EXHIBIT 99.7
EXCHANGE AGREEMENT
This Agreement, dated as of June 29, 1998, is entered into between Adelphia
Communications Corporation, a Delaware corporation ("Adelphia"), and Benbow PCS
Ventures, Inc., a California corporation ("Benbow").
WHEREAS, Adelphia holds 1,731,964 shares of Series A Redeemable Preferred
Shares (the "Series A Stock") of Benbow; and
WHEREAS, the parties wish to provide that the Series A Stock may be
exchanged for shares of Common Stock, $.01 par value per share ("Arch Common
Stock"), of Arch Communications Group, Inc., a Delaware corporation ("Arch"), on
the terms set forth herein;
NOW, THEREFORE, the parties hereby agree as follows:
1. OPTIONAL EXCHANGE. Series A Stock shall be exchangeable for Arch Common
Stock as follows:
(a) Each share of Series A Stock shall be exchangeable, to the extent
Xxxxxx can legally acquire such shares of stock, at the option of the holder
thereof, at any time and from time to time on or before April 8, 2000, and
without the payment of additional consideration by the holder thereof, for such
number of fully paid and nonassessable shares of Arch Common Stock as is
determined by dividing (i) $10.00 (the "Optional Exchange Numerator") by (ii)
the Optional Exchange Price (as defined below). The "Optional Exchange Price"
shall be the higher of (x) $13.00 (the "Optional Exchange Denominator") and (y)
the unweighted average of the closing sale prices of the Arch Common Stock on
the Nasdaq National Market for the ten trading days immediately preceding the
date of exchange. In the event of a liquidation of Xxxxxx, the right of the
holders of shares of Series A Stock to exchange such shares for Arch Common
Stock shall terminate at the close of business on the first full day preceding
the date fixed for the payment of any amounts distributable on liquidation to
the holders of Series A Stock.
(b) No fractional shares of Arch Common Stock shall be delivered upon
exchange of the Series A Stock. In lieu of any fractional shares to which the
holder would otherwise be entitled, Xxxxxx shall pay cash equal to such fraction
multiplied by the then effective Optional Exchange Price.
(c) In order for a holder of Series A Stock to exchange shares of
Series A Stock for shares of Arch Common Stock, such holder shall surrender the
certificate or certificates for such shares of Series A Stock, at the office of
the transfer agent for the Series A Stock (or at the principal office of Xxxxxx
if Xxxxxx serves as its own transfer agent), together with written notice that
such holder elects to exchange all or any number of the shares of the Series A
Stock
represented by such certificate or certificates. Such notice shall state such
holder's name or the names of the nominees in which such holder wishes the
certificate or certificates for shares of Arch Common Stock to be registered. If
required by Xxxxxx, certificates surrendered for exchange shall be endorsed or
accompanied by a written instrument or instruments of transfer, in form
satisfactory to Xxxxxx, duly executed by the registered holder or his, her or
its attorney duly authorized in writing. The date of receipt of such
certificates and notice by the transfer agent (or by Xxxxxx if Xxxxxx serves as
its own transfer agent) shall be the exchange date ("Optional Exchange Date").
Xxxxxx shall, as soon as practicable after the Optional Exchange Date, deliver
at such office to such holder of Series A Stock, or to his, her or its nominees,
a certificate or certificates for the number of shares of Arch Common Stock to
which such holder shall be entitled, together with cash in lieu of any fraction
of a share.
2. MANDATORY EXCHANGE.
(a) On April 8, 2000, to the extent Xxxxxx can legally acquire such
shares of stock, each then outstanding Series A Preferred Share shall
automatically be exchanged for such number of fully paid and nonassessable
shares of Arch Common Stock as is determined by dividing (i) $10.00 (the
"Mandatory Exchange Numerator") by (ii) the unweighted average of the closing
sale prices of the Arch Common Stock on the Nasdaq National Market for the ten
trading days immediately preceding April 8, 2000 (the "Mandatory Exchange
Price").
(b) If the closing sale price of the Arch Common Stock on the Nasdaq
National Market for any twenty consecutive trading days prior to April 8, 2000
equals or exceeds $13.00 (the "Mandatory Exchange Benchmark"), each then
outstanding share of Series A Stock shall, to the extent Xxxxxx can legally
acquire such shares of stock, effective as of the close of business on such
twentieth trading day, automatically be exchanged for such number of fully paid
and nonassessable shares of Arch Common Stock as is determined by dividing (i)
the Mandatory Exchange Numerator by (ii) the unweighted average of the closing
sale prices of the Arch Common Stock on the Nasdaq National Market for such
twenty consecutive trading days (the "Benchmark Exchange Price").
(c) All holders of record of shares of Series A Stock shall be given
written notice of the date (the "Mandatory Exchange Date") and place designated
for mandatory exchange of all such shares of Series A Stock pursuant to this
Section 2. Such notice need not be given in advance of the Mandatory Exchange
Date. Such notice shall be sent by first class or registered mail, postage
prepaid, to each record holder of Series A Stock at such holder's address last
shown on the records of the transfer agent for the Series A Stock (or the
records of Xxxxxx, if it serves as its own transfer agent). Upon receipt of such
notice, each holder of shares of Series A Stock shall surrender his, her or its
certificate or certificates for all such shares to Xxxxxx at the place
designated in such notice, and shall thereafter receive certificates for the
number of shares of Arch Common Stock to which such holder is entitled pursuant
to this Section 2. If so required by Xxxxxx, certificates surrendered for
exchange shall be endorsed or accompanied by written instrument or instruments
of transfer, in form satisfactory to Xxxxxx, duly executed by the registered
holder or by his, her or its attorney duly authorized in writing. As soon as
practicable after the Mandatory Exchange Date and the surrender of the
certificate or certificates
for Series A Stock, Xxxxxx shall cause to be delivered to such holder, or on
his, her or its written order, a certificate or certificates for the number of
full shares of Arch Common Stock deliverable on such exchange in accordance with
the provisions hereof and cash as provided in Section 1(b) above in respect of
any fraction of a share of Arch Common Stock otherwise deliverable upon such
exchange.
3. ADJUSTMENT PROVISIONS. The Optional Exchange Numerator, Optional
Exchange Denominator, Mandatory Exchange Numerator and Mandatory Exchange
Benchmark (each, a "Base Price") shall be subject to adjustment as follows:
(i) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If Arch at any time
or from time to time after the date of issuance of the Series A Stock (the
"Issue Date") effects a subdivision of the outstanding Arch Common Stock, the
Base Price then in effect immediately before such subdivision shall be
proportionately decreased, and conversely, if Arch at any time or from time to
time after the Issue Date combines the outstanding shares of Arch Common Stock
into a smaller number of shares, the Base Price then in effect immediately
before such combination shall be proportionately increased. Any adjustment under
this subsection (i) shall become effective at the open of business on the date
the subdivision or combination becomes effective.
(ii) ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. If Arch at
any time or from time to time after the Issue Date makes, or fixes, a record
date for the determination of holders of Arch Common Stock entitled to receive a
dividend or other distribution payable in additional shares of Arch Common
Stock, then and in each such event the Base Price then in effect shall be
decreased as of the time of such issuance or, in the event such record date is
fixed, as of the opening of business on such record date, by multiplying the
Base Price then in effect by a fraction (A) the numerator of which is the total
number of shares of Arch Common Stock issued and outstanding immediately prior
to the time of such issuance or the close of business on such record date, and
(B) the denominator of which shall be the total number of shares of Arch Common
Stock issued and outstanding immediately prior to the time of such issuance or
the close of business on such record date plus the number of shares of Arch
Common Stock deliverable in payment of such dividend or distribution; PROVIDED,
HOWEVER, that if such record date is fixed and such dividend is not fully paid
or if such distribution is not fully made on the date fixed therefor, the Base
Price shall be recomputed accordingly as of the close of business on such record
date and thereafter the Base Price shall be adjusted pursuant to this subsection
(ii) as of the time of actual payment of such dividend or distribution.
(iii) ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. In the event
Arch at any time or from time to time after the Issue Date makes, or fixes, a
record date for the determination of holders of Arch Common Stock entitled to
receive a dividend or other distribution payable in securities of Arch other
than shares of Arch Common Stock, then and in each such event provision shall be
made so that the holders of Series A Stock shall receive, upon exchange thereof,
in addition to the number of shares of Arch Common Stock receivable thereupon,
the amount of securities of Arch which they would have received had their Series
A Stock been for Arch Common Stock on the date of such event and had they
thereafter, during the
period from the date of such event to and including the exchange date, retained
such securities receivable by them as aforesaid during such period, subject to
all other adjustments called for during such period under this Section 3 with
respect to the rights of the holders of the Series A Stock.
(iv) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. In
the event that at any time or from time to time after the Issue Date, the Arch
Common Stock deliverable upon the exchange of the Series A Stock is changed into
the same or a different number of shares of any class or classes of shares of
stock, whether by recapitalization, reclassification or otherwise (other than a
subdivision or combination of shares or stock dividend or a reorganization,
merger, consolidation or sale of assets, provided for elsewhere in this Section
3), then and in any such event each holder of Series A Stock shall have the
right thereafter to exchange such Series A Stock for the kind and amount of
stock and other securities and property receivable upon such recapitalization,
reclassification or other change, by holders of the number of shares of Arch
Common Stock for which such shares of Series A Stock could have been exchanged
immediately prior to such recapitalization, reclassification or change, all
subject to further adjustment as provided herein.
(v) ADJUSTMENT FOR CONSOLIDATION OR MERGER. In case of any
consolidation or merger of Arch with or into another corporation or the sale of
all or substantially all of the assets of Arch to another corporation, each
share of Series A Stock shall thereafter be exchangeable (or shall be exchanged
for a security which shall be exchangeable) for the kind and amount of shares of
stock or other securities or property to which a holder of the number of shares
of Arch Common Stock deliverable upon exchange of such Series A Stock would have
been entitled upon such consolidation, merger or sale; and, in such case,
appropriate adjustment (as determined in good faith by the Board of Directors)
shall be made in the application of the provisions in this Section 3 set forth
with respect to the rights and interest thereafter of the holders of the Series
A Stock, to the end that the provisions set forth in this Section 3 shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the exchange of
the Series A Stock.
(vi) CERTIFICATE OF ADJUSTMENT. In each case of an adjustment or
readjustment of the Base Price or the number of shares of Arch Common Stock or
other securities deliverable upon exchange of the Series A Stock, Xxxxxx shall
compute such adjustment or readjustment in accordance with the provisions hereof
and prepare a certificate, signed by its principal financial officer, showing
such adjustment or readjustment, and shall mail such certificate, by first class
mail, postage prepaid, to each registered holder of the Series A Stock at the
holder's address as shown in Xxxxxx'x books. The certificate shall set forth
such adjustment or readjustment, showing in reasonable detail the facts upon
which such adjustment or readjustment is based, including a statement of (A) the
Base Price at the time in effect and (B) the type and amount, if any, of other
property which at the time would be received upon exchange of the Series A
Stock.
4. EXCHANGE OF DIVIDENDS. Upon the exchange (whether optional or mandatory)
of Series A Stock for Arch Common Stock, all accrued but unpaid Mandatory
Dividends (as such term is defined in the Certificate of Determination filed
with the Secretary of State of California
to establish the Series A Stock (the "Certificate of Determination")), together
with interest thereon as provided in Section 1(a) of the Certificate of
Determination, and all other declared but unpaid dividends, if any, immediately
prior to such exchange shall be exchanged for Arch Common Stock at a price equal
to (i) in the case of optional exchange, the Optional Exchange Price (as defined
in Section 1(a) above), (ii) in the case of mandatory exchange pursuant to
Section 2(a) above, the Mandatory Exchange Price (as defined in Section 2(a)
above), and (iii) in the case of mandatory exchange pursuant to Section 2(b)
above, the Benchmark Exchange Price (as defined in Section 2(b) above).
5. EFFECT OF GUARANTY. Xxxxxx'x obligations hereunder are guaranteed by
Arch pursuant to a Guaranty of even date herewith. To the extent that Arch pays
or performs under such Guaranty Agreement, Xxxxxx is relieved from performing
the corresponding obligations hereunder.
6. TRANSFERS OF RIGHTS. This Agreement, and the rights and obligations of
Adelphia hereunder, may be assigned by Adelphia to any person or entity to which
Series A Stock is transferred by Adelphia; provided that the transferee provides
written notice of such assignment to Xxxxxx.
7. GENERAL.
(a) NOTICES. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be delivered by hand or
mailed by first class certified or registered mail, return receipt requested,
postage prepaid, or via a nationally recognized courier service:
If to Benbow, 0000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000, Attention:
June X. Xxxxx, or at such other address or addresses as may have been furnished
to Adelphia in writing by Xxxxxx, with a copy to (which shall not constitute
notice) Young, Vogl, Harlick, Wilson & Xxxxxxx LLP, 000 Xxxxxxxxxx Xxxxxx, Xxxxx
0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxx X. Xxxxxx, Esq.
If to Adelphia, Adelphia Building, Main at Xxxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxxxxxx 00000, Attention: Xxxxx X. Xxxxx, or at such other address or
addresses as may have been furnished to Xxxxxx in writing by Adelphia, with a
copy to (which shall not constitute notice) Paul, Hastings, Xxxxxxxx & Xxxxxx
LLP, 000 Xxxxxxxxx Xxxxxx XX, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000, Attention:
Xxxxxx X. Xxxxxxxx, Esq.
Notices provided in accordance with this Section 7(a) shall be deemed
delivered upon personal delivery or two business days after deposit in the mail.
(b) ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter.
(c) AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), with the
written consent of Xxxxxx and Adelphia. No waivers of or exceptions to any term,
condition or provision of this Agreement, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any such term,
condition or provision.
(d) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be one and the same document.
(e) SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(f) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
(g) INVESTMENT LETTER. As a condition to each exchange of Series A
Stock for Arch Common Stock hereunder, Benbow shall obtain (and provide to Arch)
from the person(s) receiving the Arch Common Stock upon such exchange an
investment letter in the form of EXHIBIT A attached hereto.
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Executed as of the date first written above.
XXXXXX PCS VENTURES, INC.
By:
Title:
ADELPHIA COMMUNICATIONS
CORPORATION
By:
Title:
