<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
American Telecasting, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
As filed with the Commissioner on May 27, 1999
<PAGE> 2
AMERICAN TELECASTING, INC. LOGO
TO THE STOCKHOLDERS OF AMERICAN TELECASTING, INC.
A MERGER PROPOSAL-YOUR VOTE IS VERY IMPORTANT
American Telecasting's board of directors unanimously approved a merger
agreement between Sprint Corporation and American Telecasting. The proposed
transaction involves the merger of a newly formed company, which is wholly owned
by Sprint, with and into American Telecasting with American Telecasting
surviving the merger. Effectively, the merger will enable Sprint to acquire all
of American Telecasting's outstanding shares of common stock.
In the merger, each of your shares of American Telecasting Class A Common
Stock will be exchanged for $6.50 in cash. In order to complete the merger, the
merger agreement must be adopted by the holders of a majority of outstanding
shares of American Telecasting common stock. The merger is also subject to
obtaining antitrust and communications regulatory approval, as well as other
conditions.
After considering a number of factors, including the opinion of its
investment banker, Lazard Freres & Co. LLC, your board of directors unanimously
approved the merger agreement and the merger. In addition, the board declared
the merger advisable and fair to American Telecasting stockholders. American
Telecasting's board of directors unanimously recommends that you vote to adopt
the merger agreement.
This proxy statement provides you with detailed information concerning
American Telecasting, Sprint and the merger. Please give all of the information
contained in this proxy statement your careful attention.
The date, time and place of the special meeting:
June 25, 1999
10:00 a.m., local time
American Telecasting, Inc.
Marriott Hotel
5580 Tech Center Drive
Colorado Springs, Colorado 80919
Please use this opportunity to take part in the affairs of American
Telecasting by voting on the adoption of the merger agreement. Whether or not
you plan to attend the meeting, please complete, sign, date and return the
accompanying proxy in the enclosed self-addressed stamped envelope. Returning
your proxy does NOT deprive you of your right to attend the meeting and to vote
your shares in person. YOUR VOTE IS IMPORTANT.
On behalf of the board of directors, I thank you for your support and
appreciate your consideration of this matter.
/s/ ROBERT D. HOSTETLER
ROBERT D. HOSTETLER
President and Chief Executive Officer
This proxy statement is dated May 24, 1999 and was first mailed to stockholders
on or about May 27, 1999.
<PAGE> 3
AMERICAN TELECASTING, INC. LOGO
AMERICAN TELECASTING, INC.
5575 Tech Center Drive, Suite 300
Colorado Springs, Colorado 80919
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
Notice is hereby given that a special meeting of stockholders of American
Telecasting, Inc. will be held on June 25, 1999, at 10:00 a.m., local time, at
the Marriott Hotel, 5580 Tech Center Drive, Colorado Springs, Colorado 80919,
for the following purposes:
1. To consider and vote upon a proposal to adopt the Agreement and Plan of
Merger, dated as of April 26, 1999, among American Telecasting, Sprint
Corporation and DD Acquisition Corporation, a wholly owned subsidiary of Sprint,
pursuant to which DD Acquisition will merge with and into American Telecasting
and American Telecasting will survive the merger. In the merger, holders of
outstanding shares of the Class A Common Stock (other than Sprint and DD
Acquisition), par value $.01 per share, of American Telecasting will receive
$6.50 in cash for each share of American Telecasting common stock held by them.
Adoption of the merger agreement will also constitute approval of the merger and
the other transactions contemplated by the merger agreement.
2. To transact such other business as may properly come before the special
meeting or any adjournment thereof.
These items of business are described in the attached proxy statement. Only
stockholders of record at the close of business on May 24, 1999, the record
date, are entitled to receive notice of and to vote at the special meeting. You
may vote in person at the special meeting, even if you have returned a proxy.
By order of the Board of Directors
/s/ ROBERT D. HOSTETLER
Robert D. Hostetler
President and Chief Executive Officer
May 24, 1999
Whether or not you plan to attend the meeting, please complete, sign, date
and return the accompanying proxy in the enclosed self-addressed stamped
envelope. Returning your proxy does NOT deprive you of your right to attend the
meeting and to vote your shares in person.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
QUESTIONS AND ANSWERS ABOUT AMERICAN TELECASTING'S MERGER
AND THE SPECIAL MEETING OF STOCKHOLDERS................... 1
SUMMARY..................................................... 2
Special Factors........................................... 2
The Merger Agreement...................................... 4
Dissenters' Rights of Appraisal........................... 5
The Voting Agreements..................................... 5
THE PARTIES................................................. 7
SPECIAL FACTORS............................................. 8
Background of the merger.................................. 8
Recommendation of American Telecasting's board of
directors and fairness of the merger................... 10
Opinion of American Telecasting's investment banker....... 11
Interests of certain persons in the merger and certain
relationships.......................................... 14
Regulatory requirements and third party consents.......... 15
Accounting Treatment...................................... 16
Federal income tax consequences of the merger............. 16
Fees and expenses......................................... 16
INFORMATION CONCERNING THE SPECIAL MEETING.................. 17
Proxy statement........................................... 17
Time, place and date...................................... 17
Purpose of the special meeting............................ 17
Stockholder record date for the special meeting........... 17
Vote of American Telecasting stockholders required for
adoption of the merger agreement....................... 17
Proxies................................................... 18
THE MERGER AGREEMENT........................................ 19
General; Merger Consideration............................. 19
Dissenting Shares......................................... 19
Treatment of Stock Options................................ 19
Closing; Effective Time................................... 19
Cancellation of Shares.................................... 19
Exchange of Certificates.................................. 20
Transfers................................................. 20
Lost, Stolen or Destroyed Certificates.................... 20
Representations and Warranties............................ 20
Conduct of Business Prior to the Merger................... 21
Agreement Not to Solicit Other Offers..................... 22
Certain Other Covenants and Agreements.................... 23
Conditions of the Proposed Merger......................... 26
Termination............................................... 27
Termination Fee........................................... 28
Amendment and Waiver...................................... 28
THE VOTING AGREEMENTS....................................... 29
Agreement to Vote......................................... 29
Restrictions on Transfer.................................. 29
Termination of Voting Agreements.......................... 29
Representations and Warranties............................ 29
DISSENTERS' RIGHTS OF APPRAISAL............................. 30
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
AMERICAN TELECASTING, INC. SELECTED FINANCIAL DATA.......... 33
MARKET FOR THE COMMON STOCK................................. 34
American Telecasting common stock market price and
dividend information................................... 34
Market price of American Telecasting common stock......... 34
SECURITIES OWNERSHIP........................................ 35
INDEPENDENT ACCOUNTANTS..................................... 37
STOCKHOLDER PROPOSALS....................................... 37
WHERE YOU CAN FIND MORE INFORMATION......................... 37
OTHER BUSINESS.............................................. 38
FORWARD-LOOKING STATEMENTS.................................. 38
Annex A -- Agreement and Plan of Merger
Annex B -- Voting Agreements
Annex C -- Opinion of Lazard Freres & Co. LLC
Annex D -- Section 262 of the Delaware General Corporation
Law
</TABLE>
ii
<PAGE> 6
QUESTIONS AND ANSWERS ABOUT AMERICAN TELECASTING'S MERGER
AND THE SPECIAL MEETING OF STOCKHOLDERS
Q: WHY IS AMERICAN TELECASTING MERGING?
A: American Telecasting is merging with a newly formed company, which is
wholly owned by Sprint, in order to enable Sprint to acquire all of
American Telecasting's outstanding shares of common stock.
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: If the merger is completed, you will receive $6.50 in cash for each share
of American Telecasting common stock that you own.
Q: WHAT WILL HAPPEN TO AMERICAN TELECASTING AFTER THE MERGER?
A: American Telecasting will be owned by Sprint.
Q: WHY IS THE BOARD OF DIRECTORS RECOMMENDING THAT I VOTE FOR THE MERGER
AGREEMENT?
A: After considering a number of factors, including the opinion of its
investment banker, Lazard Freres & Co. LLC, your board of directors
unanimously believes that the terms of the merger agreement are advisable
and fair to stockholders.
Q: WHAT IF THE MERGER IS NOT COMPLETED?
A: It is possible the merger will not be completed. That might happen if, for
example, American Telecasting stockholders do not adopt the merger
agreement. Should that occur, neither Sprint nor any third party is under
any obligation to make or consider any alternative proposals regarding the
purchase of the shares of American Telecasting common stock.
Q: WHAT DO I NEED TO DO NOW?
A: Mail your signed proxy card in the enclosed return envelope as soon as
possible, so that your shares will be represented at the special meeting.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After the merger is completed, we will send you written instructions
for exchanging your share certificates.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will vote your shares only if you provide instructions on how
to vote. You should follow the directions provided by your broker regarding
how to instruct your broker to vote your shares.
Q: MAY I CHANGE MY VOTE?
A: Yes. Just send the Secretary of American Telecasting a written revocation
notice or a later-dated, signed proxy card before the special meeting or
attend the special meeting and vote.
Q: WHO MAY VOTE ON THE MERGER?
A: All stockholders of record as of the close of business on May 24, 1999 may
vote. You are entitled to one vote per share of American Telecasting common
stock that you owned on the record date. For the merger to occur, the
holders of at least a majority of the outstanding shares must approve the
merger agreement and the merger.
Q: WHEN AND WHERE IS THE SPECIAL MEETING?
A: The special meeting will be held at 10:00 a.m. on June 25, 1999 at the
Marriott Hotel, 5580 Tech Center Drive, Colorado Springs, Colorado 80919.
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: We will complete the merger when all of the conditions to its completion
are satisfied or waived. The merger will become effective when we file a
certificate of merger with the State of Delaware. We are working toward
completing the merger as quickly as possible and hope to complete the
merger during the third calendar quarter of 1999.
Q: WHAT ELSE WILL HAPPEN AT THE MEETING?
A: We know of no other matters, other than as described in the "Notice of
Special Meeting," which are to come before the special meeting.
Q: WHAT RIGHTS DO I HAVE IF I OPPOSE THE MERGER?
A: You may dissent from the merger and seek appraisal of the fair market value
of your shares by complying with all of the Delaware law procedures
explained on pages 30 to 32.
Q: WHO CAN ANSWER MY QUESTIONS?
A: If you have questions about the merger or need additional copies of this
proxy statement, please call Georgeson & Company, Inc., a professional
soliciting organization retained by American Telecasting, at 1-800-
223-2064. If you have any questions about American Telecasting's operations,
please call David K. Sentman at 719-260-5533.
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SUMMARY
This summary may not contain all of the information that is important to
you. You should read carefully this entire document and the other documents we
refer to for a more complete understanding of the merger and other transactions
contemplated by American Telecasting and Sprint. In particular, you should read
the documents attached to this proxy statement, including the merger agreement
and the voting agreements, which are attached as Annexes A and B, respectively.
In addition, we incorporate by reference important business and financial
information about American Telecasting into this proxy statement. You may obtain
the information incorporated by reference into this proxy statement without
charge by following the instructions in the section entitled "Where You Can Find
More Information" on pages 37 and 38 of this proxy statement.
SPECIAL FACTORS
PURPOSE, BACKGROUND AND EFFECTS OF THE MERGER AND RELATED TRANSACTIONS
The purpose of the merger is to enable Sprint to acquire the entire
outstanding equity interest in American Telecasting. Upon completion of the
merger, American Telecasting, as the surviving corporation, will become wholly
owned by Sprint.
RECOMMENDATION OF AMERICAN TELECASTING'S BOARD OF DIRECTORS
After considering a number of factors, including the opinion of Lazard
Freres & Co. LLC, American Telecasting's board of directors has unanimously
approved the merger agreement and the merger and recommends that you vote to
adopt the merger agreement and approve the merger. The board of directors has
unanimously determined that the merger is fair to American Telecasting
stockholders and the terms and provisions of the merger agreement (including the
$6.50 per share purchase price) are advisable.
FACTORS CONSIDERED BY THE BOARD OF DIRECTORS
In reaching its decision to recommend adoption of the merger agreement and
approval of the merger, the board of directors considered a number of factors,
including the following:
- a comparison of the historical market prices of American Telecasting
common stock with the per share price offered by Sprint--the $6.50 per
share price represents a:
- 17.5% premium over the $5.53 closing bid price per share of American
Telecasting common stock on April 16, 1999, which was 10 days prior to
the date on which the merger was announced
- 212.5% premium over the $2.08 closing bid price per share of American
Telecasting common stock on April 7, 1999, which was 20 days prior to
the date on which the merger was announced
- 480.4% premium over the $1.12 closing bid price per share of American
Telecasting common stock on March 29, 1999, which was 29 days prior to
the date on which the merger was announced
- the presentation of Lazard Freres to American Telecasting's board of
directors on April 26, 1999, comparing:
- American Telecasting to other selected comparable publicly traded
companies in the wireless cable industry and showing that, among other
things, the enterprise value of the selected comparable companies as a
multiple of footprint households ranged from 29.8x to 36.8x as compared
to 39.4x for American Telecasting and as a multiple of line of sight
households ranged from 39.6x to 49.4x as compared to 50.1x for American
Telecasting
- the merger to selected comparable acquisition transactions in the
wireless cable industry and showing that, among other things, the
transaction value as a multiple of footprint households ranged from 32x
to 35.3x as compared to 39.4x for the merger and as a multiple of line
of sight households ranged from 41.5x to 45.9x as compared to 50.1x for
the merger
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<PAGE> 8
- the opinion of Lazard Freres addressed to American Telecasting's board of
directors that, as of April 26, 1999, the $6.50 per share to be received
by the holders of American Telecasting common stock in connection with
the merger was fair to those stockholders (other than Sprint and DD
Acquisition) from a financial point of view
- that if a merger transaction with Sprint was not negotiated with American
Telecasting remaining as a publicly owned corporation, it was possible
that because of continued deterioration in the financial condition of
American Telecasting, or a decline in the market price of American
Telecasting common stock or the stock market in general, the price that
American Telecasting stockholders might receive in a future sale
transaction might be less than the $6.50 per share price offered in the
merger by Sprint
- the merger agreement's provisions permitting the board of directors to
terminate the merger agreement in order to exercise the board's fiduciary
duties and to accept an alternative proposal more favorable to American
Telecasting stockholders during the 20-day period commencing on April 26,
1999, subject to certain conditions, including American Telecasting's
payment of an $11 million termination fee to Sprint
LAZARD FRERES & CO. LLC'S FAIRNESS OPINION
Lazard Freres rendered to the board of directors of American Telecasting
its oral opinion (which was subsequently confirmed in writing) that, as of April
26, 1999, based upon and subject to the assumptions made, matters considered and
limits of review set forth in the opinion, the $6.50 per share to be received by
American Telecasting stockholders in connection with the merger was fair to such
stockholders (other than Sprint and DD Acquisition) from a financial point of
view. Lazard Freres' opinion is included as Annex C at the end of this proxy
statement. Please read the opinion carefully.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
All of American Telecasting's officers and directors own shares of American
Telecasting common stock and/or hold options to purchase the common stock and,
to that extent, their interest in the merger is the same as yours. In accordance
with the terms of the merger agreement, all options held by American Telecasting
employees will be cashed out in the merger. You should note that some of
American Telecasting's directors and officers have relationships or interests in
the merger that are different from your interests as a stockholder or that may
present a conflict of interest. For a description of these interests, see pages
14 to 15.
ACCOUNTING TREATMENT
American Telecasting has been advised by Sprint that Sprint intends to
treat the merger as a "purchase" for accounting and financial reporting
purposes. See page 16.
U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The receipt of cash for shares of American Telecasting common stock
pursuant to the merger will be a taxable transaction for U.S. federal income tax
purposes. See page 16.
AMERICAN TELECASTING STOCKHOLDERS MUST APPROVE THE MERGER
At the special meeting on June 25, 1999, holders of a majority of the
outstanding shares of American Telecasting common stock must approve the merger
agreement in order for the merger to be consummated. You are entitled to one
vote per share of American Telecasting common stock that you owned on May 24,
1999.
REGULATORY APPROVALS REQUIRED TO COMPLETE THE MERGER
The merger is subject to antitrust and federal communications laws.
American Telecasting and Sprint have made the required filings with the
Department of Justice, the Federal Trade Commission (the "FTC") and the Federal
Communications Commission (the "FCC"), but we cannot complete the merger until
the applicable waiting and comment periods have expired or have been terminated
or the required approval has been granted. The Department of Justice, FTC, FCC
or a government, state or private person may challenge the merger at any time
before its completion.
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THE MERGER AGREEMENT
THE MERGER CONSIDERATION
If the merger is completed, you will be entitled to receive $6.50 in cash
for each of your shares of American Telecasting common stock.
CONDITIONS TO COMPLETION OF THE MERGER
The obligations of American Telecasting and Sprint to complete the merger
are subject to the prior satisfaction or waiver of various conditions. These
conditions are described in detail on pages 26 and 27 and include, among others,
the following:
- American Telecasting stockholders must adopt the merger agreement and
approve the merger
- the applicable waiting periods under the antitrust laws must expire or be
terminated
- the applicable approvals from the FCC must be received
- no injunction or order preventing the completion of the merger may be in
effect
- the respective representations and warranties of American Telecasting and
Sprint in the merger agreement must be true and correct in all material
respects
- American Telecasting and Sprint must comply with their respective
agreements in the merger agreement in all material respects
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated under certain circumstances at any
time before the completion of the merger, as summarized below.
The merger agreement may be terminated by the mutual consent of American
Telecasting and Sprint.
In addition, the merger agreement may be terminated by either American
Telecasting or Sprint if:
- American Telecasting stockholders do not adopt the merger agreement
- the merger is not completed prior to September 30, 1999 (or October 31,
1999 if the sole condition remaining unfulfilled to complete the merger
on September 30, 1999 is any required approval by the FCC); provided that
such date may be extended to December 31, 1999, at Sprint's option, if
Sprint advances funds to American Telecasting sufficient to make certain
interest payments which become due in December 1999
- a governmental authority has issued a final and nonappealable order
prohibiting the merger or the other transactions provided for in the
merger agreement
American Telecasting may terminate the merger agreement if Sprint or DD
Acquisition has breached in any material respect any of their respective
representations, warranties, covenants or other agreements in the merger
agreement and that breach cannot be remedied within 30 days of notice of such
breach.
Sprint may terminate the merger agreement if American Telecasting has
breached any of its representations, warranties, covenants or other agreements
in the merger agreement and that breach gives rise to the failure of a condition
to the obligations of either Sprint or DD Acquisition to complete the merger and
the breach cannot be remedied within 30 days of notice of such breach.
In the event that (i) any person (other than Sprint) shall have publicly
disclosed an acquisition proposal relating to an acquisition transaction of the
nature specified in the merger agreement and (ii) following such disclosure, at
the special meeting, American Telecasting stockholders do not adopt the merger
agreement and (iii) not later than 12 months after any termination of the merger
agreement by either American Telecasting or Sprint because American Telecasting
stockholders do not adopt the merger agreement, American Telecasting enters into
a definitive agreement for such an alternative acquisition transaction, then
Sprint will be entitled to receive an $11 million termination fee from American
Telecasting.
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<PAGE> 10
Furthermore, Sprint may terminate the merger agreement and receive payment
of an $11 million termination fee from American Telecasting if American
Telecasting's board of directors takes either of the following actions:
- withdraws or adversely modifies its approval and recommendation of the
merger and the merger agreement
- approves or recommends, or enters into an agreement relating to, any
alternative proposal relating to an acquisition transaction of the nature
specified in the merger agreement and involving American Telecasting and
a party other than Sprint
NO OTHER NEGOTIATIONS INVOLVING AMERICAN TELECASTING
American Telecasting has agreed, subject to certain exceptions during the
20-day period ending on May 16, 1999, until the merger is completed or the
merger agreement is terminated, not to solicit, initiate, encourage, make,
implement, recommend, participate in discussions regarding or negotiate,
directly or indirectly, any proposal for an acquisition transaction of the
nature specified in the merger agreement and involving American Telecasting and
a party other than Sprint.
DISSENTERS' RIGHTS OF APPRAISAL
Any stockholder who does not wish to accept the $6.50 per share in the
merger has the right under Delaware law to have the "fair value" of his, her or
its shares determined by the Delaware Chancery Court. This "right of appraisal"
is subject to a number of restrictions and technical requirements. Generally, in
order to exercise appraisal rights:
- you must not vote in favor of the merger
- you must make a written demand for appraisal in compliance with Delaware
law before the vote on the merger
Merely voting against the merger will not protect your right of appraisal.
Annex D to this proxy statement contains the Delaware statutory provision
relating to your right of appraisal. Failure to follow all of the steps required
by this provision will result in the loss of your right of appraisal. The
Delaware law requirements for exercising appraisal rights are explained on pages
30 to 32 of this proxy statement.
THE VOTING AGREEMENTS
In connection with the merger agreement, each of Robert D. Hostetler,
Donald R. DePriest, CFW Communications Foundation, CFW Communications Company
and MCT Investors, L.P., each a stockholder of American Telecasting, has entered
into a voting agreement with Sprint. Such stockholders collectively own, of
record and beneficially, American Telecasting common stock representing
6,784,351 shares or approximately 26% of the total outstanding shares of common
stock. Under the voting agreements, each stockholder has agreed:
- not to transfer or encumber any of his or its shares of American
Telecasting common stock, except with respect to existing pledge
agreements
- not to grant any proxies or enter into any other voting agreements with
respect to his or its shares of American Telecasting common stock
- to vote in favor of adopting the merger agreement and approval of the
merger
- to vote against:
- any extraordinary corporate transaction, such as a merger or other
business combination, involving American Telecasting or its subsidiaries
(other than the merger)
- any sale or transfer of a material amount of the assets or securities of
American Telecasting or its subsidiaries
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The voting agreements will terminate upon the earliest of:
- the termination of the merger agreement
- the date on which the merger becomes effective
In addition, each of the stockholders who executed a voting agreement made
certain representations and warranties to Sprint regarding among other things,
his or its authority to execute the voting agreement and ownership of American
Telecasting common stock.
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THE PARTIES
AMERICAN TELECASTING, INC.
5575 Tech Center Drive, Suite 300
Colorado Springs, Colorado 80919
(719) 260-5533
American Telecasting was formed in 1988 to develop wireless cable
television systems in mid-sized markets throughout the United States. As of
March 31, 1999, American Telecasting provided analog subscription television
service to approximately 102,400 subscribers in 32 operational wireless cable
systems located in selected U.S. markets. American Telecasting also has wireless
cable (microwave) frequency interests in more than 20 other U.S. markets. As of
December 31, 1998, American Telecasting had approximately 10.1 million estimated
households in the protected service areas of its markets. American Telecasting's
principal business strategy is to pursue implementation of a wireless broadband
access capability that American Telecasting believes will eventually be the best
use of the wireless cable spectrum. American Telecasting believes that market,
technological and regulatory developments are creating an opportunity for the
current wireless cable spectrum to be used to serve future customers with fixed,
two-way, high-speed data and telephony services. For a more detailed description
of the business of American Telecasting, see the descriptions thereof set forth
in American Telecasting's Annual Report on Form 10-K for the year ended December
31, 1998, which is incorporated herein by reference. See "Where You Can Find
More Information."
SPRINT CORPORATION
2330 Shawnee Mission Parkway
Westwood, Kansas 66205
(913) 624-3703
Sprint is a diversified telecommunications provider, providing long
distance, local and wireless communications services. Sprint also engages in
product distribution and directory publishing activities, and other
telecommunications activities, investments and alliances. For the year ended
December 31, 1998, Sprint had $17.1 billion in revenue and $450.5 million in
income from continuing operations.
DD ACQUISITION CORPORATION
2330 Shawnee Mission Parkway
Westwood, Kansas 66205
(913) 624-3703
DD Acquisition Corporation is a newly incorporated Delaware corporation
organized in connection with the merger. DD Acquisition has not carried on any
activities to date. Until immediately prior to the effective time of the merger,
it is not expected that DD Acquisition will have any significant assets or
liabilities or engage in activities other than those incident to its formation
and capitalization and the transactions contemplated by the proposed merger.
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SPECIAL FACTORS
BACKGROUND OF THE MERGER
Historically, the primary business of American Telecasting has been
developing analog wireless cable systems to provide subscription television
service. Presently, American Telecasting is pursuing the implementation of a
wireless broadband access business strategy. The board of directors of American
Telecasting believes that market, technological and regulatory developments are
creating an opportunity for the wireless cable microwave spectrum to be used to
serve future customers with fixed, two-way high-speed data and telephony
services.
The migration of American Telecasting's strategy to wireless broadband
access has been evolutionary. Initially, American Telecasting and other wireless
cable companies developed analog subscription video businesses. American
Telecasting increased its video subscriber base rapidly through 1995, when its
video customers totaled approximately 174,000. In 1996, American Telecasting
reduced its customer growth substantially in recognition of the increasingly
challenging environment for analog subscription video and in reaction to the
substantial cash being consumed to support analog video customer growth.
Beginning in 1997, American Telecasting began managing its analog video business
principally for cash flow. During 1996 and 1997, American Telecasting began to
evaluate various alternative products and services, including digital video and
high-speed Internet access. American Telecasting eventually determined not to
launch commercial digital video services, but did decide to begin commercial
high-speed Internet access in three markets. In 1997 and 1998, American
Telecasting initiated advanced technology trials of two-way data and voice over
wireless cable microwave spectrum and focused extensively on the wireless
broadband business strategy.
A key element of American Telecasting's principal business strategy has
been to seek a relationship with a strategic partner who would benefit from this
direct broadband "last mile" access and facilitate access to technology,
markets, infrastructure and capital. Over recent years, American Telecasting has
engaged in discussions with a variety of potential strategic partners, including
several telecommunications, software, Internet service providers and equipment
companies, regarding the possibility of an investment in or business combination
with American Telecasting.
In December 1996, American Telecasting first contacted Sprint regarding the
possibility of a potential strategic transaction. Minimal conversations occurred
between American Telecasting and Sprint until June 1998.
In August 1997, American Telecasting retained Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ") to provide financial advisory services with
respect to strategic partner transactions and a possible financial
restructuring. DLJ assisted American Telecasting in discussions with and
presentations to several potential strategic partners.
During June and July 1998, Sprint and American Telecasting began
exploratory discussions regarding the possibility of a potential strategic
transaction and, in connection therewith, entered into a confidentiality
agreement under which Sprint was furnished with certain limited financial and
business information concerning American Telecasting. These preliminary
discussions ended without reaching any further agreement, and American
Telecasting had minimal further contact with Sprint until April 15, 1999.
Prior to and following the foregoing discussions, American Telecasting
continued to meet with several potential strategic partners and to analyze
various potential strategic options that might be available to it, including
possible business combinations or alliances, possible financial restructuring,
possible divestitures of one or more of its wireless cable assets and possible
acquisitions of certain cable-related assets.
During the period of these discussions, American Telecasting entered into a
series of transactions designed to provide financing and to better position
American Telecasting for strategic transactions. In March 1997, American
Telecasting entered into an agreement with BellSouth Corporation and BellSouth
Wireless, providing for the sale of all of American Telecasting's Florida and
Louisville, Kentucky wireless cable assets. Approximately $31.7 million of the
proceeds from such sale was used for debt repayments pursuant to indentures
relating to American Telecasting's senior subordinated notes due 2004 and 2005.
In
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<PAGE> 14
July 1998, American Telecasting purchased the remaining 35% partnership interest
that American Telecasting did not already own in Fresno MMDS Associates. In
March 1999, American Telecasting agreed to acquire wireless cable channels in
Portland, Oregon, and in April 1999, American Telecasting agreed to sell
wireless cable systems in Billings, Montana, Rapid City, South Dakota and Grand
Island, Nebraska.
On March 22, 1999, DLJ resigned its engagement with American Telecasting to
provide advisory services to MCI WorldCom, Inc.
On April 12, 1999, American Telecasting became aware, through a public
announcement, that Sprint had entered into an agreement to acquire the common
equity of Peoples Choice TV Corp. At a meeting of the Executive Committee of the
board held on April 12, 1999, the Executive Committee authorized senior
management to contact outside financial advisors to replace DLJ with respect to
the continued consideration and implementation of possible strategic
transactions for American Telecasting, including a sale of the company. On April
14, 1999, Lazard Freres & Co. LLC was retained.
On April 15, 1999, Lazard Freres began approaching several potential
strategic partners, including Sprint and MCI WorldCom, on a confidential basis,
to further discuss their interest in entering into a strategic business
combination with American Telecasting. Because of the numerous discussions
American Telecasting had held with potential strategic partners over the past
several years, American Telecasting and Lazard Freres believe that the strategic
partners contacted were the most likely parties to be interested in making a
proposal for a strategic business combination with American Telecasting. On
April 16, 1999, American Telecasting also became aware, through a public
announcement, that CAI Wireless Communications, Inc. had entered into a letter
of intent to be acquired by MCI WorldCom.
On April 17, 1999, American Telecasting's senior management and
representatives of Lazard Freres reported to the board the results of their
preliminary discussions with potential strategic partners, including preliminary
indications of interest in pursuing a transaction from Sprint and MCI WorldCom.
From April 21 through April 25, Sprint and its representatives and legal
advisors reviewed due diligence documents and had numerous discussions with
senior management of American Telecasting. At the same time, MCI WorldCom and
its representatives were also reviewing transaction documents and engaging in
discussions with Lazard Freres and senior management of American Telecasting.
During the week of April 18, 1999, representatives of Lazard Freres
indicated to the potential strategic partners that, although no determination
had been made to sell the company, American Telecasting was willing to consider
proposals related to a potential business combination. During that week,
American Telecasting received and initially evaluated proposals or expressions
of interest from Sprint and MCI WorldCom. After American Telecasting further
reviewed such proposals and expressions of interest with its legal and financial
advisors at an Executive Committee meeting on April 20, 1999, such financial
advisors contacted Sprint and MCI WorldCom to clarify and discuss certain
business issues and resolve certain due diligence items which remained open. On
April 24, 1999, Lazard Freres contacted Sprint and MCI WorldCom to solicit their
best proposals.
On April 24, 1999, senior management and the Executive Committee of the
board of directors met to discuss the status of discussions with Sprint and MCI
WorldCom. Lazard Freres and senior management reviewed the steps taken to date.
At the conclusion of the meeting the board authorized senior management and
representatives of American Telecasting to pursue a negotiated transaction with
Sprint providing for Sprint's acquisition of American Telecasting for cash. MCI
WorldCom never made a formal proposal; however, MCI WorldCom indicated certain
principal terms of a proposal that they were considering. These terms were not
as favorable to the stockholders of American Telecasting as the terms contained
in the offer from Sprint.
Negotiations with Sprint continued over April 25 and 26, 1999, culminating
in a form of definitive agreement to be presented for review by the board of
directors at a meeting scheduled for the evening of April 26, 1999. At the board
meeting, the terms of the proposed transaction with Sprint and the merger
agreement were presented to and reviewed by the board. Lazard Freres made a
presentation to the board and delivered its oral opinion (subsequently confirmed
in writing) as to the fairness of the $6.50 per share cash
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<PAGE> 15
consideration to be received in the merger by the holders of outstanding common
stock (other than Sprint and DD Acquisition). The board of directors analyzed
and discussed the merger agreement and the merger and reviewed proposed
resolutions related to the transaction. After discussion and further analysis,
the board unanimously approved the merger agreement and recommended that
American Telecasting stockholders adopt the merger agreement and approve the
merger.
RECOMMENDATION OF AMERICAN TELECASTING'S BOARD OF DIRECTORS AND FAIRNESS OF THE
MERGER
At a special meeting on April 26, 1999, after considering a number of
factors, including Lazard Freres' opinion, American Telecasting's board of
directors determined that the merger agreement is advisable and the merger is
fair to American Telecasting stockholders. Accordingly, the board of directors
approved the merger agreement and now recommends that American Telecasting
stockholders adopt the merger agreement and approve the merger and the other
transactions contemplated by the merger agreement.
Factors considered by the board of directors. In determining to approve the
merger agreement and recommend that stockholders adopt it, the board of
directors considered the following factors, each of which the board of directors
concluded supported its determination:
- Opinion. The board of directors considered the financial presentations of
Lazard Freres and Lazard Freres' oral opinion delivered at the April 26,
1999 meeting of the board of directors (which was subsequently confirmed
in writing) to the effect that, as of the date of its opinion, the $6.50
per share to be received by the holders of shares of American Telecasting
common stock in connection with the merger was fair from a financial
point of view to those holders (other than Sprint and DD Acquisition).
The full text of Lazard Freres' written opinion, which sets forth the
assumptions made, matters considered and limits of review described to
the board of directors, is attached as Annex C to this proxy statement.
Stockholders are urged to, and should, read Lazard Freres' opinion
carefully.
- Merger consideration. The board of directors concluded that the merger
consideration represented the highest price that Sprint would likely be
willing to pay in acquiring the shares of American Telecasting common
stock. The terms of the merger resulted from arm's-length negotiations
with Sprint that were intended to obtain the highest possible price.
- Market price and premium. The board of directors considered the
historical market prices of the American Telecasting common stock and
noted that the $6.50 per share price offered by Sprint represents a:
- 17.5% premium over the $5.53 closing bid price per share of American
Telecasting common stock on April 16, 1999, which was 10 days prior to
the date on which the merger was announced
- 212.5% premium over the $2.08 closing bid price per share of American
Telecasting common stock on April 7, 1999, which was 20 days prior to
the date on which the merger was announced
- 480.4% premium over the $1.12 closing bid price per share of American
Telecasting common stock on March 29, 1999, which was 29 days prior to
the date on which the merger was announced
- Financial Analysis. The presentation of Lazard Freres to American
Telecasting's board of directors on April 26, 1999, comparing (1)
American Telecasting to other selected comparable publicly traded
companies in the wireless cable industry and showing that, among other
things, the enterprise value of the selected comparable companies as a
multiple of footprint households ranged from 29.8x to 36.8x as compared
to 39.4x for American Telecasting and as a multiple of line of sight
households ranged from 39.6x to 49.4x as compared to 50.1x for American
Telecasting, and (2) the merger to selected comparable acquisition
transactions in the wireless cable industry and showing that, among other
things, the transaction value as a multiple of footprint households
ranged from 32x to 35.3x as compared to 39.4x for the merger and as a
multiple of line of sight households ranged from 41.5x to 45.9x as
compared to 50.1x for the merger.
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- Terms of the merger agreement. The board of directors also considered the
terms of the merger agreement, including:
- the ability of the board of directors, in the exercise of its fiduciary
duties, to cause American Telecasting to furnish confidential
information about its operations to third parties making alternative
acquisition proposals
- the ability of the board of directors, in the exercise of its fiduciary
duties, to terminate the merger agreement and to accept an alternative
business combination transaction which the board determines to be more
favorable to American Telecasting stockholders compared to the merger
during the 20-day period commencing on April 26, 1999, subject to
certain conditions, including American Telecasting's payment of an $11
million termination fee to Sprint
- Possible decline in market price of American Telecasting common
stock. The board of directors also considered the possibility that if a
merger transaction with Sprint was not negotiated and American
Telecasting remained as a publicly owned corporation, it is possible that
because of continued deterioration in the financial condition of American
Telecasting or a decline in the market price of American Telecasting
common stock or the stock market in general, the price that American
Telecasting stockholders might receive in a future sale transaction might
be less than the $6.50 per share price offered in the merger by Sprint.
- Availability of dissenters' rights. The board of directors also
considered the fact that dissenters' rights of appraisal will be
available to stockholders under Delaware law.
- Interests of various parties in the merger. American Telecasting's
directors were aware that some of American Telecasting's directors and
officers have relationships and interests in the merger that differ from
the interests of American Telecasting stockholders.
The board of directors considered the fact that if the merger is approved,
American Telecasting stockholders will not participate in the future growth of
American Telecasting. Because of the risks and uncertainties associated with
American Telecasting's future prospects, the board of directors concluded that
this detriment was not quantifiable.
Reasons for the board of directors' determination. In reaching its decision
to approve the merger agreement and recommend that American Telecasting
stockholders adopt the merger agreement and approve the merger, the board of
directors considered the factors listed in the preceding section. In view of the
wide variety of factors considered in connection with its evaluation of the
merger and the merger agreement, the board of directors did not find it
practicable to, and did not attempt to, quantify, rank or otherwise assign
relative weights to the specific factors it considered in reaching its
determinations.
OPINION OF AMERICAN TELECASTING'S INVESTMENT BANKER
American Telecasting retained Lazard Freres to act as its exclusive
investment banker in connection with a possible business combination. On April
26, 1999, Lazard Freres rendered to the board of directors of American
Telecasting its oral opinion (which was reconfirmed in writing) that, as of such
date and based upon and subject to the various considerations set forth in the
opinion, the $6.50 per share to be received by the holders of American
Telecasting common stock was fair to those holders (other than Sprint and DD
Acquisition) from a financial point of view.
THE FULL TEXT OF LAZARD FRERES' WRITTEN OPINION DATED APRIL 26, 1999, WHICH
SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND QUALIFICATIONS AND
LIMITATIONS ON THE REVIEW UNDERTAKEN BY LAZARD FRERES, IS ATTACHED HERETO AS
ANNEX C. THE SUMMARY OF THE LAZARD FRERES OPINION SET FORTH IN THIS PROXY
STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH
OPINION. AMERICAN TELECASTING STOCKHOLDERS ARE URGED TO READ THE OPINION OF
LAZARD FRERES IN ITS ENTIRETY. THE ENGAGEMENT OF LAZARD FRERES AND ITS OPINION
ARE FOR THE BENEFIT OF THE BOARD OF DIRECTORS OF AMERICAN TELECASTING, AND
LAZARD FRERES' OPINION WAS RENDERED TO THE BOARD OF DIRECTORS IN CONNECTION WITH
ITS CONSIDERATION OF THE MERGER. LAZARD FRERES' OPINION IS DIRECTED ONLY TO THE
FAIRNESS OF THE MERGER CONSIDERATION FROM A FINANCIAL POINT OF VIEW TO HOLDERS
OF
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<PAGE> 17
AMERICAN TELECASTING COMMON STOCK (OTHER THAN SPRINT AND DD ACQUISITION) AND
DOES NOT ADDRESS ANY OTHER ASPECTS OF THE MERGER WITH SPRINT. THE OPINION IS NOT
INTENDED TO, AND DOES NOT CONSTITUTE, A RECOMMENDATION TO ANY AMERICAN
TELECASTING STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD VOTE WITH RESPECT TO
THE MERGER. LAZARD FRERES HAS CONSENTED TO THE USE AND DESCRIPTION OF ITS
OPINION FOR THE PURPOSE OF FILING AND DISTRIBUTING THIS PROXY STATEMENT.
In connection with its written opinion dated April 26, 1999, to the board
of directors of American Telecasting, Lazard Freres:
(i) reviewed the financial terms and conditions of the merger
agreement;
(ii) analyzed certain historical business and financial information
relating to American Telecasting;
(iii) reviewed various other data provided to Lazard Freres by
American Telecasting relating to its business (Lazard Freres noted that
American Telecasting did not prepare financial forecasts that Lazard Freres
deemed relevant in connection with the merger);
(iv) held discussions with members of senior management of American
Telecasting with respect to the business and prospects of American
Telecasting and the strategic objectives of American Telecasting;
(v) reviewed public information with respect to certain other
companies in lines of business Lazard Freres believed to be generally
comparable to the business of American Telecasting;
(vi) reviewed the financial terms of certain business combinations
involving companies in lines of business Lazard Freres believed to be
generally comparable to those of American Telecasting and in other
industries generally;
(vii) reviewed the historical stock prices and trading volumes of
American Telecasting common stock; and
(viii) conducted such other financial studies, analyses and
investigations as Lazard Freres deemed appropriate.
Lazard Freres relied upon the accuracy and completeness of the foregoing
information and did not assume any responsibility for any independent
verification of such information or any independent valuation or appraisal of
any of the assets or liabilities of American Telecasting or concerning the
solvency or fair value of American Telecasting. Lazard Freres assumed no
responsibility for and expressed no view as to the information reviewed by it.
The written opinion of Lazard Freres was necessarily based on economic,
monetary, market and other conditions as in effect on, and the information made
available to it as of, April 26, 1999. In rendering its opinion, Lazard Freres
did not address the relative merits of the merger, any alternative potential
transaction or American Telecasting's underlying decision to effect the merger.
In rendering its opinion, Lazard Freres assumed that the merger would be
consummated on the terms described in the merger agreement, without any waiver
of any material terms or conditions by American Telecasting and that obtaining
the necessary regulatory approvals for the merger would not have an adverse
effect on American Telecasting. Lazard Freres noted that it did not solicit
third party indications of interest in acquiring American Telecasting (other
than from two other parties identified by American Telecasting and believed by
American Telecasting and Lazard Freres to be the most likely parties to be
interested in acquiring American Telecasting) nor did it actively seek any other
offers.
The following is a summary of the material financial and comparative
analyses performed by Lazard Freres in connection with providing its oral
opinion to the board of directors of American Telecasting. These materials were
reviewed with American Telecasting's board of directors at its meeting on April
26, 1999.
Comparable Publicly Traded Companies Analysis. Lazard Freres compared the
enterprise value implied by the merger consideration expressed as a multiple of
actual revenues, cash flows and operating profits to the trading multiples of
public companies in lines of business believed to be generally comparable to
those of American Telecasting. These enterprise value multiples reflect the
general view of the market with respect to
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<PAGE> 18
the relative growth prospects, financial stability, market position, management
and a variety of other factors of individual companies within an industry. Such
analysis can help to determine how the public markets value companies in similar
industries with similar financial prospects and challenges.
Lazard Freres reviewed and compared certain actual financial, operating and
stock market information of companies in lines of business believed to be
generally comparable to those of American Telecasting in the wireless cable
industry. The selected comparable companies consisted of CAI Wireless Systems,
Inc., People's Choice TV Corp., and Wireless One, Inc. The analysis indicated
that the enterprise value of the selected comparable companies as a multiple of
footprint households ranged from 29.8x to 36.8x as compared to 39.4x for
American Telecasting and as a multiple of line of sight households ranged from
39.6x to 49.4x as compared to 50.1x for American Telecasting. The analysis also
indicated that the enterprise value of the selected comparable companies as a
multiple of last twelve months revenues ranged from 10.2x to 26.4x as compared
to 8.3x for American Telecasting.
Selected Precedent Transactions Analysis. Lazard Freres reviewed selected
publicly available financial, operating and stock market information of two
recent acquisition transactions in the wireless cable industry, namely
Sprint/People's Choice TV and MCI WorldCom/CAI Wireless Systems. Based upon such
information for the selected transactions, the transaction value as a multiple
of footprint households ranged from 32x to 35.3x as compared to 39.4x for
Sprint/American Telecasting and as a multiple of line of sight households ranged
from 41.5x to 45.9x as compared to 50.1x for Sprint/American Telecasting. The
analysis of such information for the selected transactions also indicated that
the transaction value as a multiple of last quarters actual revenues (4th
quarter, 1998) ranged from 16.5x to 35.1x as compared to 9.1x for
Sprint/American Telecasting.
The summary set forth above does not purport to be a complete description
of the analyses performed by Lazard Freres, although it is a summary of the
material financial and comparative analyses performed by Lazard Freres in
arriving at its opinion. The preparation of a fairness opinion is a complex
process and is not necessarily susceptible to partial analysis or summary
description. Selecting portions of the analysis or the summary set forth above
without considering the analyses as a whole could create an incomplete or
misleading view of the process underlying the opinion of Lazard Freres. No
company or transaction used in the above analyses as a comparison is identical
to American Telecasting or the transactions contemplated by the merger
agreement. In arriving at its opinion, Lazard Freres considered the results of
all such analyses and did not assign relative weights to any of the analyses.
The analyses were prepared solely for the purpose of Lazard Freres providing its
opinion to American Telecasting's board of directors in connection with its
consideration of the merger and do not purport to be appraisals or necessarily
reflect the prices at which businesses or securities actually may be sold, which
may be significantly more or less favorable than as set forth in these analyses.
The opinion and presentation of Lazard Freres to the board of directors of
American Telecasting was only one of many factors taken into consideration by
the board of directors in making its determination to approve the merger
agreement. In addition, the terms of the merger agreement were determined
through arm's-length negotiations between American Telecasting and Sprint, and
were approved by the board of directors of American Telecasting.
Lazard Freres is an internationally recognized investment banking firm and
is continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements, leveraged
buyouts, and valuations for estate, corporate and other purposes. Lazard Freres
was selected to act as investment banker to the board of directors of American
Telecasting because of its expertise and its reputation in investment banking
and mergers and acquisitions.
In connection with Lazard Freres' services as investment banker to American
Telecasting, including its delivery of the opinion summarized above, American
Telecasting has agreed to pay Lazard Freres a fee of approximately $3.9 million,
$500,000 of which was paid upon the public announcement of the merger, with the
remainder payable upon consummation of the merger. The Company also has agreed
to reimburse Lazard Freres for its reasonable out-of-pocket expenses (including
reasonable fees and expenses of its legal counsel)
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<PAGE> 19
and will indemnify Lazard Freres and certain related parties against certain
liabilities that may arise out of the rendering of the opinion.
In the ordinary course of its business, Lazard Freres and its affiliates
may actively trade in the securities of American Telecasting for its own account
and for the account of its customers and, accordingly, may at any time hold a
long or short position.
INTERESTS OF CERTAIN PERSONS IN THE MERGER AND CERTAIN RELATIONSHIPS
In considering the recommendation of American Telecasting's board of
directors with respect to the merger, stockholders should be aware that various
members of the board of directors and American Telecasting's management have
interests that may present them with actual, potential or the appearance of
potential conflicts of interest in connection with the merger. The board of
directors was aware of these potential or actual conflicts of interest and
considered them along with other matters described in detail in the section of
this proxy statement entitled "Special Factors -- Recommendation of American
Telecasting's board of directors and fairness of the merger."
The merger agreement provides that the current directors of DD Acquisition
will be the directors of the surviving corporation. The merger agreement also
provides that the current officers of American Telecasting will be the initial
officers of the surviving corporation. It is anticipated, however, that Mr.
Seney and Mr. DePriest will resign as officers at the effective time of the
merger.
American Telecasting's executive officers and directors currently own of
record an aggregate of 5,473,238 shares of American Telecasting common stock,
representing approximately 21.2% of the total outstanding shares. In addition,
American Telecasting's executive officers and directors own options to purchase
an aggregate of 402,373 shares of American Telecasting common stock at strike
prices ranging from $0.719 to $1.00. Each of these options will be cancelled in
the merger in exchange for an amount of cash equal to the positive difference
between $6.50 and the applicable share strike price. Upon the cash-out of all
options at the effective time of the merger, American Telecasting expects that
the following directors and executive officers will receive the following cash
payments for their options:
<TABLE>
<CAPTION>
NAME AMOUNT
---- ------
<S> <C>
Robert D. Hostetler......................................... $825,000
David K. Sentman............................................ 610,620
Terry J. Holmes............................................. 500,620
Bryan H. Scott.............................................. 97,199
Nasser Sharabianlou......................................... 111,250
Charles A. Spann............................................ 28,905
Lee G. Haglund.............................................. 56,630
</TABLE>
The merger agreement provides that the surviving corporation will,
following completion of the merger, indemnify all past and present officers and
directors of American Telecasting to the same extent and in the same manner as
these persons are indemnified by American Telecasting under Delaware law and
American Telecasting's charter and by-laws. This indemnification covers any acts
or omissions of these officers and directors occurring prior to the effective
time of the merger. The merger agreement also provides that for six years
following completion of the merger, the surviving corporation will provide
directors' and officers' liability insurance coverage to American Telecasting's
current officers and directors substantially similar to American Telecasting's
existing policy. However, the surviving corporation will not be required to pay
an annual premium for the directors' and officers' insurance in excess of 150%
of the last annual premium paid prior to the date of the merger agreement but,
in that case will purchase as much coverage as possible for that amount.
American Telecasting has an employment agreement with David K. Sentman,
Senior Vice President and Chief Financial Officer of American Telecasting. Mr.
Sentman's current base salary is $200,000. Pursuant to his employment agreement,
Mr. Sentman is also eligible to receive a cash bonus with respect to each
calendar year of up to 40% of his base salary. Mr. Sentman's employment
agreement expires on April 24, 2001. The agreement provides that Mr. Sentman is
entitled to receive severance payments equal to one year's base salary
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<PAGE> 20
plus accrued bonus in the event the agreement is terminated without cause, and
two year's base salary plus accrued bonus under certain circumstances following
a change in control of American Telecasting. The consummation of the merger
would constitute a change of control for purposes of this employment agreement.
The agreement also prohibits Mr. Sentman from competing with American
Telecasting for the term of his employment and for one year thereafter.
The board of directors of American Telecasting has authorized cash
achievement bonus payments payable upon the consummation of the merger to Mr.
Hostetler, Mr. Sentman, Mr. Holmes and certain other officers and employees
selected by the board. The aggregate amount of payments which may be made under
this program is a maximum of $2.5 million. The specific amounts to be paid will
be determined at a future date based on the amount and timing of a strategic
transaction it considers pertinent. American Telecasting has not yet determined
the extent to which any anticipated payments to Messrs. Hostetler, Sentman and
Holmes, or others, constitute "excess parachute payments" within the meaning of
Internal Revenue Code Section 280G.
REGULATORY REQUIREMENTS AND THIRD PARTY CONSENTS
In connection with the merger, Sprint and American Telecasting are required
to file documents under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the Communications Act of 1934, as amended. In addition,
the parties must make various filings, provide notices and/or obtain approvals
under various federal and state securities laws and cable franchising laws.
Finally, American Telecasting must file the certificate of merger with the
Secretary of State of the State of Delaware.
Under the Hart-Scott-Rodino Act and the related rules of the FTC, certain
acquisition transactions may not be completed unless selected information has
been furnished to the Antitrust Division of the Department of Justice and the
FTC and prescribed waiting period requirements have been satisfied. One
condition to completion of the merger is the expiration or termination of all
applicable Hart-Scott-Rodino Act waiting periods.
Under the Hart-Scott-Rodino Act, both Sprint and American Telecasting filed
the necessary documents with the Justice Department and the FTC in connection
with the merger. Under this statute, the parties may not complete the merger
until a 30-calendar day waiting period following the filings has expired which
waiting period is due to expire on June 10, 1999, unless this period has
terminated earlier or the parties receive a request for additional information.
As a result of the merger, American Telecasting will undergo a transfer of
control. Pursuant to the Communications Act of 1934, as amended, and the FCC's
rules, applications for approval of the transfer of control of American
Telecasting and its subsidiaries and affiliates that hold FCC authorizations
must be filed with the FCC. Before the merger can be consummated, the FCC must
grant such applications. Sprint and American Telecasting filed such applications
on May 21, 1999.
In considering such applications, the FCC will evaluate whether grants will
serve the public interest, convenience and necessity, primarily considering the
status of each of the underlying licenses and whether Sprint is legally,
technically and financially qualified to assume control over each such licensee.
Under the FCC's rules, once the FCC issues a public notice announcing its
acceptance for filing of an application proposing such a change of control,
interested parties have 30 days to object to the application or such longer time
as is allowed by the FCC. Once the FCC issues a public notice of the grant or
denial of the application, interested parties have 30 days to petition the FCC
to reconsider its action, and the FCC has 30 days to reconsider its own action
and 40 days to order before it for review the record of an action taken pursuant
to delegated authority. There are other procedural options for seeking further
administrative or judicial review of an FCC decision. The FCC's rules permit the
consummation of the merger immediately upon the grant of the applications unless
a stay is issued.
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There can be no assurance that the required regulatory approvals described
above will be received or, if received, of the timing and the terms and
conditions thereof.
Except as discussed above, American Telecasting does not believe that any
material third party consents will be required in connection with the merger.
ACCOUNTING TREATMENT
American Telecasting has been advised by Sprint that Sprint intends to
treat the merger as a "purchase" for accounting and financial reporting
purposes. Consequently, the aggregate merger consideration paid in connection
with the merger will be allocated to American Telecasting's assets and
liabilities based upon their fair values, with any excess being treated as
goodwill.
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a summary of certain United States federal income tax
consequences of the merger to stockholders of American Telecasting whose shares
of American Telecasting common stock would be converted to the right to receive
cash pursuant to the merger. The discussion is for general information only and
does not purport to consider all aspects of United States federal income
taxation that might be relevant to stockholders of American Telecasting. The
discussion is based on current law which is subject to change possibly with
retroactive effect. The discussion applies only to stockholders who hold shares
of American Telecasting common stock as capital assets, and may not apply to
shares of American Telecasting common stock received pursuant to the exercise of
employee stock options or otherwise as compensation, or to certain types of
stockholders (such as insurance companies, tax-exempt organizations, financial
institutions and broker-dealers) who may be subject to special rules. This
discussion does not discuss the tax consequences to any stockholder of American
Telecasting who, for United States federal income tax purposes, is a
non-resident alien individual, foreign corporation, foreign partnership or
foreign estate or trust, and does not address any aspect of state, local or
foreign tax laws.
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH STOCKHOLDER SHOULD
CONSULT SUCH STOCKHOLDER'S TAX ADVISOR REGARDING THE APPLICABILITY OF THE RULES
DISCUSSED BELOW TO SUCH STOCKHOLDER AND THE PARTICULAR TAX EFFECTS TO SUCH
STOCKHOLDER OF THE MERGER, INCLUDING THE APPLICATION OF STATE, LOCAL AND FOREIGN
TAX LAWS.
The receipt of cash for shares of American Telecasting common stock
pursuant to the merger will be a taxable transaction for United States federal
income tax purposes. In general, a stockholder who surrenders shares of American
Telecasting common stock for cash pursuant to the merger will recognize capital
gain or loss for United States federal income tax purposes equal to the
difference, if any, between the amount of cash received and such stockholder's
adjusted tax basis in the shares of American Telecasting common stock
surrendered. Gain or loss will be determined separately for each block of shares
(i.e., shares acquired at the same cost in a single transaction) surrendered for
cash pursuant to the merger. Such gain or loss will be long-term capital gain or
loss provided that a stockholder's holding period for such shares is more than
12 months at the time of the consummation of the merger.
FEES AND EXPENSES
Whether or not the merger is completed and except as stated in this
section, all fees and expenses incurred in connection with the merger will be
paid by the party incurring the fees and expenses.
Furthermore, American Telecasting has agreed to pay Sprint an $11 million
termination fee if (i) any person (other than Sprint) has publicly disclosed an
alternative proposal relating to an alternative acquisition proposal, (ii)
following such disclosure, the stockholders of American Telecasting do not adopt
the merger agreement with Sprint and (iii) not later than 12 months after any
termination of the merger agreement as a result of such stockholder vote,
American Telecasting enters into an agreement for such an alternative
acquisition proposal.
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INFORMATION CONCERNING THE SPECIAL MEETING
PROXY STATEMENT
This proxy statement is being furnished to you in connection with the
solicitation of proxies by American Telecasting's board of directors in
connection with the proposed merger with Sprint.
This proxy statement is first being furnished to stockholders of American
Telecasting on or about May 27, 1999.
TIME, PLACE AND DATE
The special meeting of stockholders of American Telecasting is scheduled to
be held as follows:
June 25, 1999
10:00 a.m., local time
American Telecasting, Inc.
Marriott Hotel
5580 Tech Center Drive
Colorado Springs, Colorado 80919
PURPOSE OF THE SPECIAL MEETING
The special meeting is being held so that stockholders of American
Telecasting may consider and vote upon a proposal to adopt the merger agreement
and to transact any other business that properly comes before the special
meeting or any adjournment. Adoption of the merger agreement will also
constitute approval of the merger with Sprint and the other transactions
contemplated by the merger agreement.
If the stockholders of American Telecasting adopt the merger agreement, DD
Acquisition will merge with and into American Telecasting and American
Telecasting will survive the merger. Holders of American Telecasting common
stock will receive $6.50 in cash for each share of American Telecasting common
stock that they own. This cash merger consideration will not be paid in exchange
for shares of American Telecasting common stock which are held in the treasury
of American Telecasting, owned by Sprint or DD Acquisition or held by dissenting
stockholders.
STOCKHOLDER RECORD DATE FOR THE SPECIAL MEETING
American Telecasting's board of directors has fixed the close of business
on May 24, 1999, as the record date for determination of American Telecasting
stockholders entitled to notice of and entitled to vote at the special meeting.
On the record date, there were 25,847,256 shares of American Telecasting common
stock outstanding, held by approximately 326 holders of record.
VOTE OF AMERICAN TELECASTING STOCKHOLDERS REQUIRED FOR ADOPTION OF THE MERGER
AGREEMENT
A majority of the voting power of the outstanding shares of American
Telecasting common stock entitled to vote at the special meeting must be
represented, either in person or by proxy, to constitute a quorum at the special
meeting. Broker non-votes and shares as to which a stockholder abstains will be
included in determining whether there is a quorum at the special meeting.
In order for the merger to be consummated, the holders of a majority of the
outstanding shares of American Telecasting common stock must approve the merger.
Stockholders are entitled to one vote for each share of American Telecasting
common stock owned on the record date on each proposal to be presented to
stockholders at the special meeting. Approximately 26% of the outstanding shares
of American Telecasting common stock will be voted in favor of the merger
pursuant to voting agreements described on page 29.
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PROXIES
All shares of American Telecasting common stock represented by properly
executed proxies received before or at the special meeting will, unless the
proxies are revoked, be voted in accordance with the instructions indicated
thereon. If no instructions are indicated on a properly executed proxy, the
shares will be voted FOR adoption of the merger agreement. You are urged to mark
the box on the proxy to indicate how to vote your shares.
If a properly executed proxy is returned and the stockholder has abstained
from voting on adoption of the merger agreement, the American Telecasting common
stock represented by the proxy will be considered present at the special meeting
for purposes of determining a quorum and for purposes of calculating the vote,
but will not be considered to have been voted in favor of adoption of the merger
agreement. Similarly, if an executed proxy is returned by a broker holding
shares of American Telecasting common stock in street name which indicates that
the broker does not have discretionary authority to vote on adoption of the
merger agreement, the shares will be considered present at the meeting for
purposes of determining the presence of a quorum and calculating the vote, but
will not be considered to have been voted in favor of adoption of the merger
agreement. Your broker will vote your shares only if you provide instructions on
how to vote by following the information provided to you by your broker.
Because adoption of the merger agreement and approval of the merger require
the affirmative vote of the holders of a majority of the outstanding shares of
American Telecasting common stock, as of the record date, abstentions, failures
to vote and broker non-votes will have the same effect as a vote against
adoption of the merger agreement and approval of the merger.
American Telecasting does not expect that any matter other than adoption of
the merger agreement will be brought before the special meeting. If, however,
other matters are properly presented, the persons named as proxies will vote in
accordance with their judgment with respect to those matters, unless authority
to do so is withheld in the proxy.
You may revoke your proxy at any time before it is voted by:
- sending a written revocation notice to the Secretary of American
Telecasting at 5575 Tech Center Drive, Suite 300, Colorado Springs,
Colorado 80919;
- granting a subsequent proxy; or
- appearing in person and voting at the special meeting, however,
attendance at the special meeting will not in and of itself constitute
revocation of a proxy.
American Telecasting will incur the expenses incurred in connection with
the printing and mailing of this proxy statement. In addition to solicitation by
use of the mails, proxies may be solicited from American Telecasting
stockholders by directors, officers and employees of American Telecasting in
person or by telephone, telegram or other means of communication. Such
directors, officers and employers will not be additionally compensated, but may
be reimbursed for reasonable out-of-pocket expenses in connection with such
solicitation. American Telecasting has retained Georgeson & Company, Inc. at an
approximate cost of $10,000 plus reimbursement of expenses, to assist in the
solicitation of proxies. American Telecasting and Georgeson & Company, Inc. will
also request banks, brokers and other intermediaries holding shares beneficially
owned by others to send this proxy to and obtain proxies from the beneficial
owners and will reimburse the holders for their reasonable expenses in so doing.
YOU SHOULD NOT SEND IN ANY STOCK CERTIFICATES WITH YOUR PROXIES. A
TRANSMITTAL FORM WITH INSTRUCTIONS FOR THE SURRENDER OF STOCK CERTIFICATES FOR
AMERICAN TELECASTING COMMON STOCK WILL BE MAILED TO YOU AS SOON AS PRACTICABLE
AFTER COMPLETION OF THE MERGER.
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THE MERGER AGREEMENT
The following describes certain aspects of the proposed merger, including
material provisions of the merger agreement. The following description of the
merger does not purport to be complete and is qualified in its entirety by
reference to the merger agreement, a copy of which is attached as Annex A to
this proxy statement and is incorporated herein by reference. We urge
stockholders to read the merger agreement carefully.
GENERAL; MERGER CONSIDERATION
The terms of the merger are set forth in the merger agreement. The merger
agreement was approved by your board and signed by American Telecasting, Sprint
and DD Acquisition as of April 26, 1999. Pursuant to the merger agreement, and
on the terms and conditions set forth therein, at the effective time, DD
Acquisition will be merged with and into American Telecasting. American
Telecasting will be the surviving corporation in the merger and will become a
wholly owned subsidiary of Sprint. As a result of the merger, each share of
common stock issued and outstanding immediately prior to the effective time
(other than common stock already owned by Sprint or DD Acquisition, common stock
owned as treasury stock by American Telecasting and shares of common stock as to
which dissenters' rights of appraisal have been perfected) shall be converted
into, and become exchangeable for, $6.50 in cash (the "merger consideration").
DISSENTING SHARES
In the merger, stockholders of American Telecasting have appraisal rights
under Section 262 of the Delaware General Corporation Law. If you exercise your
appraisal rights and comply with the requirements of Section 262, the shares of
common stock you own will not be converted into the right to receive the merger
consideration at the effective time. Instead, you will receive the appraised
value of your shares of common stock, which may be more or less than $6.50 per
share. If after the effective time, you fail to comply with the requirements of
Section 262, your shares will be converted into the right to receive the merger
consideration and remain outstanding following the merger. At the effective
time, you will not have any rights (including voting rights and rights to
dividends or distributions) with respect to your shares other than rights
provided by Section 262. For a summary of the requirements that a stockholder
must follow in order to exercise his or her appraisal rights, see "Dissenters'
Rights of Appraisal."
TREATMENT OF STOCK OPTIONS
American Telecasting agreed to offer holders of American Telecasting stock
options, whether or not the stock option is exercisable, the right to cancel his
or her stock option in exchange for an amount in cash equal to $6.50 less the
exercise price of the stock option.
CLOSING; EFFECTIVE TIME
The closing of the merger will take place no later than the third business
day following the satisfaction or waiver of the conditions to the merger set
forth in the merger agreement. Concurrently with the closing, American
Telecasting and Sprint will cause a certificate of merger to be executed,
acknowledged and filed with the Secretary of State of the State of Delaware. The
merger will become effective at the time the certificate of merger is duly filed
with the Secretary of State of the State of Delaware or at such later time
agreed by the parties and established under the certificate of merger. See
"-- Conditions of the Proposed Merger" and "The Merger -- Required Regulatory
Filings and Approvals."
CANCELLATION OF SHARES
At the effective time, all shares of common stock of American Telecasting
will no longer be outstanding and will be canceled and retired and will cease to
exist, and each certificate formerly representing any of such shares (other than
shares as to which dissenters' rights of appraisal have been perfected) will
thereafter represent only the right to receive the merger consideration.
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EXCHANGE OF CERTIFICATES
Prior to the effective time, Sprint agreed to designate a bank or trust
company to act as agent for the benefit of the holders of shares of American
Telecasting common stock to receive the funds necessary to make payments to such
holders upon surrender of the certificates. Upon surrender of a certificate to
such agent together with a signed letter of transmittal, duly executed, each
stockholder will be entitled to receive in exchange therefor the merger
consideration that such stockholder has the right to receive pursuant to the
provisions of the merger agreement, and the certificate will then be canceled.
No interest will be paid or accrued on any amount payable upon due surrender of
the certificates.
TRANSFERS
After the effective time, the stock transfer books of American Telecasting
will be closed and thereafter there shall be no further registration of
transfers of shares of common stock on the records of American Telecasting.
LOST, STOLEN OR DESTROYED CERTIFICATES
In the event any certificate is lost, stolen or destroyed, upon the making
of an affidavit of that fact by the stockholder claiming such certificate to be
lost, stolen or destroyed and, if required by the surviving corporation or
Sprint, the posting by such stockholder of a bond, in such reasonable amount as
the surviving corporation or Sprint may direct, as indemnity against any claim
that may be made against it with respect to such certificate, the agent
designated by Sprint, as described above under "Exchange of Certificates," will
issue in exchange for such lost, stolen or destroyed certificate the applicable
merger consideration such stockholder is entitled to receive pursuant to the
merger agreement.
REPRESENTATIONS AND WARRANTIES
Mutual Representations and Warranties. The merger agreement contains
various representations and warranties of the parties relating to and including,
among other things: (a) capitalization and organization and similar corporate
matters; (b) authorization, execution, delivery, performance and enforceability
of the merger agreement and related matters; (c) conflicts under governing
documents, required consents or approvals, and violations of any agreements or
law; (d) information supplied in this proxy statement; and (e) brokers.
Additional Representations and Warranties of American Telecasting. American
Telecasting has made additional representations relating to: (a) the filing and
validity of FCC licenses and other licenses and permits; (b) filings with the
Securities and Exchange Commission; (c) certain changes or events; (d) the
filing of tax returns and other tax matters; (e) valid title to assets; (f)
change of control agreements; (g) litigation; (h) contracts and commitments; (i)
retirement and other employee plans and matters relating to the Employee
Retirement Income Security Act of 1974, as amended; (j) contracts with labor
unions or organizations; (k) compliance with environmental regulations; (l)
ownership of intellectual property; (m) year 2000 compliance; (n) insurance
policies; (o) notes and accounts receivable; (p) transactions with affiliates;
(q) other merger discussions; (r) disclosures in its disclosure letter to
Sprint; and (s) the exercise of outstanding warrants.
Additional Representations and Warranties of Sprint and DD
Acquisition. Each of Sprint and DD Acquisition has made additional
representations relating to: (a) no prior activities of DD Acquisition; (b) the
sufficiency of funds available to acquire all the shares of American Telecasting
common stock; and (c) the fact that, except for the transactions contemplated by
the merger agreement, neither Sprint nor DD Acquisition beneficially owns any
shares of American Telecasting common stock.
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CONDUCT OF BUSINESS PRIOR TO THE MERGER
American Telecasting has covenanted and agreed as to itself and, where
indicated, each of its subsidiaries that, except as specified in its disclosure
letter to Sprint or as contemplated by the merger agreement, after the date of
the merger agreement and prior to the effective time (unless Sprint shall
otherwise approve in writing):
- it and its subsidiaries will conduct their businesses in the ordinary
course of business and in a manner consistent with prior practice;
- it and its subsidiaries will use all commercially reasonable efforts to
maintain and protect the FCC licenses and channel leases, to preserve
their business organizations substantially intact, to keep available the
services of their current officers and employees and to maintain their
existing relations with suppliers and other persons with which American
Telecasting or its subsidiaries has significant business relations;
- it and its subsidiaries will use all commercially reasonable efforts on a
basis consistent with past practice to continue to provide wireless cable
television service to the American Telecasting subscriber base;
- it will comply in all material respects with all applicable laws and
regulations wherever its business is conducted, including the timely
filing of all reports with the FCC and Securities and Exchange
Commission;
- it will not amend or modify the American Telecasting certificate of
incorporation or bylaws;
- it will not split, combine or reclassify its outstanding shares of
capital stock;
- it will not authorize, declare, set aside or pay any dividend payable in
cash, stock or property in respect of any capital stock other than
dividends from subsidiaries;
- it will not repurchase or otherwise acquire or permit any of its
subsidiaries to purchase or otherwise acquire any shares of its capital
stock;
- neither it nor its subsidiaries will issue, deliver or sell, or authorize
or propose the issuance, delivery or sale of, any shares of its capital
stock or any securities convertible into any such shares of its capital
stock, or any rights, warrants or options to acquire any such shares or
convertible securities or any stock appreciation rights, phantom stock
plans or stock equivalents, other than the issuance of shares of common
stock upon (i) the exercise of options outstanding as of the date of the
merger agreement, and (ii) the exercise of warrants outstanding as of the
date of the merger agreement;
- neither it nor its subsidiaries will incur any indebtedness for borrowed
money or guaranty any such indebtedness of another person, other than (i)
borrowings under existing lines of credit (or under any refinancing of
such existing lines) or (ii) indebtedness owing to, or guaranties of
indebtedness owing to, American Telecasting;
- neither it nor its subsidiaries will make any loans or advances to any
other person other than loans or advances between any subsidiaries or
between American Telecasting and its subsidiaries (other than loans or
advances less than $50,000 made in the ordinary course of business
consistent with past practice);
- neither it nor its subsidiaries will merge or consolidate with any other
entity in any transaction, or sell any business or assets in a single
transaction or series of transactions in which the aggregate
consideration is $100,000 or greater;
- neither it nor its subsidiaries will change its accounting policies
except as required by generally accepted account principles;
- neither it nor its subsidiaries will make any change in employment terms
for any of its directors or officers;
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- neither it nor its subsidiaries will alter, amend or create any
obligations with respect to compensation, severance, benefits, change of
control payments or any other payments to employees, directors or
affiliates of American Telecasting or its subsidiaries, other than with
respect to alterations or amendments made with respect to non-officers
and non-directors in the ordinary course of business consistent with past
practice or as expressly contemplated by the merger agreement or
consented to in writing by Sprint;
- neither it nor any of its subsidiaries will make any changes to its
benefit plans;
- neither it nor any of its subsidiaries will enter into any leasing or
licensing agreements, take-or-pay arrangements or other affiliations,
alignments or agreements with respect to its FCC licenses, provided,
American Telecasting may renegotiate any channel leases in the ordinary
course of business;
- neither it nor any of its subsidiaries will willfully take any action
that would cause any of its representations and warranties in the merger
agreement to become untrue and incorrect in all material respects; and
- neither it nor any of its subsidiaries will commit or agree to take any
of the foregoing actions.
In addition, American Telecasting and each of its subsidiaries agreed not
to take any action that would, or could reasonably be expected to, result in the
conditions to the obligations of American Telecasting, Sprint or DD Acquisition
to consummate the merger not being satisfied.
AGREEMENT NOT TO SOLICIT OTHER OFFERS
Under the merger agreement, American Telecasting agreed not to, nor
authorize or permit any of its subsidiaries or any of its officers, directors,
employees, auditors, attorneys, financial advisors, lenders and other agents to,
directly or indirectly, (a) solicit, initiate or encourage the submission of any
bona fide proposal with respect to a merger, consolidation, share exchange,
tender offer or similar transaction involving American Telecasting, or any
purchase or other acquisition of all or any significant portion of the assets of
American Telecasting or any equity interest in American Telecasting (an
"Acquisition Proposal") or (b) participate in or encourage any discussion or
negotiations regarding, or furnish to any person any non-public information with
respect to, or take any other action to facilitate any inquiries or the making
of, any proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal. However, the merger agreement provides that the American
Telecasting board is entitled to furnish information to, or enter into
discussions or negotiations with, any person or entity that makes an unsolicited
Acquisition Proposal prior to May 16, 1999, and to the extent that (a) the
American Telecasting board, based upon the advice of outside legal counsel,
determines in good faith that such action is required for the board of directors
to comply with its fiduciary obligations to the holders of common stock under
applicable Delaware law, (b) prior to taking such action, American Telecasting
receives from such person or entity an executed agreement in reasonably
customary form relating to the confidentiality of information to be provided to
such person or entity and (c) the American Telecasting board concludes in good
faith, based upon written advice from its independent financial advisor, that
the Acquisition Proposal is more favorable to the stockholders of American
Telecasting than the proposed merger with Sprint. American Telecasting agreed to
provide immediate oral and written notice to Sprint of (a) the receipt of any
such Acquisition Proposal or any inquiry which could reasonably be expected to
lead to any Acquisition Proposal, (b) the material terms and conditions of such
Acquisition Proposal or inquiry, (c) the identity of such person or entity
making any such Acquisition Proposal or inquiry and (d) American Telecasting's
intention to furnish information to, or enter into discussions or negotiations
with, such person or entity. American Telecasting agreed to continue to keep
Sprint informed of the status and details of any such Acquisition Proposal or
inquiry. American Telecasting had the right to enter into such alternative
Acquisition Proposal providing for a proposal deemed superior by American
Telecasting's board after Sprint was provided with three business days'
opportunity to counter such proposal.
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CERTAIN OTHER COVENANTS AND AGREEMENTS
Access to Information; Confidentiality. The merger agreement provides that
from April 26, 1999 to the effective time, American Telecasting will, and will
cause the representatives of American Telecasting to, afford the representatives
of Sprint and DD Acquisition reasonable access at all reasonable times to the
officers, employees, agents, properties, offices and other facilities, books and
records of American Telecasting and its subsidiaries, and shall furnish Sprint
and DD Acquisition with all financial, operating and other data and information
as Sprint and DD Acquisition, through their representatives, may reasonably
request. Sprint will remain subject to the terms of a confidentiality agreement
with American Telecasting dated June 4, 1998. No investigation pursuant to this
provision shall affect any representation or warranty in the merger agreement of
any party or any condition to the obligations of the parties.
Notification of Certain Matters. The merger agreement provides that
American Telecasting give prompt notice to Sprint, and Sprint give prompt notice
to American Telecasting, of (i) the occurrence, or nonoccurrence, of any event
which would be likely to cause any representation or warranty contained in the
merger agreement to be untrue or inaccurate in any material respect and (ii) any
failure by such party (or DD Acquisition, in the case of Sprint) to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it.
Further Assurances. Upon the terms and subject to the conditions of the
merger agreement, each of the parties to the merger agreement agreed to use all
commercially reasonable efforts to take, or cause to be taken, all appropriate
action, and to do, or cause to be done, all things necessary, proper or
advisable under law to consummate and make effective the merger and the other
transactions contemplated by the merger agreement, including, without
limitation, using all commercially reasonable efforts to obtain all licenses,
permits, consents, approvals, authorizations, qualifications and orders of each
governmental entity and parties to contracts with American Telecasting and its
subsidiaries as are necessary for the consummation of the merger and the other
transactions contemplated by the merger agreement and to fulfill the conditions
set forth in the merger agreement. If at any time after the effective time any
further action is necessary or desirable to carry out the purposes of the merger
agreement, the proper officers of each party to the merger agreement and the
surviving corporation agreed to use all commercially reasonable efforts to take
all such action.
In connection with, and without limiting the foregoing, American
Telecasting agreed to:
- take all actions necessary to ensure that no state antitakeover
statute or similar statute or regulation is or becomes operative with
respect to the merger agreement, the merger or any other transactions
contemplated by the merger agreement and
- if any state antitakeover statute or similar statute or regulation
is or becomes operative with respect to the merger agreement, the merger or
any other transaction contemplated by the merger agreement, take all
actions necessary to ensure that the merger agreement, the merger and any
other transactions contemplated by the merger agreement may be consummated
as promptly as practicable on the terms contemplated by the merger
agreement and otherwise to minimize the effect of such statute or
regulation on the merger and the other transactions contemplated by the
merger agreement.
The parties to the merger agreement have agreed to use their best efforts
to secure promptly all necessary approvals from the FCC that are required to
consummate the merger agreement. The parties agreed to use their best efforts to
prosecute such applications with diligence and to diligently oppose any
objections to such applications to the end that each application, as soon as
practicable, is granted by the FCC and such grants shall no longer be subject to
any further administrative or judicial review.
Board Recommendations. In connection with the merger and special
stockholders' meeting called to adopt and approve the merger, the American
Telecasting board agreed to recommend to the holders of the common stock of
American Telecasting to vote in favor of the merger and to use all commercially
reasonable efforts to obtain the necessary approvals by such holders of the
merger agreement, subject to the provisions referred to in the following
paragraph.
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The merger agreement provides that neither the American Telecasting board
nor any committee thereof may (i) withdraw, qualify or modify, or propose
publicly to withdraw, qualify or modify, in a manner adverse to Sprint, the
approval or recommendation of such board of directors of the merger or the
merger agreement, (ii) approve or recommend, or propose publicly to approve or
recommend, any transaction involving an Acquisition Proposal from a third party
or (iii) cause American Telecasting to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement related
to any alternative transaction. Nevertheless, if prior to May 16, 1999 the
American Telecasting board determined in good faith that it had received an
Acquisition Proposal more favorable to the stockholders of American Telecasting
than the proposed merger with Sprint as described above under "Agreement Not to
Solicit Other Offers" and after receipt of advice from outside counsel that it
is required to do so by its fiduciary duties to holders of the common stock of
American Telecasting under applicable law, the American Telecasting board could
have (subject to this and the following sentences) informed holders of common
stock of American Telecasting that it no longer believed that the proposed
merger with Sprint was advisable and no longer recommended approval of the
merger with Sprint and entered into an agreement with respect to such
Acquisition Proposal, but only at a time that was after the third business day
following Sprint's receipt of written notice from the American Telecasting board
that it had received such Acquisition Proposal. During such three business day
period, American Telecasting agreed to provide Sprint an opportunity to propose
such adjustments to the terms and conditions of the merger agreement as would
enable American Telecasting to proceed with its recommendation to its
stockholders, provided that any such proposed adjustment will be at the sole
discretion of the American Telecasting board, exercised in good faith; provided
further, however, that any such proposed adjustment, the sole effect of which is
to (i) increase the amount of the merger consideration, (ii) waive one or more
conditions to the obligations of Sprint or DD Acquisition to effect the merger
or (iii) modify the terms and conditions of the merger agreement to reflect
identical terms and conditions contained in such Acquisition Proposal, will be
automatically accepted, and the merger agreement will be amended accordingly.
Unless the merger agreement has been earlier terminated, American
Telecasting has agreed that a stockholder meeting shall nevertheless be convened
and votes with respect to the proposed merger with Sprint taken.
Stockholder Litigation. American Telecasting agreed to give Sprint the
opportunity to participate in the defense or settlement of any stockholder
litigation against American Telecasting and its directors relating to the
transactions contemplated by the merger agreement or the merger; provided,
however, that no such settlement shall be agreed to without Sprint's consent
which consent will not be unreasonably withheld.
Stockholders' Meeting. American Telecasting agreed to cause a special
meeting of its stockholders to be duly called and held as soon as practicable
for the purpose of voting on the approval and adoption of the merger agreement
and the proposed merger with Sprint. American Telecasting will take all action
necessary in accordance with Delaware law and American Telecasting's certificate
of incorporation and bylaws to duly call, give notice of, and convene such
special meeting. American Telecasting will use all commercially reasonable
efforts to solicit from holders of shares of common stock of American
Telecasting entitled to vote at such special meeting proxies in favor of such
approval and shall take all other action necessary or, in the reasonable opinion
of Sprint, helpful to secure the vote or consent of such holders required to
effect the proposed merger with Sprint.
Indemnification of Directors and Officers; Directors and Officers'
Insurance. All rights to indemnification by American Telecasting now existing in
favor or each present and former director, officer, employee and agent of
American Telecasting or its subsidiaries as provided in American Telecasting's
certificate of incorporation or bylaws, in each case as in effect on the date of
the merger agreement, or pursuant to any other agreements in effect on the date
of the merger agreement, copies of which have been provided or made available to
Sprint, will survive the proposed merger with Sprint, and Sprint agreed to (i)
cause the surviving corporation to continue in full force and effect for a
period of at least six years from the effective time all rights to
indemnification and (ii) perform, or cause the surviving corporation to perform,
in a timely manner, the surviving corporation's obligation with respect thereto.
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Sprint will cause the surviving corporation to, and the surviving
corporation will, maintain in effect for six years from the effective time, if
available, the current directors' and officers' liability insurance covered by
such policies (provided that the surviving corporation may substitute therefor
policies of at least the same coverage containing terms and conditions which are
not materially less favorable) with respect to matters occurring prior to the
effective time. However, in no event will the surviving corporation be required
to expend more than an amount per year equal to 150% of current annual premiums
paid by American Telecasting for such insurance.
If the surviving corporation or any of its successors or assigns (i)
consolidates with or merges into any other persons and is not the continuing or
surviving corporation or entity of such consolidation or merger or (ii)
transfers all or substantially all of its properties and assets to any persons,
then, and in each such case, proper provision will be made so that the
successors and assigns of the surviving corporation will assume the obligations
described above.
FCC Applications. American Telecasting and Sprint have agreed to coordinate
efforts and cooperate with each other, to the extent permitted by the FCC rules,
in the preparation and filing of applications with the FCC. Upon the request of
Sprint, American Telecasting will use all commercially reasonable efforts to
prepare and file and/or to cause the lessor of a channel lease to prepare and
file, at Sprint's expense, an application to be filed with the FCC, as soon as
practicable, and to the extent applicable, in no event after (i) the end of the
initial one-week filing window in which the FCC will accept applications for the
provision of two-way services or (ii) the end of a filing window for major
modification applications established pursuant to Section 74.911(c) of the FCC
rules.
Director Resignations. American Telecasting agreed to cause to be delivered
to Sprint resignations of all the directors of American Telecasting's
subsidiaries to be effective upon the consummation of the proposed merger with
Sprint. American Telecasting will cause such directors, prior to resignation, to
appoint new directors nominated by Sprint to fill such vacancies.
Rights Plan. The American Telecasting board agreed to adopt pursuant to the
merger agreement, and has subsequently adopted, a rights plan between American
Telecasting and a rights agent selected by it and to approve the appropriate
resolutions so that (i) neither Sprint nor DD Acquisition will become an
"acquiring person" under such rights plan as a result of the transactions
contemplated by the merger or the voting agreements, (ii) no "stock acquisition
date" or "distribution date," each as determined pursuant to such rights plan,
will occur as a result of the merger or the voting agreements and (iii) all
outstanding rights to purchase Series A Junior Participating Preferred Stock
issued and outstanding under the rights plan will expire at the effective time
of the merger. For a description of American Telecasting's rights plan, see
American Telecasting's Form 8-A, filed with the Securities and Exchange
Commission on May 3, 1999.
Year 2000 Plan. American Telecasting agreed to (i) use all commercially
reasonable efforts to ensure that its year 2000 plan shall be completed in a
timely manner, (ii) allow Sprint to monitor American Telecasting's year 2000
compliance issues and year 2000 plan, (iii) provide prompt notice to Sprint if
American Telecasting does not achieve, or reasonably expects it shall not
achieve milestones and objectives identified in its year 2000 plan and (iv)
cooperate in good faith with Sprint's efforts to ensure that American
Telecasting is year 2000 compliant.
Employee Benefits. Sprint and DD Acquisition agreed that, effective as of
the effective time of the merger and for a three-year period following the
effective time of the merger, the surviving corporation and its subsidiaries and
successors will provide to the employees of American Telecasting or any of its
subsidiaries immediately prior to the effective time of the merger with employee
benefit plans and programs which provide benefits that are no less favorable in
the aggregate to those provided to such employees immediately prior to the date
of the merger agreement. With respect to such benefits, service accrued by such
employees during employment with American Telecasting and its subsidiaries prior
to the effective time of the merger will be recognized for all employment and
benefit related purposes as service rendered to the surviving corporation and
its subsidiaries and successors, except for benefit accruals under the defined
benefit pension plan sponsored by Sprint and to the extent necessary to prevent
duplication of benefits.
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<PAGE> 31
Sprint and DD Acquisition agreed to honor and to cause the surviving
corporation to honor all contracts, agreements, arrangements, policies, plans
and commitments of American Telecasting and its subsidiaries in effect as of the
date of the merger agreement that are applicable with respect to any employee,
officer or director or former employee, officer or director of American
Telecasting or any of its subsidiaries; provided, however, that the foregoing
will not preclude Sprint or DD Acquisition from amending or terminating any of
such plans in accordance with their terms. With respect to any welfare plan in
which the employees are eligible to participate after the effective time of the
merger, Sprint and DD Acquisition will cause the surviving corporation to (i)
waive all limitations as to preexisting conditions exclusions (to the extent
such exclusions are not currently applicable to employees) and waiting periods
with respect to participation and coverage requirements (to the extent any such
waiting periods are not currently in effect with respect to employees)
applicable to the employees and (ii) provide each employee with credit for any
co-payments and deductibles paid prior to the effective time of the merger in
satisfying any applicable deductible or out-of-pocket requirements.
Matters Relating to Bond Appreciation Rights. At any time, and from time to
time, prior to the effective time of the merger, upon the written request of
American Telecasting, Sprint will loan funds to American Telecasting in an
aggregate amount not to exceed $3.5 million for the purpose of funding amounts
required to be paid by American Telecasting to the holders of American
Telecasting's bond appreciation rights upon the exercise thereof. Interest will
accrue on such loans at a rate of ten percent (10%) per annum, and the aggregate
principal amount of such loans, together with accrued interest thereon, will be
due and payable on the first anniversary of any termination of the merger
agreement; provided, that, if (i) American Telecasting enters into an
acquisition agreement related to an alternative transaction and (ii) the merger
agreement is terminated by Sprint because American Telecasting's board withdrew,
modified or changed in a manner adverse to Sprint or DD Acquisition its approval
or recommendation of the merger agreement or the proposed merger with Sprint or
recommended such alternative transaction or executed an agreement relating to
such alternative transaction with a person or entity other than Sprint, DD
Acquisition or their affiliates, then the entire principal amount of such loans,
together with accrued interest thereon, will be due and payable upon demand as
of the date of such termination.
Matters Relating to Notes. If on September 30, 1999, the termination date
of the merger agreement, the only condition to the closing of the proposed
merger with Sprint remaining unfulfilled is the receipt of any required approval
by the FCC, then Sprint will have the option to extend the termination date to
December 31, 1999 by delivering to American Telecasting on or prior to September
30, 1999 a notice by which Sprint agrees to loan to American Telecasting up to
$13 million, in cash, for the purpose, among other things, of paying interest
due in December 1999 for American Telecasting's senior discount notes due 2004.
See "Merger -- Termination." Interest will accrue on such loan at a rate of ten
percent (10%) per annum, and the aggregate principal amount of such loan,
together with accrued interest thereon, will be due and payable on the first
anniversary of any termination of the merger agreement; provided, that, if (i)
the merger agreement is terminated in accordance with the terms of the merger
agreement (other than as a result of a breach by Sprint or DD Acquisition) and
(ii) American Telecasting enters into an acquisition agreement related to an
alternative transaction that would, if consummated in accordance with its terms,
provide to American Telecasting or the stockholders of American Telecasting a
per share cash consideration equal to or greater than ninety percent (90%) of
the merger consideration, then the entire principal amount of such loans,
together with accrued interest thereon, will be due and payable upon demand as
of the date of such termination.
CONDITIONS OF THE PROPOSED MERGER
Mutual Conditions. The obligation of each of Sprint, DD Acquisition and
American Telecasting to effect the merger is conditioned on the following:
- the approval of the merger by the requisite vote of the stockholders of
American Telecasting;
- the expiration or termination of the waiting period applicable to the
consummation of the merger under the Hart-Scott-Rodino Act, any necessary
approval by the FCC, and all other actions by or in respect
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<PAGE> 32
of or filings with any governmental entity required to permit the
consummation of the merger shall have been made or obtained (as the case
may be);
- no temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal
restraint or prohibition (including any statute, rule, regulation,
injunction, order or decree proposed, enacted, enforced, promulgated,
issued or deemed applicable to, or any consent or approval withheld with
respect to the merger, by any governmental entity) preventing the
consummation of the merger shall be in effect; provided, however, that
the parties invoking this condition shall use all commercially reasonable
efforts to have any such order or injunction vacated;
- the other party's representations and warranties, subject to certain
materiality exceptions, being true and correct as of the date of the
merger agreement; and
- the performance in all material respects by the other party of its
obligations under the merger agreement;
TERMINATION
The merger agreement may be terminated:
(i) at any time prior to the effective time of the proposed merger
with Sprint, whether before or after approval of the merger agreement by
the stockholders of American Telecasting, by mutual written consent of
American Telecasting and Sprint;
(ii) by Sprint or American Telecasting, if any court of competent
jurisdiction or other governmental entity has issued an order, decree,
ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the proposed merger with Sprint and such order,
decree, ruling or other action shall have become final and nonappealable;
provided, however, that the party terminating the merger agreement will use
all commercially reasonable efforts to have such order, decree, ruling or
action vacated;
(iii) by Sprint or American Telecasting, if the proposed merger with
Sprint is not consummated on or before September 30, 1999 (or October 31,
1999 if the only condition to the closing remaining unfulfilled on
September 30, 1999 is any required approval by the FCC); provided, however,
that if Sprint delivers to American Telecasting the notice regarding the
loan for interest payments to be made by American Telecasting as described
above under "-- Certain Other Covenants and Agreements -- Matters Relating
to Notes", such date shall be extended to December 31, 1999; provided,
further, that the terminating party has not failed to fulfill any
obligation under the merger agreement or has been the primary cause of, or
resulted in, the failure to consummate the merger on or before such date;
(iv) by American Telecasting or Sprint, if the merger agreement and
the proposed merger with Sprint fail to be approved and adopted by American
Telecasting stockholders at the special meeting;
(v) by Sprint, if the American Telecasting board of directors
withdraws, modifies or changes in a manner adverse to Sprint or DD
Acquisition its approval or recommendation of the merger agreement or the
proposed merger with Sprint or recommends an alternative Acquisition
Proposal or executes an agreement relating to an alternative Acquisition
Proposal or similar business combination with a person or entity other than
Sprint, DD Acquisition or their affiliates;
(vi) by Sprint, if American Telecasting breaches any representation,
warranty, covenant or agreement contained in the merger agreement which
causes the representations and warranties of American Telecasting not to be
true and correct in all material respects or prevents American Telecasting
from performing in all material respects its obligations pursuant to the
merger agreement and, within 30 days after written notice of such breach to
American Telecasting from Sprint, such breach is not cured in all material
respects or waived by Sprint or DD Acquisition;
(vii) by American Telecasting, if Sprint or DD Acquisition breaches in
any material respect any of their respective representations, warranties
covenants or other agreements contained in the merger
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<PAGE> 33
agreement and, within 30 days after written notice of such breach to Sprint
from American Telecasting, such breach is not cured in all material
respects or waived by American Telecasting; or
(viii) by American Telecasting, if, in compliance with the provisions
set forth in the merger agreement and described above under the caption
"Certain Other Covenants and Agreements -- Board Recommendations," American
Telecasting enters into a definitive agreement related to an alternative
proposal that would, if consummated in accordance with its terms, provide
to American Telecasting or the stockholders of American Telecasting a per
share consideration equal to or greater than $1.00 per share in excess of
the merger consideration; provided that American Telecasting makes a
simultaneous payment to Sprint of a termination fee of $11 million.
TERMINATION FEE
In the event of the termination of the merger agreement, the merger
agreement has no further effect except pursuant to the provisions described in
the following paragraph. There is no liability on the part of any party on such
termination except for liability for any willful breach and except as otherwise
provided in the merger agreement.
If Sprint exercises its right to terminate the merger agreement pursuant to
clause (v) under "-- Termination," American Telecasting will pay to Sprint the
$11 million termination fee, in same-day funds, as liquidated damages and not as
a penalty to reimburse Sprint for its time, expense and lost opportunity costs
of pursuing the merger, upon consummation of the transaction relating to such
Acquisition Proposal. In addition, if (i) any person (other than Sprint) shall
have publicly disclosed an alternative Acquisition Proposal, (ii) following such
disclosure, the adoption and approval by American Telecasting stockholders of
the merger agreement and proposed merger with Sprint is not obtained and (iii)
within one year after termination of the merger agreement, American Telecasting
enters into an agreement relating to, or consummates, an Acquisition Proposal
with a person other than Sprint or DD Acquisition, then immediately prior to,
and as a condition of, consummation of such transaction, American Telecasting
must pay to Sprint upon demand the $11 million termination fee.
AMENDMENT AND WAIVER
Subject to the provisions of applicable law, any provision of the merger
agreement may be amended or modified at any time prior to the effective time of
the merger by means of a written agreement executed and delivered by duly
authorized officers of the respective parties. The conditions to each of the
parties' obligations to consummate the merger are for the sole benefit of such
party and may be waived by such party in whole or in part to the extent
permitted by applicable law.
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THE VOTING AGREEMENTS
The voting agreements were entered into simultaneously with the merger
agreement. Set forth below is a brief summary of material provisions of the
voting agreements, which are attached as Annex B to this proxy statement. We
urge stockholders to read Annex B in its entirety.
AGREEMENT TO VOTE
Pursuant to the voting agreements, Robert D. Hostetler, Donald R. DePriest,
CFW Communications Foundation, CFW Communications Company and MCT Investors,
L.P., each a stockholder of American Telecasting, have appointed Sprint as proxy
to vote their shares of common stock as follows:
- in favor of adoption and approval of the merger agreement, all other
transactions contemplated thereby and any actions required in furtherance
thereof; and
- against the following actions (other than the merger with Sprint and the
transactions contemplated by or required to implement the merger
agreement with Sprint and the voting agreements) involving American
Telecasting or any of its subsidiaries: (i) any extraordinary corporate
transaction, such as a merger, consolidation, business combination,
tender or exchange offer, reorganization, recapitalization, liquidation
or other change of control; or (ii) any sale or transfer of a material
amount of the assets or securities of American Telecasting or its
subsidiaries.
RESTRICTIONS ON TRANSFER
Also pursuant to the voting agreements, each of the stockholders who
executed a voting agreement has agreed, except with respect to existing pledge
agreements or as otherwise consented to in writing by Sprint in its sole
discretion, not to:
- either directly or indirectly, offer or otherwise sell, assign, pledge,
hypothecate, transfer, exchange, tender, dispose or grant an option to
dispose of any of his or its shares of American Telecasting common stock
or any interest therein, or agree to do any of the foregoing; or
- take any action which would have the effect of preventing or disabling
such stockholder from performing such stockholder's obligations under the
voting agreements.
TERMINATION OF VOTING AGREEMENTS
The voting agreements terminate upon the earliest of:
- the termination of the merger agreement in accordance with its terms;
- the date on which the merger becomes effective; and
- the recommendation by the board of directors of American Telecasting of
an alternative proposal prior to May 16, 1999 that would, if consummated
in accordance with its terms, provide to American Telecasting or the
stockholders of American Telecasting a per share consideration equal to
or greater than $1.00 per share in excess of the merger consideration.
REPRESENTATIONS AND WARRANTIES
Pursuant to the voting agreements, each of the stockholders who has
executed a voting agreement represented and warranted the following to Sprint:
- that the voting agreement is binding and enforceable, in accordance with
its terms, upon such stockholder;
- that the voting agreement or the transactions contemplated thereby do not
result in a breach of or default under any agreements to which such
stockholder is a party that would prevent or materially delay the
performance by such stockholder of his or its obligation under the voting
agreement;
- that such stockholder is the record owner of his or its shares of
American Telecasting common stock and has the right to vote or direct the
voting of such shares; and
- that such stockholder has not appointed or granted any proxies, which
appointment or grant is still effective, with respect to his or its
shares of American Telecasting common stock (except for the proxies
contemplated by the voting agreements).
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DISSENTERS' RIGHTS OF APPRAISAL
Under Section 262 of the Delaware General Corporation Law, any holder of
American Telecasting common stock who does not wish to accept the merger
consideration may dissent from the merger and elect to have the fair value of
the stockholder's shares of American Telecasting common stock (exclusive of any
element of value arising from the accomplishment or expectation of the merger)
judicially determined and paid to the stockholder in cash, together with a fair
rate of interest, if any, provided that the stockholder complies with the
provisions of Section 262 of the Delaware General Corporation Law. The following
discussion is not a complete statement of the law pertaining to appraisal rights
under Delaware law, and is qualified in its entirety by the full text of Section
262, which is provided in its entirety as Annex D to this proxy statement. All
references in Section 262 and in this summary to a "stockholder" are to the
record holder of the shares of common stock as to which appraisal rights are
asserted. A person having a beneficial interest in shares of common stock held
of record in the name of another person, such as a broker or nominee, must act
promptly to cause the record holder to follow properly the steps summarized
below and in a timely manner to perfect appraisal rights.
Under Section 262, where a proposed merger is to be submitted for approval
at a meeting of stockholders, as in the case of the special meeting, the
corporation, not less than 20 days prior to the meeting, must notify each of its
stockholders entitled to appraisal rights that the appraisal rights are
available and include in the notice a copy of Section 262. This proxy statement
shall constitute the notice to the holders of common stock and the applicable
Delaware law provisions are attached to this proxy statement as Annex D. Any
stockholder who wishes to exercise appraisal rights or who wishes to preserve
the right to do so should review carefully the following discussion and Annex D
to this proxy statement because failure to comply with the procedures specified
in Section 262 timely and properly will result in the loss of appraisal rights.
Moreover, because of the complexity of the procedures for exercising the right
to seek appraisal of the common stock, American Telecasting believes that
stockholders who consider exercising these rights should seek the advice of
counsel.
Any holder of common stock wishing to exercise the right to dissent from
the merger and demand appraisal under Section 262 must satisfy each of the
following conditions:
- The stockholder must deliver to American Telecasting a written demand for
appraisal of the stockholder's shares before the vote on the merger
agreement at the special meeting, which demand will be sufficient if it
reasonably informs American Telecasting of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of the holder's shares;
- The stockholder must not vote its shares of common stock in favor of the
merger agreement. Because a proxy which does not contain voting
instructions will, unless revoked, be voted in favor of the merger
agreement, a stockholder who votes by proxy and who wishes to exercise
appraisal rights must vote against the merger agreement or abstain from
voting on the merger agreement; and
- The stockholder must continuously hold the shares from the date of making
the demand through the effective time. Accordingly, a stockholder who is
the record holder of shares of common stock on the date the written
demand for appraisal is made but who thereafter transfers the shares
prior to the effective time will lose any right to appraisal in respect
of that stockholder's shares.
Neither voting (in person or by proxy) against, abstaining from voting on
or failing to vote on the proposal to approve and adopt the merger agreement
will constitute a written demand for appraisal within the meaning of Section
262. The written demand for appraisal must be in addition to and separate from
any such proxy or vote.
Only a holder of record of shares of common stock issued and outstanding
immediately prior to the effective time is entitled to assert appraisal rights
for the shares of common stock registered in that holder's name. A demand for
appraisal should be executed by or on behalf of the stockholder of record, fully
and correctly, as that stockholder's name appears on the stock certificates,
should specify the stockholder's name and mailing address, the number of shares
of common stock owned and that the stockholder intends thereby to demand
appraisal of the stockholder's common stock. If the shares are owned of record
in a fiduciary capacity, such as by a trustee, guardian or custodian, execution
of the demand should be made in that capacity, and if
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<PAGE> 36
the shares are owned of record by more than one person as in a joint tenancy or
tenancy in common, the demand should be executed by or on behalf of all owners.
An authorized agent, including one or more joint owners, may execute a demand
for appraisal on behalf of a stockholder; however, the agent must identify the
record owner or owners and expressly disclose the fact that, in executing the
demand, the agent is acting as agent for the owner or owners. A record holder
such as a broker who holds shares as nominee for several beneficial owners may
exercise appraisal rights with respect to the shares held for one or more
beneficial owners while not exercising these rights with respect to the shares
held for other beneficial owners; in that case, the written demand should set
forth the number of shares as to which appraisal is sought, and where no number
of shares is expressly mentioned the demand will be presumed to cover all shares
held in the name of the record owner. Stockholders who hold their shares in
brokerage accounts or other nominee forms and who wish to exercise appraisal
rights are urged to consult with their brokers to determine the appropriate
procedures for the making of a demand for appraisal by a nominee.
A stockholder who elects to exercise appraisal rights under Section 262
should mail or deliver a written demand to: American Telecasting, Inc., 5575
Tech Center Drive, Suite 300, Colorado Springs, Colorado 80919, Attention:
Secretary.
Within 10 days after the effective time, the surviving corporation must
send a notice as to the effectiveness of the merger to each former stockholder
of American Telecasting who has made a written demand for appraisal in
accordance with Section 262 and who has not voted in favor of the merger
agreement. Within 120 days after the effective time, but not thereafter, either
the surviving corporation or any dissenting stockholder who has complied with
the requirements of Section 262 may file a petition in the Delaware Chancery
Court demanding a determination of the value of the shares of common stock held
by all dissenting stockholders. American Telecasting is under no obligation to
and has no present intent to file a petition for appraisal, and stockholders
seeking to exercise appraisal rights should not assume that the surviving
corporation will file such a petition or that the surviving corporation will
initiate any negotiations with respect to the fair value of such shares.
Accordingly, stockholders who desire to have their shares appraised should
initiate any petitions necessary for the perfection of their appraisal rights
within the time periods and in the manner prescribed in Section 262. Inasmuch as
American Telecasting has no obligation to file such a petition, the failure of a
stockholder to do so within the period specified could nullify that
stockholder's previous written demand for appraisal. In any event, at any time
within 60 days after the effective time (or at any time thereafter with the
written consent of American Telecasting), any stockholder who has demanded
appraisal has the right to withdraw the demand and to accept payment of the
merger consideration.
Under the merger agreement, American Telecasting has agreed to give Sprint
prompt notice of any demands for appraisal received by it, withdrawals of these
demands, and any other instruments served in accordance with Delaware law and
received by American Telecasting and relating thereto. Sprint shall direct all
negotiations and proceedings with respect to demands for appraisal under
Delaware law. American Telecasting shall not, except with the prior written
consent of Sprint, make any payment with respect to any demands for appraisal,
or offer to settle, or settle, any such demands.
Within 120 days after the effective time, any stockholder who has complied
with the provisions of Section 262 to that point in time will be entitled to
receive from the surviving corporation, upon written request, a statement
setting forth the aggregate number of shares not voted in favor of the merger
agreement and with respect to which demands for appraisal have been received and
the aggregate number of holders of these shares. The surviving corporation must
mail the statement to the stockholder within 10 days of receipt of the request
or within 10 days after expiration of the period for delivery of demands for
appraisals under Section 262, whichever is later.
A stockholder timely filing a petition for appraisal with the Court of
Chancery must deliver a copy to the surviving corporation, which will then be
obligated within 20 days to provide the Delaware Court of Chancery with a duly
verified list containing the names and addresses of all stockholders who have
demanded appraisal of their shares. After notice to these stockholders, the
Delaware Court of Chancery is empowered to conduct a hearing on the petition to
determine which stockholders are entitled to appraisal rights. The Delaware
Court of Chancery may require stockholders who have demanded an appraisal for
their shares and who hold stock
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represented by certificates to submit their certificates to the Register in
Chancery for notation thereon of the pendency of the appraisal proceedings, and
if any stockholder fails to comply with the requirement, the Delaware Court of
Chancery may dismiss the proceedings as to that stockholder.
After determining the stockholders entitled to an appraisal, the Delaware
Court of Chancery will appraise the "fair value" of their shares, exclusive of
any element of value arising from the accomplishment or expectation of the
merger, together with a fair rate of interest, if any, to be paid upon the
amount determined to be the fair value. The costs of the action may be
determined by the Delaware Chancery Court and taxed upon the parties as the
Delaware Chancery Court deems equitable. Upon application of a dissenting
stockholder, the Delaware Chancery Court may also order that all or a portion of
the expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorneys' fees and the
fees and expenses of experts, be charged pro rata against the value of all of
the shares entitled to appraisal. STOCKHOLDERS CONSIDERING SEEKING APPRAISAL
SHOULD BE AWARE THAT THE FAIR VALUE OF THEIR SHARES AS DETERMINED UNDER SECTION
262 COULD BE MORE THAN, THE SAME AS OR LESS THAN THE MERGER CONSIDERATION THEY
WOULD RECEIVE UNDER THE MERGER AGREEMENT IF THEY DID NOT SEEK APPRAISAL OF THEIR
SHARES. STOCKHOLDERS SHOULD ALSO BE AWARE THAT INVESTMENT BANKING OPINIONS ARE
NOT OPINIONS AS TO FAIR VALUE UNDER SECTION 262.
In determining fair value and, if applicable, a fair rate of interest, the
Delaware Chancery Court is to take into account all relevant factors. In
Weinberger v. UOP, Inc., the Delaware Supreme Court discussed the factors that
could be considered in determining fair value in an appraisal proceeding,
stating that "proof of value by any techniques or methods that are generally
considered acceptable in the financial community and otherwise admissible in
court" should be considered, and that "fair price obviously requires
consideration of all relevant factors involving the value of a company." The
Delaware Supreme Court stated that, in making this determination of fair value,
the court must consider market value, asset value, dividends, earnings
prospects, the nature of the enterprise and any other facts that could be
ascertained as of the date of the merger that throw any light on future
prospects of the merged corporation. In Weinberger, the Delaware Supreme Court
stated that "elements of future value, including the nature of the enterprise,
that are known or susceptible of proof as of the date of the merger and not the
product of speculation, may be considered." Section 262 provides that fair value
is to be "exclusive of any element of value arising from the accomplishment or
expectation of the merger."
Any stockholder who has duly demanded an appraisal in compliance with
Section 262 will not, after the effective time, be entitled to vote the shares
subject to the demand for any purpose or be entitled to the payment of dividends
or other distributions on those shares (except dividends or other distributions
payable to holders of record of shares as of a record date prior to the
effective time).
Any stockholder may withdraw its demand for appraisal and accept the merger
consideration by delivering to the surviving corporation a written withdrawal of
the stockholder's demand for appraisal, except that (1) any such attempt to
withdraw made more than 60 days after the effective time will require written
approval of the surviving corporation and (2) no appraisal proceeding in the
Delaware Chancery Court shall be dismissed as to any stockholder without the
approval of the Delaware Chancery Court, and such approval may be conditioned
upon such terms as the Delaware Chancery Court deems just. If the surviving
corporation does not approve a stockholder's request to withdraw a demand for
appraisal when such approval is required or if the Delaware Chancery Court does
not approve the dismissal of an appraisal proceeding, the stockholder would be
entitled to receive only the appraised value determined in any such appraisal
proceeding, which value could be lower than the value of the merger
consideration.
FAILURE TO COMPLY STRICTLY WITH ALL OF THE PROCEDURES SET FORTH IN SECTION
262 WILL RESULT IN THE LOSS OF A STOCKHOLDER'S STATUTORY APPRAISAL RIGHTS.
CONSEQUENTLY, ANY STOCKHOLDER WISHING TO EXERCISE APPRAISAL RIGHTS IS URGED TO
CONSULT LEGAL COUNSEL BEFORE ATTEMPTING TO EXERCISE SUCH RIGHTS.
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AMERICAN TELECASTING, INC. SELECTED FINANCIAL DATA
The selected financial information included in the table below for each of
the five years in the period ended December 31, 1998 has been derived from and
is qualified in its entirety by the audited financial statements of American
Telecasting, including those incorporated into this proxy statement by reference
to American Telecasting's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, available as described below under "Where You Can Find More
Information." The selected financial data presented below for the three months
ended March 31, 1998 and 1999 and as of March 31, 1998 and 1999 has been derived
from, and should be read in conjunction with, the unaudited interim financial
statements of American Telecasting incorporated into this proxy statement by
reference to American Telecasting's Quarterly Report on Form 10-Q for the three
months ended March 31, 1999, available as described below under "Where You Can
Find More Information". In the opinion of American Telecasting, such unaudited
interim financial statements have been prepared on the same basis as the audited
financial statements and include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the results of
operations for the interim periods.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31 FISCAL YEAR ENDED DECEMBER 31
--------------------- ----------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Total revenue............... $ 10,299 $ 12,713 $ 47,737 $ 59,031 $ 62,032 $ 47,501 $ 21,629
Net loss.................... (13,845) (18,270) (74,946) (52,471) (104,630) (66,635) (15,478)
Net loss per share -- basic
and diluted............... (0.54) (0.71) (2.91) (2.06) (5.78) (4.17) (1.07)
Total assets................ $ 121,028 $253,692 $ 127,665 $261,247 $ 283,572 $317,049 $226,920
Notes payable to banks and
other borrowings.......... 248,410 305,624 239,986 295,625 261,303 236,558 120,442
Stockholders'
(deficit)/equity.......... (137,789) (67,494) (124,170) (49,224) 3,113 53,736 93,843
</TABLE>
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MARKET FOR THE COMMON STOCK
AMERICAN TELECASTING COMMON STOCK MARKET PRICE AND DIVIDEND INFORMATION
Effective with the close of business on October 28, 1998, The Nasdaq Stock
Market delisted American Telecasting common stock from the Nasdaq SmallCap
Market. American Telecasting common stock currently is quoted on the OTC
Bulletin Board under the symbol "ATEL." The following table shows the per share
high and low sales prices for American Telecasting common stock on The Nasdaq
Stock Market (as reported by Nasdaq) through October 27, 1998, and the high and
low bid prices for American Telecasting common stock on the OTC Bulletin Board
since October 28, 1998, in each case for the calendar year periods indicated.
Quotations from the OTC Bulletin Board reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not necessarily represent actual
transactions. American Telecasting has never declared or paid any cash dividends
on its common stock and does not expect to declare dividends in the foreseeable
future. American Telecasting's ability to declare dividends is affected by
covenants in certain debt facilities that prohibit American Telecasting from
declaring dividends and prohibit its subsidiaries from transferring funds in the
form of cash dividends, loans or advances to American Telecasting.
MARKET PRICE OF AMERICAN TELECASTING COMMON STOCK
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
FISCAL YEAR 1998
First Quarter............................................... $1.47 $0.53
Second Quarter.............................................. 1.00 0.47
Third Quarter............................................... 1.09 0.25
Fourth Quarter.............................................. 0.56 0.10
FISCAL YEAR 1999
First Quarter............................................... $2.02 $0.19
Second Quarter (through May 24, 1999)....................... 8.34 1.50
</TABLE>
On April 26, 1999, the last full trading day prior to the day on which the
execution of the merger agreement was publicly announced, the high and low sales
prices for American Telecasting common stock were $7.44 and $6.88, respectively.
On May 24, 1999, the closing price for the American Telecasting common
stock was $6.09.
The market price for American Telecasting common stock is subject to
fluctuation and stockholders are urged to obtain current market quotations. No
assurance can be given as to the future price of or market for American
Telecasting common stock.
34
<PAGE> 40
SECURITIES OWNERSHIP
The following table sets forth selected information believed by American
Telecasting to be accurate based on information provided to it concerning the
beneficial ownership of American Telecasting common stock by each stockholder
who is known by American Telecasting to own beneficially in excess of 5% of the
outstanding American Telecasting common stock and by each director, American
Telecasting's chief executive officer, each of American Telecasting's other four
most highly compensated executive officers and all executive officers and
directors as a group, in each case as of April 30, 1999. Except as otherwise
indicated, all persons listed below have (i) sole voting power and investment
power with respect to their shares, except to the extent that authority is
shared by spouses under applicable law, and (ii) record and beneficial ownership
with respect to their shares. The shares and percentages set forth below include
shares of American Telecasting common stock which were outstanding or issuable
within 60 days upon the exercise of options outstanding as of April 30, 1999.
Certain of the shares set forth below, representing approximately 26% of the
total shares of common stock outstanding as of April 30, 1999, are subject to
voting agreements with Sprint. See "The Voting Agreements." Unless otherwise
indicated below, the address of each beneficial owner is at the principal
business address of American Telecasting, which is 5575 Tech Center Drive, Suite
300, Colorado Springs, Colorado 80919.
<TABLE>
<CAPTION>
AMERICAN TELECASTING
COMMON STOCK
-----------------------
NUMBER OF PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OF SHARES
------------------------------------ --------- ----------
<S> <C> <C>
MCT Investors, L.P.(1)...................................... 2,163,648 8.4%
1555 King Street, Suite 500
Alexandria, Virginia 22314
CFW Communications Company(2)............................... 1,486,434 5.8%
401 Spring Lane, Suite 300
Waynesboro, Virginia 22980
James S. Quarforth(3)....................................... 5,570 *
Donald R. DePriest(4)....................................... 4,874,135 18.9%
Richard F. Seney(5)......................................... 112,250 *
Robert D. Hostetler(6)...................................... 547,458 2.1%
Carl A. Rosberg(7).......................................... 1,900 *
Mitchell R. Hauser.......................................... 2,418 *
David K. Sentman(8)......................................... 65,001 *
Terry J. Holmes(9).......................................... 78,925 *
Bryan H. Scott.............................................. 305 *
Nasser Sharabianlou(10)..................................... 6,667 *
All current directors and executive officers as a group (12
persons).................................................. 5,696,574 22.0%
</TABLE>
- -------------------------
* Less than one percent
(1) Consists solely of 2,163,648 shares which are held of record by MCT but
owned beneficially by Donald R. DePriest. Mr. DePriest is the Chairman of
the Board, President and sole stockholder of MedCom Development Corporation,
which is the sole general partner of MCT. Mr. DePriest has sole voting and
investment power with respect to these shares, which power is exercised
through MedCom and MCT. MCT disclaims beneficial ownership with respect to
these shares.
(2) Includes 74,322 shares owned by CFW Communications Foundation, a Virginia
non-stock corporation. All of the directors of CFW are also directors of CFW
Communications Foundation.
(3) Includes 20 shares owned by Mr. Quarforth's minor children, of which Mr.
Quarforth disclaims beneficial ownership. Excludes 1,486,434 shares owned
beneficially by CFW, of which Mr. Quarforth disclaims beneficial ownership.
Mr. Quarforth is President and Chief Executive Officer of CFW.
(4) Includes 2,163,648 shares held of record by MCT over which Mr. DePriest has
sole voting and investment power, 41,058 shares held of record by MedCom
over which Mr. DePriest has sole voting and
35
<PAGE> 41
investment power, and 2,645,236 shares held directly by Mr. DePriest. See
Note 1 above. Also includes 24,193 shares held of record by CD Partners, a
general partnership of which Mr. DePriest is a 50% partner, over which Mr.
DePriest has shared voting and investment power. Mr. DePriest disclaims
beneficial ownership over all shares held by MCT and CD Partners, except to
the extent of Mr. DePriest's pro rata interest in the profits and losses of
MCT and CD Partners, respectively.
(5) Excludes 2,163,648 shares held by MCT, of which Mr. Seney disclaims
beneficial ownership. Mr. Seney is Vice President and General Manager of
MedCom, the sole general partner of MCT.
(6) Includes the right to acquire 100,000 shares of common stock within 60 days
upon the exercise of outstanding stock options.
(7) Excludes 1,486,434 shares owned beneficially by CFW, of which Mr. Rosberg
disclaims beneficial ownership. Mr. Rosberg is Senior Vice President and a
director of CFW.
(8) Includes the right to acquire 65,001 shares of common stock within 60 days
upon the exercise of outstanding stock options.
(9) Includes the right to acquire 50,001 shares of common stock within 60 days
upon the exercise of outstanding stock options.
(10) Includes the right to acquire 6,667 shares of common stock within 60 days
upon the exercise of outstanding stock options.
As of May 7, 1999, based on Sprint's Schedule 13D filed with the SEC,
except in connection with the voting agreements described on page 29 of this
proxy statement, none of Sprint, any pension, profit-sharing or similar plan of
Sprint or any associate or affiliate beneficially owns any shares of American
Telecasting common stock.
36
<PAGE> 42
INDEPENDENT ACCOUNTANTS
The firm of Arthur Andersen LLP has served as American Telecasting's
independent auditors since 1988. The consolidated financial statements of
American Telecasting for the fiscal year ended December 31, 1998, incorporated
by reference to American Telecasting's Annual Report on Form 10-K have been
audited by Arthur Andersen, as stated in their report appearing in the Form
10-K. American Telecasting expects that representatives of Arthur Andersen will
be present at the special meeting and will both respond to appropriate questions
from American Telecasting stockholders and make a statement, if they so desire.
STOCKHOLDER PROPOSALS
If the merger is consummated, there will be no stockholders of American
Telecasting, other than Sprint, and no public participation in any future
meetings of stockholders of American Telecasting. However, if the merger is not
consummated, American Telecasting stockholders will continue to be entitled to
attend and participate in American Telecasting stockholders' meetings, and in
accordance with Rule 14a-8 under the Exchange Act, any stockholder may present
proposals for consideration at the next annual meeting of the stockholders of
American Telecasting.
Proposals received from stockholders are given careful consideration by
American Telecasting and are eligible for consideration for inclusion in the
proxy statement for the 2000 annual meeting of the stockholders if they are
received by American Telecasting on or before November 26, 1999. You should send
any proposal to the attention of the President, American Telecasting, 5575 Tech
Center Drive, Suite 300, Colorado Springs, Colorado 80919. In order for
proposals submitted by stockholders not submitted in accordance with Rule 14a-8
to be timely within the meaning of Rule 14a-4(c) under the Exchange Act, the
proposal must be submitted so that it is received no later than November 26,
1999.
WHERE YOU CAN FIND MORE INFORMATION
The SEC allows American Telecasting to "incorporate by reference"
information into this proxy statement, which means that it can disclose
important information by referring you to another document filed separately with
the SEC. The following documents are incorporated by reference in this proxy
statement and are deemed to be a part of this proxy statement, except for any
information superseded by information contained directly in this proxy
statement:
<TABLE>
<CAPTION>
AMERICAN TELECASTING SEC FILINGS (FILE NO. 0-23008) PERIOD OR DATE OF REPORT
- --------------------------------------------------- ------------------------
<S> <C>
Annual Report on Form 10-K Year ended December 31, 1998
Quarterly Report on Form 10-Q Quarter ended March 31, 1999
Current Report on Form 8-K Filed April 7, 1999
Current Report on Form 8-K Filed April 28, 1999
Current Report on Form 8-K Filed April 30, 1999
Registration on Form 8-A Filed May 3, 1999
Current Report on Form 8-K Filed May 20, 1999
</TABLE>
We incorporate by reference additional documents that American Telecasting
may file with the SEC after the date of this proxy statement and before the
special meeting. These include periodic reports, such as Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as
proxy statements. The information contained in any of those documents will be
considered a part of this proxy statement from the date the document is filed
and will supplement or amend the information contained in this proxy statement.
American Telecasting undertakes to provide by first class mail, without
charge and within one business day of receipt of any request, to any person to
whom a copy of this proxy statement has been delivered, a copy of any or all
documents referred to above which have been incorporated by reference in this
proxy statement,
37
<PAGE> 43
other than exhibits to those documents (unless the exhibits are specifically
incorporated by reference into those documents). Please direct requests for
copies of documents to:
David K. Sentman
American Telecasting, Inc.
5575 Tech Center Drive, Suite 300
Colorado Springs, Colorado 80919
Tel: (719) 260-5533
American Telecasting is currently subject to the information requirements
of the Exchange Act and accordingly, American Telecasting files periodic
reports, proxy statements and other information with the SEC relating to its
business, financial and other matters. You may obtain copies of these documents
at prescribed rates, at the public reference facilities maintained by the SEC
at:
<TABLE>
<S> <C> <C>
Room 1024 500 West Madison Street 7 World Trade Center
450 Fifth Street, N.W. Suite 1400 Suite 1300
Judiciary Plaza Chicago, Illinois 60661 New York, New York 10048
Washington, D.C. 20549
</TABLE>
For further information concerning the SEC's public reference rooms, you may
call the SEC at 1-800-SEC-0330. You may also access some of this information on
the World Wide Web through the SEC's Internet address at "http://www.sec.gov."
OTHER BUSINESS
The board of directors does not know of any other matters to be presented
for action at the special meeting other than as set forth in this proxy
statement. If any other business should properly come before the meeting, the
persons named in the accompanying form of proxy intend to vote thereon in
accordance with their best judgment unless they are directed by a proxy to do
otherwise.
FORWARD-LOOKING STATEMENTS
All statements contained in this proxy statement and in the documents
incorporated by reference into this proxy statement that are not historical
facts, including but not limited to statements regarding the pending merger and
American Telecasting's plans for future development and operation of its
business, are based on current expectations. These statements are
forward-looking in nature and involve a number of known and unknown risks and
uncertainties. Actual results may differ materially. American Telecasting wishes
to caution readers not to place undue reliance on any such forward-looking
statements, which statements are made pursuant to the Private Securities
Litigation Reform Act of 1995 and, as such, speak only as of the date made.
Statements regarding parties other than American Telecasting are based upon
representations of such other parties.
38
<PAGE> 44
ANNEX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SPRINT CORPORATION,
DD ACQUISITION, CORP.
AND
AMERICAN TELECASTING, INC.
DATED AS OF
APRIL 26, 1999
<PAGE> 45
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
THE MERGER................................................................. A-1
Section 1.1 The Merger; Effects of the Merger........................... A-1
Section 1.2 Effective Time.............................................. A-1
Section 1.3 Closing..................................................... A-2
Section 1.4 Directors and Officers of the Surviving Corporation......... A-2
Section 1.5 Subsequent Actions.......................................... A-2
Section 1.6 Consideration for the Merger; Conversion or Cancellation of
Company Common Stock in the Merger.......................... A-2
ARTICLE II
SURRENDER OF SHARES OF COMPANY COMMON STOCK;
DISSENTING SHARES; COMPANY OPTIONS......................................... A-2
Section 2.1 Surrender of Certificates................................... A-2
Section 2.2 Dissenting Shares........................................... A-4
Section 2.3 Company Stock Options and Purchase Plans.................... A-4
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY.................................................. A-5
Section 3.1 Organization and Standing................................... A-5
Section 3.2 Capitalization.............................................. A-5
Section 3.3 Authority for Agreement..................................... A-6
Section 3.4 No Conflict................................................. A-7
Section 3.5 Required Filings and Consents............................... A-7
Section 3.6 Compliance.................................................. A-7
Section 3.7 Licenses and Permits........................................ A-7
Section 3.8 SEC Filings, Financial Statements........................... A-10
Section 3.9 Absence of Certain Changes or Events........................ A-11
Section 3.10 Taxes....................................................... A-11
Section 3.11 Title to Assets............................................. A-12
Section 3.12 Change of Control Agreements................................ A-12
Section 3.13 Litigation.................................................. A-12
Section 3.14 Contracts and Commitments................................... A-13
Section 3.15 Information Supplied........................................ A-13
Section 3.16 Employee Benefit Plans...................................... A-13
Section 3.17 Labor and Employment Matters................................ A-14
Section 3.18 Environmental Compliance and Disclosure..................... A-15
Section 3.19 Intellectual Property....................................... A-16
Section 3.20 Year 2000 Compliance........................................ A-17
Section 3.21 Brokers..................................................... A-17
Section 3.22 Insurance Policies.......................................... A-17
Section 3.23 Notes and Accounts Receivable............................... A-18
Section 3.24 Transactions with Affiliates................................ A-18
Section 3.25 Company Warrants............................................ A-18
Section 3.26 No Existing Discussions..................................... A-18
Section 3.27 Disclosure.................................................. A-18
</TABLE>
<PAGE> 46
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND PURCHASER.................................................... A-18
Section 4.1 Organization and Standing................................... A-18
Section 4.2 Authority for Agreement..................................... A-19
Section 4.3 No Conflict................................................. A-19
Section 4.4 Required Filings and Consents............................... A-19
Section 4.5 Information Supplied........................................ A-19
Section 4.6 Brokers..................................................... A-19
Section 4.7 No Prior Activities......................................... A-19
Section 4.8 Sufficient Funds............................................ A-20
Section 4.9 Share Ownership............................................. A-20
ARTICLE V
COVENANTS.................................................................. A-20
Section 5.1 Conduct of the Business Pending the Merger.................. A-20
Section 5.2 Access to Information; Confidentiality...................... A-21
Section 5.3 Notification of Certain Matters............................. A-21
Section 5.4 Further Assurances.......................................... A-21
Section 5.5 Stockholders' Meeting....................................... A-22
Section 5.6 Board Recommendations....................................... A-23
Section 5.7 Stockholder Litigation...................................... A-24
Section 5.8 Indemnification............................................. A-24
Section 5.9 Public Announcements........................................ A-25
Section 5.10 Acquisition Proposals....................................... A-25
Section 5.11 FCC Applications............................................ A-25
Section 5.12 Undertakings of Parent...................................... A-26
Section 5.13 Director Resignations....................................... A-26
Section 5.14 Rights Plan................................................. A-26
Section 5.15 Year 2000 Plan.............................................. A-26
Section 5.16 Employee Benefits........................................... A-26
Section 5.17 Matters Relating to BARs.................................... A-27
Section 5.18 Matters Relating to Notes................................... A-27
ARTICLE VI
CONDITIONS................................................................. A-27
Section 6.1 Conditions to the Obligation of Each Party.................. A-27
Section 6.2 Conditions to Obligations of Parent and Purchaser to Effect
the Merger.................................................. A-28
Section 6.3 Conditions to Obligations of the Company to Effect the
Merger...................................................... A-28
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER.......................................... A-28
Section 7.1 Termination................................................. A-28
Section 7.2 Effect of Termination....................................... A-29
Section 7.3 Amendments.................................................. A-29
Section 7.4 Waiver...................................................... A-29
</TABLE>
<PAGE> 47
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE VIII
GENERAL PROVISIONS......................................................... A-30
Section 8.1 No Third Party Beneficiaries................................ A-30
Section 8.2 Entire Agreement............................................ A-30
Section 8.3 Succession and Assignment................................... A-30
Section 8.4 Counterparts................................................ A-30
Section 8.5 Headings.................................................... A-30
Section 8.6 Governing Law............................................... A-30
Section 8.7 Severability................................................ A-30
Section 8.8 Specific Performance........................................ A-30
Section 8.9 Construction................................................ A-31
Section 8.10 Non-Survival of Representations and Warranties and
Agreements.................................................. A-31
Section 8.11 Certain Definitions......................................... A-31
Section 8.12 Fees and Expenses........................................... A-31
Section 8.13 Notices..................................................... A-31
Section 8.14 Control of the Company...................................... A-32
Section 8.15 Matters relating to the Voting Agreements................... A-32
</TABLE>
<PAGE> 48
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 26, 1999 (this
"Agreement"), by and among American Telecasting, Inc. a Delaware corporation
(the "Company"), DD Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Parent ("Purchaser"), and Sprint Corporation, a Kansas corporation
("Parent").
WHEREAS, the Board of Directors of each of Parent, Purchaser and the
Company has approved, and deems it advisable and in the best interests of its
respective stockholders to consummate the acquisition of the Company by Parent
upon the terms and subject to the conditions set forth herein; and
WHEREAS, in furtherance thereof, upon the terms and subject to the
conditions set forth in this Agreement, (i) Purchaser would be merged with and
into the Company (the "Merger"), with the Company as the surviving corporation
(the "Surviving Corporation"), in accordance with the General Corporation Law of
the State of Delaware (the "DGCL") and (ii) each issued and outstanding share of
Class A Common Stock, $0.01 par value per share, of the Company (including any
and all rights to be attached thereto to acquire shares of preferred stock of
the Company pursuant to the Rights Plan (as defined in Section 5.14), and any
other rights associated therewith, to be adopted by the Company pursuant to
Section 5.14, the "Company Common Stock") immediately prior to the Effective
Time (as defined in Section 1.2) would, except as otherwise expressly provided
herein, be converted into the right to receive the Merger Consideration (as
defined in Section 1.6); and
WHEREAS, concurrently herewith and as a condition and inducement to
Parent's and Purchaser's willingness to enter into this Agreement, Parent and
certain stockholders of the Company have entered into voting agreements, dated
as of the date hereof (the "Voting Agreements"), pursuant to which such
stockholders have agreed, upon the terms and conditions set forth therein, to
vote the outstanding shares of Company Common Stock owned by them in favor of
the Merger; and
WHEREAS, the Company, Parent and Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein,
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER; EFFECTS OF THE MERGER. Subject to the terms and
conditions of this Agreement, at the Effective Time, the Company and Purchaser
shall consummate a merger pursuant to which (a) Purchaser shall be merged with
and into the Company and the separate corporate existence of Purchaser shall
thereupon cease, (b) the Company shall be the successor or surviving corporation
in the Merger and shall continue to be governed by the laws of the State of
Delaware, and (c) the separate corporate existence of the Company with all its
rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger, except as set forth in this Section 1.1. Pursuant to the Merger,
(x) the certificate of incorporation of the Company, as in effect immediately
prior to the Effective Time, shall be the certificate of incorporation of the
Surviving Corporation until thereafter amended as provided by law and such
certificate of incorporation, and (y) the by-laws of the Company, as in effect
immediately prior to the Effective Time, shall be the by-laws of the Surviving
Corporation until thereafter amended as provided by law, by such certificate of
incorporation or by such by-laws. The Merger shall have the effects specified in
the DGCL.
SECTION 1.2 EFFECTIVE TIME. Subject to the provisions of this Agreement,
the Merger shall be consummated as promptly as practicable (and in any event
within three business days) after satisfaction or, to the extent permitted
hereunder, waiver of all conditions to each party's obligation to consummate the
Merger contained in Article VI, by duly filing an appropriate certificate of
merger (the "Certificate of Merger"), in such form as is required by and
executed in accordance with, the relevant provisions of the DGCL. The
<PAGE> 49
Merger shall become effective on the date on which such Certificate of Merger is
duly filed with the Secretary of State of the State of Delaware or such other
time as is agreed upon by the parties and specified in such certificate of
merger (the "Effective Time"). The date on which the Effective Time shall occur
is referred to herein as the "Effective Date."
SECTION 1.3 CLOSING. On the Effective Date, the closing ("Closing") of the
Merger shall take place at 10:00 a.m. at the offices of King & Spalding, 1185
Avenue of the Americas, New York, New York.
SECTION 1.4 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors of Purchaser and the officers of the Company at the Effective Time
shall, from and after the Effective Time, be the directors and officers,
respectively, of the Surviving Corporation until their successors shall have
been duly elected or appointed or qualified or until their earlier death,
resignation or removal in accordance with the certificate of incorporation and
the by-laws of the Surviving Corporation. If, at the Effective Time, a vacancy
shall exist on the Company Board of Directors or in any office of the Surviving
Corporation, such vacancy may thereafter be filled in the manner provided by
law.
SECTION 1.5 SUBSEQUENT ACTIONS. If at any time after the Effective Time
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Company or Purchaser acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement, the officers and directors of
the Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of either the Company or Purchaser, all such deeds, bills of
sale, instruments of conveyance, assignments and assurances and to take and do,
in the name and on behalf of each of such corporations or otherwise, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
SECTION 1.6 CONSIDERATION FOR THE MERGER; CONVERSION OR CANCELLATION OF
COMPANY COMMON STOCK IN THE MERGER. At the Effective Time, by virtue of the
Merger and without any action on the part of Parent, Purchaser, the Company or
the holders of any shares of Company Common Stock:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares to be cancelled
pursuant to Section 1.6(b) and Dissenting Shares (as defined in Section
2.2, if any)) shall be cancelled and extinguished and converted
automatically into the right to receive $6.50 in cash, without interest
thereon (as may be adjusted pursuant to Section 5.6, the "Merger
Consideration").
(b) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time and owned by Parent or Purchaser
(other than shares in trust account, managed accounts, custodial accounts
and the like that are beneficially owned by third parties), or which is
held in the treasury of the Company or any of its Subsidiaries, shall cease
to be outstanding, be cancelled and retired without payment of any
consideration therefor and cease to exist.
(c) Each share of common stock of Purchaser issued and outstanding
immediately prior to the Effective time shall be converted into and become
one validly issued, fully paid and nonassessable share of common stock, par
value $.01 per share, of the Surviving Corporation.
ARTICLE II
SURRENDER OF SHARES OF COMPANY COMMON STOCK; DISSENTING
SHARES; COMPANY OPTIONS
SECTION 2.1 SURRENDER OF CERTIFICATES.
(a) Prior to the Effective Time, Parent shall designate a bank or
trust company reasonably satisfactory to the Company to act as agent (the
"Paying Agent") for the holders of shares of Company
A-2
<PAGE> 50
Common Stock in connection with the Merger to receive in trust the funds to
which holders of shares of Company Common Stock shall become entitled
pursuant to Section 1.6(a). On or prior to the Effective Time, Parent or
Purchaser shall deposit, or cause to be deposited, with the Paying Agent
for the benefit of holders of shares of Company Common Stock the aggregate
Merger Consideration to which such holders shall be entitled at the
Effective Time pursuant to Section 1.6(a). Such funds shall be invested as
directed by Parent or the Surviving Corporation pending payment thereof by
the Paying Agent to holders of shares of Company Common Stock. Earnings
from such investments shall be the sole and exclusive property of Purchaser
and the Surviving Corporation, and no part of such earnings shall accrue to
the benefit of holders of shares of Company Common Stock.
(b) As soon as reasonably practicable after the Effective Time, Parent
shall cause the Paying Agent to mail to each holder of record of a
certificate representing shares of Company Common Stock (a "Certificate"),
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Paying Agent and shall be in such
form and have such other provisions not inconsistent with this Agreement as
Parent may specify) and (ii) instructions for use in effecting the
surrender of Certificates in exchange for payment of the Merger
Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent or to such other agent or agents as may be appointed by
Parent, together with such letter of transmittal, duly executed, the holder
of such Certificate shall be entitled to receive in exchange therefor the
Merger Consideration for each share of Company Common Stock formerly
represented by such Certificate, and the Certificate so surrendered shall
forthwith be cancelled. If payment of the Merger Consideration is to be
made to a person other than the person in whose name the surrendered
Certificate is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or shall be otherwise
in proper form for transfer and that the person requesting such payment
shall have paid any transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered
holder of the Certificate surrendered or shall have established to the
satisfaction of the Surviving Corporation that such tax either has been
paid or is not applicable. Until surrendered as contemplated by this
Section 2.1, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive the Merger
Consideration in cash as contemplated by this Section 2.1. If any
Certificate shall have been lost, stolen or destroyed, upon making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by the Surviving Corporation or
Parent, the posting by such person of a bond, in such reasonable amount as
the Surviving Corporation or Parent may direct, as indemnity against any
claim that may be made against it with respect to such Certificate, the
Paying Agent will issue in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration such holder is entitled to
receive pursuant to this Section 2.1.
(c) At the Effective Time, the stock transfer books of the Company
shall be closed, and thereafter there shall be no further registration of
transfers of shares of Company Common Stock on the records of the Company.
From and after the Effective Time, the holders of Certificates evidencing
ownership of shares of Company Common Stock outstanding immediately prior
to the Effective Time shall cease to have any rights with respect to such
shares, except as otherwise provided for herein or by applicable law. All
cash paid pursuant to this Article II upon the surrender or exchange of
Certificates shall be deemed to have been paid in full satisfaction of all
rights pertaining to the shares of Company Common Stock theretofore
represented by such Certificate.
(d) At any time following six months after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any funds (including any earnings received with respect
thereto) which had been made available to the Paying Agent and which have
not been disbursed to holders of Certificates, and thereafter such holders
shall be entitled to look only to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) and only as general
creditors thereof with respect to the Merger Consideration payable upon due
surrender of their Certificates. If any Certificates representing shares of
Company Common Stock shall not have been surrendered immediately prior to
such date on which the Merger Consideration in respect of such Certificate
would otherwise
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escheat to or become the property of any Governmental Entity, any such
cash, shares, dividends or distributions payable in respect of such
Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or
interest of any person previously entitled thereto. Notwithstanding the
foregoing, neither the Surviving Corporation nor the Paying Agent shall be
liable to any holder of a Certificate for Merger Consideration delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
(e) Parent, Purchaser, the Surviving Corporation and the Paying Agent,
as the case may be, shall be entitled to deduct and withhold from the
Merger Consideration otherwise payable pursuant to this Agreement to any
holder of shares of Company Common Stock and Company Options such amounts
that Parent, Purchaser, the Surviving Corporation or the Paying Agent is
required to deduct and withhold with respect to the making of such payment
under the Internal Revenue Code of 1986, as amended ( the "Code"), the
rules and regulations promulgated thereunder or any provision of state,
local or foreign tax law. To the extent that amounts are so withheld by
Parent, Purchaser, the Surviving Corporation or the Paying Agent, such
amounts shall be treated for all purposes of this Agreement as having been
paid to the holder of shares of Company Common Stock and Company Options in
respect of which such deduction and withholding was made by Parent,
Purchaser, the Surviving Corporation or the Paying Agent.
SECTION 2.2 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary,
any shares of Company Common Stock as to which the holder thereof has
demanded appraisal with respect to the Merger in accordance with Section
262 of the DGCL and as of the Effective Time has neither effectively
withdrawn nor lost his right to such appraisal ("Dissenting Shares") shall
not be converted into or represent a right to receive cash pursuant to
Section 1.6, but the holder thereof shall be entitled to only such rights
as are granted in Section 262 of the DGCL.
(b) Notwithstanding the provisions of Section 2.2(a), if any holder of
shares of Company Common Stock who demands appraisal of such shares under
the DGCL effectively withdraws or loses (through failure to perfect or
otherwise) his right to appraisal, then as of the Effective Time or the
occurrence of such event, whichever later occurs, such holder's shares of
Company Common Stock shall automatically be converted into and represent
only the right to receive the Merger Consideration as provided in Section
1.6(a), without interest, upon surrender of the Certificate or Certificates
representing such shares pursuant to Section 2.1.
(c) The Company shall give Parent (i) prompt notice of any written
demands for appraisal or payment of the fair value of any shares of Company
Common Stock, withdrawals of such demands, and any other instruments served
on the Company pursuant to the DGCL received by the Company and (ii) the
opportunity to direct all negotiations and proceedings with respect to
demands for appraisal under the DGCL. Except with the prior written consent
of Parent, the Company shall not voluntarily make any payment with respect
to any demands for appraisal, settle or offer to settle any such demands.
SECTION 2.3 COMPANY STOCK OPTIONS AND PURCHASE PLANS.
(a) Immediately prior to the Effective Time, each holder of an
employee stock option to purchase shares of Company Common Stock (a
"Company Option"), whether vested or unvested, will be entitled to receive
from the Company, and shall receive, in settlement of each Company Option
an amount in cash equal to the product of (i) the excess, if any, of the
Merger Consideration over the exercise price per share of such Company
Option and (ii) the number of shares of Company Common Stock subject to
such Company Option. All Options shall terminate as of the Effective Time.
(b) Except as may be otherwise agreed to by Parent and the Company,
all stock option and purchase plans established by the Company or any of
its Subsidiaries shall terminate as of the Effective Time and the
provisions in any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of
Company or any of its Subsidiaries shall be deleted, terminated and of no
further force or effect as of the Effective Time.
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(c) If and to the extent necessary or required by the terms of the
plans governing Company Options or pursuant to the terms of any Company
Option granted thereunder, each of Parent and the Company shall use its
best efforts to obtain the consent of each holder of outstanding Company
Options to the foregoing treatment of such Company Options.
(d) Parent, Purchaser and the Company shall take all such steps as may
be required to cause the transactions contemplated by this Section 2.3 and
any other dispositions of the Company equity securities (including
derivative securities) or acquisitions of Parent equity securities
(including derivative securities) in connection with this Agreement by each
individual who (a) is a director or officer of the Company or (b) at the
Effective Time, will become a director or officer of Parent, to be exempt
under Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), such steps to be taken in accordance with the
No-Action Letter dated January 12, 1999, issued by the Securities and
Exchange Commission (the "SEC") to Skadden, Arps, Slate, Meagher & Flom
LLP.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule prepared and signed by the
Company and delivered to Parent simultaneously with the execution hereof (the
"Company Disclosure Letter"), the Company represents and warrants to Parent and
Purchaser that all of the statements contained in this Article III are true and
correct as of the date of this Agreement (or, if made as of a specified date, as
of such date).
SECTION 3.1 ORGANIZATION AND STANDING. Each of the Company and each
Subsidiary (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (ii) has full
corporate power and authority and all necessary government approvals to own,
lease and operate its properties and assets and to conduct its business as
presently conducted and (iii) is duly qualified or licensed to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary except where failure to
be so qualified or licensed would not, individually or in the aggregate, have a
Company Material Adverse Effect. "Company Material Adverse Effect" means any
material adverse change in or effect on the consolidated businesses, financial
condition or results of operations of the Company and its Subsidiaries, taken as
a whole (including, but not limited to, any change that materially adversely
affects the FCC Licenses or Channel Leases), other than any change or effect
related to (i) any loss of subscribers to the Company's wireless cable
television services and (ii) any adverse developments in the Company's
consolidated revenue or results of operations. The Company has furnished or made
available to Parent true and complete copies of its certificate of incorporation
(including any certificates of designations attached thereto, the "Company
Certificate of Incorporation") and by-laws (the "Company By-laws") and the
certificate of incorporation and bylaws (or equivalent organizational documents)
of each Subsidiary, each as amended to date. Such certificate of incorporation,
bylaws or equivalent organizational documents are in full force and effect, and
neither the Company nor any Subsidiary is in violation of any provision of its
certificate of incorporation, bylaws or equivalent organizational documents.
SECTION 3.2 CAPITALIZATION. The authorized capital stock of the Company
(the "Company Stock") consists of 2,500,000 shares of Preferred Stock (the
"Preferred Stock"), 500,000 shares of Series B Convertible Preferred Stock (the
"Convertible Preferred Stock"), 45,000,000 shares of Company Common Stock and
10,000,000 shares of Class B Common Stock (the "Class B Common Stock"). As of
the date hereof, (i) 25,818,154 shares of Company Common Stock are issued and
outstanding, all of which are validly issued, fully paid and nonassessable and
free of preemptive rights, (ii) no shares of Company Common Stock are held in
the treasury of the Company, (iii) 503,220 shares of Company Common Stock are
issuable pursuant to outstanding Company Options, (iv) 1,898,856 shares of
Company Common Stock are issuable upon exercise of outstanding warrants of the
Company (the "Company Warrants"), and (v) there are no issued and outstanding
shares of Preferred Stock, Convertible Preferred Stock or Class B Common Stock.
The
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Company will authorize and reserve shares of Series A Junior Participating
Preferred Stock for future issuance pursuant to the Rights Plan. The Company
Disclosure Letter sets forth a true and complete list of the outstanding Company
Options and Company Warrants, in each case with the exercise price. Except as
set forth above or in the Company Disclosure Letter, there are no options,
warrants, convertible securities, subscriptions, stock appreciation rights,
phantom stock plans or stock equivalents or other rights, agreements,
arrangements or commitments (contingent or otherwise) of any character issued or
authorized by the Company relating to the issued or unissued capital stock of
the Company or any Subsidiary or obligating the Company or any Subsidiary to
issue or sell any shares of capital stock of, or options, warrants, convertible
securities, subscriptions or other equity interests in, the Company or any
Subsidiary. All Company Stock subject to issuance as aforesaid, upon issuance on
the terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and nonassessable.
Except as set forth in the Company Disclosure Letter, there are no outstanding
contractual obligations of the Company or any Subsidiary to repurchase, redeem
or otherwise acquire any shares of Company Stock or any capital stock of any
Subsidiary or to pay any dividend or make any other distribution in respect
thereof or to provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any person. Except as set forth in the
Company Disclosure Letter, the Company owns beneficially and of record all of
the issued and outstanding capital stock of each Subsidiary and does not own an
equity interest in any other corporation, partnership or entity, other than in
the Subsidiaries. Each outstanding share of capital stock of each Subsidiary is
duly authorized, validly issued, fully paid and nonassessable and each such
share owned by the Company or another Subsidiary is free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on the Company's or such other Subsidiary's voting
rights, charges and other encumbrances of any nature whatsoever.
SECTION 3.3 AUTHORITY FOR AGREEMENT.
(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder
and, subject to obtaining necessary stockholder approval, to consummate the
Merger and the other transactions contemplated by this Agreement. The
execution, delivery and performance by the Company of this Agreement, and
the consummation by the Company of the Merger and the other transactions
contemplated by this Agreement, have been duly authorized by all necessary
corporate action (including, without limitation, the unanimous approval of
the Company Board of Directors) and no other corporate proceedings on the
part of the Company are necessary to authorize this Agreement or to
consummate the Merger or the other transactions contemplated by this
Agreement (other than, with respect to the Merger, the approval and
adoption of this Agreement by the affirmative vote of a majority of the
voting power of the then outstanding shares of Company Common Stock and the
filing and recordation of appropriate merger documents as required by the
DGCL). This Agreement has been duly executed and delivered by the Company
and, assuming the due authorization, execution and delivery by Parent and
Purchaser, constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms. The
affirmative vote of holders of the outstanding shares of Company Common
Stock entitled to vote at a duly called and held meeting of stockholders is
the only vote of the Company's stockholders necessary to approve this
Agreement, the Merger and the other transactions contemplated by this
Agreement.
(b) At a meeting duly called and held on April 26, 1999, the Company
Board of Directors unanimously (i) determined that this Agreement and the
other transactions contemplated hereby, including the Merger, are fair to
and in the best interests of the Company and the holders of shares of
Company Common Stock, (ii) approved, authorized and adopted this Agreement,
the Merger and the other transactions contemplated hereby, and (iii)
resolved, subject to the rights of the Company Board of Directors under
Section 5.6 hereof, to recommend that the stockholders of the Company
approve and adopt this Agreement and the Merger, and none of the aforesaid
actions by the Company Board of Directors has been amended, rescinded or
modified. The action taken by the Company Board of Directors constitutes
approval of the Merger and the other transactions contemplated hereby by
the Company Board of Directors under the provisions of Section 203 of the
DGCL such that Section 203 of the DGCL does not apply to this Agreement or
the other transactions contemplated hereby.
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(c) Lazard Freres & Co. LLC has advised the Company Board of Directors
of its opinion, and has undertaken to deliver to the Company Board of
Directors such opinion in writing dated the date of this Agreement, that,
as of such date and based on the assumptions, qualifications and
limitations contained therein, the Merger Consideration is fair, from a
financial point of view, to such holders.
SECTION 3.4 NO CONFLICT. The execution and delivery of this Agreement by
the Company do not, and the performance of this Agreement by the Company and the
consummation of the Merger and the other transactions contemplated by this
Agreement will not, (i) conflict with or violate the Company Certificate of
Incorporation or Company Bylaws or equivalent organizational documents of any of
its Subsidiaries, (ii) subject to Section 3.5, conflict with or violate any
United States federal, state or local or any foreign statute, law, rule,
regulation, ordinance, code, order, judgment, decree or any other requirement or
rule of law (a "Law") applicable to the Company or any of its Subsidiaries or by
which any property or asset of the Company or any of its Subsidiaries is bound
or affected, or (iii) except as set forth in the Company Disclosure Letter,
result in a breach of or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, give to others any right of
termination, amendment, acceleration or cancellation of, result in triggering
any payment or other obligations, or result in the creation of a lien or other
encumbrance on any property or asset of the Company or any of its Subsidiaries
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries or any property or asset of any of them is bound or affected,
except in the case of clauses (ii) and (iii) above for any such conflicts,
violations, breaches, defaults or other occurrences which could not,
individually or in the aggregate, have a Company Material Adverse Effect.
SECTION 3.5 REQUIRED FILINGS AND CONSENTS. The execution and delivery of
this Agreement by the Company do not, and the performance of this Agreement by
the Company will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any United States federal, state or local or
any foreign government or any court, administrative or regulatory agency or
commission or other governmental authority or agency, domestic or foreign (a
"Governmental Entity"), except (i) for applicable requirements, if any, of the
Exchange Act, state securities or "blue sky" laws ("Blue Sky Laws") and filing
and recordation of appropriate merger documents as required by the DGCL, (ii)
for those required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), (iii) for those required by the Federal
Communications Commission or any successor entity (the "FCC") under the
Communications Act of 1934, as amended, and the rules, regulations and policies
of the FCC promulgated thereunder (collectively, the "Communications Act"),
including those required in connection with the transfer of control of the
Company and the assignment of the FCC Licenses (as defined in Section 3.7
hereof) held by the Company and its Subsidiaries and affiliates (the "FCC
Filings"), (iv) for filings contemplated by Section 3.15 hereof, and (v) where
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, could not, individually or in the aggregate,
have a Company Material Adverse Effect.
SECTION 3.6 COMPLIANCE. Subject to Section 3.7 and except as disclosed in
the Company Disclosure Letter, each of the Company and its Subsidiaries (i) has
been operated at all times in compliance with all Laws applicable to the Company
or any of its Subsidiaries or by which any property, business or asset of the
Company or any of its Subsidiaries is bound or affected and (ii) is not in
default or violation of any notes, bonds, mortgages, indentures, contracts,
agreements, leases, licenses, permits, franchises, or other instruments or
obligations to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any property or asset of the
Company or any of its Subsidiaries is bound or affected, except in either case
for any such failures to comply, conflicts, defaults or violations that could
not, individually or in the aggregate, have a Company Material Adverse Effect.
SECTION 3.7 LICENSES AND PERMITS.
(a) The Company Disclosure Letter sets forth all of the FCC licenses,
permits, applications, and authorizations for BTAs (as hereinafter
defined), MDS stations (as hereinafter defined), Local Multipoint
Distribution Service facilities ("LMDS"), ITFS stations (as hereinafter
defined) and other FCC licensed facilities (collectively, the "FCC
Licenses") either held by the Company or a Subsidiary
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thereof, or that are subject to an agreement pursuant to which the use of
the transmission capacity associated therewith is leased by the Company or
a Subsidiary thereof (the "Channel Leases"). The Company Disclosure Letter
correctly sets forth the identity of the holder and lessor and lessee (if
other than the Company or a Subsidiary thereof) of the transmission
capacity of such FCC Licenses and the termination date of such FCC
Licenses. Except as set forth in the Company Disclosure Letter, each FCC
License held by the Company or a Subsidiary thereof, and to the knowledge
of the Company, each other FCC License was duly and validly issued and
assigned to the holder thereof by the FCC pursuant to procedures which
comply with all requirements of applicable Law, including the requirements
of any international agreements implemented by the FCC related to channel
use or frequency coordination. There has been no occurrence of any event or
the existence of any circumstances which may lead to the forfeiture,
revocation, suspension, impairment, adverse modification or non-renewal of
any FCC License held by the Company or a Subsidiary thereof, or to the
knowledge of the Company, of any FCC License held by the lessor of a
Channel Lease or the imposition of a monetary fine or forfeiture against
the holder of an FCC License including, without limitation, any limitation
or discontinuance of service or operation of the facility associated with
the FCC License. Except as set forth in the Company Disclosure Letter, each
FCC License held by the Company or a Subsidiary thereof, and to the
knowledge of the Company, each other FCC License has been duly authorized
and is in full force and effect, and there is no known conflict with the
valid rights of others which could have a material adverse effect on the
value or use of the FCC Licenses or the transmission capacity associated
therewith. Except as set forth in the Company Disclosure Letter or in any
Channel Lease, there are no agreements, arrangements or understandings
relating to the assignment, transfer, conveyance or pledge of any FCC
License held by the Company or a Subsidiary thereof, or to the knowledge of
the Company, any other FCC License, in whole or in part, or any interest
therein for the markets in which the Company or any of its Subsidiaries
operate.
(b) Except as disclosed in Schedule 3.7(a) of the Company Disclosure
Letter, the Company, its Subsidiaries and, to the knowledge of the Company,
each of the other holders of the FCC Licenses has duly filed in a timely
manner all filings and reports relating to the FCC Licenses and the Channel
Leases required to be filed with a Governmental Entity by the holders of
the FCC Licenses, the Company or its Subsidiaries, as the case may be,
under the Communications Act, other applicable Laws or FCC rules. The
Company, its Subsidiaries and, to the knowledge of the Company, the other
holders of the FCC Licenses are in material compliance with all applicable
Laws, including, without limitation, the Communications Act and the FCC
rules relating to the operation or use of the FCC Licenses, and, each
filing and report filed with a Governmental Entity with respect to the
Company, its Subsidiaries, their FCC Licenses, or to the knowledge of the
Company, the other FCC Licenses is true, correct and complete in all
respects and there have been no changes in the ownership of the FCC
Licenses since the filing of the most recent ownership report.
(c) The Company Disclosure Letter correctly sets forth all of the
Channel Leases pursuant to which the Company or a Subsidiary thereof may
use the transmission capacity of the FCC Licenses corresponding thereto.
Except as disclosed in the Company Disclosure Letter, each of the Channel
Leases was duly and validly entered into by the parties thereto pursuant to
procedures which comply with all requirements of applicable Law, including
the requirements of the FCC, and no event has occurred or circumstances
exist which may lead to the revocation, suspension, termination, breach,
default, adverse modification or non-renewal of any Channel Lease or
material provision thereof, or cause any Channel Lease, or any material
provision thereof, not to comply with the requirements of the FCC. Except
as disclosed in the Company Disclosure Letter, no provision of any of the
Channel Leases prohibits, restricts or would reasonably be expected to
materially adversely affect or delay: (i) the Colocation (as defined
herein) of the FCC Licenses at the corresponding Colocation Site (as
defined herein), and the filing with the FCC, by the holder of the
corresponding FCC License, of any application for authorization (including
a Colocation Application) relating thereto; (ii) the use or implementation
of digital technology in connection with the provision of one-way
transmission of data, Internet, video (including video programming), and
other similar services using the transmission capacity of the FCC License
("Digital Services"), and the filing with the FCC, by the holder of the
corresponding FCC License, of any application for authorization relating to
such Digital Service; or (iii) the use or implementation of
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two-way technology in connection with the provision of two-way transmission
of data, Internet, video (including video programming), telephony and other
similar services using the transmission capacity of the FCC License
("Two-Way Services"), and the filing with the FCC, by the holder of the
corresponding FCC License, of any application for authorization relating to
such Two-Way Service. Except as set forth in the Company Disclosure Letter,
the Company has the sole right under each of the Channel Leases to use all
of the transmission capacity associated with the FCC License for the
provision of any services authorized by the FCC, including analog services,
Digital Services, and Two-Way Services (other than the transmission
capacity expressly reserved by such Channel Lease for the holder of an FCC
License in the Instructional Television Fixed Service (the "ITFS
Service")). Buyer upon the closing of the transactions contemplated by this
Agreement, will have the sole right to use the transmission capacity of the
FCC License under each of the Channel Leases for the provision of any
services authorized by the FCC, including analog services, Digital Services
and Two-Way Services (other than the transmission capacity expressly
reserved by such Channel Lease for the holder of an FCC License in the ITFS
Service). Each Channel Lease is in full force and effect and the parties
thereto are in compliance with the terms thereof and there are no known
conflicts with the valid rights of others. No third party has any rights to
assert any interests in any of the Channel Leases or the rights and
benefits granted to the Company or its Subsidiaries pursuant thereto. No
event has occurred which permits, or after notice or lapse of time or both
would permit the revocation, suspension, termination, breach, default,
adverse modification or non-renewal of any Channel Lease by the lessor of
such Channel Lease. There are no existing or alleged defaults by the
lessors or the Company or its Subsidiaries under any of the Channel Leases,
including any defaults relating to the payment obligations thereunder.
Except as set forth in the Company Disclosure Letter, the consummation of
the transactions contemplated by this Agreement will not result in the
breach or violation of any of the terms, conditions, or provisions of any
of the Channel Leases or give rise to any right of termination of any
Channel Lease.
(d) Except as set forth in the Company Disclosure Letter, neither the
Company nor any Subsidiary thereof, nor, to the knowledge of the Company,
any lessor under any Channel Lease has agreed to accept any interference
from any third party or to take any action to protect any third party's
reception from interference that would have a Company Material Adverse
Effect on the development of the Company's current business. The Company
Disclosure Letter sets forth all interference and coordination agreements
entered into by the Company, any of its Subsidiaries or affiliates or, to
the knowledge of the Company, any other holder of an FCC License.
(e) There is no outstanding adverse judgment, injunction, decree or
order that has been issued by the FCC against the Company, or a Subsidiary
or affiliate thereof or, to the knowledge of the Company, the holder of an
FCC License, or any action, proceeding or investigation pending before or,
to the knowledge of the Company, threatened by the FCC or a third party
(excluding a cable franchising authority) specifically, including, but not
limited to, any pending or threatened proceeding that would have the effect
of revoking or restricting or impairing one or more of the FCC Licenses or
the operations of the Company or a Subsidiary or affiliate thereof.
(f) Except as set forth in the Company Disclosure Letter, all
regulatory fees and expenses due and payable to the FCC associated with the
FCC Licenses have been paid by the Company or a Subsidiary thereof and, to
the knowledge of the Company, by each other holder of an FCC License,
including all fees and costs associated with the FCC Licenses held by the
Company or a Subsidiary thereof to provide LMDS or MDS service in basic
trading areas, as defined by Rand McNally (the "BTAs"). The Company
Disclosure Letter discloses any discounts or bidding credits that the
Company or a Subsidiary thereof received from the FCC in conjunction with
the licensing of the BTAs.
(g) The Company Disclosure Letter accurately lists each of the FCC
Licenses, and accurately discloses and describes (i) whether an application
is pending before, or has been granted by the FCC to authorize the
operation of the facilities associated with any FCC License at a common
transmitter site with other Multichannel Multipoint Distribution Service
and Multipoint Distribution Service stations (collectively, "MDS") and ITFS
stations (a "Colocation Application" for the "Colocation" of the FCC
License); (ii) whether any other applications, in addition to Colocation
Applications, have been filed
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with or granted by the FCC, to authorize the provision of Digital Services
and/or Two-Way Services on the facilities associated with any FCC License
(collectively referred to as "Other Applications"); and (iii) the status of
each Colocation Application and Other Application, including (A) the
transmission site proposed in the Colocation Application (the "Colocation
Site") or in the Other Applications, or authorized by the grant thereof;
and (B) the authorized or proposed technical parameters and conditions for
the provision of analog services and, to the extent applicable, Digital
Services and Two-Way Services pursuant to the Colocation Application or
Other Application. Except as set forth in the Company Disclosure Letter,
(i) each Colocation Application and Other Application filed with the FCC by
the Company, a Subsidiary thereof or the holder of an FCC License complies
with the FCC rules and other applicable Laws (including the interference
protection and coordination requirements) and has been accepted for filing
by the FCC; (ii) there are no pending, or to the knowledge of the Company,
threatened interference issues, petitions to deny, written informal
objections, outstanding no-objection letters, comments, petitions for
reconsideration, petitions for review, waiver requests, other similar
filings, or to the knowledge of the Company, competing or conflicting
applications, relating to such Colocation Applications and Other
Applications; and (iii) a protected service area for the FCC License has
been granted or requested, unless such FCC License is associated with a BTA
authorization for the MDS service.
(h) Tower Site Leases
(i) The Company Disclosure Letter accurately and completely lists
and sets forth a description (including location of premises, term, and
assignability) of all agreements between the Company and any Person
relating to the location and use of towers, earth stations and
associated real estate at such sites (including at the Colocation Sites)
(the "Tower Site Leases"). All such Tower Site Leases are valid,
subsisting, and in full force and effect and not subject to a breach by
the Company or, to the knowledge of the Company, any of the parties
thereto.
(ii) All of the existing towers owned by the Company or its
Subsidiaries or affiliates and located at the Colocation Sites ("Company
Towers"), and to the knowledge of the Company, all other towers used in
conjunction with one or more FCC Licenses ("Other Towers") are
obstruction-marked and lighted to the extent required by, and in
accordance with applicable Laws, including the rules and regulations of
the Federal Aviation Administration (the "FAA") and the FCC. Except as
set forth in the Company Disclosure Letter, all appropriate
notifications to the FAA have been filed for each Company Tower, and to
the knowledge of the Company, each Other Tower where required by the
rules and regulations of the FAA or the FCC.
(i) Cable Franchises. The Company Disclose Letter discloses all cable
franchises ("Franchises") held by the Company or its Subsidiaries. Except
as set forth in the Company Disclosure Letter, (i) all such Franchises are
valid and in full force and effect; (ii) the Company and its Subsidiaries
are in compliance with the terms and conditions of such Franchises; and
(iii) no third parties have asserted any rights in such Franchises.
SECTION 3.8 SEC FILINGS, FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports, statements and documents
required to be filed with the SEC since January 1, 1997 (collectively, the
"SEC Reports"), each of which has complied in all material respects with
the applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations promulgated thereunder, or
the Exchange Act, and the rules and regulations promulgated thereunder,
each as in effect on the date so filed. None of the SEC Reports (including,
but not limited to, any financial statements or schedules included or
incorporated by reference therein) contained when filed any untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated or incorporated by reference therein or necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
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(b) Each of the audited consolidated balance sheets of the Company as
of December 31, 1998 and December 31, 1997 and the related consolidated
statements of operations, shareholders' deficit and cash flows for the
three fiscal years in the period ended December 31, 1998 included in its
Annual Report on Form 10-K for the fiscal year ended December 31, 1998 (the
"Company 10-K"), in each case, including any related notes thereto, as
filed with the SEC (collectively, the "Company Financial Statements"), has
been prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes thereto) and fairly presents in
all material respects the consolidated financial position of the Company
and its Subsidiaries at the respective date thereof and the consolidated
results of its operations and changes in cash flows for the periods
indicated.
(c) Except as disclosed in the Company Disclosure Letter, there are no
liabilities of the Company or any of its Subsidiaries of any kind
whatsoever, whether or not accrued and whether or not contingent or
absolute, that are material to the Company and its Subsidiaries, taken as a
whole, other than (i) liabilities disclosed or provided for in the
consolidated balance sheet of the Company and its Subsidiaries at December
31, 1998, including the notes thereto, (ii) liabilities disclosed in the
SEC Reports, (iii) liabilities incurred on behalf of the Company in
connection with this Agreement and the transactions contemplated hereby,
and (iv) liabilities incurred in the ordinary course of business consistent
with past practice since December 31, 1998, none of which are, individually
or in the aggregate, reasonably likely to have a Company Material Adverse
Effect.
(d) The Company has heretofore furnished or made available to Parent a
complete and correct copy of any amendments or modifications through the
date hereof which have not yet been filed with the SEC to agreements,
documents or other instruments which previously had been filed by the
Company with the SEC as exhibits to the SEC Reports pursuant to the
Securities Act and the rules and regulations promulgated thereunder or the
Exchange Act and the rules and regulations promulgated thereunder.
SECTION 3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as contemplated
by this Agreement or as disclosed in the Company Disclosure Letter or the Recent
SEC Reports, since December 31, 1998, the Company and its Subsidiaries have
conducted their respective businesses only in the ordinary course and consistent
with prior practice and there has not been (i) any event or occurrence of any
condition that has had or would reasonably be expected to have a Company
Material Adverse Effect, (ii) any declaration, setting aside or payment of any
dividend or any other distribution with respect to any of the capital stock of
the Company or any Subsidiary, (iii) any material change in accounting methods,
principles or practices employed by the Company, or (iv) any action of the type
described in Sections 5.1(b) (other than Section 5.1(b)(v) and (vi)) or 5.1(c)
which had such action been taken after the date of this Agreement would be in
violation of any such Section.
SECTION 3.10 TAXES. Except as set forth in the Company Disclosure Letter:
(a) the Company and each of its Subsidiaries have timely filed all material Tax
Returns required to be filed by it and all such Tax Returns are true, correct
and complete in all material respects, or requests for extensions to file such
returns or reports have been timely filed, granted and have not expired, except
to the extent that such failures to file, to be complete or correct or to have
extensions granted that remain in effect individually or in the aggregate would
not have a material adverse effect on the Company; (b) the Company and each of
its Subsidiaries has paid (or there has been paid on its behalf) all Taxes shown
as due on such Tax Returns, paid all Taxes otherwise due and payable except for
such Taxes otherwise due and payable that would not individually or in the
aggregate have a Company Material Adverse Effect, and the most recent financial
statements contained in the SEC Reports reflect an adequate reserve in
accordance with GAAP for all Taxes payable by the Company and its Subsidiaries
for all taxable periods and portions thereof accrued through the date of the
financial statements; (c) no deficiencies for any Taxes have been proposed,
asserted or assessed against the Company or any of its Subsidiaries that are not
adequately reserved for, except for deficiencies that individually or in the
aggregate would not have a material adverse effect on the Company; (d) neither
the Company nor any of its Subsidiaries has made an election under Section
341(f) of the Code; (e) neither the Company nor any of its Subsidiaries has
waived any statute of limitations in respect of any material Taxes or agreed to
any extension of time with respect to a material Tax assessment or material
deficiency; and (f) neither the Company nor any of its
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Subsidiaries is a party to, is bound by or has any obligation under, a Tax
sharing contract or other agreement or arrangement for the allocation,
apportionment, sharing, indemnification, or payment of Taxes. For purposes of
this Agreement, (a) "Tax" (and, with correlative meaning, "Taxes") means any
federal, state, local or foreign income, gross receipts, property, sales, use,
license, excise, franchise, employment, payroll, premium, withholding,
alternative or added minimum, ad valorem, transfer or excise tax, or any other
tax, custom, duty, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or penalty or addition thereto,
whether disputed or not, imposed by any Governmental Entity, and (b) "Tax
Return" means any return, report or similar statement required to be filed with
respect to any Tax (including any attached schedules), including, without
limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.
SECTION 3.11 TITLE TO ASSETS.
(a) Except as set forth in the SEC Reports filed since January 1, 1999
and prior to the date hereof (the "Recent SEC Reports") or in the Company
Disclosure Letter, the Company and each of its Subsidiaries have good and
marketable title to, or a valid leasehold interest in, all of their real
and personal properties and assets reflected in the Recent SEC Reports or
acquired after December 31, 1998 (other than assets disposed of since
December 31, 1998 in the ordinary course of business consistent with past
practice), in each case free and clear of all title defects, liens,
encumbrances and restrictions, except for (i) liens, encumbrances or
restrictions which secure indebtedness which are reflected in the Recent
SEC Reports; (ii) liens for Taxes accrued but not yet payable; (iii) liens
arising as a matter of law in the ordinary course of business with respect
to obligations incurred after December 31, 1998, provided that the
obligations secured by such liens are not delinquent; and (iv) such title
defects, liens, encumbrances and restrictions, if any, as individually or
in the aggregate are not reasonably likely to have a Company Material
Adverse Effect. The Company Disclosure Letter sets forth a true, correct
and complete list of all real property owned by the Company or any of its
Subsidiaries, or as to which the Company or any such Subsidiary has the
option to purchase or acquire. Except as set forth in the Company
Disclosure Letter, the Company and each of its Subsidiaries either own, or
have valid leasehold interests in, all properties and assets used by them
in the conduct of their business, except where the absence of such
ownership or leasehold interest could not individually or in the aggregate
have a Company Material Adverse Effect.
(b) Except as set forth in the Recent SEC Reports or in the Company
Disclosure Letter, neither the Company nor any of its Subsidiaries has any
legal obligation, absolute or contingent, to any other person to sell or
otherwise dispose of, or to grant any right of first refusal or right to
proceeds relating to such sale or disposition of, any of its assets with an
individual value in excess of $25,000.
SECTION 3.12 CHANGE OF CONTROL AGREEMENTS. Except as disclosed in the
Company Disclosure Letter or the Recent SEC Reports, neither the execution and
delivery of this Agreement nor the consummation of the Merger or the other
transactions contemplated by this Agreement, will (either alone or in
conjunction with any other event) result in, cause the accelerated vesting or
delivery of, or increase the amount or value of, any payment or benefit to any
director, officer or employee of the Company. Except as set forth in the Company
Disclosure Letter, without limiting the generality of the foregoing, no amount
paid or payable by the Company in connection with the Merger or the other
transactions contemplated by this Agreement, including accelerated vesting of
options (either solely as a result thereof or as a result of such transactions
in conjunction with any other event) will be an "excess parachute payment"
within the meaning of Section 280G of the Code.
SECTION 3.13 LITIGATION. Except for such matters disclosed in the Company
Disclosure Letter or the Recent SEC Reports which, if adversely determined, have
not had, and would not reasonably be expected to have, a Company Material
Adverse Effect, there are no claims, suits, actions, investigations, indictments
or information, or administrative, arbitration or other proceedings
("Litigation") pending or, to the knowledge of the Company, threatened against
the Company or any of its Subsidiaries. Except for such matters which have not
had, and could not reasonably be expected to have, a Company Material Adverse
Effect, there are no judgments, orders, injunctions, decrees, stipulations or
awards (whether rendered by a court, administrative
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agency, or by arbitration, pursuant to a grievance or other procedure) against
or relating to the Company or any of its Subsidiaries.
SECTION 3.14 CONTRACTS AND COMMITMENTS. The Company Disclosure Letter sets
forth a true, correct and complete list of the following contracts to which the
Company or a Subsidiary is a party (including every amendment, modification or
supplement to the foregoing): (i) any contracts of employment, (ii) agreements
or arrangements for the purchase or sale of any assets (otherwise than in the
ordinary course of business), (iii) agreements, contracts or indentures relating
to the borrowing of money, (iv) agreements with unions, material independent
contractor agreements and material leased or temporary employee agreements, (v)
tower site leases and other leases of any real property involving annual rent of
$25,000 or more, (vi) programming and retransmission consent agreements, (vii)
contracts containing covenants limiting the freedom of the Company, or any of
its Subsidiaries, to engage in any line of business or to compete with any
entity and (viii) other than respect to contracts identified in the Company
Disclosure Letter pursuant to Section 3.7, all other contracts, agreements or
commitments involving annual payments made by or to the Company or a Subsidiary
of $100,000. Except for agreements, arrangements or commitments disclosed in the
Company Disclosure Letter, neither the Company nor any of its Subsidiaries is a
party to any agreement, arrangement or commitment which is material to the
business of the Company taken as a whole. The Company has delivered or made
available true, correct and complete copies of all such agreements, arrangements
and commitments to Parent. Neither the Company nor any of its Subsidiaries is in
default under any such agreement, arrangement or commitment which has had, or
could reasonably be expected to have, a Company Material Adverse Effect.
SECTION 3.15 INFORMATION SUPPLIED. The proxy statement to be mailed to the
Company's stockholders in connection with the Stockholders' Meeting (as defined
in Section 5.5) (the "Proxy Statement") at the date such document is first
published, sent or delivered to the Company's stockholders or, unless promptly
corrected, at any time during the pendency of the Stockholders' Meeting, will
not, unless promptly corrected, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading. The Proxy Statement will comply as to form
and substance in all material respects with the requirements of the Exchange Act
and the applicable rules and regulations of the SEC thereunder. Notwithstanding
the foregoing, no representation or warranty is made by the Company with respect
to statements made or incorporated by reference therein based on information
supplied by Parent or Purchaser for inclusion or incorporation by reference in
the foregoing document.
SECTION 3.16 EMPLOYEE BENEFIT PLANS. All employee benefit plans,
compensation arrangements and other benefit arrangements covering employees of
the Company or any of its Subsidiaries (the "Company Benefit Plans") and all
employee agreements providing for compensation, severance or other benefits to
any employee or former employee of the Company or any of its Subsidiaries are
set forth in the Company Disclosure Letter. True and complete copies of the
Company Benefit Plans have been made available to Parent. Any Company Benefit
Plan intended to be qualified under Section 401(a) of the Code has received a
determination letter or is a model prototype plan and continues to satisfy the
requirements for such qualification. Neither the Company nor any of its
Subsidiaries nor any ERISA Affiliate of the Company maintains, contributes to or
has maintained or contributed in the past six (6) years to any benefit plan
which is covered by Title IV of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 412 of the Code. Neither any Company
Benefit Plan, nor the Company nor any Subsidiary has incurred any material
liability or penalty under Section 4975 of the Code or Section 502(i) of ERISA
or engaged in any transaction that is reasonably likely to result in any such
liability or penalty. Except as set forth in the Company Disclosure Letter, each
Company Benefit Plan has been maintained and administered in compliance with its
terms and with ERISA and the Code to the extent applicable thereto, except for
such non-compliance which individually or in the aggregate could not reasonably
be expected to have a Company Material Adverse Effect. There is no pending or
anticipated Litigation against or otherwise involving any of the Company Benefit
Plans and no Litigation (excluding claims for benefits incurred in the ordinary
course of Company Benefit Plan activities) has been brought against or with
respect to any such Company Benefit Plan, except for any of the foregoing which
individually or in the aggregate could not have a Company Material
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Adverse Effect. All contributions required to be made as of the date hereof to
the Company Benefit Plans have been made or provided for. Except as described in
the SEC Reports or as required by Law, neither the Company nor any of its
Subsidiaries maintains or contributes to any plan or arrangement which provides
or has any liability to provide life insurance or medical or other employee
welfare benefits to any employee or former employee upon his retirement or
termination of employment, and neither the Company nor any of its Subsidiaries
has ever represented, promised or contracted (whether in oral or written form)
to any employee or former employee that such benefits would be provided.
For purposes of this Agreement "ERISA Affiliate" means any business or
entity which is a member of the same "controlled group of corporations," an
"affiliated service group" or is under "common control" with an entity within
the meanings of Sections 414(b), (c) or (m) of the Code, is required to be
aggregated with the entity under Section 414(o) of the Code, or is under "common
control" with the entity, within the meaning of Section 4001(a)(14) of ERISA, or
any regulations promulgated or proposed under any of the foregoing sections.
SECTION 3.17 LABOR AND EMPLOYMENT MATTERS. Except as set forth in the
Company Disclosure Letter:
(a) Neither the Company nor any of its Subsidiaries is a party to, or
bound by, any collective bargaining agreement or other contracts,
arrangements, agreements or understandings with a labor union or labor
organization that was certified by the National Labor Relations Board
("NLRB"). Except for such matters which, individually or in the aggregate,
could not have a Company Material Adverse Effect, there is no existing,
pending or threatened (i) unfair labor practice charge or complaint, labor
dispute, labor arbitration proceeding or any other matter before the NLRB
or any other comparable state agency against or involving the Company or
any of its Subsidiaries, (ii) activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any of
its Subsidiaries, (iii) certification or decertification question relating
to collective bargaining units at the premises of the Company or any of its
Subsidiaries or (iv) lockout, strike, organized slowdown, work stoppage or
work interruption with respect to such employees.
(b) Neither the Company nor any of its Subsidiaries has taken any
action that would constitute a "Mass Layoff" or "Plant Closing" within the
meaning of the Worker Adjustment and Retraining Notification ("WARN") Act
or would otherwise trigger notice requirements or liability under any state
or local plant closing notice law. No agreement, arbitration or court
decision or governmental order in any way limits or restricts any of the
Company, any of its Subsidiaries or Parent from relocating or closing any
of the operations of the Company or any of its Subsidiaries.
(c) Neither the Company nor any of its Subsidiaries has failed to pay
when due any wages, bonuses, commissions, benefits, taxes, penalties or
assessments or other monies, owed to, or arising out of the employment of
or any relationship or arrangement with, any officer, director, employee,
sales representative, contractor, consultant or other agent. There are no
citations, investigations, administrative proceedings or formal complaints
of violations of any federal or state wage and hour laws pending or, to the
knowledge of the Company, threatened before the Department of Labor or any
federal, state or administrative agency or court against or involving the
Company or any of its Subsidiaries.
(d) The Company and each of its Subsidiaries are in compliance in all
material respects with all immigration laws relating to employment and have
properly completed and maintained all applicable forms (including but not
limited to I-9 forms) and, to the knowledge of the Company, there are no
citations, investigations, administrative proceedings or formal complaints
of violations of the immigration laws pending or threatened before the
Immigration and Naturalization Service or any federal, state or
administrative agency or court against or involving the Company or any of
its Subsidiaries.
(e) There are no investigations, administrative proceedings, charges
or formal complaints of discrimination (including discrimination based upon
sex, age, marital status, race, national origin, sexual preference,
disability, handicap or veteran status) pending or, to the knowledge of the
Company, threatened before the Equal Employment Opportunity Commission or
any federal, state or local agency or court against or involving the
Company or any of its Subsidiaries. No discrimination and/or retaliation
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claim is pending or, to the knowledge of the Company, threatened against
the Company or any of its Subsidiaries under the 1866, 1877, 1964 or 1991
Civil Rights Acts, the Equal Pay Act, the Age Discrimination in Employment
Act, as amended, the Americans with Disabilities Act, the Family and
Medical Leave Act, the Fair Labor Standards Act, ERISA, or any other
federal law relating to employment or any comparable state or local fair
employment practices act regulating discrimination in the workplace, and no
wrongful discharge, libel, slander, invasion of privacy or other claim
(including but not limited to violations of the Fair Credit Reporting Act,
as amended, and any applicable whistleblower statutes) under any state or
federal law is pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries.
(f) If the Company or any of its Subsidiaries is a Federal, State or
local contractor obligated to develop and maintain an affirmative action
plan, no discrimination claim, show-cause notice, conciliation proceeding,
sanctions or debarment proceedings is pending or, to the knowledge of the
Company, has been threatened against the Company or any of it Subsidiaries
with the Office of Federal Contract Compliance Programs or any other
Federal agency or any comparable state or local agency or court and no desk
audit or on-site review is in progress.
(g) There are no citations, investigations, administrative proceedings
or formal complaints of violations of local, state or federal occupational
safety and health laws pending or, to the knowledge of the Company,
threatened before the Occupational Safety and Health Review Commission or
any federal, state or local agency or court against or involving the
Company or any of its Subsidiaries.
(h) No workers' compensation or retaliation claim is pending against
the Company or any of its Subsidiaries in excess of $250,000 in the
aggregate and the Company maintains adequate insurance with respect to
workers' compensation claims pursuant to insurance policies that are
currently in force, or has accrued an adequate liability for such
obligations, including, without limitation, adequate accruals with respect
to accrued but unreported claims and retroactive insurance premiums.
SECTION 3.18 ENVIRONMENTAL COMPLIANCE AND DISCLOSURE. Except as disclosed
in the Recent SEC Reports or in the Company Disclosure Letter:
(a) The Company possesses, and is in compliance in all material
respects with, all permits, licenses and government authorizations and has
filed all notices that are required under local, state and federal Laws and
regulations relating to protection of the environment, pollution control,
product registration and hazardous materials ("Environmental Laws")
applicable to the Company, and the Company is in compliance in all material
respects with all applicable limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and
timetables contained in those laws or contained in any Law, regulation,
code, plan, order, decree, judgment, notice, permit or demand letter
issued, entered, promulgated or approved thereunder;
(b) The Company has not received notice of actual or threatened
liability under the Federal Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") or any similar state or local
statute or ordinance from any governmental agency or any third party and,
to the knowledge of the Company, there are no facts or circumstances which
could form the basis for the assertion of any claim against the Company
under any Environmental Laws including, without limitation, CERCLA or any
similar local, state or foreign Law with respect to any on-site or off-site
location;
(c) The Company has neither entered into or agreed to, nor does it
contemplate entering into any consent decree or order, and is not subject
to any judgment, decree or judicial or administrative order relating to
compliance with, or the cleanup of hazardous materials under, any
applicable Environmental Laws;
(d) The Company has not been subject to any administrative or judicial
proceeding pursuant to and, to the knowledge of the Company, has not been
alleged to be in violation of, applicable Environmental Laws or regulations
either now or any time during the past five years;
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(e) The Company has not received notice that it is subject to any
claim, obligation, liability, loss, damage or expense of whatever kind or
nature, contingent or otherwise, incurred or imposed or based upon any
provision of any Environmental Law and arising out of any act or omission
of the Company, its employees, agents or representatives or, to the
knowledge of the Company, arising out of the ownership, use, control or
operation by the Company of any plant, facility, site, area or property
(including, without limitation, any plant, facility, site, area or property
currently or previously owned or leased by the Company) from which any
hazardous materials were released into the environment (the term "release"
meaning any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping or disposing into the
environment, and the term "environment" meaning any surface or ground
water, drinking water supply, soil, surface or subsurface strata or medium,
or the ambient air);
(f) The Company has heretofore furnished or made available to Parent
true, correct and complete copies of all files of the Company relating to
environmental matters (or an opportunity to review such files). The Company
has not paid any fines, penalties or assessments within the last five years
with respect to environmental matters; and
(g) To the Company's knowledge, none of the assets owned by the
Company or any real property leased by the Company contain any friable
asbestos, regulated PCBs or underground storage tanks.
(h) As used in this Section 3.18, the term "Hazardous Materials" means
any waste, pollutant, hazardous substance, toxic, ignitable, reactive or
corrosive substance, hazardous waste, special waste, industrial substance,
by-product, process intermediate product or waste, petroleum or
petroleum-derived substance or waste, chemical liquids or solids, liquid or
gaseous products, or any constituent of any such substance or waste, the
use, handling or disposal of which by the Company is in any way governed by
or subject to any applicable Law, rule or regulation of any Governmental
Entity.
SECTION 3.19 INTELLECTUAL PROPERTY.
(a) The Company Disclosure Letter sets forth a true and complete list
of (i) all United States and foreign patents, trademark, service mark and
copyright registrations and applications therefor, and material trademarks,
trade names, service marks and copyrights owned by the Company and its
Subsidiaries (the "Intellectual Property Rights") and (ii) all United
States and foreign patents, trademarks, trade names, service marks and
copyrights licensed to the Company or any of its Subsidiaries (the
"Licensed Rights"). The Company represents and warrants that, except as set
forth in the Company Disclosure Letter, (i) the Intellectual Property
Rights are free and clear of any liens, claims or encumbrances, are not
subject to any license (royalty bearing or royalty free) and are not
subject to any other arrangement requiring any payment to any person or the
obligation to grant rights to any person in exchange; (ii) to the knowledge
of the Company, the Licensed Rights are free and clear of any liens,
claims, encumbrances, royalties or other obligations; and (iii) the
Intellectual Property Rights and the Licensed Rights are all those material
rights necessary to the conduct of the business of each of the Company, its
Subsidiaries and the Company's affiliates as presently conducted. Except as
set forth in the Company Disclosure Letter, the validity of the
Intellectual Property Rights and title thereto, (i) have not been
questioned in any prior Litigation; (ii) are not being questioned in any
pending Litigation; and (iii) to the knowledge of the Company, are not the
subject(s) of any threatened or proposed Litigation. The business of each
of the Company and its Subsidiaries, as presently conducted, does not
conflict with and, to the knowledge of the Company, has not been alleged to
conflict with any patents, trademarks, trade names, service marks,
copyrights or other intellectual property rights of others. The
consummation of the transactions contemplated hereby will not result in the
loss or impairment of any of the Intellectual Property Rights or the
Company's or its Subsidiaries' right to use any of the Licensed Rights. To
the knowledge of the Company, there are no third parties using any of the
Intellectual Property Rights material to the business of the Company or its
Subsidiaries as presently conducted.
(b) Except as identified in the Company Disclosure Letter, each of the
Company and its Subsidiaries owns, or possesses valid rights to, all
computer software programs that are material to the conduct of the business
of the Company and its Subsidiaries. To the Company's knowledge, there are
no
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infringement suits, actions or proceedings pending or threatened against
the Company or any Subsidiary with respect to any software owned or
licensed by the Company or any Subsidiary.
SECTION 3.20 YEAR 2000 COMPLIANCE.
(a) The Company has made available to Parent the Company's plan to
ensure that it will be Year 2000 Compliant (the "Year 2000 Plan"). To the
Company's knowledge, the Year 2000 Plan will enable the Company to be Year
2000 Compliant in a timely manner except as to matters which are not
reasonably likely to result in a Company Material Adverse Effect and the
cost for the Company to become Year 2000 Compliant is estimated to be $1.2
million.
(b) "Year 2000 Compliant" means that (i) the products, services, or
other item(s) at issue accurately process, provide and/or receive date/time
data (including calculating, comparing, and sequencing), within, from,
into, and between centuries (including the twentieth and twenty-first
centuries and the years 1999 and 2000), including leap year calculations,
and (ii) neither the performance nor the functionality nor the supply of
the products, services, and other item at issue will be affected by
dates/times prior to, on, after, or spanning January 1, 2000. The design of
the products, services, and other item at issue to ensure compliance with
the foregoing warranties and representations includes proper date/time data
century recognition and recognition of 1999 and 2000, calculations that
accommodate same century and multicentury formulae and date/time values
before, on, after, and spanning January 1, 2000, and date/time data
interface values that reflect the century, 1999, and 2000. In particular,
but without limitation, (A) no value for current date/time will cause any
error, interruption, or decreased performance in or for such product,
service, and other item, (B) all manipulations of date and time related
data (including calculating, comparing, sequencing, processing, and
outputting) will produce correct results for all valid dates and times,
including when used in combination with other products, services, or items,
(C) all date/time elements in interfaces and data storage will specify the
century to eliminate date ambiguity without human intervention, including
leap year calculations, (D) where any date/time element is represented
without a century, the correct century will be unambiguous for all
manipulations involving that element, (E) authorization codes, passwords,
and zaps (purge functions) will function normally and in the same manner
during prior to, on, and after January 1, 2000, including the manner in
which they function with respect to expiration dates and CPU serial
numbers, and (F) the Company's and its Subsidiaries' supply of the product,
service, and other item will not be interrupted, delayed, decreased, or
otherwise affected by the advent of the year 2000.
SECTION 3.21 BROKERS. Except for Lazard Freres & Co. LLC, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with this Agreement, the Merger or the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The Company Disclosure Letter includes a complete and
correct copy of the agreement between the Company and Lazard Freres & Co. LLC to
which such firm would be entitled to any payment relating to this Agreement, the
Merger or the other transactions contemplated by this Agreement.
SECTION 3.22 INSURANCE POLICIES. The Company has furnished or made
available to Parent prior to the date hereof a complete and accurate list of all
insurance policies in force naming the Company, any of its Subsidiaries or
employees thereof as an insured or beneficiary or as a loss payable payee or for
which the Company or any Subsidiary has paid or is obligated to pay all or part
of the premiums. Neither the Company nor any Subsidiary has received notice of
any pending or threatened cancellation or premium increase (retroactive or
otherwise) with respect thereto, and each of the Company and the Subsidiaries is
in compliance in all material respects with all conditions contained therein.
There are no material pending claims against such insurance policies by the
Company or any Subsidiary as to which insurers are defending under reservation
of rights or have denied liability, and there exists no material claim under
such insurance policies that has not been properly filed by the Company or any
Subsidiary. Except for the self-insurance retentions or deductibles set forth in
the policies contained in the aforementioned list, the policies are adequate in
scope and amount to cover all prudent and reasonably foreseeable risks which may
arise in the conduct of the business of the Company and the Subsidiaries that
would reasonably be expected to have a Company Material Adverse Effect.
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SECTION 3.23 NOTES AND ACCOUNTS RECEIVABLE.
(a) Except as disclosed in the Company Disclosure Letter, there are no
notes receivable of the Company or any Subsidiary owing by any director,
officer, stockholder or employee of the Company or any Subsidiary.
(b) Except as disclosed in the Company Disclosure Letter, all accounts
receivable of the Company and any Subsidiary are current or covered by
adequate reserves for uncollectability, and there are no material disputes
regarding the collectibility of any such accounts receivable that would
reasonably be expected to have a Company Material Adverse Effect.
SECTION 3.24 TRANSACTIONS WITH AFFILIATES. Except as set forth in the
Company Disclosure Letter (other than compensation and benefits received in the
ordinary course of business as an employee or director of the Company or its
Subsidiaries), no director, officer or other "affiliate" or "associate" (as such
terms are defined in Rule 12b-2 under the Exchange Act) of the Company or any
Subsidiary or any entity in which, to the knowledge of the Company, any such
director, officer or other affiliate or associate, owns any beneficial interest
(other than a publicly held corporation whose stock is traded on a national
securities exchange or in the over-the-counter market and less than 1% of the
stock of which is beneficially owned by any such persons) has any interest in:
(i) any contract, arrangement or understanding with, or relating to the business
or operations of Company or any Subsidiary; (ii) any loan, arrangement,
understanding, agreement or contract for or relating to indebtedness of the
Company or any Subsidiary; or (iii) any property (real, personal or mixed),
tangible, or intangible, used or currently intended to be used in, the business
or operations of the Company or any Subsidiary.
SECTION 3.25 COMPANY WARRANTS. Upon the consummation of the Merger, each
of the Company's then outstanding warrants to acquire shares of Company Common
Stock shall, pursuant to their terms, become exercisable, upon payment of the
applicable exercise price thereof, into the right to receive an amount in cash
determined by multiplying (A) the Merger Consideration by (B) the number of
shares of Company Common Stock such holder could have purchased had such holder
exercised such warrant in full immediately prior to the consummation of the
Merger.
SECTION 3.26 NO EXISTING DISCUSSIONS. As of the execution of this
Agreement, the Company is not engaged, directly or indirectly, in any
negotiations or discussions with any other party with respect to an Acquisition
Proposal (as defined in Section 5.10).
SECTION 3.27 DISCLOSURE. No representation, warranty or covenant made by
the Company in this Agreement or in the Company Disclosure Letter contains an
untrue statement of a material fact or omits to state a material fact required
to be stated herein or therein or necessary to make the statements contained
herein or therein not misleading. Any matter expressly disclosed in the Company
Disclosure Letter shall be deemed to be disclosed as to such matter so long as
such disclosure being made states clearly the matter being disclosed and the
context for which it is being disclosed.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND PURCHASER
Each of Parent and Purchaser represents and warrants to the Company as
follows:
SECTION 4.1 ORGANIZATION AND STANDING. Such person (a) is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (b) has full corporate power and authority to
own, lease and operate it properties and assets and to conduct its business as
presently conducted and (c) is duly qualified or licensed to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except where the
failure to be so qualified or licensed would not, individually or in the
aggregate, have a material adverse effect on Parent or Purchaser.
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SECTION 4.2 AUTHORITY FOR AGREEMENT. Such person has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the Merger and the other
transactions contemplated by this Agreement. The execution, delivery and
performance by such person of this Agreement, and the consummation by each such
person of the Merger and the other transactions contemplated by this Agreement,
have been duly authorized by all necessary corporate action and no other
corporate proceedings on the part of such person are necessary to authorize this
Agreement or to consummate the Merger or the other transactions contemplated by
this Agreement (other than, with respect to the Merger, the filing and
recordation of appropriate merger documents as required by the DGCL). This
Agreement has been duly executed and delivered by such person and, assuming due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of each of such person enforceable against such person in
accordance with its terms.
SECTION 4.3 NO CONFLICT. The execution and delivery of this Agreement by
such person do not, and the performance of this Agreement by such person and the
consummation of the Merger and the other transactions contemplated by this
Agreement will not, (i) conflict with or violate the certificate of
incorporation or bylaws of such person, (ii) conflict with or violate any Law
applicable to such person or by which any property or asset of such person is
bound or affected, or (iii) result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of such person pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which such person is a party or by which such person
or any property or asset of either of them is bound or affected, except in the
case of clauses (ii) and (iii) for any such conflicts, violations, breaches,
defaults or other occurrences which would not, individually or in the aggregate,
prevent or materially delay the performance by such person of its respective
obligations under this Agreement or the consummation of the Merger or the other
transactions contemplated by this Agreement.
SECTION 4.4 REQUIRED FILINGS AND CONSENTS. The execution and delivery of
this Agreement by such person do not, and the performance of this Agreement by
such person will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Entity, except (i) for
applicable requirements, if any, of the Exchange Act, Blue Sky Laws and filing
and recordation of appropriate merger documents as required by the DGCL, (ii)
for those required by the HSR Act, (iii) for the FCC Filings, (iv) for filings
contemplated by Section 3.15 and (v) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not, individually or in the aggregate, prevent or materially delay the
performance by such person of any of its respective obligations under this
Agreement or the consummation of the Merger or the other transactions
contemplated by this Agreement.
SECTION 4.5 INFORMATION SUPPLIED. None of the information supplied or to
be supplied by Parent or Purchaser for inclusion or incorporation by reference
in the Proxy Statement will, at the date such document is first published, sent
or delivered to Company's stockholders or, unless promptly corrected, at any
time during the pendency of the Stockholders' Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
Notwithstanding the foregoing, no representation or warranty is made by such
person with respect to statements made or incorporated by reference therein
based on information supplied by the Company for inclusion or incorporation by
reference in the foregoing document.
SECTION 4.6 BROKERS. No broker, finder or investment banker (other than
Warburg Dillon Read LLC) is entitled to any brokerage, finder's or other fee or
commission payable by such person in connection with this Agreement, the Merger
or the other transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Parent or Purchaser.
SECTION 4.7 NO PRIOR ACTIVITIES. Except for obligations or liabilities
incurred in connection with its incorporation or organization or the negotiation
and consummation of this Agreement, the Merger and the transactions contemplated
hereby, Purchaser has not incurred any obligations or liabilities, and has not
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engaged in any business or activities of any type or kind whatsoever or entered
into any agreements or arrangements with any person or entity.
SECTION 4.8 SUFFICIENT FUNDS. Either Parent or Purchaser has available, or
has made arrangements to obtain (through existing credit arrangements or
otherwise), sufficient funds to acquire all of the shares of Company Common
Stock outstanding on a fully diluted basis for the Merger Consideration and to
pay all fees and expenses related to the transactions contemplated by this
Agreement.
SECTION 4.9 SHARE OWNERSHIP. Except for the transactions contemplated by
this Agreement, none of Parent, Purchaser or any of their respective affiliates
or associates beneficially owns any shares of Company Common Stock.
ARTICLE V
COVENANTS
SECTION 5.1 CONDUCT OF THE BUSINESS PENDING THE MERGER.
(a) The Company covenants and agrees that, except for actions taken to
implement this Agreement and the transactions contemplated hereby and
except as set forth in the Company Disclosure Letter, between the date of
this Agreement and the Effective Time, unless Parent shall otherwise agree
in writing, (i) the business of the Company and its Subsidiaries shall be
conducted only in, and the Company and its Subsidiaries shall not take any
action except in, the ordinary course of business and in a manner
consistent with prior practice, (ii) the Company and its Subsidiaries shall
use all commercially reasonable efforts to maintain and protect the FCC
Licenses and Channel Leases, to preserve substantially intact their
business organizations, to keep available the services of their current
officers and employees and to preserve the current relationships of the
Company and its Subsidiaries with suppliers and other persons with which
the Company or its Subsidiaries has significant business relations, (iii)
the Company and its Subsidiaries shall use all commercially reasonable
efforts on a basis consistent with past practice to continue to provide
wireless cable television services to the Company's subscriber base and
(iv) the Company will comply in all material respects with all applicable
Laws and regulations wherever its business is conducted, including, without
limitation, the timely filing of all reports, forms or other documents with
the FCC and with the SEC required pursuant to the Securities Act or the
Exchange Act.
(b) The Company covenants and agrees that, except for actions taken to
implement this Agreement and the transactions contemplated hereby, between
the date of this Agreement and the Effective Time, the Company shall not,
nor shall the Company permit any of its Subsidiaries to, (i) declare or pay
any dividends on or make other distributions (whether in cash, stock or
property) in respect of any of its capital stock, except for dividends by a
wholly owned Subsidiary of the Company to the Company or another wholly
owned Subsidiary of the Company, (ii) split, combine or reclassify any of
its capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for shares of
its capital stock, (iii) except as set forth in the Company Disclosure
Letter, repurchase or otherwise acquire any shares of its capital stock,
(iv) issue, deliver or sell, or authorize or propose the issuance, delivery
or sale of, any shares of its capital stock or any securities convertible
into any such shares of its capital stock, or any rights, warrants or
options to acquire any such shares or convertible securities or any stock
appreciation rights, phantom stock plans or stock equivalents, other than
the issuance of shares of Company Common Stock upon the exercise of Company
Options or Company Warrants outstanding as of the date of this Agreement,
(v) willfully take any action that would make the Company's representations
and warranties set forth in Article III not true and correct in all
material respects, or (vi) take any action that would, or could reasonably
be expected to, result in any of the conditions set forth in Article VI not
being satisfied.
(c) The Company covenants and agrees that, except for actions taken to
implement this Agreement and the transactions contemplated hereby, between
the date of this Agreement and the Effective Time, the Company shall not,
nor shall the Company permit any of its Subsidiaries to, (i) amend its
certificate of incorporation (including any certificate of designations
attached thereto) or bylaws or other equivalent
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organizational documents; (ii) except as set forth in the Company
Disclosure Letter, incur any indebtedness for borrowed money or guaranty
any such indebtedness of another person, other than (A) borrowings under
existing lines of credit (or under any refinancing of such existing lines)
or (B) indebtedness owing to, or guaranties of indebtedness owing to, the
Company (iii) make any loans or advances to any other person other than
loans or advances between any Subsidiaries of the Company or between the
Company and any of its Subsidiaries (other than loans or advances less than
$50,000 made in the ordinary course of business consistent with past
practice); (iv) except as set forth in the Company Disclosure Letter, merge
or consolidate with any other entity in any transaction, or sell any
business or assets in a single transaction or series of transactions in
which the aggregate consideration is $100,000 or greater; (v) change its
accounting policies except as required by GAAP; (vi) make any change in
employment terms for any of its directors or officers; (vii) alter, amend
or create any obligations with respect to compensation, severance,
benefits, change of control payments or any other payments to employees,
directors or affiliates of the Company or its Subsidiaries, other than with
respect to alterations or amendments made with respect to non-officers and
non-directors in the ordinary course of business consistent with past
practice or as expressly contemplated by this Agreement or consented to in
writing by Parent; (viii) make any change to the Company Benefit Plans;
(ix) enter into any leasing or licensing agreements, take-or-pay
arrangements or other affiliations, alignments or agreements with respect
to the FCC Licenses, provided, the Company may renegotiate any Channel
Leases in the ordinary course of business; or (x) commit or agree to take
any of the actions described in this Section 5.1.
SECTION 5.2 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) From the date hereof to the Effective Time, the Company shall, and
shall cause the officers, directors, employees, auditors, attorneys,
financial advisors, lenders and other agents (collectively, the
"Representatives") of the Company to, afford the Representatives of Parent
and Purchaser reasonable access at all reasonable times to the officers,
employees, agents, properties, offices and other facilities, books and
records of the Company and its Subsidiaries, and shall furnish Parent and
Purchaser with all financial, operating and other data and information as
Parent or Purchaser, through its Representatives, may reasonably request.
Parent will remain subject to the terms of the Seller and Non-Disclosure of
Proprietary Information Agreement with the Company dated June 4, 1998 (the
"Confidentiality Agreement").
(b) No investigation pursuant to this Section 5.2 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
SECTION 5.3 NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (i) the
occurrence, or nonoccurrence, of any event which would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect and (ii) any failure by such party (or
Purchaser, in the case of Parent) to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 5.3
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice. If any event or matter arises after the date of
this Agreement which, if existing or occurring at the date of this Agreement,
would have been required to be set forth or described in the Company Disclosure
Letter or which is necessary to correct any information in the Company
Disclosure Letter which has been rendered inaccurate thereby, then from time to
time prior to the Closing the Company shall supplement, or amend, and deliver to
Parent the Company Disclosure Letter which it has delivered pursuant to this
Agreement.
SECTION 5.4 FURTHER ASSURANCES.
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use all commercially reasonable efforts to take, or
cause to be taken, all appropriate action, and to do, or cause to be done,
all things necessary, proper or advisable under Law to consummate and make
effective the Merger and the other transactions contemplated by this
Agreement, including, without limitation, using all commercially reasonable
efforts to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of each Governmental Entity and
parties to contracts with the Company and its
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Subsidiaries as are necessary for the consummation of the Merger and the
other transactions contemplated by this Agreement and to fulfill the
conditions set forth in Article VI. If 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 of each party to this Agreement and the
Surviving Corporation shall use all commercially reasonable efforts to take
all such action.
(b) In connection with, and without limiting the foregoing, the
Company shall (i) take all actions necessary to ensure that no state
antitakeover statute or similar statute or regulation is or becomes
operative with respect to this Agreement, the Merger or any other
transactions contemplated by this Agreement and (ii) if any state
antitakeover statute or similar statute or regulation is or becomes
operative with respect to this Agreement, the Merger or any other
transaction contemplated by this Agreement, take all actions necessary to
ensure that this Agreement, the Merger and any other transactions
contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger and the
other transactions contemplated by this Agreement.
(c) The parties hereto shall use their best efforts to secure promptly
all necessary approvals from the FCC that are required to consummate this
Agreement. Without limitation to the foregoing, promptly after the date of
this Agreement, the parties shall file with the FCC applications seeking
authorization for the transfer of control of the Company to Purchaser at
the Closing. The parties shall use their best efforts to prosecute such
applications with diligence and shall diligently oppose any objections to
such applications to the end that each application, as soon as practicable,
shall be granted by the FCC and such grants shall no longer be subject to
any further administrative or judicial review.
SECTION 5.5 STOCKHOLDERS' MEETING.
(a) In order to consummate the Merger, the Company, acting through the
Company Board of Directors, shall, in accordance with applicable law:
(i) duly call, give notice of, convene and hold a special meeting
of its stockholders (the "Stockholders' Meeting") as promptly as
practicable after the date of this Agreement for the purpose of voting
on the approval and adoption of this Agreement and the Merger (the
"Company Stockholder Approval");
(ii) prepare and file with the SEC a preliminary proxy statement
relating to the Merger and this Agreement (the "Proxy Statement") and
use its best efforts to obtain and furnish the information required to
be included by the SEC in the Proxy Statement and, after consultation
with Parent, to respond promptly to any comments made by the SEC with
respect to the preliminary Proxy Statement and cause a definitive Proxy
Statement to be mailed to its stockholders at the earliest practicable
time;
(iii) each party to this Agreement will notify the other parties
promptly of the receipt of the comments of the SEC, if any, and of any
request by the SEC for amendments or supplements to the Proxy Statement
or for additional information with respect thereto, and will supply the
other parties with copies of all correspondence between such party or
its representatives, on the one hand, and the SEC or members of its
staff, on the other hand, with respect to the Proxy Statement or the
Merger. If (A) at any time prior to the Stockholders' Meeting, any event
should occur relating to the Company or any of its Subsidiaries which
should be set forth in an amendment of, or a supplement to, the Proxy
Statement, the Company will promptly inform Parent and (B) if at any
time prior to the Stockholders' Meeting, any event should occur relating
to Parent or Purchaser or any of their respective subsidiaries or
affiliates, or relating to the plans of any such persons for the Company
after the Effective Time, that should be set forth in an amendment of,
or a supplement to, the Proxy Statement, Parent will promptly inform the
Company, and in the case of (A) or (B) the Company and Parent, will,
upon learning of such event, promptly prepare, and the Company shall
file and, if required, mail such amendment or supplement to the
Company's stockholders; provided, prior to such filing or mailing, the
Company and Parent shall consult with each other with respect to such
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amendment or supplement. The Company and its counsel shall permit Parent
and its counsel to participate in all communications with the SEC and
its staff, including any meetings and telephone conferences, relating to
the Proxy Statement, the Merger or this Agreement;
(iv) subject to Section 5.6, include in the Proxy Statement the
recommendation of the Board that stockholders of the Company vote in
favor of the approval of the Merger and the adoption of this Agreement;
and
(v) use all commercially reasonable efforts to solicit from holders
of shares of Company Common Stock proxies in favor of the Merger and
shall take all other action necessary or, in the reasonable opinion of
Parent, advisable to secure any vote or consent of stockholders required
by the DGCL to effect the Merger.
(b) The Company hereby represents that Lazard Freres & Co. LLC, the
Company's independent financial advisor, has, subject to the terms of its
engagement letter with the Company, consented to the inclusion of
references to its opinion in the Proxy Statement.
(c) Parent will provide the Company with the information concerning
Parent and Purchaser required to be included in the Proxy Statement.
(d) Parent shall vote, or cause to be voted, in favor of the approval
of the Merger and the approval and adoption of this Agreement all shares of
Company Common Stock owned by Parent, Purchaser or any of Parent's other
Subsidiaries.
SECTION 5.6 BOARD RECOMMENDATIONS.
(a) In connection with the Merger and Stockholders' Meeting, the
Company Board of Directors shall (i) subject to Section 5.6(b) hereof,
recommend to the holders of shares of Company Common Stock to vote in favor
of the Merger and use all commercially reasonable efforts to obtain the
necessary approvals by the Company's stockholders of this Agreement and
(ii) otherwise comply with all legal requirements applicable to such
meeting.
(b) Neither the Company Board of Directors nor any committee thereof
shall, except as expressly permitted by this Section 5.6 (b), (i) withdraw,
qualify or modify, or propose publicly to withdraw, qualify or modify, in a
manner adverse to Parent, the approval or recommendation of the Company
Board of Directors or such committee of the Merger or this Agreement, (ii)
approve or recommend, or propose publicly to approve or recommend, any
transaction involving an Acquisition Proposal (as defined in Section 5.10)
from a third party (an "Alternative Transaction"), or (iii) cause the
Company to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, an "Acquisition
Agreement") related to any Alternative Transaction. Notwithstanding the
foregoing, if during the 20-day period commencing on the date hereof (the
"Initial Period"), the Company Board of Directors determines in good faith,
after it has received a Superior Proposal (as hereinafter defined) in
compliance with Section 5.10 and after receiving advice from outside
counsel as to its fiduciary duties to the Company's stockholders under
applicable Law, the Company Board of Directors may (subject to this and the
following sentences) inform the Company's stockholders that it no longer
believes that the Merger is advisable and no longer recommends approval of
the Merger (a "Subsequent Determination") and enter into an Acquisition
Agreement with respect to a Superior Proposal, but only at a time that is
after the third business day following Parent's receipt of written notice
advising Parent that the Company Board of Directors has received a Superior
Proposal. Such written notice shall specify the material terms and
conditions of such Superior Proposal, identify the person making such
Superior Proposal and state that the Company Board of Directors intends to
make a Subsequent Determination. During such three business day period, the
Company shall provide an opportunity for Parent to propose such adjustments
to the terms and conditions of this Agreement as would enable the Company
to proceed with its recommendation to its stockholders without a Subsequent
Determination; provided, however, that the acceptance of any such proposed
adjustment shall be at the sole discretion of the Company Board of
Directors, exercised in good faith, and this Agreement shall be amended to
reflect any such accepted adjustments; provided, further, however, that any
such proposed adjustment, the sole effect of which is to
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(i) increase the amount of the Merger Consideration, (ii) waive one or more
conditions to the obligations of Parent or Purchaser to effect the Merger
or (iii) modify the terms and conditions of this Agreement to reflect
identical terms and conditions contained in such Superior Proposal, shall
be automatically accepted, and this Agreement shall be amended to reflect
any such automatically accepted adjustments. Parent and Purchaser hereby
acknowledge and agree that the Company may enter into an Acquisition
Agreement with respect to a Superior Proposal in accordance with this
Section 5.6, whether or not this Agreement is terminated, and that, in the
event that the Company enters into an Acquisition Agreement with respect to
a Superior Proposal in accordance with this Section 5.6, neither Parent nor
the parties to such Acquisition Agreement may propose or enter into any
adjustments to the terms and conditions of this Agreement or such
Acquisition Agreement, respectively. Notwithstanding the foregoing, unless
this Agreement is earlier terminated in accordance with its terms, this
Agreement and the Merger shall be submitted to the stockholders of the
Company whether or not the Company Board of Directors has made a Subsequent
Determination. For purposes of this Agreement, a "Superior Proposal" means
any proposal (on its most recently amended or modified terms, if amended or
modified) made by a third party to enter into an Alternative Transaction
which the Company Board of Directors determines in its good faith judgment
(based on, among other things, the written advice of an independent
financial advisor) to be more favorable to the Company's stockholders than
the Merger, taking into account all relevant factors (including whether, in
the good faith judgment of the Company Board of Directors, after obtaining
the advice of such independent financial advisor, the third party is
reasonably able to finance the transaction, and any proposed changes to
this Agreement that may be proposed by Parent in response to such
Alternative Transaction). Nothing contained in this Section 5.6 or any
other provision hereof shall prohibit the Company or the Company Board of
Directors from (x) taking and disclosing to the Company's stockholders
pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act a
position with respect to a tender or exchange offer by a third party, which
is consistent with its obligations hereunder or (y) making such disclosure
to the Company's stockholders as, in the good faith judgment of the Company
Board of Directors after receiving advice from outside counsel, is
consistent with its obligations hereunder and is required by applicable
law; provided, that the Company may not, except as provided by this Section
5.6, withdraw, qualify or modify, in a manner adverse to Parent, the
approval or recommendation of the Company Board of Directors of the Merger
or this Agreement.
SECTION 5.7 STOCKHOLDER LITIGATION. The Company shall give Parent the
opportunity to participate in the defense or settlement of any stockholder
Litigation against the Company and its directors relating to the transactions
contemplated by this Agreement or the Merger; provided, however, that no such
settlement shall be agreed to without Parent's consent which consent will not be
unreasonably withheld.
SECTION 5.8 INDEMNIFICATION.
(a) It is understood and agreed that all rights to indemnification by
the Company now existing in favor of each present and former director,
officer, employee and agent of the Company or its Subsidiaries (the
"Indemnified Parties") as provided in the Company Certificate of
Incorporation or the Company Bylaws and the certificate of incorporation
and bylaws (or equivalent organizational documents) of each Subsidiary, in
each case as in effect on the date of this Agreement, or pursuant to any
other agreements in effect on the date hereof, copies of which have been
furnished or made available to Parent, shall survive the Merger and Parent
shall (i) cause the Surviving Corporation to continue in full force and
effect for a period of at least six years from the Effective Time and (ii)
perform, or cause the Surviving Corporation to perform, in a timely manner,
the Surviving Corporation's obligation with respect thereto. Parent and
Purchaser agree that any claims for indemnification hereunder as to which
they have received written notice prior to the sixth anniversary of the
Effective Time shall survive, whether or not such claims shall have been
finally adjudicated or settled.
(b) Parent shall cause the Surviving Corporation to, and the Surviving
Corporation shall, maintain in effect for six years from the Effective
Time, if available, the current directors' and officers' liability
insurance policies ("D&O Insurance") covered by such policies (provided
that the Surviving Corporation may substitute therefor policies of at least
the same coverage containing terms and conditions which are not materially
less favorable) with respect to matters occurring prior to the Effective
Time; provided,
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however, that in no event shall the Surviving Corporation be required to
expend pursuant to this Section 5.8(b) more than an amount per year equal
to 150% of current annual premiums paid by the Company for such insurance.
In the event that, but for the proviso to the immediately preceding
sentence, the Surviving Corporation would be required to expend more than
150% of current annual premiums, the Surviving Corporation shall obtain the
maximum amount of such insurance obtainable by payment of annual premiums
equal to 150% of current annual premiums. If the Surviving Corporation
elects to reduce the amount of insurance coverage pursuant to the preceding
sentence, it will furnish to the officers and directors currently covered
by such D&O Insurance reasonable notice of such reduction in coverage and
shall, to the extent additional coverage is available, afford such persons
the opportunity to pay such additional premiums as may be necessary to
maintain the existing level of D&O Insurance coverage.
(c) If the Surviving Corporation or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and
assets to any person, then, and in each such case, proper provision shall
be made so that the successors and assigns of the Surviving Corporation
shall assume the obligations set forth in this Section 5.8.
(d) The provisions of this Section 5.8 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
SECTION 5.9 PUBLIC ANNOUNCEMENTS. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement, or the Merger and shall not issue any
such press release or make any such public statement prior to such consultation,
except as may be required by Law or any listing agreement with a national
securities exchange or trading system to which Parent or the Company is a party.
SECTION 5.10 ACQUISITION PROPOSALS. The Company shall not, nor shall it
authorize or permit any of its Subsidiaries or Representatives to, directly or
indirectly, (a) solicit, initiate or encourage the submission of any Acquisition
Proposal or (b) participate in or encourage any discussion or negotiations
regarding, or furnish to any person any non-public information with respect to,
or take any other action to facilitate any inquiries or the making of, any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal; provided, however, that the foregoing shall not prohibit
the Company Board of Directors from furnishing information to, or entering into
discussions or negotiations with, any person or entity that makes an unsolicited
Acquisition Proposal during the Initial Period, and to the extent that, (A) the
Company Board of Directors, based upon the advice of outside legal counsel,
determines in good faith that such action is required for the Company Board of
Directors to comply with its fiduciary obligations to the Company Stockholders
under applicable Delaware law, (B) prior to taking such action, the Company
receives from such person or entity an executed agreement in reasonably
customary form relating to the confidentiality of information to be provided to
such person or entity and (C) the Company Board of Directors concludes in good
faith, based upon written advice from its independent financial advisor, that
the Acquisition Proposal is a Superior Proposal. The Company shall provide
immediate oral and written notice to Parent of (a) the receipt of any such
Acquisition Proposal or any inquiry which could reasonably be expected to lead
to any Acquisition Proposal, (b) the material terms and conditions of such
Acquisition Proposal or inquiry, (c) the identity of such person or entity
making any such Acquisition Proposal or inquiry and (d) the Company's intention
to furnish information to, or enter into discussions or negotiations with, such
person or entity. The Company shall continue to keep Parent informed of the
status and details of any such Acquisition Proposal or inquiry. For purposes of
this Agreement, "Acquisition Proposal" means any bona fide proposal with respect
to a merger, consolidation, share exchange, tender offer or similar transaction
involving the Company, or any purchase or other acquisition of all or any
significant portion of the assets of the Company or any equity interest in the
Company.
SECTION 5.11 FCC APPLICATIONS. The Company and Parent shall coordinate
efforts and cooperate with each other, to the extent permitted by the FCC rules,
in the preparation and filing of Colocation Applications and Other Applications
with the FCC. Without limitation to the foregoing, upon the request of Parent,
the
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Company shall use its reasonable efforts to prepare and file and/or to cause the
lessor of a Channel Lease to prepare and file, at Parent's expense, a Colocation
Application or Other Application to be filed with the FCC, as soon as
practicable, and to the extent applicable, in no event after: (i) the end of the
initial one week filing window in which the FCC will accept Other Applications
for the provision of Two-Way Services pursuant to the newly adopted FCC rules
governing the provision of Two-Way Services; or (ii) the end of a filing window
for ITFS major modification applications established pursuant to Section
74.911(c) of the FCC rules.
SECTION 5.12 UNDERTAKINGS OF PARENT. Parent shall perform, or cause to be
performed, when due all obligations of Purchaser under this Agreement.
SECTION 5.13 DIRECTOR RESIGNATIONS. The Company shall cause to be
delivered to Parent resignations of all the directors of the Company's
Subsidiaries to be effective upon the consummation of the Merger. The Company
shall cause such directors, prior to resignation, to appoint new directors
nominated by Parent to fill such vacancies.
SECTION 5.14 RIGHTS PLAN. The Board of Directors of Company shall as
promptly as practicable, and in any event prior to 5:00 p.m., New York time, on
April 30, 1999, adopt a Rights Agreement between the Company and a rights agent
selected by it (the "Rights Plan") and shall approve the appropriate resolutions
so that (i) neither Parent nor Purchaser will become an "Acquiring Person" (as
defined in the Rights Plan) as a result of the Merger or the Voting Agreements,
(ii) no "Stock Acquisition Date" or "Distribution Date" (as such terms are
defined in the Rights Plan) will occur as a result of the Merger or the Voting
Agreements, and (iii) all outstanding rights to purchase Series A Junior
Participating Preferred Stock issued and outstanding under the Rights Plan will
expire at the Effective Time.
SECTION 5.15 YEAR 2000 PLAN. The Company shall use all commercially
reasonable efforts to ensure that the Year 2000 Plan shall be completed in a
timely manner. The Company shall (i) allow Parent to monitor the Company's Year
2000 Compliance issues and Year 2000 Plan, (ii) provide prompt notice to Parent
if the Company does not achieve, or reasonably expects it shall not achieve,
milestones and objectives identified in the Year 2000 Plan and (iii) cooperate
in good faith with Parent's efforts to ensure that the Company is Year 2000
Compliant.
SECTION 5.16 EMPLOYEE BENEFITS.
(a) Parent and Purchaser agree that, effective as of the Effective
Time and for a three-year period following the Effective Time, the
Surviving Corporation and its Subsidiaries and successors shall provide to
the employees of the Company or any of its Subsidiaries immediately prior
to the Effective Time ("Employees") with employee plans and programs which
provide benefits that are no less favorable in the aggregate to those
provided to such Employees immediately prior to the date hereof. With
respect to such benefits, service accrued by such Employees during
employment with the Company and its Subsidiaries prior to the Effective
Time shall be recognized for all employment and benefit-related purposes as
service rendered to the Surviving Corporation and its Subsidiaries and
successors, except for benefit accruals under the defined benefit pension
plan sponsored by Parent and to the extent necessary to prevent duplication
of benefits.
(b) Parent and Purchaser agree to honor and to cause the Surviving
Corporation to honor, in accordance with their terms, and to make required
payments when due under, all contracts, agreements, arrangements, policies,
plans and commitments of the Company and its Subsidiaries in effect as of
the date hereof (including but not limited to employment, incentive and
severance agreements and arrangements), as amended through the date hereof,
that are applicable with respect to any employee, officer or director or
former employee, officer or director of the Company or any of its
Subsidiaries (the "Plans"); provided, however, that the foregoing shall not
preclude Parent or Purchaser from amending or terminating any Plan in
accordance with its terms. Parent and Purchaser acknowledge that
consummation of the Merger shall constitute a "Change in Control" and a
"Covered Transaction" for purposes of the Plans.
(c) With respect to any welfare plans in which the Employees are
eligible to participate after the Effective Time, Parent and Purchaser
shall cause the Surviving Corporation to (i) waive all limitations as
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to preexisting conditions exclusions (to the extent such exclusions are not
currently applicable to Employees) and waiting periods with respect to
participation and coverage requirements (to the extent any such waiting
periods are not currently in effect with respect to Employees) applicable
to the Employees and (ii) provide each Employee with credit for any
co-payments and deductibles paid prior to the Effective Time in satisfying
any applicable deductible or out-of-pocket requirements.
SECTION 5.17 MATTERS RELATING TO BARS. At any time, and from time to time,
prior to the Effective Time, upon the written request of the Company, Parent
shall loan funds to the Company, in an aggregate amount not to exceed $3.5
million for the purpose of funding the amounts required to be paid by the
Company to the holders of the Company's Bond Appreciation Rights (relating to
the Company's Senior Discount Notes due 2004 (the "2004 Notes")) upon the
exercise thereof. Interest will accrue on such loans at a rate of ten percent
(10%) per annum, and the aggregate principal amount of such loans, together with
accrued interest thereon, shall be due and payable on the first anniversary of
any termination of this Agreement; provided, that, if (i) the Company enters
into an Acquisition Agreement related to an Alternative Transaction and (ii)
this Agreement is terminated pursuant to Section 7.1(d)(i), then the entire
principal amount of such loans, together with accrued interest thereon, shall be
due and payable upon demand as of the date of such termination. All loans made
to the Company by Parent pursuant to this Section 5.17 shall be secured by the
outstanding capital stock of a Subsidiary of the Company, which Subsidiary will
hold rights to use licenses to provide wireless cable services to not less than
150,000 PSA footprint households.
SECTION 5.18 MATTERS RELATING TO NOTES. If on September 30, 1999 the only
condition to the Closing remaining unfulfilled is the receipt of any required
approval by the FCC, then Parent shall have the option to extend the End Date
(as defined in Section 7.1(b)(i)) to December 31, 1999 by delivering to the
Company on or prior to September 30, 1999 a notice by which Parent shall agree
to loan to the Company up to $13,000,000, in cash, for the purpose, among other
things, of paying interest due in December 1999 on the Company's 2004 Notes.
Interest will accrue on such loan at a rate of ten percent (10%) per annum, and
the aggregate principal amount of such loan, together with accrued interest
thereon, shall be due and payable on the first anniversary of any termination of
this Agreement; provided, that, if (i) this Agreement is terminated in
accordance with the terms hereof (other than as a result of a breach of this
Agreement by Parent or Purchaser) and (ii) the Company enters into an
Acquisition Agreement related to an Alternative Transaction that would, if
consummated in accordance with its terms, provide to the Company or the
stockholders of the Company a per share cash consideration equal to or greater
than ninety percent (90%) of the Merger Consideration, then the entire principal
amount of such loans, together with accrued interest thereon, shall be due and
payable upon demand as of the date of such termination. All loans made to the
Company by Parent pursuant to this Section 5.18 shall be secured by the
outstanding capital stock of a Subsidiary of the Company, which Subsidiary will
hold rights to use licenses to provide wireless cable services to not less than
500,000 PSA footprint households with at least twenty (20) MDS and ITFS
channels, in the aggregate.
ARTICLE VI
CONDITIONS
SECTION 6.1 CONDITIONS TO THE OBLIGATION OF EACH PARTY. The respective
obligations of Parent, Purchaser and the Company to effect the Merger are
subject to the satisfaction of the following conditions, unless waived in
writing by all parties:
(a) This Agreement and the Merger shall have been approved and adopted
by the requisite vote of the Company's stockholders, as required by the
DGCL, the Company Certificate of Incorporation and the Company Bylaws;
(b) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other legal restraint or prohibition (including, any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to, or any consent or approval
withheld with respect to, the Merger, by any Governmental Entity)
preventing the consummation of the Merger shall be in effect; provided,
however, that the parties
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invoking this condition shall use all commercially reasonable efforts to
have any such order or injunction vacated; and
(c) All actions by or in respect of or filings with any Governmental
Entity required to permit the consummation of the Merger shall have been
obtained or made (including any necessary approval by the FCC and the
expiration or termination of any applicable waiting period under the HSR
Act).
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF PARENT AND PURCHASER TO EFFECT THE
MERGER. The obligations of Parent and Purchaser to effect the Merger are
further subject to satisfaction or waiver at or prior to the Effective Time of
the condition that the representations and warranties of the Company in this
Agreement shall have been true and correct in all material respects as of the
date of this Agreement and the Company shall have performed in all material
respects all obligations required to be performed by it under this Agreement.
SECTION 6.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY TO EFFECT THE
MERGER. The obligations of the Company to effect the Merger are further subject
to satisfaction or waiver at or prior to the Effective Time of the condition
that the representations and warranties of Parent and Purchaser in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and Parent and Purchaser shall have performed in all material
respects all obligations required to be performed by them under this Agreement.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 TERMINATION. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, whether before or
after approval of matters presented in connection with the Merger by the
Company's stockholders:
(a) By the mutual written consent of Parent and the Company;
(b) By either of the Company or Parent:
(i) if the Effective Date shall not have occurred on or before
September 30, 1999 (or October 31, 1999 if the only condition to the
Closing remaining unfulfilled on September 30, 1999 is any required
approval by the FCC) (the "End Date"); provided, however, that if Parent
delivers to the Company the notice referred to in Section 5.18, the End
Date shall be extended to December 31, 1999; provided, further, that the
right to terminate this Agreement under this Section 7.1(b)(i) shall not
be available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of the
Effective Date to occur on or before such date;
(ii) if any Governmental Entity shall have issued an order, decree
or ruling or taken any other action (which order, decree, ruling or
other action the parties hereto shall use their reasonable efforts to
lift), which permanently restrains, enjoins or otherwise prohibits the
Merger and such order, decree, ruling or other action shall have become
final and non-appealable; or
(iii) if, at the Stockholders' Meeting, the Company Stockholder
Approval shall not have been obtained.
(c) By the Company:
(i) in connection with entering into a definitive agreement as
permitted by Section 5.6 related to a Superior Proposal that would, if
consummated in accordance with its terms, provide to the Company or the
stockholders of the Company a per share consideration equal to or
greater than $1.00 per share in excess of the Merger Consideration (as
may be adjusted pursuant to Section 5.6); provided the Company has
complied with all provisions of Section 5.6 and of Section 5.10,
including the notice provisions therein, and that the Company makes
simultaneous payment to Parent of funds as required by Section 7.2(b);
or
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(ii) if Parent or Purchaser shall have breached in any material
respect any of their respective representations, warranties, covenants
or other agreements contained in this Agreement, which breach cannot be
or has not been cured within 30 days after the giving of written notice
by the Company to Parent or Purchaser, as applicable.
(d) By Parent:
(i) if the Company Board of Directors shall have withdrawn,
modified or changed in a manner adverse to Parent or Purchaser its
approval or recommendation of this Agreement or the Merger or shall have
recommended an Acquisition Proposal or shall have executed an agreement
in principle or definitive agreement relating to an Acquisition Proposal
or similar business combination with a person or entity other than
Parent, Purchaser or their affiliates; or
(ii) if the Company shall have breached any representation,
warranty, covenant or other agreement contained in this Agreement which
(x) would give rise to the failure of a condition set forth in Section
6.2 and (y) cannot be or has not been cured within 30 days after the
giving of written notice to the Company.
SECTION 7.2 EFFECT OF TERMINATION.
(a) In the event of the termination of this Agreement pursuant to
Section 7.1 hereof, this Agreement shall forthwith be terminated and have
no further effect except as specifically provided herein and, except as
provided in this Section 7.2 and in Section 8.12, there shall be no
liability on the part of any party hereto, provided that nothing herein
shall relieve any party from liability for fraud or any willful breach
hereof.
(b) If (i) Parent or Purchaser exercises its right to terminate this
Agreement under Section 7.1(d)(i), the Company shall pay to Parent $11
million (the "Termination Fee"), payable in same-day funds, as liquidated
damages and not as a penalty to reimburse Parent for its time, expense and
lost opportunity costs of pursuing the Merger, upon consummation of the
transaction relating to such Acquisition Proposal.
(c) In the event that (i) any person shall have publicly disclosed an
Acquisition Proposal and (ii) following such disclosure, at the
Stockholders' Meeting, the Company Stockholder Approval is not obtained
(other than as a result of a breach of this Agreement by Parent or
Purchaser) and (iii) not later than twelve months after any termination of
this Agreement pursuant to Section 7.1(b)(iii) the Company shall have
entered into a definitive agreement for an Alternative Transaction, or
shall have consummated an Alternative Transaction, then immediately prior
to, and as a condition of, the consummation of such Alternative Transaction
the Company shall pay, or cause to be paid, to Parent the Termination Fee,
payable in same-day funds, as liquidated damages and not as a penalty, to
reimburse Parent for its time, expense and lost opportunity costs of
pursuing the Merger.
(d) Notwithstanding anything to the contrary set forth in this
Agreement, if the Company fails promptly to pay to Parent any amounts due
under this Section 7.2, the Company shall pay the costs and expenses
(including reasonable legal fees and expenses) in connection with any
action, including the filing of any lawsuit or other legal action, taken to
collect payment, together with interest on the amount of any unpaid fee or
obligation at the publicly announced prime rate of Citibank, N.A. in effect
from time to time from the date such fee or obligation was required to be
paid.
SECTION 7.3 AMENDMENTS. Subject to applicable law, this Agreement may not
be amended except by action of the Board of Directors of each of the parties
hereto set forth in an instrument in writing signed on behalf of each of the
parties hereto; provided, however, that after approval of the Merger by the
Company's stockholders, no amendment may be made without the further approval of
the Company's stockholders if the effect of such amendment would be to reduce
the Merger Consideration or change the form thereof.
SECTION 7.4 WAIVER. At any time prior to the Effective Time, whether
before or after the Stockholders' Meeting, any party hereto, by action taken by
its board of directors, may (i) extend the time for the performance of any of
the covenants, obligations or other acts of any other party hereto or (ii) waive
any
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inaccuracy of any representations or warranties or compliance with any of the
agreements, covenants or conditions of any other party or with any conditions to
its own obligations. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party by its duly authorized officer. The failure of
any party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights. The waiver of any such
right with respect to particular facts and other circumstances shall not be
deemed a waiver with respect to any other facts and circumstances and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 NO THIRD PARTY BENEFICIARIES. Other than the provisions of
Article II and Sections 5.7, 5.8 and 5.16 hereof, nothing in this Agreement
shall confer any rights or remedies upon any person other than the parties
hereto.
SECTION 8.2 ENTIRE AGREEMENT. This Agreement constitutes the entire
Agreement among the parties with respect to the subject matter hereof and
supersedes any prior understandings, agreements, or representations by or among
the parties, written or oral, with respect to the subject matter hereof.
SECTION 8.3 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and their respective
successors. No party may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written approval of the
other parties; provided, however, that Purchaser may freely assign its rights to
another wholly owned subsidiary of Parent without such prior written approval
but no such assignment shall relieve Purchaser of any of its obligations
hereunder.
SECTION 8.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
SECTION 8.5 HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.6 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to principles of conflicts of law thereof.
SECTION 8.7 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
SECTION 8.8 SPECIFIC PERFORMANCE. Each of the parties acknowledges and
agrees that the other party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the parties agrees that
the other party shall be entitled to seek an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any action instituted in
any court of the United States or any state thereof having jurisdiction over the
parties and the matter, in addition to any other remedy to which it may be
entitled, at law or in equity.
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SECTION 8.9 CONSTRUCTION. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
SECTION 8.10 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
AGREEMENTS. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 7.1, as the case may be, except that (i) the agreements set
forth in Articles I, II and VIII and Sections 5.4, 5.7, 5.8 and 5.16 shall
survive the Effective Time indefinitely and (ii) the agreements set forth in
Sections 5.7, 5.8 and 7.2 and in Article VIII shall survive the termination of
this Agreement indefinitely.
SECTION 8.11 CERTAIN DEFINITIONS. For purposes of this Agreement, the
terms "associate" and "affiliate" shall have the same meaning as set forth in
Rule l2b-2 promulgated under the Exchange Act, and the term "person" shall mean
any individual, corporation, partnership (general or limited), limited liability
company, limited liability partnership, trust, joint venture, joint-stock
company, syndicate, association, entity, unincorporated organization or
government or any political subdivision, agency or instrumentality thereof. For
purposes of this Agreement, the term "Subsidiary" shall mean, with respect to
any party, any corporation or other organization, whether incorporated or
unincorporated, of which (a) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
Board of Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its Subsidiaries, or by such party and
one or more of its Subsidiaries or (b) such party or any other Subsidiary of
such party is a general partner (excluding any such partnership where such party
or any subsidiary of such party does not have a majority of the voting interest
in such partnership).
SECTION 8.12 FEES AND EXPENSES. Each party hereto shall pay its own costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby.
SECTION 8.13 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by telecopy
or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties at the following addresses, or at such other address
for a party as shall be specified in a notice given in accordance with this
Section 8.13:
If to Parent or Purchaser:
Sprint Corporation
2330 Shawnee Mission Parkway
Westwood, Kansas 66205
Telecopier: (913) 624-2256
Attention: President and J. Richard Devlin
with a copy to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Telecopier: (404) 572-5146
Attention: Bruce N. Hawthorne
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If to the Company:
American Telecasting, Inc.
5575 Tech Center Drive, Suite 300
Colorado Springs, Colorado 80919
Telecopier: (719) 260-5010
Attention: Robert D. Hostetler
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Telecopier: (212) 735-2000
Attention: Randall H. Doud
SECTION 8.14 CONTROL OF THE COMPANY. Purchaser has not exercised and shall
not exercise any control of the Company, its Subsidiaries or the FCC Licenses
held by the Company or its Subsidiaries prior to the Closing and the grant of
the necessary approvals by the FCC.
SECTION 8.15 MATTERS RELATING TO THE VOTING AGREEMENTS. The Company
acknowledges and agrees that it shall be responsible and held liable for any and
all monetary damages arising out of or relating to any breach of any Voting
Agreement by the stockholder of the Company party thereto.
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IN WITNESS WHEREOF, the Company, Parent and Purchaser and have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
AMERICAN TELECASTING, INC.
By: /s/ ROBERT D. HOSTETLER
------------------------------------
Name: Robert D. Hostetler
Title: President and
Chief Executive Officer
SPRINT CORPORATION
By: /s/ THEODORE H. SCHELL
------------------------------------
Name: Theodore H. Schell
Title: Senior Vice President
DD ACQUISITION, CORP.
By: /s/ THEODORE H. SCHELL
------------------------------------
Name: Theodore H. Schell
Title: Vice President
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ANNEX B
VOTING AGREEMENT
VOTING AGREEMENT, dated as of April 26, 1999 (this "Agreement"), between
CFW Communications Foundation (the "Stockholder") and Sprint Corporation, a
Kansas corporation (the "Parent").
WHEREAS, American Telecasting, Inc., a Delaware corporation (the
"Company"), Parent, and DD Acquisition, Corp., a Delaware corporation and a
wholly owned subsidiary of Parent ("Purchaser"), have, substantially
contemporaneously with the execution of this Agreement, entered into an
Agreement and Plan of Merger, dated as of the date hereof (as the same may be
amended, supplemented or otherwise modified, the "Merger Agreement"), which
provides, among other things, that Purchaser shall be merged with and into the
Company (the "Merger"), upon the terms and subject to the conditions set forth
in the Merger Agreement (capitalized terms used but not defined herein having
the respective meanings ascribed to them in the Merger Agreement);
WHEREAS, as a condition to the willingness of Parent to enter into the
Merger Agreement, Parent has required that the Stockholder agree, and in order
to induce Parent to enter into the Merger Agreement, the Stockholder has agreed,
to enter into this Agreement;
WHEREAS, as of the date hereof, the Stockholder is the record owner of
74,322 shares of Company Common Stock and may receive a transfer from CFW
Communications Company of an additional 200,000 shares of Company Common Stock
(such shares of Company Common Stock, together with associated Rights, being
collectively referred to herein as the "Voting Agreement Shares").
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, the parties hereto expressly agree as follows:
1. RESTRICTIONS ON TRANSFER AND CONVERSION.
a. The Stockholder hereby covenants and agrees that the Stockholder
shall not, except with respect to existing pledge agreements or as
otherwise consented to in writing by Parent in its sole discretion, prior
to the termination of this Agreement, (i) either directly or indirectly,
offer or otherwise sell, assign, pledge, hypothecate, transfer, exchange,
tender, dispose or grant an option to dispose of any Voting Agreement
Shares or any interest therein, or agree to do any of the foregoing, or
(ii) take any action which would have the effect of preventing or disabling
the Stockholder from performing the Stockholder's obligations under this
Agreement.
b. No violation of the foregoing provisions of this Section 1 shall
operate to terminate this Agreement.
2. STOCKHOLDER'S RIGHTS. The Stockholder shall, as to the Voting Agreement
Shares, possess and be entitled to exercise all stockholder's rights and powers
of every kind as the beneficial owner thereof, including the right to vote the
Voting Agreement Shares and the right to take part in, or give or withhold
consent to, any corporate or stockholders' action with respect to which such
Voting Agreement Shares are entitled to be voted, except as such rights are
limited by this Agreement.
3. VOTING AGREEMENT.
a. The Stockholder has revoked or terminated any proxies, voting
agreements or similar arrangements previously given or entered into with
respect to the Voting Agreement Shares as to the matters set forth below
and hereby irrevocably appoints Parent, during the term of this Agreement,
as proxy for the Stockholder to: (i) vote all of the Voting Agreement
Shares in favor of the adoption and approval of the Merger Agreement; and
(ii) vote all of the Voting Agreement Shares against: (A) any extraordinary
corporate transaction (other than the Merger), such as a merger,
consolidation, business combination, tender or exchange offer,
reorganization, recapitalization, liquidation or other change of control
involving the Company or any of its subsidiaries, including, but not
limited to, any Acquisition Proposal, and
<PAGE> 82
(B) any sale or transfer of a material amount of the assets or securities
of the Company or any of its Subsidiaries (other than pursuant to the
Merger).
b. The Stockholder shall vote on all issues other than those specified
in Section 3(a) that come before any meeting of stockholders of the Company
in such Stockholder's sole discretion, provided that such vote is not
inconsistent with the purposes of this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The Stockholder
hereby represents and warrants to Parent as follows:
a. This Agreement has been duly and validly executed and delivered by
the Stockholder and, assuming it constitutes a valid and binding agreement
of Parent, constitutes a legal, valid and binding agreement of the
Stockholder enforceable against the Stockholder in accordance with its
terms, except that the enforcement hereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
b. The execution and delivery of this Agreement by the Stockholder
does not, and the performance of this Agreement by the Stockholder will
not, 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 result in the creation of a lien or encumbrance on any of the Voting
Agreement Shares pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument
or obligation to which the Stockholder is a party or by which the
Stockholder or the Voting Agreement Shares are bound or affected, except,
in the case of each of the foregoing, for any such conflicts, violations,
breaches, defaults or other occurrences which would not prevent or
materially delay the performance by the Stockholder of its obligations
under this Agreement or the transactions contemplated hereby.
c. As of the date hereof, the Stockholder is the record owner of the
Voting Agreement Shares and has the right to vote or direct the voting of
the Voting Agreement Shares. The Voting Agreement Shares, or a portion
thereof, may be subject to existing security interests, liens, claims or
pledges. The Stockholder has not appointed or granted any proxy, which
appointment or grant is still effective, with respect to the Voting
Agreement Shares.
5. TERMINATION. This Agreement shall terminate upon the earliest to occur
of (i) the termination of the Merger Agreement in accordance with its terms,
(ii) the Effective Time, and (iii) the recommendation by the Company Board of
Directors in accordance with the provisions of Section 5.6 of the Merger
Agreement of a Superior Proposal that would, if consummated in accordance with
its terms, provide to the Company or the stockholders of the Company a per share
consideration equal to or greater than $1.00 per share in excess of the Merger
Consideration.
6. 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
and shall be effective upon receipt of delivery, if delivered personally, mailed
by registered or certified mail (postage prepaid, return receipt requested) or
delivered by a recognized national overnight courier to the parties at the
following addresses (or at such other address for a party as shall be specified
by like changes of address) or sent by electronic transmission (provided that a
confirmation copy is sent by another approved means): (i) if to Parent, to the
address set forth in Section 8.13 of the Merger Agreement; and (ii) if to the
Stockholder, 401 Spring Lane, Suite 300, Waynesboro, Virginia 22980, Attention:
James S. Quarforth, President and Chief Executive Officer, CFW Communications
Company, Telecopy No: 540-946-3595.
7. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement among
the parties with respect to the subject matter hereof and supersedes all other
prior agreements and understandings, both written and oral, among the parties or
any of them with respect to the subject matter hereof.
B-2
<PAGE> 83
8. PARTIES IN INTEREST. All covenants and agreements contained herein
shall be binding upon, and inure to the benefit of, the Stockholder or Parent,
whichever is applicable under the terms hereof. Nothing in this Agreement,
whether express or implied, shall be construed to give to any Person, other than
the Stockholder or Parent, any legal or equitable right, remedy or claim under
or in respect of this Agreement (and any covenants, conditions or provisions
contained herein).
9. ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise, by any of the parties hereto without the prior
written consent of each of the other parties hereto.
10. AMENDMENT AND WAIVERS. This Agreement may be amended, supplemented or
otherwise modified, and compliance with any provision hereof may be waived, only
in a writing signed by or on behalf of the parties hereto. A copy of any such
amendment, supplement or modification shall be filed in the registered office of
the Company in the State of Delaware. Neither the failure nor delay on the part
of any party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof.
11. 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. 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 to the parties as closely as possible to the fullest extent
permitted by applicable law in a mutually acceptable manner in order that the
terms of this Agreement remain as originally contemplated to the fullest extent
possible.
12. GOVERNING LAW. The laws of the State of Delaware (irrespective of its
choice of law principles) shall govern all issues concerning the validity of
this Agreement, the construction of its terms, and the interpretation and
enforcement of the rights and duties of the parties.
13. ENFORCEMENT OF AGREEMENT. The parties agree that irreparable damage
would occur and that the parties would not have any adequate remedy at law in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of Delaware or in Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity. Each of the parties
hereto (i) consents to submit to the personal jurisdiction of any Federal court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated
hereby, (ii) agrees that such party will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court
and (iii) agrees that such party will not bring any action relating to this
Agreement or any of the transactions contemplated hereby in any court other than
a Federal court sitting in the State of Delaware or a Delaware state court.
Notwithstanding the foregoing, the parties agree that any and all monetary
damages that Parent may be entitled to by reason of a breach by the Stockholder
of this Agreement shall solely be the responsibility of the Company under the
Merger Agreement.
14. COUNTERPARTS. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
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IN WITNESS WHEREOF, each of the parties hereto have executed this
Agreement, or caused this Agreement to be duly executed, as of the date hereof.
CFW COMMUNICATIONS FOUNDATION
/s/ JAMES S. QUARFORTH
--------------------------------------
Name: James S. Quarforth
Title:
SPRINT CORPORATION
By: /s/ THEODORE H. SCHELL
------------------------------------
Name: Theodore H. Schell
Title: Senior Vice President
Strategic Planning
& Corporate Development
B-4
<PAGE> 85
VOTING AGREEMENT
VOTING AGREEMENT, dated as of April 26, 1999 (this "Agreement"), between
MCT Investors, L.P. ("MCT"), acting through its general partner MedCom
Development Corporation ("MedCom" and, together with MCT, the "Stockholder") and
Sprint Corporation, a Kansas corporation (the "Parent").
WHEREAS, American Telecasting, Inc., a Delaware corporation (the
"Company"), Parent, and DD Acquisition, Corp., a Delaware corporation and a
wholly owned subsidiary of Parent ("Purchaser"), have, substantially
contemporaneously with the execution of this Agreement, entered into an
Agreement and Plan of Merger, dated as of the date hereof (as the same may be
amended, supplemented or otherwise modified, the "Merger Agreement"), which
provides, among other things, that Purchaser shall be merged with and into the
Company (the "Merger"), upon the terms and subject to the conditions set forth
in the Merger Agreement (capitalized terms used but not defined herein having
the respective meanings ascribed to them in the Merger Agreement);
WHEREAS, as a condition to the willingness of Parent to enter into the
Merger Agreement, Parent has required that the Stockholder agree, and in order
to induce Parent to enter into the Merger Agreement, the Stockholder has agreed,
to enter into this Agreement;
WHEREAS, as of the date hereof, the Stockholder is the record owner of
2,163,648 shares of Company Common Stock in the record name of MCT and 41,058
shares of Company Common Stock in the record name of MedCom (such shares of
Company Common Stock, together with associated Rights, being collectively
referred to herein as the "Voting Agreement Shares").
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, the parties hereto expressly agree as follows:
1. RESTRICTIONS ON TRANSFER AND CONVERSION.
a. The Stockholder hereby covenants and agrees that the Stockholder
shall not, except with respect to existing pledge agreements or as
otherwise consented to in writing by Parent in its sole discretion, prior
to the termination of this Agreement, (i) either directly or indirectly,
offer or otherwise sell, assign, pledge, hypothecate, transfer, exchange,
tender, dispose or grant an option to dispose of any Voting Agreement
Shares or any interest therein, or agree to do any of the foregoing, or
(ii) take any action which would have the effect of preventing or disabling
the Stockholder from performing the Stockholder's obligations under this
Agreement.
b. No violation of the foregoing provisions of this Section 1 shall
operate to terminate this Agreement.
2. STOCKHOLDER'S RIGHTS. The Stockholder shall, as to the Voting Agreement
Shares, possess and be entitled to exercise all stockholder's rights and powers
of every kind as the beneficial owner thereof, including the right to vote the
Voting Agreement Shares and the right to take part in, or give or withhold
consent to, any corporate or stockholders' action with respect to which such
Voting Agreement Shares are entitled to be voted, except as such rights are
limited by this Agreement.
3. VOTING AGREEMENT.
a. The Stockholder has revoked or terminated any proxies, voting
agreements or similar arrangements previously given or entered into with
respect to the Voting Agreement Shares as to the matters set forth below
and hereby irrevocably appoints Parent, during the term of this Agreement,
as proxy for the Stockholder to: (i) vote all of the Voting Agreement
Shares in favor of the adoption and approval of the Merger Agreement; and
(ii) vote all of the Voting Agreement Shares against: (A) any extraordinary
corporate transaction (other than the Merger), such as a merger,
consolidation, business combination, tender or exchange offer,
reorganization, recapitalization, liquidation or other change of control
involving the Company or any of its subsidiaries, including, but not
limited to, any Acquisition Proposal, and (B) any sale or transfer of a
material amount of the assets or securities of the Company or any of its
Subsidiaries (other than pursuant to the Merger).
B-5
<PAGE> 86
b. The Stockholder shall vote on all issues other than those specified
in Section 3(a) that come before any meeting of stockholders of the Company
in such Stockholder's sole discretion, provided that such vote is not
inconsistent with the purposes of this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The Stockholder
hereby represents and warrants to Parent as follows:
a. This Agreement has been duly and validly executed and delivered by
the Stockholder and, assuming it constitutes a valid and binding agreement
of Parent, constitutes a legal, valid and binding agreement of the
Stockholder enforceable against the Stockholder in accordance with its
terms, except that the enforcement hereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
b. The execution and delivery of this Agreement by the Stockholder
does not, and the performance of this Agreement by the Stockholder will
not, 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 result in the creation of a lien or encumbrance on any of the Voting
Agreement Shares pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument
or obligation to which the Stockholder is a party or by which the
Stockholder or the Voting Agreement Shares are bound or affected, except,
in the case of each of the foregoing, for any such conflicts, violations,
breaches, defaults or other occurrences which would not prevent or
materially delay the performance by the Stockholder of its obligations
under this Agreement or the transactions contemplated hereby.
c. As of the date hereof, the Stockholder is the record owner of the
Voting Agreement Shares and has the right to vote or direct the voting of
the Voting Agreement Shares. The Voting Agreement Shares, or a portion
thereof, may be subject to existing security interests, liens, claims or
pledges. The Stockholder has not appointed or granted any proxy, which
appointment or grant is still effective, with respect to the Voting
Agreement Shares.
5. TERMINATION. This Agreement shall terminate upon the earliest to occur
of (i) the termination of the Merger Agreement in accordance with its terms,
(ii) the Effective Time, and (iii) the recommendation by the Company Board of
Directors in accordance with the provisions of Section 5.6 of the Merger
Agreement of a Superior Proposal that would, if consummated in accordance with
its terms, provide to the Company or the stockholders of the Company a per share
consideration equal to or greater than $1.00 per share in excess of the Merger
Consideration.
6. 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
and shall be effective upon receipt of delivery, if delivered personally, mailed
by registered or certified mail (postage prepaid, return receipt requested) or
delivered by a recognized national overnight courier to the parties at the
following addresses (or at such other address for a party as shall be specified
by like changes of address) or sent by electronic transmission (provided that a
confirmation copy is sent by another approved means): (i) if to Parent, to the
address set forth in Section 8.13 of the Merger Agreement; and (ii) if to the
Stockholder, 1555 King Street, Suite 500, Alexandria, Virginia 22314, Telecopy
No: 703-683-6329.
7. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement among
the parties with respect to the subject matter hereof and supersedes all other
prior agreements and understandings, both written and oral, among the parties or
any of them with respect to the subject matter hereof.
8. PARTIES IN INTEREST. All covenants and agreements contained herein
shall be binding upon, and inure to the benefit of, the Stockholder or Parent,
whichever is applicable under the terms hereof. Nothing in this Agreement,
whether express or implied, shall be construed to give to any Person, other than
the Stockholder or Parent, any legal or equitable right, remedy or claim under
or in respect of this Agreement (and any covenants, conditions or provisions
contained herein).
B-6
<PAGE> 87
9. ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise, by any of the parties hereto without the prior
written consent of each of the other parties hereto.
10. AMENDMENT AND WAIVERS. This Agreement may be amended, supplemented or
otherwise modified, and compliance with any provision hereof may be waived, only
in a writing signed by or on behalf of the parties hereto. A copy of any such
amendment, supplement or modification shall be filed in the registered office of
the Company in the State of Delaware. Neither the failure nor delay on the part
of any party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof.
11. 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. 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 to the parties as closely as possible to the fullest extent
permitted by applicable law in a mutually acceptable manner in order that the
terms of this Agreement remain as originally contemplated to the fullest extent
possible.
12. GOVERNING LAW. The laws of the State of Delaware (irrespective of its
choice of law principles) shall govern all issues concerning the validity of
this Agreement, the construction of its terms, and the interpretation and
enforcement of the rights and duties of the parties.
13. ENFORCEMENT OF AGREEMENT. The parties agree that irreparable damage
would occur and that the parties would not have any adequate remedy at law in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of Delaware or in Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity. Each of the parties
hereto (i) consents to submit to the personal jurisdiction of any Federal court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated
hereby, (ii) agrees that such party will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court
and (iii) agrees that such party will not bring any action relating to this
Agreement or any of the transactions contemplated hereby in any court other than
a Federal court sitting in the State of Delaware or a Delaware state court.
Notwithstanding the foregoing, the parties agree that any and all monetary
damages that Parent may be entitled to by reason of a breach by the Stockholder
of this Agreement shall solely be the responsibility of the Company under the
Merger Agreement.
14. COUNTERPARTS. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
B-7
<PAGE> 88
IN WITNESS WHEREOF, each of the parties hereto have executed this
Agreement, or caused this Agreement to be duly executed, as of the date hereof.
MCT INVESTORS, L.P.
By: MEDCOM DEVELOPMENT CORPORATION,
as General Partner
By: /s/ DONALD R. DEPRIEST
-------------------------------------
Name: Donald R. DePriest
Title: President and Chairman of the
Board
SPRINT CORPORATION
By: /s/ THEODORE H. SCHELL
-------------------------------------
Name: Theodore H. Schell
Title: Senior Vice President
Strategic Planning
& Corporate Development
B-8
<PAGE> 89
VOTING AGREEMENT
VOTING AGREEMENT, dated as of April 26, 1999 (this "Agreement"), between
Robert D. Hostetler (the "Stockholder") and Sprint Corporation, a Kansas
corporation (the "Parent").
WHEREAS, American Telecasting, Inc., a Delaware corporation (the
"Company"), Parent, and DD Acquisition, Corp., a Delaware corporation and a
wholly owned subsidiary of Parent ("Purchaser"), have, substantially
contemporaneously with the execution of this Agreement, entered into an
Agreement and Plan of Merger, dated as of the date hereof (as the same may be
amended, supplemented or otherwise modified, the "Merger Agreement"), which
provides, among other things, that Purchaser shall be merged with and into the
Company (the "Merger"), upon the terms and subject to the conditions set forth
in the Merger Agreement (capitalized terms used but not defined herein having
the respective meanings ascribed to them in the Merger Agreement);
WHEREAS, as a condition to the willingness of Parent to enter into the
Merger Agreement, Parent has required that the Stockholder agree, and in order
to induce Parent to enter into the Merger Agreement, the Stockholder has agreed,
to enter into this Agreement;
WHEREAS, as of the date hereof, the Stockholder is the record owner of
447,975 shares of Company Common Stock (such shares of Company Common Stock,
together with associated Rights, being collectively referred to herein as the
"Voting Agreement Shares").
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, the parties hereto expressly agree as follows:
1. RESTRICTIONS ON TRANSFER AND CONVERSION.
a. The Stockholder hereby covenants and agrees that the Stockholder
shall not, except with respect to existing pledge agreements or as
otherwise consented to in writing by Parent in its sole discretion, prior
to the termination of this Agreement, (i) either directly or indirectly,
offer or otherwise sell, assign, pledge, hypothecate, transfer, exchange,
tender, dispose or grant an option to dispose of any Voting Agreement
Shares or any interest therein, or agree to do any of the foregoing, or
(ii) take any action which would have the effect of preventing or disabling
the Stockholder from performing the Stockholder's obligations under this
Agreement.
b. No violation of the foregoing provisions of this Section 1 shall
operate to terminate this Agreement.
2. STOCKHOLDER'S RIGHTS. The Stockholder shall, as to the Voting Agreement
Shares, possess and be entitled to exercise all stockholder's rights and powers
of every kind as the beneficial owner thereof, including the right to vote the
Voting Agreement Shares and the right to take part in, or give or withhold
consent to, any corporate or stockholders' action with respect to which such
Voting Agreement Shares are entitled to be voted, except as such rights are
limited by this Agreement.
3. VOTING AGREEMENT.
a. The Stockholder has revoked or terminated any proxies, voting
agreements or similar arrangements previously given or entered into with
respect to the Voting Agreement Shares as to the matters set forth below
and hereby irrevocably appoints Parent, during the term of this Agreement,
as proxy for the Stockholder to: (i) vote all of the Voting Agreement
Shares in favor of the adoption and approval of the Merger Agreement; and
(ii) vote all of the Voting Agreement Shares against: (A) any extraordinary
corporate transaction (other than the Merger), such as a merger,
consolidation, business combination, tender or exchange offer,
reorganization, recapitalization, liquidation or other change of control
involving the Company or any of its subsidiaries, including, but not
limited to, any Acquisition Proposal, and (B) any sale or transfer of a
material amount of the assets or securities of the Company or any of its
Subsidiaries (other than pursuant to the Merger).
B-9
<PAGE> 90
b. The Stockholder shall vote on all issues other than those specified
in Section 3(a) that come before any meeting of stockholders of the Company
in such Stockholder's sole discretion, provided that such vote is not
inconsistent with the purposes of this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The Stockholder
hereby represents and warrants to Parent as follows:
a. This Agreement has been duly and validly executed and delivered by
the Stockholder and, assuming it constitutes a valid and binding agreement
of Parent, constitutes a legal, valid and binding agreement of the
Stockholder enforceable against the Stockholder in accordance with its
terms, except that the enforcement hereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
b. The execution and delivery of this Agreement by the Stockholder
does not, and the performance of this Agreement by the Stockholder will
not, 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 result in the creation of a lien or encumbrance on any of the Voting
Agreement Shares pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument
or obligation to which the Stockholder is a party or by which the
Stockholder or the Voting Agreement Shares are bound or affected, except,
in the case of each of the foregoing, for any such conflicts, violations,
breaches, defaults or other occurrences which would not prevent or
materially delay the performance by the Stockholder of its obligations
under this Agreement or the transactions contemplated hereby.
c. As of the date hereof, the Stockholder is the record owner of the
Voting Agreement Shares and has the right to vote or direct the voting of
the Voting Agreement Shares. The Voting Agreement Shares, or a portion
thereof, may be subject to existing security interests, liens, claims or
pledges. The Stockholder has not appointed or granted any proxy, which
appointment or grant is still effective, with respect to the Voting
Agreement Shares.
5. TERMINATION. This Agreement shall terminate upon the earliest to occur
of (i) the termination of the Merger Agreement in accordance with its terms,
(ii) the Effective Time, and (iii) the recommendation by the Company Board of
Directors in accordance with the provisions of Section 5.6 of the Merger
Agreement of a Superior Proposal that would, if consummated in accordance with
its terms, provide to the Company or the stockholders of the Company a per share
consideration equal to or greater than $1.00 per share in excess of the Merger
Consideration.
6. 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
and shall be effective upon receipt of delivery, if delivered personally, mailed
by registered or certified mail (postage prepaid, return receipt requested) or
delivered by a recognized national overnight courier to the parties at the
following addresses (or at such other address for a party as shall be specified
by like changes of address) or sent by electronic transmission (provided that a
confirmation copy is sent by another approved means): (i) if to Parent, to the
address set forth in Section 8.13 of the Merger Agreement; and (ii) if to the
Stockholder, Robert D. Hostetler, President and Chief Executive Officer,
American Telecasting, Inc., 5575 Tech Center Drive, Suite, Colorado Springs,
Colorado 80919, Telecopy No: 719-260-5010.
7. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement among
the parties with respect to the subject matter hereof and supersedes all other
prior agreements and understandings, both written and oral, among the parties or
any of them with respect to the subject matter hereof.
8. PARTIES IN INTEREST. All covenants and agreements contained herein
shall be binding upon, and inure to the benefit of, the Stockholder or Parent,
whichever is applicable under the terms hereof. Nothing in this Agreement,
whether express or implied, shall be construed to give to any Person, other than
the Stockholder
B-10
<PAGE> 91
or Parent, any legal or equitable right, remedy or claim under or in respect of
this Agreement (and any covenants, conditions or provisions contained herein).
9. ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise, by any of the parties hereto without the prior
written consent of each of the other parties hereto.
10. AMENDMENT AND WAIVERS. This Agreement may be amended, supplemented or
otherwise modified, and compliance with any provision hereof may be waived, only
in a writing signed by or on behalf of the parties hereto. A copy of any such
amendment, supplement or modification shall be filed in the registered office of
the Company in the State of Delaware. Neither the failure nor delay on the part
of any party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof.
11. 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. 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 to the parties as closely as possible to the fullest extent
permitted by applicable law in a mutually acceptable manner in order that the
terms of this Agreement remain as originally contemplated to the fullest extent
possible.
12. GOVERNING LAW. The laws of the State of Delaware (irrespective of its
choice of law principles) shall govern all issues concerning the validity of
this Agreement, the construction of its terms, and the interpretation and
enforcement of the rights and duties of the parties.
13. ENFORCEMENT OF AGREEMENT. The parties agree that irreparable damage
would occur and that the parties would not have any adequate remedy at law in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of Delaware or in Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity. Each of the parties
hereto (i) consents to submit to the personal jurisdiction of any Federal court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated
hereby, (ii) agrees that such party will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court
and (iii) agrees that such party will not bring any action relating to this
Agreement or any of the transactions contemplated hereby in any court other than
a Federal court sitting in the State of Delaware or a Delaware state court.
Notwithstanding the foregoing, the parties agree that any and all monetary
damages that Parent may be entitled to by reason of a breach by the Stockholder
of this Agreement shall solely be the responsibility of the Company under the
Merger Agreement.
14. COUNTERPARTS. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
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IN WITNESS WHEREOF, each of the parties hereto have executed this
Agreement, or caused this Agreement to be duly executed, as of the date hereof.
/s/ ROBERT D. HOSTETLER
--------------------------------------
Robert D. Hostetler
SPRINT CORPORATION
By: /s/ THEODORE H. SCHELL
------------------------------------
Name: Theodore H. Schell
Title: Senior Vice President
Strategic Planning
& Corporate Development
B-12
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VOTING AGREEMENT
VOTING AGREEMENT, dated as of April 26, 1999 (this "Agreement"), between
Donald R. DePriest (the "Stockholder") and Sprint Corporation, a Kansas
corporation (the "Parent").
WHEREAS, American Telecasting, Inc., a Delaware corporation (the
"Company"), Parent, and DD Acquisition, Corp., a Delaware corporation and a
wholly owned subsidiary of Parent ("Purchaser"), have, substantially
contemporaneously with the execution of this Agreement, entered into an
Agreement and Plan of Merger, dated as of the date hereof (as the same may be
amended, supplemented or otherwise modified, the "Merger Agreement"), which
provides, among other things, that Purchaser shall be merged with and into the
Company (the "Merger"), upon the terms and subject to the conditions set forth
in the Merger Agreement (capitalized terms used but not defined herein having
the respective meanings ascribed to them in the Merger Agreement);
WHEREAS, as a condition to the willingness of Parent to enter into the
Merger Agreement, Parent has required that the Stockholder agree, and in order
to induce Parent to enter into the Merger Agreement, the Stockholder has agreed,
to enter into this Agreement;
WHEREAS, as of the date hereof, the Stockholder is the record owner of
2,645,236 shares of Company Common Stock (such shares of Company Common Stock,
together with associated Rights, being collectively referred to herein as the
"Voting Agreement Shares").
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, the parties hereto expressly agree as follows:
1. RESTRICTIONS ON TRANSFER AND CONVERSION.
a. The Stockholder hereby covenants and agrees that the Stockholder
shall not, except with respect to existing pledge agreements or as
otherwise consented to in writing by Parent in its sole discretion, prior
to the termination of this Agreement, (i) either directly or indirectly,
offer or otherwise sell, assign, pledge, hypothecate, transfer, exchange,
tender, dispose or grant an option to dispose of any Voting Agreement
Shares or any interest therein, or agree to do any of the foregoing, or
(ii) take any action which would have the effect of preventing or disabling
the Stockholder from performing the Stockholder's obligations under this
Agreement.
b. No violation of the foregoing provisions of this Section 1 shall
operate to terminate this Agreement.
2. STOCKHOLDER'S RIGHTS. The Stockholder shall, as to the Voting Agreement
Shares, possess and be entitled to exercise all stockholder's rights and powers
of every kind as the beneficial owner thereof, including the right to vote the
Voting Agreement Shares and the right to take part in, or give or withhold
consent to, any corporate or stockholders' action with respect to which such
Voting Agreement Shares are entitled to be voted, except as such rights are
limited by this Agreement.
3. VOTING AGREEMENT.
a. The Stockholder has revoked or terminated any proxies, voting
agreements or similar arrangements previously given or entered into with
respect to the Voting Agreement Shares as to the matters set forth below
and hereby irrevocably appoints Parent, during the term of this Agreement,
as proxy for the Stockholder to: (i) vote all of the Voting Agreement
Shares in favor of the adoption and approval of the Merger Agreement; and
(ii) vote all of the Voting Agreement Shares against: (A) any extraordinary
corporate transaction (other than the Merger), such as a merger,
consolidation, business combination, tender or exchange offer,
reorganization, recapitalization, liquidation or other change of control
involving the Company or any of its subsidiaries, including, but not
limited to, any Acquisition Proposal, and (B) any sale or transfer of a
material amount of the assets or securities of the Company or any of its
Subsidiaries (other than pursuant to the Merger).
B-13
<PAGE> 94
b. The Stockholder shall vote on all issues other than those specified
in Section 3(a) that come before any meeting of stockholders of the Company
in such Stockholder's sole discretion, provided that such vote is not
inconsistent with the purposes of this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The Stockholder
hereby represents and warrants to Parent as follows:
a. This Agreement has been duly and validly executed and delivered by
the Stockholder and, assuming it constitutes a valid and binding agreement
of Parent, constitutes a legal, valid and binding agreement of the
Stockholder enforceable against the Stockholder in accordance with its
terms, except that the enforcement hereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
b. The execution and delivery of this Agreement by the Stockholder
does not, and the performance of this Agreement by the Stockholder will
not, 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 result in the creation of a lien or encumbrance on any of the Voting
Agreement Shares pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument
or obligation to which the Stockholder is a party or by which the
Stockholder or the Voting Agreement Shares are bound or affected, except,
in the case of each of the foregoing, for any such conflicts, violations,
breaches, defaults or other occurrences which would not prevent or
materially delay the performance by the Stockholder of its obligations
under this Agreement or the transactions contemplated hereby.
c. As of the date hereof, the Stockholder is the record owner of the
Voting Agreement Shares and has the right to vote or direct the voting of
the Voting Agreement Shares. The Voting Agreement Shares, or a portion
thereof, may be subject to existing security interests, liens, claims or
pledges. The Stockholder has not appointed or granted any proxy, which
appointment or grant is still effective, with respect to the Voting
Agreement Shares.
5. TERMINATION. This Agreement shall terminate upon the earliest to occur
of (i) the termination of the Merger Agreement in accordance with its terms,
(ii) the Effective Time, and (iii) the recommendation by the Company Board of
Directors in accordance with the provisions of Section 5.6 of the Merger
Agreement of a Superior Proposal that would, if consummated in accordance with
its terms, provide to the Company or the stockholders of the Company a per share
consideration equal to or greater than $1.00 per share in excess of the Merger
Consideration.
6. 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
and shall be effective upon receipt of delivery, if delivered personally, mailed
by registered or certified mail (postage prepaid, return receipt requested) or
delivered by a recognized national overnight courier to the parties at the
following addresses (or at such other address for a party as shall be specified
by like changes of address) or sent by electronic transmission (provided that a
confirmation copy is sent by another approved means): (i) if to Parent, to the
address set forth in Section 8.13 of the Merger Agreement; and (ii) if to the
Stockholder, 1555 King Street, Suite 500, Alexandria, Virginia 22314, Telecopy
No: 703-683-6329.
7. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement among
the parties with respect to the subject matter hereof and supersedes all other
prior agreements and understandings, both written and oral, among the parties or
any of them with respect to the subject matter hereof.
8. PARTIES IN INTEREST. All covenants and agreements contained herein
shall be binding upon, and inure to the benefit of, the Stockholder or Parent,
whichever is applicable under the terms hereof. Nothing in this Agreement,
whether express or implied, shall be construed to give to any Person, other than
the Stockholder or Parent, any legal or equitable right, remedy or claim under
or in respect of this Agreement (and any covenants, conditions or provisions
contained herein).
B-14
<PAGE> 95
9. ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise, by any of the parties hereto without the prior
written consent of each of the other parties hereto.
10. AMENDMENT AND WAIVERS. This Agreement may be amended, supplemented or
otherwise modified, and compliance with any provision hereof may be waived, only
in a writing signed by or on behalf of the parties hereto. A copy of any such
amendment, supplement or modification shall be filed in the registered office of
the Company in the State of Delaware. Neither the failure nor delay on the part
of any party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof.
11. 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. 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 to the parties as closely as possible to the fullest extent
permitted by applicable law in a mutually acceptable manner in order that the
terms of this Agreement remain as originally contemplated to the fullest extent
possible.
12. GOVERNING LAW. The laws of the State of Delaware (irrespective of its
choice of law principles) shall govern all issues concerning the validity of
this Agreement, the construction of its terms, and the interpretation and
enforcement of the rights and duties of the parties.
13. ENFORCEMENT OF AGREEMENT. The parties agree that irreparable damage
would occur and that the parties would not have any adequate remedy at law in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of Delaware or in Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity. Each of the parties
hereto (i) consents to submit to the personal jurisdiction of any Federal court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated
hereby, (ii) agrees that such party will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court
and (iii) agrees that such party will not bring any action relating to this
Agreement or any of the transactions contemplated hereby in any court other than
a Federal court sitting in the State of Delaware or a Delaware state court.
Notwithstanding the foregoing, the parties agree that any and all monetary
damages that Parent may be entitled to by reason of a breach by the Stockholder
of this Agreement shall solely be the responsibility of the Company under the
Merger Agreement.
14. COUNTERPARTS. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
B-15
<PAGE> 96
IN WITNESS WHEREOF, each of the parties hereto have executed this
Agreement, or caused this Agreement to be duly executed, as of the date hereof.
/s/ DONALD R. DEPRIEST
--------------------------------------
Donald R. DePriest
SPRINT CORPORATION
By: /s/ THEODORE H. SCHELL
------------------------------------
Name: Theodore H. Schell
Title: Senior Vice President
Strategic Planning
& Corporate Development
B-16
<PAGE> 97
VOTING AGREEMENT
VOTING AGREEMENT, dated as of April 26, 1999 (this "Agreement"), between
CFW Communications Company (the "Stockholder") and Sprint Corporation, a Kansas
corporation (the "Parent").
WHEREAS, American Telecasting, Inc., a Delaware corporation (the
"Company"), Parent, and DD Acquisition, Corp., a Delaware corporation and a
wholly owned subsidiary of Parent ("Purchaser"), have, substantially
contemporaneously with the execution of this Agreement, entered into an
Agreement and Plan of Merger, dated as of the date hereof (as the same may be
amended, supplemented or otherwise modified, the "Merger Agreement"), which
provides, among other things, that Purchaser shall be merged with and into the
Company (the "Merger"), upon the terms and subject to the conditions set forth
in the Merger Agreement (capitalized terms used but not defined herein having
the respective meanings ascribed to them in the Merger Agreement);
WHEREAS, as a condition to the willingness of Parent to enter into the
Merger Agreement, Parent has required that the Stockholder agree, and in order
to induce Parent to enter into the Merger Agreement, the Stockholder has agreed,
to enter into this Agreement;
WHEREAS, as of the date hereof, the Stockholder is the record owner of
1,412,112 shares of Company Common Stock (such shares of Company Common Stock,
together with associated Rights, being collectively referred to herein as the
"Voting Agreement Shares").
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, the parties hereto expressly agree as follows:
1. RESTRICTIONS ON TRANSFER AND CONVERSION.
a. The Stockholder hereby covenants and agrees that the Stockholder
shall not, except with respect to existing pledge agreements or as
otherwise consented to in writing by Parent in its sole discretion, prior
to the termination of this Agreement, (i) either directly or indirectly,
offer or otherwise sell, assign, pledge, hypothecate, transfer, exchange,
tender, dispose or grant an option to dispose of any Voting Agreement
Shares or any interest therein, or agree to do any of the foregoing, or
(ii) take any action which would have the effect of preventing or disabling
the Stockholder from performing the Stockholder's obligations under this
Agreement; provided, that the Stockholder may transfer up to 200,000 Voting
Agreement Shares to CFW Communications Foundation.
b. No violation of the foregoing provisions of this Section 1 shall
operate to terminate this Agreement.
2. STOCKHOLDER'S RIGHTS. The Stockholder shall, as to the Voting Agreement
Shares, possess and be entitled to exercise all stockholder's rights and powers
of every kind as the beneficial owner thereof, including the right to vote the
Voting Agreement Shares and the right to take part in, or give or withhold
consent to, any corporate or stockholders' action with respect to which such
Voting Agreement Shares are entitled to be voted, except as such rights are
limited by this Agreement.
3. VOTING AGREEMENT.
a. The Stockholder has revoked or terminated any proxies, voting
agreements or similar arrangements previously given or entered into with
respect to the Voting Agreement Shares as to the matters set forth below
and hereby irrevocably appoints Parent, during the term of this Agreement,
as proxy for the Stockholder to: (i) vote all of the Voting Agreement
Shares in favor of the adoption and approval of the Merger Agreement; and
(ii) vote all of the Voting Agreement Shares against: (A) any extraordinary
corporate transaction (other than the Merger), such as a merger,
consolidation, business combination, tender or exchange offer,
reorganization, recapitalization, liquidation or other change of control
involving the Company or any of its subsidiaries, including, but not
limited to, any Acquisition Proposal, and (B) any sale or transfer of a
material amount of the assets or securities of the Company or any of its
Subsidiaries (other than pursuant to the Merger).
B-17
<PAGE> 98
b. The Stockholder shall vote on all issues other than those specified
in Section 3(a) that come before any meeting of stockholders of the Company
in such Stockholder's sole discretion, provided that such vote is not
inconsistent with the purposes of this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The Stockholder
hereby represents and warrants to Parent as follows:
a. This Agreement has been duly and validly executed and delivered by
the Stockholder and, assuming it constitutes a valid and binding agreement
of Parent, constitutes a legal, valid and binding agreement of the
Stockholder enforceable against the Stockholder in accordance with its
terms, except that the enforcement hereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
b. The execution and delivery of this Agreement by the Stockholder
does not, and the performance of this Agreement by the Stockholder will
not, 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 result in the creation of a lien or encumbrance on any of the Voting
Agreement Shares pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument
or obligation to which the Stockholder is a party or by which the
Stockholder or the Voting Agreement Shares are bound or affected, except,
in the case of each of the foregoing, for any such conflicts, violations,
breaches, defaults or other occurrences which would not prevent or
materially delay the performance by the Stockholder of its obligations
under this Agreement or the transactions contemplated hereby.
c. As of the date hereof, the Stockholder is the record owner of the
Voting Agreement Shares and has the right to vote or direct the voting of
the Voting Agreement Shares. The Voting Agreement Shares, or a portion
thereof, may be subject to existing security interests, liens, claims or
pledges. The Stockholder has not appointed or granted any proxy, which
appointment or grant is still effective, with respect to the Voting
Agreement Shares.
5. TERMINATION. This Agreement shall terminate upon the earliest to occur
of (i) the termination of the Merger Agreement in accordance with its terms,
(ii) the Effective Time, and (iii) the recommendation by the Company Board of
Directors in accordance with the provisions of Section 5.6 of the Merger
Agreement of a Superior Proposal that would, if consummated in accordance with
its terms, provide to the Company or the stockholders of the Company a per share
consideration equal to or greater than $1.00 per share in excess of the Merger
Consideration.
6. 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
and shall be effective upon receipt of delivery, if delivered personally, mailed
by registered or certified mail (postage prepaid, return receipt requested) or
delivered by a recognized national overnight courier to the parties at the
following addresses (or at such other address for a party as shall be specified
by like changes of address) or sent by electronic transmission (provided that a
confirmation copy is sent by another approved means): (i) if to Parent, to the
address set forth in Section 8.13 of the Merger Agreement; and (ii) if to the
Stockholder, 401 Spring Lane, Suite 300, Waynesboro, Virginia 22980, Attention:
James S. Quarforth, President and Chief Executive Officer, Telecopy No:
540-946-3595.
7. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement among
the parties with respect to the subject matter hereof and supersedes all other
prior agreements and understandings, both written and oral, among the parties or
any of them with respect to the subject matter hereof.
8. PARTIES IN INTEREST. All covenants and agreements contained herein shall
be binding upon, and inure to the benefit of, the Stockholder or Parent,
whichever is applicable under the terms hereof. Nothing in this Agreement,
whether express or implied, shall be construed to give to any Person, other than
the Stockholder or Parent, any legal or equitable right, remedy or claim under
or in respect of this Agreement (and any covenants, conditions or provisions
contained herein).
B-18
<PAGE> 99
9. ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise, by any of the parties hereto without the prior
written consent of each of the other parties hereto.
10. AMENDMENT AND WAIVERS. This Agreement may be amended, supplemented or
otherwise modified, and compliance with any provision hereof may be waived, only
in a writing signed by or on behalf of the parties hereto. A copy of any such
amendment, supplement or modification shall be filed in the registered office of
the Company in the State of Delaware. Neither the failure nor delay on the part
of any party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof.
11. 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. 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 to the parties as closely as possible to the fullest extent
permitted by applicable law in a mutually acceptable manner in order that the
terms of this Agreement remain as originally contemplated to the fullest extent
possible.
12. GOVERNING LAW. The laws of the State of Delaware (irrespective of its
choice of law principles) shall govern all issues concerning the validity of
this Agreement, the construction of its terms, and the interpretation and
enforcement of the rights and duties of the parties.
13. ENFORCEMENT OF AGREEMENT. The parties agree that irreparable damage
would occur and that the parties would not have any adequate remedy at law in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of Delaware or in Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity. Each of the parties
hereto (i) consents to submit to the personal jurisdiction of any Federal court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated
hereby, (ii) agrees that such party will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court
and (iii) agrees that such party will not bring any action relating to this
Agreement or any of the transactions contemplated hereby in any court other than
a Federal court sitting in the State of Delaware or a Delaware state court.
Notwithstanding the foregoing, the parties agree that any and all monetary
damages that Parent may be entitled to by reason of a breach by the Stockholder
of this Agreement shall solely be the responsibility of the Company under the
Merger Agreement.
14. COUNTERPARTS. For the convenience of the parties hereto, this Agreement
may be executed in any number of counterparts, each such counterpart being
deemed to be an original instrument, and all such counterparts shall together
constitute the same agreement.
B-19
<PAGE> 100
IN WITNESS WHEREOF, each of the parties hereto have executed this Agreement
to be duly executed, as of the date hereof.
CFW COMMUNICATIONS COMPANY
By: /s/ JAMES S. QUARFORTH
------------------------------------
Name: James S. Quarforth
Title: President and Chief Executive
Officer
SPRINT CORPORATION
By: /s/ THEODORE H. SCHELL
------------------------------------
Name: Theodore H. Schell
Title: Senior Vice President
Strategic
& Corporate Development
Planning
B-20
<PAGE> 101
ANNEX C
LAZARD FRERES & CO. LLC
FOUR EMBARCADERO CENTER
SAN FRANCISCO, CA 94111
- ------------------------------------------------------------
TELEPHONE (415) 623-5000
FACSIMILE (415) 421-5050 SAN FRANCISCO
April 26, 1999
The Board of Directors
American Telecasting, Inc.
5575 Tech Center Drive, Suite 300
Colorado Springs, Colorado 80919
Dear Members of the Board:
We understand that American Telecasting, Inc. (the "Company"), Sprint
Corporation ("Parent") and DD Acquisition Corp., a wholly owned subsidiary of
Parent ("Merger Sub"), have entered into an Agreement and Plan of Merger dated
April 26, 1999 (the "Agreement"), pursuant to which Merger Sub will merge with
and into the Company (the "Merger"). Pursuant to the Merger, each share of the
Company's Class A common stock, par value $0.01 per share (the "Common Stock"),
outstanding immediately prior to the effective time of the Merger (other than
shares of Common Stock held by Parent or Merger Sub, shares of Common Stock held
in the treasury of the Company and shares of Common Stock held by stockholders
who demand appraisal for such shares in accordance with the Delaware General
Corporation Law (the "DGCL"), if the DGCL provides for appraisal rights for such
shares in the Merger) will be converted into the right to receive $6.50 in cash.
You have requested our opinion as to the fairness, from a financial point
of view, to the holders of shares of Common Stock (other than Parent and Merger
Sub) of the consideration to be paid pursuant to the Agreement. In connection
with this opinion, we have:
(i) Reviewed the financial terms and conditions of the Agreement;
(ii) Analyzed certain historical business and financial information
relating to the Company;
(iii) Reviewed various other data provided to us by the Company
relating to its business (we note that the Company does not prepare
forecasts that we deemed relevant in connection with the Merger);
(iv) Held discussions with members of the senior management of the
Company with respect to the business, prospects, and strategic objectives
of the Company;
(v) Reviewed public information with respect to certain other
companies in lines of business we believe to be generally comparable to the
business of the Company;
(vi) Reviewed the financial terms of certain business combinations
involving companies in lines of business we believe to be generally
comparable to those of the Company, and in other industries generally;
(vii) Reviewed the historical stock prices and trading volumes of the
Common Stock; and
(viii) Conducted such other financial studies, analyses and
investigations as we deemed appropriate.
We have relied upon the accuracy and completeness of the foregoing
information, and have not assumed any responsibility for any independent
verification of such information or any independent valuation or appraisal of
any of the assets or liabilities of the Company, or concerning the solvency or
fair value of the Company. We assume no responsibility for and express no view
as to the information reviewed by us.
<PAGE> 102
LAZARD FRERES & CO. LLC
Further, our opinion is necessarily based on economic, monetary, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof. In rendering our opinion, we did not address the relative
merits of the Merger, any alternative potential transaction or the Company's
underlying decision to effect the Merger.
In rendering our opinion, we have assumed that the Merger will be
consummated on the terms described in the Agreement, without any waiver of any
material terms or conditions by the Company and that obtaining the necessary
regulatory approvals for the Merger will not have an adverse effect on the
Company. We were not requested to solicit third party indications of interest in
acquiring the Company (other than from two other parties identified by the
Company) nor have we actively sought any other offers.
Lazard Freres & Co. LLC is acting as investment banker to the Company in
connection with the Merger and will receive a fee for our services, a
substantial portion of which is contingent upon the consummation of the Merger.
In addition, the Company has agreed to indemnify us for certain liabilities that
may arise out of the rendering of this opinion.
Our engagement and the opinion expressed herein are for the benefit of the
Company's Board of Directors and our opinion is rendered to the Company's Board
of Directors in connection with its consideration of the Merger. This opinion is
not intended to and does not constitute a recommendation to any holder of Common
Stock as to whether such stockholder should vote for the Merger. It is
understood that this letter may not be disclosed or otherwise referred to
without our prior consent, except as may otherwise be required by law or by a
court of competent jurisdiction.
Based on and subject to the foregoing, we are of the opinion that the
consideration to be paid pursuant to the Agreement in the Merger is fair to the
holders of shares of Common Stock (other than Parent and Merger Sub) from a
financial point of view.
Very truly yours,
LAZARD FRERES & CO. LLC
By /s/ RICHARD P. EMERSON
------------------------------------
Richard P. Emerson
Managing Director
C-2
<PAGE> 103
ANNEX D
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
262 APPRAISAL RIGHTS. (a) Any stockholder of a corporation of this State
who holds shares of stock on the date of the making of a demand pursuant to
subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to sec.228 of this title shall be entitled to an appraisal by the Court
of Chancery of the fair value of the stockholder's shares of stock under the
circumstances described in subsections (b) and (c) of this section. As used in
this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec.251 (other than a merger effected pursuant to
sec.251(g) of this title), sec.252, sec.254, sec.257, sec.258, sec.263 or
sec.264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the Surviving Corporation
as provided in subsection (f) of sec.251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sec.sec.251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec.253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate
<PAGE> 104
of incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of such
stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of
such stockholder's shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such stockholder's
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must
do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to sec.228 or
sec.253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise
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<PAGE> 105
entitled to appraisal rights, may file a petition in the Court of Chancery
demanding a determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
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<PAGE> 106
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
D-4
<PAGE> 107
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
- --------------------------------------------------------------------------------
AMERICAN TELECASTING, INC.
5575 Tech Center Drive, Suite 300
Colorado Springs, Colorado 80919
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF AMERICAN TELECASTING, INC. FOR THE
SPECIAL MEETING OF STOCKHOLDERS ON JUNE 25, 1999
The undersigned stockholder of American Telecasting, Inc. ("American
Telecasting") hereby appoint(s) Robert D. Hostetler, Richard F. Seney,
David K. Sentman and each of them individually, with full power of
substitution, the proxy of the undersigned, to vote all shares of Class A
Common Stock, par value $.01 per share, of American Telecasting which the
undersigned is entitled, in any capacity, to vote at the special meeting
of stockholders to be held on June 25, 1999 and any and all adjournments
or postponements thereof, with all powers the undersigned would possess
if personally present, as follows:
This proxy, if properly executed and returned, will be voted in
accordance with the instructions appearing on the proxy and at the
discretion of the proxy holders as to any matters that may properly
come before the special meeting. IN THE ABSENCE OF SPECIFIC INSTRUCTIONS,
THIS PROXY WILL BE VOTED FOR APPROVAL OF EACH OF THE PROPOSALS STATED AND
AT THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER MATTER THAT MAY
PROPERLY COME BEFORE THE SPECIAL MEETING.
Please complete, sign and return the proxy card to register your
voting instructions for all shares owned by you.
(Continued, and to be signed and dated on reverse side)
<PAGE> 108
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
<TABLE>
<CAPTION>
Please mark your
votes as in this [X]
example.
<S> <C> <C> <C> <C>
FOR AGAINST ABSTAIN THE BOARD OF DIRECTORS OF AMER-
1. To approve and adopt the Agreement and Plan of Merger [ ] [ ] [ ] ICAN TELECASTING RECOMMENDS A
pursuant to which DD Acquisition will be merged with and VOTE FOR APPROVAL OF THE STATED
into American Telecasting, with American Telecasting being PROPOSALS
the surviving corporation in the merger. Approval of this
proposal will also constitute approval of the transactions
contemplated by the merger agreement, including the merger.
2. In their discretion, to vote upon all matters incident to the FOR AGAINST ABSTAIN
conduct of the special meeting and such others matters as
may properly come before the special meeting or any ad-
journments or postponements thereof. [ ] [ ] [ ]
THE UNDERSIGNED HEREBY
ACKNOWLEDGES RECEIPT OF THE
NOTICE OF SPECIAL MEETING AND
THE PROXY STATEMENT DATED MAY
24, 1999, RELATING TO THE
SPECIAL MEETING.
Date
---------------------------
--------------------------------
Signature
--------------------------------
Signature if held jointly
Note: Please sign this proxy
exactly as name appears herein.
If shares are held by joint
tenants, both should sign.
Attorneys-in-fact, executors,
administrators, trustees,
guardians, corporation officers
or others signing in a
representative capacity should
indicate the capacity in which
they are signing.
PLEASE SIGN, DATE, AND MAIL THIS
PROXY PROMPTLY IN THE RETURN
ENVELOPE whether or not you
expect to attend the special
meeting. You may nevertheless
vote in person if you do attend.
</TABLE>
