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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report: April 5, 1996
AirTouch Communications, Inc.
Delaware 1-12342 94-3213132
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
One California Street, San Francisco, California 94111
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 658-2000
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Item 5. Other Events.
AirTouch Communications, Inc. ("AirTouch") announced on Saturday, April 6, 1996
that it will acquire the shares of Cellular Communications, Inc. that it did not
already own as described in the press release attached as Exhibit 99.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
Exhibit 10. Agreement and Plan of Merger among AirTouch Communications,
Inc., AirTouch Cellular and Cellular Communications, Inc.
dated as of April 5, 1996.
Exhibit 99. Press Release dated April 6, 1996.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AIRTOUCH COMMUNICATIONS, INC.
By: /s/ Mohan S. Gyani
------------------
Mohan S. Gyani
Executive Vice President and
Chief Financial Officer
Date: April 9, 1996
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Exhibits Index
Exhibit 10. Agreement and Plan of Merger among AirTouch Communications,
Inc., AirTouch Cellular and Cellular Communications, Inc.
dated as of April 5, 1996.
Exhibit 99. Press Release dated April 6, 1996.
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EXHBIT 10
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AGREEMENT AND PLAN OF MERGER
among
AIRTOUCH COMMUNICATIONS, INC.,
AIRTOUCH CELLULAR
and
CELLULAR COMMUNICATIONS, INC.
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Dated as of April 5, 1996
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TABLE OF CONTENTS
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ARTICLE I THE MERGER................................................................................ 1
1.1 Effective Time of the Merger.............................................................. 1
1.2 Closing................................................................................... 2
1.3 Effects of the Merger..................................................................... 2
ARTICLE II MANNER OF CONVERTING SHARES............................................................... 2
2.1 Certain Definitions....................................................................... 2
2.2 Conversion of Securities.................................................................. 3
(a) AirTouch Cellular Capital Stock.................................................... 3
(b) CCI Stock.......................................................................... 3
(c) Election of Consideration.......................................................... 3
(d) Excess Cash Elections.............................................................. 4
(e) Excess Unit Elections.............................................................. 4
(f) Insufficient Elections............................................................. 4
(g) Class B Maximum Adjustment......................................................... 5
(h) Treasury Shares; Shares Held by AirTouch........................................... 5
(i) Dissenting Shares.................................................................. 5
(j) No Fractional Shares............................................................... 5
(k) Closing of Transfer Books.......................................................... 6
(l) Adjustments to Preserve Tax Status of Merger....................................... 6
2.3 Election Procedures....................................................................... 6
2.4 Adjustments for Dilution and Other Matters................................................ 7
2.5 Conversion of Dissenting CCI Stock........................................................ 7
2.6 Employee Stock Options.................................................................... 7
2.7 CCI Convertible Debt...................................................................... 8
2.8 Calculation of Conversion Price for AirTouch Class B and Class C Preferred................ 8
2.9 Rights Plan Redemption Consideration...................................................... 9
ARTICLE III EXCHANGE OF SHARES........................................................................ 9
3.1 Exchange Procedures....................................................................... 9
3.2 Voting and Dividends...................................................................... 10
3.3 No Liability.............................................................................. 10
3.4 Withholding Rights........................................................................ 10
ARTICLE IV REPRESENTATIONS AND WARRANTIES............................................................ 11
4.1 Representations and Warranties of CCI..................................................... 11
(a) Corporate Organization............................................................. 11
(b) Capitalization..................................................................... 11
(c) Authority.......................................................................... 12
(d) Disclosure Documents............................................................... 12
(e) Consents; No Violation............................................................. 13
(f) SEC Reports; Material Contracts; Financial Statements.............................. 13
(g) Absence of Certain Changes......................................................... 14
(h) Undisclosed Liabilities............................................................ 14
(i) Compliance with Laws............................................................... 14
(j) Legal Proceedings.................................................................. 14
(k) Finders; Investment Bankers........................................................ 14
(l) Tax Returns, Audits and Liabilities................................................ 14
(m) Employee Benefit Plans............................................................. 16
(n) Opinion of Financial Advisor....................................................... 17
(o) Intercompany Balances; Transactions with Affiliates................................ 17
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(p) Tax Matters........................................................................ 18
(q) Material Contracts................................................................. 18
4.2 Representations and Warranties of AirTouch................................................ 18
(a) Corporate Organization............................................................. 18
(b) Capitalization..................................................................... 18
(c) Authority.......................................................................... 18
(d) Valid Issuance..................................................................... 18
(e) Disclosure Documents............................................................... 18
(f) Consents; No Violation............................................................. 19
(g) SEC Reports; Financial Statements.................................................. 19
(h) Absence of Certain Changes......................................................... 19
(i) Finders; Investment Bankers........................................................ 20
(j) Tax Matters........................................................................ 20
ARTICLE V PRE-CLOSING COVENANTS..................................................................... 20
5.1 CCI Interim Operations.................................................................... 20
(a) Conduct of Business................................................................ 20
(b) Charters and By-Laws; Ownership of New Par......................................... 20
(c) Capital Stock...................................................................... 20
(d) Dividends; Other Payments.......................................................... 20
(e) No Material Transactions; No Affiliate Transactions................................ 20
(f) Employee Plans, Compensation, et. ................................................. 21
(g) Assets............................................................................. 21
(h) Debt............................................................................... 21
(i) Settlements........................................................................ 22
(j) Accounting Methods................................................................. 22
(k) Merger Fees........................................................................ 22
(l) No Inconsistent Acts............................................................... 22
5.2 Certain Covenants of AirTouch............................................................. 22
(a) Charters and Bylaws................................................................ 22
(b) Capital Stock; Dividends........................................................... 22
(c) Disposition of Assets.............................................................. 22
5.3 Access and Information.................................................................... 23
5.4 Registration Statement.................................................................... 23
5.5 Stockholders' Approval.................................................................... 24
5.6 Stockholder Rights Plan................................................................... 24
5.7 Tax Matters............................................................................... 24
5.8 Indemnification........................................................................... 24
5.9 Further Assurances; Cooperation........................................................... 24
5.10 New York Office Lease; Furniture and Fixtures............................................. 25
5.11 Affiliates; Other Documents............................................................... 25
5.12 Affiliate Transactions.................................................................... 25
5.13 Redemption of Series B Preference Stock................................................... 25
5.14 Accountants "Comfort" Letters............................................................. 26
5.15 Employees................................................................................. 26
5.16 Expenses.................................................................................. 26
5.17 Sale of Celsat Subsidiaries............................................................... 26
5.18 Transition Arrangements................................................................... 26
5.19 Maintenance of D&O Insurance.............................................................. 27
ARTICLE VI CONDITIONS................................................................................ 27
6.1 Conditions to Each Party's Obligation to Effect the Merger................................ 27
(a) Stockholder Approval............................................................... 27
(b) Regulatory Approvals............................................................... 27
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(c) HSR Act............................................................................ 27
(d) Registration Statement Effective................................................... 27
(e) State Securities Laws.............................................................. 27
(f) NYSE Listing....................................................................... 27
(g) No Injunction...................................................................... 27
6.2 Conditions to Obligations of CCI to Effect the Merger..................................... 27
(a) Representations and Warranties..................................................... 28
(b) Performance of Obligations......................................................... 28
(c) Legal Opinions..................................................................... 28
(d) Comfort Letter of AirTouch's Accountants........................................... 28
(e) Tax Opinion........................................................................ 28
6.3 Conditions to Obligations of AirTouch to Effect the Merger ............................... 28
(a) Representations and Warranties..................................................... 28
(b) Performance of Obligations......................................................... 28
(c) FCC Consents....................................................................... 28
(d) Consents Under Agreements.......................................................... 28
(e) Legal Opinions..................................................................... 29
(f) Tax Opinion........................................................................ 29
(g) Litigation, etc.................................................................... 29
(h) Comfort Letter of CCI's Accountants................................................ 29
(i) Rights Agreement................................................................... 29
(j) Consummation of Certain Transactions............................................... 29
(k) Absence of Restrictive Conditions.................................................. 29
(l) Contingent Liabilities............................................................. 29
(m) Change in Business Condition....................................................... 30
(n) Amendment of Indemnification Agreements............................................ 30
ARTICLE VII TERMINATION; AMENDMENT AND MISCELLANEOUS.................................................. 30
7.1 Termination............................................................................... 30
7.2 Effect of Termination..................................................................... 31
7.3 Termination Expenses...................................................................... 31
7.4 Non-Survival of Representations, Warranties and Coventants Following the Effective Time... 31
7.5 Waiver and Amendment...................................................................... 31
7.6 Entire Agreement.......................................................................... 31
7.7 Applicable Law............................................................................ 31
7.8 Interpretation............................................................................ 31
7.9 Notices................................................................................... 31
7.10 Counterparts.............................................................................. 32
7.11 Severability.............................................................................. 32
7.12 No Assignment............................................................................. 32
7.13 Specific Performance...................................................................... 33
7.14 Consent to Jurisdiction................................................................... 33
7.15 Publicity................................................................................. 33
Certain Schedules and Exhibits that do not contain material information have been omitted. The
Company will furnish such exhibits and schedules to the Commission supplementally upon request.
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Table of Certain Defined Terms
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Term Section
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Affiliate Transactions 4.1(o)
AirTouch Common Stock 4.2(b)
AirTouch Preferred Stock Issue Price 2.8(c)
AirTouch Security 2.2(j)
Business Condition 4.1(e)
Cash Election 2.2(c)
Cash Election Shares 2.2(d)
CCI Class A Preferred 4.1(b)
CCI Class A Preference Stock 4.1(b)
CCI Convertible Debt 2.7
CCI Financial Statements 4.1(f)
CCI Option Plans 2.6
CCI Redeemable Preferred 4.1(b)
CCI Series A Common 4.1(b)
CCI Series B Preference Stock 4.1(b)
CCI Series C Common 4.1(b)
CCI Series D Preference Stock 4.1(b)
CGCL 1.1(b)
Closing 1.2
Closing Date 1.2
Code Recitals
Commission 2.6(b)
Confidentiality Agreement 7.2(b)
Credit Agreement 5.1(h)
DGCL 1.1(a)
Disclosure Documents 4.1(d)
Dissenting CCI Stock 2.2(i)
Effective Time 1.1
Employee New Options 4.1(b)
Exchange Act 4.1(d)
Exchange Agent 2.2(k)
Existing Agreement Recitals
FCC Consents 6.3(c)
Form of Election 2.2(c)
Governmental Entity 4.1(e)
HSR Act 4.1(e)
Intercompany Balances 4.1(o)
Merger Recitals
Merger Fees 4.1(k)
New Par Recitals
Non-Election 2.2(c)
Non-Election Shares 2.2(d)
NYSE 2.8(c)
Per Share Cash Consideration 2.2(b)
Per Share Unit Consideration 2.2(b)
Proxy Statement 4.1(d)
Registration Statement 4.2(e)
Regulatory Approvals 4.1(e)
Rights 4.1(b)
Rights Agreement 4.1(b)
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Term Section
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Rights Redemption 5.6
Securities Act 3.1(c)
Stockholders Meeting 5.5
Surviving Corporation 1.3(a)
Unit Election 2.2(c)
Unit Election Shares 2.2(e)
Volume Weighted-Average Trading Price 2.8(c)
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into
as of April 5, 1996, among AIRTOUCH COMMUNICATIONS, INC., a Delaware
corporation ("AirTouch"), AIRTOUCH CELLULAR, a California corporation
("AirTouch Cellular"), and CELLULAR COMMUNICATIONS, INC., a Delaware
corporation ("CCI").
W I T N E S S E T H:
WHEREAS, AirTouch and CCI, among others, are parties to an Amended
and Restated Agreement and Plan of Merger and Joint Venture Organization dated
as of December 14, 1990 (the "Existing Agreement"); and
WHEREAS, pursuant to the Existing Agreement, AirTouch and CCI on July
31, 1991 organized New Par, a Delaware general partnership ("New Par"), and
currently each hold indirectly a fifty percent ownership interest therein; and
WHEREAS, AirTouch presently owns approximately 37% of the outstanding
capital stock of CCI and, pursuant to an Appraisal Process (as defined in the
Existing Agreement) which is currently scheduled to commence on August 2, 1996,
has the right, by causing the Redemption (as defined in the Existing
Agreement), to acquire the rest of CCI's equity; and
WHEREAS, pursuant to the terms and subject to the conditions of this
Agreement, AirTouch and CCI desire instead to effect a business combination in
the form of a merger of CCI with and into AirTouch Cellular, or another wholly
owned subsidiary of AirTouch (the "Merger"); and
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under the provisions of section 368 of
the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the respective Boards of Directors of AirTouch, AirTouch
Cellular and CCI have resolved that the transactions described herein are in
the best interests of the parties and their respective stockholders and have
approved the transactions described herein.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements herein contained, the
parties hereby agree as follows:
ARTICLE I
THE MERGER
1.1 Effective Time of the Merger. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date:
(a) a certificate of merger (the "Certificate of Merger")
shall be duly prepared and executed by AirTouch Cellular and thereafter
delivered to the Secretary of State of Delaware for filing, as provided
in the Delaware General Corporation Law ("DGCL"); and
(b) an agreement of merger, together with related certificates
(the "Agreement of Merger"), shall be duly prepared and executed by
AirTouch Cellular and thereafter delivered to the Secretary of State of
California for filing, as provided in the California General
Corporation Law ("CGCL").
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The Merger shall become effective upon the later of such filings, or at
such time thereafter as is provided in the Certificate of Merger or Agreement
of Merger (the "Effective Time").
1.2 Closing. The closing of the Merger (the "Closing") shall take
place at 10:00 a.m. on the second business day after satisfaction (or waiver)
of each of the conditions set forth in Article 6 (the "Closing Date"), at the
offices of Pillsbury Madison & Sutro LLP in San Francisco, California, unless
another time, date or place is agreed to in writing by the parties hereto.
1.3 Effects of the Merger.
(a) At the Effective Time, (i) the separate existence of CCI shall
cease, and CCI shall be merged with and into AirTouch Cellular with the result
that AirTouch Cellular shall be the "Surviving Corporation" following the
Effective Time, (ii) the Certificate of Incorporation of AirTouch Cellular as
in effect immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation and (iii) the by-laws of AirTouch
Cellular as in effect immediately prior to the Effective Time shall be the
by-laws of the Surviving Corporation.
(b) The directors and officers of AirTouch Cellular immediately prior
to the Effective Time shall be the directors and officers, respectively, of the
Surviving Corporation as of the Effective Time and until their successors are
duly appointed and elected in accordance with applicable law.
(c) At and after the Effective Time, the Merger shall have the effects
set forth in section 259 of the DGCL and section 1107 of the CGCL.
ARTICLE II
MANNER OF CONVERTING SHARES
2.1 Certain Definitions. As used in Article II and elsewhere in this
Agreement, the following terms shall have the meanings set forth below:
"AirTouch Class B Preferred" means AirTouch's 6.00% Mandatorily
Convertible Class B Preferred Stock, Series 1996, par value $0.01 per
share, to be issued at the Closing pursuant to the Certificate of
Designation, Preferences and Rights attached hereto as Exhibit 2.1(a).
"AirTouch Class C Preferred" means AirTouch's 4.25% Convertible
Class C Preferred Stock, Series 1996, par value $0.01 per share, to be
issued at the Closing pursuant to the Certificate of Designation,
Preferences and Rights attached hereto as Exhibit 2.1(b).
"AirTouch Preferred Stock Issue Price" has the meaning set
forth in Section 2.8(c).
"Cash Election Number" shall be equal to (i) 28% of the number
of CCI Common Equivalent Shares outstanding as of immediately prior to
the Effective Time, minus (ii) the number of CCI Common Equivalent
Shares represented by Dissenting CCI Stock; provided that the Cash
Election Number shall be subject to adjustment in accordance with
Section 2.2(l).
"Class B Per-Unit Amount" means an amount equal to (i) $27.50,
divided by (ii) the AirTouch Preferred Stock Issue Price, as adjusted
in accordance with Sections 2.2(g) and 2.2(l) (calculated to the
nearest one-thousandth).
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"Class C Per-Unit Amount" means 0.550, as adjusted in
accordance with Sections 2.2(g) and 2.2(l) (calculated to the nearest
one-thousandth).
"CCI Common Stock" means the CCI Series A Common and the CCI
Series C Common.
"CCI Stock" means the CCI Common Stock, the CCI Redeemable
Preferred, the CCI Class A Preference Stock, and the CCI Series B
Preference Stock.
"CCI Common Equivalent Shares" means, as of any particular
time, the sum of (i) the number of issued and outstanding shares of CCI
Common Stock and (ii) the number of shares of CCI Common Stock into
which shares of issued and outstanding shares of CCI Redeemable
Preferred, CCI Class A Preference Stock and CCI Series B Preference
Stock are convertible (excluding, for purposes of either calculation,
any treasury shares and shares held by AirTouch).
"Unit" means one unit of AirTouch securities (nominal value,
$55 per unit) consisting of (i) a number of shares of AirTouch Class B
Preferred equal to the Class B Per-Unit Amount and (ii) a number of
shares of AirTouch Class C Preferred equal to the Class C Per-Unit
Amount.
"Unit Election Number" shall be equal to 72% of the number of
CCI Common Equivalent Shares outstanding as of immediately prior to the
Effective Time; provided that the Unit Election Number shall be subject
to adjustment in accordance with Section 2.2(l).
2.2 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of AirTouch, AirTouch Cellular, CCI
or the holders of any of the following securities:
(a) AirTouch Cellular Capital Stock. Each share of capital
stock of AirTouch Cellular issued and outstanding immediately prior to
the Effective Time shall remain outstanding as one share of Common
Stock of the Surviving Corporation;
(b) CCI Stock. Subject to the other provisions of this
Section 2.2 and Article II (including, without limitation, Section
2.9), each share of CCI Stock issued and outstanding immediately prior
to the Effective Time (excluding any treasury shares, shares held by
AirTouch, and shares of Dissenting CCI Stock) shall be converted into
the right to receive, for each CCI Common Equivalent Share represented
thereby:
(i) one Unit, subject to adjustment in accordance with
Section 2.4 (the "Per Share Unit Consideration"),
(ii) $55 in cash, without interest, subject to adjustment in
accordance with Section 2.4 (the "Per Share Cash
Consideration"), or
(iii) a combination of a fraction of a Unit and cash;
determined in accordance with Section 2.2(d), Section 2.2(e) or Section
2.2(f), as applicable.
(c) Election of Consideration. Subject to the allocation and
election procedures set forth in this Section 2.2, each holder of
record (as of the Effective Time) of shares of CCI Stock will be
entitled (i) to elect to receive cash for all of such shares (a "Cash
Election"), (ii) to elect to receive Units for all of such shares (a
"Unit Election"), or (iii) to indicate that such record holder has no
preference as to the receipt of cash or Units for such shares (a
"Non-Election"). All such elections shall be made on a form designed
for that purpose (a
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"Form of Election"). Holders of record of shares of CCI Stock who hold
such shares as nominees, trustees or in other representative capacities
(a "Representative") may submit multiple Forms of Election, provided
that such Representative certifies that each such Form of Election
covers all the shares of CCI Stock held by each Representative for a
particular beneficial owner.
(d) Excess Cash Elections. If the aggregate number of CCI
Common Equivalent Shares covered by Cash Elections (the "Cash Election
Shares") exceeds the Cash Election Number, all shares of CCI Stock
covered by Unit Elections and all shares of CCI Stock covered by
Non-Elections (the "Non-Election Shares") shall be converted into the
right to receive Units, and the shares of CCI Stock covered by Cash
Elections shall be converted into the right to receive Units and cash
in the following manner:
each share shall be converted into the right to receive (i) an
amount in cash, without interest, equal to the product of (x)
the Per Share Cash Consideration and (y) a fraction (the "Cash
Fraction"), the numerator of which shall be the Cash Election
Number and the denominator of which shall be the total number
of Cash Election Shares, and (ii) a number of Units equal to
the product of (x) the Per Share Unit Consideration and (y) a
fraction equal to one minus the Cash Fraction, multiplied in
each case by the number of CCI Common Equivalent Shares
represented by such share.
(e) Excess Unit Elections. If the aggregate number of CCI
Common Equivalent Shares covered by Unit Elections (the "Unit Election
Shares") exceeds the Unit Election Number, all shares of CCI Stock
covered by Cash Elections and all shares of CCI Stock covered by
Non-Elections shall be converted into the right to receive cash, and
all shares of CCI Stock covered by Unit Elections shall be converted
into the right to receive Units and cash in the following manner:
each share shall be converted into the right to receive (i) a
number of Units equal to a fraction (the "Unit Fraction"), the
numerator of which shall be the Unit Election Number and the
denominator of which shall be the total number of Unit Election
Shares, and (ii) an amount in cash, without interest, equal to
the product of (x) the Per Share Cash Consideration and (y) a
fraction equal to one minus the Unit Fraction, multiplied in
each case by the number of CCI Common Equivalent Shares
represented by such share.
(f) Insufficient Elections. In the event that neither Section
2.2(d) nor Section 2.2(e) above is applicable, all shares of CCI Stock
covered by Cash Elections shall be converted into the right to receive
cash, all shares of CCI Stock covered by Unit Elections shall be
converted into the right to receive Units, and the shares of CCI Stock
covered by Non-Elections, if any, shall be converted into the right to
receive Units and cash in the following manner:
each share shall be converted into the right to receive (i) an
amount in cash, without interest, equal to the product of (x)
the Per Share Cash Consideration and (y) a fraction (the
"Non-Election Fraction"), the numerator of which shall be the
excess, if any, of the Cash Election Number over the total
number of Cash Election Shares and the denominator of which
shall be the excess of (A) the number of shares of CCI Common
Equivalent Shares immediately prior to the Effective Time over
(B) the sum of the total number of Cash Election Shares and the
total number of Unit Election Shares and (ii) a number of Units
equal to the product of (x) the Per Share Unit Consideration
and (y) a fraction equal to one minus the Non-Election
Fraction,
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multiplied in each case by the number of CCI Common Equivalent
Shares represented by such share.
(g) Class B Maximum Adjustment. Notwithstanding the
foregoing, the number of shares of AirTouch Class B Preferred issued in
the Merger (without regard to conversions of CCI Convertible Debt or
exercises of options under the CCI Option Plans occurring, in either
case, after the Effective Time) shall in no event exceed the quotient
of (i) $500 million, divided by (ii) the AirTouch Preferred Stock Issue
Price (the "Class B Maximum"). If the calculations pursuant to
Sections 2.2(d)-(f) would otherwise cause the number of shares of
AirTouch Class B Preferred issued in the Merger to exceed the Class B
Maximum, then instead of issuing such shares of AirTouch Class B
Preferred in excess of the Class B Maximum (the "Class B Excess"), the
composition of each Unit shall be adjusted as follows:
(i) the Class B Per-Unit Amount shall be decreased by an
amount equal to (x) the Class B Excess, divided by (y) the
number of Units to be issued in the Merger (the "Class B
Per-Unit Reduction"); and
(ii) the Class C Per-Unit Amount shall be increased by an
amount equal to (x) the amount of the Class B Per-Unit
Reduction, multiplied by (y) a fraction, the numerator of which
is the Class C Per-Unit Amount (prior to making any adjustment
hereunder) and the denominator of which is the Class B Per-Unit
Amount (prior to making any adjustment hereunder).
(h) Treasury Shares; Shares Held by AirTouch. Each share of
CCI Stock held in the treasury of CCI and each share of CCI Stock owned
by AirTouch or any direct or indirect wholly owned subsidiary of
AirTouch or of CCI immediately prior to the Effective Time shall be
canceled and extinguished without any conversion thereof and no payment
shall be made with respect thereto.
(i) Dissenting Shares. Each outstanding share of CCI Stock as
to which a written demand for appraisal is filed in accordance with
section 262 of the DGCL at or prior to the Stockholders' Meeting and
not withdrawn at or prior to the Stockholders' Meeting and which is not
voted in favor of the Merger shall not be converted into or represent a
right to receive Units or cash hereunder unless and until the holder
shall have failed to perfect, or shall have effectively withdrawn or
lost his or her right to appraisal of and payment for his or her CCI
Stock under such section 262, at which time his or her shares shall be
treated in accordance with Section 2.5. All such shares of CCI Stock
as to which such a written demand for appraisal is so filed and not
withdrawn at or prior to the time of such vote and which are not voted
in favor of the Merger, except any such shares of CCI Stock the holder
of which, prior to the Effective Time, shall have effectively withdrawn
or lost his or her right to appraisal of payment for his or her shares
of CCI Stock under such section 262,are herein called "Dissenting CCI
Stock." CCI shall give AirTouch prompt notice upon receipt by CCI of
any written demands for appraisal rights, withdrawal of such demands,
and any other instruments served pursuant to section 262 of the DGCL,
and CCI shall give AirTouch the opportunity to direct all negotiations
and proceedings with respect to such demands. CCI shall not
voluntarily make any payment with respect to any demands for appraisal
rights and shall not, except with the prior written consent of
AirTouch, settle or offer to settle any such demands. Each holder of
CCI Stock who becomes entitled, pursuant to section 262 of the DGCL, to
payment for his or her shares of CCI Stock under the provisions of such
section shall receive payment therefor from the Surviving Corporation
and such shares of CCI Stock shall be canceled.
(j) No Fractional Shares. Notwithstanding any other
provisions of this Agreement, each holder of shares of CCI Stock
exchanged pursuant to the Merger who would otherwise
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have been entitled to receive a fraction of a share of AirTouch Class B
Preferred or AirTouch Class C Preferred (each, an "AirTouch Security"),
after taking into account all certificates delivered by such holder,
shall receive, in lieu thereof, cash (without interest) in an amount
equal to such fractional part of an AirTouch Security multiplied by the
AirTouch Preferred Stock Issue Price (in the case of the AirTouch Class
B Preferred) or $50 (in the case of the AirTouch Class C Preferred).
No such holder shall be entitled to dividends, voting rights or any
other rights as a stockholder in respect of any fractional share of
AirTouch Security.
(k) Closing of Transfer Books. At the Effective Time, the
stock transfer books of CCI shall be closed as to holders of CCI
capital stock immediately prior to the Effective Time and no transfer
of CCI capital stock by any such holder shall thereafter be made or
recognized. If, after the Effective Time, certificates are properly
presented in accordance with Article III of this Agreement to the
exchange agent, Bank of New York (the "Exchange Agent"), such
certificates shall be canceled and exchanged for certificates
representing the number of whole AirTouch Securities, and a check
representing the amount of cash, if any, into which the CCI Stock
represented thereby was converted in the Merger. Any other provision
of this Agreement notwithstanding, none of AirTouch, CCI, the Surviving
Corporation and the Exchange Agent shall be liable to a holder of CCI
capital stock for any amount paid or property delivered in good faith
to a public official pursuant to any applicable abandoned property,
escheat, or similar law.
(l) Adjustments to Preserve Tax Status of Merger. If, after
giving effect to the calculations made pursuant to Sections 2.2(d)-(f)
(but without giving effect to any adjustment that would otherwise be
required pursuant to Section 2.2(g)), the Tax Opinion referred to in
Section 6.3(f) cannot be rendered (as determined in writing by
Pillsbury Madison & Sutro LLP) as a result of the Merger potentially
failing to satisfy continuity of interest requirements under applicable
federal income tax principles relating to reorganization under Section
368(a) of the Code, then, to the minimum extent necessary (as
determined by Pillsbury Madison & Sutro LLP) to enable the Tax Opinion
to be rendered: (i) the Cash Election Number shall be reduced (and the
Unit Election Number shall be correspondingly increased on a
share-for-share basis) and (ii) the composition of each Unit shall be
adjusted by recalculating the Class B Per-Unit Amount and the Class C
Per-Unit Amount in the manner contemplated by Exhibit 2.2(l).
Notwithstanding the foregoing, in the event that as a result of
adjustments contemplated by this Section 2.2(l), the Unit Election
Number would exceed 80% of the number of CCI Common Equivalent Shares
outstanding as of immediately prior to the Effective Time, then the
Board of Directors of AirTouch, in its sole discretion, may elect to
terminate this Agreement by providing written notice to CCI of such
intention.
2.3 Election Procedures.
(a) Elections shall be made by holders of CCI Stock by mailing to the
Exchange Agent a Form of Election. To be effective, a Form of Election must be
properly completed, signed and submitted to the Exchange Agent and accompanied
by the certificates representing the shares of CCI Stock as to which the
election is being made (or by an appropriate trust company in the United States
or a member of a registered national securities exchange or the National
Association of Securities Dealers, Inc. (the "NASD")). AirTouch shall have the
discretion, which it may delegate in whole or in part to the Exchange Agent, to
determine whether Forms of Election have been properly completed, signed and
submitted or revoked and to disregard immaterial defects in Forms of Election.
The decision of AirTouch (or the Exchange Agent) in such matters shall be
conclusive and binding. Neither AirTouch nor the Exchange Agent shall be under
any obligation to notify any person of any defect in a Form of Election
submitted to the Exchange Agent. The Exchange Agent shall also make all
computations contemplated by this Section 2.3 and all such computations shall
be conclusive and binding on the holders of CCI Stock. Forms of Election and
other appropriate and customary transmittal materials (which shall specify that
delivery shall be effected and risk of loss and title to the certificates
theretofore representing shares of CCI Stock shall pass, only upon proper
delivery of such
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certificates to the Exchange Agent) in such form as AirTouch and CCI shall
mutually agree shall be mailed on the date that the Proxy Statement is first
mailed to the stockholders of CCI.
(b) For the purposes hereof, a holder of CCI Stock who does not submit
a Form of Election which is received by the Exchange Agent prior to the
Election Deadline (as hereinafter defined) shall be deemed to have made a
Non-Election. If AirTouch or the Exchange Agent shall determine that any
purported Cash Election or Unit Election was not properly made, such purported
Cash Election or Unit Election shall be deemed to be of no force and effect and
the stockholder making such purported Cash Election or Unit Election shall, for
purposes hereof, be deemed to have made a Non-Election.
(c) AirTouch and CCI shall each use its best efforts to mail the Form
of Election to all persons or entities who become holders of CCI Stock during
the period between the record date for the Stockholders' Meeting and 10:00 a.m.
New York time, on the date five business days prior to the anticipated
Effective Time and to make the Form of Election available to all persons or
entities who become holders of CCI Stock subsequent to such day and no later
than the close of business on the business day prior to the Effective Time. A
Form of Election must be received by the Exchange Agent by the close of
business on the last business day prior to the Effective Time (the "Election
Deadline") in order to be effective. All elections may be revoked until the
Election Deadline.
2.4 Adjustments for Dilution and Other Matters. If prior to the
Effective Time, CCI shall declare a stock dividend or distribution upon or
subdivide, split up, reclassify or combine the CCI Stock, or declare a
dividend, or make a distribution, on the CCI Stock in any security convertible
into CCI Stock (provided that no such action may be taken by CCI without
AirTouch's prior written consent as so provided in Article V), an appropriate
adjustment or adjustments will be made to the Per Share Cash Consideration and
the Per Share Unit Consideration. If at the Effective Time, CCI shall have
outstanding more shares of CCI Stock than are contemplated to be outstanding or
subject to subscription, option, stock-based or stock-related award or right,
warrant, right, conversion, exchange or other agreement, arrangement or
commitment of any character by the representation and warranty in Section
4.1(b), then, at the election of the Board of Directors of AirTouch and
notwithstanding other provisions hereof, and without limiting any of its other
rights hereunder, the Per Share Cash Consideration and the Per Share Unit
Consideration shall be appropriately adjusted downward to obtain the same
aggregate value of consideration to be delivered in the Merger by AirTouch that
would have resulted if such representation and warranty had been true and
correct at the Effective Time.
2.5 Conversion of Dissenting CCI Stock. If prior to the Effective
Time any stockholder of CCI shall fail to perfect, or shall effectively
withdraw or lose, his or her right to appraisal of and payment for his or her
shares of Dissenting CCI Stock under section 262 of the DGCL, the Dissenting
CCI Stock of such holder shall be treated for purposes of this Article II like
any other shares of outstanding CCI Stock. If, after the Effective Time, any
holder of CCI Stock shall fail to perfect, or shall effectively withdraw or
lose, his or her right to appraisal of and payment for his or her Dissenting
CCI Stock under section 262 of the DGCL, each share of Dissenting CCI Stock of
such holder shall be treated in the same manner as Non-Election Shares under
the procedures of set forth in Article II and in accordance with the
procedures, and subject to the conditions, set forth in this Article III.
2.6 Employee Stock Options.
(a) CCI shall use its reasonable best efforts to obtain the written
consent of each holder of options outstanding under the CCI 1991 Stock Option
Plan or the CCI Non-Employee Director Stock Option Plan (collectively, the "CCI
Option Plans") to the conversion procedure described in paragraph (b) below.
In the event that a holder of options outstanding under a CCI Option Plan (each
option for one share of CCI Common Stock being a "CCI Option") fails prior to
the Effective Time to consent to the conversion procedure described in
paragraph (b) below, the conversion procedure described in paragraph (c) below
shall be applied to such options.
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<PAGE> 14
(b) If this paragraph (b) applies, at and as of the Effective Time
AirTouch shall substitute an option to purchase AirTouch Common Stock (an
"AirTouch Common Option") for each CCI Option. Each AirTouch Common Option so
substituted by AirTouch under this Agreement shall continue to be subject to
substantially the same terms and conditions set forth in the applicable CCI
Option Plan and in the corresponding CCI Option immediately prior to the
Effective Time, including but not limited to the immediate exercisability of
each such CCI Option, except that:
(i) Such AirTouch Common Option shall be exercisable for that
number of whole shares of AirTouch Common Stock equal to the product of
the number of shares of CCI Common Stock that were purchasable under
such CCI Option immediately prior to the Effective Time multiplied by
the Option Adjustment Ratio (as defined below), rounded down to the
nearest whole number of shares of AirTouch Common Stock; and
(ii) The per share exercise price for the shares of AirTouch
Common Stock issuable upon exercise of such AirTouch Common Option
shall be equal to the quotient determined by dividing the exercise
price per share of CCI Common Stock at which such CCI Option was
exercisable immediately prior to the Effective Time by the Option
Adjustment Ratio and rounding the resulting exercise price up to the
nearest whole cent.
The "Option Adjustment Ratio" shall be equal to (A) the Volume-Weighted Average
Trading Price of a share of CCI Common Stock during the last five trading days
on which CCI Common Stock is traded before the Effective Time divided by (B)
the Volume-Weighted Average Trading Price of a share of AirTouch Common Stock
during such period. As soon as reasonably practicable after the Effective
Time, AirTouch shall register the shares of AirTouch Common Stock underlying
the AirTouch Common Options with the Securities and Exchange Commission (the
"Commission") on a Form S-8 and shall keep such registration effective until
the exercise or termination of all AirTouch Common Options. AirTouch shall
reserve for issuance a sufficient number of shares of AirTouch Common Stock for
issuance upon exercise of the AirTouch Common Options.
(c) If this paragraph (c) applies, at and as of the Effective Time
AirTouch shall substitute an option to purchase one Unit (an "AirTouch
Preferred Option") for each CCI Option. Each AirTouch Preferred Option so
substituted by AirTouch under this Agreement shall continue to be subject to
substantially the same terms and conditions set forth in the applicable CCI
Option Plan and in the corresponding CCI Option immediately prior to the
Effective Time, including but not limited to the immediate exercisability of
each such CCI Option. The per Unit exercise price for the Unit issuable upon
exercise of such AirTouch Preferred Option shall be equal to the exercise price
per share of CCI Common Stock at which such CCI Option was exercisable
immediately prior to the Effective Time. As soon as reasonably practicable
after the Effective Time, AirTouch shall register the shares of AirTouch Class
B Preferred and AirTouch Class C Preferred underlying the AirTouch Preferred
Options with the Commission on a Form S-8 and shall keep such registration
effective until the exercise or termination of all AirTouch Preferred Options.
AirTouch shall reserve for issuance a sufficient number of shares of AirTouch
Class B Preferred and AirTouch Class C Preferred for issuance upon exercise of
the AirTouch Preferred Options.
2.7 CCI Convertible Debt. Effective as of the Effective Time, the
Zero Coupon Convertible Subordinated Notes due 1999 of CCI (the "CCI
Convertible Debt") shall be assumed by the Surviving Corporation. The
Surviving Corporation shall execute one or more supplemental indentures as may
be required pursuant to the terms of the indenture relating to the CCI
Convertible Debt.
2.8 Calculation of Conversion Price for AirTouch Class B and Class C
Preferred.
(a) The Conversion Price for purposes of the Certificate of
Designation, Preferences and Rights for the AirTouch Class B Preferred shall be
the dollar amount equal to the product of (i) the AirTouch Preferred Stock
Issue Price (as defined below) and (ii) 1.24.
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<PAGE> 15
(b) The Conversion Price for purposes of Certificate of Designation,
Preferences and Rights for the AirTouch Class C Preferred shall be the dollar
amount equal to the product of (i) the AirTouch Preferred Stock Issue Price and
(ii) 1.25.
(c) As used in this Section 2.8:
"AirTouch Preferred Stock Issue Price" means the
Volume-Weighted Average Trading Price for AirTouch Common Stock for the
15 trading-day period ending on the second calendar day preceding the
date on which the Proxy Statement is first mailed to CCI's
stockholders, but shall in no event be lower than $29 nor higher than
$35.
"Volume-Weighted Average Trading Price" means, for any given
period, an amount equal to (i) the cumulative sum, for each trade of
AirTouch Common Stock during such period on the New York Stock Exchange
("NYSE") (or such other principal exchange or over-the-counter market
on which such security is listed), of the product of: (x) the sale
price times (y) the number of shares of AirTouch Common Stock sold at
such price, divided by (ii) the total number of shares of AirTouch
Common Stock so traded during the period.
2.9 Rights Plan Redemption Consideration. Of the consideration
provided for in Section 2.2(b) which each holder of a share of CCI Stock issued
and outstanding immediately prior to the Effective Time shall be entitled to
receive, $.01 in value per CCI Common Stock Equivalent Share shall be in
payment for the redemption of the Right associated therewith pursuant to
Section 5.6 hereof (the "Rights Redemption Payment"). Accordingly, the
consideration provided for in Section 2.2(b) which each holder of a share of
CCI Stock shall be entitled to receive by virtue of the Merger shall be the
consideration described in (i), (ii) or (iii) thereof, less $.01 in value. The
Rights Redemption Payment shall be paid with respect to each Right upon
surrender by such holder of the certificate formerly representing CCI Stock
with which such Right was associated in the manner provided in Article III.
ARTICLE III
EXCHANGE OF SHARES
3.1 Exchange Procedures.
(a) Upon the later to occur of the Effective Time and the completion
of the allocation procedure set forth in Section 2.2, AirTouch shall issue to
the Exchange Agent the number of AirTouch Securities issuable in the Merger and
the amount of cash payable in the Merger; provided, however, that
notwithstanding any other provision of this Agreement, AirTouch shall not issue
to the Exchange Agent AirTouch Securities or cash payable with respect to
shares of CCI Stock unless and until share certificates and the required
transmittal materials pursuant to Article II and Article III have been received
in proper form by the Exchange Agent. The Exchange Agent shall not be entitled
to vote or exercise any rights of ownership with respect to AirTouch Securities
held by it from time to time hereunder, except that it shall receive and hold
all dividends or other distributions paid or distributed with respect to such
shares for the account of the persons entitled thereto.
(b) After completion of the allocation procedure set forth in Section
2.2, each holder of a certificate formerly representing CCI Stock who
surrenders or has surrendered such certificate (or customary affidavits and
indemnification regarding the loss or destruction of such certificate),
together with duly executed transmittal materials included in the Election
Form, to the Exchange Agent shall, upon acceptance thereof, be entitled to the
number of Units, and/or cash, into which the shares of CCI Stock shall have
been converted pursuant hereto. AirTouch shall cause the Exchange Agent to
accept such certificate upon compliance with such reasonable and customary
terms and conditions as the Exchange Agent may impose to effect an orderly
exchange thereof in accordance with normal practices. Until surrendered as
contemplated by this Section 3.1,
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<PAGE> 16
each certificate representing CCI Stock shall be deemed at any time after the
Effective Time to evidence only the right to receive upon such surrender Units
and/or cash, as provided in this Agreement.
(c) To the extent provided by Section 2.2(j) of this Agreement, each
holder of shares of CCI Stock issued and outstanding at the Effective Time also
shall receive, upon surrender of the certificate or certificates representing
such shares, cash in lieu of any fractional AirTouch Securities to which such
holder would otherwise be entitled. AirTouch shall not be obligated to deliver
the consideration to which any former holder of CCI Stock is entitled as a
result of the Merger until such holder surrenders his certificate or
certificates representing shares of CCI Stock for exchange as provided in this
Article III. In addition, certificates surrendered for exchange by any person
constituting an "affiliate" of CCI for purposes of Rule 144(c) under the
Securities Act of 1933, as amended (the "Securities Act"), shall not be
exchanged for AirTouch Securities until AirTouch has received a written
agreement from such person as provided in Section 5.11. If any AirTouch
Securities, or any check representing cash and/or declared but unpaid
dividends, is to be issued in a name other than that in which a certificate
surrendered for exchange is issued, the certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer and the person
requesting such exchange shall affix any requisite stock transfer tax stamps to
the certificate surrendered or provide funds for their purchase or establish to
the satisfaction of the Exchange Agent that such taxes are not payable.
3.2 Voting and Dividends. Former stockholders of CCI shall not be
entitled to exercise any voting rights with respect to AirTouch Securities
which they are entitled to receive in the Merger, unless and until such holders
have exchanged their certificates representing CCI Stock for certificates
representing AirTouch Securities in accordance with the provisions of this
Agreement. Until surrendered for exchange in accordance with the provisions of
Section 3.1 of this Agreement, each certificate theretofore representing shares
of CCI Stock (other than shares to be canceled pursuant to Section 2.2(h) of
this Agreement) shall from and after the Effective Time represent for all
purposes only the right to receive Units, and/or cash, as set forth in this
Agreement. No dividends or other distributions declared or made after the
Effective Time with respect to AirTouch Securities with a record date after the
Effective Time shall be paid to the holder of any unsurrendered certificate of
CCI Stock with respect to the shares of AirTouch Securities represented
thereby, until the holder of such certificate of CCI Stock shall surrender such
certificate. Subject to the effect of applicable laws, following surrender of
any such certificate of CCI Stock, there shall be paid to the holder of the
certificates representing whole shares of AirTouch Securities issued in
exchange therefor, without interest, (i) the amount of any cash payable with
respect to a fractional AirTouch Security to which such holder is entitled
pursuant to Section 2.2(j) and the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to
such whole shares of AirTouch Securities, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date after
the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of AirTouch Securities.
3.3 No Liability. Neither AirTouch nor CCI shall be liable to any
holder of shares of CCI Stock for any such AirTouch Security (or dividends or
distributions with respect thereto) or cash delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
3.4 Withholding Rights. AirTouch or the Exchange Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of CCI Stock such amounts as
AirTouch or the Exchange Agent is required to deduct and withhold with respect
to the making of such payment under the Code, or any provision of state, local
or foreign tax law. To the extent that amounts are so withheld by AirTouch or
the Exchange Agent, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the shares of CCI Stock in
respect of which such deduction and withholding was made by AirTouch or the
Exchange Agent.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of CCI. CCI hereby represents and
warrants to AirTouch and AirTouch Cellular that:
(a) Corporate Organization.
(i) CCI and each of its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, and has the requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as it is now
being conducted. CCI has delivered to AirTouch copies of the certificate of
incorporation and by-laws of CCI and each of its subsidiaries, as amended to
date, which certificates and by-laws are in full force and effect; and
(ii) For purposes of this Agreement, neither New Par nor any entity
controlled by New Par (a "New Par Subsidiary") shall be deemed to be a
subsidiary of CCI, and, unless specifically provided to the contrary,
references to "CCI and its subsidiaries, taken as a whole" or phrases of
similar effect shall be deemed to exclude New Par or any New Par Subsidiary
from their scope. References to New Par shall be deemed to include New Par and
the New Par Subsidiaries.
(b) Capitalization.
(i) The authorized capital stock of CCI consists of 100,000,000 shares
of Redeemable Common Stock, par value $.01 per share, of which 100,000,000
shares have been designated Series A Common Stock ("CCI Series A Common");
100,000,000 shares of Nonredeemable Common Stock, par value $.01 per share, of
which 100,000,000 shares have been designated Series C Common Stock ("CCI
Series C Common"); 100,000,000 shares of Redeemable Participating Convertible
Preferred Stock, par value $.01 per share ("CCI Redeemable Preferred");
2,500,000 shares of Class A Preferred Stock, par value $.01 per share ("CCI
Class A Preferred"); 218 shares of Series B Preferred Stock, par value $100 per
share ("CCI Series B Preferred"); 3,000 shares of Class C Preferred Stock, par
value $100 per share ("CCI Class C Preferred"); and 5,000,000 shares of
Preference Stock, par value $1.00 per share, of which 2,500,000 shares have
been designated Class A Preference Stock ("CCI Class A Preference Stock"),
3,000 shares have been designated Series B Preference Stock ("CCI Series B
Preference Stock"), and 500,000 shares have been designated Series D Junior
Participating Preference Stock ("CCI Series D Preference Stock"). As of the
date hereof, there were issued and outstanding (A) 17,151,730 shares of CCI
Series A Common, (B) 10,066,000 shares of CCI Series C Common, (C) 13,196,498
shares of CCI Redeemable Preferred, (D) 2,206,000 shares of CCI Class A
Preference Stock and (E) 1,566 shares of CCI Series B Preference Stock, all of
which have been duly authorized and validly issued, and are fully paid and
nonassessable and free from preemptive or other similar rights. There are no
shares of CCI Class A Preferred, CCI Series B Preferred, CCI Class C Preferred
or CCI Series D Preference Stock issued or outstanding. Other than 1,005,000
shares of CCI Series A Common, no shares of CCI capital stock are held as
treasury shares.
(ii) Set forth on Schedule 4.1(b)(ii) is a list of each subsidiary,
whether direct or indirect, of CCI. No subsidiary, whether direct or indirect,
of CCI holds any shares of CCI capital stock. Except as set forth in Schedule
4.1(b)(ii), CCI owns directly or indirectly all the shares of capital stock of
each subsidiary and such shares have been duly authorized and validly issued
and are fully paid and nonassessable, and are owned free and clear of all
liens, claims or encumbrances (including, without limitation, preemptive or
other similar rights) with respect to the equity ownership thereof. Schedule
4.1(b)(ii) lists each subsidiary of CCI that has an ownership interest in New
Par, along with the amount of such ownership interest. Each such subsidiary
conducts no business other than the ownership of New Par. All such ownership
interests in New Par are owned free and clear of all liens, claims or
encumbrances with respect to the equity ownership thereof. Except for the
subsidiaries of CCI set forth on Schedule 4.1(b)(ii), a 50% equity interest in
New Par, and the other
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<PAGE> 18
equity interests described in Schedule 4.1(b)(ii), CCI has no direct or
indirect beneficial ownership interest in any corporation, partnership, joint
venture or other entity.
(iii) Except for (A) the preferred stock purchase rights (the
"Rights") of CCI issued pursuant to the Rights Agreement dated as of July 31,
1991 (the "Rights Agreement"), between CCI and Continental Stock Transfer &
Trust Company, as Rights Agent, (B) Employee New Options (as defined in the
Existing Agreement) outstanding on the date hereof, (C) shares of CCI
Redeemable Preferred, CCI Class A Preference Stock, CCI Series B Preference
Stock and CCI Series A Common, (D) the CCI Convertible Debt, and (E) the
agreements listed on Schedule 4.1(b)(iii), there are no outstanding
subscriptions, options, stock-based or stock-related awards or rights,
warrants, rights, convertible or exchangeable securities or other agreements,
arrangements or commitments of any character (including, without limitation,
registration rights) relating to or based upon the issued or unissued capital
stock or other securities of CCI or any of it subsidiaries. Schedule
4.1(b)(iii) sets forth the number of Employee New Options outstanding as of the
date hereof categorized by name of optionee, character of the option,
underlying shares, exercise price, date of vesting, expiration date and
employer. CCI has previously furnished to AirTouch a detailed list of Employee
New Options setting forth the name of each optionee and the material terms of
such option, together with complete copies of each stock option plan and
agreement. Except for the Existing Agreement, there are no voting trusts or
other agreements or understandings to which CCI or any subsidiary thereof is a
party with respect to the voting of capital stock of CCI or any subsidiary
thereof.
(iv) Set forth on Schedule 4.1(b)(iv) is a summary of all repurchases
of CCI capital stock effected by CCI or any subsidiary thereof during the last
three years, setting forth in reasonable detail the number of shares acquired
and the purchase price paid.
(c) Authority. CCI has the requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the Merger and the Rights Redemption and the other transactions
contemplated hereby by CCI have been duly authorized by all necessary corporate
action on the part of CCI, subject only to approval by the stockholders of CCI
at the Stockholders' Meeting by the affirmative vote of a majority of the
shares of CCI Stock, voting together as a single class. The Board of Directors
of CCI has (i) approved the transactions contemplated hereby, (ii) taken all
necessary corporate action so neither Section 203 of the DGCL ("Section 203")
nor, to the extent applicable, Section 1707.041 of the Ohio Securities Law
("Section 1707.041"), requires any special vote of stockholders in connection
therewith, and none of the restrictions on business combinations set forth in
Section 203 or, to the extent applicable, Section 1707.041 will apply to the
Merger, (iii) taken all necessary corporate action so that the Rights Agreement
will not apply to the Merger (including without limitation the amendment of the
Rights Agreement so that AirTouch will not be deemed to be an Acquiring Person
by virtue of the execution of this agreement or the consummation of the
transactions contemplated hereby, which amendment is in full force and effect),
and (iv) resolved to recommend that stockholders of CCI vote in favor of the
approval of this Agreement, the Merger, the Rights Redemption and the other
transactions contemplated hereby at the Stockholders' Meeting. This Agreement
has been duly executed and delivered by CCI and constitutes a valid and binding
obligation thereof, enforceable against it in accordance with its terms.
(d) Disclosure Documents.
(i) None of the information supplied by CCI in writing specifically
for inclusion in the Registration Statement or any Disclosure Document (as
defined in paragraph (ii) below) in connection with the Merger, or in any
amendments or supplements thereto, at the time of effectiveness (with respect
to the Registration Statement or any amendment thereto), the first mailing and
at the time of the Stockholders' Meeting, will contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(ii) Each other document required to be filed by CCI with the
Commission in connection with the Merger (the "Disclosure Documents")
including, without limitation, the letter to stockholders, notice of
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<PAGE> 19
meeting, proxy statement and form of proxy to be distributed to stockholders in
connection with the Merger, and any schedules required to be filed with the
Commission in connection therewith (collectively, the "Proxy Statement"), and
any amendments or supplements thereto will, when filed, comply as to form in
all material respects with the applicable requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). At the time the Proxy
Statement or any amendment or supplement thereto is first mailed to
stockholders of CCI and at the time of the Stockholders Meeting, the Proxy
Statement, as supplemented or amended, if applicable, will not contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. At the time of the
filing of any Disclosure Documents other than the Proxy Statement and at the
time of any distribution thereof, such Disclosure Document 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 therein, in the light of the circumstances
under which they were made, not misleading.
(iii) The representations and warranties contained in Section
4.1(d)(i) and (ii) shall not apply to statements or omissions included in the
Disclosure Documents based upon information furnished in writing by AirTouch to
CCI specifically for use therein.
(e) Consents; No Violation. Neither the execution and delivery of
this Agreement by CCI, nor the consummation of the transactions contemplated
hereby, will (i) conflict with, or result in any breach or violation of, any
provision of the certificate of incorporation or by-laws of CCI or any
subsidiary thereof; (ii) constitute, with or without notice or the passage of
time or both, a breach, violation or default, create a lien, or give rise to
any right of termination, modification, cancellation, prepayment or
acceleration, under any order, writ, injunction, decree, law, statute, rule or
regulation, governmental permit or license, or any mortgage, indenture, lease,
agreement or other instrument of CCI or any subsidiary thereof, or to which any
of their respective properties is subject, except for breaches, violations,
defaults, liens, or rights of termination, modification, cancellation,
prepayment or acceleration which would not, singly or in the aggregate, have a
material adverse effect on the business, financial condition, assets,
liabilities or results of operations (the "Business Condition") of CCI and its
subsidiaries, taken as a whole, or on the ability of CCI to consummate the
transactions contemplated hereby; (iii) give rise to any preemptive or other
similar right of any third party with respect to any shares of capital stock or
properties of CCI or any subsidiary thereof; or (iv) require any consent,
approval or authorization of, notification to, or filing with, any court,
governmental agency or regulatory or administrative authority (each, a
"Governmental Entity") on the part of CCI or any subsidiary thereof, other than
(A) the filing of certificates with respect to the Merger in accordance with
the DGCL and CGCL and, where applicable, the corporation laws of Michigan or
Ohio, (B) filings with the Commission under the Securities Act and the Exchange
Act, (C) filings under state securities or blue sky laws, (D) filings required
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (E) approvals required by the Federal Communications
Commission (the "FCC") and, if required, the public utility commissions of
Ohio, Kentucky and Indiana to effectuate the Merger (the foregoing being
hereinafter referred to as the "Regulatory Approvals"), (F) the consents and
approvals listed on Schedule 4.1(e), and (G) consents, approvals,
authorizations, notifications, waivers or filings the failure of which to
obtain or make would not, singly or in the aggregate, have a material adverse
effect on the Business Condition of CCI and its subsidiaries, taken as a whole,
or materially adversely affect the ability of CCI to consummate the
transactions contemplated hereby.
(f) SEC Reports; Material Contracts; Financial Statements.
(i) CCI has furnished to AirTouch complete copies of all reports,
statements and schedules required to be filed by CCI with the Commission
pursuant to the Exchange Act since January 1, 1994 (collectively, the "CCI SEC
Reports"). As of their respective dates, the CCI SEC Reports complied in all
material respects with all applicable requirements of the Exchange Act and did
not contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
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(ii) The audited and unaudited consolidated financial statements of
CCI included (or incorporated by reference) in the CCI SEC Reports (the "CCI
Financial Statements") have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as stated in the
financial statements or the notes thereto), and fairly present the financial
position of CCI and its consolidated subsidiaries as of the dates thereof and
the results of their operations and cash flows for the periods then ended,
subject, in the case of the unaudited financial statements, to normal year-end
adjustments.
(g) Absence of Certain Changes. Since December 31, 1995, (i) except
as set forth in Schedule 4.1(g), CCI and its subsidiaries have each conducted
their respective businesses only in the ordinary and usual course, and (ii)
neither CCI nor any of its subsidiaries has undergone or suffered any change in
its Business Condition which has been, individually or in the aggregate,
materially adverse to CCI and its subsidiaries, taken as a whole, or to the
ability of CCI to consummate the transactions contemplated hereby.
(h) Undisclosed Liabilities. Except as disclosed in Schedule 4.1(h),
neither CCI nor any subsidiary thereof is subject to any liabilities of any
nature (whether or not required to be accrued or disclosed under SFAS No. 5)
which have had or can reasonably be expected to have, individually or in the
aggregate, an adverse financial effect with respect to CCI and its subsidiaries
exceeding $10 million, except (i) to the extent set forth or provided for in
the CCI Financial Statements for the year ended December 31, 1995 and (ii)
liabilities incurred since December 31, 1995 in the ordinary course of
business, none of which has had or can reasonably be expected to have
individually or in the aggregate an adverse financial effect with respect to
CCI and its subsidiaries exceeding $10 million.
(i) Compliance with Laws. Neither CCI nor any subsidiary thereof is
in violation of any decree, order, statute, rule or regulation so as to
materially adversely affect the Business Condition of CCI and its subsidiaries,
taken as a whole, or the ability of CCI to consummate the transactions
contemplated hereby.
(j) Legal Proceedings. Except as set forth in Schedule 4.1(j), there
is no litigation, proceeding or governmental investigation pending or, to the
best of CCI's knowledge, threatened, against CCI or any subsidiary thereof or
any of their respective properties or businesses or against any CCI Employee
Plan or CCI Benefit Arrangement (as each is defined in Section 4.1(m)) or any
of their respective assets which, if decided adversely, would have a material
adverse effect on the Business Condition of CCI and its subsidiaries, taken as
a whole, or on the ability of CCI to consummate the transactions contemplated
hereby.
(k) Finders; Investment Bankers. Neither CCI nor any subsidiary
thereof, nor any of their respective officers or directors, has employed any
broker, finder or investment banker or incurred any liability for any brokerage
fees, commissions or finder's fees in connection with the transactions
contemplated hereby, except that CCI has arrangements with Donaldson Lufkin &
Jenrette Securities Corporation and Wasserstein Perella & Co. (a copy of the
written agreement relating to each of which has previously been provided to
AirTouch). Schedule 4.1(k) sets forth a bona fide estimate of the aggregate
amount of all fees and expenses expected to be paid by CCI to all attorneys,
accountants, investment bankers, proxy solicitors and other advisors in
connection with the Merger ("Merger Fees").
(l) Tax Returns, Audits and Liabilities.
(i) For purposes of this Section 4.1(l), the following terms shall
have the following meanings:
"Income Taxes" means any federal, state, local or foreign
income, franchise or similar tax.
"Group" means each affiliated group, within the meaning of
Section 1504 of the Code (and any combined, consolidated, unitary group
or similar group for purposes of any applicable foreign, state or local
law), of which CCI or any present CCI subsidiary, or any predecessors
or successors to CCI or any present CCI subsidiary is a member
(collectively the "Groups").
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"Returns" means any return, report, information return,
questionnaire, statement, estimate, declaration or other document
(including any related or supporting information) filed or required to
be filed for any period through and including the Closing with any
taxing authority in connection with the determination, assessment or
collection of any Taxes or the administration of any laws, regulations
or administrative requirements relating to any Taxes (whether or not
payment is required to be made with respect to such document).
"Subsidiary" means any subsidiary of CCI and shall include any
present or former subsidiary for the period during which such
subsidiary (i) was owned, directly or indirectly, by CCI; or (ii) was
the member of a Group.
"Tax" or "Taxes" means all material taxes, fees, levies,
imposts, assessments or other charges including, but not limited to,
foreign, federal, state, county or local income, profits, gross
receipts, payroll, excise, property, sales, use, employment, value
added, unitary, capital, net worth, transfer, withholding, and franchise
taxes and customs duties together with any penalties, interest or
additions to tax thereon or costs or expenses related thereto.
(ii) Except as set forth in Schedule 4.1(l)(ii), CCI, each Subsidiary
thereof, New Par (to the extent CCI, or any of its subsidiaries, or any
employee thereof, is responsible for the preparation of Returns therefor) and
the Groups have (A) timely filed in accordance with all applicable laws, and
will continue through the Effective Time to timely file, all Returns required
to be filed by them and all Returns were or will be correct and complete in all
material respects, and (B) paid all Taxes whether or not shown on any Return
required to be paid by CCI, each of its Subsidiaries and the Groups and will
continue to pay such Taxes for periods ending on or before the Effective Time.
Except as set forth in Schedule 4.1(l)(ii), complete copies of (A) consolidated
federal Income Tax Returns for CCI and its Subsidiaries, and (B) state and
local Income and other Tax Returns of CCI and its Subsidiaries and the Groups
for each of the years ended December 31, 1991, 1992, 1993 and 1994, and (C) all
information relating to any valuation of International, LDCO and PRCO (as each
is defined in the Existing Agreement) at the time of or done in connection with
the distribution of common stock of International, LDCO and PRCO, have
heretofore been delivered or made available to AirTouch (it being understood
that the only information so described may be earnings and profits workpapers
prepared by Ernst & Young LLP). CCI will deliver or make available, within 30
days of filing, (A) the consolidated federal income tax Returns for the year
ended December 31, 1995 for CCI and its Subsidiaries (due to be filed on or
before September 15, 1996), and (B) state and local income tax Returns of CCI,
any Subsidiary thereof and any Group. Except as set forth in Schedule
4.1(l)(ii), (A) there is no action, suit, proceeding, investigation, audit,
claim or assessment pending or proposed with respect to any Return that relates
to CCI or any Subsidiary thereof or any Group for Taxes, nor is there any
factual or legal basis therefor that has not been reserved or provided for on
the audited consolidated and consolidating balance sheet, (B) there are no
encumbrances upon any property or assets of CCI, any Subsidiary thereof or any
Group that arose in connection with any failure (or alleged failure) to pay any
Taxes other than liens for current property taxes not yet due, (C) all amounts
required to be collected or withheld by CCI and each Subsidiary thereof with
respect to amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party have been duly collected or withheld
and any such amounts that are required to be remitted to any taxing authority
have been duly remitted, (D) no extension of time within which to file any
Return that relates to CCI, its Subsidiaries or the Groups has been requested
which Return has not since been filed, (E) there are no waivers or extensions
of any applicable statute of limitations for the assessment or collection of
Taxes with respect to any Return that relates to CCI, any Subsidiary thereof or
any Group which remain in effect, (F) there are no tax rulings, requests for
rulings, or closing agreements relating to CCI or any Subsidiary thereof or
any Group which could affect their liability for Taxes for any period after
the Effective Time, (G) all federal, state and local Income Tax Returns of CCI
or each Subsidiary thereof or any Group with respect to taxable periods through
the year ended December 31, 1990 have been examined and closed or are Returns
with respect to which the applicable statute of limitations has expired without
extension or waiver and no notification of intention to audit or examine has
been received from the Internal Revenue Service or any other taxing authority
with respect to the Taxes of CCI, any Subsidiary thereof or any Group, and any
deficiencies resulting from such audits have been paid in full, (H) no issue
was raised by any taxing authority with respect to any audit that, if raised
with respect to any
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<PAGE> 22
Return filed for a subsequent taxable period, could result in a deficiency
of Taxes or other adjustment, (I) no power of attorney has been granted by CCI
or any Subsidiary thereof or any Group with respect to any matter relating to
Taxes of CCI or its Subsidiaries or any Group which is currently in force, and
(J) neither CCI or any of its Subsidiaries, nor any Group, has filed a consent
under section 341(f) of the Code or any comparable provision of state revenue
statutes. Except as set forth in Schedule 4.1(l)(ii), CCI has filed a
consolidated Return for federal Income Tax purposes on behalf of itself and
other members of the Group (within the meaning of section 1504 of the Code) of
which it is the parent corporation since at least the date on which each was
incorporated.
(iii) CCI has heretofore provided AirTouch with complete copies
(descriptions if unwritten) of any and all Tax allocation, indemnity, or
sharing arrangement or agreement to which CCI or any Subsidiary thereof is a
party.
(iv) Except as set forth in Schedule 4.1(l)(iv), none of CCI, any
Subsidiary thereof or any Group has either agreed nor been required to make an
adjustment under section 481 of the Code by reason of a change in accounting
method or otherwise.
(v) The unpaid Taxes of CCI and its Subsidiaries (A) did not, as of
the year ended December 31, 1995, exceed the reserve for Tax liability (rather
than any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of the audited consolidated
and consolidating balance sheet (rather than in any notes thereto) as of and
for the year ended December 31, 1995, and (B) do not exceed that reserve as
adjusted for the passage of time through the Closing Date in accordance with
the past custom and practice of CCI and its Subsidiaries in filing their
Returns.
(m) Employee Benefit Plans.
(i) Schedule 4.1(m)(i) sets forth a correct list of all of the
following:
(A) each "employee benefit plan," as such term is defined in
section 3(3) of ERISA, which is covered by Title I of ERISA and which
is maintained, or otherwise contributed to, by CCI or any of its
subsidiaries for the benefit of, or pursuant to which any of them has
any liability with respect to, current or former employees of CCI or
any subsidiary thereof (a "CCI Employee Plan") and any trust (including
a trust intended to qualify under section 501(c)(9) of the Code)
related thereto;
(B) each other plan, program, policy, contract or arrangement
providing for bonuses, pensions, deferred compensation, retirement
benefits, profit sharing, incentive pay, stock appreciation rights,
severance pay, salary continuation or similar benefits,
hospitalization, medical, dental or disability benefits, life insurance
or other employee benefits, or compensation to or for any current or
former officer, consultant, director or employee of CCI or any
subsidiary thereof or members of their respective families (other than
directors' and officers' liability policies), maintained or otherwise
contributed to by CCI or any subsidiary thereof, whether or not reduced
to writing (a "CCI Benefit Arrangement");
(C) each "employee benefit plan" and related trust described
in subparagraph (A) above, and each plan, program, policy, contract or
arrangement described in subparagraph (B) above, that would have been
included within the definition of CCI Employee Plan or CCI Benefit
Arrangement had such descriptions also referred to current or former
employees of New Par (or, with respect to (B), members of their
respective families); and
(D) all individuals employed by CCI or any subsidiary thereof,
and the position, employer and compensation payable to each such
individual.
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(ii) Each CCI Employee Plan and CCI Benefit Arrangement has been
established and maintained in all material respects in accordance with its
terms and in compliance with all applicable laws, including, but not limited
to, ERISA and the Code. No CCI Employee Plan is subject to Part 3 of Subtitle
B of Title I of ERISA, Title IV of ERISA or section 412 of the Code. To the
best knowledge of CCI, none of CCI or any subsidiary thereof, or any of the CCI
Employee Plans, nor any of their respective current or former directors,
officers, employees or agents, have, with respect to any CCI Employee Plan,
engaged directly or indirectly in any "prohibited transaction," as such term is
defined in section 4975 of the Code or section 406 of ERISA. With respect to
those CCI Employee Plans intended to qualify under the Code, CCI has obtained
from the Internal Revenue Service an advance determination letter to the effect
that such CCI Employee Plan and related trust are so qualified, and to the best
knowledge of CCI, no circumstances exist which would adversely affect such
qualification. With respect to any CCI Employee Plan, there has not occurred
and no circumstances exist which would constitute a reportable event under
section 4043 of ERISA (other than a reportable event for which the 30-day
notice requirement has been waived). Neither CCI nor any subsidiary thereof
has contributed to a "multiemployer plan" within the meaning of section 3(37)
of ERISA.
(iii) Neither CCI nor any subsidiary thereof has ever represented,
promised or contracted (whether in oral or written form) to any current or
former employee (either individually or to employees as a group) that such
current or former employee(s) would be provided at any cost to CCI with life
insurance or employee welfare plan benefits (within the meaning of section 3(l)
of ERISA) upon their retirement or termination of employment.
(iv) No payment or benefit which will or may be made by CCI or any
subsidiary thereof will be characterized as a "parachute payment" within the
meaning of section 280G(b)(2) of the Code.
(v) CCI has provided to AirTouch complete copies of all CCI Employee
Plans, CCI Benefit Arrangements, any trusts related thereto and the most recent
annual reports on Form 5500 and Summary Plan Descriptions required to be filed
by CCI or any subsidiary thereof in connection with any CCI Employee Plan.
(vi) Neither CCI nor any subsidiary thereof is a party to a collective
bargaining agreement.
(vii) Neither the execution or delivery of this Agreement, nor the
consummation of the transactions contemplated hereby (either alone or together
with any additional or subsequent events), shall constitute an event under any
CCI Employee Plan, CCI Benefit Arrangement, loan or individual agreement or
contract that may result in any payment (whether of severance pay or
otherwise), restriction or limitation upon the assets of any CCI Employee Plan
or CCI Benefit Arrangement, acceleration of payment or funding, vesting, or
increase in benefits or compensation with respect to any current or former
employee or director of CCI, any subsidiary thereof or New Par, or the
forgiveness of any loan.
(viii) All contributions, premiums or other payments due from CCI or
any subsidiary thereof to (or under) any CCI Employee Plan or CCI Benefit
Arrangement to provide benefits for any individuals associated with CCI or any
subsidiary thereof have been fully paid or adequately provided for on the books
or financial statements of CCI or any subsidiary thereof.
(n) Opinion of Financial Advisor. The Company has received the
opinions of Donaldson Lufkin & Jenrette Securities Corporation and Wasserstein
Perella & Co. to the effect that, as of the date hereof, the consideration to
be received by the holders of the CCI Stock in the Merger is fair to such
holders from a financial point of view.
(o) Intercompany Balances; Transactions with Affiliates.
(i) Schedule 4.1(o)(i) sets forth a correct list of each amount (an
"Intercompany Balance") due to CCI, its subsidiaries or New Par from, or due
from CCI, its subsidiaries or New Par to, (A) any former subsidiary or business
unit of CCI, (B) any employee, officer or director of CCI or (C) any other
entity (other
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<PAGE> 24
than a current CCI subsidiary or New Par) of which any employee, officer or
director of CCI is an officer, director or significant stockholder
(collectively, "CCI Affiliates").
(ii) Schedule 4.1(o)(ii) sets forth a correct list of all agreements,
contracts or other arrangements in effect at any time since December 31, 1995
pursuant to which either (A) any CCI Affiliate provides or provided, or causes
or caused, to be provided any assets, services or facilities used by CCI, any
subsidiary thereof or New Par or (B) CCI, any subsidiary thereof or New Par
provides or provided, or causes or caused to be provided, any assets, services
or facilities to any CCI Affiliate (each, an "Affiliate Transaction").
(p) Tax Matters. Neither CCI or its subsidiaries, nor, to the
knowledge of CCI, any of its affiliates has knowingly taken or agreed to take
any action that would prevent the Merger from constituting a reorganization
qualifying under the provisions of Section 368(a) of the Code.
(q) Material Contracts. Except for the contracts identified as
material contracts in CCI's Annual Report on Form 10-K for the year ended
December 31, 1995 and the contracts identified on the Schedules hereto, there
are no material contracts, leases, agreements or understandings, whether
written or oral, to which CCI or any subsidiary is a party or by which any of
them is bound.
4.2 Representations and Warranties of AirTouch. AirTouch hereby
represents and warrants to CCI that:
(a) Corporate Organization. Each of AirTouch and AirTouch Cellular is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and has the requisite corporate
power and authority to own, lease and operate its properties and to carry on
its business as it is now being conducted.
(b) Capitalization. The authorized capital stock of AirTouch consists
of 1,100,000,000 shares of common stock, $.01 par value ("AirTouch Common
Stock"), and 50,000,000 shares of preferred stock, $.01 par value ("AirTouch
Preferred Stock"). As of the date hereof, there were (i) 499,170,915 shares of
AirTouch Common Stock issued and outstanding, all of which have been duly
authorized and validly issued, and are fully paid and non-assessable and free
from preemptive or other similar rights and (ii) no shares of AirTouch
Preferred Stock issued and outstanding.
(c) Authority. Each of AirTouch and AirTouch Cellular has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by AirTouch and AirTouch Cellular have been, and the
consummation of the transactions contemplated hereby by AirTouch and AirTouch
Cellular will be, duly authorized by all necessary corporate action on the part
of each of them. This Agreement has been duly executed and delivered by each
of AirTouch and AirTouch Cellular and constitutes a valid and binding
obligation thereof, enforceable against it in accordance with its terms.
(d) Valid Issuance. The AirTouch Securities to be delivered at the
Closing, when issued and delivered in accordance with the terms hereof for the
consideration expressed herein, will be duly authorized, validly issued, fully
paid and non-assessable.
(e) Disclosure Documents.
(i) The registration statement(s) to be filed by AirTouch with the
Commission with respect to the offering of AirTouch Class B Preferred and
AirTouch Class C Preferred in connection with the Merger (the "Registration
Statement") and any amendments or supplements thereto, will, when filed, comply
as to form in all material respects with the requirements of the Securities Act
and will not contain, at the time the Registration Statement becomes effective
or at the time of the Stockholders' Meeting, any untrue statement of a
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material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements contained therein not misleading.
(ii) The representations and warranties contained in Section 4.2(e)(i)
shall not apply to statements or omissions included in the Registration
Statement or the Disclosure Documents based upon information furnished in
writing by CCI to AirTouch specifically for use therein.
(f) Consents; No Violation. Neither the execution and delivery of
this Agreement by AirTouch or AirTouch Cellular, nor the consummation of the
transactions contemplated hereby will (i) conflict with, or result in any
breach or violation of, any provision of the certificate of incorporation or
by-laws of AirTouch or AirTouch Cellular or any of their respective
subsidiaries; (ii) constitute, with or without notice or the passage of time or
both, a breach, violation or default, create a lien, or give rise to any right
of termination, modification, cancellation, prepayment or acceleration, under
any order, writ, injunction, decree, law, statute, rule or regulation,
governmental permit or license, or any mortgage, indenture, lease, agreement or
other instrument of AirTouch or AirTouch Cellular or to which any of their
respective subsidiaries, or any of their respective properties is subject,
except for breaches, violations, defaults, liens, or rights of termination,
modification, cancellation, prepayment or acceleration which would not, singly
or in the aggregate, have a material adverse effect on the Business Condition
of AirTouch and its subsidiaries, taken as a whole, or on the ability of
AirTouch or AirTouch Cellular to consummate the transactions contemplated
hereby; (iii) give rise to any preemptive or other similar right of any third
party with respect to any shares of capital stock or properties of AirTouch; or
(iv) require any consent, approval or authorization of, notification to, or
filing with, any Governmental Entity on the part of AirTouch or AirTouch
Cellular or any of their subsidiaries, other than (A) the filing of
certificates with respect to the Merger in accordance with the DGCL and CGCL
and, where applicable, the corporation laws of Michigan or Ohio, (B) the filing
of the Certificates of Designation, Preferences and Rights of the AirTouch
Class B Preferred and the AirTouch Class C Preferred with the Secretary of
State of Delaware, (C) filings with the Commission under the Securities Act and
the Exchange Act, (D) filings under state securities or "blue" sky laws, (E)
filings required pursuant to the HSR Act, (F) the Regulatory Approvals, (G) the
consents and approvals listed on Schedule 4.2(f), and (H) consents, approvals,
authorizations, notifications, waivers or filings the failure of which to
obtain or make would not, singly or in the aggregate, have a material adverse
effect on the Business Condition of AirTouch and its subsidiaries, taken as a
whole, or materially adversely affect the ability of AirTouch or AirTouch
Cellular to consummate the transactions contemplated hereby.
(g) SEC Reports; Financial Statements.
(i) AirTouch has furnished to CCI complete copies of all reports,
statements and schedules required to be filed by AirTouch with the Commission
pursuant to the Exchange Act since January 1, 1994 (collectively, the "AirTouch
SEC Reports"). As of their respective dates, the AirTouch SEC Reports complied
in all material respects with all applicable requirements of the Exchange Act
and did not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
(ii) The audited and unaudited consolidated financial statements of
AirTouch included (or incorporated by reference) in the AirTouch SEC Reports
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as stated in the financial statements or
the notes thereto) and fairly present the financial position of AirTouch and
its consolidated subsidiaries as of the dates thereof and the results of their
operations and cash flows for the periods then ended, subject, in the case of
the unaudited financial statements, to normal year-end adjustments.
(h) Absence of Certain Changes. From December 31, 1995 to the date
hereof, (i) except as set forth in Schedule 4.2(h), AirTouch has conducted its
respective businesses only in the ordinary and usual course, and (ii) AirTouch
has not undergone or suffered any change in its Business Condition which has
been, individually or in the aggregate, materially adverse to AirTouch and its
subsidiaries, taken as a whole, or to the ability of AirTouch or AirTouch
Cellular to consummate the transactions contemplated hereby.
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<PAGE> 26
(i) Finders; Investment Bankers. Neither AirTouch, AirTouch Cellular
or any of their respective subsidiaries, nor any of their respective officers
or directors, has employed any broker, finder or investment banker or incurred
any liability for any brokerage fees, commissions or finder's fees in
connection with the transactions contemplated hereby, except that AirTouch has
an arrangement with Lehman Brothers Inc. and, in connection with the execution
of the Existing Agreement, CS First Boston Corporation and Salomon Inc.
(j) Tax Matters. Neither AirTouch or its subsidiaries, nor, to the
knowledge of AirTouch, any of its affiliates has knowingly taken or agreed to
take any action that would prevent the Merger from constituting a
reorganization qualifying under the provisions of Section 368(a) of the Code.
ARTICLE V
PRE-CLOSING COVENANTS
5.1 CCI Interim Operations. During the period from the date of this
Agreement to the Effective Time, except as specifically contemplated by this
Agreement or as otherwise approved in writing by AirTouch, which approval shall
not be unreasonably withheld:
(a) Conduct of Business. CCI shall conduct its business, and shall
cause its subsidiaries to conduct their respective businesses, only in the
ordinary course of their respective existing businesses and otherwise as
required by section 3.1.1(a) of the Existing Agreement.
(b) Charters and By-Laws; Ownership of New Par. Except as expressly
contemplated by this Agreement, CCI will not, and CCI will cause its
subsidiaries not to, make or propose any change or amendment in their
respective charters or by-laws. CCI will not, and will cause its subsidiaries
not to, make any change in their respective direct or indirect ownership
interests in New Par.
(c) Capital Stock. CCI will not, and CCI will cause its subsidiaries
not to, (i) issue, pledge or sell any shares of capital stock (including
treasury shares) or any other securities of any of them, or (ii) issue any
securities convertible into, exchangeable for or representing a right to
purchase or receive, or enter into any contract, understanding or arrangement
with respect to the issuance of, any shares of capital stock or based on or
otherwise tracking the performance or characteristics of capital stock, or
(iii) grant any stock-based or stock-related awards or rights or make any
similar arrangements or awards with respect to or based upon other securities
of any of them, or (iv) enter into any arrangement or contract with respect to
the purchase or voting of shares of any of their capital stock, or (v) adjust,
split, combine or reclassify any of their capital stock or other securities, or
(vi) make any other changes in their capital structures. Notwithstanding the
foregoing, this Section 5.1(c) shall not apply to (A) the issuance of shares of
CCI Series A Common in connection with conversion of CCI Redeemable Preferred,
(B) the issuance of shares of CCI Series A Common in connection with the
conversion of CCI Series B Preference Stock, (C) the issuance of shares of CCI
Series A Common upon exercise of Employee New Options, or (D) the issuance of
shares of CCI Series A Common upon conversion of CCI Convertible Debt. CCI
shall promptly inform AirTouch of the terms of any issuances of shares in
accordance with the preceding sentence.
(d) Dividends; Other Payments. Neither CCI nor any subsidiary thereof
will declare, set aside, pay or make any dividend or other distribution or
payment (whether in cash, stock or property) with respect to, or purchase or
redeem, any shares of its capital stock.
(e) No Material Transactions; No Affiliate Transactions. CCI will
not, and CCI will cause its subsidiaries not to, (A) authorize, recommend,
propose or enter into an agreement in principle or a definitive agreement with
respect to any merger, consolidation, liquidation, dissolution or similar
business combination, any joint venture partnership or collaborative
arrangement, or any acquisition of a material amount of assets or securities;
(B) enter into or terminate any material contract or agreement, or make any
change in any of its material leases or contracts, other than renewals of
contracts and leases without material adverse changes of
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<PAGE> 27
terms; or (C) enter into, or otherwise engage in, any Affiliate Transaction.
Notwithstanding the foregoing, CCI shall be permitted to effect the
transactions contemplated by Section 5.10 and the sale of capital stock
contemplated by Section 5.17 with any person or entity.
(f) Employee Plans, Compensation, etc. Except for normal changes in
the ordinary course of business that are consistent with past practice, or as
provided by Section 2.6 hereof, and that, in the aggregate, do not result in a
material increase of benefits or compensation expense to CCI or any of its
subsidiaries relative to the level in effect prior to such changes and except
as required by law, CCI will not, and will cause its subsidiaries not to:
(i) adopt, enter into, amend or terminate any bonus,
profit-sharing, compensation, severance, termination, pension,
retirement, deferred compensation, employment or other employee benefit
plan, agreement, trust, fund or other arrangement for the benefit or
welfare of any individual, to the extent that any such action would
affect directors, officers or employees associated with CCI, its
subsidiaries or New Par;
(ii) enter into any new employment arrangements or
relationships with new or existing employees which has the legal effect
of any relationship other than at-will employment;
(iii) increase in any manner the compensation or fringe
benefits of any director, officer or employee associated with CCI, its
subsidiaries or New Par or pay any benefit to any director, officer or
employee associated with CCI, its subsidiaries or New Par other than
pursuant to an existing plan or arrangement and in amounts consistent
with past practice; or
(iv) grant any awards to any director, officer or employee
associated with CCI, its subsidiaries or New Par under any bonus,
incentive, performance or other compensation plan or arrangement
(including, without limitation, the granting of stock options, stock
appreciation rights, stock-based or stock-related awards, performance
units or restricted stock, or the removal of existing restrictions in
any benefit plans or agreements or awards made thereunder).
Except as required by law, CCI will not, and will cause its subsidiaries not
to, take any action to segregate assets for, or in any other way secure, the
payment of compensation or benefits to any employee associated with CCI, its
subsidiaries or New Par under any employee plan, agreement, contract or
arrangement or adopt, enter into or amend any contract, agreement, commitment
or arrangement to do any of the acts described in this Section 5.1(f). CCI
will not, and will cause its subsidiaries not to, become obligated to make any
payment or transfer of property that constitutes a "parachute payment" within
the meaning of section 280G(b)(2) of the Code.
(g) Assets. CCI will not, and will cause its subsidiaries not to,
encumber, sell, lease or otherwise dispose of any material assets or cancel,
release or assign any indebtedness owed thereto or any claims held thereby, or
enter into any contract, agreement, commitment or arrangement to do any of the
foregoing.
(h) Debt. Except in the ordinary course of its business consistent
with past practice, CCI will not, and will cause its subsidiaries not to, (i)
incur or assume any indebtedness (and any indebtedness permitted by the
preceding shall, to the extent of indebtedness for money borrowed or capital
leases, be prepayable without penalty, other than customary prepayment charges
of a nature substantially similar to those provided in the Credit Agreement,
dated as of December 27, 1995, by and among Cellular Communications of Ohio,
Inc., certain of its subsidiaries and the lenders named therein (the "Credit
Agreement") for LIBOR and CD rate loans); (ii) make any loans, advances or
capital contributions to, or investments in, any other person (other than a
direct or indirect wholly owned subsidiary of CCI); (iii) issue or sell any
debt securities or guarantee any indebtedness; or (iv) enter into any contract,
agreement, commitment or arrangement to do any of the
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foregoing. CCI will not incur indebtedness under the Credit Agreement that
would have a maturity date, or interest period ending, after August 1, 1996,
except for any such indebtedness incurred prior to the date hereof.
(i) Settlements. CCI will not, and will cause its subsidiaries not
to, settle any claim, action or proceeding involving monetary damages, except
in the ordinary course of business, consistent with past practice.
(j) Accounting Methods. CCI will not change its methods of accounting
in effect at December 31, 1995, except as required by changes in generally
accepted accounting principles as concurred in by its independent accountants.
(k) Merger Fees. CCI will not, and will cause its subsidiaries not
to, pay (or agree to become obligated to pay) any Merger Fees in excess of the
amount set forth in Schedule 4.1(k), other than any excess amounts which are
immaterial in the aggregate incurred in connection with, and in furtherance of,
consummation of the transactions contemplated hereby.
(l) No Inconsistent Acts. Neither CCI nor any subsidiary thereof will
take, or agree to take, any action that would result in any of the conditions
set forth in Sections 6.1 and 6.3 not being satisfied.
5.2 Certain Covenants of AirTouch. During the period from the date of
this Agreement to the Effective Time, except as specifically contemplated by
this Agreement or as otherwise approved in writing by CCI, which approval shall
not be unreasonably withheld:
(a) Charters and Bylaws. AirTouch will not make any change or
amendment in its charter or by-laws except for such changes or
amendments that would not have had a material adverse effect on the
rights of the AirTouch Class B Preferred or AirTouch Class C Preferred
were such AirTouch Class B Preferred or AirTouch Class C Preferred to
have been outstanding on the date thereof.
(b) Capital Stock; Dividends. AirTouch will not undertake a
reclassification of AirTouch Common Stock, or pay any single dividend
or other distribution (whether in cash, capital stock or other assets)
to holders of AirTouch Common Stock where the value of such dividend or
distribution (in excess of the fair market value of any consideration
received therefor) together with the amount of all dividends and
distributions made to the holders of AirTouch Common Stock during the
period from the date hereof and prior to such dividend or distribution
exceeds 20% of the product of (i) the Volume-Weighted Average Trading
Price on the record date for determining the stockholders entitled to
receive such dividend or distribution and (ii) the number of shares of
AirTouch Common Stock outstanding on such record date.
(c) Disposition of Assets. AirTouch will not enter into any
agreement providing for a transaction or series of related transactions
that results in the transfer, sale or other disposition by AirTouch of
assets of (i) AirTouch International, a California corporation, (ii)
AirTouch Cellular of Nevada, a Nevada corporation, or (iii) AirTouch
Cellular, to the extent that the assets subject to such transfer, sale
or disposition in the aggregate would represent more than 20% of the
total fair market value of AirTouch and its subsidiaries, taken as
whole, measured on a proportionate basis immediately prior to such
disposition (excepting any such transaction or series of related
transactions in which a majority of the value of the consideration
received in exchange for the assets transferred, sold or otherwise
disposed of consists of assets (or interests in assets) of a like kind
or nature and excepting any transactions pursuant to existing
agreements).
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5.3 Access and Information.
(a) During the period from the date hereof through the Effective Time,
CCI shall, and shall cause its subsidiaries to, afford AirTouch, and its
accountants, counsel and other representatives, reasonable access from time to
time during normal business hours to the properties, books, contracts, Returns
and other tax records, commitments and records of CCI and its subsidiaries, and
shall also cause such of its officers, employees, accountants, counsel and
other agents or representatives to meet and confer with AirTouch and its
accountants, counsel and other representatives as AirTouch may reasonably
request, for the purpose of conducting any review or investigation reasonably
related to the Merger, and CCI and its subsidiaries will cooperate fully with
all such reviews and investigations.
(b) During the period from the date hereof through the Effective Time,
CCI shall furnish to AirTouch (i) all reports filed by CCI or any subsidiary
thereof with the Commission (other than reports filed pursuant to section 13(d)
or 13(g) of the Exchange Act) promptly upon the filing thereof, and (ii)
monthly and other interim financial statements in the form prepared by CCI for
its internal use. During this period, CCI also shall notify AirTouch in
writing promptly of any material change in the Business Condition of CCI and
its subsidiaries, or of CCI, its subsidiaries and New Par, taken as a whole.
During the period from the date hereof through the Effective Time, AirTouch
shall furnish to CCI all reports filed by AirTouch with the Commission (other
than reports filed pursuant to section 13(d) or 13(g) of the Exchange Act)
promptly upon the filing thereof. During this period AirTouch also shall
notify CCI in writing promptly of any material change in the Business Condition
of AirTouch and its subsidiaries, taken as a whole.
(c) CCI shall and shall cause its subsidiaries to deliver to AirTouch
at least ten business days prior to the Closing a schedule which sets forth the
following information with respect to CCI and each of its subsidiaries as of
December 31, 1995 (it being understood that some information set forth therein
may be developed on the basis of estimates derived by CCI and its subsidiaries
in good faith and using reasonable best efforts): (A) the adjusted basis of CCI
and each of its subsidiaries in its assets; (B) the amount of any net operating
loss, net capital loss, unused investment or other credit, unused foreign tax
credit, or excess charitable contribution allocable to CCI and each of its
subsidiaries; and (C) the amount of any deferred gain or loss allocable to CCI
and each of its subsidiaries arising out of any deferred intercompany
transaction (within the meaning of section 1.1502-13(a)(2) of the Income Tax
Regulations); and (D) the amount of any excess loss accounts (within the
meaning of section 1.1502-19 of the Income Tax Regulations), if any, of each of
the subsidiaries.
(d) Notwithstanding the foregoing provisions of this Section, no party
shall be required to grant access or furnish information to the other party to
the extent that such access or the furnishing of such information is prohibited
by law. No investigation by a party hereto made heretofore or hereafter shall
affect the representations and warranties of the parties which are contained
herein and each such representation and warranty shall survive such
investigation.
5.4 Registration Statement. AirTouch and CCI shall promptly
prepare and file with the Commission the Proxy Statement, and AirTouch shall
prepare and file with the Commission the Registration Statement in which the
Proxy Statement will be included as a prospectus. Each of AirTouch and CCI
shall provide reasonable opportunity for the other to review and comment upon
the contents of the Proxy Statement and the Registration Statement and shall
not include therein or omit therefrom any information to which counsel to the
other shall reasonably object. After the date of the mailing of the Proxy
Statement, each of AirTouch and CCI agrees promptly to notify the other of and
to correct any information which either of them shall have furnished for
inclusion in the Proxy Statement that shall have become false or misleading in
any material respect. Each of AirTouch and CCI shall use all reasonable
efforts to have the Registration Statement declared effective under the
Securities Act as promptly as practicable after such filing. AirTouch shall
also take any action (other than qualifying to do business in any jurisdiction
in which it is now not so qualified) reasonably required to be taken under any
applicable state securities laws in connection with the issuance of the
AirTouch Securities in the Merger, and CCI shall furnish all information
concerning CCI and the holders of CCI Stock as may be reasonably requested in
connection with any such action.
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5.5 Stockholders' Approval. CCI shall promptly call a meeting of its
stockholders to be held no later than July 26, 1996 for voting upon the Merger
(the "Stockholders' Meeting"), provided that the Registration Statement shall
then be effective. In connection with the Stockholders' Meeting, CCI shall
mail the Proxy Statement and Registration Statement to its stockholders on a
timely basis, but in no event earlier than June 17, 1996. The Board of
Directors of CCI (i) has recommended approval of the Merger, the Rights
Redemption and this Agreement, (ii) shall include, and shall not withdraw or
modify, each such recommendation in the Proxy Statement unless under applicable
law, including applicable disclosure obligations, it is required to omit,
withdraw or modify any such recommendation, (iii) shall submit for approval of
its stockholders the matters to be voted upon at the Stockholders' Meeting, and
(iv) shall use its best efforts (including, without limitation, soliciting
proxies for such approvals), to the extent permitted by applicable law, to
obtain such stockholder approval.
5.6 Stockholder Rights Plan. CCI will take all actions necessary to
cause the Rights to be redeemed immediately prior to the Effective Time (the
"Rights Redemption"), with the payment therefor to be in the manner and form
provided for by Section 2.9 hereof.
5.7 Tax Matters. Neither CCI or AirTouch nor any direct or indirect
subsidiary of either of them shall knowingly take any action that would
jeopardize the treatment of the Merger as a reorganization under section 368 of
the Code.
5.8 Indemnification. From and after the Effective Time, AirTouch
shall cause the Surviving Corporation to (i) indemnify and hold harmless the
present and former officers and directors of CCI in respect of acts or
omissions occurring prior to the Effective Time to the extent provided under
the Amended and Restated Certificate of Incorporation and bylaws of CCI in
effect on the date hereof and (ii) perform and fulfill all of its obligations
under the Indemnification Agreements between CCI and the persons listed in
Schedule 5.8 and in effect as of the date hereof.
5.9 Further Assurances; Cooperation. Each of the parties hereto shall
perform its obligations under this Agreement and take or cause to be taken and
do or cause to be done all things necessary, proper or advisable under
applicable law to obtain all necessary regulatory approvals and waivers and
other necessary consents and satisfy all conditions to the obligations of the
parties under this Agreement and to cause the transactions contemplated hereby
to be carried out promptly in accordance with the terms hereof and shall
cooperate fully with one another and their respective officers, directors,
employees, agents, counsel, accountants and other representatives in connection
with any steps required to be taken as part of their respective obligations
under this Agreement; upon the execution of this Agreement and thereafter, each
party shall do such things as may be reasonably requested by the other parties
herein in order more effectively to consummate such transactions (including,
but not limited to, promptly delivering to the other information necessary to
prepare and pursue all necessary regulatory filings, approvals and waivers), in
each case including, without limitation:
(a) Subject to the terms and conditions herein provided, CCI
and AirTouch shall promptly make their respective filings and
submissions and shall take, or cause to be taken, all actions and do,
or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to (i) obtain the consents, approvals,
authorizations and waivers described in Sections 4.1(e) and 4.2(f),
(ii) comply with the provisions of the HSR Act, and (iii) obtain any
other required approval of any Governmental Entity with jurisdiction
over the Merger and to obtain any other necessary consents, and, in the
event any change in the transactions contemplated hereby is required in
order to accomplish the foregoing, except as provided elsewhere in this
Agreement, to take all necessary steps to accommodate such change to
the extent it would not materially adversely affect the parties' rights
or obligations hereunder. Each of the parties hereto agrees to
cooperate in the preparation of and to provide all information required
for the prompt filing of all applications, the Proxy Statement, the
Registration Statement, the Disclosure Documents, approvals and waivers
required for the approval and consummation of the Merger.
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(b) In the event any claim, action, suit, investigation or
other proceeding by any governmental body or other person is commenced
which questions the validity or legality of the Merger or seeks damages
in connection therewith, the parties agree to cooperate and use all
reasonable efforts to defend against such claim, action, suit,
investigation or other proceeding and, if any injunction or other order
of the type referred to in Section 6.1(g) is issued in any such action,
suit or other proceeding, to use best efforts to have such injunction
or other order dissolved, and to cooperate reasonably regarding the
removal of any other impediment to the consummation of the Merger.
(c) AirTouch shall give prompt written notice to CCI and CCI
shall give prompt notice to AirTouch, to the extent known by the chief
executive officer or any financial officer of the party giving notice,
of (i) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any representation or
warranty of the disclosing party contained in this Agreement to be
untrue or inaccurate in any material respect at any time from the date
hereof to the Effective Time or which will or may result in the failure
to satisfy any of the conditions specified in Article VI or (ii) any
failure of the disclosing party to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it
hereunder.
5.10 New York Office Lease; Furniture and Fixtures.
(a) At or before the Effective Time, CCI shall cause the office lease
for CCI's offices at 110 E. 59th Street, New York, New York (covering a portion
of the 21st floor and all of the 26th floor of such premises) (the
"Headquarters Lease"), a copy of which has previously been furnished to
AirTouch, to be terminated or novated, such that after the Effective Time
neither AirTouch nor the Surviving Corporation shall have any liability or
obligation of any kind whatsoever with respect to the Headquarters Lease.
Neither CCI nor any subsidiary thereof shall make, or obligate itself to make,
any payment to any person or entity including, without limitation, the lessors
in connection with such termination or novation. CCI represents and warrants
that as of the date hereof it has a binding commitment from a formerly
affiliated company for the assignment thereto of the Headquarters Lease in the
manner required by this Section 5.10(a).
(b) At or before the Effective Time, CCI shall sell, or cause to be
sold, all office equipment, fixtures, furniture and leasehold improvements
owned by CCI and located at CCI's offices at 110 E. 59th Street, New York, New
York for net proceeds to CCI of not less than the book value of such equipment,
fixtures, furniture and leasehold improvements. CCI represents and warrants
that as of the date hereof it has a binding commitment from a formerly
affiliated company to purchase such fixtures, furniture and leasehold
improvements on the foregoing terms.
5.11 Affiliates; Other Documents. At least 40 days prior to the
Effective Time, CCI shall deliver to AirTouch a letter identifying all persons
who are, at the time, "affiliates" of CCI for purposes of Rule 145 under the
Securities Act. CCI shall use best efforts to cause each person named in the
letter delivered by it to deliver to AirTouch prior to the Closing Date a
written "Affiliates" agreement, in the form attached hereto as Exhibit 5.11,
providing that such person shall dispose of the AirTouch Securities to be
received by such person in the Merger only in accordance with applicable law
and, in addition, contains a representation by such "affiliate" that it has no
present plan or intention to dispose of any such shares of AirTouch Securities.
CCI agrees, upon request, to use all reasonable efforts to obtain and deliver
to AirTouch any customary certificate or other document from any officer or
stockholder of CCI as may be reasonably requested by Pillsbury Madison & Sutro
LLP in connection with the Tax Opinion referred to in Section 6.3(f).
5.12 Affiliate Transactions. At or before the Effective Time, CCI
shall (a) repay, or cause to be repaid, all Intercompany Balances and (b)
terminate, or cause to be terminated, all Affiliate Transactions.
5.13 Redemption of Series B Preference Stock. On or before the date
that the Proxy Statement is first mailed to stockholders, CCI shall mail a
notice of redemption (a "Redemption Notice") to each of the
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holders of CCI's Series B Preference Stock, which shall (i) specify a date for
redemption no later than the date of the Stockholders' Meeting, (ii) contain
the information required by, and otherwise be in form and substance as required
by, the terms of the Series B Preference Stock, and (iii) call for redemption
all of the issued and outstanding shares of such Series B Preference Stock. On
or before the date of the Stockholders' Meeting, CCI shall have redeemed all of
the issued and outstanding shares of Series B Preference Stock, except to the
extent that holders of shares of Series B Preference Stock have elected to
exercise their conversion right in lieu of redemption and CCI has, on or before
such date, converted their Series B Preference Stock into shares of CCI's
Series A Redeemable Common.
5.14 Accountants "Comfort" Letters. Each of AirTouch and CCI will use
best efforts to cause to be delivered to the other "comfort" letters from their
respective independent accountants, in form and substance reasonably
satisfactory to the recipient, dated (i) two days prior to the date the Proxy
Statement is first mailed to CCI's stockholders and (ii) two days prior to the
date the stockholders of CCI adopt this Agreement.
5.15 Employees; Long-Term Incentive Plan.
(a) At or before the Effective Time, CCI shall, or shall cause its
subsidiaries to, either obtain a letter of resignation in form and substance
reasonably satisfactory to AirTouch, or terminate, each employee of CCI or any
subsidiary thereof (including any such employees who may be seconded to New Par
at the Effective Time).
(b) Immediately prior to the Effective Time, upon instructions from
AirTouch, CCI will terminate, or will cause its subsidiaries to terminate, the
secondment to New Par of each employee of CCI or any subsidiary thereof.
(c) Any voluntary resignation, or termination, of employees of CCI or
its subsidiaries effected pursuant to paragraph (a) or (b) above shall be
without any cost, expense or contractual liability (including, without
limitation, severance payments or similar costs) to CCI, New Par, AirTouch or
any of their respective affiliates. CCI shall use its best efforts to obtain a
written commitment from such employees of CCI and its subsidiaries as AirTouch
may designate to provide AirTouch (at the request of AirTouch) with consulting
or advisory services following the Effective Time with respect to the
operations of CCI, its subsidiaries or New Par for reasonable and customary
compensation.
(d) As of the Effective Time, the Cellular One Long-Term Incentive
Plan will terminate, the stock appreciation rights granted thereunder will vest
in full and, within 45 days following the Effective Time (or such shorter
period as is reasonably practicable, but no sooner than 30 days following the
Effective Time), AirTouch shall cause all vested stock appreciation rights
outstanding thereunder to be paid in cash.
5.16 Expenses. Subject to Section 7.3, whether or not the Merger is
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses, except that all costs and expenses, including filing fees,
related to the printing, mailing or filing of the Registration Statement and
Proxy Statement or to any other filing with any Governmental Entity in
connection with the transactions contemplated hereby shall be shared equally by
AirTouch and CCI.
5.17 Sale of Celsat Subsidiaries. CCI shall use its best efforts to
sell, at or before the Effective Time, the capital stock (or all of the assets
and liabilities) of CCI Data, Inc. and CCI Sub, Inc. for proceeds to CCI of not
less than $2 million. CCI hereby represents and warrants to AirTouch that (a)
except for CCI Data, Inc. and CCI Sub, Inc., neither CCI nor any subsidiary
thereof has any direct or indirect beneficial ownership interest in Celsat
America, Inc. and (b) neither CCI Data, Inc. nor CCI Sub, Inc. has any assets
(having more than de minimis value) other than in interests in, and rights
associated with, Celsat America, Inc.
5.18 Transition Arrangements. During the period from the date hereof
through the Effective Time, CCI shall, and shall cause its subsidiaries to,
cooperate fully with AirTouch to effect a transition to AirTouch
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of control of New Par as of the Effective Time. AirTouch and CCI will form a
team (to be chaired by AirTouch) which will have the authority to implement the
transition (including, without limitation, a transition to use by New Par of
the "AirTouch" brand name as of the Effective Time).
5.19 Maintenance of D&O Insurance. At all times during the period
from the date hereof through the Effective Date, CCI shall maintain in full
force and effect the directors' and officers' insurance policy which is in
effect on the date hereof.
ARTICLE VI
CONDITIONS
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each of AirTouch and CCI to effect the Merger and the
other transactions contemplated hereby shall be subject to the fulfillment or
waiver at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. The stockholders of CCI shall have
approved all matters relating to this Agreement, the Merger and the
Rights Redemption required to be approved by such stockholders by the
vote required under the DGCL at the Stockholders' Meeting.
(b) Regulatory Approvals. All required authorizations, orders,
grants, consents, permissions, approvals and waivers of any Governmental
Entity with jurisdiction over the transactions contemplated hereby,
other than those authorizations, orders, grants, consents, permissions,
approvals and waivers the failure of which to receive would not, singly
or in the aggregate, have a material adverse effect on the Business
Condition of CCI, its subsidiaries and New Par taken as a whole, shall
have been received and shall remain in effect, provided, however, that
if the condition set forth in Section 6.3(c) is waived by AirTouch, then
this condition will be deemed to have been satisfied with respect to the
FCC Consents.
(c) HSR Act. Any applicable waiting period under the HSR Act
shall have expired or been terminated.
(d) Registration Statement Effective. The Registration Statement
shall have been declared effective and shall not be subject to a stop
order or any threatened stop order.
(e) State Securities Laws. AirTouch shall have received all
state securities and "blue sky" permits and other authorizations
necessary to consummate the transactions contemplated hereby.
(f) NYSE Listing. The AirTouch Securities to be issued to the
holders of the capital stock of CCI upon consummation of the Merger
shall have been authorized for listing on the NYSE, subject to official
notice of issuance.
(g) No Injunction. Neither AirTouch nor CCI shall be subject to
any order, decree or injunction of a Governmental Entity of competent
jurisdiction which enjoins or prohibits the consummation of the
transactions contemplated hereby and no proceeding shall have been
initiated by any Governmental Entity and be continuing which seeks such
an injunction. There shall not be any action taken, or any statute,
rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger which makes the consummation thereof illegal.
6.2 Conditions to Obligations of CCI to Effect the Merger. The
obligations of CCI to effect the Merger shall be subject to the fulfillment or
waiver at or prior to the Effective Time of the following additional
conditions:
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(a) Representations and Warranties. The representations and
warranties of AirTouch set forth in this Agreement shall have been true
and correct in all material respects when made and (unless made as of a
specified date) shall be true and correct in all material respects as
if made as of the Effective Time, and CCI shall have received a
certificate dated as of the Closing Date signed by the vice chairman
and the chief financial officer of AirTouch to that effect.
(b) Performance of Obligations. AirTouch shall have performed
in all material respects all obligations required to be performed by it
under this Agreement prior to the Effective Time, and CCI shall have
received a certificate dated as of the Closing Date signed by the vice
chairman and chief financial officer of AirTouch to that effect.
(c) Legal Opinions. CCI shall have received the opinions of
Margaret G. Gill, Senior Vice President, Legal, External Affairs and
Secretary of AirTouch, and Pillsbury Madison & Sutro LLP, counsel to
AirTouch, both dated the Closing Date, substantially in the form of
Exhibits 6.2(c)-1 and 6.2(c)-2 hereto, respectively.
(d) Comfort Letter of AirTouch's Accountants. CCI shall have
received the letter of Price Waterhouse, AirTouch's independent
accountants, prepared pursuant to the provisions of Section 5.14.
(e) Tax Opinion. CCI shall have received the opinion of
Skadden, Arps, Slate, Meagher & Flom, counsel to CCI, dated the Closing
Date, to the effect that the Merger will be treated for Federal income
tax purposes as a reorganization within the meaning of section 368(a)
of the Code, and that AirTouch and CCI will each be a party to that
reorganization within the meaning of section 368(b) of the Code and
that no gain or loss will be recognized by the stockholders of CCI to
the extent they receive AirTouch Securities solely in exchange for
shares of CCI Stock.
6.3 Conditions to Obligations of AirTouch to Effect the Merger. The
obligations of AirTouch to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the following
additional conditions:
(a) Representations and Warranties. The representations and
warranties of CCI set forth in this Agreement shall have been true and
correct in all material respects when made and (unless made as of a
specified date) shall be true and correct in all material respects as
if made as of the Effective Time, and AirTouch shall have received a
certificate dated as of the Closing Date signed by the chairman and the
chief financial officer of CCI to that effect.
(b) Performance of Obligations. CCI shall have performed in
all material respects all obligations required to be performed by it
under this Agreement prior to the Effective Time, and AirTouch shall
have received a certificate dated as of the Closing Date signed by the
chairman and the chief financial officer of CCI to that effect.
(c) FCC Consents. All orders and approvals of the FCC
required in connection with the consummation of the transactions
contemplated hereby ("FCC Consents") shall have been obtained or made,
whether or not any appeal or request for reconsideration of such order
is pending, or whether the time for filing any such appeal or request
for reconsideration or for any sua sponte action by the FCC has
expired.
(d) Consents Under Agreements. The consent, approval or
waiver of each person (other than Governmental Entities) whose consent
or approval shall be required in order to permit (i) the succession by
AirTouch Cellular as the Surviving Corporation in the Merger to any
material obligation, right or interest of CCI or any subsidiary of CCI,
or (ii) the indirect
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acquisition of CCI's ownership interest in New Par, under any material
loan or credit agreement, note, mortgage, indenture, lease, license or
other agreement or instrument (other than the Credit Agreement, as to
which the parties acknowledge repayment will be required at the
Effective Time) shall have been obtained.
(e) Legal Opinions. AirTouch shall have received the opinions
of Richard J. Lubasch, Vice President- General Counsel of CCI, and
Skadden, Arps, Slate, Meagher & Flom, counsel to CCI, both dated the
Closing Date, substantially in the form attached hereto as Exhibits
6.3(e)-1 and 6.3(e)-2 hereto, respectively.
(f) Tax Opinion. AirTouch shall have received the opinion of
Pillsbury Madison & Sutro LLP, counsel to AirTouch, dated the Closing
Date, to the effect that the Merger will be treated for federal income
tax purposes as a reorganization within the meaning of Section 368(a)
of the Code, and that AirTouch, AirTouch Cellular and CCI will each be
a party to that reorganization within the meaning of Section 368(b) of
the Code.
(g) Litigation, etc. There shall be no pending or threatened
material action or proceeding by any person against AirTouch, CCI, any
subsidiary of either or New Par, or any director, officer or employee
thereof, challenging or in any way or in any manner seeking to restrict
or prohibit the transactions contemplated hereby or seeking to obtain
any damages against any person as a result of the transactions
contemplated hereby, which action or proceeding has or would have a
reasonable likelihood of success.
(h) Comfort Letter of CCI's Accountants. AirTouch shall have
received the letters from Ernst & Young LLP, as CCI's independent
accountants, prepared pursuant to the provisions of Section 5.14.
(i) Rights Agreement. The Rights shall have been redeemed (by
resolution of the Board of Directors of CCI and provision for payment
as set forth in Section 2.9) in accordance with their terms.
(j) Consummation of Certain Transactions. The transactions
contemplated by Section 5.10 shall have been consummated in accordance
with the provisions thereof.
(k) Absence of Restrictive Conditions. There shall not be any
action taken, or any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Merger, by any
Governmental Entity which, in connection with the transactions
contemplated hereby, imposes any condition or restriction upon AirTouch
or the Surviving Corporation or their respective subsidiaries which in
the reasonable business judgment of AirTouch would materially interfere
with the benefits sought to be obtained by AirTouch hereunder.
(l) Contingent Liabilities. Except for matters described in
the schedules delivered by CCI to AirTouch hereunder, at the time of
the Closing (i) there shall not be any suit, action or proceeding, or
any investigation or inquiry, by any Governmental Entity (collectively,
"proceeding"), which shall be pending or, to the knowledge of CCI,
threatened against or affecting CCI, any subsidiary thereof or New Par,
and (ii) there shall not be any potential unasserted claim or liability
against CCI, any subsidiary thereof or New Par (whether or not such
claim or liability is required to be accrued or disclosed under SFAS
No. 5), in the case of either a proceeding under clause (i) or a claim
or liability under clause (ii), which could be reasonably expected to
have, either individually or in the aggregate with all other such
proceedings, claims or liabilities, a material adverse effect on CCI,
its subsidiaries and New Par taken as a whole (which shall be deemed to
have occurred if involving losses, liabilities (which if contingent
could reasonably be expected to result in loss), costs or expenses of
more than $50 million).
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(m) Change in Business Condition. Since the date hereof,
there shall not have occurred any change in the Business Condition of
CCI, its subsidiaries and New Par, taken as a whole, that would have or
would be reasonably likely to have, individually or in the aggregate, a
materially adverse effect thereon; provided, however, that the
foregoing shall not apply to any change resulting from general cellular
industry conditions or a regulatory development affecting the cellular
industry generally.
(n) Amendment of Indemnification Agreements. Prior to the
Effective Time, CCI shall have entered into an amendment of each
indemnity agreement by and between CCI and any officer or director of
CCI or any other entity, pursuant to which the indemnitee (i)
acknowledges that for purposes of indemnification by CCI or its
subsidiaries such indemnitee has not served at the request of CCI or
any such subsidiary thereof as a director, officer, employee, trustee,
agent or fiduciary of any corporation, partnership, joint venture,
trust or other entity other than CCI or any of its current subsidiaries
("non-CCI position") and (ii) waives any rights to indemnification that
would arise out of or relate to such indemnitee's serving in any such
non-CCI position and to which such indemnitee would otherwise be
entitled pursuant to such indemnity agreement or the certificate of
incorporation or bylaws of CCI or any subsidiary thereof.
ARTICLE VII
TERMINATION; AMENDMENT AND MISCELLANEOUS
7.1 Termination. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement, the Merger and
the other transactions contemplated hereby by the stockholders of CCI, this
Agreement may be terminated and the Merger abandoned at any time prior to the
Effective Time:
(a) By mutual consent of AirTouch and CCI; or
(b) By either AirTouch or CCI, if the Effective Time does not
occur on or before September 15, 1996 (unless the failure of such
occurrence shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe its covenants and
agreements set forth herein required to be performed or observed by
such party on or before the Effective Time); or
(c) By AirTouch, in accordance with the provisions of Section
2.2(l); provided that AirTouch shall have given CCI five business days'
written notice of such termination; or
(d) (i) By either AirTouch or CCI, if the approval of the
stockholders of CCI contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a duly
held meeting of stockholders or of any adjournment thereof, or (ii) by
AirTouch, if any of the recommendations described in clause (i) of
Section 5.5 shall not have been included in the Proxy Statement, or
shall have been withdrawn or modified; or
(e) By AirTouch, if at the time of the Stockholders' Meeting
the holders of shares of CCI Stock representing more than 10% of the
CCI Common Equivalent Shares have submitted written demands for
appraisal of their respective shares pursuant to section 262 of the
DGCL which demands have not been withdrawn; or
(f) By either AirTouch or CCI, if any permanent injunction or
other order of a court or other competent authority preventing the
consummation of the Merger shall have become final and non-appealable.
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<PAGE> 37
7.2 Effect of Termination.
(a) In the event of the termination and abandonment of this Agreement
pursuant to Section 7.1, this Agreement shall become void and have no effect,
except that (i) the provisions of this Section 7.2, Section 7.3 and Section 7.6
shall survive any such termination and abandonment and (ii) no party shall be
relieved or released from any liability arising out of an intentional breach of
any provision of this Agreement.
(b) Upon any such termination and abandonment of this Agreement, the
Existing Agreement and the letter agreement, dated March 31, 1995, between
AirTouch and CCI, as extended by letter agreement dated January 23, 1996
(together, the "Confidentiality Agreement"), shall remain in full force and
effect.
7.3 Termination Expenses. In the event this Agreement is terminated
pursuant to Section 7.1(d) AirTouch shall be entitled to reimbursement from CCI
and its subsidiaries for all reasonable internal and external costs, fees and
expenses incurred by such terminating party and any of its subsidiaries in
connection with the transactions contemplated hereby, including the
preparation, printing, filing, shipping, and distribution of the Registration
Statement and the Proxy Statement and the pursuit of Regulatory Approvals (such
fees and expenses to include all legal, consulting and accounting fees,
disbursements and expenses).
7.4 Non-Survival of Representations, Warranties and Covenants
Following the Effective Time. Except for Article II, Article III, Section 5.8,
Section 5.15(d) and Article VII (excluding Sections 7.1, 7.2 and 7.3), none of
the respective representations, warranties, obligations, covenants and
agreements of the parties shall survive the Effective Time.
7.5 Waiver and Amendment. Any provision of this Agreement may be
waived at any time by the party which is, or whose stockholders are, entitled
to the benefits hereof and this Agreement may be amended or supplemented at any
time before or after approval of this Agreement by the stockholders of CCI to
the extent permitted under section 251(d) of the DGCL. No waiver, amendment or
supplement shall be effective unless in writing and signed by the party or
parties sought to be bound thereby.
7.6 Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) contains the entire agreement among AirTouch, AirTouch
Cellular and CCI with respect to the transactions contemplated hereby, and this
Agreement supersedes all prior agreements among the parties with respect to
these matters; provided, however, that the Existing Agreement and the
Confidentiality Agreement remain in full force and effect and are not modified
hereby.
7.7 Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without giving effect to
the conflicts of law principles thereof.
7.8 Interpretation. The descriptive headings contained in this
Agreement are for convenience and reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
7.9 Notices. Each party shall promptly give written notice to the
other parties upon becoming aware of the occurrence or, to its knowledge, a
pending or threatened occurrence, of any event which would case or constitute a
breach of any of its representations, warranties or covenants contained or
referenced in this Agreement and will use its best efforts to prevent or
promptly remedy the same. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, telegraphed or
telecopied or sent by certified or registered mail, postage prepaid, and shall
be deemed to be given, dated and received when so delivered personally,
telegraphed or telecopied or, if mailed, five business days after the date of
mailing to the following address or telecopy number, or to such other address
or addresses as such person may subsequently designate by notice given
hereunder:
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If to CCI:
Cellular Communications, Inc.
110 East 59th Street
New York, NY 10022
Attention: Richard J. Lubasch,
Vice President and General Counsel
Telecopy: (212) 906-8497
With copies to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Attention: Kenneth J. Bialkin and
Thomas H. Kennedy
Telecopy: (212) 735-2000
If to AirTouch or AirTouch Cellular:
AirTouch Communications, Inc.
One California Street
San Francisco, CA 94111
Attention: Margaret G. Gill,
Senior Vice President,
Legal, External Affairs and Secretary
Telecopy: (415) 658-2298
With copies to:
Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, CA 94104
Attention: Nathaniel M. Cartmell III
Telecopy: (415) 983-1200
or to such other address as any party may have furnished to the other parties
in writing in accordance with this Section 7.9.
7.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one agreement.
7.11 Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
7.12 No Assignment. Neither of the parties hereto may assign any of its
rights or delegate any of its obligations (whether by operation of law or
otherwise) under this Agreement to any other person or entity; provided that
AirTouch Cellular shall be entitled to assign all of its rights and obligations
hereunder to any wholly owned subsidiary of AirTouch. Any such purported
assignment or delegation that is made without the prior written consent of the
other parties to this Agreement shall be void and of no effect. Subject to the
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<PAGE> 39
foregoing provisions of this Section 7.12, this Agreement shall be binding upon
and inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
7.13 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
7.14 Consent to Jurisdiction. Each of the parties hereby submits to the
exclusive jurisdiction of the Chancery Court of the State of Delaware and the
Federal courts of the United States of America located in Delaware in respect
of the transactions contemplated by this Agreement, and hereby waives, and
agrees not to assert, as a defense in any action, suit or proceeding for the
transactions contemplated by this Agreement, that it is not subject thereto or
that such action, suit or proceeding may not be brought or is not maintainable
in said courts or that the Agreement may not be enforced in or by said courts
or that its property is exempt or immune from execution, that the suit, action
or proceeding is brought in an inconvenient forum, or that the venue of the
suit, action or proceeding is improper.
7.15 Publicity. So long as this Agreement is in effect, each of AirTouch
and CCI agrees to consult with the other in issuing any press release or
otherwise making any public statement with respect to the transactions
contemplated hereby or the other party, and neither CCI nor AirTouch will issue
any press release or make any such public statement prior to such consultation
and giving the other a reasonable opportunity to review and comment on any such
proposed press release or public statement, except as may be required by law.
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<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first written above.
AIRTOUCH COMMUNICATIONS, INC.
By: /s/ Arun Sarin
----------------------------------
Name: Arun Sarin
Title: Vice Chairman
AIRTOUCH CELLULAR
By: /s/ Mohan Gyani
----------------------------------
Name: Mohan Gyani
Title: Executive Vice President and
Chief Executive Officer
CELLULAR COMMUNICATIONS, INC.
By: /s/ George Blumenthal
----------------------------------
Name: George Blumenthal
Title: Chairman
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EXHIBIT 2.1(a)
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF
6.00% CLASS B MANDATORILY CONVERTIBLE PREFERRED STOCK,
SERIES 1996
OF
AIRTOUCH COMMUNICATIONS, INC.
AIRTOUCH COMMUNICATIONS, INC. (the "Corporation"), a Delaware
corporation governed by the provisions of the General Corporation Law of the
State of Delaware, as amended, hereby certifies that, under authority conferred
upon the Board of Directors by the Certificate of Incorporation of the
Corporation and the provisions of Section 151 of the General Corporation Law of
the State of Delaware, the Board of Directors at a meeting held on April 4, 1996
duly adopted the following resolution:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation by the Certificate of Incorporation and Section
151 of the Delaware General Corporation Law, the Board of Directors hereby
approves the amount, preferences and rights, including voting rights, of this
Corporation's 6.0% Class B Mandatorily Convertible Preferred Stock, Series 1996
(the "Class C Preferred"), as presented to the Board of Directors; and be it
further
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation by the Certificate of Incorporation and Section
141 of the Delaware General Corporation Law, a committee known as the Preferred
Stock Committee, of which Arun Sarin shall be the sole member, is established,
and that such committee is authorized to incorporate the amount, rights, and
preferences of each of the Class B Preferred and the Class C Preferred, as
approved by this Board of Directors, into Certificates of Designation,
Preferences and Rights to be filed with the Secretary of State of the State of
Delaware, provided that the Preferred Stock Committee may approve modifications
to the amounts, preferences and rights of the Class B Preferred and the Class C
Preferred, other than the voting rights.
The Corporation further certifies that under the authority conferred
upon the Preferred Stock Committee by resolutions of the Board of Directors
adopted at a meeting held on April 4, 1996 and the provisions of Sections 141
and 151 of the General Corporation Law of the State of Delaware, the Preferred
Stock Committee of the Board of Directors duly adopted the following resolution:
RESOLVED, that under authority conferred upon the Preferred Stock
Committee by resolutions of the Board of Directors duly adopted at a meeting
held on April 4, 1996 and the provisions of Section 141 and 151 of the General
Corporation Law of the State of Delaware, the Preferred Stock Committee hereby
fixes the amount, preferences and rights of the shares of the 6% Class B
Mandatorily Convertible Preferred Stock, Series 1996, as set forth in Schedule A
attached hereto, and the proper officers of the Corporation are hereby
authorized and directed to execute and file a Certificate of Designation,
Preferences and Rights containing such provisions with the Secretary of the
State of Delaware and with such other governmental agencies or authorities as
any of such officers may deem appropriate.
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SCHEDULE A
1. DESIGNATION AND AMOUNT.
The designation of the series of Preferred Stock created by this
Certificate shall be "6.00% Class B Mandatorily Convertible Preferred Stock,
Series 1996, par value $0.01 per share" (the "Class B Preferred Shares"), and
the number of shares constituting such series shall be 24,000,000. Such number
of shares may be increased or decreased by resolution of the Board of Directors,
provided that no decrease shall reduce the number of Class B Preferred Shares to
a number less than that of the Class B Preferred Shares then outstanding plus
the number of shares issuable upon exercise of outstanding rights, options or
warrants or upon conversion of outstanding securities issued by the Corporation.
2. DEFINITIONS.
As used in this Certificate:
"Anti-Dilution Adjustment Ratio" has the meaning set forth in Section
4(d)(ii).
"Business Day" shall mean any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of California or the State of New
York are authorized or obligated by law or executive order to close or are
closed because of a banking moratorium or otherwise.
"Class B Preferred Shares" means the shares of 6.00% Class B
Mandatorily Convertible Preferred Stock, 1996 Series.
"Class C Preferred Stock" shall mean the 4.25% Class C Convertible
Preferred Stock, Series 1996.
"Common Stock" shall mean the common stock of the Corporation, par
value $.01 per share.
"Contingent Payment" has the meaning set forth in Section 5(a).
"Contingent Payment Calculation Date" has the meaning set forth in
Section 5(a).
"Conversion Price" has the meaning set forth in the definition of
Maturity Exchange Rate.
"Current Market Price" per share of Common Stock at any date shall be
deemed to be the Volume-Weighted Average Trading Price over the fifteen
consecutive Trading Day period ending on and including such date of
determination; provided, however, if any event that results in an adjustment of
the Maturity Exchange Rate or the Optional Conversion Rate occurs during such
fifteen Trading Day period, the Current Market Price as determined pursuant to
the foregoing shall be appropriately adjusted to reflect the occurrence of such
event.
"Determination Date" means, with respect to the issuance, sale or
exchange of any Equity Securities, the later of (a) the date upon which the
price or the amount of consideration to be received in consideration of such
issuance, sale or exchange is fixed and (b) the date upon which a public
announcement of the transaction is made, provided that if no public announcement
is made, the Determination Date shall be the date set forth in (a).
"Distribution Adjustment Ratio" has the meaning set forth in Section
4(d)(iii).
"Dividend Payment Date" has the meaning set forth in Section 3(a).
"Equity Securities" shall mean the Common Stock or any debt, equity or
other security or contractual right, in each case that is convertible into or
exercisable or exchangeable for, or based on the value of, the Common Stock or
any warrants, options or other rights to purchase the Common Stock or other
Equity Securities (other than Rights).
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<PAGE> 43
"Equity Security Adjustment Ratio" has the meaning set forth in Section
4(d)(vi).
"Exempt Issuance" means (a) Equity Securities issued pursuant to any
existing or future employee stock purchase plan, employee stock option plan or
other employee or director benefit plan or (b) Equity Securities issued pursuant
to any stockholder purchase plan or plan for the reinvestment of dividends or
interest, to the extent that the consideration paid for the Equity Securities
issued pursuant to any such stockholder or dividend or interest reinvestment
plan is not less than 95% of the Fair Market Value of such securities as of the
date of the issuance of the Equity Securities.
"Extraordinary Distribution" means any single dividend or other
distribution (including by reclassification of shares or recapitalization of the
Corporation, as well as any such dividend or distribution made in connection
with a merger or consolidation in which the Corporation is the continuing
corporation and the Common Stock is not changed or exchanged) to holders of
Common Stock (effected while any of the Class B Preferred Shares are
outstanding) (i) of cash, where the aggregate amount of such single cash
dividend or distribution together with the amount of all cash dividends and
distributions made to holders of Common Stock over the twelve-month period
ending on the payment date for such cash dividend or distribution, when combined
with the aggregate amount of all previous Pro Rata Repurchases during such
period (for this purpose, including only that portion of the aggregate purchase
price of each such Pro Rata Repurchase which is in excess of the Fair Market
Value of the Common Stock repurchased as determined on the Business Day prior to
the public announcement of such Pro Rata Repurchase made during such period),
exceeds twelve and one-half percent (12-1/2%) of the aggregate Fair Market Value
of all shares of Common Stock outstanding on the record date for determining the
stockholders entitled to receive such Extraordinary Distribution and (ii) of any
evidences of indebtedness of the Corporation or evidences of indebtedness or
securities of any other person or any other property (including, without
limitation, shares of capital stock of any subsidiary of the Corporation), or
any combination thereof. The Fair Market Value of any such single dividend or
other distribution that, pursuant to clause (i), constitutes an Extraordinary
Distribution shall for purposes of the first paragraph of Section 4(d)(iii)
hereof be the sum of the Fair Market Value of such Extraordinary Distribution
plus the amount of any other cash dividends and distributions made within the
relevant period referred to above to holders of Common Stock to the extent such
other dividends and distributions were not previously included in the
calculation of an adjustment pursuant to the first paragraph of Section
4(d)(iii) hereof within such period.
"Fair Market Value" shall mean the Volume-Weighted Average Trading
Price of the Security in question for the five-day period before the earlier of
the day in question and the "ex" date with respect to any issuance or
distribution requiring such computation. The term "ex" date, when used with
respect to any issuance or distribution, means the first day on which the Common
Stock trades regular way, without the right to receive such issuance or
distribution, on the exchange or in the market to determine that day's
Volume-Weighted Average Trading Price. With respect to any asset or security for
which there is no Current Market Price, the Fair Market Value of such asset or
security shall be determined in good faith by the Board of Directors.
"Initial Issuance Date" means the date upon which the Class B Preferred
Shares are initially issued.
"International Adjustment Ratio" has the meaning set forth in Section
4(d)(iv).
"International Distribution" means a distribution to the holders of
Common Stock of any equity interest in an International Entity, on a per share
basis.
"International Entity" means any entity predominantly holding interests
in cellular operations outside the United States that has an aggregate Fair
Market Value of U.S.$ 1 billion or more.
"Issue Price" has the meaning set forth in the definition of Maturity
Exchange Rate.
"Issued Equity Securities" has the meaning set forth in Section
4(d)(ii).
"Junior Stock" has the meaning set forth in Section 3(b).
"Liquidation Amount" has the meaning set forth in Section 6(c).
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"Mandatory Conversion" has the meaning set forth in Section 4(a).
"Maturity Date" has the meaning set forth in Section 4(a).
"Maturity Exchange Rate" is equal to, subject to adjustment as to
amount and shares, as described herein, (a) if the Maturity Price is greater
than or equal to $____ per share (the "Conversion Price") [THE ISSUE PRICE TIMES
1.24], 0.806 shares of Common Stock per Class B Preferred Share, (b) if the
Maturity Price is less than the Conversion Price but greater than $___ per share
(the "Issue Price") [AIRTOUCH PREFERRED STOCK ISSUE PRICE AS DEFINED IN THE
MERGER AGREEMENT], the rate of Common Stock per Class B Preferred Share that is
equal to the Issue Price divided by the Maturity Price, and (c) if the Maturity
Price is less than or equal to the Issue Price, one share of Common Stock per
Class B Preferred Share.
"Maturity Price" means the Volume-Weighted Average Trading Price per
share of Common Stock for the 20 consecutive Trading Day period immediately
prior to (but not including) the Maturity Date.
"New Issuance Adjustment Ratio" has the meaning set forth in Section
4(d)(v).
"Non-Dilutive Amount" in respect of an issuance, sale or exchange by
the Corporation of any Equity Securities (other than Common Stock) shall mean
the excess of (i) the Fair Market Value of a share of Common Stock on the
Determination Date multiplied by the maximum number of shares of Common Stock
which could be acquired on such date upon the exercise, conversion or exchange
in full of such Equity Securities (and any Equity Securities receivable upon
exercise, conversion or exchange thereof), whether or not then exercisable,
convertible or exchangeable at such date, if any, over (ii) the aggregate amount
payable pursuant to the exercise, conversion or exchange of such Equity
Securities, whether or not then exercisable, convertible or exchangeable, to
purchase or acquire such maximum number of shares of Common Stock (and any
Equity Securities receivable upon exercise, conversion or exchange thereof);
provided, however, that in no event shall the Non-Dilutive Amount be less than
zero. For purposes of the foregoing sentence, the amount payable pursuant to the
exercise, conversion or exchange of such Equity Securities to purchase or
acquire shares of Common Stock shall be deemed to be the Fair Market Value of
the consideration payable pursuant to the exercise, conversion or exchange of
such Equity Securities on the Determination Date (excluding for that purpose the
Fair Market Value of the Equity Security to be so exercised, converted or
exchanged).
"Optional Conversion Rate" has the meaning set forth in Section 4(c).
"Parity Preferred Stock" has the meaning set forth in Section 3(a).
"Preferred Stock Directors" has the meaning set forth in Section 8(b).
"Pro Rata Repurchases" means any purchase of shares of Common Stock by
the Corporation or any affiliate thereof (as defined in Rule 12b-2 under the
Securities Exchange Act of 1934 (the "Exchange Act")) pursuant to any tender
offer or exchange offer subject to Section 13(e) of the Exchange Act, or
pursuant to any other offer available to substantially all holders of Common
Stock, whether for cash, shares of capital stock of the Corporation, other
securities of the Corporation, evidences of indebtedness of the Corporation or
any other person or any other property (including, without limitation, shares of
capital stock, other securities or evidences of indebtedness of a subsidiary of
the Corporation), or any combination thereof, effected while any of the shares
of Class B Preferred Shares are outstanding; provided, however, that "Pro Rata
Repurchase" shall not include any purchase of shares by the Corporation or any
affiliate thereof made in open market transactions substantially in accordance
with the requirements of Rule 10b-18 as in effect under the Exchange Act or on
such other terms and conditions as the Board of Directors shall have determined
are reasonably designed to prevent such purchases from having a material effect
on the trading market for the Common Stock. The "Effective Date" of a Pro Rata
Repurchase shall mean the date of acceptance of shares for purchase or exchange
under any tender or exchange offer which is a Pro Rata Repurchase or the date of
purchase with respect to any Pro Rata Repurchase that is not a tender or
exchange offer.
"Recapitalization Adjustment Ratio" has the meaning set forth in
Section 4(d)(i).
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<PAGE> 45
"Reorganization Event" has the meaning set forth in Section 4(e).
"Rights" means rights of the Corporation issued or issuable under the
Rights Agreement dated September 9, 1994 between the Corporation and The Bank of
New York or pursuant to any successor stockholder rights plan replacing the
Rights Agreement.
"Security Issue Date" means the date on which a particular Class B
Preferred Share is issued.
"Senior Preferred Stock" has the meaning set forth in Section 3(a).
"Third Party" means any person as to which the Corporation does not
own, directly or indirectly, and does not have the power to direct, more than
20% of the outstanding voting interests.
"Trading Date" shall mean a date on which the New York Stock Exchange
(or any successor thereto) is open for the transaction of business.
"Volume-Weighted Average Trading Price" for any given period means, for
a security, an amount equal to (A) the cumulative sum, for each trade of such
security during such period on the New York Stock Exchange (or such other
principal exchange or over-the-counter market on which such security is listed),
of the product of: (x) the sale price times (y) the number of shares of the
security sold at such price; divided by (B) the total number of securities so
traded during the specified period.
3. DIVIDENDS.
(a) Payment of Dividends. The holders of outstanding Class B Preferred
Shares shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available therefor, cumulative preferential
dividends from the Security Issue Date, at the rate per Class B Preferred Share
of $____ per annum, as may be adjusted in accordance with the provisions hereof
[6% OF THE ISSUE PRICE], and no more, payable quarterly in arrears on the 15th
day of each February, May, August and November, respectively (each such date
being hereinafter referred to as a "Dividend Payment Date"), or, if any Dividend
Payment Date is not a Business Day, then the Dividend Payment Date shall be the
next succeeding Business Day. The first dividend payment shall be for the period
from the Security Issue Date to but excluding the first day of the next calendar
quarter, and will be payable on the first Dividend Payment Date thereafter. Each
quarterly period beginning on January 1, April 1, July 1 and October 1 in each
year and ending on and including the day next preceding the first day of the
next such quarterly period shall be a dividend period. Dividends (or amounts
equal to accrued and unpaid dividends) payable on Class B Preferred Shares for
any period less than a full quarterly dividend period will be computed on the
basis of a 360-day year of twelve 30-day months and the actual number of days
elapsed in any period less than one month. The Board of Directors may fix a
record date for the determination of holders of Class B Preferred Shares
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be no more than 60 calendar days prior to the date fixed
for the payment thereof. If the Security Issue Date of a particular Class B
Preferred Share is later than the Initial Issuance Date solely due to a delay in
the surrender by the holder of a certificate representing a share of capital
stock of Cellular Communications, Inc. ("CCI") pursuant to Section 3.2 of the
Agreement and Plan of Merger between the Corporation and CCI, then,
notwithstanding the foregoing, dividends on such Class B Preferred Share shall
be payable from the Initial Issuance Date.
Dividends on the Class B Preferred Shares will accrue, whether or not
there are funds legally available for the payment of such dividends and whether
or not such dividends are declared, on a daily basis from the previous Dividend
Payment Date. Accumulated unpaid dividends shall not bear interest. Dividends
will cease to accrue in respect of Class B Preferred Shares on the Maturity Date
or on the date of their earlier conversion.
The Preferred Shares will rank on a parity as to payment of dividends
with the Class C Preferred, and with any future preferred stock issued by the
Corporation (the "Parity Preferred Stock") that by its terms ranks pari passu
with the Preferred Shares with respect to payment of dividends.
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The Preferred Shares will be subordinate as to payment of dividends to
any future preferred stock issued by the Corporation that by its terms is senior
to the Preferred Shares with respect to payment of dividends (the "Senior
Preferred Stock").
(b) Payment of Dividends on Junior Stock. As long as any Class B
Preferred Shares are outstanding, no dividends or other distributions for any
dividend period (other than dividends payable in shares of, or warrants, rights
or options exercisable for or convertible into shares of, Common Stock or any
other capital stock of the Corporation ranking junior to the Class B Preferred
Shares as to the payment of dividends and the distribution of assets upon
liquidation ("Junior Stock") and cash in lieu of fractional shares of such
Junior Stock in connection with any such dividend) will be paid on any Junior
Stock unless: (i) full dividends on all outstanding shares of Senior Preferred
Stock and Parity Preferred Stock (including the Class B Preferred Shares) have
been paid, or declared and set aside for payment, for all dividend periods
terminating on or prior to the payment date of such Junior Stock dividend or
distribution and for the current dividend period, to the extent such Senior
Preferred Stock or Parity Preferred Stock dividends are cumulative; (ii) the
Corporation has paid or set aside all amounts, if any, then or theretofore
required to be paid or set aside for all purchase, retirement, and sinking
funds, if any, for any outstanding shares of Senior Preferred Stock or Parity
Preferred Stock; and (iii) the Corporation is not in default on any of its
obligations to redeem any outstanding shares of Senior Preferred Stock or Parity
Preferred Stock.
In addition, as long as any Class B Preferred Shares are outstanding,
no shares of any Junior Stock may be purchased, redeemed, or otherwise acquired
by the Corporation or any of its subsidiaries (except in connection with a
reclassification or exchange of any Junior Stock through the issuance of other
Junior Stock (and cash in lieu of fractional shares of such Junior Stock in
connection therewith) or the purchase, redemption, or other acquisition of any
Junior Stock with any Junior Stock (and cash in lieu of fractional shares of
such Junior Stock in connection therewith)) nor may any funds be set aside or
made available for any sinking fund for the purchase or redemption of any Junior
Stock unless: (i) full dividends on all outstanding shares of Senior Preferred
Stock and Parity Preferred Stock have been paid, or declared and set aside for
payment, for all dividend periods terminating on or prior to the date of such
purchase, redemption or acquisition and for the current dividend period, to the
extent such Senior Preferred Stock or Parity Preferred Stock dividends are
cumulative; (ii) the Corporation has paid or set aside all amounts, if any, then
or theretofore required to be paid or set aside for all purchase, retirement,
and sinking funds, if any, for any outstanding shares of Senior Preferred Stock
or Parity Preferred Stock; and (iii) the Corporation is not in default on any of
its obligations to redeem any outstanding shares of Senior Preferred Stock or
Parity Preferred Stock.
Subject to the provisions described above, such dividends or other
distributions (payable in cash, property, or Junior Stock) as may be determined
from time to time by the Board of Directors may be declared and paid on the
shares of any Junior Stock and from time to time Junior Stock may be purchased,
redeemed or otherwise acquired by the Corporation or any of its subsidiaries. In
the event of the declaration and payment of any such dividends or other
distributions, the holders of such Junior Stock will be entitled, to the
exclusion of holders of any outstanding Senior Preferred Stock or Parity
Preferred Stock, to share therein according to their respective interests.
(c) Payment of Dividends on Parity Preferred Stock. As long as any
Class B Preferred Shares are outstanding, dividends or other distributions for
any dividend period may not be paid on any outstanding shares of Parity
Preferred Stock (other than dividends or other distributions payable in Junior
Stock and cash in lieu of fractional shares of such Junior Stock in connection
therewith), unless either: (a) (i) full dividends on all outstanding shares of
Senior Preferred Stock and Parity Preferred Stock have been paid, or declared
and set aside for payment, for all dividend periods terminating on or prior to
the payment date of such Senior Preferred Stock or Parity Preferred Stock
dividend or distribution and for the current dividend period, to the extent such
Senior Preferred Stock or Parity Preferred Stock dividends are cumulative; (ii)
the Corporation has paid or set aside all amounts, if any, then or theretofore
required to be paid or set aside for all purchase, retirement and sinking funds,
if any, for any outstanding shares of Senior Preferred Stock and Parity
Preferred Stock; and (iii) the Corporation is not in default on any of its
obligations to redeem any outstanding shares of Senior Preferred Stock or Parity
Preferred Stock; or (b) any such dividends are declared and paid pro rata so
that the amounts of any dividends declared and paid per share on outstanding
Class B Preferred Shares and each other share of such Parity Preferred Stock
will in all cases bear to each other the same ratio that accrued and unpaid
dividends (including any accumulation with respect to unpaid dividends for prior
dividend periods, if such dividends are cumulative) per
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share of outstanding Class B Preferred Shares and such other outstanding shares
of Parity Preferred Stock bear to each other.
In addition, as long as any Class B Preferred Shares are outstanding,
the Corporation may not purchase, redeem or otherwise acquire any Parity
Preferred Stock (except with any Junior Stock and cash in lieu of fractional
shares of such Junior Stock in connection therewith) unless: (i) full dividends
on all outstanding shares of Senior Preferred Stock and Parity Preferred Stock
have been paid, or declared and set aside for payment, for all dividend periods
terminating on or prior to the payment date of such Senior Preferred Stock or
Parity Preferred Stock purchase, redemption or other acquisition and for the
current dividend period, to the extent such Senior Preferred Stock and Parity
Preferred Stock dividends are cumulative; (ii) the Corporation has paid or set
aside all amounts, if any, then or theretofore required to be paid or set aside
for all purchase, retirement, and sinking funds, if any, for any outstanding
shares of Senior Preferred Stock and Parity Preferred Stock; (iii) the
Corporation is not in default of any of its obligations to redeem any
outstanding shares of Senior Preferred Stock or Parity Preferred Stock unless
all Parity Preferred Stock as to which such a default exists is purchased or
redeemed on a pro rata basis.
(d) Any dividend payment made on the Class B Preferred Shares shall
first be credited against the earliest accrued but unpaid dividend due with
respect to the Class B Preferred Shares.
(e) All dividends paid with respect to the Class B Preferred Shares
shall be paid pro rata to the holders entitled thereto.
(f) Holders of the Class B Preferred Shares shall be entitled to
receive dividends in preference to and in priority over any dividends upon any
shares of the Corporation ranking junior to the Class B Preferred Shares as to
dividends, but subject to the rights of holders of shares of the Corporation
having a preference and a priority over the payment of dividends on the Class B
Preferred Shares.
4. CONVERSION.
(a) Mandatory Conversion. On ______, 1999, or such earlier date as may
occur as a result of an event set forth in Section 4(e) (the "Maturity Date")
[THREE YEARS AFTER INITIAL ISSUANCE DATE], each outstanding Class B Preferred
Share shall convert automatically (the "Mandatory Conversion") into Common Stock
at the Maturity Exchange Rate in effect on the Maturity Date, and all accrued
and unpaid dividends on such Class B Preferred Share (other than previously
declared dividends payable to the holder of record on a prior date) through and
including the Maturity Date, whether or not declared, shall be immediately due
and payable in cash out of funds legally available for the payment of dividends,
subject to the conversion of the Class B Preferred Shares at the option of the
holder at any time prior to the Maturity Date. Dividends on the Class B
Preferred Shares shall cease to accrue and such shares shall cease to be
outstanding on the Maturity Date. The Corporation shall make such arrangements
as it deems appropriate for the issuance of certificates representing shares of
Common Stock and for the payment of cash in respect of such accrued and unpaid
dividends, if any, or cash in lieu of fractional shares, if any, in exchange for
and contingent upon surrender of certificates representing the Class B Preferred
Shares, and the Corporation may defer the payment of dividends on shares of
Common Stock issuable upon conversion of the Class B Preferred Shares and the
voting thereof until, and make such payment and voting contingent upon, the
surrender of such certificates representing the Class B Preferred Shares,
provided that the Corporation shall give the holders of the Class B Preferred
Shares such notice of any such actions as the Corporation deems appropriate and
upon such surrender such holders shall be entitled to receive such dividends
declared and paid on such shares of Common Stock subsequent to the Maturity
Date. Amounts payable in cash in respect of the Class B Preferred Shares or in
respect of such shares of Common Stock shall not bear interest.
(b) Redemption by the Corporation. Class B Preferred Shares are not
redeemable by the Corporation prior to the Maturity Date.
(c) Conversion at Option of Holder. Class B Preferred Shares are
convertible at the option of the holder thereof at any time prior to the
Maturity Date into shares of Common Stock at a rate of 0.806 of a share of
Common Stock for each Class B Preferred Share (the "Optional Conversion Rate")
(equivalent to a conversion price of $__ per share of Common Stock)[ISSUE PRICE
TIMES 1.24], subject to adjustment as set forth below.
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Conversion of Class B Preferred Shares at the option of the holder may
be effected by delivering certificates evidencing such shares, together with
written notice of conversion and a proper assignment of such certificates to the
Corporation or in blank, to the office or agency to be maintained by the
Corporation for that purpose (and, if applicable, cash payment of an amount
equal to the dividend payable on such shares), and otherwise in accordance with
conversion procedures established by the Corporation. Each optional conversion
shall be deemed to have been effected immediately prior to the close of business
on the date on which the foregoing requirements shall have been satisfied and
dividends will cease to accrue in respect of Class B Preferred Shares at such
time. The conversion shall be at the Optional Conversion Rate in effect at such
time and on such date.
Holders of Class B Preferred Shares at the close of business on a
record date for any payment of declared dividends shall be entitled to receive
the dividend payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion of such shares following such record date and
prior to the corresponding Dividend Payment Date. Except as provided above, upon
any optional conversion of Class B Preferred Shares, the Corporation shall make
no payment or allowance for unpaid dividends, whether or not in arrears, on
converted Class B Preferred Shares or for previously declared dividends or
distributions on the shares of Common Stock issued upon such conversion.
(d) Maturity Exchange Rate and Optional Conversion Rate Adjustments.
The Maturity Exchange Rate and the Optional Conversion Rate shall each be
subject to adjustment from time to time as provided below in this section (d).
(i) If the Corporation shall, after the Initial Issuance Date:
(A) pay a stock dividend or make a distribution with
respect to its Common Stock in shares of such Common Stock,
(B) subdivide or split its outstanding Common Stock
into a greater number of shares,
(C) combine its outstanding shares of Common Stock
into a smaller number of shares, or
(D) issue any shares of capital stock of the
Corporation as a distribution with respect to, or by
reclassification of, its Common Stock (other than the Rights,
Equity Securities covered under Section 4(d)(ii), and
distributions pursuant to Section 5 hereof),
then, in any such event, (1) the Maturity Exchange Rate in effect
immediately prior to such event shall be adjusted such that (aa) the
Issue Price and the Conversion Price shall each be adjusted by
multiplying them by a fraction, the numerator of which is one and the
denominator of which is the number of shares of Common Stock of the
Corporation that a holder of one share of Common Stock prior to any
event described above would hold after such event (assuming the
issuance of fractional shares) (the "Recapitalization Adjustment
Ratio"), and (bb) the ratios set forth in (a), (b) and (c) of the
definition of Maturity Exchange Rate shall each be adjusted by
multiplying them by a fraction, the numerator of which is one and the
denominator of which is the Recapitalization Adjustment Ratio; and (2)
the Optional Conversion Rate in effect immediately prior to such event
shall be adjusted by multiplying it by a fraction, the numerator of
which is one and the denominator of which is the Recapitalization
Adjustment Ratio. Such adjustment shall become effective at the opening
of business on the Business Day next following the record date for
determination of stockholders entitled to receive such dividend or
distribution, in the case of a dividend or distribution, and shall
become effective immediately after the effective date, in the case of a
subdivision, split, combination or reclassification. Such adjustment
shall be made successively. In the case of an event described in
subsection (D) above, each Class B Preferred Share shall become
convertible into shares of capital stock of the Corporation as to which
a holder of Common Stock immediately prior to such a distribution shall
be entitled, or into which the Common Stock has become reclassified, at
the Maturity Exchange Rate or Optional Conversion Rate as modified by
this subsection
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(i). In the event of any such reclassification into more than one
resulting class of capital stock of the Corporation, the shares of each
such resulting class issuable upon conversion of a Class B Preferred
Share shall be in the same proportion, if possible, or if not possible,
in substantially the same portion, which the total number of shares of
such class resulting from such reclassification bears to the total
number of shares of all classes resulting from all such
reclassifications.
(ii) If the Corporation shall, after the Initial Issuance
Date, issue Equity Securities (other than Common Stock, the Rights or
Exempt Issuances) ("Issued Equity Securities") to all holders of its
Common Stock entitling them (for a period not exceeding 45 days from
the later of the record date and the Determination Date of such
issuance) to subscribe for or purchase shares of Common Stock or other
Equity Securities at a price per share less than the Fair Market Value
of the Common Stock or other Equity Security to be acquired in effect
on the Determination Date for such issuance of Equity Securities
(treating the price per share of the Equity Securities to be acquired
as equal to (x) the sum of (A) the Fair Market Value of the
consideration payable for a unit of the Equity Security plus (B) the
Fair Market Value of any additional consideration initially payable
upon the exercise, conversion or exchange of such security into Common
Stock divided by (y) the number of shares of Common Stock initially
underlying or that may be acquired upon the exercise, conversion or
exchange of such Equity Security) then, in any such event unless such
Equity Securities are issued to holders of Class B Preferred Shares on
a pro rata basis with the shares of Common Stock based on the Optional
Conversion Rate on the date immediately preceding the record date for
such issuance, (A) the Maturity Exchange Rate in effect on the record
date described below shall be adjusted (1) by multiplying the ratios
set forth in (a), (b) and (c) of the definition of Maturity Exchange by
a fraction of which the numerator shall be the sum of (x) the number of
shares of Common Stock outstanding on the date of issuance of such
Issued Equity Securities immediately prior to such issuance, plus (y)
the number of additional shares of Common Stock offered for
subscription or purchase pursuant to such Issued Equity Securities
(including the Common Stock that may be acquired upon the exercise,
conversion or exchange of the Equity Securities), and of which the
denominator shall be the sum of (x) the number of shares of Common
Stock outstanding on the date of issuance of such Issued Equity
Securities immediately prior to such issuance, plus (y) the number of
additional shares of Common Stock which the aggregate offering price of
the total number of shares of Common Stock so offered for subscription
or purchase (including, without limitation, the Fair Market Value of
the consideration payable for a unit of the Equity Securities so
offered plus the Fair Market Value of any additional consideration
payable upon exercise, conversion or exchange of such Equity
Securities) would purchase at such Fair Market Value as of the record
date for such issuance (the "Anti-Dilution Adjustment Ratio") and (2)
by multiplying the Issue Price and the Conversion Price by a fraction
equal to one divided by the Anti-Dilution Adjustment Ratio, and (B) the
Optional Conversion Ratio in effect on the record date described below
shall be adjusted by multiplying it by the Anti-Dilution Adjustment
Ratio. Such adjustment shall become effective at the opening of
business on the Business Day next following the record date for the
determination of stockholders entitled to receive such rights or
warrants. To the extent that shares of Common Stock are not delivered
after the expiration of such rights or warrants, the Maturity Exchange
Rate and the Optional Conversion Rate shall each be readjusted to the
Maturity Exchange Rate and the Optional Conversion Rate which would
then be in effect had the adjustments been made upon the issuance of
such rights or warrants upon the basis of delivery of only the number
of shares of Common Stock actually delivered. Such adjustment shall be
made successively.
(iii) If the Corporation shall, after the Initial Issuance
Date, make an Extraordinary Dividend or effect a Pro Rata Repurchase of
Common Stock, then unless such Extraordinary Dividend is made to each
holder of Class B Preferred Shares on a pro rata basis with the shares
of Common Stock based on the Optional Conversion Rate in effect on the
record date for such payment or distribution, in any such event, then
(A) the Maturity Exchange Rate in effect immediately prior to such
event shall be adjusted (1) by multiplying the ratios set forth in (a),
(b) and (c) of the definition of Maturity Exchange Rate by a fraction
of which the numerator shall be the product of (i) the number of shares
of Common Stock outstanding immediately before such Extraordinary
Dividend or Pro Rata Repurchase (minus, in the case of a Pro Rata
Repurchase, the number of shares of Common Stock repurchased by the
Corporation) and (ii) the Fair Market Value per share of the Common
Stock on the record date for the determination of stockholders entitled
to receive such Extraordinary Dividend or, with respect to a Pro Rata
Purchase, on the Trading Day immediately preceding the first public
announcement of such Pro Rata Repurchase, and of which the
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denominator shall be (i) the product of (x) the number of shares of
Common Stock outstanding immediately before such Extraordinary
Distribution or Pro Rata Repurchase and (y) the Fair Market Value of a
share of Common Stock on the record date with respect to such
Extraordinary Distribution, or, in the case of a Pro Rata Repurchase on
the Trading Day immediately preceding the first public announcement by
the Corporation or any of its Affiliates of the intent to effect such
Pro Rata Repurchase, minus (ii) the Fair Market Value of the
Extraordinary Distribution or the aggregate purchase price of the Pro
Rata Repurchase, as the case may be (provided that such denominator
shall never be less than 1.0) (the "Distribution Adjustment Ratio") and
(2) by multiplying the Issue Price and the Conversion Price by a
fraction of which the numerator shall be one and the denominator shall
be the Distribution Adjustment Ratio; and (B) the Optional Conversion
Rate in effect immediately prior to such event shall be adjusted by
multiplying it by the Distribution Adjustment Ratio; provided, however,
that no Pro Rata Repurchase shall cause an adjustment to the Maturity
Exchange Rate or the Optional Conversion Rate unless the amount of all
cash dividends and distributions made to holders of Common Stock over
the twelve-month period ending on the Effective Date of such Pro Rata
Repurchase, when combined with the aggregate amount of all Pro Rata
Repurchases, including such Pro Rata Repurchase (for all purposes of
this Section 4(d)(iii) including only that portion of the Fair Market
Value of the aggregate purchase price of each Pro Rata Repurchase which
is in excess of the Fair Market Value of the Common Stock repurchased
as determined on the Trading Day immediately preceding the first public
announcement by the Corporation or any of its Affiliates of the intent
to effect each such Pro Rata Repurchase), the Effective Dates of which
fall within such period, exceeds twelve and one-half percent (12-1/2%)
of the aggregate Fair Market Value of all shares of Common Stock
outstanding on the Trading Day immediately preceding the first public
announcement by the Corporation or any of its Affiliates of the intent
to effect such Pro Rata Repurchase. Such adjustment shall become
effective on the opening of business on the Business Day next following
the record date for the determination of stockholders entitled to
receive such dividend or distribution. Such adjustment shall be made
successively.
(iv) If the Corporation shall, after the Initial Issuance
Date, make an International Distribution, and on the record date for
such International Distribution the Fair Market Value of the Common
Stock is greater than the Conversion Price, then each holder of Class B
Preferred Shares as of the record date of such distribution shall
receive such International Distribution on a pro rata basis with the
shares of Common Stock based on the Optional Conversion Rate in effect
on the record date for such International Distribution, and the Issue
Price and the Conversion Price shall be adjusted by multiplying the
Issue Price and the Conversion Price by a fraction, of which the
numerator shall be (i) the product of (x) the number of shares of
Common Stock outstanding immediately prior to such International
Distribution and (y)(i) the Fair Market Value of a share of Common
Stock on the record date with respect to such International
Distribution, minus (ii) the Fair Market Value of the International
Distribution, and of which the denominator shall be the product of (x)
the number of shares of Common Stock outstanding immediately prior to
such International Distribution and (y) the Fair Market Value per share
of the Common Stock on the record date for the determination of
stockholders entitled to receive such International Dividend (the
"International Adjustment Rate"). With respect to all shares of Series
B Preferred Shares outstanding and subsequently issued, the dividend
payable pursuant to Section 2(a) hereof and the Liquidation Amount
shall each be adjusted by multiplying each of them by the International
Adjustment Rate. Such adjustment shall be made successively. In the
event that this subsection (iv) is applicable, then the provisions of
subsection (iii) shall not apply. If this subsection (iv) is not
applicable, then the provisions of subsection (iii) shall apply to such
International Distribution. All adjustments pursuant to this subsection
shall become effective on the opening of business on the Business Day
next following the record date for the determination of stockholders
entitled to receive such International Distribution. If the Corporation
has received an opinion of a nationally recognized law firm or
accounting firm that the procedure set forth in this subsection (iv)
would result in an adverse tax consequence to the Corporation or the
holders of the Common Stock, then the provisions of this subsection
(iv) shall not apply, and the provisions of subsection (iii) shall be
applicable.
(v) In case the Corporation shall, at any time or from time to
time while any of the shares of Class B Preferred Shares are
outstanding, issue, sell or exchange shares of Common Stock (other than
(i) pursuant to any Rights, (ii) Exempt Issuances or pursuant to Equity
Securities issued as Exempt Issuances, (iii) pursuant to Equity
Security theretofore outstanding entitling the holder to purchase or
acquire shares
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of Common Stock. (iv) a dividend or distribution to holders of Common
Stock or (v) distributions pursuant to Section 5 hereof) for a
consideration having a Fair Market Value on the Determination Date less
than the Fair Market Value of such shares of Common Stock on the
Determination Date, then (A) the Maturity Exchange Rate in effect
immediately prior to such issuance, sale or exchange shall be adjusted
(1) by multiplying the ratios set forth in (a), (b) and (c) of the
definition of Maturity Exchange Rate by a fraction of which the
numerator shall be the sum of (x) number of shares of Common Stock
outstanding on the date of such issuance immediately prior to such
issuance, plus (y) the number of additional shares of Common Stock so
issued, and of which the denominator shall be the sum of (x) the number
of shares of Common Stock outstanding on the date of such issuance
immediately prior to such issuance, plus (y) the number of additional
shares of Common Stock which the aggregate price paid for the total
number of shares of Common Stock so offered for subscription or
purchase would purchase at such Fair Market Value as of the
Determination Date (the "New Issuance Adjustment Ratio") and (2) by
multiplying the Issue Price and the Conversion Price by a fraction
equal to one divided by the New Issuance Adjustment Ratio, and (B) the
Optional Conversion Ratio in effect immediately prior to such issuance
shall be adjusted by multiplying it by the New Issuance Adjustment
Ratio. Notwithstanding the foregoing, the provisions of this subsection
(iv) shall not apply if the Board of Directors of the Corporation has
determined that the value of any consideration to be received in
exchange for the issuance, sale or exchange of such Common Stock to any
Third Party following arm's length negotiations shall be based upon the
Volume-Weighted Average Trading Price or closing price or similar
measure of the Common Stock or of the consideration to be paid for the
Common Stock, as measured on a single date or over a period of days
within a reasonable amount of time prior to the issuance, sale or
exchange of such Common Stock.
(vi) In case the Corporation shall, at any time or from time
to time while any of the shares of Class B Preferred Shares are
outstanding, issue, sell or exchange any Equity Security (other than
Common Stock, the Rights, Exempt Issuances or distributions pursuant to
Section 5 hereof) other than any such issuance to all holders of shares
of Common Stock as a dividend or distribution (including by way of a
reclassification of shares or a recapitalization of the Corporation)
for a consideration having a Fair Market Value on the Determination
Date less than the Non-Dilutive Amount, then (A) the Maturity Exchange
Rate shall be adjusted (1) by multiplying the ratios set forth in (a),
(b) and (c) of the definition of Maturity Exchange Rate by a fraction,
the numerator of which shall be the product of (x) the Fair Market
Value of a share of Common Stock on the Determination Date and (y) the
sum of the number of shares of Common Stock outstanding on such day
plus the maximum number of shares of Common Stock underlying or which
could be acquired pursuant to such Equity Security at the time of the
issuance, sale or exchange of such Equity Security (assuming shares of
Common Stock could be acquired pursuant to such Equity Security at such
time), and the denominator of which shall be the sum of (x) the Fair
Market Value of all the shares of Common Stock outstanding on
Determination Date plus (y) the Fair Market Value of the consideration
received by the Corporation in respect of such issuance, sale or
exchange of such Equity Security plus (z) the Fair Market Value as of
the Determination Date of the consideration which the Corporation would
receive upon exercise, conversion or exchange in full of all such
Equity Securities (the "Equity Security Issuance Adjustment Ratio") and
(2) by multiplying the Issue Price and the Conversion Price by a
fraction equal to one over the Equity Security Adjustment Ratio, and
(B) the Optional Conversion Ratio shall be adjusted by multiplying it
by the Equity Security Adjustment Ratio. Notwithstanding the foregoing,
the provisions of this subsection (vi) shall not apply if the Board of
Directors has determined that the value of any consideration to be
received in exchange for the issuance, sale or exchange of such Equity
Securities to a Third Party following arm's length negotiations shall
be based upon the Volume-Weighted Average Trading Price or closing
price or similar measure of the Equity Securities or of the
consideration to be paid therefor, as measured on a single day or over
a period of days within a reasonable amount of time prior to the
issuance, sale or exchange of such Equity Securities.
(vii) Any shares of Common Stock issuable in payment of a
dividend shall be deemed to have been issued immediately prior to the
close of business on the record date for such dividend for purposes of
calculating the number of outstanding shares of Common Stock under
subsection (ii) above.
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(viii) The Corporation shall also be entitled to make such
adjustments in the Maturity Exchange Rate and the Optional Conversion
Rate as it in its sole discretion shall determine to be advisable in
order that any stock dividends, subdivisions of shares, distribution of
rights to purchase stock or securities, or distribution of securities
convertible into or exchangeable for stock (or any transaction which
could be treated as any of the foregoing transactions pursuant to
Section 305 of the Internal Revenue Code of 1986, as amended) made by
the Corporation to its stockholders after the Initial Issuance Date
shall not be taxable.
(ix) In any case in which subsection 4(d) shall require that
an adjustment as a result of any event become effective at the opening
of business on the Business Day next following a record date and the
date fixed for conversion pursuant to subsection 4(a) or 4(c) occurs
after such record date, but before the occurrence of such event, the
Corporation may, in its sole discretion, elect to defer the following
until after the occurrence of such event: (A) issuing to the holder of
any converted Class B Preferred Shares the additional shares of Common
Stock issuable upon such conversion over the shares of Common Stock
issuable before giving effect to such adjustments and (B) paying to
such holder any amount in cash in lieu of a fractional share of Common
Stock pursuant to subsection 4(i).
(x) All adjustments to the Maturity Exchange Rate and the
Optional Conversion Rate shall be calculated to the nearest 1/1000th of
a share of Common Stock. No adjustment in the Maturity Exchange Rate or
the Optional Conversion Rate shall be required unless such adjustment
would require an increase or decrease of at least one percent therein;
provided, however, that any adjustment which by reason of this
subsection (x) is not required to be made shall be carried forward and
taken into account in any subsequent adjustment, and provided further
that any adjustment shall be required and made in accordance with the
provisions of this Section (other than this subparagraph (x)) not later
than such time as may be required in order to preserve the taxfree
nature of a distribution to the holders of shares of Common Stock. If
any action or transaction would require adjustment to the Maturity
Exchange Rate or the Optional Conversion Rate pursuant to more than one
paragraph of this Section 4, only one adjustment shall be made and such
adjustment shall be the amount of the adjustment that has the highest
absolute value.
(e) Adjustment for Consolidation or Merger. In case of (A) any
consolidation or merger to which the Corporation is a party (other than a merger
or consolidation in which the Corporation is the surviving or continuing
corporation and in which the Common Stock outstanding immediately prior to the
merger or consolidation remains unchanged), (B) any sale or transfer to another
corporation of the property of the Corporation as an entirety or substantially
as an entirety, or (C) any statutory exchange of securities with another
corporation (other than in connection with a merger or acquisition in which the
Corporation is the surviving or continuing corporation and in which the Common
Stock outstanding immediately prior to the merger or consolidation remains
unchanged) (each a "Reorganization Event"), then the Maturity Date of the Class
B Preferred Shares shall accelerate to be the time and date that is immediately
prior to the effective time of the Reorganization Event, and the Class B
Preferred Shares shall automatically convert on such date in accordance with the
procedure set forth in Section 4(a) without any further action on the part of
the holder or the Corporation. Notwithstanding the foregoing, a transaction
described in (A), (B) or (C) above shall only be a Reorganization Event if it is
a bona fide transaction not entered into primarily for the purposes of causing
the Maturity Date to occur.
For purposes of the immediately preceding paragraph and subsection 4(g)
(iii), any sale or transfer to another corporation of property of the
Corporation which did not account for at least 50% of the consolidated net
income of the Corporation for its most recent fiscal year ending prior to the
consummation of such transaction shall not in any event be deemed to be a sale
or transfer of the property of the Corporation as an entirety or substantially
as an entirety.
(f) Notice of Adjustments. Whenever the Maturity Exchange Rate and
Optional Conversion Rate are adjusted as herein provided, the Corporation shall:
(i) forthwith compute the adjusted Maturity Exchange Rate and
Optional Conversion Rate in accordance herewith and prepare a
certificate signed by an officer of the Corporation setting forth the
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<PAGE> 53
adjusted Maturity Exchange Rate and the Optional Conversion Rate, the
method of calculation thereof in reasonable detail and the facts
requiring such adjustment and upon which such adjustment is based,
which certificate shall be conclusive, final and binding evidence of
the correctness of the adjustment, and file such certificate forthwith
with the transfer agent for the Class B Preferred Shares and the Common
Stock; and
(ii) make a prompt public announcement and mail a notice to
the holders of the outstanding Class B Preferred Shares stating that
the Maturity Exchange Rate and the Optional Conversion Rate have been
adjusted, the facts requiring such adjustment and upon which such
adjustment is based and setting forth the adjusted Maturity Exchange
Rate and Optional Conversion Rate, such notice to be mailed at or prior
to the time the Corporation mails an interim statement to its
stockholders covering the fiscal quarter during which the facts
requiring such adjustment occurred, but in any event within 45 days of
the end of such fiscal quarter.
(g) Notices. In case, at any time while any of the Class B Preferred
Shares are outstanding,
(i) the Corporation shall declare a dividend (or any other
distribution) on its Common Stock, excluding any cash dividends (other
than Extraordinary Dividends), or
(ii) the Corporation shall authorize the issuance to all
holders of its Common Stock of rights or warrants to subscribe for or
purchase shares or its Common Stock or of any other Equity Securities,
or
(iii) the Corporation shall authorize any reclassification of
its Common Stock (other than a subdivision or combination thereof) or
capital stock or any consolidation or merger to which the Corporation
is a party and for which approval of any stockholders of the
Corporation is required (except for a merger of the Corporation into
one of its subsidiaries solely for the purpose of changing the
corporate name or corporate domicile of the Corporation to another
state of the United States and in connection with which there is no
substantive change in the rights or privileges of any securities of the
Corporation other than changes resulting from differences in the
corporate statutes of the then existing and the new state of domicile),
or the sale or transfer to another corporation of the property of the
Corporation as an entirety or substantially as an entirety, or
(iv) the Corporation shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the Corporation,
or
(v) there shall occur any Pro Rata Repurchase,
then the Corporation shall cause to be filed at each office or agency
maintained for the purpose of conversion of the Class B Preferred
Shares, and shall cause to be mailed to the holders of Class B
Preferred Shares at their last addresses as they shall appear on the
stock register, at least 10 days before the date hereinafter specified
(or the earlier of the dates hereinafter specified, in the event that
more than one date is specified), a notice stating (A) the date on
which a record is to be taken for the purpose of such dividend,
distribution, rights or warrants, or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution, rights or warrants are to be
determined, or (B) the date on which any such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or
winding up is expected to become effective, and the date as of which it
is expected that holders of Common Stock of record shall be entitled to
exchange their Common Stock for securities or other property (including
cash), if any, deliverable upon such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation. or winding up. The
failure to give or receive the notice required by this subsection (g)
or any defect therein shall not affect the legality or validity of such
dividend, distribution, right or warrant or other action.
(h) Effect of Conversions. The person or persons in whose name or names
any certificate or certificates for shares of Common Stock shall be usable upon
any conversion or redemption shall be deemed to have become on the date of any
such conversion or redemption the holder or holders of record of the shares
represented thereby; provided, however, that any such surrender on any date when
the stock transfer books of the
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<PAGE> 54
Corporation shall be closed shall constitute the person or persons in whose name
or names the certificate or certificates for such shares are to be issued as the
record holder or holders thereof for all purposes at the opening of business on
the next succeeding day on which such stock transfer books are open.
(i) No Fractional Shares. No fractional shares or script representing
fractional shares of Common Stock shall be issued upon the redemption or
conversion of any Class B Preferred Shares. In lieu of any fractional share
otherwise issuable in respect of the aggregate number of Class B Preferred
Shares of any holder which are converted upon Mandatory Conversion or any
optional conversion, such holder shall be entitled to receive an amount in cash
(computed to the nearest cent) equal to the same fraction of (i) the Maturity
Price of the Common Stock, in the case of a Mandatory Conversion, or (ii) the
Current Market Price as of the second Trading Date immediately preceding the
effective date of conversion, in the case of an optional conversion by a holder.
If more than one share shall be surrendered for conversion at one time by or for
the same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
Class B Preferred Shares so surrendered.
(j) Re-issuance. Class B Preferred Shares that have been issued and
reacquired in any manner, including shares purchased, exchanged, redeemed or
converted, shall not be reissued as 6.00% Class B Mandatorily Convertible
Preferred Stock, Series 1996 and shall (upon compliance with any applicable
provisions of the laws of the State of Delaware) have the status of authorized
and unissued shares of the Preferred Stock undesignated as to series and may be
redesignated and reissued as part of any series of Preferred Stock.
(k) Payment of Taxes. The Corporation shall pay any and all
documentary, stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Common Stock on the redemption or conversion of
share of Class B Preferred Shares pursuant to this Section 4; provided, however,
that the Corporation shall not be required to pay any tax which may be payable
in respect of any registration of transfer involved in the issue or delivery of
shares of Common Stock in a name other than that of the registered holder of
Class B Preferred Shares redeemed or converted or to be redeemed or converted,
and no such issue or delivery shall be made unless and until the person
requesting such issue has paid to the Corporation the amount of any such tax or
has established, to the satisfaction of the Corporation, that such tax has been
paid.
(l) Reservation of Common Stock. The Corporation shall at all times
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued Common Stock and/or its issued Common Stock held in
its treasury, for the purpose of effecting any Mandatory Conversion of the Class
B Preferred Shares or any conversion of the Class B Preferred Shares at the
option of the holder, the full number of shares of Common Stock then deliverable
upon any such conversion of all outstanding Class B Preferred Shares.
5. CONTINGENT PRICE ADJUSTMENT PAYMENT.
(a) Holders of outstanding Class B Preferred Shares shall be entitled
to receive, when, as and if declared by the Board of Directors out of funds
legally available therefor, a contingent payment (the "Contingent Payment") in
the amount set forth below if the Volume-Weighted Average Trading Price of the
Class B Preferred Shares over the 30 consecutive calendar days commencing
_______, 1996 [THE DATE THAT IS THREE MONTHS AFTER THE INITIAL ISSUANCE DATE]
and ending _______, 1996 (the "Contingent Payment Calculation Date") is as
follows:
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<PAGE> 55
<TABLE>
<CAPTION>
Trading Price Cumulative Amount per share
- ------------- ---------------------------
($ million)
<S> <C> <C> <C>
$54.50 to $55.00 in each case 0.00 in each case
$54.49 to $54.00 multiplied by the 2.00 divided by the total
$53.99 to $53.75 quotient obtained 4.00 number of Class B
$53.74 to $53.50 by dividing the 6.00 Preferred Shares
$53.49 to $53.25 Issue Price by 8.00 issued and
$53.24 to $53.00 $55.00 10.00 outstanding as of
$52.99 to $52.75 12.50 the Contingent
less than $52.75 15.00 Payment
Calculation Date
</TABLE>
The Contingent Payment shall be sent no later than the tenth Business
Day following the Contingent Payment Date to holders of record as of the
Contingent Payment Date.
(b) The Corporation may, at its option, pay the Contingent Payment in
the form of capital stock by delivering a number of shares of Class C Preferred
Stock or Common Stock equal to the Contingent Payment Amount divided by the
Volume-Weighted Average Trading Price of the Class C Preferred Stock or Common
Stock, as applicable, over the 30 day period described above, or cash in lieu of
fractional shares at such price.
6. LIQUIDATION RIGHTS.
(a) The Class B Preferred Shares will rank on a parity as to
distribution of assets upon liquidation with the Class C Preferred Stock, and
with any future preferred stock issued by the Corporation that by its terms
ranks pari passu with the Class B Preferred Shares with respect to distribution
of assets upon liquidation.
(b) The Class B Preferred Shares will be subordinate as to distribution
of assets upon liquidation of dividends to any future preferred stock issued by
the Corporation that by its terms is senior to the Class B Preferred Shares with
respect to distribution of assets upon liquidation.
(c) In the event of the liquidation, dissolution, or winding up of the
business of the Corporation, whether voluntary or involuntary, the holders of
Class B Preferred Shares then outstanding, after payment or provision for
payment of the debts and other liabilities of the Corporation and the payment or
provision for payment of any distribution on any shares of the Corporation
having a preference and a priority over the Class B Preferred Shares on
liquidation, and before any distribution to holders of any shares of the
Corporation that are junior and subordinate to the Class B Preferred Shares on
liquidation, shall be entitled to be paid out of the assets of the Corporation
available for distribution to its stockholders an amount per Class B Preferred
Share of cash equal to $ ___ [THE "INITIAL ISSUE PRICE"], as adjusted pursuant
to the terms hereof (the "Liquidation Amount"), plus an amount equal to all
accrued and unpaid dividends thereon, and shall, after the holders of Common
Stock have received an amount per share of Common Stock equal to the amount paid
per Class B Preferred Share, be entitled to participate on a pro rata basis with
the holders of Common Stock. In the event the assets of the Corporation
available for distribution to the holders of the Class B Preferred Shares upon
any dissolution, liquidation or winding up of the Corporation shall be
insufficient to pay in full the liquidation payments payable to the holders of
outstanding Class B Preferred Shares and of all other series of Preferred Stock
that ranks on a parity with the Class B Preferred Shares in the event of
liquidation, the holders of Class B Preferred Shares and of all other series of
such parity Preferred Stock shall share ratably in such distribution of assets
in proportion to the amount which would be payable on such distribution if the
amounts to which the holders of outstanding Class B Preferred Shares and the
holders of outstanding shares of such parity Preferred Stock were paid in full.
Except as provided in this Section 6, holders of Class B Preferred Shares shall
not be entitled to any distribution in the event of liquidation, dissolution or
winding up of the affairs of the Corporation.
(d) For the purposes of this Section 6, none of the following shall be
deemed to be a voluntary or involuntary liquidation, dissolution or winding up
of the Corporation:
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<PAGE> 56
(i) the sale, lease, transfer or exchange of all or
substantially all of the assets of the Corporation; or
(ii) the consolidation or merger of the Corporation with one
or more other corporations (whether or not the Corporation is the
corporation surviving such consolidation or merger).
7. NO PREEMPTIVE RIGHTS.
The holders of Class B Preferred Shares shall have no preemptive
rights, including preemptive rights with respect to any shares of capital stock
or other securities of the Corporation convertible into or carrying rights or
options to purchase any such shares.
8. VOTING RIGHTS.
(a) The holders of Class B Preferred Shares shall have the right with
the holders of Common Stock to vote in the election of directors and upon each
other matter coming before any meeting of the stockholders on which the holders
of Common Stock are entitled to vote, on the basis of four-fifths of a vote for
each share held (which number shall be adjusted in accordance with adjustments
to the Optional Conversion Ratio). The holders of Class B Preferred Shares and
Common Stock shall vote together as one class except as otherwise set forth
herein or as otherwise provided by law or elsewhere in the Certificate of
Incorporation.
(b) If at any time dividends payable on the Class B Preferred Shares or
any other series of Parity Preferred Stock are in arrears and unpaid in an
aggregate amount equal to or exceeding the aggregate amount of dividends payable
thereon for six quarterly dividend periods, or if any other series of Preferred
Stock shall be entitled for any other reason to exercise voting rights, separate
from the Common Stock, to elect any Directors of the Corporation ("Preferred
Stock Directors"), the holders of the Class B Preferred Shares, voting
separately as a class with the holders of all other series of Preferred Stock
upon which like voting rights have been conferred and are exercisable, shall
have the right to vote for the election of two Preferred Stock Directors of the
Corporation, such Directors to be in addition to the number of Directors
constituting the Board of Directors immediately prior to the accrual of such
right. Such right of the holders of Class B Preferred Shares to elect two
Preferred Stock Directors shall, when vested, continue until all dividends in
arrears on the Class B Preferred Shares and such other series of Preferred Stock
shall have been paid in full and the right of any other series of Preferred
Stock to exercise voting rights, separate from the Common Stock, to elect
Preferred Stock Directors shall terminate or have terminated and, when so paid,
and any such termination occurs or has occurred, such right of the holders of
Class B Preferred Shares to elect two Preferred Stock Directors separately as a
class shall cease, subject always to the same provisions for the vesting of such
right of the holders of the Class B Preferred Shares to elect two Preferred
Stock Directors in the case of future dividend defaults.
The term of office of each Director elected pursuant to the preceding
paragraph shall terminate on the earlier of (i) the next annual meeting of
stockholders at which a successor shall have been elected and qualified or (ii)
the termination of the right of the holders of Class B Preferred Shares and such
other series of Preferred Stock to vote for Directors pursuant to the preceding
paragraph. Vacancies on the Board of Directors resulting from the death,
resignation or other cause of any such Director shall be filled exclusively by
no less than two-thirds of the remaining Directors and the Director so elected
shall hold office until a successor is elected and qualified.
(c) For as long as any Class B Preferred Shares remain outstanding, the
affirmative consent of the holders of at least two-thirds thereof actually
voting (voting separately as a class) given in person or by proxy, at any annual
meeting or special meeting of the stockholders called for such purpose, shall be
necessary to amend, alter or repeal any of the provisions of the Certificate of
Incorporation of the Corporation which would adversely affect the powers,
preferences or rights of the holders of the Class B Preferred Shares then
outstanding or reduce the minimum time required for any notice to which holders
of Class B Preferred Shares then outstanding may be entitled; provided, however,
that any such amendment, alteration or repeal that would authorize, create or
increase the authorized amount of any shares of stock (whether or not already
authorized) ranking junior to, on a parity with, or senior to the Class B
Preferred Shares with respect to payment of dividends or payment upon
liquidation
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<PAGE> 57
shall be deemed not to affect adversely such powers, preferences or rights and
shall not be subject to approval by the holders of Class B Preferred Shares; and
provided further that the holders of the Class B Preferred Shares shall not have
any voting rights with respect to the amendment, alteration or repeal of any
provisions of the Certificate of Incorporation of the Corporation approved at a
meeting of the stockholders the record date of which is prior to the issuance of
any Class B Preferred Shares.
(d) Except as set forth in this Section 8 or as required by law, the
holders of the Class B Preferred Shares shall not have any voting rights.
IN WITNESS WHEREOF, AirTouch Communications, Inc. has caused this
certificate to be executed this day of ____________, 1996.
AIRTOUCH COMMUNICATIONS, INC.
By: _____________________________________
17
<PAGE> 58
EXHIBIT 2.1(b)
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF
4.25% CLASS C CONVERTIBLE PREFERRED STOCK,
SERIES 1996
OF
AIRTOUCH COMMUNICATIONS, INC.
AIRTOUCH COMMUNICATIONS, INC. (the "Corporation"), a Delaware
corporation governed by the provisions of the General Corporation Law of the
State of Delaware, as amended, hereby certifies that, under authority conferred
upon the Board of Directors by the Certificate of Incorporation of the
Corporation and the provisions of Section 151 and Section 141 of the General
Corporation Law of the State of Delaware, the Board of Directors at a meeting
held on April 4, 1996 duly adopted the following resolutions:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation by the Certificate of Incorporation and Section
151 of the Delaware General Corporation Law, the Board of Directors hereby
approves the amount, preferences and rights, including voting rights, of this
Corporation's 4.25% Class C Convertible Preferred Stock, Series 1996 (the "Class
C Preferred"), as presented to the Board of Directors; and be it further
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation by the Certificate of Incorporation and Section
141 of the Delaware General Corporation Law, a committee known as the Preferred
Stock Committee, of which Arun Sarin shall be the sole member, is established,
and that such committee is authorized to incorporate the amount, rights, and
preferences of each of the Class B Preferred and the Class C Preferred, as
approved by this Board of Directors, into Certificates of Designation,
Preferences and Rights to be filed with the Secretary of State of the State of
Delaware, provided that the Preferred Stock Committee may approve modifications
to the amounts, preferences and rights of the Class B Preferred and the Class C
Preferred, other than the voting rights.
The Corporation further certifies that under the authority conferred
upon the Preferred Stock Committee by resolutions of the Board of Directors
adopted at a meeting held on April 4, 1996 and the provisions of Sections 141
and 151 of the General Corporation Law of the State of Delaware, the Preferred
Stock Committee of the Board of Directors duly adopted the following resolution:
RESOLVED, that under authority conferred upon the Preferred Stock
Committee by resolutions of the Board of Directors duly adopted at a meeting
held on April 4, 1996 and the provisions of Section 141 and 151 of the General
Corporation Law of the State of Delaware, the Preferred Stock Committee hereby
fixes the amount, preferences and rights of the shares of the 4.25% Class C
Mandatorily Convertible Preferred Stock, Series 1996, as set forth in Schedule B
attached hereto, and the proper officers of the Corporation are hereby
authorized and directed to execute and file a Certificate of Designation,
Preferences and Rights containing such provisions with the Secretary of the
State of Delaware and with such other governmental agencies or authorities as
any of such officers may deem appropriate.
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<PAGE> 59
SCHEDULE B
Section 1. DESIGNATION AND AMOUNT.
The designation of the series of Preferred Stock created by this
Certificate shall be "4.25% Class C Convertible Preferred Stock, Series 1996,
par value $0.01 per share" (the "Class C Preferred Shares"), and the number of
shares constituting such series shall be 19,000,000. Such number of shares may
be increased or decreased by resolution of the Board of Directors, provided that
no decrease shall reduce the number of Class C Preferred Shares to a number less
than that of the Class C Preferred Shares then outstanding plus the number of
shares issuable upon exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the Corporation.
Section 2. DEFINITIONS.
As used in this Certificate:
"Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of California or the
State of New York are authorized or obligated by law or executive order to close
or are closed because of a banking moratorium or otherwise.
"Current Market Price" per share of Common Stock at any date
shall be deemed to be the Volume-Weighted Average Trading Price over the fifteen
consecutive Trading Day period ending on and including such date of
determination; provided, however, if any event that results in an adjustment of
the Exchange Rate occurs during such fifteen Trading Day period, the Current
Market Price as determined pursuant to the foregoing shall be appropriately
adjusted to reflect the occurrence of such event;
"Call Price" has the meaning set forth in Section 4(a).
"Class B Preferred Shares" means the shares of 6.0% Class B
Mandatorily Convertible Preferred Stock, 1996 Series.
"Class C Preferred Shares" means the shares of 4.25% Class C
Convertible Preferred Stock, 1996 Series.
"Determination Date" means, with respect to the issuance, sale
or exchange of any Equity Securities, the later of (a) the date upon which the
price or the amount of consideration to be received in consideration of such
issuance, sale or exchange is fixed and (b) the date upon which a public
announcement of the transaction is made, provided that if no public announcement
is made, the Determination Date shall be the date set forth in (a).
"Dividend Payment Date" has the meaning set forth in Section
3(a).
"Equity Securities" shall mean the Common Stock or any debt,
equity or other security or contractual right, in each case that is convertible
into or exercisable or exchangeable for, or based on the value of, the Common
Stock or any warrants, options or other rights to purchase the Common Stock or
other Equity Securities (other than Rights).
"Exchange Rate" has the meaning set forth in Section 4(c).
"Exempt Issuance" means (a) Equity Securities issued pursuant
to any existing or future employee stock purchase plan, employee stock option
plan or other employee or director benefit plan or (b) Equity Securities issued
pursuant to any stockholder purchase plan or plan for the reinvestment of
dividends or interest, to the extent that the consideration paid for the Equity
Securities issued pursuant to any such stockholder or dividend or interest
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<PAGE> 60
reinvestment plan is not less than 95% of the Fair Market Value of such
securities as of the date of the issuance of the Equity Securities.
"Extraordinary Distribution" means any single dividend or
other distribution (including by reclassification of shares or recapitalization
of the Corporation, as well as any such dividend or distribution made in
connection with a merger or consolidation in which the Corporation is the
continuing corporation and the Common Stock is not changed or exchanged) to
holders of Common Stock (effected while any of the shares of Class C Preferred
Stock are outstanding) (i) of cash, where the aggregate amount of such single
cash dividend or distribution together with the amount of all cash dividends and
distributions made to holders of Common Stock during the twelve-month period
ending on the payment date for such cash dividend or distribution to holders of
Common Stock, when combined with the aggregate amount of all previous Pro Rata
Repurchases during such period (for this purpose, including only that portion of
the aggregate purchase price of each such Pro Rata Repurchase which is in excess
of the Fair Market Value of the Common Stock repurchased as determined on the
Business Day prior to the public announcement of such Pro Rata Repurchase made
during such period), exceeds twelve and one-half percent (12-1/2%) of the
aggregate Fair Market Value of all shares of Common Stock outstanding on the
record date for determining the stockholders entitled to receive such
Extraordinary Distribution and (ii) of any evidences of indebtedness of the
Corporation or evidences of indebtedness or securities of any other person or
any other property (including, without limitation, shares of capital stock of
any subsidiary of the Corporation), or any combination thereof. The Fair Market
Value of any such single dividend or other distribution that, pursuant to clause
(i), constitutes an Extraordinary Distribution shall for purposes of the first
paragraph of Section 4(d)(iii) hereof be the sum of the Fair Market Value of
such Extraordinary Distribution plus the amount of any other cash dividends and
distributions made within the relevant period referred to above to holders of
Common Stock to the extent such other dividends and distributions were not
previously included in the calculation of an adjustment pursuant to the first
paragraph of Section 4(d)(iii) hereof within such period.
"Fair Market Value" shall mean the Volume-Weighted Average
Trading Price of the Security in question for the five-day period before the
earlier of the day in question and the "ex" date with respect to any issuance or
distribution requiring such computation. The term "ex" date, when used with
respect to any issuance or distribution, means the first day on which the Common
Stock trades regular way, without the right to receive such issuance or
distribution, on the exchange or in the market to determine that day's
Volume-Weighted Average Trading Price. With respect to any asset or security for
which there is no Current Market Price, the Fair Market Value of such asset or
security shall be determined in good faith by the Board of Directors.
"Issued Equity Securities" has the meaning set forth in
Section 4(d)(ii).
"Initial Issuance Date" means the date upon which the first
Class C Preferred Share is initially issued.
"International Distribution" means a distribution to the
holders of Common Stock of any equity interest in an International Entity, on a
per share basis.
"International Entity" means any entity predominantly holding
interests in cellular operations outside the United States that has an aggregate
Fair Market Value of U.S.$ 1 billion or more.
"Junior Stock" has the meaning set forth in Section 3(b).
"Maturity Date" has the meaning set forth in Section 4(a).
"Non-Dilutive Amount" in respect of an issuance, sale or
exchange by the Corporation of any Equity Securities (other than Common Stock)
shall mean the excess of (i) the Fair Market Value of a share of Common Stock on
the Determination Date multiplied by the maximum number of shares of Common
Stock which could be acquired on such date upon the exercise, conversion or
exchange in full of such Equity Securities (and any Equity Securities receivable
upon exercise, conversion or exchange thereof), whether or not then exercisable,
convertible or exchangeable at such date, if any, over (ii) the aggregate amount
payable pursuant to the exercise, conversion or exchange of such Equity
Securities, whether or not then exercisable, convertible or exchangeable, to
purchase or acquire such maximum
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<PAGE> 61
number of shares of Common Stock (and any Equity Securities receivable upon
exercise, conversion or exchange thereof); provided, however, that in no event
shall the Non-Dilutive Amount be less than zero. For purposes of the foregoing
sentence, the amount payable pursuant to the exercise, conversion or exchange of
such Equity Securities to purchase or acquire shares of Common Stock shall be
deemed to be the Fair Market Value of the consideration payable pursuant to the
exercise, conversion or exchange of such Equity Securities on the Determination
Date (excluding for that purpose the Fair Market Value of the Equity Security to
be so exercised, converted or exchanged).
"Parity Preferred Stock" has the meaning set forth in Section
3(a).
"Preferred Stock Directors" has the meaning set forth in
Section 8(b).
"Pro Rata Repurchases" means any purchase of shares of Common
Stock by the Corporation or any affiliate thereof (as defined in Rule 12b-2
under the Security Exchange Act of 1934 (the "Exchange Act") pursuant to any
tender offer or exchange offer subject to Section 13(e) of the Exchange Act, or
pursuant to any other offer available to substantially all holders of Common
Stock, whether for cash, shares of capital stock of the Corporation, other
securities of the Corporation, evidences of indebtedness of the Corporation or
any other person or any other property (including, without limitation, shares of
capital stock, other securities or evidences of indebtedness of a subsidiary of
the Corporation), or any combination thereof, effected while any of the shares
of Class C Preferred Shares are outstanding, pursuant to any tender offer or
exchange offer subject to Section 13(e) of the Exchange Act, or pursuant to any
other offer available to substantially all holders of Common Stock; provided,
however, that "Pro Rata Repurchase" shall not include any purchase of shares by
the Corporation or any subsidiary thereof made in open market transactions
substantially in accordance with the requirements of Rule 10b-18 as in effect
under the Exchange Act or on such other terms and conditions as the Board of
Directors shall have determined are reasonably designed to prevent such
purchases from having a material effect on the trading market for the Common
Stock. The "Effective Date" of a Pro Rata Repurchase shall mean the date of
acceptance of shares for purchase or exchange under any tender or exchange offer
which is a Pro Rata Repurchase or the date of purchase with respect to any Pro
Rata Repurchase that is not a tender or exchange offer.
"Provisional Redemption Date" has the meaning set forth in
Section 4(b)(i).
"Provisional Redemption Price" has the meaning set forth in
Section 4(b)(i).
"Provisional Redemption Year" has the meaning set forth in
Section 4(b)(i).
"Reorganization Event" has the meaning set forth in Section
4(e).
"Rights" means rights of the Corporation issued or issuable
under the Rights Agreement dated September 9, 1994 between the Corporation and
The Bank of New York or pursuant to any successor stockholder rights plan
replacing the Rights Agreement.
"Senior Preferred Stock" has the meaning set forth in Section
3(a).
"Security Issue Date" means the date on which a particular
Class C Preferred Share is issued.
"Third Party" means any person as to which the Corporation
does not own, directly or indirectly, and does not have the power to direct,
more than 20% of the outstanding voting interests.
"Trading Date" shall mean a date on which the New York Stock
Exchange (or any successor thereto) is open for the transaction of business.
"Volume-Weighted Average Trading Price" for any given period
means, for a security, an amount equal to (A) the cumulative sum, for each trade
of such security during such period on the New York Stock Exchange (or such
other principal exchange or over-the-counter market on which such security is
listed), of the product of: (x) the
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sale price and (y) the number of shares of the security sold at such price;
divided by (B) the total number of securities so traded during the specified
period.
Section 3. DIVIDENDS.
(a) Payment of Dividends. The holders of outstanding Class C
Preferred Shares shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available therefor, cumulative
preferential dividends from the Security Issue Date, at the rate per Class C
Preferred Share of $2.125 per annum, as adjusted pursuant hereto, and no more,
payable quarterly in arrears on the 15th day of each February, May, August and
November, respectively (each such date being hereinafter referred to as a
"Dividend Payment Date"), or, if any Dividend Payment Date is not a Business
Day, then the Dividend Payment Date shall be the next succeeding Business Day.
The first dividend payment shall be for the period from the date of issuance to
but excluding the first day of the next calendar quarter, and will be payable on
the first Dividend Payment Date thereafter. Each quarterly period beginning on
January 1, April 1, July 1 and October 1 in each year and ending on and
including the day next preceding the first day of the next such quarterly period
shall be a dividend period. Dividends (or amounts equal to accrued and unpaid
dividends) payable on Class C Preferred Shares for any period less than a full
quarterly dividend period will be computed on the basis of a 360-day year of
twelve 30-day months and the actual number of days elapsed in any period less
than one month. The Board of Directors may fix a record date for the
determination of holders of Class C Preferred Shares entitled to receive payment
of a dividend or distribution declared thereon, which record date shall be no
more than 60 calendar days prior to the date fixed for the payment thereof. If
the Security Issue Date of a particular Class C Preferred Share is later than
the Initial Issuance Date solely due to a delay in the surrender by the holder
of a certificate representing a share of capital stock of Cellular
Communications, Inc. ("CCI") pursuant to Section 3.2 of the Agreement and Plan
of Merger between the Corporation and CCI, then, notwithstanding the foregoing,
dividends on such Class C Preferred Share shall be payable from the Initial
Issuance Date.
Dividends on the Class C Preferred Shares will accrue whether
or not there are funds legally available for the payment of such dividends and
whether or not such dividends are declared on a daily basis from the previous
Dividend Payment Date. Accumulated unpaid dividends shall not bear interest.
Dividends will cease to accrue in respect of Class C Preferred Shares on the
Maturity Date or on the date of their earlier redemption or conversion.
The Class C Preferred Shares will rank on a parity as to
payment of dividends with Class B Preferred Shares, and with any future
preferred stock issued by the Corporation (the "Parity Preferred Stock") that by
its terms ranks pari passu with the Class C Preferred Shares with respect to
payment of dividends.
The Class C Preferred Shares will be subordinate as to payment
of dividends to any future preferred stock issued by the Corporation that by its
terms is senior to the Class C Preferred Shares with respect to payment of
dividends (the "Senior Preferred Stock").
(b) Payment of Dividends on Junior Stock. As long as any Class C
Preferred Shares are outstanding, no dividends or other distributions for any
dividend period (other than dividends payable in shares of, or warrants, rights
or options exercisable for or convertible into shares of, Common Stock or any
other capital stock of the Corporation ranking junior to the Class C Preferred
Shares as to the payment of dividends ("Junior Stock") and cash in lieu of
fractional shares of such Junior Stock in connection with any such dividend)
will be paid on any Junior Stock unless: (i) full dividends on all outstanding
shares of Senior Preferred Stock and Parity Preferred Stock (including the Class
C Preferred Shares) have been paid, or declared and set aside for payment, for
all dividend periods terminating on or prior to the payment date of such Junior
Stock dividend or distribution and for the current dividend period, to the
extent such Senior Preferred Stock or Parity Preferred Stock dividends are
cumulative; (ii) the Corporation has paid or set aside all amounts, if any, then
or theretofor required to be paid or set aside for all purchase, retirement, and
sinking funds, if any, for any outstanding shares of Senior Preferred Stock or
Parity Preferred Stock; and (iii) the Corporation is not in default on any of
its obligations to redeem any outstanding shares of Senior Preferred Stock or
Parity Preferred Stock.
In addition, as long as any Class C Preferred Shares are
outstanding, no shares of any Junior Stock may be purchased, redeemed, or
otherwise acquired by the Corporation or any of its subsidiaries (except in
connection
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with a reclassification or exchange of any Junior Stock through the
issuance of other Junior Stock (and cash in lieu of fractional shares of such
Junior Stock in connection therewith) or the purchase, redemption, or other
acquisition of any Junior Stock with any Junior Stock (and cash in lieu of
fractional shares of such Junior Stock in connection therewith)) nor may any
funds be set aside or made available for any sinking fund for the purchase or
redemption of any Junior Stock unless: (i) full dividends on all outstanding
shares of Senior Preferred Stock and Parity Preferred Stock have been paid, or
declared and set aside for payment, for all dividend periods terminating on or
prior to the date of such purchase, redemption or acquisition and for the
current dividend period, to the extent such Senior Preferred Stock or Parity
Preferred Stock dividends are cumulative; (ii) the Corporation has paid or set
aside all amounts, if any, then or theretofor required to be paid or set aside
for all purchase, retirement, and sinking funds, if any, for any outstanding
shares of Senior Preferred Stock or Parity Preferred Stock; and (iii) the
Corporation is not in default on any of its obligations to redeem any
outstanding shares of Senior Preferred Stock or Parity Preferred Stock unless
all Parity Preferred Stock at to which such a default exists is purchased or
redeemed on a pro rata basis.
Subject to the provisions described above, such dividends or
other distributions (payable in cash, property, or Junior Stock) as may be
determined from time to time by the Board of Directors may be declared and paid
on the shares of any Junior Stock and from time to time Junior Stock may be
purchased, redeemed or otherwise acquired by the Corporation or any of its
subsidiaries. In the event of the declaration and payment of any such dividends
or other distributions, the holders of such Junior Stock will be entitled, to
the exclusion of holders of any outstanding Senior Preferred Stock or Parity
Preferred Stock, to share therein according to their respective interests.
(c) Payment of Dividends on Parity Preferred Stock. As long as any
Class C Preferred Shares are outstanding, dividends or other distributions for
any dividend period may not be paid on any outstanding shares of Parity
Preferred Stock (other than dividends or other distributions payable in Junior
Stock and cash in lieu of fractional shares of such Junior Stock in connection
therewith), unless either: (a) (i) full dividends on all outstanding shares of
Senior Preferred Stock and Parity Preferred Stock have been paid, or declared
and set aside for payment, for all dividend periods terminating on or prior to
the payment date of such Senior Preferred Stock or Parity Preferred Stock
dividend or distribution and for the current dividend period, to the extent such
Senior Preferred Stock or Parity Preferred Stock dividends are cumulative; (ii)
the Corporation has paid or set aside all amounts, if any, then or theretofor
required to be paid or set aside for all purchase, retirement and sinking funds,
if any, for any outstanding shares of Senior Preferred Stock and Parity
Preferred Stock; and (iii) the Corporation is not in default on any of its
obligations to redeem any outstanding shares of Senior Preferred Stock or Parity
Preferred Stock; or (b) any such dividends are declared and paid pro rata so
that the amounts of any dividends declared and paid per share on outstanding
Class C Preferred Shares and each other share of such Parity Preferred Stock
will in all cases bear to each other the same ratio that accrued and unpaid
dividends (including any accumulation with respect to unpaid dividends for prior
dividend periods, if such dividends are cumulative) per share of outstanding
Class C Preferred Shares and such other outstanding shares of Parity Preferred
Stock bear to each other.
In addition, as long as any Class C Preferred Shares are
outstanding, the Corporation may not purchase, redeem or otherwise acquire any
Senior Preferred Stock or Parity Preferred Stock (except with any Junior Stock
and cash in lieu of fractional shares of such Junior Stock in connection
therewith) unless: (i) full dividends on all outstanding shares of Senior
Preferred Stock and Parity Preferred Stock have been paid, or declared and set
aside for payment, for all dividend periods terminating on or prior to the
payment date of such Parity Preferred Stock purchase, redemption or other
acquisition and for the current dividend period, to the extent such Senior
Preferred Stock and Parity Preferred Stock dividends are cumulative; (ii) the
Corporation has paid or set aside all amounts, if any, then or theretofor
required to be paid or set aside for all purchase, retirement, and sinking
funds, if any, for any outstanding shares of Senior Preferred Stock and Parity
Preferred Stock; and (iii) the Corporation is not in default of any of its
obligations to redeem any outstanding shares of Senior Preferred Stock or Parity
Preferred Stock., unless all Parity Preferred Stock as to which such a default
exists is purchased or redeemed on a pro rata basis.
(d) Any dividend payment made on the Class C Preferred Shares
shall first be credited against the earliest accrued but unpaid dividend due
with respect to the Class C Preferred Shares.
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(e) All dividends paid with respect to the Class C Preferred
Shares shall be paid pro rata to the holders entitled thereto.
(f) Holders of the Class C Preferred Shares shall be entitled to
receive dividends in preference to and in priority over any dividends upon any
shares of the Corporation ranking junior to the Class C Preferred Shares as to
dividends, but subject to the rights of holders of shares of the Corporation
having a preference and a priority over the payment of dividends on the Class C
Preferred Shares.
Section 4. REDEMPTION AND CONVERSION.
(a) Mandatory Redemption. On ______, 2016 (the "Maturity Date")
[20 YEARS FROM THE INITIAL ISSUANCE DATE], the Class C Preferred Shares shall
terminate and the holder of each outstanding Class C Preferred Share shall be
entitled to receive an amount in cash equal to $50.00 per share (the "Call
Price") plus all accrued and unpaid dividends on such Class C Preferred Share
(other than previously declared dividends payable to a holder of record on a
prior date) to the Maturity Date, whether or not declared, out of funds legally
available for the payment of dividends, subject to the redemption of the Class C
Preferred Shares by the Corporation or the conversion of the Class C Preferred
Shares at the option of the holder at any time prior to the Maturity Date.
Dividends on the Class C Preferred Shares shall cease to accrue and such shares
shall cease to be outstanding on the Maturity Date. The Corporation shall make
such arrangements as it deems appropriate for the payment of cash in respect of
the Call Price and accrued and unpaid dividends, if any, in exchange for and
contingent upon surrender of certificates representing the Class C Preferred
Shares, and the Corporation may defer the payment of the Call Price or dividends
on such shares of Common Stock and the voting thereof until, and make such
payment and voting contingent upon, the surrender of such certificates
representing the Class C Preferred Shares, provided that the Corporation shall
give the holders of the Class C Preferred Shares such notice of any such actions
as the Corporation deems appropriate and upon such surrender such holders shall
be entitled to receive such dividends declared and paid on such shares of Common
Stock subsequent to the Maturity Date. Amounts payable in cash in respect of the
Class C Preferred Shares or in respect of such shares of Common Stock shall not
bear interest.
(b) Redemption at the Option of the Corporation.
(i) Right to Redeem . Class C Preferred Shares are not
redeemable by the Corporation prior to _________, 1999 (the "Provisional
Redemption Date") [THE DATE THAT IS THREE YEARS AFTER THE INITIAL ISSUANCE
DATE]. From and after the Provisional Redemption Date until ________, 2000 [THE
DATE THAT IS FOUR YEARS AFTER THE INITIAL ISSUANCE DATE] (the "Provisional
Redemption Year"), the Class C Preferred Shares may be redeemed by the
Corporation at any time after the Volume-Weighted Average Trading Price of the
Common Stock on a per day basis has exceeded $______ [130% OF THE PRODUCT OF THE
AIRTOUCH ISSUE PRICE AND 1.25] on 15 separate Trading Days during any 30
consecutive Trading Day period during the Provisional Redemption Year (the
"Provisional Redemption Price"). After the Provisional Redemption Year, the
Class C Preferred Shares may be redeemed by the Corporation regardless of
whether the Common Stock has achieved the Provisional Redemption Price. Until
______, 2006, the Corporation may only redeem the Class C Preferred Shares by
delivering an amount of Common Stock equal to the Call Price divided by the
Volume-Weighted Average Trading Price of the Common Stock for the 15 consecutive
Trading Day period prior to the record date for such redemption. From _________,
2006 [the date that is 10 years after the Initial Issuance Date] until the
Maturity Date, the Class C Preferred Shares may be redeemed by the Corporation
by delivering either (a) the amount of Common Stock described in the previous
sentence or (b) cash in an amount equal to the Call Price.
The public announcement of any call for redemption shall be
made prior to, or at the time of, the mailing of the notice of such call to
holders of Class C Preferred Shares as described below. If fewer than all the
outstanding Class C Preferred Shares are to be redeemed, Class C Preferred
Shares to be redeemed shall be selected by the Corporation from outstanding
Class C Preferred Shares not previously redeemed by lot or pro rata (as nearly
as may be practicable) or by any other method determined by the Board of
Directors in its sole discretion to be equitable. As used in this subparagraph
(b), the term "Notice Date" with respect to any notice given by the Corporation
in connection
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with a redemption of Class C Preferred Shares means the date on which first
occurs either the public announcement of such redemption or the commencement of
mailing of such notice to the holders of Class C Preferred Shares.
(ii) Notice of Redemption. The Corporation shall provide
notice of any redemption of the Class C Preferred Shares to holders of record of
Class C Preferred Shares to be called for redemption not less than 15 nor more
than 60 days prior to the date fixed for such redemption. Such notice shall be
provided by mailing notice of such redemption, first class postage prepaid, to
each holder of record of Class C Preferred Shares to be redeemed, at such
holder's address as it appears on the stock register of the Corporation;
provided, however, that neither failure to give such notice nor any defect
therein shall affect the validity of the proceeding for the redemption of any
Class C Preferred Shares to be redeemed except as to the holders to whom the
Corporation has failed to give said notice or whose notice was defective.
Each such notice shall state, as appropriate, the following
and may contain such other information as the Corporation deems advisable:
(A) the redemption date;
(B) that all outstanding Class C Preferred Shares are
to be redeemed or, in the case of a call for redemption of fewer than all
outstanding Class C Preferred Shares, the number of such shares held by such
holder to be redeemed;
(C) the number of shares of Common Stock deliverable
upon redemption of each Class C Preferred Share to be redeemed and, if
applicable, the Call Price and the Current Market Price used to calculate such
number of shares of Common Stock;
(D) the place or places where certificates for such
shares are to be surrendered for redemption; and
(E) that dividends on the Class C Preferred Shares to
be redeemed shall cease to accrue on such redemption date (except as otherwise
provided herein).
(iii) Deposit of Shares and Funds. The Corporation's
obligation to deliver shares of Common Stock and provide funds upon redemption
in accordance with this Section 4 shall be deemed fulfilled if, on or before a
redemption date, the Corporation shall irrevocably deposit, with a bank or trust
company, or an affiliate of a bank or trust company, having an office or agency
in New York City and having a capital and surplus of at least $50,000,000, or
shall set aside or make other reasonable provision for the issuance of such
number of shares of Common Stock as are required to be delivered by the
Corporation pursuant to this Section 4 upon the occurrence of the related
redemption (and for the payment of cash in lieu of the issuance of fractional
share amounts and accrued and unpaid dividends payable in cash on the shares to
be redeemed as and to the extent provided by this Section 4). Any interest
accrued on such funds shall be paid to the Corporation from time to time. Any
shares of Common Stock or funds so deposited and unclaimed at the end of two
years from such redemption date shall be repaid and released to the Corporation,
after which the holder or holders of such Class C Preferred Shares so called for
redemption shall look only to the Corporation for delivery of such shares of
Common Stock or funds.
(iv) Surrender of Certificates; Status. Each holder of
Class C Preferred Shares to be redeemed shall surrender the certificates
evidencing such shares (properly endorsed or assigned for transfer, if the Board
of Directors shall so require and the notice shall so state) to the Corporation
at the place designated in the notice of such redemption and shall there upon be
entitled to receive certificates evidencing shares of Common Stock and to
receive any funds payable pursuant to this Section 4 following such surrender
and following the date of such redemption. In case fewer than all the Class C
Preferred Shares represented by any such surrendered certificate are called for
redemption, a new certificate shall be issued at the expense of the Corporation
representing the unredeemed Class C Preferred Shares. If such notice of
redemption shall have been given, and if on the date fixed for redemption,
shares of Common Stock and funds necessary for the redemption shall have been
irrevocably either set aside by the Corporation
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separate and apart from its other funds or assets in trust for the account of
the holders of the shares to be redeemed or converted (and so as to be and
continue to be available therefore) or deposited with a bank or a trust company
or an affiliate thereof as provided herein or the Corporation shall have made
other reasonable provision therefore, then, notwithstanding that the
certificates evidencing any Class C Preferred Shares so called for redemption or
subject to conversion shall not have been surrendered, the Class C Preferred
Shares represented thereby so called for redemption shall be deemed no longer
outstanding, dividends with respect to the Class C Preferred Shares so called
for redemption shall cease to accrue on the date fixed for redemption (except
that holders of Class C Preferred Shares at the close of business on a record
date for any payment of dividends shall be entitled to receive the dividend
payable on such shares on the corresponding Dividend Payment Date
notwithstanding the redemption of such shares following such record date and
prior to such Dividend Payment Date) and all rights with respect to the Class C
Preferred Shares so called for redemption shall forthwith after such date cease
and terminate, except for the rights of the holders to receive the shares of
Common Stock and funds, if any, payable pursuant to this Section 4 without
interest upon surrender of their certificates therefore (unless the Corporation
defaults on the delivery of such shares or the payment of such funds). Holders
of Class C Preferred Shares that are redeemed shall not be entitled to receive
dividends declared and paid on such shares of Common Stock, and such shares of
Common Stock shall not be entitled to vote, until such shares of Common Stock
are issued upon the surrender of the certificates representing such Class C
Preferred Shares and upon such surrender such holders shall be entitled to
receive such dividends declared and paid on such shares of Common Stock
subsequent to such redemption date without interest thereon.
(c) Conversion at Option of Holder. Class C Preferred Shares are
convertible at the option of the holder thereof at any time prior to the
Maturity Date, unless previously redeemed, into shares of Common Stock at a rate
of __ shares of Common Stock per Class C Preferred Share, as such rate may be
adjusted as provided below (the "Exchange Rate") [CALL PRICE DIVIDED BY THE
PRODUCT OF THE AIRTOUCH PREFERRED STOCK ISSUE PRICE (AS DEFINED IN THE MERGER
AGREEMENT) AND 1.25].
Conversion of Class C Preferred Shares at the option of the
holder may be effected by delivering certificates evidencing such shares,
together with written notice of conversion and a proper assignment of such
certificates to the Corporation or in blank, to the office or agency to be
maintained by the Corporation for that purpose (and, if applicable, cash payment
of an amount equal to the dividend payable on such shares), and otherwise in
accordance with conversion procedures established by the Corporation. Each
optional conversion shall be deemed to have been effected immediately prior to
the close of business on the date on which the foregoing requirements shall have
been satisfied, and dividends will cease to accrue in respect of Class C
Preferred Shares at such time. The conversion shall be at the Exchange Rate in
effect at such time and on such date.
Holders of Class C Preferred Shares at the close of business
on a record date for any payment of declared dividends shall be entitled to
receive the dividend payable on such shares on the corresponding Dividend
Payment Date notwithstanding the conversion of such shares following such record
date and prior to the corresponding Dividend Payment Date. Except as provided
above, upon any optional conversion of Class C Preferred Shares, the Corporation
shall make no payment or allowance for unpaid dividends, whether or not in
arrears, on converted Class C Preferred Shares or for previously declared
dividends or distributions on the shares of Common Stock issued upon such
conversion.
(d) Exchange Rate Adjustments. The Exchange Rate shall be subject
to adjustment from time to time as provided below in this section (d).
(i) If the Corporation shall, after the Initial Issuance
Date:
(A) pay a stock dividend or make a distribution
with respect to its Common Stock in capital stock of the Corporation,
(B) subdivide or split its outstanding Common
Stock into a greater number of shares,
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(C) combine its outstanding shares of Common
Stock into a smaller number of shares, or
(D) issue any shares of capital stock of the
Corporation as a distribution with respect to, or by reclassification of its
shares of Common Stock (other than the Rights or Equity Securities covered under
Section 4(d)(ii)),
then, in any such event, the Exchange Rate in effect immediately prior to such
event shall be adjusted so that the holder of any Preferred Shares shall
thereafter be entitled to receive upon conversion or upon redemption by the
Corporation in the form of Common Stock or conversion at the option of the
holder, the number of shares of Common Stock of the Corporation which such
holder would have owned or been entitled to receive immediately following any
event described above had such Preferred Shares been converted immediately prior
to such event or any record date with respect thereto. Such adjustment shall
become effective at the opening of business on the business day next following
the record date for determination of stockholders entitled to receive such
dividend or distribution, in the case of a dividend or distribution, and shall
become effective immediately after the effective date, in the case of a
subdivision, split, combination or reclassification. Such adjustment shall be
made successively. In the case of an event described in subsection (D) above,
each Class C Preferred Share shall become convertible into shares of capital
stock of the Corporation as to which a holder of Common Stock immediately prior
to such a distribution shall be entitled, or into which the Common Stock has
become reclassified, at the Exchange Rate as modified by this subsection (i). In
the event of any such reclassification into more than one resulting class of
capital stock of the Corporation, the shares of each such resulting class
issuable upon conversion of a Class C Preferred Share shall be in the same
proportion, if possible, or if not possible, substantially the same proportion
which the total number of shares of such class resulting from such
reclassification bears to the total number of shares of all classes resulting
from all such reclassifications.
(ii) If the Corporation shall, after the Initial Issuance
Date, issue without cost Equity Securities (other than Common Stock, the Rights
or Exempt Issuances) ("Issued Equity Securities") to all holders of its Common
Stock entitling them (for a period not exceeding 45 days from the later of the
record date of such issuance and the Determination Date) to subscribe for or
purchase shares of Common Stock or other Equity Securities at a price per share
less than the Fair Market Value of the Common Stock or other Equity Security to
be acquired in effect on the Determination Date for such issuance (treating the
price per share of the Equity Securities to be acquired as equal to (x) the sum
of the Fair Market Value of the consideration payable for a unit of the Equity
Security plus (B) the Fair Market Value of any additional consideration
initially payable upon the exercise, conversion or exchange of such security
into Common Stock divided by (y) the number of shares of Common Stock initially
underlying or that may be acquired upon the exercise, conversion or exchange of
such Equity Security) then, in any such event unless such Equity Securities are
issued to holders of Class C Preferred Shares on a pro rata basis with the
shares of Common Stock based on the Exchange Rate on the date immediately
preceding such issuance, the Exchange Rate in effect on the record date
described below shall be adjusted by multiplying it by a fraction of which the
numerator shall be the sum of (x) the number of shares of Common Stock
outstanding on the date of issuance of such Issued Equity Securities immediately
prior to such issuance, plus (y) the number of additional shares of Common Stock
offered for subscription or purchase pursuant to such Issued Equity Securities
(including the Common Stock that may be acquired upon the exercise, conversion
or exchange of the Equity Securities), and of which the denominator shall be the
sum of (x) number of shares of Common Stock outstanding on the date of issuance
of such Issued Equity Securities immediately prior to such issuance, plus (y)
the number of additional shares of Common Stock which the aggregate offering
price of the total number of shares of Common Stock so offered for subscription
or purchase (including, without limitation, the Fair Market Value of the
consideration payable for a unit of the Equity Securities so offered plus the
Fair Market Value of any additional consideration payable upon exercise,
conversion or exchange of such Equity Securities) would purchase at such Fair
Market Value as of the Determination Date for such issuance. Such adjustment
shall become effective at the opening of business on the Business Day next
following the record date for the determination of stockholders entitled to
receive such rights or warrants. To the extent that shares of Common Stock are
not delivered after the expiration of such Equity Securities, the Exchange Rate
shall each be readjusted to the Exchange Rate which would then be in effect had
the adjustments been made upon the issuance of such Equity Securities upon the
basis of delivery of only the number of shares of Common Stock actually
delivered. Such adjustment shall be made successively.
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(iii) If the Corporation shall, after the Initial Issuance
Date, make an Extraordinary Dividend or effect a Pro Rata Repurchase of Common
Stock, then unless such Extraordinary Dividend is made to each holder of Class C
Preferred Shares on a pro rata basis with the shares of Common Stock based on
the Exchange Rate in effect on the date immediately preceding such payment or
distribution, in any such event, then the Exchange Rate in effect immediately
prior to such event shall be adjusted by multiplying it by a fraction of which
the numerator shall be the product of (i) the number of shares of Common Stock
outstanding immediately before such Extraordinary Dividend or Pro Rata
Repurchase (minus, in the case of a Pro Rata Repurchase, the number of shares of
Common Stock repurchased by the Corporation and (ii) the Fair Market Value per
share of the Common Stock on the record date for the determination of
stockholders entitled to receive such Extraordinary Dividend and the number of
shares outstanding immediately prior to such Distribution or, in the case of a
Pro Rata Repurchase on the Trading Day immediately preceding the first public
announcement of such Pro Rata Repurchase, as the case may be, and of which the
denominator shall be (i) the product of (x) the number of shares of Common Stock
outstanding immediately before such Extraordinary Distribution or Pro Rata
Repurchase and (y) the Fair Market Value of a share of Common Stock on the
record date with respect to such Extraordinary Distribution, or, in the case of
a Pro Rata Repurchase on the Trading Day immediately preceding the first public
announcement by the Corporation or any of its Affiliates of the intent to effect
such Pro Rata Repurchase, as the case may be, minus (ii) the Fair Market Value
of the Extraordinary Distribution or the aggregate purchase price of the Pro
Rata Repurchase, as the case may be (provided that such denominator shall never
be less than 1.0); provided, however, that no Pro Rata Repurchase shall cause an
adjustment to the Exchange Rate unless the amount of all cash dividends and
distributions made to holders of Common Stock during the twelve-month period
ending on the Effective Date of such Pro Rata Repurchase, when combined with the
aggregate amount of all Pro Rata Repurchases, including such Pro Rata Repurchase
(for all purposes of this Section 4(d)(iii) including only that portion of the
Fair Market Value of the aggregate purchase price of each Pro Rata Repurchase
which is in excess of the Fair Market Value of the Common Stock repurchased as
determined on the Trading Day immediately preceding the first public
announcement by the Corporation or any of its Affiliates of the intent to effect
each such Pro Rata Repurchase), the Effective Dates of which fall within such
period, exceeds twelve and one-half percent (12-1/2%) of the aggregate Fair
Market Value of all shares of Common Stock outstanding on the Trading Day
immediately preceding the first public announcement by the Corporation or any of
its Affiliates of the intent to effect such Pro Rata Repurchase. Such adjustment
shall become effective on the opening of business on the Business Day next
following the record date for the determination of stockholders entitled to
receive such dividend or distribution. Such adjustment shall be made
successively.
(iv) If the Corporation shall, after the Initial Issuance
Date, make an International Distribution, then each holder of Class C Preferred
Shares as of the record date of such distribution shall receive such
International Distribution on a pro rata basis with the shares of Common Stock
based on the Exchange Rate in effect on the record date for such International
Distribution. With respect to all shares of Series C Preferred Shares
outstanding and subsequently issued, the dividend payable pursuant to Section
2(a) hereof and the Call Price shall each be adjusted by multiplying each of
them by a fraction, of which the numerator shall be (i) the product of (x) the
number of shares of Common Stock outstanding immediately prior to such
International Distribution and (y)(i) the Fair Market Value of a share of Common
Stock on the record date with respect to such International Distribution, minus
(ii) the Fair Market Value of the International Distribution, and of which the
denominator shall be the product of (x) the number of shares of Common Stock
outstanding immediately prior to such International Distribution and (y) the
Fair Market Value per share of the Common Stock on the record date for the
determination of stockholders entitled to receive such International Dividend.
Such adjustment shall be made successively. In the event that this subsection
(iv) is applicable, then the provisions of subsection (iii) shall not apply. All
adjustments pursuant to this subsection shall become effective on the opening of
business on the Business Day next following the record date for the
determination of stockholders entitled to receive such International
Distribution. If the Corporation has received an opinion of a nationally
recognized law firm or accounting firm that the procedure set forth in this
subsection (iv) would result in an adverse tax consequence to the Corporation or
the holders of the Common Stock, then the provisions of this subsection (iv)
shall not apply, and the provisions of subsection (iii) shall be applicable.
(v) In case the Corporation shall, at any time or from time to
time while any of the shares of Class C Preferred Shares are outstanding, issue,
sell or exchange shares of Common Stock (other than (i) pursuant to any
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<PAGE> 69
Rights, (ii) Exempt Issuances or pursunt to Equity Securities issued as Exempt
Issuances, (iii) pursuant to any Equity Security theretofore outstanding
entitling the holder to purchase or acquire shares of Common Stock or (iv)
distributions pursuant to Section 5 of the Certificate of Designation, Rights
and Preferences of the Class B Preferred Shares) for a consideration having a
Fair Market Value on the Determination Date for such issuance of Equity
Securities less than the Fair Market Value of such shares of Common Stock on the
date of such issuance, sale or exchange, then the Exchange Rate in effect
immediately prior to such issuance, sale or exchange shall be adjusted by
multiplying it by a fraction of which the numerator shall be the sum of (x)
number of shares of Common Stock outstanding on the date of such issuance
immediately prior to such issuance, plus (y) the number of additional shares of
Common Stock so issued, and of which the denominator shall be the sum of (x) the
number of shares of Common Stock outstanding on the date of such issuance
immediately prior to such issuance, plus (y) the number of additional shares of
Common Stock which the aggregate price paid for the total number of shares of
Common Stock so offered for subscription or purchase would purchase at such Fair
Market Value as of the Determination Date for such issuance. Notwithstanding the
foregoing, the provisions of this subsection (v) shall not apply if the Board of
Directors of the Corporation has determined that the value of any consideration
to be received in exchange for the issuance, sale or exchange of such Common
Stock in a transaction with a Third Party negotiated at arm's length shall be
based upon the Volume-Weighted Average Trading Price or closing price or similar
measure of the Common Stock or of the consideration to be paid for the Common
Stock, as measured on a single date or over a period of days within a reasonable
amount of time prior to the issuance, sale or exchange of such Common Stock.
(vi) In case the Corporation shall, at any time or from
time to time while any of the shares of Class C Preferred Shares are
outstanding, issue, sell or exchange any Equity Security (other than Common
Stock, the Rights, Exempt Issuances or distributions to holders pursuant to
Section 5 of the Certificate of Designation, Preferences and Rights for the
Class B Shares) other than any such issuance to all holders of shares of Common
Stock as a dividend or distribution (including by way of a reclassification of
shares or a recapitalization of the Corporation) for a consideration having a
Fair Market Value on the Distribution Date less than the Non-Dilutive Amount,
then the Exchange Rate shall be adjusted by multiplying it by a fraction, the
numerator of which shall be the product of (x) the Fair Market Value of a share
of Common Stock on the Trading Day immediately preceding the first public
announcement of such issuance, sale or exchange and (y) the sum of the number of
shares of Common Stock outstanding on such day plus the maximum number of shares
of Common Stock underlying or which could be acquired pursuant to such Equity
Security at the time of the issuance, sale or exchange of such Equity Security
(assuming shares of Common Stock could be acquired pursuant to such Equity
Security at such time), and the denominator of which shall be the sum of (x) the
Fair Market Value of all the shares of Common Stock outstanding on the
Distribution Date plus (y) the Fair Market Value of the consideration received
by the Corporation in respect of such issuance, sale or exchange of such Equity
Security plus (z) the Fair Market Value as of the time of such issuance of the
consideration which the Corporation would receive upon exercise, conversion or
exchange in full of all such Equity Securities. Notwithstanding the foregoing,
the provisions of this subsection (vi) shall not apply if the Board of Directors
has determined that the value of any consideration to be received in exchange
for the issuance, sale or exchange of such Equity Securities in a transaction
with a Third Party negotiated at arm's length shall be based upon the
Volume-Weighted Average Trading Price or closing price or similar measure of the
Equity Securities or of the consideration to be paid therefor, as measured on a
single day or over a period of days within a reasonable amount of time prior to
the issuance, sale or exchange of such Equity Securities.
(vi) Any shares of Common Stock issuable in payment of a
dividend shall be deemed to have been issued immediately prior to the close of
business on the record date for such dividend for purposes of calculating the
number of outstanding shares of Common Stock under subsection (ii) above.
(vii) The Corporation shall also be entitled to make such
adjustments in the Exchange Rate as it in its sole discretion shall determine to
be advisable in order that any stock dividends, subdivisions of shares,
distribution of rights to purchase stock or securities, or distribution of
securities convertible into or exchangeable for stock (or any transaction which
could be treated as any of the foregoing transactions pursuant to Section 305 of
the Internal Revenue Code of 1986, as amended) made by the Corporation to its
stockholders the Initial Issuance Date shall not be taxable.
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<PAGE> 70
(viii) In any case in which subsection 4(d) shall require
that an adjustment as a result of any event become effective at the opening of
business on the Business Day next following a record date and the date fixed for
conversion pursuant to subsection 4(b) occurs after such record date, but before
the occurrence of such event, the Corporation may, in its sole discretion, elect
to defer the following until after the occurrence of such event: (A) issuing to
the holder of any converted Class C Preferred Shares the additional shares of
Common Stock issuable upon such conversion over the shares of Common Stock
issuable before giving effect to such adjustments and (B) paying to such holder
any amount in cash in lieu of a fractional share of Common Stock pursuant to
subsection 3(i).
(ix) All adjustments to the Exchange Rate shall be
calculated to the nearest 1/100th of a share of Common Stock. No adjustment in
the Exchange Rate shall be required unless such adjustment would require an
increase or decrease of at least one percent therein; provided, however, that
any adjustment which by reason of this subsection (ix) is not required to be
made shall be carried forward and taken into account in any subsequent
adjustment and provided further that any adjustment shall be required and made
in accordance with the provisions of this Section (other than this subparagraph
(ix)) not later than such time as may be required in order to preserve the
taxfree nature of a distribution to the holders of shares of Common Stock. If
any action or transaction would require adjustment to the Exchange Rate pursuant
to more than one paragraph of this Section 4, only one adjustment shall be made
and such adjustment shall be the amount of the adjustment that has the highest
absolute value.
(e) Adjustment for Consolidation or Merger. In case of (A) any
consolidation or merger to which the Corporation is a party (other than a merger
or consolidation in which the Corporation is the surviving or continuing
corporation and in which the Common Stock outstanding immediately prior to the
merger or consolidation remains unchanged), (B) any sale or transfer to another
corporation of the property of the Corporation as an entirety or substantially
as an entirety, or (C) any statutory exchange of securities with another
corporation (other than in connection with a merger or acquisition in which the
Corporation is the surviving or continuing corporation and in which the Common
Stock outstanding immediately prior to the merger or consolidation remains
unchanged) (each a "Reorganization Event"), then proper provision shall be made
so that each Class C Preferred Share shall, after consummation of such
transaction, be subject to (i) conversion at the option of the holder into the
Merger Consideration (as defined below) receivable upon consummation of such
transaction by a holder of the number of shares of Common Stock into which such
Class C Preferred Share might have been converted immediately prior to
consummation of such transaction, (ii)conversion on the Maturity Date into the
Merger Consideration receivable upon consummation of such transaction by a
holder of the number of shares of Common Stock into which such Class C Preferred
Share would have converted if the conversion on the Maturity Date had occurred
immediately prior to the date of consummation of such transaction, plus the
right to receive cash in an amount equal to all accrued and unpaid dividends on
such Class C Preferred Shares (other than previously declared dividends payable
to a holder of record as of a prior date), (iii) redemption on any redemption
date in exchange for the Merger Consideration receivable upon consummation of
such transaction by a holder of the number of shares of Common Stock that would
have been issuable in effect on such redemption date upon a redemption of such
share immediately prior to consummation of such transaction, assuming that, if
the Notice Date for such redemption is not prior to such transaction, the Notice
Date had been the date of such transaction.
"Merger Consideration" means the kind or amount of securities,
cash or other property receivable upon consummation of a Reorganization Event
(provided that if the kind or amount of securities, cash or other property
receivable upon consummation of such transaction is not the same for each
non-electing share, then the kind and amount of securities, cash or other
property receivable upon consummation of such transaction for each non-electing
share shall be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares).
For purposes of the immediately preceding paragraph and
subsection 4(g) (iii), any sale or transfer to another corporation of property
of the Corporation which did not account for at least 50% of the consolidated
net income of the Corporation for its most recent fiscal year ending prior to
the consummation of such transaction shall not in any event be deemed to be a
sale or transfer of the property of the Corporation as an entirety or
substantially as an entirety.
13
<PAGE> 71
(f) Notice of Adjustments. Whenever the Exchange Rate is adjusted
as herein provided, the Corporation shall:
(i) forthwith compute the adjusted Exchange Rate in
accordance herewith and prepare a certificate signed by an officer of the
Corporation setting forth the adjusted Exchange Rate, the method of calculation
thereof in reasonable detail and the facts requiring such adjustment and upon
which such adjustment is based, which certificate shall be conclusive, final and
binding evidence of the correctness of the adjustment, and file such certificate
forthwith with the transfer agent for the Class C Preferred Shares and the
Common Stock; and
(ii) make a prompt public announcement and mail a notice
to the holders of the outstanding Class C Preferred Shares stating that the
Exchange Rate has been adjusted, the facts requiring such adjustment and upon
which such adjustment is based and setting forth the adjusted Exchange Rate,
such notice to be mailed within 45 days after the close of the fiscal quarter
during which the facts requiring such adjustment occurred.
(g) Notices. In case, at any time while any of the Class C
Preferred Shares are outstanding,
(i) the Corporation shall declare a dividend (or any
other distribution) on its Common Stock, excluding any cash dividends (other
than an Extraordinary Distribution); or
(ii) the Corporation shall authorize the issuance to all
holders of its Common Stock of rights or warrants to subscribe for or purchase
shares or its Common Stock or of any other Equity Securities; or
(iii) the Corporation shall authorize any reclassification
of its Common Stock (other than a subdivision or combination thereof) or capital
stock or any consolidation or merger to which the Corporation is a party and for
which approval of any stockholders of the Corporation is required (except for a
merger of the Corporation into one of its subsidiaries solely for the purpose of
changing the corporate name or corporate domicile of the Corporation to another
state of the United States and in connection with which there is no substantive
change in the rights or privileges of any securities of the Corporation other
than changes resulting from differences in the corporate statutes of the then
existing and the new state of domicile), or the sale or transfer to another
corporation of the property of the Corporation as an entirety or substantially
as an entirety; or
(iv) the Corporation shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the Corporation; or
(v) there shall occur any Pro Rata Repurchase,
then the Corporation shall cause to be filed at each office or agency maintained
for the purpose of conversion of the Class C Preferred Shares, and shall cause
to be mailed to the holders of Class C Preferred Shares at their last addresses
as they shall appear on the stock register, at least 10 days before the date
hereinafter specified (or the earlier of the dates hereinafter specified, in the
event that more than one date is specified), a notice stating (A) the date on
which a record is to be taken for the purpose of such dividend, distribution,
rights or warrants, or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend, distribution,
rights or warrants are to be determined, or (B) the date on which any such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their Common Stock for securities or other property (including cash),
if any, deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation. or winding up. The failure to give or
receive the notice required by this subsection (g) or any defect therein shall
not affect the legality or validity of such dividend, distribution, right or
warrant or other action.
(h) Effect of Conversions. The person or persons in whose name
or names any certificate or certificates for shares of Common Stock shall be
usable upon any conversion or redemption shall be deemed to have become on the
date of any such conversion or redemption the holder or holders of record of the
shares represented thereby; provided, however, that any such surrender on any
date when the stock transfer books of the Corporation shall be closed shall
14
<PAGE> 72
constitute the person or persons in whose name or names the certificate or
certificates for such shares are to be issued as the record holder or holders
thereof for all purposes at the opening of business on the next succeeding day
on which such stock transfer books are open.
(i) No Fractional Shares. No fractional shares or script
representing fractional shares of Common Stock shall be issued upon the
redemption or conversion of any Class C Preferred Shares. In lieu of any
fractional share otherwise issuable in respect of the aggregate number of Class
C Preferred Shares of any holder which are converted upon Mandatory Conversion
or any optional conversion, such holder shall be entitled to receive an amount
in cash (computed to the nearest cent) equal to the same fraction of (i) the
Maturity Price of the Common Stock or (ii) the Current Market Price on the
second Trading Date immediately preceding the effective date of conversion, in
the case of an optional conversion by a holder. If more than one share shall be
surrendered for conversion at one time by or for the same holder, the number of
full shares of Common Stock issuable upon conversion thereof shall be computed
on the basis of the aggregate number of Class C Preferred Shares so surrendered.
(j) Re-issuance. Class C Preferred Shares that have been issued and
reacquired in any manner, including shares purchased, exchanged, redeemed or
converted, shall not be reissued as 4.25% Class C Convertible Preferred Stock,
Series 1996, and shall (upon compliance with any applicable provisions of the
laws of the State of Delaware) have the status of authorized and unissued shares
of the Preferred Stock undesignated as to series and may be redesignated and
reissued as part of any series of Preferred Stock.
(k) Payment of Taxes. The Corporation shall pay any and all
documentary, stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Common Stock on the redemption or conversion of
share of Class C Preferred Shares pursuant to this Section 3; provided, however,
that the Corporation shall not be required to pay any tax which may be payable
in respect of any registration of transfer involved in the issue or delivery of
shares of Common Stock in a name other than that of the registered holder of
Class C Preferred Shares redeemed or converted or to be redeemed or converted,
and no such issue or delivery shall be made unless and until the person
requesting such issue has paid to the Corporation the amount of any such tax or
has established, to the satisfaction of the Corporation, that such tax has been
paid.
(l) Reservation of Common Stock. The Corporation shall at all times
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued Common Stock and/or its issued Common Stock held in
its treasury, for the purpose of effecting any Mandatory Conversion of the Class
C Preferred Shares or any conversion of the Class C Preferred Shares at the
option of the holder, the full number of shares of Common Stock then deliverable
upon any such conversion of all outstanding Class C Preferred Shares.
Section 5. LIQUIDATION RIGHTS.
(a) In the event of the liquidation, dissolution, or winding up of
the business of the Corporation, whether voluntary or involuntary, the holders
of Class C Preferred Shares then outstanding, after payment or provision for
payment of the debts and other liabilities of the Corporation and the payment or
provision for payment of any distribution on any shares of the Corporation
having a preference and a priority over the Class C Preferred Shares on
liquidation, shall be entitled to be paid out of the assets of the Corporation
available for distribution to its stockholders on a parity basis with the
holders of Common Stock, as if such Class C Preferred Shares had converted to
Common Stock at the Exchange Rate then in effect on the date immediately prior
to such distribution, an amount per Class C Preferred Share of cash equal to the
amount paid per share of Common Stock. The holders of Class C Preferred Shares
and of all other series of Common Stock shall share ratably in such distribution
of assets in proportion to the amount of shares of Common Stock held by such
holders, in the case of Common Stock, or represented by the Class C Preferred
Shares, in the case of Class C Preferred Shares. Except as provided in this
Section 5, holders of Class C Preferred Shares shall not be entitled to any
distribution in the event of liquidation, dissolution or winding up of the
affairs of the Corporation.
(b) For the purposes of this Section 5, none of the following
shall be deemed to be a voluntary or involuntary liquidation, dissolution or
winding up of the Corporation:
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<PAGE> 73
(i) the sale, lease, transfer or exchange of all or
substantially all of the assets of the Corporation; or
(ii) the consolidation or merger of the Corporation with
one or more other corporations (whether or not the Corporation is the
corporation surviving such consolidation or merger).
Section 6. NO PREEMPTIVE RIGHTS.
The holders of Class C Preferred Shares shall have no
preemptive rights, including preemptive rights with respect to any shares of
capital stock or other securities of the Corporation convertible into or
carrying rights or options to purchase any such shares.
Section 7. VOTING RIGHTS.
(a) The holders of Class C Preferred Shares shall not have any
voting rights except as required by law and except as set forth below in Section
7(b) and (c).
(b) If at any time dividends payable on the Class C Preferred
Shares or any other series of Parity Preferred Stock are in arrears and unpaid
in an aggregate amount equal to or exceeding the aggregate amount of dividends
payable thereon for six quarterly dividend periods, or if any other series of
Preferred Stock shall be entitled for any other reason to exercise voting
rights, separate from the Common Stock, to elect any Directors of the
Corporation ("Preferred Stock Directors"), the holders of the Class C Preferred
Shares, voting separately as a class with the holders of all other series of
Preferred Stock upon which like voting rights have been conferred and are
exercisable, shall have the right to vote for the election of two Preferred
Stock Directors of the Corporation, such Directors to be in addition to the
number of Directors constituting the Board of Directors immediately prior to the
accrual of such right. Such right of the holders of Class C Preferred Shares to
elect two Preferred Stock Directors shall, when vested, continue until all
dividends in arrears on the Class C Preferred Shares and such other series of
Preferred Stock shall have been paid in full and the right of any other series
of Preferred Stock to exercise voting rights, separate from the Common Stock, to
elect Preferred Stock Directors shall terminate or have terminated and, when so
paid, and any such termination occurs or has occurred, such right of the holders
of Class C Preferred Shares to elect two Preferred Stock Directors separately as
a class shall cease, subject always to the same provisions for the vesting of
such right of the holders of the Class C Preferred Shares to elect two Preferred
Stock Directors in the case of future dividend defaults.
The term of office of each Director elected pursuant to the
preceding paragraph shall terminate on the earlier of (i) the next annual
meeting of stockholders at which a successor shall have been elected and
qualified or (ii) the termination of the right of the holders of Class C
Preferred Shares and such other series of Preferred Stock to vote for Directors
pursuant to the preceding paragraph. Vacancies on the Board of Directors
resulting from the death, resignation or other cause of any such Director shall
be filled exclusively by no less than two-thirds of the remaining Directors and
the Director so elected shall hold office until a successor is elected and
qualified.
(c) For as long as any Class C Preferred Shares remain outstanding,
the affirmative consent of the holders of at least two-thirds thereof actually
voting (voting separately as a class) given in person or by proxy, at any annual
meeting or special meeting of the shareholders called for such purpose, shall be
necessary to amend, alter or repeal any of the provisions of the Certificate of
Incorporation of the Corporation which would adversely affect the powers,
preferences or rights of the holders of the Class C Preferred Shares then
outstanding or reduce the minimum time required for any notice to which holders
of Class C Preferred Shares then outstanding may be entitled; provided, however,
that any such amendment, alteration or repeal that would authorize, create or
increase the authorized amount of any shares of stock (whether or not already
authorized) ranking junior to, on a parity with, or senior to the Class C
Preferred Shares with respect to payment of dividends or payment upon
liquidation shall be deemed not to adversely affect such powers, preferences
or rights and shall not be subject to approval by the holders of Class C
Preferred Shares; and provided further that the holders of the Preferred
Shares shall not have any voting rights with respect to the
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<PAGE> 74
amendment, alteration or repeal of any provisions of the Certificate of
Incorporation of the Corporation approved at a meeting of the stockholders the
record date of which is prior to the issuance of any Class C Preferred Shares.
IN WITNESS WHEREOF, AirTouch Communications, Inc. has caused this certificate to
be executed this day of ____________, 1996.
AIRTOUCH COMMUNICATIONS, INC.
By:______________________
17
<PAGE> 75
Exhibit 2.2(l)
<TABLE>
<CAPTION>
1. Definitions
-----------
<S> <C>
Additional C Shares = Cash Reduction Amount
---------------------
FMV-C Share
Additional Unit Amount = Cash Reduction Amount
---------------------
$55
Cash Reduction Amount = (a) the amount of the reduction in Cash Election Number
required pursuant to clause (i) of Section 2.2(l), multiplied
by (b) $55
Class B Shares Pre-Adjustment = (a) $500 million, divided by (b) the AirTouch Preferred
Stock Issue Price.
Class C Shares Pre-Adjustment = (a) (i) Units Pre-Adjustment, multiplied by $55, minus,
(ii) $500 million, divided by (b) $50
FMV-C Share = the fair market value of one share of AirTouch Class C
Preferred determined in writing by Lehman Brothers Inc. as
of the Effective Time
Units Pre-Adjustment = 72% of the number of CCI Common Equivalent Shares
outstanding as of immediately prior to the Effective Time
2. Calculation of Adjustments
to Class B Per-Unit Amount
and Class C Per-Unit Amount
Class B Shares Pre-Adjustment
Class B Per-Unit Amount = -----------------------------
Units Pre-Adjustment + Additional Unit Amount
Class C Per-Unit Amount = Class C Shares Pre-Adjustment + Additional C Shares
---------------------------------------------------
Units Pre-Adjustment + Additional Unit Amount
</TABLE>
<PAGE> 1
EXHIBIT 99
AIRTOUCH TO ACQUIRE CELLULAR COMMUNICATIONS INC. FOR $1.65 BILLION
Acquisition Extends AirTouch Brand Reach Into 22 Key Michigan and Ohio Markets
- -- Increases AirTouch's Ownership of Three of the Nation's Top Thirty Markets to
100%
AirTouch and CCI will host a joint conference call on Monday, April 8, at 5:45
AM Pacific time. To participate call 415-904-7367 and to hear a rebroadcast for
up to 48 hours following the call, dial 800-633-8284 and enter reservation
number 1684229.
SAN FRANCISCO -- AirTouch Communications (NYSE:ATI) today announced that it has
signed a definitive merger agreement with Cellular Communications Inc. (CCI)
(NASDAQ: COMMA) to acquire the remaining 60% of the capital stock of CCI which
it does not already own for $55 of cash and convertible preferred securities of
AirTouch. With the acquisition, AirTouch will add about 5 million proportionate
POPs, an additional $90 million of pro-forma 1995 operating cash flow and more
than 325,000 customers, bringing its total domestic cellular portfolio to nearly
43 million POPs, $695 million of pro-forma 1995 proportionate operating cash
flow and 2.6 million customers.
The merger, which is subject to regulatory and CCI stockholder approval, is
expected to close by early August.
This transaction brings to a close a process that started with the 1990
agreement between AirTouch and CCI where each company contributed its cellular
properties in Michigan and Ohio to a 50/50 joint venture. Under that agreement,
AirTouch acquired a minority equity position in CCI, as well as the right to
acquire the rest of CCI based on a series of appraisals scheduled to begin this
August. The merger will make this appraisal process unnecessary.
The $1.65 billion acquisition of CCI includes the assumption of about $200
million of net debt. This transaction will be recorded under purchase accounting
methodology and is expected to dilute earnings over the next few years. The
transaction will be structured using cash and securities. Stockholders may elect
cash or securities, subject to proration. Approximately 28% of the outstanding
shares will be acquired for cash with the remaining 72% exchanged for two series
of newly issued AirTouch convertible preferred securities. The exact number of
shares to be acquired for cash and securities will be determined at closing.
AirTouch expects to maintain its investment grade credit rating and minimize
stockholder dilution as a result of the 24% to 25% conversion premiums of the
different preferred securities.
George Blumenthal, CCI's chairman, stated, "CCI's stockholders will have the
opportunity to become AirTouch stockholders and participate in the rapid growth
of AirTouch's domestic and international wireless ventures."
"Both AirTouch and CCI stockholders will benefit from merging the companies now
as compared to waiting for up to 18 months in the appraisal process," said Sam
Ginn, chairman and chief executive officer of AirTouch. "The acquisition
represents AirTouch's continued
<PAGE> 2
commitment to attractive opportunities in the cellular industry worldwide and
extends the AirTouch brand name into one of the largest and fastest growing
regional cellular systems in the country. The acquisition also furthers our
overall national scale and scope strategy," said Ginn. "CCI's impressive
operations with strong growth, excellent cash flow and customer retention will
add to our overall strong operating performance and contribute to our continued
growth."
"Acquiring the remainder of CCI now lets us further integrate these key
properties into our operations before new competition enters the market, giving
us immediate advantages from common systems and a single brand," said Ginn.
Additionally, the acquisition enables both companies to avoid the uncertainty,
costs, distractions and time commitment of the up to three appraisals.
Cellular Communications' primary business interest is its 50% ownership position
in the joint venture which is the leading provider of cellular services in the
states of Michigan and Ohio and covers 16 million POPs. The joint venture
currently does business under the Cellular One brand name and has more than 1
million subscribers, $580 million in 1995 net operating revenue and $284 million
in 1995 operating cash flow.
AirTouch Communications is a global wireless communications company, with
interests in cellular, paging, personal communications services and the
Globalstar satellite system in the United States and eleven other nations:
Belgium, Germany, India, Italy, Japan, Poland, Portugal, South Korea, Spain,
Sweden and Thailand. The company, based in San Francisco, serves more than 5.5
million customers worldwide.
A Transaction Summary is appended with further details.
AirTouch was advised in this transaction by Lehman Brothers. CCI was advised in
this transaction by Donaldson, Lufkin & Jenrette and Wasserstein Perella & Co.
CONTACT:
Terry Kramer, Executive Director Investor Relations
415-658-2040
TRANSACTION SUMMARY
I. THE MERGER
Each share of CCI stock will be converted (on a per common share basis) into
right to receive either:
- -$55 cash
- -a Unit (defined below); or
- -combination of cash and Unit
Stockholders will engage in cash/unit election process, with maximum of 28%
cash.
Each Unit consists of fractional share of Class B Preferred Stock (equal to
$27.50 divided by Issue Price (defined below)) and 0.55 of a share of
<PAGE> 3
Class C Preferred Stock, subject to maximum number of shares of Class B ($500
million divided by Issue Price). If there is a limit of Class B due to $500
million maximum, there will be an increase in the amount of Class C per Unit.
Value of unit at closing may be greater or lesser than $55 depending on
performance of AirTouch stock and other market conditions.
In order to preserve tax-deferred status, AirTouch can decrease amount of cash
to 20%.
CCI Convertible Debenture will be assumed by surviving corporation.
Merger subject to conditions, including
- -CCI stockholder vote
- -HSR and regulatory approval
- -absence of material contingent liabilities of CCI or material adverse change of
CCI (other than resulting from general cellular industry conditions or a
regulatory development affecting the cellular industry generally)
- -tax deferred status
II. SUMMARY DESCRIPTION OF COLLAR MECHANISM
The Issue Price of the Convertible Preferred (Class C) and the Mandatorily
Convertible Preferred (Class B) will be based upon the volume weighted average
trading price of AirTouch common stock for the 15-day period prior to the
mailing of the proxy statement ("Issue Price"), subject to a collar mechanism.
If the volume weighted average trading price per share of AirTouch Common Stock
for the 15-day period prior to the mailing of the proxy statement is less than
$29.00, then the Issue Price will be $29.00.
If the volume weighted average trading price per share of AirTouch Common Stock
for the 15-day period prior to the mailing of the proxy statement is greater
than $35.00, then the Issue Price will be $35.00.
III. SUMMARY OF TERMS - MANDATORILY CONVERTIBLE PREFERRED STOCK (CLASS B)
Total Amount - $500 million
Dividend - 6.00% payable quarterly, in arrears
Maturity - 3 years
Issue Price - Issue Price to be the volume weighted average trading price per
share of AirTouch common stock for the 15-day period prior to mailing of proxy
statement, subject to the collar mechanism
Conversion Feature:
Conversion Premium - 24.00% over Issue Price
Shares per Security
<PAGE> 4
- -If the value per share of AirTouch common stock at maturity is less than the
Issue Price, 1.00 shares of AirTouch common stock
- -If value per share of AirTouch common stock at maturity is between Issue Price
and Conversion Price, 1.00 to 0.806 of a share of AirTouch common stock, such
that value of AirTouch common stock received is equal to the Issue Price
- -If value per share of AirTouch common stock at maturity is greater than
Conversion Price, 0.806 of a share of AirTouch common stock
- -Call Feature - Non-call for life
- -Collar - $29.00 to $35.00 per share
IV SUMMARY OF TERMS - CONVERTIBLE PREFERRED STOCK (CLASS C)
Total Amount - Non-cash component of transaction (72%), less $500 million amount
of Mandatorily Convertible Preferred
Dividend - 4.25% payable quarterly, in arrears
Maturity - 20 years
Issue Price - Issue Price to be volume weighted average trading price per share
of AirTouch common stock for the 15-day period prior to stockholder proxy
mailing, subject to the collar mechanism
Conversion Premium - 25.00% over Issue Price
Stated Amount - $50.00 par value
Call Feature
- -Non-call for first three years.
- -Provisional call at par for one year thereafter if AirTouch common stock trades
at or above 130% of Conversion Price.
- -Callable after year 4 at par.
- -Redeemable only in AirTouch common stock before year 10.
- -Thereafter redeemable at AirTouch's option for cash at par or AirTouch Common
stock equal to $50 at the current market price.
Collar - $29.00 to $35.00 per AirTouch share
V. SUMMARY OF CONTINGENT VALUE PAYMENT ON MANDATORILY CONVERTIBLE PREFERRED
(CLASS B)
- -There will be a contingent payment to holders of the Mandatorily Convertible
Preferred if the security trades below $54.50 per equivalent CCI common share.
- -The contingent payment will be determined by the volume weighted average
trading price of the Mandatorily Convertible Preferred in the 30 calendar days
beginning three months after transaction closing.
- -The aggregate contingent payment will range from $0.0 to $15.0 million. Each
outstanding share of Class B will receive pro rata amount. The payment may be
made in cash or, at AirTouch's option, in an equivalent amount of Class C
Preferred Securities or AirTouch common stock.
