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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 27, 1997
COMMNET CELLULAR INC.
(Exact name of registrant as specified in charter)
Colorado 0-15056 84-0924904
(State or other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
8350 East Crescent Parkway 80111
Suite 400 (Zip Code)
Englewood, Colorado
(Address of Principal
Executive Offices)
Registrant's telephone number, including area code: (303) 694-3234
<PAGE>
Item 5. Other Events.
CommNet Cellular Inc. ("CommNet") and Blackstone Capital Partners
Merchant Banking Fund and affiliated funds ("Blackstone") have signed an
Agreement and Plan of Merger dated as of May 27, 1997 (the "Merger Agreement")
providing for the merger of CommNet with AV Acquisition Corp., a Delaware
corporation formed by Blackstone. The Merger Agreement provides that the owner
of each outstanding share of CommNet common stock, par value $.001 per share,
can elect either to receive $36.00 in cash for that share or to retain that
share, subject to proration as described below. Upon completion of the
transaction, Blackstone will be the majority owner of CommNet. The merger is
valued at approximately $718 million, including net indebtedness of
approximately $200 million to be refinanced. The Merger Agreement is filed
herewith as Exhibit 2.1 and is incorporated by reference herein.
The Merger Agreement provides that in no event can more than
approximately 590,000 shares of CommNet common stock (approximately 4% of the
currently outstanding shares) be retained by present CommNet shareholders. If
holders elect to retain more than approximately 590,000 of the outstanding
shares, then the shares available will be prorated among those electing to
retain shares and cash will be paid for all other shares. If holders elect to
retain fewer than approximately 590,000 of the outstanding shares, the remaining
available shares will be prorated among those electing cash.
Following the merger, affiliates of Blackstone expect to own
approximately 87% of CommNet's outstanding shares. Blackstone will invest up to
approximately $142 million of equity in the transaction and The Chase Manhattan
Corporation has committed to provide and arrange all of the financing required
to complete the recapitalization of the Company. CommNet will continue to
operate as an independent public company under its current name and management,
with headquarters in Englewood, Colorado.
The merger is subject to certain conditions, including the approval
of CommNet's shareholders at a special meeting to be held as soon as
practicable, the receipt of certain approvals from the Federal Communications
Commission, the expiration of antitrust regulatory waiting periods and the
funding of financing arrangements.
The Merger Agreement includes provisions prohibiting CommNet from
actively soliciting another purchaser, and provides for the payment of certain
fees and the reimbursement of certain expenses to Blackstone in the event of a
termination of the Merger Agreement under certain circumstances.
In connection with the execution and delivery of the Merger Agreement
and the transactions contemplated thereby, the Board of Directors of CommNet
authorized the execution and delivery of an amendment, dated as of May 27, 1997,
to CommNet's Rights Agreement dated as of December 10, 1990, as amended, which
is filed herewith as Exhibit 4.1.
CommNet has issued a press release announcing the execution of the
Merger Agreement, which is filed herewith as Exhibit 99.1.
<PAGE>
Item 7. Financial Statements and Exhibits.
(c) The following exhibits are filed with this report:
2.1 Agreement and Plan of Merger dated as of May 27, 1997 between
AV Acquisition Corp. and CommNet Cellular Inc.
4.1 Rights Amendment dated as of May 27, 1997 between CommNet
Cellular Inc. and State Street Bank and Trust Company
99.1 Press Release dated May 28, 1997
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
COMMNET CELLULAR INC.
Date: May 28, 1997 By: /s/ Daniel P. Dwyer
-------------------
Chief Financial Officer
<PAGE>
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF MAY 27, 1997
BETWEEN
COMMNET CELLULAR INC.
AND
AV ACQUISITION CORP.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I. THE MERGER....................................................... 1
1.1. The Merger............................................................. 1
1.2. Closing................................................................ 2
1.3. Effective Time......................................................... 2
1.4. Effects of the Merger.................................................. 2
1.5. Articles of Incorporation.............................................. 2
1.6. By-Laws................................................................ 2
1.7. Officers and Directors of Surviving Corporation........................ 2
1.8. Effect on Capital Stock................................................ 3
1.9. CCI Common Stock Elections............................................. 4
1.10. Proration............................................................. 5
ARTICLE II. EXCHANGE OF CERTIFICATES........................................ 7
2.1. Exchange Fund.......................................................... 7
2.2. Exchange Procedures.................................................... 7
2.3. No Further Ownership Rights in CCI Common Stock Exchanged for Cash; No
Fractional Shares...................................................... 8
2.4. Termination of Exchange Fund........................................... 9
2.5. No Liability........................................................... 9
2.6. Investment of Exchange Fund............................................ 9
2.7. Lost Certificates...................................................... 9
2.8. Withholding Rights..................................................... 9
2.9. Further Assurances..................................................... 10
2.10. [Intentionally Omitted]............................................... 10
2.11. Shares of Dissenting Shareholders..................................... 10
2.12. The Debt Offers....................................................... 10
ARTICLE III. REPRESENTATIONS AND WARRANTIES................................. 11
3.1. Representations and Warranties of CCI.................................. 11
3.2. Representations and Warranties of Merger Sub........................... 23
ARTICLE IV. COVENANTS RELATING TO CONDUCT OF BUSINESS....................... 26
4.1. Covenants of CCI....................................................... 26
4.2. Covenants of Merger Sub................................................ 28
4.3. Regulatory Compliance; Advice of Changes; Government Filings........... 29
4.4. Transition Planning.................................................... 29
4.5. Control of Other Party's Business...................................... 30
ARTICLE V. ADDITIONAL AGREEMENTS............................................ 30
5.1. Preparation of Form S-4; Proxy Statement; CCI Shareholder Meeting...... 30
5.2. Access to Information.................................................. 31
5.3. Approvals and Consents; Cooperation.................................... 31
5.4. Acquisition Proposals.................................................. 32
5.5. Stock Options and Other Stock Plans.................................... 34
5.6. Fees and Expenses...................................................... 35
5.7. Indemnification; Directors' and Officers' Insurance.................... 35
5.8. Rights Agreement....................................................... 35
5.9. Public Announcements................................................... 36
5.10. Affiliates............................................................ 36
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
5.11. Certain Agreements................................................... 36
5.12. Nasdaq Listing and Exchange Act Registration......................... 36
ARTICLE VI. CONDITIONS PRECEDENT........................................... 36
6.1. Conditions to Each Party's Obligation to Effect the Merger............ 36
6.2. Additional Conditions to Obligations of Merger Sub.................... 37
6.3. Additional Conditions to Obligations of CCI........................... 39
ARTICLE VII. TERMINATION AND AMENDMENT..................................... 40
7.1. Termination........................................................... 40
7.2. Effect of Termination................................................. 42
7.3. Amendment............................................................. 43
7.4. Extension; Waiver..................................................... 43
ARTICLE VIII. GENERAL PROVISIONS........................................... 43
8.1. Non-Survival of Representations, Warranties and Agreements............ 43
8.2. Notices............................................................... 44
8.3. Interpretation........................................................ 44
8.4. Counterparts.......................................................... 44
8.5. Entire Agreement; No Third Party Beneficiaries........................ 44
8.6. Governing Law......................................................... 45
8.7. Severability.......................................................... 45
8.8. Assignment............................................................ 45
8.9. Enforcement........................................................... 45
8.10. Definitions.......................................................... 45
8.11. WAIVER OF JURY TRIAL................................................. 47
</TABLE>
ANNEXES AND CCI DISCLOSURE SCHEDULE
Annexes
A. Employee Benefits Matters
B. Form of CCI Affiliate Letter
CCI Disclosure Schedule
ii
<PAGE>
GLOSSARY OF DEFINED TERMS
<TABLE>
<CAPTION>
Location of
Definition Defined Term
<S> <C>
Acquiring Person.................................................Section 3.1(q)
Acquisition Proposal.............................................Section 5.4(a)
Action...........................................................Section 6.2(g)
Affiliate..........................................................Section 8.10
Agreement..............................................................Preamble
Blackstone.............................................................Recitals
Board of Directors.................................................Section 8.10
Business Day.......................................................Section 8.10
Cash Election Price..............................................Section 1.8(b)
Cash Proration Factor....................................Section 1.10(c)(ii)(1)
CBCA...................................................................Recitals
CCI....................................................................Preamble
CCI Affiliates.....................................................Section 8.10
CCI Benefit Plans............ ................................Section 3.1(m)(i)
CCI Common Stock.......................................................Recitals
CCI Disclosure Schedule.............................................Section 3.1
CCI Material Contracts........................................Section 3.1(l)(i)
CCI Permits......................................................Section 3.1(f)
CCI SEC Reports...............................................Section 3.1(d)(i)
CCI Stock Option Plans........................................Section 3.1(b)(i)
CCI Shareholders Meeting.........................................Section 5.1(c)
CCI Voting Debt..............................................Section 3.1(b)(iv)
CIFC.........................................................Section 3.1(b)(vi)
CIFC Facilities..............................................Section 3.1(b)(vi)
Closing.............................................................Section 1.2
Closing Date........................................................Section 1.2
CoBank.......................................................Section 3.1(b)(vi)
CoBank Credit Agreement......................................Section 3.1(b)(vi)
Code................................................................Section 2.8
Colorado Articles of Merger.........................................Section 1.3
Commitment Letter................................................Section 3.2(h)
Communications Act..........................................Section 3.1(c)(iii)
Consolidated Subsidiaries.....................................Section 3.1(a)(i)
Control Proposal...................................................Section 8.10
Core States Facility.........................................Section 3.1(b)(vi)
Debt Offers.....................................................Section 2.12(a)
DGCL...................................................................Recitals
Dissenting Shares..................................................Section 2.11
</TABLE>
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Distribution Date................................................Section 3.1(q)
Effective Time......................................................Section 1.3
Electing Shares..................................................Section 1.8(b)
Election Date....................................................Section 1.9(c)
Eligible Institution.............................................Section 1.9(c)
ERISA.........................................................Section 3.1(m)(i)
Excess Shares....................................................Section 2.3(b)
Exchange Act................................................Section 3.1(c)(iii)
Exchange Agent...................................................Section 1.9(b)
Exchange Fund.......................................................Section 2.1
Expenses............................................................Section 5.6
Facility.........................................................Section 3.2(h)
FCC.........................................................Section 3.1(c)(iii)
FCC Consents.....................................................Section 6.1(c)
FCC Licenses.....................................................Section 3.1(f)
Form of Election.................................................Section 1.9(c)
Form S-4....................................................Section 3.1(c)(iii)
Funding..........................................................Section 6.3(d)
GAAP..........................................................Section 3.1(a)(i)
General Partner Licensees........................................Section 3.1(f)
Governmental Entity.........................................Section 3.1(c)(iii)
Guaranty.....................................................Section 3.1(b)(vi)
HSR Act.....................................................Section 3.1(c)(iii)
IRS...........................................................Section 3.1(m)(i)
Letters of Transmittal..........................................Section 2.12(b)
Liens........................................................Section 3.1(b)(ii)
Limited Partner Licensees........................................Section 3.1(f)
Managed Affiliates...............................................Section 3.1(f)
Material Adverse Change............................................Section 8.10
Material Adverse Effect............................................Section 8.10
Merger.................................................................Recitals
Merger Consideration.............................................Section 1.8(b)
Merger Sub.............................................................Preamble
MS Certificate of Merger............................................Section 1.3
Nasdaq......................................................Section 3.1(c)(iii)
Non-Cash Election................................................Section 1.9(a)
Non-Cash Election Number........................................Section 1.10(a)
Non-Cash Election Share..........................................Section 1.8(b)
Non-Cash Proration Factor....................................Section 1.10(b)(i)
Nonmanaged Affiliates............................................Section 3.1(f)
Notes........................................................Section 3.1(b)(vi)
Offer Documents.................................................Section 2.12(b)
Offers to Purchase..............................................Section 2.12(b)
Option Value.....................................................Section 5.5(a)
Options..................................................................5.5(a)
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Organizational Documents...........................................Section 8.10
Parent.................................................................Recitals
Person.............................................................Section 8.10
Proxy Statement.............................................Section 3.1(c)(iii)
Required CCI Votes...............................................Section 3.1(k)
Required Consents...........................................Section 3.1(c)(iii)
Required Regulatory Approvals....................................Section 6.2(c)
Rights........................................................Section 3.1(b)(i)
Rights Agreement..............................................Section 3.1(b)(i)
SEC...........................................................Section 3.1(d)(i)
Securities Act..............................................Section 3.1(b)(vii)
Senior Subordinated Notes....................................Section 3.1(b)(vi)
Senior Subordinated Notes Indenture..........................Section 3.1(b)(vi)
Share Reference Date..........................................Section 3.1(b)(i)
Special Committee........................................................3.1(p)
Stock Acquisition Date...........................................Section 3.1(q)
Subordinated Notes...........................................Section 3.1(b)(vi)
Subordinated Notes Indenture.................................Section 3.1(b)(vi)
Subsidiary.........................................................Section 8.10
Superior Proposal................................................Section 5.4(a)
Surviving Corporation................ ..............................Section 1.1
Tax................................................................Section 8.10
Taxes..............................................................Section 8.10
Taxable............................................................Section 8.10
Tax Return.........................................................Section 8.10
Terminating CCI Breach...........................................Section 7.1(g)
Terminating Merger Sub Breach....................................Section 7.1(h)
Termination Date.................................................Section 7.1(b)
the other party....................................................Section 8.10
Violation....................................................Section 3.1(c)(ii)
WARN.............................................................Section 4.1(f)
v
<PAGE>
AGREEMENT AND PLAN OF MERGER, dated as of May 27, 1997 (this
"Agreement"), between COMMNET CELLULAR INC., a Colorado corporation ("CCI"), and
AV ACQUISITION CORP., a Delaware corporation ("Merger Sub").
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of CCI and Merger Sub have
each determined that the Merger is in the best interests of their respective
shareholders and have approved the Merger upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
share of common stock, par value $.001 per share, of CCI ("CCI Common Stock")
and the Rights (as defined in Section 3.1(b)(i)) associated therewith, other
than shares owned by Parent or Merger Sub or any wholly owned Subsidiary of
Merger Sub or by any wholly owned Subsidiary of CCI, and Dissenting Shares (as
defined in Section 2.11) will be converted into either (A) the right to retain
at the election of the holder thereof and subject to the terms hereof, CCI
Common Stock or (B) the right to receive cash;
WHEREAS, in order to effectuate the foregoing, Merger Sub, upon the
terms and subject to the conditions of this Agreement and in accordance with the
Colorado Business Corporation Act (the "CBCA") and the Delaware General
Corporation Law (the "DGCL"), will merge with and into CCI (the "Merger");
WHEREAS, Merger Sub is owned solely by one or more Persons
(collectively, "Parent"), all of which are Affiliates of Blackstone Management
Associates II L.L.C. ("Blackstone");
WHEREAS, it is intended that the Merger be recorded as a
recapitalization for financial reporting purposes; and
WHEREAS, CCI and Merger Sub desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I.
THE MERGER
1.1. The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the CBCA and the DGCL, Merger Sub shall
be merged with and into CCI at the Effective Time. At the Effective Time, the
separate corporate existence of Merger Sub shall cease and CCI shall continue as
the surviving corporation (the "Surviving Corporation").
1
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1.2. Closing. The closing of the Merger (the "Closing") will take place on
the fifth Business Day after satisfaction or waiver (as permitted by this
Agreement and applicable law) of the conditions (excluding conditions that, by
their terms, cannot be satisfied until the Closing Date) set forth in Article VI
(the "Closing Date"), unless another time or date is agreed to in writing by the
parties hereto. The Closing shall be held at the offices of Latham & Watkins,
233 South Wacker Drive, Suite 5800, Chicago, Illinois 60606, unless another
place is agreed to in writing by the parties hereto.
1.3. Effective Time. As soon as practicable following the Closing, the
parties shall (i) file articles of merger (the "Colorado Articles of Merger") in
such form as is required by and executed in accordance with the CBCA, (ii) file
a certificate of merger (the "MS Certificate of Merger") in such form as is
required by and executed in accordance with the DGCL and (iii) make all other
filings or recordings required under the CBCA and the DGCL. The Merger shall
become effective at the latest of (i) such time as the Colorado Articles of
Merger are duly filed with the Colorado Secretary of State, (ii) such time as
the MS Certificate of Merger is duly filed with the Delaware Secretary of State,
or (iii) such other time as Merger Sub and CCI shall agree in writing should be
specified in the Colorado Articles of Merger and the MS Certificate of Merger
(the date and time the Merger becomes effective being the "Effective Time").
1.4. Effects of the Merger. At and after the Effective Time, the Merger
will have the effects set forth in the CBCA and the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of CCI and Merger Sub shall
be vested in the Surviving Corporation, and all debts, liabilities and duties of
CCI and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
1.5. Articles of Incorporation. The articles of incorporation of CCI, as
in effect immediately prior to the Effective Time, shall be the articles of
incorporation of the Surviving Corporation, until thereafter changed or amended
as provided therein or by applicable law.
1.6. By-Laws. The by-laws of Merger Sub as in effect at the Effective Time
shall be the by-laws of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
1.7. Officers and Directors of Surviving Corporation. The directors of
Merger Sub shall be the directors of the Surviving Corporation and the officers
of the Surviving Corporation shall be those designated by Merger Sub prior to
the Effective Time, until the earlier of their resignation or removal or
otherwise ceasing to be an officer or director or until their respective
successors are duly elected and qualified, as the case may be.
2
<PAGE>
1.8. Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of CCI, Merger Sub or the holders of
any shares of CCI Common Stock or any shares of capital stock of Merger Sub:
(a) Cancellation of Certain Stock. Each share of CCI Common Stock
that is owned by Parent or Merger Sub or any wholly owned Subsidiary of
Merger Sub and each share of CCI Common Stock that is owned by any wholly
owned Subsidiary of CCI (together, in each case, with the associated Right)
shall automatically be cancelled and retired and shall cease to exist and
no consideration shall be delivered in exchange therefor.
(b) Conversion or Retention of CCI Common Stock. Except as otherwise
provided herein and subject to Section 1.10, each issued and outstanding
share of CCI Common Stock (other than shares to be cancelled in accordance
with Section 1.8(a) and Dissenting Shares) together with the associated
Right shall be converted into the following (the "Merger Consideration"):
(i) for each such share of CCI Common Stock with respect to
which an election to retain CCI Common Stock has been effectively made
and not revoked or forfeited pursuant to Sections 1.9(c), (d) and (e)
("Electing Shares"), the right to retain one fully paid and
nonassessable share of CCI Common Stock and the associated Right (a
"Non-Cash Election Share"); and
(ii) for each such share of CCI Common Stock (other than
Electing Shares), the right to receive in cash from CCI following the
Merger an amount equal to $36.00 (the "Cash Election Price").
(c) Cancellation and Retirement of CCI Common Stock. As of the
Effective Time, all shares of CCI Common Stock (and the associated Rights)
(other than shares referred to in Section 1.8(b)(i)) issued and outstanding
immediately prior to the Effective Time shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist, and
each holder of a certificate representing any such shares of CCI Common
Stock (and the associated Rights) shall cease to have any rights with
respect thereto, except (i) the right to receive cash, including cash in
lieu of fractional shares of CCI Common Stock (and the associated Rights),
to be issued or paid in consideration therefor upon surrender of such
certificate in accordance with Article 2, or (ii) in the case of Dissenting
Shares, any rights under Article 113 of the CBCA.
(d) Merger Sub Capital Stock. Each share of capital stock of Merger
Sub issued and outstanding immediately prior to the Effective Time shall be
converted into a number of shares of the CCI Common Stock following the
Merger equal to the quotient of (i) 3,939,167 divided by (ii) the number of
shares of common stock of Merger Sub outstanding immediately prior to the
Effective Time.
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1.9. CCI Common Stock Elections.
(a) Each Person who, on or prior to the Election Date (as defined in
Section 1.9(c)), is a record holder of shares of CCI Common Stock (and the
associated Rights) will be entitled, with respect to all or any portion of
his shares, to make an unconditional election (a "Non-Cash Election") on or
prior to such Election Date to retain Non-Cash Election Shares, on the
basis hereinafter set forth.
(b) Prior to the mailing of the Proxy Statement (as defined in
Section 3.1(c)(iii), Merger Sub shall appoint a bank or trust company which
is reasonably satisfactory to CCI to act as exchange agent (the "Exchange
Agent") for the payment of the Merger Consideration.
(c) CCI shall prepare a form of election, which form shall be subject
to the reasonable approval of Merger Sub (the "Form of Election"), to be
mailed by CCI with the Proxy Statement to the record holders of CCI Common
Stock as of the record date for the CCI Shareholders Meeting and otherwise
distributed in accordance with the requirements of the SEC, which Form of
Election shall be used by each record holder of shares of CCI Common Stock
(and the associated Rights) who wishes to elect, subject to the provisions
of Section 1.10, to retain Non-Cash Election Shares for any or all shares
of CCI Common Stock (and the associated Rights) as to which it is the
record holder. CCI will use its reasonable efforts to make the Form of
Election and the Proxy Statement available to all Persons who become
holders of CCI Common Stock during the period between such record date and
the Election Date referred to below. Any such holder's election to retain
Non-Cash Election Shares shall have been properly made only if the Exchange
Agent shall have received at its designated office, by 5:00 p.m., local
time for the Exchange Agent, on the Business Day next preceding the date of
the CCI Shareholders Meeting (the "Election Date"), pursuant to (i) a Form
of Election properly completed and signed and accompanied by certificates
representing the shares of CCI Common Stock (and the associated Rights) to
which such Form of Election relates, duly endorsed in blank or otherwise in
form acceptable for transfer on the books of CCI (or by an appropriate
guarantee of delivery of such certificates as set forth in such Form of
Election from a firm which is an "eligible guarantor institution" (as
defined in Rule 17Ad-15 under the Exchange Act) (an "Eligible
Institution"), provided such certificates are in fact delivered to the
Exchange Agent within three Nasdaq trading days after the date of execution
of such guarantee of delivery) or (ii) such other procedures as may be set
forth in the Proxy Statement.
(d) Any Form of Election may be revoked by the holder submitting it
to the Exchange Agent only by notice received by the Exchange Agent prior
to 5:00 p.m., local time for the Exchange Agent, on the Election Date in
accordance with the procedures set forth in the Proxy Statement (unless
Merger Sub and CCI determine not less than two Business Days prior to the
Election Date that the Closing Date is not likely to occur within five
Business Days following the date of the CCI Shareholders Meeting, in which
case any Form of Election will remain revocable until a subsequent date
which shall be a
4
<PAGE>
date prior to the Closing Date determined by Merger Sub and CCI). In
addition, all Forms of Election shall automatically be revoked if the
Exchange Agent is notified in writing by Merger Sub and CCI that this
Agreement has been terminated. If a Form of Election is properly revoked,
the certificate or certificates (or guarantees of delivery, as appropriate)
for the shares of CCI Common Stock (and the associated Rights) to which
such Form of Election relates shall be promptly returned by the Exchange
Agent to the shareholder submitting the same, or pursuant to such other
procedures as are set forth in the Proxy Statement.
(e) The determination of the Exchange Agent (or CCI in the event the
Exchange Agent declines to make such determination) shall be binding as to
whether elections to retain Non-Cash Election Shares have been properly
made or revoked pursuant to this Section 1.9 with respect to shares of CCI
Common Stock (and the associated Rights) and as to when elections and
revocations were received by it. If the Exchange Agent reasonably
determines in good faith that any election to retain Non-Cash Election
Shares was not properly made with respect to shares of CCI Common Stock
(and the associated Rights), such shares shall be treated by the Exchange
Agent as shares which were not Electing Shares at the Effective Time, and
such shares shall be exchanged in the Merger for cash pursuant to Section
1.8(b)(ii), subject to proration as provided in Section 1.10. The Exchange
Agent (or CCI in the event Exchange Agent declines to make such
determination) shall also make all computations as to the allocation and
the proration contemplated by Section 1.10, and any such computation shall
be conclusive and binding on the holders of shares of CCI Common Stock. The
Exchange Agent may, with the mutual written agreement of Merger Sub and
CCI, establish procedures as are consistent with this Section 1.9 for the
implementation of the elections provided for herein as shall be necessary
or desirable fully to effect such elections.
1.10. Proration.
(a) Notwithstanding anything in this Agreement to the contrary, the
aggregate number of shares of CCI Common Stock (and the associated Rights)
to be converted into the right to retain CCI Common Stock (and the
associated Rights) at the Effective Time (the "Non-Cash Election Number")
shall be equal to 588,611 (excluding for this purpose any shares of CCI
Common Stock (and the associated Rights) to be cancelled pursuant to
Section 1.8(a)).
(b) If the number of Electing Shares exceeds the Non-Cash Election
Number, then each Electing Share shall be converted into the right to
retain Non-Cash Election Shares or receive cash in accordance with the
terms of Section 1.8(b) in the following manner:
(i) A proration factor (the "Non-Cash Proration Factor") shall
be determined by dividing the Non-Cash Election Number by the total
number of Electing Shares.
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(ii) The number of Electing Shares covered by each Non-Cash
Election to be converted into the right to retain Non-Cash Election
Shares shall be determined by multiplying the Non-Cash Proration
Factor by the total number of Electing Shares covered by such Non-Cash
Election.
(iii) All Electing Shares, other than those shares converted into
the right to receive Non-Cash Election Shares in accordance with
Section 1.10(b)(ii), shall be converted into cash (on a consistent
basis among shareholders who made the election referred to in Section
1.8(b)(i), pro rata to the number of shares as to which they made such
election) as if such shares were not Electing Shares in accordance
with the terms of Section 1.8(b)(ii).
(c) If the number of Electing Shares is less than the Non-Cash
Election Number, then:
(i) all Electing Shares shall be converted into the right to
retain CCI Common Stock (and the associated Rights) in accordance with
the terms of Section 1.8(b)(i);
(ii) additional shares of CCI Common Stock (other than Electing
Shares and Dissenting Shares) shall be converted into the right to
retain Non-Cash Election Shares in accordance with the terms of
Section 1.8(b) in the following manner:
(1) a proration factor (the "Cash Proration Factor") shall
be determined by dividing (x) the difference between the Non-Cash
Election Number and the number of Electing Shares, by (y) the
total number of shares of CCI Common Stock outstanding at the
Effective Time (other than Electing Shares and Dissenting
Shares); and
(2) the number of shares of CCI Common Stock in addition
to Electing Shares to be converted into the right to retain Non-
Cash Election Shares shall be determined by multiplying the Cash
Proration Factor by the total number of shares of CCI Common
Stock outstanding at the Effective Time (other than Electing
Shares and Dissenting Shares); and
(iii) Subject to Section 2.11, shares of CCI Common Stock subject
to clause (ii) of this Section 1.10(c) shall be converted into the
right to retain Non-Cash Election Shares in accordance with Section
1.8(b)(i) as if such shares had been the subject of a Non-Cash
Election (on a consistent basis among shareholders who held shares of
CCI Common Stock as to which they did not make the election referred
to in Section 1.8(b)(i), pro rata based upon the number of shares as
to which they did not make such election).
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ARTICLE II.
EXCHANGE OF CERTIFICATES
2.1. Exchange Fund.
At or as soon as reasonably practicable after the Effective Time, CCI
shall deposit with the Exchange Agent for the benefit of the holders of the
shares of CCI Common Stock (and the associated Rights), the cash portion of the
Merger Consideration for exchange pursuant to this Article II. The Exchange
Agent shall deliver cash contemplated to be paid pursuant to Section 1.8 (such
cash being hereinafter referred to as the "Exchange Fund") in exchange for
outstanding shares of CCI Common Stock (and the associated Rights).
2.2. Exchange Procedures.
(a) Exchange. As soon as reasonably practicable after the Effective
Time, each holder of an outstanding certificate or certificates which prior
thereto represented shares of CCI Common Stock (and the associated Rights)
shall, upon surrender to the Exchange Agent of such certificate or
certificates and acceptance thereof by the Exchange Agent, be entitled to a
certificate or certificates representing the number of full Non-Cash
Election Shares, if any, to be retained by the holder thereof pursuant to
this Agreement and the amount of cash, if any, into which the number of
shares of CCI Common Stock (and the associated Rights) previously
represented by such certificate or certificates surrendered shall have been
converted pursuant to this Agreement. The Exchange Agent shall accept such
certificates upon compliance with such reasonable terms and conditions as
the Exchange Agent may impose to effect an orderly exchange thereof in
accordance with normal exchange practices. After the Effective Time there
shall be no further transfer on the records of CCI or its transfer agent of
certificates representing shares of CCI Common Stock (and the associated
Rights) which have been converted, in whole or in part, pursuant to this
Agreement into the right to receive cash, and if such certificates are
presented to CCI for transfer, they shall be cancelled against delivery of
cash and, if appropriate, certificates for Non-Cash Election Shares. If any
certificate for such Non-Cash Election Shares is to be issued in, or if the
Cash Election Price is to be remitted to, a name other than that in which
the certificate for CCI Common Stock surrendered for exchange is
registered, it shall be a condition of such exchange that the certificate
so surrendered shall be properly endorsed, with signature guaranteed by an
Eligible Institution, or otherwise in proper form for transfer and that the
Person requesting such exchange shall pay to CCI, the Exchange Agent or
CCI's transfer agent any transfer or other taxes required by reason of the
issuance of certificates for such Non-Cash Election Shares in a name other
than that of the registered holder of the certificate surrendered, or
establish to the satisfaction of CCI, the Exchange Agent or its transfer
agent that such tax has been paid or is not applicable. Until surrendered
as contemplated by this Section 2.2, each certificate for shares of CCI
Common Stock shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Merger
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Consideration as contemplated by Section 1.8. No interest will be paid or
will accrue on any cash payable as Merger Consideration or in lieu of any
fractional shares of Non-Cash Election Shares.
(b) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with respect to Non-Cash Election Shares with a record
date after the Effective Time shall be paid to the holder of any
unsurrendered certificate for shares of CCI Common Stock with respect to
the Non-Cash Election Shares represented thereby and no cash payment in
lieu of fractional shares shall be paid to any such holder pursuant to
Section 2.3(b) until the surrender of such certificate in accordance with
this Article II. Subject to the effect of applicable laws, following
surrender of any such certificate, there shall be paid to the holder of the
certificate representing whole Non-Cash Election Shares issued in
connection therewith, without interest, (i) at the time of such surrender
or as promptly after the sale of the Excess Shares as practicable, the
amount of any cash payable in lieu of a fractional share of Non-Cash
Election Shares to which such holder is entitled pursuant to Section 2.3(b)
and the proportionate amount of any dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such
whole Non-Cash Election Shares, and (ii) at the appropriate payment date,
the proportionate amount of any dividends or other distributions with a
record date after the Effective Time but prior to such surrender and a
payment date subsequent to such surrender payable with respect to such
whole Non-Cash Election Shares.
2.3. No Further Ownership Rights in CCI Common Stock Exchanged for Cash; No
Fractional Shares.
(a) All cash paid upon the surrender for conversion of certificates
representing shares of CCI Common Stock (and the associated Rights) in
accordance with the terms of Article I and this Article II shall be deemed
to have been issued (and paid) in full satisfaction of all rights
pertaining to the shares of CCI Common Stock (and the associated Rights)
surrendered for conversion for cash theretofore represented by such
certificates.
(b) Notwithstanding any other term of this Agreement, (i) no
certificates or scrip representing fractional shares of Non-Cash Election
Shares shall be issued in connection with the Merger, and such fractional
share interests will not entitle the owner thereof to vote or to any rights
of a shareholder of CCI after the Merger; and (ii) each holder of shares of
CCI Common Stock (and the associated Rights) exchanged pursuant to the
Merger who would otherwise have been entitled to receive a fraction of a
Non-Cash Election Share (after taking into account all shares of CCI Common
Stock delivered by such holder) shall receive, in lieu thereof, a cash
payment (without interest) representing such holder's proportionate
interest in the net proceeds from the sale by the Exchange Agent (following
the deduction of applicable transaction costs) on behalf of all such
holders of the Non-Cash Election Shares (the "Excess Shares") representing
such fractions. Such sale shall be made as soon as practicable after the
Effective Date.
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2.4. Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of certificates representing shares of CCI
Common Stock (and the associated Rights) for eighteen months after the Effective
Time shall be delivered to the Surviving Corporation or otherwise on the
instruction of the Surviving Corporation, and any holders of such certificates
who have not theretofore complied with this Article II shall thereafter look
only to the Surviving Corporation for the Merger Consideration with respect to
the shares of CCI Common Stock (and the associated Rights) formerly represented
thereby to which such holders are entitled pursuant to Section 2.2 and only as
general creditors thereof for payment of their claim for the Cash Election
Price, if any, Non-Cash Election Shares, if any, any cash in lieu of fractional
shares of Non-Cash Election Shares and any dividends or distributions with
respect to Non-Cash Election Shares which such holders may be entitled.
2.5. No Liability. None of Merger Sub, CCI, the Surviving Corporation or
the Exchange Agent shall be liable to any Person in respect of Non-Cash Election
Shares (or dividends or distributions with respect thereto) or any cash from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any certificates representing
shares of CCI Common Stock (and the associated Rights) shall not have been
surrendered prior to eighteen months after the Effective Time (or immediately
prior to such earlier date on which any cash, if any, any cash in lieu of
fractional shares of Non-Cash Election Shares or any dividends or distributions
with respect to Non-Cash Election Shares in respect of such certificate would
otherwise escheat to or become the property of any Governmental Entity (as
defined in Section 3.1(c)(iii)), any such cash, dividends or distributions in
respect of such certificate shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any Person previously entitled thereto.
2.6. Investment of Exchange Fund. The Exchange Agent shall invest any cash
included in the Exchange Fund as directed by the Surviving Corporation on a
daily basis. Any interest and other income resulting from such investments shall
promptly be paid to the Surviving Corporation.
2.7. Lost Certificates. If any certificate of CCI Common Stock (and the
associated Rights) shall have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the Person claiming such certificate to be lost,
stolen or destroyed and, if required by CCI, the posting by such Person of a
bond in such reasonable amount as CCI may direct as indemnity against any claim
that may be made against it with respect to such certificate, the Exchange Agent
will deliver in exchange for such lost, stolen or destroyed certificate the
applicable Merger Consideration with respect to the shares of CCI Common Stock
(and the associated Rights) formerly represented thereby, pursuant to this
Agreement.
2.8. Withholding Rights. CCI and the Exchange Agent shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of CCI Common Stock (and the associated
Rights) such amounts as CCI or the Exchange Agent, as applicable, is required to
deduct and withhold with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the "Code"), or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld by
CCI or
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the Exchange Agent, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the shares of CCI Common
Stock (and the associated Rights) in respect of which such deduction and
withholding was made by such party.
2.9. Further Assurances. At and after the Effective Time, the officers and
directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of CCI or Merger Sub, any deeds, bills of
sale, assignments or assurances and to take and do, in the name and on behalf of
CCI or Merger Sub, any other actions and things to vest, perfect or confirm of
record or otherwise in the Surviving Corporation any and all right, title and
interest in, to and under any of the rights, properties or assets acquired or to
be acquired by the Surviving Corporation as a result of, or in connection with,
the Merger.
2.10. [Intentionally Omitted].
2.11. Shares of Dissenting Shareholders. Notwithstanding anything in this
Agreement to the contrary, any shares of CCI Common Stock (and the associated
Rights) that are issued and outstanding immediately prior to the Effective Time
and that are held by shareholders who shall not have voted in favor of the
Merger and who shall have demanded properly in writing payment for such shares
in accordance with Article 113 of the CBCA (collectively, the "Dissenting
Shares") shall not be converted into or represent the right to receive the
Merger Consideration or any cash in lieu of fractional shares of CCI Common
Stock (and the associated Rights). Such shareholders shall be entitled to
receive payment of the fair value (as defined in Article 113) of such shares of
CCI Common Stock (and the associated Rights) held by them in accordance with the
provisions of Article 113 of the CBCA, except that all Dissenting Shares held by
shareholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to payment for such shares of CCI Common Stock
(and the associated Rights) under such Article 113 shall thereupon be treated as
shares that are not Electing Shares and had been converted into and had become
exchangeable, as of the Effective Time, for the right to receive, without any
interest thereon, the Merger Consideration. CCI shall give Merger Sub prompt
notice of any notice or demands for payment in accordance with Article 113 of
the CBCA for shares of CCI Common Stock received by CCI and Merger Sub shall
have the right to participate in and approve all negotiations and proceedings
with respect to such demands. CCI shall not, except with the prior written
consent of Merger Sub, make any payment with respect to, or settle or offer to
settle, any such demands.
2.12. The Debt Offers.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 7.1, CCI shall, within 10 days of receiving any
request by Merger Sub to do so (but in no event earlier than twenty
calendar days after the date hereof), commence offers to purchase all of
the outstanding aggregate principal amount of Senior Subordinated Notes and
all of the outstanding aggregate principal amount of Subordinated Notes on
the terms set forth in Section 2.12 of the CCI Disclosure Schedule and such
other customary terms and conditions as are reasonably acceptable to Merger
Sub (the "Debt Offers"). CCI shall waive any of the conditions to the Debt
Offers and
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make any other changes in the terms and conditions of the Debt Offers as
may be reasonably requested by Merger Sub, and CCI shall not, without
Merger Sub's prior consent, waive any material condition to the Debt
Offers, make any changes to the terms and conditions of the Debt Offers set
forth in Section 2.12 of the CCI Disclosure Schedule or make any other
material changes in the terms and conditions of the Debt Offers.
Notwithstanding the immediately preceding sentence, Merger Sub shall not
request that CCI make any change to the terms and conditions of the Debt
Offers which decreases the price per Senior Subordinated Note or
Subordinated Note payable in the Debt Offers (other than by adding
consideration) or imposes conditions to the Debt Offers in addition to
those set forth in Section 2.12 of the CCI Disclosure Schedule which are
materially adverse to holders of Senior Subordinated Notes or Subordinated
Notes (it being agreed that a request by Merger Sub that CCI waive any
condition in whole or in part at any time and from time to time in its sole
discretion shall not be deemed to be materially adverse to any holder of
Senior Subordinated Notes or Subordinated Notes), unless such change was
previously approved by CCI in writing. CCI covenants and agrees that,
subject to the terms and conditions of this Agreement, including but not
limited to the conditions in the Debt Offers, it will accept for payment
and pay for the Senior Subordinated Notes or Subordinated Notes as soon as
such conditions to the Debt Offers and Section 6.2(d) hereof are satisfied
and it is permitted to do so under applicable law, provided that CCI shall
coordinate the timing of any such purchase with Merger Sub in order to
obtain the greatest participation in the Debt Offers.
(b) Promptly following the date of this Agreement, CCI shall prepare,
subject to advice and comments of Merger Sub, an offer to purchase for each
of the Senior Subordinated Notes and the Subordinated Notes (or portions
thereof) and forms of the related letters of transmittal (the "Letters of
Transmittal") (collectively, the "Offers to Purchase") and summary
advertisement, as well as all other information and exhibits (collectively,
the "Offer Documents"). All mailings to the holders of Senior Subordinated
Notes and Subordinated Notes in connection with the Debt Offers shall be
subject to the prior review, comment and approval of Merger Sub (which
approval shall not be unreasonably withheld or delayed). CCI will use its
reasonable best efforts to cause the Offer Documents to be mailed to the
holders of the Senior Subordinated Notes and the Subordinated Notes as
promptly as practicable following receipt of the request from Merger Sub
under Section 2.12(a) to do so. CCI agrees promptly to correct any
information in the Offer Documents that shall be or have become false or
misleading in any material respect.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of CCI. Except as set forth in the CCI
Disclosure Schedule delivered by CCI to Merger Sub at or prior to the execution
of this Agreement (the "CCI Disclosure Schedule") (each section of which
qualifies the correspondingly
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numbered representation and warranty or covenant to the extent specified
therein), CCI represents and warrants to Merger Sub as follows:
(a) Organization, Standing and Power.
(i) Each of CCI and each of the Consolidated Subsidiaries that
is a corporation has been duly organized and is validly existing and
in good standing under the laws of its jurisdiction of incorporation.
Each of the Consolidated Subsidiaries that is a partnership has been
duly formed and is validly existing under the laws of the jurisdiction
of its formation. Each of CCI and each of the Consolidated
Subsidiaries is duly qualified and in good standing to do business in
each jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification necessary, other
than in such jurisdictions where the failure so to qualify could not
reasonably be expected, either individually or in the aggregate, to
have a Material Adverse Effect on CCI. The copies of the
Organizational Documents of CCI which were previously furnished to
Merger Sub are true, complete and correct copies of such documents as
in effect on the date of this Agreement. As used herein, "Consolidated
Subsidiaries" means the corporations (other than TVX, Inc.) and
partnerships which are, or which in accordance with generally accepted
accounting principles ("GAAP") should be, consolidated for purposes of
CCI's financial reporting, exclusive of partnerships unless CCI or an
entity which it controls is the controlling general partner of such
partnership.
(ii) Each of the Managed Affiliates that is a corporation has
been duly organized and is validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization. Each of
the Managed Affiliates that is a partnership has been duly formed and
is validly existing under the laws of the jurisdiction of its
formation. Each of the Managed Affiliates is duly qualified and in
good standing to do business in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes
such qualification necessary, other than in such jurisdictions where
the failure so to qualify could not reasonably be expected, either
individually or in the aggregate, to have a Material Adverse Effect on
CCI.
(b) Capital Structure.
(i) As of May 12, 1997 (the "Share Reference Date"), the
authorized capital stock of CCI consisted of (A) 40,000,000 shares of
CCI Common Stock, of which 13,765,965 shares were outstanding and (B)
1,000,000 shares of preferred stock, of which 150,000 shares of Series
A Preferred Stock have been designated (none of which have been
issued) and were reserved for issuance upon exercise of the rights
(the "Rights") distributed to the holders of CCI Common Stock pursuant
to the Rights Agreement dated as of December 10, 1990, as amended,
between CCI and State Street Bank and Trust Company, as successor to
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The Bank of New York, as rights agent (the "Rights Agreement"). Since
the Share Reference Date, to the date of this Agreement, there have
been no issuances of shares of the capital stock of CCI or any other
securities of CCI other than issuances of shares pursuant to options
or rights outstanding as of the Share Reference Date under the CCI
Benefit Plans. All issued and outstanding shares of the capital stock
of CCI are duly authorized, validly issued, fully paid and non-
assessable, and no class of capital stock is entitled to preemptive
rights. There were outstanding as of the Share Reference Date no
options, warrants or other rights to acquire capital stock from CCI
other than options representing in the aggregate the right to purchase
1,910,025 shares of CCI Common Stock under the CCI Omnibus Stock and
Incentive Plan, the CCI Key Agent Stock Option Plan and the Stock
Option Agreement dated September 19, 1995 between CCI and Doron Lurie
(collectively, the "CCI Stock Option Plans"). No options or warrants
or other rights to acquire capital stock from CCI have been issued or
granted since the Share Reference Date to the date of this Agreement.
(ii) Except as set forth in Section 3.1(b) of the CCI Disclosure
Schedule, all of the issued and outstanding shares of capital stock of
each Consolidated Subsidiary that is a corporation are duly
authorized, validly issued, fully paid and non-assessable and are
owned, directly or indirectly, by CCI and, where owned by CCI or a
Consolidated Subsidiary, are owned free and clear of any liens,
claims, encumbrances, restrictions, preemptive rights or any other
claims of any third party ("Liens"). Except as set forth in Section
3.1(b) of the CCI Disclosure Schedule, all of the partnership
interests of each Consolidated Subsidiary that is a partnership have
been validly created pursuant to its partnership agreement and all of
the partnership interests of each partnership Consolidated Subsidiary
are owned, directly or indirectly, by CCI and, where owned by CCI or a
Consolidated Subsidiary, are owned free and clear of any Liens.
(iii) Except as set forth in Section 3.1(b) of the CCI Disclosure
Schedule, all of the issued and outstanding shares of capital stock
owned by CCI or a Consolidated Subsidiary in each Managed Affiliate or
CCI Affiliate which is a corporation are duly authorized, validly
issued, fully paid and non-assessable and, where owned directly by CCI
or a Consolidated Subsidiary, as applicable, are owned free and clear
of any Liens. Except as set forth in Section 3.1(b) of the CCI
Disclosure Schedule, all of the partnership interests of each Managed
Affiliate or CCI Affiliate which is a partnership in which CCI or a
Consolidated Subsidiary has a direct partnership interest have been
validly created pursuant to such partnership's partnership agreement
and all of the partnership interests of each partnership Managed
Affiliate or CCI Affiliate directly owned by CCI or a Consolidated
Subsidiary, as applicable, are free and clear of any Liens.
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(iv) As of the date of this Agreement, no bonds, debentures,
notes or other indebtedness of CCI having the right to vote on any
matters on which shareholders may vote ("CCI Voting Debt") are issued
or outstanding.
(v) Except as otherwise set forth in this Section 3.1(b), as of
the date of this Agreement, there are no securities, options,
warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which CCI or any of the Consolidated
Subsidiaries is a party or by which any of them is bound obligating
CCI or any of the Consolidated Subsidiaries to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of capital
stock or other voting securities of CCI or any of the Consolidated
Subsidiaries or obligating CCI or any of the Consolidated Subsidiaries
to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or
undertaking. As of the date of this Agreement, there are no
outstanding obligations of CCI or any of the Consolidated Subsidiaries
to repurchase, redeem or otherwise acquire any shares of capital stock
of CCI or any of the Consolidated Subsidiaries.
(vi) As of May 27, 1997, the only outstanding indebtedness for
borrowed money of CCI, the Consolidated Subsidiaries and the Managed
Affiliates is (a) $176,651,000 in aggregate principal amount of
11 3/4% Senior Subordinated Discount Notes Due 2003 (the "Senior
Subordinated Notes") issued pursuant to the Indenture dated as of
September 1, 1993 between CCI and State Street Bank and Trust Company,
as trustee (the "Senior Subordinated Notes Indenture"), (b)
$80,000,000 in aggregate principal amount of 11 1/4% Subordinated
Notes Due 2005 (the "Subordinated Notes," and together with the Senior
Subordinated Notes, the "Notes") issued pursuant to the Indenture
dated as of July 6, 1995 between CCI and American Bank National
Association, as trustee (the "Subordinated Notes Indenture"), (c) debt
under the Consolidated Loan Agreement dated as of September 6, 1995
among Cellular, Inc. Financial Corporation, a direct wholly owned
subsidiary of CCI ("CIFC"), CoBank ACB, as agent ("CoBank") and the
several lenders parties thereto (the "CoBank Credit Agreement") not
exceeding $24,040,000, (d) indebtedness owed to CIFC by Consolidated
Subsidiaries or Managed Affiliates under the credit facilities set
forth on Section 3.1(i) of the CCI Disclosure Schedule (the "CIFC
Facilities"), (e) indebtedness to CoreStates Bank under the Credit
Agreement dated as of September 4, 1996 between Sioux Falls Cellular
Limited Partnership and CoreStates Bank, N.A. (the "CoreStates
Facility") not exceeding $3,500,000, and (f) other indebtedness for
borrowed money not exceeding $3,000,000. Other than the guarantee of
the CoBank Credit Agreement, pursuant to the Third Amended and
Restated Guaranty of CommNet Cellular Inc. to CoBank ACB, dated as of
September 6, 1995, as amended (the "Guaranty"), any loans and other
extensions of credit under the CoBank Credit Agreement, the CIFC
Facilities and the CoreStates Facility which are prepayable in full in
accordance with their terms, and other than the Notes, no indebtedness
for borrowed money of CCI or the
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Consolidated Subsidiaries contains any restriction upon the incurrence
of indebtedness for borrowed money by CCI or any Consolidated
Subsidiary or any Managed Affiliate or restricts the ability of any of
the foregoing to grant any Liens on its properties or assets.
(vii) There are no agreements or arrangements pursuant to which
(i) CCI is or could be required to register shares of CCI Common Stock
or other securities under the Securities Act of 1933, as amended (the
"Securities Act"), or (ii) CCI is a party and which restricts the
voting or disposition of any CCI Common Stock.
(c) Authority; No Conflicts.
(i) CCI has all requisite corporate power and authority to
enter into this Agreement and, subject to the adoption of this
Agreement by the requisite vote of the holders of CCI Common Stock, to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of CCI, subject in the case of the
consummation of the Merger to the adoption of this Agreement by the
shareholders of CCI. This Agreement has been duly executed and
delivered by CCI and constitutes a valid and binding agreement of CCI,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting
creditors generally, by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or
at law) or by an implied covenant of good faith and fair dealing.
(ii) Except as set forth in Section 3.1(c)(ii) of the CCI
Disclosure Schedule, the execution and delivery of this Agreement does
not or will not, as the case may be, and the consummation of the
transactions contemplated hereby will not, conflict with, or result in
any violation of, or constitute a default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
amendment, cancellation or acceleration of any obligation or the loss
of a material benefit under, or the creation of a lien, pledge,
security interest, charge or other encumbrance on any assets (any such
conflict, violation, default, right of termination, amendment,
cancellation or acceleration, loss or creation, a "Violation")
pursuant to: (A) any provision of the Organizational Documents of CCI,
any Consolidated Subsidiary or Managed Affiliate that is a corporation
or (B) except as could not reasonably be expected to have a Material
Adverse Effect on CCI and, subject to obtaining or making the
consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in paragraph (iii) below, any
loan or credit agreement, note, mortgage, bond, indenture, lease,
benefit plan or other agreement, obligation, instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or
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regulation applicable to CCI or any of the Consolidated Subsidiaries
or their properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any supranational, national,
state, municipal or local government, any instrumentality,
subdivision, court, administrative agency or commission or other
authority thereof, or any quasi-governmental or private body
exercising any regulatory, taxing, importing or other governmental or
quasi-governmental authority (a "Governmental Entity"), is required by
or with respect to CCI, any Consolidated Subsidiary or, to the
knowledge of CCI, any Managed Affiliate, in connection with the
execution and delivery of this Agreement by CCI or the consummation by
CCI of the transactions contemplated hereby, except for (x) the filing
with the SEC of (i) a proxy statement relating to the Required CCI
Votes at the CCI Shareholders Meeting (such proxy statement as amended
or supplemented from time to time, the "Proxy Statement"), (ii) the
registration statement on Form S-4 to be filed with the SEC pursuant
to the Securities Act by CCI in connection with the registration of
the Non-Cash Election Shares pursuant to the Merger (the "Form S-4")
and (iii) such reports under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as may be required in connection with
this Agreement and the transactions contemplated by this Agreement,
including the Debt Offers, (y) those required under or in relation to
(A) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (B) the Communications Act of 1934, as
amended (the "Communications Act"), and any rules and regulations
promulgated by the Federal Communications Commission ("FCC"), (C)
state securities or "blue sky" laws, (D) the CBCA and the DGCL with
respect to the filing and recordation of appropriate merger or other
documents, (E) rules and regulations of any state public service or
utility commissions or similar state regulatory bodies, (F) rules and
regulations of the Nasdaq National Market ("Nasdaq"), and (G)
antitrust or other competition laws of other jurisdictions, and (z)
such consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to make or obtain could
not reasonably be expected to have a Material Adverse Effect on CCI.
Consents, approvals, orders, authorizations, registrations,
declarations and filings required under or in relation to clause (x)
or (y) are hereinafter referred to as "Required Consents."
(d) Reports and Financial Statements.
(i) CCI has filed all required reports, schedules, forms,
statements and other documents required to be filed by it with the
Securities and Exchange Commission (the "SEC") since September 30,
1994 (collectively, including all exhibits thereto, the "CCI SEC
Reports"). No Consolidated Subsidiary of CCI is required to file any
form, report or other document with the SEC. None of the CCI SEC
Reports, as of their respective dates (and, if amended or superseded
by a filing prior to the date of this Agreement or of the Closing
Date, then on the date
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of such filing), contained or will contain any untrue statement of a
material fact or omitted or will omit 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 financial statements (including the related
notes) included in the CCI SEC Reports presents fairly, in all
material respects, the consolidated financial position and
consolidated results of operations and cash flows of CCI as of the
respective dates or for the respective periods set forth therein, all
in conformity with GAAP consistently applied during the periods
involved except as otherwise noted therein, and subject, in the case
of the unaudited interim financial statements, to normal and recurring
year-end adjustments that have not been and are not expected to be
material in amount. All of such CCI SEC Reports, as of their
respective dates (and as of the date of any amendment to the
respective CCI SEC Report), complied as to form in all material
respects with the applicable requirements of the Securities Act and
the Exchange Act and the rules and regulations promulgated thereunder.
(ii) Except as set forth in the CCI SEC Reports filed prior to
the date of this Agreement, and except for liabilities and obligations
incurred in the ordinary course of business consistent with past
practice since March 31, 1997, as of the date of this Agreement
neither CCI nor any of the Consolidated Subsidiaries has any
liabilities or obligations (other than arising under this Agreement)
of any nature which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on CCI or
could reasonably be expected to prevent or materially delay the
performance of this Agreement by CCI.
(e) Offer Documents; Proxy Statement. None of the information
supplied or to be supplied by CCI for inclusion or incorporation by
reference in (i) the Form S-4 will, at the time the Form S-4 is filed with
the SEC, and at any time it is amended or supplemented or at the time it
becomes effective under the Securities Act, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, (ii) the Proxy
Statement will, at the date it is first mailed to CCI's shareholders or at
the time of the CCI Shareholders 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 the light
of the circumstances under which they are made, not misleading, or (iii)
the Offer Documents will, at the time the Offer Documents or any amendments
or supplements thereto are first published, sent or given to holders of the
Notes, or at the time the applicable Debt Offer is consummated, 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 the light of the circumstances under which they were made, not
misleading, except that in each case no representation is made by CCI with
respect to statements made or incorporated by reference therein based on
information supplied in writing by Merger Sub specifically for inclusion
therein. The Form S-4 will, as of its effective date,
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and the prospectus contained therein will, as of its date, comply as to
form in all material respects with the requirements of the Securities Act
and the rules and regulations promulgated thereunder, and the Proxy
Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder, except that in each case no representation is made by CCI with
respect to statements made or incorporated by reference therein based on
information supplied in writing by Merger Sub specifically for inclusion
therein.
(f) Compliance with Applicable Laws; Regulatory Matters. CCI, the
Consolidated Subsidiaries, the CCI Affiliates which hold FCC Licenses for
which CCI serves (pursuant to contract) as managing agent (the "Managed
Affiliates"), the partnerships which hold FCC licenses to operate cellular
telephone systems ("FCC Licenses") for which a Consolidated Subsidiary is
the managing general partner (the "General Partner Licensees") and, to the
knowledge of CCI, the CCI Affiliates for which CCI does not serve as
managing agent (the "Nonmanaged Affiliates") and the partnerships which
hold FCC Licenses for which Consolidated Subsidiaries are non-managing
general partners or are limited partners (the "Limited Partner Licensees")
hold all permits, licenses, certificates, franchises, registrations,
variances, exemptions, orders and approvals of all Governmental Entities
which are material to the operation of the businesses of CCI, taken as a
whole (the "CCI Permits"). CCI, the Consolidated Subsidiaries, the Managed
Affiliates, the General Partner Licensees and, to the knowledge of CCI, the
Nonmanaged Affiliates and the Limited Partner Licensees are in compliance
with the terms of the CCI Permits, except where the failure so to comply,
individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect on CCI. Except as disclosed in the CCI SEC
Reports, the businesses of CCI, the Consolidated Subsidiaries, the Managed
Affiliates, the General Partner Licensees and, to the knowledge of CCI, the
Nonmanaged Affiliates and the Limited Partner Licensees are not being and
have not been conducted in violation of any law, ordinance, regulation,
judgment, decree, injunction, rule or order of any Governmental Entity,
except for violations which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on CCI. As of the
date of this Agreement, no investigation (other than with respect to Taxes)
by any Governmental Entity with respect to CCI or any of the Consolidated
Subsidiaries, the Managed Affiliates, the General Partner Licensees and, to
the knowledge of CCI, the Nonmanaged Affiliates and the Limited Partner
Licensees is pending or, to the knowledge of CCI, threatened, other than
investigations which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on CCI. Since
March 31, 1997, CCI and each of the Consolidated Subsidiaries, the Managed
Affiliates, the General Partner Licensees and, to the knowledge of CCI, the
Nonmanaged Affiliates and the Limited Partner Licensees required to make
filings under all applicable laws regulating the cellular telephone
business have filed with all applicable Governmental Entities all material
forms, statements, reports and documents (including exhibits, annexes and
any amendments thereto) required to be filed by them, and each such filing
complied with all applicable laws, rules and regulations, except for such
nonfiling or noncompliance which could not, individually or in the
aggregate, reasonably be expected to have a Material
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Adverse Effect on CCI or prevent or materially delay the performance of
this Agreement by CCI. Set forth in Section 3.1(f) of the CCI Disclosure
Schedule is a true and complete list of all cellular FCC Licenses held by
CCI, any Consolidated Subsidiary, or any Managed Affiliate.
(g) Litigation. Other than rulemaking or other proceedings of
general applicability affecting the cellular telephone industry and except
as disclosed in the CCI SEC Reports, there is no litigation, arbitration,
claim, suit, action, investigation or proceeding pending or, to the
knowledge of CCI, threatened, against or affecting CCI or any Consolidated
Subsidiary or, to CCI's knowledge, Managed Affiliate which, individually or
in the aggregate, has had or could reasonably be expected to have a
Material Adverse Effect on CCI, nor is there any judgment, award, decree,
injunction, rule or order of any Governmental Entity or arbitrator
outstanding against CCI or any Consolidated Subsidiary or, to CCI's
knowledge, Managed Affiliate which, individually or in the aggregate, has
had or could reasonably be expected to have a Material Adverse Effect on
CCI.
(h) Taxes. (i) CCI and each of the Consolidated Subsidiaries and
Managed Affiliates have duly and timely filed (taking into account any
extension of time within which to file) all material Tax Returns required
to be filed by any of them and all such filed Tax Returns are complete and
accurate in all material respects; (ii) CCI and each of the Consolidated
Subsidiaries and Managed Affiliates have paid all Taxes that are shown as
due on such filed Tax Returns or that CCI or any of the Consolidated
Subsidiaries or Managed Affiliates is obligated to withhold from amounts
owing to any employee, creditor or third party, except with respect to
matters contested in good faith or for such amounts that, individually or
in the aggregate, could not reasonably be expected to have a Material
Adverse Effect on CCI; (iii) as of the date of this Agreement, there are no
pending or, to the knowledge of CCI, threatened in writing audits,
examinations, investigations or other proceedings in respect of Taxes or
Tax matters relating to CCI or any of the Consolidated Subsidiaries or
Managed Affiliates which, if determined adversely to CCI or such
Consolidated Subsidiary or Managed Affiliate, could reasonably be expected
to have a Material Adverse Effect on CCI; (iv) there are no deficiencies or
claims for any Taxes that have been proposed, asserted or assessed against
CCI or any of the Consolidated Subsidiaries or Managed Affiliates which, if
such deficiencies or claims were finally resolved against CCI or any of the
Consolidated Subsidiaries or Managed Affiliates, could reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect on CCI; (v) there are no material Liens for Taxes upon the assets of
CCI or any of the Consolidated Subsidiaries or Managed Affiliates, other
than Liens for current Taxes not yet due and payable and Liens for Taxes
that are being contested in good faith by appropriate proceedings; (vi)
none of CCI or any of the Consolidated Subsidiaries or Managed Affiliates
has made an election under Section 341(f) of the Code; (vii) except as set
forth in Section 3.1(h) of the CCI Disclosure Schedule, no extension of the
statute of limitations on the assessment of any Taxes has been granted by
CCI or any of its Consolidated Subsidiaries or Managed Affiliates and is
currently in effect; (viii) except as set forth in Section 3.1(h) of the
CCI Disclosure Schedule, none of
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CCI, its Consolidated Subsidiaries or Managed Affiliates is a party to any
agreement or arrangement that could reasonably be expected to result,
separately or in the aggregate, in the actual or deemed payment by CCI or a
subsidiary of any "excess parachute payments" within the meaning of Section
280G or 162(m) of the Code; (ix) none of CCI, its Consolidated Subsidiaries
and Managed Affiliates has been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(l)(A)(ii) of the Code; (x)
all Taxes required to be withheld, collected or deposited by or with
respect to CCI, its Consolidated Subsidiaries and Managed Affiliates have
been timely withheld, collected or deposited, as the case may be, and, to
the extent required, have been paid to the relevant taxing authority; (xi)
none of CCI, its Consolidated Subsidiaries and Managed Affiliates has
issued or assumed (A) any obligations described in Section 279(A) of the
Code, (B) except as set forth in Section 3.1(h) of the CCI Disclosure
Schedule, any applicable high yield discount obligations, as defined in
Section 163(i) of the Code, or (C) any registration-required obligations,
within the meaning of Section 163(f)(2) of the Code, that is not in
registered form; (xii) there are no requests for information currently
outstanding that could affect the Taxes of CCI, its Consolidated
Subsidiaries and Managed Affiliates; and (xiii) there are no proposed
reassessments of any property owned by CCI, its Consolidated Subsidiaries
and Managed Affiliates or other proposals that could increase the amount of
any Tax to which CCI or any such Person would be subject.
(i) Subsidiaries and Affiliates. Section 3.1(b) of the CCI
Disclosure Schedule lists CCI's ownership interests in all the Consolidated
Subsidiaries, the Managed Affiliates, the General Partner Licensees, the
Nonmanaged Affiliates and the Limited Partner Licensees as of the date of
this Agreement. Section 3.1(i) of the CCI Disclosure Schedule lists all
material outstanding contractual agreements of CCI or any of the
Consolidated Subsidiaries to provide funds to, or make any investment (in
the form of a loan, capital contribution or otherwise) in, any Consolidated
Subsidiary, Managed Affiliate, General Partner Licensee, Nonmanaged
Affiliate and Limited Partner Licensee, except such agreements as would not
require any investment or provision of funds or assets in an amount or
having a fair market value in excess of $1,000,000 for any such investment
or $2,500,000 in the aggregate for all such investments.
(j) Absence of Certain Changes or Events. Except as disclosed in the
CCI SEC Reports: (A) since March 31, 1997, CCI and the Consolidated
Subsidiaries and Managed Affiliates have conducted their respective
businesses in the ordinary course consistent with their past practices and
have not incurred any material liability, except in the ordinary course of
their respective businesses consistent with their past practices; and (B)
since March 31, 1997 to the date of this Agreement, there has not been any
Material Adverse Change.
(k) Vote Required. The affirmative vote of the holders of a majority
of the outstanding shares of CCI Common Stock (the "Required CCI Votes") is
the only vote of the holders of any class or series of CCI capital stock
necessary to approve this Agreement and the transactions contemplated
hereby (assuming for purposes of this
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representation the accuracy of the representations contained in Section
3.2(f), without giving effect to the knowledge qualification thereto).
(l) Certain Agreements.
(i) All contracts listed or which would be required to be listed
as an exhibit to CCI's Annual Report on Form 10-K under the rules and
regulations of the SEC relating to the business of CCI and the
Consolidated Subsidiaries and any contracts that would be required to
be so listed but for the exception with respect to listing contracts
made in the ordinary course of business (the "CCI Material Contracts")
are valid and in full force and effect except to the extent they have
previously expired in accordance with their terms, and neither CCI nor
any of the Consolidated Subsidiaries has violated any provision of, or
committed or failed to perform any act which, with or without notice,
lapse of time, or both, could reasonably be expected to constitute a
default under the provisions of, any such CCI Material Contract,
except for defaults which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on CCI. To
the knowledge of CCI, no counterparty to any such CCI Material
Contract has violated any provision of, or committed or failed to
perform any act which, with or without notice, lapse of time, or both,
could reasonably be expected to constitute a default or other breach
under the provisions of, such CCI Material Contract, except for
defaults or breaches which, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect on CCI.
(ii) Except as set forth in Section 3.1(l)(ii) of the CCI
Disclosure Schedule, as of the date of this Agreement none of CCI or
any of the Consolidated Subsidiaries or, to the knowledge of CCI, any
of the Managed Affiliates has entered into any agreement or
arrangement limiting or otherwise restricting CCI or any of the
Consolidated Subsidiaries or any of the Managed Affiliates from
engaging or competing in any line of business or in any geographic
area.
(m) Employee Benefit Plans; Labor Matters.
(i) With respect to each employee benefit plan, program,
arrangement and contract (including, without limitation, any "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and any bonus,
deferred compensation, stock bonus, stock purchase, restricted stock,
stock option, employment, termination, change in control and severance
plan, program, arrangement and contract), whether or not subject to
ERISA, to which CCI or any of the Consolidated Subsidiaries is a party
or has any liability in respect of or which is maintained or
contributed to by CCI or any of the Consolidated Subsidiaries (the
"CCI Benefit Plans"), CCI has made available to Parent a true and
complete copy of (A) such CCI Benefit Plan, (B) the two most recent
annual reports (Form 5500) filed with the Internal Revenue Service
(the "IRS"), (C) each trust or other funding arrangement relating to
such
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CCI Benefit Plan, (D) the most recent summary plan description related
to each CCI Benefit Plan for which a summary plan description is
required, (E) the most recent actuarial report (if applicable)
relating to an CCI Benefit Plan and (F) the most recent determination
letter, if any, issued by the IRS with respect to any CCI Benefit Plan
qualified under Section 401(a) of the Code.
(ii) Each of the CCI Benefit Plans that is an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA and that is
intended to be qualified under Section 401(a) of the Code has received
a favorable determination letter from the IRS, and CCI is not aware,
after reasonable inquiry, of any circumstances likely to result in the
revocation of any such favorable determination letter that could
reasonably be expected to have a Material Adverse Effect on CCI.
(iii) No event has occurred and, to the knowledge of CCI, after
reasonable inquiry, there exists no condition or set of circumstances,
in connection with which CCI or any of the Consolidated Subsidiaries
could be subject, either directly or by reason of its affiliation with
any member of its Controlled Group (defined as any entity which is a
member of a controlled group of organizations within the meaning of
Section 414(b), (c), (m), or (o) of the Code) to any liability under
the terms of any CCI Benefit Plans, ERISA, the Code or any other
applicable law which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on CCI.
(iv) None of CCI, any of the Consolidated Subsidiaries or any of
the Managed Affiliates is a party to any collective bargaining or
other labor union contracts and no collective bargaining agreement is
being negotiated by CCI or any of the Consolidated Subsidiaries or
Managed Affiliates. There is no pending labor dispute, strike or work
stoppage against CCI or any of the Consolidated Subsidiaries or
Managed Affiliates which may interfere with the respective business
activities of CCI or any of the Consolidated Subsidiaries or Managed
Affiliates, except where such dispute, strike or work stoppage could
not reasonably be expected to have a Material Adverse Effect on CCI.
There is no pending charge or complaint against CCI or any of the
Consolidated Subsidiaries or Managed Affiliates by the National Labor
Relations Board or any comparable state agency, except where such
unfair labor practice, charge or complaint could not reasonably be
expected to have a Material Adverse Effect on CCI. Neither CCI nor any
of the Consolidated Subsidiaries has any present or future obligation
to contribute to, or any liability in respect of, any "multiemployer
plan" as described in Section 3(37) of ERISA.
(v) No CCI Benefit Plan exists which could result in the payment
to any employee of CCI or any of the Consolidated Subsidiaries of any
money or other property or rights or accelerate or provide any other
rights or benefits to any such employee as a result of the
transactions contemplated by this Agreement,
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whether or not such payment would constitute a parachute payment
within the meaning of Code Section 280G.
(n) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any
broker's or finder's fee or any other similar commission or fee in
connection with any of the transactions contemplated by this Agreement,
based on arrangements made by or on behalf of CCI, except Merrill Lynch &
Co., whose fees and expenses will be paid by CCI in accordance with CCI's
agreement with such firm.
(o) Opinion of Financial Advisor. CCI has received the opinion of
Merrill Lynch & Co. dated the date of this Agreement, to the effect that,
as of such date, the Merger Consideration is fair to the holders of CCI
Common Stock (other than Parent).
(p) Board Recommendation. As of the date hereof, the Board of
Directors of CCI, at a meeting duly called and held, has, based upon the
recommendation of the Special Committee of independent directors formed
pursuant to a unanimous written consent dated May 19, 1997 (the "Special
Committee"), by unanimous vote of those directors present (who constituted
100% of the directors then in office) (i) determined that this Agreement
and the transactions contemplated hereby, including the Merger, taken
together are fair to and in the best interests of the shareholders of CCI
and (ii) resolved to recommend that the holders of the shares of CCI Common
Stock approve this Agreement and the transactions contemplated herein,
including the Merger.
(q) Rights Agreement. Under the Rights Agreement, (i) none of the
approval, execution or delivery of this Agreement or the consummation of
the Merger or the other transactions contemplated hereby will cause (1) the
Rights to become exercisable, (2) Merger Sub, Parent or Blackstone to be
deemed an "Acquiring Person" (as defined in the Rights Agreement), or (3)
the "Stock Acquisition Date" (as defined in the Rights Agreement) to occur
upon any such event. The "Distribution Date" (as defined in the Rights
Agreement) has not occurred.
(r) Takeover Statutes. No Colorado state takeover statute or similar
statute or regulation of the State of Colorado applies or purports to apply
to the Agreement or any of the transactions contemplated herein, including
the Merger. Subject to receipt of the FCC consents, no provision of the
Organizational Documents of CCI or Consolidated Subsidiaries or Managed
Affiliates would, as a result of the consummation of the transactions
contemplated hereby, directly or indirectly restrict or impair the ability
of Merger Sub or Parent to vote, or otherwise to exercise the rights of a
shareholder with respect to securities of CCI or of any Consolidated
Subsidiary (to the extent securities of any Consolidated Subsidiary are
owned directly or indirectly by CCI) or permit any shareholder or general
partner to acquire securities of CCI on a basis not available to Merger Sub
or Parent.
3.2. Representations and Warranties of Merger Sub. Merger Sub represents
and warrants to CCI as follows:
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(a) Organization, Standing and Power. Merger Sub is a corporation
duly organized and validly existing under the laws of its jurisdiction of
incorporation and Merger Sub is in good standing under the laws of its
jurisdiction of incorporation has all requisite power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary other than in
such jurisdictions where the failure so to qualify could not reasonably be
expected, either individually or in the aggregate, to have a Material
Adverse Effect on Merger Sub.
(b) Authority; No Conflicts.
(i) Merger Sub has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of
Merger Sub. This Agreement has been duly executed and delivered by
Merger Sub and constitutes a valid and binding agreement of Merger
Sub, enforceable against it in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or
affecting creditors generally, or by general equity principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(ii) The execution and delivery of this Agreement does not or
will not, as the case may be, and the consummation of the transactions
contemplated hereby will not, result in any Violation of: (A) any
provision of the Organizational Documents of Merger Sub or (B) except
as could not reasonably be expected to have a Material Adverse Effect
on Merger Sub and subject to obtaining or making the consents,
approvals, orders, authorizations, registrations, declarations and
filings referred to in paragraph (iii) below, any loan or credit
agreement, note, mortgage, bond, indenture, lease, benefit plan or
other agreement, obligation, instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Merger Sub or its properties or
assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to Merger Sub in connection with the
execution and delivery of this Agreement by Merger Sub or the
consummation by Merger Sub of the transactions contemplated hereby,
except for (A) the Required Consents set forth in Section 3.1(c)(iii)
and (B) such consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to make
or obtain could not reasonably be expected to have a Material Adverse
Effect on Merger Sub.
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(c) Information Supplied.
(i) None of the information supplied or to be supplied in
writing by Merger Sub specifically for inclusion in (i) the Offer
Documents shall, at the time the Offer Documents or any amendments or
supplements thereto are first published, sent or given to noteholders,
as the case may be, 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 were made, not misleading, (ii) the
Form S-4 will, at the time the Form S-4 is filed with the SEC, and at
any time it is amended or supplemented or at the time it becomes
effective under the Securities Act, 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 were made, not misleading, and
(iii) the Proxy Statement will, at the date it is first mailed to the
shareholders of CCI or at the time of the CCI Shareholders 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 were made, not misleading. Notwithstanding the foregoing, Merger
Sub makes no representation or warranty with respect to any
information supplied by CCI or any of its representatives which is
contained in or incorporated by reference in any of the foregoing
documents.
(d) No Vote Required. No vote or approval of (i) any holder of
any interest in Parent or (ii) the holders of any class of Merger Sub
shares is necessary to approve this Agreement and the transactions
contemplated hereby other than those already obtained by Parent and Merger
Sub on or before the date hereof.
(e) Brokers or Finders. Except for Morgan Stanley & Co.
Incorporated, no agent, broker, investment banker, financial advisor or
other firm or Person is or will be entitled to any broker's or finder's fee
or any other similar commission or fee in connection with any of the
transactions contemplated by this Agreement based on arrangements made by
or on behalf of Merger Sub or Parent.
(f) Ownership of CCI Common Stock. As of the date of this Agreement,
neither Parent or Merger Sub nor, to the best of its knowledge, any of
Parent's affiliates or associates (as such terms are defined under the
Exchange Act) (i) beneficially owns, directly or indirectly or (ii) is
party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in case of either clause (i) or
(ii), shares of capital stock of CCI.
(g) FCC Qualification. Blackstone and Parent are each fully
qualified under the Communications Act, and any applicable state
regulations, to control all CCI Permits (including, without limitation, all
FCC Licenses), without the requirement of divestiture
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of any CCI Permits or FCC Licenses or of any interests held by Blackstone
or any of its Affiliates.
(h) Financing. Merger Sub has delivered to CCI a true and complete
copy of a commitment letter (the "Commitment Letter") providing financing
from The Chase Manhattan Bank and Chase Securities, Inc. dated May 23, 1997
for the transactions contemplated hereby (the "Facility"). The Commitment
Letter is in effect on the date hereof, has not been amended or modified,
and there is no breach or default existing, or with notice or the passage
of time may exist, thereunder.
(i) No Business Activities. Merger Sub is not a party to any
material agreements and has not conducted any activities other than in
connection with the organization of Merger Sub, the negotiation and
execution of this Agreement and the consummation of the transactions
contemplated hereby. Merger Sub has no Subsidiaries.
ARTICLE IV.
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1. Covenants of CCI. During the period from the date of this Agreement
and continuing until the Effective Time (except as expressly contemplated or
permitted by this Agreement or to the extent that Merger Sub shall otherwise
consent in writing):
(a) Ordinary Course. Except as set forth in Section 4.1(a) of the
CCI Disclosure Schedule, CCI and the Consolidated Subsidiaries and Managed
Affiliates shall carry on their respective businesses in the usual, regular
and ordinary course in all material respects, in substantially the same
manner as heretofore conducted, and shall use all reasonable efforts to
preserve intact their present lines of business, maintain their rights and
franchises and preserve their relationships with customers, suppliers and
others having business dealings with them to the end that their ongoing
businesses shall not be impaired in any material respect at the Effective
Time; provided, however, that no action by CCI or the Consolidated
Subsidiaries or Managed Affiliates with respect to matters specifically
addressed by any other provision of this Section 4.1 shall be deemed a
breach of this Section 4.1(a) unless such action would constitute a breach
of one or more of such other provisions.
(b) Dividends; Changes in Share Capital. CCI shall not, and shall
not permit any of the Consolidated Subsidiaries to, and shall not propose
to, (i) declare or pay any dividends on or make other distributions in
respect of any of its capital stock, except dividends by the Consolidated
Subsidiaries in the ordinary course of business consistent with past
practice, (ii) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for, shares of its capital stock,
except for any such transaction by a wholly owned Subsidiary of CCI which
remains a wholly owned Subsidiary after consummation of such transaction,
or (iii) repurchase, redeem or otherwise acquire any shares of its capital
stock or any securities convertible into or exercisable for any shares of
its capital stock except for the purchase from time to time by CCI of CCI
Common Stock in the
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ordinary course of business consistent with past practice in connection
with the CCI Benefit Plans.
(c) Issuance of Securities. Except as set forth in Section 5.5, CCI
shall not issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock of any class, any CCI
Voting Debt or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such shares or CCI Voting Debt,
or enter into any agreement with respect to any of the foregoing and shall
not amend any equity-related awards issued pursuant to the CCI Benefit
Plans, other than (i) the issuance of CCI Common Stock (and the associated
Rights) upon the exercise of stock options issued in the ordinary course of
business and consistent with past practice in accordance with the terms of
the CCI Stock Option Plans as in effect on the date of this Agreement, and
(ii) issuances of options, rights or other awards, and amendments to
equity-related awards, in the ordinary course of business and consistent
with past practice pursuant to the CCI Stock Option Plans as in effect on
the date of this Agreement.
(d) Organizational Documents. Except to the extent required to
comply with their respective obligations hereunder, required by law or
required by the rules and regulations of Nasdaq, CCI and the Consolidated
Subsidiaries shall not amend or propose to amend their respective
Organizational Documents.
(e) Indebtedness. CCI shall not, and shall not permit any of the
Consolidated Subsidiaries to, (i) incur or suffer to exist any indebtedness
for borrowed money or guarantee any such indebtedness or issue or sell any
debt securities or warrants or rights to acquire any debt securities of CCI
or any of the Consolidated Subsidiaries or guarantee any debt securities of
other Persons other than indebtedness of CCI or any Consolidated Subsidiary
to CCI or any wholly owned Subsidiary of CCI and other than in the ordinary
course of business or as permitted pursuant to Section 4.1(e) of the CCI
Disclosure Schedule, (ii) make any loans, advances or capital contributions
to, or investments in, any other Person, other than by CCI or a
Consolidated Subsidiary to or in CCI, any Consolidated Subsidiary or CCI
Affiliate or as permitted pursuant to Section 4.1(e) of the CCI Disclosure
Schedule or (iii) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than in the case of clauses (ii) and (iii), loans,
advances, capital contributions, investments, payments, discharges or
satisfactions incurred or committed to in the ordinary course of business
consistent with past practice.
(f) Benefit Plans; WARN. CCI shall not, and shall not permit any of
the Consolidated Subsidiaries to (i) increase the compensation payable or
to become payable to any of its executive officers or employees, (ii) adopt
or amend (except as may be required or prudent under law) any bonus, profit
sharing, compensation, stock option, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement, trust,
fund or other arrangement (including any CCI Benefit Plan) for the benefit
or welfare of any employee, director or former director or employee, (iii)
grant any new or modified severance or termination arrangement or increase
or accelerate any
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benefits payable under its severance or termination pay policies in effect
on the date hereof, (iv) effectuate a "plant closing" or "mass layoff," as
those terms are defined in the Worker Adjustment and Retraining
Notification Act of 1988 ("WARN"), affecting in whole or in part any site
of employment, facility, operating unit or employee of CCI or any of the
Consolidated Subsidiaries, without notifying Merger Sub in advance and
without complying with the notice requirements and other provisions of
WARN, or (v) take any action with respect to the grant of any severance or
termination pay, or stay, bonus or other incentive arrangement (other than
pursuant to benefit plans and policies in effect on the date of this
Agreement), except in each case of clauses (i) - (v) (A) any such increases
or grants, or amendments or modifications, made in the ordinary course of
business and in accordance with past practice, or (B) as provided in
Section 5.5.
(g) Other Actions. CCI shall not, and shall not permit any of the
Consolidated Subsidiaries to, take any action that could reasonably be
expected to result in (i) any of the representations or warranties of CCI
set forth in this Agreement that are qualified as to materiality becoming
untrue, (ii) any of such representations or warranties that are not so
qualified becoming untrue in any material respect or (iii) except as
otherwise permitted by Section 5.4, any of the conditions to the Merger set
forth in Article VI not being satisfied.
(h) Accounting Methods; Income Tax Elections. Except as disclosed in
CCI SEC Reports filed prior to the date of this Agreement, or as required
by a Governmental Entity, CCI shall not change its methods of accounting in
effect at March 31, 1997, except as required by changes in GAAP as
concurred in by CCI's independent auditors. CCI shall not (i) change its
fiscal year or (ii) make any material Tax election or settle or compromise
any federal, state, local or foreign Tax liability, other than in the
ordinary course of business consistent with past practice, without
consultation with Merger Sub.
(i) Certain Agreements. CCI shall not, and shall not permit any of
the Consolidated Subsidiaries to, enter into any agreement or arrangement
that limits or otherwise restricts CCI or any of the Consolidated
Subsidiaries or any of their respective affiliates or any successor thereto
or that could, after the Closing, limit or restrict Surviving Corporation
or any of its affiliates or any successor thereto from engaging or
competing in any line of business or in any geographic area.
4.2. Covenants of Merger Sub. During the period from the date of this
Agreement and continuing until the Effective Time (except as expressly
contemplated or permitted by this Agreement or to the extent that CCI shall
otherwise consent in writing):
(a) Governing Documents. Except to the extent required to comply
with its obligations hereunder or required by law, Merger Sub shall not
amend or propose to amend its Organizational Documents in any manner.
(b) Other Actions. Merger Sub shall not take any action that could
reasonably be expected to result in (i) any of the representations or
warranties of Merger Sub set forth in this Agreement that are qualified as
to materiality becoming untrue, (ii) any of
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such representations or warranties that are not so qualified becoming
untrue in any material respect or (iii) any of the conditions to the Merger
set forth in Article VI not being satisfied.
4.3. Regulatory Compliance; Advice of Changes; Government Filings.
Merger Sub agrees to take all actions necessary to comply with the
Communications Act and the HSR Act so as to consummate the Merger as promptly as
is practicable, provided, however, that in no event shall Merger Sub, Parent or
any of its Affiliates be required to divest any material business interest in
order to obtain approvals under the HSR Act. Each party shall (a) confer on a
regular and frequent basis with the other, (b) report (to the extent permitted
by law, regulation and any applicable confidentiality agreement) on operational
matters and (c) promptly advise the other orally and in writing of (i) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect, (ii) the failure by it (A) to comply with or
satisfy in any respect any covenant, condition or agreement required to be
complied with or satisfied by it under this Agreement that is qualified as to
materiality or (B) to comply with or satisfy in any material respect any
covenant, condition or agreement required to be complied with or satisfied by it
under this Agreement that is not so qualified as to materiality or (iii) any
change, event or circumstance that has had or could reasonably be expected to
have a Material Adverse Effect on such party; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement. CCI and Merger Sub shall file all reports required to be
filed by each of them with the SEC (and all other Governmental Entities) between
the date of this Agreement and the Effective Time and shall (to the extent
permitted by law or regulation or any applicable confidentiality agreement)
deliver to the other party copies of all such reports promptly after the same
are filed. Subject to applicable laws relating to the exchange of information,
each of CCI and Merger Sub shall have the right to review in advance, and to the
extent practicable each will consult with the other, with respect to all the
information relating to the other party and each of their respective
Subsidiaries, which appears in any filings, announcements or publications made
with, or written materials submitted to, any third party or any Governmental
Entity in connection with the transactions contemplated by this Agreement. In
exercising the foregoing right, each of the parties hereto agrees to act
reasonably and as promptly as practicable. Each party agrees that, to the extent
practicable, it will consult with the other party with respect to the obtaining
of all permits, consents, approvals and authorizations of all third parties and
Governmental Entities necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the other party apprised
of the status of matters relating to completion of the transactions contemplated
hereby.
4.4. Transition Planning. Mark T. Gallogly, as President of Merger Sub,
and Arnold C. Pohs, as Chief Executive Officer of CCI, jointly shall be
responsible for coordinating all aspects of transition planning and
implementation relating to the Merger and the other transactions contemplated
hereby. If either such person ceases to be President or Chief Executive Officer,
respectively, of his company for any reason, such person's successor shall
assume his predecessor's responsibilities under this Section 4.4. During the
period between the
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date of this Agreement and the Effective Time, Messrs. Gallogly and Pohs jointly
shall coordinate policies and strategies with respect to regulatory authorities
and bodies, in all cases subject to applicable law.
4.5. Control of Other Party's Business. Nothing contained in this
Agreement shall give CCI, directly or indirectly, the right to control or direct
Parent's operations prior to the Effective Time. Nothing contained in this
Agreement shall give Parent directly or indirectly, the right to control or
direct CCI's operations prior to the Effective Time. Prior to the Effective
Time, each of CCI and Parent shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision over its
respective operations.
ARTICLE V.
ADDITIONAL AGREEMENTS
5.1. Preparation of Form S-4; Proxy Statement; CCI Shareholder Meeting.
(a) As soon as practicable following the date of this Agreement, CCI
shall prepare the Proxy Statement, and CCI shall prepare and file with the
SEC the Form S-4, in which the Proxy Statement will be included. Merger Sub
will cooperate with CCI in connection with the preparation of the Proxy
Statement including, but not limited to, furnishing to CCI any and all
information regarding Parent and its affiliates as may be required to be
disclosed therein. CCI shall use its reasonable best efforts to have the
Form S-4 declared effective under the Securities Act as promptly as
practicable after such filing. CCI will use all reasonable efforts to cause
the Proxy Statement to be mailed to its shareholders as promptly as
practicable after the Form S-4 is declared effective under the Securities
Act. CCI shall also take any action required to be taken under any
applicable state securities laws in connection with the registration and
qualification of CCI Common Stock following the Merger. CCI and Merger Sub
each agree to correct any information provided by it for use in the Form S-
4 which shall have become false or misleading.
(b) CCI will as promptly as practicable notify Merger Sub of (i) the
effectiveness of the Form S-4, (ii) the receipt of any comments from the
SEC and (iii) any request by the SEC for any amendment to the Form S-4 or
for additional information. All filings by CCI with the SEC, including the
Form S-4 and any amendment thereto, and all mailings to CCI's shareholders
in connection with the Merger, including the Proxy Statement, shall be
subject to the prior review, comment and approval of Merger Sub (such
approval not to be unreasonably withheld or delayed).
(c) Unless the Board of Directors of CCI determines in good faith
after consultation with outside legal counsel that such action is necessary
for it not to breach its fiduciary obligations to shareholders under
applicable law, (i) CCI shall, as soon as practicable following the date of
this Agreement, duly call, give notice of, convene and hold a meeting of
its shareholders (the "CCI Shareholders Meeting") for the purpose of
obtaining the Required CCI Votes with respect to this Agreement, (ii) the
Board of Directors of CCI shall recommend adoption of this Agreement by the
shareholders of
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CCI as set forth in Section 3.1(p), and (iii) CCI shall take all lawful
action to solicit such adoption. Any such recommendation, together with a
copy of the opinion referred to in Section 3.1(o) shall be included in the
Proxy Statement. CCI will use its best efforts to hold such meeting as soon
as practicable after the date hereof.
5.2. Access to Information. Upon reasonable notice, CCI shall (and shall
cause each of the Consolidated Subsidiaries and Managed Affiliates, to the
extent affording such access is permitted by the Organizational Documents or
other pertinent agreements of such entity, to) afford to the officers,
employees, accountants, counsel, financial advisors and other representatives of
Parent reasonable access during normal business hours, during the period prior
to the Effective Time, to all its properties, books, contracts, commitments and
records and, during such period, CCI shall (and shall cause each of the
Consolidated Subsidiaries and Managed Affiliates, to the extent causing such
furnishing is permitted by the Organizational Documents or other pertinent
agreements of such entity, to) furnish promptly to Parent (a) access to each
report, schedule, registration statement and other document filed, published,
announced or received by it during such period pursuant to the requirements of
Federal or state securities laws, as applicable (other than reports or documents
which such party is not permitted to disclose under applicable law) and (b)
consistent with its legal obligations, all other information concerning its
business, properties and personnel as Parent may reasonably request; provided,
however, CCI may restrict the foregoing access to the extent that (i) a
Governmental Entity requires CCI or any of the Consolidated Subsidiaries or
Managed Affiliates to restrict access to any properties or information
reasonably related to any such contract on the basis of applicable laws and
regulations with respect to national security matters or (ii) any law, treaty,
rule or regulation of any Governmental Entity applicable to CCI or the
Consolidated Subsidiaries or Managed Affiliates requires CCI or the Consolidated
Subsidiaries or Managed Affiliates to restrict access to any properties or
information.
5.3. Approvals and Consents; Cooperation. Each of CCI and Merger Sub
shall cooperate with each other and use (and shall cause their respective
Subsidiaries to use) its best efforts to take or cause to be taken all actions,
and do or cause to be done all things, necessary, proper or advisable on their
part under this Agreement and applicable laws to consummate and make effective
the Merger and the other transactions contemplated by this Agreement as soon as
practicable, including (i) preparing and filing as promptly as practicable all
documentation to effect all necessary applications, notices, petitions, filings,
tax ruling requests and other documents and to obtain as promptly as practicable
all consents, waivers, licenses, orders, registrations, approvals, permits, tax
rulings and authorizations necessary or advisable to be obtained from any third
party and/or any Governmental Entity in order to consummate the Merger or any of
the other transactions contemplated by this Agreement and (ii) taking all
reasonable steps as may be necessary to obtain all such consents, waivers,
licenses, registrations, permits, authorizations, tax rulings, orders and
approvals. Without limiting the generality of the foregoing, each of CCI and
Merger Sub agrees to make all necessary filings in connection with the Required
Regulatory Approvals as promptly as practicable after the date of this
Agreement, and to use its best efforts to furnish or cause to be furnished, as
promptly as practicable, all information and documents requested with respect to
such Required Regulatory Approvals and shall otherwise cooperate with the
applicable Governmental Entity in order to obtain any
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Required Regulatory Approvals in as expeditious a manner as possible. Each of
CCI and Merger Sub shall use its best efforts to resolve such objections, if
any, as any Governmental Entity may assert with respect to this Agreement and
the transactions contemplated hereby in connection with the Required Regulatory
Approvals. In the event that a suit is instituted by a Person or Governmental
Entity challenging this Agreement and the transactions contemplated hereby as
violative of applicable antitrust or competition laws or the Communications Act,
each of CCI and Merger Sub shall use its best efforts to resist or resolve such
suit. CCI and Merger Sub each shall, upon request by the other, furnish the
other with all information concerning itself, its Subsidiaries, directors,
officers and shareholders and such other matters as may reasonably be necessary
or advisable in connection with the Proxy Statement or any other statement,
filing, tax ruling request, notice or application made by or on behalf of CCI,
Merger Sub or any of their respective Subsidiaries to any third party and/or any
Governmental Entity in connection with the Merger or the other transactions
contemplated by this Agreement.
5.4. Acquisition Proposals.
(a) CCI agrees that neither it nor any of its officers and directors
shall, and that it shall direct and use its best efforts to cause its
employees, agents and representatives (including any investment banker,
attorney or accountant retained by it) not to, directly or indirectly,
initiate, solicit, encourage or otherwise facilitate any inquiries or the
making of any proposal, or offer with respect to a merger, reorganization,
share exchange, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving, or any purchase
of all or any significant portion of the assets or 10% or more of the
equity securities of, CCI (any such proposal or offer being hereinafter
referred to as an "Acquisition Proposal"). CCI further agrees that neither
it nor any of its officers and directors shall, and that it shall direct
and use its best efforts to cause its employees, agents and representatives
(including any investment banker, attorney or accountant retained by it)
not to, directly or indirectly, provide any confidential information or
data to any Person relating to an Acquisition Proposal or engage in any
negotiations concerning an Acquisition Proposal; provided, however, that
nothing contained in this Agreement shall prevent CCI or its Board of
Directors from (A) complying with Rule 14e-2 and Rule 14d-9 promulgated
under the Exchange Act with regard to an Acquisition Proposal; (B) engaging
in any discussions or negotiations with, or providing any information to,
any Person in response to a bona fide written Acquisition Proposal by any
such Person; or (C) recommending such bona fide written Acquisition
Proposal to the shareholders of CCI, if and only to the extent that, in any
such case as is referred to in clause (B) or (C), (i) the Board of
Directors of CCI concludes in good faith (after consultation with its
financial advisors) that such Acquisition Proposal is reasonably capable of
being completed, taking into account all legal, financial, regulatory and
other aspects of the proposal and the Person making the proposal, and
would, if consummated, result in a transaction more favorable to CCI
shareholders from a financial point of view than the transaction
contemplated by this Agreement (any such more favorable Acquisition
Proposal being referred to in this Agreement as a "Superior Proposal") and
(ii) the Board of Directors of CCI determines in good faith after
consultation with outside legal counsel that such action is necessary for
it
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not to breach its fiduciary obligations to shareholders under applicable
law, provided further that upon taking an action described in clauses (A)
through (C) above, it shall contemporaneously notify Merger Sub it has
initiated such actions. CCI agrees that it will immediately cease and cause
to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any Acquisition Proposal.
(b) CCI shall make, subject to the condition that the transactions
contemplated herein actually occur, any undertakings (including
undertakings to make divestitures, provided that such divestitures need not
themselves be made until after the transactions contemplated hereby
actually occur) required in order to comply with the antitrust requirements
or laws of any governmental entity, including the HSR Act, in connection
with the transactions contemplated by this Agreement; provided that no such
divestiture or undertaking shall be made (i) without the consent of CCI, if
it is reasonably likely to have a Material Adverse Effect upon CCI, and
(ii) unless approved by Merger Sub (which approval shall not be
unreasonably withheld or delayed) and if such approval is granted, such
undertakings (or the fulfillment thereof) shall not constitute a breach of
a representation or warranty or covenant hereunder.
(c) CCI shall cooperate with any reasonable requests of Merger Sub
or the SEC related to the recording of the Merger as a recapitalization for
financial reporting purposes, including, without limitation, to assist
Merger Sub and its affiliates with any presentation to the SEC with regard
to such recording and to include appropriate disclosure with regard to such
recording in all filings with the SEC and all mailings to shareholders made
in connection with the Merger. In furtherance of the foregoing, CCI shall
provide to Merger Sub for the prior review of Merger Sub's advisors any
description of the transactions contemplated by this Agreement which is
meant to be disseminated.
(d) CCI agrees to provide, and will cause its Consolidated
Subsidiaries and its and their respective officers, employees and advisors
to provide, all necessary and appropriate cooperation in connection with
the arrangement of any financing to be consummated contemporaneously with
or at or after the Closing in respect of the transactions contemplated by
this Agreement. In conjunction with the obtaining of any such financing,
CCI agrees, at the request of Merger Sub, to call for prepayment or
redemption, or to prepay or redeem any then existing indebtedness of CCI,
including indebtedness under the CoBank Credit Agreement and the Notes;
provided that no such prepayment or redemption or in the case of the Notes,
call for prepayment or redemption, shall themselves actually be made (nor
shall CCI be required to incur any liability in respect of such prepayment
or redemption) until contemporaneously with or after, or, in the case of
the call for prepayment of the Notes, immediately prior to or
contemporaneously with, the Effective Time of the Merger and satisfaction
of the conditions set forth in Section 6.2(d).
(e) Merger Sub hereby agrees to use all reasonable efforts to
assist CCI in arranging the financing in respect of the transactions
contemplated by this Agreement
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described in the Commitment Letter, including using all reasonable efforts
(A) to assist CCI in the negotiation of definitive agreements with respect
thereto and (B) to the extent consistent with the operation of the business
of CCI and its Subsidiaries in the ordinary course and the fiduciary and
other obligations of CCI and its Subsidiaries and their respective
directors and general partners, satisfy all conditions applicable to Merger
Sub in such definitive agreements. Merger Sub will keep CCI informed of the
status of its efforts to assist CCI in arranging such financing.
(f) Neither Merger Sub nor its affiliates will take any
initiatives involving CCI that would otherwise require CCI to make a public
announcement, make any public comment or proposal with respect to any
Acquisition Proposal, become a member of a "group" within the meaning of
Section 13(d) of the Exchange Act, enter into any discussions,
negotiations, arrangements or understanding with any third party with
respect to any of the foregoing or otherwise seek to control or influence
CCI, in all cases except as expressly contemplated by this Agreement.
(g) Merger Sub agrees that, while this Agreement remains in
effect, at any meeting of the holders of shares of CCI Common Stock at
which Merger Sub or any Affiliate of Merger Sub shall have the right to
vote its shares of CCI Common Stock or at any meeting of the holders of
shares of CCI Common Stock, however called, or in connection with any
written consent of the holders of shares of CCI Common Stock, each of
Merger Sub and any such Affiliate shall vote (or cause to be voted) the
shares of CCI Common Stock held by it, to the extent voting rights exist
with respect to the proposals to be acted upon, in favor of adoption of
this Agreement and approval of the other transactions contemplated by this
Agreement.
5.5 Stock Options and Other Stock Plans.
(a) Unless exercised or cancelled prior to the Effective Time,
outstanding options to purchase shares of CCI Common Stock (the "Options")
issued and outstanding under the CCI Stock Option Plans shall remain
outstanding immediately following the Effective Time and such Options shall
be subject to adjustment pursuant to the terms of the CCI Stock Option
Plans. Anything to the contrary set forth herein notwithstanding, prior to
the Effective Time, CCI may enter into agreements in respect of Options
pursuant to the CCI Stock Option Plans, providing for the payment upon
surrender of the Option at the Effective Time of an amount of cash per
share subject to each such Option equal to the difference between the
exercise price of such Option and the Cash Election Price, less an amount
equal to all taxes required to be withheld from such payment (the "Option
Value"). CCI may accelerate the vesting of any outstanding Options in
accordance with the terms thereof.
(b) Anything to the contrary set forth herein notwithstanding,
during the period from the date of this Agreement to the Effective Time,
CCI shall not grant any Options or issue any stock to any director, officer
or employee, except that it may (i) issue stock pursuant to the exercise of
Options granted under CCI Stock Option Plans,
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(ii) grant restricted stock to Arnold C. Pohs pursuant to the terms of the
Retirement and Consulting Agreement, dated March 30, 1997, between CCI and
Mr. Pohs, and (iii) on or after November 1, 1997, grant Options consistent
with past practice to certain of its employees pursuant to CCI Stock Option
Plans.
(c) Except as provided herein, the CCI Disclosure Schedule or as
otherwise agreed by the parties, the CCI Stock Option Plans shall be
terminated as of the Effective Time pursuant to their terms.
(d) Prior to the Effective Time, Merger Sub and CCI shall
cooperate to take all such other action as may be necessary to carry out
the terms of this Section 5.5.
(e) Annex A hereto sets forth certain additional agreements among
the parties hereto with respect to employee benefits matters and is hereby
incorporated herein by reference.
5.6. Fees and Expenses. Whether or not the Merger is consummated, all
Expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such Expenses, except
(a) if the Merger is consummated, the Surviving Corporation shall pay, or cause
to be paid, any and all property or transfer taxes imposed on CCI, the
Consolidated Subsidiaries or the CCI Affiliates and any real property transfer
tax imposed on any holder of shares of capital stock of CCI resulting from the
Merger, and (b) as provided in Section 7.2. As used in this Agreement,
"Expenses" of a party includes all out-of-pocket expenses (including, without
limitation, all fees and expenses of all banks, investment banking firms and
other financial institutions, and their respective agents and counsel,
accountants, experts and consultants to a party hereto and its Affiliates)
incurred by a party or on its behalf, whether incurred prior to, on or after the
date of this Agreement, in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement and the
transactions contemplated hereby and the financing thereof, including the
preparation, printing, filing and mailing of the Proxy Statement, the Form S-4
and the Offer Documents and the solicitation of shareholder approvals and all
other matters related to the transactions contemplated hereby.
5.7. Indemnification; Directors' and Officers' Insurance. The Surviving
Corporation shall cause to be maintained in effect (i) for a period of six years
after the Effective Time, the current provisions regarding indemnification of
officers and directors contained in the Organizational Documents of CCI and (ii)
for a period of six years after the Effective Time, the current policies of
directors' and officers' liability insurance and fiduciary liability insurance
maintained by CCI (provided that the Surviving Corporation may substitute
therefor policies of at least the same coverage and amounts containing terms and
conditions which are, in the aggregate, no less advantageous to the insured)
with respect to claims arising from facts or events that occurred on or before
the Effective Time.
5.8. Rights Agreement. The Board of Directors of CCI shall take all
action necessary (including redeeming the Rights immediately prior to the
Effective Time or amending
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the Rights Agreement) in order to render the Rights inapplicable to the
Merger and the other transactions contemplated by this Agreement.
5.9. Public Announcements. CCI and Merger Sub shall use all reasonable
efforts to develop a joint communications plan and each party shall use all
reasonable efforts (i) to ensure that all press releases and other public
statements with respect to the transactions contemplated hereby shall be
consistent with such joint communications plan, and (ii) unless otherwise
required by applicable law or by obligations pursuant to any listing agreement
with or rules of any securities exchange, to consult with each other before
issuing any press release or otherwise making any public statement with respect
to this Agreement or the transactions contemplated hereby.
5.10. Affiliates. Prior to the Closing Date, CCI shall deliver to Merger
Sub a letter identifying all Persons who are, at the time this Agreement is
submitted for approval to the shareholders of CCI, "affiliates" of CCI for
purposes of Rule 145 under the Securities Act. CCI shall use its reasonable
efforts to cause each such Person to deliver to Merger Sub on or prior to the
Closing Date a written agreement substantially in the form attached as Annex B
hereto.
5.11. Certain Agreements. Neither CCI nor any subsidiary of CCI will
waive or fail to enforce any provision of any confidentiality or standstill or
similar agreement to which it is a party entered into in connection with a
possible sale of CCI, without the prior written consent of Merger Sub (which
shall not be unreasonably withheld or delayed).
5.12. Nasdaq Listing and Exchange Act Registration.
(a) The Surviving Corporation will not take any action, for at
least 90 days after the Effective Time, to cause the CCI Common Stock to be
de-listed from Nasdaq, and during such 90 day period shall undertake all
reasonable efforts to maintain such listing; provided, however, that
nothing in this Section 5.12 shall require the Surviving Corporation to
take any affirmative action to prevent the CCI Common Stock from being de-
listed by Nasdaq if the CCI Common Stock ceases to meet the applicable
listing standards.
(b) The Surviving Corporation shall not take any action, for at
least 90 days after the Effective Time, which would cause the CCI Common
Stock to cease being subject to Section 12 of the Exchange Act or, in the
event the Surviving Corporation is no longer subject to Section 12 of the
Exchange Act, shall not file during such 90 day period a Form 15 (or
successor or similar form) to cause the Surviving Corporation to no longer
be subject to reporting requirements of Section 12 of the Exchange Act.
ARTICLE VI.
CONDITIONS PRECEDENT
6.1. Conditions to Each Party's Obligation to Effect the Merger. The
obligations of CCI and Merger Sub to effect the Merger are subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
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(a) Shareholder Approval. CCI shall have obtained all approvals
of holders of shares of capital stock of CCI necessary to approve this
Agreement and all the transactions contemplated hereby (including the
Merger).
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired.
(c) FCC Consents. The FCC shall have granted its consent to the
consummation of the transactions contemplated hereby ("FCC Consents"). No
timely request for stay, motion or petition for reconsideration or
rehearing, application or request for review, or notice of appeal or other
judicial petition for review of the FCC Consents shall be pending, and the
time for filing any such request, motion, petition, application, appeal, or
notice, and for the entry of an order staying, reconsidering, or reviewing
on the FCC's own motion, shall have expired.
(d) No Injunctions or Restraints, Illegality. No temporary
restraining order, preliminary or permanent injunction or other order
issued by a court or other Governmental Entity of competent jurisdiction
shall be in effect and have the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger; provided, however, that
the provisions of this Section 6.1(d) shall not be available to any party
whose failure to fulfill its obligations pursuant to Section 5.3 shall have
been the cause of, or shall have resulted in, such order or injunction.
(e) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order, and any material "blue sky" and other
state securities laws applicable to the registration and qualification of
the CCI Common Stock following the Merger shall have been complied with in
all material respects.
6.2. Additional Conditions to Obligations of Merger Sub. The obligations
of Merger Sub to effect the Merger are subject to the satisfaction, or waiver by
Merger Sub, on or prior to the Closing Date, of the following additional
conditions:
(a) Representations and Warranties. Each of the representations
and warranties of CCI set forth in this Agreement that is qualified as to
materiality shall have been true and correct when made and shall be true
and correct on and as of the Closing Date as if made on and as of such date
(other than representations and warranties which address matters only as of
a certain date which shall be true and correct as of such certain date),
and each of the representations and warranties of CCI that is not so
qualified shall have been true and correct in all material respects when
made and shall be true and correct in all material respects on and as of
the Closing Date as if made on and as of such date (other than
representations and warranties which address matters only as of a certain
date which shall be true and correct in all material respects as of such
certain date), and Merger Sub shall have received a certificate of the
chief executive officer and the chief financial officer of CCI to such
effect.
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(b) Performance of Obligations of CCI. CCI shall have performed or
complied with all agreements and covenants required to be performed by it
under this Agreement at or prior to the Closing Date that are qualified as
to materiality and shall have performed or complied in all material
respects with all other agreements and covenants required to be performed
by it under this Agreement at or prior to the Closing Date that are not so
qualified as to materiality, and Merger Sub shall have received a
certificate of the chief executive officer and the chief financial officer
of CCI to such effect.
(c) Required Regulatory Approvals. All Required Consents and all
other authorizations, consents, orders and approvals of, and declarations
and filings with, and all expirations of waiting periods imposed by, any
Governmental Entity which, if not obtained in connection with the
consummation of the transactions contemplated hereby, could reasonably be
expected to have a Material Adverse Effect on CCI (collectively, "Required
Regulatory Approvals") shall have been obtained, have been declared or
filed or have occurred, as the case may be, and all such Required
Regulatory Approvals shall be in full force and effect.
(d) Financing. CCI or CIFC shall have received the proceeds of
financing on terms and conditions set forth in the Commitment Letter or
upon terms and conditions which are, in the reasonable judgment of Merger
Sub, substantially equivalent thereto, and to the extent that any of the
terms and conditions are not set forth in such Commitment Letter, on terms
and conditions reasonably satisfactory to Merger Sub.
(e) Debt Offers. At or before the Effective Time and subject to the
Funding, Merger Sub shall have received evidence that the terms of the
Senior Subordinated Notes and the Subordinated Notes shall have been
amended, to the reasonable satisfaction of Merger Sub, as to the matters
provided in Section 2.12 of the CCI Disclosure Schedule. At or before the
Effective Time and subject to the Funding, CCI shall have purchased the
Senior Subordinated Notes and the Subordinated Notes as contemplated by
Section 2.12.
(f) CoBank Credit Agreement. At or before the Effective Time and
subject to the Funding, CIFC shall have repaid in full all amounts
outstanding under the CoBank Credit Agreement. In connection therewith,
CoBank shall have provided CIFC with a repayment letter acknowledging that
(i) the CoBank Credit Agreement shall be terminated, (ii) any and all Liens
held by CoBank related thereto shall have been released and (iii) CIFC and
CCI shall have been released from any and all liabilities under the CoBank
Credit Agreement and the related Guaranty.
(g) No Litigation. There shall not be pending any suit, action,
investigation or proceeding by any Governmental Entity (an "Action") (i)
seeking to restrain or prohibit the consummation of the Merger or any of
the other transactions contemplated by this Agreement or seeking to obtain
damages from CCI or Parent or any of their respective Subsidiaries or the
Managed Affiliates, which if determined adversely to CCI, would be
reasonably likely to have a Material Adverse Effect on CCI, (ii) seeking to
prohibit or
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limit the ownership or operation by CCI or any of the Consolidated
Subsidiaries or Managed Affiliates or Parent of any material portion of the
business or assets of CCI, the Consolidated Subsidiaries and the Managed
Affiliates (taking CCI, the Consolidated Subsidiaries and the Managed
Affiliates as a whole), or seeking to require CCI or any of the
Consolidated Subsidiaries or Managed Affiliates or Parent to dispose of or
hold separate any material portion of the business or assets of CCI, the
Consolidated Subsidiaries and the Managed Affiliates (taking CCI, the
Consolidated Subsidiaries and the Managed Affiliates as a whole) as a
result of the Merger or any of the other transactions contemplated by this
Agreement, (iii) seeking to prohibit Parent from effectively controlling in
any material respect the business or operations of CCI, the Consolidated
Subsidiaries and the Managed Affiliates, taken as a whole, or (iv) seeking
to impose limitations on the ability of Parent or Merger Sub to acquire or
hold, or exercise full rights of ownership of, any shares of CCI Common
Stock, including, without limitation, the right to vote CCI Common Stock on
all matters properly presented to the shareholders of CCI or which
otherwise would have a Material Adverse Effect on CCI; provided, however,
that the provisions of this Section 6.2(g) shall not be available to Merger
Sub if it has failed to fulfill its obligations pursuant to Section 5.3 (or
other breach of a representation, warranty or covenant hereof) shall have
been the cause of, or shall have resulted in, such suit, action,
investigation or proceeding.
(h) Recapitalization. Merger Sub shall be reasonably satisfied that
the Merger shall be recorded as a recapitalization for financial reporting
purposes.
(i) Material Adverse Change. Since the date of this Agreement, no
Material Adverse Change shall have occurred and be continuing.
6.3. Additional Conditions to Obligations of CCI. The obligations of CCI
to effect the Merger are subject to the satisfaction, or waiver by CCI on or
prior to the Closing Date, of the following additional conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Merger Sub set forth in this Agreement that is qualified as
to materiality shall have been true and correct when made and shall be true
and correct on and as of the Closing Date as if made on and as of such date
(other than representations and warranties which address matters only as of
a certain date which shall be true and correct as of such certain date),
and each of the representations and warranties of Merger Sub that is not so
qualified shall have been true and correct in all material respects when
made and shall be true and correct in all material respects on and as of
the Closing Date as if made on and as of such date (other than
representations and warranties which address matters only as of a certain
date which shall be true and correct in all material respects as of such
certain date), and CCI shall have received a certificate of the chief
executive officer and the chief financial officer of Merger Sub to such
effect.
(b) Performance of Obligations of Merger Sub. Merger Sub shall have
performed or complied with all agreements and covenants required to be
performed by it
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under this Agreement at or prior to the Closing Date that are qualified as
to materiality and shall have performed or complied in all material
respects with all agreements and covenants required to be performed by it
under this Agreement at or prior to the Closing Date that are not so
qualified as to materiality, and CCI shall have received a certificate of
the chief executive officer and the chief financial officer of Merger Sub
to such effect.
(c) Required Regulatory Approvals. All Required Regulatory Approvals
shall have been obtained, have been declared or filed or have occurred, as
the case may be, and shall be in full force and effect.
(d) Funding of Facility and Equity. At or immediately prior to the
Effective Time, Merger Sub shall cause CCI or CIFC to have received the
proceeds of not less than $650,000,000 of indebtedness under the Facility
and CCI to have received not less than $129,000,000 of common equity
investment (the "Funding").
ARTICLE VII.
TERMINATION AND AMENDMENT
7.1. Termination. This Agreement may be terminated at any time prior to the
Effective Time, by action taken or authorized by the Board of Directors of the
terminating party or parties, whether before or after approval of the matters
presented in connection with the Merger by the shareholders of CCI:
(a) By mutual written consent of Merger Sub and CCI, by action of
their respective Boards of Directors;
(b) By either CCI or Merger Sub if the Effective Time shall not have
occurred on or before the six-month anniversary of the date of this
Agreement (the "Termination Date"); provided, however, that the right to
terminate this Agreement under this Section 7.1(b) 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 Effective Time to
occur on or before the Termination Date; and provided, further, that if on
the Termination Date any conditions to the Closing set forth in Section
6.1(b) or (c), Section 6.2(c) or Section 6.3(c) shall not have been
fulfilled, but all other conditions to the Closing shall be fulfilled or
shall be capable of being fulfilled, then the Termination Date shall be
extended to the nine-month anniversary of the date of this Agreement.
(c) By either CCI or Merger Sub if any Governmental Entity shall have
issued an order, decree or ruling or taken any other action (which order,
decree, ruling or other action the parties shall have used their best
efforts to resist, resolve or lift, as applicable, subject to the
provisions of Section 5.3) permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement, and such
order, decree, ruling or other action shall have become final and
nonappealable;
(d) By either Merger Sub or CCI if the approval by the shareholders
of CCI required for the consummation of the Merger or the other
transactions contemplated
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hereby shall not have been obtained by reason of the failure to obtain the
required vote at a duly held meeting of shareholders or at any adjournment
thereof;
(e) By Merger Sub if the Board of Directors of CCI (i) shall withdraw
or modify in any manner adverse to Merger Sub its approval or
recommendation of this Agreement or the Merger, (ii) failed as promptly as
practicable after the Form S-4 is declared effective to mail the Proxy
Statement to its shareholders or failed to include in such statement such
recommendation, (iii) in response to the commencement of any tender offer
or exchange offer for more than 20% of the outstanding shares of CCI Common
Stock, shall have not recommended rejection of such tender offer or
exchange offer by the date required for such recommendation under Rule
14e-2 of the Exchange Act, (iv) shall approve or recommend any acquisition
of CCI or a material portion of its assets or any tender offer for shares
of its capital stock, in each case, other than by Merger Sub or an
Affiliate thereof, or (v) shall resolve to take any of the actions
specified in clauses (i) or (iv) above;
(f) By CCI, if the Board of Directors of CCI accepts a Superior
Proposal after determining in good faith after consultation with legal
counsel as to its fiduciary obligations under applicable law, that the
failure to accept such Superior Proposal would constitute a breach of its
fiduciary duties;
(g) By Merger Sub, upon a material breach of any covenant or
agreement on the part of CCI set forth in this Agreement, or if (i) any
representation or warranty of CCI that is qualified as to materiality shall
have become untrue or (ii) any representation or warranty of CCI that is
not so qualified shall have become untrue in any material respect, in each
case such that the conditions set forth in Section 6.2(a) or Section 6.2(b)
would not be satisfied (a "Terminating CCI Breach"); provided, however,
that, if such Terminating CCI Breach is capable of being cured by CCI
through the exercise of its best efforts prior to the 90th day following
CCI's obtaining notice of such breach and for so long as CCI continues to
exercise such best efforts, Merger Sub may not terminate this Agreement
under this Section 7.1(g); or
(h) By CCI, upon a material breach of any covenant or agreement on
the part of Merger Sub set forth in this Agreement, or if (i) any
representation or warranty of Merger Sub that is qualified as to
materiality shall have become untrue or (ii) any representation or warranty
of Merger Sub that is not so qualified shall have become untrue in any
material respect, in each case such that the conditions set forth in
Section 6.3(a) or Section 6.3(b) would not be satisfied (a "Terminating
Merger Sub Breach"); provided, however, that, if such Terminating Merger
Sub Breach is capable of being cured by Merger Sub through the exercise of
its best efforts prior to the 90th day following Merger Sub's obtaining
notice of such breach and for so long as Merger Sub continues to exercise
such best efforts, CCI may not terminate this Agreement under this Section
7.1(h).
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7.2. Effect of Termination.
(a) In the event of termination of this Agreement by either CCI or
Merger Sub as provided in Section 7.1, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of
Merger Sub or CCI or their respective officers or directors except (i) with
respect to Sections 3.1(n), 3.2(e), Section 5.6, this Section 7.2 and
Article VIII and (ii) with respect to any liabilities or damages incurred
or suffered by a party as a result of the willful breach by the other party
of any of its representations, warranties, covenants or other agreements
set forth in this Agreement.
(b) In addition to any other amounts which may be payable or
become payable pursuant to any other paragraph of this Section 7.2, CCI
shall reimburse Blackstone Management Partners L.P. for all Expenses of
Merger Sub; provided that in no event shall CCI be required to pay in
excess of an aggregate of $4,000,000 pursuant to this Section 7.2(b).
Payment of Expenses pursuant to this Section 7.2(b) shall be made not later
than two Business Days after delivery to CCI of notice of demand for
payment and a documented itemization setting forth in reasonable detail all
Expenses of Merger Sub (which itemization may be supplemented and updated
from time to time by such party until the 60th day after such party
delivers such notice of demand for payment).
(c)(i) If this Agreement shall have been terminated pursuant to
Sections 7.1(b), 7.1(d) or 7.1(g) and either of the following shall have
occurred prior to such termination: (A) any Person (including CCI or any
of its Subsidiaries or CCI Affiliates, but excluding Merger Sub or any of
its Affiliates) shall have become the beneficial owner of more than 25% of
the outstanding shares of CCI Common Stock, or (B)(x) on or after the date
of this Agreement any Person (other than Merger Sub or any of its
affiliates) shall have made, or proposed, communicated or disclosed in a
manner which is or otherwise becomes public a bona fide intention to make a
Control Proposal (including by making such a Control Proposal), and (y) on
or prior to the twelve-month anniversary of the date of this Agreement, CCI
either consummates with any Person a transaction the proposal of which
would otherwise qualify as a Control Proposal or enters into a definitive
agreement with any Person with respect to a transaction the proposal of
which would otherwise qualify as a Control Proposal (whether or not such
Person is the Person referred to in clause (x) above); or
(ii) if this Agreement is terminated pursuant to Section
7.1(e) or Section 7.1(f);
then CCI shall, (1) in the case of clause (c)(i)(A) and (c)(ii) above, promptly,
but in no event later than one Business Day after the termination of this
Agreement and (2) in the case of clause (c)(i)(B) above, promptly, but in no
event later than one Business Day after an event specified in subclause (y)
thereof shall have occurred, pay Blackstone Management Partners L.P. a fee equal
to $14 million less amounts paid pursuant to section 7.2(b), in cash, which
amount shall be payable in same day funds. No termination of this Agreement at a
time when a fee is payable
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pursuant to this Section 7.2(c) following termination of this Agreement shall be
effective until such fee is paid. Only one fee shall be payable pursuant to this
Section 7.2(c).
(d) Notwithstanding the foregoing, no amount shall be payable
pursuant to Section 7.2(b) or 7.2(c) if (i) at the time this Agreement
shall have been terminated, Merger Sub is then in material breach of its
obligations or representations and warranties under this Agreement, (ii)(x)
this Agreement shall have been terminated pursuant to Section 7.1(b), (y)
at the time of such termination CCI is not then in material breach of its
obligations or representations and warranties under this Agreement and (z)
at the time of such termination any of the conditions set forth in Sections
6.1(b), 6.1(c), 6.2(c), 6.2(d), 6.2(e), 6.2(g) and 6.2(h) shall not have
been satisfied or waived, provided, however, with respect to unsatisfied or
unwaived conditions set forth in Section 6.2(e), amounts shall be payable
pursuant to Section 7.2(b), but not Section 7.2(c), or (iii) this Agreement
shall have been terminated pursuant to (x) Section 7.1(c) and at the time
of such termination CCI is not then in material breach of its obligations
or representations and warranties under this Agreement, or (y) Section
7.1(a).
7.3. Amendment. This Agreement (including the Annexes and Schedules
hereto) may be amended by the parties hereto, by action taken or authorized by
their respective Boards of Directors, at any time before or after approval of
the matters presented in connection with the Merger by the shareholders of CCI,
but, after any such approval, no amendment shall be made which by law or in
accordance with the rules of Nasdaq requires further approval by such
shareholders without such further approval. This Agreement (including the
Annexes and Schedules hereto) may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
7.4. Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party. The failure of
any party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
ARTICLE VIII.
GENERAL PROVISIONS
8.1. Non-Survival of Representations, Warranties and Agreements. None of
the representations, warranties, covenants and other agreements in this
Agreement or in any instrument delivered pursuant to this Agreement, including
any rights arising out of any breach of such representations, warranties,
covenants and other agreements, shall survive the Effective Time, except for
those covenants and agreements contained herein and therein that by their terms
apply or are to be performed in whole or in part after the Effective Time and
for the provisions of
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this Article VIII. Nothing in this Section 8.1 shall relieve any party for any
breach of any representation, warranty, covenant or other agreement in this
Agreement occurring prior to termination.
8.2. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given (a) on the date of delivery if delivered
personally or delivered by facsimile (but in the case of facsimile transmission,
transmitted on the same day by the method described in clause (b)), (b) on the
first Business Day following the date of dispatch if delivered by a recognized
next-day courier service, or (c) on the tenth Business Day following the date of
mailing if delivered by registered or certified mail, return receipt requested,
postage prepaid. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the party
to receive such notice:
(i) if to Merger Sub, to AV Acquisition Corp., c/o Blackstone
Management Associates II L.L.C., 345 Park Avenue, 31st Floor, New
York, New York 10154, Attention: Mark T. Gallogly, Facsimile No.
(212) 754-8704, with a copy to Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York 10017, Attention: Philip T.
Ruegger III, Esq., Facsimile No. (212) 455-2502.
(ii) if to CCI, to CommNet Cellular Inc., 8350 East Crescent
Parkway, Suite 400, Englewood, Colorado 80111, Attention: President,
Facsimile No.: (303) 694-5590, with a copy to Latham & Watkins, 233
South Wacker Drive, Suite 5800, Chicago, Illinois 60606, Attention:
Mark D. Gerstein, Esq., Facsimile No.: (312) 993-9767.
8.3. Interpretation. When a reference is made in this Agreement to
Sections, Annexes or Schedules, such reference shall be to a Section of or Annex
or Schedule to this Agreement unless otherwise indicated. The table of contents,
glossary of defined terms and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".
8.4. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
8.5. Entire Agreement; No Third Party Beneficiaries.
(a) This Agreement constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, other than the
confidentiality and standstill agreement entered into by Blackstone
Management Partners L.P. and CCI in connection with the
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transactions contemplated hereby, which shall survive the execution and
delivery of this Agreement.
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement, other than Section 5.7 (which is intended to be for the benefit
of the Persons covered thereby and may be enforced by such Persons).
8.6. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York.
8.7. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.
8.8. Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto, in
whole or in part (whether by operation of law or otherwise), without the prior
written consent of the other party, and any attempt to make any such assignment
without such consent shall be null and void, except that Merger Sub may assign,
in its sole discretion, any or all of its rights, interests and obligations
under this Agreement to any direct or indirect wholly owned Subsidiary of Parent
without the consent of CCI, but no such assignment shall relieve Merger Sub of
any of its obligations under this Agreement. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns.
8.9. Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the parties
shall be entitled to specific performance of the terms hereof, this being in
addition to any other remedy to which they are entitled at law or in equity.
8.10. Definitions. As used in this Agreement:
(a) "Affiliate" shall have the meaning ascribed to such term under
Rule 12b-2 under the Exchange Act.
(b) "Board of Directors" means the Board of Directors of any
specified Person and any properly serving and acting committees thereof.
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(c) "Business Day" means any day on which banks are not required or
authorized to close in the City of New York.
(d) "CCI Affiliates" means each of the corporations and
partnerships through which CCI holds indirect ownership interests in
cellular licensees and those cellular licensees in which CCI holds an
ownership interest which is not a Consolidated Subsidiary.
(e) "Control Proposal" means an Acquisition Proposal which seeks to
acquire a controlling interest in CCI.
(f) "Material Adverse Change" means any change in the business,
financial condition or results of operations of CCI or any of the
Consolidated Subsidiaries or Managed Affiliates that has had, or could
reasonably be expected to have, a Material Adverse Effect on CCI.
(g) "Material Adverse Effect" means, with respect to any entity,
any adverse change, circumstance or effect that, individually or in the
aggregate with all other adverse changes, circumstances and effects, is or
is reasonably likely to be materially adverse to the business, operations,
assets, liabilities (including, without limitation, contingent
liabilities), financial condition or results of operations of such entity
and its Subsidiaries taken as a whole.
(h) "Organizational Documents" means, with respect to any entity,
the charter, by-laws or other governing documents of such entity.
(i) "Person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization, entity
or "group" (as referred to in Section 13(d)(3) of the Exchange Act).
(j) "Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated,
(i) of which such party or any other Subsidiary of such party is a general
partner (excluding partnerships, the general partnership interests of which
held by such party or any Subsidiary of such party do not have a majority
of the voting interests in such partnership) or (ii) at least a majority of
the securities or other interests of which having by their terms ordinary
voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or
by any one or more of its Subsidiaries, or by such party and one or more of
its Subsidiaries.
(k) (i) "Tax" (including, with correlative meaning, the terms
"Taxes" and "Taxable") means all federal, state, local and foreign income,
profits, franchise, gross receipts, environmental, customs duty, capital
stock, severance, stamp, payroll, sales, employment, unemployment
disability, use, property, withholding, excise, production, value added,
occupancy and other taxes, duties or assessments of any nature whatsoever,
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together with all interest, penalties, fines and additions to tax imposed
with respect to such amounts and any interest in respect of such penalties
and additions to tax, and (ii) "Tax Return" means all returns and reports
(including elections, claims, declarations, disclosures, schedules,
estimates, computations and information returns) required to be supplied to
a Tax authority in any jurisdiction relating to Taxes.
(l) "the other party" means, with respect to CCI, Merger Sub and
means, with respect to Merger Sub, CCI.
8.11. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND FOR ANY
COUNTERCLAIM THEREIN.
47
<PAGE>
IN WITNESS WHEREOF, CCI and Merger Sub have caused this Agreement to
be signed by their respective officers thereunto duly authorized, all as of the
date first written above.
COMMNET CELLULAR INC.
By: /s/ Arnold C. Pohs
Name: Arnold C. Pohs
Title: President
AV ACQUISITION CORP.
By: /s/ Mark T. Gallogly
Name: Mark T. Gallogly
Title: President
48
<PAGE>
Exhibit 4.1
RIGHTS AGREEMENT AMENDMENT
--------------------------
AMENDMENT, dated as of May 27, 1997, to the Rights Agreement, dated as
of December 10, 1990, as amended (the "Rights Agreement"), between CommNet
Cellular Inc., a Colorado corporation, formerly Cellular, Inc. (the "Company"),
and State Street Bank and Trust Company, as successor to The Bank of New York
(the "Rights Agent").
The Company and the Rights Agent have heretofore executed and entered
into the Rights Agreement. Pursuant to Section 26 of the Rights Agreement, the
Company and the Rights Agent may from time to time supplement or amend the
Rights Agreement in accordance with the provisions of Section 26 thereof. All
acts and things necessary to make this Amendment a valid agreement according to
its terms have been done and performed, and the execution and delivery of this
Agreement by the Company and the Rights Agent have been in all respects
authorized by the Company and the Rights Agent.
In consideration of the foregoing premises and mutual agreements set
forth in the Rights Agreement and this Amendment, the parties hereto agree as
follows:
1. Section 1(a) of the Rights Agreement is hereby modified and
amended to read in its entirety as follows:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 25% or more of the Common Stock
of the Company then outstanding, but shall not include (i) the Company, (ii) any
Subsidiary (as such term is hereinafter defined) of the Company, (iii) any
employee benefit plan of the Company or any Subsidiary of the Company, (iv) any
entity holding Common Stock for or pursuant to the terms of any such plan, or
(v) AV Acquisition Corp., a Delaware corporation (together with any assignee
thereof pursuant to the Merger Agreement (as defined below), Blackstone
Management Associates II L.L.C. or any Affiliate thereof ("AV Acquisition");
provided, however, that AV Acquisition will not be excepted from this definition
of "Acquiring Person" in the event that AV Acquisition becomes the Beneficial
Owner of 25% or more of the Common Stock of the Company then outstanding other
than pursuant to the terms of the Agreement and Plan of Merger, dated as of May
27, 1997 (the "Merger Agreement"), between the Company and AV Acquisition.
2. Section 3(a) of the Rights Agreement is hereby amended by adding
as the final sentence thereto the following:
"Notwithstanding anything in this Agreement to the contrary, a
Distribution Date shall not be deemed to have occurred solely as
a result of (i) the approval, execution or delivery of the Merger
Agreement, or (ii) the consummation of the Merger (as defined in
the Merger Agreement)."
<PAGE>
3. Section 11(a) of the Rights Agreement is hereby amended by adding
to the final sentence thereto the following:
"Notwithstanding anything in this Agreement to the contrary, a
Section 11(a)(ii) Event shall not be deemed to have occurred
solely as a result of (i) the approval, execution or delivery of
the Merger Agreement, or (ii) the consummation of the Merger (as
defined in the Merger Agreement)".
4. Section 13(a) of the Rights Agreement is hereby amended by adding
as the final sentence thereto the following:
"Notwithstanding anything in this Agreement to the contrary, a
Section 13 Event shall not be deemed to have occurred solely as a
result of (i) the approval, execution or delivery of the Merger
Agreement, or (ii) the consummation of the Merger (as defined in
the Merger Agreement)."
5. Except as expressly amended hereby, the Rights Agreement remains
in full force and effect in accordance with its terms.
6. The Rights Agreement, as amended by this Amendment, and each
Right and each Rights Certificate exist under and pursuant to the Colorado
Business Corporation Act.
7. This Amendment to the Rights Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado.
8. This Amendment to the Rights Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed an original, and all such counterparts shall together constitute but one
and the same instrument.
9. Except as expressly set forth herein, this Amendment to the
Rights Agreement shall not by implication or otherwise alter, modify, amend or
in any way affect any of the terms, conditions, obligations, covenants or
agreements contained in the Rights Agreement, all of which are ratified and
affirmed in all respects and shall continue in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
the Rights Agreement to be duly executed as of the day and year first above
written.
Attest: COMMNET CELLULAR INC.
By: /s/ Amy M. Shapiro By: /s/ Arnold C. Pohs
--------------------------- --------------------------
Title: General Counsel Title: President
Attest: STATE STREET BANK AND TRUST COMPANY
By: /s/ Justine Alonzo By: /s/ David Saporito
--------------------------- --------------------------
Title: Senior Client Administrator Title: Managing Director
<PAGE>
Exhibit 99.1
FOR IMMEDIATE RELEASE
Contact: CommNet Cellular Inc.
Daniel P. Dwyer
Chief Financial Officer
(303) 694-8520
Blackstone Capital Partners
Mark T. Gallogly
(212) 836-9805
COMMNET CELLULAR INC. ANNOUNCES $36.00 PER SHARE
MERGER AGREEMENT WITH
BLACKSTONE CAPITAL PARTNERS MERCHANT BANKING FUND AND
AFFILIATED FUNDS
Englewood, CO and New York, NY. May 28, 1997. CommNet Cellular Inc.
("CommNet") (Nasdaq National Market-CELS), a leading cellular provider in rural
areas with one of the largest geographic collections of contiguous cellular
markets in the United States, and Blackstone Capital Partners Merchant Banking
Fund and affiliated funds ("Blackstone") today jointly announced the signing of
an Agreement and Plan of Merger providing for the merger of CommNet with AV
Acquisition Corp., a Delaware corporation formed by Blackstone. The merger
agreement provides that the owner of each outstanding share of CommNet common
stock can elect either to receive $36.00 in cash for that share or to retain
that share, subject to proration as described below. Upon completion of the
transaction, Blackstone will be the majority owner of CommNet. The merger is
valued at approximately $718 million, including net indebtedness of
approximately $200 million to be refinanced.
The merger agreement provides that in no event can more than approximately
590,000 shares of CommNet common stock (approximately 4% of the currently
outstanding shares) be retained by present CommNet shareholders. If holders
elect to retain more than approximately 590,000 of the outstanding shares, then
the shares available will be prorated among those electing to retain shares and
cash will be paid for all other shares. If holders elect to retain fewer than
approximately 590,000 of the outstanding shares, the remaining available shares
will be prorated among those electing cash.
Following the merger, affiliates of Blackstone expect to own approximately
87% of CommNet's outstanding shares. Blackstone will invest up to approximately
$142 million of equity in the transaction and The Chase Manhattan Corporation
has committed to provide and arrange all of the financing required to complete
the recapitalization of the Company. CommNet
<PAGE>
will continue to operate as an independent public company under its current name
and management, with headquarters in Englewood, Colorado.
"We are delighted to team with Blackstone and be the beneficiaries of their
superior financial experience, expertise and strength. Our outstanding past
performance is only the prelude to our even brighter future together," said
Arnold C. Pohs, Chairman, President and CEO of CommNet.
Stephen A. Schwarzman, President and Chief Executive Officer of Blackstone
commented, "CommNet is well positioned to continue growing rapidly in its rural
markets where cellular penetration is increasing. The combination of CommNet's
strong management team, leading market positions and well developed cellular
infrastructure together with Blackstone's financial resources should allow
CommNet to realize its full potential."
The merger is subject to certain conditions, including the approval of
CommNet's shareholders at a special meeting to be held as soon as practicable,
the receipt of certain approvals from the Federal Communications Commission, the
expiration of antitrust regulatory waiting periods and the funding of financing
arrangements.
The merger agreement includes provisions prohibiting CommNet from actively
soliciting another purchaser, and provides for the payment of certain fees and
the reimbursement of certain expenses to Blackstone in the event of a
termination of the merger agreement under certain circumstances.
Merrill Lynch & Co. acted as exclusive financial advisor to CommNet and
rendered a fairness opinion in connection with the transaction. Blackstone was
advised by Morgan Stanley & Co.
CommNet operates, manages and finances cellular telephone systems in which
its subsidiaries and affiliates hold ownership interests. CommNet owns
interests in 82 markets in 14 states with a proportionate interest in 3.5
million pops. CommNet is the manager in 56 of these markets with a total
population of 4.2 million residing in nine contiguous states in the mountain and
plains regions. These managed markets represent one of the largest geographic
collections of contiguous wireless systems in the United States.
The Blackstone Group L.P. is a private investment bank based in New York
and founded in 1985 by Peter G. Peterson, its Chairman, and Stephen A.
Schwarzman, its President and Chief Executive Officer. The Blackstone Group
L.P.'s main businesses include strictly friendly principal investments, real
estate investing and asset management, restructuring and merger and acquisition
advisory services.
Any offering of securities in connection with the merger will be made only
by means of a prospectus.
