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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report: January 29, 1998
AirTouch Communications, Inc.
Delaware 1-12342 94-3213132
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
One California Street, San Francisco, California 94111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 658-2000
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Item 5. Other Events.
AirTouch Communications, Inc. and U S WEST, Inc. announced on January 29, 1998
that they have signed a definitive agreement on the merger of their domestic
wireless interests as described in the press release attached as Exhibit 99.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
Exhibit 2.1 Agreement and Plan of Merger among U S WEST, Inc.,
U S WEST Media Group, Inc., U S WEST NewVector
Group, Inc. and AirTouch Communications, Inc. dated
as of January 29, 1998.
Exhibit 99. Press Release dated January 29, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AIRTOUCH COMMUNICATIONS, INC.
By: /s/ MOHAN S. GYANI
-----------------------------------
Mohan S. Gyani
Executive Vice President and
Chief Financial Officer
Date: February 9, 1998
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Exhibits Index
Exhibit 2.1 Agreement and Plan of Merger among U S WEST, Inc., U S WEST
Media Group, Inc., U S WEST NewVector Group, Inc. and AirTouch
Communications, Inc. dated as of January 29, 1998.
Exhibit 99. Press Release dated January 29, 1998
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EXHIBIT 2.1
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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
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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
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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
Certain Schedules and Exhibits that do not contain material information
have been omitted. The Company will furnish such exhibits and schedules
to the Commission supplementally upon request.
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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).
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"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 Hart-Scott-Rodino 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).
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<PAGE> 15
"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.
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<PAGE> 16
"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
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<PAGE> 17
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
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<PAGE> 18
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.
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<PAGE> 19
"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.
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<PAGE> 20
"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.
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<PAGE> 21
"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 mark, 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.
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<PAGE> 22
"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:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
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)
</TABLE>
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<PAGE> 23
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
AirTouch Consents........................................ 5.4
AirTouch Indemnified Parties............................. 11.1
AirTouch Pension Plan.................................... 8.3(b)
AirTouch Retirement Plan................................. 8.3(b)
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)
</TABLE>
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<PAGE> 24
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
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)
</TABLE>
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, 235 Montgomery
Street, San Francisco, California, 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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<PAGE> 25
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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<PAGE> 26
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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<PAGE> 27
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. ss. 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 Lehman 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 Morgan Stanley & 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 & Manges 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 NonQualified 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 & Manges 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 & Manges 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 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 or , 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 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.
7800 East Orchard Road
Englewood, Colorado 80111
Attention: General Counsel
Telephone: (303) 793-6500
Telecopy: (303) 793-6707
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with a copy (which shall not constitute notice) to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Dennis J. Block, Esq.
Telephone: (212) 310-8000
Telecopy: (212) 310-8007
If to AirTouch
or NV or PCS Holdings (after the Merger), to:
AirTouch Communications, Inc.
One California Street
San Francisco, California 94111
Attention: Margaret G. Gill, Esq.
Senior Vice President - Legal,
External Affairs and Secretary
Telephone: (415) 658-2000
Telecopy: (415) 658-2551
with a copy (which shall not constitute notice) to:
Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, California 94101
Attention: Nathaniel M. Cartmell III, Esq.
Telephone: (415) 983-1000
Telecopy: (415) 983-1200
Such names and addresses may be changed by notice given in accordance with this
Section .
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
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 (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: /s/ James E. Shaughnessy
------------------------------------
Name: James E. Shaughnessy
Title: Vice President
U S WEST MEDIA GROUP, INC.
By: /s/ Richard A. Post
------------------------------------
Name: Richard A. Post
Title: Vice President and
Chief Financial Officer
U S WEST NEWVECTOR GROUP, INC.
By: /s/ Stephen E. Brilz
------------------------------------
Name: Stephen E. Brilz
Title: Assistant Secretary
U S WEST PCS HOLDINGS, INC.
By: /s/ Stephen E. Brilz
------------------------------------
Name: Stephen E. Brilz
Title: Assistant Secretary
AIRTOUCH COMMUNICATIONS, INC.
By:
------------------------------------
Name:
Title:
<PAGE> 93
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: James E. Shaughnessey
Title: Vice President
U S WEST MEDIA GROUP, INC.
By:
------------------------------------
Name: Richard A. Post
Title: Vice President and
Chief Financial Officer
U S WEST NEWVECTOR GROUP, INC.
By:
------------------------------------
Name: Stephen E. Brilz
Title: Assistant Secretary
U S WEST PCS HOLDINGS, INC.
By:
------------------------------------
Name: Stephen E. Brilz
Title: Assistant Secretary
AIRTOUCH COMMUNICATIONS, INC.
By: /s/ Mohan S. Gyani
------------------------------------
Name: Mohan S. Gyani
Title: Executive Vice President
and Chief Financial Officer
<PAGE> 1
EXHIBIT 99
FOR RELEASE: JANUARY 29, 1998
CONTACT: KATHY REINHART, AIRTOUCH 415-658-2042
SUSAN ROSENBERG, AIRTOUCH 415-658-2209
CATHY FOWLER, U S WEST MEDIA GROUP 303-793-6509
STEVE LANG, U S WEST MEDIA GROUP 303-793-6290
AIRTOUCH AND U S WEST MEDIA GROUP ANNOUNCE NEW
$5.7 BILLION PLAN TO MERGE U.S. WIRELESS INTERESTS
- AIRTOUCH EXPANDS WIRELESS FOOTPRINT AND INCREASES
U.S. CELLULAR CUSTOMER BASE 50 PERCENT -
- U S WEST MEDIA GROUP TO FOCUS RESOURCES ON CORE BROADBAND STRATEGY
WHILE REDUCING DEBT BY ABOUT $1.4 BILLION -
SAN FRANCISCO - AirTouch Communications Inc. (NYSE:ATI) and U S WEST Media Group
(NYSE:UMG) today announced a new definitive agreement to merge the U.S. cellular
and PCS interests of U S WEST Media Group into AirTouch. U S WEST Media Group's
international wireless interests are not included in this transaction.
With this acquisition, AirTouch will rank as the second largest wireless
provider in the United States, based on third quarter 1997 proportionate
customers.
The companies value the transaction at about $5.7 billion. U S WEST Media Group
will receive approximately $1.6 billion in AirTouch dividend-bearing preferred
stock and about $2.7 billion in AirTouch common stock. Also, U S WEST Media
Group will transfer approximately $1.4 billion of debt to AirTouch.
Upon closing, AirTouch will own U S WEST Media Group's U.S. cellular property, U
S WEST NewVector Group, and its interest in PCS provider PrimeCo Personal
Communications, thereby increasing AirTouch's ownership interest in PrimeCo from
approximately 25 to 50 percent. By bringing a tax-efficient close to a very
successful partnership, the merger is an important strategic milestone for both
companies, enhancing AirTouch's wireless scale and U S WEST Media Group's focus
on broadband in the U.S. and abroad, and wireless internationally.
According to AirTouch chairman and CEO Sam Ginn, "With this acquisition,
AirTouch casts a strong vote of confidence in our industry's future and
reinforces our commitment to wireless. By adding the U.S. wireless interests of
U S WEST Media Group, we'll significantly bolster our operating scale and expand
our footprint. And we'll do so by
<PAGE> 2
taking on more debt and issuing preferred stock, thereby minimizing the number
of shares of AirTouch common stock issued."
"We are very pleased with this agreement. It provides great value for great
properties. It allows for a streamlined, tax-efficient culmination of our
partnership with AirTouch while allowing us to focus our resources on our core
businesses. Our broadband strategy will benefit from reduced leverage, increased
capital availability and enhanced management focus. In short, it's the right
deal for both our shareowners and customers," said Chuck Lillis, president and
CEO of U S WEST Media Group.
As a result of the merger, AirTouch will add to its proportionate U.S. wireless
portfolio, 2.2 million cellular customers in 12 states and 62,000 PrimeCo
customers, based on third quarter 1997 proportionate results. The company will
expand its wireless footprint to cover 34 million more POPs.
The change of ownership will be transparent to most NewVector customers. The two
companies have been operating their U.S. cellular properties as part of a joint
venture agreement since July 1994, and NewVector began using the AirTouch
Cellular brand more than a year ago. In addition, NewVector employees will
generally follow their work and become AirTouch employees once the transaction
is final.
According to the terms of the merger, the number of AirTouch common shares to be
issued will vary depending on the trading price of AirTouch common stock during
a 30-day period prior to closing. AirTouch will issue approximately 60.8 million
shares to U S WEST Media Group if AirTouch stock is trading at $45 or higher,
for a total deal value of $5.735 billion. If AirTouch is trading at $40 or
lower, U S WEST Media Group will receive approximately 67.1 million AirTouch
shares for a total deal value of $5.685 billion.
AirTouch's earnings per share dilution, primarily due to the amortization of
acquisition intangibles, is expected to peak around $0.40 in 1999 and decline
thereafter. The company plans to pursue cost savings to mitigate this dilution.
The company does not expect a change in its investment grade credit ratings as a
result of the transaction.
Once consummated, the transaction will replace the 1994 multi-phased joint
venture agreement.
Closing of the merger, which is expected about the middle of this year, is
subject to Hart-Scott-Rodino clearance and other approvals. Shareowner approvals
are not required.
AirTouch Communications is a global wireless communications company, with
interests in cellular, paging, and personal communications services in the
United States, Belgium, Germany, India, Italy, Japan, Poland, Portugal, Romania,
South Korea, Spain, and Sweden, as well as an interest in the Globalstar
satellite system. The company, based in San Francisco, serves more than 10
million proportionate customers worldwide.
<PAGE> 3
U S WEST Media Group (NYSE:UMG) one of America's largest broadband
communications companies, is involved in domestic and international cable and
telephony, wireless communications, and directory and information services. For
1996, the group had proportionate pro forma revenue of $8.1 billion. U S WEST
Media Group is one of two major groups owned by parent company U S WEST, Inc.
The other major group is U S WEST Communications, which provides
telecommunications services in 14 western and midwestern states. U S WEST has
proposed splitting the two groups into separate public companies sometime after
mid-1998, pending shareowner and other approvals.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995
Except for the historical information presented, the matters discussed in this
release are forward-looking statements and are subject to risks and
uncertainties that could cause actual results to differ materially. Such factors
include: a change in economic conditions in the various markets served by
AirTouch's operations which would adversely affect the level of demand for
wireless services; greater-than-anticipated competitive activity requiring new
pricing and/or product offerings or resulting in higher acquisition costs;
greater-than-expected customer growth driving increased investment in network
capacity; level of fraudulent activity; impact of new business opportunities
requiring significant up-front investment; the timing of combination of
AirTouch's and U S WEST Media Group's cellular properties in the U.S.; impact on
capital spending from the deployment of new technologies; and that technologies
will not perform according to expectations. These and other factors related to
the business are described in the Company's 10-K under Investment
Considerations" and the quarterly reports on Form 10-Q.
###
