SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
APPLICATION OR DECLARATION
under
The Public Utility Holding Company Act of 1935
THE SOUTHERN DEVELOPMENT AND INVESTMENT GROUP, INC.
64 Perimeter Center East
Atlanta, Georgia 30346
(Name of company or companies filing this statement
and addresses of principal executive offices)
THE SOUTHERN COMPANY
(Name of top registered holding company parent
of each applicant or declarant)
Tommy Chisholm, Secretary
The Southern Company
64 Perimeter Center East
Atlanta, Georgia 30346
(Name and address of agent for service)
The Commission is requested to mail signed copies of all
orders, notices and communications to:
W. L. Westbrook J. Kevin Fletcher
Financial Vice President President
The Southern Company The Southern Development and
64 Perimeter Center East Investment Group, Inc.
Atlanta, Georgia 30346 64 Perimeter Center East
Atlanta, Georgia 30346
John D. McLanahan, Esq.
Troutman Sanders LLP
600 Peachtree Street, N.E.
Suite 5200
Atlanta, Georgia 30308-2216
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INFORMATION REQUIRED
Item 1. Description of Proposed Transaction.
1.1 Background. The Southern Development and Investment
Group, Inc. ("Development") is a wholly-owned non-utility
subsidiary company of The Southern Company ("Southern"), a
registered holding company under the Public Utility Holding
Company Act of 1935, as amended (the "Act"). Southern, through
five operating electric utility subsidiaries, Alabama Power
Company, Georgia Power Company, Gulf Power Company, Mississippi
Power Company, and Savannah Electric and Power Company
(collectively, the "Operating Companies"), provides retail and
wholesale electric service throughout Georgia, most of Alabama,
and parts of Florida and Mississippi.
By order dated January 25, 1995 (Holding Company Act Release
No. 26221) (the "January 1995 Order"), the Commission authorized
Development to engage in, among other activities, the preliminary
investigation and study of new business ventures or investment
opportunities, including business opportunities utilizing new
communications technologies and related facilities ("R&D
Activities"); energy and demand side management services to
customers both within and without the Southern System service
territory ("Energy/DSM Management"); and the development,
construction and operation of a prototype energy management
communications network ("Prototype Network") at various locations
in the Southern System service territory through which a variety
of two-way, or interactive, customer-utility communications based
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services could be provided, including but not limited to
communications in connection with Energy/DSM Management measures
and other utility-related as well as nonutility-related
activities.
Development has entered into a Stock Purchase Agreement
("Purchase Agreement") with ITC Holding Company, Inc. ("ITC"), a
closely-held Delaware corporation, pursuant to which ITC has
agreed to issue and Development has agreed to purchase 250,000
shares of ITC's authorized and unissued shares of common stock,
par value $.01 per share, which, on a fully diluted basis (based
on the number of authorized shares outstanding on September 8,
1995, and reserved for issuance upon exercise of outstanding
stock options), would represent about 3% of the aggregate number
of ITC's issued and outstanding shares of common stock (the
"Shares"). Closing under the Purchase Agreement is anticipated
to occur not later than May 31, 1996. The form of Purchase
Agreement is included herewith as Exhibit B.
Southern will provide approximately $7 million to
Development in order to fund Development's purchase of the Shares
and to pay costs associated with the transaction. Such funds
will be advanced to Development as a cash capital contribution at
or prior to closing under the Purchase Agreement. Southern will
obtain such funds from sales of common stock, as authorized in
Holding Company Act Release Nos. 26347 and 26349, dated August 2
and August 3, 1995, respectively, from borrowings and/or
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commercial paper sales, as authorized in Holding Company Act
Release No. 26346, dated August 1, 1995, and from available cash,
chiefly dividends from subsidiaries.
1.2 Description of ITC and its Operations.
ITC was incorporated under Delaware law in 1994 and has its
principal offices in West Point, Georgia. It is a closely-held
holding company which, through several majority-owned
subsidiaries, is engaged in the business of providing
telecommunications services and related products primarily in the
southeastern U.S. ITC's revenues are derived primarily from
telephone exchange, toll, cellular and teleconferencing services,
and from network access charges. ITC's Telecommunications
Operations Group, which includes its wholly-owned subsidiaries,
Interstate Telephone Co. and Valley Telephone Co., provides local
telephone exchange service in regulated local exchange areas and
non-regulated regional service areas in various communities in
Georgia and Alabama, including Lanett and Auburn, Alabama and
Columbus, Newnan, LaGrange and West Point, Georgia. These
companies also offer a broad range of paging products and
services, customer premises equipment products, and support
services for other providers of telecommunications services. For
the year ended December 31, 1994, the Telecommunications
Operations Group generated revenues of approximately $18.8
million, or about 29% of ITC's consolidated revenues in 1994.
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InterCall, Inc., a wholly-owned subsidiary which commenced
operations in 1991, provides audio conference (multi-party)
calling services primarily for use by businesses for sales
meetings, board meetings, training sessions, investor relations
and other similar multi-party communications. For the year ended
December 31, 1994, InterCall contributed approximately $18.4
million, or about 28%, to ITC's consolidated revenues.
ITC indirectly owns 50.3% of the outstanding common stock of
InterCel, Inc. ("InterCel"), a publicly-held company whose shares
are traded on the NASDAQ. InterCel provides cellular telephone
service in five counties of western Georgia, two counties in
eastern Alabama, and eight counties in Maine. The company is
expanding its presence in the southeastern U.S. through the
acquisition of Powertel PCS Partners, L.P. ("Powertel"), the
owner of licenses to provide personal communications services
("PCS") in contiguous parts of nine southeastern states.1 ITC
is negotiating agreements under which portions of the PCS system
1 Personal communications service, or PCS, is a wireless
two-way service provided on a portion of the radio spectrum
allocated by the Federal Communications Commission in 1993. PCS
differs from traditional cellular telephone service principally
in that PCS systems will operate at a higher frequency band and
employ advanced (i.e., improved) digital technology that will
overcome some of the limitations in current digital cellular
systems. The enhanced services and features that InterCel will
be able to offer over its PCS network include, among others,
increased call security; call screening, routing and forwarding,
caller ID, message waiting and call hold; longer battery life;
single number service (i.e., the ability of subscribers to switch
incoming calls using the same number between the primary landline
and wireless locations); and simultaneous voice and data
communications.
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would be located on existing towers owned by the Operating
Companies and Southern Communications Services, Inc. The current
partners of Powertel include ITC, a subsidiary of ITC, and two
non-affiliates, a wholly-owned subsidiary of SCANA Corp. and
South Atlantic Capital Corp. ITC reported revenues of
approximately $21.8 million from InterCel's operations in 1994,
which represented 33% of ITC's consolidated revenues. Reference
is made to the registration statement on Form S-1 filed August
25, 1995, in File No. 33-96216, which describes InterCel's
proposed acquisition of the shares of Powertel, including those
shares of Powertel now held by ITC. Following the issuance of
the additional common stock of InterCel as a part of a public
offering and in exchange for Powertel's shares, ITC's percentage
interest in InterCel will be reduced to approximately 27.5%.
Another subsidiary, Interstate Fibernet Co. ("IFN"), owns
and operates (alone or in ventures with others) a regional
optical fiber transmission network in Mississippi, Alabama,
Georgia, Louisiana, North Carolina and South Carolina. These
facilities are strategically located, primarily in optical power
ground wire (OPGW) along power company transmission right-of-way.
A portion of this network is being constructed along right-of-way
of certain of the Operating Companies. IFN is a wholesale
transmission carrier (carriers' carrier).
InterServ Services Corporation ("InterServ"), a 79%-owned
subsidiary which was incorporated in 1993, provides outsourced
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customer service and business-to-business telemarketing services
to a variety of businesses, primarily in the southeast. A unit
of InterServ provides customer satisfaction survey information to
certain of the Operating Companies.
In addition to the foregoing, ITC holds minority investments
in a number of other small and start-up companies engaged in,
among other businesses, fiber, wireless cable television, caller
ID equipment marketing, and other telecommunications related
operations.
ITC is authorized under its amended and restated certificate
of incorporation to issue 10,000,000 shares of common stock, all
of one class, having a par value of $.01 per share. ITC's
outstanding shares are currently held directly and beneficially
by Campbell B. Lanier, III, the company's founder, chairman and
chief executive officer, and his wife, children and other family
members (the "Lanier Family Interests"); a partnership including
Mr. Lanier and five unaffiliated companies2 ("ITC Associates");
other members of ITC's senior management; and various non-
management employees of ITC and its subsidiaries. On a fully
2 CT Communications, Inc., North State Telephone Company,
Lexington Telephone Company, National Enterprises, Inc., and MPX
Systems, Inc. (a wholly-owned subsidiary of SCANA Corp.). ITC
Associates is a general partnership under Georgia law. It was
formed solely for the purpose of aggregating the common shares of
ITC owned by these major corporate investors in order to enable
the partners to use the equity method of accounting; that is, so
that each of the partners can report its pro rata share of ITC's
earnings for financial reporting purposes.
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diluted basis, the current breakdown in the beneficial ownership
of ITC's shares is as follows:
Lanier Family Interests 69.0%
ITC Associates 22.6%
Other Senior Management 5.9%
Non-Management Employees/Other 2.5%
Total 100%
ITC's board of directors currently consists of nine members,
five of whom (including Mr. Lanier) are members of the senior
management of ITC and its wholly-owned and majority-owned
subsidiaries. Under ITC's by-laws, the board of directors may
have as many as eleven members. As described below, in
connection with Development's purchase of the Shares, ITC will be
obligated under the terms of the Purchase Agreement to use its
best efforts for a period of three years to cause election of a
nominee of Development as a member of ITC's board of directors.
(See Purchase Agreement, section 9). It is anticipated that Paul J.
DeNicola, an executive vice president and a director of Southern,
will be nominated to serve as a director of ITC. Mr. DeNicola
will not serve as an officer of ITC.
1.3 Terms of the Purchase Agreement.
The purchase price for the Shares is $6,195,000, payable in
cash at closing, provided that closing occurs on or before
January 25, 1996. Thereafter, the purchase price will bear
interest at 8.75% per annum. (section 1.2). The obligations of the
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parties are subject to satisfaction on or before the closing date
of various conditions precedent that are usual and customary for
a transaction of this type, including, in the case of
Development, the receipt of this Commission's order approving the
transactions. (section 7.3).
Under Section 9.1 of the Purchase Agreement, ITC is
obligated to (i) provide financial and other information
concerning ITC's operations on an ongoing basis to Development;
(ii) permit a representative of Development upon reasonable
notice to visit and inspect the properties of ITC, examine ITC's
corporate and financial records, and discuss the affairs,
finances and other matters with ITC's management; (iii) for a
period of three years following closing, use its best efforts to
cause a nominee of Development to be elected to ITC's board of
directors; and (iv) from and after an initial public offering of
ITC's shares, make publicly available information concerning ITC
sufficient to enable Development to dispose of all or a portion
of the Shares pursuant to Rule 144 under the Securities Act of
1933.
Development's obligation to purchase the Shares is further
conditioned upon Development's admission as a partner of ITC
Associates, should Development seek to be admitted. (section 7.5)
Development proposes to contribute the Shares to ITC Associates
in exchange for its partnership interest. As previously
indicated, supra fn. 2, the sole purpose for ITC Associates is to
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enable certain major corporate investors in ITC to aggregate
their shares for financial reporting purposes. ITC Associates
has no other business and has no ability to influence or control
the election of directors or other corporate policies or
decisions of ITC, whether through the exercise of voting powers
over the shares so held or otherwise. Any partner may withdraw
ITC shares contributed to the partnership (and any additional
shares received as a dividend or as a result of a share split or
other distribution) at any time upon 30 days written notice. The
partnership is automatically dissolved if it ceases to hold at
least 20% of the ITC shares.
1.4 Purpose of Investment.
Under the proposed arrangement, Development will have an
opportunity to acquire a small minority interest in ITC, and to
participate in ITC's corporate governance. However, because a
substantial majority of the board of ITC is and will continue to
be dominated by its controlling shareholders, Development's board
representation will not enable it to dominate or dictate the
business affairs of ITC.
As described in Item 1.2, above, various ITC subsidiaries
are engaged in telecommunications and related activities within
the area served by the Operating Companies. One subsidiary
conducts independent telephone company local exchange service in
southwestern Georgia and southeastern Alabama. Another is
developing cable and broad-band communications systems in
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southern Alabama, notably Montgomery. Still another will be
developing wireless PCS service throughout the service territory
of Alabama Power Company and on the periphery of the service
territories of Gulf Power Company and Mississippi Power Company.
Development has been engaged in discussions with ITC for
some time concerning the possibility of conducting joint
development and experimentation with respect to the modernization
of telecommunications in the southeastern U.S. so as to permit,
among other things, the type of utility and utility-related
communications services that Development is authorized to provide
under the January 1995 Order, including but not limited to
Energy/DSM Management services and the build-out of portions of
the Prototype Network. As an outgrowth of these discussions,
Development and ITC concluded that the best and most efficient
way for the parties to cement a strategic alliance and thereafter
jointly develop processes that will utilize the latest in
telecommunications technology changes and provide the foundation
for modern utility-related communications, is for Development to
acquire a small minority interest in ITC and participate in ITC
management's deliberations as it considers the types and kinds of
deployment of wireless and broadband communications systems, as
well as the modernization of a small local exchange telephone
company which serves smaller towns and cities, as well as some
rural areas.
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Development's proposed investment in ITC will provide
Development with an opportunity to have input at the strategic
planning level as a regional telecommunications holding company
formulates its plans for investment in modernization of
communications. Much of that investment will take place in areas
served by the Operating Companies. Although Development's
investment in ITC will not be restricted in any way, it will in
fact be used in furtherance of projects within Georgia, Alabama
and Florida to an overwhelming degree.
Conversely, Development's participation in ITC's management
will provide ITC with the informed insight of Southern as to its
utility-related requirements and needs for the future. Southern
and the Operating Companies will clearly benefit to the extent
that Development's input into ITC's strategic plans results in
new investment in the kinds of telecommunications facilities,
services and features required by the Operating Companies.
Item 2. Fees, Commissions and Expenses.
A statement of the fees, commission or expenses paid or
incurred in connection with the proposed transaction will be
filed by amendment.
Item 3. Applicable Statutory Provisions.
Sections 9(a)(1) and 10 of the Act and Rule 51 thereunder
are applicable to Development's acquisition of the Shares,
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whether directly or indirectly through ITC Associates.
Southern's making of cash capital contributions to Development is
deemed to be excepted from the declaration requirements of Rule
45(a) under Section 12(b) by reason of Rule 45(b)(4).
The proposed transaction is also subject to Rule 54. Under
Rule 54, in determining whether to approve the issue or sale of a
security by a registered holding company for purposes other than
the acquisition of an "exempt wholesale generator" or "foreign
utility company," or other transactions by such registered
holding company or its subsidiaries other than with respect to
"exempt wholesale generators" or "foreign utility companies," the
Commission shall not consider the effect of the capitalization or
earnings of any subsidiary which is an "exempt wholesale
generator" or a "foreign utility company" upon the registered
holding company system if the "safe harbor" conditions of Rule 53
are satisfied.
Southern currently meets all of the "safe harbor" conditions
set forth in Rule 53. Southern's "aggregate investment" in
"exempt wholesale generators" and "foreign utility companies" at
September 30, 1995 was approximately $1.244 billion,3 or
approximately 38.7% of Southern's "consolidated retained
earnings," as defined in Rule 53(a)(1)(ii), as of such date
3 The stated "aggregate investment" assumes completion of
Southern's acquisition of 100% of the common shares of South
Western Electricity, plc, a "foreign utility company" that
provides electric service in parts of southwest England.
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(approximately $3.2 billion). Furthermore, Southern has complied
and will continue to comply with the record keeping requirements
of Rule 53(a)(2) concerning associate "exempt wholesale
generators" and "foreign utility companies." In addition, as
required by Rule 53(a)(3), no more than 2% of the employees of
the Operating Companies will, at any one time, directly or
indirectly render services to "exempt wholesale generators" and
"foreign utility companies." Finally, since none of the
circumstances described in Rule 53(b) exists or, as a result
hereof, will exist, the provisions of Rule 53(a) are not made
inapplicable by Rule 53(b).
Item 4. Regulatory Approval.
The transaction proposed herein is not subject to the
jurisdiction of any State commission or of any federal commission
other than the Securities and Exchange Commission.
Item 5. Procedure.
The applicant requests that the Commission's order be issued
as soon as the rules allow, and that there be no thirty-day
waiting period between the issuance of the Commission's order and
the date on which it is to become effective. The applicant
hereby waives a recommended decision by a hearing officer or
other responsible officer of the Commission and hereby consents
that the Division of Investment Management may assist in the
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preparation of the Commission's decision and/or order in this
matter unless such Division opposes the matters covered hereby.
Item 6. Exhibits and Financial Statements.
(a) Exhibits.
A - None.
B - Form of Stock Purchase Agreement.
C - None.
D - None.
E - None.
F - Opinion of counsel. (To be filed by amendment).
G - Form of Federal Register Notice.
(b) Financial Statements.
None.
Item 7. Information as to Environmental Effects.
(a) In light of the nature of the proposed transactions, as
described in Item 1 hereof, the Commission's action in this
matter will not constitute any major federal action significantly
affecting the quality of the human environment.
(b) No other federal agency has prepared or is preparing an
environmental impact statement with regard to the proposed
transactions.
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SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned company has duly caused this
statement to be signed on its behalf by the undersigned thereunto
duly authorized.
Dated: October 6, 1995
THE SOUTHERN DEVELOPMENT AND INVESTMENT
GROUP, INC.
By: /s/Tommy Chisholm
Tommy Chisholm, Vice President and
Secretary
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Exhibit B
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
ITC HOLDING COMPANY, INC.
AS "SELLER"
AND
THE SOUTHERN DEVELOPMENT
AND INVESTMENT GROUP, INC.
AS "PURCHASER"
September ___, 1995
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), made and
entered into this ____ day of September, 1995, by and between ITC
HOLDING COMPANY, INC., a Delaware corporation ("Seller"), and THE
SOUTHERN DEVELOPMENT AND INVESTMENT GROUP, INC., a Georgia
corporation ("Purchaser");
W I T N E S S E T H:
WHEREAS, Seller desires to issue and sell to Purchaser, and
Purchaser desires to buy from Seller, Two Hundred Fifty Thousand
(250,000) shares (the "Shares") of Seller's common stock, $0.01
par value, on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants and agreements, and upon
the terms and subject to the conditions hereinafter set forth,
the parties hereto, intending to be legally bound, hereby agree
as follows:
ARTICLE I
ISSUANCE AND SALE OF SHARES
1.1 Purchase and Sale of Shares of Seller. On the terms
and subject to the conditions set forth herein, at the Closing
(as hereinafter defined), Purchaser agrees to purchase, accept
and acquire the Shares from Seller, and Seller agrees to issue,
sell, transfer, convey, assign and deliver the Shares to
Purchaser.
1.2 Purchase Price. The purchase price for the Shares (the
"Purchase Price") shall be an amount equal to Six Million One
Hundred Ninety-Five Thousand Dollars ($6,195,000), payable in
cash at the Closing. In the event that, despite Purchaser's
compliance with the provisions of Section 5.1 hereof, Purchaser
has not obtained the approval of the "Commission" (as hereinafter
defined) on or before the end of the 120 day period commencing on
the date hereof, then the Purchase Price shall bear interest at
the rate of 8.75% per annum beginning on the expiration of such
120 day period through the Closing Date.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents, warrants, covenants and agrees
with and to Purchaser as follows:
2.1 Organization. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware and has all requisite power and authority, corporate
or otherwise, to carry on and conduct its business as it is now
being conducted and to own or lease its properties and assets,
and except as set forth in Schedule 2.1, is duly qualified and in
good standing in every state of the United States in which the
nature of its business requires it to be so qualified.
2.2 Subsidiaries. Schedule 2.2 sets forth a true, correct
and complete list of every Person (as hereinafter defined) in
which Seller holds (beneficially or of record) any Material
Interest (as hereinafter defined). There are no outstanding
contractual obligations of Seller to acquire any direct or
indirect Material Interest in any Person or provide any type of
financing or guarantee any obligations in excess of $500,000 of
any Person, including any Person in which Seller holds a Material
Interest. For purposes of this Agreement, the term "Material
Interest" shall mean any equity or other ownership interest that
has a market value (excluding any discounts that may otherwise be
applied by virtue of the limited liquidity or minority position
of such interest) on the date hereof in excess of $1,000,000, and
the term "Person" shall mean any individual, corporation,
partnership, limited liability company, joint venture, business
enterprise, proprietorship, joint stock company, business trust
and any other association or entity.
2.3 Power and Authority. The Board of Directors of Seller
has duly authorized the execution and delivery of this Agreement
and the performance by Seller of its obligations hereunder.
Seller has the right, power and capacity to execute, deliver and
perform this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly
executed and delivered by Seller and constitutes the legal, valid
and binding obligation of Seller, enforceable in accordance with
its terms, except as such enforceability may be limited by
general principles of equity or by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally.
2.4 No Violation. The execution, delivery and performance
by Seller of this Agreement and the consummation of the
transactions contemplated hereby will not, with or without the
giving of notice or the lapse of time, or both, (a) violate any
provision of law, statute, ordinance, rule or regulation or any
court or administrative order or process to which Seller is
subject, (b) violate any order, judgment or decree applicable to
Seller, or (c) conflict with, or result in a breach of or
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constitute a default under, or cause the termination of, any term
or condition of the Certificate of Incorporation or Bylaws of
Seller or any court order, contract, agreement, commitment, plan,
document or other instrument to which Seller is a party or by
which its properties may be bound.
2.5 Authorized and Outstanding Stock. The authorized
capital stock of Seller consists of 10,000,000 shares of common
stock, all of one class, having a par value of $0.01 par value
per share, of which 7,162,066.85 shares are issued and
outstanding as of September 8, 1995. Seller has reserved
1,250,000 shares of its Common Stock for issuance upon exercise
of stock options. All of such issued and outstanding shares of
capital stock are validly issued, fully paid and nonassessable,
free of all preemptive or similar rights. Except as set forth on
Schedule 2.5, Seller does not have outstanding, and is not bound
by, any subscriptions, options, warrants, calls, commitments or
agreements requiring Seller to issue, or entitling any person or
entity to acquire any, additional shares of capital stock or any
other equity security, including any right of conversion or
exchange under any outstanding security or other instrument, and
Seller is not obligated to issue any shares of its capital stock
for any purpose or to purchase, redeem or otherwise acquire any
shares of its capital stock. Except as set forth on Schedule
2.5, no shareholder of Seller is entitled to any preemptive
rights, rights of first refusal or similar rights. Seller will
not, as of the Closing Date, be under any obligation to register
any of its outstanding securities under the Federal Act (as
hereinafter defined).
2.6 Ownership of the Shares. Upon consummation of the
Closing, the Shares to be issued to Purchaser shall be duly
authorized, validly issued, fully paid and non-assessable, and
Seller shall transfer the Shares to Purchaser free and clear of
any liens, restrictions, claims, equities, options, charges,
rights of first refusal, encumbrances, preemptive or similar
rights, or other restrictions whatsoever.
2.7 Financial Statements; Materials. Schedule 2.7 sets
forth (a) audited consolidated balance sheets of Seller and its
subsidiaries as of December 31, 1994, December 31, 1993 and
December 31, 1992 and the related consolidated statements of
income, stockholders' investment and cash flows for the years
then ended (the "Financial Statements"); and (b) the unaudited
consolidated balance sheet of Seller and its subsidiaries as of
June 30, 1995 and the related, unaudited consolidated statements
of income, stockholders' investment and cash flow for the six
month period then ended (the "Interim Financial Statements").
The Financial Statements have been prepared from the books and
records of Seller in accordance with generally accepted
accounting principles ("GAAP"), consistently applied. The
Financial Statements and the Interim Financial Statements fairly
present the financial position of Seller and its subsidiaries as
of the periods indicated and the results of their operations and
cash flows for the respective periods set forth herein. In
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addition, Seller has prepared and delivered to Purchaser certain
materials contained in a brochure entitled "Southern Company/ITC
Meeting, June 27, 1995" (the "Materials"). The Materials were
prepared in good faith on estimates, information and assumptions
which are reasonable and fair in light of current conditions,
except as set forth on Schedule 2.7 hereunder.
2.8 No Undisclosed Liabilities. Except as set forth on
Schedule 2.8 hereto, Seller does not have any liabilities or
obligations of any nature except as reflected or set forth on the
Financial Statements or the Interim Financial Statements, other
than liabilities or obligations arising in the ordinary course of
business since June 30, 1995. Except as set forth on Schedule
2.8 hereto, Seller knows of no reasonable basis for the assertion
against Seller of any liability or obligation material to the
business or financial condition of Seller not fully reserved
against or reflected in the Financial Statements, other than
liabilities and obligations arising in the ordinary course of
business since June 30, 1995.
2.9 Compliance with Laws. Except as set forth on Schedule
2.9, Seller is in compliance with all federal and state laws and
regulations applicable to Seller (including, without limitation,
those relating to occupational safety), except where the failure
to be so in compliance would not have a material adverse effect
on the business or financial condition of Seller.
2.10 Compliance with FCC Requirements. Seller, its physical
facilities, electrical and mechanical systems and transmitting
equipment are being and have been operated in all material
respects in accordance with the specifications of the applicable
Licenses (as hereinafter defined) and with each document
submitted in support of such Licenses, and Seller is in full
compliance in all material respects with all requirements,
policies, rules and regulations of the FCC (as hereinafter
defined), except in each case where the failure to be so in
compliance would not have a material adverse effect on the
business or financial condition of Seller. There is not
currently pending or, to the knowledge of Seller, threatened, any
proceeding, complaint or investigation before the FCC relating to
Seller. For purposes of this Agreement, "FCC" shall mean the
Federal Communications Commission and "Licenses" shall mean those
permits, licenses, franchises and other authorizations necessary
for Seller to conduct its business as it is presently being
conducted.
2.11 Environmental Matters.
(a) Except as set forth on Schedule 2.11(a) hereto,
Seller has obtained all Licenses which are required with
respect to the operation of its business under federal,
state, local and foreign laws relating to pollution or
protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals or industrial, toxic or
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hazardous substances or wastes into the environment
(including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata) or
otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport
or handling of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes (the
"Environmental Laws").
(b) Except as set forth on Schedule 2.11(b), Seller is
in compliance in all material respects with all terms and
conditions of the required Licenses and is also in
compliance in all material respects with all other
limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and
timetables contained in the Environmental Laws or contained
in any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered,
promulgated or approved thereunder.
(c) Except as set forth on Schedule 2.11(c), there is
no civil, criminal or administrative action, suit, demand,
claim, hearing, notice of violation, investigation,
proceeding, notice or demand letter pending or, to the
knowledge of Seller, threatened against Seller relating in
any way to the Environmental Laws or any regulation, code,
plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder.
(d) Except as set forth on Schedule 2.11(d), there are
no past or present (or, to the knowledge of Seller, future)
events, conditions, circumstances, activities, practices,
incidents, actions or plans which are reasonably likely to
interfere with or prevent Seller's compliance or continued
compliance with the Environmental Laws or with any
regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or
approved thereunder, or which are reasonably likely to give
rise to any common law or legal liability of Seller under
Environmental Laws, including, without limitation, liability
under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 or similar state or local laws, or
otherwise form the basis of any claim, action, demand, suit,
proceeding, hearing, notice of violation, study or
investigation, based on or related to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release
or threatened release into the environment, by Seller of any
pollutant, contaminant, chemical or industrial, toxic or
hazardous substance or waste.
(e) The operation of Seller's business does not exceed
the permissible levels of exposure to RF radiation specified
in the FCC's current or, to the knowledge of Seller,
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proposed rules, regulations and policies concerning RF
radiation.
2.12 Property. Seller has good, valid, and marketable title
to all of its properties and assets, real, personal and mixed,
tangible and intangible, which individually or in the aggregate
have a market value in excess of $1,000,000.
2.13 Intangible Assets. Seller has good and marketable
title to, or holds adequate licenses or otherwise possesses all
such rights as are necessary to use all trademarks, service
marks, trade names, copyrights and patents and applications
therefor, used or proposed to be used, in or necessary for the
conduct of its business as now conducted or proposed to be
conducted (the "Intangible Assets"). No proceedings have been
instituted, are pending, or to the knowledge of Seller, are
threatened that (i) challenge the validity of the ownership or
use by Seller of the Intangible Assets, or (ii) allege that
Seller has misused the trade secrets or other industrial or
intellectual property rights of others or that the inventions,
patents, patent applications, trademarks, service marks,
trademark or service mark applications, trademark or service mark
registrations, trade names or copyrights and related rights, as
used in Seller's business, infringe upon or otherwise violate the
rights of others.
2.14 Litigation. Except as set forth on Schedule 2.14
hereto, there are no actions, suits or administrative or
arbitration or other proceedings pending or, to the knowledge of
Seller, threatened, against Seller or any of the Subsidiaries.
2.15 Employee Arrangements. Seller shall provide to
Purchaser, upon written request by Purchaser prior to the
Closing, true, correct and complete copies of all written
pension, retirement, profit sharing, deferred compensation, stock
option, employee stock ownership, severance pay, vacation, bonus
or other incentive plan, any other written or unwritten employee
program, arrangement or agreement, whether arrived at through
collective bargaining or otherwise, any medical, vision, dental
or other health plan, any life insurance plans or any other
employee benefit plan or fringe benefit plan, including, without
limitation, any "employee benefit plan," as that term is defined
in Section 3(3) of the Employee Retirement Income Security Act of
1974 as amended ("ERISA"), currently maintained by, sponsored in
whole or in part by, or contributed to by Seller or any
subsidiary or affiliate thereof for the benefit of employees,
retirees, dependents, spouses, directors, independent contractors
or other beneficiaries with respect to Seller and under which
employees, retirees, dependents, spouses, directors, independent
contractors or other beneficiaries with respect to Seller are
eligible to participate (collectively, the "Benefit Plans").
Except as set forth on Schedule 2.15, Seller has no unfunded
liability with respect to any Benefit Plans.
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2.16 Contracts and Commitments; Insurance.
(a) Schedule 2.16 sets forth a true and complete list
of all contracts to which Seller is a party that (i)
continue for a period of more than one year from the date
hereof and cannot be terminated on one month's or less
notice, without penalty, or (ii) require payments from
Seller after the date hereof, in the aggregate, in excess of
$500,000.00. To the knowledge of Seller, Seller is not in
default (and no condition or state of facts exists which,
with notice or lapse of time or both, would constitute such
a default) under any contract required to be listed on
Schedule 2.16.
(b) Seller currently has in effect policies of
insurance adequately insuring Seller, its business,
properties and assets. Such levels of insurance are
consistent with levels customarily carried by similarly
situated companies.
2.17 Required Consents and Approvals. Except for the
consent of Seller's Board of Directors, no consent or approval is
required by virtue of Seller's execution hereof or the
consummation by Seller of any of the transactions contemplated
herein.
2.18 Absence of Material Changes. Except as set forth on
Schedule 2.18 and as
otherwise contemplated by this Agreement or with the prior
approval of Purchaser and since December 31, 1994, neither Seller
nor, with respect to items described in paragraphs (a), (b) and
(e) below, any Subsidiary, has:
(a) Suffered any material adverse change in its
financial condition, business or operations or any material
damage, destruction or loss adversely affecting its
business;
(b) Disposed of or encumbered or agreed to dispose of
or to encumber, or pledged or granted a security interest in
or agreed to pledge or grant an interest in, any portion of
its business that is material to the operation of its
business or any increase or agreement to increase any of its
indebtedness, except in the ordinary course of business;
(c) Declared, set aside or paid any dividend or other
distribution in respect of its capital stock or made any
direct or indirect redemption, purchase or other acquisition
of any such stock;
(d) Issued or sold or agreed to issue or sell any of
its stock, bonds, notes or other corporate securities at a
per-share purchase price less than the Purchase Price being
paid by Purchaser hereunder (assuming conversion of any
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convertible securities that may have been issued into
equivalent securities with the Shares);
(e) Granted any options, warrants or other rights
calling for the issuance of stock or other corporate
securities except pursuant to bona-fide employee or director
stock options and restricted stock;
(f) Negotiated or entered into any merger or
consolidation involving it or any agreement to merge or
consolidate with any other entity or acquire or agree to
acquire any stock, business, property or assets of any other
person, firm, association, corporation or other business
organization providing for a purchase price in excess of
$1,000,000; or
(g) Except as specifically stated in the Agreement,
made or entered into any agreement or commitment by Seller
to do or to take any of the actions referred to in
paragraphs (a) through (f) of this Section 2.18 or any
Subsidiary to do or to take any of the actions referred to
in paragraphs (a) and (b) of this Section 2.18.
2.19 Taxes.
(a) For purposes of this Agreement, "Tax" or "Taxes"
shall mean all taxes, assessments, charges, duties, fees,
levies or other governmental charges (including interest,
penalties or additions associated therewith) including,
without limitation, federal, state, city, county, foreign or
other income, franchise, capital stock, real property,
personal property, tangible, withholding, FICA, unemployment
compensation, disability, transfer, sales, use, excise and
all other taxes of any kind for which Seller may have any
liability imposed by the United States or any state, county,
city, country or foreign government or subdivision or agency
thereof, whether disputed or not.
(b) Except as otherwise disclosed in Schedule 2.19
hereof:
(i) All returns, including estimated returns
and reports of every kind with respect to Taxes, which
are due to have been filed in accordance with any
applicable law, have been duly filed. All Taxes,
deposits or other payments due for the periods covered
by such returns and reports have been paid and
satisfied in full, except for Taxes for which proper
accruals have been made on the books of Seller as of
the Closing Date.
(ii) There are not now any extensions of time
in effect with respects to the dates on which any
returns or reports of Taxes were or are due to be
filed. All deficiencies asserted as a result of any
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examination of any return or report of Taxes heretofore
filed by Seller have been paid, accrued on the books of
Seller, or finally settled and no issue has been raised
in any such examination which, by application of the
same or similar principles reasonably could be expected
to result in a proposed deficiency for any other period
not so examined. Seller has received no written notice
of any claims or proposals for deficiencies for any
Taxes, or of any audit or investigation of any return
or report of Taxes and no such claims, proposals,
audits or investigations are currently threatened. No
returns or reports of Taxes are being examined by
relevant tax authorities.
(iii) There are no outstanding waivers or
agreements by Seller for the extension of time for the
assessment of any Taxes or deficiency thereof, nor are
there any requests for rulings, outstanding subpoenas
or requests for information, notice of proposed
reassessment of any property owned or leased by Seller
or any other matter pending between Seller and any
taxing authority. All returns or reports of Taxes have
either been examined by all relevant tax authorities or
the taxable years therefor have been closed by
operation of law. There are no liens for Taxes upon
any property or assets of Seller except liens for
current Taxes not yet due.
(c) Seller shall make available, upon reasonable
request, to Purchaser copies of all returns of Taxes filed
by or on behalf of Seller.
2.20 Transactions with Related Parties. Except as disclosed
on Schedule 2.20, Seller is not a party to any agreement with any
of Seller's directors, officers or shareholders or any affiliate
of any of the foregoing calling for payment by Seller of greater
than $500,000 under which it (a) leases any real or personal
property (either to or from such person), (b) has incurred any
debt for borrowed money or under which it has lent money (other
than routine travel advances), (c) licenses technology (either to
or from such person), (d) is obligated to purchase any tangible
or intangible asset from or sell such asset to such person, or
(e) purchases products or services from such person. Except as
set forth on Schedule 2.20, there exist no agreements among
shareholders of Seller to act in concert with respect to their
voting or holding of Seller's securities.
2.21 Private Offering. Since December 31, 1994, neither
Seller nor anyone acting on Seller's behalf has sold or has
offered any of the Shares for sale to, or solicited offers to buy
from, or otherwise approached or negotiated with respect thereto
with, any prospective purchaser of the Shares other than
Purchaser or with the consent and knowledge of the Purchaser.
Neither Seller nor any person acting on Seller's behalf shall
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offer the Shares for issue or sale to, or solicit any offer to
acquire any of the same from, anyone so as to bring the issuance
and sale of such Shares within the provisions of Section 5 of the
Federal Act. Based upon the representations of the Purchaser set
forth in Article III, the offer, issuance and sale of the Shares
are and will be exempt from the registration and prospectus
delivery requirements of the Federal Act, and have been
registered or qualified (or are exempt from registration and
qualification) under the registration, permit or qualification
requirements of all applicable state securities laws.
2.22 Broker's or Finder's Fees. Seller has not authorized
any, person to act as broker, finder or in any other similar
capacity in connection with the transactions contemplated by this
Agreement.
2.23 Disclosure. No representation or warranty of Seller
contained in this Agreement or in the Materials and no statement
contained in any Schedule or any certificate, document or
instrument furnished or to be furnished by Seller or any
Subsidiary pursuant to or in connection with this Agreement
contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact necessary in order
to make the statements herein or therein contained not
misleading.
2.24 Survival. The representations, warranties, covenants
and agreements of Seller contained in this Agreement shall
survive for a period of two (2) years following the Closing,
except for claims raised with respect thereto within such two (2)
year period, which shall survive without limitation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as
follows:
3.1 Organization. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Georgia.
3.2 Power and Authority. Except as set forth in Section
5.1: Purchaser has the right, power and capacity to execute,
deliver and perform this Agreement and to consummate the
transactions contemplated hereby; this Agreement has been duly
and validly executed and delivered by Purchaser and constitutes
the legal, valid and binding obligation of Purchaser, enforceable
in accordance with its terms, except as such enforceability may
be limited by general principles of equity or by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors rights generally; the
execution and delivery of the Agreement by Purchaser, the
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performance by Purchaser of its covenants and agreements
hereunder, and the consummation of the transactions contemplated
hereby have been authorized by all necessary corporate action on
the part of Purchaser; and the execution, delivery and
performance by Purchaser of this Agreement and the consummation
of the transactions contemplated hereby will not, with or without
the giving of notice or the lapse of time, or both, (i) violate
any provision of law, statute, rule or regulation to which
Purchaser is subject, (ii) violate any order, judgment or decree
applicable to Purchaser, or (iii) conflict with, or result in a
breach or default under, or cause the termination of, any term or
condition of any charter or bylaw of Purchaser or any court
order, agreement, document or other instrument to which Purchaser
is a party or by which its properties may be bound.
3.3 Consents. Except for the consent of the Securities and
Exchange Commission (the "Commission") referenced in Section 5.1
and except as set forth on Schedule 3.3, no authorization,
consent, approval, order of or filing with or notice to any
governmental agency, instrumentality or authority is necessary
for the execution and delivery of this Agreement by Purchaser or
the consummation by Purchaser of the transactions contemplated
hereby.
3.4 Broker's or Finder's Fees. Purchaser has not
authorized any person to act as broker, finder or in any other
similar capacity in connection with the transactions contemplated
by this Agreement.
3.5 Purchase for Investment. Purchaser understands that
the Shares to be purchased by it under this Agreement have not
been registered under any state securities laws or under the
Securities Act of 1933, as amended (the "Securities Act"), and
that the Shares may not be offered for sale, sold or otherwise
transferred unless such Shares subsequently are so registered or
qualify for exemption from registration under applicable state
securities laws and the Securities Act. Purchaser is acquiring
the Shares under this Agreement in good faith solely for its own
account, for investment and not with a view toward resale or
other distribution within the meaning of the Securities Act. The
Shares will not be offered for sale, sold or otherwise
transferred by Purchaser without either registration or exemption
from registration under applicable state securities laws and the
Securities Act. Purchaser has such knowledge and experience in
financial and business matters that Purchaser is capable of
evaluating the merits and risks of Purchaser's investment in the
Shares. Purchaser understands and is able to bear any economic
risks associated with such investment (including, without
limitation, the necessity of holding such Shares for an
indefinite period of time, inasmuch as such Shares have not been
registered under the Securities Act).
ARTICLE IV
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COVENANTS OF SELLER
4.1 Obligation to Update Information. At all times
subsequent to the execution hereof and from time to time prior to
the date scheduled for the Closing, Seller shall, and shall have
the obligation to, correct and supplement in writing any
information furnished by it in this Agreement or on any Exhibit
or Schedule to this Agreement that, to the knowledge of Seller,
is incorrect or incomplete, and shall periodically and within a
reasonable period of time furnish such corrected and supplemental
information to Buyer, so that such information shall be correct
and complete at the time such updated information is so provided.
Upon and after receipt of such corrected and supplemental
information, Buyer shall have the right, in its sole discretion,
to determine not to proceed with the consummation of the
transactions provided for in this Agreement; and if it elects not
to so proceed, Buyer shall notify Seller of its election not to
proceed, and thereupon this Agreement shall be deemed cancelled,
and the parties shall thereafter have no obligations to one
another other than as described in Section 8.4(b) herein.
4.2 Access. From the date of this Agreement to the Closing
Date, Seller shall (a) provide Purchaser with such information as
Purchaser may from time to time request with respect to Seller
and the transactions contemplated by this Agreement, (b) provide
Purchaser and its officers, counsel and other authorized
representatives access during regular business hours and upon
notice to the books, records and offices of Seller, as Purchaser
may from time to time request, and (c) permit Purchaser to make
such inspections thereof as Purchaser may request. Any
investigation shall be conducted in such a manner so as not to
interfere unreasonably with the operation of the business of
Seller.
ARTICLE V
COVENANTS OF THE PARTIES
Seller and Purchaser hereby covenant to and agree with one
another as follows:
5.1 Approval of the Commission. It is specifically
understood and agreed by Purchaser and Seller that the Closing
shall be in all respects subject to the receipt of prior consent
from the Commission. Purchaser shall prepare and submit for
filing with the Commission the requisite applications and other
necessary instruments or documents requesting the consent of the
Commission, including, without limitation, a statement on Form U-
1 filed pursuant to the Public Utility Holding Company Act of
1935 and the rules and regulations promulgated pursuant thereto.
After such applications and documents have been submitted for
filing with the Commission, Purchaser and, upon Purchaser's
request and at Purchaser's expense, Seller, shall process such
applications with all reasonable diligence and take all
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reasonable steps necessary to obtain the requisite consent of the
Commission.
5.2 Approvals of Third Parties. Seller and Purchaser will
use all reasonable efforts, and will cooperate with one another,
to secure all necessary consents, approvals, authorizations and
exemptions from governmental agencies and other third parties,
and to obtain the satisfaction of the conditions specified in
Articles VI and VII, as required in order to enable Seller and
Purchaser to effect the transactions contemplated hereby in
accordance with the terms and conditions hereof.
5.3 Confidentiality. Each party shall, and shall use all
reasonable efforts to cause its authorized representatives to,
hold in strict confidence, and not disclose to any person without
the prior written consent of the other party, or use in any
manner except in connection with the transactions contemplated
hereby any information obtained from the other party in
connection with the transactions contemplated hereby. These
confidentiality measures shall not apply to disclosures required
to be made by court order or decree, applicable law, or required
financial statement disclosure of Seller, or to information or
materials ascertainable or obtained from public or published
sources.
5.4 Further Assurances. Subject to the terms and
conditions herein provided, each of Seller and Purchaser agrees
to attempt reasonably and in good faith to take, or cause to be
taken, all actions reasonably within its control and to do, or
cause to be done, all things reasonably within its control that
are necessary, proper or advisable under applicable laws and
regulations to consummate the transactions contemplated by this
Agreement.
ARTICLE VI
CONDITIONS TO SELLER'S OBLIGATIONS
Each of the obligations of Seller to be performed hereunder
shall be subject to the satisfaction (or waiver by Seller) at or
prior to the Closing Date of each of the following conditions:
6.1 Representations and Warranties True at Closing Date.
Purchaser's representations and warranties contained in this
Agreement shall be true in all material respects on and as of the
Closing Date with the same force and effect as though made on and
as of such date; Purchaser shall have complied in all material
respects with the covenants and agreements set forth herein to be
performed by it on or before the Closing Date; and Purchaser
shall have delivered to Seller a certificate dated the Closing
Date and signed by a duly authorized officer of Purchaser to all
such effects, to the best of such officer's knowledge,
information and belief.
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6.2 Purchase Price. Purchaser shall have tendered payment
of the Purchase Price by wire transfer of immediately available
funds to an account designated by Seller.
6.3 Litigation. No suit, investigation, action or other
proceeding shall be threatened or pending against Seller or
Seller before any court or governmental agency which, in the
reasonable opinion of counsel for Seller, could result in the
restraint or prohibition of Seller, or the obtaining of damages
or other relief from Seller, in connection with this Agreement or
the consummation of the transactions contemplated hereby.
6.4 Required Approvals and Consents. All necessary
approvals and consents (including, without limitation, the
consent of the Commission) for the transactions provided for
hereunder shall have been obtained.
ARTICLE VII
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligations of Purchaser to be performed hereunder shall
be subject to the satisfaction (or waiver by Purchaser) on or
before the Closing Date if each of the following conditions:
7.1 Representations and Warranties True at Closing Date.
The representations and warranties of Seller contained in this
Agreement shall be true in all material respects on and as of the
Closing Date with the same force and effect as though made on and
as of such date; Seller shall have complied in all material
respects with the covenants and agreements set forth herein to be
performed by it on or before the Closing Date; and Seller shall
have delivered to Purchaser a certificate dated the Closing Date
signed by a duly authorized officer of Seller and by the Chief
Executive Officer of Seller (with respect to representations
applicable to Seller) to all such effects, to the best of their
knowledge, information and belief.
7.2 Litigation. No suit, investigation, action or other
proceeding shall be overtly threatened or pending against
Purchaser, Seller, or Seller before any court or governmental
agency which, in the reasonable opinion of counsel for Purchaser,
could result in the restraint or prohibition of any such party,
or the obtaining of damages or other relief from any such party,
in connection with this Agreement or the consummation of the
transactions contemplated hereby.
7.3 Required Approvals and Consents. All necessary
approvals and consents (including, without limitation, the
consent of the Commission) for the transactions provided for
hereunder shall have been obtained.
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7.4 Satisfactory Completion of Due Diligence. Purchaser
and its representatives shall have completed their due diligence
review of Seller, and the results of such review, including
confirmation of the financial condition and business prospects of
Seller, shall be satisfactory to Purchaser in its sole
discretion.
7.5 Admission to Partnership. At Purchaser's election,
Purchaser shall be entitled to be admitted to that certain
partnership named "ITC Associates" (the "Partnership") existing
pursuant to that certain General Partnership Agreement dated as
of December 13, 1993, as amended. In the event Purchaser so
elects to be admitted, Purchaser shall be a partner in the
Partnership having rights, privileges and obligations similar to
that afforded to the other partners.
ARTICLE VIII
CLOSING
8.1 Closing. Subject to the satisfaction or waiver of the
conditions set forth herein, the closing of the purchase and sale
of the Shares (the "Closing") shall take place at the offices of
Troutman Sanders LLP, 600 Peachtree Street, N.E., 5200
NationsBank Plaza, Atlanta, Georgia 30308-2216 at 9:00 a.m. upon
the earlier to occur of (a) thirty (30) days following the
receipt of all approvals necessary in order to consummate the
transaction (including, without limitation, the consent of the
Commission), or (b) May 31, 1996 (the "Closing Date").
8.2 Deliveries by Seller. At Closing, Seller shall take
the following actions:
(a) Seller shall deliver to Purchaser certificates
evidencing the Shares, duly executed by the appropriate
officers of the Seller and duly registered in Purchaser's
name;
(b) Seller shall deliver to Purchaser the certificate
described in Section 7.1; and
(c) Seller shall deliver to Purchaser a certificate of
Seller's Secretary or Assistant Secretary as to: the
resolutions adopted by the Board of Directors of Seller
authorizing the transactions contemplated hereby; the
Certificate of Incorporation of Seller, as amended and
restated; and the Bylaws of Seller.
8.3 Deliveries by Purchaser. At Closing, Purchaser shall
take the following actions:
(a) Purchaser shall deliver by wire transfer of
immediately available funds to an account designated by
Seller the Purchase Price;
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(b) Purchaser shall deliver to Seller the certificate
described in Section 6.1;
(c) Purchaser shall deliver to Seller a certificate of
Purchaser's Secretary or Assistant Secretary as to the
resolutions adopted by the Board of Directors of Purchaser
authorizing the transactions contemplated hereby; and
(d) Purchaser shall deliver to Seller resolutions of
its Board of Directors, certified by a Secretary or
Assistant Secretary of Purchaser, authorizing the execution
and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
8.4 Termination Prior to Closing.
(a) Method of Termination. This Agreement may be
terminated at any time prior to Closing as follows:
(i) By the mutual consent of Seller and
Purchaser;
(ii) By Purchaser should Purchaser elect not to
proceed pursuant to Section 4.1;
(iii) By Seller after Closing Date is
scheduled to occur pursuant to Section 8.1, if any of
the conditions set forth on Section 5.1, Section 8.3 or
Article VI hereof, to which the obligations of Seller
are subject, have not been fulfilled or waived, unless
such fulfillment has been made impossible by any act or
failure to act by Seller;
(iv) By Purchaser after Closing Date is scheduled
to occur pursuant to Section 8.1, if any of the
conditions set forth on Section 5.1, 8.2 or Article VII
hereof, to which the obligations of Purchaser are
subject, have not been fulfilled or waived, unless such
fulfillment has been made impossible by any act or
failure to act by Purchaser; or
(v) By operation of law.
(b) Survival of Certain Obligations. Notwithstanding
the termination of this Agreement under Section 8.4(a), the
obligations under Sections 5.3, 8.4(c), 11.6 and 11.10 shall
continue.
(c) Confidential Information. Purchaser acknowledges
that the financial and other information received from
Seller and Seller relating to Seller is confidential and
that disclosure of such information to third parties can
reasonably be expected to cause harm to Seller. Purchaser
agrees that in the event of termination of this Agreement,
it shall return to Seller all original documents previously
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delivered to Purchaser in connection with this Agreement and
all copies thereof, with certification of such action by an
officer of Purchaser, within thirty (30) days after such
termination; provided, however, that nothing herein shall
diminish Purchaser's obligations pursuant to any other
confidentiality agreement between Purchaser and Seller with
respect to the transactions contemplated hereby.
ARTICLE IX
POST-CLOSING COVENANTS OF SELLER
9.1 Covenants. As long as Purchaser shall remain a
stockholder of Seller (or any successor thereto by merger,
consolidation, operation of law or otherwise), Seller covenants
and agrees that the Seller will:
(a) keep books of account and prepare financial
statements and shall cause to be furnished to Purchaser or
its designee such data and information (financial and
otherwise) as Purchaser or its designee, from time to time,
may reasonably request bearing upon or relating to the
financial condition of the Seller and/or the results of the
Seller's operations as of a fiscal quarter, including,
without limitation, the following (all of the foregoing and
following to be kept and prepared in accordance with GAAP
applied on a consistent basis):
(i) As soon as available and in any event within
90 days after the end of each fiscal year of Seller, a
consolidated balance sheet of Seller as at the end of
such year and the related consolidated statements of
income, stockholders' investment and cash flows of
Seller and its subsidiaries for such fiscal year,
setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable
detail and accompanied by a report thereon of Arthur
Andersen & Co. or other independent public accountants
of comparable recognized national standing, which
report shall be unqualified as to scope of audit and
shall state that (1) such financial statements have
been prepared in accordance with GAAP consistently
applied (except for changes in application in which
such accountant concurs), (2) such financial statements
present fairly, in all material respects, the
consolidated financial position of Seller and its
subsidiaries as of such fiscal year end and the results
of their operations and their cash flows for such
fiscal year in conformity with GAAP as at the end of
such fiscal year, and (3) the audit was conducted in
accordance with generally accepted auditing standards;
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(ii) As soon as available and in any event within
45 days after the end of each fiscal quarter of Seller,
a consolidated balance sheet of Seller as at the end of
such quarter and the related consolidated statements of
income, stockholders' investment and cash flows of
Seller and its subsidiaries for such fiscal quarter and
for the portion of Seller's fiscal year ended at the
end of such quarter, setting forth for each quarter
commencing after December 31, 1994 in comparative form
the figures for the corresponding quarter and the
corresponding portion of Seller's previous fiscal year,
all in reasonable detail and all certified by the
president or chief financial officer of Seller to be
complete and to fairly present the consolidated
financial position as at the end of such fiscal
quarter, and the consolidated results of operations and
cash flows for such fiscal quarter and such portion of
Seller's fiscal year, of Seller and its subsidiaries in
accordance with GAAP, consistently applied (subject to
normally recurring, year-end audit adjustments):
(iii) Promptly upon the mailing or filing
thereof, copies of all financial statements, reports
and proxy statements mailed to Seller's shareholders,
and copies of all registration statements, periodic
reports and other documents, if any, filed with the
Commission (or any successor thereto) or any national
securities exchange;
(iv) with reasonable promptness, such other data
and information (financial and otherwise) relating to
the affairs of Seller as Purchaser or its designee may
from time to time reasonably request.
(b) permit any representative designated by the
Purchaser upon reasonable notice and during normal business
hours, to (A) visit and inspect any of the properties of
Seller, (B) examine the corporate and financial records of
Seller and make copies thereof or extracts therefrom, and
(C) discuss the affairs, finances and accounts of Seller
with the directors, officers, key employees and independent
accountants of Seller; provided that such representative
shall, if requested by Seller, enter into a customary
Confidentiality Agreement and shall notify Seller of each
recipient of information received by such representative;
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(c) for a period of three (3) years following the
Closing Date, use its best efforts to cause Paul DeNicola or
his successor ("Purchaser's Nominee") to be nominated and
elected to Seller's Board of Directors. During such three-
year period, Purchaser's Nominee may resign from Seller's
Board of Directors and, following such resignation and
provided that such resignation was based upon the advice of
counsel to Purchaser, rendered in good faith, to the effect
that such resignation is necessary or advisable under then-
existing or proposed rules or regulations of the Commission
or the Federal Communications Commission (or any successor
or successors to such agencies with jurisdiction over
cellular and broadband licensees or utility holding
companies, as applicable), shall nevertheless be afforded
the same rights and privileges as other directors of Seller
other than voting privileges. By way of illustration and
not in limitation of the foregoing, following any such
resignation Purchaser's Nominee shall be entitled to receive
all notices of directors' meetings, to receive materials and
information furnished generally to the directors of Seller
and to attend meetings of directors; and
(d) from and after an initial public offering of
Seller's capital stock make publicly available information
concerning Seller sufficient to allow Purchaser (or a
subsequent institutional holder) to dispose of all or a
portion of the Shares pursuant to Rule 144 (or any successor
provision) promulgated by the Commission under the Federal
Act.
ARTICLE X
INDEMNIFICATION
10.1 Indemnification by Seller. Seller agrees to indemnify
and reimburse Purchaser, its successors and assigns for any and
all liabilities, damages (including fines, penalties and civil or
criminal judgments or settlements), costs (including court costs)
and expenses (including reasonable attorneys' fees) incurred as a
result of, or with respect to, any breach of, or noncompliance by
Seller with, any representation, warranty, covenant or agreement
made by Seller in this Agreement (hereinafter, "Loss" or
"Losses"); provided, however, that Seller's obligation to
indemnify shall arise only after the aggregate amount of Losses
suffered or incurred exceeds $250,000 (in which event Seller
shall have the obligation to indemnify the Protected Parties for
all Losses suffered or incurred, and not merely the excess over
$250,000); and further provided that in no event shall Seller
have any liability for Losses in excess of the Purchase Price).
10.2 Indemnification by Purchaser. Purchaser agrees to
indemnify and reimburse Seller, its successors and assigns for
any and all liabilities, damages (including fines, penalties and
civil or criminal judgments or settlements), costs (including
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court costs) and expenses (including reasonable attorneys' fees)
incurred as a result of, or with respect to, any breach of, or
noncompliance by Purchaser with, any representation, warranty,
covenant or agreement made by Purchaser in this Agreement
(hereinafter, "Loss" or "Losses"); provided, however, that
Purchaser's obligation to indemnify shall arise only after the
aggregate amount of Losses suffered or incurred exceeds $250,000
(in which event Purchaser shall have the obligation to indemnify
the Protected Parties for all Losses suffered or incurred, and
not merely the excess over $250,000); and further provided that
in no event shall Purchaser have any liability for Losses in
excess of the Purchase Price).
10.3 Notice of Claim. A party entitled to indemnification
hereunder (a "Protected Party") shall promptly notify the party
required to indemnify such Protected Party ("Indemnifying Party")
in writing of any claim for recovery, specifying in reasonable
detail the nature and date of the Loss, and, if known, the
amount, or an estimate of the amount, of the liability arising
therefrom. The Protected Party shall provide to Seller as
promptly as practicable thereafter information and documentation
reasonably requested by Seller to support and verify the claim
asserted. The Indemnifying Party shall promptly and fully
reimburse the Protected Party to the fullest extent of the Loss
following receipt of such claim, but in no event more than
fifteen (15) days from the receipt thereof.
10.4 Defense. If the facts pertaining to Loss arise out of
the claim of any third party other than any Protected Party, or
if there is any claim against a third party available by virtue
of the circumstances of the Loss, the Indemnifying Party may
assume the defense or the prosecution thereof by prompt written
notice to the appropriate Protected Party, including the
employment of counsel or accountants, at the Indemnifying Party's
cost and expense. The Protected Party shall have the right to
employ, at its expense, counsel separate from counsel employed by
the Indemnifying Party in any such action and to participate
therein. The Indemnifying Party shall not be liable for any
settlement of any such claim effected without its prior written
consent, which shall not be unreasonably withheld. Whether or
not the Indemnifying Party choose to so defend or prosecute such
claim, all the parties hereto shall cooperate in the conduct
thereof, if reasonably practicable, and shall furnish such
records, information and testimony, and attend such conferences,
discovery proceedings, hearings, trials and appeals, as may be
reasonably requested in connection therewith. The Indemnifying
Party shall be subrogated to all rights and remedies of the
Protected Party.
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ARTICLE XI
MISCELLANEOUS
11.1 Entire Agreement. This Agreement (including the
schedules) constitutes the sole understanding of the parties with
respect to the subject matter hereof. No amendment, modification
or alteration of the terms or provisions of this Agreement shall
be binding unless the same shall be in writing and duly executed
by the parties hereto.
11.2 Successors and Assigns. The terms, conditions and
obligations of this Agreement shall inure to the benefit of and
be binding upon the respective successors and assigns of the
parties hereto. Neither Seller nor Purchaser may assign its
rights, duties or obligations hereunder or any part thereof to
any other person or entity without the prior written consent of
the other party hereto.
11.3 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed
to be an original and all of which shall constitute the same
instrument.
11.4 Headings. The headings of the Sections and paragraphs
of this Agreement are inserted for convenience only and shall not
be deemed to constitute part of this Agreement or to affect the
construction hereof.
11.5 Modification and Waiver. Any of the terms or
conditions of this Agreement may be waived in writing at any time
by the party which is entitled to the benefits thereof. No
waiver of any of the provisions of this Agreement shall be deemed
to or shall constitute a waiver of any other provision hereof
(whether or not similar).
11.6 Expenses. Seller and Purchaser shall each pay all
costs and expenses incurred by it or on its behalf in connection
with this Agreement and the transactions contemplated hereby,
including fees and expenses of its own financial consultants,
accountants and counsel.
11.7 Notices. Any notice, request, instruction or other
document to be given hereunder by any party hereto to any other
party hereto shall be in writing and delivered personally or sent
by registered or certified mail, postage prepaid,
if to Seller to: ITC Holding Company, Inc.
910 First Avenue
P.O. Box 510
West Point, Georgia 31833
Attention: William H. Scott, III,
President
Telephone: 706/645-1011
Facsimile: 706/645-8614
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if to Purchaser to: The Southern Development and
Investment Group, Inc.
64 Perimeter Center East
Atlanta, Georgia 30346
Attention: Thomas R. Kellogg, Vice
President and General
Manager
Telephone: 404/668-4941
Facsimile: 404/668-4617
with a copy to: Troutman Sanders LLP
600 Peachtree Street, N.E.
5200 NationsBank Plaza
Atlanta, GA 30308-2216
Attention: Robert W. Grout, Esquire
Telephone: 404/885-3152
Facsimile: 404/885-3947
or at such other address for a party as shall be specified by
like notice. Any notice which is delivered personally in the
manner provided herein shall be deemed to have been duly given to
the party to whom it is directed upon actual receipt by such
party (or its agent for notices hereunder). Any notice which is
addressed and mailed in the manner herein provided shall be
conclusively presumed to have been duly given to the party to
which it is addressed at the close of business, local time of the
recipient, on the fourth business day after the day it is so
placed in the mail.
11.8 Lost, Stolen, Mutilated Certificates; Exchange. Upon
receipt by Seller of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any certificate
evidencing any of the Shares, and (in the case of loss, theft or
destruction) of an unsecured indemnity satisfactory to it, and
upon reimbursement to Seller of all reasonable expenses
incidental thereto, and upon surrender and cancellation of such
certificate, if mutilated, Seller will make and deliver in lieu
of such certificate a new certificate of like tenor and for the
number of shares evidenced by such certificate which remain
outstanding. Upon surrender of any certificate representing the
Shares for exchange at the offices of the Seller, Seller at its
expense will cause to be issued in exchange therefor new
certificates in such denomination or denominations as may be
requested for the same aggregate number of Shares, represented by
the certificate so surrendered and registered as such holder may
request. Seller will also pay the cost of all deliveries of
certificates for Shares to the offices of the Purchaser
(including the cost of insurance against loss or theft in an
amount satisfactory to the holders) upon any exchange provided
for in this Section 11.8.
11.9 Further Cooperation. From and after the Closing Date,
the parties will each take all such action and deliver all such
documents as shall be reasonably necessary or appropriate to
confirm and vest title to the Shares in Purchaser and otherwise
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to enable Purchaser to enjoy the benefits contemplated by this
Agreement.
11.10 Governing Law. This Agreement shall be construed
in accordance with and governed by the laws of the State of
Georgia without giving effect to the principles of conflicts of
law thereof.
11.11 Public Announcements. Seller and Purchaser shall
consult with each other before issuing any press releases or
otherwise making any public statements with respect to this
Agreement and the transactions contemplated hereby and shall not
issue any such press release or make any public statement prior
to such consultation, except as such person's counsel advises may
be required by law.
11.12 Knowledge. As used herein, the terms "knowledge
of Seller" or "known to Seller," or language of similar
intention, shall mean the actual knowledge of members of Seller's
management and directors and such knowledge as such persons
should possess in the performance of duties on behalf of Seller
or upon reasonable investigation of the business affairs of
Seller.
11.13 No Third-Party Beneficiaries. With the exception
of the parties to this Agreement, there shall exist no right of
any person to claim a beneficial interest in this Agreement or
any rights occurring by virtue of this Agreement.
11.14 Construction. Words of inclusion shall not be
construed as terms of limitation herein, so that references to
"included" matters shall be regarded as non-exclusive, non-
characterizing illustrations. Nothing disclosed in any Schedule
shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Schedule
identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail.
11.15 References. Whenever reference is made in this
Agreement to any Article, Section or Schedule, such reference
shall be deemed to apply to the specified Article or Section of
this Agreement or the specified Schedule to this Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed on its behalf as of the day and
year first above written.
"SELLER"
ITC HOLDING COMPANY, INC.
By:
William H. Scott, III,
President
"PURCHASER"
THE SOUTHERN DEVELOPMENT AND
INVESTMENT GROUP, INC.
By:
Name:
Title
By:
Name:
Title
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Exhibit G
FORM OF FEDERAL REGISTER NOTICE
The Southern Development and Investment Group, Inc.
("Development"), a wholly-owned nonutility subsidiary of The
Southern Company ("Southern"), a registered holding company under
the Public Utility Holding Company Act of 1935 (the "Act"), has
filed an application-declaration pursuant to Sections 9 and 10 of
the Act and Rules 51 and 54 thereunder.
Development requests authorization to purchase from ITC
Holding Co., Inc. ("ITC"), a closely-held Delaware corporation,
250,000 shares of ITC's authorized and unissued shares of common
stock, par value $.01 per share, which, on a fully diluted basis,
will represent approximately 3% of the aggregate number of ITC's
issued and outstanding shares of common stock. The purchase
price for these shares is $6,195,00; provided that, if closing
under the related stock purchase agreement between Development
and ITC shall not occur by January 25, 1996, then the purchase
price will bear interest at a rate of 8.75% per annum from such
date until closing. Southern will make a cash capital
contribution to Development in an amount of approximately $7
million in order to fund Development's purchase of the shares and
to pay other costs associated with the transaction.
ITC is a telecommunications holding company which, through
several wholly- and partially-owned subsidiaries, provides local
telephone exchange, toll, cellular and teleconferencing services
and sells related products (e.g., customer premises equipment;
paging products) primarily in areas of the southeastern United
<PAGE>
States, including areas served by Southern's operating utility
subsidiaries. ITC and certain subsidiaries of Southern have
previously entered into agreements under which portions of the
optical fiber transmission network of an ITC subsidiary have been
installed along the operating companies' utility right-of-way.
Development and ITC have also engaged in discussions concerning
possible joint development and experimentation with respect to
the modernization of telecommunications in the southeastern
United States, particularly with respect to the types of utility
and utility-related communications services that Development is
authorized to provide under the terms of the Commission's order
of January 25, 1995 (HCAR No. 26221), including but not limited
to energy and demand-side management services and the build-out
of communications network in various locations inside the
Southern service territory to be used for such purposes.
Development states that its investment in ITC will enable it
to have input into the strategic planning of a major regional
telecommunications provider as it formulates plans for investment
in the modernization of communications infrastructure, much of
which will be in Southern's service area. Development also
asserts that its investment in ITC will provide ITC with the
informed insight of a major customer of ITC, thereby enabling it
to address the communications needs of Southern's subsidiaries.
Under the stock purchase agreement, ITC will be obligated to
use its best efforts for a period of three years to cause the
election to the board of directors of ITC of a nominee of
Development. Development states that neither it nor any
<PAGE>
associate company will, as a result of the ownership of the
shares to be acquired and participation on ITC's board have the
ability to control or dictate any corporate decisions or policies
of ITC. In this regard, Development represents that ITC is a
privately-held company that is controlled by its founder and
chief executive officer and related family interests and certain
other executive officers of the company.
<PAGE>
