<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ____________ to _______________
COMMISSION FILE NUMBER 1-13272
OmniAmerica, Inc.
(formerly Specialty Teleconstructors, Inc.)
(Exact name of registrant as specified in its charter)
Delaware 85-0421409
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12001 STATE HWY 14 NORTH 87008
CEDAR CREST, NEW MEXICO (Zip Code)
(Address of principal executive offices)
(505) 281-2197
(Issuer's telephone number,
including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
Yes [x] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 15,106,360 shares of stock on
November 11, 1998.
<PAGE> 2
OmniAmerica, Inc. and Subsidiaries
(formerly Specialty Teleconstructors, Inc.)
Quarterly Report for the Quarter ended September 30, 1998
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 1998 (Unaudited)
and June 30, 1998................................................................................ 3
Consolidated Statements of Earnings for the three-months
ended September 30, 1998 and 1997 (Unaudited).................................................... 4
Consolidated Statements of Cash Flows for the three-months
ended September 30, 1998 and 1997 (Unaudited).................................................... 5
Notes to Unaudited Consolidated Financial Statements as of
September 30, 1998................................................................................ 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation.......................................................................... 9
Item 3. Quantitative and Qualitative Disclosure About Market Risk...................................... 12
Part II - Other Information
Item 1. Legal Proceedings.............................................................................. 13
Item 2. Changes in Securities.......................................................................... 13
Item 3. Defaults upon Senior Securities................................................................ 13
Item 4. Submission of Matters to a Vote of Security Holders............................................ 13
Item 5. Other Information.............................................................................. 13
Item 6. Exhibits and Reports on Form 8-K............................................................... 13
Signatures................................................................................................. 14
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OMNIAMERICA, INC. AND SUBSIDIARIES
(FORMERLY SPECIALTY TELECONSTRUCTORS, INC.)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
(UNAUDITED)
September 30, June 30,
1998 1998
-------------- --------------
<S> <C> <C>
Current assets:
Cash and cash equivalents ................................................ $ 786,073 $ 4,349,324
Contracts receivable, net of allowance for doubtful accounts
of $390,230 for both September 30,1998 and June 30, 1998 ................ 22,611,877 17,349,853
Costs and estimated earnings in excess of billings on
uncompleted contracts ................................................... 5,800,903 3,747,671
Components inventory ..................................................... 3,572,624 3,430,868
Prepaid income taxes ..................................................... -- 287,849
Other current assets ..................................................... 1,214,547 891,148
-------------- --------------
Total current assets ............................................. 33,986,024 30,056,713
Property and equipment, net ............................................... 80,524,265 50,847,107
Goodwill, net of amortization of $1,927,686 at September 30, 1998
and $808,250 at June 30, 1998 ............................................ 92,333,055 87,993,151
Investment in unconsolidated subsidiary ................................... 8,047,011 7,889,650
Other assets, net ......................................................... 2,333,323 2,536,804
-------------- --------------
$ 217,223,678 $ 179,323,425
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable ................................................... $ 12,555,104 $ 8,802,734
Notes payable to stockholder ............................................. -- 80,000
Billings in excess of costs and estimated earnings
on uncompleted contracts ................................................ 362,408 758,932
Accrued expenses ......................................................... 2,331,180 2,171,429
Current installments of notes and capital leases payable ................. 600,696 474,696
-------------- --------------
Total current liabilities ........................................ 15,849,388 12,287,791
Deferred income taxes ..................................................... 214,666 213,378
Notes and capital leases payable, excluding current installments .......... 62,912,825 31,631,459
-------------- --------------
Total liabilities ................................................ 78,976,879 44,132,628
Stockholders' Equity:
Common stock, $.01 par value. Authorized 100,000,000 shares; issued
15,206,299 at September 30, 1998 and 15,070,294 at June 30, 1998 ........ 152,063 150,703
Additional paid-in capital ............................................... 131,931,279 129,131,297
Treasury stock, at cost, 100,000 shares .................................. (1,387,500) (1,387,500)
Notes receivable from officer and director ............................... (600,000) (600,000)
Retained earnings ........................................................ 8,150,957 7,896,297
-------------- --------------
Total stockholders' equity ....................................... 138,246,799 135,190,797
-------------- --------------
Commitments and contingencies
$ 217,223,678 $ 179,323,425
============== ==============
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
3
<PAGE> 4
OMNIAMERICA, INC. AND SUBSIDIARIES
(FORMERLY SPECIALTY TELECONSTRUCTORS, INC.)
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
For the three months ended
September 30,
1998 1997
-------------- --------------
<S> <C> <C>
Revenues earned:
Installation services .................................................... $ 18,561,266 $ 11,466,225
Component sales .......................................................... 3,747,498 1,333,731
Tower leasing ............................................................ 2,128,787 --
-------------- --------------
Total revenues earned ............................................ 24,437,551 12,799,956
-------------- --------------
Cost of revenues earned:
Cost of installation services ............................................ 15,492,601 9,309,024
Cost of component sales .................................................. 3,075,112 973,679
Cost of tower leasing .................................................... 1,463,707 --
-------------- --------------
Total cost of revenues earned .................................... 20,031,420 10,282,703
-------------- --------------
Gross profit on revenues earned .................................. 4,406,131 2,517,253
Selling, general and administrative expenses .............................. 3,397,483 1,210,376
-------------- --------------
Earnings from operations ................................................. 1,008,648 1,306,877
Other income (expenses):
Interest income .......................................................... 11,560 17,344
Interest expense ......................................................... (626,123) (78,695)
Equity in earnings of unconsolidated subsidiary .......................... 157,361 --
Other, net ............................................................... 13,214 51,471
-------------- --------------
(443,988) (9,880)
-------------- --------------
Earnings before income taxes ............................................. 564,660 1,296,997
Income taxes .............................................................. 310,000 508,900
-------------- --------------
Net earnings ............................................................. $ 254,660 $ 788,097
============== ==============
Shares of common stock used in computing earnings per share:
Basic ................................................................... 15,065,328 7,891,486
Diluted ................................................................. 15,362,774 8,164,386
Net earnings per common shares:
Basic ................................................................... $ 0.02 $ 0.10
-------------- --------------
Diluted ................................................................. $ 0.02 $ 0.10
============== ==============
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
4
<PAGE> 5
OMNIAMERICA, INC. AND SUBSIDIARIES
(FORMERLY SPECIALTY TELECONSTRUCTORS, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the three months ended
September 30,
1998 1997
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings .............................................................. $ 254,660 $ 788,097
Adjustments to reconcile net earnings to net cash (used in) provided by
operating activities:
Depreciation of property and equipment .................................... 837,933 415,864
Amortization .............................................................. 1,119,436 48,923
Equity in earnings of unconsolidated subsidiary ........................... (157,361) --
Changes in operating assets and liabilities, net of acquisitions:
Contracts receivable .................................................... (4,887,024) 2,806,729
Costs and estimated earnings in excess of billings on
uncompleted contracts ................................................. (2,053,232) (1,719,735)
Components inventory .................................................... (141,756) (172,564)
Prepaid income taxes .................................................... 287,849 193,109
Other assets ............................................................ (119,918) (140,108)
Trade accounts payable .................................................. 3,752,370 (203,840)
Billings in excess of costs and estimated earnings on
uncompleted contracts ................................................. (396,524) (60,786)
Accrued expenses ........................................................ 159,751 (86,926)
Current income taxes .................................................... -- 305,076
Deferred income taxes ................................................... 1,288 (50,786)
-------------- --------------
Net cash (used in) provided by operating activities ................... (1,342,528) 2,123,053
-------------- --------------
Cash flows from investing activities:
Purchases of property and equipment ....................................... (32,120,235) (153,995)
Proceeds from sale of available for sale securities ....................... -- 67,057
Cash expended in acquisition of Teleforce Communications, LLC., ........... (640,000) --
-------------- --------------
--------------
Net cash used in investing activities ................................. (32,760,235) (86,938)
-------------- --------------
Cash flows from financing activities:
Lines of credit, net ...................................................... -- (1,957,752)
Principal payments on note payable to stockholder ......................... (80,000) (406,000)
Borrowings from notes payable ............................................. 30,496,087 --
Proceeds from sale of common stock, net ................................... 314,480 89,679
Principal payments on notes payable to banks .............................. (191,055) (279,307)
-------------- --------------
Net cash provided by (used in) financing activities ................... 30,539,512 (2,553,380)
-------------- --------------
Net decrease in cash and cash equivalents ............................. (3,563,251) (517,265)
Cash and cash equivalents:
Beginning of period ....................................................... 4,349,324 989,720
-------------- --------------
End of period ............................................................. $ 786,073 $ 472,455
============== ==============
Supplemental disclosure of cash flow information:
Teleforce Communications, LLC. acquisition in July 1998
Contracts receivable ............................................ $ 375,000
Goodwill ........................................................ 2,751,862
--------------
$ 3,126,862
==============
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
5
<PAGE> 6
OmniAmerica, Inc. and Subsidiaries
(formerly Specialty Teleconstructors, Inc.)
Notes to Unaudited Consolidated Financial Statements
September 30, 1998
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial reporting and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
disclosures normally required by generally accepted accounting principles for
complete financial statements or those normally reflected in the Company's
Annual Report on Form 10-KSB. The financial information included herein reflects
all adjustments (consisting of normal recurring adjustments) which are, in the
opinion of management, necessary to a fair presentation of results for interim
periods. Results of interim periods are not necessarily indicative of the
results to be expected for a full year. These unaudited consolidated financial
statements should be read in conjunction with the consolidated financial
statements for the year ended June 30, 1998 and the notes thereto included in
the Company's Form 10-KSB.
On September 14, 1998, Specialty Teleconstructors, Inc. ("STI"), through a
merger with a wholly-owned subsidiary of STI, changed its name from STI to
OmniAmerica, Inc ("OmniAmerica" or the "Company"), changed its state of
incorporation from Nevada to Delaware, and changed its Nasdaq ticker symbol from
SCTR to XMIT.
New Accounting Standards
Effective July 1, 1998, the Company adopted SFAS No. 130, Reporting
Comprehensive Income and SFAS No. 131, Financial Reporting for Segments of
Business Enterprise. Under the provisions of SFAS No. 130, there are currently
no items other than net income which would be classified as part of
comprehensive income. Under the provisions of SFAS No. 131, there are no
requirements for interim financial statements in the initial year of
application.
Principles of Consolidation
Investment in a 33 1/3% owned affiliated company is accounted for on the equity
basis of accounting and accordingly, the statement of earnings includes the
Company's proportionate share of the affiliate's income since its date of
acquisition during fiscal year 1998.
Reclassification
Certain prior year amounts have been reclassified to conform to the current year
presentation.
(2) PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
Estimated
useful September 30, June 30,
lives (years) 1998 1998
------------ ------------ ------------
<S> <C> <C> <C>
Tower assets ...................... 30 $ 63,536,131 $ 34,918,139
Land .............................. -- 3,528,681 3,528,681
Buildings ......................... 15-40 5,104,439 4,932,786
Vehicles .......................... 3-7 7,225,203 6,406,562
Furniture and fixtures ............ 3-10 2,331,084 1,794,439
Equipment ......................... 3-10 4,741,286 4,556,502
Leasehold improvements ............ 5 180,324 156,053
------------ ------------
86,647,148 56,293,162
Less accumulated depreciation ..... (6,122,883) (5,446,055)
------------ ------------
$ 80,524,265 $ 50,847,107
============ ============
</TABLE>
6
<PAGE> 7
OmniAmerica, Inc. and Subsidiaries
(formerly Specialty Teleconstructors, Inc.)
Notes to Unaudited Consolidated Financial Statements
September 30, 1998
(3) ACQUISITIONS
During the first three months of fiscal year 1999, the Company consummated the
following transactions (see the Form 10-KSB for additional information on these
transactions) which were accounted for by the purchase method of accounting, and
accordingly, the operating results of the acquired entities have been included
in the consolidated operating results since the date of acquisition.
On July 9, 1998, the Company paid $640,000 and issued 81,270 shares of
restricted common stock of the Company at a price of $30.60 per share,
determined by the closing price on or about July 9, 1998, in exchange for
substantially all of the assets and liabilities of Teleforce Communications,
LLC ("Teleforce"). Teleforce provides site acquisition services for the
wireless communications industry.
On August 26, 1998, the Company acquired three towers for approximately
$2,400,000.
On September 29, 1998, pursuant to an asset purchase and sale agreement with
certain wholly-owned subsidiaries of Arch Communications Group, the Company
acquired 70 towers on 68 sites for approximately $20,400,000 financed primarily
with proceeds from the Chase Manhattan senior secured revolving credit facility
(see Form 10-KSB for additional information on this credit facility).
The results of operations for the periods presented would not have been
materially different had these transactions taken place at the beginning of the
periods.
(4) INVESTMENT IN UNCONSOLIDATED SUBSIDIARY
As a result of the Company's April 1998 merger with OmniAmerica Holdings
described in Form 10-KSB, the Company holds a 33 1/3% interest in Kline Iron and
Steel Co., Inc. ("Kline"), a company which fabricates structural and tower steel
products, domestically and internationally, and is accounted for under the
equity method. Summarized historical financial information of Kline for the
three-month period ended September 30, 1998 is as follows:
Revenues $ 21,890,000
Gross margin 3,349,000
Net income 472,000
(5) CONTINGENCIES
The Company is, and from time to time may be, a party to routine legal
proceedings incidental to its business. The outcome of these legal proceedings
is not expected to have a material adverse effect on the Company's business,
results of operations or financial condition, based on the Company's current
understanding of the relevant facts and law. The Company maintains general
liability insurance against risks arising out of the normal course of business.
7
<PAGE> 8
OmniAmerica, Inc. and Subsidiaries
(formerly Specialty Teleconstructors, Inc.)
Notes to Unaudited Consolidated Financial Statements
September 30, 1998
(6) EARNINGS PER SHARE
The following is the reconciliation of the numerators and denominators of the
basic and diluted EPS computations for net income and other related disclosures
required by Statement of Financial Accounting Standards No. 128, Earnings Per
Share.
<TABLE>
<CAPTION>
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- ------------
<S> <C> <C> <C>
For the three months ended September 30, 1998: Basic earnings per share:
Income available to common stockholders .................................... $ 254,660 15,065,328 $ 0.02
Effect of dilutive shares:
Options .................................................................... -- 297,446
------------ ------------
Dilutive earnings per shares:
Income available to common stockholders plus
assumed conversions ..................................................... $ 254,660 15,362,774 $ 0.02
============ ============ ============
For the three months ended September 30, 1997: Basic earnings per share:
Income available to common stockholders .................................... $ 788,097 7,891,486 $ 0.10
Effect of dilutive shares:
Options .................................................................... -- 272,900
------------ ------------
Dilutive earnings per shares:
Income available to common stockholders plus
assumed conversions ..................................................... $ 788,097 8,164,386 $ 0.10
============ ============ ============
</TABLE>
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
FORWARD-LOOKING STATEMENTS
Statements contained herein that are not historical facts are forward-looking
statements ("forward-looking statements") within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, which are intended to be covered by the safe
harbors created by those sections. In addition, such forward-looking statements
may be contained in filings made by the Company with the Securities and Exchange
Commission, or press releases or oral statements made from time to time by or
with the approval of an authorized executive officer of the Company. Such
forward-looking statements are necessarily estimates reflecting the best
judgment of the Company's management based upon current information and involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company, or industry results,
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such risks,
uncertainties and other factors include, but are not limited to, those set forth
in the Company's Annual Report on Form 10-KSB for the fiscal year ended June 30,
1998 under the caption "ITEM 6, MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Cautionary Statements" and
elsewhere therein and appearing from time to time in filings made by the Company
with the Securities and Exchange Commission. These risks, uncertainties and
other factors should not be construed as exhaustive and the Company does not
undertake, and specifically disclaims any obligation, to update any
forward-looking statements to reflect occurrences or unanticipated events or
circumstances after the date of such statements.
PLAN OF OPERATIONS
Historically, the Company principally has been engaged in building sites for
wireless carriers, who have traditionally owned and operated their own
transmission tower assets. While the Company continues to provide infrastructure
building and implementation services to wireless carriers, since the April
Merger (as defined in the June 30, 1998 Form 10-KSB), the Company's focus has
been directed increasingly toward developing sources of recurring revenues,
specifically building towers for its own account (build-to-suit), acquiring
towers from carriers and other owners, maximizing lease revenues from existing
towers, and entering into long-term maintenance contracts with other tower
owners. The Company's focus on sources of recurring revenues is intended, in
part, to capitalize on recent trends by several carriers who have begun to
evaluate opportunities to outsource the ownership and operation of their
wireless infrastructure either by selling their existing tower sites to
independent third party tower owners and operators, who would then lease tower
space back to the carriers, and/or entering into build-to-suit arrangements,
whereby an independent third party builds, owns and leases tower sites to the
wireless carriers, often with multiple tenants on any given site. The Company
believes that its historical competency of tower construction coupled with the
ownership and leasing operations acquired in the April Merger makes the Company
one of the leading candidates for carrier outsourcing.
The Company believes owning towers and leasing tower space to the wireless
carriers will provide more stable long-term recurring revenues. In addition to
the Company's plan to pursue opportunities to acquire existing sites and towers
from carriers seeking to outsource their wireless infrastructure, the Company
believes that, at the present time, utilizing its infrastructure building and
implementation resources to construct towers for its own account is a more cost-
effective method of expanding its portfolio of owned towers. Late in the second
fiscal quarter of 1998, the Company began focusing on opportunities to provide
build-to-suit services to wireless carriers as part of its efforts to develop
sources of recurring revenues. The Company's build-to-suit program offers a
turnkey solution to wireless carriers and is designed to reduce carriers'
capital expenditures and overhead associated with the traditional methods of
acquiring and owning their wireless networks. As of September 30, 1998,
approximately 448 sites were under written or oral commitments from five
wireless carriers. In addition to the sites subject to build-to-suit
commitments, as of September 30, 1998, the Company was conducting site
acquisition or construction related activities with respect to approximately 175
towers and/or rooftop transmission facilities for its own account. There can be
no assurance that the Company will successfully enter into additional
significant build-to-suit agreements with any wireless carrier or group of
carriers or that it will be able to reach definitive agreements with the owners
of sites not currently under written contract or develop the sites in a
cost-effective manner, that implementation of its existing build-to-suit
agreements will result in the Company's ownership of all of the towers
originally contemplated by those agreements or that the Company will complete
the development of
9
<PAGE> 10
any of the towers or rooftop transmission facilities currently being developed
for its own account. As the Company focuses its resources increasingly on tower
ownership, revenues from third parties generated by its infrastructure building
and implementation services operations are likely to decline. Management
believes that the decline in revenues from its infrastructure building and
implementation services operations will be offset over time by the recurring
revenue stream expected from tower ownership, including revenues from owned
towers acquired in the April Merger, revenues from future tower acquisitions by
the Company, revenues from towers the Company is currently developing and
building for its own account and revenues from the towers the Company will
develop and build for its own account in the future.
RESULTS OF OPERATIONS
Revenues. The Company's revenues for the three-month period ended September 30,
1998 increased approximately 91% to $24,437,551 from $12,799,956 for the same
three-month period in the prior year. Management believes the increase in
revenues was due primarily to an increased rollout of wireless infrastructure
building and implementation activity that began in the fourth quarter of the
last fiscal year end and continued into this quarter, a commensurate increase in
component sales and income in the amount of $2,128,787 derived from tower
leasing operations acquired in the April Merger that did not exist in the
previous fiscal quarter.
Gross Profit. Gross profit for the three-month period ended September 30, 1998
increased approximately 75% to $4,406,131 from $2,517,253 for the same
three-month period in the prior year. Gross profit as a percentage of revenues
decreased to 18% for the first three months of fiscal 1999 from 20% for the same
three months of fiscal 1998. Management believes the increase in gross profit
was primarily due to the increase in revenues generated for the period, as noted
above. Management believes the decrease in gross profit as a percentage of
revenue is due primarily to the increase in expenses related to the
build-to-suit programs begun in the fourth quarter of the previous fiscal year.
As part of the Company's on-going strategy, significant resources have been
devoted to build-to-suit programs in the first quarter of fiscal 1999, thus
reducing the extent of installation services provided to third parties. This
resulted in lower gross profit as a percentage of revenue.
Selling, General and Administrative ("SG&A") Expenses. SG&A expenses were
$3,397,483 (14% of revenues) for the first three months of fiscal year 1999 as
compared to $1,210,376 (9% of revenues) for the same period last year. This
increase was primarily due to the increased administrative requirements of the
Company for the build-to-suit program and tower leasing, both of which did not
exist in the previous quarter of fiscal 1998, along with an increase in goodwill
amortization as a result of the April Merger.
Interest Expense. Due to increases in debt related to the acquisition of towers
and sites primarily from Arch Communications Group, Inc. in the aggregate amount
of approximately $33.5 million and the financing of the build-to-suit program,
interest expense increased to $626,123 for the three-month period ended
September 30, 1998 from $78,695 for the same three-month period in the prior
year.
Equity in Earnings of Unconsolidated Subsidiary. As a result of the April
Merger, the Company holds a 33 1/3% interest in Kline Iron & Steel Co., Inc., a
diversified steel fabricator that also fabricates broadcasting towers. For the
three months ended September 30, 1998, the Company recognized $157,361 in
earnings from this unconsolidated subsidiary. For the three months ended
September 30, 1997, no amounts were recognized as the Company did not hold the
equity investment during that period.
Income Tax Provision. The Company's effective tax rate was 39% for the first
quarter of the previous year versus 55% for the current quarter in fiscal 1999,
an increase of 16%. This increase is primarily the result of non-deductible
amortization expense for goodwill recognized as a result of the April Merger.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal requirements for cash are to finance tower
acquisition-related activities, capital expenditures, working capital and debt
service. The Company's present focus is on developing additional recurring
revenue through leasing revenues from towers built for its own account and
acquired towers from carriers and other
10
<PAGE> 11
owners, as well as maximizing lease revenues from existing towers, and entering
into long-term maintenance contracts with other tower owners. The Company has
relied primarily on available bank borrowings to finance this initiative.
For the three months ended September 30, 1998, cash flows used by operating
activities were $1,342,528, as compared to $2,123,053 in cash provided by
operating activities for the same period in the prior year. This difference is
primarily attributable to the change in the level of contracts receivable
associated with installation services and to working capital investments related
to the Company's build-to-suit program partially offset by increases in accounts
payable.
Cash flows used for investing activities were $32,760,235 for the first three
months of fiscal 1999 as compared to $86,938 for the same period in fiscal 1998.
The increase in fiscal 1999 is primarily due to the Company's tower acquisition
activity and build-to-suit program.
For the first quarter, cash flows provided by financing activities were
$30,539,512 in fiscal 1999 as compared to cash flows used in financing
activities of $2,553,380 in 1998. This change is primarily attributable to the
impact of borrowings under the Chase Manhattan credit facilities for fiscal 1999
as compared to reduction in debt in fiscal 1998. During the three months ended
September 30, 1998, the Company has used available bank financing from Chase
Manhattan in the amount of $30,496,087, since June 30, 1998. The increase is
directly attributed to the purchase of existing towers and sites primarily from
Arch Communications Group, Inc. and the Company's build-to-suit program. Total
availability under the existing credit facilities was approximately $14,500,000
at September 30, 1998.
A substantial portion of the Company's cash flow from operations will be
required for debt service, which will increase significantly due to the increase
in debt in the first quarter resulting in a substantial increase in interest
expense. Accordingly, the Company's leverage could make it vulnerable to a
downturn in the operating performance of its tower leasing and installation
services or in economic conditions. Management believes that its cash flows from
operations along with additional financing sources will be sufficient to meet
its debt service requirements for interest and scheduled principal payments. If
such cash flow were not sufficient to meet its debt service requirements, the
Company may be required to sell equity securities, refinance its obligations, or
dispose of one or more of its properties in order to make such scheduled
payments. There can be no assurance that the Company would be able to effect any
of such transactions on favorable terms.
As a result of the current commitments of the Company and the limited
availability of funds under the existing credit facilities, the Company expects
that it will be required to seek additional sources of funding. The Company
believes that it will be able to obtain sufficient financial resources,
including borrowings from its credit facilities with Chase Manhattan as
described in the June 30, 1998 Form 10-KSB, to finance operations for the
foreseeable future. The Company intends to finance its obligations under pending
build-to-suit commitments out of borrowings from its credit facilities and will
consider the issuance of debt or equity securities to finance any future tower
site acquisitions or build-to-suit commitments.
YEAR 2000
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs or hardware that have date-sensitive software or embedded
chips may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities. Failure by the Company and/or material third parties, such as power
utility providers, financial institutions and other critical suppliers and major
customers to complete Year 2000 readiness
11
<PAGE> 12
activities in a timely manner could have a material adverse effect on the
Company's business and results of operations.
The Company is engaged in a company-wide effort to achieve Year 2000 readiness
for both information technology and non-information technology systems. The
Company expects to achieve company-wide Year 2000 readiness by mid-1999. The
Company has formed a committee consisting of senior management and information
technology staff and consultants to assess, remediate, test and implement
processes to meet Year 2000 readiness.
To date, the Company is nearly complete in its assessment of all systems that
could be significantly affected by the Year 2000 Issue. The near completed
assessment indicated that most of the Company's significant information
technology systems could be affected, particularly the general ledgers, billing,
inventory, and payment systems. The Company has determined that most of the
products it has sold and will continue to sell do not require remediation to be
Year 2000 compliant. Accordingly, the Company does not believe that the Year
2000 Issue presents material exposure as it relates to the Company's products.
In addition, the Company is gathering information about the Year 2000 compliance
status of its significant suppliers and subcontractors and will continue to
monitor their compliance.
The Company's systems are at various stages of readiness. The assessment stage
is approximately 75% complete, which includes non-information technology such as
embedded microprocessors. Remediation, testing and implementation has not begun
as of the present quarter, but will be expected to be completed by mid-1999.
The Company began inquiries of its significant suppliers, subcontractors and
other third-party support services (i.e. banking services) and customers to
assess their Year 2000 readiness efforts. Letters of compliance will be
requested from such third parties in the second fiscal quarter. To date, the
Company is not aware of any external agent with a Year 2000 issue that would
materially impact the Company's results of operations, liquidity, or capital
resources. However, the Company has no means of ensuring that external agents
will be Year 2000 ready. A combination of telephone interviews and on-site
visits will be considered to assure there will be no interruption in operations.
Contingency plans to choose alternative third-party agents will be formalized in
the third fiscal quarter.
The Company will utilize mostly internal resources to replace, test, and
implement the software and operating equipment and outside consultants where
necessary for Year 2000 modifications. The total cost of the Year 2000 project
is not expected to exceed $75,000 for the entire effort. Because the Company's
readiness program is not yet fully implemented, and is subject to certain risks
and uncertainties, including the readiness efforts of material third parties,
there can be no assurance that the Company will not incur material costs beyond
the anticipated costs described above. The cost of the Year 2000 project and the
dates by which the Company believes it will be Year 2000 ready are based on
management's current best estimates, which were derived based on numerous
assumptions of future events, including the continued availability of certain
resources, third-party modification plans and other factors. There can be no
guarantee, however, that these estimates will be achieved, and actual results
could differ materially from those anticipated.
INFLATION
Historically, inflation has not been a significant factor to the Company as
labor is the primary cost of operations and its contracts are typically
short-term in nature. On an ongoing basis, the Company attempts to minimize any
effects of inflation on its operating results by controlling operating costs
and, whenever possible, seeking to ensure that contract prices reflect increases
in costs due to inflation.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of September 30, 1998, the Company maintains a portion of its cash and
cash equivalents in short-term financial instruments which are subject to
interest rate risks and, accordingly, will decline in value if interest rates
decline. Due to the relatively small investment in such instruments and the
short duration of such instruments, fluctuations in interest rates with respect
to such instruments would not materially affect the Company's financial
condition.
The Company's outstanding long-term debt at September 30, 1998 bears
interest at variable rates and, accordingly, will be affected by interest rate
changes. At September 30, 1998, the Company had approximately $63.5 million of
long-term debt subject to variable interest rates. For illustration purposes, an
increase of 1.0% in interest rates with respect to the Company's long-term debt,
based on June 30, 1998 positions, would have increased interest expense for the
quarter ended September 30, 1998 by approximately $316,000.
12
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
On July 9, 1998, the Company issued 81,270 shares of its common stock
as partial consideration for its acquisition of substantially all of
the assets of Teleforce Communications, LLC. In connection with such
issuance, the Company relied on the exemption from registration
provided in Section 4(2) of the Securities Act of 1933, as amended.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On July 24, 1998, the holders of approximately 59.3% of the Company's
outstanding common stock executed a written consent (i) authorizing the
Company's merger for the purpose of reincorporating (the
"Reincorporation Merger") in Delaware and (ii) approving the Company's
1998 Stock Option Plan. An Information Statement relating to such
matters was distributed on August 24, 1998 to the stockholders of the
Company not party to such written consent. The Reincorporation Merger
and the 1998 Stock Option Plan became effective on September 14, 1998.
ITEM 5. OTHER INFORMATION
On November 16, 1998, the Company announced that it had entered into an
Agreement and Plan of Merger with American Tower Company and American
Towers, Inc. ("ATI") pursuant to which the Company will, subject to the
receipt of necessary governmental consents and other customary closing
conditions, be merged with and into ATI.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
2.1 Agreement and Plan of Merger by and among American
Tower Corporation, American Towers, Inc. and
OmniAmerica, Inc., dated as of November 16, 1998.
27.1 Financial Data Schedule
99.1 Press Release dated November 16, 1998.
(b) Reports on Form 8-K
(i) The Company filed a Report on Form 8-KA on July 7,
1998 to amend the 8-K filed May 7, 1998 by including
pro forma financial information related to the merger
between OAI Acquisition Corp., a Delaware corporation
and a wholly-owned subsidiary of the Company, with
and into OmniAmerica Holdings Corporation, a Delaware
corporation.
(ii) The Company filed a Report on Form 8-K on September
14, 1998 relating to its merger for the purpose of
reincorporating in Delaware, which merger was
consummated on September 14, 1998.
13
<PAGE> 14
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
OmniAmerica, Inc.
(Registrant)
Date: November 16, 1998 By: /s/ Anthony S. Ocepek
-------------------------------------------
Anthony S. Ocepek, Chief Financial Officer
(Chief Financial Officer of the Registrant,
thereunto duly authorized)
14
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
2.1 Agreement and Plan of Merger by and among American
Tower Corporation, American Towers, Inc. and
OmniAmerica, Inc., dated as of November 16, 1998.
27.1 Financial Data Schedule
99.1 Press Release dated November 16, 1998.
</TABLE>
<PAGE> 1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
By and Among
AMERICAN TOWER CORPORATION,
AMERICAN TOWERS, INC.
and
OMNIAMERICA, INC.
Dated as of
November 16, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1
DEFINED TERMS; TARGET DISCLOSURE SCHEDULE............................. -1-
ARTICLE 2
THE MERGER............................................................ -2-
2.1 The Merger................................................. -2-
2.2 Closing.................................................... -2-
2.3 Effective Time............................................. -2-
2.4 Effect of the Merger....................................... -2-
2.5 Certificate of Incorporation............................... -2-
2.6 Bylaws..................................................... -2-
2.7 Directors and Officers..................................... -2-
ARTICLE 3
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES........................ -2-
3.1 Conversion of Capital Stock................................ -2-
3.2 Exchange of Certificates. ................................ -4-
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF TARGET.............................. -5-
4.1 Organization and Business; Power and Authority; Effect of
Transaction................................................ -5-
4.2 Financial and Other Information. .......................... -7-
4.3 Material Statements and Omissions; Absence of Events....... -7-
4.4 Title to Properties; Leases................................ -8-
4.5 Compliance with Private Authorizations..................... -9-
4.6 Compliance with Governmental Authorizations and Applicable
Law....................................................... -10-
4.7 Year 2000 Compliant....................................... -10-
4.9 Insurance................................................. -11-
4.10 Tax Matters. ............................................ -11-
4.11 ERISA Matters............................................. -12-
4.13 Bank Accounts, Etc........................................ -13-
4.14 Employment and Consulting Arrangements.................... -14-
4.15 Material Agreements....................................... -14-
4.16 Ordinary Course of Business............................... -15-
4.17 Broker or Finder.......................................... -16-
4.18 Environmental Matters..................................... -16-
4.19 Capital Stock............................................. -17-
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ATC AND ATI........................ -17-
5.1 Organization and Business; Power and Authority; Effect of
Transaction............................................... -17-
5.2 Financial and Other Information........................... -18-
5.3 Material Statements and Omissions; Absence of Events...... -18-
5.4 Broker or Finder.......................................... -19-
5.5 Capital Stock............................................. -19-
5.6 Tax Matters. ............................................ -20-
5.7 Compliance with Governmental Authorizations and
Applicable Law. ......................................... -20-
5.8 Year 2000 Compliant....................................... -21-
5.9 Compliance with Private Authorizations.................... -21-
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
5.10 Title to Properties; Leases............................... -21-
5.11 Related Transactions...................................... -22-
5.12 Insurance................................................. -23-
5.13 ERISA Matters............................................. -23-
5.14 Product Liability......................................... -24-
5.15 Ordinary Course of Business............................... -24-
5.16 Environmental Matters..................................... -25-
5.18 Material Agreements....................................... -26-
ARTICLE 6
COVENANTS............................................................ -27-
6.1 Access to Information; Confidentiality. ................. -27-
6.2 Agreement to Cooperate; Certain Other Covenants. ........ -28-
6.3 Public Announcements...................................... -28-
6.4 Notification of Certain Matters........................... -29-
6.5 Other Offers; No Solicitation............................. -29-
6.6 Conduct of Business by Target Pending the Merger.......... -30-
6.7 Additional Tax Matters.................................... -32-
6.8 Certificates of Non-Foreign Status........................ -32-
6.9 Target Stock Options...................................... -33-
6.10 Stockholder Approval...................................... -33-
6.11 Registration Statement and Proxy/Information Statement.... -34-
6.12 Directors', Officers' and Employees' Indemnification...... -34-
6.13 Solicitation of Employees................................. -36-
6.14 Registration Rights....................................... -36-
ARTICLE 7
CLOSING CONDITIONS................................................... -36-
7.1 Conditions to Obligations of Each Party................... -36-
7.2 Conditions to Obligations of ATC and ATI.................. -37-
7.3 Conditions to Obligations of Target....................... -38-
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER.................................... -39-
8.1 Termination............................................... -39-
8.2 Effect of Termination..................................... -40-
ARTICLE 9
GENERAL PROVISIONS................................................... -40-
9.1 Waivers; Amendments....................................... -41-
9.2 Fees and Expenses. ...................................... -41-
9.3 Notices................................................... -41-
9.4 Specific Performance; Other Rights and Remedies........... -42-
9.5 Severability.............................................. -42-
9.6 Counterparts.............................................. -43-
9.7 Section Headings.......................................... -43-
9.8 Governing Law............................................. -43-
9.9 Entire Agreement.......................................... -43-
9.10 Assignment................................................ -43-
9.11 Parties in Interest....................................... -44-
9.12 Non-Survival of Representations, Warranties, Covenants
and Agreements............................................ -44-
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
APPENDIX A: Definitions
EXHIBITS:
EXHIBIT A: Registration Rights Agreement (Section 7.2(f)).
EXHIBIT B: Target Investment Letter (Section 7.2(g)).
EXHIBIT C: Target Tax Certificate (Section 7.2(h)).
EXHIBIT D: ATC Tax Certificate (Section 7.3(e)).
EXHIBIT E: ATC Voting Agreement (Section 7.3(f)).
EXHIBIT F: Representation Letter to Target's Auditors (Section 6.10(e)).
EXHIBIT G: Target Officer's Certificate (Section 7.2(a)).
</TABLE>
-iii-
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger, dated as of November 16, 1998, by and
among American Tower Corporation, a Delaware corporation ("ATC"), American
Towers, Inc. a Delaware corporation ("ATI"), and OmniAmerica, Inc., a Delaware
corporation ("Target").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of ATC, ATI and Target have
determined that the merger (the "Merger") of Target into ATI on the terms and
conditions set forth in this Agreement and Plan of Merger (this "Agreement") is
consistent with and in furtherance of the long-term business strategy of each,
and is fair to, and in the best interests of, ATI and Target and the
stockholders of each; and
WHEREAS, this Agreement provides that Target shall be merged with
and into ATI, and ATI shall be the surviving corporation; and
WHEREAS, the Boards of Directors of ATI and Target have approved and
adopted this Agreement and have directed that this Agreement be submitted to the
stockholders of ATI and Target, respectively, for their adoption and approval;
and
WHEREAS, the Board of Directors of ATC has approved and adopted this
Agreement and approved the Merger on behalf of ATI as the sole stockholder of
ATI;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained and other
valuable consideration, the receipt and adequacy whereof are hereby
acknowledged, the parties hereto hereby, intending to be legally bound,
represent, warrant, covenant and agree as follows:
ARTICLE 1
DEFINED TERMS; TARGET DISCLOSURE SCHEDULE
As used herein, unless the context otherwise requires, the terms
defined in Appendix A shall have the respective meanings set forth therein.
References to the term "Target" in such definitions shall include all of
Target's Subsidiaries, except as the context otherwise requires. Terms defined
in the singular shall have a comparable meaning when used in the plural, and
vice versa, and the reference to any gender shall be deemed to include all
genders. Unless otherwise defined or the context otherwise clearly requires,
terms for which meanings are provided in this Agreement shall have such meanings
when used in the Target Disclosure Schedule, and each Collateral Document
executed or required to be executed pursuant hereto or thereto or otherwise
delivered, from time to time, pursuant hereto or thereto. References to
"hereof," "herein" or similar terms are intended to refer to the Agreement as a
whole and not a particular section, and references to "this Section" or "this
Article" are intended to refer to the entire section or article and not a
particular subsection thereof. The term "either party" shall, unless the context
otherwise requires, refer to ATC and ATI, on the one hand, and Target, on the
other hand. All matters set forth in or otherwise disclosed in the Target SEC
Documents are hereby incorporated by reference into the Target Disclosure
Schedule.
<PAGE> 6
ARTICLE 2
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Delaware General Corporation
Law (the "DCL"), at the Effective Time, Target shall be merged with and into
ATI. As a result of the Merger, the separate corporate existence of Target shall
cease and ATI shall continue as the surviving corporation in the Merger
(sometimes referred to, as such, as the "Surviving Corporation").
2.2 Closing. Unless this Agreement shall have been terminated
pursuant to Section 8.1 and subject to the satisfaction or, to the extent
permitted by Applicable Law, waiver of the conditions set forth in Article 7,
the closing of the Merger (the "Closing") will take place, at 10:00 a.m., on the
Closing Date, at the offices of Sullivan & Worcester LLP, One Post Office
Square, Boston, Massachusetts 02109, on the business date that is the fifth
(5th) business day after the date on which all of the conditions set forth in
Article 7 (other than those which require delivery of opinions or documents at
the Closing) shall have been satisfied or waived, unless another date, time or
place is agreed to in writing by the parties. The date on which the Closing
occurs is herein referred to as the "Closing Date."
2.3 Effective Time. Subject to the provisions of this Agreement, as
promptly as practicable after the Closing, the parties hereto shall cause the
Merger to be consummated by filing a Certificate of Merger and any related
filings required under the DCL with the Secretary of State of the State of
Delaware. The Merger shall become effective at such time as such documents are
duly filed as aforesaid, or at such later time as is specified in such documents
(the "Effective Time").
2.4 Effect of the Merger. The Merger shall have the effects provided
for under the DCL.
2.5 Certificate of Incorporation. The Certificate of Incorporation
of ATI, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided therein and in accordance with Applicable Law.
2.6 Bylaws. The bylaws of ATI in effect at the Effective Time shall
be the bylaws of the Surviving Corporation until amended in accordance with
Applicable Law and the Organic Documents of ATI.
2.7 Directors and Officers. From and after the Effective Time, until
their successors are duly elected or appointed and qualified, or upon their
earlier resignation or removal, in accordance with Applicable Law and the
Organic Documents of ATI, (a) the directors of ATI at the Effective Time shall
be the directors of the Surviving Corporation, and (b) the officers of ATI at
the Effective Time shall be the officers of the Surviving Corporation.
ARTICLE 3
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
3.1 Conversion of Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of ATC, ATI or Target or their
respective stockholders:
-2-
<PAGE> 7
(a) Each share of Common Stock, par value $.01 per
share, of ATI issued and outstanding immediately prior to the
Effective Time shall remain outstanding;
(b) Each share of Common Stock, par value $.01 per share
(collectively, the "Target Common Stock") issued and outstanding
immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be
converted into the right to receive one and one-tenth (1.1) shares
(the "Exchange Ratio") of Class A Common Stock, par value $.01 per
share, of ATC (the "ATC Common Stock") (the "Merger Consideration");
and
(c) Each share of Target Common Stock owned by Target
immediately prior to the Effective Time shall automatically be
canceled and extinguished without any conversion thereof and no
payment shall be made with respect thereto.
If, prior to Closing, ATC
(i) pays a dividend or makes a distribution
on the ATC Common Stock in shares of ATC Common Stock;
(ii) subdivides its outstanding shares of
ATC Common Stock into a greater number of shares;
(iii) combines its outstanding shares of ATC
Common Stock into a smaller number of shares;
(iv) pays a dividend or makes a distribution
on ATC Common Stock in shares of its capital stock or
other securities other than ATC Common Stock; or
(v) issues by reclassification of ATC Common
Stock any shares of its capital stock or other
securities;
then the Merger Consideration and the Exchange Ratio in effect immediately prior
to such action shall be proportionately adjusted so that each holder of shares
of Target Common Stock thereafter shall receive the aggregate number and kind of
shares of ATC capital stock or other securities that it would have owned
immediately following such action if such shares of Target Common Stock had been
converted to ATC Common Stock immediately prior to such action. The adjustment
provided for in this Section shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
At the Effective Time, all shares of Target Common Stock shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and certificates previously evidencing any such shares of Target
Common Stock (each, a "Certificate") shall thereafter represent the right to
receive, upon the surrender of such Certificate in accordance with the
provisions of Section 3.2, the Merger Consideration multiplied by the number of
shares of Target Common Stock represented by such Certificate, and a holder of
more than one Certificate shall have the right to receive the Merger
Consideration multiplied by the number of shares of Target Common Stock
represented by all such Certificates. In lieu of issuing fractional shares, ATC
shall convert the holder's right to receive ATC Common Stock pursuant to the
provisions of this Section into a right to receive (i) the highest whole number
of shares of ATC Common Stock to which the holder is entitled plus (ii) cash
equal to the fraction of a share of ATC Common Stock to which the holder would
-3-
<PAGE> 8
otherwise be entitled multiplied by the Fair Market Value of one share of ATC
Common Stock as of the Effective Time. The holders of such Certificates
previously evidencing shares of Target Common Stock outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
shares of Target Common Stock, except as otherwise provided herein or by
Applicable Law.
3.2 Exchange of Certificates.
(a) Pursuant to an agreement reasonably satisfactory to ATC and
Target (the "Exchange Agent Agreement") to be entered into at or prior to the
Closing Date between ATC and the transfer agent for the ATC Common Stock (the
"Exchange Agent"), at or from time to time following the Effective Time, ATC
shall deposit or cause to be deposited in trust for the benefit of the Target
stockholders an aggregate number of shares of ATC Common Stock representing the
aggregate Merger Consideration and an amount of cash necessary to cash out
fractional shares to which holders of Target Common Stock shall be entitled at
the Effective Time pursuant to the provisions of this Article. The Exchange
Agent shall invest any cash held by it in such manner as ATC directs. Any net
profit from, or interest or income produced by, such investments shall be
payable to ATC as and when requested by ATC. ATC shall be required to replace
any cash lost as a result of any investment.
(b) As soon as practicable, but within five (5) business days
subsequent to the Effective Time, the Exchange Agent shall mail to each holder
of record of a Certificate or Certificates (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon actual delivery of the Certificates to the
Exchange Agent) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for cash and certificates representing shares of ATC
Common Stock. Upon surrender of Certificates for cancellation to the Exchange
Agent, together with a duly executed letter of transmittal and such other
documents as the Exchange Agent shall reasonably require, the holder of such
Certificates shall be entitled to receive in exchange therefor cash and a
certificate representing that number of whole shares of ATC Common Stock into
which the shares of Target Common Stock, theretofore represented by the
Certificates so surrendered, shall have been converted pursuant to the
provisions of Section 3.1, and the Certificates so surrendered shall be
canceled. Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to a holder of shares of Target Common Stock for
any shares of ATC Common Stock or dividends or distributions thereon delivered
to a public official pursuant to applicable abandoned property, escheat or
similar Laws. Certificates surrendered for exchange by any Person constituting
an "affiliate", as that term is used in paragraphs (c) and (d) of Rule 145 under
the Securities Act, of Target shall not be exchanged until ATC has received a
written agreement from such Person as provided in Section 7.2(g).
(c) Promptly following the date which is six (6) months after the
Closing Date, the Exchange Agent shall deliver to ATC all cash, certificates
(including any ATC Common Stock) and other documents in its possession relating
to the transactions described in this Agreement, and the Exchange Agent's duties
shall terminate. Thereafter, each holder of a Certificate may surrender such
Certificate to ATC and (subject to applicable abandoned property, escheat and
similar Laws) receive in exchange therefor the Merger Consideration to which
such holder is entitled, without any interest thereon. Notwithstanding the
foregoing, neither the Exchange Agent nor any party hereto shall be liable to a
holder of Target Common Stock for any ATC Common Stock delivered to a public
official pursuant to applicable abandoned property, escheat or similar Laws.
(d) If the Merger Consideration (or any portion thereof) is to be
paid to a Person other than the Person in whose name the Certificate surrendered
in exchange therefor is registered, it shall be a condition to
-4-
<PAGE> 9
the payment of the Merger Consideration that the Certificate so surrendered
shall be properly endorsed or accompanied by appropriate stock powers (with
signatures guaranteed in accordance with the transmittal form) and otherwise in
proper form for transfer, that such transfer otherwise be proper and that the
Person requesting such transfer pay to the Exchange Agent any transfer or other
Taxes payable by reason of the foregoing or establish to the satisfaction of the
Exchange Agent that such Taxes have been paid or are not required to be paid.
(e) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and subject to such other
reasonable conditions as the Board of Directors of ATC may impose, ATC shall
issue in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration deliverable in respect thereof as determined in accordance with
this Article. When authorizing such issue of the Merger Consideration in
exchange therefor, the Board of Directors of ATC may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed Certificate to give ATC a bond or other surety in such sum
as it may reasonably direct as indemnity against any Claim that may be made
against ATC or the transfer agent for the ATC Common Stock with respect to the
Certificate alleged to have been lost, stolen or destroyed.
(f) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions declared after the Effective Time on ATC Common
Stock shall be paid with respect to any whole shares of ATC Common Stock
represented by a Certificate until such Certificate is surrendered for exchange
as provided herein. Subject to the effect of Applicable Laws, following
surrender of any such Certificate, there shall be paid to the holder of the
shares of ATC Common Stock issued in exchange therefor, without interest, (i) at
the time of such surrender, the amount of dividends or other distributions with
a record date after the Effective Time theretofore payable with respect to such
whole shares of ATC Common Stock and not paid, less the amount of any
withholding taxes which may be required thereon, and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of ATC Common Stock, less
the amount of any withholding taxes which may be required thereon.
(g) ATC shall be entitled to, or shall be entitled to cause the
Exchange Agent to, deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Target Common Stock such
amounts as are required to be deducted and withheld with respect to the making
of such payment under the Code, or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by ATC or the Exchange Agent, as
the case may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Target Common Stock
in respect of which such deduction and withholding was made by ATC or the
Exchange Agent.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF TARGET
Target hereby represents and warrants to ATC and ATI as follows:
-5-
<PAGE> 10
4.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) Target is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization, has all
requisite power and authority (corporate and other) to own or hold under lease
its properties and to conduct its business as now conducted and is duly
qualified and in good standing as a foreign corporation in each other
jurisdiction (as shown on Section 4.1(a) of the Target Disclosure Schedule) in
which the character of the property owned or leased by it or the nature of its
business or operations requires such qualification, except for such
qualifications the failure of which to obtain, individually or in the aggregate,
would not have a Material Adverse Effect on Target.
(b) Target has all requisite power and authority (corporate and
other) necessary to enable it to execute and deliver, and to perform its
obligations under, this Agreement and each Collateral Document executed or
required to be executed by it pursuant hereto or thereto and to consummate the
Transactions; and the execution, delivery and performance by Target of this
Agreement and each Collateral Document executed or required to be executed by it
pursuant hereto or thereto have been duly authorized by all requisite corporate
or other action on the part of Target, subject to the requisite approval of the
stockholders of Target. The affirmative vote of the holders of shares of Target
Common Stock representing a majority of the outstanding voting power of Target
Common Stock is the only vote necessary to approve and adopt this Agreement and
the transactions contemplated by this Agreement. This Agreement has been duly
executed and delivered by Target and constitutes, and each Collateral Document
executed or required to be executed by it pursuant hereto or thereto or to
consummate the Transactions when executed and delivered by Target will
constitute, legal, valid and binding obligations of Target, enforceable in
accordance with their respective terms, except as such enforceability may be
subject to bankruptcy, moratorium, insolvency, reorganization, arrangement,
voidable preference, fraudulent conveyance and other similar Laws relating to or
affecting the rights of creditors and except as the same may be subject to the
effect of general principles of equity. The provisions of Section 203 of the DCL
will not apply to ATC by reason of this Agreement or the Merger. The Board of
Directors of Target, at a meeting duly called and held at which a quorum was
present throughout, has approved the Merger and this Agreement, and has
recommended that the Target stockholders approve and adopt this Agreement and
the transactions contemplated hereby, including without limitation the Merger
and the acquisition by ATC of the "beneficial" ownership contemplated thereby.
(c) Except to the extent necessary under the Target Credit
Agreements or as set forth in Section 4.1(c) of the Target Disclosure Schedule,
neither the execution and delivery by Target of this Agreement or any Collateral
Document executed or required to be executed by it pursuant hereto or thereto,
nor the consummation of the Transactions, nor compliance with the terms,
conditions and provisions hereof or thereof by Target:
(i) will conflict with, or result in a breach or
violation of, or constitute a default under, any Organic Document of
Target or any material Applicable Law, or will conflict with, or
result in a breach or violation of, or constitute a default under,
or permit the acceleration of any obligation or liability in, or but
for any requirement of giving of notice or passage of time or both
would constitute such a conflict with, breach or violation of, or
default under, or permit any such acceleration in, any Material
Agreement of Target; or
(ii) will require Target to make or obtain any
Governmental Authorization, Governmental Filing or Private
Authorization, except (A) filings under the Hart-Scott-Rodino Act,
(B) for FCC approvals, (C) the filing with the SEC of (I) the Target
Proxy Statement and (II) such reports under Section 13(a) or 15(d)
of the Exchange Act as may be required in connection with this
Agreement and
-6-
<PAGE> 11
the transactions contemplated hereby, (D) the filing of the
Certificate of Merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states
in which Target is qualified to do business, and (E) such other
Governmental Authorizations, Governmental Filings and Private
Authorizations the failure of which to be made or obtained would
not, individually or in the aggregate, have a Material Adverse
Effect on Target.
(d) Except as set forth in Section 4.1(d) of the Target Disclosure
Schedule, Target does not have any Subsidiaries, each of which, unless noted
otherwise in Section 4.1(d) of the Target Disclosure Schedule, is (i)
wholly-owned, (ii) a corporation duly organized, validly existing and in good
standing under the laws of the respective state of incorporation set forth
opposite its name on Section 4.1(d) of the Target Disclosure Schedule, and (iii)
duly qualified and in good standing as a foreign corporation in each other
jurisdiction (as shown on Section 4.1(d) of the Target Disclosure Schedule) in
which the character of the property owned or leased by it or the nature of its
business or operations requires such qualification, with full power and
authority (corporate and other) to carry on the business in which it is engaged,
except for such qualifications the failure of which to obtain, individually or
in the aggregate, would not have a Material Adverse Effect on Target. Target
owns, directly or indirectly, all of the outstanding capital stock and equity
interests (as shown in Section 4.1(d) of the Target Disclosure Schedule) of each
Subsidiary, free and clear of all Liens (except under the Target Credit
Agreements and as described in the notes to the Target Financial Statements),
and all such stock or other equity interests have been duly authorized and
validly issued and are fully paid and nonassessable. There are no outstanding
Option Securities or Convertible Securities, or agreements or understandings of
any nature whatsoever, relating to the authorized and unissued or outstanding
capital stock or equity interests of any Subsidiary of Target. Except as the
context otherwise requires, the representations and warranties of Target set
forth in this Article shall apply to each of such Subsidiaries with the same
force and effect as though each of them were named in each Section of this
Article.
4.2 Financial and Other Information. Target has heretofore made
available to ATC its Annual Report on Form 10-KSB for its fiscal year ended June
30, 1998, its Information Statement on Schedule 14C filed on August 24, 1998,
its Proxy Statement on Schedule 14A filed on November 9, 1998, and all Current
Reports filed on Form 8-K since May 1, 1998 (collectively, the "Target SEC
Documents"). As of the respective dates thereof, the Target SEC Documents were
prepared in all material respects in accordance with the Exchange Act and did
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Target has timely filed all forms, reports and documents with the
SEC required to be filed by it pursuant to the Securities Act and the Exchange
Act which complied as to form, at the time such form, document or report was
filed, in all material respects with the applicable requirements of the
Securities Act and the Exchange Act. The consolidated financial statements of
Target included in the Target SEC Documents (the "Target Financial Statements"),
including in each case the notes thereto, have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby,
except as otherwise noted therein, are true, accurate and complete in all
material respects, and fairly present the consolidated financial condition and
the consolidated results of operations and cash flow of Target, on the bases
therein stated, as of the respective dates thereof, and for the respective
periods covered thereby subject, in the case of unaudited financial statements,
to normal nonmaterial year-end audit adjustments and accruals.
4.3 Material Statements and Omissions; Absence of Events.
(a) Neither any representation or warranty made by Target contained
in this Agreement or in the certificate to be delivered pursuant to Section 7.2
(a) nor the Target Disclosure Schedule contains or will
-7-
<PAGE> 12
contain any untrue statement of a material fact or omits or will omit to state
any material fact required to make any statement contained herein or therein, in
light of the circumstances under which they were made, not misleading. Without
limiting the generality of the foregoing, (i) the Target Proxy Statement will
not, at the date it is first mailed to the holders of Target Common Stock and at
the time of the Target Stockholders Meeting, and (ii) the information with
respect to Target furnished to ATC for inclusion in the ATC Registration
Statement and the ATC Transaction Prospectus will not, at the time such
Registration Statement becomes effective under the Securities Act, and the ATC
Transaction Prospectus, at the date it is first mailed to the holders of Target
Common Stock and at the time of the Target Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. For
purposes of the foregoing, the truth of any information or the existence of any
omissions at the time of the Target Stockholders Meeting shall be determined
with reference to the Target Proxy Statement and the ATC Transaction Prospectus,
each as then amended or supplemented. The Target Proxy Statement will comply as
to form in all material respects with the requirements of the Exchange Act and
the rules and regulations thereunder. Notwithstanding the foregoing, no
representation or warranty is made by Target with respect to statements made or
incorporated by reference therein based on information specifically supplied by
ATC for inclusion or incorporation by reference in the Target Proxy Statement.
(b) Since the date of the most recent financial statements
constituting a part of the Target Financial Statements, except to the extent
specifically described in Section 4.3(b) of the Target Disclosure Schedule,
there has been no material adverse change in Target from that reflected in the
most recent Target Financial Statements. There is no Event known to Target which
has had, or will have, a Material Adverse Effect on Target, except to the extent
specifically described in Section 4.3(b) of the Target Disclosure Schedule and
except for matters affecting the tower rental, ownership and construction
industry generally, and except for any Event arising out of the execution or
public announcement of this Agreement. Target is not aware of any impending or
contemplated Event that would cause any of the representations and warranties
made by it in this Article not to be true, correct and complete on the date of
such Event as if made on that date.
4.4 Title to Properties; Leases.
(a) Section 4.4(a) of the Target Disclosure Schedule sets forth a
list of all Real Property owned by Target. Target has good indefeasible,
marketable and insurable title to all such real property (other than easement
and leasehold real property) and good indefeasible and marketable title to all
of its other owned property and assets, tangible and intangible (collectively,
the "Target Assets"); all of the Target Assets are so owned, in each case, free
and clear of all Liens, except (i) Permitted Liens, and (ii) Liens set forth on
Section 4.4(a) of the Target Disclosure Schedule. Except as disclosed in Section
4.4(a) of the Target Disclosure Schedule, all improvements on the real property
owned or leased by Target are in compliance with applicable zoning, wetlands and
land use laws, ordinances and regulations and applicable title covenants,
conditions, restrictions and reservations in all respects necessary to conduct
the Target Business as presently conducted or proposed to be conducted on or
prior to the Closing Date, except for any instances of non-compliance which,
individually or in the aggregate, have not had and will not have a Material
Adverse Effect on Target. Except as disclosed in Section 4.4(a) of the Target
Disclosure Statement, all such improvements comply with all Applicable Laws,
Governmental Authorizations and Private Authorizations, except for any instances
of non-compliance which, individually or in the aggregate, have not had and will
not have a Material Adverse Effect on Target. Except as disclosed in Section
4.4(a) of the Target Disclosure Statement, all of the transmitting towers,
ground radials, guy anchors, transmitting buildings and related improvements, if
any, located on the real property owned or leased by Target are located entirely
on such real property except for any instances of non-compliance which,
individually or in the aggregate, have not had and will not have a Material
-8-
<PAGE> 13
Adverse Effect on Target. Except as set forth in Section 4.4(a) of the Target
Disclosure Schedule, such transmitting towers, ground radials, guy anchors,
transmitting buildings and related improvements and other material items of
personal property, including equipment, are, in Target's reasonable business
judgment, in a state of good repair and maintenance and sound operating
condition, normal wear and tear excepted, have been maintained in a manner
consistent with generally accepted standards of sound engineering practice, and
currently permit the Target Business to be operated in accordance with the terms
and conditions of all Applicable Laws, Governmental Authorizations and Private
Authorizations, except where the failure to be in such repair or condition or to
be so usable, individually or in the aggregate, has not had and will not have a
Material Adverse Effect on Target. Except for such exceptions as would not,
individually or in the aggregate, have a Material Adverse Effect on Target, all
inventory reflected in the most recent balance sheet constituting a part of the
Target Financial Statements or manufactured, purchased or acquired since such
time is up to normal commercial standards and is saleable, in the case of
finished goods inventory in the ordinary course of business within a reasonable
period of time; no material amount of inventory so reflected is obsolete, and
all inventory so reflected or subsequently manufactured, purchased or acquired
is in amounts and categories substantially consistent with prior practice.
(b) Section 4.4(b) of the Target Disclosure Schedule contains a list
of all Leases under which any real property used in the business of Target (the
"Target Business") is leased to Target by any Person. Except as otherwise set
forth in Section 4.4(b) of the Target Disclosure Schedule, each Lease under
which Target holds real property constituting a part of the Target Assets is in
full force and effect, has been duly authorized, executed and delivered by
Target and, to its knowledge, each of the other parties thereto, and is a legal,
valid and binding obligation of Target, and, to its knowledge, each of the other
parties thereto, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, moratorium, insolvency and similar
Laws affecting the rights and remedies of creditors and obligations of debtors
generally and by general principles of equity except, in each case, for such
exceptions which individually or in the aggregate, have not had and will not
have a Material Adverse Effect on Target. Target has a valid leasehold interest
in and enjoys peaceful and undisturbed possession under all Leases pursuant to
which it holds any such real property, subject to the terms of each Lease and
Applicable Law and except for Permitted Liens and such other Liens as,
individually or in the aggregate, have not had and will not have a Material
Adverse Effect on Target. Neither Target nor, to Target's knowledge, any other
party thereto, has failed to duly comply with all of the material terms and
conditions of each such Lease or has done or performed, or failed to do or
perform (and no Claim is pending or, to the knowledge of Target, threatened to
the effect that Target has not so complied, done and performed or failed to do
and perform) any act which would invalidate or provide grounds for the other
party thereto to terminate (with or without notice, passage of time or both)
such Leases or impair the rights or benefits, or increase the costs, of Target
under any of such Leases in any material respect except, in each case, for such
exceptions which individually or in the aggregate, have not had and will not
have a Material Adverse Effect on Target.
4.5 Compliance with Private Authorizations. Section 4.5 of the
Target Disclosure Schedule sets forth a true, accurate and complete list and
description of each Private Authorization which individually is material to
Target. Target has obtained all Private Authorizations that are necessary for
the ownership or operation of the Target Assets or the conduct of the Target
Business, as currently conducted or proposed to be conducted on or prior to the
Closing Date, which, if not obtained and maintained, individually or in the
aggregate, have not and will not have a Material Adverse Effect on Target. All
of such Private Authorizations are valid and in good standing and are in full
force and effect, except for such exceptions as, individually or in the
aggregate, have not had and will not have a Material Adverse Effect on Target.
Target is not in breach or violation of, or in default in the performance,
observance or fulfillment of, any such Private Authorization, and, to Target's
knowledge, no Event exists or has occurred which constitutes, or but for any
requirement of
-9-
<PAGE> 14
giving of notice or passage of time or both would constitute, such a breach,
violation or default, under any such Private Authorization, except for such
breaches, violations or defaults as, individually or in the aggregate, have not
had and will not have a Material Adverse Effect on Target.
4.6 Compliance with Governmental Authorizations and Applicable Law.
(a) Section 4.6(a) of the Target Disclosure Schedule contains a
true, complete and accurate description of each Governmental Authorization
required under Applicable Law (i) to own and operate the Target Assets and
conduct the Target Business, as currently conducted or proposed to be conducted
on or prior to the Closing Date, which, individually or in the aggregate, is
material to Target. Target has obtained all Governmental Authorizations that are
necessary for the ownership or operation of the Target Assets or the conduct of
the Target Business as now conducted and which, if not obtained and maintained,
would, individually or in the aggregate, have a Material Adverse Effect on
Target, all of which are valid and in good standing and in full force and
effect, with such exceptions as, individually or in the aggregate, have not had
and will not have a Material Adverse Effect on Target. None of the Governmental
Authorizations listed in Section 4.6(a) of the Target Disclosure Schedule is
subject to any restriction or condition that would limit in any material respect
the ownership or operations of the Target Assets or the conduct of the Target
Business as currently conducted, except for restrictions and conditions
generally applicable to Governmental Authorizations of such type and such
exceptions as, individually or in the aggregate, have not had and will not have
a Material Adverse Effect on Target. The conduct of the Target Business is in
accordance with the Governmental Authorizations, except for such noncompliances
as, individually or in the aggregate, have not had and will not have a Material
Adverse Effect on Target. No such Governmental Authorization is the subject of
any pending or, to Target's knowledge, threatened challenge or proceeding to
revoke or terminate any such Governmental Authorization.
(b) Except as otherwise specifically set forth in Section 4.6(b) of
the Target Disclosure Schedule, Target has conducted its business and owned and
operated its property and assets in accordance with all Applicable Laws and
Governmental Authorizations, except for such breaches, violations and defaults
as, individually or in the aggregate, have not had and will not have a Material
Adverse Effect on Target. Except as otherwise specifically described in Section
4.6(b) of the Target Disclosure Schedule, Target is not in and is not charged by
any Authority with, and, to Target's knowledge, is not threatened or under
investigation by any Authority with respect to, any breach or violation of, or
default in the performance, observance or fulfillment of, any Applicable Law
relating to the ownership and operation of the Target Assets or the conduct of
the Target Business which, individually or in the aggregate, has had or will
have a Material Adverse Effect on Target. Except as otherwise specifically
described in Section 4.6(b) of the Target Disclosure Schedule, to Target's
knowledge, no Event exists or has occurred, as of the date of this Agreement,
which constitutes, or but for any requirement of giving of notice or passage of
time or both would constitute, such a breach, violation or default, under any
Governmental Authorization or any Applicable Law, except for such breaches,
violations or defaults as, individually or in the aggregate, have not had and
will not have a Material Adverse Effect on Target. With respect to matters, if
any, of a nature referred to in Section 4.6(b) of the Target Disclosure
Schedule, except as otherwise specifically described in Section 4.6(b) of the
Target Disclosure Schedule, all such information and matters set forth in the
Target Disclosure Schedule, if adversely determined against Target, individually
or in the aggregate, will not have a Material Adverse Effect on Target.
(c) As of the date of this Agreement, there are no Legal Actions of
any kind pending or, to the knowledge of Target, threatened at law, in equity or
before any Authority against Target or any of its officers or directors relating
to the ownership or operation of the Target Assets or the conduct of the Target
Business,
-10-
<PAGE> 15
which if determined adversely to Target, individually or in the aggregate, will
have a Material Adverse Effect on Target.
4.7 Year 2000 Compliant. Target has reviewed the areas within its
business and operations which Target believes could be adversely affected by the
"Year 2000 Problem" (that is, the risk that computer applications used by Target
may be unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date on or after December 31, 1999),
and is making related inquiry of material suppliers, vendors and customers.
Based on such reviews, Target believes that the "Year 2000 Problem" will not
have a Material Adverse Effect on Target. Except as set forth in Section 4.7 of
the Target Disclosure Schedule, to Target's knowledge, each hardware, software
and firmware product (collectively "Software") used by Target in its business is
Year 2000 compliant, except for such noncompliances that, individually or in the
aggregate, have not and will not have a Material Adverse Effect on Target. The
current status, projected cost and prognosis of any Year 2000 remedial efforts
with respect to non-compliant Software and with respect to any identified Year
2000 issues with any material supplier, vendor or customer are listed in Section
4.7 of the Target Disclosure Schedule.
4.8 Related Transactions. Target is not a party or subject to any
Contractual Obligation relating to the ownership or operation of the Target
Assets or the conduct of the Target Business between Target and any of its
officers or directors or, to the knowledge of Target, any member of the
Immediate Family of any thereof or any Affiliate of any of the foregoing,
including without limitation any Contractual Obligation providing for the
furnishing of services to or by, providing for rental of property, real,
personal or mixed, to or from, or providing for the lending or borrowing of
money to or from or otherwise requiring payments to or from, any such Person,
other than (a) Employment Arrangements listed or described in Section 4.14 of
the Target Disclosure Schedule or not required to be disclosed thereon because
of the amount involved in such Employment Arrangement, (b) Contractual
Obligations between Target and any of the foregoing, that will be terminated, at
no cost or expense to Target, prior to the Closing, or (c) as specifically set
forth in Section 4.8 of the Target Disclosure Schedule.
4.9 Insurance. Target maintains, with respect to the Target Assets
and the Target Business, policies of fire and extended coverage and casualty,
liability and other forms of insurance in such amounts and against such risks
and losses as are customary in Target's business.
4.10 Tax Matters. Except where all failures to do so will not in the
aggregate have a Material Adverse Effect on Target, Target has in accordance
with all Applicable Laws filed all Tax Returns which are required to be filed,
and has paid, or made adequate provision for the payment of, all Taxes which
have or may become due and payable pursuant to said Tax Returns and all other
governmental charges and assessments received to date other than those Taxes
being contested in good faith for which adequate provision has been made on the
most recent balance sheet forming part of the Target Financial Statements. The
Tax Returns of Target have been prepared in all material respects in accordance
with all Applicable Laws. Except where all failures to do so will not in the
aggregate have a Material Adverse Effect on Target, all Taxes which Target is
required by Law to withhold and collect have been duly withheld and collected,
and have been paid over, in a timely manner, to the proper Authorities to the
extent due and payable. Except as set forth in Section 4.10 of the Target
Disclosure Schedule, Target has not executed any waiver to extend, or otherwise
taken or failed to take any action that would have the effect of extending, the
applicable statute of limitations in respect of any Tax liabilities of Target
for the fiscal years prior to and including the most recent fiscal year.
Adequate provision has been made on the most recent balance sheet forming part
of Target Financial Statements for all Taxes accrued through the date of such
balance sheet of any kind, including interest and penalties in respect thereof,
whether disputed or not, and whether past, current or deferred, accrued or
unaccrued, fixed,
-11-
<PAGE> 16
contingent, absolute or other, and there are, to Target's knowledge, no past
transactions or matters which, individually or in the aggregate, could result in
additional Taxes which would, if imposed, have a Material Adverse Effect on
Target for which an adequate reserve has not been provided on such balance
sheet. Target is not a "consenting corporation" within the meaning of Section
341(f) of the Code. Target has at all times been taxable as a Subchapter C
corporation under the Code, and has never been a member of any consolidated
group for Tax purposes, except as otherwise set forth in Section 4.10 of the
Target Disclosure Schedule. To the best of Target's knowledge, Target does not
have any material income or gain that has been and continues to be deferred
under Regulations Section 1.1502-13 or Regulations Section 1.1502-13T (or under
Regulations Sections 1.1502-13, 1.1502-13T, 1.1502-14, or 1.1502-14T, all as in
effect prior to Treasury Decision 8597) and Target does not have any material
excess loss account in a Subsidiary under Regulations Section 1.1502- 19. Except
as disclosed in Section 4.10 of the Target Disclosure Schedule, Target is not a
party to any tax sharing agreement or arrangement.
Target is not currently, has not been within the past five years,
and does not anticipate becoming prior to the Effective Time, a "United States
real property holding corporation" within the meaning of Section 897(c) of the
Code. To Target's knowledge, no Person has beneficially owned more than five
percent (5%) of the then outstanding Target Common Stock at any time during the
part five (5) years, other than Persons who are "United States persons" within
the meaning of Section 7701(a)(30) of the Code and other than Persons who have
individually or as part of a group filed a Schedule 13D or a Schedule 13G
relating to such holdings under the Exchange Act.
4.11 ERISA Matters
(a) Target (which for purposes of this Section shall include any
ERISA Affiliate of Target) currently sponsors, maintains and contributes only to
the Plans and Employment Arrangements set forth in Section 4.11(a) and Section
4.14, respectively, of the Target Disclosure Schedule. Target does not
contribute to or have an obligation to contribute to, and has not at any time
contributed to or had an obligation to contribute to, and no Plan listed in
Section 4.11(a) of the Target Disclosure Schedule is, (i) an employee pension
benefit plan within the meaning of Section 3(2) of ERISA, (ii) a Multiemployer
Plan, or (iii) a Plan subject to Section 412 of the Code, Section 302 of ERISA
or Title IV of ERISA. Target has no actual or potential liability under Title IV
of ERISA. Target does not maintain any Plan that provides for post-retirement
medical or life insurance benefits, and Target does not have any obligation or
liability with respect to any such Plan previously maintained by Target, except
as the provisions of COBRA may apply to any former employees of Target. Except
as set forth in Section 4.11(a) of the Target Disclosure Schedule, as to all
Plans and Employment Arrangements listed in Section 4.11(a) or Section 4.14 of
the Target Disclosure Schedule:
(i) all such Plans and Employment Arrangements comply
and have been administered in form and in operation, in all material
respects, in accordance with their respective terms and with all
Applicable Laws except for such noncompliance that will not,
individually or in the aggregate, have a Material Adverse Effect on
Target and Target has not received any notice from any Authority
disputing or investigating such compliance;
(ii) none of the assets of any such Plan are invested in
employer securities or employer real property;
(iii) there are no Claims (other than routine Claims for
benefits or actions seeking qualified domestic relations orders)
pending or, to Target's knowledge, threatened involving such Plans
or the assets of such Plans, and, to Target's knowledge, no facts
exist which are reasonably likely to give
-12-
<PAGE> 17
rise to any such Claims (other than routine Claims for benefits or
actions seeking qualified domestic relations orders) except, in each
case, as will not, individually or in the aggregate, have a Material
Adverse Effect on Target;
(iv) all material contributions to, and material
payments from, the Plans and Employment Arrangements that may have
been required to be made in accordance with the terms of the Plans
and Employment Arrangements, and any applicable collective
bargaining agreement, have been made other than contributions and
payments which will not, individually or in the aggregate, have a
Material Adverse Effect on Target. All such contributions to, and
payments from, the Plans and Employment Arrangements, except those
payments to be made from a trust qualified under Section 401(a) of
the Code, for any period ending before the Closing Date that are not
yet, but will be, required to be made, will be properly accrued and
reflected on the financial books and records of Target;
(v) to Target's knowledge, no Event has occurred which
would result in imposition on Target of (A) any breach of fiduciary
duty liability damages under Section 409 of ERISA, (B) a civil
penalty assessed pursuant to subsections (c), (i) or (l) of Section
502 of ERISA or (C) a tax imposed pursuant to Chapter 43 of Subtitle
D of the Code;
(vi) Target has not incurred any material liability to a
Plan (other than for contributions not yet due) which liability has
not been fully paid or accrued for payment as of the date hereof;
(vii) except as otherwise set forth in Section 4.11(a)
of the Target Disclosure Schedule, no current or former employee of
Target will be entitled to any additional benefits or any
acceleration of the time of payment or vesting of any benefits under
any Plan or Employment Arrangement as a result of the transactions
contemplated by this Agreement;
(viii) no compensation payable by Target to any of its
employees under any existing Plan or Employment Arrangement
(including by reason of the transactions contemplated hereby) will
be subject to disallowance under Section 162(m) of the Code; and
(ix) any amount that could be received (whether in cash
or property or by virtue of the vesting of property) as a result of
any of the transactions contemplated by this Agreement by any
employee, officer, director or independent contractor of Target who
is a "disqualified individual" (as such term is defined in proposed
Regulation Section 1.280G-1) under any employment arrangement would
not be characterized as an "excess parachute payment" (as such term
is defined in Section 280G(b)(1) of the Code), except for any amount
that is approved by the stockholders of Target on or before the
Closing Date in the manner provided in Section 280G(b)(5) of the
Code.
(b) The execution, delivery and performance by Target of this
Agreement and the Collateral Documents executed or required to be executed by
Target pursuant hereto and thereto will not involve any prohibited transaction
within the meaning of ERISA or Section 4975 of the Code with respect to any Plan
listed in Section 4.11(a) of the Target Disclosure Schedule.
4.12 Product Liability. Except as expressly set forth in Section
4.12 of the Target Disclosure Schedule, there is not now pending or, to the
knowledge of Target, threatened any Claim (or any basis for any such Claim)
relating to, any damages to or losses of any third party for injuries to Persons
or damage to property, or for breach of warranty, arising out of any alleged
defect in the quality or condition of any of Target's products or services or
property or assets, which, in the case of pending or threatened Claims, if
-13-
<PAGE> 18
determined adversely to Target, individually or in the aggregate (taking into
account unasserted Claims of a similar nature), will have a Material Adverse
Effect on Target.
4.13 Bank Accounts, Etc. Section 4.13 of the Target Disclosure
Schedule contains a true, accurate and complete list as of the date hereof of
all banks, trust companies, savings and loan associations and brokerage firms in
which Target has an account or a safe deposit box and the names of all Persons
authorized to draw thereon, to have access thereto, or to authorize transactions
therein, the names of all Persons, if any, holding valid and subsisting powers
of attorney from Target and a summary statement as to the terms thereof. Target
will not make or permit to be made any change affecting its account or safe
deposit box with any bank, trust company, savings and loan association or
brokerage firm, in the names of the Persons authorized to draw thereon, to have
access thereto or to authorize transactions therein or in such powers of
attorney, or open any additional accounts or boxes or grant any additional
powers of attorney, without in each case first notifying ATC in writing.
4.14 Employment and Consulting Arrangements. Section 4.14 of the
Target Disclosure Schedule contains a true, accurate and complete list of all
Target employees and consultants whose annual compensation is in excess of
$100,000 (the "Target Employees"), together with each such Person's title or the
capacity in which he or she is employed or retained and each such Person's
annual compensation. Target has no obligation or liability, contingent or other,
under any Employment Arrangement with any Target Employee, other than (i) those
listed or described in Section 4.14 of the Target Disclosure Schedule, (ii)
those incurred in the ordinary and usual course of business, or (iii) such
obligations or liabilities as do not and will not have, in the aggregate, any
Material Adverse Effect on Target. Except as described in Section 4.14 of the
Target Disclosure Schedule, (a) none of the employees of Target is now
represented by any labor union or other employee collective bargaining
organization, and Target is not a party to any labor or other collective
bargaining agreement with respect to any of employees of Target, (b) there are
no pending grievances, disputes or controversies with any union or any other
employee or collective bargaining organization of such employees, or threats of
strikes, work stoppages or slowdowns or any pending demands for collective
bargaining by any such union or other organization, (c) neither Target nor any
of such employees is now subject to or involved in or, to Target's knowledge,
threatened with, any union elections, petitions therefor or other organizational
or recruiting activities, in each case with respect to the employees of Target,
and (d) as of the date hereof, none of the Target Employees has notified Target
that he or she does not intend to continue employment with Target until the
Closing or with ATC following the Closing. Target has performed in all material
respects all obligations required to be performed under all Employment
Arrangements with Target Employees and is not in material breach or violation of
or in material default or arrears under any of the terms, provisions or
conditions thereof.
4.15 Material Agreements. Listed on Section 4.15 of the Target
Disclosure Schedule are all Material Agreements (other than Leases of Real
Property to Target) relating to the ownership or operation of the Target Assets
or the conduct of the Target Business or to which Target is a party or to which
it is bound or which any of the Target Assets is subject. True, accurate and
complete copies of each of such Material Agreements have been made available by
Target to ATC. All of such Material Agreements are valid, binding and legally
enforceable obligations of Target and, to its knowledge, all other parties
thereto, except as such enforceability may be limited by bankruptcy, moratorium,
insolvency and similar Laws affecting the rights and remedies of creditors and
obligations of debtors generally and by general principles of equity except in
each case, for such exceptions which individually or in the aggregate, have not
had and will not have a Material Adverse Effect on Target. Neither Target nor,
to its knowledge, any other party thereto, has failed to duly comply with all of
the material terms and conditions of each such Material Agreement or has done or
performed, or failed to do or perform (and no Claim is pending or, to the
knowledge of Target, threatened in
-14-
<PAGE> 19
writing to the effect that Target has not so complied, done and performed or
failed to do and perform) any act which would invalidate or provide grounds for
the other party thereto to terminate (with or without notice, passage of time or
both) such Material Agreement or impair the rights or benefits, or increase the
costs, of Target under any such Material Agreement except, in each case, for
such exceptions which individually or in the aggregate, have not had and will
not have a Material Adverse Effect on Target. All Contracts for the construction
by Target of towers for other Persons can be performed, in the aggregate for all
such Contracts, without any loss to Target.
4.16 Ordinary Course of Business. Target, from the date of the most
recent Target Financial Statements to the date hereof, except (i) as may be
described on Section 4.16 of the Target Disclosure Schedule, (ii) as may be
required or expressly contemplated by the terms of this Agreement, or (iii) as
may be described in the Target Financial Statements, including the notes
thereto:
(a) has operated its business in all material respects
in the normal, usual and customary manner in the ordinary and
regular course of business, consistent with prior practice;
(b) except in each case in the ordinary course of
business, consistent with prior practice:
(i) has not incurred any obligation or
liability (fixed, contingent or other) individually
having a value in excess of $100,000;
(ii) has not sold or otherwise disposed of
or contracted to sell or otherwise dispose of any of its
properties or assets having a value in excess of
$100,000;
(iii) has not entered into any individual
commitment having a value in excess of $100,000; and
(iv) has not canceled any debts or claims
having a value in excess of $100,000;
(c) has not created or permitted to be created any Lien
on any of the Target Assets, except for Permitted Liens;
(d) has not made or committed to make any additions to
its property or any purchases of equipment in excess of $100,000,
except in the ordinary course of business consistent with past
practice or for normal maintenance and replacements;
(e) has not increased the compensation payable or to
become payable to any of the Target Employees other than nonmaterial
increases in the ordinary course of business, or otherwise
materially altered, modified or changed the terms of their
employment;
(f) has not suffered any material damage, destruction or
loss (whether or not covered by insurance) or any acquisition or
taking of property by any Authority;
(g) has not waived any rights of material value without
fair and adequate consideration;
(h) has not experienced any work stoppage;
-15-
<PAGE> 20
(i) except in the ordinary course of business, has not
entered into, amended or terminated any Lease, Governmental
Authorization, Private Authorization, Material Agreement or
Employment Arrangement, or any transaction, agreement or arrangement
with any Affiliate of Target;
(j) has not made, paid or declared any Distribution; and
(k) has not entered into any transactions or series of
related transactions which individually or in the aggregate is
material to the Target Assets or the Target Business and which is
not otherwise disclosed in the Target Disclosure Schedule.
4.17 Broker or Finder. No Person assisted in or brought about the
negotiation of this Agreement or the Merger in the capacity of broker, agent or
finder or in any similar capacity on behalf of Target, other than BT Wolfensohn
whose fees and expenses will be paid by Target.
4.18 Environmental Matters. Except as set forth in Section 4.18 of
the Target Disclosure Schedule, and except for exceptions that, individually or
in the aggregate, have not had and would not have a Material Adverse Effect on
Target, Target:
(a) has not been notified in writing that it is
potentially liable under, has not received any written request for
information or other correspondence concerning its potential
liability with respect to any site or facility under, and, to
Target's knowledge, is not a "potentially responsible party" under,
the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, the Resource Conservation Recovery Act, as
amended, or any similar state Law;
(b) is not a party to any outstanding consent decree,
compliance order or administrative order or other judgment, order,
writ, injunction or decree creating on-going obligations issued
pursuant to any Environmental Law;
(c) has, to its knowledge, obtained all material
Environmental Permits required under Environmental Laws, and, to its
knowledge, has filed all applications, notices and other material
documents required to be filed prior to the date of this Agreement
to effect the timely renewal or issuance of all Environmental
Permits necessary for the continued ownership or operation of the
Target Assets or conduct of the Target Business in the manner
currently owned, operated and conducted and proposed to be owned,
operated and conducted on or prior to the Closing Date;
(d) is in compliance with all Environmental Laws, and is
not the subject of or, to Target's knowledge, threatened with any
Legal Action involving a demand for damages or other potential
liability, including any Lien, with respect to violations or
breaches of any Environmental Law;
(e) has not knowingly installed or used any above ground
or underground storage tanks, friable asbestos, polychlorinated
biphenyls or urea formaldehyde foam insulation on any property
currently owned, leased or operated by Target and, to its knowledge,
there are no above ground or underground storage tanks containing
Hazardous Materials, friable asbestos, polychlorinated biphenyls or
urea formaldehyde foam insulation on any property currently owned,
leased or operated by Target, the installation, use or presence of
which is not in compliance with Environmental Laws; and
(f) has no knowledge of any past or present Event
related to Target's properties, operations or business, which Event,
individually or in the aggregate, could reasonably be expected
-16-
<PAGE> 21
to interfere with or prevent continued compliance in all material
respects with all Environmental Laws applicable to the ownership or
operation of the Target Assets or the conduct of the Target Business
substantially in the manner now conducted or proposed to be
conducted on or prior to the Closing Date, or which, individually or
in the aggregate, may form the basis of any material Claim for or
arising out of the release or threatened release into the
environment of any Hazardous Material.
Section 4.18 of the Target Disclosure Schedule sets forth a true, correct and
complete list of all existing Phase I environmental site assessment reports (an
"Environmental Report") on each parcel of Real Property owned or leased by
Target for which an Environmental Report has previously been prepared for Target
(true, correct and complete copies of which, in each case, have heretofore been
delivered by Target to ATC).
4.19 Capital Stock. The authorized and outstanding capital stock of
Target, on a fully-diluted basis, is as set forth in Section 4.19 of the Target
Disclosure Schedule. All of such outstanding capital stock has been duly
authorized and validly issued, is fully paid and nonassessable and is not
subject to any statutory preemptive or similar rights. As of the date hereof,
there is no owner of record or, to Target's knowledge, beneficially of more than
five percent (5%) of the Target Common Stock, except as shown in Section 4.19 of
the Target Disclosure Schedule. Target has not granted or issued, nor has Target
agreed to grant or issue, any shares of its capital stock or any Option Security
or Convertible Security, and Target is not a party to or bound by any agreement,
put or commitment pursuant to which it is obligated to purchase, redeem or
otherwise acquire any shares of capital stock or any Option Security or
Convertible Security, except in each case as set forth in the most recent Target
Financial Statements or Section 4.19 of the Target Disclosure Schedule.
4.20 Materiality. The representations and warranties set forth in
this Article are true and correct as of the date hereof without the materiality
exceptions or qualifications contained therein, except to the extent that the
failure of such representations and warranties to be so true and correct,
individually or in the aggregate, will not have a Material Adverse Effect on
Target.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ATC AND ATI
Each of ATC and ATI, jointly and severally, hereby represents and
warrants to Target as follows:
5.1 Organization and Business; Power and Authority; Effect of
Transaction.
(a) Each of ATC and ATI is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, has all requisite power and authority (corporate and other) to own
or hold under lease its properties and to conduct its business as now conducted
and is duly qualified and in good standing as a foreign corporation in each
other jurisdiction in which the character of the property owned or leased by it
or the nature of its business or operations requires such qualification, except
for such qualifications the failure of which to obtain, individually or in the
aggregate, would not have a Material Adverse Effect on ATC.
(b) Each of ATC and ATI has all requisite power and authority
(corporate and other) necessary to enable it to execute and deliver, and to
perform its obligations under, this Agreement and each Collateral Document
executed or required to be executed by it pursuant hereto or thereto and to
consummate the Transactions; and the execution, delivery and performance by ATC
and ATI of this Agreement and each
-17-
<PAGE> 22
Collateral Document executed or required to be executed by it pursuant hereto or
thereto have been duly authorized by all requisite corporate or other action on
the part of ATC and ATI. This Agreement has been duly executed and delivered by
ATC and ATI and constitutes, and each Collateral Document executed or required
to be executed by each of them pursuant hereto or thereto or to consummate the
Transactions when executed and delivered by ATC and ATI will constitute, legal,
valid and binding obligations of each of ATC and ATI, enforceable in accordance
with their respective terms, except as such enforceability may be limited by
bankruptcy, moratorium, insolvency and similar Laws affecting the rights and
remedies of creditors and obligations of debtors generally and by general
principles of equity.
(c) Except to the extent necessary under their credit facilities,
neither the execution and delivery by ATC and ATI of this Agreement or any
Collateral Document executed or required to be executed by each of them pursuant
hereto or thereto, nor the consummation of the Transactions, nor compliance with
the terms, conditions and provisions hereof or thereof by ATC and ATI:
(i) will conflict with, or result in a breach or
violation of, or constitute a default under, any Organic Document of
ATC or ATI or any material Applicable Law, or will conflict with, or
result in a breach or violation of, or constitute a default under,
or permit the acceleration of any obligation or liability in, or but
for any requirement of giving of notice or passage of time or both
would constitute such a conflict with, breach or violation of, or
default under, or permit any such acceleration in, any material
agreement of ATC or ATI; or
(ii) will require ATC or ATI to make or obtain any
Governmental Authorization, Governmental Filing or Private
Authorization, except (A) filings contemplated by the Registration
Rights Agreement, (B) filings under the Hart-Scott-Rodino Act, (C)
for FCC approvals, (D) the filing with the SEC of (I) the ATC
Registration Statement and (II) such reports under Section 13(a) or
15(d) of the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, (E)
the filing of the Certificate of Merger with the Delaware Secretary
of State and appropriate documents with the relevant authorities of
other states in which ATI is qualified to do business, (F) the
filing of a Supplemental Listing Application with the New York Stock
Exchange, and (G) such other Governmental Authorizations,
Governmental Filings and Private Authorizations the failure of which
to be made or obtained would not, individually or in the aggregate,
have a Material Adverse Effect on ATC.
5.2 Financial and Other Information. ATC has heretofore made
available to Target its Annual Report on Form 10-K for its fiscal year ended
December 31, 1997, its Prospectus, dated July 1, 1998, and all Current Reports
filed on Form 8-K since July 1, 1998 (collectively, the "ATC SEC Documents"). As
of the respective dates thereof, the ATC SEC Documents were prepared in all
material respects in accordance with the Securities Act and the Exchange Act and
did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. ATC has timely filed all forms, reports and documents with the SEC
required to be filed by it pursuant to the Securities Act and the Exchange Act
which complied as to form, at the time such form, document or report was filed,
in all material respects with the applicable requirements of the Securities Act
and the Exchange Act. The consolidated financial statements of ATC included in
the ATC SEC Documents (the "ATC Financial Statements"), including in each case
the notes thereto, have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, except as otherwise
noted therein, are true, accurate and complete in all material respects, and
fairly present the consolidated financial condition and the consolidated results
of operations and cash flow of ATC, on the bases therein stated, as of the
respective dates thereof, and for the respective periods
-18-
<PAGE> 23
covered thereby subject, in the case of unaudited financial statements, to
normal nonmaterial year-end audit adjustments and accruals.
5.3 Material Statements and Omissions; Absence of Events.
(a) Neither any representation or warranty made by ATC or ATI
contained in this Agreement or in the certificate to be delivered pursuant to
Section 7.3(a) nor the ATC SEC Documents contains or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
required to make any statement contained herein or therein, in light of the
circumstances under which they were made, not misleading. Without limiting the
generality of the foregoing, (i) the ATC Registration Statement will not, at the
time such Registration Statement becomes effective under the Securities Act, and
the ATC Transaction Prospectus, at the date it is first mailed to the holders of
Target Common Stock and at the time of the Target Stockholders Meeting, and (ii)
the information with respect to ATC furnished to Target for inclusion in the
Target Proxy Statement will not, at the date it is first mailed to the holders
of Target Common Stock and at the time of the Target Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. For purposes of the foregoing, the truth of any information or the
existence of any omissions at the time of the Target Stockholders Meeting shall
be determined with reference to the ATC Transaction Prospectus and the Target
Proxy Statement, each as then amended or supplemented. The ATC Registration
Statement and the ATC Transaction Prospectus will comply as to form in all
material respects with the requirements of the Securities Act and the rules and
regulations thereunder. Notwithstanding the foregoing, no representation or
warranty is made by ATC with respect to statements made or incorporated by
reference therein based on information specifically supplied by Target for
inclusion or incorporation by reference in the ATC Registration Statement or the
ATC Transaction Prospectus.
(b) Since the date of the most recent financial statements
constituting a part of the ATC Financial Statements, except to the extent
specifically described in the ATC SEC Documents, there has been no material
adverse change in ATC or any of its Subsidiaries from that reflected in the most
recent ATC Financial Statements. There is no Event known to ATC which has had a
Material Adverse Effect on ATC, except to the extent specifically described in
the ATC SEC Documents and except for matters affecting the tower rental,
ownership and construction industry generally, and except for any Event arising
out of the execution or public announcement of this Agreement. ATC is not aware
of any impending or contemplated Event that would cause any of the
representations and warranties made by it in this Article not to be true,
correct and complete on the date of such Event as if made on that date.
5.4 Broker or Finder. No Person assisted in or brought about the
negotiation of this Agreement or the Transactions in the capacity of broker,
agent or finder or in any similar capacity on behalf of ATC or ATI, other than
Credit Suisse First Boston Corporation whose fees and expenses will be paid by
ATC.
5.5 Capital Stock. The authorized and outstanding capital stock of
ATC, as of September 30, 1998, is as set forth in the most recent ATC SEC
Documents. Between September 30, 1998 and the date of this Agreement, ATC has
not issued or agreed to issue any shares of ATC Common Stock, other capital
stock, Convertible Securities or Option Securities, other than pursuant to (a)
the exercise of Option Securities theretofore granted pursuant to the 1997 Stock
Option Plan, as amended and restated, of ATC (the "ATC Option Plan"), (b)
acquisitions or mergers referred to in the ATC SEC Documents, (c) conversions of
Class B Common Stock, par value $.01 per share, of ATC into ATC Common Stock,
(d) the ATC Option Plan and (e) the issuance of 1,430,879 shares of ATC Common
Stock in a recently consummated acquisition. All of
-19-
<PAGE> 24
such outstanding capital stock has been, and, when issued in accordance with the
terms of this Agreement, the ATC Common Stock to be issued upon consummation of
the Merger will be, duly authorized and validly issued, fully paid and
nonassessable and not subject to any statutory preemptive or similar rights.
5.6 Tax Matters. Except where all failures to do so will not in the
aggregate have a Material Adverse Effect on ATC, ATC and each of its
Subsidiaries has (a) in accordance with all Applicable Laws filed all Tax
Returns which are required to be filed, and (b) paid, or made adequate provision
for the payment of, all Taxes which have or may become due and payable pursuant
to said Tax Returns and all other governmental charges and assessments received
to date other than those Taxes being contested in good faith for which adequate
provision has been made on the most recent balance sheet forming part of the ATC
Financial Statements. The Tax Returns of ATC and each of its Subsidiaries have
been prepared in all material respects in accordance with all Applicable Laws.
Except where all failures to do so will not in the aggregate have a Material
Adverse Effect on ATC, all Taxes which ATC and each of its Subsidiaries is
required by Law to withhold and collect have been duly withheld and collected,
and have been paid over, in a timely manner, to the proper Authorities to the
extent due and payable. Adequate provision has been made on the most recent
balance sheet forming part of the ATC Financial Statements for all Taxes accrued
through the date of such balance sheet of any kind, including interest and
penalties in respect thereof, whether disputed or not, and whether past,
current or deferred, accrued or unaccrued, fixed, contingent, absolute or other,
and there are, to ATC's knowledge, no past transactions or matters which,
individually or in the aggregate, could result in additional Taxes which would,
if imposed, have a Material Adverse Effect on ATC for which an adequate reserve
has not been provided on such balance sheet. Neither ATC nor any of its
Subsidiaries is a "consenting corporation" within the meaning of Section 341(f)
of the Code. ATC, and each of its corporate Subsidiaries at all times since
owned directly or indirectly by ATC, has been taxable as a Subchapter C
corporation under the Code, and has never been a member of any consolidated
group for Tax purposes, except (i) during the period it was included in the tax
reports of American Radio Systems Corporation, as described in the ATC SEC
Documents, and (ii) any consolidated group with one or more of ATC and its
Subsidiaries. Neither ATC nor any of its Subsidiaries is a party to any tax
sharing agreement or arrangement, except (i) the ARS-ATS Separation Agreement,
as described in the ATC SEC Documents, and (ii) any agreement among one or more
of ATC and ATC's Subsidiaries.
5.7 Compliance with Governmental Authorizations and Applicable Law.
(a) ATC and its Subsidiaries have conducted their respective
businesses and owned and operated their respective property and assets in
accordance with all Applicable Laws and Governmental Authorizations, except for
such breaches, violations and defaults as, individually or in the aggregate,
have not had and will not have a Material Adverse Effect on ATC. Neither ATC nor
any of its Subsidiaries is in, or is charged by any Authority with, or, to ATC's
knowledge, is threatened or under investigation by any Authority with respect
to, any breach or violation of, or default in the performance, observance or
fulfillment of, any Applicable Law relating to the ownership and operation of
their respective assets or the conduct of their respective businesses which,
individually or in the aggregate, has had or will have a Material Adverse Effect
on ATC. No Event exists or has occurred which constitutes, or but for any
requirement of giving of notice or passage of time or both would constitute,
such a breach, violation or default, under any Governmental Authorization or any
Applicable Law, except for such breaches, violations or defaults as,
individually or in the aggregate, have not had and will not have a Material
Adverse Effect on ATC.
(b) ATC or one of its Subsidiaries has obtained all Governmental
Authorizations that are necessary for the ownership or operation of the assets
of ATC and its Subsidiaries or the conduct of the business of ATC and its
Subsidiaries as now conducted and which, if not obtained and maintained, would,
-20-
<PAGE> 25
individually or in the aggregate, have a Material Adverse Effect on ATC, all of
which are valid and in good standing and in full force and effect, with such
exceptions as, individually or in the aggregate, have not had and will not have
a Material Adverse Effect on ATC. None of such Governmental Authorizations is
subject to any restriction or condition that would limit in any material respect
the ownership or operations of the assets of ATC and its Subsidiaries or the
conduct of the business of ATC and its Subsidiaries as currently conducted,
except for restrictions and conditions generally applicable to Governmental
Authorizations of such type and such exceptions as, individually or in the
aggregate, have not had and will not have a Material Adverse Effect on ATC. The
conduct of the business of ATC and its Subsidiaries is in accordance with the
Governmental Authorizations, except for such noncompliances as, individually or
in the aggregate, have not had and will not have a Material Adverse Effect on
ATC. No such Governmental Authorization is the subject of any pending or, to
ATC's knowledge, threatened challenge or proceeding to revoke or terminate any
such Governmental Authorization.
(c) There are no Legal Actions of any kind pending or, to the
knowledge of ATC, threatened at law, in equity or before any Authority against
ATC or any of its Subsidiaries or the officers or directors of any thereof
relating to the ownership or operation of their respective assets or the conduct
of their respective businesses which, if determined adversely to ATC or its
Subsidiaries, individually or in the aggregate, will have a Material Adverse
Effect on ATC.
5.8 Year 2000 Compliant. ATC has reviewed the areas within its and
its Subsidiaries' businesses and operations which ATC believes could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by ATC may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date on or
after December 31, 1999), and is making related inquiry of material suppliers,
vendors and customers. Based on such reviews, ATC believes that the "Year 2000
Problem" will not have a Material Adverse Effect on ATC. To ATC's knowledge,
each hardware, software and firmware product (collectively "Software") used by
ATC in its business is Year 2000 compliant, except for such noncompliances that,
individually or in the aggregate, have not had and will not have a Material
Adverse Effect on ATC.
5.9 Compliance with Private Authorizations. ATC and its Subsidiaries
have obtained all Private Authorizations that are necessary for the ownership or
operation by ATC and its Subsidiaries of their respective assets or the conduct
of their respective businesses, as currently conducted or proposed to be
conducted on or prior to the Closing Date, which, if not obtained and
maintained, individually or in the aggregate, have not had and will not have a
Material Adverse Effect on ATC and its Subsidiaries taken as a whole. All of
such Private Authorizations are valid and in good standing and are in full force
and effect, except for such exceptions as, individually or in the aggregate,
have not had and will not have a Material Adverse Effect on ATC and its
Subsidiaries taken as a whole. Neither ATC nor any of its Subsidiaries is in
breach or violation of, or in default in the performance, observance or
fulfillment of, any such Private Authorization, and no Event exists or has
occurred which constitutes, or but for any requirement of giving of notice or
passage of time or both would constitute, such a breach, violation or default,
under any such Private Authorization, except for such breaches, violations or
defaults as, individually or in the aggregate, have not had and will not have a
Material Adverse Effect on ATC and its Subsidiaries taken as a whole.
5.10 Title to Properties; Leases.
(a) Each of ATC and its Subsidiaries has good indefeasible,
marketable and insurable title to all of its real property (other than easement
and leasehold real property) and good indefeasible and marketable title to all
of its other owned property and assets, tangible and intangible; all of such
property and assets are
-21-
<PAGE> 26
so owned, in each case, free and clear of all Liens, except (i) Permitted Liens,
and (ii) Liens set forth in the ATC Financial Statements. All improvements on
the real property owned or leased by ATC or any of its Subsidiaries are in
compliance with applicable zoning, wetlands and land use laws, ordinances and
regulations and applicable title covenants, conditions, restrictions and
reservations in all respects necessary to conduct the business as presently
conducted or proposed to be conducted on or prior to the Closing Date by ATC and
its Subsidiaries, except for any instances of non-compliance which, individually
or in the aggregate, have not had and will not have a Material Adverse Effect on
ATC. All such improvements comply with all Applicable Laws, Governmental
Authorizations and Private Authorizations, except for any instances of
non-compliance which, individually or in the aggregate, have not had and will
not have a Material Adverse Effect on ATC. All of the transmitting towers,
ground radials, guy anchors, transmitting buildings and related improvements, if
any, located on the real property owned or leased by ATC or any of its
Subsidiaries are located entirely on such real property except for any instances
of non-compliance, individually or in the aggregate, have not had and could not
reasonably be expected to have a Material Adverse Effect on ATC. Such
transmitting towers, ground radials, guy anchors, transmitting buildings and
related improvements and other material items of personal property, including
equipment, are, in ATC's reasonable business judgment, in a state of good repair
and maintenance and sound operating condition, normal wear and tear excepted,
have been maintained in a manner consistent with generally accepted standards of
sound engineering practice, and currently permit the business of ATC and its
Subsidiaries to be operated in accordance with the terms and conditions of all
Applicable Laws, Governmental Authorizations and Private Authorizations, except
where the failure to be in such repair or condition or to be so usable,
individually or in the aggregate, has not had and will not have a Material
Adverse Effect on ATC.
(b) Each Lease under which ATC or any of its Subsidiaries holds real
property is in full force and effect, has been duly authorized, executed and
delivered by ATC and, to its knowledge, each of the other parties thereto, and
is a legal, valid and binding obligation of ATC or one of its Subsidiaries, and,
to its knowledge, each of the other parties thereto, enforceable in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
moratorium, insolvency and similar Laws affecting the rights and remedies of
creditors and obligations of debtors generally and by general principles of
equity except, in each case, for exceptions which individually or in the
aggregate, have not had and will not have a Material Adverse Effect on ATC. ATC
or one of its Subsidiaries has a valid leasehold interest in and enjoys peaceful
and undisturbed possession under all Leases pursuant to which it holds any such
real property, subject to the terms of each Lease and Applicable Law and except
for Permitted Liens and such other Liens as, individually or in the aggregate,
have not had and will not have a Material Adverse Effect on ATC. Neither ATC nor
any of its Subsidiaries nor, to ATC's knowledge, any other party thereto, has
failed to duly comply with all of the material terms and conditions of each
Lease or has done or performed, or failed to do or perform (and no Claim is
pending or, to the knowledge of ATC, threatened to the effect that ATC has not
so complied, done and performed or failed to do and perform) any act which would
invalidate or provide grounds for the other party thereto to terminate (with or
without notice, passage of time or both) such Leases or impair the rights or
benefits, or increase the costs, of ATC under any Lease in any material respect
except, in each case, for exceptions which individually or in the aggregate,
have not had and will not have a Material Adverse Effect on ATC.
5.11 Related Transactions. Neither ATC nor any of its Subsidiaries
is a party or subject to any Contractual Obligation relating to the ownership or
operation of the assets of ATC and its Subsidiaries or the conduct of its or any
of their businesses between ATC or any of its Subsidiaries, on the one hand, and
any of its officers or directors, on the other hand, or, to the knowledge of
ATC, any member of the Immediate Family of any thereof or any Affiliate of any
of the foregoing, including without limitation any Contractual Obligation
providing for the furnishing of services to or by, providing for rental of
property, real, personal or mixed, to
-22-
<PAGE> 27
or from, or providing for the lending or borrowing of money to or from or
otherwise requiring payments to or from, any such Person, other than (a) as
described in the ATC SEC Documents, (b) employment agreements with certain of
the officers, and (c) other Contractual Obligations that are, in the reasonable
business judgment of ATC, on terms no less favorable to ATC or the applicable
Subsidiary than would exist with a nonaffiliated Person.
5.12 Insurance. ATC or one of its Subsidiaries maintains, with
respect to the assets of ATC and its Subsidiaries and the business of ATC and
its Subsidiaries , policies of fire and extended coverage and casualty,
liability and other forms of insurance in such amounts and against such risks
and losses as are customary in ATC's and its Subsidiaries' businesses.
5.13 ERISA Matters
(a) Except as described in the ATC SEC Documents, neither ATC nor
any of its Subsidiaries contributes to or has an obligation to contribute to,
and has not at any time contributed to or had an obligation to contribute to,
(i) an employee pension benefit plan within the meaning of Section 3(2) of
ERISA, (ii) a Multiemployer Plan, or (iii) a Plan subject to Section 412 of the
Code, Section 302 of ERISA or Title IV of ERISA. Neither ATC nor any of its
Subsidiaries has any actual or potential liability under Title IV of ERISA.
Neither ATC nor any of its Subsidiaries maintains any Plan that provides for
post-retirement medical or life insurance benefits, and neither ATC nor any of
its Subsidiaries has any obligation or liability with respect to any such Plan
previously maintained by ATC or any of its Subsidiaries, except as the
provisions of COBRA may apply to any former employees of ATC or any of its
Subsidiaries. As to all Plans and Employment Arrangements of ATC and its
Subsidiaries:
(i) all such Plans and Employment Arrangements comply
and have been administered in form and in operation, in all material
respects, in accordance with their respective terms and with all
Applicable Laws, except for such noncompliance that will not,
individually or in the aggregate, have a Material Adverse Effect on
ATC, and neither ATC nor any of its Subsidiaries has received any
notice from any Authority disputing or investigating such
compliance;
(ii) there are no Claims (other than routine Claims for
benefits or actions seeking qualified domestic relations orders)
pending or, to ATC's knowledge, threatened involving such Plans or
the assets of such Plans, and, to ATC's knowledge, no facts exist
which are reasonably likely to give rise to any such Claims (other
than routine Claims for benefits or actions seeking qualified
domestic relations orders) except, in each case, as will not,
individually or in the aggregate, have a Material Adverse Effect on
ATC;
(iii) all material contributions to, and material
payments from, the Plans and Employment Arrangements that may have
been required to be made in accordance with the terms of the Plans
and Employment Arrangements, and any applicable collective
bargaining agreement, have been made other than contributions and
payments which will not, individually or in the aggregate, have a
Material Adverse Effect on ATC. All such contributions to, and
payments from, the Plans and Employment Arrangements, except those
payments to be made from a trust qualified under Section 401(a) of
the Code, for any period ending before the Closing Date that are not
yet, but will be, required to be made, will be properly accrued and
reflected on the financial books and records of ATC;
(iv) to ATC's knowledge, no Event has occurred which
would result in imposition on ATC or any of its Subsidiaries of (A)
any breach of fiduciary duty liability damages under Section 409
-23-
<PAGE> 28
of ERISA, (B) a civil penalty assessed pursuant to subsections (c),
(i) or (l) of Section 502 of ERISA or (C) a tax imposed pursuant to
Chapter 43 of Subtitle D of the Code;
(v) neither ATC nor any of its Subsidiaries has incurred
any material liability to a Plan (other than for contributions not
yet due) which liability has not been fully paid or accrued for
payment as of the date hereof;
(vi) no current or former employee of ATC or any of its
Subsidiaries will be entitled to any additional benefits or any
acceleration of the time of payment or vesting of any benefits under
any Plan or Employment Arrangement as a result of the transactions
contemplated by this Agreement; and
(vii) no compensation payable by ATC or any of its
Subsidiaries to any of its employees under any existing Plan or
Employment Arrangement (including by reason of the transactions
contemplated hereby) will be subject to disallowance under Section
162(m) of the Code.
(b) The execution, delivery and performance by ATC of this Agreement
and the Collateral Documents executed or required to be executed by ATC pursuant
hereto and thereto will not involve any prohibited transaction within the
meaning of ERISA or Section 4975 of the Code with respect to any Plan maintained
by ATC or any of its Subsidiaries.
5.14 Product Liability. There is not now pending or, to the
knowledge of ATC, threatened any Claim (or any basis for any such Claim)
relating to, any damages to or losses of any third party for injuries to Persons
or damage to property, or for breach of warranty, arising out of any alleged
defect in the quality or condition of any of ATC's products or services or
property or assets, which, in the case of pending or threatened Claims, if
determined adversely to ATC, individually or in the aggregate (taking into
account unasserted Claims of a similar nature), will have a Material Adverse
Effect on ATC.
5.15 Ordinary Course of Business. From the date of the most recent
ATC Financial Statements to the date hereof, except (i) as may be required or
expressly contemplated by the terms of this Agreement, (ii) for the merger
agreement with TeleCom Towers, L.L.C., or (iii) as may be described in or
contemplated by the ATC SEC Documents, each of ATC and its Subsidiaries:
(a) has operated its business in all material respects
in the normal, usual and customary manner in the ordinary and
regular course of business (which includes, without limitation, the
construction and acquisition of towers), consistent with prior
practice;
(b) except in each case in the ordinary course of
business (which includes, without limitation, the construction and
acquisition of towers), consistent with prior practice:
(i) has not incurred any obligation or
liability (fixed, contingent or other) individually
having a value in excess of $500,000;
(ii) has not sold or otherwise disposed of
or contracted to sell or otherwise dispose of any of its
properties or assets having a value in excess of
$500,000;
(iii) has not canceled any debts or claims
having a value in excess of $100,000;
-24-
<PAGE> 29
(iv) has not entered into any individual
commitment having a value in excess of $500,000; and
(c) has not created or permitted to be created any Lien
on any of the assets of ATC and its Subsidiaries, except for
Permitted Liens;
(d) has not made or committed to make any additions to
its property or any purchases of equipment in excess of $500,000,
except in the ordinary course of business consistent with past
practice or for normal maintenance and replacements;
(e) has not increased the compensation payable or to
become payable to any of the ATC Employees other than increases in
the ordinary course of business that are not material to ATC, or
otherwise altered, modified or changed, in a manner material to ATC,
the terms of their employment;
(f) has not suffered any material damage, destruction or
loss (whether or not covered by insurance) or any acquisition or
taking of property by any Authority;
(g) has not waived any rights of material value without
fair and adequate consideration;
(h) has not experienced any work stoppage;
(i) except in the ordinary course of business (which
includes the construction and acquisition of towers), has not
entered into, amended or terminated any Lease, Governmental
Authorization, Private Authorization, Material Agreement or
Employment Arrangement, or any transaction, agreement or arrangement
with any Affiliate of ATC;
(j) has not made, paid or declared any Distribution; and
(k) has not entered into any transactions or series of
related transactions which individually or in the aggregate is
material to the assets of ATC and its Subsidiaries taken as a whole
or the business of ATC and its Subsidiaries taken as a whole.
5.16 Environmental Matters. Except for exceptions that, individually
or in the aggregate, have not had and would not have a Material Adverse Effect
on ATC, neither ATC nor any of its Subsidiaries:
(a) has been notified in writing that it is potentially
liable under, has received any written request for information or
other correspondence concerning its potential liability with respect
to any site or facility under, or, to ATC's knowledge, is a
"potentially responsible party" under, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, the Resource Conservation Recovery Act, as amended, or any
similar state Law;
(b) is a party to any outstanding consent decree,
compliance order or administrative order or other judgment, order,
writ, injunction or decree creating on-going obligations issued
pursuant to any Environmental Law;
(c) has, to its knowledge, failed to obtain all material
Environmental Permits required under Environmental Laws, or, to its
knowledge, failed to file all applications, notices and other
material documents required to be filed prior to the date of this
Agreement to effect the timely renewal
-25-
<PAGE> 30
or issuance of all Environmental Permits necessary for the continued
ownership or operation of the assets of ATC and its Subsidiaries
taken as a whole or conduct of the business of ATC and its
Subsidiaries taken as a whole in the manner currently owned,
operated and conducted and proposed to be owned, operated and
conducted on or prior to the Closing Date;
(d) is not in compliance with all Environmental Laws, or
is the subject of or, to ATC's knowledge, threatened with any Legal
Action involving a demand for damages or other potential liability,
including any Lien, with respect to violations or breaches of any
Environmental Law;
(e) has knowingly installed or used any above ground or
underground storage tanks, friable asbestos, polychlorinated
biphenyls or urea formaldehyde foam insulation on any property
currently owned, leased or operated by ATC or any of its
Subsidiaries and, to ATC's knowledge, there are no above ground or
underground storage tanks containing Hazardous Materials, friable
asbestos, polychlorinated biphenyls or urea formaldehyde foam
insulation on any property currently owned, leased or operated by
ATC or any of its Subsidiaries, the installation, use or presence of
which is not in compliance with Environmental Laws; and
(f) has any knowledge of any past or present Event
related to ATC's or any of its Subsidiaries' properties, operations
or business, which Event, individually or in the aggregate, could
reasonably be expected to interfere with or prevent continued
compliance in all material respects with all Environmental Laws
applicable to the ownership or operation of the assets of ATC and
its Subsidiaries taken as a whole or the business of ATC and its
Subsidiaries taken as a whole substantially in the manner now
conducted or proposed to be conducted on or prior to the Closing
Date, or which, individually or in the aggregate, may form the basis
of any material Claim for or arising out of the release or
threatened release into the environment of any Hazardous Material.
5.17 Materiality. The representations and warranties set forth in
this Article are true and correct as of the date hereof without the materiality
exceptions or qualifications contained therein, except to the extent that the
failure of such representations and warranties to be so true and correct,
individually or in the aggregate, will not have a Material Adverse Effect on
ATC.
5.18 Material Agreements. All of the agreements filed in the ATC SEC
Documents under exhibit 10 pursuant to Regulation S-K are valid, binding and
legally enforceable obligations of ATC or its Subsidiaries, as the case may be,
and, to ATC's knowledge, all other parties thereto, except as such
enforceability may be limited by bankruptcy, moratorium, insolvency and similar
Laws affecting the rights and remedies of creditors and obligations of debtors
generally and by general principles of equity except, in each case, for
exceptions which individually or in the aggregate, have not had and will not
have a Material Adverse Effect on ATC. Except as set forth in the ATC SEC
Documents, neither ATC (or its Subsidiaries, as the case may be) nor, to its
knowledge, any other party thereto, has failed to duly comply with all of the
material terms and conditions of each such material agreement or has done or
performed, or failed to do or perform (and no Claim, other than ATC's Notice of
Disagreement with CBS Corporation, described in ATC's Form 10-Q for the fiscal
quarter ended September 30, 1998, is pending or, to the knowledge of ATC,
threatened in writing to the effect that ATC has not so complied, done and
performed or failed to do and perform) any act which would invalidate or provide
grounds for the other party thereto to terminate (with or without notice,
passage of time or both) such material agreement or impair the rights or
benefits, or increase the costs, of ATC (or its Subsidiaries, as the case may
be) under any such material agreement, except, in each case, for exceptions
which individually or in the aggregate, have not had and will not have a
Material Adverse Effect on ATC.
-26-
<PAGE> 31
All Contracts for the construction by ATC (or its Subsidiaries) of towers for
other Persons can be performed, in the aggregate for all such Contracts, without
any loss to ATC (or its Subsidiaries).
ARTICLE 6
COVENANTS
6.1 Access to Information; Confidentiality.
(a) Each party shall afford to the other party and its accountants,
counsel, financial advisors and other representatives (the "Representatives")
full access during normal business hours and upon reasonable notice throughout
the period prior to the Closing Date to all of its (and its Subsidiaries')
properties, books, contracts, insurance policies, studies and reports,
environmental studies and reports, commitments and records (including without
limitation Tax Returns) and, during such period, shall furnish promptly upon
written request (i) a copy of each report, schedule and other document filed or
received by any party pursuant to the requirements of any Applicable Law or
filed by it with any Authority in connection with the Merger or any other
report, schedule or documents which may have a material effect on the
businesses, operations, properties, prospects, personnel, condition (financial
or other), or results of operations of their respective businesses, and (ii)
such other information concerning any of the foregoing as ATC or Target shall
reasonably request. All Confidential Information furnished pursuant to the
provisions of this Agreement, including without limitation this Section, or
developed based upon disclosures pursuant to this Agreement or otherwise will be
kept confidential and shall not, without the prior written consent of the party
disclosing such Confidential Information, be disclosed by the other party in any
manner whatsoever, in whole or in part, and, except as required by Applicable
Law (including without limitation in connection with any registration, proxy or
information statement or similar document filed pursuant to any federal or state
securities Law in connection with the Merger) shall not be used for any
purposes, other than in connection with the Merger. Except as otherwise herein
provided, each party agrees to reveal such Confidential Information only to
those of its Representatives or other Persons whom it believes need to know such
Confidential Information for the purpose of evaluating and consummating the
Merger. For purposes of this Agreement, "Confidential Information" shall mean
any and all information related to the business or businesses of ATC, ATI and
their respective Affiliates or Target and its Affiliates, including any of their
respective successors and assigns, other than information that (i) has been or
is obtained from a source independent of the disclosing party that, to the
receiving party's knowledge, is not subject to any confidentiality restriction,
(ii) is or becomes generally available to the public other than as a result of
unauthorized disclosure by the receiving party, or (iii) is independently
developed by the receiving party without reliance in any way on information
provided by the disclosing party or a third party independent of the disclosing
party that, to the receiving party's knowledge, is subject to any
confidentiality restriction.
(b) Notwithstanding the provisions of Section 6.1(a), (i) in
connection with the Merger, each party may disclose such information as it may
reasonably determine to be necessary in connection with seeking all Governmental
and Private Authorizations or that is required by Applicable Law to be
disclosed, including without limitation in any registration, proxy or
information statement or other document required to be filed under any federal
or state securities Law, and (ii) each party may, with the prior written consent
of the other party, which consent shall not be unreasonably withheld, delayed or
conditioned, disclose the subject matters of this Agreement to Persons with whom
the other party has a business or contractual relationship in connection with
the due diligence investigation of the other party and its attorneys, financial
advisors and accountants in connection with the transactions contemplated
hereunder. In the event that this Agreement is
-27-
<PAGE> 32
terminated in accordance with its terms, each party shall promptly redeliver all
written Confidential Information provided pursuant to this Section or any other
provision of this Agreement or otherwise in connection with the Merger or
developed based on such information and shall not retain any copies, extracts or
other reproductions in whole or in part of such written material, other than,
unless mutual releases are exchanged by the parties, one copy thereof which
shall be delivered to independent counsel for such party which shall be bound by
the provisions of Section 6.1(a).
(c) Anything in this Section or elsewhere in this Agreement to the
contrary notwithstanding, either party may disclose information received or
retained by it in accordance with the provisions of this Agreement if it can
demonstrate (i) such information is generally available to or known by the
public from a source other than the party seeking to disclose such information
or (ii) was obtained by the party seeking to disclose such information from a
source other than the other party, provided that such source was not, to the
knowledge of the disclosing party, bound by a duty of confidentiality to the
other party or another party with respect to such information.
(d) No investigation pursuant to this Section or otherwise shall
affect any representation or warranty in this Agreement of any party or any
condition to the obligations of the parties hereto.
(e) The provisions of this Section shall apply to all Subsidiaries
of ATC and Target.
6.2 Agreement to Cooperate; Certain Other Covenants.
(a) Each of the parties hereto shall use reasonable business efforts
(x) to take, or cause to be taken, all actions and to do, or cause to be done,
all things necessary, proper or advisable under Applicable Law to consummate the
Merger and the other Transactions, and (y) to refrain from taking, or cause to
be refrained from taking, any action and to refrain from doing or causing to be
done, anything which could impede or impair the consummation of the Merger or
the consummation of the other Transactions, including, in all cases, without
limitation using its reasonable business efforts (i) to prepare and file with
the applicable Authorities as promptly as practicable after the execution of
this Agreement all requisite applications and amendments thereto, together with
related information, data and exhibits, necessary to request issuance of orders
approving the Merger by all such applicable Authorities, (ii) to obtain all
necessary or appropriate waivers, consents and approvals, (iii) to effect all
necessary registrations, filings and submissions (including without limitation
filings within ten (10) business days of the date of this Agreement under the
Hart-Scott-Rodino Act and all filings necessary for ATI to own and operate the
Target Assets and the Target Business), (iv) to lift any injunction or other
legal bar to the Merger (and, in such case, to proceed with the Merger as
expeditiously as possible), (v) to obtain the satisfaction of the conditions
specified in Article 7, and (vi) to cure any breach or untruth of such party
upon receipt of notice as provided in Section 8.1(c) or (d) or upon otherwise
becoming aware of such breach or untruth.
(b) The parties shall cooperate with one another in the preparation
of all Tax Returns, questionnaires, applications or other documents regarding
any Taxes or transfer, recording, registration or other fees which become
payable in connection with the Merger that are required to be filed on or before
the Closing Date.
(c) The provisions of this Section shall apply to all Subsidiaries
of ATC and Target.
6.3 Public Announcements. Until the Closing or the termination of
this Agreement, each party shall consult with the other before issuing any press
release or otherwise making any public statements with
-28-
<PAGE> 33
respect to this Agreement or the Merger and shall not issue any such press
release or make any such public statement without the prior written approval of
the other. Notwithstanding the foregoing, the parties acknowledge and agree that
they may, without each other's prior consent, issue such press releases or make
such public statements as may be required by Applicable Law, in which case the
issuing party shall use all reasonable efforts to consult with the other party
and agree upon the nature, content and form of such press release or public
statement. The provisions of this Section shall apply to all Subsidiaries of ATC
and Target.
6.4 Notification of Certain Matters. Each party shall give prompt
notice to the other of the occurrence or non-occurrence of any Event the
occurrence or non-occurrence of which would be reasonably likely to cause (a)
any representation or warranty made by it contained in this Agreement to be
untrue or inaccurate in any material respect or (b) any failure by it to comply
with or satisfy, or be able to comply with or satisfy, in any material respect,
any covenant, condition or agreement to be complied with or satisfied by it
under this Agreement in any material respect, such that, in any such case, one
or more of the conditions of Closing would not be satisfied; provided, however,
that the delivery of any notice pursuant to this Section shall not limit or
otherwise affect the rights and remedies available hereunder to the party
receiving such notice or the obligations of the party delivering such notice and
shall not, in any event, affect the representations, warranties, covenants and
agreements of the parties or the conditions to their respective obligations
under this Agreement.
6.5 Other Offers; No Solicitation.
(a) Target shall not, nor shall Target knowingly permit any of its
Subsidiaries or any of its or any of its Subsidiaries' officers, directors,
investment bankers, brokers, financial advisors, finders, attorneys, accountants
or other agents or representatives to, directly or indirectly, (i) solicit,
initiate or encourage (including by way of furnishing non-public information),
or take any other action to facilitate, any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, an
Alternative Transaction or (ii) participate in any discussions or negotiations
or otherwise cooperate regarding an Alternative Transaction; provided, however,
that if the Board of Directors of Target determines in good faith, based on the
advice of outside counsel, that failure to do so would constitute a breach of
its fiduciary duties to Target's stockholders under Applicable Law, Target, in
response to a written Alternative Transaction that (I) was unsolicited or that
did otherwise result from a breach of this Section, and (II) is reasonably
likely to lead to a Superior Proposal, may (x) furnish non-public information
with respect to Target to the Person who made such Alternative Transaction
pursuant to a customary confidentiality agreement and (y) participate in
discussions and negotiations regarding such Alternative Transaction. Without
limiting the foregoing, it is understood that any violation of the restrictions
set forth in the preceding sentence by any director or officer of Target or any
of its Subsidiaries, whether or not acting on behalf of Target or any of its
Subsidiaries, shall be deemed to be a breach of this Section by Target.
(b) The Board of Directors of Target shall not (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to ATC, its
approval or recommendation of this Agreement or the Merger, (ii) approve or
recommend, or propose to approve or recommend, an Alternative Transaction, or
(iii) cause Target to enter into any letter of intent, agreement in principle,
acquisition agreement or merger or other similar agreement with respect to an
Alternative Transaction, unless (x) the Board of Directors of Target shall have
determined in good faith, based on the advice of independent counsel, that (A)
failure to do so would be inconsistent with its fiduciary duties to Target's
stockholders under Applicable Law, and (B) based upon the advice of Target's
financial advisors, such Alternative Transaction is a Superior Proposal, and (y)
Target shall have terminated this Agreement pursuant to the provisions of
paragraph (f) of Section 8.1.
-29-
<PAGE> 34
(c) Nothing contained in this Section shall prohibit Target from at
any time (i) taking and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act; provided, however, that
neither Target nor its Board of Directors shall, except as permitted by Section
6.5(b), propose to approve or recommend an Alternative Transaction or (ii)
making a "stop-look-and-listen" communication with respect to an Alternative
Transaction of the nature contemplated by, and in compliance with, Rule 14d-9
under the Exchange Act as a result of receiving an Acquisition Proposal.
(d) If Target decides to terminate this Agreement under paragraph
(f) of Section 8.1 because of a Superior Proposal, it shall give ATC written
notice of such termination no later than five (5) days prior to any such
termination. At such time, Target will cause its financial advisor to supply ATC
with such information as such financial advisor deems necessary to maximize
value to the Target's stockholders. Target shall be obligated to consider any
revised offer communicated to Target by ATC in connection with its decision to
terminate this Agreement.
(e) If Target shall receive a firm, bona fide written proposal or
proposals from any Person relating to any Alternative Transaction, and Target's
Board of Directors shall determine in good faith, based upon the advice of
independent counsel, and after receiving advice from Target's independent
financial advisors, that (i) such Alternative Transaction is a Superior Proposal
and (ii) the failure to terminate this Agreement would be inconsistent with the
director's fiduciary obligations under Applicable Law, then Target shall
terminate this Agreement.
(f) If Target terminates this Agreement pursuant to Section 6.5(e),
Target shall pay ATC the amounts set forth in Section 8.2 hereof in accordance
with the terms thereof.
6.6 Conduct of Business by Target Pending the Merger. Except as set
forth in Section 6.6 of the Target Disclosure Schedule, otherwise contemplated
by this Agreement or as provided in Target's business plan previously provided
to ATC (the "Business Plan"), after the date hereof and prior to the Closing
Date or earlier termination of this Agreement, unless ATC shall otherwise
consent in writing, which consent shall not be unreasonably withheld, Target
shall, and shall cause each of its Subsidiaries to:
(a) conduct its business in the ordinary and usual
course of business and consistent with past practice;
(b) not (i) amend or propose to amend its Organic
Documents, (ii) split, combine or reclassify (whether by stock
dividend or otherwise) its outstanding capital stock or issue or
authorize the issue of any other securities in respect of, in lieu
of, or in substitution for, shares of its capital stock, or (iii)
declare, set aside, pay or make, or agree to declare, set aside, pay
or make, any Distribution, whether in cash, stock, property or
otherwise; other than distributions to Target or its Subsidiaries by
one of Target's Subsidiaries;
(c) not issue, sell, pledge or dispose of, or agree to
issue, sell, pledge or dispose of, any shares of Target Common
Stock, other shares of capital stock, Convertible Securities or
Option Securities, except pursuant to the exercise of options
outstanding on the date hereof;
(d) not (i) incur or become contingently liable with
respect to any Indebtedness for Money Borrowed, other than (x)
borrowings, not to exceed the sum of (I) the principal amount of
borrowings presently outstanding and (II) the Indebtedness set forth
in the Business Plan, (ii) redeem, purchase, acquire or offer or
agree to redeem, purchase or acquire any shares of its capital
stock,
-30-
<PAGE> 35
Convertible Securities or Option Securities, (iii) sell, lease,
license, pledge, dispose of or encumber any properties or assets or
sell any businesses other than (x) inventory in the ordinary course
of business, (y) Liens arising in accordance with the provisions of
indebtedness in effect on the date hereof and in accordance with
their present terms, and (z) leases of towers and shelter space to
third-party customers, or (iv) make any loans, advances or capital
contributions to, or investments in, any other Person, except to
officers and employees of Target for travel, business or relocation
expenses in the ordinary course of business;
(e) not enter into or agree to enter into (other than
agreements which are binding on Target as of the date hereof) any
Restricted Transaction (or group of related Restricted
Transactions), whether for its own account or for any other Person,
if (i) the aggregate amount reasonably expected to be expended by
Target or any of its Subsidiaries in connection with such individual
Restricted Transaction (together with any group of related
Restricted Transactions) exceeds $10.0 million, or (ii) the
aggregate amount to be expended in connection with all Restricted
Transactions (together with any group of related Restricted
Transactions) exceeds $100.0 million; provided, however, that the
foregoing restriction shall not apply to any Restricted Transaction
pursuant to agreements which are described in Section 6.6(e) of the
Target Disclosure Schedule;
(f) use reasonable business efforts to preserve intact
its business organization and goodwill, keep available the services
of its present officers and key employees, and preserve the goodwill
and business relationships with customers and others having business
relationships with them and not engage in any action, directly or
indirectly, with the intent to adversely impact the transactions
contemplated by this Agreement;
(g) confer on a regular and frequent basis with one or
more representatives of ATC to report material operational matters
and the general status of ongoing operations;
(h) not adopt, enter into, amend or terminate any
employment, severance, special pay arrangement with respect to
termination of employment or other similar arrangements or
agreements with any directors, officers or key employees;
(i) maintain with financially responsible insurance
companies insurance on the Target Assets and the Target Business in
such amounts and against such risks and losses as are consistent
with past practice;
(j) not make any Tax election that could reasonably be
likely to have a Material Adverse Effect on Target or settle or
compromise any material Tax liability;
(k) except in the ordinary course of business or except
as would not be reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Target, not modify, amend or
terminate any Material Agreement to which Target is a party or by
which any of the Target Assets may be bound or to which any of them
may be subject or waive, release or assign any material rights or
claims thereunder;
(l) not make any material change to its accounting
methods, principles or practices, except as may be required by GAAP;
-31-
<PAGE> 36
(m) except in the ordinary course of business and in
accordance with past practices and policies, not enter into any
Lease or other agreement with respect to any antennae site on any of
its towers, whether presently owned or hereafter acquired by Target;
(n) except as set forth in Section 4.14 of the Target
Disclosure Schedules, (i) not grant to any executive officer or
other key employee of Target any increase in compensation, except
for normal increases in the ordinary course of business consistent
with past practice or as required under Employment Arrangements set
forth in Section 4.14 of the Target Disclosure Schedule, (ii) not
grant to any such executive officer any increase in severance or
termination pay, except as was required under any Employment
Arrangements set forth in Section 4.14 of the Target Disclosure
Schedule, (iii) not adopt or amend any Plan or Employment
Arrangement (including change any actuarial or other assumption used
to calculate funding obligations with respect to any Plan, or change
the manner in which contributions to any Plan are made or the basis
on which such contributions are determined) and (iv) except in the
ordinary course, not enter into, amend in any material respect or
terminate any Material Governmental Authorization, material Private
Authorization or Material Agreement;
(o) not voluntarily take or permit to be taken any
action which if taken between the end of its most recent fiscal
quarter and prior to the date of this Agreement would have been
required to be noted as an exception on Section 4.16 of the Target
Disclosure Schedule, other than pursuant to the conduct of its
business in the ordinary and usual course of business and consistent
with past practice; and
(p) not authorize or enter into any agreement that would
violate any of the foregoing.
In the event that Target or any of its Subsidiaries desires to take any of the
actions prohibited by the provisions of this Section, Target shall give prompt
written notice to ATC, referring to the provisions of this Section. As stated
above, Target's ability to take such action shall be subject to the written
consent of ATC, which consent shall not be unreasonably withheld; provided,
however, that if ATC does not object to the taking of such action within five
(5) business days of receipt of such notice and all material information
requested by ATC with respect thereto, Target or such Subsidiary shall have the
right to take such action. ATC's failure to object to the taking of any such
action shall not, in any event, relieve Target from the obligation to comply
with the provisions of this Agreement (other than, to the extent provided, in
paragraph (d) of this Section) and shall not be deemed to be a waiver of any
condition of ATC's obligations to consummate the Merger set forth in Section
7.2. The parties also agree that, regardless of whether or not ATC's consent is
required by this Section 6.6, Target shall communicate with the Chief Operating
Officer and the Chief Financial Officer of ATC on a reasonably regular basis
with respect to the Business Plan and the ongoing operations of Target.
6.7 Additional Tax Matters. Each party hereto shall use all
reasonable business efforts to cause the Merger to qualify, and shall not take,
and shall use all reasonable business efforts to prevent any Affiliate of such
party from taking, any action that could reasonably be expected to prevent the
Merger from qualifying as a reorganization under the provisions of Section
368(a) of the Code.
6.8 Certificates of Non-Foreign Status. Prior to the Closing Date,
Target and ATC shall in respect of the conversion of Target Common Stock
pursuant to the Merger use their reasonable business efforts to obtain on behalf
of themselves, from each Person who owned of record or, to Target's knowledge,
beneficially, five percent (5%) or more of the Target Common Stock at any time
during the five-year period preceding the Effective Time and who will continue
to own any Target Common Stock immediately prior to the Effective Time, a
certificate of non-foreign status of such stockholder that meets the
requirements of Section 1445 of
-32-
<PAGE> 37
the Code and Section 1.1445-2(b) of the Regulations, it being understood that
the failure to obtain any such certificate shall not be deemed to be a breach of
this Section. Target shall furnish to ATC on the Closing Date a copy of any such
certificates of non-foreign status obtained by Target.
6.9 Target Stock Options. Prior to the Effective Time, ATC and
Target shall take such action as may be necessary to cause each unexpired and
unexercised option to purchase Target Common Stock from Target or any of its
Subsidiaries that is outstanding immediately prior to the Merger and that will
not expire if not exercised prior thereto, a true, correct and complete list of
which, as of the date of this Agreement, is set forth in Section 6.9 of the
Target Disclosure Schedule (each, a "Target Option" and collectively, the
"Target Options") to be automatically converted at the Effective Time into an
option (each, an "ATC Option" and collectively, the "ATC Options") to purchase a
number of shares of ATC Common Stock equal to the product of the number of
shares of Target Common Stock which the holder is entitled to purchase under the
Target Option multiplied by the Exchange Ratio, at a price per share equal to
the quotient obtained by dividing (a) the per share option exercise price
determined pursuant to the Target Option, by (b) the Exchange Ratio. Each ATC
Option will otherwise have the same terms and conditions as the Target Option
exchanged therefor, including acceleration and period of exercise, and, with
respect to Target Options that are "incentive stock options" under the Code at
the Effective Time, will contain such terms as are necessary to preserve such
status following the conversion described herein. At the Effective Time, ATC
will execute and deliver to each holder of an ATC Option a document evidencing
ATC's assumptions of Target's obligations under the Target Option and all
references in the stock option agreements to Target shall be deemed to refer to
ATC. As of the Effective Time, ATC shall assume all of Target's obligations with
respect to the Target Options as so amended and shall, from and after the
Effective Time, have reserved for issuance upon exercise of the ATC Options all
shares of ATC Common Stock covered thereby and shall file a Registration
Statement on Form S-8 to register under the Securities Act the shares of ATC
Common Stock subject to the ATC Options granted in replacement of Target
Options. ATC shall take all actions reasonably necessary to maintain the
effectiveness of such Registration Statement (and maintain the current status of
the prospectus or prospectuses contained therein) for so long as such ATC
Options remain outstanding. ATC shall also use its reasonable business efforts
to list, subject to official notice of issuance, all shares of ATC Common Stock
subject to the ATC Options on The New York Stock Exchange and/or such other
exchanges or trading markets on which the ATC Common Stock is then listed or
traded. No fractional shares of ATC Common Stock will be issued upon the
exercise of any ATC Option, and instead the exercising holder of such ATC Option
shall receive cash for any fractional share amounts, based on the fair market
value of the ATC Common Stock at the time of exercise. To the extent that any
former holder of Target Options is terminated by ATC or its Subsidiaries other
than for cause subsequent to the Effective Time, ATC shall provide such holder
with the opportunity to effect a broker-assisted cashless exercise, to the
extent exercisable at the time of such termination, of the ATC Options then held
by such holder prior to the expiration of such options. The foregoing provision
is intended to be for the benefit of, and shall be enforced by, the holders of
Target Options and subject to the provisions of the plans governing the Target
Options, their heirs and personal representatives and shall be binding upon ATC
and its successors and assigns.
6.10 Stockholder Approval. Target will, as soon as practicable
following the date hereof, establish a record date for, and, after the
Registration Statement has become effective, duly call, give notice of, convene
and hold a meeting of its stockholders (the "Target Stockholders Meeting") for
the purpose of obtaining the approval and adoption of this Agreement and the
approval of the Merger by the Target stockholders (the "Target Stockholder
Approval"). Such notice shall comply with the provisions of Applicable Law.
Target will, through its Board of Directors, recommend to its stockholders
approval and adoption of this Agreement and approval of the Merger, subject to
the fiduciary duties of the Target Board of Directors under Applicable Law.
-33-
<PAGE> 38
6.11 Registration Statement and Proxy/Information Statement.
(a) ATC shall prepare and file with the SEC as soon as is reasonably
practicable after the date hereof a Registration Statement under the Securities
Act (the "ATC Registration Statement") on Form S-4 in connection with the Merger
for the purpose of registering all of the shares of ATC Common Stock to be
issued in the Merger. ATC shall also take any action required under Applicable
Law in connection with causing the ATC Registration Statement to be declared
effective by the SEC as promptly as practicable, including without limitation
making all filings under applicable state blue sky or securities Laws in
connection with the issuance of shares of ATC Common Stock in the Merger.
(b) Target shall prepare and file with the SEC as soon as is
reasonably practicable after the date hereof a proxy statement in connection
with the Target Stockholders Meeting (the "Target Proxy Statement"), complying
with applicable rules and regulations of the SEC and the DCL.
(c) ATC and Target shall promptly furnish to the other all
information, and take such other actions, as may reasonably be requested in
connection with any action taken to comply with the provisions of this Section
including, in the case of ATC, the preparation of the final prospectus (the "ATC
Transaction Prospectus") contained in the ATC Registration Statement and, in the
case of Target, the preparation of the Target Proxy Statement. Target and ATC
shall correct promptly any information provided by it to be used specifically in
the Target Proxy Statement or the ATC Registration Statement that shall have
become false or misleading in any material respect and shall take all steps
necessary to file with the SEC and have cleared by the SEC any amendment or
supplement to the Target Proxy Statement or the ATC Registration Statement so as
to correct the Target Proxy Statement or the ATC Registration Statement and
cause it to be disseminated to the stockholders of Target, to the extent
required by Applicable Law. Without limiting the generality of the foregoing,
each party shall notify the other promptly of the receipt of the comments of the
SEC and of any request by the SEC for amendments or supplements to the Target
Proxy Statement or the ATC Registration Statement, as the case may be, or for
additional information, and shall supply the other with copies of all
correspondence between it or its representatives, on the one hand, and the SEC
or members of its staff, on the other hand, with respect to the Target Proxy
Statement or the ATC Registration Statement. Whenever any Event occurs which
should be described in an amendment or a supplement to the Target Proxy
Statement or the ATC Registration Statement, Target and ATC shall, upon learning
of such Event, promptly prepare, file and clear with the SEC and, if prior to
the Effective Time, mail to the holders of shares of Target Common Stock such
amendment or supplement; provided, however, that, prior to such mailing, (i)
Target and ATC shall consult with each other with respect to such amendment or
supplement, (ii) shall afford to the other reasonable opportunity to comment
thereon, and (iii) each such amendment or supplement shall be reasonably
satisfactory to the other.
(d) In the event Target shall not be required to call the Target
Stockholders Meeting pursuant to Section 6.10, all references to the Target
Proxy Statement in this Agreement shall be deemed to be references to the Target
Information Statement.
(e) Target shall use its reasonable business efforts to cause to be
delivered to ATC and its directors a letter of independent auditors, dated (i)
the date of the ATC Registration Statement, and (ii) the Closing Date, and
addressed to ATC and its directors, in form, scope and substance customary for
letters delivered by independent public accountants in connection with
registrations statements similar to the ATC Registration Statement; provided
that ATC shall have delivered a representation letter to Target's auditors in
the form attached hereto as Exhibit F.
-34-
<PAGE> 39
6.12 Directors', Officers' and Employees' Indemnification
(a) The Organic Documents of ATC shall contain provisions no less
favorable with respect to indemnification than are set forth in the Organic
Documents of Target, as in effect on the date hereof, which provisions shall not
be amended, repealed or otherwise modified for a period of six (6) years from
the Effective Time in any manner that would adversely affect the rights
thereunder of individuals who at any time prior to the Effective Time were
officers or directors of Target, unless such modification shall be required by
Applicable Law.
(b) From and after the Effective Time, ATC shall indemnify, defend
and hold harmless the present and former officers and directors, in their
capacities as such, of Target (collectively, the "Indemnified Parties") against
all losses, expenses, claims, damages, liabilities or amounts that are paid in
settlement of, or otherwise in connection with any claim, action, suit,
proceeding or investigation (as used in this Section, a "claim"), based in whole
or in part on the fact that the Indemnified Party (or the Person controlled by
the Indemnified Party) is or was an officer or director of Target and arising
out of actions or omissions occurring at or prior to the Effective Time
(including without limitation in connection with this Agreement, the Merger and
the Transactions), whether asserted or claimed prior to, at or after the
Effective Time, in each case to the fullest extent permitted under Applicable
Law (and shall pay any expenses, as incurred, in advance of the final
disposition of any such action or proceeding to each Indemnified Party to the
fullest extent permitted under Applicable Law). Without limiting the foregoing,
in the event any such claim is brought against any of the Indemnified Parties,
(i) such Indemnified Parties may retain counsel (including local counsel) which
shall be reasonably satisfactory to ATC, and ATC shall pay all reasonable fees
and expenses of such counsel for such Indemnified Parties; (ii) ATC shall have
the right, but not the obligation, to assume the defense of any such claim with
counsel (including local counsel) which shall be reasonably satisfactory to the
Indemnified Parties (after which time ATC shall not be liable for any fees and
expenses of counsel retained by the Indemnified Parties); and (iii) ATC shall
use its reasonable business efforts to assist in the defense of any such claim;
provided, however, that ATC shall not be liable for any settlement effected
without its written consent, which consent shall not be unreasonably withheld,
delayed or conditioned.
(c) ATC will cause to be maintained for a period of not less than
six (6) years from the Effective Time Target's current directors' and officers'
insurance and indemnification policies to the extent that they provide coverage
for events occurring prior to the Effective Time (the "D&O Insurance") for all
persons who are directors and executive officers of Target on the date of this
Agreement, so long as the annual premium therefor would not be in excess of two
hundred fifty percent (250%) of the current premium. If any then existing D&O
Insurance expires, is terminated or canceled during such six-year period, ATC
will use its best efforts to cause to be obtained as much D&O Insurance as can
be obtained for the remainder of such period for an annualized premium not in
excess of two hundred fifty percent (250%), on terms and conditions no less
advantageous to the covered Persons than the then existing D&O Insurance.
Notwithstanding the foregoing, ATC or its Subsidiaries may, in lieu of
maintaining such existing D&O Insurance as provided above, cause coverage to be
provided under any policy maintained for the benefit of ATC and its Subsidiaries
so long as the terms thereof are not materially less advantageous to the
beneficiaries thereof than the existing D&O Insurance.
(c) In the event ATC or any of their respective successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any Person, then and in each such case, proper provisions shall be made so
that the successors and assigns of ATC shall assume the obligations set forth in
this Section.
-35-
<PAGE> 40
(d) This Section is intended to be for the benefit of, and shall be
enforceable by, the Indemnified Parties, their heirs and personal
representatives and shall be binding on ATC and its successors and assigns.
6.13 Solicitation of Employees. If this Agreement is terminated,
each of ATC and Target agrees that neither it nor any of its Affiliates will,
for a period of twelve (12) months from the date of such termination, solicit or
actively seek to hire any individual who during such period is employed by ATC
or any of its Affiliates or Target or any of its Affiliates, as the case may be,
whether or not such individual would commit breach of such individual's
employment agreement in leaving such employment; provided, however, that the
foregoing shall not prevent ATC or Target (or any of their respective
Affiliates) from soliciting or actively seeking to hire any such key employee
who (i) initiates employment discussions with it, (ii) is not employed by ATC or
Target, as the case may be, on the date Target or ATC (or any of their
respective Affiliates), as the case may be, first solicits such key employee, or
(iii) soliciting through general advertisement, including without limitation on
the Internet.
6.14 Registration Rights Agreement. ATC agrees that, from time to
time after the Closing, ATC shall add or shall cause to be added as a party to
the Registration Rights Agreement each Person who is an affiliate of Hicks,
Muse, Tate & Furst Incorporated and who receives shares of ATC Common Stock as a
direct or indirect distributee or transferee of HMTF/Omni Partners LP. The
foregoing provision is intended to be for the benefit of, and shall be enforced
by, such distributees or transferee and shall be binding upon ATC and its
successors and assigns.
ARTICLE 7
CLOSING CONDITIONS
7.1 Conditions to Obligations of Each Party. The respective
obligations of each party to consummate the Merger shall, except as hereinafter
provided in this Section, be subject to the satisfaction at or prior to the
Closing Date of the following conditions, any or all of which may be waived, in
whole or in part, to the extent permitted by Applicable Law:
(a) No temporary restraining order, preliminary or
permanent injunction or other order issued by any Authority of
competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect;
provided, however, that the party invoking this condition shall use
its reasonable business efforts to have such order, injunction,
restraint or prohibition vacated or lifted.
(b) Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the
Hart-Scott-Rodino Act shall have expired or been terminated;
(c) Except with respect to the Hart-Scott-Rodino Act
(which is addressed in Section 7.1(b)), all authorizations,
consents, waivers, orders or approvals required to be obtained from
all Authorities, and all filings (other than the Certificate of
Merger), submissions, registrations, notices or declarations
required to be made by any of the parties with any Authority which
would prevent the consummation of the Merger or result in a Material
Adverse Effect on Target if not obtained or made shall have been
obtained from, and made with, all such Authorities;
-36-
<PAGE> 41
(d) The ATC Common Stock to be issued as part of the
Merger Consideration shall have been listed for trading on The New
York Stock Exchange, subject to official notice of issuance;
(e) The ATC Registration Statement shall have become
effective under the Securities Act and shall not be the subject of
any stop order or proceedings seeking a stop order; and
(f) The Target Stockholder Approval shall have been
obtained.
7.2 Conditions to Obligations of ATC and ATI. The obligation of ATC
to cause ATI to, and of ATI to, consummate the Merger shall be subject to the
satisfaction of the following conditions, any or all of which may be waived, in
whole or in part, by ATC and ATI to the extent permitted by Applicable Law:
(a) (i) The representations and warranties of Target
contained in this Agreement (other than in Section 4.19) shall be
true and correct at and as of the Closing Date with the same force
and effect as though made on and as of such date, except (x) to the
extent such representations and warranties expressly speak as of an
earlier date (in which case such representations and warranties
shall be true and correct as of such earlier date) and (y) to the
extent that the failure of such representations and warranties to be
true and correct, individually or in the aggregate, will not have a
Material Adverse Effect on Target; provided, however, that for the
purpose of this clause (y), representations and warranties that are
qualified as to materiality (including by reference to "Material
Adverse Effect ") shall not be deemed to be so qualified; (ii) the
representations and warranties of Target set forth in Section 4.19
of this Agreement shall be true and correct; provided, however, that
any untruth shall be disregarded for purposes of this Section 7.2(c)
if, by mutually agreed upon adjustment of the Exchange Ratio and the
Merger Consideration at Closing, the untruth is rendered harmless
and such adjustment either does not require the approval of the
Target stockholders, or such approval has been obtained, in
accordance with the DCL; (iii) each and all of the agreements and
covenants to be performed or satisfied by Target or any of the
Target stockholders hereunder at or prior to the Closing Date shall
have been duly performed or satisfied in all material respects; and
(iv) Target shall have furnished ATC with an officer's certificate
in the form attached hereto as Exhibit G evidencing the truth of
such representations, warranties, covenants and agreements and the
performance of such agreements or conditions;
(b) Other than those which, individually or in the
aggregate, the failure of which to obtain will not have a Material
Adverse Effect on Target, all authorizations, consents, waivers,
orders or approvals required by the provisions of this Agreement to
be obtained from all Persons (other than Authorities) prior to the
consummation of the Merger, including without limitation those
required in order for ATI to continue to own all of the Target
Assets and continue to operate the Target Business substantially as
conducted immediately prior to the Closing shall have been obtained,
without the imposition, individually or in the aggregate, of any
condition or requirement which will have a Material Adverse Effect
on Target;
(c) Between the date of this Agreement and the Closing
Date, there shall not have occurred and be continuing any material
adverse change in Target from that reflected in the most recent
Target Financial Statements;
(d) As of the Closing Date, no Legal Action shall be
pending before any Authority which, individually or in the
aggregate, will have a Material Adverse Effect on Target, it being
understood and agreed that a written request by any Authority for
information with respect to the Merger, which
-37-
<PAGE> 42
information could be used in connection with such Legal Action,
shall not be deemed to be a Legal Action pending before any such
Authority and no Legal Action by any Target stockholder in respect
of the transactions contemplated herein will be deemed to create a
Material Adverse Effect;
(e) All Convertible Securities and Option Securities
(other than the Target Options which shall be exchanged for ATC
Options in accordance with the provisions of Section 6.9) of Target,
if any, outstanding immediately prior to the Closing shall be
canceled and, from and after the Closing, shall no longer be of any
force or effect;
(f) Each of the Target stockholders listed therein shall
have executed and delivered to ATC an agreement substantially in the
form attached hereto as Exhibit A and made a part hereof (the
"Registration Rights Agreement");
(g) Each executive officer, director and other Person
who, in the opinion of ATC based on the advice of counsel, may be an
"affiliate," as that term is used in paragraphs (c) and (d) of Rule
145 under the Securities Act, of Target shall have executed and
delivered to ATC an investment letter substantially in the form of
Exhibit B attached hereto and made a part hereof (the "Target
Investment Letters");
(h) ATC shall have received from its tax counsel,
Sullivan & Worcester LLP, a favorable opinion, dated as of the
Closing Date, to the effect that the Merger constitutes a
reorganization within the meaning of Section 368 of the Code and
that, as a consequence, none of ATC, ATI or Target will recognize
any gain or loss for federal income tax purposes as a result of
consummation of the Merger, and, in connection with such opinion,
Target shall have executed and delivered to ATC and such counsel a
certificate substantially in the form attached hereto as Exhibit C
and made a part hereof;
(i) All instruments evidencing Indebtedness for Money
Borrowed of Target represented by all bank credit agreements (the
"Target Credit Agreements") shall permit the repayment thereof by
ATC without premium or penalty; and
(j) Each of the agreements listed in Section 7.2(j) of
the Target Disclosure Schedule shall have been terminated by Target,
or amended on the terms and conditions set forth in such Section,
and the fees and expenses payable by Target with respect to the
Merger pursuant to the Financial Advisory Agreement listed therein
shall have been waived, in each case, at no cost or expense to
Target; provided, however, that this provision shall not prevent the
payment in full of accrued fees and expenses under the Monitoring
and Oversight Agreement incurred in the ordinary course.
7.3 Conditions to Obligations of Target. The obligation of Target to
consummate the Merger shall be subject to the satisfaction of the following
conditions, any or all of which may be waived, in whole or in part, by Target to
the extent permitted by Applicable Law:
(a) The representations and warranties of ATC and ATI
contained in this Agreement (other than in Section 5.5) shall be
true and correct in all material respects at and as of the Closing
Date with the same force and effect as though made on and as of such
date, except (x) to the extent such representations and warranties
expressly speak as of an earlier date (in which case such
representations and warranties shall be true and correct as of such
earlier date) and (y) to the extent that the failure of such
representations and warranties to be true and correct, individually
or in the aggregate, will not have a Material Adverse Effect on ATC;
provided, however, that for the purpose of this clause (y),
representations and warranties that are qualified as to materiality
(including by
-38-
<PAGE> 43
reference to "Material Adverse Effect ") shall not be deemed to be
so qualified; (ii) the representations and warranties of ATC set
forth in Section 5.5 of this Agreement shall be true and correct;
provided, however, that any untruth shall be disregarded for
purposes of this Section 7.3(c) if, by mutually agreed upon
adjustment of the Exchange Ratio and the Merger Consideration at
Closing, the untruth is rendered harmless and such adjustment either
does not require the approval of the ATC or ATI stockholders, or
such approval has been obtained, in accordance with the DCL; (iii)
each and all of the agreements and covenants to be performed or
satisfied by ATC or ATI hereunder at or prior to the Closing Date
shall have been duly performed or satisfied in all material
respects; and (iv) ATC and ATI shall have furnished Target with an
officer's certificate in the form of Exhibit G hereto evidencing the
truth of such representations, warranties, covenants and agreements
and the performance of such agreements or conditions;
(b) Between the date of this Agreement and the Closing
Date, there shall not have occurred and be continuing any material
adverse change in ATC from that reflected in the most recent ATC
Financial Statements;
(c) As of the Closing Date, no Legal Action shall be pending before any
Authority which, individually or in the aggregate, will have a Material Adverse
Effect on ATC, it being understood and agreed that a written request by any
Authority for information with respect to the Merger, which information could be
used in connection with such Legal Action, shall not be deemed to be a Legal
Action pending before any such Authority and no Legal Action by any Target
stockholder in respect of the transactions contemplated herein will be deemed to
create a Material Adverse Effect;
(d) ATC shall have executed and delivered the
Registration Rights Agreement;
(e) Target shall have received from its tax counsel,
Weil, Gotshal & Manges LLP a favorable opinion, dated as of the
Closing Date, to the effect that the Merger constitutes a
reorganization within the meaning of Section 368 of the Code and
that, as a consequence, the Target stockholders will not recognize
gain or loss for federal income tax purposes as a result of
consummation of the Merger, except to the extent of the cash,
property (other than the ATC Common Stock) or other nonstock Merger
Consideration received pursuant to the consummation of the Merger,
and, in connection with such opinion, ATC shall have executed and
delivered to Target and such counsel a certificate substantially in
the form attached hereto as Exhibit D and made a part hereof; and
(f) ATC shall have delivered to Target an agreement
substantially in the form of Exhibit E attached hereto and made a
part hereof (the "ATC Voting Agreement") executed by the Persons
named therein and any individual nominated pursuant thereto shall
have been elected a director of ATC.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time only pursuant to the following provisions:
(a) by mutual consent of Target and ATC; or
-39-
<PAGE> 44
(b) by ATC or Target if any permanent injunction, decree
or judgment of any Authority preventing consummation of the Merger
shall have become final and nonappealable; or
(c) by Target in the event (i) it is not in material
breach of its covenants and agreements under this Agreement and none
of its representations or warranties shall have become and continue
to be untrue in any manner that would cause the condition set forth
in Section 7.2(c) not to be satisfied, and (ii) either (A) the
Termination Date has occurred without the consummation of the
Merger, or (B) ATC or ATI is in material breach of its covenants and
agreements under this Agreement or any of its representations or
warranties shall have been or become and continue to be untrue in
any manner that would cause the conditions set forth in Section
7.3(c) not to be satisfied, and such a breach or untruth is not
cured prior to the earlier of thirty (30) days after delivery of
notice thereof to ATC by Target or the Termination Date; or
(d) by ATC in the event (i) neither ATC nor ATI is in
material breach of its covenants and agreements under this Agreement
and none of its representations or warranties shall have become and
continue to be untrue in any manner that would cause the condition
set forth in Section 7.3(c) not to be satisfied, and (ii) either (A)
the Termination Date has occurred without the consummation of the
Merger, or (B) Target is in material breach of its covenants and
agreements under this Agreement or any of Target's representations
or warranties shall have been or become and continue to be untrue in
any manner that would cause the conditions set forth in Section
7.2(c) not to be satisfied, and such a breach or untruth is not
cured prior to the earlier of thirty (30) days after delivery of
notice thereof to Target by ATC or the Termination Date; or
(e) by ATC or Target in the event that prior to the
Termination Date the Target Stockholder Approval has not been
obtained, so long as the terminating party is not in material breach
of its covenants and agreements under this Agreement and none of its
representations and warranties shall have been or become and
continue to be untrue in any manner that would cause the conditions
set forth in Section 7.2(c) or 7.3(c), as the case may be, not to be
satisfied; or
(f) by Target pursuant to and in compliance with the
provisions of Section 6.5.
The term "Termination Date" shall mean April 30, 1999; provided,
however, that if FCC approval has not been obtained and/or the expiration or
earlier termination of the waiting period under the Hart-Scott-Rodino Act
has not occurred by that date, ATC may elect in its sole discretion to
extend such date to September 30, 1999, subject to the following conditions: (i)
all conditions to closing set forth in Sections 7.1, 7.2 and 7.3, other than
obtaining regulatory approval under the Hart-Scott-Rodino Act or applicable FCC
rules and regulations, shall have been fulfilled (or waived by the party whom
the condition(s) benefit) and certificates to such effect in the form of Exhibit
G shall have been delivered as of April 30, 1999 by Target and ATC,
respectively, (ii) the provisions of paragraph (c) of Section 7.1 (other than
those regarding approvals from the FCC) shall be terminated after April 30,
1999, (ii) paragraphs (a), (b), (c) and (d) of Section 7.2 shall be terminated
after April 30, 1999, and (iii) paragraphs (a), (b), and (c) of Section 7.3
shall be terminated after April 30, 1999. If ATC elects to extend the
Termination Date to September 30, 1999, it shall give Target written notice of
such extension by no later than the close of business on April 30, 1999. If such
notice has not been so received, this Agreement shall automatically terminate
with the effect set forth in Section 8.2. In the event that ATC elects to extend
the Termination Date to September 30, 1999, this Agreement may thereafter only
be terminated prior to the Effective Time pursuant to paragraphs (a), (b) and
(f) of Section 8.1 or in the event of failure of Target Stockholder Approval to
have been obtained.
-40-
<PAGE> 45
The right of ATC or Target to terminate this Agreement pursuant to
this Section shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party, any Person controlling any
such party or any of their respective Representatives whether prior to or after
the execution of this Agreement.
8.2 Effect of Termination. Except as provided in Sections 6.1 (with
respect to confidentiality), 6.3, 6.13 and 9.2 and this Section, in the event of
the termination of this Agreement pursuant to Section 8.1, this Agreement shall
forthwith become void, there shall be no liability on the part of any party, or
any of their respective stockholders, officers or directors, to the other and
all rights and obligations of any party shall cease; provided, however, that
such termination shall not relieve any party from liability for any willful or
intentional misrepresentation or breach of any of its warranties, covenants or
agreements set forth in this Agreement. In the event that this Agreement is
terminated by either party pursuant to Section 8.1(e) or by Target pursuant to
Section 8.1(f), Target shall promptly, but in no event later than two (2) days
after the date of such termination, pay ATC a fee equal to $12,000,000 in
immediately available funds. ATC and Target agree in advance that actual damages
would be difficult to ascertain and that $12,000,000 is a fair and equitable
reimbursement to ATC for damages sustained due to Target's failure to consummate
the Merger for the reasons specified in this Section. Notwithstanding the
foregoing, each party shall have the right to seek specific performance of this
Agreement pursuant to the provisions of Section 9.4. If, however, such
termination relates to the provisions of Section 6.5, ATC's sole rights shall be
those set forth in that Section.
ARTICLE 9
GENERAL PROVISIONS
9.1 Waivers; Amendments. Changes in or additions to this Agreement
may be made, or compliance with any term, covenant, agreement, condition or
provision set forth herein may be omitted or waived (either generally or in a
particular instance and either retroactively or prospectively) with, but only
with, the consent in writing of the parties hereto. No delay on the part of
either party at any time or times in the exercise of any right or remedy shall
operate as a waiver thereof. Any consent may be given subject to satisfaction of
conditions stated therein. The failure to insist upon the strict provisions of
any covenant, term, condition or other provision of this Agreement or to
exercise any right or remedy hereunder shall not constitute a waiver of any such
covenant, term, condition or other provision hereof or default in connection
therewith. The waiver of any covenant, term, condition or other provision hereof
or default hereunder shall not affect or alter this Agreement in any other
respect, and each and every covenant, term, condition or other provision of this
Agreement shall, in such event, continue in full force and effect, except as so
waived, and shall be operative with respect to any other then existing or
subsequent default in connection herewith.
9.2 Fees and Expenses. All costs and expenses incurred in connection
with any transfer Taxes, sales Taxes, recording or documentary Taxes, stamps or
other charges levied by any Authority in connection with this Agreement and the
consummation of the Merger shall be borne equally by Target and ATC, all Hart-
Scott-Rodino filing fees and expenses, if any, shall be borne by the party
making such filing, and all other costs and expenses incurred in connection with
this Agreement and the consummation of the Merger, including without limitation
fees and disbursements of counsel, financial advisors and accountants incurred
by the parties hereto, shall, unless otherwise provided herein, be borne solely
and entirely by the party which has incurred such costs and expenses.
-41-
<PAGE> 46
9.3 Notices. All notices and other communications which by any
provision of this Agreement are required or permitted to be given shall be given
in writing and shall be deemed to have been delivered (a) three (3) business
days after being mailed by first-class or express mail, postage prepaid, (b) the
next day when sent overnight by recognized courier service, (c) upon
confirmation when sent by telex, telegram, telecopy or other form of rapid
transmission, confirmed by mailing (by first class or express mail, postage
prepaid, or by recognized courier service) written confirmation at substantially
the same time as such rapid transmission, or (d) upon delivery when personally
delivered to the receiving party (which if other than an individual shall be an
officer or other responsible party of the receiving party). All such notices and
communications shall be mailed, sent or delivered as follows:
(a) If to ATC or ATI:
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Joseph L. Winn, Chief Financial Officer
Telecopier No.: (617) 375-7575
with a copy to (which shall not constitute notice to ATC or
ATI):
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Norman A. Bikales, Esq.
Telecopier No.: (617) 338-2880
(b) If to Target:
OmniAmerica, Inc.
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Jack D. Furst
Telecopier No.: (214) 740-7313
with a copy to (which shall not constitute notice to Target):
Weil, Gotshal & Manges, LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: Mary R. Korby, Esq.
Telecopier No.: (214) 746-7777
or to such other person(s), telex or facsimile number(s) or address(es) as the
party to receive any such communication or notice may have designated by written
notice to the other party.
9.4 Specific Performance; Other Rights and Remedies. Each party
recognizes and agrees that in the event the other party should refuse to perform
any of its obligations under this Agreement or any Collateral Document, the
remedy at law would be inadequate and agrees that for breach of such provisions,
each party shall, in addition to such other remedies as may be available to it
at law or in equity, be entitled to injunctive relief and to enforce its rights
by an action for specific performance to the extent permitted by Applicable Law.
-42-
<PAGE> 47
Each party hereby waives any requirement for security or the posting of any bond
or other surety in connection with any temporary or permanent award of
injunctive, mandatory or other equitable relief. Nothing herein contained shall
be construed as prohibiting any party from pursuing any other remedies available
to it pursuant to the provisions of this Agreement or Applicable Law for such
breach or threatened breach, including without limitation the recovery of
damages; provided, however, that none of the parties shall pursue, and each
party hereby waives, any punitive, incidental and consequential damages arising
out of this Agreement (including without limitation damages for diminution in
value and loss of anticipated profits).
9.5 Severability. If any term or provision of this Agreement shall
be held or deemed to be, or shall in fact be, invalid, inoperative, illegal or
unenforceable as applied to any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases, because of the
conflicting of any provision with any constitution or statute or rule of public
policy or for any other reason, such circumstance shall not have the effect of
rendering the provision or provisions in question invalid, inoperative, illegal
or unenforceable in any other jurisdiction or in any other case or circumstance
or of rendering any other provision or provisions herein contained invalid,
inoperative, illegal or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute or rule
of public policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative, illegal or unenforceable
provision had never been contained herein and such provision reformed so that it
would be valid, operative and enforceable to the maximum extent permitted in
such jurisdiction or in such case. Notwithstanding the foregoing, in the event
of any such determination the effect of which is to affect materially and
adversely any party, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by Applicable Law in an acceptable
manner to the end that the Transactions are fulfilled and consummated to the
maximum extent possible.
9.6 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, binding upon all of the
parties. In pleading or proving any provision of this Agreement, it shall not be
necessary to produce more than one set of such counterparts.
9.7 Section Headings. The headings contained in this Agreement are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
9.8 Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by, and construed in accordance
with, the applicable laws of the United States of America and the laws of State
of New York applicable to contracts made and performed in such State and, in any
event, without giving effect to any choice or conflict of laws provision or rule
that would cause the application of domestic substantive laws of any other
jurisdiction, except to the extent the DCL applies to the Merger. Anything in
this Agreement to the contrary notwithstanding, in the event of any dispute
between the parties which results in a Legal Action, the prevailing party shall
be entitled to receive from the non-prevailing party reimbursement for
reasonable legal fees and expenses incurred by such prevailing party in such
Legal Action.
9.9 Entire Agreement. This Agreement (together with the Target
Disclosure Schedule, the Exhibits hereto and the other documents delivered or to
be delivered in connection herewith) constitutes the entire agreement of the
parties with respect to the subject matter hereof and supersedes all prior
agreements, arrangements, covenants, promises, conditions, undertakings,
inducements, representations, warranties and negotiations, expressed or implied,
oral or written, between the parties, with respect to the subject matter hereof,
including without limitation any previously executed confidentiality agreement.
Each of the parties is a sophisticated Entity that was advised by experienced
counsel and, to the extent it deemed necessary, other
-43-
<PAGE> 48
advisors in connection with this Agreement. Each of the parties hereby
acknowledges that (a) none of the parties has relied or will rely in respect of
this Agreement or the transactions contemplated hereby upon any document or
written or oral information previously furnished to or discovered by it or its
representatives, other than this Agreement (or such of the foregoing as are
delivered at the Closing), (b) there are no covenants or agreements by or on
behalf of any party or any of its respective Affiliates or representatives other
than those expressly set forth in this Agreement and the Collateral Documents,
and (c) the parties' respective rights and obligations with respect to this
Agreement and the events giving rise thereto will be solely as set forth in this
Agreement and the Collateral Documents. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES CONTAINED IN THIS AGREEMENT AND ANY COLLATERAL DOCUMENT, NONE OF THE
PARTIES MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS
ANY OTHER REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER
REPRESENTATIVES, WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE
TO THE OTHER OR THE OTHER'S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER
INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
9.10 Assignment. This Agreement shall not be assignable by any party
and any such assignment shall be null and void, except that it shall inure to
the benefit of and be binding upon any successor to any party by operation of
law, including by way of merger, consolidation or sale of all or substantially
all of its assets, and ATC and ATI may assign its rights and remedies hereunder
to any bank or other financial institution which has loaned funds or otherwise
extended credit to it.
9.11 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any Person any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement,
except as otherwise provided in Sections 6.9, 6.12, 6.14 and 9.10.
9.12 Non-Survival of Representations, Warranties, Covenants and
Agreements. None of the representations, warranties, covenants and agreements in
this Agreement shall survive the Merger, and after effectiveness of the Merger
neither party nor any of its respective officers, directors or stockholders
shall have any further obligation with respect thereto. This Section shall not
limit any covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time.
9.13 Mutual Drafting. This Agreement is the result of the joint
efforts of Target and ATC, and each provision hereof has been subject to the
mutual consultation, negotiation and agreement of the parties and there shall be
no construction against any party based on any presumption of that party's
involvement in the drafting thereof.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
-44-
<PAGE> 49
IN WITNESS WHEREOF, the parties have executed this Agreement or
caused this Agreement to be executed by their respective officers thereunto duly
authorized as of the date first written above.
American Tower Corporation
By: /s/ STEVEN B. DODGE
---------------------------------
Name: Steven B. Dodge
Title: Chief Executive Officer
American Towers, Inc.
By: /s/ STEVEN B. DODGE
---------------------------------
Name: Steven B. Dodge
Title: Chief Executive Officer
OMNIAMERICA, INC.
By: /s/ JACK D. FURST
---------------------------------
Name: Jack D. Furst
Title: Chairman of the Board
-45-
<PAGE> 50
APPENDIX A
DEFINITIONS
AFFILIATE, AFFILIATED shall mean, with respect to any Person, (a)
any other Person at the time directly or indirectly controlling, controlled by
or under direct or indirect common control with such Person, (b) any other
Person of which such Person at the time owns, or has the right to acquire,
directly or indirectly, five percent (5%) or more of any class of the capital
stock or beneficial interest, (c) any other Person which at the time owns, or
has the right to acquire, directly or indirectly, five percent (5%) or more of
any class of the capital stock or beneficial interest of such Person, (d) any
executive officer or director of such Person, (e) with respect to any
partnership, joint venture or similar Entity, any general partner thereof, and
(f) when used with respect to an individual, shall include any member of such
individual's Immediate Family or a family trust.
AGREEMENT shall mean this Agreement as originally in effect,
including, unless the context otherwise specifically requires, this Appendix A,
the Target Disclosure Schedule, and all exhibits hereto, and as any of the same
may from time to time be supplemented, amended, modified or restated in the
manner herein or therein provided.
ALTERNATIVE TRANSACTION shall mean a transaction or series of
related transactions (other than the Transactions) resulting in or likely to
result in (a) any Change of Control of Target, (b) any merger, consolidation or
other business combination of Target, regardless of whether Target is the
surviving Entity unless the surviving Entity remains obligated under this
Agreement to the same extent as Target was, (c) any tender offer or exchange
offer for, or any acquisition of, any securities of Target, (d) any sale or
other disposition of all or any substantial part of the assets or business of
Target, (e) any issue or sale, or any agreement to issue or sell, any capital
stock, Convertible Securities or Option Securities of Target that could result
in a Change of Control of Target.
APPLICABLE LAW shall mean any Law of any Authority, whether domestic
or foreign, including without limitation the FCA and all federal and state
securities and Environmental Laws, to which a Person is subject or by which it
or any of its business or operations is subject or any of its property or assets
is bound.
ATC shall have the meaning given to it in the Preamble.
ATC COMMON STOCK shall have the meaning given to it in Section 3.1.
ATC FINANCIAL STATEMENTS shall have the meaning given to it in
Section 5.2.
ATC OPTION PLAN shall have the meaning given to it in Section 5.5.
ATC OPTIONS shall have the meaning given to it in Section 6.9.
ATC REGISTRATION STATEMENT shall have the meaning given to it in
Section 6.11(a).
ATC SEC DOCUMENTS shall have the meaning given to it in Section 5.2.
ATC TRANSACTION PROSPECTUS shall have the meaning given to it in
Section 6.11(c).
A-1
<PAGE> 51
ATC VOTING AGREEMENT shall have the meaning given to it in Section
7.3(i).
ATC'S KNOWLEDGE (or words of similar import) shall mean the actual
knowledge of any director or executive officer of ATC or ATI, as such knowledge
exists on the date of this Agreement, after reasonable review of appropriate ATC
and ATI records and after reasonable inquiry of appropriate ATC and ATI
employees.
ATI shall have the meaning given to it in the Preamble.
AUTHORITY shall mean any governmental or quasi-governmental
authority, whether administrative, executive, judicial, legislative or other, or
any combination thereof, including without limitation any federal, state,
territorial, county, municipal or other government or governmental or
quasi-governmental agency, arbitrator, authority, board, body, branch, bureau,
or comparable agency or Entity, commission, corporation, court, department,
instrumentality, mediator, panel, system or other political unit or subdivision
or other Entity of any of the foregoing, whether domestic or foreign, including
without limitation the FCC.
BUSINESS PLAN shall have the meaning given to it in Section 6.6.
CERTIFICATE shall have the meaning given to it in Section 3.1.
CHANGE OF CONTROL shall mean the acquisition, directly or
indirectly, by any Person or group (as such term is used in Section 13(d)(3) of
the Exchange Act) of twenty percent (20%) or more of the Target Common Stock.
CLAIMS shall mean any and all debts, liabilities, obligations,
losses, damages, deficiencies, assessments and penalties, together with all
Legal Actions, pending or threatened, claims and judgments of whatever kind and
nature relating thereto, and all fees, costs, expenses and disbursements
(including without limitation reasonable attorneys' and other legal fees, costs
and expenses) relating to any of the foregoing.
CLOSING shall have the meaning given to it in Section 2.2.
CLOSING DATE shall have the meaning given to it in Section 2.2.
COBRA shall mean the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended, as set forth in Section 4980B of the Code and Part 6 of
Subtitle B of Title I of ERISA.
CODE shall mean the Internal Revenue Code of 1986, and the rules and
regulations thereunder, all as from time to time in effect, or any successor
Law, rules or regulations, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
COLLATERAL DOCUMENTS shall mean the Registration Rights Agreement,
the Target Investment Letters, the Certificate of Merger and the Voting
Agreement.
CONFIDENTIAL INFORMATION shall have the meaning given to it in
Section 6.1(a).
CONTRACT, CONTRACTUAL OBLIGATION shall mean any agreement,
arrangement, commitment, contract, covenant, indemnity, undertaking or other
obligation or liability to which Target is a party or to which it or any of the
Target Assets is subject.
A-2
<PAGE> 52
CONTROL (including the terms "controlled," "controlled by" and
"under common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management or policies of a Person, or the disposition of such Person's assets
or properties, whether through the ownership of stock, equity or other
ownership, by contract, arrangement or understanding, or as trustee or executor,
by contract or credit arrangement or otherwise.
CONVERTIBLE SECURITIES shall mean any evidences of indebtedness,
shares of capital stock (other than common stock) or other securities directly
or indirectly convertible into or exchangeable for shares of common stock,
whether or not the right to convert or exchange thereunder is immediately
exercisable or is conditioned upon the passage of time, the occurrence or
non-occurrence or existence or non-existence of some other Event, or both.
DCL shall have the meaning given to it in Section 2.1.
DISTRIBUTION shall mean, with respect to any Person, (a) the
declaration or payment of any dividend (except dividends payable in common stock
of such Person) on or in respect of any shares of any class of capital stock of
such Person or any shares of capital stock of any Subsidiary owned by a Person
other than such Person or a Subsidiary of such Person, (b) the purchase,
redemption or other retirement of any shares of any class of capital stock of
such Person or any shares of capital stock of any Subsidiary of such Person
owned by a Person other than such Person or a Subsidiary of such Person, and (c)
any other distribution on or in respect of any shares of any class of capital
stock of such Person or any shares of capital stock of any Subsidiary of such
Person owned by a Person other than such Person or a Subsidiary of such Person.
D&O INSURANCE shall have the meaning given to it in Section 6.2(c).
EFFECTIVE TIME shall have the meaning given to it in Section 2.3.
EMPLOYMENT ARRANGEMENT shall mean any employment, consulting,
retainer, severance or similar contract, agreement, plan, or arrangement
(exclusive of any which is terminable within thirty (30) days without liability,
penalty or payment of any kind by Target or any of its Affiliates), or providing
for severance, termination payments, or for deferred compensation,
profit-sharing, bonuses, stock options, stock purchase or appreciation rights or
other forms of incentive compensation, or post-retirement insurance,
compensation or benefits, or any collective bargaining or other labor agreement,
whether or not any of the foregoing is subject to the provisions of ERISA, but
only to the extent that it covers or relates to any officer, employee or other
Person involved in the ownership or operation of the Target Assets or the
conduct of the Target Business or, as the case may be, the assets of ATC or the
conduct of the business of ATC.
ENCUMBER shall mean to suffer, accept, agree to or permit the
imposition of a Lien.
ENTITY shall mean any corporation, firm, unincorporated
organization, association, partnership, limited liability company, trust (inter
vivos or testamentary), estate of a deceased, insane or incompetent individual,
business trust, joint stock company, joint venture or other organization, entity
or business, whether acting in an individual, fiduciary or other capacity, or
any Authority.
ENVIRONMENTAL LAW shall mean any applicable Law relating to or
otherwise imposing liability or standards of conduct concerning pollution or
protection of the environment, including without limitation Laws relating to
emissions, discharges, releases or threatened releases of Hazardous Materials
into the environment (including, without limitation, ambient air, surface water,
ground water, mining or reclamation or mined land, land surface or subsurface
strata) or otherwise relating to the manufacture, processing, generation,
distribution,
A-3
<PAGE> 53
use, treatment, storage, disposal, cleanup, transport or handling of Hazardous
Materials. Environmental Laws shall include without limitation, to the extent
applicable, the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. Section 6901 et seq.), the Hazardous Material Transportation Act
(49 U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. Section 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C.
Section 1251 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the
Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.),the Federal
Insecticide Fungicide and Rodenticide Act (7 U.S.C. Section 136 et seq.), and
the Surface Mining Control and Reclamation Act of 1977 (30 U.S.C. Section 1201
et seq.), and any analogous and applicable federal, state, local or foreign
Laws, and the rules and regulations promulgated thereunder and in effect on the
date hereof, and any reference to any statutory or regulatory provision shall be
deemed to be a reference to any successor statutory or regulatory provision.
ENVIRONMENTAL PERMIT shall mean any Governmental Authorization
required by or pursuant to any Environmental Law.
ENVIRONMENTAL REPORT shall have the meaning given to it in Section
4.18.
ERISA shall mean the Employee Retirement Income Security Act of
1974, and the rules and regulations thereunder, all as from time to time in
effect, or any successor law, rules or regulations, and any reference to any
statutory or regulatory provision shall be deemed to be a reference to any
successor statutory or regulatory provision.
ERISA AFFILIATE shall mean any Person that is treated as a single
employer with Target under Sections 414(b), (c), (m) or (o) of the Code or
Section 4001(b)(1) of ERISA.
EVENT shall mean the existence or occurrence of any act, action,
activity, circumstance, condition, event, fact, failure to act, omission,
incident or practice, or any set or combination of any of the foregoing.
EXCHANGE ACT shall mean the Securities Exchange Act of 1934, and the
rules and regulations thereunder, all as from time to time in effect, or any
successor Law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
EXCHANGE AGENT shall have the meaning given to it in Section 3.2(a).
EXCHANGE AGENT AGREEMENT shall have the meaning given to it in
Section 3.2(a).
EXCHANGE RATIO shall have the meaning given to it in Section 3.1.
FAIR MARKET VALUE shall mean, with respect to the ATC Common Stock,
(a) the average of the high and low reported sales prices, regular way, or, in
the event that no sale takes place on any day, the average of the reported high
and low bid and asked prices, regular way, in either case as reported on the
principal stock exchange on which such stock is listed, or, if not so listed, on
the Nasdaq National Market System; or (b) if such stock is not so listed, (i)
the average of the high and low bid and high and low asked prices on such day in
the over-the-counter market as reported by Nasdaq, or (ii) if bid and asked
prices for such security on any day shall not have been reported through Nasdaq,
the average of the bid and asked prices for such day as furnished by any New
York Stock Exchange member firm regularly making a market in such security
selected for such purpose by ATC; or (c) if such security is not publicly
traded, as determined by an independent investment banking firm selected by ATC
whose fees and expenses shall be borne by ATC.
A-4
<PAGE> 54
FCA shall mean the Communications Act of 1934, and the rules and
regulations thereunder, all as from time to time in effect, or any successor
Law, rules or regulations, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
FCC shall mean the Federal Communications Commission and shall
include any successor Authority.
GAAP shall mean generally accepted accounting principles applied on
a consistent basis, (i) as set forth in Opinions of the Accounting Principles
Board of the American Institute of Certified Public Accountants ("AICPA") and/or
in statements of the Financial Accounting Standards Board that are applicable in
the circumstances as of the date in question, (ii) when not inconsistent with
such opinions and statements, as set forth in other AICPA publications and
guidelines and/or (iii) that otherwise arise by custom for the particular
industry, all as the same shall exist on the date of this Agreement.
GOVERNMENTAL AUTHORIZATIONS shall mean all approvals, concessions,
consents, franchises, licenses, permits, plans, registrations and other
authorizations of all Authorities, including without limitation the FCA and the
Federal Aviation Administration, in connection with the ownership or operation
of the Target Assets or the conduct of the Target Business.
GOVERNMENTAL FILINGS shall mean all filings, including franchise and
similar Tax filings, and the payment of all fees, assessments, interest and
penalties associated with such filings, with all Authorities.
HART-SCOTT-RODINO ACT shall mean the Hart-Scott-Rodino Improvement
Act of 1976, as from time to time in effect, or any successor Law, and any
reference to any statutory provision shall be deemed to be a reference to any
successor statutory provision.
HAZARDOUS MATERIALS shall mean and include any substance, material,
waste, constituent, compound, chemical (in whatever state of matter): (a) the
presence of which requires investigation or remediation under any applicable
Environmental Law; or (b) that is defined as a "hazardous waste" or "hazardous
substance" under any applicable Environmental Law; or (c) that is toxic,
explosive, corrosive, etiologic, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and is regulated with respect to
its impact on the environment by any applicable Authority or regulated by any
applicable Environmental Law; or (d) that contains gasoline, diesel fuel or
other petroleum hydrocarbons, or any by-products or fractions thereof, natural
gas, polychlorinated biphenyls ("PCBs") and PCB-containing equipment, radon or
other radioactive elements, lead, asbestos or asbestos-containing materials
("ACM"), or urea formaldehyde foam insulation.
IMMEDIATE FAMILY shall mean, with respect to any individual, his or
her spouses, past or present, children, parents and siblings, and any of the
spouses of the foregoing, past or present, in all cases whether related by
blood, by adoption or by marriage.
INDEBTEDNESS shall mean, with respect to any Person, (a) all items,
except items of capital stock or of surplus or of general contingency or
deferred tax reserves or any minority interest in any Subsidiary of such Person
to the extent such interest is treated as a liability with indeterminate term on
the consolidated balance sheet of such Person, which in accordance with GAAP
would be included in determining total liabilities as shown on the liability
side of a balance sheet of such Person, (b) all obligations secured by any Lien
to which any property or asset owned or held by such Person is subject, whether
or not the obligation secured thereby shall have been assumed, and (c) to the
extent not otherwise included, all Contractual Obligations of such Person
constituting capitalized leases and all obligations of such Person with respect
to Leases constituting part of a sale and leaseback arrangement.
A-5
<PAGE> 55
INDEBTEDNESS FOR MONEY BORROWED shall mean, with respect to Target,
money borrowed and Indebtedness represented by notes payable and drafts accepted
representing extensions of credit, all obligations evidenced by bonds,
debentures, notes or other similar instruments, the maximum amount currently or
at any time thereafter available to be drawn under all outstanding letters of
credit issued for the account of such Person, all Indebtedness upon which
interest charges are customarily paid by such Person, and all Indebtedness
(including capitalized lease obligations) issued or assumed as full or partial
payment for property or services, whether or not any such notes, drafts,
obligations or Indebtedness represent Indebtedness for money borrowed, but shall
not include (a) trade payables, (b) expenses accrued in the ordinary course of
business, (c) customer advance payments and customer deposits received in the
ordinary course of business, or (d) conditional sales agreements not prohibited
by the terms of this Agreement.
LAW shall mean any (a) administrative, judicial, legislative or
other action, code, consent decree, constitution, decree, directive, enactment,
finding, law, injunction, interpretation, judgment, order, ordinance, policy
statement, proclamation, promulgation, regulation, requirement, rule, rule of
law, rule of public policy, settlement agreement, statute, or writ of any
Authority, domestic or foreign, as in effect on the date hereof; (b) the common
law, or other legal precedent; or (c) arbitrator's, mediator's or referee's
award, decision, finding or recommendation.
LEASE shall mean any lease of property, whether real, personal or
mixed, and all amendments thereto, and shall include without limitation all use
or occupancy agreements.
LEGAL ACTION shall mean, with respect to any Person, any and all
litigation or legal or other actions, arbitrations, counterclaims,
investigations, proceedings, requests for material information by or pursuant to
the order of any Authority or suits, at law or in arbitration, equity or
admiralty, whether or not purported to be brought on behalf of such Person,
affecting such Person or any of such Person's business, property or assets.
LIEN shall mean any of the following: mortgage; lien (statutory or
other); or other security agreement, arrangement or interest; hypothecation,
pledge or other deposit arrangement; assignment; charge; levy; executory
seizure; attachment; garnishment; encumbrance (including any easement,
exception, reservation or limitation, right of way, and the like); conditional
sale, title retention or other similar agreement, arrangement, device or
restriction; preemptive or similar right; any financing lease involving
substantially the same economic effect as any of the foregoing; the filing of
any financing statement under the Uniform Commercial Code or comparable law of
any jurisdiction; restriction on sale, transfer, assignment, disposition or
other alienation; or any option, equity, claim or right of or obligation to, any
other Person, of whatever kind and character.
MATERIAL, MATERIALLY OR MATERIALITY for the purposes of this
Agreement, shall, unless specifically stated to the contrary, be determined
without regard to the fact that various provisions of this Agreement set forth
specific dollar amounts, but shall be determined with regard to the relevant
party and its Subsidiaries, taken as a whole.
MATERIAL ADVERSE EFFECT shall mean an Event that has an effect which
is materially adverse to the business or financial condition of ATC and its
Subsidiaries, taken as a whole, or Target and its Subsidiaries, taken as a
whole, as the case may be.
MATERIAL AGREEMENT shall mean, with respect to Target, any
Contractual Obligation which (a) was not entered into in the ordinary course of
business, (b) was entered into in the ordinary course of business which (i)
involved the purchase, sale or lease of goods or materials, or purchase of
services, aggregating more than $100,000 annually during any of the last three
fiscal years, or (ii) involves the leasing of space on any tower
A-6
<PAGE> 56
of Target, (c) involves a capitalized lease obligation or Indebtedness for Money
Borrowed, (d) is or otherwise constitutes a written agency, broker, dealer,
license, distributorship, sales representative or similar written agreement
involving annual payments in excess of $100,000, (e) accounted for more than
three percent (3%) of the revenues of the Target Business in any of the last
three fiscal years or is likely to account for more than three percent (3%) of
revenues of the Target Business during the current fiscal year, or (f) involves
the management by Target of any communication tower of any other Person.
MERGER shall have the meaning given to it in the first Whereas
paragraph.
MERGER CONSIDERATION shall have the meaning given to it in Section
3.1.
MULTIEMPLOYER PLAN shall mean a Plan which is a "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA.
OPTION SECURITIES shall mean all stock appreciation rights, rights,
options and warrants, and calls or commitments evidencing the right, to
subscribe for, purchase or otherwise acquire shares of capital stock or
Convertible Securities, whether or not the right to subscribe for, purchase or
otherwise acquire is immediately exercisable or is conditioned upon the passage
of time, the occurrence or non-occurrence or the existence or non-existence of
some other Event.
ORGANIC DOCUMENT shall mean, with respect to a Person which is a
corporation, its charter, its by-laws and all shareholder agreements, voting
trusts and similar arrangements applicable to any of its capital stock and, with
respect to a Person which is a partnership, its agreement and certificate of
partnership, any agreements among partners, and any management and similar
agreements between the partnership and any general partners (or any Affiliate
thereof).
PBGC shall mean the Pension Benefit Guaranty Corporation and any
Entity succeeding to any or all of its functions under ERISA.
PERMITTED LIENS shall mean (a) Liens for current Taxes not yet due
and payable, (b) such imperfections of title, easements, encumbrances and
mortgages or other Liens, if any, as are not, individually or in the aggregate,
material in character, amount or extent and do not materially detract from the
value, or materially interfere with the present use, of the property subject
thereto or affected thereby, or otherwise materially impair the conduct of the
Target Business and (c) in the case of Target, any Liens pursuant to the Target
Credit Agreements, and, in the case of ATC, the credit facilities of ATC and its
Subsidiaries.
PERSON shall mean any natural individual or any Entity.
PERSONAL PROPERTY shall mean all of the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, inventory,
spare parts and other tangible personal property which are owned or leased by
Target and used or useful as of the date hereof in the conduct of the business
or operations of the Target Business, plus such additions thereto and deletions
therefrom arising in the ordinary course of business between the date hereof and
the Closing Date.
PLAN shall mean, with respect to any Person and at a particular
time, any employee benefit plan which is covered by ERISA and in respect of
which such Person or an ERISA Affiliate is (or, if such plan were terminated at
such time, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA, but only to the extent that it covers or
relates to any officer, employee or other Person
A-7
<PAGE> 57
involved in the ownership and operation of the Target Assets or the conduct of
the business of the Target Business.
PRIVATE AUTHORIZATIONS shall mean all approvals, concessions,
consents, franchises, licenses, permits, and other authorizations of all Persons
(other than Authorities) including without limitation those with respect to
intellectual property.
REAL PROPERTY shall mean all of the fee estates and buildings and
other fixtures and improvements thereon, leasehold interests, easements,
licenses, rights to access, rights-of-way, and other real property interests
which are owned or used by Target as of the date hereof, in the operations of
the Target Business, plus such additions thereto and deletions therefrom arising
in the ordinary course of business between the date hereof and the Closing Date.
REGISTRATION RIGHTS AGREEMENT shall have the meaning given to it in
Section 7.2(f).
REGULATIONS shall mean the federal income tax regulations
promulgated under the Code, as such Regulations may be amended from time to
time. All references herein to specific sections of the Regulations shall be
deemed also to refer to any corresponding provisions of succeeding Regulations,
and all references to temporary Regulations shall be deemed also to refer to any
corresponding provisions of final Regulations.
REPRESENTATIVES shall have the meaning given to it in Section
6.1(a).
RESTRICTED TRANSACTION shall mean any (i) acquisition or agreement
to acquire (x) by merging or consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any business or any Person or
other business organization or division thereof or (y) any assets (other than in
the ordinary course of business which for purposes of this definition does not
include the acquisition of communications sites and related assets and other
business involved in the communications sites industry or the construction of
communications towers and related assets), or (ii) any undertaking or agreement
to undertake the construction of one or more communications towers.
SEC shall mean the Securities and Exchange Commission and shall
include any successor Authority.
SECURITIES ACT shall mean the Securities Act of 1933, and the rules
and regulations thereunder, all as from time to time in effect, or any successor
Law, rules or regulations, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
SUBSIDIARY shall mean, with respect to a Person, any Entity a
majority of the capital stock ordinarily entitled to vote for the election of
directors of which, or if no such voting stock is outstanding, a majority of the
equity interests of which, is owned directly or indirectly, legally or
beneficially, by such Person or any other Person controlled by such Person.
SUPERIOR PROPOSAL shall mean an Alternative Transaction that the
Board of Directors of Target determines in good faith, based on the advice of
independent counsel and Target's independent financial advisors, contains terms
and conditions, including likelihood of consummation, that are materially more
favorable to the Target stockholders that those set forth in this Agreement (as
ATC may have proposed to amend it pursuant to the provisions of Section 6.5(d)).
SURVIVING CORPORATION shall have the meaning given to it in Section
2.1.
A-8
<PAGE> 58
TARGET shall have the meaning given to it in the Preamble.
TARGET ASSETS shall have the meaning given to it in Section 4.4(a),
and shall include as appropriate, the assets of Target's Subsidiaries, as
contemplated by Section 4.4(a) and the final sentence of Section 4.1(d).
TARGET BUSINESS shall have the meaning given to it in Section
4.4(b), and shall include as appropriate, the businesses of Target's
Subsidiaries, as contemplated by Section 4.4(a) and the final sentence of
Section 4.1(d).
TARGET CREDIT AGREEMENTS shall have the meaning given to it in
Section 7.2.
TARGET COMMON STOCK shall have the meaning given to it in Section
3.1.
TARGET DISCLOSURE SCHEDULE shall mean the Target Disclosure Schedule
dated as of the date hereof and heretofore delivered by Target to ATC.
TARGET EMPLOYEES shall have the meaning given to it in Section 4.14.
TARGET FINANCIAL STATEMENTS shall have the meaning given to it in
Section 4.2.
TARGET INFORMATION STATEMENT shall mean the information statement to
be filed with the SEC by Target in the event Target does not solicit proxies
under the Exchange Act and is not, therefore, required to file the Target Proxy
Statement.
TARGET INVESTMENT LETTERS shall have the meaning given to it in
Section 7.2(g).
TARGET OPTIONS shall have the meaning given to it in Section 6.9.
TARGET PROXY STATEMENT shall have the meaning given to it in Section
6.11(b).
TARGET SEC DOCUMENTS shall have the meaning given to it in Section
4.2.
TARGET STOCKHOLDER APPROVAL shall have the meaning given it in
Section 6.10.
TARGET STOCKHOLDERS MEETING shall have the meaning given it in
Section 6.10.
TARGET'S KNOWLEDGE (or words of similar import) shall mean the
actual knowledge of any Target director or officer, as such knowledge exists on
the date of this Agreement, after reasonable review of appropriate Target
records and after reasonable inquiry of appropriate Target employees.
TAX (and "Taxable", which shall mean subject to Tax), shall mean,
with respect to any Person, (a) all taxes (domestic or foreign), including
without limitation any income (net, gross or other including recapture of any
tax items such as investment tax credits), alternative or add-on minimum tax,
gross income, gross receipts, gains, sales, use, leasing, lease, user, ad
valorem, transfer, recording, franchise, profits, property (real or personal,
tangible or intangible), fuel, license, withholding on amounts paid to or by
such Person, payroll, employment, unemployment, social security, excise,
severance, stamp, occupation, premium, environmental or windfall profit tax,
custom, duty or other tax, or other like assessment or charge of any kind
whatsoever, together with any interest, levies, assessments, charges, penalties,
additions to tax or additional amount imposed by any Taxing Authority, (b) any
joint or several liability of such Person with any other Person for
A-9
<PAGE> 59
the payment of any amounts of the type described in (a), and (c) any liability
of such Person for the payment of any amounts of the type described in (a) as a
result of any express or implied obligation to indemnify any other Person.
TAX RETURN OR RETURNS shall mean all returns, consolidated or
otherwise (including without limitation information returns), required to be
filed with any Authority with respect to Taxes.
TAXING AUTHORITY shall mean any Authority responsible for the
imposition of any Tax.
TERMINATION DATE shall have the meaning given to it in Section 8.1.
TRANSACTIONS shall mean the transactions contemplated to be
consummated on or prior to the Closing Date, including without limitation the
Merger and the execution, delivery and performance of the Collateral Documents.
A-10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1998
<CASH> 786,073
<SECURITIES> 0
<RECEIVABLES> 28,803,010
<ALLOWANCES> 390,230
<INVENTORY> 3,572,264
<CURRENT-ASSETS> 33,986,024
<PP&E> 86,647,148
<DEPRECIATION> 6,122,883
<TOTAL-ASSETS> 217,223,678
<CURRENT-LIABILITIES> 15,849,388
<BONDS> 774,035
0
0
<COMMON> 152,063
<OTHER-SE> 138,094,736<F1>
<TOTAL-LIABILITY-AND-EQUITY> 217,223,678
<SALES> 24,437,551
<TOTAL-REVENUES> 24,619,686
<CGS> 20,031,420
<TOTAL-COSTS> 23,428,903
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 564,660
<INCOME-TAX> 310,000
<INCOME-CONTINUING> 254,660
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 254,660
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
<FN>
<F1>Other equity of $138,094,736 is comprised of Additional paid-in Capital of
$131,931,279, Treasury Stock of $(1,387,500), Notes receivable from officer and
director of $(600,000) and Retained Earnings of $8,150,957
</FN>
</TABLE>
<PAGE> 1
EXHIBIT 99.1
AMERICAN TOWER CORPORATION AND OMNIAMERICA, INC. TO MERGE
BOSTON, MA and ALBUQUERQUE, NM, November 16, 1998 -- American Tower Corporation
(NYSE:AMT) and OmniAmerica, Inc. (NASDAQ:XMIT) today announced that they have
entered into a definitive agreement to merge in a stock-for-stock transaction.
Under terms of the agreement, which has been approved by the boards of
directors of both companies, OmniAmerica shareholders will receive 1.1 shares
of American Tower Class A Common Stock for each OmniAmerica share. In the
aggregate, American Tower will exchange 17.7 million shares of its stock for the
16.1 million fully diluted shares of OmniAmerica shares outstanding, and it
will assume OmniAmerica's debt.
The combined American Tower/OmniAmerica will be a leader in the fast-growing
tower industry with a national portfolio of tower assets and significant
capabilities in the areas of site acquisition, construction and development,
leasing, and operations management. The company will have approximately 3,052
towers under ownership or management, with approximately 840 additional towers
in the development or construction stages (giving effect to this transaction
and American Tower's acquisition of TeleCom Towers, which was announced
separately today).
Steve Dodge, Chairman of American Tower, said of the merger: "Once Carl Hirsch
and I began a dialogue, the merits of this merger quickly became apparent to
both of us. Our company's site acquisition and zoning skills will now be
combined with OmniAmerica's unparalleled construction skills. We have strong
tower development momentum in the East, OmniAmerica in the West. Both companies
have a commitment to tall towers, and both have strong balance sheets. Most
importantly, this merger positions American Tower to provide a more complete
range of services to its customers. We look forward to working with the fine
people at OmniAmerica and to our association with Carl and Hicks, Muse, Tate &
Furst."
Carl E. Hirsch, President and Chief Executive Officer of OmniAmerica, said:
"Throughout OmniAmerica's existence, our primary objective has been to deliver
value to our shareholders and our customers. By joining forces with American
Tower, we are taking a significant step towards achieving that goal.
OmniAmerica has built a dedicated team of experienced professionals whose skill
sets complement those of the
-more-
<PAGE> 2
2
outstanding American Tower team. It is an honor to work with Steve Dodge and
that team as we seek to position the combined company to serve the tower needs
of its nationwide client base of wireless carriers and broadcasters."
Completion of the transaction, which is expected to occur in the first quarter
of 1999, is subject to the expiration of the applicable waiting period under the
Hart-Scott-Rodino Act, as well as customary closing conditions.
Once the transaction is completed, Jack D. Furst, Chairman of OmniAmerica and
a Partner of Hicks, Muse, Tate & Furst Incorporated, OmniAmerica's largest
shareholder, will join the American Tower Board of Directors.
Credit Suisse First Boston acted as financial advisor to American Tower
Corporation in this transaction, and BT Wolfensohn acted as financial advisor
to OmniAmerica, Inc.
OmniAmerica, Inc. owns, manages and develops multi-use telecommunications sites
for radio and television broadcasting, paging, cellular, PCS and other wireless
technologies. It currently owns 246 towers (giving effect to announced
transactions) and is currently developing or has agreed to build approximately
470 more sites for specific tenants. The company offers nationwide, turn-key
tower construction and installation services through its Specialty Constructors
subsidiary, "tall tower" fabrication and construction through its ownership
interest in Kline Towers, and its Microwave Tower Services subsidiary
manufactures tower-related components.
Boston-based American Tower Corporation is a leading independent owner and
operator of broadcast and wireless communications sites in the United States and
currently operates in 44 states and the District of Columbia. With respect to
the announcements today of the OmniAmerica and TeleCom Towers transactions,
Steve Dodge remarked, "Together these mergers create a more vibrant company with
an improved asset mix, a denser national footprint, and a greatly enhanced
ability to be responsive to the needs of our customers. Further, the
stock-oriented nature of these transactions preserves the balance sheet strength
of American Tower. We look forward to completing both mergers."
This press release contains "forward-looking statements" concerning future
expectations, plans or strategies that involved a number of risks and
uncertainties. The companies wish to caution readers that certain factors may
have affected the companies' actual results and could cause results for
subsequent periods to differ materially from those expressed in any
forward-looking statement made by or on behalf of the companies. Such factors
include, but are not limited to (i) substantial capital requirements and
leverage principally as a consequence of their ongoing acquisitions and
constructions activities (ii) dependence on demand for wireless communications
and implementation of digital television, (iii) the success of the companies'
tower constructions program, and (iv) the successful integration of the
businesses of the two companies. The companies undertake no obligation to update
forward-looking statements to reflect subsequently occurring events or
circumstances.
# # #
