EXHIBIT 2.1
122695
AGREEMENT AND PLAN OF REORGANIZATION
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This Agreement and Plan of Reorganization (the "Agreement") is made and
entered into as of December 26, 1995, by and among HMZ San Juan Inc., a
Connecticut corporation, its successors and assigns ("Assignor"), Henry Zachs
(owning 98% of Assignor), Newton Brenner (owning 1% of Assignor), Christopher
Jenkins (owning 1% of Assignor), (each a "Stockholder"), Cellular Communications
of Puerto Rico, Inc., a Delaware corporation, its successors and assigns
("Cellular") and CCPR Services, Inc., a Delaware corporation, its successors and
assigns ("CCPR").
Recitals
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WHEREAS, Assignor owns a 2.622% interest as a partner (the "Interest"),
which constitutes all or substantially all of the assets of Assignor, in San
Juan Cellular Telephone Company, a general partnership (the "Partnership")
which holds the license from the Federal Communications Commission and the
Puerto Rico Telephone Regulatory Commission to operate the nonwireline Block A
cellular communications system for the San Juan-Caguas, Puerto Rico Metropolitan
Statistical Area.
WHEREAS, Assignor wishes to transfer and assign the Interest to CCPR in
exchange for shares of Common Stock of Cellular ("Shares") pursuant and subject
to the terms and conditions of this Agreement.
THEREFORE, in consideration of the mutual obligations set forth in this
Agreement, and subject to all conditions set forth herein, the parties agree as
follows:
1. Assignment of Interest: (a) On the Closing Date (as defined in
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Section 2), Assignor shall assign and transfer to CCPR all of Assignor's right,
title and interest to the Interest, free and clear of all encumbrances, liens,
pledges, charges, claims, security interests and liabilities ("Liens") other
than those expressly assumed herein by CCPR. The assignment shall include,
without being limited to, Assignor's entire interest in the Partnership,
including but not limited to the Interest, including the associated capital
account in the Partnership and all related rights with regard to Partnership
voting, profits, losses, and distributions.
(b) In consideration for the assignment contemplated by this Agreement,
CCPR shall deliver a stock certificate evidencing 350,000 Shares registered in
the name of Assignor. In the event that on or prior to the Closing Date (a)
Cellular shall pay any dividend or make any other distribution respecting its
shares of common stock or (b) the holders of its shares of common stock shall be
entitled or required to exchange their shares for other securities or
consideration, by reason of a reorganization transaction with another entity or
otherwise, then Assignor shall be entitled to receive (i) in addition to the
350,000 Shares, such dividend or other distribution as would be payable with
respect to the foregoing 350,000 Shares or (ii)
such other securities or consideration as would be exchanged for the foregoing
350,000 Shares, in each case to the effect that Assignor shall receive the
funds, securities and consideration that Assignor would have received had it
held the Shares to be issued at the Closing as at the date hereof.
(c) This Agreement and Plan of Reorganization is intended to constitute a
Plan of Reorganization within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code"), and the transactions contemplated hereby
are intended to qualify as a "reorganization" within the meaning of subsection
(a) of such Section 368.
2. Closing Date and Place. The closing of the transactions contemplated by
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this Agreement (the "Closing") shall occur as promptly as practicable after the
execution of this Agreement and satisfaction of the conditions set forth in
Section 8 hereof, at the offices of CCPR, 110 East 59th Street, 26th Floor, New
York, New York 10022.
3. Mutual Representations and Warranties. Each of Cellular and CCPR
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represent and warrants to Assignor and each Stockholder and each of Assignor and
each Stockholder represents and warrants to CCPR and Cellular that: (a) Each (if
not a natural person) is duly formed, validly existing, and in good standing
under the state and local laws to which it is subject; (b) Each has the right,
power and unconditional authority, and has taken all necessary action, including
all necessary actions on the part of its stockholders, to execute, deliver, and
fully perform its obligations under this Agreement; (c) This Agreement is
binding and enforceable against the warranting party; and (d) The execution,
delivery and performance of the obligations under this Agreement do not
constitute a material violation, breach or default under any law, regulation,
ordinance, judgment, order, agreement, charter, articles or certificate of
incorporation, by-laws, or other instrument or obligation to which the
warranting party is subject.
4. Consent to Partnership Agreement. In accordance with Section 9.1 (d) of
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the Partnership's Partnership Agreement (the "Partnership Agreement"), CCPR
consents to its admission to the Partnership on the Closing Date as a Substitute
Partner with respect to the interest of the Assignor. CCPR confirms that upon
such admission it shall be bound by all of the terms and provisions to the
Partnership Agreement, as the same has been and may be amended.
5. Assumption of Assignor's Obligations. CCPR shall assume and be bound on
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the Closing Date to perform all of the obligations, terms, covenants and
conditions of the Assignor under the Partnership Agreement, whether arising
before or after the Closing Date, with respect to each Interest assigned.
6. Assiqnor's and Stockholder's Representations and Warranties. Each of
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Assignor and each Stockholder represents and warrants to CCPR and Cellular that:
(a) Assignor is the lawful owner of the Interest, free and clear of
all
encumbrances, liens, pledges, charges, claims, security interests and
liabilities;
(b) The Information (as defined in Section 10), if any, as of the date
of its delivery to CCPR and as of the date of any Prospectus Delivery (as
defined in Section 10) will not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements made
in the Information not misleading;
(c) It is not aware of any material adverse information concerning the
Interest or the Partnership or its business, financial condition or otherwise
that has not been disclosed to CCPR;
(d) Each Stockholder, with respect to himself, is acquiring the Shares
solely for its own account, for investment and not with a view to any resale,
distribution or public offering thereof;
(e) Each Stockholder, with respect to himself, understands that
Cellular's transfer agent or other agent will be given appropriate instruction
prohibiting any transfer of the Shares which would violate the Securities Act of
1933, as amended (the "Securities Act") and that the certificates for the Shares
will bear the following legend:
"The security represented by this certificate has not been regis-
tered under the Securities Act of 1933, as amended, or under state
securities laws. The security represented by this certificate may
not be resold or transferred unless registered or exempt from
registration under the Securities Act of 1933, as amended, and
applicable state securities laws.";
(f) Each Stockholder, with respect to himself, understands that it
must hold the Shares indefinitely unless it is registered under the Securities
Act, or an exemption from registration becomes available;
(g) Each Stockholder, with respect to himself, has had ample
opportunity to ask questions of, and receive answers from, officers of Cellular
and CCPR concerning CCPR, Cellular and their respective businesses, and to
obtain any additional information it might request with respect to CCPR,
Cellular and their respective businesses, and each Stockholder acknowledges that
CCPR and Cellular have made available to it all documents and information
relating to the Shares, requested by or on behalf of each Stockholder, including
but not limited to, Cellular's annual report on Form 10-K for the-year ended
1994 and its quarterly reports on Form 10-Q for the quarters ended March 31,
June 30 and September 30, 1995;
(h) Each Stockholder, with respect to himself, understands that (i)
the
offering and sale of the Shares is intended to be exempt from registration under
the Securities Act as a private placement and (ii) there is no existing public
or other market for the Shares, and there can be no assurance that each
Stockholder will be able to sell or dispose of the Shares;
(i) Each Stockholder, with respect to himself, either alone or
together with its advisors has sufficient knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and risks of
its investment in the Shares, and each Stockholder is capable of bearing the
economic risk of such investment, including a complete loss of its investment;
and
(j) Each Stockholder, with respect to himself, is not a representative
of an alien, a corporation organized under the laws of any foreign government, a
corporation of which any officer or director is an alien or more than one fifth
of its capital stock is owned or voted by any of the foregoing, or a corporation
directly or indirectly controlled by another corporation of which any officer or
more than one-fourth of the directors are aliens or of which more than one-
fourth of its capital stock is owned or voted by the foregoing, within the
meaning of Section 310 of the Communications Act of 1934, as amended.
7. CCPR's Representation and Warranties. (a) CCPR and Cellular each
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represents and warrants to the Stockholders that the Registration Statement,
when filed, will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated or necessary in order to make this
statement therein not misleading.
(b) CCPR and Cellular represent that Cellular is 100% direct parent of CCPR
and CCPR shall make no transfer or disposition of the Interest which would
impair the transaction from meeting the requirements of a reorganization under
Section 368(a) of the Code.
(c) CCPR and Cellular each represent and warrant that each has adequate
information concerning the interest in the Partnership, its business and
financial condition and is not relying on any representation of any Stockholder
respecting the business of the Partnership; that CCPR is acquiring the Interest
solely for its own account for investment and not with a view to any resale,
distribution or public offering thereof.
8. Conditions to Closing. (a) The following are conditions precedent to
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each party's obligation to close the transactions contemplated by this
Agreement:
(i) All required authorizations, orders, grants, consents, permissions
or approvals ("Approvals") of any governmental entity with jurisdiction over the
transactions contemplated by this Agreement ("Governmental Agencies") shall have
been received and shall remain in effect;
(ii) The other parties' representations and warranties shall be true
and correct, and each other party shall have performed all of its covenants and
obligations due to be performed as of the Closing in accordance with this
Agreement;
(iii) The consummation of the transactions contemplated by this
Agreement shall not be in violation of any law, rule or regulation and shall not
be subject to any injunction or restraining order; and
(iv) Any waiting period (and any extension thereof) applicable to the
consummation of the transaction contemplated by this Agreement under the
Hart-Scott-Rodino Antitrust Improvements Act (the "HSR Act") shall have expired
or been terminated;
(b) It shall be a condition precedent to CCPR's obligation to close
the transactions contemplated by this Agreement that (i) it and its counsel have
had an opportunity to conduct due diligence as to the representations set forth
in this Agreement and CCPR shall be satisfied as to the accuracy of such
representations and (ii) that CCPR shall have entered into certain agreements
with National Telephone Company and Pacific Cellular Telephone Systems dated as
of the date hereof, and all conditions to closing such agreements shall have
been satisfied.
(c) It shall be a condition precedent to Stockholders' obligation to
close the transactions contemplated by this Agreement that (i) Cellular have
provided to Stockholders and their counsel an opportunity to conduct due
diligence as to the material accuracy of the financial representations set forth
in operating reports of San Juan Telephone Company heretofore delivered to
Assignor or any of the Stockholders; and (ii) Cellular shall not have agreed
upon or engaged in a transaction which would transfer control or equity
interests in all or a material part of the San Juan Cellular Telephone Company,
except pursuant to this Agreement or similar agreements with Pacific Cellular
Telephone Systems and National Telephone Company or as part of a transaction
which would involve transfer of control of Cellular or the transfer or exchange
of equity interest in Cellular.
9. Governmental Filings. Each of the parties hereto shall (i) make promptly
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its respective filings, and thereafter make any other required submissions,
under the HSR Act or otherwise, with respect to the transactions contemplated by
this Agreement and (ii) use its reasonable best efforts to take, or cause to be
taken, all appropriate action, and to do or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective such transactions, including, without limitation,
using its reasonable best efforts to obtain all Approvals of Governmental
Agencies as are required for the consummation of such transactions and to
fulfill the conditions to the Agreement. Each of the
parties hereto will use its reasonable efforts to lift or rescind any injunction
or restraining order described in clause (a)(iii) under Section 8.
10. Registration Statement. (a) Following the Closing, Cellular will use
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all reasonable efforts to cause to be filed and declared effective as soon as
reasonably practicable a Registration Statement to permit the public resale of
the Shares acquired by the Stockholders pursuant hereto (the "Resale"). Any
obligation to permit the Resale under the Registration Statement shall expire on
the earliest of (i) the date on which all Shares acquired hereunder have been
disposed of by the Stockholders, (ii) the date on which all Shares acquired
pursuant hereto may be freely sold to the public without restriction under the
Securities Act or (iii) the date which is two years after the Closing (or, in
the event that the holding period under Rule 144(d) of the Securities Act is
extended, such later date as to correspond with such extended holding period)
(the "Expiration"). If a Stockholder is deemed to be an "affiliate" of CCPR,
such Stockholder will provide all information necessary with respect to the
Stockholders and any proposed Resale necessary for the Registration Statement
("Information") and will comply with the prospectus delivery requirements of the
Securities Act and rules promulgated thereunder ("Prospectus Delivery").
(b) If at any time prior to the filing of the Registration Statement
or the Expiration, (i) counsel to Cellular has determined in good faith that the
compliance by Cellular with its disclosure obligations in connection with the
Registration Statement would require the disclosure of material information
which Cellular has a bona fide business purpose for preserving as confidential
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or (ii) Cellular then is unable to comply with its disclosure obligations or SEC
requirements in connection with the Registration Statement, then in either such
case Cellular shall not be required to file the Registration Statement or
maintain the effectiveness thereof or amend or supplement the Registration
Statement for a period (an "Information Delay Period") expiring upon the earlier
to occur of (A) the date on which such material information is disclosed to the
public or ceases to be material or Cellular is able to so comply with its
disclosure obligations and SEC requirements or (B) 30 days, in the case of
clause (i) above, or 45 days, in the case of clause (ii) above, after counsel to
Cellular makes such good faith determination.
(c) Cellular will give prompt written notice to Stockholders of the
commencement of an Information Delay Period (and duration). Each Stockholder, by
his acceptance of any Shares, agrees that, upon receipt of such notice it will
forthwith discontinue disposition of the Shares pursuant to the Registration
Statement, and will not deliver any prospectus forming a part thereof in
connection with any sale of Shares until the expiration of an Information Delay
Period.
(d) Notwithstanding anything in this Agreement to the contrary, if the
Registration Statement referred to in this Section 10 has not been declared
effective by July 1, 1996, then Cellular shall issue to Assignor (or its
assigns) a stock
certificate or stock certificates evidencing an aggregate of such number of
additional Shares as shall equal 5% of the amount set forth in Section 1(b)
hereof. If the Registration Statement referred to in this Section 10 has not
been declared effective by December 1, 1996, then Assignor (or its assigns)
shall have the right by giving written notice to Cellular to require Cellular to
purchase from Assignor in 1996 up to 100,000 Shares that were issued to Assignor
pursuant to this Agreement. The price per share in any such redemption shall be
equal to the average of the daily closing price on NASDAQ (or any exchange or
other securities trading market which is the principal place of trading for
Cellular's common stock at the time) for the seven trading days immediately
preceding the date on which notice of the redemption is given. Payment for such
Shares shall be made not later than three business days following delivery of
such notice.
(e) If at any time Cellular shall file an amendment to the
Registration Statement, Cellular shall promptly deliver copies of such amendment
to the Stockholders .
11. Indemnification bv the Stockholder. Cellular, CCPR and its affiliates
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shall jointly and severally be indemnified and held harmless by Assignor and
each Stockholder against any and all losses, expenses, damages, injuries,
judgments, claims and liabilities, including reasonable attorney's fees and
litigation expenses ("Losses"), arising from (a) Assignor's ownership of its
Interest prior to the Closing; (b) any material misrepresentation, breach of
warranty, or nonperformance of any obligation hereunder on the part of Assignor
or any Stockholder; (c) any other act or omission on the part of Assignor or any
Stockholder, its agents or representatives in connection with its Interest in
any Partnership; (d) any agreement, commitment or obligation of Assignor or any
Stockholder undertaken in connection with the Interest or the Partnership (and,
in the case of Assignor, arising prior to the Closing) which CCPR does not
expressly and specifically assume either hereunder or in writing prior to the
Closing, (e) Assignor's ownership, operation or conduct of any asset or business
other than the Interest, (f) any liability for any federal, state or local tax
(including interest, penalty or addition thereto) of Assignor incurred on or
prior to the Closing, or (g) based on an untrue statement of fact in the
Information or alleged omission to state therein a material fact necessary to
make the statements therein not misleading, or the failure of any Stockholder to
effect a Prospectus Delivery; provided, that no indemnification shall be due to
Cellular or any of its affiliates for any Loss resulting solely from an action
taken by Cellular in its capacity as managing general partner of the
Partnership. Notwithstanding anything in this Agreement to the contrary, each of
Cellular, CCPR and its affiliates will only seek indemnity for losses hereunder
from each Stockholder in proportion to his ownership percentage set forth on the
first page hereof .
12. Indemnification by Cellular and CCPR. Assignor and each Stockholder
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shall be indemnified and held harmless by Cellular and CCPR against any and all
losses, arising from (a) CCPR's ownership of the Interest; (b) any material
misrepresentation, breach of warranty, or nonperformance of any obligation
hereunder on the part of Cellular or CCPR; (c) any other act or omission on the
part of CCPR or its affiliates in connection with its interest in the
Partnership or (d) arising out of or based upon an untrue statement of fact in
the Registration Statement or arising out of or based upon the omission or
alleged omission to state therein a material fact necessary to make the
statements therein not misleading, other than those arising out of any
Information.
13. Continuing Effectiveness. Each party's representations shall be true
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and correct, and each party's warranties and indemnifications shall be in full
force and effect on the date that the party executes this Agreement and, to the
extent the same are applicable at Closing, as if made on the date and time of
such Closing. Each party's representations, warranties and indemnifications
shall survive the Closing and shall be fully actionable and enforceable
thereafter. In the event that a party becomes aware of any information,
occurrence or omission which would alter any of its representations or would
impair its ability to perform any of its warranties, indemnifications, or
obligations hereunder, or would possibly lead to any right to indemnification,
then the party shall notify the other party immediately of such information,
occurrence or omission and shall disclose all relevant facts. The other party
shall have the opportunity to defend itself, if necessary, in any resulting
proceeding. The settlement of any such proceeding or threatened proceeding shall
be subject to the other party's prior consent if the other party is to be
subject to any obligation to indemnify against the cost of the settlement.
14. Expenses. Cellular, CCPR, Assignor and each Stockholder shall each bear
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their own legal and other fees and expenses associated with the preparation,
execution and consummation of this Agreement and the filing and prosecution of
any required Governmental Agency submissions, provided that CCPR shall pay any
HSR filing fees to the extent applicable. CCPR will bear all costs associated
with the preparation of the Registration Statement except that each Stockholder
shall bear broker's fees or discounts associated with a resale of the Shares
acquired by such Stockholder pursuant hereto.
15. Termination as of Right. Notwithstanding any other provision herein or
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termination, this Agreement may be terminated, without liability of any kind, at
the option of either Assignor or CCPR, upon written notice to the other if there
is no Closing in accordance with all the terms of this Agreement on or before
March 31, 1996.
16. Brokers Fees. Each party represents and warrants that it has not
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engaged any broker or finder with respect to this transaction and that no
brokerage fee, commission, or finder's fee shall be due in connection with the
transaction.
17. Notices. All notices or other communications to parties under this
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Agreement shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by cable, telecopy,
facsimile or other standard form of telecommunications, or by registered or
certified mail or Federal Express delivery, postage prepaid, return receipt
requested, addressed as follows:
If to Assignor or the Stockholders:
c/o Brenner, Saltzman & Wallman
271 Whitney Avenue
New Haven, CT 06511
Att: Newton Brenner, Esq.
If to Cellular or CCPR:
110 East 59th Street, 26th Floor
New York, New York 10022
Attention: Richard J. Lubasch
18. Governing Law. This Agreement shall be interpreted, enforced and
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governed in accordance with the laws of New York (without regard to the
provisions thereof on the conflict of laws).
19. Binding Effect. This Agreement shall bind and benefit the parties,
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their representatives, and their permitted assignees and successors in interest.
20. Most Favored Treatment. In the event that at any time in 1996,
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Cellular, CCPR, the Partnership or an affiliate, enters into transaction with
any person or entity that owns a minority interest in the Partnership, on more
favorable economic terms than provided for in this Agreement (including by way
of illustration, but not by way of limitation, a greater number of Shares) then
this Agreement shall be amended in such manner as is necessary to incorporate
such more favorable terms. Any such amendment shall be deemed effective as of
the date of this Agreement.
21. Entire Agreement. This Agreement constitutes the entire agreement
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between the parties governing this Transaction. No prior agreement or
representation, whether verbal or written, shall have any force or effect. This
Agreement may be modified, superseded or cancelled only in writing signed by
each of the parties to be affected.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
first date above written.
CCPR SERVICES, INC.
By: /s/
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Senior Vice President
CELLULAR COMMUNICATIONS OF
PUERTO RICO, INC.
By: /s/
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Senior Vice President
HMZ SAN JUAN, INC.
By: /s/
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President
STOCKHOLDERS
/s/
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Henry Zachs
/s/
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Newton Brenner
/s/
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Christopher Jenkins
HMZ San Juan Inc.
c/o Brenner, Saltzman & Wallman
271 Whitney Avenue
New Haven, CT 06511
December 26, 1995
Cellular Communications Of Puerto Rico, Inc.
110 East 59th Street
26th Floor
New York, NY 10022
Dear Sir:
The undersigned, HMZ San Juan Inc. (the "Seller"), a Connecticut
corporation and Henry Zachs, Christopher Jenkins and Newton Brenner, all of the
stockholders thereof desire to exchange a partnership interest in San Juan
Cellular Telephone Company (the "Interest") for common stock of Cellular
Communications of Puerto Rico, Inc. (the "Corporation"). The undersigned
acknowledge, and understand that the Corporation is relying upon such
acknowledgement, that (i) undersigned are sophisticated with knowledge of, and
an opportunity to inquire with respect to, the cellular industry generally and
the Corporation's financial position, business, operation and prospects and (ii)
the Corporation is in possession of additional nonpublic information
(collectively, the "Company Information") with respect to the Corporation's
business, financial condition, operations and prospects, including potential
transactions which may involve a change of control ("Potential Control
Transactions"). The Corporation has assured the undersigned that none of the
Company Information relates to a potential transaction which would transfer
control or equity interests in all or a material part of the San Juan Cellular
Telephone Company, except pursuant to an agreement with the undersigned or
similar agreements with Pacific Cellular Telephone Systems and National
Telephone Company or as part of a transaction which would involve transfer of
control of Cellular or the transfer or exchange of equity interests in the
Corporation.
Subject to and in reliance upon the foregoing assurances, each of the
undersigned acknowledges that, after careful consideration and the opportunity
to consult with its counsel and other advisors, he and it is prepared to
exchange the Interests for stock of Corporation without receipt of the Company's
information.
Very truly yours,
HMZ San Juan, Inc.
By: /s/
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Its President
/s/ /s/
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Christopher Jenkins Henry Zachs
/s/
---------------------------------
Newton Brenner
ESCROW AGREEMENT
THIS AGREEMENT made and entered into as of the 27th day of December 1995 by
and among:
Brenner, Saltzman & Wallman, with offices at 271 Whitney Avenue, New
Haven, Connecticut 06511 (the "Escrow Agent"); and
Henry M. Zachs, with offices at 40 Woodland Street, Hartford,
Connecticut 06105 ("Mr. Zachs");
Newton D. Brenner, with offices at 271 Whitney Avenue, New Haven,
Connecticut 06511 ("Mr. Brenner"); and
Christopher W. Jenkins, with offices at 49 Woodland Street, Hartford,
Connecticut 06105 ("Mr. Jenkins"); and
Cellular Communications of Puerto Rico, Inc., a Delaware corporation
with offices at 110 East 59th Street, 26th Floor, New York City, New
York 10022 ("Cellular");
Mr. Zachs, Mr. Brenner, and Mr. Jenkins may be referred to hereinafter
individually as the "Shareholder" and/or collectively as the
"Shareholders".
W I T N E S S E T H :
WHEAREAS, Cellular and the Shareholders have entered into a letter
agreement dated December 26, 1995 (the "Letter Agreement") pursuant to which
certain funds are to be held in escrow from time to time; and
WHEREAS, Escrow Agent has agreed to act as escrow agent hereunder upon the
terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutal promises
herein made the parties hereto hereby agree as follows:
1. CERTAIN DEFINITIONS
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All capitalized terms not otherwise specifically defined herein shall have
the meanings ascribed to them in the Letter Agreement.
2. APPOINTMENT OF ESCROW AGENT
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The parties hereto hereby jointly appoint Escrow Agent to act as the escrow
agent hereunder, and the Escrow Agent hereby accepts the duties of escrow agent
in accordance with the terms and conditions of this Agreement.
3. ESCROW FUND
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Pursuant to the Letter Agreement, the parties hereto have caused there to
be deposited $450,000 with the Escrow Agent simultaneously with the execution of
this Agreement.
4. TERM
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The term of this Agreement shall commence on the date hereof and it shall
remain in full force and effect until the Escrow Agent has distributed all of
the Escrow Fund in its possession in accordance with the terms hereof, whereupon
all obligations of the Escrow Agent hereunder shall immediately terminate; but
the obligations of the other parties hereto pursuant to Sections 7, 8, 10, 11,
and 12 hereof shall remain in full force and effect.
5. DUTIES OF ESCROW AGENT; DISTRIBUTIONS
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The Escrow Agent shall hold the Escrow Fund in escrow until authorized
hereunder to deliver the same as described in the Letter Agreement. The Escrow
Agent may, in its discretion, require written authorization from each of the
other parties hereto prior to making any distribution.
6. DUTIES OF THE ESCROW AGENT; INVESTMENT
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The Escrow Agent shall invest the Escrow Fund held pursuant to this
Agreement without delay and keep such cash invested and reinvested in interest
bearing accounts in banks having insurance from the Federal Deposit Insurance
Corporation.
7. DUTIES OF ESCROW AGENT; RELIANCE
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(a) The obligations and duties of the Escrow Agent hereunder are purely
ministerial and shall be limited to the safekeeping of the Escrow Fund and the
actions herein specified in accordance with the provisions hereof; accordingly,
the Escrow Agent shall not be responsible for any of the agreements referred to
herein, but shall be obligated only for the performance of such duties as are
specifically set forth herein and no implied duties or obligations of the Escrow
Agent shall be imposed by virtue of this Agreement.
(b) The Escrow Agent may act in reliance upon any writing or instrument or
signature which it, in good faith, believes to be genuine; may assume the
validity and accuracy of any statements or assertions contained in such writing
or instrument; and may assume that any person purporting to give any writing,
notice, advice or instruction in connection with the provisions hereof has been
duly authorized to do so. Except for the Escrow Agent's liability arising from
its gross negligence or fraud, the Escrow Agent shall not be liable in any
manner for the sufficiency or correctness as to form, manner of execution, or
validity of any written instructions, documents or papers deposited or called
for hereunder or delivered to it, nor as to the identity, authority or rights of
any person executing or delivering, or purporting to execute or deliver the same
(c) The Escrow Agent may consult counsel satisfactory to it. The Escrow Agent
shall not be personally liable or responsible for any act it may do or omit to
do hereunder while acting in good faith and any acts done or omitted by it
pursuant to the advice of its own counsel shall be conclusive evidence of such
good faith, absent fraud or gross negligence on the part such counsel. In no
event shall the Escrow Agent be liable for indirect, private, special, or
consequential damages.
(d) The Escrow Agent is hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law, and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of
any court, or agreements stipulated to by the other parties hereto. In the
event the Escrow Agent obeys or complies with any such order, judgment or
decree of any court, it shall not be liable to any of the parties hereto or any
other person, firm or corporation by reason of such compliance, notwithstanding
any such order, judgment or decree being subsequently reversed, modified,
annulled, set aside, vacated or found to have been ordered without
jurisdiction.
8. INTERPLEADER
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Notwithstanding any provisions contained herein to the contrary, in the event
of disagreement about the interpretation of this Agreement, or about the rights
or obligations of the parties hereto, or the propriety of any action
contemplated by the Escrow Agent hereunder, the Escrow Agent, may in its sole
discretion, file an action in interpleader to resolve said disagreement. The
Escrow Agent shall be indemnified pursuant to the provisions of Section 11
hereof for all costs and attorneys' fees incurred by it in its capacity as
Escrow Agent in connection with any such interpleader action, shall be fully
protected in suspending all or part of its activities under this Agreement until
a final judgment in the interpleader action has been issued, and upon the
filing of such interpleader action, shall resign as Escrow Agent hereunder, at
the request of any party hereto.
9. SUCCESSOR ESCROW AGENT
- -------------------------
The Escrow Agent may resign at any time upon the giving of 10 days written
notice to the other parties to this Agreement or, in the event of any
litigation involving this Agreement, shall resign upon the request of the
parties hereto, in which case the Escrow Agent's duties hereunder shall
terminate and the Escrow Agent shall be relieved and discharged of all
obligations, responsibilities and liabilities hereunder. Upon any such
resignation or a resignation under Section 8 hereof, the other parties hereto
shall jointly appoint a successor escrow agent, who shall assume the duties of
Escrow Agent hereunder. The Escrow Agent shall immediately deposit all Escrow
Funds with the successor escrow agent so appointed. If a successor Escrow Agent
is not appointed within 10 days after notice of resignation, the Escrow Agent
may petition any court of competent jurisdiction to name a successor Escrow
Agent and may deposit the Escrow Fund with such court.
10. ADDITIONAL INSTRUCTIONS
- ---------------------------
The parties hereto at their respective cost and expense shall cooperate with
and assist the Escrow Agent as reasonably requested by the Escrow Agent in
connection with the Escrow Agent's performance of its obligations hereunder.
Specifically, but not in limitation of the generality of the foregoing, the
parties hereto shall furnish the Escrow Agent with other and further documents
or instruments reasonably requested by the Escrow Agent in connection with this
Agreement or its obligations with respect hereto.
11. IDEMNIFICATION
- ------------------
The other parties hereto shall reimburse the Escrow Agent for all reasonable
expenses incurred by the Escrow Agent in connection with its duties hereunder,
unless and until the Escrow Agent is determined by a court of competent
jurisdiction to have discharged any of its duties hereunder in a grossly
negligent manner or to have been guilty of willful misconduct with regard to any
of its duties hereunder. Except for the Escrow Agent's liability arising from
its gross negligence or fraud, each of the other parties hereto shall jointly
and severally indemnify and hold the Escrow Agent harmless from any and all
claims, liabilities, losses, damages, penalties, claims, actions, suits,
proceedings at law or equity, or any other expenses, fees, or charges of any
nature whatsoever which it may incur or with which it may be threatened by
reason of its acting as Escrow Agent under this Agreement; and in connection
therewith to indemnify the Escrow Agent against any and all expenses including
attorneys' fees and the cost of defending any action, suit or proceeding or
resisting any claim in such capacity; provided, however, that in the event of
a dispute among the other parties hereto, the nonprevailing party shall
indemnify and hold the prevailing party harmless against any and all costs and
expenses (including reasonable attorneys' fees) incurred by the prevailing
party pursuant to the provisions hereof.
12. REPRESENTATION
- ------------------
The parties hereto acknowledge and agree that the Escrow Agent has acted, and
may continue to act, as counsel to the Shareholders in connection with the
negotiation of the Letter Agreement and the consummation of the transactions
contemplated thereby and that the Escrow Agent may represent the Shareholders in
the future including, without limitation with respect to (a) disputes arising
under the terms of the Letter Agreement (or any other agreement, document, or
instrument executed and delivered in accordance therewith or contemplated
thereby); or (b) disputes that may involve the rights or obligations of the
other parties hereto hereunder. Cellular hereby waives any claim of conflict of
interest which may arise from the actions of the Escrow Agent hereunder and its
representation of the Shareholders, and agrees that the Escrow Agent shall not
be disqualified or otherwise estopped from representing the Shareholders in any
matter in the future. Cellular hereby waives any claim of conflict of interest
which may arise from the fact that one of the Shareholders is affiliated with
the Escrow Agent.
13. MISCELLANEOUS
- -----------------
(a) Notices. Any notice, request, acknowledgement, consent, or other
--------
communication which any party hereto is required or permitted to give to another
party shall be in writing and shall be delivered personally, sent by registered
or certified mail, return receipt requested, or sent by a recognized overnight
delivery service, in any such case to the recipient at his or its address first
stated above or at such other address of which he or it shall have given the
other party or parties due notice hereunder. Any such notice shall be deemed to
have been delivered, given, and received for all purposes as of the date so
delivered.
(b) Waiver. The failure of any party to insist in any one or more instances
------
upon the performance of any of the terms and conditions of this Agreement shall
not be construed as a waiver or relinquishment of any right granted hereunder,
or of the future performance of any such term or condition.
(c) Entire Agreement. This Agreement sets forth the entire understanding of the
----------------
parties hereto with respect to the subject matter hereof and supersedes any
prior understandings or agreements among the parties, whether written or oral,
to the extent related to the subject matter hereof.
(d) Further Acts. Each of the parties hereto shall execute and deliver all such
------------
additional documents or legal instruments, and shall perform or cause to be
performed all such further acts and things, as may be necessary or desirable to
carry out the purposes and intent of this Agreement.
(e) Amendment. This Agreement may not be amended, modified or altered in any
---------
manner, except pursuant to the terms of a written instrument signed by each of
the parties hereto.
(f) Invalid Provision. The invalidity or unenforceability of any particular
-----------------
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall thereafter be construed in all respects as if such invalid
or unenforceable provisions were omitted.
(g) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the domestic laws of the State of Connecticut without giving any
effect to any choice or conflict of law provision or rule (whether of the State
of Connecticut or of any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Connecticut.
(h) Binding Nature. This Agreement shall be binding upon and inure to the
--------------
benefit of the parties hereto and their successors, personal representatives,
heirs, devisees, guardians and assigns.
(i) Counterparts. This Agreement may be executed in any number of counterparts
------------
and all of such counterparts taken together shall for all purposes constitute
one agreement binding upon all of the parties.
(j) Headings. The headings contained in this Agreement are for reference
--------
purposes only and shall not affect the meaning or interpretation of this
Agreement.
(k) Usage. In construing this Agreement, feminine or neuter pronouns shall be
------
substituted for those of the masculine form, and the plural for the singular,
and vice versa, in any case in which the context may require. The capitalized
terms used in this Agreement shall have the meaning first applied to their first
usage in this Agreement unless otherwise indicated.
(l) Third Parties. Nothing contained in this Agreement is intended or shall be
-------------
construed to give any person, corporation or other entity, other than the
parties hereto and their respective successors and assigns, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained, this Agreement being intended to be and being for
the sole and exclusive benefit of the parties hereto and their respective
successors and assigns.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on and as of
the date first above written:
BRENNER, SALTZMAN & WALLMAN
By:________________________
___________________________
Henry M. Zachs
____________________________
Newton D. Brenner
_____________________________
Christopher W. Jenkins
CELLULAR COMMUNICATIONS OF
PUERTO RICO, INC.
By:/s/
--------------------------
Its Senior Vice President
(j) Headings. The headings contained in this Agreement are for reference
---------
purposes only and shall not affect the meaning or interpretation of this
Agreement.
(k) Usage. In construing this Agreement, feminine or neuter pronouns shall
------
be substituted for those of the masculine form, and the plural for the singular,
and vice versa, in any case in which the context may require. The capitalized
terms used in this Agreement shall have the meaning first applied to their first
usage in this Agreement unless otherwise indicated.
(l) Third Parties. Nothing contained in this Agreement is intended or shall
--------------
be construed to give any person, corporation or other entity, other than the
parties hereto and their respective successors and assigns, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained, this Agreement being intended to be and being for
the sole and exclusive benefit of the parties hereto and their respective
successors and assigns.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
and as of the date first above written:
BRENNER, SALTZMAN & WALLMAN
By: /s/
-----------------------------
/s/
--------------------------------
Henry M. Zachs
/s/
--------------------------------
Newton D. Brenner
/s/
-------------------------------
Christopher W. Jenkins
CELLULAR COMMUNICATIONS OF PUERTO
RICO, INC.
By:
----------------------------
Its
Henry M. Zachs
Newton D. Brenner
Christopher W. Jenkins
40 Woodland Street
Hartford, Connecticut 06105
December 26, 1995
Cellular Communications of Puerto Rico, Inc.
110 E. 59th Street, 26th floor
New York, New York 10025
Re: San Juan Cellular Telephone Company
Gentlemen:
On or shortly before the date of this letter, San Juan Cellular Telehphone
Company has made a distribution of $500,000 which after tax withholding will
result in $450,000 to HMZ San Juan, Inc., a Connecticut corporation ("HMZ"), one
of the partners of San Juan Cellular Telephone Company. HMZ has, in turn, made a
distribution of that amount to its shareholders.
On or shortly before the date of this letter, HMZ and the undersigned
individuals have entered into an Agreement and Plan of Reorganization with
Cellular Communications of Puerto Rico, Inc. ("Cellular") and CCPR Services,
Inc. (the "Reorganization Agreement"), providing for, among other things, the
acquisition of all or substantially all of the assets of HMZ in exchange for
shares of stock of Cellular. In the event that the closing of the transactions
contemplated by the Reorganization Agreement has not occurred by March 31, 1996,
the undersigned individuals will make a capital contribution of $450,000,
increased by any interest earned on the Escrow Fund (as hereinafter defined), to
HMZ, and will cause HMZ to make a capital contribution in that amount to San
Juan Cellular Telephone Company.
Cellular Communications of Puerto Rico, Inc.
December 26, 1995
Page 2.
In order to ensure the contribution of the undersigned individuals to HMZ,
and the contribution of HMZ to San Juan Cellular Telephone Company, $450,000
will be deposited as an Escrow Fund with Brenner, Saltzman & Wallman as Escrow
Agent. Upon the closing of the transactions contemplated by the Reorganization
Agreement on or before March 31, 1996, the escrow will be terminated and the
Escrow Fund will be distributed to Mr. Zachs. In the event that the closing of
the transactions contemplated by the Reorganization Agreement has not occurred
by March 31, 1996, the escrow will be terminated and the Escrow Fund will be
distributed to San Juan Cellular Telephone Company, in satisfaction of the
obligations of the undersigned individuals and HMZ as described above. Except in
the event that there is any dispute regarding the Escrow Fund, the fees of the
Escrow Agent shall be borne by the undersigned individuals. In the event that
there is a dispute regarding the Escrow Fund, the fees of the Escrow Agent shall
be borne 50% by the undersigned individuals and 50% by Cellular.
Please indicate your agreement to the foregoing by executing this letter in
the space provided below.
Very truly yours,
/s/
--------------------------------
Henry M. Zachs
/s/
--------------------------------
Newton D. Brenner
/s/
--------------------------------
Christopher W. Jenkins
Accepted, acknowledged and
agreed to:
CELLULAR COMMUNICATIONS OF
PUERTO RICO, INC.
By: /s/
----------------------------------
Its Senior Vice President