As filed with the Securities and Exchange Commission on April 23,
1997
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_______________________
BELLSOUTH CORPORATION
(Exact name of registrant as specified in its charter)
Georgia 4813 58-1533433
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction Classification Code Number) Identification No.)
of incorporation
or organization)
1155 Peachtree Street, N.E.
Atlanta, Georgia 30309-3610
(404) 249-2000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
KEITH B. BREEDEN
BellSouth Corporation
15G03 Campanile
1155 Peachtree Street, N.E.
Atlanta, Georgia 30309-3610
(404) 249-3035
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies To:
DAVID M. CARTER JON L. ANDERSEN
Hunton & Williams Gambrell & Stolz, L.L.P.
951 East Byrd Street Suite 4300, One Peachtree Center
Richmond, Virginia 23219-4074 303 Peachtree Street
(804) 788-7216 Atlanta, Georgia 30308
(404) 577-6000
Approximate date of commencement of the proposed sale of the
securities to the public:
As soon as practicable after the Registration Statement becomes
effective.
If the securities being registered on this form are being offered
in connection with the formation of a holding company
and there is compliance with General Instruction G, check the
following box. ___
CALCULATION OF REGISTRATION FEE
Title of Each Proposed Proposed
Class of Maximum Maximum Maximum
Securities Amount Offering Aggregate Amount of
To Be To Be Price Per Offering Registration
Registered Registered Unit Price Fee
Common Stock,
$1.00 par value 1,200,000
per share shares(1) $34.85(2) $41,820,000(2) $12,673
(1) This Registration Statement covers the maximum number of
shares of common stock of the Registrant that are expected to be
issued in connection with the transactions described herein.
(2) Estimated solely for purposes of calculating the
registration fee in accordance with Rule 457(f)(1) for Wireless
Cable of Atlanta, Inc. Common Stock, with the market value of
Wireless Cable of Atlanta, Inc. Common Stock being exchanged in
the transaction for BellSouth Corporation Common Stock based on
the average of the high and low prices for Wireless Cable of
Atlanta, Inc. Common Stock on The Nasdaq SmallCap Market on April
18, 1997.
_______________________
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date
until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
BELLSOUTH CORPORATION
CROSS-REFERENCE SHEET
Item of Form S-4 Location in Prospectus
1. Forepart of Registration Facing Page; Cross Reference
Statement and Outside Front Sheet; Outside Front Cover
Cover Page of Prospectus Page of Prospectus
2. Inside Front and Outside Inside Front Cover Page
Back Cover Pages of of Prospectus; Table of
Prospectus Contents; Where You Can Find
More Information
3. Risk Factors, Ratio of Summary; Comparative Per
Earnings to Fixed Charges Share Data
and Other Information
4. Terms of the Transaction Summary; The Merger;
Comparative Rights of
Shareholders; Annex I
5. ProForma Financial Not Applicable
Information
6. Material Contracts with the Not Applicable
Company Being Acquired
7. Additional Information Not Applicable
Required for Reoffering by
Persons and Parties
Deemed to be Underwriters
8. Interests of Named Experts Not Applicable
and Counsel
9. Disclosure of Commission's Not Applicable
Position on Indemnification
for Securities Act
Liabilities
10.Information with Respect to Where You Can Find More
S-3 Registrants Information; Summary
11.Incorporation of Certain Where You Can Find More
Information by Reference Information
12.Information with Respect Not Applicable
to S-2 or S-3 Registrants
13.Incorporation of Certain Not Applicable
Information by Reference
14.Information with Respect to Not Applicable
Registrants Other than S-2
or S-3 Registrants
15.Information with Respect to Not Applicable
S-3 Companies
16.Information with Respect to Summary; Business of
S-2 or S-3 Companies WCA; WCA Selected
Financial Data; WCA
Management's Discussion
and Analysis of Financial
Condition and Results of
Operation; WCA Financial
Statements; Where You
Can Find More Information
17.Information with Respect to Not Applicable
Companies other than S-2 or
S-3 Companies
18.Information if Proxies, Where You Can Find More
Consents or Authorizations Information; Outside
are to be Solicited Front Cover Page of Prospectus;
General Information; The Merger
19.Information if Proxies, Not Applicable
Consents or Authorizations
are not to be Solicited,
or in an Exchange Offer
<PAGE>
[Wireless Cable of Atlanta, Inc. Logo]
Fellow Shareholders:
I am pleased to invite you to attend a special meeting of
shareholders of Wireless Cable of Atlanta, Inc. on:
Tuesday, May 27, 1997
10:00 a.m.
NationsBank Plaza, 41st Floor
600 Peachtree Street, N.E.
Atlanta, Georgia
THIS IS A VERY IMPORTANT MEETING THAT AFFECTS YOUR INVESTMENT IN
WCA.
At this meeting you will be asked to vote on a merger
between WCA and a wholly-owned subsidiary of BellSouth
Corporation. In the merger, BellSouth will pay WCA shareholders
0.494 of a share of BellSouth stock for each share of WCA stock
and WCA will become a subsidiary of BellSouth. This payment is
subject to a possible adjustment based on BellSouth's stock price
before the merger, as described in the Proxy
Statement/Prospectus. The exchange of WCA stock for BellSouth
stock (other than for cash paid in lieu of fractional shares)
will be tax-free to WCA shareholders for federal income tax
purposes.
Your Board of Directors unanimously recommends that you
vote FOR approval of the merger, which we believe is in WCA's and
your best interests. The directors and executive officers of
WCA, who collectively own approximately 59% of the outstanding
shares of common stock of WCA, have agreed to vote for the
merger.
We have enclosed a notice of the special meeting and a
Proxy Statement/Prospectus discussing the merger. We encourage
you to read this document carefully. Also enclosed is a
proxy card so you can vote on the merger without attending the
meeting. Please complete, sign and date the enclosed proxy card
and return it to us as soon as possible in the envelope
we have provided. If you decide to come to the special meeting,
you may vote your shares in person whether or not you have mailed
us a proxy.
After the merger is completed, we will notify you as to how
you should proceed to exchange your WCA certificates for
BellSouth certificates. DO NOT SEND IN YOUR CERTIFICATES
UNTIL YOU RECEIVE THIS NOTIFICATION.
Very truly yours,
______________________________
Ricky C. Haney
President and Chief Executive
Officer
April 25, 1997
<PAGE>
Proposed Merger of
[WCA LOGO]
with
[BellSouth Logo]
TO THE SHAREHOLDERS OF WIRELESS CABLE OF ATLANTA, INC.:
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held
Tuesday, May 27, 1997
10:00 a.m.
NationsBank Plaza, 41st Floor
600 Peachtree Street, N.E.
Atlanta, Georgia
The Board of Directors of WCA asks you to attend this
meeting to vote on the following:
1. Proposed Merger. Your vote on the agreement
describing WCA's proposed merger with a subsidiary of BellSouth
is important. In the merger, BellSouth will pay WCA shareholders
0.494 of a share of BellSouth common stock for each share of WCA
common stock. This exchange ratio may change depending on the
price of BellSouth stock before the merger is completed. After
the merger, WCA will be a subsidiary of BellSouth. The Agreement
and Plan of Reorganization providing for the merger, which
describes the terms of the merger in great detail, is attached to
the accompanying Proxy Statement/Prospectus as Annex I; and
2. Other Business. To consider and vote on any other
matters that properly come before the meeting or any adjournments
or postponements.
Only shareholders who hold their stock at the close of
business on April 15, 1997 are entitled to notice of and to vote
at the special meeting or any adjournments or postponements
thereof.
By Order of the Board of Directors,
Richard L. Kendrick
Secretary
April 25, 1997
Norcross, Georgia
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU
VOTE FOR THE MERGER.
WE INVITE YOU TO ATTEND THE SPECIAL MEETING BECAUSE IT IS
IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. PLEASE
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE
ACCOMPANYING
POSTAGE-PAID ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY
PERSONALLY VOTE, WHICH WILL REVOKE YOUR SIGNED PROXY. YOU MAY
ALSO REVOKE YOUR PROXY AT ANY TIME BEFORE THE MEETING EITHER IN
WRITING OR BY PERSONAL NOTIFICATION.
<PAGE>
PROXY STATEMENT PROSPECTUS
FOR OF
SPECIAL MEETING OF SHAREHOLDERS OF
[WCA Logo] [BellSouth Logo]
To Be Held on May 27, 1997 Common Stock
par value $1.00
The Boards of Directors The merger cannot be
of BellSouth Corporation and completed unless WCA
Wireless Cable of Atlanta, Inc. shareholders approve it.
have agreed to merge WCA with a The WCA Board of Directors
subsidiary of BellSouth. WCA has scheduled a special
would become a wholly-owned meeting for WCA shareholders
subsidiary of BellSouth and to vote on the merger as
BellSouth would pay to WCA follows:
shareholders 0.494 of a share
of BellSouth common stock for Tuesday, May 27, 1997
each share of WCA common stock 10:00 a.m.
that they own, subject to NationsBank Plaza, 41st Floor
adjustment depending on the 600 Peachtree St., N.E.
price of BellSouth stock before Atlanta, Georgia
the merger.
This document gives you
detailed information about the
proposed merger. BellSouth
has provided the information
concerning BellSouth, and WCA
has provided the information
concerning WCA. Please see
"Where You Can Find More
Information" on page _ for
additional information about
WCA and BellSouth on file with
the United States Securities
and Exchange Commission.
This Proxy Statement/Prospectus and proxy are being mailed
to shareholders of WCA beginning about April 25, 1997.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES REGULATOR HAS APPROVED OR DISAPPROVED THE BELLSOUTH
COMMON STOCK TO BE ISSUED UNDER THIS PROXY STATEMENT/PROSPECTUS
OR DETERMINED IF THIS PROXY STATEMENT/PROSPECTUS IS ACCURATE OR
ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Proxy Statement/Prospectus is April ___, 1997.
<PAGE>
TABLE OF CONTENTS
SUMMARY. . . . . . . . . . . . . . . . . 1
GENERAL INFORMATION. . . . . . . . . . . 7
THE MERGER . . . . . . . . . . . . . . . 8
Background of the Merger; Determination
of Exchange Ratio. . . . . . . . . . 8
Reasons for the Merger; Recommendation
of the WCA Board . . . . . . . . . . 9
Effective Time of the Merger . . . . . 9
Exchange Ratio . . . . . . . . . . . . 9
Business of WCA and BellSouth Pending
the Merger . . . . . . . . . . . . . 10
Conditions to Consummation of the
Merger . . . . . . . . . . . . . . . 11
Interim Financing. . . . . . . . . . . 11
Termination. . . . . . . . . . . . . . 11
Federal Communications Commission
Approvals . . . . . . . . . . . . . 12
Hart-Scott-Rodino. . . . . . . . . . . 12
Accounting Treatment . . . . . . . . . 12
Operations After the Merger. . . . . . 12
Interests of Certain Persons in the
Merger . . . . . . . . . . . . . . . 12
Preferred Stock; Stock Options . . . . 13
Certain Federal Income Tax
Consequences . . . . . . . . . . . . 14
Appraisal Rights . . . . . . . . . . . 14
BUSINESS OF BELLSOUTH. . . . . . . . . . 17
BUSINESS OF WCA. . . . . . . . . . . . . 17
PRICE RANGE OF WCA COMMON STOCK
AND DIVIDEND POLICY. . . . . . . . . . 18
WCA MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. . . . . . . . . 19
WCA SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS. . . . . . . . 21
COMPARATIVE RIGHTS OF SHAREHOLDERS . . . 22
RESALE OF BELLSOUTH COMMON STOCK . . . . 24
EXPERTS. . . . . . . . . . . . . . . . . 24
LEGAL OPINIONS . . . . . . . . . . . . . 24
OTHER MATTERS. . . . . . . . . . . . . . 24
SHAREHOLDER PROPOSALS. . . . . . . . . . 26
WHERE YOU CAN FIND MORE INFORMATION. . . 27
FINANCIAL STATEMENTS OF WIRELESS CABLE
OF ATLANTA, INC. . . . . . . . . . . . 1
ANNEX I -- Agreement and Plan of Reorganization dated as
of February 11, 1997
ANNEX II -- Georgia Business Corporation Code - Appraisal
Rights
<PAGE>
SUMMARY
This summary highlights selected information from this document
and may not contain all of the information that is important to
you. To understand the merger fully and for a more complete
description of the legal terms of the merger, you should read
carefully this entire document and the documents we have referred
you to. See "Where You Can Find More Information." (Page ___.)
THE COMPANIES (b) BellSouth has the
resources for such
BellSouth WCA Merger Subsidiary, development and has
Inc., a wholly-owned subsidiary offered a fair price to
of BellSouth Corporation WCA shareholders;
1155 Peachtree Street, N.E.
Atlanta, Georgia 30309-3610 (c) the BellSouth stock that
(404) 249-2000 WCA shareholders would
receive in the merger
BellSouth is a communications represents a more
services company. It provides diversified investment
local and toll telephone, wireless than their WCA stock and
communications, directory would be acquired on a
advertising and publishing, video, tax-free basis. Also,
Internet and information services unlike WCA, BellSouth
to more than 27 million customers pays dividends.
in 20 countries. Although
BellSouth traces its roots
back to the Bell System, it was OTHER INTERESTS OF OFFICERS
incorporated in 1983 under the AND DIRECTORS IN THE MERGER
laws of the State of Georgia.
In considering the WCA
Wireless Cable of Atlanta, Inc. Board's recommendation that
3100 Medlock Bridge Road, Suite 340 you vote for the merger, you
Norcross, Georgia 30071 should be aware that the
(770) 409-3570 officers and directors of
WCA, have interests in the
WCA is a wireless cable merger that are different
television services company. It from, or in addition to,
provides wireless cable television their rights as WCA
service to multiple dwelling units shareholders. The merger
and commercial properties, such as agreement provides that the
large apartment complexes and three officer/directors of
office buildings. WCA was WCA will enter into three
organized under the laws of the year consulting and non-
State of Georgia. compete agreements with
BellSouth and receive annual
consulting fees of $150,000.
REASONS FOR THE MERGER Those officers' current
employment agreements
The WCA Board believes that the provide for minimum annual
terms of the merger and the merger base salaries of approx-
agreement are fair to and in the imately $100,000. The two
best interests of WCA and its other directors of WCA have
shareholders. In reaching its been elected by Digital
decision, the WCA Board of Funding of Atlanta, L.L.C.,
Directors considered the following the holder of WCA's out-
factors, among other things: standing preferred stock.
In return for Digital
(a) WCA's growth opportunities Funding of Atlanta's support
require large capital and of the merger, WCA has
operating cash commitments agreed to pay an additional
for developing its wireless dividend on this preferred
cable business from a stock prior to the merger.
technological and marketing This dividend would result
standpoint; in Digital Funding of
Atlanta's acquiring approx-
imately 5,000 additional
shares of BellSouth
common stock in the merger.
Please refer to page ___ for
more information concerning
these interests. (See
"Interests of Certain
Persons in the Merger" on
page ____.)
RECOMMENDATION TO WCA
SHAREHOLDERS
The WCA Board believes
that the merger is in
the best interest of WCA and
its shareholders and
1
<PAGE>
unanimously recommends that you CONDITIONS TO THE MERGER
vote FOR the merger.
The completion of the
merger depends upon
THE MERGER meeting a number of con-
ditions, including the
The merger agreement is approval of the Federal
attached as Annex I to this Communications Commission,
Proxy Statement/Prospectus. We the approval of WCA share-
encourage you to read the holders and the receipt of
merger agreement as it is the a legal opinion that the
legal document that governs the merger will be treated as a
merger. tax-free reorganization.
Certain of the conditions
WHAT WCA SHAREHOLDERS WILL RECEIVE to the merger may be waived
As a result of the merger, by the company entitled to
BellSouth will pay WCA shareholders assert the condition.
0.494 of a share of BellSouth BellSouth and WCA expect
common stock for each share of WCA the merger to be tax-free,
common stock that they own. This although this condition can
"exchange ratio" is based on the be waived. However, if the
market price of BellSouth common tax-free nature of the
stock on April 18, 1997 of $41.00 merger is in doubt, WCA
and is subject to adjustment based would resolicit proxies for
on the market price of BellSouth approval of the merger on a
stock shortly before the merger. taxable basis. (See
If the market price at this time "Conditions to Consummation
is above $42.625, the exchange of the Merger" on page __.)
ratio will go down and if the
market price is below $32.625, TERMINATION OF THE MERGER
the exchange ratio will go up. AGREEMENT
(See "Exchange Ratio" on
page ___.) Either company can agree
to terminate the merger
WCA shareholders will not agreement without complet-
receive fractional shares. Instead, ing the merger, if, among
they will receive a check in payment other things, any of the
for any fractional shares based on following occurs:
the market value of BellSouth stock.
(a) the merger is not
For example, if a WCA completed before
shareholder owns 100 shares of WCA August 11, 1997;
common stock, this will translate
into 49.4 shares of BellSouth common (b) the holders of a
stock when multiplied by the 0.494 majority of the
exchange ratio. He or she would stock of WCA do not
receive 49 shares of BellSouth common approve the merger;
stock and a check in the amount of .4
times the BellSouth market price used (c) the business of the
in the calculation of the exchange other party, or the
ratio. Assuming a BellSouth market prospects for the
price of $41.00, this check would be combined company,
in the amount of $16.40. materially change
for the worse; or
Do not send in your stock
certificates until instructed to do (d) the other party
so after the merger is completed. breaches or
materially fails to
WHAT WILL HAPPEN TO WCA comply with any of
its representations
If the merger is completed, WCA or warranties or
will merge with and become a obligations under
subsidiary of BellSouth. the merger
Individuals who owned stock in WCA agreement.
before the merger will own stock
in BellSouth after the merger. (See "Termination" on page
Former WCA shareholders will own __.)
less than 1% of BellSouth's common
stock after the merger. VOTE REQUIRED
Each of the directors
and officers of WCA have
executed a Voting Agree-
ment and Irrevocable Proxy
with BellSouth with
respect to a total of
approximately 59% of the
outstanding WCA shares.
Under these agreements,
the directors agree to
vote all of their WCA
shares in favor of the
merger. They also
irrevocably appoint two
representatives of
BellSouth as proxies to
vote their WCA shares in
favor of the merger.
Since the vote of these
shareholders is sufficient
to approve the merger,
approval of the merger is
assured.
2
<PAGE>
As a result, WCA shareholders may be lost. These
may not defeat the merger by voting procedures are described
against it. If they oppose the in this Proxy State-
merger and do not wish to receive ment/Prospectus, and the
BellSouth shares in the merger, Georgia law that grants
their only remedy is to seek the right is attached as
appraisal of their WCA shares. Annex II. (See "Appraisal
rights" on page __.)
(See "Appraisal Rights" below
and on page __.) COMPARATIVE PER SHARE
MARKET PRICE INFORMATION
BellSouth's Board of Directors
has approved the merger. Georgia Shares of BellSouth
law does not require BellSouth common stock are listed on
shareholders to approve the merger. the New York Stock
Exchange and certain other
REGULATORY APPROVALS stock exchanges. Shares
of WCA common stock are
BellSouth and WCA have jointly quoted on the Nasdaq
filed applications with the Federal SmallCap Market. On
Communications Commission seeking October 25, 1996, the last
its approval of the transfer of full trading day prior to
control of certain licenses to the public announcement of
BellSouth. the proposed merger,
BellSouth stock closed at
On April 9, 1997, the FCC $38.75 per share on the
approved the transfer of control of New York Stock Exchange
the licenses, and such approval will and WCA stock closed on
be deemed a final order after May 27, the Nasdaq SmallCap Market
1997 unless protested by a third at $15.00 per share. On
party or set aside by the Federal April 18, 1997, BellSouth
Communications Commission. (See stock closed at $41.00 per
"Federal Communications Commission share and WCA stock closed
Approvals" on page __.) at $18.625 per share.
(See "Price Range of WCA
IMPORTANT FEDERAL INCOME TAX Common Stock and Dividend
CONSEQUENCES Policy" on page __.)
We have structured the merger so DIVIDENDS AFTER THE MERGER
that WCA shareholders will not
recognize any gain or loss for BellSouth's current
federal income tax purposes in the annualized dividend rate
merger (except for tax payable is $1.44 per share. The
because of cash received by WCA payment of dividends by
shareholders instead of fractional BellSouth in the future,
shares or pursuant to the exercise however, will depend on
of appraisal rights). We have business conditions, its
conditioned the merger on our financial position and
receipt of a legal opinion that such earnings and other
is the case. (See "Certain Federal factors. WCA has never
Income Tax Consequences" on page __.) paid dividends to holders
of its common stock.
APPRAISAL RIGHTS (See "Price Range of WCA
Common Stock and Dividend
Under Georgia law, WCA share- Policy" on page __.)
holders who do not vote in favor of
the merger and who comply with
certain notice requirements and
other procedures will have the right
to be paid cash for the "fair value"
of their shares. "Fair value" may
be more or less than the value of
BellSouth stock to be paid to other
WCA shareholders according to the
merger agreement. BellSouth is not
required to close the merger if
shareholders owning more than 10%
of WCA common stock exercise these
dissenters rights. Dissenting WCA
shareholders must precisely follow
specific procedures to exercise
this right, or the right
3
<PAGE>
COMPARATIVE PER SHARE INFORMATION
We have summarized below the per share information for
BellSouth and WCA on a historical and equivalent basis. The WCA
Per Share Equivalents assume the merger had occurred in 1996 and
are calculated by multiplying the BellSouth historical per share
amounts by the exchange ratio of 0.494. This information shows
how each share of WCA stock that you hold would have participated
in the income from continuing operations, cash dividends and book
value of BellSouth if the merger had been effective in 1996.
However, such amounts do not necessarily reflect future per share
levels of income from continuing operations, cash dividends and
book value of BellSouth.
COMPARATIVE PER SHARE INFORMATION
At or for the
Year Ended
December 31,
1996
WCA PER SHARE EQUIVALENTS
(assuming the merger had been
effective in 1996)
Income from continuing operations
per common share $ 1.42
Cash dividends declared per common share 0.71
Book value per common share 6.60
WCA -- HISTORICAL
Net loss from continuing operations
per common share $(0.64)
Cash dividends declared per common share --
Book value per common share 1.12
BELLSOUTH -- HISTORICAL
Income from continuing operations per
common share $ 2.88
Cash dividends declared per common share 1.44
Book value per common share 13.37
4
<PAGE>
SUMMARY SELECTED HISTORICAL FINANCIAL INFORMATION
We are providing the following financial information to aid
you in your analysis of the financial aspects of the merger. We
derived this information, except for BellSouth Business Volumes,
from audited financial statements for 1992 through 1996. The
information is only a summary and you should read it in
conjunction with each company's historical financial statements
(and related notes) contained in the annual reports and other
information on file with the Securities and Exchange Commission.
See "Where You Can Find More Information" on page __.
<TABLE>
BELLSOUTH -- HISTORICAL FINANCIAL INFORMATION
At or for the Year Ended December 31,
1996 1995 1994 1993 1992
(Dollars in Millions, Except for Per Share Amounts)
<S> <C> <C> <C> <C> <C>
Revenues. . . . . . . .$19,040 $17,886 $16,845 $15,880 $15,202
Income Before
Extraordinary Losses
and Accounting
Change (1)(2) . . . .$ 2,863 $ 1,564 $ 2,160 $ 1,034 $ 1,659
Extraordinary Losses,
net of tax (3). . . . . -- (2,796) -- (87) (41)
Accounting Change,
net of tax. . . . . . -- -- -- (67) --
Net Income (Loss) . . .$ 2,863 $(1,232) $ 2,160 $ 880 $ 1,618
Weighted Average
Common Shares
Outstanding . . . . . 994 993 992 991 981
Earnings (Loss) Per
Share:
Income Before
Extraordinary Losses
and Accounting
Change. . . . . . .$ 2.88 $ 1.57 $ 2.18 $ 1.04 $ 1.69
Extraordinary Losses,
Net of Tax (3). . . -- (2.81) -- (0.09) (0.04)
Accounting Change,
Net of Tax. . . . . -- -- -- (0.06) --
Net Income (Loss) . .$ 2.88 $(1.24) $ 2.18 $ 0.89 $ 1.65
Total Assets. . . . . .$32,568 $31,880 $34,397 $32,873 $31,463
Long-Term Debt. . . . .$ 8,116 $ 7,924 $ 7,435 $ 7,381 $ 7,360
Shareholders' Equity. .$13,249 $11,825 $14,367 $13,494 $13,799
Dividends Declared
Per Common Share. . .$ 1.44 $ 1.41 $ 1.38 $ 1.38 $ 1.38
Business Volumes:
Network Access
Lines in Service
(thousands) . . . . 22,135 21,133 20,220 19,333 18,650
Access Minutes of
Use (millions):
Interstate. . . . 67,690 62,411 57,778 53,345 50,546
Intrastate. . . . 21,171 19,197 16,888 15,261 13,994
Toll messages
(millions). . . . . 1,023 1,374 1,559 1,511 1,462
Cellular Customers
(thousands): (4)
Domestic. . . . . . 3,612 2,847 2,156 1,559 1,118
International . . . 1,244 655 361 192 78
Total cellular
customers . . . . 4,856 3,502 2,517 1,751 1,196
</TABLE>
_______________________
(1) Includes the impact in 1996 of a gain on sale of BellSouth's
paging business, which increased net income by $344.
(2) Includes the impact in 1995 of a work force reduction charge,
which reduced net income by $663 and the impact in 1993 of a
charge for restructuring, which reduced net income by $697.
(3) For 1995, reflects charges of $2,718 ($2.73 per share) for
the discontinuance of Statement of Financial Accounting Standards
No. 71, "Accounting for the Effects of Certain Types of
Regulation," and $78 ($.08 per share) related to the refinancing
of long-term debt issues.
(4) Calculated on the equity basis, which includes customers
served based on BellSouth's ownership percentage in all markets
served.
5
<PAGE>
<TABLE>
WCA -- HISTORICAL FINANCIAL INFORMATION
At or for the Year Ended December 31,
1996 1995 1994 1993 1992
(Dollars in Thousands, Except for Per Share Amounts)
<S> <C> <C> <C> <C> <C>
Revenues. . . . . . $ 3,546 $ 3,285 $ 2,869 $ 2,249 $ 1,896
Net loss. . . . . . $ (703) $ (640) $ (490) $ (62) $ (17)
Preferred dividend
requirements. . . $ (437) $ (157) -- -- --
Net loss applicable
to common shares. $(1,140) $ (797) $ (490) $ (62) $ (17)
Weighted average
common shares
outstanding . . . 1,771 1,740 1,729 1,291 1,037
Net loss per share. $(0.64) $(0.46) $(0.28) $(0.05) $(0.02)
Total assets. . . . $ 6,332 $ 5,644 $ 4,315 $ 4,722 $ 2,105
Preferred stock . . $ 3,733 $ 2,121 -- -- --
Stockholders'
equity. . . . . . $ 1,993 $ 3,108 $ 3,599 $ 4,089 $ 520
Dividends declared
per common share. -- -- -- -- --
</TABLE>
INTERIM RESULTS OF OPERATIONS
On April 21, 1997, BellSouth announced its results of
operations for the quarter ended March 31, 1997. Summary
information for this period was as follows (in millions, except
per share data):
Three Months Ended
March 31,
1997 1996
Revenues $4,845 $4,541
Net Income $ 693 $ 970
Earnings Per Share $ 0.70 $ 0.98
Net income and earnings per share for the 1996 period
include an after-tax gain on the sale of BellSouth's paging
business of $344.
On April 23, 1997, WCA announced its results of operations
for the quarter ended March 31, 1997. Summary information for
this period was as follows (in thousands, except per share data):
Three Months Ended
March 31,
1997 1996
Revenues $889 $847
Net Loss ($310) ($223)
Net Loss Per Share ($0.17) ($0.13)
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GENERAL INFORMATION
You have received this Proxy Statement/Prospectus in
connection with the solicitation of proxies by the Wireless Cable
of Atlanta, Inc. Board of Directors. These proxies will be voted
at the WCA Shareholder Meeting to be held at NationsBank Plaza,
41st Floor, 600 Peachtree Street, N.E., Atlanta, Georgia, on
Tuesday, May 27, 1997, at 10:00 a.m. and any adjournment. At
this meeting, WCA shareholders will consider and vote upon: (i)
the Merger Agreement providing for the merger of WCA and a
BellSouth subsidiary, and (ii) any other matters that properly
come before the meeting or any adjournments or postponements.
Only shareholders of record of WCA at the close of business on
April 15, 1997 are entitled to notice of and to vote at
the meeting. This Proxy Statement/Prospectus is being mailed to
all such holders of record of WCA common stock beginning about
April 25, 1997.
The WCA shareholders are entitled to one vote for each
share of WCA common stock outstanding in the holder's name on the
books of WCA. Cumulative voting is not permitted. The holders
of WCA preferred stock are entitled to vote on the merger as if
the preferred stock has been converted to common stock. The
affirmative vote of the greater of (i) a majority of the
outstanding shares entitled to vote or (ii) 55% of the
shares represented at the meeting and entitled to vote, is
required for approval of the merger.
Under rules of The New York Stock Exchange, the proposal to
adopt the Merger Agreement is considered a "non-discretionary
item" and brokerage firms may not vote in their discretion on
behalf of their clients if their clients have not furnished
voting instructions. WCA will consider broker "non-votes" and
abstentions in determining the presence of a quorum at the
meeting but will not count these as votes cast for a
proposal. Broker "non-votes" and abstentions will have the
effect of a vote against the merger.
If you properly sign and return the attached proxy, it will
be voted according to your instructions. If you do not specify
any instructions, the proxy will be voted FOR the proposed
merger, and otherwise at the discretion of the proxies. You may
revoke your proxy at any time before it is exercised by (i)
filing written notice of revocation with the Secretary of WCA
(Richard L. Kendrick, Secretary, Wireless Cable of Atlanta,
Inc., 3100 Medlock Bridge Road, Suite 340, Norcross, Georgia
30071); (ii) submitting a duly executed proxy bearing a later
date; or (iii) appearing at the WCA Shareholder Meeting and
notifying the Secretary of your intention to vote in person;
however, attendance at the WCA Shareholder Meeting will not in
and of itself have the effect of revoking the proxy. Proxies
solicited by this Proxy Statement/Prospectus may be exercised
only at the WCA Shareholder Meeting and any adjournment or
postponement and will not be used for any other meeting.
The WCA Board is soliciting the accompanying proxy, and WCA
will bear the cost of the solicitation. Arrangements also may be
made with brokerage houses and custodians, nominees and
fiduciaries for forwarding of solicitation material to beneficial
owners of WCA stock and obtaining proxies from the beneficial
owners of WCA stock. WCA will reimburse these persons for their
reasonable expenses.
The WCA Board has no information that other matters will be
brought before the meeting. If, however, other matters are
presented, your proxy will be voted in accordance with the
recommendations of the WCA Board with respect to those matters.
Each of the directors and officers of WCA have executed a
Voting Agreement and Irrevocable Proxy with BellSouth with
respect to approximately 59% of the outstanding WCA common stock.
Under these agreements, the directors and officers agree to vote
all of their WCA shares in favor of the Merger Agreement.
They also irrevocably appoint two representatives of BellSouth as
proxies to vote their WCA shares in favor of the merger. The
vote of these shareholders would be sufficient to approve the
merger without the affirmative vote of any other holder of WCA
stock. See "WCA Security Ownership of Certain Beneficial
Owners."
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THE MERGER
The following discussion describes the more important
aspects of the merger of WCA with a subsidiary of BellSouth
("BellSouth Sub"). The detailed terms of the merger are
contained in the Merger Agreement, which is attached as Annex
I to this Proxy Statement/Prospectus. The description in this
Proxy Statement/Prospectus is not complete, and you should refer
to the Merger Agreement for more detail.
As discussed below in "Reasons for the Merger;
Recommendation of the WCA Board," the WCA Board believes that the
merger and the Merger Agreement are fair to, and in the best
interests of, WCA and its shareholders.
BACKGROUND OF THE MERGER; DETERMINATION OF EXCHANGE RATIO
The WCA Board of Directors historically has understood that
WCA would need substantial additional capital in order to fully
develop the Atlanta wireless cable market. In October 1995, WCA
retained Alex. Brown & Sons Inc. to explore strategic
alternatives for WCA to maximize shareholder value, including
raising such capital to develop the market and considering
potential business combinations. In April 1996, WCA
announced that it intended to pursue a suitable business
combination that would provide additional management
expertise and financing alternatives. WCA also announced that
Alex. Brown would initiate the process of finding an acceptable
partner.
In early October 1996, representatives of BellSouth
contacted WCA to determine WCA's interest in a possible business
combination with BellSouth. BellSouth initially valued WCA
common stock based upon the size of the Atlanta wireless cable
market; the number of wireless channels that would be available
for BellSouth's use; the number of WCA customers and potential
customers; the potential for growth of WCA's wireless cable
business; the possibility of integration of WCA's wireless cable
business with existing BellSouth products and services; and the
value of comparable private and public companies. This valuation
resulted in a preliminary aggregate valuation of WCA of between
$41 million and $42 million. Representatives of BellSouth
and WCA met on October 9, 1997 and discussed this valuation.
These representatives met again on October 10, 1997 and agreed at
this meeting to explore the mutual acceptability of a tax-free
transaction with an exchange ratio of .50 shares of BellSouth
common stock for each share of WCA common stock.
On October 17, 1996, representatives of Alex. Brown met
with the WCA Board of Directors and provided the WCA Board of
Directors with a preliminary analysis regarding a possible merger
with BellSouth. Alex. Brown reviewed with the WCA Board the
terms of a proposed term sheet pursuant to which each share of
WCA common stock would be exchanged for 0.50 shares of BellSouth
common stock, subject to certain adjustments, and the negotiation
of a definitive agreement mutually acceptable to both parties.
Alex. Brown also reviewed with the WCA Board WCA's recent
financial performance along with the current and historic stock
prices of WCA and BellSouth and discussed the valuations of other
companies in the wireless cable industry, including companies
that had been the subject of acquisition transactions. Alex.
Brown also reviewed the proposed term sheet with the WCA Board,
reviewed the daily exchange ratio for the preceding 12 months,
market statistics of selected publicly traded wireless cable
companies and selected acquisitions within the wireless cable
industry. Alex. Brown informed the Board that based upon its
review of the above, the proposed BellSouth transaction seemed
more favorable than other available alternatives of which
Alex. Brown was aware and, accordingly, was deserving of further
serious consideration by the WCA Board.
On October 25, 1996, the WCA Board of Directors approved a
non-binding letter of intent providing for a merger of WCA into a
subsidiary of BellSouth. In this letter of intent, WCA and
BellSouth agreed that each share of WCA common stock would be
exchanged for 0.50 shares of BellSouth common stock, subject to
adjustments depending on BellSouth's stock price prior to the
merger.
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<PAGE>
Following execution of the letter of intent, BellSouth
further reviewed WCA's financial condition and business,
including the number of wireless cable channels that would be
available for BellSouth's use. Based on BellSouth's review by
its due diligence team, the parties agreed that additional
expenditures would be required in order to acquire full use of
certain channels held by WCA. After this review, BellSouth and
WCA discussed revising the purchase price and other issues. WCA
and BellSouth agreed to reduce the exchange ratio from 0.50 to
0.49; however, BellSouth and WCA also agreed upon an adjustment
in the exchange ratio if the merger does not occur until after
BellSouth's dividend record dates for the second and third
quarters of 1997. BellSouth also agreed to provide a $1 million
non-interest-bearing loan to WCA. See "- Interim Financing."
The WCA Board of Directors approved the Merger Agreement,
and the Merger Agreement was executed on February 11, 1997.
REASONS FOR THE MERGER; RECOMMENDATION OF THE WCA BOARD
The WCA Board of Directors believes that the merger is fair
to, and in the best interests of, WCA and its shareholders. In
considering the terms and conditions of the Merger Agreement, the
WCA Board considered a number of factors, including:
(i) WCA's Limited Growth Opportunities. WCA's
growth opportunities require high capital
and operating cash requirements for
developing its wireless cable business
from a technological and marketing
standpoint.
(ii) BellSouth Resources. BellSouth has the
resources for such development and has
offered a fair price to WCA shareholders.
(iii) Diversified Investment. The BellSouth stock
that WCA shareholders would receive in the
merger represents a more diversified
investment than their WCA stock and would be
acquired on a tax-free basis. Also, unlike
WCA, BellSouth pays dividends.
The WCA Board believes that the merger is advisable because
it is fair to, and in the best interest of, WCA and its
shareholders. The WCA Board unanimously recommends that WCA's
shareholders vote FOR the Merger Agreement and the merger.
EFFECTIVE TIME OF THE MERGER
We expect the merger to close as promptly as practicable
following the shareholders meeting. The merger will be effective
on the date and the time specified in the Articles of Merger that
WCA will file with the Georgia Secretary of State as soon as
practicable after all of the conditions to the closing of the
merger are satisfied. Either WCA or BellSouth, acting alone, may
terminate the Merger Agreement if the merger has not closed by
August 11, 1997.
Until the effective time of the merger, WCA shareholders
will retain their voting rights as shareholders.
EXCHANGE RATIO
The Merger Agreement provides that each share of
outstanding WCA common stock will be converted into and represent
the right to receive a fraction of a share of BellSouth common
stock (the "Exchange Ratio"). For purposes of determining the
Exchange Ratio, the price of BellSouth common stock will be
determined by averaging its closing price as reported on the New
York Stock Exchange for the 20 trading days ending on the tenth
day before the merger.
The number of shares of BellSouth common stock may increase or
decrease depending on this average closing price, as follows:
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<PAGE>
(i) if the average closing price is between $32.625 and
$42.625, the Exchange Ratio will be 0.49;
(ii) if the average closing price is greater than $42.625,
the Exchange Ratio will be the quotient of
(A) $20.88625 divided by (B) the average closing
price, rounded to the nearest one-one thousandth of a
share; and
(iii) if the average closing price is less than $32.625,
the Exchange Ratio will be the quotient of
(A) $15.98625 divided by (B) the average closing
price, rounded to the nearest one-one thousandth of a
share.
Thus, if the average closing price is $44.625, then the
exchange ratio will be 0.47. If the average closing price is
$30.625, the exchange ratio will be 0.52.
The Merger Agreement further provides that if the merger
does not occur on or before April 10 or July 10, 1997 (the record
dates for BellSouth's second and third quarter anticipated
dividends), the exchange ratio will be increased so that WCA
shareholders will receive additional BellSouth common stock
comparable in value to the dividends WCA shareholders otherwise
would have received. It is expected that the merger will occur
subsequent to April 10, 1997 and prior to July 10, 1997. Thus,
WCA shareholders will also be entitled to receive the value of
dividends declared by BellSouth for the second quarter of 1997.
This dividend, payable to BellSouth's shareholders of record on
April 10, 1997, is equal to $0.36 per share of BellSouth common
stock. WCA shareholders will receive the value of these
dividends as if the merger had occurred by this date. WCA
shareholders will receive the value of these dividends in the
form of BellSouth common stock, and will receive cash instead of
fractional shares. Based on the closing price of BellSouth
common stock on April 18, 1997 of $41.00, the aggregate exchange
ratio would be 0.494.
After the merger is completed, we will notify you as to how
you should proceed to exchange your WCA certificates for
BellSouth certificates. Do not send in your certificates until
you receive this notification.
WCA shareholders will be entitled to receive (i)
certificates representing the number of whole shares of
BellSouth common stock for which such shares have been submitted
for exchange and (ii) cash instead of any fractional share
interest on the basis of the Exchange Ratio.
Based upon the capitalization of BellSouth and WCA as of
the date of this Proxy Statement/Prospectus, WCA shareholders
would own less than 1% of the outstanding BellSouth common stock
following consummation of the merger.
BUSINESS OF WCA AND BELLSOUTH PENDING THE MERGER
WCA has agreed that prior to the effective time of the
merger it will conduct its business as it has in the past. WCA
also agreed that it will maintain its business organization, and
relationships with employees, subscribers and others.
Furthermore, WCA agreed that it will not do anything to hinder or
delay any necessary approvals and will perform its covenants and
agreements under the Merger Agreement on a timely basis. The
Merger Agreement contains a list of WCA's specific duties in
fulfilling these obligations.
WCA also has agreed that it will not pursue any discussions
with any person other than BellSouth regarding any business
combination or change in control involving WCA or its
subsidiaries. WCA must promptly notify BellSouth of any contact
with any person regarding any such combination or change in
control.
In addition, WCA has agreed that, prior to the closing of
the merger, it will (i) use its best efforts to maintain all
Federal Communications Commission authorizations; (ii) perform
obligations under its leases and Federal Communications
Commission authorizations; (iii) maintain and defend its channel
rights; (iv) use its best efforts to maintain its current level
of subscribers and rates; and (v) use its best efforts to obtain
the
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consent of the Federal Communications Commission to the
transfer of control pursuant to the merger and the consent of
other parties under certain agreements. The Merger Agreement
contains a detailed list of these and other pre-merger
obligations of WCA.
CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the merger is conditioned upon the approval
of the shareholders of WCA and upon governmental, regulatory and
other third party approvals, including the Federal Communications
Commission's approvals by final order of the transfer of control
of WCA to BellSouth. The obligations of WCA and BellSouth to
consummate the merger are further conditioned upon the
satisfaction of terms and conditions listed in the Merger
Agreement usual for mergers of this type, including continued
accuracy of representations and warranties made by WCA and
BellSouth, the absence of any material adverse change in WCA's or
BellSouth's business and the receipt of legal and accounting
opinions.
BellSouth is not required to close the merger unless the
following are true: (i) immediately prior to the merger and
following conversion of the WCA preferred stock and the exercise
of all outstanding options, not more than 2,245,378 shares of WCA
common stock are issued and outstanding and no shares of WCA
preferred stock are issued and outstanding; (ii) Messrs. Ricky C.
Haney, Richard L. Kendrick and Allan H. Rudder have delivered
consulting and noncompete agreements to BellSouth; (iii) as of
the date of the merger, WCA has delivered the digital-ready
channels previously identified by BellSouth; (iv) on the date of
the merger, WCA has not fewer than 8,600 basic subscribers; and
(v) the holders of not more than 10% of the outstanding shares of
WCA common stock have perfected the right to dissent to the
merger.
BellSouth and WCA may waive any condition to their
obligations to consummate the merger except requisite approvals
of WCA shareholders and regulatory authorities.
INTERIM FINANCING
Under the Merger Agreement, BellSouth agreed to provide $1
million of financing to WCA as of the date after the signing of
the Merger Agreement. This financing is not interest bearing and
is to be repaid promptly following the closing of the merger.
The financing proceeds may be used only (a) to fund negative
cash flow from operations not in excess of $150,000 and (b) for
the purposes of constructing new wireless cable facilities for
multiple dwelling units, subject to the prior approval of
BellSouth.
This indebtedness will be forgiven if the Merger Agreement
is terminated in accordance with its terms (a) by BellSouth other
than as a result of a material misrepresentation or a material
breach of a covenant by WCA, (b) by BellSouth or WCA other than
because of governmental action that renders the merger illegal or
otherwise materially restricted or prohibited or (c) by WCA for
reasons other than the non-consummation of the merger before
August 11, 1997. The financing will convert to an
interest-bearing loan, however, if the Merger Agreement is
terminated in accordance with its terms (x) by BellSouth as a
result of a material misrepresentation or a material breach of a
covenant by WCA, (y) by BellSouth or WCA because of governmental
action that renders the merger illegal or otherwise materially
restricted or prohibited or (y) by WCA because the merger does
not occur before August 11, 1997, or if the holder of WCA
preferred stock elects to terminate the proxy contained in its
Voting Agreement and Irrevocable Proxy on or after August 11,
1997. Under such circumstances, interest will accrue as of the
termination date. The indebtedness will have a maturity date of
December 31, 1998 and will be secured by the stock of WCA's
subsidiaries. The interest annual rate would be 10%, increasing
to 30% if it is not repaid at maturity.
TERMINATION
The Merger Agreement may be terminated and the merger
abandoned by: (i) the mutual written consent of BellSouth and
WCA; (ii) by BellSouth or WCA, in the event of a material and
uncured breach by the other party; (iii) by BellSouth or WCA, if
any governmental body or any court takes any action that would
have the
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effect of making the merger illegal or burdensome; and
(iv) by either BellSouth or WCA if the merger does not occur
before August 11, 1997.
In the event of termination, the Merger Agreement, other
than provisions relating to confidentiality and payment of
expenses will become void without liability on the part of any
party or directors or officers, except for breach.
FEDERAL COMMUNICATIONS COMMISSION APPROVALS
As a condition to consummation of the merger, the control
of Federal Communications Commission licenses held by WCA and its
subsidiaries must first be transferred to BellSouth by final
order. This requires the Commission to first approve the
qualifications of BellSouth and determine that BellSouth's
control of the licenses would be consistent with its regulations
and the public interest. Applications have been filed with the
Commission requesting its approvals. On April 9, 1997, the
Federal Communications Commission approved the transfer of
control of the licenses, and such approval will be deemed a final
order after May 27, 1997 unless protested by a third party or set
aside by the Federal Communications Commission.
HART-SCOTT-RODINO
A Hart-Scott-Rodino filing is not legally required;
however, Federal Trade Commission staff is undertaking a
preliminary investigation of the merger to assess whether it may
have any adverse effects on competition in the delivery of
multi-channel video programming in the Atlanta area. We have
agreed to cooperate with this investigation and not to close the
merger prior to May 28, 1997. Although this inquiry could
potentially result in Federal Trade Commission action to
challenge the acquisition, we believe the possibility is unlikely
given the merger's pro-competitive nature.
ACCOUNTING TREATMENT
The merger will be accounted for using the purchase method
of accounting. BellSouth will be deemed the acquiror for
financial reporting purposes. Under the purchase method of
accounting, the purchase price in the merger is allocated among
the WCA assets acquired and WCA liabilities assumed to the extent
of their fair market value, with any excess purchase price being
allocated to goodwill. Due to the size of BellSouth relative to
the purchase price, the purchase method of accounting and the
related amortization of goodwill will have an immaterial effect
on BellSouth's financial statements and, accordingly, no effect
on WCA's shareholders.
OPERATIONS AFTER THE MERGER
After the merger, BellSouth generally will conduct the
business presently conducted by WCA in the Atlanta, Georgia
wireless cable market. BellSouth also plans to upgrade the
current wireless cable TV service in Atlanta with new high
capacity digital technology that should allow WCA to transmit
more than 100 channels directly to subscribers' homes.
By using new digital technology, BellSouth expects to cover
more than 900,000 households in the Atlanta metropolitan area.
Digital technology will permit existing spectrum to be used to
carry more programming streams on the same bandwidth and with a
higher quality picture.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The WCA officers and directors have interests in the merger
in addition to their interests as shareholders of WCA generally.
Consulting and Noncompete Agreements. Employment
agreements are currently in effect for Messrs. Ricky C. Haney,
Richard L. Hendrick and Allan H. Rudder, who are members of the
WCA Board. These
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employment agreements provide for minimum base salaries as
follows: Mr. Haney, $102,000; Mr. Kendrick, $102,000; and Mr.
Rudder, $96,000. Under the Merger Agreement, these employment
agreements must be terminated and Messrs. Haney, Hendrick and
Rudder must enter into consulting and noncompete agreements with
WCA before the merger is completed. As employees of WCA, these
officers also receive additional employee benefits such as life
and health insurance and eligibility for bonuses. These officers
will not continue to receive these benefits following the merger.
The terms of these new consulting and noncompete agreements
continue for three years from their execution. They provide for
fees in the amount of $150,000 per year, plus expenses. Under
the agreements, the consultant agrees to render all consulting
services reasonably required by WCA. Each agreement also
contains a noncompetition clause under which the consultant
agrees not to compete with WCA in the Atlanta and Athens, Georgia
areas during the term of the agreement and for one year after its
termination.
Employees of WCA who are terminated by BellSouth without
cause within six months, other than Messrs. Ricky C. Haney,
Richard L. Kendrick and Allan H. Rudder, will be paid two months
severance pay.
Holder of Preferred Stock. Digital Funding of Atlanta,
L.L.C., a private investment fund ("DFA"), owns WCA's outstanding
Series A Convertible Preferred Stock. The terms of the preferred
stock entitle DFA to elect two of WCA's five directors. Prior to
execution of the Merger Agreement, DFA informed the WCA Board of
Directors that because the merger would be anticipated to occur
in the second quarter in 1997, conversion by DFA of its preferred
stock immediately prior to the merger would result in a
significant loss to it of certain future dividend payments. As
consideration to induce DFA to convert its preferred stock in
accordance with the terms of the Merger Agreement, the WCA Board
of Directors agreed that the Company would issue to DFA, prior to
the merger, additional shares of preferred stock. The number of
shares to be issued would be the number of shares of preferred
stock which would be due under the preferred stock dividend
requirements at March 1, 1997 (2,362 shares) plus an additional
dividend of 2,362 shares. In exchange DFA agreed to convert all
of its shares of preferred stock into shares of WCA common stock
immediately prior to the merger, and to exchange those shares for
shares of BellSouth common stock in accordance with the ratio
provided in the Merger Agreement. This additional dividend would
result in DFA's acquiring approximately 5,000 additional shares
of BellSouth common stock in the merger.
Stock Options. The WCA Board of Directors has approved the
acceleration of the exercise date of outstanding options that
would otherwise not be exercisable prior to the effective time of
the merger, contingent upon the merger's occurring. Mr. Rudder
holds 14,000 options which have been accelerated.
Indemnification. After the merger, WCA will provide
indemnification to the directors and officers of WCA for claims
occurring after WCA became a reporting company under the
Securities Exchange Act of 1934 and before the merger, to the
extent permitted under the Articles of Incorporation and Bylaws
of WCA. Indemnification will continue for six years after the
merger, but any right to indemnification regarding a claim
made within the six year period will continue until final
disposition of the claim. WCA will not be obligated to
pay more than $5,000,000 in the aggregate for these
indemnification obligations.
In addition, after the merger, WCA will provide
indemnification to the directors and officers of WCA
for all losses or claims, with the approval of BellSouth,
pertaining to the Merger Agreement. This indemnification shall
continue for six years after the merger, but any right to
indemnification regarding a claim asserted or made within the six
year period shall continue until final disposition of the claim.
PREFERRED STOCK; STOCK OPTIONS
Prior to the merger, each share of WCA preferred stock must
be converted into WCA common stock and all accrued but unpaid
dividends on WCA preferred stock must be paid. In addition, all
outstanding WCA options must be exercised or canceled prior to
the merger. Immediately prior to the merger, following
conversion of WCA preferred stock and the exercise of all
outstanding WCA options, the Merger Agreement
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requires that there shall be not more than 2,245,378 shares of
WCA common stock issued and outstanding and no shares of WCA
preferred stock issued and outstanding.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
BellSouth and WCA have received the opinion of Hunton &
Williams, counsel to BellSouth, to the effect that for United
States federal income tax purposes: (i) the merger will
constitute a "reorganization" under Section 368(a)(1)(A) of the
Internal Revenue Code; (ii) no gain or loss will be recognized by
BellSouth, BellSouth Sub or WCA upon consummation of the merger,
and (iii) the merger will result in the federal income tax
consequences summarized below for WCA shareholders who receive
BellSouth common stock for WCA common stock. Receipt of the
opinion of Hunton & Williams confirming these consequences as of
the effective date of the merger is a condition to consummation
of the merger. The opinion of Hunton & Williams will be
based on certain customary assumptions and representations
regarding, among other things, the lack of previous
dealings between WCA and BellSouth, the existing and future
ownership of WCA capital stock and BellSouth capital stock and
BellSouth's future business plans for WCA. WCA and BellSouth
currently contemplate that this tax opinion will be forthcoming.
In the unexpected event that the tax opinion is not received, and
WCA and BellSouth desire to proceed with the merger on a taxable
basis, WCA would resolicit proxies for approval of the merger.
In the opinion of Hunton & Williams, if you receive solely
BellSouth common stock in exchange for your shares of WCA common
stock, you will not recognize any gain or loss on the exchange.
If you receive BellSouth common stock and cash in lieu of a
fractional share of BellSouth common stock, you will recognize
taxable gain or loss solely with respect to such cash as if the
fractional share had been received and then redeemed for the
cash. You will have an aggregate tax basis in your shares of
BellSouth common stock (including any fractional share interest)
received in the merger equal to your tax basis in the shares of
WCA common stock exchanged therefor. Your holding period for
shares of BellSouth common stock (including any fractional share
interest) received in the merger will include your holding period
for the exchanged shares of WCA common stock if they are held as
a capital asset at the effective time of the merger.
If you elect appraisal rights (described below), your
receipt of cash in exchange for WCA common stock will be a
taxable event. If you are considering the exercise of appraisal
rights you should consult with a tax adviser.
The preceding discussion summarizes the material federal
income tax consequences of the merger to WCA shareholders. It
does not discuss all potentially relevant federal income tax
matters or consequences to any foreign or other shareholders
subject to special tax treatment, nor does it discuss any
state or local tax consequences of the merger. The tax
consequences to you may depend on your individual circumstances.
We advise you to consult your own tax advisors with regard to the
merger.
APPRAISAL RIGHTS
Under Georgia law, WCA shareholders who do not vote in
favor of the Merger Agreement and who comply with certain notice
requirements and other procedures will have the right to dissent
and to be paid cash for the "fair value" of their shares. Such
"fair value" as finally determined under such procedures may be
more or less than the consideration to be received by other WCA
shareholders under the terms of the Merger Agreement. Failure to
follow such procedures precisely may result in loss of appraisal
rights. BellSouth has the right to elect not to close the merger
if the holders of more than 10% of the outstanding shares of WCA
common stock have perfected the right to dissent from the merger.
The following discussion is only a summary and not a
complete statement of the law pertaining to appraisal rights
under the Georgia Business Corporation Code. The Code section
providing for appraisal rights is reprinted in its entirety as
Annex II to this Proxy Statement/Prospectus.
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<PAGE>
If you wish to exercise appraisal rights, or "dissenters'
rights," you must deliver to WCA before the vote on the Merger
Agreement a written notice of your intent to demand payment for
your Shares. You must not vote in favor of the Merger Agreement.
A vote against approval of the Merger Agreement will not, by
itself, constitute a valid written demand for dissenters' rights.
WCA must provide a written dissenters' notice to each
dissenting shareholder within 10 days after shareholder approval
of the Merger Agreement (i) stating where the demand for payment
must be sent and where and when certificates for certificated
shares must be deposited and (ii) setting a date by which WCA
must receive the demand for payment, which date may not be fewer
than 30 nor more than 60 days after the date on which the
dissenters' notice is delivered. A shareholder must deliver a
demand for payment and deposit his or her shareholder's
certificates on or prior to the payment demand date in accordance
with the terms of the dissenters' notice. Within 10 days after
receipt of the demand for payment or within 10 days after the
merger, whichever is later, WCA must make a written offer to each
dissenting shareholder who has filed a demand for payment to pay
an amount estimated to be the "fair value" of the shares plus
accrued interest. If the dissenting shareholder accepts WCA's
offer by written notice to WCA within 30 days of WCA's offer, WCA
must make payment within 60 days after it made the offer or the
closing of the merger, whichever occurs later.
A dissenting shareholder may notify WCA, in writing, of the
shareholder's own estimate of the "fair value" of his or her
shares and demand payment, if such notice is delivered within 30
days after WCA's offer. In addition, if WCA does not offer
payment within the time period set forth in the preceding
paragraph, a dissenting shareholder may demand delivery of
certain WCA financial information (which WCA must provide
within 10 days after receipt of such demand) and may, at any time
within three years of the consummation of the merger, notify WCA
of the shareholder's own estimate of the fair value of the
shareholder's shares and demand payment.
If a demand for payment remains unsettled, then WCA, within
60 days after receipt of the demand for payment, must file a
lawsuit requesting that the "fair value" of the shares be
determined, together with accrued interest. If WCA fails to
bring such action within the 60-day period, WCA will be required
to pay each dissenter whose demand remains unsettled the amount
demanded.
The costs and expenses of any such action shall be
determined by the court and shall be assessed against WCA.
Notwithstanding the foregoing, all or any part of such costs and
expenses may be apportioned and assigned as the court may deem
equitable against any and all of the dissenting shareholders who
are party to the action and to whom WCA shall have made an offer
to pay for the shares, if the court finds that the shareholder
acted inappropriately in making a demand for payment. Such
expenses may include reasonable compensation and expenses of
appraisers appointed by the court and fees and expenses of
counsel and experts employed by WCA. If the court finds that WCA
failed to comply with legal requirements, the court may award
to any shareholder who is a party to the proceeding such sum as
the court may determine to be reasonable compensation to any
attorneys or experts employed by the shareholder in the action.
Only a shareholder of record is entitled to assert
dissenter's rights for WCA stock registered in that holder's
name. The demand for dissenters' rights should be exercised by
or on behalf of the holder of record fully and correctly, as his
or her name appears on his stock certificates. If WCA stock is
owned of record in a fiduciary capacity, such as by a trustee,
guardian or custodian, he or she should execute the demand in
that capacity, and if WCA stock is owned of record by more than
one person, such as a joint tenancy or tenants in common, all
joint owners should execute the demand. An authorized agent,
including one or more joint owners, may execute a demand for
appraisal on behalf of a holder of record, but the agent must
identify the record owner or owners and expressly disclose the
fact that, in executing the demand, the agent is acting for the
owner or owners.
If any holder of WCA stock who demands dissenters' rights
with respect to his or her shares fails to perfect, or
effectively withdraws or loses, his right to dissent, he will no
longer have the right to receive the "fair value" of his shares.
Rather, such a shareholder will be entitled only to receive the
amount of BellSouth
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stock determined by the exchange ratio described above. A WCA
shareholder will fail to perfect, or effectively withdraw or
lose, his or her right to dissent if he or she fails to deliver a
notice of intent to WCA prior to the vote on the Merger
Agreement, fails to vote against approval of the Merger Agreement
or abstain with respect to the Merger Agreement, fails to file a
demand for payment with WCA or delivers to WCA a written
withdrawal of his or her demand for payment.
Failure to follow the steps required by Georgia law for
perfecting dissenters' rights will result in the loss of such
rights. Consequently, any shareholder of WCA who desires to
exercise his or her dissenters' rights is urged to consult his or
her legal advisor before attempting to exercise such rights.
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BUSINESS OF BELLSOUTH
BellSouth Corporation is a holding company providing
telecommunications services and communications systems and
products. BellSouth provides predominantly tariffed
telecommunications services to approximately two-thirds of the
population and one-half of the territory within Alabama, Florida,
Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South
Carolina and Tennessee. BellSouth's primary other businesses are
wireless and international communications services and
advertising and publishing products.
BUSINESS OF WCA
WCA was organized in 1982 for the purpose of providing
private cable television services for multiple dwelling units.
In 1988, Vidcomm, Inc. was formed by the founders of WCA for the
purpose of operating a wireless cable company. Vidcomm became a
wholly-owned subsidiary of WCA in December 1992.
WCA has obtained the rights to transmit wireless cable
television in the Atlanta metropolitan area by holding Federal
Communications Commission licenses and leasing airtime from other
licensees. WCA's subscribers consist of apartment complexes,
commercial establishments and, to a lesser extent, single-family
homes. Proposed technical modifications are pending before the
Federal Communications Commission that, if and when approved,
would permit WCA to upgrade its wireless cable TV service with
new digital technology.
WCA has two sources for television programming that it
sells to subscribers: satellite programming (such as HBO, ESPN,
etc.) and local off-air broadcast channels. Wireless cable
programming is transmitted via microwave, as opposed to
hard-wired cable, from a central location over Federal
Communications Commission-authorized frequencies to subscribers
equipped with a special antenna. For satellite programming, WCA
utilizes an initial reception facility in Atlanta, which receives
signals via satellite and then transmits them to WCA's primary,
central transmitter located on top of the NationsBank Plaza in
Atlanta. This facility then transmits the wireless cable
programming to WCA's subscribers. In contrast, the local off-air
television signals are transmitted to a general area and
receivable by any television in the reception area. In providing
this programming source, WCA does not use its transmitter
facilities as it does for wireless cable services.
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PRICE RANGE OF WCA COMMON STOCK
AND DIVIDEND POLICY
WCA common stock is traded on The Nasdaq SmallCap Market
under the symbol "WCAI." The following table sets forth the high
and low sales prices of WCA common stock, based on the trade
prices, as reported on The Nasdaq SmallCap Market for the
following calendar quarters:
High Low
1997
Second Quarter $19.25 $18.50
(through April 15
1997)
First Quarter 19.875 15.00
1996
Fourth Quarter $18.50 $12.75
Third Quarter 16.50 13.50
Second Quarter 18.00 9.50
First Quarter 11.50 8.75
1995
Fourth Quarter $12.75 $10.25
Third Quarter 12.25 7.75
Second Quarter 10.75 8.00
First Quarter 10.50 7.25
On April 15, 1997, the Record Date, the outstanding shares
of WCA common stock were held by approximately 800 record
holders. The closing price per share of WCA common stock on
April 18, 1997 on The Nasdaq SmallCap Market was $18.625.
WCA has never paid dividends on WCA common stock and, if
the merger were not to occur, does not expect to pay dividends in
the future.
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<PAGE>
WCA MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table sets forth items from WCA's Statement
of Income as percentages of net revenue:
Percent
1994 1995 1996
Revenue 100% 100% 100%
Service Cos 57.6 65.1 68.1
Selling, general and administrative 52.9 43.0 38.3
Depreciation and amortization 17.2 22.1 26.0
Other (income) expense (1.7) (1.0) (2.4)
Loss, before income taxes 26.0 29.2 29.9
WCA's revenue increased 8% to $3,545,000 in 1996. This
increase was due primarily to an increase in the number of
subscribers from 8,500 to 9,000.
Service costs for 1996 increased as a percentage of revenue
by 3%. This increase was due primarily to an increase in tower
rental and channel lease costs due to the addition of 16 new
wireless channels during the fourth quarter of 1995.
Selling, general and administrative expense decreased by
4.7% of revenue. This decrease was due to a full year's
reduction in marketing, selling and administrative salaries and
benefits due to the elimination of the advertising sales
department and single family home marketing costs during 1995.
WCA has deferred single family home expansion to study the
improvements associated with digital signal transmission.
The deferred tax benefit increased by $359,147 during 1996.
The basis for deferring tax benefits is an excess of appreciated
asset value over the tax basis of WCA's net assets in an amount
sufficient to realize the deferred tax asset and projected future
profitable operations. Management forecasts that the current
cumulative net operating loss carryforward will be utilized by
2002 when the first net operating loss carryforward expires.
WCA's revenue increased 15% to $3,285,000 in 1995.
Although the number of subscribers increased from 8,200 to 8,500
in 1995, the increase in revenue was due primarily to an increase
in subscriptions to premium channels.
Service costs for 1995 increased by 7.5% of revenue. The
primary reason for this increase was increased programming costs
related to the increase in premium channel subscriptions. There
also was an increase in tower rental and channel lease costs
because of the addition of 16 new wireless channels during
1995.
Selling, general and administrative expense decreased by
9.9% of revenue in 1995. Approximately 7.0% of this decrease was
due to the elimination of costs related to the advertising sales
department and single family home marketing costs. WCA has
deferred single family home expansion while it continues to study
the improvements associated with digital signal transmission.
The balance of this decrease was primarily due to reduced
professional fees and travel expense.
GENERAL
Currently, most of WCA's subscribers result from contracts
with 40 apartment complexes, which typically have an initial term
of ten years. Upon expiration of the initial term, these
contracts automatically convert to month to month contracts
unless they are extended or canceled. Capital costs related to
these
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contracts are written off during the initial term. WCA continues
to add new contracts and has not had a significant amount of
contracts canceled. Any future contract cancellations should not
have a material impact on operations because WCA is adding new
contracts and should not have a significant number of
cancellations in any one year.
WCA currently has agreements to provide a competitive
lineup of 38 channels of programming to its customers. The
lineup consists of 28 microwave delivered channels and 10 local
off-air channels. During the fourth quarter of 1995, WCA
relocated its transmission site to NationsBank Plaza, the tallest
building in Atlanta, and increased its transmitter output power
from 10 to 50 watts.
LIQUIDITY AND CAPITAL RESOURCES
On March 1, 1995, WCA executed an agreement with Applied
Video Technologies, Inc. for the purchase of $3,500,000 of
convertible preferred equity. Under the terms of the agreement,
$2,100,000 was invested in 1995 and $1,400,000 in January 1996.
As soon as is practical WCA plans to offer a digital
package with more than 100 channels, subject to receipt of
various Federal Communications Commission approvals. A basic
digital package will be priced comparable to the price of the
basic package of WCA's primary franchise cable competitor. As
with the franchise cable operator, WCA will offer premium
channels, pay-per-view and other services at additional
charge to subscribers. WCA believes it will be able to provide a
higher quality, comparably priced service than its cable
competitors' service packages. These development plans will
require significant funds in addition to funds provided from
operations. WCA will have to secure these additional funds to
cover the capital needs of additional growth after 1996.
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<PAGE>
WCA SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information
regarding the beneficial ownership of WCA common stock and
preferred stock as of March 1, 1997 by (i) each person who is
known by WCA to own beneficially more than 5 percent of WCA's
common stock and preferred stock, (ii) each of WCA's directors
and (iii) all directors and executive officers of WCA as a group.
<TABLE>
Amount and Nature of Beneficial Ownership
Common Stock Preferred Stock
<S> <C> <C> <C> <C> <C>
Percent Percent
Number of Number of
Name of Shares Options Class of Shares Class
Allan H. Rudder
(Director) 359,750(1) 60,000(5) 19.78%
Ricky C. Haney
(Director) 305,000(2) 16.77%
Richard L. Kendrick
(Director) 294,000(3) 16.17%
R.S. Operators,
Inc. 278,750(4) 15.33%
Digital Funding
of Atlanta,
L.L.C. 41,734 100.00%
R. Ted Weschler
(Director) 41,734(6) 100.00%
R. Stanley Allen
(Director)(7)
All Directors
and Executive
Officers as a
group
(5 persons) 958,750 60,000 52.72% 41,734 100.00%
</TABLE>
__________________
(1) Includes currently exercisable options to purchase 46,000
shares, 2,000 shares owned by Mr. Rudder's wife and 278,750
shares owned by R.S. Operators, Inc. Mr. Rudder is Secretary,
Treasurer and a director of R.S. Operators, Inc.
(2) Includes 47,230 shares owned by Mr. Haney's wife and 5,540
shares owned by his children.
(3) Includes 26,020 shares owned by Mr. Kendrick's wife and 6,960
shares owned by his children.
(4) Mr. Ray Stevenson, III, President and majority owner of R.S.
Operators, Inc., a real estate and other investment firm, is the
beneficial owner of these shares.
(5) 46,000 options are currently exercisable and 14,000 options
are not exercisable.
(6) Includes 41,734 shares of Preferred Stock owned by Digital
Funding of Atlanta, L.L.C. Mr. Weschler has been elected to the
WCA Board of Directors by, and serves as the administrative agent
of, Digital Funding of Atlanta, L.L.C.
(7) Mr. Allen has been elected to the WCA Board of Directors by
Digital Funding of Atlanta, L.L.C.
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<PAGE>
COMPARATIVE RIGHTS OF SHAREHOLDERS
At the effective time of the merger, shareholders of WCA
automatically will become shareholders of BellSouth, and their
rights as shareholders will be determined by the BellSouth
Articles of Incorporation and BellSouth Bylaws. BellSouth and
WCA are Georgia corporations and are subject to the provisions of
the Georgia Business Corporation Code. The following is a
summary of the material differences in the rights of shareholders
of BellSouth and WCA. This summary is not a complete discussion
of the rights of holders of shares of WCA and BellSouth, but only
the primary differences.
CAPITALIZATION
WCA. The WCA Articles of Incorporation authorize the
issuance of up to 15,000,000 shares of capital stock, par value
$1.00 per share, of which 10,000,000 are classified as WCA common
stock and 5,000,000 are classified as WCA preferred stock. A
total of 1,773,400 shares of WCA common stock and 41,734 shares
of WCA Series A Preferred Stock were issued and outstanding as of
March 1, 1997. The shares of WCA preferred stock are issued in
series, with relative rights, preferences and limitations of each
series fixed by WCA's Board of Directors.
BellSouth. The capital stock of BellSouth consists of
2,200,000,000 authorized shares of common stock and 100,000,000
authorized shares of cumulative first preferred stock, par value
$1.00 per share. The shares of BellSouth preferred stock are
issuable in series, with relative rights, preferences and
limitations of each series fixed by BellSouth's Board of
Directors.
DIRECTORS AND CLASSES OF DIRECTORS; VACANCIES AND REMOVAL OF
DIRECTORS
WCA. The WCA Bylaws provide that the number of directors
must not be fewer than one nor more than seven. The WCA
shareholders have the power to determine the number of directors
within these numerical limitations, and the WCA Board currently
consists of five members. The WCA Board is not divided into
classes. Directors are elected at each annual meeting and serve
until the next annual meeting.
The WCA Bylaws also provide that any one or more directors
or the entire Board of Directors may be removed from office, with
or without cause, by the vote of the holders of 55% of the shares
entitled to vote at any shareholder meeting with respect to which
notice of such purpose has been provided.
BellSouth. The BellSouth Bylaws provide for a Board of
Directors consisting of 14 persons. BellSouth's Board of
Directors is divided into three classes, each as nearly equal in
number as possible, with one class elected annually. Each class
has a term of three years, which ends at an annual meeting of
shareholders. The authorized number of directors may be
increased or decreased by the vote of a majority of the then
authorized number of directors or by the affirmative vote of at
least 75% of the voting power of BellSouth entitled to vote
generally in the election of directors, voting together as a
single class. The number of directors, however, must not be less
than nine.
Subject to the rights of the holders of any series of
BellSouth preferred stock then outstanding, any director, or all
directors, may be removed from office at any time, with or
without cause, only by the affirmative vote of the holders of at
least 75% of the voting power of all BellSouth stock entitled to
vote generally in the election of directors, voting together as a
single class.
ANTI-TAKEOVER PROVISIONS
BellSouth Shareholder Rights Plan. BellSouth's Board of
Directors has established BellSouth's Shareholder Rights Plan.
The rights have significant anti-takeover effects if an
acquisition transaction not approved by the Board of Directors is
proposed or initiated by a person or group. Because of these
provisions, it is unlikely that any person or group will initiate
an acquisition transaction that is not approved by BellSouth's
Board of Directors. Thus, the rights could have the effect of
discouraging the acquisition of BellSouth unless
22
<PAGE>
approved by BellSouth's Board of Directors. The rights do not
interfere with any merger or other business combination approved
by BellSouth's Board of Directors and shareholders.
BellSouth Business Combinations Bylaw. As permitted by the
Georgia Business Corporation Code, BellSouth has elected to be
covered by the Georgia law that (with limited exceptions)
prohibits a person or entity from acquiring 10% of the
outstanding common stock of BellSouth without the approval of
BellSouth's Board of Directors and thereafter within five years
acquiring BellSouth without shareholder approval. This provision
may be repealed only by an affirmative vote of two-thirds of the
continuing directors and a majority of the votes entitled to be
cast by disinterested shareholders and shall not be effective
until 18 months after such shareholder vote. The Georgia statute
provides that a domestic corporation that has repealed such a
bylaw may not thereafter readopt the bylaw.
BellSouth Fair Price Provisions. "Fair price" provisions
contained in BellSouth's Articles require, generally, in
connection with a merger or similar transaction between BellSouth
and a 10% shareholder, the unanimous approval of BellSouth's
disinterested directors or the affirmative vote of two-thirds of
such directors and a majority of the outstanding shares held by
disinterested shareholders, unless (a) within the past three
years the shareholder has not increased its shareholdings by more
than one percent in any 12-month period or (b) all shareholders
receive at least the same consideration for their shares as the
interested shareholder previously paid. These provisions may be
revised or rescinded only upon the affirmative vote of at least
two-thirds of the disinterested directors and a majority of the
outstanding shares held by disinterested shareholders.
WCA. WCA does not have a shareholders rights plan.
Moreover, the WCA Articles and Bylaws do not contain a provision
electing to be governed by the business combination provisions or
the fair price provision in the Georgia Business Corporation
Code.
SPECIAL MEETINGS OF SHAREHOLDERS
WCA. The WCA Bylaws provide that a special meeting of the
shareholders may be called for any purpose at any time by the
Chairman of the Board, President, Vice President, a majority of
the Board of Directors or shareholders holding not less than
one-fourth of the voting power of WCA.
BellSouth. The BellSouth Bylaws provide that special
meetings of the shareholders may be called at any time by the
Board of Directors or the Chief Executive Officer and shall be
called upon written request to the Chief Executive Officer or
Secretary, signed by the holders of at least two-thirds of the
outstanding shares entitled to vote at the meeting.
SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
WCA. The WCA Bylaws provide that, at an annual meeting of
shareholders, any matter relating to the affairs of WCA, whether
or not stated in the notice of the meeting, may be brought up for
action except matters that the Georgia Code requires to be stated
in the notice of the meeting.
BellSouth. The BellSouth Bylaws provide that a shareholder
desiring to nominate a person for election to the Board of
Directors or to propose any other business before an annual
meeting of shareholders must notify BellSouth's Secretary in
writing between 60 and 120 days prior to the date of the meeting.
The shareholder's notice must contain detailed information as to
each person whom the shareholder proposes to nominate for
election as a director and as to any other business that the
shareholder proposes to be brought before the meeting.
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<PAGE>
RESALE OF BELLSOUTH COMMON STOCK
BellSouth common stock has been registered under the
Securities Act of 1933, which allows such shares to be traded
freely and without restriction by those holders of WCA common
stock who receive such shares in the merger and who are not
directors, executive officers and 10% or more shareholders of WCA
or BellSouth. This Proxy Statement/Prospectus does not cover any
resales of BellSouth common stock received by these persons.
EXPERTS
The consolidated financial statements of BellSouth and
subsidiaries incorporated by reference in this Proxy
Statement/Prospectus from BellSouth's Annual Report on Form 10-K
for the year ended December 31, 1996 have been incorporated in
reliance on the report, which includes an explanatory paragraph
related to a change in an accounting method, of Coopers & Lybrand
L.L.P., independent accountants, also incorporated herein by
reference, given on the authority of that firm as experts in
accounting and auditing.
The consolidated financial statements of WCA and its
subsidiary as of December 31, 1995 included in this Proxy
Statement/Prospectus have been audited by Blackwell, Poole &
Company, independent auditors, as stated in their attached
report, and have been included in reliance on the report of that
firm given upon their authority as experts in accounting and
auditing.
The consolidated financial statements of WCA and its
subsidiary as of December 31, 1996 included in this Proxy
Statement/Prospectus have been audited by Arthur Andersen LLP,
independent public accountants, as stated in their attached
report with respect thereto, and have been included in reliance
upon the authority of said firm as experts in accounting and
auditing in giving said report.
On May 14, 1996, the appointment of Blackwell, Poole &
Company as independent auditors for WCA was terminated by WCA and
Arthur Andersen LLP was engaged as independent auditors. The
decision to change independent auditors was approved by the Board
of Directors of WCA. During the fiscal year ended December 31,
1995, there were no disagreements between WCA and Blackwell,
Poole & Company on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or
procedures, which disagreements if not resolved to the
satisfaction of Blackwell, Poole & Company would have caused them
to make reference to the subject matter of the disagreement in
connection with their report. The audit report of Blackwell,
Poole & Company on WCA's financial statements as of and for the
year ended December 31, 1995 did not contain an adverse opinion
or disclaimer of opinion, nor were they qualified or modified as
to uncertainty, audit scope or accounting principles.
LEGAL OPINIONS
The legality of the BellSouth common stock to be issued in
the merger will be passed on for BellSouth by Walter H. Alford,
Executive Vice President and General Counsel of BellSouth.
A condition to consummation of the merger is the delivery
by Hunton & Williams, counsel to BellSouth, of an opinion
concerning certain federal income tax consequences of the merger.
See "The Merger -- Certain Federal Income Tax Consequences."
Certain legal matters will be passed on for WCA by Gambrell
& Stolz, L.L.P., Atlanta, Georgia and Pepper & Corazzini, L.L.P.,
Washington, D.C.
OTHER MATTERS
As of the date of this Proxy Statement/Prospectus, the WCA
Board does not know of any other matters to be presented for
action at the WCA Shareholder Meeting other than procedural
matters incident to the conduct of the meeting. WCA shareholders
may make proposals for consideration at the WCA Shareholder
Meeting in accordance with the procedures specified in WCA's
Bylaws. If shareholder proposals are made or any other matters
not now known are properly brought before the WCA Shareholder
24
<PAGE>
Meeting, the persons named in the accompanying proxy will vote
the proxy in accordance with the decision of a majority of the
WCA Board.
25
<PAGE>
SHAREHOLDER PROPOSALS
If the merger does not close for any reason, pursuant to
Rule 14a-8 under the Securities Exchange Act of 1934,
shareholders may present proper proposals for inclusion in WCA's
proxy statement and for consideration at the 1998 annual meeting
of WCA shareholders by submitting their proposals to WCA in a
timely manner. In order to be considered for the 1998 annual
meeting, shareholder proposals must be received at WCA's
headquarters, attention of the Secretary, 3100 Medlock Bridge
Road, Suite 340, Norcross, Georgia 30071 no later than December
16, 1997 and have complied with the requirements of Rule 14a-8.
26
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
BellSouth and WCA file annual, quarterly and current
reports, proxy statements and other information with the SEC.
You may read and copy any reports, statements or other
information on file at the SEC's public reference room in
Washington, D.C. You can obtain copies of these documents, upon
payment of a duplicating fee, by writing to the SEC. Please call
the SEC at 1-800-SEC-0330 for further information on the
operation of the public reference rooms. SEC filings are also
available to the public on the SEC Internet site at
http://www.sec.gov. and BellSouth's filings also are available on
its Website at http://www.bellsouth.com. As permitted by the
Rules and Regulations of the SEC, this Proxy Statement/Prospectus
does not contain all the information set forth in the
Registration Statement, of which this Proxy Statement/Prospectus
is a part, which has been filed by BellSouth with the SEC to
register the BellSouth common stock issuable in the merger.
Neither BellSouth nor WCA has authorized anyone to give any
information regarding the offer other than the information in
this Proxy Statement/Prospectus. This Proxy Statement/Prospectus
is not an offer to sell or a solicitation of an offer to buy any
securities other than the BellSouth common stock it describes,
nor is it an offer to or solicitation of anyone to whom it would
be unlawful to make an offer or solicitation. Neither the
delivery of this Proxy Statement/Prospectus nor the distribution
of any of the securities to which this Proxy Statement/Prospectus
relates implies that the information is correct as of any time
after the date of this Proxy Statement/Prospectus.
The SEC allows BellSouth and WCA to "incorporate by
reference" the information it files with it, which means that we
can disclose important information to you by referring you to
those documents. The information incorporated by reference is
considered to be part of this Proxy Statement/Prospectus, and
later information filed with the SEC will update and supersede
this information. The documents we have listed below, and with
respect to BellSouth any future filings made with the SEC under
Section 13(a), 13(c), 14 or 15(d) of the Securities and Exchange
Act of 1934 until the WCA Shareholder Meeting, comprise the
incorporated documents:
BellSouth Documents:
(a) Annual Report on Form 10-K for the year ended
December 31, 1996, which includes the description of BellSouth
common stock; and
(b) Current Report on Form 8-K for January 23,
1997.
WCA Documents:
(a) Annual Report on Form 10-KSB for the year ended
December 31, 1996.
Upon request, BellSouth and WCA will provide, without
charge, a copy of any or all of their documents incorporated by
reference in this document (other than exhibits to such
documents, unless the exhibits are specifically incorporated by
reference in such documents). You should direct requests for
copies to BellSouth Investor Relations, 1155 Peachtree Street,
Room 14B06, Atlanta, Georgia 30309-3610 (Telephone: 1-
800-241-3419), or to Wireless Cable of Atlanta, Inc., 3100
Medlock Bridge Road, Suite 340, Norcross, Georgia 30071
(Telephone: (770) 409-3570).
The Agreement and Plan of Reorganization by and between
BellSouth and WCA, dated as of February 11, 1997, which is
attached to this Proxy Statement/Prospectus as Annex I, is also
incorporated by reference herein.
27
<PAGE>
FINANCIAL STATEMENTS OF
WIRELESS CABLE OF ATLANTA, INC. AND SUBSIDIARY
INDEX TO FINANCIAL STATEMENTS
The following consolidated financial statements of Wireless
Cable of Atlanta, Inc. and its subsidiary, Vidcomm, Inc., are
included as follows:
Reports of independent public accountants F-2
Consolidated balance sheets as of December 31, 1995
and 1996 F-4
Consolidated statements of operations for the years ended
December 31, 1995 and 1996 F-5
Consolidated statements of changes in stockholders' equity
for the years ended December 31, 1995 and 1996 F-5
Consolidated statements of cash flows for the years ended
December 31, 1995 and 1996 F-6
Notes to consolidated financial statements F-7
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
and Stockholders
Wireless Cable of Atlanta, Inc.
and Subsidiary
Atlanta, Georgia
We have audited the accompanying consolidated balance sheet
of Wireless Cable of Atlanta, Inc. and Subsidiary as of December
31, 1995, and the related consolidated statements of operations,
changes in stockholders' equity, and cash flows for the year then
ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Wireless Cable of Atlanta, Inc. and
Subsidiary as of December 31, 1995, and the consolidated results
of its operations and its consolidated cash flows for the year
then ended in conformity with generally accepted accounting
principles.
Blackwell, Poole & Company
Certified Public Accountants
Atlanta, Georgia
January 31, 1996
F-2
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Wireless Cable of Atlanta, Inc. and subsidiary:
We have audited the accompanying consolidated balance sheet
of WIRELESS CABLE OF ATLANTA, INC. AND SUBSIDIARY (a Georgia
corporation) as of December 31, 1996 and the related consolidated
statements of operations, stockholders' equity, and cash flows
for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Wireless Cable of Atlanta, Inc. and subsidiary as of December
31, 1996 and the results of their operations and their cash flows
for the year then ended in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 14, 1997
F-3
<PAGE>
WIRELESS CABLE OF ATLANTA, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1995 AND 1996
<TABLE>
<S> <C> <C>
ASSETS 1995 1996
Current assets:
Cash and cash equivalents $133,000 $147,471
Accounts receivable 69,039 35,212
Other current assets 188,035 171,515
Total current asset 390,074 354,198
Property and equipment:
Cable systems and equipment 5,930,531 7,181,822
Furniture and office equipment 473,551 601,199
6,404,082 7,783,021
Less accumulated depreciation (2,516,327)(3,316,238)
3,887,755 4,466,783
Other assets:
Deferred licensing costs 204,000 136,000
Deferred tax benefit 969,941 1,267,754
Other 192,392 107,488
1,366,333 1,511,242
Total assets $5,644,162 $6,332,223
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $184,832 $339,893
Accrued expenses and liabilities 229,889 265,850
Total current liabilities 414,721 605,743
Preferred Stock 2,121,214 3,733,155
Stockholders' equity:
Common Stock of $1 par,
Authorized 10,000,000 shares.
Issued and outstanding:
1,770,000 shares in 1995 and
1,772,600 shares in 1996 1,770,000 1,772,600
Paid in capital 3,494,457 3,516,707
Accumulated deficit (2,156,230)(3,295,982)
3,108,227 1,993,325
Total liabilities and
stockholders' equity $5,644,162 $6,332,223
</TABLE>
The accompanying notes are an integral
part of these financial statements.
F-4
<PAGE>
WIRELESS CABLE OF ATLANTA, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996
<TABLE>
<S> <C> <C>
1995 1996
Revenues $3,284,816 $3,545,611
Costs and expenses:
Service costs 2,139,431 2,414,484
Selling, general and administrative 1,413,940 1,357,375
Depreciation and amortization 727,400 920,612
4,280,771 4,692,471
Loss from operations (995,955) (1,146,860)
Other income 38,384 85,005
Loss before income taxes (957,571) (1,061,855)
Deferred income tax benefits 317,903 359,147
Net loss (639,668) (702,708)
Preferred dividend requirements (157,600) (437,044)
Net loss applicable to
common shares $(797,268)$(1,139,752)
Weighted average number
of common shares outstanding 1,740,000 1,771,000
Net loss per common
share outstanding $(0.46) $(0.64)
</TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996
<TABLE>
<S> <C> <C> <C> <C> <C>
Number of $1 Par Paid-In Accumulated
Shares Value Capital Deficit Total
Balance,
December
31, 1994 1,729,000 $1,729,000 $3,229,207 $(1,358,962) $3,599,245
Stock
options and
warrants 41,000 41,000 265,250 - 306,250
Preferred
stock
dividends - - - (157,600) (157,600)
Net (loss) - - - (639,668) (639,668)
Balance,
December
31, 1995 1,770,000 $1,770,000 $3,494,457 $(2,156,230) $3,108,227
Stock
options 2,600 2,600 22,250 - 24,850
Preferred
stock
dividends - - - (437,044) (437,044)
Net (loss) - - - (702,708) (702,708)
Balance,
December
31, 1996 1,772,600 $1,772,600 $3,516,707 $(3,295,982) $1,993,325
</TABLE>
The accompanying notes are an integral
part of these financial statements.
F-5
<PAGE>
WIRELESS CABLE OF ATLANTA, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996
<TABLE>
<S> <C> <C>
1995 1996
Cash flows provided by (used for)
operating activities:
Net (loss) $(639,668) $(702,708)
Adjustments to reconcile net
loss to net cash provided by
(used for) operating activities:
Depreciation and amortization 727,400 920,612
Decrease in receivables 12,439 33,827
Increase in other current assets (149,636) (59,425)
Increase in other assets (391,216) (212,909)
Increase (decrease) in accounts
payable and accrued expenses (301,104) 101,135
Net cash provided by (used for)
operating activities (741,785) 80,532
Cash flows (used for) investing activities:
Purchase of equipment (1,762,482)(1,431,640)
Cash flows provided by financing activities:
Proceeds from common stock issue 306,250 24,850
Proceeds from preferred stock issue,
net of issue costs 1,963,614 1,340,729
Net cash provided by financing
activities 2,269,864 1,365,579
Net increase (decrease) in cash (234,403) 14,471
Cash and cash equivalents, beginning
of year 367,403 133,000
Cash and cash equivalents, end of year $133,000 $147,471
Supplemental Disclosures of Cash Flow Information
Cash paid during the year for:
Interest $ - $ -
Income taxes $ - $ -
Financing and investing activities
not affecting cash:
Preferred stock dividends $157,600 $437,044
Cash paid - -
Liabilities incurred $157,600 $437,044
</TABLE>
The accompanying notes are an integral
part of these financial statements.
F-6
<PAGE>
WIRELESS CABLE OF ATLANTA, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies:
Wireless Cable of Atlanta, Inc. and Subsidiary
("Company") provides cable television service to multiple
dwelling, single family and commercial subscribers in the
Atlanta, Georgia area. The accounting and reporting
policies of the Company conform with generally accepted
accounting principles and general practice within the
Company's industry. The following is a description of the
more significant of those policies.
The accompanying consolidated financial statements
include the accounts of Wireless Cable of Atlanta, Inc. and
its wholly owned subsidiary, Vidcomm, Inc. Intercompany
transactions and balances have been eliminated in
consolidation.
Management uses estimates and assumptions in preparing
these financial statements in accordance with generally
accepted accounting principles. Those estimates and
assumptions affect the reported amounts and disclosures in
the financial statements. Actual results could vary from
the estimates that were used.
The cost of property and equipment is depreciated over
the estimated useful lives of the related assets, generally
seven years. Depreciation is computed on the straight-line
method and accelerated methods for financial reporting
purposes and for income tax purposes, respectively.
Depreciation charged to operations amounted to $659,400 and
$852,612 in 1995 and 1996, respectively.
The Company has entered into a channel frequency lease
agreement which requires payments based on the greater of a
minimum payment or a cost per subscriber. Costs in excess of
the cost per subscriber component of the lease were
capitalized as deferred licensing costs prior to 1994,
consistent with the principles set forth in the Statement of
Financial Accounting Standards ("SFAS") No. 51. These
capitalized costs are being amortized over a five-year
period commencing in 1994. Amortization charged to
operations amounted to $68,000 in 1995 and 1996 each.
Maintenance and repairs are charged to operations when
incurred. Betterments and renewals are capitalized. When
property and equipment is sold or otherwise disposed of, the
asset account and related accumulated depreciation account
are relieved, and any gain or loss is included in
operations.
The Company accounts for its stock-based compensation
plans under Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB No. 25").
Effective in 1996, the Company adopted the disclosure option
of SFAS No. 123, "Accounting for Stock-based Compensation."
SFAS No. 123 requires that companies which do not choose to
account for stock-based compensation as prescribed by the
statement, shall disclose the pro forma effects on earnings
and earnings per share as if SFAS No. 123 had been adopted.
Additionally, certain other disclosures are required with
respect to stock compensation and the assumptions used to
determine the pro forma effects of SFAS No. 123. See Note
3.
The Company sponsors a 401(k) employee benefit plan.
All employees are eligible for participation after one year
of employment and may contribute the maximum allowable under
the plan. The Company does not contribute to the plan.
Cash equivalents at December 31, 1995 and 1996 was a
certificate of deposit in the amount of $50,000. The
Company maintains cash balances at several banks. Accounts
at each institution are insured by the Federal Deposit
Insurance Corporation up to $100,000.
2. Operating Leases:
The Company leases an office and warehouse facility
under an operating lease expiring in November 1997. Rent
expense for 1995 and 1996 was $64,962 and $67,854,
respectively.
The Company has a lease agreement for its satellite and
microwave dish facility which will expire June 6, 1997 and
may be renewed for an additional three year term. The lease
provides for a monthly rent of $1,500 and is subject to
increase based on increases in the Consumer Price Index.
Lease expense for 1995 and 1996 was $18,000 each.
The Company has a lease agreement for placement of its
television signal transmission and processing equipment
which will expire May 31, 2003. The lease provides for a
monthly rent of $9,925 which is subject to increase due to
the addition of channels and an increase in the Consumer
Price Index. Lease expense for 1995 and 1996 was $55,445
and $110,018, respectively.
The Company has lease agreements for five wireless
cable channels which will expire February 28 and July 16,
2001. The leases provide for a monthly rent based on the
number of subscribers receiving a signal with a minimum
annual rental of $128,544. Lease expense for 1995 and 1996
was $96,000 and $126,542, respectively.
The Company has a lease agreement for excess capacity
airtime of four ITFS wireless cable channels which will
expire July 19, 2007. The lease provides for a monthly rent
based on the number of subscribers receiving a signal with a
minimum annual rental of $7,560. Any renewal is subject to
negotiations. There was no lease expense for 1995 and 1996
lease expense was $10,403.
The Company has a lease agreement for excess capacity
airtime of twelve ITFS wireless cable channels which will
expire March 31, 2006. The lease provides for a monthly
rent based on the number of subscribers receiving a signal
with a minimum annual rental of $36,000. Any renewal is
subject to negotiation, however, the Company has a right of
first refusal on any competing proposal from any commercial
entity. Lease expense for 1995 and 1996 was $10,500 and
$36,000, respectively.
Minimum future rental payments under operating leases
having remaining terms in excess of one year as of December
31, 1996 for the next five years and in the aggregate are:
Year Ended December 31: Amount
1997 $ 362,404
1998 291,204
1999 291,204
2000 291,204
2001 188,408
2002 and thereafter 363,620
Total minimum future rental payments $1,788,044
3. Stock Options and Warrants:
In 1992, the shareholders approved the formation of a
Stock Option Plan for key employees to be implemented by the
Board of Directors. Under the approved terms of the plan,
options to purchase shares of the Company's common stock
will be granted at a price not less than the fair market
value of the stock at the date the key employee becomes
eligible under the plan. Options may be exercised over a
five year period not to exceed 20% per year on a cumulative
basis. At December 31, 1996, options had been granted to
five key employees for an aggregate of 71,900 shares at
option prices ranging from $6.25 to $14.00 per share
(average $7.21) and 49,100 shares (average $6.85) were
exercisable. At December 31, 1996, there were 24,500 shares
available for future grants under the plan. 1,000 shares
were exercised during 1995 and 2,600 during 1996. Also
3,000 shares under option were canceled in 1996. In
addition, warrants to purchase 40,000 shares of common stock
at a price of $7.50 per share were exercised during 1995.
These stock options have not been included in the weighted
average number of shares outstanding as they would be
anti-dilutive.
The Company accounts for its stock-based compensation
plans under APB No. 25, under which no compensation expense
has been recognized, as all options have been granted with
an exercise price equal to the fair value of the Company's
common stock on the date of grant. The Company adopted SFAS
No. 123 for disclosure purposes in 1996. For SFAS No. 123
purposes, the fair value of each option grant has been
estimated as of the date of grant using the Black-Scholes
option pricing model with the following weighted-average
assumptions used for grants in 1995; risk-free interest rate
of 6.72 percent, expected life of 5 years, dividend rate of
zero percent, and expected volatility of 55 percent. Using
these assumptions, the fair value of the stock options
granted in 1995 is $119,048, which would be amortized as
compensation expense over five years--the vesting period of
the options. There were no stock options granted in 1996.
Had compensation cost been determined consistent with SFAS
No. 123, utilizing the assumptions detailed above, the
Company's net loss and net loss per share would have been
increased to the following pro forma amounts:
1995 1996
Net Loss
As reported $797,268 $1,139,752
Pro forma $815,163 $1,169,514
Net loss per share
As reporte $ 0.46 $ 0.64
Pro forma $ 0.47 $ 0.66
Because SFAS No. 123 method of accounting has not been
applied to options granted prior to January 1, 1995, the
resulting pro forma compensation cost may not be
representative of that expected in future years.
4. Income Taxes:
Deferred income taxes are provided for temporary
differences in the bases of assets and liabilities between
financial reporting and income tax reporting. The temporary
differences result from a basis of accounting for financial
reporting different from that used for income tax reporting
and different methods and periods used to calculate
depreciation.
The components of the deferred income tax benefit for
1995 and 1996 are as follows:
1995 1996
Depreciation $80,837 $95,147
Difference between accrual
basis of accounting and tax
basis of accounting (51,124) (64,950)
Tax benefit of loss
carryforward (347,616) (389,344)
Deferred tax benefit $(317,903) $(359,147)
The components of the net nonconcurrent deferred tax
asset in 1995 and 1996 are as follows:
1995 1996
Property and equipment $(165,648) $(257,179)
Net operating loss
carryforward 1,135,589 1,524,933
Deferred tax benefit,
net $969,941 $1,267,754
The components of the net current deferred tax asset in
1995 and 1996 are as follows:
1995 1996
Property and equipment $(16,824) $(20,440)
Difference between accrual
basis of accounting and tax
basis of accounting 80,397 145,348
Deferred tax benefit, net $63,573 $124,908
Realization of the net operating loss carryforward
deferred tax assets is dependent on the Company either
generating sufficient taxable income prior to expiration of
the loss carryforwards, or employing tax-planning strategies
to utilize the excess of appreciated asset value over the
tax basis of the Company's net assets. Although realization
is not assured, management believes it is more likely than
not that all of the deferred tax asset will be realized.
The Company used an effective tax rate of 34% (28% for
federal and 6% for state) which is not significantly
different from the statutory tax rate.
The net operating loss carryforwards totaling
$4,337,752 expire as follows: 2002, $82,783; 2003,
$249,037; 2004, $286,089; 2005, $80,425; 2006, $408,730;
2007, $138,058; 2008, $154,759; 2009, $899,522; 2010,
$893,220 and 2011, $1,145,129. Investment tax credit
carryovers in the amount of $6,374 expire in 2000.
5. Preferred Stock:
During 1994, shareholders authorized the issuance of
5,000,000 shares of undesignated Preferred Stock issuable by
the Board of Directors at its discretion in one or more
series.
On March 1, 1995, the Company executed an agreement
with Applied Video Technologies, Inc. ("AVT") for the
purchase by AVT of $3,500,000 of Cumulative Convertible
Redeemable Preferred Stock, Series A ("Series A Preferred
Stock"). Under the terms of the agreement, AVT invested
$2,100,000 in the Series A Preferred Stock in 1995 and
$1,400,000 in January 1996.
Other terms of the Series A Preferred Stock include a
dividend rate of 12% payable in kind for five years at the
option of the Company and in cash thereafter, the right to
elect two members to the Board of Directors and the right to
vote, on an as converted basis, on all matters submitted to
the common stockholders with the exception of directors.
The Series A Preferred Stock can be converted into common
stock at a conversion price of $11.00 per share, and
the Company is obligated to redeem the Series A Preferred
Stock on the eighth anniversary of its issue. Series A
Preferred Stock dividends have a preference over dividends
on common stock.
6. Employment Contracts:
In September 1993, the Company entered into five year
agreements with Ricky C. Haney, Richard L. Kendrick, and
Allan H. Rudder which provide for a minimum base salary of
$102,000, $102,000 and $96,000, respectively. The
agreements provide for a severance payment equal to the
remaining contract term base salary in the event of
termination without cause. The agreements also provide for a
$6,000 annual auto allowance and minimum annual base salary
increases of five percent.
7. Subsequent Event:
On February 11, 1997, the Company entered into a
definitive agreement with BellSouth Corporation for a merger
of the Company with a subsidiary of BellSouth Corporation.
The agreement is noncancelable for a period of six months
and is expected to close within that period of time;
however, stockholder and Federal Communications Commission
approval is required. The agreement provides for a
non-taxable stock exchange of .49 shares of BellSouth
Corporation stock for each share of Company stock, with a
maximum value attributable to the Company stock of $20.88625
per share and a minimum value of $15.98625 per share. The
valuations are subject to upward adjustment for any
BellSouth distributions, such as cash dividends, prior to
closing of the merger.
In connection with the agreement, in February 1997,
BellSouth provided $1,000,000 of financing to the Company.
Prior to closing the merger, the proceeds of such financing
may be used only a) to fund negative cash flow from
operations not in excess of $150,000 and b) for construction
of new wireless cable facilities for multiple dwelling
units, approved by BellSouth. The financing does not bear
interest. In the event the agreement is terminated by
BellSouth, other than as a result of a material
misrepresentation or a material breach of a merger agreement
covenant by the Company, the financing will be forgiven. In
the event the agreement is terminated by BellSouth as a
result of a material misrepresentation or a material breach
of a merger agreement covenant by the Company, or by the
Company due to the expiration of the six month noncancelable
period of time, or by reason of actions by any governmental
entity which would have the effect of materially restricting
the consummation of the merger, the financing will, as of
the date of such event, convert into an interest-bearing
loan with interest accruing from such time at an annual rate
of 10%. The loan will be secured by the stock of the
Company subsidiary and will have a maturity date of
December 31, 1998.
<PAGE>
ANNEX I
AGREEMENT AND PLAN OF REORGANIZATION
among
BELLSOUTH CORPORATION,
BELLSOUTH WCA MERGER SUBSIDIARY, INC.,
and
WIRELESS CABLE OF ATLANTA, INC.
Dated February 11, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01 Acceptable Authorization. . . . . . . . . 1
Section 1.02 Adjustment Event. . . . . . . . . . . . . 2
Section 1.03 Affiliate . . . . . . . . . . . . . . . . 2
Section 1.04 Annual FCC Reports. . . . . . . . . . . . 2
Section 1.05 Average Closing Price . . . . . . . . . . 2
Section 1.06 Basic Subscriber. . . . . . . . . . . . . 2
Section 1.07 BellSouth . . . . . . . . . . . . . . . . 2
Section 1.08 BellSouth Common Stock. . . . . . . . . . 2
Section 1.09 BellSouth Material Adverse Effect . . . . 2
Section 1.10 BellSouth Reports . . . . . . . . . . . . 2
Section 1.11 BellSouth Sub . . . . . . . . . . . . . . 2
Section 1.12 BellSouth Sub Common Stock. . . . . . . . 2
Section 1.13 Business Day. . . . . . . . . . . . . . . 3
Section 1.14 CARS. . . . . . . . . . . . . . . . . . . 3
Section 1.15 Capacity Lease. . . . . . . . . . . . . . 3
Section 1.16 Channel . . . . . . . . . . . . . . . . . 3
Section 1.17 Closing . . . . . . . . . . . . . . . . . 3
Section 1.18 Code. . . . . . . . . . . . . . . . . . . 3
Section 1.19 Communications Act. . . . . . . . . . . . 3
Section 1.20 Companies . . . . . . . . . . . . . . . . 3
Section 1.21 Company . . . . . . . . . . . . . . . . . 3
Section 1.22 Company Benefit Plans . . . . . . . . . . 3
Section 1.23 Company Channel . . . . . . . . . . . . . 3
Section 1.24 Company Common Stock. . . . . . . . . . . 4
Section 1.25 Company Environmental Permits . . . . . . 4
Section 1.26 Company ERISA Plan. . . . . . . . . . . . 4
Section 1.27 Company FCC Authorizations. . . . . . . . 4
Section 1.28 Company Material Adverse Effect . . . . . 4
Section 1.29 Company Permits . . . . . . . . . . . . . 4
Section 1.30 Company Preferred Stock . . . . . . . . . 4
Section 1.31 Company Reports . . . . . . . . . . . . . 4
Section 1.32 Competing Transaction . . . . . . . . . . 4
Section 1.33 Confidentiality Agreement . . . . . . . . 4
Section 1.34 Contracts . . . . . . . . . . . . . . . . 4
Section 1.35 Copyright Office. . . . . . . . . . . . . 4
Section 1.36 Delivered Digital-Ready Channel . . . . . 5
Section 1.37 Dissenting Shares . . . . . . . . . . . . 5
Section 1.38 Dividend Amount . . . . . . . . . . . . . 5
Section 1.39 Effective Date. . . . . . . . . . . . . . 6
Section 1.40 Effective Time. . . . . . . . . . . . . . 6
Section 1.41 ERISA . . . . . . . . . . . . . . . . . . 6
Section 1.42 Exchange Act. . . . . . . . . . . . . . . 6
Section 1.43 Exchange Agent. . . . . . . . . . . . . . 6
Section 1.44 Exchange Ratio. . . . . . . . . . . . . . 6
Section 1.45 Expenses. . . . . . . . . . . . . . . . . 6
Section 1.46 FCC . . . . . . . . . . . . . . . . . . . 6
Section 1.47 FCC Rules . . . . . . . . . . . . . . . . 6
Section 1.48 Final Order . . . . . . . . . . . . . . . 6
Section 1.49 GAAP. . . . . . . . . . . . . . . . . . . 6
Section 1.50 GBCC. . . . . . . . . . . . . . . . . . . 7
Section 1.51 Governmental Entity . . . . . . . . . . . 7
Section 1.52 Granted Channel . . . . . . . . . . . . . 7
Section 1.53 HSR Act . . . . . . . . . . . . . . . . . 7
Section 1.54 ITFS. . . . . . . . . . . . . . . . . . . 7
Section 1.55 Knowledge of the Company. . . . . . . . . 7
Section 1.56 Law . . . . . . . . . . . . . . . . . . . 7
Section 1.57 Lien. . . . . . . . . . . . . . . . . . . 7
Section 1.58 Market. . . . . . . . . . . . . . . . . . 7
Section 1.59 Market Facilities . . . . . . . . . . . . 7
Section 1.60 MDS . . . . . . . . . . . . . . . . . . . 7
Section 1.61 Merger. . . . . . . . . . . . . . . . . . 7
Section 1.62 NYSE. . . . . . . . . . . . . . . . . . . 8
Section 1.63 OFS . . . . . . . . . . . . . . . . . . . 8
Section 1.64 Outstanding Options . . . . . . . . . . . 8
Section 1.65 Pending Application . . . . . . . . . . . 8
Section 1.66 Person. . . . . . . . . . . . . . . . . . 8
Section 1.67 Proxy Statement/Prospectus. . . . . . . . 8
Section 1.68 Registration Statement. . . . . . . . . . 8
Section 1.69 SEC . . . . . . . . . . . . . . . . . . . 8
Section 1.70 Securities Act. . . . . . . . . . . . . . 8
Section 1.71 Site Lease. . . . . . . . . . . . . . . . 8
Section 1.72 Special Meeting . . . . . . . . . . . . . 8
Section 1.73 Stockholders. . . . . . . . . . . . . . . 8
Section 1.74 Subsidiary or Subsidiaries. . . . . . . . 8
Section 1.75 Tax or Taxes. . . . . . . . . . . . . . . 9
Section 1.76 Wireless Cable Channels . . . . . . . . . 9
Section 1.77 Wireless Cable System . . . . . . . . . . 9
ARTICLE II
THE MERGER
Section 2.01 The Merger. . . . . . . . . . . . . . . . 9
Section 2.02 Effective Time of the Merger. . . . . . . 9
Section 2.03 Effect of the Merger. . . . . . . . . . . 10
Section 2.04 Articles of Incorporation . . . . . . . . 10
Section 2.05 Conversion of Securities. . . . . . . . . 10
Section 2.06 Manner of Exchange. . . . . . . . . . . . 12
Section 2.07 Dissenting Shares . . . . . . . . . . . . 12
Section 2.08 Stock Transfer Books. . . . . . . . . . . 13
Section 2.09 Closing . . . . . . . . . . . . . . . . . 13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.01 Organization and Qualification;
Subsidiaries. . . . . . . . . . . . . . . 13
Section 3.02 Articles of Incorporation and Bylaws. . . 14
Section 3.03 Capitalization; Subsidiaries. . . . . . . 14
Section 3.04 Authorization; Enforceability . . . . . . 15
Section 3.05 Required Filings and Consents . . . . . . 15
Section 3.06 No Conflict . . . . . . . . . . . . . . . 16
Section 3.07 Environmental Matters . . . . . . . . . . 16
Section 3.08 Permits; Compliance . . . . . . . . . . . 17
Section 3.09 Company Reports; Financial Statements . . 18
Section 3.10 Taxes . . . . . . . . . . . . . . . . . . 18
Section 3.11 Litigation. . . . . . . . . . . . . . . . 20
Section 3.12 Absence of Changes. . . . . . . . . . . . 20
Section 3.13 Title to and Condition of Assets. . . . . 21
Section 3.14 Contracts . . . . . . . . . . . . . . . . 21
Section 3.15 Labor Matters . . . . . . . . . . . . . . 22
Section 3.16 Employee Benefit Plans. . . . . . . . . . 22
Section 3.17 Fees and Expenses of Brokers and
Others. . . . . . . . . . . . . . . . . . 23
Section 3.18 Accuracy of Information . . . . . . . . . 24
Section 3.19 Absence of Undisclosed Liabilities. . . . 24
Section 3.20 ITFS, MDS, CARS and OFS Specifications. . 24
Section 3.21 ITFS and MDS Capacity Leases. . . . . . . 26
Section 3.22 Site Leases and Lease Options . . . . . . 27
Section 3.23 No Cable Systems. . . . . . . . . . . . . 28
Section 3.24 Operating Market. . . . . . . . . . . . . 28
Section 3.25 Retransmission Consent; Programming
Agreements. . . . . . . . . . . . . . . . 28
Section 3.26 Copyright . . . . . . . . . . . . . . . . 29
Section 3.27 Equal Employment Opportunity. . . . . . . 29
Section 3.28 Interference Consents . . . . . . . . . . 29
Section 3.29 Certain Stockholder Agreements. . . . . . 29
Section 3.30 Transactions with Affiliates. . . . . . . 30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BELLSOUTH
AND BELLSOUTH SUB
Section 4.01 Organization and Qualification. . . . . . 30
Section 4.02 Articles of Incorporation and Bylaws. . . 30
Section 4.03 Capitalization. . . . . . . . . . . . . . 30
Section 4.04 Authorization; Enforceability . . . . . . 31
Section 4.05 Required Filings and Consents . . . . . . 31
Section 4.06 No Conflict . . . . . . . . . . . . . . . 31
Section 4.07 BellSouth Reports . . . . . . . . . . . . 32
Section 4.08 Fees and Expenses of Brokers and
Others. . . . . . . . . . . . . . . . . . 32
Section 4.09 Accuracy of Information . . . . . . . . . 33
ARTICLE V
COVENANTS
Section 5.01 Conduct of the Businesses of the
Company . . . . . . . . . . . . . . . . . 33
Section 5.02 No Solicitation . . . . . . . . . . . . . 37
Section 5.03 Access to Information; Confidentiality
Agreement . . . . . . . . . . . . . . . . 38
Section 5.04 Best Efforts. . . . . . . . . . . . . . . 38
Section 5.05 Consents. . . . . . . . . . . . . . . . . 38
Section 5.06 Public Announcements. . . . . . . . . . . 39
Section 5.07 Payment of Preferred Stock Dividend
and Conversion of Outstanding Options . . 39
Section 5.08 Channel Agreements. . . . . . . . . . . . 39
Section 5.09 Control of Wireless Cable System. . . . . 40
Section 5.10 Registration Statement; Proxy
Statement/Prospectus; Special
Meeting . . . . . . . . . . . . . . . . . 40
Section 5.11 Multiple Dwelling Units . . . . . . . . . 41
Section 5.12 Interim Financing . . . . . . . . . . . . 41
Section 5.13 HSR Filings . . . . . . . . . . . . . . . 41
Section 5.14 Termination of Certain Agreements . . . . 42
Section 5.15 Studio-to-Transmitter Links . . . . . . . 42
ARTICLE VI
CONDITIONS PRECEDENT TO CONSUMMATION OF THE MERGER
Section 6.01 Conditions Precedent to Each Party's
Obligation to Effect the Merger . . . . . 42
Section 6.02 Conditions Precedent to Obligations of
the Company . . . . . . . . . . . . . . . 43
Section 6.03 Conditions Precedent to Obligations of
BellSouth and BellSouth Sub . . . . . . . 44
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.01 Termination . . . . . . . . . . . . . . . 46
Section 7.02 Effect of Termination . . . . . . . . . . 47
Section 7.03 Amendment . . . . . . . . . . . . . . . . 47
Section 7.04 Waiver. . . . . . . . . . . . . . . . . . 47
Section 7.05 Expenses. . . . . . . . . . . . . . . . . 47
Section 7.06 Equitable Relief. . . . . . . . . . . . . 48
ARTICLE VIII
ADDITIONAL COVENANTS
Section 8.01 Employment Matters. . . . . . . . . . . . 48
Section 8.02 Stock Options . . . . . . . . . . . . . . 48
Section 8.03 Indemnification of Company Officers
and Directors . . . . . . . . . . . . . . 48
ARTICLE IX
GENERAL PROVISIONS
Section 9.01 Survival of Representations and
Warranties and Covenants. . . . . . . . . 49
Section 9.02 Notices . . . . . . . . . . . . . . . . . 49
Section 9.03 Headings. . . . . . . . . . . . . . . . . 50
Section 9.04 Severability. . . . . . . . . . . . . . . 50
Section 9.05 Entire Agreement. . . . . . . . . . . . . 51
Section 9.06 Assignment. . . . . . . . . . . . . . . . 51
Section 9.07 Parties in Interest . . . . . . . . . . . 51
Section 9.08 Failure or Indulgence Not Waiver;
Remedies Cumulative . . . . . . . . . . . 51
Section 9.09 Governing Law . . . . . . . . . . . . . . 51
Section 9.10 Counterparts. . . . . . . . . . . . . . . 51
<PAGE>
EXHIBIT INDEX
1.23 Company Channel Exceptions
1.36(B) Delivered Digital-Ready Channel - ITFS
1.59 Market Facilities
3.01 Company Subsidiaries
3.02(a) Company Certificate of Incorporation
3.02(b) Company Bylaws
3.03(b)(i) Company Preferred Stock Dividends
3.03(b)(ii) Outstanding Options
3.03(c) Capitalization
3.05 Consents
3.08 Company Permits
3.10 Taxes
3.11 Litigation
3.12 Changes
3.13 Assets and Liens
3.14 Contracts
3.16 Company Benefit Plans
3.20(a) ITFS, MDS and CARS Technical Specifications
3.20(c) Pending Applications
3.21 Capacity Leases
3.22 Site Leases
3.24 Wireless Cable System Information
3.25(a) Retransmission Consent
3.25(b) Programming Agreements
3.26 Copyright Filings
3.28 Interference Consents
3.29(a) Certain Stockholders
3.29(b) Stockholder's Agreement
3.30 Transactions with Affiliates
5.01(a)(iv) Capital Expenditures
5.01(b)(xii) Form of Estoppel Certificate
5.01(b)(xiii) Certain Employees
5.01(b)(xv) Certain actions to be taken prior to
Closing Date
5.05 Consents
5.12 Form of Note
6.02(e) Form of Opinion of Hunton & Williams
6.03(h) Form of Consulting and Noncompetition Agreement
6.03(i)(i) Form of Opinion of Gambrell & Stolz, L.L.P.
6.03(i)(ii) Form of Opinion of Pepper & Corrazzini, L.L.P.
6.03(k) Delivered Digital-Ready Channels and Granted
Channels as of the Effective Date
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION dated
February 11, 1997 (as it may be amended from time to time, this
"Agreement") is made by and among (i) BELLSOUTH CORPORATION, a
Georgia corporation ("BellSouth"), (ii) BELLSOUTH WCA MERGER
SUBSIDIARY, INC., a Georgia corporation ("BellSouth Sub"), and
(iii) WIRELESS CABLE OF ATLANTA, INC., a Georgia corporation (the
"Company").
RECITALS
WHEREAS, BellSouth Sub, upon the terms and subject to
the conditions of this Agreement and in accordance with the
Georgia Business Corporation Code of the State of Georgia
("GBCC"), will merge with and into the Company (the "Merger");
and
WHEREAS, the Board of Directors of the Company has
determined that the Merger is consistent with and in furtherance
of the long-term business strategy of the Company and is fair to
and in the best interests of the Company and the holders of
Company Common Stock and Company Preferred Stock and has approved
and adopted this Agreement and the transactions contemplated
hereby; and
WHEREAS, for federal income tax purposes, it is
intended that the Merger qualify as a tax-free reorganization
under the provisions of Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the foregoing and
the representations, warranties, covenants and agreements set
forth herein and for other good and valuable consideration, the
parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms shall
have the meanings assigned to them below:
Section 1.01 Acceptable Authorization. "Acceptable
Authorization" shall mean a MDS or ITFS Channel authorized by a
license covered by the required certification or notification of
completion of construction timely filed with the FCC (and not a
special temporary, experimental or developmental authorization)
which is in full force and effect, validly issued, free of
special conditions, not subject to a pending revocation
proceeding, not in jeopardy of cancellation under FCC Rule 21.303
for removal of equipment or failure to offer service, and not
subject to forfeiture for any failure to meet a condition of any
instrument of authorization imposed by the FCC.
Section 1.02 Adjustment Event. "Adjustment Event" shall
have the meaning set forth in Section 2.05(f).
Section 1.03 Affiliate. "Affiliate," with respect to any
Person, shall mean a Person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is
under common control with, such Person.
Section 1.04 Annual FCC Reports. "Annual FCC Reports"
shall mean those reports, filings, notices and regulatory fees
required to be filed annually with the FCC by licensees,
permittees, applicants or operators in the MDS, ITFS, CARS and
OFS services, including but not limited to reports required by
Sections 21.11, 21.911 and 21.307 of FCC Rules.
Section 1.05 Average Closing Price. "Average Closing
Price" shall have the meaning set forth in Section 2.05(a).
Section 1.06 Basic Subscriber. "Basic Subscriber" means a
current subscriber to a Wireless Cable System's regular monthly
basic services who has paid for at least one full month of basic
service in full without discount, whose service rates are not
lower than the rates generally charged when that subscriber
became a subscriber and whose account receivable for such service
does not include any balance due for service provided more than
90 days before the date of determination. For bulk rate
customers, an equivalent billing unit shall be a Basic
Subscriber. The number of equivalent billing units shall be
determined by dividing the aggregate monthly amount billed for
regular monthly basic services by the Company to bulk rate
customers by the average monthly rate charged to residential
customers for regular monthly basic services.
Section 1.07 BellSouth. "BellSouth" shall mean BellSouth
Corporation, a Georgia corporation.
Section 1.08 BellSouth Common Stock. "BellSouth Common
Stock" shall have the meaning set forth in Section 2.05(a).
Section 1.09 BellSouth Material Adverse Effect. "BellSouth
Material Adverse Effect" shall have the meaning set forth in
Section 4.01.
Section 1.10 BellSouth Reports. "BellSouth Reports" shall
have the meaning set forth in Section 4.07(a).
Section 1.11 BellSouth Sub. "BellSouth Sub" shall mean
BellSouth WCA Merger Subsidiary, Inc., a Georgia corporation.
Section 1.12 BellSouth Sub Common Stock. "BellSouth Sub
Common Stock" shall have the meaning set forth in Section
2.05(e).
Section 1.13 Business Day. "Business Day" shall mean any
day other than (i) a day on which banks in the State of New York
are authorized or obligated to be closed or (ii) a day on which
BellSouth Common Stock does not trade on the NYSE.
Section 1.14 CARS. "CARS" shall mean Cable Antenna Relay
Service.
Section 1.15 Capacity Lease. "Capacity Lease" shall have
the meaning set forth in Section 3.21.
Section 1.16 Channel. "Channel" shall mean a 6 MHz wide
channel capable of carrying both audio and video signals.
Section 1.17 Closing. "Closing" shall mean the conference
held at the offices of Hunton & Williams in Atlanta, Georgia at
10:00 a.m. on the date determined by the parties in accordance
with Section 2.09.
Section 1.18 Code. "Code" shall have the meaning set forth
in the Recitals (fourth paragraph).
Section 1.19 Communications Act. "Communications Act"
shall mean the Federal Communications Act of 1934, as amended.
Section 1.20 Companies. "Companies" shall mean the Company
and each of its Subsidiaries.
Section 1.21 Company. "Company" shall mean Wireless Cable
of Atlanta, Inc., a Georgia corporation.
Section 1.22 Company Benefit Plans. "Company Benefit
Plans" shall have the meaning set forth in Section 3.16.
Section 1.23 Company Channel. "Company Channel" shall mean
an ITFS or MDS Channel which,
(A) if a MDS Channel, either (i) is authorized by the FCC to
the Company or a wholly-owned Subsidiary of the Company and
not subject to any lease to or rights inuring in any other
entity, or (ii) is leased to the Company or a wholly-owned
Subsidiary of the Company by Capacity Lease which is in full
force and effect and is enforceable in accordance with its
terms, which is not subject to termination at the option of
the lessor and which is not in default; and
(B) if an ITFS Channel, is leased to the Company by a
Capacity Lease which shall be in full force and effect and
is enforceable in accordance with its terms, which shall
not be subject to termination at the option of lessor and
which is not in default, except as set forth on Exhibit
1.23.
Section 1.24 Company Common Stock. "Company Common Stock"
shall have the meaning set forth in Section 2.05(a).
Section 1.25 Company Environmental Permits. "Company
Environmental Permits" shall have the meaning set forth in
Section 3.07.
Section 1.26 Company ERISA Plan. "Company ERISA Plan"
shall have the meaning set forth in Section 3.16.
Section 1.27 Company FCC Authorizations. "Company FCC
Authorizations" shall have the meaning set forth in Section
3.20(a).
Section 1.28 Company Material Adverse Effect. "Company
Material Adverse Effect" shall have the meaning set forth in
Section 3.01.
Section 1.29 Company Permits. "Company Permits" shall have
the meaning set forth in Section 3.08(a).
Section 1.30 Company Preferred Stock. "Company Preferred
Stock" shall have the meaning set forth in Section 2.05(b).
Section 1.31 Company Reports. "Company Reports" shall have
the meaning set forth in Section 3.09(a).
Section 1.32 Competing Transaction. "Competing
Transaction" shall have the meaning set forth in Section 5.02.
Section 1.33 Confidentiality Agreement. "Confidentiality
Agreement" shall mean the Nondisclosure Agreement between
BellSouth and the Company dated October 15, 1996.
Section 1.34 Contracts. "Contracts" shall mean contracts,
agreements, leases (including, without limitation, the Capacity
Leases and the Site Leases), licenses (including, without
limitation, the FCC authorizations required for BellSouth
to operate the Wireless Cable System), relationships and
commitments, written or oral, to which any of the Companies is a
party or by which any of the Companies or any of their properties
is bound.
Section 1.35 Copyright Office. "Copyright Office" shall
mean the Copyright Office, the Library of Congress, the Registrar
of Copyrights, the Copyright Tribunal and any successor
government agency performing functions similar to those performed
by the foregoing on the date hereof.
Section 1.36 Delivered Digital-Ready Channel. "Delivered
Digital-Ready Channel" shall mean a Granted Channel that:
(A) if an MDS Channel, transmission capacity thereon is
available full-time to the Company under a Capacity Lease
which, in BellSouth's reasonable judgment, allocates the
full capacity of the Channel at all times to the Company on
a non-common carrier basis free of any rights in the lessor
to recapture any use of the Channel or, if licensed to the
Company, may be used by the Company full-time, in each case
without violating any rights of third parties;
(B) if an ITFS Channel, transmission capacity thereon is
available to the Company under a Capacity Lease which, in
BellSouth's reasonable judgment, without amendment or
modification thereto or the payment of any consideration,
allocates no more than that amount of the transmission
capacity set forth on Exhibit 1.36(B) to the holder of the
Company FCC Authorization therefor, and which allocates all
of the remaining transmission capacity to the Company, free
from any rights in such licensee to recapture additional air
time or transmission capacity;
(C) by December 24, 1996, if an MDS Channel or an ITFS
Channel available to the Company under a Capacity Lease, was
the subject of one or more timely-filed applications pending
before the FCC proposing facilities identical in all
respects to the Market Facilities set forth on Exhibit 1.59;
provided that the Company shall be deemed to have complied
with this Section notwithstanding any adverse action taken
by the FCC with respect to the 200 watt applications listed
on Exhibit 3.20(c-I);
(D) is not subject to any agreement, and was not authorized
pursuant to any existing and expressed or implied
undertaking, which requires or could require the Channel to
operate with carrier offset, to time-share, to cease or
curtail operations, or to accept less than a 45 dB
desired-to-undesired signal ratio anywhere within a 35-mile
radius of its transmitter site;
(E) is not required by FCC authorization to use carrier
offset; and
(F) if the Channel is made available to the Company by a
Capacity Lease, such Capacity Lease, in BellSouth's
reasonable judgment, (i) obligates the lessor to seek
FCC authorization of the digital emission of the Channel,
and (ii) allows the Company to operate the Channel for the
duration of the Capacity Lease with a digital transmission
system selected by the Company.
Section 1.37 Dissenting Shares. "Dissenting Shares" shall
have the meaning set forth in Section 2.07.
Section 1.38 Dividend Amount. "Dividend Amount" shall mean
the number of shares of BellSouth Common Stock that would have
been issued under the BellSouth Dividend Reinvestment and Stock
Purchase Plan with respect to the shares of BellSouth Common
Stock that would have been issued to Stockholders hereunder had
the Effective Time occurred as of the date set forth in Section
2.05(g), assuming all dividends relating to such shares had been
reinvested in BellSouth Common Stock in accordance with the
BellSouth Dividend Reinvestment and Stock Purchase Plan.
Section 1.39 Effective Date. "Effective Date" shall have
the meaning set forth in Section 2.02.
Section 1.40 Effective Time. "Effective Time" shall have
the meaning set forth in Section 2.02.
Section 1.41 ERISA. "ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as amended.
Section 1.42 Exchange Act. "Exchange Act" shall mean the
Securities and Exchange Act of 1934, as amended, and the rules
and regulations as promulgated thereunder.
Section 1.43 Exchange Agent. "Exchange Agent" shall have
the meaning set forth in Section 2.06(a).
Section 1.44 Exchange Ratio. "Exchange Ratio" shall have
the meaning set forth in Section 2.05(a).
Section 1.45 Expenses. "Expenses" shall have the meaning
set forth in Section 7.05(b).
Section 1.46 FCC. "FCC" shall mean the Federal
Communications Commission or any successor governmental entity
that has jurisdiction over the matters which, as of the date
hereof, are within the jurisdiction of the FCC.
Section 1.47 FCC Rules. "FCC Rules" shall mean the rules,
regulations and published policies and orders of the FCC.
Section 1.48 Final Order. "Final Order" shall mean an
order or action of the FCC which is effective, which is not
subject to any petition for reconsideration, pending petition
to deny or informal objection, application for review, notice of
appeal, request for stay, petition for writ of certiorari, or
other appeal; and which cannot be subject to any timely-filed
petition for reconsideration, application for review, notice of
appeal, request for stay, petition for writ of certiorari, or
other appeal or set aside, rescinded or adversely modified
by the FCC sua sponte.
Section 1.49 GAAP. "GAAP" shall mean generally accepted
accounting principles applied on a consistent basis.
Section 1.50 GBCC. "GBCC" shall have the meaning set forth
in the Recitals (first paragraph).
Section 1.51 Governmental Entity. "Governmental Entity"
shall have the meaning set forth in Section 3.05.
Section 1.52 Granted Channel. "Granted Channel" shall mean
an ITFS or MDS Channel that (A) is the subject of an Acceptable
Authorization, (B) is the subject of one or more modification
applications, on file at the FCC, proposing facilities identical
in all respects to the Market Facilities and (C) is a Company
Channel.
Section 1.53 HSR Act. "HSR Act" shall mean the Hart Scott
Rodino Antitrust Improvements Act of 1976, as amended.
Section 1.54 ITFS. "ITFS" shall mean the Instructional
Television Fixed Service as regulated pursuant to 47 C.F.R.
Section 74.901 et. seq.
Section 1.55 Knowledge of the Company. "Knowledge of the
Company" shall mean the knowledge, after due and reasonable
inquiry, of Ricky C. Haney, Richard L. Kendrick or Allan H.
Rudder.
Section 1.56 Law. "Law" shall have the meaning set forth
in Section 3.06.
Section 1.57 Lien. "Lien" shall mean, with respect to any
asset, any mortgage, lien, pledge, charge, claim, security
interest or encumbrance of any kind in respect of such asset
and, for the purposes of this Agreement, a Person shall be deemed
to own subject to a Lien any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or any other form
of title retention agreement relating to such asset.
Section 1.58 Market. "Market" shall mean the Atlanta,
Georgia wireless cable market.
Section 1.59 Market Facilities. "Market Facilities" shall
mean those technical and operational characteristics set forth in
Exhibit 1.59.
Section 1.60 MDS. "MDS" shall mean the Multipoint
Distribution Service, including Multichannel Multipoint
Distribution Service Channels, consisting of the E-Group
Channels, F-group Channels, H-group Channels, Channel 1, Channel
2 and Channel 2A as set forth in 47 C.F.R. Section 21.901, and
ITFS Channels authorized for commercial operation under 47 C.F.R.
Section 74.990.
Section 1.61 Merger. "Merger" shall have the meaning set
forth in the Recitals (first paragraph).
Section 1.62 NYSE. "NYSE" shall mean the New York Stock
Exchange.
Section 1.63 OFS. "OFS" shall mean the Private Operational
Fixed Microwave Service as set forth in 47 C.F.R. Section 94.1 et
seq.
Section 1.64 Outstanding Options. "Outstanding Options"
shall have the meaning set forth in Section 3.03(b).
Section 1.65 Pending Application. "Pending Application"
shall have the meaning set forth in Section 3.20(c).
Section 1.66 Person. "Person" shall mean an individual,
corporation, partnership, limited liability company, association,
trust, unincorporated organization, other entity or group (as
determined under Section 13(d) of the Exchange Act).
Section 1.67 Proxy Statement/Prospectus. "Proxy
Statement/Prospectus" shall mean the proxy materials of the
Company and the prospectus of BellSouth to be distributed to the
Stockholders in connection with the Special Meeting.
Section 1.68 Registration Statement. "Registration
Statement" shall mean the Registration Statement on Form S-4,
including the Proxy Statement/Prospectus contained therein, to be
filed by BellSouth with the SEC with respect to the BellSouth
Common Stock to be offered to the holders of Company Common Stock
and Company Preferred Stock in the Merger.
Section 1.69 SEC. "SEC" shall mean the Securities and
Exchange Commission.
Section 1.70 Securities Act. "Securities Act" shall mean
the Securities Act of 1933, as amended, and all rules and
regulations promulgated thereunder.
Section 1.71 Site Lease. "Site Lease" shall have the
meaning set forth in Section 3.22(a).
Section 1.72 Special Meeting. "Special Meeting" shall mean
the special meeting of the Stockholders to be called pursuant to
Section 5.10 to consider and approve this Agreement and the
transactions contemplated hereby, and any adjournments thereof.
Section 1.73 Stockholders. "Stockholders" shall mean all
of the holders of Company Common Stock (including holders of all
Outstanding Options convertible or exchangeable for shares of
Company Common Stock) and Company Preferred Stock.
Section 1.74 Subsidiary or Subsidiaries. "Subsidiary" or
"Subsidiaries" of the Company, BellSouth, BellSouth Sub, or any
other Person shall mean any corporation, partnership, limited
liability company, joint venture or other legal entity of which
the Company, BellSouth, BellSouth Sub or such other Person, as
the case may be (either alone or through or together with any
other Subsidiary), owns, directly or indirectly, 50% or more
of the stock or other equity interests.
Section 1.75 Tax or Taxes. "Tax" or "Taxes" shall mean any
and all taxes, charges, fees, levies or assessments payable to
any federal, state, local or foreign taxing authority or agency
including, without limitation, (i) income, franchise, profits,
gross receipts, minimum, alternative minimum, estimated, ad
valorem, value added, sales, use, service, real or personal
property, capital stock, license, payroll, withholding,
disability, employment, social security, workers compensation,
unemployment compensation, utility, severance, excise, stamp,
windfall profits, transfer and gains taxes, (ii) customs duties,
imposts, charges, levies or other similar assessments of any kind
and (iii) interest, penalties and additions to tax imposed with
respect thereto.
Section 1.76 Wireless Cable Channels. "Wireless Cable
Channels" shall mean ITFS Channels and MDS Channels.
Section 1.77 Wireless Cable System. "Wireless Cable
System" shall mean Wireless Cable Channels and associated
transmission, reception and related equipment and authorizations
used or to be used to distribute television, video and other
programming to residences and other receive points and any
associated interactive or other services operated or proposed to
be operated by the Company in the Market.
ARTICLE II
THE MERGER
Section 2.01 The Merger. Subject to the terms and
conditions set forth in this Agreement, at the Effective Time,
BellSouth Sub shall be merged with and into the Company in
accordance with the provisions of, and with the effects provided
in Article 11 of the GBCC. The separate existence of BellSouth
Sub shall cease (except as may be continued by operation of law)
and the Company shall continue as the surviving corporation of
the Merger under the corporate name Wireless Cable of Atlanta,
Inc. or such other name as may be selected by BellSouth and shall
continue to be governed by the laws of the State of Georgia.
Section 2.02 Effective Time of the Merger. As soon as is
practicable after the satisfaction or, if permissible, waiver of
the conditions hereinafter set forth, the parties hereto shall
cause the Merger to be consummated by filing a certificate of
merger relating to the Agreement with the Secretary of State of
the State of Georgia in such form as required by, and executed in
accordance with the relevant provisions of GBCC (the date and
time of such filing, or such later date or time as set forth
therein, being the "Effective Date" and the "Effective Time,"
respectively) and each of BellSouth and the Company shall take
any and all lawful actions to cause the Merger to become
effective.
Section 2.03 Effect of the Merger. At the Effective Time,
the effect of the Merger shall be as provided in the applicable
provisions of the GBCC. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the
property rights, privileges, powers and franchises of BellSouth
Sub shall vest in the Company, and all debts, liabilities and
duties of BellSouth Sub shall become the debts, liabilities and
duties of the Company, and the Company shall become a
wholly-owned subsidiary of BellSouth.
Section 2.04 Articles of Incorporation. As a result of the
Merger, the Articles of Incorporation and Bylaws of the Company
shall be amended and restated in the form of the Articles of
Incorporation and Bylaws of BellSouth Sub until thereafter
amended.
Section 2.05 Conversion of Securities.
(a) At the Effective Time, by virtue of the Merger, as
provided herein, and without any action on the part of the
Company, BellSouth Sub or the holders thereof, each share of the
Company's common stock, $1.00 par value (the "Company Common
Stock"), issued and outstanding immediately prior to the
Effective Time (other than any shares of Company Common Stock to
be canceled pursuant to Section 2.05(c) and Dissenting Shares)
shall be converted into that number of shares of the common
stock, $1.00 par value per share, of BellSouth (the "BellSouth
Common Stock") determined in accordance with the Exchange Ratio.
For the purposes of this Agreement the Exchange Ratio shall
be calculated as follows:
(i) if the Average Closing Price (as defined
below) is between $32.625 and $42.625, the Exchange
Ratio shall be 0.49;
(ii) if the Average Closing Price is greater than
$42.625, the Exchange Ratio shall be the quotient of
(A) $20.88625 divided by (B) the Average Closing Price,
rounded to the nearest one-one thousandth of a share;
and
(iii) if the Average Closing Price is less than
$32.625, the Exchange Ratio shall be the quotient of
(A) $15.98625 divided by (B) the Average Closing Price,
rounded to the nearest one-one thousandth of a share.
(iv) "Average Closing Price" shall mean the
average closing sale price of BellSouth Common Stock as
reported on the NYSE for each of the 20 consecutive
trading days ending on the tenth day immediately
preceding the Effective Date; provided that for any
such trading day for which such closing sale price is
"ex-dividend," the closing sale price for such day and
any subsequent days in the 20-day period shall be
adjusted by adding the amount of the dividend to the
closing sale price.
(b) Prior to the Effective Time, (i) each share of the
Company's 12% Cumulative Convertible Redeemable Preferred Stock,
Series A, $1.00 par value (the "Company Preferred Stock") shall
be converted to Company Common Stock and all accrued but unpaid
dividends on the Company Preferred Stock shall have been paid,
and (ii) all Outstanding Options shall be exercised or canceled.
Immediately prior to the Effective Time, following conversion of
the Company Preferred Stock and the exercise of all Outstanding
Options, there shall be not more than 2,245,378 shares of Company
Common Stock issued and outstanding and no shares of Company
Preferred Stock shall be issued and outstanding.
(c) Each share of Company Common Stock or Company
Preferred Stock held in treasury and each share of Company Common
Stock or Company Preferred Stock owned by BellSouth immediately
prior to the Effective Time shall, by virtue of the Merger and as
provided herein, automatically be canceled and extinguished, and
no payment of any kind shall be made with respect thereto, and
each Dissenting Share shall be treated in accordance with Article
13 of the GBCC.
(d) No fraction of a share of BellSouth Common Stock
shall be issued in connection with the conversion of Company
Common Stock in the Merger and the distribution of BellSouth
Common Stock in respect thereof, but in lieu of such fraction,
the Exchange Agent shall make a cash payment (without interest)
equal to the same fraction of the market value of a full share of
BellSouth Common Stock, computed on the basis of the Exchange
Ratio.
(e) At and as of the Effective Time and as provided
herein, each share of common stock of BellSouth Sub, no par value
per share (the "BellSouth Sub Common Stock") shall be converted
into one share of Company Common Stock.
(f) In the event of any change in BellSouth Common
Stock between the date of this Agreement and the Effective Time
by reason of any stock dividend, subdivision, reclassification,
recapitalization, combination, exchange of shares or the like (an
"Adjustment Event"), the Exchange Ratio shall be appropriately
adjusted so that each holder of Company Common Stock will receive
in the Merger the kind and amount of securities such holder would
have been entitled to receive if the Effective Time had been
immediately prior to such Adjustment Event. Similar adjustments
shall be made successively whenever any Adjustment Event occurs.
(g) In the event the Effective Time does not occur
prior to April 10, 1997 (the record date for the cash dividend
payable with respect to BellSouth Common Stock in the second
fiscal quarter of 1997), the Dividend Amount for such quarter
shall be issued with respect to each share of Company Common
Stock in addition to the shares of BellSouth Common Stock issued
in accordance with the Exchange Ratio. In the event BellSouth
has not terminated this Agreement in accordance with Section
7.01(e) and the Effective Time does not occur prior to July 9,
1997 (the record date for the cash dividend payable with respect
to BellSouth Common Stock in the third fiscal quarter of 1997),
the Dividend Amount for such quarter shall be issued with respect
to each share of Company Common Stock, in addition to the shares
of BellSouth Common Stock issued in accordance with the Exchange
Ratio.
Section 2.06 Manner of Exchange.
(a) After the Effective Time, each holder of a
certificate for theretofore outstanding shares of Company Common
Stock, upon surrender of such certificate to the exchange agent
designated by BellSouth to effect the issuance of certificates
(the "Exchange Agent"), and a Letter of Transmittal, which shall
be mailed to each holder of a certificate for theretofore
outstanding shares of Company Common Stock by the Exchange Agent
promptly following the Effective Time, shall be entitled to
receive in exchange therefor a certificate or certificates
representing the number of full shares of BellSouth Common Stock
for which shares of Company Common Stock theretofore represented
by the certificate or certificates so surrendered shall have been
exchanged as provided in this Article II and cash in lieu of any
fractional share of BellSouth Common Stock to which such holder
is entitled pursuant to Section 2.05(d). Until so surrendered,
each outstanding certificate which, prior to the Effective Time,
represented Company Common Stock will be deemed to evidence the
right to receive the number of full shares of BellSouth Common
Stock into which the shares of Company Common Stock represented
thereby may be converted in accordance with the Exchange Ratio;
and, after the Effective Time will be deemed for all corporate
purposes of BellSouth to evidence ownership of the number of full
shares of BellSouth Common Stock into which the shares of Company
Common Stock represented thereby were converted.
(b) For shares of Company Common Stock to be converted
into BellSouth Common Stock, until such outstanding certificates
formerly representing Company Common Stock are surrendered, no
dividend payable to holders of record of BellSouth Common Stock
for any period as of any date subsequent to the Effective Time
shall be paid to the holder of such outstanding certificates in
respect thereof. If a certificate representing such shares is
presented to BellSouth, it shall be canceled and exchanged for a
certificate representing shares of BellSouth Common Stock as
herein provided. Upon surrender of certificates of Company
Common Stock in exchange for BellSouth Common Stock, there shall
be paid to the recordholder of the certificates of BellSouth
Common Stock issued in exchange therefor (i) the amount of
dividends theretofore paid for such full shares of BellSouth
Common Stock as of any date subsequent to the Effective Time
which have not yet been paid to a public official pursuant to
abandoned property laws and (ii) at the appropriate payment date
the amount of dividends with a record date after the Effective
Time but prior to surrender and a payment date subsequent to
surrender. No interest shall be payable on such dividends upon
surrender of outstanding certificates.
Section 2.07 Dissenting Shares. Notwithstanding anything
in this Agreement to the contrary, shares of Company Common Stock
and Company Preferred Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by a
stockholder (other than BellSouth and its subsidiaries, which
waive such right to dissent) who has the right (to the extent
such right is available by law) to demand and receive payment of
the fair value of his shares of Company Common Stock or Company
Preferred Stock pursuant to Section 14-2-1302 of the GBCC (the
"Dissenting Shares") shall not be converted into or be
exchangeable for the right to receive the consideration provided
in Section 2.01 of this Agreement, unless and until such holder
shall fail to perfect his or her right to dissent or shall have
effectively withdrawn or lost such right under the GBCC, as the
case may be. If such holder shall have so failed to perfect his
right to dissent or shall have effectively withdrawn or lost such
right, each of his shares of Company Common Stock or Company
Preferred Stock shall thereupon be deemed to have been converted
into, at the Effective Time, the right to receive shares of
BellSouth Common Stock as provided in Section 2.01 of this
Agreement.
Section 2.08 Stock Transfer Books. At the Effective Time,
the stock transfer books of BellSouth Sub shall be closed, and
there shall be no further registration of transfers of shares of
BellSouth Sub Common Stock thereafter on the records of the
BellSouth Sub.
Section 2.09 Closing. Unless this Agreement shall have
been terminated and the transactions herein contemplated shall
have been abandoned pursuant to Section 7.01 and subject to the
satisfaction or waiver of the conditions set forth in Article VI,
the consummation of the Merger will take place as promptly as
practicable on a date designated by BellSouth (and in any event
within 10 Business Days) after satisfaction or waiver of the
conditions set forth in Article VI, at the offices of Hunton &
Williams, NationsBank Plaza, 600 Peachtree Street, N.E., Atlanta,
Georgia 30308.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to BellSouth and
BellSouth Sub that:
Section 3.01 Organization and Qualification; Subsidiaries.
Each of the Companies is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation, has all requisite corporate power and
authority to carry on its business as it is now being conducted
and to own, operate and hold under lease its assets and
properties as, and in the places where, such properties and
assets now are owned, operated or held. Each of the Companies is
duly qualified and in good standing to do business in each
jurisdiction in which the nature of the business conducted by it
or the ownership or leasing of its properties makes such
qualification necessary, other than where the failure to be so
duly qualified and in good standing would not have a Company
Material Adverse Effect. The term "Company Material Adverse
Effect" as used in this Agreement means any change or effect
that, individually or when taken together with all other such
changes or effects, could reasonably be expected to be materially
adverse to the assets, financial condition, business or
operations of any of the Companies. Exhibit 3.01 constitutes a
true, correct and complete list of all of the Subsidiaries of the
Company. The Company does not own, directly or indirectly, nor
has it agreed to purchase or otherwise acquire 5% or more of the
capital stock or other equity interest in, or any interest
convertible into or exchangeable or exercisable for 5% or more of
the capital stock or other equity interest in any Person other
than the Subsidiaries listed on Exhibit 3.01.
Section 3.02 Articles of Incorporation and Bylaws.
Attached as Exhibits 3.02(a) and (b) hereto, are true, correct
and complete copies, in full force and effect, of the Company's
Articles of Incorporation and Bylaws, as amended or restated.
None of the Companies are in violation of any of the provisions
of their respective Articles of Incorporation or Bylaws.
Section 3.03 Capitalization; Subsidiaries.
(a) The Company's authorized equity capitalization
consists of 10,000,000 shares of Company Common Stock and
5,000,000 shares of preferred stock. As of the close of business
on September 30, 1996, 1,772,450 shares of Company Common Stock
and 39,372 shares of Company Preferred Stock were issued and
outstanding, such shares of Company Common Stock and Company
Preferred Stock constituted all of the issued and outstanding
shares of capital stock of the Company as of such date. All
issued and outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid
and non-assessable, are not subject to and have not been issued
in violation of any preemptive or similar rights, and were
offered and sold in compliance with all applicable federal and
state securities laws. At the Effective Time, there shall not be
more than 2,245,378 shares of Company Common Stock issued and
outstanding and no shares of Company Preferred Stock shall be
issued and outstanding.
(b) Except as required by Section 5.07 hereof or as
set forth on Exhibit 3.03(b)(i), the Company has not, subsequent
to December 31, 1995, declared or paid any dividend on, or
declared or made any distribution with respect to, or authorized
or effected any split-up or any other recapitalization of, any of
the Company Common Stock or Company Preferred Stock, or directly
or indirectly redeemed, purchased or otherwise acquired any of
its outstanding capital stock or agreed to take any such action
and will not take any such action during the period between the
date of this Agreement and the Effective Time. Except as set
forth on Exhibit 3.03(b)(ii), there are no securities or
obligations convertible into or exercisable or exchangeable for
shares of Company Common Stock or any other equity interests in
the Companies, or warrants, options or other rights to acquire
any such shares or interests or any such securities or
obligations, or other rights (including registration rights),
agreements, arrangements or commitments of any character to which
any of the Companies is a party relating to the issued or
unissued capital stock of, or other equity interest in, the
Companies or obligating the Companies to grant, issue or sell any
shares of the capital stock of, or other equity interest in, the
Companies, by sale, lease, license or otherwise ("Outstanding
Options"). There are no obligations, contingent or otherwise, of
the Company to (i) repurchase, redeem or otherwise acquire any
shares of Company Common Stock or Company Preferred Stock or (ii)
make any investment in (in the form of a loan, capital
contribution or otherwise), or provide any guarantee with respect
to the obligations of, any Person. There are no agreements,
arrangements or commitments of any character (contingent or
otherwise) pursuant to which any Person is or may be entitled to
receive any payment based on the revenues or earnings, or
calculated in accordance therewith, of the Company. There are no
voting trusts, or other agreements or understandings to which the
Company or any Stockholder is a party or by which the Company or
any Stockholder is bound with respect to the voting of any shares
of capital stock of the Company.
(c) All of the outstanding shares of capital stock of
the Company's Subsidiaries are validly issued, fully paid and
nonassessable and free of preemptive rights and are owned by the
Company, directly or indirectly, free and clear of all Liens or
other restrictions. Exhibit 3.03(c) sets forth the authorized
equity capitalization and outstanding capital stock of each of
the Company's Subsidiaries. The Company owns directly or
indirectly all of the issued and outstanding shares of the
capital stock and partnership or other ownership interests in
each of its Subsidiaries. There are no subscriptions, options,
warrants, rights, calls, contracts, voting trusts, proxies or
other commitments, understandings, restrictions or arrangements
relating to the issuance, sale, voting, transfer, ownership or
other rights affecting any shares of capital stock or partnership
or other ownership interests in any Subsidiary of the Company,
including any right of conversion or exchange under any
outstanding security, instrument or agreement.
Section 3.04 Authorization; Enforceability. The Company
has all requisite corporate power and authority to perform its
obligations under this Agreement and to consummate the
transactions contemplated to be consummated by it hereby. The
execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary corporate action and no
other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the
transactions contemplated hereby, other than the approval of the
Stockholders at the Special Meeting. This Agreement and all of
the other documents and instruments required hereby have been
duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery hereof by BellSouth and
BellSouth Sub, constitute the legal, valid and binding
obligations of the Company enforceable in accordance with their
respective terms.
Section 3.05 Required Filings and Consents. Neither the
execution and delivery of this Agreement by the Company, nor the
performance of this Agreement by the Company does or will require
any of the Companies to obtain any consent, approval,
authorization or permit of, or to make any filing with or
notification to any federal, state, local or foreign government,
authority, agency, department, bureau, court, commission or other
body, office or instrumentality (individually a "Governmental
Entity" and collectively, "Governmental Entities"), except for
applicable requirements, if any, of (i) the Communications Act
and FCC Rules, (ii) the HSR Act, (iii) federal securities laws or
state securities, "Blue Sky" or takeover laws, and (iv) the
filing and recordation of appropriate merger documents as
required by Law. Except as set forth on Exhibit 3.05, there is
no requirement that any party to any Contract consent to the
execution and delivery of, or the consummation of the
transactions contemplated by this Agreement. The consummation of
the transactions contemplated hereby will not result in a change
in any rights or obligations of the parties to any Contract.
Section 3.06 No Conflict. Neither the execution and
delivery of this Agreement by the Company nor the performance of
this Agreement by the Company does or will (a) conflict with or
violate any of the articles of incorporation or bylaws,
partnership or organizational documents, in each case as amended
or restated, of the Companies, (b) conflict with or violate any
federal, state, foreign or local law, statute, ordinance, rule,
treaty, published policy or guideline, regulation, order,
judgment or decree (individually a "Law" and collectively,
"Laws") applicable to any of the Companies, or by which any of
the Companies' properties are bound or to which any of its
properties are subject, (c) result in any breach of or constitute
a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or
require payment under, or result in the creation of a Lien on any
of the properties or assets of any of the Companies pursuant to
any Contract or, any other note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which any of the Companies is a party
or by which any of the Companies or any of their respective
properties are bound or to which any of their respective
properties are subject, except for such violations, conflicts,
defaults or breaches which would not, singly or in the aggregate,
have a Company Material Adverse Effect.
Section 3.07 Environmental Matters. The Company possesses
all environmental permits, licenses, approvals and authorizations
("Company Environmental Permits") which are required under
applicable Environmental Law with respect to the conduct of its
business. The Company has conducted its business in compliance
with such Company Environmental Permits and applicable
Environmental Law. No claim has been issued, no complaint has
been filed, no penalty has been assessed and no investigation or
review is pending or threatened by (a) any Governmental Entity
with respect to the handling, treatment, use, storage, recycling,
transportation, disposal or Release of any Hazardous Materials at
any location in connection with the conduct of business by the
Company or (b) any third party relating to personal injuries
resulting from the Release of any Hazardous Materials by the
Company. Except as permitted by Environmental Law, the Company
has not used, treated, transported, generated or handled any
Hazardous Materials in connection with the conduct of its
business. For purposes of this Agreement, (i) "Environmental
Law" means all current federal, state, and local, civil and
criminal laws, statutes, ordinances, codes, permits, permit
conditions, rules and regulations and common law rights of action
relating to the protection of the environment and human health
and safety including, without limitation, laws governing the
handling, use, generation, treatment, storage, transportation or
disposal of Hazardous Materials including, without limitation,
the Resource Conservation and Recovery Act of 1976, the Toxic
Substances Control Act, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Federal Water
Pollution Control Act, the Clean Air Act, the Hazardous Materials
Transportation Act, and the Occupational Safety and Health Act,
as each of the foregoing may be amended, (ii) "Hazardous
Materials" means petroleum and petroleum products, radioactive
materials, ionizing and non-ionizing radiation including without
limitation electro-magnetic fields, pesticides, asbestos and
asbestos- containing materials, polychlorinated biphenyls, lead
and products containing lead and any materials or substances
defined as or included in the definition of "hazardous
materials," "hazardous wastes," "hazardous substances," "toxic
substances," "toxic pollutants," "pollutants," "contaminants,"
"solid wastes" or "regulated substances" under any applicable
Environmental Law and (iii) "Release" means any spilling,
leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, or disposing of a
Hazardous Material into the environment.
Section 3.08 Permits; Compliance.
(a) The Companies are in possession of all franchises,
grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals, leases, rights and
orders necessary to own, lease and operate its properties and to
carry on the business of the Wireless Cable System as it is now
being conducted (collectively, the "Company Permits"). All of the
Company Permits are in full force and effect and are enforceable
in accordance with their terms, except as would not have a
Company Material Adverse Effect. The terms of said Company
Permits are not subject to any restrictions or conditions that
materially limit or would materially limit the operations of the
business of the Company or any of its subsidiaries as presently
conducted, other than restrictions or conditions generally
applicable to Company Permits of that type. Except as set forth
in Exhibit 3.11, there is no action, proceeding or investigation
pending or, to the Knowledge of the Company, threatened,
regarding suspension, termination, revocation or cancellation of
any of the Company Permits. None of the Company Permits will
terminate or lapse by reason of the transactions contemplated by
this Agreement. Except as set forth on Exhibit 3.08, no
application has been or is proposed to be made to amend or modify
any Company Permit or to acquire any additional Company Permit.
The Company has no reason to believe that any Company Permit in
effect on the date hereof will not be renewed in the ordinary
course.
(b) Exhibit 3.08 hereto sets forth a list of all
Company Permits.
(c) None of the Companies is in material conflict
with, or in default or violation of the Communications Act, FCC
Rules, any Company Permit or any other Laws applicable to it or
its business or by which their respective properties are bound or
to which their respective properties are subject, and there exist
no conditions or circumstances which could result in such a
conflict, default or violation, except for such minor violations
as do not impair or interfere with the operation of the Wireless
Cable System. None of the Companies has received from any
Governmental Entity any notification with respect to possible
conflicts, defaults or violations of Laws.
Section 3.09 Company Reports; Financial Statements.
(a) The Company has filed in a timely manner all
forms, reports, statements and other documents required to be
filed with any Governmental Entities (all such forms, reports,
statements and other documents being referred to herein,
collectively, the "Company Reports"). The Company Reports,
including all Company Reports filed after the date of this
Agreement and prior to the Effective Time, were or will be
prepared in substantial accordance with the requirements of
applicable Law and did not at the time they were filed, or will
not at the time they are filed, contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading.
(b) The audited consolidated financial statements of
the Company for the fiscal year ended December 31, 1995 and any
unaudited financial statements for the period ended September 30,
1996, and for periods ending after September 30, 1996, which have
been delivered to BellSouth including, without limitation, such
financial statements previously delivered to BellSouth
(including, in each case, any related notes thereto) are or will
be in accordance with and have been or will be derived from the
books and records of the Company, have been prepared in
accordance with GAAP (except as may be indicated in the notes
thereto, or, in the case of unaudited financial statements, for
normal recurring year-end audit adjustments), and fairly present
or will fairly present in accordance with GAAP throughout the
periods involved (except to the extent required by changes in
GAAP) the financial position of the Company as of the respective
dates thereof and the results of operations and cash flows for
the periods set forth therein.
Section 3.10 Taxes. Except as set forth on Exhibit 3.10
hereto:
(a) each of the Companies that is incorporated under
the laws of the United States or of any of the United States are
members of the affiliated group, within the meaning of Section
1504(a) of the Code, of which the Company is the common parent,
such affiliated group files a consolidated federal income tax
return and none of the Companies has ever filed a consolidated
federal income tax return with (or been included in a
consolidated return of) a different affiliated group;
(b) each of the Companies has timely filed or caused
to be filed all Tax returns required to have been filed by or for
it, and all information set forth in such Tax returns is accurate
and complete in all material respects;
(c) each of the Companies has paid or made adequate
provision on its books and records in accordance with GAAP for
all Taxes for the periods covered by such Tax returns;
(d) each of the Companies is in material compliance
with, and its records contain all information and documents
(including, without limitation, properly completed IRS Forms W-8
and Forms W-9) necessary to comply with, all applicable
information reporting and tax withholding requirements under
federal, state, local and foreign Laws, and such records identify
with specificity all accounts subject to withholding under
Section 1441, 1442 or 3406 of the Code or similar provisions of
state, local or foreign Laws;
(e) there is not a material amount of unpaid Taxes due
and payable by any of the Companies or by any other person that
is or could become a lien on any asset of the Companies, or
otherwise have a Company Material Adverse Effect;
(f) each of the Companies has collected or withheld
all Taxes required to be collected or withheld by it, and all
such Taxes have been paid to the appropriate Governmental Entity
or set aside in appropriate accounts for future payment when due;
(g) none of the Companies has granted (or is subject
to) any waiver, which is currently in effect, of the period of
limitations for the assessment of any Tax; no unpaid Tax
deficiency has been assessed or asserted against or with respect
to any of the Companies by any Governmental Entity; no power of
attorney relating to Taxes that is currently in effect has been
granted by or with respect to any of the Companies; there are no
currently pending administrative or judicial proceedings, or any
deficiency or refund litigation, with respect to Taxes of any of
the Companies; and any such assertion, assessment, proceeding or
litigation disclosed on Exhibit 3.10 is being contested in good
faith through appropriate measures, and its status is described
in Exhibit 3.10;
(h) none of the Companies has made or entered into, or
holds any asset subject to, a consent filed pursuant to Section
341(f) of the Code and the regulations thereunder or a "safe
harbor lease" subject to former Section 168(f)(8) of the Internal
Revenue Code as in effect before amendment by the Tax Reform Act
of 1984 and the regulations thereunder;
(i) none of the Companies is required to include in
income any amount from an adjustment pursuant to Section 481 of
the Code or the regulations thereunder or any similar provision
of state or local Law, and to the Knowledge of the Company, no
Governmental Entity has proposed any such adjustment;
(j) none of the Companies is obligated to make any
payments, or is a party to any Contract that could obligate it to
make any payments, that would not be deductible by reason of
Sections 162(m) or 280G of the Code;
(k) there are no excess loss accounts or deferred
intercompany gains with respect to any member of the affiliated
group of which the Company is the common parent;
(l) the most recent audited consolidated balance sheet
of the Company fully and properly reflects, as of the date
thereof, the liabilities of the Companies for all accrued Taxes
and deferred liability for Taxes and, for periods ending after
such date, the books and records of each such corporation fully
and properly reflect its liability for all accrued Taxes; and
(m) none of the Companies has an "overall foreign
loss" as defined in Section 904(f) of the Code.
Exhibit 3.10 describes all material and continuing Tax
elections, consents and agreements made by or affecting any of
the Companies, lists all types of material Taxes paid and Tax
returns filed by or on behalf of any of the Companies and
expressly indicates each Tax with respect to which any of the
Companies is or has been included in a consolidated, unitary or
combined return.
Section 3.11 Litigation.
(a) Except as set forth in Exhibit 3.11 hereto, there
is no claim, action, suit, litigation, proceeding, arbitration or
investigation of any kind, at law or in equity (including,
without limitation, actions or proceedings seeking injunctive
relief and any other action or proceeding of any nature before
any Governmental Entity), pending or, to the Knowledge of the
Company, threatened against or affecting the Companies, or any
properties or rights of the Companies. None of the claims set
forth in Exhibit 3.11 (i) has had or will have a Company Material
Adverse Effect or (ii) has had or will have a material adverse
effect on the Capacity Leases, Site Leases or FCC authorizations
required for BellSouth to operate the Wireless Cable System, or
the operation of the Channels, the transmission facilities
relating thereto or the Wireless Cable System. None of the
Companies is subject to any continuing order of, consent decree,
settlement agreement or other similar written agreement with or,
to the Knowledge of the Company, investigation by, any
Governmental Entity, or any judgment, order, writ, injunction,
decree or award of any Governmental Entity or arbitrator
including, without limitation, cease-and-desist or other orders.
(b) The Company has not admitted in writing its
inability to pay its debts generally as they become due, filed or
consented to the filing against it of a petition in bankruptcy or
a petition to take advantage of any insolvency act, made an
assignment for the benefit of creditors, consented to the
appointment of a receiver for itself or for the whole or any
substantial part of its property, or had a petition in bankruptcy
filed against it, been adjudicated a bankrupt, or filed a
petition or answer seeking reorganization or arrangement under
the federal bankruptcy laws or any other similar law of any
jurisdiction.
Section 3.12 Absence of Changes. Except as specifically
disclosed in Exhibit 3.12 hereto, since December 31, 1995, none
of the Companies has suffered any change in its business,
financial condition or results of operations that has had or will
have a Company Material Adverse Effect. Except as disclosed in
Exhibit 3.12, or as otherwise specifically contemplated by this
Agreement, there has not been since December 31, 1995 (a) any
entry into any agreement or understanding or any amendment of any
agreement or understanding between any of the Companies on the
one hand, and any of their respective directors, officers or
employees on the other hand, providing for employment, terms of
employment or compensation of any such director, officer or
employee, or any adoption of or increase in any bonus, insurance,
pension or other employee benefit plan, payment or arrangement
(including, without limitation, the granting of stock options or
stock appreciation rights or the award of restricted stock) made
to, for or with any such director, officer or employee, (b) any
labor dispute that has had or is expected to have a Company
Material Adverse Effect, (c) any entry by any of the Companies
into any material commitment, agreement, license or transaction
(including, without limitation, any borrowing, capital
expenditure, sale of assets or any Lien made on any of the
properties or assets of any of the Companies) other than in the
ordinary and usual course of business, (d) any change in the
accounting policies or practices of the Companies, (e) any
damage, destruction or loss, whether covered by insurance or not,
which has had or will have a Company Material Adverse Effect, or
(f) any agreement to do any of the foregoing.
Section 3.13 Title to and Condition of Assets. Exhibit
3.13 hereto identifies all material assets necessary for the
Company to own, lease and operate its properties and the Wireless
Cable System as it is now being conducted. As of the date
hereof, the Companies own, and as of the Effective Time each of
the Companies will own, good, valid and marketable title to all
of their assets (excluding, for purposes of this sentence, assets
held under leases), free and clear of any and all Liens or other
restrictions, except as disclosed on Exhibit 3.13 hereto. Such
assets, together with all assets held by the Companies under
leases, include all tangible and intangible assets, Contracts and
rights necessary or required for the operation of the Wireless
Cable System in accordance with past practice. None of the
Companies owns any right, title or interest in any real property.
Section 3.14 Contracts. Exhibit 3.14 hereto lists all of
the Contracts. True, correct and complete copies of each of such
Contracts have been delivered to BellSouth. Each of the
Contracts is in full force and effect, is enforceable in
accordance with its terms and is a valid, legal and binding
obligation of the Companies and, to the Knowledge of the Company,
the other parties thereto. Each of the Companies has performed
each material term, covenant and condition of each Contract that
is to be performed by it and as of the Closing Date the Company
will be current in payment of all liabilities incurred under such
Contracts.
No event has occurred that would, with the passage of time or
compliance with any applicable notice requirements, constitute a
default under any of such Contracts. To the Knowledge of the
Company, no party to any material Contract intends to cancel,
terminate or exercise any option under any of such Contracts. To
the Knowledge of the Company, there is no matter that adversely
affects, or would adversely affect, any Contract that,
individually or in the aggregate, has had or would have a Company
Material Adverse Effect.
Section 3.15 Labor Matters. With respect to employees of
the Companies (i) to the Knowledge of the Company, no senior
executive, key employee or group of employees has any plans to
terminate employment with any of the Companies, except as
contemplated by Section 5.01(b)(xiii) or Section 6.03(g), (ii)
there is no unfair labor practice charge or complaint against any
of the Companies pending or, to the Knowledge of the Company,
threatened before the National Labor Relations Board or any other
comparable authority, (iii) no grievance or any arbitration
proceeding arising out of or under collective bargaining
agreements is pending and, to the Knowledge of the Company, no
claims therefor exist or have been threatened, and (iv) there is
no litigation, arbitration proceeding, governmental
investigation, administrative charge, citation or action of any
kind pending or, to the Knowledge of the Company, proposed or
threatened against any of the Companies relating to employment,
employment practices, terms and conditions of employment or wages
and hours.
None of the Companies has any collective bargaining
relationship or duty to bargain with any Labor Organization (as
such term is defined in Section 2(5) of the National Labor
Relations Act, as amended), and none of the Companies has
recognized any Labor Organization as the collective bargaining
representative of any of its employees. No union representation
petition is pending before the National Labor Relations Board
and, to the Knowledge of the Company, there is no union
organizing activity involving the employees of any of the
Companies.
Section 3.16 Employee Benefit Plans. For purposes of this
Section, the term "Company Benefit Plans" shall mean all pension,
retirement, profit-sharing, deferred compensation, stock option,
stock bonus, stock purchase, restricted stock, stock appreciation
rights, employee stock ownership, severance pay, vacation, bonus
or other incentive plans, and all other employee programs,
arrangements or agreements, whether arrived at through collective
bargaining or otherwise and whether oral or written, all medical,
vision, dental and other health plans, all disability benefits
and plans, all life insurance and death benefit plans, and all
other employee benefit plans or fringe benefit plans, whether
oral or written, including, without limitation, any "employee
benefit plan," as that term is defined in Section 3(3) of ERISA,
currently or previously adopted, maintained by, sponsored in
whole or in part by, or contributed to by any of the Companies or
affiliates thereof for the benefit of employees, retirees,
dependents, spouses, directors, independent contractors or other
beneficiaries and under which employees, retirees, dependents,
spouses, directors, independent contractors, or other
beneficiaries are eligible to participate. Any of the Company
Benefit Plans which is an "employee pension benefit plan," as
that term is defined in Section 3(2) of ERISA, is referred to
herein as a "Company ERISA Plan."
No Company Benefit Plan is or has been a multiemployer plan
within the meaning of Sections 3(37) or 4001(a)(3) of ERISA. As
to each Company ERISA Plan which is intended to be qualified
(within the meaning of Sections 401(a) and 501(a) of the Code),
the Company has either received or timely applied for a favorable
determination letter from the Internal Revenue Service confirming
the tax-qualified status of each such Plan for each year each
such Plan has been in existence, and no circumstances exist which
would adversely affect such qualification. All Company Benefit
Plans are in compliance with the applicable provisions
(including, without limitation, any funding requirements or
limitations) of ERISA, the Code and any other applicable Laws,
the breach or violation of which could have a Company Material
Adverse Effect. No Company ERISA Plan which is a defined benefit
pension plan has any "unfunded current liability," as that term
is defined in Section 302(d)(8)(A) of ERISA, and the present fair
market value of the assets of any such plan exceeds the plan's
"benefit liabilities," as that term is defined in Section
4001(a)(16) of ERISA, when determined under actuarial factors
that would apply if the plan terminated in accordance with all
applicable legal requirements. No prohibited transaction (within
the meaning of Section 406 of ERISA or Section 4975 of the Code)
involving any Company ERISA Plan has occurred that would subject
the Company to any penalty or tax under Section 502(i) of ERISA
or Section 4975 of the Code. The Company will not be obligated
to make any "excess parachute payments" within the meaning of
Section 280G of the Code or, except as contemplated by Section
8.01, any severance payments as a result of the transactions
provided for in this Agreement. The Company has never
represented, promised, or contracted (whether in oral or written
form) to any current or former employee (either individually or
to employees as a group) that such current or former employee(s)
would be provided with life insurance or employee welfare benefit
plan benefits (within the meaning of Section 3(1) of ERISA) upon
retirement or termination of employment, other than continuation
coverage as required by Section 601 of ERISA, and neither the
Company nor any Company Benefit Plans have any liability with
respect to any such benefits.
Exhibit 3.16 is a true, correct and complete list of all
Company Benefit Plans and each trust related thereto. The
Company has provided BellSouth with access to true, correct and
complete copies of each governing document (including, if
applicable, any related trust document), agreement or, if the
plan is not written, the terms of the Plan, for each Company
Benefit Plan, together with the most recent summary plan
description, annual report and audited financial statement for
each such plan and the actuarial report for any Company Benefit
Plan that is a defined benefit pension plan or funded welfare
benefit plan.
Section 3.17 Fees and Expenses of Brokers and Others. None
of the Companies (a) has had any dealings, negotiations or
communications with any broker or other intermediary in
connection with the transactions contemplated by this Agreement,
(b) is committed to any liability for any brokers' or finders'
fees or any similar fees in connection with the transactions
contemplated by this Agreement or (c) has retained any broker or
other inter- mediary to act on its behalf in connection with the
transactions contemplated by this Agreement, except that the
Company has engaged Alex. Brown & Sons Incorporated to advise it
in connection with such transactions, and the Company shall pay
as of the Effective Date all of Alex. Brown & Sons Incorporated's
fees and expenses, not to exceed $900,000, in connection with
such engagement.
Section 3.18 Accuracy of Information. Neither this
Agreement nor any Exhibit to this Agreement contains an untrue
statement of a material fact or omits to state a material fact
necessary to make the statements contained therein not
misleading.
Section 3.19 Absence of Undisclosed Liabilities. None of
the Companies have, as of the date hereof, or will have, as of
the Effective Time, any liabilities or obligations of any kind,
whether absolute, accrued, asserted or unasserted, contingent or
otherwise, that would be required to be disclosed on a
consolidated balance sheet or the financial statement footnotes
of the Company prepared as of such date, in accordance with GAAP,
except liabilities, obligations or contingencies that were (a)
reflected on or accrued or reserved against in the consolidated
balance sheet of the Company as of December 31, 1995, included in
the financial statements of the Company or reflected in the notes
thereto, or (b) incurred after the date of such balance sheet in
the ordinary course of business and consistent with past
practices and which, individually or in the aggregate, would not
have a Company Material Adverse Effect.
Section 3.20 ITFS, MDS, CARS and OFS Specifications.
(a) Set forth in Exhibit 3.20(a) hereto is a true,
correct and complete list of the technical specifications of each
MDS Channel authorization, ITFS Channel authorization, CARS
authorization and OFS authorization licensed to any of the
Companies or subject to a Capacity Lease (the "Company FCC
Authorizations," which term shall include all such authorizations
held by any of the Companies or which become subject to a
Capacity Lease after the date hereof). For each such Company FCC
Authorization, such exhibit sets forth the (i) authorized
frequency or frequencies, (ii) authorized equivalent isotropic
radiated power, (iii) authorized antenna type (and polarization),
(iv) authorized orientation of transmission antenna, (v)
authorized transmitter site location, (vi) carrier offset
requirement, (vii) requirement to prevent or reduce or to make
adjustments to prevent or reduce interference to any other
station, (viii) protected service area, (ix) construction
certification date, (x) license expiration date, (xi) the date on
which certification or notification of completion of
construction, as appropriate, was filed with the FCC, (xii) the
name of the licensee, and (xiii) if subject to a Capacity Lease,
the Company having the Capacity Lease. Except as set forth on
Exhibit 3.20(a), the grant, renewal or assignment of each Company
FCC Authorization to the existing licensee thereof was approved
by the FCC by Final Order in accordance with standard
administrative procedures and each such license is unimpaired by
any act or omission of any such licensee or the Company. No
petition to deny or for reconsideration, application for review,
appeal, request for stay or other challenge to the grant of any
of FCC License is pending before the FCC, and the time for
requesting a challenge has passed. There is no complaint,
inquiry, investigation or proceeding pending before the FCC or,
to the Knowledge of the Company threatened, which, if determined
as requested by the moving party or as indicated in any document
initiating any inquiry, investigation or proceeding, could result
in the revocation, modification, restriction, cancellation,
termination, non-renewal or other action which is adverse to the
operations under any Company FCC Authorization, or the imposition
of a monetary forfeiture.
(b) Except as stated on Exhibit 3.20(a), no facilities
subject to a Company FCC Authorization listed on Exhibit 3.20(a)
(A) is operating or at any time has operated facilities at
variance from the FCC authorization therefor, the Communications
Act or FCC Rules, (B) is operating under any special temporary,
experimental or developmental authorization, (C) is the subject
of any carrier offset agreement, (D) is subject to a pending
license renewal application, (E) is subject to a pending request
for extension of time to complete construction of authorized
facilities or for reinstatement of such authorization for failure
to timely complete construction, (F) is subject to any complaint,
petition or other filing before the FCC that the Channel is
causing impermissible interference, (G) is subject to any
agreement which requires or could require the Channel to operate
with technical facilities different than those authorized, to
cease operation, to limit the hours of operation or to accept
interference, (H) is authorized pursuant to authorization which
is subject to challenge before the FCC or the United States Court
of Appeals, (I) has a construction certification date, a
construction completion date or date by which submission to the
FCC must be made to avoid its forfeiture that has lapsed without
the prior filing of a properly completed, filed, unopposed and
pending application to extend such date or the timely submission
of the materials required to prevent forfeiture of the
authorization, or (J) has been authorized pursuant to
authorization which is not in full force and effect or which was
not properly issued or subject to any lease, sublease or any
agreement to make it available to a third party. Except as
stated on Exhibit 3.20(a), no MDS Channel listed on such exhibit
(X) has failed to serve subscribers for any consecutive period of
12 months since the later of the date it was first constructed or
the effective date of any license renewed by Final Order
therefor, or (Y) has experienced the removal or the alteration of
equipment which rendered the Channel non-operational for a period
of thirty (30) or more consecutive days. Except as set forth on
Exhibit 3.20(a), no H-group Channel listed on such exhibit is
regulated under Part 101 of FCC Rules or is not regulated under
Part 21 of FCC Rules.
(c) Exhibit 3.20(c) and Exhibit 3.20(c-I) contain a
true, correct and complete list of all pending applications (the
"Pending Applications") for modification of MDS and ITFS station
authorizations (other than MDS BTA applications and statements of
intention), applications for extensions of time to construct MDS
and ITFS stations and applications to renew ITFS and MDS station
authorizations filed by any of the Companies or subject to any
Capacity Lease. Except for the Pending Applications set forth on
Exhibit 3.20(c-I), each Pending Application is complete, complies
with FCC Rules, and if a modification application, proposes
facilities requesting authorization consistent with the
requirement to protect adjacent and co-channel stations and
auction winners for adjacent BTAs from harmful interference as
defined by FCC Rules. To the Knowledge of the Company, no
Pending Application is mutually exclusive with any application
for a proposed facility, and no Pending Application can be
subject to any proposal which would be consolidated with such
application for purposes of mutually-exclusive disposition.
Except as set forth on Exhibit 3.20(c), no such application (i)
is subject to any informal objection or petition to deny; (ii)
proposes facilities predicted to cause impermissible interference
as determined by FCC Rule 74.903 or 21.902, as applicable; (iii)
relies upon any consent or acceptance of the interference that
would be created by such proposed facility; or (iv) proposes
carrier offset to limit either caused or received interference.
Exhibit 3.20(c) accurately lists for each Pending Application the
proposed (i) frequency or frequencies, (ii) equivalent isotropic
radiated output power, (iii) antenna type (and polarization),
(iv) system losses, (v) orientation of transmission antenna and
(vi) transmitter site location.
(d) Each of the Companies and each lessor has timely
filed all Annual FCC Reports, except to the extent that the
failure to timely file such Annual FCC Reports will not have a
Company Material Adverse Effect. Each Annual FCC Report is true,
correct and complete.
Section 3.21 ITFS and MDS Capacity Leases. Exhibit 3.21 is
a true, correct and complete list of all agreements with respect
to the lease to, lease by, sale by or acquisition by any of the
Companies of MDS or ITFS station transmission capacity or
licenses, including any such agreement with respect to station
capacity that has not been authorized (the "Capacity Leases,"
which term shall include each such agreement acquired by the
Companies, when acquired, after the date hereof). Except as set
forth on Exhibit 3.21, each Capacity Lease meets all requirements
of law and regulation, is in full force and effect and is
enforceable in accordance with its terms except as such
enforceability may be limited by receivership, insolvency and
debtor relief laws. Exhibit 3.21 sets forth for each Capacity
Lease a true, correct and complete description of: (i) the name
of the lessor; (ii) the frequencies to which the Company has the
right to use transmission capacity; (iii) the payments due
thereunder and all factors that affected or will affect changes
in the payment rate from January 1, 1996 through the end of the
current term thereof; (iv) the term of the Capacity Lease; (v)
any rights for early termination or extensions of the term of any
party thereto; (vi) any obligations continuing after the current
term and any obligations that may have not been fulfilled by any
party thereto; and (vii) any restrictions on full-time usage by
the Companies of channel capacity leased thereunder. There has
been no event or circumstances which will give any right to any
party to increase, change or materially adversely modify any
usage of any Channel under any Capacity Lease. Except for ITFS
airtime described in the ITFS Capacity Leases, the Companies have
the sole right to use the Channels under each Capacity Lease
required to conduct its business as currently conducted. To the
Knowledge of the Company, there are no facts or circumstances
that might (whether with or without notice, lapse of time or the
occurrence of any other event) reasonably give rise to the
issuance of any such notice or which might preclude the renewal
of such Capacity Leases in the normal course in accordance with
their terms. Except as set forth on Exhibit 3.21, there is no
default, and to the Knowledge of the Company, no party has
threatened default, under any Capacity Lease and the consummation
of the transactions contemplated by this Agreement will not cause
any default of any Capacity Lease. No party to any Capacity
Lease has claimed, and to the Knowledge of the Company, no party
has threatened, in any written or oral statement to any of the
Companies that such party has a right to terminate the Capacity
Lease or to seek damages against any of the Companies for the
Companies' violation of such lease. No party to any Capacity
Lease requires the consent of any third party (other than FCC) to
make the lease binding and enforceable against such party in
accordance with its terms or to deprive such party of the right
to void the lease. True, correct and complete copies of all
Capacity Leases as amended through the date of this Agreement
have been provided to BellSouth.
Section 3.22 Site Leases and Lease Options.
(a) Set forth on Exhibit 3.22 is a true, correct and
complete list of the transmitter site leases held by each of the
Companies (a "Site Lease," which term shall include each of the
Companies' transmitter Site Leases acquired by the Companies,
when acquired, after the date hereof). Except as set forth on
Exhibit 3.22, each Site Lease is in full force and effect and is
enforceable in accordance with its terms. There is no default of
any Site Lease, and no party to any Site Lease has given the
other party thereto any notice of default thereunder, except as
identified on Exhibit 3.22. Except as stated on Exhibit 3.22,
the consummation of the transactions contemplated by this
Agreement will not cause a default under any Site Lease. Exhibit
3.22 completely and accurately sets forth, for each Site Lease,
the parties, the location of the real property subject thereto,
the rental and the term. True, correct and complete copies of
all Site Leases have been provided to BellSouth.
(b) To the Knowledge of the Company, none of the real
property subject to any Site Lease is subject to any condemnation
proceeding; no lease or use of any such real property exists
which would interfere with the use of such property as
contemplated in any Site Lease for the property; there is no
existing written notice covering future condemnation thereof;
and, to the Knowledge of the Company, no such real property will
be condemned or subject to condemnation proceedings.
(c) To the Knowledge of the Company, the real property
described in each Site Lease is of sufficient size so as to
permit the erection of a guyed tower of the size contemplated in
the FCC authorizations for ITFS and MDS stations authorized by
the FCC to be built or that exist at that real property or
contemplated in pending applications to the FCC for such
authorizations. To the Knowledge of the Company, neither the
erection of any such tower, nor the construction of a utility
building adjacent thereto, nor the operation of ITFS or MDS radio
stations at any such site will violate the provisions of any
applicable building codes, fire regulations, building
restrictions, land use regulations, safety regulations,
environmental regulations, deed covenants, agreement, zoning, or
other governmental ordinances, orders or regulations.
(d) To the Knowledge of the Company, there are no
leases, rental agreements, option agreements, employment
contracts, or contracts for service or maintenance existing and
relating to or connected with the occupancy or operation of any
of the real property subject to a Site Lease other than as listed
on Exhibit 3.22. True, correct and complete copies of all such
agreements have been provided to BellSouth. None of the
Companies has any interest, present or future, in any of such
real property except for the interest as shown in Exhibit 3.22.
(e) All of the real property subject to Site Leases is
freely accessible directly from public streets, or any use of
adjoining private land to access the same is done in accordance
with valid public or private easements which are included in the
applicable Site Lease.
Section 3.23 No Cable Systems. The Wireless Cable System
does not include or provide programming to any "cable system," as
that term is defined in 47 U.S.C. Section 522(7).
None of the Companies is a "cable operator" as that term is
defined in 47 U.S.C. Section 522(5).
Section 3.24 Operating Market.
(a) Exhibit 3.24 sets forth true, correct and complete
information concerning the number of Basic Subscribers to its
Wireless Cable System, the subscriber rates and offered
programming channels for the Wireless Cable System.
(b) The equipment used in the Wireless Cable System is
in good operating condition, does not require and is not
reasonably expected to require any special or extraordinary
expenditures to remain in such condition, and can be used for its
intended purpose.
(c) All transmitters used in the Wireless Cable System
meet applicable FCC type acceptance and frequency stability
requirements.
(d) The Wireless Cable System has not received any
complaint that it, or any Channels used in it, is causing
interference to any reception, transmission or detection system.
(e) The Wireless Cable System does not require any FCC
authorization that has not been obtained for it to operate as
currently operated.
Section 3.25 Retransmission Consent; Programming
Agreements. (a) The Company has the written consent to the
retransmission of each Broadcast Station whose signal is
"retransmitted" on the Wireless Cable System. As used in this
Section, the term "Broadcast Station" means a television
broadcast station, a television translator station, a low power
television station, an educational television broadcasting
station, and includes every category of broadcast station that
may enjoy must-carry rights under FCC Rules, but does not include
a "superstation" as defined by FCC Rule 76.64(c)(2) actually
received by the Wireless Cable System by satellite downlink. The
term "retransmitted" means the receipt and retransmission of a
signal, but does not include the reception described in FCC Rule
76.64(e). A true, correct and complete list of each
retransmission consent agreement, including the term and the
payment terms of the agreement, is set forth as Exhibit 3.25(a).
True, correct and complete copies of all such retransmission
consent agreements have been provided to BellSouth.
(b) Exhibit 3.25(b) is a true, correct and complete list of
all agreements for programming, and for each such programming
agreement: (i) the name of the programmer; (ii) the programming
service; (iii) the rate, and all factors that affected or will
affect rate changes from January 1, 1996 through the end of the
current term of such agreement; and (iv) the term and any rights
for early termination or extensions of the term of any party
thereto. True, complete and correct copies of all such
programming agreements have been provided to BellSouth.
Section 3.26 Copyright. Except as set forth on Exhibit
3.uc, the Company has timely filed with the Copyright Office
semi-annual statements of account for the Wireless Cable System
for each use by the Company of MDS or ITFS Channels which require
a compulsory license for each period during which it has operated
by serving subscribers. Each such statement of account
accurately sets forth all information required to appear on such
statement by the statement and by applicable rules of the
Copyright Office, and accurately states the fees due with respect
to such statement. All such fees have been paid and, except as
set forth in Exhibit 3.26, were paid in a timely fashion. The
Company is not liable to any person for copyright infringement
under the Copyright Act as a result of its business operations.
There have been no inquiries received from the Copyright Office
or any other party which questioned such statements of account or
any copyright royalty payments made by the Company with respect
to the Wireless Cable System, and no claim, action or demand for
copyright infringement or for non-payment of royalties is pending
or, to the Knowledge of the Company, threatened or probable of
assertion with respect to the Wireless Cable System.
Section 3.27 Equal Employment Opportunity. The Company has
filed at the FCC the FCC Forms 395M as required by FCC rule 76.77
for each year since 1993 that the Wireless Cable System has been
in operation in service of subscribers. Each such report is
true, correct and complete.
Section 3.28 Interference Consents. Except as described in
Exhibit 3.28 or as required by this Agreement, as of the date of
this Agreement, there are no agreements or understandings
(written or oral) between the Company and any present or proposed
Wireless Cable System operator or MDS or ITFS licensee or
applicant with respect to adjacent market interference, the
coordination of adjacent market channel use or other matters
concerned with the operation of nearby markets or obtaining the
assistance of a party's Channel capacity lessors.
Section 3.29 Certain Stockholder Agreements. Each of the
Company Stockholders identified in Exhibit 3.29(a) hereto has
duly executed and delivered to BellSouth a letter agreement in
the form of Exhibit 3.29(b) hereto with respect to, among other
things, such stockholder's agreement to vote all shares of
Company Common Stock and Company Preferred Stock over which such
stockholder exercises voting control for approval of the
Agreement and the transactions contemplated hereby at the Special
Meeting.
Section 3.30 Transactions with Affiliates. Except as set
forth on Exhibit 3.30, (a) the Contracts do not include any
obligation or commitment between the Company and any Affiliate of
the Company and (b) there are not any receivables or other
obligations or commitments between an Affiliate of the Company
and the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BELLSOUTH
AND BELLSOUTH SUB
BellSouth and BellSouth Sub represent and warrant to the
Company that:
Section 4.01 Organization and Qualification. Each of
BellSouth and BellSouth Sub is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has all requisite corporate
power and authority to carry on its business as it is now being
conducted and to own, operate and hold under lease its assets and
properties as, and in the places where, such properties and
assets now are owned, operated or held. Each of BellSouth and
BellSouth Sub is duly qualified and in good standing to do
business in each jurisdiction in which the nature of the business
conducted by it or the ownership or leasing of its properties
makes such qualification necessary, other than where the failure
to be so duly qualified and in good standing would not have a
BellSouth Material Adverse Effect. The term "BellSouth Material
Adverse Effect" as used in this Agreement means any change or
effect that, individually or when taken together with all other
such changes or effects, could reasonably be expected to be
materially adverse to the assets, financial condition, business
or operations of BellSouth on a consolidated basis.
Section 4.02 Articles of Incorporation and Bylaws.
BellSouth Sub is not in violation of any of the provisions of its
Articles of Incorporation or Bylaws.
Section 4.03 Capitalization.
(a) BellSouth's authorized equity capitalization
consists of 2,200,000,000 shares of BellSouth Common Stock, $1.00
par value per share. As of the close of business on December 31,
1996, 1,007,575,986 shares of BellSouth Common Stock (exclusive
of 15,796,782 shares held in a grantor trust) were issued and
outstanding, such shares of BellSouth Common Stock constituted
all of the issued and outstanding shares of capital stock of
BellSouth as of such date. All issued and outstanding shares of
capital stock of BellSouth have been duly authorized and validly
issued and are fully paid and non-assessable, are not subject to
and have not been issued in violation of any preemptive or
similar rights, and were offered and sold in compliance with all
applicable federal and state securities laws.
(b) BellSouth Sub's authorized equity capitalization
consists of 100 shares of BellSouth Sub Common Stock, no par
value per share. As of the close of business on November 1,
1996, one share of BellSouth Sub Common Stock was issued and
outstanding, and such share of BellSouth Sub Common Stock
constituted all of the issued and outstanding shares of capital
stock of BellSouth Sub as of such date. All issued and
outstanding shares of capital stock of BellSouth Sub have been
duly authorized and validly issued and are fully paid and
non-assessable and free of preemptive rights and are owned by
BellSouth directly, free and clear of all Liens, claims, charges
or encumbrances. There are no subscriptions, options, warrants,
rights, calls, contracts, voting trusts, proxies or other
commitments, understandings, restrictions or arrangements
relating to the issuance, sale, voting, transfer, ownership or
other rights affecting any shares of capital stock or partnership
or other ownership interests in BellSouth Sub, including any
right of conversion or exchange under any outstanding security,
instrument or agreement.
Section 4.04 Authorization; Enforceability. Each of
BellSouth and BellSouth Sub has all requisite corporate power and
authority, to perform its obligations under this Agreement and to
consummate the transactions contemplated to be consummated by it
hereby. The execution and delivery of this Agreement by
BellSouth and BellSouth Sub and the consummation by each of them
of the transactions contemplated hereby have been duly authorized
by all necessary corporate action and no other corporate
proceedings on the part of BellSouth or BellSouth Sub are
necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement and all of the
other documents and instruments required hereby have been duly
executed and delivered by BellSouth and BellSouth Sub and,
assuming the due authorization, execution and delivery hereof by
the Company constitute the legal, valid and binding obligations
of BellSouth and BellSouth Sub enforceable in accordance with
their respective terms.
Section 4.05 Required Filings and Consents. Neither the
execution and delivery of this Agreement by BellSouth and
BellSouth Sub, nor the performance of this Agreement by BellSouth
and BellSouth Sub does or will require BellSouth or BellSouth Sub
to obtain any consent, approval, authorization or permit of, or
to make any filing with or notification to any Governmental
Entity, except for applicable requirements, if any, of (i) the
Communications Act and FCC Rules, (ii) the HSR Act, and (iii)
state securities, "Blue Sky" or takeover laws, and the filing and
recordation of appropriate merger documents as required by Law.
Section 4.06 No Conflict. Neither the execution and
delivery of this Agreement by BellSouth and BellSouth Sub nor the
performance of this Agreement by BellSouth and BellSouth Sub does
or will (a) conflict with or violate the articles of
incorporation or bylaws, in each case as amended or restated, of
BellSouth or BellSouth Sub, (b) conflict with or violate any Laws
applicable to BellSouth or BellSouth Sub, or by which any of
BellSouth's properties are bound or to which any of its
properties are subject, or (c) result in any breach of or
constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation
of, or require payment under, or result in the creation of a Lien
on any of the properties or assets of BellSouth or BellSouth Sub
pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument
or obligation to which BellSouth or BellSouth Sub is a party or
by which BellSouth, BellSouth Sub or any of their respective
properties are bound or to which any of their respective
properties are subject.
Section 4.07 BellSouth Reports.
(a) BellSouth has filed in a timely manner all forms,
reports, statements and other documents required to be filed with
the SEC including, without limitation, all Annual Reports on Form
10-K, all Quarterly Reports on Form 10-Q, all proxy statements
relating to meetings of stockholders (whether annual or special),
all other reports or registration statements and all amendments
and supplements to all such reports and registration statements
(all such forms, reports, statements and other documents being
referred to herein, collectively, as the "BellSouth Reports").
The BellSouth Reports, including all BellSouth Reports filed
after the date of this Agreement and prior to the Effective Time,
were or will be prepared in all material respects in accordance
with the requirements of the Securities Act and the Exchange Act,
as the case may be, and the rules and regulations of the SEC
thereunder applicable to such BellSouth Reports and did not at
the time they were filed, or will not at the time they are filed,
contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
(b) The consolidated financial statements of BellSouth
included in the BellSouth Reports filed with the SEC comply or
will comply as to form in all material respects with the
published rules and regulations of the SEC with respect thereto,
have been or will have been prepared in accordance with GAAP
(except as may be indicated in the notes thereto, or, in the case
of unaudited financial statements, for normal recurring year-end
audit adjustments or as permitted by Form 10-Q of the SEC) and
fairly present or will fairly present in accordance with GAAP
throughout the periods involved (except to the extent required by
changes in GAAP or as described in the notes thereto) the
consolidated financial position of BellSouth and its consolidated
Subsidiaries as of the respective dates thereof or for the
respective periods set forth therein and the consolidated results
of their operation and cash flows from the periods set forth
therein.
Section 4.08 Fees and Expenses of Brokers and Others.
Neither BellSouth nor BellSouth Sub (a) has had any dealings,
negotiations or communications with any broker or other
intermediary in connection with the transactions contemplated by
this Agreement, (b) is committed to any liability for any
brokers' or finders' fees or any similar fees in connection with
the transactions contemplated by this Agreement or (c) has
retained any broker or other intermediary to act on its behalf in
connection with the transactions contemplated by this Agreement,
except that to the extent BellSouth engages Bear, Stearns & Co.,
Inc. as a financial advisor in connection with such transaction,
BellSouth shall pay all of Bear, Stearns & Co., Inc.'s fees and
expenses in connection with such engagement.
Section 4.09 Accuracy of Information. Neither this
Agreement nor any other document provided by BellSouth or
BellSouth Sub or their employees or agents to the Company in
connection with the transactions contemplated herein contains an
untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained therein not
misleading.
ARTICLE V
COVENANTS
From and after the date of this Agreement and until the
Effective Time:
Section 5.01 Conduct of the Businesses of the Company.
Except as otherwise expressly provided in this Agreement or as
requested by BellSouth, the Company will, and will cause each of
the Companies to, conduct its operations according to its
ordinary and usual course of business and consistent with past
practice, and will use its best efforts to preserve intact its
business organization, goodwill, properties and assets, to keep
available the services of its and their officers and employees
and to maintain satisfactory relationships with licensors,
licensees, lessors, suppliers, contractors, subscribers and
others having material business relationships with it or them.
Without limiting the generality of the foregoing, and except
as otherwise expressly provided in this Agreement, prior to the
Effective Time, (a) none of the Companies will, without the prior
written consent of BellSouth:
(i) amend its articles of incorporation, bylaws,
partnership or joint venture agreements or other
organizational documents;
(ii) authorize for issuance or issue, sell or
deliver (whether through the issuance, granting, repricing
or acceleration of vesting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise)
any stock of any class or any other securities or interests,
except as required by the terms of any options, warrants,
rights or other securities outstanding as of the date hereof
and disclosed pursuant to this Agreement;
(iii) split, combine or reclassify any shares of
its capital stock or declare, set aside or pay any dividend
or other distribution (whether in cash, stock or property or
any combination thereof) in respect of its capital stock not
required pursuant to the Company's Articles of
Incorporation, or redeem or otherwise acquire any of its
securities or any securities of their respective
Subsidiaries;
(iv) (A) assume, guarantee, endorse or otherwise
become liable or responsible for the obligations of any
person; (B) incur any indebtedness; (C) make any loans,
advances or capital contributions to, or investments in, any
other Person; (D) enter into any Contract, or alter, amend,
modify or exercise any option under any existing Contract,
other than in the ordinary course of business or in
connection with the transactions contemplated by this
Agreement; or (E) authorize any single capital expenditure
which is in excess of $50,000 or capital expenditures which
are, in the aggregate, in excess of $250,000, other than
capital expenditures pursuant to Contracts entered into
prior to the date hereof which are identified on Exhibit
5.01(a)(iv);
(v) adopt or amend (except as may be required by
Law or as provided in this Agreement) any bonus, profit
sharing, compensation, severance, termination, stock option,
stock appreciation right, restricted stock, pension,
retirement, deferred compensation, employment, severance or
other employee benefit agreements, trusts, plans, funds or
other arrangements for the benefit or welfare of any
director, officer or employee, or (except for normal
increases in the ordinary course of business that are
consistent with past practices and that, in the aggregate,
do not result in a material increase in benefits or
compensation expense) increase in any manner the
compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any existing
Company Benefit Plan (including, without limitation, the
granting of any stock options, stock appreciation rights,
shares of restricted stock or performance units) or enter
into any Contract, agreement, commitment or arrangement to
do any of the foregoing;
(vi) acquire, sell, lease or dispose of any
material assets outside the ordinary course of business;
(vii) make any material change to its financial
statements or take any action, other than in the ordinary
course of business and in a manner consistent with past
practice or to comply with GAAP, with respect to accounting
policies or practices;
(viii) make any material Tax election or settle or
compromise any material federal, state, local or foreign
income Tax liability;
(ix) except for the payment of professional fees,
pay, discharge or satisfy any material indebtedness, claims,
liabilities or obligations (absolute, accrued or unasserted,
contingent or otherwise), other than the payment, discharge
or satisfaction in the ordinary course of business of
liabilities reflected or reserved against in the Company's
fiscal 1995 financial statements or incurred in the ordinary
course of business since the date thereof;
(x) take any action that would or is reasonably
likely to result in any of the conditions set forth in
Article VI not being satisfied as of the Effective Date;
(xi) sell, assign, lease, waive or grant rights
with respect to, sublease or otherwise transfer or dispose
of (A) any Capacity Lease, (B) any Site Lease, or (C) any
other asset or property of any of the Companies;
(xii) modify, amend, supplement or agree to a
novation of any Capacity Lease or any Site Lease, except as
contemplated in Section 5.08;
(xiii) allow, suffer or permit any default of any
of the Companies under any Site Lease or Capacity Lease;
(xiv) enter into any contract or commitment, or
amend or terminate any contract (or waiver of any material
right thereunder), or incur any obligation (including
obligations relating to the borrowing of money or the
guaranteeing of indebtedness) that will be binding on the
Company after the Effective Time, except for subscriber
service agreements made in the ordinary course of business,
and other classes of agreements that are not "material"
agreements; or
(xv) agree in writing or otherwise to take any of
the foregoing actions.
(b) the Company will and will cause each of the Companies
to:
(i) use its best efforts (A) to cause to be
maintained in full force and effect, and (B) to cause the
holders to renew and to extend when required to prevent
their lapse, all Company FCC Authorizations;
(ii) timely and completely perform each and every
obligation of it in each Capacity Lease, and under each Site
Lease and Company FCC Authorization, including but not
limited to the filing of Annual FCC Reports and Equal
Employment Opportunity Reports;
(iii)(A) prosecute and defend diligently and in
good faith each MDS and ITFS station application and
authorization; (B) cause each of its lessors to prosecute
and defend diligently and in good faith each MDS and ITFS
application and authorization subject to a Capacity Lease;
(C) use best efforts to prevent any such lessor from
entering into any agreement on or with respect to its
proposed or authorized ITFS or MDS Channel capacity in any
Market without the prior consultation with and the prior
approval of BellSouth; and (D) not enter into any agreement
on or with respect to its proposed or authorized MDS or ITFS
Channel capacity without the prior consultation with and the
prior approval of BellSouth;
(iv) use its best efforts (A) to prevent the
modification of any Company FCC Authorization, except for
such modifications as are required by this Agreement,
specifically approved by BellSouth or are authorized on the
date of this Agreement or which become authorized pursuant
to applications pending on the date of this Agreement and
listed in Exhibit 3.20(c); and (B) to prevent the new
application, or amendment to any Pending Application, to the
FCC for authorization related to any Capacity Lease except
(1) as required to comply with this Agreement, including but
not limited to Section 5.01(b)(iii)(E), (2) as specifically
required by the terms of the Capacity Lease, (3) as required
by the terms of an applicable FCC license, or (4) as may be
reasonably required to operate the Wireless Cable System in
accordance with the usual and ordinary course of business
consistent with past practices;
(v) cause the Wireless Cable System (A) to use
its best efforts to maintain its current level of Basic
Subscribers; (B) to not materially reduce the present
subscriber service rates and installation rates; (C) to
adhere to the current practice with respect to bad debt,
collection of subscriber accounts and deactivation of
delinquent account service; (D) to collect accounts
receivable only in the ordinary course consistent with its
past practices; and (E) to take no action designed to
accelerate or likely to accelerate the collection of its
accounts receivable;
(vi) except as otherwise set forth herein or as
requested by BellSouth, cause the Wireless Cable System to
be operated diligently in the ordinary course of business in
accordance with past practices for such operation (except
where such conduct would conflict with the covenants set
forth in Section 5.01(b) or with the Company's other
obligations under this Agreement);
(vii) at least five days prior to the Closing,
deliver to BellSouth a list of all material contracts
entered into by the Company between the date of this
Agreement and the Closing, together with copies of such
contracts; provided, that a contract shall be considered
material if (A) it is a Capacity Lease or an amendment of a
Capacity Lease or (B) it has a term exceeding one year or
obligates the Company to provide services or materials with
a cost, or to make purchases for total consideration, in
excess of $50,000.00 individually and $250,000.00 in the
aggregate for all Contracts;
(viii)(A) take all reasonable actions to maintain
all of its assets in good condition (ordinary wear and tear
excepted), and use, operate, and maintain all of such assets
in a reasonable manner; (B) maintain inventories of spare
parts, subscriber reception equipment and expendable
supplies at levels consistent with past practices; (C) if
any loss, damage, impairment, confiscation, or condemnation
of or to any of such assets occurs, repair, replace or
restore such assets to their prior condition as soon
thereafter as possible, and to use the proceeds of any claim
under any insurance policy to replace such assets that are
lost, damaged, impaired or destroyed;
(ix) maintain insurance policies on the Wireless
Cable System, their equipment, the interruption of their
business, liability, workman's compensation, fire, libel and
slander, and casualty as is customary in the wireless cable
business;
(x) ensure that there is no material change in
the broadcast hours or in the current program lineup
transmitted by the Wireless Cable System, and that there is
not any other material change in the Wireless Cable System's
programming policies, other than adding programming networks
under agreements entered into in the usual and ordinary
course of business and on terms and conditions typical in
the wireless cable industry and fair to the Company;
(xi) use its best efforts to preserve the business
and organization of the Wireless Cable System and use its
best efforts to keep available to the Wireless Cable System
its present employees and to preserve the subscriber base of
the Wireless Cable System and their present relationships
with suppliers, programmers, and others having business
relations with them;
(xii) use its best efforts to obtain (A) the
consent of the FCC to the transfer of control of the Company
as contemplated by this transaction; (B) the consent of each
party to each Capacity Lease and each Site Lease whose
consent is required by the terms of such agreement or by law
to ensure that the transfer of control of the Company to
BellSouth does not result in a default of such agreement;
and (C) estoppel certificates substantially in the form of
Exhibit 5.01(b)(xii) hereto from each lessor under each
Capacity Lease and each Site Lease;
(xiii) terminate the employment agreements with
the individuals identified on Exhibit 5.01(b)(xiii);
(xiv) cooperate with BellSouth in its efforts to
arrange meetings with, and to obtain information from, the
lessors and other parties under the Capacity Leases,
including without limitation causing Company representatives
to attend meetings with such lessors and other parties; and
(xv) use its best efforts to cause to be taken the
actions set forth in Exhibit 5.01(b)(xv).
Section 5.02 No Solicitation. The Company agrees that it
shall not, directly or indirectly, through any officer, director,
employee, agent, Affiliate, or any representative of such entity
or otherwise, initiate, solicit, pursue, or continue any
discussions, negotiations, or agreements (whether preliminary or
definitive) with any Person or entity other than BellSouth
contemplating or providing for any public or private offering of
equity, or merger, share exchange, acquisition, purchase or sale
of all or (other than in the ordinary course of business) a
substantial portion of the assets of, or any equity interest in,
any of the Companies or any other business combination or change
in control involving any of the Companies (each, a "Competing
Transaction") or, participate in any negotiations regarding, or
furnish to any other person any information with respect to, or
otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other
person to do or seek any Competing Transaction. The Company
shall promptly advise BellSouth if any such proposal or offer, or
any written inquiry or contact with any Person with respect to
any Competing Transaction, is made, shall promptly inform
BellSouth of all the terms and conditions thereof, and shall
furnish to BellSouth copies of any such written proposal or offer
and the contents of any communications in response thereto.
Section 5.03 Access to Information; Confidentiality
Agreement.
(a) The Company will give BellSouth, BellSouth Sub and
their authorized representatives reasonable access during normal
business hours to all offices and other facilities and to all
books and records of the Company, will permit BellSouth and
BellSouth Sub to make such inspections as each may reasonably
request and will cause their officers and those of its
Subsidiaries to furnish such financial and operating data and
other information with respect to its businesses and properties
as may from time to time reasonably be requested. Subject to
Section 5.06 hereof, all such information shall be kept
confidential in accordance with the Confidentiality Agreement.
(b) Notwithstanding the execution of this Agreement,
the Confidentiality Agreement shall remain in full force and
effect through the Effective Time, at which time the
Confidentiality Agreement shall terminate and be of no further
force and effect. Each party hereto hereby waives the provisions
of the Confidentiality Agreement as and to the extent necessary
to permit the solicitation of votes of the Stockholders of the
Company and to permit consummation of the transactions
contemplated hereby. Each party further acknowledges that the
Confidentiality Agreement shall survive any termination of this
Agreement pursuant to Section 7.01 hereof.
Section 5.04 Best Efforts. Subject to the terms and
conditions herein provided each of the parties hereto agrees to
use its best efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper and
advisable under applicable Law, to consummate and make effective
the transactions contemplated by this Agreement. In case at any
time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party to this Agreement shall take
all such necessary action. BellSouth and the Company will
execute any additional instruments necessary to consummate the
transactions contemplated hereby and thereby.
Section 5.05 Consents. The Company will use its best
efforts to obtain any and all consents of all third parties
(including, without limitation, the lessor under each Capacity
Lease, and Site Lease and Governmental Entities (including,
without limitation, the FCC)) necessary to the consummation of
the transactions contemplated by this Agreement, which consents
shall be identified on Exhibit 5.05. Within ten (10) days of the
date of this Agreement, the Company shall tender to BellSouth one
or more applications on the proper FCC forms for the FCC's
consent to the transfer of control of the Company with respect to
each FCC-issued license held by the Company, such applications
being executed by the Company, the transferors, and the Company's
and the transferor's portion thereof being fully completed.
BellSouth shall be responsible for preparing the transferee's
portion of such transfer applications and for filing the
applications with the FCC within ten (10) days of BellSouth's
receipt of the Company's and transferor's portion of the
applications. Each party shall cooperate with the other fully in
prosecuting such applications, such cooperation including but not
limited to responding in a timely fashion to all FCC inquiries
concerning such applications, preparing suitable amendments to
such applications, otherwise taking such actions and refraining
from taking such actions as best conducive to the grant of such
applications and joining in such appeals and requests for
reconsideration of adverse FCC orders as BellSouth may wish to
appeal or to request reconsideration. Each party shall bear its
own expenses incurred in preparing, filing and prosecuting such
applications, preparing and filing amendments to them, responding
to FCC inquiries concerning them and filing and prosecuting such
petitions for reconsideration and appeals from adverse FCC orders
as regards them.
Section 5.06 Public Announcements. The parties hereto have
agreed upon the text of a joint press release announcing, among
other things, the execution of this Agreement, which joint press
release shall be disseminated promptly following the execution
hereof. The Company and BellSouth will consult with each other
before issuing any additional press release or otherwise making
any additional public statement with respect to this Agreement,
the Merger or the transactions contemplated herein and shall not
issue any such press release or make any such public statement
prior to such consultation or as to which the other party
promptly and reasonably objects, except as may be required, in
the written opinion of such party's counsel, by Law or by
obligations pursuant to any listing agreement with any national
securities exchange or inter-dealer quotation system, in which
case the party proposing to issue such press release or make such
public announcement shall use its best efforts to consult in good
faith with, and accommodate the reasonable comments of, the other
party before issuing any such press release or making any such
public announcements.
Section 5.07 Payment of Preferred Stock Dividend and
Conversion of Outstanding Options. Prior to the Effective Time,
(i) each share of the Company Preferred Stock shall be converted
to Company Common Stock and all accrued but unpaid dividends on
the Company Preferred Stock (which dividends shall consist
exclusively of not more than 4,724 shares of Company Preferred
Stock) shall have been paid, and (ii) all Outstanding Options
shall have been exercised or canceled.
Section 5.08 Channel Agreements.
(a) The Company and the lessors under the Capacity
Leases for the A-, C-, D- and G-Group Channels shall amend such
Capacity Leases to clarify, in form and substance reasonably
acceptable to BellSouth, that the allocation of airtime is as
specified in Exhibit 1.36(B).
(b) The Company shall perform all of its obligations
required under the Assignment Agreement with Multichannel
Distribution of America, Inc., dated January 31, 1997, relating
to the E-Group Channels in Rome, Georgia.
(c) The Company shall perform all of its obligations
under the Contingent Market Coordination Agreement among the
Company, Visionspan, Inc., Wireless Entertainment Systems, Inc.
and BellSouth Wireless Cable, Inc., dated January 13, 1997.
(d) The Company shall use its best efforts to
cooperate with the efforts of BellSouth for the Company to enter
into a lease for the use of excess capacity on the B- Group
Channels authorized to Atlanta Interfaith Broadcasters, Inc.
Section 5.09 Control of Wireless Cable System. Prior to
Closing, and notwithstanding any other provision of this
Agreement, BellSouth and BellSouth Sub shall not directly or
indirectly control, supervise or direct, or attempt to control,
supervise or direct, any activities associated with the Wireless
Cable System. Such activities shall be the sole responsibility
of and in the complete discretion of the holders of the Company
FCC Authorizations.
Section 5.10 Registration Statement; Proxy
Statement/Prospectus; Special Meeting. The Company will duly
call and use its best efforts to hold the Special Meeting by
April 30, 1997, for the purpose of approving the Agreement and
will comply fully with the provisions of the Securities Act and
the Exchange Act and the rules and regulations of the SEC under
such Acts, and its Articles of Incorporation and Bylaws relating
to the call and holding of meetings of the Stockholders for such
purpose. The Board of Directors of the Company will recommend to
and actively encourage the Stockholders that they vote in favor
of this Agreement. BellSouth and the Company will jointly
prepare the Proxy Statement/Prospectus to be used in connection
with such meeting and BellSouth will prepare and file with the
SEC the Registration Statement, of which such Proxy
Statement/Prospectus shall be a part, and use its best efforts
promptly to have the Registration Statement declared effective.
In connection with the foregoing, BellSouth will comply with the
requirements of the Securities Act, the Exchange Act, the NYSE
and the rules and regulations of the SEC under such acts with
respect to the offering and sale of BellSouth Common Stock in
connection with the Merger and with all applicable state Blue Sky
and securities laws. The notices of such meetings and the Proxy
Statement/Prospectus shall not be mailed to the Stockholders
until the Registration Statement shall have become effective
under the Securities Act. The Company covenants that none of the
information supplied by the Company and BellSouth covenants that
none of the information supplied by BellSouth in the Proxy
Statement/Prospectus will, at the time of the mailing of the
Proxy Statement/Prospectus to the Stockholders, contain any
untrue statement of a material fact nor will any such information
omit any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances in which they were made, not misleading; and at all
times subsequent to the time of the mailing of the Proxy
Statement/Prospectus, up to and including the date of the meeting
of the Stockholders to which the Proxy Statement/Prospectus
relates, none of such information in the Proxy
Statement/Prospectus, as amended or supplemented, will contain an
untrue statement of a material fact or omit any material fact
required to be stated therein in order to make the statements
therein, in light of the circumstances in which they were made,
not misleading.
BellSouth, as the sole shareholder of BellSouth Sub, hereby
approves this Agreement.
Section 5.11 Multiple Dwelling Units. The Company shall
not enter into any contract or commitment to provide wireless
cable services to or construct wireless cable facilities for
multiple dwelling units without the prior written consent of
BellSouth, such consent not to be unreasonably withheld.
Section 5.12 Interim Financing. BellSouth agrees to
provide $1,000,000 of financing to the Company as of the date
following the date of this Agreement, such financing to be repaid
promptly following the Closing. The Company agrees that, prior
to the Closing or the termination of the Agreement, the proceeds
of such financing may be used only (a) to fund negative cash flow
from operations not in excess of $150,000 and (b) for the
purposes of constructing new wireless cable facilities for
multiple dwelling units, subject to the prior written consent of
BellSouth. Such financing shall not bear interest. In the event
this Agreement is terminated in accordance with its terms (w) by
BellSouth other than as a result of a material misrepresentation
or a material breach of a covenant by the Company or in
accordance with Section 7.01(d) or (x) by the Company other than
in accordance with Section 7.01(d) or Section 7.01(f), such
financing shall be forgiven. In the event (y) this Agreement is
terminated in accordance with its terms (i) by BellSouth as a
result of a material misrepresentation or a material breach of a
covenant by the Company or in accordance with Section 7.01(d) or
(ii) by the Company in accordance with Section 7.01(d) or Section
7.01(f), or (z) in the event the holder of Company Preferred
Stock elects to terminate the proxy contained in its letter
agreement in the form of Exhibit 3.29(b) hereto on or after
August 11, 1997, such financing shall as of the date of any such
termination convert into an interest-bearing loan, with interest
accruing as of the termination date, such indebtedness having a
maturity date of December 31, 1998, and being secured by the
stock of the Company's Subsidiaries. Such indebtedness shall
bear interest at an annual rate of 10%, increasing to 30% if the
indebtedness is not repaid at maturity. The Company has duly
authorized, executed and delivered to BellSouth a promissory note
in the form attached hereto as Exhibit 5.12.
Section 5.13 HSR Filings. Within 30 days of the date of
this Agreement, each of the Company and BellSouth shall make any
and all filings that the parties determine are required under the
HSR Act. In the event a reviewing governmental agency seeks
additional information, through a second request or otherwise,
each of the parties shall comply with the request with reasonable
promptness.
Section 5.14 Termination of Certain Agreements. Prior to
the Effective Time, the Company shall have terminated, without
penalty, (a) its paging resale agreement with Pactel Cellular
Inc. of Georgia and (b) its letter of intent dated July 25, 1996
with General Instrument to purchase digital set-top boxes.
Section 5.15 Studio-to-Transmitter Links. Prior to the
Effective Time, the Company shall have satisfied all obligations
under the Capacity Leases for ITFS Channels to provide
studio-to-transmitter links.
ARTICLE VI
CONDITIONS PRECEDENT TO CONSUMMATION OF THE MERGER
Section 6.01 Conditions Precedent to Each Party's
Obligation to Effect the Merger. The respective obligation of
each party to consummate the Merger is subject to the
satisfaction at or prior to the Effective Time of the following
conditions precedent:
(a) the transactions contemplated in this Agreement
shall have been approved, and the Agreement shall have been
adopted, by the affirmative vote of the Stock- holders of the
Company by the requisite vote in accordance with the GBCC and any
agreements among Stockholders;
(b) no order, decree or injunction shall have been
enacted, entered, promulgated or enforced by any United States
court of competent jurisdiction or any United States governmental
authority which prohibits the consummation of the Merger;
provided, however, that the parties hereto shall use their
commercially reasonable best efforts to have any such order,
decree or injunction vacated or reversed;
(c) any waiting period applicable to the Merger under
the HSR Act shall have terminated or expired;
(d) the receipt by BellSouth and the Company, based on
customary assumptions and on representations set forth in
certificates of officers of BellSouth and the Company (including,
without limitation, a continuity of interest representation that
satisfies the requirements of Revenue Procedure 86-42), of the
opinion of Hunton & Williams (dated the Effective Date) to the
effect that, for United States federal income tax purposes, (i)
the Merger will constitute a "reorganization" under Section
368(a) of the Code, (ii) no gain or loss will be recognized by
BellSouth, BellSouth Sub or the Company upon consummation of the
Merger, (iii) no gain or loss will be recognized by Stockholders
upon the exchange of shares of the Company Common Stock solely
for shares of BellSouth Common Stock (including any fractional
share interest) in the Merger, (iv) a Stockholder's aggregate
basis in BellSouth Common Stock (including any fractional share
interest) received in the Merger will be the same as the
Stockholder's basis in the Company Common Stock surrendered in
exchange therefor, (v) the holding period for shares of BellSouth
Common Stock (including any fractional share interest) received
by a Stockholder in the Merger will include the holding period
for the shares of the Company Common Stock exchanged therefor, if
such shares of the Company Common Stock are held as a capital
asset at the Effective Time, and (vi) cash received in lieu of a
fractional share of BellSouth Common Stock will be treated as
having been received as full payment in exchange for such
fractional share;
(e) the Registration Statement shall be effective
under the Securities Act, all applicable requirements of the
Securities Act and Exchange Act shall have been satisfied, any
applicable filings under state securities, "Blue Sky" or takeover
laws shall have been made and BellSouth shall have received all
state securities laws or "Blue Sky" permits and other
authorizations or there shall be exemptions from registration
requirements necessary to offer and issue the BellSouth Common
Stock in connection with the Merger, and neither the Registration
Statement nor any such permit, authorization or exemption shall
be subject to a stop order or threatened stop order by the SEC or
any state securities authority;
(f) if the shares of BellSouth Common Stock to be
issued in the Merger are not repurchased on the open market, such
shares to be issued in the Merger shall have been approved for
listing, upon notice of issuance, on the NYSE; and
(g) the transactions contemplated by this Agreement
shall (i) be permitted by the laws and regulations of each
jurisdiction or Governmental Entity including, without
limitation, the FCC to which the Companies or any of their
Affiliates are subject and (ii) not violate any applicable Law.
Section 6.02 Conditions Precedent to Obligations of the
Company. The obligations of the Company to consummate the Merger
are subject to the satisfaction or waiver at or prior to the
Effective Time of the following conditions precedent:
(a) there shall have occurred no BellSouth Material
Adverse Effect from the date hereof to the Effective Time;
(b) the representations and warranties of BellSouth
and BellSouth Sub contained in Article IV shall be true and
correct in all material respects when made and at and as of the
Effective Time with the same force and effect as if those
representations and warranties had been made at and as of such
time except (i) to the extent such representations and warranties
speak as of a specified earlier date, and (ii) as otherwise
contemplated or permitted by this Agreement;
(c) BellSouth shall, in all material respects, have
performed all obligations and complied with all covenants
necessary to be performed or complied with by it on or before the
Effective Time;
(d) the Company shall have received a certificate of a
senior officer of BellSouth, in form satisfactory to counsel for
the Company, certifying fulfillment of the matters referred to in
paragraphs (a) through (c) of this Section 6.02;
(e) the Company shall have received the opinion of
Hunton & Williams, counsel for BellSouth and BellSouth Sub, dated
the Effective Time, in substantially the form attached as Exhibit
6.02(e) hereto; and
(f) the FCC shall have granted its consents by Final
Order to the transfer of control of the Company to BellSouth,
which consents shall contain only such conditions as are ordinary
for the classes of such consents except for such conditions as
BellSouth may agree to accept in its sole discretion.
Section 6.03 Conditions Precedent to Obligations of
BellSouth and BellSouth Sub. The obligations of BellSouth and
BellSouth Sub to consummate the Merger are subject to the
satisfaction or waiver at or prior to the Effective Time of the
following conditions precedent:
(a) there shall have occurred no Company Material
Adverse Effect from the date hereof to the Effective Time;
(b) the representations and warranties of the Company
contained in Article III shall be true and correct in all
material respects when made and at and as of the Effective Time
with the same force and effect as if those representations and
warranties had been made at and as of such time except (i) to the
extent such representations and warranties speak as of a
specified earlier date, and (ii) as otherwise contemplated or
permitted by this Agreement;
(c) the Company shall have received all necessary and
material governmental (including, without limitation, the FCC),
regulatory, stockholder and third party lender, customer or other
clearances, consents, licenses or approvals;
(d) the Company shall, in all material respects, have
performed all obligations and complied with all covenants
necessary to be performed or complied with by it on or before the
Effective Time;
(e) immediately prior to the Effective Time, following
conversion of the Company Preferred Stock and the exercise of all
Outstanding Options, there shall be not more than 2,245,378
shares of Company Common Stock issued and outstanding and no
shares of Company Preferred Stock shall be issued and
outstanding;
(f) BellSouth shall have received a certificate of the
Chairman, President or Executive Vice President of the Company,
in form satisfactory to counsel for BellSouth, certifying
fulfillment of the matters referred to in paragraphs (a) through
(d) of this Section 6.03;
(g) Messrs. Ricky C. Haney, Richard L. Kendrick and
Allan H. Rudder shall have delivered to BellSouth evidence of the
termination of any employment agreements with the Company to
which any of them is a party;
(h) BellSouth shall have received consulting and
non-competition agreements in the forms attached as Exhibit
6.03(h) hereto from those persons specified therein;
(i) BellSouth and BellSouth Sub shall have received
(i) the opinion of Gambrell & Stolz, L.L.P., counsel for the
Company, dated the Effective Time, in substantially the form
attached as Exhibit 6.03(i)(i) hereto and (ii) the opinion of
Pepper & Corrazzini, L.L.P., in substantially the form attached
as Exhibit 6.03(i)(ii) hereto;
(j) the FCC shall have granted its consents by Final
Order to the transfer of control of the Company to BellSouth of
each FCC-issued license held by the Company, which consents shall
contain only such conditions as are ordinary for the classes of
such consents except for such conditions as BellSouth may agree
to accept in its sole discretion;
(k) As of the Effective Date, the Company shall have
delivered the Delivered Digital-Ready Channels set forth on
Exhibit 6.03(k);
(l) prior to the mailing of the Proxy
Statement/Prospectus, the Company shall have delivered to
BellSouth each estoppel certificate referred to in Section
5.01(b)(xii);
(m) the Company shall have delivered to BellSouth (A)
a supplement to Exhibit 3.20(a) setting forth the information
listed in Sections 3.20(a) and 3.20(b) for each Company FCC
Authorization first acquired by any of the Companies after the
date of this Agreement or subject to a Capacity Lease entered
into after the date of this Agreement; (B) supplements to
Exhibits 3.20(c) and 3.20(c-I) deleting Pending Applications
which have been granted and are described on the Exhibit 3.20(a)
supplement, and setting forth the information listed in Section
3.20(c) for each Pending Application filed at the FCC after the
date of this Agreement; (C) a supplement to Exhibit 3.21 setting
forth a list of Capacity Leases entered into by the Companies
after the date of this Agreement; (D) a supplement to Section
3.22 identifying each Site Lease acquired by any of the Companies
after the date of this Agreement and setting forth such other
information with respect thereto listed in Section 3.22; and (E)
a supplement to Exhibit 3.25 listing and setting forth the
information listed in Section 3.25 with respect to each
retransmission consent and programming agreement acquired by any
of the Companies or renewed by any of the Companies after the
date of this Agreement; and (F) a supplement to Exhibit 3.28
listing and setting forth the information listed in Exhibit 3.28
with respect to each interference consent entered into by any of
the Companies after the date of this Agreement;
(n) the Company shall have received letters of
resignation from each of the officers and directors of the
Company;
(o) there shall be not less than 8,600 Basic
Subscribers to the Wireless Cable System as of the Effective
Date; and
(p) Stockholders shall have perfected the right to
dissent with respect to no more than 10% of the outstanding
shares of Company Common Stock.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.01 Termination. This Agreement may be terminated
at any time prior to the Effective Time:
(a) by mutual written consent of the Company and
BellSouth;
(b) by BellSouth, upon a breach of any representation,
warranty, covenant and agreement on the part of the Company set
forth in this Agreement, or if any representation or warranty of
the Company shall have become untrue, in either case such that
the conditions set forth in Section 6.03(b) or Section 6.03(d)
would be incapable of being satisfied by August 11, 1997 (or May
12, 1997 in the event BellSouth elects to terminate this
Agreement in accordance with Section 7.01(e));
(c) by the Company upon a material breach of any
representation, warranty, covenant or agreement on the part of
BellSouth or BellSouth Sub set forth in this Agreement, or if any
representation or warranty of BellSouth or BellSouth Sub shall
have become untrue, in either case such that the conditions set
forth in Section 6.02(b) or Section 6.02(c) would be incapable of
being satisfied by August 11, 1997 (or May 12, 1997 in the event
BellSouth elects to terminate this Agreement in accordance with
Section 7.01(e));
(d) by either BellSouth or the Company, if any
Governmental Entity or any court of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any Law,
injunction or other order (whether temporary, preliminary or
permanent) which is in effect and which has the effect of making,
or any such Governmental Entity shall have commenced, any
proceeding (other than the consideration of applications for
approvals under the Communications Act) which, if adversely
determined, would have the effect of making the Merger illegal or
otherwise materially restricting or prohibiting consummation of
the Merger;
(e) by BellSouth if the Effective Time shall not have
occurred before May 12, 1997 (provided that if BellSouth shall
not elect to terminate this Agreement under this Section 7.01(e)
following such date, the consideration paid hereunder to
Stockholders shall be increased as provided in Section 2.05(g));
and
(f) by either BellSouth or the Company, if the Merger
shall not have been consummated before August 11, 1997 (provided
that the right to terminate this Agreement shall not be available
to any party where failure to fulfill any obligation under this
Agreement has been the cause of or has resulted in the failure of
the Merger to be consummated on or before such date).
Section 7.02 Effect of Termination. Except as provided in
Section 7.05 and Section 5.03(b), in the event of the termination
of this Agreement pursuant to Section 7.01, this Agreement shall
forthwith become void, there shall be no liability on the part of
BellSouth, the Company or any of their respective officers,
directors or stockholders to the other parties hereto and all
rights and obligations of any party hereto shall cease; provided
that any such termination shall be without prejudice to the
rights of any party hereto arising out of the material breach of
any other party of any covenant or material misrepresentation
contained in this Agreement.
Section 7.03 Amendment. This Agreement may be amended by
the mutual consent of the parties hereto at any time prior to the
Effective Time; provided, however, that, after approval of the
Agreement by the Stockholders of the Company, no amendment, which
under applicable Law may not be made without the approval of the
Stockholders of the Company, may be made without such approval.
This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
Section 7.04 Waiver. At any time prior to the Effective
Time, the parties hereto may (a) extend the time for the
performance of any of the obligations or other acts of any party
hereto, (b) waive any inaccuracies in the representations and
warranties of any party contained herein or in any document
delivered pursuant hereto and (c) waive compliance by any party
with any of the agreements or conditions contained herein. Any
such extension or waiver shall be valid only if set forth in an
instrument in writing signed by all of the parties hereto.
Section 7.05 Expenses.
(a) All Expenses incurred by the parties hereto shall
be borne solely and entirely by the party which has incurred such
Expenses; provided, however, that each of BellSouth and the
Company shall pay 50% of any filing fees paid under the
Securities Act and the Communications Act.
(b) "Expenses" as used in this Agreement shall include
all reasonable out- of-pocket expenses (including, without
limitation, all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to a party hereto and
its Affiliates) incurred by a party or on its behalf in
connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement and all
other matters related to the closing of the transactions
contemplated herein. The Company agrees that the fees and
expenses of Alex. Brown & Sons Incorporated shall not exceed
$900,000. The Company agrees that its Expenses, other than the
fees and expenses of Alex. Brown & Sons Incorporated, shall be
reasonable for a transaction of this type and shall not exceed
$200,000 in the aggregate. Prior to Closing, the Company shall
provide to BellSouth the final statement of Alex. Brown & Sons
Incorporated, which statement shall reflect (i) all fees and
expenses of Alex. Brown & Sons Incorporated in connection with
the Merger and (ii) that such fees and expenses do not exceed
$900,000.
Section 7.06 Equitable Relief. BellSouth and the Company
each agrees that each party shall be entitled, in addition to any
other remedies it may have under this Agreement or otherwise, to
preliminary and permanent injunctive and other equitable relief
to prevent or curtail any breach of this Agreement; provided,
however, that no specification in this Agreement of a specific
legal or equitable remedy shall be construed as a waiver or
prohibition against the pursuing of other legal or equitable
remedies in the event of such a breach.
ARTICLE VIII
ADDITIONAL COVENANTS
Section 8.01 Employment Matters. BellSouth will cause the
Company to pay two months severance pay to any employees (other
than Messrs. Ricky C. Haney, Richard L. Kendrick and Allan H.
Rudder) terminated by BellSouth without cause within the six
month period following the Effective Date. Nothing in this
Agreement is intended to give any employees any right to
continued employment after Closing.
Section 8.02 Stock Options. Each holder of Outstanding
Options shall, by giving notice to the Company prior to the
Closing Date, exercise the Outstanding Options for Company Common
Stock prior to the Effective Date and convert such Common Stock
into BellSouth Common Stock in the Merger.
Section 8.03 Indemnification of Company Officers and
Directors.
(a) After the Effective Time BellSouth agrees that the
Company shall provide indemnification to the directors and
officers of the Company for events occurring subsequent to the
Company's becoming a reporting company under the Exchange Act and
prior to the Effective Time, to the extent permitted under the
Articles of Incorporation and Bylaws of the Company as in effect
as of the date of this Agreement. Such indemnification shall
continue for six years after the Effective Time, provided that
any right to indemnification in respect of any claim asserted or
made within such six year period shall continue until final
disposition of such claim. The Company is not aware of any facts
or circumstances that it has reason to suppose would give rise to
a claim for indemnification within the scope of the Company's
Articles of Incorporation and Bylaws. The Company shall not be
obligated to pay more than $5,000,000 in the aggregate with
respect to its obligations under this Section 8.03 (a).
(b) After the Effective Time BellSouth agrees that the
Company shall provide indemnification to the directors and
officers of the Company for all losses, claims, damages, costs,
expenses (including attorneys' fees), liabilities or judgements
or amounts that are paid in settlement, with the approval of
BellSouth, based in whole or in part on, or arriving in whole or
in part out of, or pertaining to this Agreement or the
transactions contemplated hereby. Such indemnification shall
continue for six years after the Effective Time, provided that
any right to indemnification in respect of any claim asserted or
made within such six year period shall continue until final
disposition of such claim. The Company is not aware of any facts
or circumstances that it has reason to suppose would give rise to
a claim for indemnification within the scope of subsection (b).
ARTICLE IX
GENERAL PROVISIONS
Section 9.01 Survival of Representations and Warranties and
Covenants. The representations and warranties and covenants made
herein shall not survive beyond the Effective Time.
Section 9.02 Notices. All notices and other communications
given or made pursuant hereto shall be in writing and shall be
deemed to have been duly given or made as of the date when
delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested), transmitted by
facsimile with a confirmation copy simultaneously mailed by
registered or certified mail (postage prepaid, return receipt
requested), or sent by a nationally recognized overnight courier
to the recipient at the following addresses, or at such other
address as the recipient party shall have specified by prior
written notice to the sending party:
(a) If to BellSouth:
BellSouth Corporation
1155 Peachtree Street
Suite 1800
Atlanta, Georgia 30309-3610
Attention: John A. Harwood
Telephone: (404) 249-4433
Telecopier: (404) 249-5901
with a copy to:
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219-4074
Attention: David M. Carter
Telephone:(804) 788-8200
Telecopier:(804) 788-8218
(b) If to the Company:
Wireless Cable of Atlanta, Inc.
3100 Medlock Bridge Road, Suite 340
Norcross, Georgia 30071
Attention: Allan H. Rudder
Chief Financial Officer
Telephone: (770) 409-3577
Telecopier:(770) 409-3579
with a copy to:
Gambrell & Stolz, L.L.P.
Suite 4300, One Peachtree Center
303 Peachtree Street
Atlanta, Georgia 30308
Attention: Jon L. Andersen
Telephone: (404) 577-6000
Telecopier: (404) 221-6501
Section 9.03 Headings. The headings contained in this
Agreement are for convenience of reference only and shall not
affect in any way the meaning or interpretation of this
Agreement.
Section 9.04 Severability.If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced
by any rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
Section 9.05 Entire Agreement. This Agreement (together
with the exhibits), and the Confidentiality Agreement constitute
the entire agreement of the parties and supersede all prior
agreements and undertakings, both written and oral, between the
parties, or any of them, with respect to the subject matter
hereof.
Section 9.06 Assignment. This Agreement shall not be
assigned by operation of law or otherwise.
Section 9.07 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any right,
benefit or remedy of any nature whatsoever under or by reason of
this Agreement.
Section 9.08 Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of any party hereto
in the exercise of any right hereunder shall impair such right or
be construed to be a waiver of, or acquiescence in, any breach of
any representation, warranty or agreement herein, nor shall any
single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and
remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
Section 9.09 Governing Law. This Agreement and the
relationship between the parties shall be governed by, and
construed in accordance with, the laws of the State of Georgia
regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
Section 9.10 Counterparts. This Agreement may be executed
in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall
constitute one and the same agreement.
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement, or have caused this Agreement to be duly executed
on their behalf, on the day and year first hereinabove written.
WIRELESS CABLE OF ATLANTA, INC.
/s/ Allan H. Rudder
Name: Allan H. Rudder
Title: Chief Financial Officer
BELLSOUTH CORPORATION
/s/ Keith O. Cowan
Name: Keith O. Cowan
Title: Vice President - Corporate
Development
BELLSOUTH WCA MERGER
SUBSIDIARY, INC.
/s/ James W. McClintock, IV
Name: James W. McClintock, IV
Title: Vice President
<PAGE>
ANNEX II
ARTICLE 13
DISSENTERS' RIGHTS
PART 1
RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
14-2-1301. Definitions.
As used in this article, the term:
(1) "Beneficial shareholder" means the person who is
a beneficial owner of shares held in a voting trust or by a
nominee as the record shareholder.
(2) "Corporate action" means the transaction or other
action by the corporation that creates dissenters' rights under
Code Section 14-2-1302.
(3) "Corporation" means the issuer of shares held by
a dissenter before the corporate action, or the surviving or
acquiring corporation by merger or share exchange of that issuer.
(4) "Dissenter" means a shareholder who is entitled
to dissent from corporate action under Code Section 14-2-1302 and
who exercises that right when and in the manner required by Code
Sections 14-2-1320 through 14-2-1327.
(5) "Fair value," with respect to a dissenter's
shares, means the value of the shares immediately before the
effectuation of the corporate action to which the dissenter
objects, excluding any appreciation or depreciation in
anticipation of the corporate action.
(6) "Interest" means interest from the effective date
of the corporate action until the date of payment, at a rate that
is fair and equitable under all the circumstances.
(7) "Record shareholder" means the person in whose
name shares are registered in the records of a corporation or the
beneficial owner of shares to the extent of the rights granted by
a nominee certificate on file with a corporation.
(8) "Shareholder" means the record shareholder or
the beneficial shareholder. (Code 1981, Section 14-2-1301,
enacted by Ga. L. 1988, p. 1070, Section 1; Ga. L. 1993, p. 1231,
Section 16.)
14-2-1302. Right to dissent.
(a) A record shareholder of the corporation is entitled
to dissent from, and obtain payment of the fair value of his
shares in the event of, any of the following corporate actions:
(1) Consummation of a plan of merger to which the
corporation is a party;
(A) If approval of the shareholders of the
corporation is required for the merger by Code Section
14-2-1103 or the articles of incorporation and the
shareholder is entitled to vote on the merger; or
(B) If the corporation is a subsidiary that is
merged with its parent under Code Section 14-2-1104;
(2) Consummation of a plan of share exchange to which
the corporation is a party as the corporation whose shares
will be acquired, if the shareholder is entitled to vote on
the plan;
(3) Consummation of a sale or exchange of all or
substantially all of the property of the corporation if a
shareholder vote is required on the sale or exchange
pursuant to Code Section 14-2-1202, but not including a sale
pursuant to court order or a sale for cash pursuant to a
plan by which all or substantially all of the net proceeds
of the sale will be distributed to the shareholders within
one year after the date of sale;
(4) An amendment of the articles of incorporation that
materially and adversely affects rights in respect of a
dissenter's shares because it:
(A) Alters or abolishes a preferential right of
the shares;
(B) Creates, alters, or abolishes a right in
respect of redemption, including a provision respecting
a sinking fund for the redemption or repurchase, of the
shares;
(C) Alters or abolishes a preemptive right of
the holder of the shares to acquire shares or other
securities;
(D) Excludes or limits the right of the shares to
vote on any matter, or to cumulate votes, other than a
limitation by dilution through issuance of shares or
other securities with similar voting rights;
(E) Reduces the number of shares owned by
the shareholder to a fraction of a share if the
fractional share so created is to be acquired for
cash under Code Section 14-2-604; or
(F) Cancels, redeems, or repurchases all or part
of the shares of the class; or
(5) Any corporate action taken pursuant to a
shareholder vote to the extent that Article 9 of this
chapter, the articles of incorporation, bylaws, or
a resolution of the board of directors provides that voting
or nonvoting shareholders are entitled to dissent and obtain
payment for their shares.
(b) A shareholder entitled to dissent and obtain payment for
his shares under this article may not challenge the corporate
action creating his entitlement unless the corporate action fails
to comply with procedural requirements of this chapter or the
articles of incorporation or bylaws of the corporation or the
vote required to obtain approval of the corporate action was
obtained by fraudulent and deceptive mans, regardless of whether
the shareholder has exercised dissenter's rights.
(c) Notwithstanding any other provision of this article,
there shall be no right of dissent in favor of the holder of
shares of any class or series which, at the record date fixed to
determine the shareholders entitled to receive notice of and to
vote at a meeting at which a plan of merger or share exchange or
a sale or exchange of property or an amendment of the articles of
incorporation is to be acted on, were either listed on a
national securities exchange or held of record by more than
2,000 shareholders, unless:
(1) In the case of a plan of merger or share exchange,
the holders of shares of the class or series are required
under the plan of merger or share exchange to accept for
their shares anything except shares of the surviving
corporation or another publicly held corporation which at
the effective date of the merger or share exchange are
either listed on a national securities exchange or held of
record by more than 2,000 shareholders, except for scrip or
cash payments in lieu of fractional shares; or
(2) The articles of incorporation or a resolution of
the board of directors approving the transaction provides
otherwise. (Code 1981, Section 14-2-1302, enacted by Ga. L.
1988, p. 1070, Section 1; Ga. L. 1989, p. 946, Section 58.)
14-2-1303. Dissent by nominees and beneficial owners.
A record shareholder may assert dissenters' rights as to
fewer than all the shares registered in his name only if he
dissents with respect to all shares beneficially owned by any one
beneficial shareholder and notifies the corporation in writing of
the name and address of each person on whose behalf he asserts
dissenters' rights. The rights of a partial dissenter under this
Code section are determined as if the shares as to which he
dissents and his other shares were registered in the names of
different shareholders. (Code 1981, Section 14-2-1303, enacted
by Ga. L. 1988, p. 1070, Section 1.)
PART 2
PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
14-2-1320. Notice of dissenters' rights.
(a) If proposed corporate action creating dissenters' rights
under Code Section 14-2-1302 is submitted to a vote at a
shareholders' meeting, the meeting notice must state that
shareholders are or may be entitled to assert dissenters rights
under this article and be accompanied by a copy of this article.
(b) If corporate action creating dissenters' rights under
Code Section 14-2-1302 is taken without a vote of shareholders,
the corporation shall notify in writing all shareholders entitled
to assert dissenters' rights that the action was taken and send
them the dissenters' notice described in Code Section 14-2-1322
no later than ten days after the corporate action was taken.
(Code 1981, Section 14-2-1320, enacted by Ga. L. 1988, p. 1070,
Section 1;
Ga. L. 1993, p. 1231, Section 17.)
14-2-1321. Notice of intent to demand payment.
(a) If proposed corporate action creating dissenters' rights
under Code Section 14-2-1302 is submitted to a vote at a
shareholders' meeting, a record shareholder who wishes to assert
dissenters' rights:
(1) Must deliver to the corporation before the vote is
taken written notice of his intent to demand payment for his
shares if the proposed action is effectuated; and
(2) Must not vote his shares in favor of the proposed
action.
(b) A record shareholder who does not satisfy the
requirements of subsection (a) of this Code section is not
entitled to payment for his shares under this article. (Code
1981, Section 14-2-1321, enacted by Ga. L. 1988, p. 1070, Section
1.)
14-2-1322. Dissenters' notice.
(a) If proposed corporate action creating dissenters' rights
under Code Section 14-2-1302 is authorized at a shareholders'
meeting, the corporation shall deliver a written dissenters'
notice to all shareholders who satisfied the requirements of Code
Section 14-2-1321.
(b) The dissenters' notice must be sent no later than ten
days after the corporate action was taken and must:
(1) State where the payment demand must be sent and
where and when certificates for certificated shares must be
deposited;
(2) Inform holders of uncertificated shares to what
extent transfer of the shares will be restricted after the
payment demand is received;
(3) Set a date by which the corporation must receive the
payment demand, which date may not be fewer than 30 nor more than
60 days after the date the notice required in subsection (a) of
this Code section is delivered; and
(4) Be accompanied by a copy of this article. (Code
1981, Section 14-2-1322, enacted by Ga. L. 1988, p. 1070, Section
1.)
14-2-1323. Duty to demand payment.
(a) A record shareholder sent a dissenters' notice described
in Code Section 14-2-1322 must demand payment and deposit his
certificates in accordance with the terms of the notice.
(b) A record shareholder who demands payment and deposits his
shares under subsection (a) of this Code section retains all
other rights of a shareholder until these rights are canceled or
modified by the taking of the proposed corporate action.
(c) A record shareholder who does not demand payment or
deposit his share certificates where required, each by the date
set in the dissenters' notice, is not entitled to payment for his
shares under this article. (Code 1981, Section 14-2-1323,
enacted by Ga. L. 1988, p. 1070, Section 1.)
14-2-1324. Share restrictions.
(a) The corporation may restrict the transfer of
uncertificated shares from the date the demand for their payment
is received until the proposed corporate action is taken or the
restrictions released under Code Section 14-2-1326.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder
until these rights are canceled or modified by the taking of the
proposed corporate action. (Code 1981, Section 14-2-1324,
enacted by Ga. L. 1988, p. 1070, Section 1.)
14-2-1325. Offer of payment.
(a) Except as provided in Code Section 14-2-1327, within ten
days of the later of the date the proposed corporate action is
taken or receipt of a payment demand, the corporation shall by
notice to each dissenter who complied with Code Section 14-2-1323
offer to pay to such dissenter the amount the corporation
estimates to be the fair value of his or her shares, plus accrued
interest.
(b) The offer of payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a
fiscal year ending not more than 16 months before the date of
payment, an income statement for that year, a statement of
changes in shareholders' equity for that year, and the latest
available interim financial statements, if any;
(2) A statement of the corporation's estimate of the
fair value of the shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand
payment under Code Section 14-2-1327; and
(5) A copy of this article.
(c) If the shareholder accepts the corporation's offer by
written notice to the corporation within 30 days after the
corporation's offer or is deemed to have accepted such offer by
failure to respond within said 30 days, payment for his or her
shares shall be made within 60 days after the making of the offer
or the taking of the proposed corporate action, whichever is
later. (Code 1981, Section 14-2-1325, enacted by Ga. L. 1988, p.
1070, Section 1; Ga. L. 1989, p. 946, Section 59; Ga. L. 1993, p.
1231, Section 18.)
14-2-1326. Failure to take action.
(a) If the corporation does not take the proposed action
within 60 days after the date set for demanding payment and
depositing share certificates, the corporation shall return the
deposited certificates and release the transfer restrictions
imposed on uncertificated shares.
(b) If, after returning deposited certificates and releasing
transfer restrictions, the corporation takes the proposed action,
it must send a new dissenters' notice under Code Section
14-2-1322 and repeat the payment demand procedure. (Code 1981,
Section 14-2-1326, enacted by Ga. L. 1988, p. 1070, Section 1;
Ga. L. 1990, p. 257, Section 20.)
14-2-1327. Procedure if shareholder dissatisfied with payment or
offer.
(a) A dissenter may notify the corporation in writing of his
own estimate of the fair value of his shares and amount of
interest due, and demand payment of his estimate of the fair
value of his shares and interest due, if:
(1) The dissenter believes that the amount offered under
Code Section 14-2-1325 is less than the fair value of his shares
or that the interest due is incorrectly calculated; or
(2) The corporation, having failed to take the proposed
action, does not return the deposited certificates or release the
transfer restrictions imposed on uncertificated shares within 60
days after the date set for demanding payment.
(b) A dissenter waives his or her right to demand payment
under this Code section and is deemed to have accepted the
corporation's offer unless he or she notifies the corporation of
his or her demand in writing under subsection (a) of this Code
section within 30 days after the corporation offered payment for
his or her shares, as provided in Code Section 14-2-1325.
(c) If the corporation does not offer payment within the time
set forth in subsection (a) of Code Section 14-2-1325:
(1) The shareholder may demand the information required
under subsection (b) of Code Section 14-2-1325, and the
corporation shall provide the information to the shareholder
within ten days after receipt of a written demand for the
information; and
(2) The shareholder may at any time, subject to the
limitations period of Code Section 14-2-1332, notify the
corporation of his own estimate of the fair value of his shares
and the amount of interest due and demand payment of his estimate
of the fair value of his shares and interest due. (Code 1981,
Section 14-2-1327, enacted by Ga. L. 1988, p. 1070, Section 1;
Ga. L. 1989, p. 946, Section 60; Ga. L. 1990, p. 257, Section 21;
Ga. L. 1993, p. 1231, Section 19.)
PART 3
JUDICIAL APPRAISAL OF SHARES
14-2-1330. Court action.
(a) If a demand for payment under Code Section 14-2-1327
remains unsettled, the corporation shall commence a proceeding
within 60 days after receiving the payment demand and petition
the court to determine the fair value of the shares and accrued
interest. If the corporation does not commence the proceeding
within the 60 day period, it shall pay each dissenter whose
demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding, which
shall be a nonjury equitable valuation proceeding, in the
superior court of the county where a corporation's registered
office is located. If the surviving corporation is a foreign
corporation without a registered office in this state, it shall
commence the proceeding in the county in this state where the
registered office of the domestic corporation merged with or
whose shares were acquired by the foreign corporation was
located.
(c) The corporation shall make all dissenters, whether or not
residents of this state, whose demands remain unsettled parties
to the proceeding, which shall have the effect of an action quasi
in rem against their shares. The corporation shall serve a copy
of the petition in the proceeding upon each dissenting
shareholder who is a resident of this state in the manner provide
by law for the service of a summons and complaint, and upon each
nonresident dissenting shareholder either by registered or
certified mail or by publication, or in any other manner
permitted by law.
(d) The jurisdiction of the court in which the proceeding is
commenced under subsection (b) of this Code section is plenary
and exclusive. The court may appoint one or more persons as
appraisers to receive evidence and recommend decision on the
question of fair value. The appraisers have the powers described
in the order appointing them or in any amendment to it. Except
as otherwise provided in this chapter, Chapter 11 of Title 9,
known as the "Georgia Civil Practice Act," applies to any
proceeding with respect to dissenters' rights under this chapter.
(e) Each dissenter made a party to the proceeding is entitled
to judgment for the amount which the court finds to be the fair
value of his shares, plus interest to the date of judgment.
(Code 1981, Section 14-2-1330, enacted by Ga. L. 1988, p. 1070,
Section 1; Ga. L. 1989, p. 946, Section 61; Ga. L. 1993, p. 1231,
Section 20.)
14-2-1331. Court costs and counsel fees.
(a) The court in an appraisal proceeding commenced under Code
Section 14-2-1330 shall determine all costs of the proceeding,
including the reasonable compensation and expenses of appraisers
appointed by the court, but not including fees and expenses of
attorneys and experts for the respective parties. The court
shall assess the costs against the corporation, except that the
court may assess the costs against all or some of the dissenters,
in amounts the court finds equitable, to the extent the court
finds the dissenters acted arbitrarily, vexatiously, or not in
good faith in demanding payment under Code Section 14-2-1327.
(b) The court may also assess the fees and expenses of
attorneys and experts for the respective parties, in amounts the
court finds equitable:
(1) Against the corporation and in favor of any or all
dissenters if the court finds the corporation did not
substantially comply with the requirements of Code Sections
14-2-1320 through 14-2-1327; or
(2) Against either the corporation or a dissenter, in
favor of any other party, if the court finds that the party
against whom the fees and expenses are assessed acted
arbitrarily, vexatiously, or not in good faith with respect to
the rights provided by this article.
(c) If the court finds that the services of attorneys for any
dissenter were of substantial benefit to other dissenters
similarly situated, and that the fees for those services should
not be assessed against the corporation, the court may award to
these attorneys reasonable fees to be paid out of the amounts
awarded the dissenters who were benefitted. (Code 1981, Section
14-2-1331, enacted by Ga. L. 1988, p. 1070, Section 1.)
14-2-1332. Limitation of actions.
No action by any dissenter to enforce dissenters' rights
shall be brought more than three years after the corporate action
was taken, regardless of whether notice of the corporate action
and of the right to dissent was given by the corporation in
compliance with the provisions of Code Section 14-2-1320 and Code
Section 14-2-1322. (Code 1981, Section 14-2-1332, enacted by Ga.
L. 1988, p. 1070, Section 1.)
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Officers and Directors
As authorized by the Georgia Business Corporation Code (the
"Georgia Code"), BellSouth's Restated Articles of Incorporation
limit the monetary liability of its directors to BellSouth or its
shareholders for any breach of their duty of care or any other
duty as a director except (i) for misappropriation of any
business opportunity of BellSouth (ii) for acts or omissions not
in good faith or which constitute intentional misconduct or a
knowing violation of law, (iii) for liability for certain
unlawful distributions, or (iv) for any transaction from which
the director derived an improper personal benefit.
As authorized by the Georgia Code, the shareholders of
BellSouth have adopted an amendment to the bylaws expanding
directors and officers indemnification rights and approved a form
of Indemnity Agreement which BellSouth may enter with its
directors or officers. A person with whom BellSouth has entered
into such an Indemnity Agreement (an "Indemnitee") shall be
indemnified against liabilities and expenses related to such
person's capacity as an officer or director or to capacities
served with other entities at the request of BellSouth, except
for claims excepted from the limited liability provisions
described above. An Indemnitee is also entitled to the benefits
of any directors' and officers' liability insurance policy
maintained for BellSouth Indemnity Agreement will be secured with
a letter of credit in favor of the Indemnitee in an amount of not
less than $1,000,000. BellSouth has entered into Indemnity
Agreements with each of its directors.
The Georgia Code generally empowers a corporation, without
shareholder approval, to indemnify directors against liabilities
in proceedings to which they are named by reason of serving as a
director of the corporation, if such person acted in a manner
believed in good faith to be in or not opposed to the best
interests of the corporation and, in the case of a criminal
proceeding, had no reasonable cause to believe his conduct was
unlawful. Without shareholder approval, indemnification is not
permitted of a director adjudged liable to the corporation in a
proceeding by or in the right of the corporation or a proceeding
in which the director is adjudged liable based on a personal
benefit improperly received, absent judicial determination that,
in view of the circumstances, such person is fairly and
reasonably entitled to indemnification of reasonable expenses
incurred.
The Georgia Code permits indemnification and advancement of
expenses to officers who are not directors, to the extent
consistent with public policy. The Georgia Code provides for
mandatory indemnification of directors and officers who are
successful in defending against any proceeding to which they are
named because of their serving in such capacity.
BellSouth's bylaws also provide that BellSouth shall
indemnify any person made or threatened to be made a party to any
action (including any action by or in the right of BellSouth) by
reason of service as a director or officer of BellSouth (or of
another entity at BellSouth's request), against liabilities and
expenses if he acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of
BellSouth (and with respect to any criminal action, had no
reasonable cause to believe his conduct was unlawful), to the
maximum extent permitted by the Georgia Code.
The general limitations in the Georgia Code as to
indemnification may be superseded to the extent of the limited
liability provisions (with respect to directors) and the
Indemnity Agreements, as authorized by the shareholders and as
described above.
The directors and officers of BellSouth are covered by
liability insurance policies pursuant to which (a) they are
insured against loss arising from certain claims made against
them, jointly or severally, during the policy period for any
actual or alleged breach of duty, neglect, error, misstatement,
misleading statements, omissions or other wrongful act and (b)
BellSouth is entitled to have paid by the insurers, or to have
the insurers reimburse BellSouth for amounts paid by it, in
respect of such claims if BellSouth is required to indemnify
officers and directors for such claims. Insofar as
indemnification for liabilities arising under the Securities Act
of 1933, as amended, (the "Securities Act"), which may be
permitted to directors, officers or persons controlling BellSouth
pursuant to the foregoing provisions, BellSouth has been informed
that in the opinion of the SEC such indemnification is against
public policy as expressed in the Act and is therefore
unenforceable.
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits
2 Agreement and Plan of Reorganization, dated as
of February 11, 1997, by and between BellSouth
and WCA (attached to the Proxy
Statement/Prospectus as Annex I). (The
Registrant agrees to furnish supplementally a
copy of any omitted schedule to the Commission
upon request.)
5 Opinion of Walter H. Alford, Esquire with
respect to legality
8 Opinion of Hunton & Williams with respect to
tax consequences of the Merger
23(a) Consent of Coopers & Lybrand L.L.P.
23(b) Consent of Blackwell, Poole & Company
23(c) Consent of Arthur Andersen LLP
23(d) Consent of Walter H. Alford (included in
Exhibit 5)
23(e) Consent of Hunton & Williams (included in
Exhibit 8)
24 Powers of Attorney
99 Form of Proxy
(b) Financial Statement Schedules -- None
(c) Report, Opinion or Appraisal -- None
Item 22. Undertakings
(a) The undersigned Registrant hereby undertakes as
follows:
1. To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement.
(i) To include any prospectus required by
section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts
or events arising after the effective date of the registration
statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement.
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such
information in the registration statement.
2. That, for the purpose of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
3. To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
4. That prior to any public reoffering of the
securities registered hereunder through the use of a prospectus
which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of
Rule 145(c), the Registrant undertakes that such reoffering
prospectus will contain the information called for by the
applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
5. That every prospectus (i) that is filed
pursuant to the paragraph immediately preceding, or (ii) that
purports to meet the requirements of Section 10(a)(3) of the
Securities Act of 1933 and is used in connection with an offering
of securities subject to Rule 415, will be filed as part of an
amendment to the registration statement and will not be used
until such amendment is effective, and that, for the purposes of
determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
6. Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
(b) The undersigned registrant hereby undertakes to
respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or
13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first-class
mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of
the registration statement through the date of responding to the
request.
(c) The undersigned registrant hereby undertakes to
supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in the
registration statement when it became effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Atlanta and State of Georgia, on the
21st day of April, 1997.
BELLSOUTH CORPORATION
(Registrant)
By: /s/ W. Patrick Shannon
W. Patrick Shannon
Vice President and
Controller
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed by the
following persons in the capacities and on the date indicated.
PRINCIPAL EXECUTIVE OFFICER:
F. Duane Ackerman*
Chief Executive Officer
PRINCIPAL FINANCIAL OFFICER:
Ronald M. Dykes*
Executive Vice President and
Chief Financial Officer
PRINCIPAL ACCOUNTING OFFICER:
W. Patrick Shannon*
Vice President and Comptroller
DIRECTORS:
F. Duane Ackerman* Phyllis Burke Davis*
Reuben V. Andersen* John G. Medlin, Jr.*
James H. Blanchard* Robin B. Smith*
J. Hyatt Brown C. Dixon Spangler, Jr.*
John L. Clendenin* Ronald A. Terry*
Armando M. Codina* Thomas R. Williams*
Marshall M. Criser* J. Tylee Wilson*
*By /s/ W. Patrick Shannon
W. Patrick Shannon
(Individually and as Attorney-in-Fact)
__________________________
*by power of attorney
<PAGE>
EXHIBIT INDEX
Exhibit Description
2 Agreement and Plan of Merger, dated as of February
11, 1997, by and between BellSouth, BellSouth Sub
and WCA (attached to the Proxy Statement/Prospectus
as Annex I)
5 Opinion of Walter H. Alford, Esquire with respect
to legality
8 Opinion of Hunton & Williams with respect to tax
consequences of the Merger
23(a) Consent of Coopers & Lybrand L.L.P.
23(b) Consent of Blackwell, Poole & Company
23(c) Consent of Arthur Andersen LLP
23(d) Consent of Walter H. Alford (included in Exhibit 5)
23(e) Consent of Hunton & Williams (included in Exhibit
8)
24 Powers of Attorney
99 Form of Proxy
Exhibit 5
April 22, 1997
BellSouth Corporation
1155 Peachtree Street, N.E.
Atlanta, Georgia 30309-3610
Dear Sirs:
With reference to the registration statement which BellSouth
Corporation (the "Company") proposes to file with the Securities
and Exchange Commission under the Securities Act of 1933,
as amended, registering 1,200,000 common shares (par value $1.00
per share) of the Company (the "Shares") which are to be issued
in exchange for the outstanding shares of the common stock
of Wireless Cable of Atlanta, Inc. in accordance with the terms
of the Agreement and Plan of Reorganization dated as of February
11, 1997, described therein. I am of the opinion that:
(1) The Company is a corporation duly organized and validly
existing under the laws of the State of Georgia.
(2) All proper corporate proceedings have been taken so that
the Shares have been duly authorized and, when issued in
accordance with such agreement, will be legally issued, fully
paid and nonassessable.
I hereby consent to any references to me contained in, and to
the filing of this opinion with the Securities and Exchange
Commission in connection with, the registration statement
referred to above.
Very truly yours,
Walter H. Alford
Exhibit 8
HUNTON & WILLIAMS
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 233219-4074
Telephone (804) 788-8200
Facsimile (804) 788-8218
April 23, 1997
BellSouth Corporation
1155 Peachtree Street, N.E.
Atlanta, Georgia 30309-3610
Wireless Cable of Atlanta Inc.
3100 Medlock Bridge Road, Suite 340
Norcross, Georgia 30071
Merger of BellSouth WCA Merger Subsidiary, Inc.
With Wireless Cable of Atlanta, Inc.
Certain Federal Income Tax Matters
Gentlemen:
We have acted as counsel to BellSouth Corporation, a
Georgia corporation ("BellSouth"), in connection with the
proposed merger (the "Merger") of BellSouth WCA Merger
Subsidiary, Inc., a Georgia corporation and wholly-owned
subsidiary of BellSouth formed for purposes of effecting the
Merger ("Merger Sub"), into Wireless Cable of Atlanta, Inc., a
Georgia corporation ("WCA"). In the Merger, each outstanding
share of WCA common stock (except treasury shares and any shares
with respect to which appraisal rights are exercised) is to be
converted into 0.49 of a share of BellSouth common stock. The
exchange ratio of 0.49 of a share of BellSouth common stock for
each share of WCA common stock will be adjusted if the market
price of the BellSouth common stock shortly before the Merger is
above $42.625 per share or below $32.625 per share.
WCA currently has two classes of outstanding stock,
Series A Convertible Preferred Stock (the "WCA Preferred Stock")
and WCA common stock. All of the outstanding WCA Preferred Stock
will be converted into WCA common stock immediately before the
Merger. In addition, all outstanding WCA stock options will be
exercised or cancelled before the Merger. Any WCA shareholder
who becomes entitled to a fractional share of BellSouth common
stock as a result of the Merger will receive cash from BellSouth
in lieu of the fractional share. Any WCA shareholder who
exercises and perfects appraisal rights will be entitled to
receive cash from WCA for the fair value of the shareholder's
shares of WCA common stock; a condition to consummation of the
Merger is that appraisal rights not be exercised with respect to
more than 10 percent of the outstanding shares of WCA common
stock. Each outstanding share of Merger Sub stock will be
converted into one share of WCA common stock in the Merger,
thereby making WCA a wholly-owned subsidiary of BellSouth.
You have requested our opinion concerning certain
federal income tax consequences of the Merger. In giving this
opinion, we have reviewed the Agreement and Plan of
Reorganization dated as of February 11, 1997, among WCA, Merger
Sub, and BellSouth; the Form S-4 Registration Statement under the
Securities Act of 1933 relating to the Merger (the "S-4"); and
such other documents as we have considered necessary. In
addition, we have assumed the following:
1. The fair market value of the BellSouth common
stock (including any fractional share interest) received by a WCA
shareholder in exchange for WCA common stock will be
approximately equal to the fair market value of the WCA common
stock surrendered in the exchange.
2. None of the compensation received by any
shareholder-employee of WCA will be separate consideration for,
or allocable to, any shares of WCA common stock; none of the
shares of BellSouth common stock received by any shareholder-
employee in the Merger will be separate consideration for, or
allocable to, any employment agreement; and the compensation paid
to any shareholder-employee will be for services actually
rendered and will be commensurate with amounts paid to third
parties bargaining at arm's length for similar services.
3. The payment of cash in lieu of fractional shares
of BellSouth common stock is solely for the purpose of avoiding
the expense and inconvenience to BellSouth of issuing fractional
shares and does not represent separately bargained-for
consideration. The total cash consideration that will be paid in
the Merger to WCA shareholders in lieu of fractional shares of
BellSouth common stock will not exceed one percent of the total
consideration that will be issued in the Merger to the WCA
shareholders in exchange for their WCA common stock.
4. No share of WCA common stock has been or will be
redeemed in anticipation of the Merger, and WCA has not made and
will not make any extraordinary distribution with respect to its
stock in anticipation of the Merger.
5. BellSouth has no plan or intention to reacquire
any of its stock issued in the Merger or to make any
extraordinary distribution with respect to such stock.
6. There is no plan or intention by WCA shareholders
to sell, exchange, or otherwise dispose of a number of shares of
BellSouth common stock received in the Merger that would reduce
the WCA shareholders' ownership of BellSouth common stock to a
number of shares having a fair market value, as of the effective
date of the Merger, of less than 50 percent of the fair market
value of all the formerly outstanding WCA common stock as of the
same date. For this purpose, shares of WCA common stock
exchanged for cash in lieu of fractional shares of BellSouth
common stock and any shares for which appraisal rights are
exercised are treated as outstanding WCA common stock on the
effective date of the Merger. Moreover, shares of WCA common
stock and shares of BellSouth common stock held by WCA
shareholders and otherwise sold, redeemed, or disposed of before
or after the Merger are considered in making the above
determination.
7. Following the Merger, WCA will hold (i) at least
90 percent of the fair market value of the net assets and at
least 70 percent of the fair market value of the gross assets
held by WCA immediately before the Merger, and (ii) at least 90
percent of the fair market value of the net assets and at least
70 percent of the fair market value of the gross assets held by
Merger Sub immediately before the Merger. For this purpose,
amounts paid by WCA for its expenses related to the Merger, any
amounts paid to dissenting shareholders, and any redemptions and
distributions (except for regular, normal dividends) made by WCA
in connection with the Merger will be included as assets of WCA
held immediately before the Merger, but any assets transferred to
Merger Sub by BellSouth in connection with the Merger are not
taken into account.
8. On the effective date of the Merger, the fair
market value of WCA's assets will exceed the sum of its
liabilities plus the amount of liabilities, if any, to which the
assets are subject.
9. Following the Merger, WCA will continue its
historic business or use a significant portion of its historic
business assets in a business.
10. The liabilities of Merger Sub, if any, that will
be assumed by WCA and the liabilities, if any, to which the
transferred assets of Merger Sub are subject were, or will have
been, incurred by Merger Sub in the ordinary course of business.
11. BellSouth owns, and immediately before the Merger
will own, all the outstanding stock of Merger Sub; Merger Sub
holds, and will hold, only those assets necessary for it to
effect the Merger.
12. There is no intercorporate indebtedness existing
between BellSouth or Merger Sub and WCA that was issued or
acquired or will be settled at a discount, and immediately after
the Merger, neither BellSouth nor any subsidiary of BellSouth
will hold any indebtedness of WCA or any subsidiary of WCA that
was acquired at a discount.
13. Following the Merger, WCA will not issue
additional shares of its stock that would result in BellSouth's
owning less than 80 percent of the total combined voting power of
all classes of WCA's voting stock or less than 80 percent of each
class of WCA's nonvoting stock.
14. BellSouth has no plan or intention to liquidate
WCA, to merge WCA into another corporation, to sell or otherwise
dispose of any stock of WCA, or (except for dispositions made in
the ordinary course of business) to cause WCA to sell or
otherwise dispose of any of its assets.
15. WCA has no plan or intention to sell or otherwise
dispose of any assets, except for dispositions made in the
ordinary course of business.
16. BellSouth, Merger Sub, WCA, and the shareholders
of WCA will pay their respective expenses, if any, incurred in
connection with the Merger, except that each of BellSouth and WCA
will pay one half of certain filing fees.
17. For each of BellSouth, Merger Sub, and WCA, not
more than 25 percent of the fair market value of its adjusted
total assets consists of stock and securities of any one issuer,
and not more than 50 percent of the fair market value of its
adjusted total assets consists of stock and securities of five or
fewer issuers. For purposes of the preceding sentence, (a) a
corporation's adjusted total assets exclude cash, cash items
(including accounts receivable and cash equivalents), and United
States government securities, (b) a corporation's adjusted total
assets exclude stock and securities issued by any subsidiary at
least 50 percent of the voting power or 50 percent of the total
fair market value of the stock of which is owned by the
corporation, but the corporation is treated as owning directly a
ratable share (based on the percentage of the fair market value
of the subsidiary's stock owned by the corporation) of the assets
owned by any such subsidiary, and (c) all corporations that are
members of the same "controlled group" within the meaning of
section 1563(a) of the Internal Revenue Code (the "Code") are
treated as a single issuer.
18. At all times during the five-year period ending on
the effective date of the Merger, the fair market value of all of
WCA's United States real property interests was and will have
been less than 50 percent of the total fair market value of (a)
its United States real property interests, (b) its interests in
real property located outside the United States, and (c) its
other assets used or held for use in a trade or business. For
purposes of the preceding sentence, (x) United States real
property interests include all interests (other than an interest
solely as a creditor) in real property and associated personal
property (such as movable walls and furnishings) located in the
United States or the Virgin Islands and interests in any
corporation (other than a controlled corporation) owning any
United States real property interest, (y) WCA is treated as
owning its proportionate share (based on the relative fair market
value of its ownership interest to all ownership interests) of
the assets owned by any controlled corporation or any
partnership, trust, or estate in which WCA is a partner or
beneficiary, and (z) any such entity in turn is treated as owning
its proportionate share of the assets owned by any controlled
corporation or any partnership, trust, or estate in which the
entity is a partner or beneficiary. As used in this paragraph,
"controlled corporation" means any corporation at least 50
percent of the fair market value of the stock of which is owned
by WCA, in the case of a first-tier subsidiary of WCA, or by a
controlled corporation, in the case of a lower-tier subsidiary.
19. Any shares of BellSouth common stock received in
exchange for shares of WCA common stock that (a) were acquired in
connection with the performance of services, including stock
acquired through the exercise of an option or warrant acquired in
connection with the performance of services, and (b) are subject
to a substantial risk of forfeiture within the meaning of section
83(c) of the Code will be subject to substantially the same risk
of forfeiture.
20. No outstanding WCA common stock acquired in
connection with the performance of services was or will have been
acquired within six months before the effective date of the
Merger by any person subject to section 16(b) of the Securities
Exchange Act of 1934 other than pursuant to an option granted
more than six months before the effective date of the Merger.
21. Neither BellSouth nor any subsidiary of BellSouth
owns any shares of WCA stock, and neither has acquired or will
acquire any shares of WCA stock in anticipation of the Merger.
On the basis of the foregoing, and assuming that (a)
with respect to shareholders that are nonresident aliens or
foreign entities, WCA will comply with all applicable statement
and notification requirements of Treasury Regulation Section
1.897-2(g) & (h), and (b) the Merger will be consummated in
accordance with the Agreement and Plan of Reorganization, we
are of the opinion that (under existing law) for federal income
tax purposes:
1. The Merger will be a "reorganization" within the
meaning of section 368(a)(1)(A) by reason of section 368(a)(2)(E)
of the Code, and BellSouth, Merger Sub, and WCA each will be a
"party to a reorganization" within the meaning of section 368(b)
of the Code.
2. Neither BellSouth nor Merger Sub will recognize
gain or loss on the issuance of BellSouth common stock, the
acquisition of WCA common stock, or the transfer of Merger Sub's
assets to WCA in the Merger
3. WCA will not recognize gain or loss (a) on the
acquisition of the assets of Merger Sub in the Merger or (b) on
the constructive distribution, if any, of BellSouth common stock
to WCA shareholders.
4. A WCA shareholder will not recognize gain or loss
on the exchange of shares of WCA common stock for shares of
BellSouth common stock (including any fractional share interest)
in the Merger. This paragraph, as well as the following para-
graphs 5-7, does not apply to the deemed exercise of WCA stock
options and consequential receipt of shares of WCA common stock.
5. The aggregate basis of shares of BellSouth common
stock (including any fractional share interest) received by a WCA
shareholder in the Merger will be the same as the aggregate basis
of the shares of WCA common stock exchanged therefor.
6. The holding period for the shares of BellSouth
common stock (including any fractional share interest) received
by a WCA shareholder in the Merger will include the holding
period for the shares of WCA common stock exchanged therefor, if
such shares of WCA common stock are held as a capital asset on
the effective date of the Merger.
7. Cash received by a WCA shareholder in lieu of a
fractional share of BellSouth common stock will be treated as
having been received as full payment in exchange for such
fractional share pursuant to section 302(a) of the Code.
We are also of the opinion that the federal income tax
consequences of the Merger are fairly summarized in the S-4 under
the headings "Summary -- Important Federal Income Tax
Consequences" and "The Merger -- Certain Federal Income Tax
Consequences." We consent to the use of this opinion as an
exhibit to the S-4 and to the reference to this firm under such
headings. In giving this consent, we do not admit that we are
within the category of persons whose consent is required by
section 7 of the Securities Act of 1933 or the rules and
regulations promulgated thereunder by the Securities and Exchange
Commission.
Very truly yours,
HUNTON & WILLIAMS
Exhibit 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this registration
statement on Form S-4 of BellSouth Corporation of our report,
which includes an explanatory paragraph related to a change in an
accounting method, dated February 3, 1997, on our audits of the
financial statements of BellSouth Corporation as of December 31,
1996 and 1995, and for each of the three years in the period
ended December 31, 1996. We also consent to the reference to our
firm under the caption "Experts."
Coopers & Lybrand L.L.P.
Atlanta, Georgia
April 23, 1997
Exhibit 23(b)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
inclusion in this Registration Statement on Form S-4 of BellSouth
Corporation of our report dated January 31, 1996 related to the
consolidated financial statements of Wireless Cable of Atlanta,
Inc. and Subsidiary as of December 31, 1995 and for the year then
ended and to all references to our Firm included in this Form
S-4.
April 23, 1997 Blackwell, Poole & Company
Certified Public Accountants
By: Gerald L. Whalen
Title: Partner
Exhibit 23(c)
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the
inclusion in this Registration Statement on Form S-4 of BellSouth
Corporation of our report dated February 14, 1997 related to the
consolidated financial statements of Wireless Cable of Atlanta,
Inc. and Subsidiary as of December 31, 1996 and for the year then
ended and to all references to our Firm included in this
Form S-4.
Atlanta, Georgia Arthur Andersen LLP
April 21, 1997
Exhibit 24
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the
"Company"), proposes to file with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, a
registration statement (the "Registration Statement") to provide
for registration of common stock of the Company in connection
with the acquisition of Wireless Cable of Atlanta, Inc. (the
"Transaction").
NOW THEREFORE, each of the undersigned hereby constitutes and
appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon
and Arlen G. Yokley, and each of them, as attorneys for him in
his name, place and stead in each of his respective capacities in
the Company, to execute and file the Registration Statement,
including the related prospectus, and thereafter to execute and
file such additional or amended registration statement or
statements and/or a post-effective amendment or amendments and an
amended prospectus or prospectuses or amendments or supplements
thereto, to register or deregister securities, to withdraw the
registration statements or otherwise, hereby giving and granting
to said attorneys full power and authority (including
substitution and revocation) to do and perform all and every act
and thing whatsoever requisite and necessary to be done in and
about the premises in connection with the transaction as fully,
to all intents and purposes, as he might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his
hand on the date indicated.
/s/ F. Duane Ackerman April 18, 1997
F. Duane Ackerman Date
President and Chief Executive
Officer
Director
(Principal Executive Officer)
/s/ Ronald M. Dykes April 18, 1997
Ronald M. Dykes Date
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
/s/ W. Patrick Shannon April 18, 1997
W. Patrick Shannon Date
Vice President and Controller
(Principal Accounting Officer)
<PAGE>
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the
"Company"), proposes to file with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, a
registration statement (the "Registration Statement") to provide
for registration of common stock of the Company in connection
with the acquisition of Wireless Cable of Atlanta, Inc. (the
"Transaction").
NOW THEREFORE, each of the undersigned hereby constitutes and
appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon
and Arlen G. Yokley, and each of them, as attorneys for him in
his name, place and stead in each of his respective capacities in
the Company, to execute and file the Registration Statement,
including the related prospectus, and thereafter to execute and
file such additional or amended registration statement or
statements and/or a post-effective amendment or amendments and an
amended prospectus or prospectuses or amendments or supplements
thereto, to register or deregister securities, to withdraw the
registration statements or otherwise, hereby giving and granting
to said attorneys full power and authority (including
substitution and revocation) to do and perform all and every act
and thing whatsoever requisite and necessary to be done in and
about the premises in connection with the transaction as fully,
to all intents and purposes, as he might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his
hand on the date indicated.
/s/ Reuben V. Anderson April 18, 1997
Reuben V. Anderson Date
<PAGE>
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the
"Company"), proposes to file with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, a
registration statement (the "Registration Statement") to provide
for registration of common stock of the Company in connection
with the acquisition of Wireless Cable of Atlanta, Inc. (the
"Transaction").
NOW THEREFORE, each of the undersigned hereby constitutes and
appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon
and Arlen G. Yokley, and each of them, as attorneys for him in
his name, place and stead in each of his respective capacities in
the Company, to execute and file the Registration Statement,
including the related prospectus, and thereafter to execute and
file such additional or amended registration statement or
statements and/or a post-effective amendment or amendments and an
amended prospectus or prospectuses or amendments or supplements
thereto, to register or deregister securities, to withdraw the
registration statements or otherwise, hereby giving and granting
to said attorneys full power and authority (including
substitution and revocation) to do and perform all and every act
and thing whatsoever requisite and necessary to be done in and
about the premises in connection with the transaction as fully,
to all intents and purposes, as he might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his
hand on the date indicated.
/s/ James H. Blanchard April 21, 1997
James H. Blanchard Date
<PAGE>
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the
"Company"), proposes to file with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, a
registration statement (the "Registration Statement") to provide
for registration of common stock of the Company in connection
with the acquisition of Wireless Cable of Atlanta, Inc. (the
"Transaction").
NOW THEREFORE, each of the undersigned hereby constitutes and
appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon
and Arlen G. Yokley, and each of them, as attorneys for him in
his name, place and stead in each of his respective capacities in
the Company, to execute and file the Registration Statement,
including the related prospectus, and thereafter to execute and
file such additional or amended registration statement or
statements and/or a post-effective amendment or amendments and an
amended prospectus or prospectuses or amendments or supplements
thereto, to register or deregister securities, to withdraw the
registration statements or otherwise, hereby giving and granting
to said attorneys full power and authority (including
substitution and revocation) to do and perform all and every act
and thing whatsoever requisite and necessary to be done in and
about the premises in connection with the transaction as fully,
to all intents and purposes, as he might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his
hand on the date indicated.
/s/ John L. Clendenin April 18, 1997
John L. Clendenin Date
<PAGE>
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the
"Company"), proposes to file with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, a
registration statement (the "Registration Statement") to provide
for registration of common stock of the Company in connection
with the acquisition of Wireless Cable of Atlanta, Inc. (the
"Transaction").
NOW THEREFORE, each of the undersigned hereby constitutes and
appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon
and Arlen G. Yokley, and each of them, as attorneys for him in
his name, place and stead in each of his respective capacities in
the Company, to execute and file the Registration Statement,
including the related prospectus, and thereafter to execute and
file such additional or amended registration statement or
statements and/or a post-effective amendment or amendments and an
amended prospectus or prospectuses or amendments or supplements
thereto, to register or deregister securities, to withdraw the
registration statements or otherwise, hereby giving and granting
to said attorneys full power and authority (including
substitution and revocation) to do and perform all and every act
and thing whatsoever requisite and necessary to be done in and
about the premises in connection with the transaction as fully,
to all intents and purposes, as he might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his
hand on the date indicated.
/s/ Armando M. Codina April 21, 1997
Armando M. Codina Date
<PAGE>
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the
"Company"), proposes to file with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, a
registration statement (the "Registration Statement") to provide
for registration of common stock of the Company in connection
with the acquisition of Wireless Cable of Atlanta, Inc. (the
"Transaction").
NOW THEREFORE, each of the undersigned hereby constitutes and
appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon
and Arlen G. Yokley, and each of them, as attorneys for him in
his name, place and stead in each of his respective capacities in
the Company, to execute and file the Registration Statement,
including the related prospectus, and thereafter to execute and
file such additional or amended registration statement or
statements and/or a post-effective amendment or amendments and an
amended prospectus or prospectuses or amendments or supplements
thereto, to register or deregister securities, to withdraw the
registration statements or otherwise, hereby giving and granting
to said attorneys full power and authority (including
substitution and revocation) to do and perform all and every act
and thing whatsoever requisite and necessary to be done in and
about the premises in connection with the transaction as fully,
to all intents and purposes, as he might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his
hand on the date indicated.
/s/ Marshall M. Criser April 18, 1997
Marshall M. Criser Date
<PAGE>
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the
"Company"), proposes to file with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, a
registration statement (the "Registration Statement") to provide
for registration of common stock of the Company in connection
with the acquisition of Wireless Cable of Atlanta, Inc. (the
"Transaction").
NOW THEREFORE, each of the undersigned hereby constitutes and
appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon
and Arlen G. Yokley, and each of them, as attorneys for him in
his name, place and stead in each of his respective capacities in
the Company, to execute and file the Registration Statement,
including the related prospectus, and thereafter to execute and
file such additional or amended registration statement or
statements and/or a post-effective amendment or amendments and an
amended prospectus or prospectuses or amendments or supplements
thereto, to register or deregister securities, to withdraw the
registration statements or otherwise, hereby giving and granting
to said attorneys full power and authority (including
substitution and revocation) to do and perform all and every act
and thing whatsoever requisite and necessary to be done in and
about the premises in connection with the transaction as fully,
to all intents and purposes, as he might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his
hand on the date indicated.
/s/ Phyllis Burke Davis April 19, 1997
Phyllis Burke Davis Date
<PAGE>
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the
"Company"), proposes to file with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, a
registration statement (the "Registration Statement") to provide
for registration of common stock of the Company in connection
with the acquisition of Wireless Cable of Atlanta, Inc. (the
"Transaction").
NOW THEREFORE, each of the undersigned hereby constitutes and
appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon
and Arlen G. Yokley, and each of them, as attorneys for him in
his name, place and stead in each of his respective capacities in
the Company, to execute and file the Registration Statement,
including the related prospectus, and thereafter to execute and
file such additional or amended registration statement or
statements and/or a post-effective amendment or amendments and an
amended prospectus or prospectuses or amendments or supplements
thereto, to register or deregister securities, to withdraw the
registration statements or otherwise, hereby giving and granting
to said attorneys full power and authority (including
substitution and revocation) to do and perform all and every act
and thing whatsoever requisite and necessary to be done in and
about the premises in connection with the transaction as fully,
to all intents and purposes, as he might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his
hand on the date indicated.
/s/ John G. Medlin, Jr. April 21, 1997
John G. Medlin, Jr. Date
<PAGE>
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the
"Company"), proposes to file with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, a
registration statement (the "Registration Statement") to provide
for registration of common stock of the Company in connection
with the acquisition of Wireless Cable of Atlanta, Inc. (the
"Transaction").
NOW THEREFORE, each of the undersigned hereby constitutes and
appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon
and Arlen G. Yokley, and each of them, as attorneys for him in
his name, place and stead in each of his respective capacities in
the Company, to execute and file the Registration Statement,
including the related prospectus, and thereafter to execute and
file such additional or amended registration statement or
statements and/or a post-effective amendment or amendments and an
amended prospectus or prospectuses or amendments or supplements
thereto, to register or deregister securities, to withdraw the
registration statements or otherwise, hereby giving and granting
to said attorneys full power and authority (including
substitution and revocation) to do and perform all and every act
and thing whatsoever requisite and necessary to be done in and
about the premises in connection with the transaction as fully,
to all intents and purposes, as he might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his
hand on the date indicated.
/s/ Robin B. Smith April 18, 1997
Robin B. Smith Date
<PAGE>
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the
"Company"), proposes to file with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, a
registration statement (the "Registration Statement") to provide
for registration of common stock of the Company in connection
with the acquisition of Wireless Cable of Atlanta, Inc. (the
"Transaction").
NOW THEREFORE, each of the undersigned hereby constitutes and
appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon
and Arlen G. Yokley, and each of them, as attorneys for him in
his name, place and stead in each of his respective capacities in
the Company, to execute and file the Registration Statement,
including the related prospectus, and thereafter to execute and
file such additional or amended registration statement or
statements and/or a post-effective amendment or amendments and an
amended prospectus or prospectuses or amendments or supplements
thereto, to register or deregister securities, to withdraw the
registration statements or otherwise, hereby giving and granting
to said attorneys full power and authority (including
substitution and revocation) to do and perform all and every act
and thing whatsoever requisite and necessary to be done in and
about the premises in connection with the transaction as fully,
to all intents and purposes, as he might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his
hand on the date indicated.
/s/ C. Dixon Spangler, Jr. April 18, 1997
C. Dixon Spangler, Jr. Date
<PAGE>
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the
"Company"), proposes to file with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, a
registration statement (the "Registration Statement") to provide
for registration of common stock of the Company in connection
with the acquisition of Wireless Cable of Atlanta, Inc. (the
"Transaction").
NOW THEREFORE, each of the undersigned hereby constitutes and
appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon
and Arlen G. Yokley, and each of them, as attorneys for him in
his name, place and stead in each of his respective capacities in
the Company, to execute and file the Registration Statement,
including the related prospectus, and thereafter to execute and
file such additional or amended registration statement or
statements and/or a post-effective amendment or amendments and an
amended prospectus or prospectuses or amendments or supplements
thereto, to register or deregister securities, to withdraw the
registration statements or otherwise, hereby giving and granting
to said attorneys full power and authority (including
substitution and revocation) to do and perform all and every act
and thing whatsoever requisite and necessary to be done in and
about the premises in connection with the transaction as fully,
to all intents and purposes, as he might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his
hand on the date indicated.
/s/ Ronald A. Terry April 21, 1997
Ronald A. Terry Date
<PAGE>
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the
"Company"), proposes to file with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, a
registration statement (the "Registration Statement") to provide
for registration of common stock of the Company in connection
with the acquisition of Wireless Cable of Atlanta, Inc. (the
"Transaction").
NOW THEREFORE, each of the undersigned hereby constitutes and
appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon
and Arlen G. Yokley, and each of them, as attorneys for him in
his name, place and stead in each of his respective capacities in
the Company, to execute and file the Registration Statement,
including the related prospectus, and thereafter to execute and
file such additional or amended registration statement or
statements and/or a post-effective amendment or amendments and an
amended prospectus or prospectuses or amendments or supplements
thereto, to register or deregister securities, to withdraw the
registration statements or otherwise, hereby giving and granting
to said attorneys full power and authority (including
substitution and revocation) to do and perform all and every act
and thing whatsoever requisite and necessary to be done in and
about the premises in connection with the transaction as fully,
to all intents and purposes, as he might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his
hand on the date indicated.
/s/ Thomas R. Williams April 19, 1997
Thomas R. Williams Date
<PAGE>
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, BELLSOUTH CORPORATION, a Georgia corporation (the
"Company"), proposes to file with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, a
registration statement (the "Registration Statement") to provide
for registration of common stock of the Company in connection
with the acquisition of Wireless Cable of Atlanta, Inc. (the
"Transaction").
NOW THEREFORE, each of the undersigned hereby constitutes and
appoints F. Duane Ackerman, Ronald M. Dykes, W. Patrick Shannon
and Arlen G. Yokley, and each of them, as attorneys for him in
his name, place and stead in each of his respective capacities in
the Company, to execute and file the Registration Statement,
including the related prospectus, and thereafter to execute and
file such additional or amended registration statement or
statements and/or a post-effective amendment or amendments and an
amended prospectus or prospectuses or amendments or supplements
thereto, to register or deregister securities, to withdraw the
registration statements or otherwise, hereby giving and granting
to said attorneys full power and authority (including
substitution and revocation) to do and perform all and every act
and thing whatsoever requisite and necessary to be done in and
about the premises in connection with the transaction as fully,
to all intents and purposes, as he might or could do if
personally present at the doing thereof, hereby ratifying and
confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his
hand on the date indicated.
/s/ J. Tylee Wilson April 18, 1997
J. Tylee Wilson Date
Exhibit 99
WIRELESS CABLE OF ATLANTA, INC.
Revocable Proxy
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints the Board of Directors of
Wireless Cable of Atlanta, Inc. ("WCA"), with full power of
substitution, to act as proxies for the undersigned and to vote
all shares of Common Stock of WCA which the undersigned is
entitled to vote at the Special Meeting of Shareholders to be
held on May 27, 1997 at 10:00 a.m., local time, at NationsBank
Plaza, 41st Floor, 600 Peachtree Street, N.E., Atlanta, Georgia,
and at any and all adjournments thereof.
THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED.
This proxy, when properly executed, will be voted as directed
on the reverse side. If no direction is made, this proxy will be
voted FOR each of the proposals listed. If any other business
is properly presented at the Special Meeting, this proxy will be
voted by the proxies in their discretion.
(Continued, and to be marked, signed and dated, on the reverse
side) (Proxy Card, reverse side)
1. The approval and adoption of the Agreement and Plan of
Reorganization dated as of February 11, 1997 (the
"Agreement"), by and between WCA and BellSouth Corporation
("BellSouth"), providing for the merger of WCA with and into
a subsidiary of BellSouth (the "Merger") as more fully
described in the accompanying Proxy Statement/Prospectus
pursuant to which each share of Common Stock of WCA
outstanding as of the effective date of the Merger will be
converted into and become a right to receive the number of
shares of Common Stock of BellSouth (and associated stock
rights) as determined in the manner specified in the
accompanying Proxy Statement/Prospectus and the Agreement.
FOR AGAINST ABSTAIN
___ ___ ___
2. In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the
Meeting or any adjournments or postponements thereof.
The undersigned acknowledges receipt prior to the execution of
this proxy of a Notice of Special Meeting of Shareholders and of
a Proxy Statement/Prospectus dated April 25, 1997.
Please sign exactly as your name appears on
this card. When signing as attorney,
executor, administrator, trustee or guardian,
please give your full title, if shares are
held jointly, each holder may sign, but only
one signature is required.
Dated ____________________________, 1997
____________________________________________
Signature
____________________________________________
