AGREEMENT AND PLAN OF REORGANIZATION
among
BELLSOUTH CORPORATION,
BELLSOUTH WCA MERGER SUBSIDIARY, INC.,
and
WIRELESS CABLE OF ATLANTA, INC.
Dated February 11, 1997
TABLE OF CONTENTS
Page
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01 Acceptable Authorization. . . . . . . . . 1
Section 1.02 Adjustment Event. . . . . . . . . . . . . 2
Section 1.03 Affiliate . . . . . . . . . . . . . . . . 2
Section 1.04 Annual FCC Reports. . . . . . . . . . . . 2
Section 1.05 Average Closing Price . . . . . . . . . . 2
Section 1.06 Basic Subscriber. . . . . . . . . . . . . 2
Section 1.07 BellSouth . . . . . . . . . . . . . . . . 2
Section 1.08 BellSouth Common Stock. . . . . . . . . . 2
Section 1.09 BellSouth Material Adverse Effect . . . . 2
Section 1.10 BellSouth Reports . . . . . . . . . . . . 2
Section 1.11 BellSouth Sub . . . . . . . . . . . . . . 2
Section 1.12 BellSouth Sub Common Stock. . . . . . . . 2
Section 1.13 Business Day. . . . . . . . . . . . . . . 3
Section 1.14 CARS. . . . . . . . . . . . . . . . . . . 3
Section 1.15 Capacity Lease. . . . . . . . . . . . . . 3
Section 1.16 Channel . . . . . . . . . . . . . . . . . 3
Section 1.17 Closing . . . . . . . . . . . . . . . . . 3
Section 1.18 Code. . . . . . . . . . . . . . . . . . . 3
Section 1.19 Communications Act. . . . . . . . . . . . 3
Section 1.20 Companies . . . . . . . . . . . . . . . . 3
Section 1.21 Company . . . . . . . . . . . . . . . . . 3
Section 1.22 Company Benefit Plans . . . . . . . . . . 3
Section 1.23 Company Channel . . . . . . . . . . . . . 3
Section 1.24 Company Common Stock. . . . . . . . . . . 4
Section 1.25 Company Environmental Permits . . . . . . 4
Section 1.26 Company ERISA Plan. . . . . . . . . . . . 4
Section 1.27 Company FCC Authorizations. . . . . . . . 4
Section 1.28 Company Material Adverse Effect . . . . . 4
Section 1.29 Company Permits . . . . . . . . . . . . . 4
Section 1.30 Company Preferred Stock . . . . . . . . . 4
Section 1.31 Company Reports . . . . . . . . . . . . . 4
Section 1.32 Competing Transaction . . . . . . . . . . 4
Section 1.33 Confidentiality Agreement . . . . . . . . 4
Section 1.34 Contracts . . . . . . . . . . . . . . . . 4
Section 1.35 Copyright Office. . . . . . . . . . . . . 4
Section 1.36 Delivered Digital-Ready Channel . . . . . 5
Section 1.37 Dissenting Shares . . . . . . . . . . . . 5
Section 1.38 Dividend Amount . . . . . . . . . . . . . 5
Section 1.39 Effective Date. . . . . . . . . . . . . . 6
Section 1.40 Effective Time. . . . . . . . . . . . . . 6
Section 1.41 ERISA . . . . . . . . . . . . . . . . . . 6
Section 1.42 Exchange Act. . . . . . . . . . . . . . . 6
Section 1.43 Exchange Agent. . . . . . . . . . . . . . 6
Section 1.44 Exchange Ratio. . . . . . . . . . . . . . 6
Section 1.45 Expenses. . . . . . . . . . . . . . . . . 6
Section 1.46 FCC . . . . . . . . . . . . . . . . . . . 6
Section 1.47 FCC Rules . . . . . . . . . . . . . . . . 6
Section 1.48 Final Order . . . . . . . . . . . . . . . 6
Section 1.49 GAAP. . . . . . . . . . . . . . . . . . . 6
Section 1.50 GBCC. . . . . . . . . . . . . . . . . . . 7
Section 1.51 Governmental Entity . . . . . . . . . . . 7
Section 1.52 Granted Channel . . . . . . . . . . . . . 7
Section 1.53 HSR Act . . . . . . . . . . . . . . . . . 7
Section 1.54 ITFS. . . . . . . . . . . . . . . . . . . 7
Section 1.55 Knowledge of the Company. . . . . . . . . 7
Section 1.56 Law . . . . . . . . . . . . . . . . . . . 7
Section 1.57 Lien. . . . . . . . . . . . . . . . . . . 7
Section 1.58 Market. . . . . . . . . . . . . . . . . . 7
Section 1.59 Market Facilities . . . . . . . . . . . . 7
Section 1.60 MDS . . . . . . . . . . . . . . . . . . . 7
Section 1.61 Merger. . . . . . . . . . . . . . . . . . 7
Section 1.62 NYSE. . . . . . . . . . . . . . . . . . . 8
Section 1.63 OFS . . . . . . . . . . . . . . . . . . . 8
Section 1.64 Outstanding Options . . . . . . . . . . . 8
Section 1.65 Pending Application . . . . . . . . . . . 8
Section 1.66 Person. . . . . . . . . . . . . . . . . . 8
Section 1.67 Proxy Statement/Prospectus. . . . . . . . 8
Section 1.68 Registration Statement. . . . . . . . . . 8
Section 1.69 SEC . . . . . . . . . . . . . . . . . . . 8
Section 1.70 Securities Act. . . . . . . . . . . . . . 8
Section 1.71 Site Lease. . . . . . . . . . . . . . . . 8
Section 1.72 Special Meeting . . . . . . . . . . . . . 8
Section 1.73 Stockholders. . . . . . . . . . . . . . . 8
Section 1.74 Subsidiary or Subsidiaries. . . . . . . . 8
Section 1.75 Tax or Taxes. . . . . . . . . . . . . . . 9
Section 1.76 Wireless Cable Channels . . . . . . . . . 9
Section 1.77 Wireless Cable System . . . . . . . . . . 9
ARTICLE II
THE MERGER
Section 2.01 The Merger. . . . . . . . . . . . . . . . 9
Section 2.02 Effective Time of the Merger. . . . . . . 9
Section 2.03 Effect of the Merger. . . . . . . . . . . 10
Section 2.04 Articles of Incorporation . . . . . . . . 10
Section 2.05 Conversion of Securities. . . . . . . . . 10
Section 2.06 Manner of Exchange. . . . . . . . . . . . 12
Section 2.07 Dissenting Shares . . . . . . . . . . . . 12
Section 2.08 Stock Transfer Books. . . . . . . . . . . 13
Section 2.09 Closing . . . . . . . . . . . . . . . . . 13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.01 Organization and Qualification;
Subsidiaries. . . . . . . . . . . . . . . 13
Section 3.02 Articles of Incorporation and Bylaws. . . 14
Section 3.03 Capitalization; Subsidiaries. . . . . . . 14
Section 3.04 Authorization; Enforceability . . . . . . 15
Section 3.05 Required Filings and Consents . . . . . . 15
Section 3.06 No Conflict . . . . . . . . . . . . . . . 16
Section 3.07 Environmental Matters . . . . . . . . . . 16
Section 3.08 Permits; Compliance . . . . . . . . . . . 17
Section 3.09 Company Reports; Financial Statements . . 18
Section 3.10 Taxes . . . . . . . . . . . . . . . . . . 18
Section 3.11 Litigation. . . . . . . . . . . . . . . . 20
Section 3.12 Absence of Changes. . . . . . . . . . . . 20
Section 3.13 Title to and Condition of Assets. . . . . 21
Section 3.14 Contracts . . . . . . . . . . . . . . . . 21
Section 3.15 Labor Matters . . . . . . . . . . . . . . 22
Section 3.16 Employee Benefit Plans. . . . . . . . . . 22
Section 3.17 Fees and Expenses of Brokers and
Others. . . . . . . . . . . . . . . . . . 23
Section 3.18 Accuracy of Information . . . . . . . . . 24
Section 3.19 Absence of Undisclosed Liabilities. . . . 24
Section 3.20 ITFS, MDS, CARS and OFS Specifications. . 24
Section 3.21 ITFS and MDS Capacity Leases. . . . . . . 26
Section 3.22 Site Leases and Lease Options . . . . . . 27
Section 3.23 No Cable Systems. . . . . . . . . . . . . 28
Section 3.24 Operating Market. . . . . . . . . . . . . 28
Section 3.25 Retransmission Consent; Programming
Agreements. . . . . . . . . . . . . . . . 28
Section 3.26 Copyright . . . . . . . . . . . . . . . . 29
Section 3.27 Equal Employment Opportunity. . . . . . . 29
Section 3.28 Interference Consents . . . . . . . . . . 29
Section 3.29 Certain Stockholder Agreements. . . . . . 29
Section 3.30 Transactions with Affiliates. . . . . . . 30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BELLSOUTH
AND BELLSOUTH SUB
Section 4.01 Organization and Qualification. . . . . . 30
Section 4.02 Articles of Incorporation and Bylaws. . . 30
Section 4.03 Capitalization. . . . . . . . . . . . . . 30
Section 4.04 Authorization; Enforceability . . . . . . 31
Section 4.05 Required Filings and Consents . . . . . . 31
Section 4.06 No Conflict . . . . . . . . . . . . . . . 31
Section 4.07 BellSouth Reports . . . . . . . . . . . . 32
Section 4.08 Fees and Expenses of Brokers and
Others. . . . . . . . . . . . . . . . . . 32
Section 4.09 Accuracy of Information . . . . . . . . . 33
ARTICLE V
COVENANTS
Section 5.01 Conduct of the Businesses of the
Company . . . . . . . . . . . . . . . . . 33
Section 5.02 No Solicitation . . . . . . . . . . . . . 37
Section 5.03 Access to Information; Confidentiality
Agreement . . . . . . . . . . . . . . . . 38
Section 5.04 Best Efforts. . . . . . . . . . . . . . . 38
Section 5.05 Consents. . . . . . . . . . . . . . . . . 38
Section 5.06 Public Announcements. . . . . . . . . . . 39
Section 5.07 Payment of Preferred Stock Dividend
and Conversion of Outstanding Options . . 39
Section 5.08 Channel Agreements. . . . . . . . . . . . 39
Section 5.09 Control of Wireless Cable System. . . . . 40
Section 5.10 Registration Statement; Proxy
Statement/Prospectus; Special
Meeting . . . . . . . . . . . . . . . . . 40
Section 5.11 Multiple Dwelling Units . . . . . . . . . 41
Section 5.12 Interim Financing . . . . . . . . . . . . 41
Section 5.13 HSR Filings . . . . . . . . . . . . . . . 41
Section 5.14 Termination of Certain Agreements . . . . 42
Section 5.15 Studio-to-Transmitter Links . . . . . . . 42
ARTICLE VI
CONDITIONS PRECEDENT TO CONSUMMATION OF THE MERGER
Section 6.01 Conditions Precedent to Each Party's
Obligation to Effect the Merger . . . . . 42
Section 6.02 Conditions Precedent to Obligations of
the Company . . . . . . . . . . . . . . . 43
Section 6.03 Conditions Precedent to Obligations of
BellSouth and BellSouth Sub . . . . . . . 44
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.01 Termination . . . . . . . . . . . . . . . 46
Section 7.02 Effect of Termination . . . . . . . . . . 47
Section 7.03 Amendment . . . . . . . . . . . . . . . . 47
Section 7.04 Waiver. . . . . . . . . . . . . . . . . . 47
Section 7.05 Expenses. . . . . . . . . . . . . . . . . 47
Section 7.06 Equitable Relief. . . . . . . . . . . . . 48
ARTICLE VIII
ADDITIONAL COVENANTS
Section 8.01 Employment Matters. . . . . . . . . . . . 48
Section 8.02 Stock Options . . . . . . . . . . . . . . 48
Section 8.03 Indemnification of Company Officers
and Directors . . . . . . . . . . . . . . 48
ARTICLE IX
GENERAL PROVISIONS
Section 9.01 Survival of Representations and
Warranties and Covenants. . . . . . . . . 49
Section 9.02 Notices . . . . . . . . . . . . . . . . . 49
Section 9.03 Headings. . . . . . . . . . . . . . . . . 50
Section 9.04 Severability. . . . . . . . . . . . . . . 50
Section 9.05 Entire Agreement. . . . . . . . . . . . . 51
Section 9.06 Assignment. . . . . . . . . . . . . . . . 51
Section 9.07 Parties in Interest . . . . . . . . . . . 51
Section 9.08 Failure or Indulgence Not Waiver;
Remedies Cumulative . . . . . . . . . . . 51
Section 9.09 Governing Law . . . . . . . . . . . . . . 51
Section 9.10 Counterparts. . . . . . . . . . . . . . . 51
EXHIBIT INDEX
1.23 Company Channel Exceptions
1.36(B) Delivered Digital-Ready Channel - ITFS
1.59 Market Facilities
3.01 Company Subsidiaries
3.02(a) Company Certificate of Incorporation
3.02(b) Company Bylaws
3.03(b)(i) Company Preferred Stock Dividends
3.03(b)(ii) Outstanding Options
3.03(c) Capitalization
3.05 Consents
3.08 Company Permits
3.10 Taxes
3.11 Litigation
3.12 Changes
3.13 Assets and Liens
3.14 Contracts
3.16 Company Benefit Plans
3.20(a) ITFS, MDS and CARS Technical Specifications
3.20(c) Pending Applications
3.21 Capacity Leases
3.22 Site Leases
3.24 Wireless Cable System Information
3.25(a) Retransmission Consent
3.25(b) Programming Agreements
3.26 Copyright Filings
3.28 Interference Consents
3.29(a) Certain Stockholders
3.29(b) Stockholder's Agreement
3.30 Transactions with Affiliates
5.01(a)(iv) Capital Expenditures
5.01(b)(xii) Form of Estoppel Certificate
5.01(b)(xiii) Certain Employees
5.01(b)(xv) Certain actions to be taken prior to
Closing Date
5.05 Consents
5.12 Form of Note
6.02(e) Form of Opinion of Hunton & Xxxxxxxx
6.03(h) Form of Consulting and Noncompetition Agreement
6.03(i)(i) Form of Opinion of Xxxxxxxx & Xxxxx, L.L.P.
6.03(i)(ii) Form of Opinion of Pepper & Corrazzini, L.L.P.
6.03(k) Delivered Digital-Ready Channels and Granted
Channels as of the Effective Date
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION dated
February 11, 1997 (as it may be amended from time to time, this
"Agreement") is made by and among (i) BELLSOUTH CORPORATION, a
Georgia corporation ("BellSouth"), (ii) BELLSOUTH WCA MERGER
SUBSIDIARY, INC., a Georgia corporation ("BellSouth Sub"), and
(iii) WIRELESS CABLE OF ATLANTA, INC., a Georgia corporation (the
"Company").
RECITALS
WHEREAS, BellSouth Sub, upon the terms and subject to
the conditions of this Agreement and in accordance with the
Georgia Business Corporation Code of the State of Georgia
("GBCC"), will merge with and into the Company (the "Merger");
and
WHEREAS, the Board of Directors of the Company has
determined that the Merger is consistent with and in furtherance
of the long-term business strategy of the Company and is fair to
and in the best interests of the Company and the holders of
Company Common Stock and Company Preferred Stock and has approved
and adopted this Agreement and the transactions contemplated
hereby; and
WHEREAS, for federal income tax purposes, it is
intended that the Merger qualify as a tax-free reorganization
under the provisions of Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the foregoing and
the representations, warranties, covenants and agreements set
forth herein and for other good and valuable consideration, the
parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms shall
have the meanings assigned to them below:
Section 1.01 Acceptable Authorization. "Acceptable
Authorization" shall mean a MDS or ITFS Channel authorized by a
license covered by the required certification or notification of
completion of construction timely filed with the FCC (and not a
special temporary, experimental or developmental authorization)
which is in full force and effect, validly issued, free of
special conditions, not subject to a pending revocation
proceeding, not in jeopardy of cancellation under FCC Rule 21.303
for removal of equipment or failure to offer service, and not
subject to forfeiture for any failure to meet a condition of any
instrument of authorization imposed by the FCC.
Section 1.02 Adjustment Event. "Adjustment Event" shall
have the meaning set forth in Section 2.05(f).
Section 1.03 Affiliate. "Affiliate," with respect to any
Person, shall mean a Person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is
under common control with, such Person.
Section 1.04 Annual FCC Reports. "Annual FCC Reports"
shall mean those reports, filings, notices and regulatory fees
required to be filed annually with the FCC by licensees,
permittees, applicants or operators in the MDS, ITFS, CARS and
OFS services, including but not limited to reports required by
Sections 21.11, 21.911 and 21.307 of FCC Rules.
Section 1.05 Average Closing Price. "Average Closing
Price" shall have the meaning set forth in Section 2.05(a).
Section 1.06 Basic Subscriber. "Basic Subscriber" means a
current subscriber to a Wireless Cable System's regular monthly
basic services who has paid for at least one full month of basic
service in full without discount, whose service rates are not
lower than the rates generally charged when that subscriber
became a subscriber and whose account receivable for such service
does not include any balance due for service provided more than
90 days before the date of determination. For bulk rate
customers, an equivalent billing unit shall be a Basic
Subscriber. The number of equivalent billing units shall be
determined by dividing the aggregate monthly amount billed for
regular monthly basic services by the Company to bulk rate
customers by the average monthly rate charged to residential
customers for regular monthly basic services.
Section 1.07 BellSouth. "BellSouth" shall mean BellSouth
Corporation, a Georgia corporation.
Section 1.08 BellSouth Common Stock. "BellSouth Common
Stock" shall have the meaning set forth in Section 2.05(a).
Section 1.09 BellSouth Material Adverse Effect. "BellSouth
Material Adverse Effect" shall have the meaning set forth in
Section 4.01.
Section 1.10 BellSouth Reports. "BellSouth Reports" shall
have the meaning set forth in Section 4.07(a).
Section 1.11 BellSouth Sub. "BellSouth Sub" shall mean
BellSouth WCA Merger Subsidiary, Inc., a Georgia corporation.
Section 1.12 BellSouth Sub Common Stock. "BellSouth Sub
Common Stock" shall have the meaning set forth in Section
2.05(e).
Section 1.13 Business Day. "Business Day" shall mean any
day other than (i) a day on which banks in the State of New York
are authorized or obligated to be closed or (ii) a day on which
BellSouth Common Stock does not trade on the NYSE.
Section 1.14 CARS. "CARS" shall mean Cable Antenna Relay
Service.
Section 1.15 Capacity Lease. "Capacity Lease" shall have
the meaning set forth in Section 3.21.
Section 1.16 Channel. "Channel" shall mean a 6 MHz wide
channel capable of carrying both audio and video signals.
Section 1.17 Closing. "Closing" shall mean the conference
held at the offices of Hunton & Xxxxxxxx in Atlanta, Georgia at
10:00 a.m. on the date determined by the parties in accordance
with Section 2.09.
Section 1.18 Code. "Code" shall have the meaning set forth
in the Recitals (fourth paragraph).
Section 1.19 Communications Act. "Communications Act"
shall mean the Federal Communications Act of 1934, as amended.
Section 1.20 Companies. "Companies" shall mean the Company
and each of its Subsidiaries.
Section 1.21 Company. "Company" shall mean Wireless Cable
of Atlanta, Inc., a Georgia corporation.
Section 1.22 Company Benefit Plans. "Company Benefit
Plans" shall have the meaning set forth in Section 3.16.
Section 1.23 Company Channel. "Company Channel" shall mean
an ITFS or MDS Channel which,
(A) if a MDS Channel, either (i) is authorized by the FCC to
the Company or a wholly-owned Subsidiary of the Company and
not subject to any lease to or rights inuring in any other
entity, or (ii) is leased to the Company or a wholly-owned
Subsidiary of the Company by Capacity Lease which is in full
force and effect and is enforceable in accordance with its
terms, which is not subject to termination at the option of
the lessor and which is not in default; and
(B) if an ITFS Channel, is leased to the Company by a
Capacity Lease which shall be in full force and effect and
is enforceable in accordance with its terms, which shall
not be subject to termination at the option of lessor and
which is not in default, except as set forth on Exhibit
1.23.
Section 1.24 Company Common Stock. "Company Common Stock"
shall have the meaning set forth in Section 2.05(a).
Section 1.25 Company Environmental Permits. "Company
Environmental Permits" shall have the meaning set forth in
Section 3.07.
Section 1.26 Company ERISA Plan. "Company ERISA Plan"
shall have the meaning set forth in Section 3.16.
Section 1.27 Company FCC Authorizations. "Company FCC
Authorizations" shall have the meaning set forth in Section
3.20(a).
Section 1.28 Company Material Adverse Effect. "Company
Material Adverse Effect" shall have the meaning set forth in
Section 3.01.
Section 1.29 Company Permits. "Company Permits" shall have
the meaning set forth in Section 3.08(a).
Section 1.30 Company Preferred Stock. "Company Preferred
Stock" shall have the meaning set forth in Section 2.05(b).
Section 1.31 Company Reports. "Company Reports" shall have
the meaning set forth in Section 3.09(a).
Section 1.32 Competing Transaction. "Competing
Transaction" shall have the meaning set forth in Section 5.02.
Section 1.33 Confidentiality Agreement. "Confidentiality
Agreement" shall mean the Nondisclosure Agreement between
BellSouth and the Company dated October 15, 1996.
Section 1.34 Contracts. "Contracts" shall mean contracts,
agreements, leases (including, without limitation, the Capacity
Leases and the Site Leases), licenses (including, without
limitation, the FCC authorizations required for BellSouth
to operate the Wireless Cable System), relationships and
commitments, written or oral, to which any of the Companies is a
party or by which any of the Companies or any of their properties
is bound.
Section 1.35 Copyright Office. "Copyright Office" shall
mean the Copyright Office, the Library of Congress, the Registrar
of Copyrights, the Copyright Tribunal and any successor
government agency performing functions similar to those performed
by the foregoing on the date hereof.
Section 1.36 Delivered Digital-Ready Channel. "Delivered
Digital-Ready Channel" shall mean a Granted Channel that:
(A) if an MDS Channel, transmission capacity thereon is
available full-time to the Company under a Capacity Lease
which, in BellSouth's reasonable judgment, allocates the
full capacity of the Channel at all times to the Company on
a non-common carrier basis free of any rights in the lessor
to recapture any use of the Channel or, if licensed to the
Company, may be used by the Company full-time, in each case
without violating any rights of third parties;
(B) if an ITFS Channel, transmission capacity thereon is
available to the Company under a Capacity Lease which, in
BellSouth's reasonable judgment, without amendment or
modification thereto or the payment of any consideration,
allocates no more than that amount of the transmission
capacity set forth on Exhibit 1.36(B) to the holder of the
Company FCC Authorization therefor, and which allocates all
of the remaining transmission capacity to the Company, free
from any rights in such licensee to recapture additional air
time or transmission capacity;
(C) by December 24, 1996, if an MDS Channel or an ITFS
Channel available to the Company under a Capacity Lease, was
the subject of one or more timely-filed applications pending
before the FCC proposing facilities identical in all
respects to the Market Facilities set forth on Exhibit 1.59;
provided that the Company shall be deemed to have complied
with this Section notwithstanding any adverse action taken
by the FCC with respect to the 200 watt applications listed
on Exhibit 3.20(c-I);
(D) is not subject to any agreement, and was not authorized
pursuant to any existing and expressed or implied
undertaking, which requires or could require the Channel to
operate with carrier offset, to time-share, to cease or
curtail operations, or to accept less than a 45 dB
desired-to-undesired signal ratio anywhere within a 35-mile
radius of its transmitter site;
(E) is not required by FCC authorization to use carrier
offset; and
(F) if the Channel is made available to the Company by a
Capacity Lease, such Capacity Lease, in BellSouth's
reasonable judgment, (i) obligates the lessor to seek
FCC authorization of the digital emission of the Channel,
and (ii) allows the Company to operate the Channel for the
duration of the Capacity Lease with a digital transmission
system selected by the Company.
Section 1.37 Dissenting Shares. "Dissenting Shares" shall
have the meaning set forth in Section 2.07.
Section 1.38 Dividend Amount. "Dividend Amount" shall mean
the number of shares of BellSouth Common Stock that would have
been issued under the BellSouth Dividend Reinvestment and Stock
Purchase Plan with respect to the shares of BellSouth Common
Stock that would have been issued to Stockholders hereunder had
the Effective Time occurred as of the date set forth in Section
2.05(g), assuming all dividends relating to such shares had been
reinvested in BellSouth Common Stock in accordance with the
BellSouth Dividend Reinvestment and Stock Purchase Plan.
Section 1.39 Effective Date. "Effective Date" shall have
the meaning set forth in Section 2.02.
Section 1.40 Effective Time. "Effective Time" shall have
the meaning set forth in Section 2.02.
Section 1.41 ERISA. "ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as amended.
Section 1.42 Exchange Act. "Exchange Act" shall mean the
Securities and Exchange Act of 1934, as amended, and the rules
and regulations as promulgated thereunder.
Section 1.43 Exchange Agent. "Exchange Agent" shall have
the meaning set forth in Section 2.06(a).
Section 1.44 Exchange Ratio. "Exchange Ratio" shall have
the meaning set forth in Section 2.05(a).
Section 1.45 Expenses. "Expenses" shall have the meaning
set forth in Section 7.05(b).
Section 1.46 FCC. "FCC" shall mean the Federal
Communications Commission or any successor governmental entity
that has jurisdiction over the matters which, as of the date
hereof, are within the jurisdiction of the FCC.
Section 1.47 FCC Rules. "FCC Rules" shall mean the rules,
regulations and published policies and orders of the FCC.
Section 1.48 Final Order. "Final Order" shall mean an
order or action of the FCC which is effective, which is not
subject to any petition for reconsideration, pending petition
to deny or informal objection, application for review, notice of
appeal, request for stay, petition for writ of certiorari, or
other appeal; and which cannot be subject to any timely-filed
petition for reconsideration, application for review, notice of
appeal, request for stay, petition for writ of certiorari, or
other appeal or set aside, rescinded or adversely modified
by the FCC sua sponte.
Section 1.49 GAAP. "GAAP" shall mean generally accepted
accounting principles applied on a consistent basis.
Section 1.50 GBCC. "GBCC" shall have the meaning set forth
in the Recitals (first paragraph).
Section 1.51 Governmental Entity. "Governmental Entity"
shall have the meaning set forth in Section 3.05.
Section 1.52 Granted Channel. "Granted Channel" shall mean
an ITFS or MDS Channel that (A) is the subject of an Acceptable
Authorization, (B) is the subject of one or more modification
applications, on file at the FCC, proposing facilities identical
in all respects to the Market Facilities and (C) is a Company
Channel.
Section 1.53 HSR Act. "HSR Act" shall mean the Xxxx Xxxxx
Xxxxxx Antitrust Improvements Act of 1976, as amended.
Section 1.54 ITFS. "ITFS" shall mean the Instructional
Television Fixed Service as regulated pursuant to 47 C.F.R.
74.901 et. seq.
Section 1.55 Knowledge of the Company. "Knowledge of the
Company" shall mean the knowledge, after due and reasonable
inquiry, of Xxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxxx or Xxxxx X.
Xxxxxx.
Section 1.56 Law. "Law" shall have the meaning set forth
in Section 3.06.
Section 1.57 Lien. "Lien" shall mean, with respect to any
asset, any mortgage, lien, pledge, charge, claim, security
interest or encumbrance of any kind in respect of such asset
and, for the purposes of this Agreement, a Person shall be deemed
to own subject to a Lien any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or any other form
of title retention agreement relating to such asset.
Section 1.58 Market. "Market" shall mean the Atlanta,
Georgia wireless cable market.
Section 1.59 Market Facilities. "Market Facilities" shall
mean those technical and operational characteristics set forth in
Exhibit 1.59.
Section 1.60 MDS. "MDS" shall mean the Multipoint
Distribution Service, including Multichannel Multipoint
Distribution Service Channels, consisting of the E-Group
Channels, F-group Channels, H-group Channels, Channel 1, Channel
2 and Channel 2A as set forth in 47 C.F.R. Section 21.901, and
ITFS Channels authorized for commercial operation under 47 C.F.R.
Section 74.990.
Section 1.61 Merger. "Merger" shall have the meaning set
forth in the Recitals (first paragraph).
Section 1.62 NYSE. "NYSE" shall mean the New York Stock
Exchange.
Section 1.63 OFS. "OFS" shall mean the Private Operational
Fixed Microwave Service as set forth in 47 C.F.R. Section 94.1 et
seq.
Section 1.64 Outstanding Options. "Outstanding Options"
shall have the meaning set forth in Section 3.03(b).
Section 1.65 Pending Application. "Pending Application"
shall have the meaning set forth in Section 3.20(c).
Section 1.66 Person. "Person" shall mean an individual,
corporation, partnership, limited liability company, association,
trust, unincorporated organization, other entity or group (as
determined under Section 13(d) of the Exchange Act).
Section 1.67 Proxy Statement/Prospectus. "Proxy
Statement/Prospectus" shall mean the proxy materials of the
Company and the prospectus of BellSouth to be distributed to the
Stockholders in connection with the Special Meeting.
Section 1.68 Registration Statement. "Registration
Statement" shall mean the Registration Statement on Form S-4,
including the Proxy Statement/Prospectus contained therein, to be
filed by BellSouth with the SEC with respect to the BellSouth
Common Stock to be offered to the holders of Company Common Stock
and Company Preferred Stock in the Merger.
Section 1.69 SEC. "SEC" shall mean the Securities and
Exchange Commission.
Section 1.70 Securities Act. "Securities Act" shall mean
the Securities Act of 1933, as amended, and all rules and
regulations promulgated thereunder.
Section 1.71 Site Lease. "Site Lease" shall have the
meaning set forth in Section 3.22(a).
Section 1.72 Special Meeting. "Special Meeting" shall mean
the special meeting of the Stockholders to be called pursuant to
Section 5.10 to consider and approve this Agreement and the
transactions contemplated hereby, and any adjournments thereof.
Section 1.73 Stockholders. "Stockholders" shall mean all
of the holders of Company Common Stock (including holders of all
Outstanding Options convertible or exchangeable for shares of
Company Common Stock) and Company Preferred Stock.
Section 1.74 Subsidiary or Subsidiaries. "Subsidiary" or
"Subsidiaries" of the Company, BellSouth, BellSouth Sub, or any
other Person shall mean any corporation, partnership, limited
liability company, joint venture or other legal entity of which
the Company, BellSouth, BellSouth Sub or such other Person, as
the case may be (either alone or through or together with any
other Subsidiary), owns, directly or indirectly, 50% or more
of the stock or other equity interests.
Section 1.75 Tax or Taxes. "Tax" or "Taxes" shall mean any
and all taxes, charges, fees, levies or assessments payable to
any federal, state, local or foreign taxing authority or agency
including, without limitation, (i) income, franchise, profits,
gross receipts, minimum, alternative minimum, estimated, ad
valorem, value added, sales, use, service, real or personal
property, capital stock, license, payroll, withholding,
disability, employment, social security, workers compensation,
unemployment compensation, utility, severance, excise, stamp,
windfall profits, transfer and gains taxes, (ii) customs duties,
imposts, charges, levies or other similar assessments of any kind
and (iii) interest, penalties and additions to tax imposed with
respect thereto.
Section 1.76 Wireless Cable Channels. "Wireless Cable
Channels" shall mean ITFS Channels and MDS Channels.
Section 1.77 Wireless Cable System. "Wireless Cable
System" shall mean Wireless Cable Channels and associated
transmission, reception and related equipment and authorizations
used or to be used to distribute television, video and other
programming to residences and other receive points and any
associated interactive or other services operated or proposed to
be operated by the Company in the Market.
ARTICLE II
THE MERGER
Section 2.01 The Merger. Subject to the terms and
conditions set forth in this Agreement, at the Effective Time,
BellSouth Sub shall be merged with and into the Company in
accordance with the provisions of, and with the effects provided
in Article 11 of the GBCC. The separate existence of BellSouth
Sub shall cease (except as may be continued by operation of law)
and the Company shall continue as the surviving corporation of
the Merger under the corporate name Wireless Cable of Atlanta,
Inc. or such other name as may be selected by BellSouth and shall
continue to be governed by the laws of the State of Georgia.
Section 2.02 Effective Time of the Merger. As soon as is
practicable after the satisfaction or, if permissible, waiver of
the conditions hereinafter set forth, the parties hereto shall
cause the Merger to be consummated by filing a certificate of
merger relating to the Agreement with the Secretary of State of
the State of Georgia in such form as required by, and executed in
accordance with the relevant provisions of GBCC (the date and
time of such filing, or such later date or time as set forth
therein, being the "Effective Date" and the "Effective Time,"
respectively) and each of BellSouth and the Company shall take
any and all lawful actions to cause the Merger to become
effective.
Section 2.03 Effect of the Merger. At the Effective Time,
the effect of the Merger shall be as provided in the applicable
provisions of the GBCC. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the
property rights, privileges, powers and franchises of BellSouth
Sub shall vest in the Company, and all debts, liabilities and
duties of BellSouth Sub shall become the debts, liabilities and
duties of the Company, and the Company shall become a
wholly-owned subsidiary of BellSouth.
Section 2.04 Articles of Incorporation. As a result of the
Merger, the Articles of Incorporation and Bylaws of the Company
shall be amended and restated in the form of the Articles of
Incorporation and Bylaws of BellSouth Sub until thereafter
amended.
Section 2.05 Conversion of Securities.
(a) At the Effective Time, by virtue of the Merger, as
provided herein, and without any action on the part of the
Company, BellSouth Sub or the holders thereof, each share of the
Company's common stock, $1.00 par value (the "Company Common
Stock"), issued and outstanding immediately prior to the
Effective Time (other than any shares of Company Common Stock to
be canceled pursuant to Section 2.05(c) and Dissenting Shares)
shall be converted into that number of shares of the common
stock, $1.00 par value per share, of BellSouth (the "BellSouth
Common Stock") determined in accordance with the Exchange Ratio.
For the purposes of this Agreement the Exchange Ratio shall
be calculated as follows:
(i) if the Average Closing Price (as defined
below) is between $32.625 and $42.625, the Exchange
Ratio shall be 0.49;
(ii) if the Average Closing Price is greater than
$42.625, the Exchange Ratio shall be the quotient of
(A) $20.88625 divided by (B) the Average Closing Price,
rounded to the nearest one-one thousandth of a share;
and
(iii) if the Average Closing Price is less than
$32.625, the Exchange Ratio shall be the quotient of
(A) $15.98625 divided by (B) the Average Closing Price,
rounded to the nearest one-one thousandth of a share.
(iv) "Average Closing Price" shall mean the
average closing sale price of BellSouth Common Stock as
reported on the NYSE for each of the 20 consecutive
trading days ending on the tenth day immediately
preceding the Effective Date; provided that for any
such trading day for which such closing sale price is
"ex-dividend," the closing sale price for such day and
any subsequent days in the 20-day period shall be
adjusted by adding the amount of the dividend to the
closing sale price.
(b) Prior to the Effective Time, (i) each share of the
Company's 12% Cumulative Convertible Redeemable Preferred Stock,
Series A, $1.00 par value (the "Company Preferred Stock") shall
be converted to Company Common Stock and all accrued but unpaid
dividends on the Company Preferred Stock shall have been paid,
and (ii) all Outstanding Options shall be exercised or canceled.
Immediately prior to the Effective Time, following conversion of
the Company Preferred Stock and the exercise of all Outstanding
Options, there shall be not more than 2,245,378 shares of Company
Common Stock issued and outstanding and no shares of Company
Preferred Stock shall be issued and outstanding.
(c) Each share of Company Common Stock or Company
Preferred Stock held in treasury and each share of Company Common
Stock or Company Preferred Stock owned by BellSouth immediately
prior to the Effective Time shall, by virtue of the Merger and as
provided herein, automatically be canceled and extinguished, and
no payment of any kind shall be made with respect thereto, and
each Dissenting Share shall be treated in accordance with Article
13 of the GBCC.
(d) No fraction of a share of BellSouth Common Stock
shall be issued in connection with the conversion of Company
Common Stock in the Merger and the distribution of BellSouth
Common Stock in respect thereof, but in lieu of such fraction,
the Exchange Agent shall make a cash payment (without interest)
equal to the same fraction of the market value of a full share of
BellSouth Common Stock, computed on the basis of the Exchange
Ratio.
(e) At and as of the Effective Time and as provided
herein, each share of common stock of BellSouth Sub, no par value
per share (the "BellSouth Sub Common Stock") shall be converted
into one share of Company Common Stock.
(f) In the event of any change in BellSouth Common
Stock between the date of this Agreement and the Effective Time
by reason of any stock dividend, subdivision, reclassification,
recapitalization, combination, exchange of shares or the like (an
"Adjustment Event"), the Exchange Ratio shall be appropriately
adjusted so that each holder of Company Common Stock will receive
in the Merger the kind and amount of securities such holder would
have been entitled to receive if the Effective Time had been
immediately prior to such Adjustment Event. Similar adjustments
shall be made successively whenever any Adjustment Event occurs.
(g) In the event the Effective Time does not occur
prior to April 10, 1997 (the record date for the cash dividend
payable with respect to BellSouth Common Stock in the second
fiscal quarter of 1997), the Dividend Amount for such quarter
shall be issued with respect to each share of Company Common
Stock in addition to the shares of BellSouth Common Stock issued
in accordance with the Exchange Ratio. In the event BellSouth
has not terminated this Agreement in accordance with Section
7.01(e) and the Effective Time does not occur prior to July 9,
1997 (the record date for the cash dividend payable with respect
to BellSouth Common Stock in the third fiscal quarter of 1997),
the Dividend Amount for such quarter shall be issued with respect
to each share of Company Common Stock, in addition to the shares
of BellSouth Common Stock issued in accordance with the Exchange
Ratio.
Section 2.06 Manner of Exchange.
(a) After the Effective Time, each holder of a
certificate for theretofore outstanding shares of Company Common
Stock, upon surrender of such certificate to the exchange agent
designated by BellSouth to effect the issuance of certificates
(the "Exchange Agent"), and a Letter of Transmittal, which shall
be mailed to each holder of a certificate for theretofore
outstanding shares of Company Common Stock by the Exchange Agent
promptly following the Effective Time, shall be entitled to
receive in exchange therefor a certificate or certificates
representing the number of full shares of BellSouth Common Stock
for which shares of Company Common Stock theretofore represented
by the certificate or certificates so surrendered shall have been
exchanged as provided in this Article II and cash in lieu of any
fractional share of BellSouth Common Stock to which such holder
is entitled pursuant to Section 2.05(d). Until so surrendered,
each outstanding certificate which, prior to the Effective Time,
represented Company Common Stock will be deemed to evidence the
right to receive the number of full shares of BellSouth Common
Stock into which the shares of Company Common Stock represented
thereby may be converted in accordance with the Exchange Ratio;
and, after the Effective Time will be deemed for all corporate
purposes of BellSouth to evidence ownership of the number of full
shares of BellSouth Common Stock into which the shares of Company
Common Stock represented thereby were converted.
(b) For shares of Company Common Stock to be converted
into BellSouth Common Stock, until such outstanding certificates
formerly representing Company Common Stock are surrendered, no
dividend payable to holders of record of BellSouth Common Stock
for any period as of any date subsequent to the Effective Time
shall be paid to the holder of such outstanding certificates in
respect thereof. If a certificate representing such shares is
presented to BellSouth, it shall be canceled and exchanged for a
certificate representing shares of BellSouth Common Stock as
herein provided. Upon surrender of certificates of Company
Common Stock in exchange for BellSouth Common Stock, there shall
be paid to the recordholder of the certificates of BellSouth
Common Stock issued in exchange therefor (i) the amount of
dividends theretofore paid for such full shares of BellSouth
Common Stock as of any date subsequent to the Effective Time
which have not yet been paid to a public official pursuant to
abandoned property laws and (ii) at the appropriate payment date
the amount of dividends with a record date after the Effective
Time but prior to surrender and a payment date subsequent to
surrender. No interest shall be payable on such dividends upon
surrender of outstanding certificates.
Section 2.07 Dissenting Shares. Notwithstanding anything
in this Agreement to the contrary, shares of Company Common Stock
and Company Preferred Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by a
stockholder (other than BellSouth and its subsidiaries, which
waive such right to dissent) who has the right (to the extent
such right is available by law) to demand and receive payment of
the fair value of his shares of Company Common Stock or Company
Preferred Stock pursuant to Section 14-2-1302 of the GBCC (the
"Dissenting Shares") shall not be converted into or be
exchangeable for the right to receive the consideration provided
in Section 2.01 of this Agreement, unless and until such holder
shall fail to perfect his or her right to dissent or shall have
effectively withdrawn or lost such right under the GBCC, as the
case may be. If such holder shall have so failed to perfect his
right to dissent or shall have effectively withdrawn or lost such
right, each of his shares of Company Common Stock or Company
Preferred Stock shall thereupon be deemed to have been converted
into, at the Effective Time, the right to receive shares of
BellSouth Common Stock as provided in Section 2.01 of this
Agreement.
Section 2.08 Stock Transfer Books. At the Effective Time,
the stock transfer books of BellSouth Sub shall be closed, and
there shall be no further registration of transfers of shares of
BellSouth Sub Common Stock thereafter on the records of the
BellSouth Sub.
Section 2.09 Closing. Unless this Agreement shall have
been terminated and the transactions herein contemplated shall
have been abandoned pursuant to Section 7.01 and subject to the
satisfaction or waiver of the conditions set forth in Article VI,
the consummation of the Merger will take place as promptly as
practicable on a date designated by BellSouth (and in any event
within 10 Business Days) after satisfaction or waiver of the
conditions set forth in Article VI, at the offices of Hunton &
Xxxxxxxx, NationsBank Plaza, 000 Xxxxxxxxx Xxxxxx, X.X., Xxxxxxx,
Xxxxxxx 00000.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to BellSouth and
BellSouth Sub that:
Section 3.01 Organization and Qualification; Subsidiaries.
Each of the Companies is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation, has all requisite corporate power and
authority to carry on its business as it is now being conducted
and to own, operate and hold under lease its assets and
properties as, and in the places where, such properties and
assets now are owned, operated or held. Each of the Companies is
duly qualified and in good standing to do business in each
jurisdiction in which the nature of the business conducted by it
or the ownership or leasing of its properties makes such
qualification necessary, other than where the failure to be so
duly qualified and in good standing would not have a Company
Material Adverse Effect. The term "Company Material Adverse
Effect" as used in this Agreement means any change or effect
that, individually or when taken together with all other such
changes or effects, could reasonably be expected to be materially
adverse to the assets, financial condition, business or
operations of any of the Companies. Exhibit 3.01 constitutes a
true, correct and complete list of all of the Subsidiaries of the
Company. The Company does not own, directly or indirectly, nor
has it agreed to purchase or otherwise acquire 5% or more of the
capital stock or other equity interest in, or any interest
convertible into or exchangeable or exercisable for 5% or more of
the capital stock or other equity interest in any Person other
than the Subsidiaries listed on Exhibit 3.01.
Section 3.02 Articles of Incorporation and Bylaws.
Attached as Exhibits 3.02(a) and (b) hereto, are true, correct
and complete copies, in full force and effect, of the Company's
Articles of Incorporation and Bylaws, as amended or restated.
None of the Companies are in violation of any of the provisions
of their respective Articles of Incorporation or Bylaws.
Section 3.03 Capitalization; Subsidiaries.
(a) The Company's authorized equity capitalization
consists of 10,000,000 shares of Company Common Stock and
5,000,000 shares of preferred stock. As of the close of business
on September 30, 1996, 1,772,450 shares of Company Common Stock
and 39,372 shares of Company Preferred Stock were issued and
outstanding, such shares of Company Common Stock and Company
Preferred Stock constituted all of the issued and outstanding
shares of capital stock of the Company as of such date. All
issued and outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid
and non-assessable, are not subject to and have not been issued
in violation of any preemptive or similar rights, and were
offered and sold in compliance with all applicable federal and
state securities laws. At the Effective Time, there shall not be
more than 2,245,378 shares of Company Common Stock issued and
outstanding and no shares of Company Preferred Stock shall be
issued and outstanding.
(b) Except as required by Section 5.07 hereof or as
set forth on Exhibit 3.03(b)(i), the Company has not, subsequent
to December 31, 1995, declared or paid any dividend on, or
declared or made any distribution with respect to, or authorized
or effected any split-up or any other recapitalization of, any of
the Company Common Stock or Company Preferred Stock, or directly
or indirectly redeemed, purchased or otherwise acquired any of
its outstanding capital stock or agreed to take any such action
and will not take any such action during the period between the
date of this Agreement and the Effective Time. Except as set
forth on Exhibit 3.03(b)(ii), there are no securities or
obligations convertible into or exercisable or exchangeable for
shares of Company Common Stock or any other equity interests in
the Companies, or warrants, options or other rights to acquire
any such shares or interests or any such securities or
obligations, or other rights (including registration rights),
agreements, arrangements or commitments of any character to which
any of the Companies is a party relating to the issued or
unissued capital stock of, or other equity interest in, the
Companies or obligating the Companies to grant, issue or sell any
shares of the capital stock of, or other equity interest in, the
Companies, by sale, lease, license or otherwise ("Outstanding
Options"). There are no obligations, contingent or otherwise, of
the Company to (i) repurchase, redeem or otherwise acquire any
shares of Company Common Stock or Company Preferred Stock or (ii)
make any investment in (in the form of a loan, capital
contribution or otherwise), or provide any guarantee with respect
to the obligations of, any Person. There are no agreements,
arrangements or commitments of any character (contingent or
otherwise) pursuant to which any Person is or may be entitled to
receive any payment based on the revenues or earnings, or
calculated in accordance therewith, of the Company. There are no
voting trusts, or other agreements or understandings to which the
Company or any Stockholder is a party or by which the Company or
any Stockholder is bound with respect to the voting of any shares
of capital stock of the Company.
(c) All of the outstanding shares of capital stock of
the Company's Subsidiaries are validly issued, fully paid and
nonassessable and free of preemptive rights and are owned by the
Company, directly or indirectly, free and clear of all Liens or
other restrictions. Exhibit 3.03(c) sets forth the authorized
equity capitalization and outstanding capital stock of each of
the Company's Subsidiaries. The Company owns directly or
indirectly all of the issued and outstanding shares of the
capital stock and partnership or other ownership interests in
each of its Subsidiaries. There are no subscriptions, options,
warrants, rights, calls, contracts, voting trusts, proxies or
other commitments, understandings, restrictions or arrangements
relating to the issuance, sale, voting, transfer, ownership or
other rights affecting any shares of capital stock or partnership
or other ownership interests in any Subsidiary of the Company,
including any right of conversion or exchange under any
outstanding security, instrument or agreement.
Section 3.04 Authorization; Enforceability. The Company
has all requisite corporate power and authority to perform its
obligations under this Agreement and to consummate the
transactions contemplated to be consummated by it hereby. The
execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary corporate action and no
other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the
transactions contemplated hereby, other than the approval of the
Stockholders at the Special Meeting. This Agreement and all of
the other documents and instruments required hereby have been
duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery hereof by BellSouth and
BellSouth Sub, constitute the legal, valid and binding
obligations of the Company enforceable in accordance with their
respective terms.
Section 3.05 Required Filings and Consents. Neither the
execution and delivery of this Agreement by the Company, nor the
performance of this Agreement by the Company does or will require
any of the Companies to obtain any consent, approval,
authorization or permit of, or to make any filing with or
notification to any federal, state, local or foreign government,
authority, agency, department, bureau, court, commission or other
body, office or instrumentality (individually a "Governmental
Entity" and collectively, "Governmental Entities"), except for
applicable requirements, if any, of (i) the Communications Act
and FCC Rules, (ii) the HSR Act, (iii) federal securities laws or
state securities, "Blue Sky" or takeover laws, and (iv) the
filing and recordation of appropriate merger documents as
required by Law. Except as set forth on Exhibit 3.05, there is
no requirement that any party to any Contract consent to the
execution and delivery of, or the consummation of the
transactions contemplated by this Agreement. The consummation of
the transactions contemplated hereby will not result in a change
in any rights or obligations of the parties to any Contract.
Section 3.06 No Conflict. Neither the execution and
delivery of this Agreement by the Company nor the performance of
this Agreement by the Company does or will (a) conflict with or
violate any of the articles of incorporation or bylaws,
partnership or organizational documents, in each case as amended
or restated, of the Companies, (b) conflict with or violate any
federal, state, foreign or local law, statute, ordinance, rule,
treaty, published policy or guideline, regulation, order,
judgment or decree (individually a "Law" and collectively,
"Laws") applicable to any of the Companies, or by which any of
the Companies' properties are bound or to which any of its
properties are subject, (c) result in any breach of or constitute
a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or
require payment under, or result in the creation of a Lien on any
of the properties or assets of any of the Companies pursuant to
any Contract or, any other note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which any of the Companies is a party
or by which any of the Companies or any of their respective
properties are bound or to which any of their respective
properties are subject, except for such violations, conflicts,
defaults or breaches which would not, singly or in the aggregate,
have a Company Material Adverse Effect.
Section 3.07 Environmental Matters. The Company possesses
all environmental permits, licenses, approvals and authorizations
("Company Environmental Permits") which are required under
applicable Environmental Law with respect to the conduct of its
business. The Company has conducted its business in compliance
with such Company Environmental Permits and applicable
Environmental Law. No claim has been issued, no complaint has
been filed, no penalty has been assessed and no investigation or
review is pending or threatened by (a) any Governmental Entity
with respect to the handling, treatment, use, storage, recycling,
transportation, disposal or Release of any Hazardous Materials at
any location in connection with the conduct of business by the
Company or (b) any third party relating to personal injuries
resulting from the Release of any Hazardous Materials by the
Company. Except as permitted by Environmental Law, the Company
has not used, treated, transported, generated or handled any
Hazardous Materials in connection with the conduct of its
business. For purposes of this Agreement, (i) "Environmental
Law" means all current federal, state, and local, civil and
criminal laws, statutes, ordinances, codes, permits, permit
conditions, rules and regulations and common law rights of action
relating to the protection of the environment and human health
and safety including, without limitation, laws governing the
handling, use, generation, treatment, storage, transportation or
disposal of Hazardous Materials including, without limitation,
the Resource Conservation and Recovery Act of 1976, the Toxic
Substances Control Act, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Federal Water
Pollution Control Act, the Clean Air Act, the Hazardous Materials
Transportation Act, and the Occupational Safety and Health Act,
as each of the foregoing may be amended, (ii) "Hazardous
Materials" means petroleum and petroleum products, radioactive
materials, ionizing and non-ionizing radiation including without
limitation electro-magnetic fields, pesticides, asbestos and
asbestos- containing materials, polychlorinated biphenyls, lead
and products containing lead and any materials or substances
defined as or included in the definition of "hazardous
materials," "hazardous wastes," "hazardous substances," "toxic
substances," "toxic pollutants," "pollutants," "contaminants,"
"solid wastes" or "regulated substances" under any applicable
Environmental Law and (iii) "Release" means any spilling,
leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, or disposing of a
Hazardous Material into the environment.
Section 3.08 Permits; Compliance.
(a) The Companies are in possession of all franchises,
grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals, leases, rights and
orders necessary to own, lease and operate its properties and to
carry on the business of the Wireless Cable System as it is now
being conducted (collectively, the "Company Permits"). All of the
Company Permits are in full force and effect and are enforceable
in accordance with their terms, except as would not have a
Company Material Adverse Effect. The terms of said Company
Permits are not subject to any restrictions or conditions that
materially limit or would materially limit the operations of the
business of the Company or any of its subsidiaries as presently
conducted, other than restrictions or conditions generally
applicable to Company Permits of that type. Except as set forth
in Exhibit 3.11, there is no action, proceeding or investigation
pending or, to the Knowledge of the Company, threatened,
regarding suspension, termination, revocation or cancellation of
any of the Company Permits. None of the Company Permits will
terminate or lapse by reason of the transactions contemplated by
this Agreement. Except as set forth on Exhibit 3.08, no
application has been or is proposed to be made to amend or modify
any Company Permit or to acquire any additional Company Permit.
The Company has no reason to believe that any Company Permit in
effect on the date hereof will not be renewed in the ordinary
course.
(b) Exhibit 3.08 hereto sets forth a list of all
Company Permits.
(c) None of the Companies is in material conflict
with, or in default or violation of the Communications Act, FCC
Rules, any Company Permit or any other Laws applicable to it or
its business or by which their respective properties are bound or
to which their respective properties are subject, and there exist
no conditions or circumstances which could result in such a
conflict, default or violation, except for such minor violations
as do not impair or interfere with the operation of the Wireless
Cable System. None of the Companies has received from any
Governmental Entity any notification with respect to possible
conflicts, defaults or violations of Laws.
Section 3.09 Company Reports; Financial Statements.
(a) The Company has filed in a timely manner all
forms, reports, statements and other documents required to be
filed with any Governmental Entities (all such forms, reports,
statements and other documents being referred to herein,
collectively, the "Company Reports"). The Company Reports,
including all Company Reports filed after the date of this
Agreement and prior to the Effective Time, were or will be
prepared in substantial accordance with the requirements of
applicable Law and did not at the time they were filed, or will
not at the time they are filed, contain any untrue statement of a
material fact or omit to state a 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.
(b) The audited consolidated financial statements of
the Company for the fiscal year ended December 31, 1995 and any
unaudited financial statements for the period ended September 30,
1996, and for periods ending after September 30, 1996, which have
been delivered to BellSouth including, without limitation, such
financial statements previously delivered to BellSouth
(including, in each case, any related notes thereto) are or will
be in accordance with and have been or will be derived from the
books and records of the Company, have been prepared in
accordance with GAAP (except as may be indicated in the notes
thereto, or, in the case of unaudited financial statements, for
normal recurring year-end audit adjustments), and fairly present
or will fairly present in accordance with GAAP throughout the
periods involved (except to the extent required by changes in
GAAP) the financial position of the Company as of the respective
dates thereof and the results of operations and cash flows for
the periods set forth therein.
Section 3.10 Taxes. Except as set forth on Exhibit 3.10
hereto:
(a) each of the Companies that is incorporated under
the laws of the United States or of any of the United States are
members of the affiliated group, within the meaning of Section
1504(a) of the Code, of which the Company is the common parent,
such affiliated group files a consolidated federal income tax
return and none of the Companies has ever filed a consolidated
federal income tax return with (or been included in a
consolidated return of) a different affiliated group;
(b) each of the Companies has timely filed or caused
to be filed all Tax returns required to have been filed by or for
it, and all information set forth in such Tax returns is accurate
and complete in all material respects;
(c) each of the Companies has paid or made adequate
provision on its books and records in accordance with GAAP for
all Taxes for the periods covered by such Tax returns;
(d) each of the Companies is in material compliance
with, and its records contain all information and documents
(including, without limitation, properly completed IRS Forms W-8
and Forms W-9) necessary to comply with, all applicable
information reporting and tax withholding requirements under
federal, state, local and foreign Laws, and such records identify
with specificity all accounts subject to withholding under
Section 1441, 1442 or 3406 of the Code or similar provisions of
state, local or foreign Laws;
(e) there is not a material amount of unpaid Taxes due
and payable by any of the Companies or by any other person that
is or could become a lien on any asset of the Companies, or
otherwise have a Company Material Adverse Effect;
(f) each of the Companies has collected or withheld
all Taxes required to be collected or withheld by it, and all
such Taxes have been paid to the appropriate Governmental Entity
or set aside in appropriate accounts for future payment when due;
(g) none of the Companies has granted (or is subject
to) any waiver, which is currently in effect, of the period of
limitations for the assessment of any Tax; no unpaid Tax
deficiency has been assessed or asserted against or with respect
to any of the Companies by any Governmental Entity; no power of
attorney relating to Taxes that is currently in effect has been
granted by or with respect to any of the Companies; there are no
currently pending administrative or judicial proceedings, or any
deficiency or refund litigation, with respect to Taxes of any of
the Companies; and any such assertion, assessment, proceeding or
litigation disclosed on Exhibit 3.10 is being contested in good
faith through appropriate measures, and its status is described
in Exhibit 3.10;
(h) none of the Companies has made or entered into, or
holds any asset subject to, a consent filed pursuant to Section
341(f) of the Code and the regulations thereunder or a "safe
harbor lease" subject to former Section 168(f)(8) of the Internal
Revenue Code as in effect before amendment by the Tax Reform Act
of 1984 and the regulations thereunder;
(i) none of the Companies is required to include in
income any amount from an adjustment pursuant to Section 481 of
the Code or the regulations thereunder or any similar provision
of state or local Law, and to the Knowledge of the Company, no
Governmental Entity has proposed any such adjustment;
(j) none of the Companies is obligated to make any
payments, or is a party to any Contract that could obligate it to
make any payments, that would not be deductible by reason of
Sections 162(m) or 280G of the Code;
(k) there are no excess loss accounts or deferred
intercompany gains with respect to any member of the affiliated
group of which the Company is the common parent;
(l) the most recent audited consolidated balance sheet
of the Company fully and properly reflects, as of the date
thereof, the liabilities of the Companies for all accrued Taxes
and deferred liability for Taxes and, for periods ending after
such date, the books and records of each such corporation fully
and properly reflect its liability for all accrued Taxes; and
(m) none of the Companies has an "overall foreign
loss" as defined in Section 904(f) of the Code.
Exhibit 3.10 describes all material and continuing Tax
elections, consents and agreements made by or affecting any of
the Companies, lists all types of material Taxes paid and Tax
returns filed by or on behalf of any of the Companies and
expressly indicates each Tax with respect to which any of the
Companies is or has been included in a consolidated, unitary or
combined return.
Section 3.11 Litigation.
(a) Except as set forth in Exhibit 3.11 hereto, there
is no claim, action, suit, litigation, proceeding, arbitration or
investigation of any kind, at law or in equity (including,
without limitation, actions or proceedings seeking injunctive
relief and any other action or proceeding of any nature before
any Governmental Entity), pending or, to the Knowledge of the
Company, threatened against or affecting the Companies, or any
properties or rights of the Companies. None of the claims set
forth in Exhibit 3.11 (i) has had or will have a Company Material
Adverse Effect or (ii) has had or will have a material adverse
effect on the Capacity Leases, Site Leases or FCC authorizations
required for BellSouth to operate the Wireless Cable System, or
the operation of the Channels, the transmission facilities
relating thereto or the Wireless Cable System. None of the
Companies is subject to any continuing order of, consent decree,
settlement agreement or other similar written agreement with or,
to the Knowledge of the Company, investigation by, any
Governmental Entity, or any judgment, order, writ, injunction,
decree or award of any Governmental Entity or arbitrator
including, without limitation, cease-and-desist or other orders.
(b) The Company has not admitted in writing its
inability to pay its debts generally as they become due, filed or
consented to the filing against it of a petition in bankruptcy or
a petition to take advantage of any insolvency act, made an
assignment for the benefit of creditors, consented to the
appointment of a receiver for itself or for the whole or any
substantial part of its property, or had a petition in bankruptcy
filed against it, been adjudicated a bankrupt, or filed a
petition or answer seeking reorganization or arrangement under
the federal bankruptcy laws or any other similar law of any
jurisdiction.
Section 3.12 Absence of Changes. Except as specifically
disclosed in Exhibit 3.12 hereto, since December 31, 1995, none
of the Companies has suffered any change in its business,
financial condition or results of operations that has had or will
have a Company Material Adverse Effect. Except as disclosed in
Exhibit 3.12, or as otherwise specifically contemplated by this
Agreement, there has not been since December 31, 1995 (a) any
entry into any agreement or understanding or any amendment of any
agreement or understanding between any of the Companies on the
one hand, and any of their respective directors, officers or
employees on the other hand, providing for employment, terms of
employment or compensation of any such director, officer or
employee, or any adoption of or increase in any bonus, insurance,
pension or other employee benefit plan, payment or arrangement
(including, without limitation, the granting of stock options or
stock appreciation rights or the award of restricted stock) made
to, for or with any such director, officer or employee, (b) any
labor dispute that has had or is expected to have a Company
Material Adverse Effect, (c) any entry by any of the Companies
into any material commitment, agreement, license or transaction
(including, without limitation, any borrowing, capital
expenditure, sale of assets or any Lien made on any of the
properties or assets of any of the Companies) other than in the
ordinary and usual course of business, (d) any change in the
accounting policies or practices of the Companies, (e) any
damage, destruction or loss, whether covered by insurance or not,
which has had or will have a Company Material Adverse Effect, or
(f) any agreement to do any of the foregoing.
Section 3.13 Title to and Condition of Assets. Exhibit
3.13 hereto identifies all material assets necessary for the
Company to own, lease and operate its properties and the Wireless
Cable System as it is now being conducted. As of the date
hereof, the Companies own, and as of the Effective Time each of
the Companies will own, good, valid and marketable title to all
of their assets (excluding, for purposes of this sentence, assets
held under leases), free and clear of any and all Liens or other
restrictions, except as disclosed on Exhibit 3.13 hereto. Such
assets, together with all assets held by the Companies under
leases, include all tangible and intangible assets, Contracts and
rights necessary or required for the operation of the Wireless
Cable System in accordance with past practice. None of the
Companies owns any right, title or interest in any real property.
Section 3.14 Contracts. Exhibit 3.14 hereto lists all of
the Contracts. True, correct and complete copies of each of such
Contracts have been delivered to BellSouth. Each of the
Contracts is in full force and effect, is enforceable in
accordance with its terms and is a valid, legal and binding
obligation of the Companies and, to the Knowledge of the Company,
the other parties thereto. Each of the Companies has performed
each material term, covenant and condition of each Contract that
is to be performed by it and as of the Closing Date the Company
will be current in payment of all liabilities incurred under such
Contracts. No event has occurred that would, with the passage of
time or compliance with any applicable notice requirements, constitute
a default under any of such Contracts. To the Knowledge of the
Company, no party to any material Contract intends to cancel,
terminate or exercise any option under any of such Contracts. To
the Knowledge of the Company, there is no matter that adversely
affects, or would adversely affect, any Contract that,
individually or in the aggregate, has had or would have a Company
Material Adverse Effect.
Section 3.15 Labor Matters. With respect to employees of
the Companies (i) to the Knowledge of the Company, no senior
executive, key employee or group of employees has any plans to
terminate employment with any of the Companies, except as
contemplated by Section 5.01(b)(xiii) or Section 6.03(g), (ii)
there is no unfair labor practice charge or complaint against any
of the Companies pending or, to the Knowledge of the Company,
threatened before the National Labor Relations Board or any other
comparable authority, (iii) no grievance or any arbitration
proceeding arising out of or under collective bargaining
agreements is pending and, to the Knowledge of the Company, no
claims therefor exist or have been threatened, and (iv) there is
no litigation, arbitration proceeding, governmental
investigation, administrative charge, citation or action of any
kind pending or, to the Knowledge of the Company, proposed or
threatened against any of the Companies relating to employment,
employment practices, terms and conditions of employment or wages
and hours.
None of the Companies has any collective bargaining
relationship or duty to bargain with any Labor Organization (as
such term is defined in Section 2(5) of the National Labor
Relations Act, as amended), and none of the Companies has
recognized any Labor Organization as the collective bargaining
representative of any of its employees. No union representation
petition is pending before the National Labor Relations Board
and, to the Knowledge of the Company, there is no union
organizing activity involving the employees of any of the
Companies.
Section 3.16 Employee Benefit Plans. For purposes of this
Section, the term "Company Benefit Plans" shall mean all pension,
retirement, profit-sharing, deferred compensation, stock option,
stock bonus, stock purchase, restricted stock, stock appreciation
rights, employee stock ownership, severance pay, vacation, bonus
or other incentive plans, and all other employee programs,
arrangements or agreements, whether arrived at through collective
bargaining or otherwise and whether oral or written, all medical,
vision, dental and other health plans, all disability benefits
and plans, all life insurance and death benefit plans, and all
other employee benefit plans or fringe benefit plans, whether
oral or written, including, without limitation, any "employee
benefit plan," as that term is defined in Section 3(3) of ERISA,
currently or previously adopted, maintained by, sponsored in
whole or in part by, or contributed to by any of the Companies or
affiliates thereof for the benefit of employees, retirees,
dependents, spouses, directors, independent contractors or other
beneficiaries and under which employees, retirees, dependents,
spouses, directors, independent contractors, or other
beneficiaries are eligible to participate. Any of the Company
Benefit Plans which is an "employee pension benefit plan," as
that term is defined in Section 3(2) of ERISA, is referred to
herein as a "Company ERISA Plan."
No Company Benefit Plan is or has been a multiemployer plan
within the meaning of Sections 3(37) or 4001(a)(3) of ERISA. As
to each Company ERISA Plan which is intended to be qualified
(within the meaning of Sections 401(a) and 501(a) of the Code),
the Company has either received or timely applied for a favorable
determination letter from the Internal Revenue Service confirming
the tax-qualified status of each such Plan for each year each
such Plan has been in existence, and no circumstances exist which
would adversely affect such qualification. All Company Benefit
Plans are in compliance with the applicable provisions
(including, without limitation, any funding requirements or
limitations) of ERISA, the Code and any other applicable Laws,
the breach or violation of which could have a Company Material
Adverse Effect. No Company ERISA Plan which is a defined benefit
pension plan has any "unfunded current liability," as that term
is defined in Section 302(d)(8)(A) of ERISA, and the present fair
market value of the assets of any such plan exceeds the plan's
"benefit liabilities," as that term is defined in Section
4001(a)(16) of ERISA, when determined under actuarial factors
that would apply if the plan terminated in accordance with all
applicable legal requirements. No prohibited transaction (within
the meaning of Section 406 of ERISA or Section 4975 of the Code)
involving any Company ERISA Plan has occurred that would subject
the Company to any penalty or tax under Section 502(i) of ERISA
or Section 4975 of the Code. The Company will not be obligated
to make any "excess parachute payments" within the meaning of
Section 280G of the Code or, except as contemplated by Section
8.01, any severance payments as a result of the transactions
provided for in this Agreement. The Company has never
represented, promised, or contracted (whether in oral or written
form) to any current or former employee (either individually or
to employees as a group) that such current or former employee(s)
would be provided with life insurance or employee welfare benefit
plan benefits (within the meaning of Section 3(1) of ERISA) upon
retirement or termination of employment, other than continuation
coverage as required by Section 601 of ERISA, and neither the
Company nor any Company Benefit Plans have any liability with
respect to any such benefits.
Exhibit 3.16 is a true, correct and complete list of all
Company Benefit Plans and each trust related thereto. The
Company has provided BellSouth with access to true, correct and
complete copies of each governing document (including, if
applicable, any related trust document), agreement or, if the
plan is not written, the terms of the Plan, for each Company
Benefit Plan, together with the most recent summary plan
description, annual report and audited financial statement for
each such plan and the actuarial report for any Company Benefit
Plan that is a defined benefit pension plan or funded welfare
benefit plan.
Section 3.17 Fees and Expenses of Brokers and Others. None
of the Companies (a) has had any dealings, negotiations or
communications with any broker or other intermediary in
connection with the transactions contemplated by this Agreement,
(b) is committed to any liability for any brokers' or finders'
fees or any similar fees in connection with the transactions
contemplated by this Agreement or (c) has retained any broker or
other inter- mediary to act on its behalf in connection with the
transactions contemplated by this Agreement, except that the
Company has engaged Alex. Xxxxx & Sons Incorporated to advise it
in connection with such transactions, and the Company shall pay
as of the Effective Date all of Alex. Xxxxx & Sons Incorporated's
fees and expenses, not to exceed $900,000, in connection with
such engagement.
Section 3.18 Accuracy of Information. Neither this
Agreement nor any Exhibit to this Agreement contains an untrue
statement of a material fact or omits to state a material fact
necessary to make the statements contained therein not
misleading.
Section 3.19 Absence of Undisclosed Liabilities. None of
the Companies have, as of the date hereof, or will have, as of
the Effective Time, any liabilities or obligations of any kind,
whether absolute, accrued, asserted or unasserted, contingent or
otherwise, that would be required to be disclosed on a
consolidated balance sheet or the financial statement footnotes
of the Company prepared as of such date, in accordance with GAAP,
except liabilities, obligations or contingencies that were (a)
reflected on or accrued or reserved against in the consolidated
balance sheet of the Company as of December 31, 1995, included in
the financial statements of the Company or reflected in the notes
thereto, or (b) incurred after the date of such balance sheet in
the ordinary course of business and consistent with past
practices and which, individually or in the aggregate, would not
have a Company Material Adverse Effect.
Section 3.20 ITFS, MDS, CARS and OFS Specifications.
(a) Set forth in Exhibit 3.20(a) hereto is a true,
correct and complete list of the technical specifications of each
MDS Channel authorization, ITFS Channel authorization, CARS
authorization and OFS authorization licensed to any of the
Companies or subject to a Capacity Lease (the "Company FCC
Authorizations," which term shall include all such authorizations
held by any of the Companies or which become subject to a
Capacity Lease after the date hereof). For each such Company FCC
Authorization, such exhibit sets forth the (i) authorized
frequency or frequencies, (ii) authorized equivalent isotropic
radiated power, (iii) authorized antenna type (and polarization),
(iv) authorized orientation of transmission antenna, (v)
authorized transmitter site location, (vi) carrier offset
requirement, (vii) requirement to prevent or reduce or to make
adjustments to prevent or reduce interference to any other
station, (viii) protected service area, (ix) construction
certification date, (x) license expiration date, (xi) the date on
which certification or notification of completion of
construction, as appropriate, was filed with the FCC, (xii) the
name of the licensee, and (xiii) if subject to a Capacity Lease,
the Company having the Capacity Lease. Except as set forth on
Exhibit 3.20(a), the grant, renewal or assignment of each Company
FCC Authorization to the existing licensee thereof was approved
by the FCC by Final Order in accordance with standard
administrative procedures and each such license is unimpaired by
any act or omission of any such licensee or the Company. No
petition to deny or for reconsideration, application for review,
appeal, request for stay or other challenge to the grant of any
of FCC License is pending before the FCC, and the time for
requesting a challenge has passed. There is no complaint,
inquiry, investigation or proceeding pending before the FCC or,
to the Knowledge of the Company threatened, which, if determined
as requested by the moving party or as indicated in any document
initiating any inquiry, investigation or proceeding, could result
in the revocation, modification, restriction, cancellation,
termination, non-renewal or other action which is adverse to the
operations under any Company FCC Authorization, or the imposition
of a monetary forfeiture.
(b) Except as stated on Exhibit 3.20(a), no facilities
subject to a Company FCC Authorization listed on Exhibit 3.20(a)
(A) is operating or at any time has operated facilities at
variance from the FCC authorization therefor, the Communications
Act or FCC Rules, (B) is operating under any special temporary,
experimental or developmental authorization, (C) is the subject
of any carrier offset agreement, (D) is subject to a pending
license renewal application, (E) is subject to a pending request
for extension of time to complete construction of authorized
facilities or for reinstatement of such authorization for failure
to timely complete construction, (F) is subject to any complaint,
petition or other filing before the FCC that the Channel is
causing impermissible interference, (G) is subject to any
agreement which requires or could require the Channel to operate
with technical facilities different than those authorized, to
cease operation, to limit the hours of operation or to accept
interference, (H) is authorized pursuant to authorization which
is subject to challenge before the FCC or the United States Court
of Appeals, (I) has a construction certification date, a
construction completion date or date by which submission to the
FCC must be made to avoid its forfeiture that has lapsed without
the prior filing of a properly completed, filed, unopposed and
pending application to extend such date or the timely submission
of the materials required to prevent forfeiture of the
authorization, or (J) has been authorized pursuant to
authorization which is not in full force and effect or which was
not properly issued or subject to any lease, sublease or any
agreement to make it available to a third party. Except as
stated on Exhibit 3.20(a), no MDS Channel listed on such exhibit
(X) has failed to serve subscribers for any consecutive period of
12 months since the later of the date it was first constructed or
the effective date of any license renewed by Final Order
therefor, or (Y) has experienced the removal or the alteration of
equipment which rendered the Channel non-operational for a period
of thirty (30) or more consecutive days. Except as set forth on
Exhibit 3.20(a), no H-group Channel listed on such exhibit is
regulated under Part 101 of FCC Rules or is not regulated under
Part 21 of FCC Rules.
(c) Exhibit 3.20(c) and Exhibit 3.20(c-I) contain a
true, correct and complete list of all pending applications (the
"Pending Applications") for modification of MDS and ITFS station
authorizations (other than MDS BTA applications and statements of
intention), applications for extensions of time to construct MDS
and ITFS stations and applications to renew ITFS and MDS station
authorizations filed by any of the Companies or subject to any
Capacity Lease. Except for the Pending Applications set forth on
Exhibit 3.20(c-I), each Pending Application is complete, complies
with FCC Rules, and if a modification application, proposes
facilities requesting authorization consistent with the
requirement to protect adjacent and co-channel stations and
auction winners for adjacent BTAs from harmful interference as
defined by FCC Rules. To the Knowledge of the Company, no
Pending Application is mutually exclusive with any application
for a proposed facility, and no Pending Application can be
subject to any proposal which would be consolidated with such
application for purposes of mutually-exclusive disposition.
Except as set forth on Exhibit 3.20(c), no such application (i)
is subject to any informal objection or petition to deny; (ii)
proposes facilities predicted to cause impermissible interference
as determined by FCC Rule 74.903 or 21.902, as applicable; (iii)
relies upon any consent or acceptance of the interference that
would be created by such proposed facility; or (iv) proposes
carrier offset to limit either caused or received interference.
Exhibit 3.20(c) accurately lists for each Pending Application the
proposed (i) frequency or frequencies, (ii) equivalent isotropic
radiated output power, (iii) antenna type (and polarization),
(iv) system losses, (v) orientation of transmission antenna and
(vi) transmitter site location.
(d) Each of the Companies and each lessor has timely
filed all Annual FCC Reports, except to the extent that the
failure to timely file such Annual FCC Reports will not have a
Company Material Adverse Effect. Each Annual FCC Report is true,
correct and complete.
Section 3.21 ITFS and MDS Capacity Leases. Exhibit 3.21 is
a true, correct and complete list of all agreements with respect
to the lease to, lease by, sale by or acquisition by any of the
Companies of MDS or ITFS station transmission capacity or
licenses, including any such agreement with respect to station
capacity that has not been authorized (the "Capacity Leases,"
which term shall include each such agreement acquired by the
Companies, when acquired, after the date hereof). Except as set
forth on Exhibit 3.21, each Capacity Lease meets all requirements
of law and regulation, is in full force and effect and is
enforceable in accordance with its terms except as such
enforceability may be limited by receivership, insolvency and
debtor relief laws. Exhibit 3.21 sets forth for each Capacity
Lease a true, correct and complete description of: (i) the name
of the lessor; (ii) the frequencies to which the Company has the
right to use transmission capacity; (iii) the payments due
thereunder and all factors that affected or will affect changes
in the payment rate from January 1, 1996 through the end of the
current term thereof; (iv) the term of the Capacity Lease; (v)
any rights for early termination or extensions of the term of any
party thereto; (vi) any obligations continuing after the current
term and any obligations that may have not been fulfilled by any
party thereto; and (vii) any restrictions on full-time usage by
the Companies of channel capacity leased thereunder. There has
been no event or circumstances which will give any right to any
party to increase, change or materially adversely modify any
usage of any Channel under any Capacity Lease. Except for ITFS
airtime described in the ITFS Capacity Leases, the Companies have
the sole right to use the Channels under each Capacity Lease
required to conduct its business as currently conducted. To the
Knowledge of the Company, there are no facts or circumstances
that might (whether with or without notice, lapse of time or the
occurrence of any other event) reasonably give rise to the
issuance of any such notice or which might preclude the renewal
of such Capacity Leases in the normal course in accordance with
their terms. Except as set forth on Exhibit 3.21, there is no
default, and to the Knowledge of the Company, no party has
threatened default, under any Capacity Lease and the consummation
of the transactions contemplated by this Agreement will not cause
any default of any Capacity Lease. No party to any Capacity
Lease has claimed, and to the Knowledge of the Company, no party
has threatened, in any written or oral statement to any of the
Companies that such party has a right to terminate the Capacity
Lease or to seek damages against any of the Companies for the
Companies' violation of such lease. No party to any Capacity
Lease requires the consent of any third party (other than FCC) to
make the lease binding and enforceable against such party in
accordance with its terms or to deprive such party of the right
to void the lease. True, correct and complete copies of all
Capacity Leases as amended through the date of this Agreement
have been provided to BellSouth.
Section 3.22 Site Leases and Lease Options.
(a) Set forth on Exhibit 3.22 is a true, correct and
complete list of the transmitter site leases held by each of the
Companies (a "Site Lease," which term shall include each of the
Companies' transmitter Site Leases acquired by the Companies,
when acquired, after the date hereof). Except as set forth on
Exhibit 3.22, each Site Lease is in full force and effect and is
enforceable in accordance with its terms. There is no default of
any Site Lease, and no party to any Site Lease has given the
other party thereto any notice of default thereunder, except as
identified on Exhibit 3.22. Except as stated on Exhibit 3.22,
the consummation of the transactions contemplated by this
Agreement will not cause a default under any Site Lease. Exhibit
3.22 completely and accurately sets forth, for each Site Lease,
the parties, the location of the real property subject thereto,
the rental and the term. True, correct and complete copies of
all Site Leases have been provided to BellSouth.
(b) To the Knowledge of the Company, none of the real
property subject to any Site Lease is subject to any condemnation
proceeding; no lease or use of any such real property exists
which would interfere with the use of such property as
contemplated in any Site Lease for the property; there is no
existing written notice covering future condemnation thereof;
and, to the Knowledge of the Company, no such real property will
be condemned or subject to condemnation proceedings.
(c) To the Knowledge of the Company, the real property
described in each Site Lease is of sufficient size so as to
permit the erection of a guyed tower of the size contemplated in
the FCC authorizations for ITFS and MDS stations authorized by
the FCC to be built or that exist at that real property or
contemplated in pending applications to the FCC for such
authorizations. To the Knowledge of the Company, neither the
erection of any such tower, nor the construction of a utility
building adjacent thereto, nor the operation of ITFS or MDS radio
stations at any such site will violate the provisions of any
applicable building codes, fire regulations, building
restrictions, land use regulations, safety regulations,
environmental regulations, deed covenants, agreement, zoning, or
other governmental ordinances, orders or regulations.
(d) To the Knowledge of the Company, there are no
leases, rental agreements, option agreements, employment
contracts, or contracts for service or maintenance existing and
relating to or connected with the occupancy or operation of any
of the real property subject to a Site Lease other than as listed
on Exhibit 3.22. True, correct and complete copies of all such
agreements have been provided to BellSouth. None of the
Companies has any interest, present or future, in any of such
real property except for the interest as shown in Exhibit 3.22.
(e) All of the real property subject to Site Leases is
freely accessible directly from public streets, or any use of
adjoining private land to access the same is done in accordance
with valid public or private easements which are included in the
applicable Site Lease.
Section 3.23 No Cable Systems. The Wireless Cable System
does not include or provide programming to any "cable system," as
that term is defined in 47 U.S.C. 522(7).
None of the Companies is a "cable operator" as that term is
defined in 47 U.S.C. 522(5).
Section 3.24 Operating Market.
(a) Exhibit 3.24 sets forth true, correct and complete
information concerning the number of Basic Subscribers to its
Wireless Cable System, the subscriber rates and offered
programming channels for the Wireless Cable System.
(b) The equipment used in the Wireless Cable System is
in good operating condition, does not require and is not
reasonably expected to require any special or extraordinary
expenditures to remain in such condition, and can be used for its
intended purpose.
(c) All transmitters used in the Wireless Cable System
meet applicable FCC type acceptance and frequency stability
requirements.
(d) The Wireless Cable System has not received any
complaint that it, or any Channels used in it, is causing
interference to any reception, transmission or detection system.
(e) The Wireless Cable System does not require any FCC
authorization that has not been obtained for it to operate as
currently operated.
Section 3.25 Retransmission Consent; Programming
Agreements. (a) The Company has the written consent to the
retransmission of each Broadcast Station whose signal is
"retransmitted" on the Wireless Cable System. As used in this
Section, the term "Broadcast Station" means a television
broadcast station, a television translator station, a low power
television station, an educational television broadcasting
station, and includes every category of broadcast station that
may enjoy must-carry rights under FCC Rules, but does not include
a "superstation" as defined by FCC Rule 76.64(c)(2) actually
received by the Wireless Cable System by satellite downlink. The
term "retransmitted" means the receipt and retransmission of a
signal, but does not include the reception described in FCC Rule
76.64(e). A true, correct and complete list of each
retransmission consent agreement, including the term and the
payment terms of the agreement, is set forth as Exhibit 3.25(a).
True, correct and complete copies of all such retransmission
consent agreements have been provided to BellSouth.
(b) Exhibit 3.25(b) is a true, correct and complete list of
all agreements for programming, and for each such programming
agreement: (i) the name of the programmer; (ii) the programming
service; (iii) the rate, and all factors that affected or will
affect rate changes from January 1, 1996 through the end of the
current term of such agreement; and (iv) the term and any rights
for early termination or extensions of the term of any party
thereto. True, complete and correct copies of all such
programming agreements have been provided to BellSouth.
Section 3.26 Copyright. Except as set forth on Exhibit
3.uc, the Company has timely filed with the Copyright Office
semi-annual statements of account for the Wireless Cable System
for each use by the Company of MDS or ITFS Channels which require
a compulsory license for each period during which it has operated
by serving subscribers. Each such statement of account
accurately sets forth all information required to appear on such
statement by the statement and by applicable rules of the
Copyright Office, and accurately states the fees due with respect
to such statement. All such fees have been paid and, except as
set forth in Exhibit 3.26, were paid in a timely fashion. The
Company is not liable to any person for copyright infringement
under the Copyright Act as a result of its business operations.
There have been no inquiries received from the Copyright Office
or any other party which questioned such statements of account or
any copyright royalty payments made by the Company with respect
to the Wireless Cable System, and no claim, action or demand for
copyright infringement or for non-payment of royalties is pending
or, to the Knowledge of the Company, threatened or probable of
assertion with respect to the Wireless Cable System.
Section 3.27 Equal Employment Opportunity. The Company has
filed at the FCC the FCC Forms 395M as required by FCC rule 76.77
for each year since 1993 that the Wireless Cable System has been
in operation in service of subscribers. Each such report is
true, correct and complete.
Section 3.28 Interference Consents. Except as described in
Exhibit 3.28 or as required by this Agreement, as of the date of
this Agreement, there are no agreements or understandings
(written or oral) between the Company and any present or proposed
Wireless Cable System operator or MDS or ITFS licensee or
applicant with respect to adjacent market interference, the
coordination of adjacent market channel use or other matters
concerned with the operation of nearby markets or obtaining the
assistance of a party's Channel capacity lessors.
Section 3.29 Certain Stockholder Agreements. Each of the
Company Stockholders identified in Exhibit 3.29(a) hereto has
duly executed and delivered to BellSouth a letter agreement in
the form of Exhibit 3.29(b) hereto with respect to, among other
things, such stockholder's agreement to vote all shares of
Company Common Stock and Company Preferred Stock over which such
stockholder exercises voting control for approval of the
Agreement and the transactions contemplated hereby at the Special
Meeting.
Section 3.30 Transactions with Affiliates. Except as set
forth on Exhibit 3.30, (a) the Contracts do not include any
obligation or commitment between the Company and any Affiliate of
the Company and (b) there are not any receivables or other
obligations or commitments between an Affiliate of the Company
and the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BELLSOUTH
AND BELLSOUTH SUB
BellSouth and BellSouth Sub represent and warrant to the
Company that:
Section 4.01 Organization and Qualification. Each of
BellSouth and BellSouth Sub is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has all requisite corporate
power and authority to carry on its business as it is now being
conducted and to own, operate and hold under lease its assets and
properties as, and in the places where, such properties and
assets now are owned, operated or held. Each of BellSouth and
BellSouth Sub is duly qualified and in good standing to do
business in each jurisdiction in which the nature of the business
conducted by it or the ownership or leasing of its properties
makes such qualification necessary, other than where the failure
to be so duly qualified and in good standing would not have a
BellSouth Material Adverse Effect. The term "BellSouth Material
Adverse Effect" as used in this Agreement means any change or
effect that, individually or when taken together with all other
such changes or effects, could reasonably be expected to be
materially adverse to the assets, financial condition, business
or operations of BellSouth on a consolidated basis.
Section 4.02 Articles of Incorporation and Bylaws.
BellSouth Sub is not in violation of any of the provisions of its
Articles of Incorporation or Bylaws.
Section 4.03 Capitalization.
(a) BellSouth's authorized equity capitalization
consists of 2,200,000,000 shares of BellSouth Common Stock, $1.00
par value per share. As of the close of business on December 31,
1996, 1,007,575,986 shares of BellSouth Common Stock (exclusive
of 15,796,782 shares held in a grantor trust) were issued and
outstanding, such shares of BellSouth Common Stock constituted
all of the issued and outstanding shares of capital stock of
BellSouth as of such date. All issued and outstanding shares of
capital stock of BellSouth have been duly authorized and validly
issued and are fully paid and non-assessable, are not subject to
and have not been issued in violation of any preemptive or
similar rights, and were offered and sold in compliance with all
applicable federal and state securities laws.
(b) BellSouth Sub's authorized equity capitalization
consists of 100 shares of BellSouth Sub Common Stock, no par
value per share. As of the close of business on November 1,
1996, one share of BellSouth Sub Common Stock was issued and
outstanding, and such share of BellSouth Sub Common Stock
constituted all of the issued and outstanding shares of capital
stock of BellSouth Sub as of such date. All issued and
outstanding shares of capital stock of BellSouth Sub have been
duly authorized and validly issued and are fully paid and
non-assessable and free of preemptive rights and are owned by
BellSouth directly, free and clear of all Liens, claims, charges
or encumbrances. There are no subscriptions, options, warrants,
rights, calls, contracts, voting trusts, proxies or other
commitments, understandings, restrictions or arrangements
relating to the issuance, sale, voting, transfer, ownership or
other rights affecting any shares of capital stock or partnership
or other ownership interests in BellSouth Sub, including any
right of conversion or exchange under any outstanding security,
instrument or agreement.
Section 4.04 Authorization; Enforceability. Each of
BellSouth and BellSouth Sub has all requisite corporate power and
authority, to perform its obligations under this Agreement and to
consummate the transactions contemplated to be consummated by it
hereby. The execution and delivery of this Agreement by
BellSouth and BellSouth Sub and the consummation by each of them
of the transactions contemplated hereby have been duly authorized
by all necessary corporate action and no other corporate
proceedings on the part of BellSouth or BellSouth Sub are
necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement and all of the
other documents and instruments required hereby have been duly
executed and delivered by BellSouth and BellSouth Sub and,
assuming the due authorization, execution and delivery hereof by
the Company constitute the legal, valid and binding obligations
of BellSouth and BellSouth Sub enforceable in accordance with
their respective terms.
Section 4.05 Required Filings and Consents. Neither the
execution and delivery of this Agreement by BellSouth and
BellSouth Sub, nor the performance of this Agreement by BellSouth
and BellSouth Sub does or will require BellSouth or BellSouth Sub
to obtain any consent, approval, authorization or permit of, or
to make any filing with or notification to any Governmental
Entity, except for applicable requirements, if any, of (i) the
Communications Act and FCC Rules, (ii) the HSR Act, and (iii)
state securities, "Blue Sky" or takeover laws, and the filing and
recordation of appropriate merger documents as required by Law.
Section 4.06 No Conflict. Neither the execution and
delivery of this Agreement by BellSouth and BellSouth Sub nor the
performance of this Agreement by BellSouth and BellSouth Sub does
or will (a) conflict with or violate the articles of
incorporation or bylaws, in each case as amended or restated, of
BellSouth or BellSouth Sub, (b) conflict with or violate any Laws
applicable to BellSouth or BellSouth Sub, or by which any of
BellSouth's properties are bound or to which any of its
properties are subject, or (c) result in any breach of or
constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation
of, or require payment under, or result in the creation of a Lien
on any of the properties or assets of BellSouth or BellSouth Sub
pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument
or obligation to which BellSouth or BellSouth Sub is a party or
by which BellSouth, BellSouth Sub or any of their respective
properties are bound or to which any of their respective
properties are subject.
Section 4.07 BellSouth Reports.
(a) BellSouth has filed in a timely manner all forms,
reports, statements and other documents required to be filed with
the SEC including, without limitation, all Annual Reports on Form
10-K, all Quarterly Reports on Form 10-Q, all proxy statements
relating to meetings of stockholders (whether annual or special),
all other reports or registration statements and all amendments
and supplements to all such reports and registration statements
(all such forms, reports, statements and other documents being
referred to herein, collectively, as the "BellSouth Reports").
The BellSouth Reports, including all BellSouth Reports filed
after the date of this Agreement and prior to the Effective Time,
were or will be prepared in all material respects in accordance
with the requirements of the Securities Act and the Exchange Act,
as the case may be, and the rules and regulations of the SEC
thereunder applicable to such BellSouth Reports and did not at
the time they were filed, or will not at the time they are filed,
contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
(b) The consolidated financial statements of BellSouth
included in the BellSouth Reports filed with the SEC comply or
will comply as to form in all material respects with the
published rules and regulations of the SEC with respect thereto,
have been or will have been prepared in accordance with GAAP
(except as may be indicated in the notes thereto, or, in the case
of unaudited financial statements, for normal recurring year-end
audit adjustments or as permitted by Form 10-Q of the SEC) and
fairly present or will fairly present in accordance with GAAP
throughout the periods involved (except to the extent required by
changes in GAAP or as described in the notes thereto) the
consolidated financial position of BellSouth and its consolidated
Subsidiaries as of the respective dates thereof or for the
respective periods set forth therein and the consolidated results
of their operation and cash flows from the periods set forth
therein.
Section 4.08 Fees and Expenses of Brokers and Others.
Neither BellSouth nor BellSouth Sub (a) has had any dealings,
negotiations or communications with any broker or other
intermediary in connection with the transactions contemplated by
this Agreement, (b) is committed to any liability for any
brokers' or finders' fees or any similar fees in connection with
the transactions contemplated by this Agreement or (c) has
retained any broker or other intermediary to act on its behalf in
connection with the transactions contemplated by this Agreement,
except that to the extent BellSouth engages Bear, Xxxxxxx & Co.,
Inc. as a financial advisor in connection with such transaction,
BellSouth shall pay all of Bear, Xxxxxxx & Co., Inc.'s fees and
expenses in connection with such engagement.
Section 4.09 Accuracy of Information. Neither this
Agreement nor any other document provided by BellSouth or
BellSouth Sub or their employees or agents to the Company in
connection with the transactions contemplated herein contains an
untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained therein not
misleading.
ARTICLE V
COVENANTS
From and after the date of this Agreement and until the
Effective Time:
Section 5.01 Conduct of the Businesses of the Company.
Except as otherwise expressly provided in this Agreement or as
requested by BellSouth, the Company will, and will cause each of
the Companies to, conduct its operations according to its
ordinary and usual course of business and consistent with past
practice, and will use its best efforts to preserve intact its
business organization, goodwill, properties and assets, to keep
available the services of its and their officers and employees
and to maintain satisfactory relationships with licensors,
licensees, lessors, suppliers, contractors, subscribers and
others having material business relationships with it or them.
Without limiting the generality of the foregoing, and except
as otherwise expressly provided in this Agreement, prior to the
Effective Time, (a) none of the Companies will, without the prior
written consent of BellSouth:
(i) amend its articles of incorporation, bylaws,
partnership or joint venture agreements or other
organizational documents;
(ii) authorize for issuance or issue, sell or
deliver (whether through the issuance, granting, repricing
or acceleration of vesting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise)
any stock of any class or any other securities or interests,
except as required by the terms of any options, warrants,
rights or other securities outstanding as of the date hereof
and disclosed pursuant to this Agreement;
(iii) split, combine or reclassify any shares of
its capital stock or declare, set aside or pay any dividend
or other distribution (whether in cash, stock or property or
any combination thereof) in respect of its capital stock not
required pursuant to the Company's Articles of
Incorporation, or redeem or otherwise acquire any of its
securities or any securities of their respective
Subsidiaries;
(iv) (A) assume, guarantee, endorse or otherwise
become liable or responsible for the obligations of any
person; (B) incur any indebtedness; (C) make any loans,
advances or capital contributions to, or investments in, any
other Person; (D) enter into any Contract, or alter, amend,
modify or exercise any option under any existing Contract,
other than in the ordinary course of business or in
connection with the transactions contemplated by this
Agreement; or (E) authorize any single capital expenditure
which is in excess of $50,000 or capital expenditures which
are, in the aggregate, in excess of $250,000, other than
capital expenditures pursuant to Contracts entered into
prior to the date hereof which are identified on Exhibit
5.01(a)(iv);
(v) adopt or amend (except as may be required by
Law or as provided in this Agreement) any bonus, profit
sharing, compensation, severance, termination, stock option,
stock appreciation right, restricted stock, pension,
retirement, deferred compensation, employment, severance or
other employee benefit agreements, trusts, plans, funds or
other arrangements for the benefit or welfare of any
director, officer or employee, or (except for normal
increases in the ordinary course of business that are
consistent with past practices and that, in the aggregate,
do not result in a material increase in benefits or
compensation expense) increase in any manner the
compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any existing
Company Benefit Plan (including, without limitation, the
granting of any stock options, stock appreciation rights,
shares of restricted stock or performance units) or enter
into any Contract, agreement, commitment or arrangement to
do any of the foregoing;
(vi) acquire, sell, lease or dispose of any
material assets outside the ordinary course of business;
(vii) make any material change to its financial
statements or take any action, other than in the ordinary
course of business and in a manner consistent with past
practice or to comply with GAAP, with respect to accounting
policies or practices;
(viii) make any material Tax election or settle or
compromise any material federal, state, local or foreign
income Tax liability;
(ix) except for the payment of professional fees,
pay, discharge or satisfy any material indebtedness, claims,
liabilities or obligations (absolute, accrued or unasserted,
contingent or otherwise), other than the payment, discharge
or satisfaction in the ordinary course of business of
liabilities reflected or reserved against in the Company's
fiscal 1995 financial statements or incurred in the ordinary
course of business since the date thereof;
(x) take any action that would or is reasonably
likely to result in any of the conditions set forth in
Article VI not being satisfied as of the Effective Date;
(xi) sell, assign, lease, waive or grant rights
with respect to, sublease or otherwise transfer or dispose
of (A) any Capacity Lease, (B) any Site Lease, or (C) any
other asset or property of any of the Companies;
(xii) modify, amend, supplement or agree to a
novation of any Capacity Lease or any Site Lease, except as
contemplated in Section 5.08;
(xiii) allow, suffer or permit any default of any
of the Companies under any Site Lease or Capacity Lease;
(xiv) enter into any contract or commitment, or
amend or terminate any contract (or waiver of any material
right thereunder), or incur any obligation (including
obligations relating to the borrowing of money or the
guaranteeing of indebtedness) that will be binding on the
Company after the Effective Time, except for subscriber
service agreements made in the ordinary course of business,
and other classes of agreements that are not "material"
agreements; or
(xv) agree in writing or otherwise to take any of
the foregoing actions.
(b) the Company will and will cause each of the Companies
to:
(i) use its best efforts (A) to cause to be
maintained in full force and effect, and (B) to cause the
holders to renew and to extend when required to prevent
their lapse, all Company FCC Authorizations;
(ii) timely and completely perform each and every
obligation of it in each Capacity Lease, and under each Site
Lease and Company FCC Authorization, including but not
limited to the filing of Annual FCC Reports and Equal
Employment Opportunity Reports;
(iii)(A) prosecute and defend diligently and in
good faith each MDS and ITFS station application and
authorization; (B) cause each of its lessors to prosecute
and defend diligently and in good faith each MDS and ITFS
application and authorization subject to a Capacity Lease;
(C) use best efforts to prevent any such lessor from
entering into any agreement on or with respect to its
proposed or authorized ITFS or MDS Channel capacity in any
Market without the prior consultation with and the prior
approval of BellSouth; and (D) not enter into any agreement
on or with respect to its proposed or authorized MDS or ITFS
Channel capacity without the prior consultation with and the
prior approval of BellSouth;
(iv) use its best efforts (A) to prevent the
modification of any Company FCC Authorization, except for
such modifications as are required by this Agreement,
specifically approved by BellSouth or are authorized on the
date of this Agreement or which become authorized pursuant
to applications pending on the date of this Agreement and
listed in Exhibit 3.20(c); and (B) to prevent the new
application, or amendment to any Pending Application, to the
FCC for authorization related to any Capacity Lease except
(1) as required to comply with this Agreement, including but
not limited to Section 5.01(b)(iii)(E), (2) as specifically
required by the terms of the Capacity Lease, (3) as required
by the terms of an applicable FCC license, or (4) as may be
reasonably required to operate the Wireless Cable System in
accordance with the usual and ordinary course of business
consistent with past practices;
(v) cause the Wireless Cable System (A) to use
its best efforts to maintain its current level of Basic
Subscribers; (B) to not materially reduce the present
subscriber service rates and installation rates; (C) to
adhere to the current practice with respect to bad debt,
collection of subscriber accounts and deactivation of
delinquent account service; (D) to collect accounts
receivable only in the ordinary course consistent with its
past practices; and (E) to take no action designed to
accelerate or likely to accelerate the collection of its
accounts receivable;
(vi) except as otherwise set forth herein or as
requested by BellSouth, cause the Wireless Cable System to
be operated diligently in the ordinary course of business in
accordance with past practices for such operation (except
where such conduct would conflict with the covenants set
forth in Section 5.01(b) or with the Company's other
obligations under this Agreement);
(vii) at least five days prior to the Closing,
deliver to BellSouth a list of all material contracts
entered into by the Company between the date of this
Agreement and the Closing, together with copies of such
contracts; provided, that a contract shall be considered
material if (A) it is a Capacity Lease or an amendment of a
Capacity Lease or (B) it has a term exceeding one year or
obligates the Company to provide services or materials with
a cost, or to make purchases for total consideration, in
excess of $50,000.00 individually and $250,000.00 in the
aggregate for all Contracts;
(viii)(A) take all reasonable actions to maintain
all of its assets in good condition (ordinary wear and tear
excepted), and use, operate, and maintain all of such assets
in a reasonable manner; (B) maintain inventories of spare
parts, subscriber reception equipment and expendable
supplies at levels consistent with past practices; (C) if
any loss, damage, impairment, confiscation, or condemnation
of or to any of such assets occurs, repair, replace or
restore such assets to their prior condition as soon
thereafter as possible, and to use the proceeds of any claim
under any insurance policy to replace such assets that are
lost, damaged, impaired or destroyed;
(ix) maintain insurance policies on the Wireless
Cable System, their equipment, the interruption of their
business, liability, xxxxxxx'x compensation, fire, libel and
slander, and casualty as is customary in the wireless cable
business;
(x) ensure that there is no material change in
the broadcast hours or in the current program lineup
transmitted by the Wireless Cable System, and that there is
not any other material change in the Wireless Cable System's
programming policies, other than adding programming networks
under agreements entered into in the usual and ordinary
course of business and on terms and conditions typical in
the wireless cable industry and fair to the Company;
(xi) use its best efforts to preserve the business
and organization of the Wireless Cable System and use its
best efforts to keep available to the Wireless Cable System
its present employees and to preserve the subscriber base of
the Wireless Cable System and their present relationships
with suppliers, programmers, and others having business
relations with them;
(xii) use its best efforts to obtain (A) the
consent of the FCC to the transfer of control of the Company
as contemplated by this transaction; (B) the consent of each
party to each Capacity Lease and each Site Lease whose
consent is required by the terms of such agreement or by law
to ensure that the transfer of control of the Company to
BellSouth does not result in a default of such agreement;
and (C) estoppel certificates substantially in the form of
Exhibit 5.01(b)(xii) hereto from each lessor under each
Capacity Lease and each Site Lease;
(xiii) terminate the employment agreements with
the individuals identified on Exhibit 5.01(b)(xiii);
(xiv) cooperate with BellSouth in its efforts to
arrange meetings with, and to obtain information from, the
lessors and other parties under the Capacity Leases,
including without limitation causing Company representatives
to attend meetings with such lessors and other parties; and
(xv) use its best efforts to cause to be taken the
actions set forth in Exhibit 5.01(b)(xv).
Section 5.02 No Solicitation. The Company agrees that it
shall not, directly or indirectly, through any officer, director,
employee, agent, Affiliate, or any representative of such entity
or otherwise, initiate, solicit, pursue, or continue any
discussions, negotiations, or agreements (whether preliminary or
definitive) with any Person or entity other than BellSouth
contemplating or providing for any public or private offering of
equity, or merger, share exchange, acquisition, purchase or sale
of all or (other than in the ordinary course of business) a
substantial portion of the assets of, or any equity interest in,
any of the Companies or any other business combination or change
in control involving any of the Companies (each, a "Competing
Transaction") or, participate in any negotiations regarding, or
furnish to any other person any information with respect to, or
otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other
person to do or seek any Competing Transaction. The Company
shall promptly advise BellSouth if any such proposal or offer, or
any written inquiry or contact with any Person with respect to
any Competing Transaction, is made, shall promptly inform
BellSouth of all the terms and conditions thereof, and shall
furnish to BellSouth copies of any such written proposal or offer
and the contents of any communications in response thereto.
Section 5.03 Access to Information; Confidentiality
Agreement.
(a) The Company will give BellSouth, BellSouth Sub and
their authorized representatives reasonable access during normal
business hours to all offices and other facilities and to all
books and records of the Company, will permit BellSouth and
BellSouth Sub to make such inspections as each may reasonably
request and will cause their officers and those of its
Subsidiaries to furnish such financial and operating data and
other information with respect to its businesses and properties
as may from time to time reasonably be requested. Subject to
Section 5.06 hereof, all such information shall be kept
confidential in accordance with the Confidentiality Agreement.
(b) Notwithstanding the execution of this Agreement,
the Confidentiality Agreement shall remain in full force and
effect through the Effective Time, at which time the
Confidentiality Agreement shall terminate and be of no further
force and effect. Each party hereto hereby waives the provisions
of the Confidentiality Agreement as and to the extent necessary
to permit the solicitation of votes of the Stockholders of the
Company and to permit consummation of the transactions
contemplated hereby. Each party further acknowledges that the
Confidentiality Agreement shall survive any termination of this
Agreement pursuant to Section 7.01 hereof.
Section 5.04 Best Efforts. Subject to the terms and
conditions herein provided each of the parties hereto agrees to
use its best efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper and
advisable under applicable Law, to consummate and make effective
the transactions contemplated by this Agreement. In case at any
time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party to this Agreement shall take
all such necessary action. BellSouth and the Company will
execute any additional instruments necessary to consummate the
transactions contemplated hereby and thereby.
Section 5.05 Consents. The Company will use its best
efforts to obtain any and all consents of all third parties
(including, without limitation, the lessor under each Capacity
Lease, and Site Lease and Governmental Entities (including,
without limitation, the FCC)) necessary to the consummation of
the transactions contemplated by this Agreement, which consents
shall be identified on Exhibit 5.05. Within ten (10) days of the
date of this Agreement, the Company shall tender to BellSouth one
or more applications on the proper FCC forms for the FCC's
consent to the transfer of control of the Company with respect to
each FCC-issued license held by the Company, such applications
being executed by the Company, the transferors, and the Company's
and the transferor's portion thereof being fully completed.
BellSouth shall be responsible for preparing the transferee's
portion of such transfer applications and for filing the
applications with the FCC within ten (10) days of BellSouth's
receipt of the Company's and transferor's portion of the
applications. Each party shall cooperate with the other fully in
prosecuting such applications, such cooperation including but not
limited to responding in a timely fashion to all FCC inquiries
concerning such applications, preparing suitable amendments to
such applications, otherwise taking such actions and refraining
from taking such actions as best conducive to the grant of such
applications and joining in such appeals and requests for
reconsideration of adverse FCC orders as BellSouth may wish to
appeal or to request reconsideration. Each party shall bear its
own expenses incurred in preparing, filing and prosecuting such
applications, preparing and filing amendments to them, responding
to FCC inquiries concerning them and filing and prosecuting such
petitions for reconsideration and appeals from adverse FCC orders
as regards them.
Section 5.06 Public Announcements. The parties hereto have
agreed upon the text of a joint press release announcing, among
other things, the execution of this Agreement, which joint press
release shall be disseminated promptly following the execution
hereof. The Company and BellSouth will consult with each other
before issuing any additional press release or otherwise making
any additional public statement with respect to this Agreement,
the Merger or the transactions contemplated herein and shall not
issue any such press release or make any such public statement
prior to such consultation or as to which the other party
promptly and reasonably objects, except as may be required, in
the written opinion of such party's counsel, by Law or by
obligations pursuant to any listing agreement with any national
securities exchange or inter-dealer quotation system, in which
case the party proposing to issue such press release or make such
public announcement shall use its best efforts to consult in good
faith with, and accommodate the reasonable comments of, the other
party before issuing any such press release or making any such
public announcements.
Section 5.07 Payment of Preferred Stock Dividend and
Conversion of Outstanding Options. Prior to the Effective Time,
(i) each share of the Company Preferred Stock shall be converted
to Company Common Stock and all accrued but unpaid dividends on
the Company Preferred Stock (which dividends shall consist
exclusively of not more than 4,724 shares of Company Preferred
Stock) shall have been paid, and (ii) all Outstanding Options
shall have been exercised or canceled.
Section 5.08 Channel Agreements.
(a) The Company and the lessors under the Capacity
Leases for the A-, C-, D- and G-Group Channels shall amend such
Capacity Leases to clarify, in form and substance reasonably
acceptable to BellSouth, that the allocation of airtime is as
specified in Exhibit 1.36(B).
(b) The Company shall perform all of its obligations
required under the Assignment Agreement with Multichannel
Distribution of America, Inc., dated January 31, 1997, relating
to the E-Group Channels in Rome, Georgia.
(c) The Company shall perform all of its obligations
under the Contingent Market Coordination Agreement among the
Company, Visionspan, Inc., Wireless Entertainment Systems, Inc.
and BellSouth Wireless Cable, Inc., dated January 13, 1997.
(d) The Company shall use its best efforts to
cooperate with the efforts of BellSouth for the Company to enter
into a lease for the use of excess capacity on the B- Group
Channels authorized to Atlanta Interfaith Broadcasters, Inc.
Section 5.09 Control of Wireless Cable System. Prior to
Closing, and notwithstanding any other provision of this
Agreement, BellSouth and BellSouth Sub shall not directly or
indirectly control, supervise or direct, or attempt to control,
supervise or direct, any activities associated with the Wireless
Cable System. Such activities shall be the sole responsibility
of and in the complete discretion of the holders of the Company
FCC Authorizations.
Section 5.10 Registration Statement; Proxy
Statement/Prospectus; Special Meeting. The Company will duly
call and use its best efforts to hold the Special Meeting by
April 30, 1997, for the purpose of approving the Agreement and
will comply fully with the provisions of the Securities Act and
the Exchange Act and the rules and regulations of the SEC under
such Acts, and its Articles of Incorporation and Bylaws relating
to the call and holding of meetings of the Stockholders for such
purpose. The Board of Directors of the Company will recommend to
and actively encourage the Stockholders that they vote in favor
of this Agreement. BellSouth and the Company will jointly
prepare the Proxy Statement/Prospectus to be used in connection
with such meeting and BellSouth will prepare and file with the
SEC the Registration Statement, of which such Proxy
Statement/Prospectus shall be a part, and use its best efforts
promptly to have the Registration Statement declared effective.
In connection with the foregoing, BellSouth will comply with the
requirements of the Securities Act, the Exchange Act, the NYSE
and the rules and regulations of the SEC under such acts with
respect to the offering and sale of BellSouth Common Stock in
connection with the Merger and with all applicable state Blue Sky
and securities laws. The notices of such meetings and the Proxy
Statement/Prospectus shall not be mailed to the Stockholders
until the Registration Statement shall have become effective
under the Securities Act. The Company covenants that none of the
information supplied by the Company and BellSouth covenants that
none of the information supplied by BellSouth in the Proxy
Statement/Prospectus will, at the time of the mailing of the
Proxy Statement/Prospectus to the Stockholders, contain any
untrue statement of a material fact nor will any such information
omit any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances in which they were made, not misleading; and at all
times subsequent to the time of the mailing of the Proxy
Statement/Prospectus, up to and including the date of the meeting
of the Stockholders to which the Proxy Statement/Prospectus
relates, none of such information in the Proxy
Statement/Prospectus, as amended or supplemented, will contain an
untrue statement of a material fact or omit any material fact
required to be stated therein in order to make the statements
therein, in light of the circumstances in which they were made,
not misleading.
BellSouth, as the sole shareholder of BellSouth Sub, hereby
approves this Agreement.
Section 5.11 Multiple Dwelling Units. The Company shall
not enter into any contract or commitment to provide wireless
cable services to or construct wireless cable facilities for
multiple dwelling units without the prior written consent of
BellSouth, such consent not to be unreasonably withheld.
Section 5.12 Interim Financing. BellSouth agrees to
provide $1,000,000 of financing to the Company as of the date
following the date of this Agreement, such financing to be repaid
promptly following the Closing. The Company agrees that, prior
to the Closing or the termination of the Agreement, the proceeds
of such financing may be used only (a) to fund negative cash flow
from operations not in excess of $150,000 and (b) for the
purposes of constructing new wireless cable facilities for
multiple dwelling units, subject to the prior written consent of
BellSouth. Such financing shall not bear interest. In the event
this Agreement is terminated in accordance with its terms (w) by
BellSouth other than as a result of a material misrepresentation
or a material breach of a covenant by the Company or in
accordance with Section 7.01(d) or (x) by the Company other than
in accordance with Section 7.01(d) or Section 7.01(f), such
financing shall be forgiven. In the event (y) this Agreement is
terminated in accordance with its terms (i) by BellSouth as a
result of a material misrepresentation or a material breach of a
covenant by the Company or in accordance with Section 7.01(d) or
(ii) by the Company in accordance with Section 7.01(d) or Section
7.01(f), or (z) in the event the holder of Company Preferred
Stock elects to terminate the proxy contained in its letter
agreement in the form of Exhibit 3.29(b) hereto on or after
August 11, 1997, such financing shall as of the date of any such
termination convert into an interest-bearing loan, with interest
accruing as of the termination date, such indebtedness having a
maturity date of December 31, 1998, and being secured by the
stock of the Company's Subsidiaries. Such indebtedness shall
bear interest at an annual rate of 10%, increasing to 30% if the
indebtedness is not repaid at maturity. The Company has duly
authorized, executed and delivered to BellSouth a promissory note
in the form attached hereto as Exhibit 5.12.
Section 5.13 HSR Filings. Within 30 days of the date of
this Agreement, each of the Company and BellSouth shall make any
and all filings that the parties determine are required under the
HSR Act. In the event a reviewing governmental agency seeks
additional information, through a second request or otherwise,
each of the parties shall comply with the request with reasonable
promptness.
Section 5.14 Termination of Certain Agreements. Prior to
the Effective Time, the Company shall have terminated, without
penalty, (a) its paging resale agreement with Pactel Cellular
Inc. of Georgia and (b) its letter of intent dated July 25, 1996
with General Instrument to purchase digital set-top boxes.
Section 5.15 Studio-to-Transmitter Links. Prior to the
Effective Time, the Company shall have satisfied all obligations
under the Capacity Leases for ITFS Channels to provide
studio-to-transmitter links.
ARTICLE VI
CONDITIONS PRECEDENT TO CONSUMMATION OF THE MERGER
Section 6.01 Conditions Precedent to Each Party's
Obligation to Effect the Merger. The respective obligation of
each party to consummate the Merger is subject to the
satisfaction at or prior to the Effective Time of the following
conditions precedent:
(a) the transactions contemplated in this Agreement
shall have been approved, and the Agreement shall have been
adopted, by the affirmative vote of the Stock- holders of the
Company by the requisite vote in accordance with the GBCC and any
agreements among Stockholders;
(b) no order, decree or injunction shall have been
enacted, entered, promulgated or enforced by any United States
court of competent jurisdiction or any United States governmental
authority which prohibits the consummation of the Merger;
provided, however, that the parties hereto shall use their
commercially reasonable best efforts to have any such order,
decree or injunction vacated or reversed;
(c) any waiting period applicable to the Merger under
the HSR Act shall have terminated or expired;
(d) the receipt by BellSouth and the Company, based on
customary assumptions and on representations set forth in
certificates of officers of BellSouth and the Company (including,
without limitation, a continuity of interest representation that
satisfies the requirements of Revenue Procedure 86-42), of the
opinion of Hunton & Xxxxxxxx (dated the Effective Date) to the
effect that, for United States federal income tax purposes, (i)
the Merger will constitute a "reorganization" under Section
368(a) of the Code, (ii) no gain or loss will be recognized by
BellSouth, BellSouth Sub or the Company upon consummation of the
Merger, (iii) no gain or loss will be recognized by Stockholders
upon the exchange of shares of the Company Common Stock solely
for shares of BellSouth Common Stock (including any fractional
share interest) in the Merger, (iv) a Stockholder's aggregate
basis in BellSouth Common Stock (including any fractional share
interest) received in the Merger will be the same as the
Stockholder's basis in the Company Common Stock surrendered in
exchange therefor, (v) the holding period for shares of BellSouth
Common Stock (including any fractional share interest) received
by a Stockholder in the Merger will include the holding period
for the shares of the Company Common Stock exchanged therefor, if
such shares of the Company Common Stock are held as a capital
asset at the Effective Time, and (vi) cash received in lieu of a
fractional share of BellSouth Common Stock will be treated as
having been received as full payment in exchange for such
fractional share;
(e) the Registration Statement shall be effective
under the Securities Act, all applicable requirements of the
Securities Act and Exchange Act shall have been satisfied, any
applicable filings under state securities, "Blue Sky" or takeover
laws shall have been made and BellSouth shall have received all
state securities laws or "Blue Sky" permits and other
authorizations or there shall be exemptions from registration
requirements necessary to offer and issue the BellSouth Common
Stock in connection with the Merger, and neither the Registration
Statement nor any such permit, authorization or exemption shall
be subject to a stop order or threatened stop order by the SEC or
any state securities authority;
(f) if the shares of BellSouth Common Stock to be
issued in the Merger are not repurchased on the open market, such
shares to be issued in the Merger shall have been approved for
listing, upon notice of issuance, on the NYSE; and
(g) the transactions contemplated by this Agreement
shall (i) be permitted by the laws and regulations of each
jurisdiction or Governmental Entity including, without
limitation, the FCC to which the Companies or any of their
Affiliates are subject and (ii) not violate any applicable Law.
Section 6.02 Conditions Precedent to Obligations of the
Company. The obligations of the Company to consummate the Merger
are subject to the satisfaction or waiver at or prior to the
Effective Time of the following conditions precedent:
(a) there shall have occurred no BellSouth Material
Adverse Effect from the date hereof to the Effective Time;
(b) the representations and warranties of BellSouth
and BellSouth Sub contained in Article IV shall be true and
correct in all material respects when made and at and as of the
Effective Time with the same force and effect as if those
representations and warranties had been made at and as of such
time except (i) to the extent such representations and warranties
speak as of a specified earlier date, and (ii) as otherwise
contemplated or permitted by this Agreement;
(c) BellSouth shall, in all material respects, have
performed all obligations and complied with all covenants
necessary to be performed or complied with by it on or before the
Effective Time;
(d) the Company shall have received a certificate of a
senior officer of BellSouth, in form satisfactory to counsel for
the Company, certifying fulfillment of the matters referred to in
paragraphs (a) through (c) of this Section 6.02;
(e) the Company shall have received the opinion of
Hunton & Xxxxxxxx, counsel for BellSouth and BellSouth Sub, dated
the Effective Time, in substantially the form attached as Exhibit
6.02(e) hereto; and
(f) the FCC shall have granted its consents by Final
Order to the transfer of control of the Company to BellSouth,
which consents shall contain only such conditions as are ordinary
for the classes of such consents except for such conditions as
BellSouth may agree to accept in its sole discretion.
Section 6.03 Conditions Precedent to Obligations of
BellSouth and BellSouth Sub. The obligations of BellSouth and
BellSouth Sub to consummate the Merger are subject to the
satisfaction or waiver at or prior to the Effective Time of the
following conditions precedent:
(a) there shall have occurred no Company Material
Adverse Effect from the date hereof to the Effective Time;
(b) the representations and warranties of the Company
contained in Article III shall be true and correct in all
material respects when made and at and as of the Effective Time
with the same force and effect as if those representations and
warranties had been made at and as of such time except (i) to the
extent such representations and warranties speak as of a
specified earlier date, and (ii) as otherwise contemplated or
permitted by this Agreement;
(c) the Company shall have received all necessary and
material governmental (including, without limitation, the FCC),
regulatory, stockholder and third party lender, customer or other
clearances, consents, licenses or approvals;
(d) the Company shall, in all material respects, have
performed all obligations and complied with all covenants
necessary to be performed or complied with by it on or before the
Effective Time;
(e) immediately prior to the Effective Time, following
conversion of the Company Preferred Stock and the exercise of all
Outstanding Options, there shall be not more than 2,245,378
shares of Company Common Stock issued and outstanding and no
shares of Company Preferred Stock shall be issued and
outstanding;
(f) BellSouth shall have received a certificate of the
Chairman, President or Executive Vice President of the Company,
in form satisfactory to counsel for BellSouth, certifying
fulfillment of the matters referred to in paragraphs (a) through
(d) of this Section 6.03;
(g) Messrs. Xxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxxx and
Xxxxx X. Xxxxxx shall have delivered to BellSouth evidence of the
termination of any employment agreements with the Company to
which any of them is a party;
(h) BellSouth shall have received consulting and
non-competition agreements in the forms attached as Exhibit
6.03(h) hereto from those persons specified therein;
(i) BellSouth and BellSouth Sub shall have received
(i) the opinion of Xxxxxxxx & Xxxxx, L.L.P., counsel for the
Company, dated the Effective Time, in substantially the form
attached as Exhibit 6.03(i)(i) hereto and (ii) the opinion of
Pepper & Corrazzini, L.L.P., in substantially the form attached
as Exhibit 6.03(i)(ii) hereto;
(j) the FCC shall have granted its consents by Final
Order to the transfer of control of the Company to BellSouth of
each FCC-issued license held by the Company, which consents shall
contain only such conditions as are ordinary for the classes of
such consents except for such conditions as BellSouth may agree
to accept in its sole discretion;
(k) As of the Effective Date, the Company shall have
delivered the Delivered Digital-Ready Channels set forth on
Exhibit 6.03(k);
(l) prior to the mailing of the Proxy
Statement/Prospectus, the Company shall have delivered to
BellSouth each estoppel certificate referred to in Section
5.01(b)(xii);
(m) the Company shall have delivered to BellSouth (A)
a supplement to Exhibit 3.20(a) setting forth the information
listed in Sections 3.20(a) and 3.20(b) for each Company FCC
Authorization first acquired by any of the Companies after the
date of this Agreement or subject to a Capacity Lease entered
into after the date of this Agreement; (B) supplements to
Exhibits 3.20(c) and 3.20(c-I) deleting Pending Applications
which have been granted and are described on the Exhibit 3.20(a)
supplement, and setting forth the information listed in Section
3.20(c) for each Pending Application filed at the FCC after the
date of this Agreement; (C) a supplement to Exhibit 3.21 setting
forth a list of Capacity Leases entered into by the Companies
after the date of this Agreement; (D) a supplement to Section
3.22 identifying each Site Lease acquired by any of the Companies
after the date of this Agreement and setting forth such other
information with respect thereto listed in Section 3.22; and (E)
a supplement to Exhibit 3.25 listing and setting forth the
information listed in Section 3.25 with respect to each
retransmission consent and programming agreement acquired by any
of the Companies or renewed by any of the Companies after the
date of this Agreement; and (F) a supplement to Exhibit 3.28
listing and setting forth the information listed in Exhibit 3.28
with respect to each interference consent entered into by any of
the Companies after the date of this Agreement;
(n) the Company shall have received letters of
resignation from each of the officers and directors of the
Company;
(o) there shall be not less than 8,600 Basic
Subscribers to the Wireless Cable System as of the Effective
Date; and
(p) Stockholders shall have perfected the right to
dissent with respect to no more than 10% of the outstanding
shares of Company Common Stock.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.01 Termination. This Agreement may be terminated
at any time prior to the Effective Time:
(a) by mutual written consent of the Company and
BellSouth;
(b) by BellSouth, upon a breach of any representation,
warranty, covenant and agreement on the part of the Company set
forth in this Agreement, or if any representation or warranty of
the Company shall have become untrue, in either case such that
the conditions set forth in Section 6.03(b) or Section 6.03(d)
would be incapable of being satisfied by August 11, 1997 (or May
12, 1997 in the event BellSouth elects to terminate this
Agreement in accordance with Section 7.01(e));
(c) by the Company upon a material breach of any
representation, warranty, covenant or agreement on the part of
BellSouth or BellSouth Sub set forth in this Agreement, or if any
representation or warranty of BellSouth or BellSouth Sub shall
have become untrue, in either case such that the conditions set
forth in Section 6.02(b) or Section 6.02(c) would be incapable of
being satisfied by August 11, 1997 (or May 12, 1997 in the event
BellSouth elects to terminate this Agreement in accordance with
Section 7.01(e));
(d) by either BellSouth or the Company, if any
Governmental Entity or any court of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any Law,
injunction or other order (whether temporary, preliminary or
permanent) which is in effect and which has the effect of making,
or any such Governmental Entity shall have commenced, any
proceeding (other than the consideration of applications for
approvals under the Communications Act) which, if adversely
determined, would have the effect of making the Merger illegal or
otherwise materially restricting or prohibiting consummation of
the Merger;
(e) by BellSouth if the Effective Time shall not have
occurred before May 12, 1997 (provided that if BellSouth shall
not elect to terminate this Agreement under this Section 7.01(e)
following such date, the consideration paid hereunder to
Stockholders shall be increased as provided in Section 2.05(g));
and
(f) by either BellSouth or the Company, if the Merger
shall not have been consummated before August 11, 1997 (provided
that the right to terminate this Agreement shall not be available
to any party where failure to fulfill any obligation under this
Agreement has been the cause of or has resulted in the failure of
the Merger to be consummated on or before such date).
Section 7.02 Effect of Termination. Except as provided in
Section 7.05 and Section 5.03(b), in the event of the termination
of this Agreement pursuant to Section 7.01, this Agreement shall
forthwith become void, there shall be no liability on the part of
BellSouth, the Company or any of their respective officers,
directors or stockholders to the other parties hereto and all
rights and obligations of any party hereto shall cease; provided
that any such termination shall be without prejudice to the
rights of any party hereto arising out of the material breach of
any other party of any covenant or material misrepresentation
contained in this Agreement.
Section 7.03 Amendment. This Agreement may be amended by
the mutual consent of the parties hereto at any time prior to the
Effective Time; provided, however, that, after approval of the
Agreement by the Stockholders of the Company, no amendment, which
under applicable Law may not be made without the approval of the
Stockholders of the Company, may be made without such approval.
This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
Section 7.04 Waiver. At any time prior to the Effective
Time, the parties hereto may (a) extend the time for the
performance of any of the obligations or other acts of any party
hereto, (b) waive any inaccuracies in the representations and
warranties of any party contained herein or in any document
delivered pursuant hereto and (c) waive compliance by any party
with any of the agreements or conditions contained herein. Any
such extension or waiver shall be valid only if set forth in an
instrument in writing signed by all of the parties hereto.
Section 7.05 Expenses.
(a) All Expenses incurred by the parties hereto shall
be borne solely and entirely by the party which has incurred such
Expenses; provided, however, that each of BellSouth and the
Company shall pay 50% of any filing fees paid under the
Securities Act and the Communications Act.
(b) "Expenses" as used in this Agreement shall include
all reasonable out- of-pocket expenses (including, without
limitation, all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to a party hereto and
its Affiliates) incurred by a party or on its behalf in
connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement and all
other matters related to the closing of the transactions
contemplated herein. The Company agrees that the fees and
expenses of Alex. Xxxxx & Sons Incorporated shall not exceed
$900,000. The Company agrees that its Expenses, other than the
fees and expenses of Alex. Xxxxx & Sons Incorporated, shall be
reasonable for a transaction of this type and shall not exceed
$200,000 in the aggregate. Prior to Closing, the Company shall
provide to BellSouth the final statement of Alex. Xxxxx & Sons
Incorporated, which statement shall reflect (i) all fees and
expenses of Alex. Xxxxx & Sons Incorporated in connection with
the Merger and (ii) that such fees and expenses do not exceed
$900,000.
Section 7.06 Equitable Relief. BellSouth and the Company
each agrees that each party shall be entitled, in addition to any
other remedies it may have under this Agreement or otherwise, to
preliminary and permanent injunctive and other equitable relief
to prevent or curtail any breach of this Agreement; provided,
however, that no specification in this Agreement of a specific
legal or equitable remedy shall be construed as a waiver or
prohibition against the pursuing of other legal or equitable
remedies in the event of such a breach.
ARTICLE VIII
ADDITIONAL COVENANTS
Section 8.01 Employment Matters. BellSouth will cause the
Company to pay two months severance pay to any employees (other
than Messrs. Xxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxxx and Xxxxx X.
Xxxxxx) terminated by BellSouth without cause within the six
month period following the Effective Date. Nothing in this
Agreement is intended to give any employees any right to
continued employment after Closing.
Section 8.02 Stock Options. Each holder of Outstanding
Options shall, by giving notice to the Company prior to the
Closing Date, exercise the Outstanding Options for Company Common
Stock prior to the Effective Date and convert such Common Stock
into BellSouth Common Stock in the Merger.
Section 8.03 Indemnification of Company Officers and
Directors.
(a) After the Effective Time BellSouth agrees that the
Company shall provide indemnification to the directors and
officers of the Company for events occurring subsequent to the
Company's becoming a reporting company under the Exchange Act and
prior to the Effective Time, to the extent permitted under the
Articles of Incorporation and Bylaws of the Company as in effect
as of the date of this Agreement. Such indemnification shall
continue for six years after the Effective Time, provided that
any right to indemnification in respect of any claim asserted or
made within such six year period shall continue until final
disposition of such claim. The Company is not aware of any facts
or circumstances that it has reason to suppose would give rise to
a claim for indemnification within the scope of the Company's
Articles of Incorporation and Bylaws. The Company shall not be
obligated to pay more than $5,000,000 in the aggregate with
respect to its obligations under this Section 8.03 (a).
(b) After the Effective Time BellSouth agrees that the
Company shall provide indemnification to the directors and
officers of the Company for all losses, claims, damages, costs,
expenses (including attorneys' fees), liabilities or judgements
or amounts that are paid in settlement, with the approval of
BellSouth, based in whole or in part on, or arriving in whole or
in part out of, or pertaining to this Agreement or the
transactions contemplated hereby. Such indemnification shall
continue for six years after the Effective Time, provided that
any right to indemnification in respect of any claim asserted or
made within such six year period shall continue until final
disposition of such claim. The Company is not aware of any facts
or circumstances that it has reason to suppose would give rise to
a claim for indemnification within the scope of subsection (b).
ARTICLE IX
GENERAL PROVISIONS
Section 9.01 Survival of Representations and Warranties and
Covenants. The representations and warranties and covenants made
herein shall not survive beyond the Effective Time.
Section 9.02 Notices. All notices and other communications
given or made pursuant hereto shall be in writing and shall be
deemed to have been duly given or made as of the date when
delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested), transmitted by
facsimile with a confirmation copy simultaneously mailed by
registered or certified mail (postage prepaid, return receipt
requested), or sent by a nationally recognized overnight courier
to the recipient at the following addresses, or at such other
address as the recipient party shall have specified by prior
written notice to the sending party:
(a) If to BellSouth:
BellSouth Corporation
0000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Hunton & Xxxxxxxx
Riverfront Plaza, East Tower
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
Telephone:(000) 000-0000
Telecopier:(000) 000-0000
(b) If to the Company:
Wireless Cable of Atlanta, Inc.
0000 Xxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Chief Financial Officer
Telephone: (000) 000-0000
Telecopier:(000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxx, L.L.P.
Suite 4300, One Peachtree Center
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Section 9.03 Headings. The headings contained in this
Agreement are for convenience of reference only and shall not
affect in any way the meaning or interpretation of this
Agreement.
Section 9.04 Severability.If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced
by any rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
Section 9.05 Entire Agreement. This Agreement (together
with the exhibits), and the Confidentiality Agreement constitute
the entire agreement of the parties and supersede all prior
agreements and undertakings, both written and oral, between the
parties, or any of them, with respect to the subject matter
hereof.
Section 9.06 Assignment. This Agreement shall not be
assigned by operation of law or otherwise.
Section 9.07 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any right,
benefit or remedy of any nature whatsoever under or by reason of
this Agreement.
Section 9.08 Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of any party hereto
in the exercise of any right hereunder shall impair such right or
be construed to be a waiver of, or acquiescence in, any breach of
any representation, warranty or agreement herein, nor shall any
single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and
remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
Section 9.09 Governing Law. This Agreement and the
relationship between the parties shall be governed by, and
construed in accordance with, the laws of the State of Georgia
regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
Section 9.10 Counterparts. This Agreement may be executed
in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement, or have caused this Agreement to be duly executed
on their behalf, on the day and year first hereinabove written.
WIRELESS CABLE OF ATLANTA, INC.
/s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Chief Financial Officer
BELLSOUTH CORPORATION
/s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Vice President - Corporate
Development
BELLSOUTH WCA MERGER
SUBSIDIARY, INC.
/s/ Xxxxx X. XxXxxxxxxx, XX
Name: Xxxxx X. XxXxxxxxxx, XX
Title: Vice President
