Exhibit 10.4
EXCHANGE RIGHTS ACQUISITION AND GRANT AGREEMENT
THIS EXCHANGE RIGHTS ACQUISITION AND GRANT AGREEMENT (this "Agreement") is
entered into and effective as of this 23rd day of July, 2000, by and among
VOICESTREAM PCS BTA I CORPORATION, a Delaware corporation ("VoiceStream BTA"),
VoiceStream Wireless Corporation, a Delaware corporation ("VoiceStream"),
WESTERN WIRELESS CORPORATION, a Washington corporation ("WWC"), and PROVIDENCE
MEDIA PARTNERS L.P., a Delaware limited partnership ("Providence").
RECITALS
(i) VoiceStream, VoiceStream BTA, formerly known as Western PCS BTA I
Corporation, WWC, and Providence are parties to that certain PCS Block "C"
Organization and Financing Agreement dated November 5, 1995, as amended by
amendments dated April 8, 1996 (the "First Amendment"), June 27, 1996 (the
"Second Amendment"), July 30, 1996 (the "Third Amendment"), and April 14, 2000
(the "Fourth Amendment") (together, the "Organization and Financing Agreement"),
whereby the parties thereto specified certain terms with respect to the
organization and financing of Xxxx Inlet VoiceStream PV/SS PCS, L.P. (the
"Limited Partnership") and operation of various wireless telecommunications
systems, and the terms of various contracts for use among the parties thereto
and others in connection with such organization, financing, and operations. The
other parties to the Organization and Financing Agreement are: XXXX INLET PV/SS
PCS PARTNERS, L.P., a Delaware limited partnership ("Control Group"); XXXX INLET
TELECOMMUNICATIONS, INC., a Delaware corporation ("Xxxx Inlet"); and SSPCS
CORPORATION, a Delaware corporation ("SSPCS").
(ii) Control Group and VoiceStream BTA are parties to that certain Xxxx
Inlet VoiceStream PV/SS PCS, L.P. Limited Partnership Agreement dated November
5, 1995, as amended by the First Amendment, the Second Amendment, the Third
Amendment, and the Fourth Amendment (together, the "Limited Partnership
Agreement"), whereby the parties thereto formed the Limited Partnership to apply
to the FCC for the right to participate in the Auction and to bid and acquire
Licenses, as such terms are defined therein.
(iii) Pursuant to the Organization and Financing Agreement, each of Xxxx
Inlet, SSPCS and Providence is (a) defined to be a Control Group Partner with
Partnership Interests (as defined therein) in Control Group, and (b) is
therefore granted certain rights ("WWC Exchange Rights") to exchange its
ownership rights in its Partnership Interest in Control Group for shares of WWC
common stock in certain circumstances.
(iv) Providence desires to sell and WWC desires, in conjunction with
VoiceStream, to acquire for cancellation, the WWC Exchange Rights of Providence
for consideration consisting of cash from WWC and a grant of new exchange rights
by VoiceStream.
(v) The parties desire to set forth the full terms of their agreement
respecting the same in this written contract.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
ALL WORDS CAPITALIZED HEREIN AND NOT DEFINED SHALL HAVE THE MEANINGS GIVEN
THEM IN THE ORGANIZATION AND FINANCING AGREEMENT.
Otherwise, for purposes of this Agreement, the following terms have the
meanings set forth below.
"VoiceStream" means VoiceStream Wireless Corporation, a Delaware
corporation and its successors and assigns.
"VoiceStream Common Stock" means the common stock, $0.001 par value, of
VoiceStream.
"VoiceStream Organic Change" means any recapitalization, reorganization,
reclassification, spin-off, split-off, extraordinary dividend or distribution,
consolidation or merger with another Person of VoiceStream, or any successor(s)
thereto, or sale of all or substantially all, in any or a series of
transactions, of the assets or stock of VoiceStream, or any successor(s)
thereto, to another Person, or other transaction involving VoiceStream, or any
successor(s) thereto, which is effected in such a manner that holders of
VoiceStream Common Stock, or of stock or other interests in any of the
respective successors to VoiceStream as the case may be, are entitled to receive
(either directly or upon subsequent liquidation) stock, securities or assets or
other consideration with respect to or in exchange for such stock or interests.
ARTICLE II
PURCHASE OF WWC EXCHANGE RIGHTS
WWC and VoiceStream hereby purchase from Providence, and Providence hereby
sells to WWC and VoiceStream, all of Providence's right, title and interest in
and to the WWC Exchange Rights for the following consideration:
(a) the sum of Twenty Million Dollars ($20,000,000), payable in cash
within five (5) business days of the execution of this Agreement; and
(b) the grant to Providence of the rights to exchange ownership
rights in its Partnership Interest in Control Group for VoiceStream Common Stock
("Exchange Rights"), which Exchange Rights are hereby granted. The terms and
conditions of the Exchange Rights are set forth in Article III hereof.
ARTICLE III
EXCHANGE RIGHTS
3.1 Exchange Rights. The Exchange Rights shall be exercisable (the
"Exchange") by Providence only on the following terms and only during the thirty
(30) day exchange period beginning on April 27, 2002 (the "Exchange Date"), and
ending at 5:00 p.m. pacific time on May 26, 2002, (the "Exchange Period") in
accordance with the following, provided that in the event that the FCC Rules are
amended or a law or other legislation is passed ("Legislation") such that
neither License forfeiture nor violation of the C and F block eligibility
requirements (as defined by the FCC Rules) would occur as a result of the
Exchange occurring sooner than April 27, 2002, then the Exchange Date shall be
advanced to
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the earliest date that the Exchange may take place without violation of the FCC
Rules, provided, that, unless waived in writing by Providence, such date shall
not be earlier than (i) thirty (30) days after Providence has received written
notice from VoiceStream of such FCC Rule amendment or such Legislation or (ii)
if required by Providence, the date that VoiceStream, or its Affiliate, to the
extent reasonably possible, provides a legal opinion to Providence from outside
counsel to VoiceStream addressed to the Limited Partnership, which counsel and
opinion are acceptable to Providence and the Company, opining that an Exchange
on the earlier Exchange Date (such new Exchange Date to be set forth in such
legal opinion) would not result in License forfeiture or violation of the C and
F block eligibility requirements:
(a) Providence may elect to exchange all, but not less than all, of
the ownership rights in its Partnership Interest in Control Group for three
hundred twenty-one thousand three hundred and thirty-four (321,334) shares of
VoiceStream Common Stock.
(b) To cause an Exchange, Providence shall deliver an irrevocable
written notice of the same (an "Exchange Notice") to VoiceStream during the
Exchange Period; provided that, if as of the end of the Exchange Period
Providence has failed to so deliver said notice, the Exchange Rights of
Providence (pursuant to this Agreement) shall then immediately terminate.
(c) The WWC Exchange Rights of Providence set forth in the
Organization and Financing Agreement are upon execution hereof deemed cancelled
and are null and void, and Providence shall have no further right or obligation
in respect of the WWC Exchange Rights or any other part or provision of Article
III of the Organization and Financing Agreement as set forth therein, and the
parties agree that this Agreement shall supersede such Article III.
(d) VoiceStream BTA, WWC, VoiceStream and Providence agree to
structure, to the extent reasonably possible, the Exchange for Providence in a
way that is tax free to each of Providence and to VoiceStream BTA, WWC, and
VoiceStream and such structure may include a stock exchange that includes the
stock of a special purpose corporation holding the Partnership Interest of
Providence in the Control Group; provided, however, that in doing so there are
no negative tax or accounting attributes of such an Exchange that adversely
impact VoiceStream BTA, Providence, WWC, or VoiceStream to a greater extent than
would be experienced in a direct exchange for a Partnership Interest (other than
the receipt of a carry over basis due to the tax free nature of the
transaction), as determined in utmost good faith by VoiceStream BTA in its
reasonable discretion. If Providence desires such a tax free structure, it shall
be a special purpose corporation. A "special purpose corporation" shall mean a
corporation formed for the purpose of holding an interest in the Control Group.
(e) If VoiceStream BTA or VoiceStream in connection with the
Exchange, directly acquires a Partnership Interest, VoiceStream BTA or
VoiceStream, as the case may be, shall take all actions necessary to satisfy the
applicable requirements of Section 12.6 of the limited partnership agreement of
Control Group.
(f) Upon receipt of an Exchange Notice during the Exchange Period,
and if VoiceStream Common Stock is listed or admitted for trading on the NASDAQ
National Market System or the New York Stock Exchange, then VoiceStream BTA and
VoiceStream agree that VoiceStream shall issue to Providence, as soon as
reasonably practicable but in any event no later than sixty (60) days following
delivery of the Exchange Notice (the "Outside Delivery Date"), three hundred
twenty-one thousand three hundred and thirty-four (321,334) shares of
VoiceStream Common Stock provided that at the time of such issuance (i) such
shares will be duly authorized, validly issued, fully paid and non-
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assessable and free and clear of all liens, claims and encumbrances or
preemptive or similar rights, (ii) such shares are delivered in compliance with
Federal and state securities laws, (iii) such shares are subject to an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), covering the offer and sale of such shares by Providence (the
"Registration Statement") from time to time in negotiated transactions, in
market transactions or otherwise, (iv) such shares are registered or qualified
for offer of sale by Providence under the securities or blue sky laws of such
States as Providence shall reasonably request. VoiceStream covenants and agrees
that it shall (x) prepare and file with the Securities and Exchange Commission
(the "SEC") such amendments as may be necessary to keep the Registration
Statement effective until the earlier of the date all of such shares have been
sold by Providence, the date all of such shares are freely tradable without
registration or restriction (under Rule 144(k) promulgated under the Securities
Act or otherwise), but not before the expiration of the 90-day period referred
to in Section 4(3) of the Securities Act and Rule 174 promulgated thereunder,
(y) cause each such state securities or blue sky registration or qualification
to remain effective during the period the Registration Statement is required to
be kept effective hereunder, and (z) cause the shares covered by such
Registration Statement, by the date of the first sale by Providence thereunder,
to be listed or admitted for trading on each securities exchange (or, if
applicable, the NASDAQ national market system) on which VoiceStream Common Stock
is then listed or admitted for trading.
3.2 Increase or Combination of Common Stock.
At any time prior to the date VoiceStream Common Stock is issued to
Providence in accordance with this Agreement, if at any time VoiceStream (a)
pays a dividend or makes a distribution in shares of its capital stock or
securities convertible or exchangeable for shares of its capital stock, (b)
issues by reclassification, or (c) subdivides (by any stock split,
recapitalization or otherwise) one or more classes of its outstanding shares of
VoiceStream Common Stock into a greater number of shares, the number of shares
of VoiceStream Common Stock to be issued pursuant to Section 3.1 immediately
prior to such increase shall be adjusted proportionately, and if VoiceStream at
any time combines (by reverse stock split or otherwise) one or more classes of
its outstanding shares of VoiceStream Common Stock into a smaller number of
shares, the number of shares of VoiceStream Common Stock issuable to Providence
on an Exchange immediately prior to such combination shall be adjusted
proportionately to allow Providence the full benefit and effect of the increase
or combination as if the Exchange had occurred immediately prior to the increase
or combination, as the case may be.
3.3 Reorganization, Reclassification, Consolidation, Merger or Sale.
At any time prior to the date VoiceStream Common Stock is issued to
Providence in accordance with this Agreement, prior to the consummation of each
VoiceStream Organic Change, VoiceStream shall make appropriate provisions (in
form and substance reasonably satisfactory to Providence) to insure that
Providence thereafter shall have the right to exchange for and receive, in lieu
of or in addition to (as the case may be) the shares of VoiceStream Common Stock
immediately theretofore acquirable and receivable upon an Exchange, such shares
of stock, securities or assets or other consideration as Providence would have
received in connection with such VoiceStream Organic Change if Providence had
effected the Exchange immediately prior to such VoiceStream Organic Change. In
the event of each VoiceStream Organic Change, VoiceStream shall also make
appropriate provisions (in form and substance reasonably satisfactory to
Providence) to insure that Providence continues to have the benefit of this
Section 3.3 thereafter. VoiceStream shall not effect any VoiceStream Organic
Change unless prior to the consummation thereof, the successor corporation (if
other than VoiceStream) resulting from consolidation or merger or the Person
purchasing such stock or assets assumes by written instrument (in form
reasonably satisfactory to Providence) the obligation to deliver to Providence
such shares of stock,
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securities or assets or other consideration as, in accordance with the foregoing
provisions, Providence may be entitled to acquire.
3.4 Recapture of Bidding Credits and Acceleration of FCC Loans. In the
event that an Exchange results in either (a) the recapture by the FCC of any
bidding credits or other discounts received by Applicant with respect to the
award of Licenses in connection with the Auction, or (b) the acceleration of any
obligation or debt owed to the FCC in connection with the Auction, the Applicant
solely shall be liable to the FCC for such amounts.
ARTICLE IV
SHARING OF PROCEEDS OF SALE TRANSACTIONS
The parties acknowledge that Providence was under no obligation to
exercise the WWC Exchange Rights and agree that Providence is not hereunder
obligated to exercise the Exchange Rights. The parties further acknowledge and
agree that, as of this date, Providence has received a portion of the value of
the WWC Exchange Rights in cash pursuant to the transactions described in
Article II hereof, although it has not and will not exercise the WWC Exchange
Rights and may never exercise the Exchange Rights. In light of the foregoing,
the parties agree that if Providence fails to exercise the Exchange Rights
pursuant to Article III after receiving at least thirty (30) days written notice
from VoiceStream of its right to do so, then upon and from the receipt by
Providence of cash proceeds from a Sale Transaction (as defined below),
Providence shall immediately pay in cash to WWC the lesser of:
(a) Twenty Million Dollars ($20,000,000); or
(b) the amount of proceeds equal to the total amount of cash
distributions from the Limited Partnership and Control Group to which Providence
or any subsidiary, parent or Affiliate thereof is entitled as a result of the
Sale Transaction, provided that in calculating such amount, no distributions of
income or other distributions relating to the ownership and operation of the
Limited Partnership's business, assets and/or FCC licenses shall be included.
A "Sale Transaction" shall mean any sale, transfer, disposition or
conveyance (or series of related or unrelated sales, etc.), directly or
indirectly, by the Limited Partnership or any subsidiary, parent or Affiliate
thereof, of all or substantially all of its assets and the FCC licenses that
allow and comprise the wireless telecommunications systems directly or
indirectly owned by the Limited Partnership.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 VoiceStream and VoiceStream BTA jointly and severally represent and
warrant to and covenant with Providence as follows:
(a) VoiceStream is a corporation duly organized, validly existing
and in good standing under the laws of Delaware. VoiceStream has all requisite
corporate power and authority and any necessary governmental approval to own,
lease and operate its properties and to carry on its business as now being
conducted. VoiceStream is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the character of the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary.
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(b) VoiceStream has filed with the SEC all documents required to be
filed by it since December 31, 1998 under the Securities Act or the Exchange Act
(the "VoiceStream SEC Documents"). As of their respective filing dates, the
VoiceStream SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, each
as in effect on the date so filed, and at the time filed with the SEC none of
the VoiceStream SEC Documents contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The financial statements of VoiceStream included in
the VoiceStream SEC Documents comply as of their respective dates in all
material respects with the then applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles (except in
the case of the unaudited statements, as permitted by Form 10-Q under the
Exchange Act) applied on a consistent basis during the periods involved (except
as may be indicated therein or in the notes thereto) and fairly present the
consolidated financial position of VoiceStream and its consolidated subsidiaries
as at the dates thereof and the consolidated results of their operations and
their consolidated cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein).
(c) VoiceStream has provided Providence with true copies of all
contracts, agreements and other instruments governing the rights of SSPCS and
Xxxx Inlet to exchange their interests in Control Group. Prior to the Closing of
the Agreement and Plan of Merger dated as of July 23, 2000, by and among
Deutsche Telecom AG and VoiceStream, VoiceStream agrees that no material changes
will be made to such agreements that provide rights that are more favorable than
those provided to Providence.
5.2 Providence, WWC, VoiceStream and VoiceStream BTA represent and
warrant to, and covenant with and among, each other as follows:
Each party has all requisite corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby,
have been duly and validly authorized by such party's Board of Directors and no
other corporate proceedings on the part of such party or its stockholders are
necessary to authorize the execution and delivery of this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by such party and constitutes the legal,
valid and binding agreement of such party, enforceable against it in accordance
with the terms of this Agreement. No consent, approval, waiver or authorization
of, notice to or declaration or filing with any governmental entity or authority
is required in connection with the execution, delivery or performance by such
party of this Agreement or the consummation by it of the transactions
contemplated hereby.
ARTICLE VI
MISCELLANEOUS
6.1 Entire Agreement; Amendment. This Agreement and the Organization and
Financing Agreement referenced herein embody the complete agreement and
understanding among the parties hereto with respect to the subject matter hereof
and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way. This Agreement may be amended only by
an instrument executed by each of the parties hereto.
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6.2 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned or delegated by any of the parties hereto without
the prior written consent of the other parties hereto.
6.3 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement; provided that the parties shall, in good faith, negotiate
fair market-based compensation to any party which loses rights hereunder
pursuant to such interpretation.
6.4 Savings Clause. Notwithstanding anything in this Agreement to the
contrary, if the possession or exercise of any right of the parties set forth in
this Agreement would cause the Limited Partnership to violate any applicable
laws, including, without limitation, any FCC Rules, as in effect from time to
time, or result in an adverse regulatory action or ruling by the FCC, such right
shall be deemed not to exist; provided that the parties shall, in good faith,
negotiate fair market-based compensation to any party which loses any right
hereunder pursuant to such right being deemed not to exist.
6.5 Governing Law. All questions concerning the construction,
validity and interpretation of this Agreement and the exhibits and schedules
hereto shall be governed by the internal law, and not the law of conflicts, of
Delaware.
6.6 Notices. All notices, demands or other communications to be delivered
under or by reason of the provisions of this Agreement shall be in writing and
shall be deemed to have been given (a) when delivered personally to the
recipient; (b) two business days after being sent to the recipient by reputable
express courier service (charges prepaid); (c) five business days after being
mailed to the recipient by certified or registered mail, return receipt
requested and postage prepaid; and (d) when acknowledged by the recipient if
given by facsimile transmission. Such notices, demands and other communications
shall be sent to each party at the respective addresses indicated below:
If to VoiceStream BTA, WWC
or VoiceStream: 0000 000xx Xxxxxx XX
Xxxxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
With a copy in each case to: Xxxxxxx X. Xxxx
Xxxxxxx Xxxxx & Xxxxx
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
If to Providence : Providence Media Partners L.P.
00 Xxxxxxx Xxxxx, 0xx Xxxxx
Attention: Xxxxxxxx X. Xxxxxx
Fax: (000) 000-0000
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With a copy in each case to:
Xxxxxxx & Xxxxxx, LLP
0000 Xxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX
Attention: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
6.7 Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a Section of this
Agreement.
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6.8 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts taken together shall constitute one and the
same Agreement.
6.9 Effectiveness of Organization and Financing Agreement, Limited
Partnership Agreement and Technical Services Agreement. Except as modified by
this Agreement, all respective provisions of the Organization and Financing
Agreement, the Limited Partnership Agreement and the Technical Services
Agreement are unchanged and remain in full force and effect and are ratified and
confirmed by the parties hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
VOICESTREAM PCS BTA I CORPORATION PROVIDENCE MEDIA PARTNERS L.P.
By Providence Media GP Limited
Partnership
By Providence Ventures L.P., its
General Partner
By /s/ Xxxxx X. Xxxxxxxxx By /s/ Xxxxxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxxxxx Name: Xxxxxxxx X. Xxxxxx
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Title: Executive Vice President - Title: General Partner
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Finance, Strategy and
Development
WESTERN WIRELESS CORPORATION VOICESTREAM WIRELESS CORPORATION
By /s/ Xxxxxx Xxxxxxx By /s/ Xxxxx X. Xxxxxxxxx
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Name: Xxxxxx Xxxxxxx Name: Xxxxx X. Xxxxxxxxx
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Title: Vice Chairman Title: Executive Vice President -
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Finance, Strategy and
Development
SIGNATURE PAGE TO EXCHANGE RIGHTS ACQUISITION AND GRANT AGREEMENT
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