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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JANUARY 15, 1999
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AIRTOUCH COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 1-12342 NO. 94-3213132
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
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ONE CALIFORNIA STREET, SAN FRANCISCO, CALIFORNIA 94111
(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"), a Delaware corporation, has
entered into an Agreement and Plan of Merger (the "Agreement") dated January 15,
1999, with Vodafone Group Public Limited Company ("Vodafone"), an English public
limited company, and Apollo Merger Sub, Inc., a Delaware corporation and a
wholly-owned subsidiary of Vodafone ("Merger Sub"). Subject to the conditions
set forth in the Agreement, Merger Sub will be merged with and into AirTouch
(the "Merger"), upon which the separate corporate existene of Merger Sub shall
cease and AirTouch shall continue as the surviving corporation, with each share
of AirTouch Common Stock being converted into the right to receive five Ordinary
Shares of Vodafone and $9.00 in cash, subject to adjustment as set forth in the
Agreement.
The foregoing summary of certain principal terms of the Agreement does not
purport to be complete and is qualified in its entirety by reference to the
Agreement, a copy of which is attached hereto as Exhibit 2.1 and is incorporated
by reference herein.
A copy of the press release relating to the Merger is attached hereto as
Exhibit 99.1 and is incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
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EXHIBIT NO. DESCRIPTION
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2.1 Agreement and Plan of Merger dated January 15, 1999 among Vodafone Group Public Limited Company
("Vodafone"), an English public limited company, AirTouch Communications, Inc. a Delaware corporation
("AirTouch") and Apollo Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of
Vodafone ("MergerSub" and, together with AirTouch, the "Constituent Corporations").
99.1 Press Release dated January 17, 1999.
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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
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TITLE: Executive Vice President and
Chief Financial Officer
Date: January 18, 1999
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AGREEMENT AND PLAN
OF MERGER
AMONG
VODAFONE GROUP PUBLIC LIMITED COMPANY,
AIRTOUCH COMMUNICATIONS, INC.
AND
APOLLO MERGER SUB, INC.
DATED AS OF JANUARY 15, 1999
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TABLE OF CONTENTS
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ARTICLE I
THE CLOSING AND THE MERGER
1.1. CLOSING............................................................................................... 1
1.2. THE MERGER............................................................................................ 1
1.3. CONVERSION AND EXCHANGE OF SHARES..................................................................... 2
1.4. SURRENDER AND PAYMENT................................................................................. 6
1.5. AIRTOUCH STOCK OPTIONS................................................................................ 8
1.6. FRACTIONAL VODAFONE DEPOSITARY SHARES................................................................. 9
1.7. THE SURVIVING CORPORATION............................................................................. 9
1.8. LOST, STOLEN OR DESTROYED CERTIFICATES................................................................ 9
1.9. RESERVATION OF RIGHT TO REVISE TRANSACTION............................................................ 10
1.10. DISSENTING SHARES..................................................................................... 10
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1. REPRESENTATIONS AND WARRANTIES OF AIRTOUCH AND VODAFONE............................................... 10
2.1.1. ORGANIZATION, GOOD STANDING AND QUALIFICATION............................................. 11
2.1.2. CAPITAL STRUCTURE......................................................................... 11
2.1.3. CORPORATE AUTHORITY; APPROVAL AND FAIRNESS................................................ 13
2.1.4. GOVERNMENTAL FILINGS; NO VIOLATIONS....................................................... 14
2.1.5. REPORTS; FINANCIAL STATEMENTS............................................................. 15
2.1.6. ABSENCE OF CERTAIN CHANGES................................................................ 16
2.1.7. LITIGATION AND LIABILITIES................................................................ 17
2.1.8. TAKEOVER STATUTES......................................................................... 17
2.1.9. BROKERS AND FINDERS....................................................................... 17
2.1.10. OWNERSHIP OF OTHER PARTY'S COMMON STOCK................................................... 17
2.1.11. MERGER SUB'S OPERATIONS................................................................... 18
2.1.12. ASSETS.................................................................................... 18
2.1.13. LICENSES.................................................................................. 18
2.1.14. INTELLECTUAL PROPERTY..................................................................... 19
2.1.15. YEAR 2000 COMPLIANCE...................................................................... 19
2.1.16. RIGHTS PLAN............................................................................... 19
2.1.17. JOINT VENTURES............................................................................ 19
2.1.18. TAX MATTERS............................................................................... 20
ARTICLE III
COVENANTS
3.1. INTERIM OPERATIONS.................................................................................... 20
3.2. ACQUISITION PROPOSALS................................................................................. 22
3.3. INFORMATION SUPPLIED.................................................................................. 23
3.3.1. REGISTRATION STATEMENT.................................................................... 23
3.4. SHAREHOLDERS MEETINGS................................................................................. 24
3.5. FILINGS; OTHER ACTIONS; NOTIFICATION.................................................................. 25
3.6. ACCESS................................................................................................ 26
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3.7. PUBLICITY............................................................................................. 27
3.8. BENEFITS AND OTHER MATTERS............................................................................ 27
3.8.1. EMPLOYEE BENEFITS......................................................................... 27
3.8.2. DIRECTOR AND OFFICER INDEMNIFICATION AND INSURANCE........................................ 28
3.8.3. DIRECTORS OF VODAFONE..................................................................... 28
3.8.4. OFFICERS.................................................................................. 28
3.9. EXPENSES.............................................................................................. 29
3.10. TAKEOVER STATUTES..................................................................................... 29
3.11. LISTING APPLICATIONS/ESTABLISHMENT OF VODAFONE DEPOSITARY SHARES...................................... 29
3.12. LETTERS OF ACCOUNTANTS................................................................................ 29
3.13. AGREEMENTS OF AIRTOUCH RULE 145 AFFILIATES............................................................ 30
3.14. ACCOUNTING MATTERS.................................................................................... 30
3.15. TRANSITION PLANNING................................................................................... 30
3.16. VODAFONE SEC FILINGS.................................................................................. 30
3.17. INITIAL MERGER........................................................................................ 30
3.18. NOTIFICATION OF CERTAIN MATTERS....................................................................... 31
3.19. ASSUMPTION OF U.S. WEST INVESTMENT AGREEMENT.......................................................... 31
3.20. AIRTOUCH TREASURY SHARES.............................................................................. 31
ARTICLE IV
CONDITIONS
4.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER............................................ 31
4.1.1. SHAREHOLDER APPROVALS..................................................................... 31
4.1.2. REGULATORY CONSENTS....................................................................... 31
4.1.3. LAWS AND ORDERS........................................................................... 32
4.1.4. EFFECTIVENESS OF FORM F-4................................................................. 32
4.1.5. EXCHANGE LISTING.......................................................................... 32
4.1.6. INITIAL MERGER............................................................................ 32
4.2. CONDITIONS TO OBLIGATIONS OF VODAFONE AND MERGER SUB.................................................. 32
4.2.1. REPRESENTATIONS AND WARRANTIES OF AIRTOUCH................................................ 32
4.2.2. PERFORMANCE OF OBLIGATIONS OF AIRTOUCH.................................................... 32
4.2.3. CONSENTS UNDER AGREEMENTS................................................................. 32
4.2.4. TAX OPINION............................................................................... 33
4.3. CONDITIONS TO OBLIGATION OF AIRTOUCH.................................................................. 33
4.3.1. REPRESENTATIONS AND WARRANTIES............................................................ 33
4.3.2. PERFORMANCE OF OBLIGATIONS OF VODAFONE.................................................... 33
4.3.3. CONSENTS UNDER AGREEMENTS................................................................. 33
4.3.4. TAX OPINION............................................................................... 33
4.3.5. SUPPLEMENTAL RESOLUTIONS.................................................................. 34
ARTICLE V
TERMINATION
5.1. TERMINATION BY MUTUAL CONSENT......................................................................... 34
5.2. TERMINATION BY EITHER VODAFONE OR AIRTOUCH............................................................ 34
5.3. TERMINATION BY AIRTOUCH............................................................................... 34
5.4. TERMINATION BY VODAFONE............................................................................... 35
5.5. EFFECT OF TERMINATION AND ABANDONMENT................................................................. 35
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ARTICLE VI
MISCELLANEOUS AND GENERAL
6.1. SURVIVAL.............................................................................................. 36
6.2. MODIFICATION OR AMENDMENT............................................................................. 36
6.3. WAIVER................................................................................................ 36
6.4. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE................................................. 36
6.5. COUNTERPARTS.......................................................................................... 37
6.6. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL......................................................... 37
6.7. NOTICES............................................................................................... 37
6.8. ENTIRE AGREEMENT...................................................................................... 39
6.9. OBLIGATIONS OF VODAFONE AND OF AIRTOUCH............................................................... 39
6.10. SEVERABILITY.......................................................................................... 39
6.11. INTERPRETATION........................................................................................ 39
6.12. ASSIGNMENT............................................................................................ 40
6.13. SPECIFIC PERFORMANCE.................................................................................. 40
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This AGREEMENT AND PLAN OF MERGER, dated as of January 15, 1999 (this
"AGREEMENT"), among VODAFONE GROUP PUBLIC LIMITED COMPANY ("VODAFONE"), an
English public limited company, AIRTOUCH COMMUNICATIONS, INC., a Delaware
corporation ("AIRTOUCH"), and APOLLO MERGER SUB, INC., a Delaware corporation
and a wholly owned subsidiary of Vodafone ("MERGER SUB" and, together with
AirTouch, the "CONSTITUENT CORPORATIONS");
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of AirTouch, Vodafone and Merger
Sub (each, a "PARTY" and, together, the "PARTIES") have each determined that it
is in the best interests of their respective companies and stockholders to
combine their respective businesses;
WHEREAS, in furtherance of such combination, the respective Boards of
Directors of AirTouch and Merger Sub have each adopted resolutions approving
this Agreement and declaring its advisability and approving the merger (the
"MERGER") of Merger Sub with and into AirTouch in accordance with the Delaware
General Corporation Law, as amended (the "DGCL"), upon the terms and subject to
the conditions set forth herein;
WHEREAS, it is intended that, for U.S. federal income tax purposes, the
Merger shall qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "CODE"); and
WHEREAS, AirTouch and Vodafone desire to make certain representations,
warranties, covenants and agreements in connection with this Agreement.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements contained herein, the Parties hereto, intending to be
legally bound, hereby agree as follows:
ARTICLE I
THE CLOSING AND THE MERGER
1.1. CLOSING. The closing of the Merger (the "CLOSING") shall take place
(i) at 9:00 A.M. (New York time) at the offices of Sullivan & Cromwell, 125
Broad Street, New York, New York, on the third business day after the day on
which the last to be fulfilled or waived of the conditions set forth in Article
IV (other than those conditions that by their nature are to be fulfilled at the
Closing, but subject to the fulfillment or waiver of such conditions) shall be
fulfilled or waived in accordance with this Agreement or (ii) at such other
place or places and time and/or on such other date as AirTouch and Vodafone may
agree in writing (the "CLOSING DATE").
1.2. THE MERGER.
1.2.1. Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time (as defined in Section 1.2.2.), Merger Sub
shall be merged with and into AirTouch in accordance with the DGCL,
whereupon the separate existence of Merger Sub shall cease, and AirTouch
shall be the surviving corporation in the Merger (the "SURVIVING
CORPORATION") and shall continue to be governed by the laws of the State of
Delaware, and the separate corporate existence of AirTouch, with all its
rights, privileges, immunities, powers and franchises, shall continue
unaffected by the Merger except as set forth in this Article I. The Merger
shall have the effects specified in the DGCL.
1.2.2. As soon as practicable after satisfaction or waiver (to the
extent herein permitted) of the conditions to the obligations of the Parties
to consummate the Merger set forth in Article IV, AirTouch and Merger Sub
will cause a certificate of merger (the "CERTIFICATE OF MERGER") to be
executed and filed with the Secretary of State of the State of Delaware and
make all other filings or recordings required by applicable law in
connection with the Merger. The Merger shall become effective at such time
as the Certificate of Merger is duly filed with the Secretary of State of
the State of Delaware or at such later time as is specified in the
Certificate of Merger in accordance with the DGCL (the "EFFECTIVE TIME").
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1.3. CONVERSION AND EXCHANGE OF SHARES. At the Effective Time:
1.3.1. Each share of common stock, par value $.01 per share, of
AirTouch ("AIRTOUCH COMMON SHARES") owned by Vodafone, AirTouch or any
Subsidiary (as defined in Section 2.1.1.) of Vodafone or AirTouch
immediately prior to the Effective Time (each, an "EXCLUDED AIRTOUCH SHARE")
shall, by virtue of the Merger, and without any action on the part of the
holder thereof, no longer be outstanding, shall be canceled and retired
without payment of any consideration therefor and shall cease to exist.
1.3.2. Each AirTouch Common Share outstanding immediately prior to the
Effective Time, other than Excluded AirTouch Shares and Dissenting Shares
(as defined in Section 1.10.), shall be converted into and shall be canceled
in exchange for the right to receive (x) (i) five (5) (as such ratio may be
adjusted pursuant to clause (y) or (z) below, the "EXCHANGE RATIO") ordinary
shares of Vodafone, of nominal value 5p each, ("VODAFONE ORDINARY SHARES")
or, if the redenomination of Vodafone's ordinary share capital from pounds
sterling into U.S. dollars (the "REDENOMINATION") is approved by the
requisite vote of shareholders of Vodafone at the meeting convened for such
purpose as contemplated by Section 3.4. and otherwise becomes effective, of
nominal value US$.10 each (as such consideration may be adjusted pursuant to
clause (y) or (z) below, the "STOCK CONSIDERATION"), and (ii) $9.00 in cash,
without interest (as such consideration may be adjusted pursuant to clause
(y) or (z) below, the "CASH CONSIDERATION", and, together with the Stock
Consideration, the "MERGER CONSIDERATION"), PROVIDED that (y) if the 50%
Test (as defined in Section 3.1.6.) has not been satisfied but the Private
Letter Ruling (as defined in Section 3.1.7.) has been obtained, (i) the
Exchange Ratio shall be reduced by the smallest amount (rounded to the
nearest 1/1000th of a Vodafone Ordinary Share) which Fried, Frank, Harris,
Shriver & Jacobson and Sullivan & Cromwell agree in writing is necessary to
satisfy the 50% Test and (ii) the Cash Consideration shall be increased by
the value of the fraction of a Vodafone Ordinary Share (based on a value of
$17.60 per Vodafone Ordinary Share) represented by the reduction in the
Exchange Ratio pursuant to the foregoing clause (y)(i); PROVIDED FURTHER
that (z) if the Private Letter Ruling has not been obtained, (i) the
Exchange Ratio shall be reduced (provisionally, subject to clause (z)(iv)
and (z)(v) below) by the smallest amount (rounded to the nearest 1/1000th of
a Vodafone Ordinary Share) which Fried, Frank, Harris, Shriver & Jacobson
and Sullivan & Cromwell agree in writing is necessary to satisfy the test
set forth in U.S. Treasury Regulation Section 1.367(a)-3(c)(3)(iii) without
obtaining the Private Letter Ruling, (ii) the Cash Consideration shall be
reduced to $0, (iii) in lieu of the Cash Consideration, AirTouch shall,
immediately prior to Closing, pay to each holder of AirTouch Common Shares
an amount in cash for each AirTouch Common Share held by such stockholder
equal to the sum of $9.00 plus the value of the fraction of a Vodafone
Ordinary Share (based on a value of $17.60 per Vodafone Ordinary Share)
represented by the reduction in the Exchange Ratio pursuant to the foregoing
clause (z)(i) (such amount, the "AIRTOUCH CASH PAYMENT"), (iv) if AirTouch
elects to make the AirTouch Cash Payment by means of a pro rata dividend,
the Exchange Ratio shall be as determined in accordance with clause (z)(i),
and (v) if AirTouch elects to make the AirTouch Cash Payment by means of a
pro rata stock redemption, the Exchange Ratio shall be equal to (A) the
number of AirTouch Common Shares outstanding immediately prior to the
Effective Time but prior to the pro rata stock redemption, other than
Excluded AirTouch Shares and Dissenting Shares (the "OUTSTANDING NUMBER")
multiplied by (B) the provisional Exchange Ratio determined pursuant to
clause (z)(i) divided by (C) the Outstanding Number minus the number of
AirTouch Common Shares redeemed in the pro rata redemption. If AirTouch
elects to make the AirTouch Cash Payment by means of a pro rata stock
redemption, it shall establish the procedures, including an appropriate
amendment to its certificate of incorporation, by which such redemption
shall be effected.
For all purposes of this Agreement, the Cash Consideration shall not be
deemed to include the AirTouch Cash Payment. In no circumstance will the
Cash Consideration or the AirTouch Cash Payment exceed $13.00 per AirTouch
Common Share without the prior consent, at its sole discretion,
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of the board of directors of Vodafone (any such consent, the "INCREASED CASH
CONSENT"). If AirTouch is required to make the AirTouch Cash Payment, it
shall also make a payment to holders of Class C Preferred Shares (as defined
in Section 1.3.6.3.1.3.) on a pro rata basis with the payment made to
holders of AirTouch Common Shares based on the Exchange Rate (as that term
is defined in the Class C Certificate of Designation (as defined in Section
1.3.6.3.1.3.)) in effect on the date immediately preceding such cash
payment.
Any Vodafone Ordinary Shares constituting a portion of the Merger
Consideration shall be delivered to the holders of AirTouch Common Shares
(other than Excluded AirTouch Shares and Dissenting Shares) in the form of
American depositary shares, each representing the right to receive ten
Vodafone Ordinary Shares (the "VODAFONE DEPOSITARY SHARES"). The Vodafone
Depositary Shares may be evidenced by one or more receipts ("VODAFONE ADRS")
issued in accordance with the Amended and Restated Deposit Agreement, dated
as of September 16, 1991, among Vodafone, The Bank of New York, as
Depositary (the "DEPOSITARY"), and the holders from time to time of Vodafone
ADRs, as amended and restated as of the date on which the Effective Time
occurs (the "DEPOSIT AGREEMENT").
At the Effective Time, all AirTouch Common Shares shall no longer be
outstanding, shall be canceled and retired and shall cease to exist, and
each certificate (a "CERTIFICATE") formerly representing any of such
AirTouch Common Shares (other than Excluded AirTouch Shares and Dissenting
Shares) shall thereafter represent only the right to the Merger
Consideration and the AirTouch Cash Payment, if any, and the right, if any,
to receive pursuant to Section 1.6. cash in lieu of fractional Vodafone
Depositary Shares, and any dividend or distribution pursuant to Section
1.4.6., in each case without interest. The Vodafone Ordinary Shares issued
in accordance with Section 1.4.1., and the Vodafone Depositary Shares issued
as provided in this Section 1.3.2., shall be of the same class and shall
have the same rights as the currently outstanding Vodafone Ordinary Shares
and the currently outstanding Vodafone Depositary Shares, respectively
(other than in relation to the nominal value of all Vodafone Ordinary
Shares, which may be US$.10 each, provided that the Redenomination takes
effect). At and following the Closing, Vodafone and AirTouch shall be
jointly and severally liable for all stamp duties, stamp duty reserve tax
and other similar taxes and similar levies imposed in connection with the
issuance or creation of the Vodafone Depositary Shares constituting the
Stock Consideration or issued in respect of the conversion of any AirTouch
Stock Options (as defined in Section 1.5.) pursuant to Section 1.5. and any
Vodafone Depositary Shares in connection therewith and any other United
Kingdom stamp duty, stamp duty reserve tax or other similar United Kingdom
governmental charge (or any interest or penalties thereon) that may be
payable by Vodafone and AirTouch pursuant to the Deposit Agreement.
1.3.3. Each share of common stock of Merger Sub, no par value ("MERGER
SUB COMMON STOCK"), outstanding immediately prior to the Effective Time
shall be canceled and, in consideration for the issuance, in accordance with
Section 1.4.1., of the Vodafone Ordinary Shares referred to in Section
1.3.4. below, the Surviving Corporation shall issue to Vodafone at the
Effective Time such number of shares of common stock as is equal to the
number of AirTouch Common Shares outstanding immediately prior to the
Effective Time (other than the Excluded AirTouch Shares and Dissenting
Shares) with the same rights, powers and privileges as the AirTouch Common
Shares and shall constitute the only outstanding shares of common stock of
the Surviving Corporation.
1.3.4. In consideration of the issue to Vodafone by the Surviving
Corporation of shares of common stock of the Surviving Corporation pursuant
to Section 1.3.3. hereof, Vodafone shall issue, in accordance with Section
1.4.1., such number of Vodafone Ordinary Shares as is equal to the number of
AirTouch Common Shares outstanding immediately prior to the Effective Time
(other than the Excluded AirTouch Shares and the Dissenting Shares)
multiplied by the Exchange Ratio to permit the issuance of Vodafone
Depositary Shares to the holders of such AirTouch Common Shares and shall
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pay the Cash Consideration for the purpose of giving effect to the delivery
of the Merger Consideration referred to in Section 1.3.2. of this Agreement.
1.3.5. In the event that, subsequent to the date of this Agreement but
prior to the Effective Time, AirTouch changes the number of AirTouch Common
Shares, or Vodafone changes the number of Vodafone Ordinary Shares, issued
and outstanding as a result of a stock split, combination, stock dividend,
recapitalization, redenomination of share capital (other than the
Redenomination) or other similar transaction, the Exchange Ratio and other
items dependent thereon shall be appropriately adjusted.
1.3.6. AIRTOUCH PREFERRED STOCK
1.3.6.1. Prior to the Effective Time, subject to the stockholder
approval described in Section 1.3.6.2., AirTouch will cause AirTouch
Merger Sub, Inc., a newly-formed wholly owned subsidiary of AirTouch, to
merge with and into AirTouch (the "INITIAL MERGER"), with AirTouch being
the surviving corporation (the "INITIAL SURVIVING CORPORATION").
1.3.6.2. AirTouch will take, or cause to be taken, all action
necessary to submit to the vote of the holders of AirTouch Common Shares
and the holders of the 6% Class B Mandatorily Convertible Preferred
Stock, Series 1996, of AirTouch (the "CLASS B PREFERRED STOCK"), voting
together as a single class, the Initial Merger (the "INITIAL MERGER
VOTE") at the AirTouch Shareholders Meeting (as defined in Section 3.4.).
1.3.6.3. All references in this Agreement to "AIRTOUCH" shall, after
the effective time of the Initial Merger (the "INITIAL MERGER EFFECTIVE
TIME"), mean (and be deemed to refer to) the Initial Surviving
Corporation and all references to AirTouch Common Shares, shall, after
the Initial Merger Effective Time, mean (and be deemed to refer to)
common shares of the Initial Surviving Corporation (the "INITIAL
SURVIVING CORPORATION SHARES" and, individually, an "INITIAL SURVIVING
CORPORATION SHARE").
1.3.6.3.1. In the Initial Merger, at the Initial Merger
Effective Time:
1.3.6.3.1.1. Each AirTouch Common Share outstanding
immediately prior to the Initial Merger Effective Time shall
remain outstanding as an Initial Surviving Corporation Share.
1.3.6.3.1.2. Each share of Class B Preferred Stock ("CLASS B
PREFERRED SHARES" and, individually, a "CLASS B PREFERRED SHARE")
outstanding immediately prior to the Initial Merger Effective
Time shall remain outstanding as a Class B Preferred Share of the
Initial Surviving Corporation, without any change to the powers,
preferences or special rights of such Class B Preferred Share
provided for in the Certificate of Designation, Preferences and
Rights of 6.00% Class B Mandatorily Convertible Preferred Stock,
Series 1996 of AirTouch (the "CLASS B CERTIFICATE OF
DESIGNATION").
1.3.6.3.1.3. Each share of 4.25% Class C Convertible
Preferred Stock, Series 1996, par value $.01 per share, of
AirTouch ("CLASS C PREFERRED SHARES", and, individually, a "CLASS
C PREFERRED SHARE") outstanding immediately prior to the Initial
Merger Effective Time shall remain outstanding as a Class C
Preferred Share of the Initial Surviving Corporation, without any
change to the powers, preferences or special rights of such Class
C Preferred Share provided for in the Certificate of Designation
of 4.25% Class C Convertible Preferred Stock, Series 1996, of
AirTouch (the "CLASS C CERTIFICATE OF DESIGNATION"); PROVIDED,
HOWEVER, that such Class C Certificate of Designation shall
provide that holders of the Class C Preferred Shares shall be
entitled to vote together with the holders of Initial Surviving
Corporation Shares on all matters to be voted upon by holders of
Initial Surviving Corporation Shares, and that for each Class C
Preferred
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Share held, holders of Class C Preferred Shares shall be entitled
to that number of votes equal to the number of Initial Surviving
Corporation Shares into which such Class C Preferred Share is
convertible pursuant to Section 4 of the Class C Certificate of
Designation as of the record date applicable to such vote.
1.3.6.3.1.4. Each share of 5.143% Class D Cumulative
Preferred Stock, Series 1998, par value $.01 per share, of
AirTouch ("CLASS D PREFERRED SHARES", and, individually, a "CLASS
D PREFERRED SHARE"), except for such shares with respect to which
appraisal rights under Section 262 of the DGCL have been
asserted, outstanding immediately prior to the Initial Merger
Effective Time shall remain outstanding as a Class D Preferred
Share of the Initial Surviving Corporation, without any change to
the powers, preferences or special rights of such Class D
Preferred Shares provided for in the Certificate of Designation
of 5.143% Class D Convertible Preferred Stock, Series 1998, of
AirTouch (the "CLASS D CERTIFICATE OF DESIGNATION"); PROVIDED,
HOWEVER, that such Class D Certificate of Designation shall
provide (i) that holders of the Class D Preferred Shares shall be
entitled to vote together with the holders of Initial Surviving
Corporation Shares on all matters to be voted upon by holders of
Initial Surviving Corporation Shares on the basis of 12 votes for
each Class D Preferred Share held; and (ii) that Section 4(b) of
the Class D Certificate of Designation shall be amended to remove
the ability of the Company to redeem the Class D Preferred Stock
prior to the Maturity Date (as defined in the Class D Certificate
of Designation).
1.3.6.3.1.5. Each share of 5.143% Class E Cumulative
Preferred Stock, Series 1998, par value $.01 per share, of
AirTouch ("CLASS E PREFERRED SHARES", and, individually, a "CLASS
E PREFERRED SHARE"), except for such shares with respect to which
appraisal rights under Section 262 of the DGCL have been
asserted, outstanding immediately prior to the Initial Merger
Effective Time shall remain outstanding as a Class E Preferred
Share of the Initial Surviving Corporation, without any change to
the powers, preferences or special rights of such Class E
Preferred Shares provided for in the Certificate of Designation
of 5.143% Class E Cumulative Preferred Stock, Series 1998, of
AirTouch (the "CLASS E CERTIFICATE OF DESIGNATION"); PROVIDED,
HOWEVER, that such Class E Certificate of Designation shall
provide (i) that holders of the Class E Preferred Shares shall be
entitled to vote together with the holders of Initial Surviving
Corporation Shares on all matters to be voted upon by holders of
Initial Surviving Corporation Shares on the basis of 12 votes for
each Class E Preferred Share held; (ii) that the Maturity Date
(as defined in the Class E Certificate of Designation) shall be
April 1, 2020; and (iii) that the dividends payable pursuant to
Section 3 of the Class E Certificate of Designation shall be,
during the period beginning April 1, 2018 and ending April 1,
2020, at an amount per Class E Preferred Share of $87.90 per
annum as adjusted pursuant thereto.
1.3.6.3.2. In the Merger, at the Effective Time:
1.3.6.3.2.1. Each AirTouch Common Share outstanding
immediately prior to the Effective Time (other than AirTouch
Excluded Shares and Dissenting Shares) shall be treated in
accordance with Section 1.3.2.
1.3.6.3.2.2. Immediately prior to the Effective Time, each
Class B Preferred Share then outstanding shall, in accordance
with paragraphs (a) and (e) of Section 4 of the Class B
Certificate of Designation, convert automatically into AirTouch
Common Shares at the Maturity Exchange Rate (as such term is
defined in the Class B Certificate of Designation) in effect on
the Maturity Date (as such term is defined in the Class B
Certificate of Designation), and all accrued and unpaid dividends
on such Class B
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Preferred Shares (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
due and payable in cash out of funds of the Initial Surviving
Corporation legally available for the payment of dividends, as
more fully provided in the Class B Certificate of Designation.
1.3.6.3.2.3. Each Class C Preferred Share of the Initial
Surviving Corporation outstanding immediately prior to the
Effective Time, shall remain outstanding as a Class C Preferred
Share of the Surviving Corporation. Each Class C Preferred Share
shall, after consummation of the Merger, be subject to conversion
or redemption, at the election of the holder of such Class C
Preferred Share, in accordance with clauses (i), (ii), and (iii)
of Section 4(e) of the Class C Certificate of Designation.
1.3.6.3.2.4. Each Class D Preferred Share of the Initial
Surviving Corporation outstanding immediately prior to the
Effective Time (other than Dissenting Shares), shall remain
outstanding as a Class D Preferred Share of the Surviving
Corporation.
1.3.6.3.2.5. Each Class E Preferred Share of the Initial
Surviving Corporation outstanding immediately prior to the
Effective Time (other than Dissenting Shares), shall remain
outstanding as a Class E Preferred Share of the Surviving
Corporation.
1.4. SURRENDER AND PAYMENT.
1.4.1. Prior to the Effective Time, Vodafone shall appoint ChaseMellon
Shareholder Services, L.L.C. or, failing ChaseMellon Shareholder Services,
L.L.C., another agent reasonably acceptable to AirTouch as exchange agent
(the "EXCHANGE AGENT") for the purpose of exchanging Certificates for
Vodafone Depositary Shares and the Cash Consideration. Promptly after the
Effective Time, the Surviving Corporation will send, or will cause the
Exchange Agent to send, to each holder of record as of the Effective Time of
AirTouch Common Shares (other than holders of Excluded AirTouch Shares and
Dissenting Shares), a letter of transmittal, in such form as AirTouch and
Vodafone may reasonably agree, for use in effecting delivery of AirTouch
Common Shares to the Exchange Agent. AirTouch shall act as agent for each
holder of record as of the Effective Time of AirTouch Common Shares (other
than Excluded AirTouch Shares and Dissenting Shares) (each, a "RECORD
HOLDER") and shall enter into an agreement (the "NOMINEE AGREEMENT") with
Vodafone and Boston EquiServe Limited Partnership. Vodafone shall issue the
Vodafone Ordinary Shares referred to in Section 1.3.4. in registered form to
Boston EquiServe Limited Partnership or its nominee (the "NOMINEE"), as
nominee and agent for and on behalf of the Record Holders for the issuance
of Vodafone Depositary Shares in accordance with this Article I, subject to
the terms and conditions of this Agreement and the Nominee Agreement. If the
Redenomination shall take effect immediately prior to the Effective Time,
then, unless the directors of Vodafone shall determine not to issue Bearer
Shares (as defined below), the Nominee shall, as agent for the Record
Holders, instruct Vodafone to, and Vodafone shall, strike the name of the
Nominee from the Vodafone Shareholders' register, create share warrants to
bearer ("BEARER SHARES") in respect of such Vodafone Ordinary Shares and
deliver the Bearer Shares to the Nominee, as agent as aforesaid. Regardless
of whether the Redenomination takes effect and the Bearer Shares are
delivered to the Nominee, the Vodafone Ordinary Shares in registered form or
the Bearer Shares, as the case may be, held by the Nominee shall be
deposited by the Nominee or on its behalf with the Depositary (or as it may
direct) as and when required for the issuance of Vodafone Depositary Shares
in accordance with this Article I. To the extent required, the Exchange
Agent will requisition from the Depositary, from time to time, such number
of Vodafone Depositary Shares, in such denominations as the Exchange Agent
shall specify, as are issuable in respect of AirTouch Common Shares properly
delivered to the Exchange Agent. Vodafone shall from time to time deposit or
cause to be deposited cash in an amount sufficient to provide the Exchange
Agent with the cash to fund the payments to be paid by Vodafone required by
Section 1.4.2.
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1.4.2. Each holder of any AirTouch Common Shares that have been
converted into a right to receive the consideration set forth in Section
1.3.2. shall, upon surrender to the Exchange Agent of a Certificate or
Certificates, together with a properly completed letter of transmittal
covering the AirTouch Common Shares represented by such Certificate or
Certificates, without further action, be entitled to receive (i) the number
of whole Vodafone Depositary Shares included in the Merger Consideration in
respect of such AirTouch Common Shares, and (ii) a check in the amount
(after giving effect to any required tax withholdings) of (A) the Cash
Consideration that such holder has the right to receive pursuant to Section
1.3.2., plus (B) any cash in lieu of fractional shares to be paid pursuant
to Section 1.6., plus (C) any cash dividends or other distributions that
such holder has the right to receive pursuant to Section 1.4.6. Until so
surrendered, each such Certificate shall after the Effective Time represent
for all purposes only the right to receive the number of whole Vodafone
Depositary Shares included in the Merger Consideration and the applicable
amounts of cash provided in the foregoing clause (ii).
1.4.3. If any Vodafone Depositary Shares are to be issued to a person
other than the registered holder of the AirTouch Common Shares represented
by a Certificate or Certificates surrendered with respect thereto, it shall
be a condition to such issue that the Certificate or Certificates so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person requesting such issue shall pay to the Exchange
Agent any transfer or other taxes required as a result of such issue to a
person other than the registered holder of such AirTouch Common Shares or
establish to the satisfaction of the Exchange Agent that such tax has been
paid or is not payable.
1.4.4. After the close of the stock transfer books of AirTouch on the
day prior to the Effective Time, there shall be no further registration of
transfers of AirTouch Common Shares that were outstanding prior to the
Effective Time. After the Effective Time, Certificates presented to the
Surviving Corporation for transfer shall be canceled and exchanged for the
consideration provided for, and in accordance with the procedures set forth,
in this Article I.
1.4.5. Any Vodafone Ordinary Shares issued and delivered in respect of
AirTouch Common Shares pursuant to this Article I, any cash entitled to be
received therefor pursuant to Section 1.3.2., and any cash in lieu of
fractional interests in Vodafone Depositary Shares to be paid pursuant to
Section 1.6., plus any cash dividend or other distribution that such holder
has the right to receive pursuant to Section 1.4.6., that remains unclaimed
by any holder of AirTouch Common Shares six months after the Effective Time
shall be held by the Exchange Agent (or a successor agent appointed by
Vodafone) or shall be delivered to the Depositary upon the instruction of
Vodafone and held by the Depositary, in either case subject to the
instruction of Vodafone in an account or accounts designated for such
purpose. Vodafone shall not be liable to any holder of AirTouch Common
Shares for any securities delivered or any amount paid by the Depositary,
the Exchange Agent or its nominee, as the case may be, to a public official
pursuant to applicable abandoned property laws. Any cash remaining unclaimed
by holders of AirTouch Common Shares three years after the Effective Time
(or such earlier date immediately prior to such time as such cash would
otherwise escheat to or become property of any governmental entity or as is
otherwise provided by applicable Law (as defined in Section 2.1.4.2.))
shall, to the extent permitted by applicable Law, become the property of the
Surviving Corporation or Vodafone, as Vodafone may determine.
1.4.6. No dividends or other distributions with respect to securities
of Vodafone issuable with respect to AirTouch Common Shares shall be paid to
the holder of any unsurrendered Certificates until such Certificates are
surrendered as provided in this Section. Subject to the effect of applicable
Law, upon such surrender, there shall be issued and/or paid to the holder of
the Vodafone Depositary Shares issued in exchange therefor, without
interest, (A) at the time of such surrender, the dividends or other
distributions payable with respect to such Vodafone Depositary Shares with a
record date after the Effective Time and a payment date on or prior to the
date of such surrender and not previously paid and (B) at the appropriate
payment date, the dividends or other distributions payable
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with respect to such Vodafone Depositary Shares with a record date after the
Effective Time but with a payment date subsequent to such surrender. For
purposes of dividends or other distributions in respect of Vodafone
Depositary Shares, all Vodafone Depositary Shares to be issued pursuant to
the Merger shall be deemed issued and outstanding as of the Effective Time.
1.5. AIRTOUCH STOCK OPTIONS.
1.5.1. At the Effective Time, all stock options to purchase AirTouch
Common Shares (each, an "AIRTOUCH STOCK OPTION") and tandem stock
appreciation rights ("TANDEM SARS"), whether vested or unvested, which are
then outstanding and unexercised shall cease to represent a right to acquire
AirTouch Common Shares and shall be converted automatically into options to
purchase, and tandem stock appreciation rights with respect to, Vodafone
Ordinary Shares, and Vodafone shall assume each such AirTouch Stock Option
and Tandem SAR, subject to the terms of the relevant AirTouch Stock Plan (as
defined in Section 2.1.2.1.) under which it was issued and the agreement
evidencing the grant thereof; provided, however, that from and after the
Effective Time, (i) the number of Vodafone Ordinary Shares purchasable upon
exercise of each such AirTouch Stock Option or subject to a Tandem SAR shall
be equal to the number of AirTouch Common Shares that were purchasable under
such AirTouch Stock Option or subject to such Tandem SAR immediately prior
to the Effective Time multiplied by the Exchange Ratio, subject to
adjustment as provided in Section 1.3.5., and rounding down to the nearest
whole Vodafone Ordinary Share (or, if issued in the form of Vodafone
Depositary Shares, the nearest whole Vodafone Depositary Share), and (ii)
the per Vodafone Ordinary Share exercise price under each such AirTouch
Stock Option or Tandem SAR shall be obtained by dividing (A) the per share
exercise price of each such AirTouch Stock Option or Tandem SAR less the per
share Cash Consideration or AirTouch Cash Payment, as the case may be, by
(B) the Exchange Ratio, subject to adjustment as provided in Section 1.3.5.,
and rounding down to the nearest cent. Vodafone Ordinary Shares to be issued
upon the exercise of AirTouch Stock Options or Tandem SARs shall, at the
election of the holders of such AirTouch Stock Options or Tandem SARs, be
delivered in the form of Vodafone Depositary Shares evidenced by Vodafone
ADRs. Notwithstanding the foregoing, the number of Vodafone Ordinary Shares
and the per Vodafone Ordinary Share exercise price of each AirTouch Stock
Option which is intended to be an "INCENTIVE STOCK OPTION" (as defined in
Section 422 of the Code) shall be adjusted in accordance with the
requirements of Section 424 of the Code. At or prior to the Effective Time,
AirTouch shall make all necessary arrangements with respect to the AirTouch
Stock Plans to permit the assumption by Vodafone of any unexercised AirTouch
Stock Options and Tandem SARs.
1.5.2. Prior to the Effective Time, Vodafone shall make available for
issuance in accordance with Section 1.4.1. the number of Vodafone Ordinary
Shares necessary to satisfy Vodafone's obligations under Section 1.5.1. and
1.5.3. As soon as practicable after the Effective Time, Vodafone shall file
with the Securities and Exchange Commission (the "SEC") a registration
statement on an appropriate form or a post-effective amendment to a
previously filed registration statement under the Securities Act of 1933, as
amended (the "SECURITIES ACT"), with respect to the Vodafone Ordinary Shares
and the Vodafone Depositary Shares issued pursuant to Section 1.5.1. or
Section 1.5.3., and shall use its best reasonable efforts to cause such
registration statement to become and remain effective and maintain the
current status of the prospectus contained therein, as well as comply with
any applicable state securities or "BLUE SKY" laws, for so long as such
options or other awards remain outstanding.
1.5.3. At the Effective Time, each other right with respect to the
AirTouch Common Shares (an "AIRTOUCH AWARD"), whether vested or unvested,
shall be deemed to constitute a right to receive or acquire, on the same
terms and conditions as were applicable under the AirTouch Award, the same
number of Vodafone Ordinary Shares as the holder of such AirTouch Award
would have been entitled to receive pursuant to the Merger had such holder
received such AirTouch Award in full immediately prior to the Effective Time
(rounded to the nearest whole number), in each case, as appropriately
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adjusted to reflect the payment of the Cash Consideration or the AirTouch
Cash Payment, as the case may be. Effective at the Effective Time, Vodafone
shall assume each AirTouch Award in accordance with the terms of the
relevant AirTouch Stock Plan under which it was issued and the award
agreement by which it was evidenced. At or prior to the Effective Time,
Vodafone shall take all corporate action necessary to reserve for issuance a
sufficient number of Vodafone Ordinary Shares with respect to the AirTouch
Awards assumed by it in accordance with this Section 1.5.3.
1.6. FRACTIONAL VODAFONE DEPOSITARY SHARES. No fraction of a Vodafone
Depositary Share will be issued, but in lieu thereof each holder of AirTouch
Common Shares otherwise entitled to receive a fraction of a Vodafone Depositary
Share will be entitled to receive in accordance with the provisions of this
Section 1.6. from the Exchange Agent a cash payment in lieu of such fraction of
a Vodafone Depositary Share representing such holder's proportionate interest in
the net proceeds from the sale by the Exchange Agent on behalf of all such
holders of the aggregate of the fractions of Vodafone Depositary Shares which
would otherwise be issued ("EXCESS SHARES"). The sale of the Excess Shares by
the Exchange Agent shall be executed on the New York Stock Exchange, Inc. (the
"NYSE") through one or more member firms of the NYSE and shall be executed in
round lots to the extent practicable. Until the net proceeds of such sale or
sales have been distributed to the holders of AirTouch Common Shares, the
Exchange Agent will hold such proceeds in trust for the holders of AirTouch
Common Shares (the "COMMON SHARES TRUST"). Vodafone shall pay all commissions,
transfer taxes and other out-of-pocket transaction costs, including the expenses
and compensation, of the Exchange Agent incurred in connection with such sale of
the Excess Shares. The Exchange Agent shall determine the portion of the Common
Shares Trust to which each holder of AirTouch Common Shares shall be entitled,
if any, by multiplying the amount of the aggregate net proceeds comprising the
Common Shares Trust by a fraction the numerator of which is the amount of the
fractional Vodafone Depositary Share interest to which such holder of AirTouch
Common Shares is entitled and the denominator of which is the aggregate amount
of fractional share interests to which all holders of AirTouch Common Shares are
entitled. As soon as practicable after the determination of the amount of cash,
if any, to be paid to holders of AirTouch Common Shares in lieu of any
fractional Vodafone Depositary Share interests, the Exchange Agent shall make
available such amounts to such holders of AirTouch Common Shares without
interest.
1.7. THE SURVIVING CORPORATION.
1.7.1. The certificate of incorporation of AirTouch in effect at the
Effective Time shall be the certificate of incorporation of the Surviving
Corporation until amended in accordance with applicable law.
1.7.2. The bylaws of AirTouch in effect at the Effective Time shall be
the bylaws of the Surviving Corporation until amended in accordance with
applicable law.
1.7.3. From and after the Effective Time, until successors are duly
elected or appointed and qualified in accordance with applicable law, (i)
the directors of the Surviving Corporation shall comprise six directors,
three selected by the current Chief Executive Officer of Vodafone and three
selected by the current Chief Executive Officer of AirTouch, and (ii) such
officers as are mutually agreed by Vodafone and AirTouch prior to the
Effective Time shall be the officers of the Surviving Corporation.
1.8. LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any Certificate
shall have been lost, stolen or destroyed, upon the holder's compliance with the
replacement requirements established by the Exchange Agent, including, if
necessary, the posting by such Person (as defined in Section 2.1.1.) of a bond
in customary amount as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate, the Merger Consideration and any
cash payable in lieu of fractional Vodafone Depositary Shares and any unpaid
dividends or other distributions deliverable pursuant to Section 1.4.6. in
respect of the AirTouch Common Shares represented by such Certificate pursuant
to this Agreement.
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1.9. RESERVATION OF RIGHT TO REVISE TRANSACTION. Without prejudice to
Section 1.3.2., in the event of any change in law in relation to stamp duty or
stamp duty reserve tax which materially increases the costs of the issuance or
creation of the Vodafone Ordinary Shares or the Vodafone Depositary Shares
issued or created as part of the Stock Consideration or in respect of the
conversion of any AirTouch Stock Options pursuant to Section 1.5., Vodafone
shall, subject as provided below, be entitled to change its domicile to a
jurisdiction other than the U.K. Such change may be effected in such manner as
Vodafone considers appropriate, including by the imposition of a new holding
company which acquires all of the outstanding and issued shares in Vodafone in
exchange for its own shares and is then substituted for Vodafone for the
purposes of this Agreement. For this purpose Vodafone may seek such approvals
from, and propose such resolutions to, its shareholders (and if applicable the
courts) as may be necessary to effect such change; provided always that, save
with the consent of AirTouch, no such change of domicile may be undertaken if
the effect would be likely to increase any liability for taxation on AirTouch or
its stockholders or holders of AirTouch Stock Options, Tandem SARs or AirTouch
Awards from that which would apply if no such change of domicile were to occur.
1.10. DISSENTING SHARES. (a) AirTouch Common Shares (unless no Cash
Consideration is paid hereunder) and shares of Class D Preferred Shares and
Class E Preferred Shares which are issued and outstanding immediately prior to
the Effective Time and which are held by a holder who has not voted such shares
in favor of the Merger, who shall have delivered a written demand for appraisal
of such shares in the manner provided by the DGCL and who, as of the Effective
Time, shall not have effectively withdrawn or lost such right to appraisal
("DISSENTING SHARES") shall be entitled to such rights (but only such rights) as
are granted by Section 262 of the DGCL. Each holder of Dissenting Shares who
becomes entitled to payment for such Dissenting Shares pursuant to Section 262
of the DGCL shall receive payment therefor from the Surviving Corporation in
accordance with the DGCL; provided, however, that (i) if any such holder of
Dissenting Shares shall have failed to establish his entitlement to appraisal
rights as provided in Section 262 of the DGCL, (ii) if any holder of Dissenting
Shares shall have effectively withdrawn his demand for appraisal of such Shares
or lost his right to appraisal and payment for his Shares under Section 262 of
DGCL or (iii) if neither any holder of Dissenting Shares nor the Surviving
Corporation shall have filed a petition demanding a determination of the value
of all Dissenting Shares within the time provided in Section 262 of the DGCL,
such holder shall forfeit the right to appraisal of such Dissenting Shares and
each such Dissenting Share shall, in the case of AirTouch Common Shares, be
converted and exchanged pursuant to Section 1.3.2., or in the case of Class D or
Class E Preferred Shares, remain outstanding in accordance with Sections
1.3.6.3.2.4. and 1.3.6.3.2.5., respectively. AirTouch shall give Vodafone prompt
notice of any demands received by AirTouch for appraisal of AirTouch Common
Shares, shares of Class D Preferred Shares and Class E Preferred Shares and
Vodafone shall have the right to conduct all negotiations and proceedings with
respect to such demands.
(b) Any and all amounts paid by AirTouch to holders of Dissenting Shares
shall be paid by AirTouch solely out of its own cash on hand or out of its own
borrowings. In no event shall Vodafone or its Affiliates (as defined in Section
2.1.1.) provide directly or indirectly any funds to AirTouch in respect of
payments of holders of Dissenting Shares or the repayment of any such
borrowings.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1. REPRESENTATIONS AND WARRANTIES OF AIRTOUCH AND VODAFONE. Except as
set forth in the corresponding sections or subsections of the disclosure letter,
dated the date hereof and signed by an authorized officer, delivered by AirTouch
to Vodafone or by Vodafone to AirTouch (each a "DISCLOSURE LETTER," and the
"AIRTOUCH DISCLOSURE LETTER" and the "VODAFONE DISCLOSURE LETTER,"
respectively), as the case may be, or as disclosed in the AirTouch Reports (as
defined in Section 2.1.5.1.) or the Vodafone Reports (as defined in Section
2.1.5.2.) publicly available prior to the date hereof, AirTouch (except for
subparagraphs 2.1.2.2, 2.1.3.2, 2.1.5.2, 2.1.9(ii), 2.1.10.2, 2.1.11 and
2.1.14.2 below and references in paragraph 2.1.1 below to
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documents made available by Vodafone to AirTouch) hereby represents and warrants
to Vodafone, and Vodafone (except for subparagraphs 2.1.2.1, 2.1.3.1, 2.1.5.1,
2.1.8, 2.1.9(i), 2.1.10.1, 2.1.14.1 and 2.1.16 below and references in paragraph
2.1.1 below to documents made available by AirTouch to Vodafone), hereby
represents and warrants to AirTouch, that:
2.1.1. ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of it and
its Subsidiaries (as defined below) is duly organized, validly existing and
in good standing (with respect to jurisdictions that recognize the concept
of good standing) under the laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and authority,
and has been duly authorized by all necessary approvals and orders, to own,
operate and lease its properties and assets and to carry on its business as
presently conducted and is duly qualified to do business and is in good
standing in each jurisdiction where the ownership, operation or leasing of
its assets or properties or conduct of its business requires such
qualification, except where the failure to be so organized, qualified or in
good standing, or to have such power or authority would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect
(as defined below) on it. AirTouch has made available to Vodafone complete
and correct copies of its certificate of incorporation and by-laws, and
Vodafone has made available to AirTouch complete and correct copies of its
memorandum and articles of association, in all cases as amended to date.
Such certificate of incorporation and by-laws or memorandum and articles of
association, as the case may be, as so made available are in full force and
effect.
As used in this Agreement, the term (i) "SUBSIDIARY" means, with respect
to AirTouch, any entity, whether incorporated or unincorporated, in which
AirTouch owns, directly or indirectly, more than fifty percent of the
securities or other ownership interests having by their terms ordinary
voting power to elect more than fifty percent of the directors or other
persons performing similar functions, or the management and policies of
which AirTouch otherwise has the power to control, and, with respect to
Vodafone, any body corporate which is a subsidiary or subsidiary
undertaking, in each case within the meaning of the Companies Act of 1985 of
the United Kingdom, as amended (the "COMPANIES ACT"), (ii) "MATERIAL ADVERSE
EFFECT" means, with respect to any Person, a material adverse effect on the
financial condition, properties, business, or results of operations of such
Person and its Subsidiaries taken as a whole, provided, that all references
to Material Adverse Effect on Vodafone or its Subsidiaries or to AirTouch
and its Subsidiaries in this Article II or in Article III shall be deemed to
refer solely to Vodafone and its Subsidiaries and AirTouch and its
Subsidiaries, respectively, without giving effect to Vodafone's ownership of
AirTouch and its Subsidiaries after the Effective Time, (iii) "PERSON" means
any individual, corporation (including not-for-profit), general or limited
partnership, limited liability or unlimited liability company, joint
venture, estate, trust, association, organization, Governmental Entity (as
defined in paragraph 2.1.4.1 (Governmental Filings; No Violations)) or other
entity of any kind or nature, and (iv) "AFFILIATE" has the meaning specified
in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT").
2.1.2. CAPITAL STRUCTURE.
2.1.2.1. The authorized capital stock of AirTouch consists of
1,100,000,000 AirTouch Common Shares, of which 572,391,167 AirTouch
Common Shares were issued and outstanding as of the close of business on
December 31, 1998 and 4,373,383 shares were held in the treasury of
AirTouch, and 60,000,000 shares of preferred stock, par value $.01 per
share ( "AIRTOUCH PREFERRED SHARES"). Of such authorized AirTouch
Preferred Shares, (i) 7,000,000 shares have been designated as the Series
A Participating Preferred Stock, of which no shares are outstanding as of
the date hereof but of which all have been reserved for issuance pursuant
to the Rights Agreement, dated as of September 19, 1994 and as amended to
the date hereof, between AirTouch and The Bank of New York, as rights
agent (the "RIGHTS AGREEMENT"); (ii) 19,000,000 shares have been
designated as Class B Preferred Shares, of which 17,197,235 shares were
outstanding as of December 31, 1998, (iii) 13,000,000 shares have been
designated as Class C Preferred Shares, of
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which 11,044,765 shares are outstanding as of December 31, 1998, (iv)
825,000 shares have been designated as Class D Preferred Shares, all of
which shares are outstanding as of the date hereof and (v) 825,000 shares
have been designated as Class E Preferred Shares, all of which shares are
outstanding as of the date hereof. In addition, since December 31, 1998
through the date hereof, AirTouch has issued no AirTouch Common Shares
other than pursuant to previously outstanding options or convertible
securities. All of the outstanding AirTouch Common Shares and AirTouch
Preferred Shares have been duly authorized and validly issued and are
fully paid and nonassessable. Other than as set forth above, AirTouch has
no AirTouch Common Shares or AirTouch Preferred Shares reserved for or
otherwise subject to issuance, except that (i) as of the close of
business on December 31, 1998, there were 37,800,157 AirTouch Common
Shares subject to issuance pursuant to AirTouch Stock Options outstanding
under the plans of AirTouch identified in subparagraph 2.1.2.1 of the
AirTouch Disclosure Letter as being the only compensation or benefit
plans or agreements pursuant to which AirTouch Common Shares may be
issued (the "AIRTOUCH STOCK PLANS") and (ii) since December 31, 1998,
through the date hereof, AirTouch has granted AirTouch Stock Options with
respect to 1,897 AirTouch Common Shares. As of the date hereof, there are
no more than 639,284,923 AirTouch Common Shares outstanding on a fully
diluted basis. Each of the outstanding shares of capital stock or other
ownership interests of each of AirTouch's Subsidiaries that constitutes a
"SIGNIFICANT SUBSIDIARY" (as defined in Rule 1-02(w) of Regulation S-X
promulgated under the Exchange Act) is duly authorized, validly issued,
fully paid and nonassessable and owned by AirTouch or a direct or
indirect wholly owned subsidiary of AirTouch, in each case free and clear
of any lien, pledge, mortgage, security interest, claim, charge or other
encumbrance ("ENCUMBRANCE"). Except as set forth above or as contemplated
by this Agreement, there are no preemptive or other outstanding rights,
options, warrants, conversion rights, stock appreciation rights,
redemption rights, repurchase rights, agreements, arrangements, calls,
commitments or rights of any kind which obligate AirTouch or any of its
Subsidiaries to issue or sell any shares of capital stock or other
securities of AirTouch or any of its Subsidiaries or any securities or
obligations convertible or exchangeable into or exercisable for, or
giving any Person a right to subscribe for or acquire from AirTouch or
any of its Subsidiaries, any securities of AirTouch or any of its
Subsidiaries, and no securities or obligations evidencing such rights are
authorized, issued or outstanding. Except as set forth above or as
contemplated by this Agreement, AirTouch does not have outstanding any
bonds, debentures, notes or other obligations the holders of which have
the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the shareholders of AirTouch on
any matter.
2.1.2.2. The authorized share capital of Vodafone is L200,000,000
divided into 4,000,000,000 ordinary shares of nominal value 5p each. As
of the close of business on January 13, 1999, the allotted share capital
of Vodafone consisted of 3,094,601,095 Vodafone Ordinary Shares. All of
the outstanding Vodafone Ordinary Shares have been, and the Vodafone
Ordinary Shares to be issued as Merger Consideration shall be, duly
authorized and validly issued and are or will be, as the case may be,
fully paid or credited as fully paid. Vodafone has no Vodafone Ordinary
Shares reserved for or otherwise subject to issuance. Of the Vodafone
Ordinary Shares described in the first sentence of this paragraph, as of
the close of business on January 13, 1999, there were 2,230,470 Vodafone
Ordinary Shares held by trusts operated by Vodafone Group Share Trustee
Limited for the Qualifying Share Ownership Trust and Orbis Pension
Trustees Limited for the Long Term Incentive Plan in relation to certain
of the share option schemes identified in subparagraph 2.1.2.2 of the
Vodafone Disclosure Letter as being the only compensation or benefit
plans or agreements pursuant to which Vodafone Ordinary Shares may be
issued (the "OPTION SCHEMES"). Each of the outstanding shares of capital
stock or other ownership interests of each of Vodafone's Significant
Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and owned by Vodafone or a direct or indirect wholly owned
Subsidiary of Vodafone, in each case free and clear of any Encumbrance.
Except as set forth above or as
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contemplated by this Agreement, there are no preemptive or other
outstanding rights, options, warrants, conversion rights, stock
appreciation rights, redemption rights, repurchase rights, agreements,
arrangements, calls, commitments or rights of any kind which obligate
Vodafone or any of its Subsidiaries to issue or to sell any shares of
capital stock or other securities of Vodafone or any of its Subsidiaries
or any securities or obligations convertible or exchangeable into or
exercisable for, or giving any Person a right to subscribe for or acquire
from Vodafone or any of its Subsidiaries, any securities of Vodafone or
any of its Subsidiaries, and no securities or obligations evidencing such
rights are authorized, issued or outstanding. Vodafone does not have
outstanding any bonds, debentures, notes or other obligations the holders
of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the
shareholders of Vodafone on any matter.
2.1.3. CORPORATE AUTHORITY; APPROVAL AND FAIRNESS.
2.1.3.1. AirTouch has all requisite corporate power and
authority and has taken all corporate action necessary in order to
execute, deliver and perform its obligations under this Agreement and
to consummate the Merger and the other transactions contemplated
hereby (including, without limitation, the Initial Merger), subject
only to the adoption of this Agreement and the Initial Merger by the
vote of the holders of a majority of the outstanding stock entitled
to vote at the AirTouch Shareholders Meeting (as defined in Section
3.4. (Shareholders Meetings)) (the "AIRTOUCH REQUISITE VOTE"). The
execution and delivery of this Agreement has been duly authorized by
all necessary corporate action on the part of AirTouch and, assuming
the due authorization, execution and delivery of this Agreement by
Vodafone and Merger Sub, this Agreement constitutes a valid and
binding agreement of AirTouch enforceable against AirTouch in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and
to general equity principles (the "BANKRUPTCY AND EQUITY EXCEPTION").
The Board of Directors of AirTouch has (A) unanimously approved this
Agreement, the Merger and the other transactions contemplated hereby
and declared their advisability and (B) has received the opinion of
its financial advisor, Morgan Stanley & Co. Incorporated, to the
effect that, as of the date of this Agreement, the Merger
Consideration, together with the AirTouch Cash Payment, if any, is
fair to the holders of AirTouch Common Shares from a financial point
of view.
2.1.3.2. Vodafone has all requisite corporate power and
authority and has taken all corporate action necessary in order to
execute, deliver and perform its obligations under this Agreement and
to consummate the Merger and the other transactions contemplated
hereby, subject only to the approval of (i) the resolution set forth
in clause (i) of the third sentence of Section 3.4. (the "VODAFONE
REQUISITE RESOLUTION") by, on a show of hands, not less than a
majority of the holders of the outstanding Vodafone Ordinary Shares
present in person or, on a poll, by the holders of not less than a
majority of the votes attaching to the Vodafone Ordinary Shares who
vote in person or by proxy at the Vodafone Shareholders Meeting (as
defined in Section 3.4. (Shareholders Meetings)) (the "VODAFONE
REQUISITE VOTE") and (ii) the resolutions set forth in clauses (ii),
(iii), (iv), (v) and (vi) of the third sentence of Section 3.4. (the
"VODAFONE SUPPLEMENTAL RESOLUTIONS") by not less than three-fourths
(or, in the case of such clauses (iii) and (v), a majority) of the
persons voting on a show of hands or, on a poll, of the votes
attaching to the Vodafone Ordinary Shares who vote in person or by
proxy, at the Vodafone Shareholders Meeting (the "VODAFONE
SUPPLEMENTAL VOTE"). The execution and delivery of this Agreement has
been duly authorized by all necessary corporate action on the part of
Vodafone, and, assuming the due authorization, execution and delivery
of this Agreement by AirTouch, this Agreement constitutes a valid and
binding agreement of
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Vodafone, enforceable against Vodafone in accordance with its terms,
subject to the Bankruptcy and Equity Exception. The Board of
Directors of Vodafone has (A) unanimously approved this Agreement,
the Merger and the other transactions contemplated hereby and (B)
received the opinion of its financial advisor, Goldman Sachs
International, to the effect that, as of the date of this Agreement,
the Merger Consideration, together with the AirTouch Cash Payment, if
any, is fair, from a financial point of view, to Vodafone.
2.1.4. GOVERNMENTAL FILINGS; NO VIOLATIONS.
2.1.4.1. Other than the necessary filings, permits,
authorizations, notices, approvals, confirmations, consents,
declarations and/or decisions (A) pursuant to Sections 1.2.2. and
3.3.1., (B) under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR ACT"), the Exchange Act, the Securities
Act and the Exon-Florio provisions of the Omnibus Trade and
Competitiveness Act of 1988 ("EXON-FLORIO"), (C) to comply with the
rules and regulations of the NYSE or the London Stock Exchange
Limited (the "LSE") or any other stock exchanges on which securities
of Vodafone, AirTouch or any of its respective Subsidiaries are
listed, (D) with or from the European Commission, in accordance with
Article 6(1)(b), 8(2) or 10(6) of Council Regulation (EEC) No 4064/89
as amended (the "REGULATION"), (E) with or from any national
authority within the European Community to whom the Merger (or any
part of it) is referred pursuant to Article 9 (3) of the Regulation,
(F) from H.M. Treasury pursuant to section 765 of the Income and
Corporation Taxes Act 1988 (or the confirmation from H.M. Treasury or
the Inland Revenue that no such consent is required to the
transactions contemplated by this Agreement) and (G) as may be
required by laws, orders, regulations, practices and rules of the
United States Federal Communications Commission (the "FCC") and state
public utilities or public service commissions ("PUC"), the U.K.
Office of Telecommunications ("OFTEL") and foreign communications
regulatory agencies, state or foreign antitrust authorities, foreign
investment regulatory bodies or similar state, local or foreign
regulatory bodies (such filings, permits, authorizations, notices,
approvals, confirmations, consents, declarations and/or decisions to
be made, given or obtained by AirTouch being the "AIRTOUCH REQUIRED
CONSENTS" and by Vodafone being the "VODAFONE REQUIRED CONSENTS"), no
filings, notices, declarations and/or decisions are required to be
made by it with, nor are any permits, authorizations, approvals or
other confirmations or consents required to be obtained by it from,
any governmental or regulatory (including stock exchange) authority,
agency, court, commission, body or other governmental entity
(including the U.K. Panel on Takeovers and Mergers (the "TAKEOVER
PANEL")) ("GOVERNMENTAL ENTITY"), in connection with the execution
and delivery by it of this Agreement and the consummation by it of
the Merger and the other transactions contemplated hereby, except
those the failure of which to make, give or obtain would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on it or prevent, materially delay or
materially impair its ability to consummate the Merger and the other
transactions contemplated by this Agreement.
2.1.4.2. The execution, delivery and performance of this
Agreement by it do not, and the consummation by it of the Merger and
the other transactions contemplated hereby (including, in the case of
Vodafone, the issue of Vodafone Ordinary Shares, including the Bearer
Shares, if any, the delivery by Vodafone of Vodafone Ordinary Shares
to the Nominee and the deposit of Vodafone Ordinary Shares by the
Nominee with the Depositary against issuance of Vodafone Depositary
Shares in accordance with the Deposit Agreement) will not, constitute
or result in (A) a breach or violation of, or a default under, its
certificate of incorporation or by-laws, in the case of AirTouch, or
memorandum or articles of association, in the case of Vodafone, or
the comparable governing instruments of any of the Significant
Subsidiaries of AirTouch and Vodafone (in each case as amended from
time to
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time), (B) subject to making, giving or obtaining all necessary
filings, permits, authorizations, notices, approvals, confirmations,
consents, declarations and/or decisions described in subparagraph
2.1.4.1 and all other necessary third-party consents as set forth in
subparagraph 2.1.4.2 of its Disclosure Letter, a breach or violation
of, a default under, or the acceleration of any obligations or rights
of third Parties or the creation of an Encumbrance on the assets of
it or any of its Subsidiaries or of any partnership, joint venture or
similar entity in which it owns an interest and which holds
Communications Licenses (as defined in Section 2.1.13.) or holds
assets used to provide communications services, including, without
limitation, wireless communication services (with or without notice,
lapse of time or both) pursuant to, any agreement, lease, license,
contract, note, mortgage, indenture, arrangement or other obligation
("CONTRACTS") binding upon it or any of its Subsidiaries or any law,
ordinance, regulation, judgment, order, decree, arbitration, award,
license or permit of any Governmental Entity ("LAW") or governmental
or non-governmental permit or license to which it or any of its
Subsidiaries is subject, or (C) any other change in the rights or
obligations of either Party under any of its Contracts, except, in
the case of clause (B) or (C) above, for any breach, violation,
default, acceleration, creation or change that would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on it or prevent, materially delay or
materially impair its ability to consummate the Merger and the other
transactions contemplated by this Agreement.
2.1.5. REPORTS; FINANCIAL STATEMENTS.
2.1.5.1. AirTouch has made available to Vodafone copies of each
registration statement, report, proxy statement or information
statement prepared by it or its Subsidiaries and filed with the SEC
since December 31, 1997 (December 31, 1997 being the "AIRTOUCH AUDIT
DATE"), including AirTouch's Annual Report on Form 10-K for the year
ended December 31, 1998, each in the form (including exhibits,
annexes and any amendments thereto) filed with the SEC (collectively,
including any such registration statement, report, proxy statement or
information statement filed with the SEC subsequent to the date
hereof, the "AIRTOUCH REPORTS"). As of their respective dates, the
AirTouch Reports (i) complied in all material respects with, and any
AirTouch Reports filed subsequent to the date hereof will comply in
all material respects with, any applicable requirements of the
Securities Act and the Exchange Act and the rules and regulations of
the SEC promulgated thereunder and (ii) did not, and any AirTouch
Reports filed with the SEC subsequent to the date hereof will not,
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under
which they were made, not misleading. Each of the consolidated
balance sheets of AirTouch and its Subsidiaries included in or
incorporated by reference into the AirTouch Reports (including the
related notes and schedules) fairly presents, or will fairly present,
in all material respects, the consolidated financial position of
AirTouch and its Subsidiaries as of its date, and each of the related
consolidated statements of income, stockholders' equity and cash
flows included in or incorporated by reference into the AirTouch
Reports (including any related notes and schedules) fairly presents,
or will fairly present, in all material respects, the consolidated
results of operations, retained earnings and cash flows, as the case
may be, of AirTouch and its Subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to notes and
normal year-end audit adjustments that will not be material in amount
or effect), in each case in accordance with generally accepted
accounting principles in the United States ("U.S. GAAP") consistently
applied during the periods involved except as may be noted therein.
2.1.5.2. Vodafone has made available to AirTouch copies of (A)
each registration statement, report or annual report prepared by it
or its Subsidiaries and filed with the SEC
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since March 31, 1998 (the "VODAFONE AUDIT DATE," with the Vodafone
Audit Date and the AirTouch Audit Date each being referred to herein
as the relevant Party's "AUDIT DATE"), including Vodafone's Annual
Report on Form 20-F for the year ended March 31, 1998, each in the
form (including exhibits, annexes and any amendments thereto) filed
with the SEC and each biannual report distributed by Vodafone to its
shareholders (collectively, including any such registration
statement, report or annual report filed with the SEC or, in the case
of biannual reports, distributed to Vodafone shareholders subsequent
to the date hereof, the "VODAFONE REPORTS"); and (B) all circulars,
reports and other documents distributed by Vodafone to its
shareholders since its Audit Date. None of Vodafone's Subsidiaries is
required to file any form, report or other document with the SEC. As
of their respective dates, the Vodafone Reports (i) complied in all
material respects with, and any Vodafone Reports filed, distributed
or delivered subsequent to the date hereof will comply in all
material respects with, any applicable requirements of the Securities
Act and the Exchange Act and the rules and regulations of the SEC
promulgated thereunder and (ii) did not, and any Vodafone Report
filed, distributed or delivered subsequent to the date hereof will
not (and all circulars, reports and other documents referred to in
clause (B) of the preceding sentence did not, and such materials
circulated subsequent to the date hereof will not), contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
made therein, in the light of the circumstances under which they were
made, not misleading. Each of the consolidated balance sheets of
Vodafone and its Subsidiaries included in or incorporated by
reference into the Vodafone Reports (including the related notes and
schedules) fairly presents, or will fairly present, in all material
respects, the consolidated financial position of Vodafone and its
Subsidiaries as of its date, and each of the related consolidated
profit and loss accounts, statements of cash flows and statements of
total recognized gains and losses and movements in equity
shareholders' funds included in or incorporated by reference into the
Vodafone Reports (including any related notes and schedules) fairly
presents, or will fairly present, in all material respects, the
consolidated profits and losses, cash flows and shareholders' equity
of Vodafone and its Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to notes and normal
year-end audit adjustments that will not be material in amount or
effect), in each case in accordance with accounting methods under
generally accepted accounting principles in the United Kingdom ("U.K.
GAAP") consistently applied during the periods involved except as may
be noted therein. The related notes reconciling to U.S. GAAP such
consolidated balance sheet, consolidated profits and loss accounts,
statements of cash flows and statements of total recognized gains and
losses and movements in equity shareholders' funds comply and will
comply in all material respects with the requirements of the SEC
applicable to such reconciliation. The AirTouch Reports and the
Vodafone Reports are collectively referred to herein as the
"REPORTS."
2.1.6. ABSENCE OF CERTAIN CHANGES. Except as disclosed in the
Reports filed prior to the date hereof, or as expressly contemplated by
this Agreement, since its respective Audit Date it and its Subsidiaries
have conducted their respective businesses only in, and have not engaged
in any material transaction other than according to, the ordinary and
usual course of such businesses, and there has not been (i) any change in
the financial condition, properties, business or results of operations of
it and its Subsidiaries except those changes that, individually or in the
aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect on it; (ii) any declaration, setting aside or
payment of any dividend or other distribution in cash, stock or property
in respect of its capital stock, except for dividends or other
distributions on its capital stock publicly announced prior to the date
hereof and except as expressly permitted hereby; (iii) any split in its
capital stock, combination, recapitalization, redenomination of share
capital (other than the Redenomination) or other similar transaction or
issuance or authorization
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of any issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, except as expressly
contemplated hereby; or (iv) any change by it in accounting principles,
practices or methods except as required by changes in U.S. GAAP or U.K.
GAAP, as the case may be. Since its respective Audit Date, except as
provided for herein or as disclosed in the Reports filed prior to the
date hereof, there has not been any material increase in the compensation
payable or that could become payable by it or any of its Subsidiaries to
officers or key employees or any amendment of any of its compensation or
benefit plans or agreements other than increases or amendments in the
ordinary course or as contemplated by this Agreement.
2.1.7. LITIGATION AND LIABILITIES. Except as disclosed in the
Reports filed prior to the date hereof, there are no (i) civil, criminal
or administrative actions, suits, claims, hearings, investigations,
complaints or proceedings pending or, to the knowledge of, in the case of
AirTouch, its executive officers (as defined in the Exchange Act)
("AIRTOUCH OFFICERS"), and, in the case of Vodafone, its executive
directors ("VODAFONE EXECUTIVE DIRECTORS"), threatened against it or any
of its Subsidiaries (ii) obligations or liabilities, whether or not
accrued, contingent or otherwise and whether or not required to be
disclosed, or any other facts or circumstances of which, in the case of
AirTouch, the AirTouch Officers, and, in the case of Vodafone, the
Vodafone Executive Directors, have knowledge that would reasonably be
expected to result in any claims against, or obligations or liabilities
of, it or any of its Subsidiaries, except, in each case, for those that,
individually or in the aggregate, have not had and would not reasonably
be expected to have a Material Adverse Effect on it or prevent,
materially delay or materially impair its ability to consummate the
Merger and the other transactions contemplated by this Agreement.
2.1.8. TAKEOVER STATUTES. The board of directors of AirTouch has
taken or will take all appropriate and necessary action such that
Vodafone will not be prohibited from entering into a "business
combination" with AirTouch as an "interested stockholder" (in each case
as such term is used in Section 203 of the DGCL) as a result of the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby and thereby. No other "fair price,"
"moratorium," "control share acquisition" or other similar anti-takeover
statute or regulation, including such business combination provisions of
the DGCL (each, a "TAKEOVER STATUTE"), and no anti-takeover provision in
the certificate of incorporation or by-laws of AirTouch is, or at the
Effective Time will be, applicable to the Merger or any of the other
transactions contemplated by this Agreement.
2.1.9. BROKERS AND FINDERS. Neither it nor any of its Subsidiaries,
officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders'
fees in connection with the execution and delivery of this Agreement, the
Merger or the other transactions contemplated by this Agreement, except
that (i) AirTouch has retained Morgan Stanley & Co. Incorporated as its
financial advisor, the arrangements with which have been disclosed to
Vodafone prior to the date hereof, and (ii) Vodafone has employed Goldman
Sachs International as its financial advisor, the arrangements with which
have been disclosed to AirTouch prior to the date hereof.
2.1.10. OWNERSHIP OF OTHER PARTY'S COMMON STOCK.
2.1.10.1. Neither AirTouch nor any of its Subsidiaries
"beneficially owns" (as such term is defined in Rule 13d-3 under the
Exchange Act) any Vodafone Ordinary Shares or Vodafone Depositary
Shares.
2.1.10.2. Neither Vodafone nor any of its Subsidiaries
"beneficially owns" (as such term is defined in Rule 13d-3 under the
Exchange Act) any AirTouch Common Shares.
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2.1.11. MERGER SUB'S OPERATIONS. Merger Sub was formed solely
for the purpose of engaging in the transactions contemplated hereby
and has not (i) engaged in any business activities, (ii) conducted
any operations other than in connection with the transactions
contemplated hereby or (iii) incurred any liabilities other than in
connection with the transactions contemplated hereby. The execution
and delivery of this Agreement has been duly authorized by all
necessary corporate action on the part of Merger Sub and, assuming
the due authorization, execution and delivery of this Agreement by
AirTouch, this Agreement constitutes a valid and binding agreement of
Merger Sub enforceable against Merger Sub in accordance with its
terms, subject to the Bankruptcy and Equity Exception. Vodafone, as
Merger Sub's sole stockholder, has approved Merger Sub's execution of
this Agreement.
2.1.12. ASSETS. Each of it and its Subsidiaries has, and
immediately after the Effective Time will have, good and valid title
to its properties and assets, and valid and subsisting leasehold
interests in all properties or assets of which it is lessee or
licensee, in each case free and clear of any Encumbrances, except for
such defects and Encumbrances which, individually or in the
aggregate, have not had and would not reasonably be expected to have
a Material Adverse Effect on it.
2.1.13. LICENSES. Each of it, its Subsidiaries and, to the
knowledge of the AirTouch Officers, in the case of AirTouch, or the
Vodafone Executive Directors, in the case of Vodafone, its Affiliates
has all material permits, licenses, certificates, waivers or
authorizations ("LICENSES") from all Governmental Entities having
jurisdiction over any part of its business necessary for the conduct
of any of its activities, including, without limitation, licenses and
authorizations from the FCC and certificates of public convenience
and necessity from PUCs and OFTEL ("COMMUNICATIONS LICENSES") and all
such material Licenses are valid and in full force and effect, except
for any such Licenses the failure of which to have or to be in full
force and effect would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Neither it
nor any of its Subsidiaries has made any untrue statement of material
fact, nor has it omitted to disclose any material fact, to any
Governmental Entity nor has it or any of its Subsidiaries taken or
failed to take any action which misstatements, omissions, actions or
failures to act, individually or in the aggregate, would subject or
could reasonably be expected to subject any of the material Licenses
held by it or any of its Subsidiaries to revocation or failure to
renew or to the imposition of material conditions on any of such
Licenses or the renewal thereof; and to the knowledge of the AirTouch
Officers, in the case of AirTouch, or the Vodafone Executive
Directors, in the case of Vodafone no event has occurred or other
fact exists with respect to any of the material Licenses held by it
or any of its Subsidiaries which permits, or after notice or lapse of
time or both would permit, revocation or termination thereof or would
result in any other material impairment of the rights of the holder
of any of the material Licenses. There is no pending, or to the
knowledge of, in the case of AirTouch, the AirTouch Officers, or, in
the case of Vodafone, the Vodafone Executive Directors, threatened,
application, complaint, petition, objection or other pleading with
the FCC, OFTEL or other Governmental Entity which challenges or
questions the validity of, or any rights of the holders under, any
License held by AirTouch or any of its Subsidiaries or Vodafone or
any of its Subsidiaries, as applicable, except for such applications,
complaints, petitions, objections or other pleadings, that,
individually or in the aggregate, have not had and would not
reasonably be expected to have (taking into account both the
likelihood of success and the likely relief) a Material Adverse
Effect. It has no reason to believe that any such material License
held by it or any of its Subsidiaries is not likely to be renewed in
the ordinary course and without new material conditions or, in the
case of such material U.S. Licenses, that the holder of any such
License would not be entitled to a renewal expectancy as such term is
defined in 47 C.F.R. section 22.941 or any successor provisions and
associated FCC policies.
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2.1.14. INTELLECTUAL PROPERTY.
2.1.14.1. AirTouch owns the entire right, title and interest in
and to or has the right to use (pursuant to valid and defensible
license arrangements), all Intellectual Property (as defined below)
used or held for use in, or otherwise necessary for, the operation of
its business as presently operated, except as would not, individually
or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Except as provided in subparagraph 2.1.14 of the
AirTouch Disclosure Letter, there are no pending, or to the knowledge
of the AirTouch Officers, threatened proceedings or litigation or
other adverse claims affecting or relating to any such Intellectual
Property, nor, to the knowledge of the AirTouch Officers, any
reasonable basis upon which a claim may be asserted by or against
AirTouch for infringement of any such Intellectual Property that,
individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect on AirTouch's business as presently
operated. As used herein, "INTELLECTUAL PROPERTY" means all
industrial and intellectual property rights, including proprietary
technology, patents, patent applications, trademarks, trademark
applications and registrations, servicemarks, servicemark
applications and registrations, trade dress, copyrights, know-how,
licenses, trade secrets, proprietary processes, formulae and customer
lists.
2.1.14.2. Vodafone owns the entire right, title and interest in
and to or has the right to use (pursuant to valid and defensible
license arrangements), all Intellectual Property used or held for use
in, or otherwise necessary for, the operation of its business as
presently operated, except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
Except as provided in subparagraph 2.1.14 of the Vodafone Disclosure
Letter, there are no pending, or to the knowledge of the Vodafone
Managing Directors, threatened proceedings or litigation or other
adverse claims affecting or relating to any such Intellectual
Property, nor, to the knowledge of the Vodafone Managing Directors,
any reasonable basis upon which a claim may be asserted by or against
Vodafone for infringement of any such Intellectual Property that,
individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect on Vodafone's business as presently
operated.
2.1.15. YEAR 2000 COMPLIANCE. To the knowledge of the AirTouch
Officers, in the case of AirTouch and its Subsidiaries and the Vodafone
Executive Directors, in the case of Vodafone and its Subsidiaries, (i) it
and its Subsidiaries have taken steps that are reasonable to ensure that
the occurrence of the year 2000 will not materially and adversely affect
its and its Subsidiaries' information and business systems, (ii) as of
the date hereof, no material expenditures in excess of currently budgeted
items will be required to cause such systems to operate properly
following the change of the year 1999 to the year 2000 and (iii) there is
no fact or circumstance that would lead one to reasonably conclude that
it will be unable to resolve any issues with respect to its mission
critical systems arising in connection with the change from the year 1999
to the year 2000 on a timely basis before the year 2000, except for such
issues which, if not resolved, would not reasonably be likely to have a
Material Adverse Effect on it.
2.1.16. RIGHTS PLAN. AirTouch will take all necessary action with
respect to all of the outstanding Rights so that, as of immediately prior
to the Effective Time, (A) neither AirTouch nor Vodafone will have any
obligations under the Rights or the Rights Agreement and (B) the holders
of the Rights will have no rights under the Rights or the Rights
Agreement.
2.1.17. JOINT VENTURES. Set forth in subparagraph 2.1.17 of its
Disclosure Letter is a list as of the date hereof of all material
organizational documents, shareholder, partnership, membership, voting or
joint venture agreements and agreements relating to existing restrictions
on the transfer of investments to which it or its Subsidiaries is a party
in connection with joint ventures
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in which the greater of the fair market value or book value of its or its
Subsidiaries' investment in such joint venture exceeds $200 million
("JOINT VENTURE AGREEMENTS"). All of its Joint Venture Agreements are,
with respect to it and its Subsidiaries, valid and in full force and
effect on the date hereof except to the extent they have previously
expired in accordance with their terms, or if the failure to be in full
force and effect, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect on it. Neither it nor any
of its Subsidiaries has violated any provision of, or committed or failed
to perform any act which with or without notice, lapse of time or both
would constitute a default under the provisions of, any of its Joint
Venture Agreements, except in each case for such as, individually or in
the aggregate, would not reasonably be expected to result in a Material
Adverse Effect on it; it being understood that no effect arising out of
the execution, performance or consummation of this Agreement shall be
deemed to have a Material Adverse Effect for purposes of this Section
2.1.17.
2.1.18. TAX MATTERS. Neither it nor any of its Affiliates has taken
or agreed to take any action that would, or failed to take any action the
omission of which would, prevent or impede the Merger from qualifying as
a reorganization under Section 368(a) of the Code.
ARTICLE III
COVENANTS
3.1. INTERIM OPERATIONS. Each of AirTouch and Vodafone covenants and
agrees as to itself and its Subsidiaries that, after the date hereof and until
the Effective Time (unless the other Party shall otherwise approve in writing
(such approval not to be unreasonably withheld) and except as otherwise
expressly contemplated by or provided in this Agreement (including such Party's
Disclosure Letter), or as required by applicable Law):
3.1.1. the business of it and its Subsidiaries shall be conducted in
the ordinary and usual course and, to the extent consistent therewith, it
and each of its Subsidiaries shall use its best reasonable efforts to
preserve its business organization intact, maintain its Licenses in force
and without the imposition of new material restrictions or conditions,
and maintain its existing relations and goodwill with customers,
suppliers, creditors, regulators, lessors, employees and business
associates;
3.1.2. it shall not (i) amend its certificate of incorporation or
by-laws, in the case of AirTouch, or memorandum and articles of
association, in the case of Vodafone; (ii) split, combine, subdivide or
reclassify its outstanding shares of capital stock; (iii) declare, set
aside or pay any dividend or distribution payable in cash, stock or
property in respect of any capital stock other than (A) in the case of
AirTouch mandatory dividends payable on AirTouch Preferred Shares
outstanding as of the date hereof and (B) in the case of Vodafone,
regular biannual cash dividends, consistent with past practice and on
record dates consistent with past practice, including periodic dividend
increases consistent with past practice; or (iv) repurchase, redeem or
otherwise acquire, or permit any of its Subsidiaries to purchase or
otherwise acquire (except for repurchases, redemptions or acquisitions
(A) required by the terms of its capital stock or securities outstanding
on the date hereof, (B) required by or in connection with the respective
terms as of the date hereof of, any AirTouch Stock Plans, in the case of
AirTouch, or Option Schemes, in the case of Vodafone, or any dividend
reinvestment plans or scrip dividend plans as in effect on the date
hereof in the ordinary course of the operation of such plans, (C) in the
case of Vodafone, required to effect the Redenomination or (D) in the
case of AirTouch, at prices not higher than prevailing market prices),
any shares of the capital stock of Vodafone or AirTouch, as the case may
be, or any securities convertible into or exchangeable or exercisable for
any shares of its capital stock;
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3.1.3. neither it nor any of its Subsidiaries shall (i) issue, sell,
pledge, dispose of or encumber any shares of, or securities convertible
into or exchangeable or exercisable for, or rights, options, warrants,
conversion rights, stock appreciation rights, redemption rights,
repurchase rights, agreements, arrangements, calls, commitments or rights
of any kind to acquire, the capital stock of Vodafone or AirTouch, as the
case may be, of any class (other than (x) in the case of AirTouch,
AirTouch Common Shares issuable pursuant to AirTouch Stock Options or
rights outstanding on the date hereof under the AirTouch Stock Plans, (y)
in the case of Vodafone, Vodafone Ordinary Shares issuable or
transferable pursuant to options or rights outstanding on the date hereof
under the Option Schemes, additional options or rights to acquire
Vodafone Ordinary Shares granted under the terms of any Option Scheme as
in effect on the date hereof in the ordinary course of the operation of
such Option Scheme and Vodafone Ordinary Shares issuable or transferable
pursuant to such options or rights so granted, and (z) other issuances of
securities in connection with grants, awards or issuances of stock in
connection with stock-based compensation made in accordance with
paragraph 3.1.4 hereof or under scrip dividend plans as in effect as of
the date hereof); (ii) incur or modify any significant indebtedness or
other liability except in the ordinary and usual course of business or
pursuant to financial plans previously communicated to the other Party,
or for long-term indebtedness incurred in connection with the refinancing
of existing indebtedness, without first consulting with the other Party;
or (iii) make any decision or commitment with respect to a significant
investment or divestment except in the ordinary and usual course of
business or pursuant to financial plans previously communicated to the
other Party without first consulting with the other Party;
3.1.4. neither it nor any of its Subsidiaries shall terminate,
establish, adopt, enter into, make any new grants or awards of
stock-based compensation or other benefits under, amend or otherwise
modify any compensation or benefit plan or agreement or increase the
salary, wage, bonus or other compensation of any directors, officers or
employees except for grants or awards to directors, officers and
employees of it or its Subsidiaries under existing compensation or
benefit plans or agreements in the normal and usual course of business
(which shall include normal periodic performance reviews) and related
compensation and benefit increases, annual reestablishment of
compensation or benefit plans or agreements and the provision of
individual compensation or benefit plans or agreements for newly hired or
appointed officers and employees and the adoption of compensation or
benefit plans or agreements for employees of new Subsidiaries or except
for actions necessary to satisfy existing contractual obligations under
compensation or benefit plans or agreements existing as of the date
hereof. Notwithstanding anything to the contrary contained herein,
AirTouch shall not make any grants or awards of stock-based compensation
prior to the Effective Time except for grants, awards or issuances in the
normal and usual course of business consistent with past practice (i) as
required by existing contractual obligations under compensation or
benefit plans or agreements existing as of the date hereof, (ii) made to
newly hired or appointed officers and employees, (iii) made in connection
with the promotion to new positions or titles of existing officers and
employees or (iv) pursuant to AirTouch's existing 401(k) plan or employee
stock purchase plan, and provided that the aggregate number of shares of
AirTouch Common Stock calculated on a fully-diluted basis immediately
prior to the Effective Time shall not exceed an amount equal to the sum
of the number of shares of AirTouch Common Stock calculated on a
fully-diluted basis on the date of this Agreement plus 500,000. Any
breach of the covenants contained in the immediately preceding sentence
shall entitle Vodafone both to (x) injunctive relief and (y) damages
determined without regard to any limitation as to materiality or a
Material Adverse Effect hereunder payable by a downward adjustment in the
Cash Consideration or AirTouch Cash Payment, as applicable.
Notwithstanding anything to the contrary contained herein, AirTouch shall
not grant any new awards under the AirTouch Gold program, and shall not
make any payments prior to the Effective Time in respect
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of awards existing on the date hereof, except in each case, as required
by existing contractual obligations as of the date hereof.
3.1.5. It will use its best efforts to cause the Merger to
constitute a reorganization under Section 368(a) of the Code. Vodafone
shall deliver an Officer's Certificate substantially in the form of
Exhibit 3.1.5.1 executed as of the Closing Date and AirTouch shall
deliver an Officer's Certificate substantially in the form of Exhibit
3.1.5.2 executed as of the Closing Date. The Parties hereto shall timely
satisfy, or cause to be timely satisfied, all applicable tax reporting
and filing requirements contained in the Code with respect to the
transactions contemplated hereby, including, without limitation, the
reporting requirements contained in United States Treasury Regulation
Section 1.367(a)-3(c)(6).
3.1.6. It shall cooperate with the other between the date hereof and
the Closing Date, and shall use its reasonable efforts, to satisfy the
test set forth in United States Treasury Regulation Section
1.367(a)-3(c)(1)(i) (the "50% TEST").
3.1.7. It shall cooperate with the other between the date hereof and
the Closing Date, and shall use its reasonable efforts, to obtain from
the IRS prior to December 31, 1999 a private letter ruling (the "PRIVATE
LETTER RULING") with respect to the transactions contemplated by the
Agreement as described in United States Treasury Regulations Section
1.367(a)-3(c)(9); the preparation of such ruling request, and any oral or
written communication with the Internal Revenue Service, shall be
conducted jointly by Vodafone and AirTouch.
3.2. ACQUISITION PROPOSALS.
3.2.1. Each of AirTouch and Vodafone agrees that, subject to paragraph
3.2.3 and except as expressly contemplated by this Agreement, neither it nor
any of its Subsidiaries nor any of the officers or directors of it or its
Subsidiaries shall, and that it shall direct and use its best reasonable
efforts to cause its and its Subsidiaries' officers, directors, employees,
investment bankers, attorneys, accountants, financial advisors, agents or
other representatives (collectively, with respect to each of AirTouch and
Vodafone, such Person's "REPRESENTATIVES") not to, directly or indirectly,
initiate, solicit, encourage or otherwise facilitate any inquiries or the
making of any proposal or offer with respect to a merger, reorganization,
share exchange, dual-holding company transaction, consolidation or similar
transaction involving AirTouch or Vodafone, or any purchase of, or offer to
purchase, all or substantially all of the equity securities of AirTouch or
Vodafone, as the case may be, or of its and its Subsidiaries' assets taken
as a whole (any such proposal or offer being hereinafter referred to as an
"ACQUISITION PROPOSAL"). Each of AirTouch and Vodafone further agrees that
neither it nor any of its Subsidiaries nor any of its or its Subsidiaries'
officers or directors shall, and that it shall direct and use its best
reasonable efforts to cause its Representatives not to, directly or
indirectly, have any discussions with or provide any confidential
information or data to any Person relating to an Acquisition Proposal or
engage in any negotiations concerning an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an Acquisition
Proposal; PROVIDED, HOWEVER, that nothing contained in this Agreement shall
prevent either AirTouch or Vodafone or its board of directors from (i)
making any disclosure to its shareholders if, in the good faith judgment of
its board of directors, failure so to disclose would be inconsistent with
its obligations under applicable Law; (ii) negotiating with or furnishing
information to any Person who has made a bona fide written Acquisition
Proposal which did not result from a breach of this Section 3.2.1.; or (iii)
recommending such an Acquisition Proposal to its shareholders, if and only
to the extent that, in the case of actions referred to in clause (ii) or
clause (iii), such Acquisition Proposal is a Superior Proposal (as defined
below). For purposes of this Agreement, a "SUPERIOR PROPOSAL" means in
respect of AirTouch or Vodafone, as applicable, any Acquisition Proposal by
a third party (x) on terms which the board of directors of such Party
determines in its good faith judgment, after consultation with its financial
advisors (whose advice shall be communicated to the other Party), to be more
favorable from a financial point of view to its
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stockholders, in the case of AirTouch, or its shareholders, in the case of
Vodafone, than the Merger and the other transactions contemplated hereby
after giving the other Party at least five business days notice of all
material terms and conditions of such Acquisition Proposal to respond to
such third party Acquisition Proposal and (y) which the board of directors
of such Party determines in its good faith judgment to constitute a
transaction that is reasonably likely to be consummated on the terms set
forth, taking into account all legal, financial, regulatory and other
aspects of such proposal. Each of AirTouch and Vodafone agrees that it will,
on the date hereof, immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any Person conducted
heretofore with respect to any Acquisition Proposal. Each of AirTouch and
Vodafone also agrees that if it has not already done so, it will promptly
request each Person, if any, that has heretofore executed a confidentiality
agreement within the 12 months prior to the date hereof in connection with
its consideration of any Acquisition Proposal to return or destroy all
confidential information heretofore furnished to such Person by or on behalf
of it or any of its Subsidiaries.
3.2.2. Each of AirTouch and Vodafone agrees that it will take the
necessary steps promptly to inform its Subsidiaries and its and its
Subsidiaries' Representatives of the obligations undertaken in this Section
3.2. (Acquisition Proposals). Each of AirTouch and Vodafone agrees that it
will notify the other promptly (and in any case within 24 hours) if any such
inquiries, proposals or offers relating to or constituting an Acquisition
Proposal are received by, any such information is requested from, or any
such discussions or negotiations are sought to be initiated or continued
with, any of its or its Subsidiaries' Representatives (such notice to
include the name of the party making such inquiry, proposal, offer or
request).
3.2.3. Nothing contained herein shall prohibit a Party from taking and
disclosing to its shareholders a position contemplated by Rule 14d-9 or Rule
14e-2(a) under the Exchange Act with respect to an Acquisition Proposal by
means of a tender or exchange offer or, in the case of Vodafone, taking such
action and making such recommendations as the directors of Vodafone
reasonably consider necessary so as to comply with any obligations imposed
on them or Vodafone by the City Code on Takeovers and Mergers (the "CITY
CODE") or the Takeover Panel in relation to any Acquisition Proposal,
provided that, it is hereby acknowledged, for the avoidance of doubt, that
no provision of the City Code requires Vodafone or its directors to solicit
or initiate any Acquisition Proposal.
3.3. INFORMATION SUPPLIED.
3.3.1. REGISTRATION STATEMENT.
3.3.1.1. Each of Vodafone and AirTouch shall cooperate and as
promptly as practicable prepare and Vodafone shall file with the SEC as
soon as practicable a Registration Statement on Form F-4 (the "FORM F-4")
(or any successor form) under the Securities Act, with respect to the
issuance pursuant to this Agreement of the Vodafone Ordinary Shares
represented by Vodafone Depositary Shares, which Registration Statement
shall include the proxy statement/prospectus to be sent to holders of
AirTouch Common Shares and Class B Preferred Shares (the "AIRTOUCH PROXY
STATEMENT"). The Parties will cause the Form F-4 to comply as to form in
all material respects with the applicable provisions of the Securities
Act and the rules and regulations thereunder. Each of Vodafone and
AirTouch shall use its respective best reasonable efforts to have the
Form F-4 declared effective by the SEC as promptly as practicable after
such filing. Vodafone shall use its reasonable efforts to obtain, prior
to the effective date of the Form F-4, all necessary state securities law
or "Blue Sky" permits or approvals required to carry out the transactions
contemplated by this Agreement. Vodafone will advise AirTouch, promptly
after it receives notice thereof, of the time when the Form F-4 has
become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the
Vodafone Ordinary Shares represented by Vodafone Depositary Shares
issuable in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for
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amendment of the AirTouch Proxy Statement or the Form F-4 or comments
thereon and responses thereto or requests by the SEC for additional
information.
3.3.1.2. AirTouch and Vodafone each agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by
it or its Subsidiaries for inclusion or incorporation by reference in the
Form F-4, including, without limitation, the AirTouch Proxy Statement and
any amendment or supplement thereto will, at the time the Form F-4
becomes effective under the Securities Act, at the date of mailing to
shareholders and at the time or times of the AirTouch Shareholders
Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading. If at any time prior to the date of
the AirTouch Shareholders Meeting any information relating to AirTouch or
Vodafone, or any of their respective Affiliates, officers or directors,
should be discovered by AirTouch or Vodafone which should be set forth in
an amendment to the Form F-4 or a supplement to the AirTouch Proxy
Statement, so that such document would not include any misstatement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, the Party which
discovers such information shall promptly notify the other Party and, to
the extent required by Law, an appropriate amendment or supplement
describing such information shall be promptly filed with the SEC and, to
the extent required by law, disseminated to the AirTouch shareholders.
3.3.1.3. Each of Vodafone and AirTouch will use its best reasonable
efforts to cause the Vodafone Documents (as defined in Section 3.3.2.)
and the definitive AirTouch Proxy Statement, respectively, to be mailed
to its shareholders as promptly as practicable after the date hereof.
3.3.2. AirTouch and Vodafone shall cooperate with respect to and
Vodafone shall as promptly as practicable prepare and file with the LSE (a)
a circular to be sent to Vodafone shareholders in connection with the
Vodafone Shareholders Meeting (as defined in Section 3.4. (Shareholders
Meetings)) (the "VODAFONE CIRCULAR"), containing (i) a notice convening the
Vodafone Shareholders Meeting, (ii) such other information (if any) as may
be required by the LSE and the City Code and (iii) such other information as
Vodafone and AirTouch shall agree to include therein; and (b) listing
particulars relating to Vodafone and its Subsidiaries and the Vodafone
Ordinary Shares (the "VODAFONE LISTING PARTICULARS," and the Vodafone
Circular and the Vodafone Listing Particulars together being the "VODAFONE
DOCUMENTS"). AirTouch and Vodafone each agrees, as to itself and its
Subsidiaries, that the Vodafone Documents and any supplements thereto and
any other circulars or documents issued to shareholders, employees of
Vodafone, will contain all particulars relating to AirTouch and Vodafone
required to comply in all material respects with all United Kingdom
statutory and other legal provisions (including, without limitation, the
Companies Act, the Financial Services Act 1986 (the "FSA") and the rules and
regulations made thereunder, and the rules and requirements of the LSE and
the City Code) and all such information contained in such documents will be
substantially in accordance with the facts and will not omit anything
material likely to affect the import of such information.
3.4. SHAREHOLDERS MEETINGS. AirTouch will take all action necessary to
convene a meeting of the holders of AirTouch Common Shares and Class B Preferred
Shares at which the holders of AirTouch Common Shares and AirTouch Class B
Preferred Shares shall consider adoption of this Agreement and the transactions
contemplated hereby (including, without limitation, the Initial Merger) (the
"AIRTOUCH SHAREHOLDERS MEETING") as promptly as practicable after the Form F-4
has been declared effective by the SEC. Vodafone will take all action necessary
to convene an extraordinary general meeting of holders of Vodafone Ordinary
Shares at which resolutions will be proposed to approve the Merger and the other
matters specified in the next succeeding sentence (the "VODAFONE SHAREHOLDERS
MEETING") as promptly as practicable after the Vodafone Documents are cleared by
the LSE and the Form F-4 has been declared
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effective by the SEC. Vodafone shall propose at the Vodafone Shareholders
Meeting referred to above the following resolutions: (i) resolutions to approve
all of the following transactions or matters: (A) the Merger, (B) an increase in
the authorized ordinary share capital of Vodafone, and (C) the authorization of
the Vodafone Board to allot securities, including to AirTouch shareholders
pursuant to the Merger; (ii) resolutions to approve amendments to the Vodafone
Articles of Association to change the name of Vodafone to "Vodafone AirTouch
Plc"; (iii) resolutions to elect the New Directors (as defined in Section
3.8.3.) designated by AirTouch as directors of Vodafone, subject to the Merger
becoming effective; (iv) a resolution to approve amendments to the Vodafone
Articles of Association and other transactions necessary to effect the
Redenomination; (v) resolutions to increase the ordinary remuneration of
directors of Vodafone, to approve the rules of the Vodafone AirTouch Share
Option Plan and Vodafone AirTouch Long Term Incentive Plan and other
compensation or benefits for employees overseas which are based on the Vodafone
AirTouch Share Option Plan or the Vodafone AirTouch Long Term Incentive Plan;
and (vi) resolutions to amend the Vodafone Articles of Association to provide
for the delivery of notice of Vodafone Board meetings to Directors outside the
U.K., to provide for the appointment of multiple proxies by certain types of
shareholders, to provide that the Chairman of the Board of Directors shall not
have the casting vote, to permit the appointment of substitutes instead of the
proxies and to provide that special and extraordinary resolutions shall be taken
on a poll, to allow the issue of Bearer Shares, and to make certain other minor
amendments. Vodafone and AirTouch each agrees to use all reasonable efforts such
that, to the extent practical, the AirTouch Shareholders Meeting and the
Vodafone Shareholders Meeting shall be held as promptly as practicable after the
conditions precedent to holding such meetings have been fulfilled. Subject to
fiduciary obligations and the requirements of applicable Law and the terms of
this Agreement, including the provisions of Section 3.2. (Acquisition
Proposals), the board of directors of each of Vodafone and AirTouch shall
recommend to its respective shareholders the approval of the Merger and the
other transactions contemplated hereby and shall use best reasonable efforts to
solicit such approval.
3.5. FILINGS; OTHER ACTIONS; NOTIFICATION.
3.5.1. AirTouch and Vodafone shall each cooperate with the other and
(i) use (and shall use best reasonable efforts to cause their respective
Subsidiaries to use) all their respective best reasonable efforts promptly
to take or cause to be taken all actions, and do or cause to be done all
things, necessary, proper or advisable under this Agreement and applicable
Laws to consummate and make effective the Merger and the other transactions
contemplated by this Agreement as soon as practicable, including preparing
and filing as promptly as practicable all documentation to effect all
necessary filings, notices, petitions, statements, registrations,
submissions of information, applications and other documents, (ii) use (and
shall use best reasonable efforts to cause their respective Subsidiaries to
use) all their respective best reasonable efforts to obtain as promptly as
practicable all approvals, consents, registrations, permits, authorizations
and other confirmations required to be obtained from any third party (other
than AirTouch Required Consents and Vodafone Required Consents) necessary,
proper or advisable to consummate the Merger and the other transactions
contemplated by this Agreement and (iii) use (and shall use best reasonable
efforts to cause their respective Subsidiaries to use) their respective best
efforts to take or cause to be taken all actions, and do or cause to be done
all things, necessary, proper or advisable to obtain the AirTouch Required
Consents or Vodafone Required Consents, as the case may be (including,
without limitation, selling or otherwise disposing of or agreeing to dispose
of or hold separate such assets, categories of assets or businesses of
Vodafone (including Vodafone's investment in E-Plus Mobilfunk Gmbh) or
AirTouch as necessary to obtain, such AirTouch Required Consents or Vodafone
Required Consents; PROVIDED that neither Party shall be required by this
Section 3.5.1.(iii) to take any action or accept or agree to any conditions,
terms or restrictions in connection with any such AirTouch Required Consent
or Vodafone Required Consent, as the case may be, which, individually or in
the aggregate, would be reasonably expected to have a Material Adverse
Effect on Vodafone or AirTouch after the Effective Time (it being understood
that, for this purpose, materiality shall be considered with reference to
the total equity market value of
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Vodafone and AirTouch). Subject to applicable Laws relating to the exchange
of information, AirTouch and Vodafone shall have the right to review in
advance, and to the extent practicable each will consult the other on, all
the information relating to AirTouch and its Subsidiaries or Vodafone and
its Subsidiaries, as the case may be, that appears in any filing made with,
or written materials submitted to, any third party and/or any Governmental
Entity in connection with the Merger and the other transactions contemplated
by this Agreement. In exercising the foregoing right, each of AirTouch and
Vodafone shall act reasonably and as promptly as practicable.
3.5.2. AirTouch and Vodafone each shall, upon request by the other,
furnish the other with all information concerning itself, its Subsidiaries,
directors, officers and shareholders and such other matters as may be
reasonably necessary or advisable in connection with the Form F-4, the
AirTouch Proxy Statement, the Vodafone Documents or any other necessary or
appropriate filing, notice, statement, registration, submission of
information or application made by or on behalf of AirTouch or Vodafone or
any of their respective Subsidiaries to any third party and/or any
Governmental Entity in connection with the Merger and the other transactions
contemplated by this Agreement.
3.5.3. AirTouch and Vodafone each shall keep the other apprised of the
status of matters relating to completion of the Merger and the other
transactions contemplated by this Agreement, including promptly furnishing
the other with copies of notices or other communications received by
AirTouch or Vodafone, as the case may be, or any of its Subsidiaries, from
any third party and/or any Governmental Entity with respect to the Merger
and the other transactions contemplated by this Agreement. AirTouch and
Vodafone each shall give prompt notice to the other of any change that
would, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect on it or of any failure of any condition set forth
in Article IV to the other Party's obligations to effect the Merger.
3.5.4. Prior to making any filing, notice, petition, statement,
registration, submission of information or application to or with any third
party and/or Governmental Entity (including any domestic or foreign national
securities exchange) in connection with the consummation of the Merger and
the other transactions contemplated by this Agreement and except as may be
required by Law or by obligations pursuant to any listing agreement with or
rules of any domestic or foreign national securities exchange, each Party
shall make all reasonable efforts to consult with the other Party with
respect to the content of such filing, notice, petition, statement,
registration, submission of information or application and to provide the
other Party with copies of the proposed filing, notice, petition, statement,
registration, submission of information or application. AirTouch and
Vodafone each shall not agree to participate in any meeting with any
Governmental Entity in respect of any filings, investigation or other
inquiry relating to the Merger and the other transactions contemplated by
this Agreement unless it consults with the other Party in advance and, to
the extent practicable and permitted by such Governmental Entity, gives the
other Party the opportunity to attend and participate thereat.
3.5.5. In the event any claim, action, suit, investigation or other
proceeding by any Governmental Entity or other Person or other legal or
administrative proceeding is commenced that questions the validity or
legality of this Agreement or the Merger or the other transactions
contemplated by this Agreement or claims or damages in connection therewith,
the Parties agree to cooperate and use their best efforts, subject to the
limitations set forth in Section 3.5.1.(iii), to defend against and respond
thereto.
3.6. ACCESS. In order to facilitate consummation of the Merger and the
other transactions contemplated by this Agreement, the Parties hereby agree that
upon reasonable request to any executive officer of Vodafone or AirTouch, as the
case may be, designated for the purpose, and except as may otherwise be required
by applicable Law, AirTouch and Vodafone each shall (and shall cause its
Subsidiaries to) afford the other's Representatives access, during normal
business hours throughout the period prior to the
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Effective Time, to its properties, books, contracts and records and, during such
period, each shall (and shall cause its Subsidiaries to) furnish promptly to the
other all information concerning its business, properties and personnel as may
reasonably be requested, PROVIDED that no receipt of information pursuant to
this Section shall affect or be deemed to modify any representation or warranty
made by AirTouch or Vodafone hereunder, and PROVIDED, FURTHER, that the
foregoing shall not require AirTouch or Vodafone to permit any inquiry, or to
disclose any information, that in the reasonable judgment of AirTouch or
Vodafone, as the case may be, would (i) violate any antitrust or competition Law
or (ii) result in the disclosure of any trade secrets of third Parties or
violate any of its obligations with respect to confidentiality to third Parties
if AirTouch or Vodafone, as the case may be, shall have used reasonable efforts
to obtain the consent of such third party to such inspection or disclosure. All
such information shall be governed by the terms of the Confidentiality
Agreement, dated as of January 6, 1999, between the Parties (the
"CONFIDENTIALITY AGREEMENT"), including without limitation all such information
disclosed in the Disclosure Letters.
3.7. PUBLICITY. The initial press release concerning this Agreement, the
Merger and the other transactions contemplated by this Agreement shall be a
joint press release, and thereafter AirTouch and Vodafone shall consult with
each other prior to issuing any press releases or otherwise making public
announcements with respect to the Merger and the other transactions contemplated
by this Agreement.
3.8. BENEFITS AND OTHER MATTERS.
3.8.1. EMPLOYEE BENEFITS.
3.8.1.1. It is the specific intention that the compensation and
benefit programs (including annual and long- term incentive programs) to
be provided by Vodafone and its Subsidiaries for current and former
employees and directors of AirTouch will be competitive with those
provided generally by large industrial companies for each respective
home-country market, both with respect to the type and variety of
programs as well as the level of compensation and benefits afforded.
3.8.1.2. (a) Without limiting the generality of Section 3.8.1.1.,
Vodafone shall cause the AirTouch compensation and benefit plans in
effect on the date hereof to remain in effect for at least one year after
the Effective Time without change to the eligibility provisions and
levels of benefits provided thereunder.
(b) Following the Effective Time, Vodafone shall, and shall cause its
Subsidiaries to, recognize service with AirTouch and its Subsidiaries and
any predecessor entities (and any other service credited by AirTouch
under similar benefit plans) prior to the Effective Time for all purposes
(including, without limitation, eligibility to participate, vesting,
benefit accrual, eligibility to commence benefits and severance) under
any benefit plans of Vodafone or its Subsidiaries in which the particular
employee or former employee of AirTouch (or its respective Subsidiaries)
participates; PROVIDED, HOWEVER, that the foregoing shall not result in
any duplication of benefits for the same period of service. From and
after the Effective Time, Vodafone shall, and shall cause its
Subsidiaries to, (i) recognize any and all appropriate out-of-pocket
expenses of each employee or former employee of AirTouch and its
Subsidiaries for purposes of determining such employee's and former
employee's (including their beneficiaries and dependents) deductible and
copayment expenses and (ii) cause to be waived any provision which
restricts benefits by reason of pre-existing conditions.
3.8.1.3. From and after the Effective Time, Vodafone shall honor,
and shall cause its Subsidiaries to honor, in accordance with its terms,
each existing employment, change of control, severance and termination
agreement between AirTouch or any of its Subsidiaries, and any
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officer, director or employee of such company, including without
limitation all legal and contractual obligations pursuant to outstanding
bonus deferral plans, vested and accrued benefits and similar employment
and benefit arrangements and agreements in effect as of the Effective
Time.
3.1.8.4. Vodafone agrees that for three years following the
Effective Time it shall maintain a significant business presence in the
San Francisco Bay Area, including, but not limited to maintaining the Bay
Area Research Tech Facility. In addition, Vodafone agrees that AirTouch's
San Francisco office shall initially be maintained as Vodafone's
U.S./Asia Pacific regional headquarters.
3.8.2. DIRECTOR AND OFFICER INDEMNIFICATION AND INSURANCE.
(a) Vodafone agrees that all rights to indemnification and all
limitations on liability existing in favor of any Indemnitee (as defined
below) in respect of acts or omissions of such Indemnitees on or prior to
the Effective Time as provided in the certificate of incorporation and
by-laws of AirTouch and each of its Subsidiaries or an agreement between
an Indemnitee and AirTouch or any of its Subsidiaries in effect as of the
date hereof shall continue in full force and effect in accordance with
the terms thereof.
(b) For six years after the Effective Time, Vodafone shall indemnify
and hold harmless the individuals who on or prior to the Effective Time
were officers or directors or agents of AirTouch or any of its
Subsidiaries (the "INDEMNITEES") to the same extent indemnification is
provided as of the date hereof with respect to all actions or omissions
by them in their capacities as officers or directors or agents of
AirTouch, or taken by them at the request of, AirTouch or any of its
Subsidiaries. In the event any claim in respect of which indemnification
is available pursuant to the foregoing provisions is asserted or made
within the period specified in the previous sentence, all rights to
indemnification shall continue until such claim is disposed of or all
judgments, orders, decrees or other rulings in connection with such claim
are duly satisfied.
(c) For six years after the Effective Time, Vodafone shall procure
the provision of officers' and directors' liability insurance in respect
of acts or omissions occurring prior to the Effective Time covering each
such Person currently covered by AirTouch's officers' and directors'
liability insurance on terms with respect to coverage and in amounts no
less favorable than those of such policy in effect on the date hereof;
PROVIDED, HOWEVER, that during such period, Vodafone shall not be
required to procure any coverage in excess of the amount that can be
obtained for the remainder of such period for an annual premium of 150%
of the current annual premium paid by AirTouch for its existing coverage.
(d) The obligations of Vodafone under this Section 3.8.2. shall not
be terminated or modified in such a manner as to adversely affect any
Indemnitee to whom this Section 3.8.2. applies without the consent of
such affected Indemnitee (it being expressly agreed that the Indemnitees
to whom this Section 3.8.2. applies shall be third party beneficiaries of
this Section 3.8.2.).
3.8.3. DIRECTORS OF VODAFONE. At the Effective Time, the board of
directors of Vodafone AirTouch Plc shall consist of 14 directors, 7 of which
shall be directors designated prior to the Effective Time by Vodafone, of
which 3 shall be non-executive directors, and 7 of which shall be directors
designated by AirTouch, of which 5 shall be non-executive directors, and
such AirTouch and Vodafone director designees shall be the "NEW DIRECTORS."
Those New Directors designated by AirTouch shall be nominated for election
as directors of Vodafone AirTouch Plc with effect from the Effective Time.
Vodafone agrees to procure such resignations of its respective directors as
may be necessary so that at the Effective Time the New Directors are the
only directors of Vodafone AirTouch Plc. At the Effective Time, the current
chief executive officer of AirTouch, so long as he is willing and able to
serve, shall be appointed the Non-Executive Chairman of Vodafone AirTouch
Plc.
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At the Effective Time, one of the New Directors selected by Vodafone who is
a non-executive director shall be appointed as Deputy Chairman of Vodafone
AirTouch Plc. The Deputy Chairman shall be appointed as Chairman of the
Nominations Committee of the Vodafone AirTouch Plc board of directors. The
present Chairman of AirTouch shall be appointed as Chairman of the
remuneration committee of the Vodafone AirTouch Plc board of directors.
Following the Effective Time, a majority of the meetings of the board of
directors of Vodafone AirTouch Plc in each year shall be held in England.
3.8.4. OFFICERS. At the Effective Time, the current Chief Executive
Officer of Vodafone, so long as he is willing and able to serve, shall be
appointed the Chief Executive Officer of Vodafone AirTouch Plc and the
current President and Chief Operating Officer of AirTouch, so long as he is
willing and able to serve, shall be appointed Regional Chief Executive
Officer of Vodafone AirTouch Plc for Vodafone's U.S./Asia Pacific region and
Manager, Bay Area Research Tech Facility. All executive directors will
report to the Chief Executive Officer of Vodafone AirTouch Plc.
3.9. EXPENSES. Except as otherwise provided in Section 5.5. (Effect of
Termination and Abandonment), whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement, the Merger and
the other transactions contemplated by this Agreement shall be paid by the Party
incurring such expense, except that the Parties shall share equally the costs
and expenses of filing, printing and distributing the Form F-4, the AirTouch
Proxy Statement, the Vodafone Documents and related documents. Any real property
transfer, stamp or similar tax imposed on the stockholders of AirTouch in
connection with this Agreement and the transactions contemplated hereby shall be
paid solely by AirTouch from its own cash on hand or out of its own borrowings.
In no event shall Vodafone or its affiliates provide directly or indirectly any
funds to AirTouch in respect of any such payments or the repayment of any such
borrowings. Prior to the Effective Time, AirTouch will deposit in escrow cash
and/or cash equivalents in an amount sufficient to satisfy any such payment
obligation to, or on behalf of, its stockholders. Any such payment obligation
will be satisfied solely out of the deposited escrowed funds.
3.10. TAKEOVER STATUTES. If any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement, each of AirTouch and Vodafone and its board of directors shall,
subject to applicable Law, grant such approvals and take such actions as are
necessary so that the Merger and the other transactions contemplated by this
Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement, and otherwise act to eliminate or minimize the
effects of such Takeover Statute on such transactions.
3.11. LISTING APPLICATIONS/ESTABLISHMENT OF VODAFONE DEPOSITARY
SHARES. Vodafone shall promptly prepare and submit to the LSE a listing
application with respect to the Vodafone Ordinary Shares, and to the NYSE a
listing application in respect of the Vodafone Ordinary Shares represented by
Vodafone Depositary Shares issuable in the Merger, and shall use its best
efforts to obtain, prior to the Effective Time, approval for the listing of such
Vodafone Ordinary Shares, in the case of the LSE, subject to allotment, and such
Vodafone Ordinary Shares represented by Vodafone Depositary Shares, in the case
of the NYSE, subject to official notice of issuance under the symbol "VOD", or
such other symbol as the Parties agree. Vodafone will enter into all necessary
agreements with the Depositary and other Parties to establish the Vodafone
Depositary Shares issuable pursuant to the Merger. Vodafone will not take any
action to cause its Ordinary Shares to cease to be listed on the LSE or the
Vodafone Depositary Shares evidenced by Vodafone ADRs to cease to be listed on
the NYSE prior to the Effective Time.
3.12. LETTERS OF ACCOUNTANTS.
(a) AirTouch shall use its best reasonable efforts to cause to be
delivered to Vodafone "comfort" letters of PricewaterhouseCoopers LLP,
AirTouch's independent public accountants, dated the effective date of the
Form F-4 and the Closing Date, respectively, and addressed to Vodafone and
its directors, in form reasonably satisfactory to Vodafone and customary in
scope and substance for
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"comfort" letters delivered by independent public accountants in connection
with registration statements similar to the Form F-4.
(b) Vodafone shall use its best reasonable efforts to cause to be
delivered to AirTouch "comfort" letters of Deloitte & Touche, Vodafone's
independent public accountants, dated the effective date of the Form F-4 and
the Closing Date, respectively, and addressed to AirTouch and its directors,
in form reasonably satisfactory to AirTouch and customary in scope and
substance for "comfort" letters delivered by independent public accountants
in connection with registration statements similar to the Form F-4.
3.13. AGREEMENTS OF AIRTOUCH RULE 145 AFFILIATES. Prior to the date of the
AirTouch Shareholders Meeting, AirTouch shall cause to be prepared and delivered
to Vodafone a list identifying all persons who, at the time of the AirTouch
Shareholders Meeting, AirTouch believes may be deemed to be "affiliates" of
AirTouch for purposes of Rule 145 under the Securities Act (the "AIRTOUCH RULE
145 AFFILIATES"). Vodafone shall be entitled to place customary restrictive
legends on any Vodafone ADRs (or any underlying Vodafone Ordinary Shares that
may be withdrawn upon surrender of such Vodafone ADRs) received by such AirTouch
Rule 145 Affiliates. AirTouch shall use its best efforts to cause each person
who is identified as an AirTouch Rule 145 Affiliate in such list to deliver to
Vodafone, at or prior to the date of the AirTouch Shareholders Meeting, a
written agreement, in the form to be approved by the Parties, that such AirTouch
Rule 145 Affiliate will not sell, pledge, transfer or otherwise dispose of any
Vodafone Depositary Shares issued to such AirTouch Rule 145 Affiliate pursuant
to the Merger (or any underlying Vodafone Ordinary Shares that may be withdrawn
upon surrender of such Vodafone Depositary Shares), except pursuant to an
effective registration statement or in compliance with Rule 145 or an exemption
from the registration requirements of the Securities Act. Vodafone shall not
register the transfer of any Vodafone Ordinary Shares and shall cause the
Depositary not to register the transfer of any Vodafone Depositary Shares unless
such transfer is made in compliance with the foregoing.
3.14. ACCOUNTING MATTERS. The Parties agree that after the Closing the
primary consolidated financial statements of Vodafone shall be prepared in
accordance with U.K. GAAP.
3.15. TRANSITION PLANNING. The existing Chief Executive Officers of
Vodafone and AirTouch, respectively, shall be jointly responsible for
coordinating all aspects of transition planning and implementation relating to
the Merger and the other transactions contemplated hereby; PROVIDED, HOWEVER,
that it is understood and agreed that this Section 3.15. shall not apply to the
provisions of Section 3.8.3. or 3.8.4. hereof and that the corporate
headquarters of Vodafone will remain at Newbury, England. If either such Person
ceases to be Chief Executive Officer of his respective company for any reason,
such Person's successor as Chief Executive Officer shall assume his or her
predecessor's responsibilities under this Section 3.15. During the period
between the date hereof and the Effective Time, such Chief Executive Officers
shall jointly (i) examine various alternatives regarding the business of
AirTouch after the Effective Time, and (ii) coordinate policies and strategies
with respect to regulatory authorities and bodies, in all cases subject to
applicable law. Such Chief Executive Officers shall establish committees to
assist them in various aspects of the transition planning and implementation
process including, without limitation, committees on employee transition issues,
which committees shall consist of representatives of both Vodafone and AirTouch
to be designated by their respective Chief Executive Officers.
3.16. VODAFONE SEC FILINGS. Beginning as soon as practicable after the
Effective Time, and in any event within two years thereof, Vodafone agrees that
it will (i) make filings with the SEC on Form 6-K within 45 days after the end
of each of its first three fiscal quarters in each of its fiscal years
containing the principal financial information required by Form 10-Q and (ii)
make any requisite filings on Form 20-F with the SEC within 90 days after the
end of each of its fiscal years or, in each case, within such shorter time
period as would be required for a U.S. SEC reporting issuer.
3.17. INITIAL MERGER. As soon as practicable after the AirTouch
Shareholders Meeting, AirTouch shall execute and file with the Secretary of
State of the State of Delaware a certificate of merger with
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respect to the Initial Merger and make all other filings or recordings required
by law in connection with the Initial Merger.
3.18. NOTIFICATION OF CERTAIN MATTERS. Each of AirTouch and Vodafone shall
give prompt notice to the other upon obtaining knowledge of any of the
following:
3.18.1. the occurrence or nonoccurrence of any event whose occurrence
or nonoccurrence would be likely to cause either (i) any representation or
warranty 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
(ii) directly or indirectly, any Material Adverse Effect on such Party;
3.18.2. any material failure of such Party, or any officer, director,
employee or agent thereof, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder, and
3.18.3. any facts relating to such Party which would make it necessary
or advisable to amend the AirTouch Proxy Statement or the Form F-4 in order
to make the statements therein not misleading or to comply with applicable
law;
PROVIDED, HOWEVER, that the delivery of any notice pursuant to this Section
3.18. shall not limit or otherwise affect the remedies available hereunder to
the Party receiving such notice.
3.19. ASSUMPTION OF U.S. WEST INVESTMENT AGREEMENT. At the Effective Time,
Vodafone will assume the obligations of AirTouch under Articles V and VI of the
Amended and Restated Investment Agreement, dated as of April 6, 1998, between
AirTouch and U.S. West, Inc. solely to the extent provided in Section 6.9. of
such Agreement.
3.20. AIRTOUCH TREASURY SHARES. Prior to the Effective Time, the Board of
Directors of AirTouch shall have taken all corporate action necessary to retire
all AirTouch Common Shares that are issued but not outstanding.
ARTICLE IV
CONDITIONS
4.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of Vodafone, Merger Sub and AirTouch to effect the Merger
are subject to the satisfaction or waiver of each of the following conditions:
4.1.1. SHAREHOLDER APPROVALS. This Agreement and the transactions
contemplated by this Agreement (including the Initial Merger) shall have
been duly adopted by holders of AirTouch Common Shares and Class B Preferred
Shares constituting the AirTouch Requisite Vote and the Merger and the
Vodafone Requisite Resolution shall have been duly approved by the
shareholders of Vodafone constituting the Vodafone Requisite Vote.
4.1.2. REGULATORY CONSENTS. All AirTouch Required Consents and
Vodafone Required Consents from or with any Governmental Entity
(collectively, "GOVERNMENTAL CONSENTS") in connection with the consummation
of the Merger and the other transactions contemplated hereby shall have been
made or obtained, except where the failure to obtain such Governmental
Consent would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on Vodafone or AirTouch after the
Effective Time, it being understood and agreed that, for this purpose,
materiality shall be considered with reference to the total equity market
value of Vodafone and AirTouch and that the failure to obtain the approval
of the FCC and, to the extent such approval is necessary, the California
Public Utilities Commission, of the transaction contemplated by this
Agreement shall in any event be deemed to have a Material Adverse Effect,
notwithstanding such reference to such total equity market value, and such
Governmental Consents shall not contain any terms or impose any condition or
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restriction relating or applying to, or requiring changes in or limitations
on, the operation of any asset or businesses of AirTouch, Vodafone or any of
their respective Subsidiaries which term, condition or restriction,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on Vodafone or AirTouch after the Effective Time (it
being understood that, for this purpose, materiality shall be considered
with reference to the total equity market value of Vodafone and AirTouch).
4.1.3. LAWS AND ORDERS. No Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any Law (whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits the consummation of the Merger or
the other transactions contemplated by this Agreement or that would
materially frustrate the express intent and purposes of this Agreement
(collectively, an "ORDER"), and no Governmental Entity shall have instituted
or threatened any proceeding seeking any such Order.
4.1.4. EFFECTIVENESS OF FORM F-4. The Form F-4 shall have become
effective prior to the mailing of the AirTouch Proxy Statement to its
stockholders, no stop order suspending the effectiveness of the Form F-4
shall then be in effect, and no proceedings for that purpose shall then be
threatened by the SEC or shall have been initiated by the SEC and not
concluded or withdrawn; and all state securities or "BLUE SKY" permits or
approvals required to carry out the transactions contemplated hereby shall
have been received.
4.1.5. EXCHANGE LISTING. The Vodafone Ordinary Shares to be issued
pursuant to the Merger shall have been admitted to the Official List of the
LSE and such admission shall have become effective in accordance with the
rules and regulations of the LSE and the Vodafone Depositary Shares shall
have been authorized for listing on the NYSE, subject to official notice of
issuance.
4.1.6. INITIAL MERGER. The Initial Merger shall have been consummated.
4.2. CONDITIONS TO OBLIGATIONS OF VODAFONE AND MERGER SUB. The obligations
of Vodafone and Merger Sub to effect the Merger are also subject to the
satisfaction or waiver by Vodafone and Merger Sub prior to the Effective Time of
the following conditions:
4.2.1. REPRESENTATIONS AND WARRANTIES OF AIRTOUCH. The representations
and warranties of AirTouch set forth in this Agreement (i) to the extent
qualified by Material Adverse Effect shall be true and correct and (ii) to
the extent not qualified by Material Adverse Effect shall be true and
correct in each case, when made and as of the Closing Date (except that any
representation and warranty that by its terms expressly speaks as of a
specific date shall be true and correct as of such date) (PROVIDED that this
clause (ii) shall be deemed satisfied so long as any failures of such
representations and warranties to be true and correct would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on AirTouch), and Vodafone shall have received a certificate
signed on behalf of AirTouch by an executive officer of AirTouch to such
effect.
4.2.2. PERFORMANCE OF OBLIGATIONS OF AIRTOUCH. AirTouch shall have
performed all material obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and Vodafone shall have received
a certificate signed on behalf of AirTouch by an executive officer of
AirTouch to such effect.
4.2.3. CONSENTS UNDER AGREEMENTS. Consent or approval shall have been
obtained from each Person whose consent or approval shall be required in
order to consummate the Merger and the other transactions contemplated by
this Agreement under any Contract to which Vodafone or AirTouch or any of
their respective Subsidiaries is a party, except those for which the failure
to obtain such consent or approval, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on Vodafone or
AirTouch, as the case may be, and would not reasonably be likely to prevent
or materially impair the ability of Vodafone or AirTouch to consummate the
Merger and the other transactions contemplated by this Agreement.
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4.2.4. TAX OPINION. Vodafone shall have received an opinion from
Sullivan & Cromwell, dated as of the Effective Time, substantially to the
effect that, on the basis of the facts, representations and assumptions set
forth in such opinion, (i) the Merger will be treated for U.S. federal
income tax purposes as a reorganization within the meaning of Section 368(a)
of the Code and (ii) Vodafone shall be treated as a corporation under
Section 367(a)(1) of the Code with respect to each transfer of property
thereto pursuant to the Merger. In rendering such opinion, counsel may
require and rely upon representations of Vodafone and AirTouch, including
representations and covenants substantially in the form of those contained
in the Vodafone officer's certificates and the AirTouch officer's
certificates attached hereto as Exhibits 3.1.5.1 and Exhibits 3.1.5.2, and,
in addition, may rely upon an opinion of a nationally recognized investment
bank setting forth the fair market value as of the Effective Time of the
aggregate outstanding shares of each of the Class C Preferred Shares, Class
D Preferred Shares and Class E Preferred Shares and the aggregate fair
market value immediately after the Effective Time of the Vodafone Ordinary
Shares (represented by Vodafone Depositary Shares) issued to stockholders of
AirTouch in the Merger as compared to the aggregate fair market value
immediately after the Effective Time of all outstanding Vodafone Ordinary
Shares. The opinion referred to in this Section 4.2.4. shall be based upon
the Private Letter Ruling, if obtained. The opinion set forth in clause (ii)
above shall not address the tax consequences applicable to any stockholder
of AirTouch who, immediately after the Merger will be a "FIVE PERCENT
TRANSFEREE SHAREHOLDER" with respect to Vodafone within the meaning of
United States Treasury Regulation Section 1.367(a)-3(c)(5).
4.3. CONDITIONS TO OBLIGATION OF AIRTOUCH. The obligation of AirTouch to
effect the Merger is also subject to the satisfaction or waiver by AirTouch
prior to the Effective Time of the following conditions:
4.3.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Vodafone set forth in this Agreement (i) to the extent
qualified by Material Adverse Effect shall be true and correct, and (ii) to
the extent not qualified by Material Adverse Effect shall be true and
correct, in each case, when made and as of the Closing Date (except that any
representation and warranty that by its terms expressly speaks as of a
specific date shall be true and correct as of such date) (PROVIDED that this
clause (ii) shall be deemed satisfied so long as any failures of such
representations and warranties to be true and correct, taken together, would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Vodafone), and AirTouch shall have received a
certificate signed on behalf of Vodafone by an executive officer of Vodafone
to such effect.
4.3.2. PERFORMANCE OF OBLIGATIONS OF VODAFONE. Vodafone shall have
performed all material obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and AirTouch shall have received
a certificate signed on behalf of Vodafone by an executive officer of
Vodafone to such effect.
4.3.3. CONSENTS UNDER AGREEMENTS. Consent or approval shall have been
obtained from each Person whose consent or approval shall be required in
order to consummate the Merger and the other transactions contemplated by
this Agreement under any Contract to which Vodafone or AirTouch or any of
their respective Subsidiaries is a party, except those for which the failure
to obtain such consent or approval, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on Vodafone or
AirTouch, as the case may be, and would not reasonably be likely to prevent
or materially impair the ability of Vodafone or AirTouch to consummate the
Merger and the other transactions contemplated by this Agreement.
4.3.4. TAX OPINION. AirTouch shall have received an opinion from
Fried, Frank, Harris, Shriver & Jacobson, dated as of the Effective Time,
substantially to the effect that, on the basis of the facts, representations
and assumptions set forth in such opinion, (i) the Merger will be treated
for U.S. federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code and (ii) Vodafone shall be treated as a
corporation under Section 367(a)(1) of the Code with respect to
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each transfer of property thereto pursuant to the Merger. In rendering such
opinion, counsel may require and rely upon representations of Vodafone and
AirTouch, including representations and covenants substantially in the form
of those contained in the Vodafone officer's certificates and the AirTouch
officer's certificates attached hereto as Exhibits 3.1.5.1 and Exhibits
3.1.5.2, and, in addition, may rely upon an opinion of a nationally
recognized investment bank setting forth the fair market value as of the
Effective Time of the aggregate outstanding shares of each of the Class C
Preferred Shares, Class D Preferred Shares and Class E Preferred Shares and
the aggregate fair market value immediately after the Effective Time of the
Vodafone Ordinary Shares (represented by Vodafone Depositary Shares) issued
to stockholders of AirTouch in the Merger as compared to the aggregate fair
market value immediately after the Effective Time of all outstanding
Vodafone Ordinary Shares. The opinion referred to in this Section 4.3.4.
shall be based upon the Private Letter Ruling, if obtained. The opinion set
forth in clause (ii) above shall not address the tax consequences applicable
to any stockholder of AirTouch who, immediately after the Merger, will be a
"five-percent transferee shareholder" with respect to Vodafone within the
meaning of United States Treasury Regulation Section 1.367(a)-3(c)(5).
4.3.5. SUPPLEMENTAL RESOLUTIONS. The Vodafone Supplemental Resolutions
(including the election of those New Directors designated by AirTouch, but
excluding the resolutions relating to the Redenomination) shall have been
approved by the shareholders of Vodafone constituting the Vodafone
Supplemental Vote.
ARTICLE V
TERMINATION
5.1. TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approvals by the shareholders of AirTouch and Vodafone
referred to in paragraph 4.1.1 (Shareholder Approvals), by mutual written
consent of AirTouch and Vodafone, by action of their respective boards of
directors.
5.2. TERMINATION BY EITHER VODAFONE OR AIRTOUCH. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the board of directors of either Vodafone or AirTouch if (i)
the Merger shall not have been consummated by December 31, 1999, whether such
date is before or after the date of the approvals by the shareholders of
AirTouch or Vodafone (the "TERMINATION DATE"), PROVIDED, HOWEVER, that if on
such date the Conditions to the Closing set forth in Section 4.1.2. shall not
have been fulfilled, but all other conditions to the Closing shall have been
fulfilled or shall be capable of being fulfilled, at the election of the board
of directors of either AirTouch or Vodafone, the Termination Date shall be
extended to March 31, 2000; (ii) any Order permanently restraining, enjoining or
otherwise prohibiting the consummation of the Merger shall have become final and
non-appealable, whether before or after the approvals by the shareholders of
AirTouch or Vodafone; (iii) the AirTouch Requisite Vote shall not have been
obtained at the duly held AirTouch Shareholders Meeting, including any
adjournments or postponements thereof; or (iv) the Vodafone Requisite Vote shall
not have been obtained at the duly held Vodafone Shareholders Meeting, including
any adjournments or postponements thereof; PROVIDED that the right to terminate
this Agreement shall not be available to a Party that has breached in any
material respect its obligations under this Agreement in any manner that shall
have proximately contributed to the failure of the Merger to be consummated.
5.3. TERMINATION BY AIRTOUCH. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after the approval by stockholders of AirTouch referred to in paragraph 4.1.1
(Shareholder Approvals), by action of the board of directors of AirTouch, if (i)
the board of directors of Vodafone shall have withdrawn or adversely modified
its approval or recommendation to shareholders of the Merger or failed to
reconfirm such recommendation within seven business days after a written request
by AirTouch to do so; (ii) Vodafone or its board of directors
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<PAGE>
shall recommend an Acquisition Proposal to its shareholders; (iii) there shall
be a breach by Vodafone of any representation, warranty, covenant or agreement
contained in this Agreement which would result in a failure of a condition set
forth in paragraph 4.3.1 or 4.3.2 and cannot be or is not cured prior to the
Termination Date; or (iv) the board of directors of Vodafone shall have withheld
the Increased Cash Consent.
5.4. TERMINATION BY VODAFONE. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after the approval by the shareholders of Vodafone referred to in paragraph
4.1.1 (Shareholder Approvals), by action of the board of directors of Vodafone,
if (i) the board of directors of AirTouch shall have withdrawn or adversely
modified its approval or recommendation to stockholders of the Merger or failed
to reconfirm such recommendation within seven business days after a written
request by Vodafone to do so; or (ii) AirTouch or its board of directors shall
recommend an Acquisition Proposal to its stockholders; or (iii) there shall be a
breach by AirTouch of any representation, warranty, covenant or agreement
contained in this Agreement which would result in a failure of a condition set
forth in paragraph 4.2.1 or 4.2.2 and cannot be or is not cured prior to the
Termination Date.
5.5. EFFECT OF TERMINATION AND ABANDONMENT.
5.5.1. In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article V, this Agreement (other
than as set forth in Section 6.1. (Survival)) shall become void and of no
effect with no liability on the part of either Party (or of any of its
Representatives); PROVIDED, HOWEVER, that no such termination shall relieve
either Party of any liability for damages resulting from any willful and
intentional breach of this Agreement or from any obligation to pay, if
applicable, the amounts payable pursuant to Section 5.5.2. or 5.5.3.
5.5.2. In the event that (i) this Agreement is terminated by either
AirTouch or Vodafone pursuant to Section 5.2.(iii) and at the time of the
AirTouch Shareholders Meeting (or at any adjournment thereof) an Acquisition
Proposal exists with respect to AirTouch or (ii) this Agreement is
terminated by Vodafone pursuant to Section 5.4.(i), 5.4(ii) or 5.4(iii)
(solely with respect to a willful and intentional breach of a
representation, warranty, covenant or agreement of AirTouch contained in
this Agreement), then AirTouch shall promptly, but in no event later than
two business days after the date of such termination, pay to Vodafone a
termination payment equal to the AirTouch Termination Amount (as defined
below), which amount shall be exclusive of any expenses to be paid pursuant
to Section 3.9. (Expenses), payable by wire transfer of same day funds. The
term "AirTouch Termination Amount" shall mean, in the case of termination by
Vodafone pursuant to clause (ii) of the preceding sentence, $1,000,000,000
(inclusive of value added tax, if any) or, in the case of termination by
AirTouch or Vodafone pursuant to clause (i) of the preceding sentence,
"AIRTOUCH TERMINATION AMOUNT" shall mean $225,000,000 (inclusive of value
added tax, if any), plus, if (x) AirTouch executes and delivers an agreement
with respect to any Acquisition Proposal (an "AIRTOUCH ALTERNATIVE
AGREEMENT") or (y) an Acquisition Proposal with respect to AirTouch is
consummated, in any such case, within 12 months from the date of
termination, an additional $775,000,000 (inclusive of value added tax, if
any) (which additional amount shall be paid promptly but in no event later
than two business days after the earliest date on which the event requiring
AirTouch to pay such additional sum occurs). In the event that the board of
directors of AirTouch recommends the acceptance by AirTouch stockholders of
a third-party tender or exchange offer for the AirTouch Common Shares, such
recommendation shall be treated for purposes of this paragraph as though an
AirTouch Alternative Agreement had been executed. AirTouch acknowledges that
the agreements contained in this Section 5.5.2. are an integral part of the
transactions contemplated by this Agreement, and that, without these
agreements, Vodafone would not enter into this Agreement; accordingly, if
AirTouch fails promptly to pay any amount due pursuant to this Section
5.5.2., and, in order to obtain such payment, Vodafone commences a suit
which results in a judgment against AirTouch for the payment set forth in
this Section 5.5.2., AirTouch shall pay to Vodafone its costs and expenses
(including attorneys' fees) in
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connection with such suit, together with interest on the amount due from
each date for payment until the date of such payment at the prime rate of
Citibank N.A. in effect on the date such payment was required to be made
plus 2 percent.
5.5.3. In the event that (i) this Agreement is terminated by either
AirTouch or Vodafone pursuant to Section 5.2.(iv), or (ii) this Agreement is
terminated by AirTouch pursuant to Section 5.3.(i), 5.3.(ii) or 5.3.(iii)
(solely with respect to a willful and intentional breach of a
representation, warranty, covenant or agreement of Vodafone contained in
this Agreement), then Vodafone shall promptly, but in no event later than
two business days after the date of such termination, pay to AirTouch a
termination payment equal to the Vodafone Termination Amount (as defined
below), which amount shall be exclusive of any expenses to be paid pursuant
to Section 3.9. (Expenses), payable by wire transfer of same day funds. The
term "Vodafone Termination Amount" shall mean $225,000,000 (inclusive of
value added tax, if any). Vodafone acknowledges that the agreements
contained in this Section 5.5.3. are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, AirTouch
would not enter into this Agreement; accordingly, if Vodafone fails promptly
to pay any amount due pursuant to this Section 5.5.3., and, in order to
obtain such payment, AirTouch commences a suit which results in a judgment
against Vodafone for the payment set forth in this Section 5.5.3., Vodafone
shall pay to AirTouch its costs and expenses (including attorneys' fees) in
connection with such suit, together with interest on the amount due from
each date for payment until the date of such payment at the prime rate of
Citibank N.A. in effect on the date such payment was required to be made
plus 2 percent.
ARTICLE VI
MISCELLANEOUS AND GENERAL
6.1. SURVIVAL. This Article VI and the agreements of AirTouch and Vodafone
contained in Article I, Sections 3.8. (Benefits and Other Matters), 3.14
(Accounting Matters), 3.16 (Vodafone SEC Filings) and Section 3.19. (Assumption
of U.S. West Investment Agreement) shall survive the Effective Time. This
Article VI (other than Section 6.2. (Modification or Amendment) and Section 6.3.
(Waiver)), the representations and warranties contained in Section 2.1.3.
(Corporate Authority; Approval and Fairness), the agreements of AirTouch and
Vodafone contained in Section 3.9. (Expenses), Section 5.5. (Effect of
Termination and Abandonment), and the last sentence of Section 3.6. (Access)
shall survive the termination of this Agreement. Nothing contained herein shall
limit any covenant or agreement of the Parties which by its terms contemplates
performance after the Effective Time. All other representations, warranties,
agreements and covenants in this Agreement shall not survive the Effective Time
or the termination of this Agreement.
6.2. MODIFICATION OR AMENDMENT. This Agreement may be modified or amended
by agreement of the Parties, by action taken or authorized by their respective
boards of directors, at any time prior to the Effective Time; PROVIDED, HOWEVER,
that, after approval by shareholders of the matters presented at the AirTouch
Shareholders Meeting or the Vodafone Shareholders Meeting, no modification or
amendment shall be made which under applicable Law requires further approval by
such shareholders without such further approval. This Agreement may not be
modified or amended except by an instrument in writing executed and delivered by
duly authorized officers of each of the Parties.
6.3. WAIVER. Any provision of this Agreement may be waived prior to the
Effective Time if, and only if, such waiver is in writing and signed by the
Party against whom the waiver is to be effective.
6.4. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or
delay by any Party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. Except as otherwise herein provided, the rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by Law.
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6.5. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
6.6. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
6.6.1. THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN NEW YORK, AND IN
ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS TO
BE PERFORMED WHOLLY IN SUCH STATE, EXCEPT TO THE EXTENT THAT IN THE CASE OF
AIRTOUCH OR MERGER SUB, THE DELAWARE GENERAL CORPORATION LAW AND, IN THE
CASE OF VODAFONE, THE COMPANIES ACT AND ENGLISH LAW ARE APPLICABLE. The
Parties hereby irrevocably submit to the jurisdiction of the federal courts
of the United States of America located in the Borough of Manhattan, New
York State solely in respect of the interpretation and enforcement of the
provisions of this Agreement and in respect of the transactions contemplated
hereby waive, and agree not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement hereof, 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 venue thereof may not be
appropriate or that this Agreement may not be enforced in or by such courts,
and the Parties irrevocably agree that all claims with respect to such
action or proceeding shall be heard and determined in such a federal court.
The Parties hereby consent to and grant any such court jurisdiction over the
person of such Parties and over the subject matter of such dispute and agree
that mailing of process or other papers in connection with any such action
or proceeding in the manner provided in Section 6.7. (Notices), or in such
other manner as may be permitted by Law, shall be valid and sufficient
service thereof.
6.6.2. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH
PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND WITH THE ADVICE OF
COUNSEL HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 6.6.
6.7. NOTICES. Notices, requests, instructions or other documents to be
given under this Agreement shall be in writing and shall be deemed given, (i)
when sent if sent by facsimile, PROVIDED that the facsimile is promptly
confirmed by telephone confirmation thereof, (ii) when delivered, if delivered
personally to the
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<PAGE>
intended recipient, and (iii) one business day later, if sent by overnight
delivery via a national courier service, and in each case, addressed to a Party
at the following address for such Party:
IF TO AIRTOUCH:
AirTouch Communications, Inc.
One California Street, 30th Floor
San Francisco, California 94111
Attention: Margaret G. Gill
Facsimile: (415) 658-2551
with copies to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Charles M. Nathan
Facsimile: (212) 859-4000
and
Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, California 94104
Attention: Nathaniel M. Cartmell III
Facsimile: (415) 983-1200
and
Freshfields
65 Fleet Street
London EC4Y 1HS
Attention: William P.L. Lawes
Facsimile: (44) 171-832-7001
IF TO VODAFONE OR MERGER SUB:
Vodafone Group Public Limited Company
The Company Secretary's and Legal Department
The Courtyard
2-4 London Road
Newbury
Berkshire RG14 1JX
Attention: Stephen R. Scott
Facsimile: (01635) 580-857
with copies to
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Benjamin F. Stapleton, Esq.
Facsimile: (212) 558-3588
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<PAGE>
and
Linklaters & Paines
One Silk Street
London EC2Y 8HQ
Attention: David W. Cheyne, Esq.
Facsimile: (44) 171-456-2222
or to such other Persons or addresses as may be designated in writing by the
Party to receive such notice as provided above.
6.8. ENTIRE AGREEMENT. This Agreement (including any exhibits hereto), the
AirTouch Disclosure Letter, the Vodafone Disclosure Letter and the
Confidentiality Agreement constitute the entire agreement, and supersede all
other prior agreements, understandings, representations and warranties both
written and oral, between the Parties with respect to the subject matter hereof.
References herein to this Agreement shall for all purposes be deemed to include
references to the AirTouch Disclosure Letter and the Vodafone Disclosure Letter.
Except as set forth in Section 3.8.2. (Director and Officer Indemnification and
Insurance), this Agreement is not intended to confer upon any Person other than
the Parties any rights or remedies hereunder. EACH PARTY HERETO AGREES THAT,
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, OR
ANY OTHER AGREEMENT CONTEMPLATED HEREBY, NONE OF AIRTOUCH, VODAFONE OR MERGER
SUB MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY
OTHER REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL OR LEGAL ADVISORS OR OTHER
REPRESENTATIVES WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT, OR
THE TRANSACTIONS CONTEMPLATED HEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE
TO THE OTHER OR THE OTHER'S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER
INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
6.9. OBLIGATIONS OF VODAFONE AND OF AIRTOUCH. Whenever this Agreement
requires a Subsidiary of Vodafone to take any action, such requirement shall be
deemed to include an undertaking on the part of Vodafone to use best reasonable
efforts to cause such Subsidiary to take such action. Whenever this Agreement
requires a Subsidiary of AirTouch to take any action, such requirement shall be
deemed to include an undertaking on the part of AirTouch to use best reasonable
efforts to cause such Subsidiary to take such action.
6.10. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision unless the substitution of such provision would materially frustrate
the express intent and purposes of this Agreement, and (b) the remainder of this
Agreement and the application of such provision to other Persons or
circumstances shall not be affected by such invalidity or unenforceability, nor
shall such invalidity or unenforceability affect the validity or enforceability
of such provision, or the application thereof, in any other jurisdiction.
6.11. INTERPRETATION. The headings herein are for convenience of reference
only, do not constitute part of this Agreement and shall not be deemed to limit
or otherwise affect any of the provisions hereof. Where a reference in this
Agreement is made to a Section or Exhibit, such reference shall be to a Section
of or Exhibit to this Agreement unless otherwise indicated. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
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<PAGE>
6.12. ASSIGNMENT. This Agreement shall not be assignable by operation of
law or otherwise, and any purported assignment in violation of this provision
shall be void.
6.13. SPECIFIC PERFORMANCE. Each Party hereto acknowledges and agrees that
the other Party hereto could be irreparably damaged in the event that the
covenants contained in Section 3.1.4. of this Agreement are not performed in
accordance with their specific terms or are otherwise breached in each case on
or prior to the Effective Time. Accordingly, each Party agrees that the other
Party will be entitled to an injunction or injunctions to enforce specifically
such covenants in any action in any court having personal and subject matter
jurisdiction, in addition to any other remedy to which such Party may be
entitled at law or in equity.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of Vodafone, AirTouch and Merger Sub as of the date
hereof.
VODAFONE GROUP PUBLIC LIMITED COMPANY
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
AIRTOUCH COMMUNICATIONS, INC.
By:
--------------------------------------
Name:
Title:
APOLLO MERGER SUB, INC.
By:
--------------------------------------
Name:
Title:
40
<PAGE>
[vodafone LOGO] [AirTouch LOGO]
FOR IMMEDIATE RELEASE - JANUARY 17, 1999
PART I
VODAFONE AND AIRTOUCH MERGER
TO CREATE GLOBAL MOBILE TELECOMMUNICATIONS LEADER
- - Merger of equals to create a mobile telecommunications leader
- - Combined current market capitalisation of some $110 billion (L67 billion)
- - Agreed equity split of approximately 50 percent to Vodafone and 50 percent
to AirTouch
- - AirTouch shareholders to receive 5 new ordinary Vodafone shares (0.5 ADR) +
$9 cash for each AirTouch share, representing a current value for each
AirTouch common share of $97 (based on the closing ADR price on 15 January
1999 of $176)
- - Integrated board and management team: Sam Ginn to be Non-Executive Chairman
and Chris Gent to be CEO
- - Third largest UK public company
- - Global reach with operations in 23 countries and over 23 million mobile
customers
- - Unparalleled pan-European footprint
- - Aims for continued rapid growth and expansion through acquisitions, new
licences and leadership in next generation mobile technology
- - Significant cost and revenue synergies expected to be realised through the
scope and scale of the combined operations
- - Transaction expected to be tax free for US purposes to AirTouch
shareholders in respect of the share consideration
Vodafone Group Plc ("Vodafone") and AirTouch Communications, Inc. ("AirTouch")
announced on 15 January 1999 that they had agreed to join forces to create the
world's leading mobile telecommunications group.
Chris Gent, Chief Executive of Vodafone, described the Merger as a "superb
alliance of the two leading global mobile operators. We share a vision of
mobile communications as the principal platform for voice and data
communications into the next century and the combined group will have the people
and assets to realise this vision."
Sam Ginn, AirTouch Chairman and CEO, said, "Our exciting journey continues as we
live out our vision of creating the world's premier wireless company. Vodafone
AirTouch will have the
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size and financial resources to take advantage of future opportunities,
making the company a leading force not only within wireless but throughout
the telecommunications industry."
The two companies intend to unite their global operations through an agreed
merger of equals. The executive management of the new group will be headed by
Vodafone Chief Executive Chris Gent, who will be Chief Executive Officer of the
new group, and the board will be chaired by AirTouch Chairman and CEO Sam Ginn.
Vodafone and AirTouch will each appoint seven of the combined company's 14 board
members and the management team will consist of both Vodafone and AirTouch
representatives.
Under the terms of the definitive agreement, which has been approved by each
company's Board of Directors, AirTouch shareholders will be entitled to receive
5 new Vodafone ordinary shares (equivalent to 0.5 of a Vodafone American
Depository Receipt ("ADR")), in the form of ADRs, plus $9 in cash for each
AirTouch common share held at closing, subject to rebalancing between stock and
cash under certain circumstances. Vodafone shareholders and AirTouch
shareholders will each own approximately 50 percent of the combined company.
The combined enterprise, which is the product of one of the largest ever
telecommunications mergers, will be called Vodafone AirTouch Plc. It will be
headquartered in Newbury, England, with San Francisco, California serving as
US/Asia Pacific regional headquarters and technical centre for the combined
group.
Vodafone's EBITDA (proportional to its equity stakes) for the year ended 31
March 1998 was L919m ($1,516m) and AirTouch's historical proportionate EBITDA
for the same period was L1,133m ($1,869m). On a pro forma basis for the year
ended 31 March 1998, the combined group had proportionate revenues of L5,995m
($9,892m) and EBITDA of L2,052m ($3,386m). Further financial information is
contained in Appendix 1. The current combined market capitalisation of $110
billion (L67 billion) would make the group the third largest publicly traded
company in the UK and one of the world's top ten telecommunications companies by
market capitalisation.
The Merger is expected to deliver post-tax cashflow savings of approximately
L200m per annum ($330m) by the year ending 31 March 2002, resulting in a net
present value of approximately L2.1 billion ($3.5 billion), together with
significant additional cashflow benefits from revenue enhancements and new
products. Moreover, the Merger provides an outstanding platform for rapid
growth and expansion, accelerating customer growth through acquisitions, new
licences and leadership in next generation mobile technology.
The Merger is expected to benefit employees, customers and stockholders.
Vodafone and AirTouch intend to publish detailed information on the merger for
shareholders in approximately three months. Subject to shareholder approval and
regulatory consents, closing of the merger is targeted for early in the second
half of 1999.
A summary of the principal terms of the Merger is set out in Part II of this
release. Information on Vodafone and AirTouch is contained in Part III. Summary
combined financial information is set out in Appendix 1.
<PAGE>
For ease of reference, in this document, all currency conversions between pounds
sterling and US dollars have been made at a rate of $1.65:L1. Please note that
Vodafone's financials are quoted in UK GAAP and AirTouch's in US GAAP.
Vodafone is being advised by Goldman Sachs International. AirTouch is being
advised by Morgan Stanley Dean Witter & Co.
All Vodafone corporate news releases can be accessed at Vodafone's web site:
http://www.vodafone.co.uk. All AirTouch corporate news releases can be accessed
at AirTouch's web site: http://www.airtouch.com.
ENQUIRIES:
Vodafone Group Plc - 44 1635 33251 AirTouch Communications, Inc.
1 415 658 2200
Terry Barwick - Mobile 44 836 200 022 PRESS CONTACTS:
Kathy Reinhart - 1 415 658 2042
Jonathan Marshall - 1 415 658 2209
INVESTOR RELATIONS CONTACTS:
April Walden - 1 415 658 2033
Sue Pirri - 1 415 658 2040
Sonali Sen - 1 415 658 2041
Goldman Sachs International - Morgan Stanley Dean Witter & Co.
44 171 774 1000 (US) -
1 212 761 4000
Scott Mead Paul Taubman
Simon Dingemans Scott Matlock
Evan Newmark
Brunswick Group Ltd (London) -
44 171 404 5959
Alan Parker
Louise Charlton
Brunswick Group Ltd (New York)-
1 212 333 3810
Lucas van Praag
Hank Spring
Tavistock Communications - 44 171 600 2288
Tim Brown - Mobile 44 836 611 740
<PAGE>
GOLDMAN SACHS INTERNATIONAL, WHICH IS REGULATED IN THE UK BY THE SECURITIES AND
FUTURES AUTHORITY LIMITED, IS ACTING FOR VODAFONE IN CONNECTION WITH THE MERGER
AND FOR NO ONE ELSE AND WILL NOT BE RESPONSIBLE TO ANYONE OTHER THAN VODAFONE
FOR PROVIDING THE PROTECTIONS AFFORDED TO CUSTOMERS OF GOLDMAN SACHS
INTERNATIONAL OR FOR PROVIDING ADVICE IN RELATION TO THE MERGER.
<PAGE>
PART II
1. INTRODUCTION
Under the terms of the Merger:
AirTouch shareholders will be entitled to receive 5 new Vodafone ordinary shares
(equivalent to 0.5 of a Vodafone American Depository Receipt (ADR)), plus $9 in
cash for each AirTouch common share held at closing, subject to rebalancing
between stock and cash in certain circumstances (see paragraph 5). Such new
Vodafone shares will be delivered in the form of Vodafone AirTouch ADRs, which
will each represent 10 Vodafone AirTouch ordinary shares.
Following the Merger, Vodafone shareholders and AirTouch shareholders will each
own approximately 50 percent of the capital of the combined company.
Vodafone will be re-named Vodafone AirTouch Plc ("Vodafone AirTouch").
Vodafone AirTouch's shares will remain listed on the London Stock Exchange and
on the New York Stock Exchange in the form of American Depository Receipts.
Vodafone AirTouch will apply for the new shares to be issued to AirTouch's
shareholders in connection with the Merger to be listed on the London Stock
Exchange and for the American Depository Receipts to be listed on the New York
Stock Exchange on which its existing ADRs are currently listed.
The transaction is expected to be tax free for US purposes to AirTouch
shareholders in respect of the share consideration.
2. BACKGROUND TO AND REASONS FOR THE MERGER
The market for mobile communications is undergoing rapid growth as it has
developed into a mass market service. Consumers have grasped the fundamental
attractions of mobile telephony, with lightweight, secure, attractive equipment.
Current market expectations are for mobile penetration rates of 50 percent of
the population in the markets of most developed countries by the year 2003. It
is widely anticipated that over time mobile voice telephony will replace large
amounts of traffic currently carried by fixed line networks.
In addition to the acceleration of growth in the mobile communications industry,
the trend towards globalisation creates significant potential for
telecommunications providers who are capable of reaching across borders and
customer groups. The ability to leverage scale and scope provides global
operators with significant operating efficiencies and revenue benefits. As
mobile telephony enters its next phase - the development of next generation
technology and mobile broadband data - the global operators will be best
positioned to capitalise on growth in the industry.
Vodafone and AirTouch have worked well together in a variety of contexts, most
notably as partners in Sweden and Egypt. The proposed transaction will join
together two strong companies with a joint focus on mobile communications and a
shared vision of global excellence and leadership. Vodafone AirTouch will have
an unparalleled global footprint of mobile
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telephony assets, with significant management, operational and technical
expertise to capitalise on growth in the dynamic voice and data mobile
telecommunications sector.
3. BENEFITS OF THE MERGER
GLOBAL REACH
The combination of Vodafone and AirTouch will:
- - Create a global mobile group with a significant presence in the US, Europe,
Asia, Africa and Australia
- - Provide a nearly complete pan-European footprint with holdings in 11
European countries including all its major markets
- - Given its scale and scope, become a more attractive partner for other
international fixed and mobile telecommunications providers as well as
hardware and software suppliers
- - Become the "operator of choice" for international companies, business
travellers and travel-minded consumers
GROWTH PROSPECTS
The new group will:
- - Continue to be focused on mobile voice and data communications, two of the
fastest growing segments in the telecommunications industry
- - Be very well positioned for the next phase of growth in mobile
communications - the development of 3G next generation services
- - Have the financial resources to enable it to continue to invest in its
networks while pursuing other opportunities to grow organically and through
acquisitions
ADDITIONAL REVENUE AND COST BENEFITS
The new group expects to realise significant cost and revenue synergies over the
next several years. Based on a preliminary evaluation, the Merger is expected
to deliver post-tax cashflow savings of approximately L200m per annum ($330m) by
the year ending 31 March 2002, resulting in a net present value of approximately
L2.1 billion ($3.5 billion), together with significant cashflow benefits from
revenue enhancements and new products.
Expected benefits include:
- - Global purchasing and operating efficiencies including:
- volume discounts on worldwide purchases of cellular handsets, cellular
infrastructure and other assets
- savings in the development and acquisition of 3G next generation
mobile handsets, infrastructure, software and other assets
- efficiencies in the creation of a contiguous European transit network
and lower leased line costs
- - Revenue enhancements through:
<PAGE>
- optimisation of European, transatlantic and global roaming
- improved coverage of global corporate accounts
- application of global best practices
4. MERGED GROUP BOARD AND HEADQUARTERS
Vodafone AirTouch will be managed by current Vodafone and AirTouch executives.
Chris Gent, the Chief Executive of Vodafone, will become Chief Executive of
Vodafone AirTouch Plc.
In addition to Chris Gent, the executive management team of Vodafone AirTouch
will consist of five executives all of whom will sit on the board. Ken Hydon,
Vodafone Finance Director, will serve as CFO of the group. Arun Sarin, AirTouch
President and COO, will serve as CEO for the US/Pacific Asia Region and head of
technical strategy. Julian Horn-Smith, Managing Director of Vodafone Group
International, will serve as CEO for Europe/Africa/Middle East Region. David
Channing Williams, Managing Director of Vodafone Ltd., will serve as CEO for the
UK Region. Mohan Gyani, AirTouch CFO, will be the Head of Corporate Strategy.
Sam Ginn, the Chairman and CEO of AirTouch, will be appointed non-executive
Chairman of the combined group. Lord MacLaurin of Knebworth, Chairman of
Vodafone, will become Deputy Chairman of Vodafone AirTouch, and in addition to
Mr Ginn and Lord MacLaurin there will be six other non-executive Directors, two
from Vodafone and four from AirTouch.
In the period to closing, Messrs Gent and Ginn, on behalf of the boards of
directors of Vodafone and AirTouch, will assume management and oversight of the
integration planning of the two companies' activities to the extent permissible
under antitrust and regulatory laws.
Vodafone AirTouch, incorporated in the UK, will have its headquarters in
Newbury, England. One California Street, San Francisco will serve as US/Asia
Pacific regional headquarters and the Group technical centre.
5. STRUCTURE OF THE TRANSACTION
The Merger will be effected in accordance with the terms of an Agreement and
Plan of Merger dated as of 15 January 1999 (the "Merger Agreement").
Under the terms of the Merger, each share of common stock of AirTouch will be
exchanged for 5 new Vodafone AirTouch ordinary shares to be delivered in the
form of 0.5 of a ADR. AirTouch shareholders will in addition receive a cash
payment of $9 per share.
The Merger Agreement provides for these terms to be rebalanced in certain
circumstances in order to preserve AirTouch shareholders' tax-free treatment for
US purposes of the receipt of Vodafone AirTouch ordinary shares or ADRs.
AirTouch and Vodafone have agreed to use their reasonable efforts to achieve
such treatment without a rebalancing. If such rebalancing is nevertheless
necessary, the exchange ratio of 5 new Vodafone shares (0.5 ADRs) for each share
of AirTouch common stock would be subject to a downward adjustment and the cash
payment of $9 would be subject to a corresponding upward adjustment on the basis
of the 15 January 1999 Vodafone closing ADR price of $176. In the event that,
under this mechanism, the cash payment would need to increase to greater than
$13 per AirTouch share, Vodafone
<PAGE>
has the right to permit such increase at its sole discretion. If Vodafone
does not permit such increase, AirTouch will have the right to terminate the
agreement. AirTouch intends to seek a tax ruling from the U.S. Internal
Revenue Service that, if obtained, would make it unlikely that this right
will arise.
6. MERGER AGREEMENT
The Merger Agreement sets out the conditions to the closing of the Merger. It
also contains certain termination rights, mutual representations and warranties
and various covenants relating to the operation of the businesses of Vodafone
and AirTouch in the period until closing.
The Merger Agreement requires Vodafone and AirTouch to effect the Merger unless
any one of the conditions to the implementation of the Merger is not satisfied
or waived by 31 December 1999 subject to extension in the case of regulatory
consents to 31 March 2000. The Merger Agreement also provides for limited
termination rights, and termination fees to be paid by one party to the other in
certain circumstances.
PRINCIPAL CONDITIONS
- - The conditions to the implementation of the Merger include necessary
Vodafone and AirTouch shareholder approvals, receipt of certain regulatory
approvals and tax opinions and the absence of any governmental order
prohibiting the Merger.
TERMINATION RIGHTS
The circumstances in which either party is able to terminate the Merger include:
- - If either AirTouch or Vodafone shareholders do not approve the Merger and
related transactions;
- - If the other party's board recommends another superior acquisition offer
for that party;
- - If the board of the other party withdraws or adversely modifies its
recommendation of the Merger; or
- - If there is a material breach of representation, covenant or warranty by
the other party.
TERMINATION PAYMENTS
- - The parties have agreed that AirTouch will make a payment to Vodafone of up
to US$1.0bn if the Merger Agreement is terminated in the following
circumstances:
- AirTouch fails to obtain its shareholders' approval of the Merger at a
time when a third party has made an alternative proposal;
- the directors of AirTouch recommend an alternative transaction,
withdraw or adversely amend their approval of the Merger; or
- AirTouch wilfully and intentionally breaches one of its covenants or
warranties with the result that one of the conditions to the
implementation of the Merger is not satisfied
- - The parties have agreed that Vodafone will make a payment to AirTouch of
US$225 million if the Merger Agreement is terminated in similar
circumstances or if the Vodafone shareholders do not approve the Merger.
<PAGE>
7. ACCOUNTING AND REPORTING IMPLICATIONS
It is intended that Vodafone AirTouch will have a March financial year-end. The
accounts of the group will be published in pounds sterling and will be prepared
in accordance with UK GAAP, with a reconciliation to US GAAP. The combined
group will initially report semi-annually and will move to a quarterly basis
within two years from closing.
<PAGE>
PART III
INFORMATION ON VODAFONE GROUP PLC
KEY FACTS
- - Vodafone Group Plc is a leading global provider of mobile
telecommunications services. Vodafone owns interests in mobile operations
in the United Kingdom, Australia, Egypt, France, Germany, Greece, Malta,
the Netherlands, New Zealand, Fiji, South Africa, Sweden, and Uganda as
well as an interest in the Globalstar satellite system. Vodafone ventures
serve almost 10 million customers based on its ownership share of its
global ventures.
- - Cellular network interests in 13 countries in Europe, Africa and
Australasia
- - Introduced cellular technology into UK on 1 January 1985
- - Revenues for the twelve month period to 30 September 1998 - L2,870 million
- - Total Group operating profit for the twelve month period to 30 September
1998 - L816 million
- - Over 11,500 employees world-wide at end of 1998
- - World-wide customer base of approximately 9.5 million proportionate
customers
UNITED KINGDOM ACTIVITIES
- - UK market leader since 1986
- - Over 5 million UK customers
- - World's first network operator to introduce a GSM network and international
roaming
- - Successful implementation of Pay as You Talk pre-pay service which now has
over 1.3 million users
- - Current Financial Year capital expenditure on UK network expected to be
around L345 million
- - UK Distribution now showing significant benefits from re-organisation into
three businesses each concentrating on a particular market segment:
- Vodafone Retail - concentrating on consumers and small to medium sized
businesses through 240 owned specialist retail stores
- Vodafone Connect - addressing individual consumers and small to medium
sized businesses through independent retailers and dealers
- Vodafone Corporate - targeting major corporate accounts through a
direct sales force
- - Vodafone Value Added Service companies provide customers with a broad and
expanding range of specialist data, voice mail and information services
<PAGE>
VODAFONE INTERNATIONAL ACTIVITIES
- - Network interests in Australia, Egypt, Fiji, France, Germany, Greece,
Malta, the Netherlands, New Zealand, South Africa, Sweden and Uganda
- - International capital expenditure and investment now over L2.3 billion
- - International customer base now approaching 4.3 million - doubled in 1998
- - International interests licensed to serve over 300 million people
- - International contributed approximately a third of group operating profits
in the six month period to 30 September 1998
- - Strong international customer and earnings growth continues
- - International strategy of increasing interests in core cellular investments
and seeking new opportunities through cellular bids and licences wherever
these will enhance shareholder value
- - Stakeholder in Globalstar satellite consortium
<PAGE>
INFORMATION ON AIRTOUCH COMMUNICATIONS, INC.
KEY FACTS*
- - AirTouch Communications is the largest wireless company in the world based
on the total number of customers served by its ventures. AirTouch owns
interests in cellular, paging, and personal communications services in the
United States, Belgium, Egypt, Germany, India, Italy, Japan, Poland,
Portugal, Romania, South Korea, Spain, and Sweden, as well as an interest
in the Globalstar satellite system. AirTouch serves over 17 million
customers based on its ownership share of its global ventures.
- - Cellular, PCS and paging interests in 13 countries in North America,
Europe, Asia and Africa. Ventures are licensed to serve more than
700 million people
- - World-wide proportionate customer base of 17.6 million at end of 1998. More
than 40 million total venture customers
- - 12 month revenues to September 30, 1998 -- $7.1 billion
- - 12 month net income to September 30, 1998 -- $472 million
- - 12 month capital spending to September 30, 1998 -- $1.8 billion
- - More than 12,500 employees worldwide at end of 1998
- - 15 years' experience as a mobile pioneer, with expertise in all major
technologies
UNITED STATES ACTIVITIES
- - 11.8 million proportionate U.S. cellular, PCS and paging customers by end
of 1998
- - Cellular and PCS service in 25 states, including 22 of top 30 metropolitan
markets
- - U.S. cellular EBITDA margins were 44 percent for 12 months through
September 30, 1998, among the best in the industry
- - Digital service offered in all major cellular and PCS markets
- - PrimeCo PCS partnership with Bell Atlantic provides service in over 30
cities
- - Roaming agreements provide seamless service to AirTouch customers across
the country
- - Only U.S. paging company to achieve and maintain positive net income and
free cash flow
- - AirTouch has an equity stake in, and North American service provider rights
to, Globalstar satellite system
* Note: all AirTouch financial results above are proportionate, pro forma
for AirTouch's April 6 1998 acquisition of the US cellular business and the
25% interest in PrimeCo of Media One Group, Inc. unless otherwise noted.
<PAGE>
AIRTOUCH INTERNATIONAL ACTIVITIES
- - Network interests in Belgium, Egypt, Germany, India, Italy, Japan, Poland,
Portugal, Romania, South Korea, Spain, Sweden
- - Proportionate customer base over 5.7 million by end of 1998--up 83 percent
in one year
- - International interests licensed to serve more than 550 million people
- - Contributed 40 percent of total company revenue for 12 months ending
September 30, 1998
- - International strategy of increasing interests in core cellular investments
and seeking new license opportunities wherever these will enhance
shareholder value
- - AirTouch leverages best practices of each venture to improve performance
throughout company
<PAGE>
APPENDIX 1
PRO FORMA SUMMARISED PROFIT AND LOSS ACCOUNT,
NET ASSETS, NET DEBT AND CASH FLOW INFORMATION
PROFIT AND LOSS ACCOUNT
<TABLE>
<CAPTION>
FOR THE SIX
FOR THE YEAR ENDED MONTHS ENDED
31 MARCH 30 SEPTEMBER(i)
-------------------- -----------------
1997 1998 1998
L'MILLION L'MILLION L'MILLION
<S> <C> <C> <C>
TURNOVER
Vodafone 1,749 2,471 1,563
AirTouch 1,599 2,252 1,678
--------- --------- --------
Combined 3,348 4,723 3,241
--------- --------- --------
--------- --------- --------
TOTAL GROUP OPERATING PROFIT
Vodafone 539 686 455
AirTouch 361 599 477
--------- --------- --------
Combined* 900 1,285 932
--------- --------- --------
--------- --------- --------
PROPORTIONATE TURNOVER
Vodafone 2,234 2,874 1,761
AirTouch 2,545 3,121 2,277
--------- --------- --------
Combined 4,779 5,995 4,038
--------- --------- --------
--------- --------- --------
PROPORTIONATE EBITDA
Vodafone 718 919 560
AirTouch 787 1,133 904
--------- --------- --------
Combined 1,505 2,052 1,464
--------- --------- --------
--------- --------- --------
</TABLE>
Notes:
* No account has been taken of the impact of acquisition accounting on the
combined total group operating profit.
(i) AirTouch's results for the six months ended 30 September 1998 include
the impact of the acquisition of the US cellular business and the 25%
interest in PrimeCo of Media One Group, Inc. on 6 April 1998 for US$ 5.9
billion, including indebtedness.
(ii) Turnover and total group operating profit in respect of Vodafone have
been extracted from the audited financial statements for the year ended
31 March 1997 (restated) and year ended 31 March 1998 and the unaudited
interim report for the six months to 30 September 1998. Vodafone's
proportionate turnover and EBITDA are derived from publicly available
unaudited information.
(iii) Turnover, total group operating profit and proportionate turnover and
EBITDA in respect of AirTouch for the year ended 31 March 1997 have been
derived from the audited financial statements for the year ended
31 December 1996 adjusted to deduct the results of the quarter ended
31 March 1996 (derived from AirTouch's unaudited Form 10-Q for the
quarter ended 31 March 1996) and to add the results of the quarter ended
31 March 1997 (derived from AirTouch's unaudited Form 10-Q for the
quarter ended 31 March 1997). Turnover, total group operating profit
and proportionate turnover and EBITDA for the year ended 31 March 1998
have been derived on the same basis from the audited financial
statements for the year ended 31 December 1997 and the unaudited Forms
10-Q for the quarters ended 31 March 1997 and 1998. Turnover, total
group operating profit and proportionate turnover and EBITDA for the six
months to 30 September 1998 have been derived from AirTouch's unaudited
Forms 10-Q for the quarters ended
<PAGE>
30 June 1998 and 30 September 1998. Profit before taxes and preferred
dividends and after minority interests in respect of AirTouch for the
year ended 31 December 1997 was $714 million.
(iv) No adjustments have been made to restate AirTouch's accounting policies
to be consistent with those of Vodafone.
(v) AirTouch's turnover, total group operating profit and proportionate
turnover and EBITDA for each period stated above have been translated at
an exchange rate of L1 : US$1.65, the sterling rate of exchange at the
close of business on 15 January 1999.
<PAGE>
NET ASSETS AND NET DEBT AT 30 SEPTEMBER 1998
<TABLE>
<CAPTION>
VODAFONE AIRTOUCH ADJUSTMENTS PRO FORMA
L'MILLION L'MILLION L'MILLION L'MILLION
<S> <C> <C> <C> <C>
FIXED ASSETS
Intangible assets 170 5,188 31,909 37,267
Tangible assets 1,725 2,327 4,052
Investments and other long term 331 2,308 (856) 1,783
assets
--------- --------- ---------- ---------
2,226 9,823 31,053 43,102
--------- --------- ---------- ---------
CURRENT ASSETS
Stocks 36 58 94
Debtors 670 414 1,084
Other current assets - 156 156
Cash at bank 6 10 16
--------- --------- ---------- ---------
712 638 1,350
Creditors: amounts falling due (1,550) (738) (2,288)
within one year
--------- --------- ---------- ---------
Net current liabilities (838) (100) (938)
--------- --------- ---------- ---------
Total assets less current 1,388 9,723 31,053 42,164
liabilities
--------- --------- ---------- ---------
Creditors: amounts falling due after
more than one year and provisions (782) (2,953) (2,668) (6,403)
--------- --------- ---------- ---------
Net assets 606 6,770 28,385 35,761
--------- --------- ---------- ---------
--------- --------- ---------- ---------
Net debt 1,172 1,784 3,485 6,441
--------- --------- ---------- ---------
--------- --------- ---------- ---------
</TABLE>
Notes:
(i) The pro forma net assets have been derived from Vodafone's unaudited
interim report for the six months ended 30 September 1998 and AirTouch's
unaudited Form 10-Q for the quarter ended 30 September 1998.
(ii) The pro forma net assets have been adjusted, on the basis of estimates
using publicly available information, to restate AirTouch's balance
sheet to be broadly in accordance with Vodafone's accounting policies
and to reflect the estimated goodwill arising on the acquisition of
AirTouch in accordance with FRS10 (stated before fair value adjustments)
and the cash element of the consideration.
(iii) AirTouch's net assets have been translated at a sterling : US dollar
exchange rate of L1 : $1.65, the exchange rate at the close of business
on 15 January 1999. The purchase consideration and additional debt have
been translated at an exchange rate of L1 : $1.65.
<PAGE>
CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX
FOR THE YEAR ENDED MONTHS ENDED
31 MARCH 30 SEPTEMBER
------------------------- --------------
1997 1998 1998
L'MILLION L'MILLION L'MILLION
<S> <C> <C> <C>
NET CASH INFLOW FROM OPERATING ACTIVITIES, NET OF
TAXATION AND SERVICING OF FINANCE
Vodafone 485 680 410
AirTouch 471 549 593
-------- -------- -----------
Combined 956 1,229 1,003
-------- -------- -----------
-------- -------- -----------
NET CASH OUTFLOW FROM CAPITAL EXPENDITURE
Vodafone 351 516 331
AirTouch 354 433 321
-------- -------- -----------
Combined 705 949 652
-------- -------- -----------
-------- -------- -----------
NET CASH OUTFLOW FROM FINANCIAL INVESTMENT,
ACQUISITIONS AND DISPOSALS
Vodafone 467 358 44
AirTouch 316 292 271
-------- -------- -----------
Combined 783 650 315
-------- -------- -----------
-------- -------- -----------
</TABLE>
Note:
The cash flow information has been derived from the same source information and
on the same basis as the profit and loss account information above.
The financial information contained in Appendix 1 and elsewhere in this document
does not constitute statutory accounts within the meaning of Section 240 of the
Companies Act 1985. Statutory consolidated accounts of Vodafone for the
financial periods ended 31 March 1997 and 31 March 1998 received unqualified
audit opinions, did not contain a statement under Section 237(2) or (3) of the
Companies Act 1985 and have been delivered to the Registrar of Companies in
England and Wales.
The consolidated financial statements of AirTouch for the financial periods
ended 31 December 1996 and 31 December 1997 received unqualified audit opinions.
<PAGE>
APPENDIX 2
PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT
This press release includes forward-looking information and statements that are
subject to risks and uncertainties that could cause actual results to differ
materially. These statements are generally identified by the words "expect",
"intend", "believe" and other similar expressions. In particular, statements
regarding the consummation of the transaction are subject to risks that the
closing conditions to the transaction will not be satisfied, including the risk
that regulatory approvals will not be obtained, that the stockholders' of either
company will not approve the merger, that a superior acquisition proposal will
be made for either company, or that tax-free treatment for US purposes for the
Vodafone shares to be received by the AirTouch shareholders can not be achieved.
In addition, statements regarding the expected benefits of the transaction are
subject to the risk that expected synergies will not be achieved and to the
general risks associated with the companies' businesses, as described in their
filings with the SEC, including AirTouch's Form 10-K for the year-ended 31
December 1997 and subsequent, Forms 10-Q and Forms 8-K and Vodafone's 20-F and
6-K.
Further information regarding the transaction and the companies will be set
forth in AirTouch's Proxy Statement and Vodafone's Form F-4 related to the
transaction, and investors should review those filings prior to making an
investment decision.
