by the Company.
(c) Future Issuances of Interests. The Managers may provide for the
issuance of any Interests upon the exercise, conversion or exchange of rights of
any options, warrants, convertible debt securities or such other interests or
instruments as the Managers may approve.
4.2 Preferred Interests.
(a) Dividends. The holders of the Preferred Interests shall not be
entitled to receive dividends.
(b) Liquidation. Subject to the priorities and restrictions set
forth in Section 4.6, upon the occurrence of a Liquidation Event, the holders of
the Preferred Interests shall be entitled to be paid an amount equal to the sum
of (i) $1.00 per Preferred Interest, or, if less, the aggregate amount of the
Capital Contribution that shall have been paid to the Company with respect to
such Preferred Interest as of the date of such Liquidation Event (the "Preferred
Capital Amount"), and (ii) an amount per Preferred Interest (the "Preferred
Appreciation Amount"), calculated in the manner of, and equal to, interest on
such Preferred Capital Amount from the date each payment in respect of a Capital
Contribution is made through the date of the Liquidation Event (such Preferred
Capital Amount being determined daily throughout the relevant period) at the
rate of 20% per annum, compounded quarterly (meaning that each quarter such
interest rate shall be applied to the Preferred Capital Amount plus the
Preferred Appreciation Amount accrued with respect to all previous quarters);
provided, however, that any Tax Distribution or other amounts distributed in
respect of any Preferred Interest by the Company
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prior to such Liquidation Event shall be deducted, first from the Preferred
Capital Amount, and then from the Preferred Appreciation Amount, in each case,
to which the holder of such Preferred Interest is entitled hereunder. The
aggregate amount payable to the holders of Preferred Interests in respect of
each such Interest as described in this Section 4.2(b) is referred to herein as
the "Preferred Liquidation Amount".
(c) Redemption.
(i) Subject to the priorities and restrictions set forth in Section
4.5 and to any restrictions (including without limitation any requirements
as to the use of proceeds) contained in the Loan Agreements, the Preferred
Interests are redeemable, at a redemption price equal to the Preferred
Liquidation Amount as of and to the date fixed for redemption, as if such
date were the date upon which a Liquidation Event occurred, as follows:
(A) The Preferred Interests may be redeemed in whole or from time to
time in part at any time (in amounts which shall be 100,000 Preferred
Interests or an integral multiple thereof), at the option of the Company.
(B) The Company shall redeem all of the Preferred Interests then
outstanding on September 3, 2011.
(C) The Company shall, upon the occurrence of a, redeem all of the
Preferred Interests then outstanding (or, if the Company is not permitted
by any Loan Agreement to redeem all such Interests, the maximum number of
Preferred Interests so permitted to be redeemed).
(ii) The date of any redemption of any Preferred Interests pursuant
to this Section 4.2(c) is referred to herein as a "Preferred Interest
Redemption Date."
(iii) Any Preferred Interests redeemed pursuant to this Section
4.2(c) or otherwise acquired by the Company in any manner whatsoever shall
be permanently retired and shall not under any circumstances be reissued;
and the Company may from time to time take such appropriate action as may
be necessary to reduce the authorized Preferred Interests accordingly.
(iv) In case of the redemption, purchase or retirement, for any
reason, of only a part of the outstanding Preferred Interests on a
Preferred Interest Redemption Date, subject to the priorities and
restrictions set forth in Section 4.5, all Preferred Interests to be
redeemed, purchased or retired shall be selected pro rata, such that there
shall be redeemed, purchased or retired from each registered holder in
whole Preferred Interests, as nearly as practicable to the nearest whole
Preferred Interest, the proportion of all the
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Preferred Interests to be redeemed, purchased or retired which the number
of Preferred Interests held of record by such holder bears to the total
number of Preferred Interests at the time outstanding.
(d) Voting Rights. Except as otherwise provided in this Agreement
and by law, the holders of Preferred Interests shall have no vote on any matters
to be voted on by the Members of the Company.
(e) Restrictions. At any time when Preferred Interests are
outstanding, except where the vote or written consent of the holders of a
greater number of Interests of the Company is required by law or by this
Agreement, and in addition to any other vote required by law, with-out a
Majority Vote of the Preferred Members, given in person or by proxy, either in
writing or at a special meeting of the Preferred Members called for that
purpose:
(i) The Company will not (x) create or authorize the creation of any
additional class of limited liability company interests unless the same
ranks junior to the Preferred Interests both as to dividends and as to the
distribution of assets on liquidation, or (y) increase the authorized
amount of the Preferred Interests, or increase the authorized amount of
any additional class of limited liability company interests unless the
same ranks junior to the Preferred Interests both as to dividends and as
to the distribution of assets on liquidation, or (z) create or authorize
any obligations or securities convertible into Preferred Interests or into
limited liability company interests of the Company of any other class
unless the same ranks junior to the Preferred Interests both as to
dividends and as to the distribution of assets on liquidation, in each
case whether any such creation or authorization or increase shall be by
means of amendment of this Agreement, merger, consolidation or otherwise.
(ii) The Company will not amend, alter or repeal this Agreement in
any manner that affects the respective preferences, voting power,
qualifications, special or relative rights or privileges of the Preferred
Interests, the Class A Common Interests or the Class B Common Interests or
which in any manner adversely affects the Preferred Interests or the
holders thereof.
4.3 Class A Common Interests.
(a) Dividends. To the extent permitted under the Delaware Act and
subject to the priorities and restrictions set forth in Section 4.5, dividends
may be paid on the Class A Common Interests as and when declared by the
Managers; provided, however, that no dividend shall be declared or paid on the
Class A Common Interests unless there shall be concurrently declared or paid a
dividend on the Class B Common Interests, equal in amount per Class B Common
Interest to the amount of the dividend declared or paid on each Class A Common
Interest.
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(b) Liquidation. subject to the priorities and restrictions set
forth in Section 4.5, upon the occurrence of a Liquidation Event, the holders of
the Class A Common Interests shall be entitled (i) to receive $.0438 per Class A
Common Interest, or, if less, the aggregate amount of the Capital Contribution
that shall have been paid to the Company with respect to such Class A Common
Interest (the "Class A Common Capital Amount"); provided, however, that any Tax
Distribution or other amounts (other than dividends) distributed in respect of
such Class A Common Interest by the Company prior to such Liquidation Event
shall be deducted first from the Class A Common Capital Amount to which the
holder of thereof is entitled hereunder and (ii) to share ratably with the
holders of the Class B Common Interests, based upon the number of Common
Interests held by them, in all remaining net assets of the Company available for
distribution, as provided in said Section 4.5.
(c) Voting Rights. Each Class A Common Interest shall entitle the
holder thereof to one vote upon all matters upon which Class A Common Members
have the right to vote.
4.4 Class B Common Interests.
(a) Dividends. To the extent permitted under the Delaware Act and
subject to the priorities and restrictions set forth in Section 4.5, dividends
may be paid on the Class B Common Interests as and when declared by the
Managers; provided, however, that no dividend shall be declared or paid on the
Class B Common Interests unless there shall be concurrently declared or paid a
dividend on the Class A Common Interests, equal in amount per Class A Common
Interest to the amount of the dividend declared or paid on each Class B Common
Interest.
(b) Liquidation. Subject to the priorities and restrictions set
forth in Section 4.5, upon the occurrence of a Liquidation Event, the holders of
the Class B Common Interests shall be entitled (i) to receive $1.00 per Class B
Common Interest, or, if less, the aggregate amount of the Capital Contribution
that shall have been paid to the Company with respect to such Class B Common
Interest (the "Class B Common Capital Amount"); provided, however, that any Tax
Distribution or other amounts (other than dividends) distributed in respect of
such Class B Common Interest by the Company prior to such Liquidation Event
shall be deducted first from the Class B Common Capital Amount to which the
holder of thereof is entitled hereunder and (ii) to share ratably with the
holders of the Class A Common Interests, based upon the number of Common
Interests held by them, in all remaining net assets of the Company available for
distribution, as provided in said Section 4.5.
(c) Voting Rights. Each Class B Common Interest shall entitle the
holder thereof to one vote upon all matters upon which Class B Common Members
have the right to vote.
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4.5 Priority of Payments Upon Liquidation; Certain Restrictions. (a)
Upon the occurrence of a Liquidation Event, the entire net assets of the Company
available to be distributed among the holders of Interests shall be distributed
as follows:
(i) first, ratably among the holders of Preferred Interests, based
on, and up to the maximum amount of, the Preferred Liquidation Amounts to
which they are respectively entitled as provided in Section 4.2(b)(i);
(ii) then, to the extent that there are net assets of the Company
remaining after payment in full of the Preferred Liquidation Amounts, as
aforesaid, ratably among the holders of the Common Interests, based on,
and up to the maximum amount of, the Class A Common Capital Amounts and
Class B Common Capital Amounts to which they are respectively entitled as
provided in Section 4.3(b)(i) and Section 4.4(b)(i); and
(iii) finally, to the extent of the entire remaining net assets of
the Company, after payment in full of the Preferred Liquidation Amounts,
the Class A Common Capital Amounts and the Class B Common Capital Amounts
as aforesaid, ratably among the holders of the Common Interests, based on
their respective number of Common Interests as provided in Section
4.3(b)(ii) and Section 4.4(b)(ii).
(b) Restrictions on Certain Distributions and Dividends. As long as
any Preferred Interests shall remain outstanding, without a Majority Vote of the
Preferred Members, no dividend shall be declared or paid upon, nor shall any
distribution be made upon, any Common Interests, other than a dividend or
distribution payable solely in Common Interests, nor shall any Common Interests
be purchased or redeemed by the Company (other than repurchases of Common
Interests from employees of the Company following termination of their
employment), nor shall any moneys be paid to or made available for a sinking
fund for the purchase or redemption of any Common Interest, provided, however,
that no such consent of the holders of the Preferred Interests shall be required
in order for the Company to make a Tax Distribution.
4.6 Certain Notices.
(a) Notice of Liquidation. Written notice of any Liquidation Event,
stating a payment date, the amount payable upon such Liquidation Event as
provided in this Article IV to which each holder of Interests is entitled with
respect to each class of Interest, and the place where said sums shall be
payable, shall be given by mail, postage prepaid, not less than 30 or more than
60 days prior to the payment date stated therein, to all holders of record of
Interests, such notice to be addressed to each such holder at such holder's post
office address as shown by the records of the Company.
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(b) Notice of Redemption. Not less than 30 or more than 60 days
before any Preferred Interest Redemption Date, written notice shall be given by
mail, postage prepaid, to the holders of record of the Preferred Interests to be
redeemed, addressed to each such holder at such holder's post office address as
shown by the records of the Company, specifying the number of Preferred
Interests to be redeemed, the redemption price to be paid for such Preferred
Interests, the place and the date (which date shall not be a day on which banks
in The City of New York are required or authorized to close) on which the
Preferred Interests will be redeemed. If such notice of redemption shall have
been duly given and if on or before such Preferred Interest Redemption Date the
funds necessary for redemption shall have been set aside so as to be and
continue to be available therefor, then, notwithstanding that any certificate
for Preferred Interests to be redeemed shall not have been surrendered for
cancellation, after the close of business on such Preferred Interest Redemption
Date, such Preferred Interests shall no longer be deemed outstanding, and all
rights with respect to such Preferred Interests shall forthwith after the close
of business on the Preferred Interest Redemption Date, cease, except only the
right of the holders thereof to receive the redemption price for such Preferred
Interests, without interest.
4.7 Issuance of Interests Upon the Admission of Additional Members.
Subject to the rights of the existing Members as set forth in this Agreement,
additional Interests may be issued to additional Members only upon the admission
of such additional Member pursuant to Article VII of this Agreement
4.8 Fractional Interests. The Company may, but shall not be required
to, issue fractions of an Interest. If the Company does not issue fractions of
an Interest, it shall (a) arrange for the disposition of fractional Interests by
those entitled thereto, (b) pay in cash the fair value of fractions of an
Interest as of the time when those entitled to receive such fractions are
determined or (c) issue scrip or warrants in registered form (either represented
by a certificate or uncertificated) which shall entitle the holder to receive a
full Interest upon the surrender of such scrip or warrants aggregating a full
Interest. A certificate for a fractional Interest or an uncertificated
fractional Interest shall, but scrip or warrants shall not unless otherwise
provided therein, entitle the holder to exercise voting rights, to receive
dividends thereon and to participate in any of the assets of the Company in the
event of liquidation. The Managers may cause scrip or warrants to be issued
subject to the conditions that they shall become void if not exchanged for
certificates representing the full Interests or uncertificated full Interests
before a specified date, or subject to the conditions that the Interests for
which scrip or warrants are exchangeable may be sold by the Company and the
proceeds thereof distributed to the holders of scrip or warrants, or subject to
any other conditions which the Managers may impose.
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ARTICLE V
DISSOLUTION AND WINDING-UP
5.1 Dissolution. The Company shall be dissolved and its affairs
wound up upon the occurrence of the earliest of following events:
(a) the dissolution or liquidation of the Company;
(b) the Managers shall consent to the dissolution and termination of
the Company; or
(c) as otherwise required by the Delaware Act.
5.2 Resignation of Members. A Member may resign from the Company
only by transferring such Member's interests pursuant to Article VI hereof No
Member shall be able to resign or be deemed to resign if such Member ceases to
be a Member (a "Former Member") due to bankruptcy or for any other reason except
upon the Majority Vote of the Common Members, if the Company continues to exist.
Such Former Member, if not permitted or deemed to resign, shall not be entitled
to any of the rights granted to a Member hereunder or under applicable law but
shall be, to the extent not otherwise provided by this Agreement or applicable
law, entitled to receive distributions and allocations of items of income, gain,
loss, deduction, expense and credit as if such Former Member continued to be a
Member hereunder.
5.3 Winding-Up.
(a) Upon dissolution of the Company, the Company's affairs shall be
wound up by such person, who shall act as liquidating trustee, as may be
designated by the Managers.
(b) Upon the winding-up of the Company, any amounts permitted to be
distributed to Members shall be distributed in accordance with Section 4.5.
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ARTICLE VI
RESTRICTIONS ON TRANSFER; CERTAIN
SALE AND PREEMPTIVE RIGHTS
6.1 General; Tag-Along Rights.
(a) Restrictions on Transfer.
(i) No Additional Member shall be permitted to sell, exchange
or in any other manner (other than in a manner permitted by Section 6.3)
dispose of any Interests in the Company held directly or indirectly by
such Member prior to September 3, 2001 other than in an Approved
Transaction or upon the occurrence of a Redemption Event or as otherwise
required in order to comply with the provisions of this Article VI.
(ii) Subject as aforesaid, if any Member (a "Selling
Investor") proposes at any time to sell, exchange or in any other manner
(other than in a manner permitted by Section 6.3 hereof) dispose of any
Common Interests in the Company held by such Member, then such Member
shall give written notice (a "Notice of Intention to Sell") to the other
Members (collectively, the "Other Investors") setting forth in reasonable
detail the terms and conditions of such proposed transaction.
(b) Right of Other Investors Each of the Other Investors shall have
the right, exercisable upon written notice to the Selling Investor within
fifteen (15) days after receipt of any Notice of Intention to Sell, to
participate in the proposed disposition of Common Interests by the Selling
Investor to the proposed purchaser on the terms and conditions set forth in such
Notice of Intention to Sell. Each of the Other Investors may participate with
respect to all or any part of that number of Common Interests which is equal to
the product obtained by multiplying (i) the aggregate number of Common Interests
covered by the proposed disposition (treating, for purposes of such calculation,
any Common Interests issuable upon conversion of any convertible securities of
the Company or upon exercise of any options or rights covered by the proposed
disposition as representing the Common Interests issuable upon such conversion
or exercise) by (ii) a fraction, the numerator of which is the number of Common
Interests owned by such Other Investor (treating, for purposes of such
calculation, any Common Interests of such Class issuable upon conversion of any
convertible securities of the Company or upon exercise of any options or rights
then held by such Other Investor as being issued and outstanding and held by
such Other Investor as of such date) and the denominator of which is the sum of
the total number of Common Interests at the time owned by the Selling Investor
and the Other Investors combined (treating, for purposes of such calculation,
any Common Interests issuable upon conversion of any convertible securities of
the Company or upon exercise of any options or rights then held by the Selling
Investor and the Other Investors as being issued and outstanding and held by the
Selling Investor and the Other Investors, as the case may be, as of such date).
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(c) Delivery of Interests. Each of the Other Investors participating
in the proposed disposition shall deliver to the Company, as agent for such
Other Investor, for transfer to the proposed acquiror, one or more certificates
(if such Interests are certificated), properly endorsed for transfer or
accompanied by transfer powers duly endorsed for transfer, with all transfer
taxes paid and stamps affixed, which represent the Common Interests that such
Other Investor elects to dispose of pursuant to this Section 6.1. The
consummation of such proposed disposition shall be subject to the sole
discretion of the Selling Investor, which shall have no liability whatsoever to
any Other Investor participating therein other than (i) to obtain for such Other
Investor the same terms and conditions as those obtained by the Selling Investor
as set forth in the Notice of Intention to Sell or any amendment thereof
communicated to the Other Investors in the manner provided for in Section
6.1(a)(ii) above; it being understood, however, that any consideration payable
or otherwise deliverable to the Common Members participating in such disposition
shall be shared among the Common Members in a manner consistent with the
respective Interests of the Class A Common Members and the Class B Common
Members in effect immediately prior to the consummation of such disposition,
including, without limitation, giving effect to the priorities set forth in
Section 4.5.
(d) Delivery of Proceeds. The Common Interests delivered by each of
the Other Investors to the Company pursuant to Section 6.1(c), or with respect
to which instructions shall have been so given, shall be transferred by the
Company to the purchaser, in consummation of the disposition to such purchaser,
pursuant to the terms and conditions specified in Section 6.1(a) above, and the
Company shall promptly thereafter remit to such Other Investor that portion of
the proceeds of disposition to which such Other Investor is entitled by reason
of such participation.
6.2 Right of First Refusal.
(a) Notice of Transfer. Subject as set forth in Section 6.1(a)(i),
if any Additional Member (a "Selling Investor") proposes at any time to sell,
exchange or in any other manner (other than in a manner permitted by Section 6.3
hereof) dispose of any Common Interests or other equity interests in the Company
held by such Member, then such Member shall give written notice (a "Notice of
Intention to Sell") to the Initial Member and, if the circumstances described in
paragraph (b) below are applicable, to each other Additional Member, setting
forth in reasonable detail the terms and conditions of such proposed
transaction.
(b) Right of Additional Members. If the circumstances giving rise to
the delivery of a Notice of Intention to Sell are due to unanticipated personal
hardship affecting the Selling Investor (or, in the case of a Selling Investor
that is not an individual, any of such Selling Investor's equityholders), and no
Notice of Intention to Sell has previously been delivered by any Additional
Member for such a reason, the Additional Members shall have the right,
exercisable upon written notice to the Selling Investor within thirty (30) days
after receipt of any Notice of Intention to Sell, to purchase a fraction, the
numerator of which shall be the number of Common
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Interests held by such Additional Member and the denominator of which shall be
the number of Common Interests held by all Additional Members (other than the
Selling Investor) of the Common Interests covered by the proposed disposition
from the Selling Investor on the terms and conditions set forth in such Notice
of Intention to Sell.
(c) Right of Initial Member. The Initial Member shall have the
right, exercisable upon written notice to the Selling Investor within fifteen
(15) days after receipt of any Notice of Intention to Sell, to purchase all, but
not less than all, of (i) the Common Interests covered by the proposed
disposition from the Selling Investor or, (ii) in the circumstances described in
paragraph (b) above, the Common Interests that the other Additional Members have
not elected to purchase, on the terms and conditions set forth in such Notice of
Intention to Sell.
(d) Delivery of Interests. The Selling Investor shall deliver to the
Company, as agent for such Selling Investor, for transfer to the Additional
Members or the Initial Member, as the case may be, one or more certificates (if
such Interests are certificated), properly endorsed for transfer or accompanied
by transfer powers duly endorsed for transfer, with all transfer taxes paid and
stamps affixed, which represent the Common Interests that the Initial Member
elects to purchase pursuant to this Section 6.2.
(e) Delivery of Proceeds. The Common Interests delivered by the
Selling Investor to the Company pursuant to Section 6.2(d) shall be transferred
by the Company to the Additional Members or the Initial Member, as the case may
be, in consummation of the disposition to such Members or Member, pursuant to
the terms and conditions specified in Section 6.2(a) above, and the Company
shall promptly thereafter remit to the Selling Investor the proceeds of
disposition to which such Selling Investor is entitled by reason of such
disposition.
(f) Sale of Unpurchased Interests. During the 90 days following the
expiration of such 15 day offering period, the Selling Investor shall be
entitled to sell any Interests or other equity securities which the other
Members shall not have agreed to purchase as described in Section 6.2(b) and (c)
above on terms and conditions no more favorable to the purchasers thereof than
those offered to the Initial Member. Any Interests or other equity securities
offered or sold by any Additional Member after such 90 day period must be
reoffered to the Initial Member pursuant to the terms of this Section 6.2.
6.3 Permitted Transfers. Anything herein to the contrary
notwithstanding, Section 6.1 and Section 6.2 shall not apply to (i) any transfer
by any Member to one or more Affiliates of such Member or any investment limited
partnership or limited liability company under common management with any
Member, (ii) any distributions or transfers by any Member to any of its members
or partners (including any of its limited partners) or (iii) any transfer by a
Member to such Member's spouse or lineal descendants, or to a trust for the
benefit of any of the foregoing; provided, in each case, that any such
transferee (each, a "Permitted Transferee") shall agree
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in writing with the parties hereto to be bound by, and to comply with, all
applicable provisions of this Agreement.
6.4 Preemptive Rights.
(a) Offer to Sell. If the Managers approve the issuance or sale of
any Interests or equity securities of the Company in an Eligible Offering, then
the Company shall first offer to sell to each Member a portion of such Interests
or equity securities equal to all or any portion of such Member's Applicable
Percentage thereof.
(b) Right to Purchase. In order to accept an offer under Section
6.4(a), a Member must, within 15 days after receipt of written notice from the
Company describing in reasonable detail the Interests or other equity securities
being offered, the purchase price thereof, the payment terms and such Member's
Applicable Percentage, deliver a written notice to the Company accepting such
offer.
(c) Sale of Unsubscribed Interests. During the 90 days following the
expiration of such 15 day offering period, the Company shall be entitled to sell
any Interests or other equity securities which have not been subscribed for by
Members as described in Section 6.4(b) above on terms and conditions no more
favorable to the purchasers thereof than those offered to such Members. Any
Interests or other equity securities offered or sold by the Company in an
Eligible Offering after such 90 day period must be reoffered to the Members
pursuant to the terms of this Section 6.4.
6.5 Sale of the Business; Drag-Along Rights; Etc.
(a) If any transaction or series of related transactions negotiated
with an unaffiliated bona fide third party on an arm's-length basis that would
result in (i) a sale of all or substantially all of the assets of the Company is
approved by the Managers or (ii) the sale by any Member or group of Members of
equity interests of the Company representing more than 50% of all outstanding
equity interests of the Company is approved by such Members or, if such approval
is required hereunder, by the Managers (each, an "Approved Transaction"), then
each Member covenants and agrees (i) to vote all of such Member's Interests and
other voting securities of the Company held by such Member in favor of such
Approved Transaction if such a vote shall be required and (ii) to sell all of
its Interests and other equity securities of the Company to the purchaser in
such Approved Transaction if such sale shall be required by the Managers or
otherwise by the sellers as part of such Approved Transaction; provided,
however, that any consideration payable or otherwise deliverable to the Members
in such Approved Transaction shall be shared among the Members in a manner
consistent with the respective Interests of the Members as in effect immediately
prior to the consummation of such Approved Transaction.
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(b) In connection with any senior debt financing by the Company or
any of its Affiliates, each Member covenants and agrees to pledge all of its
Interests and other equity securities of the Company to the lenders
participating in such senior debt financing if such pledge shall be required by
the Managers or otherwise as part of such debt financing;
(c) In furtherance of the covenants of the Members in Section 6.5(a)
and Section 6.5(b), each Member hereby agrees to cooperate fully with the
Managers and the Company in any such Approved Transaction or debt financing and
to execute and deliver all documents (including purchase agreements) and
instruments as the Managers or the Company reasonably request to effect such
Approved Transaction or debt financing, including, without limitation, the
making of all commercially reasonable representations, warranties and
indemnifications (including participating in any escrow arrangements) and
similar arrangements relating to such Approved Transaction or debt financing,
except that no Additional Member shall be required to guarantee the obligations
of the Company or any of its Affiliates in connection with any senior debt
financing.
6.6 Additional Members' Put Option.
(a) On and at any time after September 3, 2001 but before March 1,
2002, each Additional Member (or such Additional Member's legal representative)
(each, a "Selling Investor") shall have the right and option, but not the
obligation, to require the Initial Member to purchase from such Selling Investor
any or all of the Class A Common Interests acquired by such Selling Investor
pursuant to the Subscription Agreement (collectively, the "Put Securities"). In
the event that the such right and option is exercised, the Initial Member shall
pay to such Selling Investor (or such legal representative) as the purchase
price for such Put Securities (the "Purchase Price"), an amount per Class A
Common Interest equal to the lower of (i) $1.00 per Class A Common Interest
being sold and (ii) the Fair Market Value of the Put Securities, in either case,
as of the date such Additional Member shall have given a Put Notice to the
Initial Member with respect to such Put Securities.
(b) Each Selling Investor may exercise the right and option
described in paragraph (a) above by giving the Initial Member thirty (30) days'
written notice (each, a "Put Notice") of election to sell, which notice of
election shall specify the number and description of the Put Securities and the
date of closing the sale of the Put Securities, which date shall be a business
day not later than 60 days after the date the Put Notice is given. The Company,
the Initial Member and each Selling Investor shall cooperate in determining the
Purchase Price in accordance with this Section 6.5 and the definition of Fair
Market Value within forty-five (45) days after any Put Notice is given.
(c) The closing for the purchase by the Initial Member or the
Company of the Put Securities pursuant to the provisions of this Section 6.5
will take place at the offices of the Company on the date specified in the Put
Notice. At such closing, each Selling Investor will
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deliver to the Initial Member the Put Securities, duly endorsed for transfer,
against payment in cash of the Purchase Price thereof
(d) In the event that any Additional Member has not exercised such
Additional Member's right and option under paragraph (a) above on or before
March 1, 2002, the Initial Member shall thereafter cease to be subject to the
obligation to purchase any Interests or other securities of the Company from
such Additional Member pursuant to this Section 6.6.
ARTICLE VII
ADMISSION OF NEW MEMBERS
7.1 Admission of New Members.
(a) Admission of Members. The Managers may at any time cause the
Company to admit additional Members ("New Members"); provided, however, that,
subject as set forth in Section 7.2, each Permitted Transferee of a Member shall
automatically be admitted as a Member hereunder with respect to the Interests
transferred.
(b) Time of Admission. A New Member shall be deemed admitted as a
member upon the later of: (i) the later of (1) the written request by such
Person that the Members' Interest Register reflect such admission and (2) the
execution by such Person of this Agreement or a counterpart hereof whereby such
person agrees to be bound by the provisions of this Agreement, and (ii) the time
such Person is listed as a Member in the Members' Interest Register of the
Company.
(c) Required Contribution. The Managers shall determine the
contribution the New Member needs to make and the number and class of interests
to be issued to such Member. The Managers may provide that the required
contribution may be paid prior to, at the time of, or subsequent to, the
issuance of any interest to such Member and that any subsequent contribution may
be made from distributions paid or payable in respect of such interest. If any
portion of a required contribution is payable after the issuance of the
interest, the Managers may determine that any rights otherwise incident to such
interest (including, without limitation, voting, distribution, inspection and
transfer rights) will not come into effect until such required contribution has
been made. At any time that the voting rights in respect of such interest have
been suspended, in determining whether a required percentage of Interests have
approved any action, such Interests shall be excluded from both the numerator
and the denominator of such percentage computation.
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7.2 Transferees and Assignees.
(a) Except as expressly provided herein, any transferee or assignee
of any Interest in the Company shall be subject to all of the restrictions on
transfer of an interest in the Company imposed upon a Member, even if such
transferee or assignee is not admitted to the Company as a Member. Any
transferee or assignee of an interest in the Company who is not admitted to the
Company as a Member shall nevertheless be entitled to the share of Company
profits, losses and distributions attributable to the interest acquired by such
transferee or assignee.
(b) As a condition to any person's admission to the Company as a new
or substitute Member, such person shall be required to execute an amendment to
this Agreement, in such form as may be required by the Managers, under which
such person agrees to be bound by all of the terms, provisions and obligations
of this Agreement.
ARTICLE VIII
CERTAIN AGREEMENTS
8.1 Mergers, Etc. The Company may merge or consolidate with one or
more limited liability companies, corporations, business trusts or associations,
real estate investment trusts, common law trusts or unincorporated businesses,
including a general partnership or limited partnership, formed under the laws of
the State of Delaware or any other jurisdiction, pursuant to a written agreement
of merger or consolidation ("Merger Agreement") in accordance with this Section
8.1.
(a) Procedure for Merger or Consolidation. Merger or consolidation
of the Company pursuant to this Section 8.1 requires the prior approval of the
Managers. If the Managers shall determine, in the exercise of their sole
discretion, to consent to the merger or consolidation, the Managers shall
approve the Merger Agreement, which shall set forth:
(i) the names and jurisdictions of formation or organization of each
of the business entities proposing to merge or consolidate;
(ii) the name and jurisdiction of formation or organization of the
business entity that is to survive the proposed merger or consolidation
(the "Surviving Business Entity");
(iii) the terms and conditions of the proposed merger or
consolidation;
(iv) the manner and basis of exchanging or converting the equity
securities of each constituent business entity for, or into, cash,
property or limited partnership or
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limited liability company interests, rights, securities or obligations of
the Surviving Business Entity; provided that holders of Interests shall
not receive general partnership interests in any such merger of
consolidation; and (i) if any general or limited partnership or limited
liability company interests, rights, securities or obligations of any
constituent business entity are not to be exchanged or converted solely
for, or into, cash, property or limited partnership or limited liability
company interests, rights, securities or obligations of the Surviving
Business Entity, the cash, property or limited partnership or limited
liability company interests, rights, securities or obligations of any
limited partnership, limited liability company, corporation, trust or
other entity (other than the Surviving Business Entity) which the holders
of such interests, rights, securities or obligations of the constituent
business entity are to receive in exchange for, or upon conversion of,
their interests, rights, securities or obligations and (ii) in the case of
securities represented by certificates, upon the surrender of such
certificates, which cash, property or general or limited partnership or
limited liability company interests, rights, securities or obligations of
the Surviving Business Entity or any general or limited partnership,
limited liability company, corporation, trust or other entity (other than
the Surviving Business Entity), or evidences thereof, are to be delivered;
and
(v) such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or appropriate by the Managers.
(b) Approval by Common Members of Merger or Consolidation.
(i) General. The Managers, upon their approval of the Merger
Agreement as aforesaid, shall direct that the Merger Agreement be
submitted to a vote of the Common Members whether at a meeting or by
written consent, in either case in accordance with the requirements of
Section 2.3. A copy or a summary of the Merger Agreement shall be included
in or enclosed with the notice of a meeting or the written consent.
(ii) Required Vote. The Merger Agreement shall be approved upon
receiving the Majority Vote of the Common Members voting together as a
single Class unless the Merger Agreement contains any provision which, if
contained in an amendment to this Agreement, the provisions of this
Agreement or the Delaware Act would require the vote or consent of a
greater percentage of the Interests or of any Class thereof, in which case
such greater percentage vote or consent shall be required for approval of
the Merger Agreement.
(iii) Abandonment of Merger or Consolidation. After such approval by
Majority Vote of the Common Members, and at any time prior to the filing
of the certificate of merger or consolidation pursuant to Section 8.1(c),
the merger or consolidation may be abandoned pursuant to provisions
therefor, if any, set forth in the
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Merger Agreement. The Merger Agreement shall also require the approval of
any other Class of Members if such approval is specifically required by
this Agreement.
(c) Certificate of Merger or Consolidation. Upon the required
approval by the Managers and the Common Members of a Merger Agreement, a
certificate of merger or consolidation shall be executed and filed with the
Secretary of State of the State of Delaware in conformity with the requirements
of the Delaware Act.
(d) Effect of Merger or Consolidation.
(i) Effect of Merger. At the effective time of the certificate of
merger or consolidation:
(A) all of the rights, privileges and powers of each of the business
entities that has merged or consolidated, and all property, real, personal
and mixed, and all debts due to any of those business entities and all
other things and causes of action belonging to each of those business
entities shall be vested in the Surviving Business Entity and after the
merger or consolidation shall be the property of the Surviving Business
Entity to the extent they were property of each constituent business
entity;
(B) the title to any real property vested by deed or otherwise in
any of those constituent business entities shall not revert and is not in
any way impaired because of the merger or consolidation;
(C) all rights of creditors and all liens on or security interest in
property of any of those constituent business entities shall be preserved
unimpaired; and
(D) all debts, liabilities and duties of those constituent business
entities shall attach to the Surviving Business Entity, and may be
enforced against it to the same extent as if the debts, liabilities and
duties had been incurred or contracted by it.
(ii) No Transfer of Assets or Liabilities. A merger or consolidation
effected pursuant to this Section 8.1 shall not be deemed to result in a
transfer or assignment of assets or liabilities from one entity to another
having occurred.
8.2 Public Offering. In the event that the Managers approve an
initial public offering and sale of equity securities of the Company pursuant to
an effective registration statement under the Securities Act (a "Public
Offering") or the Company is required to undertake a Public Offering pursuant to
the Registration Rights Agreement, the Members shall take all necessary or
desirable actions required or deemed advisable by the Managers in connection
with the consummation of such Public Offering. In the event that (i) such Public
Offering is an underwritten offering and the managing underwriters advise the
Company in writing that in their
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opinion the existing capital structure of the Company adversely affects the
marketability of the offering or (ii) the Common Members, voting together as a
single Class, so elect by Majority Vote, each Member shall consent to and vote
for a recapitalization, reorganization and/or exchange of such Member's
Interests into securities that the managing underwriter and/or such Common
Members by Majority Vote find acceptable and shall take all necessary or
desirable actions in connection with the consummation of such recapitalization,
reorganization and/or exchange; provided, however, that the resulting
securities, to the extent possible, reflect and are consistent with the Members'
respective Interests as in effect immediately prior to such Public Offering
(except that such recapitalization, reorganization and/or exchange shall
include, without limitation, a reclassification of the Class B Interests on a
one-for-one basis to create voting parity between the Class A Common Interests
and the Class B Common Interests); and provided further, however, that the
Members are in substantially the same economic position with respect to such
resulting securities as they were prior to such recapitalization, reorganization
and/or exchange.
8.3 Provisions Relating to Subsidiaries. With respect to each direct
and indirect subsidiary acquired or formed by the Company, the Company shall
comply with the provisions of this Section 8.3.
(a) Equity Securities. All investments by the Company in the equity
securities of such subsidiary in connection with financing such subsidiary's
purchase (whether direct or indirect) of any of the Original Telephone
Businesses, shall be funded in the ratio of 85% preferred equity and 15% common
equity, in the manner of the Preferred Interests and the Class B Common
Interests issued to the Members by the Company pursuant to the Subscription
Agreement; provided, however that the terms of the preferred and common equity
issued in such proportions shall be determined by the Managers and in any event
need not be identical to the Preferred Interests and the Common Interests issued
by the Company.
(b) Preemptive Rights. The certificate of incorporation, limited
liability company agreement, partnership agreement or other charter or other
document governing the rights and privileges and restrictions applicable to the
securities issued to the Company and the other holders of securities by such
subsidiary shall provide that any issuance of equity securities by such
subsidiary shall be governed by provisions for the benefit of the Company that
will apply with like effect to those contained in Section 6.4 of this Agreement
and the definitions used therein.
(c) Plan Asset Regulations. Each such subsidiary shall qualify as a
majority owned subsidiary for purposes of the Plan Asset Regulations.
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ARTICLE IX
CERTAIN DEFINITIONS
For the purposes of this Agreement, the following terms shall have
the meanings specified in this Article. Additional terms are defined in the text
of this Agreement.
"Acquisition Closing Date" has the meaning set forth in Section
3.3(b).
"Act" means the Delaware Limited Liability Company Act, 6 Del. C.
Section 18-101 et seq., as amended from time to time.
"Additional Members" has the meaning set forth in the recitals to
this Agreement.
"Affiliate", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control with,
such Person. For purposes of this definition, "control" (including, with
correlative meaning, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
"Applicable Percentage" means, with respect to each Common Member as
of any date, the result (expressed as a percentage) obtained by dividing (x) the
aggregate number of Common Interests held by such Common Member on such date
(treating the Common Interests issuable upon conversion of any convertible
securities of the Company or upon exercise of any options or rights then held by
such Member as being issued and outstanding and held by such Member as of such
date) by (y) the total number of Common Interests issued and outstanding as of
such date (treating the Common Interests issuable upon conversion of all
outstanding securities or upon exercise of all outstanding options or rights as
aforesaid as being issued and outstanding as of such date).
"Approved Transaction" has the meaning set forth in Section 6.5(a).
"Board" has the meaning set forth in Section 2.1.
"Book Value" has the meaning set forth in Section 3.4.
"Capital Account" has the meaning set forth in Section 3.6.
"Capital Commitment" means with respect to any Member, the amount
set forth opposite such Member's name on Schedule III hereto in the column
labeled "Capital Commitment".
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"Capital Contribution" means a contribution in cash by a Member to
the capital of the Company pursuant to this Agreement.
"Certificate of Formation" has the meaning set forth in Section
1.1(a).
"Class" means, with respect to any Interests or other equity
interests in the Company, the Class A Common Interests, the Class B Common
Interests, the Preferred Interests, the Common Interests, and each other class
of equity interests in the Company that may be issued from time to time in
accordance with this Agreement, and with respect to any Members, the Class A
Common Members, the Class B Common Members, the Common Members and the Preferred
Members.
"Class A Common Capital Amount" has the meaning set forth in Section
4.4(b).
"Class A Common Interest" means an interest in the Company that
represents a "Class A Common" limited liability company interest having the
designations, powers, preferences and rights, and the qualifications,
limitations and restrictions thereof, specified in Article IV.
"Class A Common Member" has the meaning set forth in Section
2.3(b)(ii).
"Class B Common Capital Amount" has the meaning set forth in Section
4.3(b).
"Class B Common Priority Amount" has the meaning set forth in
Section 4.3(b).
"Class B Common Interest" means an interest in the Company that
represents a "Class B Common" limited liability company interest having the
designations, powers, preferences and rights, and the qualifications,
limitations and restrictions thereof, specified in Article IV.
"Class B Common Member" has the meaning set forth in Section
2.3(b)(ii).
"Code" means the Internal Revenue Code of 1986, as amended. Any
reference to a Section of the Code shall include a reference to any amendatory
or successor provision thereto.
"Common Interests" means, collectively, the lass A Common Interests
and the Class B Common Interests.
"Common Members" means the Class A Common Members and the Class B
Common Members.
"Deadlock" shall mean (x) with respect to any vote of the Managers
taken on any matter under consideration at a duly convened meeting of the
Managers at which a quorum is present and acting throughout, that the number of
Managers voting in favor of such matter shall
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be equal to the number of Managers voting against such matter and (y) with
respect to any meeting of the Managers that shall have been duly called in the
manner provided in Section 2.7(a), that such meeting shall have been adjourned
on two or more occasions due to a failure to constitute a quorum of the Managers
at such meeting.
"Director" shall mean at any time and from time to time, each person
that shall be a member of the Board at such time in accordance with this
Agreement.
"Eligible Offering" means an offer by the Company to sell for cash
to one or more investors Interests or other equity securities of the Company or
any security or instrument convertible into or exchangeable for, or carrying
rights or options to purchase, Interests or other equity securities of the
Company, other than:
(i) an offering of securities by the Company to its employees,
consultants, officers and/or directors in connection with or pursuant to
any employee benefit or compensation plan or arrangement approved by the
Managers, whether currently in existence or created hereafter;
(ii) the offering and sale of Interests pursuant to the Subscription
Agreement, or in connection with any debt financing;
(iii) the issuance of Interests or other equity securities of the
Company pursuant to the exercise or conversion of any options, warrants or
convertible securities issued in compliance with the preemptive rights set
forth in Section 6.4 (except to the extent that such options, warrants or
convertible securities were themselves originally issued in an offering
not excluded from the definition of Eligible Offering under clauses (i),
(ii), (iv) or (v) of this definition.
(iv) in connection with any merger of, or acquisition by, the
Company, any corporate partnering, strategic alliance, technology
transfer, equipment financing or similar transaction by the Company or
other transaction by the Company approved by the Managers for a
consideration other than cash; or
(v) in an offering registered under the Securities Act.
"Fair Market Value" of the Class A Common Interests, or of any other
common equity interests or their equivalents in the Company outstanding at any
time (the "Common Equity") shall be determined, as of any date, as follows: (i)
if shares of Common Equity are listed or admitted to trading on one or more
national securities exchanges, the average of the last reported sales prices per
share of Common Equity as reported or, in case no such reported sales takes
place on any such day, the average of the last reported bid and asked prices per
share of Common Equity, in either case, on the principal national securities
exchange on which the
▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ Equity is listed or admitted to trading, for the twenty (20) consecutive
trading days immediately preceding such date; (ii) if the Common Equity is not
listed or admitted to trading on a national securities exchange but is traded on
the Nasdaq National Market ("NNM"), the average of the last reported sales
prices per shares of Common Equity or, in case no such reported sales takes
place on any such day, the average of the last reported bid and asked prices per
share of Common Equity, in either case, as reported on the NNM for the twenty
(20) consecutive trading days immediately preceding such date; or (iii) if the
Common Equity is not traded on the NNM but is quoted by NASDAQ or some other
nationally recognized quotation service, the average of the mean between the
highest bid and lowest asked prices as of the close of business during the
twenty(20) consecutive trading days immediately preceding such date as quoted by
NASDAQ. If none of (i), (ii) or (iii) of the preceding sentence applies, Fair
Market Value of the Common Equity shall mean, as of any date, the fair value per
interest determined jointly by the Board of Directors of the Initial Member
(excluding any member of such Board of Directors that is a Selling Investor of
Put Securities) and the Selling Investor or Selling Investors of Put Securities
evidencing a majority of Common Equity interests represented thereby; provided,
however, that if such parties are unable to reach agreement within forty-five
(45) days after a Put Notice is given, the Fair Market Value shall be determined
in good faith by an independent investment banking firm selected jointly by the
Board of Directors of the Initial Member (excluding any member of such board of
directors that is a Selling Investor of Put Securities) and the Selling Investor
or Selling Investors of Put Securities evidencing a majority of the Common
Equity interests represented thereby or, if that selection cannot be made within
fifteen (15) days, by an independent investment banking firm selected by the
American Arbitration Association in accordance with its rules, which firm shall
(x) determine, as of such date, using such methods and models as it deems
relevant, the Fair Market Value of the entire Common Equity of the Company,
which shall be the highest price that would be paid for the all the common
equity interests in the Company on a going-concern basis in a single
arm's-length transaction between a willing buyer and a willing seller and (y)
derive from such highest price the Fair Market Value of the Common Equity to be
sold, without applying any discount for a minority position or any premium for a
control position represented by such securities. The cost of such appraisal
shall be shared equally between the purchaser of the Put Securities, on the one
hand, and the Selling Investors thereof, on the other hand. Notwithstanding the
foregoing, if on any date that a Put Notice has been given (1) the shares of
Common Equity are not listed or admitted to trading in any manner described in
clauses (i), (ii) or (iii) of the first sentence of this definition and (2) the
Fair Market Value of the Common Equity shall have been previously determined as
of any date within the 180 days immediately preceding such date by an
independent investment banking firm using the appraisal method described as
aforesaid, whether pursuant to the provisions of Section 6.6 or otherwise, the
Fair Market Value of the Common Equity as of such date shall, at the election of
the purchaser of the Put Securities, be deemed to be the Fair Market Value
determined by such prior appraisal.
"Fiscal Year" shall have the meaning set forth in Section 1.5.
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"Initial Investment" has the meaning set forth in the recitals to
this Agreement.
"Initial Member" has the meaning set forth in the recitals to this
Agreement.
"Initial Member LLC Agreement" means the Amended and Restated
Limited Liability Agreement of the Initial Member, dated as of September 3,
1999, among WCAS VIII and the other members of the Initial Member named therein.
"Interests" has the meaning set forth in Section 4.1(a).
"IRS" means the Internal Revenue Service.
"Liquidation Event" means the occurrence of (i) the liquidation,
dissolution or winding up, whether voluntary or involuntary, of the Company,
(ii) the consolidation or merger of the Company with or into any other entity
(other than a merger which will not result in more than 50% of the voting
Interests and economic interests of the Company outstanding immediately after
the effective date of such merger being owned of record or beneficially by
persons other than the holders of such voting Interests and economic interests
immediately prior to such merger in the same proportions in which such Interests
were held immediately prior to such merger), (iii) the sale of all or
substantially all of the properties and assets of the Company as an entirety to
any other person, or (iv) the acquisition of "beneficial ownership" by any
"person" or "group" of voting Interests of the Company representing more than
50% of the voting power of all out-standing voting Interests, whether by way of
merger or consolidation or otherwise, other than any such acquisition by the
Initial Member or WCAS VIII. As used in the preceding sentence, (x) the terms
"person" and "group" shall have the meaning set forth in Section 13(d)(3) of the
Exchange Act, whether or not applicable, (y) the term "beneficial owner" shall
have the meaning set forth in Rules 13d-3 and 13d-5 under the Exchange Act,
whether or not applicable, except that a person shall be deemed to have
"beneficial ownership" of all voting Interests that any such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time or upon the occurrence of certain events, and (z) any
"person" or "group" will be deemed to beneficially own any voting Interests of
the Company so long as such person or group beneficially owns, directly or
indirectly, in the aggregate a majority of the voting stock of a registered
holder of the voting Interests of the Company.
"Loan Agreement" means any of the agreements pursuant to which the
Initial Member, the Company or their direct and indirect subsidiaries arrange
for, secure or obtain (i) loans and a credit facility from Bank of America and
the other members of the bank group and (ii) subordinated loans from WCAS VIII
or its affiliates and other investors designated by WCAS VIII, or such other
source of subordinated loans to the Company's direct and indirect subsidiaries
(in the case of clauses (i) and (ii) above, as such agreements may be amended,
restated, supplemented, replaced or otherwise modified from time to time,
including, without limitation, any agreement extending the maturity or term of,
or refinancing or refunding, all or any portion of the
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indebtedness or obligations under, or increasing the amount to be borrowed or
guaranteed under, any such agreements or successor agreements, whether or not by
or among the same parties).
"Majority Vote" means (i) with respect to any vote or written
consent of the Members, the affirmative vote or written consent of Members
holding Interests representing a majority of the outstanding Interests, and (ii)
with respect to any vote or written consent of any Class of Members, the
affirmative vote or written consent of Members holding any Class of Interests
representing a majority of the outstanding Interests of such Class.
"Managers" has the meaning set forth in Section 2.1 and "Manager"
shall mean at any time and from time to time, each Person that shall be one of
the Managers in office at such time in accordance with this Agreement.
"Members" has the meaning set forth in the recitals to this
Agreement.
"Members' Interest Register" has the meaning set forth in Section
2.12(a).
"Net Profits" and "Net Losses" shall mean, for any period from the
date hereof through the date of dissolution and liquidation of the Company, the
income and loss of the Company as determined in accordance with the accounting
methods followed by the Company for federal income tax purposes, but (i)
including as an item of profit income exempt from tax and described in Code
Section 705(a)(1)(B), (ii) treating as deductions items of expenditure described
in, or under Treasury Regulations deemed described in, Code Section 705(a)(2)(B)
and (iii) treating as an item of gain (or loss) both any increase (decrease) in
the Book Value of the Company's property under Section 3.4(c) and the excess
(deficit), if any, of the fair market value (taking Section 7701(g) of the Code
into account) of distributed property over (under) its Book Value. Depreciation,
depletion, amortization, income and gain (or loss) with respect to Company
assets shall be computed with reference to their Book Value rather than to their
adjusted bases in an amount consistent with Treasury Regulations ss. 1.704-1
(b)(2)(iv)(g). Profit or loss resulting from the disposition of assets shall be
determined by reference to Book Value rather than adjusted tax basis.
"Notice of Intention to Sell" has the meanings set forth in Section
6.1(a) and 6.2(a), as applicable.
"Original Telephone Business" has the meaning set forth in Section
1.6.
"Permitted Transferee" has the meaning set forth in Section 6.3.
"Person" shall mean a natural person, partnership (whether general
or limited), limited liability company, trust, estate, association, corporation,
custodian, nominee or any other individual or entity in its own or any
representative capacity.
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"Plan Asset Regulations" shall mean the Department of Labor
Regulation Section 2510.3-101(d).
"Preferred Appreciation Amount" has the meaning set forth in Section
4.2(b)(ii).
"Preferred Capital Amount" has the meaning set forth in Section
4.2(b)(i).
"Preferred Interest" means an interest in the Company that
represents a "Preferred" limited liability company interest having the
designations, powers, preferences and rights, and the qualifications,
limitations and restrictions thereof, specified in Article IV.
"Preferred Liquidation Amount" has the meaning set forth in Section
4.2(b).
"Preferred Member" has the meaning set forth in Section 2.3 (b)(ii).
"Redemption Event" means the consummation of an underwritten public
offering of Interests (or other equity securities of the Company or any
successor corporation thereto) registered under the Securities Act of 1933, as
amended.
"Regulatory Allocations" have the meaning set forth in Section 3.7.
"Remaining Capital Commitment" with respect to any Member that holds
Class B Common Interests and/or Preferred Interests (other than the Subordinated
Debt Members) means at any time the excess, if any, of the Capital Commitment of
such Member over the aggregate payments in respect of such Member's Capital
Contribution made as of such time by such Member with respect to such Member's
Class B Common Interests and/or Preferred Interests.
"Selling Investor" has the meanings set forth in Sections 6.1(a),
6.2(a) and Section 6.6(a), as applicable.
"Securities Act" means the Securities Act of 1933, as amended.
"Special Vote" has the meaning set forth in Section 2.7(b)(ii).
"Subordinated Debt Agreement" has the meaning set forth in the
recitals to this Agreement.
"Subordinated Debt Members" has the meaning set forth in the
recitals to this Agreement.
"Subscription Agreement" has the meaning set forth in the recitals
to this Agreement.
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"Tax Distribution" has the meaning set forth in Section 3.10(b).
"Tax Matters Partner" has the meaning set forth in Section 3.12.
"Transfer" means to sell, transfer, assign, pledge or otherwise
encumber or dispose of (whether with or without consideration and whether
voluntarily or involuntarily or by operation of law), directly or indirectly;
provided, that a lien arising with respect to Interests in connection with a
general lien on all or substantially all of the assets of the holder of
Interests shall not constitute a Transfer.
"Treasury Regulations" means the regulations promulgated by the U.S.
Department of Treasury under the Code, as such regulations may be amended from
time to time.
"WCAS VIII" means Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VIII, L.P., a
Delaware limited partnership.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Entire Agreement. This Agreement, including the Exhibits and
other documents and schedules attached hereto or incorporated herein by
reference and the Subscription Agreement, constitute the entire agreement of the
Members with respect to the matters covered herein. This Agreement supersedes
all prior agreements and oral understandings among the Members with respect to
such matters including, without limitation, the Original Agreement and the dba
Communications Southwest Operating Company LLC Term Sheet dated August 30, 1999
agreed to and accepted by each of the Additional Members.
10.2 Amendment. This Agreement may not be modified or amended, and
no provision hereof may be waived, without a Majority Vote of (i) the Class A
Common Members and (ii) the Class B Common Members. Notwithstanding anything to
the contrary in this Agreement (x) any amendment to the number and type of
Interests (other than an increase in the number of Class A Common Interests)
that the Company is authorized to issue that is required in order to implement
any decision, action or transaction entered into by the Company that shall have
been approved by the Managers in the manner required by this Agreement, shall be
deemed to have been approved as provided in the first sentence of this Section
10.2, (y) Schedule III attached hereto may be amended from time to time by the
Managers to the extent required to reflect accurately the then current status of
the information contained thereon and (z) the Certificate of Formation and this
Agreement may be amended from time to time by the Mangers to change any of the
information therein or herein, including the name of the Company, required by
the Delaware Act to be set forth in a certificate of formation of a limited
liability company formed thereunder.
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10.3 Duration of Certain Agreements. The agreements of the Members
set forth in Section 2.15 and Article VI of this Agreement shall terminate upon
the earliest to occur of (i) a Liquidation Event, (ii) a single Member becoming
the owner of all the Class A Common Interests subject to this Agreement, (iii)
the closing of a firm commitment underwritten public offering by which equity
securities of the Company are sold to the public in a public offering registered
under the Securities Act of 1933 and lead managed by a nationally recognized
investment banking firm, resulting in proceeds to the Company (after deducting
underwriting discounts and commissions) of not less than $75,000,000 or (iv)
with respect to any Member, the date on which such Member no longer owns any
Common Interests.
10.4 Interpretation. Whenever the context may require, any noun or
pronoun used herein shall include the corresponding masculine, feminine or
neuter forms. The singular form of nouns, pronouns and verbs shall include the
plural and vice versa.
10.5 Severability. Each provision of this Agreement shall be
considered severable and if for any reason any provision or provisions hereof
are determined to be invalid and contrary to existing or future law, such
invalidity shall not impair the operation or affect those portions of this
Agreement which are valid, and this Agreement shall remain in full force and
effect and shall be construed and enforced in all respects as if such invalid or
unenforceable provision or provisions had been omitted.
10.6 Burden and Benefit Upon Successors. Except as expressly
otherwise provided herein, this Agreement is binding upon, and inures to the
benefit of, the parties hereto and their respective heirs, executors,
administrators, personal and legal representatives, successors and permitted
assigns.
10.7 Further Assurances. Each Member hereby agrees that such Member
shall hereafter execute and deliver such further instruments, provide all
information and take or forbear such further acts and things as may be
reasonably required or useful to carry out the intent and purpose of this
Agreement and as are not inconsistent with the terms hereof.
10.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together will
constitute one instrument, binding upon all parties hereto, notwithstanding that
all of such parties may not have executed the same counterpart.
10.9 Waiver. Any forbearance or failure or delay by any officer,
Manager, Director or Member to exercise any rights, powers or remedies hereunder
shall not be deemed to be a waiver of such rights, powers or remedies and any
single or partial exercise of any right, power or remedy hereunder shall not
preclude the further exercise hereof, and every right, power or remedy of any
officer, Manager, Director or Member shall continue in full force and effect
until
56
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first written above.
WCAS CAPITAL PARTNERS III, L.P.
By: WCAS CP III Associates, L.L.C.,
General Partner
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Name:
Title:
KCS HOLDING CO.
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Name:
Title:
VESTAR CAPITAL PARTNERS III, L.P.
By: Vestar Associates III, L.P.
Its: General Partner
By: Vestar Associates Corporation III
Its: General Partner
By________________________
Name:_____________________
Title:____________________
VESTAR CAPITAL PARTNERS IV, L.P.
By: Vestar Associates IV, L.P.
Its: General Partner
By: Vestar Associates Corporation IV
Its: General Partner
By /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
----------------------------------
Name:
Title:
VESTAR\VALOR, LLC
By: Vestar Associates IV, L.P.
Its: Managing Member
By: Vestar Associates Corporation IV
Its: General Partner
By______________________________________
Name:_________________________________
Title:________________________________
58
CITICORP MEZZANINE III, L.P.
By: Citicorp Capital Investors, Ltd.
Its: General Parnter
By______________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Managing Director
SOUTHWEST
SCHEDULE I
DESCRIPTION OF INITIAL CONTRIBUTION
Initial Member Initial Contribution
-------------- --------------------
Valor Telecommunications, LLC $100
60
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SCHEDULE H
MEMBERS
Part 1
Initial Member
Valor Telecommunications, LLC ▇▇▇▇ ▇
▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Part 2
Additional Members
TA Telecom, LLC
▇▇▇▇▇ ▇▇▇▇▇, Managing Member ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
ITBR, Inc.
1250 Capital of Texas Hwy South
Building II Cielo Center, 3rd Floor
Austin, TX 78746
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
The ▇▇▇▇▇▇▇ Companies ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
WEG Telecom, LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Managing Member
▇▇▇▇▇ Investment Co., LLC
c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ Insurance
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇., ▇.▇.
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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SOUTHWEST
▇▇▇▇▇ Family LP
c/o ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇ Insurance
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇., ▇.▇.
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
PlastiCom Industries, Inc.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
M. ▇▇▇ ▇▇▇▇▇▇▇
Sunny Side, Inc./Tempside
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Clarion Communications, Inc.
c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
HMR Investments, L.L.C.
c/o ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Managing Member
Shook, Hardy & Bacon
▇▇▇▇▇▇▇▇ Square
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇ ▇. ▇▇▇▇▇▇ TTEE
▇▇▇▇▇ ▇▇▇▇▇▇ TTEE
Revocable Trusts
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
J. ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
62
SOUTHWEST
Part 3
Subordinated Debt Members
KCS Holding Co.
c/o Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Vestar Capital Partners III, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Citicorp Venture Capital, Ltd.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
63
SCHEDULE HI
CAPITALIZATION
UPDATED THROUGH JUNE 30, 2000
PART 1
Initial
Class A Class A Class B Capital
Common Interests Common Cash Preferred Interests Common Interests Commitment
Name of Interest Holders ($0.0438 per Interest) Contribution ($) ($1.00 per Interest) ($1.00 per Interest) ($)
----------------------------- --------------------- ---------------- -------------------- -------------------- -----------
Valor Telecommunications, LLC 9,211,468 403,429 348,500,000 61,096,538 410,000,000
TA Telecom LLC 798,954 35,000 0 0 35,000
(▇▇▇▇▇ ▇▇▇▇)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 798,954 35,000 0 0 35,000
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇ 798,954 35,000 0 0 35,000
WEG Telecom, LLC 798,954 35,000 0 0 35,000
(▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇)
▇▇▇▇▇ Investment CO., LLC 798,954 35,000 0 0 35,000
▇▇▇▇▇ Family LP 798,954 35,000 0 0 35,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 798,954 35,000 0 0 35,000
M. ▇▇▇ ▇▇▇▇▇▇▇ 798,954 35,000 0 0 35,000
Clarion Communications, Inc. 798,954 35,000 0 0 35,000
(▇▇▇▇▇▇ ▇▇▇▇▇▇▇)
HMR Investments, L.L.C 798,954 35,000 0 0 35,000
(▇▇▇▇▇ ▇. ▇▇▇▇▇▇)
Revocable Trusts 798,954 35,000 0 0 35,000
▇▇ ▇. ▇▇▇▇▇▇ TTEE
▇▇▇▇▇ ▇▇▇▇▇▇ TTEE
J. ▇▇▇ ▇▇▇▇▇▇▇▇ 798,954 35,000 0 0 35,000
--------------------- ---------------- -------------------- -------------------- -----------
Total 18,798,916 823,529 348,500,000 61,096,538 410,420,000
--------------------- ---------------- -------------------- -------------------- -----------
PART 2
Maximum Number Maximum Number Maximum Subordinated
Name of Interest Holders of Class B Common Interests of Preferred Interests Debt Commitment ($)
--------------------------------- --------------------------- ---------------------- --------------------
KCS Holding Co. 3,106,897 15,400,164 135,000,000
Vestar Capital Partners III, L.P. 1,294.540 1,294,540 56,250,000
Vestar Capital Partners IV, L.P.
Vestar\Valor LLC
Citicorp Venture Capital, Ltd. 776,724 3,850,041 33,750,000
--------------------------- ---------------------- --------------------
Total 5 178,162 25 666,939 225,000,000
--------------------------- ---------------------- --------------------
Minimum Number Minimum Number
Name of Interest Holders of Class B Common Interests of Preferred Interests
--------------------------------- --------------------------- ----------------------
KCS Holding Co. 1,035,632 5,133,388
Vestar Capital Partners III, L.P. 431,513 431,151
Vestar Capital Partners IV, L.P.
Vestar\Valor LLC
Citicorp Venture Capital, Ltd. 258,908 1,283,347
--------------------------- ----------------------
Total 1,726,054 8,555,646
--------------------------- ----------------------
PART 3
SUBORDINATED DEBT INVESTORS AS OF JUNE 30, 2000
Preferred Preferred Interests Total Preferred
Name of Investor Interests-Funding Commitment Fee Interests
------------------------------------ ----------------- ------------------- ---------------
WCAS Capital Partners III, L.P 1,723,680 5,133,388 6,857,068
KCS Holding Co.
c/o Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Vestar Capital Partners III, L.P. 173,180 515,756 688,936
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Vestar Capital Partners IV, L.P. 534,927 1,593,095 2,128,022
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Vestar\Valor LLC 10,094 30,060 40,154
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Citicorp Mezzanine III, L.P. 430,920 1,283,347 1,714,267
c/o Citicorp Capital Investors, Ltd.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
----------------- ------------------- ---------------
Total 2,872,801 8,555,646 11,428,447
----------------- ------------------- ---------------
Class B
Class B Common Common Interests Total Common
Name of Investor Interests-Funding Commitment Fee Interests
------------------------------------ ----------------- ---------------- ------------
WCAS Capital Partners III, L.P 340,200 1,035,632 1,375,832
KCS Holding Co.
c/o Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Vestar Capital Partners III, L.P. 34,180 104,051 138,231
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Vestar Capital Partners IV, L.P. 105,578 321,398 426,976
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Vestar\Valor LLC 1,992 6,065 8,057
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Citicorp Mezzanine III, L.P. 85,050 258,908 343,958
c/o Citicorp Capital Investors, Ltd.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
----------------- ---------------- ------------
Total 567,000 1,726,054 2,293,054
----------------- ---------------- ------------
SOUTHWEST
ANNEX A
BOARD OF DIRECTORS
Part 1
Class A Directors
▇▇▇▇▇ ▇▇▇▇
The ▇▇▇▇▇ Law Firm
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
ITBR, Inc.
1250 Capital of Texas Hwy South
Building II Cielo Center, 3rd Floor
Austin, TX 78746
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
The ▇▇▇▇▇▇▇ Companies ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Intel Corporation
MS: F9-607
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ Insurance
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇., ▇.▇.
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇ Insurance
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇., ▇.▇.
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
PlastiCom Industries, Inc.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
M. ▇▇▇ ▇▇▇▇▇▇▇
Sunny Side, Inc./Tempside
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Clarion Communications, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Shook,
Hardy & Bacon
▇▇▇▇▇▇▇▇ Square
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ - ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
J. ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
66
SOUTHWEST
Part 2
Class B Directors
▇▇▇▇ ▇▇▇▇▇▇▇▇
Valor Telecommunications, LLC
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
Vestar Capital Partners
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Vestar Capital Partners
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Vestar Capital Partners
Seventeenth Street Plaza
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. Small
Centennial Cellular Corp.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
Part 1
Class A Managers
▇▇▇▇▇ ▇▇▇▇▇
The ▇▇▇▇▇ Law Firm
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ Insurance
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇., ▇.▇.
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Clarion Communications, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
J. ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Part 2
Class B Managers
▇▇▇▇ ▇▇▇▇▇▇▇▇
Valor Telecommunications, LLC
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Vestar Capital Partners
Seventeenth Street Plaza
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Part 3
Independent Manager
▇▇▇▇▇▇▇ ▇. Small
Centennial Cellular Corp.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
70
SOUTHWEST
ANNEX C
INITIAL OFFICERS
Office Name
------ ----
Chairman ▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Executive Officer President ▇▇▇▇ ▇▇▇▇▇▇▇▇
Vice President ▇▇▇▇▇ ▇▇▇▇▇▇
Vice President Secretary ▇▇▇▇ ▇▇▇▇
Treasurer
71
SOUTHWEST
ANNEX D
MATTERS REQUIRING APPROVAL BY SPECIAL VOTE OF THE MANAGERS
The following actions by the Company require a Special Vote:
SIGNIFICANT CORPORATE TRANSACTIONS
1. Voluntary filing for bankruptcy, dissolution, winding up or
liquidation and appointment of a liquidating trustee.
2. Initial public offering of equity securities
3. Acquisition of, or merger, consolidation, or other business
combination with any other entity; becoming a party to any joint
venture or partnership
4. Sale or transfer of all or substantially all of the assets;
5. Issuance and terms of additional interests; capital contributions of
new members; recapitalization;
6. Reclassification, redemption, or repurchase of stock;
7. Modification of the initial public offering, etc. reclassification
rights of the holders of Class B Common Interests;
8. Declaration or payment of dividends and distributions, or alteration
of the manner in which, dividends or distributions are paid; and
9. Adoption and amendment of incentive stock purchase, stock option and
bonus plans;
FINANCE
1. Incurrence of indebtedness, direct or contingent, in excess of
$500,000;
2. Creating any security interest or lien on assets to secure
obligations in excess of $500,000;
3. Approval of annual budget and capital calls to finance Company
operations;
4. Capital expenditures beyond those approved in the annual budget in
excess of $250,000;
72
SOUTHWEST
5. Sales of assets valued in excess of $500,000; and
6. Changing the certified public accountants;
MANAGEMENT; BUSINESS
1. Entering into a new business or market; changing in the scope or
nature of the existing business;
2. Transactions with Affiliates;
3. Entering into any contract other than in the ordinary course of
business in excess of $250,000 or with a term of more than one
year-,
4. Leasing a significant portion of the assets of the company;
5. Commencing or settling any litigation;
6. Determination of annual salary and other direct and indirect
remuneration of directors and executive officers;
7. Appointment and removal of executive officers and delegation of
duties and powers of such officers; and
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