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As filed with the Securities and Exchange Commission on May 8, 1996
Registration No. 333-_______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CELLULAR COMMUNICATIONS OF PUERTO RICO, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3517074
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)
110 East 59th Street
New York New York 10022
(212) 355-3466
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
RICHARD J. LUBASCH, ESQ.
Senior Vice President, General Counsel and Secretary
Cellular Communications of Puerto Rico, Inc.
110 East 59th Street
New York New York 10022
(212) 906-8470
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies of all communications to:
THOMAS H. KENNEDY, ESQ.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
(212) 735-2526
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time following the date this Registration Statement is declared
effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]_______________
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SHARES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
- --------------------------------------- ---------- ----------------- ----------------- -------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value (in- 820,404 $27.125(2) $22,253,459.00(2) $7,673.61(2)
cluding Series A Junior Participating shares
Preferred Stock Purchase Rights) (1)
</TABLE>
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(1) Prior to the occurrence of certain events, the Series A Junior
Participating Preferred Stock Purchase Rights will not be evidenced
separately from shares of Common Stock.
(2) Estimated pursuant to Rule 457(c) of the Securities Act of 1933 solely for
the purpose of computing the amount of the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, MAY 8, 1996
PROSPECTUS
- ----------
820,404 SHARES
CELLULAR COMMUNICATIONS OF PUERTO RICO, INC.
COMMON STOCK
-----------
This Prospectus relates to the sale by Henry Zachs, Judith Zachs, Newton
Brenner, Christopher Jenkins, Waring Partridge, David Abel, Estate of Danny
Arnold, Estate of Robert Austin, The Ed and Natalie Friendly Trust, Nathan
Golden, Jeffrey Gordon, Eugene Goodwin, Rabbi Leon Kahane, Frank Kilpatrik,
Lawrence Family Trust, Perry Leff, Donald Meaders, George Newhart, Kenneth
Newmark, Susan Newmark, Pierce O'Donnell, Don Rickles, Barbara Rickles, Ronald
Rizzo, Anne Roberts, Larry Scharf, Bart Sokolow, Ronald Shlensky, Anthony
Thompson and Tayemi Thompson, (all of the foregoing parties are hereinafter
referred to as the "Selling Stockholders" ) of a maximum 820,404 shares of
Common Stock, par value $.01 per share (the "Common Stock"), of Cellular
Communications of Puerto Rico, Inc., a Delaware corporation (the "Company") (and
associated Series A Junior Participating Preferred Stock Purchase Rights (the
"Rights")). Such Common Stock was originally issued by the Company as
consideration in certain acquisition transactions. See "RECENT DEVELOPMENTS."
The Company will not receive any proceeds from the sale of the shares of Common
Stock offered by this Prospectus. See "SELLING STOCKHOLDERS" and "PLAN OF
DISTRIBUTION."
The Common Stock is quoted on the National Association of Securities
Dealers Automated Quotations/National Market System ("Nasdaq National Market")
under the symbol CCPR. On May 7, 1996 the last reported sale price of the
Common Stock on the Nasdaq National Market was $26.75 per share. Prospective
purchasers of the Common Stock are urged to obtain current information as to
market prices of the Common Stock.
-----------
SEE "RISK FACTORS" ON PAGES 4 THROUGH 7 FOR CERTAIN FACTORS RELEVANT TO AN
INVESTMENT IN THE COMMON STOCK OFFERED HEREBY.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MAY __, 1996
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
following Regional Offices of the Commission: Chicago Regional Office,
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and New York Regional Office, 7 World Trade Center, 13th Floor,
New York, New York 10048. Copies of such material can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Such reports, proxy statements and
other information can also be inspected at the offices of the Nasdaq National
Market, Reports Section, 1735 K Street, N.W., Washington, D.C., 20006 on which
certain securities of the Company are listed and traded.
The Company has filed with the Commission a Registration Statement on
Form S-3 (which together with all amendments and exhibits is referred to herein
as the "Registration Statement"). This Prospectus does not contain all
information set forth in the Registration Statement and the exhibits and
schedules filed thereunder, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information,
reference is hereby made to the Registration Statement which may be inspected
and copied in the manner and at the sources described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Exchange Act are hereby incorporated by reference herein:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1995 (File No. 0-19869).
2. The Company's Current Report on Form 8-K, dated April 23, 1996
(File No. 0-19869).
3. The description of the Common Stock which is contained in the
registration statements filed by the Company to register such securities under
Section 12 of the Securities Act of 1933, as amended (the "Securities Act"),
including any amendments or reports filed for the purpose of updating such
description (File No. 0-19869).
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the shares of Common Stock hereunder
shall be deemed to be incorporated by reference herein and to be part hereof
from the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is
incorporated or deemed to be incorporated by reference herein
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<PAGE>
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON
TO WHOM THIS PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF SUCH
PERSON, A COPY OF ANY AND ALL OF THE DOCUMENTS INCORPORATED BY REFERENCE IN THIS
PROSPECTUS (OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE INTO THE DOCUMENTS THAT THIS PROSPECTUS
INCORPORATES). WRITTEN OR ORAL REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO
RICHARD J. LUBASCH, SECRETARY, CELLULAR COMMUNICATIONS OF PUERTO RICO, INC., 110
EAST 59TH STREET, NEW YORK, NEW YORK 10022, TELEPHONE (212) 906-8470.
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RISK FACTORS
Ownership of the Common Stock offered hereby involves certain risks.
Prospective owners of the Common Stock, prior to engaging in any transaction
which would result in the ownership thereby of the Common Stock, should
carefully consider the following factors, in addition to all other information
contained in this Prospectus or incorporated herein by reference.
COMPETITION
Federal Communications Commission ("FCC") regulations provide that two
licensees will be authorized to provide cellular service in each cellular
service area. In the Commonwealth of Puerto Rico, the Company's wholly or
majority-owned subsidiaries, or other affiliates, face significant competition
from the Puerto Rico Telephone Company ("PRTC"), the other licensee for such
service area and which is also the sole landline telephone service provider in
Puerto Rico. PRTC is owned by the government of the Commonwealth of Puerto
Rico. PRTC is significantly larger and better capitalized than the Company and
enjoyed more than a five-year head start in fully marketing its cellular
telephone service. The Company believes that PRTC presently provides service to
approximately 61% of the subscribers to cellular telephone service in the
Commonwealth of Puerto Rico. In the U.S. Virgin Islands, the Company and its
wholly or majority owned subsidiaries, or other affiliates, face significant
competition from VitelCellular, Inc. ("VitelCellular"). VitelCellular is an
affiliate of Virgin Islands Telephone Company, which is the provider of landline
telephone service in the U.S. Virgin Islands and is also the other licensee in
each U.S. Virgin Islands cellular service area. The Company believes that
VitelCellular is significantly larger and better capitalized than the Company.
The Company believes that VitelCellular currently provides service to
approximately 45% of the subscribers of cellular service on the U.S. Virgin
Islands. Furthermore, the Company's cellular and paging operations are
dependent upon interconnection with these local landline telephone service
providers for the origination and termination of calls that constitute a large
proportion of the Company's mobile service operations. The Telecommunications
Act of 1996 contains certain provisions regarding such interconnection; however,
it is still premature to predict the effect of such legislation on the Company's
business.
Significant competition can also be expected from the other cellular
licensee in each other service area in which the Company's wholly or majority-
owned subsidiaries, or other affiliates, now, or in the future, might compete.
Alternative communications technologies now existing, in the process of
development, or to be developed in the future may also provide competition.
These include, without limitation, landline telephone service, conventional
mobile radio systems, specialized mobile radio systems, paging services,
microcell-based cordless telephones, mobile satellite services and personal
communications services ("PCS"). The FCC has recently awarded PCS licenses for
Puerto Rico and the U.S. Virgin Islands to AT&T and Centennial Cellular Corp.
("Centennial"). AT&T is the largest telecommunications company in the United
States; Centennial is an experienced cellular service provider in the U.S.
mainland and has affiliates that offer cable television services and fiber-
optic based telecommunications services in Puerto Rico. Both AT&T and
Centennial are expected to provide strong competition in the mobile
telecommunications market in Puerto Rico. The FCC will award four additional
PCS authorizations through competitive bidding in each area where the Company
provides cellular service. The Company is eligible to bid for and acquire at
least one of these authorizations in each such area. PCS is expected to utilize
digital technology which may provide better sound quality and ancillary
functions not currently available in the Company's system.
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Accordingly, PCS will provide significant competition to the Company's cellular
and paging operations and may render current cellular technology obsolete.
FRAUD
The cellular industry continues to be subject to fraudulent activity.
Cloning, which is one form of fraud, refers to the use of scanners and other
electronic devices to illegally obtain telephone numbers and electronic serial
numbers during cellular transmission. These stolen telephone and serial number
combinations can be programmed into a cellular phone and used to obtain
fraudulent access to cellular networks. Roaming fraud occurs when a phone
programmed with a number stolen from the Company's customer is used to place a
fraudulent call from another carrier's market, resulting in a roaming fee
charged to the Company that cannot be collected from the customer. The Company
continues to work to reduce the negative impacts of fraud through investment in
new technologies and the deployment of other measures. In its own markets, the
Company has had significant success in detecting and reducing fraudulent usage
of numbers stolen from the Company's customers. The cost of cellular fraud
could have a significant impact on the Company's operating results for the
foreseeable future.
REGULATORY UNCERTAINTIES
The licensing, construction, operation, acquisition and sale of
cellular telephone systems are regulated at the federal level by the FCC and, to
some extent, the Federal Aviation Administration ("FAA"). In addition, certain
aspects of cellular telephone operations are or may be subject to public utility
regulation at the state, commonwealth or local level. Future changes in the
laws and regulations governing such aspects of cellular telephone operations,
either at the federal, state, commonwealth or local level, may have a material
adverse impact on the cellular telephone operations of the Company.
FLUCTUATIONS IN THE VALUE OF WIRELESS LICENSES; RENEWAL OF FCC LICENSES
A substantial portion of the Company's assets consists of interests in
entities holding cellular licenses, the value of which will depend upon the
success of the operations of such entities and the growth and future direction
of the cellular industry generally. Values of licenses also have been affected
by fluctuations in the level of supply and demand for such licenses. In
addition, the infrequency with which licenses are traded or sold may increase
the difficulty of establishing values for the Company's license interests. Any
transfer of control of an entity holding a domestic license is subject to prior
FCC approval. Where licenses are held by partnerships, transfers of ownership
interests in such entities are often subject to contractual restrictions.
In addition, investment returns from acquisitions of interests in
existing entities holding wireless licenses or from licenses acquired through
auctions may be lower than those resulting from the Company's early license
awards because of the substantial purchase prices required to acquire such
interests. Also, under current FCC regulations, each license is subject to
renewal. Because it is possible that there will be competition for the licenses
upon the expiration of their initial ten-year terms, there can be no assurance
that any such license will be renewed in favor of the Company.
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LACK OF GEOGRAPHIC DIVERSIFICATION
The Company's business as of the date of this Prospectus is confined
to the operation of cellular telephone and paging systems in the Commonwealth of
Puerto Rico and the U.S. Virgin Islands. As such, it is highly dependent on
trends in the use of cellular telephone and paging services and is subject to
economic, social, political and governmental conditions in the Commonwealth of
Puerto Rico and in the U.S. Virgin Islands.
RADIO FREQUENCY EMISSIONS CONCERNS
Media reports have suggested that certain radio frequency ("RF")
emissions from portable cellular telephones might be linked to cancer. The
Company has collected and reviewed relevant scientific information and, based on
such information, is not aware of any credible evidence linking the usage of
portable cellular telephones with cancer. The FCC currently has a rulemaking
proceeding pending to update the guidelines and methods it uses for evaluating
RF emissions in radio equipment, including cellular telephones. While the
proposal would impose more restrictive standards on RF emissions from low-power
devices such as portable cellular telephones, it is anticipated that all
cellular telephones currently marketed and in use will comply with those
standards. The Telecommunications Act of 1996 requires that the FCC complete
action in that rulemaking proceeding within 180 days after February 7, 1996.
Additional concerns have been expressed about the safety of emissions from
cellular facilities which transmit calls to customers' telephone handsets. The
Company's facilities are licensed by the FCC and comply with the exposure levels
set by the FCC. The Telecommunications Act of 1996 provides that state and
local governments may not regulate the placement, construction or modification
of personal wireless service facilities on the basis of the environmental
effects of RF emissions as long as such facilities comply with the FCC's
regulations concerning such emissions. However, local authorities still have
jurisdiction over zoning and permitting of such facilities.
DIVIDEND POLICY
The Company has never paid cash dividends on the Common Stock and does
not anticipate paying any cash dividends in the foreseeable future. The Company
anticipates that it will retain earnings, if any, for use in the operation and
expansion of its business and does not anticipate paying any cash dividends in
the foreseeable future. Additionally, the terms of a $200,000,000 revolving
credit facility into which the Company and one of its subsidiaries have entered
contains provisions that restrict the payment of cash dividends on the Common
Stock.
HOLDING COMPANY STRUCTURE
As a holding company, the Company is ultimately dependent upon cash
distributions from the entities in which it owns interests to fund operations
and to pay the principal and interest on the Company's indebtedness. While there
are presently no material contractual restrictions on the ability of the
Company's operating entities to make payments or other distributions to the
Company, there can be no assurances that such restrictions will not exist at any
time in the future.
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CONFLICTS OF INTEREST
Certain directors and/or officers of Cellular Communications, Inc.
("CCI") are also directors and/or officers of the Company. When such persons
act in their capacity as directors and/or officers of the Company, they have a
fiduciary duty to the Company and its stockholders, which includes a duty of
loyalty to the Company and its stockholders. If a conflict of interest were to
emerge between CCI and the Company, however, there would be no assurance that
the interests of the Company would be fully protected in such instance or that
any such conflict would necessarily be resolved in favor of the Company.
CERTAIN ANTI-TAKEOVER PROVISIONS
Certain provisions of the Company's Restated Certificate of
Incorporation (the "Restated Certificate of Incorporation") and the Company's
By-laws (the "By-laws") as well as the Rights Agreement (as hereinafter
defined), and certain instruments of indebtedness of the Company, as well as
Section 203 of the Delaware General Corporation Law which prohibits certain
persons from engaging in business combinations with the Company, may be
considered to have anti-takeover effects and may delay, defer or prevent a
change in the control of the Company that might otherwise be beneficial to the
Company's stockholders. The foregoing may also adversely affect prevailing
market prices for the Common Stock. See "PURPOSES AND EFFECTS OF CERTAIN
PROVISIONS OF THE RESTATED CERTIFICATE OF INCORPORATION, BYLAWS AND THE RIGHTS
AGREEMENT."
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THE COMPANY
The Company is a Delaware corporation which was originally organized
under the name EC Acquisition, Inc. on May 18, 1988. The Company, through
wholly and majority-owned entities, or other affiliates, holds licenses from the
FCC to own and operate cellular telephone and paging systems and conduct other
related operations. The only markets served by the entities in which the
Company has an interest are in the Commonwealth of Puerto Rico and the U.S.
Virgin Islands. Prior to February 28, 1992, the Company was a wholly-owned
subsidiary of CCI.
The Company's principal executive offices are located at 110 East 59th
Street, New York, New York 10022 and its telephone number at such address is
(212) 906-8470.
RECENT DEVELOPMENTS
On December 26, 1995 the Company and CCPR Services, Inc. ("CCPR"), a wholly
owned subsidiary of the Company, entered into an Agreement and Plan of
Reorganization (the "HMZ Reorganization Agreement") with HMZ San Juan Inc., a
Connecticut corporation ("HMZ"), and Henry Zachs, Newton Brenner and Christopher
Jenkins, all of the stockholders of HMZ (collectively, the "HMZ Stockholders").
The HMZ Reorganization Agreement provides, among other things, for the purchase
by CCPR of a 2.6627% interest in San Juan Cellular Telephone Company, a general
partnership ("San Juan Cellular"), subject to certain regulatory approvals.
Pursuant to the HMZ Reorganization Agreement, on February 7, 1996, the Company
issued 350,000 shares of Common Stock and the associated Rights to HMZ in
exchange for such interest in San Juan Cellular. San Juan Cellular provides,
pursuant to authorization by the FCC, cellular radio and related communications
services in Puerto Rico. HMZ subsequently distributed the 350,000 shares of
Common Stock and the associated Rights to the HMZ Stockholders and to Judith
Zachs.
On December 26, 1995, the Company and CCPR entered into an Agreement and
Plan of Reorganization (the "NTC Reorganization Agreement") with National
Telephone Company, a Delaware corporation ("NTC"), and Waring Partridge, the
sole stockholder of NTC (the "Sole Stockholder"). The NTC Reorganization
Agreement provides, among other things, for the purchase by CCPR of a 2.6627%
interest in San Juan Cellular, subject to certain regulatory approvals.
Pursuant to the NTC Reorganization Agreement, on February 7, 1996, the Company
issued 350,000 shares of Common Stock and the associated Rights to NTC in
exchange for such interest in San Juan Cellular. NTC subsequently distributed
the 350,000 shares of Common Stock and the associated Rights to the Sole
Stockholder.
.
On December 26, 1995 the Company and CCPR entered into an Agreement (the
"PCT Reorganization Agreement" and, collectively with the HMZ Reorganization
Agreement and the NTC Reorganization Agreement, the "Reorganization Agreements")
with Pacific Cellular Telephone Systems, a California limited partnership
("PCT") and David Abel, Estate of Danny Arnold, Estate of Robert Austin, The Ed
and Natalie Friendly Trust, Nathan Golden, Jeffrey Gordon, Eugene Goodwin, Rabbi
Leon Kahane, Frank Kilpatrik, Lawrence Family Trust, Perry Leff, Donald Meaders,
George Newhart, Kenneth Newmark, Susan Newmark, Pierce O'Donnell, Don Rickles,
Barbara Rickles, Ronald Rizzo, Anne Roberts, Larry Scharf, Bart Sokolow, Ronald
Shlensky, Anthony Thompson and Tayemi Thompson, the foregoing being all of the
limited and general partners of PCT (collectively, the "Partners"). The PCT
Reorganization Agreement provides, among other things, for the purchase by CCPR
of a .902% interest in San Juan Cellular, subject to certain regulatory
approvals. Pursuant to the PCT Reorganization Agreement, on February 8, 1996,
the Company issued 120,404 shares of Common Stock and the associated Rights to
PCT in exchange for such interest in San Juan Cellular. PCT subsequently
distributed the 120,404 shares of Common Stock and the associated Rights to the
Partners.
As a result of the consummation of the transactions contemplated by each of
the Reorganization Agreements, the Company has a 100% interest in San Juan
Cellular.
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SELLING STOCKHOLDERS
All of the shares of Common Stock offered hereby are being sold by the
Selling Stockholders. As of the date of this Prospectus, the Selling
Stockholders beneficially owned all of the shares of Common Stock offered hereby
and other than the shares of Common Stock offered hereby, the Selling
Stockholders, other than Judith Zachs and Henry Zachs, did not own any other
shares of Common Stock or any other shares of the capital stock of the Company.
As of the date of this Prospectus, Judith Zachs owned an additional 625 shares
of Common Stock of the Company and Henry Zachs owned an additional 3,000 shares
of Common Stock of the Company. Immediately after the sale of all of the shares
of Common Stock offered hereby, the Selling Stockholders, other than Judith
Zachs and Henry Zachs, will not own any other shares of Common Stock or any
other shares of the capital stock of the Company (assuming the Selling
Stockholders do not acquire any other such shares after the date of this
Prospectus). Immediately after the sale of all of the shares of Common Stock
offered hereby, Judith Zachs will own 625 shares of Common Stock of the Company
and Henry Zachs will own 3,000 shares of Common Stock of the Company. Pursuant
to the Reorganization Agreements, the Company acquired an aggregate interest of
6.146% in San Juan Cellular and, in connection therewith, the Company issued the
shares of Common Stock offered hereby.
Pursuant to the registration rights provisions of the Reorganization
Agreements, the Company has, among other things, filed with the Commission the
Registration Statement of which this Prospectus is a part, and has agreed to use
all reasonable efforts to cause such Registration Statement to become effective
as soon as reasonably practicable. Additionally, pursuant to such provisions,
the Selling Stockholders have agreed that if a Selling Stockholder is deemed to
be an affiliate of the Company, then that Selling Stockholder will furnish all
information and take such other actions as may reasonably be requested by the
Company to assist the Company in fulfilling the obligations of the Company
referred to in the previous sentence. The Company will not receive any cash
proceeds or other amounts from the sale of the shares of Common Stock offered
hereby.
To the best knowledge of the Company, none of the Selling Stockholders
nor any of their respective affiliates are, or have in the past three years
been, a director or officer of the Company or any of the Company's affiliates.
Except for the transactions contemplated pursuant to this Prospectus or the
Reorganization Agreements, to the best knowledge of the Company, there is not,
and there has not in the past three years been, any material relationship
between the Company and its affiliates, on the one hand, and any of the Selling
Stockholders, on the other.
PLAN OF DISTRIBUTION
The shares of Common Stock offered hereby may be sold from time to
time in one or more transactions to purchasers either directly by the Selling
Stockholders, through agents designated by the Selling Stockholders or through
brokers, dealers or underwriters to be designated by the Selling Stockholders,
at such prices (whether at fixed offering prices, prevailing market prices,
varying prices determined at the time of sale or otherwise) and on such terms as
may be determined by the Selling Stockholders at the time of sale; additionally,
such sales may be made on the Nasdaq National Market or in the over-the-counter
market or otherwise. Such agents, brokers, dealers or underwriters will likely
receive commissions or discounts from the Selling Stockholders in customary and
ordinary amounts to be negotiated immediately prior to the sale. The Selling
Stockholders and any agents, dealers or underwriters that participate with the
Selling Stockholders in the distribution of the shares of Common Stock offered
hereby may be deemed to be "underwriters" within the meaning of the Securities
Act and any commissions received by them and any profit on the resale of the
shares of Common Stock purchased by them may be deemed underwriting commissions
or discounts under the Securities Act. To the extent required under the
Securities Act, the aggregate amount of shares of Common Stock being offered and
the terms of the offering, the names of any such agents, brokers,
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dealers or underwriters and any applicable commission with respect to a
particular offer will be set forth in an accompanying Prospectus supplement.
The aggregate proceeds to the Selling Stockholders from the sale of the shares
of Common Stock offered hereby will be the selling price of the shares of Common
Stock sold less the aggregate commissions and discounts thereon, if any, and
other expenses of issuance and distribution. None of the proceeds from the sale
of the shares of Common Stock offered hereby will be received by the Company.
USE OF PROCEEDS
The Company will not receive any of the net proceeds from the sale of
shares of Common Stock offered hereby.
DESCRIPTION OF CAPITAL STOCK
AUTHORIZED CAPITAL STOCK
The authorized capital stock of the Company consists of 32,500,000
shares, of which 2,500,000 are shares of Preferred Stock, par value $.01 per
share (the "Preferred Stock"), and 30,000,000 are shares of Common Stock. No
shares of Preferred Stock are issued and outstanding, although 80,000 shares of
Series A Junior Participating Preferred Stock have been designated and reserved
for issuance in connection with the exercise, upon certain events, of the Rights
in accordance with the Rights Agreement (as hereinafter defined). For a
description of the Rights and the Series A Junior Participating Preferred Stock,
see "PURPOSES AND EFFECTS OF CERTAIN PROVISIONS OF THE RESTATED CERTIFICATE OF
INCORPORATION, THE BY-LAWS AND THE RIGHTS AGREEMENT--Stockholder Rights Plan."
The following description is qualified in all respects by reference to the
Restated Certificate of Incorporation and the By-laws, which are incorporated by
reference herein and copies of which may be obtained as described under
"AVAILABLE INFORMATION."
COMMON STOCK
All shares of Common Stock (1) participate equally in dividends
payable to holders of Common Stock when and as declared by the Company's Board
of Directors and in net assets available for distribution to holders of Common
Stock on liquidation or dissolution (subject to any prior rights of any class of
Preferred Stock which may be issued by the Company in the future), (2) have one
vote per share on all matters submitted to a vote of the Company's stockholders
and (3) do not have cumulative voting rights in the election of directors. All
issued and outstanding shares of the Common Stock are fully paid and
nonassessable. The shares of Common Stock are neither redeemable nor
convertible, and the holders thereof have no preemptive or subscription rights
to purchase any securities of the Company. Upon any liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary, the remaining net
assets, if any, of the Company shall be distributed pro rata to the holders of
the Common Stock.
The Restated Certificate of Incorporation, the By-laws and the Rights
Agreement contain certain provisions that are intended to enhance the likelihood
of continuity and stability in the composition of the Company's Board of
Directors and which may have the effect of delaying,
10
<PAGE>
deferring or preventing a future takeover or change in control of the Company
unless such takeover or change of control is approved by the Company's Board of
Directors. Such provisions may also render the removal of the current Board of
Directors and of management more difficult. See "PURPOSES AND EFFECTS OF
CERTAIN PROVISIONS OF THE RESTATED CERTIFICATE OF INCORPORATION, THE BY-LAWS AND
THE RIGHTS AGREEMENT."
PREFERRED STOCK
The Board of Directors is authorized to provide for the issuance of
shares of Preferred Stock in one or more series, and to fix for each such series
such voting powers, full or limited, or no voting powers, and such designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as are stated in a
Certificate of Designation adopted by the Board of Directors providing for the
issue of such series and as are permitted by the Delaware General Corporation
Law (the "DGCL").
TRANSFER AGENT
Continental Stock Transfer & Trust Company is the transfer agent and
registrar for the Company's Common Stock.
PURPOSES AND EFFECTS OF CERTAIN
PROVISIONS OF THE RESTATED CERTIFICATE OF INCORPORATION,
THE BY-LAWS AND THE RIGHTS AGREEMENT
GENERAL
Certain provisions contained in the Restated Certificate of
Incorporation, the By-laws and the Rights Agreement, dated as of January 24,
1992, between the Company and Continental Stock Transfer & Trust Company (the
"Rights Agreement"), could make the acquisition of control of the Company by
means of a tender offer, open market purchases, a proxy contest, or otherwise,
more difficult. Set forth below is a description of such provisions contained
in the Restated Certificate of Incorporation, the By-laws and the Rights
Agreement. Such description is intended as a summary only and is qualified in
its entirety by reference to the Restated Certificate of Incorporation, the By-
laws and the Rights Agreement, which are incorporated by reference herein and
copies of which may be obtained as described under "AVAILABLE INFORMATION".
CLASSIFIED BOARD OF DIRECTORS
The Restated Certificate of Incorporation and the By-laws provide that
the Board of Directors be divided into three classes of directors, with the
classes to be as nearly equal in number as possible. One class of directors is
elected each year for a three-year term. The Company believes that including a
classified board provision in the Restated Certificate of Incorporation is
advantageous to the Company and its stockholders because it enhances the
likelihood of continuity and stability in the composition of the Board of
Directors and in the policies formulated by the Board of Directors. The Company
believes that this, in turn, permits the board to represent more effectively the
interests of all stockholders.
11
<PAGE>
With a classified Board of Directors, it will generally take a
majority stockholder two annual meetings of stockholders to elect a majority of
the Board of Directors. As a result, the classified board may discourage proxy
contests for the election of directors or purchases of a substantial block of
stock because its provisions could operate to prevent obtaining control of the
board in a relatively short period of time. The classification provisions could
also have the effect of discouraging a third party from making a tender offer or
otherwise attempting to obtain control of the Company, even though such an
attempt might be beneficial to the Company and its stockholders. In addition,
because under the Restated Certificate of Incorporation directors may be removed
only for cause, a classified board would delay stockholders who do not agree
with the policies of the Board of Directors from replacing a majority of the
Board of Directors for two years, unless they can demonstrate the directors
should be removed for cause and obtain the requisite vote.
NUMBER OF DIRECTORS; REMOVAL; FILLING VACANCIES
The Restated Certificate of Incorporation and the By-laws provide that
the number of directors be fixed from time to time exclusively by the Board of
Directors, but consist of not more than fifteen nor less than three directors.
In addition, the Restated Certificate of Incorporation and the By-laws provide
that, subject to any rights of holders of any shares of Preferred Stock, if any,
a majority of the Board of Directors then in office may fill any vacancies on
the Board of Directors. Accordingly, the Board of Directors could temporarily
prevent any stockholder from obtaining majority representation on the board by
enlarging the size of the board and filling the new directorships with its own
nominees.
Under the DGCL and the Restated Certificate of Incorporation, a
director serving on a classified board may be removed by the stockholders only
for cause. Moreover, the Restated Certificate of Incorporation provides that
directors may be removed only by the affirmative vote of holders of at least a
majority of the voting power of all the then outstanding shares of stock
entitled to vote generally in the election of directors (the "Voting Stock"),
voting together as a single class.
NO STOCKHOLDER ACTION BY WRITTEN CONSENT; SPECIAL MEETINGS
The Restated Certificate of Incorporation provides that stockholder
action can be taken only at an annual or special meeting of stockholders and
prohibits stockholder action by written consent in lieu of a meeting. The
Restated Certificate of Incorporation and the By-laws provide that, subject to
the rights of holders of any series of Preferred Stock, special meetings of
stockholders can be called only by the Board of Directors, the Chairman of the
Board of Directors or the President. Stockholders are not permitted to call a
special meeting or to require that the Board of Directors call a special meeting
of stockholders. Moreover, the business permitted to be conducted at any
special meeting of stockholders is limited to the purpose or purposes specified
in the written notice of such meeting.
The provisions of the Restated Certificate of Incorporation
prohibiting stockholder action by written consent may have the effect of
delaying consideration of a stockholder proposal until the next annual meeting
unless a special meeting is called by the Board of Directors, the Chairman of
the Board of Directors or the President. These provisions would also prevent
the holders of a majority of the voting power of the Voting Stock from using the
written consent procedure to take stockholder action and from taking action by
consent without giving all the stockholders of the Company entitled to vote on a
proposed action the opportunity to participate in determining such proposed
action. Moreover, a stockholder could not force stockholder consideration of a
proposal over the opposition
12
<PAGE>
of the Board of Directors, the Chairman of the Board of Directors or the
President by calling a special meeting of stockholders prior to the time the
Board of Directors, the Chairman of the Board of Directors or the President
believes such consideration to be appropriate.
ADVANCE NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS AND STOCKHOLDER PROPOSALS
The By-laws establish an advance notice procedure with regard to the
nomination, other than by or at the direction of the Board of Directors, of
candidates for election as directors (the "Nomination Procedure") and with
regard to business to be brought before an annual or special meeting of
stockholders of the Company (the "Business Procedure").
The Nomination Procedure provides that, subject to the rights of
holders of any series of Preferred Stock, if any, only persons who are nominated
by, or at the direction of, the Board of Directors or by a stockholder who has
given timely written notice to the Secretary prior to the meeting at which
directors are to be elected, will be eligible for election as directors of the
Company. The Business Procedure provides that at an annual or special meeting
only such business may be conducted as has been specified in the notice of
meeting, brought before the meeting by or at the direction of the Board of
Directors or by a stockholder who has given timely written notice to the
Secretary of such stockholder's intention to bring such business before the
meeting. Under the Nomination Procedure or the Business Procedure, to be
timely, notice must be received by the Company not less than 75 days nor more
than 90 days prior to the annual or special meeting of stockholders, provided,
however, that in the event that less than 90 days' notice or prior public
disclosure of the meeting date is given or made to stockholders, notice by the
stockholder to be timely must be received not later than the fifteenth day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made, whichever first occurs.
Under the Nomination Procedure, a stockholder's notice to the Company
proposing to nominate a person for election as a director must contain certain
information (i) about each proposed nominee, including, without limitation, (a)
the name, age, business address and residence address of the nominee, (b) the
principal occupation or employment of the nominee, (c) the class, series and
number of shares of capital stock of the Company which are beneficially owned by
the nominee, and (d) any other information relating to the nominee that is
required to be disclosed in solicitations of proxies for election of directors
pursuant to the Rules and Regulations of the Commission under the Exchange Act
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as director if elected) and (ii) about the
stockholder proposing to nominate such person, including, without limitation,
the name and record address of the stockholder and the class, series and number
of shares of capital stock of the Company which are beneficially owned by the
stockholder. The Company may require any proposed nominee to furnish such other
information as may reasonably be required by the Company to determine the
eligibility of such proposed nominee to serve as a director of the Company.
Under the Business Procedure, a stockholder's notice relating to the conduct of
business other than the nomination of directors at an annual meeting must
contain certain information about such business and about the proposing
stockholder including, without limitation, a brief description of the business
desired to be brought before the meeting, the name and record address of the
proposing stockholder, the class, series and number of shares of capital stock
of the Company owned by the proposing stockholder and a description of any
material interest of the stockholder in such business. If the officer presiding
at a meeting determines that a person was not nominated in accordance with the
Nomination Procedure, such person will not be eligible for election as a
director and such nomination shall be disregarded. If such presiding officer
determines that
13
<PAGE>
business was not properly brought before such meeting in accordance with the
Business Procedure, such business will not be transacted at such meeting.
By requiring advance notice of nominations by stockholders, the
Nomination Procedure will afford the Board of Directors a meaningful opportunity
to consider the qualifications of the proposed nominees and, to the extent
deemed necessary or desirable by the Board of Directors, to inform stockholders
about such qualification. By requiring advance notice of proposed business, the
Business Procedure will provide a more orderly procedure for conducting annual
meetings of stockholders and, to the extent deemed necessary or desirable by the
Board of Directors, will provide the Board of Directors with a meaningful
opportunity to inform stockholders, prior to such meetings, of any business
proposed to be conducted at such meetings, together with any recommendation of
the Board of Directors' position as to action to be taken with respect to such
business, so as to enable stockholders better to determine whether they desire
to attend such a meeting or grant a proxy to the Board of Directors as to the
disposition of any such business. Although the Restated Certificate of
Incorporation and the By-laws do not give the Board of Directors any power to
approve or disapprove stockholder nominations for the election of directors or
proposals for action, they may have the affect of precluding a contest for the
election of directors or the consideration of stockholder proposals if the
proper procedures are not followed, and of discouraging or deterring a third
party from conducting a solicitation of proxies to elect its own slate of
directors or to approve its proposal without regard to whether consideration of
such nominees or proposals might be harmful or beneficial to the Company and its
stockholders.
PREFERRED STOCK
The Restated Certificate of Incorporation authorizes the Board of
Directors to issue one or more series of Preferred Stock and to determine, with
respect to any series of Preferred Stock, the powers, designations, preferences,
optional or other rights, if any, and the qualifications, limitations or
restrictions thereof.
The Company believes that the ability of the Board of Directors to
issue one or more series of Preferred Stock will provide increased flexibility
in structuring possible future financings and acquisitions, and in meeting other
corporate needs which might arise. The authorized shares of Preferred Stock, as
well as shares of Common Stock, will be available for issuance without further
action by the Company's stockholders, unless such action is required by
applicable law or the rules of any stock exchange on which the Company's
securities may be listed or applicable rules of any self-regulatory
organization. If the approval of the Company's stockholders is not required for
the issuance of shares of Preferred Stock or Common Stock, the Board of
Directors does not intend to seek stockholder approval. The Board of Directors
will make any determination to issue such shares based on its judgment as to the
best interests of the Company and its stockholders. The Board of Directors, in
so acting, could issue Preferred Stock having terms that could discourage an
acquisition attempt or other transaction that some or a majority of the
stockholders might believe to be in their best interests or in which
stockholders might receive a premium for their stock over the then current
market price of such stock. The Company has no present plan to issue any shares
of the Preferred Stock, although 80,000 shares of Series A Junior Preferred
Stock have been designated and reserved for future issuance pursuant to the
Rights Agreement.
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<PAGE>
AMENDMENT OF THE BY-LAWS AND CERTAIN PROVISIONS OF THE RESTATED CERTIFICATE OF
INCORPORATION
Under the DGCL, the stockholders have the right to adopt, amend or
repeal the by-laws of a corporation. In addition, if the certificate of
incorporation so provides, the by-laws may be amended by the board of directors.
The By-laws provide that they may be amended by the Board of Directors or
stockholders, provided that if the amendment is to be adopted by the
stockholders, the affirmative vote of the holders of at least 66 2/3 percent of
the Voting Stock, voting together as a single class, is required. Other
provisions set forth in the Restated Certificate of Incorporation relate to the
election and the term of directors, the prohibition of stockholder action
without a meeting, calling a stockholders' meeting, the elimination of personal
liability of directors and the amendment of the By-laws only by the affirmative
vote of the holders of at least 66 2/3 percent of the Voting Stock, voting
together as a single class.
ANTI-TAKEOVER STATUTE
Section 203 of the DGCL prohibits certain transactions between a
Delaware corporation and an "interested stockholder," which is defined therein
as a person who, together with any affiliates and/or associates of such person,
beneficially owns, directly or indirectly, 15 percent or more of the outstanding
voting shares of a Delaware corporation. This provision prohibits certain
business combinations (defined broadly to include mergers, consolidations, sales
or other dispositions of assets having an aggregate value in excess of 10
percent of the consolidated assets of the corporation, and certain transactions
that would increase the interested stockholder's proportionate share ownership
in the corporation) between an interested stockholder and a corporation for a
period of three years after the date the interested stockholder acquired its
stock unless (i) the business combination is approved by the corporation's Board
of Directors prior to the date the interested stockholder acquired shares, (ii)
the interested stockholder acquired at least 85 percent of the voting stock of
the corporation in the transaction in which it became an interested stockholder
or (iii) the business combination is approved by a majority of the board of
directors and by the affirmative vote of 66 2/3 percent of the votes entitled to
be cast by disinterested stockholders at an annual or special meeting. The
Restated Certificate of Incorporation and By-laws do not exclude the Company
from the restrictions imposed under Section 203 of the DGCL.
STOCKHOLDER RIGHTS PLAN
The following description of the Rights Agreement is qualified in its
entirety by reference to the Rights Agreement, which has been incorporated by
reference herein and a copy of which may be obtained as described under
"AVAILABLE INFORMATION."
At a meeting held on January 23, 1992 the Board of Directors adopted
the Rights Agreement. The Rights Agreement provides that one Right will be
issued with each share of the Common Stock issued (whether originally issued or
from the Company's treasury) on or after the date of the Distribution and prior
to the Rights Distribution Date (as hereinafter defined). The Rights are not
exercisable until the Rights Distribution Date and will expire at the close of
business on February 28, 2002 unless previously redeemed by the Company as
described below. When exercisable, each Right entitles the owner to purchase
from the Company one-hundredth of a share of Series A Junior Participating
Preferred Stock at a purchase price of $100.
15
<PAGE>
Except as described below, the Rights will be evidenced by all the
Common Stock certificates and will be transferred with the Common Stock
certificates, and no separate Rights certificates will be distributed. The
Rights will separate from the Common Stock and a "Rights Distribution Date" will
occur upon the earlier of (i) 10 days following a public announcement that a
person or group of affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership of 15 percent
or more of the outstanding shares of the Common Stock (the "Stock Acquisition
Date") and (ii) 10 business days following the commencement of a tender offer or
exchange offer that would result in a person or group becoming an Acquiring
Person.
After the Rights Distribution Date, Rights certificates will be mailed
to holders of record of the Common Stock as of the Rights Distribution Date and
thereafter the separate Rights certificates alone will represent the Rights.
The Series A Junior Participating Preferred Stock issuable upon
exercise of the Rights will be entitled to a minimum preferential quarterly
dividend payment of $.01 per share and will be entitled to an aggregate dividend
of 100 times the dividend, if any, declared per share of Common Stock. In the
event of liquidation, the holders of the Series A Junior Participating Preferred
Stock will be entitled to a minimum preferential liquidation payment of $1 per
share and will be entitled to an aggregate payment of 100 times the payment made
per share of the Common Stock. Each share of Series A Junior Participating
Preferred Stock will have 100 votes and will vote together with the Common
Stock. In the event of any merger, consolidation or other transaction in which
shares of the Common Stock are changed or exchanged, each share of Series A
Junior Participating Preferred Stock will be entitled to receive 100 times the
amount received per share of the Common Stock. These rights are protected by
customary antidilution provisions. Because of the nature of the Series A Junior
Participating Preferred Stock's dividend, liquidation and voting rights, the
value of a share of Series A Junior Participating Preferred Stock purchasable
upon exercise of each Right should approximate the value of one share of the
Common Stock.
In the event that a person becomes an Acquiring Person (except
pursuant to a tender offer or an exchange offer for all outstanding shares of
the Common Stock at a price and on terms determined by at least a majority of
the members of the Board of Directors who are not officers of the Company and
who are not representatives, nominees, affiliates or associates of an Acquiring
Person, to be (i) at a price which is fair to the Company stockholders and (ii)
otherwise in the best interests of the Company and its stockholders (a
"Qualifying Offer")), each holder of a Right will thereafter have the right to
receive, upon the exercise thereof at the then current exercise price, the
Common Stock (or, in certain circumstances, cash, property or other securities
of the Company) having a value equal to two times the exercise price of the
Right. Notwithstanding any of the foregoing, following occurrence of any such
event, all Rights that are or (under certain circumstances specified in the
Rights Agreement) were beneficially owned by any Acquiring Person (or certain
related parties) will be null and void. However, Rights are not exercisable
following the occurrence of the event set forth above until such time as the
Rights are no longer redeemable by the Company as set forth below.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction in which the Company is not the surviving entity or the Common Stock
is changed or exchanged (other than a merger which follows a Qualifying Offer
and satisfies certain other requirements) or (ii) 50 percent or more of the
Company's assets or earning power is sold or transferred, each holder of a Right
(except Rights which previously have been voided as set forth above) shall
thereafter have the right to receive, upon the exercise
16
<PAGE>
thereof at the then current exercise price common stock of the acquiring company
having a value equal to two times the exercise price of the Right.
At any time until 10 days following the Stock Acquisition Date, the
Company may redeem the Rights in whole, but not in part, at a price of $.01 per
Right. Immediately upon the action of the Board of Directors ordering
redemption of the Rights, the Rights will terminate and the only right of the
holders of the Rights will be to receive the $.01 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for the Common Stock (or other consideration) or for common stock of
the acquiring company as set forth above.
Other than those provisions relating to the principal economic terms
of the Rights, any of the provisions of the Rights Agreement may be amended by
the Board of Directors prior to the Rights Distribution Date. After the Rights
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board of Directors in order to cure any ambiguity, to make changes which do not
adversely affect the interests of holders of Rights (excluding the interests of
any Acquiring Person) or to shorten or lengthen any time period under the Rights
Agreement, provided that no amendment to adjust the time period governing
redemption shall be made at such time as the Rights are not redeemable.
The Rights have certain anti-takeover effects as they will cause
substantial dilution to a person or group that acquires a substantial interest
in the Company without the prior approval of the Board of Directors. Among the
effects is that the Rights could discourage a takeover attempt that might
otherwise allow the holders of Common Stock to sell such Common Stock at a
premium to the then current market price or which might otherwise be beneficial
to stockholders.
LEGAL MATTERS
The validity of the shares of Common Stock and the associated Rights
offered hereby will be passed upon for the Company by Richard J. Lubasch, Senior
Vice President, General Counsel and Secretary of the Company. Mr. Lubasch owns
shares of the Company's capital stock and options to acquire additional shares
of the Company's capital stock.
EXPERTS
The consolidated financial statements of the Company appearing in the
Company's Annual Report (Form l0-K) for the year ended December 31, 1995 have
been audited by Ernst & Young, LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
17
<PAGE>
- --------------------------------------------------------------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY
JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
-----------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
- ------------------------------------------------
<S> <C>
Available Information........................... 2
Incorporation of Certain Documents by
Reference..................................... 2
Risk Factors.................................... 4
The Company..................................... 7
Recent Developments............................. 8
Selling Stockholders............................ 9
Plan of Distribution............................ 9
Use of Proceeds................................. 10
Description of Capital Stock.................... 10
Purposes and Effects of Certain Provisions of
the Restated Certificate of Incorporation, the
By-laws and the Rights Agreement............... 11
Legal Matters................................... 17
Experts......................................... 17
</TABLE>
- --------------------------------------------------------------------------------
820,404 SHARES
CELLULAR COMMUNICATIONS OF
PUERTO RICO, INC.
COMMON STOCK
___________________
PROSPECTUS
___________________
May __, 1996
==================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
-------------------------------------------
Securities and Exchange Commission filing fee $ 7,673.61
Exchange Listing Fees $ 16,500.00*
Legal fees and expenses $ 20,000.00
Accounting Fees and Expenses $ 5,000.00
Miscellaneous $ 10,000.00*
-----------
Total $ 59,173.61
===========
_____________
* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
-----------------------------------------
Section 145 of the General Corporation Law of the State of Delaware
(the "DGCL") grants each corporation organized thereunder, such as the
Registrant, the power to indemnify its directors and officers against
liabilities for certain of their acts. Article VIII of the Registrant's By-laws
provides for indemnification of directors and officers of the Registrant to the
full extent permitted by the DGCL.
Section 102(b) (7) of the DGCL permits a provision in the certificate
of incorporation of each corporation organized thereunder, such as the
Registrant, eliminating or limiting, with certain exceptions, the personal
liability of a director to the corporation or its stockholders for monetary
damages for certain breaches of fiduciary duty as a director. Article TENTH of
the Registrant's Restated Certificate of Incorporation eliminates the personal
liability of directors to the full extent permitted by the DGCL.
The foregoing statements are subject to the detailed provisions of
Sections 145 and 102(b) (7) of the DGCL and Article TENTH of the Registrant's
Restated Certificate of Incorporation and Article VIII of the Registrant's By-
laws.
ITEM 16. EXHIBITS
--------
2.1 Agreement and Plan of Reorganization, dated December 26, 1995, by
and among Registrant and its successors and assigns, HMZ San Juan Inc., a
Connecticut corporation, and its successors and assigns, Henry Zachs,
Newton Brenner, Christopher Jenkins, and CCPR Services, Inc., a Delaware
corporation, and its successors and assigns
2.2 Agreement and Plan of Reorganization, dated December 26, 1995, by
and among Registrant and its successors and assigns, National Telephone
Company, a Delaware corporation, and its successors and assigns, Waring
Partridge, and CCPR Services, Inc., a Delaware corporation, and its
successors and assigns
2.3 Agreement, dated December 26, 1995, by and among Registrant and its
successors and assigns, Pacific Cellular Telephone Systems, a California
limited partnership, and its successors and assigns, David Abel, Estate of
Danny Arnold, Estate of Robert Austin, The Ed and Natalie Friendly Trust,
Nathan Golden, Jeffrey Gordon, Eugene Goodwin, Rabbi Leon Kahane, Frank
Kilpatrick, Lawrence Family Trust, Perry Leff, Donald Meaders, George
Newhart, Kenneth Newmark, Susan Newmark, Pierce O'Donnell, Don Rickles,
Barbara Rickles, Ronald Rizzo, Anne Roberts, Larry Scharf, Bart Sokolow,
Ronald Shlensky, Anthony Thompson, Tayemi Thompson and CCPR Services, Inc.,
a Delaware corporation, and its successors and assigns
<PAGE>
3.1 Registrant's Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3.1 to Registrant's Registration Statement on Form S-
1, File No. 33-44420)
3.2 Registrant's By-Laws (incorporated by reference to Exhibit 3.2 to
Registrant's Registration Statement on Form S-1, File No. 33-44420)
3.3 Certificate of Designation with respect to Series A Junior Participating
Preferred Stock of the Registrant (incorporated by reference to Exhibit 4.1
to Registrant's Registration Statement on Form S-1, File No. 33-44420)
4.1 Specimen of Common Stock Certificate (incorporated by reference to Exhibit
4.1, to Registrant's Annual Report on Form 10-K for the year ended December
31, 1991, File No. 0-19869)
4.2 Rights Agreement, dated as of January 24, 1992, by and between Registrant
and Continental Stock Transfer & Trust Company, as Rights Agent
(incorporated by reference to Exhibit 4.2 to Registrant's Registration
Statement on Form S-1, File No. 33-44420)
5.1 Opinion of Richard J. Lubasch, Esq., General Counsel to Registrant,
regarding the legality of the shares being registered hereby
23.1 Consent of Ernst & Young, LLP, independent auditors to the Registrant
23.2 Consent of Richard J. Lubasch, Esq., General Counsel to Registrant
(included in Exhibit 5.1)
24.1 Powers of Attorney (included on signature page)
ITEM 17. UNDERTAKINGS
------------
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II-2
<PAGE>
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL
OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON MAY 8, 1996.
CELLULAR COMMUNICATIONS OF
PUERTO RICO, INC.
(Registrant)
By: /s/ Richard J. Lubasch
---------------------------------
Richard J. Lubasch
Senior Vice President, General
Counsel and Secretary
POWER OF ATTORNEY
We, the undersigned directors and officers of Cellular Communications
of Puerto Rico, Inc. and each of us, do hereby constitute and appoint George S.
Blumenthal and Richard J. Lubasch our true and lawful attorneys-in-fact and
agents, with power of substitution, to do any and all acts and things in our
name and behalf in our capacities as directors and officers and to execute any
and all instruments for us and in our names in the capacities indicated above,
which said attorneys-in-fact and agents may deem necessary or advisable to
enable said corporation to comply with the Securities Act of 1933, as amended,
and any rules, regulations, and requirements of the Securities and Exchange
Commission in connection with this Registration Statement, including
specifically, but without limitation, power and authority to sign for us or any
of us in our names in the capacities indicated below, and any and all amendments
(including post-effective amendments) hereto, and we do hereby ratify and
confirm all that the said attorneys-in-fact and agents, or their substitute or
substitutes, shall do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
Name Title Date
- ---------------------- ------------------------------ --------------------
<S> <C> <C>
/s/ George S. Blumenthal Chief Executive Officer, May 8, 1996
- ------------------------ Treasurer and Director
George S. Blumenthal (Principal Executive Officer)
/s/ J. Barclay Knapp President and Director May 8, 1996
- ------------------------ (Principal Operating and
J. Barclay Knapp Financial Officer)
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Gregg Gorelick Vice President - Con- May 8, 1996
- ----------------------- troller (Principal
Gregg Gorelick Accounting Officer)
/s/ Sidney R. Knafel Director May 8, 1996
- -----------------------
Sidney R. Knafel
/s/ Ted H. McCourtney Director May 8, 1996
- -----------------------
Ted H. McCourtney
/s/ Del Mintz Director May 8, 1996
- -----------------------
Del Mintz
/s/ Alan J. Patricof Director May 8, 1996
- -----------------------
Alan J. Patricof
/s/ Warran Potash Director May 8, 1996
- -----------------------
Warren Potash
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
Exhibit Description Page No.
- ------- ----------- --------
2.1 Agreement and Plan of Reorganization, dated December 26, 1995, by
and among Registrant and its successors and assigns, HMZ San Juan Inc., a
Connecticut corporation, and its successors and assigns, Henry Zachs,
Newton Brenner, Christopher Jenkins, and CCPR Services, Inc., a Delaware
corporation, and its successors and assigns
2.2 Agreement and Plan of Reorganization, dated December 26, 1995, by
and among Registrant and its successors and assigns, National Telephone
Company, a Delaware corporation, and its successors and assigns, Waring
Partridge, and CCPR Services, Inc., a Delaware corporation, and its
successors and assigns
2.3 Agreement, dated December 26, 1995, by and among Registrant and its
successors and assigns, Pacific Cellular Telephone Systems, a California
limited partnership, and its successors and assigns, David Abel, Estate
of Danny Arnold, Estate of Robert Austin, The Ed and Natalie Friendly
Trust, Nathan Golden, Jeffrey Gordon, Eugene Goodwin, Rabbi Leon Kahane,
Frank Kilpatrick, Lawrence Family Trust, Perry Leff, Donald Meaders,
George Newhart, Kenneth Newmark, Susan Newmark, Pierce O'Donnell, Don
Rickles, Barbara Rickles, Ronald Rizzo, Anne Roberts, Larry Scharf, Bart
Sokolow, Ronald Shlensky, Anthony Thompson, Tayemi Thompson and CCPR
Services, Inc., a Delaware corporation, and its successors and assigns
3.1 Registrant's Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3.1 to Registrant's Registration Statement on Form
S-1, File No. 33-44420)
3.2 Registrant's By-Laws (incorporated by reference to Exhibit 3.2 to
Registrant's Registration Statement on Form S-1, File No. 33-44420)
3.3 Certificate of Designation with respect to Series A Junior Participating
Preferred Stock of the Registrant (incorporated by reference to Exhibit
4.1 to Registrant's Registration Statement on Form S-1, File No. 33-
44420)
4.1 Specimen of Common Stock Certificate (incorporated by reference to Exhibit
4.1, to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1991, File No. 0-19869)
4.2 Rights Agreement, dated as of January 24, 1992, by and between Registrant
and Continental Stock Transfer & Trust Company, as Rights Agent
(incorporated by reference to Exhibit 4.2 to Registrant's Registration
Statement on Form S-1, File No. 33-44420)
5.1 Opinion of Richard J. Lubasch, Esq., General Counsel to Registrant,
regarding the legality of the shares being registered hereby
23.1 Consent of Ernst & Young, LLP, independent auditors to the Registrant
23.2 Consent of Richard J. Lubasch, Esq., General Counsel to Registrant
(included in Exhibit 5.1)
24.1 Powers of Attorney (included on signature page)
II-6
<PAGE>
EXHIBIT 2.1
122695
AGREEMENT AND PLAN OF REORGANIZATION
------------------------------------
This Agreement and Plan of Reorganization (the "Agreement") is made and
entered into as of December 26, 1995, by and among HMZ San Juan Inc., a
Connecticut corporation, its successors and assigns ("Assignor"), Henry Zachs
(owning 98% of Assignor), Newton Brenner (owning 1% of Assignor), Christopher
Jenkins (owning 1% of Assignor), (each a "Stockholder"), Cellular Communications
of Puerto Rico, Inc., a Delaware corporation, its successors and assigns
("Cellular") and CCPR Services, Inc., a Delaware corporation, its successors and
assigns ("CCPR").
Recitals
--------
WHEREAS, Assignor owns a 2.622% interest as a partner (the "Interest"),
which constitutes all or substantially all of the assets of Assignor, in San
Juan Cellular Telephone Company, a general partnership (the "Partnership")
which holds the license from the Federal Communications Commission and the
Puerto Rico Telephone Regulatory Commission to operate the nonwireline Block A
cellular communications system for the San Juan-Caguas, Puerto Rico Metropolitan
Statistical Area.
WHEREAS, Assignor wishes to transfer and assign the Interest to CCPR in
exchange for shares of Common Stock of Cellular ("Shares") pursuant and subject
to the terms and conditions of this Agreement.
THEREFORE, in consideration of the mutual obligations set forth in this
Agreement, and subject to all conditions set forth herein, the parties agree as
follows:
1. Assignment of Interest: (a) On the Closing Date (as defined in
----------------------
Section 2), Assignor shall assign and transfer to CCPR all of Assignor's right,
title and interest to the Interest, free and clear of all encumbrances, liens,
pledges, charges, claims, security interests and liabilities ("Liens") other
than those expressly assumed herein by CCPR. The assignment shall include,
without being limited to, Assignor's entire interest in the Partnership,
including but not limited to the Interest, including the associated capital
account in the Partnership and all related rights with regard to Partnership
voting, profits, losses, and distributions.
(b) In consideration for the assignment contemplated by this Agreement,
CCPR shall deliver a stock certificate evidencing 350,000 Shares registered in
the name of Assignor. In the event that on or prior to the Closing Date (a)
Cellular shall pay any dividend or make any other distribution respecting its
shares of common stock or (b) the holders of its shares of common stock shall be
entitled or required to exchange their shares for other securities or
consideration, by reason of a reorganization transaction with another entity or
otherwise, then Assignor shall be entitled to receive (i) in addition to the
350,000 Shares, such dividend or other distribution as would be payable with
respect to the foregoing 350,000 Shares or (ii)
<PAGE>
such other securities or consideration as would be exchanged for the foregoing
350,000 Shares, in each case to the effect that Assignor shall receive the
funds, securities and consideration that Assignor would have received had it
held the Shares to be issued at the Closing as at the date hereof.
(c) This Agreement and Plan of Reorganization is intended to constitute a
Plan of Reorganization within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code"), and the transactions contemplated hereby
are intended to qualify as a "reorganization" within the meaning of subsection
(a) of such Section 368.
2. Closing Date and Place. The closing of the transactions contemplated by
----------------------
this Agreement (the "Closing") shall occur as promptly as practicable after the
execution of this Agreement and satisfaction of the conditions set forth in
Section 8 hereof, at the offices of CCPR, 110 East 59th Street, 26th Floor, New
York, New York 10022.
3. Mutual Representations and Warranties. Each of Cellular and CCPR
--------------------------------------
represent and warrants to Assignor and each Stockholder and each of Assignor and
each Stockholder represents and warrants to CCPR and Cellular that: (a) Each (if
not a natural person) is duly formed, validly existing, and in good standing
under the state and local laws to which it is subject; (b) Each has the right,
power and unconditional authority, and has taken all necessary action, including
all necessary actions on the part of its stockholders, to execute, deliver, and
fully perform its obligations under this Agreement; (c) This Agreement is
binding and enforceable against the warranting party; and (d) The execution,
delivery and performance of the obligations under this Agreement do not
constitute a material violation, breach or default under any law, regulation,
ordinance, judgment, order, agreement, charter, articles or certificate of
incorporation, by-laws, or other instrument or obligation to which the
warranting party is subject.
4. Consent to Partnership Agreement. In accordance with Section 9.1 (d) of
---------------------------------
the Partnership's Partnership Agreement (the "Partnership Agreement"), CCPR
consents to its admission to the Partnership on the Closing Date as a Substitute
Partner with respect to the interest of the Assignor. CCPR confirms that upon
such admission it shall be bound by all of the terms and provisions to the
Partnership Agreement, as the same has been and may be amended.
5. Assumption of Assignor's Obligations. CCPR shall assume and be bound on
-------------------------------------
the Closing Date to perform all of the obligations, terms, covenants and
conditions of the Assignor under the Partnership Agreement, whether arising
before or after the Closing Date, with respect to each Interest assigned.
6. Assiqnor's and Stockholder's Representations and Warranties. Each of
-----------------------------------------------------------
Assignor and each Stockholder represents and warrants to CCPR and Cellular that:
(a) Assignor is the lawful owner of the Interest, free and clear of
all
<PAGE>
encumbrances, liens, pledges, charges, claims, security interests and
liabilities;
(b) The Information (as defined in Section 10), if any, as of the date
of its delivery to CCPR and as of the date of any Prospectus Delivery (as
defined in Section 10) will not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements made
in the Information not misleading;
(c) It is not aware of any material adverse information concerning the
Interest or the Partnership or its business, financial condition or otherwise
that has not been disclosed to CCPR;
(d) Each Stockholder, with respect to himself, is acquiring the Shares
solely for its own account, for investment and not with a view to any resale,
distribution or public offering thereof;
(e) Each Stockholder, with respect to himself, understands that
Cellular's transfer agent or other agent will be given appropriate instruction
prohibiting any transfer of the Shares which would violate the Securities Act of
1933, as amended (the "Securities Act") and that the certificates for the Shares
will bear the following legend:
"The security represented by this certificate has not been regis-
tered under the Securities Act of 1933, as amended, or under state
securities laws. The security represented by this certificate may
not be resold or transferred unless registered or exempt from
registration under the Securities Act of 1933, as amended, and
applicable state securities laws.";
(f) Each Stockholder, with respect to himself, understands that it
must hold the Shares indefinitely unless it is registered under the Securities
Act, or an exemption from registration becomes available;
(g) Each Stockholder, with respect to himself, has had ample
opportunity to ask questions of, and receive answers from, officers of Cellular
and CCPR concerning CCPR, Cellular and their respective businesses, and to
obtain any additional information it might request with respect to CCPR,
Cellular and their respective businesses, and each Stockholder acknowledges that
CCPR and Cellular have made available to it all documents and information
relating to the Shares, requested by or on behalf of each Stockholder, including
but not limited to, Cellular's annual report on Form 10-K for the-year ended
1994 and its quarterly reports on Form 10-Q for the quarters ended March 31,
June 30 and September 30, 1995;
(h) Each Stockholder, with respect to himself, understands that (i)
the
<PAGE>
offering and sale of the Shares is intended to be exempt from registration under
the Securities Act as a private placement and (ii) there is no existing public
or other market for the Shares, and there can be no assurance that each
Stockholder will be able to sell or dispose of the Shares;
(i) Each Stockholder, with respect to himself, either alone or
together with its advisors has sufficient knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and risks of
its investment in the Shares, and each Stockholder is capable of bearing the
economic risk of such investment, including a complete loss of its investment;
and
(j) Each Stockholder, with respect to himself, is not a representative
of an alien, a corporation organized under the laws of any foreign government, a
corporation of which any officer or director is an alien or more than one fifth
of its capital stock is owned or voted by any of the foregoing, or a corporation
directly or indirectly controlled by another corporation of which any officer or
more than one-fourth of the directors are aliens or of which more than one-
fourth of its capital stock is owned or voted by the foregoing, within the
meaning of Section 310 of the Communications Act of 1934, as amended.
7. CCPR's Representation and Warranties. (a) CCPR and Cellular each
------------------------------------
represents and warrants to the Stockholders that the Registration Statement,
when filed, will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated or necessary in order to make this
statement therein not misleading.
(b) CCPR and Cellular represent that Cellular is 100% direct parent of CCPR
and CCPR shall make no transfer or disposition of the Interest which would
impair the transaction from meeting the requirements of a reorganization under
Section 368(a) of the Code.
(c) CCPR and Cellular each represent and warrant that each has adequate
information concerning the interest in the Partnership, its business and
financial condition and is not relying on any representation of any Stockholder
respecting the business of the Partnership; that CCPR is acquiring the Interest
solely for its own account for investment and not with a view to any resale,
distribution or public offering thereof.
8. Conditions to Closing. (a) The following are conditions precedent to
---------------------
each party's obligation to close the transactions contemplated by this
Agreement:
(i) All required authorizations, orders, grants, consents, permissions
or approvals ("Approvals") of any governmental entity with jurisdiction over the
transactions contemplated by this Agreement ("Governmental Agencies") shall have
<PAGE>
been received and shall remain in effect;
(ii) The other parties' representations and warranties shall be true
and correct, and each other party shall have performed all of its covenants and
obligations due to be performed as of the Closing in accordance with this
Agreement;
(iii) The consummation of the transactions contemplated by this
Agreement shall not be in violation of any law, rule or regulation and shall not
be subject to any injunction or restraining order; and
(iv) Any waiting period (and any extension thereof) applicable to the
consummation of the transaction contemplated by this Agreement under the
Hart-Scott-Rodino Antitrust Improvements Act (the "HSR Act") shall have expired
or been terminated;
(b) It shall be a condition precedent to CCPR's obligation to close
the transactions contemplated by this Agreement that (i) it and its counsel have
had an opportunity to conduct due diligence as to the representations set forth
in this Agreement and CCPR shall be satisfied as to the accuracy of such
representations and (ii) that CCPR shall have entered into certain agreements
with National Telephone Company and Pacific Cellular Telephone Systems dated as
of the date hereof, and all conditions to closing such agreements shall have
been satisfied.
(c) It shall be a condition precedent to Stockholders' obligation to
close the transactions contemplated by this Agreement that (i) Cellular have
provided to Stockholders and their counsel an opportunity to conduct due
diligence as to the material accuracy of the financial representations set forth
in operating reports of San Juan Telephone Company heretofore delivered to
Assignor or any of the Stockholders; and (ii) Cellular shall not have agreed
upon or engaged in a transaction which would transfer control or equity
interests in all or a material part of the San Juan Cellular Telephone Company,
except pursuant to this Agreement or similar agreements with Pacific Cellular
Telephone Systems and National Telephone Company or as part of a transaction
which would involve transfer of control of Cellular or the transfer or exchange
of equity interest in Cellular.
9. Governmental Filings. Each of the parties hereto shall (i) make promptly
--------------------
its respective filings, and thereafter make any other required submissions,
under the HSR Act or otherwise, with respect to the transactions contemplated by
this Agreement and (ii) use its reasonable best efforts to take, or cause to be
taken, all appropriate action, and to do or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective such transactions, including, without limitation,
using its reasonable best efforts to obtain all Approvals of Governmental
Agencies as are required for the consummation of such transactions and to
fulfill the conditions to the Agreement. Each of the
<PAGE>
parties hereto will use its reasonable efforts to lift or rescind any injunction
or restraining order described in clause (a)(iii) under Section 8.
10. Registration Statement. (a) Following the Closing, Cellular will use
----------------------
all reasonable efforts to cause to be filed and declared effective as soon as
reasonably practicable a Registration Statement to permit the public resale of
the Shares acquired by the Stockholders pursuant hereto (the "Resale"). Any
obligation to permit the Resale under the Registration Statement shall expire on
the earliest of (i) the date on which all Shares acquired hereunder have been
disposed of by the Stockholders, (ii) the date on which all Shares acquired
pursuant hereto may be freely sold to the public without restriction under the
Securities Act or (iii) the date which is two years after the Closing (or, in
the event that the holding period under Rule 144(d) of the Securities Act is
extended, such later date as to correspond with such extended holding period)
(the "Expiration"). If a Stockholder is deemed to be an "affiliate" of CCPR,
such Stockholder will provide all information necessary with respect to the
Stockholders and any proposed Resale necessary for the Registration Statement
("Information") and will comply with the prospectus delivery requirements of the
Securities Act and rules promulgated thereunder ("Prospectus Delivery").
(b) If at any time prior to the filing of the Registration Statement
or the Expiration, (i) counsel to Cellular has determined in good faith that the
compliance by Cellular with its disclosure obligations in connection with the
Registration Statement would require the disclosure of material information
which Cellular has a bona fide business purpose for preserving as confidential
---- ----
or (ii) Cellular then is unable to comply with its disclosure obligations or SEC
requirements in connection with the Registration Statement, then in either such
case Cellular shall not be required to file the Registration Statement or
maintain the effectiveness thereof or amend or supplement the Registration
Statement for a period (an "Information Delay Period") expiring upon the earlier
to occur of (A) the date on which such material information is disclosed to the
public or ceases to be material or Cellular is able to so comply with its
disclosure obligations and SEC requirements or (B) 30 days, in the case of
clause (i) above, or 45 days, in the case of clause (ii) above, after counsel to
Cellular makes such good faith determination.
(c) Cellular will give prompt written notice to Stockholders of the
commencement of an Information Delay Period (and duration). Each Stockholder, by
his acceptance of any Shares, agrees that, upon receipt of such notice it will
forthwith discontinue disposition of the Shares pursuant to the Registration
Statement, and will not deliver any prospectus forming a part thereof in
connection with any sale of Shares until the expiration of an Information Delay
Period.
(d) Notwithstanding anything in this Agreement to the contrary, if the
Registration Statement referred to in this Section 10 has not been declared
effective by July 1, 1996, then Cellular shall issue to Assignor (or its
assigns) a stock
<PAGE>
certificate or stock certificates evidencing an aggregate of such number of
additional Shares as shall equal 5% of the amount set forth in Section 1(b)
hereof. If the Registration Statement referred to in this Section 10 has not
been declared effective by December 1, 1996, then Assignor (or its assigns)
shall have the right by giving written notice to Cellular to require Cellular to
purchase from Assignor in 1996 up to 100,000 Shares that were issued to Assignor
pursuant to this Agreement. The price per share in any such redemption shall be
equal to the average of the daily closing price on NASDAQ (or any exchange or
other securities trading market which is the principal place of trading for
Cellular's common stock at the time) for the seven trading days immediately
preceding the date on which notice of the redemption is given. Payment for such
Shares shall be made not later than three business days following delivery of
such notice.
(e) If at any time Cellular shall file an amendment to the
Registration Statement, Cellular shall promptly deliver copies of such amendment
to the Stockholders .
11. Indemnification bv the Stockholder. Cellular, CCPR and its affiliates
----------------------------------
shall jointly and severally be indemnified and held harmless by Assignor and
each Stockholder against any and all losses, expenses, damages, injuries,
judgments, claims and liabilities, including reasonable attorney's fees and
litigation expenses ("Losses"), arising from (a) Assignor's ownership of its
Interest prior to the Closing; (b) any material misrepresentation, breach of
warranty, or nonperformance of any obligation hereunder on the part of Assignor
or any Stockholder; (c) any other act or omission on the part of Assignor or any
Stockholder, its agents or representatives in connection with its Interest in
any Partnership; (d) any agreement, commitment or obligation of Assignor or any
Stockholder undertaken in connection with the Interest or the Partnership (and,
in the case of Assignor, arising prior to the Closing) which CCPR does not
expressly and specifically assume either hereunder or in writing prior to the
Closing, (e) Assignor's ownership, operation or conduct of any asset or business
other than the Interest, (f) any liability for any federal, state or local tax
(including interest, penalty or addition thereto) of Assignor incurred on or
prior to the Closing, or (g) based on an untrue statement of fact in the
Information or alleged omission to state therein a material fact necessary to
make the statements therein not misleading, or the failure of any Stockholder to
effect a Prospectus Delivery; provided, that no indemnification shall be due to
Cellular or any of its affiliates for any Loss resulting solely from an action
taken by Cellular in its capacity as managing general partner of the
Partnership. Notwithstanding anything in this Agreement to the contrary, each of
Cellular, CCPR and its affiliates will only seek indemnity for losses hereunder
from each Stockholder in proportion to his ownership percentage set forth on the
first page hereof .
12. Indemnification by Cellular and CCPR. Assignor and each Stockholder
------------------------------------
shall be indemnified and held harmless by Cellular and CCPR against any and all
<PAGE>
losses, arising from (a) CCPR's ownership of the Interest; (b) any material
misrepresentation, breach of warranty, or nonperformance of any obligation
hereunder on the part of Cellular or CCPR; (c) any other act or omission on the
part of CCPR or its affiliates in connection with its interest in the
Partnership or (d) arising out of or based upon an untrue statement of fact in
the Registration Statement or arising out of or based upon the omission or
alleged omission to state therein a material fact necessary to make the
statements therein not misleading, other than those arising out of any
Information.
13. Continuing Effectiveness. Each party's representations shall be true
------------------------
and correct, and each party's warranties and indemnifications shall be in full
force and effect on the date that the party executes this Agreement and, to the
extent the same are applicable at Closing, as if made on the date and time of
such Closing. Each party's representations, warranties and indemnifications
shall survive the Closing and shall be fully actionable and enforceable
thereafter. In the event that a party becomes aware of any information,
occurrence or omission which would alter any of its representations or would
impair its ability to perform any of its warranties, indemnifications, or
obligations hereunder, or would possibly lead to any right to indemnification,
then the party shall notify the other party immediately of such information,
occurrence or omission and shall disclose all relevant facts. The other party
shall have the opportunity to defend itself, if necessary, in any resulting
proceeding. The settlement of any such proceeding or threatened proceeding shall
be subject to the other party's prior consent if the other party is to be
subject to any obligation to indemnify against the cost of the settlement.
14. Expenses. Cellular, CCPR, Assignor and each Stockholder shall each bear
--------
their own legal and other fees and expenses associated with the preparation,
execution and consummation of this Agreement and the filing and prosecution of
any required Governmental Agency submissions, provided that CCPR shall pay any
HSR filing fees to the extent applicable. CCPR will bear all costs associated
with the preparation of the Registration Statement except that each Stockholder
shall bear broker's fees or discounts associated with a resale of the Shares
acquired by such Stockholder pursuant hereto.
15. Termination as of Right. Notwithstanding any other provision herein or
-----------------------
termination, this Agreement may be terminated, without liability of any kind, at
the option of either Assignor or CCPR, upon written notice to the other if there
is no Closing in accordance with all the terms of this Agreement on or before
March 31, 1996.
16. Brokers Fees. Each party represents and warrants that it has not
------------
engaged any broker or finder with respect to this transaction and that no
brokerage fee, commission, or finder's fee shall be due in connection with the
transaction.
17. Notices. All notices or other communications to parties under this
-------
<PAGE>
Agreement shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by cable, telecopy,
facsimile or other standard form of telecommunications, or by registered or
certified mail or Federal Express delivery, postage prepaid, return receipt
requested, addressed as follows:
If to Assignor or the Stockholders:
c/o Brenner, Saltzman & Wallman
271 Whitney Avenue
New Haven, CT 06511
Att: Newton Brenner, Esq.
If to Cellular or CCPR:
110 East 59th Street, 26th Floor
New York, New York 10022
Attention: Richard J. Lubasch
18. Governing Law. This Agreement shall be interpreted, enforced and
-------------
governed in accordance with the laws of New York (without regard to the
provisions thereof on the conflict of laws).
19. Binding Effect. This Agreement shall bind and benefit the parties,
--------------
their representatives, and their permitted assignees and successors in interest.
20. Most Favored Treatment. In the event that at any time in 1996,
----------------------
Cellular, CCPR, the Partnership or an affiliate, enters into transaction with
any person or entity that owns a minority interest in the Partnership, on more
favorable economic terms than provided for in this Agreement (including by way
of illustration, but not by way of limitation, a greater number of Shares) then
this Agreement shall be amended in such manner as is necessary to incorporate
such more favorable terms. Any such amendment shall be deemed effective as of
the date of this Agreement.
21. Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties governing this Transaction. No prior agreement or
representation, whether verbal or written, shall have any force or effect. This
Agreement may be modified, superseded or cancelled only in writing signed by
each of the parties to be affected.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
first date above written.
CCPR SERVICES, INC.
By: /s/
----------------------------
Senior Vice President
CELLULAR COMMUNICATIONS OF
PUERTO RICO, INC.
By: /s/
---------------------------
Senior Vice President
HMZ SAN JUAN, INC.
By: /s/
---------------------------
President
STOCKHOLDERS
/s/
-------------------------------
Henry Zachs
/s/
-------------------------------
Newton Brenner
/s/
-------------------------------
Christopher Jenkins
<PAGE>
HMZ San Juan Inc.
c/o Brenner, Saltzman & Wallman
271 Whitney Avenue
New Haven, CT 06511
December 26, 1995
Cellular Communications Of Puerto Rico, Inc.
110 East 59th Street
26th Floor
New York, NY 10022
Dear Sir:
The undersigned, HMZ San Juan Inc. (the "Seller"), a Connecticut
corporation and Henry Zachs, Christopher Jenkins and Newton Brenner, all of the
stockholders thereof desire to exchange a partnership interest in San Juan
Cellular Telephone Company (the "Interest") for common stock of Cellular
Communications of Puerto Rico, Inc. (the "Corporation"). The undersigned
acknowledge, and understand that the Corporation is relying upon such
acknowledgement, that (i) undersigned are sophisticated with knowledge of, and
an opportunity to inquire with respect to, the cellular industry generally and
the Corporation's financial position, business, operation and prospects and (ii)
the Corporation is in possession of additional nonpublic information
(collectively, the "Company Information") with respect to the Corporation's
business, financial condition, operations and prospects, including potential
transactions which may involve a change of control ("Potential Control
Transactions"). The Corporation has assured the undersigned that none of the
Company Information relates to a potential transaction which would transfer
control or equity interests in all or a material part of the San Juan Cellular
Telephone Company, except pursuant to an agreement with the undersigned or
similar agreements with Pacific Cellular Telephone Systems and National
Telephone Company or as part of a transaction which would involve transfer of
control of Cellular or the transfer or exchange of equity interests in the
Corporation.
<PAGE>
Subject to and in reliance upon the foregoing assurances, each of the
undersigned acknowledges that, after careful consideration and the opportunity
to consult with its counsel and other advisors, he and it is prepared to
exchange the Interests for stock of Corporation without receipt of the Company's
information.
Very truly yours,
HMZ San Juan, Inc.
By: /s/
-----------------------------
Its President
/s/ /s/
- ----------------------- ---------------------------------
Christopher Jenkins Henry Zachs
/s/
---------------------------------
Newton Brenner
<PAGE>
ESCROW AGREEMENT
THIS AGREEMENT made and entered into as of the 27th day of December 1995 by
and among:
Brenner, Saltzman & Wallman, with offices at 271 Whitney Avenue, New
Haven, Connecticut 06511 (the "Escrow Agent"); and
Henry M. Zachs, with offices at 40 Woodland Street, Hartford,
Connecticut 06105 ("Mr. Zachs");
Newton D. Brenner, with offices at 271 Whitney Avenue, New Haven,
Connecticut 06511 ("Mr. Brenner"); and
Christopher W. Jenkins, with offices at 49 Woodland Street, Hartford,
Connecticut 06105 ("Mr. Jenkins"); and
Cellular Communications of Puerto Rico, Inc., a Delaware corporation
with offices at 110 East 59th Street, 26th Floor, New York City, New
York 10022 ("Cellular");
Mr. Zachs, Mr. Brenner, and Mr. Jenkins may be referred to hereinafter
individually as the "Shareholder" and/or collectively as the
"Shareholders".
W I T N E S S E T H :
WHEAREAS, Cellular and the Shareholders have entered into a letter
agreement dated December 26, 1995 (the "Letter Agreement") pursuant to which
certain funds are to be held in escrow from time to time; and
WHEREAS, Escrow Agent has agreed to act as escrow agent hereunder upon the
terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutal promises
herein made the parties hereto hereby agree as follows:
1. CERTAIN DEFINITIONS
- ----------------------
All capitalized terms not otherwise specifically defined herein shall have
the meanings ascribed to them in the Letter Agreement.
2. APPOINTMENT OF ESCROW AGENT
- ------------------------------
The parties hereto hereby jointly appoint Escrow Agent to act as the escrow
agent hereunder, and the Escrow Agent hereby accepts the duties of escrow agent
in accordance with the terms and conditions of this Agreement.
<PAGE>
3. ESCROW FUND
- --------------
Pursuant to the Letter Agreement, the parties hereto have caused there to
be deposited $450,000 with the Escrow Agent simultaneously with the execution of
this Agreement.
4. TERM
- --------
The term of this Agreement shall commence on the date hereof and it shall
remain in full force and effect until the Escrow Agent has distributed all of
the Escrow Fund in its possession in accordance with the terms hereof, whereupon
all obligations of the Escrow Agent hereunder shall immediately terminate; but
the obligations of the other parties hereto pursuant to Sections 7, 8, 10, 11,
and 12 hereof shall remain in full force and effect.
5. DUTIES OF ESCROW AGENT; DISTRIBUTIONS
- ----------------------------------------
The Escrow Agent shall hold the Escrow Fund in escrow until authorized
hereunder to deliver the same as described in the Letter Agreement. The Escrow
Agent may, in its discretion, require written authorization from each of the
other parties hereto prior to making any distribution.
6. DUTIES OF THE ESCROW AGENT; INVESTMENT
- -----------------------------------------
The Escrow Agent shall invest the Escrow Fund held pursuant to this
Agreement without delay and keep such cash invested and reinvested in interest
bearing accounts in banks having insurance from the Federal Deposit Insurance
Corporation.
7. DUTIES OF ESCROW AGENT; RELIANCE
- -----------------------------------
(a) The obligations and duties of the Escrow Agent hereunder are purely
ministerial and shall be limited to the safekeeping of the Escrow Fund and the
actions herein specified in accordance with the provisions hereof; accordingly,
the Escrow Agent shall not be responsible for any of the agreements referred to
herein, but shall be obligated only for the performance of such duties as are
specifically set forth herein and no implied duties or obligations of the Escrow
Agent shall be imposed by virtue of this Agreement.
(b) The Escrow Agent may act in reliance upon any writing or instrument or
signature which it, in good faith, believes to be genuine; may assume the
validity and accuracy of any statements or assertions contained in such writing
or instrument; and may assume that any person purporting to give any writing,
notice, advice or instruction in connection with the provisions hereof has been
duly authorized to do so. Except for the Escrow Agent's liability arising from
its gross negligence or fraud, the Escrow Agent shall not be liable in any
manner for the sufficiency or correctness as to form, manner of execution, or
validity of any written instructions, documents or papers deposited or called
for hereunder or delivered to it, nor as to the identity, authority or rights of
any person executing or delivering, or purporting to execute or deliver the same
<PAGE>
(c) The Escrow Agent may consult counsel satisfactory to it. The Escrow Agent
shall not be personally liable or responsible for any act it may do or omit to
do hereunder while acting in good faith and any acts done or omitted by it
pursuant to the advice of its own counsel shall be conclusive evidence of such
good faith, absent fraud or gross negligence on the part such counsel. In no
event shall the Escrow Agent be liable for indirect, private, special, or
consequential damages.
(d) The Escrow Agent is hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law, and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of
any court, or agreements stipulated to by the other parties hereto. In the
event the Escrow Agent obeys or complies with any such order, judgment or
decree of any court, it shall not be liable to any of the parties hereto or any
other person, firm or corporation by reason of such compliance, notwithstanding
any such order, judgment or decree being subsequently reversed, modified,
annulled, set aside, vacated or found to have been ordered without
jurisdiction.
8. INTERPLEADER
- ---------------
Notwithstanding any provisions contained herein to the contrary, in the event
of disagreement about the interpretation of this Agreement, or about the rights
or obligations of the parties hereto, or the propriety of any action
contemplated by the Escrow Agent hereunder, the Escrow Agent, may in its sole
discretion, file an action in interpleader to resolve said disagreement. The
Escrow Agent shall be indemnified pursuant to the provisions of Section 11
hereof for all costs and attorneys' fees incurred by it in its capacity as
Escrow Agent in connection with any such interpleader action, shall be fully
protected in suspending all or part of its activities under this Agreement until
a final judgment in the interpleader action has been issued, and upon the
filing of such interpleader action, shall resign as Escrow Agent hereunder, at
the request of any party hereto.
9. SUCCESSOR ESCROW AGENT
- -------------------------
The Escrow Agent may resign at any time upon the giving of 10 days written
notice to the other parties to this Agreement or, in the event of any
litigation involving this Agreement, shall resign upon the request of the
parties hereto, in which case the Escrow Agent's duties hereunder shall
terminate and the Escrow Agent shall be relieved and discharged of all
obligations, responsibilities and liabilities hereunder. Upon any such
resignation or a resignation under Section 8 hereof, the other parties hereto
shall jointly appoint a successor escrow agent, who shall assume the duties of
Escrow Agent hereunder. The Escrow Agent shall immediately deposit all Escrow
Funds with the successor escrow agent so appointed. If a successor Escrow Agent
is not appointed within 10 days after notice of resignation, the Escrow Agent
may petition any court of competent jurisdiction to name a successor Escrow
Agent and may deposit the Escrow Fund with such court.
<PAGE>
10. ADDITIONAL INSTRUCTIONS
- ---------------------------
The parties hereto at their respective cost and expense shall cooperate with
and assist the Escrow Agent as reasonably requested by the Escrow Agent in
connection with the Escrow Agent's performance of its obligations hereunder.
Specifically, but not in limitation of the generality of the foregoing, the
parties hereto shall furnish the Escrow Agent with other and further documents
or instruments reasonably requested by the Escrow Agent in connection with this
Agreement or its obligations with respect hereto.
11. IDEMNIFICATION
- ------------------
The other parties hereto shall reimburse the Escrow Agent for all reasonable
expenses incurred by the Escrow Agent in connection with its duties hereunder,
unless and until the Escrow Agent is determined by a court of competent
jurisdiction to have discharged any of its duties hereunder in a grossly
negligent manner or to have been guilty of willful misconduct with regard to any
of its duties hereunder. Except for the Escrow Agent's liability arising from
its gross negligence or fraud, each of the other parties hereto shall jointly
and severally indemnify and hold the Escrow Agent harmless from any and all
claims, liabilities, losses, damages, penalties, claims, actions, suits,
proceedings at law or equity, or any other expenses, fees, or charges of any
nature whatsoever which it may incur or with which it may be threatened by
reason of its acting as Escrow Agent under this Agreement; and in connection
therewith to indemnify the Escrow Agent against any and all expenses including
attorneys' fees and the cost of defending any action, suit or proceeding or
resisting any claim in such capacity; provided, however, that in the event of
a dispute among the other parties hereto, the nonprevailing party shall
indemnify and hold the prevailing party harmless against any and all costs and
expenses (including reasonable attorneys' fees) incurred by the prevailing
party pursuant to the provisions hereof.
12. REPRESENTATION
- ------------------
The parties hereto acknowledge and agree that the Escrow Agent has acted, and
may continue to act, as counsel to the Shareholders in connection with the
negotiation of the Letter Agreement and the consummation of the transactions
contemplated thereby and that the Escrow Agent may represent the Shareholders in
the future including, without limitation with respect to (a) disputes arising
under the terms of the Letter Agreement (or any other agreement, document, or
instrument executed and delivered in accordance therewith or contemplated
thereby); or (b) disputes that may involve the rights or obligations of the
other parties hereto hereunder. Cellular hereby waives any claim of conflict of
interest which may arise from the actions of the Escrow Agent hereunder and its
representation of the Shareholders, and agrees that the Escrow Agent shall not
be disqualified or otherwise estopped from representing the Shareholders in any
matter in the future. Cellular hereby waives any claim of conflict of interest
which may arise from the fact that one of the Shareholders is affiliated with
the Escrow Agent.
<PAGE>
13. MISCELLANEOUS
- -----------------
(a) Notices. Any notice, request, acknowledgement, consent, or other
--------
communication which any party hereto is required or permitted to give to another
party shall be in writing and shall be delivered personally, sent by registered
or certified mail, return receipt requested, or sent by a recognized overnight
delivery service, in any such case to the recipient at his or its address first
stated above or at such other address of which he or it shall have given the
other party or parties due notice hereunder. Any such notice shall be deemed to
have been delivered, given, and received for all purposes as of the date so
delivered.
(b) Waiver. The failure of any party to insist in any one or more instances
------
upon the performance of any of the terms and conditions of this Agreement shall
not be construed as a waiver or relinquishment of any right granted hereunder,
or of the future performance of any such term or condition.
(c) Entire Agreement. This Agreement sets forth the entire understanding of the
----------------
parties hereto with respect to the subject matter hereof and supersedes any
prior understandings or agreements among the parties, whether written or oral,
to the extent related to the subject matter hereof.
(d) Further Acts. Each of the parties hereto shall execute and deliver all such
------------
additional documents or legal instruments, and shall perform or cause to be
performed all such further acts and things, as may be necessary or desirable to
carry out the purposes and intent of this Agreement.
(e) Amendment. This Agreement may not be amended, modified or altered in any
---------
manner, except pursuant to the terms of a written instrument signed by each of
the parties hereto.
(f) Invalid Provision. The invalidity or unenforceability of any particular
-----------------
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall thereafter be construed in all respects as if such invalid
or unenforceable provisions were omitted.
(g) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the domestic laws of the State of Connecticut without giving any
effect to any choice or conflict of law provision or rule (whether of the State
of Connecticut or of any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Connecticut.
(h) Binding Nature. This Agreement shall be binding upon and inure to the
--------------
benefit of the parties hereto and their successors, personal representatives,
heirs, devisees, guardians and assigns.
(i) Counterparts. This Agreement may be executed in any number of counterparts
------------
and all of such counterparts taken together shall for all purposes constitute
one agreement binding upon all of the parties.
<PAGE>
(j) Headings. The headings contained in this Agreement are for reference
--------
purposes only and shall not affect the meaning or interpretation of this
Agreement.
(k) Usage. In construing this Agreement, feminine or neuter pronouns shall be
------
substituted for those of the masculine form, and the plural for the singular,
and vice versa, in any case in which the context may require. The capitalized
terms used in this Agreement shall have the meaning first applied to their first
usage in this Agreement unless otherwise indicated.
(l) Third Parties. Nothing contained in this Agreement is intended or shall be
-------------
construed to give any person, corporation or other entity, other than the
parties hereto and their respective successors and assigns, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained, this Agreement being intended to be and being for
the sole and exclusive benefit of the parties hereto and their respective
successors and assigns.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on and as of
the date first above written:
BRENNER, SALTZMAN & WALLMAN
By:________________________
___________________________
Henry M. Zachs
____________________________
Newton D. Brenner
_____________________________
Christopher W. Jenkins
CELLULAR COMMUNICATIONS OF
PUERTO RICO, INC.
By:/s/
--------------------------
Its Senior Vice President
<PAGE>
(j) Headings. The headings contained in this Agreement are for reference
---------
purposes only and shall not affect the meaning or interpretation of this
Agreement.
(k) Usage. In construing this Agreement, feminine or neuter pronouns shall
------
be substituted for those of the masculine form, and the plural for the singular,
and vice versa, in any case in which the context may require. The capitalized
terms used in this Agreement shall have the meaning first applied to their first
usage in this Agreement unless otherwise indicated.
(l) Third Parties. Nothing contained in this Agreement is intended or shall
--------------
be construed to give any person, corporation or other entity, other than the
parties hereto and their respective successors and assigns, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained, this Agreement being intended to be and being for
the sole and exclusive benefit of the parties hereto and their respective
successors and assigns.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
and as of the date first above written:
BRENNER, SALTZMAN & WALLMAN
By: /s/
-----------------------------
/s/
--------------------------------
Henry M. Zachs
/s/
--------------------------------
Newton D. Brenner
/s/
-------------------------------
Christopher W. Jenkins
CELLULAR COMMUNICATIONS OF PUERTO
RICO, INC.
By:
----------------------------
Its
<PAGE>
Henry M. Zachs
Newton D. Brenner
Christopher W. Jenkins
40 Woodland Street
Hartford, Connecticut 06105
December 26, 1995
Cellular Communications of Puerto Rico, Inc.
110 E. 59th Street, 26th floor
New York, New York 10025
Re: San Juan Cellular Telephone Company
Gentlemen:
On or shortly before the date of this letter, San Juan Cellular Telehphone
Company has made a distribution of $500,000 which after tax withholding will
result in $450,000 to HMZ San Juan, Inc., a Connecticut corporation ("HMZ"), one
of the partners of San Juan Cellular Telephone Company. HMZ has, in turn, made a
distribution of that amount to its shareholders.
On or shortly before the date of this letter, HMZ and the undersigned
individuals have entered into an Agreement and Plan of Reorganization with
Cellular Communications of Puerto Rico, Inc. ("Cellular") and CCPR Services,
Inc. (the "Reorganization Agreement"), providing for, among other things, the
acquisition of all or substantially all of the assets of HMZ in exchange for
shares of stock of Cellular. In the event that the closing of the transactions
contemplated by the Reorganization Agreement has not occurred by March 31, 1996,
the undersigned individuals will make a capital contribution of $450,000,
increased by any interest earned on the Escrow Fund (as hereinafter defined), to
HMZ, and will cause HMZ to make a capital contribution in that amount to San
Juan Cellular Telephone Company.
<PAGE>
Cellular Communications of Puerto Rico, Inc.
December 26, 1995
Page 2.
In order to ensure the contribution of the undersigned individuals to HMZ,
and the contribution of HMZ to San Juan Cellular Telephone Company, $450,000
will be deposited as an Escrow Fund with Brenner, Saltzman & Wallman as Escrow
Agent. Upon the closing of the transactions contemplated by the Reorganization
Agreement on or before March 31, 1996, the escrow will be terminated and the
Escrow Fund will be distributed to Mr. Zachs. In the event that the closing of
the transactions contemplated by the Reorganization Agreement has not occurred
by March 31, 1996, the escrow will be terminated and the Escrow Fund will be
distributed to San Juan Cellular Telephone Company, in satisfaction of the
obligations of the undersigned individuals and HMZ as described above. Except in
the event that there is any dispute regarding the Escrow Fund, the fees of the
Escrow Agent shall be borne by the undersigned individuals. In the event that
there is a dispute regarding the Escrow Fund, the fees of the Escrow Agent shall
be borne 50% by the undersigned individuals and 50% by Cellular.
Please indicate your agreement to the foregoing by executing this letter in
the space provided below.
Very truly yours,
/s/
--------------------------------
Henry M. Zachs
/s/
--------------------------------
Newton D. Brenner
/s/
--------------------------------
Christopher W. Jenkins
Accepted, acknowledged and
agreed to:
CELLULAR COMMUNICATIONS OF
PUERTO RICO, INC.
By: /s/
----------------------------------
Its Senior Vice President
<PAGE>
EXHIBIT 2.2
122695
AGREEMENT AND PLAN OF REORGANIZATION
------------------------------------
This Agreement and Plan of Reorganization (the "Agreement") is made and
entered into as of December 26, 1995, by and among National Telephone Company, a
Delaware corporation, its successors and assigns ("Assignor"), Waring Partridge,
the sole stockholder of Assignor ("Stockholder"), Cellular Communications of
Puerto Rico, Inc., a Delaware corporation, its successors and assigns
("Cellular") and CCPR Services, Inc., a Delaware corporation, its successors and
assigns ("CCPR").
Recitals
--------
WHEREAS, Assignor owns a 2.622% interest as a partner (the "Interest"),
which constitutes all or substantially all of the assets of Assignor, in San
Juan Cellular Telephone Company, a general partnership (the "Partnership") which
holds the license from the Federal Communications Commission and the Puerto Rico
Telephone Regulatory Commission to operate the nonwireline Block A cellular
communications system for the San Juan-Caguas, Puerto Rico Metropolitan
Statistical Area.
WHEREAS, Assignor wishes to transfer and assign the Interest to CCPR in
exchange for shares of Common Stock of Cellular ("Shares") pursuant and subject
to the terms and conditions of this Agreement.
THEREFORE, in consideration of the mutual obligations set forth in this
Agreement, and subject to all conditions set forth herein, the parties agree as
follows:
1. Assignment of Interest: (a) On the Closing Date (as defined in
-----------------------
Section 2), Assignor shall assign and transfer to CCPR all of Assignor's right,
title and interest to the Interest, free and clear of all encumbrances, liens,
pledges, charges, claims, security interests and liabilities ("Liens") other
than those expressly assumed herein by CCPR. The assignment shall include,
without being limited to, Assignor's entire interest in the Partnership,
including but not limited to the Interest, including the associated capital
account in the Partnership and all related rights with regard to Partnership
voting, profits, losses, and distributions.
(b) In consideration for the assignment contemplated by this Agreement,
CCPR shall deliver a stock certificate evidencing 350,000 Shares registered in
the name of Assignor. In the event that on or prior to the Closing Date (a)
Cellular shall pay any dividend or make any other distribution respecting its
shares of common stock or (b) the holders of its shares of common stock shall be
entitled or required to exchange their shares for other securities or
consideration, by reason of a reorganization transaction with another entity or
otherwise, then Assignor shall be entitled to receive (i) in addition to the
350,000 Shares, such dividend or other distribution as would be payable with
respect to the foregoing 350,000 Shares or (ii) such other securities or
consideration as would be exchanged for the foregoing 350,000 Shares, in each
case to the effect that Assignor shall receive the funds,
<PAGE>
securities and consideration that Assignor would have received had it held the
Shares to be issued at the Closing as at the date hereof.
(c) This Agreement and Plan of Reorganization is intended to constitute a
Plan of Reorganization within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code"), and the transactions contemplated hereby
are intended to qualify as a "reorganization" within the meaning of subsection
(a) of such Section 368.
2. Closing Date and Place. The closing of the transactions contemplated by
-----------------------
this Agreement (the "Closing") shall occur as promptly as practicable after the
execution of this Agreement and satisfaction of the conditions set forth in
Section 8 hereof, at the offices of CCPR, 110 East 59th Street, 26th Floor, New
York, New York 10022.
3. Mutual Representations and Warranties. Each of Cellular and CCPR
--------------------------------------
represent and warrants to Assignor and Stockholder and each of Assignor and
Stockholder represents and warrants to CCPR and Cellular that: (a) Each (if not
a natural person) is duly formed, validly existing, and in good standing under
the state and local laws to which it is subject; (b) Each has the right, power
and unconditional authority, and has taken all necessary action, including all
necessary actions on the part of its stockholder, to execute, deliver, and fully
perform its obligations under this Agreement; (c) This Agreement is binding and
enforceable against the warranting party; and (d) The execution, delivery and
performance of the obligations under this Agreement do not constitute a material
violation, breach or default under any law, regulation, ordinance, judgment,
order, agreement, charter, articles or certificate of incorporation, by-laws, or
other instrument or obligation to which the warranting party is subject.
4. Consent to Partnership Agreement. In accordance with Section 9.1(d) of
---------------------------------
the Partnership's Partnership Agreement (the "Partnership Agreement"), CCPR
consents to its admission to the Partnership on the Closing Date as a Substitute
Partner with respect to the interest of the Assignor. CCPR confirms that upon
such admission it shall be bound by all of the terms and provisions to the
Partnership Agreement, as the same has been and may be amended.
5. Assumption of Assiqnor's Obligations. CCPR shall assume and be bound on
-------------------------------------
the Closing Date to perform all of the obligations, terms, covenants and
conditions of the Assignor under the Partnership Agreement, whether arising
before or after the Closing Date, with respect to each Interest assigned.
6. Assiqnor's and Stockholder's Representations and Warranties. Each of
-----------------------------------------------------------
Assignor and Stockholder represents and warrants to CCPR and Cellular that:
(a) Assignor is the lawful owner of the Interest, free and clear of
all encumbrances, liens, pledges, charges, claims, security interests and
liabilities;
<PAGE>
(b) The Information (as defined in Section 10), if any, as of the date of
its delivery to CCPR and as of the date of any Prospectus Delivery (as defined
in Section 10) will not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements made in the
Information not misleading;
(c) It is not aware of any material adverse information concerning the
Interest or the Partnership or its business, financial condition or otherwise
that has not been disclosed to CCPR;
(d) Stockholder, with respect to himself, is acquiring the Shares solely
for its own account, for investment and not with a view to any resale,
distribution or public offering thereof;
(e) Stockholder, with respect to himself, understands that Cellular's
transfer agent or other agent will be given appropriate instruction prohibiting
any transfer of the Shares which would violate the Securities Act of 1933, as
amended (the "Securities Act") and that the certificates for the Shares will
bear the following legend:
"The security represented by this certificate has not been registered
under the Securities Act of 1933, as amended, or under state securities
laws. The security represented by this certificate may not be resold or
transferred unless registered or exempt from registration under the
Securities Act of 1933, as amended, and applicable state securities
laws.";
(f) Stockholder, with respect to himself, understands that it must hold the
Shares indefinitely unless it is registered under the Securities Act, or an
exemption from registration becomes available;
(g) Stockholder, with respect to himself, has had ample opportunity to ask
questions of, and receive answers from, officers of Cellular and CCPR concerning
CCPR, Cellular and their respective businesses, and to obtain any additional
information it might request with respect to CCPR, Cellular and their respective
businesses, and Stockholder acknowledges that CCPR and Cellular have made
available to it all documents and information relating to the Shares, requested
by or on behalf of Stockholder, including but not limited to, Cellular's annual
report on Form 10-K for the year ended 1994 and its quarterly reports on Form
10-Q for the quarters ended March 31, June 30 and September 30, 1995;
(h) Stockholder, with respect to himself, understands that (i) the
offering and sale of the Shares is intended to be exempt from registration under
the Securities Act as a private placement and (ii) there is no existing public
or other
<PAGE>
market for the Shares, and there can be no assurance that Stockholder will be
able to sell or dispose of the Shares;
(i) Stockholder, with respect to himself, either alone or together with
its advisors has sufficient knowledge and experience in financial and business
matters so as to be capable of evaluating the merits and risks of its investment
in the Shares, and Stockholder is capable of bearing the economic risk of such
investment, including a complete loss of its investment; and
(j) Stockholder, with respect to himself, is not a representative of an
alien, a corporation organized under the laws of any foreign government, a
corporation of which any officer or director is an alien or more than one-fifth
of its capital stock is owned or voted by any of the foregoing, or a corporation
directly or indirectly controlled by another corporation of which any officer or
more than one-fourth of the directors are aliens or of which more than one-
fourth of its capital stock is owned or voted by the foregoing, within the
meaning of Section 310 of the Communications Act of 1934, as amended.
7. CCPR's Representation and Warranties. (a) CCPR and Cellular each
------------------------------------
represents and warrants to the Stockholder that the Registration Statement, when
filed, will not contain any untrue statement of a material fact or omit to state
a material fact required to be stated or necessary in order to make this
statement therein not misleading.
(b) CCPR and Cellular represent that Cellular is 100% direct parent of CCPR
and CCPR shall make no transfer or disposition of the Interest which would
impair the transaction from meeting the requirements of a reorganization under
Section 368(a) of the Code.
(c) CCPR and Cellular each represent and warrant that each has adequate
information concerning the interest in the Partnership, its business and
financial condition and is not relying on any representation of any Stockholder
respecting the business of the Partnership; the CCPR is acquiring the Interest
solely for its own account for investment and not with a view to any resale,
distribution or public offering thereof.
8. Conditions to Closing. (a) The following are conditions precedent to each
---------------------
party's obligation to close the transactions contemplated by this Agreement:
(i) All required authorizations, orders, grants, consents, permission or
approvals ("Approvals") of any governmental entity with jurisdiction over the
transactions contemplated by this Agreement ("Governmental Agencies") shall
have been received and shall remain in effect;
<PAGE>
(ii) The other parties' representations and warranties shall be true
and correct, and each other party shall have performed all of its covenants and
obligations due to be performed as of the Closing in accordance with this
Agreement;
(iii) The consummation of the transactions contemplated by this
Agreement shall not be in violation of any law, rule or regulation and shall not
be subject to any injunction or restraining order; and
(iv) Any waiting period (and any extension thereof) applicable to the
consummation of the transaction contemplated by this Agreement under the
Hart-Scott-Rodino Antitrust Improvements Act (the "HSR Act") shall have expired
or been terminated;
(b) It shall be a condition precedent to CCPR's obligation to close
the transactions contemplated by this Agreement that (i) it and its counsel have
had an opportunity to conduct due diligence as to the representations set forth
in this Agreement and CCPR shall be satisfied as to the accuracy of such
representations and (ii) that CCPR shall have entered into certain agreements
with National Telephone Company and Pacific Cellular Telephone Systems dated as
of the date hereof, and all conditions to closing such agreements shall have
been satisfied.
(c) It shall be a condition precedent to Stockholder's obligation to
close the transactions contemplated by this Agreement that (i) Cellular have
provided to Stockholder and their counsel an opportunity to conduct due
diligence as to the material accuracy of the financial representations set forth
in operating reports of San Juan Telephone Company heretofore delivered to
Assignor or any of the Stockholder; and (ii) Cellular shall not have agreed upon
or engaged in a transaction which would transfer control or equity interests in
all or a material part of the San Juan Cellular Telephone Company, except
pursuant to this Agreement or similar agreements with Pacific Cellular Telephone
Systems and National Telephone Company or as part of a transaction which would
involve transfer of control of Cellular or the transfer or exchange of equity
interest in Cellular.
9. Governmental Filings. Each of the parties hereto shall (i) make promptly
---------------------
its respective filings, and thereafter make any other required submissions,
under the HSR Act or otherwise, with respect to the transactions contemplated by
this Agreement and (ii) use its reasonable best efforts to take, or cause to be
taken, all appropriate action, and to do or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective such transactions, including, without limitation,
using its reasonable best efforts to obtain all Approvals of Governmental
Agencies as are required for the consummation of such transactions and to
fulfill the conditions to the Agreement. Each of the parties hereto will use its
reasonable efforts to lift or rescind any injunction or restraining order
described in clause (a)(iii) under Section 8.
<PAGE>
10. Registration Statement. (a) Following the Closing, Cellular will use
-----------------------
all reasonable efforts to cause to be filed and declared effective as soon as
reasonably practicable a Registration Statement to permit the public resale of
the Shares acquired by the Stockholder pursuant hereto (the "Resale"). Any
obligation to permit the Resale under the Registration Statement shall expire on
the earliest of (i) the date on which all Shares acquired hereunder have been
disposed of by the Stockholder, (ii) the date on which all Shares acquired
pursuant hereto may be freely sold to the public without restriction under the
Securities Act or (iii) the date which is two years after the Closing (or, in
the event that the holding period under Rule 144(d) of the Securities Act is
extended, such later date as to correspond with such extended holding period)
(the "Expiration"). If a Stockholder is deemed to be an "affiliate" of CCPR,
such Stockholder will provide all information necessary with respect to the
Stockholder and any proposed Resale necessary for the Registration Statement
("Information") and will comply with the prospectus delivery requirements of the
Securities Act and rules promulgated thereunder ("Prospectus Delivery").
(b) If at any time prior to the filing of the Registration Statement
or the Expiration, (i) counsel to Cellular has determined in good faith that the
compliance by Cellular with its disclosure obligations in connection with the
Registration Statement would require the disclosure of material information
which Cellular has a bona fide business purpose for preserving as confidential
---- ----
or (ii) Cellular then is unable to comply with its disclosure obligations or SEC
requirements in connection with the Registration Statement, then in either such
case Cellular shall not be required to file the Registration Statement or
maintain the effectiveness thereof or amend or supplement the Registration
Statement for a period (an "Information Delay Period") expiring upon the earlier
to occur of (A) the date on which such material information is disclosed to the
public or ceases to be material or Cellular is able to so comply with its
disclosure obligations and SEC requirements or (B) 30 days, in the case of
clause (i) above, or 45 days, in the case of clause (ii) above, after counsel to
Cellular makes such good faith determination.
(c) Cellular will give prompt written notice to Stockholder of the
commencement of an Information Delay Period (and duration). Stockholder, by his
acceptance of any Shares, agrees that, upon receipt of such notice it will
forthwith discontinue disposition of the Shares pursuant to the Registration
Statement, and will not deliver any prospectus forming a part thereof in
connection with any sale of Shares until the expiration of an Information Delay
Period.
(d) Notwithstanding anything in this Agreement to the contrary, if the
Registration Statement referred to in this Section 10 has not been declared
effective by July 1, 1996, then Cellular shall issue to Assignor (or its
assigns) a stock certificate or stock certificates evidencing an aggregate of
such number of additional Shares as shall equal 5% of the amount set forth in
Section 1(b) hereof. If the Registration Statement referred to in this Section
10 has not been declared effective
<PAGE>
by December 1, 1996, then Assignor (or its assigns) shall have the right by
giving written notice to Cellular to require Cellular to purchase from Assignor
in 1996 up to 100,000 Shares that were issued to Assignor pursuant to this
Agreement. The price per share in any such redemption shall be equal to the
average of the daily closing price on NASDAQ (or any exchange or other
securities trading market which is the principal place of trading for Cellular's
common stock at the time) for the seven trading days immediately preceding the
date on which notice of the redemption is given. Payment for such Shares shall
be made not later than three business days following delivery of such notice.
(e) If at any time Cellular shall file an amendment to the
Registration Statement, Cellular shall promptly deliver copies of such amendment
to the Stockholder.
11. Indemnification by the Stockholder. Cellular, CCPR and its affiliates
-----------------------------------
shall jointly and severally be indemnified and held harmless by Assignor and
Stockholder against any and all losses, expenses, damages, injuries, judgments,
claims and liabilities, including reasonable attorney's fees and litigation
expenses ("Losses"), arising from (a) Assignor's ownership of its Interest prior
to the Closing; (b) any material misrepresentation, breach of warranty, or
nonperformance of any obligation hereunder on the part of Assignor or any
Stockholder; (c) any other act or omission on the part of Assignor or any
Stockholder, its agents or representatives in connection with its Interest in
any Partnership; (d) any agreement, commitment or obligation of Assignor or any
Stockholder undertaken in connection with the Interest or the Partnership (and,
in the case of Assignor, arising prior to the Closing) which CCPR does not
expressly and specifically assume either hereunder or in writing prior to the
Closing, (e) Assignor's ownership, operation or conduct of any asset or business
other than the Interest, (f) any liability for any federal, state or local tax
(including interest, penalty or addition thereto) of Assignor incurred on or
prior to the Closing, or (g) based on an untrue statement of fact in the
Information or alleged omission to state therein a material fact necessary to
make the statements therein not misleading, or the failure of any Stockholder to
effect a Prospectus Delivery; provided, that no indemnification shall be due to
Cellular or any of its affiliates for any Loss resulting solely from an action
taken by Cellular in its capacity as managing general partner of the
Partnership. Notwithstanding anything in this Agreement to the contrary, each of
Cellular, CCPR and its affiliates will only seek indemnity for losses hereunder
from Stockholder in proportion to his ownership percentage set forth on the
first page hereof.
12. Indemnification by Cellular and CCPR. Assignor and Stockholder shall be
-------------------------------------
indemnified and held harmless by Cellular and CCPR against any and all losses,
arising from (a) CCPR's ownership of the Interest; (b) any material
misrepresentation, breach of warranty, or nonperformance of any obligation
hereunder on the part of Cellular or CCPR; (c) any other act or omission on the
part of CCPR or its affiliates in connection with its interest in the
Partnership or (d) arising out of or based upon an
<PAGE>
untrue statement of fact in the Registration Statement or arising out of or
based upon the omission or alleged omission to state therein a material fact
necessary to make the statements therein not misleading, other than those
arising out of any Information.
13. Continuing Effectiveness. Each party's representations shall be true
-------------------------
and correct, and each party's warranties and indemnifications shall be in full
force and effect on the date that the party executes this Agreement and, to the
extent the same are applicable at Closing, as if made on the date and time of
such Closing. Each party's representations, warranties and indemnifications
shall survive the Closing and shall be fully actionable and enforceable
thereafter. In the event that a party becomes aware of any information,
occurrence or omission which would alter any of its representations or would
impair its ability to perform any of its warranties, indemnifications, or
obligations hereunder, or would possibly lead to any right to indemnification,
then the party shall notify the other party immediately of such information,
occurrence or omission and shall disclose all relevant facts. The other party
shall have the opportunity to defend itself, if necessary, in any resulting
proceeding. The settlement of any such proceeding or threatened proceeding shall
be subject to the other party's prior consent if the other party is to be
subject to any obligation to indemnify against the cost of the settlement.
14. Expenses. Cellular, CCPR, Assignor and Stockholder shall each bear
---------
their own legal and other fees and expenses associated with the preparation,
execution and consummation of this Agreement and the filing and prosecution of
any required Governmental Agency submissions, provided that CCPR shall pay any
HSR filing fees to the extent applicable. CCPR will bear all costs associated
with the preparation of the Registration Statement except that Stockholder shall
bear broker's fees or discounts associated with a resale of the Shares acquired
by such Stockholder pursuant hereto.
15. Termination as of Right. Notwithstanding any other provision herein or
------------------------
termination, this Agreement may be terminated, without liability of any kind, at
the option of either Assignor or CCPR, upon written notice to the other if there
is no Closing in accordance with all the terms of this Agreement on or before
March 31, 1996.
16. Brokers Fees. Each party represents and warrants that it has not
-------------
engaged any broker or finder with respect to this transaction and that no
brokerage fee, commission, or finder's fee shall be due in connection with the
transaction.
17. Notices. All notices or other communications to parties under this
--------
Agreement shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by cable, telecopy,
facsimile or other standard form of telecommunications, or by registered or
certified mail or Federal Express delivery, postage prepaid, return receipt
requested, addressed as follows:
<PAGE>
If to Assignor or the Stockholder:
Waring Partridge
P.O. Drawer B
Kingsville, TX 78364
with a copy to
Brenner, Saltzman & Wallman
271 Whitney Avenue
New Haven, CT 06511
Att: Newton Brenner, Esq.
If to Cellular or CCPR:
110 East 59th Street, 26th Floor
New York, New York 10022
Attention: Richard J. Lubasch
18. Governing Law. This Agreement shall be interpreted, enforced and
--------------
governed in accordance with the laws of New York (without regard to the
provisions thereof on the conflict of laws).
19. Binding Effect. This Agreement shall bind and benefit the parties,
---------------
their representatives, and their permitted assignees and successors in interest.
20. Most Favored Treatment. In the event that at any time in 1996, Cellular
-----------------------
CCPR, the Partnership or an affiliate, enters into transaction with any person
or entity that owns a minority interest in the Partnership, on more favorable
economic terms than provided for in this Agreement (including by way of
illustration, but not by way of limitation, a greater number of Shares) then
this Agreement shall be amended in such manner as is necessary to incorporate
such more favorable terms. Any such amendment shall be deemed effective as of
the date of this Agreement.
21. Entire Agreement. This Agreement constitutes the entire agreement
-----------------
between the parties governing this Transaction. No prior agreement or
representation, whether verbal or written, shall have any force or effect. This
Agreement may be modified, superseded or cancelled only in writing signed by
each of the parties to be affected.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
first date above written.
CCPR SERVICES, INC.
By: /s/
-----------------------
Senior Vice President
CELLULAR COMMUNICATIONS OF
PUERTO RICO, INC.
By: /s/
-----------------------
Senior Vice President
NATIONAL TELEPHONE COMPANY
By: /s/
-----------------------
Newton Brenner,
Attorney-in-Fact for Waring Partridge
/s/
-----------------------
Newton Brenner,
Attorney-in-Fact for Waring Partridge
<PAGE>
December 26, 1995
Cellular Communications Of Puerto Rico, Inc.
110 East 59th Street
26th Floor
New York, NY 10022
Dear Sir:
The undersigned, National Telephone Company (the "Seller"), a Delaware
corporation and its sole stockholder, Waring Partridge, desire to exchange a
partnership interest in San Juan Cellular Telephone Company (the "Interest") for
common stock of Cellular Communications of Puerto Rico, Inc. (the
"Corporation"). The undersigned acknowledge, and understand that the Corporation
is relying upon such acknowledgement, that (i) undersigned are sophisticated
with knowledge of, and an opportunity to inquire with respect to, the cellular
industry generally and the Corporation's financial position, business, operation
and prospects and (ii) the Corporation is in possession of additional nonpublic
information (collectively, the "Company Information") with respect to the
Corporation's business, financial condition, operations and prospects, including
potential transactions which may involve a change of control ("Potential Control
Transactions"). The Corporation has assured the undersigned that none of the
Company Information relates to a potential transaction which would transfer
control or equity interests in all or a material part of the San Juan Cellular
Telephone Company, except pursuant to an agreement with the undersigned or
similar agreements with Pacific Cellular Telephone Systems and National
Telephone Company or as part of a transaction which would involve transfer of
control of Cellular or the transfer or exchange of equity interests in the
Corporation.
<PAGE>
Subject to and in reliance upon the foregoing assurances, each of the
undersigned acknowledges that, after careful consideration and the opportunity
to consult with its counsel and other advisors, he and it is prepared to
exchange the Interests for stock of Corporation without receipt of the Company
Information.
Very truly yours,
National Telephone Company
By: /s/
-----------------------------
Newton Brenner
Attorney-in Fact
/s/
-----------------------------
Newton Brenner
Attorney-in-Fact for
Waring Partridge
<PAGE>
ESCROW AGREEMENT
THIS AGREEMENT made and entered into as of the 27th day of December 1995 by
and among:
Brenner, Saltzman & Wallman, with offices at 271 Whitney Avenue, New
Haven, Connecticut 06511 (the "Escrow Agent"); and
Waring Partridge having an address at P.O. Drawer B, Kingsville, Texas
78364 ("Shareholder"); and
Cellular Communications of Puerto Rico, Inc., a Delaware corporation
with offices at 110 East 59th Street, 26th Floor, New York City, New
York 10022 ("Cellular");
W I T N E S S E T H :
WHEAREAS, Cellular and the Shareholder have entered into a letter
agreement dated December 26, 1995 (the "Letter Agreement") pursuant to which
certain funds are to be held in escrow from time to time; and
WHEREAS, Escrow Agent has agreed to act as escrow agent hereunder upon the
terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutual promises
herein made the parties hereto hereby agree as follows:
1. CERTAIN DEFINITIONS
- ----------------------
All capitalized terms not otherwise specifically defined herein shall have
the meanings ascribed to them in the Letter Agreement.
2. APPOINTMENT OF ESCROW AGENT
- ------------------------------
The parties hereto hereby jointly appoint Escrow Agent to act as the escrow
agent hereunder, and the Escrow Agent hereby accepts the duties of escrow agent
in accordance with the terms and conditions of this Agreement.
3. ESCROW FUND
- --------------
Pursuant to the Letter Agreement, the parties hereto have caused there to
be deposited $450,000 with the Escrow Agent simultaneously with the execution of
this Agreement.
4. TERM
- -------
The term of this Agreement shall commence on the date hereof and it shall
remain in full force and effect until the Escrow Agent has distributed all of
the Escrow Fund in its possession in accordance with the terms hereof, whereupon
all obligations of the Escrow Agent hereunder shall immediately terminate; but
the obligations of the other parties
<PAGE>
hereto pursuant to Sections 7, 8, 10, 11, and 12 hereof shall remain in full
force and effect.
5. DUTIES OF ESCROW AGENT: DISTRIBUTIONS
- ---------------------------------------
The Escrow Agent shall hold the Escrow Fund in escrow until authorized
hereunder to deliver the same as described in the Letter Agreement. The Escrow
Agent may, in its discretion, require written authorization from each of the
other parties hereto prior to making any distribution.
6. DUTIES OF THE ESCROW AGENT: INVESTMENT
- -----------------------------------------
The Escrow Agent shall invest the Escrow Fund held pursuant to this
Agreement without delay and keep such cash invested and reinvested in interest
bearing accounts in banks having insurance from the Federal Deposit Insurance
Corporation.
7. DUTIES OF ESCROW AGENT: RELIANCE
- -----------------------------------
(a) The obligations and duties of the Escrow Agent hereunder are purely
ministerial and shall be limited to the safekeeping of the Escrow Fund and the
actions herein specified in accordance with the provisions hereof, accordingly,
the Escrow Agent shall not be responsible for any of the agreements referred to
herein, but shall be obligated only for the performance of such duties as are
specifically set forth herein and no implied duties or obligations of the
Escrow Agent shall be imposed by virtue of this Agreement.
(b) The Escrow Agent may act in reliance upon any writing or instrument or
signature which it, in good faith, believes to be genuine; may assume the
validity and accuracy of any statements or assertions contained in such writing
or instrument; and may assume that any person purporting to give any writing,
notice, advice or instruction in connection with the provisions hereof has been
duly authorized to do so. Except for the Escrow Agent's liability arising from
its gross negligence or fraud, the Escrow Agent shall not be liable in any
manner for the sufficiency or correctness as to form, manner of execution, or
validity of any written instructions, documents or papers deposited or called
for hereunder or delivered to it, nor as to the identity, authority or rights of
any person executing or delivering, or purporting to execute or deliver the
same.
(c) The Escrow Agent may consult counsel satisfactory to it. The Escrow
Agent shall not be personally liable or responsible for any act it may do or
omit to do hereunder while acting in good faith and any acts done or omitted by
it pursuant to the advice of its own counsel shall be conclusive evidence of
such good faith, absent fraud or gross negligence on the part such counsel. In
no event shall the Escrow Agent be liable for indirect, private, special, or
consequential damages.
(d) The Escrow Agent is hereby expressly authorized to disregard any and
all warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law, and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court, or agreements stipulated
<PAGE>
to by the other parties hereto. In the event the Escrow Agent obeys or complies
with any such order, judgment or decree of any court, it shall not be liable to
any of the parties hereto or any other person, firm or corporation by reason of
such compliance, notwithstanding any such order, judgment or decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been ordered without jurisdiction.
8. INTERPLEADER
- ---------------
Notwithstanding any provisions contained herein to the contrary, in the event
of disagreement about the interpretation of this Agreement, or about the rights
or obligations of the parties hereto, or the propriety of any action
contemplated by the Escrow Agent hereunder, the Escrow Agent, may in its sole
discretion, file an action in interpleader to resolve said disagreement. The
Escrow Agent shall be indemnified pursuant to the provisions of Section 11
hereof for all costs and attorneys' fees incurred by it in its capacity as
Escrow Agent in connection with any such interpleader action, shall be fully
protected in suspending all or part of its activities under this Agreement until
a final judgment in the interpleader action has been issued, and upon the
filing of such interpleader action, shall resign as Escrow Agent hereunder, at
the request of any party hereto.
9. SUCCESSOR ESCROW AGENT
- -------------------------
The Escrow Agent may resign at any time upon the giving of 10 days written
notice to the other parties to this Agreement or, in the event of any
litigation involving this Agreement, shall resign upon the request of the
parties hereto, in which case the Escrow Agent's duties hereunder shall
terminate and the Escrow Agent shall be relieved and discharged of all
obligations, responsibilities and liabilities hereunder. Upon any such
resignation or a resignation under Section 8 hereof, the other parties hereto
shall jointly appoint a successor escrow agent, who shall assume the duties of
Escrow Agent hereunder. The Escrow Agent shall immediately deposit all Escrow
Funds with the successor escrow agent so appointed. If a successor Escrow Agent
is not appointed within 10 days after notice of resignation, the Escrow Agent
may petition any court of competent jurisdiction to name a successor Escrow
Agent and may deposit the Escrow Fund with such court.
10. ADDITIONAL INSTRUCTIONS
- ---------------------------
The parties hereto at their respective cost and expense shall cooperate with
and assist the Escrow Agent as reasonably requested by the Escrow Agent in
connection with the Escrow Agent's performance of its obligations hereunder.
Specifically, but not in limitation of the generality of the foregoing, the
parties hereto shall furnish the Escrow Agent with other and further documents
or instruments reasonably requested by the Escrow Agent in connection with this
Agreement or its obligations with respect hereto.
<PAGE>
11. IDEMNIFICATION
- ------------------
The other parties hereto shall reimburse the Escrow Agent for all reasonable
expenses incurred by the Escrow Agent in connection with its duties hereunder,
unless and until the Escrow Agent is determined by a court of competent
jurisdiction to have discharged any of its duties hereunder in a grossly
negligent manner or to have been guilty of willful misconduct with regard to any
of its duties hereunder. Except for the Escrow Agent's liability arising from
its gross negligence or fraud, each of the other parties hereto shall jointly
and severally indemnify and hold the Escrow Agent harmless from any and all
claims, liabilities, losses, damages, penalties, claims, actions, suits,
proceedings at law or equity, or any other expenses, fees, or charges of any
nature whatsoever which it may incur or with which it may be threatened by
reason of its acting as Escrow Agent under this Agreement; and in connection
therewith to indemnify the Escrow Agent against any and all expenses including
attorneys' fees and the cost of defending any action, suit or proceeding or
resisting any claim in such capacity; provided, however, that in the event of
a dispute among the other parties hereto, the nonprevailing party shall
indemnify and hold the prevailing party harmless against any and all costs and
expenses (including reasonable attorneys' fees) incurred by the prevailing
party pursuant to the provisions hereof.
12. REPRESENTATION
- ------------------
The parties hereto acknowledge and agree that the Escrow Agent has acted, and
may continue to act, as counsel to the Shareholder in connection with the
negotiation of the Letter Agreement and the consummation of the transactions
contemplated thereby and that the Escrow Agent may represent the Shareholder in
the future including, without limitation with respect to (a) disputes arising
under the terms of the Letter Agreement (or any other agreement, document, or
instrument executed and delivered in accordance therewith or contemplated
thereby); or (b) disputes that may involve the rights or obligations of the
other parties hereto hereunder. Cellular hereby waives any claim of conflict of
interest which may arise from the actions of the Escrow Agent hereunder and its
representation of the Shareholder, and agrees that the Escrow Agent shall not
be disqualified or otherwise estopped from representing the Shareholder in any
matter in the future. Cellular hereby waives any claim of conflict of interest
which may arise from the fact that the Shareholder is affiliated with
the Escrow Agent.
13. MISCELLANEOUS
- -----------------
(a) Notices. Any notice, request, acknowledgement, consent, or other
--------
communication which any party hereto is required or permitted to give to another
party shall be in writing and shall be delivered personally, sent by registered
or certified mail, return receipt requested, or sent by a recognized overnight
delivery service, in any such case to the recipient at his or its address first
stated above or at such other address of which he or it shall have given the
other party or parties due notice hereunder. Any such notice shall be
<PAGE>
deemed to have been delivered, given, and received for all purposes as of the
date so delivered.
(b) Waiver. The failure of any party to insist in any one or more instances
------
upon the performance of any of the terms and conditions of this Agreement shall
not be construed as a waiver or relinquishment of any right granted hereunder,
or of the future performance of any such term or condition.
(c) Entire Agreement. This Agreement sets forth the entire understanding of the
----------------
parties hereto with respect to the subject matter hereof and supersedes any
prior understandings or agreements among the parties, whether written or oral,
to the extent related to the subject matter hereof.
(d) Further Acts. Each of the parties hereto shall execute and deliver all such
------------
additional documents or legal instruments, and shall perform or cause to be
performed all such further acts and things, as may be necessary or desirable to
carry out the purposes and intent of this Agreement.
(e) Amendment. This Agreement may not be amended, modified or altered in any
---------
manner, except pursuant to the terms of a written instrument signed by each of
the parties hereto.
(f) Invalid Provision. The invalidity or unenforceability of any particular
-----------------
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall thereafter be construed in all respects as if such invalid
or unenforceable provisions were omitted.
(g) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the domestic laws of the State of Connecticut without giving any
effect to any choice or conflict of law provision or rule (whether of the State
of Connecticut or of any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Connecticut.
(h) Binding Nature. This Agreement shall be binding upon and inure to the
--------------
benefit of the parties hereto and their successors, personal representatives,
heirs, devisees, guardians and assigns.
(i) Counterparts. This Agreement may be executed in any number of counterparts
------------
and all of such counterparts taken together shall for all purposes constitute
one agreement binding upon all of the parties.
(j) Headings. The headings contained in this Agreement are for reference
--------
purposes only and shall not affect the meaning or interpretation of this
Agreement.
(k) Usage. In construing this Agreement, feminine or neuter pronouns shall be
------
substituted for those of the masculine form, and the plural for the singular,
and vice versa, in any case in which the context may require. The capitalized
terms used in this Agreement shall have the meaning first applied to their first
usage in this Agreement unless otherwise indicated.
<PAGE>
(l) Third Parties. Nothing contained in this Agreement is intended or shall be
-------------
construed to give any person, corporation or other entity, other than the
parties hereto and their respective successors and assigns, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained, this Agreement being intended to be and being for
the sole and exclusive benefit of the parties hereto and their respective
successors and assigns.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on and as of
the date first above written:
BRENNER, SALTZMAN & WALLMAN
By:/s/
---------------------------
/s/
-----------------------------
Waring Partridge
CELLULAR COMMUNICATIONS OF
PUERTO RICO, INC.
By: /s/
-------------------------
Its Senior Vice President
<PAGE>
Waring Partridge
National Telephone Company
P.O. Drawer B
Kingsville, TX 78364
December 26, 1995
Cellular Communications of Puerto Rico, Inc.
110 E. 59th Street, 26th Floor
New York, New York 10025
Re: San Juan Cellular Telephone Company
Gentlemen:
On or shortly before the date of this letter, San Juan Cellular Telephone
Company has made a distribution of $500,000 which after tax withholding will
result in $450,000 to National Telephone Company, A Delaware corporation
("National"), one of the partners of San Juan Cellular Telephone Company.
National has, in turn, made a distribution of that amount to its shareholders.
On or shortly before the date of this letter, National and the undersigned
have entered into an Agreement and Plan of Reorganization with Cellular
Communications of Puerto Rico, Inc. ("Cellular") and CCPR Services, Inc. (the
"Reorganization Agreement"), providing for, amount other things, the acquisition
of all or substantially all of the assets of National is exchange for shares of
stock of Cellular. In the event that the closing of the transactions
contemplated by the Reorganization Agreement has not occurred by March 31, 1996,
the undersigned will make a capital contribution of $450,000, increased by any
interest earned on the Escrow Fund (as hereinafter defined), to National, and
will cause National to make a capital contribution in that amount to San Juan
Cellular Telephone Company.
<PAGE>
Cellular Communications of Puerto Rico, Inc.
December 26, 1995
Page 2.
In order to ensure the contribution of the undersigned individual to
National, and the contribution of National to San Juan Cellular Telephone
Company, $450,000 will be deposited as an Escrow Fund with Brenner, Saltzman &
Wallman as Escrow Agent. Upon the closing of the transactions contemplated by
the Reorganization Agreement on or before March 31, 1996, the escrow will be
terminated and the Escrow Fund will be distributed to Mr. Partridge. In the
event that the closing of the transactions contemplated by the Reorganization
Agreement has not occurred by March 31, 1996, the escrow will be terminated and
the Escrow Fund will be distributed to San Juan Cellular Telephone Company, in
satisfaction of the obligations of the undersigned individual and National as
described above. Except in the event that there is any dispute regarding the
Escrow Fund, the fees of the Escrow Agent shall be borne by the undersigned. In
the event that there is a dispute regarding the Escrow Fund, the fees of the
Escrow Agent shall be borne 50% by the undersigned individual and 50% by
Cellular.
Please indicate your agreement to the foregoing by executing this letter in
the space provided below.
Very truly yours,
/s/
---------------------------
Waring Partridge
Accepted, acknowledged and
agreed to:
CELLULAR COMMUNICATIONS OF
PUERTO RICO, INC.
By:/s/
-----------------------
Its Senior Vice President
<PAGE>
POWER OF ATTORNEY
The undersigned, Waring Partridge, also known as Benjamin Waring Partridge,
and National Telephone Company, a Delaware corporation
("Principals") having addresses at P.O. Drawer B,
Kingsville, Texas 78364
hereby nominate, constitute and appoint
Newton D. Brenner of 271 Whitney Avenue, New Haven,
Connecticut 06511
as our true and lawful attorney-in-fact for each of the undersigned who is
authorized in my and our name, place and stead to take all necessary action
which appears to said agent to be advisable under the circumstances in
connection with the interest of the undersigned National Telephone Company in a
partnership known as San Juan Telephone Company and in connection with the
interest of the undersigned Waring Partridge as stockholder, officer or director
of National Telephone Company as respects its interest in San Juan Telephone
Company, specifically authorizing said agent to execute agreements with Cellular
Communications of Puerto Rico, Inc. or its affiliates respecting said interest,
which agreements are substantially identical in form and substance to agreements
entered into between Cellular Communications of Puerto Rico, Inc. or its
affiliates with Henry M. Zachs, Christopher Jenkins, Newton Brenner, and HMZ San
Juan, Inc. respecting their interests in San Juan Telephone Company.
Any party may rely upon a copy of this Power of Attorney to the same effect
as if it were an original document.
<PAGE>
This Power of Attorney shall expire 12:01 a.m. January 1, 1996 provided
that any action undertaken by attorney-in-fact prior to such expiration shall
remain fully valid and binding as act of the undersigned for all purposes.
This Power of Attorney shall not be affected by any disability of the
undersigned.
IN WITNESS WHEREOF the undersigned have caused this Power of Attorney to be
subscribed and acknowledged this day of December, 1995.
WARNING PARTRIDGE
a/k/a Benjamin Waring Partridge
/s/
----------------------------------
NATIONAL TELEPHONE COMPANY
By:/s/
-------------------------------
ACKNOWLEDGEMENT
State of New Jersey }
} Ss:
County of Morris }
The foregoing instrument was acknowledge before the this 23 day of December
-- --------
1996 Waring Partridge.
--
/s/
-----------------------------------
Notary Public
My Commission Expires: May 10, 1999
------------
<PAGE>
ACKNOWLEDGEMENT
State of New Jersey }
} Ss:
County of Morris }
The foregoing instrument was acknowledged before me this 23 day of December
1995 by Waring Partridge, the President of National Telephone Company, a
Delaware corporation on behalf of said corporation.
/s/
-----------------------------
Notary Public
My Commission Expires: May 10, 1999
<PAGE>
EXHIBIT 2.3
122695(R)
- ---------
AGREEMENT
---------
This Agreement (the "Agreement") is made and entered into as of December
26, 1995, by and among Pacific Cellular Telephone Systems, a California limited
partnership, its successors and assigns ("Assignor"), each of the general and
limited partners of Assignor (the names of the limited partners are listed on
the signature pages that are Exhibit A of this Agreement) (each, a "Partner" and
collectively the "Partners"), Cellular Communications of Puerto Rico, Inc., a
Delaware corporation, its successors and assigns ("Cellular") and CCPR Services,
Inc., a Delaware corporation, its successors and assigns ("CCPR").
Recitals
--------
WHEREAS, Assignor owns a .902% interest as a partner (the "Interest") in
San Juan Cellular Telephone Company, a general partnership (the "Partnership")
which holds the license from the Federal Communications Commission and the
Puerto Rico Telephone Regulatory Commission to operate the nonwireline Block A
cellular communications system for the San Juan-Caguas, Puerto Rico Metropolitan
Statistical Area.
WHEREAS, Assignor wishes to sell and assign the Interest to CCPR in
exchange for shares of Common Stock of Cellular ("Shares") pursuant and subject
to the terms and conditions of this Agreement.
THEREFORE, in consideration of the mutual obligations set forth in this
Agreement, and subject to all conditions set forth herein, the parties agree as
follows:
1. Assignment of Interest: (a) On the Closing Date (as defined in Section
-----------------------
2), Assignor shall assign and transfer to CCPR all of Assignor's right, title
and interest to the Interest, free and clear of all encumbrances, liens,
pledges, charges, claims, security interests and liabilities ("Liens") other
than those expressly assumed herein by CCPR. The assignment shall include,
without being limited to, Assignor's entire interest in the Partnership,
including but not limited to the Interest, including the associated capital
account in the Partnership and all related rights with regard to Partnership
voting, profits, losses, and distributions.
(b) In consideration for the assignment contemplated by this
Agreement, CCPR shall deliver at Assignor's option, either a stock certificate
evidencing 120,404 Shares in the aggregate registered in the name of Assignor,
or stock certificates evidencing 120,404 Shares in the aggregate, for the
amounts and registered in the names set forth in a schedule to be provided by
Assignor. If Assignor elects to have the initial stock certificates in the name
of Assignor, upon Assignor's request, CCPR or its transfer agent shall
subsequently substitute that stock certificate for stock certificates evidencing
120,404 Shares in the aggregate, for the amounts and registered in the names set
forth
<PAGE>
in a schedule to be provided by the Assignor. In the event that on or prior to
the Closing Date (a) Cellular shall pay any dividend or make any other
distribution respecting the Shares or (b) the holders of Shares shall be
entitled or required to exchange their Shares for other securities or
consideration, then Assignor (or, as aforesaid, the names set forth in the
schedule) shall be entitled to receive (i) such dividend or other distribution
as would be payable with respect to the foregoing 120,404 Shares or (ii) such
other securities or consideration as would be exchanged for the foregoing
120,404 Shares.
2. Closing Date and Place. The closing of the transactions contemplated by
-----------------------
this Agreement (the "Closing") shall occur as promptly as practicable after the
execution of this Agreement and satisfaction of the conditions set forth in
Section 8 hereof, at the offices of CCPR, 110 East 59th Street, 26th Floor, New
York, New York 10022.
3. Mutual Representations and Warranties. Each of Cellular and CCPR
-------------------------------------
represent and warrants to Assignor and the Partners and each of Assignor and
each Partner represents and warrants to CCPR and Cellular that: (a) Each (if not
a natural person) is duly formed, validly existing, and in good standing under
the state and local laws to which it is subject; (b) Each has the right, power
and unconditional authority, and has taken all necessary action, including all
necessary actions on the part of its stockholders and partners, to execute,
deliver, and fully perform its obligations under this Agreement; (c) This
Agreement is binding and enforceable against the warranting party; and (d) The
execution, delivery and performance of the obligations under this Agreement do
not constitute a material violation, breach or default under any law,
regulation, ordinance, judgment, order, agreement, charter, articles or
certificate of incorporation, bylaws, or other instrument or obligation to which
the warranting party is subject.
4. Consent to Partnership Agreement. In accordance with Section 9.1(d) of
--------------------------------
the Partnership's Partnership Agreement (the "Partnership Agreement"), CCPR
consents to its admission to the Partnership on the Closing Date as a Substitute
Partner with respect to the interest of the Assignor. CCPR confirms that upon
such admission it shall be bound by all of the terms and provisions to the
Partnership Agreement, as the same has been and may be amended.
5. Assumption of Assignor's Obligations. CCPR shall assume and be bound on
-------------------------------------
the Closing Date to perform all of the obligations, terms, covenants and
conditions of the Assignor under the Partnership Agreement, whether arising
before or after the Closing Date, with respect to each Interest assigned.
6. Assignor's and Partner's Representations and Warranties. Each of
-------------------------------------------------------
Assignor and each Partner represents and warrants to CCPR and Cellular that:
(a) Assignor is the lawful owner of the Interest, free and clear of
all encumbrances, liens, pledges, charges, claims, security interests and
liabilities;
<PAGE>
(b) The information (as defined in Section 10), if any, as of the date
of its delivery to CCPR and as of the date of any Prospectus Delivery (as
defined in Section 10) will not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements made
in the Information not misleading;
(c) It is not aware of any material adverse information concerning the
Interest or the Partnership or its business, financial condition or otherwise
that has not been disclosed to CCPR;
(d) Each Partner, with respect to himself, is acquiring the Shares
solely for its own account, for investment and not with a view to any resale,
distribution or public offering thereof;
(e) Each Partner, with respect to himself, understands that Cellular's
transfer agent or other agent will be given appropriate instruction prohibiting
any transfer of the Shares which would violate the Securities Act of 1933, as
amended (the "Securities Act") and that the certificates for the Shares will
bear the following legend:
"The security represented by this certificate has not been
registered under the Securities Act of 1933, as amended, or
under state securities laws. The security represented by this
certificate may not be resold or transferred unless registered
or exempt from registration under the Securities Act of 1933, as
amended, and applicable state securities laws.";
(f) Each Partner, with respect to himself, understands that it must
hold the Shares indefinitely unless it is registered under the Securities Act,
or an exemption from registration becomes available or they can be sold on the
market pursuant to Rule 144 of the Securities Act;
(g) Each Partner, with respect to himself, has had ample opportunity
to ask questions of, and receive answers from, officers of Cellular and CCPR
concerning CCPR, Cellular and their respective businesses, and to obtain any
additional information it might request with respect to CCPR, Cellular and their
respective businesses, and each Partner acknowledges that CCPR and Cellular have
made available to it all documents and information relating to the Shares,
requested by or on behalf of each Partner, including but not limited to,
Cellular's annual report on Form 10-K for the year ended 1994 and its quarterly
reports on Form 10-Q for the quarters ended March 31, June 30 and September 30,
1995;
(h) Each Partner, with respect to himself, understands that (i) the
offering and sale of the Shares is intended to be exempt from registration under
the Securities Act as a private placement and (ii) there is no existing public
or other market for the Shares, and there can be no assurance that each Partner
will be able to sell or dispose of the Shares;
<PAGE>
(i) Each Partner, with respect to himself, either alone or together
with its advisors has sufficient knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risks of its
investment in the Shares, and each Partner is capable of bearing the economic
risk of such investment, including a complete loss of its investment; and
(j) Each Partner, with respect to himself, is not a representative of
an alien, a corporation organized under the laws of any foreign government, a
corporation of which any officer or director is an alien or more than one fifth
of its capital stock is owned or voted by any of the foregoing, or a corporation
directly or indirectly controlled by another corporation of which any officer or
more than one-fourth of the directors are aliens or of which more than one-
fourth of its capital stock is owned or voted by the foregoing, within the
meaning of Section 310 of the Communications Act of 1934, as amended.
7. CCPR's Representation and Warranties. (a) CCPR and Cellular each
------------------------------------
represents and warrants to the Partners that the Registration Statement, when
filed, will not contain any untrue statement of a material fact or omit to state
a material fact required to be stated or necessary in order to make the
statements therein not misleading.
(b) CCPR and Cellular each represents and warrants that each has adequate
information concerning the interest in the Partnership, its business and
financial condition and is not relying on any representation of any Partner
respecting the business of the Partnership; that CCPR is acquiring the Interest
solely for its own account for investment and not with a view to any resale,
distribution or public offering thereof.
8. Conditions to Closing. (a) The following are conditions precedent to
---------------------
each party's obligation to close the transactions contemplated by this
Agreement:
(i) All required authorizations, orders, grants, consents, permissions
or approvals ("Approvals") of any governmental entity with jurisdiction over the
transactions contemplated by this Agreement ("Governmental Agencies") shall have
been received and shall remain in effect;
(ii) The other parties' representations and warranties shall be true
and correct, and each other party shall have performed all of its covenants and
obligations due to be performed as of the Closing in accordance with this
Agreement;
(iii) The consummation of the transactions contemplated by this
Agreement shall not be in violation of any law, rule or regulation and shall not
be subject to any injunction or restraining order; and
(iv) Any waiting period (and any extension thereof) applicable to the
<PAGE>
consummation of the transaction contemplated by this Agreement under the
Hart-Scott-Rodino Antitrust Improvements Act (the "HSR Act") shall have expired
or been terminated;
(b) It shall be a condition precedent to CCPR's obligation to close
the transactions contemplated by this Agreement that (i) it and its counsel have
had an opportunity to conduct due diligence as to the representations set forth
in this Agreement and CCPR shall be satisfied as to the accuracy of such
representations and (ii) that CCPR shall have entered into certain agreements
with National Telephone Company and HMZ San Juan, Inc. dated as of the date
hereof, and all conditions to closing such agreements shall have been satisfied.
(c) It shall be a condition precedent to Assignor's obligation to
close the transactions contemplated by this Agreement that (i) Cellular has
provided to Assignor and its counsel an opportunity to conduct due diligence as
to the material accuracy of the financial representations set forth in operating
reports of San Juan Telephone Company hereto delivered to Assignor or any of the
Partners; and (ii) Cellular shall not have agreed upon or engaged in a
transaction which would transfer control or equity interests in all or a
material part of the San Juan Cellular Telephone Company, except pursuant to
this Agreement or similar agreements with HMZ San Juan Inc. and National
Telephone Company or as part of a transaction which would involve transfer of
control of Cellular or the transfer or exchange of equity interest in Cellular.
9. Governmental Filings. Each of the parties hereto shall (i)
--------------------
make promptly its respective filings, and thereafter make any other required
submissions, under the HSR Act or otherwise, with respect to the transactions
contemplated by this Agreement and (ii) use its reasonable best efforts to take,
or cause to be taken, all appropriate action, and to do or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective such transactions, including, without limitation,
using its reasonable best efforts to obtain all Approvals of Governmental
Agencies as are required for the consummation of such transactions and to
fulfill the conditions to the Agreement. Each of the parties hereto will use its
reasonable efforts to lift or rescind any injunction or restraining order
described in clause (a)(iii) under Section 8.
10. Registration Statement. (a) Following the Closing, Cellular will use
----------------------
all reasonable efforts to cause to be filed and declared effective as soon as
reasonably practicable (but in any event not later than 90 days after Closing) a
Registration Statement to permit the public resale of the Shares acquired by
Assignor or the Partners pursuant hereto (the "Resale"). Any obligation to
permit the Resale under the Registration Statement shall expire on the earliest
of (i) the date on which all Shares acquired hereunder have been disposed of by
the Partners, (ii) the date on which all Shares acquired pursuant hereto may be
freely sold to the public without restriction under the Securities Act or (iii)
the date which is two years after the Closing (or, in the event that the holding
period under Rule 144(d) of the Securities Act is extended, such later
<PAGE>
date as to correspond with such extended holding period) (the "Expiration"). If
a Partner is deemed to be an "affiliate" of CCPR, such Partner will provide all
information necessary with respect to the Partners and any proposed Resale
necessary for the Registration Statement ("Information") and will comply with
the prospectus delivery requirements of the Securities Act and rules promulgated
thereunder ("Prospectus Delivery").
(b) If at any time prior to the filing of the Registration Statement
or the Expiration, (i) counsel to Cellular has determined in good faith that the
compliance by Cellular with its disclosure obligations in connection with the
Registration Statement would require the disclosure of material information
which Cellular has a bona fide business purpose for preserving as confidential
---- ----
or (ii) Cellular then is unable to comply with its disclosure obligations or SEC
requirements in connection with the Registration Statement, then in either such
case Cellular shall not be required to file the Registration Statement or
maintain the effectiveness thereof or amend or supplement the Registration
Statement for a period (an "Information Delay Period") expiring upon the earlier
to occur of (A) the date on which such material information is disclosed to the
public or ceases to be material or Cellular is able to so comply with its
disclosure obligations and SEC requirements or (B) 30 days, in the case of
clause (i) above, or 45 days, in the case of clause (ii) above, after counsel to
Cellular makes such good faith determination.
(c) Cellular will give prompt written notice to Assignor and the
Partners of the commencement of an Information Delay Period (and duration).
Assignor and each Partner, by its or his acceptance of any Shares, agrees that,
upon receipt of such notice it will forthwith discontinue disposition of the
Shares pursuant to the Registration Statement, and will not deliver any
prospectus forming a part thereof in connection with any sale of Shares until
the expiration of an Information Delay Period.
(d) Notwithstanding anything in this Agreement to the contrary, if the
Registration Statement referred to in this Section 10 has not been declared
effective by July 1, 1996, then Cellular shall issue to Assignor (or its
assigns) a stock certificate or stock certificates evidencing an aggregate of
such number of additional Shares as shall equal 5% of the amount set forth in
Section 1 (b) hereof. If the Registration Statement referred to in this Section
10 has not been declared effective by December 1, 1996, then Assignor (or its
assigns) shall have the right by giving written notice to Cellular to require
Cellular to purchase from Assignor in 1996 up to 34,401 Shares that were issued
to Assignor pursuant to this Agreement. The price per share in any such
redemption shall be equal to the average of the daily closing price on NASDAQ
(or any exchange or other securities trading market which is the principal place
of trading for Cellular's common stock at the time) for the seven trading days
immediately preceding the date on which notice of the redemption is given.
(e) If at any time Cellular shall file an amendment to the
Registration Statement, Cellular shall promptly deliver copies of such amendment
to Assignor or the Partners.
<PAGE>
11. Indemnification by the Partners. Cellular, CCPR and its affiliates
-------------------------------
shall jointly and severally be indemnified and held harmless by Assignor and
each Partner against any and all losses, expenses, damages, injuries, judgments,
claims and liabilities, including reasonable attorney's fees and litigation
expenses ("Losses"), arising from (a) Assignor's ownership of its Interest prior
to the Closing; (b) any material misrepresentation, breach of warranty, or
nonperformance of any obligation hereunder on the part of Assignor or any
Partner; (c) any other act or omission on the part of Assignor or any Partner,
its agents or representatives in connection with its Interest in any
Partnership; (d) any agreement, commitment or obligation of Assignor or any
Partner undertaken in connection with the Interest or the Partnership (and, in
the case of Assignor, arising prior to the Closing) which CCPR does not
expressly and specifically assume either hereunder or in writing prior to the
Closing, (e) Assignor's ownership, operation or conduct of any asset or business
other than the Interest, (f) any liability for any federal, state or local tax
(including interest, penalty or addition thereto) of Assignor incurred on or
prior to the Closing, or (g) based on an untrue statement of fact in the
Information or alleged omission to state therein a material fact necessary to
make the statements therein not misleading, or the failure of any Partner to
effect a Prospectus Delivery; provided, that no indemnification shall be due to
Cellular or any of its affiliates for any Loss resulting solely from an action
taken by Cellular in its capacity as managing general partner of the
Partnership.
12. Indemnification by Cellular and CCPR. Assignor and each Partner shall
-------------------------------------
be indemnified and held harmless by Cellular and CCPR against any and all
losses, arising from (a) CCPR's ownership of the Interest; (b) any material
misrepresentation, breach of warranty, or nonperformance of any obligation
hereunder on the part of Cellular or CCPR; (c) any other act or omission on the
part of CCPR or its affiliates in connection with its interest in the
Partnership or (d) arising out of or based upon an untrue statement of fact in
the Registration Statement or arising out of or based upon the omission or
alleged omission to state therein a material fact necessary to make the
statements therein not misleading, other than those arising out of any
Information.
13. Continuing Effectiveness. Each party's representations shall be true
-------------------------
and correct, and each party's warranties and indemnifications shall be in full
force and effect on the date that the party executes this Agreement and, to the
extent the same are applicable at Closing, as if made on the date and time of
such Closing. Each party's representations, warranties and indemnifications
shall survive the Closing and shall be fully actionable and enforceable
thereafter. In the event that a party becomes aware of any information,
occurrence or omission which would alter any of its representations or would
impair its ability to perform any of its warranties, indemnifications, or
obligations hereunder, or would possibly lead to any right to indemnification,
then the party shall notify the other party immediately of such information,
occurrence or omission and shall disclose all relevant facts. The other party
shall have the opportunity to defend itself, if necessary, in any resulting
proceeding. The settlement of any such proceeding or threatened proceeding shall
be subject to the other party's prior consent if the other party is to be
subject to any obligation to indemnify against the cost of the settlement.
<PAGE>
14. Expenses. Cellular, CCPR, Assignor and each Partner shall each bear
--------
their own legal and other fees and expenses associated with the preparation,
execution and consummation of this Agreement and the filing and prosecution of
any required Governmental Agency submissions, provided that CCPR shall pay any
HSR filing fees to the extent applicable. CCPR will bear all costs associated
with the preparation of the Registration Statement and, to the extent of the
fees and expenses of Cellular's transfer agent or the like, the possible
transfer of Shares from Assignor to the Partners. Each Partner shall bear
broker's fees or discounts associated with a resale of the Shares acquired by
such Partner pursuant hereto.
15. Termination as of Right. Notwithstanding any other provision herein or
-----------------------
termination, this Agreement may be terminated, without liability of any kind, at
the option of either Assignor or CCPR, upon written notice to the other if there
is no Closing in accordance with all the terms of this Agreement on or before
March 31, 1996.
16. Brokers Fees. Each party represents and warrants that it has not
-------------
engaged any broker or finder. Assignor agrees to be solely responsible for any
compensation it may owe for any underlying services in connection with this
transaction, and agrees to hold CCPR and Cellular harmless. Each party
represents and warrants that no other broker or finder has been engaged with
respect to this transaction and that no other brokerage fee, commission, or
finder's fee shall be due in connection with the transaction.
17. Notices. All notices or other communications to parties under this
--------
Agreement shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by cable, telecopy,
facsimile or other standard form of telecommunications, or by registered or
certified mail or Federal Express delivery, postage prepaid, return receipt
requested, addressed as follows:
If to Assignor or the Partners:
Pacific Cellular Telephone Systems
c/o Perry Leff
444 North Faring Road
Los Angeles, CA 90077
with a copy to:
Anne Roberts, Esq.
18 Latimer Road
Santa Monica, CA 90402
If to Cellular or CCPR:
<PAGE>
110 East 59th Street, 26th Floor
New York, New York 10022
Attention: Richard J. Lubasch
18. Governing Law. This Agreement shall be interpreted, enforced and
-------------
governed in accordance with the laws of New York (without regard to the
provisions thereof on the conflict of laws).
19. Binding Effect. This Agreement shall bind and benefit the parties,
---------------
their representatives, and their permitted assignees and successors in interest.
20. Most Favored Treatment. In the event that at any time in 1996, Cellular
----------------------
CCPR, the Partnership or an affiliate, enters into transaction with any person
or entity that owns a minority interest in the Partnership, on more favorable
economic terms than provided for in this Agreement (including by way of
illustration, but not by way of limitation, a greater number of Shares) then
this Agreement shall be amended in such manner as is necessary to incorporate
such more favorable terms. Any such amendment shall be deemed effective as of
the date of this Agreement.
21. Entire Agreement; Counterparts. This Agreement constitutes the entire
------------------------------
agreement between the parties governing this Transaction. No prior agreement or
representation, whether verbal or written, shall have any force or effect. This
Agreement may be modified, superseded or cancelled only in writing signed by
each of the parties to be affected. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any of such counterparts.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
first date above written.
CCPR SERVICES, INC.
By: /s/
---------------------------
Senior Vice President
CELLULAR COMMUNICATIONS OF
PUERTO RICO, INC.
By: /s/
------------------------
Senior Vice President
PACIFIC CELLULAR COMPANY
By: Pac-Cell Partners, Inc.
its general Partner
By: /s/
------------------------
Perry Leff
Chief Executive Officer
<PAGE>
Pacific Cellular Telephone Systems
18 Latimer Road
Santa Monica, CA 90402
December 26, 1995
Cellular Communications of Puerto Rico, Inc.
110 East 59th Street
26th Floor
New York, NY 10022
Dear Sir:
The undersigned, Pacific Cellular Telephone Systems, and all of its
partners desire to exchange a partnership interest in San Juan Cellular
Telephone Company (the "Interest") for common stock of Cellular Communications
of Puerto Rico, Inc. (the "Corporation"). The undersigned, on behalf of itself
and all of the limited partners, acknowledges, and understands that the
Corporation is relying upon such acknowledgement, that (i) undersigned, on
behalf of itself and all of the limited partners, are sophisticated with
knowledge of, and an opportunity to inquire with respect to, the cellular
industry generally and the Corporation's financial position, business, operation
and prospects and (ii) the Corporation is in possession of additional nonpublic
information (collectively, the "Company Information") with respect to the
Corporation's business, financial condition, operations and prospects, including
potential transactions which may involve a change of control ("Potential Control
Transactions"). The Corporation has assured the undersigned, on behalf of itself
and all of the limited partners, that none of the Company Information relates to
a potential transaction which would transfer control or equity interests in all
or a material part of the San Juan Cellular Telephone Company, except pursuant
to an agreement with the undersigned, on behalf of itself and all of the limited
partners, or similar agreements with HMZ San Juan Inc. and National Telephone
Company or as part of a transaction which would involve transfer of control of
Cellular or the transfer or exchange of equity interests in the Corporation.
<PAGE>
Subject to and in reliance upon the foregoing assurances, the undersigned,
on behalf of itself and all of the limited partners, acknowledges that, after
careful consideration and the opportunity to consult with its counsel and other
advisors, the undersigned, on behalf of itself and all of the limited partners,
is prepared to exchange the Interests for stock of Corporation without receipt
of the Company Information.
Very truly yours,
PACIFIC CELLULAR TELEPHONE SYSTEMS
By: Pac-Cell Partners, Inc.
its general Partner
By: /s/
------------------------------
Perry Leff
Chief Executive Officer
<PAGE>
ESCROW AGREEMENT
THIS AGREEMENT made and entered into as of the 26th day of December 1995 by
and among:
Law Offices of Anne B. Roberts, with offices at 18 Latimer Road, Santa
Monica, California 90402 (the "Escrow Agent"); and
Pacific Cellular Telephone Systems withoffices at 18 Latimer Road, Santa
Monica, California 90402 ("Pacific Cellular"); and
Cellular Communications of Puerto Rico, Inc., a Delaware corporation
with offices at 110 East 59th Street, 26th Floor, New York City, New
York 10022 ("Cellular").
W I T N E S S E T H :
WHEAREAS, Cellular and Pacific Cellular have entered into a letter
agreement dated December 26, 1995 (the "Letter Agreement") pursuant to which
certain funds are to be held in escrow from time to time; and
WHEREAS, Escrow Agent has agreed to act as escrow agent hereunder upon the
terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutal promises
herein made the parties hereto hereby agree as follows:
1. CERTAIN DEFINITIONS
- ----------------------
All capitalized terms not otherwise specifically defined herein shall have
the meanings ascribed to them in the Letter Agreement.
2. APPOINTMENT OF ESCROW AGENT
- ------------------------------
The parties hereto hereby jointly appoint Escrow Agent to act as the escrow
agent hereunder, and the Escrow Agent hereby accepts the duties of escrow agent
in accordance with the terms and conditions of this Agreement.
3. ESCROW FUND
- --------------
Pursuant to the Letter Agreement, the parties hereto have caused there to
be deposited $154,805.00 with the Escrow Agent simultaneously with the execution
of this Agreement.
<PAGE>
4. TERM
- --------
The term of this Agreement shall commence on the date hereof and it shall
remain in full force and effect until the Escrow Agent has distributed all of
the Escrow Fund in its possession in accordance with the terms hereof, whereupon
all obligations of the Escrow Agent hereunder shall immediately terminate; but
the obligations of the other parties hereto pursuant to Sections 7, 8, 10, 11,
and 12 hereof shall remain in full force and effect.
5. DUTIES OF ESCROW AGENT; DISTRIBUTIONS
- ----------------------------------------
The Escrow Agent shall hold the Escrow Fund in escrow until authorized
hereunder to deliver the same as described in the Letter Agreement. The Escrow
Agent may, in its discretion, require written authorization from each of the
other parties hereto prior to making any distribution.
6. DUTIES OF THE ESCROW AGENT; INVESTMENT
- -----------------------------------------
The Escrow Agent shall invest the Escrow Fund held pursuant to this
Agreement without delay and keep such cash invested and reinvested in interest
bearing accounts in banks having insurance from the Federal Deposit Insurance
Corporation.
7. DUTIES OF ESCROW AGENT; RELIANCE
- -----------------------------------
(a) The obligations and duties of the Escrow Agent hereunder are purely
ministerial and shall be limited to the safekeeping of the Escrow Fund and the
actions herein specified in accordance with the provisions hereof; accordingly,
the Escrow Agent shall not be responsible for any of the agreements referred to
herein, but shall be obligated only for the performance of such duties as are
specifically set forth herein and no implied duties or obligations of the Escrow
Agent shall be imposed by virtue of this Agreement.
(b) The Escrow Agent may act in reliance upon any writing or instrument or
signature which it, in good faith, believes to be genuine; may assume the
validity and accuracy of any statements or assertions contained in such writing
or instrument; and may assume that any person purporting to give any writing,
notice, advice or instruction in connection with the provisions hereof has been
duly authorized to do so. Except for the Escrow Agent's liability arising from
its gross negligence or fraud, the Escrow Agent shall not be liable in any
manner for the sufficiency or correctness as to form, manner of execution, or
validity of any written instructions, documents or papers deposited or called
for hereunder or delivered to it, nor as to the identity, authority or rights of
any person executing or delivering, or purporting to execute or deliver the same
.
(c) The Escrow Agent may consult counsel satisfactory to it. The Escrow
Agent shall not be personally liable or responsible for any act it may do or
omit to do hereunder while acting in good faith and any acts done or omitted by
it pursuant to the advice of its own counsel shall be conclusive evidence of
such good faith, absent fraud or gross negligence on the part such counsel. In
no event shall the Escrow Agent be liable for indirect, private, special, or
consequential damages.
<PAGE>
(d) The Escrow Agent is hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law, and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of
any court, or agreements stipulated to by the other parties hereto. In the
event the Escrow Agent obeys or complies with any such order, judgment or
decree of any court, it shall not be liable to any of the parties hereto or any
other person, firm or corporation by reason of such compliance, notwithstanding
any such order, judgment or decree being subsequently reversed, modified,
annulled, set aside, vacated or found to have been ordered without
jurisdiction.
8. INTERPLEADER
- ---------------
Notwithstanding any provisions contained herein to the contrary, in the event
of disagreement about the interpretation of this Agreement, or about the rights
or obligations of the parties hereto, or the propriety of any action
contemplated by the Escrow Agent hereunder, the Escrow Agent, may in its sole
discretion, file an action in interpleader to resolve said disagreement. The
Escrow Agent shall be indemnified pursuant to the provisions of Section 11
hereof for all costs and attorneys' fees incurred by it in its capacity as
Escrow Agent in connection with any such interpleader action, shall be fully
protected in suspending all or part of its activities under this Agreement until
a final judgment in the interpleader action has been issued, and upon the
filing of such interpleader action, shall resign as Escrow Agent hereunder, at
the request of any party hereto.
9. SUCCESSOR ESCROW AGENT
- -------------------------
The Escrow Agent may resign at any time upon the giving of 10 days written
notice to the other parties to this Agreement or, in the event of any
litigation involving this Agreement, shall resign upon the request of the
parties hereto, in which case the Escrow Agent's duties hereunder shall
terminate and the Escrow Agent shall be relieved and discharged of all
obligations, responsibilities and liabilities hereunder. Upon any such
resignation or a resignation under Section 8 hereof, the other parties hereto
shall jointly appoint a successor escrow agent, who shall assume the duties of
Escrow Agent hereunder. The Escrow Agent shall immediately deposit all Escrow
Funds with the successor escrow agent so appointed. If a successor Escrow Agent
is not appointed within 10 days after notice of resignation, the Escrow Agent
may petition any court of competent jurisdiction to name a successor Escrow
Agent and may deposit the Escrow Fund with such court.
10. ADDITIONAL INSTRUCTIONS
- ---------------------------
The parties hereto at their respective cost and expense shall cooperate with
and assist the Escrow Agent as reasonably requested by the Escrow Agent in
connection with the Escrow Agent's performance of its obligations hereunder.
Specifically, but not in limitation of the generality of the foregoing, the
parties hereto shall furnish the Escrow Agent with other and
<PAGE>
further documents or instruments reasonably requested by the Escrow Agent in
connection with this Agreement or its obligations with respect hereto.
11. IDEMNIFICATION
- ------------------
The other parties hereto shall reimburse the Escrow Agent for all reasonable
expenses incurred by the Escrow Agent in connection with its duties hereunder,
unless and until the Escrow Agent is determined by a court of competent
jurisdiction to have discharged any of its duties hereunder in a grossly
negligent manner or to have been guilty of willful misconduct with regard to any
of its duties hereunder. Except for the Escrow Agent's liability arising from
its gross negligence or fraud, each of the other parties hereto shall jointly
and severally indemnify and hold the Escrow Agent harmless from any and all
claims, liabilities, losses, damages, penalties, claims, actions, suits,
proceedings at law or equity, or any other expenses, fees, or charges of any
nature whatsoever which it may incur or with which it may be threatened by
reason of its acting as Escrow Agent under this Agreement; and in connection
therewith to indemnify the Escrow Agent against any and all expenses including
attorneys' fees and the cost of defending any action, suit or proceeding or
resisting any claim in such capacity; provided, however, that in the event of
a dispute among the other parties hereto, the nonprevailing party shall
indemnify and hold the prevailing party harmless against any and all costs and
expenses (including reasonable attorneys' fees) incurred by the prevailing
party pursuant to the provisions hereof.
12. REPRESENTATION
- ------------------
The parties hereto acknowledge and agree that the Escrow Agent has acted, and
may continue to act, as counsel to Pacific Cellular in connection with the
negotiation of the Letter Agreement and the consummation of the transactions
contemplated thereby and that the Escrow Agent may represent Pacific Cellular in
the future including, without limitation with respect to (a) disputes arising
under the terms of the Letter Agreement (or any other agreement, document, or
instrument executed and delivered in accordance therewith or contemplated
thereby); or (b) disputes that may involve the rights or obligations of the
other parties hereto hereunder. Cellular hereby waives any claim of conflict of
interest which may arise from the actions of the Escrow Agent hereunder and its
representation of Pacific Cellular, and agrees that the Escrow Agent shall not
be disqualified or otherwise estopped from representing Pacific Cellular in any
matter in the future. Cellular hereby waives any claim of conflict of interest
which may arise from the fact that the Escrow Agent is a Limited Partner of
Pacific Cellular.
13. MISCELLANEOUS
- -----------------
(a) Notices. Any notice, request, acknowledgement, consent, or other
--------
communication which any party hereto is required or permitted to give to another
party shall be in writing and shall be delivered personally, sent by registered
or certified mail, return receipt requested, or sent by a recognized overnight
delivery service, in any such case to the recipient at his or its address first
stated above or at such other address of which he or it shall have given the
other party or parties
<PAGE>
due notice hereunder. Any such notice shall be deemed to have been delivered,
given, and received for all purposes as of the date so delivered.
(b) Waiver. The failure of any party to insist in any one or more instances
------
upon the performance of any of the terms and conditions of this Agreement shall
not be construed as a waiver or relinquishment of any right granted hereunder,
or of the future performance of any such term or condition.
(c) Entire Agreement. This Agreement sets forth the entire understanding of the
----------------
parties hereto with respect to the subject matter hereof and supersedes any
prior understandings or agreements among the parties, whether written or oral,
to the extent related to the subject matter hereof.
(d) Further Acts. Each of the parties hereto shall execute and deliver all such
------------
additional documents or legal instruments, and shall perform or cause to be
performed all such further acts and things, as may be necessary or desirable to
carry out the purposes and intent of this Agreement.
(e) Amendment. This Agreement may not be amended, modified or altered in any
---------
manner, except pursuant to the terms of a written instrument signed by each of
the parties hereto.
(f) Invalid Provision. The invalidity or unenforceability of any particular
-----------------
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall thereafter be construed in all respects as if such invalid
or unenforceable provisions were omitted.
(g) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the domestic laws of the State of California without giving any
effect to any choice or conflict of law provision or rule (whether of the State
of California or of any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of California.
(h) Binding Nature. This Agreement shall be binding upon and inure to the
--------------
benefit of the parties hereto and their successors, personal representatives,
heirs, devisees, guardians and assigns.
(i) Counterparts. This Agreement may be executed in any number of counterparts
------------
and all of such counterparts taken together shall for all purposes constitute
one agreement binding upon all of the parties.
(j) Headings. The headings contained in this Agreement are for reference
--------
purposes only and shall not affect the meaning or interpretation of this
Agreement.
(k) Usage. In construing this Agreement, feminine or neuter pronouns shall be
------
substituted for those of the masculine form, and the plural for the singular,
and vice versa, in any case in which the context may require. The capitalized
terms used in this Agreement shall have the meaning first applied to their first
usage in this Agreement unless otherwise indicated.
(l) Third Parties. Nothing contained in this Agreement is intended or shall be
-------------
construed to give any person, corporation or other entity, other than the
parties hereto and their respective successors and assigns, any legal or
equitable right, remedy or claim under or in respect of this
<PAGE>
Agreement or any provision herein contained, this Agreement being intended to be
and being for the sole and exclusive benefit of the parties hereto and their
respective successors and assigns.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on and as of
the date first above written:
LAW OFFICES OF ANNE B. ROBERTS
By: /s/
---------------------------
PACIFIC CELLULAR TELEPHONE
SYSTEMS
By: /s/
---------------------------
Chief Executive Officer of Pac-Cell
Partners, Inc.
General Partner of Pacific Cellular
CELLULAR COMMUNICATIONS OF
PUERTO RICO, INC.
By: /s/
-------------------------------
Its Senior Vice President
<PAGE>
Pacific Cellular Telephone Systems
18 Latimer Road
Santa Monica, California 90402
December 26, 1995
Cellular Communications of Puerto Rico, Inc.
110 E. 59th Street, 26th Floor
New York, New York 10025
Re: San Juan Cellular Telephone Company
Gentlemen:
On or shortly before the date of this letter, San Juan Cellular Telephone
Company has made a distribution of $172,006.00 which after tax withholding will
result in $154,805.00 to Pacific Cellular Telephone Systems, a California
Limited Partnership ("Pacific Cellular"), one of the partners of San Juan
Cellular Telephone Company.
On or shortly before the date of this letter, Pacific Cellular and its
partners have entered into an Agreement with Cellular Communications of Puerto
Rico, Inc. ("Cellular") and CCPR Services, Inc. (the "Agreement"), providing
for, among other things, the acquisition of all or substantially all of the
assets of Pacific Cellular in exchange for shares of stock of Cellular. In the
event that the closing of the transaction contemplated by the Agreement has not
occurred by March 31, 1996, Pacific Cellular will make a capital contribution of
$154,805.00 to San Juan Cellular Telephone Company.
In order to ensure the contribution of Pacific Cellular to San Juan Cellular
Telephone Company, $154,805.00 will be deposited as an Escrow Fund with the Law
Offices of Anne B. Roberts as Escrow Agent. Upon the closing of the transactions
contemplated by the Agreement on or before March 31, 1996, the escrow will be
terminated and the Escrow Fund will be distributed to Pacific Cellular. In the
event that the closing of the transactions contemplated by the Agreement has not
occurred by March 31, 1996, the escrow will be terminated and the Escrow Funds
will be distributed to San Juan Cellular Telephone Company, in satisfaction of
the obligations of Pacific Cellular as described above. Except in the event that
there is any dispute regarding the Escrow Fund, the fees of the Escrow Agent
shall be borne by Pacific Cellular. In the event that there is a dispute
regarding the Escrow Fund, the fees of the Escrow Agent shall be borne 50% by
Pacific Cellular and 50% by Cellular.
<PAGE>
Cellular Communications of Puerto Rico, Inc.
December 26, 1995
Page two
Please indicate your agreement to the foregoing by executing this letter in
the space provided below.
Sincerely,
/s/
Perry Leff, Chief Executive Officer
Pac-Cell Partners, Inc.
General Partner of
Pacific Cellular Telephone Systems
Accepted, acknowledged and
agreed to:
CELLULAR COMMUNICATIONS OF
PUERTO RICO, INC.
By: /s/
----------------------------------
Its Senior Vice President
<PAGE>
EXHIBIT 5.1
[CCPR letterhead]
May 8, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
I am Senior Vice President, General Counsel and Secretary of Cellular
Communications of Puerto Rico, Inc., a Delaware corporation (the "Company"), and
I or members of my staff have represented the Company in connection with the
Company's Registration Statement on Form S-3 (the "Registration Statement")
being filed by the Company with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Securities Act"), providing for the
registration for sale of up to 820,404 shares of the Company's Common Stock, par
value $.01 per share (the "Shares"), and associated Series A Junior
Participating Preferred Stock Purchase Rights (the "Rights") issued pursuant to
the transactions described in the Registration Statement relating to San Juan
Cellular Telephone Company (the "Transactions").
This opinion is delivered in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the Securities Act.
In connection with this opinion, I or members of my staff have examined and
are familiar with originals or copies, certified or otherwise identified to our
satisfaction, of (i) the Registration Statement, (ii) the documents and
agreements relating to the Transactions and the Rights, (iii) the resolutions
adopted by the Board of Directors of the Company relating, among other things,
to the issuance and registration of the Shares in the Transactions (v) the
Restated Certificate of Incorporation of the Company, as amended, (vi) the By-
laws of the Company as currently in effect, and (vii) such other corporate
records or documents as we have deemed necessary to enable me to express the
opinion hereinafter set forth.
In our examination, I or members of my staff have assumed the legal
capacity of all natural persons, the genuineness of all signatures, the
authenticity of all documents submitted to us as certified or photostatic copies
and the authenticity of the originals of such latter documents.
I am a member of the Bar in the State of New York and I do not express any
opinion as the laws of any other jurisdiction other than Delaware general
corporation law and the laws of the United States of America.
Based upon and subject to the foregoing, I am of the opinion that the
Shares and the Rights issued in the Transactions are duly authorized and
validly issued, fully paid and nonassessable Shares.
I hereby consent to the reference to me under the heading "Legal Matters"
in the prospectus which constitutes a part of the Registration Statement and the
filing of this opinion as Exhibit 5 to the Registration Statement.
Very truly yours,
/s/ Richard J. Lubasch
Richard J. Lubasch
Senior Vice President,
General Counsel and
Secretary
<PAGE>
Exhibit 23.1
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Cellular
Communications of Puerto Rico, Inc. for the registration of 820,404 shares of
its common stock and to the incorporation by reference therein of our report
dated February 23, 1996, with respect to the consolidated financial statements
of Cellular Communications of Puerto Rico, Inc. included in its Annual Report
(Form 10-K) for the year ended December 31, 1995, filed with the Securities and
Exchange Commission.
/s/ ERNST & YOUNG LLP
San Juan, Puerto Rico
May 8, 1996
