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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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(Mark One):
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998.
Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
COMMISSION FILE NUMBER: 001-14195
AMERICAN TOWER CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 65-0723837
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
116 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02116
(Address of principal executive offices)
TELEPHONE NUMBER (617) 375-7500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days:
Yes X No
<TABLE>
<CAPTION>
OUTSTANDING AT
CLASS OF COMMON STOCK OCTOBER 30, 1998
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<S> <C>
Class A Common Stock........................................ 96,178,177 shares
Class B Common Stock........................................ 9,086,726 shares
Class C Common Stock........................................ 3,295,518 shares
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Total....................................................... 108,560,421 shares
</TABLE>
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<PAGE>
AMERICAN TOWER CORPORATION
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
<C> <S> <C>
ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets
December 31, 1997 and September 30, 1998.................... 1
Consolidated Statements of Operations
Three and nine months ended September 30, 1997 and 1998..... 2
Consolidated Statements of Cash Flows
Nine months ended September 30, 1997 and 1998............... 3
Notes to Consolidated Financial Statements................... 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.................................. 12
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.......................................... 19
ITEM 5. OTHER INFORMATION.......................................... 19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K........................... 20
SIGNATURES................................................. 21
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION.
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS--UNAUDITED
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents......................... $ 4,596 $ 313,454
Accounts receivable, net of allowance for doubtful
accounts of $125 and $1,138, respectively ....... 3,239 14,455
Unbilled receivables.............................. 2,872
Prepaid and other current assets.................. 790 4,638
Deferred income taxes............................. 63 63
-------- ----------
Total current assets............................ 8,688 335,482
-------- ----------
PROPERTY AND EQUIPMENT, net......................... 117,618 388,315
UNALLOCATED PURCHASE PRICE, net..................... 108,192 662,670
OTHER INTANGIBLE ASSETS, net........................ 8,424 14,647
NOTE RECEIVABLE..................................... 10,700 6,100
DEPOSITS AND OTHER LONG-TERM ASSETS................. 1,735 4,105
DEFERRED INCOME TAXES............................... 24,435
-------- ----------
TOTAL............................................... $255,357 $1,435,754
======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt................. $ 110 $ 1,125
Accounts payable.................................. 3,738 6,587
Accrued expenses.................................. 4,492 18,387
Accrued separation expenses....................... 5,113
Accrued interest.................................. 914 2,166
Unearned income................................... 1,752 5,978
Due to CBS Corporation............................ 44,809
-------- ----------
Total current liabilities....................... 11,006 84,165
-------- ----------
LONG-TERM DEBT...................................... 90,066 280,480
DEFERRED INCOME TAXES............................... 418
OTHER LONG-TERM LIABILITIES......................... 33 1,195
-------- ----------
Total long-term liabilities..................... 90,517 281,675
-------- ----------
MINORITY INTEREST IN SUBSIDIARIES................... 626 567
-------- ----------
COMMITMENTS AND CONTINGENCIES
REDEEMABLE CLASS A COMMON STOCK:
$.01 par value, 336,250 shares issued and out-
standing; at estimated redemption value of
$25.50 per share............................... 8,574
-------- ----------
STOCKHOLDERS' EQUITY:
Preferred Stock; $0.01 par value; 20,000,000
shares authorized; no shares issued or outstand-
ing..............................................
Class A Common Stock; $.01 par value; 300,000,000
shares authorized; 29,667,883 and 94,396,556
shares issued and outstanding, respectively...... 297 944
Class B Common Stock; $.01 par value; 50,000,000
shares authorized; 4,670,626 and 9,107,962 shares
issued and outstanding, respectively............. 47 91
Class C Common Stock; $.01 par value; 10,000,000
shares authorized; 1,295,518 and 3,295,518 shares
issued and outstanding, respectively............. 13 33
Additional paid-in capital........................ 155,711 1,097,359
Accumulated deficit............................... (2,860) (37,654)
-------- ----------
Total stockholders' equity...................... 153,208 1,060,773
-------- ----------
TOTAL............................................... $255,357 $1,435,754
======== ==========
</TABLE>
See notes to consolidated financial statements.
1
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS--UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- ------------------
1997 1998 1997 1998
--------- ---------- -------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Tower rental and management....... $ 3,525 $ 17,719 $ 6,478 $ 39,305
Site acquisition services......... 996 6,572 1,424 18,848
Video, voice and data
transmission..................... 6,187 13,332
-------- ---------- ------- ---------
Total operating revenues........ 4,521 30,478 7,902 71,485
-------- ---------- ------- ---------
OPERATING EXPENSES:
Operating expenses excluding
depreciation and amortization,
tower separation expenses and
corporate general and
administrative expenses:
Tower rental and management..... 1,611 8,087 2,753 18,417
Site acquisition services....... 669 4,677 836 15,412
Video, voice and data
transmission................... 3,928 8,697
Depreciation and amortization..... 1,384 17,243 2,706 32,998
Tower separation expenses......... 159 12,616
Corporate general and
administrative expenses.......... 378 1,561 919 3,186
-------- ---------- ------- ---------
Total operating expenses........ 4,042 35,655 7,214 91,326
-------- ---------- ------- ---------
INCOME (LOSS) FROM OPERATIONS....... 479 (5,177) 688 (19,841)
OTHER INCOME (EXPENSE):
Interest expense.................. (1,000) (7,121) (1,318) (17,023)
Interest income and other, net.... 37 4,451 94 6,283
Minority interest in net earnings
of subsidiaries.................. (60) (66) (221) (255)
-------- ---------- ------- ---------
TOTAL OTHER EXPENSE................. (1,023) (2,736) (1,445) (10,995)
-------- ---------- ------- ---------
LOSS BEFORE BENEFIT FOR INCOME TAXES
AND EXTRAORDINARY LOSSES........... (544) (7,913) (757) (30,836)
INCOME TAX BENEFIT.................. 1,955 49 4,934
-------- ---------- ------- ---------
LOSS BEFORE EXTRAORDINARY LOSSES.... (544) (5,958) (708) (25,902)
EXTRAORDINARY LOSS ON EXTINGUISHMENT
OF DEBT, NET OF INCOME TAX BENEFIT
OF $921............................ (1,382)
EXTRAORDINARY LOSS ON REDEMPTION OF
INTERIM PREFERRED STOCK, NET OF
INCOME TAX BENEFIT OF $5,000....... (7,510) (7,510)
-------- ---------- ------- ---------
NET LOSS............................ $ (544) $ (13,468) $ (708) $ (34,794)
======== ========== ======= =========
BASIC AND DILUTED PER COMMON SHARE:
Loss before extraordinary losses.. $ (0.01) $ (0.06) $ (0.01) $ (0.37)
Extraordinary losses.............. (0.07) (0.13)
-------- ---------- ------- ---------
Net loss.......................... $ (0.01) $ (0.13) $ (0.01) $ (0.50)
======== ========== ======= =========
WEIGHTED AVERAGE COMMON SHARES ..... 48,732 104,621 48,732 70,103
======== ========== ======= =========
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS--UNAUDITED
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------
1997 1998
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES....................... $ 3,118 $ 2,878
-------- --------
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Payments for purchase of property and equipment and
construction activities................................. (8,926) (76,291)
Payments for acquisitions................................ (62,804) (140,384)
Advances of notes receivable............................. (259) (11,100)
Repayment of notes receivable............................ 2,000
Deposits and other long-term assets...................... (2,329) (2,140)
-------- --------
Cash used for investing activities......................... (74,318) (227,915)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit facilities....................... 50,000 205,500
Repayments of other notes payable and credit facilities.. (332) (136,954)
Net proceeds from equity offerings and stock options..... 707,399
Cash transfers to CBS Corporation........................ (221,665)
Net proceeds from Interim Preferred Stock................ 300,000
Redemption of Interim Preferred Stock.................... (303,117)
Contributions from ARS................................... 25,960 56,954
Cash transfers to ARS.................................... (4,150) (51,856)
Distributions to minority interest....................... (314) (314)
Additions to deferred financing costs.................... (42) (22,052)
-------- --------
Cash provided by financing activities...................... 71,122 533,895
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS....... (78) 308,858
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD............. 2,373 4,596
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD................... $ 2,295 $313,454
======== ========
NON-CASH TRANSACTIONS:
Contribution of fixed assets and other assets from (to)
ARS..................................................... $ (725) $ 6,488
Issuance of common stock and assumption of options for
acquisitions............................................ $363,609
Increase in deferred tax assets from corporate
restructuring........................................... $135,000
Increase in due to CBS Corporation from estimated
remaining tax liabilities............................... $ 54,700
Adjustment to equity for CBS tax liability............... $ 76,960
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying financial statements have been prepared by American Tower
Corporation (ATC or the Company) (formerly American Tower Systems
Corporation), without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. The financial information included herein
is unaudited; however the Company believes such information and the
disclosures are adequate to make the information presented not misleading and
reflect all adjustments (consisting only of normal recurring adjustments) that
are necessary for a fair presentation of results of operations for such
periods. Results of interim periods may not be indicative of results for the
full year. These financial statements should be read in conjunction with the
Company's 1997 Annual Report on Form 10-K and periodic reports on Form 10-Q
filed during 1998.
Accounting Policies--In June 1998, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards (FAS) No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This statement
is effective for all fiscal quarters of years beginning after June 1999. The
Company has not completed its evaluations of FAS No. 133, but does not expect
it to significantly affect the accounting and reporting of its current hedging
activities.
Effective January 1, 1998, the Company adopted the provisions of FAS No.
130, "Reporting Comprehensive Income." There are currently no items other than
net income which would be classified as part of comprehensive income.
In February 1998, the FASB released FAS No. 132, "Employer's Disclosures
about Pensions and Other Postretirement Benefits" (FAS 132), which ATC will be
required to adopt in 1998. FAS 132 will require additional disclosure
concerning changes in ATC's pension obligations and assets and eliminates
certain other disclosures no longer considered useful. Adoption of this
standard will have no effect on reported consolidated results of operations or
financial position.
Tower Separation expenses--Tower separation expenses consist of costs
incurred in connection with the separation of the Company from its former
parent and include legal, accounting, financial advisory, and consent
solicitation fees. The Company expects to incur additional separation expenses
through the resolution of the CBS Merger adjustments described in Note 2, but
does not expect such costs to be material to the Company's results of
operations or financial position.
Reclassifications--Certain reclassifications have been made to the 1997
financial statements to conform to the 1998 presentation.
2. BUSINESS AND CORPORATE STRUCTURE
ATC was a majority owned subsidiary of American Radio Systems Corporation
(ARS or American Radio) until consummation of the CBS Merger on June 4, 1998,
as discussed below. American Towers, Inc. (ATI) is a wholly-owned subsidiary
of ATC. American Tower, L.P. (ATLP) is an indirect wholly-owned subsidiary of
ATC. ATI and ATLP are collectively referred to as the Borrower Subsidiaries.
CBS Merger: On June 4, 1998, the merger of American Radio and a subsidiary
of CBS Corporation (CBS) was consummated (the CBS Merger). As a consequence,
all of the shares of ATC Common Stock (the Common Stock) owned by ARS were
distributed to ARS common stockholders and holders of options to acquire ARS
Common Stock have been or will be distributed upon conversion of shares of ARS
7% Convertible Exchangeable Preferred Stock (the Convertible Preferred Stock).
As a consequence of the CBS Merger, ATC ceased to be a subsidiary of, or to be
otherwise affiliated with, American Radio and now operates as an independent
publicly traded company. Pursuant to the provisions of the CBS Merger
Agreement, ATC entered into an agreement (the Separation Agreement) with CBS
and ARS providing for, among other things, the orderly separation of ARS and
ATC, the allocation of certain tax liabilities to ATC and certain closing date
adjustments relating to ARS.
4
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Separation Agreement required ATC to reimburse CBS on a "make-whole"
(after tax) basis for the tax liabilities incurred by ARS attributable to the
distribution of the Common Stock owned by ARS to the ARS security holders and
certain related transactions to the extent that the aggregate amount of taxes
required to be paid by ARS exceeded $20.0 million. The amount of that tax
liability was dependent on the "fair market value" of the Common Stock at the
time of the consummation of the CBS Merger. ATC received an appraisal from an
independent appraisal firm that the "fair market value" of ARS's stock
interest in ATC was equal to $17.25 per share. Based on such appraisal, ARS
paid estimated taxes of approximately $212.0 million and was reimbursed
therefore by ATC. As required by the Separation Agreement, ATC provided CBS
with security of $9.8 million in cash (which may be replaced at ATC's option
with a letter of credit reasonably satisfactory to CBS) in connection with the
filing of estimated tax returns based on such appraisal. Such appraisal is
not, of course, binding on the Internal Revenue Service or other taxing
authorities. The Company financed its tax reimbursement obligations to CBS
with the Interim Preferred Stock proceeds discussed in Note 6. The $212.0
million payment also included estimated payments for the "make-whole"
provisions of the liability associated with the conversion of the Convertible
Preferred Stock and the working capital adjustment described below. Such taxes
gave effect to estimated deductions of approximately $85.1 million available
to ARS as a consequence of the cancellation or exercise of ARS stock options
pursuant to the CBS Merger. ATC's reimbursement obligation with respect to
such taxes would change by approximately $21.0 million for each $1.00 change
in the "fair market value" of the Class A Common Stock under the tax reporting
method followed. The average of the high and low trading prices of the Class A
Common Stock in the when-issued over-the-counter market on June 4, 1998 was
$20.50.
The $212.0 million payment did not include all the taxes payable with
respect to the shares of Class A Common Stock deliverable upon conversion of
the Convertible Preferred Stock; such taxes will be based on the "fair market
value" of the Class A Common Stock at the time of conversion. Conversions have
occurred at various times since June 4, 1998. As of September 30, 1998,
holders of Depositary Shares representing approximately 43% of the Convertible
Preferred Stock have converted or have presented for conversion and ATC has
recorded a liability of approximately $4.7 million due to CBS associated with
these conversions. On September 30, 1998, CBS issued 7% Convertible Preferred
Debentures Due 2011 (the Convertible Preferred Debentures) in exchange for the
then outstanding shares of Convertible Preferred Stock. Holders of the
Convertible Preferred Debentures are entitled to the same conversion rights as
the Convertible Preferred Stock. ATC estimates that its remaining
reimbursement obligation with respect to the taxes on the conversion of
Convertible Preferred Debentures could be approximately $11.3 million under
the tax reporting method followed. Such estimate is based on the October 26,
1998 fair market value of the Class A Common Stock of $21.375 per share. ATC's
obligation for such conversions would change by approximately $1.2 million for
each $1.00 change in the fair market value.
ARS has agreed that it will pursue, for the benefit of and at the cost of
ATC, a refund claim, attributable to the "make-whole" provision, estimated at
between $40.0 million to $45.0 million, based on the appraised "fair market
value" and the estimated taxes attributable to conversions of the Convertible
Preferred Stock set forth above. Any such refund claim will, in fact, be based
on the actual amount of taxes paid. In light of existing tax law, there can,
of course, be no assurance that any such refund claim will be successful.
The Separation Agreement provides for closing balance sheet adjustments
based on the working capital, as defined, and debt levels of ARS as of June 4,
1998. ATC will benefit from or bear the cost of such adjustments. As of June
1998, ATC's preliminary estimate of such adjustments was not expected to
exceed $50.0 million, excluding the reimbursement to CBS for the tax
consequences of any such payment estimated at approximately $33.0 million. The
estimated taxes and refund amount stated above include such estimated tax
reimbursement amount. Such preliminary estimate was based on estimated working
capital and debt amounts that were dependent upon operating results, cash
capital contributions and CBS Merger expenses and the final payment is
contingent upon a series of events as defined in the Separation Agreement. As
a result, ATC recorded a $50.0 million payable to CBS and a corresponding
reduction in equity to reflect management's estimate at that time.
5
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In accordance with the terms of the Separation Agreement, in September 1998,
CBS delivered ATC with a working capital and net debt closing statement
setting forth a proposed purchase price adjustment payment to CBS of
approximately $82.2 million, excluding accrued interest. In October 1998, ATC
provided CBS with a Notice of Disagreement to the proposed purchase price
adjustment indicating that ATC's estimate of the final adjustment payment
aggregated $11.1 million and reserving its rights to make further adjustments
upon the receipt of additional information requested of CBS. In addition, as
noted above, ATC is obligated to reimburse CBS for the tax consequences of
such payment (approximately 66 2/3%) and has paid CBS approximately $33.0
million based on the $50.0 million estimate. CBS is in the process of
reviewing such Notice of Disagreement and is required under the terms of the
Separation Agreement to resolve any differences with ATC by no later than
November 16, 1998, or, in the event that such differences cannot be resolved,
a third party may be employed to arbitrate the dispute. CBS and ATC have
mutually agreed to extend the aforementioned date to December 15, 1998. Under
the circumstances, ATC continues to believe that the amounts previously
recorded represent a reasonable estimate of the amounts which will be paid to
CBS and will adjust the amount as information becomes known to the Company.
In connection with an inter-corporate taxable transfer of assets entered
into in January 1998 by ATC in contemplation of the separation of ATC and ARS,
a portion of the tax with respect to which ATC is obligated to indemnify CBS
was incurred. Such transfer resulted in an increase in the tax bases of ATC's
assets of approximately $366.5 million. ATC will have potential depreciation
and amortization deductions over the next 15 years of $24.4 million per year
resulting in a deferred tax asset of approximately $135.0 million.
3. LOSS PER COMMON SHARE DATA
Basic loss per common share is computed using the weighted average number of
common shares outstanding during each 1998 period presented. Shares
outstanding upon consummation of the CBS Merger are assumed to be outstanding
for the entire 1998 and 1997 period presented. Shares issuable upon exercise
of options have been excluded from the computation as the effect is anti-
dilutive. Had options been included in the computation, shares for the diluted
computation would have increased by approximately 4.4 million and 4.0 million
for the three and nine months ended September 30, 1998, respectively.
4. INCOME TAXES
The Company provides for income taxes at the end of each interim period
based on the estimated effective tax rate for the full fiscal year for each
tax reporting corporate entity. Cumulative adjustments to the tax benefit are
recorded in the interim period in which a change in the estimated annual
effective rate is determined. Through January 1998, the Company participated
in a tax sharing agreement with ARS. The tax sharing agreement was terminated
in connection with the corporate restructuring described in Note 2; the
Company and its subsidiaries will now prepare and file income tax returns on a
separate consolidated basis.
5. UNALLOCATED PURCHASE PRICE
The excess of purchase price over the estimated fair value of net assets
acquired has been preliminarily recorded as unallocated purchase price and is
being amortized over an estimated aggregate useful life of fifteen years using
the straight-line method. The consolidated financial statements reflect the
preliminary allocation of certain purchase prices as the appraisals for some
acquisitions have not yet been finalized. The Company is currently conducting
studies to determine the purchase price allocations and expects that upon
final allocation, the average estimated useful life will approximate fifteen
years. The final allocation of purchase price is not expected to have a
material effect on the Company's consolidated results of operations, liquidity
or financial position.
6. STOCKHOLDERS' EQUITY
Interim Preferred Stock Financing--On June 4, 1998, the Company entered into
a stock purchase agreement (the Interim Financing Agreement) with respect to a
preferred stock financing which provided for the issuance
6
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
and sale by ATC of up to $400.0 million of Series A Redeemable Pay-In-Kind
Preferred Stock (the Interim Preferred Stock) to finance ATC's obligation to
CBS with respect to tax reimbursement. Dividends, which accrued at a rate
equal to the three-month LIBOR then in effect (approximately 5.69%) plus an
agreed upon adjustable spread (5.0% for the period in which the obligation was
outstanding), have been recorded as interest expense in the accompanying
financial statements. Such interest expense approximated $0.8 million and $3.1
million for the three and nine months ended September 30, 1998, respectively.
The Interim Preferred Stock was redeemed on July 9, 1998 at a redemption
price equal to $1,010 per share plus accrued and unpaid dividends for an
aggregate redemption value of $306.1 million. The Company incurred an
extraordinary loss of approximately $7.5 million, net of a tax benefit of
$5.0 million, during the third quarter of 1998, representing the write-off of
certain commitment, deferred financing and redemption fees.
Offering--On July 8, 1998, the Company completed a public offering of
27,861,987 shares of Class A Common Stock, $.01 par value per share (the Class
A Common Stock) (including 2,361,987 shares sold by the Company pursuant to
the exercise in full of the underwriters' over-allotment option) at $23.50 per
share. Certain selling stockholders sold an additional 3,874,911 shares in the
offering. The Company's net proceeds of the offering (after deduction of the
underwriting discount and estimated offering expenses) were approximately
$625.1 million. On July 9, 1998, the Company used approximately $306.1 million
of the net proceeds from the offering to redeem all of the outstanding shares
of the Interim Preferred Stock at a price of 101% of the stock's liquidation
preference plus accrued and unpaid dividends. The balance was invested in
short-term investment grade securities and will be used, together with
borrowings under the New Credit Facilities, to fund future acquisitions and
construction activities.
7. LONG-TERM DEBT
New Credit Facilities--In June 1998, ATC and the Borrower Subsidiaries
entered into agreements for new credit facilities (the New Credit Facilities).
The New Credit Facilities with ATC provide for a $150.0 million term loan
maturing at the earlier of (i) eight and one-half years or (ii) December 31,
2006, amortizing quarterly in an amount equal to 2.5% of the principal amount
outstanding at June 30, 2001 at the end of each quarter between such date and
June 30, 2006, both inclusive, and the balance in two equal installments on
September 30 and December 31, 2006. The ATC New Credit Facility was fully
drawn at closing and provides for interest rates determined, at the option of
ATC, of either the LIBOR Rate plus 3.50% or the Base Rate (as to be defined)
plus 2.5%. The New Credit Facilities with the Borrower Subsidiaries provide
for $900.0 million credit facilities maturing at the earlier of (a) eight
years or (b) June 30, 2006 consisting of the following: (i) a $250.0 million
multiple-draw term loan, (ii) a $400.0 million reducing revolving credit
facility and (iii) a $250.0 million 364-day revolving credit facility that
converts to a term loan facility thereafter. The Borrower Subsidiaries
borrowed $125.0 million in the form of a term loan and an additional $19.0
million under the revolving credit arrangements that was repaid out of the
proceeds of the Interim Preferred Stock sale. The interest rate provisions are
similar to those in the prior credit agreement. Borrowings under the Borrower
Subsidiaries' New Credit Facilities are conditioned upon compliance with
certain financial ratios and are required to be repaid, commencing June 30,
2001, in increasing quarterly amounts designed to amortize the loans through
maturity. The loans to ATC and the Borrower Subsidiaries are cross-guaranteed
and cross-collateralized by substantially all of the assets of the
consolidated group. The Borrower Subsidiaries are required to pay quarterly
commitment fees depending on their consolidated financial leverage, on the
aggregate unused portion of the aggregate commitment. In connection with the
repayment of borrowings under the prior credit agreement out of proceeds of
borrowings under the New Credit Facilities, ATC recognized an extraordinary
loss of approximately $1.4 million, net of a tax benefit of $0.9 million,
during the second quarter of 1998.
Assumed Debt Obligations--In connection with the ATC Merger discussed in
Note 8, the Company assumed certain long-term note obligations of the acquired
entity including a term note payable that was paid at
7
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
closing, a $4.4 million noninterest-bearing secured note payable, due in
annual installments through December 2000, a $430,000 noninterest-bearing
unsecured note payable, maturing in October 1999 and other long-term
obligations totaling approximately $34,000.
8. ACQUISITIONS
During the first nine months of 1998 and 1997, the Company consummated the
following transactions. See the Form 10-K for additional information on these
transactions.
1998 Acquisitions--
During the nine months ended September 30, 1998, the Company acquired
various communications sites and a major site acquisition business for an
aggregate purchase price of approximately $768.0 million, including the
issuance of approximately 34.8 million shares of Class A Common Stock valued
at approximately $354.0 million. The following describes the more significant
acquisitions:
In January 1998, the Company acquired all of the outstanding stock of Gearon
& Co. Inc. (Gearon), a company based in Atlanta, Georgia, for an aggregate
purchase price of approximately $80.0 million. The purchase price consisted of
approximately $32.0 million in cash and assumed liabilities and the issuance
of approximately 5.3 million shares of Class A Common Stock. Gearon is engaged
in site acquisition, development, construction and facility management of
wireless network communication facilities on behalf of its customers and owned
or had at the time of acquisition under construction approximately 40 tower
sites. Following consummation, the Company granted options to acquire up to
1,400,000 shares of Class A Common Stock at an exercise price of $13.00 to
employees of Gearon.
In January 1998, the Company acquired all of the outstanding stock of OPM-
USA-Inc. (OPM), a company which owned approximately 90 towers at the time of
acquisition. In addition, OPM is in the process of developing an additional
160 towers that are expected to be constructed during the next 12 to 18
months. The purchase price, which is variable and based on the number of
towers completed and the forward cash flow of the completed OPM towers, could
aggregate up to $105.0 million, of which approximately $21.3 million was paid
at the closing. In May 1998, the Company paid the second installment of
approximately $18.2 million which was based on the number of towers permitted
and completed and the forward cash flow of the completed towers as of April
30, 1998. In August 1998, the Company paid the third installment of
approximately $3.8 million which was determined on the same basis as the
second installment.
In May 1998, the Company consummated the acquisition of the assets relating
to a teleport business serving the Washington D.C. area for approximately
$30.5 million.
On June 8, 1998, the Company consummated the American Tower Corporation
Merger (ATC Merger) pursuant to which that entity was merged into ATC. The
preliminary purchase price was approximately $550.0 million. At the time of
closing, the acquired company owned approximately 775 communications towers
and managed approximately 125 communications towers. In conjunction with the
ATC Merger, the Company issued 28,782,386 shares of Class A Common Stock
valued at approximately $287.8 million (excluding 1,252,364 shares of Common
Stock reserved for options held by former employees of the acquired company
valued at approximately $9.7 million) and assumed approximately $4.5 million
of redeemable preferred stock (which was paid at closing) and $122.7 million
of debt (of which approximately $118.3 million, including interest and
associated fees, was paid at closing). The purchase price also includes
acquisition costs, assumed working capital and deferred income taxes. The
Company borrowed $57.0 million under the then existing credit agreements to
fund a portion of the debt pay-off. Upon consummation of the ATC Merger, the
Company changed its name from American Tower Systems Corporation to American
Tower Corporation.
8
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In June 1998, the Company merged with a company owning a broadcasting tower
in the Boston, Massachusetts area and issued 720,000 shares of Class A Common
Stock to close the transaction. In connection with this transaction, ATC
acquired a $12.0 million note receivable and issued a corresponding
nonrecourse note payable which is payable only to the extent that payments on
the note receivable are made to ATC. As such, the amounts have been offset in
the accompanying financial statements. In addition, under a put agreement that
was consummated in connection with the merger, the sellers have the right to
require the Company to purchase, at any time prior to June 5, 1999, any or all
shares of ATC Class A Common Stock received pursuant to consummation of the
merger for a purchase price equal to the then current market price. In
connection with the public offering described in Note 6 the sellers sold
383,750 of the 720,000 shares in July 1998 reducing the Company's overall
redemption obligation. Accordingly, the remaining 336,250 shares have been
recorded as redeemable common stock in the accompanying financial statements
based on the September 30, 1998 fair market value of $25.50 per share.
1997 Acquisitions--
During the nine months ended September 30, 1997, ATC acquired various
communications sites and the assets of two affiliated site acquisition
businesses, and two tower site management businesses located in southern
California and South Carolina for an aggregate purchase price of approximately
$63.0 million.
In May 1997, the Company and an unaffiliated party formed a limited
liability company (ATS/PCS, LLC, formerly Communications Systems Development,
LLC) to own and operate communication towers which will be constructed on over
50 tower sites in northern California. The Company advanced approximately $0.8
million to this entity and currently owns a 70% interest in the entity, with
the remaining 30% owned by an unaffiliated party. The accounts of the limited
liability company are included in the consolidated financial statements with
the other party's investment reflected as minority interest in subsidiary.
(See Note 10).
The following unaudited pro forma summary for the nine months ended
September 30, 1997 and 1998 presents the consolidated results of operations as
if the acquisitions had occurred as of January 1, 1997 after giving effect to
certain adjustments, including depreciation and amortization of assets and
interest expense on any debt incurred to fund the acquisitions. These
unaudited pro forma results have been prepared for comparative purposes only
and do not purport to be indicative of what would have occurred had the
acquisitions been made as of January 1, 1997 or of results which may occur in
the future.
In thousands, except per share data:
<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1998
------------------ ------------------
<S> <C> <C>
Net revenues......................... $ 79,647 $88,705
Loss before extraordinary items...... (37,589) (37,473)
Net loss............................. (37,589) (46,365)
Basic and diluted net loss per common
share............................... $ (0.48) $ (0.53)
</TABLE>
9. RELATED PARTY TRANSACTIONS
During the period that the Company was a majority owned subsidiary of ARS,
the Company received revenues of approximately $112,000, $291,000 and $565,000
from ARS for tower rentals at Company-owned sites for the three months ended
September 30, 1997 and the nine months ended September 30, 1997 and 1998,
respectively.
9
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
10. OTHER TRANSACTIONS
Consummated Transactions--
In October 1998, the Company acquired approximately 300 towers and certain
tower related assets in six transactions for an aggregate purchase price of
approximately $100.2 million. The most significant transactions included the
acquisition of 166 Atlanta, Georgia area towers. These transactions included
the acquisition of all the outstanding stock of Wauka Communications, Inc. and
the assets of Grid Site Services, Inc. The consideration in these related
transactions included the issuance of 1,430,881 shares of Class A Common
Stock. Included in the total 300 towers referenced above, the Company also
acquired 137 communications sites and tower related assets in the four other
transactions.
In October 1998, the Company contributed cash and a tower aggregating $12.6
million to ATS-Needham LLC, (ATS Needham), a limited liability company in
which ATC owned a 50.1% interest prior to such transactions. ATS Needham also
sold certain assets to the minority interest party. As a result of these
transactions, ATC now owns an 80% interest in ATS Needham.
Pending Transactions--
On November 16, 1998, ATC entered into an Agreement and Plan of Merger (the
Omni Merger Agreement) with OmniAmerica, Inc., a Delaware corporation (Omni),
and ATI, pursuant to which Omni will merge with and into ATI, which will be
the surviving corporation (the Omni Merger). Omni owns, manages and develops
multi-use telecommunications sites for radio and television broadcasting,
paging, cellular, PCS and other wireless technologies and offers nationwide,
turn-key tower construction and installation services through its Specialty
Constructors subsidiary. Omni currently owns 246 towers (giving effect to
announced transactions) and is currently developing or has agreed to build
approximately 470 more sites for specific tenants. Pursuant to the Omni Merger
Agreement, which has been approved by the Board of Directors of ATC and Omni,
and by holders of shares representing the required majority of the voting
power of Omni Common Stock, Omni stockholders will receive 1.1 shares of ATC
Class A Common Stock for each share of Common Stock of Omni. In the aggregate,
ATC will exchange approximately 17.7 million shares of ATC Class A Common
Stock in exchange for the approximately 16.1 million fully-diluted shares of
Common Stock of Omni, plus the assumption of debt. Consummation of the Omni
Merger is expected to occur in the first quarter of 1999, subject to certain
conditions including, the expiration or early termination of the waiting
period under the Hart-Scott-Rodino Antitrust Improvements act of 1976, as
amended (the HSR Act). Upon the consummation of the Omni Merger, Jack D.
Furst, the Chairman of Omni and a partner of Hicks, Muse, Tate & Furst
Incorporated, Omni's largest stockholder, will be elected to the Board of
Directors of ATC.
On November 16, 1998, ATC entered into an Agreement and Plan of Merger (the
TeleCom Merger Agreement) with TeleCom Towers, L.L.C., a Delaware limited
liability company (TeleCom), and ATI, pursuant to which TeleCom will merge
with and into ATI, which will be the surviving corporation (the TeleCom
Merger). TeleCom owns, or co-owns, approximately 367 towers and manages
another 130 revenue-generating sites in 27 states. Pursuant to the TeleCom
Merger Agreement, which has been approved by Board of Directors of ATC, the
Management Committee of TeleCom, and by holders of interests representing the
required majority of the voting power of TeleCom interests, ATC will pay a
purchase price for TeleCom of approximately $155.0 million, subject to
adjustment for closing date working capital. ATC will assume approximately
$30.0 million of debt, subject to adjustment for interim acquisitions and
capital expenditures. The purchase price (except for the working capital
adjustment, which is payable in cash) will be paid 60% in ATC Class A Common
Stock (based on average stock prices ten days before and ten days after
November 16, 1998) and 40% in cash. Consummation of the TeleCom Merger is
conditioned on, the expiration or early termination of the waiting period
under the HSR Act, and accordingly, is not expected to take place until the
first quarter of 1999. Upon the consummation of the TeleCom Merger, Dean H.
Eisner, Vice President, Business Development and Planning of Cox Enterprises,
Inc., will be elected to the Board of Directors of ATC.
10
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
ATC is negotiating certain changes in the ATS/PCS, LLC arrangements,
including the acquisition by ATC of the 58 communications sites in northern
California presently owned by ATS/PCS, LLC in exchange for shares of Class A
Common Stock, arrangements with respect to the development of communications
sites in other locations, a priority return of ATC's construction advances, an
increase in the percentage interest of the other member in ATS/PCS, LLC, and a
management fee to ATC.
In June 1998, ATC entered into an agreement to acquire a company which is in
the process of constructing towers in the Tampa, Florida area. The purchase
price will be based on a multiple of the excess of net revenues less direct
operating expenses for the month preceding closing, less the principal amount
of the secured note referred to below. The purchase price will be payable in
shares of Class A Common Stock (valued at market prices shortly prior to
closing) and, at the election of the seller, cash in an amount not to exceed
49% of the purchase price. ATC is obligated to advance construction funds to
the seller in an aggregate amount not to exceed $12.0 million in the form of a
secured note (guaranteed by the stockholders and secured by the stock of the
seller), of which approximately $6.1 million was advanced through September
30, 1998. The secured note would be payable in the event the acquisition was
not consummated. Subject to the satisfaction of certain conditions, including,
depending on the circumstances, the expiration or earlier termination of the
HSR Act waiting period, the acquisition is expected to be consummated in the
Spring of 1999.
The Company has also entered into three separate agreements to acquire
additional communications sites and tower related assets for an aggregate
purchase price of approximately $9.0 million. Such acquisitions are expected
to close in the fourth quarter of 1998 or first quarter of 1999.
The Company is also pursuing the acquisitions of tower properties and tower
businesses in new and existing locations, although there are no definitive
purchase agreements with respect thereto.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
This discussion contains "forward-looking statements" as that term is used
in the Securities Exchange Act of 1934 including statements concerning
projections, plans, objectives, future events or performance and underlying
assumptions and other statements which are other than statements of historical
fact. Certain important factors may have affected and could in the future
affect ATC's actual results and could cause ATC's actual results for
subsequent periods to differ materially from those expressed in any forward-
looking statement. Such factors include (i) substantial capital requirements
and leverage principally as a consequence of its ongoing acquisition and
construction activities, as well as its remaining tax reimbursement and other
obligations owed to ARS pursuant to the CBS Merger, (ii) dependence on demand
for wireless communications and implementation of digital television, (iii)
the success of ATC's tower construction program, and (iv) the successful
operational integration of the Company's business acquisitions. As ATC was a
wholly-owned subsidiary of American Radio during the periods presented through
June 4, 1998, the consolidated financial statements may not reflect the
results of operations or financial position of ATC had it been an independent,
public company during those periods. Because of ATC's relatively brief
operating history and the large number of recent acquisitions, the following
discussion will not necessarily reveal all significant developing or
continuing trends.
ATC was formed in July 1995 to capitalize on the opportunity in the
communications site industry. ATC is a leading independent owner and operator
of wireless communications towers in the United States. During 1997, its
acquisition and construction activity accelerated and ATC acquired or
constructed approximately 400 sites (and related site management businesses)
and its initial site acquisition and voice, video and data transmission
businesses. Since January 1, 1998, ATC has acquired various communication
sites and a major site acquisition business for an aggregate estimated
purchase price of approximately $868.0 million, including the issuance of
approximately 36.3 million shares of Class A Common Stock valued at
approximately $382.6 million.
Management expects that acquisitions consummated to date will have a
material impact on future revenues, expenses and income from continuing
operations. In addition, the impact of the construction program of ATC is not
reflected to any significant extent in the historical financial information
because most of that activity is of more recent origin and is expected to
accelerate substantially through the remainder of 1998 and 1999.
12
<PAGE>
RESULTS OF OPERATIONS
As of September 30, 1998, ATC operated approximately 1,900 communications
sites, principally in the Northeast and Mid-Atlantic regions, Florida,
California and Texas. As of September 30, 1997, ATC operated approximately 370
communications sites, principally in the Northeast and Mid-Atlantic regions
and Florida. These transactions have significantly affected operations for the
three and nine months ended September 30, 1998 as compared to the three and
nine months ended September 30, 1997.
THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1998 (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
-------------------- AMOUNT OF PERCENTAGE
1997 1998 INCREASE INCREASE
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Tower rental and management reve-
nues............................... $ 3,525 $ 17,719 $14,194 402.7%
Site acquisition service revenues... 996 6,572 5,576 559.8%
Video, voice and data transmission
revenues........................... 6,187 6,187
-------- ---------- ------- --------
Total operating revenues............ 4,521 30,478 25,957 574.1%
-------- ---------- ------- --------
Tower rental and management ex-
penses............................. 1,611 8,087 6,476 402.0%
Site acquisition service expenses... 669 4,677 4,008 599.1%
Video, voice and data transmission
expenses........................... 3,928 3,928
-------- ---------- ------- --------
Total operating expenses excluding
depreciation and amortization,
tower separation and corporate
general and administrative
expenses........................... 2,280 16,692 14,412 632.1%
-------- ---------- ------- --------
Depreciation and amortization....... 1,384 17,243 15,859 1,145.9%
Tower separation expenses........... 159 159
Corporate general and administrative
expenses........................... 378 1,561 1,183 313.0%
Interest expense.................... 1,000 7,121 6,121 612.1%
Interest income and other, net...... 37 4,451 4,414 11,929.7%
Minority interest in net earnings of
subsidiaries....................... 60 66 6 10.0%
Income tax benefit.................. 1,955 1,955
Extraordinary loss on redemption of
Interim
Preferred Stock, net............... 7,510 7,510
-------- ---------- ------- --------
Net loss............................ $ (544) $ (13,468) $12,924 2,375.7%
======== ========== ======= ========
</TABLE>
Except as explained below, substantially all of the increases indicated in
the above table were attributable to the impact of the acquisitions,
principally those that occurred in 1997 and 1998. Site acquisition service
revenues and expenses for the three months ended September 30, 1998 include
the operating results of the Gearon site acquisition division that was
acquired in January 1998 and, to a lesser extent, the operating results of two
similar businesses that were acquired in May 1997. For the three months ended
September 30, 1997, site acquisition service revenues and expenses included
the operating results from the May 1997 related business acquisitions. Video,
voice and data transmission revenues and expenses for the three months ended
September 30, 1998 include the operating results of the Company's first video,
voice and data transmission business acquired in October 1997 and a Washington
D.C. area teleport business acquired in May 1998. The increase in depreciation
and amortization is primarily attributable to the increase in depreciable and
amortizable assets resulting from the 1997 and 1998 acquisitions, and, to a
lesser extent, completed construction projects. Tower separation expenses
relate to financial advisory, legal, accounting and consent solicitation fees
and other expenses incurred in connection with the consummation of the CBS
Merger and the separation of ATC from its former parent on June 4, 1998. The
increase in corporate general and administrative expenses is primarily
attributable to the higher personnel costs associated with supporting ATC's
greater number of tower properties and growth strategy. The increase in
interest expense relates to higher borrowing levels that were used to finance
1997 and 1998 acquisitions and $0.8 million of dividends on the Interim
Preferred Stock. Interest income is related to interest earned on cash
proceeds from the
13
<PAGE>
July 1998 equity offering. The minority interest in net earnings of
subsidiaries represents the elimination of the minority stockholders' earnings
of consolidated subsidiaries. The extraordinary loss was incurred, net of an
income tax benefit of $5.0 million, as a result of the write-off of certain
commitment, deferred financing and redemption fees associated with the
Company's Interim Preferred Stock which was redeemed in July 1998. The
effective tax rate benefit for the three months ended September 30, 1998 was
approximately 24.7%. The effective rate differs from the statutory rate due to
the effect of non-deductible items, principally amortization of goodwill, on
certain stock acquisitions for which no tax benefit has been recorded.
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1998 (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------ AMOUNT OF PERCENTAGE
1997 1998 INCREASE INCREASE
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
Tower rental and management reve-
nues................................ $ 6,478 $ 39,305 $32,827 506.7%
Site acquisition service revenues.... 1,424 18,848 17,424 1,223.6%
Video, voice and data transmission
revenues............................ 13,332 13,332
------- --------- ------- -------
Total operating revenues............. 7,902 71,485 63,583 804.6%
------- --------- ------- -------
Tower rental and management ex-
penses.............................. 2,753 18,417 15,664 569.0%
Site acquisition service expenses.... 836 15,412 14,576 1,743.5%
Video, voice and data transmission
expenses............................ 8,697 8,697
------- --------- ------- -------
Total operating expenses excluding
depreciation and amortization, tower
separation and corporate general and
administrative expenses............. 3,589 42,526 38,937 1,084.9%
------- --------- ------- -------
Depreciation and amortization........ 2,706 32,998 30,292 1,119.4%
Tower separation expenses............ 12,616 12,616
Corporate general and administrative
expenses............................ 919 3,186 2,267 246.7%
Interest expense..................... 1,318 17,023 15,705 1,191.6%
Interest income and other, net....... 94 6,283 6,189 6,584.0%
Minority interest in net earnings of
subsidiaries........................ 221 255 34 15.4%
Income tax benefit................... 49 4,934 4,885 9,969.4%
Extraordinary loss on extinguishment
of debt, net........................ 1,382 1,382
Extraordinary loss on redemption of
Interim Preferred Stock, net........ 7,510 7,510
------- --------- ------- -------
Net loss............................. $ (708) $ (34,794) $34,086 4,814.4%
======= ========= ======= =======
</TABLE>
Except as explained below, substantially all of the increases indicated in
the above table were attributable to the impact of the communications sites
and related business acquisitions, principally those that occurred in 1997 and
1998. Site acquisition service revenues and expenses for the nine months ended
September 30, 1998 include the operating results of the Gearon site
acquisition division that was acquired in January 1998 and, to a lesser
extent, the operating results of two similar businesses that were acquired in
May 1997. For the nine months ended September 30, 1997, site acquisition
service revenues and expenses included the operating results from the May 1997
related business acquisitions. Video, voice and data transmission revenues and
expenses for the nine months ended September 30, 1998 include the operating
results of the Company's first video, voice and data transmission business
acquired in October 1997 and a Washington D.C. area teleport business acquired
in May 1998. The increase in depreciation and amortization is primarily
attributable to the increase in depreciable and amortizable assets resulting
from the 1997 and 1998 acquisitions, and, to a lesser extent, completed
construction projects. Tower separation expenses relate to financial advisory,
legal, accounting and consent solicitation fees and other expenses incurred in
connection with the consummation of the CBS Merger and the separation of ATC
from its former parent on June 4, 1998. The increase in corporate general and
administrative expenses is primarily attributable to the higher personnel
costs associated with supporting ATC's greater number
14
<PAGE>
of tower properties and growth strategy. The increase in interest expense
relates to higher borrowing levels that were used to finance 1997 and 1998
acquisitions, and $3.1 million of dividends associated with the Interim
Preferred Stock financing that occurred in June 1998. The increase in interest
income is related to interest earned on invested cash proceeds from the July
1998 equity offering. The minority interest in net earnings of subsidiaries
represents the elimination of the minority stockholders' earnings of
consolidated subsidiaries. The extraordinary loss on the redemption of the
Interim Preferred Stock was incurred, net of an income tax benefit of $5.0
million, as a result of the write-off of certain commitment, deferred
financing and redemption fees associated with the Company's Interim Preferred
Stock which was redeemed in July 1998. The extraordinary loss on the
extinguishment of debt was incurred, net of an income tax benefit of $0.9
million, as a result of the write-off of deferred financing costs associated
with the Company's previous credit agreements which were refinanced in June
1998. The effective tax rate benefit for the nine months ended September 30,
1998 was approximately 16% as compared to 6% for the nine months ended
September 30, 1997. The effective rate differs from the statutory rate due to
the effect of non-deductible items, principally amortization of goodwill, on
certain stock acquisitions for which no tax benefit has been recorded.
LIQUIDITY AND CAPITAL RESOURCES
ATC's liquidity needs arise from its acquisition-related activities, debt
service, working capital and capital expenditures associated principally with
its construction program. Historically, ATC has met its operational liquidity
needs with internally generated funds and has financed the acquisition of
tower related properties and its construction program, including related
working capital needs, with a combination of contributions from American Radio
and bank borrowings. For the nine months ended September 30, 1998, cash flows
from operating activities were $2.9 million, as compared to $3.1 million of
cash flows from operating activities in 1997. The change is primarily
attributable to working capital investments related to communications site
acquisitions and growth.
Cash flows used for investing activities were $227.9 million for the nine
months ended September 30, 1998 as compared to $74.3 million for the nine
months ended September 30, 1997. The increase in 1998 is due to the
acquisition and construction activity in 1998 as compared to 1997.
Cash flows provided by financing activities were $533.9 million for the nine
months ended September 30, 1998 as compared to $71.1 million in 1997. The
increase in 1998 is due principally to the impact of borrowings under the
credit facilities, the Interim Preferred Stock financing activities, and the
sale of common stock pursuant to the ATC Stock Purchase Agreement and the July
1998 equity offering, somewhat offset by the tax payments to CBS.
CBS Merger: The Separation Agreement required ATC to reimburse CBS on a
"make-whole" (after tax) basis for the tax liabilities incurred by ARS
attributable to the distribution of the Common Stock owned by ARS to the ARS
security holders and certain related transactions to the extent that the
aggregate amount of taxes required to be paid by ARS exceeded $20.0 million.
The amount of that tax liability was dependent on the "fair market value" of
the Common Stock at the time of the consummation of the CBS Merger. ATC
received an appraisal from an independent appraisal firm that the "fair market
value" of ARS's stock interest in ATC was equal to $17.25 per share. Based on
such appraisal, ARS paid estimated taxes of approximately $212.0 million and
was reimbursed therefor by ATC. As required by the Separation Agreement, ATC
provided CBS with security of $9.8 million in cash (which may be replaced at
ATC's option with a letter of credit reasonably satisfactory to CBS) in
connection with the filing of estimated tax returns based on such appraisal.
Such appraisal is not, of course, binding on the Internal Revenue Service or
other taxing authorities. The Company financed its tax reimbursement
obligations to CBS with the Interim Preferred Stock proceeds discussed below.
The $212.0 million payment also included estimated payments for the "make-
whole" provisions of the liability associated with the conversion of the
Convertible Preferred Stock and the working capital adjustment described
below. Such taxes gave effect to estimated deductions of approximately $85.1
million available to ARS as a consequence of the cancellation or exercise of
ARS stock options pursuant to the CBS Merger. ATC's reimbursement obligation
with respect to such taxes would change by approximately $21.0 million for
each $1.00 change in the "fair
15
<PAGE>
market value" of the Class A Common Stock under the tax reporting method
followed. The average of the high and low trading prices of the Class A Common
Stock in the when-issued over-the-counter market on June 4, 1998 was $20.50.
The $212.0 million payment did not include all the taxes payable with
respect to the shares of Class A Common Stock deliverable upon conversion of
the Convertible Preferred Stock; such taxes will be based on the "fair market
value" of the Class A Common Stock at the time of conversion. Conversions have
occurred at various times since June 4, 1998. As of September 30, 1998,
holders of Depositary Shares representing approximately 43% of the Convertible
Preferred Stock have converted or have presented for conversion and ATC has
recorded a liability of approximately $4.7 million due to CBS associated with
these conversions. On September 30, 1998, CBS issued Convertible Preferred
Debentures in exchange for the then outstanding shares of Convertible
Preferred Stock. Holders of the Convertible Preferred Debentures are entitled
to the same conversion rights as the Convertible Preferred Stock. ATC
estimates that its remaining reimbursement obligation with respect to the
taxes on the conversion of Convertible Preferred Debentures could be
approximately $11.3 million under the tax reporting method followed. Such
estimate is based on the October 26, 1998 fair market value of the Class A
Common Stock of $21.375 per share. ATC's obligation for such conversions would
change by approximately $1.2 million for each $1.00 change in the fair market
value.
ARS has agreed that it will pursue, for the benefit of and at the cost of
ATC, a refund claim, attributable to the "make-whole" provision, estimated at
between $40.0 million to $45.0 million, based on the appraised "fair market
value" and the estimated taxes attributable to conversions of the Convertible
Preferred Stock set forth above. Any such refund claim will, in fact, be based
on the actual amount of taxes paid. In light of existing tax law, there can,
of course, be no assurance that any such refund claim will be successful.
The Separation Agreement provides for closing balance sheet adjustments
based on the working capital, as defined, and debt levels of ARS as of June 4,
1998. ATC will benefit from or bear the cost of such adjustments. As of June
1998, ATC's preliminary estimate of such adjustments was not expected to
exceed $50.0 million, excluding the reimbursement to CBS for the tax
consequences of any such payment estimated at approximately $33.0 million. The
estimated taxes and refund amount stated above include such estimated tax
reimbursement amount. Such preliminary estimate was based on estimated working
capital and debt amounts that were dependent upon operating results, cash
capital contributions and CBS Merger expenses and the final payment is
contingent upon a series of events as defined in the Separation Agreement. As
a result, ATC recorded a $50.0 million payable to CBS and a corresponding
reduction in equity to reflect management's estimate at that time.
In accordance with the terms of the Separation Agreement, in September 1998,
CBS delivered ATC with a working capital and net debt closing statement
setting forth a proposed purchase price adjustment payment to CBS of
approximately $82.2 million, excluding accrued interest. In October 1998, ATC
provided CBS with a Notice of Disagreement to the proposed purchase price
adjustment indicating that ATC's estimate of the final adjustment payment
aggregated $11.1 million and reserving its rights to make further adjustments
upon the receipt of additional information requested of CBS. In addition, as
noted above, ATC is obligated to reimburse CBS for the tax consequences of
such payment (approximately 66 2/3%) and has paid CBS approximately $33.0
million based on the $50.0 million estimate. CBS is in the process of
reviewing such Notice of Disagreement and is required under the terms of the
Separation Agreement to resolve any differences with ATC by no later than
November 16, 1998, or, in the event that such differences cannot be resolved,
a third party may be employed to arbitrate the dispute. CBS and ATC have
mutually agreed to extend the aforementioned date to December 15, 1998. Under
the circumstances, ATC continues to believe that the amounts previously
recorded represent a reasonable estimate of the amounts which will be paid to
CBS and will adjust the amount as information becomes known to the Company.
Interim Preferred Stock Financing: On June 4, 1998, ATC issued $300.0
million of Interim Preferred Stock and used the proceeds to fund its tax
reimbursement obligation to CBS, pay the commitment and other fees and
expenses of the issue and sale of such stock and to reduce bank borrowings. As
discussed below, the Interim Preferred Stock was redeemed on July 9, 1998 and
as a result, the Company incurred an extraordinary
16
<PAGE>
loss of approximately $7.5 million, net of a tax benefit of $5.0 million,
during the third quarter of 1998 representing the write-off of certain
commitment, deferred financing and redemption fees.
Public Offering of Class A Common Stock: On July 8, 1998, the Company
completed a public offering of 27,861,987 shares of Class A Common Stock, $.01
par value per share (including 2,361,987 shares sold by the Company pursuant
to the exercise in full of the underwriters' over-allotment option) at $23.50
per share. Certain selling stockholders sold an additional 3,874,911 shares in
the offering. The Company's net proceeds of the offering (after deduction of
the underwriting discount and estimated offering expenses) were approximately
$625.1 million. On July 9, 1998, the Company used approximately $306.1 million
of the net proceeds from the offering to redeem all of the outstanding shares
of the Interim Preferred Stock at a price of 101% of the stock's liquidation
preference plus accrued on unpaid dividends. The balance was invested in
short-term investment grade securities and together with borrowings under the
New Credit Facilities, have and will be used to fund future acquisitions and
construction activities.
New Credit Facilities: In June 1998, ATC and its Borrower Subsidiaries
entered into definitive agreements with respect to the New Credit Facilities.
In connection with repayment of borrowings under the prior credit agreement
out of proceeds of borrowings under the New Credit Facilities, ATC recognized
an extraordinary loss of approximately $1.4 million, net of a tax benefit of
$0.9 million, during the second quarter of 1998. The terms of the New Credit
Facilities are discussed in Note 7. As of September 30, 1998, ATC had
approximately $281.6 million of long-term debt, of which approximately $150.0
million was outstanding under the ATC credit facility and $125.0 was
outstanding under the Borrower Subsidiaries credit facility.
A substantial portion of ATC's cash flow from operations is required for
debt service. Accordingly, ATC's leverage could make it vulnerable to a
downturn in the operating performance of its tower properties or in economic
conditions. ATC believes that its cash flows from operations will be
sufficient to meet its debt service requirements for interest and scheduled
payments of principal under the New Credit Facilities. If such cash flow were
not sufficient to meet such debt service requirements, ATC might be required
to sell equity securities, refinance its obligations or dispose of one or more
of its properties in order to make such scheduled payments. There can be no
assurance that ATC would be able to effect any of such transactions on
favorable terms.
ATC believes that it has sufficient financial resources available to it,
including borrowings under the New Credit Facilities, to finance operations
for the foreseeable future. ATC intends to finance its non-stock obligations
under pending acquisitions with cash, and, to the extent required, borrowings
under the New Credit Facilities and funds raised through the offering of
equity securities.
During the nine months ended September 30, 1998, ATC had capital
expenditures of approximately $77.0 million primarily related to construction
activities and has completed construction on approximately 200 towers during
this period. During the balance of 1998, ATC plans to build or commence
construction of approximately 230 additional towers (most of which are on a
build to suit basis) at an estimated aggregate remaining cost of approximately
$50.0 million. ATC plans to expand its construction activities and build a
substantial number of towers in 1999, which may aggregate more than 1,500
towers. If additional substantial acquisition or construction opportunities
become available, ATC may require additional financing. Any such financing
could take the form of an increase in the maximum borrowing levels under the
New Credit Facilities (which would be dependent on the ability to meet certain
leverage ratios), the issuance of debt or senior equity securities (which
could have the effect of increasing its consolidated leverage ratios) or
equity securities (which, in the case of Common Stock or securities
convertible into or exercisable for Common Stock, would have a dilutive effect
on the proportionate ownership of ATC of its then existing common
stockholders). There can be no assurance that any such financing would be
available on favorable terms.
Management expects that the consummated acquisitions and current and future
construction activities will have a material impact on liquidity. Management
believes that the acquisition activities, once integrated, will have a
favorable impact on liquidity and will offset the initial effects of the
funding requirements. Management also believes that the construction
activities may initially have an adverse effect on the future liquidity of ATC
17
<PAGE>
as newly constructed towers will initially decrease overall liquidity,
although, as such sites become more fully operational and achieve higher
utilization, they should generate cash flow, and in the long-term, increase
liquidity.
YEAR 2000
The Company is aware of the issues associated with the Year 2000 as it
relates to information systems and is currently working to resolve the
potential impact. The Company is in the process of selecting an outside
consultant to conduct an extensive review and implement a comprehensive plan
to reduce the probability of operational difficulties due to Year 2000 issues.
Although the Company has not developed a formal plan to date, the Company
believes that, with the assistance of an outside consultant, it is currently
on track towards a timely completion of resolving any potential Year 2000
problems.
The components of the Company's comprehensive plan will include the
assessment of internal systems for modification and/or replacement;
communication with external vendors to determine their state of readiness to
maintain an uninterrupted supply of goods and services to the Company;
communication with customers to ensure that their state of readiness will not
result in any operational issues; evaluation of the Company's equipment and
assets as to their ability to function properly after the turn of the century;
evaluation of facility related issues, and the development of a contingency
plan to address its most likely worst case Year 2000 scenarios. The Company's
comprehensive plan is expected to significantly reduce the Company's level of
uncertainty about the Year 2000 problem and, in particular, about the Year
2000 readiness of its material external agents.
Based on the efforts to date, the Company does not believe that the Year
2000 issue will have a material adverse effect on the Company's results of
operations, liquidity or financial condition or operational activities. With
respect to its own internal information systems, the Company does not believe
that the Year 2000 compliance issue is expected to have a material impact on
the Company's internal information systems as the Company's hardware and
software is either already Year 2000 compliant or required changes are not
expected to generate material costs. The costs incurred to date in this area
have also been immaterial, and the Company does not anticipate that the
estimated future costs, excluding any costs that may be incurred by the
Company as a result of the failure of any third parties to become Year 2000
compliant, of hiring an outside consultant and the preparation and
implementation of a comprehensive plan will be material to the Company.
INFLATION
The impact of inflation on ATC's operations has not been significant to
date. However, there can be no assurance that a high rate of inflation in the
future will not have material adverse effect on ATC's operating results.
RECENT ACCOUNTING PRONOUNCEMENT
In June 1997, the FASB released FAS No. 131 "Disclosures about Segments of
an Enterprise and Related Information" (FAS 131). FAS 131 established
standards for reporting information about the operating segments in its annual
report and interim reports. ATC will provide the required disclosure in its
full year 1998 financial information and will provide required interim
disclosure commencing with its first fiscal quarter of 1999.
18
<PAGE>
PART II. OTHER INFORMATION.
ITEM 1.--LEGAL PROCEEDINGS.
In the normal course of business, the Company is subject to certain suits
and other matters. Management believes that the eventual resolution of any
pending matters, either individually or in the aggregate, will not have a
material effect on financial position, liquidity or results of operations.
ITEM 5.--OTHER INFORMATION.
The Company has not scheduled its annual shareholders' meeting for 1999.
However, the Company anticipates that the meeting will be held in the month of
May. Shareholder proposals intended to be presented at the 1999 annual
shareholders' meeting must be received by the Secretary of ATC no later than,
January 1, 1999 in order to be included in the Company's proxy statement.
Failure to submit such shareholder proposals by the specified date will result
in management proxies being allowed to use their discretionary voting
authority when the proposal is raised at the annual meeting, without any
discussion of the matter in the proxy statement.
19
<PAGE>
ITEM 6.--EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
Listed below are the exhibits which are filed as part of this Form 10-Q
(according to the number assigned to them in Item 601 of Regulation S-K).
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF DOCUMENT EXHIBIT FILE NO.
----------- ------------------------------------ -----------------------------
<C> <S> <C>
2.1 Agreement and Plan of Merger, dated
as of November 16, 1998, by and
among ATC, American Towers, Inc., a
Delaware corporation ("ATI"), and
OmniAmerica, Inc., a Delaware
corporation (Schedules and Exhibits
omitted) .......................... Filed herewith as Exhibit 2.1
2.2 Agreement and Plan of Merger, dated
as of November 16, 1998, by and
among ATC, ATI and TeleCom Towers,
L.L.C., a Delaware limited
liability company (Schedules and
Exhibits omitted).................. Filed herewith as Exhibit 2.2
27 Financial Data Schedule............. Filed herewith as Exhibit 27
</TABLE>
(b) Reports on Form 8-K.
1. Form 8-K (Items 5 and 7) on July 16, 1998.
20
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
American Tower Corporation
By: /s/ Joseph L. Winn
Date: November 16, 1998 -----------------------------------
Joseph L. Winn
Treasurer & Chief Financial Officer
(Duly Authorized Officer)
By: /s/ Justin D. Benincasa
Date: November 16, 1998 -----------------------------------
Justin D. Benincasa
Vice President & Corporate
Controller
(Duly Authorized Officer)
21
<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
By and Among
AMERICAN TOWER CORPORATION,
AMERICAN TOWERS, INC.
and
OMNIAMERICA, INC.
Dated as of
November 16, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1
DEFINED TERMS; TARGET DISCLOSURE SCHEDULE............................. -1-
ARTICLE 2
THE MERGER............................................................ -2-
2.1 The Merger.................................................... -2-
2.2 Closing....................................................... -2-
2.3 Effective Time................................................ -2-
2.4 Effect of the Merger.......................................... -2-
2.5 Certificate of Incorporation.................................. -2-
2.6 Bylaws........................................................ -2-
2.7 Directors and Officers........................................ -2-
ARTICLE 3
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES........................ -2-
3.1 Conversion of Capital Stock................................... -2-
3.2 Exchange of Certificates...................................... -4-
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF TARGET.............................. -5-
4.1 Organization and Business; Power and Authority; Effect of
Transaction.................................................. -5-
4.2 Financial and Other Information............................... -7-
4.3 Material Statements and Omissions; Absence of Events.......... -7-
4.4 Title to Properties; Leases................................... -8-
4.5 Compliance with Private Authorizations........................ -9-
4.6 Compliance with Governmental Authorizations and
Applicable Law............................................... -10-
4.7 Year 2000 Compliant........................................... -10-
4.9 Insurance..................................................... -11-
4.10 Tax Matters................................................... -11-
4.11 ERISA Matters................................................. -12-
4.13 Bank Accounts, Etc............................................ -13-
4.14 Employment and Consulting Arrangements........................ -14-
4.15 Material Agreements........................................... -14-
4.16 Ordinary Course of Business................................... -15-
4.17 Broker or Finder.............................................. -16-
4.18 Environmental Matters......................................... -16-
4.19 Capital Stock................................................. -17-
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ATC AND ATI......................... -17-
5.1 Organization and Business; Power and Authority; Effect of
Transaction.................................................. -17-
5.2 Financial and Other Information............................... -18-
5.3 Material Statements and Omissions; Absence of Events.......... -18-
5.4 Broker or Finder.............................................. -19-
5.5 Capital Stock................................................. -19-
5.6 Tax Matters................................................... -20-
5.7 Compliance with Governmental Authorizations and
Applicable Law............................................... -20-
5.8 Year 2000 Compliant........................................... -21-
5.9 Compliance with Private Authorizations........................ -21-
5.10 Title to Properties; Leases................................... -21-
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
5.11 Related Transactions.......................................... -22-
5.12 Insurance..................................................... -23-
5.13 ERISA Matters................................................. -23-
5.14 Product Liability............................................. -24-
5.15 Ordinary Course of Business................................... -24-
5.16 Environmental Matters......................................... -25-
5.18 Material Agreements........................................... -26-
ARTICLE 6
COVENANTS............................................................. -27-
6.1 Access to Information; Confidentiality........................ -27-
6.2 Agreement to Cooperate; Certain Other Covenants............... -28-
6.3 Public Announcements.......................................... -28-
6.4 Notification of Certain Matters............................... -29-
6.5 Other Offers; No Solicitation................................. -29-
6.6 Conduct of Business by Target Pending the Merger.............. -30-
6.7 Additional Tax Matters........................................ -32-
6.8 Certificates of Non-Foreign Status............................ -32-
6.9 Target Stock Options.......................................... -33-
6.10 Stockholder Approval.......................................... -33-
6.11 Registration Statement and Proxy/Information Statement........ -34-
6.12 Directors', Officers' and Employees' Indemnification.......... -34-
6.13 Solicitation of Employees..................................... -36-
6.14 Registration Rights Agreement................................. -36-
ARTICLE 7
CLOSING CONDITIONS.................................................... -36-
7.1 Conditions to Obligations of Each Party....................... -36-
7.2 Conditions to Obligations of ATC and ATI...................... -37-
7.3 Conditions to Obligations of Target........................... -38-
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER..................................... -39-
8.1 Termination................................................... -39-
8.2 Effect of Termination......................................... -40-
ARTICLE 9
GENERAL PROVISIONS.................................................... -40-
9.1 Waivers; Amendments........................................... -41-
9.2 Fees and Expenses............................................. -41-
9.3 Notices....................................................... -41-
9.4 Specific Performance; Other Rights and Remedies............... -42-
9.5 Severability.................................................. -42-
9.6 Counterparts.................................................. -43-
9.7 Section Headings.............................................. -43-
9.8 Governing Law................................................. -43-
9.9 Entire Agreement.............................................. -43-
9.10 Assignment.................................................... -43-
9.11 Parties in Interest........................................... -44-
9.12 Non-Survival of Representations, Warranties, Covenants
and Agreements............................................... -44-
</TABLE>
APPENDIX A: Definitions
ii
<PAGE>
EXHIBITS:
EXHIBIT A: Registration Rights Agreement (Section 7.2(f)).
EXHIBIT B: Target Investment Letter (Section 7.2(g)).
EXHIBIT C: Target Tax Certificate (Section 7.2(h)).
EXHIBIT D: ATC Tax Certificate (Section 7.3(e)).
EXHIBIT E: ATC Voting Agreement (Section 7.3(f)).
EXHIBIT F: Representation Letter to Target's Auditors (Section 6.10(e)).
EXHIBIT G: Target Officer's Certificate (Section 7.2(a)).
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
Agreement and Plan of Merger, dated as of November 16, 1998, by and among
American Tower Corporation, a Delaware corporation ("ATC"), American Towers,
Inc. a Delaware corporation ("ATI"), and OmniAmerica, Inc., a Delaware
corporation ("Target").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of ATC, ATI and Target have determined
that the merger (the "Merger") of Target into ATI on the terms and conditions
set forth in this Agreement and Plan of Merger (this "Agreement") is consistent
with and in furtherance of the long-term business strategy of each, and is fair
to, and in the best interests of, ATI and Target and the stockholders of each;
and
WHEREAS, this Agreement provides that Target shall be merged with and into
ATI, and ATI shall be the surviving corporation; and
WHEREAS, the Boards of Directors of ATI and Target have approved and
adopted this Agreement and have directed that this Agreement be submitted to the
stockholders of ATI and Target, respectively, for their adoption and approval;
and
WHEREAS, the Board of Directors of ATC has approved and adopted this
Agreement and approved the Merger on behalf of ATI as the sole stockholder of
ATI;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained and other valuable
consideration, the receipt and adequacy whereof are hereby acknowledged, the
parties hereto hereby, intending to be legally bound, represent, warrant,
covenant and agree as follows:
ARTICLE 1
DEFINED TERMS; TARGET DISCLOSURE SCHEDULE
As used herein, unless the context otherwise requires, the terms defined in
Appendix A shall have the respective meanings set forth therein. References to
the term "Target" in such definitions shall include all of Target's
Subsidiaries, except as the context otherwise requires. Terms defined in the
singular shall have a comparable meaning when used in the plural, and vice
versa, and the reference to any gender shall be deemed to include all genders.
Unless otherwise defined or the context otherwise clearly requires, terms for
which meanings are provided in this Agreement shall have such meanings when used
in the Target Disclosure Schedule, and each Collateral Document executed or
required to be executed pursuant hereto or thereto or otherwise delivered, from
time to time, pursuant hereto or thereto. References to "hereof," "herein" or
similar terms are intended to refer to the Agreement as a whole and not a
particular section, and references to "this Section" or "this Article" are
intended to refer to the entire section or article and not a particular
subsection thereof. The term "either party" shall, unless the context otherwise
requires, refer to ATC and ATI, on the one hand, and Target, on the other hand.
All matters set forth in or otherwise disclosed in the Target SEC Documents are
hereby incorporated by reference into the Target Disclosure Schedule.
<PAGE>
ARTICLE 2
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions set forth in
----------
this Agreement, and in accordance with the Delaware General Corporation Law (the
"DCL"), at the Effective Time, Target shall be merged with and into ATI. As a
result of the Merger, the separate corporate existence of Target shall cease and
ATI shall continue as the surviving corporation in the Merger (sometimes
referred to, as such, as the "Surviving Corporation").
2.2 Closing. Unless this Agreement shall have been terminated pursuant to
-------
Section 8.1 and subject to the satisfaction or, to the extent permitted by
Applicable Law, waiver of the conditions set forth in Article 7, the closing of
the Merger (the "Closing") will take place, at 10:00 a.m., on the Closing Date,
at the offices of Sullivan & Worcester LLP, One Post Office Square, Boston,
Massachusetts 02109, on the business date that is the fifth (5th) business day
after the date on which all of the conditions set forth in Article 7 (other than
those which require delivery of opinions or documents at the Closing) shall have
been satisfied or waived, unless another date, time or place is agreed to in
writing by the parties. The date on which the Closing occurs is herein referred
to as the "Closing Date."
2.3 Effective Time. Subject to the provisions of this Agreement, as
--------------
promptly as practicable after the Closing, the parties hereto shall cause the
Merger to be consummated by filing a Certificate of Merger and any related
filings required under the DCL with the Secretary of State of the State of
Delaware. The Merger shall become effective at such time as such documents are
duly filed as aforesaid, or at such later time as is specified in such documents
(the "Effective Time").
2.4 Effect of the Merger. The Merger shall have the effects provided for
--------------------
under the DCL.
2.5 Certificate of Incorporation. The Certificate of Incorporation of
----------------------------
ATI, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided therein and in accordance with Applicable Law.
2.6 Bylaws. The bylaws of ATI in effect at the Effective Time shall be
------
the bylaws of the Surviving Corporation until amended in accordance with
Applicable Law and the Organic Documents of ATI.
2.7 Directors and Officers. From and after the Effective Time, until
----------------------
their successors are duly elected or appointed and qualified, or upon their
earlier resignation or removal, in accordance with Applicable Law and the
Organic Documents of ATI, (a) the directors of ATI at the Effective Time shall
be the directors of the Surviving Corporation, and (b) the officers of ATI at
the Effective Time shall be the officers of the Surviving Corporation.
ARTICLE 3
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
3.1 Conversion of Capital Stock. At the Effective Time, by virtue of the
---------------------------
Merger and without any action on the part of ATC, ATI or Target or their
respective stockholders:
-2-
<PAGE>
(a) Each share of Common Stock, par value $.01 per share, of ATI
issued and outstanding immediately prior to the Effective Time shall remain
outstanding;
(b) Each share of Common Stock, par value $.01 per share
(collectively, the "Target Common Stock") issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive one and one-tenth (1.1) shares (the "Exchange Ratio") of
Class A Common Stock, par value $.01 per share, of ATC (the "ATC Common
Stock") (the "Merger Consideration"); and
(c) Each share of Target Common Stock owned by Target immediately
prior to the Effective Time shall automatically be canceled and
extinguished without any conversion thereof and no payment shall be made
with respect thereto.
If, prior to Closing, ATC
(i) pays a dividend or makes a distribution on the ATC Common
Stock in shares of ATC Common Stock;
(ii) subdivides its outstanding shares of ATC Common Stock into a
greater number of shares;
(iii) combines its outstanding shares of ATC Common Stock into a
smaller number of shares;
(iv) pays a dividend or makes a distribution on ATC Common Stock
in shares of its capital stock or other securities other than ATC
Common Stock; or
(v) issues by reclassification of ATC Common Stock any shares of
its capital stock or other securities;
then the Merger Consideration and the Exchange Ratio in effect immediately prior
to such action shall be proportionately adjusted so that each holder of shares
of Target Common Stock thereafter shall receive the aggregate number and kind of
shares of ATC capital stock or other securities that it would have owned
immediately following such action if such shares of Target Common Stock had been
converted to ATC Common Stock immediately prior to such action. The adjustment
provided for in this Section shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
At the Effective Time, all shares of Target Common Stock shall no longer
be outstanding and shall automatically be canceled and retired and shall cease
to exist, and certificates previously evidencing any such shares of Target
Common Stock (each, a "Certificate") shall thereafter represent the right to
receive, upon the surrender of such Certificate in accordance with the
provisions of Section 3.2, the Merger Consideration multiplied by the number of
shares of Target Common Stock represented by such Certificate, and a holder of
more than one Certificate shall have the right to receive the Merger
Consideration multiplied by the number of shares of Target Common Stock
represented by all such Certificates. In lieu of issuing fractional shares, ATC
shall convert the holder's right to receive ATC Common Stock pursuant to the
provisions of this Section into a right to receive (i) the highest whole number
of shares of ATC Common Stock to which the holder is entitled plus (ii) cash
equal to the fraction of a share of ATC Common Stock to which the holder would
otherwise be entitled multiplied by the Fair Market Value of one share of ATC
Common Stock as of
-3-
<PAGE>
the Effective Time. The holders of such Certificates previously evidencing
shares of Target Common Stock outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such shares of Target Common
Stock, except as otherwise provided herein or by Applicable Law.
3.2 Exchange of Certificates.
------------------------
(a) Pursuant to an agreement reasonably satisfactory to ATC and Target (the
"Exchange Agent Agreement") to be entered into at or prior to the Closing Date
between ATC and the transfer agent for the ATC Common Stock (the "Exchange
Agent"), at or from time to time following the Effective Time, ATC shall deposit
or cause to be deposited in trust for the benefit of the Target stockholders an
aggregate number of shares of ATC Common Stock representing the aggregate Merger
Consideration and an amount of cash necessary to cash out fractional shares to
which holders of Target Common Stock shall be entitled at the Effective Time
pursuant to the provisions of this Article. The Exchange Agent shall invest any
cash held by it in such manner as ATC directs. Any net profit from, or interest
or income produced by, such invest ments shall be payable to ATC as and when
requested by ATC. ATC shall be required to replace any cash lost as a result of
any investment.
(b) As soon as practicable, but within five (5) business days subsequent to
the Effective Time, the Exchange Agent shall mail to each holder of record of a
Certificate or Certificates (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon actual delivery of the Certificates to the Exchange Agent)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for cash and certificates representing shares of ATC Common Stock.
Upon surrender of Certificates for cancellation to the Exchange Agent, together
with a duly executed letter of transmittal and such other documents as the
Exchange Agent shall reasonably require, the holder of such Certificates shall
be entitled to receive in exchange therefor cash and a certificate representing
that number of whole shares of ATC Common Stock into which the shares of Target
Common Stock, theretofore represented by the Certificates so surrendered, shall
have been converted pursuant to the provisions of Section 3.1, and the
Certificates so surrendered shall be canceled. Notwithstanding the foregoing,
neither the Exchange Agent nor any party hereto shall be liable to a holder of
shares of Target Common Stock for any shares of ATC Common Stock or dividends or
distributions thereon delivered to a public official pursuant to applicable
abandoned property, escheat or similar Laws. Certificates surrendered for
exchange by any Person constituting an "affiliate", as that term is used in
paragraphs (c) and (d) of Rule 145 under the Securities Act, of Target shall not
be exchanged until ATC has received a written agreement from such Person as
provided in Section 7.2(g).
(c) Promptly following the date which is six (6) months after the Closing
Date, the Exchange Agent shall deliver to ATC all cash, certificates (including
any ATC Common Stock) and other documents in its possession relating to the
transactions described in this Agreement, and the Exchange Agent's duties shall
terminate. Thereafter, each holder of a Certificate may surrender such
Certificate to ATC and (subject to applicable abandoned property, escheat and
similar Laws) receive in exchange therefor the Merger Consideration to which
such holder is entitled, without any interest thereon. Notwithstanding the
foregoing, neither the Exchange Agent nor any party hereto shall be liable to a
holder of Target Common Stock for any ATC Common Stock delivered to a public
official pursuant to applicable abandoned property, escheat or similar Laws.
(d) If the Merger Consideration (or any portion thereof) is to be paid to a
Person other than the Person in whose name the Certificate surrendered in
exchange therefor is registered, it shall be a condition to the payment of the
Merger Consideration that the Certificate so surrendered shall be properly
endorsed or accompanied by appropriate stock powers (with signatures guaranteed
in accordance with the transmittal
-4-
<PAGE>
form) and otherwise in proper form for transfer, that such transfer otherwise be
proper and that the Person requesting such transfer pay to the Exchange Agent
any transfer or other Taxes payable by reason of the foregoing or establish to
the satisfaction of the Exchange Agent that such Taxes have been paid or are not
required to be paid.
(e) In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and subject to such other reasonable
conditions as the Board of Directors of ATC may impose, ATC shall issue in
exchange for such lost, stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof as determined in accordance with this Article.
When authorizing such issue of the Merger Consideration in exchange therefor,
the Board of Directors of ATC may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed Certificate to give ATC a bond or other surety in such sum as it may
reasonably direct as indemnity against any Claim that may be made against ATC or
the transfer agent for the ATC Common Stock with respect to the Certificate
alleged to have been lost, stolen or destroyed.
(f) Notwithstanding any other provisions of this Agreement, no dividends or
other distributions declared after the Effective Time on ATC Common Stock shall
be paid with respect to any whole shares of ATC Common Stock represented by a
Certificate until such Certificate is surrendered for exchange as provided
herein. Subject to the effect of Applicable Laws, following surrender of any
such Certificate, there shall be paid to the holder of the shares of ATC Common
Stock issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of dividends or other distributions with a record date
after the Effective Time theretofore payable with respect to such whole shares
of ATC Common Stock and not paid, less the amount of any withholding taxes which
may be required thereon, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender payable with
respect to such whole shares of ATC Common Stock, less the amount of any
withholding taxes which may be required thereon.
(g) ATC shall be entitled to, or shall be entitled to cause the Exchange
Agent to, deduct and withhold from the consideration otherwise payable pursuant
to this Agreement to any holder of shares of Target Common Stock such amounts as
are required to be deducted and withheld with respect to the making of such
payment under the Code, or any provision of state, local or foreign tax law. To
the extent that amounts are so withheld by ATC or the Exchange Agent, as the
case may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Target Common Stock
in respect of which such deduction and withholding was made by ATC or the
Exchange Agent.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF TARGET
Target hereby represents and warrants to ATC and ATI as follows:
4.1 Organization and Business; Power and Authority; Effect of Transaction.
---------------------------------------------------------------------
(a) Target is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, has all requisite
power and authority (corporate and other) to own or hold under lease its
properties and to conduct its business as now conducted and is duly qualified
and in good
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standing as a foreign corporation in each other jurisdiction (as shown on
Section 4.1(a) of the Target Disclosure Schedule) in which the character of the
property owned or leased by it or the nature of its business or operations
requires such qualification, except for such qualifications the failure of which
to obtain, individually or in the aggregate, would not have a Material Adverse
Effect on Target.
(b) Target has all requisite power and authority (corporate and other)
necessary to enable it to execute and deliver, and to perform its obligations
under, this Agreement and each Collateral Document executed or required to be
executed by it pursuant hereto or thereto and to consummate the Transactions;
and the execution, delivery and performance by Target of this Agreement and each
Collateral Document executed or required to be executed by it pursuant hereto or
thereto have been duly authorized by all requisite corporate or other action on
the part of Target, subject to the requisite approval of the stockholders of
Target. The affirmative vote of the holders of shares of Target Common Stock
representing a majority of the outstanding voting power of Target Common Stock
is the only vote necessary to approve and adopt this Agreement and the
transactions contemplated by this Agreement. This Agreement has been duly
executed and delivered by Target and constitutes, and each Collateral Document
executed or required to be executed by it pursuant hereto or thereto or to
consummate the Transactions when executed and delivered by Target will
constitute, legal, valid and binding obligations of Target, enforceable in
accordance with their respective terms, except as such enforceability may be
subject to bankruptcy, moratorium, insolvency, reorganization, arrangement,
voidable preference, fraudulent conveyance and other similar Laws relating to or
affecting the rights of creditors and except as the same may be subject to the
effect of general principles of equity. The provisions of Section 203 of the
DCL will not apply to ATC by reason of this Agreement or the Merger. The Board
of Directors of Target, at a meeting duly called and held at which a quorum was
present throughout, has approved the Merger and this Agreement, and has
recommended that the Target stockholders approve and adopt this Agreement and
the transactions contemplated hereby, including without limitation the Merger
and the acquisition by ATC of the "beneficial" ownership contemplated thereby.
(c) Except to the extent necessary under the Target Credit Agreements or as
set forth in Section 4.1(c) of the Target Disclosure Schedule, neither the
execution and delivery by Target of this Agreement or any Collateral Document
executed or required to be executed by it pursuant hereto or thereto, nor the
consummation of the Transactions, nor compliance with the terms, conditions and
provisions hereof or thereof by Target:
(i) will conflict with, or result in a breach or violation of, or
constitute a default under, any Organic Document of Target or any material
Applicable Law, or will conflict with, or result in a breach or violation
of, or constitute a default under, or permit the acceleration of any
obligation or liability in, or but for any requirement of giving of notice
or passage of time or both would constitute such a conflict with, breach or
violation of, or default under, or permit any such acceleration in, any
Material Agreement of Target; or
(ii) will require Target to make or obtain any Governmental
Authorization, Governmental Filing or Private Authorization, except (A)
filings under the Hart-Scott-Rodino Act, (B) for FCC approvals, (C) the
filing with the SEC of (I) the Target Proxy Statement and (II) such reports
under Section 13(a) or 15(d) of the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby,
(D) the filing of the Certificate of Merger with the Delaware Secretary of
State and appropriate documents with the relevant authorities of other
states in which Target is qualified to do business, and (E) such other
Governmental Authorizations, Governmental Filings and Private
Authorizations the failure of which to be made or obtained would not,
individually or in the aggregate, have a Material Adverse Effect on
Target.
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(d) Except as set forth in Section 4.1(d) of the Target Disclosure
Schedule, Target does not have any Subsidiaries, each of which, unless noted
otherwise in Section 4.1(d) of the Target Disclosure Schedule, is (i) wholly-
owned, (ii) a corporation duly organized, validly existing and in good standing
under the laws of the respective state of incorporation set forth opposite its
name on Section 4.1(d) of the Target Disclosure Schedule, and (iii) duly
qualified and in good standing as a foreign corporation in each other
jurisdiction (as shown on Section 4.1(d) of the Target Disclosure Schedule) in
which the character of the property owned or leased by it or the nature of its
business or operations requires such qualification, with full power and
authority (corporate and other) to carry on the business in which it is engaged,
except for such qualifications the failure of which to obtain, individually or
in the aggregate, would not have a Material Adverse Effect on Target. Target
owns, directly or indirectly, all of the outstanding capital stock and equity
interests (as shown in Section 4.1(d) of the Target Disclosure Schedule) of each
Subsidiary, free and clear of all Liens (except under the Target Credit
Agreements and as described in the notes to the Target Financial Statements),
and all such stock or other equity interests have been duly authorized and
validly issued and are fully paid and nonassessable. There are no outstanding
Option Securities or Convertible Securities, or agreements or understandings of
any nature whatsoever, relating to the authorized and unissued or outstanding
capital stock or equity interests of any Subsidiary of Target. Except as the
context otherwise requires, the representations and warranties of Target set
forth in this Article shall apply to each of such Subsidiaries with the same
force and effect as though each of them were named in each Section of this
Article.
4.2 Financial and Other Information. Target has heretofore made available
-------------------------------
to ATC its Annual Report on Form 10-KSB for its fiscal year ended June 30, 1998,
its Information Statement on Schedule 14C filed on August 24, 1998, its Proxy
Statement on Schedule 14A filed on November 9, 1998, and all Current Reports
filed on Form 8-K since May 1, 1998 (collectively, the "Target SEC Documents").
As of the respective dates thereof, the Target SEC Documents were prepared in
all material respects in accordance with the Exchange Act and did not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Target
has timely filed all forms, reports and documents with the SEC required to be
filed by it pursuant to the Securities Act and the Exchange Act which complied
as to form, at the time such form, document or report was filed, in all material
respects with the applicable requirements of the Securities Act and the Exchange
Act. The consolidated financial statements of Target included in the Target SEC
Documents (the "Target Financial Statements"), including in each case the notes
thereto, have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby, except as otherwise noted therein,
are true, accurate and complete in all material respects, and fairly present the
consolidated financial condition and the consolidated results of operations and
cash flow of Target, on the bases therein stated, as of the respective dates
thereof, and for the respective periods covered thereby subject, in the case of
unaudited financial statements, to normal nonmaterial year-end audit adjustments
and accruals.
4.3 Material Statements and Omissions; Absence of Events.
----------------------------------------------------
(a) Neither any representation or warranty made by Target contained in this
Agreement or in the certificate to be delivered pursuant to Section 7.2 (a) nor
the Target Disclosure Schedule contains or will contain any untrue statement of
a material fact or omits or will omit to state any material fact required to
make any statement contained herein or therein, in light of the circumstances
under which they were made, not misleading. Without limiting the generality of
the foregoing, (i) the Target Proxy Statement will not, at the date it is first
mailed to the holders of Target Common Stock and at the time of the Target
Stockholders Meeting, and (ii) the information with respect to Target furnished
to ATC for inclusion in the ATC
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<PAGE>
Registration Statement and the ATC Transaction Prospectus will not, at the time
such Registration Statement becomes effective under the Securities Act, and the
ATC Transaction Prospectus, at the date it is first mailed to the holders of
Target Common Stock and at the time of the Target Stockholders Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. For purposes of the foregoing, the truth of any information or the
existence of any omissions at the time of the Target Stockholders Meeting shall
be determined with reference to the Target Proxy Statement and the ATC
Transaction Prospectus, each as then amended or supplemented. The Target Proxy
Statement will comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations thereunder. Notwithstanding
the foregoing, no representation or warranty is made by Target with respect to
statements made or incorporated by reference therein based on information
specifically supplied by ATC for inclusion or incorporation by reference in the
Target Proxy Statement.
(b) Since the date of the most recent financial statements constituting a
part of the Target Financial Statements, except to the extent specifically
described in Section 4.3(b) of the Target Disclosure Schedule, there has been no
material adverse change in Target from that reflected in the most recent Target
Financial Statements. There is no Event known to Target which has had, or will
have, a Material Adverse Effect on Target, except to the extent specifically
described in Section 4.3(b) of the Target Disclosure Schedule and except for
matters affecting the tower rental, ownership and construction industry
generally, and except for any Event arising out of the execution or public
announcement of this Agreement. Target is not aware of any impending or
contemplated Event that would cause any of the representations and warranties
made by it in this Article not to be true, correct and complete on the date of
such Event as if made on that date.
4.4 Title to Properties; Leases.
---------------------------
(a) Section 4.4(a) of the Target Disclosure Schedule sets forth a list of
all Real Property owned by Target. Target has good indefeasible, marketable and
insurable title to all such real property (other than easement and leasehold
real property) and good indefeasible and marketable title to all of its other
owned property and assets, tangible and intangible (collectively, the "Target
Assets"); all of the Target Assets are so owned, in each case, free and clear of
all Liens, except (i) Permitted Liens, and (ii) Liens set forth on Section
4.4(a) of the Target Disclosure Schedule. Except as disclosed in Section 4.4(a)
of the Target Disclosure Schedule, all improvements on the real property owned
or leased by Target are in compliance with applicable zoning, wetlands and land
use laws, ordinances and regulations and applicable title covenants, conditions,
restrictions and reservations in all respects necessary to conduct the Target
Business as presently conducted or proposed to be conducted on or prior to the
Closing Date, except for any instances of non-compliance which, individually or
in the aggregate, have not had and will not have a Material Adverse Effect on
Target. Except as disclosed in Section 4.4(a) of the Target Disclosure
Statement, all such improvements comply with all Applicable Laws, Governmental
Authorizations and Private Authorizations, except for any instances of non-
compliance which, individually or in the aggregate, have not had and will not
have a Material Adverse Effect on Target. Except as disclosed in Section
4.4(a) of the Target Disclosure Statement, all of the transmitting towers,
ground radials, guy anchors, transmitting buildings and related improvements, if
any, located on the real property owned or leased by Target are located entirely
on such real property except for any instances of non-compliance which,
individually or in the aggregate, have not had and will not have a Material
Adverse Effect on Target. Except as set forth in Section 4.4(a) of the Target
Disclosure Schedule, such transmitting towers, ground radials, guy anchors,
transmitting buildings and related improvements and other material items of
personal property, including equipment, are, in Target's reasonable business
judgment, in a state of good repair and maintenance and sound operating
condition, normal wear and tear excepted, have been maintained in a manner
consistent with generally
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accepted standards of sound engineering practice, and currently permit the
Target Business to be operated in accordance with the terms and conditions of
all Applicable Laws, Governmental Authorizations and Private Authorizations,
except where the failure to be in such repair or condition or to be so usable,
individually or in the aggregate, has not had and will not have a Material
Adverse Effect on Target. Except for such exceptions as would not, individually
or in the aggregate, have a Material Adverse Effect on Target, all inventory
reflected in the most recent balance sheet constituting a part of the Target
Financial Statements or manufactured, purchased or acquired since such time is
up to normal commercial standards and is sale able, in the case of finished
goods inventory in the ordinary course of business within a reasonable period of
time; no material amount of inventory so reflected is obsolete, and all
inventory so reflected or subsequently manufactured, purchased or acquired is in
amounts and categories substantially consistent with prior practice.
(b) Section 4.4(b) of the Target Disclosure Schedule contains a list of all
Leases under which any real property used in the business of Target (the "Target
Business") is leased to Target by any Person. Except as otherwise set forth in
Section 4.4(b) of the Target Disclosure Schedule, each Lease under which Target
holds real property constituting a part of the Target Assets is in full force
and effect, has been duly authorized, executed and delivered by Target and, to
its knowledge, each of the other parties thereto, and is a legal, valid and
binding obligation of Target, and, to its knowledge, each of the other parties
thereto, enforceable in accordance with its terms, except as such enforceability
may be limited by bankruptcy, moratorium, insolvency and similar Laws affecting
the rights and remedies of creditors and obligations of debtors generally and by
general principles of equity except, in each case, for such exceptions which
individually or in the aggregate, have not had and will not have a Material
Adverse Effect on Target. Target has a valid leasehold interest in and enjoys
peaceful and undisturbed possession under all Leases pursuant to which it holds
any such real property, subject to the terms of each Lease and Applicable Law
and except for Permitted Liens and such other Liens as, individually or in the
aggregate, have not had and will not have a Material Adverse Effect on Target.
Neither Target nor, to Target's knowledge, any other party thereto, has failed
to duly comply with all of the material terms and conditions of each such Lease
or has done or performed, or failed to do or perform (and no Claim is pending
or, to the knowledge of Target, threatened to the effect that Target has not so
complied, done and performed or failed to do and perform) any act which would
invalidate or provide grounds for the other party thereto to terminate (with or
without notice, passage of time or both) such Leases or impair the rights or
benefits, or increase the costs, of Target under any of such Leases in any
material respect except, in each case, for such exceptions which individually or
in the aggregate, have not had and will not have a Material Adverse Effect on
Target.
4.5 Compliance with Private Authorizations. Section 4.5 of the Target
--------------------------------------
Disclosure Schedule sets forth a true, accurate and complete list and
description of each Private Authorization which individually is material to
Target. Target has obtained all Private Authorizations that are necessary for
the ownership or operation of the Target Assets or the conduct of the Target
Business, as currently conducted or proposed to be conducted on or prior to the
Closing Date, which, if not obtained and maintained, individually or in the
aggregate, have not and will not have a Material Adverse Effect on Target. All
of such Private Authorizations are valid and in good standing and are in full
force and effect, except for such exceptions as, individually or in the
aggregate, have not had and will not have a Material Adverse Effect on Target.
Target is not in breach or violation of, or in default in the performance,
observance or fulfillment of, any such Private Authorization, and, to Target's
knowledge, no Event exists or has occurred which constitutes, or but for any
requirement of giving of notice or passage of time or both would constitute,
such a breach, violation or default, under any such Private Authorization,
except for such breaches, violations or defaults as, individually or in the
aggregate, have not had and will not have a Material Adverse Effect on Target.
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4.6 Compliance with Governmental Authorizations and Applicable Law.
--------------------------------------------------------------
(a) Section 4.6(a) of the Target Disclosure Schedule contains a true,
complete and accurate description of each Governmental Authorization required
under Applicable Law (i) to own and operate the Target Assets and conduct the
Target Business, as currently conducted or proposed to be conducted on or prior
to the Closing Date, which, individually or in the aggregate, is material to
Target. Target has obtained all Governmental Authorizations that are necessary
for the ownership or operation of the Target Assets or the conduct of the Target
Business as now conducted and which, if not obtained and maintained, would,
individually or in the aggregate, have a Material Adverse Effect on Target, all
of which are valid and in good standing and in full force and effect, with such
exceptions as, individually or in the aggregate, have not had and will not have
a Material Adverse Effect on Target. None of the Governmental Authorizations
listed in Section 4.6(a) of the Target Disclosure Schedule is subject to any
restriction or condition that would limit in any material respect the ownership
or operations of the Target Assets or the conduct of the Target Business as
currently conducted, except for restrictions and conditions generally applicable
to Governmental Authorizations of such type and such exceptions as, individually
or in the aggregate, have not had and will not have a Material Adverse Effect
on Target. The conduct of the Target Business is in accordance with the
Governmental Authorizations, except for such noncompliances as, individually or
in the aggregate, have not had and will not have a Material Adverse Effect on
Target. No such Governmental Authorization is the subject of any pending or, to
Target's knowledge, threatened challenge or proceeding to revoke or terminate
any such Governmental Authorization.
(b) Except as otherwise specifically set forth in Section 4.6(b) of the
Target Disclosure Schedule, Target has conducted its business and owned and
operated its property and assets in accordance with all Applicable Laws and
Governmental Authorizations, except for such breaches, violations and defaults
as, individually or in the aggregate, have not had and will not have a Material
Adverse Effect on Target. Except as otherwise specifically described in Section
4.6(b) of the Target Disclosure Schedule, Target is not in and is not charged by
any Authority with, and, to Target's knowledge, is not threatened or under
investigation by any Authority with respect to, any breach or violation of, or
default in the performance, observance or fulfillment of, any Applicable Law
relating to the ownership and operation of the Target Assets or the conduct of
the Target Business which, individually or in the aggregate, has had or will
have a Material Adverse Effect on Target. Except as otherwise specifically
described in Section 4.6(b) of the Target Disclosure Schedule, to Target's
knowledge, no Event exists or has occurred, as of the date of this Agreement,
which constitutes, or but for any requirement of giving of notice or passage of
time or both would constitute, such a breach, violation or default, under any
Governmental Authorization or any Applicable Law, except for such breaches,
violations or defaults as, individually or in the aggregate, have not had and
will not have a Material Adverse Effect on Target. With respect to matters, if
any, of a nature referred to in Section 4.6(b) of the Target Disclosure
Schedule, except as otherwise specifically described in Section 4.6(b) of the
Target Disclosure Schedule, all such information and matters set forth in the
Target Disclosure Schedule, if adversely determined against Target, individually
or in the aggregate, will not have a Material Adverse Effect on Target.
(c) As of the date of this Agreement, there are no Legal Actions of any
kind pending or, to the knowledge of Target, threatened at law, in equity or
before any Authority against Target or any of its officers or directors relating
to the ownership or operation of the Target Assets or the conduct of the Target
Business, which if determined adversely to Target, individually or in the
aggregate, will have a Material Adverse Effect on Target.
4.7 Year 2000 Compliant. Target has reviewed the areas within its
-------------------
business and operations which Target believes could be adversely affected by the
"Year 2000 Problem" (that is, the risk that
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computer applications used by Target may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and any date
on or after December 31, 1999), and is making related inquiry of material
suppliers, vendors and customers. Based on such reviews, Target believes that
the "Year 2000 Problem" will not have a Material Adverse Effect on Target.
Except as set forth in Section 4.7 of the Target Disclosure Schedule, to
Target's knowledge, each hardware, software and firmware product (collectively
"Software") used by Target in its business is Year 2000 compliant, except for
such noncompliances that, individually or in the aggregate, have not and will
not have a Material Adverse Effect on Target. The current status, projected cost
and prognosis of any Year 2000 remedial efforts with respect to non-compliant
Software and with respect to any identified Year 2000 issues with any material
supplier, vendor or customer are listed in Section 4.7 of the Target Disclosure
Schedule.
4.8 Related Transactions. Target is not a party or subject to any
--------------------
Contractual Obligation relating to the ownership or operation of the Target
Assets or the conduct of the Target Business between Target and any of its
officers or directors or, to the knowledge of Target, any member of the
Immediate Family of any thereof or any Affiliate of any of the foregoing,
including without limitation any Contractual Obligation providing for the
furnishing of services to or by, providing for rental of property, real,
personal or mixed, to or from, or providing for the lending or borrowing of
money to or from or otherwise requiring payments to or from, any such Person,
other than (a) Employment Arrangements listed or described in Section 4.14 of
the Target Disclosure Schedule or not required to be disclosed thereon because
of the amount involved in such Employment Arrangement, (b) Contractual
Obligations between Target and any of the foregoing, that will be terminated, at
no cost or expense to Target, prior to the Closing, or (c) as specifically set
forth in Section 4.8 of the Target Disclosure Schedule.
4.9 Insurance. Target maintains, with respect to the Target Assets and
---------
the Target Business, policies of fire and extended coverage and casualty,
liability and other forms of insurance in such amounts and against such risks
and losses as are customary in Target's business.
4.1 Tax Matters. Except where all failures to do so will not in the
-----------
aggregate have a Material Adverse Effect on Target, Target has in accordance
with all Applicable Laws filed all Tax Returns which are required to be filed,
and has paid, or made adequate provision for the payment of, all Taxes which
have or may become due and payable pursuant to said Tax Returns and all other
governmental charges and assessments received to date other than those Taxes
being contested in good faith for which adequate provision has been made on the
most recent balance sheet forming part of the Target Financial Statements. The
Tax Returns of Target have been prepared in all material respects in accordance
with all Applicable Laws. Except where all failures to do so will not in the
aggregate have a Material Adverse Effect on Target, all Taxes which Target is
required by Law to withhold and collect have been duly withheld and collected,
and have been paid over, in a timely manner, to the proper Authorities to the
extent due and payable. Except as set forth in Section 4.10 of the Target
Disclosure Schedule, Target has not executed any waiver to extend, or otherwise
taken or failed to take any action that would have the effect of extending, the
applicable statute of limitations in respect of any Tax liabilities of Target
for the fiscal years prior to and including the most recent fiscal year.
Adequate provision has been made on the most recent balance sheet forming part
of Target Financial Statements for all Taxes accrued through the date of such
balance sheet of any kind, including interest and penalties in respect thereof,
whether disputed or not, and whether past, current or deferred, accrued or
unaccrued, fixed, contingent, absolute or other, and there are, to Target's
knowledge, no past transactions or matters which, individually or in the
aggregate, could result in additional Taxes which would, if imposed, have a
Material Adverse Effect on Target for which an adequate reserve has not been
provided on such balance sheet. Target is not a "consenting corporation" within
the meaning of Section 341(f) of the Code. Target has at all times been taxable
as a Subchapter C corporation under the Code, and has never been a member of any
consolidated group for Tax purposes, except as otherwise set forth in
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Section 4.10 of the Target Disclosure Schedule. To the best of Target's
knowledge, Target does not have any material income or gain that has been and
continues to be deferred under Regulations Section 1.1502-13 or Regulations
Section 1.1502-13T (or under Regulations Sections 1.1502-13, 1.1502-13T, 1.1502-
14, or 1.1502-14T, all as in effect prior to Treasury Decision 8597) and Target
does not have any material excess loss account in a Subsidiary under Regulations
Section 1.1502-19. Except as disclosed in Section 4.10 of the Target Disclosure
Schedule, Target is not a party to any tax sharing agreement or arrangement.
Target is not currently, has not been within the past five years, and does
not anticipate becoming prior to the Effective Time, a "United States real
property holding corporation" within the meaning of Section 897(c) of the Code.
To Target's knowledge, no Person has beneficially owned more than five percent
(5%) of the then outstanding Target Common Stock at any time during the part
five (5) years, other than Persons who are "United States persons" within the
meaning of Section 7701(a)(30) of the Code and other than Persons who have
individually or as part of a group filed a Schedule 13D or a Schedule 13G
relating to such holdings under the Exchange Act.
4.1 ERISA Matters
-------------
(a) Target (which for purposes of this Section shall include any ERISA
Affiliate of Target) currently sponsors, maintains and contributes only to the
Plans and Employment Arrangements set forth in Section 4.11(a) and Section 4.14,
respectively, of the Target Disclosure Schedule. Target does not contribute to
or have an obligation to contribute to, and has not at any time contributed to
or had an obligation to contribute to, and no Plan listed in Section 4.11(a) of
the Target Disclosure Schedule is, (i) an employee pension benefit plan within
the meaning of Section 3(2) of ERISA, (ii) a Multiemployer Plan, or (iii) a Plan
subject to Section 412 of the Code, Section 302 of ERISA or Title IV of ERISA.
Target has no actual or potential liability under Title IV of ERISA. Target
does not maintain any Plan that provides for post-retirement medical or life
insurance benefits, and Target does not have any obligation or liability with
respect to any such Plan previously maintained by Target, except as the
provisions of COBRA may apply to any former employees of Target. Except as set
forth in Section 4.11(a) of the Target Disclosure Schedule, as to all Plans and
Employment Arrangements listed in Section 4.11(a) or Section 4.14 of the Target
Disclosure Schedule:
(i) all such Plans and Employment Arrangements comply and have been
administered in form and in operation, in all material respects, in
accordance with their respective terms and with all Applicable Laws except
for such noncompliance that will not, individually or in the aggregate,
have a Material Adverse Effect on Target and Target has not received any
notice from any Authority disputing or investigating such compliance;
(ii) none of the assets of any such Plan are invested in employer
securities or employer real property;
(iii) there are no Claims (other than routine Claims for benefits or
actions seeking quali fied domestic relations orders) pending or, to
Target's knowledge, threatened involving such Plans or the assets of such
Plans, and, to Target's knowledge, no facts exist which are reasonably
likely to give rise to any such Claims (other than routine Claims for
benefits or actions seeking qualified domestic relations orders) except, in
each case, as will not, individually or in the aggregate, have a Material
Adverse Effect on Target;
(iv) all material contributions to, and material payments from, the
Plans and Employment Arrangements that may have been required to be made in
accordance with the terms
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of the Plans and Employment Arrangements, and any applicable collective
bargaining agreement, have been made other than contributions and payments
which will not, individually or in the aggregate, have a Material Adverse
Effect on Target. All such contributions to, and payments from, the Plans
and Employment Arrangements, except those payments to be made from a trust
qualified under Section 401(a) of the Code, for any period ending before
the Closing Date that are not yet, but will be, required to be made, will
be properly accrued and reflected on the financial books and records of
Target;
(v) to Target's knowledge, no Event has occurred which would result in
imposition on Target of (A) any breach of fiduciary duty liability damages
under Section 409 of ERISA, (B) a civil penalty assessed pursuant to
subsections (c), (i) or (l) of Section 502 of ERISA or (C) a tax imposed
pursuant to Chapter 43 of Subtitle D of the Code;
(vi) Target has not incurred any material liability to a Plan (other
than for contributions not yet due) which liability has not been fully paid
or accrued for payment as of the date hereof;
(vii) except as otherwise set forth in Section 4.11(a) of the Target
Disclosure Schedule, no current or former employee of Target will be
entitled to any additional benefits or any acceleration of the time of
payment or vesting of any benefits under any Plan or Employment Arrangement
as a result of the transactions contemplated by this Agreement;
(vii) no compensation payable by Target to any of its employees under
any existing Plan or Employment Arrangement (including by reason of the
transactions contemplated hereby) will be subject to disallowance under
Section 162(m) of the Code; and
(ix) any amount that could be received (whether in cash or property or
by virtue of the vesting of property) as a result of any of the
transactions contemplated by this Agreement by any employee, officer,
director or independent contractor of Target who is a "disqualified
individual" (as such term is defined in proposed Regulation Section 1.280G-
1) under any employment arrangement would not be characterized as an
"excess parachute payment" (as such term is defined in Section 280G(b)(1)
of the Code), except for any amount that is approved by the stockholders of
Target on or before the Closing Date in the manner provided in Section
280G(b)(5) of the Code.
(b) The execution, delivery and performance by Target of this Agreement and
the Collateral Documents executed or required to be executed by Target pursuant
hereto and thereto will not involve any prohibited transaction within the
meaning of ERISA or Section 4975 of the Code with respect to any Plan listed in
Section 4.11(a) of the Target Disclosure Schedule.
4.12 Product Liability. Except as expressly set forth in Section 4.12 of
-----------------
the Target Disclosure Schedule, there is not now pending or, to the knowledge of
Target, threatened any Claim (or any basis for any such Claim) relating to, any
damages to or losses of any third party for injuries to Persons or damage to
property, or for breach of warranty, arising out of any alleged defect in the
quality or condition of any of Target's products or services or property or
assets, which, in the case of pending or threatened Claims, if determined
adversely to Target, individually or in the aggregate (taking into account
unasserted Claims of a similar nature), will have a Material Adverse Effect on
Target.
4.13 Bank Accounts, Etc. Section 4.13 of the Target Disclosure Schedule
------------------
contains a true, accurate and complete list as of the date hereof of all banks,
trust companies, savings and loan associations and brokerage firms in which
Target has an account or a safe deposit box and the names of all Persons
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<PAGE>
authorized to draw thereon, to have access thereto, or to authorize transactions
therein, the names of all Persons, if any, holding valid and subsisting powers
of attorney from Target and a summary statement as to the terms thereof. Target
will not make or permit to be made any change affecting its account or safe
deposit box with any bank, trust company, savings and loan association or
brokerage firm, in the names of the Persons authorized to draw thereon, to have
access thereto or to authorize transactions therein or in such powers of
attorney, or open any additional accounts or boxes or grant any additional
powers of attorney, without in each case first notifying ATC in writing.
4.14 Employment and Consulting Arrangements. Section 4.14 of the Target
--------------------------------------
Disclosure Schedule contains a true, accurate and complete list of all Target
employees and consultants whose annual compensation is in excess of $100,000
(the "Target Employees"), together with each such Person's title or the capacity
in which he or she is employed or retained and each such Person's annual
compensation. Target has no obligation or liability, contingent or other, under
any Employment Arrangement with any Target Employee, other than (i) those listed
or described in Section 4.14 of the Target Disclosure Schedule, (ii) those
incurred in the ordinary and usual course of business, or (iii) such obligations
or liabilities as do not and will not have, in the aggregate, any Material
Adverse Effect on Target. Except as described in Section 4.14 of the Target
Disclosure Schedule, (a) none of the employees of Target is now represented by
any labor union or other employee collective bargaining organization, and Target
is not a party to any labor or other collective bargaining agreement with
respect to any of employees of Target, (b) there are no pending grievances,
disputes or controversies with any union or any other employee or collective
bargaining organization of such employees, or threats of strikes, work stoppages
or slowdowns or any pending demands for collective bargaining by any such union
or other organization, (c) neither Target nor any of such employees is now
subject to or involved in or, to Target's knowledge, threatened with, any union
elections, petitions therefor or other organizational or recruiting activities,
in each case with respect to the employees of Target, and (d) as of the date
hereof, none of the Target Employees has notified Target that he or she does not
intend to continue employment with Target until the Closing or with ATC
following the Closing. Target has performed in all material respects all
obligations required to be performed under all Employment Arrangements with
Target Employees and is not in material breach or violation of or in material
default or arrears under any of the terms, provisions or conditions thereof.
4.15 Material Agreements. Listed on Section 4.15 of the Target Disclosure
-------------------
Schedule are all Material Agreements (other than Leases of Real Property to
Target) relating to the ownership or operation of the Target Assets or the
conduct of the Target Business or to which Target is a party or to which it is
bound or which any of the Target Assets is subject. True, accurate and complete
copies of each of such Material Agreements have been made available by Target to
ATC. All of such Material Agreements are valid, binding and legally enforceable
obligations of Target and, to its knowledge, all other parties thereto, except
as such enforceability may be limited by bankruptcy, moratorium, insolvency and
similar Laws affecting the rights and remedies of creditors and obligations of
debtors generally and by general principles of equity except in each case, for
such exceptions which individually or in the aggregate, have not had and will
not have a Material Adverse Effect on Target. Neither Target nor, to its
knowledge, any other party thereto, has failed to duly comply with all of the
material terms and conditions of each such Material Agreement or has done or
performed, or failed to do or perform (and no Claim is pending or, to the
knowledge of Target, threatened in writing to the effect that Target has not so
complied, done and performed or failed to do and perform) any act which would
invalidate or provide grounds for the other party thereto to terminate (with or
without notice, passage of time or both) such Material Agreement or impair the
rights or benefits, or increase the costs, of Target under any such Material
Agreement except, in each case, for such exceptions which individually or in the
aggregate, have not had and will not have a Material Adverse Effect on Target.
All Contracts for the construction by Target of towers for other Persons can be
performed, in the aggregate for all such Contracts, without any loss to Target.
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4.16 Ordinary Course of Business. Target, from the date of the most recent
---------------------------
Target Financial Statements to the date hereof, except (i) as may be described
on Section 4.16 of the Target Disclosure Schedule, (ii) as may be required or
expressly contemplated by the terms of this Agreement, or (iii) as may be
described in the Target Financial Statements, including the notes thereto:
(a) has operated its business in all material respects in the normal,
usual and customary manner in the ordinary and regular course of business,
consistent with prior practice;
(b) except in each case in the ordinary course of business, consistent
with prior practice:
(i) has not incurred any obligation or liability (fixed,
contingent or other) individually having a value in excess of
$100,000;
(ii) has not sold or otherwise disposed of or contracted to sell
or otherwise dispose of any of its properties or assets having a value
in excess of $100,000;
(iii) has not entered into any individual commitment having a
value in excess of $100,000; and
(iv) has not canceled any debts or claims having a value in
excess of $100,000;
(c) has not created or permitted to be created any Lien on any of the
Target Assets, except for Permitted Liens;
(d) has not made or committed to make any additions to its property or
any purchases of equipment in excess of $100,000, except in the ordinary
course of business consistent with past practice or for normal maintenance
and replacements;
(e) has not increased the compensation payable or to become payable to
any of the Target Employees other than nonmaterial increases in the
ordinary course of business, or otherwise materially altered, modified or
changed the terms of their employment;
(f) has not suffered any material damage, destruction or loss (whether
or not covered by insurance) or any acquisition or taking of property by
any Authority;
(g) has not waived any rights of material value without fair and
adequate consideration;
(h) has not experienced any work stoppage;
(i) except in the ordinary course of business, has not entered into,
amended or terminated any Lease, Governmental Authorization, Private
Authorization, Material Agreement or Employment Arrangement, or any
transaction, agreement or arrangement with any Affiliate of Target;
(j) has not made, paid or declared any Distribution; and
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<PAGE>
(k) has not entered into any transactions or series of related
transactions which individually or in the aggregate is material to the
Target Assets or the Target Business and which is not otherwise disclosed
in the Target Disclosure Schedule.
4.17 Broker or Finder. No Person assisted in or brought about the
----------------
negotiation of this Agreement or the Merger in the capacity of broker, agent or
finder or in any similar capacity on behalf of Target, other than BT Wolfensohn
whose fees and expenses will be paid by Target.
4.18 Environmental Matters. Except as set forth in Section 4.18 of the
---------------------
Target Disclosure Schedule, and except for exceptions that, individually or in
the aggregate, have not had and would not have a Material Adverse Effect on
Target, Target:
(a) has not been notified in writing that it is potentially liable
under, has not received any written request for information or other
correspondence concerning its potential liability with respect to any site
or facility under, and, to Target's knowledge, is not a "potentially
responsible party" under, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Resource
Conservation Recovery Act, as amended, or any similar state Law;
(b) is not a party to any outstanding consent decree, compliance order
or administrative order or other judgment, order, writ, injunction or
decree creating on-going obligations issued pursuant to any Environmental
Law;
(c) has, to its knowledge, obtained all material Environmental Permits
required under Environmental Laws, and, to its knowledge, has filed all
applications, notices and other material documents required to be filed
prior to the date of this Agreement to effect the timely renewal or
issuance of all Environmental Permits necessary for the continued ownership
or operation of the Target Assets or conduct of the Target Business in the
manner currently owned, operated and conducted and proposed to be owned,
operated and conducted on or prior to the Closing Date;
(d) is in compliance with all Environmental Laws, and is not the
subject of or, to Target's knowledge, threatened with any Legal Action
involving a demand for damages or other potential liability, including any
Lien, with respect to violations or breaches of any Environmental Law;
(e) has not knowingly installed or used any above ground or
underground storage tanks, friable asbestos, polychlorinated biphenyls or
urea formaldehyde foam insulation on any property currently owned, leased
or operated by Target and, to its knowledge, there are no above ground or
underground storage tanks containing Hazardous Materials, friable asbestos,
polychlorinated biphenyls or urea formaldehyde foam insulation on any
property currently owned, leased or operated by Target, the installation,
use or presence of which is not in compliance with Environmental Laws; and
(f) has no knowledge of any past or present Event related to Target's
properties, operations or business, which Event, individually or in the
aggregate, could reasonably be expected to interfere with or prevent
continued compliance in all material respects with all Environmental Laws
applicable to the ownership or operation of the Target Assets or the
conduct of the Target Business substantially in the manner now conducted or
proposed to be conducted on or prior to the Closing Date, or which,
individually or in the aggregate, may form the basis of any material Claim
for or arising out of the release or threatened release into the
environment of any Hazardous Material.
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<PAGE>
Section 4.18 of the Target Disclosure Schedule sets forth a true, correct and
complete list of all existing Phase I environmental site assessment reports (an
"Environmental Report") on each parcel of Real Property owned or leased by
Target for which an Environmental Report has previously been prepared for Target
(true, correct and complete copies of which, in each case, have heretofore been
delivered by Target to ATC).
4.19 Capital Stock. The authorized and outstanding capital stock of
-------------
Target, on a fully-diluted basis, is as set forth in Section 4.19 of the Target
Disclosure Schedule. All of such outstanding capital stock has been duly
authorized and validly issued, is fully paid and nonassessable and is not
subject to any statutory preemptive or similar rights. As of the date hereof,
there is no owner of record or, to Target's knowledge, beneficially of more than
five percent (5%) of the Target Common Stock, except as shown in Section 4.19 of
the Target Disclosure Schedule. Target has not granted or issued, nor has
Target agreed to grant or issue, any shares of its capital stock or any Option
Security or Convertible Security, and Target is not a party to or bound by any
agreement, put or commitment pursuant to which it is obligated to purchase,
redeem or otherwise acquire any shares of capital stock or any Option Security
or Convertible Security, except in each case as set forth in the most recent
Target Financial Statements or Section 4.19 of the Target Disclosure Schedule.
4.20 Materiality. The representations and warranties set forth in this
-----------
Article are true and correct as of the date hereof without the materiality
exceptions or qualifications contained therein, except to the extent that the
failure of such representations and warranties to be so true and correct,
individually or in the aggregate, will not have a Material Adverse Effect on
Target.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ATC AND ATI
Each of ATC and ATI, jointly and severally, hereby represents and warrants
to Target as follows:
5.1 Organization and Business; Power and Authority; Effect of Transaction.
---------------------------------------------------------------------
(a) Each of ATC and ATI is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization, has all
requisite power and authority (corporate and other) to own or hold under lease
its properties and to conduct its business as now conducted and is duly
qualified and in good standing as a foreign corporation in each other
jurisdiction in which the character of the property owned or leased by it or the
nature of its business or operations requires such qualification, except for
such qualifications the failure of which to obtain, individually or in the
aggregate, would not have a Material Adverse Effect on ATC.
(b) Each of ATC and ATI has all requisite power and authority (corporate
and other) necessary to enable it to execute and deliver, and to perform its
obligations under, this Agreement and each Collateral Document executed or
required to be executed by it pursuant hereto or thereto and to consummate the
Transactions; and the execution, delivery and performance by ATC and ATI of this
Agreement and each Collateral Document executed or required to be executed by it
pursuant hereto or thereto have been duly authorized by all requisite corporate
or other action on the part of ATC and ATI. This Agreement has been duly
executed and delivered by ATC and ATI and constitutes, and each Collateral
Document executed or
-17-
<PAGE>
required to be executed by each of them pursuant hereto or thereto or to
consummate the Transactions when executed and delivered by ATC and ATI will
constitute, legal, valid and binding obligations of each of ATC and ATI,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, moratorium, insolvency and similar
Laws affecting the rights and remedies of creditors and obligations of debtors
generally and by general principles of equity.
(c) Except to the extent necessary under their credit facilities, neither
the execution and delivery by ATC and ATI of this Agreement or any Collateral
Document executed or required to be executed by each of them pursuant hereto or
thereto, nor the consummation of the Transactions, nor compliance with the
terms, conditions and provisions hereof or thereof by ATC and ATI:
(i) will conflict with, or result in a breach or violation of, or
constitute a default under, any Organic Document of ATC or ATI or any
material Applicable Law, or will conflict with, or result in a breach or
violation of, or constitute a default under, or permit the acceleration of
any obligation or liability in, or but for any requirement of giving of
notice or passage of time or both would constitute such a conflict with,
breach or violation of, or default under, or permit any such acceleration
in, any material agreement of ATC or ATI; or
(ii) will require ATC or ATI to make or obtain any Governmental
Authorization, Governmental Filing or Private Authorization, except (A)
filings contemplated by the Registration Rights Agreement, (B) filings
under the Hart-Scott-Rodino Act, (C) for FCC approvals, (D) the filing with
the SEC of (I) the ATC Registration Statement and (II) such reports under
Section 13(a) or 15(d) of the Exchange Act as may be required in connection
with this Agreement and the transactions contemplated by this Agreement,
(E) the filing of the Certificate of Merger with the Delaware Secretary of
State and appropriate documents with the relevant authorities of other
states in which ATI is qualified to do business, (F) the filing of a
Supplemental Listing Application with the New York Stock Exchange, and (G)
such other Governmental Authorizations, Governmental Filings and Private
Authorizations the failure of which to be made or obtained would not,
individually or in the aggregate, have a Material Adverse Effect on ATC.
5.2 Financial and Other Information. ATC has heretofore made available to
-------------------------------
Target its Annual Report on Form 10-K for its fiscal year ended December 31,
1997, its Prospectus, dated July 1, 1998, and all Current Reports filed on Form
8-K since July 1, 1998 (collectively, the "ATC SEC Documents"). As of the
respective dates thereof, the ATC SEC Documents were prepared in all material
respects in accordance with the Securities Act and the Exchange Act and did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. ATC
has timely filed all forms, reports and documents with the SEC required to be
filed by it pursuant to the Securities Act and the Exchange Act which complied
as to form, at the time such form, document or report was filed, in all material
respects with the applicable requirements of the Securities Act and the Exchange
Act. The consolidated financial statements of ATC included in the ATC SEC
Documents (the "ATC Financial Statements"), including in each case the notes
thereto, have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby, except as otherwise noted therein,
are true, accurate and complete in all material respects, and fairly present the
consolidated financial condition and the consolidated results of operations and
cash flow of ATC, on the bases therein stated, as of the respective dates
thereof, and for the respective periods covered thereby subject, in the case of
unaudited financial statements, to normal nonmaterial year-end audit adjustments
and accruals.
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5.3 Material Statements and Omissions; Absence of Events.
----------------------------------------------------
(a) Neither any representation or warranty made by ATC or ATI contained in
this Agreement or in the certificate to be delivered pursuant to Section 7.3(a)
nor the ATC SEC Documents contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact required to make
any statement contained herein or therein, in light of the circumstances under
which they were made, not misleading. Without limiting the generality of the
foregoing, (i) the ATC Registration Statement will not, at the time such
Registration Statement becomes effective under the Securities Act, and the ATC
Transaction Prospectus, at the date it is first mailed to the holders of Target
Common Stock and at the time of the Target Stockholders Meeting, and (ii) the
information with respect to ATC furnished to Target for inclusion in the Target
Proxy Statement will not, at the date it is first mailed to the holders of
Target Common Stock and at the time of the Target Stockholders Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. For purposes of the foregoing, the truth of any information or the
existence of any omissions at the time of the Target Stockholders Meeting shall
be determined with reference to the ATC Transaction Prospectus and the Target
Proxy Statement, each as then amended or supplemented. The ATC Registration
Statement and the ATC Transaction Prospectus will comply as to form in all
material respects with the requirements of the Securities Act and the rules and
regulations thereunder. Notwithstanding the foregoing, no representation or
warranty is made by ATC with respect to statements made or incorporated by
reference therein based on information specifically supplied by Target for
inclusion or incorporation by reference in the ATC Registration Statement or the
ATC Transaction Prospectus.
(b) Since the date of the most recent financial statements constituting a
part of the ATC Financial Statements, except to the extent specifically
described in the ATC SEC Documents, there has been no material adverse change in
ATC or any of its Subsidiaries from that reflected in the most recent ATC
Financial Statements. There is no Event known to ATC which has had a Material
Adverse Effect on ATC, except to the extent specifically described in the ATC
SEC Documents and except for matters affecting the tower rental, ownership and
construction industry generally, and except for any Event arising out of the
execution or public announcement of this Agreement. ATC is not aware of any
impending or contemplated Event that would cause any of the representations and
warranties made by it in this Article not to be true, correct and complete on
the date of such Event as if made on that date.
5.4 Broker or Finder. No Person assisted in or brought about the
----------------
negotiation of this Agreement or the Transactions in the capacity of broker,
agent or finder or in any similar capacity on behalf of ATC or ATI, other than
Credit Suisse First Boston Corporation whose fees and expenses will be paid by
ATC.
5.5 Capital Stock. The authorized and outstanding capital stock of ATC,
-------------
as of September 30, 1998, is as set forth in the most recent ATC SEC Documents.
Between September 30, 1998 and the date of this Agreement, ATC has not issued or
agreed to issue any shares of ATC Common Stock, other capital stock, Convertible
Securities or Option Securities, other than pursuant to (a) the exercise of
Option Securities theretofore granted pursuant to the 1997 Stock Option Plan, as
amended and restated, of ATC (the "ATC Option Plan"), (b) acquisitions or
mergers referred to in the ATC SEC Documents, (c) conversions of Class B Common
Stock, par value $.01 per share, of ATC into ATC Common Stock, (d) the ATC
Option Plan and (e) the issuance of 1,430,879 shares of ATC Common Stock in a
recently consummated acquisition. All of such outstanding capital stock has
been, and, when issued in accordance with the terms of this Agreement, the ATC
Common Stock to be issued upon consummation of the Merger will be, duly
authorized and validly issued, fully paid and nonassessable and not subject to
any statutory preemptive or similar rights.
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<PAGE>
5.6 Tax Matters. Except where all failures to do so will not in the
-----------
aggregate have a Material Adverse Effect on ATC, ATC and each of its
Subsidiaries has (a) in accordance with all Applicable Laws filed all Tax
Returns which are required to be filed, and (b) paid, or made adequate provision
for the payment of, all Taxes which have or may become due and payable pursuant
to said Tax Returns and all other governmental charges and assessments received
to date other than those Taxes being contested in good faith for which adequate
provision has been made on the most recent balance sheet forming part of the ATC
Financial Statements. The Tax Returns of ATC and each of its Subsidiaries have
been prepared in all material respects in accordance with all Applicable Laws.
Except where all failures to do so will not in the aggregate have a Material
Adverse Effect on ATC, all Taxes which ATC and each of its Subsidiaries is
required by Law to withhold and collect have been duly withheld and collected,
and have been paid over, in a timely manner, to the proper Authorities to the
extent due and payable. Adequate provision has been made on the most recent
balance sheet forming part of the ATC Financial Statements for all Taxes accrued
through the date of such balance sheet of any kind, including interest and
penalties in respect thereof, whether disputed or not, and whether past, current
or deferred, accrued or unaccrued, fixed, contingent, absolute or other, and
there are, to ATC's knowledge, no past transactions or matters which,
individually or in the aggregate, could result in additional Taxes which would,
if imposed, have a Material Adverse Effect on ATC for which an adequate reserve
has not been provided on such balance sheet. Neither ATC nor any of its
Subsidiaries is a "consenting corporation" within the meaning of Section 341(f)
of the Code. ATC, and each of its corporate Subsidiaries at all times since
owned directly or indirectly by ATC, has been taxable as a Subchapter C
corporation under the Code, and has never been a member of any consolidated
group for Tax purposes, except (i) during the period it was included in the tax
reports of American Radio Systems Corporation, as described in the ATC SEC
Documents, and (ii) any consolidated group with one or more of ATC and its
Subsidiaries. Neither ATC nor any of its Subsidiaries is a party to any tax
sharing agreement or arrangement, except (i) the ARS-ATS Separation Agreement,
as described in the ATC SEC Documents, and (ii) any agreement among one or more
of ATC and ATC's Subsidiaries.
5.7 Compliance with Governmental Authorizations and Applicable Law.
--------------------------------------------------------------
(a) ATC and its Subsidiaries have conducted their respective businesses and
owned and operated their respective property and assets in accordance with all
Applicable Laws and Governmental Authorizations, except for such breaches,
violations and defaults as, individually or in the aggregate, have not had and
will not have a Material Adverse Effect on ATC. Neither ATC nor any of its
Subsidiaries is in, or is charged by any Authority with, or, to ATC's knowledge,
is threatened or under investigation by any Authority with respect to, any
breach or violation of, or default in the performance, observance or fulfillment
of, any Applicable Law relating to the ownership and operation of their
respective assets or the conduct of their respective businesses which,
individually or in the aggregate, has had or will have a Material Adverse Effect
on ATC. No Event exists or has occurred which constitutes, or but for any
requirement of giving of notice or passage of time or both would constitute,
such a breach, violation or default, under any Governmental Authorization or any
Applicable Law, except for such breaches, violations or defaults as,
individually or in the aggregate, have not had and will not have a Material
Adverse Effect on ATC.
(b) ATC or one of its Subsidiaries has obtained all Governmental
Authorizations that are necessary for the ownership or operation of the assets
of ATC and its Subsidiaries or the conduct of the business of ATC and its
Subsidiaries as now conducted and which, if not obtained and maintained, would,
individually or in the aggregate, have a Material Adverse Effect on ATC, all of
which are valid and in good standing and in full force and effect, with such
exceptions as, individually or in the aggregate, have not had and will not have
a Material Adverse Effect on ATC. None of such Governmental Authorizations is
subject to any restriction or condition that would limit in any material respect
the ownership or operations of the assets of ATC and its Subsidiaries or the
conduct of the business of ATC and its Subsidiaries as currently
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<PAGE>
conducted, except for restrictions and conditions generally applicable to
Governmental Authorizations of such type and such exceptions as, individually or
in the aggregate, have not had and will not have a Material Adverse Effect on
ATC. The conduct of the business of ATC and its Subsidiaries is in accordance
with the Governmental Authorizations, except for such noncompliances as,
individually or in the aggregate, have not had and will not have a Material
Adverse Effect on ATC. No such Governmental Authorization is the subject of any
pending or, to ATC's knowledge, threatened challenge or proceeding to revoke or
terminate any such Governmental Authorization.
(c) There are no Legal Actions of any kind pending or, to the knowledge of
ATC, threatened at law, in equity or before any Authority against ATC or any of
its Subsidiaries or the officers or directors of any thereof relating to the
ownership or operation of their respective assets or the conduct of their
respective businesses which, if determined adversely to ATC or its Subsidiaries,
individually or in the aggregate, will have a Material Adverse Effect on ATC.
5.8 Year 2000 Compliant. ATC has reviewed the areas within its and its
-------------------
Subsidiaries' businesses and operations which ATC believes could be adversely
affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by ATC may be unable to recognize and perform properly date-
sensitive functions involving certain dates prior to and any date on or after
December 31, 1999), and is making related inquiry of material suppliers, vendors
and customers. Based on such reviews, ATC believes that the "Year 2000 Problem"
will not have a Material Adverse Effect on ATC. To ATC's knowledge, each
hardware, software and firmware product (collectively "Software") used by ATC in
its business is Year 2000 compliant, except for such noncompliances that,
individually or in the aggregate, have not had and will not have a Material
Adverse Effect on ATC.
5.9 Compliance with Private Authorizations. ATC and its Subsidiaries have
--------------------------------------
obtained all Private Authorizations that are necessary for the ownership or
operation by ATC and its Subsidiaries of their respective assets or the conduct
of their respective businesses, as currently conducted or proposed to be
conducted on or prior to the Closing Date, which, if not obtained and
maintained, individually or in the aggregate, have not had and will not have a
Material Adverse Effect on ATC and its Subsidiaries taken as a whole. All of
such Private Authorizations are valid and in good standing and are in full force
and effect, except for such exceptions as, individually or in the aggregate,
have not had and will not have a Material Adverse Effect on ATC and its
Subsidiaries taken as a whole. Neither ATC nor any of its Subsidiaries is in
breach or violation of, or in default in the performance, observance or
fulfillment of, any such Private Authorization, and no Event exists or has
occurred which constitutes, or but for any requirement of giving of notice or
passage of time or both would constitute, such a breach, violation or default,
under any such Private Authorization, except for such breaches, violations or
defaults as, individually or in the aggregate, have not had and will not have a
Material Adverse Effect on ATC and its Subsidiaries taken as a whole.
5.10 Title to Properties; Leases.
---------------------------
(a) Each of ATC and its Subsidiaries has good indefeasible, marketable and
insurable title to all of its real property (other than easement and leasehold
real property) and good indefeasible and marketable title to all of its other
owned property and assets, tangible and intangible; all of such property and
assets are so owned, in each case, free and clear of all Liens, except (i)
Permitted Liens, and (ii) Liens set forth in the ATC Financial Statements. All
improvements on the real property owned or leased by ATC or any of its
Subsidiaries are in compliance with applicable zoning, wetlands and land use
laws, ordinances and regulations and applicable title covenants, conditions,
restrictions and reservations in all respects necessary to conduct the business
as presently conducted or proposed to be conducted on or prior to the Closing
Date by ATC and its Subsidiaries, except for any instances of non-compliance
which, individually or in the
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aggregate, have not had and will not have a Material Adverse Effect on ATC. All
such improvements comply with all Applicable Laws, Governmental Authorizations
and Private Authorizations, except for any instances of non-compliance which,
individually or in the aggregate, have not had and will not have a Material
Adverse Effect on ATC. All of the transmitting towers, ground radials, guy
anchors, transmitting buildings and related improvements, if any, located on the
real property owned or leased by ATC or any of its Subsidiaries are located
entirely on such real property except for any instances of non-compliance,
individually or in the aggregate, have not had and could not reasonably be
expected to have a Material Adverse Effect on ATC. Such transmitting towers,
ground radials, guy anchors, transmitting buildings and related improvements and
other material items of personal property, including equipment, are, in ATC's
reasonable business judgment, in a state of good repair and maintenance and
sound operating condition, normal wear and tear excepted, have been maintained
in a manner consistent with generally accepted standards of sound engineering
practice, and currently permit the business of ATC and its Subsidiaries to be
operated in accordance with the terms and conditions of all Applicable Laws,
Governmental Authorizations and Private Authorizations, except where the failure
to be in such repair or condition or to be so usable, individually or in the
aggregate, has not had and will not have a Material Adverse Effect on ATC.
(b) Each Lease under which ATC or any of its Subsidiaries holds real
property is in full force and effect, has been duly authorized, executed and
delivered by ATC and, to its knowledge, each of the other parties thereto, and
is a legal, valid and binding obligation of ATC or one of its Subsidiaries, and,
to its knowledge, each of the other parties thereto, enforceable in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
moratorium, insolvency and similar Laws affecting the rights and remedies of
creditors and obligations of debtors generally and by general principles of
equity except, in each case, for exceptions which individually or in the
aggregate, have not had and will not have a Material Adverse Effect on ATC.
ATC or one of its Subsidiaries has a valid leasehold interest in and enjoys
peaceful and undisturbed possession under all Leases pursuant to which it holds
any such real property, subject to the terms of each Lease and Applicable Law
and except for Permitted Liens and such other Liens as, individually or in the
aggregate, have not had and will not have a Material Adverse Effect on ATC.
Neither ATC nor any of its Subsidiaries nor, to ATC's knowledge, any other party
thereto, has failed to duly comply with all of the material terms and conditions
of each Lease or has done or performed, or failed to do or perform (and no Claim
is pending or, to the knowledge of ATC, threatened to the effect that ATC has
not so complied, done and performed or failed to do and perform) any act which
would invalidate or provide grounds for the other party thereto to terminate
(with or without notice, passage of time or both) such Leases or impair the
rights or benefits, or increase the costs, of ATC under any Lease in any
material respect except, in each case, for exceptions which individually or in
the aggregate, have not had and will not have a Material Adverse Effect on ATC.
5.11 Related Transactions. Neither ATC nor any of its Subsidiaries is a
--------------------
party or subject to any Contractual Obligation relating to the ownership or
operation of the assets of ATC and its Subsidiaries or the conduct of its or any
of their businesses between ATC or any of its Subsidiaries, on the one hand, and
any of its officers or directors, on the other hand, or, to the knowledge of
ATC, any member of the Immediate Family of any thereof or any Affiliate of any
of the foregoing, including without limitation any Contractual Obligation
providing for the furnishing of services to or by, providing for rental of
property, real, personal or mixed, to or from, or providing for the lending or
borrowing of money to or from or otherwise requiring payments to or from, any
such Person, other than (a) as described in the ATC SEC Documents, (b)
employment agreements with certain of the officers, and (c) other Contractual
Obligations that are, in the reasonable business judgment of ATC, on terms no
less favorable to ATC or the applicable Subsidiary than would exist with a
nonaffiliated Person.
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5.12 Insurance. ATC or one of its Subsidiaries maintains, with respect to
---------
the assets of ATC and its Subsidiaries and the business of ATC and its
Subsidiaries , policies of fire and extended coverage and casualty, liability
and other forms of insurance in such amounts and against such risks and losses
as are customary in ATC's and its Subsidiaries' businesses.
5.13 ERISA Matters
-------------
(a) Except as described in the ATC SEC Documents, neither ATC nor any of
its Subsidiaries contributes to or has an obligation to contribute to, and has
not at any time contributed to or had an obligation to contribute to, (i) an
employee pension benefit plan within the meaning of Section 3(2) of ERISA, (ii)
a Multiemployer Plan, or (iii) a Plan subject to Section 412 of the Code,
Section 302 of ERISA or Title IV of ERISA. Neither ATC nor any of its
Subsidiaries has any actual or potential liability under Title IV of ERISA.
Neither ATC nor any of its Subsidiaries maintains any Plan that provides for
post-retirement medical or life insurance benefits, and neither ATC nor any of
its Subsidiaries has any obligation or liability with respect to any such Plan
previously maintained by ATC or any of its Subsidiaries, except as the
provisions of COBRA may apply to any former employees of ATC or any of its
Subsidiaries. As to all Plans and Employment Arrangements of ATC and its
Subsidiaries:
(i) all such Plans and Employment Arrangements comply and have been
administered in form and in operation, in all material respects, in
accordance with their respective terms and with all Applicable Laws, except
for such noncompliance that will not, individually or in the aggregate,
have a Material Adverse Effect on ATC, and neither ATC nor any of its
Subsidiaries has received any notice from any Authority disputing or
investigating such compliance;
(ii) there are no Claims (other than routine Claims for benefits or
actions seeking quali fied domestic relations orders) pending or, to ATC's
knowledge, threatened involving such Plans or the assets of such Plans,
and, to ATC's knowledge, no facts exist which are reasonably likely to give
rise to any such Claims (other than routine Claims for benefits or actions
seeking qualified domestic relations orders) except, in each case, as will
not, individually or in the aggregate, have a Material Adverse Effect on
ATC;
(iii) all material contributions to, and material payments from, the
Plans and Employment Arrangements that may have been required to be made in
accordance with the terms of the Plans and Employment Arrangements, and any
applicable collective bargaining agreement, have been made other than
contributions and payments which will not, individually or in the
aggregate, have a Material Adverse Effect on ATC. All such contributions
to, and payments from, the Plans and Employment Arrangements, except those
payments to be made from a trust qualified under Section 401(a) of the
Code, for any period ending before the Closing Date that are not yet, but
will be, required to be made, will be properly accrued and reflected on the
financial books and records of ATC;
(iv) to ATC's knowledge, no Event has occurred which would result in
imposition on ATC or any of its Subsidiaries of (A) any breach of fiduciary
duty liability damages under Section 409 of ERISA, (B) a civil penalty
assessed pursuant to subsections (c), (i) or (l) of Section 502 of ERISA or
(C) a tax imposed pursuant to Chapter 43 of Subtitle D of the Code;
(v) neither ATC nor any of its Subsidiaries has incurred any material
liability to a Plan (other than for contributions not yet due) which
liability has not been fully paid or accrued for payment as of the date
hereof;
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<PAGE>
(vi) no current or former employee of ATC or any of its Subsidiaries
will be entitled to any additional benefits or any acceleration of the time
of payment or vesting of any benefits under any Plan or Employment
Arrangement as a result of the transactions contemplated by this Agreement;
and
(vii) no compensation payable by ATC or any of its Subsidiaries to any
of its employees under any existing Plan or Employment Arrangement
(including by reason of the transactions contemplated hereby) will be
subject to disallowance under Section 162(m) of the Code.
(b) The execution, delivery and performance by ATC of this Agreement and
the Collateral Documents executed or required to be executed by ATC pursuant
hereto and thereto will not involve any prohibited transaction within the
meaning of ERISA or Section 4975 of the Code with respect to any Plan maintained
by ATC or any of its Subsidiaries.
5.14 Product Liability. There is not now pending or, to the knowledge of
-----------------
ATC, threatened any Claim (or any basis for any such Claim) relating to, any
damages to or losses of any third party for injuries to Persons or damage to
property, or for breach of warranty, arising out of any alleged defect in the
quality or condition of any of ATC's products or services or property or assets,
which, in the case of pending or threatened Claims, if determined adversely to
ATC, individually or in the aggregate (taking into account unasserted Claims of
a similar nature), will have a Material Adverse Effect on ATC.
5.15 Ordinary Course of Business. From the date of the most recent ATC
---------------------------
Financial Statements to the date hereof, except (i) as may be required or
expressly contemplated by the terms of this Agreement, (ii) for the merger
agreement with TeleCom Towers, L.L.C., or (iii) as may be described in or
contemplated by the ATC SEC Documents, each of ATC and its Subsidiaries:
(a) has operated its business in all material respects in the normal,
usual and customary manner in the ordinary and regular course of business
(which includes, without limitation, the construction and acquisition of
towers), consistent with prior practice;
(b) except in each case in the ordinary course of business (which
includes, without limitation, the construction and acquisition of towers),
consistent with prior practice:
(i) has not incurred any obligation or liability (fixed,
contingent or other) individually having a value in excess of
$500,000;
(ii) has not sold or otherwise disposed of or contracted to sell
or otherwise dispose of any of its properties or assets having a value
in excess of $500,000;
(iii) has not canceled any debts or claims having a value in
excess of $100,000;
(iv) has not entered into any individual commitment having a
value in excess of $500,000; and
(c) has not created or permitted to be created any Lien on any of the
assets of ATC and its Subsidiaries, except for Permitted Liens;
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(d) has not made or committed to make any additions to its property or
any purchases of equipment in excess of $500,000, except in the ordinary
course of business consistent with past practice or for normal maintenance
and replacements;
(e) has not increased the compensation payable or to become payable to
any of the ATC Employees other than increases in the ordinary course of
business that are not material to ATC, or otherwise altered, modified or
changed, in a manner material to ATC, the terms of their employment;
(f) has not suffered any material damage, destruction or loss (whether
or not covered by insurance) or any acquisition or taking of property by
any Authority;
(g) has not waived any rights of material value without fair and
adequate consideration;
(h) has not experienced any work stoppage;
(i) except in the ordinary course of business (which includes the
construction and acquisition of towers), has not entered into, amended or
terminated any Lease, Governmental Authorization, Private Authorization,
Material Agreement or Employment Arrangement, or any transaction, agreement
or arrangement with any Affiliate of ATC;
(j) has not made, paid or declared any Distribution; and
(k) has not entered into any transactions or series of related
transactions which individually or in the aggregate is material to the
assets of ATC and its Subsidiaries taken as a whole or the business of ATC
and its Subsidiaries taken as a whole.
5.16 Environmental Matters. Except for exceptions that, individually or in
---------------------
the aggregate, have not had and would not have a Material Adverse Effect on
ATC, neither ATC nor any of its Subsidiaries:
(a) has been notified in writing that it is potentially liable under,
has received any written request for information or other correspondence
concerning its potential liability with respect to any site or facility
under, or, to ATC's knowledge, is a "potentially responsible party" under,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, the Resource Conservation Recovery Act, as amended, or
any similar state Law;
(b) is a party to any outstanding consent decree, compliance order or
administrative order or other judgment, order, writ, injunction or decree
creating on-going obligations issued pursuant to any Environmental Law;
(c) has, to its knowledge, failed to obtain all material Environmental
Permits required under Environmental Laws, or, to its knowledge, failed to
file all applications, notices and other material documents required to be
filed prior to the date of this Agreement to effect the timely renewal or
issuance of all Environmental Permits necessary for the continued ownership
or operation of the assets of ATC and its Subsidiaries taken as a whole or
conduct of the business of ATC and its Subsidiaries taken as a whole in the
manner currently owned, operated and conducted and proposed to be owned,
operated and conducted on or prior to the Closing Date;
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(d) is not in compliance with all Environmental Laws, or is the
subject of or, to ATC's knowledge, threatened with any Legal Action
involving a demand for damages or other potential liability, including any
Lien, with respect to violations or breaches of any Environmental Law;
(e) has knowingly installed or used any above ground or underground
storage tanks, friable asbestos, polychlorinated biphenyls or urea
formaldehyde foam insulation on any property currently owned, leased or
operated by ATC or any of its Subsidiaries and, to ATC's knowledge, there
are no above ground or underground storage tanks containing Hazardous
Materials, friable asbestos, polychlorinated biphenyls or urea formaldehyde
foam insulation on any property currently owned, leased or operated by ATC
or any of its Subsidiaries, the installation, use or presence of which is
not in compliance with Environmental Laws; and
(f) has any knowledge of any past or present Event related to ATC's or
any of its Subsidiaries' properties, operations or business, which Event,
individually or in the aggregate, could reasonably be expected to interfere
with or prevent continued compliance in all material respects with all
Environmental Laws applicable to the ownership or operation of the assets
of ATC and its Subsidiaries taken as a whole or the business of ATC and its
Subsidiaries taken as a whole substantially in the manner now conducted or
proposed to be conducted on or prior to the Closing Date, or which,
individually or in the aggregate, may form the basis of any material Claim
for or arising out of the release or threatened release into the
environment of any Hazardous Material.
5.17 Materiality. The representations and warranties set forth in this
-----------
Article are true and correct as of the date hereof without the materiality
exceptions or qualifications contained therein, except to the extent that the
failure of such representations and warranties to be so true and correct,
individually or in the aggregate, will not have a Material Adverse Effect on
ATC.
5.18 Material Agreements. All of the agreements filed in the ATC SEC
-------------------
Documents under exhibit 10 pursuant to Regulation S-K are valid, binding and
legally enforceable obligations of ATC or its Subsidiaries, as the case may be,
and, to ATC's knowledge, all other parties thereto, except as such
enforceability may be limited by bankruptcy, moratorium, insolvency and similar
Laws affecting the rights and remedies of creditors and obligations of debtors
generally and by general principles of equity except, in each case, for
exceptions which individually or in the aggregate, have not had and will not
have a Material Adverse Effect on ATC. Except as set forth in the ATC SEC
Documents, neither ATC (or its Subsidiaries, as the case may be) nor, to its
knowledge, any other party thereto, has failed to duly comply with all of the
material terms and conditions of each such material agreement or has done or
performed, or failed to do or perform (and no Claim, other than ATC's Notice of
Disagreement with CBS Corporation, described in ATC's Form 10-Q for the fiscal
quarter ended September 30, 1998, is pending or, to the knowledge of ATC,
threatened in writing to the effect that ATC has not so complied, done and
performed or failed to do and perform) any act which would invalidate or provide
grounds for the other party thereto to terminate (with or without notice,
passage of time or both) such material agreement or impair the rights or
benefits, or increase the costs, of ATC (or its Subsidiaries, as the case may
be) under any such material agreement, except, in each case, for exceptions
which individually or in the aggregate, have not had and will not have a
Material Adverse Effect on ATC. All Contracts for the construction by ATC (or
its Subsidiaries) of towers for other Persons can be performed, in the aggregate
for all such Contracts, without any loss to ATC (or its Subsidiaries).
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ARTICLE 6
COVENANTS
6.1 Access to Information; Confidentiality.
--------------------------------------
(a) Each party shall afford to the other party and its accountants,
counsel, financial advisors and other representatives (the "Representatives")
full access during normal business hours and upon reasonable notice throughout
the period prior to the Closing Date to all of its (and its Subsidiaries')
properties, books, contracts, insurance policies, studies and reports,
environmental studies and reports, commitments and records (including without
limitation Tax Returns) and, during such period, shall furnish promptly upon
written request (i) a copy of each report, schedule and other document filed or
received by any party pursuant to the requirements of any Applicable Law or
filed by it with any Authority in connection with the Merger or any other
report, schedule or documents which may have a material effect on the
businesses, operations, properties, prospects, personnel, condition (financial
or other), or results of operations of their respective businesses, and (ii)
such other information concerning any of the foregoing as ATC or Target shall
reasonably request. All Confidential Information furnished pursuant to the
provisions of this Agreement, including without limitation this Section, or
developed based upon disclosures pursuant to this Agreement or otherwise will be
kept confidential and shall not, without the prior written consent of the party
disclosing such Confidential Information, be disclosed by the other party in any
manner whatsoever, in whole or in part, and, except as required by Applicable
Law (including without limitation in connection with any registration, proxy or
information statement or similar document filed pursuant to any federal or state
securities Law in connection with the Merger) shall not be used for any
purposes, other than in connection with the Merger. Except as otherwise herein
provided, each party agrees to reveal such Confidential Information only to
those of its Representatives or other Persons whom it believes need to know such
Confidential Information for the purpose of evaluating and consummating the
Merger. For purposes of this Agreement, "Confidential Information" shall mean
any and all information related to the business or businesses of ATC, ATI and
their respective Affiliates or Target and its Affiliates, including any of their
respective successors and assigns, other than information that (i) has been or
is obtained from a source independent of the disclosing party that, to the
receiving party's knowledge, is not subject to any confidentiality restriction,
(ii) is or becomes generally available to the public other than as a result of
unauthorized disclosure by the receiving party, or (iii) is independently
developed by the receiving party without reliance in any way on information
provided by the disclosing party or a third party independent of the disclosing
party that, to the receiving party's knowledge, is subject to any
confidentiality restriction.
(b) Notwithstanding the provisions of Section 6.1(a), (i) in connection
with the Merger, each party may disclose such information as it may reasonably
determine to be necessary in connection with seeking all Governmental and
Private Authorizations or that is required by Applicable Law to be disclosed,
including without limitation in any registration, proxy or information statement
or other document required to be filed under any federal or state securities
Law, and (ii) each party may, with the prior written consent of the other party,
which consent shall not be unreasonably withheld, delayed or conditioned,
disclose the subject matters of this Agreement to Persons with whom the other
party has a business or contractual relationship in connection with the due
diligence investigation of the other party and its attorneys, financial advisors
and accountants in connection with the transactions contemplated hereunder. In
the event that this Agreement is terminated in accordance with its terms, each
party shall promptly redeliver all written Confidential Information provided
pursuant to this Section or any other provision of this Agreement or otherwise
in connection with the Merger or developed based on such information and shall
not retain any copies, extracts or other reproductions in whole or in part of
such written material, other than, unless mutual releases are exchanged by the
parties, one copy thereof which shall be delivered to independent counsel for
such party which shall be bound by the provisions of Section 6.1(a).
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(c) Anything in this Section or elsewhere in this Agreement to the contrary
notwithstanding, either party may disclose information received or retained by
it in accordance with the provisions of this Agreement if it can demonstrate (i)
such information is generally available to or known by the public from a source
other than the party seeking to disclose such information or (ii) was obtained
by the party seeking to disclose such information from a source other than the
other party, provided that such source was not, to the knowledge of the
disclosing party, bound by a duty of confidentiality to the other party or
another party with respect to such information.
(d) No investigation pursuant to this Section or otherwise shall affect any
representation or warranty in this Agreement of any party or any condition to
the obligations of the parties hereto.
(e) The provisions of this Section shall apply to all Subsidiaries of ATC
and Target.
6.2 Agreement to Cooperate; Certain Other Covenants.
-----------------------------------------------
(a) Each of the parties hereto shall use reasonable business efforts (x) to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under Applicable Law to consummate the
Merger and the other Transactions, and (y) to refrain from taking, or cause to
be refrained from taking, any action and to refrain from doing or causing to be
done, anything which could impede or impair the consummation of the Merger or
the consummation of the other Transactions, including, in all cases, without
limitation using its reasonable business efforts (i) to prepare and file with
the applicable Authorities as promptly as practicable after the execution of
this Agreement all requisite applications and amendments thereto, together with
related information, data and exhibits, necessary to request issuance of orders
approving the Merger by all such applicable Authorities, (ii) to obtain all
necessary or appropriate waivers, consents and approvals, (iii) to effect all
necessary registrations, filings and submissions (including without limitation
filings within ten (10) business days of the date of this Agreement under the
Hart-Scott-Rodino Act and all filings necessary for ATI to own and operate the
Target Assets and the Target Business), (iv) to lift any injunction or other
legal bar to the Merger (and, in such case, to proceed with the Merger as
expeditiously as possible), (v) to obtain the satisfaction of the conditions
specified in Article 7, and (vi) to cure any breach or untruth of such party
upon receipt of notice as provided in Section 8.1(c) or (d) or upon otherwise
becoming aware of such breach or untruth.
(b) The parties shall cooperate with one another in the preparation of all
Tax Returns, questionnaires, applications or other documents regarding any Taxes
or transfer, recording, registration or other fees which become payable in
connection with the Merger that are required to be filed on or before the
Closing Date.
(c) The provisions of this Section shall apply to all Subsidiaries of ATC
and Target.
6.3 Public Announcements. Until the Closing or the termination of this
--------------------
Agreement, each party shall consult with the other before issuing any press
release or otherwise making any public statements with respect to this Agreement
or the Merger and shall not issue any such press release or make any such public
statement without the prior written approval of the other. Notwithstanding the
foregoing, the parties acknowledge and agree that they may, without each other's
prior consent, issue such press releases or make such public statements as may
be required by Applicable Law, in which case the issuing party shall use all
reasonable efforts to consult with the other party and agree upon the nature,
content and form of such press release or public statement. The provisions of
this Section shall apply to all Subsidiaries of ATC and Target.
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6.4 Notification of Certain Matters. Each party shall give prompt notice
-------------------------------
to the other of the occurrence or non-occurrence of any Event the occurrence or
non-occurrence of which would be reasonably likely to cause (a) any
representation or warranty made by it contained in this Agreement to be untrue
or inaccurate in any material respect or (b) any failure by it to comply with or
satisfy, or be able to comply with or satisfy, in any material respect, any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement in any material respect, such that, in any such case, one or more
of the conditions of Closing would not be satisfied; provided, however, that the
delivery of any notice pursuant to this Section shall not limit or otherwise
affect the rights and remedies available hereunder to the party receiving such
notice or the obligations of the party delivering such notice and shall not, in
any event, affect the representations, warranties, covenants and agreements of
the parties or the conditions to their respective obligations under this
Agreement.
6.5 Other Offers; No Solicitation.
-----------------------------
(a) Target shall not, nor shall Target knowingly permit any of its
Subsidiaries or any of its or any of its Subsidiaries' officers, directors,
investment bankers, brokers, financial advisors, finders, attorneys, accountants
or other agents or representatives to, directly or indirectly, (i) solicit,
initiate or encourage (including by way of furnishing non-public information),
or take any other action to facilitate, any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, an
Alternative Transaction or (ii) participate in any discussions or negotiations
or otherwise cooperate regarding an Alternative Transaction; provided, however,
that if the Board of Directors of Target determines in good faith, based on the
advice of outside counsel, that failure to do so would constitute a breach of
its fiduciary duties to Target's stockholders under Applicable Law, Target, in
response to a written Alternative Transaction that (I) was unsolicited or that
did otherwise result from a breach of this Section, and (II) is reasonably
likely to lead to a Superior Proposal, may (x) furnish non-public information
with respect to Target to the Person who made such Alternative Transaction
pursuant to a customary confidentiality agreement and (y) participate in
discussions and negotiations regarding such Alternative Transaction. Without
limiting the foregoing, it is understood that any violation of the restrictions
set forth in the preceding sentence by any director or officer of Target or any
of its Subsidiaries, whether or not acting on behalf of Target or any of its
Subsidiaries, shall be deemed to be a breach of this Section by Target.
(b) The Board of Directors of Target shall not (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to ATC, its approval or
recommendation of this Agreement or the Merger, (ii) approve or recommend, or
propose to approve or recommend, an Alternative Transaction, or (iii) cause
Target to enter into any letter of intent, agreement in principle, acquisition
agreement or merger or other similar agreement with respect to an Alternative
Transaction, unless (x) the Board of Directors of Target shall have determined
in good faith, based on the advice of independent counsel, that (A) failure to
do so would be inconsistent with its fiduciary duties to Target's stockholders
under Applicable Law, and (B) based upon the advice of Target's financial
advisors, such Alternative Transaction is a Superior Proposal, and (y) Target
shall have terminated this Agreement pursuant to the provisions of paragraph (f)
of Section 8.1.
(c) Nothing contained in this Section shall prohibit Target from at any
time (i) taking and disclosing to its stockholders a position contemplated by
Rule 14e-2(a) promulgated under the Exchange Act; provided, however, that
neither Target nor its Board of Directors shall, except as permitted by Section
6.5(b), propose to approve or recommend an Alternative Transaction or (ii)
making a "stop-look-and-listen" communication with respect to an Alternative
Transaction of the nature contemplated by, and in compliance with, Rule 14d-9
under the Exchange Act as a result of receiving an Acquisition Proposal.
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(d) If Target decides to terminate this Agreement under paragraph (f) of
Section 8.1 because of a Superior Proposal, it shall give ATC written notice of
such termination no later than five (5) days prior to any such termination. At
such time, Target will cause its financial advisor to supply ATC with such
information as such financial advisor deems necessary to maximize value to the
Target's stockholders. Target shall be obligated to consider any revised offer
communicated to Target by ATC in connection with its decision to terminate this
Agreement.
(e) If Target shall receive a firm, bona fide written proposal or proposals
from any Person relating to any Alternative Transaction, and Target's Board of
Directors shall determine in good faith, based upon the advice of independent
counsel, and after receiving advice from Target's independent financial
advisors, that (i) such Alternative Transaction is a Superior Proposal and (ii)
the failure to terminate this Agreement would be inconsistent with the
director's fiduciary obligations under Applicable Law, then Target shall
terminate this Agreement.
(f) If Target terminates this Agreement pursuant to Section 6.5(e), Target
shall pay ATC the amounts set forth in Section 8.2 hereof in accordance with the
terms thereof.
6.6 Conduct of Business by Target Pending the Merger. Except as set forth
------------------------------------------------
in Section 6.6 of the Target Disclosure Schedule, otherwise contemplated by this
Agreement or as provided in Target's business plan previously provided to ATC
(the "Business Plan"), after the date hereof and prior to the Closing Date or
earlier termination of this Agreement, unless ATC shall otherwise consent in
writing, which consent shall not be unreasonably withheld, Target shall, and
shall cause each of its Subsidiaries to:
(a) conduct its business in the ordinary and usual course of business
and consistent with past practice;
(b) not (i) amend or propose to amend its Organic Documents, (ii)
split, combine or reclassify (whether by stock dividend or otherwise) its
outstanding capital stock or issue or authorize the issue of any other
securities in respect of, in lieu of, or in substitution for, shares of its
capital stock, or (iii) declare, set aside, pay or make, or agree to
declare, set aside, pay or make, any Distribution, whether in cash, stock,
property or otherwise; other than distributions to Target or its
Subsidiaries by one of Target's Subsidiaries;
(c) not issue, sell, pledge or dispose of, or agree to issue, sell,
pledge or dispose of, any shares of Target Common Stock, other shares of
capital stock, Convertible Securities or Option Securities, except pursuant
to the exercise of options outstanding on the date hereof;
(d) not (i) incur or become contingently liable with respect to any
Indebtedness for Money Borrowed, other than (x) borrowings, not to exceed
the sum of (I) the principal amount of borrowings presently outstanding and
(II) the Indebtedness set forth in the Business Plan, (ii) redeem,
purchase, acquire or offer or agree to redeem, purchase or acquire any
shares of its capital stock, Convertible Securities or Option Securities,
(iii) sell, lease, license, pledge, dispose of or encumber any properties
or assets or sell any businesses other than (x) inventory in the ordinary
course of business, (y) Liens arising in accordance with the provisions of
indebtedness in effect on the date hereof and in accordance with their
present terms, and (z) leases of towers and shelter space to third-party
customers, or (iv) make any loans, advances or capital contributions to, or
investments in, any other Person, except to officers and employees of
Target for travel, business or relocation expenses in the ordinary course
of business;
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(e) not enter into or agree to enter into (other than agreements which
are binding on Target as of the date hereof) any Restricted Transaction (or
group of related Restricted Transactions), whether for its own account or
for any other Person, if (i) the aggregate amount reasonably expected to be
expended by Target or any of its Subsidiaries in connection with such
individual Restricted Transaction (together with any group of related
Restricted Transactions) exceeds $10.0 million, or (ii) the aggregate
amount to be expended in connection with all Restricted Transactions
(together with any group of related Restricted Transactions) exceeds $100.0
million; provided, however, that the foregoing restriction shall not apply
to any Restricted Transaction pursuant to agreements which are described in
Section 6.6(e) of the Target Disclosure Schedule;
(f) use reasonable business efforts to preserve intact its business
organization and goodwill, keep available the services of its present
officers and key employees, and preserve the goodwill and business
relationships with customers and others having business relationships with
them and not engage in any action, directly or indirectly, with the intent
to adversely impact the transactions contemplated by this Agreement;
(g) confer on a regular and frequent basis with one or more
representatives of ATC to report material operational matters and the
general status of ongoing operations;
(h) not adopt, enter into, amend or terminate any employment,
severance, special pay arrangement with respect to termination of
employment or other similar arrangements or agreements with any directors,
officers or key employees;
(i) maintain with financially responsible insurance companies
insurance on the Target Assets and the Target Business in such amounts and
against such risks and losses as are consistent with past practice;
(j) not make any Tax election that could reasonably be likely to have
a Material Adverse Effect on Target or settle or compromise any material
Tax liability;
(k) except in the ordinary course of business or except as would not
be reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Target, not modify, amend or terminate any Material
Agreement to which Target is a party or by which any of the Target Assets
may be bound or to which any of them may be subject or waive, release or
assign any material rights or claims thereunder;
(l) not make any material change to its accounting methods, principles
or practices, except as may be required by GAAP;
(m) except in the ordinary course of business and in accordance with
past practices and policies, not enter into any Lease or other agreement
with respect to any antennae site on any of its towers, whether presently
owned or hereafter acquired by Target;
(n) except as set forth in Section 4.14 of the Target Disclosure
Schedules, (i) not grant to any executive officer or other key employee of
Target any increase in compensation, except for normal increases in the
ordinary course of business consistent with past practice or as required
under
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Employment Arrangements set forth in Section 4.14 of the Target Disclosure
Schedule, (ii) not grant to any such executive officer any increase in
severance or termination pay, except as was required under any Employment
Arrangements set forth in Section 4.14 of the Target Disclosure Schedule,
(iii) not adopt or amend any Plan or Employment Arrangement (including
change any actuarial or other assumption used to calculate funding
obligations with respect to any Plan, or change the manner in which
contributions to any Plan are made or the basis on which such contributions
are determined) and (iv) except in the ordinary course, not enter into,
amend in any material respect or terminate any material Governmental
Authorization, material Private Authorization or Material Agreement;
(o) not voluntarily take or permit to be taken any action which if
taken between the end of its most recent fiscal quarter and prior to the
date of this Agreement would have been required to be noted as an exception
on Section 4.16 of the Target Disclosure Schedule, other than pursuant to
the conduct of its business in the ordinary and usual course of business
and consistent with past practice; and
(p) not authorize or enter into any agreement that would violate any
of the foregoing.
In the event that Target or any of its Subsidiaries desires to take any of the
actions prohibited by the provisions of this Section, Target shall give prompt
written notice to ATC, referring to the provisions of this Section. As stated
above, Target's ability to take such action shall be subject to the written
consent of ATC, which consent shall not be unreasonably withheld; provided,
however, that if ATC does not object to the taking of such action within five
(5) business days of receipt of such notice and all material information
requested by ATC with respect thereto, Target or such Subsidiary shall have the
right to take such action. ATC's failure to object to the taking of any such
action shall not, in any event, relieve Target from the obligation to comply
with the provisions of this Agreement (other than, to the extent provided, in
paragraph (d) of this Section) and shall not be deemed to be a waiver of any
condition of ATC's obligations to consummate the Merger set forth in Section
7.2. The parties also agree that, regardless of whether or not ATC's consent is
required by this Section 6.6, Target shall communicate with the Chief Operating
Officer and the Chief Financial Officer of ATC on a reasonably regular basis
with respect to the Business Plan and the ongoing operations of Target.
6.7 Additional Tax Matters. Each party hereto shall use all reasonable
----------------------
business efforts to cause the Merger to qualify, and shall not take, and shall
use all reasonable business efforts to prevent any Affiliate of such party from
taking, any action that could reasonably be expected to prevent the Merger from
qualifying as a reorganization under the provisions of Section 368(a) of the
Code.
6.8 Certificates of Non-Foreign Status. Prior to the Closing Date, Target
----------------------------------
and ATC shall in respect of the conversion of Target Common Stock pursuant to
the Merger use their reasonable business efforts to obtain on behalf of
themselves, from each Person who owned of record or, to Target's knowledge,
beneficially, five percent (5%) or more of the Target Common Stock at any time
during the five-year period preceding the Effective Time and who will continue
to own any Target Common Stock immediately prior to the Effective Time, a
certificate of non-foreign status of such stockholder that meets the
requirements of Section 1445 of the Code and Section 1.1445-2(b) of the
Regulations, it being understood that the failure to obtain any such certificate
shall not be deemed to be a breach of this Section. Target shall furnish to ATC
on the Closing Date a copy of any such certificates of non-foreign status
obtained by Target.
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6.9 Target Stock Options. Prior to the Effective Time, ATC and Target
--------------------
shall take such action as may be necessary to cause each unexpired and
unexercised option to purchase Target Common Stock from Target or any of its
Subsidiaries that is outstanding immediately prior to the Merger and that will
not expire if not exercised prior thereto, a true, correct and complete list of
which, as of the date of this Agreement, is set forth in Section 6.9 of the
Target Disclosure Schedule (each, a "Target Option" and collectively, the
"Target Options") to be automatically converted at the Effective Time into an
option (each, an "ATC Option" and collectively, the "ATC Options") to purchase a
number of shares of ATC Common Stock equal to the product of the number of
shares of Target Common Stock which the holder is entitled to purchase under the
Target Option multiplied by the Exchange Ratio, at a price per share equal to
the quotient obtained by dividing (a) the per share option exercise price
determined pursuant to the Target Option, by (b) the Exchange Ratio. Each ATC
Option will otherwise have the same terms and conditions as the Target Option
exchanged therefor, including acceleration and period of exercise, and, with
respect to Target Options that are "incentive stock options" under the Code at
the Effective Time, will contain such terms as are necessary to preserve such
status following the conversion described herein. At the Effective Time, ATC
will execute and deliver to each holder of an ATC Option a document evidencing
ATC's assumptions of Target's obligations under the Target Option and all
references in the stock option agreements to Target shall be deemed to refer to
ATC. As of the Effective Time, ATC shall assume all of Target's obligations
with respect to the Target Options as so amended and shall, from and after the
Effective Time, have reserved for issuance upon exercise of the ATC Options all
shares of ATC Common Stock covered thereby and shall file a Registration
Statement on Form S-8 to register under the Securities Act the shares of ATC
Common Stock subject to the ATC Options granted in replacement of Target
Options. ATC shall take all actions reasonably necessary to maintain the
effectiveness of such Registration Statement (and maintain the current status of
the prospectus or prospectuses contained therein) for so long as such ATC
Options remain outstanding. ATC shall also use its reasonable business efforts
to list, subject to official notice of issuance, all shares of ATC Common Stock
subject to the ATC Options on The New York Stock Exchange and/or such other
exchanges or trading markets on which the ATC Common Stock is then listed or
traded. No fractional shares of ATC Common Stock will be issued upon the
exercise of any ATC Option, and instead the exercising holder of such ATC Option
shall receive cash for any fractional share amounts, based on the fair market
value of the ATC Common Stock at the time of exercise. To the extent that any
former holder of Target Options is terminated by ATC or its Subsidiaries other
than for cause subsequent to the Effective Time, ATC shall provide such holder
with the opportunity to effect a broker-assisted cashless exercise, to the
extent exercisable at the time of such termination, of the ATC Options then held
by such holder prior to the expiration of such options. The foregoing provision
is intended to be for the benefit of, and shall be enforced by, the holders of
Target Options and subject to the provisions of the plans governing the Target
Options, their heirs and personal representatives and shall be binding upon ATC
and its successors and assigns.
6.10 Stockholder Approval. Target will, as soon as practicable following
--------------------
the date hereof, establish a record date for, and, after the Registration
Statement has become effective, duly call, give notice of, convene and hold a
meeting of its stockholders (the "Target Stockholders Meeting") for the purpose
of obtaining the approval and adoption of this Agreement and the approval of the
Merger by the Target stockholders (the "Target Stockholder Approval"). Such
notice shall comply with the provisions of Applicable Law. Target will, through
its Board of Directors, recommend to its stockholders approval and adoption of
this Agreement and approval of the Merger, subject to the fiduciary duties of
the Target Board of Directors under Applicable Law.
6.11 Registration Statement and Proxy/Information Statement.
------------------------------------------------------
(a) ATC shall prepare and file with the SEC as soon as is reasonably
practicable after the date hereof a Registration Statement under the Securities
Act (the "ATC Registration Statement") on Form S-4 in connection with the Merger
for the purpose of registering all of the shares of ATC Common Stock to be
issued in the Merger. ATC shall also take any action required under Applicable
Law in connection with
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causing the ATC Registration Statement to be declared effective by the SEC as
promptly as practicable, including without limitation making all filings under
applicable state blue sky or securities Laws in connection with the issuance of
shares of ATC Common Stock in the Merger.
(b) Target shall prepare and file with the SEC as soon as is reasonably
practicable after the date hereof a proxy statement in connection with the
Target Stockholders Meeting (the "Target Proxy Statement"), complying with
applicable rules and regulations of the SEC and the DCL.
(c) ATC and Target shall promptly furnish to the other all information, and
take such other actions, as may reasonably be requested in connection with any
action taken to comply with the provisions of this Section including, in the
case of ATC, the preparation of the final prospectus (the "ATC Transaction
Prospectus") contained in the ATC Registration Statement and, in the case of
Target, the preparation of the Target Proxy Statement. Target and ATC shall
correct promptly any information provided by it to be used specifically in the
Target Proxy Statement or the ATC Registration Statement that shall have become
false or misleading in any material respect and shall take all steps necessary
to file with the SEC and have cleared by the SEC any amendment or supplement to
the Target Proxy Statement or the ATC Registration Statement so as to correct
the Target Proxy Statement or the ATC Registration Statement and cause it to be
disseminated to the stockholders of Target, to the extent required by Applicable
Law. Without limiting the generality of the foregoing, each party shall notify
the other promptly of the receipt of the comments of the SEC and of any request
by the SEC for amendments or supplements to the Target Proxy Statement or the
ATC Registration Statement, as the case may be, or for additional information,
and shall supply the other with copies of all correspondence between it or its
representatives, on the one hand, and the SEC or members of its staff, on the
other hand, with respect to the Target Proxy Statement or the ATC Registration
Statement. Whenever any Event occurs which should be described in an amendment
or a supplement to the Target Proxy Statement or the ATC Registration Statement,
Target and ATC shall, upon learning of such Event, promptly prepare, file and
clear with the SEC and, if prior to the Effective Time, mail to the holders of
shares of Target Common Stock such amendment or supplement; provided, however,
that, prior to such mailing, (i) Target and ATC shall consult with each other
with respect to such amendment or supplement, (ii) shall afford to the other
reasonable opportunity to comment thereon, and (iii) each such amendment or
supplement shall be reasonably satisfactory to the other.
(d) In the event Target shall not be required to call the Target
Stockholders Meeting pursuant to Section 6.10, all references to the Target
Proxy Statement in this Agreement shall be deemed to be references to the Target
Information Statement.
(e) Target shall use its reasonable business efforts to cause to be
delivered to ATC and its directors a letter of independent auditors, dated (i)
the date of the ATC Registration Statement, and (ii) the Closing Date, and
addressed to ATC and its directors, in form, scope and substance customary for
letters delivered by independent public accountants in connection with
registrations statements similar to the ATC Registration Statement; provided
that ATC shall have delivered a representation letter to Target's auditors in
the form attached hereto as Exhibit F.
6.12 Directors', Officers' and Employees' Indemnification
----------------------------------------------------
(a) The Organic Documents of ATC shall contain provisions no less favorable
with respect to indemnification than are set forth in the Organic Documents of
Target, as in effect on the date hereof, which provisions shall not be amended,
repealed or otherwise modified for a period of six (6) years from the Effective
Time in any manner that would adversely affect the rights thereunder of
individuals who at any time prior to the Effective Time were officers or
directors of Target, unless such modification shall be required by Applicable
Law.
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(b) From and after the Effective Time, ATC shall indemnify, defend and hold
harmless the present and former officers and directors, in their capacities as
such, of Target (collectively, the "Indemnified Parties") against all losses,
expenses, claims, damages, liabilities or amounts that are paid in settlement
of, or otherwise in connection with any claim, action, suit, proceeding or
investigation (as used in this Section, a "claim"), based in whole or in part on
the fact that the Indemnified Party (or the Person controlled by the Indemnified
Party) is or was an officer or director of Target and arising out of actions or
omissions occurring at or prior to the Effective Time (including without
limitation in connection with this Agreement, the Merger and the Transactions),
whether asserted or claimed prior to, at or after the Effective Time, in each
case to the fullest extent permitted under Applicable Law (and shall pay any
expenses, as incurred, in advance of the final disposition of any such action or
proceeding to each Indemnified Party to the fullest extent permitted under
Applicable Law). Without limiting the foregoing, in the event any such claim is
brought against any of the Indemnified Parties, (i) such Indemnified Parties may
retain counsel (including local counsel) which shall be reasonably satisfactory
to ATC, and ATC shall pay all reasonable fees and expenses of such counsel for
such Indemnified Parties; (ii) ATC shall have the right, but not the obligation,
to assume the defense of any such claim with counsel (including local counsel)
which shall be reasonably satisfactory to the Indemnified Parties (after which
time ATC shall not be liable for any fees and expenses of counsel retained by
the Indemnified Parties); and (iii) ATC shall use its reasonable business
efforts to assist in the defense of any such claim; provided, however, that ATC
shall not be liable for any settlement effected without its written consent,
which consent shall not be unreasonably withheld, delayed or conditioned.
(c) ATC will cause to be maintained for a period of not less than six (6)
years from the Effective Time Target's current directors' and officers'
insurance and indemnification policies to the extent that they provide coverage
for events occurring prior to the Effective Time (the "D&O Insurance") for all
persons who are directors and executive officers of Target on the date of this
Agreement, so long as the annual premium therefor would not be in excess of two
hundred fifty percent (250%) of the current premium. If any then existing D&O
Insurance expires, is terminated or canceled during such six-year period, ATC
will use its best efforts to cause to be obtained as much D&O Insurance as can
be obtained for the remainder of such period for an annualized premium not in
excess of two hundred fifty percent (250%), on terms and conditions no less
advantageous to the covered Persons than the then existing D&O Insurance.
Notwithstanding the foregoing, ATC or its Subsidiaries may, in lieu of
maintaining such existing D&O Insurance as provided above, cause coverage to be
provided under any policy maintained for the benefit of ATC and its Subsidiaries
so long as the terms thereof are not materially less advantageous to the
beneficiaries thereof than the existing D&O Insurance.
(c) In the event ATC or any of their respective successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
Person, then and in each such case, proper provisions shall be made so that the
successors and assigns of ATC shall assume the obligations set forth in this
Section.
(d) This Section is intended to be for the benefit of, and shall be
enforceable by, the Indemnified Parties, their heirs and personal
representatives and shall be binding on ATC and its successors and assigns.
6.13 Solicitation of Employees. If this Agreement is terminated, each of
--------------------------
ATC and Target agrees that neither it nor any of its Affiliates will, for a
period of twelve (12) months from the date of such termination, solicit or
actively seek to hire any individual who during such period is employed by ATC
or
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any of its Affiliates or Target or any of its Affiliates, as the case may be,
whether or not such individual would commit breach of such individual's
employment agreement in leaving such employment; provided, however, that the
foregoing shall not prevent ATC or Target (or any of their respective
Affiliates) from soliciting or actively seeking to hire any such key employee
who (i) initiates employment discussions with it, (ii) is not employed by ATC or
Target, as the case may be, on the date Target or ATC (or any of their
respective Affiliates), as the case may be, first solicits such key employee, or
(iii) soliciting through general advertisement, including without limitation on
the Internet.
6.14 Registration Rights Agreement. ATC agrees that, from time to time
------------------------------
after the Closing, ATC shall add or shall cause to be added as a party to the
Registration Rights Agreement each Person who is an affiliate of Hicks, Muse,
Tate & Furst Incorporated and who receives shares of ATC Common Stock as a
direct or indirect distributee or transferee of HMTF/Omni Partners LP. The
foregoing provision is intended to be for the benefit of, and shall be enforced
by, such distributees or transferee and shall be binding upon ATC and its
successors and assigns.
ARTICLE 7
CLOSING CONDITIONS
7.1 Conditions to Obligations of Each Party. The respective obligations
---------------------------------------
of each party to consummate the Merger shall, except as hereinafter provided in
this Section, be subject to the satisfaction at or prior to the Closing Date of
the following conditions, any or all of which may be waived, in whole or in
part, to the extent permitted by Applicable Law:
(a) No temporary restraining order, preliminary or permanent
injunction or other order issued by any Authority of competent jurisdiction
or other legal restraint or prohibition preventing the consummation of the
Merger shall be in effect; provided, however, that the party invoking this
condition shall use its reasonable business efforts to have such order,
injunction, restraint or prohibition vacated or lifted.
(b) Any waiting period (and any extension thereof) applicable to the
consummation of the Merger under the Hart-Scott-Rodino Act shall have
expired or been terminated;
(c) Except with respect to the Hart-Scott-Rodino Act (which is
addressed in Section 7.1(b)), all authorizations, consents, waivers, orders
or approvals required to be obtained from all Authorities, and all filings
(other than the Certificate of Merger), submissions, registrations, notices
or declarations required to be made by any of the parties with any
Authority which would prevent the consummation of the Merger or result in a
Material Adverse Effect on Target if not obtained or made shall have been
obtained from, and made with, all such Authorities;
(d) The ATC Common Stock to be issued as part of the Merger
Consideration shall have been listed for trading on The New York Stock
Exchange, subject to official notice of issuance;
(e) The ATC Registration Statement shall have become effective under
the Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order; and
(f) The Target Stockholder Approval shall have been obtained.
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7.2 Conditions to Obligations of ATC and ATI. The obligation of ATC to
----------------------------------------
cause ATI to, and of ATI to, consummate the Merger shall be subject to the
satisfaction of the following conditions, any or all of which may be waived, in
whole or in part, by ATC and ATI to the extent permitted by Applicable Law:
(a) (i) The representations and warranties of Target contained in this
Agreement (other than in Section 4.19) shall be true and correct at and as
of the Closing Date with the same force and effect as though made on and as
of such date, except (x) to the extent such representations and warranties
expressly speak as of an earlier date (in which case such representations
and warranties shall be true and correct as of such earlier date) and (y)
to the extent that the failure of such representations and warranties to be
true and correct, individually or in the aggregate, will not have a
Material Adverse Effect on Target; provided, however, that for the purpose
of this clause (y), representations and warranties that are qualified as to
materiality (including by reference to "Material Adverse Effect ") shall
not be deemed to be so qualified; (ii) the representations and warranties
of Target set forth in Section 4.19 of this Agreement shall be true and
correct; provided, however, that any untruth shall be disregarded for
purposes of this Section 7.2(c) if, by mutually agreed upon adjustment of
the Exchange Ratio and the Merger Consideration at Closing, the untruth is
rendered harmless and such adjustment either does not require the approval
of the Target stockholders, or such approval has been obtained, in
accordance with the DCL; (iii) each and all of the agreements and covenants
to be performed or satisfied by Target or any of the Target stockholders
hereunder at or prior to the Closing Date shall have been duly performed or
satisfied in all material respects; and (iv) Target shall have furnished
ATC with an officer's certificate in the form attached hereto as Exhibit G
evidencing the truth of such representations, warranties, covenants and
agreements and the performance of such agreements or conditions;
(b) Other than those which, individually or in the aggregate, the
failure of which to obtain will not have a Material Adverse Effect on
Target, all authorizations, consents, waivers, orders or approvals required
by the provisions of this Agreement to be obtained from all Persons (other
than Authorities) prior to the consummation of the Merger, including
without limitation those required in order for ATI to continue to own all
of the Target Assets and continue to operate the Target Business
substantially as conducted immediately prior to the Closing shall have been
obtained, without the imposition, individually or in the aggregate, of any
condition or requirement which will have a Material Adverse Effect on
Target;
(c) Between the date of this Agreement and the Closing Date, there
shall not have occurred and be continuing any material adverse change in
Target from that reflected in the most recent Target Financial Statements;
(d) As of the Closing Date, no Legal Action shall be pending before
any Authority which, individually or in the aggregate, will have a Material
Adverse Effect on Target, it being understood and agreed that a written
request by any Authority for information with respect to the Merger, which
information could be used in connection with such Legal Action, shall not
be deemed to be a Legal Action pending before any such Authority and no
Legal Action by any Target stockholder in respect of the transactions
contemplated herein will be deemed to create a Material Adverse Effect;
(e) All Convertible Securities and Option Securities (other than the
Target Options which shall be exchanged for ATC Options in accordance with
the provisions of Section 6.9) of Target, if any, outstanding immediately
prior to the Closing shall be canceled and, from and after the Closing,
shall no longer be of any force or effect;
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(f) Each of the Target stockholders listed therein shall have executed
and delivered to ATC an agreement substantially in the form attached hereto
as Exhibit A and made a part hereof (the "Registration Rights Agreement");
(g) Each executive officer, director and other Person who, in the
opinion of ATC based on the advice of counsel, may be an "affiliate," as
that term is used in paragraphs (c) and (d) of Rule 145 under the
Securities Act, of Target shall have executed and delivered to ATC an
investment letter substantially in the form of Exhibit B attached hereto
and made a part hereof (the "Target Investment Letters");
(h) ATC shall have received from its tax counsel, Sullivan & Worcester
LLP, a favorable opinion, dated as of the Closing Date, to the effect that
the Merger constitutes a reorganization within the meaning of Section 368
of the Code and that, as a consequence, none of ATC, ATI or Target will
recognize any gain or loss for federal income tax purposes as a result of
consummation of the Merger, and, in connection with such opinion, Target
shall have executed and delivered to ATC and such counsel a certificate
substantially in the form attached hereto as Exhibit C and made a part
hereof;
(i) All instruments evidencing Indebtedness for Money Borrowed of
Target represented by all bank credit agreements (the "Target Credit
Agreements") shall permit the repayment thereof by ATC without premium or
penalty; and
(j) Each of the agreements listed in Section 7.2(j) of the Target
Disclosure Schedule shall have been terminated by Target, or amended on the
terms and conditions set forth in such Section, and the fees and expenses
payable by Target with respect to the Merger pursuant to the Financial
Advisory Agreement listed therein shall have been waived, in each case, at
no cost or expense to Target; provided, however, that this provision shall
not prevent the payment in full of accrued fees and expenses under the
Monitoring and Oversight Agreement incurred in the ordinary course.
7.3 Conditions to Obligations of Target. The obligation of Target to
-----------------------------------
consummate the Merger shall be subject to the satisfaction of the following
conditions, any or all of which may be waived, in whole or in part, by Target to
the extent permitted by Applicable Law:
(a) The representations and warranties of ATC and ATI contained in
this Agreement (other than in Section 5.5) shall be true and correct in all
material respects at and as of the Closing Date with the same force and
effect as though made on and as of such date, except (x) to the extent such
representations and warranties expressly speak as of an earlier date (in
which case such representations and warranties shall be true and correct as
of such earlier date) and (y) to the extent that the failure of such
representations and warranties to be true and correct, individually or in
the aggregate, will not have a Material Adverse Effect on ATC; provided,
however, that for the purpose of this clause (y), representations and
warranties that are qualified as to materiality (including by reference to
"Material Adverse Effect ") shall not be deemed to be so qualified; (ii)
the representations and warranties of ATC set forth in Section 5.5 of this
Agreement shall be true and correct; provided, however, that any untruth
shall be disregarded for purposes of this Section 7.3(c) if, by mutually
agreed upon adjustment of the Exchange Ratio and the Merger Consideration
at Closing, the untruth is rendered harmless and such adjustment either
does not require the approval of the ATC or ATI stockholders, or such
approval has been obtained, in accordance with the DCL; (iii) each and all
of the agreements and covenants to be performed or satisfied by ATC or ATI
hereunder at or prior to the Closing Date shall have been duly performed or
satisfied in all material
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respects; and (iv) ATC and ATI shall have furnished Target with an
officer's certificate in the form of Exhibit G hereto evidencing the truth
of such representations, warranties, covenants and agreements and the
performance of such agreements or conditions;
(b) Between the date of this Agreement and the Closing Date, there
shall not have occurred and be continuing any material adverse change in
ATC from that reflected in the most recent ATC Financial Statements;
(c) As of the Closing Date, no Legal Action shall be pending before
any Authority which, individually or in the aggregate, will have a Material
Adverse Effect on ATC, it being understood and agreed that a written
request by any Authority for information with respect to the Merger, which
information could be used in connection with such Legal Action, shall not
be deemed to be a Legal Action pending before any such Authority and no
Legal Action by any Target stockholder in respect of the transactions
contemplated herein will be deemed to create a Material Adverse Effect;
(d) ATC shall have executed and delivered the Registration Rights
Agreement;
(e) Target shall have received from its tax counsel, Weil, Gotshal &
Manges LLP a favorable opinion, dated as of the Closing Date, to the effect
that the Merger constitutes a reorganization within the meaning of Section
368 of the Code and that, as a consequence, the Target stockholders will
not recognize gain or loss for federal income tax purposes as a result of
consummation of the Merger, except to the extent of the cash, property
(other than the ATC Common Stock) or other nonstock Merger Consideration
received pursuant to the consummation of the Merger, and, in connection
with such opinion, ATC shall have executed and delivered to Target and such
counsel a certificate substantially in the form attached hereto as Exhibit
D and made a part hereof; and
(f) ATC shall have delivered to Target an agreement substantially in
the form of Exhibit E attached hereto and made a part hereof (the "ATC
Voting Agreement") executed by the Persons named therein and any individual
nominated pursuant thereto shall have been elected a director of ATC.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Effective Time only pursuant to the following provisions:
(a) by mutual consent of Target and ATC; or
(b) by ATC or Target if any permanent injunction, decree or judgment
of any Authority preventing consummation of the Merger shall have become
final and nonappealable; or
(c) by Target in the event (i) it is not in material breach of its
covenants and agreements under this Agreement and none of its
representations or warranties shall have become and continue to be untrue
in any manner that would cause the condition set forth in Section 7.2(c)
not to be satisfied, and (ii) either (A) the Termination Date has occurred
without the consummation of the Merger, or (B) ATC or ATI is in material
breach of its covenants and agreements under this
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Agreement or any of its representations or warranties shall have been or
become and continue to be untrue in any manner that would cause the
conditions set forth in Section 7.3(c) not to be satisfied, and such a
breach or untruth is not cured prior to the earlier of thirty (30) days
after delivery of notice thereof to ATC by Target or the Termination Date;
or
(d) by ATC in the event (i) neither ATC nor ATI is in material breach
of its covenants and agreements under this Agreement and none of its
representations or warranties shall have become and continue to be untrue
in any manner that would cause the condition set forth in Section 7.3(c)
not to be satisfied, and (ii) either (A) the Termination Date has occurred
without the consummation of the Merger, or (B) Target is in material breach
of its covenants and agreements under this Agreement or any of Target's
representations or warranties shall have been or become and continue to be
untrue in any manner that would cause the conditions set forth in Section
7.2(c) not to be satisfied, and such a breach or untruth is not cured prior
to the earlier of thirty (30) days after delivery of notice thereof to
Target by ATC or the Termination Date; or
(e) by ATC or Target in the event that prior to the Termination Date
the Target Stockholder Approval has not been obtained, so long as the
terminating party is not in material breach of its covenants and agreements
under this Agreement and none of its representations and warranties shall
have been or become and continue to be untrue in any manner that would
cause the conditions set forth in Section 7.2(c) or 7.3(c), as the case may
be, not to be satisfied; or
(f) by Target pursuant to and in compliance with the provisions of
Section 6.5.
The term "Termination Date" shall mean April 30, 1999; provided, however,
that if FCC approval has not been obtained and/or the expiration or earlier
termination of the waiting period under the Hart-Scott-Rodino Act has not
occurred by that date, ATC may elect in its sole discretion to extend such date
to September 30, 1999, subject to the following conditions: (i) all conditions
to closing set forth in Sections 7.1, 7.2 and 7.3, other than obtaining
regulatory approval under the Hart-Scott-Rodino Act or applicable FCC rules and
regulations, shall have been fulfilled (or waived by the party whom the
condition(s) benefit) and certificates to such effect in the form of Exhibit G
shall have been delivered as of April 30, 1999 by Target and ATC, respectively,
(ii) the provisions of paragraph (c) of Section 7.1 (other than those regarding
approvals from the FCC) shall be terminated after April 30, 1999, (ii)
paragraphs (a), (b), (c) and (d) of Section 7.2 shall be terminated after April
30, 1999, and (iii) paragraphs (a), (b), and (c) of Section 7.3 shall be
terminated after April 30, 1999. If ATC elects to extend the Termination Date
to September 30, 1999, it shall give Target written notice of such extension by
no later than the close of business on April 30, 1999. If such notice has not
been so received, this Agreement shall automatically terminate with the effect
set forth in Section 8.2. In the event that ATC elects to extend the
Termination Date to September 30, 1999, this Agreement may thereafter only be
terminated prior to the Effective Time pursuant to paragraphs (a), (b) and (f)
of Section 8.1 or in the event of failure of Target Stockholder Approval to have
been obtained.
The right of ATC or Target to terminate this Agreement pursuant to this
Section shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any party, any Person controlling any such
party or any of their respective Representatives whether prior to or after the
execution of this Agreement.
8.2 Effect of Termination. Except as provided in Sections 6.1 (with
---------------------
respect to confidentiality), 6.3, 6.13 and 9.2 and this Section, in the event of
the termination of this Agreement pursuant to Section 8.1, this Agreement shall
forthwith become void, there shall be no liability on the part of any party, or
any of their respective stockholders, officers or directors, to the other and
all rights and obligations of any party shall cease; provided, however, that
such termination shall not relieve any party from liability for any willful or
intentional misrepresentation or breach of any of its warranties, covenants or
agreements set forth in this
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Agreement. In the event that this Agreement is terminated by either party
pursuant to Section 8.1(e) or by Target pursuant to Section 8.1(f), Target shall
promptly, but in no event later than two (2) days after the date of such
termination, pay ATC a fee equal to $12,000,000 in immediately available funds.
ATC and Target agree in advance that actual damages would be difficult to
ascertain and that $12,000,000 is a fair and equitable reimbursement to ATC for
damages sustained due to Target's failure to consummate the Merger for the
reasons specified in this Section. Notwithstanding the foregoing, each party
shall have the right to seek specific performance of this Agreement pursuant to
the provisions of Section 9.4. If, however, such termination relates to the
provisions of Section 6.5, ATC's sole rights shall be those set forth in that
Section.
ARTICLE 9
GENERAL PROVISIONS
9.1 Waivers; Amendments. Changes in or additions to this Agreement may be
-------------------
made, or compli ance with any term, covenant, agreement, condition or provision
set forth herein may be omitted or waived (either generally or in a particular
instance and either retroactively or prospectively) with, but only with, the
consent in writing of the parties hereto. No delay on the part of either party
at any time or times in the exercise of any right or remedy shall operate as a
waiver thereof. Any consent may be given subject to satisfaction of conditions
stated therein. The failure to insist upon the strict provisions of any
covenant, term, condition or other provision of this Agreement or to exercise
any right or remedy hereunder shall not constitute a waiver of any such
covenant, term, condition or other provision hereof or default in connection
therewith. The waiver of any covenant, term, condition or other provision
hereof or default hereunder shall not affect or alter this Agreement in any
other respect, and each and every covenant, term, condition or other provision
of this Agreement shall, in such event, continue in full force and effect,
except as so waived, and shall be operative with respect to any other then
existing or subsequent default in connection herewith.
9.2 Fees and Expenses. All costs and expenses incurred in connection with
-----------------
any transfer Taxes, sales Taxes, recording or documentary Taxes, stamps or other
charges levied by any Authority in connection with this Agreement and the
consummation of the Merger shall be borne equally by Target and ATC, all Hart-
Scott-Rodino filing fees and expenses, if any, shall be borne by the party
making such filing, and all other costs and expenses incurred in connection with
this Agreement and the consummation of the Merger, including without limitation
fees and disbursements of counsel, financial advisors and accountants incurred
by the parties hereto, shall, unless otherwise provided herein, be borne solely
and entirely by the party which has incurred such costs and expenses.
9.3 Notices. All notices and other communications which by any provision
-------
of this Agreement are required or permitted to be given shall be given in
writing and shall be deemed to have been delivered (a) three (3) business days
after being mailed by first-class or express mail, postage prepaid, (b) the next
day when sent overnight by recognized courier service, (c) upon confirmation
when sent by telex, telegram, telecopy or other form of rapid transmission,
confirmed by mailing (by first class or express mail, postage prepaid, or by
recognized courier service) written confirmation at substantially the same time
as such rapid transmission, or (d) upon delivery when personally delivered to
the receiving party (which if other than an individual shall be an officer or
other responsible party of the receiving party). All such notices and
communications shall be mailed, sent or delivered as follows:
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(a) If to ATC or ATI:
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Joseph L. Winn, Chief Financial Officer
Telecopier No.: (617) 375-7575
with a copy to (which shall not constitute notice to ATC or ATI):
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Norman A. Bikales, Esq.
Telecopier No.: (617) 338-2880
(b) If to Target:
OmniAmerica, Inc.
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Jack D. Furst
Telecopier No.: (214) 740-7313
with a copy to (which shall not constitute notice to Target):
Weil, Gotshal & Manges, LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: Mary R. Korby, Esq.
Telecopier No.: (214) 746-7777
or to such other person(s), telex or facsimile number(s) or address(es) as the
party to receive any such communication or notice may have designated by written
notice to the other party.
9.4 Specific Performance; Other Rights and Remedies. Each party
-----------------------------------------------
recognizes and agrees that in the event the other party should refuse to perform
any of its obligations under this Agreement or any Collateral Document, the
remedy at law would be inadequate and agrees that for breach of such provisions,
each party shall, in addition to such other remedies as may be available to it
at law or in equity, be entitled to injunctive relief and to enforce its rights
by an action for specific performance to the extent permitted by Applicable Law.
Each party hereby waives any requirement for security or the posting of any bond
or other surety in connection with any temporary or permanent award of
injunctive, mandatory or other equitable relief. Nothing herein contained shall
be construed as prohibiting any party from pursuing any other remedies available
to it pursuant to the provisions of this Agreement or Applicable Law for such
breach or threatened breach, including without limitation the recovery of
damages; provided, however, that none of the parties shall pursue, and each
party hereby waives, any punitive, incidental and consequential damages arising
out of this Agreement (including without limitation damages for diminution in
value and loss of anticipated profits).
9.5 Severability. If any term or provision of this Agreement shall be
------------
held or deemed to be, or shall in fact be, invalid, inoperative, illegal or
unenforceable as applied to any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases, because of the
conflicting of any provision
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with any constitution or statute or rule of public policy or for any other
reason, such circumstance shall not have the effect of rendering the provision
or provisions in question invalid, inoperative, illegal or unenforceable in any
other jurisdiction or in any other case or circumstance or of rendering any
other provision or provisions herein contained invalid, inoperative, illegal or
unenforceable to the extent that such other provisions are not themselves
actually in conflict with such constitution, statute or rule of public policy,
but this Agreement shall be reformed and construed in any such jurisdiction or
case as if such invalid, inoperative, illegal or unenforceable provision had
never been contained herein and such provision reformed so that it would be
valid, operative and enforceable to the maximum extent permitted in such
jurisdiction or in such case. Notwithstanding the foregoing, in the event of any
such determination the effect of which is to affect materially and adversely any
party, the parties shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible to the
fullest extent permitted by Applicable Law in an acceptable manner to the end
that the Transactions are fulfilled and consummated to the maximum extent
possible.
9.6 Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument, binding upon all of the parties. In
pleading or proving any provision of this Agreement, it shall not be necessary
to produce more than one set of such counterparts.
9.7 Section Headings. The headings contained in this Agreement are for
----------------
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
9.8 Governing Law. The validity, interpretation, construction and
-------------
performance of this Agreement shall be governed by, and construed in accordance
with, the applicable laws of the United States of America and the laws of State
of New York applicable to contracts made and performed in such State and, in any
event, without giving effect to any choice or conflict of laws provision or rule
that would cause the application of domestic substantive laws of any other
jurisdiction, except to the extent the DCL applies to the Merger. Anything in
this Agreement to the contrary notwithstanding, in the event of any dispute
between the parties which results in a Legal Action, the prevailing party shall
be entitled to receive from the non-prevailing party reimbursement for
reasonable legal fees and expenses incurred by such prevailing party in such
Legal Action.
9.9 Entire Agreement. This Agreement (together with the Target Disclosure
----------------
Schedule, the Exhibits hereto and the other documents delivered or to be
delivered in connection herewith) constitutes the entire agreement of the
parties with respect to the subject matter hereof and supersedes all prior
agreements, arrangements, covenants, promises, conditions, undertakings,
inducements, representations, warranties and negotiations, expressed or implied,
oral or written, between the parties, with respect to the subject matter hereof,
including without limitation any previously executed confidentiality agreement.
Each of the parties is a sophisticated Entity that was advised by experienced
counsel and, to the extent it deemed necessary, other advisors in connection
with this Agreement. Each of the parties hereby acknowledges that (a) none of
the parties has relied or will rely in respect of this Agreement or the
transactions contemplated hereby upon any document or written or oral
information previously furnished to or discovered by it or its representatives,
other than this Agreement (or such of the foregoing as are delivered at the
Closing), (b) there are no covenants or agreements by or on behalf of any party
or any of its respective Affiliates or representatives other than those
expressly set forth in this Agreement and the Collateral Documents, and (c) the
parties' respective rights and obligations with respect to this Agreement and
the events giving rise thereto will be solely as set forth in this Agreement and
the Collateral Documents. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
CONTAINED IN THIS AGREEMENT AND ANY COLLATERAL DOCUMENT, NONE OF THE PARTIES
MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY
OTHER REPRESENTATIONS OR
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WARRANTIES MADE BY ITSELF OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
FINANCIAL AND LEGAL ADVISORS OR OTHER REPRESENTATIVES, WITH RESPECT TO THE
EXECUTION AND DELIVERY OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER OR THE OTHER'S
REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH RESPECT TO ANY
ONE OR MORE OF THE FOREGOING.
9.10 Assignment. This Agreement shall not be assignable by any party and
----------
any such assignment shall be null and void, except that it shall inure to the
benefit of and be binding upon any successor to any party by operation of law,
including by way of merger, consolidation or sale of all or substantially all of
its assets, and ATC and ATI may assign its rights and remedies hereunder to any
bank or other financial institution which has loaned funds or otherwise extended
credit to it.
9.11 Parties in Interest. This Agreement shall be binding upon and inure
-------------------
solely to the benefit of each party, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement, except as
otherwise provided in Sections 6.9, 6.12, 6.14 and 9.10.
9.12 Non-Survival of Representations, Warranties, Covenants and Agreements.
---------------------------------------------------------------------
None of the representations, warranties, covenants and agreements in this
Agreement shall survive the Merger, and after effectiveness of the Merger
neither party nor any of its respective officers, directors or stockholders
shall have any further obligation with respect thereto. This Section shall not
limit any covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time.
9.13 Mutual Drafting. This Agreement is the result of the joint efforts of
---------------
Target and ATC, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of the parties and there shall be no
construction against any party based on any presumption of that party's
involvement in the drafting thereof.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have executed this Agreement or caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first written above.
American Tower Corporation
By:
---------------------------------
Name:
Title:
American Towers, Inc.
By:
---------------------------------
Name:
Title:
OMNIAMERICA, INC.
By:
---------------------------------
Name:
Title:
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<PAGE>
APPENDIX A
DEFINITIONS
AFFILIATE, AFFILIATED shall mean, with respect to any Person, (a) any other
Person at the time directly or indirectly controlling, controlled by or under
direct or indirect common control with such Person, (b) any other Person of
which such Person at the time owns, or has the right to acquire, directly or
indirectly, five percent (5%) or more of any class of the capital stock or
beneficial interest, (c) any other Person which at the time owns, or has the
right to acquire, directly or indirectly, five percent (5%) or more of any class
of the capital stock or beneficial interest of such Person, (d) any executive
officer or director of such Person, (e) with respect to any partnership, joint
venture or similar Entity, any general partner thereof, and (f) when used with
respect to an individual, shall include any member of such individual's
Immediate Family or a family trust.
AGREEMENT shall mean this Agreement as originally in effect, including,
unless the context otherwise specifically requires, this Appendix A, the Target
Disclosure Schedule, and all exhibits hereto, and as any of the same may from
time to time be supplemented, amended, modified or restated in the manner herein
or therein provided.
ALTERNATIVE TRANSACTION shall mean a transaction or series of related
transactions (other than the Transactions) resulting in or likely to result in
(a) any Change of Control of Target, (b) any merger, consolidation or other
business combination of Target, regardless of whether Target is the surviving
Entity unless the surviving Entity remains obligated under this Agreement to the
same extent as Target was, (c) any tender offer or exchange offer for, or any
acquisition of, any securities of Target, (d) any sale or other disposition of
all or any substantial part of the assets or business of Target, (e) any issue
or sale, or any agreement to issue or sell, any capital stock, Convertible
Securities or Option Securities of Target that could result in a Change of
Control of Target.
APPLICABLE LAW shall mean any Law of any Authority, whether domestic or
foreign, including without limitation the FCA and all federal and state
securities and Environmental Laws, to which a Person is subject or by which it
or any of its business or operations is subject or any of its property or assets
is bound.
ATC shall have the meaning given to it in the Preamble.
ATC COMMON STOCK shall have the meaning given to it in Section 3.1.
ATC FINANCIAL STATEMENTS shall have the meaning given to it in Section 5.2.
ATC OPTION PLAN shall have the meaning given to it in Section 5.5.
ATC OPTIONS shall have the meaning given to it in Section 6.9.
ATC REGISTRATION STATEMENT shall have the meaning given to it in Section
6.11(a).
ATC SEC DOCUMENTS shall have the meaning given to it in Section 5.2.
ATC TRANSACTION PROSPECTUS shall have the meaning given to it in Section
6.11(c).
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ATC VOTING AGREEMENT shall have the meaning given to it in Section 7.3(i).
ATC'S KNOWLEDGE (or words of similar import) shall mean the actual
knowledge of any director or executive officer of ATC or ATI, as such knowledge
exists on the date of this Agreement, after reasonable review of appropriate ATC
and ATI records and after reasonable inquiry of appropriate ATC and ATI
employees.
ATI shall have the meaning given to it in the Preamble.
AUTHORITY shall mean any governmental or quasi-governmental authority,
whether administrative, executive, judicial, legislative or other, or any
combination thereof, including without limitation any federal, state,
territorial, county, municipal or other government or governmental or quasi-
governmental agency, arbitrator, authority, board, body, branch, bureau, or
comparable agency or Entity, commission, corporation, court, department,
instrumentality, mediator, panel, system or other political unit or subdivision
or other Entity of any of the foregoing, whether domestic or foreign, including
without limitation the FCC.
BUSINESS PLAN shall have the meaning given to it in Section 6.6.
CERTIFICATE shall have the meaning given to it in Section 3.1.
CHANGE OF CONTROL shall mean the acquisition, directly or indirectly, by
any Person or group (as such term is used in Section 13(d)(3) of the Exchange
Act) of twenty percent (20%) or more of the Target Common Stock.
CLAIMS shall mean any and all debts, liabilities, obligations, losses,
damages, deficiencies, assessments and penalties, together with all Legal
Actions, pending or threatened, claims and judgments of whatever kind and nature
relating thereto, and all fees, costs, expenses and disbursements (including
without limitation reasonable attorneys' and other legal fees, costs and
expenses) relating to any of the foregoing.
CLOSING shall have the meaning given to it in Section 2.2.
CLOSING DATE shall have the meaning given to it in Section 2.2.
COBRA shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, as set forth in Section 4980B of the Code and Part 6 of
Subtitle B of Title I of ERISA.
CODE shall mean the Internal Revenue Code of 1986, and the rules and
regulations thereunder, all as from time to time in effect, or any successor
Law, rules or regulations, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
COLLATERAL DOCUMENTS shall mean the Registration Rights Agreement, the
Target Investment Letters, the Certificate of Merger and the Voting Agreement.
CONFIDENTIAL INFORMATION shall have the meaning given to it in Section
6.1(a).
CONTRACT, CONTRACTUAL OBLIGATION shall mean any agreement, arrangement,
commitment, contract, covenant, indemnity, undertaking or other obligation or
liability to which Target is a party or to which it or any of the Target Assets
is subject.
CONTROL (including the terms "controlled," "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction
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of the management or policies of a Person, or the disposition of such Person's
assets or properties, whether through the ownership of stock, equity or other
ownership, by contract, arrangement or understanding, or as trustee or executor,
by contract or credit arrangement or otherwise.
CONVERTIBLE SECURITIES shall mean any evidences of indebtedness, shares of
capital stock (other than common stock) or other securities directly or
indirectly convertible into or exchangeable for shares of common stock, whether
or not the right to convert or exchange thereunder is immediately exercisable or
is conditioned upon the passage of time, the occurrence or non-occurrence or
existence or non-existence of some other Event, or both.
DCL shall have the meaning given to it in Section 2.1.
DISTRIBUTION shall mean, with respect to any Person, (a) the declaration or
payment of any dividend (except dividends payable in common stock of such
Person) on or in respect of any shares of any class of capital stock of such
Person or any shares of capital stock of any Subsidiary owned by a Person other
than such Person or a Subsidiary of such Person, (b) the purchase, redemption or
other retirement of any shares of any class of capital stock of such Person or
any shares of capital stock of any Subsidiary of such Person owned by a Person
other than such Person or a Subsidiary of such Person, and (c) any other
distribution on or in respect of any shares of any class of capital stock of
such Person or any shares of capital stock of any Subsidiary of such Person
owned by a Person other than such Person or a Subsidiary of such Person.
D&O INSURANCE shall have the meaning given to it in Section 6.2(c).
EFFECTIVE TIME shall have the meaning given to it in Section 2.3.
EMPLOYMENT ARRANGEMENT shall mean any employment, consulting, retainer,
severance or similar contract, agreement, plan, or arrangement (exclusive of any
which is terminable within thirty (30) days without liability, penalty or
payment of any kind by Target or any of its Affiliates), or providing for
severance, termination payments, or for deferred compensation, profit-sharing,
bonuses, stock options, stock purchase or appreciation rights or other forms of
incentive compensation, or post-retirement insurance, compensation or benefits,
or any collective bargaining or other labor agreement, whether or not any of the
foregoing is subject to the provisions of ERISA, but only to the extent that it
covers or relates to any officer, employee or other Person involved in the
ownership or operation of the Target Assets or the conduct of the Target
Business or, as the case may be, the assets of ATC or the conduct of the
business of ATC.
ENCUMBER shall mean to suffer, accept, agree to or permit the imposition of
a Lien.
ENTITY shall mean any corporation, firm, unincorporated organization,
association, partnership, limited liability company, trust (inter vivos or
testamentary), estate of a deceased, insane or incompetent individual, business
trust, joint stock company, joint venture or other organization, entity or
business, whether acting in an individual, fiduciary or other capacity, or any
Authority.
ENVIRONMENTAL LAW shall mean any applicable Law relating to or otherwise
imposing liability or standards of conduct concerning pollution or protection of
the environment, including without limitation Laws relating to emissions,
discharges, releases or threatened releases of Hazardous Materials into the
environment (including, without limitation, ambient air, surface water, ground
water, mining or reclamation or mined land, land surface or subsurface strata)
or otherwise relating to the manufacture, processing, generation, distribution,
use, treatment, storage, disposal, cleanup, transport or handling of Hazardous
Materials. Environmental Laws shall include without limitation, to the extent
applicable, the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. Section 6901 et seq.), the Hazardous Material Transportation Act
-- ---
(49 U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery Act (42
-- ---
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U.S.C. Section 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C.
-- ---
Section 1251 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the
-- --- -- ---
Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.),the Federal
-- ---
Insecticide Fungicide and Rodenticide Act (7 U.S.C. Section 136 et seq.), and
-- ---
the Surface Mining Control and Reclamation Act of 1977 (30 U.S.C. Section 1201
et seq.), and any analogous and applicable federal, state, local or foreign
- -- ---
Laws, and the rules and regulations promulgated thereunder and in effect on the
date hereof, and any reference to any statutory or regulatory provision shall be
deemed to be a reference to any successor statutory or regulatory provision.
ENVIRONMENTAL PERMIT shall mean any Governmental Authorization required by
or pursuant to any Environmental Law.
ENVIRONMENTAL REPORT shall have the meaning given to it in Section 4.18.
ERISA shall mean the Employee Retirement Income Security Act of 1974, and
the rules and regulations thereunder, all as from time to time in effect, or any
successor law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
ERISA AFFILIATE shall mean any Person that is treated as a single employer
with Target under Sections 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA.
EVENT shall mean the existence or occurrence of any act, action, activity,
circumstance, condition, event, fact, failure to act, omission, incident or
practice, or any set or combination of any of the foregoing.
EXCHANGE ACT shall mean the Securities Exchange Act of 1934, and the rules
and regulations thereunder, all as from time to time in effect, or any successor
Law, rules or regulations, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
EXCHANGE AGENT shall have the meaning given to it in Section 3.2(a).
EXCHANGE AGENT AGREEMENT shall have the meaning given to it in Section
3.2(a).
EXCHANGE RATIO shall have the meaning given to it in Section 3.1.
FAIR MARKET VALUE shall mean, with respect to the ATC Common Stock, (a) the
average of the high and low reported sales prices, regular way, or, in the event
that no sale takes place on any day, the average of the reported high and low
bid and asked prices, regular way, in either case as reported on the principal
stock exchange on which such stock is listed, or, if not so listed, on the
Nasdaq National Market System; or (b) if such stock is not so listed, (i) the
average of the high and low bid and high and low asked prices on such day in the
over-the-counter market as reported by Nasdaq, or (ii) if bid and asked prices
for such security on any day shall not have been reported through Nasdaq, the
average of the bid and asked prices for such day as furnished by any New York
Stock Exchange member firm regularly making a market in such security selected
for such purpose by ATC; or (c) if such security is not publicly traded, as
determined by an independent investment banking firm selected by ATC whose fees
and expenses shall be borne by ATC.
FCA shall mean the Communications Act of 1934, and the rules and
regulations thereunder, all as from time to time in effect, or any successor
Law, rules or regulations, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
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FCC shall mean the Federal Communications Commission and shall include any
successor Authority.
GAAP shall mean generally accepted accounting principles applied on a
consistent basis, (i) as set forth in Opinions of the Accounting Principles
Board of the American Institute of Certified Public Accountants ("AICPA") and/or
in statements of the Financial Accounting Standards Board that are applicable in
the circumstances as of the date in question, (ii) when not inconsistent with
such opinions and statements, as set forth in other AICPA publications and
guidelines and/or (iii) that otherwise arise by custom for the particular
industry, all as the same shall exist on the date of this Agreement.
GOVERNMENTAL AUTHORIZATIONS shall mean all approvals, concessions,
consents, franchises, licenses, permits, plans, registrations and other
authorizations of all Authorities, including without limitation the FCA and the
Federal Aviation Administration, in connection with the ownership or operation
of the Target Assets or the conduct of the Target Business.
GOVERNMENTAL FILINGS shall mean all filings, including franchise and
similar Tax filings, and the payment of all fees, assessments, interest and
penalties associated with such filings, with all Authorities.
HART-SCOTT-RODINO ACT shall mean the Hart-Scott-Rodino Improvement Act of
1976, as from time to time in effect, or any successor Law, and any reference to
any statutory provision shall be deemed to be a reference to any successor
statutory provision.
HAZARDOUS MATERIALS shall mean and include any substance, material, waste,
constituent, compound, chemical (in whatever state of matter): (a) the presence
of which requires investigation or remediation under any applicable
Environmental Law; or (b) that is defined as a "hazardous waste" or "hazardous
substance" under any applicable Environmental Law; or (c) that is toxic,
explosive, corrosive, etiologic, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and is regulated with respect to
its impact on the environment by any applicable Authority or regulated by any
applicable Environmental Law; or (d) that contains gasoline, diesel fuel or
other petroleum hydrocarbons, or any by-products or fractions thereof, natural
gas, polychlorinated biphenyls ("PCBs") and PCB-containing equipment, radon or
other radioactive elements, lead, asbestos or asbestos-containing materials
("ACM"), or urea formaldehyde foam insulation.
IMMEDIATE FAMILY shall mean, with respect to any individual, his or her
spouses, past or present, children, parents and siblings, and any of the spouses
of the foregoing, past or present, in all cases whether related by blood, by
adoption or by marriage.
INDEBTEDNESS shall mean, with respect to any Person, (a) all items, except
items of capital stock or of surplus or of general contingency or deferred tax
reserves or any minority interest in any Subsidiary of such Person to the extent
such interest is treated as a liability with indeterminate term on the
consolidated balance sheet of such Person, which in accordance with GAAP would
be included in determining total liabilities as shown on the liability side of a
balance sheet of such Person, (b) all obligations secured by any Lien to which
any property or asset owned or held by such Person is subject, whether or not
the obligation secured thereby shall have been assumed, and (c) to the extent
not otherwise included, all Contractual Obligations of such Person constituting
capitalized leases and all obligations of such Person with respect to Leases
constituting part of a sale and leaseback arrangement.
INDEBTEDNESS FOR MONEY BORROWED shall mean, with respect to Target, money
borrowed and Indebtedness represented by notes payable and drafts accepted
representing extensions of credit, all obligations evidenced by bonds,
debentures, notes or other similar instruments, the maximum amount currently or
at any time thereafter available to be drawn under all outstanding letters of
credit issued for the
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account of such Person, all Indebtedness upon which interest charges are
customarily paid by such Person, and all Indebtedness (including capitalized
lease obligations) issued or assumed as full or partial payment for property or
services, whether or not any such notes, drafts, obligations or Indebtedness
represent Indebtedness for money borrowed, but shall not include (a) trade
payables, (b) expenses accrued in the ordinary course of business, (c) customer
advance payments and customer deposits received in the ordinary course of
business, or (d) conditional sales agreements not prohibited by the terms of
this Agreement.
LAW shall mean any (a) administrative, judicial, legislative or other
action, code, consent decree, constitution, decree, directive, enactment,
finding, law, injunction, interpretation, judgment, order, ordinance, policy
statement, proclamation, promulgation, regulation, requirement, rule, rule of
law, rule of public policy, settlement agreement, statute, or writ of any
Authority, domestic or foreign, as in effect on the date hereof; (b) the common
law, or other legal precedent; or (c) arbitrator's, mediator's or referee's
award, decision, finding or recommendation.
LEASE shall mean any lease of property, whether real, personal or mixed,
and all amendments thereto, and shall include without limitation all use or
occupancy agreements.
LEGAL ACTION shall mean, with respect to any Person, any and all litigation
or legal or other actions, arbitrations, counterclaims, investigations,
proceedings, requests for material information by or pursuant to the order of
any Authority or suits, at law or in arbitration, equity or admiralty, whether
or not purported to be brought on behalf of such Person, affecting such Person
or any of such Person's business, property or assets.
LIEN shall mean any of the following: mortgage; lien (statutory or other);
or other security agreement, arrangement or interest; hypothecation, pledge or
other deposit arrangement; assignment; charge; levy; executory seizure;
attachment; garnishment; encumbrance (including any easement, exception,
reservation or limitation, right of way, and the like); conditional sale, title
retention or other similar agreement, arrangement, device or restriction;
preemptive or similar right; any financing lease involving substantially the
same economic effect as any of the foregoing; the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction; restriction on sale, transfer, assignment, disposition or other
alienation; or any option, equity, claim or right of or obligation to, any other
Person, of whatever kind and character.
MATERIAL, MATERIALLY OR MATERIALITY for the purposes of this Agreement,
shall, unless specifically stated to the contrary, be determined without regard
to the fact that various provisions of this Agreement set forth specific dollar
amounts, but shall be determined with regard to the relevant party and its
Subsidiaries, taken as a whole.
MATERIAL ADVERSE EFFECT shall mean an Event that has an effect which is
materially adverse to the business or financial condition of ATC and its
Subsidiaries, taken as a whole, or Target and its Subsidiaries, taken as a
whole, as the case may be..
MATERIAL AGREEMENT shall mean, with respect to Target, any Contractual
Obligation which (a) was not entered into in the ordinary course of business,
(b) was entered into in the ordinary course of business which (i) involved the
purchase, sale or lease of goods or materials, or purchase of services,
aggregating more than $100,000 annually during any of the last three fiscal
years, or (ii) involves the leasing of space on any tower of Target, (c)
involves a capitalized lease obligation or Indebtedness for Money Borrowed, (d)
is or otherwise constitutes a written agency, broker, dealer, license,
distributorship, sales representative or similar written agreement involving
annual payments in excess of $100,000, (e) accounted for more than three percent
(3%) of the revenues of the Target Business in any of the last three fiscal
years or is likely to
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account for more than three percent (3%) of revenues of the Target Business
during the current fiscal year, or (f) involves the management by Target of any
communication tower of any other Person.
MERGER shall have the meaning given to it in the first Whereas paragraph.
MERGER CONSIDERATION shall have the meaning given to it in Section 3.1.
MULTIEMPLOYER PLAN shall mean a Plan which is a "multiemployer plan" within
the meaning of Section 4001(a)(3) of ERISA.
OPTION SECURITIES shall mean all stock appreciation rights, rights, options
and warrants, and calls or commitments evidencing the right, to subscribe for,
purchase or otherwise acquire shares of capital stock or Convertible Securities,
whether or not the right to subscribe for, purchase or otherwise acquire is
immediately exercisable or is conditioned upon the passage of time, the
occurrence or non-occurrence or the existence or non-existence of some other
Event.
ORGANIC DOCUMENT shall mean, with respect to a Person which is a
corporation, its charter, its by-laws and all shareholder agreements, voting
trusts and similar arrangements applicable to any of its capital stock and, with
respect to a Person which is a partnership, its agreement and certificate of
partnership, any agreements among partners, and any management and similar
agreements between the partnership and any general partners (or any Affiliate
thereof).
PBGC shall mean the Pension Benefit Guaranty Corporation and any Entity
succeeding to any or all of its functions under ERISA.
PERMITTED LIENS shall mean (a) Liens for current Taxes not yet due and
payable, (b) such imperfections of title, easements, encumbrances and mortgages
or other Liens, if any, as are not, individually or in the aggregate, material
in character, amount or extent and do not materially detract from the value, or
materially interfere with the present use, of the property subject thereto or
affected thereby, or otherwise materially impair the conduct of the Target
Business and (c) in the case of Target, any Liens pursuant to the Target Credit
Agreements, and, in the case of ATC, the credit facilities of ATC and its
Subsidiaries.
PERSON shall mean any natural individual or any Entity.
PERSONAL PROPERTY shall mean all of the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, inventory,
spare parts and other tangible personal property which are owned or leased by
Target and used or useful as of the date hereof in the conduct of the business
or operations of the Target Business, plus such additions thereto and deletions
therefrom arising in the ordinary course of business between the date hereof and
the Closing Date.
PLAN shall mean, with respect to any Person and at a particular time, any
employee benefit plan which is covered by ERISA and in respect of which such
Person or an ERISA Affiliate is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA, but only to the extent that it covers or relates to any
officer, employee or other Person involved in the ownership and operation of the
Target Assets or the conduct of the business of the Target Business.
PRIVATE AUTHORIZATIONS shall mean all approvals, concessions, consents,
franchises, licenses, permits, and other authorizations of all Persons (other
than Authorities) including without limitation those with respect to
intellectual property.
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REAL PROPERTY shall mean all of the fee estates and buildings and other
fixtures and improvements thereon, leasehold interests, easements, licenses,
rights to access, rights-of-way, and other real property interests which are
owned or used by Target as of the date hereof, in the operations of the Target
Business, plus such additions thereto and deletions therefrom arising in the
ordinary course of business between the date hereof and the Closing Date.
REGISTRATION RIGHTS AGREEMENT shall have the meaning given to it in Section
7.2(f).
REGULATIONS shall mean the federal income tax regulations promulgated under
the Code, as such Regulations may be amended from time to time. All references
herein to specific sections of the Regulations shall be deemed also to refer to
any corresponding provisions of succeeding Regulations, and all references to
temporary Regulations shall be deemed also to refer to any corresponding
provisions of final Regulations.
REPRESENTATIVES shall have the meaning given to it in Section 6.1(a).
RESTRICTED TRANSACTION shall mean any (i) acquisition or agreement to
acquire (x) by merging or consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any business or any Person or
other business organization or division thereof or (y) any assets (other than in
the ordinary course of business which for purposes of this definition does not
include the acquisition of communications sites and related assets and other
business involved in the communications sites industry or the construction of
communications towers and related assets), or (ii) any undertaking or agreement
to undertake the construction of one or more communications towers.
SEC shall mean the Securities and Exchange Commission and shall include any
successor Authority.
SECURITIES ACT shall mean the Securities Act of 1933, and the rules and
regulations thereunder, all as from time to time in effect, or any successor
Law, rules or regulations, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
SUBSIDIARY shall mean, with respect to a Person, any Entity a majority of
the capital stock ordinarily entitled to vote for the election of directors of
which, or if no such voting stock is outstanding, a majority of the equity
interests of which, is owned directly or indirectly, legally or beneficially, by
such Person or any other Person controlled by such Person.
SUPERIOR PROPOSAL shall mean an Alternative Transaction that the Board of
Directors of Target determines in good faith, based on the advice of independent
counsel and Target's independent financial advisors, contains terms and
conditions, including likelihood of consummation, that are materially more
favorable to the Target stockholders that those set forth in this Agreement (as
ATC may have proposed to amend it pursuant to the provisions of Section 6.5(d)).
SURVIVING CORPORATION shall have the meaning given to it in Section 2.1.
TARGET shall have the meaning given to it in the Preamble.
TARGET ASSETS shall have the meaning given to it in Section 4.4(a), and
shall include as appropriate, the assets of Target's Subsidiaries, as
contemplated by Section 4.4(a) and the final sentence of Section 4.1(d).
TARGET BUSINESS shall have the meaning given to it in Section 4.4(b), and
shall include as appropriate, the businesses of Target's Subsidiaries, as
contemplated by Section 4.4(a) and the final sentence of Section 4.1(d).
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TARGET CREDIT AGREEMENTS shall have the meaning given to it in Section 7.2.
TARGET COMMON STOCK shall have the meaning given to it in Section 3.1.
TARGET DISCLOSURE SCHEDULE shall mean the Target Disclosure Schedule dated
as of the date hereof and heretofore delivered by Target to ATC.
TARGET EMPLOYEES shall have the meaning given to it in Section 4.14.
TARGET FINANCIAL STATEMENTS shall have the meaning given to it in Section
4.2.
TARGET INFORMATION STATEMENT shall mean the information statement to be
filed with the SEC by Target in the event Target does not solicit proxies under
the Exchange Act and is not, therefore, required to file the Target Proxy
Statement.
TARGET INVESTMENT LETTERS shall have the meaning given to it in Section
7.2(g).
TARGET OPTIONS shall have the meaning given to it in Section 6.9.
TARGET PROXY STATEMENT shall have the meaning given to it in Section
6.11(b).
TARGET SEC DOCUMENTS shall have the meaning given to it in Section 4.2.
TARGET STOCKHOLDER APPROVAL shall have the meaning given it in Section
6.10.
TARGET STOCKHOLDERS MEETING shall have the meaning given it in Section
6.10.
TARGET'S KNOWLEDGE (or words of similar import) shall mean the actual
knowledge of any Target director or officer, as such knowledge exists on the
date of this Agreement, after reasonable review of appropriate Target records
and after reasonable inquiry of appropriate Target employees.
TAX (and "Taxable", which shall mean subject to Tax), shall mean, with
respect to any Person, (a) all taxes (domestic or foreign), including without
limitation any income (net, gross or other including recapture of any tax items
such as investment tax credits), alternative or add-on minimum tax, gross
income, gross receipts, gains, sales, use, leasing, lease, user, ad valorem,
transfer, recording, franchise, profits, property (real or personal, tangible or
intangible), fuel, license, withholding on amounts paid to or by such Person,
payroll, employment, unemployment, social security, excise, severance, stamp,
occupation, premium, environmental or windfall profit tax, custom, duty or other
tax, or other like assessment or charge of any kind whatsoever, together with
any interest, levies, assessments, charges, penalties, additions to tax or
additional amount imposed by any Taxing Authority, (b) any joint or several
liability of such Person with any other Person for the payment of any amounts of
the type described in (a), and (c) any liability of such Person for the payment
of any amounts of the type described in (a) as a result of any express or
implied obligation to indemnify any other Person.
TAX RETURN OR RETURNS shall mean all returns, consolidated or otherwise
(including without limitation information returns), required to be filed with
any Authority with respect to Taxes.
TAXING AUTHORITY shall mean any Authority responsible for the imposition of
any Tax.
TERMINATION DATE shall have the meaning given to it in Section 8.1.
TRANSACTIONS shall mean the transactions contemplated to be consummated on
or prior to the Closing Date, including without limitation the Merger and the
execution, delivery and performance of the Collateral Documents.
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EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER
By and Among
AMERICAN TOWER CORPORATION,
AMERICAN TOWERS, INC.
and
TELECOM TOWERS, L.L.C.
Dated as of
November 16, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
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ARTICLE 1 DEFINED TERMS................................................................ 1
ARTICLE 2 THE MERGER................................................................... 2
2.1 The Merger............................................................... 2
2.2 Closing.................................................................. 2
2.3 Effective Time........................................................... 2
2.4 Effect of the Merger..................................................... 2
2.5 Certificate of Incorporation............................................. 2
2.6 Bylaws................................................................... 2
2.7 Directors and Officers................................................... 2
ARTICLE 3 CONVERSION OF INTERESTS...................................................... 3
3.1 Conversion of TCT Units.................................................. 3
3.2 Delivery of Merger Consideration......................................... 4
3.3 Option Securities and Convertible Securities; No Payment Rights.......... 4
3.4 Determination of Merger Consideration.................................... 4
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF TCT........................................ 5
4.1 Organization and Business; Power and Authority; Effect of Transaction.... 5
4.2 Financial and Other Information.......................................... 7
4.3 Material Statements and Omissions; Absence of Events..................... 7
4.4 Title to Properties; Leases.............................................. 7
4.5 Compliance with Private Authorizations................................... 8
4.6 Compliance with Governmental Authorizations and Applicable Law........... 9
4.7 Intangible Assets........................................................ 10
4.8 Related Transactions..................................................... 10
4.9 Insurance................................................................ 10
4.10 Tax Matters.............................................................. 10
4.11 Employee Retirement Income Security Act of 1974.......................... 11
4.12 Solvency................................................................. 13
4.13 Bank Accounts, Etc....................................................... 13
4.14 Employment and Consulting Arrangements................................... 13
4.15 Material Agreements...................................................... 13
4.16 Ordinary Course of Business.............................................. 14
4.17 Material and Adverse Restrictions........................................ 15
4.18 Broker or Finder......................................................... 15
4.19 Environmental Matters.................................................... 15
4.20 Capital Stock............................................................ 16
4.21 Year 2000 Compliant...................................................... 16
4.22 Materiality.............................................................. 16
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF ATC AND ATI................................ 17
5.1 Organization and Business; Power and Authority; Effect of Transaction.... 17
5.2 ATC SEC Reports.......................................................... 18
5.3 Material Statements and Omissions; Absence of Events..................... 18
5.4 Broker or Finder......................................................... 19
</TABLE>
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<TABLE>
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5.5 Capital Stock............................................................ 19
5.6 Compliance with Governmental Authorizations and Applicable Law........... 19
5.7 Materiality.............................................................. 20
ARTICLE 6 COVENANTS.................................................................... 20
6.1 Access to Information; Confidentiality................................... 20
6.2 Agreement to Cooperate; Certain Other Covenants.......................... 21
6.3 Public Announcements..................................................... 22
6.4 Notification of Certain Matters.......................................... 22
6.5 No Solicitation.......................................................... 22
6.6 Conduct of Business by TCT Pending the Merger............................ 23
6.7 Preliminary Title Reports................................................ 25
6.8 Environmental Site Assessments........................................... 25
6.9 Solicitation of Employees................................................ 25
6.10 Certificate of Non-Foreign Status........................................ 25
6.11 Tax Returns and Other Reports............................................ 26
6.12 Section 754 Elections.................................................... 26
ARTICLE 7 CLOSING CONDITIONS........................................................... 26
7.1 Conditions to Obligations of Each Party.................................. 26
7.2 Conditions to Obligations of ATC and ATI................................. 26
7.3 Conditions to Obligations of TCT......................................... 29
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER............................................ 31
8.1 Termination.............................................................. 31
8.2 Effect of Termination.................................................... 31
ARTICLE 9 INDEMNIFICATION.............................................................. 32
9.1 Survival................................................................. 32
9.2 Indemnification.......................................................... 32
9.3 Limitation of Liability.................................................. 33
9.4 Notice of Claims......................................................... 33
9.5 Defense of Third Party Claims............................................ 33
9.6 Exclusive Remedy......................................................... 34
9.7 Indemnification of Directors and Officers................................ 34
ARTICLE 10 GENERAL PROVISIONS.......................................................... 35
10.1 Waivers; Amendments...................................................... 35
10.2 Fees, Expenses and Other Payments........................................ 36
10.3 Notices.................................................................. 36
10.4 Specific Performance; Other Rights and Remedies.......................... 37
10.5 Severability............................................................. 37
10.6 Counterparts............................................................. 38
10.7 Section Headings......................................................... 38
10.8 Governing Law; Venue..................................................... 38
10.9 Further Acts............................................................. 38
10.10 Entire Agreement......................................................... 38
10.11 Assignment............................................................... 39
10.12 Parties in Interest...................................................... 39
10.13 Mutual Drafting.......................................................... 39
10.14 TCT Disclosure Schedule.................................................. 39
10.15 ATC's Due Diligence...................................................... 40
</TABLE>
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APPENDIX A: Definitions
EXHIBITS:
EXHIBIT A: Opinion of TCT Counsel (Section 7.2(b)).
EXHIBIT B: Registration Rights Agreement (Section 7.2(m)).
EXHIBIT C: TCT Investment Letter (Section 7.2(n)).
EXHIBIT D: ATC Noncompetition Agreements (Section 7.2(p)).
EXHIBIT E: Indemnity Escrow Agreement (Section 7.2(s)).
EXHIBIT F: Opinion of Sullivan & Worcester LLP (Section 7.3(b)).
EXHIBIT G: ATC Voting Agreement (Section 7.3(h)).
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AGREEMENT AND PLAN OF MERGER
----------------------------
Agreement and Plan of Merger, dated as of November 16, 1998, by and among
American Tower Corporation, a Delaware corporation ("ATC"), American Towers,
Inc., a Delaware corporation ("ATI"), and TeleCom Towers, L.L.C., a Delaware
limited liability company ("TCT").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of ATC and ATI and the Management
Committee of TCT have determined that the merger (the "Merger") of TCT into ATI
on the terms and conditions set forth in this Agreement and Plan of Merger (this
"Agreement") is consistent with and in furtherance of the long-term business
strategy of each, and is fair to, and in the best interests of, the stockholder
of ATI and the members of TCT (the "TCT Members"); and
WHEREAS, this Agreement provides that TCT shall be merged with and into
ATI, and ATI shall be the surviving corporation; and
WHEREAS, the Boards of Directors of ATI and the Management Committee of TCT
have approved and adopted this Agreement and have directed that this Agreement
be submitted to the stockholder of ATI and the members of TCT, respectively, for
their adoption and approval; and
WHEREAS, the Board of Directors of ATC has approved and adopted this
Agreement and approved the Merger on behalf of ATI as the sole stockholder of
ATI; and
WHEREAS, as a condition of the willingness of ATC and ATI to enter into
this Agreement, and as an inducement thereto, TCT Members with the interests in
TCT required for TCT's approval of the Merger and this Agreement are delivering
their written consents approving and adopting the Merger and this Agreement;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained and other valuable
consideration, the receipt and adequacy whereof are hereby acknowledged, the
parties hereto hereby, intending to be legally bound, represent, warrant,
covenant and agree as follows:
ARTICLE 1
DEFINED TERMS
As used herein, unless the context otherwise requires, the terms defined in
Appendix A shall have the respective meanings set forth therein. The term "TCT"
as used in Appendix A shall include all Subsidiaries of TCT, except as the
context otherwise clearly requires. Terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa, and the reference to
any gender shall be deemed to include all genders. Unless otherwise defined or
the context otherwise clearly requires, terms for which meanings are provided in
this Agreement shall have such meanings when used in the TCT Disclosure
Schedule, and each Collateral Document executed or required to be executed
pursuant hereto or thereto or otherwise delivered, from time to time, pursuant
hereto or thereto. References to "hereof," "herein" or similar terms are
intended to refer to the Agreement as a whole and not a particular section, and
<PAGE>
references to "this Section" or "this Article" are intended to refer to the
entire section or article and not a particular subsection thereof. The term
"either party" shall, unless the context otherwise requires, refer to ATC and
ATI, on the one hand, and TCT, on the other hand.
ARTICLE 2
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions set forth in
----------
this Agreement, and in accordance with the Delaware General Corporation Law (the
"DCL"), and the Delaware Limited Liability Company Act (the "DLLCA"), at the
Effective Time, TCT shall be merged with and into ATI. As a result of the
Merger, the separate limited liability company existence of TCT shall cease and
ATI shall continue as the surviving Entity in the Merger (sometimes referred to,
as such, as the "Surviving Corporation").
2.2 Closing. Unless this Agreement shall have been terminated pursuant to
-------
Section 9.1 and subject to the satisfaction or, to the extent permitted by
Applicable Law, waiver of the conditions set forth in Article 8, the closing of
the Merger (the "Closing") will take place, at 10:00 a.m., on the Closing Date,
at the offices of Sullivan & Worcester LLP, One Post Office Square, Boston,
Massachusetts 02109, on the later of (a) January 4, 1999 and (b) a date set by
mutual agreement within ten (10) business days after the satisfaction of the
conditions set forth in Sections 7.1(b), 7.1(c) and 7.2(d) (unless any such
condition is waived by the party entitled to make such waiver) shall have been
satisfied or waived, unless another date, time or place is agreed to in writing
by the parties. The date on which the Closing occurs is herein referred to as
the "Closing Date."
2.3 Effective Time. Subject to the provisions of this Agreement, as
--------------
promptly as practicable after the Closing, the parties hereto shall cause the
Merger to be consummated by filing a Certificate of Merger and any related
filings required under the DCL or the DLLCA with the Secretary of State of the
State of Delaware. The Merger shall become effective at such time as such
documents are duly filed as aforesaid, or at such later time as is specified in
such documents (the "Effective Time").
2.4 Effect of the Merger. The Merger shall have the effects provided for
--------------------
under the DCL and the DLLCA.
2.5 Certificate of Incorporation. The Certificate of Incorporation of
----------------------------
ATI, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
changed or amended as provided therein or by Applicable Law.
2.6 Bylaws. The bylaws of ATI in effect at the Effective Time shall be
------
the bylaws of the Surviving Corporation until amended in accordance with
Applicable Law and the Organic Documents of ATI.
2.7 Directors and Officers. From and after the Effective Time, until
----------------------
successors are duly elected or appointed and qualified, or upon their earlier
resignation or removal, in accordance with Applicable Law and the Organic
Documents of ATI, (a) the directors of ATI at the Effective Time shall be the
directors of the Surviving Corporation, and (b) the officers of ATI at the
Effective Time shall be the officers of the Surviving Corporation.
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ARTICLE 3
CONVERSION OF INTERESTS
3.1 Conversion of TCT Units At the Effective Time, by virtue of the
-----------------------
Merger and without any action on the part of ATC, ATI or TCT or their respective
stockholders or members, as the case may be:
(a) Each share of Common Stock, par value $.01 per share, of ATI
issued and outstanding immediately prior to the Effective Time shall remain
outstanding; and
(b) Each Class A Unit of TCT and each Class B Unit of TCT
(collectively, the "TCT Units") issued and outstanding immediately prior to
the Effective Time shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into the right to receive its
pro-rata share of the Merger Consideration.
The term "Merger Price" shall mean an amount equal to the amount determined by
(i) subtracting from $155.0 million, the amount, if any, by which the
Indebtedness for Money Borrowed of TCT and its Subsidiaries at the Effective
Time (computed on a consolidated basis in accordance with GAAP) exceeds (ii) the
sum of (x) $30.0 million and (y) the aggregate amount (including acquisition
costs) TCT has paid subsequent to the execution and delivery of this Agreement
and prior to the Effective Time for any and all acquisitions including ComSites
USA and the remaining general partnership interests in Mid Pacific (for an
amount not in excess of $5.5 million) or capital expenditures, and (iii) adding
the amount by which the Current Balance as of the Effective Time exceeds zero or
subtracting the amount by which the Current Balance as of the Effective Time is
less than zero. The term "Merger Consideration" shall mean and shall be paid in
(i) shares (the "ATC Stock Consideration") of Class A Common Stock, par value
$.01 per share, of ATC (the "ATC Common Stock") in an amount equal to sixty
percent (60%) of the Merger Price (before adjustment pursuant to clause (iii) of
the immediately preceding sentence) and (ii) cash for the balance of the Merger
Price (the "Cash Consideration"). (For example, assuming Indebtedness for
Borrowed Money equal to $30.0 million and no capital expenditures, if the
Current Balance equals $10.0 million, the Merger Consideration shall be equal to
$165.0 million, payable $93.0 million in ATC Common Stock and $72.0 million in
Cash Consideration. With the same assumptions, if the Current Balance equals
($10.0 million), the Merger Consideration shall be equal to $145.0 million,
payable $93.0 million in ATC Common Stock and $52.0 million in Cash
Consideration.) The Cash Consideration and the ATC Stock Consideration shall be
paid or issued, as applicable, to each TCT Member in the same proportion that
the number of TCT Units held by such TCT Member bears to the aggregate number of
TCT Units held by all TCT Members, in all cases without distinction between
classes of TCT Units. For purposes of determining the number of shares of ATC
Common Stock issuable as the ATC Stock Consideration, the amount of the Merger
Price payable in ATC Common Stock will be divided by the Current Market Price,
subject to adjustment as provided in the following paragraph.
In the event the Closing Date Share Price is less than the Current Market
Price minus $3.50 per share (the "Floor Share Price"), the ATC Stock
Consideration shall be increased by a number of shares of ATC Common Stock
determined as follows:
(i) Divide the ATC Stock Consideration by the Floor Share Price;
(ii) Divide the ATC Stock Consideration by the Closing Date Share
Price; and
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(iii) Subtract the amount determined under paragraph (i) from the
amount determined under paragraph (ii).
In the event the Closing Date Share Price exceeds the Current Market Price plus
$3.50 per share (the "Ceiling Share Price") the ATC Stock Consideration shall be
decreased by a number of shares of ATC Common Stock determined as follows:
(i) Divide the ATC Stock Consideration by the Ceiling Share Price;
(ii) Divide the ATC Stock Consideration by the Closing Date Share
Price; and
(iii) Subtract the amount determined under paragraph (ii) from the
amount determined under paragraph (i).
At the Effective Time, all TCT Units shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and each
holder of TCT Units shall have, instead, the right to receive, in accordance
with the provisions of Section 3.2, the Merger Consideration multiplied by the
number of TCT Units owned by such TCT Member. In lieu of issuing fractional
shares, ATC shall convert the holder's right to receive ATC Common Stock
pursuant to the provisions of this Section into a right to receive (i) the
highest whole number of shares of ATC Common Stock constituting the Merger
Consideration plus (ii) cash equal to the fraction of a share of ATC Common
Stock to which the holder would otherwise be entitled multiplied by the Fair
Market Value of one share of ATC Common Stock as of the Effective Time. As of
the Effective Time, the holders of TCT Units outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such TCT
Units, except as otherwise provided herein or by Applicable Law.
3.2 Delivery of Merger Consideration. At and after the Effective Time,
--------------------------------
each TCT Member, upon the execution and delivery to ATC of a certificate, in
substantially the form heretofore agreed upon by ATC and TCT, with respect to
such TCT Units and its ownership thereof, shall be entitled to receive (a) the
Cash Consideration and (b) a certificate for ATC Common Stock representing the
number of whole shares constituting the ATC Stock Consideration and cash in an
amount sufficient to make payment for any fractional share constituting a part
of the ATC Stock Consideration, in each case representing the Merger
Consideration with respect to the TCT Units formerly held by such TCT Member in
accordance with the provisions of this Article, subject, however, to the
provisions of the Indemnity Escrow Agreement. ATC shall be entitled to deduct
and withhold from Merger Consideration otherwise payable pursuant to this
Agreement such amounts of cash or ATC Common Stock as ATC shall deem necessary
to satisfy any requirement for deduction or withholding with respect to the
making of such payment under the Code, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by ATC, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the TCT Member in respect of which such deduction and withholding
was made by ATC.
3.3 Option Securities and Convertible Securities; No Payment Rights. At
---------------------------------------------------------------
the Effective Time, each outstanding Option Security and each Convertible
Security of TCT, if any, whether or not then exercisable for or convertible into
TCT Units or other TCT securities, outstanding immediately prior to the
Effective Time, shall be canceled and retired and shall cease to exist, and the
holder thereof shall not be entitled to receive any consideration therefor.
3.4 Determination of Merger Consideration. Not later than ten (10) days
-------------------------------------
prior to the Closing Date, TCT shall submit to ATC its preliminary determination
of the amount of the Merger Consideration
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determined in accordance with the provisions of Section 3.1. Within seven (7)
days thereafter, ATC shall submit to TCT its objections, if any, to such
preliminary determination, specifying in reasonable detail the nature of such
objections. The parties shall use their reasonable business efforts to agree
upon the amount of the Merger Consideration, but in the event they are unable to
do so, then (a) the Merger shall be consummated (assuming that all other
conditions thereto shall have been satisfied), (b) the Merger Consideration at
the Effective Time shall be comprised of the Cash Consideration and the ATC
Stock Consideration as provided in this Section, and (c) a post-Effective Time
adjusting cash payment (if any) shall be made by ATC to the TCT Members as
provided in this Section. In the event the parties are unable to agree as
aforesaid, then (a) the ATC Stock Consideration at the Effective Time shall be
the ATC Stock Consideration determined by TCT, and (b) the Cash Consideration at
the Effective Time shall be the Cash Consideration determined by TCT reduced by
an amount equal to the sum (the "Adjustment Holdback") of (i) the difference
between the Cash Consideration determined by TCT and that determined by ATC, and
(ii) the difference (valued at the Current Market Price) between the ATC Stock
Consideration determined by TCT and that determined by ATC, in each case using
Merger Considerations determined pursuant to the provisions of Section 3.1. To
the extent the parties are unable to agree upon the amount of the Current
Balance, the Adjustment Holdback shall consist of cash, and to the extent the
parties are unable to agree upon the aggregate amount of acquisition expense and
capital expenditures of TCT referred to in clause (ii) of the second sentence of
Section 3.1, the Adjustment Holdback shall consist of ATC Common Stock and cash
in the proportions specified in Section 3.1. Under such circumstances, TCT and
ATC shall, within ten (10) days following the Effective Time, jointly designate
a nationally known independent public accounting firm to be retained to
determine the amount of the Current Balance and aggregate amount of acquisition
expenses and capital expenditures of TCT referred to in clause (ii) of the
second sentence of Section 3.1. The fees and other expenses of retaining such
independent public accounting firm shall be borne by ATC and TCT (prior to
Closing) and the TCT Members (out of the Adjustment Holdback after the Closing)
in inverse proportion to its determination of the contested amount of the Merger
Consideration. Such firm shall report its conclusions pursuant to this Section,
and such report shall be conclusive on all parties to this Agreement and not
subject to dispute or review. Upon determination by such independent accounting
firm (or sooner agreement of the Merger Consideration by the parties), ATC shall
deliver to the TCT Members, as their interests may appear, the amount of the
Adjustment Holdback, if any, to which they are entitled, together with interest
on the cash portion thereof at the rate of ten percent (10%) per annum.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF TCT
--------------------------------------
All representations and warranties, unless the context indicates otherwise,
exclude RCC which will be distributed by TCT to some or all TCT Members prior to
the Merger. TCT hereby represents and warrants to ATC and ATI as follows:
4.1 Organization and Business; Power and Authority; Effect of Transaction.
---------------------------------------------------------------------
(a) TCT is a limited liability company duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization, has all
requisite power and authority (limited liability company and other) to own or
hold under lease its properties and to conduct its business as now conducted and
is duly qualified and in good standing as a foreign limited liability company in
each other jurisdiction (as shown on Section 4.1(a) of the TCT Disclosure
Schedule) in which the character of the property owned or leased by it or the
nature of its business or operations requires such qualification, except for
such qualifications the failure of which to obtain, individually or in the
aggregate, would not have a material adverse effect on TCT.
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<PAGE>
(b) TCT has all requisite power and authority (limited liability company
and other) necessary to enable it to execute and deliver, and to perform its
obligations under, this Agreement and each Collateral Document executed or
required to be executed by it pursuant hereto or thereto and to consummate the
Transactions; and the execution, delivery and performance by TCT of this
Agreement and each Collateral Document executed or required to be executed by it
pursuant hereto or thereto have been duly authorized by all requisite limited
liability company or other action on the part of TCT, including without
limitation the requisite approval of the TCT Members, if any. The affirmative
vote of the holders of TCT Units representing a majority of the outstanding
voting power of all TCT Units is sufficient to approve and adopt this Agreement
and the transactions contemplated by this Agreement. This Agreement has been
duly executed and delivered by TCT and constitutes, and each Collateral Document
executed or required to be executed by it pursuant hereto or thereto or to
consummate the Transactions when executed and delivered by TCT will constitute,
legal, valid and binding obligations of TCT, enforceable in accordance with
their respective terms, except as such enforceability may be subject to
bankruptcy, moratorium, insolvency, reorganization, arrangement, voidable
preference, fraudulent conveyance and other similar Laws relating to or
affecting the rights of creditors and except as the same may be subject to the
effect of general principles of equity.
(c) Except as set forth in Section 4.1(c) of the TCT Disclosure Schedule,
neither the execution and delivery by TCT of this Agreement or any Collateral
Document executed or required to be executed by it pursuant hereto or thereto,
nor the consummation of the Transactions, nor compliance with the terms,
conditions and provisions hereof or thereof by TCT:
(i) will conflict with, or result in a breach or violation of, or
constitute a default under, any Organic Document of TCT or any Applicable
Law, or will conflict with, or result in a breach or violation of, or
constitute a default under, or permit the acceleration of any obligation or
liability in, or but for any requirement of giving of notice or passage of
time or both would constitute such a conflict with, breach or violation of,
or default under, or permit any such acceleration in, any Material
Agreement of TCT; or
(ii) will require TCT to make or obtain any Governmental
Authorization, Governmental Filing or Private Authorization, except (A)
filings under the Hart-Scott-Rodino Act, (B) for FCC approvals, and (C) the
filing of the Certificate of Merger with the Delaware Secretary of State.
(d) Except as set forth in Section 4.1(d) of the TCT Disclosure Schedule,
TCT does not have any Subsidiaries, and each such disclosed Subsidiary is (i)
wholly-owned unless noted otherwise in Section 4.1(d) of the TCT Disclosure
Schedule, (ii) a corporation or other Entity which is duly organized, validly
existing and in good standing under the laws of the respective state of
incorporation or formation set forth opposite its name on Section 4.1(d) of the
TCT Disclosure Schedule, and (iii) duly qualified and in good standing as a
foreign corporation or Entity in each other jurisdiction (as shown on Section
4.1(d) of the TCT Disclosure Schedule) in which the character of the property
owned or leased by it or the nature of its business or operations requires such
qualification, with full power and authority (corporate, partnership, limited
liability company and other) to carry on the business in which it is engaged,
except for such qualifications the failure of which to obtain, individually or
in the aggregate, would not have a material adverse effect on TCT. TCT owns,
directly or indirectly, all of the outstanding capital stock or equity interests
(as shown in Section 4.1(d) of the TCT Disclosure Schedule) of each Subsidiary,
free and clear of all Liens (except for restrictions on transfer of partnership
interests set forth in partnership agreements, as listed on Section 4.1(d)
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<PAGE>
of the TCT Disclosure Schedule, and as described in the notes to the TCT
Financial Statements), and all such stock or other equity interests has been
duly authorized and validly issued and is fully paid and nonassessable. Except
as set forth in Section 4.1(d) of the TCT Disclosure Schedule, there are no
outstanding Option Securities or Convertible Securities, or agreements or
understandings of any nature whatsoever, relating to the authorized and unissued
or outstanding capital stock or equity interests of any Subsidiary of TCT.
Except as the context otherwise requires, the representations and warranties of
TCT set forth in this Article shall apply to each of such Subsidiaries with the
same force and effect as though each of them were named in each Section of this
Article.
4.2 Financial and Other Information. TCT has heretofore made available to
-------------------------------
ATC copies of the financial statements of TCT listed in Section 4.2 of the TCT
Disclosure Schedule (the "TCT Financial Statements"). The TCT Financial
Statements, including in each case the notes thereto, have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, except as otherwise noted therein, are true, accurate and
complete in all material respects, and fairly present the consolidated financial
condition and the consolidated results of operations and cash flow of TCT, on
the bases therein stated, as of the respective dates thereof, and for the
respective periods covered thereby subject, in the case of unaudited financial
statements, to normal nonmaterial year-end audit adjustments and accruals. The
Annual Tower Revenue Run Rate of TCT for the month of October 1998 was not less
than $1,050,000.
4.3 Material Statements and Omissions; Absence of Events. Neither any
----------------------------------------------------
representation or warranty made by TCT contained in this Agreement or any
certificate, document or other instrument furnished or to be furnished by TCT
pursuant to the provisions hereof nor the TCT Disclosure Schedule contains or
will contain any untrue statement of a material fact or omits or will omit to
state any material fact required to make any statement contained herein or
therein, in light of the circumstances under which they were made, not
misleading. Since the date of the most recent financial statements constituting
a part of the TCT Financial Statements, except to the extent specifically
described in Section 4.3 of the TCT Disclosure Schedule, there has been no
change with respect to TCT which has had, or (so far as TCT can now reasonably
foresee) is likely to have, a material adverse effect on TCT. There is no Event
known to TCT which has had, or (so far as TCT can now reasonably foresee) is
likely to have, a material adverse effect on TCT, except to the extent
specifically described in Section 4.3 of the TCT Disclosure Schedule.
4.4 Title to Properties; Leases.
---------------------------
(a) Section 4.4(a) of the TCT Disclosure Schedule contains a true, accurate
and complete description of real property owned by TCT. TCT has good
indefeasible, marketable and insurable title to all such real property (other
than easement and leasehold real property) and good indefeasible and marketable
title to all of its other property and assets, tangible and intangible
(collectively, the "TCT Assets"); all of the TCT Assets are so owned, in each
case, free and clear of all Liens, except (i) Permitted Liens, and (ii) Liens
set forth on Section 4.4(a) of the TCT Disclosure Schedule (which Liens shall be
released prior to the Closing). Except for financing statements evidencing
Liens referred to in the immediately preceding sentence (a true, accurate and
complete list and description of which is set forth in Section 4.4(a) of the TCT
Disclosure Schedule), no financing statements under the Uniform Commercial Code
and no other filing which names TCT as debtor or which covers or purports to
cover any of the TCT Assets is on file in any state or other jurisdiction, and
TCT has not signed or agreed to sign any such financing statement or filing or
any agreement authorizing any secured party thereunder to file any such
financing statement or filing. Except as disclosed in Section 4.4(a) of the TCT
Disclosure Schedule, all improvements on the real property owned or leased by
TCT which improvements are owned by TCT are in compliance with applicable
zoning, wetlands and land use laws, ordinances and regulations and applicable
title covenants, conditions, restrictions and reservations in all respects
necessary to conduct the operations
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<PAGE>
as presently conducted, except for any instances of non-compliance which,
individually or in the aggregate, do not and will not have a material adverse
effect on the TCT Assets taken as a whole. Except as disclosed in Section 4.4(a)
of the TCT Disclosure Statement, all such improvements comply in all material
aspects with all Applicable Laws, Governmental Authorizations and Private
Authorizations. Except as disclosed in Section 4.4(a) of the TCT Disclosure
Statement, and except as would not, individually or in the aggregate, have a
material adverse effect on TCT, all of the transmitting towers, ground radials,
guy anchors, transmitting buildings and related improvements, if any, located on
the real property owned or leased by TCT are located entirely on such real
property. There is no pending or, to TCT's knowledge, threatened or contemplated
action to take by eminent domain or otherwise to condemn any material part of
any real property owned or leased by TCT. Except as set forth in Section 4.4(a)
of the TCT Disclosure Schedule, such transmitting towers, ground radials, guy
anchors, transmitting buildings and related improvements and other material
items of personal property, including equipment are, in TCT's reasonable
business judgment, in a state of good repair and maintenance and sound operating
condition, normal wear and tear excepted, have been maintained in a manner
consistent with generally accepted standards of sound engineering practice, and,
currently permit the TCT Business to be operated in all material respects in
accordance with the terms and conditions of all Applicable Laws, Governmental
Authorizations and Private Authorizations.
(b) Section 4.4(b) of the TCT Disclosure Schedule contains a true, accurate
and complete description of all Leases under which any real property used in the
business of TCT (the "TCT Business") is leased to TCT by any Person or by TCT to
any Person. Except as otherwise set forth in Section 4.4(b) of the TCT
Disclosure Schedule, each Lease under which TCT holds real or personal property
constituting a part of the TCT Assets has been duly authorized, executed and
delivered by TCT or its predecessor in interest thereunder and, to its
knowledge, each of the other parties thereto, and is a legal, valid and binding
obligation of TCT, and, to its knowledge, each of the other parties thereto,
enforceable in accordance with its terms, except as such enforceability may be
limited by bankruptcy, moratorium, insolvency and similar Laws affecting the
rights and remedies of creditors and obligations of debtors generally and by
general principles of equity. Except as would not, individually or in the
aggregate, have a material adverse effect on the TCT Assets or the TCT Business
taken as a whole, TCT has a valid leasehold interest in and enjoys peaceful and
undisturbed possession under all Leases pursuant to which it holds any such real
property or tangible personal property, subject to the terms of each Lease and
Applicable Law. None of the fixed assets or equipment comprising a part of the
TCT Assets is subject to contracts of sale, and none is held by TCT as lessee or
as conditional sales vendee under any Lease or conditional sales contract and
none is subject to any title retention agreement, except as set forth in Section
4.4(b) of the TCT Disclosure Schedule. True, accurate and complete copies of
each of such Leases will be made available by TCT to ATC and TCT will provide
ATC with photocopies of all such Leases requested by ATC (or true, accurate and
complete descriptions thereof have been set forth in Section 4.4(b) of the TCT
Disclosure Schedule, with respect to those that are oral). Except as would not,
individually or in the aggregate, have a material adverse effect on the TCT
Assets or the TCT Business taken as a whole, all of such Leases are valid and
subsisting and in full force and effect; neither TCT nor, to TCT's knowledge,
any other party thereto, has failed to duly comply with all of the material
terms and conditions of each such Lease or has done or performed, or failed to
do or perform (and no Claim is pending or, to the knowledge of TCT, threatened
to the effect that TCT has not so complied, done and performed or failed to do
and perform) any act which would invalidate or provide grounds for the other
party thereto to terminate (with or without notice, passage of time or both)
such Leases or impair the rights or benefits, or increase the costs, of TCT
under any of such Leases in any material respect.
4.5 Compliance with Private Authorizations. Section 4.5 of the TCT
--------------------------------------
Disclosure Schedule sets forth a true, accurate and complete list and
description of each Private Authorization which individually is material to the
TCT Assets or the TCT Business. TCT has obtained all Private Authorizations
that are
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necessary for the ownership or operation of the TCT Assets or the conduct of the
TCT Business, as currently conducted or proposed to be conducted on or prior to
the Closing Date, which, if not obtained and maintained, could, individually or
in the aggregate, have a material adverse effect on TCT. Except as would not,
individually or in the aggregate, have a material adverse effect on the TCT
Assets or the TCT Business taken as a whole, all of such Private Authorizations
are valid and in good standing and are in full force and effect. TCT is not in
material breach or violation of, or in default in the performance, observance or
fulfillment of, any such Private Authorization, and no Event exists or has
occurred which constitutes, or but for any requirement of giving of notice or
passage of time or both would constitute, such a material breach, violation or
default, under any such Private Authorization. No such Private Authorization
that is material to the TCT Business is the subject of any pending or, to TCT's
knowledge, threatened attack, revocation or termination.
4.6 Compliance with Governmental Authorizations and Applicable Law.
--------------------------------------------------------------
(a) Section 4.6(a) of the TCT Disclosure Schedule contains a true, complete
and accurate description of each material Governmental Authorization required
under Applicable Law (i) to own and operate the TCT Assets and conduct the TCT
Business, as currently conducted or proposed to be conducted on or prior to the
Closing Date, all of which are in full force and effect or (ii) that is
necessary to permit TCT to execute and deliver this Agreement and to perform its
obligations hereunder. TCT has obtained all Governmental Authorizations that
are necessary for the ownership or operation of the TCT Assets or the conduct of
the TCT Business as now conducted and which, if not obtained and maintained,
would, individually or in the aggregate, have any material adverse effect on
TCT. None of the Governmental Authorizations listed in Section 4.6(a) of the
TCT Disclosure Schedule is subject to any restriction or condition that would
limit in any material respect the ownership or operations of the TCT Assets or
the conduct of the TCT Business as currently conducted, except for restrictions
and conditions generally applicable to Governmental Authorizations of such type.
The Governmental Authorizations listed in Section 4.6(a) of the TCT Disclosure
Schedule are valid and in good standing, are in full force and effect and are
not impaired in any material respect by any act or omission of TCT or its
officers, directors, employees or agents, and the ownership and operation of the
TCT Assets and the conduct of the TCT Business are in accordance in all material
respects with the Governmental Authorizations. All material reports, forms and
statements required to be filed by TCT with all Authorities with respect to the
TCT Business have been filed and are true, complete and accurate in all material
respects. No such Governmental Authorization is the subject of any pending or,
to TCT's knowledge, threatened challenge or proceeding to revoke or terminate
any such Governmental Authorization.
(b) Except as otherwise specifically set forth in Section 4.6(b) of the TCT
Disclosure Schedule, since January 1, 1998, TCT has conducted its business and
owned and operated its property and assets in accordance with all Applicable
Laws and Governmental Authorizations, except for such breaches, violations and
defaults as, individually or in the aggregate, have not had and are not
reasonably likely to have a material adverse effect on TCT. Except as otherwise
specifically described in Section 4.6(b) of the TCT Disclosure Schedule, TCT is
not is in and is not charged by any Authority with, and, to TCT's knowledge, is
not threatened or under investigation by any Authority with respect to, any
breach or violation of, or default in the performance, observance or fulfillment
of, any Applicable Law relating to the ownership and operation of the TCT Assets
or the conduct of the TCT Business which will, individually or in the aggregate,
have a material adverse effect on TCT. Except as otherwise specifically
described in Section 4.6(b) of the TCT Disclosure Schedule, no Event exists or
has occurred, which constitutes, or but for any requirement of giving of notice
or passage of time or both would constitute, such a breach, violation or
default, under any Governmental Authorization or any Applicable Law, except for
such breaches, violations or defaults as, individually or in the aggregate, have
not had and reasonably would not have a material adverse effect on
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TCT. With respect to matters, if any, of a nature referred to in Section 4.6(b)
of the TCT Disclosure Schedule, except as otherwise specifically described in
Section 4.6(b) of the TCT Disclosure Schedule, all such information and matters
set forth in the TCT Disclosure Schedule, if adversely determined against TCT,
individually or in the aggregate, would not reasonably be expected to have a
material adverse effect on TCT.
(c) Except as set forth in Section 4.6(c) of the TCT Disclosure Schedule,
there have not been since the formation of TCT and there are no Legal Actions of
any kind pending or, to the knowledge of TCT, threatened at law, in equity or
before any Authority against TCT or any of its officers or Management Committee
representatives relating to the ownership or operation of the TCT Assets or the
conduct of the TCT Business. Such disclosed Legal Actions, if determined
adversely to TCT, individually or in the aggregate, would not reasonably be
expected to not have a material adverse effect on TCT; such disclosed Legal
Actions could not materially and adversely affect the ability of TCT to perform
its obligations under this Agreement, nor are there any judgments or orders
outstanding against TCT that could have such effect.
4.7 Intangible Assets. Section 4.7 of the TCT Disclosure Schedule sets
-----------------
forth a true, accurate and complete description of all Intangible Assets (other
than Governmental Authorizations and Private Authorizations and Leases) relating
to the ownership and operation of the TCT Assets or the conduct of the TCT
Business held or used by TCT, including without limitation the nature of TCT's
interest in each and the extent to which the same have been duly registered in
the offices as indicated therein. Except as set forth in Section 4.7 of the TCT
Disclosure Schedule, no Intangible Assets (except Governmental Authorizations,
Private Authorizations, and the Intangible Assets so set forth) are required for
the ownership or operation of the TCT Assets or the conduct of the TCT Business
as currently owned, operated and conducted or proposed to be owned, operated and
conducted on or prior to the Closing Date. TCT does not, to its knowledge,
wrongfully infringe upon or unlawfully use any Intangible Assets owned or
claimed by another, and TCT has not received any notice of any claim or
infringement relating to any such Intangible Asset.
4.8 Related Transactions. TCT is not a party or subject to any
--------------------
Contractual Obligation relating to the ownership or operation of the TCT Assets
or the conduct of the TCT Business between TCT and any of its officers or
Management Committee representatives or, to the knowledge of TCT, any member of
the Immediate Family of any thereof or any Affiliate of any of the foregoing,
including without limitation any Contractual Obligation providing for the
furnishing of services to or by, providing for rental of property, real,
personal or mixed, to or from, or providing for the lending or borrowing of
money to or from or otherwise requiring payments to or from, any such Person,
other than (a) Employment Arrangements listed or described in Section 4.14 of
the TCT Disclosure Schedule, (b) Contractual Obligations between TCT and any of
its officers, Management Committee representatives or Affiliates of TCT or any
of the foregoing, that will be terminated, at no cost or expense to ATC, prior
to the Closing, or (c) as specifically set forth in Section 4.8 of the TCT
Disclosure Schedule.
4.9 Insurance. TCT maintains, with respect to the TCT Assets and the TCT
---------
Business, policies of fire and extended coverage and casualty, liability and
other forms of insurance in such amounts and against such risks and losses as
are set forth in Section 4.9 of the TCT Disclosure Schedule.
4.10 Tax Matters. TCT has, in accordance with all Applicable Laws, filed
-----------
all Tax Returns that it was required to file, and has paid, or made adequate
provision on the most recent balance sheet forming part of the TCT Financial
Statements for the payment of, all material Taxes which have or may become due
and payable pursuant to said Tax Returns other than those Taxes being contested
in good faith for which adequate provision has been made. The Tax Returns of
TCT have been prepared in all material respects in accordance with all
Applicable Laws. All material Taxes which TCT is required by law to withhold
and collect have been duly withheld and collected, and have been paid over, in a
timely manner, to the proper
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Taxing Authorities to the extent due and payable. TCT has not executed any
waiver to extend, or otherwise taken or failed to take any action that would
have the effect of extending, the applicable statute of limitations in respect
of any Tax liabilities of TCT for the fiscal years prior to and including the
most recent fiscal year. Adequate provision has been made on the most recent
balance sheet forming part of the TCT Financial Statements for all Taxes accrued
through the date of such balance sheet in accordance with GAAP whether disputed
or not, and there are, to TCT's knowledge, no past transactions or matters which
could result in additional Taxes of a material nature being imposed on TCT for
which an adequate reserve has not been provided on such balance sheet. TCT has
at all times been classified as a partnership under the Code and, except as set
forth in Section 4.10 of the TCT Disclosure Schedule, has been similarly
classified under all state and local income Tax Laws to which it is subject; TCT
has never been a publicly traded partnership treated as a corporation under
Section 7704 of the Code, and, except as set forth in Section 4.10 of TCT
Disclosure Schedule, has never been similarly classified under state and local
income Tax Laws to which it is subject. TCT has never been a member of any
"affiliated group" of corporations, within the meaning of Section 1504(a) of the
Code. TCT is not a party to any tax sharing agreement or arrangement.
At all times during its existence, each member of TCT has been a "United
States person" as defined in Section 7701(a)(30) of the Code as then in effect.
TCT has complied with all material withholding obligations under Sections
1445(e)(1) or 1446 of the Code, and under any comparable provisions of state or
local income Tax Laws.
Except as disclosed in Section 4.10 of the TCT Disclosure Schedule and for
Taxes of a nature referred to in Section 10.2, the completion of the
Transactions will not (either alone or upon the occurrence of any additional or
subsequent Event) result in TCT being subject to additional Taxes which,
individually or in the aggregate, are material.
4.11 Employee Retirement Income Security Act of 1974.
-----------------------------------------------
(a) TCT (which for purposes of this Section shall include any ERISA
Affiliate of TCT) currently sponsors, maintains and contributes only to the
Plans and Benefit Arrangements set forth in Section 4.11(a) of the TCT
Disclosure Schedule. TCT has delivered or made available to ATC true, complete
and correct copies of (i) each Plan and Benefit Arrangement (or, in the case of
any unwritten Plans or Benefit Arrangements, reasonable descriptions thereof),
(ii) the two most recent annual reports on Form 5500 (including all schedules
and attachments thereto) filed with the Internal Revenue Service with respect to
each Plan or Benefit Arrangement (if any such report was required by Applicable
Law), (iii) the most recent summary plan description (or similar document) for
each Plan for which such a summary plan description is required by Applicable
Law or was otherwise provided to plan participants or beneficiaries, and (iv)
each trust agreement and insurance or annuity contract or other funding or
financing arrangement relating to any Plan. To the knowledge of TCT, each such
Form 5500 and each such summary plan description (or similar document) does not,
as of the date hereof, contain any material misstatements. Except as set forth
in Section 4.11(a) of the TCT Disclosure Schedule, TCT does not contribute to or
have an obligation to contribute to, and has not at any time contributed to or
had an obligation to contribute to, and no Plan listed in Section 4.11(a) of the
TCT Disclosure Schedule is, (i) an employee pension benefit plan within the
meaning of Section 3(2) of ERISA, (ii) a Multiemployer Plan, or (iii) a Plan
subject to Section 412 of the Code, Section 302 of ERISA or Title IV of ERISA.
TCT has no actual or potential liability under Title IV of ERISA. TCT does not
maintain any Plan that provides for post-retirement medical or life insurance
benefits, and TCT does not have any obligation or liability with respect to any
such Plan previously maintained by TCT, except as the provisions of COBRA may
apply to any former employees of TCT. Except as set forth in Section 4.11(a) of
the TCT Disclosure Schedule, as to all Plans and Benefit Arrangements listed in
Section 4.11(a) of the TCT Disclosure Schedule:
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(i) all such Plans and Benefit Arrangements comply and have been
administered in form and in operation, in all material respects, in
accordance with their respective terms and with all Applicable Laws and TCT
has not received any notice from any Authority that it is currently or is
going to be disputing or investigating such compliance;
(ii) none of the assets of any such Plan are invested in employer
securities or employer real property;
(iii) there are no Claims (other than routine Claims for benefits or
actions seeking quali fied domestic relations orders) pending or, to TCT's
knowledge, threatened involving such Plans or the assets of such Plans,
and, to TCT's knowledge, no facts exist which are reasonably likely to give
rise to any such Claims (other than routine Claims for benefits or actions
seeking qualified domestic relations orders);
(iv) all material contributions to, and material payments from, the
Plans and Benefit Arrangements that may have been required to be made in
accordance with the terms of the Plans and Benefit Arrangements, and any
applicable collective bargaining agreement, have been made. All such
contributions to, and payments from, the Plans and Benefit Arrangements,
except those payments to be made from a trust qualified under Section
401(a) of the Code, for any period ending before the Closing Date that are
not yet, but will be, required to be made, will be properly accrued and
reflected on the financial books and records of TCT;
(v) no Event has occurred which would result in imposition on TCT of
any material liability for (A) any breach of fiduciary duty damages under
Section 409 of ERISA, (B) a civil penalty assessed pursuant to subsections
(c), (i) or (l) of Section 502 of ERISA or (C) a tax imposed pursuant to
Chapter 43 of Subtitle D of the Code;
(vi) TCT has not incurred any material liability to a Plan (other
than for contributions not yet due) which liability has not been fully
paid or accrued for payment as of the date hereof;
(vii) except as otherwise set forth in Section 4.11(a) of the TCT
Disclosure Schedule, no current or former employee of TCT will be entitled
to any additional benefits or any acceleration of the time of payment or
vesting of any benefits under any Plan or Benefit Arrangement as a result
of the transactions contemplated by this Agreement;
(viii) no compensation payable by TCT to any of its employees under
any existing Plan or Benefit Arrangement (including by reason of the
transactions contemplated hereby) will be subject to disallowance under
Section 162(m) of the Code; and
(ix) any amount that could be received (whether in cash or property
or by virtue of the vesting of property) as a result of any of the
transactions contemplated by this Agreement by any employee, officer,
director or independent contractor of TCT who is a "disqualified
individual" (as such term is defined in proposed Regulation Section 1.280G-
1) under any employment arrangement would not be characterized as an
"excess parachute payment" (as such term is defined in Section 280G(b)(1)
of the Code), except for any amount that is approved by the stockholders of
TCT on or before the Closing Date in the manner provided in Section
280G(b)(5) of the Code.
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<PAGE>
(b) The execution, delivery and performance by TCT of this Agreement and
the Collateral Documents executed or required to be executed by TCT pursuant
hereto and thereto will not involve any prohibited transaction within the
meaning of ERISA or Section 4975 of the Code with respect to any Plan listed in
Section 4.11(a) of the TCT Disclosure Schedule.
4.12 Solvency. As of the execution and delivery of this Agreement, TCT
--------
is, and immediately prior to and immediately after giving effect to the
consummation of the Merger will be, Solvent.
4.13 Bank Accounts, Etc. Section 4.13 of the TCT Disclosure Schedule
------------------
contains a true, accurate and complete list as of the date hereof of all banks,
trust companies, savings and loan associations and brokerage firms in which TCT
has an account or a safe deposit box and the names of all Persons authorized to
draw thereon, to have access thereto, or to authorize transactions therein, the
names of all Persons, if any, holding valid and subsisting powers of attorney
from TCT and a summary statement as to the terms thereof. TCT agrees that prior
to the Closing Date it will not make or permit to be made any change affecting
any bank, trust company, savings and loan association, brokerage firm or safe
deposit box or in the names of the Persons authorized to draw thereon, to have
access thereto or to authorize transactions therein or in such powers of
attorney, or open any additional accounts or boxes or grant any additional
powers of attorney, without in each case first notifying ATC in writing.
4.14 Employment and Consulting Arrangements. Section 4.14 of the TCT
--------------------------------------
Disclosure Schedule contains a true, accurate and complete list of all TCT
employees and consultants, exclusive of consultants whose services for TCT are
terminable within thirty (30) days without liability, penalty or payment of any
kind by TCT or any Affiliate of TCT (the "TCT Employees"), together with each
such Person's title or the capacity in which he or she is employed or retained
and each such Person's compensation. TCT has no obligation or liability,
contingent or other, under any Employment Arrangement with any TCT Employee,
other than (i) those listed or described in Section 4.14 of the TCT Disclosure
Schedule, (ii) those incurred in the ordinary and usual course of business, or
(iii) such obligations or liabilities as do not and will not have, in the
aggregate, any material adverse effect on TCT. Except as described in Section
4.14 of the TCT Disclosure Schedule, (a) none of the TCT Employees is now, or
since its organization has been, represented by any labor union or other
employee collective bargaining organization, and TCT is not, and never has been,
a party to any labor or other collective bargaining agreement with respect to
any of the TCT Employees, (b) there are no pending grievances, disputes or
controversies with any union or any other employee or collective bargaining
organization of such employees, or threats of strikes, work stoppages or
slowdowns or any pending demands for collective bargaining by any such union or
other organization, and (c) neither TCT nor any of such employees is now, or has
since its organization been, subject to or involved in or, to TCT's knowledge,
threatened with, any union elections, petitions therefor or other organizational
activities, in each case with respect to the TCT Employees. TCT has performed
in all material respects all obligations required to be performed under all
Employment Arrangements and is not in material breach or violation of or in
material default or arrears under any of the terms, provisions or conditions
thereof.
4.15 Material Agreements. Listed on Section 4.15 of the TCT Disclosure
-------------------
Schedule are all Material Agreements (other than Leases, Private Authorizations
and Governmental Authorizations) relating to the ownership or operation of the
TCT Assets or the conduct of the TCT Business or to which TCT is a party or to
which it is bound or to which any of the TCT Assets is subject. True, accurate
and complete copies of each of such Material Agreements have been made available
by TCT to ATC, and TCT will provide ATC with photocopies of all such Material
Agreements requested by ATC (or true, accurate and complete descriptions thereof
have been set forth in Section 4.15 of the TCT Disclosure Schedule with respect
to Material Agreements comprised of site leases and site licenses granted by TCT
to third parties and with respect to Material Agreements that are oral). All of
such Material Agreements are valid, binding and
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<PAGE>
legally enforceable obligations of TCT and, to its knowledge, all other parties
thereto, except as such enforceability may be limited by bankruptcy, moratorium,
insolvency and similar Laws affecting the rights and remedies of creditors and
obligations of debtors generally and by general principles of equity. Except as
would not, individually or in the aggregate, have a material adverse effect on
the TCT Assets or the TCT Business taken as a whole, neither TCT nor, to its
knowledge, any other party thereto, has failed to duly comply with all of the
material terms and conditions of each such Material Agreement or has done or
performed, or failed to do or perform (and no Claim is pending or, to the
knowledge of TCT, threatened in writing to the effect that TCT has not so
complied, done and performed or failed to do and perform) any act which would
invalidate or provide grounds for the other party thereto to terminate (with or
without notice, passage of time or both) such Material Agreement or impair the
rights or benefits, or materially increase the costs, of TCT under any of such
Material Agreement.
4.16 Ordinary Course of Business. TCT, from the date of the most recent
---------------------------
TCT Financial Statements to the date hereof, except (i) as may be described on
Section 4.16 of the TCT Disclosure Schedule, (ii) as may be required or
expressly contemplated by the terms of this Agreement, or (iii) as may be
described in the TCT Financial Statements, including the notes thereto:
(a) has operated its business in all material respects in the normal,
usual and customary manner in the ordinary and regular course of business,
consistent with prior practice;
(b) except in each case in the ordinary course of business, consistent
with prior practice:
(i) has not incurred any obligation or liability (fixed,
contingent or other) individually having a value in excess of $50,000;
(ii) has not sold or otherwise disposed of or contracted to sell
or otherwise dispose of any of its properties or assets having a value
in excess of $50,000;
(iii) has not entered into any individual commitment having a
value in excess of $50,000; and
(iv) has not canceled any debts or claims;
(c) has not created or permitted to be created any Lien on any of the
TCT Assets, except for Permitted Liens;
(d) has not made or committed to make any additions to its property or
any purchases of equipment, except in the ordinary course of business
consistent with past practice or for normal maintenance and replacements;
(e) has not increased the compensation payable or to become payable to
any of the TCT Employees other than increases in the ordinary course of
business, or otherwise materially altered, modified or changed the terms of
their employment;
(f) has not suffered any material damage, destruction or loss (whether
or not covered by insurance) or any acquisition or taking of property by
any Authority;
(g) has not waived any rights of material value without fair and
adequate consideration;
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(h) has not experienced any work stoppage;
(i) except in the ordinary course of business, has not entered into,
amended or terminated any Lease, Governmental Authorization, Private
Authorization, Material Agreement or Employment Arrangement, or any
transaction, agreement or arrangement with any Affiliate of TCT;
(j) has not issued or sold, or agreed to issue or sell, any shares of
TCT Units, other shares of capital stock, Convertible Securities or Option
Securities;
(k) has not made, paid or declared any Distribution; and
(l) has not entered into any transactions or series of related
transactions which individually or in the aggregate is material to the TCT
Assets or the TCT Business.
4.17 Material and Adverse Restrictions. TCT is not a party to or subject
---------------------------------
to, nor is any of the TCT Assets subject to, any Employment Arrangement, Lease,
Material Agreement or Private Authorization which, individually or in the
aggregate, has had or, as far as TCT can now reasonably foresee, have, a
material adverse effect on TCT, except as set forth in Section 4.17 of the TCT
Disclosure Schedule and except for matters affecting the communications site
industry generally and assuming the TCT Business continues to be operated
substantially as in the past.
4.18 Broker or Finder. No Person assisted in or brought about the
----------------
negotiation of this Agreement or the Merger in the capacity of broker, agent or
finder or in any similar capacity on behalf of TCT or any TCT Member.
4.19 Environmental Matters. Except as set forth in Section 4.19 of the
---------------------
TCT Disclosure Schedule, TCT:
(a) has not been notified that it is potentially liable under, has not
received any request for information or other correspondence concerning its
potential liability with respect to any site or facility under, and, to
TCT's knowledge, is not a "potentially responsible party" under, the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, the Resource Conservation Recovery Act, as amended, or
any similar state Law;
(b) has not entered into or received any consent decree, compliance
order or administrative order issued pursuant to any Environmental Law;
(c) is not a party in interest or in default under any judgment,
order, writ, injunction or decree of any Final Order issued pursuant to any
Environmental Law;
(d) has, to its knowledge, obtained all material Environmental Permits
required under Environmental Laws, and has filed all material applications,
notices and other documents required to be filed prior to the date of this
Agreement to effect the timely renewal or issuance of all Environmental
Permits for the continued ownership or operation of the TCT Assets or
conduct of the TCT Business in the manner currently owned, operated and
conducted or proposed to be owned, operated and conducted prior to the
Closing Date;
(e) is in compliance in all material respects with all Environmental
Laws, and is not the subject of or, to TCT's knowledge, threatened with any
Legal Action involving a demand for damages or other potential liability,
including any Lien, with respect to violations or breaches of any
Environmental Law;
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<PAGE>
(f) has not conducted or received any site assessment, audit or other
investigation as to material environmental matters at any property
currently owned, leased, operated or occupied by TCT;
(g) has not installed or used any above ground or underground storage
tanks, friable asbestos, polychlorinated biphenyls or urea formaldehyde
foam insulation on any property currently owned, leased or operated by TCT
and, to its knowledge, there are no above ground or underground storage
tanks, friable asbestos, polychlorinated biphenyls or urea formaldehyde
foam insulation on any property currently owned, leased or operated by TCT;
and
(h) has no knowledge of any past or present Event related to TCT's
properties, operations or business, which Event, individually or in the
aggregate, could reasonably be expected to interfere with or prevent
continued compliance in all material respects with all Environmental Laws
applicable to the ownership or operation of the TCT Assets to the conduct
of the TCT Business substantially in the manner now conducted, or which,
individually or in the aggregate, may form the basis of any material Claim
for or arising out of the release or threatened release into the
environment of any Hazardous Material.
Section 4.19 of the TCT Disclosure Schedule sets forth a true, correct and
complete list of all existing Phase I environmental site assessment reports (an
"Environmental Report") on each parcel of Real Property owned or leased by TCT
for which an Environmental Report has previously been prepared for TCT (true,
correct and complete copies of which have heretofore been delivered by TCT to
ATC).
4.20 Capital Stock. The authorized and outstanding equity interests of TCT
-------------
are as set forth in Section 4.20 of the TCT Disclosure Schedule. All of the
outstanding TCT Units have been duly authorized and validly issued, are fully
paid and nonassessable and are not subject to any preemptive or similar rights
and are owned of record and, to TCT's knowledge, beneficially as shown in
Section 4.20 of the TCT Disclosure Schedule. No certificates have been issued
evidencing ownership of TCT Units. Except as set forth in Section 4.20 of the
TCT Disclosure Schedule, TCT has not granted or issued, nor has TCT agreed to
grant or issue, any TCT Units, other equity interests, or any Option Security or
Convertible Security, and TCT is not a party to or bound by any agreement, put
or commitment pursuant to which it is obligated to purchase, redeem or otherwise
acquire any equity interests in TCT or any Option Security or Convertible
Security.
4.21 Year 2000 Compliant. TCT has reviewed the areas within their
-------------------
business and operations which TCT believes could be materially and adversely
affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by TCT may be unable to recognize and perform properly date-
sensitive functions involving certain dates prior to and any date on or after
December 31, 1999). Based on such reviews, TCT believes that the "Year 2000
Problem" will not have a material adverse effect on TCT. Except as set forth in
Section 4.21 of the TCT Disclosure Schedule, to TCT's knowledge, each hardware,
software and firmware product (collectively "Software") used by TCT in its
business is Year 2000 compliant, except for such noncompliance that does not and
could not reasonably be expected to have a material adverse effect on TCT.
4.22 Materiality. The representations and warranties set forth in this
-----------
Article are true and correct as of the date hereof without the materiality
exceptions or qualifications contained therein, except to the
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extent that the failure of such representations and warranties to be so true and
correct, individually or in the aggregate, would not have a material adverse
effect on TCT.
ANYTHING IN THIS ARTICLE TO THE CONTRARY NOTWITHSTANDING, ATC AND ATI
ACKNOWLEDGE AND AGREE THAT TCT HAS NOT HERETOFORE DELIVERED TO THEM THE TCT
DISCLOSURE SCHEDULE AND THAT IT WILL BE DELIVERED PURSUANT TO THE PROVISIONS OF
SECTION 10.14.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ATC AND ATI
---------------------------------------------
Each of ATC and ATI, jointly and severally, hereby represents and warrants
to TCT and the TCT Members as follows:
5.1 Organization and Business; Power and Authority; Effect of Transaction.
---------------------------------------------------------------------
(a) Each of ATC and ATI is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization, has all
requisite power and authority (corporate and other) to own or hold under lease
its properties and to conduct its business as now conducted and is duly
qualified and in good standing as a foreign corporation in each other
jurisdiction in which the character of the property owned or leased by it or the
nature of its business or operations requires such qualification, except for
such qualifications the failure of which to obtain, individually or in the
aggregate, would not have a material adverse effect on ATC.
(b) Each of ATC and ATI has all requisite power and authority (corporate
and other) necessary to enable it to execute and deliver, and to perform its
obligations under, this Agreement and each Collateral Document executed or
required to be executed by it pursuant hereto or thereto and to consummate the
Transactions; and the execution, delivery and performance by ATC and ATI of this
Agreement and each Collateral Document executed or required to be executed by it
pursuant hereto or thereto have been duly authorized by all requisite corporate
or other action on the part of ATC and ATI. This Agreement has been duly
executed and delivered by ATC and ATI and constitutes, and each Collateral
Document executed or required to be executed by each of them pursuant hereto or
thereto or to consummate the Transactions when executed and delivered by ATC and
ATI will constitute, legal, valid and binding obligations of each of ATC and
ATI, enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, moratorium, insolvency and similar
Laws affecting the rights and remedies of creditors and obligations of debtors
generally and by general principles of equity.
(c) Except to the extent necessary under its credit facilities, neither the
execution and delivery by ATC and ATI of this Agreement or any Collateral
Document executed or required to be executed by each of them pursuant hereto or
thereto, nor the consummation of the Transactions, nor compliance with the
terms, conditions and provisions hereof or thereof by ATC and ATI:
(i) will conflict with, or result in a breach or violation of, or
constitute a default under, any Organic Document of ATC or ATI or any
Applicable Law, or will conflict with, or result in a breach or violation
of, or constitute a default under, or permit the acceleration of any
obligation or liability in, or but for any requirement of giving of notice
or passage of time or both would constitute such a conflict with, breach or
violation of, or default under, or permit any such acceleration in, any
Material Obligation of ATC or ATI; or
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(ii) will require ATC or ATI to make or obtain any Governmental
Authorization, Governmental Filing or Private Authorization, except (A)
filings contemplated by the Registration Rights Agreement, (B) filings
under the Hart-Scott-Rodino Act, (C) for FCC approvals, (D) the filing with
the Commission of such reports under Section 13(a) or 15(d) of the Exchange
Act as may be required in connection with this Agreement and the
transactions contemplated hereby, (E) the filing of the Certificate of
Merger with the Delaware Secretary of State, and appropriate documents with
the relevant authorities of other states in which ATI is qualified to do
business, (F) the filing of a Supplemental Listing Application with the New
York Stock Exchange, and (G) such other Governmental Authorizations,
Governmental Filings, and Private Authorizations the failure of which to be
made or obtained would not, individually or in the aggregate, have a
material adverse effect on ATC.
5.2 ATC SEC Reports. ATC has heretofore made available to TCT its Annual
---------------
Report on Form 10-K for its most recent fiscal year for which such a report has
been filed and its Quarterly Reports on Form 10-Q for all fiscal quarters for
which such a report has been filed (collectively, the "ATC SEC Documents"). As
of the respective dates thereof, the ATC SEC Documents were prepared in all
material respects in accordance with the Exchange Act and did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. ATC has timely
filed all forms, reports and documents with the SEC required to be filed by it
pursuant to the Securities Act and the Exchange Act which complied as to form,
at the time such form, document or report was filed, in all material respects
with the applicable requirements of the Securities Act and the Exchange Act.
The consolidated financial statements of ATC included in the ATC SEC Documents
(the "ATC Financial Statements"), including in each case the notes thereto, have
been prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered thereby, except as otherwise noted therein, are true,
accurate and complete in all material respects, and fairly present the
consolidated financial condition and the consolidated results of operations and
cash flow of ATC, on the bases therein stated, as of the respective dates
thereof, and for the respective periods covered thereby subject, in the case of
unaudited financial statements, to normal nonmaterial year-end audit adjustments
and accruals. As of the respective dates thereof, all forms, reports and
documents to be filed by ATC with the SEC pursuant to the Securities Act and the
Exchange Act between the date of this Agreement and the Closing Date will comply
as to form, at the time such form, document or report is filed, in all material
respects with the applicable requirements of the Securities Act and the Exchange
Act and will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
5.3 Material Statements and Omissions; Absence of Events. Neither any
----------------------------------------------------
representation or warranty made by ATC or ATI contained in this Agreement or any
certificate, document or other instrument furnished or to be furnished by ATC or
ATI pursuant to the provisions hereof nor the ATC SEC Documents contains or will
contain any untrue statement of a material fact or omits or will omit to state
any material fact required to make any statement contained herein or therein, in
light of the circumstances under which they were made, not misleading. Since
the date of the most recent financial statements constituting a part of the ATC
Financial Statements, except to the extent specifically described in the ATC SEC
Documents, there has been no change with respect to ATC or any of its
Subsidiaries that has had a material adverse effect on ATC. There is no Event
known to ATC which has had or (so far as ATC can now reasonably foresee) is
likely to have a material adverse effect on ATC, except to the extent
specifically described in the ATC SEC Documents. ATC is not aware of any
impending or contemplated Event that would cause any of the representations and
warranties made by it in this Article not to be true, correct and complete on
the date of such Event as if made on that date.
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5.4 Broker or Finder. No Person assisted in or brought about the
----------------
negotiation of this Agreement or the Transactions in the capacity of broker,
agent or finder or in any similar capacity on behalf of ATC or ATI.
5.5 Capital Stock. The authorized and outstanding capital stock of ATC,
-------------
as of the date set forth therein, is as set forth in the most recent ATC SEC
Documents. All of such outstanding capital stock has been, and, when issued in
accordance with the terms of this Agreement, the ATC Common Stock to be issued
upon consummation of the Merger will be, duly authorized and validly issued,
fully paid and nonassessable and not subject to any preemptive or similar
rights, and free and clear of all Liens attributable to any action or failure to
act of ATC or any of the Subsidiaries. Since the date as of which information
is set forth in the most recent ATC SEC Documents, ATC has not issued (a) any
shares of common stock of any class, except (i) upon conversion of shares of one
class into shares of another class, (ii) upon exercise of options referred to in
the most recent ATC Financial Statements, (iii) pursuant to the consummation of
acquisitions referred to in the ATC SEC Documents, or (iv) pursuant to the
consummation of an acquisition as part of which an aggregate of 1,430,879 shares
of ATC Common Stock were issued, or (b) any Convertible Securities or Option
Securities, except for the issue of stock options under its 1997 Stock Option
Plan, as amended and restated. Except as disclosed in the ATC SEC Documents,
all outstanding shares of capital stock of the Significant Subsidiaries (as
defined for purposes of Regulations S-X under the Exchange Act and including, in
any event, ATI) of ATC are owned by ATC (in the case of ATI and certain of such
other Significant Subsidiaries) or a direct or indirect wholly-owned Subsidiary
of ATC.
5.6 Compliance with Governmental Authorizations and Applicable Law.
--------------------------------------------------------------
(a) ATC and its Subsidiaries have conducted their respective business and
owned and operated their respective property and assets in accordance with all
Applicable Laws (including without limitation all Environmental Laws) and
Governmental Authorizations, except for such breaches, violations and defaults
as, individually or in the aggregate, have not had and are not reasonably likely
to have a material adverse effect on ATC. Neither ATC nor any of its
Subsidiaries, as of the date of this Agreement, is in, or is charged by any
Authority with, or, to ATC's knowledge, is threatened or under investigation by
any Authority with respect to, any breach or violation of, or default in the
performance, observance or fulfillment of, any Applicable Law (including without
limitation any Environmental Laws) relating to the ownership and operation of
their respective assets or the conduct of their respective businesses which,
individually or in the aggregate, has had or will have a material adverse effect
on ATC. No Event exists or has occurred, as of the date of this Agreement,
which constitutes, or but for any requirement of giving of notice or passage of
time or both would constitute, such a breach, violation or default, under any
Governmental Authorization or any Applicable Law (including without limitation
any Environmental Law), except for such breaches, violations or defaults as,
individually or in the aggregate, have not had and will not have a material
adverse effect on ATC.
(b) There are, as of the date of this Agreement, no Legal Actions of any
kind pending or, to the knowledge of ATC, threatened at law, in equity or before
any Authority against ATC or any of its Subsidiaries or the officers or
directors of any thereof relating to the ownership or operation of their
respective assets or the conduct of their respective businesses which, if
determined adversely to ATC, individually or in the aggregate, will have a
material adverse effect on ATC or which could materially and adversely affect
the ability of ATC or ATI to perform its obligations under this Agreement, nor
are there any judgments or orders outstanding against ATC or ATI that could have
such effect.
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5.7 Materiality. The representations and warranties set forth in this
-----------
Article are true and correct as of the date hereof without the materiality
exceptions or qualifications contained therein, except to the extent that the
failure of such representations and warranties to be so true and correct,
individually or in the aggregate, would not have a material adverse effect
on ATC.
ARTICLE 6
COVENANTS
6.1 Access to Information; Confidentiality.
--------------------------------------
(a) Each party shall afford to the other party and its accountants,
counsel, financial advisors and other representatives (the "Representatives")
full access during normal business hours throughout the period prior to the
Closing Date to all of its (and its Subsidiaries') properties, books, contracts,
insurance policies, studies and reports, environmental studies and reports,
commitments and records (including without limitation Tax Returns) and, during
such period, shall furnish promptly upon written request (i) a copy of each
report, schedule and other document filed or received by any party pursuant to
the requirements of any Applicable Law or filed by it with any Authority in
connection with the Merger or any other report, schedule or documents which may
have a material effect on the businesses, operations, properties, prospects,
personnel, condition (financial or other), or results of operations of their
respective businesses, (ii) to the extent not provided for pursuant to the
immediately preceding clause, in the case of TCT, all financial records,
ledgers, work papers and other sources of financial information possessed or
controlled by it or its accountants deemed by ATC or its Representatives
necessary or useful for the purpose of performing an audit of the business and
assets of TCT, and (iii) such other information concerning any of the foregoing
as ATC or TCT shall reasonably request. All Confidential Information furnished
pursuant to the provisions of this Agreement, including without limitation this
Section, will be kept confidential and shall not, without the prior written
consent of the party disclosing such Confidential Information, be disclosed by
the other party in any manner whatsoever, in whole or in part, and, except as
required by Applicable Law (including without limitation in connection with any
registration, proxy or information statement or similar document filed pursuant
to any federal or state securities Law) shall not be used for any purposes,
other than in connection with the Merger. Except as otherwise herein provided,
each party agrees to reveal such Confidential Information only to those of its
Representatives or other Persons who it believes need to know such Confidential
Information for the purpose of evaluating and consummating the Merger. For
purposes of this Agreement, "Confidential Information" shall mean any and all
information (excluding information that (i) has been or is obtained from a
source independent of the disclosing party that, to the receiving party's
knowledge, is not subject to any confidentiality restriction, (ii) is or becomes
generally available to the public other than as a result of unauthorized
disclosure by the receiving party, or (iii) is independently developed by the
receiving party without reliance in any way on information provided by the
disclosing party or a third party independent of the disclosing party that, to
the receiving party's knowledge, is not subject to any confidentiality
restriction) related to the business or businesses of ATC, ATI and their
respective Affiliates or TCT and its Affiliates, including any of their
respective successors and assigns.
(b) Notwithstanding the provisions of Section 6.1(a), (i) each party may
disclose such information as it may reasonably determine to be necessary in
connection with seeking all Governmental and Private Authorizations or that is
required by Applicable Law to be disclosed, including without limitation in any
registration, proxy or information statement or other document required to be
filed under any federal or state securities Law, and (ii) ATC may, with the
prior written consent of TCT, which consent
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shall not be unreasonably withheld, delayed or conditioned, disclose the subject
matter of this Agreement to Persons with whom TCT has a business or contractual
relationship in connection with ATC's due diligence investigation of TCT. In the
event that this Agreement is terminated in accordance with its terms, each party
shall promptly redeliver all written Confidential Information provided pursuant
to this Section or any other provision of this Agreement or otherwise in
connection with the Merger and shall not retain any copies, extracts or other
reproductions in whole or in part of such written material, other than one copy
thereof which shall be delivered to independent counsel for such party which
shall be bound by the provisions of Section 6.1(a).
(c) Anything in this Section or elsewhere in this Agreement to the contrary
notwithstanding, either party may disclose information received or retained by
it in accordance with the provisions of this Agreement if it can demonstrate (i)
such information is generally available to or known by the public from a source
other than the party seeking to disclose such information or (ii) was obtained
by the party seeking to disclose such information from a source other than the
other party, provided that such source was not bound by a duty of
confidentiality to the other party or another party with respect to such
information.
(d) No investigation pursuant to this Section or otherwise shall affect any
representation or warranty in this Agreement of any party or any condition to
the obligations of the parties hereto.
(e) The provisions of this Section shall apply to all Subsidiaries of ATC
and TCT.
6.2 Agreement to Cooperate; Certain Other Covenants.
-----------------------------------------------
(a) Each of the parties hereto shall use reasonable business efforts (x) to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under Applicable Law to consummate the
Merger and the other Transactions, and (y) to refrain from taking, or cause to
be taken, any action and to refrain from doing or causing to be done, anything
which could impede or impair the consummation of the Merger or the consummation
of the other Transactions, including, in all cases, without limitation using its
reasonable business efforts (i) to prepare and file with the applicable
Authorities as promptly as practicable after the execution of this Agreement all
requisite applications and amendments thereto, together with related
information, data and exhibits, necessary to request issuance of orders
approving the Merger by all such applicable Authorities, (ii) to obtain all
necessary or appropriate waivers, consents and approvals, (iii) to effect all
necessary registrations, filings and submissions (including without limitation
filings within five (5) business days of the date of this Agreement under the
Hart-Scott-Rodino Act and all filings necessary for ATI to own and operate the
TCT Assets and the TCT Business), (iv) to lift any injunction or other legal bar
to the Merger (and, in such case, to proceed with the Merger as expeditiously as
possible), and (v) to obtain the satisfaction of the conditions specified in
Article 8, and (vi) to advise the other of, in the case of TCT, any changes that
would be required in the TCT Disclosure Schedule if the applicable
representations and warranties set forth in Article 4 did not refer to the date
of this Agreement and, in the case of ATC, of the information with respect to
its authorized and issued capital stock, other than as a consequence of matters
heretofore disclosed by ATC to TCT, including without limitation those set forth
in the ATC SEC Documents.
(b) The parties shall cooperate with one another in the preparation of all
Tax Returns, questionnaires, applications or other documents (i) regarding any
Taxes or transfer, recording, registration or other fees which become payable in
connection with the Merger that are required to be filed on or before the
Closing Date; and (ii) to allocate under Section 1060 of the Code all the
consideration under this Agreement provided by ATC and ATI in conformity with
the past practice of ATC and ATI and with a third-party appraisal of fixed
assets to be obtained by ATI at its sole expense.
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(c) TCT shall cooperate and use its reasonable business efforts to cause
its independent accountants to reasonably cooperate with ATC in order to enable
ATC, at its sole and absolute discretion and expense, to have its independent
accountants prepare audited financial statements for TCT described in Section
6.2(g). TCT will use its reasonable business efforts to ensure that such
financial statements will have been prepared in accordance with GAAP applied on
a basis consistent with the TCT Financial Statements and will present fairly the
financial condition, results of operation and cash flow of TCT. Without limiting
the generality of the foregoing, TCT agrees that it will (i) consent to the use
of such audited financial statements in any registration, proxy or information
statement or other document filed by ATC or any of its Affiliates under the
Securities Act or the Exchange Act and (ii) execute and deliver, and cause its
officers to execute and deliver, such "representation" letters as are
customarily delivered in connection with audits and as ATC's independent
accountants may reasonably request under the circumstances.
In the event that, within forty-five (45) days of the date of this
Agreement, ATC enters into an agreement that requires it to file a registration
statement on Form S-4 under the Securities Act or commences preparation of such
a Registration Statement, ATC and TCT will enter into an amendment to this
Agreement providing, among other things, that (i) ATC shall, if permitted by the
SEC, register under the Securities Act the shares of ATC Common Stock issuable
pursuant to the consummation of the Merger, (ii) the form of TCT Investment
Letter shall be appropriately revised and the Persons from whom it is required
to be delivered shall be limited to those Persons who may be deemed to be
"affiliates" of TCT, within the meaning of the applicable rules and regulations
of the SEC under the Securities Act.
6.3 Public Announcements. Until the Closing or the termination of this
--------------------
Agreement, each party shall consult with the other before issuing any press
release or otherwise making any public statements with respect to this Agreement
or the Merger and shall not issue any such press release or make any such public
statement without the prior written approval of the other. Notwithstanding the
foregoing, the parties acknowledge and agree that they may, without each other's
prior consent, issue such press releases or make such public statements as may
be required by Applicable Law, in which case the issuing party shall use all
reasonable efforts to consult with the other party and agree upon the nature,
content and form of such press release or public statement.
6.4 Notification of Certain Matters. Each party shall give prompt notice
-------------------------------
to the other of the occurrence or non-occurrence of any Event the occurrence or
non-occurrence of which would be reasonably likely to cause (a) any
representation or warranty made by it contained in this Agreement to be untrue
or inaccurate in any material respect or (b) any failure by it to comply with or
satisfy, or be able to comply with or satisfy, in any material respect, any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement in any material respect, such that, in any such case, one or more
of the conditions of Closing would not be satisfied; provided, however, that the
delivery of any notice pursuant to this Section shall not limit or otherwise
affect the rights and remedies available hereunder to the party receiving such
notice or the obligations of the party delivering such notice and shall not, in
any event, affect the representations, warranties, covenants and agreements of
the parties or the conditions to their respective obligations under this
Agreement.
6.5 No Solicitation. Unless and until this Agreement has been terminated,
---------------
TCT shall not, and shall not permit any TCT Member to, nor shall it or any of
them knowingly permit any of its or any of their Representatives (including,
without limitation, any investment banker, financial adviser, broker, finder,
attorney, accountant or other agent or representative retained by it or any of
them) to, initiate, solicit, encourage or facilitate, or any of their
Representatives (including, without limitation, any investment banker, broker,
finder, attorney or accountant retained by it or any of them) to, initiate,
solicit or facilitate, directly
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<PAGE>
or indirectly, any inquiries or the making of any proposal with respect to any
Alternative Transaction, engage in any discussions or negotiations concerning,
or provide to any other Person any information or data relating to, it for the
purposes of, or otherwise cooperate in any way with or assist or participate in,
or facilitate any inquiries or the making of any proposal which constitutes, or
may reasonably be expected to lead to, a proposal to seek or effect any
Alternative Transaction, or agree to or endorse any Alternative Transaction. If
TCT, any TCT Member or its or any of their Representatives receives any inquiry
with respect to an Alternative Transaction while this Agreement is in effect,
TCT or such TCT Member shall inform the inquiring party that it is not entitled
to enter into discussions or negotiations relating to an Alternative
Transaction. The provisions of this Section shall apply to all Subsidiaries of
TCT other than RCC.
6.6 Conduct of Business by TCT Pending the Merger. Except as set forth in
---------------------------------------------
Section 6.6 of the TCT Disclosure Schedule or as otherwise contemplated by this
Agreement, after the date hereof and prior to the Closing Date or earlier
termination of this Agreement, unless ATC shall otherwise consent in writing,
TCT shall, and shall cause each of its Subsidiaries (other than RCC) to:
(a) conduct its business in the ordinary and usual course of business
and consistent with past practice;
(b) not (i) amend or propose to amend its Organic Documents, (ii)
split, combine or reclassify (whether by stock dividend or otherwise) its
outstanding capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of, or in substitution for shares of its
capital stock, or (iii) declare, set aside, pay or make any Distribution,
whether in cash, stock, property or otherwise;
(c) not issue, sell, pledge or dispose of, or agree to issue, sell,
pledge or dispose of, any TCT Units, other equity interests in TCT,
Convertible Securities or Option Securities;
(d) not (i) incur or become contingently liable with respect to any
Indebtedness for Money Borrowed, other than (x) borrowings, in addition to
those permitted or consented to pursuant to the provisions of clause (y)
immediately following, not to exceed the sum of (I) the principal amount of
borrowings presently outstanding and (II) $3.0 million in the aggregate
outstanding at any one time, and (y) borrowings necessary to finance
acquisitions and construction projects permitted or consented pursuant to
the provisions of paragraph (e) below, (ii) redeem, purchase, acquire or
offer or agree to redeem, purchase or acquire any of its equity interests,
including without limitation any TCT Units, other equity interests,
Convertible Securities or Option Securities, (iii) sell, lease, license,
pledge, dispose of or encumber any properties or assets or sell any
businesses other than (x) dispositions in the ordinary course of business,
(y) Liens arising in accordance with the provisions of Indebtedness for
Money Borrowed in effect on the date hereof and in accordance with their
present terms, and (z) leases of towers and shelter space to third-party
customers in the ordinary course of business and in accordance with past
practices and policies, or (iv) make any loans, advances or capital
contributions to, or investments in, any other Person, except to officers
and employees of TCT for travel, business or relocation expenses in the
ordinary course of business;
(e) not enter into or agree to enter into any Restricted Transaction
(or group of related Restricted Transactions), whether for its own account
or for any other Person, if (i) the aggregate amount reasonably expected to
be expended by TCT or any of its Subsidiaries in connection with such
individual Restricted Transaction (together with any group of related
Restricted Transactions) exceeds $3.0 million, or (ii) the aggregate amount
to be expended in connection with all Restricted Transactions (together
with any group of related Restricted Transactions) exceeds $10.0 million;
provided, however, that the foregoing restriction shall not apply to any
Restricted Transaction pursuant to agreements which are described in
Section 6.6(e) of the TCT Disclosure Schedule;
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<PAGE>
(f) use reasonable business efforts to preserve intact its business
organization and goodwill, keep available the services of its present
officers and key employees, and preserve the goodwill and business
relationships with customers and others having business relationships with
them and not engage in any action, directly or indirectly, with the intent
to adversely impact the transactions contemplated by this Agreement;
(g) confer on a regular and frequent basis with one or more
representatives of ATC to report material operational matters and the
general status of ongoing operations;
(h) not adopt, enter into, amend or terminate any employment,
severance, special pay arrangement with respect to termination of
employment or other similar arrangements or agreements with any directors,
officers or key employees without the prior approval of ATC;
(i) maintain with financially responsible insurance companies
insurance on the TCT Assets and the TCT Business in such amounts and
against such risks and losses as are consistent with past practice;
(j) not make any Tax election that could reasonably be likely to have
a material adverse effect on TCT or settle or compromise any material Tax
liability;
(k) except in the ordinary course of business or except as would not,
individually or in the aggregate, have a material adverse effect on TCT,
not modify, amend or terminate any Material Agreement to which TCT is a
party or by which any of the TCT Assets may be bound or to which any of
them may be subject or waive, release or assign any material rights or
claims thereunder;
(l) not make any material change to its accounting methods, principles
or practices, except as may be required by GAAP;
(m) not enter into any Lease or other agreement with respect to any
antennae site on any of its towers, whether presently owned or hereafter
acquired by TCT other than in the ordinary course of business and in
accordance with past practices and policies;
(n) except as set forth in Section 4.14 of the TCT Disclosure
Schedules, (i) not grant to any executive officer or other key employee of
TCT any increase in compensation, except for normal increases in the
ordinary course of business consistent with past practice or as required
under Benefit Arrangements set forth in Section 4.14 of the TCT Disclosure
Schedule, (ii) not grant to any such executive officer any increase in
severance or termination pay, except as was required under any Benefit
Arrangements set forth in Section 4.14 of the TCT Disclosure Schedule,
(iii) not adopt or, except in the ordinary course of business, amend any
Plan or Benefit Arrangement (including change any actuarial or other
assumption used to calculate funding obligations with respect to any Plan,
or change the manner in which contributions to any Plan are made or the
basis on which such contributions are determined) and (iv) except in the
ordinary course, not enter into, amend in any material respect or terminate
any Governmental Authorization, material Private Authorization or material
Contract;
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<PAGE>
(o) not voluntarily take or permit to be taken any action which if
taken between the end of its most recent fiscal quarter and prior to the
date of this Agreement would have been required to be noted as an exception
on Section 4.16 of the TCT Disclosure Schedule, other than pursuant to the
conduct of its business in the ordinary and usual course of business and
consistent with past practice; and
(p) not authorize or enter into any agreement that would violate any
of the foregoing.
In the event that TCT or any of its Subsidiaries desires to take any of the
actions prohibited by the provisions of this Section, TCT shall give prompt
written notice to ATC, referring to the provisions of this Section. In the
event that ATC does not object to the taking of such action within ten (10)
business days of receipt of such notice and all material information requested
by ATC with respect thereto, TCT or such Subsidiary shall have the right to take
such action.
6.7 Preliminary Title Reports. As promptly as practicable after the
-------------------------
execution of this Agreement, ATC may obtain at its expense a standard
preliminary title report (the "Title Report") dated on or after the date of this
Agreement issued by such title company or companies as TCT and ATC shall
mutually reasonably agree with respect to each parcel of Real Property owned or
leased by TCT or any of its Subsidiaries (other than RCC).
6.8 Environmental Site Assessments. As promptly as practicable after the
------------------------------
execution of this Agreement, ATC may at its own cost and expense obtain, and
deliver to TCT full and complete copies of, an Environmental Report on each
parcel of Real Property owned or leased by TCT or any of its Subsidiaries for
which an Environmental Report has not heretofore been delivered by TCT to ATC
(or as to which ATC has heretofore indicated that the existing Environmental
Report raises questions of potential liability which has had or could be
reasonably expected to have a material adverse effect on TCT). Site assessments
shall be conducted by such consultants and professionals as ATC and TCT shall
mutually reasonably agree and shall be arranged at times mutually convenient to
the parties. Each of TCT and ATC shall be entitled to have representatives
present at the time such site assessments are conducted and to have copies of
all correspondence with the company preparing such Environmental Reports.
6.9 Solicitation of Employees. If this Agreement is terminated, each of
--------------------------
ATC and TCT agrees that neither it nor any of its Affiliates will, for a period
of twelve (12) months from the date of such termination, solicit or actively
seek to hire any individual who during such period is employed by ATC or any of
its Affiliates or TCT or any of its Affiliates, as the case may be, whether or
not such individual would commit breach of such individual's employment
agreement or contract in leaving such employment; provided, however, that the
foregoing shall not prevent ATC or TCT (or any of their respective Affiliates)
from soliciting or actively seeking to hire any such key employee who (i)
initiates employment discussions with it, (ii) is not employed by ATC or TCT, as
the case may be, on the date TCT or ATC (or any of their respective Affiliates),
as the case may be, first solicits such key employee, or (iii) soliciting
through general advertisement, including without limitation on the Internet.
6.10 Certificate of Non-Foreign Status. Prior to the Closing Date, TCT
---------------------------------
shall use its reasonable business efforts to obtain on behalf of itself and ATC
(in connection with potential deduction and withholding obligations under
Sections 1445 or 1446 of the Code), from each TCT Member a certificate of non-
foreign status of such member that meets the requirements of both Section
1.1445-2(b) of the Regulations and Section 5.04 of Revenue Procedure 89-31,
1989-1 C.B. 895, it being understood that the failure to obtain any such
certificates shall not be deemed to be a breach of this Section. TCT shall
furnish to ATC on the Closing Date a copy of such certificates of non-foreign
status.
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6.11 Tax Returns and Other Reports. TCT's former tax matters partner
-----------------------------
(within the meaning of Section 6231 of the Code) will prepare and file all Tax
Returns and other reports, filings, and amendments required to be filed by TCT
or delivered to the TCT members after the Effective Time, provided however that
ATC and ATI shall be provided the opportunity to review and comment upon such
reports, filings, and amendments prior to their filing or delivery. The parties
hereto agree that the Merger is being effected as a convenient mechanism to sell
TCT's assets to ATI and then liquidate TCT, and accordingly the parties will
treat the Merger for income Tax purposes as a sale by TCT of all of its assets
followed by a liquidation of TCT.
6.12 Section 754 Elections. At the request of ATC, TCT and ATC shall use
---------------------
reasonable business efforts to cooperate to cause each Subsidiary of TCT that is
identified by ATC to implement an election under Section 754 of the Code and
under comparable provisions of all state and local income Tax Laws.
ARTICLE 7
CLOSING CONDITIONS
------------------
7.1 Conditions to Obligations of Each Party. The respective obligations
---------------------------------------
of each party to consummate the Merger shall, except as hereinafter provided in
this Section, be subject to the satisfaction at or prior to the Closing Date of
the following conditions, any or all of which may be waived, in whole or in
part, to the extent permitted by Applicable Law:
(a) As of the Closing Date, no Legal Action shall be pending before
any Authority seeking to enjoin, restrain, prohibit or make illegal or to
impose any materially adverse conditions in connection with, the
consummation of the Merger, it being understood and agreed that a written
request by any Authority for information with respect to the Merger, which
information could be used in connection with such Legal Action, shall not
in itself be deemed to be a Legal Action pending before any such Authority;
(b) Any waiting period (and any extension thereof) applicable to the
consummation of the Merger under the Hart-Scott-Rodino Act shall have
expired or been terminated without any condition that has a material
adverse effect on TCT or any of its Members or any Affiliate thereof;
(c) Except with respect to the Hart-Scott-Rodino Act (which is
addressed in Section 7.1(b)), all authorizations, consents, waivers, orders
or approvals required to be obtained from all Authorities, and all filings
(other than the Certificate of Merger), submissions, registrations, notices
or declarations required to be made by any of the parties with any
Authority, prior to the consummation of the Merger, shall have been
obtained from, and made with, all such Authorities, except for such
authorizations, consents, waivers, orders, approvals, filings,
registrations, notices or declarations the failure to obtain or make would
not have a material adverse effect on TCT; and
(d) The ATC Common Stock to be issued as part of the Merger
Consideration shall have been listed for trading on The New York Stock
Exchange, subject to official notice of issuance.
7.2 Conditions to Obligations of ATC and ATI. The obligation of ATC to
----------------------------------------
cause ATI to, and of ATI to, consummate the Merger shall be subject to the
satisfaction of the following conditions, any or all of which may be waived, in
whole or in part, by ATC and ATI to the extent permitted by Applicable Law:
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(a) All agreements, certificates, opinions and other documents
required to be delivered pursuant to the provisions of this Agreement shall
be reasonably satisfactory in form, scope and substance to ATC and its
counsel, and ATC and its counsel shall have received all information and
copies of all documents, including records of corporate proceedings, which
they may reasonably request in connection therewith, such documents where
appropriate to be certified by proper Authorities or corporate officers;
(b) TCT shall have furnished ATC and, at ATC's request, any bank or
other financial institution providing credit to ATC, with one or more
favorable opinions, dated the Closing Date, of counsel for TCT, reasonably
satisfactory to ATC, covering the matters set forth in Exhibit A and made a
part hereof, and in forms and scope reasonably satisfactory to ATC, and
with respect to such other matters arising after the date of this Agreement
as ATC or its counsel may reasonably request;
(c) (i) The representations and warranties of TCT contained in this
Agreement (other than in Section 4.20) shall be true and correct at and as
of the Closing Date with the same force and effect as though made on and as
of such date, except (x) to the extent such representations and warranties
expressly speak as of an earlier date (in which case such representations
and warranties shall continue to be true and correct as of such earlier
date) and (y) to the extent that the failure of such representations and
warranties to be true and correct, individually or in the aggregate, would
not have a material adverse effect on TCT; provided, however, that for the
purpose of this clause (y), representations and warranties that are
qualified as to materiality (including by reference to "material adverse
effect") shall not be deemed to be so qualified; (ii) the representations
and warranties of TCT set forth in Section 4.20 of this Agreement shall be
true and correct; provided, however, such untruth shall be disregarded for
purposes of this Section 7.2(c) if, by adjusting the Merger Consideration
at Closing, the untruth is rendered harmless and such adjustment either
does not require the approval of the TCT Members, or such approval has been
obtained, in accordance with the DLLCA: (iii) each and all of the
agreements and covenants to be performed or satisfied by TCT or any of the
TCT stockholders hereunder at or prior to the Closing Date shall have been
duly performed or satisfied in all material respects; and (iv) TCT shall
have furnished ATC with such certificates and other documents evidencing
the truth of such representations, warranties, covenants and agreements and
the performance of such agreements or conditions as ATC or its counsel
shall have reasonably requested;
(d) Other than those which, individually or in the aggregate, the
failure of which to obtain would not have a material adverse effect on the
TCT Assets or the TCT Business taken as a whole, all authorizations,
consents, waivers, orders or approvals required by the provisions of this
Agreement to be obtained from all Persons (other than Authorities) prior to
the consummation of the Merger, including without limitation those required
in order for TCT to continue to own all of the TCT Assets and continue to
operate the TCT Business as conducted immediately prior to the Closing
(including without limitation, at the cost and expense of TCT, all
modifications, if any, of Private Authorizations, Leases and Material
Agreements of TCT set forth in Section 7.2(d) of the TCT Disclosure
Schedule) shall have been obtained, without the imposition, individually or
in the aggregate, of any condition or requirement which could have a
material adverse effect on TCT;
(e) Between the date of this Agreement and the Closing Date, there
shall not have occurred and be continuing any material adverse change in
TCT from that reflected in the most recent TCT Financial Statements;
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(f) The TCT Members and TCT shall have delivered or cause to be
delivered to ATC all of the Collateral Documents and other agreements,
documents and instruments required to be delivered by the TCT Members or
TCT to ATC at or prior to the Closing pursuant to the terms of this
Agreement;
(g) ATC shall have received a letter from its independent accountants
to the effect that an unqualified report (as to the scope of the audit,
access to the books and records and the cooperation of management) on the
financial statements (consisting of a balance sheet for the fiscal year
ended December 31, 1997, and statements of operations and cash flow for the
period ended December 31, 1997) of TCT could be prepared by them in
conformity with GAAP and Regulation S-X under the Securities Act;
(h) As of the Closing Date, except as otherwise set forth in Section
4.6(a) of the TCT Disclosure Schedule, no Legal Action shall be pending
before any Authority which could, individually or in the aggregate, have a
material adverse effect on TCT, it being understood and agreed that a
written request by any Authority for information with respect to the
Merger, which information could be used in connection with such Legal
Action, shall not be deemed to be a Legal Action pending before any such
Authority;
(i) The Environmental Reports prepared pursuant to the provisions of
Section 6.8 shall not indicate the likelihood of potential liability which
has had or could reasonably be likely to have a material adverse effect on
TCT, and no Event or Events shall have occurred subsequent to the date
hereof, which, individually or in the aggregate, would cause the
representations and warranties of TCT set forth in Section 4.19 (without
regard to knowledge) to be inaccurate or incomplete in any material
respect;
(j) ATC shall have received, at its expense, a commitment to issue
standard ALTA title insurance policies insuring TCT's or any of its
Subsidiaries' (other than RCC) leasehold or fee interest in the parcels of
land representing at least 95% of TCT net revenues on which each of its
towers is located and the improvements located thereon and the Title Report
shall not disclose any exception, other than Permitted Liens (and liens on
real property owned by other Persons as to which TCT has a ground lease),
and no Event or Events shall have occurred subsequent to the date hereof,
which, individually or in the aggregate, would cause the representations
and warranties of TCT set forth in Section 4.4 (without regard to
knowledge) to be inaccurate or incomplete in any material respect;
(k) All Convertible Securities and Option Securities of TCT, if any,
outstanding immediately prior to the Closing shall be canceled or converted
to TCT Units and, from and after the Closing, shall no longer be of any
force or effect;
(l) ATC shall have received, at its expense, a report with respect to
each of the towers of TCT and any of its Subsidiaries, of such structural
engineers as are reasonably satisfactory to ATC and TCT, that shall
indicate that towers representing at least 95% of TCT net revenues (i) are
structurally sound and in good operating condition, (ii) are in compliance
with all Applicable Laws, Governmental Authorizations, Private
Authorizations and issuance requirements, and (iii) do not require
structural or other material repairs (other than those set forth in Section
7.2(l) of the TCT Disclosure Schedule heretofore delivered to ATC) costing
more than $250,000 in the aggregate; provided, however, that to the extent
the aggregate amount of such repairs is in excess of $250,000,
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ATC shall not be entitled to terminate this Agreement but the Cash
Consideration shall be reduced by an amount equal to the excess of (x) the
aggregate amount of such repairs over (y) $250,000;
(m) Cox shall have executed and delivered to ATC an agreement
substantially in the form attached hereto as Exhibit B and made a part
hereof, amended to reflect the fact that Cox shall be entitled to one (1)
demand registration on Form S-1 under the Securities Act (the
"Registration Rights Agreement");
(n) Each TCT Member that owns Class B TCT Units shall have executed
and delivered to ATC an investment letter substantially in the form of
Exhibit C attached hereto and made a part hereof (the "TCT Investment
Letters");
(o) The Annual Tower Revenue Run Rate of TCT for the month ended
immediately prior to the Closing Date shall have been not less than
$1,050,000, increased for the period between October 31, 1998 and such
month end at an annual rate of 15%, compounded annually;
(p) Cox and each of the executive officers of TCT shall have executed
and delivered to ATC agreements substantially in the form attached hereto
as part of Exhibit D and made a part hereof (the "ATC Noncompetition
Agreements");
(q) All instruments evidencing Indebtedness for Money Borrowed of TCT
or any of its Subsidiaries shall permit the repayment thereof by ATC
without premium or penalty;
(r) Any employment agreement or other arrangement between TCT and any
of Messrs. Madigan, Sivertsen, D. Smith, R. Smith and Williams will be
terminated, at no cost to ATC or ATI, and any Contractual Obligation
between TCT and any TCT Member or any member of the Immediate Family of any
TCT Member, or any Affiliate of any of the foregoing, that is to survive
the Merger shall, to the extent requested by ATC, be amended, at no cost to
ATC or ATI, to contain terms and conditions satisfactory to ATC; and
(s) Each of the Persons named therein shall have executed and
delivered to ATC an agreement substantially in the form attached hereto as
Exhibit E and made a part hereof (the "Indemnity Escrow Agreement") and ATC
shall have been permitted to make the deposits contemplated thereby.
7.3 Conditions to Obligations of TCT. The obligation of TCT to consummate
--------------------------------
the Merger shall be subject to the satisfaction of the following conditions, any
or all of which may be waived, in whole or in part, by TCT to the extent
permitted by Applicable Law:
(a) All agreements, certificates, opinions and other documents
required to be delivered pursuant to the provisions of this Agreement shall
be reasonably satisfactory in form, scope and substance to TCT and its
counsel, and TCT and its counsel shall have received all information and
copies of all documents, including records of corporate proceedings, which
they may reasonably request in connection therewith, such documents where
appropriate to be certified by proper Authorities or corporate officers;
(b) ATC shall have furnished TCT, with favorable opinions, dated the
Closing Date, of Sullivan & Worcester LLP, counsel for ATC, substantially
in the form attached hereto as Exhibit F
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and made a part hereof, and with respect to such other matters arising
after the date of this Agreement as TCT or its counsel may reasonably
request;
(c) (i) The representations and warranties of ATC and ATI contained in
this Agreement (other than in Section 5.5) shall be true and correct at and
as of the Closing Date with the same force and effect as though made on and
as of such date, except (x) to the extent such representations and
warranties expressly speak as of an earlier date (in which case such
representations and warranties shall be true and correct as of such earlier
date) and (y) to the extent that the failure of such representations and
warranties to be true and correct, individually or in the aggregate, would
not have a material adverse effect on ATC; provided, however, that for the
purpose of this clause (y), representations and warranties that are
qualified as to materiality (including by reference to "material adverse
effect") shall not be deemed to be so qualified; (ii) the representations
and warranties of ATC set forth in Section 5.5 of this Agreement shall be
true and correct; provided, however, such untruth shall be disregarded for
purposes of this Section 7.3(c) if, by adjusting the Merger Consideration
at Closing, the untruth is rendered harmless and such adjustment either
does not require the approval of the ATC or ATI stockholders, or such
approval has been obtained, in accordance with the DCL; (iii) each and all
of the agreements and covenants to be performed or satisfied by ATC or ATI
hereunder at or prior to the Closing Date shall have been duly performed or
satisfied in all material respects; and (iv) ATC and ATI shall have
furnished TCT with such certificates and other documents evidencing the
truth of such representations, warranties, covenants and agreements and the
performance of such agreements or conditions as TCT or its counsel shall
have reasonably requested;
(d) ATC and ATI shall have delivered or cause to be delivered to TCT
all of the Collateral Documents and other agreements, documents and
instruments required to be delivered by ATC and ATI to TCT at or prior to
the Closing pursuant to the terms of this Agreement;
(e) Between the date of this Agreement and the Closing Date, there
shall not have occurred and be continuing any material adverse change in
ATC from that reflected in the most recent ATC Financial Statements;
(f) As of the Closing Date, no Legal Action shall be pending before
any Authority which could, individually or in the aggregate, be reasonably
expected to have a material adverse effect on ATC, it being understood and
agreed that a written request by any Authority for information with respect
to the Merger, which information could be used in connection with such
Legal Action, shall not be deemed to be a Legal Action pending before any
such Authority;
(g) ATC shall have executed and delivered the Registration Rights
Agreement and permitted Cox and such other TCT Members as so request, in
their sole and absolute discretion, to become signatories thereto;
(h) ATC shall have delivered to Cox an agreement substantially in the
form of Exhibit G attached hereto and made a part hereof (the "ATC Voting
Agreement") executed by the ATC stockholders named therein and any
individual nominated pursuant thereto shall have been elected a director of
ATC; and
(i) ATC shall have executed and delivered to TCT the Indemnity Escrow
Agreement.
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ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
8.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Effective Time only pursuant to the following provisions:
(a) by mutual consent of TCT and ATC; or
(b) by ATC or TCT if any permanent injunction, decree or judgment of
any Authority preventing consummation of the Merger shall have become final
and nonappealable; or
(c) by TCT in the event (i) TCT is not in material breach of this
Agreement and none of its representations or warranties shall have become
and continue to be untrue in any manner that would cause the condition set
forth in Section 7.2(c) not to be satisfied, and (ii) either (A) the Merger
has not been consummated on or prior to June 30, 1999, or (B) ATC or ATI is
in material breach of this Agreement or any of its representations or
warranties shall have been or become and continue to be untrue in any
manner that would cause the conditions set forth in Section 7.3(c) not to
be satisfied, and such a breach or untruth exists and is not capable of
being cured by and will prevent or delay consummation of the Merger by or
beyond June 30, 1999; or
(d) by ATC in the event (i) neither ATC nor ATI is in material breach
of this Agreement and none of its representations or warranties shall have
become and continue to be untrue in any manner that would cause the
condition set forth in Section 7.3(c) not to be satisfied, and (ii) either
(A) the Merger has not been consummated on or prior to June 30, 1999, or
(B) TCT is in material breach of this Agreement or any of TCT's
representations or warranties shall have been or become and continue to be
untrue in any manner that would cause the conditions set forth in Section
7.2(c) not to be satisfied, and such a breach or untruth exists and is not
capable of being cured by and will prevent or delay consummation of the
Merger by or beyond June 30, 1999; or
(e) by ATC or TCT in the event the Merger has not been consummated on
or prior to the Termination Date.
The term "Termination Date" shall mean September 30, 1999 or such other
date as the parties may, from time to time, mutually agree.
The right of ATC or TCT to terminate this Agreement pursuant to this
Section shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any party, any Person controlling any such
party or any of their respective Representatives whether prior to or after the
execution of this Agreement.
8.2 Effect of Termination. Except as provided in Sections 6.1 (with
---------------------
respect to confidentiality), 6.3 and 10.2 and this Section, in the event of the
termination of this Agreement pursuant to Section 8.1, this Agreement shall
forthwith become void, there shall be no liability on the part of any party, or
any of their respective stockholders, officers or directors, to the other and
all rights and obligations of any party shall cease; provided, however, that
such termination (including without limitation any termination pursuant to the
provisions of Section 8.1(e)) shall not relieve any party from liability for any
willful or intentional misrepresentation or breach of any of its warranties,
covenants or agreements set forth in this Agreement. In the event this Agreement
is terminated by either party pursuant to Section 8.1 (c) or 8.1(d) because of
the
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intentional or wilful breach of covenant or agreement of the other party
(including without limitation the refusal of the other party to consummate the
Merger notwithstanding the fact that all of its conditions to do so have been
satisfied), the terminating party shall be entitled to liquidated damages in the
amount of $10,000,000, it being agreed that such amount shall constitute full
payment for any and all damages suffered by the nondefaulting party by reason of
such intentional or wilful breach of covenant or agreement. ATC and TCT agree
in advance that actual damages would be difficult to ascertain and that
$10,000,000 is a fair and equitable amount to reimburse TCT or ATC, as the case
may be, for damages sustained due to ATC's or TCT's failure to consummate the
Merger for the reasons specified in the immediately preceding sentence.
Notwithstanding the foregoing, the liquidated damages provisions set forth
herein are not exclusive remedies and each party shall have the right, in its
sole and absolute discretion, to seek specific performance of this Agreement
pursuant to the provisions of Section 10.4. Anything in this Agreement to the
contrary notwithstanding, although a party may have multiple reasons for
terminating this Agreement, it shall not be entitled to collect liquidated or
other damages more than once.
ARTICLE 9
INDEMNIFICATION
---------------
9.1 Survival. The representations and warranties of the parties contained
--------
in or made pursuant to this Agreement or any Collateral Document shall survive
the Closing and shall remain operative and in full force and effect for a period
of twelve (12) months after the Closing Date, except that in the case of matters
of a nature referred to in Sections 4.1, 4.20, 5.1 and 5.5 which shall survive
and remain operative and in full force and effect for a period of twenty-four
(24) months after the Closing Date, regardless of any investigation or statement
as to the results thereof made by or on behalf of any party hereto. The
covenants and agreements of the parties contained in or made pursuant to this
Agreement or any Collateral Document shall survive the Closing (unless any such
covenant or agreement by its express terms in this Agreement does not so
survive) and shall remain operative and in full force and effect for the statute
of limitations applicable to contractual obligations. The term "Indemnity
Period" shall mean the applicable period with respect to which a representation,
warranty, covenant or agreement survives the Closing as provided in this
Section. No claim for indemnification, other than with respect to fraud may be
asserted after the expiration of the Indemnity Period. Notwithstanding anything
herein to the contrary, any representation, warranty, covenant and agreement
which arises and is the subject of a Claim which is asserted in writing prior to
the expiration of the applicable Indemnity Period shall survive with respect to
such Claim or any dispute with respect thereto until the final resolution
thereof.
9.2 Indemnification.
---------------
(a) TCT agrees, with respect to the extent of each TCT Member's interest in
the Escrow Indemnity Funds on behalf of each TCT Member, to the extent provided
in this Article 9, including without limitation Section 9.3, that on and after
the Closing ATC and ATI and their respective stockholders, directors, officers,
employees, agents and representatives (collectively, the "ATC Indemnified
Parties") shall be indemnified and held harmless from and against any and all
damages, claims, losses, expenses, costs, obligations, and liabilities
including, without limiting the generality of the foregoing, liabilities for all
reasonable attorneys', accountants' and experts' fees and expenses incurred,
including those incurred to enforce the terms of this Agreement or any
Collateral Document (collectively, "Loss and Expense"), suffered by the ATC
Indemnified Parties by reason of or arising out of (i) any breach of
representation or warranty made by TCT pursuant to this Agreement or any
Collateral Document, and (ii) any failure by TCT to perform or fulfill any of
its covenants or agreements set forth in this Agreement or any Collateral
Document.
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(b) ATC and ATI, jointly and severally, agree that on and after the Closing
they will indemnify each former TCT Member and hold it harmless from and against
all Loss and Expense suffered by any of them by reason of or arising out of (i)
any breach of representation or warranty made by ATC or ATI pursuant to this
Agreement or any Collateral Document, and (ii) any failure by ATC or ATI to
perform or fulfill any of its covenants or agreements set forth in this
Agreement or any Collateral Document.
9.3 Limitation of Liability.
-----------------------
(a) Notwithstanding the provisions of Section 9.2, after the Closing, the
ATC Indemnified Parties, on the one hand, and the TCT Members, on the other
hand, shall be entitled to recover their Loss and Expense in respect of any
Claim only (i) in the event that the aggregate Loss and Expense for all Claims
exceed, in the aggregate, $500,000, in which event the indemnified party shall
be entitled to recover all such Loss and Expense including such $500,000; and
(ii) to the extent that the aggregate Loss and Expense for all Claims do not
exceed $5,000,000.
(b) Anything in this Agreement, including without limitation the provisions
of Sections 9.2 or 9.3(a), to the contrary notwithstanding, except as provided
in Section 9.6, (i) the exclusive recourse of ATC and ATI after the Closing with
respect to the liability of the TCT Members pursuant to Section 9.2 or any other
provision of this Agreement or Applicable Law which requires the TCT Members to
defend, indemnify or hold harmless ATC or ATI from or against any Claim or Loss
and Expense shall be the Escrow Indemnity Funds (as defined in the Indemnity
Escrow Agreement); and (ii) ATC's and ATI's remedies for any such liability of
any TCT Member, or for any Claim arising under this Agreement, shall be limited
to its right to recover from the Escrow Indemnity Funds in accordance with the
provisions of the Indemnity Escrow Agreement, and neither ATC nor ATI nor any of
either of their officers, directors, shareholders, agents or Affiliates shall
have any right of recovery against any TCT Member or any of its officers,
directors, shareholders, agents or Affiliates or against the assets of any of
them for any such liability.
(c) In the case any event shall occur which would otherwise entitle any
party to assert a claim for indemnification hereunder, no Loss and Expense shall
be deemed to have been sustained by such party to the extent of any proceeds
received by such party from any insurance policies with respect thereto.
9.4 Notice of Claims. If an indemnified party believes that it has
----------------
suffered or incurred any Loss and Expense, it shall notify the indemnifying
party promptly in writing, and in any event within the applicable Indemnity
Period specified in Section 9.1, describing such Loss and Expense, all with
reasonable particularity and containing a reference to the provisions of this
Agreement in respect of which such Loss and Expense shall have occurred. If any
Legal Action is instituted by a third party with respect to which an indemnified
party intends to claim any liability or expense as Loss and Expense under this
Article, such indemnified party shall promptly notify the indemnifying party of
such Legal Action, but the failure to so notify the indemnifying party shall not
relieve such indemnifying party of its obligations under this Article, except to
the extent such failure to notify prejudices such indemnifying party's ability
to defend against such Claim.
9.5 Defense of Third Party Claims. The indemnifying party shall have the
-----------------------------
right to conduct and control, through counsel of its own choosing, reasonably
acceptable to the indemnified party, any third party Legal Action or other
Claim, but the indemnified party may, at its election, participate in the
defense thereof at its sole cost and expense; provided, however, that if the
indemnifying party shall fail to defend any such Legal Action or other Claim,
then the indemnified party may defend, through counsel of its own choosing, such
Legal Action or other Claim, and (so long as it gives the indemnifying party at
least fifteen (15) days'
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notice of the terms of the proposed settlement thereof and permits the
indemnifying party to then undertake the defense thereof) settle such Legal
Action or other Claim and to recover the amount of such settlement or of any
judgment and the reasonable costs and expenses of such defense. The indemnifying
party shall not compromise or settle any such Legal Action or other Claim
without the prior written consent of the indemnified party, which consent shall
not unreasonably be withheld, delayed or conditioned if the terms and conditions
of such compromise or settlement proposed by the indemnifying party and agreed
to in writing by the claimant in such Legal Action or other Claim (a) include a
full release of the indemnified party from the Legal Action or other Claim which
is the subject of the Settlement Proposal, and (b) if the indemnified party is
an ATC Indemnified Party, do not include any term or condition which would
restrict in any material manner the continued ownership or operations of the TCT
Assets or the conduct of the TCT Business in substantially the manner then being
owned, operated and conducted by ATI (or any successor or assign). No matter
whether an indemnifying party defends or prosecutes any third party Legal Action
or Claim, the indemnified and indemnifying parties shall cooperate in the
defense or prosecution thereof. Such cooperation shall include access during
normal business hours afforded to the indemnifying party to, and reasonable
retention by the indemnified party of, records and information which are
reasonably relevant to such third party Legal Action or Claim, and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder, and the
indemnifying party shall reimburse the indemnified party for all its reasonable
out-of-pocket expenses in connection therewith.
9.6 Exclusive Remedy. Except for fraud, the indemnification provided in
----------------
this Article shall be the sole and exclusive post-Closing remedy available to
any party against any other party for any Claim under this Agreement.
9.7 Indemnification of Directors and Officers.
-----------------------------------------
(a) From and after the Effective Time, ATC and Surviving Corporation shall,
jointly and severally, indemnify, defend and hold harmless the present and
former officers, Management Committee representatives and employees of TCT and
any of its Subsidiaries, and any Person who is or was serving at the request of
TCT as an officer, director or employee or agent of another Person, against all
losses, expenses, claims, damages or liabilities arising out of actions or
omissions occurring on or prior to the Effective Time (including the
transactions contemplated by this Agreement) to the fullest extent permitted
under Applicable Law (and shall also, subject to the provisions of Section
9.7(d), advance expenses as incurred to the fullest extent permitted under
Applicable Law; provided, however, that the Person to whom expenses are advanced
provides an undertaking, reasonably satisfactory in form, scope and substance to
ATC, to repay such advances if it is ultimately determined that such Person is
not entitled to indemnification); and provided further, however, that such
indemnification shall be provided only to the extent any directors' and
officers' liability insurance policy of ATC or its Subsidiaries does not provide
coverage and actual payment thereunder with respect to the matters that would
otherwise be subject to indemnification hereunder (it being understood that ATC
or the Surviving Corporation shall, subject to the provisions of Section 9.7(d),
advance expenses on a current basis as provided in this Section notwithstanding
such insurance coverage to the extent that payments thereunder have not yet been
made, in which case ATC or the Surviving Corporation, as the case may be, shall
be entitled to repayment of such advances from the proceeds of such insurance
coverage).
(b) ATC and ATI agree that all rights to indemnification, including
provisions relating to advances of expenses incurred in defense of any Claim,
existing in favor of the present or former Management Committee representatives,
directors, officers, employees, fiduciaries and agents of TCT or any of its
Subsidiaries, and any Person who is or was serving at the request of TCT as an
officer, director or employee
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or agent (collectively, the "Indemnified Parties") as provided in the Amended
and Restated Operating Agreement of TCT or pursuant to other agreements, or
certificates of incorporation or by-laws or similar documents of any of TCT's
Subsidiaries, as in effect as of the date hereof, with respect to matters
occurring through the Effective Time, shall survive the Merger and shall
continue in full force and effect for a period of not less than six years from
the Effective Time; provided, however, that all rights to indemnification in
respect of any Claim asserted, made or commenced within such period shall
continue until the final disposition of such Claim.
(c) ATC shall maintain in effect for not less than six years after the
Effective Time the current policies of directors' and officers' liability
insurance maintained by TCT and its Subsidiaries with respect to matters
occurring prior to the Effective Time; provided, however, that (i) ATC may
substitute therefor policies of at least the same coverage containing terms and
conditions which are not materially less advantageous to the Indemnified Parties
with an insurance company or companies, the claims paving ability of which is
substantially equivalent to the claims paying ability of the insurance company
or companies providing such insurance coverage for directors and officers of ATC
and (ii) ATC shall not be required to pay an annual premium for such insurance
in excess of two (2) times the last annual premium paid prior to the date
hereof, but in such case shall purchase as much coverage as possible for such
amount.
(d) In the event that any Claim relating hereto or to the transactions
contemplated by this Agreement is commenced, before the Effective Time, the
parties hereto agree to cooperate and use their respective reasonable efforts to
vigorously defend against and respond thereto. Any Indemnified Party wishing to
claim indemnification under Section 9.7(a) upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify ATC thereof,
whereupon ATC or the Surviving Corporation shall have the right, from and after
the Effective Time, to assume and control the defense thereof, and upon such
assumption, neither ATC nor the Surviving Corporation shall be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof. Neither ATC nor the Surviving Corporation shall be liable
for any settlement effected without its prior written consent.
(e) This Section 9.7 is intended to benefit the Indemnified Parties and
shall be binding on all successors and assigns of ATC and the Surviving
Corporation.
ARTICLE 10
GENERAL PROVISIONS
------------------
10.1 Waivers; Amendments. Changes in or additions to this Agreement may be
-------------------
made, or compli ance with any term, covenant, agreement, condition or provision
set forth herein may be omitted or waived (either generally or in a particular
instance and either retroactively or prospectively) with, but only with, the
consent in writing of the parties hereto. No delay on the part of either party
at any time or times in the exercise of any right or remedy shall operate as a
waiver thereof. Any consent may be given subject to satisfaction of conditions
stated therein. The failure to insist upon the strict provisions of any
covenant, term, condition or other provision of this Agreement or to exercise
any right or remedy hereunder shall not constitute a waiver of any such
covenant, term, condition or other provision thereof or default in connection
therewith. The waiver of any covenant, term, condition or other provision
hereof or default hereunder shall not affect or alter this Agreement in any
other respect, and each and every covenant, term, condition or other
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provision of this Agreement shall, in such event, continue in full force and
effect, except as so waived, and shall be operative with respect to any other
then existing or subsequent default in connection herewith.
10.2 Fees, Expenses and Other Payments. All transfer Taxes, sales Taxes,
---------------------------------
recording or documentary Taxes, stamps or other charges levied by any Authority
in connection with this Agreement and the consummation of the Merger as well as
all costs and expenses in connection with such Taxes, stamps or other charges
shall be borne equally by the TCT Members and ATC, all costs referred to in
Sections 6.7, 6.8 and 7.2(j) shall be borne by ATC, all Hart-Scott-Rodino filing
fees and expenses shall be borne equally by TCT and ATC, and all other costs and
expenses incurred in connection with this Agreement and the consummation of the
Merger, including without limitation fees and disbursements of counsel,
financial advisors and accountants incurred by the parties hereto, shall, unless
otherwise provided herein, be borne solely and entirely by the party which has
incurred such costs and expenses.
10.3 Notices. All notices and other communications which by any provision
-------
of this Agreement are required or permitted to be given shall be given in
writing and shall be deemed to have been delivered (a) three (3) business days
after being mailed by first-class or express mail, postage prepaid, (b) the next
day when sent overnight by recognized courier service, (c) upon confirmation
when sent by telex, telegram, telecopy or other form of rapid transmission,
confirmed by mailing (by first class or express mail, postage prepaid, or by
recognized courier service) written confirmation at substantially the same time
as such rapid transmission, or (d) upon delivery when personally delivered to
the receiving party (which if other than an individual shall be an officer or
other responsible party of the receiving party). All such notices and
communications shall be mailed, sent or delivered as follows:
(a) If to ATC or ATI:
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Joseph L. Winn, Chief Financial Officer
Telecopier No.: (617) 375-7575
with a copy to (which shall not constitute notice to ATC or ATI):
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Norman A. Bikales, Esq.
Telecopier No.: (617) 338-2880
(b) If to TCT:
1525 Wilson Blvd.
Suite 500
Arlington, VA 22209
Attention: Randall N. Smith
Telecopier No.: (703) 247-2135
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with copies to (which shall not constitute notice to TCT or any TCT
Member):
Cox TeleCom Towers, Inc.
1400 Lake Hearn Dr. N.E.
Atlanta, GA 30319
Attention: Dean Eisner
Telecopier No.: (404) 847-6110
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue
Suite 800
Washington, DC 20036
Attention: Stuart A. Sheldon, Esq.
Telecopier No.: (202) 776-2222
Cameron & Mittleman
56 Exchange Terrace
Providence, RI 02903
Attention: David L. Mayer, Esq.
Telecopier No.: (401) 454-4526
or to such other person(s), telex or facsimile number(s) or address(es) as the
party to receive any such communication or notice may have designated by written
notice to the other party.
10.4 Specific Performance; Other Rights and Remedies. Each party
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recognizes and agrees that in the event the other party should refuse to perform
any of its obligations under this Agreement or any Collateral Document, the
remedy at law would be inadequate and agrees that for breach of such provisions,
each party shall, in addition to such other remedies as may be available to it
at law or in equity or as provided in Article 10, be entitled to injunctive
relief and to enforce its rights by an action for specific performance to the
extent permitted by Applicable Law. Each party hereby waives any requirement
for security or the posting of any bond or other surety in connection with any
temporary or permanent award of injunctive, mandatory or other equitable relief.
Subject to the provisions of Section 9.3, nothing herein contained shall be
construed as prohibiting any party from pursuing any other remedies available to
it pursuant to the provisions of this Agreement or Applicable Law for such
breach or threatened breach, including without limitation the recovery of
damages; provided, however, that none of the parties shall pursue, and each
party hereby waives, any punitive, incidental and consequential damages arising
out of this Agreement (including without limitation damages for diminution in
value and loss of anticipated profits).
10.5 Severability. If any term or provision of this Agreement shall be
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held or deemed to be, or shall in fact be, invalid, inoperative, illegal or
unenforceable as applied to any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases, because of the
conflicting of any provision with any constitution or statute or rule of public
policy or for any other reason, such circumstance shall not have the effect of
rendering the provision or provisions in question invalid, inoperative, illegal
or unenforceable in any other jurisdiction or in any other case or circumstance
or of rendering any other provision or provisions herein contained invalid,
inoperative, illegal or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute or rule
of public policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative, illegal or unenforceable
provision had never been contained herein and such provision reformed so that it
would be valid, operative and enforceable to the maximum extent permitted in
such jurisdiction or in such case. Notwithstanding the foregoing, in the event
of any such determination the effect of which is to affect materially and
adversely any party, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by Applicable Law in an acceptable
manner to the end that the Transactions are fulfilled and consummated to the
maximum extent possible.
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10.6 Counterparts. This Agreement may be executed in several
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, binding upon all of the
parties. In pleading or proving any provision of this Agreement, it shall not be
necessary to produce more than one set of such counterparts.
10.7 Section Headings. The headings contained in this Agreement are for
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reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
10.8 Governing Law; Venue. The validity, interpretation, construction and
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performance of this Agreement shall be governed by, and construed in accordance
with, the applicable laws of the United States of America and the laws of State
of New York applicable to contracts made and performed in such State and, in any
event, without giving effect to any choice or conflict of laws provision or rule
that would cause the application of domestic substantive laws of any other
jurisdiction, except to the extent the DCL or the DLLCA applies to the Merger.
Anything in this Agreement to the contrary notwithstanding, in the event of any
dispute between the parties which results in a Legal Action, the prevailing
party shall be entitled to receive from the non-prevailing party reimbursement
for reasonable legal fees and expenses incurred by such prevailing party in such
Legal Action. In the event of any Legal Action between the parties arising out
of this Agreement, the parties agree to submit the matter to the Delaware
Chancery Court, and the parties agree to submit to the jurisdiction of such
court.
10.9 Further Acts. Each party agrees that at any time, and from time to
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time, before and after the consummation of the transactions contemplated by this
Agreement, it will do all such things and execute and deliver all such
Collateral Documents and other assurances, as any other party or its counsel
reasonably deems necessary or desirable in order to carry out the terms and
conditions of this Agreement and the transactions contemplated hereby or to
facilitate the enjoyment of any of the rights created hereby or to be created
hereunder.
10.10 Entire Agreement. This Agreement (together with the TCT Disclosure
----------------
Schedule, the Exhibits the other Collateral Documents, and the other documents
delivered or to be delivered in connection herewith) constitutes the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all prior agreements, arrangements, covenants, promises, conditions,
undertakings, inducements, representations, warranties and negotiations,
expressed or implied, oral or written, between the parties, with respect to the
subject matter hereof, including without limitation any previously executed
confidentiality agreements and letters of intent. Each of the parties is a
sophisticated Person that was advised by experienced counsel and, to the extent
it deemed necessary, other advisors in connection with this Agreement. Each of
the parties hereby acknowledges that (a) none of the parties has relied or will
rely in respect of this Agreement or the transactions contemplated hereby upon
any document or written or oral information previously furnished to or
discovered by it or its representatives, other than this Agreement (or such of
the foregoing as are delivered at the Closing), (b) there are no covenants or
agreements by or on behalf of any party or any of its respective Affiliates or
representatives other than those expressly set forth in this Agreement and the
Collateral Documents, and (c) the parties' respective rights and obligations
with respect to this Agreement and the events giving rise thereto will be solely
as set forth in this Agreement and the Collateral Documents. WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT AND ANY COLLATERAL
DOCUMENT, NONE OF THE PARTIES MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES, AND
EACH HEREBY
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DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER
REPRESENTATIVES, WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE
TO THE OTHER OR THE OTHER'S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER
INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
10.11 Assignment. This Agreement shall not be assignable by any party and
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any such assignment shall be null and void, except that it shall inure to the
benefit of and be binding upon any successor to any party by operation of law,
including by way of merger, consolidation or sale of all or substantially all of
its assets, and ATC may assign its rights and remedies hereunder to any bank or
other financial institution which has loaned funds or otherwise extended credit
to it.
10.12 Parties in Interest. This Agreement shall be binding upon and inure
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solely to the benefit of each party, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement, except as
otherwise provided in Section 10.11.
10.13 Mutual Drafting. This Agreement is the result of the joint efforts
---------------
of TCT and ATC, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of the parties and there shall be no
construction against any party based on any presumption of that party's
involvement in the drafting thereof.
10.14 TCT Disclosure Schedule. TCT will deliver to ATC, within fifteen
-----------------------
(15) business days of the date of this Agreement, the TCT Disclosure Schedule
and all other documents required to be delivered by TCT pursuant to Article 4 of
this Agreement. Without limiting the generality of the foregoing, the TCT
Disclosure Schedule shall set forth TCT's proposal with respect to which
modifications, if any, of Private Authorizations, Leases and Material Agreements
are proposed to be a condition to Closing pursuant to the provisions of Section
7.2(d). ATC shall have the right, for a period commencing upon its receipt of
the TCT Disclosure Schedule and each other document together with a letter from
TCT indicating that such delivery constitutes a "final and complete" delivery
pursuant to this Section and terminating at 11:59 p.m. on the tenth (10th)
business day following such receipt, (a) to terminate this Agreement, if the TCT
Disclosure Schedule reveals any Event of which ATC was unaware as of the date of
this Agreement, which unknown Events, individually or in the aggregate, would
have a material adverse effect on TCT, and (b) to propose to TCT alternatives as
to which Private Authorizations, Leases and Material Agreements and which
modifications, if any, of Leases and Material Agreements are to be a condition
to Closing pursuant to the provisions of Section 7.2(d). In the event TCT does
not agree to any proposal of ATC pursuant to clause (b) of the prior sentence,
TCT and ATC shall be obligated to negotiate in good faith with respect to
resolving such matters. In the event ATC and TCT do not agree in writing on the
resolution of matters raised by any proposal made by ATC pursuant to such clause
(b) on or prior to ten (10) business days of receipt by TCT of any such proposal
of ATC (the "Interim Period") either party may, on or prior to ten (10) business
days (the "Termination Period"), following the expiration of the Interim Period,
terminate this Agreement. In the event neither party shall have so terminated
this Agreement on or prior to the expiration of the Termination Period, or, in
the event ATC makes no proposal pursuant to clause (b) of the preceding
paragraph, this Agreement shall continue in full force and effect and the
original proposal of TCT (as set forth in Section 7.2(d) of the TCT Disclosure
Schedule) shall control for purposes of determining the conditions of Closing
set forth in Section 7.2(d). The disclosures in the TCT Disclosure Schedule are
to be taken as relating to all of the representations and warranties of TCT. The
disclosure of a particular item in the TCT Disclosure
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Schedule shall not be construed as an admission by TCT that such matter falls
within the scope of any applicable materiality or other qualifications or
limitations, or that such matter has had or is reasonably likely to have a
material adverse effect. In addition, to the extent the TCT Disclosure Schedule
includes matters that are not required by this Agreement to be reflected on such
TCT Disclosure Schedule, such additional matters are set forth for information
purposes only and shall be construed as expanding the scope of any
representations, warranties or covenants of TCT hereunder. Any reference in the
TCT Disclosure Schedule to a contract, agreement, instrument, document, order,
decree or judgment shall be deemed to include a reference to all amendments and
modifications thereof, if any, so long as such amendments and modifications are
made available to ATC as part of its due diligence investigation. In the event
either party terminates this Agreement pursuant to the provisions of this
Section, neither party shall have any liability to the other. The rights of ATC
in this Section are in addition to those set forth in Section 10.15.
10.15 ATC's Due Diligence. On or prior to the fifteenth (15th) business
-------------------
day following the date of this Agreement, ATC shall have completed its due
diligence investigation of TCT and the TCT Assets and the TCT Business. ATC
shall have the right, at any time prior to 11:59 p.m. on the fifteenth (15th)
business day following the date of this Agreement to terminate this Agreement if
such investigation reveals any Event of which ATC was unaware as of the date of
this Agreement, which unknown Events, individually or in the aggregate, would
have a material adverse effect on TCT. Without limiting the generality of the
foregoing, ATC shall have been satisfied as a consequence of such due diligence
that (a) TCT and each of its Subsidiaries has at all times been classified as a
partnership under the Code, and that neither TCT nor any of its Subsidiaries has
ever been a publicly traded partnership treated as a corporation under Section
7704 of the Code, and (b) consummation of the Merger will not, either alone or
upon the occurrence of any additional or subsequent Event, result in TCT or ATC
or any of either of their Subsidiaries being subject to any additional Taxes
(other than Taxes of a nature referred to in Section 10.2) which, individually
or in the aggregate, exceed $250,000, it being the intent of the parties that
they would each bear fifty percent (50%) of such additional Taxes up to an
aggregate of $125,000 each and that in the event such additional Taxes exceed
$250,000 the parties shall negotiate in good faith how such excess shall be
borne and, in the event they are unable to agree within a reasonable period of
time, either party may terminate this Agreement without any liability of either
party. Whether or not such additional Taxes may aggregate more than $250,000,
ATC shall have the right to revise the form of this transaction, in its sole and
absolute discretion, to one in which a newly organized Subsidiary of ATC (or one
of its Subsidiaries) merges into TCT and, in such event, TCT agrees to execute
an appropriate amendment to this Agreement, so long as the execution of such
amendment does not result in additional Taxes to TCT or the TCT Members in an
aggregate amount in excess of $100,000. In the event ATC terminates this
Agreement pursuant to the provisions of this Section, neither party shall have
any liability to the other. The rights of ATC in this Section are in addition to
those set forth in Section 10.14.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have executed this Agreement or caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first written above.
American Tower Corporation
By: ____________________________________
Name:
Title:
American Towers, Inc.
By: _____________________________________
Name:
Title:
TeleCom Towers, L.L.C.
By: ______________________________________
Name:
Title:
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APPENDIX A
DEFINITIONS
ADJUSTMENT HOLDBACK shall have the meaning given to it in Section 3.4.
ADVERSE, ADVERSELY, when used alone or in conjunction with other terms
(including without limitation "affect," "change" and "effect") shall mean any
Event which is reasonably likely, in the reasonable business judgment of the
relevant party, to be expected to (a) adversely affect the validity or
enforceability of this Agreement or the likelihood of consummation of the
Merger, or (b) adversely affect the business, operations, management, or
properties, or the financial condition, or results of operation of the TCT
Assets or the TCT Business or ATC and its Subsidiaries, taken as a whole, as
applicable, or (c) impair such party's ability to fulfill its obligations under
the terms of this Agreement, or (d) adversely affect the aggregate rights and
remedies of such party under this Agreement. Notwithstanding the foregoing, and
anything in this Agreement to the contrary notwithstanding, the following events
shall not be deemed to constitute such a change, affect or effect: (i) changes
in the financial markets or general economic conditions and Events affecting the
communications sites industry generally, including without limitation conditions
or changes which affect the prevailing interest rates available to businesses
involved in the communications sites industry or which affect the prevailing
resale valuation or the method of determining such valuations of the businesses
involved in the communications sites industry, and (ii) the resignation or
retirement of any TCT employee or group of TCT employees because of the
execution and delivery of this Agreement.
AFFILIATE, AFFILIATED shall mean, with respect to any Person, (a) any other
Person at the time directly or indirectly controlling, controlled by or under
direct or indirect common control with such Person, (b) any other Person of
which such Person at the time owns, or has the right to acquire, directly or
indirectly, twenty percent (20%) or more of any class of the capital stock or
beneficial interest, (c) any other Person which at the time owns, or has the
right to acquire, directly or indirectly, twenty percent (20%) or more of any
class of the capital stock or beneficial interest of such Person, (d) any
executive officer or director of such Person, (e) with respect to any
partnership, joint venture or similar Entity, any general partner thereof, and
(f) when used with respect to an individual, shall include any member of such
individual's family or a family trust.
AGREEMENT shall mean this Agreement as originally in effect, including,
unless the context otherwise specifically requires, this Appendix A, the TCT
Disclosure Schedule, the ATC SEC Documents and all exhibits hereto, and as any
of the same may from time to time be supplemented, amended, modified or restated
in the manner herein or therein provided.
ALTERNATIVE TRANSACTION shall mean a transaction or series of related
transactions (other than the Transactions) resulting in or likely to result in
(a) any Change of Control of TCT, (b) any merger, consolidation or other
business combination of TCT, regardless of whether TCT is the surviving Entity
unless the surviving Entity remains obligated under this Agreement to the same
extent as TCT was, (c) any tender offer or exchange offer for, or any
acquisition of, any securities of TCT, (d) any sale or other disposition of all
or any substantial part of the assets or business of TCT, or (e) any issue,
sale, transfer, pledge, assignment or other conveyance, or any agreement to
issue, sell, transfer, pledge, assign or otherwise convey, any equity
securities, Convertible Securities or Option Securities by TCT or any TCT Member
that could result in a Change of Control of TCT.
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ANNUAL TOWER REVENUE RUN RATE shall mean (a) an amount equal to the normal
recurring net lease revenues (e.g., excluding charges for installation and
excluding reimbursement of expenses, other than those billed at a fixed amount,
which amount may vary from year to year and which shall be included in normal
recurring net lease revenues) received by TCT and its Subsidiaries with respect
to space rented on the towers (including net revenues received by TCT and its
Subsidiaries for managing towers of other Persons) of TCT and its Subsidiaries,
including its proportionate share of the following entities: Mid-Pacific,
Prime-Telecom Communications Co., a California general partnership, and
Shreveport Tower Company, a Louisiana general partnership multiplied by (b)
twelve (12).
APPLICABLE LAW shall mean any Law of any Authority, whether domestic or
foreign, including without limitation the FCA and all federal and state
securities and Environmental Laws, to which a Person is subject or by which it
or any of its business or operations is subject or any of its property or assets
is bound.
ATC shall have the meaning given to it in the Preamble.
ATC COMMON STOCK shall have the meaning given to it in Section 3.1.
ATC FINANCIAL STATEMENTS shall have the meaning given to it in Section 5.2.
ATC INDEMNIFIED PARTIES shall have the meaning given to it in Section
9.2(a).
ATC NONCOMPETITION AGREEMENTS shall have the meaning given to it in Section
7.2(p).
ATC SEC DOCUMENTS shall have the meaning given to it in Section 5.2.
ATC STOCK CONSIDERATION shall have the meaning given to it in Section 3.1.
ATC VOTING AGREEMENT shall have the meaning given to it in Section 7.3(h).
ATC'S KNOWLEDGE (or words of similar import) shall mean the actual
knowledge of any director or executive officer of ATC or ATI, as such knowledge
exists on the date of this Agreement, after reasonable review of appropriate ATC
and ATI records and after reasonable inquiry of appropriate ATC and ATI
employees.
ATI shall have the meaning given to it in the Preamble.
AUTHORITY shall mean any governmental or quasi-governmental authority,
whether administrative, executive, judicial, legislative or other, or any
combination thereof, including without limitation any federal, state,
territorial, county, municipal or other government or governmental or quasi-
governmental agency, arbitrator, authority, board, body, branch, bureau, or
comparable agency or Entity, commission, corporation, court, department,
instrumentality, mediator, panel, system or other political unit or subdivision
or other Entity of any of the foregoing, whether domestic or foreign, including
without limitation the FCC.
BENEFIT ARRANGEMENT shall mean any material benefit arrangement that is not
a Plan, including (a) any employment or consulting agreement, (b) any
arrangement providing for insurance coverage or workers' compensation benefits,
(c) any incentive bonus or deferred bonus arrangement, (d) any arrangement
providing termination allowance, severance or similar benefits, (e) any equity
compensation plan, (f) any deferred compensation plan, and (g) any compensation
policy and practice, but only to the extent that it covers or relates to any
officer, employee or other Person involved in the ownership and operation of the
assets of TCT or the conduct of the business of TCT.
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CASH CONSIDERATION shall have the meaning given to it in Section 3.1.
CEILING SHARE PRICE shall have the meaning given to it in Section 3.1.
CHANGE OF CONTROL shall mean the acquisition, directly or indirectly, by
any Person or group (as such term is used in Section 13(d)(3) of the Exchange
Act) of twenty percent (20%) or more of the TCT Units.
CLAIMS shall mean any and all debts, liabilities, obligations, losses,
damages, deficiencies, assessments and penalties, together with all Legal
Actions, pending or threatened, claims and judgments of whatever kind and nature
relating thereto, and all fees, costs, expenses and disbursements (including
without limitation reasonable attorneys' and other legal fees, costs and
expenses) relating to any of the foregoing.
CLOSING shall have the meaning given to it in Section 2.2.
CLOSING DATE shall have the meaning given to it in Section 2.2.
CLOSING DATE SHARE PRICE shall mean, with respect to the ATC Common Stock,
the average of the daily Fair Market Values thereof for each of the ten (10)
Trading Days prior to the Closing Date.
COBRA shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, as set forth in Section 4980B of the Code and Part 6 of
Subtitle B of Title I of ERISA.
CODE shall mean the Internal Revenue Code of 1986, and the rules and
regulations thereunder, all as from time to time in effect, or any successor
Law, rules or regulations, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
COLLATERAL DOCUMENTS shall mean the Indemnity Escrow Agreement, the
Noncompetition Agreements, the Registration Rights Agreement, the TCT Investment
Letters, the Certificate of Merger, and any other agreement, certificate,
contract, instrument, notice, opinion or other document delivered pursuant to
the provisions of this Agreement or any Collateral Document.
CONFIDENTIAL INFORMATION shall have the meaning given to it in Section
6.1(a).
CONSTRUCTION COST shall mean, with respect to each of the Subject Towers
that is not in service at the Effective Time, an amount equal to the funded cost
of such Subject Tower, determined in accordance with GAAP, applied on a basis
consistent with the TCT Financial Statements.
CONTRACT, CONTRACTUAL OBLIGATION shall mean any agreement, arrangement,
commitment, contract, covenant, indemnity, undertaking or other obligation or
liability to which TCT is a party or to which it or any of the TCT Assets is
subject.
CONTROL (including the terms "controlled," "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management or
policies of a Person, or the disposition of such Person's assets or properties,
whether through the ownership of stock, equity or other ownership, by contract,
arrangement or understanding, or as trustee or executor, by contract or credit
arrangement or otherwise.
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CONVERTIBLE SECURITIES shall mean any evidences of indebtedness, shares of
capital stock (other than common stock) or other securities directly or
indirectly convertible into or exchangeable for shares of common stock, or other
securities directly or indirectly convertible into or exchangeable for TCT Units
or other equity interests of TCT, whether or not the right to convert or
exchange thereunder is immediately exercisable or is conditioned upon the
passage of time, the occurrence or non-occurrence or existence or non-existence
of some other Event, or both.
COX shall mean Cox Telecom Towers, Inc., a Delaware corporation and one of
the TCT Members.
CURRENT BALANCE shall mean, with respect to TCT, the amount by which the
current assets of TCT and its Subsidiaries are more (or are less than) the
current liabilities of TCT (exclusive of current maturities of principal of any
Indebtedness for Money Borrowed), as determined in accordance with GAAP,
consistently applied with the TCT Financial Statements.
CURRENT MARKET PRICE shall mean, with respect to the ATC Common Stock, the
average of the daily Fair Market Values thereof for each of the twenty (20)
Trading Days commencing ten (10) Trading Days prior to the date of this
Agreement; provided, however that the Current Market Price shall not be less
than $19.20 or more than $21.25.
DCL shall have the meaning given to it in Section 2.1.
DISTRIBUTION shall mean, with respect to any Person, (a) the declaration or
payment of any dividend (except dividends payable in common stock of such
Person) on or in respect of any shares of any class of capital stock of such
Person or any shares of capital stock of any Subsidiary owned by a Person other
than such Person or a Subsidiary of such Person, (b) the purchase, redemption or
other retirement of any shares of any class of capital stock of such Person or
any shares of capital stock of any Subsidiary of such Person owned by a Person
other than such Person or a Subsidiary of such Person, and (c) any other
distribution on or in respect of any shares of any class of capital stock of
such Person or any shares of capital stock of any Subsidiary of such Person
owned by a Person other than such Person or a Subsidiary of such Person.
DLLCA shall have the meaning given to it in Section 2.1.
EFFECTIVE TIME shall have the meaning given to it in Section 2.3.
EMPLOYMENT ARRANGEMENT shall mean, with respect to TCT, any employment,
consulting, retainer, severance or similar contract, agreement, plan,
arrangement or policy (exclusive of any which is terminable within thirty (30)
days without liability, penalty or payment of any kind by TCT or any of its
Affiliates), providing for severance, termination payments, insurance coverage
(including any self-insured arrangements), workers compensation, disability
benefits, life, health, medical, dental or hospitalization benefits,
supplemental unemployment benefits, vacation or sick leave benefits, pension or
retirement benefits or for deferred compensation, profit-sharing, bonuses, stock
options, stock purchase or appreciation rights or other forms of incentive
compensation or post-retirement insurance, compensation or benefits, or any
collective bargaining or other labor agreement, whether or not any of the
foregoing is subject to the provisions of ERISA, but only to the extent that it
covers or relates to any officer, employee or other Person involved in the
ownership or operation of the TCT Assets or the conduct of the TCT Business.
ENCUMBER shall mean to suffer, accept, agree to or permit the imposition of
a Lien.
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ENTITY shall mean any corporation, firm, unincorporated organization,
association, partnership, limited liability company, trust (inter vivos or
testamentary), estate of a deceased, insane or incompetent individual, business
trust, joint stock company, joint venture or other organization, entity or
business, whether acting in an individual, fiduciary or other capacity, or any
Authority.
ENVIRONMENTAL LAW shall mean any Law relating to or otherwise imposing
liability or standards of conduct concerning pollution or protection of the
environment, including without limitation Laws relating to emissions,
discharges, releases or threatened releases of Hazardous Materials or other
chemicals or industrial pollutants, substances, materials or wastes into the
environment (including, without limitation, ambient air, surface water, ground
water, mining or reclamation or mined land, land surface or subsurface strata)
or otherwise relating to the manufacture, processing, generation, distribution,
use, treatment, storage, disposal, cleanup, transport or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances, materials
or wastes. Environmental Laws shall include without limitation the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 6901 et seq.), the Hazardous Material Transportation Act (49 U.S.C.
-- ---
Section 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.
-- ---
Section 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C.
-- ---
Section 1251 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the
-- --- -- ---
Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.), the Occupational
-- ---
Safety and Health Act (29 U.S.C. Section 651 et seq.), the Federal Insecticide
-- ---
Fungicide and Rodenticide Act (7 U.S.C. Section 136 et seq.), and the Surface
-- ---
Mining Control and Reclamation Act of 1977 (30 U.S.C. Section 1201 et seq.), and
-- ---
any analogous federal, state, local or foreign Laws, and the rules and
regulations promulgated thereunder all as from time to time in effect, and any
reference to any statutory or regulatory provision shall be deemed to be a
reference to any successor statutory or regulatory provision.
ENVIRONMENTAL PERMIT shall mean any Governmental Authorization required by
or pursuant to any Environmental Law.
ENVIRONMENTAL REPORT shall have the meaning given to it in Section 4.19.
ERISA shall mean the Employee Retirement Income Security Act of 1974, and
the rules and regulations thereunder, all as from time to time in effect, or any
successor law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
ERISA AFFILIATE shall mean any Person that is treated as a single employer
with TCT under Sections 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA.
EVENT shall mean the existence or occurrence of any act, action, activity,
circumstance, condition, event, fact, failure to act, omission, incident or
practice, or any set or combination of any of the foregoing.
EXCHANGE ACT shall mean the Securities Exchange Act of 1934, and the rules
and regulations thereunder, all as from time to time in effect, or any successor
Law, rules or regulations, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
FAIR MARKET VALUE shall mean, with respect to the ATC Common Stock, (a) the
average of the high and low reported sales prices, regular way, or, in the event
that no sale takes place on any day, the average of the reported high and low
bid and asked prices, regular way, in either case as reported on the principal
stock exchange on which such stock is listed, or, if not so listed, on the
Nasdaq National Market System; or
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<PAGE>
(b) if such stock is not so listed, (i) the average of the high and low bid and
high and low asked prices on such day in the over-the-counter market as reported
by Nasdaq, or (ii) if bid and asked prices for such security on any day shall
not have been reported through Nasdaq, the average of the bid and asked prices
for such day as furnished by any New York Stock Exchange member firm regularly
making a market in such security, or (c) if such security is not publicly
traded, as from time to time agreed to by ATC and the TCT Members or, if no such
agreement is reached within ten (10) business days of good faith negotiations,
as determined by an independent investment banking firm mutually agreeable to
ATC and the TCT Members whose fees and expenses shall be shared equally by ATC
and the TCT Members.
FCA shall mean the Communications Act of 1934, and the rules and
regulations thereunder, all as from time to time in effect, or any successor
Law, rules or regulations, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
FCC shall mean the United States Federal Communications Commission and
shall include any successor Authority.
FLOOR SHARE PRICE shall have the meaning given to it in Section 3.1.
GAAP shall mean generally accepted accounting principles applied on a
consistent basis, (i) as set forth in Opinions of the Accounting Principles
Board of the American Institute of Certified Public Accountants ("AICPA") and/or
in statements of the Financial Accounting Standards Board that are applicable in
the circumstances as of the date in question, (ii) when not inconsistent with
such opinions and statements, as set forth in other AICPA publications and
guidelines and/or (iii) that otherwise arise by custom for the particular
industry, all as the same shall exist on the date of this Agreement.
GOVERNMENTAL AUTHORIZATIONS shall mean all approvals, concessions,
consents, franchises, licenses, permits, plans, registrations and other
authorizations of all Authorities, including without limitation the United
States Forest Service and the Federal Aviation Administration, in connection
with the ownership or operation of the TCT Assets or the conduct of the TCT
Business.
GOVERNMENTAL FILINGS shall mean all filings, including franchise and
similar Tax filings, and the payment of all fees, assessments, interest and
penalties associated with such filings, with all Authorities.
HART-SCOTT-RODINO ACT shall mean the Hart-Scott-Rodino Improvement Act of
1976, as from time to time in effect, or any successor Law, and any reference to
any statutory provision shall be deemed to be a reference to any successor
statutory provision.
HAZARDOUS MATERIALS shall mean and include any substance, material, waste,
constituent, compound, chemical, natural or man-made element or force (in
whatever state of matter): (a) the presence of which requires investigation or
remediation under any Environmental Law; or (b) that is defined as a "hazardous
waste" or "hazardous substance" under any Environmental Law; or (c) that is
toxic, explosive, corrosive, etiologic, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and is regulated by any
applicable Authority or subject to any Environmental Law; or (d) the presence of
which on the real property owned or leased by such Person causes or threatens to
cause a nuisance upon any such real property or to adjacent properties or poses
or threatens to pose a hazard to the health or safety of persons on or about any
such real property; or (e) the presence of which on adjacent properties could
constitute a trespass by such Person; or (f) that contains gasoline, diesel fuel
or other petroleum hydrocarbons, or any by-products or fractions thereof,
natural gas, polychlorinated biphenyls ("PCBs") and PCB-containing equipment,
radon or other radioactive elements, ionizing radiation, electromagnetic field
radiation and other non-ionizing radiation, sonic forces and other natural
forces, lead, asbestos or asbestos-containing materials ("ACM"), or urea
formaldehyde foam insulation.
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<PAGE>
INDEBTEDNESS shall mean, with respect to any Person as of any date, (a)
all items, except items of capital stock or of surplus or of general contingency
or deferred tax reserves or any minority interest in any Subsidiary of such
Person to the extent such interest is treated as a liability with an
indeterminate term on the consolidated balance sheet of such Person, which in
accordance with GAAP would be included in determining total liabilities as shown
on the liability side of a balance sheet of such Person, (b) all obligations
secured by any Lien to which any property or asset owned or held by such Person
is subject, whether or not the obligation secured thereby shall have been
assumed, and (c) to the extent not otherwise included, all Contractual
Obligations of such Person constituting capitalized leases and all obligations
of such Person with respect to Leases constituting part of a sale and leaseback
arrangement.
INDEBTEDNESS FOR MONEY BORROWED shall mean, with respect to any Person as
of any date, money borrowed and Indebtedness represented by notes payable and
drafts accepted representing extensions of credit, all obligations evidenced by
bonds, debentures, notes or other similar instruments, the maximum amount
currently or at any time thereafter available to be drawn under all outstanding
letters of credit issued for the account of such Person, all Indebtedness upon
which interest charges are customarily paid by such Person, and all Indebtedness
(including capitalized lease obligations) issued or assumed as full or partial
payment for property or services, whether or not any such notes, drafts,
obligations or Indebtedness represent Indebtedness for money borrowed, but shall
not include (a) trade payables, (b) expenses accrued in the ordinary course of
business, (c) customer advance payments and customer deposits received in the
ordinary course of business, or (d) conditional sales agreements not prohibited
by the terms of this Agreement.
INDEMNITY ESCROW AGREEMENT shall have the meaning given to it in Section
7.2(s).
INTANGIBLE ASSETS shall mean all assets and property lacking physical
properties the evidence of ownership of which must customarily be maintained by
independent registration, documentation, certification, recordation or other
means, and shall include, without limitation, concessions, copyrights,
franchises, licenses, patents, permits, service marks, trademarks, trade names,
and applications with respect to any of the foregoing, technology and know-how.
INTELLECTUAL PROPERTY shall mean any and all research, information,
inventions, designs, procedures, developments, discoveries, improvements,
patents and applications therefor, trademarks and applications therefor, service
marks, trade names, copyrights and applications therefor, logos, trade secrets,
drawing, plans, systems, methods, specifications, computer software programs,
tapes, discs and related data processing software (including without limitation
object and source codes) owned by such Person or in which it has an ownership
interest and all other manufacturing, engineering, technical, research and
development data and know-how made, conceived, developed and/or acquired by such
Person, which relate to the manufacture, production or processing of any
products developed or sold by such Person or which are within the scope of or
usable in connection with such Person's business as it may, from time to time,
hereafter be conducted or proposed to be conducted.
INTERIM PERIOD shall have the meaning given to it in Section 11.14.
LAW shall mean any (a) administrative, judicial, legislative or other
action, code, consent decree, constitution, decree, directive, enactment,
finding, law, injunction, interpretation, judgment, order, ordinance, policy
statement, proclamation, promulgation, regulation, requirement, rule, rule of
law, rule of public
A-7
<PAGE>
policy, settlement agreement, statute, or writ of any Authority, domestic or
foreign; (b) the common law, or other legal precedent; or (c) arbitrator's,
mediator's or referee's award, decision, finding or recommendation.
LEASE shall mean any lease of property, whether real, personal or mixed,
and all amendments thereto, and shall include without limitation all use or
occupancy agreements.
LEGAL ACTION shall mean, with respect to any Person, any and all litigation
or legal or other actions, arbitrations, counterclaims, investigations,
proceedings, requests for material information by or pursuant to the order of
any Authority or suits, at law or in arbitration, equity or admiralty, whether
or not purported to be brought on behalf of such Person, affecting such Person
or any of such Person's business, property or assets.
LIEN shall mean any of the following: mortgage; lien (statutory or other);
or other security agreement, arrangement or interest; hypothecation, pledge or
other deposit arrangement; assignment; charge; levy; executory seizure;
attachment; garnishment; encumbrance (including any easement, exception,
reservation or limitation, right of way, and the like); conditional sale, title
retention or other similar agreement, arrangement, device or restriction;
preemptive or similar right; any financing lease involving substantially the
same economic effect as any of the foregoing; the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction; restriction on sale, transfer, assignment, disposition or other
alienation; or any option, equity, claim or right of or obligation to, any other
Person, of whatever kind and character.
LOSS AND EXPENSE shall have the meaning given to it in Section 9.2(a).
MATERIAL, MATERIALLY OR MATERIALITY for the purposes of this Agreement,
shall, unless specifically stated to the contrary, be determined without regard
to the fact that various provisions of this Agreement set forth specific dollar
amounts.
MATERIAL AGREEMENT shall mean, with respect to TCT, any Contractual
Obligation which (a) was not entered into in the ordinary course of business,
(b) was entered into in the ordinary course of business which (i) involved the
purchase, sale or lease of goods or materials, or purchase of services,
aggregating more than $100,000 since December 31, 1997, (ii) extends for more
than three (3) months, or (iii) is not terminable on thirty (30) days or less
notice without penalty or other payment or (iv) involves the leasing of space on
any tower of TCT involving not less than $10,000 in annual rental payments, (c)
involves a capitalized lease obligation or Indebtedness for Money Borrowed, (d)
is or otherwise constitutes a written agency, broker, dealer, license,
distributorship, sales representative or similar written agreement, (e)
accounted for more than three percent (3%) of the revenues of the TCT Business
in any of the last three fiscal years or is likely to account for more than
three percent (3%) of revenues of the TCT Business during the current fiscal
year, (f) is with the United States Forest Service, or (g) involves the
management by TCT of any communication tower of any other Person.
MERGER shall have the meaning given to it in the first Whereas paragraph.
MERGER CONSIDERATION shall have the meaning given to it in Section 3.1.
MERGER PRICE shall have the meaning given to it in Section 3.1.
MID PACIFIC shall mean Mid-Pacific-Telecom Communications Co., a Nevada
general partnership.
A-8
<PAGE>
MULTIEMPLOYER PLAN shall mean a Plan which is a "multiemployer plan" within
the meaning of Section 4001(a)(3) of ERISA.
OPTION SECURITIES shall mean all stock or equity appreciation rights,
rights, options and warrants, and calls or commitments evidencing the right, to
subscribe for, purchase or otherwise acquire shares of capital stock or TCT
Units or other equity interests in TCT or Convertible Securities, whether or not
the right to subscribe for, purchase or otherwise acquire is immediately
exercisable or is conditioned upon the passage of time, the occurrence or non-
occurrence or the existence or non-existence of some other Event.
ORGANIC DOCUMENT shall mean, with respect to a Person which is a
corporation, its charter, its by-laws and all shareholder agreements, voting
trusts and similar arrangements applicable to any of its capital stock, with
respect to a Person which is a partnership, its agreement and certificate of
partnership, any agreements among partners, and any management and similar
agreements between the partnership and any general partners (or any Affiliate
thereof) or, with respect to a Person which is a limited liability company, its
agreement of limited liability company, any agreements among members, and any
management and similar agreements between the limited liability company and any
member (or any Affiliate thereof).
PERMITTED LIENS shall mean (a) Liens for current Taxes not yet due and
payable, (b) such imperfections of title, easements, encumbrances and mortgages
or other Liens, or other matters of record if any, as are not, individually or
in the aggregate, substantial in character, amount or extent and that do not
materially detract from the value, or materially interfere with the present use,
of the property subject thereto or affected thereby, or otherwise materially
impair the conduct of the TCT Business, (c) Liens securing Indebtedness for
Money Borrowed of a nature referred to in Section 7.2(q), and (d) such other
Liens as are permitted by the provisions of this Agreement to be in place on the
Closing Date.
PERSON shall mean any natural individual or any Entity.
PERSONAL PROPERTY shall mean all of the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, inventory,
spare parts and other tangible personal property which are owned or leased by
TCT and used or useful as of the date hereof in the conduct of the business or
operations of the TCT Business, plus such additions thereto and deletions
therefrom arising in the ordinary course of business between the date hereof and
the Closing Date.
PLAN shall mean, with respect to any Person and at a particular time, any
employee benefit plan which is covered by ERISA and in respect of which such
Person or an ERISA Affiliate is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA, but only to the extent that it covers or relates to any
officer, employee or other Person involved in the ownership and operation of the
TCT Assets or the conduct of the business of the TCT Business.
PRIVATE AUTHORIZATIONS shall mean all approvals, concessions, consents,
franchises, licenses, permits, and other authorizations of all Persons (other
than Authorities) including without limitation those with respect to
Intellectual Property, but excluding leases, easements and other rights to use
real property.
RCC shall mean RCC Consultants, Inc., a Delaware corporation.
REAL PROPERTY shall mean all of the fee estates and buildings and other
fixtures and improvements thereon, leasehold interests, easements, licenses,
rights to access, rights-of-way, and other real property interests which are
owned or used by TCT as of the date hereof, in the operations of the TCT
Business, plus such additions thereto and deletions therefrom arising in the
ordinary course of business between the date hereof and the Closing Date.
A-9
<PAGE>
REGISTRATION RIGHTS AGREEMENT shall have the meaning given to it in Section
7.2(m).
REGULATIONS shall mean the federal income tax regulations promulgated under
the Code, as such Regulations may be amended from time to time. All references
herein to specific sections of the Regulations shall be deemed also to refer to
any corresponding provisions of succeeding Regulations, and all references to
temporary Regulations shall be deemed also to refer to any corresponding
provisions of final Regulations.
REPRESENTATIVES shall have the meaning given to it in Section 6.1(a).
RESTRICTED TRANSACTION shall mean any (i) acquisition or agreement to
acquire (x) by merging or consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any business or any Person or
other business organization or division thereof or (y) any assets (other than in
the ordinary course of business which for purposes of this definition does not
include the acquisition of communications sites and related assets and other
business involved in the communications sites industry or the construction of
communications towers and related assets), or (ii) any undertaking or agreement
to undertake the construction of one or more communications towers.
SEC shall mean the United States Securities and Exchange Commission.
SECURITIES ACT shall mean the Securities Act of 1933, and the rules and
regulations thereunder, all as from time to time in effect, or any successor
Law, rules or regulations, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
SOLVENT shall mean, with respect to any Person on a particular date, that
such Person is "solvent" within the meaning of the federal Bankruptcy Code and
applicable state insolvency and fraudulent conveyance statutes.
SUBSIDIARY shall mean, with respect to a Person, any Entity a majority of
the capital stock ordinarily entitled to vote for the election of directors of
which, or if no such voting stock is outstanding, a majority of the equity
interests of which, is owned directly or indirectly, legally or beneficially, by
such Person or any other Person controlled by such Person, other than RCC.
SURVIVING CORPORATION shall have the meaning given to it in Section 2.1.
TAX (and "Taxable", which shall mean subject to Tax), shall mean, with
respect to any Person, (a) all taxes (domestic or foreign), including without
limitation any income (net, gross or other including recapture of any tax items
such as investment tax credits), alternative or add-on minimum tax, gross
income, gross receipts, gains, sales, use, leasing, lease, user, ad valorem,
transfer, recording, franchise, profits, property (real or personal, tangible or
intangible), fuel, license, withholding on amounts paid to or by such Person,
payroll, employment, unemployment, social security, excise, severance, stamp,
occupation, premium, environmental or windfall profit tax, custom, duty or other
tax, or other like assessment or charge of any kind whatsoever, together with
any interest, levies, assessments, charges, penalties, additions to tax or
additional amount imposed by any Taxing Authority, (b) any joint or several
liability of such Person with any other Person for the payment of any amounts of
the type described in (a), and (c) any liability of such Person for the payment
of any amounts of the type described in (a) as a result of any express or
implied obligation to indemnify any other Person.
A-10
<PAGE>
TAX RETURN OR RETURNS shall mean all returns, consolidated or otherwise
(including without limitation information returns), required to be filed with
any Authority with respect to Taxes.
TAXING AUTHORITY shall mean any Authority responsible for the imposition of
any Tax.
TCT shall have the meaning given to it in the Preamble.
TCT ASSETS shall have the meaning given to it in Section 4.4(a) and shall,
in any event, include the assets of TCT's Subsidiaries, as contemplated by
Section 4.4(a) and the final sentence of Section 4.1(d).
TCT BUSINESS shall have the meaning given to it in Section 4.4(b) and
shall, in any event, include the business of TCT's Subsidiaries, as contemplated
by Section 4.4(b) and the final sentence of Section 4.1(d).
TCT DISCLOSURE SCHEDULE shall mean the TCT Disclosure Schedule to be
furnished in accordance with Section 10.14.
TCT EMPLOYEES shall have the meaning given it in Section 4.14.
TCT FINANCIAL STATEMENTS shall have the meaning given to it in Section 4.2.
TCT INVESTMENT LETTERS shall have the meaning given to it in Section
7.2(n).
TCT MEMBER(S) shall have the meaning given to such terms in the first
Whereas paragraph.
TCT UNITS shall have the meaning given to it in Section 3.1.
TCT'S KNOWLEDGE (or words of similar import) shall mean the actual
knowledge of any TCT Member or any TCT Management Committee representative or
officer, as such knowledge exists on the date of this Agreement, after
reasonable review of appropriate TCT records and after reasonable inquiry of
appropriate TCT employees.
TITLE REPORT shall have the meaning given to it in Section 6.7.
TERMINATION DATE shall have the meaning given to it in Section 8.1.
TRADING DAY shall mean any day on which shares of ATC Common Stock are
actually sold on the New York Stock Exchange.
TRANSACTIONS shall mean the transactions contemplated to be consummated on
or prior to the Closing Date, including without limitation the Merger and the
execution, delivery and performance of the Collateral Documents.
A-11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 313,454
<SECURITIES> 0
<RECEIVABLES> 15,593
<ALLOWANCES> 1,138
<INVENTORY> 0
<CURRENT-ASSETS> 335,482
<PP&E> 404,376
<DEPRECIATION> 16,061
<TOTAL-ASSETS> 1,435,754
<CURRENT-LIABILITIES> 84,165
<BONDS> 281,605
0
0
<COMMON> 1,068
<OTHER-SE> 1,059,705
<TOTAL-LIABILITY-AND-EQUITY> 1,435,754
<SALES> 0
<TOTAL-REVENUES> 30,478
<CGS> 0
<TOTAL-COSTS> 33,935
<OTHER-EXPENSES> 1,720
<LOSS-PROVISION> 537
<INTEREST-EXPENSE> 7,121
<INCOME-PRETAX> 7,913
<INCOME-TAX> 1,955
<INCOME-CONTINUING> 5,958
<DISCONTINUED> 0
<EXTRAORDINARY> 7,510
<CHANGES> 0
<NET-INCOME> 13,468
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
