Contribution And Formation Agreement

CONTRIBUTION AND FORMATION AGREEMENT


between


SBC COMMUNICATIONS INC.


and


BELLSOUTH CORPORATION


Dated as of April 4, 2000


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TABLE OF CONTENTS


ARTICLE I


DEFINITIONS AND TERMS


1.1 Specific Definitions.................................................. 2
1.2 Other Terms........................................................... 18
1.3 Other Definitional Provisions......................................... 18


ARTICLE II


FORMATION AND CONTRIBUTIONS


2.1 Formation of Newco and Manager........................................ 18
2.2 Contribution of SBC Wireless LLC Shares............................... 19
2.3 Contribution of BellSouth Shares...................................... 19
2.4 Issuance of Newco LLC Units........................................... 20
2.5 Closing............................................................... 20
2.6 Additional Closing Deliveries by SBC.................................. 20
2.7 Additional Closing Deliveries by BellSouth............................ 21
2.8 Deliveries by Newco................................................... 21
2.9 SBC Additional Closings............................................... 21
2.10 BellSouth Additional Closing.......................................... 22
2.11 Net Debt.............................................................. 25


ARTICLE III


REPRESENTATIONS AND WARRANTIES


3.1 Representations and Warranties of SBC................................. 27
3.2 Representations and Warranties of BellSouth........................... 38


ARTICLE IV


CERTAIN COVENANTS AND AGREEMENTS OF SBC AND BELLSOUTH


4.1 Access and Information................................................ 49
4.2 Conduct of Business................................................... 50
4.3 Registrations, Filings and Consents................................... 54
4.4 Employee Benefit Plan/Employees....................................... 56
4.5 Transferred Businesses................................................ 63


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4.6 Divestitures.......................................................... 63
4.7 Acquisitions by SBC or BellSouth...................................... 64
4.8 Accountants' Letter................................................... 64
4.9 Transition Group...................................................... 64
4.10 Initial Marketing Plan................................................ 65
4.11 Newco LLC Agreement................................................... 65
4.12 Ancillary Agreements.................................................. 65
4.13 Resale and Agency Agreements.......................................... 65
4.14 Headquarters.......................................................... 65
4.15 Branding; Corporate Name.............................................. 65
4.16 Intercompany Obligations.............................................. 66
4.17 Taxes................................................................. 66
4.18 Business Assets....................................................... 68
4.19 Notification of Certain Matters....................................... 68
4.20 Regulatory Compliance................................................. 69
4.21 Control of Operations................................................. 69
4.22 Conversions........................................................... 70
4.23 Certain Exclusions.................................................... 70
4.24 Consent of Third Parties.............................................. 71
4.25 Further Assurances.................................................... 71


ARTICLE V


CONDITIONS TO CLOSING


5.1 Conditions to Each Party's Obligation to Effect the Transaction....... 71
5.2 Conditions to Obligation of BellSouth................................. 72
5.3 Conditions to Obligation of SBC....................................... 73


ARTICLE VI


TERMINATION


6.1 Termination........................................................... 74
6.2 Effect of Termination................................................. 75


ARTICLE VII


SURVIVAL AND INDEMNIFICATION


7.1 Survival of Representations, Warranties, Covenants and Agreements;
Knowledge of Breach................................................. 76
7.2 Indemnification by BellSouth.......................................... 76
7.3 Indemnification by SBC................................................ 77
7.4 Indemnification as Sole Remedy; Specific Performance.................. 78


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7.5 Method of Asserting Claims, Etc....................................... 79
7.6 No Additional Recoveries.............................................. 80
7.7 Calculation of Losses................................................. 80
7.8 Assignment of Claims.................................................. 80
7.9 Tower Indemnity....................................................... 80


ARTICLE VIII
MISCELLANEOUS


8.1 Amendment and Waiver.................................................. 81
8.2 Expenses.............................................................. 81
8.3 Public Disclosure..................................................... 81
8.4 Assignment............................................................ 82
8.5 Entire Agreement...................................................... 82
8.6 Fulfillment of Obligations............................................ 82
8.7 Parties in Interest; No Third Party Beneficiaries..................... 82
8.8 Counterparts.......................................................... 82
8.9 Section Headings...................................................... 82
8.10 Notices............................................................... 82
8.11 Governing Law; Submission to Jurisdiction; Selection of Forum......... 84
8.12 Submission to Jurisdiction............................................ 84
8.13 Waiver of Jury Trial.................................................. 85
8.14 Severability.......................................................... 85


-iii- 5 EXHIBITS AND SCHEDULES


Exhibit A Form of Certificate of Formation of Newco


Exhibit B Form of Certificate of Incorporation of Manager


Exhibit C Form of By-laws of Manager


Exhibit D [Reserved]


Exhibit E [Reserved]


Exhibit F Form of Newco LLC Agreement


Exhibit G Form of Registration Rights Agreement


Exhibit H Form of Resale Agreements


Exhibit I Form of Agency Agreements (consisting of the Wireless Agency
Agreements and the Wireline Agency Agreements)


Exhibit J Form of Transition Services Agreement


Exhibit K Form of Management Agreement


Exhibit L Form of Intellectual Property License Agreement


Exhibit M Form of Stockholders' Agreement


Exhibit N Form of Transition Marks Agreement


Schedule 1 Excluded BellSouth Business


Schedule 2 SBC Additional Subsidiary Dates


Schedule 3 Arkansas Market and Los Angeles Market


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CONTRIBUTION AND FORMATION AGREEMENT, dated as of April 4, 2000, between SBC Communications Inc., a Delaware corporation ("SBC"), and BellSouth Corporation, a Georgia corporation ("BellSouth").


W I T N E S S E T H:


WHEREAS, SBC and BellSouth (each a "Party" and, collectively, the "Parties") wish to combine their respective Domestic mobile wireless voice and data services businesses, to be conducted through a stand-alone limited liability company to be formed under the laws of Delaware ("Newco") and governed by the terms of the Newco LLC Agreement;


WHEREAS, the Boards of Directors of each Party have approved the Transaction;


WHEREAS, the Parties are entering into this Agreement to set forth their agreement as to the creation of and contribution of certain assets to Newco and the conditions to such contributions;


WHEREAS, subject to the terms and conditions set forth herein, SBC will be contributing the SBC Business to Newco, including its equity interests in the SBC Companies;


WHEREAS, subject to the terms and conditions set forth herein, BellSouth will be contributing the BellSouth Business to Newco, including its equity interests in the BellSouth Companies;


WHEREAS, in connection with the execution and delivery of this Agreement, BellSouth, SBC and Newco will also be entering into the Newco LLC Agreement and the Stockholders' Agreement in accordance with the terms hereof; and


WHEREAS, the Parties intend that for federal income tax purposes the contributions of the SBC Business and the BellSouth Business shall (a) qualify as a transfer of assets under the provisions of Section 721 of the Internal Revenue Code of 1986, as amended (the "Code"), and (b) not interfere with the accounting by SBC of prior business combinations using the "pooling-of-interests" method of accounting;


NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and undertakings contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 7


ARTICLE I
DEFINITIONS AND TERMS


1.1 Specific Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:


"ABC Agreement" shall mean the AB Cellular Holding, LLC Limited Liability
Company Agreement, dated November 13, 1998.


"ABC Holding" shall mean AB Cellular Holding, LLC, a Delaware limited liability
company.


"Additional Subsidiaries" shall mean collectively, the SBC Additional
Subsidiaries and the BellSouth Additional Subsidiary.


"Affiliates" shall mean with respect to any Person, any Person directly or
indirectly Controlling, Controlled by, or under Common Control with
such other Person at any time during the period for which the
determination of affiliation is being made.


"Agency Agreements" shall mean, collectively, the Wireline Agency Agreements
and the Wireless Agency Agreements.


"Agreement" shall mean this Contribution and Formation Agreement, the Schedules
hereto, the BellSouth Disclosure Letter, the SBC Disclosure Letter, and
the Exhibits hereto, as the same may be amended or supplemented from
time to time in accordance with the terms hereof.


"Air-Ground Service" shall mean air-ground wireless voice and data service
provided pursuant to licenses issued by the FCC pursuant to Subpart G
of Part 22 of the FCC Rules and all air-ground wireless voice and data
services reasonably ancillary thereto.


"Ancillary Agreements" shall mean, collectively, the Agency Agreements,
Intellectual Property License Agreement, Newco LLC Agreement,
Registration Rights Agreement, Resale Agreements, Stockholders'
Agreement, Management Agreement, Transition Marks Agreement and
Transition Services Agreement, in each case substantially in the form
attached as an Exhibit hereto.


"Arkansas Assets" shall mean all right, title and interest of the applicable SBC
Additional Subsidiary in and to (i) all FCC Licenses held by the SBC
Companies or any Subsidiary of a SBC Company covering the Arkansas
Market, (ii) all other


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Licenses held by the SBC Companies or any Subsidiary of a SBC Company
relating exclusively to the wireless telecommunications systems serving
the Arkansas Market; and (iii) all other assets, rights and properties
owned or leased by SBC or any Subsidiary of SBC and used exclusively by
SBC or its Affiliates in connection with the SBC Business in the
Arkansas Market.


"Arkansas Liabilities" shall mean any direct or indirect liability,
indebtedness, obligation, cost, expense, claim, loss, damage,
deficiency, guaranty or endorsements of or by any SBC Company or any
Subsidiary of a SBC Company relating exclusively (i) to the Arkansas
Assets or (ii) the SBC Business in the Arkansas Market.


"Arkansas Market" shall have the meaning set forth on Schedule 3 of the SBC
Disclosure Letter hereto.


"Bankruptcy and Equity Exception" shall have the meaning set forth in Section
3.1(e).


"BellSouth" shall have the meaning set forth in the Preamble.


"BellSouth Additional Closing" shall have the meaning set forth in Section
2.10(d).


"BellSouth Additional Closing Date" shall have the meaning set forth in Section
2.10(e).


"BellSouth Additional Subsidiary" shall have the meaning set forth in Section
2.10(d).


"BellSouth Additional Subsidiary Value" shall mean the Fair Market Value of the
BellSouth Additional Subsidiary as of December 31, 2002.


"BellSouth Benefits Liabilities" shall have the meaning set forth in Section
4.4(m).


"BellSouth Books and Records" shall mean all books, ledgers, files, reports,
plans and operating records of, or maintained for the BellSouth
Business; provided that with respect to any of the foregoing items that
are not held by the BellSouth Companies or any of their Subsidiaries,
BellSouth Books and Records shall be deemed to refer only to items
materially related to the BellSouth Business.


"BellSouth Business" shall mean the Business as conducted by BellSouth and its
Affiliates, but shall not include the Excluded BellSouth Business.


"BellSouth Cellular" shall mean BellSouth Cellular Corp., a Georgia corporation.


"BellSouth Closing Net Debt" shall mean the BellSouth Net Debt as of the
Closing.


"BellSouth Companies" shall mean collectively BellSouth Data and BellSouth
Mobility and shall be deemed to include the BellSouth Additional
Subsidiary. For


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purposes of Sections 3.2 and 4.2 hereof, the term BellSouth Companies
shall include the Subsidiaries listed on Schedule 3.2(d) of the
BellSouth Disclosure Letter.


"BellSouth Companies' Licenses" shall have the meaning set forth in Section
3.2(n).


"BellSouth Compensation and Benefit Plans" shall have the meaning set forth in
Section 3.2(i)(i).


"BellSouth Contribution" shall have the meaning set forth in Section 2.3.


"BellSouth Data" shall mean BellSouth Wireless Data, L.P., a Delaware limited
partnership, and its successor companies.


"BellSouth Data Shares" shall mean all of the issued and outstanding equity
interests of BellSouth Data in whatever form such equity interests may
be held.


"BellSouth Deductible" shall have the meaning set forth in Section 7.2(b).


"BellSouth Disclosure Letter" shall mean the disclosure letter, dated the date
hereof, delivered by BellSouth to SBC.


"BellSouth Employees" shall have the meaning set forth in Section 3.2(i)(i).


"BellSouth Financial Statements" shall have the meaning set forth in Section
3.2(f).


"BellSouth Holdings" shall mean BellSouth Mobile Data, Inc., a Georgia
corporation, and its successor companies.


"BellSouth Interim Financial Statements" shall have the meaning set forth in
Section 3.2(f).


"BellSouth Leasing Company" shall have the meaning set forth in Section 4.4(a).


"BellSouth Mobility" shall mean BellSouth Mobility, Inc, a Georgia corporation,
and its successor companies.


"BellSouth Net Debt" shall mean, as calculated as of the Closing Date, (x) the
sum of the liabilities of (a) each of the BellSouth Companies
(including for such purposes, each direct and indirect wholly owned
Subsidiary of a BellSouth Company, but excluding the BellSouth
Additional Subsidiary) and (b) each other Subsidiary of the BellSouth
Companies, but excluding the BellSouth Additional Subsidiary,
multiplied by the direct or indirect percentage ownership of the
BellSouth Companies, minus (y) the sum of the current assets (including
cash and cash


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equivalents owned by such companies and by Wireless Investco) of (a)
each of the BellSouth Companies (including for such purposes each
direct and indirect wholly owned Subsidiary of a BellSouth Company, but
excluding the BellSouth Additional Subsidiary that are operating
Companies) and (b) each other Subsidiary of the BellSouth Companies,
but excluding the BellSouth Additional Subsidiary by the percentage
ownership of BellSouth, clauses (x) and (y) being calculated from time
to time in a manner consistent with GAAP. The Fair Market Value of the
securities of Cellemetry LLC, a Delaware limited liability company
owned by the BellSouth Companies on the Closing Date, shall be deemed a
current asset for the purposes of the calculation of the BellSouth Net
Debt.


"BellSouth Pension Plans" shall have the meaning set forth in Section 3.2(i)(i).


"BellSouth PCS" shall mean BellSouth Personal Communications, Inc., a Delaware
corporation and its successor companies.


"BellSouth Proportionate Share" shall have the meaning set forth in Section
4.4(m).


"BellSouth Required Consents" shall have the meaning set forth in Section
3.2(b)(i).


"BellSouth Shares" shall mean, collectively, the BellSouth Mobility Shares and
BellSouth Data Shares.


"BellSouth Transferred Employees" shall have the meaning set forth in Section
4.4(b).


"BellSouth Wireless Employees" shall have the meaning set forth in Section
4.4(b).


"Benefits Calculation" shall have the meaning set forth in Section 4.4(j).


"Books and Records" shall mean the BellSouth Books and Records or the SBC Books
and Records, as the context requires.


"Business" shall mean (a) the acquisition, development, ownership and operation
of businesses engaged in the Domestic provision of mobile wireless
voice and data services utilizing radio frequencies licensed by the FCC
for the provision of Cellular Service, PCS Service, Wireless Data
Service, Air-Ground Service, Satellite Services and Part 27 Service and
(b) business activities customarily ancillary to the provision of any
of the foregoing.


"Business Day" shall mean any day other than a Saturday, a Sunday or a day on
which banks in New York City are authorized or obligated by law or
executive order to close.


"Calculation" shall have the meaning set forth in Section 2.11(a).


-5- 11 "Cellular Service" shall mean mobile wireless voice and data service provided
pursuant to licenses issued by the FCC pursuant to Subpart H of Part 22
of the FCC Rules and all mobile voice and data services reasonably
ancillary thereto.


"Chosen Courts" shall have the meaning set forth in Section 8.11.


"Claim Notice" shall have the meaning set forth in Section 7.5.


"Closing" shall have the meaning set forth in Section 2.5(a).


"Closing Date" shall have the meaning set forth in Section 2.5(a).


"Closing Net Debt" shall mean the sum of the SBC Closing Net Debt and the
BellSouth Closing Net Debt.


"CMRS" shall mean Commercial mobile radio service, as defined in 47 C.F.R.
Section 20.3.


"Code" shall have the meaning set forth in the Recitals.


"Compensation and Benefit Plans" shall mean, collectively, the SBC Compensation
and Benefit Plans and the BellSouth Compensation and Benefit Plans.


"Communications Act" shall mean the Communications Act of 1934, as amended or
any successor statute.


"Confidentiality Agreement" shall have the meaning set forth in Section 4.1(c).


"Conflicted Systems" shall have the meaning set forth in Section 4.6.


"Contracts" shall mean all agreements, contracts, leases and subleases, purchase
orders, arrangements, commitments, non-governmental licenses, notes,
mortgages, indentures or other obligations.


"Control" (including the correlative meanings of the terms "Controlled by" and
"under Common Control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or
cause the direction of management policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.


"CPA Firm" shall have the meaning set forth in Section 2.11(c).


"Disposition Committee" shall have the meaning set forth in Section 4.6.


"Disposition Systems" shall have the meaning set forth in Section 4.6.


-6- 12 "Domestic" shall mean the fifty states comprising the United States of America,
the District of Columbia, the U.S. Virgin Islands and the Commonwealth
of Puerto Rico, but excluding all other territories and possessions of
the United States of America.


"Encumbrances" shall mean liens, charges, encumbrances, security interests,
options, or any other restrictions or third party rights.


"Entity" shall mean any corporation, firm, unincorporated organization,
association, partnership, limited liability company, business trust,
joint stock company, joint venture organization, entity or business.


"Environmental Law" shall mean any Law related to (A) the protection,
investigation or restoration of the environment, health, safety or
natural resources, (B) the handling, use, presence, disposal, release
or threatened release of any Hazardous Substance or (C) noise, odor,
wetlands, pollution, contamination or any injury or threat of injury to
persons or property in connection with any Hazardous Substance.


"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.


"ERISA Affiliate" shall have the meaning set forth in Section 3.1(i)(iii).


"ERISA Affiliate Plan" shall have the meaning set forth in Section 3.1(i)(iii).


"EU Merger Regulation" shall mean the Merger Regulation of the European Union,
adopted in Council Regulation (EEC) 4064/89, as amended.


"Excluded BellSouth Business" shall mean (i) all microwave licenses and related
assets, rights and interests used by BellSouth or any of its Affiliates
in any of its businesses outside of the BellSouth Business, (ii) the
rights to any Contracts with a customer of any of the BellSouth
Companies or their Subsidiaries if such Person is billed or directly
charged by BellSouth for Cellular Service or PCS Service in a manner
packaged with any Telecom Services provided by BellSouth or an
Affiliate of BellSouth and (iii) the assets listed in Schedule 1
hereto.


"Excluded SBC Business" shall mean (i) all microwave licenses and related
assets, rights and interests used by SBC or any of its Affiliates in
any of its businesses outside of the SBC Business, (ii) the rights to
any Contracts with a customer of any of the SBC Companies or their
Subsidiaries, if such Person is billed by SBC or an Affiliate of SBC
for Cellular Service or PCS Service in a manner packaged with any
Telecom Services provided by SBC or an Affiliate of SBC, (iii) all
assets,


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rights and interests related to SBC PR's and SBC Wireless's status as a
competitive local exchange carrier, (iv) all assets related to Paging
Services provided by the SBC Companies or any of their Subsidiaries and
(v) the business of Radiofone and its Subsidiaries and all assets held
by Radiofone and its Subsidiaries together with all assets acquired
from Radiofone PCS LLC, a limited liability company.


"Extended Termination Date" shall have the meaning set forth in Section 6.1(d).


"FAA" shall mean the Federal Aviation Administration or the successor agency
thereof.


"FAA Rules" shall have the meaning set forth in Section 4.20(a).


"Fair Market Value" shall mean, with respect to any asset, as of the date of
determination, the cash price at which a willing seller would sell, and
a willing buyer would buy, each being apprised of all relevant facts
and neither acting under compulsion, such asset in an arm's length,
negotiated transaction with an unaffiliated third party without time
constraints, ...