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AGREEMENT AND PLAN OF MERGER
among
U S WEST, INC.,
U S WEST MEDIA GROUP, INC.,
U S WEST NEWVECTOR GROUP, INC.,
U S WEST PCS HOLDINGS, INC.
and
AIRTOUCH COMMUNICATIONS, INC.
Dated as of January 29, 1998
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TABLE OF CONTENTS
PAGE(S)
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ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . 1
1.1 General. . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Terms Defined Elsewhere in the Agreement . . . . . . . . 17
1.3 Other Definitional Provisions. . . . . . . . . . . . . . 19
ARTICLE II THE MERGER . . . . . . . . . . . . . . . . . . . . . . . 19
2.1 Merger . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.2 Closing. . . . . . . . . . . . . . . . . . . . . . . . . 19
2.3 Effective Time . . . . . . . . . . . . . . . . . . . . . 19
2.4 Effects of the Merger. . . . . . . . . . . . . . . . . . 19
2.5 Certificate of Incorporation and Bylaws. . . . . . . . . 20
2.6 Directors. . . . . . . . . . . . . . . . . . . . . . . . 20
2.7 Officers . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; CERTIFICATES . . . . . . . . . 20
3.1 Effect on Capital Stock. . . . . . . . . . . . . . . . . 20
3.2 Determination of Common Consideration. . . . . . . . . . 21
3.3 Post-Closing Adjustments to Merger Consideration . . . . 24
3.4 Surrender and Exchange . . . . . . . . . . . . . . . . . 26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF U S WEST . . . . . . . 27
4.1 Organization and Qualification . . . . . . . . . . . . . 27
4.2 Capitalization; Subsidiaries . . . . . . . . . . . . . . 27
4.3 Corporate Authority. . . . . . . . . . . . . . . . . . . 29
4.4 Consents and Approvals . . . . . . . . . . . . . . . . . 30
4.5 Non-Contravention. . . . . . . . . . . . . . . . . . . . 30
4.6 Financial Statements; Undisclosed Liabilities. . . . . . 31
4.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . 32
4.8 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.9 ERISA Compliance . . . . . . . . . . . . . . . . . . . . 35
4.10 Compliance with Laws . . . . . . . . . . . . . . . . . . 35
4.11 Employment and Non-Competition Agreements. . . . . . . . 35
4.12 Domestic Wireless Assets . . . . . . . . . . . . . . . . 36
4.13 Intellectual Property. . . . . . . . . . . . . . . . . . 36
4.14 Labor Matters. . . . . . . . . . . . . . . . . . . . . . 37
4.15 Environmental Compliance and Liabilities . . . . . . . . 37
4.16 Licenses . . . . . . . . . . . . . . . . . . . . . . . . 38
4.17 Material Contracts . . . . . . . . . . . . . . . . . . . 38
4.18 Insurance. . . . . . . . . . . . . . . . . . . . . . . . 39
4.19 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . 39
4.20 Nature of Acquisition. . . . . . . . . . . . . . . . . . 39
4.21 Ownership of AirTouch Capital Stock. . . . . . . . . . . 40
ARTICLE V REPRESENTATIONS AND WARRANTIES OF AIRTOUCH . . . . . . . 40
5.1 Organization and Qualification . . . . . . . . . . . . . 40
5.2 Capitalization . . . . . . . . . . . . . . . . . . . . . 40
5.3 Corporate Power and Authorization. . . . . . . . . . . . 41
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5.4 Consents . . . . . . . . . . . . . . . . . . . . . . . . 42
5.5 Non-Contravention. . . . . . . . . . . . . . . . . . . . 42
5.6 AirTouch SEC Documents; Undisclosed Liabilities. . . . . 42
5.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . 43
5.8 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.9 Compliance with Laws . . . . . . . . . . . . . . . . . . 44
5.10 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VI COVENANTS RELATING TO CONDUCT OF BUSINESS. . . . . . . . 45
6.1 Conduct of Business of NV and PCS Holdings. . . . . . . 45
6.2 Conduct of Business of AirTouch. . . . . . . . . . . . . 46
6.3 Access to Information. . . . . . . . . . . . . . . . . . 50
ARTICLE VII ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . 51
7.1 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . 51
7.2 Reasonable Best Efforts. . . . . . . . . . . . . . . . . 51
7.3 Antitrust Notification; FCC and State Regulatory
Approvals. . . . . . . . . . . . . . . . . . . . . . . . 52
7.4 Supplemental Disclosure. . . . . . . . . . . . . . . . . 52
7.5 Announcements. . . . . . . . . . . . . . . . . . . . . . 52
7.6 NYSE Listing . . . . . . . . . . . . . . . . . . . . . . 53
7.7 Settlements for Cash Collections and Disbursements
After the Effective Time . . . . . . . . . . . . . . . . 53
7.8 Use of U S WEST Name . . . . . . . . . . . . . . . . . . 54
7.9 Intellectual Property. . . . . . . . . . . . . . . . . . 54
7.10 Insurance. . . . . . . . . . . . . . . . . . . . . . . . 56
7.11 Third Party Rights . . . . . . . . . . . . . . . . . . . 57
7.12 Intercompany Agreements. . . . . . . . . . . . . . . . . 57
7.13 Joint Agreements; Joint Assets . . . . . . . . . . . . . 58
7.14 Transaction Agreements . . . . . . . . . . . . . . . . . 60
7.15 Undertakings with respect to Scheduled Properties. . . . 60
7.16 Pre-Closing Capital Contributions to PCS Nucleus by
AirTouch . . . . . . . . . . . . . . . . . . . . . . . . 61
7.17 Assumption of Guarantee Obligations with respect to
Leveraged Leases . . . . . . . . . . . . . . . . . . . . 61
7.18 Repayment of Assumed NV Debt and Assumed PCS Debt. . . . 61
7.19 AirTouch Class D and Class E Preferred Stock . . . . . . 61
ARTICLE VIII EMPLOYEE MATTERS . . . . . . . . . . . . . . . . . . . . 61
8.1 Employees. . . . . . . . . . . . . . . . . . . . . . . . 61
8.2 Employee Benefit Plans and Arrangements. . . . . . . . . 62
8.3 Other Employee Matters . . . . . . . . . . . . . . . . . 62
8.4 Cooperation. . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE IX CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . 67
9.1 Conditions to Each Party's Obligations to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.2 Conditions to Obligation of AirTouch . . . . . . . . . . 68
9.3 Conditions to Obligations of U S WEST, Media, NV and
PCS Holdings . . . . . . . . . . . . . . . . . . . . . . 69
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ARTICLE X TERMINATION AND AMENDMENT. . . . . . . . . . . . . . . . 70
10.1 Termination. . . . . . . . . . . . . . . . . . . . . . . 70
10.2 Effect of Termination. . . . . . . . . . . . . . . . . . 70
10.3 Amendment. . . . . . . . . . . . . . . . . . . . . . . . 70
10.4 Extension; Waiver. . . . . . . . . . . . . . . . . . . . 70
ARTICLE XI INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . 71
11.1 Indemnification by U S WEST. . . . . . . . . . . . . . . 71
11.2 Indemnification by AirTouch. . . . . . . . . . . . . . . 73
11.3 Procedures Relating to Indemnification . . . . . . . . . 75
11.4 Miscellaneous Indemnification Provisions . . . . . . . . 77
11.5 Contribution . . . . . . . . . . . . . . . . . . . . . . 78
11.6 Tax Indemnification. . . . . . . . . . . . . . . . . . . 78
11.7 Payments Adjustments to Merger Consideration . . . . . . 79
ARTICLE XII GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . 79
12.1 Survival of Representations. . . . . . . . . . . . . . . 79
12.2 Legends. . . . . . . . . . . . . . . . . . . . . . . . . 79
12.3 Removal of Legends . . . . . . . . . . . . . . . . . . . 80
12.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . 80
12.5 Governing Law. . . . . . . . . . . . . . . . . . . . . . 80
12.6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 80
12.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . 81
12.8 Disclosure Schedules . . . . . . . . . . . . . . . . . . 82
12.9 Headings; References . . . . . . . . . . . . . . . . . . 82
12.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . 82
12.11 Parties in Interest; Assignment; Successors. . . . . . . 82
12.12 Severability . . . . . . . . . . . . . . . . . . . . . . 83
12.13 Enforcement. . . . . . . . . . . . . . . . . . . . . . . 84
12.14 Dispute Resolution . . . . . . . . . . . . . . . . . . . 84
Exhibit A-1 - Certificate of Designation, Preferences and Rights of AirTouch
Class D Preferred Stock
Exhibit A-2 - Certificate of Designation, Preferences and Rights of AirTouch
Class E Preferred Stock
Exhibit B - New Investment Agreement
Exhibit C - Patent License Agreement
Exhibit D - Software License Agreement
Exhibit E - Tax Sharing Agreement
Exhibit F - Calculation of Value Adjustment
Exhibit G-1 - Form of AirTouch Representations Letter - NV Merger
Exhibit G-2 - Form of AirTouch Representations Letter - PCS Merger
Exhibit H-1 - Form of U S WEST Representations Letter - NV Merger
Exhibit H-2 - Form of U S WEST Representations Letter - PCS Merger
Exhibit I - Resources Agreement
Exhibit J - Exceptions to Restrictions on Non-Solicitation
Exhibit K-1 - Form of MediaCo Assignment and Assumption Agreement
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Exhibit K-2 - Form of CommunicationsCo Assignment and Assumption Agreement
Exhibit K-3 - Form of NV/PCS Transferee Assignment and Assumption Agreement
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January 29, 1998, among
U S WEST, INC., a Delaware corporation ("U S WEST"), U S WEST MEDIA GROUP,
INC., a Delaware corporation and wholly owned direct subsidiary of U S WEST
("Media"), U S WEST NEWVECTOR GROUP, INC., a Colorado corporation and wholly
owned direct subsidiary of Media ("NV"), U S WEST PCS HOLDINGS, INC., a
Delaware corporation and wholly owned direct subsidiary of Media ("PCS
Holdings"), and AIRTOUCH COMMUNICATIONS, INC., a Delaware corporation
("AirTouch").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of U S WEST, Media, NV and AirTouch
each have determined that it is in the best interests of their respective
stockholders for NV to merge with and into AirTouch (the "NV Merger");
WHEREAS, the Boards of Directors of U S WEST, Media, PCS Holdings and
AirTouch each have determined that it is in the best interests of their
respective stockholders for PCS Holdings to merge with and into AirTouch (the
"PCS Holdings Merger," and collectively with the NV Merger, the "Merger");
WHEREAS, Media, as sole shareholder of NV and PCS Holdings, has approved
the Merger;
WHEREAS, for United States Federal income tax purposes, it is intended
that the NV Merger and the PCS Merger each shall qualify as a tax-free
reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended, together with the rules and regulations promulgated thereunder (the
"Code"); and
WHEREAS, U S WEST, Media, NV, PCS Holdings and AirTouch desire to make
certain representations, warranties, covenants and agreements in connection
with the Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 GENERAL. For purposes of this Agreement, the following terms shall
have the meanings set forth below:
"ACTION" shall mean any action, claim, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority or any
arbitration tribunal.
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"AFFECTED EMPLOYEES" shall mean the employees of NV and the Domestic
Wireless Subsidiaries and PCS Employees, including those employees among them
who are absent from employment due to illness, injury, military service or
other authorized absence and those employees who are disabled within the
meaning of the short-term disability plans currently applicable to NV and the
Domestic Wireless Subsidiaries; PROVIDED, HOWEVER, that "Affected Employees"
shall not include (i) employees who are disabled within the meaning of the
long-term disability plans currently applicable to the NV and the Domestic
Wireless Subsidiaries, (ii) former employees and (iii) retired employees.
"AFFILIATE" shall mean, with respect to any specified Person, any other
Person directly or indirectly controlling, controlled by or under common
control with such specified Person.
"AGREED VALUE" shall mean, for a class or series of capital stock, on
any applicable date, the average of the daily Volume-Weighted Average Trading
Prices per share of such class or series of capital stock for the ten
consecutive Trading Days beginning on the 40th Trading Day following the
issuance of such class or series of capital stock; PROVIDED, HOWEVER, that if
the Closing Date were to occur prior to the end of such ten consecutive
Trading Day period, such period shall commence on the 15th Trading Day
immediately preceding the Closing Date.
"AGREEMENT" shall mean this Agreement and Plan of Merger, together with
all exhibits and schedules hereto, as the same may be amended from time to
time in accordance with the terms hereof.
"AIRTOUCH" shall have the meaning set forth in the preamble to this
Agreement.
"AIRTOUCH CLASS D PREFERRED STOCK" shall mean the AirTouch Class D
Preferred Stock, par value $.01 per share, to be issued pursuant to the
Certificate of Designation, Preferences and Rights attached hereto as Exhibit
A-1.
"AIRTOUCH CLASS E PREFERRED STOCK" shall mean the AirTouch Class E
Preferred Stock, par value $.01 per share, to be issued pursuant to the
Certificate of Designation, Preferences and Rights attached hereto as Exhibit
A-2.
"AIRTOUCH DETERMINATION PRICE" shall mean the average of the
Volume-Weighted Average Trading Prices of AirTouch Common Stock for the 30
consecutive Trading Days (the "Averaging Period") ending on the fifth Trading
Day immediately prior to the Closing Date, rounded to the nearest one-hundred
thousandth (or if there shall not be a nearest one-hundred thousandth, to the
next higher one-hundred thousandth); PROVIDED THAT if the Board of Directors
of AirTouch declares a dividend (other than dividends for which adjustments
have been provided pursuant to Section 3.2) on the outstanding shares of
AirTouch Common Stock having a record date before the Effective Time and an
ex-dividend date (based on
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"regular way" trading on the NYSE of shares of AirTouch Common Stock) (the
"Ex-Date") that occurs during the Averaging Period, then for purposes of
computing the AirTouch Determination Price, the Volume-Weighted Average
Trading Price on any Trading Day before the Ex-Date will be adjusted by
subtracting therefrom the amount of such dividend.
"AIRTOUCH GROUP" shall mean, at and after the Effective Time, AirTouch,
the Domestic Wireless Subsidiaries and the Domestic Wireless Investments and
their respective Affiliates.
"AIRTOUCH MERGER DISCLOSURE SCHEDULE" shall mean the Disclosure
Schedule, dated as of the date hereof, delivered by AirTouch to U S WEST.
"AIRTOUCH RIGHTS AGREEMENT" shall mean the Rights Agreement between
AirTouch and Bank of New York, as Right's Agent, dated as of September 19,
1994, as amended.
"AIRTOUCH STOCK" shall mean the AirTouch Common Stock, the AirTouch
Class D Preferred Stock and the AirTouch Class E Preferred Stock.
"APPLICABLE LAWS" shall mean, with respect to any Person, all statutes,
laws, ordinances, rules, orders and regulations of any Governmental Authority
applicable to such Person and its business, properties and assets.
"ARBITRATION AGREEMENT" shall mean the Arbitration Agreement, dated as
of September 30, 1995, by and between AirTouch and U S WEST Colorado.
"ASSUMED NV DEBT" shall mean indebtedness (including accrued but unpaid
interest) of NV to a Subsidiary of U S WEST outstanding as of the Closing
Date; PROVIDED, HOWEVER, that the sum of the Assumed NV Debt and the Assumed
PCS Debt shall not be less than $1.3 billion nor more than $1.5 billion as of
the Closing Date.
"ASSUMED PCS DEBT" shall mean indebtedness (including accrued but unpaid
interest) of PCS Holdings to a Subsidiary of U S WEST outstanding as of the
Closing Date; PROVIDED, HOWEVER, that the sum of the Assumed NV Debt and the
Assumed PCS Debt shall not be less than $1.3 billion nor more than $1.5
billion as of the Closing Date.
"BUSINESS DAY" shall mean a day other than a Saturday, Sunday or other
day on which banks located in New York City or San Francisco are authorized
or required by law to close.
"CBCA" shall mean the Colorado Business Corporation Act.
"CELLULAR SERVICE" shall mean any commercial mobile radio service, and the
resale of such service, provided by a radio
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communications system authorized under the rules for the domestic public
cellular radio telecommunications service designated as Subpart H of Part 22
of the FCC's rules in effect on July 25, 1994, or any revision thereto or
successor thereof, which may be in effect from time to time, including the
network, marketing, distribution, sales, customer interfaces, and operations
function relating thereto.
"CODE" shall have the meaning set forth in the recitals to this
Agreement.
"COMMON VALUE" shall mean the result of (i) the Transaction Value, MINUS
(ii) the Preferred Value, MINUS (iii) the amount of the Assumed NV Debt and
the Assumed PCS Debt.
"COMMUNICATIONSCO" shall mean an independent company to which the
businesses of the U S WEST Communications Group and the directory businesses
of the U S WEST Media Group may be transferred by U S WEST in connection with
the U S WEST Separation.
"COMMUNICATIONS WIRELESS BUSINESS" shall mean the businesses of USWCG
and its Subsidiaries engaged in the provision of any wireless services.
"CONFIDENTIAL INFORMATION" shall mean all confidential information,
including all knowhow, discoveries, inventions (excluding subject matter
covered by patents or patent applications), improvements, processes,
formulae, specifications, trade secrets (whether patentable or not but
excluding subject matter covered by patents or patent applications), business
plans, marketing data, software, tools and documentation (other than the
software, tools and documentation identified in item 1 of Section 1.1 of the
U S WEST Merger Disclosure Schedule) and all drawings, records, books or
indicia, however evidenced, of the foregoing.
"CONSENT" shall mean any approval, consent or waiver required to be
obtained from any Third Party for the consummation of a specified
transaction, including (without limitation) any option, right of first
refusal, right of first offer or other similar right of a Third Party
triggered by a specified transaction.
"CONTRACT" shall mean any contract, agreement, lease, license, sales
order, purchase order, instrument or other commitment that is binding on any
Person or any part of its property under Applicable Law.
"CURRENT MARKET PRICE", for a class or series of capital stock, on any
applicable date, shall mean the average of the daily Volume-Weighted Average
Trading Prices per share of such class or series of capital stock for the ten
consecutive Trading
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Days ending on the third Trading Day immediately preceding such date.
"DGCL" shall mean the Delaware General Corporation Law.
"DISPOSED ASSET" shall mean each Scheduled Property as to which, as of
or at any time following the Closing Date, either of the following conditions
shall apply:
(a) AirTouch or any Subsidiary thereof shall have sold, assigned,
exchanged, transferred or otherwise disposed of such Scheduled Property in
connection with any court order with respect to, or any Settlement (in
whole or in part) of, any Scheduled Property Claim (for purposes of this
definition, the dissolution, liquidation and winding up of any partnership
underlying a Scheduled Property (including, without limitation, occurring
as a result of a withdrawal by AirTouch or any Subsidiary thereof as a
partner of such partnership) shall be considered a disposition of such
Scheduled Property); or
(b) In the case of any Scheduled Property of which, as of the date
hereof, NV or any Subsidiary thereof is a general partner or which is
otherwise managed by NV or any Subsidiary thereof, AirTouch shall not
obtain or shall lose the right to manage such Scheduled Property prior to
or on the first anniversary of the Closing Date (or if, as of such first
anniversary, a Scheduled Property Claim shall be pending which relates to
AirTouch's right to manage such Scheduled Property, the date that such
Scheduled Property Claim is finally resolved) pursuant to any court order
with respect to, or any Settlement (in whole or in part) of, any Scheduled
Property Claim; PROVIDED that such Scheduled Property shall cease to be a
Disposed Asset if AirTouch shall regain the right to manage such Scheduled
Property prior to or on the second anniversary of the Closing Date (or if,
as of such second anniversary, a Scheduled Property Claim shall be pending
which relates to AirTouch's right to manage such Scheduled Property, the
date that such Scheduled Property Claim is finally resolved).
"DISPOSED ASSET VALUE" shall mean:
(a) In the case of any Disposed Asset by operation of clause (a) of
the definition thereof, the result of:
(i) the excess, if any, of (x) the Allocated Value (as set
forth in item 2 of Section 1.1 of the U S WEST Merger Disclosure
Schedule) of such Disposed Asset (accreted at a rate of 12% per
annum from the Closing Date), over (y) the after-Tax net proceeds
received by AirTouch or any Subsidiary thereof from the sale,
assignment,
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exchange, transfer or other disposition of such Disposed Asset; PLUS
(ii) the aggregate amount of expenditures made by AirTouch
or any Subsidiary thereof with respect to such Disposed Asset
following the Closing Date (accreted at a rate of 12% per annum
from the time such expenditures are made); MINUS
(iii) the aggregate amount of distributions received by
AirTouch or any Subsidiary thereof with respect to such Disposed
Asset following the Closing Date (accreted at a rate of 12% per
annum from the time such distributions are received); and
(b) In the case of any Disposed Asset solely by operation of clause
(b) of the definition thereof, 20% of the Allocated Value of such Disposed
Asset (accreted at the rate of 12% per annum from the Closing Date).
"DISPUTE" shall mean all disputes, controversies or claims arising from
or in connection with this Agreement or any other Transaction Agreement,
whether based on contract, tort, statute or otherwise, including but not
limited to, interpretation or enforcement of such agreements, or any breach,
termination or claim of invalidity of such agreements.
"DOJ" shall mean the United States Department of Justice.
"DOMESTIC WIRELESS BUSINESS" shall mean, collectively, the businesses of
NV, the Domestic Wireless Subsidiaries, the Domestic Wireless Investments and
PCS Holdings.
"DOMESTIC WIRELESS INTELLECTUAL PROPERTY" shall mean the items set forth
in item 3 of Section 1.1 of the U S WEST Merger Disclosure Schedule.
"DOMESTIC WIRELESS INVESTMENTS" shall mean the Investments held by NV or
its Subsidiaries other than, as of the Closing Date, Investments that are
Excluded Assets.
"DOMESTIC WIRELESS SUBSIDIARIES" shall mean the Subsidiaries of NV other
than, as of the Closing Date, Subsidiaries that are Excluded Assets.
"EMPLOYEE ARRANGEMENTS" shall mean all employment and consulting
agreements, and all bonus and other incentive compensation, deferred
compensation, disability, severance, change in control, stock award, stock
option, stock purchase, collective bargaining agreements, plans, programs,
policies and arrangements with respect to the employment or termination of
employment of any employee, officer, director or other individual
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who is or was employed at any time by U S WEST or any of its Subsidiaries.
"EMPLOYEE BENEFIT PLAN" shall mean all "employee benefit plans," as
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended, which U S WEST or any of its Subsidiaries maintains or to
which U S WEST or any of its Subsidiaries has an obligation to make
contributions.
"ENCUMBRANCES" shall mean any and all mortgages, security interests,
liens, claims, pledges, restrictions, charges or other encumbrances.
"ENVIRONMENTAL LAWS" shall mean all Applicable Laws relating to
pollution or protection of human health or the environment (including,
without limitation, ambient air, surface water, ground water, wetlands, land
surface, subsurface strata, and indoor and outdoor workplace), including,
without limitation, (a) laws and regulations relating to emissions,
discharges, releases or threatened releases of any Substance of Concern or
otherwise relating to the importation, manufacture, processing, formulation,
testing, distribution, use, treatment, storage, disposal, transport or
handing of any Substance of Concern, and (b) common law principles of tort
liability related to the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA AFFILIATE" shall mean each member of a controlled group of
corporations within the meaning of section 414(b) of the Code and each member
of a group of trades or businesses under common control within the meaning of
section 414(c) of the Code.
"ESMR SERVICE" shall mean any commercial mobile radio service, and the
resale of such service, provided by radio communications system authorized
under the rules for Enhanced Specialized Mobile Radio services designated
under Subpart S of Part 90 of the FCC's rules in effect on July 25, 1994, or
any revision thereto or successor thereof, which may be in effect from time
to time, including the network, marketing, distribution, sales, customer
interfaces, and operations function relating thereto.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"EXCHANGE AGREEMENT" shall mean the Amended and Restated Agreement of
Exchange, dated as of September 30, 1995, by and between U S WEST Colorado
and AirTouch.
"EXCLUDED ASSET" shall mean each Scheduled Property as to which any of
the following shall apply as of the Closing Date:
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(a) NV or any Subsidiary thereof shall have sold, assigned, exchanged,
transferred or otherwise disposed of such Scheduled Property either (i)
pursuant to a right of first refusal made in accordance with Section
7.15(a), (ii) in fulfillment of U S WEST's obligations under Section
7.15(b) or (iii) pursuant to other written agreement of the parties hereto;
or
(b) NV or any Subsidiary thereof shall have withdrawn (voluntarily or
pursuant to a court order) as a partner of the partnership underlying such
Scheduled Property and such partnership shall have been dissolved.
"EXCLUDED ASSETS VALUE" shall equal the sum (for all Excluded Assets) of
the Allocated Value (as set forth in item 2 of Section 1.1 of the U S WEST
Merger Disclosure Schedule) of each such Excluded Asset.
"EXCLUDED CLAIM" shall mean any claim or demand made by any Person or
any Action (in each case, which is made, instituted or commenced before the
Effective Time) to the extent such claim, demand or Action (a) arises out of,
relates to or results from, directly or indirectly, (i) any actual or alleged
violation of, or seeks to enforce compliance with, any law, rule or
regulation of any Governmental Authority in respect of antitrust, consumer
disclosure or unfair competition or (ii) any actual or alleged wrongful
termination, or other actual or alleged breach or violation, of any
distribution or agent relationship (excluding any claim or demand made by any
Person or any Action which arises out of, relates to or results from solely a
claim of breach of contract) and (b) arises out of, relates to or results
from, directly or indirectly, the conduct of the Domestic Wireless Business
or any part thereof before or at the Effective Time; PROVIDED, HOWEVER, that
any claim or demand made by any Person or any Action shall not be an
"Excluded Claim" to the extent such claim, demand or Action arises out of,
relates to or results from, directly or indirectly, the conduct of WMC in
respect of any of the businesses of AirTouch or its Subsidiaries or any part
thereof before or at the Effective Time. For purposes of this definition,
the term "Subsidiary" shall not include WMC.
"EXCLUDED EMPLOYEES" shall mean all employees, former employees and
retired employees of U S WEST and its Subsidiaries and Affiliates other than
the Affected Employees.
"EXCLUDED SETTLEMENTS" shall mean all Settlements made or entered into
prior to the Effective Time to the extent such Settlements arise out of,
relate to or result from, directly or indirectly, the conduct of the Domestic
Wireless Business or any part thereof (to the extent not satisfied in full by
U S WEST, NV, a Domestic Wireless Subsidiary or a Domestic Wireless
Investment prior to the Effective Time).
-8-
"EXTRAORDINARY CASH DISTRIBUTIONS" shall mean with respect to any
consecutive 12-month period, all cash dividends and cash distributions on the
outstanding shares of AirTouch Common Stock during such period (other than
cash dividends or cash distributions for which a prior adjustment to the
Merger Consideration was previously made) to the extent such cash dividends
and cash distributions exceed, on a per share of AirTouch Common Stock basis,
5% of the average Volume-Weighted Average Trading Price of the AirTouch
Common Stock over such period.
"FAIR VALUE" shall mean (i) with respect to shares of capital stock
which is traded on an exchange or in the over-the-counter market, the average
of the Volume-Weighted Average Trading Prices per share of such class or
series of capital stock for the 30 consecutive Trading Days ending on the
fifth Trading Day immediately prior to the Closing Date, (ii) with respect to
cash, the amount of cash distributed and (iii) with respect to evidences of
indebtedness or assets or capital stock which is not traded on an exchange or
in the over-the-counter market, the value of such evidences of indebtedness
or assets or such capital stock as determined by an investment banking firm
jointly selected by AirTouch and U S WEST.
"FCC" shall mean the United States Federal Communications Commission.
"FTC" shall mean the United States Federal Trade Commission.
"GAAP" shall mean generally accepted accounting principles in effect in
the United States of America.
"GOVERNMENTAL AUTHORITY" shall mean any foreign, federal, state or local
government, court, agency or commission or other governmental or regulatory
body or authority.
"HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations issued pursuant thereto.
"INDEMNIFIABLE LOSSES" shall mean, with respect to any claim by an
Indemnified Party for indemnification under this Agreement, any and all
damages, losses, deficiencies, Liabilities, obligations, penalties,
judgments, settlements, claims, payments, fines, interest, costs and expenses
(including, without limitation, the costs and expenses of any and all
Actions, demands, assessments, judgments, settlements and compromises
relating thereto and the costs and expenses of attorneys', accountants',
consultants' and other professionals' fees and expenses incurred in the
investigation or defense thereof or the enforcement of rights thereunder).
-9-
"INDEMNIFIED PARTY" shall mean any Person that is seeking
indemnification from an Indemnifying Party pursuant to the provisions of this
Agreement.
"INDEMNIFYING PARTY" shall mean any party hereto from which any
Indemnified Party is seeking indemnification pursuant to the provisions of
this Agreement.
"INFORMATION" shall mean all records, books, Contracts, instruments,
computer data and other data and information.
"INSURANCE ARRANGEMENT" shall mean insurance policies and insurance
Contracts of any kind, including, without limitation, primary and excess
policies, commercial general liability policies, automobile policies, product
liability policies, directors' and officers' liability policies, fiduciary
liability policies, workmens' compensation policies, and self-insurance
programs and captive insurance company arrangements, together with the
rights, benefits and privileges thereunder.
"INTELLECTUAL PROPERTY" shall mean all Trademarks, Trade Names,
copyrights or copyright registrations, and patents or patents pending,
including any Contracts, licenses or other legal arrangements granting rights
or privileges to use any Trademark, Trade Name, copyright or patent.
"INTER-EXCHANGE CARRIER AGREEMENT" shall mean an agreement between NV or
any Domestic Wireless Subsidiary and any inter-exchange carrier relating to
the conduct of the operations of the Domestic Wireless Business.
"INVESTMENT AGREEMENT" shall mean the Amended and Restated Investment
Agreement dated as of September 30, 1995, by and between U S WEST Colorado
and AirTouch.
"INVESTMENT" shall mean, with respect to any Person, any equity interest
held by such Person or its Subsidiaries in another Person (other than a
Subsidiary); PROVIDED, HOWEVER, that Time Warner Entertainment Company, L.P.
shall not be deemed to be an Investment of U S WEST or of any of its
Subsidiaries.
"IRS" shall mean the United States Internal Revenue Service.
"JOINT VENTURE ORGANIZATION AGREEMENT" shall mean the Amended and
Restated Joint Venture Organization Agreement dated as of September 30, 1995
by and between U S WEST Colorado and AirTouch, as amended.
"LEGAL PROCEEDINGS" shall mean any judicial, administrative or arbitral
actions, suits, investigations, proceedings (public or private) or
governmental proceedings.
"LEVERAGED LEASES" shall mean all of the Japanese leveraged leases
entered into by PrimeCo as of the Closing Date.
-10-
"LIABILITY" shall mean, with respect to any Person, except as expressly
provided herein, any direct or indirect liability (whether absolute, accrued
or unaccrued, contingent, liquidated or unliquidated, matured or unmatured,
reflected on a balance sheet (or in the notes thereto) or otherwise, and
whether known or unknown, fixed or contingent), indebtedness, obligation,
expense, claim, deficiency, guarantee or endorsement of or by such Person
(including, without limitation, those arising under any Applicable Law or
Action or under any award of any court, tribunal or arbitrator of any kind,
and those arising under any Contract).
"LICENSE" shall mean any permit, license, waiver or authorization from
any Governmental Authority having jurisdiction over a Person required or
advisable for the conduct of an activity, including, without limitation, any
license or authorization or certificate of public convenience and necessity
from the FCC.
"MATERIAL ADVERSE EFFECT" shall mean, with respect to any Person or
business, any change or effect that is materially adverse to the business,
assets, financial condition or results of operations of such Person and its
Subsidiaries taken as a whole or to such business taken as a whole; PROVIDED
that a failure to include the business of any Excluded Asset in the Domestic
Wireless Business shall not be deemed to constitute a Material Adverse Effect
with respect to the Domestic Wireless Business.
"MATERIAL CONTRACT" shall mean any Contract made in conjunction with or
related to the operations of the Domestic Wireless Business (including,
without limitation, Contracts with customers or suppliers, Resale Agreements,
Roaming Agreements, Inter-Exchange Carrier Agreements, and similar
agreements) that (a) is reasonably anticipated by the party making a
representation with respect thereto to involve, in any given year, an
aggregate payment by any party thereto in excess of $5,000,000; (b) in the
case of any Resale Agreement, Roaming Agreement, Inter-Exchange Carrier
Agreement or network or subscriber equipment purchase Contract, is reasonably
anticipated by the party making a representation with respect thereto to
involve aggregate payments by all parties thereto in excess of $15,000,000 in
any five-year period; (c) has a term of five years or more and involves, in
any given year, an aggregate payment by any party thereto in excess of
$1,000,000; or (d) that any party thereto would be required to file as an
exhibit to its Annual Report on Form 10-K if such Person were a registrant
under Section 12 of the Exchange Act.
"MEDIA" shall have the meaning set forth in the preamble to this
Agreement.
"MEDIACO" shall mean an independent company to which the cable and
international businesses of the U S WEST Media Group
-11-
may be transferred by U S WEST in connection with the U S WEST Separation.
"MERGER" shall have the meaning set forth in the recitals to the
Agreement.
"NEW INVESTMENT AGREEMENT" shall mean the Amended and Restated
Investment Agreement attached hereto as Exhibit B.
"NV" shall have the meaning set forth in the preamble to this Agreement.
"NV/PCS TRANSFEREE" shall mean (i) if the U S WEST Separation is
consummated prior to the Effective Time, the Subsidiary of U S WEST (or
MediaCo, as applicable) to which the NV Stock and the PCS Holdings Stock will
be transferred in connection with the U S WEST Separation and (ii) if the
U S WEST Separation is consummated following the Effective Time, the Subsidiary
of U S WEST (or MediaCo, as applicable) to which the AirTouch Stock received
by Media in connection with the Merger will be transferred in connection with
the U S WEST Separation; PROVIDED that, in either such case, the NV/PCS
Transferee shall remain an Affiliate of the domestic cable businesses of the
U S WEST Media Group following the consummation of the U S WEST Separation.
"NYSE" shall mean the New York Stock Exchange, Inc.
"ORDER" shall mean action by the FCC or a state regulatory authority, as
applicable, granting the FCC's or such state regulatory authority's Consent
to the transactions contemplated hereby without any conditions which either U
S WEST or AirTouch reasonably deems to be materially adverse to it and as to
which no stay by the FCC or such state regulatory authority, as applicable,
or other Governmental Authority, is in effect.
"PATENT LICENSE AGREEMENT" shall mean the Patent License Agreement
between U S WEST and AirTouch in the form attached hereto as Exhibit C, as
the same may be amended from time to time.
"PCS EMPLOYEES" shall mean the employees identified in item 4 of Section
1.1 of the U S WEST Merger Disclosure Schedule who are employed in the
Domestic Wireless Business at the Effective Time.
"PCS HOLDINGS" shall have the meaning set forth in the preamble to this
Agreement.
"PCS NUCLEUS" shall mean PCS Nucleus, L.P., a Delaware limited
partnership.
"PCS NUCLEUS AGREEMENT" shall mean the Amended and Restated Agreement of
Limited Partnership of PCS Nucleus, dated as of
-12-
September 30, 1995, between AirTouch PCS Holdings, Inc. and PCS Holdings.
"PCS PARTNERSHIP INTERESTS" shall mean a 10.1% general partner's
interest and a 39.9% limited partner's interest in PCS Nucleus.
"PCS SERVICE" shall mean any broadband radio communications service
authorized under the rules for personal communications services designated as
Subpart E of Part 24 of the FCC's rules in effect on July 25, 1994, or any
revision thereto or successor thereof which may be in effect from time to
time, including the network, marketing, distribution, sales, customer
interface and operations functions relating thereto.
"PERMITTED ENCUMBRANCE" shall mean (a) a statutory Encumbrance not yet
due and payable or (b) any other Encumbrance that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect
with respect to the Domestic Wireless Business.
"PERSON" or "PERSON" shall mean and includes any individual,
partnership, limited liability company, joint venture, corporation,
association, joint stock company, trust, unincorporated organization or
similar entity.
"PREFERRED SHARE NUMBER" shall mean the quotient of (a) the Preferred
Value, DIVIDED BY (b) $1,000 (rounded to the nearest whole even number).
"PREFERRED VALUE" shall mean (a) $1,600,000,000, PLUS (b) the excess, if
any, of (i) $1,400,000,000, over (ii) the sum of the amounts of the Assumed
NV Debt and the Assumed PCS Debt.
"PRIMECO" shall mean PrimeCo Personal Communications, L.P., a Delaware
limited partnership.
"PRIMECO AGREEMENT" shall mean the Agreement of Limited Partnership of
PrimeCo, dated as of October 20, 1994, as amended.
"RELATED PARTY AGREEMENT" shall mean any Contract between or among NV or
any Domestic Wireless Subsidiary, on the one hand, and U S WEST, Media or any
of their respective Affiliates (other than NV or any Domestic Wireless
Subsidiary), on the other hand; PROVIDED, HOWEVER, that (i) all Employee
Arrangements and Employee Benefit Plans and (ii) all administrative services
agreements (including accounting, legal, insurance and tax services and other
similar agreements) shall not be deemed to be Related Party Agreements.
"RESALE AGREEMENT" shall mean any agreement entered into by NV or a
Domestic Wireless Subsidiary with any Third Party with respect to the resale of
any Cellular Service.
-13-
"ROAMING AGREEMENT" shall mean any agreement entered into by NV or a
Domestic Wireless Subsidiary with any Third Party relating to a roaming
arrangement with respect to customers of any Cellular Service, PCS Service,
ESMR Service or satellite service.
"SCHEDULED PROPERTIES" shall mean the Domestic Wireless Subsidiaries and
Domestic Wireless Investments listed in item 5 of Section 1.1 of the U S WEST
Merger Disclosure Schedule.
"SCHEDULED PROPERTY CLAIM" means any claim or demand made by any Person
or any Action (in either case, whether or not pending at the Effective Time
and whether or not the basis for which is known to AirTouch at the Effective
Time) that the execution, delivery or performance by AirTouch, U S WEST, NV
or any Domestic Wireless Subsidiary or any Domestic Wireless Investment
managed by NV or any Domestic Wireless Subsidiary of (A) the Joint Venture
Organization Agreement and the related agreements referred to therein or the
consummation of the transactions contemplated thereby or (B) any Transaction
Agreement to which it is or will be a party or the consummation of the
transactions contemplated thereby, has resulted or results in a violation or
breach of, or has constituted or constitutes a default, withdrawal or
impermissible transfer under, or has given or gives rise to any right of
purchase, conversion of interest, dissolution, termination, first refusal,
notice or consent under or has given or gives rise to any right of amendment,
cancellation or acceleration of material benefit under, any partnership
agreement or other formative agreement or management or similar agreement
relating to a Scheduled Property.
"SEC" shall mean the United States Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"SETTLEMENTS" shall mean any and all agreements or commitments to
settle, compromise or otherwise resolve in whole or in part any claim or
demand of any Person or any Action.
"SOFTWARE LICENSE AGREEMENT" shall mean the Software License Agreement
between U S WEST and AirTouch in the form attached hereto as Exhibit D, as
the same may be amended from time to time.
"SUBSTANCE OF CONCERN" shall mean any chemical, pollutant, contaminant,
waste, toxic substance, industrial substance, noxious substance, hazardous
substance, radioactive material, asbestos, genetically modified organism,
petroleum or petroleum product.
-14-
"SPECIFIED ACTION" shall mean any action, claim, suit, arbitration or
proceeding which has been brought before or filed by any Governmental
Authority or arbitration tribunal which (a) arises out of, relates to or
results from, directly or indirectly, (i) any actual or alleged violation of,
or seeks to enforce compliance with, any law, rule or regulation of any
Governmental Authority in respect of antitrust, consumer disclosure or unfair
competition or (ii) any actual or alleged wrongful termination, or other
actual or alleged breach or violation, of any distribution or agent
relationship (excluding any Action which arises out of, relates to or results
from solely a claim of breach of contract) and (b) arises out of, relates to
or results from, directly or indirectly, the conduct of the Domestic Wireless
Business or any part thereof before or at the Effective Time, but
specifically excluding any such action, claim, suit, arbitration or
proceeding to the extent that it (x) constitutes an Excluded Claim or (y)
arises out of, relates to or results from, directly or indirectly, the
conduct of WMC in respect of the business of AirTouch or its Subsidiaries or
any part thereof before or at the Effective Time. For purposes of this
definition, the term "Subsidiary" shall not include WMC.
"SUBSIDIARY" shall mean, with respect to any Person, (a) each
corporation, partnership, joint venture or other legal entity of which such
Person owns, either directly or indirectly, 50% or more of the stock or other
equity interests the holders of which are generally entitled to vote for the
election of the board of directors or similar governing body of such
corporation, partnership, joint venture or other legal entity and (b) each
partnership in which such Person or another Subsidiary of such Person is the
general partner or otherwise controls such partnership; PROVIDED, HOWEVER,
that PCS Nucleus shall not be deemed to be a Subsidiary of AirTouch or
U S WEST.
"TAX" or "TAXES" shall mean all taxes, charges, fees, imposts, levies or
other assessments, including, without limitation, all net income, gross
receipts, capital, sales, use, gains ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp,
occupation, property and estimated taxes, customs duties, fees, assessments
and charges of any kind whatsoever, whether computed on a separate,
consolidated, unitary, combined or any other basis, together with any
interest (including interest that would have accrued absent a netting of
Taxes) and any penalties, fines, additions to tax or additional amounts
imposed by any taxing authority (domestic or foreign) and shall include any
transferee liability in respect of Taxes.
"TAX SHARING AGREEMENT" shall mean the Tax Sharing Agreement between U S
WEST, Media, NV, PCS Holdings and AirTouch in the form attached hereto as
Exhibit E, as the same may be amended from time to time.
-15-
"THIRD PARTY" shall mean, with respect to U S WEST, Media or AirTouch, a
party or parties which is or are not an Affiliate of either U S WEST, Media
or AirTouch, respectively.
"TOMCOM AGREEMENT" shall mean the Agreement of Limited Partnership of
Tomcom, L.P., a Delaware limited partnership, dated as of October 20, 1994,
as amended.
"TRADEMARK" shall mean any federal or state service xxxx, trademark,
trade name, trademark registration or application, and all common law rights
therein.
"TRADE NAME" shall mean any trade name, corporate name, business name,
commercial name, and any registration or application therefor or any other
name used to identify a business.
"TRADING DAY" shall mean a day on which the NYSE is open for the
transaction of business.
"TRANSACTION AGREEMENTS" shall mean this Agreement, the Tax Sharing
Agreement, the Software License Agreement, the Patent License Agreement, the
Resources Agreement and the New Investment Agreement, and all agreements,
instruments, schedules, exhibits and annexes attached hereto or thereto or
delivered pursuant hereto or thereto.
"TRANSACTION VALUE" shall equal (a) $5,685,000,000, PLUS (b) the amount,
if any, of the Base Adjustment (as defined below), MINUS (c) the amount, if
any, of the Excluded Assets Value, PLUS (d) the amount of any positive Value
Adjustment (or, MINUS, the amount of any negative Value Adjustment)
calculated as of the Closing Date. The "Base Adjustment" shall equal:
AirTouch
$50,000,000, multiplied by ( Determination Price - $40 )
------------- -------------------------
$5
; provided that, for purposes of the foregoing calculation, (i) if the
AirTouch Determination Price is less than $40 per share, the Base Adjustment
shall equal zero and (ii) if the AirTouch Determination Price is greater than
$45 per share, the Base Adjustment shall equal $50,000,000.
"TRUST EXCHANGE AGREEMENT" shall mean the Amended and Restated Trust
Agreement of Exchange dated as of September 30, 1995 by and between U S WEST
Colorado and AirTouch.
"U S WEST" shall have the meaning ascribed to such term in the preamble
to this Agreement.
"U S WEST COLORADO" shall mean U S WEST, Inc., a Colorado corporation
and the predecessor of U S WEST.
"U S WEST GROUP" shall mean, after the Effective Time, U S WEST, Media
and their respective Affiliates.
-16-
"U S WEST INSURANCE ARRANGEMENTS" shall mean the Insurance Arrangements
of U S WEST existing at the Effective Time or prior thereto which are owned
or maintained by or on behalf of U S WEST or any of its predecessors.
"U S WEST INTELLECTUAL PROPERTY" shall mean all Intellectual Property of
the U S WEST Group and its Affiliates (which Affiliates exist as of the date
hereof) other than the Domestic Wireless Intellectual Property.
"U S WEST MERGER DISCLOSURE SCHEDULE" shall mean the Disclosure
Schedule, dated as of the date hereof, delivered by U S WEST to AirTouch.
"U S WEST SEPARATION" shall mean a transaction in which the businesses
of the U S WEST Communications Group and the businesses of the U S WEST Media
Group are separated into two independent companies.
"VALUE ADJUSTMENT" shall mean the result calculated in accordance with
Exhibit F hereto.
"VOLUME-WEIGHTED AVERAGE TRADING PRICE" shall mean, for any Trading Day,
an amount equal to (a) the cumulative sum, for each trade of AirTouch Common
Stock (or other class or series of capital stock) during such Trading Day on
the NYSE (or, if such security is not listed on the NYSE, such other
principal exchange or over-the-counter market on which such security is
listed), of the product of: (i) the sale price times (ii) the number of
shares of AirTouch Common Stock (or such other class or series of capital
stock) sold at such price, divided by (b) the total number of shares of
AirTouch Common Stock (or such other class or series of capital stock) so
traded during the Trading Day.
"WMC" shall mean WMC Partners, L.P., a Delaware limited partnership.
"WMC AGREEMENT" shall mean the Amended and Restated Agreement of Limited
Partnership of WMC, dated as of September 30, 1995.
1.2 TERMS DEFINED ELSEWHERE IN THE AGREEMENT. For purposes of this
Agreement, the following terms have the meanings set forth in the Sections
indicated:
TERM SECTION
---- --------
AAA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.14(a)
Accounting Referee. . . . . . . . . . . . . . . . . . . . . . . . 3.3(c)
Acquiring Person. . . . . . . . . . . . . . . . . . . . . . . . . 6.2(d)
Adjusted Cap Price. . . . . . . . . . . . . . . . . . . . . . . . 3.2(e)
Adjusted Floor Price. . . . . . . . . . . . . . . . . . . . . . . 3.2(e)
AirTouch Affiliated Group . . . . . . . . . . . . . . . . . . . . 5.8(a)
AirTouch Common Stock . . . . . . . . . . . . . . . . . . . . . . 3.1(b)
-17-
AirTouch Consents . . . . . . . . . . . . . . . . . . . . . . . . 5.4
AirTouch Indemnified Parties. . . . . . . . . . . . . . . . . . . 11.1
AirTouch Pension Plan . . . . . . . . . . . . . . . . . . . . . . 8.3(b)
AirTouch Retirement Plan. . . . . . . . . . . . . . . . . . . . . 8.3(h)
AirTouch Rights Agreement . . . . . . . . . . . . . . . . . . . . 5.2(a)
AirTouch SEC Documents. . . . . . . . . . . . . . . . . . . . . . 5.6(a)
Articles of Merger. . . . . . . . . . . . . . . . . . . . . . . . 2.3
Cap Number. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2(e)
Cap Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2(a)
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . 2.3
Claim Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3(a)
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2
Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2
Common Consideration. . . . . . . . . . . . . . . . . . . . . . . 3.1(b)
Confidentiality Agreements. . . . . . . . . . . . . . . . . . . . 6.3(c)
Core Intellectual Property. . . . . . . . . . . . . . . . . . . . 7.9(d)
Decision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.14(a)
Domestic Wireless Financial Statements. . . . . . . . . . . . . . 4.6(a)
Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Employee Communication Materials. . . . . . . . . . . . . . . . . 8.3(m)
Extraordinary Dividend. . . . . . . . . . . . . . . . . . . . . . 6.2(a)
FCC/State Orders. . . . . . . . . . . . . . . . . . . . . . . . . 4.4
Floor Number. . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2(e)
Floor Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2(a)
Gains Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
Indemnitees . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3(n)
Joint Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 7.13(a)
Joint Asset . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.13(b)
Joint Venture Agreements. . . . . . . . . . . . . . . . . . . . . 12.7(b)
Merger Consideration. . . . . . . . . . . . . . . . . . . . . . . 3.1(b)
Merger Consideration Value. . . . . . . . . . . . . . . . . . . . 6.2(d)
Modified Accrual Participant. . . . . . . . . . . . . . . . . . . 8.3(c)
Non-Qualified Plans . . . . . . . . . . . . . . . . . . . . . . . 8.3(n)
Non-solicitation Period . . . . . . . . . . . . . . . . . . . . . 8.3(l)
Notice Period . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3(b)
NV/PCS Affiliated Group . . . . . . . . . . . . . . . . . . . . . 4.8(a)
NV Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(b)
Operating Subsidiary. . . . . . . . . . . . . . . . . . . . . . . 6.2(a)
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3(o)
Parent Transaction. . . . . . . . . . . . . . . . . . . . . . . . 6.2(a)
PCS Holdings Stock. . . . . . . . . . . . . . . . . . . . . . . . 3.1(b)
Planned Capital Expenditures. . . . . . . . . . . . . . . . . . . 6.1(a)
Preferred Consideration . . . . . . . . . . . . . . . . . . . . . 3.1(b)
Recalculation Differential. . . . . . . . . . . . . . . . . . . . 3.3(b)
Recourse Right. . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
Restricted Action . . . . . . . . . . . . . . . . . . . . . . . . 6.2(a)
Services Agreement. . . . . . . . . . . . . . . . . . . . . . . . 11.1(b)
Solicit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3(l)
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . 2.1
Termination Date. . . . . . . . . . . . . . . . . . . . . . . . . 10.1(d)
Third Party Claim . . . . . . . . . . . . . . . . . . . . . . . . 11.3
Transferred Benefit Assets. . . . . . . . . . . . . . . . . . . . 8.3(b)
Transferred Benefit Liabilities . . . . . . . . . . . . . . . . . 8.3(b)
USWCG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.9(c)
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U S WEST Consents . . . . . . . . . . . . . . . . . . . . . . . . 4.4
U S WEST Indemnified Parties. . . . . . . . . . . . . . . . . . . 11.2
U S WEST Pension Plan . . . . . . . . . . . . . . . . . . . . . . 8.3(b)
U S WEST Savings Plan . . . . . . . . . . . . . . . . . . . . . . 8.3(i)
1.3 OTHER DEFINITIONAL PROVISIONS. (a) 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.
(b) The terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States dollars.
ARTICLE II
THE MERGER
2.1 MERGER. Upon the terms and subject to the conditions set forth in
this Agreement and in accordance with the CBCA and DGCL, NV and PCS Holdings
shall be merged with and into AirTouch at the Effective Time. At the
Effective Time, the separate corporate existences of NV and PCS Holdings
shall cease and AirTouch shall continue as the surviving corporation (the
"Surviving Corporation").
2.2 CLOSING. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to
Section 10.1, the closing of the Merger (the "Closing") will take place at
10:00 a.m. (San Francisco time), on the second Business Day following the
date on which the last of the conditions set forth in Article IX is fulfilled
or waived (the "Closing Date"), at the offices of Pillsbury Madison & Sutro
LLP, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx, unless another date,
time or place is agreed to by the parties hereto.
2.3 EFFECTIVE TIME. The parties hereto shall cause the Merger to be
consummated by filing a certificate of merger with the Secretary of State of
the State of Delaware (the "Certificate of Merger"), as provided in the DGCL,
and articles of merger with the Secretary of State of the State of Colorado
(the "Articles of Merger"), as provided in the CBCA, in each case, as soon as
practicable on or after the Closing Date. The Merger shall become effective
at such time as is provided in the Certificate of Merger and the Articles of
Merger (the "Effective Time").
2.4 EFFECTS OF THE MERGER. The Merger shall have the effects
prescribed by Applicable Laws.
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2.5 CERTIFICATE OF INCORPORATION AND BYLAWS. (a) At the Effective
Time, in accordance with the DGCL, the Certificate of Incorporation of
AirTouch, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation after the Effective
Time, until duly amended in accordance with its terms and the DGCL.
(b) The Bylaws of AirTouch, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with their terms, the DGCL and the Certificate of
Incorporation of the Surviving Corporation.
2.6 DIRECTORS. The directors of AirTouch immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, until the
earlier of their resignations or removal or until their respective successors
are duly elected and qualified, as the case may be.
2.7 OFFICERS. The officers of AirTouch immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignations or removal or until their respective successors
are duly elected and qualified, as the case may be.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; CERTIFICATES
3.1 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of
capital stock:
(a) CAPITAL STOCK OF AIRTOUCH. Each share of each class of capital
stock of AirTouch issued and outstanding immediately prior to the Effective
Time shall remain an issued and outstanding share of the same class of
capital stock of the Surviving Corporation.
(b) CAPITAL STOCK OF NV AND PCS HOLDINGS. The common stock, no par
value, of NV (the "NV Stock") and the common stock, no par value, of PCS
Holdings (the "PCS Holdings Stock") issued and outstanding immediately prior
to the Effective Time shall be canceled and extinguished and converted
automatically into the right to receive (i) a number of shares of common
stock, par value $.01 per share, of AirTouch (the "AirTouch Common Stock"),
together with the corresponding rights to purchase AirTouch Series A
Preferred Stock pursuant to the AirTouch Rights Agreement, determined in
accordance with Section 3.2 (the "Common Consideration"), (ii) a number of
shares of AirTouch Class D Preferred Stock equal to 50% of the Preferred
Share Number and (iii) a number of shares of AirTouch Class E Preferred Stock
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equal to 50% of the Preferred Share Number (such shares of AirTouch Class D
Preferred Stock and AirTouch Class E Preferred Stock are referred to herein
as the "Preferred Consideration", and collectively with the Common
Consideration, as the "Merger Consideration").
3.2 DETERMINATION OF COMMON CONSIDERATION.
(a) Subject to the provisions of Section 6.2, if the AirTouch
Determination Price is greater than or equal to $40.00 (the "Floor Price")
and less than or equal to $45.00 (the "Cap Price"), the number of shares of
AirTouch Common Stock that constitute the Common Consideration shall equal
the quotient of the Common Value, divided by the AirTouch Determination Price
(rounded to the nearest whole number).
(b) Subject to the provisions of Section 6.2, if the AirTouch
Determination Price is less than the Floor Price, the number of shares of
AirTouch Common Stock that constitute the Common Consideration shall equal
the quotient of the Common Value, divided by the Floor Price (rounded to the
nearest whole number).
(c) Subject to the provisions of Section 6.2, if the AirTouch
Determination Price is greater than the Cap Price, the number of shares of
AirTouch Common Stock that constitute the Common Consideration shall equal
the quotient of Common Value, divided by the Cap Price (rounded to the
nearest whole number).
(d) Subject to the provisions of Section 6.2, the Cap Price and Floor
Price shall be adjusted from time to time as follows for events occurring
prior to the Effective Time:
(i) If AirTouch shall (A) pay a dividend, or make a distribution, in
shares of AirTouch Common Stock, (B) subdivide or split its outstanding
AirTouch Common Stock into a greater number of shares, or (C) combine the
outstanding shares of AirTouch Common Stock into a smaller number of shares,
then, in any such event, the Cap Price and Floor Price shall each be adjusted
by multiplying each of the Cap Price and the Floor Price in effect
immediately prior to such date of issuance by a fraction, the numerator of
which shall be one and the denominator of which shall be the number of shares
or fractions of a share of AirTouch Common Stock that a holder of one share
of AirTouch Common Stock immediately prior to any such event would hold
immediately after such event (assuming the issuance of fractional shares).
(ii) If AirTouch shall issue rights, warrants or options for, or
securities convertible or exchangeable into or exercisable for, shares of
AirTouch Common Stock entitling the holders to subscribe for or purchase
shares of AirTouch Common Stock at a price per share that, together with the
consideration paid to AirTouch upon the issuance of such securities, is lower
than the Current Market Price both as of the date on which a
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definitive agreement is entered into with respect to such issuance or (if
there is no such agreement) the date on which such issuance is announced and
at the record date for or (if there is no record date) the date of such
issuance (other than pursuant to any existing employee benefit plan or
employee arrangement or pursuant to the AirTouch Rights Agreement), then, in
any such event, the Cap Price and the Floor Price shall each be adjusted by
multiplying each of the Cap Price and the Floor Price in effect immediately
prior to such record date or date of issuance by a fraction, the numerator of
which shall be the number of shares of AirTouch Common Stock outstanding on
such record date or date of issuance plus the maximum number of additional
shares of AirTouch Common Stock which the aggregate offering price of the
maximum number of shares of AirTouch Common Stock so offered for subscription
or purchase pursuant to such rights, warrants, options or securities would
purchase at the Current Market Price on such record date or date of issuance
(determined by multiplying such maximum number of shares by the exercise
price of such rights, warrants or options or the conversion price of such
securities (plus any other consideration received by AirTouch upon the
issuance, exercise or conversion of such rights, warrants, options or
securities) and dividing the product so obtained by the Current Market Price
on such record date or date of issuance) and the denominator of which shall
be the number of shares of AirTouch Common Stock outstanding on such date of
issuance plus the maximum number of additional shares of AirTouch Common
Stock offered for subscription pursuant to such rights, warrants, options or
securities.
(iii) If AirTouch shall issue or sell shares of AirTouch Common Stock at
a price per share that is lower both at the date on which a definitive
agreement is entered into with respect to such issuance or sale and at the
date of such issuance or sale than the Current Market Price as of the Trading
Day immediately preceding such dates (other than pursuant to any bona fide
underwritten public offering or offering pursuant to Rule 144A under the
Securities Act, pursuant to the terms of existing options or benefit plans or
upon conversion of shares of preferred stock), then, in any such event, the
Cap Price and the Floor Price shall each be adjusted by multiplying each of
the Cap Price and the Floor Price in effect immediately prior to such date of
issuance by a fraction, the numerator of which shall be the number of shares
of AirTouch Common Stock outstanding on such date of issuance plus the number
of additional shares of AirTouch Common Stock which the aggregate price of
the number of shares of AirTouch Common Stock so issued or sold would
purchase at the Current Market Price on such date of issuance (determined by
multiplying such number of shares by the purchase price of such shares and
dividing the product so obtained by the Current Market Price on such date of
issuance) and the denominator of which shall be the number of shares of
AirTouch Common Stock outstanding on such date of issuance plus the number of
additional shares of AirTouch Common Stock issued.
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(iv) If AirTouch shall pay a dividend or make a distribution to all
holders of outstanding shares of AirTouch Common Stock, of capital stock,
cash, evidence of its indebtedness or other assets of AirTouch (but excluding
(x) any cash dividends or distributions (other than Extraordinary Cash
Distributions) and (y) dividends or distributions referred to in Section
3.2(d)(i) or 3.2(e)), then the Cap Price and the Floor Price shall each be
adjusted by multiplying each of the Cap Price and the Floor Price in effect
immediately prior to the opening of business on the record date for the
determination of stockholders entitled to receive such dividend or
distribution by a fraction, the numerator of which shall be the Current
Market Price (determined as of such record date) less either (A) the Fair
Value of the portion of the capital stock, assets or evidences of
indebtedness to be so distributed applicable to one share of AirTouch Common
Stock or (B), if applicable, the amount of the Extraordinary Cash
Distribution to be distributed per share of AirTouch Common Stock, and the
denominator of which shall be such Current Market Price.
In addition, to the extent that any of the events set forth in this Section
3.2(d) occurs during the period in which the AirTouch Determination Price is
determined, then the Volume-Weighted Average Trading Prices for Trading Days
prior to the occurrence of such event used in determining the AirTouch
Determination Price shall be adjusted in a manner consistent with the
adjustments set forth in Section 3.2(d).
(e) Subject to the provisions of Section 6.2, if prior to the Effective
Time AirTouch shall pay a dividend or make a distribution to all holders of
outstanding shares of AirTouch Common Stock of shares of a class or series of
capital stock of AirTouch other than AirTouch Common Stock, then (i) Media
(or the NV/PCS Transferee) shall be entitled to receive pursuant to Section
3.1(b), in addition to the number of shares of AirTouch Common Stock which it
is entitled to receive pursuant to Section 3.1(b), a number of shares of such
class or series of capital stock equal to the number of shares of such class
or series of capital stock which it would have been entitled to receive upon
or by reason of such event if the shares of AirTouch Common Stock issuable
pursuant to Section 3.1(b) had been received immediately before the record
date (or, if no record date, the effective date) for such event and (ii) the
Cap Price and the Floor Price shall each be adjusted by multiplying each of
the Cap Price and the Floor Price in effect immediately prior to the opening
of business on such record date or effective date by a fraction, the
numerator of which shall be the Current Market Price (determined as of such
record date or effective date) less the Agreed Value of the shares of capital
stock so paid or distributed, and the denominator of which shall be such
Current Market Price (such adjusted Cap Price and adjusted Floor Price being
the "Adjusted Cap Price" and "Adjusted Floor Price"). In addition, to the
extent such event occurs during the period in which the AirTouch
Determination Price is determined, then the Volume-Weighted
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Average Trading Prices for Trading Days prior to the occurrence of such event
used in determining the AirTouch Determination Price shall be adjusted in a
manner consistent with the foregoing adjustment. In the event of such a
dividend or distribution, the number of shares of AirTouch Common Stock that
constitute the Common Consideration shall be determined in the following
manner:
(A) If the AirTouch Determination Price is less than the
Adjusted Floor Price, the number of shares of AirTouch Common Stock
that constitute the Common Consideration shall equal the quotient of
(1) the Common Value, divided by (2) the Floor Price (the "Floor
Number").
(B) If the AirTouch Determination Price is greater than the
Adjusted Cap Price, the number of shares of AirTouch Common Stock that
constitute the Common Consideration shall equal the quotient of
(1) the Common Value, divided by (2) the Cap Price (the "Cap Number").
(C) If the AirTouch Determination Price is greater than or equal
to the Adjusted Floor Price and less than or equal to the Adjusted Cap
Price, the number of shares of AirTouch Common Stock that constitute
the Common Consideration shall equal the difference between (x) the
Floor Number and (y) the product of (i) the difference between the
Floor Number and the Cap Number multiplied by (ii) a fraction, the
numerator of which shall be the difference between the AirTouch
Determination Price and the Adjusted Floor Price and the denominator
of which shall be the difference between the Adjusted Cap Price and
the Adjusted Floor Price.
(f) Any adjustments under Section 3.2(d) and (e) shall be made
successively whenever an event requiring such an adjustment occurs.
3.3 POST-CLOSING ADJUSTMENTS TO MERGER CONSIDERATION.
(a) At any time following the date that any Scheduled Property shall
become a Disposed Asset, AirTouch shall deliver to U S WEST a statement
setting forth its calculation of the Disposed Asset Value with respect
thereto. U S WEST shall, within 15 Business Days following the delivery of
such statement, notify AirTouch in writing of any dispute regarding
AirTouch's calculation of such Disposed Asset Value. Any such dispute shall
be resolved in the manner set forth in Section 3.3(c). Within five Business
Days following the later to occur of (i) the 15th Business Day following
delivery of AirTouch's calculation of such Disposed Asset Value (if such
calculation shall not have been disputed by U S WEST) and (ii) the resolution
of any dispute regarding the calculation of such Disposed Asset Value
pursuant
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to Section 3.3(c), Media (or the NV/PCS Transferee) shall return a portion of
the Merger Consideration to AirTouch by delivering to AirTouch a number of
shares of AirTouch Common Stock equal to the quotient of (i) the amount of
the Disposed Asset Value, divided by (ii) the Current Market Price of the
AirTouch Common Stock as of the date of such delivery. If following the date
of any adjustment to the Merger Consideration made pursuant to the preceding
sentence, any Scheduled Property (which was a Disposed Asset solely by
operation of clause (b) of the definition thereof) shall cease to be a
Disposed Asset, then no later than 20 Business Days following the date on
which such Scheduled Property shall so cease to be a Disposed Asset, AirTouch
shall deliver to Media (or the NV/PCS Transferee) a number of shares of
AirTouch Common Stock equal to the quotient of (i) the amount of the Disposed
Asset Value with respect thereto, divided by (ii) the Current Market Price of
the AirTouch Common Stock as of the date of such delivery.
(b) No later than 15 Business Days following the occurrence of any event
that would result in the recalculation of the Value Adjustment in accordance
with Exhibit G, AirTouch shall deliver to U S WEST a statement setting forth
its recalculation of the Value Adjustment and its calculation of the amount
equal to the difference of the Value Adjustment as so recalculated, minus the
Value Adjustment calculated as of the Closing Date (or as of the most recent
date on which the Value Adjustment shall have been recalculated pursuant to
this Section 3.3(b)) (such difference referred to herein as the
"Recalculation Differential"). U S WEST shall, within 15 Business Days
following the delivery of such statement, notify AirTouch in writing of any
dispute regarding AirTouch's calculation of the Recalculation Differential.
Any such dispute shall be resolved in the manner set forth in Section 3.3(c).
Within five Business Days following the later to occur of (i) the 15th
Business Day following delivery of AirTouch's calculation of such
Recalculation Differential (if such calculation shall not have been disputed
by U S WEST) and (ii) the resolution of any dispute regarding the calculation
of such Recalculation Differential pursuant to Section 3.3(c), either (A) if
the Recalculation Differential shall be positive, AirTouch shall deliver to
Media (or the NV/PCS Transferee) a number of shares of AirTouch Common Stock
equal to the quotient of the positive amount of the Recalculation
Differential, divided by the Current Market Price of the AirTouch Common
Stock as of the date of such delivery or (B) if the Recalculation
Differential shall be negative, Media (or the NV/PCS Transferee) shall return
a portion of the Merger Consideration to AirTouch by delivering to AirTouch a
number of shares of AirTouch Common Stock equal to the quotient of the
negative amount of the Recalculation Differential, divided by the Current
Market Price of the AirTouch Common Stock as of the date of such delivery.
(c) AirTouch and U S WEST shall meet following the delivery by U S WEST
of any notice of dispute (with respect to the
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calculation of a Disposed Asset Value or a Recalculation Differential) to
discuss in good faith, and to use best efforts to resolve, all disputed
matters. If ten Business Days following the delivery by U S WEST of any such
notice of dispute, a dispute remains as to the calculation of such Disposed
Asset Value or Recalculation Differential, as the case may be, such dispute
shall be determined by a firm of independent nationally recognized
accountants chosen and mutually accepted by AirTouch and U S WEST (the
"Accounting Referee"), which determination shall be final and conclusive.
The Accounting Referee shall resolve the dispute as promptly as practicable
(but in no event later than 20 Business Days) after having the item referred
to it. The costs, fees and expenses of the Accounting Referee shall be borne
equally by AirTouch and U S WEST.
3.4 SURRENDER AND EXCHANGE.
(a) From and after the Effective Time, Media (or the NV/PCS
Transferee), as sole holder of all of the issued and outstanding shares of NV
Stock and PCS Holdings Stock, shall be entitled to receive, upon surrender of
all the certificates representing such shares, the Merger Consideration
payable in respect of such shares as provided for in Section 3.1(b). After
the Effective Time, such certificates shall, until so surrendered, represent
for all purposes only the right to receive such Merger Consideration. From
and after the Effective Time, there shall be no further registration of the
transfer on the stock transfer books of the Surviving Corporation of shares
of NV Stock or PCS Holdings Stock which were outstanding immediately prior to
the Effective Time.
(b) No dividends, interest or other distributions with respect to the
Merger Consideration shall be paid to Media (or the NV/PCS Transferee) as the
holder of any unsurrendered certificates representing the NV Stock or the PCS
Holdings Stock outstanding prior to the Effective Time, until all such
certificates are surrendered as provided in this Section 3.4. Upon surrender
of all such certificates (or, if later, the appropriate payment date), there
shall be paid, without interest, to Media (or the NV/PCS Transferee) as the
Person in whose name the certificates representing the Merger Consideration
into which such shares were converted are registered, all dividends, interest
and other distributions payable in respect of such securities on a date
subsequent to, and in respect of a record date after, the Effective Time.
(c) AirTouch shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to Media (or the
NV/PCS Transferee) as the holder of the shares of NV Stock and PCS Holdings
Stock such amounts, if any, as are required to be deducted and withheld with
respect to the making of such payment under the Code, or any provision of
state, local or foreign Tax law. To the extent that amounts are so withheld
by AirTouch such withheld amounts shall be treated
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for all purposes of this Agreement as having been paid to Media (or the
NV/PCS Transferee) as the holder of the shares of NV Stock and PCS Holdings
Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF U S WEST
U S WEST hereby represents and warrants to AirTouch as follows:
4.1 ORGANIZATION AND QUALIFICATION. Each of U S WEST, Media, NV, PCS
Holdings and the Domestic Wireless Subsidiaries is, and the NV/PCS Transferee
will be, a corporation, partnership or other entity duly organized or formed,
validly existing and in good standing under the laws of its jurisdiction of
organization or formation and has all requisite power and authority to own,
lease and operate its assets and properties and to carry on its business as
currently conducted. Each of U S WEST, Media, NV, PCS Holdings and the
Domestic Wireless Subsidiaries is, and the NV/PCS Transferee will be, duly
qualified to do business and is in good standing in each jurisdiction where
the ownership or operation of its assets and properties or the conduct of its
business requires such qualification, except where the failure to be so
qualified or in good standing, as the case may be, would not reasonably be
expected to have a Material Adverse Effect with respect to the Domestic
Wireless Business. Complete and correct copies of the Articles of
Incorporation and Bylaws of NV and the Certificate of Incorporation and
Bylaws of PCS Holdings, each as amended to date, have been delivered to
AirTouch. Such Articles and Certificate of Incorporation and Bylaws are in
full force and effect.
4.2 CAPITALIZATION; SUBSIDIARIES. (a) The authorized capital stock of
NV consists of 43,000,000 shares of NV Stock, of which 42,150,273 shares are
issued and outstanding, and all of which are duly authorized, validly issued,
fully paid and non-assessable and not subject to preemptive rights. The
authorized capital stock of PCS Holdings consists of one share of PCS
Holdings Stock, which share is issued and outstanding and is duly authorized,
validly issued, fully paid and non-assessable and not subject to preemptive
rights. Media is the owner of all of the issued and outstanding shares of NV
Stock and PCS Holdings Stock, free and clear of all Encumbrances; PROVIDED,
that if the U S WEST Separation is consummated prior to the Closing Date, the
NV/PCS Transferee will be the owner of all of the issued and outstanding
shares of NV Stock and PCS Holdings Stock as of the Closing Date, free and
clear of all Encumbrances.
(b) Section 4.2(b) of the U S WEST Merger Disclosure Schedule sets
forth, as of the date hereof, a true and complete list of all of the Domestic
Wireless Subsidiaries and Domestic Wireless Investments, including the
jurisdiction of incorporation
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or organization of each Domestic Wireless Subsidiary and Domestic Wireless
Investment, the authorized capital stock or other ownership interests of each
Domestic Wireless Subsidiary and Domestic Wireless Investment, the percentage
of each Domestic Wireless Subsidiary's outstanding capital stock or other
ownership interests owned by NV or a Subsidiary of NV or by any other Person
and the percentage of each Domestic Wireless Investment's capital stock or
other ownership interests owned by NV or, to the knowledge of U S WEST, by
any other Person. All of the outstanding shares of capital stock of, or
other ownership interests in, each Domestic Wireless Subsidiary and Domestic
Wireless Investment directly or indirectly owned by NV are duly authorized,
validly issued, fully paid and non-assessable and, except as set forth in
Section 4.2(b) of the U S WEST Merger Disclosure Schedule, are owned by NV or
a Subsidiary of NV, free and clear of all Encumbrances. NV does not,
directly or indirectly, own any capital stock of or other ownership interests
in any corporation, partnership or other Person, other than the Domestic
Wireless Subsidiaries and Domestic Wireless Investments or, except as set
forth in Section 4.2(b) of the U S WEST Merger Disclosure Schedule, have any
Contract relating to the issuance, sale or purchase of any ownership interest
in any such Person. Except as set forth in Section 4.2(b) of the U S WEST
Merger Disclosure Schedule, none of NV, any Domestic Wireless Subsidiary or,
to the knowledge of U S WEST, any Domestic Wireless Investment has engaged or
currently engages, directly or indirectly, in the conduct or ownership of any
business or activity other than the provision in the United States of
Cellular Services. Neither U S WEST nor any Affiliate thereof (other than
the Communications Wireless Business and the business of any Excluded Assets)
directly or indirectly engages in the provision in the United States of
Cellular Services, ESMR services or PCS Services other than through the
Domestic Wireless Business.
(c) PCS Holdings does not, directly or indirectly, own any capital stock
or other ownership interests in any corporation, partnership or other Person,
other than PCS Nucleus and PrimeCo. PCS Holdings is the sole owner of the
PCS Partnership Interests, free and clear of all Encumbrances, other than as
expressly provided under the PCS Nucleus Agreement. Immediately following
the Effective Time, AirTouch will be the sole owner of all right, title and
interest to and in the PCS Partnership Interests. The PCS Partnership
Interests owned by PCS Holdings constitute the entirety of any interest in
PCS Nucleus held directly or indirectly by U S WEST or any Affiliate thereof.
(d) Other than as set forth in Sections 4.2(a) and 4.2(b) or in Section
4.2(d) of the U S WEST Merger Disclosure Schedule, (i) no shares of the
capital stock or other ownership interests of NV, PCS Holdings or any of the
Domestic Wireless Subsidiaries are authorized, issued or outstanding, or
reserved for any other purpose, and there are no options, warrants,
convertible or exchangeable securities or other rights (including
registration
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rights), agreements, arrangements or commitments of any character to which
NV, PCS Holdings or any of the Domestic Wireless Subsidiaries is a party
relating to or based upon the issued or unissued capital stock or other
ownership interests of NV, PCS Holdings or any of the Domestic Wireless
Subsidiaries or any obligation of NV or PCS Holdings or any of the Domestic
Wireless Subsidiaries to grant, issue or sell any shares of capital or other
ownership interests, of NV, PCS Holdings or any of the Domestic Wireless
Subsidiaries by sale, lease, license or otherwise and (ii) none of NV, PCS
Holdings and any of the Domestic Wireless Subsidiaries has any outstanding
bonds, debentures, notes or other obligations the holders of which have the
right to vote or which are convertible into or exercisable for securities
having the right to vote with the stockholders of NV, PCS Holdings or any of
the Domestic Wireless Subsidiaries on any matter. Except as set forth in
Section 4.2(d) of the U S WEST Merger Disclosure Schedule, there are no
voting trusts or other agreements or understandings with respect to the
voting of the capital stock or other ownership interests of NV, PCS Holdings
or any of the Domestic Wireless Subsidiaries.
4.3 CORPORATE AUTHORITY. Each of U S WEST, Media, NV and PCS Holdings
has, and, in the event that the NV/PCS Transferee shall become a party
hereto, the NV/PCS Transferee will have, the requisite corporate power and
authority to execute and deliver this Agreement and each other Transaction
Agreement to which it is a party and to perform its respective obligations
hereunder and thereunder and to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance by each of
U S WEST, Media, NV and PCS Holdings of this Agreement and each other
Transaction Agreement to which it is a party and the consummation by each of
U S WEST, Media, NV and PCS Holdings of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action on
the part of each of U S WEST, Media, NV and PCS Holdings. In the event that
the NV/PCS Transferee shall become a party hereto, the execution, delivery
and performance by the NV/PCS Transferee of this Agreement and each other
Transaction Agreement to which it becomes a party and the consummation by the
NV/PCS Transferee of the transactions contemplated hereby and thereby will be
duly authorized by all necessary corporate action on the part of the NV/PCS
Transferee. This Agreement and each other Transaction Agreement to which it
is a party has been duly executed and delivered by each of U S WEST, Media,
NV and PCS Holdings and constitutes the legal, valid and binding obligation
of each of U S WEST, Media, NV and PCS Holdings (and will be duly executed
and delivered by the NV/PCS Transferee and constitute the legal, valid and
binding obligation of the NV/PCS Transferee) enforceable against each of them
in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles.
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4.4 CONSENTS AND APPROVALS. Except (a) as set forth in Section 4.4(a)
of the U S WEST Merger Disclosure Schedule, (b) for compliance with and
filings under the HSR Act, (c) for the receipt of the Orders of the FCC and
state regulatory authorities set forth in Section 4.4(b) of the U S WEST
Merger Disclosure Schedule (the "FCC/State Orders"), (d) for the filing of
the Certificate of Merger with the Secretary of State of the State of
Delaware, the Articles of Merger with the Secretary of State of the State of
Colorado and appropriate documents with the relevant authorities of other
states in which either NV or PCS Holdings is qualified to do business, and
(e) for such filings in connection with any state or local Tax which is
attributable to the beneficial ownership of the owned or leased property used
in the operation of the Domestic Wireless Business, if any (collectively,
"Gains Taxes") (the items in clauses (a) through (e) being collectively
referred to herein as "U S WEST Consents"), no Consents, approvals, licenses,
permits, orders or authorizations of, or registrations, declarations, notices
or filings with, any Governmental Authority or any Third Party are required
to be obtained or made by or with respect to U S WEST, Media, NV, PCS
Holdings or any of the Domestic Wireless Subsidiaries (or will be required to
be obtained or made by or with respect to the NV/PCS Transferee) on or prior
to the Closing Date in connection with (A) the execution, delivery and
performance of this Agreement or any of the other Transaction Agreements, the
consummation of the transactions contemplated hereby and thereby or the
taking by U S WEST, Media, NV or PCS Holdings (or the NV/PCS Transferee) of
any other action contemplated hereby or thereby, (B) the continuing validity
and effectiveness of, the prevention of any material default or event of
withdrawal or dissolution under or the violation of the terms of (i) any
material License or Material Contract relating to the operation of NV, PCS
Holdings, any Domestic Wireless Subsidiary or, to the knowledge of U S WEST,
any Domestic Wireless Investment or (ii) any partnership, joint venture or
similar agreement of NV, PCS Holdings or any Domestic Wireless Subsidiary or
Domestic Wireless Investment or (C) the operation of the Domestic Wireless
Business following the Closing as conducted on the date hereof, other than,
in the case of clauses (A) and (C), Consents that, if not obtained or made,
would not reasonably be expected to have a Material Adverse Effect with
respect to the Domestic Wireless Business or materially impair or delay the
ability of U S WEST, Media, NV or PCS Holdings (or the NV/PCS Transferee) to
perform their respective obligations under this Agreement and the other
Transaction Agreements or consummate the transactions contemplated hereby and
thereby.
4.5 NON-CONTRAVENTION. Except as set forth in Section 4.5 of the
U S WEST Merger Disclosure Schedule, the execution, delivery and performance by
each of U S WEST, Media, NV and PCS Holdings (and the NV/PCS Transferee) of
this Agreement and each other Transaction Agreement to which it is a party,
and the consummation by U S WEST, Media, NV and PCS Holdings (and the NV/PCS
Transferee) of the transactions contemplated hereby and
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thereby, do not and will not (a) violate any provision of the Certificates of
Incorporation or Bylaws of U S WEST, Media (or the NV/PCS Transferee) or PCS
Holdings, the Articles of Incorporation or Bylaws of NV or, subject to
obtaining the U S WEST Consents, the certificate of incorporation or bylaws
or comparable organizational document of any of the Domestic Wireless
Subsidiaries or Domestic Wireless Investments; (b) subject to obtaining the
U S WEST Consents, conflict with, or result in the breach of, or constitute a
default or an event of withdrawal or dissolution under, or result in the
termination, modification, cancellation or acceleration (whether after the
filing of notice or the lapse of time or both) of any right or obligation of
U S WEST, Media, NV, PCS Holdings or any of the Domestic Wireless
Subsidiaries (or the NV/PCS Transferee) under, any note, mortgage, indenture,
lease, Material Contract, agreement or other obligation or instrument of
U S WEST, Media, PCS Holdings or any of the Domestic Wireless Subsidiaries (or
the NV/PCS Transferee); (c) subject to obtaining the U S WEST Consents, give
rise to any option, right of first refusal or similar right of any Third
Party with respect to any interest in any Domestic Wireless Subsidiary or
Domestic Wireless Investment; or (d) subject to obtaining the U S WEST
Consents, violate, or result in a breach of or constitute a default under any
Applicable Law in relation to the operation of the Domestic Wireless
Business, other than, in the case of clauses (b) and (d), any conflict,
breach, termination, modification, default, cancellation, acceleration, loss
or violation that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect with respect to the Domestic
Wireless Business or materially impair or delay the ability of U S WEST,
Media, NV or PCS Holdings (or the NV/PCS Transferee) to perform its
obligations under this Agreement and the other Transaction Agreements or
consummate the transactions contemplated hereby and thereby.
4.6 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(a) Section 4.6(a) of the U S WEST Merger Disclosure Schedule contains
the audited consolidated balance sheet of NV and its Subsidiaries as of
December 31, 1996; the audited consolidated statements of operations and cash
flows of NV and its Subsidiaries for the year ended December 31, 1996; the
unaudited consolidated balance sheet of NV and its Subsidiaries as of
September 30, 1997; and the unaudited consolidated statements of operations
and cash flows of NV and its Subsidiaries for the nine months ended September
30, 1997 (collectively, the "Domestic Wireless Financial Statements").
Except as set forth in the Domestic Wireless Financial Statements or in the
notes thereto, or otherwise in this Section 4.6(a) or in Section 4.6(a) of
the U S WEST Merger Disclosure Schedule, the Domestic Wireless Financial
Statements have been prepared in accordance with GAAP, applied on a
consistent basis for all periods presented and fairly present, in all
material respects (subject, in the case of unaudited financial statements, to
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normal recurring audit adjustments), the consolidated financial position of
NV and its Subsidiaries as of the dates set forth therein and the
consolidated results of operations and cash flows of NV and its Subsidiaries
for the periods then ended.
(b) Except (i) as set forth in the Domestic Wireless Financial
Statements or in the notes thereto, (ii) as set forth in Section 4.6(b) of
the U S WEST Merger Disclosure Schedule, (iii) for liabilities and obligations
in respect of Excluded Claims and Excluded Settlements and (iv) for
liabilities and obligations incurred since September 30, 1997 in the ordinary
course of business of the Domestic Wireless Business, neither NV nor any of
the Domestic Wireless Subsidiaries has any outstanding claims, indebtedness,
obligations or liabilities of any kind (whether accrued, absolute, contingent
or otherwise) that relate to the operations of the Domestic Wireless Business
that would be required by GAAP to be reflected in the consolidated balance
sheet of NV and its Subsidiaries or in the notes or schedules thereto.
(c) PCS Holdings has as its only assets the PCS Partnership Interests
and the contract rights under this Agreement and the PCS Nucleus Agreement.
PCS Holdings has no Liabilities of any nature, other than the principal
amount outstanding under the (i) Assumed PCS Debt, (ii) guarantees executed
in respect of the Leveraged Leases, (iii) Tax liabilities under Treasury
Regulation section 1.1502-6 resulting from PCS Holdings being a member of the
NV/PCS Affiliated Group and ERISA, environmental and other liabilities
resulting from PCS Holdings being a Subsidiary of U S WEST (all of which
shall be the sole responsibility of the U S WEST Group) and (iv) those
Liabilities expressly contemplated by or arising solely out of actions
pursuant to and not inconsistent with this Agreement or the PCS Nucleus
Agreement. Since the date of PCS Holdings' organization, neither PCS
Holdings nor any Person to which it is the successor in interest, by
operation of law or otherwise, has engaged in any business or operations
other than the ownership of the PCS Partnership Interests.
(d) Except as set forth in Section 4.6(d) of the U S WEST Merger
Disclosure Schedule or as contemplated by this Agreement, since December 31,
1996, the Domestic Wireless Business has been conducted only in the ordinary
course consistent with past practice and in the manner required by Sections
3.1(b) and 3.1(d) of the Joint Venture Organization Agreement, and there has
not been any event, change or development, other than an event, change or
development resulting from general economic or industry-wide conditions,
that, individually or in the aggregate, would reasonably be expected to have
a Material Adverse Effect with respect to the Domestic Wireless Business or
materially impair or delay the ability of U S WEST to perform its obligations
under this Agreement or the other Transaction Agreements or consummate the
transactions contemplated hereby or thereby.
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4.7 LITIGATION. Except as set forth in Section 4.7 of the U S WEST
Merger Disclosure Schedule and for investigations by Governmental Authorities
as to which U S WEST has received no notice and otherwise has no knowledge,
there are no Legal Proceedings relating to the operation of the Domestic
Wireless Business pending or, to the knowledge of U S WEST, threatened
against NV, PCS Holdings or any of the Domestic Wireless Subsidiaries, except
Legal Proceedings which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect with respect to the
Domestic Wireless Business or materially impair or delay the ability of U S
WEST, Media, NV or PCS Holdings (or the NV/PCS Transferee) to perform its
obligations under this Agreement or consummate the transactions contemplated
hereby. Except as set forth in Section 4.7 of the U S WEST Merger Disclosure
Schedule, there is no order, judgment, injunction or decree of any
Governmental Authority outstanding against U S WEST, Media (or the NV/PCS
Transferee), NV, PCS Holdings or any of the Domestic Wireless Subsidiaries
or, to the knowledge of U S WEST, any Domestic Wireless Investments that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect with respect to the Domestic Wireless Business or
materially impair or delay the ability of U S WEST, Media, NV or PCS Holdings
(or the NV/PCS Transferee) to perform its obligations under this Agreement
and the other Transaction Agreements or consummate the transactions
contemplated hereby and thereby. None of NV, the Domestic Wireless
Subsidiaries and, to the knowledge of U S WEST, the Domestic Wireless
Investments is a party to or otherwise bound by the terms of any Settlement
the terms of which, or obligations under which, AirTouch, any Domestic
Wireless Subsidiary or any Domestic Wireless Investment would be bound by or
obligated to perform following the Effective Time.
4.8 TAXES. (a) NV, PCS Holdings, each of the Domestic Wireless
Subsidiaries, and each consolidated, combined, affiliated or unitary group of
which NV, PCS Holdings, any of the Domestic Wireless Subsidiaries, is or has
ever been a member (together, the "NV/PCS Affiliated Group") has timely filed
all federal income tax returns and all other material Tax returns and reports
required to be filed by it. All such returns are complete and correct in all
material respects. NV, PCS Holdings and each of the Domestic Wireless
Subsidiaries has paid (or U S WEST or Media or, if applicable, the NV/PCS
Transferee has paid on NV's or the Domestic Wireless Subsidiaries' or PCS
Holdings' behalf) all Taxes shown due on such returns, the Domestic Wireless
Financial Statements reflect an adequate reserve for all Taxes payable by NV
and the Domestic Wireless Subsidiaries and the financial statements of PCS
Holdings reflect an adequate reserve for all Taxes payable by PCS Holdings,
in each case, for all taxable periods and portions thereof through the date
of such financial statements. No liens for Taxes exist with respect to any
of the assets or properties of NV, PCS Holdings or any of the Domestic
Wireless Subsidiaries, except for
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statutory liens for Taxes not yet due. All federal income Tax returns filed
by or on behalf of the NV/PCS Affiliated Group have been examined by and
settled with the IRS or the statute of limitations with respect to the
relevant Tax liability has expired, for all taxable periods through and
including the period ended December 31, 1987. All Taxes due with respect to
any completed and settled audit, examination or deficiency litigation with
any taxing authority have been paid in full. Except as set forth in Section
4.8(a) of the U S WEST Merger Disclosure Schedule, there is no audit,
examination, deficiency or refund litigation pending, with respect to any
Taxes for which NV, PCS Holdings or the Domestic Wireless Subsidiaries is or
might be liable and no taxing authority has given written notice of the
commencement of any audit, examination or deficiency litigation with respect
to any such Taxes. Except as set forth in Section 4.8(a) of the U S WEST
Merger Disclosure Schedule, none of NV, PCS Holdings or any of the Domestic
Wireless Subsidiaries is a party to a Tax allocation or sharing agreement or
any agreement pursuant to which NV, PCS Holdings or any of the Domestic
Wireless Subsidiaries has indemnified another party with respect to Taxes.
Except as set forth in Section 4.8(a) of the U S WEST Merger Disclosure
Schedule, none of NV, PCS Holdings or any of the Domestic Wireless
Subsidiaries shall be required to include in a taxable period ending after
the date on which the Effective Time occurs taxable income attributable to
income that economically accrued in a prior taxable year with respect to
Section 481 of the Code or any comparable provision of state or local Tax
law. No Person has made with respect to NV, PCS Holdings or any of the
Domestic Wireless Subsidiaries, or with respect to any property held by NV,
PCS Holdings or any of the Domestic Wireless Subsidiaries, any consent under
Section 341 of the Code. Except as set forth in Section 4.8(a) of the U S
WEST Merger Disclosure Schedule, there is no agreement or other document
extending, or having the effect of extending, the period of assessment or
collection of any Taxes for which NV, PCS Holdings or any of the Domestic
Wireless Subsidiaries is or might be liable. The NV/PCS Affiliated Group is
the only affiliated group of corporations, within the meaning of Section
1504(a) of the Code, of which the NV/PCS Transferee has ever been a member.
(b) (i) There is no excess loss account in the stock of any Domestic
Wireless Subsidiary, (ii) there is no deferred income or gain arising from
deferred intercompany transactions allocable to NV, PCS Holdings or any
Domestic Wireless Subsidiary and (iii) no overall foreign loss is allocable
to NV, PCS Holdings or any Domestic Wireless Subsidiary.
(c) None of U S WEST, Media, the NV/PCS Transferee, NV, PCS Holdings or
any of their Subsidiaries has taken or agreed to take any action that would
prevent the NV Merger or the PCS Holdings Merger from, in each case,
constituting a reorganization qualifying under the provisions of Section
368(a) of the Code. None of U S WEST, Media or the NV/PCS Transferee has any
plan, intention, or arrangement to dispose of any of the AirTouch Stock
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received in the NV Merger or the PCS Holdings Merger in a manner that would
cause the NV Merger or the PCS Holdings Merger, respectively, to violate the
continuity of shareholder interest requirements set forth in Treas. Regs.
Section 1.368-1.
4.9 ERISA COMPLIANCE. Except as described in the Domestic Wireless
Financial Statements, as set forth in Section 4.9 of the U S WEST Merger
Disclosure Schedule or as would not reasonably be expected to have a Material
Adverse Effect with respect to the Domestic Wireless Business, (i) all
Employee Benefit Plans and Employee Arrangements are in compliance with all
applicable requirements of law, including ERISA and the Code, and (ii)
neither NV nor any of its Subsidiaries nor PCS Holdings has any Liabilities
or obligations with respect to any such employee benefit plans or
arrangements, whether accrued, contingent or otherwise, nor to the knowledge
of U S WEST are any such Liabilities or obligations expected to be incurred.
Except as set forth in Section 4.9 of the U S WEST Merger Disclosure
Schedule, all Employee Benefit Plans in which Affected Employees participate
are sponsored by U S WEST or Media, and AirTouch shall not assume sponsorship
of any such Employee Benefit Plans as a consequence of the transactions
contemplated by this Agreement. Section 4.9 of the U S WEST Merger Disclosure
Schedule identifies all Employee Arrangements in which Affected Employees
participate.
4.10 COMPLIANCE WITH LAWS. Except as set forth in Section 4.10 of the
U S WEST Merger Disclosure Schedule, U S WEST, Media, NV, PCS Holdings and each
of the Domestic Wireless Subsidiaries is (and the NV/PCS Transferee will be)
in compliance with all Applicable Laws that relate to the operation of the
Domestic Wireless Business, except where the failure so to comply,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect with respect to the Domestic Wireless Business or
materially impair or delay the ability of U S WEST, Media, NV or PCS Holdings
(or the NV/PCS Transferee) to perform its obligations under this Agreement
and the other Transaction Agreements or consummate the transactions
contemplated hereby and thereby.
4.11 EMPLOYMENT AND NON-COMPETITION AGREEMENTS.
(a) Except as set forth in Section 4.11 of the U S WEST Merger
Disclosure Schedule, neither NV nor any Domestic Wireless Subsidiary is a
party to, or otherwise bound by, any executive employment agreement,
secondment agreement or other similar employment agreement involving annual
payments exceeding $250,000 or any non-competition, non-solicitation or other
similar agreement that would similarly restrict or impair the operations or
businesses of AirTouch or its Subsidiaries following the Effective Time.
(b) PCS Holdings has, and at the Effective Time will have, no
employees. PCS Holdings is not, and at the Effective Time
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will not be, a party to or otherwise bound by, any employment, secondment or
other similar employment agreement or any non-competition, non-solicitation
or other similar agreement that would similarly restrict or impair the
operations or businesses of AirTouch or its Subsidiaries following the
Effective Time.
4.12 DOMESTIC WIRELESS ASSETS. (a) Each of NV and the Domestic Wireless
Subsidiaries has, and immediately after the Merger each of the Surviving
Corporation (with respect to the property and assets of NV immediately prior
to the Effective Time) and the Domestic Wireless Subsidiaries will have, good
and valid title to its properties and assets (other than properties or assets
as to which it is lessee or licensee), and valid and subsisting leasehold
interests in all properties or assets of which it is lessee or licensee,
except for such defects which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect with respect to the
Domestic Wireless Business, in each case free and clear of Encumbrances other
than Permitted Encumbrances.
(b) Subject to the rights of Third Parties existing as of the date
hereof which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect with respect to the Domestic
Wireless Business, NV and the Domestic Wireless Subsidiaries have, and
immediately after the Merger the Surviving Corporation and the Domestic
Wireless Subsidiaries will have, all right, title and interest (including
minority interests) in and to (i) all of their assets that are used or held
for use in, or that are otherwise necessary for, the operation, as currently
conducted, of the Domestic Wireless Business, (ii) whether or not included
within the assets referred to in clause (i) above, all assets (including,
without limitation, capital stock and partnership interests) reflected in the
Domestic Wireless Financial Statements, in each case, as such assets may have
been added to, sold or otherwise changed in the ordinary course of business
since September 30, 1997 or in accordance with this Agreement, and (iii) all
assets of U S WEST or Media and their respective Subsidiaries primarily used
by, or held for use primarily by, the Domestic Wireless Business (other than
Intellectual Property, the U S WEST Insurance Arrangements and cash and cash
equivalents).
4.13 INTELLECTUAL PROPERTY. Except as provided in Section 4.13 of the
U S WEST Merger Disclosure Schedule, NV owns the entire right, title and
interest in and to or has the right to use (pursuant to valid and defensible
license arrangements), all material Intellectual Property used or held for
use in, or otherwise necessary for, the operation of the Domestic Wireless
Business. Except as provided in Section 4.13 of the U S WEST Merger
Disclosure Schedule, there are no pending or, to the knowledge of U S WEST,
threatened proceedings or litigation or other adverse claims affecting or
relating to such Intellectual Property, nor, to the knowledge of U S WEST any
reasonable basis upon which a claim may be asserted by or against NV or any
of the
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Domestic Wireless Subsidiaries for infringement of any such Intellectual
Property, in each case, that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect with respect to the
Domestic Wireless Business. The Patent License Agreement and the material
Intellectual Property owned by NV or which NV has the right to use will
permit the Domestic Wireless Business to use or hold for use all such
Intellectual Property to the same extent that it is used or held for use, as
of the Effective Time, in the operation of the Domestic Wireless Business.
4.14 LABOR MATTERS. To the knowledge of U S WEST, there are no
threatened labor controversies, strikes or work stoppages with any of the
employees performing work in connection with the operation of NV and the
Domestic Wireless Subsidiaries that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect with respect to the
Domestic Wireless Business. None of NV or the Domestic Wireless Subsidiaries
is a party to bargaining agreements (whether existing or currently being
negotiated) with respect to the employees of the Domestic Wireless Business.
4.15 ENVIRONMENTAL COMPLIANCE AND LIABILITIES. (a) Except as set forth
in Section 4.15(a) of the U S WEST Merger Disclosure Schedule, to the
knowledge of U S WEST, there exists no fact or condition (i) that would be
reasonably likely to subject NV or any of the Domestic Wireless Subsidiaries
to any liability or damages (including, without limitation, actual,
consequential, exemplary or punitive damages), penalties, injunctive relief
or cleanup costs under any Environmental Law or (ii) that would require or
would be reasonably likely to require cleanup, removal, remedial action or
other response by NV or any of the Domestic Wireless Subsidiaries or any
other Person pursuant to any Environmental Law that (with respect to clauses
(i) and (ii)), individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect with respect to the Domestic Wireless
Business.
(b) Except as set forth in Section 4.15(b) of the U S WEST Merger
Disclosure Schedule, NV and the Domestic Wireless Subsidiaries are each in
compliance with all applicable Environmental Laws, which compliance includes,
without limitation, the possession by NV and the Domestic Wireless
Subsidiaries of all material Licenses required for the operation of the
Domestic Wireless Business under applicable Environmental Laws and compliance
with the terms and conditions thereof, except where the failure to be in
compliance, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect with respect to the Domestic
Wireless Business.
(c) Except as set forth in Section 4.15(c) of the U S WEST Merger
Disclosure Schedule, all rights to contractual indemnification (other than
insurance policies or arrangements) for the benefit of NV or any Domestic
Wireless Subsidiary
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relating to any Liability resulting from any claim under Environmental Laws
are freely transferable and enforceable in connection with the Merger.
(d) Except as set forth in Section 4.15(d) of the U S WEST Merger
Disclosure Schedule, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without
limitation, the release, emission, discharge, presence or disposal of any
Substance of Concern or any violation of any Environmental Laws, that could
form the basis of any claim arising under Environmental Laws against NV or
any of the Domestic Wireless Subsidiaries or against any Person whose
liability for any claim arising under Environmental Laws NV or any of the
Domestic Wireless Subsidiaries has retained or assumed either contractually
or by operation of law, in each case that would reasonably be expected to
have a Material Adverse Effect with respect to the Domestic Wireless Business
or materially impair or delay the ability of U S WEST, Media, NV or PCS
Holdings (or the NV/PCS Transferee) to perform its obligations under this
Agreement and the other Transaction Agreements or consummate the transactions
contemplated hereby and thereby.
4.16 LICENSES. Each of NV and the Domestic Wireless Subsidiaries has
all material Licenses which are necessary to conduct the Domestic Wireless
Business as presently conducted. Without limiting the generality of the
foregoing, NV and the Domestic Wireless Subsidiaries hold the material
Licenses identified in Section 4.16 of the U S WEST Merger Disclosure
Schedule, and all such material Licenses are valid and in full force and
effect. None of U S WEST, Media, NV or the Domestic Wireless Subsidiaries
(or the NV/PCS Transferee) has made any untrue statement of any material
fact, or omitted to disclose any material fact, to any Governmental Authority
or taken or failed to take any action, which misstatements or omissions,
actions or failures to act, individually or in the aggregate, would subject
or could reasonably be expected to subject any of the material Licenses held
by NV and the Domestic Wireless Subsidiaries to revocation or failure to
renew. No event has occurred with respect to any of the material Licenses
which permits, or after notice or lapse of time or both would permit,
revocation or termination thereof or would result in any other material
impairment of the rights of the holder of any of the material Licenses.
U S WEST has no reason to believe that any of the Licenses identified in
Section 4.16 of the U S WEST Merger Disclosure Schedule is not likely to be
renewed in the ordinary course nor that the holder of any such License would
not be entitled to a renewal expectancy as such term is defined in 47 C.F.R.
Section 22.941 or any successor provisions and associated FCC policies.
4.17 MATERIAL CONTRACTS. (a) Section 4.17(a) of the U S WEST Merger
Disclosure Schedule contains a true and complete list of all Material
Contracts (including all Related Party Agreements which are Material
Contracts) to which NV, PCS
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Holdings or any of the Domestic Wireless Subsidiaries is a party as of the
date of this Agreement.
(b) Except as set forth in Section 4.17(b) of the U S WEST Merger
Disclosure Schedule and except (as of the Closing Date) for Material
Contracts relating to the Excluded Assets, each Material Contract listed in
Section 4.17(a) of the U S WEST Merger Disclosure Schedule is valid, binding,
in full force and effect and enforceable by NV, PCS Holdings or one of the
Domestic Wireless Subsidiaries in accordance with its terms (and, at the
Effective Time, will be enforceable by the Surviving Corporation or one of
the Domestic Wireless Subsidiaries, except to the extent terminated in
accordance with its terms (other than by reason of the transactions
contemplated hereby) or in the ordinary course of business consistent with
past practices). There exists no default or event, occurrence, condition or
act (including the consummation of the transactions contemplated hereby)
which, with the giving of notice, the lapse of time or the happening of any
other event or condition, would become a default under any such Material
Contract by NV, PCS Holdings or the Domestic Wireless Subsidiary that is a
party thereto or, to the knowledge of U S WEST, by any other party thereto,
that would reasonably be expected to have a Material Adverse Effect with
respect to the Domestic Wireless Business or materially impair or delay the
ability of U S WEST, Media, NV or PCS Holdings to perform its obligations
under this Agreement and the other Transaction Agreement or consummate the
transactions contemplated hereby and thereby.
4.18 INSURANCE. The conduct of the Domestic Wireless Business and the
assets thereof are adequately self-insured by U S WEST or an Affiliate
thereof or adequately insured (in the manner and to the extent customary for
businesses engaged in the same or similar business).
4.19 BROKERS. Except for Xxxxxx Brothers Inc., whose fees will be paid
by U S WEST, there is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of
U S WEST, Media, NV or PCS Holdings (or the NV/PCS Transferee) who might be
entitled to any fee or commission from NV or PCS Holdings in connection with
the transactions contemplated by this Agreement.
4.20 NATURE OF ACQUISITION. Media (or the NV/PCS Transferee, as
applicable) is acquiring the AirTouch Common Stock, the AirTouch Class D
Preferred Stock and AirTouch Class E Preferred Stock which constitute the
Merger Consideration for its own account, for investment. Media (or the NV
PCS Transferee, as applicable) understands that the shares of AirTouch Common
Stock, AirTouch Class D Preferred Stock and AirTouch Class E Preferred Stock
which constitute the Merger Consideration are characterized as "restricted
securities" under federal securities laws since such shares are being
acquired in a transaction not involving a public offering and that under such
laws and applicable
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regulations such securities may be resold without registration under the
Securities Act only in certain limited circumstances.
4.21 OWNERSHIP OF AIRTOUCH CAPITAL STOCK. Neither U S WEST nor any of
its Subsidiaries owns, or has at any time during the past three years owned,
any shares of capital stock of AirTouch, other than as permitted by agreement
of the parties.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AIRTOUCH
AirTouch hereby represents and warrants to U S WEST and Media as follows:
5.1 ORGANIZATION AND QUALIFICATION. Each of AirTouch and AirTouch's
Subsidiaries is a corporation, partnership or other entity duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization or formation and has all requisite power and authority to own,
lease and operate its assets and properties and to carry on its business as
currently conducted. AirTouch is duly qualified to do business and is in
good standing in each jurisdiction where the ownership or operation of its
assets and properties or the conduct of its business requires such
qualification, except where the failure to be so qualified or in good
standing, as the case may be, has or would be reasonably expected to have a
Material Adverse Effect with respect to AirTouch. Complete and correct
copies of the Certificate of Incorporation and Bylaws of AirTouch, as amended
to date, have been delivered to U S WEST. Such Certificate of Incorporation
and Bylaws are in full force and effect.
5.2 CAPITALIZATION. (a) The authorized capital stock of AirTouch
consists of (i) 1,100,000,000 shares of AirTouch Common Stock of which
504,771,115 shares were issued and outstanding as of September 30, 1997, all
of which are duly authorized, validly issued, fully paid and non-assessable
and not subject to preemptive rights created by statute, AirTouch's
Certificate of Incorporation or Bylaws or any agreement to which AirTouch is
a party or by which AirTouch is bound and (ii) 50,000,000 shares of Preferred
Stock, par value $0.01 per share, of which (A) 6,000,000 shares have been
designated as Series A Preferred Stock, none of which are issued and
outstanding and all of which are reserved for issuance upon exercise of
rights issued pursuant to the Rights Agreement, dated as of September 19,
1994, between AirTouch and The Bank of New York, as Rights Agent (the
"AirTouch Rights Agreement"), (B) 24,000,000 shares have been designated as
6.00% Class B Mandatorily Convertible Preferred Stock, Series 1996 of which
17,238,921 shares were issued and outstanding as of September 30, 1997, all
of which are duly authorized, validly issued, fully paid and non-assessable
and not subject to preemptive rights created by statute, AirTouch's
Certificate of Incorporation or Bylaws or any agreement to which
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AirTouch is a party or by which AirTouch is bound and (C) 19,000,000 shares
have been designated as 4.25% Class C Convertible Preferred Stock, Series
1996 of which 11,070,901 shares were issued and outstanding as of September
30, 1997, all of which are duly authorized, validly issued, fully paid and
non-assessable and not subject to preemptive rights created by statute,
AirTouch's Certificate of Incorporation or Bylaws or any agreement to which
AirTouch is a party or by which AirTouch is bound. The shares of AirTouch
Stock to be issued to Media (or the NV/PCS Transferee) pursuant to Section
3.1(b) shall be duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights created by statute, AirTouch's
Certificate of Incorporation or Bylaws or any agreement to which AirTouch is
a party or by which AirTouch is bound. Upon delivery by AirTouch to Media or
the NV/PCS Transferee of the certificates representing such shares of
AirTouch Stock pursuant to Section 3.4, AirTouch will have transferred to
Media or the NV/PCS Transferee good and valid title to such shares, free and
clear of any and all Encumbrances, other than Encumbrances created or
suffered to exist by Media or the NV/PCS Transferee.
(b) Other than as set forth in Section 5.2(a), or as described in the
AirTouch SEC Documents or in Section 5.2(b) of the AirTouch Merger Disclosure
Schedule, (i) no shares of the capital stock of AirTouch are authorized,
issued or outstanding, or reserved for any other purpose, and there are no
options, warrants or other rights (including registration rights),
agreements, arrangements or commitments of any character to which AirTouch or
any of its Subsidiaries is a party relating to the issued or unissued capital
stock of AirTouch or any obligation of AirTouch to grant, issue or sell any
shares of capital stock of AirTouch by sale, lease, license or otherwise and
(ii) AirTouch has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote or which are
convertible into or exercisable for securities having the right to vote with
the stockholders of AirTouch on any matter. Except as set forth in Section
5.2(b) of the AirTouch Merger Disclosure Schedule, there are no voting trusts
or other agreements or understandings with respect to the voting of the
capital stock of AirTouch.
5.3 CORPORATE POWER AND AUTHORIZATION. AirTouch has the requisite
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement by AirTouch and the consummation by AirTouch of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of AirTouch. This Agreement constitutes the legal, valid
and binding obligation of AirTouch, enforceable against AirTouch in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
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5.4 CONSENTS. Except (a) as set forth in Section 5.4 of the AirTouch
Merger Disclosure Schedule, (b) for compliance with and filings under the HSR
Act, (c) for receipt of the FCC/State Orders, (d) for the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware,
the Articles of Merger with the Secretary of State of the State of Colorado
and appropriate documents with the relevant authorities of other states in
which AirTouch is qualified to do business, (e) for the filing of the
Certificates of Designation, Preferences and Rights of the AirTouch Class D
Preferred Stock and the AirTouch Class E Preferred Stock with the Secretary
of State of the State of Delaware, and (f) for such filings in connection
with Gains Taxes (the items in clauses (a) through (f) being collectively
referred to herein as "AirTouch Consents"), no Consents, approvals, licenses,
permits, orders or authorizations of, or registrations, declarations, notices
or filings with, any Governmental Authority or any Third Party are required
to be obtained or made by or with respect to AirTouch in connection with the
execution, delivery and performance of this Agreement and the other
Transaction Agreements or the consummation of the transactions contemplated
hereby and thereby or the taking by AirTouch of any other action contemplated
hereby and thereby.
5.5 NON-CONTRAVENTION. The execution, delivery and performance by
AirTouch of this Agreement, and the consummation by AirTouch of the
transactions contemplated hereby, do not and will not (a) violate any
provision of the Certificates of Incorporation or Bylaws of AirTouch; (b)
subject to obtaining the AirTouch Consents, conflict with, or result in the
breach of, or constitute a default under, or result in the termination,
cancellation or acceleration (whether after the filing of notice or the lapse
of time or both) of any material right or obligation of AirTouch or any of
its Subsidiaries under, any material agreement, lease, Contract, note,
mortgage, indenture or other obligation of AirTouch or its Subsidiaries; or
(c) subject to obtaining the AirTouch Consents, violate, or result in a
breach of or constitute a default under any Applicable Law to which AirTouch
or any of its Subsidiaries is subject, other than, in the case of clause (b),
any conflict, breach, termination, default, cancellation, acceleration, loss
or violation that, individually or in the aggregate, would not have a
Material Adverse Effect with respect to AirTouch or materially impair or
delay the ability of AirTouch to perform its obligations under this Agreement
and the other Transaction Agreements or consummate the transactions
contemplated hereby and thereby.
5.6 AIRTOUCH SEC DOCUMENTS; UNDISCLOSED LIABILITIES. (a) AirTouch has
filed all required reports, registration statements, proxy statements, forms
and other documents with the SEC since January 1, 1997 (as such documents
have since the time of their filing been amended or supplemented, the
"AirTouch SEC Documents"). As of their respective dates, (i) the AirTouch
SEC Documents (including any financial statements filed as a part thereof or
incorporated by reference therein) complied in all
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material respects with the requirements of the Securities Act or the Exchange
Act, as applicable, and the rules and regulations of the SEC promulgated
thereunder applicable to such AirTouch SEC Documents, and (ii) at the time
they were filed (and at the time they became effective in the case of
registration statements), none of the AirTouch SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. At their respective dates, the financial statements of AirTouch
included in the AirTouch SEC Documents complied as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, were prepared in accordance
with GAAP (except, in the case of unaudited statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly presented in all
material respects (subject, in the case of unaudited financial statements, to
normal, recurring audit adjustments) the consolidated financial position of
AirTouch and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended.
(b) Except (i) as disclosed in the AirTouch SEC Documents filed and
publicly available prior to the date of this Agreement, and (ii) for
liabilities and obligations incurred in the ordinary course, neither AirTouch
nor its Subsidiaries have any outstanding claims, indebtedness, obligations
or liabilities of any kind (whether accrued, absolute, contingent or
otherwise) required by GAAP to be reflected on a consolidated balance sheet
of AirTouch and its consolidated Subsidiaries or in the notes or schedules
thereto.
(c) Except as set forth in Section 5.6(c) of the AirTouch Merger
Disclosure Schedule, since December 31, 1996, AirTouch and its Subsidiaries
have conducted their respective businesses only in the ordinary course, and
there has not been any event, change or development, other than an event,
change or development resulting from general economic or industry-wide
conditions, that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect with respect to AirTouch or
materially impair or delay the ability of AirTouch to perform its obligations
under this Agreement or the other Transaction Agreements or consummate the
transactions contemplated hereby or thereby.
5.7 LITIGATION. Except as disclosed in the AirTouch SEC Documents
filed and publicly available prior to the date of this Agreement and for
investigations by Governmental Authorities as to which AirTouch has received
no notice and otherwise has no knowledge, there are no Legal Proceedings
pending or, to the knowledge of AirTouch, threatened against AirTouch or any
of its Subsidiaries that, individually or in the aggregate, would
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reasonably be expected to have a Material Adverse Effect with respect to
AirTouch or materially impair or delay the ability of AirTouch to perform its
obligations under this Agreement or consummate the transactions contemplated
hereby. Except as disclosed in the AirTouch SEC Documents filed and publicly
available prior to the date of this Agreement, there is no order, judgment,
injunction or decree of any Governmental Authority outstanding against
AirTouch or any of its Subsidiaries that, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect with respect
to AirTouch or materially impair or delay the ability of AirTouch to perform
its obligations under this Agreement and the other Transaction Agreements or
consummate the transactions contemplated hereby or thereby.
5.8 TAXES. (a) AirTouch and each consolidated, combined, affiliated or
unitary group of which AirTouch is a member (together, the "AirTouch
Affiliated Group") has timely filed all material Tax returns or reports
required to be filed by it or requests for extensions have been timely filed
and any such extensions have been granted and have not expired. All such Tax
returns were complete and correct in all material respects. All Taxes shown
due on such returns have been paid and the most recent financial statements
contained in the AirTouch SEC Documents filed and publicly available prior to
the date of this Agreement reflect an adequate reserve for all Taxes payable
by AirTouch for all taxable periods through the date of such financial
statements.
(b) Neither AirTouch nor any of its Subsidiaries has taken or agreed to
take any action that would prevent the NV Merger or the PCS Holdings Merger
from, in each case, constituting a reorganization qualifying under the
provisions of Section 368(a) of the Code. AirTouch does not have any plan,
intention or arrangement to dispose of any assets of NV, the Domestic
Wireless Subsidiaries or the Domestic Wireless Investments (in each case,
other than any Disposed Asset) or any of the assets of PCS Holdings in a
manner that would cause the NV Merger or the PCS Holdings Merger,
respectively, to violate the continuity of business enterprise requirements
set forth in Treas. Reg. Section 1.368-1 of the Code.
5.9 COMPLIANCE WITH LAWS. AirTouch and each of its Subsidiaries is in
compliance with all Applicable Laws, except where the failure so to comply,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect with respect to AirTouch.
5.10 BROKERS. Except for Xxxxxx Xxxxxxx & Co. Incorporated, whose fees
will be paid by AirTouch, there is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on
behalf of AirTouch who might be entitled to any fee or commission from
AirTouch in
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connection with the transactions contemplated by this Agreement and the other
Transaction Agreements.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 CONDUCT OF BUSINESS OF NV AND PCS HOLDINGS. (a) Except as set
forth in item 1 of Section 6.1(a) of the U S WEST Merger Disclosure Schedule
or as otherwise contemplated by this Agreement, during the period from the
date hereof to the Effective Time, NV and PCS Holdings shall, and NV shall
cause the Domestic Wireless Subsidiaries to, except as otherwise expressly
contemplated by this Agreement, (i) conduct the Domestic Wireless Business
only in the ordinary course consistent with past practice (including, without
limitation, not taking any actions out of the ordinary course to generate
cash, such as delaying payables or accelerating receivables) and in the
manner required by Section 3.1(b) of the Joint Venture Organization
Agreement, (ii) make capital expenditures with respect to the Domestic
Wireless Business at the times and in amounts not less than 80% of the
amounts set forth in item 2 of Section 6.1(a) of the U S WEST Merger
Disclosure Schedule ("Planned Capital Expenditures") and (iii) make capital
contributions to PCS Nucleus at the times and in the amounts contemplated by
the business plans and budgets of PCS Nucleus and PrimeCo.
(b) During the period from the date hereof to the Effective Time,
except as set forth in Section 6.1(b) of the U S WEST Merger Disclosure
Schedule or as otherwise expressly contemplated by this Agreement, neither NV
nor PCS Holdings shall (and NV shall cause the Domestic Wireless Subsidiaries
not to), without the written consent of AirTouch, which consent may not be
unreasonably withheld or delayed:
(i) issue, sell, pledge, dispose of or encumber, or authorize or
propose the issuance, sale, pledge, disposition or encumbrance of, any
shares of, or securities convertible or exchangeable for, or options,
puts, warrants, calls, commitments or rights of any kind to acquire,
any shares of capital stock or voting securities of NV or PCS Holdings
or capital stock or other ownership interests of any Domestic Wireless
Subsidiary;
(ii) take any action which would be prohibited under Section 3.1(d) of
the Joint Venture Organization Agreement (treating PCS Holdings for this
purpose as a subsidiary of NV);
(iii) implement any change in its accounting principles, practices or
methods, other than as may be
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required by GAAP and other than transfers of reserves with respect to
Excluded Claims and Excluded Settlements;
(iv) take or agree to take any action that would prevent the NV
Merger, or the PCS Holdings Merger from constituting a reorganization
qualifying under the provisions of Section 368(a) of the Code;
(v) terminate, establish, adopt, enter into, amend or otherwise modify
(A) any Employee Arrangement or any employment, independent contractor,
secondment, or similar employment agreement or Employee Arrangement to the
extent any such actions would increase annual payments or contributions (or
both) to be made by NV and the Domestic Wireless Subsidiaries by an amount
in excess of $250,000 or (B) any non-competition, non-solicitation or
similar agreement affecting the Domestic Wireless Business or that would be
binding upon AirTouch or any Subsidiary of AirTouch after the Effective
Time, except for (x) budgeted, scheduled, broad-based compensation
increases implemented in the ordinary course of business consistent with
past practices, (y) amendments or modifications of Employee Arrangements
that are required by Applicable Law and (z) the termination of any non-
competition or non-solicitation agreement that would restrict the business
of AirTouch and its Subsidiaries following the Effective Time;
(vi) terminate, establish, adopt, enter into, make any new grants or
awards under, amend or otherwise modify any Employee Benefit Plans that
would be binding upon AirTouch or any Subsidiary of AirTouch after the
Effective Time, or grant any increase or potential increase in direct or
indirect compensation of any nature affecting any Affected Employee, except
for (A) budgeted, scheduled, broad-based compensation increases implemented
in the ordinary course of business consistent with past practices, and (B)
amendments or modifications of Employee Benefit Plans that are required by
Applicable Law or do not have an aggregate financial impact on Affected
Employees under all such Employee Benefit Plans exceeding $100,000;
(vii) enter into, amend or otherwise modify any Settlement the
terms of which, or obligations under which, AirTouch, any Domestic
Wireless Subsidiary or any Domestic Wireless Investment would be bound
by or obligated to perform following the Effective Time; or
(viii) authorize any of, or commit or agree to take any of, the
actions referred to in clauses (i) through (vii) above.
6.2 CONDUCT OF BUSINESS OF AIRTOUCH. (a) From and after the date hereof
to the Effective Time, except as specifically permitted by the terms of this
Agreement, AirTouch shall not
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(and, as applicable, shall cause its Subsidiaries not to), without the
written consent of U S WEST, which consent may not be unreasonably withheld
or delayed:
(i) issue any shares of AirTouch Common Stock or any option,
warrant or right relating thereto or any securities convertible into
or exchangeable for any shares of AirTouch Common Stock (other than
pursuant to existing agreements or existing options or benefit plans
or upon conversion of outstanding securities) in one or more
transactions to the extent that the number of shares of AirTouch
Common Stock issued (and/or issuable upon exercise of any such option,
warrant or right or upon conversion or exchange of any such security)
would in the aggregate represent more than 20% of the number of shares
of AirTouch Common Stock outstanding immediately prior to such
issuance;
(ii) during the period in which the AirTouch Determination Price
is being calculated, purchase or trade any shares of AirTouch Common
Stock (other than pursuant to the terms of options or benefit plans or
upon conversion, exchange or exercise of outstanding securities);
(iii) amend the Certificate of Incorporation of AirTouch to alter
or change the powers, preferences or special rights of the shares of
AirTouch Common Stock so as to affect them materially adversely, or
amend the Bylaws of AirTouch in a manner materially adverse to the
holders of AirTouch Common Stock;
(iv) effect a reclassification of the shares of AirTouch Common
Stock, or pay any single dividend or other distribution (whether in
cash, capital stock or other assets) to holders of AirTouch Common
Stock where the value of such dividend or distribution (in excess of
the fair market value of any consideration received therefor) together
with the value of all dividends and distributions (in excess of the
fair market value of any consideration received therefor) made to the
holders of AirTouch Common Stock during the period from the date
hereof and prior to such dividend or distribution exceeds 20% of the
product of (A) the Volume-Weighted Average Trading Price on the record
date for determining the stockholders entitled to receive such
dividend or distribution and (B) the number of shares of AirTouch
Common Stock outstanding on such record date (an "Extraordinary
Dividend"), or declare an Extraordinary Dividend having a record date
prior to the Effective Time;
(v) sell or exchange in a single transaction or series of related
transactions shares of capital stock
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of (A) AirTouch International, a California corporation, (B) AirTouch
Cellular of Nevada, a Nevada corporation, (C) AirTouch Cellular, a
California corporation, or (D) AirTouch Cellular, Inc., a Delaware
corporation, (each, an "Operating Subsidiary"), or permit any Operating
Subsidiary to enter into any agreement providing for a single
transaction or series of related transactions that results in the
transfer, sale or other disposition of its assets to the extent that the
shares of capital stock sold or the assets subject to such transfer,
sale or other disposition, as the case may be, in the aggregate would
represent more than 20% of the total fair market value of AirTouch and
its Subsidiaries, taken as a whole, measured on a proportionate basis
immediately prior to such transaction or series of related transactions;
PROVIDED, HOWEVER, that the foregoing shall not apply to (x) any primary
sale of shares of capital stock of any Operating Subsidiary issued after
the date hereof, and (y) any transaction or series of related
transactions in which a majority of the value of the consideration
received in exchange for the assets transferred, sold or otherwise
disposed of consists of assets (or interests in the owner of assets) of
a like kind or nature;
(vi) take or agree to take any action that would prevent the NV
Merger or the PCS Holdings Merger from constituting a reorganization
qualifying under the provisions of Section 368(a) of the Code; or
(vii) publicly announce any intention, commitment or agreement (A) to
effect any of the actions prohibited by clauses (i) through (vi) above
(each, a "Restricted Action") or (B) to merge, amalgamate or consolidate
AirTouch in any transaction in which (x) AirTouch is not the surviving
corporation and (y) the outstanding shares of AirTouch Common Stock are
converted or exchanged into other securities or property (a "Parent
Transaction"), if, in either case, such announcement would reasonably be
expected to materially impair or delay the consummation of the transactions
contemplated hereby or the ability of AirTouch to perform its obligations
under this Agreement.
(b) If prior to the Closing Date, (i) AirTouch shall publicly announce
any intention, commitment or agreement to effect any Restricted Action or a
Parent Transaction and (ii) the Volume-Weighted Average Trading Price of the
AirTouch Common Stock for the ten consecutive Trading Days ending on the 30th
day preceding the date of such public announcement is the Floor Price or
less, then the AirTouch Determination Price shall be deemed for all purposes
of this Agreement to equal the Floor Price.
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(c) (i) If prior to the Closing Date, AirTouch shall publicly announce
any intention, commitment or agreement to effect any Parent Transaction with
any Person who does not have a class of equity securities registered with the
SEC pursuant to Section 12(b) or 12(g) of the Exchange Act having
substantially the same powers, preferences and special rights as AirTouch
Common Stock, this Agreement may be terminated and the Merger abandoned by
U S WEST upon consummation of such Parent Transaction.
(ii) If prior to the Closing Date, AirTouch shall consummate a Parent
Transaction, then this Agreement shall be deemed to be modified to provide
that Media (or the NV/PCS Transferee) shall be entitled to receive: (A) in
lieu of the Common Consideration, the consideration that Media (or the NV/PCS
Transferee) would have been entitled to receive upon consummation of such
Parent Transaction if the Closing had occurred immediately prior to the
consummation of such Parent Transaction and (B) in lieu of the Preferred
Consideration, shares of preferred stock of the surviving corporation in such
Parent Transaction (or the parent of such surviving corporation if the
stockholders of AirTouch receive shares of capital stock of such parent in
connection with such Parent Transaction) having substantially the same
powers, preferences and special rights as the AirTouch Class D Preferred
Stock and AirTouch Class E Preferred Stock.
(d)(i) If prior to the Closing Date, AirTouch shall publicly announce
any intention, commitment or agreement to effect any Parent Transaction with
any Person (an "Acquiring Person") and the Merger Consideration Value (as
defined in (ii) below) to be received by holders of AirTouch Common Stock in
such Parent Transaction is less than the Floor Price, then the number of
shares of AirTouch Common Stock that constitute the Merger Consideration
shall equal the quotient of (A) the Common Value, divided by (B) the Merger
Consideration Value.
(ii) The "Merger Consideration Value," for any Parent Transaction,
shall equal the sum of (A) the amount of cash, if any, to be received per
share of AirTouch Common Stock in such Parent Transaction, PLUS (B) the
number of shares of Acquiring Person common stock, if any, to be received per
share of AirTouch Common Stock in such Parent Transaction, multiplied by the
Volume-Weighted Average Trading Price of Acquiring Person common stock for
the five consecutive Trading Days commencing on the eleventh Trading Day
following such announcement, plus (C) the fair market value of Acquiring
Person preferred stock or other property or securities, if any, to be
received per share of AirTouch Common Stock in such Parent Transaction as
determined by an investment banking firm jointly selected by AirTouch and U S
WEST; PROVIDED that if any such Acquiring Person preferred stock is
convertible into Acquiring Person common stock, such investment banking firm
will use the Volume-Weighted Average Trading Price of Acquiring Person common
stock for the five
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consecutive Trading Days commencing on the eleventh Trading Day following
such announcement in determining the value of such preferred stock.
6.3 ACCESS TO INFORMATION. (a) From the date hereof until the Closing
Date, U S WEST shall permit AirTouch and its representatives to have full
access to the management, facilities, suppliers, accounts, books, records
(including, without limitation, budgets and forecasts), contracts and other
materials of the Domestic Wireless Business reasonably requested by AirTouch
or such representatives and shall make available to AirTouch and its
representatives the directors, officers, employees and independent
accountants (and shall use reasonable best efforts to so make available its
former accountants) of the Domestic Wireless Business for interviews for the
purpose of verifying the information furnished to AirTouch. Such access and
availability shall be subject to existing confidentiality agreements and
shall be conducted by AirTouch and its representatives during normal business
hours, upon reasonable advance notice and in such a manner as not to
interfere unreasonably with the business or operations of the Domestic
Wireless Business or U S WEST.
(b) From the date hereof until the Closing Date, AirTouch shall permit
U S WEST and its representatives to have reasonable access to the management,
accounts, books, records and Material Contracts of AirTouch and its
Subsidiaries reasonably requested by U S WEST or such representatives in view
of the issuance of shares of AirTouch Stock to Media (or the NV/PCS
Transferee) in the Merger and shall make available to U S WEST and its
representatives, as reasonably requested by U S WEST, the officers, employees
and independent accountants of AirTouch and its Subsidiaries for interviews
for the purpose of verifying the information furnished to U S WEST. Such
access and availability shall be consistent generally with the approach taken
by U S WEST and AirTouch (with respect to AirTouch information) prior to the
date of this Agreement, shall be subject to existing confidentiality
agreements and shall be conducted by U S WEST and its representatives during
normal business hours, upon reasonable advance notice and in such a manner as
not to interfere unreasonably with the business or operations of AirTouch and
its Subsidiaries. To the extent that any information requested by U S WEST
pursuant to this Section 6.3(b) relates to any business plans, forecasts,
budgets or other forward-looking information, or to any business of AirTouch
or its Subsidiaries which actually or potentially competes with any
businesses of U S WEST or its Subsidiaries, AirTouch shall only be required
to permit U S WEST'S investment bankers and outside legal advisors to have
access to such information, and such investment bankers and outside legal
advisors shall not distribute, disseminate or disclose such information to U
S WEST or any of its Subsidiaries.
(c) Each of U S WEST and AirTouch agrees that it will not, and will
cause each of its respective Affiliates and representatives not to, use any
information obtained pursuant to this
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Section 6.3 for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement and the other Transaction Agreements. The
agreements, dated as of January 10, 1997 and April 4, 1997, between U S WEST
and AirTouch (collectively, the "Confidentiality Agreements"), as well as the
confidentiality obligations set forth in the Joint Venture Organization
Agreement and the WMC Agreement, shall apply with respect to information
furnished thereunder or hereunder and any other activities contemplated
thereby.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 TAX MATTERS. For purposes of the tax opinions to be delivered
pursuant to Sections 9.2(d) and 9.3(d), respectively, (i) AirTouch will
deliver representation letters substantially in the form of Exhibits G-1 and
G-2 attached hereto dated as of the Closing Date, and (ii) U S WEST and Media
and the NV/PCS Transferee shall deliver representation letters substantially
in the form of Exhibits H-1 and H-2 attached hereto, dated as of the Closing
Date, in each case, to Weil, Gotshal & Xxxxxx LLP, counsel to U S WEST, Media
and the NV/PCS Transferee, and Pillsbury Madison & Sutro LLP, counsel to
AirTouch.
7.2 REASONABLE BEST EFFORTS. Upon the terms and subject to the
conditions set forth in this Agreement, including, without limitation,
Section 7.3 and except as otherwise agreed to by the parties, each of the
parties agrees to use all reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other in doing, all things necessary, proper or advisable
to consummate and make effective, in the most expeditious manner practicable,
the Merger and the other transactions contemplated by this Agreement and the
other Transaction Agreements, including (a) the obtaining of all necessary
actions or nonactions, waivers, Consents and approvals from Governmental
Authorities and the making of all necessary registrations and filings with,
and the taking of all reasonable steps as may be necessary to obtain an
approval or waiver from, or to avoid an action or proceeding by, any
Governmental Authority, (b) the obtaining of all necessary Consents,
approvals or waivers from Third Parties, (c) the defending of any lawsuits or
other Legal Proceedings, whether judicial or administrative, challenging this
Agreement or any other Transaction Agreement or the consummation of any of
the transactions contemplated by this Agreement or any other Transaction
Agreement, including seeking to have any stay, temporary restraining order,
decree, injunction or other order entered by any court or other Governmental
Authority vacated or reversed or otherwise modified to allow the transactions
contemplated by this Agreement and the other Transaction Agreements to
proceed and (d) the execution and delivery of any additional instruments
necessary to consummate the transactions
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contemplated by, and to fully carry out the purposes of, this Agreement and
the other Transaction Agreements.
7.3 ANTITRUST NOTIFICATION; FCC AND STATE REGULATORY APPROVALS. (a) U S
WEST and AirTouch shall promptly, and in any event within ten Business Days
following the date hereof, file with the FTC and the DOJ, the notification
and report form required for the transactions contemplated by this Agreement
and any supplemental information requested in connection therewith pursuant
to the HSR Act. Each of U S WEST and AirTouch shall furnish to each other's
counsel such necessary information and reasonable assistance as the other may
request in connection with its preparation of any filing or submission that
is necessary under the HSR Act. Each of U S WEST and AirTouch shall use its
reasonable best efforts to obtain any clearance required under the HSR Act
for the consummation of the Merger and shall keep each other apprised of the
status of any communications with, and any inquiries or requests for
additional information from, the FTC and the DOJ and other Governmental
Authorities and shall comply promptly with any such inquiry or request.
(b) U S WEST and AirTouch shall promptly, and in any event within ten
Business Days following the date hereof, file any required application,
report or other filing or request for approval or notifications with the FCC
and any state regulatory authority from whom Consent or clearance is required
to be obtained in connection with the transactions contemplated hereby. Each
of U S WEST and AirTouch shall furnish to each other's counsel such necessary
information and reasonable assistance as the other may request in connection
with its preparation of any such filing or other submission. Each of U S
WEST and AirTouch shall use its reasonable best efforts to obtain any such
Consent or clearance required for the consummation of the Merger and shall
keep each other apprised of the status of any communications with, and any
inquiries or requests for additional information from, the FCC or any state
regulatory authority and shall comply promptly with any such inquiry or
request.
7.4 SUPPLEMENTAL DISCLOSURE. U S WEST, Media, NV, PCS Holdings (and
the NV/PCS Transferee) shall confer on a regular and frequent basis with
AirTouch, and promptly notify AirTouch of, and furnish AirTouch with, any
information it may reasonably request with respect to any event or condition
or the existence of any fact that would cause any of the conditions to the
obligation of AirTouch to consummate the Merger not to be satisfied, and
AirTouch shall promptly notify U S WEST of, and furnish U S WEST with, any
information it may reasonably request with respect to any event or condition
or the existence of any fact that would cause any of the conditions to the
obligations of U S WEST, Media, NV and PCS Holdings (and the NV/PCS
Transferee) to consummate the Merger not to be satisfied.
7.5 ANNOUNCEMENTS. Prior to the Closing, none of U S WEST, Media (or
the NV/PCS Transferee), NV, PCS Holdings or AirTouch
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will issue any press release or otherwise make any public statement with
respect to this Agreement and the transactions contemplated hereby without
the prior consent of the other parties (which consent shall not be
unreasonably withheld), except as expressly permitted by and in accordance
with terms of the Confidentiality Agreements or as may be required by
Applicable Law or stock exchange regulations (including, without limitation,
pursuant to the United States federal securities laws in connection with any
registration statement or report filed thereunder), in which event the party
required to make the release or announcement shall, if possible, allow the
other parties reasonable time to comment on such release or announcement in
advance of such issuance. The parties agree that the initial press release
to be issued with respect to the transactions contemplated by this Agreement
shall be in the form heretofore agreed to by the parties.
7.6 NYSE LISTING. AirTouch shall use its best efforts to cause the
shares of AirTouch Common Stock to be issued in the Merger to be approved for
listing on the NYSE, subject to official notice of issuance, prior to the
Effective Time.
7.7 SETTLEMENTS FOR CASH COLLECTIONS AND DISBURSEMENTS AFTER THE
EFFECTIVE TIME. (a) For each calendar month commencing with the month in
which the Effective Time occurs and, unless sooner terminated by agreement of
the parties, continuing for a period of two years thereafter, (i) within 15
Business Days following the end of the month in question, U S WEST shall
prepare and deliver to AirTouch, and AirTouch shall fully cooperate in
preparing, a statement of transactions which shall reflect a complete
analysis of any cash collections and cash disbursements by the U S WEST Group
on behalf of the AirTouch Group during the relevant month or for any prior
month that should have been (but was not) included in a prior statement and
(ii) within 15 Business Days following the end of the month in question,
AirTouch shall prepare and deliver to U S WEST, and U S WEST shall fully
cooperate in preparing, a statement of transactions which shall reflect a
complete analysis of any cash collections and cash disbursements by the
AirTouch Group on behalf of the U S WEST Group during the relevant month or
for any prior month that should have been (but was not) included in a prior
statement; PROVIDED, HOWEVER, in each case that, with respect to the first
such monthly period, such statement shall not reflect any cash collections or
disbursements occurring prior to the Effective Time taken into account in
determining the adjustments to the Merger Consideration.
(b) Not later than five Business Days following delivery of each such
monthly statement, U S WEST shall pay to AirTouch or AirTouch shall pay to
U S WEST, as the case may be, in cash, an amount necessary to eliminate the
account balance as reflected in each such statement (which amounts may be set
off against each other as appropriate). Any Disputes relating to such
amounts payable shall be exclusively governed by and settled in
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accordance with the provisions of Section 12.14. Payments made pursuant to
Section 7.7 shall not, for any purposes of this Agreement, constitute
Indemnifiable Losses under Article XI or be set off against any other
payments to be made (other than as provided in this Section 7.7(b)),
Liabilities asserted or claims made pursuant to this Agreement, unless
AirTouch and U S WEST otherwise agree in writing.
(c) Following the end of the two-year period referred to in Section
7.7(a) (or such earlier period as the parties hereto may agree), AirTouch and
U S WEST shall continue to deliver the statement of transactions referred to
in Section 7.7(a) and pay the amounts necessary to eliminate the account
balance as reflected in such statement in accordance with Section 7.7(b), not
less than once every calendar quarter (or at such other intervals as the
parties may agree).
(d) Each of AirTouch and U S WEST hereby grants the other a limited
irrevocable power-of-attorney to endorse, deposit and negotiate all checks,
drafts or other forms of payment made in respect of any invoice representing
a receivable payable to either of them or any of their Subsidiaries, but
which are sent by the payor to a lock box maintained by the other or is made
payable to either of them or any of their Subsidiaries but which is the
payment of a receivable which is a receivable of the other.
7.8 USE OF U S WEST NAME. Promptly after the Effective Time, AirTouch
shall cause each Domestic Wireless Subsidiary whose name includes the name
"U S WEST" to change its name to delete any reference therein to "U S WEST."
Promptly after the Effective Time, the Surviving Corporation shall, and shall
cause the Domestic Wireless Subsidiaries to, (i) terminate any license to use
the name "U S WEST" with all agents, franchisees and licensees of U S WEST
and the Domestic Wireless Business (to the extent permitted by the terms of
such license) and (ii) not to use the name "U S WEST" in connection with the
operations of the Domestic Wireless Business; PROVIDED, HOWEVER, that for a
period of 90 days after the Effective Time, the Surviving Corporation and the
Domestic Wireless Subsidiaries may continue to use the "U S WEST" name on
signage, business forms, business cards and stationery. Nothing herein shall
require the Surviving Corporation or the Domestic Wireless Subsidiaries to
recall from customers telephones, accessories or other equipment or materials
labeled with the "U S WEST" name and remove such name from such telephones,
accessories or other equipment or materials.
7.9 INTELLECTUAL PROPERTY.
(a) At the Effective Time, the U S WEST Group or a designee of U S WEST
shall retain all right, title and interest in the U S WEST Intellectual
Property and the AirTouch Group shall have all right, title and interest in
the Domestic Wireless Intellectual Property.
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(b) Subject to the Patent License Agreement and the Software License
Agreement, within 180 days following the Effective Time, except as set forth
in Sections 7.9(c) and 7.9(d), the U S WEST Group shall cease using and shall
return to AirTouch all of the Domestic Wireless Intellectual Property, and
the AirTouch Group shall cease using and return to U S WEST any of the
U S WEST Intellectual Property. Each of AirTouch and U S WEST recognize that
certain employees of the Domestic Wireless Business have been and may in the
future be employed at other Subsidiaries of U S WEST, and that certain
employees of the U S WEST and its Subsidiaries have been and may in the
future be employed in the Domestic Wireless Business, and that such employees
may have Information, confidential or otherwise, of their former employers.
The parties agree that neither will bring any Action against the other for
use or disclosure of such Information to the extent that such Information is
based solely on the recollection and knowledge of such employee and is not
contained in any document or software, or otherwise memorialized.
(c) From and after the Effective Time, (i) the U S WEST Group shall
have the right to use all Confidential Information included in the Domestic
Wireless Intellectual Property which is used by Subsidiaries of U S WEST
(other than NV, the Domestic Wireless Subsidiaries and the Domestic Wireless
Investments) as of the date hereof or used by Subsidiaries of U S WEST (other
than NV, the Domestic Wireless Subsidiaries and the Domestic Wireless
Investments) during the period from the date hereof until the Effective Time
in the ordinary course of business consistent with past practice and (ii) the
Domestic Wireless Business shall have the right to use all Confidential
Information included in the U S WEST Intellectual Property which is used by
the Domestic Wireless Business as of the date hereof or used by the Domestic
Wireless Business during the period from the date hereof until the Effective
Time in the ordinary course of business consistent with past practice;
PROVIDED, HOWEVER, that, notwithstanding the foregoing, (A) the U S WEST
Group shall not have the right to use any customer lists or other customer
data, marketing plans or other marketing data, business plans or other
financial data or operating metrics or data relating to marketing, sales and
network performance included in the Domestic Wireless Intellectual Property
and (B) for a period ending 18 months following the Effective Time, U S WEST
Communications Group, Inc. ("USWCG") and its Subsidiaries shall not have the
right to use any Confidential Information included in the Domestic Wireless
Intellectual Property other than (x) Confidential Information used by USWCG
or its Subsidiaries as of the date hereof and (y) Confidential Information
used by USWCG or its Subsidiaries to perform administrative functions
(including employee benefits, payroll, financial, clerical and accounting
functions).
(d) In the event there are any Excluded Assets on the Closing Date,
from and after the Closing Date, the business of the Excluded Assets shall
have the right to use the Domestic
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Wireless Intellectual Property to the extent it is being used by the business
of Excluded Assets as of the Closing Date; PROVIDED, HOWEVER, that, subject
to Section 7.9(c), the business of Excluded Assets shall not have the right
to use any Domestic Wireless Intellectual Property (including customer lists
or other customer data, marketing plans or other marketing data, business
plans or other financial data and operating metrics or data relating to
marketing, sales and network performance) to the extent that such Domestic
Wireless Intellectual Property relates to markets not constituting Excluded
Assets. Notwithstanding the foregoing, and subject to any rights granted
under the Resources Agreement, upon the transfer, sale or other disposition
of an Excluded Asset to a Third Party or a change of control with respect to
an Excluded Asset, any right granted pursuant to this Section 7.9(d) to use
any Core Intellectual Property (as defined below) in the business of such
Excluded Asset shall terminate. The occurrence of any event described in
Section 12.11(b) of this Agreement shall not be deemed to be a change of
control of any Excluded Asset for purposes of this Section 7.9(d). As used
herein, "Core Intellectual Property" shall mean all software, tools and
documentation included in the Domestic Wireless Intellectual Property which
is used or held for use in connection with the performance of any of the
following functions to the extent such software, tools and documentation is
proprietary and not commercially available in the form utilized by the
Domestic Wireless Business: customer billing systems, customer management
systems, customer service systems, enhanced network operations which are not
essential to the basic operation of the network (e.g., RF fingerprinting),
marketing database systems and sales information systems.
(e) For purposes of this Section 7.9 only, "Intellectual Property"
shall mean all registered and unregistered trademarks, service marks, service
names, trade styles and trade names (including, without limitation, trade
dress and other names, marks and slogans) and all associated goodwill, all
statutory, common law and registered copyrights, all patents, all
applications for any of the foregoing together with all rights to use all of
the foregoing, all know-how, inventions, discoveries, improvements,
processes, formulae (secret or otherwise), specifications, trade secrets,
whether patentable or not, licenses and other similar agreements,
confidential information, and all drawings, records, books or other indicia,
however evidenced, of the foregoing.
7.10 INSURANCE. (a) U S WEST shall, and shall cause each of its
Subsidiaries to, make available to AirTouch, the benefit of any and all
U S WEST Insurance Arrangements with respect to insured events or occurrences
prior to the Effective Time which relate to the Domestic Wireless Business
(whether or not claims relating to such events or occurrences are made prior
to or after the Effective Time).
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(b) AirTouch shall be entitled to assert without notice to U S WEST any
claim under the U S WEST Insurance Arrangements by or against the AirTouch
Group as to which the aggregate losses, Liabilities, damages or expenses to
be incurred in connection therewith are not reasonably expected by AirTouch
to exceed $100,000 by notice to the administrator of the applicable Insurance
Arrangement. In respect of any claim under the U S WEST Insurance
Arrangements by or against the AirTouch Group as to which the aggregate
losses, Liabilities, damages or expenses are reasonably expected by AirTouch
to exceed $100,000, AirTouch shall provide U S WEST with prompt notice of
events or occurrences giving rise to such a claim. U S WEST shall be
responsible for asserting, on behalf of the AirTouch Group, and shall use its
reasonable best efforts to assert (or at the option of U S WEST) to assist
AirTouch in asserting, any such claim so reported to U S WEST; PROVIDED that
U S WEST shall not effect a Settlement of any claim by or against the
AirTouch Group without the consent of AirTouch unless the Settlement includes
as an unconditional term thereof the giving by each claimant or plaintiff to
the applicable member of the AirTouch Group of a release from all liability
with respect to such claim.
(c) Nothing in this Section 7.10 shall be construed to limit or
otherwise alter in any way the indemnification obligations of U S WEST,
including those created by Article XI of this Agreement.
7.11 THIRD PARTY RIGHTS. (a) In the event that, after the Effective
Time, U S WEST or its Affiliates holds any right to indemnification or any
other contractual or other right (collectively, a "Recourse Right") with
respect to NV, the Domestic Wireless Subsidiaries or the Domestic Wireless
Investments then U S WEST shall, or shall cause a Subsidiary to, assert or
otherwise make available to the applicable member of the AirTouch Group the
full benefit of such Recourse Right by making a claim on behalf of the
applicable member of the AirTouch Group or taking other steps reasonably
requested by AirTouch.
(b) In the event that, after the Effective Time, AirTouch or the
Domestic Wireless Subsidiaries holds any Recourse Right with respect to
businesses of U S WEST other than the Domestic Wireless Business, then
AirTouch shall, or shall cause a Subsidiary to, assert or otherwise make
available to the applicable member of the U S WEST Group, the full benefit of
such Recourse Right by making a claim on behalf of the applicable member of
the U S WEST Group or taking other steps reasonably requested by U S WEST.
7.12 INTERCOMPANY AGREEMENTS. (a) Prior to the Effective Time, U S WEST
shall cause each member of the U S WEST Group to discharge in full or
otherwise satisfy or terminate any intercompany indebtedness owed by NV, any
Domestic Wireless Subsidiary or any Domestic Wireless Investment or PCS
Holdings to
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such member of the U S WEST Group, other than the Assumed NV Debt and the
Assumed PCS Debt.
(b) Prior to the Effective Time, U S WEST and NV shall discharge in
full or otherwise satisfy or terminate (i) all intercompany receivables
relating to corporate administrative services of any member of the U S WEST
Group from NV, any Domestic Wireless Subsidiary or Domestic Wireless
Investment and (ii) all intercompany receivables relating to corporate
administrative services of NV, any Domestic Wireless Subsidiary or any
Domestic Wireless Investment from any member of the U S WEST Group.
(c) Following the Effective Time, all Contracts, Licenses or other
arrangements, formal or informal, between NV, the Domestic Wireless
Subsidiaries and the Domestic Wireless Investments, on the one hand, and any
member of the U S WEST Group, on the other hand, in existence as of the
Effective Time (other than this Agreement and the other Transaction
Agreements) shall be terminable at the option of AirTouch at any time on 30
Business Days' prior written notice.
7.13 JOINT AGREEMENTS; JOINT ASSETS. (a)(i)Except as otherwise
specifically provided in this Agreement and subject to Sections 7.13(a)(ii)
and 7.13(a)(iii), any Contract to which NV or a Domestic Wireless Subsidiary
is a party that inures to the benefit of both the Domestic Wireless Business
and the business of the Excluded Assets (including, without limitation,
interconnection agreements, purchasing agreements (including rights under
purchasing agreements entered into pursuant to the TOMCOM Agreement),
national retailing contracts, bulk contracts, corporate contracts, roaming
agreements, marketing contracts and other Contracts) ("Joint Agreements")
shall be assigned as of the Closing Date, in part, so that NV or the
applicable Domestic Wireless Subsidiary, on the one hand, and the owner of
the Excluded Assets, on the other hand, each shall be entitled to the rights
and benefits inuring to its business under such agreement.
(ii) If any Joint Agreement can be assigned as a whole, but not in part,
and such Joint Agreement is primarily used by the Domestic Wireless Business,
such Joint Agreement shall be retained by NV or the applicable Domestic
Wireless Subsidiary. In such event, subject to Applicable Laws and the terms
of such Joint Agreement, NV shall (and shall cause the Domestic Wireless
Subsidiaries to) take all reasonable actions to make available to the
business of the Excluded Assets the benefit of such Joint Agreement to the
same extent of the benefit received by the business of the Excluded Assets as
of the Closing Date. To the extent that NV makes the benefits of any Joint
Agreement available to the business of the Excluded Assets, the owner of the
Excluded Assets shall be responsible for fulfilling its proportionate
interest in the obligations under such Joint Agreement. The obligation of NV
to make the benefit of any such Joint Agreement available to the business of
any Excluded Asset
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shall terminate upon the earlier to occur of (1) the expiration of the Joint
Agreement and (2) six months following the transfer, sale or other
disposition of such Excluded Asset to a Third Party or a change of control
with respect to such Excluded Asset (or such earlier date as determined by
the purchaser of such Excluded Asset).
(iii) If any Joint Agreement can be assigned as a whole, but not in
part, and such Joint Agreement is primarily used by the business of the
Excluded Assets, such Joint Agreement shall be assigned by NV or the
applicable Domestic Wireless Subsidiary to the owner of the Excluded Assets
and the Liabilities relating to such Joint Agreement shall be assumed by the
owner of the Excluded Assets. In such event, subject to Applicable Laws and
the terms of such Joint Agreement, the owner of the Excluded Assets shall
take all reasonable actions to make available to the Domestic Wireless
Business the benefit of such Joint Agreement to the same extent of the
benefit received by the Domestic Wireless Business as of the Closing Date.
To the extent that the owner of the Excluded Assets makes the benefits of any
Joint Agreement available to the Domestic Wireless Business, NV (or a
Domestic Wireless Subsidiary) shall be responsible for fulfilling its
proportionate interest in the obligations under such Joint Agreement. The
obligation of the owner of the Excluded Assets to make the benefit of any
such Joint Agreement available to the Domestic Wireless Business shall
terminate upon the earlier to occur of (1) the expiration of the Joint
Agreement and (2) six months following the transfer, sale or other
disposition of the Excluded Asset which is the primary user of such Joint
Agreement to a Third Party or a change of control with respect to such
Excluded Asset (or such earlier date as determined by AirTouch).
(b) (i) Except as otherwise specifically provided in this Agreement,
any asset of NV used in or held for use in both the Domestic Wireless
Business and the business of Excluded Assets (including, without limitation,
inventory) ("Joint Assets") shall, to the extent practicable, be divided as
of the Closing Date between the Domestic Wireless Business and the business
of the Excluded Assets so that each shall receive its proportionate interest
in such Joint Asset based upon relative proportionate subscribers included in
each business. Notwithstanding the foregoing, (A) all assets located at the
current headquarters of the Domestic Wireless Business located in Bellevue,
Washington (other than books and records of the Excluded Assets) shall be
part of the Domestic Wireless Business and shall not be Joint Assets and (B)
all assets owned by partnerships, the interests in which constitute Excluded
Assets shall be part of the Excluded Assets.
(ii) Any Joint Asset which can be assigned or otherwise transferred as
a whole, but not in part, and is primarily related to the Domestic Wireless
Business shall be part of the Domestic Wireless Business. Subject to
Applicable Law, NV shall (and shall cause the Domestic Wireless Subsidiaries
to), except as may
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otherwise be agreed by AirTouch and U S WEST, take such reasonable actions as
the owner of the Excluded Assets may request in order to make available, at
fully loaded cost, to the business of Excluded Assets, the use of any such
Joint Asset to the same extent such Joint Asset was used by the business of
Excluded Assets as of the Closing Date. The obligation of NV to make such
Joint Asset available to the business of any Excluded Asset shall terminate
six months following the transfer, sale or other disposition of such Excluded
Asset to a Third Party or a change of control with respect to such Excluded
Asset (or such earlier date as determined by the purchaser of such Excluded
Asset).
(iii) Any Joint Asset which can be assigned or otherwise transferred as
a whole, but not in part, and is primarily related to the business of
Excluded Assets and any Joint Asset owned by a partnership, an interest in
which constitutes an Excluded Asset, shall be part of the business of
Excluded Assets. Subject to Applicable Law, the owner of the Excluded Assets
shall, except as may otherwise be agreed by AirTouch and U S WEST, take such
reasonable actions as NV may request in order to make available, at fully
loaded cost, to the Domestic Wireless Business, the use of any such Joint
Asset to the same extent such Joint Asset was used by the Domestic Wireless
Business as of the Closing Date. The obligation of the owner of the Excluded
Assets to make such Joint Asset available to the Domestic Wireless Business
shall terminate six months following the transfer, sale or other disposition
of the Excluded Asset in which such asset is included to a Third Party or a
change of control with respect to such Excluded Asset (or such earlier date
as determined by AirTouch).
(c) The occurrence of any event described in Section 12.11(b) of this
Agreement shall not be deemed to be a change of control of any Excluded Asset
for purposes of this Section 7.13.
7.14 TRANSACTION AGREEMENTS. On or prior to the Closing Date, AirTouch
and U S WEST shall enter into the Tax Sharing Agreement, the Patent License
Agreement, the Software License Agreement and the New Investment Agreement.
If, as of the Closing Date, Media (or the NV/PCS Transferee) shall be the
general partner or otherwise manage any Excluded Asset, the owner of the
Excluded Assets and AirTouch Cellular shall enter into a Resources Agreement
in the form of Exhibit I hereto.
7.15 UNDERTAKINGS WITH RESPECT TO SCHEDULED PROPERTIES.
(a) In connection with the transactions contemplated hereby, NV shall
fulfill any and all obligations it may have under the partnership agreements,
other formative agreements and management agreements for each Scheduled
Property, in respect of the Consent requirements, rights of first refusal and
written notification requirements described therein.
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(b) Promptly (and in any event within ten Business Days) following the
satisfaction of the conditions set forth in Sections 9.1(a) and 9.1(e), U S
WEST shall take all actions necessary to effect the separation from the
Domestic Wireless Business of each Scheduled Property as to which a decree,
preliminary or permanent injunction, temporary restraining order or other
order of any nature shall be in effect that restrains, prevents or materially
changes the transactions contemplated hereby.
7.16 PRE-CLOSING CAPITAL CONTRIBUTIONS TO PCS NUCLEUS BY AIRTOUCH. At
such time prior to the Closing as the parties shall agree, AirTouch PCS
Holding, Inc. shall contribute to the capital of PCS Nucleus approximately
$1,600,000.
7.17 ASSUMPTION OF GUARANTEE OBLIGATIONS WITH RESPECT TO LEVERAGED
LEASES. Effective at the time of the Closing, AirTouch will assume all
Liabilities of U S WEST under all guarantees executed by U S WEST in respect
of the Leveraged Leases pursuant to the instrument of assumption attached as
an exhibit to such guarantees.
7.18 REPAYMENT OF ASSUMED NV DEBT AND ASSUMED PCS DEBT. At the time of
the Closing, AirTouch shall repay in full the Assumed NV Debt and the Assumed
PCS Debt. Media (or the NV/PCS Transferee, as applicable) shall not declare
an event of default under the Assumed NV Debt or the Assumed PCS Debt prior
to such repayment.
7.19 AIRTOUCH CLASS D AND CLASS E PREFERRED STOCK. Prior to the
Effective Time, AirTouch shall file with the Secretary of State of the State
of Delaware Certificates of Designation, Preferences and Rights with respect
to the shares of AirTouch Class D and Class E Preferred Stock issuable
pursuant to Section 3.1 in the forms of Exhibits A-1 and A-2, respectively.
ARTICLE VIII
EMPLOYEE MATTERS
8.1 EMPLOYEES. Effective as of the Effective Time, those Affected
Employees who are PCS Employees or who are employed by NV or any Domestic
Wireless Subsidiary immediately prior to the Effective Time shall remain in
the same capacities as then held by such employees (or in such other
capacities as AirTouch shall determine in its sole discretion). The Excluded
Employees shall not become employees of AirTouch or its Subsidiaries or
Affiliates as of the Effective Time, and AirTouch and its Subsidiaries and
Affiliates shall assume no employment-related Liabilities with respect to the
Excluded Employees as a result of the transactions contemplated by this
Agreement. All such Liabilities shall be retained by the U S WEST Group.
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8.2 EMPLOYEE BENEFIT PLANS AND ARRANGEMENTS. (a) Except as set forth
under paragraph (b) below with respect to incurred but unreimbursed claims
relating to Affected Employees and subject to Section 8.3(p) of this
Agreement, all Affected Employees shall cease to actively participate as of
the Effective Time in any Employee Benefit Plan or Employee Arrangement
maintained at the Effective Time by U S WEST, Media or their respective
Affiliates.
(b) AirTouch shall reimburse U S WEST for all incurred but unpaid
claims and obligations as of the Effective Time with respect to Affected
Employees under the Employee Benefit Plans and Employee Arrangements
maintained at the Effective Time by U S WEST, Media and their respective
Affiliates.
8.3 OTHER EMPLOYEE MATTERS.
(a) Except as specifically provided in this Section 8.3, as of the
Effective Time, the Affected Employees shall become eligible to participate
in the employee benefit plans of AirTouch then existing on the same terms as
applicable to similarly situated employees of AirTouch. For purposes of
determining eligibility to participate, vesting, benefit eligibility, and
benefit accrual, AirTouch shall recognize service of each Affected Employee
with U S WEST and its pre-Merger ERISA Affiliates before the Effective Time
as though such service were service with AirTouch and its ERISA Affiliates.
(b) Subject to compliance with Sections 8.3(c), 8.3(d) and 8.3(e), as
soon as reasonably practicable after the Effective Time, (i) U S WEST shall
amend the U S WEST Pension Plan (the "U S WEST Pension Plan") to provide for
the transfer of all liability for the accrued benefits of Affected Employees
(other than PCS Employees) as of the Effective Time (the "Transferred Benefit
Liabilities") and cash equal to the present value of such liabilities
("Transferred Benefit Assets"), and (ii) AirTouch shall amend the AirTouch
Employees Pension Plan (the "AirTouch Pension Plan") to accept the
Transferred Benefit Liabilities and Transferred Benefit Assets. In addition,
U S WEST shall cause the U S WEST Pension Plan to transfer additional assets
to the AirTouch Pension Plan sufficient to fund a lump sum payment option
with respect to the Transferred Benefit Liabilities. AirTouch shall cause
the AirTouch Pension Plan to provide a lump sum payment option with respect
to the transferred benefits. The Transferred Benefit Assets shall be
calculated on the basis of the actuarial assumptions specified in Section
8.3(b) of the U S WEST Merger Disclosure Schedule. The Transferred Benefit
Assets shall be adjusted from the Effective Time to the actual date of
transfer for (i) interest at the rate specified in Section 8.3(b) of the
U S WEST Merger Disclosure Schedule and (ii) benefit payments made during such
interim period.
(c) In connection with the transfer described in Section 8.3(b),
AirTouch shall amend the AirTouch Pension Plan to
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preserve the protected benefits (as defined in regulations under Section
411(d)(6) of the Code) with respect to the transferred accrued benefits and
to ensure that, subject to vesting, benefits paid to an affected participant
from the AirTouch Pension Plan are at least equal to the benefit that would
have been payable from the U S WEST Pension Plan as of the Effective Time,
treating the participant as a "Modified Accrual Participant" under the
AirTouch Pension Plan (with respect to the U S WEST Pension Plan formula
applicable to the participant as of the Effective Time). Participants
referred to in this Section 8.3(c) shall be treated similarly to all other
Modified Accrual Participants under the AirTouch Pension Plan, including with
respect to any amendment to reduce or eliminate the compensation uplift
attributable to Modified Accrual Participant status.
(d) U S WEST's obligation to effectuate the transfer described in
Section 8.3(b) shall be conditioned upon its receipt of a recent IRS
favorable determination letter with respect to the AirTouch Pension Plan.
AirTouch's obligation to receive such transfer shall be conditioned upon its
receipt of a recent IRS favorable determination letter with respect to the
U S WEST Pension Plan. U S WEST represents and warrants that, and covenants to
take all necessary action to ensure that, the U S WEST Pension Plan shall be
qualified under Section 401(a) and related sections of the Code as of the
date of such transfer, and AirTouch represents and warrants that, and
covenants to take all necessary actions to ensure that, the AirTouch Pension
Plan shall be qualified under Section 401(a) and related sections of the Code
as of the date of such transfer. In the event that it is necessary to
increase the Transferred Benefit Liabilities retroactively to the date of
transfer in order to maintain the qualified status of the U S WEST Pension
Plan or the AirTouch Pension Plan, U S WEST shall cause the U S WEST Pension
Plan to transfer cash equal to the present value of such liabilities to the
AirTouch Pension Plan, calculated on the basis of the actuarial assumptions
specified in Section 8.3(b) of the U S WEST Merger Disclosure Schedule.
(e) At least 30 days before the transfer described in Section 8.3(b)
above, U S WEST and AirTouch shall each file Form 5310-A with the IRS with
respect to the transfer unless, in the case of a de minimis transfer, such
filing is not required.
(f) Subject to Section 8.3(p), AirTouch shall provide for participation
of the Affected Employees and their dependents as of the Effective Time in
the AirTouch health and welfare plan(s) applicable to similarly situated
AirTouch employees. AirTouch shall waive any pre-existing condition
exclusion in the AirTouch medical/dental plans for Affected Employees and
their dependents. For purposes of deductible requirements and out-of-pocket
maximums under the applicable AirTouch medical or dental plan, if any,
Affected Employees and their dependents shall receive credit for any medical
or dental deductible payments incurred under the medical and dental plan(s)
of U S WEST during the calendar year
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that includes the date such employees' coverage begins under the AirTouch
medical and dental plan(s). U S WEST shall determine the extent to which
COBRA elections under the medical, dental and vision coverage of the U S WEST
health care plan are required as a result of the Merger and shall be
responsible for any required notification and administration of such
elections and any subsequently elected coverage. From and after the date of
this Agreement and through the period ending 120 days after the Effective
Time, AirTouch shall take no actions, and shall cause its Subsidiaries to
take no actions, that would alter the AirTouch medical or dental plans from
the provisions in effect as of the date of this Agreement in a manner that
would provide incentive for Affected Employees to elect COBRA coverage under
the U S WEST health care plan in lieu of coverage under the AirTouch medical
or dental plans, unless such modifications will apply equally to both
Affected Employees and other AirTouch employees covered by the AirTouch
medical and dental plans.
(g) Affected Employees who have attained the right to four or more weeks
of vacation per year under U S WEST'S vacation policy as of the Effective
Time shall remain eligible to accrue the same amount of vacation under the
applicable AirTouch vacation policy, except to the extent the applicable
AirTouch vacation policy is revised to require additional service for all
employees who have attained the right to four or more weeks of vacation per
year under the vacation policies of either U S WEST or AirTouch as of the
Effective Time.
(h) As soon as reasonably practicable after the Effective Time, U S
WEST shall cause the U S WEST Savings Plan/ESOP (the "U S WEST Savings Plan")
to transfer to the AirTouch Retirement Plan (the "AirTouch Retirement Plan")
the account balances of the Affected Employees who do not elect, under
procedures established by U S WEST that are reasonably acceptable to
AirTouch, to have their account balances retained in the U S WEST Savings
Plan. Any such transfer shall be made in the form of cash to the extent
account balances are not credited with unpaid participant loans, and by a
transfer of loans (in the form of promissory notes and/or transaction
authorization cards) to the extent account balances are credited with unpaid
participant loans. AirTouch shall amend the AirTouch Retirement Plan to
fully vest the transferred account balances.
(i) U S WEST's obligation to effectuate the transfer described in
Section 8.3(h) shall be conditioned upon its receipt of a recent IRS
favorable determination letter with respect to the AirTouch Retirement Plan.
AirTouch's obligation to receive such transfer shall be conditioned upon its
receipt of a recent IRS favorable determination letter with respect to the
U S WEST Savings Plan. U S WEST represents and warrants that the U S WEST
Savings Plan shall be qualified under Section 401(a) and related sections of
the Code as of the date of such transfer, and AirTouch represents and
warrants that the AirTouch Retirement
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Plan shall be qualified under Section 401(a) and related sections of the Code
as of the date of such transfer.
(j) Subject to Section 8.3(p), for any Affected Employee who is
receiving short-term disability benefits under the U S WEST disability plan
immediately prior to the Effective Time, AirTouch shall continue to cover
such employee under the AirTouch disability plan (and any other AirTouch
plans or policies applicable to similarly situated AirTouch employees
receiving benefits under the AirTouch disability plan) without requiring an
intervening return to work; PROVIDED, HOWEVER, that AirTouch shall determine
the extent to which periods of short-term disability under the U S WEST
disability plan will be considered for purposes of determining the length of
coverage under the AirTouch disability plan. U S WEST agrees to cause the
U S WEST disability plan to be amended prior to the Effective Time to provide
that coverage under the U S WEST disability plan for any Affected Employee
shall cease at the Effective Time whether or not the employee is then
receiving short-term disability benefits. U S WEST and AirTouch agree to
cooperate in resolving any claims from Affected Employees related to the
actions taken pursuant to this Section 8.3(j).
(k) Subject to Section 8.3(p), for any Affected Employee who is on an
approved leave of absence immediately prior to the Effective Time, AirTouch
shall continue to cover such employee under the applicable AirTouch leave of
absence policy (and any other AirTouch plans or policies applicable to
similarly situated AirTouch employees on such leave of absence) without
requiring an intervening return to work; PROVIDED, HOWEVER, that AirTouch
shall determine the extent to which the period of leave prior to the
Effective Time will be considered for purposes of determining the length of
leave under the AirTouch policy. U S WEST agrees to cause the leave of
absence policies applicable to Affected Employees prior to the Effective Time
to be amended to provide that a leave of absence for any Affected Employee
shall cease at the Effective Time whether or not the employee is then on
leave. U S WEST, Media and AirTouch agree to cooperate in resolving any
claims from Affected Employees related to the actions taken pursuant to this
Section 8.3(k).
(l) Except as provided in Exhibit J, from the date of this Agreement
until the end of the Non-solicitation Period, neither U S WEST nor any of its
Affiliates will Solicit any person employed by NV or the Domestic Wireless
Subsidiaries to leave his or her employment. For purposes of this Section
8.3(l), the "Non-solicitation Period" ends on the earlier of the first
anniversary of the Effective Time or June 1, 1999, and "Solicit" means any
affirmative recruitment specifically aimed at one or more individuals
identified by name, title or NV affiliation (i.e., beyond advertising job
openings), but "Solicit" shall not include any activities that constitute
follow-up to individuals who respond to job opening advertisements or who
voluntarily initiate employment inquiries.
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(m) U S WEST will provide AirTouch the opportunity to review and
approve, prior to distribution, all "Employee Communication Materials," as
defined herein, developed by U S WEST. For this purpose, "Employee
Communication Materials" means information, published in written or other
tangible form useful for repetitious or mass communication, to the extent
that it: (i) will be distributed at any time after the date of this
Agreement and prior to the Effective Time, and (ii) will explain to Affected
Employees any actions that will be taken to implement the commitments set
forth in this Agreement, provided that such information refers to Employee
Benefit Plans or Employee Arrangements that will be assumed by AirTouch in
whole or in part under Section 8.2, or employee benefit plans or employee
arrangements sponsored by AirTouch or its Subsidiaries that may cover
Affected Employees after the Effective Time.
(n) Prior to the Effective Time, U S WEST will amend the U S WEST
Non-Qualified Pension Plan, the U S WEST Mid-Career Pension Plan and the
Amended U S WEST Deferred Compensation Plan (the "Non-Qualified Plans") to
permit Affected Employees to elect to exclude their employment with AirTouch
or its Subsidiaries resulting from the Merger from being treated as a
termination of employment or separation from service for purposes of the
timing of distributions under the Non-Qualified Plans and to provide for the
transfer of their accrued benefits under the Non-Qualified Plans to the
AirTouch Deferred Compensation Plan. AirTouch shall amend the AirTouch
Deferred Compensation Plan as of the Effective Time to accept the accrued
benefit of any Affected Employee who makes an election as described in the
preceding sentence as a liability under the AirTouch Deferred Compensation
Plan for each such Affected Employee and to treat such accrued benefit as any
other account balance under the AirTouch Deferred Compensation Plan. The
accrued benefit for each employee under the Non-Qualified Plans shall be
determined as of the Effective Time in accordance with the assumptions and
procedures set forth in Section 8.3(n) of the U S WEST Merger Disclosure
Schedule. Notwithstanding any other provisions of any Transaction Agreement,
and without limitation under any provisions of any Transaction Agreement,
AirTouch shall indemnify, defend and hold harmless U S WEST and its
Affiliates (the "Indemnitees") from and against, and in respect of, and pay
or reimburse each Indemnitee for, all Indemnifiable Losses, as incurred,
arising out of, relating to or resulting from, directly or indirectly, the
election or transfer of accrued benefits described in this Section 8.3(n).
(o) Prior to the Effective Time, U S WEST shall provide notice to
AirTouch of its intended treatment of outstanding options to purchase shares
of capital stock of U S WEST ("Options") issued pursuant to the terms of the
Amended U S WEST 1994 Stock Plan and the outstanding Media Options and
Communications Options issued pursuant to the terms of the U S WEST Media
Group 1996 Stock Option Plan, the U S WEST Media Group 1997 Stock Option Plan
and the U S WEST Communications
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Group 1997 Stock Option Plan, in each case, held by Affected Employees as a
class. Following the Effective Time, U S WEST shall provide notice to
AirTouch of any decision to terminate or otherwise materially change the
terms of the Options held by Affected Employees as a class, such notice to be
given at or before the time general notice of such matters is given to
Affected Employees.
(p) As soon as reasonably practicable within 30 Business Days following
the date of this Agreement, U S WEST and AirTouch shall use reasonable best
efforts to agree upon (i) specific methods of transitioning Affected
Employees into employee benefit plans and employee arrangements sponsored by
AirTouch or its Subsidiaries on or after the Effective Time and (ii) a
timeline for sharing data and documents pursuant to Section 8.4.
8.4 COOPERATION. AirTouch and U S WEST shall cooperate with each other
in carrying out the terms of this Article VIII, and each party shall exchange
such information with the other party as may be reasonably required by the
other party, with respect thereto. As soon as reasonably practicable after
the Effective Time, U S WEST shall provide AirTouch a schedule showing the
name, Social Security number, hire date and any other information reasonably
requested by AirTouch with respect to each Affected Employee.
ARTICLE IX
CONDITIONS PRECEDENT
9.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger is subject to the
satisfaction or waiver (to the extent permitted under Applicable Laws) on or
prior to the Closing of the following conditions:
(a) HSR ACT. (i) The waiting periods (and any extension thereof)
applicable to the Merger under the HSR Act shall have expired or been
terminated; (ii) neither the FTC nor DOJ shall have authorized the
institution of enforcement proceedings (that have not been dismissed or
otherwise disposed of) to delay, prohibit or otherwise restrain the
transactions contemplated by the Agreement; (iii) no such proceeding shall be
pending as of the Closing Date; and (iv) no injunction or order shall have
been issued by a court of competent jurisdiction and remain in effect as of
the Closing Date.
(b) NO INJUNCTIONS OR RESTRAINTS. No statute, rule, regulation,
decree, preliminary or permanent injunction, temporary restraining order or
other order of any nature of any Governmental Authority shall be in effect
that restrains, prevents or materially changes the transactions contemplated
hereby.
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(c) EXECUTION OF TRANSACTION AGREEMENTS. Each of AirTouch and U S WEST
shall have executed and delivered the Tax Sharing Agreement, the Patent
License Agreement, the Software License Agreement and the New Investment
Agreement.
(d) NYSE LISTING. The shares of AirTouch Common Stock issuable to
Media (or the NV/PCS Transferee) in connection with the Merger shall have
been approved for listing on the NYSE, subject to official notice of issuance.
(e) FCC/STATE ORDERS. The FCC/State Orders shall have been obtained;
PROVIDED that the foregoing condition shall be deemed to have been satisfied
with respect to any Orders of the FCC which constitute FCC/State Orders if
either U S WEST or AirTouch shall have provided to the other an opinion of a
nationally recognized communications law counsel (addressed to U S WEST and
AirTouch) to the effect that the Merger and the other transactions
contemplated hereby may be consummated in compliance with the Communications
Act of 1934, as amended, without obtaining such Orders of the FCC.
9.2 CONDITIONS TO OBLIGATION OF AIRTOUCH. The obligation of AirTouch
to effect the Merger is further subject to the satisfaction of the following
conditions, any or all of which may be waived in whole or in part by AirTouch:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of U S WEST made hereunder (i) that are qualified as to materiality shall be
true and correct and (ii) that are not so qualified shall be true and correct
in all material respects, in each case as of the date of this Agreement and
(unless made as of a specified date) as of the Closing Date as though made on
and as of the Closing Date, and AirTouch shall have received a certificate of
U S WEST to that effect, dated the Closing Date, and signed on behalf of each
by an authorized officer thereof.
(b) AGREEMENTS. Each of U S WEST, Media, NV and PCS Holdings (and the
NV/PCS Transferee) shall have performed in all material respects all of its
obligations required to be performed by it under this Agreement at or prior
to the Closing Date, and AirTouch shall have received certificates of
U S WEST, Media (or the NV/PCS Transferee), NV and PCS Holdings to that effect,
dated the Closing Date, and signed on behalf of each by an authorized officer
thereof.
(c) TAX OPINION. AirTouch shall have received an opinion of Pillsbury
Madison & Sutro LLP, counsel to AirTouch, reasonably satisfactory in form and
substance to AirTouch and dated as of the Closing Date, to the effect that
for federal income tax purposes (i) each of the NV Merger and the PCS
Holdings Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code; (ii) each of AirTouch and NV, in respect of the
NV Merger, and AirTouch and PCS Holdings, in respect of the PCS Holdings
Merger, will be a party to the reorganization within
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the meaning of Section 368(b) of the Code; and (iii) no gain or loss will be
recognized by NV, PCS Holdings or AirTouch as a result of the Merger. In
rendering such opinion, Pillsbury Madison & Sutro LLP shall receive and may
rely upon representations contained in certificates of AirTouch substantially
in the form of Exhibits G-1 and G-2 and of U S WEST, Media, the NV/PCS
Transferee, NV and PCS Holdings substantially in the form of Exhibits H-1 and
H-2.
9.3 CONDITIONS TO OBLIGATIONS OF U S WEST, MEDIA, NV AND PCS HOLDINGS.
The obligations of U S WEST, Media (or the NV/PCS Transferee), NV and PCS
Holdings to effect the Merger are further subject to the satisfaction of the
following conditions, any or all of which may be waived on or prior to the
Closing Date in whole or in part by U S WEST:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of AirTouch made hereunder (i) that are qualified as to materiality shall be
true and correct and (ii) that are not so qualified shall be true and correct
in all material respects, in each case as of the date of this Agreement and
(unless made as of a specified date) as of the Closing Date as though made on
and as of the Closing Date, and U S WEST shall have received a certificate of
AirTouch to that effect, dated the Closing Date, and signed on behalf of
AirTouch by an authorized officer of AirTouch.
(b) AGREEMENTS. AirTouch shall have performed in all material respects
all of its obligations required to be performed by it under this Agreement at
or prior to the Closing Date, and U S WEST shall have received a certificate
of AirTouch to that effect dated the Closing Date and signed on behalf of
AirTouch by an authorized officer of AirTouch.
(c) TAX OPINION. U S WEST shall have received an opinion of Weil,
Gotshal & Xxxxxx LLP, counsel to U S WEST, reasonably satisfactory in form
and substance to U S WEST and dated as of the Closing Date, to the effect
that for federal income tax purposes (i) each of the NV Merger and the PCS
Holdings Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code and (ii) each of AirTouch and NV, in respect of
the NV Merger, and AirTouch and PCS Holdings, in respect of the PCS Holdings
Merger, will be a party to the reorganization within the meaning of Section
368(b) of the Code. In rendering such opinion, Weil, Gotshal & Xxxxxx LLP
shall receive and may rely upon representations contained in certificates of
AirTouch substantially in the form of Exhibits G-1 and G-2 and of U S WEST,
Media, the NV/PCS Transferee, NV and PCS Holdings substantially in the form
of Exhibits H-1 and H-2.
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ARTICLE X
TERMINATION AND AMENDMENT
10.1 TERMINATION. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time:
(a) by mutual written consent of U S WEST, on the one hand, and
AirTouch, on the other hand, or by mutual action of their respective Boards
of Directors;
(b) by AirTouch, if any of the conditions set forth in Section 9.2
shall have become incapable of fulfillment (other than as a result of any
breach by AirTouch of the terms of this Agreement) and shall not have been
waived by AirTouch;
(c) by U S WEST, in accordance with Section 6.2(c)(i) or if any of the
conditions set forth in Section 9.3 shall have become incapable of
fulfillment (other than as a result of any breach by U S WEST, Media, NV or
PCS Holdings of the terms of this Agreement) and shall not have been waived
by U S WEST;
(d) by either AirTouch, on the one hand, or U S WEST, on the other
hand, by giving written notice of such termination to the other, if the
Merger shall not have been consummated on or before June 30, 1998 (the
"Termination Date"); PROVIDED, HOWEVER, that the terminating party is not in
breach of its obligations under this Agreement; or
(e) by either U S WEST or AirTouch, if any of the conditions set forth
in Section 9.1 shall have become incapable of fulfillment (other than as a
result of any breach by the party seeking to terminate the Agreement) and
shall not have been waived in accordance with the terms of this Agreement.
10.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by U S WEST or AirTouch pursuant to Section 10.1, written notice
thereof shall promptly be given to the other parties and, except as otherwise
provided herein, this Agreement shall be terminated and become void and have
no effect, without further action by any party, other than the provisions of
Section 6.3(c) and Article XII. Nothing in this Section 10.2 shall be deemed
to release any party from any liability for any breach by such party of the
terms and provisions of this Agreement.
10.3 AMENDMENT. Subject to Applicable Laws, this Agreement may be
amended, modified or supplemented only by written agreement of U S WEST,
Media (or the NV/PCS Transferee), NV, PCS Holdings and AirTouch at any time
prior to the Effective Time with respect to any of the terms contained herein.
10.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally
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allowed: (a) extend the time for the performance of any of the obligations
or other acts of the other parties hereto; (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto; and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party. The failure of any party hereto
to assert any of its rights hereunder shall not constitute a waiver of such
rights.
ARTICLE XI
INDEMNIFICATION
11.1 INDEMNIFICATION BY U S WEST. (a) Subject to the terms and
conditions of this Agreement, from and after the Effective Time, U S WEST
shall indemnify, defend and hold harmless AirTouch and its Affiliates,
including any of its direct or indirect Subsidiaries, and their respective
directors, officers, employees, representatives, advisors and agents, and
each of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "AirTouch Indemnified Parties") from, against, and in
respect of, and pay or reimburse any such AirTouch Indemnified Party for, all
Indemnifiable Losses, as incurred, arising out of, relating to or resulting
from, directly or indirectly:
(i) any and all Excluded Claims and Excluded Settlements
(including the failure by U S WEST or any member of the U S WEST Group
to pay, perform or otherwise discharge such Excluded Claims and
Excluded Settlements in accordance with their terms);
(ii) any and all Specified Actions made, instituted or commenced
during the period from and after the Effective Time through and
including the date that is 18 months following the Effective Time;
PROVIDED, HOWEVER, that if a Specified Action arises out of, relates
to or results from, directly or indirectly, the conduct of the
Domestic Wireless Business or any part thereof both before and after
the Effective Time, then U S WEST's obligation under this Section
11.1(a)(ii) shall only be for the portion of such Specified Action
that arises out of, relates to, or results from, directly or
indirectly, the conduct of the Domestic Wireless Business, or any part
thereof, before or at the Effective Time;
(iii) the breach by U S WEST, Media (or the NV/PCS Transferee) or
their respective Affiliates, following the Effective Time, of any
agreement or covenant contained in any Transaction Agreement which
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by its express terms is to be performed or complied with after the
Effective Time;
(iv) any breach of or inaccuracy in any representation or
warranty of U S WEST contained in this Agreement (other than the last
sentence of Section 4.7);
(v) any breach of or inaccuracy in the representation and
warranty of U S WEST set forth in the last sentence of Section 4.7 or
the covenant of U S WEST set forth in Section 6.1(b)(vii).
(vi) the ownership of the Excluded Assets or the conduct of the
business of the Excluded Assets, or any part thereof, before, at or
after the Effective Time;
(vii) any Scheduled Property Claim;
(viii) the enforcement by the AirTouch Indemnified Parties of
their rights to be indemnified, defended and held harmless under this
Agreement; or
(ix) the conduct of the businesses of the U S WEST Group or the
ownership of the assets of the U S WEST Group or any part thereof (other
than the Domestic Wireless Business) in each case before, at or following
the Effective Time.
(b) (i) U S WEST shall not be liable to the AirTouch Indemnified
Parties under Section 11.1(a)(ii) or 11.1(a)(iv), except to the extent (and
then only to the extent) that the aggregate amount of all Indemnifiable
Losses for which U S WEST would, but for this Section 11.1(b), be liable
under Sections 11.1(a)(ii) and 11.1(a)(iv), in the aggregate, exceeds
$40,000,000, and then only for all such Indemnifiable Losses in excess
thereof up to an aggregate amount equal to $750,000,000.
(ii) A notice of any claim for indemnification under Section 11.1(a)(ii)
must be given by an Indemnified Party within 30 days following the 18-month
period set forth therein. A notice of any claim for indemnification under
Section 11.1(a)(iv) must be given by an Indemnified Party within 30 days
following the expiration of the period for which the applicable
representation and warranty survives the Effective Time pursuant to Section
12.1 of this Agreement. In the event notice of any claim for indemnification
under Section 11.1(a)(iv) is given within such period, the representation and
warranty that is the subject of such indemnification claim shall survive with
respect to such claim until such time as such claim is finally resolved.
(iii) U S WEST shall not be liable to the AirTouch Indemnified Parties
in respect of consequential, exemplary,
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special or punitive damages, or lost profits, except under Section 11.1(a)(v)
or to the extent actually paid by an AirTouch Indemnified Party in respect of
a Third Party Claim or an Action brought by a Governmental Authority in
connection with the Indemnifiable Losses covered by Section 11.1(a).
(iv) If any tribunal of competent jurisdiction shall have finally
determined in any Excluded Claim or any Specified Action which is subject to
indemnification under Section 11.1(a)(i) or (ii) that any portion of the
damages or judgment awarded in such Excluded Claim or Specified Action is
attributable to the gross negligence or willful misconduct of WMC in
providing services to the Domestic Wireless Business under the Services
Agreement, dated November 1, 1995, among AirTouch Cellular, AirTouch Cellular
of Nevada, NV and WMC (the "Services Agreement"), but specifically excluding
the actions of any employee of AirTouch seconded to NV, then to the extent
the actions which gave rise to such gross negligence or willful misconduct
were not authorized by, approved by or actually known to U S WEST or any
Subsidiary thereof (other than WMC) or to any Person who at the time of such
actions was an officer, executive employee or market manager of U S WEST or
any Subsidiary thereof (including any of the foregoing seconded to NV from
AirTouch) or was an employee of U S WEST or any Subsidiary thereof seconded
to, or otherwise functioning or serving in any capacity with, WMC, U S WEST
shall not be liable to the AirTouch Indemnified Parties for the amount of
Indemnifiable Losses attributable to such gross negligence or willful
misconduct.
(c) Except for the Disposed Asset Value adjustment under Section 3.3, U
S WEST shall have no liability to the AirTouch Indemnified Parties under
Section 11.1(a)(vii) in respect of any diminution of value of any Scheduled
Property or Taxes incurred in connection with a sale assignment, exchange or
other disposition of a Scheduled Property; PROVIDED that the foregoing shall
in no way limit or restrict the liability of U S WEST to the AirTouch
Indemnified Parties under Section 11.1(a)(vii) for any other Indemnifiable
Losses with respect to any Scheduled Property Claim, including (without
limitation) the costs and expenses of the investigation and defense thereof.
11.2 INDEMNIFICATION BY AIRTOUCH. (a) Subject to the terms and
conditions of this Agreement, from and after the Effective Time, AirTouch
shall indemnify, defend and hold harmless U S WEST and its respective
Affiliates and their respective directors, officers, employees,
representatives, advisors and agents, and each of the heirs, executors,
successors and assigns of any of the foregoing (collectively, the "U S WEST
Indemnified Parties") from, against, and in respect of, and pay or reimburse
any such U S WEST Indemnified Party for, all Indemnifiable Losses, as
incurred, arising out of, relating to or resulting from, directly or
indirectly:
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(i) the breach by AirTouch, following the Effective Time, of any
agreement or covenant contained in any Transaction Agreement which by
its express terms is to be performed or complied with after the
Effective Time;
(ii) any breach of or inaccuracy in any representation or warranty
of AirTouch contained in this Agreement;
(iii) any Excluded Claim or any Specified Action which is subject to
indemnification under Section 11.1(a)(i) or (ii) to the extent of the
portion, if any, of the damages or judgment awarded in such Excluded Claim
or Specified Action that any tribunal of competent jurisdiction shall have
finally determined is attributable to the gross negligence or willful
misconduct of WMC in providing services to the Domestic Wireless Business
under the Services Agreement, but specifically excluding the actions of any
employee of AirTouch seconded to NV, if the actions which gave rise to such
gross negligence or willful misconduct were not authorized by, approved by
or actually known to U S WEST or any Subsidiary thereof (other than WMC) or
to any Person who at the time of such actions was an officer, executive
employee or market manager of U S WEST or any Subsidiary thereof (other
than WMC) (including any of the foregoing seconded to NV from AirTouch) or
was an employee of U S WEST or any Subsidiary thereof (other than WMC)
seconded to, or otherwise functioning or serving in any capacity with, WMC;
(iv) the enforcement by the U S WEST Indemnified Parties of their
rights to be indemnified, defended and held harmless under this
Agreement; or
(v) except as to matters which are subject to indemnification by
U S WEST pursuant to Section 11.1, (A) the conduct of the Domestic Wireless
Business or the businesses of AirTouch and its Subsidiaries or (B) the
ownership of the assets of NV, PCS Holdings or the Domestic Wireless
Subsidiaries or AirTouch or its Subsidiaries or any part thereof, in each
case before, at or following the Effective Time.
(b) (i) AirTouch shall not be liable to the U S WEST Indemnified
Parties under Section 11.2(a)(ii), except to the extent (and then only to the
extent) that the aggregate amount of all Indemnifiable Losses for which
AirTouch would, but for this Section 11.2(b), be liable under Section
11.2(a)(ii), in the aggregate, exceeds $40,000,000, and then only for all
such Indemnifiable Losses in excess thereof up to an aggregate amount equal
to $750,000,000.
(ii) A notice of any claim for indemnification under Section 11.2(a)(ii)
must be given by an Indemnified Party within 30 days
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following the expiration of the period for which the applicable
representation and warranty survives the Effective Time pursuant to Section
12.1 of this Agreement. In the event notice of any claim for indemnification
under Section 11.2(a)(ii) is given within such period, the representation and
warranty that is the subject of such indemnification claim shall survive with
respect to such claim until such time as such claim is finally resolved.
(iii) AirTouch shall not be liable to the U S WEST Indemnified Parties
in respect of consequential, exemplary, special or punitive damages, or lost
profits, except to the extent actually paid by any U S WEST Indemnified Party
in respect of a Third Party Claim or Action brought by a Governmental
Authority in connection with the Indemnifiable Losses covered by Section
11.2(a).
11.3 PROCEDURES RELATING TO INDEMNIFICATION.
(a) In order for an Indemnified Party to be entitled to any
indemnification provided for under this Agreement in respect of, arising out
of or involving a claim or demand made by any Person who is not an
Indemnifying Party against an Indemnified Party (a "Third Party Claim"), such
Indemnified Party must notify the Indemnifying Party in writing of the Third
Party Claim reasonably promptly after receipt by such Indemnified Party of
written notice of the Third Party Claim, specifying in reasonable detail the
nature of such Third Party Claim (the "Claim Notice"); PROVIDED, HOWEVER,
that failure to give such notification shall not affect the indemnification
provided hereunder except to the extent the Indemnifying Party shall have
been actually prejudiced as a result of such failure and that with respect to
any matter for which U S WEST is the Indemnifying Party, U S WEST shall be
deemed to have received notice with respect to all matters by or against the
Domestic Wireless Business as to which any claim or demand to U S WEST or any
of its Subsidiaries shall have been made before or at the Effective Time.
(b) If a Third Party Claim is made against an Indemnified Party, the
Indemnifying Party shall have 30 days (or less if the nature of the Third
Party Claim requires) from its receipt of the Claim Notice (the "Notice
Period") to notify the Indemnified Party whether or not the Indemnifying
Party desires, at the Indemnifying Party's sole cost and expense and by
counsel of its own choosing (and reasonably acceptable to the Indemnified
Party), to defend against such Third Party Claim; PROVIDED, HOWEVER, that if,
under applicable standards of professional conduct a conflict on any
significant issue between the Indemnifying Party and any Indemnified Party
exists in respect of such Third Party Claim, then the Indemnifying Party
shall reimburse the Indemnified Party for the reasonable fees and expenses of
one outside counsel, plus any local counsel, who shall be reasonably
acceptable to the Indemnifying Party. The Indemnifying Party shall be liable
for the fees and expenses of counsel employed by the Indemnified Party for
any period during
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which the Indemnifying Party has not assumed the defense thereof (other than
during any period in which the Indemnified Party shall have failed to give
notice of the Third Party Claim as provided above). Notwithstanding the
foregoing, the Indemnifying Party shall not be entitled to assume the defense
of any Third Party Claim (and shall be liable for the fees and expenses of
counsel, who shall be reasonably acceptable to the Indemnifying Party, and
related expenses incurred by the Indemnified Party in defending such Third
Party Claim) if the Third Party Claim either (i) is a Specified Action and
the Indemnified Party or Indemnifying Party reasonably determines that the
Indemnified Party's residual liability with respect to such Specified Action
(after giving effect to any potential indemnification under Section
11.1(a)(ii)) may exceed 50% of the aggregate liability in respect of such
Specified Action or (ii) seeks an order, injunction or other equitable relief
or relief for other than money damages against the Indemnified Party which
the Indemnified Party reasonably determines cannot be separated from any
related claim for money damages. If such equitable relief or other relief
portion of the Third Party Claim can be so separated from that for money
damages, the Indemnifying Party shall be entitled to assume the defense of
the portion relating to money damages. The indemnification required by
Section 11.1 or 11.2, as the case may be, shall be made by periodic payments
of the amount thereof during the course of the investigation or defense, as
and when bills are received or the Indemnifiable Loss is incurred. If the
Indemnifying Party chooses to defend or prosecute any Third Party Claim (and
is permitted hereunder to do so), the Indemnified Party will agree to any
settlement, compromise or discharge of such Third Party Claim which the
Indemnifying Party may recommend and which by its terms obligates the
Indemnifying Party to pay the full amount of liability in connection with
such Third Party Claim; PROVIDED, HOWEVER, that, without the Indemnified
Party's consent, the Indemnifying Party shall not consent to entry of any
judgment or enter into any settlement (x) that provides for injunctive or
other nonmonetary relief affecting the Indemnified Party or (y) that does not
include as an unconditional term thereof the giving by each claimant or
plaintiff to such Indemnified Party of a release from all liability with
respect to such claim. If the Indemnifying Party elects not to defend
against such Third Party Claim or is not permitted to defend against such
claim in the circumstances described above, then the Indemnifying Party shall
have the right to participate in any such defense at its sole cost and
expense, but the Indemnified Party shall control the investigation, defense
and settlement thereof at the reasonable cost and expense of the Indemnifying
Party. Whether or not the Indemnifying Party shall have assumed or is
permitted to assume the defense of a Third Party Claim, the Indemnified Party
shall not admit any liability with respect to, or settle, compromise or
discharge, such Third Party Claim without the Indemnifying Party's prior
written consent (which consent shall not be unreasonably withheld). The
parties hereto shall cooperate in the defense or prosecution of any Third
Party Claim, which cooperation shall include the retention and (upon
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the Indemnifying Party's request) the provision to the Indemnifying Party of
records and information which are reasonably relevant to such Third Party
Claim, and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. Any Disputes between the Indemnifying Party and the Indemnified
Party under this Section 11.3(b) shall be resolved in the manner provided in
Section 12.14.
(c) In the event that an Indemnified Party should have a claim against
the Indemnifying Party hereunder which does not involve a Third Party Claim,
the Indemnified Party shall send a Claim Notice with respect to such claim to
the Indemnifying Party with reasonable promptness. The failure by any
Indemnified Party so to notify the Indemnifying Party shall not relieve the
Indemnifying Party from any liability which it may have to such Indemnified
Party under this Agreement, except to the extent that the Indemnifying Party
shall have been actually prejudiced by such failure. The Indemnifying Party
shall have 30 days from the date such Claim Notice is delivered during which
to notify the Indemnified Party in writing of any good faith objections it
has to the Indemnified Party's Claim Notice or claims for indemnification,
specifying in reasonable detail each of the Indemnifying Party's objections
thereto. If the Indemnifying Party delivers such written notice of objection
within such 30-day period, the Indemnifying Party and the Indemnified Party
shall attempt in good faith to negotiate a resolution of such Dispute. If
the Indemnifying Party and the Indemnified Party are unable to negotiate a
resolution of such Dispute within 30 days after the delivery by the
Indemnifying Party of such written notice of objection, such Dispute shall be
resolved in the manner provided in Section 12.14. If the Indemnifying Party
does not notify the Indemnified Party within 30 days following its receipt of
such notice that the Indemnified Party disputes its liability with respect to
such claim under Section 11.1 or 11.2, as the case may be, the claim shall be
conclusively deemed a liability of the Indemnifying Party under Section 11.1
or 11.2, as the case may be, and the Indemnifying Party shall pay the amount
of such liability to the Indemnified Party on demand or, in the case of any
notice in which the amount of the claim (or any portion thereof) is
estimated, on such later date when the amount of such claim (or any such
portion thereof) becomes finally determined.
11.4 MISCELLANEOUS INDEMNIFICATION PROVISIONS.
(a) The Indemnifying Party agrees to indemnify any successors of the
Indemnified Party to the same extent and in the same manner and on the same
terms and conditions as the Indemnified Party is indemnified by the
Indemnifying Party under this Article XI, provided that such Indemnified
Party and such successor have complied with the provisions of Section 12.11,
if applicable.
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(b) In determining the amount of any indemnity payable under this
Article XI or the number of shares of AirTouch Common Stock deliverable by U
S WEST to AirTouch pursuant to Section 3.3, such amount shall be (i)
increased to take account of any net Tax cost incurred by the recipient
thereof as a result of the receipt or accrual of payments hereunder
(grossed-up for such increase) and (ii) reduced to take account of any net
Tax benefit realized by the recipient arising from the incurrence or payment
of any such payment, other than any such net Tax benefit to which the
Indemnified Party would be entitled without regard to such item. In
computing the amount of any such Tax cost or Tax benefit, the recipient shall
be deemed to recognize all other items of income, gain, loss, deduction or
credit before recognizing any item arising from the receipt or accrual of any
payment hereunder.
(c) In determining the amount of any indemnity payable under this
Article XI, such amount shall be reduced by any insurance recovery if and
when actually realized or received in each case in respect of such
Indemnifiable Loss. Any such recovery shall be promptly repaid by the
Indemnified Party to the Indemnifying Party following the time at which such
recovery is realized or received pursuant to the previous sentence, minus all
reasonably allocable costs, charges and expenses incurred by the Indemnified
Party in obtaining such recovery.
(d) Notwithstanding the foregoing, if (x) the amount of Indemnifiable
Losses for which the Indemnifying Party is obligated to indemnify the
Indemnified Party is reduced by any Tax benefit or insurance recovery in
accordance with the provisions of this Section 11.4, and (y) the Indemnified
Party subsequently is required to repay the amount of any such Tax benefit or
insurance recovery or such Tax benefit or insurance recovery is disallowed,
then the obligation of the Indemnifying Party to indemnification with respect
to such amounts shall be reinstated immediately and such amounts shall be
paid promptly to the Indemnified Party in accordance with the provisions of
this Agreement.
11.5 CONTRIBUTION. To the extent that any indemnity provided for in
this Article XI is unavailable to an Indemnified Party in respect of any of
the Indemnifiable Losses of such Indemnified Party, then the Indemnifying
Party, in lieu of indemnifying such Indemnified Party hereunder, shall
contribute to the amount paid or payable by such Indemnified Party as a
result of such Indemnifiable Losses in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party on the one hand and of
the Indemnified Party on the other hand in connection with the action,
inaction, statements or omissions that resulted in such Indemnifiable Losses
as well as any other relevant equitable considerations.
11.6 TAX INDEMNIFICATION. Notwithstanding anything to the contrary in
this Article XI, all indemnification relating to
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Taxes shall be governed by the Tax Sharing Agreement (except to the extent
that the amount of any Indemnifiable Loss under this Agreement is to be
determined as provided in Section 11.4 hereof). In the event and to the
extent that there shall be a conflict between the provisions of this
Agreement (including, without limitation, the provisions of this Article XI)
and the provisions of the Tax Sharing Agreement, the provisions of the Tax
Sharing Agreement shall control.
11.7 PAYMENTS ADJUSTMENTS TO MERGER CONSIDERATION. It is the intention
of the parties hereto that payments made by the parties to each other after
the Effective Time pursuant to this Article XI or Section 3.3 or otherwise
under the Transaction Agreements are to be treated as relating back to the
Effective Time as an adjustment to the Merger Consideration, and the parties
shall take positions consistent with such intention with any Governmental
Authority, unless with respect to any payment any party receives an opinion
of counsel to the effect that there is no reasonable basis for such position.
ARTICLE XII
GENERAL PROVISIONS
12.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The
representations and warranties in this Agreement shall not survive the
Effective Time; PROVIDED, HOWEVER, that (a) all of the representations and
warranties of U S WEST (other than the last sentence of Section 4.7) and the
representations and warranties of AirTouch contained in the last sentence of
Section 5.2(a) and Sections 5.4 and 5.5 shall survive until the date that is
18 months following the Effective Time and (b) the representation and
warranty of U S WEST set forth in the last sentence of Section 4.7, which
shall survive indefinitely. The covenants contained in this Agreement shall
not survive the Effective Time except to the extent that they provide for or
contemplate performance following the Effective Time and except for the
covenant set forth in Section 6.1(b)(vii), which shall survive indefinitely.
12.2 LEGENDS. All certificates evidencing shares of AirTouch Common
Stock, AirTouch Class D Preferred Stock or AirTouch Class E Preferred Stock
acquired by Media (or the NV/PCS Transferee) 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
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THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
12.3 REMOVAL OF LEGENDS. Any legend endorsed on a certificate pursuant
to Section 12.2 shall be removed (a) if the securities represented by such
certificate shall have been effectively registered under the Securities Act
or otherwise lawfully sold in compliance with Rule 144 under the Securities
Act, or (b) if the holder of such securities shall have provided AirTouch
with an opinion of counsel, in form and substance reasonably acceptable to
AirTouch and its counsel stating that a sale, transfer or assignment of the
securities may be made without registration under the Securities Act.
12.4 EXPENSES. Except as otherwise provided herein or in any of the
other Transaction Agreements, each of the parties hereto (except for NV and
PCS Holdings, the fees, expenses and costs of which shall be paid by U S
WEST) shall pay the fees and expenses of its respective counsel, accountants
and other experts and shall pay all other costs and expenses incurred by it
in connection with the negotiation, preparation and execution of this
Agreement and the consummation of the transactions contemplated hereby,
including, without limitation, all costs and expenses incurred by it to
obtain required Consents to the consummation of the transactions contemplated
hereby.
12.5 GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware, without reference to
choice of law principles, except to the extent that the laws of the State of
Colorado are mandatorily applicable to the Merger.
12.6 NOTICES. Notices, requests, permissions, waivers, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if signed by the respective parties giving them (in the case of
any corporation the signature shall be by an officer thereof) and delivered
by hand or by telecopy or on the date of receipt indicated on the return
receipt if mailed (registered or certified, return receipt requested,
properly addressed and postage prepaid):
If to U S WEST, Media (or the NV/PCS Transferee),
or NV or PCS Holdings (prior to the Merger), to:
U S WEST, Inc.
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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with a copy (which shall not constitute notice) to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Block, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to AirTouch
or NV or PCS Holdings (after the Merger), to:
AirTouch Communications, Inc.
Xxx Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxx, Esq.
Senior Vice President - Legal,
External Affairs and Secretary
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy (which shall not constitute notice) to:
Pillsbury Madison & Sutro LLP
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxx III, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Such names and addresses may be changed by notice given in accordance with this
Section 12.6.
12.7 ENTIRE AGREEMENT.
(a) This Agreement, the Tax Sharing Agreement, the Confidentiality
Agreements, the Patent License Agreement, the Resources Agreement, the
Software License Agreement and the New Investment Agreement, together with
all schedules, exhibits, annexes, certificates, instruments and agreements
delivered pursuant hereto and thereto, contain the entire understanding of
the parties hereto and thereto with respect to the subject matter contained
herein and therein and, except to the extent specifically provided herein or
therein, supersede and cancel all prior agreements, negotiations,
correspondence, undertakings and communications of the parties, oral or
written, respecting such subject matters. There are no restrictions,
promises, representations, warranties, agreements or undertakings of any
party hereto or thereto with respect to the transactions contemplated by this
Agreement or the other agreements referred to above other than those set
forth herein or therein or made hereunder or thereunder.
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(b) The Joint Venture Organization Agreement, the WMC Agreement, the
Investment Agreement, the Exchange Agreement, the Arbitration Agreement, the
PCS Nucleus Agreement, the PrimeCo Agreement, the TOMCOM Agreement and all
letter and other agreements entered into by U S WEST, U S WEST Colorado and
AirTouch and their respective Subsidiaries pursuant thereto or in connection
therewith (the "Joint Venture Agreements") shall remain in full force and
effect, without modification, as a result of the execution of this Agreement;
PROVIDED that the obligation of the parties to proceed with any of the
transactions contemplated under the Joint Venture Agreements shall be
suspended during the period in which this Agreement remains in effect. At
the Effective Time, each of AirTouch and U S WEST (and their respective
successors and assigns and Subsidiaries) shall be released and forever
discharged from any and all obligations and liabilities of any kind at any
time arising under or in relation to the Joint Venture Agreements, and each
of the Joint Venture Agreements (other than the WMC Agreement, the PCS
Nucleus Agreement, the PrimeCo Agreement and the TOMCOM Agreement) shall
terminate.
12.8 DISCLOSURE SCHEDULES. The U S WEST Merger Disclosure Schedule
delivered by U S WEST and Media to AirTouch and the AirTouch Merger
Disclosure Schedule delivered by AirTouch to U S WEST and Media are
incorporated into this Agreement by reference and made a part hereof.
12.9 HEADINGS; REFERENCES. The article, section and paragraph headings
contained herein are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. All references herein
to "Articles", "Sections" or "Exhibits" shall be deemed to be references to
Articles or Sections hereof or Exhibits hereto unless otherwise indicated.
12.10 COUNTERPARTS. This Agreement may be executed in counterparts and
each counterpart shall be deemed to be an original, but all of which shall
constitute one and the same original.
12.11 PARTIES IN INTEREST; ASSIGNMENT; SUCCESSORS.
(a) Subject to Section 12.11(b) and (c), neither this Agreement nor any
of the rights, interest or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties.
Subject to Section 12.11(b), this Agreement shall inure to the benefit of and
be binding upon U S WEST, Media, NV, PCS Holdings and AirTouch and their
respective successors and permitted assigns. Nothing in this Agreement,
express or implied, is intended to confer upon any other Person any rights or
remedies under or by reason of this Agreement.
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(b) (i) If the U S WEST Separation is consummated (whether prior to or
following the Effective Time) and, in connection therewith, U S WEST
distributes to its stockholders (by dividend, redemption, exchange, merger or
otherwise) all of the outstanding capital stock of MediaCo, U S WEST shall
assign to MediaCo all of its rights and obligations under this Agreement,
including but not limited to, its obligations to the AirTouch Indemnified
Parties under Article XI of this Agreement; PROVIDED, HOWEVER, that U S WEST
shall not be required to assign to MediaCo its rights and obligations under
Sections 7.8, 7.9, 7.10, 7.11, 7.12 and Article VIII. Upon such assumption
by MediaCo of the obligations so assigned (by the instrument attached hereto
as Exhibit K-1), U S WEST shall be released from its obligations to AirTouch
to the extent of such assumption by MediaCo. MediaCo's Affiliates shall be
entitled to the benefit of any such rights assigned to MediaCo to the same
extent as such Affiliates are entitled to the benefits of such rights
hereunder as Affiliates of U S WEST.
(ii) If the U S WEST Separation is consummated (whether prior to or
following the Effective Time) and, in connection therewith, U S WEST
distributes to its stockholders (by dividend, redemption, exchange, merger or
otherwise) all of the outstanding capital stock of CommunicationsCo, U S WEST
shall assign to CommunicationsCo (fully or on a shared basis) such of its
rights and obligations under Sections 7.8, 7.9, 7.10, 7.11, 7.12 and Article
VIII as it may determine. Upon such assumption by CommunicationsCo of the
obligations so assigned by the instrument attached hereto as Exhibit K-2), U
S WEST shall be released from its obligations to AirTouch to the extent of
such assumption by CommunicationsCo. CommunicationsCo's Affiliates shall be
entitled to the benefit of any such rights assigned to CommunicationsCo to
the same extent as such Affiliates are entitled to the benefit of such rights
hereunder as Affiliates of U S WEST.
(c) If the U S WEST Separation is consummated prior to the Effective
Time, Media shall assign to the NV/PCS Transferee all of its rights and
obligations under this Agreement. Upon assumption by the NV/PCS Transferee
of the obligations so assigned (by the instrument attached hereto as Exhibit
K-3), Media shall be released from its obligations to AirTouch to the extent
of such assumption.
12.12 SEVERABILITY. If any provision of this Agreement or the
application thereof to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to Persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon
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any such determination, the parties shall negotiate in good faith in an
effort to agree upon a suitable and equitable substitute provision to effect
the original intent of the parties.
12.13 ENFORCEMENT. The parties agree that irreparable damage would
occur and that the parties would not have any adequate remedy at law 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 breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any United States federal court
located in the State of Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity.
In addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any United States federal court located in the State
of Delaware or any Delaware state court in the event any dispute arises out
of this Agreement or any of the transactions contemplated by this Agreement,
(b) agrees that only such courts shall have jurisdiction and venue over any
such dispute, (c) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such
court and (d) agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any
court other than a United States federal court sitting in the State of
Delaware or a Delaware state court. The provisions of this Section 12.13
shall not apply to any of the other Transaction Agreements.
12.14 DISPUTE RESOLUTION.
(a) GENERAL ARBITRATION PROVISIONS.
(i) The parties hereto agree that all Disputes shall be resolved by
binding arbitration, which shall be administered by the American
Arbitration Association ("AAA") in Phoenix, Arizona, and, except as
expressly provided in this Agreement, shall be conducted in accordance with
the Commercial Arbitration Rules of the American Arbitration Association,
as such Rules may be amended from time to time, with the hearing locale to
be Phoenix, Arizona.
(ii) A single neutral arbitrator shall preside over the arbitration
and decide the Dispute (the "Decision").
(iii) The Decision shall be binding, and the prevailing party may
enforce such decision in any court of competent jurisdiction.
(iv) The parties shall cooperate with each other in causing the
arbitration to be held in as efficient and expeditious a manner as
practicable.
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(v) The parties have selected arbitration in order to expedite the
resolution of Disputes and to reduce the costs and burdens associated with
litigation. The parties agree that the arbitrator should take these
concerns into account when determining the scope of permissible discovery
and other hearing and pre-hearing procedures.
(vi) Without limiting any other remedies which may be available under
Applicable Law, the arbitrator shall have no authority to award punitive
damages.
(vii) The arbitrator shall render a decision within 120 days after
accepting an appointment to serve as arbitrator unless the parties
otherwise agree or the arbitrator makes a finding that a party has carried
the burden of showing good cause for a longer period.
(viii) Notwithstanding anything herein to the contrary, any party may
seek a temporary restraining order or a preliminary injunction from any
court of competent jurisdiction in order to prevent immediate and
irreparable injury, loss or damage pending the selection of an arbitrator
to render a Decision on the ultimate merits of any Dispute.
(b) SELECTION OF THE ARBITRATOR.
(i) The parties hereto shall cooperate in good faith to select a
mutually agreeable arbitrator. If the parties have not agreed upon an
arbitrator within 30 days of the initiation of the arbitration, then an
arbitrator shall be selected pursuant to the provisions of Section
12.14(b)(ii) of this Agreement.
(ii) If the parties are unable to agree upon an arbitrator pursuant to
the procedures of Section 12.14(b)(i) of this Agreement, then the American
Arbitration Association shall designate an arbitrator pursuant to its
Commercial Arbitration Rules, except that the list of potential arbitrators
from the National Panel of Commercial Arbitrators submitted to the parties
shall be drawn from throughout the United States other than from the State
of Arizona, and shall have expertise in the subject matter or nature of the
Dispute.
(c) CONFIDENTIALITY. All proceedings and decisions of the arbitrator shall
be maintained in confidence, to the extent legally permissible, and shall not be
made public by any party or any arbitrator without the prior written consent of
all parties to the arbitration, except as may be required by law.
(d) FEES AND COSTS. Each party shall bear its own costs and attorneys'
fees in connection with any arbitration, and the parties shall equally bear the
fees, costs and expenses of the
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arbitrator and the arbitration proceedings; provided, however, that the
arbitrator may exercise discretion to award costs, but not attorneys' fees,
to the prevailing party.
(e) AWARD. Any arbitration award shall be binding and enforceable against
the parties hereto, their successors and assigns, and judgment may be entered
thereon in any court of competent jurisdiction.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf by its officers hereunto duly authorized, all as of
the day and year first above written.
U S WEST, INC.
By:
------------------------------------
Name:
Title:
U S WEST MEDIA GROUP, INC.
By:
------------------------------------
Name:
Title:
U S WEST NEWVECTOR GROUP, INC.
By:
------------------------------------
Name:
Title:
U S WEST PCS HOLDINGS, INC.
By:
------------------------------------
Name:
Title:
AIRTOUCH COMMUNICATIONS, INC.
By:
------------------------------------
Name:
Title:
