EXCHANGE AGREEMENT
This Exchange Agreement, dated as of January 1, 1994, is entered
into between Telephone and Data Systems, Inc., an Iowa corporation (herein
called "TDS"), and American Paging, Inc., a Delaware corporation (herein
called "API").
WHEREAS, TDS owns all of the issued and outstanding shares of the
capital stock of API;
WHEREAS, in connection with the execution and delivery of this
Agreement, API is selling in an underwritten public offering (the "Offering")
a number of its Common Shares, par value $1.00 per share, as a result of
which API will have a class of publicly held securities and API will be
subject to the reporting and other requirements of the Securities Exchange
Act of 1934, and the parties desire to provide for a recapitalization of API
to accommodate the Offering; and
WHEREAS, API and TDS desire to set forth certain agreements made
between them with respect to such recapitalization and other matters;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the terms set forth below shall have the
indicated meanings (such meanings apply equally to the singular and plural
forms thereof):
"ACT" shall mean the Securities Act of 1933, as amended.
"FCC" shall mean the Federal Communications Commission.
"SEC" shall mean the Securities and Exchange Commission.
ARTICLE II
RECAPITALIZATION
Promptly upon obtaining stockholder approval of the adoption of a
Restated Certificate of Incorporation for API in substantially the form
attached hereto as Exhibit A, API shall file the Restated Certificate of
Incorporation with the Secretary of State of Delaware pursuant to Section 103
of the General Corporation Law of Delaware, causing the 100 shares of capital
stock owned by TDS to be converted into 1,500,000 Common Shares and
15,000,000 Series A Common Shares of API.
ARTICLE III
RIGHT TO ACQUIRE ADDITIONAL API SECURITIES
Section 3.01. PURCHASE RIGHTS. In addition to the pre-emptive
rights granted to TDS as a holder of Series A Common Shares of API pursuant
to the Restated Certificate of Incorporation of API referred to in Article
II, TDS shall have the right to subscribe to any issuance of Common Shares or
any other voting securities of API, or of any securities convertible into or
exchangeable for, or carrying a right to subscribe to or acquire, Common
Shares or any other voting securities of API, other than the Common Shares
being issued pursuant to the Offering. To the extent an issuance is to be
made for consideration other than cash, the fair market value of the non-cash
consideration shall be determined by resolution of the board of directors of
API. The proportion of each such issuance that TDS shall have the right to
subscribe to (which right may be exercised in full or in part) shall be equal
to the proportion of the Common Shares that TDS would own immediately before
the issuance if all securities of API that are convertible into Common Shares
(including securities convertible into another class that is convertible into
Common Shares and including securities that in the future will become
convertible) were converted (successively, if necessary) into Common Shares.
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Section 3.02. COMPLIANCE WITH SECURITIES LAWS. In connection with
any issuance to which the purchase rights granted by Section 3.01 apply, API
shall take all such action as shall be necessary to register the securities
being issued, or to qualify them for an exemption from registration, under
the Act and any applicable state securities or blue sky laws.
Section 3.03. METHOD OF EXERCISE. The purchase rights granted by
Section 3.01 are exercisable by TDS by delivering to the Secretary of API a
written election to subscribe to a specified number (in conformity with
Section 3.01) of the securities to be issued, within such reasonable period
of time as may be established by the board of directors of API after the
giving of written notice of the proposed issuance to TDS. The closing of
such purchase shall take place at such time and place as shall be determined
by the board of directors of API, upon at least 30 days' prior written notice
to TDS. At the closing, TDS shall pay for all shares issued and sold to TDS
with cash, the cancellation of indebtedness owed by API to TDS, such other
consideration as shall be reasonably acceptable to API, or a combination of
such forms of consideration.
Section 3.04. TRANSFER OF RIGHTS. (a) The rights of TDS under
this Article may be transferred to any one or more transferees from TDS of
any Common Shares, Series A Common Shares, or any securities convertible into
or exchangeable for, or carrying
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a right to subscribe to or acquire, shares of either such class. Any
transfer of rights pursuant to this Section 3.04 shall be effective only upon
receipt by API of written notice from TDS stating the name and address of any
transferee and identifying the securities being transferred.
(b) The rights of a transferee shall be the same rights granted to
TDS in Section 3.01 with respect to the securities transferred, subject to
the same conditions as are applicable to TDS in Section 3.03.
ARTICLE IV
CERTAIN OTHER RIGHTS
Section 4.01. AGREEMENTS REGARDING PAGING INTERESTS. (a) The
parties acknowledge and agree that certain operating telephone and cellular
companies and other entities that are subsidiaries or affiliates of TDS
(other than API and subsidiaries of API) have FCC licenses to engage in radio
paging services (collectively, "Paging Services") to certain areas as set
forth on Exhibit B (the "Non-API Paging Interests"). With respect to the
Non-API Paging Interests, the parties further acknowledge and agree that:
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(1) the Non-API Paging Interests have previously been offered for
sale to API and API has decided not to acquire the Non-API Paging
Interests; and
(2) consequently, TDS and such subsidiaries and affiliates will
retain all of the Non-API Paging Interests as their own property.
(b) The parties acknowledge and agree that TDS and subsidiaries of
TDS (other than API and subsidiaries of API) may, in the future, (1) obtain
FCC licenses to engage in Paging Services or (2) acquire control of entities
that have or obtain FCC licenses to engage in Paging Services or have
interests in other entities that provide Paging Services, in exchange for all
or some of the Non-API Paging Interests or otherwise (collectively, the
"Future Paging Interests"). The parties further acknowledge and agree that
all such Future Paging Interests that are ancillary to and integrated with
other communications systems shall be retained by TDS and such subsidiaries
as their own property and the balance of such Future Paging Interests (the
"Eligible Future Paging Interests") shall be subject to Section 4.02.
Section 4.02. API RIGHT OF NEGOTIATION. TDS agrees to offer API the
opportunity to negotiate regarding the purchase of the Eligible Future Paging
Interests, subject to FCC approval of
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any purchase, if required, PROVIDED that there are no restrictions on a sale
of the interests, including without limitation any requirement that the
interests be offered first to another person before being sold to API and
PROVIDED, FURTHER, that, in the reasonable judgment of TDS, there are no
material adverse consequences to TDS that may result therefrom. If API
desires to acquire any such interests so offered, then for a period of 90
days (the "API Negotiating Period") beginning on the date of API's receipt of
TDS's offer to negotiate, API shall have the right to negotiate with TDS
about the price and other terms and conditions of the acquisition. If,
notwithstanding the negotiations of the parties, TDS and API are not able to
agree on the price and other terms and conditions of sale during the API
Negotiating Period, then there shall be no restriction on TDS's ability to
sell at any time thereafter any interest that was a subject of those
negotiations, except that if, during the one-year period beginning on the
last day of the API Negotiating Period, TDS proposes to sell to a third party
any such interest for a price that is not more than the highest price API
offered in writing for the interest during the API Negotiating Period, TDS
shall first offer in writing to sell the interest to API upon the terms and
conditions proposed for the sale to a third party. API shall have ten days
within which to accept such offer by giving written notice of acceptance. If
API does not timely accept such offer, TDS shall then be free to sell the
interest to a third party during the remainder of the
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one-year period, but only if the price and other terms and conditions of sale
are in the aggregate, in the reasonable judgment of TDS, not less favorable
to TDS than those proposed for the sale of the interest to API. After the
expiration of the one-year period, there shall be no restrictions on TDS's
ability to sell the interest.
Section 4.03. FUTURE ISSUANCE OF SERIES A COMMON SHARES. The
parties acknowledge and agree that there have been extensive and in depth
discussions between the parties regarding the issuance of additional Series A
Common Shares of API subsequent to the Offering to achieve the common goal of
the parties of permitting such future issuance in any and all circumstances
in which such issuance is requested by TDS and the board of directors of API
determines, through the proper exercise of its business judgment, that such
issuance would be for a proper corporate purpose.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
As an inducement to enter into this Agreement, each party
represents to and agrees with the other that:
(a) it is a corporation duly organized, validly existing and in
good standing under the laws of its state
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of incorporation and has all requisite corporate power to own, lease and
operate its properties, to carry on its business as presently conducted
and to carry out the transactions contemplated by this Agreement;
(b) it has duly and validly taken all corporate action necessary
to authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby;
(c) this Agreement has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation enforceable in
accordance with its terms (subject, as to the enforcement of remedies,
to applicable bankruptcy, reorganization, insolvency, moratorium or
other similar laws affecting the enforcement of creditors' rights
generally from time to time in effect, and subject to equitable
limitations on the availability of the remedy of specific performance);
and
(d) none of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or the compliance
with any of the provisions of this Agreement will (i) conflict with or
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result in a breach of any provision of its corporate charter or bylaws,
(ii) breach, violate or result in a default under any of the terms of
any agreement or other instrument or obligation to which it is a party
or by which it or any of its properties or assets may be bound, or (iii)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to it or affecting any of its properties or assets.
ARTICLE VI
MISCELLANEOUS
Section 6.01. TERMINATION OF OBLIGATIONS. Article III of this
Agreement shall terminate and cease to be of any force and effect in respect
of TDS at such time as TDS shall cease beneficially to own any securities of
API; PROVIDED, HOWEVER, that such termination shall not affect the rights of
any transferee under Section 3.04. Article IV of this Agreement shall
terminate and cease to be of any force and effect in respect of TDS if, at
any time after TDS becomes the owner of Series A Common Shares, par value
$1.00 per share, of API, less than 500,000 Series A Common Shares are
outstanding.
Section 6.02. INJUNCTIONS. Irreparable damage would occur in the
event that any of the provisions of this Agreement
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were not performed in accordance with their specific terms or were otherwise
breached. Therefore, the parties hereto shall be entitled to an injunction
or injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof in any court having
jurisdiction, such remedy being in addition to any other remedy to which they
may be entitled at law or in equity.
Section 6.03. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, void, or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and
restrictions without including any of such which may be hereafter declared
invalid, void or unenforceable. In the event that any such term, provision,
covenant or restriction is so held to be invalid, void or unenforceable, the
parties hereto shall use their best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction.
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Section 6.04. ASSIGNMENT. Except as provided otherwise in
Section 3.04, and except by operation of law or in connection with the sale
or transfer of all or substantially all the assets of a party hereto or of
all or substantially all of the capital stock of API beneficially owned by
TDS, this Agreement shall not be assignable, in whole or in part, directly or
indirectly, by either party hereto without the prior written consent of the
other, and any attempt to assign any rights or obligations arising under this
Agreement without such consent shall be void; PROVIDED, HOWEVER, that the
provisions of this Agreement shall be binding upon, inure to the benefit of
and be enforceable by the parties hereto and their respective permitted
successors and assigns.
Section 6.05. FURTHER ASSURANCES. Subject to the provisions
hereof, the parties hereto shall make, execute, acknowledge and deliver such
other instruments and documents, and take all such other actions as may be
reasonably required in order to effectuate the purposes of this Agreement and
to consummate the transactions contemplated hereby. Subject to the
provisions hereof, each of the parties shall, in connection with entering
into this Agreement, performing its obligations hereunder and taking any and
all actions relating hereto, comply with all applicable laws, regulations,
orders and decrees, obtain all required consents and approvals and make all
required filings with any governmental agency, other regulatory or
administrative agency, commission or
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similar authority and promptly provide the other with all such information as
the other may reasonably request in order to be able to comply with the
provisions of this sentence.
Section 6.06. PARTIES IN INTEREST. Nothing in this Agreement
expressed or implied is intended or shall be construed to confer any right or
benefit upon any person, firm or corporation other than the parties and their
respective permitted successors and assigns.
Section 6.07. WAIVERS, ETC. No failure or delay on the part of
the parties in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right
or power, preclude any other or further exercise thereof or the exercise of
any other right or power. No amendment, modification or waiver of any
provision of this Agreement nor consent to any departure by the parties
therefrom shall in any event be effective unless the same shall be in writing
and signed by the chief executive officer or the chief financial officer of
each party in the case of amendments or modifications, or by the chief
executive officer or the chief financial officer of the waiving or consenting
party, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.
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Section 6.08. SETOFF. All payments to be made by either party
under this Agreement shall be made without setoff, counterclaim or
withholding except as specifically set forth herein with respect to
cancellation by TDS of indebtedness owed by API, all of which are expressly
waived.
Section 6.09. CONFIDENTIALITY. Subject to any contrary
requirement of law and the right of each party to enforce its rights
hereunder in any legal action, each party shall keep strictly confidential
and shall cause its employees and agents to keep strictly confidential, any
information which it or any of its agents or employees may acquire pursuant
to, or in the course of performing its obligations under, any provision of
this Agreement; PROVIDED, HOWEVER, that such obligation to maintain
confidentiality shall not apply to information which (a) at the time of
disclosure was in the public domain not as a result of acts by the receiving
party or (b) was in the possession of the receiving party at the time of
disclosure.
Section 6.10. ENTIRE AGREEMENT. This Agreement contains the
entire understanding of the parties with respect to the transactions
contemplated hereby.
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Section 6.11. HEADINGS. Descriptive headings are for convenience
only and shall not control or affect the meaning or construction of any
provision of this Agreement.
Section 6.12. COUNTERPARTS. For the convenience of the parties,
any number of counterparts of this Agreement may be executed by the parties
hereto, and each such executed counterpart shall be, and shall be deemed to
be, an original instrument.
Section 6.13. NOTICES. All notices, consents, requests,
instructions, approvals and other communications provided for herein shall be
validly given, made or served, if in writing and delivered personally, by
telegram or sent by registered mail, postage prepaid to:
TDS at: 00 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: President
with separate copies at such address to the attention of the Chief
Financial Officer and the Corporate Secretary
API at: 0000 Xxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxxxxxx, XX 00000-0000
Attention: President
with separate copies at such address to the attention of the Chief
Financial Officer and the Corporate Secretary
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or to such other address as any party may, from time to time, designate in a
written notice given in a like manner. Any notice given under this Agreement
shall be deemed delivered when received at the appropriate address.
Section 6.14. GOVERNING LAW. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of
Illinois applicable to contracts made and to be performed therein.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers, each of whom is duly authorized,
all as of the day and year first above written.
TELEPHONE AND DATA SYSTEMS, INC.
By: /s/ XxXxx X. Xxxxxxx, Xx.
-----------------------------------------
Name: XxXxx X. Xxxxxxx, Xx.
Title: President
AMERICAN PAGING, INC.
By:/s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
Title: President
Signature Page of Exchange Agreement
dated as of January 1, 1994.
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EXHIBIT A
RESTATED CERTIFICATE OF INCORPORATION
EXHIBIT B
NON-API PAGING INTERESTS
HELD BY CELLULAR SUBSIDIARIES AND AFFILIATES OF TDS:
Licensee Callsign City State
-------------------------------- -------- ------------- ------
United States Cellular Operating KNKC392 Klamath Falls OR
Company of Medford Medford OR
United States Cellular Operating KNKC278 Richland WA
Company of Richland
United States Cellular Operating KNKC280 Yakima WA
Company of Yakima Xxxxxx WA
HELD BY TELEPHONE COMPANY SUBSIDIARIES AND AFFILIATES OF TDS:
Licensee Callsign City State
-------------------------------- -------- ------------- ------
Arcadia Telephone Company KNKC637 Xxxxxxxxxxxx XX
XXX000 Xxxxxxx XX
Badger Telecom, Inc. KUS256 Chili WI
Barnardsville Telephone Company KNKC990 Asheville NC
Bonduel Telephone Company KUS279 Bonduel WI
Xxxxxxx City Telephone Company, KUS373 Derma MS
Inc.
Camden Telephone & Telegraph KNKB475 Kingsland GA
Company, Inc.
XXXX000 Xxxxxxxxx XX
Communication Corporation of KDS416 Hickory Corners MI
Michigan
Communications Corporation of KWT929 Danville IN
Indiana
Concord Telephone Exchange, Inc. XXX000 Xxxxxxx XX
LICENSEE CALLSIGN CITY STATE
-------------------------------- -------- ------------- ------
Delta County Tele-Comm, Inc. KNKJ597 Xxxxxxxxx CO
KNKO605 Telluride CO
Eastcoast Telecom, Inc. XXX000 Xxxxxxx Xxxxx WI
Goshen Telephone Company, Inc. KDS431 Goshen XX
Xxxxxxxxx Telecom, Inc. KWT854 Pennimore WI
Happy Valley Telephone Company KNKD534 Xxxxxxxx CA
Home Telephone Company-Xxxxxxx KWT872 Xxxxxxx IN
Kearsarge Telephone Company KUS308 New London NH
KMP Telephone Company WRD432 Kerkhoven MN
Ludlow Telephone Company KNKD927 Ludlow VT
Mid-State Telephone Company KUC940 Xxxxxx MN
Midway Telephone Company KNKI323 Medford WI
Peoples Telephone Company KUS361 Leesburg AL
Scandinavia Telephone Company KUS264 Scandinavia WI
St. Xxxxxxx Telephone Company WRW295 St. Xxxxxxx SC
Tennessee Telephone Company KNKC980 Halls Crossroads TN
KNKD778 La Vergne TN
1 March 13, 1998
