<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 1, 1994
REGISTRATION NO. 33-
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW YORK 4811 13-4924710
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NUMBER)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
ROBERT E. SCANNELL
VICE PRESIDENT--LAW AND SECRETARY
AMERICAN TELEPHONE AND TELEGRAPH
32 AVENUE OF THE AMERICAS COMPANY
NEW YORK, NEW YORK 10013-2412 32 AVENUE OF THE AMERICAS
(212) 387-5400 NEW YORK, NEW YORK 10013-2412
(ADDRESS, INCLUDING ZIP CODE, AND (212) 387-5400
TELEPHONE NUMBER, (NAME, ADDRESS, INCLUDING ZIP CODE,
INCLUDING AREA CODE, OF REGISTRANT'S AND
PRINCIPAL EXECUTIVE OFFICES) TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
COPIES TO:
RICHARD D. KATCHER EVELYN CRUZ SROUFE
WACHTELL, LIPTON, ROSEN & KATZ PERKINS COIE
51 WEST 52ND STREET 1201 THIRD AVENUE
NEW YORK, NEW YORK 10019 SEATTLE, WASHINGTON 98101
(212) 403-1000 (206) 583-8888
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of the Registration Statement and the
effective time of the merger (the "Merger") of a subsidiary of American
Telephone and Telegraph Company ("AT&T") and McCaw Cellular Communications,
Inc. ("McCaw"), as described in the Agreement and Plan of Merger, dated August
16, 1993 (the "Merger Agreement") attached as Appendix A to the Proxy
Statement/Prospectus forming a part of this Registration Statement.
---------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
---------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT MAXIMUM MAXIMUM
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
- ---------------------------------------------------------------------------------------
- -
<S> <C> <C> <C> <C>
Common Stock, par value
$1.00
per share............ 228,766,955(1) N.A. N.A. $2,600,118(2)(3)
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- -
</TABLE>
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(1) Based upon the product of (a) 205,910,850, the number of outstanding
shares of Class A Common Stock, par value $.01 per share ("Class A Common
Stock"), and Class B Common Stock, par value $.01 per share ("Class B
Common Stock") of McCaw, assuming the exercise of all McCaw stock options
(whether or not currently exercisable), not including shares of Class A
Common Stock held by AT&T, and (b) 1.111, the maximum Exchange Ratio (as
defined in the Merger Agreement) permitted by the Merger Agreement.
(2) The registration fee was computed pursuant to rule 457(f) under the
Securities Act of 1933, as amended (the "Securities Act") by adding (a)
the product of (i) $52 5/8, the average of the high and low sales price of
a share of Class A Common Stock quoted on the National Association of
Securities Dealers Automated Quotations system National Market System, on
January 25, 1994 as reported in published financial sources, and (ii)
142,694,767, the number of outstanding shares of Class A Common Stock,
assuming the exercise of all options to acquire Class A Common Stock
(whether or not currently exercisable), not including shares of Class A
Common Stock held by AT&T, to (b) the product of (i) $.49, the book value
of a share of Class B Common Stock as of September 30, 1993 and (ii)
63,216,083, the number of outstanding shares of Class B Common Stock,
assuming the exercise of all options to acquire Class B Common Stock
(whether or not currently exercisable). The result was then multiplied by
1/29 of one percent.
(3) Pursuant to Rule 457(b) under the Securities Act and Section 14(g) of the
Securities Exchange Act of 1934, as amended and Rule 0-11 thereunder, the
total registration fee of $2,600,118 is offset by the filing fee of
$2,172,256 previously paid by McCaw in connection with the filing of
preliminary proxy materials on October 4, 1993. Accordingly, the fee
payable upon the filing of this Registration Statement is $427,862.
THE REGISTRANT HEREBY AMENDS THE REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
SHARES OF COMMON STOCK
TO BE ISSUED IN CONNECTION WITH THE MERGER
OF A WHOLLY OWNED SUBSIDIARY OF
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
AND
MCCAW CELLULAR COMMUNICATIONS, INC.
----------------
CROSS REFERENCE SHEET PURSUANT TO ITEM 501(B)
OF REGULATIONS S-K SHOWING THE LOCATION IN THE PROSPECTUS
OF THE INFORMATION REQUIRED BY PART I OF FORM S-4
<TABLE>
<CAPTION>
LOCATION OR
CAPTION IN PROXY
ITEM OF FORM S-4 STATEMENT/PROSPECTUS
---------------- --------------------
A.INFORMATION ABOUT THE TRANSACTION
<C> <S> <C>
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus................. Facing Page of the Registration
Statement; Outside Front Cover
Page of Proxy Statement/
Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus..................................... Available Information; Incorporation
of Certain Documents by Reference;
Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information.................. Summary
4. Terms of the Transaction........................ The Merger; Description of AT&T
Capital Stock; Comparative Rights
of McCaw Stockholders and AT&T
Stockholders
5. Pro Forma Financial Information................. Unaudited Pro Forma Combined
Financial Statements
6. Material Contacts with the Company Being
Acquired....................................... The Merger
7. Additional Information Required for Reoffering
by Persons and Parties Deemed to be
Underwriters................................... Not Applicable
8. Interests of Named Experts and Counsel.......... The Merger; Legal Opinions; Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act Comparative Rights of McCaw
Liabilities.................................... Shareholders and AT&T
Shareholders
B.INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 Registrants..... Available Information; Incorporation
of Certain Documents by Reference
11. Incorporation of Certain Information by Available Information; Incorporation
Reference...................................... of Certain Documents by Reference
12. Information with Respect to S-2 or S-3
Registrants.................................... Not Applicable
13. Incorporation of Certain Information by
Reference...................................... Not Applicable
14. Information with Respect to Registrants Other
Than S-3 or S-2 Registrants.................... Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOCATION OR
CAPTION IN PROXY
ITEM OF FORM S-4 STATEMENT/PROSPECTUS
---------------- --------------------
C.INFORMATION ABOUT THE COMPANY BEING ACQUIRED
<C> <S> <C>
15. Information with Respect to S-3 Companies....... Available Information; Incorporation
of Certain Documents by Reference
16. Information with Respect to S-2 or S-3
Companies...................................... Not Applicable
17. Information with Respect to Companies Other
Than S-2 or S-3 Companies...................... Not Applicable
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations Are to be Solicited............. Outside Front Cover Page of Proxy
Statement/Prospectus; Available
Information; Incorporation of
Certain Documents by Reference;
The Special Meeting; The Merger;
Security Ownership of Certain
Beneficial Owners and Management
of McCaw
19. Information if Proxies, Consents or
Authorizations Are Not to be Solicited or in
an Exchange Offer.............................. Not Applicable
</TABLE>
<PAGE>
LOGO
McCaw Cellular
Communications, Inc.
February 2, 1994
Dear Fellow Stockholder:
You are cordially invited to attend the Special Meeting of Stockholders (the
"Special Meeting") of McCaw Cellular Communications, Inc. ("McCaw"), which will
be held on Friday, March 25, 1994 at 11:00 a.m., local time, at Overlake
Hospital Conference Center, 1035 116th Avenue N.E., Bellevue, Washington.
At the Special Meeting you will be asked to consider and vote upon a proposal
to approve and adopt an Agreement and Plan of Merger among McCaw, American
Telephone and Telegraph Company ("AT&T") and a subsidiary of AT&T (the "Merger
Agreement"), and the merger of the AT&T subsidiary into McCaw as provided for
in the Merger Agreement (the "Merger"). In the Merger, each outstanding share
of the Class A Common Stock and the Class B Common Stock of McCaw (together,
the "McCaw Common Stock") will be converted into one share of the Common Stock
of AT&T, subject to adjustment as described in the accompanying Proxy
Statement/Prospectus, and McCaw will become a wholly owned subsidiary of AT&T.
Stockholders will receive cash in lieu of any fractional shares.
You should read carefully the accompanying Notice of Special Meeting of
Stockholders and the Proxy Statement/Prospectus for details of the Merger and
additional related information.
MCCAW'S BOARD OF DIRECTORS HAS DETERMINED THE MERGER TO BE FAIR TO AND IN THE
BEST INTERESTS OF MCCAW AND ITS STOCKHOLDERS, HAS UNANIMOUSLY APPROVED AND
DECLARED ADVISABLE THE MERGER AGREEMENT AND THE MERGER AND RECOMMENDS A VOTE
FOR APPROVAL OF THE MERGER AGREEMENT AND THE MERGER.
The affirmative vote of the holders of shares representing a majority of the
outstanding voting power of the McCaw Common Stock is necessary to approve the
Merger Agreement and the Merger. Pursuant to separate agreements, the
beneficial owners of shares of McCaw Common Stock having an aggregate of more
than 80% of the voting power of the McCaw Common Stock, including members of
the McCaw family and British Telecommunications plc, have agreed to vote in
favor of the Merger Agreement and the Merger. Accordingly, approval thereof by
the McCaw stockholders is assured.
Whether or not you plan to attend the Special Meeting, please complete, sign
and date the enclosed proxy card and return it promptly in the enclosed postage
prepaid envelope. If you attend the Special Meeting, you may vote in person if
you wish, even though you previously have returned your proxy card. Your prompt
cooperation will be greatly appreciated.
Please do not send your share certificates with your proxy card. After
approval of the Merger Agreement and the Merger by McCaw stockholders and
satisfaction of all other conditions to the Merger, you will receive a
transmittal form and instructions for the surrender and exchange of your
shares.
Sincerely,
/S/ CRAIG O. McCAW
CRAIG O. McCAW
Chairman and Chief Executive Officer
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD.
<PAGE>
MCCAW CELLULAR COMMUNICATIONS, INC.
5400 CARILLON POINT
KIRKLAND, WASHINGTON 98033
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 25, 1994
TO THE STOCKHOLDERS OF McCAW CELLULAR COMMUNICATIONS, INC.:
A Special Meeting of the Stockholders (the "Special Meeting") of McCaw
Cellular Communications, Inc., a Delaware corporation ("McCaw"), will be held
on Friday, March 25, 1994 at 11:00 a.m., local time, at Overlake Hospital
Conference Center, 1035 116th Avenue N.E., Bellevue, Washington, for the
following purposes:
1. To consider and vote upon a proposal to approve and adopt an Agreement
and Plan of Merger, dated August 16, 1993 (the "Merger Agreement"), among
McCaw, American Telephone and Telegraph Company, a New York corporation
("AT&T"), and Ridge Merger Corporation, a Delaware corporation and a wholly
owned subsidiary of AT&T ("Merger Sub"), and the merger of Merger Sub into
McCaw upon the terms and subject to the conditions thereof (the "Merger").
Pursuant to the Merger Agreement, McCaw will become a wholly owned
subsidiary of AT&T, and each share of Class A Common Stock (the "Class A
Common Stock"), par value $.01 per share, and Class B Common Stock (the
"Class B Common Stock"), par value $.01 per share, of McCaw (together, the
"McCaw Common Stock") issued and outstanding immediately prior to the
Merger (other than shares held by AT&T) will be converted into one share of
common stock of AT&T (an "AT&T Common Share"), par value $1.00 per share
(the "Exchange Ratio"); provided, however, that (i) in the event the
average of the last reported sale price on the New York Stock Exchange,
Inc. for the 20 most recent trading days ending on the fifth day prior to
the date of closing of the Merger (the "Closing Date Market Price") of one
AT&T Common Share is less than $53.00, the Exchange Ratio will be equal to
$53.00 divided by the Closing Date Market Price of one AT&T Common Share,
but in no event greater than 1.111 AT&T Common Shares, and (ii) in the
event the Closing Date Market Price of one AT&T Common Share is greater
than $71.73, the Exchange Ratio will be equal to $71.73 divided by the
Closing Date Market Price of one AT&T Common Share, but in no event less
than .909 of an AT&T Common Share. THE MERGER IS MORE COMPLETELY DESCRIBED
IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS, AND A COPY OF THE MERGER
AGREEMENT IS ATTACHED AS APPENDIX A THERETO.
2. To transact such other matters relating to the conduct of the Special
Meeting or any adjournments or postponements thereof.
Only holders of record of shares of McCaw Common Stock at the close of
business on January 31, 1994, the record date for the Special Meeting, are
entitled to notice of and to vote at the Special Meeting and any adjournments
or postponements thereof.
The affirmative vote of the holders of shares representing a majority of the
outstanding voting power of the McCaw Common Stock is necessary to approve the
Merger Agreement and the Merger. Pursuant to separate agreements, the
beneficial owners of shares of McCaw Common Stock having an aggregate of more
than 80% of the voting power of the McCaw Common Stock, including members of
the McCaw family and British Telecommunications plc, have agreed to vote in
favor of the Merger Agreement and the Merger. Accordingly, approval thereof by
the McCaw stockholders is assured.
HOLDERS OF MCCAW COMMON STOCK WILL NOT BE ENTITLED TO APPRAISAL RIGHTS AS A
RESULT OF THE MERGER. Under Delaware law, appraisal rights are unavailable to
holders of the Class A Common Stock because the Class A Common Stock was, on
the record date, designated as a national market system security by the
National Association of Securities Dealers, Inc. and will be converted into
AT&T Common Shares, which on the effective date of the Merger will be listed on
the New York Stock Exchange. Further, appraisal rights will be unavailable to
holders of the Class B Common Stock when they vote in favor of the Merger as
they
<PAGE>
have agreed to do. See "THE MERGER--Absence of Appraisal Rights" in the
accompanying Proxy Statement/Prospectus. Management of McCaw anticipates that
the Merger will be consummated in the second calendar quarter of 1994, subject
to receipt of regulatory approvals and expiration of the waiting periods under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. See "THE
MERGER--Conditions; Waivers" and "--Regulatory Approvals" in the accompanying
Proxy Statement/ Prospectus.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE
PREPAID ENVELOPE. PLEASE DO NOT SEND ANY SHARE CERTIFICATES AT THIS TIME. YOUR
PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED BY SIGNING AND RETURNING A
LATER DATED PROXY WITH RESPECT TO THE SAME SHARES, BY FILING WITH THE SECRETARY
OF MCCAW A WRITTEN REVOCATION BEARING A LATER DATE, OR BY ATTENDING AND VOTING
AT THE SPECIAL MEETING.
McCAW CELLULAR COMMUNICATIONS, INC.
/s/ Tom A. Alberg
By: ____________________________________
Tom A. Alberg
Secretary
Kirkland, Washington
February 2, 1994
<PAGE>
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
PROSPECTUS
---------------
MCCAW CELLULAR COMMUNICATIONS, INC.
PROXY STATEMENT
FOR A SPECIAL MEETING OF STOCKHOLDERS OF MCCAW CELLULAR COMMUNICATIONS, INC.
TO BE HELD ON MARCH 25, 1994
McCaw Cellular Communications, Inc., a Delaware corporation ("McCaw"), is
furnishing this Proxy Statement/Prospectus to its stockholders in connection
with the solicitation of proxies by the Board of Directors of McCaw for use at
its Special Meeting of Stockholders and at any adjournments or postponements
thereof (the "Special Meeting").
At the Special Meeting, McCaw stockholders will consider and vote upon a
proposal to approve and adopt an Agreement and Plan of Merger, dated August
16, 1993 (the "Merger Agreement"), among McCaw, American Telephone and
Telegraph Company, a New York corporation ("AT&T"), and Ridge Merger
Corporation, a Delaware corporation and a wholly owned subsidiary of AT&T
("Merger Sub"), and the merger of Merger Sub into McCaw upon the terms and
subject to the conditions thereof (the "Merger"). In the Merger, McCaw will
become a wholly owned subsidiary of AT&T, and each share of Class A Common
Stock (the "Class A Common Stock"), par value $.01 per share, and Class B
Common Stock (the "Class B Common Stock"), par value $.01 per share, of McCaw
(together, the "McCaw Common Stock") issued and outstanding immediately prior
to the Merger (other than shares held by AT&T) will be converted into one
share of common stock of AT&T (an "AT&T Common Share"), par value $1.00 per
share (the "Exchange Ratio"); provided, however, that (i) in the event the
average of the last reported sale price on the New York Stock Exchange, Inc.
(the "NYSE") for the 20 most recent trading days ending on the fifth day prior
to the date of the closing of the Merger (the "Closing Date Market Price") of
one AT&T Common Share is less than $53.00, the Exchange Ratio will be equal to
$53.00 divided by the Closing Date Market Price of one AT&T Common Share, but
in no event greater than 1.111 AT&T Common Shares, and (ii) in the event the
Closing Date Market Price of one AT&T Common Share is greater than $71.73, the
Exchange Ratio will be equal to $71.73 divided by the Closing Date Market
Price of one AT&T Common Share, but in no event less than .909 of an AT&T
Common Share. See "THE MERGER--Terms of the Merger."
Pursuant to separate agreements, the beneficial owners of shares of McCaw
Common Stock having an aggregate of more than 80% of the voting power of the
McCaw Common Stock, including members of the McCaw family and British
Telecommunications plc ("BT"), through its wholly owned subsidiary, BT USA
Holdings, Inc. ("BT USA"), have agreed to vote in favor of the Merger
Agreement and the Merger. Accordingly, approval thereof by the McCaw
stockholders is assured.
No fractional AT&T Common Shares will be issued in the Merger. In lieu of
any such fractional shares, each holder of McCaw Common Stock who otherwise
would be entitled to receive a fractional AT&T Common Share pursuant to the
Merger will be paid an amount in cash, without interest, equal to such
holder's proportionate interest in the net proceeds from the sale or sales in
the open market by the exchange agent for the Merger (the "Exchange Agent"),
on behalf of all such holders, of the aggregate fractional AT&T Common Shares,
if any, that would have been issued in the Merger. As soon as practicable
following the Effective Time (as hereinafter defined), the Exchange Agent will
determine the excess, if any, of (i) the number of full AT&T Common Shares
delivered to the Exchange Agent by AT&T over (ii) the aggregate number of full
AT&T Common Shares to be distributed to holders of McCaw Common Stock (such
excess being herein called the "Excess Shares"), and the Exchange Agent, as
agent for the former holders of McCaw Common Stock, will sell any such Excess
Shares at the prevailing prices on the NYSE. The sale of any Excess Shares
will be executed through one or more member firms of the NYSE and will be
executed in round lots to the extent practicable.
This Proxy Statement/Prospectus is first being mailed to McCaw stockholders
on or about February 4, 1994.
THE AT&T COMMON SHARES ISSUABLE IN THE MERGER HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------
The date of this Proxy Statement/Prospectus is February 2, 1994.
<PAGE>
This Proxy Statement/Prospectus constitutes the Prospectus of AT&T filed as
part of a Registration Statement on Form S-4 (the "Registration Statement")
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
AT&T Common Shares issuable in connection with the Merger. All information
concerning AT&T contained in this Proxy Statement/Prospectus has been
furnished by AT&T and all information concerning McCaw prior to the Merger
contained in this Proxy Statement/Prospectus has been furnished by McCaw.
AVAILABLE INFORMATION
AT&T and McCaw are subject to the information and reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
certain regional offices of the Commission located at Suite 1400, Northwestern
Atrium Center, 500 West Madison Street, Chicago, Illinois 60661; and 7 World
Trade Center, 13th Floor, New York, New York 10048. Copies of such information
can be obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. In addition,
reports, proxy statements and other information concerning AT&T can be
inspected at the NYSE, 20 Broad Street, New York, New York 10005; the Midwest
Stock Exchange, One Financial Place, 440 South LaSalle Street, Chicago,
Illinois 60605; the Pacific Stock Exchange (the "PSE"), 301 Pine Street, San
Francisco, California 94104; the Boston Stock Exchange, One Boston Place,
Boston, Massachusetts 02108; and the Philadelphia Stock Exchange, 1900 Market
Street, Philadelphia, Pennsylvania 19103, the national and regional securities
exchanges on which AT&T Common Shares are listed. Reports, proxy statements
and other information concerning McCaw can be inspected at the PSE, 301 Pine
Street, San Francisco, California 94104, on which exchange the Class A Common
Stock is listed.
This Proxy Statement/Prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. The Registration
Statement and any amendments thereto, including exhibits filed as a part
thereof, are available for inspection and copying as set forth above.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH DOCUMENTS,
OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED
BY REFERENCE THEREIN, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON, INCLUDING
ANY BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT/PROSPECTUS IS DELIVERED
UPON WRITTEN OR ORAL REQUEST TO, IN THE CASE OF DOCUMENTS RELATING TO AT&T,
THE SECRETARY'S DEPARTMENT, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, ROOM
2420E, 32 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10013-2412, TELEPHONE
NUMBER (212) 387-5400; AND, IN THE CASE OF DOCUMENTS RELATING TO MCCAW,
INVESTOR RELATIONS, MCCAW CELLULAR COMMUNICATIONS, INC., 5400 CARILLON POINT,
KIRKLAND, WASHINGTON 98033, TELEPHONE NUMBER (206) 828-1350. TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BEFORE MARCH 11, 1994.
ii
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by AT&T or McCaw with the
Commission pursuant to the Exchange Act are incorporated herein by this
reference:
I. AT&T's Annual Report on Form 10-K for the year ended December 31,
1992;
II. AT&T's Quarterly Reports on Form 10-Q for the periods ended March 31,
1993, June 30, 1993 and September 30, 1993;
III. AT&T's Current Reports on Form 8-K dated February 16, 1993, February
23, 1993, August 4, 1993, August 16, 1993, as amended, October 8, 1993,
December 30, 1993, January 14, 1994 and January 27, 1994;
IV. McCaw's Annual Report on Form 10-K for the year ended December 31,
1992, as amended;
V. McCaw's Quarterly Reports on Form 10-Q for the periods ended March 31,
1993, June 30, 1993, as amended, and September 30, 1993; and
VI. McCaw's Current Reports on Form 8-K dated August 16, 1993, as
amended, and December 1, 1993.
All documents filed by AT&T or McCaw pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date hereof and prior to the date
of the Special Meeting shall be deemed to be incorporated by reference herein
and to be a part hereof from the date any such document is filed.
Any statements contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document which also is incorporated by reference
herein) modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed to constitute a part hereof except as so
modified or superseded. All information appearing in this Proxy
Statement/Prospectus is qualified in its entirety by the information and
financial statements (including notes thereto) appearing in the documents
incorporated herein by reference, except to the extent set forth in the
immediately preceding statement.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS WITH RESPECT TO THE MATTERS DESCRIBED IN THIS PROXY
STATEMENT/PROSPECTUS OTHER THAN THOSE CONTAINED HEREIN OR IN THE DOCUMENTS
INCORPORATED BY REFERENCE HEREIN. ANY INFORMATION OR REPRESENTATIONS WITH
RESPECT TO SUCH MATTERS NOT CONTAINED HEREIN OR THEREIN MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY AT&T OR MCCAW. THIS PROXY
STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE
IN THE AFFAIRS OF AT&T OR MCCAW SINCE THE DATE HEREOF OR THAT THE INFORMATION
IN THIS PROXY STATEMENT/PROSPECTUS OR IN THE DOCUMENTS INCORPORATED BY
REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR
THEREOF.
iii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION..................................................... ii
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... iii
SUMMARY................................................................... 1
The Companies........................................................... 1
Special Meeting of McCaw Stockholders................................... 1
The Merger.............................................................. 2
Certain Significant Considerations...................................... 9
Summary Historical and Unaudited Pro Forma Combined Financial Data...... 9
AT&T Historical......................................................... 10
McCaw Historical........................................................ 11
Unaudited AT&T and McCaw Pro Forma Combined............................. 12
Comparative Per Share Data.............................................. 13
Comparative Per Share Market Information................................ 14
THE SPECIAL MEETING....................................................... 15
Special Meeting......................................................... 15
Record Date; Shares Entitled to Vote; Vote Required..................... 15
Proxies; Proxy Solicitation............................................. 16
THE COMPANIES............................................................. 17
AT&T.................................................................... 17
Merger Sub.............................................................. 17
McCaw................................................................... 17
THE MERGER................................................................ 17
Background.............................................................. 17
McCaw's Reasons for the Merger; Recommendation of the McCaw Special
Committee and the McCaw Board.......................................... 24
AT&T's Reasons for the Merger........................................... 26
Opinions of the Financial Advisors to the McCaw Special Committee and to
the McCaw Board........................................................ 27
Terms of the Merger..................................................... 33
Effective Time of the Merger............................................ 34
Exchange of Certificates in the Merger.................................. 34
Listing of the AT&T Common Shares on the NYSE........................... 35
Representations and Warranties.......................................... 35
Business of McCaw Pending the Merger.................................... 36
Certain Covenants of AT&T............................................... 37
Pursuit of New Opportunities Pending the Merger......................... 38
No Solicitation......................................................... 39
Conditions; Waivers..................................................... 39
Amendment; Termination.................................................. 40
Agreements of BT and the McCaw Block to Vote in Favor of the Merger..... 41
Certain Federal Income Tax Consequences................................. 41
Regulatory Approvals.................................................... 42
Resale of AT&T Common Shares Issued in the Merger; Affiliates........... 44
Accounting Treatment.................................................... 44
Interests of Certain Persons in the Merger.............................. 44
Management and Operations of McCaw after the Merger..................... 47
Expenses and Fees....................................................... 48
Litigation.............................................................. 48
Absence of Appraisal Rights............................................. 48
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
OTHER AGREEMENTS.......................................................... 49
McCaw Block Agreement................................................... 49
BT Letter Agreement..................................................... 50
BT Waiver............................................................... 52
August 1993 Put Letter.................................................. 53
DIVIDENDS ON AND MARKET PRICES OF AT&T COMMON SHARES AND McCAW COMMON
STOCK.................................................................... 54
AT&T.................................................................... 54
McCaw................................................................... 55
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF McCAW... 56
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS......................... 59
DESCRIPTION OF AT&T CAPITAL STOCK......................................... 68
DESCRIPTION OF McCAW CAPITAL STOCK........................................ 68
COMPARATIVE RIGHTS OF McCAW STOCKHOLDERS AND AT&T STOCKHOLDERS............ 69
Beneficial Ownership of Stock........................................... 69
Business Combinations................................................... 69
Appraisal Rights........................................................ 70
State Takeover Legislation.............................................. 70
Stockholder Rights Plan................................................. 71
Amendments to Charters.................................................. 71
Amendments to By-Laws................................................... 72
Preemptive Rights....................................................... 72
Redemption of Capital Stock............................................. 73
Dividend Sources........................................................ 73
Duration of Proxies..................................................... 73
Stockholder Action...................................................... 74
Special Stockholder Meetings............................................ 74
Cumulative Voting....................................................... 74
Number and Election of Directors........................................ 74
Removal of Directors.................................................... 75
Vacancies............................................................... 76
Indemnification of Directors and Officers............................... 77
Limitation of Personal Liability of Directors........................... 78
LEGAL OPINIONS............................................................ 79
EXPERTS................................................................... 79
PROPOSALS BY McCAW STOCKHOLDERS........................................... 80
</TABLE>
Appendix A--Agreement and Plan of Merger, dated August 16, 1993, among AT&T,
Merger Sub and McCaw
Appendix B--Agreement, dated as of August 16, 1993, by and among AT&T, on the
one hand, and Craig O. McCaw, John E. McCaw, Jr., Bruce R. McCaw
and Keith W. McCaw and the other persons set forth on the
signature page thereto, on the other hand
Appendix C--Letter agreement, dated August 16, 1993, among AT&T, BT and BT USA
Appendix D--Waiver and Agreement, dated August 16, 1993, among McCaw, BT and
BT USA
Appendix E--Letter, dated August 16, 1993, from AT&T to McCaw, regarding an
offer by AT&T to purchase certain shares of Class A Common Stock
Appendix F--Opinion of Salomon Brothers Inc
Appendix G--Opinion of Lazard Freres & Co.
v
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
TERM PAGE
- ---- ----
<S> <C>
Acquiring Person........................................................... 24
Affiliates................................................................. 44
Antitrust Division......................................................... 6
AT&T....................................................................... i
AT&T Board................................................................. 5
AT&T By-Laws............................................................... 69
AT&T Certificate of Incorporation.......................................... 37
AT&T Common Share.......................................................... i
August 1993 Put Letter..................................................... 6
BellSouth.................................................................. 43
Bonus Pools................................................................ 46
BT......................................................................... i
BT Guaranty Agreement...................................................... 51
BT Letter Agreement........................................................ 6
BT Purchase Agreement...................................................... 51
BT Registrable Securities.................................................. 51
BT Registration Rights Agreement........................................... 51
BT Stockholders Agreement.................................................. 51
BT USA..................................................................... i
BT Waiver.................................................................. 6
BT/McCaw Registration Rights Agreement..................................... 51
California Settlement...................................................... 44
Cellular System............................................................ 37
Certificates............................................................... 35
Claircom................................................................... 17
Class A Common Stock....................................................... i
Class B Common Stock....................................................... i
Closing.................................................................... 4
Closing Date Market Price.................................................. i
Code....................................................................... 34
Commission................................................................. ii
Committee.................................................................. 46
Comparable Group........................................................... 28
CTC........................................................................ 11
Delaware Business Combination Law.......................................... 70
Decree..................................................................... 43
Designated Party........................................................... 75
Designated Party Nominees.................................................. 75
DGCL....................................................................... 3
EBITDA..................................................................... 28
Effective Time............................................................. 3
Eighteen-Month Period...................................................... 50
Employee Initial Amount.................................................... 46
Excess Shares.............................................................. i
Exchange Act............................................................... ii
Exchange Agent............................................................. i
Exchange Ratio............................................................. i
Executive Plan............................................................. 46
FCC........................................................................ 7
fiduciary out.............................................................. 21
for cause.................................................................. 47
FTC........................................................................ 6
</TABLE>
vi
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE
- ---- ----
<S> <C>
HSR Act.................................................................... 6
Independent Directors...................................................... 75
Initial Amount............................................................. 46
Initial Period............................................................. 50
Lazard Freres.............................................................. 3
Lazard Freres Report....................................................... 30
LIN........................................................................ 1
LIN Bonus Pool............................................................. 46
LIN Closing................................................................ 46
LIN Rights Agreement....................................................... 24
McCaw...................................................................... i
McCaw Block................................................................ 5
McCaw Block Agreement...................................................... 5
McCaw Board................................................................ 3
McCaw Bonus Pool........................................................... 45
McCaw By-Laws.............................................................. 16
McCaw Certificate of Incorporation......................................... 36
McCaw Common Stock......................................................... i
McCaw Registrable Securities............................................... 49
McCaw Registration Notice.................................................. 50
McCaw Registration Rights Agreement........................................ 49
McCaw Registration Rights Holders.......................................... 49
McCaw Shareholders Agreement............................................... 49
McCaw Special Committee.................................................... 3
Merger..................................................................... i
Merger Agreement........................................................... i
Merger Sub................................................................. i
MSA........................................................................ 31
NASDAQ..................................................................... 14
New Opportunities Rules.................................................... 38
New York Business Combination Law.......................................... 71
NYBCL...................................................................... 70
NYSE....................................................................... i
Offer...................................................................... 53
Opportunities.............................................................. 38
Option..................................................................... 34
Option Plans............................................................... 34
Participating McCaw Stockholders........................................... 50
PMVG....................................................................... 45
POPs....................................................................... 28
Proposed Contingent Payment Rights......................................... 19
Proposed Strategic Alliance................................................ 18
PSE........................................................................ ii
Publication Date........................................................... 44
Put Shares................................................................. 53
Real Property Tax Payment.................................................. 42
Record Date................................................................ 15
Registration Statement..................................................... ii
resale opportunity......................................................... 38
S&P 500.................................................................... 31
Salomon Brothers........................................................... 3
</TABLE>
vii
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE
- ---- ----
<S> <C>
Salomon Brothers Report.................................................... 27
Securities Act............................................................. ii
September 1992 Put Letter.................................................. 18
SFAS....................................................................... 10
Special Committee Suggested Changes........................................ 20
Special Meeting............................................................ i
Stockholder Action......................................................... 48
Surviving Corporation...................................................... 33
The Equitable.............................................................. 58
Triggering Event........................................................... 24
Twelve-Month Period........................................................ 50
wireless opportunity....................................................... 38
</TABLE>
viii
<PAGE>
SUMMARY
Certain significant matters discussed in this Proxy Statement/Prospectus are
summarized below. This summary is not intended to be complete and is qualified
in all respects by reference to the more detailed information appearing or
incorporated by reference in this Proxy Statement/Prospectus (including the
Appendices hereto).
THE COMPANIES
American Telephone and
Telegraph Company...... AT&T participates in two industries: the global in-
formation movement and management industry and the
financial services and leasing industry. In the
global information movement and management industry,
AT&T's services and products combine communications
and computing. In the financial services and leasing
industry, AT&T provides direct financing and finance
leasing programs for its own products and the prod-
ucts of other companies, leases products to its cus-
tomers under operating leases and is in the general
purpose credit card business.
The mailing address of AT&T's principal executive of-
fices is 32 Avenue of the Americas, New York, New
York 10013-2412, and its telephone number is (212)
387-5400. See "THE COMPANIES--AT&T."
Ridge Merger
Corporation............ Merger Sub, a wholly owned subsidiary of AT&T, was
formed by AT&T solely for the purpose of effecting -
the Merger. The mailing address of Merger Sub's prin-
cipal executive offices is c/o American Telephone an
Telegraph Company, 32 Avenue of the Americas, New
York, New York 10013-2412, and its telephone number
is (212) 387-5400. See "THE COMPANIES--Merger Sub."
McCaw Cellular
Communications, Inc. .. McCaw develops and provides wireless personal commu-
nications services, including cellular telephone,
paging and air-to-ground communications. LIN Broad-
casting Corporation, a Delaware corporation and a ma-
jority owned subsidiary of McCaw ("LIN"), owns inter-
ests in cellular telephone service providers, and
owns seven network-affiliated television stations.
The mailing address of McCaw's principal executive
offices is 5400 Carillon Point, Kirkland, Washington
98033, and its telephone number is (206) 827-4500.
See "THE COMPANIES--McCaw."
SPECIAL MEETING OF MCCAW STOCKHOLDERS
Date, Time and Place of
the Special Meeting.... The Special Meeting is to be held on Friday, March
25, 1994 at 11:00 a.m., local time, at Overlake Hos-
pital Conference Center, 1035 116th Avenue N.E.,
Bellevue, Washington.
Purpose of the Special
Meeting................ The purpose of the Special Meeting is to consider and
vote upon a proposal to approve and adopt the Merger
Agreement and the Merger.
1
<PAGE>
Record Date............. Only holders of record of shares of McCaw Common
Stock at the close of business on January 31, 1994
are entitled to notice of and to vote at the Special
Meeting. On that date, 148,450,863 shares of Class A
Common Stock and 60,137,547 shares of Class B Common
Stock were outstanding and entitled to vote.
Vote Required........... The affirmative vote of the holders of shares repre-
senting a majority of the outstanding voting power of
the McCaw Common Stock entitled to vote at the Spe-
cial Meeting is required for approval and adoption of
the Merger Agreement and the Merger. Certain benefi-
cial owners of shares of McCaw Common Stock having an
aggregate of more than 80% of the voting power of the
McCaw Common Stock, including members of the McCaw
family and BT, have agreed to vote in favor of the
Merger Agreement and the Merger. Accordingly, ap-
proval thereof by the McCaw stockholders is assured.
See "THE SPECIAL MEETING--Record Date; Shares Enti-
tled to Vote; Vote Required," "THE MERGER--Agreements
of BT and the McCaw Block to Vote in Favor of the
Merger" and "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT OF McCAW."
THE MERGER
General................. Upon consummation of the Merger, Merger Sub will
merge into McCaw, McCaw will become a wholly owned
subsidiary of AT&T and each share of McCaw Common
Stock issued and outstanding immediately prior to the
Merger (other than shares held by AT&T) will be con-
verted into one AT&T Common Share; provided, however,
that (i) in the event the Closing Date Market Price
of one AT&T Common Share is less than $53.00, the Ex-
change Ratio will be equal to $53.00 divided by the
Closing Date Market Price of one AT&T Common Share,
but in no event greater than 1.111 AT&T Common
Shares, and (ii) in the event the Closing Date Market
Price of one AT&T Common Share is greater than
$71.73, the Exchange Ratio will be equal to $71.73
divided by the Closing Date Market Price of one AT&T
Common Share, but in no event less than .909 of an
AT&T Common Share. If, prior to the Effective Time,
AT&T should split or combine the AT&T Common Shares,
or pay a stock dividend or other stock distribution
in AT&T Common Shares, or otherwise change the AT&T
Common Shares into any other securities, or make any
other dividend or distribution on the AT&T Common
Shares (other than normal quarterly dividends as the
same may be adjusted from time to time in the ordi-
nary course), then the Exchange Ratio will be appro-
priately adjusted to reflect such split, combination,
dividend or other distribution or change.
Fractional Shares....... No fractional AT&T Common Shares will be issued in
the Merger. In lieu of any such fractional shares,
each holder of McCaw Common Stock who otherwise would
be entitled to receive a fractional AT&T Common Share
pursuant to the Merger will be paid an amount in
cash, without interest, equal to such holder's pro-
portionate interest in the net proceeds from the sale
or sales in the open market by the Exchange
2
<PAGE>
Agent, on behalf of all such holders, of the aggre-
gate fractional AT&T Common Shares, if any, that
would have been issued in the Merger. As soon as
practicable following the Effective Time, the Ex-
change Agent will determine the number of Excess
Shares, if any, and the Exchange Agent, as agent for
the former holders of McCaw Common Stock, will sell
any such Excess Shares at the prevailing prices on
the NYSE. The sale of any Excess Shares will be exe-
cuted through one or more member firms of the NYSE
and will be executed in round lots to the extent
practicable. See "THE MERGER--Terms of the Merger."
Recommendation of the
McCaw Board of
Directors..............
The Board of Directors of McCaw (the "McCaw Board")
has determined the Merger to be fair to and in the
best interests of McCaw and its stockholders and has
unanimously approved and declared advisable the
Merger Agreement and the Merger. The McCaw Board rec-
ommends that McCaw stockholders approve the Merger
Agreement and the Merger. The McCaw Board's recommen-
dation is based upon the recommendation of a Special
Committee of the McCaw Board (the "McCaw Special Com-
mittee") and a number of factors discussed in this
Proxy Statement/Prospectus. See "THE MERGER--McCaw's
Reasons for the Merger; Recommendation of the McCaw
Special Committee and the McCaw Board."
Opinions of Financial
Advisors to the McCaw
Special Committee and
to the McCaw Board.....
Salomon Brothers Inc ("Salomon Brothers") has ren-
dered an opinion to the McCaw Special Committee to
the effect that, as of August 16, 1993, the consider-
ation to be received by McCaw stockholders in connec-
tion with the Merger is fair to such stockholders
(other than AT&T, BT or any of their respective af-
filiates) from a financial point of view. Lazard
Freres & Co. ("Lazard Freres") has rendered an opin-
ion to the McCaw Board to the effect that, as of Au-
gust 15, 1993, the consideration to be received by
McCaw stockholders in connection with the proposed
Merger is fair to such stockholders (other than AT&T,
BT or any of their respective affiliates) from a fi-
nancial point of view. Copies of the opinion of Salo-
mon Brothers, dated August 16, 1993, and the opinion
of Lazard Freres, dated August 15, 1993, setting
forth the assumptions made, the matters considered
and the limitations on the review undertaken in ren-
dering such opinions, are attached to this Proxy
Statement/Prospectus as Appendices F and G, respec-
tively, and should be read carefully in their entire-
ties. See "THE MERGER--Opinions of the Financial Ad-
visors to the McCaw Special Committee and to the
McCaw Board."
Effective Time of the Following receipt of all required governmental ap-
Merger................. provals and satisfaction or waiver (where permissi-
ble) of the other conditions to the Merger, the
Merger will be consummated and become effective at
the time (the "Effective Time") at which the certifi-
cate of merger to be filed pursuant to the General
Corporation Law of the State of Delaware (the "DGCL")
is accepted for filing by the Secretary of State of
the State of
3
<PAGE>
Delaware or such later date and time as may be speci-
fied in such certificate of merger. See "THE MERGER--
Effective Time of the Merger" and "--Conditions;
Waivers."
Exchange of
Certificates in the
Merger.................
Promptly after the Effective Time, the Exchange Agent
will mail a transmittal form and instructions to each
holder of record (other than AT&T) of certificates
which immediately prior to the Effective Time repre-
sented outstanding shares of McCaw Common Stock,
which form and instructions are to be used in for-
warding such certificates for surrender and exchange
for (i) certificates representing that number of
whole AT&T Common Shares that such holder has the
right to receive pursuant to the Merger and (ii) cash
for any fractional AT&T Common Shares to which such
holder otherwise would be entitled. MCCAW STOCKHOLD-
ERS ARE REQUESTED NOT TO SURRENDER THEIR CERTIFICATES
FOR EXCHANGE UNTIL SUCH TRANSMITTAL FORM AND INSTRUC-
TIONS ARE RECEIVED. Holders of certificates formerly
representing shares of McCaw Common Stock will not be
entitled to receive dividends or any other distribu-
tions from AT&T until such certificates are so sur-
rendered. Persons entitled to receive dividends or
other distributions in respect of the certificates
surrendered in connection with the Merger will not be
entitled to receive interest on such dividends or
other distributions. See "THE MERGER--Exchange of
Certificates in the Merger."
Listing of the AT&T
Common Shares on the
NYSE................... AT&T has agreed to use all reasonable efforts to
cause the AT&T Common Shares to be issued pursuant to
the Merger Agreement and upon exercise of stock op-
tions granted to employees of McCaw and its subsidi-
aries to be listed for trading on the NYSE. Such au-
thorization for listing is a condition to the obliga-
tions of AT&T, Merger Sub and McCaw to consummate the
Merger.
Business of McCaw
Pending the Merger.....
McCaw has agreed that, prior to the Effective Time or
earlier termination of the Merger Agreement, except
as contemplated by the Merger Agreement, McCaw and
its subsidiaries will each conduct its operations ac-
cording to its ordinary course of business consistent
with past practice. In addition, unless AT&T agrees
in writing or except as otherwise permitted pursuant
to the Merger Agreement or as previously disclosed to
AT&T, prior to the Effective Time neither McCaw nor
any of its subsidiaries is permitted to engage in any
of a number of actions specified in the Merger Agree-
ment. See "THE MERGER--Business of McCaw Pending the
Merger."
Pursuit of New
Opportunities Pending
the Merger............. AT&T and McCaw have agreed that, prior to the closing
of the Merger (the "Closing") or earlier termination
of the Merger Agreement, AT&T and McCaw will not pur-
sue certain business opportunities relating to the
provision of wireless and cellular communications
services except in accordance with certain procedures
set forth in the Merger Agreement. See "THE MERGER--
Pursuit of New Opportunities Pending the Merger."
4
<PAGE>
No Solicitation......... McCaw has agreed that, prior to the Closing or ear-
lier termination of the Merger Agreement, neither
McCaw nor any of its officers, employees, representa-
tives, agents or affiliates will, directly or indi-
rectly, encourage, solicit or engage in discussions
or negotiations with any third party (other than
AT&T) concerning any merger, consolidation, share ex-
change or similar transaction, any purchase of sig-
nificant assets or equity of McCaw or its significant
subsidiaries, or any other transaction that would in-
volve the transfer or potential transfer of control
of McCaw, other than the transactions contemplated by
the Merger Agreement. See "THE MERGER--No Solicita-
tion."
Management and
Operations of McCaw
after the Merger....... After the Merger, McCaw will be a wholly owned sub-
sidiary of AT&T. McCaw will operate as one of AT&T's
business units, and AT&T currently intends to retain
McCaw's corporate headquarters in Kirkland, Washing-
ton. After the Merger, McCaw will have access to re-
sources generally available to AT&T's other business
units, will participate in appropriate activities
with other AT&T business units and will operate under
the direction and guidance of AT&T's senior manage-
ment and the Board of Directors of AT&T (the "AT&T
Board"). See "THE MERGER--Management and Operations
of McCaw after the Merger."
Conditions of the
Merger; Termination.... The consummation of the Merger is conditioned upon
the fulfillment or waiver (where permissible) of cer-
tain conditions set forth in the Merger Agreement.
See "THE MERGER--Conditions; Waivers." The Merger
Agreement may be terminated (i) by mutual consent of
AT&T and McCaw, (ii) by either AT&T or McCaw if the
Merger has not been consummated by September 30, 1994
and (iii) under certain other circumstances. See "THE
MERGER--Amendment; Termination."
Agreements of BT and
the McCaw Block to
Vote in Favor of the
Merger................. McCaw Block Agreement. Concurrently with the execu-
tion of the Merger Agreement, AT&T, on the one hand,
and Craig O. McCaw, John E. McCaw, Jr., Bruce R.
McCaw, Keith W. McCaw and certain other holders of
Class B Common Stock (including certain directors and
officers of McCaw) set forth on the signature page
thereto (collectively, the "McCaw Block"), on the
other hand, entered into an agreement dated as of Au-
gust 16, 1993 (the "McCaw Block Agreement"). Pursuant
to the McCaw Block Agreement, each member of the
McCaw Block has agreed to attend the Special Meeting,
in person or by proxy, and to vote all shares of
McCaw Common Stock that such member has the right to
vote for approval and adoption of the Merger Agree-
ment and the Merger. As of January 31, 1994, the mem-
bers of the McCaw Block had the power to vote shares
representing approximately 62% of the voting power of
the McCaw Common Stock. See "OTHER AGREEMENTS--McCaw
Block Agreement" and "THE MERGER--Interests of Cer-
tain Persons in the Merger."
5
<PAGE>
BT Letter Agreement. Concurrently with the execution
of the Merger Agreement, AT&T, BT and BT USA entered
into a letter agreement dated August 16, 1993 (the
"BT Letter Agreement"). Pursuant to the BT Letter
Agreement, each of BT and BT USA has agreed to vote
all shares of McCaw Common Stock that it has the
right to vote in favor of approval of the Merger
Agreement and the Merger at the Special Meeting. As
of January 31, 1994, BT had the power to vote shares
representing approximately 21% of the voting power of
the McCaw Common Stock. See "OTHER AGREEMENTS--BT
Letter Agreement."
Other Agreements........ BT Waiver. Concurrently with the execution of the
Merger Agreement, McCaw, BT and BT USA entered into a
letter agreement dated August 16, 1993 (the "BT Waiv-
er"). Pursuant to the BT Waiver, the parties agreed
that, effective upon consummation of the Merger, the
agreements among McCaw, BT and BT USA specified under
"OTHER AGREEMENTS--BT Letter Agreement" would termi-
nate automatically. BT USA also irrevocably waived
its rights under certain provisions of such agree-
ments with respect to the execution, delivery and
performance of the Merger Agreement and the consumma-
tion of the transactions contemplated thereby. See
"OTHER AGREEMENTS--BT Waiver" and "--BT Letter Agree-
ment."
August 1993 Put Letter. Concurrently with the execu-
tion of the Merger Agreement, AT&T delivered to McCaw
a letter dated August 16, 1993 (the "August 1993 Put
Letter"). Pursuant to the August 1993 Put Letter,
AT&T irrevocably offered, subject to the terms and
conditions thereof, to purchase 11,707,317 shares of
newly issued Class A Common Stock at $51.25 per
share, or an aggregate of $600 million, in the event
the Merger is not consummated. McCaw may accept such
offer at any time within 15 days after the Merger
Agreement is terminated in accordance with its terms.
See "OTHER AGREEMENTS--August 1993 Put Letter."
Certain Federal Income
Tax Consequences....... It is expected that the Merger will constitute a re-
organization for federal income tax purposes and, ac-
cordingly, that no gain or loss will be recognized by
holders of McCaw Common Stock upon the conversion of
McCaw Common Stock solely into AT&T Common Shares in
the Merger (except with respect to any cash received
in lieu of a fractional share interest in AT&T Common
Shares). See "THE MERGER--Certain Federal Income Tax
Consequences." McCaw stockholders are urged to con-
sult their own tax advisors as to the specific tax
consequences to them of the Merger.
Regulatory Approvals.... In connection with the Merger, AT&T, McCaw and mem-
bers of the McCaw Block have made filings or applica-
tions with (i) the Federal Trade Commission (the
"FTC") and the Antitrust Division of the Department
of Justice (the "Antitrust Division") pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules promulgated thereunder (the
"HSR Act"), (ii) the Federal Com-
6
<PAGE>
munications Commission (the "FCC") and (iii) various
state regulatory commissions. Consummation of the
Merger is conditioned upon, among other things, expi-
ration of the waiting periods under the HSR Act, ap-
proval by the FCC of the transfer of control of McCaw
and the receipt of other necessary regulatory approv-
als. See "THE MERGER--Regulatory Approvals" and "--
Conditions; Waivers."
Accounting Treatment.... It is expected that the Merger will be accounted for
as a pooling of interests. It is a condition to the
obligation of AT&T to consummate the Merger that AT&T
receive the opinion of Coopers & Lybrand that the
Merger may be accounted for as a pooling of inter-
ests. See "THE MERGER--Accounting Treatment."
Interests of Certain
Persons in the Merger.. In the Merger Agreement, AT&T agreed to assume all
outstanding options granted under McCaw's stock op-
tion plans. In the event the Merger is consummated
and subject in some cases to the satisfaction of cer-
tain other conditions, vesting of options to purchase
Class A Common Stock or LIN common stock held by cer-
tain McCaw executive officers will accelerate.
In connection with the Merger, AT&T agreed to the es-
tablishment by McCaw and LIN of bonus pools of $113
million and $7.75 million, respectively, under which
bonuses will be payable to certain of their respec-
tive employees following consummation of the Merger.
The schedule of payments of these bonuses is intended
to encourage such employees to remain with McCaw or
LIN, as the case may be. All bonuses under the McCaw
bonus pool payable to executive officers will be pay-
able in three installments (50% at the Closing, 25%
on the first anniversary of the Closing and 25% on
the second anniversary of the Closing), in each case
to persons who remain employed by McCaw, AT&T or any
of their subsidiaries at such times (except as pro-
vided under the severance program discussed below).
The amounts payable at the Closing under the bonuses
allocated to Craig O. McCaw, Wayne M. Perry, James L.
Barksdale, Nicolas Kauser and Steven W. Hooper are
$7,500,000, $2,500,000, $2,000,000, $1,250,000 and
$1,100,000, respectively. The amounts payable at the
Closing under the bonuses allocated to each of
McCaw's other executive officers, Tom A. Alberg and
Peter L.S. Currie, are each less than $1,100,000. Ad-
ditional amounts may be allocated under the bonus
pools to each of McCaw's executive officers, other
than Messrs. McCaw and Perry. See "THE MERGER -- In-
terests of Certain Persons in the Merger."
Also in connection with the Merger, AT&T agreed to
the establishment by McCaw and LIN of severance pro-
grams which will provide benefits to executives in
the event that they are terminated in certain circum-
stances following consummation of the Merger. The
initial amounts payable under the severance programs
to Messrs. McCaw, Perry, Barksdale, Currie and Hooper
are $5,000,000, $3,500,000, $1,300,000, $1,100,000
and $1,000,000, respectively. The initial amounts
payable under the severance programs to each of
McCaw's other executive officers, Messrs. Alberg and
Kauser, are each less than $1,000,000. See "THE MERG-
ER--Interests of Certain Persons in the Merger."
7
<PAGE>
In addition, each of McCaw's executive officers, in-
cluding Messrs. McCaw, Perry and Barksdale, each of
whom is a director of McCaw, holds options, and cer-
tain of McCaw's other directors hold options. See
"SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT OF McCAW."
Litigation.............. McCaw, the directors of McCaw, BT USA and AT&T were
named as defendants in certain lawsuits filed by
McCaw stockholders beginning in November 1992, in
connection with the announcement that AT&T and McCaw
were discussing a possible strategic alliance. These
lawsuits, which were consolidated into a single ac-
tion, challenged and sought to enjoin the proposed
strategic alliance and, in addition, sought money
damages. In connection with the proposed Merger, a
settlement agreement has been reached with respect to
these lawsuits, subject to court approval, consumma-
tion of the Merger and other customary conditions.
See "THE MERGER--Litigation."
Absence of Appraisal
Rights................. Under the DGCL, holders of McCaw Common Stock will
not be entitled to appraisal rights as a result of
the Merger. See "THE MERGER--Absence of Appraisal
Rights."
8
<PAGE>
CERTAIN SIGNIFICANT CONSIDERATIONS
In considering the Merger, McCaw stockholders should take into account the
following: (i) the Exchange Ratio of one-to-one may vary if the Closing Date
Market Price of one AT&T Common Share is less than $53.00, in which case
stockholders will receive that number of AT&T Common Shares equal to $53.00
divided by the Closing Date Market Price of one AT&T Common Share, but in no
event greater than 1.111 AT&T Common Shares, or, if the Closing Date Market
Price of one AT&T Common Share is greater than $71.73, in which case
stockholders will receive that fraction of an AT&T Common Share equal to $71.73
divided by the Closing Date Market Price of one AT&T Common Share, but in no
event less than .909 of an AT&T Common Share, and (ii) the price of AT&T Common
Shares at the Effective Time can be expected to vary from the Closing Date
Market Price and the prices as of the date of this Proxy Statement/Prospectus
and the date on which McCaw stockholders vote on the Merger due to changes in
the business, operations or prospects of AT&T, market assessments of the
likelihood that the Merger will be consummated and the time thereof, general
market and economic conditions, and other factors. See "SUMMARY--The Merger"
and "DIVIDENDS ON AND MARKET PRICES OF AT&T COMMON SHARES AND McCAW COMMON
STOCK."
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA
COMBINED FINANCIAL DATA
The following summary historical financial data of AT&T and McCaw and the
summary unaudited pro forma combined financial data have been derived from the
historical consolidated financial statements of AT&T and McCaw incorporated by
reference herein. The pro forma combined financial data give effect to the
Merger by combining the financial statement data of AT&T and McCaw at and for
each year in the three-year period ended December 31, 1992 and at and for the
nine-month periods ended September 30, 1993 and 1992 on a pooling-of-interests
basis of accounting. The pro forma combined financial data are not necessarily
indicative of actual or future operating results or financial position that
would have occurred or will occur upon consummation of the Merger. The summary
financial data presented below should be read in conjunction with such
financial statements and the Notes thereto. The historical financial data at
and for each year in the five-year period ended December 31, 1992, with respect
to AT&T and McCaw, have been extracted from audited financial statements filed
with the Commission. Historical financial data at and for the nine-month
periods ended September 30, 1993 and 1992 with respect to AT&T and McCaw have
been extracted from unaudited financial statements filed with the Commission
and, in the opinion of AT&T's and McCaw's respective managements, include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the results of operations and financial position at and
for each of the interim periods presented. See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE" and "UNAUDITED PRO FORMA COMBINED FINANCIAL
STATEMENTS."
9
<PAGE>
AT&T HISTORICAL(1)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
AT OR FOR NINE
MONTHS ENDED
SEPTEMBER 30, AT OR FOR YEAR ENDED DECEMBER 31,
---------------- ---------------------------------------
1993(2) 1992 1992 1991(3) 1990 1989 1988(4)
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total revenues.......... $48,697 $47,400 $64,904 $63,089 $62,191 $61,100 $61,756
Operating income (loss). 4,579 4,549 6,269 1,358 5,496 5,024 (2,275)
Net income (loss) appli-
cable to common shares. (4,776) 2,807 3,807 522 3,104 3,109 (1,231)
Weighted average common
shares outstanding..... 1,351 1,329 1,332 1,293 1,282 1,294 1,309
Earnings (loss) per com-
mon share.............. (3.53) 2.11 2.86 0.40 2.42 2.40 (0.94)
Cash dividends declared
per common share....... 0.99 0.99 1.32 1.32 1.32 1.20 1.20
BALANCE SHEET DATA:
Total assets............ 59,432 56,265 57,188 53,355 48,322 42,187 39,869
Long-term debt, includ-
ing capital leases..... 7,173 8,851 8,604 8,484 9,354 8,377 8,350
Shareowners' equity..... 13,149 18,201 18,921 16,228 15,883 14,723 13,705
</TABLE>
- --------
(1) AT&T merged with NCR Corporation in September 1991. The merger was
accounted for as a pooling of interests and, accordingly, the consolidated
financial statements of AT&T were restated for all periods prior to the
merger to include the accounts and operations of NCR Corporation.
(2) Effective January 1, 1993, AT&T adopted Statement of Financial Accounting
Standards ("SFAS") No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." This standard requires companies to accrue
for estimated future postretirement benefit expenses during the years
employees are working and earning benefits for retirement. Under the
standard, AT&T had an accumulated postretirement benefit obligation related
to past service from current retirees and active employees. A portion of
that liability was provided for by funding group life insurance benefits and
by funding trusts for health care benefits prior to 1993. An after-tax
charge of $7,023, or $5.20 per share, was recorded as the cumulative effect
of an accounting change in the first quarter of 1993. Also effective January
1, 1993, AT&T adopted SFAS No. 109, "Accounting for Income Taxes." Among
other provisions, this standard requires deferred tax balances to be
determined using the enacted income tax rate for the years in which taxes
will be paid or refunds received. The adoption of SFAS No. 109 resulted in a
net income benefit of $383, or $0.28 per share. This benefit was recorded as
the cumulative effect of an accounting change in the first quarter of 1993.
In addition, AT&T adopted SFAS No. 112, "Employers' Accounting for
Postemployment Benefits," effective January 1, 1993. This standard requires
the accrual of estimated future postemployment benefits during the years
employees are working and accumulating these benefits and for disability
benefits when the disabilities occur. Postemployment benefits are any
benefits provided after employment is discontinued, but before retirement.
AT&T recorded an after-tax charge of $1,128 or $0.83 per share, as the
cumulative effect of the accounting change in the first quarter of 1993, and
recorded after-tax charges of $121 or $0.09 per share, representing the cost
of adopting SFAS No. 112 for the nine months ended September 30, 1993.
(3) 1991 data were significantly affected by $4,500 of business restructuring
and other charges, which reduced net income by $2,863, or $2.21 per share.
(4) 1988 data were significantly affected by a $6,700 pre-tax charge related to
rapid conversion of the long- distance network to fully digital operation,
which reduced net income by $3,935, or $3.01 per share.
10
<PAGE>
MCCAW HISTORICAL
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
AT OR FOR NINE
MONTHS ENDED
SEPTEMBER 30, AT OR FOR YEAR ENDED DECEMBER 31,
--------------- -------------------------------------------
1993 1992(1) 1992(1) 1991(1) 1990(2)(3) 1989 1988
------ ------- ------- ------- ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net revenues............ $1,583 $1,249 $1,743 $ 1,366 $1,037 $ 504 $ 311
Operating income (loss). 303 180 259 116 48 (140) (154)
Net income (loss) appli-
cable to common
shares(4).............. (65) (223) (286) (2,231) 562 (289) (297)
Weighted average common
shares outstanding..... 201 182 183 181 182 148 124
Earnings (loss) per com-
mon share.............. (0.32) (1.26) (1.60) (12.40) 2.97 (2.07) (2.61)
Cash dividends declared
per common share(5).... -- -- -- -- -- -- --
BALANCE SHEET DATA:
Total assets............ 9,078 8,821 8,955 8,728 8,714 3,041 2,076
Long-term debt.......... 4,693 5,526 5,562 5,199 5,225 1,739 1,822
Redeemable preferred
stock of a subsidiary.. 1,272 1,137 1,171 1,037 902 -- --
Shareowners' equity
(deficit).............. 101 (359) (410) (136) 2,045 1,004 (11)
</TABLE>
- --------
(1) McCaw retroactively adopted SFAS No. 109, "Accounting for Income Taxes,"
effective January 1, 1991 and has restated its 1992 and 1991 financial
statements. The effect of this retroactive adoption was to increase net
loss applicable to common shares $1,880 for the year ended December 31,
1991 and decrease net loss applicable to common shares $59 and $79 for the
nine months ended September 30, 1992 and the year ended December 31, 1992,
respectively. The adoption increased net loss per common share $10.36 for
the year ended December 31, 1991 and decreased net loss per common share
$0.32 and $0.43 for the nine months ended September 30, 1992 and the year
ended December 31, 1992, respectively. The effect of the adoption on the
September 30, 1992 and the December 31, 1992 and 1991 balance sheets was to
increase total assets $40, $39 and $11, respectively, increase deferred tax
liability $1,881, $1,861 and $1,912, respectively, and decrease
shareowners' equity $1,821, $1,801 and $1,880, respectively.
(2) On March 5, 1990, McCaw acquired an approximate 52% interest in LIN. McCaw
accounted for the acquisition as a purchase and accordingly, its financial
statements reflect the consolidation of LIN's results from the date of
acquisition. On August 10, 1990, LIN acquired a controlling interest in
Cellular Telephone Company ("CTC"), the New York City A Block cellular
licensee. This acquisition increased LIN's interest in CTC to 93%. LIN
accounted for the acquisition as a purchase. Concurrently with its
acquisition of CTC, LIN sold 1.01% of its ownership interest in the
Philadelphia A Block cellular licensee. This sale decreased LIN's interest
in such licensee to 49.99%. The CTC acquisition and the disposition of the
controlling interest in the Philadelphia licensee are reflected in McCaw's
financial statements as if the changes in ownership and control occurred
concurrently with the purchase of LIN.
(3) Effective January 1, 1990, McCaw prospectively changed its amortization
period for cellular licensing costs from 10 years to 40 years to conform
more closely with industry practices. The effect of this change for the
year ended December 31, 1990 was to increase operating income $153,
increase net income applicable to common shares $242 and increase earnings
per common share $1.33.
(4) Includes $243 pre-tax gain on a transaction with BellSouth Corporation for
the year ended December 31, 1991 and $1,158 pre-tax gain on a transaction
with Contel Cellular Inc. for the year ended December 31, 1990.
(5) McCaw has never paid cash dividends on the McCaw Common Stock.
11
<PAGE>
UNAUDITED AT&T AND MCCAW PRO FORMA COMBINED
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
AT OR FOR NINE
MONTHS ENDED
SEPTEMBER 30, AT OR FOR YEAR ENDED DECEMBER 31,
---------------- -----------------------------------
1993 1992 1992 1991 1990
------- ------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total revenues............ $50,280 $48,649 $ 66,647 $ 64,455 $ 63,228
Operating income.......... 4,882 4,729 6,528 1,474 5,544
Net income (loss) applica-
ble to common shares(1).. (6,681) 2,525 3,442 171 3,666
Weighted average common
shares outstanding(2)(3). 1,541 1,511 1,515 1,474 1,464
Earnings (loss) per common
share(1)(2).............. (4.34) 1.67 2.27 0.12 2.50
Cash dividends declared
per common share(4)...... 0.99 0.99 1.32 1.32 1.32
BALANCE SHEET DATA:
Total assets(1)(3)........ 68,071 65,046 66,104 62,072 57,036
Long-term debt, including
capital leases........... 11,866 14,377 14,166 13,683 14,579
Redeemable preferred stock
of a subsidiary.......... 1,272 1,137 1,171 1,037 902
Shareowners' equity(1)(3). 12,811 19,663 20,312 17,972 17,928
</TABLE>
- --------
(1) McCaw's historical financial statements reflect the adoption of SFAS No.
109, "Accounting for Income Taxes," retroactive to January 1, 1991. AT&T
adopted SFAS No. 109 effective January 1, 1993. For conformity purposes,
the pro forma combined information for AT&T and McCaw has been adjusted as
if McCaw had adopted SFAS No. 109 on January 1, 1993. Such adoption would
result in the use of different tax assumptions related to intangible assets
McCaw acquired in purchase business combinations in 1991 and 1992 that
would increase the cumulative effect of adopting SFAS No. 109 by $39.
Accordingly, the pro forma combined net income applicable to common shares
has been decreased $1,840, $59 and $79 for the nine months ended September
30, 1993 and 1992, and the year ended December 31, 1992, respectively, and
increased $1,880 for the year ended December 31, 1991. Pro forma combined
earnings per common share have been decreased $1.19, $0.04 and $0.05 for
the nine months ended September 30, 1993 and 1992, and the year ended
December 31, 1992, respectively, and increased $1.28 for the year ended
December 31, 1991. Pro forma combined total assets have been decreased $39,
$40, $39 and $11 at September 30, 1993 and 1992 and December 31, 1992 and
1991, respectively. Pro forma combined shareowners' equity has been
decreased $39 at September 30, 1993, and increased $1,821, $1,801 and
$1,880 at September 30, 1992 and December 31, 1992 and 1991, respectively.
Also effective January 1, 1993, AT&T adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." When McCaw adopts SFAS No. 112,
the impact on the McCaw financial statements is expected to be immaterial.
(2) The pro forma combined information for AT&T and McCaw has been prepared
assuming that one AT&T Common Share is issued for each share of McCaw
Common Stock. If the maximum exchange ratio of 1.111 were assumed, pro
forma combined earnings (loss) per share for the nine months ended
September 30, 1993 and 1992 and for the years ended December 31, 1992, 1991
and 1990 would be $(4.28), $1.65, $2.24, $0.11 and $2.47, respectively.
(3) The pro forma combined information for 1993 excludes AT&T's $400 investment
in 14.5 shares of Class A Common Stock, purchased in February 1993.
(4) Pro forma combined cash dividends per common share reflect AT&T's cash
dividends declared in the periods presented.
12
<PAGE>
COMPARATIVE PER SHARE DATA
The following table presents AT&T's and McCaw's historical per share data and
unaudited pro forma combined per share data to reflect consummation of the
Merger based upon the historical financial statements of AT&T and McCaw. The
pro forma combined information is not necessarily indicative of actual or
future operating results or financial position that would have occurred or will
occur upon consummation of the Merger. The information presented below should
be read in conjunction with the Unaudited Pro Forma Combined Financial
Statements included elsewhere in this Proxy Statement/Prospectus and the
separate historical consolidated financial statements of AT&T and McCaw which
are incorporated by reference herein.
<TABLE>
<CAPTION>
AT OR FOR NINE
MONTHS ENDED
SEPTEMBER 30, AT OR FOR YEAR ENDED DECEMBER 31,
--------------- ------------------------------------
1993 1992 1992 1991 1990
------- ------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
HISTORICAL:
Per AT&T Common Share:
Book value............ $ 9.74 $ 13.66 $ 14.12 $ 12.39 $ 12.46
Cash dividends de-
clared............... 0.99 0.99 1.32 1.32 1.32
Earnings (loss)....... (3.53) 2.11 2.86 0.40 2.42
Per share of McCaw Com-
mon Stock:
Book value............ 0.49 (1.97) (2.20) (0.74) 11.41
Cash dividends de-
clared............... -- -- -- -- --
Earnings (loss)....... (0.32) (1.26) (1.60) (12.40) 2.97
PRO FORMA(1):
Combined per AT&T Common
Share and per share of
McCaw Common Stock
equivalent:
Book value(2)(3)...... 8.31 12.97 13.31 12.05 12.33
Cash dividends de-
clared(4)............ 0.99 0.99 1.32 1.32 1.32
Earnings (loss)(2).... (4.34) 1.67 2.27 0.12 2.50
</TABLE>
- --------
(1) The pro forma combined information for AT&T and McCaw has been prepared
assuming that one AT&T Common Share is issued for each share of McCaw
Common Stock. The pro forma combined per share of McCaw Common Stock
equivalent reflects the pro forma combined per AT&T Common Share amounts
multiplied by the assumed Exchange Ratio of 1.0. If the maximum exchange
ratio of 1.111 were assumed, pro forma combined book value per share at
September 30, 1993 and 1992, and at December 31, 1992, 1991 and 1990 would
be $8.19, $12.80, $13.13, $11.89 and $12.16, respectively, and pro forma
combined earnings (loss) per share for the nine months ended September 30,
1993 and 1992 and for the years ended December 31, 1992, 1991 and 1990
would be $(4.28), $1.65, $2.24, $0.11 and $2.47, respectively.
(2) McCaw's historical financial statements reflect the adoption of SFAS No.
109, "Accounting for Income Taxes," retroactive to January 1, 1991. AT&T
adopted SFAS No. 109 effective January 1, 1993. The pro forma combined
information for AT&T and McCaw has been adjusted as if McCaw had adopted
SFAS No. 109 on January 1, 1993. Accordingly, the pro forma combined book
value per share has been decreased $0.03 at September 30, 1993, and
increased $1.20, $1.18 and $1.26 at September 30, 1992 and December 31,
1992 and 1991, respectively. Pro forma combined earnings per share have
been decreased $1.19, $0.04 and $0.05 for the nine months ended September
30, 1993 and 1992, and the year ended December 31, 1992, respectively, and
increased $1.28 for the year ended December 31, 1991. Also effective
January 1, 1993, AT&T adopted SFAS No. 112, "Employers' Accounting for
Postemployment Benefits." When McCaw adopts SFAS No. 112, the impact on the
McCaw financial statements is expected to be immaterial.
(3) Pro forma combined book value per share at September 30, 1993 excludes
AT&T's $400 million investment in 14.5 million shares of Class A Common
Stock, purchased in February 1993.
(4) Pro forma combined cash dividends per common share reflect AT&T's cash
dividends declared in the periods presented.
13
<PAGE>
COMPARATIVE PER SHARE MARKET INFORMATION
The AT&T Common Shares are listed and primarily traded on the NYSE. The table
below sets forth, for the fiscal periods indicated, the high and low sale
prices per AT&T Common Share in the NYSE Composite Transactions as reported in
published financial sources. The Class A Common Stock is quoted on the National
Association of Securities Dealers Automated Quotations System ("NASDAQ")
National Market System and is also listed and traded on the PSE. The table
below sets forth for the fiscal periods indicated the high and low sale prices
per share of the Class A Common Stock on the NASDAQ National Market System as
reported in published financial sources. These prices reflect inter-dealer
prices, without retail mark-up, mark-down or commission, and may not
necessarily represent actual transactions. For current price information, McCaw
stockholders are urged to consult publicly available sources.
<TABLE>
<CAPTION>
PRICE PER SHARE OF COMMON STOCK
-------------------------------
MCCAW CLASS A AT&T
--------------- ---------------
HIGH LOW HIGH LOW
------- ------- ------- -------
<S> <C> <C> <C> <C>
Fiscal 1991
First Quarter................................. $26 1/2 $15 $35 1/8 $29
Second Quarter................................ 29 20 41 1/4 33 5/8
Third Quarter................................. 30 1/4 20 40 3/8 36
Fourth Quarter................................ 30 1/4 25 1/4 39 5/8 35 1/8
Fiscal 1992
First Quarter................................. 36 28 3/4 41 3/8 36 5/8
Second Quarter................................ 29 3/4 22 3/4 44 5/8 40 1/8
Third Quarter................................. 28 1/4 23 1/8 45 3/8 42
Fourth Quarter................................ 34 1/4 20 1/4 53 1/8 40 5/8
Fiscal 1993
First Quarter................................. 41 1/4 31 1/2 59 1/8 50 1/8
Second Quarter................................ 46 1/4 35 63 7/8 53 3/4
Third Quarter................................. 57 3/4 44 3/4 65 57 3/8
Fourth Quarter................................ 57 5/8 50 61 3/8 52
Fiscal 1994
First Quarter (through January 31, 1994)...... 54 1/4 50 1/4 57 1/8 51 5/8
</TABLE>
On November 3, 1992, the last full trading day prior to announcement that
AT&T and McCaw were discussing a possible strategic alliance, the reported NYSE
Composite Transactions closing price per AT&T Common Share was $43 3/8 and the
reported NASDAQ National Market System closing price per share of Class A
Common Stock was $24 5/8. On August 13, 1993, the last full trading day prior
to announcement of the execution of the Merger Agreement, the reported NYSE
Composite Transactions closing price per AT&T Common Share was $62 3/8 and the
reported NASDAQ National Market System closing price per share of Class A
Common Stock was $51 1/4. On January 31, 1994, the most recent available date
prior to printing this Proxy Statement/Prospectus, the reported NYSE Composite
Transactions closing price per AT&T Common Share was $56 3/4 and the reported
NASDAQ National Market System closing price per share of Class A Common Stock
was $54 McCaw stockholders are urged to obtain current market quotations.
14
<PAGE>
THE SPECIAL MEETING
SPECIAL MEETING
This Proxy Statement/Prospectus is being furnished to McCaw stockholders in
connection with the solicitation by the McCaw Board of proxies for use at the
Special Meeting to be held on Friday, March 25, 1994 at 11:00 a.m., local time,
at Overlake Hospital Conference Center, 1035 116th Avenue N.E., Bellevue,
Washington.
At the Special Meeting, McCaw stockholders will consider and vote upon a
proposal to approve and adopt the Merger Agreement and the Merger. Approval and
adoption of the Merger Agreement and the Merger by McCaw stockholders is
assured. See "THE MERGER--Agreements of BT and the McCaw Block to Vote in Favor
of the Merger." The Merger Agreement provides that, upon the terms and subject
to the conditions thereof, Merger Sub will merge into McCaw, McCaw will become
a wholly owned subsidiary of AT&T and each share of McCaw Common Stock issued
and outstanding immediately prior to the Merger (other than shares held by
AT&T) will be converted into one AT&T Common Share; provided, however, that (i)
in the event the Closing Date Market Price of one AT&T Common Share is less
than $53.00, the Exchange Ratio will be equal to $53.00 divided by the Closing
Date Market Price of one AT&T Common Share, but in no event greater than 1.111
AT&T Common Shares, and (ii) in the event the Closing Date Market Price of one
AT&T Common Share is greater than $71.73, the Exchange Ratio will be equal to
$71.73 divided by the Closing Date Market Price of one AT&T Common Share, but
in no event less than .909 of an AT&T Common Share. See "THE MERGER--Terms of
the Merger."
No fractional AT&T Common Shares will be issued in the Merger. In lieu of any
such fractional shares, each holder of McCaw Common Stock who otherwise would
be entitled to receive a fractional AT&T Common Share pursuant to the Merger
will be paid an amount in cash, without interest, equal to such holder's
proportionate interest in the net proceeds from the sale or sales in the open
market by the Exchange Agent, on behalf of all such holders, of the aggregate
fractional AT&T Common Shares, if any, that would have been issued in the
Merger. As soon as practicable following the Effective Time, the Exchange Agent
will determine the number of Excess Shares, if any, and the Exchange Agent, as
agent for the former holders of McCaw Common Stock, will sell any such Excess
Shares at the prevailing prices on the NYSE. The sale of any Excess Shares will
be executed through one or more member firms of the NYSE and will be executed
in round lots to the extent practicable. See "THE MERGER--Terms of the Merger."
Holders of McCaw Common Stock will not be entitled to appraisal rights as a
result of the Merger. See "THE MERGER--Terms of the Merger" and "--Absence of
Appraisal Rights."
THE MCCAW BOARD HAS UNANIMOUSLY APPROVED AND DECLARED ADVISABLE THE MERGER
AGREEMENT AND THE MERGER AND RECOMMENDS THAT MCCAW STOCKHOLDERS VOTE "FOR"
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE MERGER. See "THE MERGER--
McCaw's Reasons for the Merger; Recommendation of the McCaw Special Committee
and the McCaw Board." The AT&T Board has approved the Merger Agreement and the
issuance of AT&T Common Shares in the Merger, and the Board of Directors of
Merger Sub and AT&T, as the sole stockholder of Merger Sub, have approved and
adopted the Merger Agreement and the Merger. Approval of the Merger Agreement
and the Merger by AT&T's stockholders is not required.
RECORD DATE; SHARES ENTITLED TO VOTE; VOTE REQUIRED
The close of business on January 31, 1994 (the "Record Date") has been fixed
as the record date for determining the holders of McCaw Common Stock who are
entitled to notice of and to vote at the Special Meeting. As of the Record
Date, there were 148,450,863 shares of Class A Common Stock and 60,137,547
shares of Class B Common Stock outstanding and entitled to vote. The holders of
record on the Record Date of shares of Class A Common Stock are entitled to one
vote per share of Class A Common Stock, and the holders of record on the Record
Date of Class B Common Stock are entitled to ten votes per share of Class B
Common Stock, on each matter submitted to a vote at the Special Meeting.
Holders of Class A Common Stock and Class B Common Stock will vote together on
the Merger Agreement and Merger as a single class.
15
<PAGE>
The presence in person or by proxy of the holders of shares representing a
majority of the voting power of the McCaw Common Stock entitled to vote is
necessary to constitute a quorum for the transaction of business at the Special
Meeting. Under the DGCL and McCaw's By-Laws, as amended (the "McCaw By-Laws"),
the affirmative vote of holders of shares representing a majority of the
outstanding voting power of the McCaw Common Stock present in person or
represented by proxy at the Special Meeting is required for approval and
adoption of the Merger Agreement and the Merger.
Certain beneficial owners of shares of McCaw Common Stock having an aggregate
of more than 80% of the voting power of the McCaw Common Stock, including
members of the McCaw family and BT, have agreed to vote in favor of the Merger
Agreement and the Merger. Accordingly, approval thereof by the McCaw
stockholders is assured. See "THE MERGER--Agreements of BT and the McCaw Block
to Vote in Favor of the Merger" and "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT OF McCAW."
Abstention from voting and broker nonvotes will have the practical effect of
voting against the approval and adoption of the Merger Agreement and the Merger
since they represent one less vote for such approval and adoption. However,
since the approval and adoption of the Merger Agreement and the Merger are
already assured, such abstentions and broker nonvotes will not affect the
outcome of the vote.
PROXIES; PROXY SOLICITATION
Shares of McCaw Common Stock represented by properly executed proxies
received at or prior to the Special Meeting which have not been revoked will be
voted at the Special Meeting in accordance with the instructions contained
therein. Shares of McCaw Common Stock represented by properly executed proxies
for which no instruction is given will be voted "FOR" approval and adoption of
the Merger Agreement and the Merger. McCaw stockholders are requested to
complete, sign, date and return promptly the enclosed proxy card in the postage
prepaid envelope provided for this purpose to ensure that their shares are
voted. A stockholder may revoke a proxy by submitting at any time prior to the
vote on the Merger Agreement and the Merger a later-dated proxy with respect to
the same shares, by delivering written notice of revocation to the Secretary of
McCaw at any time prior to such vote or by attending the Special Meeting and
voting in person. Mere attendance at the Special Meeting will not in and of
itself revoke a proxy.
If the Special Meeting is postponed or adjourned for any reason, at any
subsequent reconvening of the Special Meeting all proxies will be voted in the
same manner as such proxies would have been voted at the original convening of
the meeting (except for any proxies which have theretofore effectively been
revoked or withdrawn), notwithstanding that they may have been effectively
voted on the same or any other matter at a previous meeting.
McCaw will bear the cost of soliciting proxies from its stockholders. In
addition to solicitation by mail, directors, officers and employees of McCaw
and AT&T may solicit proxies by telephone, telegram or otherwise. Such
directors, officers and employees of McCaw and AT&T will not be additionally
compensated for such solicitation but may be reimbursed for out-of-pocket
expenses incurred in connection therewith. Brokerage firms, fiduciaries and
other custodians who forward soliciting material to the beneficial owners of
shares of McCaw Common Stock held of record by them will be reimbursed for
their reasonable expenses incurred in forwarding such material. McCaw has
retained Georgeson & Company, Inc. to aid in soliciting proxies from its
stockholders. The fees of such firm are estimated to be $5,500 plus
reimbursement of out-of-pocket expenses.
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THE COMPANIES
AT&T
AT&T is a major participant in two industries: the global information
movement and management industry, and the financial services and leasing
industry. In the global information movement and management industry, AT&T's
services and products combine communications and computing. These services and
products include: voice, data and image telecommunications services that can be
used with the telecommunications and information products or systems of AT&T
and others; telecommunications products and systems, ranging from voice
instruments to complex network switching and transmission systems; computer
products and systems; installation, maintenance and repair services for
communication and computer products; optical fiber and cable; and components
for high-technology products and systems. In the financial services and leasing
industry, AT&T provides direct financing and finance leasing programs for
AT&T's own products and the products of other companies, leases products to
customers under operating leases, and is in the general purpose credit card
business. The mailing address of AT&T's principal executive offices is 32
Avenue of the Americas, New York, New York 10013-2412, and its telephone number
is (212) 387-5400.
MERGER SUB
Merger Sub, a wholly owned subsidiary of AT&T, was formed by AT&T solely for
the purpose of effecting the Merger. The mailing address of Merger Sub's
principal executive offices is c/o American Telephone and Telegraph Company, 32
Avenue of the Americas, New York, New York 10013-2412, and its telephone number
is (212) 387-5400.
MCCAW
McCaw develops and provides wireless personal communications services,
including cellular telephone, paging and air-to-ground communications. McCaw,
both directly and through its 52% ownership of LIN, is the largest cellular
telephone company in the United States based on 1992 revenues. McCaw is also
the fifth largest radio common carrier operator in the United States based on
1992 year-end subscribers. Radio common carrier systems provide paging services
(a lower-cost, complementary product line to cellular services) and
conventional mobile phone and telephone answering services. McCaw also owns
Claircom Communications Group, L.P. ("Claircom"), which began providing two-way
voice communications services for airline passengers in February 1993 and plans
to provide two-way data communications services (including facsimiles)
beginning in 1994. LIN also owns seven network-affiliated television stations.
The mailing address of McCaw's principal executive offices is 5400 Carillon
Point, Kirkland, Washington 98033, and its telephone number is (206) 827-4500.
THE MERGER
THE DESCRIPTION OF THE MERGER AGREEMENT SET FORTH BELOW DOES NOT PURPORT TO
BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MERGER
AGREEMENT, A COPY OF WHICH IS ATTACHED AS APPENDIX A TO THIS PROXY
STATEMENT/PROSPECTUS AND INCORPORATED BY REFERENCE HEREIN.
BACKGROUND
From prior to 1990 to the present, McCaw and AT&T and their respective
subsidiaries have engaged in various arm's-length business arrangements with
each other in the ordinary course of business. These arrangements include (i)
the provision by AT&T to McCaw and its subsidiaries of interexchange (i.e.,
"long-distance") telephone services (which services are currently provided in
accordance with an agreement for Virtual Telecommunications Network Service
entered into in 1991), (ii) agency agreements pursuant to which
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AT&T offers services of McCaw and its subsidiaries on their behalf at AT&T
phone center stores, (iii) purchases of equipment by McCaw and its subsidiaries
from AT&T, (iv) financing agreements in connection with such equipment
purchases and (v) services provided by AT&T to Claircom, a company in which
McCaw owns a significant interest.
McCaw and AT&T first discussed the possibility of a significant investment by
AT&T in McCaw and/or a strategic relationship between the two companies in
August 1990 and occasional exploratory discussions occurred thereafter until
early 1991. Discussions occurred again in the fall of 1991 and, on November 22,
1991, AT&T and McCaw executed a mutual confidentiality agreement. In the course
of discussions between representatives of AT&T and McCaw, various transaction
structures were explored involving partial investments and/or operating
arrangements, including transaction structures that would involve the potential
acquisition of control of McCaw by AT&T. These discussions continued through
the end of 1991 and the first half of 1992.
By August 1992, discussions between the representatives of AT&T and McCaw
were focused on the proposed investment by AT&T of $2 billion to purchase newly
issued shares of Class A Common Stock from McCaw, the purchase by AT&T from the
McCaw Block of an option to obtain voting control of McCaw, exercisable through
1999, and the licensing by AT&T to McCaw of the AT&T service mark for use in
connection with wireless communications services offered by McCaw.
In August 1992, representatives of McCaw raised with representatives of AT&T
concerns as to McCaw's prolonged inability to raise capital in the public
capital markets as a result of McCaw's ongoing discussions with AT&T. The
representatives of McCaw told the representatives of AT&T that McCaw would
terminate the discussions unless AT&T provided assurances as to McCaw's access
to equity capital no later than the first quarter of 1993. In response, and to
induce McCaw to continue discussions with AT&T, representatives of AT&T orally
agreed, subject to the approval of the AT&T Board, to provide McCaw the right
to require AT&T to purchase $400 million of the Class A Common Stock. The
purchase price was set at $27.625 per share, the closing price of the Class A
Common Stock on the day of the oral agreement. The oral agreement was approved
by the AT&T Board on September 13, 1992. On September 14, 1992, AT&T delivered
a letter (the "September 1992 Put Letter") to McCaw granting McCaw the right to
require AT&T to purchase 14,479,638 newly issued shares of Class A Common Stock
for $400 million, exercisable between February 15 and February 28, 1993.
The discussions between AT&T and McCaw with respect to a possible transaction
continued through August, September and October 1992. In September 1992, AT&T
also commenced discussions with BT in an effort to gain BT's participation in
and consent to the transaction being discussed between AT&T and McCaw. As a
result of these discussions, AT&T and BT came to an understanding with respect
to AT&T's purchase of the shares of McCaw Common Stock owned by BT for $49 per
share, increased by 4 1/2% per annum from January 1, 1993 through September 30,
1993, contingent upon consummation of the transaction under discussion with
McCaw.
On November 4, 1992, AT&T and McCaw announced publicly that they were
discussing a proposed strategic alliance (the "Proposed Strategic Alliance").
The Proposed Strategic Alliance contemplated: (i) the purchase by AT&T of 47.6
million newly issued shares of Class A Common Stock at $42 per share, increased
by 7% per annum from January 1, 1993 (including any shares purchased pursuant
to the September 1992 Put Letter), (ii) the purchase by AT&T of 22.1 million
shares of Class A Common Stock and 13.7 million shares of Class B Common Stock
beneficially owned by BT for $49 per share, increased by 4 1/2% per annum from
January 1, 1993 through September 30, 1993, (iii) the purchase by AT&T for $100
million, increased by 7% per annum from January 1, 1993, from McCaw's
controlling stockholders, of an option to obtain voting control of McCaw,
exercisable between one and seven years after the closing of the equity
investment described above, at an exercise price of $600 million, increased by
7% per annum from January 1, 1993, (iv) the grant by AT&T to McCaw of a 99-year
license to use the AT&T service mark on McCaw's wireless services, (v)
operating arrangements that would give McCaw access to AT&T marketing,
distribution and
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technology resources and (vi) the grant by McCaw to AT&T of contingent rights
to receive payments in the event the McCaw stock price for specified periods in
the years 1999, 2000 and 2001 exceeded $80, $90 and $100 per share,
respectively (the "Proposed Contingent Payment Rights"). The purchase of newly
issued shares of Class A Common Stock from McCaw and of the McCaw Common Stock
held by BT would have given AT&T a one-third equity interest in McCaw.
Also on November 4, 1992, the McCaw Board met and formed the McCaw Special
Committee, consisting of three independent directors of McCaw, to assist the
McCaw Board in assessing the Proposed Strategic Alliance, to recommend or
negotiate changes thereto, to consult with McCaw management, BT and Craig O.
McCaw, Chairman and Chief Executive Officer of McCaw, with respect to the
Proposed Strategic Alliance and to retain (at McCaw's expense) such attorneys,
investment bankers or other advisors as it deemed necessary (subject to the
prior approval of the McCaw Board to the extent the expense thereof would
exceed $500,000 in the aggregate). The McCaw Special Committee then selected
legal counsel and, with the assistance of such counsel, engaged Salomon
Brothers as its financial advisor. Following the public announcement of the
Proposed Strategic Alliance, litigation was filed by McCaw stockholders in the
Delaware Court of Chancery entitled In re McCaw Cellular Communications, Inc.
Shareholders Litigation. See "THE MERGER--Litigation." Following the filing of
this suit, plaintiffs' counsel conferred with defendants' counsel concerning
the litigation.
Over the next several months, representatives of AT&T and McCaw, with the
assistance and input of the McCaw Special Committee, continued their
negotiations with respect to the Proposed Strategic Alliance. At these
negotiations, the representatives of AT&T and McCaw discussed the terms of
proposed agreements relating to: (i) AT&T's proposed purchase of McCaw Common
Stock from McCaw, including restrictive covenants to be applicable to McCaw and
to AT&T and provisions for the Proposed Contingent Payment Rights; (ii) AT&T's
proposed purchase of an option from the McCaw Block to obtain voting control of
McCaw; (iii) board representation for AT&T prior to exercise or expiration of
the option to obtain voting control, and board representation for the McCaw
Block in the event that AT&T were to exercise such option; (iv) restrictions on
transfer and rights of first refusal with respect to shares of McCaw Common
Stock to be held by AT&T and by the McCaw Block; (v) the licensing of the AT&T
service mark for use by McCaw on its wireless communications services, and the
coordination of service offerings and the pursuit of new wireless service
opportunities by AT&T and McCaw; and (vi) the access by McCaw to AT&T's
marketing, distribution and technology resources. The extended time frame for
these negotiations was due, in large part, to the complex issues involved in
the proposed licensing and other operational arrangements.
On February 23, 1993, during the course of these ongoing negotiations, McCaw
exercised its put right under the September 1992 Put Letter. McCaw determined
to exercise this put right for a number of reasons. First, as had been
projected in August 1992, McCaw desired to raise equity capital in order to
retire debt that either was coming due or that carried high interest rates.
Second, because of the ongoing nature of discussions with AT&T, McCaw did not
want to raise equity capital through a public offering. Third, AT&T had agreed
that it would increase the purchase price of the shares that it was to buy in
the Proposed Strategic Alliance so that the average price for the shares to be
purchased under the September 1992 Put Letter, together with the shares to be
purchased in the Proposed Strategic Alliance (if the Proposed Strategic
Alliance were consummated), would be $42 per share. Pursuant to McCaw's
exercise of its put right under the September 1992 Put Letter, on February 23,
1993, AT&T purchased 14,479,638 newly issued shares of Class A Common Stock
from McCaw for $400 million.
Discussions with respect to the Proposed Strategic Alliance continued, with
regular meetings and negotiations occurring over the ensuing months. While
significant progress was made, issues remained outstanding, primarily with
respect to the proposed licensing arrangements between AT&T and McCaw, the
terms of the option for AT&T to obtain voting control of McCaw, the
determination of the types of wireless services that could be offered by each
of AT&T and McCaw and the terms on which they could be offered, the terms for
making combined offerings of AT&T and McCaw services, the allocation of new
wireless opportunities between AT&T and McCaw, and the various changes to the
terms of the Proposed Strategic Alliance suggested by the McCaw Special
Committee and its legal and financial advisors. These suggested
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changes (the "Special Committee Suggested Changes") involved proposals that (i)
AT&T make a $500 million tender offer for publicly held shares of Class A
Common Stock as part of the Proposed Strategic Alliance, (ii) AT&T be required
to own 51% of the McCaw Common Stock in order to exercise the option to obtain
voting control, (iii) the Proposed Contingent Payment Rights be revised to make
them less valuable to AT&T, (iv) provisions be added to permit McCaw's public
stockholders to participate in McCaw Common Stock purchases or sales by AT&T or
sales by the McCaw Block and (v) limitations be imposed that could require AT&T
to pay a higher price were it to seek to acquire 100% of the publicly held
McCaw Common Stock. During this period, the AT&T Board and the McCaw Board
received updates as to the status of negotiations from their respective
managements and advisors, and the McCaw Special Committee met regularly with
its advisors to discuss the progress of negotiations and information and
analyses with respect to McCaw, AT&T and the Proposed Strategic Alliance.
In view of, among other things, the difficulties and time delays experienced
in arriving at mutually satisfactory arrangements for the Proposed Strategic
Alliance, which difficulties and time delays resulted from the outstanding
issues described above and the fact that McCaw would continue to have
stockholders other than AT&T and at the same time share with AT&T the AT&T
service mark, members of AT&T's management concluded that it would be
appropriate to explore the desirability and feasibility of a merger with McCaw
as a potential alternative to the Proposed Strategic Alliance. Thus, on July
15, 1993, representatives of AT&T met with representatives of McCaw. At that
meeting, AT&T representatives indicated that they believed that the Proposed
Strategic Alliance represented a desirable and feasible transaction, but that
AT&T wished to explore the desirability and feasibility, from its point of
view, of a merger as a potential alternative. The McCaw representatives
indicated that if AT&T were to determine to make a merger proposal, they
believed that the McCaw Board would be willing to consider such an alternative.
Thereafter, analyses and exploratory discussions were conducted as part of an
effort by AT&T to assess the desirability and feasibility of a merger
alternative. At the same time, discussions continued with respect to issues
relating to the Proposed Strategic Alliance.
At a special meeting of the McCaw Board on July 30, 1993, the McCaw Board was
briefed on the status of discussions with AT&T. McCaw's management and advisors
discussed the operational issues that would be involved in combining the two
companies in a merger, the financial capacity of AT&T to effect a merger, the
issues that had been raised in structuring satisfactory agreements in
connection with the Proposed Strategic Alliance, AT&T's willingness to proceed
with the Proposed Strategic Alliance or a similar transaction notwithstanding
such difficulties and the alternatives available to McCaw.
The McCaw Special Committee met telephonically on August 2 with its legal and
financial advisors and reviewed the status of the negotiations with respect to
the Proposed Strategic Alliance and the discussions of a possible merger
alternative at the July 30 meeting of the McCaw Board. The McCaw Special
Committee discussed the fact that if the two companies combined in a merger and
each stockholder received the same consideration per share in the possible
merger, the Special Committee Suggested Changes would not be required. In
addition, the McCaw Special Committee considered that one alternative to the
possible merger and the Proposed Strategic Alliance would be for McCaw to
remain an independent entity.
The McCaw Special Committee again met telephonically on August 9 with its
legal and financial advisors and discussed the status of the Proposed Strategic
Alliance and the possible merger alternative, including the due diligence
investigation to be conducted by the financial advisors to the McCaw Special
Committee. The McCaw Special Committee also reviewed the status of the
consolidated action filed by McCaw stockholders in the Delaware Court of
Chancery entitled In re McCaw Cellular Communications, Inc. Shareholders
Litigation. See "THE MERGER--Litigation." The McCaw Special Committee did not
discuss the impact of the litigation on the transaction alternatives. The McCaw
Special Committee reviewed certain provisions of a possible merger agreement
that were forwarded by McCaw and that related to the pursuit of new wireless
service opportunities by AT&T and McCaw. The McCaw Special Committee did not
discuss any specific financial terms of the possible merger agreement at this
meeting since they had not yet been negotiated. In addition, Salomon Brothers
updated the McCaw Special Committee on the state of the cellular industry and
the debt and equity markets.
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On August 14, 1993, upon his return from a business trip to China, Mr. Robert
E. Allen, Chairman of the Board and Chief Executive Officer of AT&T, met with
senior AT&T officers and advisors and decided to make a merger proposal to
McCaw. Thereafter, on August 14, 1993, Mr. Allen and Mr. Craig O. McCaw,
Chairman of the Board and Chief Executive Officer of McCaw, negotiated the
financial terms of the merger proposal. Mr. McCaw insisted upon an exchange
ratio of one AT&T Common Share per share of McCaw Common Stock, subject to
adjustment if the price of the AT&T Common Shares were to decline below a
certain level, and also proposed that McCaw have a right to terminate the
merger agreement if the market price of the AT&T Common Shares were to decline
below a further level or if the McCaw Board believed it had a fiduciary duty to
terminate (a "fiduciary out"). Mr. McCaw also requested that the exchange ratio
be adjusted to reflect any dividends paid on the AT&T Common Shares prior to
consummation of the merger. Based upon his knowledge of McCaw and the industry
in general, and his experience, Mr. McCaw believed that the one-to-one exchange
ratio represented a full and fair price for the McCaw Common Stock. See "THE
MERGER--McCaw's Reasons for the Merger; Recommendation of the McCaw Special
Committee and the McCaw Board" and "--Opinions of the Financial Advisors to the
McCaw Special Committee and to the McCaw Board." Mr. Allen was not willing to
agree to an exchange ratio as high as one-to-one, particularly in light of Mr.
McCaw's request for a right of termination if the market price of the AT&T
Common Shares were to decline below a certain level and for a fiduciary out,
which Mr. Allen viewed as creating unacceptable uncertainty as to consummation
of the proposed merger. Mr. Allen was also not willing to agree to any
adjustment for regular dividends paid on the AT&T Common Shares.
After a series of negotiations, Mr. Allen determined that he would be willing
to meet Mr. McCaw's insistence on a one-to-one exchange ratio, if Mr. McCaw
were willing to eliminate any adjustment for regular cash dividends on the AT&T
Common Shares and to add to the certainty of the proposed merger by eliminating
the requested fiduciary out and the termination right for a specified decline
in the market price of the AT&T Common Shares. Mr. McCaw determined that if
AT&T were willing to accept a one-to-one exchange ratio, he would be willing to
forego any adjustment for regular cash dividends on the AT&T Common Shares. Mr.
McCaw also determined that, at the one-to-one exchange ratio level, and given
the strategic benefits of a merger with AT&T, he was willing to make a firm
commitment to the proposed merger. In light of this determination, as well as
the fact that no other offers had been made in the months since public
announcement of the Proposed Strategic Alliance and the fact that the proposed
merger would be reviewed by the McCaw Special Committee and the McCaw Board,
Mr. McCaw decided he was willing to accept Mr. Allen's insistence that the
certainty of the proposed merger be enhanced by eliminating the fiduciary out
and the termination right for a specified decline in the market price of the
AT&T Common Shares, assuming that an agreement on adjustments for fluctuations
in the market price of the AT&T Common Shares could be reached.
Mr. Allen was willing to discuss adjustments for fluctuations in the market
price of the AT&T Common Shares, so long as there were parallel adjustments for
both increases and decreases in market price. Because Mr. McCaw desired that
McCaw stockholders participate fully in any increase in the market price of the
AT&T Common Shares above the then market price of $62.375 per share, and was
willing to accept the risk of up to a 15% decrease in such market price, Mr.
McCaw proposed that there be no adjustment in the exchange ratio for the first
15% increase or decrease in the market price of the AT&T Common Shares (i.e.,
up to $71.73 or down to $53 per share). Mr. McCaw also proposed that there be
price protection, to maintain merger consideration having a constant market
price of $53 per share, for some amount of any decline in the market price of
the AT&T Common Shares below $53 per share. After negotiation, Mr. Allen agreed
that AT&T would provide such price protection for up to an additional 10%
decline below $53 per share (i.e., down to $47.70 per share, or a maximum
exchange ratio of 1.111 AT&T Common Shares for each share of McCaw Common
Stock), subject to a similar adjustment to provide for merger consideration
having a constant market price of $71.73 per share for up to an additional 10%
increase in the market price of the AT&T Common Shares above $71.73 per share
(i.e., up to $78.90 per share, or a minimum exchange ratio of .909 of an AT&T
Common Share for each share of McCaw Common Stock). Accordingly, Mr. Allen and
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Mr. McCaw finally agreed to a one-to-one exchange ratio, with adjustments for
increases or decreases in the market price of the AT&T Common Shares up to 10%
above $71.73 per share or below $53 per share, but with no fiduciary out or
termination right for further decreases in the market price of the AT&T Common
Shares and no dividend adjustment, all subject to approval by the AT&T Board,
the McCaw Board and the McCaw Special Committee.
Also on August 14, 1993 and on August 15, 1993, the relevant parties
negotiated and finalized the remaining terms of the Merger Agreement, as well
as the McCaw Block Agreement, the BT Letter Agreement, the BT Waiver and the
August 1993 Put Letter, subject to approval by the AT&T Board, the McCaw Board,
the McCaw Special Committee and the BT Board of Directors. The representatives
of AT&T insisted that BT and the McCaw Block agree to vote for the Merger and
not take actions that would prevent AT&T from accounting for the Merger as a
pooling of interests. The representatives of BT and of the McCaw Block
acquiesced to these provisions. The representatives of BT and of members of the
McCaw Block requested that AT&T grant registration rights with respect to the
AT&T Common Shares to be received by them in the Merger, to which the
representatives of AT&T agreed. The representatives of McCaw requested the
right to require AT&T to purchase shares of Class A Common Stock for $600
million at a price per share of $51.25 in the event the Merger Agreement were
terminated, in order to give McCaw assurances as to liquidity if the Merger
were not consummated. The representatives of AT&T agreed to this request.
On August 14, 1993, the McCaw Board met with McCaw executives and its
financial and legal advisors to consider in detail the specific price and terms
of the possible merger. At this meeting, the McCaw Board authorized the McCaw
Special Committee to recommend the approval or disapproval of the proposed
merger. The McCaw Board also heard reports from Mr. McCaw and other members of
McCaw management on the results of their negotiations with AT&T, received the
presentation of Lazard Freres described under "THE MERGER--Opinions of the
Financial Advisors to the McCaw Special Committee and the McCaw Board" and
received a presentation by McCaw's legal advisors regarding the McCaw Board's
duties under Delaware law in considering the proposed merger. The McCaw Board
extensively discussed and considered the desirability of a one-to-one ratio for
the exchange of McCaw Common Stock and AT&T Common Shares, price protection and
the ability to terminate in the event of significant variations in the market
price of AT&T Common Shares prior to the Closing, financial liquidity in the
event the proposed merger should not close, flexibility for McCaw to operate
its business between execution of a definitive agreement and the Closing,
AT&T's insistence on eliminating the uncertainties associated with both the
fiduciary out and a provision permitting McCaw to terminate if the market price
of the AT&T Common Shares were to decline below a certain level, and AT&T's
willingness to agree to a one-to-one exchange ratio if the fiduciary out and
such a McCaw termination right were omitted. With regard to the absence of a
fiduciary out in the proposed merger, the McCaw Board was aware that no
combination could be consummated without the consent of Craig O. McCaw, acting
as the Designated Party (as hereinafter defined); that the McCaw Block was not
generally interested in selling its interest in McCaw, but would consider a
merger with AT&T because of unique technological and strategic advantages of a
combination with AT&T and because of AT&T's financial resources; that a
fiduciary out would not benefit McCaw stockholders unless alternative
transactions were likely to provide greater value than the proposed merger with
AT&T; and that, in any event, Mr. McCaw would not necessarily consent to a
combination with any other entity. The McCaw Board also took into account the
possibility that the proposed merger could constitute a basis for resolving the
litigation with respect to the Proposed Strategic Alliance described under "THE
MERGER--Litigation." Finally, the McCaw Board considered McCaw's prospects if
it were to remain independent, the regulatory approvals needed to consummate
the proposed merger and the length of time required to obtain them, the
importance to AT&T of obtaining pooling-of-interests accounting treatment for
the proposed merger, the bonus pool and severance arrangements for employees of
McCaw and LIN described under "THE MERGER--Interests of Certain Persons in the
Merger," and the agreements AT&T proposed to enter into with BT.
At the August 14, 1993 meeting, the McCaw Board asked extensive questions of
Lazard Freres as part of its discussion. The McCaw Board requested further
explanation of the financial terms of the proposed
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merger and of the report presented by Lazard Freres described under "THE
MERGER--Opinions of the Financial Advisors to the McCaw Special Committee and
the McCaw Board." The McCaw Board also questioned Lazard Freres regarding the
relative merits of proceeding with the proposed merger without a fiduciary out
and a termination right if the market price of the AT&T Common Shares were to
decline below a certain level. The Lazard Freres representatives responded that
the absence of such protections for McCaw should be weighed against the
possibility of obtaining a higher price from any other party. In the course of
the presentation and the discussions that followed, the McCaw Board asked
representatives of Lazard Freres whether any other potential acquiror could
likely offer a transaction on terms superior to AT&T's proposed merger. The
Lazard Freres representatives noted that Lazard Freres had not been engaged to
solicit third-party indications of interest in acquiring all or any part of
McCaw and did not actively seek any such offers. Such representatives observed,
however, that there was a limited number of such third parties who would have
the financial resources to make such an offer, that third parties who might
have the resources might not have the same incentive as AT&T to make an offer
because they might not perceive that they could benefit to the same extent as
AT&T from McCaw's ability to utilize their technology and brand name after any
merger, that no such offers had been made following the announcement of the
Proposed Strategic Alliance in November 1992, and that there could be no
assurance that, if solicited, any offer would be forthcoming on terms superior
to the proposed merger with AT&T.
On August 15, 1993, the McCaw Special Committee met to discuss the proposed
merger with its legal and financial advisors. Salomon Brothers delivered the
presentation, described under "THE MERGER--Opinions of Financial Advisors to
the McCaw Special Committee and the McCaw Board," regarding the financial terms
of the proposed merger and responded to questions from the members of the McCaw
Special Committee. The McCaw Special Committee requested Salomon Brothers' view
as to whether McCaw would have access to the capital markets to fund its
ongoing capital needs in the event the proposed merger was not consummated.
Salomon Brothers indicated that it was their view that, based on the current
state of the capital markets, McCaw could fund its capital requirements through
a combination of debt, equity and equity-linked securities but pointed out the
volatility of those markets. The McCaw Special Committee also requested Salomon
Brothers' view with respect to the reasons for exchanging McCaw Common Stock,
which historically displayed high cash flow growth, for AT&T Common Shares.
Salomon Brothers pointed out that a premium was being received for McCaw Common
Stock and that the stocks exhibited differing volatility characteristics. The
McCaw Special Committee also requested further explanation of the mechanics of
the exchange ratio, and Salomon Brothers explained how the exchange ratio,
together with its collar, would operate at various prices for the AT&T Common
Shares. The McCaw Special Committee then received the oral opinion of Salomon
Brothers described under "THE MERGER--Opinions of the Financial Advisors to the
McCaw Special Committee and to the McCaw Board." After presentations by counsel
to the McCaw Special Committee regarding the duties of the McCaw Special
Committee and by counsel to McCaw regarding the terms of the proposed merger,
and after further discussion, the McCaw Special Committee resolved to recommend
that the McCaw Board approve the proposed merger.
Immediately after the McCaw Special Committee meeting on August 15, 1993, the
McCaw Board met and again reviewed the history of the negotiations with AT&T,
including the agreement of Mr. McCaw and Mr. Allen, subject to the approval of
the AT&T Board, the McCaw Special Committee and the McCaw Board, to a one-to-
one ratio, with adjustments for increases or decreases in the market price of
the AT&T Common Shares above $71.73 per share or below $53 per share, but with
no fiduciary out or termination right for further decreases in the market price
of the AT&T Common Shares. The McCaw Board concluded that the benefit to the
McCaw stockholders of a fiduciary out was limited because it was unlikely that
a third party would make an offer superior to the proposed merger with AT&T and
that any potential benefit was outweighed by the factors listed under "THE
MERGER--McCaw's Reasons for the Merger; Recommendations of the McCaw Special
Committee and the McCaw Board," considered in the aggregate. The McCaw Board
received a report on the opinion of Salomon Brothers that had been delivered to
the McCaw Special Committee. Representatives of Lazard Freres continued their
presentation to the McCaw Board, described under "THE MERGER--Opinions of
Financial Advisors to the McCaw Special Committee and the McCaw Board," and
responded to additional questions from the McCaw Board regarding the
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financial terms of the proposed merger, the background of the proposed merger
and other potentially interested parties. The McCaw Board then received the
recommendation of the McCaw Special Committee, which also reported on its
independent deliberations during the negotiations for the Proposed Strategic
Alliance and the proposed merger. The McCaw Board also received the
presentation and written opinion of Lazard Freres described under "THE MERGER--
Opinions of the Financial Advisors to the McCaw Special Committee and to the
McCaw Board." The McCaw Board then approved the Merger Agreement by unanimous
vote of those directors present (which approval was subsequently ratified by
the entire McCaw Board by unanimous written consent). The Merger Agreement does
not contain a fiduciary out, but does permit the McCaw Board to take and
disclose to McCaw stockholders a position under applicable Exchange Act rules
with respect to a tender or exchange offer for shares of McCaw Common Stock
commenced by a third party. See "THE MERGER--No Solicitation."
On August 15, 1993, the LIN Board of Directors approved (i) certain LIN
employee matters (including the establishment and modification of certain
employee benefit plans described under "THE MERGER--Interests of Certain
Persons in the Merger"), (ii) an amendment to the Rights Agreement, dated May
2, 1988, as amended, between LIN and Manufacturers Hanover Trust Company, as
Rights Agent (the "LIN Rights Agreement"), to provide that execution of the
Merger Agreement and consummation of the proposed merger would not constitute a
"Triggering Event" or result in AT&T's becoming an "Acquiring Person," as such
terms are defined in the LIN Rights Agreement and (iii) the proposed merger for
purposes of Section 203 of the DGCL.
Also on August 15, 1993, the AT&T Board met and received presentations with
respect to the terms of the Merger Agreement and other agreements and the
financial and strategic impact of the proposed merger on AT&T. The AT&T Board
also took into account the execution prior to the AT&T Board meeting of an
agreement in principle with counsel for the plaintiffs in the litigation with
respect to the Proposed Strategic Alliance, described under "THE MERGER--
Litigation," providing for a settlement of that litigation on the basis of
entry into the Merger Agreement. Following these presentations and discussion,
the AT&T Board approved the Merger Agreement, the McCaw Block Agreement, the BT
Letter Agreement and the August 1993 Put Letter by unanimous vote of those
directors present.
On the morning of August 16, 1993, the BT Board of Directors met and
authorized the proposed arrangements between BT, on the one hand, and AT&T and
McCaw, on the other hand. Execution and delivery of the Merger Agreement, the
McCaw Block Agreement, the BT Letter Agreement, the BT Waiver and the August
1993 Put Letter were then completed, and the agreements were publicly
announced.
MCCAW'S REASONS FOR THE MERGER; RECOMMENDATION OF THE MCCAW SPECIAL COMMITTEE
AND THE MCCAW BOARD
The McCaw Special Committee and the McCaw Board have determined the Merger to
be fair to and in the best interests of McCaw and its stockholders.
ACCORDINGLY, THE MCCAW BOARD HAS UNANIMOUSLY APPROVED AND DECLARED ADVISABLE
THE MERGER AGREEMENT AND THE MERGER AND RECOMMENDS THAT THE MCCAW STOCKHOLDERS
VOTE "FOR" APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE MERGER.
Although the holders of McCaw Common Stock, other than the McCaw Block and
BT, will not have an opportunity to approve or disapprove the Merger by a
separate vote and will not have appraisal rights under Delaware law, the McCaw
Board does not believe that such a separate vote is needed where, as here, all
holders of McCaw Common Stock will receive the same consideration for their
shares in the Merger, the McCaw Block and BT have the same interest in
obtaining the most favorable transaction available as do the other holders of
the McCaw Common Stock, and the Special Committee independently reviewed the
terms of the Merger with its independent legal and financial advisors and
concluded that the Merger was fair to and in the best interests of McCaw and
its stockholders. The McCaw Board was also aware of the fact that the AT&T
Common Shares to be received by the holders of the McCaw Common Stock on the
Effective Date will be listed on the NYSE and are widely traded. As discussed
under "THE MERGER--Absence of
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Appraisal Rights," under Delaware law, appraisal rights are unavailable for
shares of stock designated as NASDAQ National Market System securities which
are to be converted in a merger into shares of stock of a corporation listed on
a national securities exchange, such as the NYSE. The McCaw Board believes this
provision recognizes that such stockholders already have a "market out" where
there is a substantial trading market for the shares they will receive in the
merger, making unnecessary a judicially created market for their shares through
the statutory appraisal process.
As described above under "THE MERGER--Background," the decisions of the McCaw
Special Committee to recommend, and of the McCaw Board to approve, the Merger
Agreement and the Merger on August 15, 1993 followed extensive negotiations
between McCaw and AT&T regarding the Proposed Strategic Alliance. During the
period between announcement of the Proposed Strategic Alliance and initial
discussion of a possible merger alternative, the McCaw Special Committee met 39
times and the McCaw Board met five times, at which meetings both the McCaw
Special Committee and the McCaw Board reviewed in detail McCaw's business,
results of operations and prospects, including McCaw's business opportunities
with reference to the Proposed Strategic Alliance. Also during this period, the
McCaw Special Committee reviewed with Salomon Brothers, and the McCaw Board
independently reviewed with Lazard Freres, information provided by McCaw
management, the range of values to McCaw stockholders that might be achievable
in connection with McCaw's business opportunities and the uncertainties
inherent in achieving those values.
During the course of their respective deliberations relating to a possible
merger with AT&T, the McCaw Special Committee and the McCaw Board took into
account the information about McCaw and AT&T acquired during the negotiations
for the Proposed Strategic Alliance, and also considered, without assigning
relative weights to, the following other factors:
(i) the terms and conditions of the Merger Agreement, including the
amount and form of the consideration, the proposed price protection range
compared to the ranges in certain other transactions, the fact that the
holders of shares of Class B Common Stock will receive for their shares the
same consideration offered the holders of shares of Class A Common Stock
and the degree of flexibility provided to McCaw to conduct its business
prior to the Closing, which the McCaw Special Committee and the McCaw Board
believed represented the most favorable transaction possible with AT&T for
McCaw's public stockholders;
(ii) the historical and prospective business of McCaw, including, among
other things, the current financial condition and future prospects of
McCaw, the strategic direction of McCaw's business, the current conditions
in, and future prospects of, the wireless industry, the competitive
position of McCaw in that industry, and the historical business and future
prospects of AT&T and its current financial condition, the current
conditions in, and future prospects of, the telecommunications industry and
the competitive position of AT&T in that industry, which indicated to the
McCaw Special Committee and the McCaw Board that there is a good strategic
fit between the two companies and that the Merger may produce benefits to
McCaw stockholders by allowing them to participate in a combined enterprise
with greater business and financial resources that is well positioned to
take advantage of new opportunities and meet competitive challenges;
(iii) the unique combination of technological and financial resources
offered by AT&T, which the McCaw Special Committee and the McCaw Board
believed would give McCaw the opportunity to share in AT&T's research and
development activities and in the resulting technological advances and
allow the exchange of AT&T Common Shares for shares of McCaw Common Stock
without prohibitive dilution;
(iv) the potential for synergies from the companies' complementary assets
and businesses, which the McCaw Special Committee and the McCaw Board
believed would have a favorable impact on long-term value for McCaw
stockholders as holders of AT&T Common Shares after the Merger;
(v) the opportunity for the McCaw stockholders to retain a significant
continuing interest in the telecommunications industry in general and the
wireless industry in particular through the acquisition
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of AT&T Common Shares, which the McCaw Special Committee and the McCaw
Board believed would be favorable to McCaw's public stockholders and
consistent with their investment intent in purchasing shares of the Class A
Common Stock;
(vi) historical data relating to market prices and trading volumes of the
Class A Common Stock, historical data relating to market prices and trading
volumes of and dividends on AT&T Common Shares, market prices of and
dividends on AT&T Common Shares compared to those of certain other publicly
traded companies and the likely effects of the Merger on AT&T's financial
condition, including the dilutive effects of the issuance of AT&T Common
Shares in the Merger, the likely reaction of the financial market to the
Merger and the effect of such reaction on the price of AT&T Common Shares,
which the McCaw Special Committee and the McCaw Board believed indicated
that the value of the AT&T Common Shares to be received in the Merger was
within the range of fair value from a financial point of view to McCaw
stockholders;
(vii) the regulatory approvals required for the Merger, the estimated
length of time required to consummate the Merger, and AT&T's delivery of
the August 1993 Put Letter, which August 1993 Put Letter will provide
liquidity to McCaw in the event that the Merger is not consummated for
regulatory or other reasons;
(viii) alternatives to the Merger, including, among other things,
remaining an independent entity, entering into the Proposed Strategic
Alliance or similar transaction with AT&T, and possible strategic alliances
or combinations with other partners and the risks associated with such
alternatives, including constraints on the ability of McCaw to obtain
financing to support its growth, the difficulty of structuring a
satisfactory strategic alliance with AT&T and the absence of firm proposals
by potential acquirors despite the public announcement of the Proposed
Strategic Alliance, which the McCaw Special Committee and the McCaw Board
believed resulted in the likelihood that no other alternative would provide
significantly greater value for McCaw stockholders than the Merger;
(ix) the structure of the Merger, which would permit holders of McCaw
Common Stock to exchange all their shares of McCaw Common Stock for AT&T
Common Shares on a tax-free basis;
(x) the willingness of Craig O. McCaw and the other members of the McCaw
Block and BT to vote in favor of the Merger and the willingness of BT to
waive certain of its contractual rights in connection with the Merger,
which were necessary for McCaw to consummate the Merger, and the fact that
the McCaw Block and BT will receive the same consideration per share as
that offered to the other holders of the Class A Common Stock, which
indicated to the McCaw Special Committee and the McCaw Board the fairness
of the Exchange Ratio to McCaw's public stockholders;
(xi) the presentation of Salomon Brothers delivered to the McCaw Special
Committee at its meeting on August 15, 1993, including Salomon Brothers'
oral opinion, confirmed by its written opinion, dated August 16, 1993,
that, as of such dates, the consideration to be received by McCaw
stockholders in connection with the Merger is fair to such stockholders
(other than AT&T, BT or any of their respective affiliates) from a
financial point of view; and
(xii) the presentations of Lazard Freres delivered to the McCaw Board at
its meetings on August 14 and August 15, 1993, including Lazard Freres'
written opinion, dated August 15, 1993, that, as of such date, the
consideration to be received by McCaw stockholders in connection with the
proposed Merger is fair to such stockholders (other than AT&T, BT or any of
their respective affiliates) from a financial point of view.
AT&T'S REASONS FOR THE MERGER
The AT&T Board believes that the Merger is in the best interests of AT&T and
AT&T stockholders because it is expected to enable AT&T to enter a high-growth
area of the telecommunications industry and to expand AT&T's relationship with
telecommunications-intensive customers through the provision of wireless
services.
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OPINIONS OF THE FINANCIAL ADVISORS TO THE MCCAW SPECIAL COMMITTEE AND TO THE
MCCAW BOARD
Opinion of Salomon Brothers to the McCaw Special Committee. Salomon Brothers
delivered to the McCaw Special Committee its written opinion that, as of August
16, 1993, the consideration to be received by McCaw stockholders in connection
with the Merger is fair to such stockholders (other than AT&T, BT or any of
their respective affiliates) from a financial point of view. Such opinion
confirmed the oral opinion given by Salomon Brothers to the McCaw Special
Committee on August 15, 1993. No limitations were imposed by the McCaw Special
Committee upon Salomon Brothers with respect to the investigations made or the
procedures followed by it in rendering its opinion.
THE FULL TEXT OF THE OPINION OF SALOMON BROTHERS DATED AUGUST 16, 1993, WHICH
SETS FORTH ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITS ON THE REVIEW
UNDERTAKEN, IS ATTACHED AS APPENDIX F TO THIS PROXY STATEMENT/PROSPECTUS. MCCAW
STOCKHOLDERS ARE URGED TO READ SUCH OPINION IN ITS ENTIRETY. SALOMON BROTHERS'
OPINION IS DIRECTED ONLY TO THE FAIRNESS OF THE CONSIDERATION TO BE RECEIVED BY
THE MCCAW STOCKHOLDERS AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY MCCAW
STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD VOTE. THE SUMMARY OF THE OPINION
OF SALOMON BROTHERS SET FORTH IN THIS PROXY STATEMENT/PROSPECTUS IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.
In arriving at its opinion, Salomon Brothers (i) reviewed the Merger
Agreement and its related schedules, (ii) reviewed certain publicly available
business and financial information relating to McCaw, (iii) reviewed certain
other information, including financial forecasts, provided to Salomon Brothers
by McCaw and (iv) met with McCaw management to discuss the business of McCaw.
With respect to AT&T, Salomon Brothers reviewed only publicly available
business and financial information. Salomon Brothers also considered such other
information, financial studies, analyses and investigations and financial,
economic and market criteria which it deemed relevant.
In connection with its review, Salomon Brothers did not independently verify
any of the foregoing information and relied on such information being complete
and accurate in all material respects. With respect to the financial forecasts,
Salomon Brothers assumed that they had been reasonably prepared on bases
reflecting the best currently available estimates and judgments of McCaw
management as to the future financial performance of McCaw. In addition,
Salomon Brothers did not make an independent evaluation or appraisal of any of
the assets of McCaw or of AT&T, nor was it furnished with any such appraisals.
Salomon Brothers did not review any of the arrangements that BT entered into
with AT&T in connection with the Merger, and Salomon Brothers expressed no
opinion as to any of the terms of such arrangements.
The following is a summary of the report presented by Salomon Brothers to the
McCaw Special Committee on August 15, 1993 in connection with its August 16,
1993 fairness opinion (the "Salomon Brothers Report"):
Stock Trading History and Exchange Ratio Analysis. Salomon Brothers reviewed
the history of the trading prices of the Class A Common Stock and AT&T Common
Shares in relation to each other, and the relationship between price movements
of such common stocks. The Salomon Brothers Report included charts setting
forth historical ratios (the closing price of McCaw divided by the closing
price of AT&T) of such common stocks during the one-year period from and
including August 14, 1992 through and including August 13, 1993, and the five-
year period from and including August 14, 1988 through and including August 13,
1993. The average ratio for the one-year and five-year periods ended August 13,
1993 was approximately 0.66 and 0.75, respectively. During such one-year and
five-year periods, the highs were approximately 0.82 and 1.30, respectively,
and the lows were approximately 0.50 and 0.37, respectively.
Discounted Cash Flow Analysis. Using a discounted cash flow analysis, Salomon
Brothers estimated the present value of the future cash flows that McCaw could
produce over a ten-year period from 1993 through 2002, under various
assumptions, if McCaw were to perform on a stand-alone basis (without giving
effect to any operating or other efficiencies pursuant to the Merger) in
accordance with management's forecasts and certain variants thereof. Salomon
Brothers set forth certain equity market value reference ranges for McCaw based
upon the sum of (i)(A) the aggregate discounted value (using various discount
rates ranging from 11% to 13%) of the ten-year unleveraged free cash flows of
McCaw, plus (B) the discounted value
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(using various discount rates ranging from 11% to 13%) of (a) the final year's
projected earnings before interest, taxes, depreciation and amortization
("EBITDA") multiplied by (b) numbers representing various terminal or exit
multiples (ranging from 10x to 11x), plus (ii) certain corporate adjustments
made by subtracting long-term debt and adding cash, marketable securities and
estimated cash proceeds from the exercise of certain stock options. This
analysis resulted in an equity value reference range per share of McCaw Common
Stock from $43.50 to $57.17.
Comparable Company Analysis. Salomon Brothers reviewed and compared the
financial and market performance of the following group of seven publicly
traded cellular communications companies with that of McCaw: Associated
Communications Corporation; Cellular Communications, Inc.; Centennial Cellular
Corp.; Contel Cellular Inc.; LIN; United States Cellular Corp.; and Vanguard
Cellular Systems, Inc. (the "Comparable Group"). Salomon Brothers selected the
Comparable Group companies on the basis of various factors, including primarily
each company's concentration in the cellular business, the location of its
cellular properties and the maturity of its cellular business. Salomon Brothers
examined certain publicly available financial data of the Comparable Group,
including firm value (defined as equity market value adjusted by adding long-
term debt and subtracting cash, marketable securities and estimated cash
proceeds from the exercise of certain stock options) and multiples of total
revenues, EBITDA and net number of United States persons ("POPs") represented
by the interests owned. Salomon Brothers then applied certain of these
multiples to publicly available estimates of McCaw's total revenues, EBITDA and
net POPs for the period of twelve months prior to June 30, 1993. This analysis
resulted in an equity value reference range per share of McCaw Common Stock
from $42.07 to $59.09.
Comparable Acquisition Analysis. Salomon Brothers also reviewed the
consideration paid or proposed to be paid in other acquisitions of cellular
communications companies. Specifically, Salomon Brothers reviewed the following
acquiror/target transactions: Bell Atlantic Corporation/Metro Mobile CTS, Inc.
(consummated April 1992); BellSouth Enterprises/McCaw Cellular Communications--
Midwest Properties (consummated September 1991); GTE Corporation/Providence
Journal Cellular Properties (consummated October 1990); Contel
Corporation/McCaw Cellular Communications--Southeast Properties (consummated
February 1990); Ameritech Corp./Cybertel Financial Corp. (consummated November
1991); and Comcast Corporation/Metromedia Company (consummated March 1992). The
analysis considered the multiple of firm value to net POPs and the multiple of
adjusted firm value (firm value adjusted to reflect lower industry discount
rates associated with decreases in United States treasury bond yields) to net
POPs, in each case as of the date of public announcement of the Merger. This
analysis resulted in an equity value reference range per share of McCaw Common
Stock from $45.54 to $51.21.
Pro Forma Merger Consequences Analysis. Salomon Brothers analyzed certain pro
forma effects on AT&T resulting from the Merger for the period of twelve months
prior to June 30, 1993, the projected twelve-month period ending December 31,
1993 and the following three years. This analysis, based upon the assumptions
described above, AT&T's historical results for the period of twelve months
prior to June 30, 1993 and estimates provided by Institutional Brokerage
Estimate Systems, Inc. and equity analysts' research reports for AT&T, showed
12% initial dilution in earnings per share for the projected period ending
December 31, 1993, and decreasing dilution thereafter, for the stockholders of
AT&T. No transaction costs, reductions in debt servicing costs, or revenue or
operating synergies, were taken into account in this analysis.
In connection with the Salomon Brothers Report, Salomon Brothers presented to
the McCaw Special Committee various operating synergies which McCaw's
management believed could be obtained following the Merger with AT&T. Salomon
Brothers calculated the present discounted value of such projected synergies
(using various discount rates ranging from 11% to 13%) to be an additional
$12.07 to $14.84 per share in excess of the present discounted value of McCaw
Common Stock on a stand-alone basis.
In arriving at its opinion dated August 16, 1993, and in presenting the
Salomon Brothers Report, Salomon Brothers performed certain financial analyses,
the material portions of which are summarized above. The summary set forth
above does not purport to be a complete description of Salomon Brothers'
analyses. Salomon Brothers believes that its analyses and the summary set forth
above must be considered as a whole and that selecting portions of its analyses
could create an incomplete view of the process underlying the
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analyses set forth in the opinion and the Salomon Brothers Report. In
performing its analyses, Salomon Brothers made numerous assumptions with
respect to industry performance, general business, economic, market and
financial conditions and other matters, many of which are beyond the control of
McCaw and AT&T. The trading values specified in the Salomon Brothers Report do
not purport to be indicative of actual trading values of McCaw Common Stock,
which may be significantly more or less than the amounts set forth in the
Salomon Brothers Report. Actual trading values will depend upon several
factors, including events affecting McCaw's industry, general economic, market
and interest rate conditions and other factors which generally influence the
price of securities.
No company or transaction used in the comparable company analysis or
comparable acquisition analysis summarized above is identical to McCaw or the
contemplated transaction. Accordingly, any such analysis of the value of the
proposed Merger involves complex considerations and judgments concerning
differences in the potential financial and operating characteristics of the
comparable companies and other factors in relation to the trading and
acquisition values of the comparable companies and publicly announced
transactions.
Salomon Brothers is an internationally recognized investment banking firm and
regularly engages in the valuation of businesses and their securities in
connection with mergers and acquisitions and for other purposes. The McCaw
Special Committee selected Salomon Brothers to act as its financial advisor on
the basis of Salomon Brothers' international reputation and its familiarity
with McCaw and the cellular industry in general. Salomon Brothers has
previously acted as financial advisor to AT&T in connection with financings and
other matters unrelated to the Merger for which it has received customary
compensation. In the course of its business, Salomon Brothers actively trades
the debt and equity securities of McCaw and AT&T for its own account and for
the accounts of customers. Accordingly, Salomon Brothers may at any time hold a
long or short position in such securities.
Fees Paid to Salomon Brothers. McCaw has paid Salomon Brothers aggregate fees
of $4,250,000 in consideration for Salomon Brothers' services. McCaw has also
agreed to reimburse Salomon Brothers for its out-of-pocket expenses, including
reasonable fees and disbursements of counsel. McCaw has agreed to indemnify
Salomon Brothers and its affiliates, their respective directors, officers,
partners, agents and employees and each person, if any, controlling Salomon
Brothers or any of its affiliates against certain liabilities, including
certain liabilities under the federal securities laws, relating to or arising
out of its engagement.
Opinion of Lazard Freres to the McCaw Board. At the meeting of the McCaw
Board held on August 15, 1993, Lazard Freres delivered to the McCaw Board its
written opinion that, as of August 15, 1993, the consideration to be received
by McCaw stockholders in connection with the proposed Merger is fair to such
stockholders (other than AT&T, BT or any of their respective affiliates) from a
financial point of view.
The full text of the opinion of Lazard Freres dated August 15, 1993, which
sets forth the assumptions made, matters considered and limits on the review
undertaken, is attached as Appendix G to this Proxy Statement/Prospectus. McCaw
stockholders are urged to read such opinion in its entirety. Lazard Freres'
opinion is directed only to the fairness of the consideration to be received by
the McCaw stockholders and does not constitute a recommendation to any McCaw
stockholder as to how such stockholder should vote. The summary of the opinion
of Lazard Freres set forth in this Proxy Statement/Prospectus is qualified in
its entirety by reference to the full text of such opinion.
In arriving at its opinion, Lazard Freres, among other things, (i) reviewed
the terms and conditions of the August 15, 1993 draft of the Merger Agreement;
(ii) analyzed certain historical business and financial information relating to
McCaw and AT&T, including the Annual Reports to Stockholders and Annual Reports
on Form 10-K of McCaw and AT&T for each of the fiscal years ended December 31,
1988 through 1992, and the Quarterly Reports on Form 10-Q of McCaw and AT&T for
the quarters ended March 31, June 30 and September 30 for each of the same
fiscal years and for the quarter ended March 31, 1993; (iii) reviewed certain
financial forecasts and other data provided to Lazard Freres by McCaw relating
to the business of McCaw; (iv) conducted discussions with members of McCaw's
senior management and limited discussions with members of AT&T's senior
management with respect to the business and prospects of
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McCaw and AT&T and the strategic objectives of each; (v) reviewed public
information with respect to certain other companies in lines of business Lazard
Freres believes to be generally comparable to the businesses of McCaw and AT&T;
(vi) reviewed the financial terms of certain recent business combinations in
the telecommunications industry specifically and in other industries generally;
(vii) reviewed the historical stock prices and trading volumes of Class A
Common Stock and AT&T Common Shares; and (viii) conducted such other financial
studies, analyses and investigations as Lazard Freres deemed appropriate.
Lazard Freres neither received nor reviewed any financial projections or other
nonpublic information prepared by AT&T pertaining to the future prospects of
AT&T.
Lazard Freres relied on the accuracy and completeness of the financial and
other information provided to it by McCaw and AT&T and did not undertake any
independent verification of such information or any independent valuation or
appraisal of any of the assets of McCaw or AT&T. With respect to the financial
forecasts provided to it by McCaw, Lazard Freres assumed that such financial
forecasts were reasonably prepared on a basis reflecting the best currently
available judgments of McCaw management as to the future financial performance
of McCaw. Lazard Freres' opinion was based on economic, monetary and market
conditions existing on the date of its opinion. Lazard Freres assumed that
obtaining the necessary regulatory and governmental approvals for the Merger
may significantly delay consummation of the Merger, and that, in the course of
obtaining such approvals, no restriction will be imposed that will have a
material adverse effect on the contemplated benefits of the Merger. Lazard
Freres was not asked by the McCaw Board to solicit third-party indications of
interest in acquiring all or any part of McCaw, nor did Lazard Freres actively
seek any such offers.
Lazard Freres expressed no opinion as to what the actual value of AT&T Common
Shares will be when issued to the McCaw stockholders upon consummation of the
Merger. Lazard Freres did not review any of the arrangements that BT or any of
its affiliates entered into with AT&T in connection with the Merger, nor did
Lazard Freres express any opinion as to any of the terms or conditions of any
such arrangements.
In arriving at its opinion and making its presentations to the McCaw Board at
the August 14 and August 15, 1993 meetings, Lazard Freres considered and
discussed certain financial analyses and other factors. In connection with its
presentation, Lazard Freres provided the McCaw Board with a summary of
valuation results obtained by using several different valuation methods as well
as other materials concerning McCaw Common Stock and AT&T Common Shares (the
"Lazard Freres Report").
The following paragraphs describe Lazard Freres' analysis of McCaw.
Discounted Cash Flow Analysis. Lazard Freres performed a discounted cash flow
analysis of McCaw's and LIN's cellular businesses based upon estimates of
projected financial performance provided by McCaw. Utilizing these projections,
Lazard Freres discounted to the present (i) the projected stream of unlevered
proportionate cash flows to year 2002 for each of McCaw's and LIN's cellular
holdings and (ii) the projected terminal value of each of such holdings at such
year based upon different ranges of multiples of projected EBITDA. After-tax
cash flows were calculated as projected earnings before net interest and taxes,
subtracting taxes at an estimated rate of 36%, adding projected depreciation
and amortization, and subtracting projected capital expenditures. Lazard Freres
applied several discount rates (ranging from 9.0% to 13.0%) and multiples of
EBITDA (ranging from nine to eleven times EBITDA) to each of McCaw's and LIN's
cellular holdings.
For McCaw's paging business and McCaw's proportionate interest in LIN's
television business, Lazard Freres arrived at estimated values for such
businesses by applying various multiples of projected EBITDA in 1993 to each
such business, ranging from eight to ten times for McCaw's paging business, and
from seven to nine times for LIN's television business. The discount rates and
multiples of EBITDA utilized by Lazard Freres in its analyses varied based upon
discussions with the management of McCaw and Lazard Freres' judgments as to the
manner in which different businesses are valued, their hypothetical costs of
capital and the possible risks and opportunities in the different businesses.
After subtracting net debt, refinancing fees and call premiums from the
results and adding proceeds from the exercise of outstanding stock options,
Lazard Freres arrived at estimated ranges of value for the equity of
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McCaw. Utilizing this methodology, the implied value of McCaw Common Stock was
estimated at between $44 and $62 per share on a fully diluted basis.
Comparable Acquisition Transaction Analysis. Lazard Freres reviewed certain
publicly available information on announced sale transactions of cellular
businesses since August 1989. For each such transaction, Lazard Freres analyzed
the estimated purchase price paid per POP for different metropolitan
statistical area ("MSA") ranks, which ranged from an estimated low of $27 per
POP in the smallest MSA to an estimated high of $350 per POP in the largest
MSA. Utilizing the high, low and average price paid per POP within various
groups of MSA ranks, Lazard Freres calculated the implied value for McCaw's
cellular assets based upon the MSA ranks of McCaw's cellular markets. Utilizing
this methodology, the implied value per POP of McCaw's cellular business,
including McCaw's proportionate interest in LIN's cellular business, was
estimated at between $125 and $256, and the mean implied value per POP was
estimated at $201. With an assumed AT&T Common Share price per share of $62 3/8
(the reported closing sales price per AT&T Common Share on August 13, 1993, the
last full trading day prior to the public announcement of the execution of the
Merger Agreement), and an Exchange Ratio of 1.0, the implied total market value
of net assets per POP of McCaw, including McCaw's proportionate interest in
LIN's cellular business, was calculated to be $282 per POP, which was greater
than the implied value per POP derived from the comparable acquisition
transaction analysis.
Comparable Public Company Analysis. Lazard Freres compared certain publicly
available financial, operating and stock market performance data of selected
publicly traded companies in the cellular communication, paging and television
broadcast businesses with the historical financial, operating and stock market
performance of McCaw and LIN. Lazard Freres analyzed, among other things, the
market values, the market capitalizations, the dividend yields, the total
market value of net assets per POP (in the case of companies in the cellular
communication business) and certain operating statistics of McCaw, LIN and
selected publicly traded companies. This analysis showed that the total market
value of net assets per POP for such companies in the cellular communications
business (excluding LIN) ranged from an estimated low of $100 to an estimated
high of $247. The publicly traded companies reviewed by Lazard Freres in this
analysis included: Associated Communications Corporation, BCE Mobile
Communications Inc., Cellular Communications, Inc., Centennial Cellular Corp.,
Contel Cellular Inc., Rogers Cantel Mobile Communications Inc., United States
Cellular Corp. and Vanguard Cellular Systems, Inc. in the cellular
communication business; Archer Communications Inc., Dial Page Inc., Mobile
Telecommunications Technologies Corporation, Pageamerica Group, Inc., Paging
Network, Inc., ProNet Inc. and United States Paging Corp. in the paging
business; and A.H. Belo Corporation, Granite Broadcasting Corporation, Outlet
Broadcasting Inc., Scripps Howard Broadcasting Co., and United Television Inc.
in the television broadcast business.
Stock Price and Volume Analysis. Lazard Freres reviewed the performance of
the per share market prices and trading volumes of the Class A Common Stock and
the LIN common stock for various time periods and compared such per share
market price movements to the Standard & Poor's Industrial Average of 500
stocks (the "S&P 500"). Lazard Freres also reviewed the per share market prices
of the Class A Common Stock and the LIN common stock for various time periods
and compared such per share market price movements to the movements of a
composite index of certain publicly traded cellular companies. Such cellular
companies included: Associated Communications Corporation, Cellular
Communications, Inc., Centennial Cellular Corp., Contel Cellular Inc., United
States Cellular Corp. and Vanguard Cellular Systems, Inc. Lazard Freres also
reviewed the per share market price of the Class A Common Stock for various
time periods and compared such per share market price movements to the
movements of AT&T Common Shares. This comparison showed that the ratio of the
closing sales price per AT&T Common Share to the closing sales price per share
of Class A Common Stock has been greater than 1.0 since mid-1989, and at times
since then has been greater than 3.0. This comparison also showed that, on
August 13, 1993 (the last full trading day prior to the public announcement of
the execution of the Merger Agreement), the ratio of the reported closing sales
price per AT&T Common Share to the reported closing sales price per share of
the Class A Common Stock was 1.217.
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The following paragraphs describe Lazard Freres' analysis of AT&T.
Comparable Public Company Analysis. Lazard Freres compared the projected
financial performance of selected publicly traded companies with the projected
financial performance of AT&T. These analyses were based upon a composite of
various research analyst estimates for AT&T and such selected publicly traded
companies. As noted above, Lazard Freres neither received nor reviewed any
financial projections or other nonpublic information prepared by AT&T
pertaining to the future prospects of AT&T. Lazard Freres analyzed, among other
things, the market values, the market capitalizations, the dividend yields and
the projected price earnings ratios of AT&T and the following companies: MCI
Communications Corp.; Sprint Corporation; a group of independent long-distance
companies, including ACC Corp., ALC Communications Corporation, LCI
International, Inc., LDDS Communications, Inc., WCT Communications Inc. and
U.S. Long Distance Corp.; a group consisting of GTE Corporation and the seven
regional Bell operating companies (Ameritech Corp., Bell Atlantic Corp.,
BellSouth Corp., NYNEX Corp., Pacific Telesis Group, Southwestern Bell Corp.
and U S WEST, Inc.); a group of mainframe computer manufacturers, including
International Business Machines Corporation, Digital Equipment Corporation,
Unisys Corporation, Hewlett-Packard Company and Compaq Computer Corporation;
and a group of network products and systems companies, including ADC
Telecommunications, Inc., Telco Systems, Inc. and Tellabs Operations, Inc.
Stock Price and Volume Analysis. Lazard Freres reviewed the performance of
the per share market price and trading volume of AT&T Common Shares for various
time periods and compared such per share market price movements to the S&P 500,
to MCI Communications Corp. and to various indices of small long-distance and
international long-distance companies. Such small long-distance companies
included ALC Communications Corporation, LCI International, Inc., LDDS
Communications, Inc. and The Williams Companies, Inc., and such international
long-distance companies included Bell Canada, BT, Cable and Wireless plc, Hong
Kong Telecommunications Limited, Nippon Telegraph and Telephone Corporation and
Telefonica de Espana, S.A. Lazard Freres also compared certain historical
price earnings multiples of AT&T Common Shares to the S&P 500 and MCI
Communications Corp. Finally, Lazard Freres compared certain historical
dividend yields of AT&T to the S&P 500.
In addition to the foregoing analyses with respect to McCaw and AT&T, Lazard
Freres performed the following analysis with respect to the impact of the
Merger.
Pro Forma Merger Analysis. Lazard Freres analyzed the pro forma impact of the
Merger on earnings per share for AT&T for periods following consummation of the
Merger, and compared such amounts to projected earnings per share on a stand-
alone basis for AT&T based upon a composite of research analyst estimates.
Assuming that AT&T achieves no synergies in revenues or earnings resulting from
the Merger, such analyses estimated that, with an Exchange Ratio of 1.0,
holders of AT&T Common Shares would incur dilution of 9.3% for the fiscal year
ending December 31, 1994, and decreasing dilution thereafter.
In arriving at its opinion and in presenting the Lazard Freres Report, Lazard
Freres performed a variety of financial analyses, the material portions of
which are summarized above. The summary set forth above does not purport to be
a complete description of the analyses performed by Lazard Freres. In addition,
Lazard Freres believes that its analyses must be considered as a whole and that
selecting portions of such analyses and of the factors considered by it,
without considering all of such analyses and factors, could create an
incomplete view of the process underlying its analyses set forth in the opinion
and the Lazard Freres Report. The preparation of a fairness opinion is a
complex process and is not necessarily susceptible to partial analysis or
summary description. With regard to the comparable acquisition transaction
analysis and the comparable public company analyses summarized above, Lazard
Freres selected comparable public companies on the basis of various factors,
including the size of the public company and similarity of the line of
business; however, no public company utilized as a comparison is identical to
McCaw, AT&T or the business segment for which a comparison is being made.
Accordingly, an analysis of the foregoing is not mathematical; rather, it
involves complex considerations and judgments concerning differences in
financial and operating characteristics of the comparable companies and other
factors that could affect the acquisition or public trading value of the
comparable companies to which McCaw, AT&T or their respective business segments
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are being compared. In performing its analyses, Lazard Freres made numerous
assumptions with respect to industry performance, general business and economic
conditions and other matters, many of which are beyond McCaw's or AT&T's
control. Any estimates contained in such analyses are not necessarily
indicative of actual past or future results or values, which may be
significantly more or less than such estimates. Estimates of values of
companies or parts of companies do not purport to be appraisals or necessarily
to reflect the price at which such companies or parts may actually be sold, and
such estimates are inherently subject to uncertainty. The forecast of financial
results for McCaw used by Lazard Freres in performing its analyses were
prepared by the management of McCaw, without independent verification thereof
by Lazard Freres.
Lazard Freres is an internationally recognized investment banking firm that
regularly engages in the valuation of businesses and their securities in
connection with mergers and acquisitions. The McCaw Board selected Lazard
Freres to act as its financial advisor on the basis of Lazard Freres'
international reputation, McCaw's prior relationship with Lazard Freres and
Lazard Freres' familiarity with McCaw. Lazard Freres advised McCaw on its
acquisition of LIN, for which Lazard Freres received compensation totaling
$14,750,000, and Lazard Freres has performed other investment banking services
for McCaw in the past for which it has received customary compensation. Lazard
Freres has previously acted as financial advisor to AT&T in connection with
matters unrelated to the Merger for which it has received customary
compensation.
Fees Paid to Lazard Freres. McCaw (i) has paid Lazard Freres an aggregate of
$4,000,000, (ii) will pay Lazard Freres an additional $16,000,000 upon
consummation of the Merger and (iii) in the event the Merger Agreement is
terminated and McCaw exercises its put right under the August 1993 Put Letter,
will pay Lazard Freres a fee equal to 1% of the gross proceeds received by
McCaw in connection with the sale of newly issued stock pursuant to such
exercise; provided that in the event McCaw repurchases such stock pursuant to
the terms of the August 1993 Put Letter (see "OTHER AGREEMENTS--August 1993 Put
Letter"), Lazard Freres will repay to McCaw the amount of such fee. McCaw has
also agreed to reimburse Lazard Freres for all reasonable out-of-pocket
expenses, including, but not limited to, fees and expenses of its counsel, and
has agreed to indemnify Lazard Freres against certain liabilities in connection
with its engagement.
TERMS OF THE MERGER
The Merger. Subject to the terms and conditions of the Merger Agreement,
Merger Sub will merge with and into McCaw at the Effective Time. The separate
corporate existence of Merger Sub will then cease, and the internal corporate
affairs of McCaw (the "Surviving Corporation") will continue to be governed by
the laws of the State of Delaware.
Certificate of Incorporation and By-Laws. The Merger Agreement provides that
the certificate of incorporation of Merger Sub as in effect immediately prior
to the Effective Time will become the certificate of incorporation of the
Surviving Corporation. The by-laws of Merger Sub in effect at the Effective
Time will become the by-laws of the Surviving Corporation.
Directors and Officers. The directors of Merger Sub at the Effective Time
will become the directors of the Surviving Corporation until their successors
have been duly elected or appointed and qualified or until their earlier death,
resignation or removal. The officers of McCaw at the Effective Time will become
the officers of the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal. See "THE MERGER--Management and Operations of McCaw after the Merger."
Conversion of McCaw Common Stock in the Merger. At the Effective Time, each
issued and outstanding share of McCaw Common Stock (other than shares owned by
AT&T) will be converted into one AT&T Common Share; provided, however, that (i)
in the event the Closing Date Market Price of one AT&T Common Share is less
than $53.00, the Exchange Ratio will be equal to $53.00 divided by the Closing
Date Market Price of one AT&T Common Share, but in no event greater than 1.111
AT&T Common Shares, and (ii) in the event the Closing Date Market Price of one
AT&T Common Share is greater than $71.73, the Exchange Ratio will be equal to
$71.73 divided by the Closing Date Market Price of one AT&T Common Share, but
in
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no event less than .909 of an AT&T Common Share. If, prior to the Effective
Time, AT&T should split or combine the AT&T Common Shares, or pay a stock
dividend or other stock distribution in AT&T Common Shares, or otherwise change
the AT&T Common Shares into any other securities, or make any other dividend or
distribution on the AT&T Common Shares (other than normal quarterly dividends
as the same may be adjusted from time to time in the ordinary course), then the
Exchange Ratio will be appropriately adjusted to reflect such split,
combination, dividend or other distribution or change.
In addition, each outstanding option to purchase shares of McCaw Common Stock
(each, an "Option") issued pursuant to McCaw's stock option plans
(collectively, the "Option Plans"), whether or not vested or exercisable, will
be assumed by AT&T and will constitute an option to acquire, on the same terms
and conditions as were applicable under such assumed Option, that number of
AT&T Common Shares equal to the product of the Exchange Ratio and the number of
shares of McCaw Common Stock subject to such Option, at a price per share equal
to the aggregate exercise price for the shares of McCaw Common Stock subject to
such Option divided by the number of full AT&T Common Shares deemed to be
purchasable pursuant to such Option; provided, however, that (i) subject to the
provisions of clause (ii) below, the number of AT&T Common Shares that may be
purchased upon exercise of such Option will not include any fractional shares
and, upon the last such exercise of such Option, a cash payment will be made
for any fractional share based upon the per share average of the highest and
lowest sale price of AT&T Common Shares as reported in the NYSE Composite
Transactions on the date of such exercise, and (ii) in the case of any Option
to which Section 421 of the Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder (collectively, the "Code") applies by reason
of its qualification under Section 422 or Section 423 of the Code, the Option
price, the number of shares purchasable pursuant to such Option and the terms
and conditions of exercise of such Option will be determined in order to comply
with Section 424 of the Code. At the Effective Time, AT&T will deliver to
holders of Options appropriate option agreements representing the right to
acquire AT&T Common Shares on the same terms and conditions as contained in the
outstanding Options (subject to any adjustments required by the preceding
sentence), upon surrender of the outstanding Options. AT&T will comply with the
terms of the Option Plans as they apply to the Options assumed as set forth
above.
Based upon the number of shares of McCaw Common Stock outstanding on the
Record Date, assuming the exercise of all outstanding Options (whether or not
currently exercisable), and based upon the maximum Exchange Ratio permitted by
the Merger Agreement, a maximum of 228,766,955 AT&T Common Shares may be issued
in connection with the Merger.
Fractional Shares. No fractional AT&T Common Shares will be issued in the
Merger. In lieu of any such fractional shares, each holder of McCaw Common
Stock who otherwise would be entitled to receive a fractional AT&T Common Share
pursuant to the Merger will be paid an amount in cash, without interest, equal
to such holder's proportionate interest in the net proceeds from the sale or
sales in the open market by the Exchange Agent, on behalf of all such holders,
of the aggregate fractional AT&T Common Shares, if any, that would have been
issued in the Merger. As soon as practicable following the Effective Time, the
Exchange Agent will determine the number of Excess Shares, if any, and the
Exchange Agent, as agent for the former holders of McCaw Common Stock, will
sell any such Excess Shares at the prevailing prices on the NYSE. The sale of
any Excess Shares will be executed through one or more member firms of the NYSE
and will be executed in round lots to the extent practicable.
EFFECTIVE TIME OF THE MERGER
Promptly following receipt of all required governmental approvals and
satisfaction or waiver (where permissible) of the other conditions to the
Merger, the Merger will be consummated and become effective at the time at
which the certificate of merger to be filed pursuant to the DGCL is accepted
for filing by the Secretary of State of the State of Delaware or such later
date and time as may be specified in such certificate of merger. See "THE
MERGER--Conditions; Waivers."
EXCHANGE OF CERTIFICATES IN THE MERGER
Promptly after the Effective Time, the Exchange Agent will mail a transmittal
form and instructions to each holder of record (other than AT&T) of
certificates which immediately prior to the Effective Time
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represented outstanding shares of McCaw Common Stock (the "Certificates"),
which form and instructions are to be used in forwarding the Certificates for
surrender and exchange for (i) certificates representing that number of whole
AT&T Common Shares that such holder has the right to receive pursuant to the
Merger and (ii) cash for any fractional AT&T Common Shares to which such holder
otherwise would be entitled. MCCAW STOCKHOLDERS ARE REQUESTED NOT TO SURRENDER
THEIR CERTIFICATES FOR EXCHANGE UNTIL SUCH TRANSMITTAL FORM AND INSTRUCTIONS
ARE RECEIVED. At and after the Effective Time and until surrendered as provided
above, Certificates will be deemed to represent the right to receive
certificates representing that number of whole AT&T Common Shares into which
the shares of McCaw Common Stock formerly represented by such Certificates were
converted in the Merger and a cash payment in lieu of any fractional shares,
and the holders of Certificates will not be entitled to receive dividends or
any other distributions from AT&T until such Certificates are so surrendered.
Upon surrender of a Certificate, there shall be paid to the person in whose
name such AT&T Common Shares are issued any dividends or other distributions
which have a record date after the Effective Time and which became payable
prior to surrender with respect to such AT&T Common Shares. After such
surrender, there shall be paid to the person in whose name the AT&T Common
Shares are issued any dividends or other distributions on such shares which
have a record date after the Effective Time and prior to such surrender and a
payment date after such surrender, and such payment will be made on the payment
date. In no event shall the persons entitled to receive such dividends or other
distributions be entitled to receive interest on such dividends or other
distributions.
LISTING OF THE AT&T COMMON SHARES ON THE NYSE
In the Merger Agreement, AT&T has agreed to use all reasonable efforts to
cause the AT&T Common Shares which are to be issued pursuant to the Merger
Agreement and upon exercise of Options granted to employees of McCaw and its
subsidiaries to be listed for trading on the NYSE. Such authorization for
listing is a condition to the obligations of AT&T, Merger Sub and McCaw to
consummate the Merger.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and warranties of the
parties thereto. The Merger Agreement includes representations and warranties
by McCaw as to (i) the corporate organization, standing and power of McCaw and
its subsidiaries, (ii) approvals by the McCaw Board and fairness opinions
received by McCaw, (iii) its capitalization, (iv) the authorization of the
Merger Agreement, (v) pending or threatened litigation, (vi) the Merger
Agreement's noncontravention of any agreement, law or charter or by-law
provision and the absence of the need (except as specified) for governmental or
third-party consents to the Merger, (vii) the terms, existence, operations,
liabilities and compliance with applicable laws of McCaw employee plans, and
certain other matters relating to the Employee Retirement Income Security Act
of 1974, as amended, (viii) payment of taxes, (ix) ownership of and rights to
use certain intellectual property, (x) the accuracy of McCaw's financial
statements and filings with the Commission, (xi) the conduct of McCaw's
business in the ordinary and usual course and the absence of any material
adverse change in the financial condition, business, results of operations,
properties, assets, liabilities or prospects of McCaw, (xii) certain contracts
and leases of McCaw and its subsidiaries, (xiii) certain transactions with
affiliates, (xiv) authority for the use of the AT&T service mark by McCaw, (xv)
brokers and finders employed by McCaw, (xvi) the accuracy of information to be
supplied by McCaw for inclusion in this Proxy Statement/Prospectus and in the
Registration Statement, (xvii) the fact that the Merger Agreement and the
transactions contemplated thereby do not constitute a "Triggering Event," as
such term is defined under the LIN Rights Agreement and (xviii) certain tax
matters.
The Merger Agreement also includes representations and warranties by AT&T and
Merger Sub as to (i) the corporate organization, standing and power of AT&T and
its subsidiaries, (ii) the authorization of the Merger Agreement, (iii) AT&T's
capitalization, (iv) the authorization of the AT&T Common Shares to be issued
pursuant to the Merger Agreement, (v) pending or threatened litigation, (vi)
the Merger Agreement's noncontravention of any agreement, law or charter or by-
law provision and the absence of the need (except as specified) for
governmental or third-party consents to the Merger, (vii) ownership of and
rights to use
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certain intellectual property, (viii) the accuracy of AT&T's financial
statements and filings with the Commission, (ix) the absence of any material
adverse change in the business, financial condition, results of operations,
properties, assets, liabilities or prospects of AT&T, (x) certain contracts and
leases of AT&T and its subsidiaries, (xi) the ownership, activities and assets
of Merger Sub, (xii) brokers and finders employed by AT&T, (xiii) the accuracy
of information to be supplied by AT&T for inclusion in this Proxy
Statement/Prospectus and in the Registration Statement, (xiv) the ownership of
shares of McCaw Common Stock by AT&T and (xv) certain tax matters.
BUSINESS OF MCCAW PENDING THE MERGER
McCaw has agreed that, among other things, prior to the Effective Time or
earlier termination of the Merger Agreement, except as contemplated by the
Merger Agreement, it and its subsidiaries will each conduct its operations
according to its ordinary course of business consistent with past practice and,
to the extent consistent therewith, with no less diligence and effort than
would be applied in the absence of the Merger Agreement, seek to preserve
intact its current business organizations, keep available the service of its
current officers and employees and preserve its relationships with customers,
suppliers and others having business dealings with it with the objective that
their goodwill and ongoing businesses shall be unimpaired at the Effective
Time. McCaw has agreed that, unless AT&T agrees in writing or except as
previously disclosed to AT&T or otherwise permitted pursuant to the Merger
Agreement, prior to the Effective Time neither McCaw nor any of its
subsidiaries will:
(i) except for (A) shares of McCaw Common Stock issued upon exercise of
Options outstanding as of August 16, 1993 under McCaw's employee benefit
plans and (B) conversions of Class B Common Stock into Class A Common Stock
pursuant to McCaw's Restated Certificate of Incorporation (the "McCaw
Certificate of Incorporation"), issue, deliver, sell, dispose of, pledge or
otherwise encumber, or authorize or propose the issuance, sale, disposition
or pledge or other encumbrance of (x) any additional shares of its capital
stock of any class (including McCaw Common Stock), or any securities or
rights convertible into, exchangeable for, or evidencing the right to
subscribe for any shares of its capital stock, or any rights, warrants,
options, calls, commitments or any other agreements of any character to
purchase or acquire any shares of its capital stock or any securities or
rights convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of its capital stock, or (y) any other securities
in respect of, in lieu of, or in substitution for, McCaw Common Stock
outstanding on August 16, 1993;
(ii) redeem, purchase or otherwise acquire, or propose to redeem,
purchase or otherwise acquire, any of its outstanding securities (including
McCaw Common Stock);
(iii) split, combine, subdivide or reclassify any shares of its capital
stock or declare, set aside for payment or pay any dividend, or make any
other actual, constructive or deemed distribution in respect of any shares
of its capital stock or otherwise make any payments to stockholders in
their capacity as such (other than dividends or distributions paid by any
McCaw subsidiary other than LIN);
(iv) (A) grant any material increases in the compensation of any of its
directors, officers or key employees, except in the ordinary course of
business consistent with past practice, (B) pay or agree to pay any
pension, retirement allowance or other material employee benefit not
required or contemplated by any of the existing benefit, severance, pension
or employment plans, agreements or arrangements as in effect on August 16,
1993 to any such director, officer or key employee, whether past or
present, (C) enter into any new or materially amend any existing employment
agreement with any such director, officer or key employee, except for
employment agreements with new employees entered into in the ordinary
course of business consistent with past practice, (D) enter into any new or
materially amend any existing severance agreement with any such director,
officer or key employee, except as previously disclosed to AT&T or (E)
except as may be required to comply with applicable law, become obligated
under any new pension plan or arrangement, welfare plan or arrangement,
multi-employer plan or arrangement, employee benefit plan or arrangement,
severance plan or arrangement, benefit plan or arrangement, or similar plan
or arrangement, which was not in existence on August 16, 1993, or amend
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any such plan or arrangement in existence on August 16, 1993 if such
amendment would have the effect of enhancing or accelerating any benefits
thereunder;
(v) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of
McCaw or any of its subsidiaries not constituting an inactive subsidiary
(other than the Merger, and other than such of the foregoing with respect
to any McCaw subsidiary as do not change McCaw's beneficial ownership
interest in such subsidiary);
(vi) make any acquisition, by means of merger, consolidation or
otherwise, of (A) any direct or indirect ownership interest in or assets
comprising any domestic public cellular radio telecommunications service
system licensed under Part 22 of the Rules of the FCC (a "Cellular System")
or other business enterprise or operation or (B) except in the ordinary
course and consistent with past practice, any other assets;
(vii) (A) dispose of any direct or indirect ownership interest in any
Cellular System (including any shares of capital stock of any subsidiary
holding such interest) in any of the 100 largest MSAs in terms of
population (as determined by the most recent estimate at such time by the
Donnelley Marketing Service or such successor or replacement service as
shall be generally recognized in the cellular industry at such time) or any
controlling interest in any other Cellular System, (B) except with AT&T's
consent which will not be unreasonably withheld, make any other disposition
of any other direct or indirect ownership interest in or assets comprising
any Cellular System or other business enterprise or operation or (C) except
in the ordinary course and consistent with past practice, dispose of any
other assets;
(viii) adopt any amendments to the McCaw Certificate of Incorporation or
McCaw By-Laws or alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or ownership
of any McCaw subsidiary not constituting an inactive McCaw subsidiary;
(ix) other than borrowings under existing credit facilities or other
borrowings in the ordinary course (but in all cases only in the aggregate
at any time outstanding up to $750 million of additional borrowings after
August 16, 1993), incur any indebtedness for borrowed money or guarantee
any such indebtedness or, except in the ordinary course consistent with
past practice, make any loans, advances or capital contributions to, or
investments in, any other person (other than to McCaw or any wholly owned
subsidiary of McCaw);
(x) engage in the conduct of any business other than telecommunications
and related businesses;
(xi) enter into any agreement providing for acceleration of payment or
performance or other consequence as a result of a change of control of
McCaw or its subsidiaries;
(xii) enter into any contract, arrangement or understanding requiring the
purchase of equipment, materials, supplies or services over a period
greater than 24 months and for the expenditure of greater than $10 million
per year, which is not cancellable without penalty on 30 days' or less
notice; or
(xiii) authorize, recommend, propose or announce an intention to do any
of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
CERTAIN COVENANTS OF AT&T
AT&T has agreed that prior to the Effective Time or earlier termination of
the Merger Agreement, except as permitted in the Merger Agreement or with
McCaw's prior written consent, AT&T will not (i) adopt a plan of complete or
partial liquidation, dissolution, merger or consolidation (other than a merger
or consolidation in which AT&T would not become a subsidiary of any other
person); (ii) adopt any amendments to the Restated Certificate of Incorporation
of AT&T (the "AT&T Certificate of Incorporation"), or take any other action
requiring a vote of the holders of AT&T Common Shares, which would adversely
affect the terms and provisions of the AT&T Common Shares or the rights of the
holders thereof, (iii) sell or otherwise dispose of any shares of McCaw Common
Stock or (iv) authorize, recommend, propose or announce an intention, or enter
into any contract, agreement, commitment or arrangement, to do any of the
foregoing.
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PURSUIT OF NEW OPPORTUNITIES PENDING THE MERGER
Pursuant to the Merger Agreement, AT&T and McCaw have agreed not to pursue
certain business opportunities relating to the provision of wireless and
cellular communications services until the Closing or earlier termination of
the Merger Agreement, except in accordance with certain procedures set forth in
the Merger Agreement. Specifically, AT&T and McCaw have agreed that, during
this period, neither AT&T nor McCaw will, directly or indirectly, pursue any
"wireless opportunity" or "resale opportunity" in North America (together,
"Opportunities"), except in accordance with the rules (the "New Opportunities
Rules") summarized below.
For the purposes of the New Opportunities Rules, a "wireless opportunity" is
generally defined as an opportunity to acquire a 5% or greater interest in a
radio channel license that is used to provide telecommunications services that
are initiated or terminated using electromagnetic spectrum, and a "resale
opportunity" is generally defined as an opportunity to resell (or own 5% or
more of a company that resells) cellular telecommunications services or similar
voice wireless services to conduct a business comparable to any of McCaw's
businesses. The New Opportunities Rules do not apply to pursuit of
Opportunities by any entity in which AT&T or McCaw, as the case may be, has
less than a 33% interest (so long as there is no existing right or obligation
to cause the entity to become a subsidiary and so long as pursuit of the
Opportunity was not a principal purpose for investing in the entity).
Pursuant to the New Opportunities Rules, McCaw has the sole right to
determine and direct the pursuit of certain Opportunities previously disclosed
to AT&T, as well as Opportunities that McCaw is contractually bound to direct
to LIN. AT&T may pursue such Opportunities only if McCaw or LIN determines not
to pursue them.
AT&T has the right under the New Opportunities Rules to determine and direct
the pursuit of other Opportunities, except that (i) the Opportunity must either
be pursued through McCaw (at AT&T's direction) or AT&T must first offer McCaw
the right to participate in the Opportunity through a 50-50 joint venture (with
the joint venture managed by McCaw); (ii) McCaw has a veto over pursuit of: (A)
any Opportunity if 40% or more of the population covered by the Opportunity is
within territory already served by McCaw, (B) satellite services primarily
serving mobile stations on the ground in North America and wireless services
serving populations primarily located within North America involving air-to-
ground services and (C) resale within territory served by McCaw; and (iii) if
more than 20% but less than 40% of the population covered by the Opportunity is
within territory served by McCaw, AT&T must use reasonable efforts to divide
the Opportunity and to pursue only that portion of the Opportunity less than
20% of the population covered by which is in territory served by McCaw.
An acquisition opportunity is not subject to the New Opportunities Rules if
the wireless opportunity and the resale opportunity portion constitute less
than 20% of the value of the entire opportunity. However, if it is feasible to
segregate the wireless and the resale portion of such an opportunity from the
remainder of the opportunity, AT&T is obligated to do so (in which case the
wireless opportunity and/or the resale opportunity that has been segregated
will be subject to the New Opportunities Rules).
In addition, AT&T is generally required to finance, through arm's-length
lending to McCaw or its subsidiaries, McCaw's pursuit of any Opportunity (other
than Opportunities required to be directed to LIN) in accordance with the
foregoing rules. AT&T and McCaw are currently negotiating a credit agreement
providing for such lending. The proposed credit agreement contemplates a
lending facility of up to $350 million from AT&T to a wholly owned subsidiary
of McCaw. Borrowings would be due two years after the earlier of the Closing or
termination of the Merger Agreement, and would bear interest at the London
Inter-Bank Offered Rate plus 2.5% (or, in the event the borrowings are
guaranteed by McCaw, at the interest rate then in effect under McCaw's bank
credit agreement).
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NO SOLICITATION
Under the Merger Agreement, McCaw has agreed that, prior to the Closing,
neither it nor any of its officers, employees, representatives, agents or
affiliates will, directly or indirectly, encourage, solicit or engage in
discussions or negotiations with any third party (other than AT&T) concerning
any merger, consolidation, share exchange or similar transaction involving
McCaw or any of its significant subsidiaries, or any purchase of all or a
significant portion of the assets of or equity interest in McCaw or any of its
significant subsidiaries, or any other transaction that would involve the
transfer or potential transfer of control of McCaw, other than the transactions
contemplated by the Merger Agreement; provided, however, that McCaw or the
McCaw Board may take and disclose to McCaw stockholders a position under
applicable Exchange Act rules with respect to a tender offer or an exchange
offer for shares of McCaw Common Stock commenced by a third party. McCaw has
agreed to notify AT&T immediately of any inquiries or proposals with respect to
any such transaction that are received by, or any such negotiations or
discussions that are sought to be initiated with, McCaw or any of its
significant subsidiaries.
CONDITIONS; WAIVERS
Conditions to Each Party's Obligations to Effect the Merger. The respective
obligations of McCaw, AT&T and Merger Sub to effect the Merger are subject to
the satisfaction or waiver of the following conditions: (i) the Merger shall
have been approved by the holders of shares representing at least a majority of
the voting power of the outstanding McCaw Common Stock, (ii) all filings
required to be made with, and all consents, approvals, permits and
authorizations required to be obtained from, governmental and regulatory
authorities in connection with the execution, delivery and performance of the
obligations under the Merger Agreement shall have been made or obtained without
limitations or restrictions unacceptable to AT&T in its reasonable judgment,
except in the case of certain authorizations (other than those under the HSR
Act or from the FCC or state regulatory authorities) where the failure to
obtain such authorizations would not be reasonably expected to have a material
adverse effect upon the business, properties, operations, condition or
prospects of McCaw and its subsidiaries, taken as a whole, or AT&T and its
subsidiaries, taken as a whole, (iii) there shall not be in effect any
judgment, writ, order, injunction or decree of any court or governmental body
enjoining or otherwise preventing consummation of the transactions contemplated
by the Merger Agreement, or permitting consummation only subject to conditions
or restrictions unacceptable to AT&T in its reasonable judgment, (iv) there
shall be no stop order suspending the effectiveness of, or any action by the
Commission to suspend the effectiveness of, the Registration Statement, (v) the
AT&T Common Shares required to be issued pursuant to the Merger Agreement shall
have been approved for listing on the NYSE, and (vi) all required
authorizations, consents and approvals (other than those described in clause
(ii) of this sentence), the failure to obtain which would have a material
adverse effect upon AT&T and its subsidiaries, taken as a whole, shall have
been obtained.
Conditions to the Obligations of AT&T and Merger Sub. The respective
obligations of AT&T and Merger Sub to effect the Merger are subject to the
satisfaction or waiver of the following additional conditions: (i) each of the
representations and warranties of McCaw contained in the Merger Agreement or
otherwise expressly required by the Merger Agreement to be made after the
execution thereof (A) shall have been true in all material respects when made
and (B) except for certain specific exceptions, shall be true in all material
respects at the time of the Closing with the same effect as though such
representations and warranties had been made at such time, (ii) at or prior to
the Closing, McCaw shall have performed or complied in all material respects
with all agreements and conditions required of it pursuant to the Merger
Agreement, (iii) McCaw shall have delivered to AT&T a certificate, dated the
date of the Closing and signed by the President or any Vice President of McCaw,
certifying as to the fulfillment of the conditions specified in clauses (i) and
(ii) of this sentence, (iv) AT&T shall have received a legal opinion from
Andrew A. Quartner, Esq. or other counsel for McCaw satisfactory to AT&T, in
substantially the form attached to the Merger Agreement, (v) all corporate
proceedings taken by McCaw in connection with the transactions contemplated by
the Merger Agreement shall be reasonably satisfactory to AT&T and AT&T's
special counsel, (vi) AT&T shall have received a tax opinion of Wachtell,
Lipton, Rosen & Katz, counsel for AT&T, as contemplated by the Merger
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Agreement, including an opinion of Wachtell, Lipton, Rosen & Katz that the
Merger will constitute a "tax-free" reorganization under Section 368(a) of the
Code, (vii) AT&T shall have received an opinion from Coopers & Lybrand that the
Merger will qualify for pooling-of-interests accounting treatment, (viii) no
suit, action, investigation, inquiry or other proceeding by any United States
governmental body or other material governmental body shall have been
instituted and be pending which imposes or which would be reasonably expected
to impose any condition or restriction unacceptable to AT&T in its reasonable
judgment, and (ix) the Registration Statement shall disclose no information in
existence on the date of the execution of the Merger Agreement which is
materially adverse to McCaw's business, properties, operations, condition or
prospects not previously disclosed in reports of McCaw filed with the
Commission, in the Merger Agreement or in the draft Form 10-Q of McCaw provided
to AT&T in connection with the execution of the Merger Agreement.
Conditions to the Obligations of McCaw. The obligations of McCaw to effect
the Merger are subject to the satisfaction or waiver of the following
additional conditions: (i) each of the representations and warranties of AT&T
and Merger Sub contained in the Merger Agreement or otherwise expressly
required by the Merger Agreement to be made after the execution thereof (A)
shall have been true in all material respects when made and (B) except for
certain specific exceptions, shall be true in all material respects at the time
of the Closing with the same effect as though such representations and
warranties had been made at such time, (ii) at or prior to the Closing, AT&T
shall have performed or complied in all material respects with all agreements
and conditions required of it pursuant to the Merger Agreement, (iii) AT&T
shall have delivered to McCaw a certificate, dated the date of the Closing and
signed by the President or any Vice President of AT&T, certifying as to the
fulfillment of the conditions specified in clauses (i) and (ii) of this
sentence, (iv) McCaw shall have received a legal opinion from Robert E.
Scannell, Esq. or other counsel for AT&T satisfactory to McCaw, in
substantially the form attached to the Merger Agreement, (v) all corporate
proceedings taken by AT&T in connection with the transactions contemplated by
the Merger Agreement shall be reasonably satisfactory to McCaw and McCaw's
special counsel, (vi) McCaw shall have received a tax opinion of Jones, Day,
Reavis & Pogue, tax counsel for McCaw, as contemplated by the Merger Agreement,
including an opinion of Jones, Day, Reavis & Pogue that the Merger will
constitute a "tax-free" reorganization under Section 368(a) of the Code, and
(vii) the Registration Statement shall disclose no information in existence on
the date of the execution of the Merger Agreement which is materially adverse
to AT&T's business, properties, operations, condition or prospects not
previously disclosed in reports of AT&T filed with the Commission, in the
Merger Agreement or in the draft Form 10-Q of AT&T provided to McCaw in
connection with the execution of the Merger Agreement.
AMENDMENT; TERMINATION
The parties to the Merger Agreement may not amend, change, supplement, waive
or otherwise modify the Merger Agreement except by an instrument in writing
signed by the party against whom enforcement is sought.
The Merger Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time, before or after the approval by McCaw
stockholders, either by the mutual written consent of AT&T and McCaw, or by
mutual action of their respective Boards of Directors.
The Merger Agreement may also be terminated by action of either the AT&T
Board or the McCaw Board if (i) the Merger has not been consummated by
September 30, 1994 (provided that the right to terminate under this clause (i)
will not be available to any party whose failure to fulfill any obligation
under the Merger Agreement has been the cause of or resulted in the failure of
the Merger to occur on or before such date) or (ii) any court or governmental
body in the United States has issued a final and nonappealable order, decree or
ruling or taken any other final and nonappealable action permanently
restraining, enjoining or otherwise prohibiting the Merger.
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In the event of termination of the Merger Agreement and abandonment of the
Merger, neither AT&T, Merger Sub nor McCaw (or any of their directors or
officers) will have any liability or further obligation to any party to the
Merger Agreement, except with respect to certain confidentiality requirements
as provided for in the Merger Agreement. Notwithstanding the foregoing, each
party to the Merger Agreement will remain liable for any breach of the Merger
Agreement.
AGREEMENTS OF BT AND THE MCCAW BLOCK TO VOTE IN FAVOR OF THE MERGER
McCaw Block Agreement. Concurrently with the execution of the Merger
Agreement, AT&T and the McCaw Block entered into the McCaw Block Agreement.
Pursuant to the McCaw Block Agreement, each member of the McCaw Block has
agreed to attend the Special Meeting, in person or by proxy, and to vote all
shares of McCaw Common Stock that such member has the right to vote for
approval and adoption of the Merger Agreement and the Merger. As of January 31,
1994, the members of the McCaw Block had the power to vote shares representing
approximately 62% of the voting power of the McCaw Common Stock. See "OTHER
AGREEMENTS--McCaw Block Agreement."
BT Letter Agreement. Concurrently with the execution of the Merger Agreement,
AT&T entered into the BT Letter Agreement with BT and BT USA. Pursuant to the
BT Letter Agreement, each of BT and BT USA has agreed to vote all shares of
McCaw Common Stock that it has the right to vote in favor of approval of the
Merger Agreement and the Merger at the Special Meeting. As of January 31, 1994,
BT had the power to vote shares representing approximately 21% of the voting
power of the McCaw Common Stock. See "OTHER AGREEMENTS--BT Letter Agreement."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
It is a condition to the obligation of McCaw to consummate the Merger that
McCaw receive an opinion from Jones, Day, Reavis & Pogue, tax counsel for
McCaw, to the effect that (i) the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code,
(ii) no gain or loss will be recognized by McCaw as a result of the Merger and
(iii) no gain or loss will be recognized by a McCaw stockholder as a result of
the Merger with respect to shares of McCaw Common Stock converted solely into
AT&T Common Shares. It is a condition to the obligation of AT&T to consummate
the Merger that AT&T have received an opinion to the same effect from Wachtell,
Lipton, Rosen & Katz. The effects of any cash received in lieu of fractional
share interests and any Real Property Tax Payments (as hereinafter defined) are
discussed below.
Based upon the advice of their respective counsel, AT&T and McCaw expect that
the Merger will qualify as a reorganization under the Code with the
consequences set forth above. Assuming that the Merger so qualifies, the tax
basis of the AT&T Common Shares received by McCaw stockholders in the Merger
will be the same, in each instance, as the tax basis of the McCaw Common Stock
surrendered in exchange therefor, excluding any basis allocable to fractional
share interests in AT&T Common Shares for which cash is received. In addition,
the holding period of the AT&T Common Shares received in the Merger by McCaw
stockholders will include the period during which the shares of McCaw Common
Stock surrendered in exchange therefor were held, provided that such shares of
McCaw Common Stock were held as capital assets at the Effective Time.
Holders of McCaw Common Stock who receive cash in the Merger as a result of
the rounding off of fractional share interests in AT&T Common Shares will be
treated, in each instance, as having received the fractional share interests
and then as having sold such interests for the cash received. This sale will
result in the recognition of gain or loss for federal income tax purposes,
measured by the difference between the amount of cash received and the portion
of the basis of the share of McCaw Common Stock allocable to such fractional
share interests. Such gain or loss will be capital gain or loss, provided that
such share of McCaw Common Stock was held as a capital asset at the Effective
Time, and will be long-term capital gain or loss if such share of McCaw Common
Stock has been held for more than one year.
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Certain states and localities impose a tax on certain transfers (which
include the Merger) of an interest in real property (including leases) located
therein. Any returns required to be filed in connection with such tax will be
filed by McCaw on behalf of the McCaw stockholders, and McCaw will pay any tax
due thereon. The portion of any such payment attributable to a McCaw
stockholder is referred to herein as a "Real Property Tax Payment."
A Real Property Tax Payment, if any, should result in a deemed distribution
by McCaw to a McCaw stockholder, which distribution would be taxed to such
stockholder as a dividend to the extent of McCaw's current and accumulated
earnings and profits as determined for federal income tax purposes (and
thereafter would reduce the tax basis in his or her McCaw Common Stock and, if
such basis is reduced to zero, would then be taxed as gain from the sale or
exchange of such McCaw Common Stock). Any tax on such deemed distribution will
be the responsibility of the McCaw stockholder.
THE FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER AND DOES NOT PURPORT TO BE A COMPLETE
ANALYSIS OR LISTING OF ALL POTENTIAL TAX EFFECTS RELEVANT TO A DECISION WHETHER
TO VOTE IN FAVOR OF APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE
MERGER. THE DISCUSSION DOES NOT ADDRESS THE TAX CONSEQUENCES THAT MAY BE
RELEVANT TO A PARTICULAR McCAW STOCKHOLDER SUBJECT TO SPECIAL TREATMENT UNDER
CERTAIN FEDERAL INCOME TAX LAWS, SUCH AS DEALERS IN SECURITIES, BANKS,
INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS, NON-UNITED STATES PERSONS AND
STOCKHOLDERS WHO ACQUIRED THEIR SHARES OF McCAW COMMON STOCK PURSUANT TO THE
EXERCISE OF McCAW OPTIONS OR OTHERWISE AS COMPENSATION, NOR ANY CONSEQUENCES
ARISING UNDER THE LAWS OF ANY STATE, LOCALITY OR FOREIGN JURISDICTION.
MOREOVER, THE TAX CONSEQUENCES TO HOLDERS OF McCAW OPTIONS ARE NOT DISCUSSED.
THE DISCUSSION IS BASED UPON THE CODE, TREASURY REGULATIONS THEREUNDER AND
ADMINISTRATIVE RULINGS AND COURT DECISIONS AS OF THE DATE HEREOF. ALL OF THE
FOREGOING ARE SUBJECT TO CHANGE AND ANY SUCH CHANGE COULD AFFECT THE CONTINUING
VALIDITY OF THIS DISCUSSION. McCAW STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS CONCERNING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES
OF THE MERGER TO THEM.
REGULATORY APPROVALS
HSR Act and Antitrust. AT&T and McCaw must observe the notification and
waiting period requirements of the HSR Act before the Merger may be
consummated. The HSR Act provides for an initial 30-calendar day waiting period
following the filing with the FTC and the Antitrust Division of certain
Notification and Report Forms by the parties to the Merger and certain other
parties. The HSR Act further provides that if, within the initial 30-calendar-
day waiting period, the FTC or the Antitrust Division issues a request for
additional information or documents, the waiting period will be extended until
11:59 p.m. on the twentieth day after the date of substantial compliance by the
filing parties with such request. Only one such extension of the initial
waiting period is permitted under the HSR Act; however, the filing parties may
voluntarily extend the waiting period.
AT&T, McCaw and certain members of the McCaw Block have made the requisite
filings under the HSR Act in connection with the Merger, and the initial
waiting periods with respect to such filings were to expire at various times
ranging from 11:59 p.m. on September 22, 1993 to 11:59 p.m. on September 25,
1993. On September 22, 1993, AT&T and McCaw each received an extensive request
from the Antitrust Division for additional information and documents with
respect to the Merger and the telecommunications industry. Accordingly, the
waiting period under the HSR Act has been extended and will not expire until
the twentieth calendar day after AT&T and McCaw have each substantially
complied with such request for additional information and documents. Each of
AT&T and McCaw is responding to the request as rapidly as practicable, but
cannot predict when substantial compliance will be achieved.
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The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Merger. At any time before or
after the Effective Time, the FTC or the Antitrust Division could, among other
things, seek under the antitrust laws to enjoin the Merger or to cause AT&T to
divest itself, in whole or in part, of McCaw or of other business conducted by
AT&T. Under certain circumstances, private parties and state governmental
authorities may also bring legal action under the antitrust laws challenging
the Merger. On December 2, 1993, BellSouth Corporation ("BellSouth") filed a
motion in the case entitled United States v. Western Electric Co. Inc. et al.,
Civil Action No. 82-0192, for a declaratory ruling that the Merger would
violate Section I(D) of the Modification of Final Judgment (the "Decree"),
United States v. American Tel. and Tel. Co., 552 F. Supp. 131, 226-34 (D.D.C.
1982), aff'd mem. sub. nom Maryland v. United States, 450 U.S. 1001 (1982) and
cannot be consummated without a modification of the Decree. On December 16,
1993, AT&T filed an opposition to the BellSouth motion. On January 5, 1994, the
U.S. Department of Justice filed a response to the BellSouth motion that, in
part, supported the motion. On January 19, 1994, BellSouth filed a reply to
AT&T's opposition and to the Department of Justice's response. AT&T and McCaw
believe that BellSouth is not entitled to the relief sought. On January 27,
1994, AT&T filed a motion for expedited determination of the issues raised by
BellSouth's motion, or, in the alternative, for an expedited waiver of any
relevant Decree provisions. There can be no assurance that AT&T will prevail
with respect to the BellSouth challenge or any other challenge to the Merger
that may be made on antitrust grounds.
The obligations of AT&T and McCaw to consummate the Merger are subject to the
condition that there be no preliminary or permanent injunction or other order
by any court or governmental or regulatory authority of competent jurisdiction,
including any state governmental or regulatory authorities, prohibiting
consummation of the Merger or permitting such consummation only subject to any
condition or restriction unacceptable to AT&T in its reasonable judgment. In
addition, the obligation of AT&T to consummate the Merger is subject to the
condition that no suit, action, investigation, inquiry or other proceeding by
any United States governmental body or other material governmental body shall
have been instituted and be pending which imposes or which would be reasonably
expected to impose any condition or restriction unacceptable to AT&T in its
reasonable judgment. Each party has agreed to use all reasonable efforts to
have any such injunction or order lifted and otherwise satisfy the conditions
to Closing.
FCC. On August 23, 1993, AT&T and Craig O. McCaw filed various applications
seeking consent of the FCC to the proposed transfer of control of McCaw to
AT&T, which consent is required prior to consummation of the Merger. The FCC
has issued public notices concerning these applications and has established a
schedule, pursuant to which (i) interested parties were permitted to petition
to deny the applications by November 1, 1993, (ii) responses to those petitions
were due by December 2, 1993 and (iii) replies to such responses were due by
January 18, 1994.
Thirteen parties filed petitions with the FCC on November 1, 1993. Eleven of
these petitions were filed by competitors of McCaw and/or AT&T and seek to
impose conditions on the Merger or alternatively to deny the request for FCC
consent to the transfer of control of McCaw. One petition supports the
transaction and the remaining petition notifies the FCC of parallel activities
by a state public utility commission. Two additional petitions were filed by
third parties opposing the conditions and delays to the proposed Merger which
would be imposed by the other petitions. Two petitions were also filed out of
time. AT&T and McCaw responded to these petitions on December 2, 1993 and
January 18, 1994. On January 18, 1994, eight of the original objecting parties
also filed reply comments which continue to seek to impose conditions on the
Merger or to deny the request for FCC consent to the transfer of control of
McCaw.
State Governmental Authorities. Pursuant to various applicable statutes, AT&T
and McCaw were required to file applications with nine state regulatory
commissions seeking approval and/or a statement of nonopposition to the Merger.
Such applications were filed in Alaska, California, Hawaii, Louisiana, Maine,
New York, Nevada, Ohio and West Virginia. The commissions of all of the
foregoing states, except California, have approved the applications or issued
statements of non-opposition; the California application is still
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pending. The receipt of necessary approvals from applicable state regulatory
authorities is a condition to the obligations of AT&T and McCaw to consummate
the Merger.
Although AT&T has requested expedited treatment in California, there is no
specified statutory time frame within which the California commission must act
on the application. Interested parties may seek to intervene in these
proceedings and may request the California commission to disapprove or place
conditions on the proposed transaction as it relates to California utilities.
In December 1993, AT&T and McCaw entered into a settlement agreement (the
"California Settlement") with all of the original opposing parties in
California regarding the provision of cellular and interexchange services to
customers in California. On December 9, 1993, AT&T and McCaw filed a motion
seeking the California commission's approval of the California Settlement. On
January 3, 1994, an interested party in the proceedings filed an objection
arguing that the California Settlement does not resolve certain questions of
material fact, including the impact of the proposed Merger on competition in
California's telecommunications industry. Another party has filed a brief in
connection with the California Settlement directed solely to alleged illegal
marketing activities unrelated to the Merger. On January 18, 1994, AT&T and
McCaw filed a reply to the comments opposing approval of the California
Settlement. AT&T and McCaw believe the oppositions to the California Settlement
to be without merit. However, there are no assurances that the California
commission will approve the California Settlement, or, if approved, when such
approval will be granted. There also can be no assurance that additional
challenges will not be made or that, if such a challenge is made, AT&T and
McCaw will prevail.
RESALE OF AT&T COMMON SHARES ISSUED IN THE MERGER; AFFILIATES
The AT&T Common Shares to be issued to McCaw stockholders in connection with
the Merger will be freely transferable under the Securities Act, except for
AT&T Common Shares issued to any person deemed to be an affiliate of McCaw for
purposes of Rule 145 under the Securities Act at the time of the Special
Meeting ("Affiliates"). Affiliates may not sell their AT&T Common Shares
acquired in connection with the Merger except pursuant to an effective
registration statement under the Securities Act covering such shares, or in
compliance with Rule 145 promulgated under the Securities Act or another
applicable exemption from the registration requirements of the Securities Act.
Pursuant to the Merger Agreement, McCaw has agreed that prior to the Effective
Time it will deliver to AT&T a letter identifying all persons who at the time
of the Special Meeting may be deemed to be Affiliates. McCaw has further agreed
to use all reasonable efforts to cause each person who is so identified as an
Affiliate in such letter to deliver to AT&T on or prior to the date of this
Proxy Statement/Prospectus a written agreement that such Affiliate will not
sell, pledge, transfer or otherwise dispose of any AT&T Common Shares received
in the Merger in violation of the Securities Act, and that such Affiliate will
not sell any AT&T Common Shares or any shares of McCaw Common Stock or
otherwise reduce such Affiliate's risk relative to any AT&T Common Shares until
after such time as consolidated financial statements which reflect at least 30
days of post-Merger operations have been published by AT&T (the date of such
publication, the "Publication Date"), except as permitted by Staff Accounting
Bulletin No. 76 issued by the Commission. See "THE MERGER--Accounting
Treatment."
ACCOUNTING TREATMENT
It is expected that the Merger will be accounted for as a pooling of
interests for accounting and financial reporting purposes. It is a condition to
the obligation of AT&T to consummate the Merger that AT&T receive the opinion
of Coopers & Lybrand that the Merger may be accounted for as a pooling of
interests. See "THE MERGER--Conditions; Waivers."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
General. McCaw will be the Surviving Corporation in the Merger and, following
the Merger, will be a wholly owned subsidiary of AT&T. It is currently
anticipated that Mr. James L. Barksdale, McCaw's President and Chief Operating
Officer, will continue in such capacity, and AT&T and Mr. Barksdale are
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discussing the terms of a possible employment agreement. Mr. Craig O. McCaw,
Chairman and Chief Executive Officer of McCaw, is expected to relinquish that
position and become a member of the AT&T Board.
In connection with the Merger, the McCaw Board adopted the bonus and
severance arrangements described below to reward certain employees for
sustained excellent work, to provide incentives for such employees to continue
to work with the same sense of enthusiasm and desire to enhance stockholder
value until and after the Closing and to provide protection for such employees
in the event that their jobs should be substantially changed following the
Closing. The LIN Board of Directors adopted the bonus and severance
arrangements and provided for the accelerated vesting of LIN's employee stock
options described below for similar reasons as well as to provide an incentive
for LIN's employees to remain with LIN through the completion of the
transactions contemplated by the Private Market Value Guarantee dated December
11, 1989 between McCaw and LIN (the "PMVG").
Stock Options. At the Effective Time, each Option issued pursuant to the
Option Plans and then outstanding, whether or not vested or exercisable, will
be assumed by AT&T and will constitute an option to acquire, on the same terms
and conditions as were applicable under such assumed Option, that number of
AT&T Common Shares equal to the product of the Exchange Ratio and the number of
shares of McCaw Common Stock subject to such Option, at a price per share equal
to the aggregate exercise price for the shares of McCaw Common Stock subject to
such Option divided by the number of full AT&T Common Shares deemed to be
purchasable pursuant to such Option; provided, however, that (i) subject to the
provisions described in clause (ii) below, the number of AT&T Common Shares
that may be purchased upon exercise of such Option will not include any
fractional share and, upon the last exercise of such Option, a cash payment
will be made for any fractional share based upon the average of the highest and
lowest sale prices of AT&T Common Shares as reported in the NYSE Composite
Transactions on the date of such exercise and (ii) in the case of any Option to
which Section 421 of the Code applies by reason of its qualification under
Section 422 or 423 of the Code, the Option price, the number of shares
purchasable pursuant to such Option and the terms and conditions of exercise of
such Option will be determined in order to comply with Section 424 of the Code.
The vesting of Options will not accelerate upon consummation of the Merger,
except that Options to purchase 273,334, 52,000 and 18,750 shares of Class A
Common Stock held by James L. Barksdale, Tom A. Alberg and Nicolas Kauser,
respectively, will vest pursuant to the provisions of their respective
employment contracts upon consummation of the Merger. In connection with the
Merger, LIN provided for the acceleration of vesting of certain outstanding
options to purchase shares of LIN common stock issued pursuant to LIN's stock
option plans. In the event the Merger is consummated, options to purchase
45,000, 57,500 and 30,000 shares of LIN common stock held by Craig O. McCaw,
Tom A. Alberg and Wayne M. Perry, respectively, will vest (if not otherwise
vested prior thereto pursuant to their terms) at the time McCaw or any
affiliate consummates any acquisition of all or substantially all the remaining
shares of LIN common stock or LIN is otherwise sold, whether pursuant to the
PMVG or otherwise. In addition, options to purchase LIN common stock held by
the foregoing executive officers will vest (if not otherwise vested prior
thereto pursuant to their terms) if their employment with LIN is terminated
under certain circumstances on or after the Closing. As of January 31, 1994,
Options to purchase 8,723,542 and 3,078,536 shares of Class A Common Stock and
Class B Common Stock, respectively, were outstanding under the Option Plans at
exercise prices ranging from $50.50 to $1.00 per share. For additional
information regarding the Options held by officers and directors, see "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF McCAW."
Bonus Pools. In connection with the Merger, AT&T agreed to McCaw's
establishment of an aggregate $113 million bonus pool (the "McCaw Bonus Pool")
for certain persons employed by McCaw and its subsidiaries as of August 15,
1993, conditioned upon consummation of the Merger. The McCaw Bonus Pool was
designed both to reward employees for their contributions to McCaw and to
encourage them to remain with McCaw until the Merger and thereafter and to
continue to work to create stockholder value for the combined companies with
the same enthusiasm as they have demonstrated prior to the Merger. Of the total
amount available under the McCaw Bonus Pool, $96 million has been allocated. A
committee consisting of
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Craig O. McCaw and Wayne M. Perry (the "Committee") has determined the specific
bonus payable to each such employee other than themselves based on the
employee's compensation, overall contributions to McCaw, longevity with McCaw
and other factors considered appropriate. The Compensation Committee of the
McCaw Board, composed of independent directors of McCaw, has determined the
bonuses payable to Messrs. McCaw and Perry based on their contributions to
McCaw and their long associations with McCaw, and to encourage them to continue
to make similar contributions to McCaw's business until the Merger and
thereafter. The remaining $17 million will be allocated by the Committee prior
to the Closing to eligible employees on the basis of the same criteria
described above. All bonuses payable to executive officers will be payable in
three installments (50% at the Closing, 25% on the first anniversary of the
Closing and 25% on the second anniversary of the Closing), in each case to
persons who remain employed by McCaw, AT&T or any of their subsidiaries at such
times (except as provided under the Executive Plan, as hereinafter defined).
The amount payable at the Closing under the bonuses allocated to Messrs. McCaw,
Perry, Barksdale, Kauser and Hooper under the McCaw Bonus Pool are $7,500,000,
$2,500,000, $2,000,000, $1,250,000 and $1,100,000, respectively. The amounts
payable at the Closing under the bonuses allocated to each of McCaw's other
executive officers, Messrs. Alberg and Currie, are each less than $1,100,000.
Except as provided under the Executive Plan, the remaining two installments of
the bonus allocated to each such officer, each such installment equal to 50% of
the amount payable to such officer at the Closing, are payable to such officer
on the first and second anniversaries of the Closing if he remains employed by
McCaw, AT&T or any of their subsidiaries at such times. In addition, each of
McCaw's executive officers (other than Messrs. McCaw and Perry) remains
eligible to receive a portion of the remaining $17 million when it is
allocated.
In connection with the Merger, AT&T agreed to LIN's establishment of an
aggregate $7.75 million bonus pool (the "LIN Bonus Pool" and, together with the
McCaw Bonus Pool, the "Bonus Pools") for certain persons employed by LIN and
its subsidiaries as of August 15, 1993, conditioned upon both consummation of
the Merger and the closing of any acquisition of all or substantially all the
remaining shares of LIN common stock by McCaw or of a sale of LIN (pursuant to
the PMVG or otherwise) (the "LIN Closing"). The other terms and conditions of
the LIN Bonus Pool are equivalent to the terms and conditions of the McCaw
Bonus Pool, except that, if the LIN Closing has not occurred by any of the
respective bonus payment dates, such bonus payments will not be made until the
date of the LIN Closing. No payment from the LIN Bonus Pool has been allocated
to an executive officer of McCaw, except for certain amounts to Mr. Alberg
included in the amounts described above.
Severance Arrangements. In connection with the Merger, AT&T agreed to McCaw's
establishment of an Executive Separation Plan (the "Executive Plan"). The
Executive Plan provides benefits in an aggregate amount not to exceed $35.5
million to certain executives in the event that they are terminated (other than
for cause, as defined in the Executive Plan) on or after the Closing or in the
event that they terminate their employment within six months following an
adverse change in working conditions (including a reduction in salary or bonus
opportunities in the absence of overall poor performance, a material reduction
in scope of responsibility, authority or other conditions of employment, a
notice that an executive's employment location will be moved more than 40 miles
or certain decreases in executive perquisites or other employee benefits) on or
after the Closing. In accordance with the provisions of the Executive Plan, the
initial amount payable to each executive (the "Initial Amount") has been
determined by the Committee (or the Compensation Committee of the McCaw Board
in the cases of Messrs. McCaw and Perry) based on the factors utilized in
allocating the McCaw Bonus Pool. The Initial Amounts payable to Messrs. McCaw,
Perry, Barksdale, Currie and Hooper are $5,000,000, $3,500,000, $1,300,000,
$1,100,000 and $1,000,000, respectively. The Initial Amounts payable to each of
McCaw's other executive officers, Messrs. Alberg and Kauser, are each less than
$1,000,000. The amount payable under the Executive Plan for each eligible
executive will be the Initial Amount if termination occurs on or after the date
of Closing but on or before February 28, 1995, 60% of the Initial Amount if
termination occurs after February 28, 1995 but on or before February 28, 1996
and 25% of the Initial Amount if termination occurs after February 28, 1996 but
on or before February 28, 1997. No payments will be made under the Executive
Plan for terminations after February 28, 1997.
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In addition to the amounts discussed above, executives (including executives
of LIN) would also receive any unpaid installments under the Bonus Pools,
unless terminated for consistently poor performance documented by substantially
contemporaneous notices. In the event that any payment or portion thereof under
the Executive Plan, including any accelerated bonus payment, would subject any
executive to an excise tax under Section 4999 of the Code, such executive would
be entitled to receive a tax gross-up payment to cover such excise tax and
related penalties and interest (including any taxes payable in connection with
the gross-up payment).
AT&T also agreed to McCaw's establishment of a severance program under which
certain employees selected by the Committee who earned less than $115,000 in
1993 would receive payments in the event of termination (other than for cause,
the definition of "for cause" being the same as under the Executive Plan) on or
after the Closing or in the event that they terminate their employment within
six months following an adverse change in working conditions (including a
reduction in salary or bonus opportunities in the absence of overall poor
performance, a material reduction in scope of responsibility, authority or
other conditions of employment, a notice that an employee's employment location
will be moved more than 40 miles or certain decreases in executive perquisites
or other employee benefits) on or after the Closing. The amount payable to any
such employee will be 200% of such employee's total 1993 compensation (the
"Employee Initial Amount") if termination occurs on or after the date of
Closing but on or before February 28, 1995, 60% of the Employee Initial Amount
if termination occurs after February 28, 1995 but on or before February 28,
1996, and 25% of the Employee Initial Amount if termination occurs after
February 28, 1996 but on or before February 28, 1997. No such payments will be
made for terminations after February 28, 1997. Such employees would also
receive any unpaid installments under the Bonus Pools, unless terminated for
consistently poor performance documented by substantially contemporaneous
notices, and would be entitled to the same tax gross-up payment, if any, which
executives would be entitled to receive under the Executive Plan or in
connection with any accelerated bonus payment.
Indemnification of Directors and Officers Pursuant to the Merger
Agreement. From and after the Effective Time, AT&T will indemnify, defend and
hold harmless the present and former officers, directors and employees of McCaw
and its subsidiaries against all losses, expenses, claims, damages or
liabilities arising out of actions or omissions occurring on or prior to the
Effective Time to the full extent permitted or required under applicable law
(except to the extent of directors' and officers' liability insurance coverage
and actual payment with respect thereto). AT&T has agreed to maintain for not
less than six years the current (or appropriate replacement) policies of
directors' and officers' liability insurance maintained by McCaw and its
subsidiaries with respect to matters occurring prior to the Effective Time.
AT&T is not required to pay an annual premium for such insurance in excess of
three times the last annual premium paid prior to August 16, 1993, but will, in
such case, purchase as much coverage as possible for such amount.
MANAGEMENT AND OPERATIONS OF MCCAW AFTER THE MERGER
After the Merger, McCaw will be a wholly owned subsidiary of AT&T. McCaw will
operate as one of AT&T's business units, and AT&T currently intends to retain
McCaw's corporate headquarters in Kirkland, Washington. After the Merger, McCaw
will have access to resources generally available to AT&T's other business
units, will participate in appropriate activities with other AT&T business
units and will operate under the direction and guidance of AT&T's senior
management and the AT&T Board. See "THE MERGER--Terms of the Merger."
Mr. Craig O. McCaw, Chairman and Chief Executive Officer of McCaw, is
expected to relinquish that position and become a member of the AT&T Board.
AT&T has asked Mr. James L. Barksdale, President and Chief Operating Officer of
McCaw, to continue in that position for McCaw after the Merger. AT&T believes
that Mr. Barksdale will agree to serve in such capacity, and AT&T and Mr.
Barksdale are discussing the terms of a possible employment agreement.
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In addition to Mr. Barksdale, AT&T has held discussions with other executive
officers of McCaw regarding the terms and conditions of their employment with
McCaw following the Merger. While it is anticipated that employment agreements
with certain of these executive officers will be entered into after the Merger,
the terms of any such employment agreements have not been negotiated.
EXPENSES AND FEES
Whether or not the Merger is consummated, AT&T and McCaw will each pay their
own expenses in connection with the Merger.
LITIGATION
Commencing in November 1992, several actions were filed by McCaw stockholders
in the Delaware Court of Chancery. The actions, which were consolidated in an
action entitled In re McCaw Cellular Communications, Inc. Shareholders
Litigation (the "Stockholder Action"), named as defendants McCaw, the directors
of McCaw, BT USA and AT&T. The Stockholder Action challenged the Proposed
Strategic Alliance, alleging that such transactions improperly would have
provided for special favorable treatment to holders of Class B Common Stock as
compared with Class A Common Stock, enabled BT USA to dispose of its interests
in McCaw at a premium without justification, enabled members of the McCaw
family to "sell" their "votes" to AT&T for $100 million to $700 million without
diminishing their equity positions, and created long-term conflicts of interest
between the director defendants and the best interests of McCaw and its public
stockholders. The Stockholder Action sought to enjoin the Proposed Strategic
Alliance, preliminarily and permanently or, if consummated, to rescind the
transactions, and also prayed for an award of damages. In connection with the
proposal for the Merger, an agreement in principle was reached between the
plaintiffs and the defendants in the Stockholder Action for a settlement of the
action, which settlement is subject to approval by the court, consummation of
the Merger and other customary conditions. The proposed settlement would
contain a "global" release of all claims of the stockholders of McCaw, whether
directly, derivatively, representatively or in any other capacity, in
connection with or that arise out of the subject matter of the Stockholder
Action, provided that the Merger is consummated. In connection with such
settlement, AT&T would pay plaintiffs' counsel such amount, not to exceed
$3,000,000, as may be awarded by the court to plaintiffs' counsel for
attorneys' fees and disbursements. The defendants have denied, and continue to
deny, that they have committed any violations of law and, as the agreement in
principle states, are entering into the settlement to eliminate the burden and
expense of further litigation. If approved, the settlement will release all
claims of McCaw stockholders in connection with or that arise out of the
subject matter of the Stockholder Action, the Proposed Strategic Alliance, the
Merger, the negotiation and consideration of such transactions, and the
fiduciary or disclosure obligations of any of the defendants (or other persons
to be released) with respect to any of the foregoing. It is expected that McCaw
stockholders separately will be provided a notice containing further
information regarding the proposed settlement and related proceedings,
including a settlement hearing to be scheduled by the court.
ABSENCE OF APPRAISAL RIGHTS
Under the DGCL, holders of McCaw Common Stock will not be entitled to
appraisal rights as a result of the Merger. Under the DGCL, appraisal rights
are unavailable in a merger for shares of any class of stock which on the
applicable record date for the stockholder vote on such merger are designated
as NASDAQ National Market System securities and which are to be converted into
shares of stock of any other corporation listed on the effective date of the
merger on a national securities exchange. On the Record Date, the Class A
Common Stock was designated as a NASDAQ National Market System security and it
is a condition to consummation of the Merger that the AT&T Common Shares
continue to be listed on the NYSE. Accordingly, holders of the Class A Common
Stock will not be entitled to appraisal rights as a result of the Merger.
Further, stockholders who vote in favor of a merger are not entitled to
appraisal rights under the DGCL as a result of such merger. Holders of the
Class B Common Stock have agreed to vote in favor of the Merger. See "OTHER
AGREEMENTS--McCaw Block Agreement" and "--BT Letter Agreement." Accordingly,
holders of the Class B Common Stock will not be entitled to appraisal rights as
a result of the Merger when they so vote their shares.
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OTHER AGREEMENTS
THE DESCRIPTIONS OF THE AGREEMENTS SET FORTH BELOW DO NOT PURPORT TO BE
COMPLETE AND ARE QUALIFIED IN THEIR ENTIRETIES BY REFERENCE TO THE MCCAW BLOCK
AGREEMENT, THE BT LETTER AGREEMENT, THE BT WAIVER AND THE AUGUST 1993 PUT
LETTER, COPIES OF WHICH ARE ATTACHED AS APPENDICES B, C, D AND E, RESPECTIVELY
TO THIS PROXY STATEMENT/PROSPECTUS AND ARE INCORPORATED BY REFERENCE HEREIN.
MCCAW BLOCK AGREEMENT
The Agreement. Concurrently with the execution of the Merger Agreement, AT&T
and the McCaw Block entered into the McCaw Block Agreement, pursuant to which
each member of the McCaw Block has agreed to attend the Special Meeting, in
person or by proxy, and to vote all shares of McCaw Common Stock that such
member has the right to vote for approval and adoption of the Merger Agreement
and the Merger.
Similarly, Craig O. McCaw, in his capacity as Designated Party under the
shareholders agreement, dated as of May 31, 1989, as amended as of December 31,
1989 and March 15, 1992, among McCaw and the stockholder signatories thereto
(the "McCaw Shareholders Agreement"), has agreed to attend the Special Meeting,
in person or by proxy, and to vote all shares of McCaw Common Stock that he has
the right in such capacity to vote for approval and adoption of the Merger
Agreement and the Merger.
The McCaw Block Agreement also provides that, at all times prior to the
Effective Time, the members of the McCaw Block will collectively continue to
own shares of McCaw Common Stock having the right to cast a majority of the
votes of the outstanding capital stock of McCaw entitled to vote on the Merger
Agreement and the Merger and any such other proposals.
The McCaw Block Agreement also contains certain provisions relating to the
treatment of the Merger as a pooling of interests for accounting purposes.
Specifically, each member of the McCaw Block has agreed and represented to AT&T
that, until 30 days prior to the Effective Time, such member will not sell or
transfer any McCaw securities or any AT&T capital stock, except for certain
limited sales and transfers specified in the McCaw Block Agreement. Such
permitted sales and transfers are limited to (i) transfers or other
dispositions of a number of shares of McCaw Common Stock less than 10% of the
sum of (A) the number of shares of McCaw Common Stock held by such member of
the McCaw Block and (B) the number of shares of McCaw Common Stock subject to
currently exercisable Options held by such member of the McCaw Block, (ii)
transfers or other dispositions by operation of law upon the death of such
member of the McCaw Block or by the estate of such member of the McCaw Block if
necessary to pay estate taxes or (iii) other transfers or dispositions that
will not prevent AT&T from accounting for the Merger as a pooling of interests,
taking into account the actions of all other affiliates. Each member of the
McCaw Block has further agreed and represented to AT&T that from and after 30
days prior to the Effective Time, such member will not sell or transfer any
McCaw securities or any AT&T capital stock (except for sales or transfers that
will not prevent AT&T from accounting for the Merger as a pooling of interests)
until the Publication Date.
Registration Rights. The McCaw Block Agreement also provides that Craig O.
McCaw, John E. McCaw, Jr., Bruce R. McCaw and Wayne M. Perry (collectively, the
"McCaw Registration Rights Holders"), on the one hand, and AT&T, on the other
hand, shall enter into a Registration Rights Agreement (the "McCaw Registration
Rights Agreement") at the Effective Time with respect to the AT&T Common Shares
to be received by the McCaw Registration Rights Holders in the Merger.
The McCaw Registration Rights Agreement gives the McCaw Registration Rights
Holders the right to require AT&T, under certain circumstances, to register for
resale under the Securities Act the AT&T Common Shares acquired by the McCaw
Registration Rights Holders and certain related entities pursuant to the Merger
Agreement (including securities which may be issued by way of conversion,
exchange, stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation, or other reorganization of the
shares originally acquired) ("McCaw Registrable Securities").
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Pursuant to the McCaw Registration Rights Agreement, AT&T has agreed, at any
time during the twelve-month period (the "Twelve-Month Period") commencing on
the first day after the 120-day period immediately following the Publication
Date (the "Initial Period") and during the eighteen-month period commencing on
the day after the last day of the Twelve-Month Period (the "Eighteen-Month
Period"), upon the written request of any McCaw Registration Rights Holder, to
notify (the "McCaw Registration Notice") each McCaw Registration Rights Holder
not included in such request and to use all reasonable efforts to effect the
registration under the Securities Act of all or part of the McCaw Registration
Rights Holders' McCaw Registrable Securities (but in any event not less than
10,000,000 AT&T Common Shares) requested to be registered in such request or
requested by any other McCaw Registration Rights Holder within 15 days after
delivery of the McCaw Registration Notice (the McCaw Registration Rights
Holders requesting registration being collectively referred to as the
"Participating McCaw Stockholders"); provided, however, that no more than one
such request will be made during each of the Twelve-Month Period and the
Eighteen-Month Period.
Pursuant to the McCaw Registration Rights Agreement, AT&T is permitted,
subject to certain customary limitations, to postpone any registration
described in the preceding paragraph. In addition, AT&T may, with the consent
of the McCaw Registration Rights Holders, include in any such registration
other securities for sale for its own account or for the account of any other
person or entity. AT&T is also permitted to choose the lead managing
underwriter in connection with such registration, and the Participating McCaw
Stockholders are permitted to choose a co-managing underwriter reasonably
acceptable to AT&T.
Under the McCaw Registration Rights Agreement, the McCaw Registration Rights
Holders have agreed to certain customary "holdback" provisions whereby, if
required by the managing underwriter in connection with such underwriter's sale
and distribution of McCaw Registrable Securities, the McCaw Registration Rights
Holders will not effect any public sale or distribution of any McCaw
Registrable Securities during the seven days prior to and the 90 days after any
underwritten registration by AT&T has become effective, provided that the McCaw
Registration Rights Holders shall not be required to delay registration
pursuant to such holdback provisions more than one time during the Twelve-Month
Period or more than one time during the Eighteen-Month Period.
All expenses (except the expense of counsel retained by Participating McCaw
Stockholders, certain insurance premiums obtained by Participating McCaw
Stockholders, such stockholders' pro rata share of any fees and disbursements
of underwriters customarily paid by sellers of securities who are not issuers
of such securities and all underwriting discounts and transfer taxes) of any
registration of McCaw Registrable Securities will be paid by AT&T.
The McCaw Registration Rights Agreement contains certain customary
indemnification provisions whereby AT&T is obligated to indemnify and hold
harmless the Participating McCaw Stockholders and certain related parties, and
the Participating McCaw Stockholders are obligated to indemnify and hold
harmless AT&T and certain related parties, in each case in connection with
certain liabilities relating to the registration of the McCaw Registrable
Securities. The McCaw Registration Rights Agreement also provides for certain
rights of contribution in the event that such indemnity is unavailable.
The McCaw Registration Rights Agreement terminates automatically upon the
expiration of the Eighteen-Month Period, except that (i) the indemnification
obligations of AT&T and the McCaw Registration Rights Holders will survive such
termination and (ii) certain obligations of AT&T to provide Exchange Act
filings and other information to the McCaw Registration Rights Holders will
survive as to each McCaw Registration Rights Holder until such party can
dispose of all McCaw Registrable Securities pursuant to Rule 145(d)(2) or
(d)(3) of the Securities Act.
BT LETTER AGREEMENT
The Agreement. Concurrently with the execution of the Merger Agreement, AT&T,
BT and BT USA entered into the BT Letter Agreement, pursuant to which each of
BT and BT USA consented to and waived
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its rights under the Purchase Agreement, as amended (the "BT Purchase
Agreement"), dated January 19, 1989, between McCaw and BT USA, to the extent
necessary to permit (without violating the terms of the BT Purchase Agreement)
the execution and delivery of the Merger Agreement and the consummation of the
transactions contemplated thereby. The BT Letter Agreement provides that McCaw
may rely upon such consent as if it were a party to such agreement.
Under the BT Letter Agreement, each of BT and BT USA has agreed to vote all
shares of McCaw Common Stock that it has the right to vote in favor of approval
of the Merger Agreement and the Merger at the Special Meeting.
The BT Letter Agreement also provides that, as of the Effective Time, BT and
BT USA will terminate the following agreements: (i) the BT Purchase Agreement,
which provided, among other things, for McCaw to sell and BT to purchase
certain capital stock of McCaw, (ii) the Shareholders Agreement, dated June 20,
1989, among BT USA, McCaw and certain McCaw stockholders (the "BT Stockholders
Agreement"), which specifies certain rights of each party as stockholders of
McCaw, grants BT USA certain rights, including the right to designate a number
of qualified nominees to the McCaw Board, provides for certain voting
agreements between BT USA and McCaw and places certain restrictions on BT USA,
including restrictions on the sale or transfer by BT USA of McCaw Common Stock,
(iii) the Registration Rights Agreement, dated June 20, 1989, between BT USA
and McCaw (the "BT/McCaw Registration Rights Agreement"), which grants BT USA
registration rights with respect to certain shares of McCaw Common Stock and
(iv) the Amended and Restated Guaranty Agreement, dated January 19, 1989,
between BT and McCaw (the "BT Guaranty Agreement"), in which BT guarantees
certain obligations of BT USA to McCaw under the BT Purchase Agreement, the
BT/McCaw Registration Rights Agreement and the BT Stockholders Agreement.
Pursuant to the BT Letter Agreement, each of BT and BT USA further agreed
that, until 30 days prior to the Effective Time, it will not sell or transfer
any securities of McCaw or any shares of capital stock of AT&T beneficially
owned by it, except that BT and BT USA may transfer or sell that number of
shares of McCaw Common Stock which is less than 10% of the aggregate number of
shares of McCaw Common Stock held by them or otherwise sell or transfer shares
of such McCaw Common Stock to the extent that such sales or transfers will not
prevent AT&T from accounting for the Merger as a pooling of interests. In
addition, from and after 30 days prior to the Effective Time, each of BT and BT
USA has agreed not to sell or transfer any securities of McCaw or any shares of
capital stock of AT&T until the Publication Date, except that BT and BT USA may
make such sales or transfers that will not prevent AT&T from accounting for the
Merger as a pooling of interests.
Prior to the Effective Time, each of BT and BT USA has agreed not to act in
concert with, finance or become a stockholder of any other person or entity for
the purpose of acquiring, holding, voting or disposing of any securities of
McCaw, nor will it acquire, propose or agree to acquire, finance or become or
be a partner or stockholder of any such person or entity who directly or
indirectly acquires, proposes or agrees to acquire any class of securities of
McCaw or any of its subsidiaries, equal to or greater than 5% of the
outstanding securities of such class.
Registration Rights. The BT Letter Agreement also provides that BT USA and
AT&T shall enter into a Registration Rights Agreement (the "BT Registration
Rights Agreement") at the Effective Time with respect to the AT&T Common Shares
to be received by BT USA in the Merger.
The BT Registration Rights Agreement obligates AT&T under certain
circumstances to register for resale under the Securities Act the AT&T Common
Shares acquired by BT USA pursuant to the Merger Agreement (including
securities which may be issued by way of conversion, exchange, stock dividend
or stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization of the shares originally
acquired) ("BT Registrable Securities").
Pursuant to the BT Registration Rights Agreement, AT&T has agreed, at any
time subsequent to the fifteenth day of the second full calendar month
commencing after the date of the BT Registration Rights
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Agreement, and prior to the second anniversary of the date of the BT
Registration Rights Agreement, upon the written request of BT USA (and subject
to certain customary limitations on the frequency and timing of such requests),
to use all reasonable efforts to effect the registration under the Securities
Act of the BT Registrable Securities (but in any event not less than 15,000,000
AT&T Common Shares) requested to be registered. Any such registration which
becomes effective subsequent to the Initial Period must be registered for
disposition in a firm commitment underwriting. BT USA has agreed not to sell
any BT Registrable Securities until the Publication Date.
Under the BT Registration Rights Agreement, after the Initial Period AT&T is
permitted under certain circumstances to postpone any registration described in
the preceding paragraph. AT&T is further permitted after the Initial Period,
subject to certain limitations, to include in any such registration other
securities for sale for its own account or for the account of any other person
or entity. In the case of an underwritten offering, AT&T is also permitted to
choose the lead managing underwriter in connection with such registration, and
BT USA is permitted to choose a co-managing underwriter reasonably acceptable
to AT&T.
The BT Registration Rights Agreement also provides BT USA with the right,
subject to certain limitations, to include its BT Registrable Securities in
registration statements initiated by AT&T with respect to the sale by AT&T of
AT&T Common Shares. In the case of such registrations, AT&T may select an
underwriter, if any, without consulting BT USA.
In addition, BT USA has agreed to certain customary "holdback" provisions,
whereby, if required by the managing underwriter in connection with such
underwriter's sale and distribution of BT Registrable Securities, BT USA will
not effect any public sale or distribution (other than during the Initial
Period) of any BT Registrable Securities during the seven days prior to and the
90 days after any underwritten registration by AT&T has become effective. AT&T
has agreed not to effect any public sale or distribution for cash of any AT&T
Common Shares during the Initial Period after any registration pursuant to the
foregoing has become effective, except under certain limited circumstances.
All expenses (except the expense of counsel retained by BT USA, certain
insurance premiums obtained by BT USA, BT USA's pro rata share of any fees and
disbursements of underwriters customarily paid by sellers of securities who are
not issuers of such securities and all underwriting discounts and transfer
taxes) of any registration of BT Registrable Securities will be paid by AT&T.
The BT Registration Rights Agreement contains certain customary
indemnification provisions whereby AT&T is obligated to indemnify and hold
harmless BT USA and certain related parties, and BT USA is obligated to
indemnify and hold harmless AT&T and certain related parties, in each case in
connection with certain liabilities relating to the registration of the BT
Registrable Securities. The BT Registration Rights Agreement also provides for
certain rights of contribution in the event that such indemnity is unavailable.
The BT Registration Rights Agreement terminates automatically at any time
that BT USA is able to dispose of all BT Registrable Securities then held by it
in a three-month period pursuant to Rule 145(d)(1) (or any successor provision)
under the Securities Act (assuming for such purposes that Rule 145(d)(1) is at
all times applicable to BT USA), except that the indemnification obligations of
AT&T and BT USA will survive such termination.
BT WAIVER
Concurrently with the execution of the Merger Agreement, McCaw, BT and BT USA
entered into the BT Waiver. Pursuant to the BT Waiver, the parties agreed that,
effective upon consummation of the Merger, the following agreements will
terminate automatically and be of no further force and effect: the BT Purchase
Agreement, the BT Stockholders Agreement and the BT Guaranty Agreement. BT USA
also irrevocably waived its rights under certain provisions of the BT Purchase
Agreement which relate to the merger, consolidation, transfer of capital stock,
sale of assets and similar corporate transformations of McCaw, but
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only with respect to the execution, delivery and performance of the Merger
Agreement and consummation of the transactions contemplated thereby.
The BT Waiver provides that for so long as the Merger Agreement is in effect,
BT's investment in and relationship with MCI Communications Corporation on the
terms that had been disclosed prior to August 16, 1993 shall not be deemed to
constitute a breach of certain obligations of BT USA under the BT Purchase
Agreement and of certain obligations of BT under the BT Guaranty Agreement. In
general, the obligations described in the preceding sentence relate to
covenants by BT USA and BT that they will not, among other things, and subject
to certain exceptions (i) engage in the United States in the cellular telephone
business or assist any other person or entity in relation to such business,
(ii) solicit any employee of McCaw having access to confidential information of
McCaw to leave the employment of McCaw or (iii) solicit any part of the
business of McCaw from a customer or prospective customer of McCaw.
In addition, pursuant to the BT Waiver, BT USA has agreed that, so long as
the Merger Agreement is in effect, the election to the McCaw Board of one
nominee of AT&T will not violate any provision of the BT Purchase Agreement or
any other agreement between McCaw and BT USA.
AUGUST 1993 PUT LETTER
Concurrently with the execution of the Merger Agreement, AT&T delivered the
August 1993 Put Letter to McCaw, pursuant to which AT&T irrevocably offered
(the "Offer"), subject to the terms and conditions thereof, to purchase
11,707,317 newly issued shares (the "Put Shares") of Class A Common Stock at
$51.25 per share, or an aggregate of $600 million, in the event the Merger is
not consummated. McCaw may accept the Offer at any time within 15 days after
the Merger Agreement is terminated in accordance with the provisions thereof.
If the Offer is accepted, the purchase and sale of the Put Shares will take
place on the fifth business day following such acceptance, provided that McCaw
may delay the closing in order to satisfy certain conditions.
Registration Rights. AT&T has the right to require (on up to two occasions)
that McCaw register under applicable federal and state securities laws the sale
by AT&T of all or a portion of the Put Shares. AT&T also has the right to
participate in McCaw's registered offerings of shares of McCaw Common Stock.
All such registration rights are on customary terms and conditions.
Representations and Warranties. The August 1993 Put Letter contains various
representations and warranties relating to, among other things, (i) the
authorization and issuance of the Put Shares, (ii) the enforceability of the
Offer and (iii) the purpose of AT&T's acquisition of the Put Shares.
Certain Conditions. AT&T will have no obligation to purchase the Put Shares
if certain events, including the following, occur (in each case, subject to
certain exceptions): (i) an amendment to the McCaw Certificate of Incorporation
adversely affecting the Put Shares; (ii) the payment of dividends on, or the
redemption or other acquisition of, shares of McCaw Common Stock, or a change
of any such shares into a different number or kind of securities or other
property; (iii) a sale or disposition of assets in violation of the terms of
the Merger Agreement; (iv) the issuance of voting securities representing 5% or
more of the voting power of McCaw; or (v) a transfer by Craig O. McCaw (and/or
other members of his family) of (A) his rights as Designated Party under the
McCaw Shareholders Agreement (such Designated Party having the right, among
other things, to vote shares representing a majority of McCaw's outstanding
voting power) or (B) voting securities of McCaw if, following such transfer,
the transferee would have a 5% or greater voting interest in McCaw.
AT&T's obligation to purchase the Put Shares is also conditioned upon (i) the
expiration of the applicable waiting period under the HSR Act, and the making
and receipt of all other necessary regulatory filings and approvals; (ii) the
absence of any injunction or other order of any court or administrative body
prohibiting completion of the transactions contemplated by the August 1993 Put
Letter or imposing damages
53
<PAGE>
as a result thereof; and (iii) the performance by McCaw of its obligations
under, and the accuracy of its warranties contained in, the August 1993 Put
Letter. McCaw may delay the closing in order to satisfy such conditions, for up
to 240 days, in the case of the conditions described in clause (i) or (ii) of
the preceding sentence, or for up to 60 days, in the case of the condition
described in clause (iii) of the preceding sentence.
Repurchase of Put Shares. If it is finally judicially determined (after all
available appeals) by decision of a court of competent jurisdiction that
McCaw's breach of any of its obligations under the Merger Agreement was the
cause of or resulted in the failure of the Merger to occur, AT&T may by written
notice require McCaw to repurchase all the Put Shares at a price equal to the
purchase price paid by AT&T plus an amount calculated at the rate of 7% per
annum thereon, compounded annually. The closing of such repurchase shall occur
on the 90th day after such written notice is given.
DIVIDENDS ON AND MARKET PRICES OF
AT&T COMMON SHARES AND MCCAW COMMON STOCK
AT&T
The AT&T Common Shares are listed and primarily traded on the NYSE. The table
below sets forth for the fiscal periods indicated the high and low sale prices
per AT&T Common Share in the NYSE Composite Transactions (as reported in
published financial sources) and the dividends declared per AT&T Common Share.
<TABLE>
<CAPTION>
AT&T COMMON SHARES
-------------------------
DIVIDENDS
HIGH LOW PER SHARE
------- ------- ---------
<S> <C> <C> <C>
Fiscal 1991
First Quarter....................................... $35 1/8 $29 $0.33
Second Quarter...................................... 41 1/4 33 5/8 0.33
Third Quarter....................................... 40 3/8 36 0.33
Fourth Quarter...................................... 39 5/8 35 1/8 0.33
Fiscal 1992
First Quarter....................................... 41 3/8 36 5/8 0.33
Second Quarter...................................... 44 5/8 40 1/8 0.33
Third Quarter....................................... 45 3/8 42 0.33
Fourth Quarter...................................... 53 1/8 40 5/8 0.33
Fiscal 1993
First Quarter....................................... 59 1/8 50 1/8 0.33
Second Quarter...................................... 63 7/8 53 3/4 0.33
Third Quarter....................................... 65 57 3/8 0.33
Fourth Quarter...................................... 61 3/8 52 0.33
Fiscal 1994
First Quarter (through January 31, 1994)............ 57 1/8 51 5/8 N/A
</TABLE>
On November 3, 1992, the last full trading day prior to announcement that
AT&T and McCaw were discussing the Proposed Strategic Alliance, the reported
NYSE Composite Transactions closing price per AT&T Common Share was $43 3/8. On
August 13, 1993, the last full trading day prior to announcement of the
execution of the Merger Agreement, the reported NYSE Composite Transactions
closing price per AT&T Common Share was $62 3/8. On January 31, 1994, the most
recent available date prior to printing this Proxy Statement/Prospectus, the
reported NYSE Composite Transactions closing price per AT&T Common Share was
$56 3/4. McCaw stockholders are urged to obtain current market quotations.
54
<PAGE>
MCCAW
The Class A Common Stock has been quoted on the NASDAQ National Market System
under the symbol "MCAWA" since McCaw's initial public offering on August 21,
1987. On March 17, 1988, the Class A Common Stock began trading on the PSE
under the symbol "MCWA." The table below sets forth for the fiscal periods
indicated the high and low sale prices per share of the Class A Common Stock on
the NASDAQ National Market System as reported in published financial sources.
These prices reflect inter-dealer prices, without retail mark-up, mark-down or
commission, and may not necessarily represent actual transactions.
<TABLE>
<CAPTION>
MCCAW CLASS A
COMMON STOCK
---------------
HIGH LOW
------- -------
<S> <C> <C>
Fiscal 1991
First Quarter................................................. $26 1/2 $15
Second Quarter................................................ 29 20
Third Quarter................................................. 30 1/4 20
Fourth Quarter................................................ 30 1/4 25 1/4
Fiscal 1992
First Quarter................................................. 36 28 3/4
Second Quarter................................................ 29 3/4 22 3/4
Third Quarter................................................. 28 1/4 23 1/8
Fourth Quarter................................................ 34 1/4 20 1/4
Fiscal 1993
First Quarter................................................. 41 1/4 31 1/2
Second Quarter................................................ 46 1/4 35
Third Quarter................................................. 57 3/4 44 3/4
Fourth Quarter................................................ 57 5/8 50
Fiscal 1994
First Quarter (through January 31, 1994)...................... 54 1/4 50 1/4
</TABLE>
There is no public trading market for the Class B Common Stock.
McCaw has never paid cash dividends on the Class A Common Stock or the Class
B Common Stock. McCaw's senior bank revolving credit facility prohibits McCaw
from paying cash dividends, as does the Merger Agreement. McCaw's public debt
securities also restrict the payment of dividends. There are also restrictions
on the ability of certain of McCaw's subsidiaries to pay dividends to McCaw. It
is not anticipated that any cash dividends will be paid on the Class A Common
Stock or the Class B Common Stock in the foreseeable future.
On November 3, 1992, the last full trading day prior to announcement that
AT&T and McCaw were discussing the Proposed Strategic Alliance, the reported
NASDAQ National Market System closing price per share of Class A Common Stock
was $24 5/8. On August 13, 1993, the last full trading day prior to
announcement of the execution of the Merger Agreement, the reported NASDAQ
National Market System closing price per share of Class A Common Stock was $51
1/4. On January 31, 1994, the most recent available date prior to printing this
Proxy Statement/Prospectus, the reported NASDAQ National Market System closing
price per share of Class A Common Stock was $54. McCaw stockholders are urged
to obtain current market quotations.
55
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT OF MCCAW
The following table sets forth, as of December 31, 1993, as to each class of
equity securities of McCaw, all shares beneficially owned by (i) owners of 5%
or more of any such class, (ii) directors of McCaw, (iii) certain executive
officers of McCaw and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNERSHIP PERCENT
TITLE OF CLASS BENEFICIAL OWNER (NUMBER OF SHARES) OF CLASS
-------------- ---------------- -------------------- --------
<S> <C> <C> <C>
Class B Common Stock(1). Craig O. McCaw 47,745,823(1)(2) 77.3%
BT USA 13,709,063(3) 22.8%
John E. McCaw, Jr. 8,959,600(1)(4) 14.9%
Keith W. McCaw 10,211,211(1)(5) 17.0%
Bruce R. McCaw 10,866,573(1)(6) 18.1%
Wayne M. Perry 2,020,808(1)(7) 3.3%
John W. Stanton 551,263(1)(8) *
Directors and executive officers
as a group (17 persons) 48,941,814(1)(9) 77.7%
Class A Common
Stock(1)(10)........... Craig O. McCaw 16,345,376(1)(2) 9.9%
BT USA 35,859,199(3) 22.1%
AT&T 14,479,638 9.7%
The Equitable Companies
Incorporated 12,465,719(11) 8.4%
John E. McCaw, Jr. 9,012,850(1)(4) 5.7%
Keith W. McCaw 10,212,761(1)(5) 6.4%
Bruce R. McCaw 10,866,573(1)(6) 6.8%
Wayne M. Perry 2,164,994(1)(7) 1.4%
John W. Stanton 551,263(1)(8) *
James L. Barksdale 110,000(9) *
Harold S. Eastman 225,000(9) *
Harold W. Andersen 4,000(9) *
Daniel J. Evans 5,500(9) *
Stuart M. Sloan 44,000(9) *
John C. McDonald 2,300(9) *
Tom A. Alberg 73,453(9) *
Peter L.S. Currie 198,500(9) *
Steven W. Hooper 714,877(9) *
Directors and executive officers
as a group (17 persons) 50,656,447(1)(9) 25.5%
</TABLE>
- --------
* Less than 1%
(1) Craig, John, Keith and Bruce McCaw and certain members of management are
parties to the McCaw Shareholders Agreement pursuant to which Craig O.
McCaw is entitled to vote all shares of the Class B Common Stock owned by
the other parties thereto (a total of 32,055,947 shares of Class B Common
Stock). The McCaw brothers are also parties to the BT Stockholders
Agreement. For the Class B Common Stock, the numbers set forth above
opposite Craig O. McCaw include the Class B Common Stock described in
footnotes 2, 4, 5, 6, 7 and 8 below and such other additional shares of
Class B Common Stock subject to the McCaw Shareholders Agreement and the
options to purchase Class B Common Stock described in footnote 2 below, but
not such options to acquire Class B Common Stock described in footnote 7 or
any other options to acquire Class B Common Stock held by other parties to
the McCaw Shareholders Agreement. They also do not include the Class B
Common Stock held by BT USA described in footnote 3 below, which Craig O.
McCaw, as Designated Party under the McCaw Shareholders Agreement, is not
entitled to vote. If all of the foregoing shares of Class B Common Stock
56
<PAGE>
and options to purchase Class B Common Stock were included, the total would
be 62,923,133 shares representing 99.5% of the Class B Common Stock. For
the Class A Common Stock, the numbers set forth above opposite Craig O.
McCaw include the Class A Common Stock and Class B Common Stock and the
vested options to purchase Class A Common Stock and Class B Common Stock
held by Craig O. McCaw described in footnote 2 below, but not such Class B
Common Stock or options to acquire Class B Common Stock described in
footnotes 4, 5, 6, 7 and 8 below or any other shares of Class B Common
Stock or options held by parties to the McCaw Shareholders Agreement. They
also do not include the Class A Common Stock and options held by BT USA
described in footnote 3 below, which Craig O. McCaw, as Designated Party,
is not entitled to vote. If all the foregoing shares of Class B Common
Stock and Class A Common Stock and options to purchase Class B Common Stock
and Class A Common Stock were included, the total would be 72,019,706
shares representing 36.4% of the Class A Common Stock.
(2) Craig O. McCaw owns outright 13,709,172 shares of Class B Common Stock and
400,000 shares of Class A Common Stock and has options exercisable within
60 days to purchase 1,610,289 shares of Class B Common Stock and 255,000
shares of Class A Common Stock. Includes 370,415 shares of Class B Common
Stock and 500 shares of Class A Common Stock held by The McCaw Foundation,
as to which Mr. McCaw maintains sole dispositive power.
(3) BT USA owns outright 13,709,063 shares of Class B Common Stock and
22,140,136 shares of Class A Common Stock and has options to purchase
10,000 shares of Class A Common Stock. BT USA is a party to the BT
Stockholders Agreement.
(4) John E. McCaw, Jr. owns outright 8,917,000 shares of Class B Common Stock
and 4,500 shares of Class A Common Stock and has options exercisable
within 60 days to purchase 48,750 shares of Class A Common Stock. Includes
32,600 shares of Class B Common Stock held in trusts for the benefit of
John E. McCaw, Jr.'s children, of which trusts he is the sole trustee, and
10,000 shares of Class B Common Stock held by a corporation wholly owned
by him.
(5) Keith W. McCaw owns outright 10,159,096 shares of Class B Common Stock.
Includes 48,465 shares of Class B Common Stock and 1,550 shares of Class A
Common Stock held by The McCaw Foundation, as to which Mr. McCaw maintains
sole dispositive power and 3,650 shares of Class B Common Stock held in
trusts for his children, of which trusts he is the sole trustee.
(6) Bruce R. McCaw owns outright 10,671,258 shares of Class B Common Stock.
Includes 44,000 shares of Class B Common Stock held in trusts for the
benefit of John E. McCaw, Jr.'s children, of which trusts he is a trustee,
55,800 shares of Class B Common Stock held in the Keith McCaw Family
Trust, of which he is a trustee, and 95,515 shares of Class B Common Stock
held by The McCaw Foundation, as to which he maintains sole dispositive
power.
(7) Wayne M. Perry owns outright 1,214,699 shares of Class B Common Stock and
2,936 shares of Class A Common Stock and has options exercisable within 60
days to purchase 806,109 shares of Class B Common Stock and 141,250 shares
of Class A Common Stock.
(8) John W. Stanton owns outright 531,263 shares of Class B Common Stock.
Includes 20,000 shares of Class B Common Stock held in trust for the
benefit of John W. Stanton's child, of which trust Mr. Stanton is one of
the trustees and as to which he disclaims beneficial ownership.
(9) Messrs. Eastman, Barksdale, Andersen, Evans, Sloan, McDonald, Alberg,
Currie and Hooper hold options exercisable within 60 days to purchase
225,000, 110,000, 3,000, 3,000, 2,000, 2,000, 73,000, 182,500 and 68,500
shares of Class A Common Stock, respectively. Mr. Hooper also holds
options exercisable within 60 days to purchase 389,882 shares of Class B
Common Stock and is trustee of a trust which holds 47,500 shares of Class
B Common Stock for the benefit of Mr. Perry's family. Directors and
executive officers as a group hold options exercisable within 60 days to
purchase 1,171,500 shares of Class A Common Stock and 2,806,280 shares of
Class B Common Stock.
(10) Class B Common Stock is convertible into Class A Common Stock. In
calculating the percentages set forth above, it is assumed that an
individual's Class B Common Stock and options to purchase Class B Common
Stock are converted into Class A Common Stock, but that no other
outstanding Class B Common Stock or options are so converted.
57
<PAGE>
(11) The shares indicated above were held as of May 31, 1993 by The Equitable
Companies Incorporated ("The Equitable") and certain subsidiaries. Of the
shares indicated above, Equity and Law PLC has sole power to vote and to
dispose of 50,000 shares, The Equitable Life Assurance Society has sole
power to vote 3,928,902 shares, shared power to vote 289,420 shares and
sole power to dispose of 4,218,322 shares, and The Equitable Capital
Management Corporation has sole power to vote and to dispose of 6,494,935
shares. Alliance Capital Management, L.P., has sole power to vote 992,600
shares, shared power to vote 43,500 shares and sole power to dispose of
1,441,359 shares. Donaldson, Lufkin & Jenrette Securities has sole power
to vote and to dispose of 153,500 shares. The source of this information
is Amendment No. 6 to The Equitable's Schedule 13G dated as of June 8,
1993.
As Designated Party under the McCaw Shareholders Agreement, Craig O. McCaw
controls approximately 62% of the outstanding voting power of the McCaw Common
Stock. BT USA controls approximately 21% of such voting power and the remainder
is held by the public and by AT&T.
The address of each holder of 5% or more of the Class B Common Stock or the
Class A Common Stock is the address of McCaw set forth earlier in this Proxy
Statement/Prospectus, except for BT USA, the address of which is 100 Park
Avenue, 13th Floor, New York, New York 10017, The Equitable, the address of
which is 787 Seventh Avenue, New York, New York 10019 and AT&T, the address of
which is 32 Avenue of the Americas, New York, New York 10013.
58
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Combined Statements of Income and Balance
Sheet give effect to the Merger on a pooling-of-interests basis of accounting.
These Unaudited Pro Forma Combined Financial Statements have been prepared from
the historical consolidated financial statements of AT&T and McCaw and should
be read in conjunction therewith. The historical financial statements of AT&T
and McCaw are incorporated by reference elsewhere in this Proxy
Statement/Prospectus. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
This pro forma combined information is not necessarily indicative of actual
or future operating results or financial position that would have occurred or
will occur upon consummation of the Merger.
The Unaudited Pro Forma Combined Balance Sheet gives effect to the Merger as
if it had occurred on September 30, 1993, combining the balance sheets of AT&T
and McCaw at September 30, 1993. The Unaudited Pro Forma Combined Statements of
Income give effect to the Merger as if it had occurred at the beginning of each
of the periods presented, combining the results of AT&T and McCaw for each of
the three years in the period ended December 31, 1992 and for the nine-month
periods ended September 30, 1993 and 1992.
59
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1992
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
-------------- ----------------------
AT&T MCCAW ADJUSTMENTS COMBINED
------- ------ ----------- --------
<S> <C> <C> <C> <C>
SALES AND REVENUES
Telecommunications services.......... $39,580 $1,387 $40,967
Sales of products and systems........ 16,473 -- 16,473
Rentals and other services........... 6,957 356 7,313
Financial services and leasing....... 1,894 -- 1,894
------- ------ -------
Total revenues..................... 64,904 1,743 66,647
------- ------ -------
COSTS
Telecommunications services.......... 25,267 611 25,878
Products and systems................. 9,846 -- 9,846
Rentals and other services........... 3,287 166 3,453
Financial services and leasing....... 1,310 -- 1,310
------- ------ -------
Total costs........................ 39,710 777 40,487
------- ------ -------
Gross margin......................... 25,194 966 26,160
------- ------ -------
OPERATING EXPENSES
Selling, general and administrative
expenses............................ 15,950 707 16,657
Research and development expenses.... 2,911 -- 2,911
Provision for business restructuring. 64 -- 64
------- ------ -------
Total operating expenses........... 18,925 707 19,632
------- ------ -------
Operating income..................... 6,269 259 6,528
Other income, net.................... 352 45 397
Interest expense..................... 663 490 1,153
------- ------ -------
Income (loss) before income taxes and
preferred stock dividend of a
subsidiary.......................... 5,958 (186) 5,772
Provision for income taxes........... 2,151 (34) $ 79 (3C) 2,196
Provision for preferred stock divi-
dend of a subsidiary................ -- 134 134
------- ------ ----- -------
NET INCOME (LOSS).................... $ 3,807 $ (286) $ (79) $ 3,442
======= ====== ===== =======
Weighted average common shares out-
standing............................ 1,332 183 (2) 1,515
======= ====== =======
Earnings per common share............ $ 2.86 $ 2.27
======= =======
Dividends declared per common share.. $ 1.32 $ 1.32
======= =======
</TABLE>
See accompanying notes to unaudited pro forma combined financial statements.
60
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1991
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
--------------- -----------------------
AT&T MCCAW ADJUSTMENTS COMBINED
------- ------- ----------- --------
<S> <C> <C> <C> <C>
SALES AND REVENUES
Telecommunications services......... $38,805 $ 1,055 $39,860
Sales of products and systems....... 15,941 -- 15,941
Rentals and other services.......... 6,959 311 7,270
Financial services and leasing...... 1,384 -- 1,384
------- ------- -------
Total revenues.................... 63,089 1,366 64,455
------- ------- -------
COSTS
Telecommunications services......... 25,276 559 25,835
Products and systems................ 9,134 -- 9,134
Rentals and other services.......... 3,344 139 3,483
Financial services and leasing...... 1,071 -- 1,071
------- ------- -------
Total costs....................... 38,825 698 39,523
------- ------- -------
Gross margin........................ 24,264 668 24,932
------- ------- -------
OPERATING EXPENSES
Selling, general and administrative
expenses........................... 16,220 552 16,772
Research and development expenses... 3,114 -- 3,114
Provision for business
restructuring...................... 3,572 -- 3,572
------- ------- -------
Total operating expenses.......... 22,906 552 23,458
------- ------- -------
Operating income.................... 1,358 116 1,474
Other income, net................... 208 294 502
Gain on sale of stock by a
subsidiary......................... 43 -- 43
Interest expense.................... 726 578 1,304
------- ------- -------
Income (loss) before income taxes,
preferred stock dividend of a
subsidiary and cumulative effect of
accounting change.................. 883 (168) 715
Provision for income taxes.......... 361 (27) $ 76 (3C) 410
Provision for preferred stock
dividend of a subsidiary........... -- 134 134
------- ------- ------ -------
Income before cumulative effect of
accounting change.................. 522 (275) (76) 171
Cumulative effect of change in
accounting for income taxes........ -- (1,956) 1,956 (3C) --
------- ------- ------ -------
NET INCOME (LOSS)................... $ 522 $(2,231) $1,880 $ 171
======= ======= ====== =======
Weighted average common shares
outstanding........................ 1,293 181 (2) 1,474
======= ======= =======
Earnings per common share........... $ 0.40 $ 0.12
======= =======
Dividends declared per common share. $ 1.32 $ 1.32
======= =======
</TABLE>
See accompanying notes to unaudited pro forma combined financial statements.
61
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1990
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
-------------- --------------------
AT&T MCCAW ADJUSTMENTS COMBINED
------- ------ ----------- --------
<S> <C> <C> <C> <C>
SALES AND REVENUES
Telecommunications services............. $38,263 $ 757 $39,020
Sales of products and systems........... 16,124 -- 16,124
Rentals and other services.............. 6,993 280 7,273
Financial services and leasing.......... 811 -- 811
------- ------ -------
Total revenues........................ 62,191 1,037 63,228
------- ------ -------
COSTS
Telecommunications services............. 25,633 437 26,070
Products and systems.................... 9,228 -- 9,228
Rentals and other services.............. 3,377 124 3,501
Financial services and leasing.......... 645 -- 645
------- ------ -------
Total costs........................... 38,883 561 39,444
------- ------ -------
Gross margin............................ 23,308 476 23,784
------- ------ -------
OPERATING EXPENSES
Selling, general and administrative
expenses............................... 14,782 428 15,210
Research and development expenses....... 2,935 -- 2,935
Provision for business restructuring.... 95 -- 95
------- ------ -------
Total operating expenses.............. 17,812 428 18,240
------- ------ -------
Operating income........................ 5,496 48 5,544
Other income, net....................... 257 1,187 1,444
Interest expense........................ 874 497 1,371
------- ------ -------
Income before income taxes, preferred
stock dividend of a subsidiary and
extraordinary item..................... 4,879 738 5,617
Provision for income taxes.............. 1,775 315 2,090
Provision for preferred stock dividend
of a subsidiary........................ -- 52 52
------- ------ -------
Income before extraordinary item........ 3,104 371 3,475
Extraordinary item--tax benefit of prior
years' operating loss.................. -- 191 191
------- ------ -------
NET INCOME.............................. $ 3,104 $ 562 $ 3,666
======= ====== =======
Weighted average common shares
outstanding............................ 1,282 182(2) 1,464
======= ====== =======
Earnings per common share............... $ 2.42 $ 2.50
======= =======
Dividends declared per common share..... $ 1.32 $ 1.32
======= =======
</TABLE>
See accompanying notes to unaudited pro forma combined financial statements.
62
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1993
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
--------------- -----------------------
AT&T MCCAW ADJUSTMENTS COMBINED
------- ------ ----------- --------
<S> <C> <C> <C> <C>
SALES AND REVENUES
Telecommunications services......... $29,942 $1,287 $31,229
Sales of products and systems....... 11,919 -- 11,919
Rentals and other services.......... 5,044 296 5,340
Financial services and leasing...... 1,792 -- 1,792
------- ------ -------
Total revenues.................... 48,697 1,583 50,280
------- ------ -------
COSTS
Telecommunications services......... 18,589 508 19,097
Products and systems................ 7,179 -- 7,179
Rentals and other services.......... 2,384 152 2,536
Financial services and leasing...... 1,215 -- 1,215
------- ------ -------
Total costs....................... 29,367 660 30,027
------- ------ -------
Gross margin........................ 19,330 923 20,253
------- ------ -------
OPERATING EXPENSES
Selling, general and administrative
expenses........................... 12,181 620 12,801
Research and development expenses... 2,262 -- 2,262
Provision for business
restructuring...................... 308 -- 308
------- ------ -------
Total operating expenses.......... 14,751 620 15,371
------- ------ -------
Operating income.................... 4,579 303 4,882
Other income, net................... 468 156 624
Loss on sale of stock by a
subsidiary......................... 9 -- 9
Interest expense.................... 404 301 705
------- ------ -------
Income before income taxes,
preferred stock dividend of a
subsidiary and cumulative effects
of accounting changes.............. 4,634 158 4,792
Provision for income taxes.......... 1,642 122 1,764
Provision for preferred stock
dividend of a subsidiary........... -- 101 101
------- ------ -------
Income (loss) before cumulative
effects of accounting changes...... 2,992 (65) 2,927
Cumulative effects on prior years of
changes in accounting for:
Postretirement benefits, net...... (7,023) -- (7,023)
Income taxes...................... 383 -- $(1,840)(3C) (1,457)
Postemployment benefits, net...... (1,128) -- (1,128)
------- ------ ------- -------
NET LOSS............................ $(4,776) $ (65) $(1,840) $(6,681)
======= ====== ======= =======
Weighted average common shares
outstanding........................ 1,351 201(2) (11)(3B) 1,541
======= ====== ======= =======
Per common share:
Income before cumulative effects of
accounting changes................. $ 2.21 $ 1.90
Cumulative effects of accounting
changes............................ (5.75) (6.23)
------- -------
Net loss............................ $ (3.53) $ (4.34)
======= =======
Dividends declared per common share. $ 0.99 $ 0.99
======= =======
</TABLE>
See accompanying notes to unaudited pro forma combined financial statements.
63
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1992
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
------------- ----------------------
AT&T MCCAW ADJUSTMENTS COMBINED
------- ----- ----------- --------
<S> <C> <C> <C> <C>
SALES AND REVENUES
Telecommunications services............. $29,856 $ 994 $30,850
Sales of products and systems........... 11,167 -- 11,167
Rentals and other services.............. 5,060 255 5,315
Financial services and leasing.......... 1,317 -- 1,317
------- ----- -------
Total revenues........................ 47,400 1,249 48,649
------- ----- -------
COSTS
Telecommunications services............. 19,050 447 19,497
Products and systems.................... 6,665 -- 6,665
Rentals and other services.............. 2,379 118 2,497
Financial services and leasing.......... 940 -- 940
------- ----- -------
Total costs........................... 29,034 565 29,599
------- ----- -------
Gross margin............................ 18,366 684 19,050
------- ----- -------
OPERATING EXPENSES
Selling, general and administrative
expenses............................... 11,574 504 12,078
Research and development expenses....... 2,204 -- 2,204
Provision for business restructuring.... 39 -- 39
------- ----- -------
Total operating expenses.............. 13,817 504 14,321
------- ----- -------
Operating income........................ 4,549 180 4,729
Other income, net....................... 344 39 383
Interest expense........................ 500 378 878
------- ----- -------
Income (loss) before income taxes and
preferred stock dividend of a
subsidiary............................. 4,393 (159) 4,234
Provision for income taxes.............. 1,586 (37) $ 59 (3C) 1,608
Provision for preferred stock dividend
of a subsidiary........................ -- 101 101
------- ----- ---- -------
NET INCOME (LOSS)....................... $ 2,807 $(223) $(59) $ 2,525
======= ===== ==== =======
Weighted average common shares
outstanding............................ 1,329 182(2) 1,511
======= ===== =======
Earnings per common share............... $ 2.11 $ 1.67
======= =======
Dividends declared per common share..... $ 0.99 $ 0.99
======= =======
</TABLE>
See accompanying notes to unaudited pro forma combined financial statements.
64
<PAGE>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 1993
(IN MILLIONS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
---------------- ----------------------
AT&T MCCAW ADJUSTMENTS COMBINED
------- ------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Cash and temporary cash investments... $ 798 $ 253 $ 1,051
Receivables, net of allowances
Accounts receivable................. 10,916 289 11,205
Finance receivables................. 9,981 -- 9,981
Inventories........................... 3,572 29 3,601
Deferred income taxes................. 2,286 -- 2,286
Other current assets.................. 681 216 897
------- ------- -------
Total current assets.............. 28,234 787 29,021
Property, plant and equipment, net.... 19,002 1,488 20,490
Licensing costs, net.................. -- 3,936 3,936
Investments........................... 1,540 1,933 $(400)(3B) 3,073
Finance receivables................... 3,900 -- 3,900
Prepaid pension costs................. 3,871 -- 3,871
Other assets, net..................... 2,885 934 (39)(3C) 3,780
------- ------- ----- -------
TOTAL ASSETS.......................... $59,432 $ 9,078 $(439) $68,071
======= ======= ===== =======
LIABILITIES AND DEFERRED CREDITS
Accounts payable...................... $ 4,668 $ 81 $ 4,749
Payroll and benefit-related
liabilities.......................... 3,080 48 3,128
Postretirement and postemployment
benefit liabilities.................. 526 -- 526
Debt maturing within one year......... 9,926 367 10,293
Dividends payable..................... 447 -- 447
Other current liabilities............. 4,499 402 4,901
------- ------- -------
Total current liabilities......... 23,146 898 24,044
Long-term debt, including capital
leases............................... 7,173 4,693 11,866
Postretirement and postemployment
benefit liabilities.................. 10,306 -- 10,306
Other liabilities..................... 4,462 65 4,527
Deferred income taxes................. (9) 1,991 1,982
Unamortized investment tax credits.... 286 -- 286
Other deferred credits................ 347 -- 347
------- ------- -------
Total liabilities and deferred
credits.......................... 45,711 7,647 53,358
Minority interests.................... 572 58 630
Redeemable preferred stock of a
subsidiary........................... -- 1,272 1,272
SHAREOWNERS' EQUITY
Common stock.......................... 1,350 2 $ 190 (3A) 1,542
Additional paid in capital............ 11,891 2,820 (190)(3A) 14,121
(400)(3B)
Guaranteed ESOP obligation............ (355) -- (355)
Foreign currency translation
adjustments.......................... (11) -- (11)
Retained earnings (deficit)........... 274 (2,721) (39)(3C) (2,486)
------- ------- ----- -------
Total shareowners' equity......... 13,149 101 (439) 12,811
------- ------- ----- -------
TOTAL LIABILITIES AND SHAREOWNERS'
EQUITY............................... $59,432 $ 9,078 $(439) $68,071
======= ======= ===== =======
</TABLE>
See accompanying notes to unaudited pro forma combined financial statements.
65
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
NOTE 1--HISTORICAL PRESENTATION
Certain amounts reported in McCaw's historical financial statements have been
reclassified to conform to the AT&T presentations in the accompanying Unaudited
Pro Forma Combined Balance Sheet and Statements of Income. Such
reclassifications are not material to the Unaudited Pro Forma Combined
Financial Statements.
NOTE 2--EXCHANGE RATIO
As set forth in the Merger Agreement, the Exchange Ratio will be one AT&T
Common Share for each share of McCaw Common Stock; provided, however, that (i)
in the event the Closing Date Market Price of one AT&T Common Share is less
than $53.00, the Exchange Ratio will be equal to $53.00 divided by the Closing
Date Market Price of one AT&T Common Share, but in no event greater than 1.111
AT&T Common Shares, and (ii) in the event the Closing Date Market Price of one
AT&T Common Share is greater than $71.73, the Exchange Ratio will be equal to
$71.73 divided by the Closing Date Market Price of one AT&T Common Share, but
in no event less than .909 of an AT&T Common Share. For purposes of the
Unaudited Pro Forma Combined Financial Statements, an Exchange Ratio of one
AT&T Common Share per share of McCaw Common Stock is assumed. If the maximum
exchange ratio of 1.111 were assumed, pro forma combined earnings (loss) per
share for the nine months ended September 30, 1993 and 1992 and for the years
ended December 31, 1992, 1991 and 1990 would be $(4.28), $1.65, $2.24, $0.11
and $2.47, respectively.
NOTE 3--OTHER PRO FORMA ADJUSTMENTS
(A) The McCaw Common Stock account has been adjusted to reflect the assumed
exchange of one AT&T Common Share, par value $1.00 per share, for each of
approximately 192.3 shares of McCaw Common Stock, par value $.01 per share,
outstanding at September 30, 1993 (excluding shares of McCaw Common Stock held
by AT&T--see Note 3(B)). The difference between the par value of the AT&T
Common Shares and the par value of the McCaw Common Stock, after giving effect
to the assumed Exchange Ratio, is reflected as a reduction to additional paid-
in capital of $190.
(B) The $400 investment by AT&T in 14.5 shares of Class A Common Stock
purchased in February 1993 has been eliminated. The weighted average common
shares outstanding for the nine months ended September 30, 1993 have been
adjusted to eliminate the impact of this purchase.
(C) McCaw's historical financial statements reflect the adoption of SFAS No.
109, "Accounting for Income Taxes," retroactive to January 1, 1991. AT&T
adopted SFAS No. 109 effective January 1, 1993. For conformity purposes, the
pro forma combined information for AT&T and McCaw has been adjusted as if McCaw
had adopted SFAS No. 109 on January 1, 1993. Such adoption would result in the
use of different tax assumptions related to intangible assets McCaw acquired in
purchase business combinations in 1991 and 1992 that would increase the
cumulative effect of adopting SFAS No. 109 by $39. Accordingly, the pro forma
combined net income has been decreased $79 for the year ended December 31,
1992, increased $1,880 for the year ended December 31, 1991, and decreased
$1,840 and $59 for the nine months ended September 30, 1993 and 1992,
respectively. Pro forma combined earnings per common share have been decreased
$0.05 for the year ended December 31, 1992, increased $1.28 for the year ended
December 31, 1991, and decreased $1.19 and $0.04 for the nine months ended
September 30, 1993 and 1992, respectively. Pro forma combined total assets and
shareowners' equity have been decreased $39 at September 30, 1993. Also
effective January 1, 1993, AT&T adopted SFAS No. 112, "Employers' Accounting
for Postemployment Benefits." When McCaw adopts SFAS No. 112, the impact on the
McCaw financial statements is expected to be immaterial.
(D) No adjustments have been reflected in the Unaudited Pro Forma Combined
Financial Statements for direct expenses related to the Merger. Direct expenses
included in the historical periods presented have not been adjusted for in the
Unaudited Pro Forma Combined Financial Statements. Such amounts are not
material.
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<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(E) No adjustments to eliminate intercompany transactions and balances have
been made in the Unaudited Pro Forma Combined Financial Statements as such
amounts are not material.
(F) The cash dividends per common share in the Unaudited Pro Forma Combined
Financial Statements reflect AT&T's cash dividends declared in the periods
presented. McCaw has never paid cash dividends on the McCaw Common Stock.
NOTE 4--FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The Unaudited Pro Forma Combined Financial Statements assume that the Merger
qualifies as a "tax-free" reorganization for federal income tax purposes.
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<PAGE>
DESCRIPTION OF AT&T CAPITAL STOCK
The following descriptions are summarized from the provisions of the AT&T
Certificate of Incorporation.
AT&T's authorized capital includes 2,000,000,000 AT&T Common Shares. All AT&T
Common Shares are entitled to participate equally in dividends. Each
stockholder has one vote for each share registered in such stockholder's name
as of the applicable record date for any matter presented to stockholders. All
AT&T Common Shares rank equally on liquidation. All outstanding AT&T Common
Shares, and all AT&T Common Shares to be issued pursuant to the Merger, are or
will be fully paid and nonassessable by AT&T. Holders of AT&T Common Shares
have no preemptive rights.
AT&T's authorized capital also includes a class of 100,000,000 preferred
shares, issuable in series, cumulative as to dividends and having an authorized
maximum liquidation preference of $8,000,000,000. The preferred shares rank
prior to the AT&T Common Shares both as to dividends and on liquidation. There
are no preferred shares issued or outstanding. The AT&T Board is authorized to
establish the number of shares, designations, relative rights, preferences and
limitations, including voting and conversion rights, of any future series of
preferred shares.
DESCRIPTION OF MCCAW CAPITAL STOCK
The following descriptions are summarized from the provisions of the McCaw
Certificate of Incorporation.
McCaw's authorized common stock consists of 400,000,000 shares of Class A
Common Stock and 200,000,000 shares of Class B Common Stock. The Class A Common
Stock and the Class B Common Stock are identical in all respects except that
(i) holders of Class A Common Stock are entitled to one vote per share and
holders of Class B Common Stock are entitled to ten votes per share on all
matters on which holders of McCaw Common Stock are entitled to vote and (ii) if
dividends payable in shares of common stock are declared, holders of Class A
Common Stock will receive shares of Class A Common Stock and holders of Class B
Common Stock will receive shares of Class B Common Stock.
Each share of Class B Common Stock is convertible into one share of Class A
Common Stock at the option of the holder at any time. Shares of Class B Common
Stock will automatically convert into a like number of shares of Class A Common
Stock upon the occurrence of certain events specified in the BT Stockholders
Agreement and the McCaw Shareholders Agreement.
All shares of McCaw Common Stock rank equally on liquidation. Dividends may
be declared and paid to holders of Class B Common Stock only if at such time an
equal per share dividend is declared and paid to holders of Class A Common
Stock, and vice versa.
McCaw may redeem capital stock from any holder at the lesser of (i) fair
market value and (ii) if such stock was purchased within one year of such
redemption, such holder's purchase price, to prevent the loss or secure the
reinstatement of any license or franchise from any governmental agency held by
McCaw or any of its subsidiaries, which license or franchise is conditioned
upon some or all of the holders of McCaw stock possessing prescribed
qualifications. The BT Purchase Agreement provides that BT USA will have
certain rights in connection with redemptions of McCaw capital stock. See
"COMPARATIVE RIGHTS OF McCAW STOCKHOLDERS AND AT&T STOCKHOLDERS--Redemption of
Capital Stock."
No holders of shares of McCaw Common Stock have preemptive rights. As set
forth in the McCaw Certificate of Incorporation, however, pursuant to the BT
Purchase Agreement, BT USA is entitled to certain rights with respect to
issuances of capital stock. See "COMPARATIVE RIGHTS OF McCAW STOCKHOLDERS AND
AT&T STOCKHOLDERS--Preemptive Rights."
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<PAGE>
McCaw's authorized capital also includes 10,000,000 shares of preferred
stock, par value $.01 per share, none of which is issued or outstanding, which
shares may be issued from time to time in one or more series. The McCaw
Certificate of Incorporation authorizes the McCaw Board to determine the
designation of any such series and to fix the powers, preferences and rights,
and the qualifications, limitations and restrictions thereon, to the full
extent permitted by law.
COMPARATIVE RIGHTS OF MCCAW
STOCKHOLDERS AND AT&T STOCKHOLDERS
If the Merger is consummated, holders of McCaw Common Stock will become
holders of AT&T Common Shares and the rights of the former McCaw stockholders
will be governed by the laws of the State of New York and by the AT&T
Certificate of Incorporation and the AT&T By-Laws, as amended (the "AT&T By-
Laws"). The rights of AT&T stockholders under the AT&T Certificate of
Incorporation and the AT&T By-Laws differ in certain respects from the rights
of McCaw stockholders under the McCaw Certificate of Incorporation and the
McCaw By-Laws. Certain differences between the rights of AT&T stockholders and
McCaw stockholders are summarized below. THIS SUMMARY IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH DOCUMENTS. For information as to
how such documents may be obtained, see "AVAILABLE INFORMATION."
In connection with the execution of the Merger Agreement, each of BT and BT
USA has agreed to waive certain rights described below under the BT Purchase
Agreement to the extent necessary to permit the execution and delivery of the
Merger Agreement. Each of BT and BT USA has also agreed to terminate the BT
Purchase Agreement and the BT Stockholders Agreement as of the Effective Time.
See "OTHER AGREEMENTS--BT Letter Agreement" and "--BT Waiver."
BENEFICIAL OWNERSHIP OF STOCK
As of the date of this Proxy Statement/Prospectus, the outstanding equity of
McCaw is owned approximately 22% by members of the McCaw Block and the
directors and management of McCaw, approximately 17% by BT USA and
approximately 7% by AT&T. As a result of the disproportionate voting rights
between the Class A Common Stock and the Class B Common Stock, as of the date
of this Proxy Statement/Prospectus, members of the McCaw Block and management
hold approximately 62% of the combined voting power of the McCaw Common Stock
and BT USA holds approximately 21% of the combined voting power of the McCaw
Common Stock. See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT OF McCAW."
To the best of AT&T's knowledge, no person or entity is the beneficial owner
of 5% or more of the AT&T Common Shares as of the date of this Proxy
Statement/Prospectus, and no person or entity is expected to become the
beneficial owner of 5% or more of the AT&T Common Shares as a result of the
Merger.
BUSINESS COMBINATIONS
Generally, under the DGCL, the approval by the affirmative vote of the
holders of a majority of the outstanding stock (or, if the certificate of
incorporation provides for more or less than one vote per share, a majority of
the votes of the outstanding stock) of a corporation entitled to vote on the
matter is required for a merger or consolidation or sale, lease or exchange of
all or substantially all the corporation's assets to be consummated.
The McCaw Certificate of Incorporation does not contain any provisions
relating to stockholder approval of business combinations. However, the BT
Purchase Agreement prohibits, during any 12-month period, sales or other
dispositions of cellular assets involving 15% or more of the aggregate POPs in
which McCaw has an interest or noncellular assets involving 15% or more of the
fair market value of McCaw's
69
<PAGE>
total assets without the consent of BT USA. In addition, the BT Purchase
Agreement grants BT USA the right to receive notice of, and to participate in,
certain proposed mergers or consolidations of McCaw with or into any other
entity.
Under the New York Business Corporation Law (the "NYBCL"), the vote of the
holders of two-thirds of all outstanding shares of stock of a New York
corporation entitled to vote thereon is required for mergers and
consolidations, and for sales, leases, exchanges or other dispositions of all
or substantially all the assets of a corporation, if not made in the usual or
regular course of the business actually conducted by such corporation.
The AT&T Certificate of Incorporation does not contain any provisions
relating to stockholder approval of business combinations.
APPRAISAL RIGHTS
Under the DGCL, except as otherwise provided by the DGCL, stockholders have
the right to demand and receive payment of the fair value of their stock in the
event of a merger or consolidation. However, except as otherwise provided by
the DGCL, stockholders do not have appraisal rights if, among other things, the
consideration they receive for their shares consists of (i) shares of stock of
the corporation surviving or resulting from such merger or consolidation, (ii)
shares of stock of any other corporation which at the effective date of the
merger or consolidation will be either listed on a national securities exchange
(which is true in the case of the AT&T Common Shares) or designated as a
national market system security on an inter-dealer quotation system by the
National Association of Securities Dealers, Inc. or held of record by more than
2,000 stockholders, (iii) cash in lieu of fractional shares of the corporations
described in clause (i) or (ii) of this sentence, or (iv) any combination of
shares of stock and cash in lieu of fractional shares described in the
foregoing clauses (i), (ii) and (iii). See "THE MERGER--Absence of Appraisal
Rights."
Stockholders of a New York corporation have the right to dissent and receive
payment of the fair value of their shares, except as otherwise provided by the
NYBCL, in the event of certain amendments or changes to the certificate of
incorporation adversely affecting their shares, certain mergers or
consolidations, certain sales, leases, exchanges or other dispositions of all
or substantially all the corporation's assets and certain share exchanges.
STATE TAKEOVER LEGISLATION
Delaware Business Combination Law. Section 203 of the DGCL (the "Delaware
Business Combination Law") generally prohibits any business combination
(defined to include a variety of transactions, including (i) mergers and
consolidations, (ii) sales or dispositions of assets having an aggregate market
value equal to 10% or more of the aggregate market value of the corporation
determined on a consolidated basis, (iii) issuances of stock (except for
certain pro rata and other issuances), and (iv) disproportionate benefits from
the corporation (including loans and guarantees)) between a Delaware
corporation and any interested stockholder (defined generally as any person
who, directly or indirectly, beneficially owns 15% or more of the outstanding
voting stock of the corporation) for a period of three years after the date on
which the interested stockholder became an interested stockholder. The
restrictions of the Delaware Business Combination Law do not apply, however,
(A) if, prior to such date, the board of directors of the corporation approved
either the business combination or the transaction which resulted in such
stockholder's becoming an interested stockholder, (B) if, upon consummation of
the transaction resulting in such stockholder's becoming an interested
stockholder, the interested stockholder owned at least 85% of the voting stock
of the corporation at the time the transaction was commenced (excluding, for
the purposes of determining the number of shares outstanding, shares owned by
persons who are directors and also officers and by certain employee plans of
the corporation), (C) if, on or subsequent to such date, the business
combination is approved by the board of directors and the holders of at least
two-thirds of the shares not involved in the transaction or (D) under certain
other circumstances.
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<PAGE>
In addition, a Delaware corporation may adopt an amendment to its certificate
of incorporation or by-laws expressly electing not to be governed by the
Delaware Business Combination Law if, in addition to any other vote required by
law, such amendment is approved by the affirmative vote of a majority of the
shares entitled to vote. Such amendment will not, however, be effective until
12 months after such stockholder vote and will not apply to any business
combination with an interested stockholder who was such on or prior to the
effective date of such amendment. The McCaw By-Laws contain a provision which
expressly provides that the Delaware Business Combination Law shall not apply
to McCaw. The Delaware Business Combination Law is inapplicable to the Merger.
New York Business Combination Law. Section 912 of the NYBCL (the "New York
Business Combination Law") prohibits any business combination (defined to
include a variety of transactions, including mergers, sales or dispositions of
assets, issuances of stock, liquidations, reclassifications and benefits from
the corporation, including loans or guarantees) with, involving or proposed by
any interested stockholder (defined generally as any person who, directly or
indirectly, beneficially owns 20% or more of the outstanding voting stock of a
resident domestic New York corporation) for a period of five years after the
date on which the interested stockholder became an interested stockholder.
After such five-year period a business combination between a resident domestic
New York corporation and such interested stockholder is prohibited unless
either certain "fair price" provisions are complied with or the business
combination is approved by a majority of the outstanding voting stock not
beneficially owned by such interested stockholder or its affiliates. The New
York Business Combination Law exempts from its prohibitions any business
combination with an interested stockholder if such business combination, or the
purchase of stock by the interested stockholder that caused such stockholder to
become such, is approved by the board of directors of the resident domestic New
York corporation prior to the date on which the interested stockholder becomes
such. AT&T will be considered a resident domestic New York corporation as long
as at least 10% of its voting stock is owned beneficially by residents of (or
organizations having their principal offices in) the State of New York.
A resident domestic New York corporation may adopt an amendment to its by-
laws, approved by the affirmative vote of the holders, other than interested
stockholders and their affiliates and associates, of a majority of the
outstanding voting stock, excluding the voting stock of interested stockholders
and their affiliates and associates, expressly electing not to be governed by
the New York Business Combination Law. However, such amendment will not be
effective until 18 months after such stockholder vote and will not apply to any
business combination with an interested stockholder who was such on or prior to
the effective date of such amendment. AT&T has not amended the AT&T By-Laws to
elect not to be governed by the New York Business Combination Law.
STOCKHOLDER RIGHTS PLAN
Neither AT&T nor McCaw has a stockholder rights plan.
AMENDMENTS TO CHARTERS
Under the DGCL, unless otherwise provided in the charter, a proposed charter
amendment requires an affirmative vote of a majority of all votes entitled to
be cast on the matter. If any such amendment would adversely affect the rights
of any holders of shares of a class or series of stock, the vote of the holders
of a majority of all outstanding shares of the class or series, voting as a
class, is also necessary to authorize such amendment. The DGCL requires an
affirmative vote of a majority of the total number of shares outstanding and
entitled to vote thereon to amend the McCaw Certificate of Incorporation.
However, the McCaw Certificate of Incorporation provides that so long as
certain provisions of the BT Purchase Agreement remain in effect, certain
actions by the McCaw Board shall be taken only in accordance with the BT
Purchase Agreement. Among other things, the BT Purchase Agreement provides that
the McCaw Board shall not approve any amendment to the McCaw Certificate of
Incorporation, if such amendment would adversely
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<PAGE>
impair BT USA's rights under the BT Purchase Agreement or the BT Stockholders
Agreement, without the consent of BT.
Under the NYBCL, amendments of the certificate of incorporation may be
authorized by vote of the holders of a majority of all outstanding shares
entitled to vote thereon at a meeting of stockholders. If any such amendment
would adversely affect the rights of any holders of shares of a class or series
of stock, the vote of the holders of a majority of all outstanding shares of
the class or series, voting as a class, is also necessary to authorize such
amendment. Pursuant to the Merger Agreement, AT&T has agreed that, prior to the
Closing or earlier termination of the Merger Agreement, it will not adopt any
amendments to the AT&T Certificate of Incorporation which would adversely
affect the terms and provisions of the AT&T Common Shares or the rights of the
holders of such shares. See "THE MERGER--Certain Covenants of AT&T."
AMENDMENTS TO BY-LAWS
Under the DGCL, the power to adopt, alter and repeal the by-laws is vested in
the stockholders, except to the extent that the charter or the by-laws vest it
in the board of directors.
The McCaw Certificate of Incorporation provides that the McCaw Board may
adopt, alter and repeal the McCaw By-Laws. However, the McCaw Certificate of
Incorporation also provides that action by the McCaw Board is subject to
certain provisions of the BT Purchase Agreement relating to McCaw Board
matters, so long as such provisions are in effect. Among other things, the BT
Purchase Agreement provides that the McCaw Board shall not approve any
amendment to the McCaw By-Laws, if such amendment would adversely impair BT
USA's rights under the BT Purchase Agreement or the BT Stockholders Agreement,
without the consent of BT. The McCaw By-Laws provide that the McCaw By-Laws may
be amended, altered or repealed and that new by-laws may be adopted by either
the McCaw stockholders or the McCaw Board when such power is conferred upon the
McCaw Board by the McCaw Certificate of Incorporation. Such amendment,
alteration, repeal or adoption may occur at any regular meeting of the McCaw
stockholders or of the McCaw Board or at any special meeting of the McCaw
stockholders or of the McCaw Board if such alteration, amendment, repeal or
adoption is contained in the notice of such special meeting. In addition,
subject to certain exceptions, the McCaw By-Laws provide that so long as
certain provisions of the BT Purchase Agreement remain in effect, the McCaw
Board may take certain actions only if such action has been approved by the
vote of (i) the majority of the directors and (ii) either (A) a majority of the
three Independent Directors (as hereinafter defined) or (B) a majority of the
directors other than the Designated Party Nominees. The size of the McCaw Board
is currently set at 16 persons, of whom 9 are Designated Party Nominees.
Under the NYBCL, except as otherwise provided in the certificate of
incorporation, by-laws may be amended, repealed or adopted by vote of the
holders of the shares at the time entitled to vote in the election of any
directors. When so provided in the certificate of incorporation or a by-law
adopted by the stockholders, by-laws also may be amended, repealed or adopted
by the board by such vote as may be therein specified, which may be greater
than the vote otherwise prescribed by law, but any by-law adopted by the board
may be amended or repealed by the stockholders entitled to vote thereon as
provided by the NYBCL.
The AT&T By-Laws may be amended by the stockholders of AT&T at any meeting,
or by the AT&T Board at any meeting by a majority vote of the full AT&T Board,
or at two successive meetings by a majority vote of a quorum present.
PREEMPTIVE RIGHTS
Under the DGCL, a stockholder does not possess preemptive rights unless such
rights are specifically granted in the certificate of incorporation. The McCaw
Certificate of Incorporation does not provide for preemptive rights. Under the
BT Purchase Agreement, however, in the event McCaw issues shares of capital
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stock, BT USA has the right to acquire a number of shares of such capital stock
so that BT USA's percentage ownership interest in McCaw's capital stock remains
unchanged.
Under the NYBCL, except as otherwise provided in the NYBCL or in the
certificate of incorporation, the holders of equity shares are granted certain
preemptive rights. The AT&T Certificate of Incorporation provides that no
holder of AT&T Common Shares has any preemptive rights to purchase any shares
or other securities of AT&T.
REDEMPTION OF CAPITAL STOCK
Under the DGCL, subject to certain limitations, a corporation's stock may be
made subject to redemption by the corporation at its option, at the option of
the holders of such stock or upon the happening of a specified event. Under the
McCaw Certificate of Incorporation, the corporation has the right to redeem
outstanding shares of its capital stock if the McCaw Board determines that such
redemption is necessary to prevent the loss, or secure the reinstatement, of
any governmental license or franchise held by McCaw.
The McCaw Certificate of Incorporation further provides that, so long as
certain provisions of the BT Purchase Agreement remain in effect, any
redemption of McCaw capital stock shall be made only in accordance with the
terms of the BT Purchase Agreement. Among other things, the BT Purchase
Agreement prohibits a redemption of McCaw Common Stock held by BT unless the
redemption is required by applicable law or regulation or unless BT consents to
the redemption.
Under the NYBCL, subject to certain limitations, a corporation's certificate
of incorporation may provide for one or more classes or series of shares to be
redeemable at the option of the corporation or the holders thereof, at such
prices, within such times and under such conditions as are stated in the
certificate of incorporation. The AT&T Certificate of Incorporation does not
contain such a provision.
DIVIDEND SOURCES
Under the DGCL, a board of directors may authorize a corporation to make
distributions to its stockholders, subject to any restrictions in its
certificate of incorporation, either (i) out of surplus or (ii) if there is no
surplus, out of net profits for the fiscal year in which the dividend is
declared and/or the preceding fiscal year. Under the DGCL, no distribution out
of net profits is permitted, however, if the corporation's capital is less than
the amount of capital represented by the issued and outstanding stock of all
classes having a preference upon the distribution of assets, until such
deficiency has been repaired.
Under the NYBCL, except as otherwise provided in the NYBCL, dividends may be
declared and paid and other distributions may be made out of surplus only, so
that the net assets of the corporation remaining after such declaration,
payment or distribution must at least equal the amount of its stated capital. A
corporation may declare and pay dividends or make other distributions, except
when the corporation is insolvent or would thereby be made insolvent, or when
the declaration, payment or distribution would be contrary to any restrictions
contained in the corporation's certificate of incorporation.
DURATION OF PROXIES
Under the DGCL and the McCaw By-Laws, no proxy is valid more than three years
after its date unless otherwise provided in the proxy.
Under the NYBCL, no proxy is valid more than 11 months after its date unless
otherwise provided in the proxy. Irrevocable proxies may be created for (i) a
pledgee, (ii) a person who has purchased or agreed to purchase the shares,
(iii) a creditor of the corporation who extends credit in consideration of the
proxy, (iv) a person who has contracted to perform services as an officer of
the corporation if a proxy is required by the employment contract and (v) a
person designated under a voting agreement.
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STOCKHOLDER ACTION
Under the DGCL, unless otherwise provided in the certificate of
incorporation, any action required or permitted to be taken at a meeting of
stockholders may be taken without a meeting, without prior notice and without a
vote, if a written consent or consents setting forth the action taken is signed
by the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote upon such action were present and voted. The
McCaw By-Laws permit stockholder action to be taken by a majority written
consent.
Under the NYBCL, any action required or permitted to be taken by vote may be
taken without a meeting by written consent or consents, setting forth the
action taken and signed by the holders of all outstanding shares entitled to
vote thereon, provided that the certificate of incorporation may contain a
provision requiring the written consent of the holders of less than all
outstanding shares. The AT&T Certificate of Incorporation does not contain such
a provision.
SPECIAL STOCKHOLDER MEETINGS
The DGCL provides that a special meeting of stockholders may be called by the
board of directors or by such person or persons as may be authorized by the
certificate of incorporation or by the by-laws. The McCaw By-Laws provide that
special meetings may be called by the Chairman of the Board or the Chief
Executive Officer and must be called by the Chairman of the Board, the Chief
Executive Officer or the Secretary upon the written request of a majority of
the McCaw Board or at the written request of stockholders owning a majority of
the voting power of McCaw's capital stock entitled generally to vote for the
election of directors. However, the McCaw By-Laws provide that so long as
certain provisions of the BT Purchase Agreement remain in effect, the McCaw
Board may take certain actions only if such action has been approved by the
vote of (i) the majority of the directors and (ii) either (A) a majority of the
three Independent Directors or (B) a majority of the directors other than the
Designated Party Nominees.
The AT&T By-Laws provide that special meetings of the stockholders may be
called at any time by the Chairman of the Board, by the AT&T Board or upon a
request signed by stockholders representing at least one-third of the AT&T
Common Shares. In addition, the NYBCL provides that if, for a period of one
month after the date fixed by or under the by-laws for the annual meeting of
stockholders or, if no date has been so fixed, for a period of 13 months after
the last annual meeting, there is a failure to elect a sufficient number of
directors to conduct the business of the corporation, the board shall call a
special meeting for the election of directors. If such special meeting is not
called by the board within two weeks after the expiration of such period or if
it is called but there is a failure to elect such directors for a period of two
months after the expiration of such period, holders of 10% of the shares
entitled to vote in an election of directors may, in writing, demand the call
of a special meeting for the election of directors.
CUMULATIVE VOTING
The DGCL permits cumulative voting, but neither the McCaw Certificate of
Incorporation nor the McCaw By-Laws provide for cumulative voting for the
election of directors.
Under the NYBCL, the certificate of incorporation may provide that in all
elections of directors each stockholder is entitled to cumulate such
stockholder's votes. The AT&T Certificate of Incorporation does not contain
such a provision.
NUMBER AND ELECTION OF DIRECTORS
The DGCL permits the certificate of incorporation or the by-laws of a
corporation to contain provisions governing the number and terms of directors.
However, if the certificate of incorporation contains provisions fixing the
number of directors, such number may not be changed without amending the
certificate of incorporation. The McCaw Certificate of Incorporation provides
that the number of directors shall be as
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provided for in the McCaw By-Laws. The McCaw By-Laws state that the McCaw Board
shall have 17 members, elected annually, and that such number may be increased
or decreased by the vote of a majority of directors then in office, although
less than a quorum, or by the sole remaining director, provided that no
decrease in the number of directors shortens the term of an incumbent director.
The DGCL permits the certificate of incorporation of a corporation or a by-
law adopted by the stockholders to provide that directors be divided into one,
two or three classes. The term of office of one class of directors shall expire
each year with the terms of office of no two classes expiring the same year.
McCaw does not have a classified board of directors.
Certain holders of shares of McCaw Common Stock, including the McCaw Block,
entered into the McCaw Shareholders Agreement, which provides that the parties
thereto will vote their shares in accordance with the directions of Craig O.
McCaw (or his successor, each the "Designated Party"), and that the Designated
Party is entitled to designate all members of the McCaw Board. The McCaw
Shareholders Agreement will terminate upon consummation of the Merger.
The BT Stockholders Agreement (i) entitles BT USA to designate four members
of the McCaw Board, subject to reduction so that its Board representation
remains substantially proportionate with its equity interest or to comply with
certain requirements imposed by federal law, (ii) requires the Designated Party
to designate three directors independent of any relationship with any officer
or director of McCaw or with himself, BT USA or any other holder of 1% or more
of McCaw's outstanding stock (the "Independent Directors"), and (iii) entitles
the Designated Party to designate the remaining directors (the "Designated
Party Nominees"). Moreover, the McCaw By-Laws provide that, so long as certain
provisions of the BT Purchase Agreement remain in effect, the McCaw Board may
take certain actions only if such action has been approved by the vote of (i)
the majority of the directors and (ii) either (A) a majority of the three
Independent Directors or (B) a majority of the directors other than the
Designated Party Nominees. The size of the McCaw Board is currently set at 16
members, of whom 9 are Designated Party Nominees.
Subject to certain limitations, the NYBCL permits the number of directors of
a corporation to be fixed by its by-laws, by action of the stockholders or by
action of the board under the specific provision of a by-law adopted by the
stockholders. At each annual meeting of the stockholders, directors are to be
elected to hold office until the next annual meeting, except as described below
for corporations with classified boards. The AT&T Certificate of Incorporation
provides that the number of directors shall be as provided for in the AT&T By-
Laws. The AT&T By-Laws provide that the number of directors shall be not less
than 10 nor more than 25, the exact number of directors within such minimum and
maximum limits to be fixed and determined by the vote of a majority of the
entire AT&T Board.
The NYBCL permits the certificate of incorporation or the specific provisions
of a by-law adopted by the stockholders to provide that directors be divided
into either two, three or four classes. All classes must be as nearly equal in
number as possible, and no class may include less than three directors. The
term of office of one class of directors shall expire each year, with the terms
of office of no two classes expiring the same year. AT&T does not have a
classified board of directors.
REMOVAL OF DIRECTORS
The DGCL provides that a director or directors may be removed with or without
cause by the holders of a majority of the shares then entitled to vote at an
election of directors, except that (i) members of a classified board may be
removed only for cause, unless the certificate of incorporation provides
otherwise and (ii) in the case of a corporation having cumulative voting, if
less than the entire board is to be removed, no director may be removed without
cause if the votes cast against such director's removal would be sufficient to
elect such director if then cumulatively voted at an election of the entire
board of directors or of the class of directors of which such director is a
part.
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The McCaw By-Laws provide that a director or directors may be removed with or
without cause at any meeting of the stockholders by a vote of holders owning
stock representing a majority of the votes represented and entitled to vote at
such meeting.
The BT Stockholders Agreement provides that, if any party who has nominated a
director proposes that such director be removed from the McCaw Board, the other
parties to the agreement will vote their shares in favor of the director's
removal, provided that the Designated Party shall not have the right to have
any Independent Director removed from the board without BT USA's consent.
The NYBCL provides that any or all of the directors may be removed for cause
by vote of the stockholders and, if the certificate of incorporation or the
specific provisions of a by-law adopted by the stockholders provide, directors
may be removed by action of the board of directors. If the certificate of
incorporation or the by-laws so provide, any or all of the directors may be
removed without cause by vote of the stockholders. The removal of directors,
with or without cause, is subject to the following: (i) in the case of a
corporation having cumulative voting, no director may be removed when the votes
cast against such director's removal would be sufficient to elect the director
if voted cumulatively and (ii) if a director is elected by the holders of
shares of any class or series, such director may be removed only by the
applicable vote of the holders of the shares of that class or series voting as
a class. An action to procure a judgment removing a director for cause may be
brought by the attorney general or by the holders of 10% of the outstanding
shares, whether or not entitled to vote.
Neither the AT&T Certificate of Incorporation nor the AT&T By-Laws provide
that directors may be removed without cause by action of the stockholders.
VACANCIES
Under the DGCL, unless otherwise provided in the certificate of incorporation
or the by-laws, vacancies on the board of directors and newly created
directorships resulting from an increase in the authorized number of directors
may be filled by a majority of the directors then in office, although less than
a quorum, or by the sole remaining director, provided that, in the case of a
classified board, such vacancies and newly created directorships may be filled
by a majority of the directors elected by such class, or by the sole remaining
director so elected. In the case of a classified board, directors elected to
fill vacancies or newly created directorships shall hold office until the next
election of the class for which such directors have been chosen, and until
their successors have been duly elected and qualified. In addition, if, at the
time of the filling of any such vacancy or newly created directorship, the
directors in office constitute less than a majority of the whole board (as
constituted immediately prior to any such increase), the Delaware Court of
Chancery may, upon application of any stockholder or stockholders holding at
least 10% of the total number of outstanding shares entitled to vote for such
directors, summarily order an election to fill any such vacancy or newly
created directorship, or replace the directors chosen by the directors then in
office.
The McCaw By-Laws provide that all directors elected to fill vacancies or
newly created directorships shall remain in office until the next annual
election and until their successors are duly elected and qualified. To the
extent that the McCaw Board must take action to fill any vacancy or newly
created directorship, it is subject to the provisions of the McCaw By-Laws,
which state that so long as certain provisions of the BT Purchase Agreement
remain in effect, the McCaw Board may take certain actions only if such action
has been approved by the vote of (i) the majority of the directors and (ii)
either (A) a majority of the three Independent Directors or (B) a majority of
the directors other than the Designated Party Nominees.
Under the NYBCL, newly created directorships resulting from an increase in
the number of directors and vacancies occurring on the board for any reason
except the removal of directors without cause may be filled by vote of the
board of directors. However, the certificate of incorporation or by-laws may
provide that such newly created directorships or vacancies are to be filled by
vote of the stockholders. Unless the certificate of incorporation or the
specific provisions of a by-law adopted by the stockholders provide that the
board
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may fill vacancies occurring on the board by reason of the removal of directors
without cause, such vacancies may be filled only by vote of the stockholders. A
director elected to fill a vacancy, unless elected by the stockholders, will
hold office until the next meeting of stockholders at which the election of
directors is in the regular order of business and until his or her successor
has been elected and qualified.
The AT&T Certificate of Incorporation does not provide for the removal of
directors without cause. The AT&T By-Laws provide that any vacancy on the AT&T
Board may be filled by a majority vote of the remaining directors.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the DGCL, a corporation may not indemnify any director, officer,
employee or agent made or threatened to be made party to any threatened,
pending or completed proceeding unless such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal proceeding, had
no reasonable cause to believe that his or her conduct was unlawful. The McCaw
By-Laws contain provisions which require McCaw to indemnify such persons to the
full extent permitted by the DGCL.
The DGCL also establishes several mandatory rules for indemnification. In the
case of a proceeding by or in the right of the corporation to procure a
judgment in its favor (e.g., a stockholder derivative suit), a corporation may
indemnify an officer, director, employee or agent if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed
to the best interests of the corporation; provided, however, that no person
adjudged to be liable to the corporation may be indemnified unless, and only to
the extent that, the Delaware Court of Chancery or the court in which such
action or suit was brought determines upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which such court deems proper. A director, officer, employee or agent who is
successful, on the merits or otherwise, in defense of any proceeding subject to
the DGCL's indemnification provisions must be indemnified by the corporation
for reasonable expenses incurred therein, including attorneys' fees.
The DGCL and the McCaw By-Laws state that a determination must be made that a
director or officer has met the required standard of conduct before the
director or officer may be indemnified. The determination may be made by (i) a
majority vote of a quorum of disinterested directors, (ii) independent legal
counsel (selected by the disinterested directors) or (iii) the stockholders.
The DGCL and the McCaw By-Laws require McCaw to advance reasonable expenses
to a director or officer after such person provides an undertaking to repay the
corporation if it is determined that the required standard of conduct has not
been met. In addition, the McCaw By-Laws permit McCaw to advance expenses to
other employees and agents in a similar manner.
The indemnification and advancement of expenses described above under the
DGCL is not exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise. McCaw
has entered into indemnification agreements with certain of its officers and
directors which provide that indemnification and advancement of expenses will
be available to such persons regardless of any amendment to or revocation of
the indemnification provisions contained in the McCaw By-Laws.
Under the NYBCL, a corporation may indemnify its directors and officers made,
or threatened to be made, a party to any action or proceeding, except for
stockholder derivative suits, if such director or officer acted in good faith,
for a purpose which he or she reasonably believed to be in or, in the case of
service to another corporation or enterprise, not opposed to the best interests
of the corporation, and, in criminal proceedings, had no reasonable cause to
believe his or her conduct was unlawful. In the case of stockholder derivative
suits, the corporation may indemnify a director or officer if he or she acted
in good faith for a
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purpose which he or she reasonably believed to be in or, in the case of service
to another corporation or enterprise, not opposed to the best interests of the
corporation, except that no indemnification may be made in respect of (i) a
threatened action, or a pending action which is settled or otherwise disposed
of, or (ii) any claim, issue or matter as to which such person has been
adjudged to be liable to the corporation, unless and only to the extent that
the court in which the action was brought, or, if no action was brought, any
court of competent jurisdiction, determines upon application that, in view of
all the circumstances of the case, the person is fairly and reasonably entitled
to indemnity for such portion of the settlement amount and expenses as the
court deems proper.
Any person who has been successful on the merits or otherwise in the defense
of a civil or criminal action or proceeding will be entitled to
indemnification. Except as provided in the preceding sentence, unless ordered
by a court pursuant to the NYBCL, any indemnification under the NYBCL pursuant
to the above paragraph may be made only if authorized in the specific case and
after a finding that the director or officer met the requisite standard of
conduct by (i) the disinterested directors if a quorum is available, (ii) the
board upon the written opinion of independent legal counsel or (iii) the
stockholders.
The indemnification described above under the NYBCL is not exclusive of other
indemnification rights to which a director or officer may be entitled, whether
contained in the certificate of incorporation or by-laws or when authorized by
(i) such certificate of incorporation or by-laws, (ii) a resolution of
stockholders, (iii) a resolution of directors or (iv) an agreement providing
for such indemnification, provided that no indemnification may be made to or on
behalf of any director or officer if a judgment or other final adjudication
adverse to the director or officer establishes that his or her acts were
committed in bad faith or were the result of active and deliberate dishonesty
and were material to the cause of action so adjudicated, or that he or she
personally gained in fact a financial profit or other advantage to which he or
she was not legally entitled.
The AT&T By-Laws provide that AT&T is authorized, by (i) a resolution of
stockholders, (ii) a resolution of directors or (iii) an agreement providing
for such indemnification, to the fullest extent permitted by applicable law, to
provide indemnification and to advance expenses to its directors and officers
in respect of claims, actions, suits or proceedings based upon, arising from,
relating to or by reason of the fact that any such director or officer serves
or served in such capacity with the corporation or at the request of AT&T in
any capacity with any other enterprise. AT&T has entered into indemnification
agreements with certain of its officers and directors in accordance with the
AT&T By-Laws.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling AT&T or McCaw
pursuant to the foregoing provisions, AT&T and McCaw have been informed that in
the opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
LIMITATION OF PERSONAL LIABILITY OF DIRECTORS
The DGCL provides that a corporation's certificate of incorporation may
include a provision limiting the personal liability of a director to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director. However, no such provision can eliminate or limit the
liability of a director for (i) any breach of the director's duty of loyalty to
the corporation or its stockholders, (ii) acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of the law,
(iii) violation of certain provisions of the DGCL, (iv) any transaction from
which the director derived an improper personal benefit or (v) any act or
omission prior to the adoption of such a provision in the certificate of
incorporation. The McCaw Certificate of Incorporation contains a provision
eliminating the personal liability for monetary damages of its directors to the
full extent permitted under Delaware law.
The NYBCL provides that a corporation's certificate of incorporation may
contain a provision eliminating or limiting the personal liability of directors
to the corporation or its stockholders for damages
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for any breach of duty in such capacity. However, no such provision can
eliminate or limit the liability of any director (i) if a judgment or other
final adjudication adverse to such director establishes that such director's
acts or omissions were in bad faith, or involved intentional misconduct or a
knowing violation of law, or that the director personally gained in fact a
financial profit or other advantage to which such director was not legally
entitled or that the director's acts violated certain provisions of the NYBCL
or (ii) for any act or omission prior to the adoption of such a provision in
the certificate of incorporation.
The AT&T Certificate of Incorporation provides that no director will be
personally liable to AT&T or any of its stockholders for damages for any breach
of duty as a director; provided, however, that the liability of a director will
not be eliminated or limited (i) if a judgment or other final adjudication
adverse to him or her establishes that his or her acts or omissions were in bad
faith or involved intentional misconduct or a knowing violation of law or that
he or she personally gained in fact a financial profit or other advantage to
which he or she was not legally entitled or that his or her acts violated
Section 719 of the NYBCL (which includes declaration of dividends, purchase of
capital stock, distribution of assets to stockholders after dissolution of the
corporation and loans to directors to the extent contrary to New York law) or
(ii) for any act or omission prior to the adoption of this provision by the
AT&T stockholders.
LEGAL OPINIONS
The legality of the AT&T Common Shares to be issued in connection with the
Merger is being passed upon for AT&T by Jim G. Kilpatric, Senior Vice
President-Law of AT&T. As of January 31, 1994, Mr. Kilpatric owned 1,133.77
AT&T Common Shares and held options to purchase an additional 53,325 AT&T
Common Shares.
Certain of the tax consequences of the Merger to McCaw stockholders will be
passed upon at the Effective Time, as a condition to the Merger, by Wachtell,
Lipton, Rosen & Katz, New York, New York, on behalf of AT&T, and by Jones, Day,
Reavis & Pogue, Washington, D.C., on behalf of McCaw. See "THE MERGER--Certain
Federal Income Tax Consequences." Members of the firm of Wachtell, Lipton,
Rosen & Katz participating in the representation of AT&T in the Merger
beneficially owned as of January 5, 1994 approximately 130 AT&T Common Shares.
Members of the firm of Jones, Day, Reavis & Pogue participating in the
representation of McCaw in the Merger beneficially owned as of January 24, 1994
approximately 4,000 AT&T Common Shares.
EXPERTS
The consolidated financial statements and consolidated financial statement
schedules of AT&T and its subsidiaries incorporated by reference or included in
AT&T's Annual Report on Form 10-K for the year ended December 31, 1992 and
incorporated by reference in this Proxy Statement/Prospectus are incorporated
by reference herein in reliance upon the reports of Coopers & Lybrand,
independent auditors, given on the authority of that firm as experts in
accounting and auditing.
The consolidated financial statements and schedules of McCaw incorporated in
this Proxy Statement/Prospectus by reference to McCaw's Annual Report on Form
10-K, as amended, for the fiscal year ended December 31, 1992 have been audited
by Arthur Andersen & Co., independent public accountants, as set forth in their
report. In that report, that firm states that with respect to LIN and its
subsidiaries, its opinion is based on the reports of other independent
auditors, namely Ernst & Young. The consolidated financial statements and
supporting schedules referred to above have been incorporated herein by
reference in reliance upon the authority of those firms as experts in giving
said reports, which include an explanatory paragraph with respect to the change
in the method of accounting for income taxes effective January 1, 1991, as
explained in Notes 1 and 10 to McCaw's consolidated financial statements.
Representatives of Arthur Andersen & Co. are expected to be present at the
Special Meeting and available to respond to appropriate questions, and will
also have the opportunity to make a statement at such time if they desire to do
so.
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PROPOSALS BY MCCAW STOCKHOLDERS
Stockholder proposals intended to be presented at McCaw's 1994 Annual Meeting
of Stockholders (assuming the Merger is not consummated prior to such meeting,
which will not be held if the Merger is consummated prior to the scheduled date
for such Annual Meeting) must have been received by McCaw not later than
December 7, 1993 for inclusion in the proxy materials for such meeting.
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
AMONG
AMERICAN TELEPHONE AND TELEGRAPH COMPANY,
RIDGE MERGER CORPORATION
AND
MCCAW CELLULAR COMMUNICATIONS, INC.
DATED AUGUST 16, 1993
<PAGE>
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
ARTICLE I
Definitions.............................................................. A- 1
ARTICLE II
The Merger; Effective Time; Closing...................................... A- 4
2.1. The Merger.................................................... A- 4
2.2. Effective Time................................................ A- 5
2.3. Closing....................................................... A- 5
ARTICLE III
Terms of Merger.......................................................... A- 5
3.1. Certificate of Incorporation.................................. A- 5
3.2. The By-Laws................................................... A- 5
3.3. Directors..................................................... A- 5
3.4. Officers...................................................... A- 5
ARTICLE IV
Merger Consideration; Conversion or Cancellation of Shares in the Merger. A- 5
4.1. Share Consideration; Conversion or Cancellation of Shares in
the Merger................................................... A- 5
4.2. Payment for Shares in the Merger.............................. A- 7
4.3. Fractional Shares............................................. A- 8
4.4. Transfer of Shares after the Effective Time................... A- 8
ARTICLE V
Representations and Warranties of the Company............................ A- 8
5.1. Organization, Etc. of the Company............................. A- 8
5.2. Operations of Subsidiaries.................................... A- 9
5.3. Agreement..................................................... A- 9
5.4. Fairness Opinion.............................................. A-10
5.5. Capital Stock................................................. A-10
5.6. Litigation.................................................... A-10
5.7. Compliance With Other Instruments, Etc........................ A-10
5.8. Employee Benefit Plans........................................ A-11
5.9. Taxes......................................................... A-12
5.10. Intellectual Property......................................... A-12
5.11. Reports and Financial Statements.............................. A-13
5.12. Absence of Certain Changes or Events.......................... A-13
5.13. Contracts and Leases.......................................... A-13
5.14. Affiliated Transactions....................................... A-14
5.15. Ability to Use Service Mark................................... A-14
5.16. Brokers and Finders........................................... A-14
5.17. S-4 Registration Statement and Proxy Statement/Prospectus..... A-14
5.18. LIN Rights Plan............................................... A-14
5.19. Tax Matters................................................... A-14
</TABLE>
A-i
<PAGE>
<TABLE>
<C> <S> <C>
ARTICLE VI
Representations and Warranties of AT&T and Merger Sub.................... A-14
6.1. Organization, Etc. of AT&T.................................... A-15
6.2. Operations of Subsidiaries.................................... A-15
6.3. Agreement..................................................... A-15
6.4. Capital Stock................................................. A-16
6.5. Authorization for AT&T Common Shares.......................... A-16
6.6. Litigation.................................................... A-16
6.7. Compliance with Other Instruments, Etc. ...................... A-16
6.8. Intellectual Property......................................... A-17
6.9. Reports and Financial Statements.............................. A-17
6.10. Absence of Certain Changes or Events.......................... A-17
6.11. Contracts and Leases.......................................... A-17
6.12. Ownership of Merger Sub; No Prior Activities; Assets of Merger
Sub.......................................................... A-18
6.13. Brokers and Finders........................................... A-18
6.14. S-4 Registration Statement and Proxy Statement/Prospectus..... A-18
6.15. Ownership of Shares........................................... A-18
6.16. Tax Matters................................................... A-18
ARTICLE VII
Additional Covenants and Agreements...................................... A-19
7.1. Conduct of Business of the Company............................ A-19
7.2. Other Transactions............................................ A-20
7.3. Meeting of Stockholders....................................... A-21
7.4. Registration Statement........................................ A-21
7.5. Reasonable Efforts............................................ A-21
7.6. Access to Information......................................... A-22
7.7. Indemnification of Directors and Officers..................... A-23
7.8. Registration and Listing of AT&T Common Shares................ A-23
7.9. Affiliates of AT&T and the Company............................ A-24
7.10. Certain Covenants of AT&T..................................... A-24
7.11. New Opportunities; Joint Venture Arrangements................. A-24
7.12. Tax Matters................................................... A-28
7.13. Dividends..................................................... A-28
7.14. FCC Matters................................................... A-28
7.15. New York Real Property Gains and Transfer Tax................. A-28
ARTICLE VIII
Conditions............................................................... A-29
8.1. Conditions to Each Party's Obligations........................ A-29
8.2. Conditions to Obligations of AT&T and Merger Sub.............. A-29
8.3. Conditions to Obligations of the Company...................... A-31
ARTICLE IX
Termination.............................................................. A-32
9.1. Termination by Mutual Consent................................. A-32
9.2. Termination by Either AT&T or the Company..................... A-32
9.3. Effect of Termination and Abandonment......................... A-32
</TABLE>
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<TABLE>
<C> <S> <C>
ARTICLE X
Miscellaneous and General................................................. A-32
10.1. Expenses....................................................... A-32
10.2. Notices, Etc. ................................................. A-32
10.3. Amendments, Waivers, Etc....................................... A-33
10.4. No Assignment.................................................. A-33
10.5. Entire Agreement............................................... A-33
10.6. Specific Performance........................................... A-33
10.7. Remedies Cumulative............................................ A-34
10.8. No Waiver...................................................... A-34
10.9. No Third Party Beneficiaries................................... A-34
10.10. Jurisdiction................................................... A-34
10.11. Public Announcements........................................... A-34
10.12. Governing Law.................................................. A-34
10.13. Name, Captions, Etc. .......................................... A-34
10.14. Counterparts................................................... A-34
10.15. Knowledge...................................................... A-34
</TABLE>
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<PAGE>
AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger (hereinafter called this "Agreement"), dated
August 16, 1993, among American Telephone and Telegraph Company, a New York
corporation ("AT&T"), Ridge Merger Corporation, a Delaware corporation and a
direct Wholly Owned Subsidiary of AT&T ("Merger Sub"), and McCaw Cellular
Communications, Inc., a Delaware corporation (the "Company").
Recitals
Whereas, the Boards of Directors of AT&T, Merger Sub and the Company each
have determined that it is in the best interests of their respective
stockholders for Merger Sub to merge with and into the Company, upon the terms
and subject to the conditions of this Agreement;
Whereas, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Code;
Whereas, it is intended that the Merger shall be recorded for accounting
purposes as a pooling of interests; and
Whereas, AT&T, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger.
Now, Therefore, in consideration of the mutual representations, warranties,
covenants and agreements set forth herein, AT&T, Merger Sub and the Company
hereby agree as follows:
ARTICLE I
Definitions
As used in this Agreement, the following terms shall have the respective
meanings set forth below:
"Affiliate": As defined in Rule 12b-2 under the Exchange Act.
"AT&T": American Telephone and Telegraph Company, a New York corporation.
"AT&T Common Shares": Shares of common stock, par value $1.00 per share, of
AT&T.
"AT&T Companies": AT&T, Merger Sub and any other direct or indirect Wholly
Owned Subsidiary of AT&T.
"AT&T Disclosure Statement": The disclosure statement dated the date of this
Agreement delivered by AT&T to the Company.
"AT&T Draft Second Quarter Form 10-Q": The draft Form 10-Q of AT&T for the
quarter ended June 30, 1993, as previously provided by AT&T to the Company.
"AT&T SEC Reports": As defined in Section 6.9(a).
"AT&T Tax Matters Certificate": As defined in Section 6.16.
"Authorization": Any consent, approval or authorization of, expiration or
termination of any waiting period requirement (including pursuant to the HSR
Act) by, or filing, registration, qualification, declaration or designation
with, any Governmental Body.
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"Benefit Arrangement": As defined in Section 5.8(a).
"BT": British Telecommunications plc.
"BT Shareholders Agreement": The shareholders agreement, dated as of June 20,
1989, among the Company, BT USA, McCaw and the other signatories thereto.
"BT Stock Purchase Agreement": The amended and restated stock purchase
agreement, dated as of January 19, 1989, as amended as of May 1, 1989, between
the Company and BT USA.
"BT USA": British Telecom USA Holdings, Inc.
"Cellular System": A domestic public cellular radio telecommunications
service system licensed under Part 22 of the FCC's Rules.
"Certificate of Merger": The certificate of merger with respect to the merger
of Merger Sub with and into the Company, containing the provisions required by,
and executed in accordance with, Section 251 of the DGCL.
"Certificates": As defined in Section 4.2(b).
"Claim": As defined in Section 7.7(a).
"Class A Common Stock": Class A Common Stock, par value $.01 per share, of
the Company.
"Class B Common Stock": Class B Common Stock, par value $.01 per share, of
the Company.
"Closing": The closing of the Merger.
"Closing Date": The date on which the Closing occurs.
"Closing Date Market Price": With respect to one AT&T Common Share, the
average Closing Price for such a share during the period of the 20 most recent
trading days ending on the fifth business day prior to the Closing Date.
"Closing Price": On any day, the last reported sale price of one AT&T Common
Share on the NYSE.
"Code": The Internal Revenue Code of 1986, as amended, and all regulations
promulgated thereunder, as in effect from time to time.
"Company": McCaw Cellular Communications, Inc., a Delaware corporation.
"Company Disclosure Statement": The disclosure statement dated the date of
this Agreement delivered by the Company to AT&T.
"Company Draft Second Quarter Form 10-Q": The draft Form 10-Q of the Company
for the quarter ended June 30, 1993, as previously provided by the Company to
AT&T.
"Company SEC Reports": As defined in Section 5.11.
"Company Stock Option Plans": As defined in Section 4.1(e).
"Company Tax Matters Certificate": As defined in Section 5.19.
"Designated Party": McCaw or such other person designated as the Designated
Party pursuant to the McCaw Shareholders Agreement.
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<PAGE>
"DGCL": The Delaware General Corporation Law.
"Effective Time": As defined in Section 2.2.
"Employee Plan": As defined in Section 5.8(a).
"Employees": As defined in Section 5.8(a).
"ERISA": The Employee Retirement Income Security Act of 1974, as amended, and
all regulations promulgated thereunder, as in effect from time to time.
"ERISA Affiliates": Any trade or business, whether or not incorporated, that
is now or has at any time in the past been treated as a single employer with
the Company or any of its Subsidiaries under Section 414(b) or (c) of the Code
and the Treasury Regulations thereunder.
"Excess Shares": As defined in Section 4.3.
"Exchange Act": The Securities Exchange Act of 1934, as amended.
"Exchange Agent": As defined in Section 4.2(a).
"Exchange Fund": As defined in Section 4.2(a).
"Exchange Ratio": As defined in Section 4.1(a).
"FCC": The Federal Communications Commission.
"Fractional Securities Fund": As defined in Section 4.3.
"Governmental Body": Any Federal, state, municipal, political subdivision or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.
"HSR Act": The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
"Indemnified Parties": As defined in Section 7.7(a).
"Intellectual Property": All industrial and intellectual property rights
including, but not limited to, Proprietary Technology, patents, patent
applications, trademarks, trademark applications and registrations, service
marks, service mark applications and registrations, copyrights, know-how,
licenses, trade secrets, proprietary processes, formulae and customer lists.
"Proprietary Technology" means all proprietary processes, formulae, inventions,
trade secrets, know-how, development tools and other proprietary rights used by
the Company and its Subsidiaries or AT&T and its Subsidiaries, as the case may
be, pertaining to any product, software or service manufactured, marketed,
licensed or sold by the Company and its Subsidiaries or AT&T and its
Subsidiaries, as the case may be, in the conduct of their business or used,
employed or exploited in the development, license, sale, marketing,
distribution or maintenance thereof, and all documentation and media
constituting, describing or relating to the above, including, but not limited
to, manuals, memoranda, know-how, notebooks, software, records and disclosures.
"LIN": LIN Broadcasting Corporation, a Delaware corporation.
"LIN Rights Agreement": The Rights Agreement, dated as of May 2, 1988, as
amended, between LIN and Manufacturers Hanover Trust Company, as Rights Agent.
"McCaw": Craig O. McCaw, an individual.
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"McCaw Block": The shareholders of the Company who are parties to the McCaw
Shareholders Agreement.
"McCaw Shareholders Agreement": The shareholders agreement, dated as of May
31, 1989, as amended as of December 31, 1989 and March 15, 1992, among the
Company and the shareholder signatories thereto.
"Merger": The merger of Merger Sub with and into the Company as contemplated
by Section 2.1.
"Merger Sub": Ridge Merger Corporation, a Delaware corporation.
"NASD": The National Association of Securities Dealers, Inc.
"NASDAQ": The NASD Automated Quotation System.
"NYSE": The New York Stock Exchange, Inc.
"Option": As defined in Section 4.1(e).
"Person": Any individual or corporation, company, partnership, trust,
incorporated or unincorporated association, joint venture or other entity of
any kind.
"Proxy Statement/Prospectus": As defined in Section 7.4.
"Respective Representatives": As defined in Section 7.6.
"Rule 145 Affiliate": As defined in Section 7.9.
"S-4 Registration Statement": As defined in Section 7.4.
"SEC": The Securities and Exchange Commission.
"Securities Act": The Securities Act of 1933, as amended.
"Share Consideration": As defined in Section 4.1(b).
"Shares": Collectively, the shares of Class A Common Stock and the shares of
Class B Common Stock.
"Significant Subsidiary": As defined under Rule 12b-1 of the Exchange Act.
"Stockholders Meeting": As defined in Section 7.3.
"Subsidiary": As to any Person, any other Person of which at least 50% of the
equity or voting interests are owned, directly or indirectly, by such first
Person.
"Surviving Corporation": The surviving corporation in the Merger.
"Wholly-Owned Subsidiary": A Subsidiary of which 100% of the equity interest
is owned directly or indirectly by the parent company.
ARTICLE II
The Merger; Effective Time; Closing
2.1. The Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time, Merger Sub shall be merged with and into the Company in
accordance with the provisions of Section 251 of the
A-4
<PAGE>
DGCL and with the effect provided in Sections 259 and 261 of the DGCL. The
separate corporate existence of Merger Sub shall thereupon cease and the
Company shall be the Surviving Corporation and shall continue to be governed by
the laws of the State of Delaware. At the election of AT&T, any direct Wholly
Owned Subsidiary of AT&T may be substituted for Merger Sub as a constituent
corporation in the Merger, provided that the parties shall have executed an
appropriate amendment to this Agreement in form and substance reasonably
satisfactory to the Company and AT&T in order to reflect such substitution.
2.2. Effective Time. The Merger shall become effective on the date and at the
time (the "Effective Time") that the Certificate of Merger shall have been
accepted for filing by the Secretary of State of the State of Delaware (or such
later date and time as may be specified in the Certificate of Merger), which
shall be the Closing Date or as soon as practicable thereafter.
2.3. Closing. Subject to the fulfillment or waiver of the conditions set
forth in Article VIII, the Closing shall take place (i) at the offices of
Wachtell, Lipton, Rosen & Katz, New York, New York, at 10:00 a.m. on the fifth
business day following the date of receipt of the last Authorization required
by Section 8.1(b) or (ii) at such other place and/or time and/or on such other
date as AT&T and the Company may agree or as may be necessary to permit the
fulfillment or waiver of the conditions set forth in Article VIII.
ARTICLE III
Terms of Merger
3.1. Certificate of Incorporation. The Certificate of Incorporation of Merger
Sub as in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation, until duly amended
in accordance with the terms thereof and of the DGCL, except that Article
SECOND thereof shall be amended to read as follows:
"The name of the Corporation (which is hereinafter called the
"Corporation") is McCaw Cellular Communications, Inc."
3.2. The By-Laws. The By-Laws of Merger Sub in effect at the Effective Time
shall be the By-Laws of the Surviving Corporation, until duly amended in
accordance with the terms thereof, of the Certificate of Incorporation of the
Surviving Corporation and of the DGCL.
3.3. Directors. The directors of Merger Sub at the Effective Time shall, from
and after the Effective Time, be the directors of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the
Surviving Corporation's Certificate of Incorporation and By-Laws.
3.4. Officers. The officers of the Company at the Effective Time shall, from
and after the Effective Time, be the officers of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the
Surviving Corporation's Certificate of Incorporation and By-Laws.
ARTICLE IV
MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF SHARES IN THE MERGER
4.1. Share Consideration; Conversion or Cancellation of Shares in the
Merger. Subject to the provisions of this Article IV, at the Effective Time, by
virtue of the Merger and without any action on the part of the holders thereof,
the shares of the constituent corporations shall be converted as follows:
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<PAGE>
(a) Each Share issued and outstanding immediately prior to the Effective Time
(other than Shares owned by AT&T) shall be converted into one AT&T Common Share
(the "Exchange Ratio"); provided, however, that (i) in the event the Closing
Date Market Price of one AT&T Common Share is less than $53.00, the Exchange
Ratio shall be equal to $53.00 divided by the Closing Date Market Price of one
AT&T Common Share, but in no event greater than 1.111 AT&T Common Shares, and
(ii) in the event the Closing Date Market Price of one AT&T Common Share is
more than $71.73, the Exchange Ratio shall be equal to $71.73 divided by the
Closing Date Market Price of one AT&T Common Share, but in no event less than
.909 of an AT&T Common Share. If, prior to the Effective Time, AT&T should
split or combine the AT&T Common Shares, or pay a stock dividend or other stock
distribution in AT&T Common Shares, or otherwise change the AT&T Common Shares
into any other securities, or make any other dividend or distribution on the
AT&T Common Shares (other than normal quarterly dividends as the same may be
adjusted from time to time in the ordinary course), then the Exchange Ratio
will be appropriately adjusted to reflect such split, combination, dividend or
other distribution or change.
(b) All Shares to be converted into AT&T Common Shares pursuant to this
Section 4.1 shall cease to be outstanding, shall be canceled and retired and
shall cease to exist, and each holder of a certificate representing any such
Shares shall thereafter cease to have any rights with respect to such Shares,
except the right to receive for each of the Shares, upon the surrender of such
certificate in accordance with Section 4.2, the amount of AT&T Common Shares
specified above (the "Share Consideration") and cash in lieu of fractional AT&T
Common Shares as contemplated by Section 4.3.
(c) Each Share issued and outstanding and owned by AT&T immediately prior to
the Effective Time shall cease to be outstanding, shall be canceled and retired
without payment of any consideration therefor and shall cease to exist.
(d) Each share of Common Stock, par value $0.01 per share, of Merger Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into one share of common stock of the Surviving Corporation.
(e) Each outstanding option to purchase Shares (each, an "Option") issued
pursuant to the Company's stock option plans (collectively, the "Option Plans")
set forth in the Company SEC Reports, whether or not vested or exercisable,
shall be assumed by AT&T and shall constitute an option to acquire, on the same
terms and conditions as were applicable under such assumed Option, a number of
AT&T Common Shares equal to the product of the Exchange Ratio and the number of
Shares subject to such Option, at a price per share equal to the aggregate
exercise price for the Shares subject to such Option divided by the number of
full AT&T Common Shares deemed to be purchasable pursuant to such Option;
provided, however, that (i) subject to the provisions of clause (ii) below, the
number of AT&T Common Shares that may be purchased upon exercise of such Option
shall not include any fractional shares and, upon the last such exercise of
such Option, a cash payment shall be made for any fractional share based upon
the per share average of the highest and lowest sale price of AT&T Common
Shares as reported in the NYSE Composite Transactions on the date of such
exercise, and (ii) in the case of any Option to which Section 421 of the Code
applies by reason of its qualification under Section 422 or Section 423 of the
Code ("qualified stock options"), the option price, the number of shares
purchasable pursuant to such Option and the terms and conditions of exercise of
such Option shall be determined in order to comply with Section 424 of the
Code. At the Effective Time, AT&T shall deliver to holders of Options
appropriate option agreements representing the right to acquire AT&T Common
Shares on the same terms and conditions as contained in the outstanding Options
(subject to any adjustments required by the preceding sentence), upon surrender
of the outstanding Options. AT&T shall comply with the terms of the Option
Plans as they apply to the Options assumed as set forth above.
AT&T shall take all corporate action necessary to reserve for issuance a
sufficient number of AT&T Common Shares for delivery upon exercise of the
Options assumed in accordance with this Section 4.1(e).
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<PAGE>
AT&T shall file a registration statement on Form S-8 (or any successor form) or
another appropriate form, effective as of the Effective Time, with respect to
AT&T Common Shares subject to such Options and shall use all reasonable efforts
to maintain the effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such Options remain outstanding. With respect
to those individuals who subsequent to the Merger will be subject to the
reporting requirements under Section 16(a) of the Exchange Act, AT&T shall
administer the Option Plans assumed pursuant to this Section 4.1(e) in a manner
that complies with Rule 16b-3 promulgated under the Exchange Act to the extent
the applicable Option Plan complied with such rule prior to the Merger.
4.2. Payment for Shares in the Merger. The manner of making payment for
Shares in the Merger shall be as follows:
(a) At the Effective Time, AT&T shall make available to an exchange agent
selected by AT&T and reasonably acceptable to the Company (the "Exchange
Agent"), for the benefit of those Persons who immediately prior to the
Effective Time were the holders of Shares, a sufficient number of certificates
representing AT&T Common Shares required to effect the delivery of the
aggregate Share Consideration required to be issued pursuant to Section 4.1
(the certificates representing AT&T Common Shares comprising such aggregate
Share Consideration being hereinafter referred to as the "Exchange Fund"). The
Exchange Agent shall, pursuant to irrevocable instructions, deliver the AT&T
Common Shares contemplated to be issued pursuant to Section 4.1 and effect the
sales provided for in Section 4.3 out of the Exchange Fund. The Exchange Fund
shall not be used for any other purpose.
(b) Promptly after the Effective Time, the Exchange Agent shall mail to each
holder of record (other than holders of certificates for Shares referred to in
Section 4.1(c)) of a certificate or certificates which immediately prior to the
Effective Time represented outstanding Shares (the "Certificates") (i) a form
of letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent) and (ii) instructions for
use in effecting the surrender of the Certificates for payment therefor. Upon
surrender of Certificates for cancellation to the Exchange Agent, together with
such letter of transmittal duly executed and any other required documents, the
holder of such Certificates shall be entitled to receive for each of the Shares
represented by such Certificates the Share Consideration and the Certificates
so surrendered shall forthwith be canceled. Until so surrendered, Certificates
shall represent solely the right to receive the Share Consideration and any
cash in lieu of fractional AT&T Common Shares as contemplated by Section 4.3
with respect to each of the Shares represented thereby. No dividends or other
distributions that are declared after the Effective Time on AT&T Common Shares
and payable to the holders of record thereof after the Effective Time will be
paid to Persons entitled by reason of the Merger to receive AT&T Common Shares
until such Persons surrender their Certificates. Upon such surrender, there
shall be paid to the Person in whose name the AT&T Common Shares are issued any
dividends or other distributions having a record date after the Effective Time
and payable with respect to such AT&T Common Shares between the Effective Time
and the time of such surrender. After such surrender there shall be paid to the
Person in whose name the AT&T Common Shares are issued any dividends or other
distributions on such AT&T Common Shares which shall have a record date after
the Effective Time and prior to such surrender and a payment date after such
surrender and such payment shall be made on such payment date. In no event
shall the Persons entitled to receive such dividends or other distributions be
entitled to receive interest on such dividends or other distributions. If any
cash or any certificate representing AT&T Common Shares is to be paid to or
issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of such exchange that
the Certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer and that the Person requesting such exchange shall pay
to the Exchange Agent any transfer or other taxes required by reason of the
issuance of certificates for such AT&T Common Shares in a name other than that
of the registered holder of the Certificate surrendered, or shall establish to
the satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to a holder of Shares for any AT&T
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<PAGE>
Common Shares or dividends thereon or, in accordance with Section 4.3, proceeds
of the sale of fractional interests, delivered to a public official pursuant to
applicable escheat law. The Exchange Agent shall not be entitled to vote or
exercise any rights of ownership with respect to the AT&T Common Shares held by
it from time to time hereunder, except that it shall receive and hold all
dividends or other distributions paid or distributed with respect to such AT&T
Common Shares for the account of the Persons entitled thereto.
(c) Certificates surrendered for exchange by any Person constituting a Rule
145 Affiliate of the Company shall not be exchanged for certificates
representing AT&T Common Shares until AT&T has received a written agreement
from such Person as provided in Section 7.9.
(d) Any portion of the Exchange Fund and the Fractional Securities Fund which
remains unclaimed by the former stockholders of the Company for one year after
the Effective Time shall be delivered to AT&T, upon demand of AT&T, and any
former stockholders of the Company shall thereafter look only to AT&T for
payment of their claim for the Share Consideration for the Shares or for any
cash in lieu of fractional AT&T Common Shares.
4.3. Fractional Shares. No fractional AT&T Common Shares shall be issued in
the Merger. In lieu of any such fractional securities, each holder of Shares
who would otherwise have been entitled to a fraction of an AT&T Common Share
upon surrender of Certificates for exchange pursuant to this Article IV will be
paid an amount in cash (without interest) equal to such holder's proportionate
interest in the net proceeds from the sale or sales in the open market by the
Exchange Agent, on behalf of all such holders, of the aggregate fractional AT&T
Common Shares issued pursuant to this Article IV. As soon as practicable
following the Effective Time, the Exchange Agent shall determine the excess of
(i) the number of full AT&T Common Shares delivered to the Exchange Agent by
AT&T over (ii) the aggregate number of full AT&T Common Shares to be
distributed to holders of Shares (such excess being herein called the "Excess
Shares"), and the Exchange Agent, as agent for the former holders of Shares,
shall sell the Excess Shares at the prevailing prices on the NYSE. The sale of
the Excess Shares by the Exchange Agent shall be executed on the NYSE through
one or more member firms of the NYSE and shall be executed in round lots to the
extent practicable. AT&T shall pay all commissions, transfer taxes and other
out-of-pocket transaction costs, including the expenses and compensation of the
Exchange Agent, incurred in connection with such sale of Excess Shares. Until
the net proceeds of such sale have been distributed to the former stockholders
of the Company, the Exchange Agent will hold such proceeds in trust for such
former stockholders (the "Fractional Securities Fund"). As soon as practicable
after the determination of the amount of cash to be paid to former stockholders
of the Company in lieu of any fractional interests, the Exchange Agent shall
make available in accordance with this Agreement such amounts to such former
stockholders.
4.4. Transfer of Shares after the Effective Time. No transfers of Shares
shall be made on the stock transfer books of the Company after the close of
business on the day prior to the date of the Effective Time.
ARTICLE V
Representations and Warranties of the Company
The Company hereby represents and warrants to AT&T and Merger Sub that,
except as set forth in the Company Disclosure Statement:
5.1. Organization, Etc. of the Company. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted and proposed by the
Company to be conducted, to enter into this Agreement and to carry out the
provisions of this Agreement and consummate the transactions contemplated
hereby. The Company 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 would be
A-8
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reasonably expected (so far as can be foreseen at the time) to have a material
adverse effect on the business, properties, operations, condition (financial or
other) or prospects of the Company and its Subsidiaries taken as a whole. The
Company has obtained from the appropriate Governmental Bodies (including,
without limitation, the FCC) all approvals and licenses necessary for the
conduct of its business and operations as currently conducted, which approvals
and licenses are valid and remain in full force and effect, except where the
failure to have obtained such approvals or licenses or the failure of such
licenses and approvals to be valid and in full force and effect does not have
and would not be reasonably expected (so far as can be foreseen at the time) to
have a material adverse effect on the business, properties, operations,
condition (financial or other) or prospects of the Company and its Subsidiaries
taken as a whole. The Company is not subject to any order, complaint,
proceeding or investigation pending or, to the knowledge of the Company,
threatened, which affects or would be reasonably expected (so far as can be
foreseen at the time) to affect the validity of any such approvals or licenses
or impair the renewal thereof, except where the invalidity of any such
approvals or licenses or the non-renewal thereof does not have and would not be
reasonably expected (so far as can be foreseen at the time) to have a material
adverse effect on the business, properties, operations, condition (financial or
other) or prospects of the Company and its Subsidiaries taken as a whole.
5.2. Operations of Subsidiaries. Each Subsidiary of the Company (a) is a
corporation or other legal entity duly organized, validly existing and (if
applicable) in good standing under the laws of the jurisdiction of its
organization and has the full power and authority to own its properties and
conduct its business and operations as currently conducted, except where the
failure to be duly organized, validly existing and in good standing does not
have, and would not be reasonably expected (so far as can be foreseen at the
time) to have, a material adverse effect on the business, properties,
operations, condition (financial or other) or prospects of the Company and its
Subsidiaries taken as a whole, (b) 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,
except where the failure to be so qualified does not have and would not be
reasonably expected (so far as can be foreseen at the time) to have a material
adverse effect on the business, properties, operations, condition (financial or
other) or prospects of the Company and its Subsidiaries taken as a whole, (c)
has obtained from the appropriate Governmental Bodies (including, without
limitation, the FCC) all approvals and licenses necessary for the conduct of
its business and operations as currently conducted, which licenses and
approvals are valid and remain in full force and effect, except where the
failure to have obtained such approvals and licenses or the failure of such
licenses and approvals to be valid and in full force and effect does not have
and would not be reasonably expected (so far as can be foreseen at the time) to
have a material adverse effect on the business, properties, operations,
condition (financial or other) or prospects of the Company and its Subsidiaries
taken as a whole, and (d) is subject to no order, complaint, proceeding or
investigation pending or, to the knowledge of the Company or such Subsidiary,
threatened, which would be reasonably expected (so far as can be foreseen at
the time) to affect the validity of any such approvals or licenses or impair
the renewal thereof, except where the invalidity of any such approvals or
licenses or the non-renewal thereof does not have and would not be reasonably
expected (so far as can be foreseen at the time) to have a material adverse
effect on the business, properties, operations, condition (financial or other)
or prospects of the Company and its Subsidiaries taken as a whole.
5.3. Agreement. This Agreement and the consummation of the transactions
contemplated hereby have been unanimously approved by the Board of Directors of
the Company and have been duly authorized by all other necessary corporate
action on the part of the Company (except for the approval of the Company's
stockholders contemplated by Section 7.3). This Agreement has been duly
executed and delivered by a duly authorized officer of the Company and
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws of general application which may affect the enforcement of creditors'
rights generally and by general equitable principles. The Company has delivered
to AT&T true and correct copies of resolutions adopted by the Board of
Directors of the Company approving this Agreement.
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5.4. Fairness Opinion. The Board of Directors of the Company has received the
opinion, dated as of the date hereof, of Lazard Freres & Co. to the effect that
the consideration to be received by the holders of Shares in the Merger is fair
to such holders from a financial point of view. Such opinion (a copy of which
has been delivered to AT&T) has not been withdrawn, revoked or modified.
5.5. Capital Stock. The authorized capital stock of the Company consists of
(a) 400,000,000 shares of Class A Common Stock, of which 145,365,773 shares are
outstanding as of the date hereof, (b) 200,000,000 shares of Class B Common
Stock, of which 60,832,998 shares are outstanding as of the date hereof, and
(c) 10,000,000 shares of preferred stock, par value $0.01 per share, none of
which are outstanding as of the date hereof. All outstanding Shares are duly
authorized, validly issued, fully paid and nonassessable, and no class of
capital stock of the Company is entitled to preemptive rights. There are
outstanding on the date hereof no options, warrants or other rights to acquire
capital stock from the Company, other than the right to convert shares of Class
B Common Stock into Class A Common Stock pursuant to the Certificate of
Incorporation of the Company, except (i) options representing in the aggregate
the right to purchase up to 7,203,555 shares of Class A Common Stock pursuant
to the Company's employee benefit plans and (ii) options representing in the
aggregate the right to purchase up to 3,608,536 shares of Class B Common Stock
pursuant to the Company's employee benefit plans. Except as disclosed in the
Company SEC Reports, all outstanding shares of capital stock of the Significant
Subsidiaries of the Company are owned by the Company or a direct or indirect
Wholly Owned Subsidiary of the Company, free and clear of all liens, charges,
encumbrances, claims and options of any nature.
5.6. Litigation. Except as disclosed in the Company SEC Reports filed prior
to August 1, 1993, there are no actions, suits, investigations or proceedings
(adjudicatory, rulemaking or otherwise) pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries (or any
Employee Plan or Benefit Arrangement), or any property of the Company or any
such Subsidiary (including Intellectual Property), in any court or before any
arbitrator of any kind or before or by any Governmental Body, except actions,
suits, investigations or proceedings which, in the aggregate, (a) do not have
and would not be reasonably expected (so far as can be foreseen at the time) to
have a material adverse effect on (i) the business, properties, operations,
condition (financial or other) or prospects of the Company and its Subsidiaries
taken as a whole or (ii) the ability of the Company to perform its obligations
under this Agreement and (b) do not and would not be reasonably expected (so
far as can be foreseen at the time) to prevent the Company and its Subsidiaries
from using, subject to notice and a reasonable transition period, the service
mark "AT&T" as the exclusive service mark for their telecommunications services
(other than television broadcasting).
5.7. Compliance with Other Instruments, Etc. Neither the Company nor any
Subsidiary of the Company is in violation of any term of (a) its charter, by-
laws or other organizational documents, (b) any agreement or instrument related
to indebtedness for borrowed money or any other agreement to which it is a
party or by which it is bound, (c) any applicable law, ordinance, rule or
regulation of any Governmental Body, or (d) any applicable order, judgment or
decree of any court, arbitrator or Governmental Body, the consequences of which
violation, whether individually or in the aggregate, have or would be
reasonably expected (so far as can be foreseen at the time) to have a material
adverse effect on (i) the business, properties, operations, condition
(financial or other) or prospects of the Company and its Subsidiaries taken as
a whole or (ii) the ability of the Company to perform its obligations under
this Agreement. The execution, delivery and performance of this Agreement by
the Company will not result in any violation of or conflict with, constitute a
default under, or require any consent under any term of the charter, by-laws or
other organizational document of the Company (or any of its Subsidiaries) or
any such agreement, instrument, law, ordinance, rule, regulation, order,
judgment or decree or result in the creation of (or impose any obligation on
the Company or any of its Subsidiaries to create) any mortgage, lien, charge,
security interest or other encumbrance upon any of the properties or assets of
the Company or any of its Subsidiaries pursuant to any such term, except where
such violation, conflict or default, or the failure to obtain such consent,
individually or in the aggregate, does not have and would not be reasonably
expected (so far as can be foreseen at the time) to have a material adverse
effect on (i) the business, properties, operations, condition (financial or
other)
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or prospects of the Company and its Subsidiaries taken as a whole or (ii) the
ability of the Company to perform its obligations under this Agreement. Other
than the BT Stock Purchase Agreement and the BT Shareholders Agreement, and the
Waiver and Agreement, dated as of the date hereof, among BT, BT USA and the
Company, a true and correct copy of which has heretofore been delivered to
AT&T, and the other agreements expressly contemplated thereby, neither the
Company nor any of its Subsidiaries is a party to any agreement or other
arrangement with BT or any of its Subsidiaries relating to the Company or any
of its Subsidiaries or the securities of the Company.
5.8. Employee Benefit Plans. (a) The Company SEC Reports or the Company
Disclosure Statement sets forth a true and complete list of all the following:
(i) each "employee benefit plan," as such term is defined in Section 3(3) of
ERISA, pursuant to which the Company or any of its Subsidiaries has (A) any
material liability with respect to current or former employees, agents,
directors, or independent contractors of the Company or its Subsidiaries
("Employees") or (B) any obligation to issue capital stock of the Company or
any of its Subsidiaries (each, an "Employee Plan"), and (ii) each other plan,
program, policy, contract or arrangement providing for bonuses, pensions,
deferred pay, stock or stock related awards, severance pay, salary continuation
or similar benefits, hospitalization, medical, dental or disability benefits,
life insurance or other employee benefits, or compensation to or for any
Employees or any beneficiaries or dependents of any Employees (other than
directors' and officers' liability policies), whether or not insured or funded,
(A) pursuant to which the Company or any of its Subsidiaries has any material
liability or (B) constituting an employment or severance agreement or
arrangement with any officer or director of the Company or any Significant
Subsidiary or with any holder of shares of Class B Common Stock (each, a
"Benefit Arrangement"). Any such Benefit Arrangements constituting employment
or severance agreements or arrangements with any officer or director of a
Subsidiary of the Company that is not a Significant Subsidiary are not in the
aggregate material to the Company and its Subsidiaries taken as a whole. The
Company has used its reasonable efforts to provide to AT&T with respect to each
Employee Plan and Benefit Arrangement: (i) a true and complete copy of all
written documents comprising such Employee Plan or Benefit Arrangement
(including amendments and individual agreements relating thereto) or, if there
is no such written document, an accurate and complete description of such
Employee Plan or Benefit Arrangement; (ii) the most recent Form 5500 or Form
5500-C (including all schedules thereto), if applicable; (iii) the most recent
financial statements and actuarial reports, if any; (iv) the summary plan
description currently in effect and all material modifications thereof, if any;
and (v) the most recent Internal Revenue Service determination letter, if any.
Any such Employee Plans and Benefit Arrangements not so provided are not in the
aggregate material to the Company and its Subsidiaries taken as a whole.
(b) Each Employee Plan and Benefit Arrangement has been established and
maintained in all material respects in accordance with its terms and in
material compliance with all applicable laws, including, but not limited to,
ERISA and the Code. Neither the Company nor any of its Subsidiaries nor any of
their respective current or former directors, officers, or employees, nor, to
the best knowledge of the Company, any other disqualified person or party-in-
interest with respect to any Employee Plan, have engaged directly or indirectly
in any "prohibited transaction," as such term is defined in section 4975 of the
Code or section 406 of ERISA, with respect to which the Company or its
Subsidiaries could have or has any material liability. All contributions
required to be made to the Employee Plans and Benefit Arrangements have been
made in a timely fashion. Each Employee Plan that is intended to be qualified
under Section 401(a) of the Code is so qualified, and each related trust is
exempt from taxation under Section 501(a) of the Code.
(c) With respect to each Employee Plan that is subject to Title IV of ERISA:
(i) as of the last applicable annual valuation date, the present value of all
benefits under such Employee Plan exceeded the value of the assets of such
Employee Plan allocable to such benefits, on a projected benefits basis, using
the actuarial methods, factors and assumptions used for the most recent
actuarial report with respect to such Employee Plan; and (ii) there has been no
termination, partial termination or "reportable event" (as defined in Section
4043 of ERISA) with respect to any such Employee Plan. No Employee Plan that is
subject to Section 412 of
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the Code has incurred any "accumulated funding deficiency" (as defined in
Section 412 of the Code), whether or not waived.
(d) No Employee Plan is a "multiemployer plan" as that term is defined in
Section 3(37) of ERISA or a "multiple employer plan" described in Section
4063(a) of ERISA, nor has the Company or any ERISA Affiliate of the Company at
any time since September 2, 1974, contributed to or been obligated to
contribute to such a multiemployer plan or multiple employer plan.
(e) Except with respect to an Employee Plan, neither the Company nor any
ERISA Affiliate has any Controlled Group Liability, nor do any circumstances
exist that could result in any of them having any Controlled Group Liability.
"Controlled Group Liability" means any and all liabilities under (i) Title IV
of ERISA, (ii) section 302 of ERISA, (iii) sections 412 and 4971 of the Code
and (iv) the continuation coverage requirements of section 601 et seq. of ERISA
and section 4980B of the Code.
(f) Neither the execution or delivery of this Agreement, nor the consummation
of the transactions contemplated hereby (either alone or together with any
additional or subsequent events), constitutes an event under any Employee Plan,
Benefit Arrangement, loan to, or individual agreement or contract with, an
Employee that may result in any payment (whether of severance pay or
otherwise), restriction or limitation upon the assets of any Employee Plan or
Benefit Agreement, acceleration of payment or vesting, increase in benefits or
compensation, or required funding, with respect to any Employee, or the
forgiveness of any loan or other commitment of any Employees.
(g) There are no actions, suits, arbitrations, inquiries, investigations or
other proceedings (other than routine claims for benefits) pending or, to the
Company's knowledge, threatened, with respect to any Employee Plan or Benefit
Arrangement.
(h) No amounts paid or payable by the Company or any Subsidiary to or with
respect to any Employee will fail to be deductible for federal income tax
purposes by reason of Section 280G of the Code.
(i) No Employees and no beneficiaries or dependents of Employees are or may
become entitled under any Employee Plan or Benefit Arrangement to post-
employment welfare benefits of any kind, including without limitation death or
medical benefits, other than coverage mandated by Section 4980B of the Code.
(j) There are no agreements with, or pending petitions for recognition of, a
labor union or association as the exclusive bargaining agent for any of the
employees of the Company or any of its Subsidiaries; no such petitions have
been pending at any time within two years of the date of this Agreement and, to
the best knowledge of the Company, there has not been any organizing effort by
any union or other group seeking to represent any employees of the Company or
any of its Subsidiaries as their exclusive bargaining agent at any time within
two years of the date of this Agreement. There are no labor strikes, work
stoppages or other labor troubles, other than routine grievance matters, now
pending, or, to the Company's knowledge, threatened, against the Company or any
of its Subsidiaries, nor have there been any such labor strikes, work stoppages
or other labor troubles, other than routine grievance matters, with respect to
the Company or any of its Subsidiaries at any time within two years of the date
of this Agreement.
5.9. Taxes. The Company and its Subsidiaries have filed all federal, state,
county, local and foreign tax returns required to be filed by them, and have
paid all taxes shown to be due thereon, other than taxes appropriate reserves
for which have been made in the Company's financial statements (and, to the
extent material, such reserves have been accurately described to AT&T). There
are no assessments or adjustments that have been asserted in writing against
the Company or its Subsidiaries for any period for which the Company has not
made appropriate reserves in the Company's financial statements.
5.10. Intellectual Property. The Company and its Subsidiaries own, or have
the defensible right to use, the Intellectual Property used in the Company's
business, except where the failure to own or have the
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right to use such Intellectual Property, in the aggregate, does not have and
would not be reasonably expected (so far as can be foreseen at the time) to
have a material adverse effect on the business, properties, operations,
condition (financial or other) or prospects of the Company and its Subsidiaries
taken as a whole.
5.11. Reports and Financial Statements. (a) The Company has filed all reports
(including without limitation proxy statements) required to be filed with the
SEC since January 1, 1989 (collectively, the "Company SEC Reports"), and has
previously furnished or made available to AT&T true and complete copies of all
the Company SEC Reports. None of the Company SEC Reports, as of their
respective dates (as amended through the date hereof), contained any untrue
statement of material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the balance
sheets (including the related notes) included in the Company SEC Reports
presents fairly, in all material respects, the consolidated financial position
of the Company and its Subsidiaries as of the respective dates thereof, and the
other related statements (including the related notes) included therein present
fairly, in all material respects, the results of operations and the changes in
financial position of the Company and its Subsidiaries for the respective
periods or as of the respective dates set forth therein, all in conformity with
generally accepted accounting principles consistently applied during the
periods involved, except as otherwise noted therein and subject, in the case of
the unaudited interim financial statements, to normal year-end adjustments and
any other adjustments described therein. All of the Company SEC Reports, as of
their respective dates (as amended through the date hereof), complied in all
material respects with the requirements of the Exchange Act and the applicable
rules and regulations thereunder.
(b) The Company and its Subsidiaries have not made any misstatements of fact,
or omitted to disclose any fact, to any federal or state regulatory authority,
or taken or failed to take any action, which misstatements or omissions,
actions or failures to act, individually or in the aggregate, subject or would
be reasonably expected (so far as can be foreseen at the time) to subject any
licenses or approvals referred to in Section 5.1 or 5.2 to revocation or
failure to renew, except where such revocation or failure to renew,
individually or in the aggregate, does not have and would not be reasonably
expected to have a material adverse effect on the business, properties,
operations, condition (financial or other) or prospects of the Company and its
Subsidiaries taken as a whole.
5.12. Absence of Certain Changes or Events. During the period since March 31,
1993, (a) the business of the Company and its Subsidiaries has been conducted
only in the ordinary course, consistent with past practice, (b) neither the
Company nor any Subsidiary has entered into any material transaction other than
in the ordinary course, consistent with past practice, and (c) there has not
been any material adverse change in the business, financial condition, results
of operations, properties, assets, liabilities or prospects of the Company and
its Subsidiaries taken as a whole (other than as a result of economic or
political developments of general applicability).
5.13. Contracts and Leases. The Company SEC Reports contain an accurate and
complete listing of all material contracts, leases, agreements or
understandings, whether written or oral, required to be described therein or
filed as exhibits thereto pursuant to the Exchange Act and the applicable rules
and regulations thereunder. Each of such contracts, leases, agreements and
understandings is in full force and effect and (a) none of the Company or its
Subsidiaries or, to the Company's best knowledge, any other party thereto, has
breached or is in default thereunder, (b) no event has occurred which, with the
passage of time or the giving of notice would constitute such a breach or
default, (c) no claim of material default thereunder has, to the Company's best
knowledge, been asserted or threatened and (d) none of the Company or its
Subsidiaries or, to the Company's best knowledge, any other party thereto is
seeking the renegotiation thereof or substitute performance thereunder, except
where such breach or default, or attempted renegotiation or substitute
performance, individually or in the aggregate, does not have and would not be
reasonably expected (so far as can be foreseen at the time) to have a material
adverse effect on the business, properties, operations, condition (financial or
other) or prospects of the Company and its Subsidiaries taken as a whole.
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5.14. Affiliated Transactions. The Company SEC Reports contain an accurate
and complete listing of all contracts, leases, agreements or understandings,
whether written or oral, with or on behalf of any Affiliate of the Company, to
which the Company or any of its Subsidiaries is a party or is otherwise bound
and which is required to be described in or filed as an exhibit to any Company
SEC Report pursuant to the Exchange Act and the applicable rules and
regulations thereunder.
5.15. Ability to Use Service Mark. The Company and its Subsidiaries have all
necessary power and authority (to the extent permitted by AT&T and assuming
AT&T has the power and authority to so permit) to cause their
telecommunications services (other than television broadcasting) to be
marketed, sold and provided by the Company or such Subsidiaries exclusively
under the service mark "AT&T", and the use of such service mark for such
services exclusively will not violate any agreement or other binding
arrangement or understanding to which the Company or any of its Subsidiaries is
bound.
5.16. Brokers and Finders. Except for the fees and expenses payable to Lazard
Freres & Co. and Salomon Brothers Inc, which fees and expenses are reflected in
their agreements with the Company, copies of which have been furnished to AT&T,
the Company has not employed any investment banker, broker, finder, consultant
or intermediary in connection with the transactions contemplated by this
Agreement which would be entitled to any investment banking, brokerage,
finder's or similar fee or commission in connection with this Agreement or the
transactions contemplated hereby.
5.17. S-4 Registration Statement and Proxy Statement/Prospectus. None of the
information supplied or to be supplied by the Company for inclusion or
incorporation by reference in the S-4 Registration Statement or the Proxy
Statement/Prospectus will (a) in the case of the S-4 Registration Statement, at
the time it becomes effective, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements therein not misleading or (b) in the case of
the Proxy Statement/Prospectus, at the time of the mailing of the Proxy
Statement/Prospectus and at the time of the Stockholder Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. If at any
time prior to the Effective Time any event with respect to the Company, its
officers and directors or any of its Subsidiaries should occur which is
required to be described in an amendment of, or a supplement to, the Proxy
Statement/Prospectus or the S-4 Registration Statement, the Company shall
notify AT&T thereof by reference to this Section 5.17 and such event shall be
so described, and such amendment or supplement shall be promptly filed with the
SEC and, as required by law, disseminated to the stockholders of the Company
and such amendment or supplement shall comply with all provisions of applicable
law. The Proxy Statement/Prospectus will (with respect to the Company) comply
as to form in all material respects with the requirements of the Exchange Act.
5.18. LIN Rights Plan. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby constitutes or
will constitute a Triggering Event, or results or will result in AT&T becoming
an Acquiring Person, under the LIN Rights Agreement.
5.19. Tax Matters. The representations set forth in the numbered paragraphs
of the form of Tax Matters Certificate of the Company attached to the Company
Disclosure Statement (the "Company Tax Matters Certificate") are true and
correct in all respects, and such representations are hereby incorporated
herein by reference with the same effect as if set forth herein in their
entirety.
ARTICLE VI
Representations and Warranties of AT&T and Merger Sub
AT&T and Merger Sub each represents and warrants to the Company that, except
as set forth in the AT&T Disclosure Statement:
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6.1. Organization, Etc. of AT&T. AT&T is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York
and has all requisite corporate power and authority to own and operate its
properties, to carry on its business as now conducted and proposed by AT&T to
be conducted, to enter into this Agreement and to carry out the provisions of
this Agreement and consummate the transactions contemplated hereby. AT&T 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 would be reasonably expected (so far as can be foreseen at the time) to have
a material adverse effect on the business, properties, operations, condition
(financial or other) or prospects of AT&T and its Subsidiaries taken as a
whole. AT&T has obtained from the appropriate Governmental Bodies (including,
without limitation, the FCC) all approvals and licenses necessary for the
conduct of its business and operations as currently conducted, which approvals
and licenses are valid and remain in full force and effect, except where the
failure to have obtained such approvals or licenses or the failure of such
licenses and approvals to be valid and in full force and effect does not have
and would not be reasonably expected (so far as can be foreseen at the time) to
have a material adverse effect on the business, properties, operations,
condition (financial or other) or prospects of AT&T and its Subsidiaries taken
as a whole. AT&T is not subject to any order, complaint, proceeding or
investigation pending or, to the knowledge of AT&T, threatened, which affects
or would be reasonably expected (so far as can be foreseen at the time) to
affect the validity of any such approvals or licenses or impair the renewal
thereof, except where the invalidity of any such approvals or licenses or the
non-renewal thereof does not have and would not be reasonably expected (so far
as can be foreseen at the time) to have a material adverse effect on the
business, properties, operations, condition (financial or other) or prospects
of AT&T and its Subsidiaries taken as a whole.
6.2. Operations of Subsidiaries. Each Subsidiary of AT&T (a) is a corporation
or other legal entity duly organized, validly existing and (if applicable) in
good standing under the laws of the jurisdiction of its organization and has
the full power and authority to own its properties and conduct its business and
operations as currently conducted, except where the failure to be duly
organized, validly existing and in good standing does not have, and would not
be reasonably expected (so far as can be foreseen at the time) to have, a
material adverse effect on the business, properties, operations, condition
(financial or other) or prospects of AT&T and its Subsidiaries taken as a
whole, (b) 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, except where the failure to
be so qualified does not have and would not be reasonably expected (so far as
can be foreseen at the time) to have a material adverse effect on the business,
properties, operations, condition (financial or other) or prospects of AT&T and
its Subsidiaries taken as a whole, (c) has obtained from the appropriate
Governmental Bodies (including, without limitation, the FCC) all approvals and
licenses necessary for the conduct of its business and operations as currently
conducted, which licenses and approvals are valid and remain in full force and
effect, except where the failure to have obtained such approvals and licenses
or the failure of such licenses and approvals to be valid and in full force and
effect does not have and would not be reasonably expected (so far as can be
foreseen at the time) to have a material adverse effect on the business,
properties, operations, condition (financial or other) or prospects of AT&T and
its Subsidiaries taken as a whole, and (d) is subject to no order, complaint,
proceeding or investigation pending or, to the knowledge of AT&T or such
Subsidiary, threatened, which would be reasonably expected (so far as can be
foreseen at the time) to affect the validity of any such approvals or licenses
or impair the renewal thereof, except where the invalidity of any such
approvals or licenses or the non-renewal thereof does not have and would not be
reasonably expected (so far as can be foreseen at the time) to have a material
adverse effect on the business, properties, operations, condition (financial or
other) or prospects of AT&T and its Subsidiaries taken as a whole.
6.3 Agreement. This Agreement and the consummation of the transactions
contemplated hereby have been approved by the respective Boards of Directors of
AT&T and Merger Sub, by the unanimous vote of those directors present, and by
AT&T as the sole stockholder of Merger Sub (no other corporate action on the
part of AT&T or Merger Sub being necessary). This Agreement has been duly
executed and delivered by
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a duly authorized officer of each of AT&T and Merger Sub and constitutes a
valid and binding agreement of AT&T and Merger Sub, enforceable against AT&T
and Merger Sub in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws of general application which may affect the enforcement of creditors'
rights generally and by general equitable principles. AT&T has delivered to the
Company true and correct copies of resolutions adopted by the Board of
Directors of each of AT&T and Merger Sub approving this Agreement.
6.4 Capital Stock. The authorized capital stock of AT&T consists of (a)
2,000,000,000 AT&T Common Shares and (ii) 100,000,000 shares of preferred
stock, $1.00 par value per share. All of the outstanding shares of capital
stock of AT&T are duly authorized, validly issued, fully paid and
nonassessable, and no class of capital stock of AT&T is entitled to preemptive
rights. As of the close of business on July 31, 1993, (i) 1,347,525,000 AT&T
Common Shares and no shares of preferred stock were issued and outstanding and
(ii) 55,000 AT&T Common Shares were held in the treasury of AT&T. Except as
disclosed in the AT&T SEC Reports, all outstanding shares of capital stock of
the Significant Subsidiaries of AT&T are owned by AT&T or a direct or indirect
wholly owned Subsidiary of AT&T, free and clear of all liens, charges,
encumbrances, claims and options of any nature. As of the close of business on
July 31, 1993, there were 29,749,000 AT&T Common Shares reserved for issuance
upon the exercise of options.
6.5 Authorization for AT&T Common Shares. Prior to the Effective Time, AT&T
will have taken all necessary action to permit it to issue the number of AT&T
Common Shares required to be issued pursuant to Article IV. The AT&T Common
Shares issued pursuant to Article IV will, when issued, be duly authorized,
validly issued, fully paid and nonassessable and no stockholder of AT&T will
have any preemptive right of subscription or purchase in respect thereof. The
AT&T Common Shares will, when issued, be registered under the Securities Act
and the Exchange Act and registered or exempt from registration under any
applicable state securities laws.
6.6 Litigation. Except as disclosed in the AT&T SEC Reports filed prior to
August 1, 1993, there are no actions, suits, investigations or proceedings
(adjudicatory, rulemaking or otherwise) pending or, to the knowledge of AT&T,
threatened against AT&T or any of its Subsidiaries, or any property of AT&T or
any such Subsidiary (including Intellectual Property), in any court or before
any arbitrator of any kind or before or by any Governmental Body, except
actions, suits, investigations or proceedings which, in the aggregate, do not
have and would not be reasonably expected (so far as can be foreseen at the
time) to have a material adverse effect on (i) the business, properties,
operations, condition (financial or other) or prospects of AT&T and its
Subsidiaries taken as a whole or (ii) the ability of AT&T to perform its
obligations under this Agreement.
6.7 Compliance with Other Instruments, Etc. Neither AT&T nor any Subsidiary
of AT&T is in violation of any term of (a) its charter, by-laws or other
organizational documents, (b) any agreement or instrument related to
indebtedness for borrowed money or any other agreement to which it is a party
or by which it is bound, (c) any applicable law, ordinance, rule or regulation
of any Governmental Body, or (d) any applicable order, judgment or decree of
any court, arbitrator or Governmental Body, the consequences of which
violation, whether individually or in the aggregate, have or would be
reasonably expected (so far as can be foreseen at the time) to have a material
adverse effect on (i) the business, properties, operations, condition
(financial or other) or prospects of AT&T and its Subsidiaries taken as a whole
or (ii) the ability of AT&T to perform its obligations under this Agreement.
The execution, delivery and performance of this Agreement by each of AT&T and
Merger Sub will not result in any violation of or conflict with, constitute a
default under, or require any consent under any term of the charter or by-laws
of AT&T (or any of its Subsidiaries) or any such agreement, instrument, law,
ordinance, rule, regulation, order, judgment or decree or result in the
creation of (or impose any obligation on AT&T or any of its Subsidiaries to
create) any mortgage, lien, charge, security interest or other encumbrance upon
any of the properties or assets of AT&T or any of its Subsidiaries pursuant to
any such term, except where such violation, conflict or default, or the failure
to obtain such consent, individually or in the aggregate, does not have and
would not be reasonably expected (so far as can be foreseen at the time) to
have a material adverse effect on (i) the business, properties,
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operations, condition (financial or other) or prospects of AT&T and its
Subsidiaries taken as a whole or (ii) the ability of AT&T to perform its
obligations under this Agreement. Other than the letter agreement, dated the
date hereof, among BT, BT USA and AT&T, a true and correct copy of which has
heretofore been delivered to the Company, neither AT&T nor any of its
Subsidiaries is a party to any agreement or other arrangement with BT or any of
its Subsidiaries relating to the Company or any of its Subsidiaries or the
securities of the Company.
6.8 Intellectual Property. AT&T and its Subsidiaries own, or have the
defensible right to use, the Intellectual Property used in AT&T's business,
except where the failure to own or have the right to use such Intellectual
Property, in the aggregate, does not have and would not be reasonably expected
(so far as can be foreseen at the time) to have a material adverse effect on
the business, properties, operations, condition (financial or other) or
prospects of AT&T and its Subsidiaries taken as a whole.
6.9 Reports and Financial Statements. (a) AT&T has filed all reports
(including without limitation proxy statements) required to be filed with the
SEC since January 1, 1989 (collectively, the "AT&T SEC Reports"), and has
previously furnished or made available to the Company true and complete copies
of all AT&T SEC Reports. None of the AT&T SEC Reports, as of their respective
dates (as amended through the date hereof), contained any untrue statement of
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. Each of the balance sheets
(including the related notes) included in the AT&T SEC Reports presents fairly,
in all material respects, the consolidated financial position of AT&T and its
Subsidiaries as of the respective dates thereof, and the other related
statements (including the related notes) included therein present fairly, in
all material respects, the results of operations and the changes in financial
position of AT&T and its Subsidiaries for the respective periods or as of the
respective dates set forth therein, all in conformity with generally accepted
accounting principles consistently applied during the periods involved, except
as otherwise noted therein and subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments and any other adjustments
described therein. All of the AT&T SEC Reports, as of their respective dates
(as amended through the date hereof), complied in all material respects with
the requirements of the Exchange Act and the applicable rules and regulations
thereunder.
(b) AT&T and its Subsidiaries have not made any misstatements of fact, or
omitted to disclose any fact, to any federal or state regulatory authority, or
taken or failed to take any action, which misstatements or omissions, actions
or failures to act, individually or in the aggregate, subject or would be
reasonably expected (so far as can be foreseen at the time) to subject any
licenses or approvals referred to in Section 6.1 or 6.2 to revocation or
failure to renew, except where such revocation or failure to renew,
individually or in the aggregate, does not have and would not be reasonably
expected to have a material adverse effect on the business, properties,
operations, condition (financial or other) or prospects of AT&T and its
Subsidiaries taken as a whole.
6.10 Absence of Certain Changes or Events. During the period since March 31,
1993, there has not been any material adverse change in the business, financial
condition, results of operations, properties, assets, liabilities or prospects
of AT&T and its Subsidiaries taken as a whole (other than as a result of
economic or political developments of general applicability).
6.11 Contracts and Leases. The AT&T SEC Reports contain an accurate and
complete listing of all material contracts, leases, agreements or
understandings, whether written or oral, required to be described therein or
filed as exhibits thereto pursuant to the Exchange Act and the applicable rules
and regulations thereunder. Each of such contracts, leases, agreements and
understandings is in full force and effect and (a) none of AT&T or its
Subsidiaries or, to AT&T's best knowledge, any other party thereto, has
breached or is in default thereunder, (b) no event has occurred which, with the
passage of time or the giving of notice would constitute such a breach or
default, (c) no claim of material default thereunder has, to AT&T's best
knowledge, been asserted or threatened and (d) none of AT&T or its Subsidiaries
or, to AT&T's best knowledge, any other party thereto is seeking the
renegotiation thereof or substitute performance thereunder,
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except where such breach or default, or attempted renegotiation or substitute
performance, individually or in the aggregate, does not have and would not be
reasonably expected (so far as can be foreseen at the time) to have a material
adverse effect on the business, properties, operations, condition (financial or
other) or prospects of AT&T and its Subsidiaries taken as a whole.
6.12 Ownership of Merger Sub; No Prior Activities; Assets of Merger
Sub. (a) Merger Sub was formed by AT&T solely for the purpose of engaging in
the transactions contemplated hereby.
(b) As of the date hereof and the Effective Time, the capital stock of Merger
Sub is and will be owned 100% by AT&T directly. Further, there are not as of
the date hereof and there will not be at the Effective Time any outstanding or
authorized options, warrants, calls, rights, commitments or any other
agreements of any character which Merger Sub is a party to, or may be bound by,
requiring it to issue, transfer, sell, purchase, redeem or acquire any shares
of capital stock or any securities or rights convertible into, exchangeable
for, or evidencing the right to subscribe for or acquire, any shares of capital
stock of Merger Sub.
(c) As of the date hereof and the Effective Time, except for obligations or
liabilities incurred in connection with its incorporation or organization and
the transactions contemplated thereby and hereby, Merger Sub has not and will
not have incurred, directly or indirectly through any Subsidiary or affiliate,
any obligations or liabilities or engaged in any business or activities of any
type or kind whatsoever or entered into any arrangements or arrangements with
any Person or entity.
(d) AT&T will take all action necessary to ensure that Merger Sub at no time
prior to the Effective Time owns any asset other than an amount of cash
necessary to incorporate Merger Sub and to pay the expenses of the Merger
attributable to Merger Sub if the Merger is consummated.
6.13 Brokers and Finders. Except for the fees and expenses payable to Morgan
Stanley & Co., Incorporated, which fees and expenses will be paid by AT&T, AT&T
has not employed any investment banker, broker, finder, consultant or
intermediary in connection with the transactions contemplated by this Agreement
which would be entitled to any investment banking, brokerage, finder's or
similar fee or commission in connection with this Agreement or the transactions
contemplated hereby.
6.14 S-4 Registration Statement and Proxy Statement/Prospectus. None of the
information to be supplied by AT&T or Merger Sub for inclusion or incorporation
by reference in the S-4 Registration Statement or the Proxy
Statement/Prospectus will (a) in the case of the S-4 Registration Statement, at
the time it becomes effective, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements therein not misleading or (b) in the case of
the Proxy Statement/Prospectus, at the time of the mailing of the Proxy
Statement/Prospectus and at the time of the Stockholder Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. If at any
time prior to the Effective Time any event with respect to AT&T, its officers
and directors or any of its Subsidiaries shall occur which is required to be
described in the Proxy Statement/Prospectus or the S-4 Registration Statement,
AT&T shall notify the Company thereof by reference to this Section 6.14 and
such event shall be so described, and an amendment or supplement shall be
promptly filed with the SEC and, as required by law, disseminated to the
stockholders of the Company and such amendment or supplement shall comply with
all provisions of applicable law. The S-4 Registration Statement will comply
(with respect to AT&T and Merger Sub) as to form in all material respects with
the provisions of the Securities Act.
6.15 Ownership of Shares. AT&T owns 14,479,638 Shares.
6.16 Tax Matters. The representations set forth in the numbered paragraphs of
the form of Tax Matters Certificate of AT&T attached to the AT&T Disclosure
Statement (the "AT&T Tax Matters
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Certificate") are true and correct in all respects, and such representations
are hereby incorporated herein by reference with the same effect as if set
forth herein in their entirety.
ARTICLE VII
Additional Covenants and Agreements
7.1 Conduct of Business of the Company. Except as contemplated by this
Agreement or as set forth in the Company Disclosure Statement, during the
period from the date of this Agreement to the Effective Time, (i) the Company
will, and will cause each of its Subsidiaries to, conduct its operations
according to its ordinary course of business consistent with past practice,
(ii) the Company will not, and will cause each of its Subsidiaries not to,
enter into any material transaction other than in the ordinary course of
business consistent with past practice and (iii) to the extent consistent with
the foregoing, with no less diligence and effort than would be applied in the
absence of this Agreement, the Company will, and will use all reasonable
efforts to cause each of its Subsidiaries to, seek to preserve intact its
current business organizations, keep available the service of its current
officers and employees and preserve its relationships with customers, suppliers
and others having business dealings with it with the objective that their
goodwill and ongoing businesses shall be unimpaired at the Effective Time.
Without limiting the generality of the foregoing, and except as otherwise
permitted in this Agreement, prior to the Effective Time, the Company will not,
and will not permit any of its Subsidiaries to, without the prior written
consent of AT&T (except to the extent set forth in Section 7.1 of the Company
Disclosure Statement):
(a) except for (i) Shares issued upon exercise of options outstanding as of
the date hereof under the Company's employee benefit plans, as set forth in
Section 5.5 and (ii) conversions of Class B Common Stock into Class A Common
Stock pursuant to the Company's Certificate of Incorporation, issue, deliver,
sell, dispose of, pledge or otherwise encumber, or authorize or propose the
issuance, sale, disposition or pledge or other encumbrance of (A) any
additional shares of its capital stock of any class (including the Shares), or
any securities or rights convertible into, exchangeable for, or evidencing the
right to subscribe for any shares of its capital stock, or any rights,
warrants, options, calls, commitments or any other agreements of any character
to purchase or acquire any shares of its capital stock or any securities or
rights convertible into, exchangeable for, or evidencing the right to subscribe
for, any shares of its capital stock, or (B) any other securities in respect
of, in lieu of, or in substitution for, Shares outstanding on the date hereof;
(b) redeem, purchase or otherwise acquire, or propose to redeem, purchase or
otherwise acquire, any of its outstanding securities (including the Shares);
(c) split, combine, subdivide or reclassify any shares of its capital stock
or declare, set aside for payment or pay any dividend, or make any other
actual, constructive or deemed distribution in respect of any shares of its
capital stock or otherwise make any payments to stockholders in their capacity
as such (other than dividends or distributions paid by any Subsidiary of the
Company other than LIN);
(d) (i) grant any material increases in the compensation of any of its
directors, officers or key employees, except in the ordinary course of business
consistent with past practice, (ii) pay or agree to pay any pension, retirement
allowance or other material employee benefit not required or contemplated by
any of the existing benefit, severance, pension or employment plans, agreements
or arrangements as in effect on the date hereof to any such director, officer
or key employees, whether past or present, (iii) enter into any new or
materially amend any existing employment agreement with any such director,
officer or key employee, except for employment agreements with new employees
entered into in the ordinary course of business consistent with past practice,
(iv) enter into any new or materially amend any existing severance agreement
with any such director, officer or key employee, except as permitted in the
Company Disclosure Statement or (v) except as may be required to comply with
applicable law, become obligated under any new pension plan or arrangement,
welfare plan or arrangement, multi-employer plan or arrangement, employee
benefit plan or
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arrangement, severance plan or arrangement, benefit plan or arrangement, or
similar plan or arrangement, which was not in existence on the date hereof, or
amend any such plan or arrangement in existence on the date hereof if such
amendment would have the effect of enhancing or accelerating any benefits
thereunder;
(e) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its Subsidiaries not constituting an inactive Subsidiary
(other than the Merger, and other than such of the foregoing with respect to
any Subsidiary of the Company as do not change the beneficial ownership
interest of the Company in such Subsidiary);
(f) make any acquisition, by means of merger, consolidation or otherwise, of
(i) any direct or indirect ownership interest in or assets comprising any
Cellular System or other business enterprise or operation or (ii) except in the
ordinary course and consistent with past practice, any other assets;
(g)(i) dispose of any direct or indirect ownership interest in any Cellular
System (including any shares of capital stock of any Subsidiary holding such
interest) in any of the 100 largest Metropolitan Statistical Areas in terms of
population (as determined by the most recent estimate at such time by the
Donnelley Marketing Service or such successor or replacement service as shall
be generally recognized in the cellular industry at such time) or any
controlling interest in any other Cellular System, (ii) except with AT&T's
consent which will not be unreasonably withheld, make any other disposition of
any other direct or indirect ownership interest in or assets comprising any
Cellular System or other business enterprise or operation or (iii) except in
the ordinary course and consistent with past practice, dispose of any other
assets;
(h) adopt any amendments to its Certificate of Incorporation or By-Laws or
alter through merger, liquidation, reorganization, restructuring or in any
other fashion the corporate structure or ownership of any Subsidiary not
constituting an inactive Subsidiary of the Company;
(i) other than borrowings under existing credit facilities or other
borrowings in the ordinary course (but in all cases only in the aggregate at
any time outstanding up to $750 million of additional borrowings after the date
hereof), incur any indebtedness for borrowed money or guarantee any such
indebtedness or, except in the ordinary course consistent with past practice,
make any loans, advances or capital contributions to, or investments in, any
other Person (other than to the Company or any Wholly Owned Subsidiary of the
Company);
(j) engage in the conduct of any business other than telecommunications and
related businesses;
(k) enter into any agreement providing for acceleration of payment or
performance or other consequence as a result of a change of control of the
Company or its Subsidiaries;
(l) enter into any contract, arrangement or understanding requiring the
purchase of equipment, materials, supplies or services over a period greater
than 24 months and for the expenditure of greater than $10 million per year,
which is not cancellable without penalty on 30 days' or less notice; or
(m) authorize, recommend, propose or announce an intention to do any of the
foregoing, or enter into any contract, agreement, commitment or arrangement to
do any of the foregoing.
7.2 Other Transactions. Prior to the Closing, neither the Company nor any of
its officers, employees, representatives, agents or Affiliates will, directly
or indirectly, encourage, solicit or engage in discussions or negotiations with
any third party (other than AT&T) concerning any merger, consolidation, share
exchange or similar transaction involving the Company or any of its Significant
Subsidiaries, or any purchase of all or a significant portion of the assets of
or equity interest in the Company or any of its Significant Subsidiaries, or
any other transaction that would involve the transfer or potential transfer of
control of the Company, other than the transactions contemplated hereby. The
Company will notify AT&T immediately of any inquiries or proposals with respect
to any such transaction that are received by, or any such negotiations or
discussions that are sought to be initiated with, the Company or any of its
Significant Subsidiaries. Nothing
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contained in this Agreement shall prohibit or restrict the Company's Board of
Directors from taking and disclosing to the Company's stockholders a position
in accordance with Rules 14d-9 and 14e-2 under the Exchange Act with respect to
a tender offer or an exchange offer for shares of Company Common Stock
commenced by a third party.
7.3. Meeting of Stockholders. (a) The Company will take all action necessary
in accordance with applicable law and its Certificate of Incorporation and By-
Laws to convene a meeting of its stockholders (the "Stockholders Meeting") as
promptly as practicable to consider and vote upon the approval of the Merger.
Subject to the fiduciary duties of the Company's Board of Directors under
applicable law as advised in writing by counsel, the Board of Directors of the
Company shall recommend and declare advisable such approval and the Company
shall take all lawful action to solicit, and use all reasonable efforts to
obtain, such approval. By agreement dated the date hereof, each of the members
of the McCaw Block executing such agreement, and McCaw in his capacity as
Designated Party, have agreed to vote all Shares owned by them or which they
have the right to vote in favor of approval of the Merger and this Agreement at
the Stockholders Meeting, which vote the Company represents and warrants shall
be sufficient to obtain the requisite approval of the Merger and this Agreement
at the Stockholders Meeting.
(b) AT&T, as the sole stockholder of Merger Sub, has consented to the
adoption of this Agreement by Merger Sub and agrees that such consent shall be
treated for all purposes as a vote duly adopted at a meeting of the
stockholders of Merger Sub held for this purpose.
7.4. Registration Statement. AT&T will, as promptly as practicable, prepare
and file with the SEC a registration statement on Form S-4 (the "S-4
Registration Statement"), containing a proxy statement/prospectus, in
connection with the registration under the Securities Act of the AT&T Common
Shares issuable upon conversion of the Shares and the other transactions
contemplated hereby. The S-4 Registration Statement will contain pro forma
financial statements accounting for the Merger as a pooling of interests
(unless AT&T shall have irrevocably and unconditionally waived in writing the
condition set forth in Section 8.2(g)). The Company will, as promptly as
practicable, prepare and file with the SEC a proxy statement that will be the
same proxy statement/prospectus contained in the S-4 Registration Statement and
a form of proxy, in connection with the vote of the Company's stockholders with
respect to the Merger (such proxy statement/prospectus, together with any
amendments thereof or supplements thereto, in each case in the form or forms
mailed to the Company's stockholders, is herein called the "Proxy
Statement/Prospectus"). AT&T and the Company will use all reasonable efforts to
have, or cause the S-4 Registration Statement to be, declared effective as
promptly as practicable, and also will take any other action required to be
taken under federal or state securities laws, and the Company will use all
reasonable efforts to cause the Proxy Statement/Prospectus to be mailed to
stockholders of the Company at the earliest practicable date.
7.5. Reasonable Efforts. The Company and AT&T shall and shall use all
reasonable efforts to cause their respective Subsidiaries to: (i) promptly make
all filings and seek to obtain all Authorizations required under all applicable
laws with respect to the Merger and the other transactions contemplated hereby
and will cooperate with each other with respect thereto; (ii) use all
reasonable efforts to promptly take, or cause to be taken, all other actions
and do, or cause to be done, all other things necessary, proper or appropriate
to satisfy the conditions set forth in Article VIII and to consummate and make
effective the transactions contemplated by this Agreement on the terms and
conditions set forth herein as soon as practicable (including seeking to remove
promptly any injunction or other legal barrier that may prevent such
consummation); (iii) not take any action (including, without limitation,
effecting or agreeing to effect or announcing an intention or proposal to
effect, any acquisition, business combination or other transaction) which might
reasonably be expected to impair the ability of the parties to consummate the
Merger at the earliest possible time (regardless of whether such action would
otherwise be permitted or not prohibited hereunder) and (iv) not take any
action (regardless of whether such action would otherwise be permitted or not
prohibited hereunder) that prevents AT&T from accounting for the Merger as a
pooling of interests or that results in AT&T being required to issue a number
of AT&T Common Shares in the Merger such that AT&T would be required to obtain
a vote of its stockholders under applicable NYSE rules; provided, however, that
in connection with any
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filing or submission required or action to be taken by either the Company or
AT&T or any of their Subsidiaries to effect the Merger and to consummate the
other transactions contemplated hereby, except for divestitures not exceeding
$50 million in the aggregate, (A) neither the Company nor any of its
Subsidiaries shall, without AT&T's prior written consent, commit to any
divestiture or hold separate or similar transaction and (B) neither AT&T nor
any of its Subsidiaries shall be required to divest or hold separate or
otherwise take or commit to take any action that limits its freedom of action
with respect to, or its ability to retain, the Company or any of its
Subsidiaries or any material portion of the assets of the Company and its
Subsidiaries or any of the existing (as of the date hereof) business, product
lines or assets of AT&T or any of its Subsidiaries. Each party hereby agrees
that it will not, and it will direct its accountants not to, discuss with or
make any written presentations to the SEC concerning the application of pooling
treatment accounting to transactions engaged in by the other parties hereto or
the Affiliates thereof, unless such party has provided to the other parties a
reasonable opportunity to participate fully in any such discussion or
presentation. After the time, if any, that the S-4 Registration Statement shall
have been declared effective, AT&T shall promptly notify the Company if at any
time it has reason to believe that Coopers & Lybrand will not be able to
deliver the opinion referred to in Section 8.2(g) at the Closing, and each of
AT&T and the Company shall promptly advise the other of any fact or
circumstance of which it becomes aware (and which has not theretofore been
disclosed to the other) which it believes would adversely impact the ability to
satisfy such condition set forth in Section 8.2(g). During the period of 60
days prior to the Closing, AT&T will not repurchase or otherwise acquire in the
public market, or announce any intention or proposal to repurchase or otherwise
acquire in the public market, any shares of its capital stock (other than
immaterial numbers of shares in the ordinary course and consistent with past
practice), nor will AT&T take any other action a principal purpose of which is
to affect the calculation of the Exchange Ratio.
7.6. Access to Information. Subject to currently existing contractual and
legal restrictions applicable to the Company (which the Company represents and
warrants are not material) or to AT&T (which AT&T represents and warrants are
not material), and upon reasonable notice, each of the Company and AT&T shall
(and shall cause each of its Subsidiaries to) afford to officers, employees,
counsel, accountants and other authorized representatives of the other party
("Respective Representatives") access, during normal business hours throughout
the period prior to the Effective Time, to its properties, books and records
(including, without limitation, the work papers of independent accountants)
and, during such period, shall (and shall cause each of its Subsidiaries to)
furnish promptly to such Respective Representatives all information concerning
its business, properties and personnel as may reasonably be requested, provided
that no investigation pursuant to this Section 7.6 shall affect or be deemed to
modify any of the respective representations or warranties made by AT&T or the
Company. Each of the Company and AT&T agrees that it will not, and will cause
its Respective Representatives not to, use any information obtained pursuant to
this Section 7.6 for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement. Subject to the requirements of
law, each party hereto will keep confidential, and will cause its Respective
Representatives to keep confidential, all information and documents obtained
pursuant to this Section 7.6 except as otherwise consented to by the other
party; provided, however, that neither AT&T nor the Company shall be precluded
from making any disclosure which it deems required by law in connection with
the Merger. In the event any party is required to disclose any information or
documents pursuant to the immediately preceding sentence, such party shall
promptly give written notice of such disclosure that is proposed to be made to
the other party so that the parties can work together to limit the disclosure
to the greatest extent possible and, in the event that either party is legally
compelled to disclose any information, to seek a protective order or other
appropriate remedy or both. Upon any termination of this Agreement, each of the
Company and AT&T will collect and deliver to the other party all documents
obtained pursuant to this Section 7.6 or otherwise from such party or its
Respective Representatives by it or any of its Respective Representatives then
in their possession and any copies thereof. All requests for access to the
Company or AT&T and their Subsidiaries pursuant to this Section 7.6 shall be
made through their Respective Representatives named in the AT&T Disclosure
Statement or the Company Disclosure Statement, as the case may be.
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7.7. Indemnification of Directors and Officers. (a) From and after the
Effective Time, AT&T shall, and shall cause the Surviving Corporation to,
indemnify, defend and hold harmless the present and former officers, directors
and employees of the Company and any of its Subsidiaries, whether any such
Person is or was an officer, director or employee of the Company or any of its
Subsidiaries, or is or was serving at the request of the Company as an officer,
director or employee or agent of another Person, against all losses, expenses,
claims, damages or liabilities arising out of actions or omissions occurring on
or prior to the Effective Time (including, without limitation, the transactions
contemplated by this Agreement) to the full extent permitted or required under
applicable law (and shall also advance expenses as incurred to the fullest
extent permitted under applicable law, provided that the Person to whom
expenses are advanced provides an undertaking to repay such advances if it is
ultimately determined that such Person is not entitled to indemnification);
provided, however, that such indemnification shall be provided only to the
extent any directors' and officers' liability insurance policy of the Company
or its Subsidiaries does not provide coverage and actual payment thereunder
with respect to the matters that would otherwise be subject to indemnification
hereunder (it being understood that AT&T shall, and shall cause the Surviving
Corporation to, advance expenses on a current basis as provided in this
paragraph (a) notwithstanding such insurance coverage to the extent that
payments thereunder have not yet been made, in which case AT&T or the Surviving
Corporation, as the case may be, shall be entitled to repayment of such
advances from the proceeds of such insurance coverage). AT&T and Merger Sub
agree that all rights to indemnification, including provisions relating to
advances of expenses incurred in defense of any action, suit or proceeding,
whether civil, criminal, administrative or investigative (each, a "Claim"),
existing in favor of the present or former directors, officers, employees,
fiduciaries and agents of the Company or any of its Subsidiaries, whether any
such Person is or was an officer, director or employee of the Company or any of
its Subsidiaries, or is or was serving at the request of the Company as an
officer, director or employee or agent of another Person (collectively, the
"Indemnified Parties") as provided in the Company's Certificate of
Incorporation or By-Laws or pursuant to other agreements, or certificates of
incorporation or by-laws or similar documents of any of the Company's
Subsidiaries, as in effect as of the date hereof, with respect to matters
occurring through the Effective Time, shall survive the Merger and shall
continue in full force and effect for a period of not less than six years from
the Effective Time; provided, however, that all rights to indemnification in
respect of any Claim asserted, made or commenced within such period shall
continue until the final disposition of such Claim. AT&T shall cause to be
maintained in effect for not less than six years after the Effective Time the
current policies of directors' and officers' liability insurance maintained by
the Company and the Company's Subsidiaries with respect to matters occurring
prior to the Effective Time; provided, however, that (i) AT&T may substitute
therefor policies of at least the same coverage containing terms and conditions
which are no less advantageous to the Indemnified Parties and (ii) AT&T shall
not be required to pay an annual premium for such insurance in excess of three
times the last annual premium paid prior to the date hereof, but in such case
shall purchase as much coverage as possible for such amount.
(b) In the event that any action, suit, proceeding or investigation relating
hereto or to the transactions contemplated by this Agreement is commenced,
whether before or after the Closing, the parties hereto agree to cooperate and
use their respective reasonable efforts to vigorously defend against and
respond thereto.
(c) This Section 7.7 is intended to benefit the Indemnified Parties and shall
be binding on all successors and assigns of AT&T, Merger Sub, the Company and
the Surviving Corporation.
7.8. Registration and Listing of AT&T Common Shares. (a) AT&T will use all
reasonable efforts to register the AT&T Common Shares to be issued pursuant to
this Agreement, and upon exercise of stock options granted to employees of the
Company and its Subsidiaries, under the applicable provisions of the Securities
Act.
(b) AT&T will use all reasonable efforts to cause the AT&T Common Shares to
be issued pursuant to this Agreement, and upon exercise of stock options
granted to employees of the Company and its Subsidiaries, to be listed for
trading on the NYSE.
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7.9. Affiliates of AT&T and the Company. Prior to the Effective Time, the
Company shall deliver to AT&T a letter identifying all Persons who, at the time
this Agreement is submitted for approval to the stockholders of the Company,
may be deemed to be "affiliates" of the Company for purposes of Rule 145 under
the Securities Act (the "Rule 145 Affiliates") or who may otherwise be deemed
to be Affiliates of the Company. The Company shall use all reasonable efforts
to cause each Person who is identified as a Rule 145 Affiliate in such list to
deliver to AT&T on or prior to the Effective Time, a written agreement, in the
form to be approved by the parties hereto, that such Rule 145 Affiliate will
not sell, pledge, transfer or otherwise dispose of any shares of AT&T Common
Shares issued to such Rule 145 Affiliate pursuant to the Merger, except
pursuant to an effective registration statement or in compliance with Rule 145
or an exemption from the registration requirements of the Securities Act. Each
of AT&T and the Company shall use all reasonable efforts to cause their
respective Affiliates not to take any action that would impair AT&T's ability
to account for the Merger as a pooling of interests. Without limiting the
foregoing, the Company shall use all reasonable efforts to cause each Person
who is identified as an Affiliate in the list referred to above to deliver to
AT&T on or prior to the earlier of (i) the mailing of the Proxy
Statement/Prospectus or (ii) the thirtieth day prior to the Effective Time, a
written agreement, in the form to be approved by the parties hereto, that such
Affiliate will not thereafter sell or in any other way reduce such Affiliate's
risk relative to any AT&T Common Shares received in the Merger (within the
meaning of the SEC's Codification of Financial Reporting Policies (S) 201.01
(reprinted in 7 Fed. Sec. L. Rep. (CCH) (P)72,951), until such time as
financial results (including combined sales and net income) covering at least
30 days of post-merger operations have been published (which financial results
AT&T agrees to publish in accordance with past practice as part of its
applicable Form 10-Q or 10-K filing covering such period), except as permitted
by Staff Accounting Bulletin No. 76 issued by the SEC. Concurrently with the
execution of this Agreement, each of the members of the McCaw Block and BT have
agreed to execute such written agreements.
7.10. Certain Covenants of AT&T. Except as otherwise permitted in this
Agreement, prior to the Effective Time, AT&T will not, without the prior
written consent of the Company:
(a) adopt a plan of complete or partial liquidation, dissolution, merger or
consolidation (other than the Merger and any other merger or consolidation in
which AT&T would not become a Subsidiary of any Person);
(b) adopt any amendments to its Certificate of Incorporation, or take any
other action requiring a vote of the holders of AT&T Common Shares, which would
adversely affect the terms and provisions of the AT&T Common Shares or the
rights of the holders of such shares;
(c) sell or otherwise dispose of any Shares; or
(d) authorize, recommend, propose or announce an intention to do any of the
foregoing, or enter into any contract, agreement, commitment or arrangement to
do any of the foregoing.
7.11. New Opportunities; Joint Venture Arrangements
7.11.1 Wireless Service Opportunities.
(a) Except as otherwise set forth below, until the Closing or the earlier
termination of this Agreement, neither AT&T nor the Company shall directly or
indirectly pursue a Wireless Service Opportunity or a Resale Service
Opportunity within North America. The foregoing shall not restrict a "Qualified
Entity" of AT&T or the Company from pursuing any such Opportunity if promoting
or assisting in the pursuit of such Opportunity was not a principal purpose of
such party's investment in such Qualified Entity. A Qualified Entity of a party
is an entity in which such party has directly or indirectly less than a 33%
voting and equity interest, if such party does not have a right or obligation
to cause such entity to become a Subsidiary of such party.
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(b) The Company shall determine in its sole discretion whether and in what
manner to pursue (i) any Opportunities referred to in Item 9 of Section 7.1 of
the Company Disclosure Statement, and (ii) any Opportunities to acquire
interests in United States Cellular Systems which the Company is required to
direct to LIN and afford it a priority right to pursue under the PMVG and
which LIN determines to pursue; provided that if the Company notifies AT&T
that it does not wish to pursue any such Opportunity referred to in this
paragraph (b) (and the Company shall notify AT&T within a reasonable time
after AT&T's request that it notify AT&T) AT&T may thereafter do so in
accordance with the provisions hereof.
(c) AT&T shall determine in its sole discretion whether to pursue all other
Wireless Service Opportunities or Resale Service Opportunities, provided that
the Company shall conduct the pursuit of such Opportunities under AT&T's
direction unless AT&T elects to conduct such pursuit itself or to have another
Subsidiary of AT&T do so, and provided further that AT&T may not directly or
indirectly pursue a Company Priority Opportunity without the prior written
consent of the Company, in which case it may pursue such Opportunity in
accordance with the provisions of this section 7.11. In the case of any
Wireless Service Opportunities to be pursued by AT&T in which more than 20%
but less than 40% of the pops covered thereby are within the Company
Territory, AT&T shall use all reasonable efforts (i) to separate the portion
of the Opportunity having pops within the Company Territory (the "separated
inside portion") from the remaining portion of the Opportunity (the "remaining
portion"), to the extent necessary such that fewer than 20% of the pops
covered by the remaining portion are within the Company Territory, (ii) to
dispose of to an unaffiliated third party (or, at the Company's option, to the
Company) the right to pursue the separated inside portion and retain no direct
or indirect interest therein (other than through the Company) and (iii) to
pursue the remaining portion itself or through a Subsidiary.
(d) Prior to the acquisition of any Wireless Service Interest or Resale
Service Interest or providing a Resale Service, AT&T shall deliver to the
Company a written proposal referring to this section 7.11 (a "Proposal
Letter") which specifies in reasonable detail the material terms (including
without limitation the proposed cost and proposed method of financing) and
conditions of such acquisition or provision. If the Company notifies AT&T
within 15 days after delivery of such Proposal Letter that it wishes to pursue
itself any such Wireless Service Opportunity or Resale Service Opportunity
that is a Company Priority Opportunity, or that it wishes a Joint Venture to
pursue any Opportunity as specified in such Proposal Letter, such notification
shall be irrevocable and such Opportunity shall thereafter be pursued on
behalf of the Company or the Joint Venture, as the case may be, under the
direction of AT&T at such price and other terms and conditions as may be
negotiated by AT&T, provided that AT&T shall not obligate the Company or the
Joint Venture to effect such Opportunity at a cost materially greater than the
price specified in such Proposal Letter or on terms and conditions materially
less favorable to the Company or the Joint Venture than specified in such
Proposal Letter without the written consent of the Company given in its sole
discretion (which consent or withholding of consent shall be given by the
Company within 10 days after being advised of such other cost or other terms
and conditions, and which consent shall be irrevocable if given). If the
Company does not so notify AT&T within such 15-day period or consent within
such 10-day period if applicable, AT&T directly or indirectly may pursue and
acquire any such Opportunity that is not a Company Priority Opportunity (or
any Company Priority Opportunity that the Company has notified AT&T that AT&T
may pursue) at a cost not materially less than the cost specified in the
Proposal Letter and on such other terms and conditions not materially more
favorable to AT&T than the terms and conditions specified in such Proposal
Letter.
(e) AT&T shall not directly or indirectly acquire such Wireless Service
Interest or Resale Service Interest, or provide Resale Service, in any case at
a cost materially less than the cost specified in the Proposal Letter or on
such other terms and conditions materially more favorable to it than specified
therein without first offering the Company the right to elect to have the
Company or a Joint Venture, as the case may be, acquire such Wireless Service
Interest or Resale Service Interest or provide such Resale Service, at such
cost or on such terms and conditions, provided that the Company shall
conclusively be deemed to have declined to make such election unless the
Company has irrevocably notified AT&T within ten days of such offer of its
election to acquire or have a Joint Venture so acquire such Wireless Service
Interest or so provide such Resale Service.
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(f) Any Joint Venture shall be owned 50% by the Company and 50% by AT&T and
shall be managed by the Company; provided that, in the event this Agreement is
terminated, any Joint Venture previously established under this section 7.11
shall thereafter be managed jointly by the Company and AT&T. The agreements
governing any Joint Venture shall have such customary terms and conditions as
shall be agreed to by the parties consistent with this section 7.11.
7.11.2 Combined Opportunity.
(a) Any acquisition opportunity (a "Combined Opportunity") that involves a
Wireless Service Opportunity or Resale Service Opportunity combined with the
opportunity to acquire other assets or interests shall not be considered a
Wireless Service Opportunity or Resale Service Opportunity, and may be pursued
by any party or its Affiliates without regard to the allocation criteria set
forth in this section 7.11 (but subject to the other provisions of this
Agreement), if the Wireless Service Opportunity and Resale Service Opportunity
included in such Combined Opportunity constitute less than 20% of the value of
such Combined Opportunity.
(b) Notwithstanding the foregoing, in the event it is possible to separate
the Wireless Service Opportunity or Resale Service Opportunity from any
Combined Opportunity without any material adverse effect (including any
material adverse effect on the ability to pursue the other portion of the
Combined Opportunity), then the Wireless Service Opportunity or Resale Service
Opportunity included in such Combined Opportunity will be subject to the
allocation criteria of this section 7.11.
7.11.3 Financing. (a) AT&T will lend to the Company or one or more Wholly
Owned Subsidiaries of the Company designated by the Company, which if the
Company elects may be formed for this purpose (a "Borrower"), at such
reasonable times as may be requested by such Borrower, the amounts to be
expended by the Company or its Subsidiaries in pursuing the Opportunities
referred to in paragraphs (a), (b) and (d) of Item 9 of Section 7.1 of the
Company Disclosure Statement or that AT&T determines shall be pursued in
accordance with section 7.11.1(c), together with costs and expenses incurred by
the Company or such Subsidiaries in acquiring and owning the Wireless Service
Interests or Resale Service Interests or interests in a Joint Venture that may
be acquired pursuant to such Opportunities in accordance with this section
7.11.
(b) Each such loan shall be negotiated in good faith and shall be provided on
such commercially reasonable terms and conditions as would be available to the
Borrower from a third-party lender at arm's length and including the following
terms:
(i) interest only payable quarterly, with principal due upon maturity;
(ii) maturity date to be two years after the earlier of (x) the Closing
under the Agreement and (y) the termination of the Agreement; and
(iii) perfected first priority security interest in the Company's or such
Subsidiary's interest in the Wireless Service Interest or Resale Service
Interest or interest in the Joint Venture acquired with such loan.
7.11.4 Definitions. For purposes of this Section 7.11, the following terms
shall have the following meanings:
"Borrower": As defined in section 7.11.3 of this Agreement.
"Cellular Service": Any Wireless Service that is initiated or terminated
using cellular Electromagnetic Spectrum.
"Combined Opportunity": As defined in section 7.11.2 of this Agreement.
"Company Priority Opportunity": (i) All Wireless Service Opportunities 40% or
more of the pops covered by which are within the Company Territory, (ii) as
long as the Company and its subsidiaries maintain
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voting control over American Mobile Satellite Corporation (or share in such
control with other entities or affiliated groups of entities, none of which has
greater voting rights than the Company and its subsidiaries), all Wireless
Service Opportunities serving pops located primarily within North America
involving satellite communications to mobile stations on the ground and, as
long as the Company and its subsidiaries maintain similar control over Claircom
Communications, all Wireless Service Opportunities serving pops located
primarily within North America involving air-to-ground service, (iii) all
opportunities to provide Resale Service in the Major Company Territory and (iv)
all opportunities to provide Resale Services in the Company Territory that
feature comparable or lesser functionality in essentially the same price range
as the Wireless Services provided by the Company in such Territory.
"Company Territory": Collectively, the Major Company Territory and the Minor
Company Territory.
"Electromagnetic Spectrum": The entire range of wavelengths or frequencies of
electromagnetic radiation through the air or open space which shall not in any
event include electromagnetic radiation when transmitted through a wire, cable
or other physical connection (e.g., fiber optic or other lines).
"Joint Venture": Any joint venture between AT&T and the Company formed
pursuant to this section 7.11.
"Major Company Territory": The geographic areas within the United States as
to which the Company or one of its subsidiaries has a 25% or greater interest
in a Major Radio Channel License.
"Major Radio Channel License": A Radio Channel License which permits, either
exclusively or among other services, and is capable of being used to provide
under current technology, voice transmissions which are fully interconnected
with the public switched telephone network.
"Minor Company Territory": The geographic areas within the United States as
to which the Company or one of its subsidiaries has a 25% or greater interest
in a Minor Radio Channel License.
"Minor Radio Channel License": Any Radio Channel License other than a Major
Radio Channel License.
"Minor Wireless Service": Any Wireless Service provided under a Minor Radio
Channel License.
"Minor Wireless Service Interest": Any direct or indirect interest in a Minor
Radio Channel License.
"Minor Wireless Service Opportunity": An opportunity to acquire a Minor
Wireless Service Interest.
"PMVG": The Private Market Value Guarantee, dated December 11, 1989, between
the Company and LIN.
"Radio Channel License": A license granted by the government of the United
States, Canada or Mexico for the use of Electromagnetic Spectrum to provide
Wireless Services.
"Resale Service": The resale of Cellular Services or similar voice Wireless
Services to conduct a business within North America comparable to any of the
Wireless Services businesses of the Company and its Subsidiaries, provided that
(a) the resale of Cellular Services or similar voice Wireless Services by the
Company or its Affiliates (i) in the Company Territory or (ii) outside of the
Company Territory as part of an offering of Wireless Services to customers
within the Company Territory (whether pursuant to a "national account" program,
roaming arrangements or otherwise) shall not be deemed to be a Resale Service
and (b) the resale of Cellular Services or similar voice Wireless Services by
AT&T or its Affiliates in a manner and for a purpose comparable to such resale
being done by them as part of their current business shall not be deemed to be
a Resale Service.
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"Resale Service Interest": A direct or indirect interest in any entity that
engages in a Resale Service, provided that beneficial ownership of debt
securities or equity securities having less than 5% of the voting power and
equity of any entity that engages in a Resale Service shall not be deemed to be
a Resale Service Interest.
"Resale Service Opportunity": An opportunity to acquire a Resale Service
Interest or to provide Resale Service within North America.
"Wireless Service": Any transmission between the points of origin and
reception of voice, data, image or other information that is initiated or
terminated using Electromagnetic Spectrum, regardless of whether other portions
of the overall transmission are accomplished using Electromagnetic Spectrum,
wire, cable or other physical connection; provided, however, that transmissions
using unlicensed Electromagnetic Spectrum, the usage of which is not charged,
between a cordless telecommunications device (i.e., a wireless
telecommunications device usable only within or in the immediate vicinity of
the customer's premises) and its related receiver on such premises, shall be
disregarded for the purpose of determining whether a transmission is initiated
or terminated using Electromagnetic Spectrum. The presence of internal wiring,
cable or other physical connection within a mobile vehicle (including without
limitation an automobile, ship, aircraft or train) or within a building,
building complex or other small group of adjacent buildings shall also be
disregarded for purposes of determining whether a transmission to or from such
mobile vehicle, building, building complex or group of adjacent buildings was
terminated or initiated using Electromagnetic Spectrum.
"Wireless Service Interest": Any direct or indirect interest in a Radio
Channel License; provided that beneficial ownership of debt securities or
equity securities having less than 5% of the voting power and equity of any
entity which holds a Radio Channel License shall not be deemed to be a Wireless
Service Interest.
"Wireless Service Opportunity": An opportunity to acquire a Wireless Service
Interest within North America.
7.12 Tax Matters. Neither the Company nor AT&T shall take any action that
would cause their respective representations set forth in Sections 5.19 and
6.16 not to be true in all material respects from and after the date hereof
until the Effective Time. Neither party has any reason to believe that it will
not be able to make such representations as of the Effective Time. Each party
agrees to report the Merger on all tax returns and other filings as a tax-free
reorganization under Section 368(a) of the Code except where, in the opinion of
nationally recognized tax counsel to such party, there is not "substantial
authority", as defined in Section 6662 of the Code, to support such a position.
7.13. Dividends. It is the current intention of AT&T's Board of Directors
that the current $1.32 per share annual cash dividend on the AT&T Common Shares
will be maintained following the Effective Time, subject to its evaluation from
time to time of AT&T's results of operations, financial condition, capital
requirements and other relevant considerations.
7.14. FCC Matters. Prior to the Effective Time, AT&T will not and will not
permit any of its Subsidiaries to, directly or indirectly, control, supervise,
or direct, or attempt to control, supervise or direct, the operations of FCC
licensed facilities of the Company and its Subsidiaries in contravention of
applicable law or regulation.
7.15. New York Real Property Gains and Transfer Tax. Any liability arising
out of New York State and/or New York City Real Property Gains and Transfer
Taxes, with respect to interests in real property owned directly or indirectly
by the Company immediately prior to the Merger, if applicable and due with
respect to the Merger, shall be borne by the Company and expressly shall not be
a liability of the stockholders of the Company.
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ARTICLE VIII
Conditions
8.1. Conditions to Each Party's Obligations. The respective obligations of
each party to consummate the transactions contemplated by this Agreement are
subject to the fulfillment at or prior to the Effective Time of each of the
following conditions, any or all of which may be waived in whole or in part by
the party being benefitted thereby, to the extent permitted by applicable law:
(a) Stockholder Approval. This Agreement and the transactions contemplated
hereby shall have been duly approved or ratified by the requisite holders of
Shares in accordance with applicable law and the Certificate of Incorporation
and By-Laws of the Company.
(b) Government Consents, Etc. All (i) Authorizations specified in item (d) of
Section 5.7 of the Company Disclosure Statement and items (b), (c) and (d) of
Section 6.7 of the AT&T Disclosure Statement and (ii) other Authorizations
required in connection with the execution and delivery of this Agreement and
the performance of the obligations hereunder shall have been made or obtained,
in each case without limitation or restriction unacceptable to AT&T in its
reasonable judgment (which reasonable judgment shall take into account, without
limitation, the size and scope of the transactions contemplated hereby and the
benefits anticipated to be derived by AT&T from its rights and obligations
hereunder), except, in the case of Authorizations referred to in clause (ii)
above, where the failure to have obtained such Authorizations would not be
reasonably expected (so far as can be foreseen at the time) to have a material
adverse effect on the business, properties, operations, condition (financial or
other) or prospects of (x) the Company and its Subsidiaries taken as a whole or
(y) AT&T and its Subsidiaries taken as a whole.
(c) No Injunction. There shall not be in effect any judgment, writ, order,
injunction or decree of any court or Governmental Body of competent
jurisdiction, restraining, enjoining or otherwise preventing consummation of
the transactions contemplated by this Agreement or permitting such consummation
only subject to any condition or restriction unacceptable to AT&T in its
reasonable judgment (which reasonable judgment shall take into account, without
limitation, the size and scope of the transactions contemplated hereby and the
benefits anticipated to be derived by AT&T from its rights and obligations
hereunder).
(d) Registration Statement. The S-4 Registration Statement shall have been
declared effective and shall be effective at the Effective Time, and no stop
order suspending effectiveness shall have been issued, no action, suit,
proceeding or investigation by the SEC to suspend the effectiveness thereof
shall have been initiated and be continuing, and all necessary approvals under
state securities laws or the Securities Act or Exchange Act relating to the
issuance or trading of the AT&T Common Shares shall have been received.
(e) Listing of AT&T Common Shares on NYSE. The AT&T Common Shares required to
be issued hereunder (including upon exercise of Options as referred to in
Section 4.1(e)) shall have been approved for listing on the NYSE, subject only
to official notice of issuance.
(f) Third Party Consents. All required authorizations, consents or approvals
of any third party (other than a Governmental Body), the failure to obtain
which would have a material adverse effect on AT&T and its Subsidiaries taken
as a whole (assuming the Merger had taken place), shall have been obtained.
8.2. Conditions to Obligations of AT&T and Merger Sub. The respective
obligations of AT&T and Merger Sub to consummate the transactions contemplated
by this Agreement are subject to the fulfillment at or prior to the Effective
Time of each of the following conditions, any or all of which may be waived in
whole or part by AT&T and Merger Sub, as the case may be, to the extent
permitted by applicable law:
(a) Representations and Warranties True. The representations and warranties
of the Company contained in Section 5 and Section 7.6 or otherwise required
hereby to be made after the date hereof in a writing expressly referred to
herein by or on behalf of the Company pursuant to this Agreement shall have
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been true in all material respects when made. The representations and
warranties of the Company set forth in Sections 5.1 through 5.4, Section 5.6
(excluding any such pending or threatened actions, suits, investigations or
proceedings brought by or on behalf of the Company's stockholders insofar as
they relate to the transactions contemplated by this Agreement), Section 5.7,
the first sentence of Section 5.9, Sections 5.10 through 5.12, Sections 5.15
through 5.19 and Section 7.6 shall be true in all material respects at the time
of the Closing with the same effect as though such representations and
warranties had been made at such time, except for changes resulting from the
consummation of the transactions contemplated by this Agreement. The omission
of any representations and warranties from the condition set forth in the
preceding sentence shall not be construed to mean that the matters covered by
such omitted representations and warranties are necessarily excluded from
coverage under one or more representations or warranties specified in such
sentence.
(b) Performance. The Company shall have performed or complied in all material
respects with all agreements and conditions contained herein required to be
performed or complied with by it prior to or at the time of the Closing.
(c) Compliance Certificate. The Company shall have delivered to AT&T a
certificate, dated the date of the Closing, signed by the President or any Vice
President of the Company, certifying as to the fulfillment of the conditions
specified in Section 8.2(a) and (b).
(d) Opinion of Counsel for the Company. AT&T shall have received from Andrew
A. Quartner, Esq. or other counsel for the Company satisfactory to AT&T an
opinion, dated the Closing Date, in substantially the form set forth in
Schedule 8.2(d) hereto.
(e) Proceedings. All corporate proceedings taken by the Company in connection
with the transactions contemplated hereby and all documents incident thereto
shall be reasonably satisfactory in all respects to AT&T and AT&T's special
counsel, and AT&T and AT&T's special counsel shall have received all such
counterpart originals or certified or other copies of such documents as they
may reasonably request.
(f) Tax Opinion. AT&T shall have received an opinion of Wachtell, Lipton,
Rosen & Katz, dated the Effective Time, to the effect that (i) the Merger will
be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code; (ii) each of AT&T, Merger Sub and the
Company will be a party to the reorganization within the meaning of Section
368(b) of the Code; (iii) no gain or loss will be recognized by the Company,
AT&T or Merger Sub as a result of the Merger; and (iv) no gain or loss will be
recognized by a stockholder of the Company as a result of the Merger with
respect to the Shares converted solely into AT&T Common Shares. In rendering
such opinion, Wachtell, Lipton, Rosen & Katz may receive and rely upon
representations contained in certificates of the Company, AT&T, Merger Sub and
others, including, without limitation, the AT&T Tax Matters Certificate and the
Company Tax Matters Certificate.
(g) Pooling Opinion. AT&T shall have received an opinion of Coopers &
Lybrand, in form and substance reasonably satisfactory to AT&T, that the Merger
will qualify for pooling-of-interests accounting treatment.
(h) No Government Proceeding or Litigation. No suit, action, investigation,
inquiry or other proceeding by any U.S. Federal Governmental Body or any other
material Governmental Body shall have been instituted and be pending, or which
imposes or would be reasonably expected (so far as can be foreseen at the time)
to impose any remedy, condition or restriction unacceptable to AT&T in its
reasonable judgment (which reasonable judgment shall take into account, without
limitation, the size and scope of the transactions contemplated hereby and the
benefits anticipated to be derived by AT&T from its rights and obligations
hereunder).
(i) Certain Disclosures. The S-4 Registration Statement, at the time it shall
have been declared effective, shall disclose no information in existence on the
date hereof materially adverse to the Company's business,
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properties, operations, condition (financial or other) or prospects not
previously disclosed in the Company SEC Reports, this Agreement or the Company
Draft Second Quarter Form 10-Q.
8.3. Conditions to Obligations of the Company. The obligations of the Company
to consummate the transactions contemplated by this Agreement are subject to
the fulfillment at or prior to the Effective Time of each of the following
conditions, any or all of which may be waived in whole or in part by the
Company to the extent permitted by applicable law:
(a) Representations and Warranties True. The representations and warranties
of AT&T and Merger Sub contained in Section 6 and Section 7.6 or otherwise
required hereby to be made after the date hereof in a writing expressly
referred to herein by or on behalf of AT&T and Merger Sub pursuant to this
Agreement shall have been true in all material respects when made; and the
representations contained in Sections 6.1 through 6.3, Section 6.5, Section 6.6
(excluding any such pending or threatened actions, suits, investigations or
proceedings brought by or on behalf of the Company's stockholders insofar as
they relate to the transactions contemplated by this Agreement), Section 6.7,
Sections 6.8 through 6.10, Sections 6.12 through 6.16 and Section 7.6 shall be
true in all material respects at the time of the Closing with the same effect
as though such representations and warranties had been made at such time,
except for changes resulting from the consummation of the transactions
contemplated by this Agreement. The omission of any representations and
warranties from the condition set forth in the preceding sentence shall not be
construed to mean that the matters covered by such omitted representations and
warranties are necessarily excluded from coverage under one or more
representations or warranties specified in such sentence.
(b) Performance. AT&T shall have performed or complied in all material
respects with all agreements and conditions contained herein required to be
performed or complied with by it prior to or at the time of the Closing.
(c) Compliance Certificate. AT&T shall have delivered to the Company a
certificate, dated the date of the Closing, signed by the President or any Vice
President of AT&T, certifying as to the fulfillment of the conditions specified
in Section 8.3(a) and (b).
(d) Opinion of Counsel for AT&T. The Company shall have received from Robert
E. Scannell, Esq. or other counsel for AT&T satisfactory to the Company an
opinion, dated the Closing Date, in substantially the form set forth in
Schedule 8.3(d) hereto.
(e) Proceedings. All corporate proceedings taken by AT&T in connection with
the transactions contemplated hereby and all documents incident thereto shall
be reasonably satisfactory in all respects to the Company and the Company's
special counsel, and the Company and the Company's special counsel shall have
received all such counterpart originals or certified or other copies of such
documents as they may reasonably request.
(f) Tax Opinion. The Company shall have received an opinion of Jones, Day,
Reavis & Pogue, dated the Effective Time, to the effect that (i) the Merger
will be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code; (ii) each of AT&T, Merger Sub and the
Company will be a party to the reorganization within the meaning of Section
368(b) of the Code; (iii) no gain or loss will be recognized by the Company as
a result of the Merger; and (iv) no gain or loss will be recognized by a
stockholder of the Company as a result of the Merger with respect to the Shares
converted solely into AT&T Common Shares. In rendering such opinion, Jones,
Day, Reavis & Pogue may receive and rely upon representations contained in
certificates of AT&T and Merger Sub, the Company and others, including, without
limitation, the AT&T Tax Matters Certificate and the Company Tax Matters
Certificate.
(g) Certain Disclosures. The S-4 Registration Statement, at the time it shall
have been declared effective, shall disclose no information in existence on the
date hereof materially adverse to AT&T's business, properties, operations,
condition (financial or other) or prospects not previously disclosed in the
AT&T SEC Reports, this Agreement or the AT&T Draft Second Quarter Form 10-Q.
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ARTICLE IX
Termination
9.1. Termination by Mutual Consent. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or
after the approval by holders of Shares, either by the mutual written consent
of AT&T and the Company, or by mutual action of their respective Boards of
Directors.
9.2. Termination by Either AT&T or the Company. This Agreement may be
terminated (upon notice from the terminating party to the other parties) and
the Merger may be abandoned by action of the Board of Directors of either AT&T
or the Company if (a) the Merger shall not have been consummated by September
30, 1994 (provided that the right to terminate this Agreement under this clause
(a) shall not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of or resulted in the failure of the
Merger to occur on or before such date), (b) any court of competent
jurisdiction in the United States or Governmental Body in the United States
shall have issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and
nonappealable, or (c) the S-4 Registration Statement shall not have been
declared effective within five months after the initial filing with the SEC of
the preliminary Proxy Statement/Prospectus (unless AT&T shall have irrevocably
and unconditionally waived in writing the condition set forth in Section
8.2(g)).
9.3. Effect of Termination and Abandonment. In the event of termination of
this Agreement and abandonment of the Merger pursuant to this Article IX, no
party hereto (or any of its directors or officers) shall have any liability or
further obligation to any other party to this Agreement, except as provided in
Section 7.6 and except that nothing herein will relieve any party from
liability for any breach of this Agreement.
ARTICLE X
Miscellaneous and General
10.1. Expenses. Except as set forth in Section 7.15, each party shall bear
its own expenses, including the fees and expenses of any attorneys,
accountants, investment bankers, brokers, finders or other intermediaries or
other Persons engaged by it, incurred in connection with this Agreement and the
transactions contemplated hereby.
10.2. Notices, Etc. All notices, requests, demands or other communications
required by or otherwise with respect to this Agreement shall be in writing and
shall be deemed to have been duly given to any party when delivered personally
(by courier service or otherwise), when delivered by telecopy and confirmed by
return telecopy, or seven days after being mailed by first-class mail, postage
prepaid and return receipt requested in each case to the applicable addresses
set forth below:
If to the Company:
McCaw Cellular Communications, Inc.
5400 Carillon Point
Kirkland, Washington 98033
Attn: Mr. Tom A. Alberg
Telecopy: (206) 828-1835
and
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McCaw Cellular Communications, Inc.
1150 Connecticut Avenue, N.W.
Washington, D.C. 20036
Attn: Andrew A. Quartner, Esq.
Telecopy: (202) 223-9095
with a copy to:
Gary D. Friedman, Esq.
Friedman & Kaplan
875 Third Avenue
New York, New York 10022
Telecopy: (212) 355-6401
If to AT&T:
American Telephone and Telegraph Company
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Attn: Robert E. Scannell, Esq.
Telecopy: (908) 221-7205
with a copy to:
Richard D. Katcher, Esq.
Wachtell, Lipton, Rosen & Katz
299 Park Avenue
New York, New York 10171
Telecopy: (212) 371-1658
or to such other address as such party shall have designated by notice so given
to each other party.
10.3. Amendments, Waivers, Etc. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified except by an instrument in writing
signed by the party (or, in the case of Section 7.7, the Indemnified Party)
against whom enforcement is sought.
10.4. No Assignment. This Agreement shall be binding upon and shall inure to
the benefit of and be enforceable by the parties and their respective
successors and assigns; provided that, except as otherwise expressly set forth
in this Agreement, neither the rights nor the obligations of any party may be
assigned or delegated without the prior written consent of the other party.
10.5. Entire Agreement. Except as otherwise provided herein, this Agreement
(together with the Confidentiality Agreement, dated as of November 22, 1991,
between AT&T and the Company) embodies the entire agreement and understanding
between the parties relating to the subject matter hereof and supersedes all
prior agreements and understandings relating to such subject matter. There are
no representations, warranties or covenants by the parties hereto relating to
such subject matter other than those expressly set forth in this Agreement
(including the Company Disclosure Statement and the AT&T Disclosure Statement)
and any writings expressly required hereby.
10.6. Specific Performance. The parties acknowledge that money damages are
not an adequate remedy for violations of this Agreement and that any party may,
in its sole discretion, apply to a court of competent jurisdiction for specific
performance or injunctive or such other relief as such court may deem just and
proper in order to enforce this Agreement or prevent any violation hereof and,
to the extent permitted by applicable law, each party waives any objection to
the imposition of such relief.
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<PAGE>
10.7. Remedies Cumulative. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise or beginning of the
exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
10.8. No Waiver. The failure of any party hereto to exercise any right, power
or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by
such party of its right to exercise any such or other right, power or remedy or
to demand such compliance.
10.9. No Third Party Beneficiaries. This Agreement is not intended to be for
the benefit of and shall not be enforceable by any Person or entity who or
which is not a party hereto, except for the indemnification provisions
contained in section 7.7, which provisions may be enforced by any Indemnified
Party referred to therein.
10.10. Jurisdiction. Each party hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court for the Southern District of
New York or any court of the State of New York located in the City of New York
in any action, suit or proceeding arising in connection with this Agreement,
and agrees that any such action, suit or proceeding shall be brought only in
such court (and waives any objection based on forum non conveniens or any other
objection to venue therein); provided, however, that such consent to
jurisdiction is solely for the purpose referred to in this section 10.10 and
shall not be deemed to be a general submission to the jurisdiction of said
Courts or in the State of New York other than for such purpose. AT&T and the
Company hereby waive any right to a trial by jury in connection with any such
action, suit or proceeding.
10.11. Public Announcements. AT&T and the Company will agree upon the timing
and content of the initial press release to be issued describing the
transactions contemplated by this Agreement, and will not make any public
announcement thereof prior to reaching such agreement unless required to do so
by applicable law or regulation. To the extent reasonably requested by either
party, each party will thereafter consult with and provide reasonable
cooperation to the other in connection with the issuance of further press
releases or other public documents describing the transactions contemplated by
this Agreement.
10.12. Governing Law. This Agreement and all disputes hereunder shall be
governed by and construed and enforced in accordance with the internal laws of
the State of New York, without regard to principles of conflict of laws.
10.13. Name, Captions, Etc. The name assigned this Agreement and the section
captions used herein are for convenience of reference only and shall not affect
the interpretation or construction hereof. Unless otherwise specified, (a) the
terms "hereof", "herein" and similar terms refer to this Agreement as a whole
and (b) references herein to Articles or Sections refer to articles or sections
of this Agreement.
10.14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all, the
parties hereto.
10.15. Knowledge. The term "knowledge" or "best knowledge" and any
derivatives thereof when applied to any party to this Agreement shall refer
only to the actual knowledge of that party (or in the case of a corporation,
partnership or other entity, the actual knowledge of its executive officers),
but no information known by any other employee, or any attorney, accountant or
other representative, of such party shall be imputed to such party.
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<PAGE>
In Witness Whereof, this Agreement has been executed and delivered by the
parties set forth below.
McCaw Cellular
Communications, Inc.
/s/Craig O. McCaw
By: _________________________________
Name: Craig O. McCaw
Title: Chairman and Chief
Executive Officer
American Telephone and
Telegraph Company
/s/Robert E. Allen
By: _________________________________
Name: Robert E. Allen
Title: Chairman and Chief
Executive Officer
Ridge Merger Corporation
/s/Marilyn J. Wasser
By: _________________________________
Name: Marilyn J. Wasser
Title: President
A-35
<PAGE>
APPENDIX B
AGREEMENT
Agreement, dated as of August 16, 1993, by and among American Telephone and
Telegraph Company, a New York corporation ("AT&T"), on the one hand, and Craig
O. McCaw, John E. McCaw, Jr., Bruce R. McCaw and Keith W. McCaw and the other
persons set forth on the signature page hereto (collectively, the "McCaw
Block"), on the other hand.
Whereas, concurrently herewith, AT&T, Ridge Merger Corporation, a Delaware
corporation and a wholly-owned subsidiary of AT&T ("Merger Sub"), and McCaw
Cellular Communications, Inc., a Delaware corporation (the "Company"), are
entering into an Agreement and Plan of Merger (the "Merger Agreement";
capitalized terms used without definition herein having the meanings ascribed
thereto in the Merger Agreement);
Whereas, the members of the McCaw Block are the beneficial owners of the
number of Shares set forth in Schedule I hereto (the "McCaw Block Shares");
Whereas, approval of the Merger Agreement by the Company's stockholders is a
condition to the consummation of the Merger; and
Whereas, as a condition to its entering into the Merger Agreement, AT&T has
required that the members of the McCaw Block agree, and the members of the
McCaw Block have agreed, to enter into this Agreement;
Now Therefore, in consideration of the foregoing and the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
Section 1. Agreement to Vote. (a) Each member of the McCaw Block hereby
agrees to attend the Stockholders Meeting, in person or by proxy, and to vote
(or cause to be voted) all Shares, and any other voting securities of the
Company, whether issued heretofore or hereafter, that such member of the McCaw
Block owns or has the right to vote, for approval and adoption of the Merger
Agreement and the Merger, such agreement to vote to apply also to any
adjournment or adjournments of the Stockholders Meeting.
(b) Without limiting the foregoing, McCaw, in his capacity as Designated
Party under the McCaw Shareholders Agreement hereby agrees, subject to the
proviso in paragraph (c) below, to attend the Stockholders Meeting, in person
or by proxy, and to vote all Shares, and any other voting securities of the
Company, whether issued heretofore or hereafter, that McCaw has the right to
vote, for approval and adoption of the Merger Agreement and the Merger, such
agreement to vote to apply also to any adjournment or adjournments of the
Stockholders Meeting.
(c) Each member of the McCaw Block hereby agrees that at all times prior to
the Effective Time, the members of the McCaw Block shall collectively continue
to own a number and kind of Shares having the right to cast a majority of the
votes of the outstanding capital stock of the Company entitled to vote on the
Merger Agreement and the Merger and any such other proposals. The members of
the McCaw Block shall not amend, terminate or otherwise modify the McCaw
Shareholders Agreement so as to deprive McCaw, in his capacity as the
Designated Party, of the right to cast a majority of the votes of the
outstanding capital stock of the Company entitled to vote on the Merger
Agreement and the Merger; provided that, in the event of the death or
incapacity of McCaw (or any successor Designated Party), the members of the
McCaw Block shall promptly appoint another member of the McCaw Block as the new
Designated Party, which member of the McCaw Block shall assume the agreements
of McCaw (or such successor Designated Party) hereunder in his capacity as the
Designated Party.
(d) To the extent inconsistent with the foregoing provisions of this Section
1, each member of the McCaw Block hereby revokes any and all previous proxies
with respect to such member's Shares or any other voting securities of the
Company.
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Section 2. Securities Act Covenants and Representations. Each member of the
McCaw Block hereby agrees and represents to AT&T as follows:
(a) Such member of the McCaw Block has been advised that the offering,
sale and delivery of AT&T Common Shares pursuant to the Merger will be
registered under the Securities Act on a Registration Statement on Form S-
4. Such member of the McCaw Block has also been advised, however, that to
the extent such member of the McCaw Block is considered an "affiliate" of
the Company at the time the Merger Agreement is submitted for a vote of the
stockholders of the Company, any public offering or sale by such member of
the McCaw Block of any AT&T Common Shares received by such member of the
McCaw Block in the Merger will, under current law, require either (i) the
further registration under the Securities Act of any AT&T Common Shares to
be sold by such member of the McCaw Block, (ii) compliance with Rule 145
promulgated by the SEC under the Securities Act or (iii) the availability
of another exemption from such registration under the Securities Act.
(b) Such member of the McCaw Block has read this Agreement and the Merger
Agreement and has discussed their requirements and other applicable
limitations upon such member's ability to sell, transfer or otherwise
dispose of AT&T Common Shares, to the extent such member of the McCaw Block
believed necessary, with such member's counsel or counsel for the Company.
(c) Such member of the McCaw Block also understands that stop transfer
instructions will be given to AT&T's transfer agents with respect to AT&T
Common Shares and that a legend will be placed on the certificates for the
AT&T Common Shares issued to such member of the McCaw Block, or any
substitutions therefor, to the extent such member of the McCaw Block is
considered an "affiliate" of the Company at the time the Merger Agreement
is submitted for a vote of the stockholders of the Company.
Section 3. Pooling Covenants and Representations. Each member of the McCaw
Block hereby agrees and represents to AT&T that:
(a) During the period from the execution hereof until 30 days prior to
the Effective Time, such member of the McCaw Block will not transfer or
otherwise dispose of any securities of the Company or any shares of capital
stock of AT&T held by such member of the McCaw Block, except for (i)
transfers or other dispositions of a number of Shares less than 10% of the
sum of (A) the number of Shares held by such member of the McCaw Block and
(B) the number of Shares subject to currently exercisable options held by
such member of the McCaw Block, (ii) transfers or other dispositions by
operation of law upon the death of such member of the McCaw Block or by the
estate of such member of the McCaw Block if necessary to pay estate taxes
or (iii) other transfers or dispositions that will not prevent AT&T from
accounting for the Merger as a pooling of interests, taking into account
the actions of other Affiliates.
(b) From and after 30 days prior to the Effective Time, such member of
the McCaw Block will not sell, transfer or otherwise dispose of any
securities of the Company or of any AT&T Common Shares received by such
member of the McCaw Block in the Merger or other shares of capital stock of
AT&T until after such time as results covering at least 30 days of combined
operations of the Company and AT&T have been published by AT&T, in the form
of a quarterly earnings report, an effective registration statement filed
with the SEC, a report to the SEC on Form 10-K, 10-Q or 8-K, or any other
public filing or announcement which includes the combined results of
operations, except for transfers or other dispositions that, taking into
account the actions of other Affiliates, will not prevent AT&T from
accounting for the Merger as a pooling of interests.
Section 4. Tax Representations. In addition to, and not in lieu of, the
representations and covenants set forth in Sections 2 and 3 hereof, each member
of the McCaw Block, other than Messrs. Hooper, Stanton, Hamilton and Quartner,
represents and warrants to AT&T that the representations set forth in Exhibit A
hereto are true as of the date hereof and will be true as of the Effective
Time. Such representations may be relied upon by counsel to AT&T and to the
Company in connection with the opinions contemplated by Sections 8.2(f) and
8.3(f) of the Merger Agreement.
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<PAGE>
Section 5. Registration Rights. At the Effective Time, AT&T shall enter into
a Registration Rights Agreement in the form attached hereto as Exhibit B with
the members of the McCaw Block set forth therein as signatories thereto.
Section 6. Other Covenants and Agreements.
(a) Consent to this Agreement. McCaw hereby consents, in his capacity as
Designated Party pursuant to Section 3 of the McCaw Shareholders Agreement, to
the execution of this Agreement by each of the members of the McCaw Block.
(b) Further Assurances. Each party shall execute and deliver such additional
instruments and other documents and shall take such further actions as may be
necessary or appropriate to effectuate, carry out and comply with all of their
obligations under this Agreement. Without limiting the generality of the
foregoing, none of the parties hereto shall enter into any agreement or
arrangement (or alter, amend or terminate any existing agreement or
arrangement) if such action would materially impair the ability of any party to
effectuate, carry out or comply with all the terms of this Agreement. If
requested by AT&T, each member of the McCaw Block agrees to execute a letter to
AT&T representing that such member of the McCaw Block has complied with such
member's obligations hereunder as of the date of such letter.
Section 7. Representations and Warranties of AT&T. AT&T represents and
warrants to each member of the McCaw Block as follows: Each of this Agreement
and the Merger Agreement has been approved by the Board of Directors of AT&T,
and the Merger Agreement has been approved by the Board of Directors of Merger
Sub and by AT&T as the sole stockholder of Merger Sub, in each case
representing all necessary corporate action on the part of AT&T and Merger Sub
(no action by the stockholders of AT&T being required). Each of this Agreement
and the Merger Agreement has been duly executed and delivered by a duly
authorized officer of AT&T and, in the case of the Merger Agreement, Merger
Sub. Each of this Agreement and the Merger Agreement constitutes a valid and
binding agreement of AT&T and, in the case of the Merger Agreement, Merger Sub,
enforceable against AT&T and, in the case of the Merger Agreement, Merger Sub
in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general application which may affect the enforcement of creditors' rights
generally and by general equitable principles.
Section 8. Representations and Warranties of the Members of the McCaw
Block. Each member of the McCaw Block, as to such member, represents and
warrants to AT&T as follows: This Agreement has been duly executed and
delivered by such member of the McCaw Block. This Agreement constitutes the
valid and binding agreement of such member, enforceable against such member in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws of general
application which may affect the enforcement of creditors' rights generally and
by general equitable principles. The Shares listed next to the name of such
member of the McCaw Block on Schedule I hereto are the only voting securities
of the Company owned (beneficially or of record) by such member of the McCaw
Block.
Section 9. Effectiveness and Termination. It is a condition precedent to the
effectiveness of this Agreement that the Merger Agreement shall have been
executed and delivered and be in full force and effect. In the event the Merger
Agreement is terminated in accordance with its terms, this Agreement shall
automatically terminate and be of no further force or effect. Upon such
termination, except for any rights any party may have in respect of any breach
by any other party of its or his obligations hereunder, none of the parties
hereto shall have any further obligation or liability hereunder.
Section 10. Miscellaneous.
(a) Notices, Etc. All notices, requests, demands or other communications
required by or otherwise with respect to this Agreement shall be in writing and
shall be deemed to have been duly given to any party when delivered personally
(by courier service or otherwise), when delivered by telecopy and confirmed by
return
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telecopy, or seven days after being mailed by first-class mail, postage prepaid
in each case to the applicable addresses set forth below:
If to AT&T:
American Telephone and Telegraph Company
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Attn: Robert E. Scannell, Esq.
Telecopy: (908) 221-7205
with a copy to:
Richard D. Katcher, Esq.
Wachtell, Lipton, Rosen & Katz
299 Park Avenue
New York, New York 10171
Telecopy: (212) 371-1658
If to any member of the McCaw Block:
c/o McCaw Cellular Communications, Inc.
5400 Carillon Point
Kirkland, Washington 98033
Attn: Mr. Craig O. McCaw
Telecopy: (206) 828-8450
with a copy to:
Stephen E. Jacobs, Esq.
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Telecopy: (212) 310-8007
and
McCaw Cellular Communications, Inc.
1150 Connecticut Avenue, N.W.
Washington, D.C. 20036
Attn: Andrew A. Quartner, Esq.
Telecopy: (202) 223-9095
or to such other address as such party shall have designated by notice so given
to each other party.
(b) Amendments, Waivers, Etc. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated except by an
instrument in writing signed by AT&T and the McCaw Representative; provided
that: without the consent of any party no such amendment, change, supplement,
waiver, modification or termination shall in any way further restrict the
transferability of any Stock held by a party hereto, impose any obligation on
such party, diminish the benefits of such party hereunder or restrict the
rights of such party as set forth herein (in each case, other than in a de
minimis respect), without the consent of such party.
(c) Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns, including without limitation in the case of any
corporate party hereto any corporate successor by merger or otherwise, and in
the case of any
B-4
<PAGE>
individual party hereto any trustee, executor, heir, legatee or personal
representative succeeding to the ownership of such party's Shares or other
securities subject to this Agreement. Notwithstanding any transfer of Shares,
the transferor shall remain liable for the performance of all obligations under
this Agreement of transferor.
(d) Entire Agreement. This Agreement (together with the Merger Agreement)
embodies the entire agreement and understanding among the parties relating to
the subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter. There are no representations,
warranties or covenants by the parties hereto relating to such subject matter
other than those expressly set forth in this Agreement and the Merger
Agreement.
(e) Severability. If any term of this Agreement or the application thereof to
any party or circumstance shall be held invalid or unenforceable to any extent,
the remainder of this Agreement and the application of such term to the other
parties or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by applicable law, provided that in such event
the parties shall negotiate in good faith in an attempt to agree to another
provision (in lieu of the term or application held to be invalid or
unenforceable) that will be valid and enforceable and will carry out the
parties' intentions hereunder.
(f) Specific Performance. The parties acknowledge that money damages are not
an adequate remedy for violations of this Agreement and that any party may, in
its sole discretion, apply to a court of competent jurisdiction for specific
performance or injunctive or such other relief as such court may deem just and
proper in order to enforce this Agreement or prevent any violation hereof and,
to the extent permitted by applicable law, each party waives any objection to
the imposition of such relief.
(g) Remedies Cumulative. All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise or beginning of the exercise
of any thereof by any party shall not preclude the simultaneous or later
exercise of any other such right, power or remedy by such party.
(h) No Waiver. The failure of any party hereto to exercise any right, power
or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by
such party of its right to exercise any such or other right, power or remedy or
to demand such compliance.
(i) No Third Party Beneficiaries. This Agreement is not intended to be for
the benefit of and shall not be enforceable by any person or entity who or
which is not a party hereto.
(j) Jurisdiction. Each party hereby irrevocably submits to the exclusive
jurisdiction of the Court of Chancery in the State of Delaware or the United
States District Court for the Southern District of New York or any court of the
State of New York located in the City of New York in any action, suit or
proceeding arising in connection with this Agreement, and agrees that any such
action, suit or proceeding shall be brought only in such court (and waives any
objection based on forum non conveniens or any other objection to venue
therein); provided, however, that such consent to jurisdiction is solely for
the purpose referred to in this paragraph (j) and shall not be deemed to be a
general submission to the jurisdiction of said Courts or in the States of
Delaware or New York other than for such purposes. Each party hereto hereby
waives any right to a trial by jury in connection with any such action, suit or
proceeding.
(k) Governing Law. This Agreement and all disputes hereunder shall be
governed by and construed and enforced in accordance with the General
Corporation Law of the State of Delaware to the fullest extent possible and in
the alternative by the internal laws of the State of New York without regard to
principles of conflicts of law.
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(l) Name, Captions, Gender. The name assigned this Agreement and the section
captions used herein are for convenience of reference only and shall not affect
the interpretation or construction hereof. Whenever the context may require,
any pronoun used herein shall include the corresponding masculine, feminine or
neuter forms.
(m) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all, the
parties hereto.
(n) Limitation on Liability. No member of the McCaw Block shall have any
liability hereunder for any actions or omissions of any other members of the
McCaw Block.
(o) Expenses. AT&T shall bear its own expenses, and the Company shall bear
the expenses of the McCaw Block, incurred in connection with this Agreement and
the transactions contemplated hereby, except that in the event of a dispute
concerning the terms or enforcement of this Agreement, the prevailing party in
any such dispute shall be entitled to reimbursement of reasonable legal fees
and disbursements from the other party or parties to such dispute.
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<PAGE>
In Witness Whereof, the parties have duly executed this Agreement as of the
date first above written.
American Telephone and Telegraph
Company
/s/ Robert E. Scannell
By: _________________________________
Robert E. Scannell Vice President-
-Law and Secretary
/s/ Craig O. McCaw
_____________________________________
Craig O. McCaw, individually and
in his capacity as Designated
Party under the McCaw Shareholders
Agreement
/s/ John E. McCaw, Jr.
_____________________________________
John E. McCaw, Jr.
/s/ Bruce R. McCaw
_____________________________________
Bruce R. McCaw
/s/ Keith W. McCaw
_____________________________________
Keith W. McCaw
John E. McCaw, Jr. Living Trust UA
Dtd Sep 28 88
/s/ John E. McCaw, Jr.
By: _________________________________
John E. McCaw, Jr., Trustee
JEM Investments, Inc.
/s/ John E. McCaw, Jr.
By: _________________________________
John E. McCaw, Jr., President
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<PAGE>
MANAGEMENT:
Wayne M. Perry
/s/ Wayne M. Perry
_____________________________________
Christine Perry
/s/ Christine Perry
_____________________________________
Steven W. Hooper
/s/ Steven W. Hooper
_____________________________________
John Stanton
/s/ John Stanton
_____________________________________
Mark R. Hamilton
/s/ Mark R. Hamilton
_____________________________________
Andrew A. Quartner
/s/ Andrew A. Quartner
_____________________________________
Wayne M. and Christine Perry Family
Trust UA Dtd Mar 12 89
/s/ Steven W. Hooper
By: _________________________________
Steven W. Hooper, Trustee
TRUSTS:
Leslie McCaw 1988 Trust
/s/ John E. McCaw, Jr.
By: _________________________________
John E. McCaw, Jr., Trustee
B-8
<PAGE>
Trust FBO Leslie Holden McCaw UA Dtd
Mar 29 89
/s/ Bruce R. McCaw
By: _________________________________
Bruce R. McCaw, Trustee
/s/ Ann Smith McCaw
By: _________________________________
Ann Smith McCaw, Trustee
Jane McCaw 1988 Trust
/s/ John E. McCaw, Jr.
By: _________________________________
John E. McCaw, Jr., Trustee
Trust FBO Jane Elizabeth McCaw UA
Dtd Mar 29 89
/s/ Bruce R. McCaw
By: _________________________________
Bruce R. McCaw, Trustee
/s/ Ann Smith McCaw
By: _________________________________
Ann Smith McCaw, Trustee
Keith W. McCaw Family Trust
/s/ Bruce R. McCaw
By: _________________________________
Bruce R. McCaw, Trustee
B-9
<PAGE>
SCHEDULE I
SHARE OWNERSHIP
<TABLE>
<CAPTION>
NAME OF STOCKHOLDER SHARES OWNED BENEFICIALLY
------------------- ------------------------------------------
CLASS A COMMON STOCK CLASS B COMMON STOCK
--------------------- --------------------
SHARES OPTIONS SHARES OPTIONS
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Craig O. McCaw....................... 400,000 410,000 13,709,172 1,810,289
John E. McCaw, Jr.................... 4,500 55,000 3,007,537 0
Bruce R. McCaw....................... 0 0 10,971,258 0
Keith W. McCaw....................... 0 0 10,459,096 0
John E. McCaw, Jr.
Living Trust...................... 0 0 5,996,963 0
JEM Investments, Inc................. 0 0 10,000 0
The McCaw Foundation................. 2,475 0 540,395 0
Leslie McCaw 1988 Trust.............. 0 0 15,000 0
Trust FBO Leslie Holden
McCaw 1989........................ 0 0 22,000 0
Jane McCaw 1988 Trust................ 0 0 15,000 0
Trust FBO Jane Elizabeth
McCaw 89.......................... 0 0 22,000 0
Wayne M. Perry and
Christine Perry
Family Trust...................... 0 0 47,500 0
Keith W. McCaw
Family Trust...................... 0 0 55,800 0
Wayne M. Perry....................... 2,936 235,000 1,214,699 1,006,109
Steven W. Hooper..................... 4,194 129,500 150,101 489,882
John Stanton......................... 0 95,000 531,263 0
Mark R. Hamilton..................... 0 114,000 0 139,203
Andrew A. Quartner................... 269 157,000 0 163,053
---------- ---------- ---------- ---------
Totals...........................
</TABLE>
B-10
<PAGE>
EXHIBIT A
The representations set forth below are provided in connection with the
Agreement and Plan of Merger dated August 16, 1993 (the "Agreement"), by and
among McCaw Cellular Communications, Inc. (the "Company"), American Telephone
and Telegraph Corporation ("AT&T") and Ridge Merger Corporation ("Merger Sub").
Capitalized terms used but not defined herein have the meanings given to them
in the Agreement.
I have no plan or intention to sell, exchange, transfer by gift or otherwise
dispose of any AT&T Common Shares to be received by me in the merger ("Merger")
of Merger Sub with and into the Company, except as follows:*
(a) I may sell, exchange, transfer by gift or otherwise dispose of up to
10% of the AT&T Common Shares received by me in the Merger in exchange for
Shares that were outstanding on the date of the Agreement;
(b) After the date of the Agreement, I may exercise up to 40% of my
options to acquire Shares and then sell, exchange, transfer by gift or
otherwise dispose of the AT&T Common Shares received by me in the Merger in
exchange for the Shares so acquired; and
(c) I may reduce the amount of AT&T Common Shares that I sell, exchange,
or otherwise dispose of under clause (a) and increase, by the same amount,
the amount of AT&T Common Shares that I may sell, exchange, transfer by
gift or otherwise dispose of under clause (b) (and would increase the
number of options to acquire Shares that I exercise under clause (b)
commensurately).
I may exercise more options to acquire Shares than is specified in clause (b)
(as adjusted by clause (c)), but I have no plan or intention to sell, exchange,
transfer by gift or otherwise dispose of the AT&T Common Shares to be received
by me in the Merger in exchange for the additional Shares so acquired.
For purposes of the foregoing representations, if I sell Shares after the
date of the Agreement and before the Merger, such Shares will be considered
converted into AT&T Common Shares in the Merger and then sold.
- --------
* Each of these representations is made in the aggregate for any individual and
his fund in the McCaw Foundation, to the extent the individual controls the
disposition of the McCaw Foundation's assets.
B-11
<PAGE>
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement, dated as of , 199 , between American
Telephone and Telegraph Company, a New York corporation (the "Company"), on the
one hand, and Craig O. McCaw, John E. McCaw, Jr., Bruce R. McCaw, Keith W.
McCaw and Wayne M. Perry (collectively, the "McCaw Shareholders"), on the other
hand.
Whereas, pursuant to an Agreement and Plan of Merger dated August 16, 1993
(the "Merger Agreement"), between the Company, Ridge Merger Corporation, a
Delaware corporation ("Merger Sub") and a wholly owned subsidiary of the
Company, and McCaw Cellular Communications Inc., a Delaware corporation
("McCaw"), Merger Sub has merged into McCaw on the date hereof, and pursuant
thereto shares of Class A Common Stock, par value $.01 of McCaw ("McCaw Class A
Stock"), and shares of Class B Common Stock, par value $.01 of McCaw ("McCaw
Class B Stock"), held by the McCaw Shareholders have been converted into shares
of Common Stock, par value $1.00 per share of the Company ("Common Stock"); and
Whereas, in an agreement dated August 16, 1993 (the "McCaw Block Agreement")
(the Company has agreed to enter into this Agreement to provide certain
registration rights to the McCaw Shareholders with respect to such shares of
Common Stock.
Now, Therefore, in consideration of the premises and the mutual agreements
set forth herein, the parties agree as follows:
1. Definitions. As used herein, the following terms shall have the following
meanings:
(a) Commission: the Securities and Exchange Commission, and any successor
thereto.
(b) Exchange Act: the Securities Exchange Act of 1934, as amended, and
any successor thereto, and the rules and regulations thereunder.
(c) NASD: the National Association of Securities Dealers, Inc.
(d) Person: any individual or corporation, trust, partnership or other
legal entity.
(e) Registrable Securities: (i) the shares of Common Stock acquired by
the McCaw Shareholders (or by Jetstream Aviation, Inc. or by trusts that
are parties to the McCaw Block Agreement and of which any of the McCaw
shareholders is a trustee) on the date hereof pursuant to the Merger
Agreement and those Persons succeeding to the interest of such holder by
gift or by virtue of the laws of descent and distribution and (ii) any
securities issued or issuable with respect to any Common Stock referred to
in subdivision (i) by way of conversion, exchange, stock dividend or stock
split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise. As to any
particular Registrable Securities, once issued such securities shall cease
to be Registrable Securities when (x) a registration statement with respect
to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (y) they shall have been
distributed to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act or (z) they shall have ceased to be outstanding.
(f) Registration Expenses: all expenses incident to the Company's
performance of or compliance with this Agreement, including, without
limitation, all registration, filing and NASD fees, all fees and expenses
of complying with securities or blue sky laws, all word processing,
duplicating and printing expenses, messenger and delivery expenses, the
fees and disbursements of counsel for the Company and of its independent
public accountants, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, premiums and other costs of policies of insurance obtained by
the Company against liabilities arising out of the public offering of
Registrable Securities being registered and any fees and disbursements of
underwriters customarily paid by issuers,
B-12
<PAGE>
but excluding fees and disbursements of counsel retained by any of the
McCaw Shareholders, premiums and other costs of policies of insurance
obtained by the McCaw Shareholders against liabilities arising out of the
public offering of the Registrable Securities being registered, any fees
and disbursements of underwriters customarily paid by sellers of securities
who are not the issuers of such securities and all underwriting discounts
and commissions and transfer taxes, if any, relating to Registrable
Securities.
(g) Securities Act: the Securities Act of 1933, as amended, and any
successor thereto, and the rules and regulations thereunder.
2. Registration on Request. (a) Request. During the twelve month period (the
"Twelve Month Period") commencing on the day after the last day of the Initial
Period (as defined in the Registration Rights Agreement dated of even date
herewith between the Company and BT USA Holdings, Inc., a Delaware corporation
("BT") (the "BT Registration Rights Agreement")) and during the eighteen month
period commencing on the day after the last day of the Twelve Month Period (the
"Eighteen Month Period"), upon the written request (a "Request") of any one or
more of the McCaw Shareholders requesting that the Company effect the
registration under the Securities Act of all or a part of the McCaw
Shareholders' Registrable Securities (but in any event not less than an
aggregate of 10,000,000 shares of Common Stock, as adjusted to reflect any
stock splits, combinations of shares, reclassifications or comparable
transactions, or such lesser number of shares as shall then constitute all of
the Registrable Securities then owned by the McCaw Shareholders), the Company
will provide notice of such Request in accordance with Section 8 (the
"Registration Notice") to each of the McCaw Shareholders not included in such
Request and will use all reasonable efforts (subject to section 4(b)) to effect
such registration of the Registrable Securities which the Company has been so
requested to register in the Request or requested by any other McCaw
Shareholder within 15 days after delivery of the Registration Notice (the McCaw
Shareholders requesting registration shall collectively be referred to as the
"Participating McCaw Shareholders"); provided that no more than one Request
shall be made during the Twelve Month Period, and no more than one Request
shall be made during the Eighteen Month Period.
The Company may include in any such registration other securities for sale
for its own account or for the account of any other Person only with the
consent of the McCaw Shareholders.
(b) Registration Statement Form. The Company shall effect any registration
requested under this section 2 by the filing of a registration statement on
such form as the Company in its sole discretion may determine.
(c) Expenses. The Registration Expenses in connection with any registration
which may be requested under this section 2 shall be borne by the Company. The
Participating McCaw Shareholders shall bear the expense of fees and
disbursements of counsel retained by the Participating McCaw Shareholders,
premiums and other costs of policies of insurance obtained by the Participating
McCaw Shareholders against liabilities arising out of the public offering of
the Registrable Securities, any fees and disbursements of underwriters
customarily paid by sellers of securities and all underwriting discounts and
commissions and transfer taxes, if any, relating to Registrable Securities.
(d) Selection of Underwriters. The lead managing underwriter of a sale under
a registration statement effected by means of a firm commitment underwriting
shall be selected by the Company, and the Participating McCaw Shareholders
shall be entitled to designate one co-managing underwriter, which co-managing
underwriter shall be reasonably acceptable to the Company. Any additional co-
managing underwriters shall be selected by the Company.
3. Registration Procedures. If the Company is required to use all reasonable
efforts to effect the registration of Registrable Securities under the
Securities Act as provided in section 2, the Company will as expeditiously as
possible:
B-13
<PAGE>
(i) prepare and (within 30 days after the receipt of a Request) file with
the Commission the requisite registration statement to effect such
registration and use all reasonable efforts to cause such registration
statement to become effective, provided that before filing such
registration statement or any amendments thereto, the Company will furnish
to the counsel selected by the Participating McCaw Shareholders copies of
all such documents proposed to be filed, which documents will be subject to
the review of such counsel before any such filing is made, and the Company
will comply with any reasonable request made by such counsel to make
changes in any information contained in such documents relating to the
Participating McCaw Shareholders;
(ii) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection
therewith as may be necessary to maintain the effectiveness of such
registration and to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement until the earlier of the termination of this Agreement pursuant
to section 16, such time as all of such securities have been disposed of
and the date which is 90 days after the date of initial effectiveness of
such registration statement;
(iii) furnish to the Participating McCaw Shareholders such number of
conformed copies of such registration statement and of each such amendment
and supplement thereto (in each case including all exhibits), such number
of copies of the prospectus contained in such registration statements
(including each to be completed prospectus and any summary prospectus) and
any other prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such other
documents, including documents incorporated by reference, as the
Participating McCaw Shareholders may reasonably request;
(iv) use all reasonable efforts to register or qualify all Registrable
Securities under such other securities or blue sky laws of such
jurisdictions as the Participating McCaw Shareholders shall reasonably
request, to keep such registration or qualification in effect for so long
as such registration statement remains in effect, and take any other action
which may be reasonably necessary or advisable to enable the Participating
McCaw Shareholders to consummate the disposition in such jurisdictions of
the securities owned by the Participating McCaw Shareholders, except that
the Company shall not for any such purpose be required to qualify generally
to do business as a foreign corporation in any jurisdiction wherein it
would not but for the requirements of this subdivision (iv) be obligated to
be so qualified or to consent to general service of process in any such
jurisdiction;
(v) use all reasonable efforts to cause all Registrable Securities
covered by such registration statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to
enable the Participating McCaw Shareholders to consummate the disposition
of such Registrable Securities;
(vi) furnish to the Participating McCaw Shareholders a signed
counterpart, addressed to the Participating McCaw Shareholders (and the
underwriters, if any), of
(x) an opinion of counsel for the Company, dated the effective date
of such registration statement (and, if such registration includes an
underwritten public offering, dated the date of the closing under the
underwriting agreement), reasonably satisfactory in form and substance
to the Participating McCaw Shareholders, and
(y) a "comfort" letter, dated the effective date of such registration
statement (and, if such registration includes an underwritten public
offering, dated the date of the closing under the underwriting
agreement), signed by the independent public accountants who have
certified the Company's financial statements included in such
registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' letter, with respect to events subsequent to the date of such
financial statements all as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to the underwriters in
underwritten public offerings of securities and, in the case of the
accountants' letter, such other financial matters, as the Participating
McCaw Shareholders (or the underwriters, if any) may reasonably request;
B-14
<PAGE>
(vii) immediately notify the Participating McCaw Shareholders at any time
when the Company becomes aware that a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made, and at the request of the
Participating McCaw Shareholders promptly prepare and furnish to the
Participating McCaw Shareholders a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made;
(viii) otherwise use all reasonable efforts to comply with the Securities
Act and the Exchange Act and with all applicable rules and regulations of
the Commission, and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at
least twelve months, but not more than eighteen months, beginning with the
first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, and not file any amendment or supplement to
such registration statement or prospectus to which the Participating McCaw
Shareholders shall have reasonably objected on the grounds that such
amendment or supplement does not comply in all material respects with the
requirements of the Securities Act, having been furnished with a copy
thereof at least five business days prior to the filing thereof;
(ix) provide a transfer agent and registrar for all Registrable
Securities covered by such registration statement not later than the
effective date of such registration statement; and
(x) use all reasonable efforts to list all Common Stock covered by such
registration statement on any securities exchange on which any of the
Common Stock is then listed.
The Company may require the Participating McCaw Shareholders to furnish the
Company such information regarding the Participating McCaw Shareholders and the
distribution of such securities as the Company may from time to time reasonably
request in writing.
The McCaw Shareholders agree by acquisition of the Registrable Securities
that upon receipt of any notice from the Company of the happening of any event
of the kind described in subdivision (vii) of this section 3, the Participating
McCaw Shareholders will forthwith discontinue their disposition of Registrable
Securities pursuant to the registration statement relating to such Registrable
Securities until the Participating McCaw Shareholders' receipt of the copies of
the supplemented or amended prospectus contemplated by subdivision (vii) of
this section 3 and, if so directed by the Company, will deliver to the Company
(at the Company's expense) all copies then in the Participating McCaw
Shareholders' possession, other than permanent file copies, of the prospectus
relating to such Registrable Securities current at the time of receipt of such
notice.
4. Underwritten Offerings. (a) Requested Underwritten Offerings. If requested
by the underwriters for any underwritten offerings by the Participating McCaw
Shareholders of not less than an aggregate of 10,000,000 shares of Common
Stock, as adjusted to reflect any stock splits, combinations of shares,
reclassifications or comparable transactions under a registration requested
pursuant to section 2, the Company will enter into a customary underwriting
agreement with such underwriters for such offering, to contain such
representations and warranties by the Company and such other terms as are
customarily contained in agreements of this type, including, without
limitation, indemnities to the effect and to the extent provided in section 6.
The Participating McCaw Shareholders shall be a party to such underwriting
agreement and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
B-15
<PAGE>
for the benefit of the Participating McCaw Shareholders and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of the
Participating McCaw Shareholders. The Participating McCaw Shareholders shall
not be required to make any representations or warranties to or agreement with
the Company or the underwriters other than representations, warranties or
agreements regarding the Participating McCaw Shareholders and the Participating
McCaw Shareholders' intended method of distribution and any other
representation required by law.
(b) Holdback Agreement; Postponement. (i) The McCaw Shareholders agree by
acquisition of the Registrable Securities, if so required by the managing
underwriter, not to effect any public sale or distribution of such securities
during the seven days prior to and the 90 days after any underwritten
registration by the Company (either for its own account or for the benefit of
the holders of any securities of the Company) has become effective (or such
period of time shorter than 90 days that is sufficient and appropriate, in the
opinion of the managing underwriter, in order to complete the sale and
distribution of securities included in such registration); provided that the
right to delay registration pursuant to this section 4(b)(i) shall not be
exercised more than one time during the Twelve Month Period or more than one
time during the Eighteen Month Period.
(ii) The Company may postpone any registration which is requested pursuant to
section 2 if it determines that in view of the advisability of deferring public
disclosure of material corporate developments or other information, the
disclosures required to be made pursuant thereto would not be in the best
interests of the Company at that time.
5. Preparation; Reasonable Investigation. In connection with the preparation
and filing of the registration statement under the Securities Act, the Company
will give the Participating McCaw Shareholders, their underwriters, if any, and
their respective counsel, the opportunity to participate in the preparation of
such registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give
each of them such access to its books and records and such opportunities to
discuss the business of the Company with its officers, its counsel and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of the Participating McCaw Shareholders' and
such underwriters' respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
6. Indemnification. (a) Indemnification by the Company. In the event of any
registration of any Registrable Securities of the Company under the Securities
Act, the Company will, and hereby does, indemnify and hold harmless the
Participating McCaw Shareholders, each other Person who participates as an
underwriter in the offering or sale of such securities and each other Person
who controls any such underwriter within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to which
the Participating McCaw Shareholders or any such underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the registration statement under which such Registrable Securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and the Company will reimburse the Participating McCaw
Shareholders and each such underwriter and controlling person for any legal or
any other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, liability, action or proceedings; provided
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment
B-16
<PAGE>
or supplement in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by the
Participating McCaw Shareholders specifically stating that it is for use in the
preparation thereof, and provided further that the Company shall not be liable
to any Person who participates as an underwriter in the offering or sale of
Registrable Securities or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such Person's failure to send or give
a copy of the final prospectus or supplement to the Persons asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Registrable Securities to such
Person if such statement or omission was corrected in such final prospectus or
supplement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of the Participating McCaw Shareholders
or any such underwriter or controlling person and shall survive the transfer of
such securities by the Participating McCaw Shareholders.
(b) Indemnification by the Participating McCaw Shareholders. The Company may
require, as a condition to including any Registrable Securities in any
registration statement filed pursuant to section 2, that the Company shall have
received an undertaking satisfactory to it from the Participating McCaw
Shareholders to indemnify and hold harmless (in the same manner and to the same
extent as set forth in subdivision (a) of this section 6) the Company, each
director of the Company, each officer of the Company and each other Person, if
any, who controls the Company within the meaning of the Securities Act, with
respect to any untrue statement or alleged untrue statement of a material fact
in or omission or alleged omission to state a material fact from such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, if such
untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information furnished
to the Company through an instrument duly executed by the Participating McCaw
Shareholders specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the Company
or any such director, officer, or controlling person and shall survive the
transfer of such securities by the Participating McCaw Shareholders.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified party of
notice of the commencement of any action or proceeding involving a claim
referred to in the preceding subdivisions of this section 6, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such action,
provided that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under the
preceding subdivisions of this section 6, except to the extent that the
indemnifying party is actually prejudiced by such failure to give notice. In
case any such action is brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly notified
to the extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to the indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation.
(d) Other Indemnification. Indemnification similar to that specified in the
preceding subdivisions of this section 6 (with appropriate modifications) shall
be given by the Company and the Participating McCaw Shareholders with respect
to any required registration or other qualification of securities under any
Federal or state law or regulation of governmental authority other than the
Securities Act.
(e) Indemnification Payments. The indemnification required by this section 6
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
B-17
<PAGE>
(f) Contribution. If for any reason the foregoing indemnity is unavailable,
or is insufficient to hold harmless an indemnified party, then the indemnifying
party shall contribute to the amount paid or payable by the indemnified party
as a result of the expense, loss, damage or liability, (i) in such proportion
as is appropriate to reflect the relative fault of the indemnifying party on
the one hand and the indemnified party on the other (determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or omission relates to information supplied by the indemnifying
party or the indemnified party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission), or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law or provides a lesser sum to the indemnified
party than the amount hereinafter calculated, in the proportion as is
appropriate to reflect not only the relative fault of the indemnifying party
and the indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other, as
well as any other relevant equitable considerations. No indemnified party
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any indemnifying
party who was not guilty of such fraudulent misrepresentation.
7. Covenants Relating to Rule 144. The Company will file in a timely manner,
information, documents and reports in compliance with the Exchange Act and
will, at its expense, forthwith upon the request of the McCaw Shareholders,
deliver to the McCaw Shareholders a certificate, signed by the Company's
principal financial officer, stating (a) the Company's name, address and
telephone number (including area code), (b) the Company's Internal Revenue
Service identification number, (c) the Company's Commission file number, (d)
the number of shares of Common Stock outstanding as shown by the most recent
report or statement published by the Company, and (e) whether the Company has
filed the reports required to be filed under the Exchange Act for a period of
at least 90 days prior to the date of such certificate and in addition has
filed the most recent annual report required to be filed thereunder. If at any
time the Company is not required to file reports in compliance with either
section 13 or section 15(d) of the Exchange Act, the Company at its expense
will forthwith upon the written request of the McCaw Shareholders, make
available adequate current public information with respect to the Company
within the meaning of paragraph (c)(2) of Rule 144 of the General Rules and
Regulations promulgated under the Securities Act.
8. Notices, etc. All notices, requests, demands or other communications
required by or otherwise with respect to this Agreement shall be in writing and
shall be deemed to have been duly given to any party when delivered personally
(by courier service or otherwise), when delivered by telecopy if receipt is
confirmed by return telecopy, or five days after being mailed by registered or
certified mail, return receipt requested, in each case to the applicable
addresses set forth below:
If to any of the McCaw Shareholders:
c/o McCaw Cellular Communications, Inc.
5400 Carillon Point
Kirkland, Washington 98033
Attn: Mr. Craig O. McCaw
Telecopy: (206) 828-8450
with a copy to:
Stephen E. Jacobs, Esq.
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Telecopy: (212) 310-8007
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If to the Company:
American Telephone and Telegraph Company
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Attn: Robert E. Scannell, Esq.
Vice President-Law and Secretary
Telecopy: (908) 221-7205
with a copy to:
Richard D. Katcher, Esq.
Wachtell, Lipton, Rosen & Katz
299 Park Avenue
New York, New York 10171
Telecopy: (212) 371-1658
or to such other address as such party shall have designated by notice so given
to each other party.
9. Amendments, Waivers, etc. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated except by an
instrument in writing signed by the party against whom enforcement is sought or
as expressly provided in section 16. The failure of any party to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
10. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties relating to the subject matter hereof and
supersedes all prior agreements and understandings relating to such subject
matter.
11. Severability. If any term of this Agreement or the application thereof to
any party or circumstance shall be held invalid or unenforceable to any extent,
the remainder of this Agreement and the application of such term to the other
parties or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by applicable law.
12. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of any successor by merger of any corporate party hereto.
13. Governing Law. This Agreement and all disputes hereunder shall be
governed by and construed and enforced in accordance with the laws of the State
of New York.
14. Name, Captions. The name assigned this Agreement and the section captions
used herein are for convenience of reference only and shall not affect the
interpretation or construction hereof.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all, the
parties hereto.
16. Termination. This Agreement shall terminate and be of no further force
and effect upon the expiration of the Eighteen Month Period; provided that,
notwithstanding this section 16, the provisions of section 6 shall survive the
termination of this Agreement; and provided further that the obligations set
forth in section 7 shall survive as to each McCaw Shareholder until such time
as such McCaw Shareholder can dispose of all Registrable Securities pursuant to
Rule 145(d)(2) or (d)(3).
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In Witness Whereof, the parties have duly executed this Agreement as of the
date first above written.
American Telephone and Telegraph
Company
By: _________________________________
Title:
_____________________________________
Craig O. McCaw
_____________________________________
John E. McCaw, Jr.
_____________________________________
Bruce R. McCaw
_____________________________________
Keith W. McCaw
_____________________________________
Wayne M. Perry
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<PAGE>
APPENDIX C
BRITISH TELECOMMUNICATIONS PLC
BT CENTRE
81 NEWGATE STREET
LONDON EC1A 7AJ
August 16, 1993
To: American Telephone and Telegraph Company
295 North Maple Avenue
Maple Ridge, New Jersey 07920
Attn: Alex J. Mandl, Executive Vice President
Re: Agreement and Plan of Merger with McCaw Cellular
Communications, Inc.
Dear Sirs:
Reference is hereby made to (i) that certain Purchase Agreement (as
heretofore amended, the "BT Purchase Agreement") dated January 19, 1989,
between McCaw Cellular Communications, Inc., a Delaware corporation (the
"Company"), and BT USA Holdings, Inc., a Delaware corporation ("BT USA"), and
(ii) that certain Agreement and Plan of Merger, of even date herewith, between
American Telephone and Telegraph Company, a New York corporation ("AT&T"),
Ridge Merger Corporation, a Delaware corporation and a wholly owned subsidiary
of AT&T, and the Company (the "Merger Agreement"; capitalized terms used
without definition herein having the meanings ascribed thereto in the Merger
Agreement).
1. Each of BT and BT USA hereby consents to, and waives its rights under the
BT Purchase Agreement to the extent necessary to permit (without violation of
the terms of the BT Purchase Agreement), the execution and delivery of the
Merger Agreement and the consummation of the transactions contemplated thereby.
The Company shall be entitled to rely on such consent and waiver as if it were
a party to this letter agreement. AT&T represents and warrants that except for
the Merger Agreement, a complete and correct copy of which is annexed hereto,
and the agreements, schedules and disclosure statements referred to therein,
there presently exists no arrangements, either written or oral, between AT&T on
the one hand and the Company on the other hand relating to or arising out of
the transactions contemplated by the Merger Agreement.
2. BT and BT USA hereby agree to the termination, effective as of the
Effective Time, of each of the following agreements:
(a) BT Purchase Agreement;
(b) Amended and Restated Guaranty Agreement, dated as of January 19,
1989, as heretofore amended, between BT and the Company;
(c) Shareholders Agreement, dated as of June 20, 1989, between BT USA,
the Company and certain stockholders of the Company listed on the signature
pages thereto; and
(d) Registration Rights Agreement, dated as of June 20, 1989 between BT
USA and the Company.
The effect of this paragraph 2 shall be that the parties to the agreements
referenced in clauses (a) through (d) of this paragraph 2 shall be released
from all of their respective obligations and liabilities thereunder as of the
Effective Time. AT&T shall cause the Company, at the Effective Time, to agree
to such termination and release. Each of BT and BT USA represents and warrants
that except for the agreements listed above and except for the Waiver and
Agreement dated the date hereof between BT USA and the Company, complete
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and correct copies of all of which are annexed hereto, there presently exists
no arrangements, either written or oral, between BT or BT USA on the one hand
and the Company on the other hand effecting, relating to the Company or any of
its Subsidiaries or the securities of the Company.
3. Each of BT and BT USA hereby agrees and represents to AT&T that:
(a) it will not, during the period from the execution hereof until 30
days prior to the Effective Time, transfer or otherwise dispose of (or
permit the transfer or other disposition of) any securities of the Company
or any shares of capital stock of AT&T beneficially owned by it or by any
entity with respect to which it has the power to control the decision by
such entity to transfer or otherwise dispose of such securities, except
that it may (i) transfer or otherwise dispose of a number of Shares which
is less than 10% of the aggregate number of Shares held by it, or (ii)
otherwise transfer or dispose of Shares to the extent that such transfers
or dispositions will not prevent AT&T from accounting for the Merger as a
pooling of interests, taking into account the actions of other Affiliates;
(b) it will not, from and after 30 days prior to the Effective Time,
sell, transfer or otherwise dispose of (or permit the sale, transfer or
other disposition of) any securities of the Company or any AT&T Common
Shares received by it in the Merger or other shares of capital stock of
AT&T beneficially owned by it or by any entity with respect to which it has
the power to control the decision by such entity to transfer or otherwise
dispose of such securities, until after such time as results covering at
least 30 days of combined operations of the Company and AT&T have been
published by AT&T, in the form of a quarterly earnings report, an effective
registration statement filed with the SEC, a report to the SEC on Form 10-
K, 10-Q or 8-K, or any other public filing or announcement which includes
the combined results of operations, except that it may make such transfers
or other dispositions that, taking into account the actions of other
Affiliates, will not prevent AT&T from accounting for the Merger as a
pooling of interests;
(c) it will not prior to the Effective Time form, join or participate in,
or encourage the formation of, a partnership, limited partnership,
syndicate or other group, or otherwise act in concert with or finance or
become a shareholder of any other Person, for the purpose of acquiring,
holding, voting or disposing of Class A Common Stock or Class B Common
Stock or any other securities of the Company, nor will it acquire, propose
to acquire or agree to acquire, or finance or become or be a partner or
shareholder of any Person who directly or indirectly acquires, proposes to
acquire or agrees to acquire, any shares of Class A Common Stock or Class B
Common Stock or any other class of securities of the Company or any of its
Subsidiaries, in any such case equal to or greater than 5% of the
outstanding securities of such class; and
(d) it will vote all Shares owned by it or which it has the right to vote
in favor of approval of the Merger at the Stockholders Meeting.
In the event BT or BT USA desires to transfer or otherwise dispose of
securities of the Company or shares of capital stock of AT&T beneficially owned
by it during the time period from the execution hereof until 30 days prior to
the Effective Time, AT&T will use its reasonable efforts to obtain the
concurrence of the SEC that such transfer or other disposition will not
jeopardize AT&T's ability to account for the Merger as a pooling of interests.
4. Neither BT nor BT USA will make any sale, transfer or other disposition of
AT&T Common Shares in violation of the Securities Act or the Rules and
Regulations promulgated thereunder.
5. At the Effective Time, BT USA and AT&T will enter into a Registration
Rights Agreement, in the form attached hereto as Exhibit A, with respect to the
AT&T Common Shares to be received by BT USA in the Merger. The reference to the
number 15 million in section 2(a) thereof shall be adjusted to reflect any
stock splits, combinations of shares, reclassifications or comparable
transactions between the date hereof and the Effective Time.
6. AT&T will provide prompt notification to BT and BT USA when any material
consent or approval of governmental or regulatory authorities that is required
to consummate the transactions contemplated by the Merger Agreement is obtained
or given.
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7. The provisions of this letter will automatically terminate and be of no
further force or effect upon termination of the Merger Agreement in accordance
with its terms prior to the consummation of the transactions contemplated
thereby.
8. The provisions of this letter shall be binding upon BT, BT USA, AT&T and
each of their successors and assigns. This letter shall be governed by and
interpreted in accordance with the internal laws of the State of New York
without regard to principles of conflict of laws. Each of BT, BT USA and AT&T
hereby irrevocably submits to the exclusive jurisdiction of the United States
District Court for the Southern District of New York or any court of the State
of New York located in the City of New York in any action, suit or proceeding
arising in connection with this Agreement, and agrees that any such action,
suit or proceeding shall be brought only in such court (and waives any
objection based on forum non conveniens or any other objection to venue
therein); provided, however, that such consent to jurisdiction is solely for
the purpose referred to in this paragraph and shall not be deemed to be a
general submission to the jurisdiction of said Courts or in the State of New
York other than for such purposes. Each of BT, BT USA and AT&T hereby waives
any right to a trial by jury in connection with any such action, suit or
proceeding.
Any notice required to be sent to any party hereunder shall be sent by
registered or certified mail, return receipt requested, using the addresses set
forth herein or such other address as shall be furnished in writing by the
parties.
This letter constitutes the complete understanding between AT&T, BT and BT
USA concerning the subject matter hereof.
Very truly yours,
BRITISH TELECOMMUNICATIONS plc
/s/ Malcolm Argent
By: _________________________________
Name: Malcolm Argent
Title: Group Director and
Secretary
BT USA Holdings, Inc.
/s/ Jan L. Vinokour
By: _________________________________
Name: Jan L. Vinokour
Title: VP and Legal and Secretary
Agreed and Accepted:
American Telephone and Telegraph
Company
/s/ Robert E. Scannell
By: _________________________________
Name: Robert E. Scannell
Title: Vice President--Law and
Secretary
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EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement, dated as of , 199 , between American
Telephone and Telegraph Company, a New York corporation (the "Company"), and BT
USA Holdings, Inc., a Delaware corporation ("BT") which is a wholly-owned
subsidiary of British Telecommunications plc ("British Telecom").
Whereas, pursuant to an Agreement and Plan of Merger dated August 16, 1993
(the "Merger Agreement"), between the Company, Ridge Merger Corporation, a
Delaware corporation ("Merger Sub") and a wholly owned subsidiary of the
Company, and McCaw Cellular Communications Inc., a Delaware corporation
("McCaw"), Merger Sub has merged into McCaw on the date hereof, and pursuant
thereto shares of Class A Common Stock, par value $.01 of McCaw ("McCaw Class A
Stock"), and shares of Class B Common Stock, par value $.01 of McCaw ("McCaw
Class B Stock"), held by BT have been converted into shares of Common Stock,
par value $1.00 per share of the Company ("Common Stock"); and
Whereas, in a letter agreement dated August 16, 1993 the Company has agreed
to enter into this Agreement to provide certain registration rights to BT with
respect to such shares of Common Stock.
Now, Therefore, in consideration of the premises and the mutual agreements
set forth herein, the parties agree as follows:
1. Definitions. As used herein, the following terms shall have the following
meanings:
(a) Commission: the Securities and Exchange Commission, and any successor
thereto.
(b) Exchange Act: the Securities Exchange Act of 1934, as amended, and any
successor thereto, and the rules and regulations thereunder.
(c) NASD: the National Association of Securities Dealers, Inc.
(d) Person: any individual or corporation, trust, partnership or other legal
entity.
(e) Registrable Securities: (i) the shares of Common Stock acquired by BT on
the date hereof pursuant to the Merger Agreement and (ii) any securities issued
or issuable with respect to any Common Stock referred to in subdivision (i) by
way of conversion, exchange, stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular Registrable Securities, once
issued such securities shall cease to be Registrable Securities when (x) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (y) they shall have
been distributed to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act or (z) they shall have ceased to be
outstanding.
(f) Registration Expenses: all expenses incident to the Company's performance
of or compliance with this Agreement, including, without limitation, all
registration, filing and NASD fees, all fees and expenses of complying with
securities or blue sky laws, all word processing, duplicating and printing
expenses, messenger and delivery expenses, the fees and disbursements of
counsel for the Company and of its independent public accountants, including
the expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance, premiums and other costs of
policies of insurance obtained by the Company against liabilities arising out
of the public offering of Registrable Securities being registered and any fees
and disbursements of underwriters customarily paid by issuers, but excluding
fees and disbursements of counsel retained by BT, premiums and other costs of
policies of insurance obtained by BT against liabilities arising out of the
public offering of the Registrable Securities being registered, any fees and
disbursements of
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underwriters customarily paid by sellers of securities who are not the issuers
of such securities and all underwriting discounts and commissions and transfer
taxes, if any, relating to Registrable Securities.
(g) Securities Act: the Securities Act of 1933, as amended, and any successor
thereto, and the rules and regulations thereunder.
2. Registration on Request. (a) Request. At any time subsequent to the
fifteenth day of the second full calendar month commencing after the date of
this Agreement, and prior to the second anniversary of the date of this
Agreement, upon the written request (a "Request") of BT requesting that the
Company effect the registration under the Securities Act of all or part of BT's
Registrable Securities (but in any event not less than an aggregate of
15,000,000 shares of Common Stock, as adjusted to reflect any stock splits,
combinations of shares, reclassifications or comparable transactions, or such
lesser number of shares as shall then constitute all of the Registrable
Securities then owned by BT) and specifying the intended method of disposition
thereof, the Company will use all reasonable efforts to effect the registration
under the Securities Act of the Registrable Securities which the Company has
been so requested to register in the Request; provided that as to any
registration statement which becomes effective subsequent to the Initial Period
(as hereinafter defined), such Registrable Securities shall be registered only
for disposition in a firm commitment underwriting. BT agrees that it will not
sell any Registrable Securities until the date on which results covering at
least 30 days of combined operations of McCaw and the Company have been
published by the Company (the date of such publication being referred to herein
as the "Publication Date"), in the form of a quarterly earnings report, an
effective registration statement filed with the Commission, a report to the
Commission on Form 10-K, 10-Q or 8-K, or any other public filing or
announcement which includes the combined results of operations, and the Company
agrees that if the Publication Date has not occurred on or prior to the date
the first registration statement requested under this section 2 is required to
be filed pursuant to section 4(i), then such results shall be included in such
registration statement.
The Company may include in such registration other securities for sale for
its own account or for the account of any other Person, provided that as to any
registration statement which becomes effective during the 120 day period after
the Publication Date (such 120 day period being referred to herein as the
"Initial Period", which Initial Period may be extended for up to an additional
60 days as set forth in the following two sentences) the Company may include
such other securities only with the consent of BT. The Initial Period may be
extended by a period, not to exceed 60 days, equal to the length of time in the
Initial Period during which (i) trading generally shall have been suspended or
materially limited on or by the New York Stock Exchange, (ii) trading of any
securities of the Company shall have been suspended on the New York Stock
Exchange, (iii) a general moratorium on commercial banking activities in New
York shall have been declared by either federal or New York state authorities,
or (iv) there shall have occurred and be continuing hostilities or any calamity
or crisis that is material and adverse, and in the case of any of the events
specified in clauses (i) through (iv), such event singly or together with any
other such event made it, in the reasonable judgment of the lead U.S.
investment banker for BT, confirmed in writing, impracticable to market the
Registrable Securities for such period of time. The Initial Period may also be
extended, if BT makes a Request before, on or within two business days after
the Publication Date, by a period of time equal to the length of time between
the date the registration statement is filed with the SEC and the date such
registration statement becomes effective.
(b) Registration Statement Form. The Company shall effect any registration
requested under this section 2 by the filing of a registration statement on
such form as the Company in its sole discretion may determine.
(c) Expenses. The Registration Expenses in connection with each registration
requested under this section 2 shall be borne by the Company. BT shall bear the
expense of fees and disbursements of counsel retained by BT, premiums and other
costs of policies of insurance obtained by BT against liabilities arising out
of the public offering of the Registrable Securities being registered, any fees
and disbursements of
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underwriters customarily paid by sellers of securities and all underwriting
discounts and commissions and transfer taxes, if any, relating to Registrable
Securities.
(d) Selection of Underwriters. The lead managing underwriter of a requested
registration effected by means of a firm commitment underwriting pursuant to
this section 2 shall be selected by the Company, and BT shall be entitled to
designate one co-managing underwriter, which co-managing underwriter shall be
reasonably acceptable to the Company. Any additional co-managing underwriters
shall be selected by the Company.
(e) Limitation on Requests. The Company shall not be required to effect any
registration upon the request of BT if at the time of such request the Company
is in the process of, or at any time within 6 months prior to such request it
has completed, a registered distribution of any of its securities as to which
it delivered to BT a notice pursuant to section 3, except that, notwithstanding
any of the foregoing provisions, if BT had previously requested inclusion of
securities in an incidental registration pursuant to section 3 hereof and the
amount so requested to be included had been cut back by the managing
underwriter more than 10% pursuant to section 3(e), then the above reference in
this section 2(e) to a 6 month period shall instead be deemed to be a period of
such duration as may be recommended by the managing underwriter of such
registered distribution or if such distribution is not underwritten, by the
Company's lead investment banker (as determined on the basis of the Company's
three most recent underwritten offerings of securities), but in any event not
more than 6 months from the date of its most recently completed distribution;
provided that the right to delay registration pursuant to this section 2(e)
shall not be exercised during the Initial Period.
(f) Delay in Registration. Notwithstanding anything to the contrary herein,
the Company may postpone any registration which is requested pursuant to this
section 2 for a period of up to 90 days if it determines that in view of the
advisability of deferring public disclosure of material corporate developments
or other information, such registration and the disclosures required to be made
pursuant thereto would not be in the best interests of the Company at the time;
provided that the right to delay registration pursuant to this section 2(f)
shall not be exercised more than one time during any consecutive 12 month
period; and provided further that the right to delay registration pursuant to
this section 2(f) shall not be exercised during the Initial Period.
3. Incidental Registration. (a) Right to Include Registrable Securities. If
the Company at any time after the Publication Date and prior to the second
anniversary of the date of this Agreement proposes to register shares of Common
Stock under the Securities Act (other than by a registration on Form S-4 or S-8
or any successor or similar forms or for purposes of facilitating the Company's
dividend reinvestment or similar plans), whether or not for sale for its own
account, in a manner which would permit registration of Registrable Securities
by the Company for sale to the public under the Securities Act, it will each
such time give prompt written notice to BT of its intention to do so and of
BT's rights under this section 3. Upon the written request of BT made within 20
days after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by BT and, if such request is
made other than during the Initial Period, that the intended method of
disposition thereof is a firm commitment underwriting), the Company will use
all reasonable efforts to effect the registration under the Securities Act of
all Registrable Securities which the Company has been so requested to register
by BT, to the extent requisite to permit the disposition (if other than during
the Initial Period, pursuant to a firm commitment underwriting) of the
Registrable Securities so to be registered, by inclusion of such Registrable
Securities in the registration statement which covers the securities which the
Company proposes to register, provided that if, at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of such securities, the Company may, at its election, give
written notice of such determination to BT and, thereupon, (i) in the case of a
determination not to register, the Company shall be relieved of its obligation
to register any Registrable Securities in connection with such registration
(but not from its obligation to pay the Registration Expenses in connection
therewith), without prejudice, however, to the rights of BT to request that
such registration be effected as a registration under section 2,
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and (ii) in the case of a delay in registering, the Company shall be permitted
to delay registering any Registrable Securities for the same period as the
delay in registering such other securities. No registration effected under this
section 3 shall relieve the Company of its obligation to effect any
registration upon request under section 2 except to the extent provided in
section 2(e).
(b) Registration Statement Form. The Company shall effect any registration
under this section 3 by the filing of a registration statement on such form as
the Company in its sole discretion may determine.
(c) Expenses. The Registration Expenses in connection with each registration
requested under this section 3 shall be borne by the Company. BT shall bear the
expense of fees and disbursements of counsel retained by BT, premiums and other
costs of policies of insurance obtained by BT against liabilities arising out
of the public offering of the Registrable Securities being registered, its pro
rata share of any fees and disbursements of underwriters customarily paid by
sellers of securities who are not the issuers of such securities and all
underwriting discounts and commissions and transfer taxes, if any, relating to
Registrable Securities.
(d) Selection of Underwriters. The Company shall effect any registration
under this section 3 with or without underwriters as the Company in its sole
discretion may determine, and if such registration is to be an underwritten
registration, the Company may select such underwriters without consultation
with BT.
(e) Priority in Incidental Registrations. During the Initial Period, if a
registration as to which this section 3 is applicable involves an underwritten
offering by the Company or any other Person (other than BT) and the managing
underwriter advises the Company in writing that, in its opinion, the number of
securities proposed to be included in such registration exceeds the number
which can be sold in such offering without materially and adversely affecting
the successful marketing thereof or the number which can be sold without
materially adversely affecting the trading market in Common Stock, the Company
will include in such registration the number of shares of Common Stock which
the Company is so advised can be sold in such offering without such material
adverse effect, and the number of shares proposed by the Company to be sold for
its own account and the number of Registrable Securities requested to be
included in such registration by BT and any other Persons shall be reduced on a
pro rata basis, based upon the number of shares proposed to be sold by the
Company for its own account and the number of shares requested to be included
by BT and such other Persons. At any time other than during the Initial Period,
if a registration as to which this section 3 is applicable involves an
underwritten offering by the Company or any other Person (other than BT) and
the managing underwriter advises the Company in writing that, in its opinion,
the number of securities proposed to be included in such registration exceeds
the number which can be sold in such offering without materially and adversely
affecting the successful marketing thereof or the number which can be sold
without materially adversely affecting the trading market in Common Stock, the
Company will include in such registration to the extent of the number of shares
of Common Stock which the Company is so advised can be sold in such offering
without such material adverse effect (i) first, the securities proposed by the
Company to be sold for its own account and (ii) second, other securities
(including Registrable Securities) requested to be included in such
registration pro rata among all Persons both requesting and entitled to such
registration on the basis of the number of such securities requested to be
included by such Persons.
4. Registration Procedures. If and whenever the Company is required to use
all reasonable efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in sections 2 and 3, the Company will as
expeditiously as possible:
(i) prepare and (within 30 days after the receipt of a Request and within
30 days after the receipt of a request by BT in response to a notice
delivered by the Company pursuant to section 3(a)) file with the Commission
the requisite registration statement to effect such registration and use
all reasonable efforts to cause such registration statement to become
effective, provided that before filing such registration statement or any
amendments thereto, the Company will furnish to the counsel selected by BT
copies of all such documents proposed to be filed, which documents will be
subject to the review of
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such counsel before any such filing is made, and the Company will comply
with any reasonable request made by such counsel to make changes in any
information contained in such documents relating to BT, and provided
further however, that the Company may discontinue any registration of its
securities which are not Registrable Securities at any time prior to the
effective date of the registration statement relating thereto;
(ii) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection
therewith as may be necessary to maintain the effectiveness of such
registration and to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement until the earlier of such time as all of such securities have
been disposed of and (x) in the case of a registration statement filed
during the Initial Period, until the later to occur of (A) the expiration
of the Initial Period and (B) 90 days after such registration statement
becomes effective or (y) in the case of a registration statement filed
after the Initial Period, 90 days after such registration statement becomes
effective;
(iii) furnish to BT such number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus contained
in such registration statements (including each to be completed prospectus
and any summary prospectus) and any other prospectus filed under Rule 424
under the Securities Act, in conformity with the requirements of the
Securities Act, and such other documents, including documents incorporated
by reference, as BT may reasonably request;
(iv) use all reasonable efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement
under such other securities or blue sky laws of such jurisdictions as BT
shall reasonably request, to keep such registration or qualification in
effect for so long as such registration statement remains in effect, and
take any other action which may be reasonably necessary or advisable to
enable BT to consummate the disposition in such jurisdictions of the
securities owned by BT, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not but for the
requirements of this subdivision (iv) be obligated to be so qualified or to
consent to general service of process in any such jurisdiction;
(v) use all reasonable efforts to cause all Registrable Securities
covered by such registration statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to
enable BT to consummate the disposition of such Registrable Securities;
(vi) furnish to BT a signed counterpart, addressed to BT (and the
underwriters, if any), of
(x) an opinion of counsel for the Company, dated the effective date
of such registration statement (and, if such registration includes an
underwritten public offering, dated the date of the closing under the
underwriting agreement), reasonably satisfactory in form and substance
to BT, and
(y) a "comfort" letter, dated the effective date of such registration
statement (and, if such registration includes an underwritten public
offering, dated the date of the closing under the underwriting
agreement), signed by the independent public accountants who have
certified the Company's financial statements included in such
registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' letter, with respect to events subsequent to the date of such
financial statements all as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to the underwriters in
underwritten public offerings of securities and, in the case of the
accountants' letter, such other financial matters, as BT (or the
underwriters, if any) may reasonably request;
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(vii) immediately notify BT, at any time when the Company becomes aware
that a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under
which they were made, and at the request of BT promptly prepare and furnish
to BT a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made;
(viii) otherwise use all reasonable efforts to comply with the Securities
Act and the Exchange Act and with all applicable rules and regulations of
the Commission, and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at
least twelve months, but not more than eighteen months, beginning with the
first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, and not file any amendment or supplement to
such registration statement or prospectus to which BT shall have reasonably
objected on the grounds that such amendment or supplement does not comply
in all material respects with the requirements of the Securities Act,
having been furnished with a copy thereof at least five business days prior
to the filing thereof;
(ix) provide a transfer agent and registrar for all Registrable
Securities covered by such registration statement not later than the
effective date of such registration statement; and
(x) use all reasonable efforts to list all Common Stock covered by such
registration statement on any securities exchange on which any of the
Common Stock is then listed.
The Company may require BT to furnish the Company such information regarding BT
and the distribution of such securities as the Company may from time to time
reasonably request in writing.
BT agrees by acquisition of such Registrable Securities that upon receipt of
any notice from the Company of the happening of any event of the kind described
in subdivision (vii) of this section 4, BT will forthwith discontinue BT's
disposition of Registrable Securities pursuant to the registration statement
relating to such Registrable Securities until BT's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (vii) of this
section 4 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies then in BT's possession, other than permanent
file copies, of the prospectus relating to such Registrable Securities current
at the time of receipt of such notice. In the event the Company shall give any
such notice, the period referred to in subdivision (ii) of this section 4 shall
be extended by a number of days equal to the number of days during the period
from and including the giving of notice pursuant to subdivision (vii) of this
section 4 to and including the date when BT shall have received the copies of
the supplemented or amended prospectus contemplated by subdivision (vii) of
this section 4.
5. Underwritten Offerings. (a) Requested Underwritten Offerings. If requested
by the underwriters for any underwritten offerings by BT pursuant to a
registration requested pursuant to section 2, the Company will enter into a
customary underwriting agreement with such underwriters for such offering, to
contain such representations and warranties by the Company and such other terms
as are customarily contained in agreements of this type, including, without
limitation, indemnities to the effect and to the extent provided in section 7.
BT shall be a party to such underwriting agreement and may, at its option,
require that any or all of the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of BT and that any or
all of the conditions precedent to the obligations of such underwriters under
such underwriting agreement be conditions precedent to the obligations of BT.
BT shall not be required to make any representations or warranties to or
agreement with the Company or the underwriters other than the holdback
agreement
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contemplated by section 5(c), representations, warranties or agreements
regarding BT and BT's intended method of distribution and any other
representation required by law.
(b) Incidental Underwritten Offerings. If the Company at any time proposes to
register any of its securities under the Securities Act as contemplated by
section 3 and such securities are to be distributed by or through one or more
underwriters, the Company will, subject to the provisions of section 3(b), use
all reasonable efforts, if requested by BT, to arrange for such underwriters to
include the Registrable Securities to be offered and sold by such holder among
the securities to be distributed by such underwriters. BT shall be a party to
the underwriting agreement between the Company and such underwriters and may,
at its option, require that any or all of the representations and warranties
by, and the other agreements on the part of, the Company to and for the benefit
of such underwriters shall also be made to and for the benefit of BT and that
any or all of the conditions precedent to the obligations of such underwriters
under such underwriting agreement be conditions precedent to the obligations of
BT. BT shall not be required to make any representations or warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements regarding BT and BT's intended method of distribution
and any other representation required by law.
(c) Holdback Agreements. (i) BT agrees by acquisition of the Registrable
Securities, if so required by the managing underwriter, not to effect any
public sale or distribution of such securities during the seven days prior to
and the 90 days after any underwritten registration by the Company (either for
its own account or for the benefit of the holders of any securities of the
Company) has become effective (or such period of time shorter than 90 days that
is sufficient and appropriate, in the opinion of the managing underwriter, in
order to complete the sale and distribution of securities included in such
registration), provided that the holdback agreement contemplated by this
section 5(c) shall not be effective during the Initial Period.
(ii) The Company agrees not to effect any public sale or distribution of
Common Stock for cash during the Initial Period after any registration pursuant
to section 2 or 3 has become effective (or such period of time shorter than 90
days that is sufficient and appropriate, in the opinion of the lead U.S.
investment banker for BT, in order to complete the sale and distribution of
securities included in such registration), (x) except as part of such
registration, or pursuant to registrations on Form S-4 and S-8 or any successor
or similar forms thereto, or pursuant to registrations theretofore filed with
the Commission under Rule 415 or any successor or similar rule, or (y) unless,
in the opinion of the lead U.S. investment banker for BT, such sale or
distribution by the Company will not adversely affect the sale and distribution
of securities included in such registration; provided that this paragraph
5(c)(ii) shall not restrict the Company's ability to effect a public sale or
distribution of Common Stock at any time other than during the Initial Period.
6. Preparation; Reasonable Investigation. In connection with the preparation
and filing of each registration statement under the Securities Act, the Company
will give BT, its underwriters, if any, and their respective counsel, the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto, and will give each of them such access
to its books and records and such opportunities to discuss the business of the
Company with its officers, its counsel and the independent public accountants
who have certified its financial statements as shall be necessary, in the
opinion of BT and such underwriters' respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
7. Indemnification. (a) Indemnification by the Company. In the event of any
registration of any Registrable Securities of the Company under the Securities
Act, the Company will, and hereby does, indemnify and hold harmless BT, its
directors and officers, each other Person who participates as an underwriter in
the offering or sale of such securities and each other Person, if any, who
controls BT or any such underwriter within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to which
BT or any such director or officer or underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any
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untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such Registrable Securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and the Company will reimburse BT and each such
director, officer, underwriter and controlling person for any legal or any
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceedings; provided that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company through an instrument duly executed by BT
specifically stating that it is for use in the preparation thereof, and
provided further that the Company shall not be liable to any Person who
participates as an underwriter in the offering or sale of Registrable
Securities or any other Person, if any, who controls such underwriter within
the meaning of the Securities Act in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of such Person's failure to send or give a copy of the final
prospectus to the Persons asserting an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such
statement or omission was corrected in such final prospectus. Such indemnity
shall remain in full force and effect regardless of any investigation made by
or on behalf of BT or any such director, officer, underwriter or controlling
person and shall survive the transfer of such securities by BT.
(b) Indemnification by BT. The Company may require, as a condition to
including any Registrable Securities in any registration statement filed
pursuant to section 2 or 3, that the Company shall have received an undertaking
satisfactory to it from BT to indemnify and hold harmless (in the same manner
and to the same extent as set forth in subdivision (a) of this section 7) the
Company, each director of the Company, each officer of the Company and each
other Person, if any, who controls the Company within the meaning of the
Securities Act, with respect to any untrue statement or alleged untrue
statement of a material fact in or omission or alleged omission to state a
material fact from such registration statement, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, if such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company through an instrument duly
executed by BT specifically stating that it is for use in the preparation of
such registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the Company
or any such director, officer, or controlling person and shall survive the
transfer of such securities by BT.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified party of
notice of the commencement of any action or proceeding involving a claim
referred to in the preceding subdivisions of this section 7, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such action,
provided that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under the
preceding subdivisions of this section 7, except to the extent that the
indemnifying party is actually prejudiced by such failure to give notice. In
case any such action is brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly notified
to the extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to the indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation.
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(d) Other Indemnification. Indemnification similar to that specified in the
preceding subdivisions of this section 7 (with appropriate modifications) shall
be given by the Company and BT with respect to any required registration or
other qualification of securities under any Federal or state law or regulation
of governmental authority other than the Securities Act.
(e) Indemnification Payments. The indemnification required by this section 7
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
(f) Contribution. If for any reason the foregoing indemnity is unavailable,
or is insufficient to hold harmless an indemnified party, then the indemnifying
party shall contribute to the amount paid or payable by the indemnified party
as a result of the expense, loss, damage or liability, (i) in such proportion
as is appropriate to reflect the relative fault of the indemnifying party on
the one hand and the indemnified party on the other (determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or omission relates to information supplied by the indemnifying
party or the indemnified party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission), or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law or provides a lesser sum to the indemnified
party than the amount hereinafter calculated, in the proportion as is
appropriate to reflect not only the relative fault of the indemnifying party
and the indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other, as
well as any other relevant equitable considerations. No indemnified party
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any indemnifying
party who was not guilty of such fraudulent misrepresentation.
8. Covenants Relating to Rule 144. The Company will file in a timely manner,
information, documents and reports in compliance with the Exchange Act and
will, at its expense, forthwith upon the request of BT, deliver to BT a
certificate, signed by the Company's principal financial officer, stating (a)
the Company's name, address and telephone number (including area code), (b) the
Company's Internal Revenue Service identification number, (c) the Company's
Commission file number, (d) the number of shares of Common Stock outstanding as
shown by the most recent report or statement published by the Company, and (e)
whether the Company has filed the reports required to be filed under the
Exchange Act for a period of at least 90 days prior to the date of such
certificate and in addition has filed the most recent annual report required to
be filed thereunder. If at any time the Company is not required to file reports
in compliance with either section 13 or section 15(d) of the Exchange Act, the
Company at its expense will forthwith upon the written request of BT, make
available adequate current public information with respect to the Company
within the meaning of paragraph (c)(2) of Rule 144 of the General Rules and
Regulations promulgated under the Securities Act.
9. Notices, etc. All notices, requests, demands or other communications
required by or otherwise with respect to this Agreement shall be in writing and
shall be deemed to have been duly given to any party when delivered personally
(by courier service or otherwise), when delivered by telecopy if receipt is
confirmed by return telecopy, or five days after being mailed by registered or
certified mail, return receipt requested, in each case to the applicable
addresses set forth below:
If to BT:
British Telecommunications plc
BT Centre
81 Newgate Street
London EC1A 7AJ
Attn: Colin R. Green
Solicitor and Chief Legal Adviser
Telecopy:
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with a copy to:
Albert F. Lilley, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
Telecopy:
If to the Company:
American Telephone and Telegraph Company
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Attn: Robert E. Scannell, Esq.
Vice President-Law and Secretary
Telecopy: (908) 221-7205
with a copy to:
Richard D. Katcher, Esq.
Wachtell, Lipton, Rosen & Katz
299 Park Avenue
New York, New York 10171
Telecopy: (212) 371-1658
or to such other address as such party shall have designated by notice so given
to each other party.
10. Amendments, Waivers, etc. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated except by an
instrument in writing signed by the party against whom enforcement is sought or
as expressly provided in section 17. The failure of any party to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
11. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties relating to the subject matter hereof and
supersedes all prior agreements and understandings relating to such subject
matter.
12. Severability. If any term of this Agreement or the application thereof to
any party or circumstance shall be held invalid or unenforceable to any extent,
the remainder of this Agreement and the application of such term to the other
parties or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by applicable law.
13. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of any successor by merger of any corporate party hereto.
BT may transfer the Registrable Securities and its rights hereunder to British
Telecom or any direct or indirect wholly-owned subsidiary of British Telecom.
14. Governing Law. This Agreement and all disputes hereunder shall be
governed by and construed and enforced in accordance with the laws of the State
of New York.
15. Name, Captions. The name assigned this Agreement and the section captions
used herein are for convenience of reference only and shall not affect the
interpretation or construction hereof.
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16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all, the
parties hereto.
17. Termination. This Agreement shall terminate and be of no further force
and effect at any time that BT is able to dispose of all Registrable Securities
then held by it in a three-month period pursuant to Rule 145(d)(1) (or any
successor provision) under the Securities Act (assuming for purposes of this
section 17 that Rule 145(d)(1) is at all times applicable to BT); provided
that, notwithstanding this section 17, the provisions of section 7 shall
survive the termination of this Agreement.
In Witness Whereof, the parties have duly executed this Agreement as of the
date first above written.
American Telephone and Telegraph
Company
By: _________________________________
Title:
BT USA Holdings, Inc.
By: _________________________________
Title:
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APPENDIX D
MCCAW CELLULAR COMMUNICATIONS, INC.
5400 CARILLON POINT
KIRKLAND, WA 98033
AUGUST 16, 1993
BT USA Holdings, Inc.
100 Park Avenue
New York, N.Y. 10017
WAIVER AND AGREEMENT
Gentlemen:
We refer to the Amended and Restated Purchase Agreement, dated as of January
19, 1989 and as further amended (the "Purchase Agreement"), between McCaw
Cellular Communications, Inc. ("MCCI") and BT USA Holdings, Inc. ("BT"), and
the related Guaranty delivered by British Telecommunications plc ("British
Telecom"), and to the Agreement and Plan of Merger, dated as of the date hereof
(the "Merger Agreement"), among MCCI, American Telephone and Telegraph Company
("AT&T") and Ridge Merger Corp. Capitalized terms used herein without
definition have the meanings ascribed to them in the Purchase Agreement.
In consideration of the mutual promises herein, MCCI and BT hereby agree,
effective immediately upon execution of this Waiver and Agreement, as follows:
1. BT hereby irrevocably waives the provisions of section 9.6 of the
Purchase Agreement with respect to (but only with respect to) the
execution, delivery and performance of the Merger Agreement and the
consummation of the transactions contemplated thereby, and BT expressly
agrees that such provisions are not applicable to such Merger Agreement and
such transactions contemplated thereby; provided that the waiver and
agreement provided for in this paragraph will automatically terminate and
be of no further force and effect upon the termination of the Merger
Agreement prior to the closing of the transactions contemplated thereby.
2. For so long as the Merger Agreement is in effect, MCCI hereby agrees
that British Telecom's investment in and relationship with MCI
Communications Corporation ("MCI") on the terms that have heretofore been
publicly disclosed shall not be deemed to constitute a breach of BT's
obligations under section 12(c) of the Purchase Agreement or British
Telecom's obligations under section 6(c) of the Guaranty, provided that the
agreement set forth in this paragraph will automatically terminate and be
of no further force and effect upon the date that is five days after
delivery of notice by MCCI to BT and British Telecom of the termination of
the Merger Agreement prior to the closing of the transactions contemplated
thereby; and provided further that the provisions of this paragraph shall
not be relevant in determining, nor admissible in any proceeding to
determine or otherwise used in any way to interpret, at any time after the
termination of the Merger Agreement whether British Telecom's investment in
and relationship with MCI is or is not a breach of the aforesaid
obligations of BT and British Telecom.
3. For so long as the Merger Agreement is in effect, one nominee of AT&T
may be elected to the Board of Directors of MCCI and such election will not
violate any provision of the Purchase Agreement, the Shareholders Agreement
or any other agreement between MCCI and BT, notwithstanding any provision
of any such agreement to the contrary; provided that the agreement provided
for in this paragraph (i) supersedes the letter dated June 25, 1993 from BT
to MCCI regarding the appointment of a nominee of AT&T to the Board of
Directors of MCCI and (ii) will automatically terminate and be of no
further force and effect upon the termination of the Merger Agreement prior
to any closing of the transactions contemplated thereby.
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<PAGE>
4. Except as expressly set forth in this Waiver and Agreement, the
provisions of the Purchase Agreement, the Shareholders Agreement and the
Guaranty remain in full force and effect until the closing of the
transactions contemplated by the Merger Agreement, at which time the
Purchase Agreement, the Shareholders Agreement and the Guaranty will
automatically terminate and be canceled and will be deemed null and void
and of no further force and effect and each of MCCI and BT and their
affiliates and their respective successors and assigns, will thereupon be
released from all of their respective obligations thereunder. It is hereby
acknowledged that such termination, cancellation and release is and will be
without any liability or obligation, except as is expressly set forth in
this Waiver and Agreement, on the part of either of MCCI and BT or on the
part of any of their present or former officers, directors or affiliates or
their respective successors and assigns.
5. Each party hereto shall, and shall cause its respective affiliates to,
execute and deliver such additional instruments and other documents and
take such further actions as may reasonably be necessary or appropriate to
effectuate, carry out and comply with the terms of this Waiver and
Agreement and to effectuate the closing of the transactions contemplated by
the Merger Agreement.
6. Each party hereto, by executing and delivering this Waiver and
Agreement, hereby represents and warrants to the other that this Waiver and
Agreement has been duly authorized by all necessary corporate action on the
part of such party, has been duly executed and delivered by a duly
authorized officer of such party and constitutes the valid and binding
agreement of such party enforceable against it in accordance with its
terms, except that such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
of general application which may affect the enforcement of creditors'
rights generally. Each party also agrees and acknowledges that its
execution and delivery of this Waiver and Agreement is an essential
inducement to the parties' executing and delivering the Merger Agreement
and that absent such Waiver the Merger Agreement would not be executed and
delivered. Each of MCCI, on the one hand and BT and British Telecom, on the
other hand, hereby further represents and warrants to the other that,
except for the Merger Agreement and the other agreements, complete and
correct copies of which are annexed hereto or have been delivered
simultaneously herewith, there presently exist no other written agreements
between AT&T or any of its directors, officers, stockholders or affiliates,
on the one hand, and MCCI or BT and British Telecom, as the case may be, or
any of their respective directors, officers, stockholders or affiliates, on
the other, relating to or arising out of the transactions contemplated by
the Merger Agreement.
7. The provisions of this Waiver and Agreement shall be binding upon BT,
British Telecom and MCCI and each of their successors and assigns. This
Waiver and Agreement shall be governed by and interpreted in accordance
with the internal laws of the State of New York without regard to
principles of conflict of laws. Each of BT, British Telecom and MCCI hereby
irrevocably submits to the exclusive jurisdiction of the United States
District Court for the Southern District of New York or any court of the
State of New York located in the City of New York in any action, suit or
proceeding arising in connection with this Waiver and Agreement, and agrees
that any such action, suit or proceeding shall be brought only in such
court (and waives any objection based on forum non conveniens or any other
objection to venue therein); provided, however, that such consent to
jurisdiction is solely for the purpose referred to in this paragraph and
shall not be deemed to be a general submission to the jurisdiction of said
Courts or in the State of New York other than for such purposes. Each of
BT, British Telecom and MCCI hereby waives any right to a trial by jury in
connection with any such action, suit or proceeding.
Any notice required to be sent to any party hereunder shall be sent by
registered or certified mail, return receipt requested, using the addresses set
forth herein (in the case of MCCI, to the attention of General Counsel; in the
case of BT, to the attention of Jan Vinokour, Esq.; and in the case of British
Telecom, to British Telecom Centre, 81 Newgate Street, London, England EC1A
7AJ, Attention: Colin R. Green LLB) or such other address as shall be furnished
in writing by the parties.
This letter constitutes the complete understanding among BT, British Telecom
and MCCI concerning the subject matter hereof.
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Please confirm your agreement with the foregoing by executing the enclosed
copy in the space provided below and returning a fully-executed copy to us.
Sincerely,
McCaw Cellular Communications, Inc.
/s/ Wayne M. Perry
By: _________________________________
Title: Vice Chairman
Agreed to and Acknowledged by:
BT USA Holdings, Inc.
/s/ Jan L. Vinokour
By: _________________________________
Title: VP and Legal Secretary
British Telecommunications plc
/s/ Malcolm Argent
By: _________________________________
Title: Group Director and
Secretary
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APPENDIX E
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
295 NORTH MAPLE AVENUE
BASKING RIDGE, NEW JERSEY 07920
AUGUST 16, 1993
McCaw Cellular Communications, Inc.
5400 Carillon Point
Kirkland, Washington 98033
Attention: Mr. Craig O. McCaw
Chairman of the Board and
Chief Executive Officer
Gentlemen:
In consideration of the payment of $1,000, receipt of which is hereby
acknowledged, and the promises made herein by the Company (as defined below),
and in order to induce the Company to enter into the Agreement (as defined
below), American Telephone and Telegraph Company, a New York corporation
("Offeror"), hereby irrevocably offers, subject to the terms and conditions set
forth below, to purchase, for an aggregate of $600 million, 11,707,317 shares
of Class A Common Stock (the "Shares") of McCaw Cellular Communications, Inc.,
a Delaware corporation (the "Company"), at a price per share of $51.25 (the
"Per Share Price"). (This offer is hereinafter referred to as the "Offer".)
The Offer, which may be accepted in whole but not in part, will remain open
and in full force and effect until 5:00 p.m., New York time, on the date (the
"Expiration") that is 15 days after the "Trigger Date" (as hereinafter
defined), at which time, if not previously accepted, it will expire and be of
no further force and effect. The Offer may not be accepted prior to the Trigger
Date. In order for the Offer to be accepted, a counterpart of this letter,
executed under "Acceptance of Offer" as provided on the signature page hereof,
must be received by the undersigned prior to the Expiration. The "Trigger Date"
shall be the date on which the Agreement and Plan of Merger, dated as of the
date hereof, among the Company, Offeror and Ridge Merger Corporation (the
"Agreement") shall have been terminated in accordance with Article IX thereof.
If the Offer is accepted, the purchase and sale of the Shares will be on the
following terms:
1. Closing. The closing shall take place on the fifth business day following
Offeror's receipt as aforesaid of an executed counterpart of this letter
accepting the Offer, or on such later date as may be permitted by the
provisions of paragraph 5. At the closing, (a) Offeror shall deliver to the
Company $600 million by check drawn on immediately available funds or by wire
transfer of such amount to an account specified by the Company no less than
five business days prior to the closing, and (b) the Company shall deliver to
Offeror certificates representing the Shares registered in the name of Offeror.
2. Registration Rights. If requested by Offeror, the Company shall as
promptly as practicable, except as otherwise set forth in this paragraph 2, use
its best efforts to register, at the Company's sole cost and expense (except
for underwriting discounts or fees, if any, and fees of Offeror's counsel, all
of which will be borne by Offeror), the sale by Offeror of all or a portion of
the Shares under the Securities Act of 1933 (the "Act") and under such state
securities laws as Offeror may reasonably request and keep same effective for
at least six months. The Company shall not be required to effect more than two
registrations under the Act and shall not be required to use its best efforts
to seek to effect the same if both the Company's and Offeror's counsel advise
that such is not necessary to effect the disposition of shares as desired by
Offeror. Notwithstanding anything to the contrary herein, the Company may by
action of its Board of Directors postpone any registration requested for a
period of up to 90 days if the Board of Directors in good faith determines at
its meetings during the period that such registration would require disclosures
that would not be in the best interests of the Company at the time. If any such
registration is to be effected, the Company
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<PAGE>
and Offeror, in connection with each registration, will enter into customary
agreements (including indemnity agreements and agreements with underwriters)
necessary or desirable to effect such disposition. In addition, the Company
shall from and after the closing afford Offeror customary "piggyback"
registration rights (on similar terms, including the payment by the Company of
all costs and expenses, other than Offeror's underwriting discounts or fees, if
any, and fees of Offeror's counsel). Any "piggyback" registration rights
utilized by Offeror will not count against Offeror's primary registration
rights set forth above.
3. Warranties. (a) The Company, by its acceptance of the Offer, represents
and warrants to Offeror that the Shares will be duly and validly authorized and
issued to Offeror and will be fully paid and nonassessable.
(b) Offeror hereby represents and warrants to the Company that (i) the Offer
has been duly and validly authorized by all necessary corporate action on the
part of Offeror, (ii) the Offer (and Offeror's obligations hereunder upon the
acceptance of the Offer in accordance with the terms hereof) constitutes the
legal, valid and binding obligation of Offeror enforceable in accordance with
its terms, except as the same may be limited by applicable bankruptcy laws and
equitable principles, and (iii) Shares acquired by Offeror pursuant hereto will
be acquired for investment and without a view to distribution. Offeror
acknowledges receipt from the Company of the Company Disclosure Statement,
dated as of the date hereof, delivered pursuant to the Agreement.
4. Changes in Stock; Ownership. Offeror shall have no obligation hereunder if
prior to the closing any of the events set forth in the following subparagraph
(a) or subparagraph (b) occurs without the consent of the Offeror:
(a) Except as set forth in the next two succeeding sentences, the Company
shall have taken, or entered into an agreement an effect of which will be
to take, any of the following actions: (i) amending the terms of the
Company's Class A shares or Class B shares or otherwise amending its
Certificate of Incorporation to adversely affect any such shares; (ii)
changing all or a portion of the currently outstanding Class A shares or
Class B shares into a different number or kind of securities or cash or
other property; (iii) paying any dividend with respect to the Company's
Class A shares or Class B shares; (iv) redeeming or otherwise acquiring any
shares of the Company; (v) selling or otherwise disposing of assets if such
sale or disposition would violate the Agreement in any material respect; or
(vi) issuing voting securities and/or rights (whether or not currently
exercisable) to acquire voting securities representing (assuming exercise
of such rights) a 5% or greater voting interest in the Company.
Notwithstanding the foregoing, none of the following shall constitute an
event referred to in the immediately preceding sentence (or relieve Offeror
of any of its obligations hereunder): (i) conversions by any individual
holder of Class B shares, on an individual-specific basis, of such holder's
Class B shares into Class A shares, so long as such conversions do not
cause the parties to the shareholders agreement referred to in clause (i)
of the first sentence of paragraph 4(b) to own less than a majority of the
voting power of the Company; (ii) the payment of dividends with respect to
the Company's Class A shares and Class B shares paid in shares of the
Company's capital stock, so long as (A) Offeror receives a proportional
share of such dividend at the closing of its purchase of Shares hereunder
as if it had held the Shares on the record date for such dividend and (B)
the terms of the capital stock issued in such dividend do not require or
provide for the payment of regular dividends thereon and no dividends are
declared or paid thereon; and (iii) redemptions or other acquisitions of
shares (A) up to 1/2% of the outstanding equity interest of the Company in
any six-month period, (B) up to a dollar amount of redemptions or
acquisitions of shares equal to the dollar value (as of the date of
issuance) of shares issued by the Company for acquisitions, but only to the
extent such redemption or acquisition of shares is consummated within 12
months of such issuance of shares, and (C) as required to comply with
foreign ownership laws and regulations.
(b) Except as set forth in the next two succeeding sentences, Craig O.
McCaw ("Stockholder") and/or other members of Stockholder's family shall
have transferred or granted rights (whether or not currently exercisable)
to acquire, or entered into an agreement an effect of which will be to
transfer or
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<PAGE>
grant such rights to acquire: (i) "designated party" status under the
currently existing shareholders agreement among Stockholder and his family
relating to the Company or any similar status under any new or amended
shareholders agreement; or (ii) voting securities of the Company to or by
any one person (or to or by more than one person acting as a group within
the meaning of the Securities Exchange Act of 1934), if following such
transfer or grant or consummation of such agreement, such person or group
would have a 5% or greater voting interest in the Company (assuming
exercise of any such rights, and assuming acquisition of all other voting
securities of the Company which such person or group has a right (whether
or not currently exercisable) or an agreement to acquire). Notwithstanding
the foregoing, none of the following shall constitute an event referred to
in the immediately preceding sentence (or relieve Offeror of any of its
obligations hereunder): (i) the appointment of a new "designated party"
upon Stockholder's death or incapacity (so long as no consideration, other
than appropriate compensation to an individual for service in such
capacity, is directly or indirectly paid or given in consideration of such
appointment); (ii) any transfer by operation of will or the laws of descent
and distribution; (iii) any transfer, grant or agreement to or with Offeror
(or an announcement of intention with respect thereto); (iv) any transfer
of voting securities to a member of Stockholder's family or a trust or
other entity all the beneficiaries of or beneficial owners of which are
Stockholder and members of his family, so long as such person or entity is
a party to the shareholders agreement referred to in clause (i) of the
first sentence of this subparagraph (b); and (v) any sales of Class A
shares in the public market in normal broker's transactions, so long as
following any such sales the parties to the shareholders agreement referred
to in clause (i) of the first sentence of this subparagraph (b) own a
majority of the voting power of the Company.
5. Further Condition. (a) The obligation of Offeror to effect the purchase of
Shares is further conditioned upon: (i) the expiration by the closing of the
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (the "HSR Act") and the making and receipt by the closing of all
other necessary regulatory filings and approvals; (ii) the absence at the
closing of any injunction or other order of any court or administrative body
prohibiting completion of the transactions contemplated hereby or imposing
damages as a result thereof; and (iii) the performance by the Company of its
obligations hereunder and the accuracy of its representations and warranties
contained in paragraph 3 hereof.
(b) Offeror shall seek promptly to comply with the HSR Act by filing the
Notification and Report Form thereunder no later than ten days after the
termination of the Agreement, and after termination of the Agreement to
expeditiously make or seek to obtain any other necessary filings or approvals
known to it to be required; provided, however, that Offeror shall not be
required to make any HSR Act filing, or any other filing that also requires a
filing by the Company, unless and until the Company makes such filing. Each of
the parties hereto shall use all reasonable efforts to satisfy the conditions
set forth in paragraph 5(a).
(c) If the conditions set forth in paragraph 5(a) shall not have been
satisfied, the closing may be delayed by the Company by notice to Offeror for a
period not to exceed 240 days to permit additional time to satisfy the
conditions set forth in clauses (i) and (ii) thereof or 60 days in the case of
the condition set forth in clause (iii) thereof. If such conditions shall not
be satisfied at the end of such 240-day or 60-day period, neither Offeror nor
the Company shall have any further obligation hereunder, provided that this
sentence shall not relieve any party of liability for breach.
6. Repurchase of Shares. Notwithstanding anything to the contrary herein, in
the event that it is finally judicially determined (after all available
appeals) by decision of a court of competent jurisdiction that the Company's
breach of any of its obligations under the Agreement was the cause of or
resulted in the failure of the Merger to occur on or before the date of
termination, at any time within 60 days after the date of such final judicial
determination Offeror may deliver a written notice (the "Notice") to the
Company requesting that the Company repurchase all the Shares then held by
Offeror, at a price per share equal to the Per Share Price plus an amount
calculated at the rate of 7% per annum thereon (calculated on the basis of a
365-day year and actual days elapsed) compounded annually from and including
the date of closing hereunder until
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<PAGE>
but not including the date of repurchase pursuant to this paragraph 6. Any such
Notice shall be irrevocable when delivered, and the Company shall be obligated
to repurchase such Shares in accordance with the provisions of this paragraph
6.
The closing of such repurchase shall be held at the principal office of the
Company at 11:00 A.M. local time on the 90th day after date of delivery of the
Notice or at such other time and place as the parties may agree. At such
closing, (x) Offeror shall deliver certificates representing such Shares, duly
endorsed for transfer and accompanied by all requisite stock transfer taxes,
and such Shares shall be free and clear of any liens, charges, encumbrances or
rights of others of any nature whatsoever arising from any action or inaction
by Offeror, and Offeror shall so represent and warrant, and (y) Offeror shall
also represent and warrant that Offeror is the record and beneficial owner of
such Shares with good and marketable title thereto. The Company shall deliver
at such closing, by certified or official bank check or wire transfer of
immediately available funds, the aforesaid purchase price. Each party to the
transaction shall further represent and warrant that the transaction has been
authorized by all necessary action (corporate or otherwise) on its part. Each
party shall also execute such documents as are otherwise reasonably required to
effectuate such transaction.
7. Other Provisions. (a) All notices and other communications hereunder shall
be in writing and shall be deemed received if delivered personally or by
courier or overnight delivery service, or by registered or certified mail
(return receipt requested), to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
if to Offeror:
American Telephone and Telegraph Company
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Attention: Marilyn J. Wasser, Esq.
Room 6245H2
with a copy to:
Richard D. Katcher, Esq.
Wachtell, Lipton, Rosen & Katz
299 Park Avenue
New York, New York 10171
if to the Company or to Stockholder:
McCaw Cellular Communications, Inc.
5400 Carillon Point
Kirkland, Washington 98033
Attention: Mr. Tom A. Alberg
and
McCaw Cellular Communications, Inc.
1250 Connecticut Avenue, N.W.
Suite 401
Washington, D.C. 20036
Attention: Andrew A. Quartner, Esq.
with a copy to:
Gary D. Friedman, Esq.
Friedman & Kaplan
875 Third Avenue
New York, New York 10022
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<PAGE>
(b) This letter embodies the entire agreement and understanding between the
parties relating to the subject matter hereof (which shall not be deemed to be
the subject matter of the Agreement) and supersedes all prior agreements and
understanding relating to such subject matter. There are no representations,
warranties or covenants by the parties hereto relating to this letter or the
Offer other than those expressly set forth herein and in the Company Disclosure
Statement.
(c) This letter and the Offer may not be amended, changed, supplemented,
waived or otherwise modified except by an instrument in writing signed by the
party against whom enforcement is sought.
(d) This letter and the Offer contained herein, and all disputes hereunder,
shall be governed by, and construed in accordance with, the internal laws of
the State of New York, without regard to principles of conflicts of law.
If you desire to accept the Offer, please act prior to the Expiration as set
forth in the first paragraph of this letter.
Very truly yours,
American Telephone and Telegraph
Company
/s/ Robert E. Scannell
By: _________________________________
Title: Vice President--Law and
Secretary
Acceptance of Offer
Accepted and Agreed:
McCaw Cellular Communications, Inc.
By: _________________________________
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<PAGE>
APPENDIX F
[LETTERHEAD OF SALOMON BROTHERS]
August 16, 1993
Special Committee of the Board of Directors
McCaw Cellular Communications, Inc.
5400 Carillon Point
Kirkland, Washington 98033
Dear Sirs:
You have requested our opinion as investment bankers as to the fairness, from
a financial point of view, to the stockholders of McCaw Cellular
Communications, Inc. (the "Company"), of the consideration to be received by
such stockholders in connection with the proposed merger (the "Merger") of the
Company with a subsidiary of American Telephone and Telegraph Company ("AT&T"),
pursuant to the draft Merger Agreement dated as of August 15, 1993, among AT&T,
a subsidiary of AT&T and the Company (the "Merger Agreement").
In arriving at our opinion, we have reviewed the Merger Agreement and its
related schedules. We have also reviewed certain publicly available business
and financial information relating to the Company, as well as certain other
information, including financial projections, provided to us by the Company. We
have discussed the past and current operations and financial condition and
prospects of the company with its senior management. With respect to AT&T, we
have reviewed only publicly available business and financial information. We
have also considered such other information, financial studies, analyses,
investigations and financial, economic and market criteria which we deemed
relevant.
We understand that British Telecommunications plc and certain of its
affiliates (collectively, "British Telecom") are negotiating with AT&T certain
arrangements relating to British Telecom in connection with the Merger. We have
not reviewed any such arrangements and we express no opinion as to any of the
terms of such arrangements.
We have assumed and relied without independent verification on the accuracy
and completeness of the information reviewed by us for the purpose of this
opinion. With respect to the Company's financial projections, we have assumed
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the Company's management as to the future
financial performance of the Company. We have not make an independent
evaluation or appraisal of the assets of the Company or of AT&T, nor have we
been furnished with any such appraisals. Our opinion is necessarily based upon
business, market, economic and other conditions as they exist on, and can be
evaluated as of, the date of this letter.
We have acted as financial advisor to the Special Committee of the Board of
Directors of the Company in connection with the Merger and will receive a fee
for our services which is payable upon the delivery of this opinion.
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<PAGE>
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the consideration to be received by the stockholders of the
Company in connection with the Merger is fair to such stockholders (other than
AT&T, British Telecom or any of their respective affiliates) from a financial
point of view.
Very truly yours,
SALOMON BROTHERS INC
/s/ Frederic M. Seegal
By: _________________________________
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<PAGE>
APPENDIX G
[LETTERHEAD OF LAZARD FRERES & CO.]
August 15, 1993
The Board of Directors
McCaw Cellular Communications, Inc.
5400 Carillon Point
Kirkland, Washington 98033
Dear Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders (collectively, the "Stockholders") of the Class A Common
Stock, par value $0.01 per share, and the Class B Common Stock, par value $0.01
per share (collectively, the "Common Stock"), of McCaw Cellular Communications,
Inc. ("McCaw"), of the consideration (the "Merger Consideration") to be
received by the Stockholders in the proposed merger (the "Merger") of McCaw and
a subsidiary of American Telephone and Telegraph Company ("AT&T").
We understand that the Merger is to be effected pursuant to an Agreement and
Plan of Merger among AT&T, a subsidiary of AT&T and McCaw (the "Merger
Agreement"), whereby each share of Class A Common Stock and Class B Common
Stock of McCaw (other than any shares of Common Stock owned by AT&T, all of
which will be canceled), will be converted into the right to receive one share
of common stock, par value $1.00 per share, of AT&T (the "AT&T Common Stock"),
subject to adjustment as described in the Merger Agreement. We further
understand that the Merger is intended to be accounted for as a pooling-of-
interests in accordance with generally accepted accounting principles as
described in Accounting Principles Board Opinion Number 16.
Lazard Freres & Co. has, from time to time, acted as financial advisor to
McCaw and has acted as its financial advisor in connection with the proposed
Merger. We have, among other things:
(i) reviewed the terms and conditions of the draft Merger Agreement dated
as of August 15, 1993,
(ii) analyzed certain historical business and financial information
relating to McCaw and AT&T, including the Annual Reports to
Stockholders and Annual Reports on Form 10-K of McCaw and AT&T for each
of the fiscal years ended December 31, 1988 through 1992, and Quarterly
Reports on Form 10-Q of McCaw and AT&T for the quarters ended March 31,
June 30, and September 30 for each of the same fiscal years and for the
quarter ended March 31, 1993,
(iii) reviewed certain financial forecasts and other data provided to us by
McCaw relating to the business of McCaw,
(iv) conducted discussions with members of the senior management of McCaw
and limited discussions with members of the senior management of AT&T
with respect to the business and prospects of McCaw and AT&T and the
strategic objectives of each,
(v) reviewed public information with respect to certain other companies in
lines of businesses we believe to be generally comparable to the
businesses of McCaw and AT&T,
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<PAGE>
(vi) reviewed the financial terms of certain recent business combinations
in the telecommunications industry specifically and in other industries
generally,
(vii) reviewed the historical stock prices and trading volumes of the
Common Stock and of the AT&T Common Stock, and
(viii) conducted such other financial studies, analyses and investigations
as we deemed appropriate.
We have neither received nor reviewed any financial projections or other non-
public information prepared by AT&T pertaining to the future prospects of AT&T.
We understand that British Telecommunications plc and certain of its
affiliates (collectively, "BT") have entered into certain arrangements with
AT&T in connection with the Merger Agreement. We have not reviewed any of such
arrangements between BT and AT&T, and we express no opinion as to any of the
terms or conditions of any such arrangements.
We have relied upon the accuracy and completeness of the financial and other
information provided by McCaw and AT&T to us and have not undertaken any
independent verification of such information or any independent valuation or
appraisal of any of the assets of McCaw or AT&T. With respect to the financial
forecasts referred to above, we have assumed that they have been reasonably
prepared on a basis reflecting the best currently available judgments of
McCaw's management as to the future financial performance of McCaw. Further,
our opinion is based on economic, monetary and market conditions existing on
the date of this opinion. We express no opinion as to what the value of the
AT&T Common Stock actually will be when issued to the Stockholders upon
consummation of the Merger.
In rendering our opinion, we have also assumed that obtaining the necessary
regulatory and governmental approvals for the proposed Merger may significantly
delay consummation of the Merger, and that, in the course of obtaining such
approvals, no restriction will be imposed that will have a material adverse
effect on the contemplated benefits of the proposed Merger.
We have not reviewed any proxy statement or similar document that may be
prepared for use in connection with the proposed Merger. In addition, we were
not asked by the Board of Directors to solicit third party indications of
interest in acquiring all or any part of McCaw, nor have we actively sought any
such offers.
Our engagement and the opinion expressed herein is solely for the benefit of
McCaw's Board of Directors and is not on behalf of and is not intended to
confer rights or remedies upon AT&T, any stockholders of McCaw or AT&T, or any
other person other than McCaw's Board of Directors.
Based on the foregoing and such other factors as we deemed relevant,
including our assessment of current economic, monetary and market conditions,
we are of the opinion that as of the date hereof, the Merger Consideration is
fair to the Stockholders (other than AT&T, BT or any of their respective
affiliates) from a financial point of view.
Very truly yours,
LAZARD FRERES & CO.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to the statutes of the State of New York, a director or officer of a
corporation is entitled, under specified circumstances, to indemnification by
the corporation against reasonable expenses, including attorneys' fees,
incurred by him in connection with the defense of a civil or criminal
proceeding to which he has been made, or threatened to be made, a party by
reason of the fact that he was such director or officer. In certain
circumstances, indemnity is provided against judgments, fines and amounts paid
in settlement. In general, indemnification is available where the director or
officer acted in good faith, for a purpose such director or officer reasonably
believed to be in the best interests of the corporation. Specific court
approval is required in some cases. The foregoing statement is qualified in its
entirety by reference to Sections 715, 717 and 721 through 725 of the New York
Business Corporation Law ("NYBCL").
The by-laws of the registrant provide that the registrant is authorized, by
(i) a resolution of shareholders, (ii) a resolution of directors or (iii) an
agreement providing for such indemnification, to the fullest extent permitted
by applicable law, to provide indemnification and to advance expenses to its
directors and officers in respect of claims, actions, suits, or proceedings
based upon, arising from, relating to, or by reason of the fact that any such
director or officer serves or served in such capacity with the corporation or
at the request of the registrant in any capacity with any other enterprise.
The registrant has entered into contracts with its officers and directors,
pursuant to the provisions of NYBCL Section 721, by which it will be obligated
to indemnify such persons, to the fullest extent permitted by the NYBCL,
against expenses, fees, judgments, fines, and amounts paid in settlement in
connection with any present or future threatened, pending or completed action,
suit or proceeding based in any way upon or related to the fact that such
person was an officer or director of the registrant or, at the request of the
registrant, an officer, director or other partner, agent, employee, or trustee
of another enterprise. The contractual indemnification so provided will not
extend to any situation where a judgment or other final adjudication adverse to
such person establishes that his acts were committed in bad faith or were the
result of active and deliberate dishonesty or that there inured to such person
a financial profit or other advantage.
The directors and officers of the registrant are covered by insurance
policies indemnifying them against certain liabilities, including certain
liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act"), which might be incurred by them in such capacities.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following exhibits are filed herewith or incorporated herein by
reference.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<C> <S>
2.01 --Agreement and Plan of Merger, dated August 16, 1993, among the registrant, Ridge
Merger Corporation and McCaw Cellular Communications, Inc. (included as Appendix A
to the Proxy Statement/Prospectus). The registrant agrees to furnish
supplementally a copy of any omitted schedule to the Commission upon request.
3.01 --Restated Certificate of Incorporation of the registrant (incorporated by
reference to Exhibit 4-B to the registrant's Form SE dated July 21, 1992).
3.02 --By-laws of the registrant.
4.01 --AT&T and certain of its consolidated subsidiaries have outstanding certain long-
term debt. None of such debt exceeds 10% of the total assets of AT&T and its
consolidated subsidiaries; therefore, copies of the constituent instruments
defining the rights of the holders of such debt are not included as exhibits to
this Registration Statement. AT&T agrees to furnish copies of such instruments to
the Commission upon request.
5.01 --Opinion of Jim G. Kilpatric, Senior Vice President-Law of the registrant, as to
the legality of the securities being registered.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<C> <S>
8.01 --Opinion of Wachtell, Lipton, Rosen & Katz as to certain federal income tax
consequences.
8.02 --Opinion of Jones, Day, Reavis & Pogue as to certain federal income tax
consequences.
23.01 --Consent of Jim G. Kilpatric (included in Exhibit 5.01).
23.02 --Consent of Coopers & Lybrand.
23.03 --Consent of Arthur Andersen & Co.
23.04 --Consent of Ernst & Young.
23.05 --Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 8.01).
23.06 --Consent of Jones, Day, Reavis & Pogue (included in Exhibit 8.02).
23.07 --Consent of Lazard Freres & Co.
23.08 --Consent of Salomon Brothers Inc
23.09 --Consent of Mr. Craig O. McCaw to serve as a director of the registrant.
24.01 --Powers of Attorney.
99.01 --Form of proxy for special meeting to be mailed to McCaw shareholders.
99.02 --Agreement, dated as of August 16, 1993, by and among AT&T, on the one hand, and
Craig O. McCaw, John E. McCaw, Jr., Bruce R. McCaw and Keith W. McCaw and the
other persons set forth on the signature page thereto, on the other hand (included
as Appendix B to the Proxy Statement/Prospectus).
99.03 --Letter agreement, dated August 16, 1993, between AT&T, BT and BT USA (included as
Appendix C to the Proxy Statement/Prospectus).
99.04 --Waiver and Agreement, dated August 16, 1993, between McCaw, BT and BT USA
(included as Appendix D to the Proxy Statement/Prospectus).
99.05 --Letter, dated August 16, 1993, from AT&T to McCaw, regarding an offer by
AT&T to purchase certain shares of Class A Common Stock (included as
Appendix E to the Proxy Statement/Prospectus).
99.06 --Opinion of Salomon Brothers Inc (included as Appendix F to the Proxy
Statement/Prospectus).
99.07 --Opinion of Lazard Freres & Co. (included as Appendix G to the Proxy
Statement/Prospectus).
</TABLE>
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(2) That, prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.
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<PAGE>
(3) That, every prospectus (i) that is filed pursuant to paragraph (2)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(4) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to item 4, 10(b), 11, or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.
(5) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the provisions of Item 20 hereof, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW
YORK, ON FEBRUARY 1, 1994.
American Telephone and Telegraph
Company
/s/ S. L. Prendergast
By:
-------------------------------------
(S. L. PRENDERGAST, VICE PRESIDENT AND
TREASURER)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATE INDICATED.
PRINCIPAL EXECUTIVE OFFICER:
-----------------------------
R. E. Allen* Chairman of the Board
PRINCIPAL FINANCIAL OFFICER:
----------------------------
R. W. Miller* Chief Financial Officer
PRINCIPAL ACCOUNTING OFFICER:
-----------------------------
R. F. Davis* Vice President and Controller
DIRECTORS:
R. E. Allen*
M. Kathryn Eickhoff*
Walter Y. Elisha*
Philip M. Hawley*
Carla A. Hills*
Belton K. Johnson*
Drew Lewis*
Donald F. McHenry*
Victor A. Pelson*
Donald S. Perkins*
Henry B. Schacht*
Michael I. Sovern*
Franklin A. Thomas*
Joseph D. Williams*
Thomas H. Wyman*
/s/ S. L. Prendergast
*By: ___________________________________
(S. L. PRENDERGAST)
(ATTORNEY-IN-FACT)
February 1, 1994
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER PAGE
------- ----
<C> <S> <C>
2.01 --Agreement and Plan of Merger, dated August 16, 1993, among
the registrant, Ridge Merger Corporation and McCaw Cellular
Communications, Inc. (included as Appendix A to the Proxy
Statement/Prospectus). The registrant agrees to furnish
supplementally a copy of any omitted schedule to the
Commission upon request.
3.01 --Restated Certificate of Incorporation of the registrant
(incorporated by reference to Exhibit 4-B to the registrant's
Form SE dated July 21, 1992).
3.02 --By-laws of the registrant.
4.01 --AT&T and certain of its consolidated subsidiaries have
outstanding certain long-term debt. None of such debt exceeds
10% of the total assets of AT&T and its consolidated
subsidiaries; therefore, copies of the constituent instruments
defining the rights of the holders of such debt are not
included as exhibits to this Registration Statement. AT&T
agrees to furnish copies of such instruments to the Commission
upon request.
5.01 --Opinion of Jim G. Kilpatric, Senior Vice President-Law of the
registrant, as to the legality of the securities being
registered.
8.01 --Opinion of Wachtell, Lipton, Rosen & Katz as to certain
federal income tax consequences.
8.02 --Opinion of Jones, Day, Reavis & Pogue as to certain federal
income tax consequences.
23.01 --Consent of Jim G. Kilpatric (included in Exhibit 5.01).
23.02 --Consent of Coopers & Lybrand.
23.03 --Consent of Arthur Andersen & Co.
23.04 --Consent of Ernst & Young.
23.05 --Consent of Wachtell, Lipton, Rosen & Katz (included in
Exhibit 8.01).
23.06 --Consent of Jones, Day, Reavis & Pogue (included in Exhibit
8.02).
23.07 --Consent of Lazard Freres & Co.
23.08 --Consent of Salomon Brothers Inc
23.09 --Consent of Mr. Craig O. McCaw to serve as a director of the
registrant.
24.01 --Powers of Attorney.
99.01 --Form of proxy for special meeting to be mailed to McCaw
shareholders.
99.02 --Agreement, dated as of August 16, 1993, by and among AT&T, on
the one hand, and Craig O. McCaw, John E. McCaw, Jr., Bruce R.
McCaw and Keith W. McCaw and the other persons set forth on
the signature page thereto, on the other hand (included as
Appendix B to the Proxy Statement/Prospectus).
99.03 --Letter agreement, dated August 16, 1993, between AT&T, BT and
BT USA (included as Appendix C to the Proxy
Statement/Prospectus).
99.04 --Waiver and Agreement, dated August 16, 1993, between McCaw,
BT and BT USA (included as Appendix D to the Proxy
Statement/Prospectus).
99.05 --Letter, dated August 16, 1993, from AT&T to McCaw, regarding
an offer by AT&T to purchase certain shares of Class A Common
Stock (included as Appendix E to the Proxy
Statement/Prospectus).
99.06 --Opinion of Salomon Brothers Inc (included as Appendix F to
the Proxy Statement/Prospectus).
99.07 --Opinion of Lazard Freres & Co. (included as Appendix G to the
Proxy Statement/Prospectus).
</TABLE>
<PAGE>
EXHIBIT 3.02
BY-LAWS
OF
AMERICAN TELEPHONE AND
TELEGRAPH COMPANY
AS AMENDED
APRIL 20, 1993
<PAGE>
CONTENTS
ARTICLE I MEETINGS OF SHAREHOLDERS
Section 1--Annual Meeting--Notice
2--Record Date
3--Special Meetings--Notice
4--Failure to Receive Notice
ARTICLE II CONDUCT OF SHAREHOLDERS'
MEETINGS
Quorum, Adjournment and Voting
ARTICLE III INSPECTORS
ARTICLE IV BOARD OF DIRECTORS
Section 1--Election
2--Number
3--Vacancy
ARTICLE V MEETINGS OF DIRECTORS
Section 1--Regular Meetings
2--Special Meetings
3--Notice of Meeting
4--Quorum
5--Location
6--Participation by Telephone
and Action Taken Without a
Meeting
ARTICLE VI EXECUTIVE AND OTHER
COMMITTEES
Composition, Quorum, Authority,
Alternate Members and Action by
Written Consent
ARTICLE VII OFFICERS OF THE COMPANY
Section 1--Election and Titles
2--Appointments--Other
Officers and Agents
<PAGE>
CONTENTS--CONTINUED
ARTICLE VIII DUTIES OF OFFICERS
Section 1--Chairman of the Board
2--Other Officers
3--Absence of Chairman
ARTICLE IX DUTIES OF TREASURER AND
ASSISTANT TREASURERS
Section 1--Funds--Receipts and
Disbursements
2--Reports
3--Depositaries
4--Assistant Treasurers'
Authority
5--Security
ARTICLE X DUTIES OF SECRETARY AND
ASSISTANT SECRETARIES
Section 1--Notices--Shareholders' and
Directors' Meetings
2--Records of Shareholders' and
Directors' Meetings
Custody and Use of Seal
3--Assistant Secretaries'
Authority
ARTICLE XI DUTIES OF CONTROLLER
ARTICLE XII TRANSFER OF SHARES
Section 1--Issuance and Transfer
2--Loss of Certificates
ARTICLE XIII INDEMNIFICATION OF
DIRECTORS AND OFFICERS
ARTICLE XIV SEAL
ARTICLE XV AMENDMENTS
<PAGE>
BY-LAWS
-------
ARTICLE I.
MEETINGS OF SHAREHOLDERS
SECTION 1. The annual meeting of the shareholders shall be held in April each
year on such day, at such time and at such place as shall be designated in the
notice of the meeting.
A notice of the annual meeting as approved by the Board of Directors shall be
mailed not less than ten nor more than fifty days before the meeting, directed
to each shareholder entitled to vote at said meeting at his address as it
appears on the record of shareholders unless he shall have filed with the
Secretary a written request that notices intended for him be mailed to some
other address, in which case it shall be directed to him at such other address.
SECTION 2. The Board of Directors may fix, in advance, a date not more than
fifty nor less than ten days before the date of any meeting of the shareholders
as the record date for determination of shareholders entitled to notice of or
to vote at such meeting, and only shareholders of record on such date shall be
entitled to notice of or to vote at such meeting.
SECTION 3. Special meetings of the shareholders may be called at any time by
either the Chairman of the Board or the Board of Directors, and shall be called
upon a request to the Chairman of the Board
1
<PAGE>
or Secretary, signed by shareholders representing at least one-third of the
shares. Any such request shall specify the time and the purpose or purposes of
the proposed meeting. The meeting shall be held at such place within or without
the State of New York as may be designated in the notice of the meeting.
A notice of not less than ten nor more than fifty days shall be given by mail
for each special meeting, in the manner provided for notice of the annual
meeting. Such notice shall state the purpose or purposes for which the meeting
is called and the time when and the place where it is to be held and shall
indicate that the notice is being issued by or at the direction of the person
or persons calling the meeting.
SECTION 4. Failure to receive notice of any meeting shall not invalidate the
meeting.
ARTICLE II.
THE CONDUCT OF SHAREHOLDERS' MEETINGS
At all meetings of the shareholders, the holders of forty per centum of the
shares entitled to vote thereat shall constitute a quorum, except as otherwise
required by law; but the shareholders present may adjourn the meeting to
another time or place despite the absence of a quorum. Every shareholder
entitled to vote shall be entitled to one vote for each share standing in his
name on the record of shareholders; and every shareholder entitled to vote may
vote in person or by proxy.
All elections by shareholders shall be by ballot.
2
<PAGE>
ARTICLE III.
INSPECTORS
The Board of Directors, in advance of any shareholders' meeting, shall appoint
three Inspectors to act at the meeting or any adjournment thereof. In case any
person appointed fails to appear or act, the vacancy may be filled by
appointment made by the Board in advance of the meeting or at the meeting by
the person presiding thereat.
ARTICLE IV.
THE BOARD OF DIRECTORS
SECTION 1. The business of the company shall be managed under the direction of
its Board of Directors, who shall be elected by the shareholders at the annual
meeting.
SECTION 2. The number of Directors shall not be less than ten nor more than
twenty-five, the exact number of Directors within such minimum and maximum
limits to be fixed and determined by the vote of a majority of the entire
Board. In case of any increase in the number of Directors, the additional
Directors may be elected by a majority of the Directors then in office.
SECTION 3. Any vacancy in the Board may be filled by a majority vote of the
remaining Directors, though less than a quorum.
ARTICLE V.
MEETINGS OF DIRECTORS
SECTION 1. Regular meetings shall be held at such times and places as the Board
may determine.
3
<PAGE>
SECTION 2. Special meetings of the Directors may be called at any time by the
Chairman of the Board, or by two members of the Executive Committee, and shall
be called by the Chairman of the Board, or by the Secretary, forthwith upon
request in writing signed by two Directors and specifying the object of the
meeting. At least three days' notice of a special meeting shall be given in the
manner provided for herein.
SECTION 3. Any notice of a meeting of Directors required to be given may be
given to each Director by mail or telegraph, addressed to him at his residence
or usual place of business, or in person or by telephone, stating the time and
place of the proposed meeting.
SECTION 4. One-third of the entire Board shall constitute a quorum.
SECTION 5. Meetings of the Directors may be held within or without the State of
New York.
SECTION 6. Any one or more members of the Board may participate in a meeting of
the Board by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear each other
at the same time. Participation by such means shall constitute presence in
person at a meeting.
Any action required or permitted to be taken by the Board may be taken without
a meeting if all members of the Board consent in writing to the adoption of a
resolution authorizing the action. The resolution and the written consents
thereto by the members of the Board shall be filed with the minutes of the
proceedings of the Board.
4
<PAGE>
ARTICLE VI.
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
The Board of Directors, by resolution adopted by a majority of the entire
Board, may designate from their number an Executive Committee and other
committees, and may determine the quorum thereof. Any such committee shall
consist of three or more members and shall serve at the pleasure of the Board.
The Chairman of the Board, one or more Vice Chairmen of the Board and the
President, if any, shall be members of the Executive Committee. The Executive
Committee shall, except as otherwise provided by law or by resolution of the
Board, have all the authority of the Board of Directors during the intervals
between the meetings of the Board. The Executive Committee shall keep a record
of its proceedings, which shall from time to time be reported to the Board of
Directors. The Chairman of the Board shall preside at the meetings of the
Executive Committee.
Committees other than the Executive Committee shall, except as otherwise
provided by law, have such authority as shall be provided by resolution of the
Board.
The Board may designate from time to time one or more Directors as alternate
members of the Executive Committee or of any other committee, who may replace
any absent member or members at any meeting of the committee.
Any one or more members of the Executive Committee or any other committee
established by the Board pursuant to this Article VI may participate in a
meeting of such committee by means of a conference
5
<PAGE>
telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at the meeting.
Any action required or permitted to be taken by the Executive Committee or any
other committee established by the Board pursuant to this Article VI may be
taken without a meeting if all members of the committee consent in writing to
the adoption of a resolution authorizing the action. The resolution and written
consents thereto shall be filed with the minutes of the proceedings of the
committee.
ARTICLE VII.
OFFICERS OF THE COMPANY
SECTION 1. The officers of the company shall be elected by the Board of
Directors, and may consist of a Chairman of the Board, one or more Vice
Chairmen of the Board, a President, such number of Executive Vice Presidents
and Senior Vice Presidents as the Board of Directors shall from time to time
determine, a Secretary, a Treasurer and a Controller. The officers shall hold
office until their successors have been elected.
SECTION 2. The Board of Directors may appoint one or more Assistant
Secretaries, one or more Assistant Treasurers, one or more Assistant
Controllers, and such other officers and agents as the Board may consider
necessary.
6
<PAGE>
ARTICLE VIII.
DUTIES OF THE CHAIRMAN OF THE BOARD,
PRESIDENT, VICE CHAIRMEN OF THE BOARD,
EXECUTIVE VICE PRESIDENTS
AND SENIOR VICE PRESIDENTS
SECTION 1. The Chairman of the Board shall be the chief executive officer of
the company and shall have such authority and perform such duties as usually
appertain to the chief executive office in business corporations. He shall
preside at the meetings of the Board of Directors and he, or such officer as he
may designate from time to time, shall preside at meetings of the shareholders.
SECTION 2. The President, Vice Chairmen of the Board, Executive Vice Presidents
and Senior Vice Presidents shall perform such duties as the Board of Directors
or Chairman of the Board may from time to time determine.
SECTION 3. In case of absence or inability of the Chairman of the Board, the
President shall possess all the authority of the Chairman of the Board.
ARTICLE IX.
DUTIES OF THE TREASURER AND ASSISTANT TREASURERS
SECTION 1. The Treasurer shall receive all the funds of the company, and shall
disburse them under the direction of the Board of Directors. All disbursement
instruments shall be signed by such person or persons and in such manner as the
Board may from time to time provide.
SECTION 2. The Treasurer shall keep full and regular books, showing all his
receipts and dis-
7
<PAGE>
bursements, which books shall be open at all times to the inspection of the
Chairman of the Board or of any member of the Board of Directors; and he shall
make such reports and perform such other duties as the Chairman of the Board or
Board of Directors may require.
SECTION 3. The Treasurer shall deposit all moneys received by him, in the
corporate name of the company, with such depositaries as shall be approved from
time to time by the Board of Directors or by the Chairman of the Board, the
President, a Vice Chairman of the Board or the Treasurer.
SECTION 4. Assistant Treasurers shall have such of the authority and perform
such of the duties of the Treasurer as may be provided in these by-laws or
assigned to them by the Board of Directors or the Chairman of the Board or by
the Treasurer upon the approval of the Chairman of the Board, the President or
a Vice Chairman of the Board. During the Treasurer's absence or inability, his
authority and duties shall be possessed by such Assistant Treasurer or
Assistant Treasurers as the Board of Directors, the Chairman of the Board, the
President or a Vice Chairman of the Board may designate.
SECTION 5. The Board of Directors may require the Treasurer and Assistant
Treasurers to give such security for the faithful performance of their duties
as the Board shall from time to time determine.
8
<PAGE>
ARTICLE X.
DUTIES OF THE SECRETARY AND ASSISTANT SECRETARIES
SECTION 1. The Secretary shall send notice to the shareholders of all annual
and special meetings, and to the Directors of meetings of the Board where
notice is required to be given; and he shall perform such other duties as may
be required of him by the Chairman of the Board or Board of Directors, and such
as usually appertain to the office of Secretary.
SECTION 2. The Secretary or in his absence an Assistant Secretary shall keep an
accurate record of the proceedings of the Board of Directors and of the
Executive Committee, and of all meetings of shareholders, and shall have the
custody of the seal of the company and affix it to all instruments requiring
the seal.
SECTION 3. Assistant Secretaries shall have such of the authority and perform
such of the duties of the Secretary as may be provided in these by-laws or
assigned to them by the Board of Directors or the Chairman of the Board or by
the Secretary upon the approval of the Chairman of the Board, the President or
a Vice Chairman of the Board. During the Secretary's absence or inability, his
authority and duties shall be possessed by such Assistant Secretary or
Assistant Secretaries as the Board of Directors, the Chairman of the Board, the
President or a Vice Chairman of the Board may designate.
9
<PAGE>
ARTICLE XI.
DUTIES OF THE CONTROLLER
The Controller shall be the principal accounting officer of the company and
shall perform such duties as may be required of him by the Chairman of the
Board or Board of Directors.
ARTICLE XII.
TRANSFER OF SHARES
SECTION 1. Certificates for shares shall be issued by the Treasurer. Shares
shall be transferable only on the record of shareholders of the company by the
holder thereof in person or by attorney, upon surrender of the outstanding
certificate therefor. This requirement shall be embodied in each certificate.
SECTION 2. In case of the loss of a certificate, a new certificate may be
issued upon such terms as the Board of Directors may prescribe.
ARTICLE XIII.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The company is authorized, by (i) a resolution of shareholders, (ii) a
resolution of Directors, or (iii) an agreement providing for such
indemnification, to the fullest extent permitted by applicable law, to provide
indemnification and to advance expenses to its Directors and officers in
respect of claims, actions, suits or proceedings based upon, arising from,
relating to or by reason of the fact that any such Director or officer serves
or served in such capacity with the corporation or at the request of the
company in any capacity with any other enterprise.
10
<PAGE>
ARTICLE XIV.
SEAL
The common seal of the company shall be in the following form.
(ART) Seal of American Telephone and Telegraph Co.
ARTICLE XV.
AMENDMENTS
These by-laws may be amended by the shareholders at any meeting; or by the
Board of Directors at any meeting by a majority vote of the full Board, or at
two successive meetings by a majority vote of a quorum present. The notice of a
special meeting of the Board at which such action is to be taken shall set
forth the substance of the proposed amendment.
11
<PAGE>
EXHIBIT 5.01
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
32 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10013-2412
February 1, 1994
American Telephone and Telegraph Company
32 Avenue of the Americas
New York, New York 10013-2412
Ladies & Gentlemen:
I refer to the registration statement on Form S-4 (the "Registration
Statement") being filed by American Telephone and Telegraph Company, a New York
corporation ("AT&T"), with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
registration of up to 228,766,955 shares of common stock, par value $1.00 per
share of AT&T (the "Shares"), to be issued in connection with the merger of
McCaw Cellular Communications, Inc. and a subsidiary of AT&T, as described in
the Agreement and Plan of Merger, dated August 16, 1993, attached as Appendix A
to the Proxy Statement/Prospectus forming a part of the Registration Statement
(the "Merger Agreement").
I am familiar with the terms of the Merger Agreement, and the proposed
issuance of the Shares thereunder, and have examined such records, documents
and questions of law, and satisfied myself as to such matters of fact, as I
have considered relevant and necessary as a basis for this opinion.
Based on the foregoing, I am of the opinion that:
1. AT&T is duly incorporated and validly existing under the laws of the
State of New York; and
2. The Shares will be legally issued, fully paid and nonassessable when
(i) the Registration Statement, as finally amended, shall have become
effective under the Securities Act; and (ii) certificates representing the
Shares shall have been duly executed, countersigned and registered and duly
delivered in accordance with the terms of the Merger Agreement.
I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to all references to me included in or made a part
of the Registration Statement.
Very truly yours,
/s/ Jim G. Kilpatric
Jim G. Kilpatric
Senior Vice President--Law
<PAGE>
EXHIBIT 8.01
[WACHTELL, LIPTON, ROSEN & KATZ LETTERHEAD]
February 1, 1994
American Telephone and Telegraph Company
32 Avenue of the Americas
New York, New York 10013-2412
Dear Sirs:
Reference is made to the Registration Statement on Form S-4 (the
"Registration Statement") of American Telephone and Telegraph Company ("AT&T")
relating to the merger of Ridge Merger Corporation, a wholly-owned subsidiary
of AT&T, with and into McCaw Cellular Communications, Inc.
We have participated in the preparation of the discussion set forth under the
heading "The Merger--Certain Federal Income Tax Consequences" in the joint
proxy statement and prospectus that is part of the Registration Statement. In
our opinion, such discussion is accurate in all material respects.
We consent to the use of this opinion as Exhibit 8.01 to the Registration
Statement and to the reference to our firm under the heading "The Merger--
Certain Federal Income Tax Consequences" in the joint proxy statement and
prospectus that is part of the Registration Statement. In giving such consent,
we do not hereby admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act of 1933.
Very truly yours,
/s/ Wachtell, Lipton, Rosen &
Katz
<PAGE>
EXHIBIT 8.02
[LETTERHEAD OF JONES, DAY, REAVIS & POGUE]
February 1, 1994
McCaw Cellular Communications, Inc.
5400 Carillon Point
Kirkland, WA 98033
Gentlemen:
Reference is made to the Registration Statement on Form S-4 (the
"Registration Statement") of American Telephone and Telegraph Company ("AT&T")
relating to the merger of Ridge Merger Corporation, a wholly-owned subsidiary
of AT&T, with and into McCaw Cellular Communications, Inc.
We have participated in the preparation of the discussion set forth under the
heading "The Merger--Certain Federal Income Tax Consequences" in the joint
proxy statement and prospectus that is part of the Registration Statement. In
our opinion, such discussion is accurate in all material respects.
We consent to the use of this opinion as Exhibit 8.02 to the Registration
Statement and to the reference to our firm under the heading "The Merger--
Certain Federal Income Tax Consequences" in the joint proxy statement and
prospectus that is part of the Registration Statement.
Very truly yours,
/s/ Jones, Day, Reavis & Pogue
<PAGE>
EXHIBIT 23.02
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this registration statement
on Form S-4 of American Telephone and Telegraph Company ("AT&T") of our
reports, dated January 28, 1993, on our audits of the consolidated financial
statements and consolidated financial statement schedules of AT&T and its
subsidiaries, which are included or incorporated by reference in AT&T's Annual
Report on Form 10-K for the year ended December 31, 1992, and of our report,
dated January 28, 1993, on our audits of the consolidated financial statements
of AT&T and its subsidiaries, which is included in McCaw Cellular
Communications, Inc.'s Current Report on Form 8-K dated August 16, 1993, as
amended. We also consent to the reference to our Firm under the caption
"Experts" and all other references to our Firm elsewhere in this registration
statement.
Coopers & Lybrand
New York, New York
January 31, 1994
<PAGE>
EXHIBIT 23.03
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated May 17, 1993
included in McCaw Cellular Communications, Inc.'s ("McCaw") Form 10-K for the
year ended December 31, 1992 and to all references to our Firm included in this
American Telephone and Telegraph Company ("AT&T") registration statement on
Form S-4 relating to the AT&T Common Shares issuable in connection with the
merger between McCaw and AT&T.
Arthur Andersen & Co.
Seattle, Washington
February 1, 1994
<PAGE>
EXHIBIT 23.04
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report on the consolidated financial statements of LIN
Broadcasting Corporation and subsidiaries dated May 14, 1993, included in McCaw
Cellular Communications, Inc.'s ("McCaw") Annual Report (Form 10-K/A Amendment
No. 3) for the year ended December 31, 1992, and incorporated by reference in
the Registration Statement on Form S-4 and the related prospectus of American
Telephone and Telegraph Company ("AT&T") relating to the registration of AT&T
Common Shares issuable in connection with the merger between McCaw and AT&T.
Ernst & Young
Seattle, Washington
January 31, 1994
<PAGE>
EXHIBIT 23.07
[LETTERHEAD OF LAZARD FRERES & CO.]
February 1, 1994
Board of Directors
McCaw Cellular Communications, Inc.
5400 Carillon Point
Kirkland, WA 98033
Members of the Board:
We hereby consent to the references to our firm and to the inclusion of the
opinion of our firm dated August 15, 1993 in the Proxy Statement of McCaw
Cellular Communications, Inc. (which is also the Prospectus of American
Telephone and Telegraph Company) constituting a part of the Registration
Statement on Form S-4 of American Telephone and Telegraph Company filed with
the Securities and Exchange Commission on the date hereof. In giving the
foregoing consent, we do not admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange Commission
thereunder.
LAZARD FRERES & CO.
<PAGE>
EXHIBIT 23.08
[SALOMON BROS LETTERHEAD]
We hereby consent to the use of our opinion dated August 16, 1993, as
Appendix F to the Proxy Statement/Prospectus included in the Registration
Statement on Form S-4 relating to the merger of McCaw Cellular Communications,
Inc. and American Telephone and Telegraph Company and to the references to our
firm name under the captions "Summary--The Merger" and "THE MERGER--Background;
Opinions of the Financial Advisors to the McCaw Special Committee and to the
McCaw Board" in such Proxy Statement/Prospectus. In giving such consent, we do
not thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, or the rules and
regulations of the Securities and Exchange Commission thereunder.
Salomon Brothers Inc
/s/ Frank D. Yeary
By __________________________________
February 1, 1994
<PAGE>
EXHIBIT 23.09
CONSENT
The undersigned hereby consents to being named as a prospective director of
American Telephone and Telegraph Company ("AT&T") in the Registration Statement
on Form S-4 filed by AT&T with the Securities and Exchange Commission on
February 1, 1994.
/s/ Craig O. McCaw
-------------------------------------
CRAIG O. MCCAW
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement on Form S-4 with respect to common shares to
be issued in connection with the merger of a wholly-owned subsidiary of the
Company with McCaw Cellular Communications, Inc.; and
WHEREAS, the undersigned is both a director and an officer of the Company,
as indicated below his signature:
NOW, THEREFORE, the undersigned hereby constitutes and appoints R. W.
MILLER, R. F. DAVIS and S. L. PRENDERGAST, and each of them, as attorneys for
him and in his name, place and stead, and in his capacity as both a director and
an officer of the Company, to execute and file such registration statement with
respect to the above-described common shares, and thereafter to execute and file
any amended registration statement or statements with respect thereto, hereby
giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to all intents and
purposes, as he might or could do if personally present at the doing thereof,
hereby ratifying and confirming all that said attorneys may or shall lawfully
do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 19th day of November, 1993.
/s/ R.E. Allen
---------------------
R.E. Allen
Chairman of the Board
and Director
<PAGE>
- 2 -
STATE OF New Jersey )
) ss.
COUNTY OF Somerset )
On the 19th day of November, 1993, personally appeared before me R. E.
Allen, to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 19th day of November, 1993.
/s/ Janet M. Kirpan
----------------------------
Notary Public
JANET M. KIRPAN
Notary Public, State of New Jersey
No. 2003672
Qualified in Somerset County
Commission Expires September 23, 1995
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement on Form S-4 with respect to common shares to
be issued in connection with the merger of a wholly-owned subsidiary of the
Company with McCaw Cellular Communications, Inc.; and
WHEREAS, the undersigned is an officer of the Company, as indicated below
his signature:
NOW, THEREFORE, the undersigned hereby constitutes and appoints R. W.
MILLER, R. F. DAVIS and S. L. PRENDERGAST, and each of them, as attorneys for
him and in his name, place and stead, and in his capacity as an officer of the
Company, to execute and file such registration statement with respect to the
above-described common shares, and thereafter to execute and file any amended
registration statement or statements with respect thereto, hereby giving and
granting to said attorneys, and each of them, full power and authority to do and
perform each and every act and thing whatsoever requisite and necessary to be
done in and about the premises, as fully, to all intents and purposes, as he
might or could do if personally present at the doing thereof, hereby ratifying
and confirming all that said attorneys may or shall lawfully do, or cause to be
done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 19th day of November, 1993.
/s/ R. W. Miller
---------------------
R. W. Miller
Chief Financial Officer
and Group Executive
<PAGE>
- 2 -
STATE OF New Jersey )
) ss.
COUNTY OF Somerset )
On the 19th day of November, 1993, personally appeared before me R. W.
Miller, to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 19th day of November, 1993.
/s/ Janet M. Kirpan
----------------------------
Notary Public
JANET M. KIRPAN
Notary Public, State of New Jersey
No. 2003672
Qualified in Somerset County
Commission Expires September 23, 1995
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement with respect to common shares to be issued in
connection with the merger of a wholly-owned subsidiary of the Company with
McCaw Cellular Communications, Inc.; and
WHEREAS, the undersigned is an officer of the Company, as indicated below
his signature:
NOW, THEREFORE, the undersigned hereby constitutes and appoints R. W.
MILLER, R. F. DAVIS and S. L. PRENDERGAST, and each of them, as attorneys for
him and in his name, place and stead, and in his capacity as an officer of
the Company, to execute and file such registration statement with respect to the
above-described common shares, and thereafter to execute and file any amended
registration statement or statements with respect thereto, hereby giving and
granting to said attorneys, and each of them, full power and authority to do and
perform each and every act and thing whatsoever requisite and necessary to be
done in and about the premises, as fully, to all intents and purposes, as he
might or could do if personally present at the doing thereof, hereby ratifying
and confirming all that said attorneys may or shall lawfully do, or cause to be
done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 19th day of November, 1993.
/s/ R.F. Davis
---------------------
R.F. Davis
Vice President and
Controller
<PAGE>
- 2 -
STATE OF New Jersey )
) ss.
COUNTY OF Somerset )
On the 19th day of November, 1993, personally appeared before me R. F.
Davis, to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 19th day of November, 1993.
/s/ Janet M. Kirpan
----------------------------
Notary Public
JANET M. KIRPAN
Notary Public, State of New Jersey
No. 20003672
Qualified in Somerset County
Commission Expires September 23, 1995
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement on Form S-4 with respect to common shares to
be issued in connection with the merger of a wholly-owned subsidiary of the
Company with McCaw Cellular Communications, Inc.; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and appoints R. W.
MILLER, R. F. DAVIS and S. L. PRENDERGAST, and each of them, as attorneys for
him or her and in his or her name, place and stead, and in his or her capacity
as a director of the Company, to execute and file such registration statement
with respect to the above-described common shares, and thereafter to execute and
file any amended registration statement or statements with respect thereto,
hereby giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to all intents and
purposes, as he or she might or could do if personally present at the doing
thereof, hereby ratifying and confirming all that said attorneys may or shall
lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 17th day of November, 1993.
/s/ M. Kathryn Eickhoff
---------------------
Director
<PAGE>
- 2 -
STATE OF New York )
) ss.
COUNTY OF New York )
On the 17th day of November, 1993, personally appeared before me M. Kathryn
Eickhoff, to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that (s)he executed
and delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 17th day of November, 1993.
/s/ Janet M. Kirpan
----------------------------
Notary Public
JANET M. KIRPAN
NOTARY PUBLIC, State of New York
NO. 31-4624682
Qualified in New York County
Commission Expires March 30, 1994
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement on Form S-4 with respect to common shares to
be issued in connection with the merger of a wholly-owned subsidiary of the
Company with McCaw Cellular Communications, Inc.; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and appoints R. W.
MILLER, R. F. DAVIS and S. L. PRENDERGAST, and each of them, as attorneys for
him or her and in his or her name, place and stead, and in his or her capacity
as a director of the Company, to execute and file such registration statement
with respect to the above-described common shares, and thereafter to execute and
file any amended registration statement or statements with respect thereto,
hereby giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to all intents and
purposes, as he or she might or could do if personally present at the doing
thereof, hereby ratifying and confirming all that said attorneys may or shall
lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 18th day of November, 1993.
/s/ Walter Y. Elisha
---------------------
Director
<PAGE>
- 2 -
STATE OF SOUTH CAROLINA )
) ss.
COUNTY OF YORK )
On the 18th day of November, 1993, personally appeared before me Walter Y.
Elisha, to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that (s)he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 18th day of November, 1993.
/s/ Patricia M. Kimbrell
----------------------------
Notary Public
Commission Expires: 4-2-03
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement on Form S-4 with respect to common shares to
be issued in connection with the merger of a wholly-owned subsidiary of the
Company with McCaw Cellular Communications, Inc.; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and appoints R. W.
MILLER, R. F. DAVIS and S. L. PRENDERGAST, and each of them, as attorneys for
him or her and in his or her name, place and stead, and in his or her capacity
as a director of the Company, to execute and file such registration statement
with respect to the above-described common shares, and thereafter to execute and
file any amended registration statement or statements with respect thereto,
hereby giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to all intents and
purposes, as he or she might or could do if personally present at the doing
thereof, hereby ratifying and confirming all that said attorneys may or shall
lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 18th day of November, 1993.
/s/ P.M. Hawley
---------------------
Director
<PAGE>
State of California )
)
County of Los Angeles)
On 11-18-93 before me, Kimberly Saavedra, Notary Public
-------- ------------------------------------------------------
DATE NAME, TITLE OF OFFICER - E.G., JANE DOE, NOTARY PUBLIC
personally appeared Philip M. Hawley
---------------------------------------------------------,
NAME(S) OF SIGNER(S)
[_] personally known to me -OR- [x] proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s)
is/are subscribed to the within instrument
and acknowledged to me that he/she/they
executed the same in his/her/their
authorized capacity(ies), and that by
his/her/their signature(s) on the instrument
the person(s), or the entity upon behalf of
which the person(s) acted, executed the
instrument.
WITNESS my hand and offical seal.
/s/ Kimberly Saavedra
----------------------------------
SIGNATURE OF NOTARY
SEAL OFFICIAL NOTARY SEAL
KIMBERLY SAAVEDRA
Notary Public - California
LOS ANGELES COUNTY
My Comm. Expires Sep 15, 1995
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement on Form S-4 with respect to common shares to
be issued in connection with the merger of a wholly-owned subsidiary of the
Company with McCaw Cellular Communications, Inc.; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and appoints R. W.
MILLER, R. F. DAVIS and S. L. PRENDERGAST, and each of them, as attorneys for
him or her and in his or her name, place and stead, and in his or her capacity
as a director of the Company, to execute and file such registration statement
with respect to the above-described common shares, and thereafter to execute and
file any amended registration statement or statements with respect thereto,
hereby giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to all intents and
purposes, as he or she might or could do if personally present at the doing
thereof, hereby ratifying and confirming all that said attorneys may or shall
lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 19th day of November, 1993.
/s/ Carla A. Hills
---------------------
Director
<PAGE>
- 2 -
STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN FRANCISCO )
On the 19th day of November, 1993, personally appeared before me Carla A.
Hills, to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that (s)he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 19th day of November, 1993.
/s/ May S. Pon
----------------------------
Notary Public
OFFICIAL SEAL
MAY S. PON
NOTARY PUBLIC - CALIFORNIA
SEAL CITY & COUNTY OF SAN FRANCISCO
My Comm. Expires April 22, 1994
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement on Form S-4 with respect to common shares to
be issued in connection with the merger of a wholly-owned subsidiary of the
Company with McCaw Cellular Communications, Inc.; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and appoints R. W.
MILLER, R. F. DAVIS and S. L. PRENDERGAST, and each of them, as attorneys for
him or her and in his or her name, place and stead, and in his or her capacity
as a director of the Company, to execute and file such registration statement
with respect to the above-described common shares, and thereafter to execute and
file any amended registration statement or statements with respect thereto,
hereby giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to all intents and
purposes, as he or she might or could do if personally present at the doing
thereof, hereby ratifying and confirming all that said attorneys may or shall
lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 23rd day of November, 1993.
/s/ Belton K. Johnson
---------------------
Director
<PAGE>
- 2 -
STATE OF TEXAS )
) ss.
COUNTY OF BEXAR )
On the 23rd day of November, 1993, personally appeared before me Belton K.
Johnson, to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that (s)he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 23rd day of November, 1993.
/s/ Janette Ganster
----------------------------
Notary Public
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement on Form S-4 with respect to common shares to
be issued in connection with the merger of a wholly-owned subsidiary of the
Company with McCaw Cellular Communications, Inc.; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and appoints R. W.
MILLER, R. F. DAVIS and S. L. PRENDERGAST, and each of them, as attorneys for
him or her and in his or her name, place and stead, and in his or her capacity
as a director of the Company, to execute and file such registration statement
with respect to the above-described common shares, and thereafter to execute and
file any amended registration statement or statements with respect thereto,
hereby giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to all intents and
purposes, as he or she might or could do if personally present at the doing
thereof, hereby ratifying and confirming all that said attorneys may or shall
lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 18th day of November, 1993.
/s/ Drew Lewis
---------------------
Director
<PAGE>
- 2 -
STATE OF Pennsylvania )
) ss.
COUNTY OF Lehigh )
On the 18th day of November, 1993, personally appeared before me Drew Lewis,
to me known, and known to me to be the person described in and who executed the
foregoing instrument and duly acknowledged that (s)he executed and delivered
the same for the purpose therein expressed.
WITNESS my hand and official seal this 18th day of November, 1993.
/s/ Maria E. Contelles
----------------------------
Notary Public
Notarial Seal
Maria E. Contelles, Notary Public
Bethlehem, Northampton County
My Commission Expires April 3, 1995
Member, Pennsylvania Association of Notaries
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement on Form S-4 with respect to common shares to
be issued in connection with the merger of a wholly-owned subsidiary of the
Company with McCaw Cellular Communications, Inc.; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and appoints R. W.
MILLER, R. F. DAVIS and S. L. PRENDERGAST, and each of them, as attorneys for
him or her and in his or her name, place and stead, and in his or her capacity
as a director of the Company, to execute and file such registration statement
with respect to the above-described common shares, and thereafter to execute and
file any amended registration statement or statements with respect thereto,
hereby giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to all intents and
purposes, as he or she might or could do if personally present at the doing
thereof, hereby ratifying and confirming all that said attorneys may or shall
lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 22nd day of November, 1993.
/s/ Donald F. McHenry
---------------------
Director
<PAGE>
- 2 -
STATE OF New Jersey )
) ss.
COUNTY OF Somerset )
On the 22nd day of November, 1993, personally appeared before me Donald F.
McHenry, to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that (s)he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 22nd day of November, 1993.
/s/ Janet M. Kirpan
----------------------------
Notary Public
Janet M. Kirpan
Notary Public, State of New Jersey
No. 2003672
Qualified in Somerset County
Commission Expires September 23, 1995
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement on Form S-4 with respect to common shares to
be issued in connection with the merger of a wholly-owned subsidiary of the
Company with McCaw Cellular Communications, Inc.; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and appoints R. W.
MILLER, R. F. DAVIS and S. L. PRENDERGAST, and each of them, as attorneys for
him or her and in his or her name, place and stead, and in his or her capacity
as a director of the Company, to execute and file such registration statement
with respect to the above-described common shares, and thereafter to execute and
file any amended registration statement or statements with respect thereto,
hereby giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to all intents and
purposes, as he or she might or could do if personally present at the doing
thereof, hereby ratifying and confirming all that said attorneys may or shall
lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 19th day of November, 1993.
/s/ Victor A. Pelson
---------------------
Director
<PAGE>
- 2 -
STATE OF New Jersey )
) ss.
COUNTY OF Somerset )
On the 19th day of November, 1993, personally appeared before me Victor A.
Pelson, to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that (s)he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 19th day of November, 1993.
/s/ Janet M. Kirpan
----------------------------
Notary Public
Janet M. Kirpan
Notary Public, State of New Jersey
No. 2003672
Qualified in Somerset County
Commission Expires September 22, 1995
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement on Form S-4 with respect to common shares to
be issued in connection with the merger of a wholly-owned subsidiary of the
Company with McCaw Cellular Communications, Inc.; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and appoints R. W.
MILLER, R. F. DAVIS and S. L. PRENDERGAST, and each of them, as attorneys for
him or her and in his or her name, place and stead, and in his or her capacity
as a director of the Company, to execute and file such registration statement
with respect to the above-described common shares, and thereafter to execute and
file any amended registration statement or statements with respect thereto,
hereby giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to all intents and
purposes, as he or she might or could do if personally present at the doing
thereof, hereby ratifying and confirming all that said attorneys may or shall
lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 30th day of November, 1993.
/s/ Donald S. Perkins
---------------------
Director
<PAGE>
- 2 -
STATE OF Illinois )
) ss.
COUNTY OF DuPage )
On the 30th day of November, 1993, personally appeared before me Donald S.
Perkins, to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that (s)he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 30th day of November, 1993.
/s/ Mary Frances Kelley
----------------------------
Notary Public
"OFFICIAL SEAL"
Mary Frances Kelley
Notary Public, State of Illinois
My Commission Expires Nov. 6, 1995
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement on Form S-4 with respect to common shares to
be issued in connection with the merger of a wholly-owned subsidiary of the
Company with McCaw Cellular Communications, Inc.; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and appoints R. W.
MILLER, R. F. DAVIS and S. L. PRENDERGAST, and each of them, as attorneys for
him or her and in his or her name, place and stead, and in his or her capacity
as a director of the Company, to execute and file such registration statement
with respect to the above-described common shares, and thereafter to execute and
file any amended registration statement or statements with respect thereto,
hereby giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to all intents and
purposes, as he or she might or could do if personally present at the doing
thereof, hereby ratifying and confirming all that said attorneys may or shall
lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 18th day of November, 1993.
/s/ H.B. Schacht
---------------------
Director
STATE OF INDIANA
COUNTY OF BARTHOLOMEW
On the 18th day of November, 1993, personally appeared before me H. B. Schacht,
to me known, and known to me to be the person described in and who executed the
foregoing instrument and duly acknowledged that he executed and delivered the
same for the purpose therein expressed.
WITNESS my hand and official seal this 18th day of November, 1993.
/s/ Jayne Allender
----------------------------------
Jayne Allender, Notary Public
JAYNE ALLENDER
NOTARY PUBLIC STATE OF INDIANA
BARTHOLOMEW COUNTY
MY COMMISSION EXP. FEB 5, 1995
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement on Form S-4 with respect to common shares to
be issued in connection with the merger of a wholly-owned subsidiary of the
Company with McCaw Cellular Communications, Inc.; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and appoints R. W.
MILLER, R. F. DAVIS and S. L. PRENDERGAST, and each of them, as attorneys for
him or her and in his or her name, place and stead, and in his or her capacity
as a director of the Company, to execute and file such registration statement
with respect to the above-described common shares, and thereafter to execute and
file any amended registration statement or statements with respect thereto,
hereby giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to all intents and
purposes, as he or she might or could do if personally present at the doing
thereof, hereby ratifying and confirming all that said attorneys may or shall
lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 23rd day of November, 1993.
/s/ Michael I. Sovern
---------------------
Director
<PAGE>
- 2 -
STATE OF New Jersey )
) ss.
COUNTY OF Somerset )
On the 23rd day of November, 1993, personally appeared before me Michael I.
Sovern, to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that (s)he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 23rd day of November, 1993.
/s/ Janet M. Kirpan
----------------------------
Notary Public
Janet M. Kirpan
Notary Public, State of New Jersey
No. 2003672
Qualified in Somerset County
Commission Expires September 23, 1995
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement on Form S-4 with respect to common shares to
be issued in connection with the merger of a wholly-owned subsidiary of the
Company with McCaw Cellular Communications, Inc.; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and appoints R. W.
MILLER, R. F. DAVIS and S. L. PRENDERGAST, and each of them, as attorneys for
him or her and in his or her name, place and stead, and in his or her capacity
as a director of the Company, to execute and file such registration statement
with respect to the above-described common shares, and thereafter to execute and
file any amended registration statement or statements with respect thereto,
hereby giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to all intents and
purposes, as he or she might or could do if personally present at the doing
thereof, hereby ratifying and confirming all that said attorneys may or shall
lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 18th day of November, 1993.
/s/ Franklin Thomas
---------------------
Director
<PAGE>
- 2 -
STATE OF New York )
) ss.
COUNTY OF New York )
On the 18th day of November, 1993, personally appeared before me Franklin
Thomas, to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that (s)he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 18th day of November, 1993.
/s/ Alice W. Gupton
----------------------------
Notary Public
Alice W. Gupton
Notary Public, State of New York
No. 24-4779662
Qualified in Kings County
Certificate Filed in New York County
Commission Expires June 30, 1995
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement on Form S-4 with respect to common shares to
be issued in connection with the merger of a wholly-owned subsidiary of the
Company with McCaw Cellular Communications, Inc.; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and appoints R. W.
MILLER, R. F. DAVIS and S. L. PRENDERGAST, and each of them, as attorneys for
him or her and in his or her name, place and stead, and in his or her capacity
as a director of the Company, to execute and file such registration statement
with respect to the above-described common shares, and thereafter to execute and
file any amended registration statement or statements with respect thereto,
hereby giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to all intents and
purposes, as he or she might or could do if personally present at the doing
thereof, hereby ratifying and confirming all that said attorneys may or shall
lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 23rd day of November, 1993.
/s/ Joseph D. Williams
-----------------------
Director
<PAGE>
- 2 -
STATE OF NEW JERSEY )
) ss.
COUNTY OF SOMERSET )
On the 23rd day of November, 1993, personally appeared before me Joseph D.
Williams to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that (s)he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 23rd day of November, 1993.
/s/ Janet M. Kirpan
----------------------------
Notary Public
Janet M. Kirpan
Notary Public, State of New Jersey
No.2003672
Qualified In Somerset County
Commission Expires September 23, 1995
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement on Form S-4 with respect to common shares to
be issued in connection with the merger of a wholly-owned subsidiary of the
Company with McCaw Cellular Communications, Inc.; and
WHEREAS, the undersigned is a director of the Company:
NOW, THEREFORE, the undersigned hereby constitutes and appoints R. W.
MILLER, R. F. DAVIS and S. L. PRENDERGAST, and each of them, as attorneys for
him or her and in his or her name, place and stead, and in his or her capacity
as a director of the Company, to execute and file such registration statement
with respect to the above-described common shares, and thereafter to execute and
file any amended registration statement or statements with respect thereto,
hereby giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever requisite
and necessary to be done in and about the premises, as fully, to all intents and
purposes, as he or she might or could do if personally present at the doing
thereof, hereby ratifying and confirming all that said attorneys may or shall
lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 18th day of November, 1993.
/s/ Thomas H. Wyman
---------------------
Director
<PAGE>
- 2 -
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On the 18th day of November, 1993, personally appeared before me Thomas H.
Wyman, to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that (s)he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 18th day of November, 1993.
/s/ Vickie S. Heaton
----------------------------
Notary Public
VICKIE S. HEATON
NOTARY PUBLIC STATE OF NEW YORK
N0. 31-4789837
QUALIFIED IN NEW YORK COUNTY
COMMISSION EXPIRES APRIL 30, 199__
<PAGE>
PROXY MCCAW CELLULAR COMMUNICATIONS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Craig O. McCaw, Wayne M. Perry and John E.
McCaw, Jr. as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote as designated below all the
shares of common stock of McCaw Cellular Communications, Inc. ("McCaw") held of
record by the undersigned on January 31, 1994 at the special meeting of
stockholders to be held on March 25, 1994 or any adjournments or postponements
thereof.
PROPOSAL TO APPROVE AND ADOPT THE AGREEMENT AND PLAN OF MERGER, dated August
16, 1993, among McCaw, American Telephone and Telegraph Company ("AT&T"), and
Ridge Merger Corporation ("Merger Sub"), a subsidiary of AT&T, and THE MERGER
of Merger Sub into McCaw upon the terms and subject to the conditions thereof,
pursuant to which shares of McCaw Common Stock will be converted into shares of
common stock of AT&T, par value $1.00 per share.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE MERGER AGREEMENT AND THE
MERGER.
FOR [_] AGAINST [_] ABSTAIN [_]
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE MERGER AGREEMENT AND THE MERGER.
The undersigned acknowledges receipt from McCaw prior to the execution of
this proxy of a Proxy Statement/Prospectus dated February 2, 1994.
DATED _______________________ , 1994
PLEASE SIGN EXACTLY AS NAME APPEARS
BELOW. WHEN SHARES ARE HELD BY
JOINT TENANTS, BOTH SHOULD SIGN.
WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE FULL TITLE AS SUCH. IF
A CORPORATION, PLEASE SIGN IN FULL
CORPORATE NAME BY PRESIDENT OR
OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PART-
NERSHIP NAME BY AUTHORIZED PERSON.
____________________________________
SIGNATURE
____________________________________
SIGNATURE IF HELD JOINTLY
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
