EXHIBIT T3B
FORM OF AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
NEXTWAVE WIRELESS LLC
Dated as of [__________], 2005
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.......................................................................1
Section 1.01. Certain Definitions......................................................1
Section 1.02. Other Definitional Provisions............................................7
ARTICLE II ORGANIZATION, PURPOSE AND POWERS..................................................8
Section 2.01. Name.....................................................................8
Section 2.02. Certificate of Conversion and Certificate of Formation...................8
Section 2.03. Purpose..................................................................8
Section 2.04. Powers...................................................................8
Section 2.05. Principal Office.........................................................8
Section 2.06. Registered Office........................................................8
Section 2.07. Registered Agent.........................................................8
Section 2.08. Qualification in Other Jurisdictions.....................................8
Section 2.09. Term.....................................................................9
Section 2.10. Title to Company Assets..................................................9
Section 2.11. Limited Liability........................................................9
ARTICLE III CAPITALIZATION AND CAPITAL CONTRIBUTIONS..........................................9
Section 3.01. Capital Contributions....................................................9
Section 3.02. Additional Contributions.................................................9
Section 3.03. Capital Accounts.........................................................9
Section 3.04. Interests................................................................9
ARTICLE IV MEMBERS; VOTING..................................................................10
Section 4.01. Members.................................................................10
Section 4.02. Voting Rights...........................................................10
Section 4.03. Meetings................................................................10
Section 4.04. Additional Issuances....................................................11
Section 4.05. Other Business..........................................................11
.................................................................................11
ARTICLE V TRANSFER OF INTERESTS............................................................12
Section 5.01. Prohibited Transfers....................................................12
Section 5.02. Indemnities.............................................................12
Section 5.03. Legends on Certificates.................................................13
Section 5.04. Termination of Rights...................................................13
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE VI MANAGEMENT AND OPERATION OF THE COMPANY..........................................13
Section 6.01. Board of Managers.......................................................13
Section 6.02. Officers................................................................17
Section 6.03. Exculpation and Indemnification.........................................18
.................................................................................19
ARTICLE VII ALLOCATIONS AND OTHER TAX MATTERS................................................19
Section 7.01. General Application.....................................................19
Section 7.02. General Allocations.....................................................20
Section 7.03. Special Allocations.....................................................21
Section 7.04. Allocation of Nonrecourse Liabilities...................................22
Section 7.05. Changes of Interest.....................................................22
Section 7.06. Tax Allocations.........................................................22
Section 7.07. Withholding Tax Payments and Obligations................................24
Section 7.08. Tax Classification of the Company.......................................25
Section 7.09. Other Tax Elections.....................................................25
Section 7.10. Tax Matters Member......................................................26
ARTICLE VIII DISTRIBUTIONS....................................................................26
Section 8.01. Requirement and Characterization of Distributions.......................26
Section 8.02. Non-Cash Distributions..................................................26
Section 8.03. Tax Distributions.......................................................26
Section 8.04. Return of Distributions.................................................27
ARTICLE IX BOOKS AND RECORDS; REPORTS.......................................................27
Section 9.01. Books and Records.......................................................27
Section 9.02. Reports.................................................................27
ARTICLE X DISSOLUTION AND LIQUIDATION......................................................29
Section 10.01. Dissolution.............................................................29
Section 10.02. Liquidation.............................................................29
Section 10.03. Final Allocation........................................................29
Section 10.04. Distributions Upon Liquidation..........................................29
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE XI MISCELLANEOUS....................................................................30
Section 11.01. Conversion..............................................................30
Section 11.02. Severability............................................................30
Section 11.03. Entire Agreement........................................................30
Section 11.04. Binding Effect..........................................................30
Section 11.05. Parties in Interest.....................................................30
Section 11.06. Notices.................................................................31
Section 11.07. Additional Documents and Acts...........................................31
Section 11.08. Headings................................................................31
Section 11.09. Interpretation..........................................................31
Section 11.10. Article 8 "Opt-in"......................................................31
Section 11.11. Equitable Relief; Attorneys' Fees; Remedies Cumulative..................31
Section 11.12. Representations and Warranties..........................................32
Section 11.13. Jurisdiction............................................................32
Section 11.14. Governing Law...........................................................33
Section 11.15. Amendments; Waivers.....................................................33
Section 11.16. Expenses................................................................33
Section 11.17. Counterparts............................................................33
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EXHIBIT A
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
NEXTWAVE WIRELESS LLC
This Amended and Restated Limited Liability Company Agreement
(this "Agreement") of NextWave Wireless LLC (the "Company") is entered into this
[ ]th day of [ ], 2005 by the Members listed on Schedule A.
RECITALS:
WHEREAS, the Company was converted from a Delaware corporation
into, and was formed as a, limited liability company pursuant to the General
Corporation Law of the State of Delaware and the Act by filing the Certificate
of Conversion and the Certificate of Formation with the Office of the Secretary
of State of the State of Delaware, in each case on December 29, 2004;
WHEREAS, NextWave Telecom Inc., a Delaware corporation and
formerly the sole member of the Company ("NTI"), entered into a Limited
Liability Company Agreement, dated as of December 29, 2004 (the "Initial
Agreement");
WHEREAS, pursuant to the Second Modified Third Joint Plan of
Reorganization of NTI and certain of its Affiliates, Interests were distributed
and/or issued to stockholders of NTI and the management of the Company (the
"Plan Distribution"); and
WHEREAS, the parties hereto wish to effect the following: (a) the
amendment and restatement of the Initial Agreement, (b) the admission of the
Persons listed on the signature pages hereto as Members and (c) the continuation
of the Company on the terms set forth herein.
NOW THEREFORE, in consideration of the mutual promises of the
parties hereto hereinafter set forth and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Definitions. For purposes of this
Agreement, the following terms shall have the following meanings:
"Act" means the Delaware Limited Liability Company Act.
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"Adjusted Capital Account Deficit" means, with respect to any
Member, the deficit balance, if any, in such Member's Capital Account as of the
end of the relevant Fiscal Year, after giving effect to the following
adjustments:
(a) credit to such Capital Account any amounts that such
Member is obligated to restore pursuant to any provision of this
Agreement or is deemed obligated to restore pursuant to the
penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5)
of the Regulations; and
(b) debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of "Adjusted Capital Account Deficit" is
intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the
Regulations and shall be interpreted consistently therewith.
"Affiliate" means, with respect to any Person, (a) any other
Person directly or indirectly controlling, controlled by or under common control
with such first Person, (b) a partner or member of such Person or (c) any
spouse, child, grandchild, parent, grandparent or sibling of such Person or a
trust or other entity for such Person's benefit. For the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control with") means, with
respect to any Person, the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through ownership of voting securities, by contract or otherwise.
"Agreement" shall have the meaning set forth in the Preamble
hereto.
"Applicable Federal Rate" means the interest rate specified for
debt instruments of equivalent terms pursuant to Section 1274(d)(1) of the Code.
"Board of Managers" means the board of managers of the Company
with the powers and obligations as set forth in this Agreement.
"Book Item" shall have the meaning set forth in Section
7.06(a)(i).
"Business Day" means any day that is not a Saturday, a Sunday or
a day on which banks are required or permitted to be closed in the State of New
York.
"Capital Account" means, with respect to any Member, the Capital
Account maintained for such Member in accordance with the following provisions:
(a) To each Member's Capital Account there shall be credited
such Member's Capital Contribution, such Member's distributive
share of Net Income and any item in the nature of income or gain
that is specially allocated pursuant to Section 7.03 and the
amount of any Company liabilities assumed by such Member or that
are secured by any property distributed to such Member.
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(b) To each Member's Capital Account there shall be debited
the amount of cash and the Gross Asset Value of any property
distributed to such Member pursuant to any provision of this
Agreement, such Member's distributive share of Net Loss and any
item in the nature of expense or loss that is specially allocated
pursuant to Section 7.03 and the amount of any liabilities of
such Member assumed by the Company or that are secured by any
property contributed by such Member to the Company.
(c) In the event that all or a portion of a Member's
Interests are Transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the Capital Account of
the transferor to the extent that it relates to the Transferred
Interests.
(d) In determining the amount of any liability for purposes
of clauses (a) and (b) above, there shall be taken into account
Section 752(c) of the Code and any other applicable provisions of
the Code and the Regulations.
The foregoing provision and other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Section 1.704-1(b) of the Regulations and shall be interpreted and applied in a
manner consistent with such Regulations.
"Capital Contributions" means, with respect to any Member, the
sum of the amount of cash and the fair market value (on the date contributed) of
any property (other than money) contributed or deemed contributed pursuant to
Revenue Ruling 99-5, 1999-1 C.B. 434, to the Company by such Member (or its
predecessors in interest) with respect to the Interests held by such Member.
"Change in Control" means (a) a sale, merger or similar
transaction or series of related transactions involving the Company as a result
of which those Persons who in the aggregate held 100% of the voting power of the
Company immediately prior to such transaction do not hold (either directly or
indirectly) more than 50% of the voting power of the Company (or the surviving
or resulting entity thereof) after giving effect to such transaction or (b) the
sale of all or substantially all of the assets of the Company and its
Subsidiaries, taken as a whole, in a transaction or series of related
transactions.
"Code" means the United States Internal Revenue Code of 1986.
"Company" shall have the meaning set forth in the Preamble
hereto.
"Company Minimum Gain" shall have the same meaning as
"partnership minimum gain" set forth in Sections 1.704-2(b)(2) and 1.704-2(d) of
the Regulations.
"Conversion Election" shall have the meaning set forth in Section
7.08(a).
"Costs" shall have the meaning set forth in Section 6.03(a).
3
"Depreciation" means, for each Fiscal Year, an amount equal to
the depreciation, amortization or other cost recovery deduction allowable for
U.S. federal income tax purposes with respect to an asset for such Fiscal Year,
except that (a) with respect to any asset the Gross Asset Value of which differs
from its adjusted tax basis for U.S. federal income tax purposes at the
beginning of such Fiscal Year and which difference is being eliminated by use of
the "remedial method" as defined by Section 1.704-3(d) of the Regulations,
Depreciation for such Fiscal Year shall be the amount of book basis recovered
for such Fiscal Year under the rules prescribed by Section 1.704-3(d)(2) of the
Regulations, and (b) with respect to any other asset the Gross Asset Value of
which differs from its adjusted tax basis for U.S. federal income tax purposes
at the beginning of such Fiscal Year, Depreciation shall be an amount which
bears the same ratio to such beginning Gross Asset Value as the U.S. federal
income tax depreciation, amortization or other cost recovery deduction for such
Fiscal Year bears to such beginning adjusted tax basis, provided that if the
adjusted tax basis for U.S. federal income tax purposes of an asset at the
beginning of such Fiscal Year is zero, Depreciation shall be determined with
reference to such beginning Gross Asset Value using any reasonable method
selected by a majority of the Board of Managers.
"Depreciation Recapture" shall have the meaning set forth in
Section 7.06(a)(ii)(B).
"Fiscal Year" means the calendar year, except that if the Company
is required under the Code to use a taxable year other than a calendar year,
then Fiscal Year shall mean such taxable year.
"GAAP" means United States generally accepted accounting
principles.
"Gross Asset Value" means, with respect to any asset, such
asset's adjusted basis for U.S. federal income tax purposes, except as follows:
(a) the Gross Asset Value of any asset (other than money)
contributed or deemed contributed pursuant to Revenue Ruling
99-5, 1999-1 C.B. 434, by a Member to the Company is the gross
fair market value of such asset as determined by a majority of
the Board of Managers at the time of contribution;
(b) the Gross Asset Value of all Company assets shall be
adjusted to equal their respective gross fair market values, as
determined by a majority of the Board of Managers, as of the
following times: (i) the acquisition of any additional Interest
in the Company by any new or existing Member in exchange for more
than a de minimis Capital Contribution; (ii) the distribution by
the Company to the Member of more than a de minimis amount of
property as consideration for an Interest in the Company; (iii)
the grant of an Interest in the Company (other than a de minimis
Interest) as consideration for the provision of services to or
for the benefit of the Company by an existing Member acting in a
Member capacity, or by a new Member acting in a Member capacity
or in anticipation of becoming a Member; and (iv) the liquidation
4
of the Company within the meaning of Section 1.704-1(b)(2)(ii)(g)
of the Regulations; provided, however, that the adjustments
pursuant to clauses (i), (ii) and (iii) above shall be made only
if a majority of the Board of Managers reasonably determines that
such adjustments are necessary or appropriate to reflect the
relative economic interests of the Members in the Company; and
(c) the Gross Asset Value of any Company asset distributed
to any Member shall be adjusted to equal the gross fair market
value of such asset on the date of distribution as determined by
a majority of the Board of Managers.
If the Gross Asset Value of a Company asset has been determined
or adjusted pursuant to clause (a) or (b) above, such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account with respect to
such asset for purposes of computing Net Income or Net Loss.
"Indemnified Party" shall have the meaning set forth in Section
6.03(a).
"Interest Majority" means an aggregate Percentage Interest of the
then outstanding Interests in excess of 50%.
"Interests" shall have the meaning set forth in Section 3.04.
"Loss" shall have the meaning set forth in Section 6.03(a).
"Manager" means a manager on the Board of Managers.
"Meeting" means any meeting of the Members that fits the
description in Section 4.03.
"Members" means the Persons listed on Schedule A, as may be
amended from time to time.
"Member Nonrecourse Debt" shall have the same meaning as the term
"partner nonrecourse debt" set forth in Section 1.704-2(b)(4) of the
Regulations.
"Member Nonrecourse Debt Minimum Gain" means an amount, with
respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that
would result if the Member Nonrecourse Debt were treated as a Nonrecourse
Liability, determined in accordance with Section 1.704-2(i)(3) of the
Regulations.
"Member Nonrecourse Deductions" shall have the same meaning as
the term "partner nonrecourse deductions" set forth in Sections 1.704-2(i)(1)
and 1.704-2(i)(2) of the Regulations.
"Net Income" and "Net Loss" means, for each Fiscal Year or other
period, an amount equal to the Company's taxable income or loss for such Fiscal
Year or period, determined in accordance with Section 703(a) of the Code (for
this purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Section 703(a)(1) of the Code shall be included in
taxable income or loss) with the following adjustments:
5
(a) any income of the Company that is exempt from U.S.
federal income tax and not otherwise taken into account in
computing Net Income or Net Loss pursuant to this paragraph shall
be added to such income or loss;
(b) any expenditures of the Company described in Section
705(a)(2)(B) of the Code or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Section 1.704-(1)(b)(2)(iv)(i) of the
Regulations, and not otherwise taken into account in computing
Net Income or Net Loss pursuant to this paragraph, shall be
subtracted from such taxable income or loss;
(c) in the event the Gross Asset Value of any Company asset
is adjusted pursuant to subdivisions (b) or (c) of the definition
of "Gross Asset Value", the amount of such adjustment shall be
taken into account as gain or loss from the disposition of such
asset for purposes of computing Net Income or Net Loss;
(d) gain or loss resulting from any disposition of Company
property with respect to which gain or loss is recognized for
U.S. federal income tax purposes shall be computed by reference
to the Gross Asset Value of the property disposed of,
notwithstanding that the adjusted tax basis of such property
differs from its Gross Asset Value;
(e) in lieu of depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation
for such Fiscal Year, computed in accordance with the definition
of "Depreciation"; and
(f) any items which are specially allocated pursuant to the
provisions of Section 7.03 shall not be taken into account in
computing Net Income or Net Loss.
"Nonrecourse Deductions" shall have the meaning set forth in
Section 1.704-2(b)(1) and 1.704-2(c) of the Regulations.
"Nonrecourse Liability" shall have the meaning set forth in
Section 1.752-1(a)(2) of the Regulations.
"NTI" shall have the meaning set forth in the Recitals hereto.
"Officers" shall have the meaning set forth in Section 6.02(a).
"Percentage Interest" means, with respect to any Member, for any
calculation relating to Interests, the ratio that the aggregate number of
Interests held by such Member bears to the aggregate number of Interests held by
all Members, expressed as a percentage.
6
"Permitted Transfer" shall have the meaning set forth in Section
5.01(a).
"Person" means a natural person, corporation, partnership,
limited liability company, trust, joint venture, governmental entity or other
entity, association or group.
"Plan Distribution" shall have the meaning set forth in the
Recitals hereto.
"Public Sale" means any Transfer of Interests pursuant to an
underwritten public offering (which is consented to by the Board of Managers)
pursuant to an effective registration statement filed under the Securities Act.
"Qualified Public Offering" means an underwritten public offering
pursuant to an effective registration statement filed under the Securities Act
covering the offer and sale of securities for the account of the Company.
"Regulations" means the Income Tax Regulations promulgated under
the Code, as amended from time to time.
"Securities Act" means the United States Securities Act of 1933.
"Subsidiary" means any Person of which the Company, directly or
indirectly, owns at the time more than fifty percent (50%) of the outstanding
equity or voting interests thereof.
"Tax Matters Member" shall have the meaning set forth in Section
7.10(a).
"Transfer" means, with respect to any Interests, (a) when used as
a verb, to sell, assign, dispose of, exchange, pledge, encumber, hypothecate or
otherwise transfer such Interests, whether directly or indirectly, or agree or
commit to do any of the foregoing, (b) when used as a noun, a direct or indirect
sale, assignment, disposition, exchange, pledge, encumbrance, hypothecation or
other transfer of such Interests or any agreement or commitment to do any of the
foregoing, and (c) any other transfer within the meaning of Section
1.7704-1(a)(3) of the Regulations.
"Underwithheld Member" shall have the meaning set forth in
Section 7.07(e).
Section 1.02. Other Definitional Provisions. When a reference is
made in this Agreement to an "Article", a "Section", an "Exhibit" or a
"Schedule", such reference shall be to an Article of, a Section of, an Exhibit
to or Schedule to this Agreement, unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. The definitions contained in
7
this Agreement are applicable to the singular as well as the plural forms of
such terms and to the masculine as well as to the feminine and neuter genders of
such term. Any statute defined or referred to herein means such statute as from
time to time amended, modified or supplemented, including by succession of
comparable successor statutes. References to a Person are also to its permitted
successors and assigns.
ARTICLE II
ORGANIZATION, PURPOSE AND POWERS
Section 2.01. Name. The name of the Company shall be NextWave
Wireless LLC or any other name permitted by the Act as afterwards designated by
appropriate amendment to the Certificate of Formation of the Company. All
business of the Company shall be conducted under the Company name.
Section 2.02. Certificate of Conversion and Certificate of
Formation. The Certificate of Conversion of NextWave Wireless Inc. converting
such corporation into the Company and the Certificate of Formation of the
Company were filed with the Secretary of State of the State of Delaware in
accordance with the General Corporation Law of the State of Delaware and the
Act, respectively, in each case on December 29, 2004.
Section 2.03. Purpose. The Company was formed for the object and
purpose of, and the nature of the business to be conducted and promoted by the
Company is, engaging in all lawful activities for which limited liability
companies may be formed under the Act.
Section 2.04. Powers. The Company shall have the power to do any
and all acts reasonably necessary, appropriate, proper, advisable, incidental or
convenient to or for both the furtherance of the purpose described herein and
the benefit of the Company.
Section 2.05. Principal Office. The principal place of business
and office of the Company shall be located at, and the Company's business shall
be conducted from, such place or places as may hereafter be determined by the
Board of Managers.
Section 2.06. Registered Office. The address of the registered
office of the Company in the State of Delaware is c/o National Corporate
Research, Ltd., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Section 2.07. Registered Agent. The name and address of the
registered agent of the Company for service of process on the Company in the
State of Delaware is c/o National Corporate Research, Ltd., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Section 2.08. Qualification in Other Jurisdictions. The Board of
Managers shall cause the Company to be registered or qualified under its own
name or under an assumed or fictitious name pursuant to a foreign limited
liability company statute or similar law in any jurisdiction in which the
Company owns property or transacts business if such registration or
qualification is necessary to protect the limited liability of the Members or to
permit the Company lawfully to own property or transact business in such
jurisdiction.
8
Section 2.09. Term. The Company commenced on the date of the
filing of the Certificate of Formation of the Company on December 29, 2004, in
accordance with the Act and shall continue until dissolution of the Company in
accordance with Article X.
Section 2.10. Title to Company Assets. Title to Company assets,
whether real, personal or mixed and whether tangible or intangible, shall be
deemed to be owned by the Company as an entity, and no Member, individually or
collectively with other Members or Persons, shall have any ownership interest in
such Company assets or any portion thereof. All assets of the Company shall be
recorded as the property of the Company in its books and records, irrespective
of the name in which legal title to such Company assets is held.
Section 2.11. Limited Liability. Except as otherwise provided by
the Act, the debts, obligations and liabilities of the Company, whether arising
in contract, tort or otherwise, shall be solely the debts, obligations and
liabilities of the Company, and none of the Members, Managers, Officers,
employees or agents of the Company (including a Person having more than one such
capacity) shall be obligated personally for any such debt, obligation or
liability of the Company solely by reason of acting in such capacity.
ARTICLE III
CAPITALIZATION AND CAPITAL CONTRIBUTIONS
Section 3.01. Capital Contributions. The Members and their
respective Capital Contributions are as set forth on Schedule A (as may be
amended from time to time).
Section 3.02. Additional Contributions. Except as required by the
Act, no Member is required, under any circumstances, to make any additional
Capital Contributions to the Company.
Section 3.03. Capital Accounts. Separate Capital Accounts shall
be maintained for each Member on the books of the Company. Members will have no
obligation to restore any negative balance in their respective Capital Accounts.
Section 3.04. Interests. Each Member's ownership interests in the
Company shall be represented by interests ("Interests"). As of the date hereof,
the total number of Interests that the Company shall have authority to issue is
[ ] Interests. The number of Interests issued to each Member in respect of such
Member's Capital Account on the date hereof is set forth opposite such Member's
name on Schedule A. Schedule A shall be amended from time to time upon the
consummation of additional Capital Contributions to the Company to reflect the
changes in the Members' Capital Accounts in respect thereof. Each Interest shall
have the same relative rights as and be identical in all respects to all the
other Interests. Interests that have been redeemed by the Company shall not be
reissued.
9
ARTICLE IV
MEMBERS; VOTING
Section 4.01. Members. The name and the mailing address of each
Member are as set forth below its name on Schedule A, which Schedule shall be
amended from time to time to reflect the addition or withdrawal of any Member
permitted under the terms of this Agreement. No Member shall be entitled to
claim any distribution upon resignation from the Company other than as provided
by the Board of Managers. Subject to and in accordance with this Agreement,
additional Persons may be admitted as Members with the consent of a majority of
the Board of Managers and upon such terms as may be determined by the Board of
Managers. The Board of Managers shall admit as a Member any Person who acquires
Interests (i) in a Permitted Transfer or (ii) pursuant to and in compliance with
Article V. Upon the admission of such Person as a Member, the Board of Managers
shall amend Schedule A to reflect the name, address and the ownership interest
of such Person in the Company.
Section 4.02. Voting Rights.
(a) Voting Interests. Except as otherwise provided in this
Agreement or as required by applicable law, the affirmative vote, consent or
agreement of Members holding at least an Interest Majority shall be the act of
the Members of the Company. All Members holding Interests shall be entitled to
one vote for each Interest held.
(b) Consent. Unless otherwise expressly provided herein, consent
of the holders of Interests for purposes of this Agreement may be obtained: (i)
at any Meeting of the Members holding Interests, provided that Members holding
at least an Interest Majority are present at such Meeting and that Members
holding a majority of the Interests held by the Members holding Interests and
attending the Meeting, vote in favor of the matter being voted upon, or (ii) by
the written consent of the Members holding at least the then Interest Majority,
provided that a copy of such consent is sent to all the Members as soon as
reasonably practicable thereafter.
Section 4.03. Meetings.
(a) Notice; Participation. Any matter requiring the approval or
consent of the holders of Interests pursuant to this Agreement may be considered
at a Meeting of the holders of Interests held not less than five (5) days nor
more than sixty (60) days after notification thereof shall have been given by
the Board of Managers to the holders of Interests. Such notification may be
given by the Board of Managers, in its discretion, at any time. Any such
notification shall state briefly the purpose, time and place of the Meeting.
Notices shall be deemed given (i) when delivered personally by hand, (ii) when
sent by facsimile (with written confirmation of transmission), (iii) one
Business Day following the day sent by overnight courier (with written
confirmation of receipt) or (iv) when sent by electronic mail (with return
receipt). All such Meetings shall be held within or outside the State of the
Company's principal place of business at such reasonable place as the Board of
Managers shall designate and during normal business hours. Any Meeting may be
10
held by conference telephone or similar communication equipment so long as all
Members holding Interests participating in the Meeting can hear one another, and
all Members holding Interests participating by telephone or similar
communication equipment shall be deemed to be present in person at the Meeting.
If an Interest Majority is not present at a Meeting, a majority of the total
number of Interests represented may adjourn the Meeting from time to time with
further notice.
(b) Waiver of Notice. A Member may waive any notice required by
this Agreement before or after any Meeting by signing a written waiver of the
Member's right to receive notice of such Meeting. A Member's attendance at a
meeting: (i) waives objection to lack of notice or defective notice of the
Meeting, unless the Member at the beginning of the Meeting or promptly upon the
Member's arrival objects to holding the Meeting or transacting business at the
Meeting; (ii) waives objection to consideration of a particular matter at the
Meeting that is not within the purpose or purposes described in the Meeting
notice, unless the Member objects to considering the matter when it is
presented; and (iii) results in a presumption that the Member assented to the
action taken at such Meeting unless such Member's dissent shall be entered in
the minutes of the Meeting or unless such Member shall file his, her or its
written dissent to such action with the Person acting as the secretary of the
Meeting before the adjournment thereof, or shall personally deliver or forward
such written dissent by registered mail to the other Members immediately after
the adjournment of the Meeting; provided, however, such right to dissent shall
not apply to a Member who voted in favor of any action at such Meeting.
Section 4.04. Additional Issuances. A majority of the Board of
Managers may, at any time, increase the total number of Interests that the
Company shall have authority to issue in accordance with the terms set forth
herein, admit one or more additional Members and amend this Agreement to reflect
any rights of such additional Interests that the Board of Managers deems to be
in the best interest of the Company. Upon the admission of a Person as an
additional Member, each such Person shall, by executing this Agreement and such
other subscription documents as the Board of Managers determines in its sole
discretion, agree to become a Member and to be bound by the terms of this
Agreement.
Section 4.05. Other Business. Subject to the terms of any
employment, duties of loyalty of any Officer, restrictive covenant or other
agreement with the Company, a Member may engage in or possess an interest in
other business ventures (connected or unconnected with the Company) of any kind
and description, independently or with others. The Company shall not have any
rights in or to such independent ventures or the income or profits therefrom by
virtue of this Agreement. Notwithstanding the foregoing, each Member that is an
employee of the Company shall (and hereby agrees to) serve the Company
faithfully, with undivided loyalty.
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ARTICLE V
TRANSFER OF INTERESTS
Section 5.01. Prohibited Transfers.
(a) No Member may Transfer any or all of his, her or its
Interests if such Transfer (i) would subject the Company to the reporting
requirements of the Securities Exchange Act of 1934, (ii) would cause the
Company to lose its status as a partnership for U.S. federal income tax purposes
or cause the Company to be classified as a "publicly traded partnership" ("PTP")
within the meaning of Section 7704 of the Code, including (A) any Transfer to be
made on an established securities market within the meaning of Section
1.7704-1(b) of the Regulations, including an over-the-counter market or an
inter-dealer quotation system, or a secondary market or the substantial
equivalent thereof within the meaning of Section 1.7704-1(c) of the Regulations
or (B) any Transfer that would be inconsistent with Section 7.08(b), provided
that the restrictions under this Section 5.01(a)(ii) shall not apply to any
Transfer on an interdealer quotation system that regularly disseminates firm buy
or sell quotations by identified brokers or dealers by electronic means or
otherwise or on a secondary market or the substantial equivalent thereof (all
within the meaning of the Regulations) so long as such Transfer would not
preclude (in the determination of the Company) reliance on Section 1.7704-1(d)
of the Regulations to avoid PTP status, or (iii) is in violation of applicable
federal or state securities laws.
(b) Subject to Sections 5.01(a) and 5.01(c), any Member may
Transfer any or all of his, her or its Interests to a transferee in each of the
following cases (each, a "Permitted Transfer"): (i) as part of a Public Sale of
the Company's securities or (ii) to an Affiliate, provided that in the case of a
Permitted Transfer pursuant to clause (ii), such transferee shall receive and
hold such Interests subject to the provisions of this Agreement in the same
manner as the transferor and the effectiveness of the Permitted Transfer shall
be conditioned on the transferee executing a joinder to this Agreement.
(c) Unless there has been a Conversion Election, any transferee
of an Interest, other than as part of a Public Sale of the Company's securities,
shall, immediately prior to the completion of any Transfer, certify in writing
to the Company that the representations set forth on Exhibit A are true and
correct in all respects with respect to such transferee.
(d) Any attempted Transfer of Interests other than in accordance
with this Agreement shall be null and void and the Company shall refuse to
recognize any such Transfer and shall not reflect on its records any change in
record ownership of Interests pursuant to any such purported Transfer.
Section 5.02. Indemnities. In the event that any holder of
Interests is required to provide any representations, warranties or indemnities
in connection with any Transfer of such Interests in a transaction described in
this Article V (other than representations, warranties and indemnities
concerning such holder's valid ownership of its Interests free of all liens and
encumbrances (other than those arising under applicable securities laws), and
12
such holder's authority, power and right to enter into and consummate such sale
or transfer without violating any other agreement), then such holder shall not
be liable for more than its pro rata share (based upon the number of Interests
held) of any liability for misrepresentation, breach of warranty or indemnity
and such liability shall not exceed the total purchase price received by such
holder for its Interests and such liability shall be satisfied first out of any
funds escrowed for such purpose.
Section 5.03. Legends on Certificates. During the term of this
Agreement, each certificate or other instrument representing Interests subject
to this Agreement shall bear the following legends on its face, or upon the
reverse side thereof, appropriately completed, which legends shall likewise be
endorsed upon all certificates representing Interests that shall hereafter be
issued and which are subject to this Agreement:
"THE INTERESTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS AND NEITHER THESE SECURITIES NOR ANY
INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS."
"THE INTERESTS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND CONDITIONS SET FORTH IN THE
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, DATED
AS OF [____________], 2005, BY AND AMONG THE MEMBERS OF NEXTWAVE
WIRELESS LLC. A COPY OF SUCH AGREEMENT MAY BE OBTAINED FROM
NEXTWAVE WIRELESS AT ITS PRINCIPAL EXECUTIVE OFFICES."
Section 5.04. Termination of Rights. The terms, conditions and
obligations set forth in this Article V shall terminate upon the earlier to
occur of: (a) the closing of a Qualified Public Offering and (b) the closing of
a Change in Control.
ARTICLE VI
MANAGEMENT AND OPERATION OF THE COMPANY
Section 6.01. Board of Managers.
(a) Management. In accordance with the Act, management of the
Company shall be vested in the Board of Managers. A Person does not have to hold
Interests as a Member of the Company in order to serve as a Manager. The Board
of Managers shall have the power to do any and all acts necessary or convenient
13
to or for the furtherance of the purposes of the Company set forth in this
Agreement except to the extent management powers are expressly reserved to the
Members by this Agreement, the Certificate of Formation of the Company or the
Act. Each Manager shall have the same fiduciary duties as a member of the board
of directors of a Delaware corporation (assuming such corporation had in its
certificate of incorporation a provision eliminating the liabilities of Managers
as provided in Section 102(b)(7) of the General Corporation Law of the State of
Delaware).
(b) Number, Appointment. The Board of Managers shall consist of
up to eleven (11) Managers as determined by the Board of Managers and shall
initially consist of seven (7) Managers. Appointments made pursuant to this
Section 6.01 shall be evidenced by an instrument in writing signed by the
appointing party and delivered to the Company. Each appointee shall hold office
until his or her successor is appointed and qualified or until his or her
earlier resignation, removal or death. The Managers shall be appointed by the
Interest Majority.
(c) Initial Board of Managers. The Board of Managers on the date
of this Agreement shall be: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, [INSERT NAMES OF
THREE SENIOR MEMBERS OF MANAGEMENT, INCLUDING THE CHIEF EXECUTIVE OFFICER, AND
TWO MANAGERS WHO WILL BE REPRESENTATIVES OF TWO OF THE LARGER NON-INSIDER EQUITY
HOLDERS OF THE COMPANY].
(d) Term. The term of the initial Managers specified in Section
6.01(c) shall expire at the second anniversary of this Agreement. From and after
the second anniversary of this Agreement, the Managers shall be elected for a
term of office to expire at the first anniversary of such election, and shall
continue to hold office until their respective successors are elected and
qualified, except in case of the death, resignation or removal of any Manager.
(e) Withdrawal; Removal; Replacement. Any Manager may withdraw at
any time. Managers may be removed at any time for any reason or no reason upon
the written direction of the Persons that appointed such Manager pursuant to
Section 6.01(b), effective upon the delivery of such written direction by the
removing Persons to the Company. In the event that any Manager is removed or
shall have resigned or become unable to serve, the Persons who have the power to
designate such Manager pursuant to Section 6.01(b) shall have the power to
designate a person to fill such vacancy, whereupon each of the parties hereto,
or their successors and assigns, agree to take such action as is necessary to
promptly elect such person to fill such vacancy.
(f) Expenses of the Managers. The Company shall reimburse all
Managers for all reasonable direct out-of-pocket expenses incurred by them in
attending meetings of the Board of Managers.
(g) Regular Meetings. Unless otherwise consented to by at least a
majority of the Board of Managers, the Board of Managers shall hold regular
meetings not less frequently than once every quarter at a time and place fixed
by the Board of Managers.
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(h) Special Meetings. Special meetings of the Board of Managers
shall be held whenever called by at least three (3) Managers. Unless otherwise
agreed to by all of the Managers present at a special meeting, the business to
be transacted at any special meeting shall be limited to that stated in the
notice of the meeting.
(i) Place of Meetings. The Board of Managers may hold its
meetings at such place or places as the Board of Managers may from time to time
determine.
(j) Telephonic Meetings. Managers may participate in a meeting of
the Board of Managers by means of a conference telephone or similar
communication equipment by means of which all persons participating in the
meeting can hear each other. Participation in a meeting pursuant to this
paragraph shall constitute presence in person at such meeting.
(k) Consent of Managers. Unless otherwise expressly provided
herein, consent of the Board of Managers for purposes of this Agreement may be
obtained: (i) at any regular meeting of the Board of Managers, or at any special
meeting of the Board of Managers, provided that at least a majority of the
Managers are present at such meeting and that a majority of those attending
Managers vote in favor of the matter being voted upon, or (ii) by the written
consent of a majority of the Board of Managers, provided that a copy of such
consent is sent to all the Managers as soon as reasonably practicable
thereafter.
(l) Powers of the Board of Managers. Without limiting the
generality of this Section 6.01, except as otherwise specifically provided in
this Agreement, the Members hereby delegate to the Board of Managers all
necessary powers to manage and carry out the purposes, business, property and
affairs of the Company, including the power to:
(i) take any and all acts on behalf of the Company, including
acts relating to management and governance, in respect of any
Subsidiaries or other entity pursuant to which the Company shall have
any equity, voting or other rights;
(ii) sell, exchange, lease or otherwise dispose of any other
property and assets owned by the Company, or any part thereof, or any
interest therein;
(iii) borrow money from any Person, issue evidences of
indebtedness in connection therewith, refinance, increase the amount
of, modify, amend, or change the terms of, or extend the time for the
payment of any indebtedness or obligation of the Company, and secure
such indebtedness by mortgage, deed of trust, pledge, security
interest or other lien on Company assets;
(iv) ▇▇▇ on, defend or compromise any and all claims or
liabilities in favor of or against the Company; submit any or all such
claims or liabilities to arbitration; and confess a judgment against
the Company in connection with any litigation in which the Company is
involved;
15
(v) employ from time to time, at the expense of the Company, on
such terms and for such compensation as the Board of Managers may
determine, but subject to this Agreement, Persons to render services
to the Company, including accountants and attorneys (who may also act
as such for the Members or any of their Affiliates);
(vi) pay or cause to be paid all expenses, fees, charges, taxes
and liabilities incurred or arising in connection with the Company or
any of its Subsidiaries, or in connection with the management thereof,
including such expenses and charges for the services of the Company
employees, accountants, attorneys and other agents or independent
contractors, and such other expenses and charges as the Board of
Managers deems necessary or advisable to incur;
(vii) deposit Company funds in certificates of deposit, bank
savings accounts and money market accounts as the Board of Managers
shall determine;
(viii) establish and maintain the books and records of the
Company in accordance with Section 9.01;
(ix) (A) make elections for foreign, federal, state and local tax
purposes, including any election permitted by applicable law to adjust
the basis of Company property pursuant to Sections 754, 734(b), and/or
743(b) of the Code, and/or comparable provisions of state or local law
in connection with Company distributions; and (B) direct the Tax
Matters Member to extend the statute of limitations for assessment of
tax deficiencies against Members with respect to adjustments to the
Company's federal, state or local tax returns;
(x) enter into, make and perform such contracts, agreements and
other undertakings as may be deemed necessary or advisable for the
conduct of the business of the Company, and do any act or execute any
document on behalf of the Company as the Board of Managers may deem
necessary, convenient, incidental or appropriate to the furtherance of
the business of the Company or any of its Subsidiaries; and
(xi) take any action not specifically limited hereby that is not
inconsistent with the purposes of the Company.
(m) Board Committees. The Board of Managers shall designate a
compensation committee and a corporate governance committee. Each of the
compensation committee and the corporate governance committee shall consist of
three (3) Managers, two of which shall be independent Managers as determined by
the Board of Managers and the other being the Chief Executive Officer of the
Company. The initial Managers on each of the compensation committee and the
corporate governance committee shall be ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and the
Chief Executive Officer of the Company. The Board of Managers shall delegate to
the compensation committee the authority to make all decisions regarding any
possible stock option or other equity plans of the Company and the compensation
of the management and key employees of the Company. The Board of Managers shall
16
delegate to the corporate governance committee the authority to make all
decisions regarding the form of organization of the Company, including any
restructurings involving the Company, changes to the organizational documents of
the Company or conversions of the legal form of the Company. The Board of
Managers may designate an audit committee or such other committees as it shall
determine from time to time, each consisting of two (2) or more Managers, to
serve at the pleasure of the Board of Managers, prescribe the manner in which
proceedings of such committees shall be conducted and delegate the authority
which such committees shall have. The appointment of members or alternate
members of a committee shall be by a majority vote of the authorized number of
Managers. The decision by a majority of the Manager members of any committee
will control such committee's actions.
Section 6.02. Officers.
(a) Appointment of Officers. The Board of Managers may appoint
individuals as officers of the Company ("Officers"), which shall include: (i) a
Chief Executive Officer, (ii) a President, (iii) a Treasurer and (iv) a
Secretary, and may include such other Officers as the Board of Managers deems
advisable. No Officer need be a Member or a Manager. An individual can be
appointed to more than one office.
(b) Duties of Officers Generally. Under the direction of and, at
all times, subject to the authority of the Board of Managers and any limitations
or restrictions set forth in this Agreement, the Officers shall have full and
complete discretion to manage and control the day-to-day business, operations
and affairs of the Company in the ordinary course of its business, to make all
decisions affecting the day-to-day business, operations and affairs of the
Company in the ordinary course of its business and to take all such actions as
he or she deems necessary or appropriate to accomplish the foregoing. Each
Officer shall have such individual powers and duties as may be prescribed by the
Board of Managers or this Agreement.
(c) Authority of Officers. Subject to Section 6.02(b), any
Officer of the Company shall have the right, power and authority to transact
business in the name of the Company or to execute agreements on behalf of the
Company, with respect to those agreements which are commonly signed by such
officers of a business incorporated in Delaware. With respect to all matters
within the ordinary course of business of the Company, third parties dealing
with the Company may rely conclusively upon any certificate of any Officer to
the effect that such Officer is acting on behalf of the Company.
(d) Removal, Resignation and Filling of Vacancy of Officers. The
Board of Managers may remove any Officer, for any reason or for no reason, at
any time. Any Officer may resign at any time by giving written notice to the
Board of Managers, and such resignation shall take effect at the date of the
receipt of such notice or at any later time specified in such notice; provided,
however, that unless otherwise specified in such notice, the acceptance of the
resignation shall not be necessary to make it effective. Any such resignation
shall be without prejudice to the rights, if any, of the Company or such Officer
under this Agreement. A vacancy in any office because of death, resignation,
removal or otherwise shall be filled in the manner prescribed in this Agreement
for regular appointments to that office.
17
(e) Compensation of Officers. The Officers shall be entitled to
receive compensation from the Company as determined by the Board of Managers.
(f) Chief Executive Officer. Under the direction of and, at all
times, subject to the authority of the Board of Managers, the Chief Executive
Officer, if appointed, shall have general supervision over the day-to-day
business, operations and affairs of the Company. The Chief Executive Officer
shall have such other powers and perform such other duties as may from time to
time be prescribed by the Board of Managers.
(g) President. The President shall exercise the functions of the
Chief Executive Officer during the absence or disability of the Chief Executive
Officer and shall perform such other duties as from time to time may be assigned
by the Chief Executive Officer or the Board of Managers.
(h) Treasurer. The Treasurer shall be the Chief Financial Officer
of the Company and shall keep and maintain, or cause to be kept and maintained,
adequate and correct books and records of accounts of the properties and
business transactions of the Company, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital and Interests. The
Treasurer shall have the custody of the funds and securities of the Company, and
shall keep full and accurate accounts of receipts and disbursements in books
belonging to the Company. The Treasurer shall have such other powers and perform
such other duties as may from time to time be prescribed by the Board of
Managers.
(i) Secretary. The Secretary shall (i) keep the minutes of the
meetings of the Members and the Board of Managers in one or more books provided
for that purpose; (ii) see that all notices are duly given in accordance with
the provisions of this Agreement and as required by law; (iii) be custodian of
the Company records; (iv) keep a register of the addresses of each Member which
shall be furnished to the Secretary by such Member; and (v) in general perform
all duties incident to the office of a secretary of a company. The Secretary
shall have such other powers and perform such other duties as may from time to
time be prescribed by the Board of Managers.
Section 6.03. Exculpation and Indemnification.
(a) None of the Members, Managers or Officers (each, an
"Indemnified Party") shall be liable to the Company or any other Person or
entity who has an interest in the Company for any loss, damage or claim (a
"Loss") (or any expenses or costs associated therewith ("Costs")) incurred by
reason of any act or omission performed or omitted by such Indemnified Party in
good faith on behalf of the Company and in a manner reasonably believed to be
within the scope of the authority conferred on such Indemnified Party by this
Agreement, except that an Indemnified Party shall be liable for any such Loss
and Costs incurred by reason of such Indemnified Party's acts or omissions (i)
18
which are not in good faith or which such Indemnified Party did not reasonably
believe to be in or to not be opposed to the best interests of the Company or
which involve intentional misconduct or knowing violation of the law or (ii)
from which an improper personal benefit shall have been derived by such
Indemnified Party; provided, however, that any indemnity under this Section 6.03
shall be provided out of and to the extent of the Company assets only, and no
Member, Manager or Officer shall have personal liability on account thereof. The
Company shall advance Costs incurred by or on behalf of an Indemnified Party in
connection with any Loss within twenty (20) days after receipt by the Company
from the Indemnified Party of a statement requesting such advances from to time,
provided that such statement provides reasonable documentary evidence of such
Costs and provides a written undertaking by the Indemnified Party to repay any
and all advanced Costs in the event such Indemnified Party is ultimately
determined to not be entitled to indemnification by the Company. The Company may
enter into agreements with its Managers to provide for indemnification
consistent with the terms and conditions set forth in this Section 6.03.
(b) The Company shall have the power to indemnify any Person who
was or is a party or is threatened to be made a party to, or testifies in, any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative in nature, by reason of the fact that
such Person was or is a Manager, Officer or employee or agent of the Company, or
is or was serving at the request of the Company as a Manager, officer, employee
or agent of another corporation, partnership, limited liability company, joint
venture, employee benefit plan, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such Person in connection with such action,
suit or proceeding to the full extent permitted by law or enter into agreements
with any such Person for the purpose of providing for such indemnification.
(c) The provisions of this Section 6.03 are for the benefit of
the Indemnified Parties, their heirs, successors, assigns and administrators and
shall not be deemed to create any rights for the benefit of any other Persons.
Any amendment, modification or repeal of this Section 6.03 or any provision
hereof shall be prospective only and shall not in any way affect the limitations
on the Company's liability to any Indemnified Party under this Section 6.03 as
in effect immediately prior to such amendment, modification or repeal with
respect to claims arising from or relating to matters occurring, in whole or in
part, prior to such amendment, modification or repeal, regardless of when such
claims may arise or be asserted.
ARTICLE VII
ALLOCATIONS AND OTHER TAX MATTERS
Section 7.01. General Application. The rules set forth below in
this Article VII shall apply for the purposes of determining each Member's
general allocable share of the items of income, gain, loss or expense comprising
Net Income or Net Loss of the Company for each Fiscal Year, determining special
allocations of other items of income, gain, loss and expense and adjusting the
balance of each Member's Capital Account to reflect the aforementioned general
and special allocations. For each Fiscal Year, the special allocations in
Section 7.03 shall be made immediately prior to the general allocations of
Section 7.02.
19
Section 7.02. General Allocations.
(a) Hypothetical Liquidation. The items of income, expense, gain
and loss of the Company comprising Net Income or Net Loss for a Fiscal Year
shall be allocated among the Persons who were Members during such Fiscal Year in
a manner that will, as nearly as possible, cause the Capital Account balance of
each Member at the end of such Fiscal Year to equal the positive or negative
difference between:
(i) the hypothetical distribution (if any) that such Member would
receive if, on the last day of the Fiscal Year, (x) all Company
assets, including cash, were sold for cash equal to their Gross Asset
Values, taking into account any adjustments thereto for such Fiscal
Year; (y) all Company liabilities were satisfied in cash according to
their terms (limited, with respect to each Nonrecourse Liability, to
the Gross Asset Value of the assets securing such liability); and (z)
the net proceeds thereof (after satisfaction of such liabilities) were
distributed in full pursuant to Section 10.04, and
(ii) the sum of (x) the amount, if any, that such Member is
obligated to contribute to the capital of the Company; (y) such
Member's share of the Company Minimum Gain determined pursuant to
Section 1.704-2(g) of the Regulations; and (z) such Member's share of
Member Nonrecourse Debt Minimum Gain determined pursuant to Section
1.704-2(i)(5) of the Regulations, all computed immediately prior to
the hypothetical sale described in Section 7.02(a)(i).
(b) Determination of Items Comprising Allocations.
(i) In the event that the Company has Net Income for a Fiscal
Year,
(A) for any Member as to whom the allocation pursuant to
Section 7.02(a) would reduce his, her or its Capital Account,
such allocation shall be comprised of a proportionate share of
each of the Company's items of expense or loss entering into the
computation of Net Income for such Fiscal Year; and
(B) the allocation pursuant to Section 7.02(a) in respect of
each Member (other than a Member referred to in Section
7.02(b)(i)(A)) shall be comprised of a proportionate share of
each Company item of income, gain, expense and loss entering into
the computation of Net Income for such Fiscal Year (other than
the portion of each Company item of expense and loss, if any,
that is allocated pursuant to Section 7.02(b)(i)(A)).
20
(ii) In the event that the Company has a Net Loss for a Fiscal
Year,
(A) for any Member as to whom the allocation pursuant to
Section 7.02(a) would increase his, her or its Capital Account,
such allocation shall be comprised of a proportionate share of
the Company's items of income and gain entering into the
computation of Net Loss for such Fiscal Year; and
(B) the allocation pursuant to Section 7.02(a) in respect of
each Member (other than a Member referred to in Section
7.02(b)(ii)(A)) shall be comprised of a proportionate share of
each Company item of income, gain, expense and loss entering into
the computation of Net Loss for such Fiscal Year (other than the
portion of each Company item of income and gain, if any, that is
allocated pursuant to Section 7.02(b)(ii)(A)).
(c) Loss Limitation. Notwithstanding anything to the contrary in
this Section 7.02, the amount of items of Company expense and loss allocated
pursuant to this Section 7.02 to any Member shall not exceed the maximum amount
of such items that can be so allocated without causing such Member to have an
Adjusted Capital Account Deficit at the end of any Fiscal Year, unless each
Member would have an Adjusted Capital Account Deficit. All such items in excess
of the limitation set forth in this Section 7.02(c) shall be allocated first, to
Members who would not have an Adjusted Capital Account Deficit, pro rata, in
proportion to their Capital Account balances, adjusted as provided in clauses
(a) and (b) of the definition of Adjusted Capital Account Deficit, until no
Member would be entitled to any further allocation, and thereafter, to all
Members, pro rata, in proportion to their Percentage Interests.
Section 7.03. Special Allocations. The following special
allocations shall be made in the following order:
(a) Minimum Gain Chargeback. In the event that there is a net
decrease during a Fiscal Year in either Company Minimum Gain or Member
Nonrecourse Debt Minimum Gain, then notwithstanding any other provision of this
Article VII, each Member shall receive such special allocations of items of
Company income and gain as are required in order to conform to Section 1.704-2
of the Regulations.
(b) Qualified Income Offset. Subject to Section 7.03(a), but
notwithstanding any other provision of this Article VII, items of income and
gain shall be specially allocated to the Members in a manner that complies with
the "qualified income offset" requirement of Section 1.704-1(b)(2)(ii)(d)(3) of
the Regulations.
(c) Deficit Capital Accounts Generally. In the event that a
Member has a deficit Capital Account balance at the end of any Fiscal Year which
is in excess of the sum of (i) the amount such Member is then obligated to
restore pursuant to this Agreement, and (ii) the amount such Member is then
deemed to be obligated to restore pursuant to the penultimate sentences of
Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations, respectively, such
21
Member shall be specially allocated items of Company income and gain in an
amount of such excess as quickly as possible, provided that any allocation under
this Section 7.03(c) shall be made only if and to the extent that a Member would
have a deficit Capital Account balance in excess of such sum after all
allocations provided for in this Article VII have been tentatively made as if
this Section 7.03(c) were not in this Agreement.
(d) Deductions Attributable to Member Nonrecourse Debt. Any item
of Company loss or expense that is attributable to Member Nonrecourse Debt shall
be specially allocated to the Members in the manner in which they share the
economic risk of loss (as defined in Section 1.752-2 of the Regulations) for
such Member Nonrecourse Debt.
(e) Allocation of Nonrecourse Deductions. Each Nonrecourse
Deduction of the Company shall be specially allocated among the Members in
accordance with their respective Percentage Interests.
The allocations pursuant to Sections 7.03(a), 7.03(b) and 7.03(c) shall be
comprised of a proportionate share of each of the Company's items of income or
gain. The amounts of any Company income, gain, loss or deduction available to be
specially allocated pursuant to this Section 7.03 shall be determined by
applying rules analogous to those set forth in subparagraphs (a) through (e) of
the definitions of Net Income and Net Loss.
Section 7.04. Allocation of Nonrecourse Liabilities. For purposes
of determining each Member's share of Nonrecourse Liabilities, if any, of the
Company in accordance with Section 1.752-3(a)(3) of the Regulations, the
Members' interests in Company profits shall be determined in the same manner as
prescribed by Section 7.03(e).
Section 7.05. Changes of Interest. In the event of (a) a Transfer
of all or part of a Member's Interests (in accordance with the provisions of
this Agreement) or (b) the admission of an additional Member or any increase in
the number of Interests of an existing Member at any time other than the end of
a Fiscal Year, the shares of items of Company Net Income or Net Loss and
specially allocated items allocable to the Interests Transferred or acquired
shall be allocated between the transferor and the transferee (or to the
additional or existing Member in the event of an admission or increase) in a
manner determined by a majority of the Board of Managers in its sole discretion
that is not inconsistent with the applicable provisions of the Code and the
Regulations.
Section 7.06. Tax Allocations.
(a) Section 704(b) Allocations.
(i) Each item of income, gain, loss or deduction for U.S. federal
income tax purposes that corresponds to an item of income, gain, loss
or expense that is either taken into account in computing Net Income
or Net Loss or is specially allocated pursuant to Section 7.03 (a
"Book Item") shall be allocated among the Members in the same
proportion as the corresponding Book Item is allocated among them
pursuant to Section 7.02 or 7.03.
22
(ii) (A) If the Company recognizes Depreciation Recapture in
respect of the sale of any Company asset,
(I) the portion of the gain on such sale which is
allocated to a Member pursuant to Section 7.02 or 7.03 shall
be treated as consisting of a portion of the Company's
Depreciation Recapture on the sale and a portion of the
balance of the Company's remaining gain on such sale under
principles consistent with Section 1.1245-1 of the
Regulations; and
(II) if, for U.S. federal income tax purposes, the
Company recognizes both "unrecaptured Section 1250 gain" (as
defined in Section 1(h) of the Code) and gain treated as
ordinary income under Section 1250(a) of the Code in respect
of such sale, the amount treated as Depreciation Recapture
under Section 7.06(a)(ii)(A)(I) shall be comprised of a
proportionate share of both such types of gain.
(B) For purposes of this Section 7.06(a)(ii), "Depreciation
Recapture" means the portion of any gain from the disposition of
an asset of the Company that, for U.S. federal income tax
purposes (x) is treated as ordinary income under Section 1245 of
the Code; (y) is treated as ordinary income under Section 1250 of
the Code; or (z) is "unrecaptured Section 1250 gain" as such term
is defined in Section 1(h) of the Code.
(b) Section 704(c) Allocations. In the event any property of the
Company is credited to the Capital Account of a Member at a value other than its
tax basis (whether as a result of a contribution of such property or a
revaluation of such property pursuant to subdivision (b) of the definition of
"Gross Asset Value"), then allocations of taxable income, gain, loss and
deductions with respect to such property shall be made in a manner that will
comply with Sections 704(b) and 704(c) of the Code and the Regulations
thereunder. The Company, in the discretion of a majority of the Board of
Managers, may make, or not make, "curative" or "remedial" allocations (within
the meaning of the Regulations under Section 704(c) of the Code) including:
(i) "curative" allocations that offset the effect of the "ceiling
rule" for a prior Fiscal Year (within the meaning of Section
1.704-3(c)(3)(ii) of the Regulations); and
(ii) "curative" allocations from dispositions of contributed
property (within the meaning of Section 1.704-3(c)(3)(iii)(B) of the
Regulations).
(c) Credits. All tax credits shall be allocated among the Members
as determined by a majority of the Board of Managers in its and absolute
discretion, consistent with applicable law.
23
The tax allocations made pursuant to this Section 7.06 shall be solely for tax
purposes and shall not affect any Member's Capital Account or share of non-tax
allocations or distributions under this Agreement.
Section 7.07. Withholding Tax Payments and Obligations. In the
event that withholding taxes are paid or required to be paid in respect of
amounts received or distributed by the Company, such payments or obligations
shall be treated as follows:
(a) Payments to the Company. If the Company receives proceeds in
respect of which a tax has been withheld, the Company shall be treated as having
received cash in an amount equal to the amount of such withheld tax, and, for
all purposes of this Agreement, each Member shall be treated as having received
a distribution pursuant to Section 8.01 equal to the portion of the withholding
tax allocable to such Member, as reasonably determined by a majority of the
Board of Managers. In the event that the Company receives a refund of taxes
previously withheld by a third party from one or more payments to the Company,
the economic benefit of such refund shall be apportioned among the Members in a
manner reasonably determined by a majority of the Board of Managers to offset
the prior operation of this Section 7.07(a) in respect of such withheld taxes.
(b) Payments by the Company. The Company is authorized to
withhold from any payment made to, or any distributive share of, a Member, any
taxes required by law to be withheld, and in such event, such taxes shall be
treated as if an amount equal to such withheld taxes had been paid to the Member
rather than paid over to the taxing authority.
(c) Overwithholding. Neither the Company nor any Member shall be
liable for any excess taxes withheld in respect of any other Member's interest
in the Company, and, in the event of overwithholding, such other Member's sole
recourse shall be to apply for a refund from the appropriate governmental
authority.
(d) Certain Withheld Taxes Treated as Demand Loans. Any taxes
withheld pursuant to Section 7.07(a) or 7.07(b) shall be treated as if
distributed to the relevant Member to the extent an amount equal to such
withheld taxes would then be distributable to such Member and, to the extent in
excess of such distributable amounts, as a demand loan payable by the Member to
the Company with interest at the Applicable Federal Rate as of the date of such
withholding. The Board of Managers may, in its discretion, either demand payment
of the principal and accrued interest on such demand loan at any time, and
enforce payment thereof by legal process, or may withhold from one or more
distributions to a Member amounts sufficient to satisfy such Member's
obligations under any such demand loan.
(e) Indemnity. In the event that the Company, any Manager, any
Officer, or any Member or any Affiliate thereof, becomes liable as a result of a
failure to withhold and remit taxes in respect of any other Member (the
"Underwithheld Member"), then, in addition to, and without limiting, any
indemnities for which the Underwithheld Member may be liable under Section 6.03,
24
such Underwithheld Member shall indemnify and hold harmless the Company, the
Managers, the Officers or the other Members, as the case may be, in respect of
all taxes, including interest and penalties, and any expenses incurred in any
examination, determination, resolution, and payment of such liability. The
provisions contained in this Section 7.07(e) shall survive the termination of
the Company and the withdrawal of any Member.
Section 7.08. Tax Classification of the Company. Subject to
Section 7.08(a), it is intended that the Company be classified as a partnership
for U.S. federal income tax purposes following the Plan Distribution, in
accordance with Revenue Ruling 99-5, 1999-1 C.B. 434.
(a) Certain Tax Elections. The Company shall not, without the
consent of a majority of the Board of Managers, file any election pursuant to
Section 301.7701-3(c) of the Regulations to be treated as an entity other than a
partnership (a "Conversion Election"). The Company shall not elect, pursuant to
Section 761(a) of the Code, to be excluded from the provisions of subchapter K
of the Code.
(b) Publicly Traded Partnership. To ensure that Interests are not
traded on an established securities market within the meaning of Section
1.7704-1(b) of the Regulations or readily tradable on a secondary market or the
substantial equivalent thereof within the meaning of Section 1.7704-1(c) of the
Regulations, notwithstanding anything to the contrary contained in this
Agreement:
(i) Establishment of a Market. The Company shall not participate
in the establishment of a market or the inclusion of Interests
thereon; and
(ii) Non-Recognition of Certain Market Transfers. The Company
shall not recognize any Transfer (other than any transfer with respect
to which the representations set forth on Exhibit A are provided) made
on any market by (A) redeeming any Interests of a Member, or (B)
admitting as a Member any transferee pursuant to a Transfer or
otherwise recognizing any rights of any transferee, such as a right of
such transferee to receive Company distributions (directly or
indirectly) or to acquire an interest in the capital or profits of the
Company.
Section 7.09. Other Tax Elections.
(a) Elections by the Company. Except as provided in Section 7.08,
relating to the tax classification of the Company, a majority of the Board of
Managers may make, or not make, any tax election provided under the Code, or any
provision of state, local or foreign tax law. All decisions and other matters
concerning the computation and allocation of items of income, gain, loss,
deduction and credits among the Members, and accounting procedures, not
specifically and expressly provided for by the terms of this Agreement, shall be
determined by a majority of the Board of Managers. Any determination made
pursuant to this Section 7.09(a) by a majority of the Board of Managers shall be
conclusive and binding on all Members.
25
(b) Election by Members. In the event any Member makes any tax
election that requires the Company to furnish information to such Member to
enable such Member to compute its own tax liability, or requires the Company to
file any tax return or report with any tax authority, in either case that would
not be required in the absence of such election made by such Member, a majority
of the Board of Managers may, as a condition to furnishing such information or
filing such return or report, require such Member to pay to the Company any
incremental expenses incurred in connection therewith.
Section 7.10. Tax Matters Member.
(a) Designation. From time to time, the Board of Managers shall
designate a Member to serve as the tax matters partner within the meaning of
Section 6231(a)(7) of the Code (the "Tax Matters Member"). In such capacity, the
Tax Matters Member shall have all of the rights, authority and power, and shall
be subject to all of the regulations of, a tax matters partner to the extent
provided in the Code and the Regulations.
(b) State and Local Tax Law. If any state or local tax law
provides for a tax matters partner or person having similar rights, powers,
authority or obligations, the Tax Matters Member shall also serve in such
capacity. In all other cases, the Tax Matters Member shall represent the Company
in all tax matters to the extent allowed by law.
(c) Expenses of the Tax Matters Member. Expenses incurred by the
Tax Matters Member as the Tax Matters Member, or in a similar capacity as set
forth in this Section 7.10, shall be borne by the Company as Company expenses.
Such expenses shall include fees of attorneys and other tax professionals,
accountants, appraisers and experts, filing fees and reasonable out of pocket
costs.
(d) Effect of Certain Decisions by Tax Matters Member. Any
decisions made by the Tax Matters Member, including whether or not to settle or
contest any tax matter, whether or not to extend the period of limitations for
the assessment or collection of any tax and the choice of forum for such contest
shall be made by the Tax Matters Member acting at the direction of a majority of
the Board of Managers.
ARTICLE VIII
DISTRIBUTIONS
Section 8.01. Requirement and Characterization of Distributions.
Except as otherwise provided in this Section 8.01, if and to the extent that the
Company makes distributions to its Members, the Company shall (to the extent
permitted by law, including Section 18-607 of the Act) make distributions to the
Members to each Member in accordance with their Percentage Interests as set
forth on Schedule A. Any distribution made pursuant to this Section 8.01 shall
be made as soon as reasonably practicable after the declaration of such
distribution by the Board of Managers.
26
Section 8.02. Non-Cash Distributions. Whenever a distribution
provided for in this Article VIII shall be payable in property other than cash,
the value of such distribution shall be deemed to be the Gross Asset Value of
such property.
Section 8.03. Tax Distributions. The Board of Managers shall
cause the Company to distribute quarterly to the Members an amount designed to
assist the Members in satisfying their tax liability attributable to allocations
of income, gain, loss, deduction and credit of the Company in any Fiscal Year
for which such an allocation is required (a "Tax Distribution"). For purposes of
this Section 8.03, the Board of Managers shall calculate the Tax Distribution
based on the Members' distributive shares of the Company's taxable income
determined in accordance with Article VII. In determining the amount of any Tax
Distribution, it shall be assumed that the items of income, gain, deduction,
loss and credit in respect of the Company were the only such items entering into
the computation of tax liability of the Members for the Fiscal Year in respect
of which the Tax Distribution was made and that each Member was subject to tax
at the highest marginal effective rate of federal, state and local income tax
applicable to an individual resident in New York, New York, taking account of
any difference in rates applicable to ordinary income and capital gains and any
allowable deductions in respect of such state and local taxes in computing such
Member's liability for U.S. federal income tax purposes. The principles of
computation set forth in this Section 8.03 shall apply to each Member,
notwithstanding that any given Member may not generally be subject to tax under
the Code or applicable provisions of state or local tax law.
Section 8.04. Return of Distributions. Members receiving
distributions made in violation of the Act or this Agreement shall return such
distributions to the Company. Except for those distributions made in violation
of the Act or this Agreement, no Member shall be obligated to return any
distribution to the Company or pay the amount of any distribution for the
account of the Company or to any creditor of the Company.
ARTICLE IX
BOOKS AND RECORDS; REPORTS
Section 9.01. Books and Records.
(a) Company Books and Records. The Company will keep appropriate
books and records with respect to the Company's business, including all books
and records necessary to provide any information, lists and copies of documents
required to be provided pursuant to Section 9.02 or pursuant to applicable laws.
(b) Accounting. The books of the Company shall be kept on an
accrual basis for all purposes, including tax purposes, and the Company shall
prepare its financial statements using GAAP, consistently applied. The Fiscal
Year of the Company shall be the calendar year.
(c) Bank Accounts. The bank accounts of the Company shall be
maintained in such institutions as the Board of Managers shall determine. All
deposits and other funds not needed in the operation of the business may be
invested in the discretion of the Board of Managers. The funds of the Company
shall not be commingled with the funds of any other Person.
27
Section 9.02. Reports.
(a) Audited Annual Financial Statements. Within ninety (90) days
after the end of each Fiscal Year, the Company shall deliver to each Member a
copy of the audited consolidated balance sheet of the Company and its
consolidated Subsidiaries as at the end of such year, together with the related
audited statement of operations, Members' Capital Accounts and cash flow of the
Company and its consolidated Subsidiaries for such year (or similar statements
if such statements change as the result of changes in GAAP), together with
appropriate notes to such financial statements, and setting forth in each case
in comparative form the corresponding figures for the preceding Fiscal Year.
Such financial statements shall be accompanied by the report of the Company's
independent accountants to the effect that such financial statements have been
prepared in conformity with GAAP applied on a basis consistent with prior years
(except as otherwise specified in such report) and that the audit of such
financial statements has been performed in accordance with GAAP and represent
fairly the financial position of the Company and its consolidated Subsidiaries
as of the dates indicated and the results of their operations and cash flows for
the periods indicated. At the same time, the Company shall deliver, at the
Company's sole expense, to each Member a report indicating such Member's share
of all items of income, gain, loss, deduction and credit of the Company for such
Fiscal Year on a GAAP basis for financial reporting purposes and for U.S.
federal income tax purposes and any other financial information related to the
Company and its Subsidiaries which is reasonably requested by a Member for
federal, state, local or foreign income or franchise or other tax purposes.
(b) Quarterly Reports. As soon as practicable following the end
of the each fiscal quarter, including the final fiscal quarter of each Fiscal
Year (and in any event not later than forty-five (45)) days after the end of the
applicable fiscal quarter), the Company shall prepare and deliver to each Member
an unaudited balance sheet of the Company and its consolidated Subsidiaries as
of the end of such fiscal quarter and the related unaudited statement of
operations, Member's Capital Accounts and cash flow of the Company and its
consolidated Subsidiaries for such fiscal quarter and for the Fiscal Year to
date (or similar statements if such statements change as the result of changes
in GAAP), in each case setting forth in comparative form the corresponding
figures for the preceding fiscal quarter and for the fiscal quarter of the prior
Fiscal Year corresponding to the fiscal quarter just completed. At such time,
the Company shall deliver, at the Company's sole expense, to each Member an
estimate of such Member's share of all items of income, gain, loss, deduction
and credit of the Company for such fiscal quarter and for the Fiscal Year to
date for U.S. federal income tax purposes.
(c) Tax Returns. The Board of Managers shall use all commercially
reasonable efforts to furnish or cause to be furnished to the Members within
seventy-five (75) days after the end of each Company Fiscal Year, a Schedule K-1
and such other information (if any) with respect to the Company as may be
necessary for the preparation of such Member's tax returns, including a
statement showing each Member's share of Company income, gain or loss, expense
and credits for the applicable Company Fiscal Year. The Company shall provide to
each Member, together with Schedule K-1, a statement of the balance of such
Member's Capital Account.
28
ARTICLE X
DISSOLUTION AND LIQUIDATION
Section 10.01. Dissolution. The Company shall dissolve, and its
affairs shall be wound up, upon the first to occur of the following: (a) the
approval of a majority of the Board of Managers and (b) the entry of a decree of
judicial dissolution under Section 18-802 of the Act. As soon as possible
following the occurrence of any of the events provided in clauses (a) or (b)
above, the Company shall prepare and execute a statement of intent to dissolve
in such form as shall be prescribed by the Secretary of State of the State of
Delaware and the same shall be delivered to that office, or as otherwise
required by law.
Section 10.02. Liquidation. Upon dissolution of the Company, the
Board of Managers or, if one is appointed, an authorized liquidating trustee
shall wind up the Company's affairs. Upon termination and dissolution of the
Company and liquidation of its assets, the Board of Managers or liquidating
trustee, as the case may be, shall apply the Company's assets to the payment of
all liabilities owing to creditors in accordance with applicable law. The Board
of Managers or liquidating trustee, as the case may be, shall set up such
reserves as it deems reasonably necessary for any contingent or unforeseen
liabilities or obligations of the Company. Said reserves may be paid by the
Board of Managers or liquidating trustee, as the case may be, upon dissolution
to a bank or trust company to be held in escrow for the purpose of paying any
such contingent or unforeseen liabilities or obligations and, at the point in
time when the Board of Managers or liquidating trustee, as the case may be, may
deem that no further risk of such unforeseen liabilities or obligations exists,
such reserves shall be distributed to the Members or their assigns in the manner
set forth in Section 10.04. The Board of Managers or, if applicable, the
liquidating trustee, shall (a) determine which assets shall be distributed in
kind and which assets shall be liquidated and (b) either cause the Company's
assets to be sold or distributed, and if sold, shall cause the proceeds
therefrom, to the extent sufficient therefor, to be applied and distributed as
provided in Section 10.04.
Section 10.03. Final Allocation. After paying all liabilities due
creditors and providing for reserves in accordance with Section 10.02, the Board
of Managers or liquidating trustee, as the case may be, shall make a final
allocation of all items comprising Net Income and Net Loss to the Members'
Capital Accounts in accordance with Article VII, which allocation shall take
into account any unrealized gains and losses with respect to assets to be
distributed in kind in accordance with Sections 1.704-1(b)(2)(iv)(e) and
1.704-1(b)(2)(iv)(f) of the Regulations.
29
Section 10.04. Distributions Upon Liquidation. Upon dissolution
of the Company in accordance with Section 10.01 and the payment to creditors,
including the establishment of reasonable reserves, in accordance with Section
10.02, the Company shall distribute the remaining assets of the Company in the
order of priority set forth in Section 8.01. Except as otherwise specifically
provided in this Agreement, each Member shall only be entitled to look to the
assets of the Company for the return of his, her or its positive Capital Account
balance and shall have no recourse for his, her or its Capital Contribution
and/or share of any income or profits of the Company (upon dissolution or
otherwise) against any other Member.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Conversion. Notwithstanding anything to the
contrary contained herein, each of the Members hereby agrees that it will, at
the expense of the Company, take such action and execute such documents as may
reasonably be necessary to convert the Company into a corporation substantially
concurrently with the closing of a Qualified Public Offering, provided that
representations and warranties to be made by the Members in connection with such
conversion, if any, will be negotiated at such time. In such event, Members
shall be entitled to receive upon such conversion that value of each series of
the securities of the corporation into which the Company is converted as equals
the amount such Member would be entitled to receive under Section 11.01 related
to the Interests which such Member held in the Company immediately prior to such
conversion, provided that (a) the Company shall have complied with all of the
provisions of this Agreement, including, without limitation, those relating to
proportional adjustments with respect to the Interests and (b) upon completion
of such conversion the securities received by each such Member shall as nearly
as practicable provide the Member with the same economic and other rights as
such Member was entitled to prior to such conversion into a corporation.
Section 11.02. Severability. Each provision of this Agreement
shall be considered separable and, if for any reason any provision or provisions
herein are determined to be invalid, unenforceable or illegal under any existing
or future law, such invalidity, unenforceability or illegality shall not impair
the operation of, or affect those portions of this Agreement which are, valid,
enforceable and legal.
Section 11.03. Entire Agreement. This Agreement constitutes the
entire agreement of the Members with respect to the subject matter hereof and
supersedes any prior agreements or understandings among the parties.
Section 11.04. Binding Effect. Subject to the provisions of this
Agreement relating to transferability, this Agreement will be binding upon and
inure to the benefit of the Members, and their respective successors and
assigns.
Section 11.05. Parties in Interest. Except as expressly provided
in the Act, nothing in this Agreement shall confer any rights or remedies under
or by reason of this Agreement on any Persons other than the Members and their
30
respective successors and assigns nor shall anything in this Agreement relieve
or discharge the obligation or liability of any third person to any party to
this Agreement, nor shall any provision give any third person any right of
subrogation or action over or against any party to this Agreement.
Section 11.06. Notices. Any notice, payment, demand, or other
communication required or permitted to be given to any Member hereunder shall be
given by (i) personal delivery, (ii) courier (with signed acknowledgment of
receipt), (iii) facsimile transmission (with "answerback" confirmation of
transmission), or (iv) certified or registered mail, with return receipt, in
each case to the address (or facsimile number) of such Member set forth on
Schedule A, or such other address (or facsimile number) as such Member may
specify from time to time in a written notice to the other Members. Any such
notice, payment, demand or other communication shall be deemed to have been
given, delivered, received and effective upon receipt.
Section 11.07. Additional Documents and Acts. Each Member agrees
to execute and deliver such additional documents and instruments and to perform
such additional acts as may be necessary or appropriate to effectuate, carry out
and perform all of the terms, provisions, and conditions of this Agreement and
the transactions contemplated hereby.
Section 11.08. Headings. All headings herein are inserted only
for convenience and ease of reference and are not to be considered in the
construction or interpretation of any provision of this Agreement.
Section 11.09. Interpretation. In the event any claim is made by
any Member relating to any conflict, omission or ambiguity in this Agreement, no
presumption or burden of proof or persuasion shall be implied by virtue of the
fact that this Agreement was prepared by or at the request of a particular
Member or his or her counsel.
Section 11.10. Article 8 "Opt-in".Pursuant to and in accordance
with the provisions of 6 Del. Code Section 8-103(c), all limited liability
company interests of the Company shall be considered and treated as "securities"
(within the meaning of 6 Del. Code Section 1-102(a)(15)) governed by Article 8
of the Delaware Uniform Commercial Code. All limited liability company interests
of the Company shall hereinafter be evidenced and represented by a Certificate
of Limited Liability Company Interest issued by the Company to the Member. Such
Certificate of Limited Liability Company Interest is intended to be and shall be
considered a "security certificate" within the meaning of 6 Del. Code Section
8-102(a)(16). The limited liability company interests represented or evidenced
by such Certificate are intended to be treated as and shall be considered
"certificated securities" within the meaning of 6 Del. Code Section 8-102(a)(4).
Appropriate officers of the Company are hereby authorized, empowered, and
directed to execute and deliver any such Certificate.
Section 11.11. Equitable Relief; Attorneys' Fees; Remedies
Cumulative. The Members agree that the remedy of damages at law for a violation
by a Member of any of the terms and conditions of this Agreement is an
inadequate remedy. In recognition of the irreparable harm that such a violation
31
would cause the Company and its Members, the Members agree that in addition to
any other remedies or relief afforded by law, the Company and/or one or more of
its Members may obtain an injunction against an actual or threatened violation
of this Agreement or may obtain an order compelling the Member to specifically
perform any provisions of this Agreement, it being the understanding of the
Members that both damages and an injunction or order of specific performance
shall be proper modes of relief and are not to be considered alternative or
mutually exclusive remedies. The rights and remedies provided in this Agreement
are cumulative, and the use of any one right or remedy by the Company or any
Member shall not preclude or waive the right to use any or all other remedies.
Such rights and remedies are given in addition to any other rights and remedies
the Company or Members may have under the Act, applicable statutes, ordinances,
common law or otherwise. In the event of any actual or threatened violation
hereof, the violating Member agrees to pay the costs, expenses and reasonable
attorneys' fees incurred by the Company and its Members in pursuing any of
its/their rights with respect to such actual or threatened violation, in
addition to the actual damages sustained by the Company and/or its Members as a
result thereof.
Section 11.12. Representations and Warranties. Each of the
Members (as to himself, herself or itself only, as the case may be) hereby
represents and warrants to the Company and the other Members that:
(a) he, she or it has full power, authority and legal capacity to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby, and the execution, delivery and performance by him, her or
it of this Agreement and the consummation by him, her or it of the transactions
contemplated hereby have been duly authorized by all necessary action;
(b) this Agreement has been duly and validly executed and
delivered by him, her or it and constitutes the binding obligation thereof
enforceable against him, her or it in accordance with its terms; and
(c) the execution, delivery and performance by him, her or it of
this Agreement and the consummation by him, her or it of the transactions
contemplated hereby will not, with or without the giving of notice or the lapse
of time, or both, (i) violate any provision of law, statute, rule or regulation
to which he, she or it is subject, (ii) violate any order, judgment or decree
applicable to him, her or it or (iii) conflict with, or result in a breach or
default under, any term or condition of any agreement or other instrument to
which he, she or it is a party or by which he, she or it is bound.
Section 11.13. Jurisdiction. Any action, suit or proceeding
seeking to interpret or enforce any provision of, or based on, arising out of,
or in any way related to, any right, obligation or matter set forth in this
Agreement shall be brought in the courts of the State of Delaware (or, if
jurisdiction is appropriate, any federal court sitting in the State of
Delaware), and each of the parties consents to the jurisdiction of such courts
(and the appropriate appellate courts) in any such action, suit or proceeding
and waives any objection to jurisdiction and venue laid therein. Process in any
32
action, suit or proceeding referred to in this preceding sentence may be served
on any party anywhere in the world. Each of the parties hereto waives any right
that it may have to trial by jury in respect of any litigation based on, or
arising out of, under or in connection with this Agreement.
Section 11.14. Governing Law. This Agreement shall be governed
by, and construed under, the laws of the State of Delaware (without regard to
conflict of laws principles thereof), and all rights and remedies shall be
governed by such laws.
Section 11.15. Amendments; Waivers. Unless otherwise provided in
this Agreement, this Agreement may not be modified, altered, supplemented or
amended (by merger, repeal or otherwise) except pursuant to a written consent of
the corporate governance committee of the Board of Managers and the consent of
the Interest Majority, provided that the corporate governance committee of the
Board of Managers may amend this Agreement without the consent of the Members to
cure any ambiguity, to correct or supplement any inconsistent or incomplete
provisions or to correct any stenographic or clerical errors. No failure or
delay on the part of any Member in exercising any rights under this Agreement,
or in insisting on strict performance of any covenant or condition contained in
this Agreement, shall operate as a waiver of any of such Member's rights
hereunder.
Section 11.16. Expenses. Each Member and the Company shall pay
its own costs and expenses incurred in connection with the preparation and
execution of this Agreement, or any amendment or waiver hereof, and the
transactions contemplated hereby and all matters related hereto.
Section 11.17. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original of this
Agreement.
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IN WITNESS WHEREOF, the undersigned, intending to be legally
bound hereby, have duly executed this Agreement as of the date first written
above.
COMPANY
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NEXTWAVE WIRELESS LLC
By:
Name:
Title:
MEMBERS
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__________________________
__________________________
34