1
Exhibit 10.4
Draft 9/30/95
AMENDED AND RESTATED
AGREEMENT OF EXCHANGE
THIS AMENDED AND RESTATED AGREEMENT OF EXCHANGE (this "Agreement"), dated as
of September 30, 1995, by and between AIRTOUCH COMMUNICATIONS, INC., a Delaware
corporation ("ATI"), and U S WEST, INC., a Colorado corporation ("USW"),
W I T N E S S E T H:
WHEREAS, ATI and USW are parties to that certain Amended and Restated Joint
Venture Organization Agreement dated as of the date hereof (the "Organization
Agreement"), providing for a series of transactions, including the establishment
of a partnership to be known as WMC Partners, L.P. ("WMC") pursuant to that
certain Amended and Restated Agreement of Limited Partnership of WMC Partners,
L.P., dated as of the date hereof (the "WMC Partnership Agreement"); and
WHEREAS, USW holds a direct beneficial ownership interest in WMC (such
interest in WMC, to the extent it continues to be beneficially held by USW from
time to time hereafter, the "WMC Interest"); and
WHEREAS, each of USW and ATI have certain rights to cause the direct or
indirect exchange of the WMC Interest for capital stock of ATI (the "Exchange");
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
THE EXCHANGE
1.1. Manner of the Exchange. Upon the terms and subject to the conditions
set forth herein, the parties agree that the Exchange shall be effected either
pursuant to (i) a merger (the "Merger"), as set forth in the Agreement and Plan
of Merger attached hereto as Exhibit A (the "Merger Agreement"), or (ii) a sale
by USW or a subsidiary thereof to ATI of the WMC Interest as described in
Section 1.5(a) or (b) (the "Sale").
1.2. Delivery of Notice. Except as otherwise provided in the Amended and
Restated Trust Agreement of Exchange dated as of the date hereof between ATI and
USW (the "Trust Agreement of Exchange"), USW and ATI shall complete and execute
the Merger Agreement and employ all reasonable efforts to satisfy the conditions
to the Merger set forth in Article IV of the Merger Agreement upon the
occurrence of any of the following:
(a) During the period beginning on the latest of (i) the Phase II Closing
Date, (ii) the PCS Contribution Date, or (iii) the earlier of (A) the New Par
Contribution Date or (B) the Back-End Termination Date, and ending on the
earlier of the Expiration Date or the closing of the initial Exchange described
in Section 1.5 of the Trust Agreement of Exchange, ATI shall have received from
USW written notice of USW's election to cause the Exchange to occur;
(b) Following the later of (i) the date on which Final MFJ Relief first
occurs or (ii) the Expiration Date, and during any 90-day period referred to in
Section 2.7(b) of the WMC Partnership Agreement if the dispute involves USW, USW
shall have received from ATI written notice of ATI's election to cause the
Exchange to occur; or
2
(c) At any time after both (i) the date on which Final MFJ Relief first
occurs and (ii) the date the USW Group first owns less than 5% of the aggregate
Percentage Interests in WMC, USW shall have received from ATI written notice of
ATI's election to cause the Exchange to occur.
1.3. Determination of Consideration.
(a) General. Within ten business days after the date (the "Notice Date")
when a notice shall have been delivered pursuant to Section 1.2, representatives
of ATI and USW shall meet to determine the appropriate number of shares of
capital stock of ATI to be exchanged for the WMC Interest (the "Final Number of
ATI Shares"). In the event that such representatives of ATI and USW shall be
unable to reach agreement with respect to the Final Number of ATI Shares within
30 business days after the Notice Date, the Final Number of ATI Shares and the
Aggregate Consideration (as defined in paragraph (h) below) shall be determined
as follows.
(b) Selection of Appraisers. ATI and USW each shall designate by written
notice to WMC and the other a firm of recognized national standing familiar with
appraisal techniques applicable to the determination of the Appraisal Number of
ATI Shares (as defined below) to serve as an Appraiser pursuant to this Section
1.3 (the firms designated by ATI and USW being referred to herein as the "ATI
Appraiser" and the "USW Appraiser," respectively) within 30 business days after
the failure to reach mutual agreement referred to in paragraph (a) above. In the
event that either ATI or USW fails to designate its Appraiser within the
foregoing time period, the other shall have the right to designate such
Appraiser by notifying the failing party in writing of such designation (and the
Appraiser so designated shall be the ATI Appraiser or the USW Appraiser, as the
case may be).
(c) Evaluation Procedures. Each Appraiser shall be directed to determine the
number of shares of capital stock of ATI equal to the quotient of (i) (A) the
Private Market Value (as defined in Section 6.1 hereof) or (B) in the case of an
election by ATI pursuant to Section 1.2(c) hereof, the Fair Market Value (as
defined in Section 6.1 hereof), in either case of the WMC Interest as of the
Notice Date, divided by (ii) the Fair Public Market Value Per Share (as defined
in Section 6.1 hereof) of ATI Common Stock (as defined in Section 6.1 hereof) as
of the Notice Date (the quotient for each such Appraisal being the "Appraisal
Number of ATI Shares"). Each Appraiser also shall be directed to deliver a
certificate (an "Appraiser's Certificate") to both ATI and USW upon the
conclusion of its determination, which in no event shall be later than the 30th
day after its respective designation, and each Appraiser's Certificate once
delivered may not be retracted or modified in any respect. Each Appraiser will
keep confidential all information disclosed by ATI and WMC in the course of
conducting its evaluation, and, to that end, will execute such customary
documentation as ATI and WMC reasonably may request with respect to such
confidentiality obligation. ATI will provide, and ATI and USW will cooperate in
causing WMC to provide, each Appraiser with such information within ATI's and
WMC's possession that reasonably may be requested in writing by the Appraiser
for purposes of its evaluation hereunder. The Appraisers shall consult with each
other in the course of conducting their respective evaluations. Each Appraiser
will be directed to comply with the provisions of this Section 1.3, and to that
end each of ATI and USW will provide to its respective Appraiser a complete and
correct copy of this Section 1.3 (and the definitions of capitalized terms used
in this Section 1.3 that are defined elsewhere).
(d) Determination of the Final Number of ATI Shares. The Final Number of ATI
Shares shall be determined on the basis of the Appraisers' Certificates in
accordance with the provisions of this paragraph. The higher of the Appraisal
Number of ATI Shares set forth on the Appraisers' Certificates is hereinafter
referred to as the "Higher Value" and the lower of the Appraisal Number of ATI
Shares is hereinafter referred to as the "Lower Value." If the Higher Value is
not more than 110% of the Lower
-2-
3
Value, the Final Number of ATI Shares shall be the arithmetic average of such
two Values. If the Higher Value is more than 110% of the Lower Value, a third
appraiser shall be selected in accordance with the provisions of paragraph (e)
below, and the Final Number of ATI Shares will be determined in accordance with
the provisions of paragraph (f) below.
(e) Selection of and Procedure for Third Appraiser. If the Higher Value is
more than 110% of the Lower Value, within seven days thereafter the ATI
Appraiser and the USW Appraiser shall agree upon and jointly designate a third
firm of recognized national standing familiar with appraisal techniques
applicable to the determination of the Appraisal Number of ATI Shares to serve
as an appraiser pursuant to this Section 1.3 (the "Third Appraiser"), by written
notice to each of ATI and USW. ATI and USW shall direct the Third Appraiser to
determine the Appraisal Number of ATI Shares (the "Third Value") in accordance
with the provisions of paragraph (c) above, and to deliver to ATI and USW an
Appraiser's Certificate on or before the 30th day after the designation of such
Appraiser hereunder. The Third Appraiser will be directed to comply with the
provisions of this Section 1.3, and to that end the parties will provide to the
Third Appraiser a complete and correct copy of this Section 1.3 (and the
definitions of capitalized terms used in this Section 1.3 that are defined
elsewhere).
(f) Alternative Determination of the Final Number of ATI Shares. Upon the
delivery by the Third Appraiser of its Appraiser's Certificate, the Final Number
of ATI Shares will be determined as provided in this paragraph (f). The Final
Number of ATI Shares will be (w) the Lower Value, if the Third Value is less
than the Lower Value, (x) the Higher Value, if the Third Value is greater than
the Higher Value, (y) the arithmetic average of the Third Value and the other
Value (Lower or Higher) that is closer to the Third Value, if the Third Value
falls within the range between (and including) the Lower Value and the Higher
Value, and (z) the Third Value, if the Lower Value and the Higher Value are
equally close to the Third Value.
(g) Costs. ATI and USW each will bear the cost of the Appraiser designated
by it or on its behalf. If the Higher Value is not more than 115% of the Lower
Value, or if the Higher Value and the Lower Value are equally close to the Third
Value, ATI and USW each shall bear 50% of the cost of the Third Appraiser, if
any; otherwise, the party whose Appraiser's determination of the Final Number of
ATI Shares is farther from the Third Value shall bear the entire cost of the
Third Appraiser. ATI and USW agree to pay when due the fees and expenses of the
Appraisers in accordance with the foregoing provisions.
(h) Aggregate Consideration. The aggregate consideration to be received by
USW or a subsidiary thereof (the "Aggregate Consideration") in connection with
the Merger or the Sale, as the case may be, shall consist of ATI Common Stock
and, if necessary, shares of a series of preferred stock of ATI embodying the
terms set forth in Exhibit B hereto (the "ATI Preferred Stock"), determined as
follows:
(i) USW shall receive that number of shares of ATI Common Stock
(rounded down to the nearest whole number) equal to the least of (A) the
number of shares which would at the Effective Time (as defined in Section
6.1 hereof) of the Merger or the Closing of the Sale, as the case may be,
have voting power equal to or less than 19.9% of the Voting Power
Outstanding before the issuance of such shares, (B) the number of shares
which at the Effective Time (as defined in the Merger Agreement) of the
Merger or the Closing of the Sale, as the case may be, would be equal to or
less than 19.9% of the number of shares of common stock of ATI outstanding
immediately before the issuance of such shares; and (C) the Final Number of
ATI Shares.
(ii) USW shall receive that number of shares of ATI Preferred Stock
equal to the excess, if any, of the Final Number
-3-
4
of ATI Shares over the number of shares of ATI Common Stock determined
pursuant to clause (i) above.
(i) Stock Adjustments. The Final Number of ATI Shares used in the
calculations described in paragraphs (d) and (f) above, and the Final Number of
ATI Shares used in the calculations described in paragraph (h) above, shall be
adjusted appropriately for stock splits, stock dividends, stock combinations,
reclassifications and the like of ATI Common Stock subsequent to the Notice
Date.
(j) Conclusive Determination. To the fullest extent provided by law, the
determination of the Final Number of ATI Shares made pursuant to this Section
1.3 shall be final and binding on ATI and USW, and such determination shall not
be appealable to or reviewable by any court or arbitrator.
1.4. Execution of Merger Agreement. As soon as practicable following the
determination of the Final Number of ATI Shares pursuant to Section 1.3, but in
no event later than 10 days thereafter, ATI and USW each shall complete and
execute, and each shall cause its appropriate respective subsidiary to execute,
the Merger Agreement in substantially the form set forth in Exhibit A hereto.
The parties agree that ATI shall have the right to determine in its sole
discretion the form and substance of Annexes A and B to the Merger Agreement.
1.5. Right to Require Sale. In the event that either ATI or USW shall fail
within 10 days after the determination of the Final Number of ATI Shares to have
the Merger Agreement executed by their respective appropriate parties, the
following shall apply:
(a) If ATI shall have so failed, USW may deliver to ATI written notice
requiring ATI to purchase the WMC Interest in exchange for the Aggregate
Consideration plus, if ATI's failure shall have resulted from other than the
prohibition of such execution by any order, decree or injunction of a court of
competent jurisdiction or an action taken or any statute, rule or regulation
enacted, promulgated or deemed applicable to the Merger by any Governmental
Entity that makes execution of the Merger Agreement illegal, an amount equal to
35% of the taxable income attributable to such sale (net of the amount of
taxable income that would have been generated by the Merger, such as income
arising from deferred intercompany gain or an excess loss account in the stock
of any USW HoldSub (as defined in Section 2.2(a))) (the "Tax Adjustment").
(b) If USW shall have so failed, ATI may deliver to USW written notice
requiring USW to cause the WMC Interest to be sold to ATI in exchange for the
Aggregate Consideration.
(c) In the event that either ATI or USW exercises its right to cause the
Sale, the provisions of Sections 1.6 and 1.7 and of Article IV shall be
applicable.
1.6. Sale Procedure. Any written notice delivered pursuant to paragraph (a)
or (b) of Section 1.5 (a "Sale Notice") shall specify the closing date of the
Sale, which closing date shall be at least 15 but not more than 30 business days
after the date of such notice; provided, however, that such date shall be
extended in order to permit the parties to obtain all requisite regulatory
approvals.
1.7. Closing. The closing of the Sale (the "Closing") shall take place at
such time and place as the parties may agree and on the date specified in the
Sale Notice or at such other time, date or place as may be agreed to by the
parties or as extended pursuant to Section 1.6. The date and time at which a
Closing occurs is referred to as the "Closing Date." At the Closing, USW shall
cause to be assigned to ATI all right, title and interest in and to the WMC
Interest, free and clear of any Liens (as herein-
-4-
5
after defined), and ATI shall simultaneously deliver to USW a certificate or
certificates representing the Aggregate Consideration and, if the Sale is
pursuant to Section 1.5(a), a wire transfer in the amount of the Tax Adjustment,
if any, to an account designated by USW three business days in advance.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties of ATI. ATI hereby represents and
warrants to USW as follows:
(a) Organization and Qualification. It is a corporation duly organized and
existing in good standing under the laws of the State of Delaware and has the
corporate power to own its properties and to carry on its business as now being
conducted.
(b) Authorization; Enforcement. It has full legal right, power and authority
to enter into and perform this Agreement; the execution and delivery of this
Agreement by it and the consummation by it of the transactions contemplated
hereby, other than the approval by ATI's board of directors of the Merger
Consideration (as defined in the Merger Agreement) and the approval of the
Preferred Certificate (as defined in Section 3.1(a)), have been duly authorized
by it; this Agreement has been duly executed and delivered by it and this
Agreement constitutes its valid and binding obligation enforceable against it in
accordance with its terms, except that (i) such enforcement is subject to the
effect of any bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies and (ii) the remedies of specific performance and injunctive
relief may be subject to general principles of equity.
(c) No Conflicts. The execution, delivery and performance of this Agreement
and the consummation by it of the transactions contemplated hereby will not
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any of its properties or assets
pursuant to any agreement, indenture or instrument to which it is a party, or
result in a violation of its certificate of incorporation or by-laws or any law,
rule, regulation, order, judgment or decree applicable to it or by which any of
its properties or assets is bound or affected. No consent, authorization or
order of, or filing or registration with, any court or governmental agency is
required for the execution, delivery and performance by it of this Agreement,
except to the extent of (i) any applicable requirements under the ▇▇▇▇-▇▇▇▇▇-
▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) any
consent or approval of the FCC or any other federal or state governmental agency
the necessity of which arises solely out of WMC's licenses or operations, (iii)
any filings required under the Exchange Act, or (iv) any filings expressly
contemplated hereby.
(d) Authorization of ATI Common Stock and ATI Preferred Stock. ATI has taken
all necessary action to permit it to issue the number of shares of ATI Common
Stock issuable pursuant to the terms of this Agreement, and prior to the Closing
or the Effective Time, as the case may be, ATI will have taken all necessary
action to permit it to issue the number of shares of ATI Preferred Stock
issuable pursuant to the terms of this Agreement. Shares of ATI Common Stock and
ATI Preferred Stock issued pursuant to the terms of this Agreement will, when
issued, be validly issued, fully paid and nonassessable and no person will have
any preemptive right of subscription or purchase in respect thereof.
-5-
6
2.2. Representations and Warranties of USW. USW hereby represents and
warrants to ATI as follows:
(a) Organization and Qualification. It is, and each subsidiary thereof that
holds the WMC Interest (a "USW HoldSub") will be at the time of the Closing, a
corporation duly organized and existing in good standing under the laws of the
state of its incorporation and it has, and each USW HoldSub at the time of the
Closing will have, the corporate power to own its properties and to carry on its
business as now being conducted.
(b) Authorization; Enforcement. It has full legal right, power and authority
to enter into and perform this Agreement; the execution and delivery of this
Agreement by USW and the consummation by it of the transactions contemplated
hereby have been duly authorized by it; this Agreement has been duly executed
and delivered by it and this Agreement constitutes its valid and binding
obligation enforceable against it in accordance with its terms, except that (i)
such enforcement is subject to the effect of any bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies and (ii)
the remedies of specific performance and injunctive relief may be subject to
general principles of equity. At the time of the Closing, each USW HoldSub will
have duly authorized the transactions contemplated hereby to the extent required
and will have full legal right, power and authority to perform this Agreement.
(c) No Conflicts. The execution, delivery and performance of this Agreement
by it and the consummation by each of USW and, to the extent required, the
consummation by each USW HoldSub, of the transactions contemplated hereby will
not conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a Lien (as defined in paragraph (d) below) on any properties or
assets of any of them pursuant to any agreement, indenture or instrument to
which any of them is a party or by which the properties or assets of any of them
are bound or affected, or result in a violation of the certificate of
incorporation or by-laws of any of them or any law, rule, regulation, order,
judgment or decree applicable to any of them or by which any of the properties
or assets of any of them is bound or affected. No consent, authorization or
order of, or filing or registration with, any court or governmental agency is
required for the execution, delivery and performance by each of USW and, to the
extent required, by each USW HoldSub of this Agreement, except to the extent of
(i) any applicable requirements under the HSR Act, (ii) any consent or approval
of the FCC or any other federal or state governmental agency the necessity of
which arises solely out of WMC's licenses or operations, (iii) any filings
required under the Exchange Act, or (iv) any filings expressly contemplated
hereby.
(d) Title. At the Effective Time or Closing, as the case may be, USW will be
the sole record and beneficial owner of all of the capital stock of each USW
HoldSub, free and clear of all liens, adverse claims, pledges, security
interests, options, liabilities or other contractual, legal or equitable rights
or encumbrances (collectively, "Liens"). At the Effective Time or Closing, as
appropriate, USW or a USW HoldSub will be the sole legal and beneficial owner of
the WMC Interest free and clear of all Liens; and immediately after the
Effective Time or the Closing, as the case may be, ATI or a subsidiary of ATI
will be the owner of all the right, title and interest of USW and each USW
HoldSub to and in the WMC Interest free and clear of all Liens. The WMC Interest
owned by USW constitutes, and at the Effective Time or the Closing, as the case
may be, the WMC Interest held by each USW HoldSub will constitute, the entirety
of any WMC interest held directly or indirectly by USW.
-6-
7
ARTICLE III
COVENANTS
3.1. Covenants of ATI. During the period from the date hereof to the
Effective Time or the Closing, as the case may be, except as specifically
contemplated by this Agreement or as otherwise approved in writing by USW:
(a) Designation and Reservation of Shares. ATI will reserve and keep
available out of its authorized but unissued shares of capital stock the full
number of shares of ATI Common Stock and ATI Preferred Stock, if any, at any
time deliverable upon the consummation of the Merger or at the Closing, as the
case may be. ATI agrees that prior to the Effective Time or the Closing Date, as
the case may be, it will have filed with the appropriate public official in its
state of incorporation a certificate (the "Preferred Certificate") designating a
sufficient number of shares of ATI Preferred Stock.
(b) No Inconsistent Agreements. After the date hereof, ATI shall not and
shall not permit its Affiliates to, take any action or enter into any agreement
inconsistent with the rights granted to USW hereunder or which could adversely
affect the ability of ATI and USW to consummate the Merger or Sale as
contemplated hereunder, including, without limitation, entering into any loan
agreement or other arrangement containing terms or conditions which would limit
or prohibit the consummation of the Merger or Sale.
3.2. Covenants of USW. During the period from the date of this Agreement to
the Effective Time or the Closing, as the case may be, except as specifically
contemplated by this Agreement or as otherwise approved in writing by ATI:
(a) No Inconsistent Agreements. After the date hereof, USW shall not, and
shall not permit its Affiliates to, take any action or enter into any agreement
inconsistent with the rights granted to ATI hereunder or which could adversely
affect the ability of ATI, USW or any USW HoldSub to consummate the Merger or
Sale as contemplated hereunder, including, without limitation, entering into any
loan agreement or other arrangement containing terms or conditions which would
limit or prohibit the consummation of the Merger or Sale.
(b) Transfer of WMC Interest Prohibited. From and after the Notice Date,
unless the Merger or the Closing shall have been abandoned pursuant to Section
4.4, USW shall not, and shall not permit its subsidiaries to, and its
subsidiaries shall not, sell, pledge, transfer or otherwise dispose of the WMC
Interest or any interest therein, including through the creation of any Lien
thereon.
3.3. Further Assurances; Cooperation. (a) Each of the parties hereto shall
perform its obligations under this Agreement and take or cause to be taken and
do or cause to be done all things necessary, proper or advisable under
applicable law to obtain all necessary regulatory approvals and waivers and all
other necessary consents and satisfy all conditions to the obligations of the
parties under this Agreement and shall cooperate fully with one another and
their respective officers, directors, employees, agents, counsel, accountants
and other representatives in connection with any steps required to be taken as a
part of their respective obligations under this Agreement; and each party shall
do such things as reasonably may be requested by the other parties hereto in
order more effectively to consummate the Merger or the Sale, as the case may be
(including, but not limited to, promptly delivering to the other information
necessary to prepare and pursue all necessary regulatory filings, approvals and
waivers).
(b) In the event that a change in the structure of the Exchange would be
necessary or desirable to accomplish a tax-free merger or reorganization
(including a reorganization described in Section 368(a)(1)(C) of the Internal
Revenue Code of 1986, as amended), USW and ATI shall take
-7-
8
all reasonable steps necessary to accommodate such change to the extent it would
not adversely affect the parties' rights or obligations under the terms of the
Merger Agreement or this Agreement; provided that in any such event ATI and USW
shall negotiate in good faith to appropriately compensate the other to the
extent adversely affected by such change.
3.4. Occurrence of the Exchange Prior to Final MFJ Relief. If the Effective
Time or the Closing, as the case may be, shall occur as a result of USW's
sending a notice pursuant to Section 1.2(a) prior to the date on which Final MFJ
Relief first occurs, the parties agree that: (i) ATI shall not be obligated to
take any action or forego any business opportunity in order to accommodate USW's
election to cause the Merger or Sale to occur prior to the date on which Final
MFJ Relief first occurs, (ii) ATI shall not be obligated to take any action or
forego any business opportunity in order to enable USW to maintain beneficial
ownership of any capital stock of ATI and (iii) if (A) an activity or proposed
activity in which ATI or an Affiliate is or would be engaged, or a transaction
or proposed transaction to which ATI or an Affiliate is or would be a party, is
not or would not be, or is perceived by any regulatory authority not to be, in
compliance with the MFJ, and (B) the indemnification of ATI by USW pursuant to
Section 5.1(b)(ii) is unavailable or inadequate, then USW shall take all actions
necessary in order to avoid or correct such noncompliance and to allow ATI at
all times to operate its business free of any and all MFJ restrictions.
3.5. Provision in Case of Consolidation or Merger of ATI. In the event that
prior to the Effective Time or the Closing, as the case may be, ATI shall enter
into an agreement of merger, consolidation or other business combination with
any Person ("Acquiring Corporation") which has a class of equity securities
having substantially the same rights as ATI Common Stock (including but not
limited to voting, dividend, liquidation, and redemption rights) ("Acquiror
Common Stock"), and in connection with such agreement (i) the Acquiring
Corporation shall acquire at least 85% of the Voting Power Outstanding or ATI
Common Stock will no longer be registered with the Securities and Exchange
Commission pursuant to section 12(b) or 12(g) of the Exchange Act or (ii) the
Acquiring Corporation shall acquire assets satisfying the requirements of
clauses (A), (B) and (C) of clause (ii) of the definition of Change of Control
contained in the Amended and Restated Investment Agreement between the parties
dated the date hereof, and a majority of the value of the consideration to be
received by ATI in exchange therefor shall not consist of assets (or interests
in assets) of a like kind or nature, then ATI shall cause such agreement to
provide that upon consummation of such consolidation, merger or other business
combination this Agreement and the Merger Agreement shall be deemed to be
modified and amended to provide that USW shall receive Acquiror Common Stock
rather than ATI Common Stock in any Merger or Sale. Accordingly, from and after
such consummation references herein to ATI Common Stock shall be deemed to be
references to Acquiror Common Stock (including for purposes of Section 6.1(a)).
If any such consolidation, merger or other business combination shall be
consummated after the Notice Date and prior to the Closing, the Closing shall be
delayed for an appropriate period to determine under Section 1.3 the number of
shares of Acquiror Common Stock to be issued at the Effective Time or the
Closing, as the case may be, and to satisfy all conditions to the Merger or the
Closing. ATI shall not enter into any such consolidation, merger or other
business combination unless the Acquiring Corporation assumes in writing all the
obligations of ATI hereunder. The provisions of this Section 3.5 shall apply to
successive consolidations, mergers or other business combinations.
3.6. Contributions, Distributions and Dividends After the Notice Date. ATI
agrees to compensate USW at the Effective Time or at the Closing, as the case
may be, for (i) any dividends (other than those for which adjustments have been
made pursuant to Section 1.3(i)) that would have been received prior to the
Effective Time or the Closing Date by USW in respect of the Aggregate
Consideration if the Aggregate Consideration had been issued to USW on or prior
to the first record date therefor announced by ATI
-8-
9
subsequent to the Notice Date, and (ii) any capital contributions to WMC made by
USW or its Affiliates with respect to the WMC Interest during the period after
the Notice Date and prior to the Effective Time or the Closing, as the case may
be. USW agrees to make, or to cause to be made, all capital contributions due
after the Notice Date and prior to the Effective Time or the Closing, as the
case may be, to the extent any such capital contribution, if not made, would
constitute a Defaulted Contribution (as defined in the WMC Partnership
Agreement). USW agrees to compensate ATI at the Closing for any distributions
received by USW or its Affiliates with respect to the WMC Interest during the
period after the Notice Date and prior to the Closing.
ARTICLE IV
CONDITIONS TO CLOSING OF THE SALE
4.1. Conditions to Each Party's Obligation to Effect the Sale. The
obligations of the parties hereto to consummate the Sale are subject to the
satisfaction or waiver, at or before the Closing, of each of the following
conditions:
(a) No Prohibition. The consummation of the Sale shall not be prohibited by
any order, decree or injunction of a court of competent jurisdiction (each party
agreeing to use all reasonable efforts to have any such order reversed or
injunction lifted), and there shall not have been any action taken or any
statute, rule or regulation enacted, promulgated or deemed applicable to the
Sale by any Governmental Entity that makes consummation of the Sale illegal.
(b) Authorizations. All required authorizations, orders, grants, consents,
permissions, approvals and waivers of any governmental entity with jurisdiction
over the Sale (including all filings under the HSR Act and the expiration of all
waiting periods thereunder) shall have been received and shall remain in effect,
other than authorizations, orders, grants, consents, permissions and approvals
the failure of which to receive would not, singly or in the aggregate, have a
material adverse effect on the business condition of USW or ATI.
4.2. Conditions to Obligations of ATI. The obligations of ATI to effect the
Sale are subject to the satisfaction or waiver, at or before the Closing, of
each of the following conditions, except to the extent that any failure of the
conditions set forth in paragraphs (a) or (b) below results in damage to ATI
that is fully compensable by monetary damages.
(a) Representations and Warranties. The representations and warranties of
USW set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date.
(b) Performance of Obligations of USW. USW shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing.
(c) Nature of Acquisition. USW shall have provided ATI with an undertaking
to the effect that USW is acquiring the shares of ATI Common Stock and ATI
Preferred Stock, if any, hereunder for its own account, for investment and not
with a view to the resale or distribution thereof, except in compliance with the
Securities Act of 1933, as amended.
(d) No Change of Control. There shall not have been a Change of Control of
USW at any time after the date hereof and USW shall not be a party to any
agreement which contemplates a transaction (or series of transactions) which,
when consummated, would result in a Change of Control of USW.
-9-
10
4.3. Conditions to Obligations of USW. The obligations of USW to effect the
Sale are subject to the satisfaction or waiver, at or before the Closing, of
each of the following conditions, except to the extent that the failure of any
such condition results in damage to USW that is fully compensable by monetary
damages:
(a) Representations and Warranties. The representations and warranties of
ATI set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date.
(b) Performance of Obligations of ATI. ATI shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date.
4.4. Abandonment of Merger or Sale. In the event that the Effective Time or
the Closing, as the case may be, has not occurred within two years after the
Notice Date, either ATI or USW may elect, subject to the following sentence, by
written notice to the other to abandon the Merger or the Sale, as the case may
be, in which event this Agreement shall be operative thereafter as if the notice
delivered pursuant to Section 1.2 never had been delivered; provided, however,
in the event that the Expiration Date shall have occurred within the foregoing
two year period, such two year period may be extended, subject to the following
sentence, at the option of either party, by written notice to the other
delivered prior to the expiration of such two year period, for one additional
year. Notwithstanding the foregoing, the right to abandon the Merger or the
Sale, or to extend the two-year period for one additional year, pursuant to this
Section shall not be available to any party whose failure to fulfill any
obligation under this Agreement or the Merger Agreement has been the cause of,
or results in, the failure of the Effective Time or the Closing to have occurred
within such period.
ARTICLE V
INDEMNIFICATION
5.1. Indemnification.
(a) Indemnification by ATI. ATI shall defend, indemnify and hold harmless
USW and each of USW's subsidiaries, shareholders, affiliates, officers,
directors, employees, agents, successors and assigns (USW and such persons,
collectively, "USW's Indemnified Persons"), and shall reimburse USW's
Indemnified Persons for, from and against each and every demand, claim, loss,
liability, judgment, damage, cost and expense (including, without limitation,
interest, penalties, costs of preparation and investigation, and the reasonable
fees, disbursements and expenses of attorneys, accountants and other
professional advisors) (collectively, "Losses") imposed on or incurred by USW's
Indemnified Persons, directly or indirectly (including without limitation
diminution in value of an equity interest), relating to, resulting from or
arising out of any inaccuracy in any representation or warranty of ATI herein or
in the Merger Agreement in any respect, whether or not USW's Indemnified Persons
relied thereon, or any breach or nonfulfillment of any covenant, agreement or
other obligation of ATI under this Agreement, the Merger Agreement, or any
certificate or other document delivered or to be delivered pursuant hereto. The
parties agree that the Tax Adjustment described in Section 1.5(a) is an agreed
upon payment limited to the failure to execute the Merger Agreement under the
circumstances described therein and is not intended as an admission of the fact
or measure of damages for any purpose, and that this Section 5.1 shall govern
with respect to a Loss relating to, resulting from or arising out of any other
matter described in the foregoing sentence.
-10-
11
(b) Indemnification by USW. USW shall defend, indemnify and hold harmless
ATI and each of ATI's subsidiaries, shareholders, affiliates, officers,
directors, employees, agents, successors and assigns (ATI and such persons,
collectively, "ATI's Indemnified Persons"), and shall reimburse ATI's
Indemnified Persons, for, from and against all Losses imposed on or incurred by
ATI's Indemnified Persons, directly or indirectly (including without limitation
diminution in value of an equity interest), relating to, resulting from or
arising out of (i) any inaccuracy in any representation or warranty of USW
herein or in the Merger Agreement in any respect, whether or not ATI's
Indemnified Persons relied thereon, or any breach or nonfulfillment of any
covenant, agreement or other obligation of USW under this Agreement, the Merger
Agreement, or any certificate or other document delivered or to be delivered
pursuant hereto and (ii) the occurrence of the Exchange prior to the time of
Final MFJ Relief as a result of USW's sending a notice pursuant to Section
1.2(a) hereof, including but not limited with respect thereto to any Losses
suffered as a result of the circumstances described in Section 3.4(iii).
ARTICLE VI
MISCELLANEOUS
6.1. Definitions. For purposes of this Agreement, the following terms have
the following meanings:
(a) "ATI Common Stock" means shares of the class designated as Common Stock
of ATI at the date of this Agreement or shares of any class or classes resulting
from any reclassification or reclassifications thereof and which have no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of ATI and which
are not subject to redemption by ATI;provided that if at any time there shall be
more than one such resulting class, the shares of each such class then so
issuable shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.
(b) "Expiration Date" means July 25, 2004, unless subsequent to the date
hereof ATI shall have entered into an agreement, or an amendment of any existing
agreement, with CCI that would extend the time that any interest in or assets of
New Par could be contributed to WMC, in which case it shall be July 25, 2005.
(c) "Fair Public Market Value Per Share" shall mean the price per share as
of the Notice Date at which a willing investor would purchase and a willing
publicly traded company would sell, the combination of primary shares of ATI
Common Stock and ATI Preferred Stock to be issued to USW as contemplated by this
Agreement, each being apprised of all relevant facts and circumstances,
including without limitation, such investor's pro forma ownership percentage,
rights to board representation, voting restrictions, ownership limitations,
transfer rights and restrictions and the terms of any preferred stock to be
issued (including redemption features), any material non-public information in
ATI's possession and any temporary market anomalies existing on the Notice Date,
in a single arm's-length negotiated transaction without time constraints.
(d) "Fair Market Value" means, with respect to the WMC Interest, as of the
Notice Date, the price at which a willing seller would sell, and a willing buyer
would buy, the WMC Interest each being apprised of all relevant facts with
respect to the WMC Interest and neither acting under compulsion, in an
arm's-length negotiated transaction with an unaffiliated third party without
time constraints.
(e) "Final MFJ Relief" shall mean that the MFJ has been vacated or is
otherwise no longer enforceable or in effect as a result of federal agency
-11-
12
action, legislation or final court order and that none of the equal access
requirements (as defined under Section II (A) of the MFJ), the nondiscrimination
requirements (as defined under Section II (B) of the MFJ) and the line of
business restrictions (as defined in Section II (D) of the MFJ) on the ▇▇▇▇
Operating Companies (as defined in the MFJ) has been imposed or extended by
legislation, final agency action or final court order; provided, however, that
Final MFJ Relief shall be deemed to have occurred even though equal access or
nondiscrimination requirements remain, in the event that such requirements are
imposed equally on the wireless operations of all telecommunications carriers by
legislation, final court order or final agency action.
(f) "Private Market Value of the WMC Interest" is defined as the price, as
of the Notice Date, at which a willing seller would sell, and a willing buyer
would buy, each being apprised of all relevant facts, including the tax effects
of the Exchange on the buyer and seller, and neither acting under compulsion,
the WMC Interest in an arm's-length negotiation without time constraints, with
such price adjusted to include (to the extent not previously included) a pro
rata share of any control premium inherent in a sale of WMC as a whole.
(g) "Voting Power Outstanding" means the aggregate number of votes which may
be cast by holders of those securities outstanding which entitle the holders
thereof to vote generally on all matters submitted to ATI's shareholders for a
vote.
All capitalized terms in this Agreement which are not defined herein shall
have the meanings set forth in the WMC Partnership Agreement as in effect on the
date hereof.
6.2. Termination. This Agreement and the Merger Agreement shall
automatically terminate (whether or not a notice has previously been delivered
pursuant to Section 1.2 hereof) at such time as USW no longer holds any WMC
interest. Subject to Section 3.5(i), upon the consummation of any transaction
which results in ATI no longer having a class of equity securities registered
with the Securities and Exchange Commission pursuant to Section 12(b) or 12(g)
of the Exchange Act having substantially the same rights as the ATI Common
Stock, neither USW nor ATI shall have the right to deliver a notice pursuant to
Section 1.2 hereof until such further time as ATI again shall have a class of
equity securities registered with the Securities and Exchange Commission
pursuant to Section 12(b) or 12(g) of the Exchange Act having substantially the
same rights as the ATI Common Stock, and any Merger or Sale as to which the
Effective Time or Closing has not yet occurred shall be abandoned and this
Agreement shall be operative thereafter as if the notice delivered pursuant to
Section 1.2 never had been delivered. The termination of this Agreement shall
not relieve any party from liability for any breach hereof or of the Merger
Agreement.
6.3. Severability. If any term, provision, covenant or restriction of this
Agreement is determined to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect, unless such action would substantially impair the
benefits to either party of the remaining provisions of this Agreement.
6.4. Specific Enforcement. The parties hereto acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions of this
Agreement, this being in addition to any other remedy to which they may be
entitled by law or equity.
-12-
13
6.5. Entire Agreement; Amendments. Except to the extent that other
agreements are specifically referred to herein, this Agreement between ATI and
USW contains the entire understanding of the parties with respect to the matters
covered hereby and thereby and, except as specifically set forth herein, neither
ATI nor USW makes any representation, warranty, covenant or undertaking with
respect to such matters. This Agreement amends and restates in its entirety that
certain Agreement of Exchange, dated as of July 25, 1994, between ATI's
predecessor, AirTouch Communications, a California corporation, and USW. This
Agreement may be amended only by a writing executed by the parties hereto. The
parties hereto may amend this Agreement without notice to or the consent of any
third party.
6.6. Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be effective (a) when personally
delivered or transmitted by telecopier on a business day during normal business
hours where such notice is to be received at the address or number designated
below or (b) on the business day following the date of mailing by overnight
courier, fully prepaid, addressed to such address, whichever shall first occur.
The addresses for such communications shall be:
If to ATI: AirTouch Communications, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Senior Vice President-Legal,
External Affairs and Secretary
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Pillsbury Madison & Sutro
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to USW: U S WEST, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: U S WEST, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change its address for notices under this Section 6.6 by giving at
least 10 days' prior notice of such changed address to the other party hereto.
6.7. Legends. All certificates evidencing shares of ATI Common Stock and ATI
Preferred Stock, if any, acquired by USW directly or indirectly pursuant to this
Agreement shall be endorsed with the legends set forth below:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
PLEDGED, OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT, OR
UNLESS THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL OR OTHER
EVIDENCE, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH
REGISTRATION IS NOT REQUIRED.
-13-
14
THE SHARES REPRESENTED HEREBY ARE SUBJECT TO THE PROVISIONS OF AN AMENDED
AND RESTATED INVESTMENT AGREEMENT (INCLUDING THE RESTRICTIONS ON TRANSFER
SET FORTH THEREIN), DATED AS OF SEPTEMBER 30, 1995, BETWEEN THE COMPANY AND
USW AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE ALIENATED EXCEPT IN
ACCORDANCE THEREWITH. A COPY OF SUCH AGREEMENT IS ON FILE AT THE OFFICE OF
THE CORPORATE SECRETARY OF THE COMPANY.
6.8. Removal of Legends. Any legend endorsed on a certificate pursuant to
Section 6.7 shall be removed (i) with respect to the first legend set forth
under Section 6.7, (A) if the securities represented by such certificate shall
have been effectively registered under the Securities Act or otherwise lawfully
sold in a public transaction, or (B) if the holder of such securities shall have
provided ATI with an opinion of counsel, in form and substance acceptable to ATI
and its counsel stating that a sale, transfer or assignment of the securities
may be made without registration under the Securities Act of 1993, as amended,
and (ii) with respect to the second legend set forth under Section 6.7, if the
securities represented by such certificate shall have been effectively
transferred in compliance with clause (ii), (iii) or (iv) of the second sentence
of Section 5.3(a) of the Amended and Restated Investment Agreement dated as of
September 30, 1995 between ATI and USW (the "Investment Agreement") or all the
obligations of USW under Articles V or VIII of the Investment Agreement have
terminated, or a Change of Control of ATI has occurred.
6.9. Waivers. No waiver by either party of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future thereof or a waiver of any other provision,
condition or requirement of this Agreement; nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
6.10. Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions of this Agreement.
6.11. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and legal representatives.
Neither ATI nor USW shall assign this Agreement or any rights hereunder without
the prior written consent of the other (which consent may be withheld for any
reason in the sole discretion of the party from whom consent is sought);
provided, however, that USW may assign its rights (but not its obligations)
under this Agreement to a Wholly Owned Subsidiary that is the direct beneficial
owner of the WMC Interest.
6.12. No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision of this Agreement
be enforced by, any other person.
6.13. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware without regard to
the principles of conflicts of laws.
6.14. Counterparts. This Agreement may be executed in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts shall together constitute one and the same instrument.
6.15. Arbitration. The parties agree to submit to arbitration their disputes
described in the Arbitration Agreement dated the date hereof between ATI and
USW.
-14-
15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the date hereof.
AIRTOUCH COMMUNICATIONS, INC. U S WEST, INC.
By ______________________________ By ______________________________
Name: Name:
Title: Title:
16
EXHIBIT B TO EXCHANGE AGREEMENT
SUMMARY OF TERMS
HOLDER: U S West, Inc. or its affiliates ("USW").
NUMBER OF SHARES: To be determined in accordance with the Amended
and Restated Agreement of Exchange between
AirTouch Communications, Inc. ("ATI") and USW
dated September 30, 1995.
DIVIDENDS: USW shares ratably and proportionately with
holders of ATI Common Stock in the payment of
dividends when, as and if declared by the Board
of Directors.
LIQUIDATION VALUE: Liquidation value per share of Series B
Preferred stock is equal to the fair market
value, at the date of liquidation, of one share
of ATI Common Stock.
REDEMPTION: (a) Redeemable at USW's option for a price per
share equal to the fair market value per share
of ATI Common Stock. Redemption price is fixed
on the date USW delivers redemption notice;
payment (including interest at rate TBD) to be
made no later than 180 days thereafter. Amounts
redeemed count against twelve-month maximum in
Section 5.3(a) of the Amended and Restated
Investment Agreement between ATI and USW dated
September 30, 1995.
(b) Each share of Series B Preferred Stock is
also redeemable at ATI's option at any time for
one share of ATI Common Stock.
CONVERSION: The Series B Preferred Stock is not convertible.
RESTRICTIONS ON TRANSFER: Shares of Series B Preferred Stock may not be
transferred except to wholly owned subsidiaries
of USW.
VOTING RIGHTS: None.
BOARD REPRESENTATION: Series B Preferred Stock does not by itself
entitle USW to representation on the Board of
Directors.