1
EXHIBIT 2.1
AMENDED AND RESTATED
JOINT VENTURE ORGANIZATION AGREEMENT
BETWEEN
AIRTOUCH COMMUNICATIONS, INC.
AND
U S WEST, INC.
September 30, 1995
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TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.1 AFFILIATE . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2 AGREEMENT OF EXCHANGE . . . . . . . . . . . . . . . . . . . . . 3
1.3 AIRTOUCH CALIFORNIA . . . . . . . . . . . . . . . . . . . . . . 3
1.4 APPROVED BUSINESS PLAN . . . . . . . . . . . . . . . . . . . . . 3
1.5 ARBITRATION AGREEMENT . . . . . . . . . . . . . . . . . . . . . 4
1.6 ATI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.7 ATI PHASE II ASSETS . . . . . . . . . . . . . . . . . . . . . . 4
1.8 ATI CELLULAR SUBSIDIARIES . . . . . . . . . . . . . . . . . . . 4
1.9 ATI EMPLOYEE BENEFIT PROGRAM . . . . . . . . . . . . . . . . . . 4
1.10 ATI SERVICES AGREEMENT . . . . . . . . . . . . . . . . . . . . . 4
1.11 ATI PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.12 ATI PHASE II TRIGGER . . . . . . . . . . . . . . . . . . . . . . 4
1.13 AUTHORIZATION . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.14 BACK END TERMINATION DATE . . . . . . . . . . . . . . . . . . . 4
1.15 BALANCE SHEETS . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.16 BENEFICIAL PHASE II ASSET . . . . . . . . . . . . . . . . . . . 5
1.17 BUSINESS DAY . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.18 CASH FLOW . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.19 CCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.20 CECO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.21 CELLULAR PARTNERSHIP AGREEMENT . . . . . . . . . . . . . . . . . 5
1.22 CODE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.23 CONSENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.24 CONTRIBUTION DATE . . . . . . . . . . . . . . . . . . . . . . . 5
1.25 DECREE COURT . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.26 DELAWARE RULPA . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.27 DOMESTIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.28 DOMESTIC CELLULAR ASSET . . . . . . . . . . . . . . . . . . . . 6
1.29 DOMESTIC CELLULAR BUSINESS . . . . . . . . . . . . . . . . . . . 6
1.30 DOMESTIC CELLULAR INVESTMENT . . . . . . . . . . . . . . . . . . 6
1.31 DOMESTIC CELLULAR INVESTMENT ENTITY . . . . . . . . . . . . . . 6
1.32 DOMESTIC CELLULAR SERVICE . . . . . . . . . . . . . . . . . . . 6
1.33 DOMESTIC CELLULAR SUBSIDIARY . . . . . . . . . . . . . . . . . . 6
1.34 DOMESTIC CELLULAR TRANSACTIONS . . . . . . . . . . . . . . . . . 6
1.35 EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.36 EMPLOYEE BENEFIT PROGRAM . . . . . . . . . . . . . . . . . . . . 7
1.37 ENVIRONMENTAL LAWS . . . . . . . . . . . . . . . . . . . . . . . 8
1.38 EO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.39 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.40 ERISA AFFILIATE . . . . . . . . . . . . . . . . . . . . . . . . 8
1.41 ESMR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.42 FAIR MARKET VALUE . . . . . . . . . . . . . . . . . . . . . . . 9
1.43 FINAL ORDER . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.44 FCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.45 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . 9
1.46 GOVERNMENTAL BODY . . . . . . . . . . . . . . . . . . . . . . . 9
1.47 INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.48 INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . . . . 9
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1.49 INTER-EXCHANGE CARRIER AGREEMENT . . . . . . . . . . . . . . . . 10
1.50 INVESTMENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 10
1.51 LEASED PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . 10
1.52 LICENSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.53 LIEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.54 MATERIAL ADVERSE EFFECT . . . . . . . . . . . . . . . . . . . . 10
1.55 MATERIAL CONTRACT . . . . . . . . . . . . . . . . . . . . . . . 10
1.56 MFJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.57 MSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.58 NEW PAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.59 NEW PAR ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.60 NEW PAR CONTRIBUTION DATE . . . . . . . . . . . . . . . . . . . 11
1.61 NEW PAR DETERMINATION DATE . . . . . . . . . . . . . . . . . . . 11
1.62 NEWVECTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.63 NEWVECTOR SERVICES AGREEMENT . . . . . . . . . . . . . . . . . . 11
1.64 NV-EMPLOYEE BENEFIT PROGRAMS . . . . . . . . . . . . . . . . . . 11
1.65 ORGANIZATION AGREEMENT . . . . . . . . . . . . . . . . . . . . . 11
1.66 OWNED PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.67 PARTIAL MFJ RELIEF . . . . . . . . . . . . . . . . . . . . . . . 11
1.68 PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.69 PARTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.70 PCS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.71 PCS CONTRIBUTION DATE . . . . . . . . . . . . . . . . . . . . . 12
1.72 PCS PAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.73 PCS PAR EMPLOYEE AGREEMENT . . . . . . . . . . . . . . . . . . . 12
1.74 PCS PAR PARTNERSHIP AGREEMENT . . . . . . . . . . . . . . . . . 13
1.75 PCS TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . 13
1.76 PERCENTAGE INTEREST . . . . . . . . . . . . . . . . . . . . . . 13
1.77 PERMITTED LIABILITIES . . . . . . . . . . . . . . . . . . . . . 13
1.78 PERMITTED LIEN . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.79 PERSON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.80 PHASE I . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.81 PHASE I CLOSING . . . . . . . . . . . . . . . . . . . . . . . . 13
1.82 PHASE I CLOSING DATE . . . . . . . . . . . . . . . . . . . . . . 13
1.83 PHASE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.84 PHASE II CLOSING . . . . . . . . . . . . . . . . . . . . . . . . 14
1.85 PHASE III . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.86 PHASE III CLOSING . . . . . . . . . . . . . . . . . . . . . . . 14
1.87 POPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.88 PRECEDING QUARTER . . . . . . . . . . . . . . . . . . . . . . . 14
1.89 PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.90 QUARTER AT ISSUE . . . . . . . . . . . . . . . . . . . . . . . . 14
1.91 REIMBURSED EXPENSES . . . . . . . . . . . . . . . . . . . . . . 14
1.92 RELATED AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . 14
1.93 RELATED PARTY AGREEMENT . . . . . . . . . . . . . . . . . . . . 14
1.94 RESALE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . 15
1.95 RETURN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.96 ROAMING AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . 15
1.97 SAN DIEGO CELLULAR PROPERTY . . . . . . . . . . . . . . . . . . 15
1.98 SCHEDULED NEW PAR RELATED ASSET . . . . . . . . . . . . . . . . 15
1.99 SCHEDULED NPRA 12% VALUE . . . . . . . . . . . . . . . . . . . . 15
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1.100 SCHEDULED PHASE II RELATED ASSETS . . . . . . . . . . . . . . . 16
1.102 SCHEDULED PIIRA 12% VALUE . . . . . . . . . . . . . . . . . . . 16
1.103 SUBSIDIARY . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.104 SUBSTANCE OF CONCERN . . . . . . . . . . . . . . . . . . . . . . 16
1.105 TAX OR TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.106 TAX SHARING ARRANGEMENT . . . . . . . . . . . . . . . . . . . . 16
1.107 TO THE KNOWLEDGE OF ATI . . . . . . . . . . . . . . . . . . . . 17
1.108 TO THE KNOWLEDGE OF USW . . . . . . . . . . . . . . . . . . . . 17
1.109 TRADEMARK . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.110 TRADE NAME . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.111 TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.112 TRANSFERRED SUBSIDIARY . . . . . . . . . . . . . . . . . . . . . 17
1.114 TRUST AGREEMENT OF EXCHANGE . . . . . . . . . . . . . . . . . . 17
1.115 TUCSON CELLULAR INTEREST . . . . . . . . . . . . . . . . . . . . 17
1.116 UNPERMITTED LIABILITY . . . . . . . . . . . . . . . . . . . . . 17
1.117 USW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.118 USW PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.119 USW PHASE II ASSETS . . . . . . . . . . . . . . . . . . . . . . 18
1.120 WMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.121 WMC EMPLOYEE AGREEMENT . . . . . . . . . . . . . . . . . . . . . 18
1.122 WMC PARTNERSHIP COMMITTEE . . . . . . . . . . . . . . . . . . . 18
1.123 WMC PARTNERSHIP AGREEMENT . . . . . . . . . . . . . . . . . . . 18
ARTICLE 2 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 19
2.1 Representations and Warranties of USW . . . . . . . . . . . . . 19
(a) Corporate Organization. . . . . . . . . . . . . . . . . . . 19
(b) Capitalization: Ownership of Shares. . . . . . . . . . . . . 20
(c) Authority. . . . . . . . . . . . . . . . . . . . . . . . . . 21
(d) Authorizations and Consents; No Violation . . . . . . . . . 22
(e) Financial Statements . . . . . . . . . . . . . . . . . . . . 23
(f) Absence of Other Changes . . . . . . . . . . . . . . . . . . 23
(g) Compliance with Laws . . . . . . . . . . . . . . . . . . . . 24
(h) MFJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(i) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 24
(j) Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(k) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(l) Material Contracts and Related Party Agreements . . . . . . 26
(m) Employment and Non-Competition Agreements . . . . . . . . . 27
(n) Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(o) Intellectual Property . . . . . . . . . . . . . . . . . . . 28
(p) Employee Benefit Programs . . . . . . . . . . . . . . . . . 28
(q) Labor Matters . . . . . . . . . . . . . . . . . . . . . . . 31
(r) Environmental Compliance and Liabilities . . . . . . . . . . 32
(s) Other Liabilities . . . . . . . . . . . . . . . . . . . . . 33
(t) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.2 Representations and Warranties of ATI . . . . . . . . . . . . . . 34
(a) Corporate Organization. . . . . . . . . . . . . . . . . . . 34
(b) Capitalization: Ownership of Shares. . . . . . . . . . . . . 35
(c) Authority. . . . . . . . . . . . . . . . . . . . . . . . . . 37
(d) Authorizations and Consents; No Violation . . . . . . . . . 37
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(e) Financial Statements . . . . . . . . . . . . . . . . . . . . 39
(f) Absence of Other Changes . . . . . . . . . . . . . . . . . . 39
(g) Compliance with Laws . . . . . . . . . . . . . . . . . . . . 40
(h) MFJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(i) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 40
(j) Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(k) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(l) Material Contracts . . . . . . . . . . . . . . . . . . . . . 42
(m) Employment and Non-Competition Agreements . . . . . . . . . 43
(n) Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(o) Intellectual Property . . . . . . . . . . . . . . . . . . . 44
(p) Employee Benefit Programs . . . . . . . . . . . . . . . . . 44
(q) Labor Matters . . . . . . . . . . . . . . . . . . . . . . . 47
(r) Environmental Compliance and Liabilities . . . . . . . . . . 48
(s) Other Liabilities . . . . . . . . . . . . . . . . . . . . . 50
(t) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 50
(v) Amendment to Rights Plan . . . . . . . . . . . . . . . . . . 50
ARTICLE 3 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
3.1 Covenants of USW . . . . . . . . . . . . . . . . . . . . . . . . 51
(a) Effectuation of this Agreement . . . . . . . . . . . . . . . 51
(b) Conduct of Business . . . . . . . . . . . . . . . . . . . . 52
(c) Reporting. . . . . . . . . . . . . . . . . . . . . . . 52
(d) No Changes . . . . . . . . . . . . . . . . . . . . . . . . . 53
(e) Access and Information . . . . . . . . . . . . . . . . . . . 55
(f) Divestiture of San Diego Cellular Property . . . . . . . . . 55
(g) Operation of Certain Assets.
. . . . . . . . . . . . . . . . . . . . . . . . . . 56
(h) Tucson Cellular Interest. . . . . . . . . . . . . . . . . . 57
3.2 Covenants of ATI . . . . . . . . . . . . . . . . . . . . . . . . . 57
(a) Effectuation of this Agreement . . . . . . . . . . . . . . . 58
(b) Conduct of Business . . . . . . . . . . . . . . . . . . . . 59
(c) Reporting. . . . . . . . . . . . . . . . . . . . . . . . . 59
(d) No Changes . . . . . . . . . . . . . . . . . . . . . . . . . 60
(e) Access and Information . . . . . . . . . . . . . . . . . . . 62
(f) Divestiture of Tucson Cellular Interest . . . . . . . . . . 63
(g) Operation of Certain Assets . . . . . . . . . . . . . . . . 63
(h) San Diego Cellular Property . . . . . . . . . . . . . . . . 64
3.3 Fiduciary Obligations . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE 4 PHASE I CLOSING ADJUSTMENTS . . . . . . . . . . . . . . . . . . . 65
4.1 Cash Flows and Funding Prior to Phase I . . . . . . . . . . . . . 65
4.2 Phase I Closing . . . . . . . . . . . . . . . . . . . . . . . . . 65
4.3 Special Provisions relating to the San Diego
Cellular Property and the Tucson Cellular
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
4.4 Independent Third Party Verification . . . . . . . . . . . . . . . 71
4.5 Initial Phase II Asset Percentages . . . . . . . . . . . . . . . . 72
4.6 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE 5 PHASE II CLOSING PERCENTAGES . . . . . . . . . . . . . . . . . . . 74
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5.1 Cash Flows and Funding Prior to Phase II . . . . . . . . . . . . . 74
5.2 Basic Principles for Phase II Closing Percentages . . . . . . . . 75
5.3 Additional Principles for Phase II Closing Percentages . . . . . . 76
5.4 Phase II Closing Percentages . . . . . . . . . . . . . . . . . . . 78
5.5 Restated Phase II Closing Percentages . . . . . . . . . . . . . . 78
5.6 Phase I Quarterly Computations . . . . . . . . . . . . . . . . . . 79
5.7 Phase II Closing Percentages . . . . . . . . . . . . . . . . . . . 81
5.8 Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
5.9 Phase I Quarterly Records . . . . . . . . . . . . . . . . . . . . 85
5.10 Quarterly Values . . . . . . . . . . . . . . . . . . . . . . . . . 85
(a) "Quarterly Value-100% New Par" . . . . . . . . . . . . . . . . 85
(b) "Quarterly Value-50% New Par" . . . . . . . . . . . . . . . . 86
(c) "Quarterly Value-No New Par" . . . . . . . . . . . . . . . . . 86
5.11 New Par Adjustment . . . . . . . . . . . . . . . . . . . . . . . . 86
5.12 Scheduled Phase II Related Assets . . . . . . . . . . . . . . . . 87
5.13 Minority Indebtedness Adjustment . . . . . . . . . . . . . . . . . 90
5.14 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . 90
ARTICLE 6 PHASES OF THE JOINT VENTURE AND CLOSINGS . . . . . . . . . . . . . 90
6.1 Prior to Phase I . . . . . . . . . . . . . . . . . . . . . . . . . 90
6.2 Phase I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
(a) Conditions to Phase I Closing . . . . . . . . . . . . . . . . 91
(b) Deliveries on or before the Phase I Closing . . . . . . . . . 91
6.3 Phase II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
(a) Conditions to Phase II Closing . . . . . . . . . . . . . . . . 92
(b) Deliveries on or before the Phase II Closing . . . . . . . . . 93
6.4 PCS Contribution Date . . . . . . . . . . . . . . . . . . . . . . 95
6.5 New Par Contribution Date . . . . . . . . . . . . . . . . . . . . 96
ARTICLE 7 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
7.1 Termination of this Organization Agreement. . . . . . . . . . . . 97
7.2 Winding Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
ARTICLE 8 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . 98
8.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
8.2 Indemnity by USW . . . . . . . . . . . . . . . . . . . . . . . . . 98
8.3 Indemnity by ATI . . . . . . . . . . . . . . . . . . . . . . . . . 99
8.4 Indemnity by WMC . . . . . . . . . . . . . . . . . . . . . . . . . 100
8.5 Tax Indemnification . . . . . . . . . . . . . . . . . . . . . . . 100
8.6 Notification of Claims . . . . . . . . . . . . . . . . . . . . . . 101
8.7 Access and Cooperation . . . . . . . . . . . . . . . . . . . . . . 101
8.8 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
ARTICLE 9 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
9.1 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
9.3 Modifications; Amendments; Waivers . . . . . . . . . . . . . . . . 103
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9.4 Rules of Interpretation . . . . . . . . . . . . . . . . . . . . . 103
9.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
9.6 Certain Tax Matters . . . . . . . . . . . . . . . . . . . . . . . 104
9.7 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
9.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
9.9 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
9.10 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . 106
9.11 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . 106
9.12 Survival of Representations and Warranties . . . . . . . . . . . . 106
9.13 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . 106
9.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.1 AFFILIATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2 AGREEMENT OF EXCHANGE . . . . . . . . . . . . . . . . . . . . . . 3
1.3 AIRTOUCH CALIFORNIA . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 APPROVED BUSINESS PLAN . . . . . . . . . . . . . . . . . . . . . . 3
1.5 ARBITRATION AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 4
1.6 ATI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.7 ATI PHASE II ASSETS . . . . . . . . . . . . . . . . . . . . . . . 4
1.8 ATI CELLULAR SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . 4
1.9 ATI EMPLOYEE BENEFIT PROGRAM . . . . . . . . . . . . . . . . . . . 4
1.10 ATI SERVICES AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 4
1.11 ATI PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.12 ATI PHASE II TRIGGER . . . . . . . . . . . . . . . . . . . . . . . 4
1.13 AUTHORIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.14 BACK END TERMINATION DATE . . . . . . . . . . . . . . . . . . . . 4
1.15 BALANCE SHEETS . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.16 BENEFICIAL PHASE II ASSET . . . . . . . . . . . . . . . . . . . . 5
1.17 BUSINESS DAY . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.18 CASH FLOW . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.19 CCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.20 CECO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.21 CELLULAR PARTNERSHIP AGREEMENT . . . . . . . . . . . . . . . . . . 5
1.22 CODE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.23 CONSENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.24 CONTRIBUTION DATE . . . . . . . . . . . . . . . . . . . . . . . . 5
1.25 DECREE COURT . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.26 DELAWARE RULPA . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.27 DOMESTIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.28 DOMESTIC CELLULAR ASSET . . . . . . . . . . . . . . . . . . . . . 6
1.29 DOMESTIC CELLULAR BUSINESS . . . . . . . . . . . . . . . . . . . . 6
1.30 DOMESTIC CELLULAR INVESTMENT . . . . . . . . . . . . . . . . . . . 6
1.31 DOMESTIC CELLULAR INVESTMENT ENTITY . . . . . . . . . . . . . . . 6
1.32 DOMESTIC CELLULAR SERVICE . . . . . . . . . . . . . . . . . . . . 6
1.33 DOMESTIC CELLULAR SUBSIDIARY . . . . . . . . . . . . . . . . . . . 6
1.34 DOMESTIC CELLULAR TRANSACTIONS . . . . . . . . . . . . . . . . . . 6
1.35 EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.36 EMPLOYEE BENEFIT PROGRAM . . . . . . . . . . . . . . . . . . . . . 7
1.37 ENVIRONMENTAL LAWS . . . . . . . . . . . . . . . . . . . . . . . . 8
1.38 EO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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1.39 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.40 ERISA AFFILIATE . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.41 ESMR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.42 FAIR MARKET VALUE . . . . . . . . . . . . . . . . . . . . . . . . 9
1.43 FINAL ORDER . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.44 FCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.45 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . 9
1.46 GOVERNMENTAL BODY . . . . . . . . . . . . . . . . . . . . . . . . 9
1.47 INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.48 INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . 9
1.49 INTER-EXCHANGE CARRIER AGREEMENT . . . . . . . . . . . . . . . . . 10
1.50 INVESTMENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . 10
1.51 LEASED PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.52 LICENSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.53 LIEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.54 MATERIAL ADVERSE EFFECT . . . . . . . . . . . . . . . . . . . . . 10
1.55 MATERIAL CONTRACT . . . . . . . . . . . . . . . . . . . . . . . . 10
1.56 MFJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.57 MSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.58 NEW PAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.59 NEW PAR ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.60 NEW PAR CONTRIBUTION DATE . . . . . . . . . . . . . . . . . . . . 11
1.61 NEW PAR DETERMINATION DATE . . . . . . . . . . . . . . . . . . . . 11
1.62 NEWVECTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.63 NEWVECTOR SERVICES AGREEMENT . . . . . . . . . . . . . . . . . . . 11
1.64 NV-EMPLOYEE BENEFIT PROGRAMS . . . . . . . . . . . . . . . . . . . 11
1.65 ORGANIZATION AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 11
1.66 OWNED PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.67 PARTIAL MFJ RELIEF . . . . . . . . . . . . . . . . . . . . . . . . 11
1.68 PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.69 PARTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.70 PCS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.71 PCS CONTRIBUTION DATE . . . . . . . . . . . . . . . . . . . . . . 12
1.72 PCS PAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.73 PCS PAR EMPLOYEE AGREEMENT . . . . . . . . . . . . . . . . . . . . 12
1.74 PCS PAR PARTNERSHIP AGREEMENT . . . . . . . . . . . . . . . . . . 13
1.75 PCS TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.76 PERCENTAGE INTEREST . . . . . . . . . . . . . . . . . . . . . . . 13
1.77 PERMITTED LIABILITIES . . . . . . . . . . . . . . . . . . . . . . 13
1.78 PERMITTED LIEN . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.79 PERSON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.80 PHASE I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.81 PHASE I CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.82 PHASE I CLOSING DATE . . . . . . . . . . . . . . . . . . . . . . . 13
1.83 PHASE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.84 PHASE II CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.85 PHASE III . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.86 PHASE III CLOSING . . . . . . . . . . . . . . . . . . . . . . . . 14
1.87 POPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.88 PRECEDING QUARTER . . . . . . . . . . . . . . . . . . . . . . . . 14
1.89 PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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1.90 QUARTER AT ISSUE . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.91 REIMBURSED EXPENSES . . . . . . . . . . . . . . . . . . . . . . . 14
1.92 RELATED AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 14
1.93 RELATED PARTY AGREEMENT . . . . . . . . . . . . . . . . . . . . . 15
1.94 RESALE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.95 RETURN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.96 ROAMING AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . 15
1.97 SAN DIEGO CELLULAR PROPERTY . . . . . . . . . . . . . . . . . . . 15
1.98 SCHEDULED NEW PAR RELATED ASSET . . . . . . . . . . . . . . . . . 16
1.99 SCHEDULED NPRA 12% VALUE . . . . . . . . . . . . . . . . . . . . . 16
1.100 SCHEDULED PHASE II RELATED ASSETS . . . . . . . . . . . . . . . . 16
1.102 SCHEDULED PIIRA 12% VALUE . . . . . . . . . . . . . . . . . . . . 16
1.103 SUBSIDIARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.104 SUBSTANCE OF CONCERN . . . . . . . . . . . . . . . . . . . . . . . 16
1.105 TAX OR TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.106 TAX SHARING ARRANGEMENT . . . . . . . . . . . . . . . . . . . . . 17
1.107 TO THE KNOWLEDGE OF ATI . . . . . . . . . . . . . . . . . . . . . 17
1.108 TO THE KNOWLEDGE OF USW . . . . . . . . . . . . . . . . . . . . . 17
1.109 TRADEMARK . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.110 TRADE NAME . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.111 TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.112 TRANSFERRED SUBSIDIARY . . . . . . . . . . . . . . . . . . . . . . 17
1.114 TRUST AGREEMENT OF EXCHANGE . . . . . . . . . . . . . . . . . . . 17
1.115 TUCSON CELLULAR INTEREST . . . . . . . . . . . . . . . . . . . . . 17
1.116 UNPERMITTED LIABILITY . . . . . . . . . . . . . . . . . . . . . . 18
1.117 USW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.118 USW PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.119 USW PHASE II ASSETS . . . . . . . . . . . . . . . . . . . . . . . 18
1.120 WMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.121 WMC EMPLOYEE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 18
1.122 WMC PARTNERSHIP COMMITTEE . . . . . . . . . . . . . . . . . . . . 18
1.123 WMC PARTNERSHIP AGREEMENT . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 2 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . 19
2.1 Representations and Warranties of USW . . . . . . . . . . . . . . 19
(a) Corporate Organization . . . . . . . . . . . . . . . . . . . . 19
(b) Capitalization: Ownership of Shares. . . . . . . . . . . . . . 20
(c) Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(d) Authorizations and Consents; No Violation . . . . . . . . . . 22
(e) Financial Statements . . . . . . . . . . . . . . . . . . . . . 23
(f) Absence of Other Changes . . . . . . . . . . . . . . . . . . . 23
(g) Compliance with Laws . . . . . . . . . . . . . . . . . . . . . 24
(h) MFJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(i) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(j) Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(k) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(l) Material Contracts and Related Party Agreements . . . . . . . 27
(m) Employment and Non-Competition Agreements . . . . . . . . . . 27
(n) Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(o) Intellectual Property . . . . . . . . . . . . . . . . . . . . 28
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(p) Employee Benefit Programs . . . . . . . . . . . . . . . . . . 28
(q) Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . 31
(r) Environmental Compliance and Liabilities . . . . . . . . . . . 32
(s) Other Liabilities . . . . . . . . . . . . . . . . . . . . . . 33
(t) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.2 Representations and Warranties of ATI . . . . . . . . . . . . . . . 34
(a) Corporate Organization. . . . . . . . . . . . . . . . . . . . 34
(b) Capitalization: Ownership of Shares. . . . . . . . . . . . . . 35
(c) Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(d) Authorizations and Consents; No Violation . . . . . . . . . . 38
(e) Financial Statements . . . . . . . . . . . . . . . . . . . . . 39
(f) Absence of Other Changes . . . . . . . . . . . . . . . . . . . 40
(g) Compliance with Laws . . . . . . . . . . . . . . . . . . . . . 40
(h) MFJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(i) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(j) Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(k) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(l) Material Contracts . . . . . . . . . . . . . . . . . . . . . . 43
(m) Employment and Non-Competition Agreements . . . . . . . . . . 43
(n) Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(o) Intellectual Property . . . . . . . . . . . . . . . . . . . . 44
(p) Employee Benefit Programs . . . . . . . . . . . . . . . . . . 44
(q) Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . 47
(r) Environmental Compliance and Liabilities . . . . . . . . . . . 48
(s) Other Liabilities . . . . . . . . . . . . . . . . . . . . . . 50
(t) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(v) Amendment to Rights Plan . . . . . . . . . . . . . . . . . . . 50
ARTICLE 3 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
3.1 Covenants of USW . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(a) Effectuation of this Agreement . . . . . . . . . . . . . . . . 51
(b) Conduct of Business . . . . . . . . . . . . . . . . . . . . . 52
(c) Reporting. . . . . . . . . . . . . . . . . . . . . . . . 53
(d) No Changes . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(e) Access and Information . . . . . . . . . . . . . . . . . . . . 55
(f) Divestiture of San Diego Cellular Property . . . . . . . . . . 55
(g) Operation of Certain Assets . . . . . . . . . . . . . . . . . . 57
(h) Tucson Cellular Interest . . . . . . . . . . . . . . . . . . . 57
3.2 Covenants of ATI . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(a) Effectuation of this Agreement . . . . . . . . . . . . . . . . 58
(b) Conduct of Business . . . . . . . . . . . . . . . . . . . . . 59
(c) Reporting. . . . . . . . . . . . . . . . . . . . . . . . . . 59
(d) No Changes . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(e) Access and Information . . . . . . . . . . . . . . . . . . . . 62
(f) Divestiture of Tucson Cellular Interest . . . . . . . . . . . 63
(g) Operation of Certain Assets . . . . . . . . . . . . . . . . . 64
(h) San Diego Cellular Property . . . . . . . . . . . . . . . . . 64
3.3 Fiduciary Obligations . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE 4 PHASE I CLOSING ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . 65
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4.1 Cash Flows and Funding Prior to Phase I . . . . . . . . . . . . . . 65
4.2 Phase I Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4.3 Special Provisions relating to the San Diego
Cellular Property and the Tucson Cellular
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
4.4 Independent Third Party Verification . . . . . . . . . . . . . . . . 71
4.5 Initial Phase II Asset Percentages . . . . . . . . . . . . . . . . . 72
4.6 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE 5 PHASE II CLOSING PERCENTAGES . . . . . . . . . . . . . . . . . . . . 74
5.1 Cash Flows and Funding Prior to Phase II . . . . . . . . . . . . . . 74
5.2 Basic Principles for Phase II Closing Percentages . . . . . . . . . 75
5.3 Additional Principles for Phase II Closing Percentages . . . . . . . 76
5.4 Phase II Closing Percentages . . . . . . . . . . . . . . . . . . . . 78
5.5 Restated Phase II Closing Percentages . . . . . . . . . . . . . . . 78
5.6 Phase I Quarterly Computations . . . . . . . . . . . . . . . . . . . 79
5.7 Phase II Closing Percentages . . . . . . . . . . . . . . . . . . . . 81
5.8 Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
5.9 Phase I Quarterly Records . . . . . . . . . . . . . . . . . . . . . 85
5.10 Quarterly Values . . . . . . . . . . . . . . . . . . . . . . . . . . 85
(a) "Quarterly Value-100% New Par" . . . . . . . . . . . . . . . . . 85
(b) "Quarterly Value-50% New Par" . . . . . . . . . . . . . . . . . 86
(c) "Quarterly Value-No New Par" . . . . . . . . . . . . . . . . . . 86
(ii) "Deemed Amount-50% New Par" . . . . . . . . . . . . . . . 87
(iii) "Deemed Amount-No New Par" . . . . . . . . . . . . . . . . 87
5.11 New Par Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . 87
5.12 Scheduled Phase II Related Assets . . . . . . . . . . . . . . . . . 88
5.13 Minority Indebtedness Adjustment . . . . . . . . . . . . . . . . . . 91
5.14 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . 91
ARTICLE 6 PHASES OF THE JOINT VENTURE AND CLOSINGS . . . . . . . . . . . . . . 91
6.1 Prior to Phase I . . . . . . . . . . . . . . . . . . . . . . . . . . 91
6.2 Phase I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
(a) Conditions to Phase I Closing . . . . . . . . . . . . . . . . . 92
(b) Deliveries on or before the Phase I Closing . . . . . . . . . . 92
6.3 Phase II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
(a) Conditions to Phase II Closing . . . . . . . . . . . . . . . . . 93
(b) Deliveries on or before the Phase II Closing . . . . . . . . . . 94
6.4 PCS Contribution Closing . . . . . . . . . . . . . . . . . . . . . . 96
6.5 New Par Contribution Date . . . . . . . . . . . . . . . . . . . . . 97
ARTICLE 7 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
7.1 Termination of this Organization Agreement. . . . . . . . . . . . . . 98
7.2 Winding Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
ARTICLE 8 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
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8.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
8.2 Indemnity by USW . . . . . . . . . . . . . . . . . . . . . . . . . 99
8.3 Indemnity by ATI . . . . . . . . . . . . . . . . . . . . . . . . . 100
8.4 Indemnity by WMC . . . . . . . . . . . . . . . . . . . . . . . . . 101
8.5 Tax Indemnification . . . . . . . . . . . . . . . . . . . . . . . 101
8.6 Notification of Claims . . . . . . . . . . . . . . . . . . . . . . 102
8.7 Access and Cooperation . . . . . . . . . . . . . . . . . . . . . . 102
8.8 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
ARTICLE 9 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
9.1 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
9.3 Modifications; Amendments; Waivers . . . . . . . . . . . . . . . . 104
9.4 Rules of Interpretation . . . . . . . . . . . . . . . . . . . . . 104
9.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
9.6 Certain Tax Matters . . . . . . . . . . . . . . . . . . . . . . . 105
9.7 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
9.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
9.9 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
9.10 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . 107
9.11 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . 107
9.12 Survival of Representations and Warranties . . . . . . . . . . . . 107
9.13 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . 107
9.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
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13
THIS AMENDED AND RESTATED JOINT VENTURE ORGANIZATION AGREEMENT (the
"Organization Agreement") is entered into as of September 30, 1995, by and
between AIRTOUCH COMMUNICATIONS, INC., a Delaware corporation ("ATI"), and U S
WEST, INC., a Colorado corporation ("USW").
W I T N E S S E T H:
WHEREAS, ATI and USW or certain of their affiliates are the direct and/or
indirect owners of interests in and rights to certain cellular communications
systems; and
WHEREAS, regional and national markets are developing in the wireless
communications business, and it is becoming increasingly important to increase
the scale and scope of services offered to compete effectively with lower costs
in such markets; and
WHEREAS, there are substantial operating, technological and development
efficiencies of scale and scope to be achieved by a joint venture combining
certain of the current cellular and wireless properties of ATI and USW and their
affiliates; and
WHEREAS, ATI and USW have concluded that it will be in their respective best
interests, and the best interests of the public, to form a joint venture for the
purpose of coordinating wireless services and owning, operating, managing,
maintaining, and constructing cellular, PCS (as hereinafter defined), and other
wireless communications systems and, in furtherance thereof, ATI and USW wish to
organize a joint venture; and
WHEREAS, the MFJ (as hereinafter defined) currently applies to USW and its
affiliated companies and restricts them from engaging in certain activities,
which restrictions are acknowledged to have anticompetitive consequences; and
WHEREAS, the MFJ restrictions do not apply to ATI and its affiliates, and
any imposition of those restrictions would create inefficiencies, limit ATI's
competitive options, and reduce consumer choice; and
WHEREAS, it is the intent of the parties to this Organization Agreement to
achieve the scope and scale efficiencies of integration to the extent possible
consistent with the current MFJ restrictions, while, at the same time, limiting
the application of such MFJ restrictions only to those entities and activities
to which they currently apply; and
WHEREAS, the parties have structured this transaction in phases, the timing
of which is dependent on the continued
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14
applicability of the MFJ, and it is the intent of the parties, subject to the
terms and conditions hereof, to integrate completely all aspects of their
cellular and wireless businesses as soon as practicable without the imposition
of MFJ restrictions on ATI or its cellular properties; and
WHEREAS, on July 25, 1994, AirTouch Communications, a California corporation
and predecessor to ATI ("AirTouch California"), and USW executed a Joint Venture
Organization Agreement (the "Initial Organization Agreement"); and
WHEREAS, simultaneously with the execution of the Initial Organization
Agreement, AirTouch California and USW entered into that certain Investment
Agreement, that certain Agreement of Exchange, that certain Partnership
Agreement of WMC Partners, L.P., that certain Partnership Agreement of PCS
Nucleus, L.P., that certain Trust Agreement of Exchange, and that certain
Arbitration Agreement; and
WHEREAS, ATI and USW now wish to amend and restate the Initial Organization
Agreement and certain of the Related Agreements (as defined below):
NOW, THEREFORE, in consideration of the promises, mutual covenants and
agreements herein contained, the sufficiency of which is hereby acknowledged,
and in order to set forth the respective rights, obligations and interests of
ATI and USW and their Affiliates to one another, the parties hereto, intending
to be bound, agree as follows:
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15
AGREEMENT
ARTICLE 1
DEFINITIONS
(a) As used herein, the following terms shall have the following meanings:
1.1 AFFILIATE shall mean any Person that, directly or indirectly through
one or more intermediaries, controls, is controlled by, or is under
common control with the Person specified. For purposes of this
Organization Agreement, ATI and its Affiliates shall not be considered
to be Affiliates of WMC or PCS Par; USW and its Affiliates shall not be
considered to be Affiliates of WMC or PCS Par; WMC shall not be
considered to be an Affiliate of ATI or USW or any of their respective
Affiliates; PCS Par shall not be considered to be an Affiliate of ATI
or USW or either of their Affiliates; CCI shall not be considered to be
an Affiliate of ATI until such time, if ever, as ATI shall be entitled
to exercise full discretion with respect to voting the shares of Common
Stock of CCI beneficially owned by ATI (other than shares of Common
Stock of CCI owned by ATI by virtue of its ownership of the Class A
Preference Stock of CCI); and no wireline cable television company in
which USW owns, directly or indirectly, less than fifty percent (50%)
of the equity or voting interests shall be considered to be an
Affiliate of USW. For purposes of this definition, the term "CONTROL"
(including the terms "CONTROLLED BY" and "UNDER COMMON CONTROL WITH")
as used with respect to any Person means the possession, direct or
indirect, of the power to (a) vote in excess of fifty percent (50%) of
the voting securities of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by
contract or otherwise.
1.2 AGREEMENT OF EXCHANGE shall mean that certain Amended and Restated
Agreement of Exchange, by and between ATI and USW, dated as of the date
hereof, a copy of which is appended hereto as ATTACHMENT 1.2, as
amended, modified or supplemented from time to time.
1.3 AIRTOUCH CALIFORNIA shall mean AirTouch Communications, a California
corporation.
1.4 APPROVED BUSINESS PLAN shall have the meaning set forth in SECTION 2.10
of the WMC Partnership Agreement.
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1.5 ARBITRATION AGREEMENT shall mean that certain Amended and Restated
Arbitration Agreement entered into by and between USW and ATI, dated as
of the date hereof, a copy of which is appended hereto as ATTACHMENT
1.5, as amended, modified or supplemented from time to time.
1.6 ATI shall mean AirTouch Communications, Inc., a Delaware corporation.
1.7 ATI PHASE II ASSETS shall mean the assets listed on ATTACHMENT 1.7 to
this Organization Agreement.
1.8 ATI CELLULAR SUBSIDIARIES shall mean AirTouch Cellular, Inc., a
California corporation; AirTouch Cellular of Nevada, a Nevada
corporation; and AirTouch Cellular of Saginaw, Inc., a Michigan
corporation, and any successor corporation to any of the foregoing
resulting from the restructuring by ATI of its ownership of Domestic
Cellular Businesses pursuant to SECTION 3.2(a)(v) hereof.
1.9 ATI EMPLOYEE BENEFIT PROGRAMS shall have the meaning set forth in
SECTION 2.2(p)(i) hereof.
1.10 ATI SERVICES AGREEMENT shall mean an agreement to be entered into by
and between WMC and any of the ATI Cellular Subsidiaries, substantially
in the form appended hereto as Attachment 1.10.
1.11 ATI PARTIES shall mean ATI, the ATI Cellular Subsidiaries, and the
corporate and partnership Subsidiaries of the ATI Cellular
Subsidiaries.
1.12 ATI PHASE II TRIGGER shall have the meaning set forth in SECTION
6.3(c)(iii) hereof.
1.13 AUTHORIZATION shall mean any authorization, order, grant, consent,
approval, permission or waiver required to be obtained from any
Governmental Body for the consummation of any specified Transaction of
any Phase or for the performance by any Party of any of its obligations
under this Organization Agreement and the Related Agreements, including
without limitation any Final Order and the expiration of any waiting
period applicable under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
1.14 BACK END TERMINATION DATE shall have the meaning set forth in Section
1.8 of the WMC Partnership Agreement.
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17
1.15 BALANCE SHEETS shall have the meaning set forth in SECTION 2.1(e), or
in SECTION 2.2(e) hereof, as the context may require.
1.16 BENEFICIAL PHASE II ASSET shall have the meaning set forth in SECTION
1.8 of the WMC Partnership Agreement.
1.17 BUSINESS DAY shall mean any day on which national banking institutions
in San Francisco, California, are open for the transaction of banking
business.
1.18 CASH FLOW shall have the meaning set forth in Section 5.8.
1.19 CCI shall mean Cellular Communications, Inc., a Delaware corporation.
1.20 CECO shall mean the Civil Enforcement Consent Order entered by the
United States District Court for the District of Columbia on or about
February 2, 1989, in United States v. Western Electric Co. (Case No.
82-0192).
1.21 CELLULAR PARTNERSHIP AGREEMENT shall mean the partnership agreement of
any partnership that conducts a Domestic Cellular Business and in which
any USW Party or ATI Party holds an interest.
1.22 CODE shall mean the Internal Revenue Code of 1986, as amended from time
to time.
1.23 CONSENT shall mean any approval, consent or waiver required to be
obtained from any non-governmental third party for the consummation of
a specified Transaction of any Phase or for the performance by any
Party of any of its obligations under this Organization Agreement and
the Related Agreements, 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 contemplated by this
Organization Agreement or any Related Agreement.
1.24 CONTRIBUTION DATE shall mean the date of the Phase II Closing;
provided, however, that with respect to any Beneficial Phase II Asset
or Transferred Subsidiary that is contributed or transferred to WMC
after the Phase II Closing, the Contribution Date shall be the date
such contribution or transfer is effected.
1.25 DECREE COURT shall mean the court having jurisdiction over the MFJ.
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1.26 DELAWARE RULPA shall mean the Delaware Revised Uniform Limited
Partnership Act.
1.27 DOMESTIC shall refer to the fifty (50) states of the United States, the
District of Columbia, Puerto Rico, the Gulf of Mexico, and Guam.
1.28 DOMESTIC CELLULAR ASSET shall mean any assets, rights, properties, and
franchises of every kind and nature used primarily or exclusively in
the operation of a Domestic Cellular Business (including the FCC
Licenses with respect thereto), whether held directly or indirectly
through a Person's wholly owned Subsidiaries, and any other asset,
right, property, or business of such Person or its wholly owned
Subsidiaries constituting part of, or used primarily in connection
with, such Person's Domestic Cellular Business.
1.29 DOMESTIC CELLULAR BUSINESS shall mean the business of acquiring,
developing, owning, and operating businesses, and interests in
businesses, exclusively or primarily engaged in the provision of
Domestic Cellular Service.
1.30 DOMESTIC CELLULAR INVESTMENT shall mean any equity interest held by a
Person in a Domestic Cellular Investment Entity.
1.31 DOMESTIC CELLULAR INVESTMENT ENTITY shall mean any Person that is
conducting a Domestic Cellular Business in which a specified Person
holds an equity interest, but which is not a Subsidiary of such Person.
1.32 DOMESTIC CELLULAR SERVICE shall mean any commercial mobile radio
service, and the resale of such service, provided by a radio
communications system authorized under the rules for the domestic
public cellular radio telecommunications service designated as Subpart
K of Part 22 of the FCC's rules in effect on the Effective Date, 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.
1.33 DOMESTIC CELLULAR SUBSIDIARY shall mean, with respect to a Person, a
Subsidiary that is conducting a Domestic Cellular Business.
1.34 DOMESTIC CELLULAR TRANSACTIONS shall mean the formation of WMC; the
execution and delivery of the ATI Services Agreement, and the NewVector
Services
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Agreement; the contribution of the ATI Phase II Assets, the USW Phase
II Assets, the Scheduled Phase II Related Assets, the Beneficial Phase
II Assets, the New Par Assets and the Scheduled New Par Related Asset
to WMC; and the other transactions referred to in ARTICLES 6 and 7
hereof.
1.35 EFFECTIVE DATE shall mean July 25, 1994.
1.36 EMPLOYEE BENEFIT PROGRAM shall mean any of the following employee
benefit plans, programs or arrangements (whether or not set forth in a
written document):
(a) Any employee pension benefit plan, as defined in Section 3(2) of
ERISA, including without limitation any multiemployer plan within
the meaning of Section 4001(a)(3) of ERISA;
(b) Any employee welfare benefit plan, as defined in Section 3(1) of
ERISA;
(c) Any bonus, deferred-compensation, incentive, restricted-stock,
stock purchase, stock option, stock appreciation right, phantom
stock, debenture, supplemental pension, profit-sharing,
commission, royalty pool or similar plan or arrangement;
(d) Any plan, program, agreement, policy, commitment or other
arrangement relating to severance or termination pay, whether or
not published or generally known;
(e) Any plan, program, agreement, policy, commitment or other
arrangement relating to the provision of any benefit described in
Section 3(1) of ERISA to former employees or the survivors or
dependents of employees or former employees;
(f) Any plan that is maintained outside of the United States primarily
for the benefit of persons substantially all of whom are
nonresident aliens, as described in Section 4(b)(4) of ERISA;
(g) Any plan that is an excess benefit plan, as defined in Section
3(36) of ERISA, and is unfunded, as described in Section 4(b)(5)
of ERISA;
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(h) Any plan, program, agreement, policy, commitment or other
arrangement relating to loans or other extensions of credit, loan
guarantees, relocation assistance or similar benefits;
(i) Any plan, program, agreement, policy, commitment or other
arrangement relating to paid or unpaid leaves of absence,
education expense or vacation; or
(k) Any other plan, program, agreement, policy, commitment or other
arrangement relating to employee benefits, executive compensation
or fringe benefits or that is subject to Section 125 of the Code.
1.37 ENVIRONMENTAL LAWS shall mean all federal, state, local, and foreign
laws and regulations 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 handling
of any Substance of Concern, and (b) common law principles of tort
liability.
1.38 EO shall mean the Enforcement Order entered by the United States
District Court for the District of Columbia on or about February 15,
1991, in United States v. Western Electric Co. (Case No. 82-0192).
1.39 ERISA shall mean the Employee Retirement Security Act of 1974, as
amended.
1.40 ERISA AFFILIATE shall mean each person (as defined in Section 3(9) of
ERISA) that, together with the entity being described, would be treated
as a single employer under Section 4001(b) of ERISA or that would be
deemed to be a member of the same "controlled group" within the meaning
of Section 414(b), (c), (m), and (o) of the Code (provided, however,
that when the subject of the provision is a multiemployer plan only
subsections (b) and (c) of Section 414 shall be taken into account).
ERISA Affiliate shall also mean any partnership in which the entity
being described is a general partner.
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21
1.41 ESMR shall refer to any commercial mobile radio service, and the resale
of such service, authorized under the rules for Enhanced Specialized
Mobile Radio services designated under Subpart S or Part 90 of the
FCC's rules in effect on the Effective Date, or any revision 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.
1.42 FAIR MARKET VALUE shall have the meaning set forth in SECTION 1.8 of
the WMC Partnership Agreement.
1.43 FINAL ORDER shall mean any action by the FCC or a state regulatory
authority as to which (a) no request for stay by the FCC or state
regulatory authority is pending, no such stay is in effect, and, if any
deadline for filing any such request is designated by statute or
regulation, it has passed; (b) no petition for rehearing or
reconsideration of the action is pending before the FCC or state
regulatory authority, as applicable, and the time for filing any such
petition has passed; (c) the FCC or state regulatory authority, as
applicable, does not have the action under reconsideration on its own
motion, and the time for such reconsideration has passed; and (d) no
appeal to a court, or request or stay by a court, of the FCC's or state
regulatory authority's action, as applicable, is pending or in effect,
and, if any deadline for filing such appeal or request is designated by
statute or rule, it has passed.
1.44 FCC shall mean the Federal Communications Commission or any successor
agency or entity performing substantially the same functions.
1.45 FINANCIAL STATEMENTS shall have the meaning set forth in SECTION
2.1(e), or in SECTION 2.2(e) hereof, as the context may require.
1.46 GOVERNMENTAL BODY shall mean any federal, state, municipal, political
subdivision or other governmental department, commission, board,
bureau, agency or instrumentality.
1.47 INCOME TAXES means any federal, state, local or foreign income,
franchise or similar Taxes and in each instance any interest, penalties
or additions to taxes attributable to such Taxes.
1.48 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
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granting rights or privileges to use any Trademark, Trade Name or
patent, used in, and material to the conduct of, the Domestic Cellular
Business of any Person.
1.49 INTER-EXCHANGE CARRIER AGREEMENT shall mean an agreement between any
ATI Party and any inter-exchange carrier or between any USW Party and
any inter-exchange carrier relating to the conduct of a Domestic
Cellular Business.
1.50 INVESTMENT AGREEMENT shall mean that certain Amended and Restated
Investment Agreement, entered into by and between USW and ATI, dated as
of the date hereof, a copy of which is appended hereto as ATTACHMENT
1.50, as amended, modified or supplemented from time to time.
1.51 LEASED PROPERTY shall mean any Domestic Cellular Asset consisting of a
leasehold interest in real or personal property.
1.52 LICENSE shall mean any permit, license, waiver or authorization from
any Governmental Body having jurisdiction over a Person required or
advisable for the conduct of an activity, including, without
limitation, any FCC license or any authorization or certificate of
public convenience and necessity.
1.53 LIEN shall mean any lien, pledge, claim, encumbrance, mortgage,
security interest or other charge against property.
1.54 MATERIAL ADVERSE EFFECT shall mean a material adverse effect on the
business, assets, financial condition, results of operations or
prospects of a specified Person or Persons.
1.55 MATERIAL CONTRACT shall mean any agreement, contract or commitment made
in conjunction with or related to a Domestic Cellular 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
annual aggregate payments by any party thereto in excess of five
million dollars ($5,000,000); (b) is reasonably anticipated by the
Party making a representation with respect thereto to involve aggregate
payments by all parties thereto in excess of ten million dollars
($10,000,000) in any five (5) year period; (c) has a term of five (5)
years or more; or (d) that any party thereto would be required to file
as an exhibit to
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23
its Annual Report on Form 10-K if such Person were a registrant under
Section 12 of the Securities Exchange Act of 1934, as amended.
1.56 MFJ shall mean the Modification of Final Judgment entered in United
States v. AT&T, 552 F. Supp. 131 (D.D.C.), on or about August 24, 1982,
as subsequently modified from time to time.
1.57 MSA shall mean Metropolitan Statistical Area.
1.58 NEW PAR shall mean the general partnership between the PacTel Group and
the CCI Group (or their successors) organized pursuant to the laws of
the State of Delaware and that certain New Par Partnership Agreement,
dated as of August 1, 1991.
1.59 NEW PAR ASSETS shall mean all of the ownership interests in, or assets
of, New Par, as of July 25, 1994.
1.60 NEW PAR CONTRIBUTION DATE shall have the meaning set forth in the WMC
Partnership Agreement.
1.61 NEW PAR DETERMINATION DATE shall mean either (i) if ATI and its
Affiliates shall, directly or indirectly, acquire all of the assets of
New Par, the later to occur of the New Par Contribution Date or the
Phase II Closing or (ii) if ATI and its Affiliates shall not, directly
or indirectly, acquire all of the assets of New Par, the later to occur
of the Back End Termination Date or the Phase II Closing.
1.62 NEWVECTOR shall mean U S WEST NewVector Group, Inc., a Colorado
corporation and wholly owned Subsidiary of USW.
1.63 NEWVECTOR SERVICES AGREEMENT shall mean an agreement to be entered into
by and between WMC and NewVector substantially in the form of the
Services Agreement appended hereto as Attachment 1.10.
1.64 NV-EMPLOYEE BENEFIT PROGRAMS shall have the meaning set forth in
SECTION 2.1(p)(i) hereof.
1.65 ORGANIZATION AGREEMENT shall mean this Joint Venture Organization
Agreement.
1.66 OWNED PROPERTY shall mean any Domestic Cellular Asset consisting of a
fee interest in real or personal property.
1.67 PARTIAL MFJ RELIEF shall mean a final court order, federal agency
action or the enactment of federal
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legislation modifying the MFJ (to the extent such modification is
necessary) to allow WMC:
(a) To provide interexchange telecommunications services that (i)
originate from a cellular radio or other wireless device and that are
not routed through a wireless PBX or comparable device directly to a
landline local telephone company end office, or (ii) are routed through
wireless switching equipment to any terminating device (including
cellular CPE, voice-mail or any other type of terminating device); and
(b) To provide the services identified in subparagraph (a) above free
of the obligations and restrictions contained in sections II(A) and
II(B) of the MFJ, and free of any requirement to provide those services
through a separate subsidiary, sales force or group of employees,
whether imposed in the waiver process or otherwise.
As used herein, Partial MFJ Relief shall be deemed to have occurred
even though equal access or nondiscrimination requirements remain, to
the extent that those requirements are imposed on all wireless carriers
by legislation, by final court order or by final agency action.
1.68 PARTIES shall mean USW and ATI.
1.69 PARTY shall mean USW or ATI, as the context may require.
1.70 PCS shall refer to any broad-band 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 the
Effective Date, 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.
1.71 PCS CONTRIBUTION DATE shall have the meaning set forth in the WMC
Partnership Agreement.
1.72 PCS PAR shall mean PCS Nucleus, L.P., a Delaware limited partnership
organized pursuant to the PCS Par Partnership Agreement.
1.73 PCS PAR EMPLOYEE AGREEMENT shall mean an agreement regarding employees
to be entered into by and among ATI and USW and PCS Par pursuant to
this Organization Agreement.
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1.74 PCS PAR PARTNERSHIP AGREEMENT shall mean that certain Amended and
Restated Agreement of Limited Partnership of PCS Par, entered into
under the Delaware RULPA by and between ATI and USW, dated as of the
date hereof, a copy of which is appended hereto as ATTACHMENT 1.74, as
amended, modified or supplemented from time to time.
1.75 PCS TRANSACTIONS shall mean the formation of PCS Par, and the
contribution of Percentage Interests in PCS Par to WMC in accordance
with SECTION 6.4 hereof.
1.76 PERCENTAGE INTEREST shall mean a partner's proportional interest in a
partnership, whether as a general partner, a limited partner or both a
general and a limited partner.
1.77 PERMITTED LIABILITIES shall mean, with respect to a Person's Domestic
Cellular Business, ordinary course trade accounts payable, accrued
expenses for goods and services purchased, and unearned revenue and
customer deposits arising in the ordinary course of business.
1.78 PERMITTED LIEN shall mean (a) a statutory Lien not yet due or payable
or (b) a Lien that is not material in character, amount or extent and
does not materially detract from the value, or interfere with the use
of, the assets subject thereto or affected thereby or otherwise
materially impair the business operations being conducted or proposed
to be conducted with such assets.
1.79 PERSON shall mean any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, estate,
unincorporated organization, governmental or regulatory body or other
entity.
1.80 PHASE I shall mean the period beginning at the Phase I Closing and
continuing until the Phase II Closing.
1.81 PHASE I CLOSING shall mean the closing of the Domestic Cellular
Transactions to be closed upon satisfaction or waiver of all conditions
set forth in SECTION 6.2(a) of this Organization Agreement.
1.82 PHASE I CLOSING DATE means the date of the Phase I Closing.
1.83 PHASE II shall mean the period beginning at the Phase II Closing and
continuing until the Phase III Closing, if any.
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1.84 PHASE II CLOSING shall mean the closing of the Transactions to be
closed upon satisfaction or waiver of all conditions set forth in
SECTION 6.3(a) of this Organization Agreement.
1.85 PHASE III shall mean the period following the Phase III Closing.
1.86 PHASE III CLOSING shall mean the closing of the Exchange or the Initial
Exchange as contemplated in the Agreement of Exchange or the Trust
Agreement of Exchange, respectively, as the case may be.
1.87 POPS shall mean the number that is the product of (a) the population of
an FCC-licensed cellular market (based on the 1993 Xxxxxxxx Marketing
Service population estimates for such market), and (b) the percentage
of direct or indirect ownership interest of a Person in the entity
holding the valid cellular license for such market as of the date
specified.
1.88 PRECEDING QUARTER shall have the meaning set forth in Section 5.6(d)
hereof.
1.89 PURCHASE PRICE means, with respect to any Scheduled Phase II Related
Asset or Scheduled New Par Related Asset, the amounts set forth in the
last column of Attachment 1.89 hereto opposite the name of such
Scheduled Phase II Related Asset or Scheduled New Par Related Asset.
1.90 QUARTER AT ISSUE means, for the purposes of any computation, the fiscal
quarter during Phase I with respect to which such computation is being
made.
1.91 REIMBURSED EXPENSES means (i) any expenses incurred by one Party (the
"first Party") for the benefit of WMC where the other Party has agreed
in writing to reimburse the first Party, and (ii) any expense for any
Party where the other Party has an obligation to indemnify such Party
pursuant to Article 8 hereof.
1.92 RELATED AGREEMENTS shall mean the WMC Partnership Agreement, the PCS
Par Partnership Agreement, the Agreement of Exchange, the Trust
Agreement of Exchange, the Investment Agreement, the ATI Services
Agreement, the NewVector Services Agreement, and the Arbitration
Agreement. With reference to a particular Party, Related Agreement
shall mean any of the above-referenced agreements to which such Party
or an Affiliate of such Party is a party.
1.93 RELATED PARTY AGREEMENT shall mean any contract, agreement, transaction
or relationship between or
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among (a) a USW Party or an ATI Party and an Affiliate of such ATI
Party or USW Party relating to a Domestic Cellular Business; (b) a USW
Party or an ATI Party or an Affiliate thereof and WMC; or (c) a USW
Party or an ATI Party or an Affiliate thereof and PCS Par.
1.94 RESALE AGREEMENT shall mean any agreement entered into by any ATI Party
or any USW Party with any third party relating to the resale of any
Domestic Cellular Service.
1.95 RETURN means any report, return, statement, estimate, declaration,
claim for refund, form, information return or other document filed or
required to be filed with respect to Taxes, including any schedule or
attachment thereto, and including any amendment thereof; provided,
however, that whenever a Subsidiary is a member of an affiliated group,
within the meaning of Section 1504 of the Code (or any combined,
consolidated, unitary group or similar group for purposes of any
applicable foreign, state or local law), the Return with respect to
such Subsidiary shall be the schedule to the Return for such group
which relates to such Subsidiary and, when available, any pro forma
Returns prepared for such Subsidiary.
1.96 ROAMING AGREEMENT shall mean any agreement entered into by any ATI
Party or any USW Party with any third party with respect to a roaming
arrangement for domestic cellular or domestic PCS, ESMR or satellite
customers.
1.97 SAN DIEGO CELLULAR PROPERTY shall mean the assets held by U S WEST
Cellular of California, a wholly owned Subsidiary of NewVector, in
connection with the conduct of the non-wireline cellular system
licensed to serve the San Diego MSA, free and clear of all Liens and
liabilities (other than Permitted Liabilities). For purposes of this
Organization Agreement, the San Diego Cellular Property shall not be
considered to be a USW Phase II Asset, a Domestic Cellular Asset, a
Domestic Cellular Subsidiary, a Domestic Cellular Investment or a
component of the Domestic Cellular Business of any Person.
1.98 SCHEDULED NEW PAR RELATED ASSET means Ohio-6 (Xxxxxx).
1.99 SCHEDULED NPRA 12% VALUE means, for any date of determination, an
amount equal to the Purchase Price paid by or on behalf of New Par to
purchase the Scheduled New Par Related Asset, accreted at the rate
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of 12% per annum for the period beginning on the Phase I Closing Date
and ending on such date of determination.
1.100 SCHEDULED PHASE II RELATED ASSETS means the assets set forth on
Attachment 1.89 to be contributed to WMC by USW (or the USW Parties)
on the Phase II Closing.
1.102 SCHEDULED PIIRA 12% VALUE means, with respect to any Scheduled Phase
II Related Asset for any date of determination, an amount equal to the
Purchase Price for such Scheduled Phase II Related Asset, accreted at
the rate of 12% per annum for the period beginning on the Phase I
Closing Date and ending on such date of determination.
1.103 SUBSIDIARY of a Person shall mean (a) an entity at least fifty percent
(50%) of the equity or voting interests of which are owned, directly
or indirectly, by such Person; (b) a limited partnership whose sole
general partner or managing general partner is such Person; or (c) a
general partnership whose managing general partner is such Person. For
purposes of this Organization Agreement, neither WMC nor PCS Par shall
be considered to be a Subsidiary of USW or ATI.
1.104 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.
1.105 TAX OR TAXES means taxes of any kind, levies or other like
assessments, customs, duties, imposts, charges or fees, including,
without limitation, income, gross receipts, ad valorem, value added,
excise, real or personal property, asset, stamp, sales, use, service,
service use, lease, license, payroll, transaction, capital, net worth,
withholding, employment, disability, social security, workers'
compensation, utility, severance, production, unemployment
compensation, occupation, premium, windfall profits, transfer, gains,
recapture, alternative or add-on minimum, environmental, estimated or
other governmental taxes imposed or payable to the United States, or
any state, county, local or foreign government or subdivision or
agency thereof, and in each instance such term shall include any
interest, penalties or additions to tax attributable to any such Tax.
1.106 TAX SHARING ARRANGEMENT means any written or unwritten agreement or
arrangement for the allocation
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or payment of or with respect to Tax liabilities or Tax benefits.
1.107 TO THE KNOWLEDGE OF ATI shall mean to the actual knowledge of an
executive officer of ATI.
1.108 TO THE KNOWLEDGE OF USW shall mean to the actual knowledge of an
executive officer of NewVector.
1.109 TRADEMARK shall mean any service xxxx, trademark, trade name,
trademark registration or application, service xxxx registration or
application or derivative name.
1.110 TRADE NAME shall mean any trade name, corporate name, business name,
commercial name, trade name, registration or application or any other
name used to identify a business or for any other business purpose.
1.111 TRANSACTIONS shall mean the Domestic Cellular Transactions, the PCS
Transactions, and any other transactions contemplated by this
Organization Agreement and the Related Agreements.
1.112 TRANSFERRED SUBSIDIARY shall mean any ATI Domestic Cellular Subsidiary
or USW Domestic Cellular Subsidiary, as the case may be, the capital
stock of which is actually contributed or transferred to WMC, and any
corporate Subsidiary thereof.
1.113 TRANSITION BONUSES means any amount paid or payable to employees as
retention or transition bonuses.
1.114 TRUST AGREEMENT OF EXCHANGE shall mean that certain Amended and
Restated Trust Agreement of Exchange, by and between ATI and USW,
dated as of the date hereof, a copy of which is appended hereto as
Attachment 1.114, as amended, modified or supplemented from time to
time.
1.115 TUCSON CELLULAR INTEREST shall mean the 5.88 percent (5.88%) limited
partnership interest held by AirTouch Cellular of Arizona in Tucson
Cellular Telephone Company, a Nevada limited partnership that operates
the non-wireline cellular system in the Tucson, Arizona MSA. For
purposes of this Organization Agreement, the Tucson Cellular Interest
shall not be considered to be an ATI Phase II Asset, a Domestic
Cellular Asset, a Domestic Cellular Property, a Domestic Cellular
Investment or a component of the Domestic Cellular Business of any
Person.
1.116 UNPERMITTED LIABILITY means any indebtedness (including principal,
interest or financing
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expenses), and any liability other than a Permitted Liability.
Unpermitted Liabilities shall include any liability incurred with
respect to any controversy or litigation, tax-related or otherwise,
that relates to the period prior to the Phase I Closing.
1.117 USW shall mean U S WEST, Inc., a Colorado corporation.
1.118 USW PARTIES shall mean USW, NewVector, and all corporate and
partnership Subsidiaries of NewVector.
1.119 USW PHASE II ASSETS shall mean the assets listed on ATTACHMENT 1.119
to this Organization Agreement.
1.120 WMC shall mean WMC Partners, L.P., a Delaware limited partnership
organized pursuant to the WMC Partnership Agreement.
1.121 WMC EMPLOYEE AGREEMENT shall mean the WMC Employees Agreement, entered
into as of July 25, 1994, by and between ATI, USW and WMC, a copy of
which is appended hereto as Attachment 1.121 as amended, modified or
supplemented from time to time.
1.122 WMC PARTNERSHIP COMMITTEE shall mean the Partnership Committee of WMC
as defined in SECTION 2.2(a) of the WMC Partnership Agreement.
1.123 WMC PARTNERSHIP AGREEMENT shall mean that certain Amended and Restated
Agreement of Limited Partnership of WMC Partners, L.P., dated as of
the date hereof, a copy of which is appended hereto as ATTACHMENT
1.123, as amended, modified or supplemented from time to time.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
---- -------
Balance Sheet Differential 4.3(b)
Final New Par Adjustment 5.11
Incremental Percentages 5.6(b)
Net Asset Value 4.2(3)
New Par Quarterly Adjustments 4.7(b)
Phase II Closing Percentages 5.4
Quarterly Adjustment Amount 5.6(a)
Quarterly Percentages 5.6(b)
Quarterly Records 5.9
Quarterly Values 5.10
San Diego Taxes 3.1(f)(ii)
Tucson Taxes 3.2(f)(i)
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of USW. USW hereby represents and
warrants to ATI that each of the following statements was true and correct as of
the Effective Date, and, except as otherwise expressly stated herein, will be
true and correct as of the Phase I Closing and the Phase II Closing as if made
on and as of such dates.
(a) Corporate Organization.
(i) USW is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation and has all
requisite corporate power and authority to own and operate its properties, to
carry on its business as now conducted, to enter into this Organization
Agreement and the Related Agreements and to carry out the provisions of this
Organization Agreement and the Related Agreements and consummate the
Transactions contemplated hereby and thereby. USW is duly qualified and in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification
necessary and where the failure to be so qualified has or could reasonably be
expected to have a Material Adverse Effect on USW and its Subsidiaries, taken as
a whole.
(ii) All Domestic Cellular Assets currently owned, directly or
indirectly, in whole or in part, by USW are held, owned or operated, directly or
indirectly, by NewVector or by a Subsidiary of NewVector. Except for the
interest it holds in Cascade Mobile Communications, L.P., NewVector is not
engaged, directly or indirectly, in the conduct or ownership of any business or
activity other than the Domestic Cellular Business.
(iii) NewVector is a corporation duly organized, validly existing
and in good standing under the laws of Colorado and has all requisite corporate
power and authority to own and operate its properties and to carry on its
business as now conducted. NewVector is duly qualified and in good standing in
each jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary and
where the failure to be so qualified has or could reasonably be expected to have
a Material Adverse Effect on NewVector and its Subsidiaries, taken as a whole.
(iv) Each corporate Subsidiary of NewVector is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation and has all requisite corporate power and authority to own and
operate its property and to carry on its business as now conducted. Each such
Subsidiary is duly qualified and in good standing in
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each jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary and
where the failure to be so qualified has or could reasonably be expected to have
a Material Adverse Effect on NewVector and its Subsidiaries, taken as a whole.
(v) Each partnership Subsidiary of NewVector is a general or
limited partnership duly organized and validly existing in its state of
organization and has all requisite partnership power and authority to own and
operate its properties and to carry on its business as now conducted. Each such
partnership Subsidiary is duly qualified in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification necessary and where the failure to be so
qualified has or could reasonably be expected to have a Material Adverse Effect
on NewVector and its Subsidiaries, taken as a whole.
(b) Capitalization: Ownership of Shares.
(i) SCHEDULE 2.1(b)(i) contains a true, current, and complete list
of the authorized, issued and outstanding capital stock (including the par or
stated value thereof) of NewVector. All issued and outstanding shares of capital
stock of NewVector are duly authorized, validly issued, fully paid, and
non-assessable. USW has good legal title to, and beneficial ownership of, such
shares of NewVector free and clear of all Liens, restrictions, equities, options
or claims whatsoever, except as set forth on SCHEDULE 2.1(b)(i). USW has full
authority to transfer, convey, and deliver such shares free and clear of all
Liens, restrictions, equities, options, and claims. Except for this Organization
Agreement and the Related Agreements, there are no outstanding subscriptions,
options, warrants, calls, rights, commitments, rights of exchange, plans,
arrangements, understandings or other agreements of any kind or character
relating to or providing for the issuance, sale, delivery or transfer of
securities of any class of NewVector stock (including any right of conversion or
exchange under any outstanding security or other instrument) to any Person.
(ii) SCHEDULE 2.1(b)(ii) contains a true, current, and complete
list of (A) the name of each corporate Subsidiary of NewVector, (B) the state of
incorporation of such Subsidiary, (C) the states where such Subsidiary is
qualified to do business, (D) the authorized, issued and outstanding capital
stock (including the par or stated value thereof) of each Subsidiary, and (E)
the number of shares and percentage of issued and outstanding capital stock of
each Subsidiary beneficially owned by NewVector. The issued and outstanding
shares of capital stock of each such Subsidiary are duly authorized, validly
issued, fully paid, and non-assessable. NewVector or a wholly owned Subsidiary
of NewVector has good legal title to, and beneficial ownership of, such shares
free and clear of all
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Liens, restrictions, equities, options or claims whatsoever, except as set forth
on SCHEDULE 2.1(b)(ii). There are no outstanding subscriptions, options,
warrants, calls, rights, commitments, rights of exchange, plans, arrangements,
understandings or other agreements of any kind or character relating to or
providing for the issuance, sale, delivery or transfer of securities of any
class of stock of any corporate Subsidiary of NewVector (including any right of
conversion or exchange under any outstanding security or other instrument) to
any Person.
(iii) SCHEDULE 2.1(b)(iii) contains a true, current, and complete
list of (A) the name of each partnership Subsidiary of NewVector, (B) the state
of organization of each such Subsidiary, (C) the states where each such
Subsidiary is qualified to do business, and (D) the general and limited
partnership interests in each such Subsidiary beneficially owned by NewVector.
NewVector or a Subsidiary of NewVector has good legal title to, and beneficial
ownership of, its partnership interest in each such Subsidiary. Except as set
forth on SCHEDULE 2.1(b)(iii) or in any Cellular Partnership Agreement for a
partnership listed on SCHEDULE 2.1(b)(iii), NewVector or a Subsidiary of
NewVector owns each such interest free and clear of all Liens, restrictions,
equities, options or claims whatsoever. Except as set forth on SCHEDULE
2.1(b)(iii), there are no outstanding subscriptions, options, calls, rights,
commitments, rights of exchange, plans, arrangements, understandings or other
agreements of any kind or character relating to or providing for the issuance,
sale, delivery or transfer of partnership interests of any partnership
Subsidiary of NewVector (including any right of conversion or exchange under any
outstanding agreement or instrument) to any Person. USW has furnished to ATI
true and complete copies of all Cellular Partnership Agreements for all
partnerships listed on SCHEDULE 2.1(b)(iii).
(iv) SCHEDULE 2.1(b)(iv) contains a true, current, and complete
list of all Domestic Cellular Investments owned or held by each USW Party,
including the Percentage Interest held in each Domestic Cellular Investment
Entity by such USW Party as a general and/or as a limited partner. Either
NewVector or one of its Subsidiaries has good legal title to, and beneficial
ownership of, such interests. Except as set forth on SCHEDULE 2.1(b)(iv) or in
any Cellular Partnership Agreement for a partnership listed on SCHEDULE
2.1(b)(iv), NewVector or one of its Subsidiaries owns such interests free and
clear of all Liens, encumbrances, restrictions, equities, options or claims
whatsoever. USW has furnished to ATI true and complete copies of all
certificates or articles of incorporation and by-laws, partnership agreements or
joint venture agreements for all Domestic Cellular Investment Entities listed on
SCHEDULE 2.1(b)(iv).
(c) Authority. This Organization Agreement and the Related Agreements
and the consummation of the Transactions
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contemplated hereby and thereby have been duly authorized by all necessary
corporate or partnership action on the part of the USW Parties. This
Organization Agreement has been duly executed and delivered by a duly authorized
officer of USW and constitutes a valid and binding agreement of USW, enforceable
against USW in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other similar laws of
general application that may affect the enforcement of creditors' rights
generally and by general equitable principles.
(d) Authorizations and Consents; No Violation.
(i) Except as disclosed on one of the Schedules referenced in this
SECTION 2.1(d), neither the execution and delivery of this Organization
Agreement nor the consummation of the Transactions contemplated by this
Organization Agreement and the Related Agreements will (A) conflict with, or
result in any breach or violation of, any provision of the certificates or
articles of incorporation or by-laws of any of the USW Parties; (B) constitute,
with or without notice or the passage of time or both, a breach, violation or
default, create a Lien or give rise to any right of termination, modification,
cancellation, prepayment or acceleration under any order, writ, injunction,
decree, law, statute, rule or regulation, franchise, governmental permit or
license or any mortgage, indenture, lease, Material Contract, agreement or other
instrument of any USW Party or to which any USW Party or its respective
properties is subject, except for breaches, violations, defaults, Liens or
rights of termination, modification, cancellation, prepayment or acceleration
which would not, singly or in the aggregate, have a Material Adverse Effect on
NewVector and its Subsidiaries, taken as a whole, or adversely affect the
ability of USW to consummate the Transactions and perform its obligations
contemplated by this Organization Agreement and the Related Agreements; (C) give
rise to any option, right of first refusal or similar right of any third party
with respect to any interest in any USW Party, USW Domestic Cellular Asset, USW
Domestic Cellular Subsidiary or any USW Domestic Cellular Investment; or (D)
require any Consent or Authorization to effectuate the Transactions contemplated
by this Organization Agreement and the Related Agreements.
(ii) SCHEDULE 2.1(d)(ii) contains a complete list of all
Authorizations reasonably anticipated to be required to be obtained from any
federal Governmental Body or court by any USW Party with respect to the
consummation of the (A) Phase I Transactions and (B) Phase II Transactions
contemplated by this Organization Agreement and the Related Agreements.
(iii) SCHEDULE 2.1(d)(iii) contains a complete list of all
Authorizations reasonably anticipated to be required to be obtained from any
state public utility commission or other state, county or local Governmental
Body by any USW Party with respect to the consummation of the (A) Phase I
Transactions and
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(B) Phase II Transactions contemplated by this Organization Agreement and the
Related Agreements.
(iv) Except as set forth in any Cellular Partnership Agreement,
any Material Contract existing on the Effective Date (a copy of which was
provided to ATI prior to the Effective Date) or other agreement referred to in
SECTION 2.1(b)(iii) or 2.1(b)(iv) hereof or in SCHEDULE 2.1(d)(iv) hereto, no
Consents are reasonably anticipated to be required to be obtained pursuant to
any partnership, joint venture or other similar agreement or any Material
Contract to which any USW Party is a party with respect to the consummation of
the (A) Phase I Transactions and (B) Phase II Transactions contemplated by this
Organization Agreement and the Related Agreements.
(e) Financial Statements. USW has furnished to ATI true and complete
copies of the audited consolidated balance sheets at December 31, 1992 and 1993
("BALANCE SHEETS"); audited consolidated income and cash flow statements of
USW's Domestic Cellular Business for the fiscal years ended December 31, 1992,
and December 31, 1993; an unaudited balance sheet at May 31, 1994; and unaudited
consolidated income and cash flow statements for the five-month period ending
May 31, 1994 (such Balance Sheets and income and cash flow statements are
hereinafter collectively referred to as "FINANCIAL STATEMENTS"), setting forth
the financial condition and results of operations of USW's Domestic Cellular
Business as of the respective dates of the Financial Statements and for the
periods covered thereby. The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods specified, except as expressly noted therein, and
except that the May 31, 1994 Financial Statements do not contain footnotes. The
Balance Sheets fairly present the financial condition of USW's Domestic Cellular
Business as of the dates thereof. The consolidated income and cash flow
statements fairly present the results of operations of USW's Domestic Cellular
Business for the periods indicated. USW agrees to use reasonable efforts to
furnish to ATI as soon as they are available true and correct unaudited Balance
Sheets as of May 31, 1994, for each USW Domestic Cellular Subsidiary and USW
Domestic Cellular Investment Entity.
(f) Absence of Other Changes. Except as contemplated by this
Organization Agreement or as set forth in SCHEDULE 2.1(f), from and after June
1, 1994, each of the USW Parties has conducted its Domestic Cellular Business in
the ordinary and usual course and there has not been (i) any borrowing outside
the ordinary course of business or incurrence of any obligations other than
Permitted Liabilities or other liabilities incurred in the ordinary course of
business; (ii) any Lien imposed on any of the properties or assets of any of the
USW Parties (other than Permitted Liens); or (iii) any increases in compensation
payable to officers and employees of
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NewVector or any Subsidiary of NewVector, which in the aggregate may be expected
to have a Material Adverse Effect on NewVector and the Subsidiaries of
NewVector, taken as a whole. From and after June 1, 1994, there has not been any
change in the business, financial condition, assets, liabilities or results of
operation of USW's Domestic Cellular Business, other than as a result of a
change resulting from general cellular industry conditions or as a result of a
regulatory development affecting the cellular industry generally, which could
reasonably be expected to have a Material Adverse Effect on NewVector and its
Subsidiaries, taken as a whole, or to affect adversely the ability of USW to
consummate the Transactions and perform its obligations as contemplated by this
Organization Agreement and the Related Agreements.
(g) Compliance with Laws. Subject to SECTION 2.1(h) hereof, each of the
USW Parties is in compliance with all laws, statutes, ordinances, regulations,
rules, judgments, decrees, orders, and other requirements applicable to the
operation of its Domestic Cellular Business, except for any non-compliances
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect on NewVector and its Subsidiaries, taken as a
whole, or to affect adversely the ability of USW to consummate the Transactions
and perform its obligations contemplated by this Organization Agreement and the
Related Agreements.
(h) MFJ. USW and USW's Domestic Cellular Business are subject to the
terms of the MFJ, CECO and EO and must operate in conformance with their
respective requirements and prohibitions. USW has reviewed this Organization
Agreement and the Related Agreements attached hereto pursuant to its normal
review procedures under the CECO and the EO and believes it can consummate the
Transactions and perform its obligations as contemplated by this Organization
Agreement and the Related Agreements.
(i) Litigation. Except as disclosed on SCHEDULE 2.1(i), there are no
actions, suits, investigations or proceedings (adjudicatory, rulemaking or
otherwise) pending or, to the knowledge of USW, threatened against any USW Party
or, to the knowledge of USW, pending or threatened against any USW Domestic
Cellular Investment Entity, at law or in equity, before any court or
Governmental Body, except actions, suits, investigations or proceedings which,
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect on NewVector and its Subsidiaries, taken as a whole, or to affect
adversely the ability of USW to consummate the Transactions and perform its
obligations as contemplated by this Organization Agreement and the Related
Agreements.
(j) Licenses. The USW Parties and the USW Domestic Cellular Investment
Entities have all material Licenses which are necessary to conduct USW's
Domestic Cellular Business as it
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is presently conducted. Without limitation of the foregoing, the USW Parties and
the USW Domestic Cellular Investment Entities hold the material Licenses
identified on SCHEDULE 2.1(j), and all such material Licenses are valid and in
full force and effect. No USW Party has made any untrue statement of fact, or
omitted to disclose any fact, to any Governmental Body or taken or failed to
take any action, which misstatements or omissions, actions or failures to act,
individually or in the aggregate, subject or could reasonably be expected to
subject any of the material Licenses they hold to revocation or failure to
renew. No event has occurred with respect to any of the material Licenses held
by a USW Party or by a USW Domestic Cellular Investment Entity 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. USW has no reason to believe that any of
the material Licenses identified on SCHEDULE 2.1(j) is not likely to be renewed
in the ordinary course or that the holder of any such material License would not
be entitled to a renewal expectancy as such term is defined in 47 C.F.R. Section
22.941 or any successor provisions and associated FCC policies.
(k) Taxes. NewVector and its corporate Subsidiaries have each (i)
filed, within the times and in the manner prescribed by law, and will continue
to timely file through the Contribution Date all Returns required to be filed by
or with respect to each of them, (ii) paid all Taxes shown to have become due
pursuant to such Returns, and (iii) will continue to pay all Taxes payable
pursuant to such Returns for periods ending on or before the Contribution Date.
There are no Taxes of NewVector and its corporate Subsidiaries for which a
notice of, or assessment or demand for, payment has been received or which are
otherwise due and payable and NewVector and its corporate Subsidiaries will
continue to pay such Taxes for periods ending on or before the Contribution
Date. Except as disclosed in SCHEDULE 2.1(k), no examination or audit of any Tax
Return of NewVector or any of its corporate Subsidiaries is currently in
progress, and there are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any Tax Return of NewVector or any
of its corporate Subsidiaries. Except as disclosed to ATI on a revised and
updated SCHEDULE 2.1(k) delivered by the Phase I Closing, complete copies of (i)
the federal Income Tax Returns of NewVector and its corporate Subsidiaries and
(ii) state and local Income Tax Returns and other Tax Returns of NewVector and
its corporate Subsidiaries for each of the years ended December 31, 1989, 1990,
1991, 1992 and 1993 have been delivered or will be made available to ATI by the
Phase I Closing. Except as set forth on the revised and updated SCHEDULE 2.1(k)
to be delivered to ATI by the Phase I Closing, (A) there is no action, suit,
proceeding, investigation, audit, claim or assessment pending or proposed with
respect to any Return, which action, suit, proceeding, investigation, audit,
claim or assessment
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relates to NewVector or any of its corporate Subsidiaries, (B) all amounts
required to be collected or withheld by NewVector of any of its corporate
Subsidiaries with respect to Taxes have been duly collected or withheld and any
such amounts that are required to be remitted to any taxing authority have been
duly remitted, (C) no extension of time within which to file any Return that
relates to NewVector or any of its corporate Subsidiaries has been requested
which Return has not since been filed, (D) there are no tax rulings, requests
for rulings, or closing agreements relating to NewVector or any of its corporate
Subsidiaries which could affect their liability for Taxes for any period after
the Phase I Closing, (E) all federal, state and local (x) Income Tax Returns of
NewVector and each of its corporate Subsidiaries, and (y) consolidated, combined
or unitary Income Tax Returns, which include NewVector or any of its corporate
Subsidiaries, with respect to taxable periods through the year ended December
31, 1989 have been examined and closed or are Returns with respect to which the
applicable statute of limitations has expired without extension or waiver, (F)
no power of attorney has been granted by USW or NewVector or any of its
corporate Subsidiaries with respect to any matter relating to Taxes of the
NewVector or its corporate Subsidiaries which is currently in force, (G) neither
USW nor any corporate Subsidiary thereof has filed a consent under section
341(f) of the Code or any comparable state provision, and (H) there are no Liens
for Taxes (other than for current Taxes not yet due and payable) on the assets
of NewVector or any of its corporate Subsidiaries. Except as set forth on the
revised and updated SCHEDULE 2.1(k) to be delivered to ATI by the Phase I
Closing, NewVector and each of its corporate Subsidiaries has been an includable
member of the affiliated group (within the meaning of section 1504 of the Code)
of which USW is the parent corporation and has joined in filing a consolidated
return since the date on which each was incorporated and will be an includable
member of such affiliated group included in USW's consolidated return through
the Contribution Date. Any Tax Sharing Arrangement that may exist between a USW
Transferred Subsidiary, on the one hand, and USW or any Affiliate of USW, on the
other hand, shall terminate, and any obligations to make payments under any such
Tax Sharing Arrangement shall be canceled, as of the Contribution Date.
(l) Material Contracts and Related Party Agreements.
(i) SCHEDULE 2.1(l)(i) contains a true and complete list of all
Material Contracts (including Related Party Agreements, if applicable) to which
any USW Party was a party as of the Effective Date.
(ii) Each contract listed in SCHEDULE 2.1(l)(i) was in full force
and effect on the Effective Date, and there exists no default or event,
occurrence, condition or act (including the consummation of the Transactions)
which, with the giving of notice, the lapse of time or the happening of any
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other event or condition, would become a default thereunder by any USW Party or
by any other party thereto which could reasonably be expected to result in a
Material Adverse Effect on NewVector and the Subsidiaries of NewVector, taken as
a whole, or to affect adversely the ability of USW to consummate the
Transactions and perform its obligations contemplated by this Organization
Agreement and the Related Agreements.
(iii) All Related Party Agreements to which any USW Party is a
party have been entered into in the ordinary course of business and contain
terms no more and no less favorable to either party than would be the case in an
arm's-length transaction.
(m) Employment and Non-Competition Agreements. Except as set forth in
SCHEDULE 2.1(m), neither NewVector nor any Subsidiary of NewVector is a party to
any employment agreement or is a party to or otherwise bound by any
non-competition, non- solicitation or other similar agreement relating to its
Domestic Cellular Business.
(n) Assets.
(i) Each USW Party has (A) good and marketable fee title to all
its Owned Property and (B) good and valid title to the leasehold estates in all
its Leased Property, in each case free and clear of all Liens other than
Permitted Liens. The Owned Property and the Leased Property of the USW Parties
include all rights and properties necessary to the conduct of such parties'
Domestic Cellular Businesses in the manner in which they are presently
conducted.
(ii) There exists no default, or event which with the passage of
time or notice or both would constitute a default, by any USW Party with respect
to any indebtedness, mortgage, pledge or other hypothecation, the payment of
which is secured by a security interest in all or part of any USW Party's
Domestic Cellular Assets which could reasonably be expected to result in a
Material Adverse Effect on NewVector and the Subsidiaries of NewVector, taken as
a whole, or to affect adversely the ability of USW to consummate the
Transactions and perform its obligations contemplated by this Organization
Agreement and the Related Agreements. None of the USW Parties' Domestic Cellular
Assets is subject to any Lien that would impair or prevent the continued conduct
of USW's Domestic Cellular Business as it has been conducted.
(iii) All of the buildings, structures, appurtenances, and
equipment used in USW's Domestic Cellular Business are in good operating
condition and in a state of good maintenance and repair, ordinary wear and tear
excepted, and adequate and suitable for the purposes for which they are
presently being used, except for conditions which would not, singly or in the
aggregate, have a Material Adverse Effect on
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NewVector and its Subsidiaries, taken as a whole. None of such buildings,
structures, appurtenances or equipment, nor the operation or maintenance
thereof, violates in any material respect any restrictive covenant or any
provision of any federal, state or local law, ordinance, rule or regulation or
encroaches on any property owned by others. No condemnation proceeding is
pending or, to the knowledge of USW, threatened which would preclude or impair
the use of any such property for the purposes for which it is currently used.
(o) Intellectual Property. A USW Party owns the entire right, title and
interest in and to all Intellectual Property (including Trademarks and Trade
Names) used in, and material to the conduct of, USW's Domestic Cellular
Business. All such Intellectual Property is owned or used pursuant to defensible
licenses or other legal arrangements. There are no pending or, to the knowledge
of USW, threatened proceedings or litigation or other adverse claims affecting
or relating to such Intellectual Property, nor to the knowledge of USW any
reasonable basis upon which a claim may be asserted by or against any USW Party
for infringement of any such Intellectual Property which could reasonably be
expected to have a Material Adverse Effect on the USW Parties, taken as a whole.
All Intellectual Property used in, and material to the conduct of, USW's
Domestic Cellular Business will be transferred or licensed to WMC at the Phase I
Closing pursuant to one or more license agreements and will be usable by WMC in
the conduct of its Domestic Cellular Business on the same terms as such
Intellectual Property is currently being used by the USW Parties in the conduct
of USW's Domestic Cellular Business.
(p) Employee Benefit Programs.
(i) SCHEDULE 2.1(p)(i) sets forth a true and complete list of all
Employee Benefit Programs to which NewVector or any Subsidiary of NewVector is a
party or contributes or is currently obligated to contribute ("NV-Employee
Benefit Programs"). USW has provided to ATI a true and complete list of all
executives of NewVector and the Subsidiaries of NewVector for whom individual
agreements pertaining to Employee Benefit Programs are under consideration by
NewVector or any Subsidiary of NewVector (such agreements, if and when entered
into, to be considered NV-Employee Benefit Programs for purposes of this
Organization Agreement).
(ii) USW provided to ATI prior to the Effective Date complete,
accurate, and current copies of each of the following:
(A) The text, including amendments, of each of the
NV-Employee Benefit Programs, to the extent reduced to writing;
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(B) A written description of all material elements of the
NV-Employee Benefit Programs, to the extent not previously reduced to writing;
(C) With respect to any NV-Employee Benefit Program described
in Section 3(3) of ERISA that is required to prepare such a document or make
such a filing: (I) the most recent summary plan description, as described in
Section 102 of ERISA, (II) any summary of material modifications that has been
distributed to participants or filed with the U.S. Department of Labor but that
has not been incorporated into an updated summary plan description furnished
under Subparagraph (I) above, and (III) the annual report, as described in
Section 103 of ERISA or Section 6039D of the Code, as applicable, for the most
recent plan year for which an annual report has been prepared, and any required
actuarial and financial statements, opinions and schedules;
(D) Where applicable, the actuarial reports for the most
recent three (3) reporting periods for which such a report has been prepared for
any NV-Employee Benefit Program;
(E) The trust agreement or other funding instrument for each
NV-Employee Benefit Program which is funded;
(F) For each NV-Employee Benefit Program that is intended to
meet the qualification requirements of Section 401(a) of the Code ("NV-Qualified
Plan"), the most recent request for a determination concerning the plan's
qualification under Section 401(a) of the Code, as filed with the Internal
Revenue Service ("IRS"); and
(G) For each NV-Qualified Plan, the most recent determination
concerning the plan's qualification under Section 401(a) of the Code, as issued
by the IRS.
(iii) Each NV-Employee Benefit Program is in compliance with the
applicable provisions of ERISA, the Code, and other federal or state law,
including all requirements under the Code and ERISA for filing reports (which
were true and correct in all material respects as of the date filed), and
benefits have been paid in accordance with the provisions of the NV-Employee
Benefit Program, except for such noncompliances and failures which, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect on
NewVector and its Subsidiaries, taken as a whole.
(iv) Each NV-Qualified Plan has been determined by the IRS to
qualify under Section 401 of the Code, and the trusts created thereunder have
been determined to be exempt from tax under the provisions of Section 501 of the
Code, and nothing has occurred that would cause the loss of such qualification
or tax-exempt status.
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(v) Neither NewVector nor any Subsidiary of NewVector is a party
to, makes, is making or is obligated to make contributions or has made, or been
obligated to make, contributions at any time during the immediately preceding
period covering at least five (5) plan years to a multiemployer plan, within the
meaning of Section 4001(a)(3) of ERISA.
(vi) Neither NewVector nor any Subsidiary of NewVector expects to
incur any liability under Title IV of ERISA (other than premiums due and not
delinquent under Section 4007 of ERISA) with respect to any NV-Employee Benefit
Program.
(vii) Except as set forth in SCHEDULE 2.1(p)(vii), none of the
NV-Qualified Plans subject to Title IV of ERISA has any unfunded pension
liability. For purposes of this SECTION 2.1(p)(vii), an NV-Qualified Plan has an
unfunded pension liability if the plan is subject to Section 412(m) of the Code
and the plan's benefit liabilities under Section 4001(a)(16) of ERISA exceed the
current value of the plan's assets, determined in accordance with the
assumptions used by the NV-Qualified Plan's actuaries for funding the plan
pursuant to Section 412 of the Code for the applicable plan year. Neither
NewVector nor any Subsidiary of NewVector has transferred any unfunded pension
liability outside of the ERISA Affiliates or otherwise has engaged in a
transaction subject to Section 4069 of ERISA.
(viii) All contributions, premiums or other payments due from
NewVector or any Subsidiary of NewVector to, or under, any NV-Employee Benefit
Program have been fully paid as required by law or by the terms of any such
Employee Benefit Program; all contributions, premiums, or other payments due
from NewVector or any Subsidiary of NewVector to, or under, any NV-Employee
Benefit Program have been adequately provided for on the books and financial
statements of NewVector or the Subsidiary of NewVector, as the case may be; and
no accumulated funding deficiency, as defined in Section 302 of ERISA and
Section 412(m) of the Code, whether or not waived, exists with respect to an
NV-Employee Benefit Program.
(ix) There are no pending or, to the knowledge of USW, threatened
claims, actions or lawsuits, other than routine claims for benefits in the
ordinary course, asserted or instituted against (A) any NV-Employee Benefit
Program or (B) any fiduciary with respect to any NV-Employee Benefit Program for
which NewVector or a Subsidiary of NewVector may be directly or indirectly
liable, through indemnification obligations or otherwise.
(x) Within the six-year period ending on the date of reference,
neither NewVector nor any Subsidiary of NewVector has engaged, directly or
indirectly, in (A) a nonexempt prohibited transaction (as defined in Section
4975 of the Code or Section 406 of ERISA) in connection with any
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Employee Benefit Program that has a reasonable likelihood of having a Material
Adverse Effect on NewVector and its Subsidiaries, taken as a whole, or (B) any
act or omission constituting a violation of Section 404 of ERISA.
(xi) The Transactions contemplated by this Organization Agreement
do not invoke any change-in-control provision in any NV-Employee Benefit
Program.
(xii) NewVector and each Subsidiary of NewVector is in compliance
with the health care continuation provisions of Sections 162(k), before
amendment, and 4980B of the Code and the regulations thereunder with respect to
such requirements.
(xiii) Except as provided in the WMC Employee Agreement or the PCS
Par Employee Agreement, neither NewVector nor any Subsidiary of NewVector has
any liability or expects to incur any liability with respect to any Employee
Benefit Program to which neither NewVector nor any Subsidiary of NewVector is a
party, contributes or is obligated to contribute.
(q) Labor Matters. Each of NewVector and each NewVector Subsidiary has
complied with all applicable laws and regulations in all material respects
relating to the employment of labor, including those related to wages, hours,
occupational health and safety, workers' compensation, collective bargaining,
unlawful discrimination, and the payment of Social Security and similar taxes
pertaining to its Domestic Cellular Business. To the knowledge of USW, there are
no threatened labor controversies, strikes or work stoppages with any of the
employees performing work in a Domestic Cellular Business. Neither NewVector nor
any Subsidiary of NewVector is a party to any collective bargaining agreement,
nor are any collective bargaining agreements currently being negotiated with
respect to the employees of NewVector or any NewVector Subsidiary in its
Domestic Cellular Business. Except as set forth in SCHEDULE 2.1(i), there are no
pending employment-related issues, including without limitation governmental
audits, disputes (including those listed in SCHEDULE 2.1(q) hereto), litigation,
labor controversies, strikes or work stoppages with or regarding any of the
employees performing work in the Domestic Cellular Business that, individually
or in the aggregate, would reasonably be expected to have a Material Adverse
Effect on NewVector and its Subsidiaries, taken as a whole. NewVector and each
Subsidiary of NewVector have properly verified the identity and authorization to
work in the United States and have properly completed and retained INS forms I-9
for all employees where required by the Immigration Reform and Control Act of
1986 and related statutes. All individuals who are performing or have performed
services for NewVector or any NewVector Subsidiary and are or were classified as
"independent contractors" for tax purposes qualify for such classification.
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(r) Environmental Compliance and Liabilities.
(i) Except as set forth in SCHEDULE 2.1(r), USW has no knowledge
of any conditions that exist with respect to any Owned Property, Leased Property
or other property operated by NewVector, any Subsidiary of NewVector or any USW
Domestic Cellular Investment Entity that would be likely to subject NewVector or
any Subsidiary of NewVector 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 that require
or are likely to require cleanup, removal, remedial action or other response by
NewVector or any Subsidiary of NewVector pursuant to any Environmental Law
which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on NewVector and its Subsidiaries, taken as a whole.
(ii) Except as set forth in SCHEDULE 2.1(r), each of NewVector and
its Subsidiaries is in substantial compliance with all applicable Environmental
Laws, which compliance includes, without limitation, (A) the possession by
NewVector and its Subsidiaries of all material permits and other governmental
authorizations required under applicable Environmental Laws and compliance with
the terms and conditions thereof, (B) compliance with notification, reporting,
and registration provisions of applicable Environmental Laws, and (C) compliance
with all statutory and regulatory standards under applicable Environmental Laws.
(iii) Neither NewVector nor any of its Subsidiaries is a party to
any litigation or administrative proceeding, nor, to the knowledge of USW, is
any litigation or administrative proceeding threatened against NewVector or any
of its Subsidiaries that asserts or alleges that NewVector or any of its
Subsidiaries or its or their predecessors violated or is violating any
Environmental Law or that NewVector or any of its Subsidiaries or its or their
predecessors is required to clean up, remove or take remedial or other
responsive action due to the use, storage, treatment, disposal, discharge,
leaking or release of any Substance of Concern. Except as set forth in SCHEDULE
2.1(r), there are no claims under any Environmental Law pending against
NewVector or any of its Subsidiaries or against any Person whose liability for
any claim NewVector or any of its Subsidiaries has retained or assumed either
contractually or by operation of law, and neither NewVector nor any of its
Subsidiaries nor any of its or their predecessors, nor any part of the Domestic
Cellular Assets of NewVector or any of its Subsidiaries, is subject to any
judgment, decree, order or citation related to or arising out of any
Environmental Law, and neither NewVector nor any of its Subsidiaries has been
named or listed as a potentially responsible party by any governmental or other
entity in a matter arising under or relating to any Environmental Law. Except as
set forth in SCHEDULE 2.1(r), neither NewVector nor any of its Subsidiaries has
received any
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written communication from a Governmental Body that alleges that NewVector or
any of its Subsidiaries is not in full compliance with the Environmental Laws.
To the knowledge of USW, except as set forth in SCHEDULE 2.1(r), no USW Domestic
Cellular Investment Entity is a party to any litigation or administrative
proceeding, nor is any litigation or administrative proceeding threatened
against a USW Domestic Cellular Investment Entity, arising under any
Environmental Law which would likely have a Material Adverse Effect, singly or
in the aggregate, on the business, operations or financial condition of
NewVector and its Subsidiaries, taken as a whole, or adversely affect the
ability of USW to consummate the Transactions and perform its obligations
contemplated by this Organization Agreement and the Related Agreements.
(iv) Except as set forth in SCHEDULE 2.1(r), 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, that could form the basis of any claim
arising under Environmental Laws against NewVector or any of its Subsidiaries or
against any Person whose liability for any claim arising under Environmental
Laws NewVector or any of its Subsidiaries has retained or assumed either
contractually or by operation of law.
(v) USW will, upon request by ATI, provide ATI with true and
complete copies of all environmental assessments that have heretofore been
performed on all Owned Property or Leased Property operated by NewVector or any
of its Subsidiaries and of all notices or other materials listed in SCHEDULE
2.1(r).
(s) Other Liabilities. Except (i) as disclosed in SCHEDULE 2.1(s) or
any other Schedule attached to this Organization Agreement, (ii) as reflected on
the Balance Sheets or otherwise referred to in the Financial Statements
(including footnotes to the Financial Statements), or (iii) incurred in the
ordinary course of business or otherwise permitted by this Organization
Agreement, there are no outstanding claims, liabilities or indebtedness of any
nature, secured or unsecured, contingent or absolute, matured or unmatured,
known or unknown, which would likely have a Material Adverse Effect, singly or
in the aggregate, on the business, operations or financial condition of
NewVector and its Subsidiaries, taken as a whole, or adversely affect the
ability of USW to consummate the Transactions and perform its obligations
contemplated by this Organization Agreement and the Related Agreements.
(t) Insurance. USW's Domestic Cellular Assets and the conduct of USW's
Domestic Cellular Business are adequately self-insured by USW or adequately
insured (in the manner and to the extent customary for businesses engaged in the
same or similar business) by financially sound and reputable insurers. Any such
policies are, and each of the USW Parties will cause
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such policies or renewals thereof to remain, in full force and effect.
(u) Finders; Investment Bankers. Neither USW nor any of its
Affiliates, nor any of their respective officers or directors, has employed any
broker, finder or investment banker or incurred any liability for any brokerage
fees, commissions or finder's fees in connection with the Transactions
contemplated by this Organization Agreement and the Related Agreements that
would be a liability of ATI, WMC, PCS Par or any of USW's Domestic Cellular
Assets, Domestic Cellular Subsidiaries or Domestic Cellular Investments.
2.2 Representations and Warranties of ATI. ATI hereby represents and
warrants to USW that each of the following statements was true and correct as of
the Effective Date and, except as otherwise expressly stated herein, will be
true and correct as of the Phase I Closing and the Phase II Closing, as if made
on and as of such dates.
(a) Corporate Organization.
(i) ATI is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation and has all
requisite corporate power and authority to own and operate its properties, to
carry on its business as now conducted, to enter into this Organization
Agreement and the Related Agreements and to carry out the provisions of this
Organization Agreement and the Related Agreements and consummate the
Transactions contemplated hereby and thereby, except for the approval by the
board of directors of ATI of a certificate of designation with respect to the
preferred stock referred to in the Agreement of Exchange. ATI is duly qualified
and in good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary and where the failure to be so qualified has or could
reasonably be expected to have a Material Adverse Effect on ATI and its
Subsidiaries, taken as a whole.
(ii) All Domestic Cellular Assets currently owned, directly or
indirectly, in whole or in part, by ATI are held, owned or operated, directly or
indirectly, by the ATI Cellular Subsidiaries, except for a 14.74% partnership
interest in CMT Partners held by AirTouch Paging of California. The ATI Cellular
Subsidiaries are not engaged, directly or indirectly, in the conduct or
ownership of any business or activity other than the Domestic Cellular Business.
(iii) Each of the ATI Cellular Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation and has all requisite corporate power and authority to own and
operate its properties and to carry on its business as now
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conducted. Each of the ATI Cellular Subsidiaries is duly qualified and in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification
necessary and where the failure to be so qualified has or could reasonably be
expected to have a Material Adverse Effect on the ATI Cellular Subsidiaries and
their Subsidiaries, taken as a whole.
(iv) Each corporate Subsidiary of an ATI Cellular Subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation and has all requisite corporate power and
authority to own and operate its property and to carry on its business as now
conducted. Each such Subsidiary is duly qualified and in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification necessary and where the
failure to be so qualified has or could reasonably be expected to have a
Material Adverse Effect on the ATI Cellular Subsidiaries and their Subsidiaries,
taken as a whole.
(v) Each partnership Subsidiary of an ATI Cellular Subsidiary is a
general or limited partnership duly organized and validly existing in its state
of organization and has all requisite partnership power and authority to own and
operate its properties and to carry on its business as now conducted. Each such
partnership Subsidiary is duly qualified in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification necessary and where the failure to be so
qualified has or could reasonably be expected to have a Material Adverse Effect
on the ATI Cellular Subsidiaries and their Subsidiaries, taken as a whole.
(b) Capitalization: Ownership of Shares.
(i) SCHEDULE 2.2(b)(i) contains a true, current and complete list
of the authorized, issued and outstanding capital stock (including the par or
stated value thereof) of ATI, as of the Effective Date, and of each ATI Cellular
Subsidiary. All issued and outstanding shares of capital stock of ATI and each
ATI Cellular Subsidiary are duly authorized, validly issued, fully paid, and
non-assessable. ATI has good legal title to, and beneficial ownership of, all
issued and outstanding shares of each ATI Cellular Subsidiary free and clear of
all Liens, restrictions, equities, options or claims whatsoever, except as set
forth in SCHEDULE 2.2(b)(i). ATI has full authority to transfer, convey and
deliver such shares of each ATI Cellular Subsidiary free and clear of all Liens,
restrictions, equities, options and claims. Except for this Organization
Agreement and the Related Agreements, there are no outstanding subscriptions,
options, warrants, calls, rights, commitments, rights of exchange, plans,
arrangements, understandings or other agreements of any kind or character
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relating to or providing for the issuance, sale, delivery or transfer of any
class of capital stock of any ATI Cellular Subsidiary (including any right of
conversion or exchange under any outstanding security or other instrument) to
any Person.
(ii) SCHEDULE 2.2(b)(ii) contains a true, current and, complete
list of (A) the name of each corporate Subsidiary of the ATI Cellular
Subsidiaries, (B) the state of incorporation of each corporate Subsidiary of the
ATI Cellular Subsidiaries, (C) the states where each Subsidiary is qualified to
do business, (D) the authorized, issued and outstanding capital stock (including
the par or stated value thereof) of each Subsidiary, and (E) the number of
shares and percentage of issued and outstanding capital stock of each Subsidiary
beneficially owned by each ATI Cellular Subsidiary. The issued and outstanding
shares of capital stock of each such Subsidiary are duly authorized, validly
issued, fully paid, and non-assessable. An ATI Cellular Subsidiary or a
Subsidiary of an ATI Cellular Subsidiary has good legal title to, and beneficial
ownership of, such shares free and clear of all Liens, restrictions, equities,
options or claims whatsoever, except as set forth on SCHEDULE 2.2(b)(ii). There
are no outstanding subscriptions, options, warrants, calls, rights, commitments,
rights of exchange, plans, arrangements, understandings or other agreements of
any kind or character relating to or providing for the issuance, sale, delivery
or transfer of securities of any class of stock of any corporate Subsidiary of
an ATI Cellular Subsidiary (including any right of conversion or exchange under
any outstanding security or other instrument) to any Person.
(iii) SCHEDULE 2.2(b)(iii) contains a true, current, and complete
list of (A) the name of each partnership Subsidiary of the ATI Cellular
Subsidiaries, (B) the state of organization of each such Subsidiary, (C) the
states where each such Subsidiary is qualified to do business, and (D) the
general and limited partnership interests in each such Subsidiary beneficially
owned by each ATI Cellular Subsidiary. An ATI Cellular Subsidiary or a
Subsidiary of an ATI Cellular Subsidiary has good legal title to, and beneficial
ownership of, its partnership interest in each such Subsidiary. Except as set
forth on SCHEDULE 2.2(b)(iii) or in any Cellular Partnership Agreement for a
partnership listed in SCHEDULE 2.2(b)(iii), an ATI Cellular Subsidiary or a
Subsidiary of an ATI Cellular Subsidiary owns each such interest free and clear
of all Liens, restrictions, equities, options or claims whatsoever. Except as
set forth on SCHEDULE 2.2(b)(iii), there are no outstanding subscriptions,
options, calls, rights, commitments, rights of exchange, plans, arrangements,
understandings or other agreements of any kind or character relating to or
providing for the issuance, sale, delivery or transfer of partnership interests
of any partnership Subsidiary of an ATI Cellular Subsidiary (including any right
of conversion or exchange under any outstanding agreement or instrument) to any
Person. ATI has furnished to USW true and complete copies of all Cellular
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Partnership Agreements for all partnerships listed on SCHEDULE 2.2(b)(iii).
(iv) SCHEDULE 2.2(b)(iv) contains a true, current, and complete
list of all Domestic Cellular Investments owned or held by each ATI Party,
including the Percentage Interest held in each Domestic Cellular Investment
Entity by such ATI Party as a general partner and/or as a limited partner.
Either an ATI Cellular Subsidiary or one of its Subsidiaries has good legal
title to, and beneficial ownership of, such interests. Except as set forth on
SCHEDULE 2.2(b)(iv) or in any Cellular Partnership Agreement for a partnership
listed on SCHEDULE 2.2(b)(iv), an ATI Cellular Subsidiary or one of its
Subsidiaries owns such interests free and clear of all Liens, encumbrances,
restrictions, equities, options or claims whatsoever. ATI has furnished to USW
true and complete copies of all certificates or articles of incorporation and
by-laws, partnership agreements or joint venture agreements for all Domestic
Cellular Investment Entities listed on SCHEDULE 2.2(b)(iv).
(c) Authority. This Organization Agreement and the Related Agreements
and the consummation of the Transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate or partnership action on the
part of the ATI Parties, except for the approval by the board of directors of
ATI of a certificate of designation with respect to the preferred stock referred
to in the Agreement of Exchange. This Organization Agreement has been duly
executed and delivered by a duly authorized officer of ATI and constitutes a
valid and binding agreement of ATI, enforceable against ATI in accordance with
its terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general application that
may affect the enforcement of creditors' rights generally and by general
equitable principles. In the event that ATI or any of the ATI Cellular
Subsidiaries shall change the state of its incorporation in any form of
transaction, this Organization Agreement and the Related Agreements and the
consummation of the Transactions contemplated hereby will have been duly
authorized by all necessary corporate or partnership action, and this
Organization Agreement will continue to be a valid and binding agreement of ATI,
enforceable against ATI in accordance with its terms, except as may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium and other
similar laws of general application that may affect the enforcement of
creditors' rights generally and by general equitable principles.
(d) Authorizations and Consents; No Violation.
(i) Except as disclosed on one of the Schedules referenced in this
SECTION 2.2(d), neither the execution and delivery of this Organization
Agreement nor the consummation of the Transactions contemplated by this
Organization Agreement and
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the Related Agreements will (A) conflict with, or result in any breach or
violation of, any provision of the certificates or articles of incorporation or
by-laws of any of the ATI Parties; (B) constitute, with or without notice or the
passage of time or both, a breach, violation or default, create a Lien or give
rise to any right of termination, modification, cancellation, prepayment or
acceleration under any order, writ, injunction, decree, law, statute, rule or
regulation, franchise, governmental permit or license or any mortgage,
indenture, lease, Material Contract, agreement or other instrument of any ATI
Party or to which any ATI Party or its respective properties is subject, except
for breaches, violations, defaults, Liens or rights of termination,
modification, cancellation, prepayment or acceleration which would not, singly
or in the aggregate, have a Material Adverse Effect on the ATI Cellular
Subsidiaries and their Subsidiaries, taken as a whole, or adversely affect the
ability of ATI to consummate the Transactions and perform its obligations
contemplated by this Organization Agreement and the Related Agreements; (C) give
rise to any option, right of first refusal or similar right of any third party
with respect to any interest in any ATI Party, ATI Domestic Cellular Asset, ATI
Domestic Cellular Subsidiary or any ATI Domestic Cellular Investment; or (D)
require any Consent or Authorization to effectuate the Transactions contemplated
by this Organization Agreement and the Related Agreements.
(ii) SCHEDULE 2.2(d)(ii) contains a complete list of all
Authorizations reasonably anticipated to be required to be obtained from any
federal Governmental Body or court by any ATI Party with respect to the
consummation of the (A) Phase I Transactions and (B) Phase II Transactions
contemplated by this Organization Agreement and the Related Agreements.
(iii) SCHEDULE 2.2(d)(iii) contains a complete list of all
Authorizations reasonably anticipated to be required to be obtained from any
state public utility commission or other state, county or local Governmental
Body by any ATI Party with respect to the consummation of the (A) Phase I
Transactions and (B) Phase II Transactions contemplated by this Organization
Agreement and the Related Agreements.
(iv) Except as set forth in any Cellular Partnership Agreement,
any Material Contract existing on the Effective Date (a copy of which was
provided to USW prior to the Effective Date) or other agreement referred to in
SECTION 2.2(b)(iii) or 2.2(b)(iv) hereof or in SCHEDULE 2.2(d)(iv) hereto, no
Consents are reasonably anticipated to be required to be obtained pursuant to
any partnership, joint venture or other similar agreement or any Material
Contract to which any ATI Party is a party with respect to the consummation of
the (A) Phase I Transactions and (B) Phase II Transactions contemplated by this
Organization Agreement and the Related Agreements.
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(e) Financial Statements.
(i) ATI has furnished to USW true and complete copies of the
unaudited consolidated balance sheets at December 31, 1992 and 1993 ("BALANCE
SHEETS"); consolidated income and cash flow statements of ATI's Domestic
Cellular Business for the fiscal years ended December 31, 1992, and December 31,
1993; an unaudited balance sheet at May 31, 1994; and consolidated income and
cash flow statements for the five-month period ending May 31, 1994 (such Balance
Sheets and income and cash flow statements are hereinafter collectively referred
to as "FINANCIAL STATEMENTS"), setting forth the financial condition and results
of operations of ATI's Domestic Cellular Business as of the respective dates of
the Financial Statements and for the periods covered thereby. The Financial
Statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods specified,
except as expressly noted therein and except that the Financial Statements do
not include footnotes. The Balance Sheets fairly present the financial condition
of ATI's Domestic Cellular Business as of the dates thereof, except as expressly
noted therein or as set forth in SCHEDULE 2.2(e). The consolidated income and
cash flow statements fairly present the results of operations of ATI's Domestic
Cellular Business for the periods indicated, except as expressly noted therein
or as set forth in SCHEDULE 2.2(e). ATI agrees to use reasonable efforts to
furnish to USW as soon as they are available unaudited Balance Sheets as of May
31, 1994, for each ATI Domestic Cellular Subsidiary and ATI Domestic Cellular
Investment Entity.
(ii) ATI covenants and agrees to use reasonable efforts to furnish
promptly to USW after the date hereof historical financial information for New
Par for the periods, and containing the line items (including as to customer
information) that previously was furnished to USW with respect to ATI's other
Domestic Cellular Assets, Domestic Cellular Subsidiaries, and Domestic Cellular
Investments. ATI represents and warrants that such historical financial
information, when viewed in the aggregate, will not be inconsistent in any
material respect with the publicly available financial information for New Par
for the corresponding periods. In the event that, after reviewing such
information, USW determines that it believes ATI's representation in the
preceding sentence has been breached, USW must notify ATI of such determination
in writing promptly, and in no event later than 30 days after the furnishing of
the last items of such information. Notwithstanding anything to the contrary
elsewhere in this Organization Agreement, in the event that no such notice is
provided within such period, the representation and warranty set forth in this
SECTION 2.2(e)(ii) shall not survive beyond such period.
(f) Absence of Other Changes. Except as contemplated by this
Organization Agreement or as set forth in
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SCHEDULE 2.2(f), from and after June 1, 1994, each of the ATI Parties has
conducted its Domestic Cellular Business in the ordinary and usual course and
there has not been (i) any borrowing outside the ordinary course of business or
incurrence of any obligations other than Permitted Liabilities or other
liabilities incurred in the ordinary course of business; (ii) any Lien imposed
on any of the properties or assets of any of the ATI Parties (other than
Permitted Liens); or (iii) any increases in compensation payable to officers and
employees of any of the ATI Domestic Cellular Subsidiaries or their
Subsidiaries, which in the aggregate may be expected to have a Material Adverse
Effect on the ATI Domestic Cellular Subsidiaries and their Subsidiaries, taken
as a whole.
(g) Compliance with Laws. Each of the ATI Parties is in compliance with
all laws, statutes, ordinances, regulations, rules, judgments, decrees, orders,
and other requirements applicable to the operation of its Domestic Cellular
Business, except for any non-compliances which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect on
the ATI Cellular Subsidiaries and their Subsidiaries, taken as a whole, or to
affect adversely the ability of ATI to consummate the Transactions and perform
its obligations contemplated by this Organization Agreement and the Related
Agreements.
(h) MFJ. ATI acknowledges that USW is subject to the MFJ, CECO and EO
and must operate in conformance to their requirements and prohibitions,
including performance of the obligations as contemplated by this Organization
Agreement and the Related Agreements.
(i) Litigation. Except as disclosed on SCHEDULE 2.2(i), there are no
actions, suits, investigations or proceedings (adjudicatory, rulemaking or
otherwise) pending or, to the knowledge of ATI, threatened against any ATI Party
or, to the knowledge of ATI, pending or threatened against any ATI Domestic
Cellular Investment Entity, at law or in equity, before any court or
Governmental Body, except actions, suits, investigations or proceedings which,
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect on the ATI Cellular Subsidiaries and their Subsidiaries, taken as a
whole, or to affect adversely the ability of ATI to consummate the Transactions
and perform its obligations as contemplated by this Organization Agreement and
the Related Agreements.
(j) Licenses. The ATI Parties and the ATI Domestic Cellular Investment
Entities have all material Licenses which are necessary to conduct ATI's
Domestic Cellular Business as it is presently conducted. Without limitation of
the foregoing, the ATI Parties and the ATI Domestic Cellular Investment Entities
hold the material Licenses identified on SCHEDULE 2.2(j), and all such material
Licenses are valid and in full force and effect. No ATI Party has made any
untrue statement of
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fact, or omitted to disclose any fact, to any Governmental Body or taken or
failed to take any action, which misstatements or omissions, actions or failures
to act, individually or in the aggregate, subject or could reasonably be
expected to subject any of the material Licenses they hold to revocation or
failure to renew. No event has occurred with respect to any of the material
Licenses held by an ATI Party or by an ATI Domestic Cellular Investment Entity
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. ATI has no reason to
believe that any of the material Licenses identified on SCHEDULE 2.2(j) is not
likely to be renewed in the ordinary course or that the holder of any such
material License would not be entitled to a renewal expectancy as such term is
defined in 47 C.F.R. Section 22.941 or any successor provisions and associated
FCC policies.
(k) Taxes. The ATI Cellular Subsidiaries and their corporate
Subsidiaries have each (i) filed, within the times and in the manner prescribed
by law, and will continue to timely file through the Contribution Date all
Returns required to be filed by or with respect to each of them, (ii) paid all
Taxes shown to have become due pursuant to such Returns, and (iii) will continue
to pay all Taxes payable pursuant to such Returns for periods ending on or
before the Contribution Date. There are no Taxes of the ATI Cellular
Subsidiaries and their corporate Subsidiaries for which a notice of, or
assessment or demand for, payment has been received or which are otherwise due
and payable and the ATI Cellular Subsidiaries and their corporate Subsidiaries
will continue to pay such Taxes for periods ending on or before the Contribution
Date. Except as disclosed in SCHEDULE 2.2(k), no examination or audit of any Tax
Return of any ATI Cellular Subsidiary or any of their corporate Subsidiaries is
currently in progress, and there are no outstanding agreements or waivers
extending the statutory period of limitation applicable to any Tax Return of any
ATI Cellular Subsidiary or any of its corporate Subsidiaries. Except as
disclosed to USW on a revised and updated SCHEDULE 2.2(k) delivered by the Phase
I Closing, complete copies of (i) the federal Income Tax Returns of the ATI
Cellular Subsidiaries and their corporate Subsidiaries and (ii) state and local
Income Tax Returns and other Tax Returns of the ATI Cellular Subsidiaries and
their corporate Subsidiaries for each of the years ended December 31, 1989,
1990, 1991, 1992 and 1993 have been delivered or will be made available to USW
by the Phase I Closing. Except as set forth on the revised and updated SCHEDULE
2.2(k) to be delivered to USW by the Phase I Closing, (A) there is no action,
suit, proceeding, investigation, audit, claim or assessment pending or proposed
with respect to any Return, which action, suit, proceeding, investigation,
audit, claim or assessment relates to any of the ATI Cellular Subsidiaries or
their corporate Subsidiaries, (B) all amounts required to be collected or
withheld by any of the ATI Cellular Subsidiaries or their
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corporate Subsidiaries with respect to Taxes have been duly collected or
withheld and any such amounts that are required to be remitted to any taxing
authority have been duly remitted, (C) no extension of time within which to file
any Return that relates to any of the ATI Cellular Subsidiaries or their
corporate Subsidiaries has been requested which Return has not since been filed,
(D) there are no tax rulings, requests for rulings, or closing agreements
relating to the ATI Cellular Subsidiaries or their corporate Subsidiaries which
could affect their liability for Taxes for any period after the Phase I Closing
, (E) all federal, state and local (x) Income Tax Returns of each of the ATI
Cellular Subsidiaries and their corporate Subsidiaries, and (y) consolidated,
combined or unitary Income Tax Returns, which include any of the ATI Cellular
Subsidiaries or their corporate Subsidiaries, with respect to taxable periods
through the year ended December 31, 1989 have been examined and closed or are
Returns with respect to which the applicable statute of limitations has expired
without extension or waiver, (F) no power of attorney has been granted by ATI or
any of the ATI Cellular Subsidiaries or their corporate Subsidiaries with
respect to any matter relating to Taxes of the ATI Cellular Subsidiaries or
their corporate Subsidiaries which is currently in force, (G) neither ATI nor
any corporate Subsidiary thereof has filed a consent under section 341(f) of the
Code or any comparable state provision, and (H) there are no Liens for Taxes
(other than for current Taxes not yet due and payable) on the assets of any of
the ATI Cellular Subsidiaries or their corporate Subsidiaries. Except as set
forth on the revised and updated SCHEDULE 2.2(k) to be delivered to USW by the
Phase I Closing, each of the ATI Cellular Subsidiaries and their corporate
Subsidiaries has been an includable member of the affiliated group (within the
meaning of section 1504 of the Code) of which ATI is the parent corporation and
has joined in filing a consolidated return since the date on which each was
incorporated and will be an includable member of such affiliated group included
in ATI's consolidated return through the Contribution Date. Any Tax Sharing
Arrangement that may exist between an ATI Transferred Subsidiary, on the one
hand, and ATI or any Affiliate of ATI, on the other hand, shall terminate, and
any obligations to make payments under any such Tax Sharing Arrangement shall be
canceled, as of the Contribution Date.
(l) Material Contracts and Related Party Agreements.
(i) SCHEDULE 2.2(l)(i) contains a true and complete list of all
Material Contracts (including Related Party Agreements, if applicable) to which
any ATI Party was a party as of the Effective Date.
(ii) Each contract listed in SCHEDULE 2.2(l)(i) was in full force
and effect on the Effective Date, and there exists no default or event,
occurrence, condition or act (including the consummation of the Transactions)
which, with the
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giving of notice, the lapse of time or the happening of any other event or
condition, would become a default thereunder by any ATI Party or by any other
party thereto which could reasonably be expected to result in a Material Adverse
Effect on the ATI Cellular Subsidiaries and their Subsidiaries, taken as a
whole, or to affect adversely the ability of ATI to consummate the Transactions
and perform its obligations contemplated by this Organization Agreement and the
Related Agreements.
(iii) All Related Party Agreements to which any ATI Party is a
party have been entered into in the ordinary course of business and contain
terms no more and no less favorable to either party than would be the case in an
arm's-length transaction.
(m) Employment and Non-Competition Agreements. Except as set forth in
SCHEDULE 2.2(m), no ATI Cellular Subsidiary nor any Subsidiary of an ATI
Cellular Subsidiary is a party to any employment agreement or is a party to or
otherwise bound by any non-competition, non-solicitation or other similar
agreement relating to its Domestic Cellular Business.
(n) Assets.
(i) Each ATI Party has (A) good and marketable fee title to all
its Owned Property and (B) good and valid title to the leasehold estates in all
its Leased Property, in each case free and clear of all Liens other than
Permitted Liens. The Owned Property and the Leased Property of the ATI Parties
include all rights and properties necessary to the conduct of such parties'
Domestic Cellular Businesses in the manner in which they are presently
conducted.
(ii) There exists no default, or event which with the passage of
time or notice or both would constitute a default, by any ATI Party with respect
to any indebtedness, mortgage, pledge or other hypothecation, the payment of
which is secured by a security interest in all or part of any ATI Party's
Domestic Cellular Assets which could reasonably be expected to result in a
Material Adverse Effect on the ATI Cellular Subsidiaries and their Subsidiaries,
taken as a whole, or to affect adversely the ability of ATI to consummate the
Transactions and perform its obligations contemplated by this Organization
Agreement and the Related Agreements. None of the ATI Parties' Domestic Cellular
Assets is subject to any Lien that would impair or prevent the continued conduct
of ATI's Domestic Cellular Business as it has been conducted.
(iii) All of the buildings, structures, appurtenances, and
equipment used in ATI's Domestic Cellular Business are in good operating
condition and in a state of good maintenance and repair, ordinary wear and tear
excepted, and adequate and suitable for the purposes for which they are
presently being used, except for conditions which would not,
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singly or in the aggregate, have a Material Adverse Effect on the ATI Cellular
Subsidiaries and their Subsidiaries, taken as a whole. None of such buildings,
structures, appurtenances or equipment, nor the operation or maintenance
thereof, violates in any material respect any restrictive covenant or any
provision of any federal, state or local law, ordinance, rule or regulation or
encroaches on any property owned by others. No condemnation proceeding is
pending or, to the knowledge of ATI, threatened which would preclude or impair
the use of any such property for the purposes for which it is currently used.
(o) Intellectual Property. An ATI Party owns the entire right, title
and interest in and to all Intellectual Property (including Trademarks and Trade
Names) used in, and material to the conduct of, ATI's Domestic Cellular
Business. All such Intellectual Property is owned or used pursuant to defensible
licenses or other legal arrangements. There are no pending or, to the knowledge
of ATI, threatened proceedings or litigation or other adverse claims affecting
or relating to such Intellectual Property, nor to the knowledge of ATI any
reasonable basis upon which a claim may be asserted by or against any ATI Party
for infringement of any such Intellectual Property which could reasonably be
expected to have a Material Adverse Effect on the ATI Parties, taken as a whole.
All Intellectual Property used in, and material to the conduct of, ATI's
Domestic Cellular Business will be transferred or licensed to WMC at the Phase I
Closing, pursuant to one or more license agreements, and will be usable by WMC
in the conduct of its Domestic Cellular Business on the same terms as such
Intellectual Property is currently being used by the ATI Parties in the conduct
of ATI's Domestic Cellular Business.
(p) Employee Benefit Programs.
(i) SCHEDULE 2.2(p)(i) sets forth a true and complete list
of all Employee Benefit Programs to which ATI, any ATI Cellular Subsidiary or
any Subsidiary thereof is a party or contributes or is currently obligated to
contribute ("ATI Employee Benefit Programs"). ATI has provided to USW a true and
complete list of all executives of ATI, the ATI Cellular Subsidiaries, and the
Subsidiaries thereof for whom individual agreements pertaining to Employee
Benefit Programs are under consideration by ATI, an ATI Cellular Subsidiary or a
Subsidiary thereof (such agreements, if and when entered into, to be considered
ATI Employee Benefit Programs for purposes of this Organization Agreement).
(ii) ATI provided to USW prior to the Effective Date complete,
accurate, and current copies of each of the following:
(A) The text, including amendments, of each of the ATI
Employee Benefit Programs, to the extent reduced to writing;
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(B) A written description of all material elements of the ATI
Employee Benefit Programs, to the extent not previously reduced to writing;
(C) With respect to any ATI Employee Benefit Program
described Section 3(3) of ERISA that is required to prepare such a document or
make such a filing: (I) the most recent summary plan description, as described
in Section 102 of ERISA, (II) any summary of material modifications that has
been distributed to participants or filed with the U.S. Department of Labor but
that has not been incorporated into an updated summary plan description
furnished under Subparagraph (I) above, and (III) the annual report, as
described in Section 103 of ERISA or Section 6039D of the Code, as applicable,
for the most recent plan year for which an annual report has been prepared, and
any required actuarial and financial statements, opinions and schedules;
(D) Where applicable, the actuarial reports for the most
recent three (3) reporting periods for which such a report has been prepared for
any Employee Benefit Program;
(E) The trust agreement or other funding instrument for each
ATI Employee Benefit Program which is funded;
(F) For each ATI Employee Benefit Program that is intended to
meet the qualification requirements of Section 401(a) of the Code ("ATI
Qualified Plan"), the most recent request for a determination concerning the
plan's qualification under Section 401(a) of the Code, as filed with the IRS;
and
(G) For each ATI Qualified plan, the most recent
determination concerning the plan's qualification under Section 401(a) of the
Code, as issued by the IRS.
(iii) Each ATI Employee Benefit Program is in compliance with the
applicable provisions of ERISA, the Code, and other federal or state law,
including all requirements under the Code and ERISA for filing reports (which
were true and correct in all material respects as of the date filed), and
benefits have been paid in accordance with the provisions of the ATI Employee
Benefit Program, except for such noncompliances and failures which, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect on
the ATI Cellular Subsidiaries and their Subsidiaries, taken as a whole.
(iv) Each ATI Qualified Plan has been determined by the IRS to
qualify under Section 401 of the Code, and the trusts created thereunder have
been determined to be exempt from tax under the provisions of Section 501 of the
Code,
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and nothing has occurred that would cause the loss of such qualification or
tax-exempt status.
(v) Neither any ATI Cellular Subsidiary nor any Subsidiary thereof
is a party to, makes, is making, or is obligated to make contributions or has
made, or been obligated to make, contributions at any time during the
immediately preceding period covering at least five (5) plan years to a
multiemployer plan, within the meaning of Section 4001(a)(3) of ERISA.
(vi) Neither any ATI Cellular Subsidiary nor any Subsidiary
thereof expects to incur any liability under Title IV of ERISA (other than
premiums due and not delinquent under Section 4007 of ERISA) with respect to any
ATI Employee Benefit Program.
(vii) Except as set forth in SCHEDULE 2.2(p)(vii), none of the ATI
Qualified Plans subject to Title IV of ERISA has any unfunded pension liability.
For purposes of this SECTION 2.2(p)(vii), an ATI Qualified Plan has an unfunded
pension liability if the plan is subject to Section 412(m) of the Code and the
plan's benefit liabilities under Section 4001(a)(16) of ERISA exceed the current
value of the plans's assets, determined in accordance with the assumptions used
by the ATI Qualified Plan's actuaries for funding the plan pursuant to Section
412 of the Code for the applicable plan year. Neither any ATI Cellular
Subsidiary nor any Subsidiary thereof has transferred any unfunded pension
liability outside of the ERISA Affiliates or otherwise has engaged in a
transaction subject to Section 4069 of ERISA.
(viii) All contributions, premiums or other payments due from any
ATI Cellular Subsidiary or any Subsidiary thereof to, or under, any ATI Employee
Benefit Program have been fully paid as required by law or by the terms of any
such Employee Benefit Program; all contributions, premiums or other payments due
from any ATI Cellular Subsidiary or any Subsidiary thereof to, or under, any ATI
Employee Benefit Program have been adequately provided for on the books and
financial statements of the applicable ATI Cellular Subsidiary and/or the
applicable Subsidiary thereof; and no accumulated funding deficiency, as defined
in Section 302 of ERISA and Section 412(m) of the Code, whether or not waived,
exists with respect to an ATI Employee Benefit Program.
(ix) There are no pending or, to the knowledge of ATI, threatened
claims, actions or lawsuits, other than routine claims for benefits in the
ordinary course, asserted or instituted against (A) any ATI Employee Benefit
Program or (B) any fiduciary with respect to any ATI Employee Benefit Program
for which an ATI Cellular Subsidiary or any Subsidiary thereof may be directly
or indirectly liable, through indemnification obligations or otherwise.
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(x) Within the six-year period ending on the date of reference,
neither any ATI Cellular Subsidiary nor any Subsidiary thereof has engaged,
directly or indirectly, in (A) any nonexempt prohibited transaction (as defined
in Section 4975 of the Code or Section 406 of ERISA) in connection with any
Employee Benefit Program that has a reasonable likelihood of having a Material
Adverse Effect on the ATI Cellular Subsidiaries and their Subsidiaries, taken as
a whole, or (B) any act or omission constituting a violation of Section 404 of
ERISA.
(xi) The Transactions contemplated by this Organization Agreement
do not invoke any change-in-control provision in any ATI Employee Benefit
Program.
(xii) Each ATI Cellular Subsidiary and each Subsidiary thereof is
in compliance with the health care continuation provisions of Sections 162(k),
before amendment, and 4980B of the Code and the regulations thereunder with
respect to such requirements.
(xiii) Except as provided in the WMC Employee Agreement or the PCS
Par Employee Agreement, neither any ATI Cellular Subsidiary nor any Subsidiary
thereof has any liability or expects to incur any liability with respect to any
Employee Benefit Program to which neither an ATI Cellular Subsidiary nor any
Subsidiary thereof is a party, contributes or is obligated to contribute.
(xiv) None of WMC, PCS Par or the USW Parties, nor any successors
thereto, has any existing or contingent liability with respect to any Employee
Benefit Programs maintained or contributed to by the "Telesis Group" (as the
term is defined in that certain Separation Agreement between Pacific Telesis
Group and PacTel Corporation dated October 7, 1993).
(q) Labor Matters. Each of the ATI Cellular Subsidiaries and their
Subsidiaries has complied with all applicable laws and regulations in all
material respects relating to the employment of labor, including those related
to wages, hours, occupational health and safety, worker's compensation,
collective bargaining, unlawful discrimination, and the payment of Social
Security and similar taxes pertaining to their Domestic Cellular Business. To
the knowledge of ATI, there are no threatened labor controversies, strikes or
work stoppages with any of the employees performing work in a Domestic Cellular
Business. No ATI Cellular Subsidiary nor any of its Subsidiaries is a party to
any collective bargaining agreement, nor are any collective bargaining
agreements currently being negotiated with respect to the employees of the ATI
Cellular Subsidiaries and their Subsidiaries in their Domestic Cellular
Business. Except as set forth in SCHEDULE 2.2(i), there are no pending
employment-related issues, including without limitation governmental audits,
disputes
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(including those listed in SCHEDULE 2.2(q) hereto), litigation, labor
controversies, strikes or work stoppages with or regarding any of the employees
performing work in the Domestic Cellular Business that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect on the
ATI Cellular Subsidiaries and their Subsidiaries, taken as a whole. Each ATI
Cellular Subsidiary and each Subsidiary thereof has properly verified the
identity and authorization to work in the United States and has properly
completed and retained INS forms I-9 for all employees required by the
Immigration Reform and Control Act of 1986 and related statutes. All individuals
who are performing or have performed services for the ATI Cellular Subsidiaries
and their Subsidiaries and are or were classified as "independent contractors"
for tax purposes qualify for such classification.
(r) Environmental Compliance and Liabilities.
(i) Except as set forth in SCHEDULE 2.2(r), ATI has no knowledge
of any conditions that exist with respect to any Owned Property, Leased Property
or other property operated by any ATI Cellular Subsidiary, any Subsidiaries of
an ATI Cellular Subsidiary, any ATI Domestic Cellular Subsidiary or any ATI
Domestic Cellular Investment Entity that would be likely to subject such ATI
Cellular Subsidiary or any of its 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 that require or are likely to require cleanup, removal, remedial action
or other response by any ATI Cellular Subsidiary or any of its Subsidiaries
pursuant to any Environmental Law which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on the ATI Cellular
Subsidiaries and their Subsidiaries, taken as a whole.
(ii) Except as set forth in SCHEDULE 2.2(r), each of the ATI
Cellular Subsidiaries and their Subsidiaries is in substantial compliance with
all applicable Environmental Laws, which compliance includes, without
limitation, (A) the possession by the ATI Cellular Subsidiaries and their
Subsidiaries of all material permits and other governmental authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof, (B) compliance with notification, reporting, and
registration provisions of applicable Environmental Laws, and (C) compliance
with all statutory and regulatory standards under applicable Environmental Laws.
(iii) Neither any ATI Cellular Subsidiary nor any of its
Subsidiaries is a party to any litigation or administrative proceeding, nor, to
the knowledge of ATI, is any litigation or administrative proceeding threatened
against any ATI Cellular Subsidiary or any of its Subsidiaries that asserts or
alleges that such ATI Cellular Subsidiary or any of its
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Subsidiaries or any predecessor of any of them violated or is violating any
Environmental Law or that such ATI Cellular Subsidiary or any of its
Subsidiaries or any predecessor of any of them is required to clean up, remove
or take remedial or other responsive action due to the use, storage, treatment,
disposal, discharge, leaking or release of any Substance of Concern. Except as
set forth in SCHEDULE 2.2(r), there are no claims under any Environmental Law
pending against any ATI Cellular Subsidiary or any of its Subsidiaries or
against any Person whose liability for any claim any ATI Cellular Subsidiary or
any of its Subsidiaries has retained or assumed either contractually or by
operation of law, and neither any ATI Cellular Subsidiary nor any of its
Subsidiaries nor any predecessor of any of them, nor any part of the Domestic
Cellular Assets of any ATI Cellular Subsidiary or any of its Subsidiaries is
subject to any judgment, decree, order or citation related to or arising out of
any Environmental Law, and no ATI Cellular Subsidiary nor any of its
Subsidiaries has been named or listed as a potentially responsible party by any
governmental or other entity in a matter arising under or relating to any
Environmental Law. Except as set forth in SCHEDULE 2.2(r), no ATI Cellular
Subsidiary nor any of its Subsidiaries has received any written communication
from a Governmental Body that alleges that such ATI Cellular Subsidiary or any
of its Subsidiaries is not in full compliance with the Environmental Laws. To
the knowledge of ATI, except as set forth in SCHEDULE 2.2(r), no ATI Domestic
Cellular Investment Entity is a party to any litigation or administrative
proceeding, nor is any litigation or administrative proceeding threatened
against an ATI Domestic Cellular Investment Entity arising under any
Environmental Law which would likely have a Material Adverse Effect, singly or
in the aggregate, on the business, operations or financial condition of the ATI
Domestic Cellular Subsidiaries and their Subsidiaries, taken as a whole, or
adversely affect the ability of ATI to consummate the Transactions and perform
its obligations contemplated by this Organization Agreement and the Related
Agreements.
(iv) Except as set forth in SCHEDULE 2.2(r), 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, that could form the basis of any claim
arising under Environmental Laws against any ATI Cellular Subsidiary or any of
its Subsidiaries or against any Person whose liability for any claim arising
under Environmental Laws any ATI Cellular Subsidiary or any of its Subsidiaries
has retained or assumed either contractually or by operation of law.
(v) ATI will, upon request by USW, provide USW with true and
complete copies of all environmental assessments that have heretofore been
performed on all Owned Property or Leased Property operated by any ATI Cellular
Subsidiary or any
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of its Subsidiaries and of all notices or other materials listed in SCHEDULE
2.2(r).
(s) Other Liabilities. Except (i) as disclosed in SCHEDULE 2.2(s) or
any other Schedule attached to this Organization Agreement, (ii) as reflected on
the Balance Sheets or otherwise referred to in the Financial Statements
(including footnotes to the Financial Statements), or (iii) incurred in the
ordinary course of business or otherwise permitted by this Organization
Agreement, there are no outstanding claims, liabilities or indebtedness of any
nature, secured or unsecured, contingent or absolute, matured or unmatured,
known or unknown, which would likely have a Material Adverse Effect, singly or
in the aggregate, on the business, operations or financial condition of the ATI
Cellular Subsidiaries and their Subsidiaries, taken as a whole, or adversely
affect the ability of ATI to consummate the Transactions and perform its
obligations contemplated by this Organization Agreement and the Related
Agreements.
(t) Insurance. ATI's Domestic Cellular Assets and the conduct of ATI's
Domestic Cellular Business are adequately self-insured by ATI or adequately
insured (in the manner and to the extent customary for businesses engaged in the
same or similar business) by financially sound and reputable insurers. Any such
policies are, and each of the ATI Parties will cause such policies or renewals
thereof to remain, in full force and effect.
(u) Finders; Investment Bankers. Neither ATI nor any of its Affiliates,
nor any of their respective officers or directors, has employed any broker,
finder or investment banker or incurred any liability for any brokerage fees,
commissions or finder's fees in connection with the Transactions contemplated by
this Organization Agreement and the Related Agreements that would be a liability
of USW, WMC, PCS Par or any of ATI's Domestic Cellular Assets, Domestic Cellular
Subsidiaries or Domestic Cellular Investments.
(v) Amendment to Rights Plan. Effective September 19, 1994, ATI has
amended its Rights Agreement dated as of July 22, 1993 (the "Rights Agreement")
so that USW and its Affiliates shall not be deemed to be "Acquiring Persons" in
connection with their becoming "Beneficial Owners" of "Common Shares" (as such
terms are defined in the Rights Agreement) pursuant to any of the Related
Agreements. ATI has furnished to USW a true and correct copy of such Rights
Agreement, as so amended.
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ARTICLE 3
COVENANTS
3.1 Covenants of USW. From and after the Effective Date, except as
otherwise expressly stated herein, USW covenants and agrees as follows:
(a) Effectuation of this Agreement. USW will use reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable to carry out all of its obligations under
this Organization Agreement and the Related Agreements and to consummate and
make effective the Transactions contemplated by this Organization Agreement and
the Related Agreements, including without limitation:
(i) Promptly to make all applications and filings and to use
reasonable efforts to obtain all Authorizations and Consents required to be
obtained by the USW Parties on or before the Phase I Closing;
(ii) Promptly, and in any event by the earlier of (A) forty-five
(45) days after notice by either Party that the Phase II Closing is likely to
occur within one hundred eighty (180) days, but for receipt of the
Authorizations described in SCHEDULES 2.1(d)(iv)(A), 2.1(d)(iv)(B),
2.2(d)(iv)(A), and 2.2(d)(iv)(B) hereto, and (B) the third anniversary of the
Effective Date, to make all applications and filings and to use reasonable
efforts to obtain all other Authorizations and Consents required to be obtained
by the USW Parties on or before the Phase II Closing to enable the Parties to
consummate the Phase II Domestic Cellular Transactions and, if applicable, to
cause the PCS Contribution Date to occur, at the earliest practicable time,
including without limitation to use reasonable efforts to be in a position to
contribute all of the USW Phase II Assets and the Scheduled Phase II Related
Assets to WMC at the Phase II Closing or as soon thereafter as possible;
(iii) In the event any changes are required in order to facilitate
obtaining the Authorizations and Consents required for the Transactions
contemplated by this Organization Agreement and the Related Agreements, to take
reasonable steps necessary to accommodate such changes to the extent they would
not materially adversely affect the Parties' rights or obligations hereunder;
provided that in any such event, USW and ATI shall negotiate in good faith to
compensate the other appropriately to the extent adversely affected by such
changes;
(iv) To cause NewVector to execute and deliver the NewVector
Services Agreement at the Phase I Closing;
(v) Prior to the Phase II Closing, to use reasonable efforts to
effect such internal restructuring as may
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be necessary to contribute the USW Phase II Assets and the Scheduled Phase II
Related Assets to WMC in the form of direct ownership of Domestic Cellular
Assets or partnership interests rather than shares of capital stock of
corporations;
(vi) Promptly to take, or cause to be taken, all other actions and
do, or cause to be done, all other things necessary, proper or advisable to
consummate and make effective the Transactions contemplated by this Organization
Agreement and the Related Agreements on the terms and conditions set forth
herein as soon as reasonably practicable; and
(vii) In the event any claim, action, suit, investigation or other
proceeding by any Governmental Body or other Person is commenced which questions
the validity or legality of any of the Transactions, and any injunction or other
order is issued in any such proceeding, to use reasonable efforts to have such
injunction or other order dissolved, and to cooperate reasonably with ATI
regarding the defense of such proceedings and the removal of any other
impediment to the consummation of the Transactions.
(b) Conduct of Business. Except as contemplated by this Organization
Agreement and the Related Agreements, USW shall, and shall cause the other USW
Parties to, use reasonable efforts to operate USW's Domestic Cellular Business
in all respects prior to the Phase II Closing in the ordinary course and
consistent with past practice (except as expressly authorized by this
Organization Agreement and the Related Agreements), in a manner not inconsistent
with the Approved Business Plan, and with the objective that the goodwill and
value of USW's Domestic Cellular Business shall be maximized, including without
limitation, by maintaining USW's Domestic Cellular Assets in good condition,
maintaining their material Licenses in good standing, managing their officers
and employees effectively, and preserving and protecting their material
relationships with customers, suppliers and other third parties; provided,
however, that nothing contained in this SECTION 3.1(b) shall apply to the
conduct of any Domestic Cellular Business conducted by Tucell, L.P., a Delaware
limited partnership, in the Tucson, Arizona MSA prior to the divestiture of the
Tucson Cellular Interest by AirTouch Cellular of Arizona, which shall be
operated until such time in the ordinary course by Tucell, L.P.; and provided
further that nothing contained in this SECTION 3.1(b) shall apply to the conduct
of the San Diego Cellular Property, which shall be operated prior to its
divestiture in the ordinary course by U S WEST Cellular of California.
(c) Reporting. For the period from the Effective Date to the Phase II
Closing, USW shall deliver to ATI and WMC monthly (or less frequent, at the
direction of the WMC Partnership Committee, but no less frequent than quarterly)
reports consisting of such financial information as shall be
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directed by the WMC Partnership Committee prepared by or under the supervision
of the principal financial officer of NewVector, in a form specified by WMC,
sufficient to show all transfers of cash or other assets between or among any of
the USW Parties, including, without limitation, all transactions governed by the
methodology adopted pursuant to Articles 4 and 5 of this Organization Agreement.
From and after the Effective Date, USW shall deliver to ATI such financial
statements or other financial information regarding USW's Domestic Cellular
Business as ATI may reasonably require to comply with requirements of law
(including in connection with any filing by ATI with the Securities and Exchange
Commission) or generally accepted accounting principles. From and after the
Effective Date, USW covenants and agrees to provide prompt written notice to ATI
describing in reasonable detail any facts or circumstances that have resulted in
any representation or warranty made by USW in SECTION 2.1 hereof no longer being
true and correct in any material respect or any failure of a USW Party to comply
with any material covenant contained herein.
(d) No Changes. Except as otherwise permitted in this Organization
Agreement or in an Approved Business Plan, until the Phase II Closing, USW shall
cause NewVector and its Subsidiaries not to:
(i) (A) Grant any material increases in the compensation of any
officers or employees engaged in USW's Domestic Cellular Business, except in the
ordinary course of business consistent with past practice, (B) pay or agree to
pay any material employee benefit not required or contemplated by the terms of
the NV-Employee Benefit Programs in effect or identified to ATI on the Effective
Date, except as those terms may be modified or new Employee Benefit Programs may
be adopted in the ordinary course of business consistent with past practice, (C)
enter into any new, or materially amend any existing, employment agreement with
any such officer or employee engaged in USW's Domestic Cellular Business, except
for employment agreements with new employees entered into in the ordinary course
of business consistent with past practice and NV-Employee Benefit Programs
identified to ATI before the Effective Date, (D) except as may be required to
comply with applicable law, adopt or amend in any material respect any
collective bargaining agreement relating to any employee engaged in USW's
Domestic Cellular Business, (E) enter into any new, or materially amend any
existing, severance agreement with any officer or employee engaged in USW's
Domestic Cellular Business except for NV- Employee Benefit Programs identified
to ATI before the Effective Date, or (F) become obligated under any new Employee
Benefit Program that was not in existence as of the Effective Date, or amend any
NV-Employee Benefit Program in existence as of the Effective Date if such
amendment would have the effect of enhancing or accelerating any benefits
thereunder, except for NV-Employee Benefit Programs identified to ATI before the
Effective Date and for new programs or amendments that
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(I) may be required to comply with applicable law or (II) taken together with
other actions involving Employee Benefit Programs, are in the ordinary course of
business and consistent with past practice and do not have a Material Adverse
Effect on NewVector and its Subsidiaries, taken as a whole.
(ii) Adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization,
except in accordance with SECTION 3.1(a)(v) of this Organization Agreement;
provided, however, that in the event of any such merger, reorganization or
restructuring, the certificate of incorporation, by-laws or other organizational
documents of the successor shall be the same as the certificate of
incorporation, by-laws or other organizational documents of the predecessor in
effect on the Effective Date, to the extent legally permissible.
(iii) Adopt any amendments to its certificate of incorporation,
by-laws or partnership agreements or alter through merger, liquidation,
reorganization, restructuring or in any other fashion its corporate or
partnership structure or ownership, except in accordance with SECTION 3.1(a)(v)
of this Organization Agreement; provided, however, that in the event of any such
merger, reorganization or restructuring, the certificate of incorporation,
by-laws or other organizational documents of the successor shall be the same as
the certificate of incorporation, by-laws or other organizational documents of
the predecessor in effect on the Effective Date, to the extent legally
permissible.
(iv) Authorize, declare or pay any dividend or other distribution
to, issue any capital stock or partnership interest to, or cause or permit any
investment to be made in, USW by NewVector or any NewVector Subsidiary, except
for distributions or dividends of free cash flow or in accordance with any
Approved Business Plan.
(v) Incur any indebtedness or liabilities other than Permitted
Liabilities or contractual obligations incurred in the ordinary course of
business (other than Material Contracts) or pursuant to SECTION 3.1(d)(vii)
hereof; except in the ordinary course consistent with past practice, make any
advances or capital contributions to any other Person; make any loan to USW; or
consent to the incurrence of any indebtedness or call for capital contributions
by any USW Domestic Cellular Subsidiary or USW Domestic Cellular Investment
Entity;
(vi) Except as provided in SECTION 3.1(f) of this Organization
Agreement or in the WMC Partnership Agreement, sell, assign, pledge, encumber
(except for Permitted Liens) or otherwise transfer any direct or indirect
interest in any material USW Domestic Cellular Asset, NewVector, any NewVector
Subsidiary, any USW Domestic Cellular Subsidiary, any USW
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Domestic Cellular Investment, without the prior written consent of the WMC
Partnership Committee;
(vii) Enter into, assume, terminate or materially alter any
Material Contract or Related Party Agreement, except in the ordinary course of
business or with the prior written consent of the WMC Partnership Committee;
(viii) Enter into or consent to any modification or amendment of
any partnership or other agreement or to any sale, exchange or transfer of
assets or other action that would have the effect of delaying the time that any
USW Phase II Asset or Scheduled Phase II Related Asset could be contributed to
WMC or changing the character or diminishing the value of any USW Phase II Asset
or Scheduled Phase II Related Asset; or
(ix) Take any action inconsistent with the consummation of the
Transactions as contemplated by this Organization Agreement and the Related
Agreements.
(e) Access and Information. To the extent permitted by law and subject
to any restrictions contained in Material Contracts and the USW Cellular
Partnership Agreements, USW shall afford to ATI such access, during normal
business hours, to books, records (including, without limitation, tax returns
and, if consented to by the independent auditors, work papers of such auditors),
plant and personnel, and to such other information of USW relating to USW's
Domestic Cellular Business and of NewVector and its Subsidiaries (except
information relating to the San Diego Cellular Property and Tucell, L.P. and its
Domestic Cellular Business before the Tucson Cellular Interest is divested by
AirTouch Cellular of Arizona) as ATI shall reasonably request, including,
without limitation, all information relating to the transactions governed by the
methodology adopted pursuant to ARTICLES 4 or 5 of this Agreement. USW agrees to
treat, and will cause its respective accountants, counsel and other
representatives to treat, confidentially all nonpublic information concerning
the ATI Parties furnished or made available to it in connection with the
Transactions contemplated by this Organization Agreement and the Related
Agreements, subject to the requirements of law and the provisions of this
Organization Agreement and the Related Agreements. If this Organization
Agreement is terminated prior to the Phase I Closing, USW will deliver to ATI
all documents, work papers and other material (including copies) obtained by it
in connection herewith, whether obtained before or after the Effective Date.
(f) Divestiture of San Diego Cellular Property. USW agrees to use
reasonable efforts to cause NewVector to divest itself of the San Diego Cellular
Property on or before the Phase I Closing or otherwise to obtain any
Authorizations required to permit the Phase I Transactions to occur prior to a
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divestiture of the San Diego Cellular Property, subject to the following
conditions:
(i) On the later of (A) the Phase II Closing or (B) the date of
divestiture of the San Diego Cellular Property, USW shall make a capital
contribution to WMC equal to the pre-Tax consideration (cash and/or non-cash),
received from the divestiture of the San Diego Cellular Property reduced only by
reasonable closing costs incurred in connection with such divestiture.
(ii) USW shall be solely responsible for the payment of any Taxes
related to the divestiture and any Tax- related penalties and interest thereon.
Promptly after the closing of a transaction (or a series of transactions)
resulting in the divestiture of the San Diego Cellular Property, USW shall
deliver to ATI and WMC a written notice (the "San Diego Notice") stating (A) the
amount of the respective capital contributions to be paid to WMC by USW and ATI
pursuant to SECTIONS 3.1(f)(i) and (B) the amount of the San Diego Taxes. For
purposes of this Section 3.1(f)(ii) and Sections 3.2(h),(i) and (j), "San Diego
Taxes" means federal, state and local Taxes incurred in connection with the
divestiture of the San Diego Cellular Property (exclusive of penalties or
interest), determined using an assumed combined federal, state and local Tax
rate of 40% based on the actual taxable gain recognized for federal income tax
purposes upon such divestiture (adjusted to take into account any refunds or
adjustments made by any federal income taxing authority, other than with respect
to penalties or interest) and determined without regard to the availability of
net operating loss carryforwards or similar tax offsets or benefits, and without
regard to the tax effect of the contribution or payment of any amount pursuant
to this Section 3.1(f) or Sections 3.2(h) through (j) hereof.
(iii) If and when required or advisable to avoid or mitigate any
non-compliance with the MFJ, CECO or EO or any law or regulation of any
Governmental Body or to obtain any necessary Authorizations, USW agrees to place
its San Diego Cellular Property in trust pending divestiture on such terms as
shall be approved by the Governmental Bodies having jurisdiction thereof.
(iv) Except as provided in Article 4, from and after the date of
consummation of the exchange, if any, of the San Diego Cellular Property for
another property or interest, such property or interest shall be treated for all
purposes of this Organization Agreement as a USW Phase II Asset and a USW
Domestic Cellular Asset, USW Domestic Cellular Subsidiary or USW Domestic
Cellular Investment, as the case may be.
(g) Operation of Certain Assets. If and to the extent that USW,
despite its reasonable efforts, is unable to contribute any USW Phase II Assets
or Scheduled Phase II Related
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Assets to WMC at the Phase II Closing in accordance with SECTION 6.3(b)(ii) of
this Organization Agreement, USW covenants and agrees to continue to make
reasonable efforts to make such contribution thereafter during Phase II, to the
maximum extent possible without violating the MFJ, CECO, EO or any law, rule or
regulation of any Governmental Body having jurisdiction over WMC or either
Party. The representations and warranties made by USW with respect to each such
Beneficial Phase II Asset in SECTION 2.1 hereof shall remain true and correct in
all material respects on the date such Beneficial Phase II Asset shall be
contributed to WMC, and USW shall comply with all covenants contained herein
with respect to the Beneficial Phase II Assets until such Beneficial Phase II
Assets are contributed to WMC.
(h) Tucson Cellular Interest. Upon USW's receipt of the Tucson Notice,
ATI and USW shall use their best good faith efforts to reach agreement on a form
of payment of 50 percent of the Tucson Taxes (the "Tucson Taxes Payment") which
(A) gives ATI the full benefit of the Tucson Taxes Payment (but without any
gross-up), (B) minimizes the Tax liability of ATI with respect to such Payment,
and (C) improves the ability of USW to treat such amount as an investment under
its method of accounting. If ATI and USW fail to reach agreement on the form of
such Payment within 30 days of ATI's mailing of the Tucson Notice, USW shall
make the Tucson Taxes Payment in cash to ATI upon the later of the expiration of
such 30 day period or the conclusion of the process described in Section 3.1(i).
(i) In the event that USW disagrees with ATI's calculation of the
amount of Tucson Taxes, USW may challenge that determination by notifying ATI in
writing of the grounds for such disagreement within ten (10) days of USW's
receipt of the Tucson Notice. ATI and USW shall negotiate in good faith to
resolve such disagreements. If USW and ATI fail to resolve such disagreements,
then the matter will be referred to arbitration in accordance with the
Arbitration Agreement for resolution.
(j) In the event of a determination that Tucson Taxes may be different
than the amount originally used for purposes of Sections 3.1(h) and (i) and
Section 3.2(f)(i), ATI shall consult with USW concerning the audit, appeal,
amended return or other process potentially leading to such redetermination
provided that such redetermination shall be calculated using the assumed tax
rate, disregarding net operating loss carryforwards and similar tax offsets and
benefits, disregarding the tax effect of the contribution or payment of any
amount and disregarding any penalties and interest, all as provided in Section
3.2(f)(i); and upon any such redetermination becoming final, appropriate
adjustments shall be made among the parties to reflect such redetermination.
3.2 Covenants of ATI. From and after the Effective Date, except as
otherwise expressly stated herein, ATI covenants and agrees as follows:
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(a) Effectuation of this Agreement. ATI will use reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable to carry out all of its obligations under
this Organization Agreement and the Related Agreements and to consummate and
make effective the Transactions contemplated by this Organization Agreement and
the Related Agreements, including without limitation:
(i) Promptly to make all applications and filings and to use
reasonable efforts to obtain all Authorizations and Consents required to be
obtained by the ATI Parties on or before the Phase I Closing;
(ii) Promptly, and in any event by the earlier of (A) forty-five
(45) days after notice by either Party that the Phase II Closing is likely to
occur within one hundred eighty (180) days, but for receipt of the
Authorizations described in SCHEDULES 2.1(d)(iv)(A), 2.1(d)(iv)(B),
2.2(d)(iv)(A), and 2.2(d)(iv)(B) hereto, and (B) the third anniversary of the
Effective Date, to make all applications and filings and to use reasonable
efforts to obtain all other Authorizations and Consents required to be obtained
by the ATI Parties on or before the Phase II Closing to enable the Parties to
consummate the Phase II Domestic Cellular Transactions and, if applicable, to
cause the PCS Contribution Closing to occur, at the earliest practicable time,
including without limitation to use reasonable efforts to be in a position to
contribute all of the ATI Phase II Assets to WMC at the Phase II Closing or as
soon thereafter as possible;
(iii) In the event any changes are required in order to facilitate
obtaining the Authorizations and Consents required for the Transactions
contemplated by this Organization Agreement and the Related Agreements, to take
reasonable steps necessary to accommodate such changes to the extent they would
not materially adversely affect the Parties' rights or obligations hereunder;
provided that in any such event, USW and ATI shall negotiate in good faith to
compensate the other appropriately to the extent adversely affected by such
changes;
(iv) To cause ATI's Cellular Subsidiaries to execute and deliver
the ATI Services Agreement at the Phase I Closing;
(v) Prior to the Phase II Closing, to use reasonable efforts to
effect such internal restructuring as may be necessary to contribute the ATI
Phase II Assets to WMC in the form of direct ownership of Domestic Cellular
Assets or partnership interests rather than shares of capital stock of
corporations;
(vi) Promptly to take, or cause to be taken, all other actions and
do, or cause to be done, all other things
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necessary, proper or advisable to consummate and make effective the Transactions
contemplated by this Organization Agreement and the Related Agreements on the
terms and conditions set forth herein as soon as reasonably practicable;
(vii) In the event any claim, action, suit, investigation or other
proceeding by any Governmental Body or other Person is commenced which questions
the validity or legality of any of the Transactions and an injunction or other
order is issued in any such proceeding, to use reasonable efforts to have such
injunction or other order dissolved, and to cooperate reasonably with USW
regarding the defense of such proceedings and the removal of any other
impediment to the consummation of the Transactions; and
(viii) To cooperate with, and use reasonable efforts to assist,
USW in obtaining Partial MFJ Relief.
(b) Conduct of Business. Except as contemplated by this Organization
Agreement and the Related Agreements, ATI shall, and shall cause the other ATI
Parties to, use reasonable efforts to operate ATI's Domestic Cellular Business
in all respects prior to the Phase II Closing in the ordinary course and
consistent with past practice (except as expressly authorized by this
Organization Agreement and the Related Agreements), in a manner not inconsistent
with the Approved Business Plan, and with the objective that the goodwill and
value of ATI's Domestic Cellular Business shall be maximized, including without
limitation, by maintaining ATI's Domestic Cellular Assets in good condition,
maintaining their material Licenses in good standing, managing their officers
and employees effectively, and preserving and protecting their relationships
with customers, suppliers and other third parties; provided, however, that
nothing contained in this SECTION 3.2(b) shall apply to the conduct of (i) the
Tucson Cellular Interest prior to its divestiture or (ii) the Domestic Cellular
Business conducted by any ATI Party in San Diego, California, prior to the
divestiture of the San Diego Cellular Property by NewVector, each of which shall
be operated until such times in the ordinary course and by its respective owner.
(c) Reporting. For the period from the Effective Date to the Phase II
Closing, ATI shall deliver to USW and WMC monthly (or less frequent, at the
direction of the WMC Partnership Committee, but not less frequent than
quarterly) reports consisting of such financial information as shall be directed
by the WMC Partnership Committee prepared by or under the supervision of the
principal financial officer of the ATI Cellular Subsidiaries, in a form
specified by WMC, sufficient to show all transfers of cash or other assets
between or among any of the ATI Parties, including, without limitation, all
transactions governed by the methodology pursuant to Articles 4 and 5 of this
Organization Agreement. From and after the Effective Date, ATI shall deliver to
USW such financial statements or
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other financial information regarding ATI's Domestic Cellular Business as USW
may reasonably require to comply with requirements of law (including in
connection with any filing by USW with the Securities and Exchange Commission)
or generally accepted accounting principles. From and after the Effective Date
hereof, ATI covenants and agrees to provide prompt written notice to USW
describing in reasonable detail any facts or circumstances that have resulted in
any representation or warranty made by ATI in SECTION 2.2 hereof no longer being
true and correct in material respects as of such date or any failure of an ATI
Party to comply with any material covenant contained herein.
(d) No Changes. Except as otherwise permitted in this Organization
Agreement or in any Approved Business Plan, until the Phase II Closing, ATI
shall cause the ATI Cellular Subsidiaries and their Subsidiaries not to:
(i) (A) Grant any material increases in the compensation of any
officers or employees engaged in ATI's Cellular Business, except in the ordinary
course of business consistent with past practice, (B) pay or agree to pay any
material employee benefit not required or contemplated by the terms of the ATI
Employee Benefit Programs in effect or identified to USW on the Effective Date,
except as those terms may be modified or new Employee Benefit Programs may be
adopted in the ordinary course of business consistent with past practice, (C)
enter into any new, or materially amend any existing, employment agreement with
any such officer or employee engaged in ATI's Domestic Cellular Business, except
for employment agreements with new employees entered into in the ordinary course
of business consistent with past practice and ATI Employee Benefit Programs
identified to USW prior to the Effective Date, (D) except as may be required to
comply with applicable law, adopt or amend in any material respect any
collective bargaining agreement relating to any employee engaged in ATI's
Domestic Cellular Business, (E) enter into any new, or materially amend any
existing, severance agreement with any officer or employee engaged in ATI's
Domestic Cellular Business except for ATI Employee Benefit Programs identified
to USW before the Effective Date, or (F) become obligated under any new Employee
Benefit Program that was not in existence as of the Effective Date, or amend any
ATI Employee Benefit Program in existence as of the Effective Date if such
amendment would have the effect of enhancing or accelerating any benefits
thereunder, except for ATI Employee Benefit Programs identified to USW before
the Effective Date and for new programs or amendments that (I) may be required
to comply with applicable law or (II) taken together with other actions
involving Employee Benefit Programs, are in the ordinary course of business and
consistent with past practice and do not have a Material Adverse Effect on the
ATI Cellular Subsidiaries and their Subsidiaries, taken as a whole.
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(ii) Adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
(other than a reincorporation of ATI pursuant to which the successor corporation
shall assume all rights and obligations of ATI pursuant to this Organization
Agreement), except in accordance with SECTION 3.2(a)(v) of this Organization
Agreement; provided, however, that in the event of any such merger,
reorganization or restructuring, the certificate of incorporation, by-laws or
other organizational documents of the successor shall be the same as the
certificate of incorporation, by-laws or other organizational documents of the
predecessor in effect on the Effective Date, to the extent legally permissible;
(iii) Adopt any amendments to its certificate of incorporation,
by-laws or partnership agreements or alter through merger, liquidation,
reorganization, restructuring or in any other fashion its corporate or
partnership structure or ownership, except in accordance with SECTION 3.2(a)(v)
of this Organization Agreement; provided, however, that in the event of any such
merger, reorganization or restructuring, the certificate of incorporation,
by-laws or other organizational documents of the successor shall be the same as
the certificate of incorporation, by-laws or other organizational documents of
the predecessor in effect on the Effective Date, to the extent legally
permissible;
(iv) Authorize, declare or pay any dividend or other distribution
to, issue any capital stock or partnership interest to, or cause to or permit
any investment to be made in, ATI by any ATI Cellular Subsidiary or any of its
Subsidiaries, except for distributions or dividends of free cash flow or in
accordance with any Approved Business Plan;
(v) Incur any indebtedness or liabilities other than Permitted
Liabilities or contractual obligations incurred in the ordinary course of
business (other than Material Contracts) or pursuant to SECTION 3.2(d)(vii)
hereof; except in the ordinary course consistent with past practice, make any
advances or capital contributions to any other Person; make any loan to ATI; or
consent to the incurrence of any indebtedness or call for capital contributions
by any ATI Domestic Cellular Subsidiary or ATI Domestic Cellular Investment
Entity;
(vi) Except as provided in SECTION 3.2(f) of this Organization
Agreement or in the WMC Partnership Agreement, sell, assign, pledge, encumber
(except for Permitted Liens) or otherwise transfer any direct or indirect
interest in any material ATI Domestic Cellular Asset, any ATI Party, any ATI
Domestic Cellular Subsidiary, or any ATI Domestic Cellular Investment, without
the prior written consent of the WMC Partnership Committee; provided, however,
that nothing contained in this SECTION 3.2(d)(vi) shall apply to any
distribution of assets of CMT Partners, a Delaware general partnership, in
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accordance with the terms and conditions of the CMT Partners Partnership
Agreement or any transfer by any ATI Party of any interest in New Par or CCI
pursuant to SECTION 9(b) of the Termination Agreement between CCI and AirTouch
California and Section 4.4 of the Amended and Restated Agreement and Plan of
Merger and Joint Venture Organization between CCI and AirTouch California.
(vii) Enter into, assume, terminate, or materially alter any
Material Contract or Related Party Agreement, except in the ordinary course of
business or with the prior written consent of the WMC Management Committee;
(viii) Enter into or consent to any modification or amendment of
any partnership or other agreement or to any sale, exchange or transfer of
assets or other action that would have the effect of delaying the time that any
ATI Phase II Asset or any interest in or assets of New Par could be contributed
to WMC or changing the character or diminishing the value of any ATI Phase II
Asset or interest in or assets of New Par; provided that notwithstanding the
foregoing ATI may enter into an agreement or an amendment of any existing
agreements with CCI that would extend for up to one year the time that any
interest in or assets of New Par could be contributed to WMC; or
(ix) Take any action inconsistent with the consummation of the
Transactions time as contemplated by this Organization Agreement and the Related
Agreements.
(e) Access and Information. To the extent permitted by law and subject
to any restrictions contained in Material Contracts and the ATI Cellular
Partnership Agreements, ATI shall afford to USW such access, during normal
business hours, to books, records (including, without limitation, tax returns
and, if consented to by the independent auditors, work papers of such auditors),
plant and personnel, and to such other information of ATI relating to the ATI
Parties and to ATI's Domestic Cellular Business (except its Tucson Cellular
Interest and any Domestic Cellular Business conducted by any ATI Party in San
Diego, California, prior to divestiture of the San Diego Cellular Property by
NewVector) as USW shall reasonably request, including, without limitation, all
information relating to any transactions governed by the methodology adopted
pursuant to ARTICLES 4 or 5 of this Organization Agreement. ATI agrees to treat,
and will cause its respective accountants, counsel and other representatives to
treat confidentially all nonpublic information concerning the USW Parties
furnished or made available to it in connection with the transactions
contemplated by this Organization Agreement and the Related Agreements, subject
to the requirements of law and the provisions of this Organization Agreement and
the Related Agreements. If this Organization Agreement is terminated prior to
the Phase I Closing, ATI will deliver to USW all documents, work papers and
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other material (including copies) obtained by it in connection herewith, whether
obtained before or after the Effective Date.
(f) Divestiture of Tucson Cellular Interest. ATI agrees to use
reasonable efforts to cause AirTouch Cellular of Arizona to divest itself of the
Tucson Cellular Interest on or before the Phase I Closing or otherwise to obtain
any Authorizations required to permit the Phase I Transactions to occur prior to
a divestiture of the Tucson Cellular Interest, subject to the following
conditions:
(i) ATI shall be solely responsible for the payment of any Taxes
related to the divestiture and any Tax-related penalties or interest thereon.
Promptly after the closing of a transaction (or a series of transactions)
resulting in the divestiture of the Tucson Cellular Interest, ATI shall provide
to USW and WMC a written notice (the "Tucson Notice") stating the amount of the
Tucson Taxes. For purposes of this Section 3.2(f)(i) and Sections 3.1(h),(i) and
(j), "Tucson Taxes" means federal, state and local Taxes incurred in connection
with the divestiture of the Tucson Cellular Interest (exclusive of penalties or
interest), determined using an assumed combined federal, state and local Tax
rate of 40% based on the actual taxable gain recognized for federal income tax
purposes upon such divestiture (adjusted to take into account any refunds or
adjustments made by any federal income taxing authority, other than with respect
to penalties or interest) and determined without regard to the availability of
net operating loss carryforwards or similar tax offsets or benefits, and without
regard to the tax effect of the contribution or payment of any amount pursuant
to this Section 3.2(f) or Sections 3.1(h) through (j) hereof.
(ii) If and when required or advisable to avoid or mitigate any
non-compliance with the MFJ, CECO or EO or any law or regulation of any
Governmental Body or to obtain any necessary Authorizations, ATI agrees to place
its Tucson Cellular Interest in trust pending divestiture on such terms as shall
be approved by the Governmental Bodies having jurisdiction thereof.
(iii) From and after the date of consummation of the exchange, if
any, of the Tucson Cellular Interest for another property or interest, such
property or interest shall be treated for all purposes of this Organization
Agreement as an ATI Phase II Asset and as an ATI Domestic Cellular Asset, ATI
Domestic Cellular Subsidiary or ATI Domestic Cellular Interest, as the case may
be.
(g) Operation of Certain Assets. If and to the extent that ATI, despite
its reasonable efforts, is unable to contribute any ATI Phase II Assets to WMC
at the Phase II Closing in accordance with SECTION 6.3(b)(iii) of this
Organization Agreement, ATI covenants and agrees to continue to
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make reasonable efforts to make such contribution thereafter during Phase II, to
the maximum extent possible without violating the MFJ, CECO, EO or any law, rule
or regulation of any Governmental Body having jurisdiction over WMC or either
Party. The representations and warranties made by ATI with respect to each such
Beneficial Phase II Asset in SECTION 2.2 hereof shall remain true and correct in
all material respects on the date such Beneficial Phase II Asset shall be
contributed to WMC, and ATI shall comply with all covenants contained herein
with respect to the Beneficial Phase II Assets until such Beneficial Phase II
Assets are contributed to WMC.
(h) San Diego Cellular Property. Upon ATI's receipt of the San Diego
Notice, USW and ATI shall use their best good faith efforts to reach agreement
on a form of payment of 50 percent of the San Diego Taxes (the "San Diego Taxes
Payment") which (A) gives USW the full benefit of the San Diego Taxes Payment
(but without any gross-up), (B) minimizes the Tax liability of USW with respect
to such Payment, and (C) improves the ability of ATI to treat such amount as an
investment under its method of accounting. If USW and ATI fail to reach
agreement on the form of such Payment within 30 days of USW's mailing of the San
Diego Notice, ATI shall make the San Diego Taxes Payment in cash to USW upon the
later of the expiration of such 30 day period or the conclusion of the process
described in Section 3.2(i).
(i) In the event that ATI disagrees with USW's calculation of the
amount of San Diego Taxes, ATI may challenge that determination by notifying USW
in writing of the grounds for such disagreement within ten (10) days of ATI's
receipt of the San Diego Notice. USW and ATI shall negotiate in good faith to
resolve such disagreements. If ATI and USW fail to resolve such disagreements,
then the matter will be referred to arbitration in accordance with the
Arbitration Agreement for resolution.
(j) In the event of a determination that San Diego Taxes may be
different than the amount originally used for purposes of Section 3.2(h) and (i)
and Section 3.1(f)(ii), USW shall consult with ATI concerning the audit, appeal,
amended return or other process potentially leading to such redetermination
provided that such redetermination shall be calculated using the assumed tax
rate, disregarding net operating loss carryforwards and similar tax offsets and
benefits, disregarding the tax effect of the contribution or payment of any
amount and disregarding any penalties and interest, all as provided in Section
3.1(f)(ii); and upon any such redetermination becoming final, appropriate
adjustments shall be made among the parties to reflect such redetermination.
3.3 Fiduciary Obligations. The Parties hereto acknowledge that each may
have fiduciary obligations to other Persons, including without limitation
shareholders and partners
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in Domestic Cellular Subsidiaries and Domestic Cellular Investment Entities.
Each Party shall comply with all such fiduciary obligations.
ARTICLE 4
PHASE I CLOSING ADJUSTMENTS
4.1 Cash Flows and Funding Prior to Phase I. During the period from the
Effective Date and ending immediately prior to the Phase I Closing (i) USW shall
be entitled to the cash flows and responsible for the funding requirements
relating to the USW Phase II Assets and the Scheduled Phase II Related Assets,
and (ii) ATI shall be entitled to the cash flows and responsible for the funding
requirements relating to the ATI Phase II Assets, New Par and the Scheduled New
Par Related Asset. Except as otherwise provided in this Agreement, any and all
indebtedness or liabilities incurred by the Parties prior to the Phase I Closing
shall be the sole responsibility of such Party.
4.2 Phase I Closing.
(a) At the Phase I Closing, USW and ATI each shall be responsible for
having increased the Net Asset Value of their respective Phase II Assets (and
with respect to ATI, New Par) by an amount equal to the proforma increase in Net
Asset Value determined in accordance with Schedule 4.2A (with respect to USW) or
Schedules 4.2B and 4.2C (with respect to ATI) for the Phase I Closing.
(i) If there is no date on Schedules 4.2A, 4.2B or 4.2C that is
the same as the Phase I Closing Date, the proforma increase in Net Asset Value
shall be determined by interpolating on a straight line basis the amounts on
Schedules 4.2A, 4.2B or 4.2C from the last date preceding and first date
subsequent to the Phase I Closing.
(ii) The appropriate assumption regarding ATI's ownership of New
Par shall be taken into account for purposes of determining ATI's proforma
increase in Net Asset Value (as set forth on Schedules 4.2B and 4.2C). As long
as the New Par Determination Date has not occurred at the time of the Phase I
Closing, ATI's pro forma increase in Net Asset Value shall be determined by
taking 50% of the pro forma increase in Net Asset Value for New Par (as set
forth on Schedule 4.2C) into account.
(iii) As an example, if the Phase I Closing occurs on September
30, 1995 and, assuming that no New Par Determination Date shall have occurred as
of such date, the proforma increase in Net Asset Value for USW shall be
$302,760,000 and the pro forma increase in Net Asset Value for ATI shall be
$466,888,500 (computed as the sum of $381,793,000 from Schedule 4.2B and
$85,095,500 from Schedule 4.2C).
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(iv) The parties acknowledge and agree that the intent of the
provisions of this Article 4 is for the parties to increase the Net Asset Value
of their Phase II Assets and New Par Assets in the ordinary course of business
and primarily through capital expenditures, and for neither party to be able to
obtain any benefit with respect to WMC or the other party from an artificial
increase in the Net Asset Value of their Phase II Assets or New Par Assets.
(b) Within forty-five (45) business days after the Phase I Closing
Date, each Party's change in Net Asset Value from May 31, 1994 to the Phase I
Closing Date shall be calculated. To the extent that ATI's or USW's change in
Net Asset Value from May 31, 1994 to the Phase I Closing Date is greater than or
less than such Party's proforma increase in Net Asset Value from May 31, 1994 to
the Phase I Closing Date shown on Schedule 4.2A or Schedules 4.2B and 4.2C,
respectively, and in each case as adjusted in accordance with Section 4.3 and,
for ATI, the appropriate assumption as to New Par ownership, each of ATI and USW
shall: (i) if such Party's difference (the "Balance Sheet Differential") is a
negative amount, either (A) contribute cash to WMC in an amount equal to the
absolute value of such Balance Sheet Differential, or (B) make a Balance Sheet
Differential election; or (ii) if such Party's Balance Sheet Differential is a
positive amount, either (A) distribute or dividend cash from such Party's
Domestic Cellular Subsidiaries in an amount equal to such Balance Sheet
Differential, or (B) make a Balance Sheet Differential election.
(c) A Party may make a Balance Sheet Differential election with
respect to all, but (except as provided in the proviso to the second sentence of
clause (i) of this paragraph (c)) not less than all, of a positive or negative
Balance Sheet Differential by delivering a written notice of such election to
WMC and to the other Party within ten (10) days of the date on which each
Party's change in Net Asset Value from May 31, 1994 to the Phase I Closing Date
has been finally determined.
(i) Upon either Party making a Balance Sheet Differential
election, such election shall be taken into account for purposes of calculating
the Initial Percentages of the Parties as of the Phase I Closing Date in
accordance with Section 4.5 hereof. A Balance Sheet Differential election shall
not be available to the extent a Party's positive balance is due to Current
Assets that were generated or retained by such Party (such as through the
incurrence of an Unpermitted Liability) unless such Party can show that it acted
in the ordinary course of business, consistent with past practice; provided,
however, that such Current Assets (not available for a Balance Sheet
Differential election) shall be available for distribution to such Party. The
Parties acknowledge and agree that the general business practice is for each
Party to make daily distributions of all excess cash and to retain only the
amount of cash necessary to operate the business.
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(ii) In the event that any Party makes a Balance Sheet
Differential election, (A) the amount of such Party's Balance Sheet Differential
shall be hereinafter referred to as such Party's "Balance Sheet Differential
Amount," (B) unless the other Party also makes a Balance Sheet Differential
election, such other Party's Balance Sheet Differential Amount shall be zero,
and (C) the amount, positive or negative, equal to the sum of the Balance Sheet
Differential Amounts of both of the Parties shall be hereinafter referred to as
the "Total Differential Election Amount."
(d) For the purposes of this Article 4, the following definitions
shall apply as they relate to Phase II Assets and New Par:
(i) "Net Asset Value" means, for either Party, an amount equal to
the sum of:
(A) Current Assets;
(B) plus: Gross Investment in Property, Plant and Equipment;
(C) less: Current Liabilities.
(ii) "Current Assets" means, for each Party, those assets that are
reasonably expected to be realized in cash or sold or consumed during the normal
operating cycle of the entity or within one year. Except as otherwise provided
herein, Current Assets shall include: cash, cash equivalents, accounts
receivable and associated reserves, pre-paid expenses, inventories, marketable
securities and such other current assets as would reasonably be included under
generally accepted accounting principles, but shall exclude (A) all income tax
balances that existed on May 31, 1994, and exist on the Phase I Closing
including prepaid and deferred income taxes and income taxes receivable, (B)
notes or other amounts receivable from affiliates other than amounts receivable
from Affiliates for transactions conducted on an arm's length basis for direct
services rendered or for payment of operating liabilities on behalf of such
Affiliates and (C) any changes in net Cellular Service and Equipment accounts
receivable balances resulting from any change in the Days Sales Outstanding
ratio as of the Phase I Closing Date from the Days Sales Outstanding ratio as of
May 31, 1994. For the purposes of the preceding sentence, the Days Sales
Outstanding ratio shall equal (x) the net Service and Equipment accounts
receivable balance as of May 31, 1994, or the Phase I Closing, as the case may
be, divided by (y) the average of the service and equipment revenues for the two
months preceding May 31, 1994, or the Phase I Closing, as the case may be. The
parties shall use consistent methodologies and accounts in the calculation of
the Day Sales Outstanding ratio.
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(iii) "Gross Investment in Property, Plant and Equipment" means,
for each Party, such Party's gross investment in those assets that are tangible,
relatively long-lived and necessary to generate future cash flows or for the
ongoing operation of the business. Gross property plant and equipment includes
land, buildings, leasehold improvements, cellular plant and switching,
transmission, furniture, computer systems, construction-in-process, software,
office equipment, cellular and other telephone equipment and such other elements
as would reasonably be included under generally accepted accounting principles
but shall exclude capitalized interest incurred after May 31, 1994 and any
write-up of asset values. Depreciation and amortization are excluded from this
balance. In addition, the gross investment in all property, plant and equipment
sold or otherwise disposed of in the ordinary course of business during the
period from May 31, 1994 to the Phase I Closing Date shall be added back in
determining gross property plant and equipment at the Phase I Closing Date;
provided, however, that (A) an amount equal to the net receivables or proceeds
resulting from any such sales or disposals shall be deducted in determining the
Net Asset Value at the Phase I Closing Date, and (B) all cash and non-cash
consideration received from such sale or disposal shall be treated for all other
purposes of this Organization Agreement as a Phase II Asset of the Party making
such sale or disposal (except that such consideration received from any sale or
disposal of any property, plant or equipment of New Par shall be treated for all
other purposes of this Organization Agreement as an asset of New Par).
(iv) "Current Liabilities" means, for each Party, obligations that
are expected to be satisfied either by the use of Current Assets or by the
creation of other Current Liabilities within one year. Current Liabilities shall
also include accounts payable, unearned revenue and customer deposits, accrued
liabilities for equipment, services, employee compensation and benefits and
shall exclude (A) notes payable and capital lease obligations (including amounts
related to borrowing, indebtedness and accrued interest), (B) all income tax
balances (including deferred taxes and income taxes payable), and (C) any
amounts payable to Affiliates, except that amounts payable to Affiliates for
transactions conducted on an arm's length basis for direct services rendered or
for payment of operating liabilities on behalf of USW or ATI such as payment of
the Parties' state and local taxes, insurance or other direct operating expenses
shall not be excluded.
(e) Notwithstanding anything to the contrary in this Article 4, the
Net Asset Value of USW and ATI shall not reflect any effects or changes that are
attributable to any of the following:
(i) such Party's failure to operate its business in accordance
with Section 3.1(b) or Section 3.2(b),
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respectively, or otherwise to operate its business in the ordinary course and
consistent with past practice,
(ii) any Scheduled Phase II Related Asset or any Scheduled New Par
Related Asset,
(iii) any reimbursement made in connection with any Reimbursed
Expense (it being understood that Schedules 4.2A, 4.2B and 4.2C should not
reflect the effects of any such Reimbursed Expense), and
(iv) all balances related to income taxes, including income taxes
payable, receivable, prepaid or deferred.
(f) The calculation of the increase in Net Asset Value shall be
determined from fully proportional balance sheets for each Party for May 31,
1994 and the Phase I Closing Date. Notwithstanding anything herein to the
contrary, the balance sheets for the Phase I Closing Date shall reflect a
consistent application of accounting principles and methods from May 31, 1994 to
the Phase I Closing.
(g) The appropriate assumption regarding ATI's ownership of New Par
shall be taken into account for purposes of determining Net Asset Value of ATI
for May 31, 1994 and the Phase I Closing. As long as the New Par Determination
Date has not occurred at the time of the Phase I Closing, 50% of New Par shall
be taken into account for purposes of calculating the Net Asset Value of ATI for
May 31, 1994 and the Phase I Closing.
(h) The Parties shall mutually agree on the specific methodology for
determining the Net Asset Value as of May 31, 1994 and such methodology shall be
used to calculate each Party's Net Asset Value as of the Phase I Closing. Each
Party shall prepare a schedule that shows such Party's calculation of Net Asset
Value as of May 31, 1994 and shall present such schedule (along with any
workpapers or other supporting documents) to the other Party prior to the Phase
I Closing Date. Each Party shall prepare a schedule that shows such Party's
calculation of Net Asset Value as of the Phase I Closing Date and shall present
such schedule (along with any workpapers or other supporting documents) within
twenty (20) business days after the Phase I Closing Date. In each case, each
Party shall have a right to review the calculations used to determine the other
Party's schedule required hereunder and request adjustments based on such review
or the Independent Third Party review pursuant to Section 4.4.
(i) The Parties acknowledge and agree that the specific methodology to
be used by both Parties to calculate Net Asset Value as of May 31, 1994 and as
of the Phase I Closing (as well as the pro forma increase in Net Asset Value)
should be consistent. If the Parties have used inconsistent methodologies, the
Parties will use reasonable best efforts to
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agree to a consistent methodology and to make the appropriate adjustments to the
Net Asset Values as of May 31, 1994, the pro forma increase thereto, and the Net
Asset Values as of the Phase I Closing to reflect such consistent methodology.
(j) In determining Net Asset Value, each Party's non-managed property
interests shall be accounted for on a fully proportional basis; provided,
however, that if the necessary financial information for any non-managed
property is not available as of any date on which Net Asset Value is to be
calculated, the financial information related to such non-managed property used
in the calculation of Net Asset Value shall be determined by interpolating on a
straight line basis the financial information from the closest date preceding
and the closest date subsequent to such date for which the necessary information
is available.
(k) Any assets (other than New Par) included for purposes of
calculating Net Asset Value of any Party shall be treated as Phase II Assets of
such Party for all purposes of this Organization Agreement (including Article 5
hereof) and accordingly shall in no event be used to satisfy any Unpermitted
Liability of such Party, distributed as a dividend to such Party or otherwise be
used in a manner inconsistent with the use of such Party's Phase II Assets;
provided, however, that the foregoing shall not apply to any cash distributed by
a Party pursuant to subparagraph (A) of clause (ii) of the last sentence of
Section 4.2(b)).
4.3 Special Provisions relating to the San Diego Cellular Property and the
Tucson Cellular Interest. As the change in Net Asset Values calculated under
Section 4.2 above includes the effects of USW's San Diego Cellular Property and
ATI's Tucson Cellular Interest, and since each of USW and ATI intends to sell or
dispose of such properties, this Section 4.3 sets forth the adjustments to the
Net Asset Values to be calculated under Section 4.2 to reflect the sale or other
disposition of the San Diego Cellular Property and the Tucson Cellular Interest.
(a) Upon the sale or other disposition (or deposit in a trust pending
sale) of the San Diego Cellular Property and the Tucson Cellular Interest,
Schedules 4.2A and 4.2B shall be adjusted to remove the effects of the San Diego
Cellular Property and the Tucson Cellular Interest on the increases in Net Asset
Values set forth therein, and such adjustments shall occur prior to determining
a Party's Balance Sheet Differential under Section 4.2 above. Any effect of the
San Diego Cellular Property, the Tucson Cellular Interest or any properties or
interests acquired in exchange for the San Diego Cellular Property shall not be
taken into account for purposes of determining Net Asset Value as of May 31,
1994 or as of the Phase I Closing.
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(b) Any cash proceeds from the sale or other disposition of the San
Diego Cellular Property or the Tucson Cellular Interest shall be:
(i) managed by the recipient at the unanimous direction of the WMC
Partnership Committee;
(ii) separately maintained and tracked in the accounting records
of USW or ATI;
(iii) upon the Phase II Closing, contributed, along with any
interest earned or dividends received, to WMC as part of the capital
contribution of USW, with respect to proceeds from the sale or other disposition
of the San Diego Cellular Property, and of ATI with respect to proceeds from the
sale or other disposition of the Tucson Cellular Interest; and
(iv) if this Agreement terminates prior to the Phase II Closing,
returned to the sole control of USW, along with any interest earned or dividends
received, with respect to the proceeds of the sale or other disposition of the
San Diego Cellular Property, and returned to the sole control of ATI, along with
any interest earned or dividends received, with respect to the proceeds of the
sale or other disposition of the Tucson Cellular Interest.
(c) The sale or disposition of the San Diego Cellular Property or the
Tucson Cellular Interest shall not cause or result in any adjustment to
Schedules 4.5A or 4.5B attached hereto.
4.4 Independent Third Party Verification.
(a) At the earliest practicable date, and in no event later than
October 31, 1995, USW and ATI shall mutually agree upon an independent third
party accounting firm of national standing and/or such other consultant familiar
with the cellular industry (an "Independent Third Party") to (i) verify the
calculations in Section 4.3(a) above, and (ii) verify that the projections for
San Diego and Tucson used to develop Schedule 4.5A were fair and reasonable.
Each of USW and ATI shall provide such Independent Third Party with all
information necessary to make all such verifications by December 15, 1995. The
costs and fees of such Independent Third Party shall be shared equally by the
Parties. The parties acknowledge and agree that if the Independent Third Party
concludes that the calculations in Sections 4.3(a) above are incorrect, there
shall be (i) a recalculation of Section 4.3(a) based upon the findings of the
Independent Third Party, and (ii) an appropriate adjustment to Schedule 4.5A.
(b) Either Party may request that any other calculation or
determination required under this Article 4 or
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under Article 5 also be performed by such Independent Third Party, the costs and
fees of which shall be shared equally among the Parties (as long as, for
purposes of sharing costs and fees, both Parties agree upon the scope and cost
of the calculation or determination to be performed by such Independent Third
Party, with such agreement not to be unreasonably withheld).
4.5 Initial Phase II Asset Percentages. Each Party's relative percentage
interest in the cash flow attributable to the Phase II Assets, the Scheduled
Phase II Related Assets, New Par and the Scheduled New Par Related Asset as of
the Phase I Closing shall be determined in accordance with this Section 4.5.
Such relative percentage interests shall be determined within five (5) days of
the date when the parties no longer have the ability to make Balance Sheet
Differential elections pursuant to Section 4.2(c) and such relative percentage
interests as of the Phase I Closing shall be used for purposes of the
calculation of the relative Phase II Closing Percentages of the Parties as set
forth in Article 5. In general, three alternative computations of such relative
percentage interests are to be made as of the Phase I Closing Date to reflect
three different assumptions as to ATI's ownership of New Par (based on ATI's
potential ownership of 100%, 50% or no portion of New Par) and, as set forth
herein, such New Par assumptions generally affect values and percentages that
are to be used as the basis for such calculations.
(a) First, three sets of "Tentative Initial Percentages" shall be
identified as of the Phase I Closing in accordance with Schedule 4.5A attached
hereto and based on three different assumptions as to New Par ownership. The
first set of Tentative Initial Percentages shall be the "Tentative Initial
Percentage-100% New Par" and shall be based on the assumption that ATI shall
contribute 100% of New Par. The second set of Tentative Initial Percentages
shall be the "Tentative Initial Percentage-50% New Par" and shall be based on
the assumption that ATI shall contribute 50% of New Par. The third set of
Tentative Initial Percentages shall be the "Tentative Initial Percentage-No New
Par" and shall be based on the assumption that ATI shall contribute no interest
in New Par. In the event that there is no date on Schedule 4.5A with the same
date as the Phase I Closing Date, the Tentative Initial Percentages shall be
determined by interpolating on a straight line basis the percentages on Schedule
4.5A from the last date preceding and first date subsequent to the Phase I
Closing Date and closest in time thereto. As an example, if the Phase I Closing
occurs on September 30, 1995, no interpolation shall be necessary and (assuming
Schedule 4.5A is not adjusted pursuant to Section 4.3 hereof) for ATI and USW,
the Tentative Initial Percentages-100% New Par shall be 73.9301% and 26.0699%,
respectively, the Tentative Initial Percentages-50% New Par shall be 69.8117%
and 30.1883%, respectively and the Tentative Initial Percentages-No New Par
shall be 64.1490% and 35.8510%, respectively.
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(b) Second, three alternative "Phase I Closing Values" shall be
determined as of the Phase I Closing as follows:
(i) The first step in determining the Phase I Closing Values shall
be to identify (A) the "Assumed Phase II Assets Value" which shall be the value
indicated on Schedule 4.5B, and (B) the "Assumed New Par Assets Value" which
shall be equal to the product of (I) 38.712%, and (II) the Assumed Phase II
Assets Value. The Parties acknowledge and agree that such Assumed Values are
only a basis to be used for the computations set forth in this Article 5 and are
not intended to reflect the true value of the Phase II Assets or New Par.
(ii) The second step in determining the Phase I Closing Values
shall be to calculate three alternative "Initial Values" by reference to the
Assumed Phase II Assets Value and the Assumed New Par Assets Value and based on
the three different assumptions as to New Par ownership.
(A) The first Initial Value shall be the "Initial Value-100%
New Par" and shall be equal to the Assumed Phase II Assets Value plus 100% of
the Assumed New Par Assets Value.
(B) The second Initial Value shall be the "Initial Value-50%
New Par" and shall be equal to the Assumed Phase II Assets Value plus 50% of the
Assumed New Par Assets Value.
(C) The third Initial Value shall be the "Initial Value-No
New Par" and shall be equal to the Assumed Phase II Assets Value.
(iii) The third step in determining the three alternative Phase I
Closing Values shall be to calculate such values as the three alternative
Initial Values, in each case, accreted at the rate of 12% per annum from July
25, 1994 to the Phase I Closing Date. Such Initial Values as so accreted shall
be referred to respectively as the "Phase I Closing Value-100% New Par," the
"Phase I Closing Value-50% New Par" and the "Phase I Closing Value-No New Par."
(c) Third, three sets of alternative "Initial Percentages" shall be
computed as of the Phase I Closing based on the three different assumptions as
to New Par ownership as follows. In each case, such Initial Percentages shall
take into account the Scheduled New Par Related Asset.
(i) The first set of Initial Percentages shall be the "Initial
Percentages-100% New Par" and, for each Party, shall be determined as the
quotient obtained by dividing (xx) such Party's Restated Phase I Closing Assets
by (yy) the aggregate Restated Phase I Closing Assets of both of the
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Parties. For purposes of this determination, the "Restated Phase I Closing
Assets" shall mean, for each Party, the sum of (A) the product of (I) such
Party's Tentative Initial Percentage-100% New Par, and (II) the Phase I Closing
Value-100% New Par, plus or minus, (B) such Party's Differential
Election Amount, plus (C) for ATI, the Scheduled NPRA 12% Value of the
Scheduled New Par Related Asset as determined as of the Phase I Closing.
(ii) The second set of Initial Percentages shall be the Initial
Percentage-50% New Par and shall be computed in the manner described in clause
(i) except that (A) such Party's Tentative Initial Percentage-50% New Par shall
be used in place of such Party's Tentative Initial Percentage-100% New Par, (B)
the Phase I Closing Value-50% New Par shall be used in place of the Phase I
Closing Value-100% New Par, and (C) 50% (rather than 100%) of the Scheduled NPRA
12% Value as determined as of the Phase I Closing shall be taken into account.
(iii) The third set of Initial Percentages shall be the Initial
Percentage-No New Par and shall be computed in the manner described in clause
(i) except that (A) such Party's Tentative Initial Percentage-No New Par shall
be used in place of such Party's Tentative Initial Percentage-100% New Par, (B)
the Phase I Closing Value-No New Par shall be used in place of the Phase I
Closing Value-100% New Par, and (C) no portion (rather than 100%) of the
Scheduled NPRA 12% Value shall be taken into account.
(d) Examples 2 and 3 of Exhibit A, attached hereto, reflect some of
the basic calculations set forth in this Section 4.5.
4.6 Dispute Resolution. If the Parties are unable to agree on the
adjustments to be made under this Article 4, including the adjustments to be
made to reflect the findings of the Independent Third Party pursuant to Section
4.4, the Parties shall follow the dispute resolution procedures set forth in
Section 5.14.
ARTICLE 5
PHASE II CLOSING PERCENTAGES
5.1 Cash Flows and Funding Prior to Phase II.
(a) During Phase I (i) USW shall be entitled to the cash flows and
responsible for the funding requirements relating to the USW Phase II Assets and
the Scheduled Phase II Related Assets, and (ii) ATI shall be entitled to the
cash flows and responsible for the funding requirements relating to the ATI
Phase II Assets, New Par, and the Scheduled New Par Related Asset.
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(b) Except as otherwise provided herein, any and all indebtedness or
liabilities incurred by the Parties prior to the Phase II Closing shall be the
sole responsibility of such Party. USW and ATI shall make every reasonable
effort to have any and all indebtedness or liabilities outstanding as of the
Phase I Closing Date and incurred in connection with such Party's Phase II
Assets (and for USW, Scheduled Phase II Related Assets) other than any
indebtedness and liabilities of the type allowed pursuant to Section 3.1(d)(v)
or Section 3.2(d)(v), respectively, repaid as soon as reasonably practicable and
in all events prior to the Phase II Closing.
5.2 Basic Principles for Phase II Closing Percentages. This Section 5.2 is
intended to provide general guidelines with respect to certain basic principles
that govern the process to be used to determine the relative Phase II Closing
Percentages of the Parties as of the Phase II Closing. Section 5.3 sets forth
general guidelines with respect to certain additional principles which are also
to be taken into account in determining such Phase II Closing Percentages.
Specific guidelines for computing the relative Phase II Closing Percentages
(based upon the general principles referred to in this Section 5.2 and Section
5.3) are set forth in Sections 5.4 through 5.10 hereof and Section 5.12 hereof.
(a) During Phase I (i) USW shall be entitled to the cash flows and
responsible for the funding requirements relating to the USW Phase II Assets and
the Scheduled Phase II Related Assets, and (ii) ATI shall be entitled to the
cash flows and responsible for the funding requirements relating to the ATI
Phase II Assets, New Par, and the Scheduled New Par Related Asset.
(b) The percentage interests of the Parties in the cash flows
(positive or negative) attributable to the Phase II Assets and New Par are
initially determined at the Phase I Closing in accordance with Section 4.5 and
the schedule set forth therein (i.e., with such initial percentages determined
by reference to the time of the Phase I Closing and after taking into account
certain additional complicating factors, as generally described in Section 5.3).
(c) Cash flows for Phase II Assets, Scheduled Phase II Related Assets,
New Par, and the Scheduled New Par Related Asset are recorded quarterly and
generally serve as the basis for computing adjustments to the initial percentage
interests (established as of the Phase I Closing) as follows, in each case, as
modified to take into account additional complicating factors (as generally set
forth in Section 5.3):
(i) For each quarter of Phase I, a cash flow adjustment amount is
calculated for each Party as follows. For USW the quarterly cash flow adjustment
amount shall be the difference between (A) the quarterly cash flow attributable
to
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USW's Phase II Assets and the Scheduled Phase II Related Assets, and (B) the
product of (1) USW's percentage interest in cash flows (generally as determined
by reference to its initial percentage interest for the first quarter and to its
restated percentage interest for each quarter thereafter), and (2) the aggregate
quarterly cash flows of both Parties attributable to the Phase II Assets, the
Scheduled Phase II Related Assets, and ATI's share of New Par and the Scheduled
New Par Related Asset. For ATI the quarterly cash flow adjustment amount shall
be the difference between (A) the quarterly cash flow attributable to ATI's
Phase II Assets and ATI's share of New Par and the Scheduled New Par Related
Asset and (B) the product of (1) ATI's percentage interest in cash flows
(generally as determined by reference to its initial percentage interest for the
first quarter and to its restated percentage interest for each quarter
thereafter), and (2) the aggregate quarterly cash flows of both Parties
attributable to the Phase II Assets, the Scheduled Phase II Related Assets, and
ATI's share of New Par and the Scheduled New Par Related Asset.
(ii) For each quarter of Phase I, the cash flow adjustment amount
is converted into a percentage (an "incremental percentage") of the total value
of the Phase II Assets, the Scheduled Phase II Related Assets, New Par and the
Scheduled New Par Related Asset (with such values accreting at the rate of 12%
per annum).
(iii) For each quarter of Phase I, the Party with a negative cash
flow adjustment amount for such quarter shall be identified and the incremental
percentage for such quarter shall be added to such Party's restated percentage
interest as of such quarter (and subtracted from the other Party's restated
percentage interest as of such quarter) in order to obtain the restated
percentage interests for the Parties that will apply for the following quarter.
(iv) The percentage interests of the Parties are revised and
restated pursuant to this process for each quarter of Phase I and such quarterly
revisions are cumulative until Phase II Closing Percentages are calculated at
the Phase II Closing (generally by adding or subtracting, as appropriate, the
incremental percentage determined for the final quarter of Phase I to the
restated percentage interests of the Parties as of such final quarter).
5.3 Additional Principles for Phase II Closing Percentages. Section 5.2 sets
forth the general guidelines with respect to certain basic principles that
govern the process to be used to determine the relative Phase II Closing
Percentages of the Parties as of the Phase II Closing. This Section 5.3 sets
forth the general guidelines with respect to certain additional principles that
complicate such determination but are nevertheless to be taken into account.
Specific guidelines for computing such Phase II Closing Percentages (based upon
the
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general principles set forth in Section 5.2 and this Section 5.3) are set forth
in Sections 5.4 through 5.10 hereof and Section 5.12 hereof.
(a) In general, three alternative computations are to be made
initially (as described in Section 4.5) and for each quarter of Phase I to
reflect three different assumptions as to ATI's ownership of New Par (based on
ATI's potential ownership of 100%, 50% or no portion of New Par).
(i) Such New Par assumptions generally affect values, percentages
and cash flows to be used for each quarterly calculation.
(A) If a New Par Contribution Date occurs at the time of the
Phase II Closing, initial and quarterly assumptions based on ATI's 100%
ownership of New Par are used to determine Phase II Closing Percentages.
(B) If a Back End Termination Date occurs prior to or on the
Phase II Closing, initial and quarterly assumptions based on ATI's ownership of
no portion of New Par are used to determine Phase II Closing Percentages.
(C) If the New Par Determination Date has not occurred at the
time of the Phase II Closing, initial and quarterly assumptions based on ATI's
50% ownership of New Par are used to determine Phase II Closing Percentages.
(ii) The Scheduled New Par Related Asset is to be taken into
account as of the Phase I Closing based on the appropriate New Par assumption
(ownership of 100%, 50% or no portion, as the case may be).
(iii) If the New Par Determination Date occurs after the Phase II
Closing, revised Phase II Closing Percentages are computed, but only for
purposes of determining the Parties' revised percentage interests in WMC cash
flows after the New Par Determination Date.
(b) In the event that either Party has made a Balance Sheet
Differential Election, the initial percentage interests of the Parties are
restated as of the Phase I Closing in the manner described in Section 4.5.
(c) The initial percentage interests of the Parties shall be restated
as of the Phase I Closing in the manner described in Section 4.5 to take into
account the Scheduled New Par Related Asset.
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(d) Scheduled Phase II Related Assets are contributed to WMC at the
Phase II Closing. At such time, ATI can elect to either (i) contribute cash in
an amount so as to avoid dilution, or (ii) have the final percentage interests
of the Parties in the Phase II Assets restated as of the Phase II Closing to
take into account USW's contribution of the Scheduled Phase II Related Assets.
5.4 Phase II Closing Percentages. Promptly after the Phase II Closing (and
in no event later than forty-five (45) days after the Phase II Closing), the
"Phase II Closing Percentages" of each Partner shall be determined as follows:
(a) In the event that the New Par Contribution Date occurs at the time
of the Phase II Closing, each Party's Phase II Closing Percentage shall be equal
to the Phase II Closing Percentage-100% New Par determined for the date of the
Phase II Closing for such Party pursuant to Section 5.7.
(b) In the event that the New Par Determination Date has not occurred
at the time of the Phase II Closing, each Party's Phase II Closing Percentage
shall be equal to the Phase II Closing Percentage-50% New Par determined for the
date of the Phase II Closing for such Party pursuant to Section 5.7.
(c) In the event that a Back End Termination Date occurs prior to (or
on) the Phase II Closing, each Party's Phase II Closing Percentage shall be
equal to the Phase II Closing Percentage-No New Par determined for the date of
the Phase II Closing for such Party pursuant to Section 5.7.
(d) In the event that the New Par Determination Date has not occurred
at the time of the Phase II Closing, all three sets of Phase II Closing
Percentages shall be determined for the date of the Phase II Closing pursuant to
Section 5.7 and shall be recorded and retained by the Parties until the time
that the Phase II Closing Percentages are redetermined in accordance with
Section 5.5.
(e) Each Party shall have the right to review the calculations used to
determine the Phase II Closing Percentages, including quarterly Cash Flow
computations (as set forth in Section 5.8) and to request adjustments based on
such review or the Independent Third Party review (pursuant to Section 4.4).
5.5 Restated Phase II Closing Percentages.
(a) In the event that the New Par Determination Date occurs after the
Phase II Closing, the applicable "Phase II Closing Percentages" of the Parties
shall be redetermined as of the New Par Determination Date as follows:
(i) In the event a New Par Contribution Date occurs subsequent to
the Phase II Closing, each Party's Phase II
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Closing Percentage applicable as of such New Par Contribution Date shall be
equal to the Phase II Closing Percentage-100% New Par determined for the date of
the Phase II Closing for such Party and recorded pursuant to Section 5.4(d).
(ii) In the event that a Back End Termination Date occurs
subsequent to the Phase II Closing, each Party's Phase II Closing Percentage
applicable as of such Back End Termination Date shall be equal to the Phase II
Closing Percentage-No New Par determined for the date of the Phase II Closing
for such Party and recorded pursuant to Section 5.4(d).
(b) Such Phase II Closing Percentages are one factor in the
calculation used to determine the relative Percentage Interests of the Parties
in WMC as of such New Par Determination Date (with such Percentage Interests to
be computed in accordance with Section 4.9 of the WMC Partnership Agreement).
5.6 Phase I Quarterly Computations. To provide a basis for the
determination of Phase II Closing Percentages in Section 5.4 and the
redetermination of Phase II Closing Percentages in Section 5.5, three sets of
"Quarterly Percentages" (based on the three different assumptions as to New Par
ownership) shall be computed for each fiscal quarter of Phase I (by reference to
the immediately preceding fiscal quarter) and for the Phase II Closing (by
reference to the final quarter of Phase I), in each case, as follows:
(a) First, for each fiscal quarter of Phase I, three sets of
"Quarterly Adjustment Amounts" shall be computed for the Parties.
(i) The first set of Quarterly Adjustment Amounts shall be the
"Quarterly Adjustment Amounts-100% New Par" and shall be determined for each
Party as the difference between (A) the Cash Flow for such Party set forth in
such Party's Quarterly Record for such quarter (as retained in accordance with
Section 5.9 and, with respect to ATI, as determined by reference to the ATI
Record-100% New Par), and (B) the product of (I) such Party's Quarterly
Percentage-100% New Par (determined in accordance with paragraph (d) hereof) for
such quarter, and (II) the aggregate Cash Flow for both Parties as set forth in
the Quarterly Records for such quarter (determined for ATI by reference to the
ATI Record-100% New Par).
(ii) The second set of Quarterly Adjustment Amounts shall be the
"Quarterly Adjustment Amounts-50% New Par" and shall be computed in the manner
described in clause (i) except that (A) Cash Flow for ATI (and aggregate Cash
Flow for both Parties) shall be determined by reference to the ATI Record-50%
New Par rather than the ATI Record-100% New Par, and (B) a Party's Quarterly
Percentage-50% New Par shall be used in place of the Party's Quarterly
Percentage-100% New Par,
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(iii) The third set of Quarterly Adjustment Amounts shall be the
"Quarterly Adjustment Amounts-No New Par" and shall be computed in the manner
described in clause (i) except that (A) Cash Flow for ATI (and aggregate Cash
Flow for both Parties) shall be determined by reference to the ATI Record-No New
Par rather than the ATI Record-100% New Par, and (B) a Party's Quarterly
Percentage-No New Par shall be used in place of the Party's Quarterly
Percentage-100% New Par,
(b) Second, for each fiscal quarter of Phase I, three "Incremental
Percentages" shall be determined as follows.
(i) The first Incremental Percentage shall be the "Incremental
Percentage-100% New Par" and shall be determined as the quotient obtained by
dividing (A) the positive Quarterly Adjustment Amount-100% New Par (determined
in accordance with paragraph (a) of this Section 5.6) for such quarter, by (B)
the Quarterly Value-100% New Par (determined in accordance with Section 5.10(a))
for such quarter,
(ii) The second Incremental Percentage shall be the "Incremental
Percentage-50% New Par" and shall be determined as the quotient obtained by
dividing (A) the positive Quarterly Adjustment Amount-50% New Par for such
quarter, by (B) the Quarterly Value-50% New Par (determined in accordance with
Section 5.10(b)) for such quarter,
(iii) The third Incremental Percentage shall be the "Incremental
Percentage-No New Par" and shall be determined as the quotient obtained by
dividing (A) the positive Quarterly Adjustment Amount-No New Par for such
quarter, by (B) the Quarterly Value-No New Par (determined in accordance with
Section 5.10(c)) for such quarter,
(c) Third, for the first fiscal quarter of Phase I, each Party's
Quarterly Percentage-100% New Par shall be equal to its Initial Percentage-100%
New Par (as determined in accordance with Section 4.5(c)(i)), each Party's
Quarterly Percentage-50% New Par shall be equal to its Initial Percentage-50%
New Par (as determined in accordance with Section 4.5(c)(ii)), and each Party's
Quarterly Percentage-No New Par shall be equal to its Initial Percentage-No New
Par (as determined in accordance with Section 4.5(c)(iii)).
(d) Fourth, for each fiscal quarter of Phase I after the first fiscal
quarter, by reference to the immediately preceding fiscal quarter of Phase I,
and for the date of the Phase II Closing, by reference to the final quarter of
Phase I (with such immediately preceding fiscal quarter or final quarter of
Phase I, as the case may be, hereinafter referred to as the "Preceding
Quarter"), three sets of "Quarterly Percentages" shall be determined for the
Parties as follows:
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(i) The first set of Quarterly Percentages shall be the "Quarterly
Percentages-100% New Par" and shall be computed (A) for the Party whose
Quarterly Adjustment Amount-100% New Par for the Preceding Quarter (as
determined in accordance with paragraph (a) of this Section 5.6) was positive,
by subtracting the Incremental Percentage-100% New Par determined (in accordance
with paragraph (b) of this Section 5.6) for such Preceding Quarter from such
Party's Quarterly Percentage-100% New Par (as determined in accordance with this
Section 5.6(d)) for such Preceding Quarter, and (B) for the Party whose
Quarterly Adjustment Amount-100% New Par for the Preceding Quarter was negative,
by adding the Incremental Percentage-100% New Par determined for such Preceding
Quarter to such Party's Quarterly Percentage-100% New Par (as determined in
accordance with this Section 5.6(d)) for such Preceding Quarter),
(ii) The second set of Quarterly Percentages shall be the
"Quarterly Percentages-50% New Par" and shall be computed in the manner set
forth in clause (i) except that (A) a Party's Quarterly Adjustment Amount-50%
New Par shall be used in place of the Party's Quarterly Adjustment Amount-100%
New Par, (B) the Incremental Percentage-50% New Par shall be used in place of
the Incremental Percentage-100% New Par, and (C) a Party's Quarterly
Percentage-50% New Par shall be used in place of the Party's Quarterly
Percentage-100% New Par,
(iii) The third set of Quarterly Percentages shall be the
"Quarterly Percentages-No New Par" and shall be computed in the manner set forth
in clause (i) except that (A) a Party's Quarterly Adjustment Amount-No New Par
shall be used in place of the Party's Quarterly Adjustment Amount-100% New Par,
(B) the Incremental Percentage-No New Par shall be used instead of the
Incremental Percentage-100% New Par, and (C) a Party's Quarterly Percentage-No
New Par shall be used in place of the Party's Quarterly Percentage-100% New Par.
(c) Example 4 of Exhibit A, attached hereto, reflects some of the
basic calculations set forth in this Section 5.6.
5.7 Phase II Closing Percentages. For the date of the Phase II Closing, the
three sets of "Phase II Closing Percentages" shall be determined for the Parties
as follows:
(a) If, ATI contributes to the capital of WMC cash (or a note) in an
amount equal to the PIIRA LIBOR+ Adjustment in accordance with Sections 5.12(b)
and (c) hereof, then each Party's Phase II Closing Percentage-100% New Par shall
be equal to its Quarterly Percentage-100% New Par, each Party's Phase II Closing
Percentage-50% New Par shall be equal to its Quarterly Percentage-50% New Par,
and each Party's Phase II Closing Percentage-No New Par shall be equal to its
Quarterly Percentage-No New Par (in each case, with such Party's Quarterly
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Percentages determined as of the Phase II Closing in accordance with Section
5.6(d)).
(b) If, ATI invokes a Scheduled PIIRA Redetermination Procedure, then
the three sets of Phase II Closing Percentages as of the Phase I Closing shall
be redetermined in the manner described in Section 5.12.
5.8 Cash Flow.
(a) The general intent of this Section 5.8 is to calculate free cash
flow while (i) excluding the impact of all payments made or expenses incurred
with respect to financing and debt, (ii) excluding all impacts from acquisitions
and dispositions of domestic cellular licenses, businesses and business units,
and (iii) assuming that each Party has a 40% income tax rate with no book to tax
adjustments.
(b) For purposes of this Article 5 (including the computation set
forth under Section 5.6), "Cash Flow" derived from any Phase II Asset, New Par,
any Scheduled Phase II Related Asset or the Scheduled New Par Related Asset
generally means, for any period, an amount equal to the sum of:
(i) pre-tax net income or loss,
(ii) plus interest expense and any other costs related to
indebtedness charged to income,
(iii) plus any impact or expense related to any affiliate
contracts or any expenses allocable from the parent company
of one of the Partners except to the extent such contracts
or expenses have been approved by the WMC Partnership
Committee in the manner set forth in Section 2.16(a) of the
WMC Partnership Agreement (such unapproved contracts or
expenses, "Affiliate Contracts"), if such impacts or
expenses are charged to income,
(iv) plus expenses incurred in connection with a Party's failure
to operate its business in accordance with Section 3.1(b) or
Section 3.2(b), as the case may be, or that relate to the
period prior to the Phase I Closing, including but not
limited to, any controversy, litigation, penalty or fine
assessed by a regulatory agency that relate to the period
prior to the Phase I Closing ("Exceptional Items") if the
expense for such Exceptional Item is charged to income,
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(v) plus expenses attributable to Reimbursed Expenses or
Transition Bonuses if such expenses are charged to income,
(vi) minus revenues attributable to Exceptional Items if such
revenues are credited to income,
(vii) minus revenues (or expense relief) attributable to
Reimbursed Expenses if such revenues or expense relief are
credited to income,
(viii) minus 40% of the sum (positive or negative) obtained by
adding the amounts set forth in clauses (i) through (vii)
above,
(ix) plus depreciation and amortization charged to income,
(x) plus non-cash charges to income where the offsetting entry
does not impact working capital,
(xi) minus non-cash credits to income where the offsetting entry
does not impact working capital,
(xii) plus decreases in working capital, or
(xiii) minus increases in working capital, it being understood
that working capital changes calculated for purposes of
clause (xii) or this clause (xiii) shall exclude any
impacts related to (A) payments, payables, prepayments,
deferrals, or distributions with respect to Unpermitted
Liabilities, (B) Reimbursed Expenses, Transition Bonuses,
or Affiliate Contracts, or (C) accrued, prepaid or deferred
interest, income taxes or dividends,
(xiv) minus capital expenditures,
(xv) minus expenditures that create tangible non-current assets
or prepaids,
(xvi) minus capital contributions to Excluded Minority Interests
as described in paragraph (h),
(xvii) plus distributions received from Excluded Minority
Interests as described in paragraph (h),
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(xviii) minus expenditures for long-lived intangible assets if
such expenditures were approved by the WMC Partnership
Committee.
(c) Cash Flow shall be determined in accordance with GAAP accounting
principles and presented on a fully proportional basis.
(d) Any revenues, expenses, profits and losses from MFJ Restricted
Activities shall be excluded from the determination of Cash Flow and for all
purposes under this Article 5.
(e) In each case, the items set forth in paragraph (b) shall only be
taken into account as they relate to any Phase II Asset, New Par, any Scheduled
Phase II Related Asset or the Scheduled New Par Related Asset, as the case may
be, for the period for which such Cash Flow is being computed. Any item set
forth in paragraph (b), as it relates to any asset for any period, should only
be counted once (and any repetitive descriptions of the same item should be
ignored).
(f) Impacts related to acquisitions and dispositions of domestic
cellular licenses, businesses and business units shall not be taken into account
for purposes of determining Cash Flow.
(g) Impacts related to payments, payables, prepayments, deferrals,
expenses, or distributions with respect to Unpermitted Liabilities or any income
tax payment or receipt (and other similar direct account changes) shall not be
taken into account for purposes of determining Cash Flow.
(h) For purposes of this Section 5.8, "Excluded Minority Interests"
mean minority interests with respect to which sufficiently detailed financial
information is not available within a reasonable time frame to prepare a
proportional cash flow calculation prior to the date of the Phase II Closing. As
set forth in clauses (xvi) and (xvii) of paragraph (b), Cash Flow for purposes
of this Article 5 (including the calculation of Phase II Closing Percentages
pursuant to Section 5.6) shall originally be calculated by reference to capital
contributions to, and distributions from, such Excluded Minority Interests. The
Parties agree to recalculate such Cash Flow (and any items, such as Phase II
Closing Percentages, computed in whole or in part by reference to Cash Flow) as
the actual financial information becomes available (by using such actual
financial information rather than capital contributions and distributions);
provided, however, that such actual financial information is provided within
three (3) years of the Phase II Closing.
(i) Items that would otherwise reduce Cash Flow shall not be taken
into account (A) to the extent that such items are attributable (I) to USW's or
ATI's failure to operate
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its business in accordance with Section 3.1(b) or Section 3.2(b), respectively,
or (II) to a Party's failure (except as contemplated in an Approved Business
Plan) to operate its business in the ordinary course, consistent with past
practice and in the manner contemplated by the Approved Business Plan, or (B) to
the extent that such items are attributable to an expenditure or payment that is
not ordinary and necessary.
5.9 Phase I Quarterly Records. To provide a basis for purposes of the
calculations set forth in Section 5.6, quarterly records for each fiscal quarter
of Phase I ("Quarterly Records") shall be maintained as follows:
(a) Quarterly Records for USW (the "USW Records") shall be maintained
for each quarter of Phase I to record the Cash Flow for such quarter from (A)
the USW Phase II Assets, and (B) the Scheduled Phase II Related Assets.
(b) Three alternative Quarterly Records for ATI (the "ATI Record")
shall be maintained for each quarter of Phase I to record Cash Flow based on the
three alternative assumptions as to New Par ownership.
(i) The first type of ATI Record shall be the ATI Record-100% New
Par and shall record for each quarter of Phase I (1) the Cash Flow for such
quarter from the ATI Phase II Assets, (2) 100% of the Cash Flow for such quarter
from New Par, and (3) 100% of the Cash Flow for such quarter from the Scheduled
New Par Related Asset.
(ii) The second type of ATI Quarterly Record shall be the "ATI
Record-50% New Par" and shall be computed in the manner described in clause (i)
except that 50% (rather than 100%) of the Cash Flow for such quarter from New
Par shall be included and 50% (rather than 100%) of the Cash Flow for such
quarter from the Scheduled New Par Related Asset shall be included.
(iii) The third type of ATI Quarterly Record shall be the "ATI
Record-No New Par" and shall be computed in the same manner described in clause
(i) except that no portion (rather than 100%) of the Cash Flow for such quarter
from New Par shall be included and no portion (rather than 100%) of the Cash
Flow for such quarter from the Scheduled New Par Related Asset shall be
included.
5.10 Quarterly Values. For purposes of the calculations set forth in Section
5.6, three alternative "Quarterly Values" (based on the three assumptions as to
New Par ownership) shall be defined with respect to any fiscal Quarter of Phase
I as follows.
(a) "Quarterly Value-100% New Par" shall mean, an amount equal to the
sum of (A) the Initial Value-100% New Par
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(as determined in accordance with 4.5(b)(ii)(A)), accreted at the rate of 12%
per annum from July 25, 1994 to the last day of the Quarter at Issue, plus (B)
the aggregate Scheduled PIIRA 12% Values of all Scheduled Phase II Related
Assets as determined for the last day of the Quarter at Issue, plus (C) 100% of
the Scheduled NPRA 12% Value as determined for the last day of the Quarter at
Issue, plus or minus (D) the Total Differential Election Amount (as defined in
Section 4.2(c)), if any, accreted at the rate of 12% per annum from the Phase I
Closing Date to the last day of the Quarter at Issue.
(b) "Quarterly Value-50% New Par" shall mean an amount computed in the
same manner as provided in paragraph (a) except (i) the Initial Value-50% New
Par (as determined in accordance with 4.5(b)(ii)(B)) shall be used in place of
the Initial Value-100% New Par, and (ii) 50% (rather than 100%) of the Scheduled
NPRA 12% Value shall be taken into account.
(c) "Quarterly Value-No New Par" shall mean an amount computed in the
same manner as provided in paragraph (a) except (i) the Initial Value-No New Par
(as determined in accordance with 4.5(b)(ii)(C)) shall be used in place of the
Initial Value-100% New Par, and (ii) no portion (rather than 100%) of the
Scheduled NPRA 12% Value shall be taken into account.
5.11 New Par Adjustment.
(a) In the event that a New Par Determination Date occurs subsequent to
the Phase II Closing, New Par Quarterly Adjustments shall be determined for each
quarter during the period beginning on the Phase II Closing and ending on the
New Par Determination Date.
(b) For any quarter during Phase II (prior to the New Par Determination
Date), the New Par Quarterly Adjustment shall be the product of (i) 50% of the
Cash Flow for New Par for such quarter, and (ii) USW's Percentage Interest in
WMC for such quarter (as determined pursuant to the WMC Partnership Agreement).
(c) Such New Par Quarterly Adjustments (positive or negative) shall
accrete at the rate of 3 month LIBOR + 1/2%, compounded quarterly, for the
period beginning on the first day subsequent to the fiscal quarter to which such
Quarterly Adjustment relates and ending on the date that the Final New Par
Adjustment computed hereunder is paid.
(d) The quarterly amounts so accreted shall be totaled to determine a
Final New Par Adjustment.
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(e) Within forty-five (45) days after the New Par Determination Date:
(i) if the Final New Par Adjustment is positive, ATI shall
contribute an amount to WMC, in cash or in the form of a note, equal to (A) the
Final New Par Adjustment, divided by (B) USW's Percentage Interest in WMC on the
New Par Determination Date (as redetermined pursuant to Section 4.9 of the WMC
Partnership Agreement);
(ii) if the Final New Par Adjustment is negative, USW shall
contribute an amount to WMC, in cash or in the form of a note, equal to (A) the
Final New Par Adjustment, divided by (B) ATI's Percentage Interest in WMC on the
New Par Determination Date (as redetermined pursuant to Section 4.9 of the WMC
Partnership Agreement).
(f) Any note issued pursuant to this Section 5.11 shall bear interest
at a rate equal to three month LIBOR + 1/2%, compounded quarterly, and shall be
due and payable no later than two years after the date of issuance.
(g) Example 5 of Exhibit A attached hereto, reflects some of the basic
calculations set forth in this Section 5.11.
5.12 Scheduled Phase II Related Assets.
(a) On the Phase II Closing USW shall contribute the Scheduled Phase
II Related Assets to WMC.
(b) ATI shall elect by written notice to USW and WMC within thirty
days after the date that the Scheduled Phase II Related Assets are contributed
to WMC, either (i) to contribute to the capital of WMC, within thirty (30) days
after sending such written notice, cash (or a note) in an amount equal to the
PIIRA LIBOR+ Adjustment computed in accordance with paragraph (c) below, or (ii)
to have each Party's Phase II Closing Percentage redetermined as of the date of
the Phase II Closing (based on the three different assumptions as to New Par
ownership) and as of the New Par Determination Date (based on the appropriate
assumption as to New Par ownership), in each case with such percentages
redetermined in accordance with the procedures set forth in paragraph (d) below
(the "Scheduled PIIRA Redetermination Procedure").
(c) In the event that ATI decides pursuant to paragraph (b) above to
contribute cash (or a note) to WMC, the following shall occur:
(i) First, the "PIIRA LIBOR+ Value" shall be determined as an
amount equal to the aggregate Purchase Prices for the Scheduled Phase II Related
Assets, in each case accreted at the rate of 3 month LIBOR + 1/2%, compounded
quarterly, for the
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period beginning on the Phase I Closing Date and ending on the date of the Phase
II Closing.
(ii) Second, the PIIRA LIBOR+ Adjustment shall be determined as
the product of (i) the PIIRA LIBOR+ Value, and (ii) two-and one-third (the
quotient obtained by dividing seventy percent by thirty percent).
(iii) The Phase II Closing Percentages shall not be redetermined
on the date of the Phase II Closing to take into account USW's contribution of
the Scheduled Phase II Related Assets.
(d) In the event that ATI has elected to invoke the Scheduled PIIRA
Redetermination Procedure, each Party's Phase II Closing Percentage as of the
Phase I Closing (and as of the New Par Determination Date) shall be determined
in the following manner:
(i) First, three alternative "Restated Phase II Asset Values"
shall be computed as of the Phase II Closing (based on the three different
assumptions as to New Par ownership) as follows:
(A) The "Restated Phase II Asset Value-100% New Par" shall be
equal to the sum of (A) the Initial Value-100% New Par (as determined in
accordance with 4.5(b)(ii)(A)), accreted at the rate of 12% per annum from July
25, 1994 to the date of the Phase II Closing, plus (B) 100% of the Scheduled
NPRA 12% Value as determined for the date of the Phase II Closing, plus or minus
(C) the Total Differential Election Amount (as defined in Section 4.2(c)), if
any, accreted at the rate of 12% per annum from the Phase I Closing Date to the
date of the Phase II Closing.
(B) The "Restated Phase II Asset Value-50% New Par" shall be
computed in the same manner as provided in subparagraph (A) except (I) the
Initial Value-50% New Par (as determined in accordance with Section
4.5(b)(ii)(B)) shall be used in place of the Initial Value-100% New Par, and
(II) 50% (rather than 100%) of the Scheduled NPRA 12% Value as of the Phase II
Closing shall be taken into account.
(C) The "Restated Phase II Asset Value-No New Par" shall be
computed in the same manner as provided in subparagraph (A) except (I) the
Initial Value-No New Par (as determined in accordance with Section
4.5(b)(ii)(C)) shall be used in place of the Initial Value-100% New Par, and
(II) no portion (rather than 100%) of the Scheduled NPRA 12% Value as of the
Phase II Closing shall be taken into account.
(ii) Second, the three alternative Phase II Closing Percentages
shall be redetermined in the following manner:
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(A) The "Phase II Closing Percentage-100% New Par" of each
Party shall be redetermined as the quotient obtained by dividing (1) the
Restated Closing Phase II Assets of such Party, by (2) the Restated Closing
Phase II Assets of both of the Parties. For purposes of this determination,
"Restated Closing Phase II Assets" shall mean, for each Party, the sum of (I)
the product of x) such Party's Phase II Quarterly Percentage-100% New Par
determined for the Phase II Closing in accordance with Section 5.6(d)), and y)
the Restated Phase II Asset Value-100% New Par, plus (II) for USW, the aggregate
Scheduled PIIRA 12% Values of all Scheduled Phase II Related Assets, as
determined for the date of the Phase II Closing.
(B) The "Phase II Closing Percentage-50% New Par" shall be
redetermined in the manner described in subparagraph (A) except that (I) such
Party's Phase II Quarterly Percentage-50% New Par shall be used in place of such
Party's Phase II Quarterly Percentage-100% New Par, and (II) the Restated Phase
II Asset Value-50% New Par shall be used in place of the Restated Phase II Asset
Value-100% New Par.
(C) The "Phase II Closing Percentage-No New Par" shall be
redetermined in the manner described in subparagraph (A) except that (I) such
Party's Phase II Quarterly Percentage-No New Par shall be used in place of such
Party's Phase II Quarterly Percentage-100% New Par, and (II) the Restated Phase
II Asset Value-No New Par shall be used in place of the Restated Phase II Asset
Value-100% New Par.
(e) This Section 5.12 assumes that USW shall have obtained all
Authorizations and Consents necessary to transfer all Scheduled Phase II Related
Assets to WMC as of the Phase II Closing. In the event that any Scheduled Phase
II Related Assets are not contributed to WMC as of the Phase II Closing, this
Section 5.12 shall be applied as of the Phase II Closing without taking into
account Scheduled Phase II Related Assets that are not contributed to WMC on the
Phase II Closing. In the event that such Scheduled Phase II Related Assets are
later contributed to WMC, a similar methodology shall be used to allow ATI to
elect to (i) contribute cash (or a note) so as to avoid dilution (with such
amount determined based upon the Purchase Price of such Scheduled Phase II
Related Assets, accreted from the Phase I Closing Date at the rate of 3 month
LIBOR + 1/2%, compounded quarterly), or (ii) to have Phase II Closing
Percentages as of the date such Scheduled Phase II Related Assets are
contributed to WMC redetermined (based upon assumed accretion at 12% per annum
of the Purchase Prices of such Scheduled Phase II Related Assets and of the
appropriate Initial Value or Values, the appropriate portion or portions (100%,
50% or no portion) of the Scheduled NPRA 12% Value, the Total Differential
Election Amount, and any Scheduled Phase II Related Assets previously
contributed to WMC).
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(f) Example 6 and Example 7 (Calculation 1) of Exhibit A, attached
hereto, reflects some of the basic calculations set forth in this Section 5.12.
5.13 Minority Indebtedness Adjustment. In the event that any direct or
indirect Unpermitted Liability of any Party is assumed, directly or indirectly,
by WMC, such Party shall contribute cash to WMC equal to the amount of such
liability, including, without limitation, the amount of all unpaid interest
accrued with respect to such liability. This Section 5.13 is not intended to be
the sole remedy in the event that indebtedness is incurred in violation of a
Party's covenant pursuant to Section 3.1(d) or 3.2(d), as the case may be, of
this Organization Agreement.
5.14 Dispute Resolution. If the Parties are unable to agree on the
adjustments to be made under Article 4 or under this Article 5:
(a) First, the Parties shall refer the disputed matter to their
respective Chief Financial Officers in an attempt to reach a resolution;
(b) Second, if the Chief Financial Officers are unable to resolve a
disputed matter within thirty (30) days after referral to them of a dispute, the
dispute shall be submitted to the Chairman of the Board of Directors of each
Party in an attempt to reach a resolution; and
(c) Third, if the Chairmen are unable to resolve a disputed matter
within thirty (30) days after referral to them of the dispute, the dispute shall
be referred to arbitration in accordance with the Arbitration Agreement for
resolution.
ARTICLE 6
PHASES OF THE JOINT VENTURE AND CLOSINGS
6.1 Prior to Phase I. From and after the Effective Date and prior to the
Phase I Closing, the Domestic Cellular Business and PCS activities of the
Parties and their respective Affiliates shall be governed by this Organization
Agreement, the Investment Agreement, the WMC Partnership Agreement, the PCS Par
Partnership Agreement, and all other documents delivered in connection therewith
or in connection with the Initial Organization Agreement. Between the Effective
Date hereof and the Phase I Closing, neither USW nor ATI nor any of their
respective Affiliates shall directly or indirectly control, supervise or direct,
or attempt to control, supervise or direct, the operation of any of the Phase II
Assets now licensed to the other Party or the other Party's Affiliates.
6.2 Phase I. From and after the Phase I Closing and prior to the Phase II
Closing, the Domestic Cellular Business
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and PCS activities of the Parties and their respective Affiliates shall be
governed by this Organization Agreement, the Investment Agreement, the Agreement
of Exchange, the Trust Agreement of Exchange, the WMC Partnership Agreement, the
PCS Par Partnership Agreement, the ATI Services Agreement, the NewVector
Services Agreement, and all other documents delivered in connection therewith or
in connection with the Initial Organization Agreement.
(a) Conditions to Phase I Closing. The obligation of the Parties to
proceed with the Phase I Closing is conditioned on:
(i) Receipt by USW of all Authorizations required to be obtained
with respect to Phase I, as identified in SCHEDULES 2.1(d)(ii) and 2.1(d)(iii)
hereto;
(ii) Receipt by ATI of all Authorizations required to be obtained
with respect to Phase I, as identified in SCHEDULES 2.2(d)(ii) and 2.2(d)(iii)
hereto; and
(iii) No preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, nor any
statute, rule, regulation or executive order promulgated or enacted by any
Governmental Body shall be in effect that would make the consummation of the
Transactions in Phase I contemplated by this Organization Agreement and the
Phase I Related Agreements illegal. In the event any such injunction or order
shall be issued, the Parties hereto agree to cooperate to restructure the Phase
I Transaction to the minimum extent necessary to avoid or mitigate such
consequences, while preserving to the fullest extent possible the intent of the
Parties regarding Phase I operations as well as the relative economic positions
of the Parties. The Parties shall attempt to determine the manner of
restructuring which best gives effect to the intent of the Parties set forth in
this SECTION 6.2(a)(iii).
(b) Deliveries on or before the Phase I Closing. On or before the
Phase I Closing, the Parties shall deliver the following:
(i) Each Party shall deliver to the other a certificate, executed
on such Party's behalf by an authorized officer, to the effect that:
(A) The representations and warranties of such Party
contained in SECTION 2.1 or SECTION 2.2 of this Organization Agreement remain
true and complete on and as of the Phase I Closing, except as set forth in such
certificate;
(B) Such Party has performed and is in compliance with all of
its agreements and covenants contained in
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this Organization Agreement and the Related Agreements, as of the Phase I
Closing, except as set forth in such certificate;
(ii) ATI shall cause to be delivered to WMC the executed ATI
Services Agreement;
(iii) USW shall cause to be delivered to WMC the executed
NewVector Services Agreement; and
(iv) Each Party shall cause to be executed and delivered to WMC
any and all instruments required or advisable to license to WMC such Party's
Intellectual Property.
(c) Phase I Closing. The Phase I Closing shall occur on a date
mutually agreed on in writing by USW, ATI and WMC that shall be a Business Day
no later than the twentieth (20th) Business Day following the receipt of the
Authorizations described in SECTIONS 6.2(a)(i) and 6.2(a)(ii) hereof.
6.3 Phase II. From and after the Phase II Closing Date and until and unless
the Phase III Closing shall occur, the Domestic Cellular Businesses and PCS
activities of the Parties shall be governed by this Organization Agreement, the
Investment Agreement, the Agreement of Exchange, the Trust Agreement of
Exchange, the WMC Partnership Agreement, the PCS Par Partnership Agreement, and
all other documents delivered in connection therewith or in connection with the
Initial Organization Agreement.
(a) Conditions to Phase II Closing. The obligation of the Parties to
proceed with the Phase II Closing is conditioned on:
(i) Receipt by USW of all Authorizations required to be obtained
with respect to Phase II, as identified in SCHEDULES 2.1(d)(ii) and 2.1(d)(iii)
hereto;
(ii) Receipt by ATI of all Authorizations required to be obtained
with respect to Phase II, as identified in SCHEDULES 2.2(d)(ii) and 2.2(d)(iii)
hereto;
(iii) USW's obligation to proceed with the Phase II Closing shall
be conditioned on ATI's ability to vest in WMC all right, title, and interest in
and to ATI Phase II Assets representing aggregate POPs equal to sixty percent
(60%) or more of the total POPs of all ATI Phase II Assets, which condition USW
may waive, or decline to waive, in writing in its sole discretion;
(iv) ATI's obligation to proceed with the Phase II Closing shall
be conditioned on USW's ability to vest in WMC all right, title, and interest in
and to USW Phase II Assets representing aggregate POPs equal to sixty percent
(60%) or more of the total POPs of all USW Phase II Assets and
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Scheduled Phase II Related Assets, which condition ATI may waive, or decline to
waive, in writing in its sole discretion; and
(v) No preliminary or permanent injunction or other order, decree
(other than the MFJ as currently in effect) or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, nor any statute, rule, regulation or executive order promulgated
or enacted by any Governmental Body shall be in effect that would make the
consummation of the Phase II Closing illegal, or would, after the Phase II
Closing, impose material restrictions or limitations on the operations of WMC
which would not otherwise be imposed on the Phase II Assets or Scheduled Phase
II Related Assets of one or both of the Parties and which would be so burdensome
as to deprive such Party or Parties of fundamental benefits expected to be
derived from the Phase II Closing.
(b) Deliveries on or before the Phase II Closing. On or before the
Phase II Closing, each of the Parties and WMC shall deliver the following:
(i) Each Party shall deliver to the other a certificate, executed
on such Party's behalf by an authorized officer, to the effect that:
(A) The representations and warranties of such Party
contained in SECTION 2.1 or SECTION 2.2 of this Organization Agreement remain
true and complete on and as of the Phase II Closing, except as set forth in such
certificate;
(B) Such Party has performed and is in compliance, in all
material respects, with all of its agreements and covenants contained in this
Organization Agreement and the Related Agreements, as of the Phase II Closing,
except as set forth in such certificate;
(ii) USW shall cause to be executed and delivered to WMC any and
all instruments required or advisable to vest in WMC all right, title, and
interest in and to each of USW's Phase II Assets and the Scheduled Phase II
Related Assets for which all required Authorizations and Consents, if any, have
been obtained, free and clear of all indebtedness for borrowed money and Liens,
in the manner most advantageous to the USW Parties and WMC, as determined by the
WMC Partnership Committee;
(iii) ATI shall cause to be executed and delivered to WMC any and
all instruments required or advisable to vest in WMC all right, title, and
interest in and to each of ATI's Phase II Assets for which all required
Authorizations and Consents, if any, have been obtained, free and clear of all
indebtedness for borrowed money and Liens, in the manner most
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advantageous to the ATI Parties and WMC, as determined by the WMC Partnership
Committee;
(iv) WMC shall assume all Permitted Liabilities associated with
the USW Phase II Assets and Scheduled Phase II Related Assets and the ATI Phase
II Assets contributed to WMC at the Phase II Closing and all other liabilities
and obligations associated with the USW Phase II Assets and Scheduled Phase II
Related Assets and the ATI Phase II Assets contributed to WMC at the Phase II
Closing arising on and after the Phase II Closing pursuant to contracts (other
than Material Contracts) entered into in the ordinary course of business,
Material Contracts identified in SCHEDULES 2.1(l) and 2.2(l) hereto, and
Material Contracts approved by the WMC Partnership Committee but shall not
assume (A) any Unpermitted Liability or (B) any liability for income taxes for
any period prior to the Phase II Contribution Date;
(v) Unless USW shall elect to have the PCS Par Contribution Date
occur on a subsequent date in accordance with the WMC Partnership Agreement,
each of USW and ATI shall cause to be executed and delivered to WMC any and all
instruments required or advisable to vest in WMC all right, title, and interest
in and to its Percentage Interest in PCS Par, free and clear of all indebtedness
for borrowed money and Liens, together with a certificate as described in
SECTION 6.4(c)(i) hereof; and
(vi) In the event that the Phase II Closing shall occur prior to
Partial MFJ Relief (except pursuant to SECTION 6.3(c)(iii) hereof), WMC shall,
within 45 days of receipt of each detailed invoice, reimburse ATI for the
one-time cost of restructuring such of its domestic cellular operations and
separating any assets or activities that would otherwise subject WMC or USW to
liability for violation of the MFJ; provided, however, that ATI shall not be
entitled to any compensation from WMC or USW for any lost profits or opportunity
costs arising out of or relating to the commencement of Phase II.
(c) Phase II Closing. The Phase II Closing shall occur on a date
mutually agreed upon in writing by USW, ATI, and WMC that shall be a Business
Day no later than the twentieth (20th) Business Day following satisfaction of
all conditions to the Phase II Closing and the first to occur of the following:
(i) Receipt of Partial MFJ Relief;
(ii) The written agreement of USW, ATI, and WMC to commence Phase
II;
(iii) Ninety (90) days following written notice provided by ATI to
USW and WMC that ATI elects to exercise its right under this SECTION 6.3(c)(iii)
to cause Phase II to be
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commenced (such right referred to herein as the "ATI Phase II Trigger"); and
(iv) The fourth anniversary of the Effective Date.
6.4 PCS Contribution Date.
(a) On the PCS Contribution Date (as defined in the WMC Partnership
Agreement), each of USW and ATI and/or their Affiliates shall make a capital
contribution to WMC equal to one hundred percent (100%) of their respective
Percentage Interests in PCS Par, free and clear of all indebtedness for borrowed
money or Liens.
(b) The obligation of the Parties to proceed with the PCS Contribution
Date is conditioned on: (i) receipt by USW and ATI of all Authorizations
required to be obtained with respect to the contribution of their Percentage
Interests in PCS Par which may include those identified in SCHEDULES 2.1(d)(ii),
2.1(d)(iii), 2.2(d)(ii), and 2.2(d)(iii) hereto; and (ii) no preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, nor any statute, rule, regulation or executive order promulgated
or enacted by any Governmental Body, shall be in effect that would make the
consummation of the PCS Contribution Date illegal or would impose any material
limitation on the consummation of such PCS Contribution Date or other operations
of WMC or otherwise restrain, enjoin or prevent the consummation of the PCS
Contribution Date.
(c) On or before the PCS Contribution Date, each of the Parties shall
deliver the following:
(i) Each Party shall deliver to the other and to WMC a
certificate, executed on such Party's behalf by an authorized officer and dated
as of the date of the PCS Contribution Date, representing and warranting to the
other Party and to WMC that: (A) such Party has good legal title to, and
beneficial ownership of, its Percentage Interest in PCS Par free and clear of
all Liens, restrictions, equities, options, and claims; (B) the contribution of
such Percentage Interest in PCS Par has been duly authorized by all necessary
corporate or partnership action on the part of such Party and will not conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a Lien
or other encumbrance on any of its properties or assets pursuant to any
agreement, indenture or instrument to which it is a party, or result in a
violation of its certificate of incorporation or by-laws or any law, rule,
regulation, order, judgment or decree applicable to it or by which any of its
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properties or assets is bound or affected; and (C) immediately after the PCS
Contribution Date, WMC will be the owner of all right, title and interest of USW
in and to such Percentage Interest.
(ii) Each Party shall cause to be executed and delivered to WMC
any and all instruments required or advisable to vest in WMC all right, title,
and interest in and to its Percentage Interest in PCS Par.
6.5 New Par Contribution Date.
(a) If and when ATI shall acquire, directly or indirectly, all of the
New Par Assets, ATI shall transfer, or cause to be transferred, to WMC at the
earliest practicable time thereafter, but in no event earlier than the Phase II
Closing Date, its entire right, title, and interest in and to the New Par Assets
and the Scheduled New Par Related Asset (as defined in the WMC Agreement) free
and clear of all indebtedness for borrowed money or Liens (other than Permitted
Liabilities).
(b) The obligation of ATI to transfer, or cause to be transferred, to
WMC the New Par Assets and the Scheduled New Par Related Asset is conditioned
on:
(i) Receipt by ATI of all Authorizations required to be obtained
with respect thereto, which may include certain of those identified in SCHEDULES
2.2(d)(iv)(A) and 2.2(d)(iv)(B); and
(ii) No preliminary or permanent injunction or other order,
decree, or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, nor any
statute, rule, regulation or executive order promulgated or enacted by any
Governmental Body shall be in effect that would make the consummation of the New
Par Contribution Date illegal or would impose any material limitation on the
consummation of the New Par Contribution Date or on the Phase II operations of
WMC or otherwise restrain, enjoin or prevent the consummation of the New Par
Contribution Date.
(c) On or before the New Par Contribution Date, ATI shall deliver the
following:
(i) A certificate, executed on its behalf by an authorized
officer, to the effect that: (A) ATI has good legal title to, and beneficial
ownership of, the New Par Assets and the Scheduled New Par Related Asset free
and clear of all Liens, restrictions, equities, options, and claims, and (B) the
transfer of the New Par Assets and the Scheduled New Par Related Asset has been
duly authorized by all necessary corporate or partnership action on the part of
ATI.
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(ii) ATI shall cause to be executed and delivered to WMC any and
all instruments required or advisable to vest in WMC all right, title, and
interest in and to the New Par Assets and the Scheduled New Par Related Asset.
(iii) WMC shall assume all Permitted Liabilities associated with
the New Par Assets and the Scheduled New Par Related Asset contributed to WMC at
the New Par Contribution Date and all other liabilities and obligations
associated with the New Par Assets and the Scheduled New Par Related Assets
contributed to WMC at the New Par Contribution Date arising on and after the New
Par Contribution Date pursuant to contracts (other than Material Contracts)
entered into in the ordinary course of business, Material Contracts identified
in Section 2.2(e) hereto, and Material Contracts approved by the WMC Partnership
Committee, but WMC shall not assume (A) any Unpermitted Liability or (B) any
liability for income taxes for any period prior to the New Par Contribution
Date.
ARTICLE 7
TERMINATION
7.1 Termination of this Organization Agreement. (a) This Organization
Agreement shall terminate:
(i) Upon mutual written agreement of the Parties;
(ii) Ninety (90) days after the date that either Party provides
written notice to the other that it declines to proceed with the Phase II
Closing in accordance with SECTION 6.3(a)(iii) or 6.3(a)(iv) of this
Organization Agreement, as the case may be;
(iii) On July 25, 1997, if the Phase I Closing shall not have
occurred by that date; or
(iv) On July 25, 2004, if the Phase II Closing shall not have
occurred by that date.
(b) Anything herein to the contrary notwithstanding, the right to
terminate this Organization Agreement under this SECTION 7.1(a) shall not be
available to a Party whose failure to fulfill any covenant or obligation under
this Organization Agreement has been the cause of, or results in, the failure of
the Phase I Closing or the Phase II Closing to occur within the time period set
forth in this SECTION 7.1(a).
7.2 Winding Up. In the event that this Organization Agreement is terminated
pursuant to SECTION 7.1(a) hereof, the joint venture affairs of the Parties
shall be wound up in accordance with the provisions of Article 8 of the WMC
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Partnership Agreement and the provisions of Article 8 of the PCS Par Partnership
Agreement.
ARTICLE 8
INDEMNIFICATION
8.1 Definitions. As used in this ARTICLE 8, the following terms shall have
the meanings set forth below:
(a) "CLAIM" shall mean any claim based upon, arising out of or
otherwise in respect of any Loss.
(b) "INDEMNITEE" shall mean any Person which may be entitled to seek
indemnification pursuant to the provisions of this ARTICLE 8.
(c) "INDEMNITOR" shall mean any Person which may be obligated to
provide indemnification pursuant to this ARTICLE 8.
(d) "LOSS" shall mean any loss, liability, damage, cost, and expense,
including amounts paid in defense of, or with respect to any settlement or
judgment relating to, any demand, claim, action or cause of action or assessment
(including without limitation, diminution in value of any equity interest),
relating to or arising out of any of the occurrences set forth in SECTION 8.2,
8.3, 8.4 or 8.5 hereof. Loss shall include reasonable fees, disbursements, and
expenses of attorneys, accountants, and other professional advisers and shall be
net of any insurance proceeds received by an Indemnitee on account of such
Losses and net of any reimbursement of Losses received by an Indemnitee pursuant
to a right of contribution or to a contractual or other arrangement.
(e) "NOTICE PERIOD," as applied to any Claim for which an Indemnitee
seeks to be indemnified pursuant to this ARTICLE 8, shall mean the period ending
twelve (12) months after the time at which the Indemnitee has received actual
notice of a Third-Party Claim, or as to any other claim has obtained actual
knowledge of the facts or circumstances giving rise to such claim for which such
Indemnitee would reasonably be expected to be entitled to indemnification
pursuant to this ARTICLE 8.
(f) "RELATED COST" shall mean any liability, cost, expense (including,
without limitation, any reasonable expenses of investigation and attorneys' and
accountants' fees), loss, damage, assessment, settlement or judgment (other than
an item of Tax) which arises out of the imposition or assessment of any Tax.
8.2 Indemnity by USW. Except as otherwise expressly provided in this
ARTICLE 8, USW shall defend, indemnify, and hold harmless WMC, ATI, ATI's
Subsidiaries, and each of their officers, directors, employees, agents,
successors and assigns,
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and shall reimburse such Indemnitees for, from and against all Losses imposed on
or incurred by such Indemnitees, directly or indirectly, relating to, resulting
from or arising out of (a) any representation or warranty made by USW in this
Organization Agreement or any Related Agreement that was materially false when
made; (b) any liability or obligation of any nature (known or unknown, absolute,
accrued, contingent or otherwise) related to USW's Phase II Assets or Scheduled
Phase II Related Assets and Percentage Interest in PCS Par and attributable to
periods prior to the Phase II Closing (or such later date on which a particular
Phase II Asset was contributed to WMC) and the PCS Contribution Date,
respectively (excluding Permitted Liabilities and other liabilities assumed by
WMC at the Phase II Closing in accordance with SECTION 6.3(b)(iv) hereof); or
(c) any material default by USW in the performance of its obligations and
covenants under this Organization Agreement and the Related Agreements;
provided, however, that if, and to the extent that, an adjustment is made to
USW's Percentage Interest in WMC pursuant to Article 4 of the WMC Partnership
Agreement on account of the inability of USW to contribute any Phase II Assets
to WMC, no indemnification obligation shall arise under this SECTION 8.2; and
provided further that nothing herein shall relieve USW of any indemnification
obligation under this SECTION 8.2 for Losses incurred by ATI as a result of a
breach of any covenant by USW hereunder to contribute the USW Phase II Assets or
Scheduled Phase II Related Assets to WMC.
8.3 Indemnity by ATI. Except as otherwise expressly provided in this ARTICLE
8, ATI shall defend, indemnify, and hold harmless WMC, USW, USW's Subsidiaries,
and each of their officers, directors, employees, agents, successors and
assigns, and shall reimburse such Indemnitees for, from and against all Losses
imposed or incurred by such Indemnitees, directly or indirectly, relating to,
resulting from or arising out of (a) any representation or warranty made by ATI
in this Organization Agreement or any Related Agreement that was materially
false when made; (b) any liability or obligation of any nature (known or
unknown, absolute, accrued, contingent or otherwise) related to ATI's Phase II
Assets, Percentage Interest in PCS Par and he New Par Assets and Scheduled New
Par Related Asset if a New Par Contribution Date shall occur and attributable
to periods prior to the Phase II Closing (or such later date on which a
particular Phase II Asset was contributed to WMC), the PCS Contribution Date and
the New Par Contribution Date, respectively (excluding Permitted Liabilities and
other liabilities assumed by WMC at the Phase II Closing of the New Par
Contribution Date in accordance with SECTIONS 6.3(b)(iv) and 6.5(c)(iii) hereof
respectively); or (c) any material default by ATI in the performance of its
obligations and covenants under this Organization Agreement and the Related
Agreements; provided, however that if, and to the extent that, an adjustment is
made to ATI's Percentage Interest in WMC pursuant to Article 4 of the WMC
Partnership Agreement on
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account of the inability of ATI to contribute any Phase II Assets to WMC, no
indemnification obligation shall arise under this SECTION 8.3; and provided
further than nothing herein shall relieve ATI of any indemnification obligation
under this SECTION 8.3 for Losses incurred by USW as a result of a breach of any
covenant by ATI hereunder to contribute the ATI Phase II Assets to WMC.
8.4 Indemnity by WMC. The Parties shall cause WMC, from and after the
Effective Date and to the fullest extent permitted by law, to indemnify, defend
and hold harmless ATI and USW and their respective Affiliates, and their
Affiliates' officers, directors, employees, agents and representatives, from and
against any and all Losses arising out of, resulting from or relating to (a) any
act or omission taken or omitted to be taken by such Indemnitee at the direction
of the WMC Partnership Committee or the Approved Business Plan, including
without limitation pursuant to SECTION 6.3(b)(ii) or 6.3(b)(iii) of this
Organization Agreement or as a result of a decision by WMC to cause USW or ATI
or their Affiliates to terminate the employment of any employee thereof in
furtherance of the Approved Business Plan; or (b) any claim arising out of the
reasonable efforts by any Indemnitee to make the contributions to WMC required
to be made pursuant to SECTION 6.3(b)(ii) or 6.3(b)(iii) hereof.
8.5 Tax Indemnification. (a) Each of ATI and USW shall be individually
responsible for, will pay or cause to be paid, and will individually indemnify
and hold harmless the other Party and WMC from and against any and all Tax
liabilities and Related Costs from or related to each of the following:
(i) Any and all Taxes with respect to any taxable period of any
Domestic Cellular Asset, Domestic Cellular Subsidiary or Domestic Cellular
Investment Entity (or any predecessor) ending on or before the date such
Domestic Cellular Asset, Domestic Cellular Subsidiary or Domestic Cellular
Investment was contributed or transferred to WMC;
(ii) Any and all Taxes with respect to any taxable period ending
on or before the date any Domestic Cellular Asset, Domestic Cellular Subsidiary
or Domestic Cellular Investment was contributed or transferred to WMC resulting
from any Domestic Cellular Asset, Domestic Cellular Subsidiary or Domestic
Cellular Investment Entity having been (or ceasing to be) included in any
consolidated, combined or unitary tax return for any such period (including any
liability for taxes resulting from a "deferred intercompany transaction," within
the meaning of Treasury Regulation Section 1.1502-13(a)(2) or any analogous or
similar provision under state or local law or regulation);
(iii) Any and all Taxes arising from any member of a consolidated,
combined or unitary group of which the contributed Domestic Cellular Asset,
Domestic Cellular
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Subsidiary or Domestic Cellular Investment Entity is or was a member on or
before its contribution or transfer to WMC for which such Domestic Cellular
Asset, Domestic Cellular Subsidiary or Domestic Cellular Investment is liable
pursuant to Treasury Regulation Section 1.1502-6(a) or any analogous or similar
provision under state or local law or regulation;
(iv) Any breach by such Party of any representation or warranty
made in SECTION 2.1(k) or 2.2(k) of this Organization Agreement;
(v) Any penalty or interest assessed or imposed by any taxing
authority; or
(vi) Any repayment of any refund described in Section 9.6(d).
(b) There shall be no limitations period with respect to any indemnity
in this SECTION 8.5.
8.6 Notification of Claims. Except as set forth in this SECTION 8.6, no
Indemnitor shall be obligated to indemnify any Indemnitee against any Loss
unless the Indemnitee shall have delivered to the Indemnitor within the Notice
Period a written notice ("CLAIM NOTICE") describing in reasonable detail the
facts giving rise to such Claim of Loss and stating that the Indemnitee intends
to seek indemnification for such Loss from the Indemnitor pursuant to this
ARTICLE 8. The foregoing notwithstanding, if an Indemnitee would otherwise be
entitled to indemnification hereunder but for its failure timely to deliver a
Claim Notice, such Indemnitee shall nevertheless be entitled to be indemnified
hereunder (a) if the Indemnitee can establish that the time elapsed between the
end of the Notice Period and the giving of the Claim Notice is reasonable in all
the circumstances, or (b) to the extent (but only to the extent) that the
Indemnitee can establish that the Indemnitor has not been prejudiced by such
time elapsed or by any intervening payment, settlement or other disposition of
such Claim.
8.7 Access and Cooperation. The Parties shall make available to each other
as reasonably requested all information, records and documents relating to all
Losses and shall preserve all such information, records and documents until the
termination of any Claim and the resolution of any issue with respect to
indemnification hereunder relating to such Claim. Each party shall also make
available to the other, as reasonably requested, their personnel (including
technical personnel), agents and other representatives who are responsible for
preparing or maintaining information, records or other documents, or who may
have particular knowledge, with respect to any Claim. An Indemnitee shall also
cooperate with an Indemnitor in attempting to minimize the Losses subject to
indemnification by pursuing and/or assigning to the Indemnitor any rights of
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contribution or right to reimbursement through contractual or other
arrangements.
8.8 Remedies. Except as expressly provided in SECTION 6.3(a)(iii),
6.3(a)(iv) or 7.1(a) of this Organization Agreement, the sole remedies available
to USW, ATI or WMC shall be the right to indemnification set forth herein and
the right to seek specific enforcement. USW and ATI each expressly and
intentionally waives the right to refuse to consummate any transactions
contemplated by this Organization Agreement or the Related Agreements as a
result of any false representation or warranty or breach of any covenant made in
this Organization Agreement or any Related Agreement by the other Party.
ARTICLE 9
MISCELLANEOUS
9.1 Arbitration. The Parties agree to submit to arbitration those disputes
described in the Arbitration Agreement.
9.2 Notices. (a) All notices called for under this Organization Agreement
shall be in writing and shall be deemed given if delivered personally or by
facsimile transmission and followed promptly by mail, telexed or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice; provided that notices of a change of address
shall be effective only upon receipt thereof):
If to ATI:
AirTouch Communications
Xxx Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxxx X. Xxxx, Esq.
Senior Vice President-Legal,
External Affairs, and Secretary
With a Copy to:
Pillsbury Madison & Sutro
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxxxx III
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If to USW:
U S WEST, Inc.
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Executive Vice President and General
Counsel
or to any other address or addressee as any party entitled to receive notice
under this Organization Agreement shall designate, from time to time, to others
in the manner provided in this SECTION 9.2 for the service of Notices.
(b) Any notice delivered to the party hereto to whom it is addressed
shall be deemed to have been given and received on the day it was received;
provided, however, that if such day is not a Business Day then the notice shall
be deemed to have been given and received on the Business Day next following
such day. Any notice sent by telex or facsimile transmission shall be deemed to
have been given and received on the Business Day next following the day of
transmission.
9.3 Modifications; Amendments; Waivers. This Agreement amends and restates
in its entirety the Initial Organization Agreement. This Organization Agreement
may be modified only by a written instrument duly executed by each Party hereto.
Any waiver of any term or condition of this Organization Agreement shall be
effective only if made in writing and only in the specific instance and for the
purpose for which given. No failure or delay on the part of any party hereto in
exercising any right, power, or privilege under this Organization Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege preclude any other or further exercise thereof or
the exercise of any other right, power or privilege.
9.4 Rules of Interpretation.
(a) This Organization Agreement and the Related Agreements shall be
interpreted to give effect to every provision contained in each agreement;
provided, however, that if, and to the extent that, there is any conflict
between (i) a provision in this Organization Agreement and a provision in the
Investment Agreement, the Investment Agreement shall control; (ii) a provision
in this Organization Agreement and a provision in the WMC Partnership Agreement,
the WMC Partnership Agreement shall control; (iii) a provision in this
Organization Agreement and a provision in the PCS Par Partnership Agreement, the
PCS Par Partnership Agreement shall control; (iv) a provision in this
Organization Agreement and a provision in the Agreement of Exchange, the
Agreement of Exchange shall control; (v) a provision in this Organization
Agreement and a provision in the Trust Agreement of Exchange, the Trust
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Agreement of Exchange shall control; or (vi) a provision in this Organization
Agreement and a provision in any other Related Agreement, this Organization
Agreement shall control.
(b) The examples set forth in Exhibit A, attached hereto, are not
intended to amend, modify or supercede the provisions of Articles 4 and 5. In
the event of any conflict between the terms of this Organization Agreement and
the examples set forth in Exhibit A, the terms of this Organization Agreement
shall control.
9.5 Expenses. Except as specifically provided herein, whether or not the
Transactions contemplated hereby are consummated, all costs and expenses
incurred in connection with the Transactions contemplated in this Organization
Agreement shall be paid by the Party incurring such cost or expense. Each Party
and its Affiliates shall bear all costs and expenses, including, without
limitation, any sales taxes, transfer taxes, recording fees and attorneys' or
accountants' fees incurred in contributing, transferring or causing its
Affiliates to transfer any Domestic Cellular Assets, Domestic Cellular
Subsidiaries, Domestic Cellular Investments, and Percentage Interests in PCS Par
to WMC, and any expenses, fees, and costs necessary for any Approvals shall be
paid by the Party seeking such Approval.
9.6 Certain Tax Matters.
(a) Whenever it is necessary for purposes of this Agreement to
determine the Tax liability of a taxable entity for a taxable year or period
that begins before and ends after the date such entity was contributed or
transferred to WMC, the determination shall be made (i) in the case of Taxes
that are not based on income or gross receipts (e.g., property taxes), by
apportioning such Taxes on a per diem basis; and (ii) in the case of Taxes based
on income or on gross receipts, by apportioning the total Tax liability for such
taxable year or period on the assumption that the taxable year or period ended
as of the close of the date such entity was contributed or transferred to WMC,
with income (or other applicable measure) apportioned as provided in Income Tax
Regulations section 1.1502-76(b)(4), provided that any deferred gain or loss on
deferred intercompany transactions which must be restored to income by ATI, USW
or their Subsidiaries by reason of the transfer or contribution of any Domestic
Cellular Asset, Domestic Cellular Subsidiary or Domestic Cellular Investment (or
any analogous state, local or foreign tax effects) shall be allocated entirely
to the period ending with the date of such contribution or transfer.
(b) Each of ATI and USW shall be individually responsible for preparing
and filing all Tax Returns for the Transferred Subsidiaries of ATI and USW,
respectively, for Tax periods ending prior to or on the Contribution Date and
making any required Tax payments with respect of such Tax Returns.
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Such Returns will report the operations of such Transferred Subsidiaries
consistent with past practice.
(c) USW and ATI shall, and each shall, as applicable cause their
respective affiliates to, use its best efforts to provide each other with such
assistance as may reasonably be requested by any of them in connection with Tax
matters, including providing information with respect to the preparation of any
Tax Return or other document required to be filed by any taxing authority, any
audit or other examination by any taxing authority, any judicial or
administrative proceeding or dispute relating to liability for Taxes or any
claim arising under this SECTION 9.6 or SECTION 8.5, and each shall retain and
provide to the other access to such records and other information as may be
relevant to such Return, audit, examination, proceeding or determination.
(d) Each of ATI and USW shall individually be entitled to all refunds
of Taxes received with respect to any taxable period of any Domestic Cellular
Asset, Domestic Cellular Subsidiary or Domestic Cellular Investment Entity (or
any predecessor) ending on or before the date such Domestic Cellular Asset,
Domestic Cellular Subsidiary or Domestic Cellular Investment Entity was
contributed or transferred to WMC; provided, however, that if any amount of such
refund is later determined to be repayable to the appropriate taxing authority,
ATI or USW, as appropriate shall indemnify the other Party from and against the
amount of such repayment under Section 7.5(a)(vi).
9.7 Publicity. So long as this Organization Agreement is in effect, each
Party and its Affiliates agree to consult with the other Party in issuing any
press release or otherwise making any public statement with respect to the
transactions contemplated hereby, and neither Party nor any of its Affiliates
will issue any press release or make any such public statement prior to such
consultation and giving the other Party a reasonable opportunity to review and
comment on any such proposed press release or public statement, except as may be
required by law.
9.8 Severability. If any one or more of the provisions of this Organization
Agreement shall be held to be invalid, illegal, or unenforceable, the validity,
legality and enforceability of the remaining provisions of this Organization
Agreement shall not be affected thereby. To the extent permitted by applicable
law, each party hereto waives any provision of law which renders any provision
of this Organization Agreement invalid, illegal, or unenforceable in any
respect.
9.9 Headings. The descriptive headings contained in this Organization
Agreement are for convenience and reference only, do not form a part of it, and
do not in any way modify,
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interpret or construe the intentions of the parties to this Organization
Agreement.
9.10 Time of Essence. Time is of the essence of this Organization Agreement.
9.11 Choice of Law. This Organization Agreement shall be governed by and
construed in accordance with the substantive laws of the State of Delaware,
without regard to choice of law principles.
9.12 Survival of Representations and Warranties. The representations and
warranties contained in this Organization Agreement shall survive after the date
hereof, the Phase I Closing, and the Phase II Closing.
9.13 Miscellaneous. This Organization Agreement (including the documents and
instruments referred to herein and attached hereto and other agreements executed
by the Parties on the Effective Date or the date hereof) (a) constitutes the
entire agreement and supersedes all other agreements and understandings, both
written and oral, among the parties that are prior to the date hereof, or any of
them, with respect to the subject matter hereof; (b) is not intended to confer
upon any other person any rights or remedies hereunder; and (c) shall not be
assigned by either party hereto by operation of law or otherwise (except as
otherwise provided herein).
9.14 Counterparts. This Organization Agreement may be executed in one or
more counterparts, each of which counterparts shall be deemed to be an original,
and all such counterparts shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have hereunto fixed their
signatures this 30th day of September, 1995.
AIRTOUCH COMMUNICATIONS, INC. U S WEST, INC.
By: _________________________ By: __________________________
Its: ________________________ Its: _________________________
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The following attachments have been omitted. The Company agrees to furnish
supplementally a copy of any omitted schedule to the Commission upon request.
Attachment 1.5 Arbitration Agreement
Attachment 1.7 ATI Phase I Assets
Attachment 1.10 ATI Services Agreement
Attachment 1.50 Investment Agreement
Attachment 1.89 Scheduled Phase II Related Assets
Attachment 1.114 Trust Agreement of Exchange
Attachment 1.119 USW Phase II Assets
Attachment 1.21 WMC Employment Agreement
Attachment 1.123 WMC Partnership Agreement
Attachment 1.2 Agreement of Exchange
Article 2 Existing Schedules
Article 4 4.2A, 4.2B, 4.2C, 4.5A, 4.5B
