<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 30, 1998
REGISTRATION NO. 333-52481
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
AMERICAN TOWER CORPORATION
(FORMERLY AMERICAN TOWER SYSTEMS CORPORATION)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 4899 65-0598206
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
116 HUNTINGTON AVENUE, BOSTON, MASSACHUSETTS 02116
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
STEVEN B. DODGE
AMERICAN TOWER CORPORATION
116 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02116
(617) 375-7500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
COPIES TO:
NORMAN A. BIKALES, ESQ. JOHN T. BOSTELMAN, ESQ.
SULLIVAN & WORCESTER LLP SULLIVAN & CROMWELL
ONE POST OFFICE SQUARE 125 BROAD STREET
BOSTON, MASSACHUSETTS 02109 NEW YORK, NEW YORK 10004
----------------
CALCULATION OF REGISTRATION FEE
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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE
SECURITIES TO BE REG- TO BE OFFERING PRICE OFFERING AMOUNT OF
ISTERED REGISTERED(1) PER SECURITY(2) PRICE(1)(2)(3) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Stock,
$.01 par value........ 26,252,626(3) (3) $58,414,252 $17,233(4)
- -----------------------------------------------------------------------------------------------
</TABLE>
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(1) Includes 2,386,603 shares which the Underwriters have the option to
purchase to cover over-allotments of shares. See "Underwriting".
(2) Based on the average of (a) the bid and ask prices in the "when-issued"
trading market on May 5, 1998 and May 28, 1998, with respect to 23,866,023
shares and (b) the high and low prices reported on the New York Stock
Exchange on June 23, 1998, in accordance with Rule 457(c) under the
Securities Act.
(3) The shares registered herein include (a) 22,918,499 shares for which a
registration fee has previously been paid with the original filing of this
registration statement on May 12, 1998 based upon $21 1/8, which equals
the average of the bid and ask prices in the "when-issued" trading market
on May 5, 1998; (b) 701,372 additional shares for which a registration fee
has previously been paid with the filing of Amendment No.1 to this
registration statement on June 1, 1998 based upon $19 1/8, which is the
average of the bid and ask prices in the "when-issued" trading market on
May 28, 1998; and (c) 2,632,755 additional shares for which a registration
fee is paid herewith based upon $22 3/16, which is the average of the high
and low prices reported on the New York Stock Exchange on June 23, 1998.
(4) Aggregate fees of $146,784 were previously paid with the initial filing of
this Registration Statement and Amendment No. 1 thereto with the
Commission on May 12, 1998 and June 1, 1998, respectively. A fee of
$17,233 is hereby paid in connection with this filing.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS
REGISTRATION STATEMENT WILL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES
AND EXCHANGE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JUNE 30, 1998
23,866,023 SHARES
LOGO
CLASS A COMMON STOCK
($.01 PAR VALUE)
--------
Of the shares offered hereby (this "Offering") 20,000,000 shares are being sold
by American Tower Corporation (formerly American Tower Systems Corporation,
"ATS") and 3,866,023 shares are being sold by the Selling Stockholders named
herein. ATS will not receive any of the proceeds of shares sold by the
Selling Stockholders. With certain exceptions, the Class A Common Stock and
the Class B Common Stock vote as a single class with the Class A Common
Stock and the Class B Common Stock entitled to one vote and ten votes per
share, respectively. Assuming consummation of this Offering, Steven B.
Dodge and Thomas H. Stoner together with their affiliates will have
approximately 44.5% of the combined voting power with respect to
substantially all matters submitted for the vote of all stockholders.
The Class A Common Stock is traded on the New York Stock Exchange (the "NYSE")
under the symbol "AMT". The closing price per share on June 29, 1998 on the
NYSE was $22 7/8.
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH AN INVESTMENT IN THE CLASS A COMMON STOCK, SEE "RISK FACTORS" ON PAGE
11.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS
PRICE TO DISCOUNTS AND PROCEEDS TO TO SELLING
PUBLIC COMMISSIONS COMPANY(1) STOCKHOLDERS
-------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Per Share.................................. $ $ $ $
Total (2).................................. $ $ $ $
</TABLE>
(1) Before deduction of expenses, all of which are payable by ATS, estimated at
$1,500,000.
(2) ATS has granted the Underwriters an option, exercisable for 30 days from
the date of this Prospectus, to purchase a maximum of 2,386,602 additional
shares to cover over-allotments of shares. If the option is exercised in
full, the total Price to Public will be $ , Underwriting Discounts and
Commissions will be $ and Proceeds to Company will be $ .
The shares are offered by the several Underwriters when, as and if delivered
to and accepted by the Underwriters and subject to their right to reject orders
in whole or in part. It is expected that the shares will be ready for delivery
on or about July 8, 1998, against payment in immediately available funds.
CREDIT SUISSE FIRST BOSTON
BT ALEX. BROWN
LEHMAN BROTHERS
MORGAN STANLEY DEAN WITTER
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
Prospectus dated June , 1998.
<PAGE>
[MAP OF THE UNITED STATES SHOWING TOWER SITES]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES
OFFERED HEREBY, INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE
SHORT COVERING TRANSACTIONS, PENALTY BIDS AND PASSIVE MARKET MAKING. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
i
<PAGE>
ATS's principal executive offices are located at 116 Huntington Avenue,
Boston, Massachusetts 02116, (617) 375-7500.
ATS changed its name to American Tower Corporation upon consummation of the
ATC Merger. See "Prospectus Summary--History of ATS".
----------------
PRESENTATION OF INFORMATION
The information with respect to ATS gives effect to all acquisitions which
have been consummated since January 1, 1997 or which are subject to a binding
agreement (the "Recent Transactions"), except as otherwise explained. The
Unaudited Pro Forma Condensed Consolidated Financial Statements of ATS (and
certain other pro forma financial information) give effect only to the more
significant acquisitions. The consummation of the CBS Merger and the ATC
Merger, the issuance of Interim Preferred Stock and the closing of the New
Credit Facilities, all as described in the Prospectus Summary and elsewhere,
occurred in June 1998. All percentages of total voting power set forth in this
Prospectus are based on shares outstanding as of June 29, 1998, do not give
effect to subsequent conversions, if any, of Class B Common Stock or Class C
Common Stock into Class A Common Stock, and assume that the Underwriters'
over-allotment option is not exercised.
As used in this Prospectus, (a) the "Company", "American Tower", "American
Tower Systems" and "ATS" mean American Tower Corporation (name changed from
American Tower Systems Corporation pursuant to the ATC Merger), (b) "ATC"
means American Tower Corporation, prior to the ATC Merger, (c) "ATC Merger"
means the merger of ATC into ATS, (d) "American Radio" or "ARS" means American
Radio Systems Corporation, (e) "CBS" means CBS Corporation, (f) "CBS Merger"
means the merger of a subsidiary of CBS into ARS, (g) "ATSI" means American
Tower Systems (Delaware), Inc., a wholly-owned subsidiary of ATS and one of
the operating subsidiaries of ATS, (h) "ATSLP" means American Tower Systems,
L.P., an indirect wholly-owned subsidiary of ATS and one of the other
operating subsidiaries of ATS, (i) "Borrower-Subsidiary" means each of ATSI
and ATSLP, and (j) "ATS Pro Forma Transactions" include, among other things,
seven major acquisitions, but do not include all Recent Transactions (see Note
(2) under "Selected Financial Data"). References to ATS include ATS and its
consolidated subsidiaries, unless the context otherwise requires.
FORWARD-LOOKING STATEMENTS
Some of the statements contained in this Prospectus under "Prospectus
Summary", "Risk Factors", "Management's Discussion and Analysis of Financial
Condition and Results of Operations", "Industry Overview" and "Business" are
forward-looking. They include statements concerning (a) growth strategy, (b)
liquidity and capital expenditures, (c) construction and acquisition
activities, (d) debt levels and ability to obtain financing and service debt,
(e) competitive conditions in the communications site and wireless carrier
industries, (f) regulatory matters affecting the communications site and
wireless carrier industries, (g) projected growth of the wireless
communications and wireless carrier industries, and (h) general economic
conditions. Actual results may differ materially from those suggested by the
forward-looking statements for various reasons, including those discussed
under "Risk Factors".
ii
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
iii
<PAGE>
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this Prospectus.
It is not complete and may not contain all of the information to be considered
before investing in the Class A Common Stock. Investors should read the entire
Prospectus carefully, including the "Risk Factors" section and the pro forma
financial information and the financial statements and the notes to those
statements. The information with respect to ATS gives effect to all
acquisitions which have been consummated since January 1, 1997 or which are
subject to a binding agreement, except as otherwise explained.
AMERICAN TOWER
GENERAL
ATS is a leading independent owner and operator of communications towers in
the United States. As a consequence of its current industry position and
experience, ATS believes it is favorably positioned to capitalize on the growth
opportunities inherent in a rapidly expanding and highly fragmented
communications site industry. Since its organization in 1995, ATS has grown,
predominantly through acquisitions, to a company operating more than 1,800
towers in 44 states and the District of Columbia. ATS intends to continue to
pursue strategic acquisitions while devoting increasing financial and other
resources to tower construction. In 1998, ATS currently plans to build or
commence construction of between approximately 400 and 500 towers, at an
estimated aggregate cost of between approximately $80.0 and $100.0 million. For
the year ended December 31, 1997, giving effect to the ATS Pro Forma
Transactions, ATS had net revenues and EBITDA of $94.9 million and $40.2
million, respectively. For the three months ended March 31, 1998, giving effect
to the ATS Pro Forma Transactions, ATS had net revenues and EBITDA of $25.1
million and $9.7 million, respectively.
ATS's primary business is the leasing of antennae sites on multi-tenant
towers for a diverse range of wireless communications industries, including
personal communications services ("PCS"), cellular, enhanced specialized mobile
radio ("ESMR"), specialized mobile radio ("SMR"), paging, and fixed microwave,
as well as radio and television broadcasters. ATS also offers its customers a
broad range of network development services, including network design, site
acquisition, zoning and other regulatory approvals, tower construction and
antennae installation. ATS intends to expand these services and to capitalize
on its relationships with its wireless customers through construction for them
of major tower networks that ATS will own and operate. ATS is also engaged in
the video, voice and data transmission business, which it currently conducts in
the New York City to Washington, D.C. corridor and in Texas.
ATS is geographically diversified with significant networks of communications
towers throughout the United States. Its largest networks are in California,
Florida and Texas, and it owns and operates or is constructing tower networks
in numerous cities, including Albuquerque, Atlanta, Austin, Baltimore, Boston,
Dallas, Houston, Jacksonville, Kansas City, Los Angeles, Miami-Ft. Lauderdale,
Minneapolis, Nashville, New York, Philadelphia, Sacramento, San Antonio, San
Diego, San Francisco, Tucson, Washington, D.C. and West Palm Beach.
ATS has a diversified base of approximately 2,500 customers, no one of which
accounted for more than 10% of its 1997 pro forma net revenues from site
leasing activities and the five largest of which accounted for less than 30% of
such net revenues. ATS's wide range of customers include most of the major
wireless service providers, including Airtouch, Alltell, AT&T Wireless PCS,
Bell Atlantic Mobile, BellSouth, GTE Mobilnet, Houston Cellular, Metrocall,
Mobile Comm, Nextel, Omnipoint, PacBell, PageNet, PowerTel, PrimeCo PCS,
SkyTel, Southwestern Bell, Sprint PCS and Western Wireless. In addition, most
of the major companies in the radio and television broadcasting industry are
ATS's customers, including ABC, CBS, Chancellor Media, Clear Channel, CNN, Fox,
Jacor and NBC.
1
<PAGE>
ATS's growth strategy is designed to enhance its position as a leading U.S.
provider of communications sites and network development services to the
wireless communications and broadcasting industries. The principal elements of
this strategy are: (i) to maximize utilization of antennae sites through
targeted sales and marketing techniques; (ii) to expand its tower construction
activities, principally through build to suit projects; and (iii) to pursue
strategic acquisitions, designed principally to facilitate entry into new
geographic markets and to complement the construction program.
ATS's growth strategy is designed to capitalize on the rapid growth taking
place in the wireless communications industry. ATS believes that the increase
in demand for wireless communications is attributable to a number of factors,
including the increasing mobility of the U.S. population and the growing
awareness of the benefits of mobile communications, technological advances in
communications equipment, decreasing costs of wireless services, favorable
changes in telecommunications regulations, and business and consumer
preferences for higher quality voice and data transmission. This demand has
prompted the issuance of new wireless communication licenses, including those
for certain new higher frequency technologies (such as PCS and ESMR) that have
a reduced cell range and thus require a higher density of towers in the
network. Because of the anticipated increase in the demand for these new
technologies, as well as the expansion of other wireless services (including
cellular and paging), ATS expects that construction of new wireless networks
will increase substantially over the next several years.
ATS believes that as the wireless communications industry has grown it has
become more competitive. As a consequence, many carriers may seek to preserve
capital and speed access to their markets by focusing on activities that
contribute directly to subscriber growth, by outsourcing infrastructure
requirements such as owning, constructing and maintaining towers or by co-
locating transmission facilities. Management also believes that national and
other large wireless service providers will prefer to deal with a company, such
as ATS, that can meet the majority of such providers' needs within a particular
market or region, rather than, as in the past, with a large number of
individual tower owners, construction companies and other service providers.
See "Risk Factors".
In addition to such favorable growth and outsourcing trends, management
believes that ATS will benefit from several communications site industry
characteristics, including: (i) a recurring and growing revenue stream; (ii)
low tenant "churn"; (iii) a diversified customer base, principally of national
companies; (iv) favorable tower cash flow margins; (v) low on-going maintenance
capital requirements; (vi) local government and environmental initiatives which
promote increased antennae co-location; and (vii) consolidation opportunities
in a highly fragmented industry.
GROWTH STRATEGY
ATS's objective is to enhance its position as a leading U.S. provider of
communications site and network development services to the wireless
communications and broadcasting industries. ATS's growth strategy consists of
the following principal elements:
Internal Growth through Sales, Service and Capacity
Utilization. Management believes that a substantial opportunity for
profitable growth exists by maximizing the utilization of existing and
future towers. Because the costs of operating a site are largely fixed,
increasing tower utilization significantly improves tower operating
margins. ATS intends to use targeted sales and marketing techniques to
increase utilization on both existing and newly constructed towers and to
maximize investment returns on acquired towers with underutilized capacity.
Growth by Construction. Management intends to focus on new tower
development for the foreseeable future. ATS believes that attractive
investment returns can be achieved by constructing new tower networks in
and around markets in which it already has a presence, along major
highways, and in targeted new markets, particularly markets that have not
been significantly built out by carriers or other communications
2
<PAGE>
site companies. By working with one or more "anchor" tenants, ATS will seek
to develop an overall master plan for a particular network. This strategy
serves to minimize, to some extent, the risks associated with the
investment. Strategic acquisitions will also be pursued to fill out or, in
certain cases, initiate a tower network. Management also intends to pursue
new tower construction to service the demand for digital television and for
tower space for radio antennae displaced by digital television
requirements. Over time, management believes that more than half of its
towers will result from new construction, with the vast majority of these
designed to serve the wireless communications industry.
The ability to obtain, and commit to, large new construction projects
will require significant financial resources. Management believes that its
cost of capital, relative to the cost of capital of its competitors, will
be an important factor in determining the success of its growth by
construction strategy. Based on its previous capital market transactions,
management believes that it has a good reputation in the financial
community that will help it raise capital on the favorable terms necessary
to finance its growth. However, there can be no assurance that funds will
be available to ATS on such terms.
During 1997, ATS (including ATC and other acquired companies) built or
had under construction approximately 240 towers, including those
constructed for and owned by third parties. During 1998, ATS currently
plans to build or commence construction of between approximately 400 and
500 towers (most of which are on a build to suit basis) at an estimated
aggregate cost of between approximately $80.0 and $100.0 million. In
addition, ATS is seeking several major build to suit projects, although
there can be no assurance that any definitive agreements will result.
Growth by Acquisition. ATS has achieved a leading industry position
primarily through acquisitions, and intends to continue to pursue strategic
acquisitions of communications sites in new and existing markets, including
possibly non-U.S. markets. Among the potential acquisitions are tower
networks owned by major wireless service providers, including many of the
regional Bell operating companies and their affiliates, that may seek to
divest their ownership of such networks for reasons similar to those
motivating them to outsource their new construction requirements. Some of
these acquisitions may include plans or commitments to construct towers.
ATS is actively considering, and intends to continue actively considering,
opportunities to acquire communication sites and related properties,
including possible significant acquisitions ranging in size from several
hundred towers to several thousand towers and from purchase prices of tens
of millions of dollars to several hundreds of millions of dollars. There
can, of course, be no assurance that ATS will enter into any binding
agreements with respect to any such acquisitions, or if it does, the terms
or timing of any such acquisition. ATS also intends to pursue, on a
selective basis, the acquisition of site acquisition companies and
providers of video, voice and data transmission services. ATS may also
pursue acquisitions related to the communications site industry, including
companies engaged in the tower fabrication business.
HISTORY OF ATS
In early 1995, Steven B. Dodge, Chairman of the Board, President and Chief
Executive Officer of American Radio, and other members of management,
recognized the opportunity in the communications site industry as a consequence
of ARS's ownership and operation of broadcast towers. ATS was formed in July
1995 to capitalize on this opportunity. ATS's 1996 acquisition program was
modest, entailing the acquisition of approximately 15 communications sites and
businesses managing approximately 250 sites for others, for an aggregate
purchase price of approximately $21.0 million. Since January 1, 1997, ATS has
acquired more than 550 communications sites, exclusive of the ATC Merger, and
its site acquisition and voice, video and data transmission businesses.
RECENT AND PENDING TRANSACTIONS
ATC Merger. On June 8, 1998, ATS consummated a merger agreement with ATC,
pursuant to which ATC merged into ATS (the "ATC Merger"). ATC was a leading
independent owner and operator of wireless
3
<PAGE>
communications towers with approximately 950 towers (including then pending
acquisitions of approximately 35 towers) in 32 states, of which approximately
125 towers were managed for a third party owner. ATC owned and operated towers
in 45 of the top 100 metropolitan statistical areas in the United States and
had clusters of towers in cities such as Albuquerque, Atlanta, Baltimore,
Dallas, Houston, Jacksonville, Kansas City, Minneapolis, Nashville and San
Antonio. ATC's customers included Bell South Mobility, CSX Transportation, GTE
Mobilnet, Houston Cellular, Nextel, PageMart, PageNet, SBC Communications,
Shell Offshore, Sprint PCS and various federal and local government agencies.
For the year ended December 31, 1997, ATC had net revenues and EBITDA of $20.0
million and $12.7 million, respectively. For the three months ended March 31,
1998, ATC had net revenues and EBITDA of $6.3 million and $4.1 million,
respectively. ATS issued approximately 30.1 million shares of Class A Common
Stock (including shares issuable upon exercise of options) pursuant to the ATC
Merger. Such 30.0 million shares represent approximately 35% of ATS's pro forma
number of shares of outstanding Common Stock (giving effect to the exercise of
all options then outstanding, but not to this Offering or the issuance of
shares pursuant to the acquisitions described in the following paragraph). See
"Business--Recent Transactions--ATC Merger".
Pending Acquisitions. ATS is involved in several other pending acquisitions,
the principal ones involving the acquisition of: (i) the 58 towers of an
existing joint venture in which ATS owns a 70% interest ("ATS/PCS"), for a
number of shares of Class A Common Stock that is being negotiated, and (ii) a
company that is in the process of constructing approximately 40 towers in the
Tampa, Florida area for a purchase price equal to the excess of (a) ten (10)
times the annualized operating cash flow of those towers at the time of closing
(estimated for the spring of 1999) over (b) the seller's aggregate indebtedness
for money borrowed at such time. See "Business--Recent Transactions--Pending
Acquisitions". The seller, at its option, may require that at least 50.1% of
such purchase price consist of shares of Class A Common Stock valued at the
time of the closing and that the balance be paid in cash.
CBS Merger. In December 1997, American Radio entered into an amended and
restated merger agreement (the "CBS Merger Agreement") pursuant to which a
subsidiary of CBS was merged into American Radio on June 4, 1998. As a
consequence of the consummation of the CBS Merger, all of the shares of ATS
owned by ARS were or will be distributed to ARS common stockholders and holders
of options to acquire ARS Common Stock or upon conversion of shares of ARS
Convertible Exchangeable Preferred Stock (the "ARS Convertible Preferred
Stock") or contributed to ATS (in the case of ARS options exchanged for ATS
options). As a consequence of the CBS Merger, ATS ceased to be a subsidiary of,
or otherwise affiliated with, American Radio and operates as an independent
publicly traded company. Pursuant to the provisions of the CBS Merger
Agreement, ATS entered into an agreement (the "ARS-ATS Separation Agreement")
with CBS and ARS providing for, among other things, the allocation of certain
tax liabilities to ATS, certain closing date adjustments relating to ARS, the
lease to ARS by ATS of space on certain towers previously owned by ARS and
transferred to ATS, the orderly separation of ARS and ATS, and certain
indemnification obligations (including with respect to securities laws matters)
of ATS.
ATS's principal obligation is to reimburse CBS on a "make-whole" (after tax)
basis for the tax liabilities in excess of $20.0 million incurred by ARS
attributable to the distribution of the Common Stock to the ARS security
holders and certain related transactions. The amount of that tax liability is
dependent on the "fair market value" of the Common Stock at the time of the
consummation of the CBS Merger. In light of the significant increase in the
trading levels of the Class A Common Stock, ATS and CBS agreed that ARS will
treat the tax reimbursement on its tax return on a more conservative basis than
originally contemplated in order to avoid the possibility of significant
interest and penalties for which ATS would be responsible. ATS received an
appraisal from an independent appraisal firm that the "fair market value" of
ARS's stock interest in ATS was equal to $17.25 per share. Based on such
appraisal, ARS paid estimated taxes of approximately $212.0 million and was
reimbursed therefor by ATS. Such taxes gave effect to estimated deductions of
approximately $85.1 million available to ARS
4
<PAGE>
as a consequence of the disqualification of ARS incentive stock options
pursuant to the CBS Merger. ATS's reimbursement obligation with respect to such
taxes would change by approximately $21.0 million for each $1.00 change in the
"fair market value" of the Common Stock under the tax reporting method to be
followed. The last quoted sale price per share of the Class A Common Stock in
the "when-issued" over-the-counter market on June 4, 1998 was $20.50. Such
taxes did not include the taxes payable with respect to the shares of Class A
Common Stock deliverable upon conversion of the ARS Convertible Preferred
Stock; such taxes will be based on the "fair market value" of the Class A
Common Stock at the time of conversion. Based on the closing per share price of
the Class A Common Stock on June 15, 1998 of $21.875, ATS estimates that its
reimbursement obligation with respect to such taxes on ARS Convertible
Preferred Stock will be approximately $12.8 million under the tax reporting
method to be followed. As required by the ARS-ATS Separation Agreement, ATS
provided CBS with security of $9.8 million in cash (which may be replaced at
ATS's option with a letter of credit reasonably satisfactory to CBS) in
connection with the filing of estimated tax returns based on such appraisal.
Such appraisal is not, of course, binding on the Internal Revenue Service or
other taxing authorities. For information with respect to possible challenges
by the Internal Revenue Service (or other taxing authorities) to such appraisal
and other positions, assumptions and interpretations of various income tax
rules that were used in determining the amount of the estimated taxes, see
"Risk Factors--Relationship Between ATS and ARS--Certain Contingent
Liabilities" and "Relationship between ATS and ARS--Sharing of Tax and Other
Consequences".
ARS has agreed that it will pursue, for the benefit and at the cost of ATS, a
refund claim, attributable to the foregoing "make-whole" provision, estimated
at approximately $40.0 million, based on the appraised "fair market value" and
the estimated taxes attributable to conversions of the ARS Convertible
Preferred Stock set forth above. Any such refund claim will in fact be based on
the actual amount of tax paid. In light of existing tax law, there can, of
course, be no assurance that any such refund claim will be successful.
In connection with an inter-corporate taxable transfer of assets entered into
in January 1998 by ATS in contemplation of the separation of ATS and ARS, a
portion of the tax with respect to which ATS is obligated to indemnify CBS was
incurred. Such transfer resulted in an increase in the tax bases of ATS's
assets of approximately $366.5 million. ATS will have potential depreciation
and amortization deductions over the next 15 years of $24.4 million per year
resulting in a deferred tax asset of approximately $135.0 million.
The ARS-ATS Separation Agreement also provides for closing date balance sheet
adjustments based upon the working capital (current assets less defined
liabilities) and specified debt levels of ARS. ATS will benefit from or bear
the cost of such adjustments. ATS's preliminary estimate of such adjustments is
that it will be required to make a payment of not more than $50.0 million and
that, in addition, it will be required to reimburse CBS for the tax
consequences of any such payment. The estimated taxes and refund amount stated
above include approximately $33.0 million of taxes attributed to such $50.0
million adjustment payment. Since the amounts of working capital and debt are
dependent upon the uncertainty, among other things, of recent operating results
and cash capital expenditures, as well as CBS Merger expenses, ATS is unable to
state definitively what payments, if any, will be owed by ATS to CBS. See
"Relationship Between ATS and ARS--Closing Date Adjustments".
On June 4, 1998, ATS entered into a stock purchase agreement (the "Interim
Financing Agreement") with, among others, Credit Suisse First Boston
Corporation, one of the Representatives of the several Underwriters, with
respect to a preferred stock financing (the "Interim Financing") which provides
for the issuance and sale by ATS of up to $400.0 million of preferred stock
(the "Interim Preferred Stock") to finance ATS's obligation to CBS with respect
to tax reimbursement. Pursuant to the Interim Financing Agreement, ATS issued
$300.0 million of Interim Preferred Stock and used the proceeds to fund such
tax reimbursement obligation, to pay the fees and other expenses of the issue
and sale of such stock and to reduce bank borrowings. ATS intends to redeem the
Interim Preferred Stock out of the proceeds of this Offering.
5
<PAGE>
New Credit Facilities. On June 16, 1998, ATS entered into new loan
arrangements (the "New Credit Facilities") with its senior lenders, pursuant to
which the maximum borrowing of the Borrower Subsidiaries was increased from
$400.0 million to $900.0 million, subject to compliance with certain financial
ratios, of which $125.0 million is outstanding in the form of a term loan, and
ATS (the parent holding company) borrowed an additional $150.0 million.
MANAGEMENT
The senior management of ATS consists of the following senior executive
officers: Steven B. Dodge, Chairman of the Board of Directors, President and
Chief Executive Officer; Douglas Wiest, Chief Operating Officer; Joseph L.
Winn, Treasurer and Chief Financial Officer; James S. Eisenstein, Executive
Vice President--Corporate Development; J. Michael Gearon, Jr., Executive Vice
President of ATS, president of Gearon Communications, the site acquisition and
development division of ATS, and a director; and Alan L. Box, Executive Vice
President responsible for the video, voice and data transmission business of
ATS and a director. ATS is managed through a central headquarters in Boston,
but relies on four regional offices (located in Atlanta, Boston, Houston and
the San Francisco Bay area) for marketing, operations and site management.
6
<PAGE>
THE OFFERING
Class A Common Stock 20,000,000 shares by ATS(1)
offered................
3,866,023 shares by the Selling Stockholders
23,866,023 Total shares of Class A Common Stock
Common Stock to be
outstanding after this
Offering (2)........... 86,752,078 shares of Class A Common Stock
8,972,847 shares of Class B Common Stock
3,295,518 shares of Class C Common Stock
99,020,443 Total shares of Common Stock
Voting rights...........
With certain exceptions, the Class A Common Stock and
the Class B Common Stock vote as a single class with
each share of Class A Common Stock entitled to one
vote and each share of Class B Common Stock entitled
to ten votes. The holders of the Class A Common
Stock, voting as a separate class, are entitled to
elect two independent directors and Delaware
corporate law and ATS's Restated Certificate of
Incorporation (the "ATS Restated Certificate")
require certain class votes. Assuming consummation of
this Offering, approximately 44.5% of the total
voting power will be owned by Steven B. Dodge and
Thomas H. Stoner together with their affiliates. See
"Principal and Selling Stockholders". The Class C
Common Stock is nonvoting, except as otherwise
required by law. The term "Common Stock" means the
Class A Common Stock, the Class B Common Stock and
the Class C Common Stock.
Other rights............ Each class of Common Stock has the same rights to
dividends and upon liquidation. The Class B Common
Stock cannot be sold or transferred, except to
certain permitted transferees, and automatically
converts into Class A Common Stock upon any other
sale or transfer. The Class B Common Stock and the
Class C Common Stock are convertible into Class A
Common Stock on a share-for-share basis, subject, in
the case of the one holder of Class C Common Stock,
to certain conditions. See "Description of Capital
Stock".
Trading Market..........
The Class A Common Stock is traded on the New York
Stock Exchange (the "NYSE"). The last quoted sales
price per share on June 29, 1998 on the NYSE was $22
- -------- 7/8.
(1) Does not include 2,386,602 shares of Class A Common Stock issuable by ATS
pursuant to the over-allotment option granted to the Underwriters.
(2) Does not include (a) shares of Class A Common Stock issuable upon
conversion of Class B Common Stock or Class C Common Stock, (b) 2,386,602
shares of Class A Common Stock issuable by ATS pursuant to the over-
allotment option granted to the Underwriters, (c) an aggregate of
4,103,014 shares of Common Stock to be issued pursuant to the exercise of
options issued in exchange for options previously outstanding as follows:
(i) options to purchase 682,000 shares of Common Stock of ATSI, which were
exchanged for options to purchase approximately 931,330 shares of Common
Stock at a weighted average exercise price of $4.17, or (ii) options to
purchase 599,400 shares of ARS Common Stock, which were exchanged for
options to purchase 1,862,806 shares of Common Stock at a weighted average
exercise price of $6.21, and (iii) options to purchase 6,500 shares of ATC
Common Stock, which were exchanged for options to purchase 1,252,364
shares of Class A Common Stock at a weighted average exercise price of
$2.28, or (d) shares issuable pursuant to certain pending acquisitions.
7
<PAGE>
Use of Proceeds.........
ATS estimates that it will receive net proceeds from
this Offering of approximately $417.1 million. It
expects to use such net proceeds to redeem the
Interim Preferred Stock at a price of 101% of the
liquidation preference and to reduce bank borrowings;
the proceeds of the Interim Preferred Stock were used
to satisfy ATS's obligation to reimburse CBS for the
tax liabilities required to be borne by ATS pursuant
to the ARS-ATS Separation Agreement, to pay the fees
and expenses associated with the Interim Financing
and to reduce bank borrowings. ATS will not receive
any proceeds from the sale of Class A Common Stock by
the Selling Stockholders.
Risk Factors............
For a discussion of certain risks investors should
consider before investing in the Class A Common
Stock, see "Risk Factors".
Dividend Policy......... ATS does not intend to pay cash dividends on the
Common Stock. Moreover, the New Credit Facilities
restrict the payment of cash dividends by ATS.
8
<PAGE>
SELECTED FINANCIAL DATA
The following Selected Financial Data of ATS has been derived from the
consolidated financial statements of ATS included elsewhere in this Prospectus.
The Selected Financial Data should be read in conjunction with ATS's audited
and unaudited interim financial statements and the notes thereto and with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations". The Selected Financial Data as of March 31, 1997 and 1998 are
unaudited but, in the opinion of management, contain all adjustments necessary
for a fair presentation in conformity with generally accepted accounting
principles. The pro forma financial data with respect to the three months ended
March 31, 1998 and year ended December 31, 1997 included below reflects certain
adjustments, as explained elsewhere in this Prospectus, and therefore any
comparison of such pro forma financial data with the Selected Financial Data
appearing below for periods prior to 1997 is inappropriate. Such pro forma
financial data gives effect to this Offering, the ATS Pro Forma Transactions
and the CBS Merger, as described in the Notes to Unaudited Pro Forma Condensed
Consolidated Statements of Operations of ATS. The ATS Pro Forma Transactions do
not include all Recent Transactions or pending construction. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations".
The historical financial data presented below reflects periods during which
ATS did not operate as an independent company. Therefore, such data may not
reflect the results of operations or the financial condition which would have
resulted if ATS had operated as a separate, independent company during such
periods, and is not necessarily indicative of ATS's future results of
operations or financial condition.
"Tower Cash Flow" means operating income (loss) before depreciation and
amortization and corporate general and administrative expenses. "EBITDA" means
operating income (loss) before depreciation and amortization. "After-tax cash
flow" means income (loss) before extraordinary items, plus depreciation and
amortization, less preferred stock dividends. All of such terms include
deferred revenue attributable to certain leases. See Consolidated Statements of
Cash Flow of American Tower Systems and Notes to Consolidated Financial
Statements of American Tower Systems. ATS does not consider Tower Cash Flow,
EBITDA and after-tax cash flow as, nor should they be considered in isolation
from, or as a substitute for, alternative measures of operating results or cash
flow from operating activities (as determined in accordance with generally
accepted accounting principles ("GAAP")) or as a measure of ATS's profitability
or liquidity. Although these measures of performance are not calculated in
accordance with GAAP, ATS has included them because many of them are widely
used in the communications site industry as a measure of a company's operating
performance. More specifically, ATS believes they can assist in comparing
company performance on a consistent basis without regard to depreciation and
amortization, which can vary significantly depending on accounting methods
(particularly where acquisitions are involved) or non-operating factors such as
historical cost bases. Tower Cash Flow also excludes the effect of corporate
general and administrative expenses, which generally do not relate directly to
communications site performance.
9
<PAGE>
SELECTED FINANCIAL DATA(1)
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS THREE MONTHS ENDED
DECEMBER 31, 1997 ENDED MARCH 31, MARCH 31, 1998
------------------------ ----------------- ------------------
HISTORICAL
-----------------
JULY 17, 1995 YEAR ENDED
THROUGH DECEMBER 31,
DECEMBER 31, 1995 1996 HISTORICAL PRO FORMA(2) 1997 1998 PRO FORMA(2)
----------------- ------------ ---------- ------------ ------- -------- ------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net operating revenues.. $ 163 $2,897 $ 17,508 $ 94,922 $1,366 $17,925 $25,089
Operating expenses:
Operating expenses ex-
cluding
depreciation, amorti-
zation and corporate
general and
administrative........ 60 1,362 8,713 50,182 538 11,495 13,887
Depreciation and amor-
tization.............. 57 990 6,326 54,896 504 5,802 14,555
Corporate general and
administrative........ 230 830 1,536 4,536 280 541 1,541
----- ------ --------- -------- ------- -------- -------
Total operating ex-
penses................ 347 3,182 16,575 109,614 1,322 17,838 29,983
----- ------ --------- -------- ------- -------- -------
Operating income
(loss)................. (184) (285) 933 (14,692) 44 87 (4,894)
Interest expense, net... -- (36) 2,789 5,406 71 1,565 2,234
Other expense (income).. -- -- 15 15
Minority interest in net
earnings of subsidiar-
ies(3)................. -- 185 178 178 80 79 79
----- ------ --------- -------- ------- -------- -------
Loss before income tax-
es..................... (184) (434) (2,049) (20,291) (107) (1,557) (7,207)
Benefit (provision) for
income
taxes.................. 74 (46) 473 2,775 49 30 1,545
----- ------ --------- -------- ------- -------- -------
Loss before extraordi-
nary item.............. $(110) $ (480) $ (1,576) $(17,516) $ (58) $ (1,527) $(5,662)
===== ====== ========= ======== ======= ======== =======
Basic and diluted pro
forma loss per common
share before extraordi-
nary item(4)........... $ (0.03) $ (0.18) -- $ (0.03) $ (0.06)
========= ======== ======= ======== =======
Basic and diluted pro
forma common shares
outstanding............ 48,692 97,515 -- 48,967 97,515
========= ======== ======= ======== =======
OTHER OPERATING DATA:
Tower cash flow......... $ 103 $1,535 $ 8,795 $ 44,740 $ 828 $ 6,430 $11,202
EBITDA.................. (127) 705 7,259 40,204 548 5,889 9,661
EBITDA margin........... (N/A) 24.3% 41.5% 42.4% 40.1% 32.9% 38.5%
After-tax cash flow..... (53) 510 4,750 37,380 446 4,275 8,893
Cash provided by (used
for)
operating activities... (51) 2,229 9,913 -- 216 (1,737) --
Cash used for investing
activities............. -- -- (216,783) -- (3,346) (91,835) --
Cash provided by financ-
ing
activities............. 63 132 209,092 -- 2,410 95,777 --
</TABLE>
<TABLE>
<CAPTION>
1995 1996 1997 1998(5)
---- ---- ---- -------
<S> <C> <C> <C> <C>
TOWER DATA(5):
Towers operated at beginning of period................... -- 3 269 671
Towers acquired(6)...................................... 3 265 321 1,043
Towers constructed...................................... -- 1 81 90
--- --- --- -----
Towers operated at end of period......................... 3 269 671 1,804
=== === === =====
Aggregate towers constructed(7).......................... 3 31 240 90
=== === === =====
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
MARCH 31, 1998
------------------------
HISTORICAL PRO FORMA(2)
---------- ------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................ $ 6,800 $ 76,111
Working capital, excluding current portion of long-
term debt........................................... (124,945) 64,465
Property and equipment, net.......................... 156,827 282,615
Total assets......................................... 533,014 1,118,074
Long-term debt, including current portion............ 157,150 135,432
Total stockholders' equity........................... 233,317 844,616
</TABLE>
- --------
(1) ATSI was organized on July 17, 1995 and American Radio contributed all of
the issued and outstanding capital stock of ATSI to ATS on September 24,
1996. Year-to-year comparisons are significantly affected by the timing of
acquisitions of communications sites and related businesses and
construction of towers, both of which have been numerous during the period.
The principal acquisitions made in 1996, 1997 and 1998 are described in
"Business--Recent Transactions" and the Consolidated Financial Statements
of ATS.
(2) The unaudited pro forma Statement of Operations Data and Other Operating
Data for the three months ended March 31, 1998 and the year ended December
31, 1997 give effect to the ATS Pro Forma Transactions, the CBS Merger, and
this Offering, as if each of the foregoing had occurred on January 1, 1998
and January 1, 1997, respectively. The unaudited pro forma Balance Sheet
Data as of March 31, 1998 gives effect to the ATC Merger (the only ATS Pro
Forma Transactions not then consummated), the CBS Merger and this Offering,
as if each of the foregoing had occurred on March 31, 1998. The term "ATS
Pro Forma Transactions" means the Meridian Transaction, the Diablo
Transaction, the MicroNet Transaction, the Tucson Transaction, the Gearon
Transaction, the OPM Transaction, the ATC Merger, consummation of
transactions contemplated by the Stock Purchase Agreement, and the transfer
of towers (the "Transfer of Towers") from ARS to ATS. It does not include
all of the Recent Transactions or pending construction. None of the
foregoing data gives effect to the Interim Financing because the Interim
Preferred Stock is to be redeemed out of the proceeds of this Offering. See
"Business--Recent Transactions" and "Unaudited Pro Forma Condensed
Consolidated Financial Statements of ATS".
(3) Represents the elimination of the 49.9% member's earnings of ATS Needham,
LLC, in which ATSLP holds a 50.1% interest and the elimination of the 30%
member's loss of ATS/PCS (formerly Communications Systems Development LLC),
in which ATSLP holds a 70% interest.
(4) Pro forma basic and diluted loss per share has been computed using (a) in
the case of historical information, the number of shares outstanding
following the CBS Merger and (b) in the case of pro forma information, the
number of shares expected to be outstanding following the CBS Merger and
the transactions discussed in Note 2 above and the Notes to the Unaudited
Pro Forma Condensed Consolidated Statement of Operations.
(5) Includes information with respect to ATS only and is for the year shown,
except 1998, which is as of May 1, and assumes consummation of all Recent
Transactions then pending (including those of ATC), but does not include
towers then under construction by ATS. See Note (7) below.
(6) Includes towers managed for others (including rooftops), the management
contracts for which were acquired, as follows; 1996--251 (217); 1997--86
(35); and 1998--155 (27).
(7) Includes towers constructed in each period by ATS and all acquired (or to
be acquired) companies, including, in certain cases, towers constructed for
and owned by third parties.
11
<PAGE>
RISK FACTORS
Investors should consider carefully the following factors, in addition to
the other information contained in this Prospectus, before purchasing the
securities offered hereby.
SUBSTANTIAL CAPITAL REQUIREMENTS AND LEVERAGE
ATS's acquisition and construction activities have created and will continue
to create substantial ongoing capital requirements. During 1997, ATS made
capital investments aggregating approximately $184.1 million for acquisitions
and approximately $20.6 million for capital expenditures and construction,
including site upgrades. ATS currently has under construction or plans to
construct during 1998 between approximately 400 and 500 towers at an estimated
aggregate cost of between approximately $80.0 and $100.0 million. In addition,
ATS is actively seeking several major build to suit projects. Historically,
ATS has financed its capital expenditures through a combination of bank
borrowings, equity investments by ARS, and cash flow from operations. As of
March 31, 1998, on a pro forma basis, giving effect to all then or currently
pending Recent Transactions, the CBS Merger and the Interim Financing (but not
planned construction and the use of proceeds of this Offering), ATS would have
had aggregate borrowings of approximately $393.4 million (exclusive of certain
non-recourse debt), Interim Preferred Stock outstanding with an aggregate
liquidation preference of $300.0 million, and obligations under the ARS-ATS
Separation Agreement with respect to closing date balance sheet adjustments
estimated at not more than approximately $50.0 million, as described elsewhere
in this Prospectus. See "--Relationship between ATS and ARS--Certain
Contingent Liabilities" below.
ATS expects that it will continue to be required to borrow funds to finance
construction and acquisitions and that it will operate with substantial
leverage. If ATS's revenues and cash flow do not meet current expectations, or
if its borrowing base is reduced as a result of operating performance, ATS may
have limited ability to access necessary capital. If such cash flow is not
sufficient to meet its debt service requirements, ATS could be required to
sell equity or debt securities, refinance its obligations or dispose of
certain of its operating assets in order to make scheduled payments. There can
be no assurance that ATS would be able to effect any such transactions on
favorable terms.
On June 16, 1998, ATS entered into the New Credit Facilities with its senior
lenders, pursuant to which the maximum borrowing capacity of the Borrower
Subsidiaries was increased from $400.0 million to $900.0 million, subject to
compliance with certain financial ratios, of which $125.0 million is
outstanding in the form of a term loan, and ATS (the parent holding company)
borrowed an additional $150.0 million. The New Credit Facilities include
certain financial and operational covenants and other restrictions that must
be satisfied. Included among such provisions are limitations on additional
indebtedness, capital expenditures, uses of borrowed funds, permitted
investments, and cash distributions. Such agreements also require the
maintenance of certain financial ratios. The obligations of the borrowers
under the New Credit Facilities are collateralized, among other things, by a
first priority security interest in substantially all of the operating assets
and property of the consolidated group.
Management believes that, upon consummation of this Offering, ATS will have
available to it funds sufficient to finance current construction plans, to
consummate pending acquisitions, to redeem the Interim Preferred Stock and to
satisfy its obligation with respect to the closing date balance sheet
adjustments under the ARS-ATS Separation Agreement. Should additional
construction or acquisition opportunities become available, however, ATS might
require additional financing during 1998. Any such financing could take the
form of an increase in the maximum borrowing levels under the New Credit
Facilities (which would be dependent on the ability to meet certain leverage
ratios) or the issuance of debt or senior equity securities (which could have
the effect of increasing consolidated leverage ratios) or Class A Common
Stock, convertible securities or warrants (which would have a dilutive effect
on the proportionate ownership of ATS of its then existing common
stockholders). There can be no assurance that any such debt or equity
financing would be available on favorable terms. See "Business--Growth
Strategy--Growth by Construction" and "--Growth by Acquisition".
12
<PAGE>
DEPENDENCE ON DEMAND FOR WIRELESS COMMUNICATIONS AND IMPLEMENTATION OF DIGITAL
TELEVISION
The demand for rental space on ATS's towers is dependent on a number of
factors beyond ATS's control. Such factors include the demand for wireless
services by consumers, the financial condition and access to capital of
wireless service providers, wireless service providers' preference for owning
or leasing their communications sites, government licensing of broadcast
rights, changes in Federal Communications Commission ("FCC") regulations,
zoning and environmental regulations, and general economic conditions. A
slowdown in the growth of wireless communications in the United States would
depress network expansion activities and reduce the demand for ATS's antennae
sites. In addition, the demand for ATS's antennae sites could be adversely
affected by factors such as a downturn in a particular wireless segment, or of
the number of carriers, nationally or locally, in a particular segment. Such a
downturn could result from technological or other competition or other factors
beyond the control of ATS. In addition, wireless service providers often enter
into "roaming" and "resale" arrangements that permit providers to serve
customers in areas where they do not have facilities. Specifically, in most
cases, these arrangements are intended to permit a provider's customers to
obtain service in areas outside the provider's license area or, in the case of
resale arrangements, to permit a provider that has no licenses to enter the
wireless marketplace. Current FCC rules, which are subject to sunset
requirements that vary from service to service and market to market, also give
licensed wireless service providers the right to enter into roaming and resale
arrangements with other providers licensed to serve overlapping service areas.
Such roaming and resale arrangements could be viewed by some wireless service
providers as superior alternatives to constructing their own facilities or
leasing antennae space on communications sites owned by ATS. If such
arrangements were to become common, there could be a material adverse effect
on ATS's prospects, financial condition and results of operations. See
"Industry Overview".
The demand for rental space on ATS's towers is also dependent on the demand
for tower sites by television and radio broadcasters. Many of the same factors
described above are also applicable to television and radio broadcasters. ATS
could also be affected adversely should the development of digital television
be delayed or impaired, or if demand were to decrease because of industry
delays in implementing the changes.
CONSTRUCTION OF NEW TOWERS
The success of ATS's growth strategy is highly dependent on its ability to
complete new tower construction. Such construction can be prevented, delayed
and/or made more costly by factors beyond the control of ATS. Among such
factors are zoning and local permitting requirements, FCC and Federal Aviation
Administration ("FAA") regulations, environmental group opposition,
availability of erection equipment and skilled construction personnel, and
adverse weather conditions. In addition, as the pace of tower construction has
increased in recent years, manpower and equipment needed to erect towers have
been in increasing demand. Such factors could increase costs and delay time
schedules associated with new tower construction, either of which could have a
material adverse effect on ATS's prospects, financial condition and results of
operations. The anticipated increase in construction activity, both for ATS
and the communications site industry generally, is likely to exacerbate
significantly these factors. The construction of towers for the broadcasting
industry could be particularly affected by a potential shortage of
construction capability should a large number of towers be required to be
built in a relatively short period of time to accommodate the initiation of
digital television service. See "Business--Regulatory Matters".
In addition, the scope of ATS's 1998 and subsequent construction program is
substantially greater than the combined past construction programs of ATS and
the various companies that it has acquired or agreed to acquire, including
Gearon and ATC. While ATS's construction program will be conducted and managed
at a regional level, there can be no assurance that ATS has sufficient
personnel resources to ensure the timely and efficient implementation of its
construction program in a cost effective manner and the subsequent management
of the substantially increased number of towers.
ATS competes for new tower construction sites with wireless service
providers, site developers and other independent communications site operating
companies. ATS believes that competition for tower construction
13
<PAGE>
sites will increase and that additional competitors will enter the
communications site market, certain of which may have greater financial and
other resources than ATS.
In addition to competing for new tower construction sites, ATS faces strong
competition for build to suit opportunities, principally from other
independent communications site operators and site developers, certain of
which have more extensive experience and offer a broader range of services
(principally in constructing themselves rather than managing the construction
of others) than ATS can presently offer.
Build to suit activities involve certain additional risks. Although such
projects involve at least one "anchor" tenant, there can be no assurance that
a sufficient number of additional tenants will be secured for all or most of
the towers to be constructed pursuant to such projects (particularly the
larger ones that ATS is seeking) to ensure that such projects will be
profitable. Moreover, ATS may find that one of the reasons that carriers are
willing to permit ATS to build towers for them is that certain or many of such
towers may be on sites where it is either expensive or difficult to build or
that such sites are unlikely to attract a sufficient number of other tenants
to ensure profitability or adequate investment returns. In addition, as noted
above, ATS's experience to date has been limited to projects of considerably
smaller scope than the projects that it is negotiating and others on which it
will be bidding.
Accordingly, there can be no assurance that ATS's construction program,
including one or more of its build to suit projects, might not have a material
adverse effect on ATS's prospects, financial condition and results of
operations.
ACQUISITION STRATEGY
ATS has pursued, and intends to continue to pursue, its acquisition
strategy. The risks inherent in such a strategy include increasing leverage
and debt service requirements, combining disparate company cultures and
facilities, and operating towers in many geographically diverse markets.
Certain of these risks may be increased to the extent that ATS's acquisitions
(such as the ATC Merger) are larger and/or involve communications sites in
diverse geographic areas. In addition, management will be responsible for a
substantially larger pool of assets than it has previously managed in the
communications site industry. Accordingly, there can be no assurance that one
or more of ATS's past or future acquisitions may not have a material adverse
effect on its prospects, financial condition and results of operations.
ATS competes with certain wireless service providers, site developers and
other independent tower owners and operators, as well as financial
institutions, for acquisitions of towers and sites. Certain of those
competitors have greater financial and other resources than ATS. The success
of ATS's growth strategy continues to be dependent, although to a lesser
extent than in the past, on its ability to identify and complete acquisitions.
Increased competition, which ATS anticipates will occur, may result in fewer
opportunities as well as higher prices. No assurance can be given that ATS
will be able to identify, finance and complete acquisitions on acceptable
terms.
RELATIONSHIP BETWEEN ATS AND ARS--CERTAIN CONTINGENT LIABILITIES
The ARS-ATS Separation Agreement requires ATS to reimburse CBS on a "make-
whole" (after tax) basis for the tax liabilities to be incurred by ARS
attributable to the distribution of the Common Stock to the ARS security
holders and certain related transactions to the extent that the aggregate
amount of taxes required to be paid by ARS exceeds $20.0 million. The amount
of that tax liability is dependent on the "fair market value" of the Common
Stock at the time of the consummation of the CBS Merger. In light of the
significant increase in the trading levels of the ATS Class A Common Stock,
ATS and CBS agreed that ARS will treat the tax reimbursement on its tax return
on a more conservative basis than originally contemplated in order to avoid
the
14
<PAGE>
possibility of significant interest and penalties for which ATS would be
responsible. ATS received an appraisal from an independent appraisal firm that
the "fair market value" of ARS's stock interest in ATS was equal to $17.25 per
share. Based on such appraisal, ARS paid estimated taxes of approximately
$212.0 million and was reimbursed therefor by ATS. Such taxes gave effect to
estimated deductions of approximately $85.1 million available to ARS as a
consequence of the disqualification of ARS incentive stock options pursuant to
the CBS Merger. ATS's reimbursement obligation with respect to such taxes
would change by approximately $21.0 million for each $1.00 change in the "fair
market value" of the Common Stock under the tax reporting method to be
followed. The last quoted sale price per share of the Class A Common Stock in
the when-issued over-the-counter market on June 4, 1998 was $20.50. Such taxes
did not include the taxes payable with respect to the shares of Class A Common
Stock deliverable upon conversion of the ARS Convertible Preferred Stock; such
taxes will be based on the "fair market value" of the Class A Common Stock at
the time of conversion. Based on the closing per share price of the Class A
Common Stock on June 15, 1998 of $21.875, ATS estimates that its reimbursement
obligation with respect to such taxes on ARS Convertible Preferred Stock will
be approximately $12.8 million under the tax reporting method to be followed.
As required by the ARS-ATS Separation Agreement, ATS provided CBS with
security of $9.8 million in cash (which may be replaced at ATS's option with a
letter of credit reasonably satisfactory to CBS) in connection with the filing
of estimated tax returns based on such appraisal. Such appraisal is not, of
course, binding on the Internal Revenue Service or other taxing authorities.
ARS has agreed that it will pursue, for the benefit and at the cost of ATS,
a refund claim, attributable to the "make-whole" provision, estimated at
approximately $40.0 million, based on the appraised "fair market value" and
the estimated taxes attributable to conversions of the ARS Convertible
Preferred Stock set forth above. Any such refund claim will, in fact, be based
on the actual amount of taxes paid. In light of existing tax law, there can,
of course, be no assurance that any such refund claim will be successful.
Prospective investors should be aware that the Internal Revenue Service (or
other taxing authorities) could challenge the factual or legal basis on which
the estimates set forth above are based. For example, the Internal Revenue
Service (or other taxing authorities) could assert that the fair market value
of the Common Stock distributed by ARS was greater than the appraisal, basing
such challenge on the fact that the trading levels of the Common Stock before
or following the consummation of the CBS Merger both of which were
significantly higher, or that the distribution represented a "control" block
and therefore commanded a "premium" or that the "enterprise" value of ATS
exceeded the aggregate market value. ATS is unable to state whether challenges
will be made by the Internal Revenue Service (or other taxing authorities) to
other positions taken by ARS (on behalf of and at the expense of ATS) on the
tax returns or, if made, whether a court would sustain them. See "Relationship
between ATS and ARS--Sharing of Tax and Other Consequences".
The ARS-ATS Separation Agreement also provides for closing date balance
sheet adjustments based upon the working capital (current assets less defined
liabilities) and specified debt levels of ARS. ATS will benefit from or bear
the cost of such adjustments. ATS's preliminary estimate of such adjustments
is that it will be required to make a payment of not more than $50.0 million
and that, in addition, it will be required to reimburse CBS for the tax
consequences of such payment. The estimated taxes and refund amounts stated
above include approximately $33.0 million of taxes attributed to such $50.0
million adjustment payment. Since the amounts of working capital and debt are
dependent upon the uncertainty, among other things, of recent operating
results and cash capital expenditures as well as CBS Merger expenses, ATS is
unable to state definitively what payments, if any, will be owed by ATS. See
"Relationship Between ATS and ARS--Closing Date Adjustments".
The ARS-ATS Separation Agreement also provides for the leasing by ATS to ARS
of space (at below market rentals negotiated with CBS in September 1997) on 16
towers previously owned by ARS and transferred by ARS to ATS. See
"Relationship Between ATS and ARS--Lease Arrangements".
DEPENDENCE ON KEY PERSONNEL
The implementation of ATS's growth strategy is dependent, to a significant
degree, on the efforts of ATS's Chief Executive Officer and its other
executive officers. ATS has not entered into employment agreements with
15
<PAGE>
any of its executive officers, other than with J. Michael Gearon, Jr., the
former principal stockholder and chief executive officer of Gearon & Co.,
Inc., and Douglas Wiest, the recently recruited Chief Operating Officer. Many
of the executive and other officers have been granted options to purchase
shares of Common Stock that are subject to vesting provisions generally over a
five-year period. However, there can be no assurance that ATS will be able to
retain such officers, the loss of whom could have a material adverse effect
upon it, or that it will be able to prevent them from competing in the event
of their departure. ATS does not maintain key man life insurance of any
significance on the lives of any of such officers.
ENVIRONMENTAL MATTERS
Under various federal, state and local environmental laws, an owner or
lessee of real estate may become liable for the costs of investigation,
removal or remediation of soil and groundwater contaminated by certain
hazardous substances or wastes. Certain of such laws impose cleanup
responsibility and liability without regard to whether the owner or operator
of the real estate knew of or was responsible for the contamination. Such
liability may continue whether or not operations at the property have been
discontinued or the property has been transferred. The owner or operator of
contaminated real estate also may be subject to common law claims by third
parties based on damages and costs resulting from off-site migration of the
contamination. ATS may be potentially liable for environmental costs such as
those discussed above.
CONTROL BY THE PRINCIPAL STOCKHOLDERS; RESTRICTIONS ON CHANGE OF CONTROL
On June 29, 1998, giving pro forma effect to the consummation of this
Offering, Messrs. Dodge and Stoner, together with their affiliates (the
"Principal Stockholders"), owned approximately 44.5% of the combined voting
power of the Common Stock. See "Principal and Selling Stockholders".
Accordingly, the Principal Stockholders may, in effect, be able to control
the vote on all matters submitted to a vote of the holders of the Common
Stock, except with respect to (i) the election of two independent directors,
and (ii) those matters that the ATS Restated Certificate or applicable law
requires a 66 2/3% vote or a class vote. Control by the Principal Stockholders
may have the effect of discouraging certain types of transactions involving an
actual or potential change of control of ATS. See "Description of Capital
Stock--Common Stock". The ATS Restated Certificate contains provisions
limiting the aggregate voting ownership of Mr. Dodge (and his Controlled
Entities as defined therein) and provides for the automatic conversion of all
of his (and their) Class B Common Stock to Class A Common Stock should his
voting percentage fall below certain specified amounts. See "Description of
Capital Stock--Common Stock--ATS Merger Amendments".
The New Credit Facilities provide that a "Change of Control" (as defined
therein) of ATS constitutes an "Event of Default". In addition, the
Communications Act of 1934, as amended (the "Communications Act"), and the
rules of the FCC require the prior consent of the FCC for any change of
control of ATS. Finally, certain provisions of the Delaware law may have the
effect of discouraging a third party from making an acquisition proposal for
ATS and may thereby inhibit a change of control. See "Description of Capital
Stock--Delaware Business Combination Provisions".
RISK ASSOCIATED WITH NEW TECHNOLOGIES
The emergence of new technologies could reduce the need for tower-based
transmission and reception and, thereby, have a negative impact on ATS's
operations. For example, the FCC has granted license applications for several
low-earth orbiting satellite systems that are intended to provide mobile voice
and/or data services. Although such systems are highly capital-intensive and
are not yet commercially tested, mobile satellite systems could compete with
land-based wireless communications systems, thereby reducing the demand for
the infrastructure services provided by ATS. Additionally, the growth in
delivery of video services by direct broadcast satellites and the development
and implementation of signal combining technologies (which permit one antenna
to service two different frequencies of transmission and, thereby, two
customers) and satellite-delivery systems may reduce the need for tower-based
broadcast transmission. The occurrence of any of these factors could have a
material adverse effect on ATS's prospects, financial condition and results of
operations.
16
<PAGE>
CERTAIN PERCEIVED HEALTH RISKS
ATS and the lessees of antennae sites on its towers are subject to
government regulations relating to radio frequency ("RF") emissions. In recent
years, there have been several substantial studies by the scientific community
investigating the potential connection between RF emissions and possible
negative health effects, including cancer. The results of these studies have,
to date, been inconclusive. ATS has not been subject to any claims relating to
RF emissions, although it is possible that such claims may arise in the
future. Since ATS does not maintain any significant insurance with respect to
such matters, such claims, if substantiated, could have a material adverse
effect on its prospects, financial condition and results of operations.
LACK OF DIVIDENDS; RESTRICTIONS ON PAYMENT OF DIVIDENDS AND REPURCHASE OF
COMMON STOCK; DILUTION
ATS intends to retain any available earnings for the growth of its business
and does not anticipate paying any cash dividends on the Common Stock in the
foreseeable future. In addition, the New Credit Facilities restrict the
payment of cash dividends or other distributions and the repurchase,
redemption or other acquisition of equity securities of ATS. See "Description
of Capital Stock--Dividend Restrictions". The public offering price exceeds
the net tangible book value per share. Investors who purchase shares of Class
A Common Stock in this Offering will sustain immediate and substantial
dilution (approximately $19.44 per share). See "Dilution".
POSSIBLE VOLATILITY OF STOCK PRICE
Investors may not be able to resell the shares of Class A Common Stock at or
above the public offering price. Factors such as market conditions in the
wireless communications industry may have a significant impact on the market
price of the Class A Common Stock. Further, the stock market has experienced
volatility that affects the market prices of companies in ways often unrelated
to the operating performance of such companies. These market fluctuations may
adversely affect the market price of the Class A Common Stock. There can be no
assurance as to the price at which the Class A Common Stock will trade or as
to the liquidity or volatility of any such trading market. Market prices might
also be affected by shares available for future sale held by certain
stockholders who hold freely saleable shares or who have registration rights.
See "Shares Eligible for Future Sale".
17
<PAGE>
USE OF PROCEEDS
The net proceeds to ATS from this Offering (after deduction of the
underwriting discount and estimated offering expenses) are estimated to be
approximately $417.1 million ($466.6 million if the Underwriters' over-
allotment option is exercised in full). ATS expects to use such net proceeds
to redeem the Interim Preferred Stock at a price of 101% of its liquidation
preference and to reduce borrowings under the New Credit Facilities. Proceeds
of the Interim Preferred Stock were used to reimburse CBS with respect to the
taxes payable as a consequence of the separation of ARS and ATS pursuant to
the CBS Merger, to pay the fees and expenses associated with the Interim
Financing, to reduce bank borrowings, and to invest in short-term investment
grade securities. The New Credit Facilities of the Borrower Subsidiaries
provide for a total of $900.0 million in credit facilities consisting of (i) a
$250.0 million multiple-draw term loan, (ii) a $400.0 million reducing
revolving credit facility, and (iii) a $250.0 million 364-day revolving credit
facility that converts to a term loan facility thereafter. The ATS New Credit
Facility is a $150.0 million single-draw term loan that has been fully
borrowed. The New Credit Facilities bears interest at a rate of LIBOR plus
2.0% to 3.5% per annum through December 31, 1998 and matures December 31,
2006. Borrowings under the New Credit Facilities may be used to finance the
construction of towers, ATS's remaining obligations with respect to
acquisitions, and its obligations with respect to the closing date balance
sheet adjustments under the ARS-ATS Separation Agreement. ATS may also utilize
such borrowings to finance, among other things, acquisitions of additional
communications sites or other related businesses. ATS is actively considering,
and intends to continue actively considering, opportunities to acquire
communication sites and related properties, including possible significant
acquisitions ranging in size from several hundred towers to several thousand
towers and from purchase prices of tens of millions of dollars to several
hundred of millions of dollars. However, ATS has no binding commitments or
agreements with respect to any material acquisition, except as otherwise
described in this Prospectus. See "Business--Growth Strategy--Growth by
Acquisition" and "--Recent Transactions".
As of March 31, 1998, on a pro forma basis, assuming consummation of the ATS
Pro Forma Transactions and all other Recent Transactions, as well as the CBS
Merger and the Interim Financing, but not this Offering, ATS would have had
aggregate indebtedness under the New Credit Facilities of approximately $393.4
million and Interim Preferred Stock outstanding with an aggregate liquidation
preference of $300.0 million. After giving effect to this Offering and
assuming the use of the net proceeds described above, as of such date, on such
pro forma basis, there would have been aggregate borrowings under the New
Credit Facilities of approximately $279.3 million and ATS would have owned
short-term investment grade securities of approximately $70.0 million. The
Chase Manhattan Bank ("Chase") is a lender under the New Credit Facilities for
the Borrower Subsidiaries and will receive its proportionate share (5.2%) of
any repayments of borrowings. Chase is an affiliate of Chase Equity
Associates. See "Management--Certain Transactions", "Principal and Selling
Stockholders", "Relationship between ATS and ARS--Sharing of Tax and Other
Consequences" and the Notes to Consolidated Financial Statements of American
Tower.
ATS will not receive any proceeds from the sale of Class A Common Stock by
the Selling Stockholders.
18
<PAGE>
MARKET PRICES AND DIVIDEND POLICY
On February 27, 1998, the Class A Common Stock commenced trading on a "when-
issued" basis on the inter-dealer bulletin board of the over-the-counter
market. During the period from February 27, 1998 through June 4, 1998, the
range of the high and low per share bid prices in such "when-issued" market
was $26 1/8 and $15 1/2. The Class A Common Stock commenced trading on NYSE on
June 5, 1998 (the day following consummation of the CBS Merger). During the
period from June 5, 1998 through June 29, 1998, the range of the high and low
per share closing prices as reported on NYSE was $23 3/8 and $21 1/8. On June
29, 1998, the per share closing price as reported on NYSE was $22 7/8.
ATS has not paid a dividend on any class of its capital stock and
anticipates that it will retain future earnings, if any, to fund the
development and growth of its business. It does not anticipate paying cash
dividends on shares of Common Stock in the foreseeable future. In addition,
each Borrower Subsidiary is restricted under the New Credit Facilities from
paying dividends on the stock (distributions to its partners, in the case of
ATSLP) and repurchasing, redeeming or otherwise acquiring any shares of Common
Stock (or partnership interests). Since ATS has no significant assets other
than its ownership of various subsidiaries, all of which are so restricted,
its ability to pay cash dividends in the foreseeable future is restricted. The
New Credit Facilities also restrict the payment of cash dividends by ATS. See
"Description of Capital Stock--Dividend Restrictions" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources".
19
<PAGE>
CAPITALIZATION
Prior to the consummation of the CBS Merger, ATS was operated as part of
American Radio. The following table sets forth the capitalization of ATS as of
March 31, 1998, and as adjusted to give effect to (a) the ATS Pro Forma
Transactions, the CBS Merger and the Interim Financing and (b) this Offering,
as if all of the foregoing had been consummated on March 31, 1998. See Notes
to the Unaudited Pro Forma Condensed Consolidated Balance Sheet.
Management believes that the assumptions used provide a reasonable basis on
which to present such pro forma capitalization. The capitalization table below
should be read in conjunction with the historical financial statements of ATS,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Unaudited Pro Forma Condensed Consolidated Financial
Statements of ATS". The capitalization table below is provided for
informational purposes only and (i) is not necessarily indicative of ATS's
capitalization or financial condition had the transactions and events referred
to above been consummated on the date assumed, (ii) may not reflect the
capitalization or financial condition which would have resulted had ATS been
operated as a separate, independent company, and (iii) is not necessarily
indicative of ATS's future capitalization or financial condition.
<TABLE>
<CAPTION>
MARCH 31, 1998
------------------------------------------
PRO FORMA FOR ATS
PRO FORMA
TRANSACTIONS, CBS
MERGER AND PRO FORMA FOR
HISTORICAL INTERIM FINANCING THIS OFFERING
---------- ----------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents........... $ 6,800 $ 76,111 $ 76,111
======== ======== ========
Interim Preferred Stock, due within
one year(1)(4)..................... $ -- $300,000 $ --
======== ======== ========
Long term debt, including current
portion(2)(3)
Borrowings under the Loan
Agreement......................... $155,500 $247,889 $133,782
Other long-term debt............... 1,650 1,650 1,650
-------- -------- --------
Total long-term debt............... 157,150 249,539 135,432
-------- -------- --------
Stockholders' equity(2)(4)
Common Stock(5)
Class A Common Stock............... 364 651 851
Class B Common Stock............... 93 91 91
Class C Common Stock............... 33 33 33
Additional paid-in capital......... 286,589 444,121 861,028
Notes receivable, due from
stockholders...................... (49,375)
Accumulated deficit................ (4,387) (4,387) (17,387)
-------- -------- --------
Total stockholders' equity......... 233,317 440,509 844,616
-------- -------- --------
Total capitalization............... $390,467 $690,048 $980,048
======== ======== ========
</TABLE>
- --------
(1) The ARS-ATS Separation Agreement requires ATS, among other things (a) to
bear the tax consequences of the distribution by ARS to its security
holders of the Common Stock owned by it to the extent that the aggregate
amount of taxes required to be paid by ARS exceeds $20.0 million, and (b)
to bear the burden (or receive the benefit) of any closing date balance
sheet adjustments based upon the working capital and specified debt levels
of ARS. ATS issued $300.0 million of the Interim Preferred Stock and used
the proceeds to reimburse CBS for such tax liability, to pay the
commitment and other fees and other expenses of the issue and sale of the
Interim Preferred Stock and to reduce bank borrowings. ATS intends to
finance the closing date balance sheet adjustments through bank
borrowings; pro forma effect has been given to aggregate bank borrowings
of approximately $50.0 million in this capitalization table. See
"Relationship between ATS and ARS--Sharing of Tax and Other Consequences"
and "--Closing Date Adjustments".
20
<PAGE>
(2) For additional information, see "Unaudited Pro Forma Condensed
Consolidated Financial Statements of ATS" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources".
(3) See Notes to Consolidated Financial Statements and "Indebtedness of ATS"
for additional information regarding the components and terms of ATS's
long-term debt. Approximately $145.5 million of additional long-term
borrowings are expected to be required (on a net basis) to finance (a) the
Recent Transactions not included in the ATS Pro Forma Transactions and (b)
the balance (approximately $84.0 million) of the maximum purchase price of
the OPM Transaction, assuming required cash flow levels are achieved. Such
borrowings do not include approximately $12.0 million of non-recourse
indebtedness issued in connection with the Intracoastal Transaction. See
"Business--Recent Transactions--Consummated Acquisitions".
(4) Consists of (a) Preferred Stock, par value $.01 per share, 20,000,000
authorized shares and 300,000 shares of Interim Preferred Stock issued and
outstanding (pro forma) (see Note (1) above); (b) Class A Common Stock,
par value $.01 per share, 300,000,000 authorized shares; shares issued and
outstanding: 36,351,266 (historical), 66,752,078 (pro forma), and
86,752,078 (pro forma for this Offering); (c) Class B Common Stock, par
value $.01 per share, 50,000,000 authorized shares; shares issued and
outstanding: 9,320,576 (historical) and 8,972,847 (pro forma and pro forma
for this Offering); and (d) Class C Common Stock, par value $.01 per
share, 10,000,000 authorized shares; shares issued and outstanding:
3,295,518 (historical, pro forma and pro forma for this Offering). The
outstanding share information gives effect to all consummated Recent
Transactions.
(5) The number of outstanding shares does not include, except as otherwise
indicated: (a) shares of Class A Common Stock issuable upon conversion of
Class B Common Stock or Class C Common Stock, (b) shares issuable upon
exercise of options currently outstanding to purchase an aggregate of
4,311,300 shares of Common Stock, (c) an aggregate of 4,103,014 shares of
Common Stock to be issued pursuant to the exercise of options issued in
exchange for options formerly outstanding as follows: (i) options to
purchase 682,000 shares of Common Stock of ATSI, which were exchanged for
options to purchase approximately 931,330 shares of Common Stock, (ii)
options to purchase 599,400 shares of ARS Common Stock, which were
exchanged for options to purchase 1,862,806 shares of Common Stock, and
(iii) options to purchase 6,500 shares of ATC Common Stock, which were
exchanged for options to purchase 1,252,364 shares of Common Stock, or (d)
shares issuable pursuant to certain pending Recent Transactions. See the
Notes to Consolidated Financial Statements and "Business--Recent
Transactions--Pending Acquisitions".
21
<PAGE>
DILUTION
As of March 31, 1998, the pro forma net tangible book value of ATS, after
giving effect to the ATS Pro Forma Transactions and the CBS Merger, was
negative $176.6 million or negative $2.28 per share of Common Stock. "Pro
forma net tangible book value per share" represents the amount of total pro
forma tangible assets (total) pro forma assets less pro forma goodwill and
other pro forma intangible assets of ATS reduced by the amount of total pro
forma liabilities and divided by the pro forma number of shares of Common
Stock outstanding. After giving effect to the application of the net proceeds
from the sale of 20,000,000 shares of Class A Common Stock by ATS contemplated
hereby (after deduction of the underwriting discount, estimated offering
expenses and 1% premium to redeem the Interim Preferred Stock), the as
adjusted pro forma net tangible book value of ATS as of such date would have
been positive $237.5 million or positive $2.44 per share. This represents an
immediate increase in such pro forma net tangible book value of $4.72 to
existing stockholders and an immediate dilution in net tangible book value of
$19.44 per share to new investors purchasing shares in this Offering.
The following table illustrates the dilution per share as described above:
<TABLE>
<S> <C>
Public offering price per share................................... $21.875
-------
Pro forma net tangible book value per share before this Offer-
ing............................................................ (2.28 )
Increase attributable to this Offering.......................... 4.72
-------
As adjusted pro forma net tangible book value per share after this
Offering......................................................... 2.44
-------
Dilution to new investors......................................... $19.44
=======
</TABLE>
Based on the foregoing assumptions, the following table sets forth, as of
the closing of this Offering, the number of shares of Common Stock acquired
from ATS, the total consideration paid to ATS by the existing stockholders and
the new investors purchasing shares of Class A Common Stock from ATS in this
Offering and the average price per share paid by each group:
<TABLE>
<CAPTION>
SHARES OF COMMON TOTAL
STOCK ACQUIRED CONSIDERATION AVERAGE PRICE
----------------- -------------- PER SHARE OF
NUMBER(1) PERCENT $(2) PERCENT COMMON STOCK
--------- ------- ------ ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders(3).... 79,020 80% $444.9 50% $ 5.63
New investors............... 20,000 20 437.5 50 21.875
------ --- ------ --- -------
Total..................... 99,020 100% $882.4 100% $ 8.91
====== === ====== === =======
</TABLE>
(1) In Thousands.
(2) In Millions.
(3) Pro forma to reflect the ATS Pro Forma Transactions and the CBS Merger.
22
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF ATS
The following unaudited pro forma condensed consolidated financial
statements of ATS consist of an unaudited pro forma condensed consolidated
balance sheet as of March 31, 1998 and an unaudited pro forma condensed
consolidated statement of operations for the three months ended March 31, 1998
and the year ended December 31, 1997 adjusted for the ATS Pro Forma
Transactions, the CBS Merger including the issuance of $300.0 million of
Interim Preferred Stock and payments required under the ARS-ATS Separation
Agreement, and this Offering, as if such transactions had been consummated on
January 1, 1998 and January 1, 1997, respectively, with respect to the
unaudited pro forma condensed consolidated statements of operations, and March
31, 1998 with respect to the unaudited pro forma condensed consolidated
balance sheet. With respect to acquisitions, the pro forma statements give
effect only to the ATS Pro Forma Transactions based on their significance in
relation to all of ATS's acquisitions and, therefore, do not include all
Recent Transactions. The unaudited pro forma condensed consolidated balance
sheet and the unaudited pro forma condensed consolidated statements of
operations should be read in conjunction with ATS's consolidated financial
statements and notes thereto, as well as the financial statements and notes
thereto of certain businesses that have been or may be acquired, which are
included elsewhere in this Prospectus. The unaudited pro forma condensed
consolidated balance sheet and the unaudited pro forma condensed consolidated
statement of operations are not necessarily indicative of the financial
condition or the results of operations that would have been reported had such
events actually occurred on the date specified, nor are they indicative of the
results of operations that would have resulted had ATS been operated as a
separate, independent company during such periods, and are not necessarily
indicative of ATS's future financial conditions or results of operations.
In reviewing the unaudited pro forma condensed consolidated financial
statements set forth below, in addition to the assumptions and other matters
noted in the above paragraph and in the notes to the unaudited pro forma
condensed consolidated financial statements, it should be noted that estimated
incremental costs that will be incurred because ATS will be an independent
company have been reflected in the pro forma adjustments. However, there can
be no assurance that actual incremental costs for such independent operation
will not exceed such estimated amounts.
23
<PAGE>
AMERICAN TOWER CORPORATION
(FORMERLY AMERICAN TOWER SYSTEMS CORPORATION)
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS PRO FORMA
FOR ATS FOR ATS
PRO FORMA PRO FORMA
TRANSACTIONS TRANSACTIONS
AND CBS AND CBS ADJUSTMENTS FOR
HISTORICAL MERGER(A) MERGER(A) THIS OFFERING(B) PRO FORMA
---------- ------------ ------------ ---------------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equiva-
lents.................. $ 6,800 $ 69,311 $ 76,111 $ 76,111
Accounts receivable,
net.................... 5,742 1,084 6,826 6,826
Other current assets.... 4,427 984 5,411 5,411
Notes receivable........ 1,000 1,000 1,000
Property and equipment,
net.................... 156,827 125,788 282,615 282,615
Intangible assets, net.. 229,189 387,893 617,082 $ (10,000) 607,082
Deferred income taxes... 123,273 10,000 133,273 133,273
Deposits and other as-
sets................... 5,756 5,756 5,756
-------- --------- ---------- --------- ----------
Total.................. $533,014 $ 595,060 $1,128,074 $ (10,000) $1,118,074
======== ========= ========== ========= ==========
LIABILITIES AND STOCK-
HOLDERS' EQUITY
Current liabilities, ex-
cluding current portion
of long-term debt...... $141,914 $(118,031) $ 23,883 $ 23,883
Interim preferred stock,
due within one year.... 300,000 300,000 $(300,000) --
Deferred income taxes... 113,326 113,326 113,326
Other long-term liabili-
ties................... 33 184 217 217
Long-term debt, includ-
ing current portion.... 157,150 92,389 249,539 (114,107) 135,432
Minority interest in
subsidiaries........... 600 600 600
Stockholders' equity.... 233,317 207,192 440,509 404,107 844,616
-------- --------- ---------- --------- ----------
Total.................. $533,014 $ 595,060 $1,128,074 $ (10,000) $1,118,074
======== ========= ========== ========= ==========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet.
24
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
The unaudited pro forma condensed consolidated balance sheet as of March 31,
1998 gives effect to the consummation of the ATC Merger (collectively, with
the Diablo Transaction, the Meridian Transaction, the MicroNet Transaction,
the Gearon Transaction, the OPM Transaction, the Tucson Transaction, the
Transfer of Towers from ARS to ATS, and the transactions contemplated by the
Stock Purchase Agreement, the "ATS Pro Forma Transactions"), the CBS Merger
(including the issuance of $300.0 million of Interim Preferred Stock and
payments required under the ARS-ATS Separation Agreement) and this Offering,
as if each of the foregoing had occurred on March 31, 1998. See "Business--
Recent Transactions" for a description of each of the transactions included in
the ATS Pro Forma Transactions.
(a) The following table sets forth the pro forma balance sheet adjustments
with respect to the ATS Pro Forma Transactions (the ATC Merger being the only
then-unconsummated ATS Pro Forma Transaction) and the CBS Merger as of March
31, 1998. (In thousands).
<TABLE>
<CAPTION>
ATC CBS
MERGER(I) MERGER(II) TOTAL
--------- ---------- ---------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents...................... $ 1,111 $ 68,200 $ 69,311
Accounts receivable, net....................... 1,084 1,084
Other current assets........................... 984 984
Property and equipment, net.................... 125,788 125,788
Intangible assets, net......................... 377,893 10,000 387,893
Deferred income taxes.......................... 10,000 10,000
-------- --------- ---------
Total......................................... $506,860 $ 88,200 $ 595,060
======== ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities, excluding current portion
of long-term debt............................. $ 3,969 $(122,000) $(118,031)
Interim preferred stock, due within one year... 300,000 300,000
Deferred income taxes.......................... 113,326 113,326
Other long-term liabilities.................... 184 184
Long-term debt, including current portion...... 91,789 50,000 141,789
Stockholders' equity........................... 297,592 (139,800) 157,792
-------- --------- ---------
Total......................................... $506,860 $ 88,200 $ 595,060
======== ========= =========
</TABLE>
- --------
(i) In connection with the ATC Merger, a deferred tax liability of $113.3
million will be established for the differences in bases for book and tax
purposes resulting from the transaction. The working capital deficiency of
ATC at March 31, 1998 ($1.0 million) has also been recorded as a pro forma
adjustment.
(ii) The ARS-ATS Separation Agreement requires ATS to reimburse CBS on a
"make-whole" (after tax) basis for the tax liabilities to be incurred by
ARS attributable to the distribution of the Common Stock to the ARS
security holders and certain related transactions to the extent that the
aggregate amount of taxes required to be paid by ARS exceeds $20.0
million. The amount of that tax liability is dependent on the "fair
market value" of the Common Stock at the time of the consummation of the
CBS Merger. ATS received an appraisal from an independent appraisal firm
that the "fair market value" of ARS's stock interest in ATS was equal to
$17.25 per share. Based on such appraisal, ARS paid estimated taxes of
approximately $212.0 million and was reimbursed therefor by ATS. Such
taxes gave effect to estimated deductions of approximately $85.1 million
available to ARS as a consequence of the disqualification of ARS
incentive stock options pursuant to the CBS Merger. ATS's reimbursement
obligation with respect to such taxes would change by approximately $21.0
million for each $1.00 change in the "fair market value" of the Common
Stock under the tax reporting method to be followed. The last quoted sale
price per share of the Class A Common Stock in the when-issued over-the-
counter market on June 4, 1998 was $20.50. Such taxes did not include the
taxes payable with respect to the shares of Class A Common Stock
deliverable upon conversion of the ARS Convertible Preferred Stock; such
taxes will be based on the "fair market value" of the Class A Common
Stock at the time of conversion. Based on the closing per share price of
the Class A Common Stock on June 15, 1998 of $21.875, ATS estimates that
its reimbursement obligation with respect to such taxes on ARS
Convertible Preferred Stock will be approximately $12.8 million under the
tax reporting method to be followed. As required by the ARS-ATS
Separation Agreement, ATS provided CBS with security of $9.8 million in
cash (which may be replaced at ATS's option with a letter of credit
reasonably satisfactory to CBS) in connection with the filing of
estimated tax returns based on such appraisal. Such appraisal is not, of
course, binding on the Internal Revenue Service or other taxing
authorities. For information with respect to possible challenges by the
Internal Revenue Service (or other taxing authorities) to such appraisal
and other positions, assumptions and interpretations of various income
tax rules that were used in determining the amount of the estimated
taxes, see "Risk Factors--Relationship between ATS and ARS--Certain
Contingent Liabilities" and "Relationship between ATS and ARS--Sharing of
Tax and Other Consequences". In June 1998, ATS issued $300.0 million of
the Interim Preferred Stock and used the proceeds to fund its tax
reimbursement obligation, to pay the commitment and other fees and other
expenses of the issue and sale of the Interim Preferred Stock and to
reduce bank borrowings. The proceeds of this Offering will be used
principally to redeem the Interim Preferred Stock at a price equal to
101% of the liquidation preference together with accrued and unpaid
dividends.
25
<PAGE>
The ARS-ATS Separation Agreement also provides for closing date balance
sheet adjustments based upon the working capital (current assets less
defined liabilities) and specified debt levels of ARS. ATS will benefit from
or bear the cost of such adjustments. ATS's preliminary estimate of such
adjustments is that it will be required to make a payment of not more than
$50.0 million and that, in addition, it will be required to reimburse CBS
for the tax consequences of such payment. The estimated taxes stated above
include approximately $33.0 million of taxes attributed to such $50.0
million adjustment payment. ATS intends to finance such obligations through
bank borrowings; pro forma effect has been given to aggregate bank
borrowings of approximately $50.0 million in the pro forma balance sheet.
Since the amounts of working capital and debt are dependent upon the
uncertainty, among other things, of recent operating results and cash
capital expenditures as well as CBS Merger expenses, ATS is unable to state
definitively what payments, if any, will be owed by ATS. See "Relationship
between ATS and ARS--Closing Date Adjustments".
In connection with an inter-corporate taxable transfer of assets entered
into in January 1998 by ATS in contemplation of the separation of ATS and ARS,
a portion of the tax with respect to which ATS is obligated to indemnify CBS
was incurred. Such transfer resulted in an increase in the tax basis of ATS's
assets of approximately $366.5 million. Management currently believes that ATS
will have potential depreciation and amortization deductions over the next 15
years of $24.4 million per year resulting in a deferred tax asset of
approximately $135.0 million. As of March 31, 1998, ATS had recorded a
deferred tax asset of approximately $125.0 million to reflect these potential
depreciation and amortization deductions. An additional $10.0 million deferred
tax asset has been recorded in the March 31, 1998 proforma condensed
consolidated balance sheet to reflect the Company's current estimate.
All of the ATS Pro Forma Transactions (other than the Transfer of Towers)
have been or will be accounted for under the purchase method of accounting.
The Transfer of Towers from ARS to ATS will be recorded at the historical
depreciated net book value of such towers on the books of ARS on the date of
transfer.
The following table describes the financing of the transactions described
above.
<TABLE>
<CAPTION>
PURCHASE BORROWINGS BY COMMON STOCK
PRICE ATS ISSUED BY ATS
-------- ------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Tucson Transaction.................... $12,000 $12,000
Gearon Transaction.................... 80,000(i) 32,000 $48,000(i)
OPM Transaction....................... 21,306 21,306
ATC Merger............................ 503,681(ii) 91,789 287,824(ii)
</TABLE>
- --------
(i) Purchase price includes approximately 5.3 million shares valued at $9.00
per share.
(ii) Purchase price includes approximately 28.8 million shares valued at
$10.00 per share, the estimated fair value when the ATC Merger Agreement
was signed.
On January 22, 1998, ATS issued Common Stock pursuant to the Stock Purchase
Agreement for an aggregate of $80.0 million, $79.4 million net of expenses (of
which approximately $49.4 million was paid in the form of secured notes due
and paid upon consummation of the CBS Merger and the balance in cash).
ATS issued a total of 62,115,719 shares of Common Stock to effect all of the
transactions described above. The following shares have been or will be
issued: the Gearon Transaction (5,333,333), the ATC Merger (28,782,386), the
Stock Purchase Agreement (8,000,000), and this Offering (20,000,000).
While the ATS Pro Forma Transactions do not constitute all of the Recent
Transactions, management believes that the impact of the Recent Transactions
that are not included in the pro forma financial information on revenues,
expenses and income from continuing operations, when compared to those that
are so included, is not likely to be material. The ATS Pro Forma Transactions,
exclusive of the ATC Merger, represented approximately 80% of the more than
550 sites acquired since January 1, 1997 and 85% of the aggregate purchase
price thereof. In addition, the ATC Merger (which is included in the ATS Pro
Forma Transactions) represented the acquisition of approximately 950
communications sites (including ATC's pending acquisitions involving
approximately 35 sites) for approximately 30.0 million shares of Class A
Common Stock and the repayment of approximately $125.0 million of debt. For
information with respect to other acquisitions that are not included in the
ATS Pro Forma Transactions and are, in the aggregate, of materially less
significance than the ATC Merger, see "Business--Recent Transactions--
Consummated Acquisitions" and "--Pending Acquisitions".
26
<PAGE>
(b) To record the effect of the issuance of 20,000,000 shares of Common
Stock and the net proceeds (approximately $417.1 million) of this Offering
less the write-off of issuance costs related to the Interim Preferred Stock
($10.0 million) and a 1% premium to redeem the Interim Preferred Stock ($3.1
million).
27
<PAGE>
AMERICAN TOWER CORPORATION
(FORMERLY AMERICAN TOWER SYSTEMS CORPORATION)
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ADJUSTMENTS PRO FORMA FOR
FOR ATS PRO ATS PRO
FORMA FORMA
TRANSACTIONS TRANSACTIONS
AND CBS AND CBS ADJUSTMENTS FOR
HISTORICAL MERGER(A) MERGER THIS OFFERING(B) PRO FORMA
---------- ------------ ------------- ---------------- ---------
<S> <C> <C> <C> <C> <C>
Net revenues............ $17,508 $ 77,414 $ 94,922 $ 94,922
Operating expenses...... 8,713 41,469 50,182 50,182
Depreciation and
amortization........... 6,326 48,570 54,896 54,896
Corporate general and
administrative
expenses............... 1,536 3,000 4,536 4,536
------- -------- -------- --------
Operating income
(loss)................. 933 (15,625) (14,692) (14,692)
------- -------- -------- --------
Other expense:
Interest expense,
net.................. 2,789 55,947 58,736 $(53,330) 5,406
Other expense......... 15 15 15
Minority interest in
net earnings of
subsidiaries......... 178 178 178
------- -------- -------- -------- --------
Total other expense
(income)........... 2,982 55,947 58,929 (53,330) 5,599
------- -------- -------- -------- --------
Income (loss) before
income taxes........... (2,049) (71,572) (73,621) 53,330 (20,291)
Income tax benefit
(provision)............ 473 6,014(c) 6,487 (3,712)(c) 2,775
------- -------- -------- -------- --------
Income (loss) before
extraordinary item..... $(1,576) $(65,558) $(67,134) $ 49,618 $(17,516)
======= ======== ======== ======== ========
Pro forma basic and
diluted loss per common
share before
extraordinary item..... $ (0.87) $ (0.18)
======== ========
Pro forma common shares
outstanding(d)......... 77,515 20,000 97,515
======== ======== ========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Statement of
Operations.
28
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
The unaudited pro forma condensed consolidated statement of operations for
the year ended December 31, 1997 gives effect to the ATS Pro Forma
Transactions, the CBS Merger and this Offering, as if each of the foregoing
had occurred on January 1, 1997.
(a) To record the results of operations for the ATS Pro Forma Transactions
and the CBS Merger. The results of operations have been adjusted to: (i)
reverse historical interest expense of $6.5 million; (ii) record interest
expense of $7.9 million for the year ended December 31, 1997, as a result of
approximately $61.0 million of additional net debt to be incurred in
connection with the ATS Pro Forma Transactions, after giving effect to the
proceeds from the issuance of Common Stock pursuant to the Stock Purchase
Agreement for an aggregate purchase price of $80.0 million, $79.4 million net
of expenses (of which approximately $49.4 million was paid in the form of
secured notes (which were paid upon consummation of the CBS Merger) and the
balance in cash); (iii) record additional interest expense related to
dividends on the Interim Preferred Stock at an effective annual rate of 11.35%
and the amortization of the estimated issuance costs incurred in connection
with issuance of the Interim Preferred Stock for the entire period presented;
and (iv) record interest expense related to additional long-term borrowings
incurred to pay an estimated closing date balance sheet adjustment of
approximately $50.0 million. Because the Interim Preferred Stock is required
to be redeemed in one year, ATS has elected to reflect the dividend as
interest expense. Each 1/4% change in the interest rate applicable to the
change in floating rate debt would increase or decrease, as appropriate, the
net adjustment to interest expense by approximately $0.2 million.
The results of operations have also been adjusted to reverse historical
depreciation and amortization expense of $9.1 million for the year ended
December 31, 1997 and record depreciation and amortization expense of $48.6
million for the year ended December 31, 1997 based on estimated allocations of
purchase prices. Depreciation expense for property, plant and equipment
acquired has been determined based on an average life of 15 years. Costs of
acquired intangible assets for the transactions are amortized over 15 years.
The preliminary estimates of the fair value of property, plant and equipment
and intangible assets may change upon final appraisal. The depreciation
adjustment also includes the effects of the assumed transfer by ARS to ATS of
16 towers with a historical net book value of $4.2 million, representing an
additional equity investment in ATS by ARS.
A portion of corporate general and administrative expenses of the prior
owners has not been carried forward into the pro forma condensed financial
statements as these costs represent duplicative facilities and compensation to
owners and/or executives not retained by ATS. Because ATS already maintains
its own separate corporate headquarters which provides services substantially
similar to those represented by these costs, they are not expected to recur
following the acquisition. After giving effect to an estimated $3.0 million of
incremental costs, ATS believes that it has existing management capacity
sufficient to provide such services without incurring additional incremental
costs.
The following table sets forth the historical results of operations for the
ATS Pro Forma Transactions and the CBS Merger for the year ended December 31,
1997 (In Thousands).
<TABLE>
<CAPTION>
MERIDIAN DIABLO MICRONET TUCSON GEARON OPM
TRANSACTION TRANSACTION TRANSACTION TRANSACTION TRANSACTION TRANSACTION
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net revenues............ $2,385 $6,957 $15,103 $1,460 $29,930 $ 863
Operating expenses...... 1,730 4,876 8,695 453 19,688 1,146
Depreciation and
amortization........... 211 393 2,626 166 186 428
Corporate general and
administrative......... 500 488
------ ------ ------- ------ ------- -------
Operating income
(loss)................. 444 1,188 3,782 841 10,056 (1,199)
Other (income) expense:
Interest expense, net.. 80 110 198 636
Other expense (in-
come)................. (133) (34) (12) (95) (16)
------ ------ ------- ------ ------- -------
Income (loss) from oper-
ations before income
taxes.................. $ 364 $1,211 $ 3,816 $ 655 $10,151 $(1,819)
====== ====== ======= ====== ======= =======
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
TRANSFER STOCK
ATC OF PURCHASE CBS PRO FORMA
MERGER TOWERS AGREEMENT MERGER ADJUSTMENTS TOTAL
------- -------- --------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Net revenues............ $20,006 $ 710 $ 77,414
Operating expenses...... 4,138 743 41,469
Depreciation and
amortization........... 4,903 215 $ 39,442 48,570
Corporate general and
administrative......... 3,183 (1,171) 3,000
------- ----- -------- --------
Operating income
(loss)................. 7,782 (248) (38,271) (15,625)
Other (income) expense:
Interest expense (in-
come), net............ 5,439 $(6,352) $ 48,050(i) 7,786 55,947
Other expense (in-
come)................. 514 (224)
------- ----- ------- -------- -------- --------
Income (loss) from oper-
ations before income
taxes.................. $ 1,829 $(248) $ 6,352 $(48,050) $(45,833) $(71,572)
======= ===== ======= ======== ======== ========
</TABLE>
(i) Assumes the Interim Preferred Stock remains outstanding during the entire
period presented and full amortization of deferred issuance costs.
(b) To record the elimination of the Interim Preferred Stock dividends and
the pro forma effect to interest expense from the repayment of approximately
$68.4 million of debt with proceeds from this Offering. An extraordinary loss
aggregating $13.0 million relating to the redemption of the Interim Preferred
Stock has not been reflected.
(c) To record the tax effect of the pro forma adjustments and impact on
ATS's estimated effective tax rate. The actual effective tax rate may be
different once the final allocation of purchase price is determined.
(d) Includes shares issued or expected to be issued pursuant to the Gearon
Transaction (5,333,333), the ATC Merger (28,782,386), the Stock Purchase
Agreement (8,000,000), and this Offering (20,000,000).
30
<PAGE>
AMERICAN TOWER CORPORATION
(FORMERLY AMERICAN TOWER SYSTEMS CORPORATION)
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ADJUSTMENTS PRO FORMA FOR
FOR ATS PRO ATS PRO
FORMA FORMA
TRANSACTIONS TRANSACTIONS
AND CBS AND CBS ADJUSTMENTS FOR
HISTORICAL MERGER(A) MERGER THIS OFFERING(B) PRO FORMA
---------- ------------ ------------- ---------------- ---------
<S> <C> <C> <C> <C> <C>
Net revenues............ $17,925 $ 7,164 $ 25,089 $25,089
Operating expenses...... 11,495 2,392 13,887 13,887
Depreciation and
amortization........... 5,802 8,753 14,555 14,555
Corporate general and
administrative
expenses............... 541 1,000 1,541 1,541
------- -------- -------- -------
Operating income
(loss)................. 87 (4,981) (4,894) (4,894)
------- -------- -------- -------
Other expense:
Interest expense,
net.................. 1,565 21,347 22,912 $(20,678) 2,234
Other expense.........
Minority interest in
net earnings of
subsidiaries......... 79 79 79
------- -------- -------- -------- -------
Total other expense
(income)........... 1,644 21,347 22,991 (20,678) 2,313
------- -------- -------- -------- -------
Income (loss) before
income taxes........... (1,557) (26,328) (27,885) 20,678 (7,207)
Income tax benefit
(provision)............ 30 2,428(c) 2,458 (913)(c) 1,545
------- -------- -------- -------- -------
Income (loss) before
extraordinary item..... $(1,527) $(23,900) ($25,427) $ 19,765 $(5,662)
======= ======== ======== ======== =======
Pro forma basic and
diluted loss per common
share before
extraordinary item..... $ (0.33) $ (0.06)
======== =======
Pro forma common shares
outstanding(d)......... 77,515 20,000 97,515
======== ======== =======
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Statement of
Operations.
31
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
The unaudited pro forma condensed consolidated statement of operations for
the three months ended March 31, 1998 gives effect to the ATS Pro Forma
Transactions, the CBS Merger and this Offering, as if each of the foregoing
had occurred on January 1, 1998.
(a) To record the results of operations for the ATS Pro Forma Transactions
and the CBS Merger. The results of operations have been adjusted to: (i)
reverse historical interest expense of $1.8 million; (ii) record interest
expense of $2.0 million for the three months ended March 31, 1998, as a result
of approximately $42.4 million of additional net debt to be incurred in
connection with the ATS Pro Forma Transactions, after giving effect to the
proceeds from the issuance of Common Stock pursuant to the Stock Purchase
Agreement for an aggregate purchase price of $80.0 million, $79.4 million net
of expenses (of which approximately $49.4 million was paid in the form of
secured notes (which were paid upon consummation of the CBS Merger) and the
balance in cash); (iii) record additional interest expense related to
dividends on the Interim Preferred Stock at an effective annual rate of 11.35%
and the amortization of the estimated issuance costs incurred in connection
with issuance of the Interim Preferred Stock for the entire period presented;
and (iv) record interest expense related to additional long-term borrowings
incurred to pay an estimated closing date balance sheet adjustment of
approximately $50.0 million. Because the Interim Preferred Stock is required
to be redeemed in one year, ATS has elected to reflect the dividend as
interest expense. Each 1/4% change in the interest rate applicable to the
change in floating rate debt would increase or decrease, as appropriate, the
net adjustment to interest expense by approximately $0.03 million.
The results of operations have also been adjusted to reverse historical
depreciation and amortization expense of $1.8 million for the three months
ended March 31, 1998 and record depreciation and amortization expense of $8.7
million for the three months ended March 31, 1998 based on estimated
allocations of purchase prices. Depreciation expense for property, plant and
equipment acquired has been determined based on an average life of 15 years.
Costs of acquired intangible assets for the transactions are amortized over 15
years. The preliminary estimates of the fair value of property, plant and
equipment and intangible assets may change upon final appraisal. The
depreciation adjustment also includes the effects of the transfer by ARS to
ATS of 16 towers with a historical net book value of $4.2 million,
representing an additional equity investment in ATS by ARS.
A portion of corporate general and administrative expenses of the prior
owners has not been carried forward into the pro forma condensed financial
statements as these costs represent duplicative facilities and compensation to
owners and/or executives not retained by ATS. Because ATS already maintains
its own separate corporate headquarters which provides services substantially
similar to those represented by these costs, they are not expected to recur
following the acquisition. After giving effect to an estimated $3.0 million of
incremental costs, ATS believes that it has existing management capacity
sufficient to provide such services without incurring additional incremental
costs.
The following table sets forth the historical results of operations for the
ATS Pro Forma Transactions (that were unconsummated as of January 1, 1998) and
the CBS Merger for the three months ended March 31, 1998. (In thousands).
<TABLE>
<CAPTION>
GEARON ATC CBS PRO FORMA
TRANSACTION MERGER MERGER ADJUSTMENTS TOTAL
----------- ------ -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Net revenues............. $ 904 $6,260 $ 7,164
Operating expenses....... 1,087 1,305 2,392
Depreciation and amorti-
zation.................. 19 1,755 $ 6,979 8,753
Corporate general and ad-
ministrative............ 862 138 1,000
----- ------ -------- ------- --------
Operating income (loss).. (202) 2,338 (7,117) (4,981)
Other (income) expense:
Interest expense (in-
come), net............ (17) 1,791 $ 19,382(i) 191 21,347
Other expense (in-
come)................. 574 (574)
----- ------ -------- ------- --------
Income (loss) from opera-
tions before income tax-
es...................... $(759) $ 547 $(19,382) $(6,734) $(26,328)
===== ====== ======== ======= ========
</TABLE>
32
<PAGE>
(i) Assumes the Interim Preferred Stock remains outstanding during the entire
period presented and full amortization of deferred issuance costs.
(b) To record the elimination of the Interim Preferred Stock dividends and
the pro forma effect to interest expense from the repayment of approximately
$114.1 million of debt with proceeds from this Offering. An extraordinary loss
aggregating $13.0 million relating to the redemption of the Interim Preferred
Stock has not been reflected.
(c) To record the tax effect of the pro forma adjustments and the impact on
ATS's estimated effective tax rate. The actual effective tax rate may be
different once the final allocation of purchase price is determined.
(d) Includes shares issued or expected to be issued pursuant to the Gearon
Transaction (5,333,333), the ATC Merger (28,782,386), the Stock Purchase
Agreement (8,000,000), and this Offering (20,000,000).
33
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
This discussion contains "forward-looking statements," including statements
concerning projections, plans, objectives, future events or performance and
underlying assumptions and other statements which are other than statements of
historical fact. ATS wishes to caution readers that certain important factors
may have affected and could in the future affect ATS's actual results and
could cause ATS's actual results for subsequent periods to differ materially
from those expressed in any forward-looking statement made by or on behalf of
ATS. These important factors include, among others, the risk factors set forth
herein under "Risk Factors". The discussion should be read in conjunction with
the American Tower Systems Consolidated Financial Statements and the notes
thereto contained elsewhere in this Prospectus. As ATS was a wholly-owned
subsidiary of American Radio during the periods presented, the consolidated
financial statements may not reflect the results of operations or financial
position of ATS had it been an independent, public company during such
periods. Because of ATS's relatively brief operating history and the large
number of recent acquisitions, the following discussion, which relates solely
to ATS on an historical basis and does not include acquired companies, is
presented to satisfy certain disclosure requirements of the Securities and
Exchange Commission (the "SEC" or the "Commission") and will not necessarily
reveal any significant developing or continuing trends. See "Business--Growth
Strategy".
ATS was formed in July 1995 to capitalize on the opportunity in the
communications site industry. ATS is a leading independent owner and operator
of wireless communications towers in the United States. On a pro forma basis,
ATS currently owns and operates more than 1,800 towers in 44 states and the
District of Columbia. ATS's rapid growth is a result primarily of numerous
acquisitions during 1996, 1997 and 1998. During 1996, ATS acquired
approximately 15 communications sites and site management businesses involving
approximately 250 sites for an aggregate purchase price of approximately $21.0
million. During 1997, its acquisition and construction activity accelerated
and ATS acquired or constructed approximately 400 communications sites (and
related site management businesses) and its initial site acquisition and
voice, video and data transmission businesses. Since January 1, 1998,
exclusive of the ATC Merger, ATS has acquired approximately 150 communications
sites, a major site acquisition business, and a third teleport. The ATC Merger
involved the acquisition of approximately 950 communications towers (including
pending acquisitions of approximately 35 towers) in exchange for the issuance
of approximately 30.0 million shares of Class A Common Stock and the repayment
of approximately $118.0 million of debt. ATS has acquisitions pending for
approximately 40 additional towers.
RESULTS OF OPERATIONS
Management expects that acquisitions consummated to date, particularly the
ATC Merger, will have a material impact on future revenues, expenses and
income from continuing operations. As indicated in the Unaudited Pro Forma
Condensed Consolidated Statement of Operations for the three months ended
March 31, 1998 and the year ended December 31, 1997, there is a dramatic
difference between the historical results and the pro forma results for each
of the foregoing items. The notes to the Unaudited Pro Forma Condensed
Consolidated Statement of Operations for the three months ended March 31, 1998
and the year ended December 31, 1997 indicate the effect of certain of the
acquisitions, and their impact on revenues, expenses and income from
continuing operations. In that connection, the increase in operating expenses
and, to a greater extent, depreciation and amortization, each as a percentage
of net revenues in the pro forma information compared to the historical
information, should be noted. While the ATS Pro Forma Transactions do not
constitute all of the Recent Transactions, management believes that the impact
of the Recent Transactions that are not included in the pro forma financial
information on revenues, expenses and income from continuing operations, when
compared to those that are so included, is not likely to be material. The ATS
Pro Forma Transactions, exclusive of the ATC Merger, represent approximately
80% of the more than 550 communications sites acquired since January 1, 1997
and ATS's site acquisition and voice, video and data transmission businesses,
and 85% of the aggregate purchase price thereof. In addition, the ATC Merger
(which is included in the ATS Pro Forma Transactions) represented
34
<PAGE>
the acquisition of approximately 950 communications towers (including pending
acquisitions of approximately 35 towers) for approximately 30.0 million shares
of Class A Common Stock and the repayment of approximately $118.0 million of
debt. For information with respect to consummated and pending acquisitions
that are not included in the ATS Pro Forma Transactions and are, in the
aggregate, of materially less significance, see "Business--Recent
Transactions". Finally, the impact of the construction program of ATS is not
reflected to any significant extent in the pro forma information because most
of that activity is of more recent origin and is expected to accelerate
substantially in 1998. Management believes that potential investors should be
aware of the dramatic changes in the nature and scope of ATS's business in
reviewing the ensuing discussion of comparative historical results.
THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (DOLLARS IN THOUSANDS)
As of March 31, 1998, ATS operated approximately 880 communications sites
principally in the Northeast and Mid-Atlantic regions, Florida and California.
As of March 31, 1997, ATS operated approximately 270 communications sites,
principally in the Northeast and Mid-Atlantic regions and Florida. See the
Notes to the Consolidated Financial Statements for a description of the
acquisitions consummated in 1998. These transactions have significantly
affected operations for the three months ended March 31, 1998 as compared to
the three months ended March 31, 1997.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, AMOUNT OF PERCENTAGE
--------------- INCREASE INCREASE
1997 1998 (DECREASE) (DECREASE)
------ ------- ---------- ----------
<S> <C> <C> <C> <C>
Tower rental and management revenues... $1,365 $ 9,493 $ 8,128 595.5%
Site acquisition service revenues...... -- 5,275 5,275
Video, voice and data transmission rev-
enues................................. -- 3,142 3,142
Other.................................. 1 15 14 1,400.0%
------ ------- -------
Total operating revenues............... 1,366 17,925 16,559 1,212.2%
------ ------- -------
Tower rental and management expenses... 538 4,899 4,361 810.6%
Site acquisition service expenses...... -- 4,544 4,544
Video, voice and data transmission ex-
penses................................ -- 2,052 2,052
------ ------- -------
Operating expenses excluding deprecia-
tion and amortization and corporate
general and administrative expenses... 538 11,495 10,957 2,036.6%
------ ------- -------
Depreciation and amortization.......... 504 5,802 5,298 1,051.2%
Corporate general and administrative
expenses.............................. 280 541 261 93.2%
Interest expense, net.................. 71 1,565 1,494 2,104.2%
Minority interest in net earnings of
subsidiaries.......................... 80 79 (1) (1.3)%
Income tax benefit..................... 49 30 (19) (38.8)%
------ ------- -------
Net loss............................... $ (58) $(1,527) $ 1,469 2,532.8%
====== ======= =======
Tower cash flow........................ $ 828 $ 6,430 $ 5,602 676.6%
====== ======= =======
EBITDA................................. $ 548 $ 5,889 $ 5,341 974.6%
====== ======= =======
</TABLE>
As noted above, ATS consummated numerous acquisitions in 1997 and 1998, many
of which were of a material size. Except as explained below, substantially all
of the increases indicated in the above table were attributable to the impact
of these communications sites and related business acquisitions, principally
those that occurred in 1997 and 1998. The increase in site acquisition service
revenues and expenses is attributable to the Gearon acquisition that occurred
in January 1998, and, to a substantially lesser extent, the impact of a May
1997 acquisition of two similar businesses. The increase in video, voice and
data transmission revenues and expenses is attributable to an acquisition that
occurred in October 1997. The increase in depreciation and amortization is
primarily attributable to the increase in depreciable and amortizable assets
resulting from the 1997 and 1998 acquisitions, and, to a substantially lesser
extent, completed construction projects. The increase in corporate
35
<PAGE>
general and administrative expense is primarily attributable to the higher
personnel costs associated with supporting ATS's greater number of tower
properties and growth strategy. The increase in interest expense, net, relates
to higher borrowing levels which were used to finance 1998 and, to a
substantially lesser extent, 1997 acquisitions. The minority interest in net
earnings of subsidiaries represents the elimination of the minority
stockholders' earnings of consolidated subsidiaries. The effective tax rate
benefit for the three months ended March 31, 1998 was approximately 2% as
compared to 46% for the three months ended March 31, 1997. The effective rate
benefit in 1998 is due to the effect of non-deductible items, principally
amortization of goodwill, on certain stock acquisitions for which no tax
benefit was recorded.
YEAR ENDED DECEMBER 31, 1997 AND 1996 (DOLLARS IN THOUSANDS)
As of December 31, 1997, ATS operated approximately 670 communications sites
principally in the Northeast and Mid-Atlantic regions, Florida and California.
As of December 31, 1996, ATS operated approximately 270 communications sites,
principally in the Northeast and Mid-Atlantic regions and Florida. See the
Notes to Consolidated Financial Statements for a description of the
acquisitions consummated in 1997 and 1996. These transactions have
significantly affected operations for the year ended December 31, 1997 as
compared to the year ended December 31, 1996.
<TABLE>
<CAPTION>
AMOUNT OF PERCENTAGE
INCREASE INCREASE
1996 1997 (DECREASE) (DECREASE)
------ ------- ---------- ----------
<S> <C> <C> <C> <C>
Tower rental and management revenues............... $2,817 $13,025 $10,208 362.4%
Site acquisition service revenues.................. -- 2,123 2,123
Video, voice and data transmission revenues........ -- 2,084 2,084
Other.............................................. 80 276 196 245.0%
------ ------- -------
Total operating revenues........................... 2,897 17,508 14,611 504.3%
------ ------- -------
Tower rental and management expenses............... 1,362 6,080 4,718 346.4%
Site acquisition service expenses.................. -- 1,360 1,360
Video, voice and data transmission expenses........ -- 1,273 1,273
------ ------- -------
Operating expenses excluding depreciation and amor-
tization
and corporate general and administrative expenses.. 1,362 8,713 7,351 539.7%
------ ------- -------
Depreciation and amortization...................... 990 6,326 5,336 539.0%
Corporate general and administrative expenses...... 830 1,536 706 85.1%
Interest expense (income), net..................... (36) 2,804 2,840 N/A
Minority interest in net earnings of subsidiaries.. 185 178 (7) (3.8%)
Income tax benefit (provision)..................... (46) 473 519 N/A
Extraordinary loss................................. -- 694 694
------ ------- -------
Net loss........................................... $ (480) $(2,270) $ 1,790 372.9%
====== ======= =======
Tower cash flow.................................... $1,535 $ 8,795 $ 7,260 473.0%
====== ======= =======
EBITDA............................................. $ 705 $ 7,259 $ 6,554 930.0%
====== ======= =======
</TABLE>
As noted above, ATS consummated numerous acquisitions in 1997 and 1996, many
of which were of a material size. Except as explained below, substantially all
of the increases indicated in the above table were attributable to the impact
of these communications sites and related business acquisitions, principally
those that occurred in 1997. The increase in depreciation and amortization was
primarily attributable to the increase in depreciable and amortizable assets
resulting from the 1996 and 1997 acquisitions and, to a substantially lesser
extent, completed construction projects. The increase in corporate general and
administrative expenses was primarily attributable to the higher personnel
costs associated with supporting ATS's greater number of tower properties and
growth strategy. The increase in interest expense related to higher borrowing
levels which were used to finance 1997 and, to a substantially lesser extent,
the 1996 acquisitions. The minority interest in net earnings of subsidiaries
represents the elimination of the minority stockholder's earnings of
consolidated subsidiaries. The increase is related to increased overall
earnings of ATS Needham, LLC, in which ATS holds a
36
<PAGE>
50.1% interest. The effective tax rate for the year December 31, 1997 was
approximately 23%. The effective tax rate in 1997 is due to the effect of non-
deductible items, principally amortization of goodwill, on certain stock
acquisitions. In 1996, ATS recorded a tax provision of approximately $46,000
despite a loss before taxes of approximately $434,000. This primarily resulted
from non-deductible items, principally amortization of goodwill for which no
tax benefit was recorded. The extraordinary loss in 1997, of approximately
$0.7 million net of tax, represents the write-off of deferred financing fees
associated with ATS's loan agreement.
YEAR ENDED DECEMBER 31, 1996 AND PERIOD ENDED DECEMBER 31, 1995 (DOLLARS IN
THOUSANDS)
As of December 31, 1996, ATS operated approximately 270 communications sites
principally in the Northeast and Mid-Atlantic regions and Florida. As of
December 31, 1995, ATS operated three wireless communications sites in
Florida. See the Notes to Consolidated Financial Statements for a description
of the acquisitions consummated in 1996. These transactions have significantly
affected operations for the year ended December 31, 1996 as compared to the
period from July 17, 1995 (date of incorporation) to December 31, 1995.
<TABLE>
<CAPTION>
AMOUNT OF PERCENTAGE
INCREASE INCREASE
1995 1996 (DECREASE) (DECREASE)
----- ------ ---------- ----------
<S> <C> <C> <C> <C>
Total operating revenues.................. $ 163 $2,897 $2,734 1,677.3%
Operating expenses excluding depreciation
and amortization and corporate general
and administrative expenses.............. 60 1,362 1,302 2,170.0%
Depreciation and amortization............. 57 990 933 1,636.8%
Corporate general and administrative ex-
penses................................... 230 830 600 260.9%
Interest expense (income), net............ -- (36) (36)
Minority interest in net earnings of sub-
sidiary.................................. -- 185 185
Income tax benefit (provision)............ 74 (46) (120) N/A
----- ------ ------
Net loss.................................. $(110) $ (480) $ 370 336.4%
===== ====== ======
Tower cash flow........................... $ 103 $1,535 $1,432 1,390.3%
===== ====== ======
EBITDA.................................... $(127) $ 705 $ 832 N/A
===== ====== ======
</TABLE>
As noted above, ATS consummated several acquisitions in 1996, two of which
were of a material size. Except as explained below, substantially all of the
increases indicated in the above table were attributable to the impact of
these communications sites and related business acquisitions that occurred in
1996. The increase in depreciation and amortization was primarily attributable
to the increase in depreciable and amortizable assets resulting from the 1996
acquisitions. The increase in corporate general and administrative expense was
primarily attributable to the higher personnel costs associated with
supporting ATS's greater number of tower properties. The increase in interest
income was attributable to higher investable cash balances. The minority
interest in net earnings of subsidiary represents the elimination of the
minority stockholder's earnings of consolidated subsidiaries. ATS purchased
its 50.1% interest in ATS Needham, LLC, in July 1996. In 1996, ATS recorded a
tax provision of approximately $46,000 despite a loss before taxes of
approximately $434,000. This primarily resulted from non-deductible items,
principally amortization of goodwill for which no tax benefit was recorded.
The effective tax rate in 1995 was consistent with the statutory rate.
LIQUIDITY AND CAPITAL RESOURCES
ATS's liquidity needs arise from its acquisition-related activities, debt
service, working capital, and capital expenditures. Historically, ATS has met
its operational liquidity needs with internally generated funds and has
financed the acquisition of tower related properties, including related
working capital needs, with a combination of contributions from American Radio
and bank borrowings. For the three months ended March 31, 1998, cash flows
used for operating activities were $1.7 million, as compared to $0.2 million
of cash flows from operating activities in 1997. The change is primarily
attributable to working capital investments related to communications site
acquisitions and growth.
37
<PAGE>
Cash flows used for investing activities were $91.8 million for the three
months ended March 31, 1998 as compared to $3.3 million for the three months
ended March 31, 1997. The increase in 1998 is due to the acquisition and
construction activity in 1998 as compared to 1997.
Cash flows provided by financing activities were $95.8 million for the three
months ended March 31, 1998 as compared to $2.4 million in 1997. The increase
in 1998 is due principally to the impact of borrowings under the Loan
Agreement and proceeds from the sale of common stock pursuant to the ATS Stock
Purchase Agreement.
CBS Merger: As a consequence of the consummation of the CBS Merger, all of
the shares of ATS owned by ARS were or will be distributed to ARS common
stockholders and holders of options to acquire ARS Common Stock or upon
conversion of shares of ARS Convertible Preferred Stock, or in the case of ARS
options exchanged for ATS options, contributed to ATS. As a consequence of the
CBS Merger, ATS ceased to be a subsidiary of, or otherwise affiliated with,
American Radio and operates as an independent publicly traded company.
Pursuant to the provisions of the CBS Merger Agreement, ATS entered into the
ARS-ATS Separation Agreement with CBS and ARS providing for, among other
things, the allocation of certain tax liabilities to ATS, certain closing date
adjustments relating to ARS, the lease to ARS by ATS of space on certain
towers previously owned by ARS and transferred to ATS, the orderly separation
of ARS and ATS, and certain indemnification obligations (including with
respect to securities laws matters) of ATS.
ATS's principal obligation is to reimburse CBS on a "make-whole" (after tax)
basis for the tax liabilities in excess of $20.0 million to be incurred by ARS
attributable to the distribution of the Common Stock to the ARS security
holders and certain related transactions. The amount of that tax reimbursement
obligation is dependent on the "fair market value" of the Common Stock at the
time of the consummation of the CBS Merger. In light of the significant
increase in the trading levels of the Class A Common Stock, ATS and CBS have
agreed that ARS will treat the tax reimbursement on its tax return on a more
conservative basis than originally contemplated in order to avoid the
possibility of significant interest and penalties for which ATS would be
responsible. ATS received an appraisal from an independent appraisal firm that
the "fair market value" of ARS's stock interest in ATS was equal to $17.25 per
share. Based on such appraisal, ARS paid estimated taxes of approximately
$212.0 million and was reimbursed therefor by ATS. Such taxes gave effect to
estimated deductions of approximately $85.1 million available to ARS as a
consequence of the disqualification of ARS incentive stock options pursuant to
the CBS Merger. ATS's reimbursement obligation with respect to such taxes
would change by approximately $21.0 million for each $1.00 change in the "fair
market value" of the Common Stock under the tax reporting method to be
followed. The last quoted sale price per share of the Class A Common Stock in
the when-issued over-the-counter market on June 4, 1998 was $20.50. Such taxes
did not include the taxes payable with respect to the shares of Class A Common
Stock deliverable upon conversion of the ARS Convertible Preferred Stock; such
taxes on ARS Convertible Preferred Stock will be based on the "fair market
value" of the Class A Common Stock at the time of conversion. Based on the
closing per share price of the Class A Common Stock on June 15, 1998 of
$21.875, ATS estimates that its reimbursement obligation with respect to such
taxes on ARS Convertible Preferred Stock will be approximately $12.8 million
under the tax reporting method to be followed. As required by the ARS-ATS
Separation Agreement, ATS provided CBS with security of $9.8 million in cash
(which may be replaced at ATS's option with a letter of credit reasonably
satisfactory to CBS) in connection with the filing of estimated tax returns
based on such appraisal. Such appraisal is not, of course, binding on the
Internal Revenue Service or other taxing authorities. For information with
respect to possible challenges by the Internal Revenue Service (or other
taxing authorities) to such appraisal and other positions, assumptions and
interpretations of various income tax rules that were used in determining the
amount of the estimated taxes, see "Risk Factors--Relationship between ATS and
ARS--Certain Contingent Liabilities" and "Relationship between ATS and ARS--
Sharing of Tax and Other Consequences".
ARS has agreed that it will pursue, for the benefit and at the cost of ATS,
a refund claim, attributable to the "make whole" provision, estimated at
approximately $40.0 million, based on the assumed "fair market value" and the
estimated taxes attributable to conversions of the ARS Convertible Preferred
Stock set forth above. Any such refund claim will, in fact, be based on the
actual amount of tax paid. In light of existing tax law, there can, of course,
be no assurance that any such refund claim will be successful.
38
<PAGE>
In connection with an inter-corporate taxable transfer of assets entered
into in January 1998 by ATS in contemplation of the separation of ATS and ARS,
a portion of the tax with respect to which ATS is obligated to indemnify CBS
was incurred. Such transfer resulted in an initial increase in the tax basis
of ATS's assets of approximately $330.0 million. Based on the current estimate
of $366.5 million, ATS will have potential depreciation and amortization
deductions over the next 15 years of $24.4 million per year resulting in a
deferred tax asset and corresponding liability due to ARS of approximately
$135.0 million to reflect these transactions. As of March 31, 1998, ATS had
recorded a deferred tax asset of approximately $125.0 million to reflect these
potential depreciation and amortization deductions. An additional $10.0
million deferred tax asset will be recorded during the second quarter of 1998
to reflect the Company's current estimate.
The ARS-ATS Separation Agreement also provides for closing date balance
sheet adjustments based upon the working capital (current assets less defined
liabilities) and specified debt levels of ARS. ATS will benefit from or bear
the cost of such adjustments. ATS's preliminary estimate of such adjustments
is that it will be required to make a payment of not more the $50.0 million
and that, in addition, it will be required to reimburse CBS for the tax
consequences of any such payment. The estimated taxes and refund amount stated
above include approximately $33.0 million of taxes attributed to such $50.0
million adjustment payment. Since the amounts of working capital and debt are
dependent upon the uncertainty, among other things, of recent operating
results and cash capital expenditures, as well as CBS merger expenses, ATS is
unable to state definitively what payments will be owed by ATS to CBS. See
"Relationship between ATS and ARS--Closing Date Adjustments".
On June 4, 1998, ATS entered into the Interim Financing Agreement for the
Interim Financing providing for the issue and sale by ATS of up to $400.0
million of Interim Preferred Stock in order to finance ATS's obligation to CBS
with respect to tax reimbursement. Pursuant to such agreement, ATS issued
$300.0 million of the Interim Preferred Stock and used the proceeds to fund
such tax reimbursement obligation, to pay the commitment and other fees and
other expenses of the issue and sale of the Interim Preferred Stock and to
reduce bank borrowings. The proceeds of this Offering will be used principally
to redeem the Interim Preferred Stock at a price equal to 101% of the
liquidation preference together with accrued and unpaid dividends. ATS intends
to fund the closing date balance sheet adjustments through bank borrowings.
Stock Purchase Agreement: In January 1998, ATS issued 8,000,000 shares of
Common Stock at a purchase price of $10.00 per share, for an aggregate
purchase price of $80.0 million, of which an aggregate of 4,487,500 shares of
Class B Common Stock and 450,000 shares of Class A Common Stock were issued in
exchange for an aggregate of $49.4 million of notes secured by ARS Common
Stock having a market value of not less than 175% of the principal amount and
accrued and unpaid interest on such notes. The notes were paid out of the
proceeds to such purchasers of the CBS Merger. These transactions will
increase ATS's ability to fund acquisitions and meet its liquidity and capital
resource needs. See "Business--Recent Transactions--Stock Purchase Agreement".
Loan Arrangements: In October 1997, ATSI entered into a loan agreement (the
"1997 Loan Agreement") that provided ATSI with a $250.0 million loan
commitment based on it maintaining certain operational ratios and an
additional $150.0 million loan at the discretion of ATS, which is available
through June 2005. Following the closing of the 1997 Loan Agreement and
repayment of amounts outstanding under the previous agreement, ATSI incurred
an extraordinary loss in the fourth quarter of 1997 of approximately $1.2
million, that was recorded net of the applicable income tax benefit of $0.7
million, representing the write-off of deferred financing fees associated with
the previous facility. The terms of the 1997 Loan Agreement are discussed in
the Notes to Consolidated Financial Statements. As of March 31, 1998, ATS had
approximately $157.1 million of total long-term debt, of which approximately
$155.5 million represented borrowings outstanding under the 1997 Loan
Agreement. As of such date, assuming consummation of all of the then or
currently pending acquisitions, the CBS Merger and the Interim Financing (but
not the consummation of this Offering), the aggregate amount of long-term debt
would have been approximately $393.4 million and Interim Preferred Stock with
an aggregate liquidation preference of $300.0 million would have been
outstanding. In January 1998, the 1997 Loan Agreement was amended to reflect
the transfer of substantially all of the assets and business of ATSI
39
<PAGE>
(immediately prior to consummation of the Gearon Transaction) to ATSLP, as a
consequence of which ATSI and ATSLP became co-borrowers and jointly and
severally liable under the 1997 Loan Agreement and various subsidiaries of ATS
and ATSI guaranteed all of the obligations of ATSI and ATSLP under the 1997
Loan Agreement.
On June 16, 1998, ATS and the Borrower Subsidiaries entered into definitive
agreements with respect to the New Credit Facilities. The New Credit
Facilities with ATS provide for a $150.0 million term loan maturing at the
earlier of (i) eight and one-half years or (ii) December 31, 2006, amortizing
quarterly in an amount equal to 2.5% of the principal amount outstanding at
June 30, 2001 at the end of each quarter between such date and June 30, 2006,
both inclusive, and the balance in two equal installments on September 30 and
December 31, 2006. The ATS New Credit Facility was fully drawn at closing and
provides for interest rates determined, at the option of ATS, of either the
LIBOR Rate (as to be defined) plus 3.50% or the Base Rate (as to be defined)
plus 2.5%. The New Credit Facilities with the Borrower Subsidiaries provide
for $900.0 million credit facilities maturing at the earlier of (a) eight
years or (b) June 30, 2006 consisting of the following: (i) a $250.0 million
multiple-draw term loan, (ii) a $400.0 million reducing revolving credit
facility and (iii) a $250.0 million 364-day revolving credit facility that
converts to a term loan facility thereafter. The Borrower Subsidiaries
borrowed $125.0 in the form of a term loan and an additional approximately
$19.0 million under the revolving credit arrangements that was repaid out of
the proceeds of the Interim Preferred Stock sale. The interest rate provisions
are similar to those in the Loan Agreement, except that the range over the
Base Rate is between 0.00% and 1.250% and the range over the LIBOR Rate is
between 0.750% and 2.250%. Borrowings under the Borrower Subsidiaries' New
Credit Facilities are conditioned upon compliance with certain financial
ratios and are required to be repaid, commencing June 30, 2001, in increasing
quarterly amounts designed to amortize the loans at maturity. The loans to ATS
and the Borrower Subsidiaries are cross-guaranteed and cross-collateralized by
substantially all of the assets of the consolidated group. The Borrower
Subsidiaries are required to pay quarterly commitment fees equal to 0.375% or
0.250% per annum, depending on their consolidated financial leverage, on the
aggregate unused portion of the aggregate commitment (other than, until taken
down, the 364-day facility on which it is 0.125% until so taken down). Other
provisions of the Borrower Subsidiaries' New Credit Facilities are comparable
to the 1997 Loan Agreement, although the financial and other covenants are
somewhat more favorable to the Borrower Subsidiaries in certain respects,
including an increase of the Total Debt (of the Borrower Subsidiaries and
their Restricted Subsidiaries) to Annualized Operating Cash Flow ratio from
6.0:1 to 6.5:1 and the inclusion of a Total Debt (of ATS and its Restricted
Subsidiaries) to Annualized Operating Cash Flow ratio of 8.0:1. The New Credit
Facility of ATS restricts the payment of cash dividends and other
distributions and the redemption, purchase or other acquisition of equity
securities. See "Description of Capital Stock--Dividend Restrictions". In
connection with the repayment of borrowings under the 1997 Loan Agreement out
of proceeds of borrowings under the New Credit Facilities, ATS will recognize
an extraordinary loss of approximately $1.4 million, net of a tax benefit of
$0.9 million, during the second quarter of 1998. See "Indebtedness of ATS".
During 1997, ATS built or had under construction approximately 80 towers and
had additional capital expenditures of approximately $20.6 million. During
1998, ATS plans to build or commence construction of between approximately 400
and 500 towers (most of which are on a build to suit basis) at an estimated
aggregate cost of between approximately $80.0 to $100.0 million.
A substantial portion of ATS's cash flow from operations is required for
debt service. Accordingly, ATS's leverage could make it vulnerable to a
downturn in the operating performance of its towers or in general economic
conditions. ATS believes that its cash flows from operations will be
sufficient to meet its debt service requirements for interest and scheduled
payments of principal under the New Credit Facilities. If such cash flows were
not sufficient to meet such debt service requirements, ATS might be required
to sell equity securities, refinance its obligations or dispose of
communications sites or other businesses in order to make such scheduled
payments. There can be no assurance that ATS would be able to effect any of
such transactions on favorable terms.
ATS historically has had sufficient cash from its operations to meet its
working capital needs, including normal capital expenditures, but excluding
financing of acquisitions and construction, and believes that it has
sufficient financial resources available to it, including borrowings under the
New Credit Facilities, to finance operations for the foreseeable future.
40
<PAGE>
ATS intends to finance its obligations, estimated at approximately $145.5
million, under pending acquisitions and the balance (approximately $84.0
million) of the maximum purchase price of the OPM Transaction (assuming
required cash flow levels are achieved) out of the proceeds of borrowings
under the New Credit Facilities.
Management believes that, upon consummation of this Offering, ATS will have
sufficient funds available to it in order to finance current construction
plans and pending acquisitions, to redeem the Interim Preferred Stock and to
fund its closing date balance sheet adjustments obligations under the ARS-ATS
Separation Agreement. However, should additional construction or acquisition
opportunities become available, ATS may require additional financing during
1998. Any such financing could take the form of an increase in the maximum
borrowing levels under the New Credit Facilities (which would be dependent on
the ability to meet certain leverage ratios), the issue of debt or senior
equity securities (which could have the effect of increasing its consolidated
leverage ratios) or equity securities (which, in the case of Common Stock or
securities convertible into or exercisable for Common Stock, would have a
dilutive effect on the proportionate ownership of ATS by its then existing
common stockholders). There can be no assurance that any such financing would
be available on favorable terms. See "Business--Growth Strategy--Growth by
Construction" and "--Growth by Acquisition".
Management expects that the consummated acquisitions and current and future
construction activities will have a material impact on liquidity. As indicated
in the Unaudited Pro Forma Condensed Consolidated Balance Sheet and the
foregoing discussion, there is a substantial difference in the historical and
pro forma liquidity of ATS. Management believes that the acquisition
activities once integrated will have a favorable impact on liquidity and will
offset the initial effects of the funding requirements. Management also
believes that the construction activities may initially have an adverse effect
on the future liquidity of ATS as newly constructed towers will initially
decrease overall liquidity. However, as such sites become more fully
operational and achieve higher utilization, management believes that they
should generate cash flow and, in the longer term, increase liquidity.
See "Business--Recent Transactions" and the Notes to Consolidated Financial
Statements with respect to acquisition and construction commitments.
YEAR 2000
ATS is aware of the issues associated with the Year 2000 as it relates to
information systems. The Year 2000 is not expected to have a material impact
on ATS's current information systems because its software is either already
Year 2000 compliant or required changes are not expected to be material. Based
on the nature of ATS's business, ATS anticipates it is not likely to
experience material business interruption due to the impact of Year 2000
compliance on its customers and vendors. As a result, ATS does not anticipate
the incremental expenditures to address Year 2000 compliance will be material
to ATS's liquidity, financial position or results of operations over the next
few years.
INFLATION
The impact of inflation on ATS's operations has not been significant to
date. However, there can be no assurance that a high rate of inflation in the
future will not have material adverse effect on ATS's operating results.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (FAS) No. 130, "Reporting Comprehensive
Income," which became effective for the Company for periods beginning after
December 15, 1997. FAS No. 130 establishes standards for reporting and
displaying comprehensive income and its components (revenues, expenses, gains,
and losses) in a full set of general purpose financial statements. FAS No. 130
requires that a company (a) classify items of other comprehensive income by
their nature in a financial statement and (b) display the accumulated balance
of other comprehensive income separately from retained earnings and additional
paid-in-capital in the equity section of the balance sheet. Reclassification
of financial statements for earlier periods provided for comparative purposes
is required. The Company has adopted this statement in the first quarter of
1998. Comprehensive income does not differ from net income.
41
<PAGE>
In June 1997, the FASB released FAS No. 131 "Disclosures about Segments of
an Enterprise and Related Information" (FAS 131). FAS 131 established
standards for reporting information about the operating segments in its annual
report and interim reports. ATS will adopt this standard for its full year
1998 financial information.
In February 1998, the FASB released FAS No. 132, "Employer's Disclosures
about Pensions and Other Postretirement Benefits" (FAS 132), which ATS will be
required to adopt in 1998. FAS 132 will require additional disclosure
concerning changes in ATS's pension obligations and assets and eliminates
certain other disclosures no longer considered useful. Adoption of this
standard will have no effect on reported consolidated results of operations or
financial position.
42
<PAGE>
INDUSTRY OVERVIEW
Communications site owners and operators have benefited in recent years from
a substantial increase in demand for wireless communications services. The
Cellular Telecommunications Industry Association estimates that the number of
subscribers to wireless telephone services was approximately five million in
1990. According to The Strategis Group, a telecommunications marketing
research firm, the number of subscribers to cellular and PCS is over 50
million today and is projected to increase to over 100 million by the year
2001. This demand has prompted the issuance of new wireless communication
licenses and construction of new wireless networks. ATS believes that the
increase in demand for wireless communications is attributable to a number of
factors, including the increasing mobility of the U.S. population and the
growing awareness of the benefits of mobile communications, technological
advances in communications equipment, decreasing costs of wireless services,
favorable changes in telecommunications regulations, and business and consumer
preferences for higher quality voice and data transmission. Consequently, more
towers will be required to accommodate the anticipated increase in the demand
for higher frequency technologies (such as PCS and ESMR) which have a reduced
cell range and thus require a higher density of towers in the network. The
Personal Communications Industry Association (of which James S. Eisenstein, an
executive officer of ATS, is a director) estimates that over 100,000
additional antennae sites will have to be built to accommodate the needs of
cellular and PCS over the next ten years.
ATS believes that as the wireless communications industry has grown it has
become more competitive. As a consequence, many carriers may seek to preserve
capital and speed access to their markets by focusing on activities that
contribute directly to subscriber growth, by outsourcing infrastructure
requirements such as owning, constructing and maintaining towers or by co-
locating transmission facilities. Previously, carriers typically sourced many
of such services in-house, while local non-integrated service contractors
focused on specific segments such as radio frequency engineering, site
acquisition and tower construction. To meet these carrier needs, independent
operators have expanded into a number of associated network and communications
site services, such as the selection and acquisition of communications sites
(including the resolution of zoning and permitting issues), the design of
wireless and broadcast sites and networks, and the construction or supervision
of construction of towers. Also, in order to accelerate network deployment or
expansion and to generate efficiencies, carriers are increasingly co-locating
transmission infrastructure with that of other network operators. The need for
co-location has also been driven by regulatory restrictions and the growing
interest of local municipalities in slowing the proliferation of towers in
their communities by requiring that towers accommodate multiple tenants.
While the wireless communications industry is experiencing rapid growth, the
television broadcasting industry, with strong encouragement from both Congress
and the FCC, is actively planning its strategy for the transition from analog
to digital technology. This change will be required by a construction
timetable imposed on television broadcast licensees by the FCC. The FCC
construction timetable, although subject to revision, currently requires a
number of television stations to commence digital service as soon as May 1,
1999, and some stations have promised to begin such service earlier. ATS
believes that this transition will require a substantial investment in
enhanced broadcast infrastructure, including the construction or reengineering
of broadcast towers. While ATS expects much of the associated capital
requirements will be borne by the broadcasters, management believes that a
significant opportunity exists to invest profitably in the creation of tower
capacity designed to accommodate digital antennas for television broadcasters.
Management believes that, as with the deployment of towers for the wireless
carriers, speed to market and limited capital resources will cause certain
broadcasters to outsource the construction or reengineering of their towers in
order to accommodate digital technology.
A communications tower's location, height and the loaded capacity at certain
wind speeds determine its desirability to wireless carriers and the number of
antennae that the tower can support. An antenna's height on a tower and such
tower's location determine the line-of-sight of such antenna with the horizon
and, consequently, the distance a signal can be transmitted. Some users, such
as paging companies and SMR providers in rural areas, need higher elevations
for broader coverage. Other carriers such as PCS, ESMR and cellular companies
in metropolitan areas usually do not need to place their equipment at the
highest tower point to maximize transmission distance and quality.
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A tower can be either self-supporting or supported by guy wires. There are
two types of self-supporting towers: the lattice and the monopole. A lattice
tower is usually tapered from the bottom up and can have three or four legs. A
monopole is a tubular structure that is typically used as a single purpose
tower or in places where there are space constraints or a need to address
aesthetic concerns. Self-supporting towers typically range in height from 50-
200 feet for monopoles and up to 1,000 feet for lattices, while guyed towers
can reach 2,000 feet or more. A typical communications site consists of a
compound enclosing the tower or towers and an equipment shelter (which houses
a variety of transmitting, receiving and switching equipment).
Rooftop or other building top sites are more common in urban downtown areas
where tall buildings are generally available and multiple communications sites
are required due to high traffic density. One advantage of a rooftop site is
that zoning regulations typically permit installation of antennae. In cases of
such population density, neither height nor extended radius of coverage is as
important. Moreover, the installation of a free-standing tower structure in
urban areas will often prove to be impossible due to zoning restrictions and
land availability and cost.
The cost of construction of a tower varies both by site location (which will
determine, among other things, the required height of the tower) and type of
tower. Non-broadcast towers (whether on a rooftop or the ground) generally
cost between approximately $150,000 and $200,000, while broadcasting towers
(which generally are built to bear a greater load) generally cost between
approximately $300,000 and $1.0 million if on an elevated location and between
approximately $1.0 million and $3.5 million if on flat terrain. While the
number of tenants that a tower can accommodate will vary depending on the
nature of the services provided by such tenants and the height of the tower,
non-broadcast towers of 200-300 feet that are designed to maximize capacity
generally are capable of housing between five and ten tenants using an
aggregate of between 25 and 50 antennae and broadcasting towers generally are
capable of housing between ten and forty tenants using an aggregate of between
50 and 100 antennae. Annual rental payments vary considerably depending upon
(i) the type of service being provided; (ii) the size of the transmission line
and the number and weight of the antennae on the tower; (iii) the existing
capacity of the tower; (iv) the antenna's placement on, and the location and
height of, the tower; and (v) the competitive environment.
[GRAPHIC OF TYPES OF TOWERS]
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Lease terms vary depending upon the industry user, with television and radio
broadcasters tending to prefer longer term leases (15 to 20 years) than
wireless communications service providers (five to ten years). In either case,
most of such leases contain provisions for multiple renewals at the option of
the tenant. Governmental agencies, because of budgetary restrictions,
generally have one-year leases that tend to renew automatically. Leases tend
to be renewed because of the complications associated with moving antennae. In
the case of a television or radio broadcaster, such a move might necessitate
FCC approval and could entail major dislocations and the uncertainty
associated with building antennae in new coverage areas. In the case of
cellular, PCS and other wireless users, moving one antenna might necessitate
moving several others because of the interlocking grid-like nature of their
wireless systems. In addition, the increasing difficulty of obtaining local
zoning approvals, the environmental activism of community groups and the
restrictions imposed upon owners and operators by the FAA and upon tenants by
the FCC tend to reduce the number of alternatives available to a tower user.
Leases generally provide for annual automatic price increases (escalator
provisions) based on specified estimated cost measures or on increases in the
consumer price index. Owners and operators generally also receive fees for
installing customers' equipment and antennae on the communications site.
Wireless communications towers are owned by a wide range of companies,
including wireless service providers, regional Bell operating companies, long
distance companies, television and radio broadcasting companies, independent
tower operators, utilities and railroads. Despite the increasing demand for
communications sites, the industry remains highly fragmented, with few
independent operators owning a large number of towers. ATS estimates that no
one independent tower owner and operator (one which owns and operates
communications sites principally for other entities) owns more than 2% of the
towers in the United States. The pace of consolidation has begun to
accelerate, however, as the larger independent operators continue to acquire
small local or regional operators and purchase communications sites and
related assets from wireless communications carriers. Management believes that
a major factor contributing to such consolidation is the emergence of many
major companies seeking to provide increasingly sophisticated wireless
services on a national basis. This, in turn, creates a need for substantial
companies capable of developing and constructing networks of communications
sites and maintaining and servicing the sophisticated support facilities
associated with ongoing operations. ATS believes that the national and other
large wireless service providers will prefer to deal with a company that can
meet the majority of such providers' needs within a particular market or
region, rather than, as in the past, a large number of individual tower
owners, construction companies and other service providers. See "Risk
Factors".
Unlike the fragmented nature of the communications site business, customers
in all segments of the wireless communications industry and the broadcast
industry tend to be large, well capitalized national companies.
As a consequence of the foregoing factors, as well as the lack of
seasonality of the industry, the communications site industry is characterized
by a predictable and recurring stream of income.
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BUSINESS
GENERAL
ATS is a leading independent owner and operator of wireless communications
towers in the United States. As a consequence of its current industry position
and experience, ATS believes it is favorably positioned to capitalize on the
growth opportunities inherent in a rapidly expanding and highly fragmented
communications site industry. Since its organization in 1995, ATS has grown,
predominantly through acquisitions, to a company operating more than 1,800
towers in 44 states and the District of Columbia. ATS intends to continue to
pursue strategic acquisitions while devoting increasing financial and other
resources to tower construction. In 1998, ATS currently plans to build or
commence construction of between approximately 400 and 500 towers at an
estimated aggregate cost of between approximately $80.0 and $100.0 million.
For the year ended December 31, 1997, giving effect to the ATS Pro Forma
Transactions, ATS had net revenues and EBITDA of $94.9 million and $40.2
million, respectively. For the three months ended March 31, 1998, giving
effect to the ATS Pro Forma Transactions, ATS had net revenues and EBITDA of
$25.1 million and $9.7 million, respectively.
ATS's primary business is the leasing of antennae sites on multi-tenant
towers for a diverse range of wireless communications industries, including
PCS, cellular, ESMR, SMR, paging and fixed microwave, as well as radio and
television broadcasters. ATS also offers its customers a broad range of
network development services, including network design, site acquisition,
zoning and other regulatory approvals, tower construction and antennae
installation. ATS intends to expand these services and to capitalize on its
relationships with its wireless customers through construction for them of
major tower networks that ATS will own and operate. ATS is also engaged in the
video, voice and data transmission business, which it currently conducts in
the New York City to Washington, D.C. corridor and Texas.
ATS is geographically diversified with significant networks of
communications towers throughout the United States. Its largest networks are
in California, Florida and Texas, and it owns and operates or is constructing
tower networks in numerous cities, including Albuquerque, Atlanta, Austin,
Baltimore, Boston, Dallas, Houston, Jacksonville, Kansas City, Los Angeles,
Miami-Ft. Lauderdale, Minneapolis, Nashville, New York, Philadelphia,
Sacramento, San Antonio, San Diego, San Francisco, Tucson, Washington, D.C.
and West Palm Beach.
ATS has a diversified base of approximately 2,500 customers, no one of which
accounted for more than 10% of its 1997 net pro forma revenues from site
leasing activities and the five largest of which accounted for less than 30%
of such net revenues. ATS's wide range of customers includes most of the major
wireless service providers in that industry, including Airtouch, Alltell, AT&T
Wireless PCS, Bell Atlantic Mobile, BellSouth, GTE Mobilnet, Houston Cellular,
Metrocall, Mobile Comm, Nextel, Omnipoint, PacBell, PageNet, PowerTel, PrimeCo
PCS, SkyTel, Southwestern Bell, Sprint PCS and Western Wireless. In addition,
most of the major companies in the radio and television broadcasting industry
are ATS's customers, including ABC, CBS, Chancellor Media, Clear Channel, CNN,
Fox, Jacor and NBC. ATS's site acquisition services are provided to most of
such wireless service providers, and ATS has constructed or is constructing
towers on a build to suit basis for companies such as Nextel, Omnipoint and
Southwestern Bell. The principal users of ATS's video, voice and data
transmission services are television broadcasters and other video suppliers
such as CBS, CNN, Fox and HBO.
Management estimates that its site leasing activities, which it believes
generate the highest profit margin of its businesses, account for
approximately 56% of its ongoing pro forma net revenues; site acquisition
activities (including construction for others) account for 24%; and the video,
voice and data transmission business accounts for 20%. However, in light of
management's intention to focus on construction activities, which will
increase the number of antennae sites available for leasing, ATS believes that
leasing activities are likely to grow at a more rapid rate than other aspects
of its business.
ATS derives its revenue from various industry segments. The percentage of
ATS's pro forma net revenues derived from the various industry segments
(including from its site acquisition activities) is estimated to be
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approximately as follows: PCS--23%; paging--13%; ESMR--12%; cellular--9%; two-
way radio--5%; SMR --3%; radio and television broadcasting--3%; microwave--3%;
and federal and other governmental agencies--9%. The remaining approximately
20% of such revenues are derived from its video, voice and data transmission
customers which are primarily the major television networks, CNN and HBO.
Management believes that the foregoing percentages are not necessarily
indicative of future contributions likely to be made by the various aspects of
its business or of the several different types of wireless providers,
particularly in light of the anticipated growth of PCS, cellular and ESMR
compared to other wireless providers and management's intended focus on build
to suit and other tower construction activities.
ATS's growth strategy is designed to enhance its position as a leading U.S.
provider of communications sites and network development services to the
wireless communications and broadcasting industries. The principal elements of
this strategy are: (i) to maximize utilization of antennae sites through
targeted sales and marketing techniques; (ii) to expand its tower construction
activities, principally through build to suit projects; and (iii) to pursue
strategic acquisitions, designed principally to facilitate entry into new
geographic markets and to complement the construction program.
ATS believes that as the wireless communications industry has grown it has
become more competitive. As a consequence, many carriers may seek to preserve
capital and speed access to their markets by focusing on activities that
contribute directly to subscriber growth and by outsourcing infrastructure
requirements such as owning, constructing and maintaining towers. ATS also
believes that many carriers are, for similar reasons, increasingly co-locating
transmission facilities with those of others, a trend likely to be accelerated
because of regulatory restrictions and the growing tendency of local
municipalities to require that towers accommodate multiple tenants. Management
also believes that national and other large wireless service providers will
prefer to deal with a company, such as ATS, that can meet the majority of such
providers' needs within a particular market or region, rather than, as in the
past, with a large number of individual tower owners, construction companies
and other service providers. See "Risk Factors".
Management believes that, in addition to such favorable growth and
outsourcing trends, the communications site industry and ATS will benefit from
several favorable characteristics, including the following: (i) a recurring
and growing revenue stream based to a significant extent on long-term leases;
(ii) low tenant "churn" due to the costs and disruption associated with
reconfiguring a wireless network or broadcasting location; (iii) a customer
base which is diversified by industry, among customers within each industry
and geographical area, and which consists principally of large, financially
responsible national companies; (iv) favorable absolute and incremental tower
cash flow margins due to low variable operating costs; (v) low on-going
maintenance capital requirements; (vi) local government and environmental
initiatives to reduce the numbers of towers thereby requiring carriers to co-
locate antennae; and (vii) opportunity to consolidate in a highly fragmented
industry, thereby creating the potential for enhanced levels of customer
service and operating efficiency.
GROWTH STRATEGY
ATS's objective is to enhance its position as a leading U.S. provider of
communications sites and network development services to the wireless
communications and broadcasting industries. ATS's growth strategy consists of
the following principal elements:
Internal Growth through Sales, Service and Capacity
Utilization. Management believes that a substantial opportunity for
profitable growth exists by maximizing the utilization of existing and
future towers. Because the costs of operating a site are largely fixed,
increasing tower utilization significantly improves site operating margins.
Moreover, when a specific tower reaches full antennae attachment capacity,
ATS is often able to construct an additional tower at the same location,
thereby further leveraging its investment in land, related equipment and
certain operating costs, such as taxes, utilities and telephone service.
ATS intends to use targeted sales and marketing techniques to increase
utilization of both existing and newly constructed towers and to maximize
investment returns on acquired towers with underutilized
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capacity. Management believes that the key to the success of this strategy
lies in its ability to develop and consistently deliver a high level of
customer service, and to be widely recognized as a company that makes
realistic commitments and then delivers on them. Since speed to market and
reliable network performance are critical components to the success of
wireless service providers, ATS's ability to assist its customers in
meeting these criteria will ultimately define its marketing success and
capacity utilization. ATS targets wireless providers that are expanding or
improving their existing network infrastructure as well as those deploying
new technologies.
Growth by Construction. ATS believes that attractive investment returns
can be achieved by constructing new tower networks in and around markets in
which it already has a presence, along major highways, and in targeted new
markets, particularly markets that have not been significantly built out by
carriers or other communications site companies. By working with one or
more "anchor" tenants, ATS will seek to develop an overall master plan for
a particular network by locating new sites in areas identified by its
customers as optimal for their network expansion requirements. ATS
generally secures commitments for leasing prior to commencing construction,
thereby minimizing, to some extent, the risks associated with the
investment. See "Risk Factors--Construction of New Towers". In certain
cases, ATS may identify and secure all zoning and other regulatory permits
for a site in anticipation of customer demand, with actual construction
being delayed until an anchor tenant is secured on reasonable terms.
Strategic acquisitions will also be pursued as a means of filling out or,
in certain cases, initiating, a tower network.
Because of the relatively attractive initial returns which can be
achieved from new tower construction, and because ATS can design and build
towers to specifications that assure ample future capacity and minimize the
need for future capital expenditures, management intends to place a strong
emphasis on new tower development for the foreseeable future. Management
also intends to pursue new tower construction to service the demand for
digital television and for tower space for radio antennae displaced by
digital television requirements. Over time, management believes that more
than half of its towers will result from new construction, with the vast
majority of these designed to serve the wireless communications industry.
During 1997, ATS (including ATC and other acquired companies) constructed
or had under construction approximately 240 towers, including those
constructed for and owned by third parties. During 1998, ATS currently
plans to construct or have under construction between approximately 400 and
500 towers (most of which are on a build to suit basis) at an estimated
aggregate cost of between approximately $80.0 and $100.0 million. In
addition, ATS is seeking several major build to suit projects, although
there can be no assurance that any definitive agreements will result.
The ability to obtain, and commit to, large new construction projects
will require significant financial resources. Management believes that its
cost of capital, relative to the cost of capital of its competitors, will
be an important factor in determining the success of its growth by
construction strategy. Based on its previous capital market transactions,
management believes that it has a good reputation in the financial
community, including among banks, investment banking firms, institutional
investors and public investors, and that such reputation will help it
attract capital on the favorable terms necessary to finance its growth.
However, there can be no assurance that funds will be available to ATS on
such terms.
Growth by Acquisition. ATS has achieved a leading industry position
primarily through acquisitions. ATS intends to continue to target strategic
acquisitions in markets or regions where it already owns towers as well as
new markets, possibly including non-U.S. markets.
Among the potential acquisitions are tower networks owned by major
wireless service providers, including many of the regional Bell operating
companies and their affiliates, that may seek to divest their ownership of
such networks for reasons similar to those motivating them to outsource
their new construction requirements. There can, of course, be no assurance
that ATS will acquire any such networks.
ATS will attempt to increase revenues and operating margins at acquired
communications sites through expanded sales and marketing efforts, improved
customer service, the elimination of redundant overhead and, in certain
instances, increasing tower capacity. Acquisitions are evaluated using
numerous criteria,
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including potential demand, tower location, tower height, existing capacity
utilization, local competition, and local government restrictions on new
tower development.
ATS also intends to pursue, on a selective basis, the acquisition of site
acquisition companies and providers of video, voice and data transmission
services, and may pursue acquisitions related to the communications site
industry, including companies engaged in the tower fabrication business.
While to date the majority of ATS's growth has resulted from acquisition
activities, management expects to shift ATS's emphasis more towards build
to suit and new tower construction, where it believes investment returns
are more attractive. It will, however, continue to evaluate numerous
acquisition prospects, including possible divestitures by major wireless
service providers, and expects to pursue and consummate acquisitions when
the economics or strategic opportunity are attractive.
ATS is actively considering, and intends to continue actively
considering, opportunities to acquire communication sites and related
properties that meet its acquisition criteria, including possible
significant acquisitions. ATS' current activities with respect to possible
significant acquisitions range from the evaluation of properties, to
submissions of indications of interests and first- or second-round bids, to
early-stage negotiations. These opportunities range in size from several
hundred towers to several thousand towers and from purchase prices of tens
of millions of dollars to several hundreds of millions of dollars. Such
purchase prices could take the form of cash, ATS stock or other securities,
or a combination thereof. No material acquisition opportunity has yet
reached the agreement or probable agreement stage other than those
described in this Prospectus. See "Business--Recent Transactions". Of
course, ATS cannot predict whether it will enter into any binding
agreements with respect to such acquisitions or, if it does, the terms or
timing of any such significant acquisitions.
PRODUCTS AND SERVICES
. LEASING OF ANTENNAE SITES. ATS's primary business is the leasing of
antennae sites on multi-tenanted communications towers to companies in all
segments of the wireless communications and broadcasting industries. Giving
effect to pending acquisitions, ATS will have more than 1,800 towers in 44
states and the District of Columbia, approximately 490 of which are managed
for others, including approximately 280 rooftop antennae.
ATS rents tower space and provides related services for a diverse range of
wireless communications industries, including PCS, cellular, ESMR, SMR,
paging, fixed microwave, as well as radio and television broadcasters. ATS is
geographically diversified with significant tower networks throughout the
United States with its largest networks in California, Florida and Texas, and
owns and operates communications sites or is constructing tower networks in
cities such as Albuquerque, Atlanta, Austin, Baltimore, Boston, Dallas,
Houston, Jacksonville, Kansas City, Los Angeles, Miami-Ft. Lauderdale,
Minneapolis, Nashville, New York, Philadelphia, Sacramento, San Antonio, San
Diego, San Francisco, Tucson, Washington, D.C. and West Palm Beach.
ATS's leases, like most of those in the industry, generally vary depending
upon the industry user, with television and radio broadcasters preferring long
term leases (generally from 15 to 20 years), and wireless communications
providers favoring somewhat shorter lease terms (generally from five to ten
years), with multiple renewals at the option of the tenant. However, the
leases acquired as a consequence of the ATC Merger tend to be of shorter
duration, generally two years, and permit earlier termination if ATS were to
attempt to impose price increases relating to escalator provisions. Leases of
all lengths tend to be renewed due to the costs and disruption associated with
reconfiguring a wireless network or broadcast location.
Most of ATS's leases have escalator provisions (annual automatic increases
based on specified estimated cost measures or on increases in the consumer
price index) that permit ATS to keep pace with inflation. While these
provisions are not by themselves intended to be a primary source of growth,
they provide a stable and predictable growth component that is then enhanced
by increased tower utilization.
The number of antennae which ATS's towers can accommodate varies depending
on the type of tower (broadcast or non-broadcast), the height of the tower,
and the nature of the services provided by such antennae,
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although broadcasting towers generally are capable of holding more and larger
antennae and serving more tenants than non-broadcasting towers. Annual rental
payments vary considerably depending upon (i) the type of service being
provided; (ii) the size of the transmission line and the number and weight of
the antennae on the tower; (iii) the existing capacity of the tower; (iv) the
antenna's placement on, and the location and height of, the tower; and (v) the
competitive environment. Management believes that it is not possible to state
with any degree of precision the vacancy or unused capacity of a "typical"
tower, group of related towers or all of its towers for a variety of reasons,
including, among others, the variations that occur depending on the types of
antennae placed on the tower, the types of service being provided by the tower
users, the type and location of the tower or towers, the ability to build
other towers so as to configure a network of related towers, whether any of
the users have imposed restrictions on competitive users, and whether there
are any environmental, zoning or other restrictions on the number or type of
users.
Build to Suit Business. Historically, cellular and other wireless service
providers have constructed a majority of their towers for their own use, while
usually outsourcing certain services such as site acquisition and construction
management. More recently, however, service providers have expressed a growing
interest in having independent companies own the towers on which they will
secure space under long-term leases. Management believes this trend is the
result of a need among such providers to preserve capital and to speed access
to their markets by focusing on activities that contribute to subscriber
growth and by outsourcing infrastructure requirements such as owning,
constructing and maintaining towers or by co-locating their transmission
infrastructure. ATS has positioned itself as an attractive choice for this
build to suit opportunity. It has done so by acquiring and developing
reputable site acquisition companies with established client relationships in
both site acquisition and construction management, and by securing the
financial resources necessary to participate in the build to suit arena on a
substantial scale. Management believes companies that are able to demonstrate
the ability to successfully locate, acquire and permit sites and finance and
construct towers in a timely manner will be used by a significant number of
wireless service providers on an expanded basis. ATS is currently engaged in
build to suit efforts for a range of clients including Nextel, Omnipoint,
Prime and Southwestern Bell and is seeking several major build to suit
projects, although there can be no assurance that any definitive agreements
will result.
In most cases, well engineered and well located towers built to serve the
specifications of an initial anchor tenant in the wireless communications
sector will attract three or more additional wireless tenants over time,
thereby increasing revenue and enhancing margins. ATS has had only limited
experience, to date, with build to suit projects and those that it has
completed and that are operational have been on a much smaller scale than
those that it is negotiating or will seek in the future. Management believes
that ATS's favorable results (occupancy and financial) achieved on completed
projects are not representative of the results likely to be achieved from the
larger projects ATS is currently contemplating and, therefore, has not
included information with respect to the typical vacancy rates or financial
results that can be expected to be generated by such build to suit projects.
See "Risk Factors--Construction of New Towers" for a description of certain
risks involved in tower construction, particularly those involving large build
to suit projects.
Communications Site Management Business. ATS is a leading manager of
communications sites, principally rooftop sites but also ground towers, for
other owners. A principal aspect of this business is the development of new
sources of revenue for building owners by effectively managing all aspects of
rooftop telecommunications, including two-way radio systems, microwave, fiber
optics, wireless cable and paging, and rooftop infrastructure construction
services. ATS manages approximately 490 sites (of which approximately 280 are
rooftops) in 35 states. Management contracts are generally for a period of
five years and contain automatic five-year renewal periods unless terminated
by either party on notice prior to such renewal term or upon an uncured
default. Pursuant to these contracts, ATS is responsible for marketing
antennae sites on the tower, reviewing existing and negotiating future license
agreements with tenant users, managing and enforcing those agreements,
supervising installation of equipment by tenants to ensure, among other
things, non-interference with other users, supervising repairs and maintenance
to the towers, as well as site billing, collections and contract
administration. In addition, ATS handles all calls as well as questions
regarding the site so that the building
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management team or owner is relieved of this responsibility. For such
services, ATS is entitled to a percentage of lease payments, which is higher
for new tenants than for existing tenants. Upon any termination of a contract,
unless because of its default, ATS is entitled to its percentage with respect
to then existing tenants so long as they remain tenants.
. SITE ACQUISITION BUSINESS. ATS's site acquisition division has developed
more than 8,000 sites in 48 states and currently has field offices in 13 major
cities including Atlanta, Chicago, Charlotte, Cleveland, Jacksonville, New
Orleans and Seattle. The site selection and acquisition process begins with
the network design. Highway corridors, population centers and topographical
features are identified within the carrier's existing or proposed network, and
drive tests are performed to monitor all PCS, cellular and ESMR frequencies to
locate the systems then operating in that geographic area and identify where
any holes in coverage may exist. Based on this data, the carrier and ATS
develop a "search ring", generally of one-mile radius, within which the site
acquisition department identifies land available either for purchase or lease.
ATS personnel select the most suitable sites, based on demographics, traffic
patterns and signal characteristics. The site is then submitted to the local
zoning/planning board for approval. If the site is approved, in certain
instances ATS will supervise construction of the towers and other improvements
on the communications site. ATS's site acquisition services are provided on a
fixed fee or time and materials basis. Existing users of ATS's site
acquisition business include Airtouch, Alltel, AT&T Wireless PCS, Ameritech,
Bell Atlantic Mobile, BellSouth, GTE Mobilnet, MobileComm, PageNet, Power Tel,
SkyTel, Southwestern Bell, Sprint PCS and Western Wireless. While ATS will
continue to provide site acquisition services to those customers desiring
them, it also intends to actively market its construction and leasing services
as an extension of these services.
. VOICE, VIDEO AND DATA TRANSMISSION BUSINESS. ATS's voice, video and data
transmission business is operated in the New York City to Washington, D.C.
corridor and in Texas. A teleport is the technical link for all video, voice
and data transmission to and from ground based, terrestrial sources and
satellites. A typical teleport facility consists of 20-40 satellite dishes
(antennae), a 24-hour, 365-day operations center, microwave and fiber optics
links, and generators and other support facilities. ATS owns a teleport
outside of New York City and one outside of Washington, D.C., and distributes
video, voice and data over the New York to Washington D.C. corridor through a
fiber and microwave network, including 13 towers. The New York teleport system
is located on a 70-acre owned site which is zoned for 29 microwave dishes of
which 22 are existing, thereby providing significant expansion capacity. The
Washington teleport system is located in northern Virginia, inside of the
Washington Beltway, on ten acres and houses 40 antennae with the capacity for
an additional ten antennae. The network includes both fiber and microwave
channels, is used by all of the major television broadcast networks, and
accesses all domestic and major international satellites in the operating
region. The system is able to distribute voice, video and data through
satellite or terrestrial distribution. The Texas system consists of a teleport
outside of Dallas that enables it to distribute video, voice and data from
Dallas to Corpus Christi through a fiber and microwave network including 35
towers. This system includes 15 microwave dishes and covers the most populated
area of Texas, servicing Austin, Corpus Christi, Dallas, Houston and San
Antonio. The system connects to all major sports and convention venues, video
companies and broadcast networks in those cities. The principal users of ATS's
video, voice and data transmission services are television broadcasters and
other video suppliers such as CBS, CNN, Fox and HBO.
CUSTOMERS
ATS's customers aggregate approximately 2,500 and include many of the major
companies in the wireless communications industry. While none of ATS's
customers accounted for as much as 10% of its 1997 pro forma net revenues from
site leasing activities, most of the customers named below account for more
than 1% of such revenues, and each is considered by ATS to be an important
customer:
(i) Cellular and PCS: Airtouch, Alltell, AT&T Wireless PCS, Bell Atlantic
Mobile, BellSouth, GTE Mobilnet, Houston Cellular, Mobile Comm, Omnipoint,
PacBell, Prime Co, PCS, Southwestern Bell Mobile Systems (operating as
Cellular One), and Sprint PCS;
(ii) Paging: Arch, Metrocall, PageMart, PageNet and Pittencrief;
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(iii) ESMR: Nextel; and
(iv) Television and Radio Broadcasting: ABC, CBS, Chancellor Media, Clear
Channel, CNN, Fox, Jacor Communications and NBC.
ATS's site acquisition activities, which afford ATS the opportunity to
furnish additional services such as the construction and leasing of
communications sites, are provided to most of the cellular, PCS and ESMR
customers listed above. ATS has constructed or is constructing towers on a
build to suit basis for companies such as Nextel, Omnipoint and Southwestern
Bell and is seeking several major build to suit projects, although there can
be no assurance that any definitive agreements will result.
The principal users of ATS's video, voice and data transmission services are
television broadcasters and other video suppliers such as CBS, CNN, Fox and
HBO. Revenues are derived from two sources of approximately equal
significance: (i) contracted, long-term services of a regular, recurring
nature and (ii) nonrecurring services relating to special news or events.
Monthly transmissions average approximately 3,500 at ATS's teleports.
MANAGEMENT ORGANIZATION
ATS is headquartered in Boston and is organized on a regional basis with
each region being headed by a vice president who reports to the Chief
Operating Officer. Its current regional operations are based in Boston,
Atlanta, Houston and the San Francisco Bay area, although additional regional
centers may develop over time. Management believes that its regional
operations centers which are in varying stages of development should
ultimately be capable of responding effectively to the opportunities and
customer needs of their respective defined geographic areas and that these
operations centers should have skilled engineering, construction management
and marketing personnel. Management also believes that over time enhanced
customer service and greater operating efficiencies can be achieved by
centralizing certain operating functions, including accounting and lease
administration. Such centralization, when achieved, will enable key
information about each site, tower lease and customer to become part of a
centralized database, with communications links to regional operations
centers.
In conjunction with its acquisition of various companies, management
believes it has obtained the services of key personnel with skills in areas
such as site acquisition, construction management, tower operations,
engineering, marketing, lease administration and finance. As ATS seeks to
expand its size and improve on the quality and consistency of service
delivery, it believes it needs to complete the staffing of its existing
regions and may, in the longer term, need to supplement its current workforce
in certain critical areas, develop new regional centers and intensify its
dedication to customer service. Accordingly, management is actively recruiting
key personnel to complete the staffing of its regional operations centers and
to strengthen and deepen its corporate group. ATS focuses its efforts on
recruiting people from the industry sectors it serves and in some instances
recruiting skilled engineering, marketing and other personnel from outside the
communications site, wireless communications and broadcasting industries.
HISTORY
In early 1995, Steven B. Dodge, Chairman of the Board, President and Chief
Executive Officer of American Radio, and other members of American Radio's
management, recognized the opportunity in the communications site industry as
a consequence of ARS's ownership and operation of broadcast towers. ATS was
formed in July 1995 to capitalize on this opportunity. During 1996, ATS's
acquisition program was modest, entailing the acquisition of companies owning
an aggregate of 15 communications sites and managing approximately 250 sites
for others, for an aggregate purchase price of approximately $21.0 million.
During that year, however, ATS entered into several more significant
acquisition agreements that were consummated in 1997.
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RECENT TRANSACTIONS
Of the following Recent Transactions, only the Meridian Transaction, the
Diablo Transaction, the MicroNet Transaction, the Tucson Transaction, the
Gearon Transaction, the OPM Transaction, the ATC Merger and the Transfer of
Towers from ARS to ATS are included in the ATS Pro Forma Transactions.
Consummated Acquisitions. Since January 1, 1997, exclusive of the ATC
Merger, ATS has consummated more than 15 acquisitions (including those agreed
to in 1996) involving more than 550 sites (including sites on which towers are
to be constructed) and its site acquisition and voice, video and data
transmission businesses.
In May 1997, ATS consummated, among others, three acquisitions as follows:
(i) the purchase of two related companies engaged in the site acquisition
business for unaffiliated third parties in various locations in the United
States for approximately $13.0 million; (ii) the purchase of a tower site
management business in Georgia, North Carolina and South Carolina for
approximately $5.4 million consisting of 21 tower sites, and (iii) the
purchase of a 70% interest in a business that will initially own and operate
communications towers that are to be constructed on 58 sites in northern
California; the remaining 30% of the joint venture (ATS/PCS) is owned by an
unaffiliated party. ATS paid the other party approximately $0.8 million in
cash for its 70% interest and is obligated to provide equity financing for the
construction of those towers (estimated at approximately $5.3 million) as well
as any others that the joint venture may construct. See "--Pending
Acquisitions" below.
In July 1997, ATS consummated four unrelated acquisitions, including the
purchase for approximately $33.5 million of 56 sites and a tower site
management business in southern California (the "Meridian Transaction").
In October 1997, ATS consummated two unrelated acquisitions as follows: (i)
110 sites and a site management business primarily in northern California for
approximately $45.0 million (the "Diablo Transaction"); and (ii) 128 owned or
leased tower sites, principally in the Mid-Atlantic region, with the remainder
in California and Texas, and the video, voice and data transmission business
for approximately $70.25 million (the "MicroNet Transaction").
In January 1998, ATS consummated the acquisition of OPM-USA-INC. ("OPM"), a
company which owned approximately 90 towers at the time of acquisition (the
"OPM Transaction"). In addition, OPM is in the process of developing an
additional approximately 160 towers that are expected to be constructed during
the next 12 to 18 months. The purchase price, which is variable and based on
the number of towers completed and the forward cash flow of the completed OPM
towers, could aggregate up to $105.0 million, of which approximately $21.3
million was paid at the closing. ATS has also agreed to provide the financing
to OPM to enable it to construct the 160 towers in an aggregate amount not to
exceed $37.0 million (less advances as of consummation aggregating
approximately $5.7 million).
In January 1998, ATS consummated the Gearon Transaction pursuant to which
ATSI merged with a company engaged primarily in the site acquisition business
for unaffiliated third parties that also owned or had under construction 40
tower sites. The merger price of approximately $80.0 million was paid by
delivery of 5,333,333 shares of Class A Common Stock, the payment of
approximately $32.0 million in cash and assumed liabilities.
In January 1998, as part of the CBS Merger, ARS transferred to ATS 14 of the
16 communications sites currently used by American Radio and various third
parties and ARS and ATS entered into leases or subleases of space on the
towers transferred. The remaining two communications sites were transferred to
ATS following the acquisition by ARS of the sites from third parties. See
"Relationship between ATS and ARS--Lease Arrangements".
In January 1998, ATS consummated the purchase of a communications site with
six towers in Tucson, Arizona (the "Tucson Transaction") for approximately
$12.3 million.
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In February 1998, ATS acquired 11 communications tower sites in northern
California for approximately $11.8 million.
In May 1998, ATS acquired the assets relating to a teleport serving the
Washington, D.C. area for a purchase price of approximately $30.5 million. The
facility is located in northern Virginia, inside of the Washington Beltway, on
ten acres.
In June 1998, ATS acquired a broadcasting tower (the "Intracoastal
Transaction") in the Boston area for 720,000 shares of Class A Common Stock.
As part of such acquisition, ATS issued non-recourse notes in the aggregate
principal amount of approximately $12.0 million that are payable solely to the
extent of payments made on a note in an equal principal amount received as
part of the acquisition.
ATC Merger. On June 8, 1998, ATS consummated the ATC Merger Agreement
pursuant to which ATC merged with and into ATS which is the surviving
corporation. Pursuant to the ATC Merger, ATS issued an aggregate of 28,782,386
shares of Class A Common Stock (including shares issuable upon exercise of
options to acquire ATC Common Stock which, to the extent they were outstanding
as of the effectiveness of the ATC Merger, became options to acquire Class A
Common Stock). The 30.0 million shares of Class A Common Stock represented 35%
of the aggregate number of shares of Common Stock which were outstanding
immediately after consummation of the ATC Merger on a pro forma basis,
assuming the exercise of all ATS and ATC stock options outstanding immediately
prior to the ATC Merger, but before giving effect to the acquisitions
described in the preceding paragraph under "--Consummated Acquisitions" above
and under "--Pending Acquisitions" below.
As a condition to consummation of the ATC Merger, Messrs. Dodge and Stoner
entered into a voting agreement with ATC and certain of the ATC common
stockholders, pursuant to which Messrs. Dodge and Stoner agreed to vote in
favor of the election of each of Messrs. Lummis and Mays (or any other nominee
of Mr. Lummis and Clear Channel reasonably acceptable to the ATS Board of
Directors) so long as Mr. Lummis and Clear Channel (or their respective
affiliates) hold at least 50% of the shares of Class A Common Stock to be
received by him or it in the ATC Merger. Messrs. Lummis and Mays were elected
to the Board of Directors immediately following the ATC Merger.
Chase Capital, which is an affiliate of Chase Equity Associates, a
stockholder of ATS, and Mr. Chavkin, a director of ATS, owned approximately
18.1% of the ATC Common Stock as of April 6, 1998 and had a representative on
the ATC Board of Directors. See "Principal and Selling Stockholders". Summit
Capital of Houston ("Summit Capital") received a $2.25 million broker's fee
from ATC upon consummation of the ATC Merger. Fred Lummis, the former
President and Chief Executive Officer of ATC, and a director of ATS, is an
affiliate of Summit Capital.
The provisions of the ATC Merger Agreement are comparable to those customary
in similar transactions, including without limitation (a) detailed,
substantially identical representations and warranties of ATS and ATC that did
not survive consummation of the ATC Merger and (b) agreements of ATS to (i)
indemnify the officers and directors of ATC and to maintain officer and
director insurance for their benefit, (ii) maintain employment benefits for a
period of one year for officers and employees of ATC, both on terms and
conditions comparable to those presently in effect, and (iii) continue the
employment of ATC employees at existing salary levels for a period of one
year.
ATC was a leading independent owner and operator of wireless communications
towers and operated approximately 915 towers in 32 states, including
approximately 125 towers managed for a third party owner and had agreed to
acquire approximately 35 additional towers in 1998 at an aggregate estimated
cost of approximately $17.4 million. For the year ended December 31, 1997, ATC
had net revenues and EBITDA of $20.0 million and $12.7 million, respectively.
For the three months ended March 31, 1998, ATC had net revenues and EBITDA of
$6.3 million and $4.1 million, respectively.
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ATC rented tower space and provided related services to wireless
communications service providers, as well as operators of private networks and
government agencies, for a diverse range of applications including cellular,
PCS, ESMR, SMR, paging and fixed microwave. ATC owned and operated towers in
45 of the largest 100 metropolitan statistical areas in the United States and
has clusters of towers in cities such as Albuquerque, Atlanta, Baltimore,
Dallas, Houston, Jacksonville, Kansas City, Nashville, San Antonio and San
Diego. ATC had a diversified base of approximately 865 customers, no one of
which accounted for more than 10% of its net revenues for the year ended
December 31, 1997. ATS's wide range of customers included most of the major
wireless service providers such as Bell South Mobility, GTE Mobilnet, Houston
Cellular, Nextel, PageMart, PageNet, Pittencrief Communications, SBC
Communications, Sprint PCS, and various government agencies.
ATC was organized in October 1994 by an investor group led by Summit Capital
Inc. and Chase Capital to acquire Bowen-Smith Corp. ("Bowen-Smith"). Bowen-
Smith had been in the tower rental business since 1966, initially serving the
communications tower requirements of two-way radio and microwave transmission
users. At the time of the acquisition (the "Bowen-Smith Acquisition"), Bowen-
Smith owned 184 towers on 175 sites located primarily in Texas, Louisiana and
Oklahoma. Within the first year after the Bowen-Smith Acquisition, ATC
acquired or constructed more than 75 towers. In December 1995, ATC acquired
103 towers from CSX Realty Development Corporation, and in October 1996, ATC
acquired 154 towers from Prime Communication Sites Holding, L.L.C. In June
1997, ATC completed a private placement of common stock with Clear Channel
representing approximately 30.03% of ATC (before giving effect to stock
options) and resulting in net proceeds to ATC of $23.0 million. During 1997,
ATC acquired or agreed to acquire approximately 200 towers and constructed or
had under construction at year end approximately 65 towers.
Pending Acquisitions. In June 1998, ATS entered into an agreement to acquire
a company which is in the process of constructing approximately 40 towers in
the Tampa, Florida area, of which 11 are presently operational. The purchase
price will be equal to an excess of (i) ten times the "Current Run Rate Cash
Flow" at the time of closing, over (ii) the principal amount of the secured
note referred to below. The purchase price will be payable in shares of Class
A Common Stock (valued at market prices shortly prior to closing) and, at the
election of the seller, cash in an amount not to exceed 49% of the purchase
price. "Current Run Rate Cash Flow" means twelve (12) times the excess of net
revenues over direct operating expenses for the month preceding closing. ATS
is obligated to advance construction funds to the seller in an aggregate
amount not to exceed $12.0 million in the form of a secured note (guaranteed
by the stockholders on a nonrecourse basis and secured by the stock of the
seller), of which approximately $4.1 million has been advanced to date. The
secured note is payable if the acquisition is not consummated. Subject to the
satisfaction of certain conditions, including, depending on the circumstances,
the expiration or earlier termination of the HSR Act waiting period, the
acquisition is expected to be consummated in the spring of 1999.
ATS is negotiating certain changes in the ATS/PCS arrangements, including
the acquisition by ATS of the 58 communications sites in northern California
presently owned by ATS/PCS in exchange for shares of Class A Common Stock,
arrangements with respect to the development of communications sites in other
locations, a priority return of ATS's construction advances, an increase in
the percentage interest of the other member in ATS/PCS, and a management fee
to ATS.
Other Transactions. ATS is negotiating and intends to pursue the acquisition
of other communications sites and management and related businesses, although
there are no definitive binding agreements with respect to any material
transaction except as referred to in this Prospectus.
Stock Purchase Agreement. In January 1998, ATS consummated the transactions
contemplated by the Stock Purchase Agreement, dated as of January 8, 1998,
with certain officers and directors of ARS and ATS (or their affiliates or
members of their family or family trusts), pursuant to which those persons
purchased shares of Common Stock at $10.00 per share, as follows: Mr. Dodge:
4,000,000 (Class B); Mr. Box: 450,000 (Class A); Mr. Charlton H. Buckley:
300,000 (Class A); each of Messrs. Eisenstein and Steven J. Moskowitz: 25,000
(Class A); Mr. Arthur Kellar: 400,000 (Class A); Mr. Stoner, his wife and
certain family trusts: 649,950 (Class B); other Stoner family and trust
purchasers: 150,050 (Class A); and Chase Equity Associates: 2,000,000 (Class
C).
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Messrs. Buckley (one of the selling stockholders) and Kellar were directors of
ARS, and Mr. Chavkin, a director of ATS and a former director of ARS, is an
affiliate of Chase Equity Associates. Mr. Moskowitz serves as a Vice President
of ATS and the General Manager of the Northeast Region.
Payment of the purchase price was in the form of cash in the case of Chase
Equity Associates, all members of Mr. Stoner's family and the family trusts
(but not Mr. Stoner and his wife) and Messrs. Buckley, Eisenstein, Kellar and
Moskowitz, and, in the case of Messrs. Dodge, Box and Stoner (and his wife),
in the form of a note that was paid in full upon consummation of the CBS
Merger. The notes bore interest at the six-month London Interbank Offered
Rate, from time to time, plus 1.5% per annum, and were secured by shares of
ARS Common Stock having a fair market value of not less than 175% of the
principal amount of and accrued and unpaid interest on the note. The notes
were prepayable at any time at the option of the obligor and were due and
payable, at the option of ATS, in the event of certain defaults set forth
therein.
The ARS Board appointed a special committee (the "Special Committee")
consisting of three directors (who were not directors of ATS and who were not
a party to the Stock Purchase Agreement) to determine the fairness to ARS from
a financial point of view of the terms and conditions of the Stock Purchase
Agreement. None of the members of the Special Committee was a party to the
Stock Purchase Agreement. No limitations were imposed on the activities of the
Special Committee by the ARS Board. The Special Committee retained Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") to act as its
exclusive financial advisor in connection with the transactions contemplated
by the Stock Purchase Agreement. No limitations were placed on the activities
of Merrill Lynch. Merrill Lynch delivered its written opinion, dated January
8, 1998, to the Special Committee that, as of such date and based upon and
subject to the matters set forth therein, the purchase price of $10.00 per
share to be received by ATS pursuant to the Stock Purchase Agreement was fair
from a financial point of view to ARS. Based upon such opinion, and its own
evaluation of the terms and conditions of the Stock Purchase Agreement, the
Special Committee approved the Stock Purchase Agreement as fair to and in the
best interests of ARS.
Pursuant to an Engagement Letter, dated November 20, 1997, ARS agreed to pay
Merrill Lynch a fee of $500,000 in consideration for its services. ARS has
also agreed to reimburse Merrill Lynch for its expenses, including reasonable
fees and expenses of its counsel, and to indemnify Merrill Lynch for
liabilities and expenses arising out of its engagement and the transactions in
connection therewith, including liabilities under the federal securities laws.
ATS is obligated under the ATS-ARS Separation Agreement to reimburse ARS for
all such fees and expenses which ARS has incurred to Merrill Lynch and to
assume such indemnification obligation.
Amended Credit Facilities. In order to facilitate future growth and, in
particular, to finance its construction program in June 1998, ATS and the
Borrower Subsidiaries entered into the New Credit Facilities with its senior
lenders, pursuant to which the existing maximum borrowing of the Borrower
Subsidiaries would be increased from $400.0 million to $900.0 million, subject
to compliance with certain financial ratios, of which $125.0 million is
outstanding in the form of a term loan, and ATS (the parent company) borrowed
an additional $150.0 million. See "Indebtedness of ATS".
SALES AND MARKETING
ATS's sales and marketing personnel target wireless carriers expanding their
network capabilities as well as carriers entering new markets. ATS attempts to
minimize hurdles to purchasing decisions by offering master license agreements
which correspond to the internal requirements of wireless operators. ATS also
offers standardized system pricing in areas in which it operates tower
networks enabling potential customers to obtain pricing information for an
entire service area rather than on a tower-by-tower basis. ATS believes
customer satisfaction is the key to successful marketing and that referrals
from its current customers are and will continue to be a primary source of new
customers.
REGULATORY MATTERS
Federal Regulations. Both the FCC and the FAA regulate towers used for
wireless communications and radio and television antennae. Such regulations
control the siting, lighting, marking and maintenance of towers
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and may, depending on the characteristics of the tower, require registration
of tower facilities and issuance of determinations of no hazard. Wireless
communications devices operating on towers are separately regulated and
independently licensed by the FCC based upon the regulation of the particular
frequency used. In addition, the FCC also separately licenses and regulates
television and radio stations broadcasting from towers. Depending on the
height and location, proposals to construct new antenna structures or to
modify existing antenna structures are reviewed by the FAA to ensure that the
structure will not present a hazard to aircraft, and such review is a
prerequisite to FCC authorization of communication devices placed on the
tower. Tower owners also may bear the responsibility for notifying the FAA of
any tower lighting failures. ATS generally indemnifies its customers against
any failure to comply with applicable standards. Failure to comply with
applicable requirements may lead to civil penalties.
The introduction and development of digital television also may affect ATS
and some of its largest customers. In addition, the need to install additional
antennae required to deliver DTV service may necessitate the relocation of
many currently co-located FM antennae. The need to secure state and local
regulatory approvals for the construction and reconstruction of this
substantial number of antennae and the structures on which they are mounted
presents a potentially significant regulatory obstacle to the communications
site industry. As a result, the FCC has solicited comments on whether, and in
what circumstances, the FCC should preempt state and local zoning and land use
laws and ordinances regulating the placement and construction of
communications sites. There can be no assurance as to whether or when any such
federal preemptive regulations may be promulgated or, if adopted, what form
they might take, whether they would be more or less restrictive than existing
state and local regulations, or whether the constitutionality of such
regulation, if challenged on constitutional grounds, would be upheld.
Local Regulations. Local regulations include city and other local
ordinances, zoning restrictions and restrictive covenants imposed by local
authorities. These regulations vary greatly, but typically require tower
owners to obtain approval from local officials or community standards
organizations prior to tower construction. Local regulations can delay or
prevent new tower construction or site upgrade projects, thereby limiting
ATS's ability to respond to customer demand. In addition, such regulations
increase costs associated with new tower construction. There can be no
assurance that existing regulatory policies will not adversely affect the
timing or cost of new tower construction or that additional regulations will
not be adopted which increase such delays or result in additional costs to
ATS. Such factors could have a material adverse effect on ATS's financial
condition or results of operations.
ENVIRONMENTAL MATTERS
Under various federal, state and local environmental laws, ordinances and
regulations, an owner of real estate or a lessee conducting operations thereon
may become liable for the costs of investigation, removal or remediation of
soil and groundwater contaminated by certain hazardous substances or wastes.
Certain of such laws impose cleanup responsibility and liability without
regard to whether the owner or operator of the real estate or operations
thereon knew of or was responsible for the contamination, and whether or not
operations at the property have been discontinued or title to the property has
been transferred. The owner or operator of contaminated real estate also may
be subject to common law claims by third parties based on damages and costs
resulting from off-site migration of the contamination. In connection with its
former and current ownership or operation of its properties, ATS may be
potentially liable for environmental costs such as those discussed above.
ATS believes it is in compliance in all material respects with all
applicable material environmental laws. ATS has not received any written
notice from any governmental authority or third party asserting, and is not
otherwise aware of, any material environmental non-compliance, liability or
claim relating to hazardous substances or wastes or material environmental
laws. However, no assurance can be given (i) that there are no undetected
environmental conditions for which ATS might be liable in the future or (ii)
that future regulatory action, as well as compliance with future environmental
laws, will not require ATS to incur costs that could have a material adverse
effect on ATS's financial condition and results of operations.
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COMPETITION
ATS competes for antennae site customers with wireless carriers that own and
operate their own tower networks and lease tower space to other carriers, site
development companies that acquire space on existing towers for wireless
providers and manage new tower construction, other national independent tower
companies and traditional local independent tower operators. Wireless service
providers that own and operate their own tower networks generally are
substantially larger and have greater financial and other resources than ATS.
ATS believes that tower location and capacity, price, quality of service and
density within a geographic market historically have been and will continue to
be the most significant competitive factors affecting owners, operators and
managers of communications sites.
ATS competes for acquisition and new tower construction sites with wireless
service providers, site developers and other independent tower operating
companies, as well as financial institutions. ATS believes that competition
for acquisitions and tower construction sites will increase and that
additional competitors will enter the tower market, certain of which may have
greater financial and other resources than ATS.
ATS also faces strong competition for build to suit opportunities,
principally from other independent communications sites operators and site
developers, certain of which have more extensive experience and offer a
broader range of services (principally in constructing for themselves rather
than managing the construction of others) than ATS can presently offer.
PROPERTIES
ATS's interests in its communications sites are comprised of a variety of
fee interests, leasehold interests created by long-term lease agreements,
private easements, and easements, licenses or rights-of-way granted by
government entities. In rural areas, a communications site typically consists
of a three to five acre tract which supports towers, equipment shelters and
guy wires to stabilize the structure. Less than 2,500 square feet are required
for a self-supporting tower structure of the kind typically used in
metropolitan areas. Land leases generally have twenty (20) to twenty-five (25)
year terms, with three five-year renewals, or are for five-year terms with
automatic renewals unless ATS otherwise specifies. Some land leases provide
"trade-out" arrangements whereby ATS allows the landlord to use tower space in
lieu of paying all or part of the land rent. ATS has more than 1,000 land
leases. Pursuant to the New Credit Facilities, the senior lenders have liens
on, among other things, all leases of tower space, contracts relating to the
management of towers for others, cash, accounts receivable, the stock and
inter-company debt of all Restricted Subsidiaries, inventory and other
personal property, fixtures, intellectual property, as well as certain fee and
leasehold interests, and the proceeds thereof of ATS and its Restricted
Subsidiaries.
LEGAL PROCEEDINGS
ATS is occasionally involved in legal proceedings that arise in the ordinary
course of business. While the outcome of these proceedings cannot be predicted
with certainty, management does not expect any pending matters to have a
material adverse effect on ATS's financial condition or results of operations.
EMPLOYEES
As of June 24, 1998, ATS employed approximately 450 full time individuals
and considers its employee relations to be satisfactory.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information concerning the executive
officers and directors of ATS:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Steven B. Dodge(1)...... 52 Chairman of the Board, President and Chief Executive Officer
Alan L. Box............. 46 Executive Vice President and Director
Douglas Wiest........... 45 Chief Operating Officer
Arnold L.
Chavkin(1)(2)(3)....... 46 Director
James S. Eisenstein..... 40 Executive Vice President--Corporate Development
J. Michael Gearon, Jr... 33 Executive Vice President and Director
Fred R. Lummis.......... 44 Director
Randall Mays............ 32 Director
Thomas H. Ston-
er(1)(2)(3)............ 63 Director
Joseph L. Winn.......... 46 Treasurer and Chief Financial Officer
</TABLE>
- --------
(1) Member of the Executive Committee; Mr. Stoner is the Chairman of the
Executive Committee.
(2) Member of the Audit Committee; Mr. Chavkin is the Chairman of the Audit
Committee.
(3) Member of the Compensation Committee; Mr. Stoner is the Chairman of the
Compensation Committee.
The ATS Board will be expanded to include one or two additional independent
directors. Although management has had discussions with certain persons
concerning their willingness to serve as independent directors, no decisions
or commitments have been made with respect to filling those positions. The two
independent directors will be elected annually, commencing in 1999, by the
holders of Class A Common Stock, voting as a separate class. All directors
hold office until the annual meeting of the stockholders of ATS next following
their election or until their successors are elected and qualified. Each
executive officer is appointed annually and serves at the discretion of the
ATS Board.
As a condition to the consummation of the ATC Merger, two nominees of ATC,
Fred R. Lummis, Chairman of the Board, President and Chief Executive Officer
of ATC, and Randall Mays, the Chief Financial Officer and Executive Vice
President of Clear Channel, one of the principal stockholders of ATC, were
elected as directors of ATS, and Mr. Winn resigned as a director of ATS. See
"Business--Recent Transactions--ATC Merger" for information with respect to
the voting agreement relating to the election of nominees of Mr. Lummis and
Clear Channel.
Steven B. Dodge is the Chairman, President and Chief Executive Officer of
ATS. Mr. Dodge was also the Chairman of the Board, President and Chief
Executive Officer of ARS, a position he occupied since its founding on
November 1, 1993 until consummation of the CBS Merger. Dodge was the founder
in 1988 of Atlantic Radio, L.P. ("Atlantic") which was one of the predecessor
entities of American Radio. Prior to forming Atlantic, Mr. Dodge served as
Chairman and Chief Executive Officer of American Cablesystems Corporation
("American Cablesystems"), a cable television company he founded in 1978 and
operated as a privately-held company until 1986 when it completed a public
offering in which its stock was priced at $14.50 per share. American
Cablesystems was merged into Continental Cablevision, Inc. in 1988 in a
transaction valued at more than $750.0 million, or $46.50 per share. The
initial public offering of ARS Class A Common Stock occurred in June 1995 at a
price of $16.50 per share. Upon consummation of the CBS Merger, each share of
ARS Class A Common Stock was exchanged into $44.00 and one share of Class A
Common Stock. Mr. Dodge also serves as a director of American Media, Inc. and
the National Association of Broadcasters (the "NAB").
Alan L. Box is an Executive Vice President and a director of ATS. Mr. Box
served as Chief Operating Officer of ATS from June 1997 to March 1998 at which
time he assumed his present role as the Executive Vice President responsible
for the video, voice and data transmission business of ATS. Mr. Box also was
an Executive Vice President and a director of ARS from April, 1997 when EZ
Communications, Inc. ("EZ") merged into
59
<PAGE>
ARS (the "EZ Merger") until consummation of the CBS Merger. Prior to the EZ
Merger, Mr. Box was employed by EZ, starting in 1974 as the General Manager of
EZ's Washington, D.C. area radio station. He became Executive Vice President
and General Manager and a director of EZ in 1979, President of EZ in 1985 and
Chief Executive Officer of EZ in 1995. He serves as a director of George Mason
Bankshares, Inc. and George Mason Bank.
Arnold L. Chavkin is the Chairman of the Audit Committee of the Board of
ATS. Mr. Chavkin was the Chairman of the Audit Committee of the Board of
American Radio since its founding until consummation of the CBS Merger. Mr.
Chavkin is a general partner of Chase Capital Partners ("CCP"), previously
known as Chemical Venture Partners ("CVP"), which is a general partner of
Chase Equity Associates ("CEA"), a stockholder of ARS and ATC, and previously
a principal stockholder of Multi Market Communications, Inc., one of the
predecessors of American Radio. Mr. Chavkin has been a General Partner of CCP
and CVP since January 1992 and has served as the President of Chemical
Investments, Inc. since March 1991. Chase Capital, which is an affiliate of
Chase Equity Associates, owned approximately 18.1% of ATC; Chase, which is
also an affiliate of Chase Capital is a lender under the Loan Agreement with a
6.75% participation. Mr. Chavkin is also a director of R&B Falcon Drilling
Company, Bell Sports Corporation, Wireless One, Inc. and Patina Oil & Gas
Corporation. Prior to joining Chemical Investments, Inc., Mr. Chavkin was a
specialist in investment and merchant banking at Chemical Bank for six years.
For the information with respect to the interests of an affiliate of Mr.
Chavkin, CCP and CEA in ATC, see "Business--Recent Transactions--ATC Merger".
James S. Eisenstein is the Executive Vice President--Corporate Development
of ATS. Mr. Eisenstein has overall responsibility for seeking out acquisition
and development opportunities for ATS. Mr. Eisenstein helped form ATS in the
summer of 1995. From 1990 to 1995, he was Chief Operating Officer for Amaturo
Group Ltd., a broadcast company operating eleven radio stations and four
broadcasting towers, several of which were purchased by American Radio. In
February 1998, Mr. Eisenstein was elected to serve on the Board of Directors
of the Personal Communications Industry Association, the leading international
trade association representing the wireless communications industry. He has
extensive experience in structuring acquisitions and the operation and
management of broadcasting and tower businesses.
J. Michael Gearon, Jr. was the principal stockholder and Chief Executive
Officer of Gearon & Co., Inc., a position he has held since September 1991. As
a condition to consummation of the Gearon Transaction, Mr. Gearon was elected
a director of ATS and President of Gearon Communications, the division of ATS
which operates its site acquisition business. See "Business--Recent
Transactions".
Fred R. Lummis, a director of ATS, has served as Chairman, Chief Executive
Officer and President of ATC since its organization in October 1994. Mr.
Lummis has been the President of Summit Capital, a private investment firm,
since 1990. Mr. Lummis served as Senior Vice President of Duncan, Cook & Co.,
a private investment firm from 1986 to 1990 and as Vice President of Texas
Commerce Bank Inc. from 1978 to 1986. Mr. Lummis currently serves on the board
of several private companies and is a trustee of the Baylor College of
Medicine.
Randall Mays, a director of ATS, has served as Chief Financial Officer and
Executive Vice President of Clear Channel since February 1997, prior to which
he had served as a Vice President and Treasurer since joining Clear Channel in
1993. Prior to joining Clear Channel, he was an associate at Goldman, Sachs &
Co.
Thomas H. Stoner is the Chairman of the Executive Committee and the
Compensation Committee of the Board of ATS. Mr. Stoner was the Chairman of the
Executive Committee and the Compensation Committee of the Board of American
Radio since its founding until consummation of the CBS Merger. Mr. Stoner
founded Stoner Broadcasting Systems, Inc. ("Stoner") in 1965. Stoner, which
was one of the predecessors of American Radio, operated radio stations for
over 25 years in large, medium and small markets. Mr. Stoner is a director of
Gaylord Container Corporation and a trustee of the Chesapeake Bay Foundation.
60
<PAGE>
Douglas Wiest is the Chief Operating Officer of ATS. Mr. Wiest joined ATS in
February 1998, initially as the Chief Operating Officer of Gearon
Communications, and assumed his current position in March 1998. Prior to
joining ATS, Mr. Wiest was Regional Vice President of Engineering and
Operations for Nextel's southern region. Prior to joining Nextel in 1993, Mr.
Wiest was employed by McCaw Communications where he was engaged in network
systems development for approximately three years and by Pacific Telesis where
he was engaged in strategic planning and operations for approximately eight
years.
Joseph L. Winn is the Chief Financial Officer and Treasurer of ATS. Mr. Winn
was also Treasurer, Chief Financial Officer and a director of ARS since its
founding until consummation of the CBS Merger. In addition to serving as Chief
Financial Officer of American Radio, Mr. Winn was Co-Chief Operating Officer
responsible for Boston operations until May 1994. Mr. Winn served as Chief
Financial Officer and a director of the general partner of Atlantic after its
organization. He also served as Executive Vice President of the general
partner of Atlantic from its organization until June 1992, and as its
President from June 1992 until the organization of ARS. Prior to joining
Atlantic, Mr. Winn served as Senior Vice President and Corporate Controller of
American Cablesystems after joining that company in 1983.
EXECUTIVE COMPENSATION
All of the executive officers of ATS listed below (other than Mr.
Eisenstein) were employees of ARS (or, in the case of Mr. Box, of EZ prior to
the EZ Merger) since the organization of ATS in 1995 until consummation of the
CBS Merger. During that period the highest paid executive officers, other than
Mr. Dodge, who are employees of ATS, were Messrs. Box, Winn and Eisenstein.
The compensation of each of those individuals (other than Mr. Eisenstein) was
principally for acting as an executive officer of American Radio (or, in the
case of Mr. Box, EZ prior to the EZ Merger) and, accordingly, information
provided with respect to their executive compensation represents compensation
paid by ARS (with the exception of Mr. Eisenstein).
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------- ------------------------------
NAME AND OTHER ANNUAL SHARES UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY(3) BONUS COMPENSATION OPTIONS(4) COMPENSATION
------------------ ---- --------- -------- ------------ ----------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Steven B. Dodge(1)(2)... 1995 $252,625 -- -- -- --
Chairman of the Board, 1996 $297,250 50,000 -- 40,000 4,910(5)
President
and Chief Executive 1997 $502,338 -- -- 100,000 1,716(5)
Officer
Joseph L. Winn(1)(2).... 1995 $227,859 -- -- 65,000 --
Treasurer and Chief 1996 $257,250 42,500 -- 20,000 11,456(6)
Financial
Officer 1997 $352,329 40,000 -- 35,000 12,876(6)
Alan L. Box(1)(2)....... 1997 $264,400(7) -- -- 100,000 1,216(8)
Chief Operating Officer
James S. Eisenstein(2).. 1995 $ 62,109 -- -- 40,000(8) 5,260(9)
Executive Vice 1996 $169,250 19,000 -- 200,000(10) 8,669(9)
President--
Corporate Development 1997 $212,367 -- -- 20,000(10) 12,656(9)
</TABLE>
- --------
(1) Represents both annual and long-term compensation paid by ARS.
(2) The Compensation Committee of ATS has approved annual base salaries for
1998 for Mr. Dodge, and each of its other five executive officers, at the
following rates: Mr. Dodge: $250,000; Mr. Box: $50,000; Mr. Eisenstein
$200,000; Mr. Gearon: $200,000; Mr. Wiest: $225,000; and Mr. Winn:
$225,000. Such salaries commenced (in the case of Messrs. Dodge, Winn and
Eisenstein) with the consummation of the CBS Merger, prior to which time
such individuals (other than Mr. Eisenstein) were paid by ARS at their
then present compensation rates.
61
<PAGE>
(3) Includes American Radio's matching 401(k) plan contributions.
(4) Represents options to purchase shares of ARS Common Stock granted
pursuant to the ARS stock option plan, except in the case of Mr.
Eisenstein. See "--Stock Option Information" below.
(5) Includes group term life insurance and parking expenses paid by ARS.
(6) Includes group term life insurance, automobile lease and parking expenses
paid by ARS.
(7) Includes $87,500 paid by ATS commencing October 1, 1997.
(8) Includes group term life insurance paid by ARS.
(9) Includes group term life insurance and automobile expenses paid by ATS.
(10) Represents options to purchase shares of common stock of ATSI granted
pursuant to the ATSI Plan. See "--Stock Option Information" below.
DIRECTOR COMPENSATION
The ATS Board will be expanded to include one or two additional independent
directors. Such independent directors will be granted options to purchase
25,000 shares of common stock, which will be exercisable in 20% cumulative
annual increments commencing one year from the date of grant and will expire
at the end of ten years. The outside directors will also receive fees of
$3,000 for each Board of Directors meeting attended and $1,000 for each
committee meeting attended held apart from a board meeting and will be
reimbursed for expenses.
STOCK OPTION INFORMATION
Effective November 5, 1997, ATS instituted the 1997 Stock Option Plan, as
amended and restated (the "Plan"), which is administered by the Compensation
Committee of the ATS Board. The Plan was designed to encourage directors,
consultants and key employees of American Tower Systems and its subsidiaries
to continue their association with ATS by providing opportunities for such
persons to participate in the ownership of ATS and in its future growth
through the granting of stock options, which may be options designed to
qualify as incentive stock options ("ISOs") within the meaning of Section 422
of the Code, or options not intended to qualify for any special tax treatment
under the Code ("NQOs"). The Plan provides that ATS may not grant options to
purchase more than 5,000,000 shares per year per participant.
The duration of the ISOs and NQOs granted under the Plan may be specified by
the Compensation Committee pursuant to each respective option agreement, but
in no event shall any such option be exercisable after the expiration of ten
(10) years after the date of grant. In the case of any employee who owns (or
is considered under Section 424(d) of the Code as owning) stock possessing
more than ten percent of the total combined voting power of all classes of
stock of ATS, no ISO shall be exercisable after the expiration of five
(5) years from the date such option is granted. The option pool under the Plan
consists of an aggregate of 15,000,000 shares of Common Stock that may consist
of shares of Class A Common Stock, shares of Class B Common Stock or some
combination thereof. As a condition to consummation of the ATC Merger, the
Plan was amended to provide that all future grants of options under the Plan
must be to purchase shares of Class A Common Stock.
In July 1996, ATSI adopted its 1996 Stock Option Plan (the "ATSI Plan") and,
pursuant thereto, options were granted to various officers of ATSI (the "ATSI
Options"). In connection with the CBS Merger, those options to purchase the
common stock of ATSI will be converted into options to acquire shares of Class
A Common Stock (the "ATS Options"). In addition, each option to purchase
shares of ARS Common Stock (the "ARS Options") held by persons who will be
directors or employees of ATS may be exchanged for ATS Options. The ARS
Options will be exchanged in a manner that will preserve the spread in such
ARS Options between the option exercise price and the fair market value of ARS
Common Stock and the ratio of the spread to the exercise price prior to such
conversion and, to the extent applicable, otherwise in conformity with the
rules under Section 424(a) of the Code and the regulations promulgated
thereunder.
During the year ended December 31, 1997 the only options granted pursuant to
the ATSI Plan to the individuals referred to in "--Executive Compensation"
above were to Mr. Eisenstein.
62
<PAGE>
OPTION GRANTS IN FISCAL YEAR 1997
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION
FOR OPTION
TERMS(B)
--------------------
NUMBER OF
SHARES OF
UNDERLYING EXERCISE
OPTIONS PRICE EXPIRATION
NAME GRANTED(A) PER SHARE DATE 5% 10%
---- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
James S. Eisenstein.... 27,312 $5.49 1/2/07 $ 94,298 $ 238,970
</TABLE>
- --------
(a) Gives effect to the exchange of ATSI Options to purchase 20,000 shares at
$7.50 per share for ATS Options.
(b) The potential realizable value at assumed annual rates of stock price
appreciation for the option term of 5% and 10% would be $94,298 and
$238,970, respectively. A 5% and 10% per year appreciation in stock price
from $5.49 per share yields appreciation of $3.45 per share and $8.75 per
share, respectively. The actual value, if any, Mr. Eisenstein may realize
will depend on the excess of the stock price over the exercise price on
the date the option is exercised, so that there is no assurance the value
realized by an executive will be at or near the amounts reflected in this
table.
The only unexercised options granted pursuant to the ATSI Plan to the
individuals referred to in "--Executive Compensation" above were to Mr.
Eisenstein.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT DECEMBER 31, 1997 AT DECEMBER 31, 1997(B)
---------------------------- ----------------------------
NAME EXERCISABLE(A) UNEXERCISABLE EXERCISABLE(A) UNEXERCISABLE
---- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
James S. Eisenstein..... 114,709 185,720 $717,260 $1,137,479
</TABLE>
- --------
(a) In 1996 Mr. Eisenstein was granted options pursuant to the ATSI Plan for
an aggregate of 200,000 shares at $5.00 per share. Such options became
exercisable to the extent of 80,000 shares on July 1, 1997 and become
exercisable in 20% cumulative annual increments commencing on July 1,
1998, and expire September 9, 2006. Giving effect to the exchange of ATSI
Options for ATS Options, Mr. Eisenstein will have options to purchase
273,117 shares of Class A Common Stock at $3.66 per share, of which
109,247 shares are presently purchasable. An additional ten-year option to
purchase 20,000 shares of common stock of ATSI at $7.50 per share was
granted to Mr. Eisenstein on January 2, 1997. Giving effect to the
exchange of ATSI Options for ATS Options, this option will convert into an
option to purchase 27,312 of shares of Class A Common Stock at $5.49 per
share, of which 5,462 shares are presently purchasable.
(b) The value of unexercised in-the-money options of Mr. Eisenstein at
December 31, 1997, based on an assumed price of $10.00 per share was
approximately $1,854,739.
In January 1998, the Compensation Committee granted options to purchase
shares of Common Stock to the executive officers of ATS in the amounts shown.
All such options have an exercise price of $10.00, the price at which shares
of Common Stock were sold pursuant to the Stock Purchase Agreement, are to
purchase Class A Common Stock (Class B Common Stock in the case of Mr. Dodge)
and become exercisable in 20% cumulative annual increments commencing one year
from the grant dates: Mr. Dodge--1,700,000 shares; Mr. Box--120,000 shares;
Mr. Eisenstein--28,000 shares; and Mr. Winn--275,000 shares. Pursuant to
options granted as a condition to consummation of the Gearon Transaction,
Messrs. Gearon and Wiest received options to purchase 234,451 shares and
240,001 shares, respectively, of Class A Common Stock at $13.00 per share,
which also become exercisable in 20% cumulative annual increments. In June
1998, following consummation of the ATC Merger, the Compensation Committee
granted options to purchase shares of Class A Common Stock to certain
executive officers of ATS, at an exercise price of $21.125 per share, all of
which become exercisable in 20% cumulative annual increments, as follows: Mr.
Dodge--1,300,000 shares; Mr. Box--80,000 shares; Mr. Eisenstein--22,000
shares; and Mr. Winn--210,000 shares.
63
<PAGE>
All employees of ARS who became employees of ATS (which includes, among
others, Messrs. Box, Dodge, Eisenstein and Winn) who held options to purchase
ARS Common Stock (including Mr. Box: 100,000 shares; Mr. Dodge: 290,000
shares; Mr. Eisenstein: 40,000 shares; and Mr. Winn: 280,000 shares) were
given the opportunity to convert their ARS Options into ATS Options. Such
conversion was effectuated upon consummation of the CBS Merger in a manner
designed to preserve the spread in such ARS Options between the option
exercise price and the fair market value of ARS Common Stock and the ratio of
the spread to the exercise price prior to such conversion and, to the extent
applicable, otherwise in conformity with the rules under Section 424(a) of the
Code and the regulations promulgated thereunder. Messrs. Box, Dodge,
Eisenstein and Winn exercised their respective rights to exchange ARS Options
for ATS Options such that such individuals hold ATS Options as follows (based
on a $64 7/8 and $20 7/8 per share value for the ARS Common Stock and Common
Stock, respectively): Mr. Box: 310,778 shares of Class A Common Stock at $8.77
per share; Mr. Dodge: an aggregate of 901,257 shares of Class B Common Stock
at prices ranging between $3.19 and $10.00 per share; Mr. Eisenstein: 124,311
shares of Class B Common Stock at $7.64 per share; and Mr. Winn: an aggregate
of 405,037 shares of Class B Common Stock and 25,080 shares of Class A Common
Stock at prices ranging between $2.05 and $9.09 per share. The information set
forth above does not include such to be exchanged ARS Options held by Messrs.
Dodge, Box, Eisenstein and Winn. See "Principal and Selling Stockholders".
In addition to options outstanding and to be outstanding under the Plan, ATS
has issued options to purchase an aggregate of 1,862,806 shares pursuant to
the exchange of ARS options (including those shown above for certain executive
officers) and 1,252,364 shares pursuant to the exchange of ATC options.
CERTAIN TRANSACTIONS
Chase was a lender with a 6.75% participation under the 1997 Loan Agreement
and has a 5.2% participation under the New Credit Facilities for the Borrower
Subsidiaries. Chase is an affiliate of CVP, the general partner of CEA; Mr.
Chavkin, a director of ATS and ARS, is a general partner of CVP. At June 20,
1998, the aggregate principal amount outstanding under the New Credit
Facilities of the Borrower Subsidiaries was approximately $294.0 million.
Chase's share of interest and fees paid by ATS pursuant to the provisions of
the 1997 Loan Agreement was $0.3 million in 1997. For information with respect
to the interests of Chase Capital, an affiliate of Mr. Chavkin, in ATC and the
ATC Merger, see "Business--Recent Transactions--ATC Merger".
For information with respect to the sale of shares of Common Stock to Mr.
Dodge and certain other officers and directors (and their affiliates, family
members and family trusts) of ARS and ATS, see "Business--Recent
Transactions--Stock Purchase Agreement".
For information with respect to the continuing relationship between ATS and
ARS, see "Relationship between ATS and ARS".
Management believes that the above transactions (other than the lease
arrangements with ARS which were negotiated with CBS on a below-market basis),
to the extent they were with affiliated parties, were on terms, and ATS
intends to continue its policy that all future transactions between it and its
officers, directors, principal stockholders and affiliates will be on terms,
not less favorable to ATS than those which could be obtained from unaffiliated
parties.
64
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following information sets forth certain information known to ATS as of
June 29, 1998 with respect to the shares of Common Stock that are beneficially
owned as of such date by (i) each person known by ATS to own more than 5% of
the outstanding Common Stock, (ii) each director of ATS, (iii) each executive
officer of ATS, and (iv) all directors and executive officers of ATS as a
group. The table also sets forth information of a comparable nature giving
effect, in addition to the foregoing, to the consummation of this Offering.
The number of shares beneficially owned by each director or executive officer
is determined according to the rules of the Commission, and the information is
not necessarily indicative of beneficial ownership for any other purpose.
Under such rules, beneficial ownership includes any shares as to which the
individual or entity has sole or shared voting power or investment power and
also any shares which the individual or entity has the right to acquire within
sixty days of June 29, 1998 through the exercise of an option, conversion
feature or similar right. Except as noted below, each holder has sole voting
and investment power with respect to all shares of Common Stock listed as
owned by such person or entity.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK BENEFICIALLY PRO FORMA
OWNED PRIOR TO THIS OFFERING FOR THIS OFFERING+
-------------------------------------------------- -----------------------
PERCENT PERCENT PERCENT OF PERCENT OF SHARES PERCENT OF PERCENT OF
OF OF COMMON TOTAL VOTING BEING COMMON TOTAL VOTING
NUMBER CLASS A CLASS B STOCK POWER OFFERED STOCK POWER
---------- ------- ------- ---------- ------------ --------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DIRECTORS AND EXECUTIVE
OFFICERS
Steven B. Dodge(1)...... 6,555,326 * 68.87 8.25 40.28 -- 6.59 35.81
Thomas H. Stoner(2)..... 1,587,377 * 17.00 2.01 9.79 -- 1.60 8.68
Alan L. Box(3).......... 913,084 1.37 -- 1.16 * -- * *
James S. Eisenstein(4).. 214,296 * * * * -- * *
J. Michael Gearon,
Jr.(5)................. 4,711,113 7.06 -- 5.96 3.01 -- 4.69 2.63
Fred R. Lummis(6)....... 1,812,072 2.70 -- 2.28 1.15 -- 1.82 1.02
Randall Mays (Clear
Channel)(7)............ 9,019,717 13.51 -- 11.41 5.76 -- 9.11 5.11
Douglas Wiest(8)........ 44,444 * -- * * 8,888 * *
Joseph L. Winn(9)....... 279,908 * 3.03 * 1.74 -- * 1.55
Arnold L. Chavkin
(CEA)(10).............. 9,827,231 9.79 -- 12.44 4.17 -- 9.92 3.70
All executive officers
and directors as a
group
(ten persons)(11)...... 34,963,568 34.62 87.78 43.59 65.68 -- 34.82 58.44
FIVE PERCENT
STOCKHOLDERS
Baron Capital Group,
Inc.(12)............... 6,603,150 9.89 -- 8.36 4.22 -- 6.67 3.74
OTHER SELLING
STOCKHOLDERS
Dan King Brainard(13)... 548,889 * -- * * 148,889 * *
The 1997 Gearon Family
Trust(14).............. 471,111 * -- * * 71,111 * *
Arnold 1994 Limited
Partnership(15)........ 494,202 * -- * * 192,671 * *
Arnold Family Limited
Partnership(16)........ 494,202 * -- * * 192,671 * *
BOCP II, Limited
Liability Company(17).. 1,014,607 1.52 -- 1.28 * 1,014,607 * *
Equus Equity
Appreciation Fund,
L.P.(18)............... 1,860,242 2.78 -- 2.35 1.19 732,151 1.14 *
Karen Edwards
Kwilosz(19)............ 6,666 6,666
William R. Lummis(20)... 563,563 * -- * * 202,305 * *
Ransom C. Lummis(21).... 127,163 * -- * * 25,457 * *
Isabel Stude
Lummis(22)............. 32,754 * -- * * 6,557 * *
Melham Inc.(23)......... 172,537 * -- * * 172,537 * *
Mayfirst Associates
Ltd.(24)............... 103,377 * -- * * 108,377 * *
Summit Capital
Inc.(25)............... 963,356 1.44 -- 1.22 * 289,007 * *
Ann Isabel Stude Trust
I(26).................. 93,445 * -- * * 19,267 * *
Scott R. McQueen(27).... 360,000 204,375 * *
Randall T. Odeneal(28).. 360,000 179,375 * *
Charlton H.
Buckley(29)............ 1,773,057 2.66 -- 2.24 1.13 300,000 1.49 *
---------
TOTAL SHARES............ 3,866,023
=========
</TABLE>
- -------
* Less than 1%.
+ Does not include 2,386,602 shares of Class A Common Stock issuable by ATS
pursuant to the over-allotment option granted to the Underwriters.
(1) Mr. Dodge is Chairman of the Board, President and Chief Executive Officer
of ATS. His address is 116 Huntington Avenue, Boston, Massachusetts
02116. Does not include an aggregate of 509,677 shares of Class B Common
Stock purchasable under ATS Options received in exchange for ARS Options
upon consummation
65
<PAGE>
of the CBS Merger; includes an aggregate of 391,580 shares of Class B
Common Stock as to which such options are exercisable. Includes 10,030
shares of Class A Common Stock and 4,037,114 shares of Class B Common
Stock owned by Mr. Dodge, an aggregate of 25,050 shares of Class A Common
Stock and 20,832 shares of Class B Common Stock owned by three trusts for
the benefit of Mr. Dodge's children, 66,720 shares of Class A Common Stock
and 2,000,000 shares of Class B Common Stock owned by a limited liability
company, of which Mr. Dodge is the sole member and 3,000 shares of Class A
Common Stock owned by Mr. Dodge's wife. Mr. Dodge disclaims beneficial
ownership in all shares owned by such trusts and his wife. Does not
include 1,700,000 shares of Class B Common Stock purchasable under an
option granted on January 8, 1998 and 1,300,000 shares of Class A Common
Stock purchasable under an option granted on June 22, 1998 to Mr. Dodge
under the Plan and 170 shares of Class A Common Stock held by Thomas S.
Dodge, an adult child of Mr. Dodge, with respect to which Mr. Dodge
disclaims beneficial ownership.
(2) Mr. Stoner is Chairman of the Executive Committee of the ATS Board. His
address is 116 Huntington Avenue, Boston, Massachusetts 02116. Does not
include 12,431 shares of Class A Common Stock purchasable under an ATS
Option received in exchange for an ARS Option upon consummation of the
CBS Merger and 25,000 shares of Class A Common Stock purchasable under an
option granted on January 8, 1998 to Mr. Stoner under the Plan; includes
3,108 shares of Class A Common Stock as to which such exchanged option is
exercisable. Includes 46,311 shares of Class B Common Stock owned by his
wife, 160,998 shares of Class B Common Stock and 36,000 shares of Class A
Common Stock owned by a charitable foundation, of which Mr. Stoner serves
as an officer and an aggregate of 403,460 shares of Class B Common Stock
and 22,500 shares of Class A Common Stock owned by trusts of which he
and/or certain other persons are trustees. Mr. Stoner disclaims
beneficial ownership of 232,128 shares of Class B Common Stock and 58,500
shares of Class A Common Stock owned by the charitable foundation and
such trusts. Does not include 100,675 shares of Class A Common Stock and
62,454 shares of Class B Common Stock owned by Mr. Stoner's adult
children.
(3) Mr. Box is a director and an Executive Vice President of ATS. His address
is 116 Huntington Avenue, Boston, Massachusetts 02116. Includes 2,070
shares of Class A Common Stock owned by two trusts for the benefit of Mr.
Box's children and 62,156 shares of Class A Common Stock purchasable
under ATS Options received in exchange for ARS Options upon consummation
of the CBS Merger. Does not include 248,622 shares of Class A Common
Stock purchasable under such exchanged ATS Options or 120,000 shares of
Class A Common Stock purchasable under an option granted on January 8,
1998 and 80,000 shares of Class A Common Stock purchasable under an
option granted on June 22, 1998 to Mr. Box under the Plan.
(4) Mr. Eisenstein is Executive Vice President--Corporate Development of ATS.
His address is 116 Huntington Avenue, Boston, Massachusetts 02116. Does
not include 49,724 shares of Class B Common Stock purchasable under ATS
Options received in exchange for ARS Options upon consummation of the CBS
Merger; includes 74,587 shares of Class B Common Stock as to which such
options will be exercisable. Does not include an aggregate of 185,720
shares of Class A Common Stock purchasable under ATSI Options which
became options to purchase Class A Common Stock; includes an aggregate of
114,709 shares of Class A Common Stock as to which such options are
exercisable. Does not include 28,000 shares of Class A Common Stock
purchasable under an option granted on January 8, 1998 and 22,000 shares
of Class A Common Stock purchasable under an option granted in June 22,
1998 to Mr. Eisenstein under the Plan.
(5) Mr. Gearon is an Executive Vice President and director of ATS. His
address is 116 Huntington Avenue, Boston, Massachusetts 02116. Includes
4,240,002 shares of Class A Common Stock currently owned by Mr. Gearon
and 471,111 shares (71,111 of which are to be offered in this Offering)
of Class A Common Stock held by a trust for the benefit of Mr. Gearon's
children of which J. Michael Gearon, Sr. is the trustee. Mr. Gearon
disclaims beneficial ownership in all shares owned by such trust. Does
not include 234,451 shares of Class A Common Stock purchasable under
options granted on January 22, 1998 to Mr. Gearon under the Plan.
(6) Mr. Lummis was the Chairman, Chief Executive Officer and President of ATC
and is a director of ATS. His address is 3411 Richmond Avenue, Suite 400,
Houston, Texas 77046. Includes 95,421 shares of Class A Common Stock
owned by Mr. Lummis, an aggregate of 256,252 shares of Class A Common
Stock owned by trusts of which he is trustee, 963,356 shares of Class A
Common Stock owned by Summit, an affiliate of Mr. Lummis by reason of Mr.
Lummis's 50% ownership of the common stock of Summit, and 497,043
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shares of Class A Common Stock purchasable under an option originally
granted by ATC which became an option to purchase Class A Common Stock
pursuant to the ATC Merger.
(7) Mr. Mays, the Chief Financial Officer and an Executive Vice President of
Clear Channel, is a director of ATS. His address is P.O. Box 659512, San
Antonio, Texas 78265-9512. Clear Channel owns all of the shares of Class
A Common Stock shown in the table. Mr. Mays disclaims beneficial
ownership of Clear Channel's ownership of such shares.
(8) Mr. Wiest is the Chief Operating Officer of ATS. His address is 116
Huntington Avenue, Boston, Massachusetts 02116. Includes 44,444 shares of
Class A Common Stock owned by Mr. Wiest. Does not includes 240,001 shares
of Class A Common Stock purchasable under options granted on January 22,
1998 to Mr. Wiest under the Plan.
(9) Mr. Winn is the Treasurer and Chief Financial Officer of ATS. His address
is 116 Huntington Avenue, Boston, Massachusetts 02116. Includes 2,000
shares of Class A Common Stock and 230,657 shares of Class B Common Stock
owned individually by Mr. Winn and 100 shares of Class A Common Stock
held for the benefit of his children. Does not include an aggregate of
110,464 shares of Class B Common Stock and 20,064 shares of Class A
Common Stock purchasable under ATS Options received in exchange for ARS
Options upon consummation of the CBS Merger; includes an aggregate of
42,135 shares of Class B Common Stock and 5,016 shares of Class A Common
Stock as to which such options are exercisable. Does not include an
aggregate of 275,000 shares of Class A Common Stock purchasable under an
option granted on January 8, 1998 and 210,000 shares of Class A Common
Stock purchasable under an option granted on June 22, 1998 to Mr. Winn
under the Plan.
(10) Mr. Chavkin is a director of ATS. His address is 116 Huntington Avenue,
Boston, Massachusetts 02116. Mr. Chavkin, as a general partner of CCP,
which is the general partner of CEA may be deemed to own beneficially
shares held by CEA and Chase Capital, an affiliate of Mr. Chavkin.
Includes 26,911 shares of Class A Common Stock and 3,295,518 shares of
Class C Common Stock owned by CEA, 5,201,163 shares of Class A Common
Stock owned by Chase Capital and 1,300,531 shares of Class A Common Stock
owned by Archery Partners, which may be deemed an affiliate of Chase
Capital. Mr. Chavkin disclaims such beneficial ownership of such shares.
The address of CCP and CEA is 380 Madison Avenue, 12th Floor, New York,
New York 10017. Does not include 12,431 shares of Class A Common Stock
purchasable under an ATS Option received in exchange for an ARS Option
upon consummation of the CBS Merger and 25,000 shares of Class A Common
Stock purchasable under an option granted on January 8, 1998 to Mr.
Chavkin under the Plan; includes 3,108 shares of Class A Common Stock as
to which such exchanged option is exercisable.
(11) Includes all shares stated to be owned in the preceding notes.
(12) The address of Baron Capital Group, Inc. ("Baron") is 767 Fifth Avenue,
New York, New York 10153. Based on Baron's Amendment No. 4 to Schedule
13D dated March 27, 1998, Mr. Baron, the president of Baron, has sole
voting power over 180,000 shares of Class A Common Stock, shared voting
power over 1,883,150 shares of Class A Common Stock, sole dispositive
power over 180,000 shares of Class A Common Stock and shared dispositive
power over 1,883,150 shares of Class A Common Stock. Mr. Baron disclaims
beneficial ownership of 6,603,150 shares of Class A Common Stock.
(13) The address of Dan King Brainard is 1760 The Exchange, N.W., Suite 200,
Atlanta, Georgia 30076.
(14) The address of the trustee for The 1997 Gearon Family Trust is 1760 The
Exchange, N.W., Suite 200, Atlanta, Georgia 30076. After such sale, The
1997 Gearon Family Trust will have 400,000 shares of Class A Common
Stock. J. Michael Gearon, Sr. is the sole trustee of the trust. The
children of J. Michael Gearon, Jr. are the beneficiaries of the trust.
(15) The address of Arnold 1994 Limited Partnership is 1001 Fannin, Suite 720,
Houston, Texas 77002.
(16) The address of Arnold Family Limited Partnership is 1001 Fannin, Suite
720, Houston, Texas 77002.
(17) The address of BOCP II, Limited Liability Company, an affiliate of Banc
One Corporation, is 150 East Bay Street, 24th floor, Columbus, Ohio
43215.
(18) The address of Equus Capital Corporation is 2929 Allen Parkway, Suite
2500, Houston, Texas 77019. Equus Equity Appreciation Fund, L.P. is a
limited partnership, the general partner of which is Equus Capital
Corporation.
(19) The address of Karen Edwards Kwilosz is 675 Winnmark Drive, Roswell,
Georgia 30076.
(20) The address of William R. Lummis is 4525 Texas Commerce Tower, 600
Travis, Houston, Texas 77002. Mr. Lummis is the father of Fred Lummis, a
director of ATS.
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(21) The address of Ransom C. Lummis is 910 Travis, Houston, Texas 77002. Mr.
Lummis is the brother of Fred Lummis, a director of ATS.
(22) The address of Isabel Stude Lummis is 910 Travis, Houston, Texas 77002.
Ms. Lummis is the sister-in-law of Fred Lummis, a director of ATS.
(23) The address of Melham Inc. is 5 Post Oak Park, Suite 2560, Houston, Texas
77027.
(24) The address of Mayfirst Associates Ltd. is 5 Post Oak Park, Suite 2560,
Houston, Texas 77027.
(25) The address of Summit Capital Inc. is 8 Greenway Plaza, Suite 714,
Houston, Texas 77046. Fred Lummis, a director of ATS, serves as the
President of Summit Capital.
(26) The address of the trustee for the Ann Isabel Stude Trust I is 1600
Smith, Suite 5100, Houston, Texas 77002.
(27) The address of Scott R. McQueen is 1921 Gallows Road, Vienna, Virginia
22182.
(28) The address of Randall T. Odeneal is 1921 Gallows Road, Vienna, Virginia
22182.
(29) The address of Charlton H. Buckley is 31 Lake Front Drive, Glenbrook,
Nevada 89413.
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RELATIONSHIP BETWEEN ATS AND ARS
ATS, ARS and CBS have entered into the ARS-ATS Separation Agreement to
provide, among other things, for (i) the sharing of various liabilities and
obligations, including without limitation those relating to the taxes payable
by ARS as a consequence of the consummation of the CBS Merger, (ii) certain
adjustments based on ARS's working capital and indebtedness as of the
Effective Time of the CBS Merger, and (iii) the leasing of space to ARS on
certain of ATS's towers. The following is a summary description of the rights
and obligations of the parties under the ARS-ATS Separation Agreement, a copy
of which has been filed as an exhibit to the Registration Statement. The
summary is qualified in its entirety by reference to the full and complete
text of the ARS-ATS Separation Agreement. Certain terms used in this Section
without definition are defined in the ARS-ATS Separation Agreement or
incorporated therein by reference to the CBS Merger Agreement.
SHARING OF TAX AND OTHER CONSEQUENCES
With respect to the terms and conditions of the CBS Merger, including the
sharing of the tax consequences thereof, the ARS-ATS Separation Agreement
provides as follows:
(a) American Tower Systems is obligated to indemnify CBS and American
Radio and its Subsidiaries (other than the Tower Subsidiaries, collectively
the "ATS Group") harmless from and against any liabilities (other than
certain tax liabilities) to which American Radio or any of its Subsidiaries
(other than the ATS Group) may be or become subject that relate to or arise
from the assets, business, operations, debts or liabilities of the ATS
Group, including without limitation (i) the assets to be transferred to ATS
except certain leases listed in the CBS Merger Agreement, including without
limitation, (z) the assets (or debts or liabilities associated therewith)
to be transferred to ATS pursuant to the provisions of Article 11 of the
ARS-ATS Separation Agreement; (ii) liabilities (A) in connection with the
distribution of the Tower Stock Consideration as part of the CBS Merger,
(B) relating to or arising from any agreement, arrangement or understanding
(other than the Merger Agreement and the Collateral Documents, except as
otherwise expressly set forth therein) entered into by American Radio, ATS
or any member of the American Tower Group (x) for the benefit of any member
of the ATS Group, (y) in contemplation of the CBS Merger or (z) with
respect to the sale, assignment, transfer or other disposition of shares of
Common Stock, (C) relating to or arising from any untrue statement or
alleged untrue statements of a material fact contained in the Prospectus
furnished to the holders of ARS Convertible Preferred Stock, any proxy
statement used in connection with any ARS stockholder meeting with respect
to approval of the Tower Merger, the Registration Statement or in any
document filed, or any document delivered to any securityholder of American
Radio, or required to be filed in connection with the CBS Merger, or in any
document filed or required to be filed by American Radio or any member of
the ATS Group in connection with the preceding clause (B) or any omission
or alleged omission to state therein a 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, except with
respect to information provided by or relating solely to American Radio
(excluding ATS Mergercorp and the ATS Group) that is contained in or
expressly consistent with (x) the Filed American SEC Documents, (y) the
American Form 10-Q or (z) the American Included SEC Information (which
American Radio has agreed to furnish and which excludes information
pertaining to the CBS Merger, the Tower Separation and certain other
related information), or (D) in connection with any action or omission of
any Tower Employee for the benefit of, including without limitation in
furtherance of the business of, any member of the American Tower Group or
in connection with or incident to such employee's duties and
responsibilities as a Tower Employee, (iii) any economic impact related to
or arising from the failure to obtain any government authorizations,
private authorizations or other third party consents, or to make any
governmental filings, necessary to consummate the CBS Merger, (iv) the
rental and related expenses for the relevant portion of the leased premises
located at 116 Huntington Avenue, Boston Massachusetts in the event of the
failure to obtain the landlord's consent to the assignment of the
obligations relating to, or sublease of, such relevant portion of such
premises, and (v) total defects relating to the assets conveyed or to be
conveyed by ARS to ATS pursuant to the ARS--ATS Separation Agreement.
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(b) American Radio is obligated to indemnify the ATS Group and hold it
harmless from and against any liabilities (other than certain tax
liabilities) to which the ATS Group may be or become subject that relate to
or arise from (i) the assets, business, operations, debts or liabilities of
American Radio or its Subsidiaries (other than the ATS Group) whether
arising prior to, concurrent with or after the CBS Merger, or (ii) the
American Included SEC Documents.
(c) The allocation of Tax liabilities and deconsolidation of American
Radio and the ATS Group is to be made in accordance with the principles set
forth in the ARS-ATS Separation Agreement, including without limitation
that ATS is obligated to indemnify (and make whole on an after-tax basis)
CBS for all Taxes imposed by any Taxing Authority on any member of the
American Tax Group or on CBS as a result of or in connection with (i) the
sale or transfer of assets to the American Tower Group pursuant to Section
11.2 of the ARS-ATS Separation Agreement (or between members of the
American Tax Group prior to the final transfer to a member of the American
Tower Group or between members of the American Tower Group), (ii) the CBS
Merger, (iii) the Tower Separation, (iv) any other disposition or issuance
of stock of ATS contemplated or permitted by the CBS Merger Agreement or
any Collateral Document, (v) the merger of ATS with any other Person, (vi)
the transactions occurring on or about January 20-21, 1998, involving ATSLP
or interests therein, as the case may be, or otherwise in connection with
the Tower Deconsolidation or related transactions, or (vii) the exercise
(or cashout) of stock options of employees of the ATS Tax Group, including
without limitation any Taxes (1) on any gain to any member of the American
Tax Group arising under Section 311 of the Code, (2) on any deferred gain
to any member of the American Tax Group triggered as a result of or upon
any such event, (3) on any gain attributable to any excess loss account
triggered upon any such event, (4) arising as a result of the election or
other transactions contemplated by Section 4.2(j) of the ARS-ATS Separation
Agreement, (5) on any income or gain arising as a result of transactions
described in Section 6.8(a) of the CBS Merger Agreement, (6) as a result of
the timing of the payment of Taxes (including, without limitation, any
estimated Taxes) under the ARS-ATS Separation Agreement, (7) on any gain on
the conversion of ARS Convertible Preferred Stock into Common Stock, and
(8) in the nature of any transfer Taxes arising from any such event, all to
the extent that the additional liability for such Taxes payable by the
American Tax Group as a consequence of such events (on a "but for" basis)
exceeds $20,000,000. ATS is entitled to pursue in the name of ARS, but for
its own account and at its own cost and expense, a refund claim with
respect to the issue of whether the tax indemnity required under the ARS-
ATS Separation Agreement gives rise to an adjustment to the tax basis of
ARS's interest in American Tower (the so-called "make-whole" provision).
The ARS-ATS Separation Agreement also provides that, subject to certain
limitations, in computing the amount of taxable gain that is recognized by
ARS in connection with the distribution of the Common Stock, ARS shall, if
so requested by ATS, report the amount so realized based on the "fair
market value" of such stock as determined by an appraisal prepared by a
mutually agreed upon appraiser and, under certain circumstances, ATS would
be required to provide letters of credit or other security satisfactory to
CBS in connection with filings based on such appraisal and certain other
reporting positions.
(d) The ARS-ATS Separation Agreement provides that a member of the ATS
Group shall assume to the extent permitted by the landlord, the obligations
under the lease of 116 Huntington Avenue, Boston, Massachusetts, with
respect to the relevant portion of such leased premises.
(e) American Radio is obligated to transfer, or cause its Subsidiaries to
transfer, to ATS the communications towers agreed upon by CBS and American
Radio prior to the execution of the CBS Merger Agreement (the "Transferred
Towers"), and ATS is obligated to assume all of American Radio's and such
Subsidiaries' obligations with respect to the Transferred Towers to the
extent set forth in the ARS-ATS Separation Agreement.
(f) Upon the consummation of the CBS Merger, certain employees of
American Radio (the "ATS Employees") were offered full-time employment by
ATS or one of its Subsidiaries. Members of the ATS Group have agreed, for a
period of eighteen (18) months following the consummation of the CBS
Merger, not to actively solicit or seek to hire any employees of American
Radio or its Subsidiaries not engaged in the business of the ATS Group as
of the date of the original CBS Merger agreement, other than the ATS
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Employees, it being understood and agreed that such agreement shall not be
deemed to prevent members of the ATS Group from placing general
advertisements in publications or on the Internet or soliciting any such
employee who (i) initiates employment discussions with a member of the ATS
Group or (ii) is not employed by American Radio or CBS or any of their
respective Subsidiaries on the date such a member first solicits such
employee.
The ARS-ATS Separation Agreement contains detailed provisions with respect
to the rights and obligations of the Indemnitees and the indemnifying parties,
including as to when the indemnifying party is not entitled to assume the
defense of certain Third Party Actions. For a complete description of the
material terms and conditions of the ARS-ATS Separation Agreement relating to
the sharing of tax and other liabilities, see the ARS-ATS Separation
Agreement. See also "Prospectus Summary--American Tower Systems--CBS Merger"
and "Unaudited Pro Forma Condensed Consolidated Financial Statements of
American Tower Systems".
CLOSING DATE ADJUSTMENTS
The ARS-ATS Separation Agreement also contains provisions relating to
adjustments of the amount required to be paid by CBS in the CBS Merger, based
on American Radio's working capital and indebtedness as of the Closing Date.
Any such adjustments are required to be paid by or to ATS. With respect to
such adjustments, the ARS-ATS Separation Agreement provides, among other
things, for an adjustment as follows:
(a) Subject to paragraph (c) below, if Closing Working Capital is less
than $70,000,000 plus $15.0 million (which the parties have agreed is the
agreed upon value of the tax benefit attributable to the exercise of all
options or the cancellation for value of options) (the "WC Amount"), then
ATS shall, and if Closing Working Capital is greater than the WC Amount,
CBS shall, owe the other the amount of such difference. The term "Working
Capital" shall mean Current Assets minus Liabilities. The terms "Current
Assets" and "Liabilities" shall mean the current assets and liabilities of
the Post-Closing American Group calculated in accordance with GAAP, except
that (i) outstanding principal amount of indebtedness and liquidation
preference of preferred stock will be excluded, (ii) cash and notes
receivable of employees relating to the exercise of stock options will be
excluded, (iii) accruals for taxes will be included except that (A) there
shall not be taken into account (I) tax liabilities (x) for which ATS is
obligated to indemnify American Radio and its Subsidiaries (other than the
ATS Group) pursuant to the provisions of the ARS-ATS Separation Agreement,
and (y) of the American Tax Group's in the amount of $20.0 million, (II)
deferred income Tax assets and liabilities that exist or arise from
differences in basis for Tax and financial reporting purposes attributable
to acquisitions, exchanges and dispositions or attributable to depreciation
and amortization, and (III) Tax benefits arising from (x) net operating
losses to the extent that they have reduced income of the American Tax
Group described in Section 4.2(b) of the ARS-ATS Separation Agreement
(i.e., referred to in paragraph (c) under "--Sharing of Tax and Other
Consequences" above, or (y) the exercise or cancellation of options for
value or from a disqualifying disposition of stock received upon exercise
of incentive stock options between the date of the original CBS Merger
Agreement and the Effective Time, and (B) accruals for taxes relating to
acquisitions, exchanges or dispositions will be determined in accordance
with ARS's past accounting practices, (iv) Current Assets will be increased
by amount equal to the sum of (x) the amount derived by multiplying the
Cash Consideration by the number of shares of ARS Common Stock held in its
treasury as of the Effective Date and (y) the aggregate amount of the
spread of $44.00 over the exercise price of each ARS Option outstanding on
the date of the Original CBS Merger Agreement terminated or canceled not
for value prior to the Effective Time or for which the holder has elected
to receive an option to acquire Common Stock in lieu thereof, less the tax
benefit that would have been received with respect to the exercise of such
options, (v) Current Assets will be (A) increased (if the number of shares
of ARS Common Stock issuable upon conversion of the ARS Convertible
Preferred Stock is fewer than 3,750,000) by an amount equal to the amount
derived by multiplying the Cash Consideration by the excess of (I)
3,750,000 less (II) the number of shares of ARS Common Stock issuable upon
conversion of the ARS Convertible Preferred Stock or (B) decreased (if the
number of shares of ARS Common Stock issuable upon conversion of the ARS
Convertible Preferred Stock is greater than 3,750,000) by an amount equal
to the amount derived by multiplying the Cash Consideration by the excess
of (I) the
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number of shares of ARS Common Stock issuable upon conversion of the ARS
Convertible Preferred Stock less (II) 3,750,000, (vi) liabilities from the
radio broadcasting rights contracts for St. Louis Rams games will be
limited to $3,300,000, (vii) amounts owed by ATS to American Radio pursuant
to Section 16.3 of the ARS-ATS Separation Agreement (i.e., certain expenses
related to ATS) shall be excluded from Current Assets and liabilities with
respect to such amounts shall be excluded from Liabilities, and (viii)
liabilities shall not include the liability, if any, of American Radio with
respect to payments for ARS Options cancelled pursuant to the provisions of
Section 6.8(a) of the Merger Agreement.
(b) Subject to paragraph (c) below, if Closing Net Debt is greater than
the Debt Amount minus $50,419,000, minus cash received by the Post-Closing
American Group in respect of options exercised between the date of the
Original CBS Merger Agreement and the Effective Time (the "CD Amount"), ATS
shall, and if Closing Net Debt is less than the CD Amount, CBS shall, owe
the other the amount of such difference. "Debt Amount" shall mean
$1,066,721,000, subject to adjustment for the failure to consummate any of
the Recent Transactions relating to American Radio and for the consummation
of any other acquisitions or dispositions. The term "Net Debt" shall mean
outstanding principal amount of indebtedness (including, without
duplication, guarantees of indebtedness) plus outstanding liquidation
preference of all preferred stock (other than the ARS Convertible Preferred
Stock), including, without limitation, the aggregate liquidation preference
of any junior preferred security issued by American to CBS, minus cash,
including, without limitation, the aggregate purchase price of any junior
preferred security issued by American to CBS; provided, however, Net Debt
shall not include indebtedness, if any, of American Radio incurred to fund
(i) payments with respect to options canceled pursuant to Section 6.8(a) of
the Merger Agreement, or (ii) any liability for which ATS has, in fact,
reimbursed American Radio.
(c) The amounts owed pursuant to the provisions of paragraphs (a) and (b)
above shall be aggregated or netted, as appropriate (the resulting amount,
the "Adjustment Amount"). In the event that the Adjustment Amount minus
$10,000,000 is greater than $0 (the "Final Adjustment Amount"), the party
that owes the Final Adjustment Amount will make payment by wire transfer of
immediately available funds of the Final Adjustment Amount together with
interest thereon at a rate of interest equal to the lesser of (i) 10% per
annum and (ii) if ATS is being charged a rate of interest by a financial
institution, such rate, but in no event lower than the prime rate as
reported in the The Wall Street Journal on the date of the Closing
Statement becomes final and binding on the parties, calculated on the basis
of the actual number of days elapsed divided by 365, from the date of the
Effective Time to the date of actual payment.
(d) In the event ATS and CBS cannot agree on any item, the dispute will
be resolved by the Accounting Firm, whose authority is limited to whether
the Closing Statement was prepared in compliance with the requirements set
forth above and the allocation of the costs of dispute resolution, and the
Accounting Firm is not to make any other determination. The ARS-ATS
Separation Agreement provides for interim payments of amounts not in
dispute.
(e) During the period of time from and after the delivery of the Closing
Statements to ATS through the date the Closing Statement becomes final and
binding on CBS, ARS and ATS, CBS will cause the Post-Closing American Group
to afford ATS and any accountants, counsel or financial advisors retained
by ATS in connection with the adjustments described above reasonable access
(with the right to make copies) during normal business hours to the books
and records of the Post-Closing American Group to the extent relevant to
the adjustments.
(f) Any adjustment pursuant to Article 10 of the ARS-ATS Separation
Agreement (i.e., these provisions) shall be taken into account in the
calculation of Tax liability pursuant to Section 4.2(b) of the ARS-ATS
Separation Agreement, and any increase or decrease in the amount of Taxes
that are reimbursable or indemnifiable by the ATS Group as a result of any
such adjustment shall be treated as an adjustment to Taxes described in
Section 4.2(f) of the ARS-ATS Separation Agreement.
See "Risk Factors--Relationship Between ATS and ARS--Certain Contingent
Obligations" for information concerning certain issues that have arisen
between ATS and CBS with respect to the interpretation and intent of the
working capital adjustments and the CBS Merger Agreement generally.
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See Section Article 10 of the ARS-ATS Separation Agreement for a complete
description of the Closing Date adjustments. See also "Prospectus Summary--
American Tower Systems--CBS Merger" and "Unaudited Pro Forma Condensed
Consolidated Financial Statements of American Tower Systems".
LEASE ARRANGEMENTS
In connection with the consummation of the CBS Merger, ATS and ARS entered
into the definitive documentation ("Tower Leases") with respect to certain
broadcasting towers ("Towers"). The markets in which such Towers are located
and the annual "market price" for each antenna are set forth in Exhibit B to
the CBS Merger Agreement. Subject to certain exceptions, 14 of the Towers were
owned or leased by ARS and in January 1998 became the property of ATS; the
balance will be transferred by ARS to ATS upon acquisition by ARS. Each of the
Tower Leases contains or will contain standard and customary terms and
conditions including the following: (a) with certain exceptions, each Tower
Lease will be for a term of twenty (20) years with four (4) renewal periods of
five (5) years each; each such renewal to be upon the same terms and
conditions as the original Tower Lease; (b) prior to the Effective Time, ARS
used its best efforts to extend the term of each lease ("Land Leases") to a
minimum duration of twenty (20) years, inclusive of renewal periods, if any,
and provide CBS with respect to the Towers subject to the extended Land
Leases, tower leases with the equivalent benefits set forth in clauses (c),
(d) and (e) and for a minimum duration of twenty (20) years ("Extended Tower
Leases"). With respect to any such Land Leases that is not; prior to ninety
(90) days following the Effective Time (which was on June 4, 1998), so
extended (except with respect to one Land Lease) ARS, ATS and CBS agreed to
negotiate in good faith to agree upon definitive documentation to provide CBS,
prior to the determination of the Final Adjustment Amount, with respect to the
Towers subject to such Land Leases, tower leases with the benefits equivalent
of such Extended Tower Leases or mutually agreed to alternative arrangements
providing equivalent value to CBS; (c) each Tower Lease will provide that no
payments will be payable by CBS for a period of three (3) years from the
consummation of the CBS Merger; for the next three (3) years the payments will
be as follows: one-third ( 1/3) of the market price as set forth in Exhibit B
to the CBS Merger Agreement corresponding to each FM antenna (or AM/FM
antenna) for year four (4); two-thirds ( 2/3) for year five (5) and full
market price for year six (6); thereafter, for the balance of the term and any
renewals thereof, the payments will be the market price, together with an
annual increase every year, beginning for year seven (7), of the lesser of
five percent (5%) or the Consumer Price Index for all Urban Consumers over the
previous year's payments (except with respect to three leases which such
payments began at the consummation of the CBS Merger, with respect to CBS, and
began on January 1, 1998 as between ARS and ATS); (d) all expenses for taxes,
insurance, maintenance and utilities in respect of each Tower will be paid by
ATS; and (e) ATS has assumed the obligation and responsibility for complying
with all applicable law with respect to the Towers.
See Article 11 of the ARS-ATS Separation Agreement for a more complete
description of the lease arrangements.
TRANSITIONAL SERVICES
Each of CBS, ARS and ATS have agreed, subject to the terms and conditions of
the ARS-ATS Separation Agreement, from and after the consummation of the CBS
Merger, to use its reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other in doing, all things necessary, proper or advisable to provide, in the
most expeditious manner practicable, the goods and/or services described in
Article 12 of the ARS-ATS Separation Agreement, including without limitation,
with respect to, among other things, (i) making its employees, including
senior management, available (x) to assist in the preparation of all documents
(including tax returns) required to be filed with governmental authorities
(including the Commission) or furnished to security holders, (y) to consult
regarding the financial software systems currently used by ARS, and (z) to
assist in the consummation of all pending acquisitions, exchanges and
dispositions or other transactions of ARS and resolving any existing
contingent liabilities of ARS, (ii) providing financial and other information
with respect to ATS required by CBS or ARS in connection with the preparation
of all documents required to be filed with governmental authorities (including
the Commission) or furnished to security holders, and (iii) making available
or assisting in obtaining all documents prepared for ARS by its
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independent accountants and counsel. ATS is obligated to deliver promptly to
CBS all books and financial and other records of ARS in its possession
(including those located at ATS's corporate headquarters) and all software and
hardware located at such corporate headquarters. ATS is entitled to access to
and to make copies of all documents, records and other material delivered to
CBS.
For a description of the terms and conditions of the ARS-ATS Separation
Agreement relating to the providing of transactional services, see Article 12
of the ARS-ATS Separation Agreement.
EXPENSES
Promptly following the consummation of the CBS Merger, ATS is obligated to
pay to ARS in immediately available funds (and make ARS whole on an after-tax
basis under the principles set forth in the ARS-ATS Separation Agreement) an
amount equal to the aggregate costs and expenses incurred by ARS in connection
with any agreement, arrangement or understanding (other than the Tower
Documentation) entered into by ARS, ATS Mergercorp or any member of the ATS
Group following the date of the original CBS Merger Agreement (x) for the
benefit of any member of the American Tower Group, (y) in contemplation of the
consummation of the CBS Merger or (z) in connection with the sale, assignment,
transfer or other disposition of shares of Common Stock, including without
limitation such costs and expenses incurred by ARS to Merrill Lynch (as part
of the Stock Purchase Agreement) and any such costs and expenses incurred by
ARS to Credit Suisse First Boston in excess of those set forth in the
engagement letter between ARS and Credit Suisse First Boston provided by ARS
to CBS. See Section 16.3 of the ARS-ATS Separation Agreement.
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INDEBTEDNESS OF ATS
The summary contained herein of the material provisions of the New Credit
Facilities does not purport to be complete and is qualified in its entirety by
reference to the New Credit Facilities, which are filed as an exhibit to the
Registration Statement of which this Prospectus is a part and to which exhibit
reference is made hereby. Capitalized terms used in this Section which are not
otherwise defined in this Prospectus shall have the meaning ascribed thereto
in the New Credit Facilities.
In order to finance acquisitions of communications sites and other related
businesses and the construction of towers and for general corporate purposes,
ATS and the Borrower Subsidiaries have borrowed and expect to continue to
borrow under the New Credit Facilities. The New Credit Facilities with the
Borrower Subsidiaries provide for $900.0 million credit facilities maturing at
the earlier of (a) eight years or (b) June 30, 2006 consisting of the
following: (i) a $250.0 million multiple-draw term loan, (ii) a $400.0 million
reducing revolving credit facility and (iii) a $250.0 million 364-day
revolving credit facility that converts to a term loan facility thereafter.
The revolving credit commitments are required to be reduced and the terms
loans are required to be amortized, in both cases, quarterly, in increasing
amounts designed to amortize the loans by maturity, commencing June 30, 2001.
The New Credit Facility with ATS provides for a $150.0 million term loan
maturing at the earlier of (i) eight and one-half years or (ii) December 31,
2006, amortizing quarterly in an amount equal to 2.5% of the principal amount
outstanding at June 30, 2001 at the end of each quarter between such date and
June 30, 2006, both inclusive, and the balance in two equal installments on
September 30 and December 31, 2006. The ATS New Credit Facility was fully
drawn at closing and a term loan of $125.0 million is outstanding under one of
the Borrower Subsidiaries' New Credit Facilities.
Until interest rates are fixed or capped at ATS's request, all outstanding
amounts under the New Credit Facilities of the Borrower Subsidiaries bear
interest at a variable base rate plus a variable margin based on certain of
ATS's financial ratios. Interest rates under the New Credit Facilities of the
Borrower Subsidiaries are determined, at the option of ATS, at either the
LIBOR Rate plus 0.75% to 2.25% or the Base Rate plus 0.00% to 1.25%. The
spread over the LIBOR Rate and the Base Rate varies from time to time,
depending upon ATS's financial leverage. The Borrower Subsidiaries pay
quarterly commitment fees equal to (i) 0.250% or 0.375% per annum, in each
case depending on their financial leverage, on the aggregate unused portion of
the aggregate $650.0 million commitment, and (ii) 0.125% on the additional
$250.0 million commitment (until such time as ATS elects to make it part of
the permanent commitment). Borrowings may be made under the New Credit
Facilities by the Borrower Subsidiaries only so long as they remain in
compliance with certain financial ratios and meet certain other conditions.
The New Credit Facility of ATS provides for interest rates determined, at the
option of ATS, of either the LIBOR Rate (as to be defined) plus 3.50% or the
Base Rate (as to be defined) plus 2.5%.
Indebtedness may be incurred under the New Credit Facilities for
acquisitions, construction and other capital expenditures, working capital and
general corporate purposes, including satisfaction of ATS obligations under
the ARS-ATS Separation Agreement with respect to any closing date balance
sheet adjustments. The New Credit Facilities of the Borrower Subsidiaries
require the maintenance of the following ratios: (i) Senior Debt to Annualized
Operating Cash Flow of not more than 6.50:1 declining in stages to 3.00:1 by
September 30, 2003 and thereafter; (ii) Total Debt (which includes debt of
ATS) to Annualized Operating Cash Flow of not more than 8.00:1 declining in
stages to 4.00:1 by September 30, 2003 and thereafter; (iii) Annualized
Operating Cash Flow to Fixed Charges ratio of not less than 1.05:1; (iv)
Annualized Operating Cash Flow to Interest Expense of not less than 1.50:1
increasing to 2.50:1 at December 31, 2003 and thereafter; and (v) Annualized
Operating Cash Flow to Pro Forma Debt Service ratio of not less than 1.10:1
increasing to 1.150:1 at December 31, 2002 and thereafter. The Total Debt to
Annualized Operating Cash Flow ratio is also contained in ATS's New Credit
Facility.
The New Credit Facilities contain certain financial and operational
covenants and other restrictions with which ATS and the Restructured
Subsidiaries (which includes the Borrower Subsidiaries) must comply, whether
or not there are any borrowings outstanding, including, among other things,
restrictions on acquisitions (of
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communications site management businesses), additional indebtedness, capital
expenditures and investments in Unrestricted Subsidiaries, and restricts the
ability of ATS and the Restructured Subsidiaries (which includes the Borrower
Subsidiaries) to pay dividends or make other distributions, and to redeem,
purchase or otherwise acquire shares of its capital stock or other equity
interests and prohibit any such dividend, distribution, redemption, purchase
or other acquisition during the existence of a Default or Event of Default
thereunder. See "Description of Capital Stock--Dividend Restrictions". ATS's
New Credit Facility prohibits the repayment of the indebtedness outstanding
thereunder without the consent of the lenders under the New Credit Facilities
of the Borrower Subsidiaries.
The loans to ATS and the Borrower Subsidiaries are cross-guaranteed and
cross-collateralized by liens on, among other things, all leases of tower
space, contracts relating to the management of towers for others, cash,
accounts receivable, capital stock (or other equity interests) and inter-
company debt of all Restricted Subsidiaries, inventory and other personal
property, fixtures, intellectual property, as well as certain fee and
leasehold interests, and the proceeds thereof of ATS and its Restricted
Subsidiaries. Borrowings under the ATS New Credit Facility are subordinated to
the guaranty by ATS of indebtedness under the New Credit Facilities of the
Borrower Subsidiaries.
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DESCRIPTION OF CAPITAL STOCK
The following summary description of the terms of the capital stock of ATS,
including the Interim Preferred Stock and of the Exchange Preferred Stock
(collectively sometimes referred to as the "Senior Preferred Stock") is
qualified in its entirety by reference to the ATS Restated Certificate (which
includes the Certificate of Designation of the Interim Preferred Stock (the
"Interim Certificate of Designation") and the Certificate of Designation of
the Exchange Preferred Stock (the "Exchange Certificate of Designation" and,
collectively with the Interim Certificate of Designation, the "Certificates of
Designation")), a copy of each of which has been filed with the Commission and
is part of the Registration Statement of which this Prospectus is a part and
the summary herein of certain provisions thereof does not purport to be
complete and is subject to, and is qualified in its entirety by, reference
thereto. Certain terms used in this summary without definition are defined in
the ATS Restated Certificate, including one or both of the Certificates of
Designation and, unless otherwise noted, have the same meaning as given such
terms therein.
GENERAL
The authorized capital stock of American Tower Systems consists of
20,000,000 shares of Preferred Stock, $.01 par value per share (the "Preferred
Stock") 300,000,000 shares of Class A Common Stock, $.01 par value per share,
50,000,000 shares of Class B Common Stock, $.01 par value per share, and
10,000,000 shares of Class C Common Stock, $.01 par value per share. The
outstanding shares of Common Stock as of June 29, 1998 were as follows: Class
A Common Stock--65,752,078 Class B Common Stock--8,972,847; and Class C Common
Stock--3,295,518.
PREFERRED STOCK
The 20,000,000 authorized and unissued shares of Preferred Stock may be
issued with such designations, preferences, limitations and relative rights as
the ATS Board may authorize, including, but not limited to: (i) the
distinctive designation of each series and the number of shares that will
constitute such series; (ii) the voting rights, if any, of shares of such
series; (iii) the dividend rate on the shares of such series, any restriction,
limitation or condition upon the payment of such dividends, whether dividends
shall be cumulative, and the dates on which dividends are payable; (iv) the
prices at which, and the terms and conditions on which, the shares of such
series may be redeemed, if such shares are redeemable; (v) the purchase or
sinking fund provisions, if any, for the purchase or redemption of shares of
such series; (vi) any preferential amount payable upon shares of such series
in the event of the liquidation, dissolution or winding-up of ATS or the
distribution of its assets; and (vii) the price or rates of conversion at
which, and the terms and conditions on which the shares of such series may be
converted into other securities, if such shares are convertible. Although ATS
has no present intention to issue shares of Preferred Stock, the issuance of
Preferred Stock, or the issuance of rights to purchase such shares, could
discourage an unsolicited acquisition proposal.
Interim Preferred Stock. The Interim Preferred Stock has an initial
aggregate liquidation preference of $300.0 million and is issued in the form
of a redeemable pay-in-kind preferred stock that is senior to all future
issues of Preferred Stock (other than the Exchange Preferred Stock). The
Interim Preferred Stock is subject to mandatory redemption one year after
issue or, to the extent not so redeemed, is exchangeable, at the option of the
holder, for shares of Exchange Preferred Stock with a liquidation preference
equal to the liquidation of the Interim Preferred Stock so exchanged plus the
applicable Redemption Premium (as defined in the Certificate of Designation of
the Interim Preferred Stock). The Interim Preferred Stock pays dividends,
which may be paid in kind, at a rate equal to three-month LIBOR plus a margin
which will increase based on the length of time the Interim Preferred Stock is
outstanding. The Interim Preferred Stock is subject to mandatory redemption
one year after the issuance of any Interim Preferred Stock (the "Redemption
Date"). If the Interim Preferred is not redeemed on the Redemption Date, the
holders of the Interim Preferred will have the option to either exchange the
Interim Preferred into the Exchange Preferred Stock or collect dividends at
the default rate which shall be set at the greater of the dividend rate
payable on the Exchange Preferred Stock or the rate that is payable on the
Interim Preferred Stock on the Redemption Date plus 2%. The Exchange Preferred
Stock pays dividends at the
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greater of (i) the interest rate on eleven year U.S. Treasury Securities (the
"Treasury Rate") on the Redemption Date plus the spread applicable to that
time and (ii) the Treasury Rate on the date of issuance plus the spread
applicable at that time. The Exchange Preferred Stock will be exchangeable at
ATS's option into subordinated notes. The Interim Preferred Stock and the
Exchange Preferred contain provisions customary to similar securities
including financial covenants similar to those of the New Credit Facilities
(except for those relating to financial ratios), a change of control provision
and provisions permitting the election of two additional directors to the ATS
Board of Directors in the event of certain defaults. The Interim Preferred
will be redeemed out of the proceeds of this Offering.
COMMON STOCK
Dividends. Holders of record of shares of Common Stock on the record date
fixed by the ATS Board are entitled to receive such dividends as may be
declared by the ATS Board out of funds legally available for such purpose. No
dividends may be declared or paid in cash or property on any share of any
class of Common Stock, however, unless simultaneously the same dividend is
declared or paid on each share of the other classes of Common Stock, except
that in the event of any such dividend in which shares of stock of any company
(including American Tower Systems or any of its Subsidiaries) are distributed,
such shares may differ as to voting rights to the extent that voting rights
now differ among the different classes of Common Stock. In the case of any
dividend payable in shares of Common Stock, holders of each class of Common
Stock are entitled to receive the same percentage dividend (payable in shares
of that class) as the holders of each other class. See "--Dividend
Restructures" below.
Voting Rights. Except as otherwise required by law and in the election of
directors, holders of shares of Class A Common Stock and Class B Common Stock
have the exclusive voting rights and will vote as a single class on all
matters submitted to a vote of the stockholders, with each share of Class A
Common Stock entitled to one vote and each share of Class B Common Stock
entitled to ten votes. The holders of the Class A Common Stock, voting as a
separate class, have the right to elect two independent directors. The Class C
Common Stock is nonvoting except as otherwise required by Delaware law.
Under Delaware law, the affirmative vote of the holders of a majority of the
outstanding shares of any class of common stock is required to approve, among
other things, a change in the designations, preferences and limitations of the
shares of such class of common stock. Under the ATS Restated Certificate, the
affirmative vote of the holders of not less than 66 2/3% of the Class A Common
Stock and Class B Common Stock, voting as a single class, is required in order
to amend most of the provisions of the ATS Restated Certificate, including
those relating to the provisions of the various classes of Common Stock,
indemnification of directors, exoneration of directors for certain acts, and
such super-majority provision.
Conversion Provisions. Shares of Class B Common Stock and, except as
hereinafter noted, Class C Common Stock are convertible, at any time at the
option of the holder, on a share for share basis into shares of Class A Common
Stock. The present owner of Class C Common Stock can convert such stock only
in the event of a Conversion Event (as defined in the ATS Restated
Certificate) or with the consent of the ATS Board. Shares of Class B Common
Stock automatically convert into shares of Class A Common Stock upon any sale,
transfer, assignment or other disposition other than to Permitted Transferees
(as defined in the ATS Restated Certificate) which term presently includes
certain family members, trusts and other family entities and charitable
organizations and upon pledges but not to the pledgee upon foreclosure.
ATC Merger Amendments. As a condition of consummation of the ATC Merger
Agreement, the ATS Restated Certificate was amended to (i) limit the aggregate
voting power of Steven B. Dodge (and his Controlled Entities as defined
therein) to 49.99% of the aggregate voting power of all shares of capital
stock entitled to vote generally for the election of directors (less the
voting power represented by the shares of Class B Common Stock acquired by the
Stoner Purchasers (as defined therein) pursuant to the Stock Purchase
Agreement and owned by them or any of their Controlled Entities on Family
Members at such time), (ii) prohibit future issuances of Class B Common Stock
(except upon exercise of then outstanding options and pursuant to stock
dividends or stock splits), (iii) limit transfers of Class B Common Stock to a
more narrow group than had previously been provided, (iv) provide for
automatic conversion of the Class B Common Stock to Class A Common Stock at
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such time as the aggregate voting power of Mr. Dodge (and his Controlled
Entities) falls below either (x) 50% of their initial aggregate voting power
(immediately after consummation of the ATC Merger) or (y) 20% of the aggregate
voting power of all shares of Common Stock at the time outstanding, and (v)
require consent of the holders of a majority of Class A Common Stock for
amendments adversely affecting the Class A Common Stock.
Liquidation Rights. Upon liquidation, dissolution or winding-up of ATS, the
holders of each class of Common Stock are entitled to share ratably (based on
the number of shares held) in all assets available for distribution after
payment in full of creditors and payment in full to any holders of the
Preferred Stock then outstanding of any amount required to be paid under the
terms of the Preferred Stock.
Other Provisions. The holders of Common Stock are not entitled to preemptive
or subscription rights. The shares of Common Stock presently outstanding are
validly issued, fully paid and nonassessable. In any merger, consolidation or
business combination, the consideration to be received per share by holders of
each class of Common Stock must be identical to that received by holders of
the other class of Common Stock, except that in any such transaction in which
shares of Common Stock (or any other company) are distributed, such shares may
differ as to voting rights to the extent that voting rights now differ among
the different classes of Common Stock. No class of Common Stock may be
subdivided, consolidated, reclassified or otherwise changed unless,
concurrently, the other classes of Common Stock are subdivided, consolidated,
reclassified or otherwise changed in the same proportion and in the same
manner.
DIVIDEND RESTRICTIONS
ATSI is prohibited under the terms of its New Credit Facilities from paying
cash dividends or making other distributions on, or making redemptions,
purchases or other acquisitions of, its capital stock (including Preferred
Stock) except that, beginning on April 15, 2002, ATSI may, if no Default
exists or would be created thereby under the New Credit Facilities, pay cash
dividends to the extent that Restricted Payments do not exceed (i) 50% of
Excess Cash Flow for the preceding calendar year, or (ii) 50% of the net
proceeds of any debt or equity offering after June 16, 1998. Comparable
restrictions are imposed on the ability of ATSLP to make distributions to its
partners. Since ATS has no other significant assets other than its ownership
of all of the capital stock of ATSI and the owner of ATSLP, its ability to pay
dividends to its stockholders in the foreseeable future is restricted. ATS's
New Credit Facility also restricts cash dividends and other distributions on,
and redemptions, purchases or other acquisitions of, ATS capital stock, except
in an amount not in excess the net proceeds of any equity offering not used to
satisfy its obligations under the ARS-ATS Separation Agreement or for other
permitted purposes (such as investments in Unrestricted Subsidiaries).
DELAWARE BUSINESS COMBINATION PROVISIONS
Under the DGCL, certain "business combinations" (including the issuance of
equity securities) between a Delaware corporation and any person who owns,
directly or indirectly, 15% or more of the voting power of the corporation's
shares of capital stock (an "Interested Stockholder") must be approved by the
holders of at least 66 2/3% of the voting stock not owned by the Interested
Stockholder if it occurs within three years of the date such person became an
Interested Stockholder unless prior to such date the ATS Board approved either
the business combination or the transaction which resulted in the stockholder
becoming an Interested Stockholder. The CBS Merger and the Stock Purchase
Agreement were approved by the ATS Board.
LISTING OF CLASS A COMMON STOCK
The Class A Common Stock is traded on the NYSE under the symbol "AMT".
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is Harris Trust and
Savings Bank, 311 West Monroe Street, Chicago, Illinois 60606 (telephone
number (312) 461-4600).
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SHARES ELIGIBLE FOR FUTURE SALE
GENERAL
Upon completion of the Offering, there will be an aggregate of approximately
99.0 million shares of Common Stock outstanding. All of such shares, other
than an aggregate of approximately 6.1 million shares issued in connection
with the Gearon Transaction and certain other acquisitions and the 8.0 million
shares issued pursuant to the Stock Purchase Agreement, will be freely
transferable without restriction or future registration under the Securities
Act of 1933, as amended (the "Securities Act"), unless held by an "affiliate"
(as that term is defined under the Securities Act) of ATS. Persons who may be
deemed to be affiliates of ATS after the CBS Merger generally include
individuals or entities that directly, or indirectly through one or more
intermediaries, control, are controlled by, or are under common control with,
ATS. Persons who are affiliates of ATS will be permitted to sell their Common
Stock received pursuant to the CBS Merger only pursuant to an effective
registration statement under the Securities Act or pursuant to an exemption
from registration under the Securities Act, such as the exemption afforded by
Rule 144 thereunder. Stockholders who received unregistered shares of Common
Stock, including pursuant to the Stock Purchase Agreement and the Gearon
Transaction, as well as certain "affiliates" of ATS, have certain demand and
"piggy-back" registration rights with respect to their shares of Common Stock.
In general, under Rule 144 as currently in effect, any person (or persons
whose shares are aggregated) who has beneficially owned restricted shares of
Common Stock for at least one year is entitled to sell, within any three-month
period, a number of such shares which does not exceed the greater of 1% of the
then outstanding shares of Class A Common Stock (approximately 870,000 shares)
or the average weekly public trading volume of the Class A Common Stock during
the four calendar weeks preceding the date on which notice of the sale is
filed with the Commission. Sales under Rule 144 are also subject to certain
manner of sale provisions, notice requirements and the availability of current
public information about ATS. Any person (or persons whose shares are
aggregated) who has not been an affiliate of ATS at any time during the past
three months preceding a sale and who has owned shares of Common Stock for at
least two years is entitled to sell such shares under Rule 144(k) without
regard to the volume limitations, manner of sale provisions, public
information or notice requirements of Rule 144. In February 1997, the
Commission solicited comments regarding certain proposed amendments to Rule
144, including reducing the aforementioned one year and two year holding
periods.
Options to purchase an aggregate of approximately 10.6 million shares of
Common Stock will be outstanding immediately following this Offering. Shares
of Common Stock issued upon exercise of such options are registered on Form S-
8 under the Securities Act and, therefore, freely transferable under the
securities laws. ATS has entered into an agreement to register under the
Securities Act shares of Common Stock issued pursuant to the Stock Purchase
Agreement, the ATC Merger, the Gearon Transaction, certain other acquisitions
and shares held by certain affiliates of ATS.
ATS cannot make any predictions as to the effect, if any, sales of shares of
Common Stock, or the availability of shares for future sale, will have on the
market price of the Class A Common Stock prevailing from time to time.
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UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated June . , 1998 (the "Underwriting Agreement"), the
Underwriters named below (the "Underwriters"), for whom Credit Suisse First
Boston, BT Alex. Brown Incorporated, Lehman Brothers Inc., Morgan Stanley &
Co. Incorporated, Bear, Stearns & Co. Inc., Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Smith Barney Inc. are acting as representatives (the
"Representatives"), have severally but not jointly agreed to purchase from ATS
and the Selling Stockholders the following respective numbers of shares of
Class A Common Stock:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ----------
<S> <C>
Credit Suisse First Boston Corporation...............................
BT Alex. Brown Incorporated..........................................
Lehman Brothers Inc. ................................................
Morgan Stanley & Co. Incorporated....................................
Bear, Stearns & Co. Inc. ............................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated....................................................
Smith Barney Inc. ...................................................
----------
Total.............................................................. 23,866,023
==========
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will be
obligated to purchase all of the shares offered hereby (other than those
shares covered by the over-allotment option described below) if any are
purchased. The Underwriting Agreement provides that, in the event of a default
by an Underwriter, in certain circumstances the purchase commitments of non-
defaulting Underwriters may be increased or the Underwriting Agreement may be
terminated.
ATS has granted to the Underwriters an option, expiring at the close of
business on the 30th the day after the date of this Prospectus, to purchase an
aggregate of up to 2,386,602 additional shares of Class A Common Stock from
ATS at the public offering price less the underwriting discounts and
commissions, all as set forth on the cover page of this Prospectus. The
Underwriters may exercise such option only to cover over-allotments in the
sale of the shares of the Class A Common Stock. To the extent that the option
is exercised, each Underwriter will become obligated, subject to certain
conditions, to purchase approximately the same percentage of additional shares
of the Class A Common Stock as it was obligated to purchase pursuant to the
Underwriting Agreement.
ATS has been advised by the Representatives that the Underwriters propose to
offer the shares to the public at the public offering price set forth on the
cover page of this Prospectus and, through the Representatives, to certain
dealers at such price less a concession of $ . per share, and the
Underwriters and such dealers may allow a discount of $ . per share on sales
to certain other dealers. After the public offering, the public offering price
and concession and discount to dealers may be changed by the Representatives.
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ATS, its officers and directors, the Selling Stockholders and certain other
holders of Common Stock have agreed that, for a period of 120 days after the
date of this Prospectus, they will not publicly offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, or file with the
Commission a registration statement under the Securities Act relating to, any
additional shares of its Class A Common Stock, or securities convertible into
or exchangeable or exercisable for any shares of its Class A Common Stock, or
publicly disclose the intention to make any such offer, sale, pledge, disposal
or filing, without the prior written consent of Credit Suisse First Boston,
except with respect to (i) private issuances of Class A Common Stock or
securities convertible into or exchangeable for Class A Common Stock in
connection with acquisitions if the holders thereof agree to be bound by the
foregoing 120-day restriction to the same extent as ATS, (ii) grants of
employee stock options pursuant to the terms of the Plan, (iii) issuances of
Common Stock pursuant to the exercise of stock options, or (iv) conversions of
Class B Common Stock or Class C Common Stock into Class A Common Stock.
ATS and the Selling Stockholders have agreed to indemnify the Underwriters
against certain liabilities, including civil liabilities under the Securities
Act, or contribute to payments which the Underwriters may be required to make
in respect thereof.
ATS intends to use more than 10% of the net proceeds from the sale of the
Class A Common Stock to redeem Interim Preferred Stock owned by Credit Suisse
First Boston Corporation and affiliates of Merrill Lynch, Pierce, Fenner &
Smith Incorporated, two of the Representatives. Accordingly, the offering is
being made in compliance with the requirements of Rule 2710(c)(8) of the
National Association of Securities Dealers, Inc. Conduct Rules. This rule
provides generally that if more than 10% of the net proceeds from the sale of
stock, not including underwriting compensation, is paid to the underwriters or
their affiliates, the initial public offering price of the stock may not be
higher than that recommended by a "qualified independent underwriter" meeting
certain standards. Accordingly, Bear, Stearns & Co. Inc. is assuming the
responsibilities of acting as the qualified independent underwriter in pricing
the offering and conducting due diligence. The initial public offering price
of the Class A Common Stock set forth on the cover page of this Prospectus is
no higher than the price recommended by Bear, Stearns & Co. Inc.
The Representatives, on behalf of the Underwriters, may engage in over-
allotment, stabilizing transactions, syndicate covering transactions, penalty
bids and "passive" market making in accordance with Regulation M under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Over-
allotment involves syndicate sales in excess of the offering size, which
creates a syndicate short position. Stabilizing transactions permit bids to
purchase the underlying security so long as the stabilizing bids do not exceed
a specified maximum. Syndicate covering transactions involve purchases of the
Class A Common Stock in the open market after the distribution has been
completed in order to cover syndicate short positions. Penalty bids permit the
Representatives to reclaim a selling concession from a syndicate member when
the Class A Common Stock originally sold by such syndicate member are
purchased in a syndicate covering transaction to cover syndicate short
positions. In "passive" market making, market makers in the Class A Common
Stock who are Underwriters or prospective underwriters may, subject to certain
limitations, make bids for or purchases of the Class A Common Stock until the
time, if any, at which a stabilizing bid is made. Such stabilizing
transactions, syndicate covering transactions and penalty bids may cause the
price of the Securities to be higher than it would otherwise be in the absence
of such transactions. These transactions may be effected on the New York Stock
Exchange or otherwise and, if commenced, may be discontinued at any time.
The Class A Common Stock is traded on the New York Stock Exchange under the
symbol "AMT".
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Class A Common Stock in Canada is being made only on
a private placement basis exempt from the requirement that ATS and the Selling
Stockholders prepare and file a prospectus with the securities, regulatory
authorities in each province where trades of the Class A Common Stock are
effected. Accordingly, any resale of the Class A Common Stock in Canada must
be made in accordance with applicable
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securities laws which will vary depending on the relevant jurisdiction, and
which may require resales to be made in accordance with available statutory
exemptions or pursuant to a discretionary exemption granted by the applicable
Canadian securities regulatory authority. Purchasers are advised to seek legal
advice prior to any resale of the Class A Common Stock.
REPRESENTATIONS OF PURCHASERS
Each purchaser of the Class A Common Stock in Canada who receives a purchase
confirmation will be deemed to represent to ATS, the Selling Stockholders and
the dealer from whom such purchase confirmation is received that (i) such
purchaser is entitled under applicable provincial securities laws to purchase
each Class A Common Stock without the benefit of a prospectus qualified under
such securities laws, (ii) where required by law, that such purchaser is
purchasing as principal and not as agent, and (iii) such purchaser has
reviewed the text above under "Resale Restrictions".
RIGHTS OF ACTION (ONTARIO PURCHASERS)
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available,
including common law rights of action for damages or rescission or rights of
action under the civil liability provisions of the U.S. federal securities
laws.
ENFORCEMENT OF LEGAL RIGHTS
All of the issuer's directors and officers as well as the experts named
herein and the Selling Stockholders may be located outside of Canada and, as a
result, it may not be possible for Canadian purchasers to effect service of
process within Canada upon the issuer or such persons. All or a substantial
portion of the assets of the issuer and such persons may be located outside of
Canada and, as a result, it may not be possible to satisfy a judgment against
the issuer or such persons in Canada or to enforce a judgment obtained in
Canadian courts against such issuer or persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of the Class A Common Stock to whom the Securities Act (British
Columbia) applies is advised that such purchaser is required to file with the
British Columbia Securities Commission a report within ten days of the sale of
any Class A Common Stock acquired by such purchaser pursuant to this offering.
Such report must be in the form attached to British Columbia Securities
Commission Blanket Order BOR #95/17, a copy of which may be obtained from ATS.
Only one such report must be filed in respect of the Class A Common Stock
acquired on the same date and under the same prospectus exemption.
TAXATION AND ELIGIBILITY FOR INVESTMENT
Canadian purchasers of Class A Common Stock should consult their own legal
and tax advisors with respect to the tax consequences of an investment in the
Class A Common Stock in their particular circumstances and with respect to the
eligibility of the Class A Common Stock for investment by the purchaser under
relevant Canadian Legislation.
VALIDITY OF THE SHARES
The validity of the shares of Class A Common Stock offered hereby will be
passed upon for ATS by Sullivan & Worcester LLP, Boston, Massachusetts, and
for the Underwriters by Sullivan & Cromwell, New York, New York. Norman A.
Bikales, a member of the firm of Sullivan & Worcester LLP, owns 9,000 shares
of Class A Common Stock and 41,490 shares of Class B Common Stock and has an
option to purchase 20,000 shares of Class A Common Stock at $10.00 per share.
Mr. Bikales and/or associates of that firm serve as secretary or assistant
secretaries of ATS and certain of its subsidiaries.
83
<PAGE>
EXPERTS
The following financial statements included in this Prospectus and the
related financial statement schedules included elsewhere in the Registration
Statement have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports, which are included herein, and have been so included
herein in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing:
(1) The consolidated financial statements and related financial statement
schedules of American Tower Systems Corporation as of December 31, 1997 and
1996, for the years ended December 31, 1997 and 1996, and for the period
July 17, 1995 (Incorporation) to December 31, 1995;
(2) The combined financial statements of Meridian Communications as of
December 31, 1995 and 1996 and for each of the two years then ended;
(3) The financial statements of Diablo Communications, Inc. as of
December 31, 1995 and 1996 and for each of the two years then ended;
(4) The financial statements of Gearon & Co., Inc as of December 31, 1996
and 1997 and for each of the two years then ended; and
(5) The financial statements of OPM-USA-INC. as of December 31, 1996 and
1997 and for each of the two years then ended.
The combined financial statements of net assets of MicroNet, Inc. and
Affiliates sold to ATS as of December 31, 1996 and October 31, 1997 and for
the year then ended December 31, 1996 and the ten months ended October 31,
1997 have been audited by Pressman Ciocca Smith LLP, independent certified
public accountants, as stated in their report appearing in this Prospectus and
have been so included in reliance upon the report of such firm as experts in
accounting and auditing.
The financial statements of Diablo Communications of Southern California,
Inc. for the years ended December 31, 1996 and 1997 and for the year ended
December 31, 1997 and for the period September 1, 1995 (inception) to December
31, 1996 have been audited by Rooney, Ida, Nolt & Ahern, independent auditors,
as stated in their report appearing in this Prospectus and have been so
included in reliance upon the report of such firm as experts.
The financial statements of Tucson Communications Company at December 31,
1997 and 1996, and for the years then ended, appearing in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon appearing elsewhere herein, and
are included in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
The consolidated financial statements of American Tower Corporation and
subsidiaries as of December 31, 1997 and 1996, and for each of the years in
the three year period ended December 31, 1997, have been included in this
Prospectus and Registration Statement in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants appearing herein, and
upon the authority of such firm as experts in accounting and auditing.
84
<PAGE>
AVAILABLE INFORMATION
American Tower Systems has filed with the Commission a Registration
Statement on Form S-1 (the "Registration Statement") under the Securities Act
with respect to the Class A Common Stock to be offered hereby. This Prospectus
does not contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto. For further information with
respect to American Tower Systems and the securities offered hereby, reference
is made to the Registration Statement and the exhibits and schedules filed
therewith. Statements contained in this Prospectus as to the contents of any
contract or any other document to which reference is made are not necessarily
complete, and in each instance reference is made to the copy of such contract
or other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference. The Registration
Statement can be inspected without charge and copied at the prescribed rates
at the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, at the Commission's Regional
Offices at Seven World Trade Center, 13th Floor, New York, New York 10048, and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
The Commission maintains a Web site; the address of such site is
http://www.sec.gov.
ATS is subject to the informational requirements of the Exchange Act and in
accordance therewith files reports, proxy statements and other information
with the Commission. Such reports, proxy statements and other information
filed by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Judiciary Plaza, Washington, D.C. 20549, and at the Commission's Regional
Offices at Citicorp Center, 500 West Madison, Suite 1400, Chicago, Illinois
60661 and 7 World Trade Center, Suite 1300, New York, New York 10048. Copies
of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Room 1024, Judiciary Plaza, Washington,
D.C. 20549, at prescribed rates. The Company's Class A Common Stock is listed
on the New York Stock Exchange, and such reports, proxy statements and certain
other information can also be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
85
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
Independent Auditors' Report............................................ F-3
Consolidated Balance Sheets as of December 31, 1996 and 1997 and March
31, 1998 (unaudited)................................................... F-4
Consolidated Statements of Operations for the period from July 17, 1995
("Incorporation") to December 31, 1995 and the years ended December 31,
1996 and 1997 and three months ended March 31, 1997 and 1998
(unaudited)............................................................ F-5
Consolidated Statements of Stockholder's Equity for the period from July
17, 1995 ("Incorporation") to December 31, 1995 and the years ended
December 31, 1996 and 1997 and three months ended March 31, 1998
(unaudited)............................................................ F-6
Consolidated Statements of Cash Flows for the period from July 17, 1995
("Incorporation") to December 31, 1995 and the years ended December 31,
1996 and 1997 and three months ended March 31, 1997 and 1998
(unaudited)............................................................ F-7
Notes to Consolidated Financial Statements.............................. F-8
MICRONET, INC. AND AFFILIATES
Report of Independent Certified Public Accountants...................... F-26
Combined Statements of Net Assets Sold as of December 31, 1996 and
October 31, 1997....................................................... F-27
Combined Statements of Income Derived From Net Assets Sold for the year
ended December 31, 1996 and ten months ended October 31, 1997.......... F-28
Combined Statements of Cash Flows Derived from Net Assets Sold for the
year ended December 31, 1996 and ten months ended October 31, 1997..... F-29
Notes to Combined Financial Statements.................................. F-30
DIABLO COMMUNICATIONS, INC.
Independent Auditors' Report............................................ F-36
Balance Sheets as of December 31, 1995 and 1996 and September 30, 1997
(unaudited)............................................................ F-37
Statements of Income for the years ended December 31, 1995 and 1996 and
nine months ended September 30, 1996 and 1997 (unaudited).............. F-38
Statements of Stockholders' Equity for the years ended December 31, 1995
and 1996 and nine months ended September 30, 1997 (unaudited).......... F-39
Statements of Cash Flows for years ended December 31, 1995 and 1996 and
nine months ended September 30, 1996 and 1997 (unaudited).............. F-40
Notes to Financial Statements........................................... F-41
DIABLO COMMUNICATIONS OF SOUTHERN CALIFORNIA, INC.
Independent Auditors' Report............................................ F-45
Balance Sheets as of December 31, 1995 and 1996 and September 30, 1997
(unaudited)............................................................ F-46
Statements of Operations for the period from September 1, 1995
(inception) to December 31, 1995, year ended December 31, 1996, and
nine months ended September 30, 1996 and 1997 (unaudited).............. F-47
Statements of Stockholders' Equity for the period from September 1, 1995
(inception) to December 31, 1995, year ended December 31, 1996 and nine
months ended September 30, 1997 (unaudited)............................ F-48
Statements of Cash Flows for the period from September 1, 1995
(inception) to December 31, 1995, year ended December 31, 1996 and nine
months ended September 30, 1996 and 1997 (unaudited)................... F-49
Notes to Financial Statements........................................... F-50
MERIDIAN COMMUNICATIONS
Independent Auditors' Report............................................ F-55
Combined Balance Sheets as of December 31, 1995 and 1996 and June 30,
1997 (unaudited)........................................................ F-56
Combined Statements of Income for the years ended December 31, 1995 and
1996 and six months ended June 30, 1996 and 1997 (unaudited).......... F-57
</TABLE>
F-1
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Combined Statements of Partners' Capital and Stockholder's Equity for
the years ended December 31, 1995 and 1996 and six months ended June
30, 1997 (unaudited)................................................. F-58
Combined Statements of Cash Flows for years ended December 31, 1995 and
1996 and six months ended June 30, 1996 and 1997 (unaudited)......... F-59
Notes to Combined Financial Statements................................. F-60
TUCSON COMMUNICATIONS COMPANY
Report of Independent Auditors......................................... F-65
Balance Sheets as of December 31, 1996 and 1997........................ F-66
Statements of Income for the years ended December 31, 1996 and 1997 ... F-67
Statements of Partners' Deficit for the years ended December 31, 1996
and 1997 .............................................................. F-68
Statements of Cash Flows for the years ended December 31, 1996 and
1997................................................................. F-69
Notes to Financial Statements.......................................... F-70
GEARON & CO., INC.
Independent Auditors' Report........................................... F-73
Balance Sheets as of December 31, 1996 and 1997........................ F-74
Statements of Operations for the years ended December 31, 1996 and
1997................................................................... F-75
Statements of Changes in Stockholders' Equity for the years ended De-
cember 31, 1996 and 1997............................................... F-76
Statements of Cash Flows for the years ended December 31, 1996 and
1997................................................................... F-77
Notes to Financial Statements.......................................... F-78
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
Independent Auditors' Report........................................... F-82
Consolidated Balance Sheets as of December 31, 1996 and 1997 and March
31, 1998 (unaudited)................................................... F-83
Consolidated Statements of Operations for the years ended December 31,
1995, 1996 and 1997 and three months ended March 31, 1997 and 1998
(unaudited).......................................................... F-84
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1995, 1996 and 1997 and three months ended March 31,
1998 (unaudited)..................................................... F-85
Consolidated Statements of Cash Flows for the years ended December 31,
1995, 1996 and 1997 and three months ended March 31, 1997 and 1998
(unaudited).......................................................... F-86
Notes to Consolidated Financial Statements............................. F-87
OPM-USA-INC.
Independent Auditors' Report........................................... F-97
Balance Sheets as of December 31, 1996 and 1997........................ F-98
Statements of Operations for the years ended December 31, 1996 and
1997.................................................................. F-99
Statements of Stockholders' Equity (Deficiency) for the years ended De-
cember 31, 1996 and 1997.............................................. F-100
Statements of Cash Flows for the years ended December 31, 1996 and
1997.................................................................. F-101
Notes to Financial Statements.......................................... F-102
</TABLE>
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors ofAmerican Tower Systems Corporation:
We have audited the accompanying consolidated balance sheets of American
Tower Systems Corporation and subsidiaries (the "Company"), a wholly owned
subsidiary of American Radio Systems Corporation, as of December 31, 1997 and
1996 and the related consolidated statements of operations, stockholder's
equity and cash flows for the years ended December 31, 1997 and 1996 and the
period from July 17, 1995 (Incorporation) to December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the consolidated financial position of the companies as
of December 31, 1997 and 1996, and the results of their operations and their
cash flows for the years ended December 31, 1997 and 1996 and the period from
Incorporation to December 31, 1995 in conformity with generally accepted
accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Boston, Massachusetts
March 6, 1998 (except for
the sixth paragraph of Note
1 and the second paragraph
of Note 4, as to which the
dates are March 27, 1998)
F-3
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
MARCH 31, 1998
1996 1997 (UNAUDITED)
----------- ------------ --------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.......... $ 2,373,360 $ 4,595,500 $ 6,799,598
Accounts receivable, net of allow-
ance for doubtful accounts of
$47,000, $125,000 and $355,000 in
1996, 1997 and 1998, respectively
.................................. 236,990 3,238,877 5,742,112
Unbilled receivables............... 3,028,378
Prepaid and other current assets... 79,657 789,677 1,336,825
Deferred income taxes.............. 62,560 62,560
----------- ------------ ------------
Total current assets............. 2,690,007 8,686,614 16,969,473
----------- ------------ ------------
PROPERTY AND EQUIPMENT, net.......... 19,709,523 117,617,776 156,827,010
UNALLOCATED PURCHASE PRICE, net...... 12,954,959 108,192,255 221,532,005
OTHER INTANGIBLE ASSETS, net......... 1,336,361 8,424,406 7,656,737
INVESTMENT IN AFFILIATE.............. 325,000 310,305 310,208
NOTES RECEIVABLE..................... 10,700,000 1,000,000
INTEREST RECEIVABLE--STOCKHOLDER
NOTES RECEIVABLE.................... 674,277
DEPOSITS AND OTHER LONG-TERM ASSETS.. 101,803 1,424,540 4,771,462
DEFERRED INCOME TAXES................ 123,272,646
----------- ------------ ------------
TOTAL................................ $37,117,653 $255,355,896 $533,013,818
=========== ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt.. $ 117,362 $ 110,391 $ 112,409
Accounts payable................... 1,058,822 3,738,230 2,581,420
Accrued expenses................... 715,322 4,492,064 9,417,069
Accrued interest................... 913,624 2,148,666
Unearned income.................... 252,789 1,752,248 2,556,715
Due to Parent (tax liability)...... 125,210,000
----------- ------------ ------------
Total current liabilities........ 2,144,295 11,006,557 142,026,279
----------- ------------ ------------
LONG-TERM DEBT....................... 4,417,896 90,066,269 157,037,420
DEFERRED INCOME TAXES................ 279,218 417,628
OTHER LONG-TERM LIABILITIES.......... 18,950 32,750 32,550
----------- ------------ ------------
Total long-term liabilities...... 4,716,064 90,516,647 157,069,970
----------- ------------ ------------
MINORITY INTEREST IN SUBSIDIARIES.... 528,928 625,652 600,240
----------- ------------ ------------
COMMITMENTS AND CONTINGENCIES (Note
5)
STOCKHOLDERS' EQUITY:
Preferred Stock; $0.01 par value;
20,000,000 shares authorized; no
shares issued or outstanding......
Common Stock; $.01 par value;
10,000,000 shares authorized;
3,000 shares issued and outstand-
ing in 1996....................... 30
Class A Common Stock; $.01 par val-
ue; 200,000,000 shares authorized;
29,667,883 and 36,351,266 shares
issued and outstanding, respec-
tively............................ 296,679 363,513
Class B Common Stock; $.01 par val-
ue; 50,000,000 shares authorized;
4,670,626 and 9,320,576 shares is-
sued and outstanding, respective-
ly................................ 46,706 93,206
Class C Common Stock; $.01 par val-
ue; 10,000,000 shares authorized;
1,295,518 and 3,295,518 shares is-
sued and outstanding, respective-
ly................................ 12,955 32,955
Notes receivable, due from stock-
holders........................... (49,375,000)
Additional paid-in capital......... 30,318,420 155,710,741 286,589,686
Accumulated deficit................ (590,084) (2,860,041) (4,387,031)
----------- ------------ ------------
Total stockholders' equity....... 29,728,366 153,207,040 233,317,329
----------- ------------ ------------
TOTAL................................ $37,117,653 $255,355,896 $533,013,818
=========== ============ ============
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM
JULY 17, 1995
(INCORPORATION) PERIOD ENDED THREE MONTHS
TO DECEMBER 31, DECEMBER 31, ENDED MARCH 31,
--------------- ----------------------- ------------------------
1997 1998
1995 1996 1997 (UNAUDITED) (UNAUDITED)
--------------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
REVENUES:
Tower rental and
management (see Note
6 for related party
revenue)............. $ 162,933 $2,893,633 $13,223,093 $1,364,751 $ 9,492,616
Site acquisition
services.............. 2,122,547 5,275,021
Video, voice and data
transmission.......... 2,083,756 3,142,184
Other................. 186 3,245 79,071 918 15,367
---------- ---------- ----------- ---------- -----------
Total operating rev-
enues.............. 163,119 2,896,878 17,508,467 1,365,669 17,925,188
---------- ---------- ----------- ---------- -----------
OPERATING EXPENSES:
Operating expenses
excluding
depreciation and
amortization and
corporate general and
administrative
expenses:
Tower rental and
management.......... 59,417 1,362,284 6,080,273 537,535 4,899,329
Site acquisition
service............. 1,360,217 4,543,579
Video, voice and data
transmission........ 1,272,682 2,051,587
Depreciation and
amortization.......... 57,428 989,936 6,326,323 504,024 5,802,052
Corporate general and
administrative
expense.............. 230,109 830,248 1,536,263 280,097 541,220
---------- ---------- ----------- ---------- -----------
Total operating ex-
penses............. 346,954 3,182,468 16,575,758 1,321,656 17,837,767
---------- ---------- ----------- ---------- -----------
INCOME (LOSS) FROM OPER-
ATIONS................. (183,835) (285,590) 932,709 44,013 87,421
---------- ---------- ----------- ---------- -----------
OTHER INCOME (EXPENSE):
Interest expense...... (3,039,235) (95,504) (2,430,202)
Interest income and
other, net............ 36,204 235,023 24,872 864,946
Minority interest in
net earnings (loss)
of subsidiaries...... (184,897) (177,313) (80,374) (79,379)
---------- ---------- ----------- ---------- -----------
TOTAL OTHER EXPENSE..... (148,693) (2,981,525) (151,006) (1,644,635)
---------- ---------- ----------- ---------- -----------
LOSS BEFORE BENEFIT
(PROVISION) FOR INCOME
TAXES AND EXTRAORDINARY
LOSS .................. (183,835) (434,283) (2,048,816) (106,993) (1,557,214)
BENEFIT (PROVISION) FOR
INCOME TAXES........... 73,424 (45,390) 472,671 49,039 30,224
---------- ---------- ----------- ---------- -----------
LOSS BEFORE EXTRAORDI-
NARY LOSS.............. (110,411) (479,673) (1,576,145) (57,954) (1,526,990)
EXTRAORDINARY LOSS ON
EXTINGUISHMENT OF DEBT,
NET OF INCOME TAX BENE-
FIT OF $462,500........ (693,812)
---------- ---------- ----------- ---------- -----------
NET LOSS................ $ (110,411) $ (479,673) $(2,269,957) $ (57,954) $(1,526,990)
========== ========== =========== ========== ===========
BASIC AND DILUTED PRO
FORMA PER COMMON SHARE
AMOUNTS:
Loss before
extraordinary loss.... $ (0.03) $ (0.03)
Extraordinary loss.... (0.01)
----------- -----------
Net loss.............. $ (0.05) $ (0.03)
=========== ===========
PRO FORMA BASIC AND DI-
LUTED COMMON SHARES
OUTSTANDING............ 48,691,790 48,967,360
=========== ===========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
PERIOD FROM JULY 17, 1995 (INCORPORATION) TO DECEMBER 31, 1995, YEARS ENDED
DECEMBER 31, 1996 AND 1997 AND THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK COMMON STOCK COMMON STOCK COMMON STOCK
------------------ -------------------- -------------------- --------------------
CLASS A CLASS B CLASS C
-------------------- -------------------- -------------------- NOTE RECEIVABLE,
OUTSTANDING OUTSTANDING OUTSTANDING OUTSTANDING DUE FROM
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT STOCKHOLDERS
----------- ------ ----------- -------- ----------- -------- ----------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of com-
mon stock to par-
ent.............. 10
Contributions
from parent:
Cash............
Non-cash........
Cash transfers to
parent...........
Net loss.........
------
BALANCE, DECEM-
BER 31, 1995..... 10
Issuance of
common stock to
parent........... 2,990 $ 30
Contributions
from parent:
Cash............
Non-cash........
Transfers to par-
ent:
Cash............
Non-cash........
Net loss.........
------ ---- ------------
BALANCE, DECEM-
BER 31, 1996..... 3,000 30
Contributions
from parent:
Cash............
Non-cash........
Transfers to par-
ent:
Cash............
Non-cash........
Recapitalization
(Note 8)......... (3,000) (30) 29,667,883 $296,679 4,670,626 $ 46,706 1,295,518 $ 12,955
Net loss.........
------ ---- ---------- -------- --------- -------- --------- -------- ------------
BALANCE, DECEM-
BER 31, 1997..... -- -- 29,667,883 296,679 4,670,626 46,706 1,295,518 12,955
====== ==== ========== ======== ========= ======== ========= ======== ============
Contributions
from parent:
Cash............
Non-cash........
Cash transfers to
parent:..........
Issuance of com-
mon stock, net of
issuance costs of
$601,762 1,350,050 13,501 4,649,950 46,500 2,000,000 20,000 $(49,375,000)
Issuance of Class
A Common Stock
for Gearon Merger
................. 5,333,333 53,333
Net loss.........
------ ---- ---------- -------- --------- -------- --------- -------- ------------
BALANCE, MARCH
31, 1998 (Unau-
dited)........... -- $ -- 36,351,266 $363,513 9,320,576 $ 93,206 3,295,518 $32,955 $(49,375,000)
====== ==== ========== ======== ========= ======== ========= ======== ============
<CAPTION>
ADDITIONAL
PAID-IN ACCUMULATED
CAPITAL DEFICIT TOTAL
------------- ------------ -------------
<S> <C> <C> <C>
Issuance of com-
mon stock to par-
ent..............
Contributions
from parent:
Cash............ $ 242,215 $ 242,215
Non-cash........ 3,816,445 3,816,445
Cash transfers to
parent........... (179,426) (179,426)
Net loss......... $ (110,411) (110,411)
------------- ------------ -------------
BALANCE, DECEM-
BER 31, 1995..... 3,879,234 (110,411) 3,768,823
Issuance of
common stock to
parent........... (30)
Contributions
from parent:
Cash............ 2,548,557 2,548,557
Non-cash........ 29,856,885 29,856,885
Transfers to par-
ent:
Cash............ (4,866,226) (4,866,226)
Non-cash........ (1,100,000) (1,100,000)
Net loss......... (479,673) (479,673)
------------- ------------ -------------
BALANCE, DECEM-
BER 31, 1996..... 30,318,420 (590,084) 29,728,366
Contributions
from parent:
Cash............ 143,073,631 143,073,631
Non-cash........ 50,000 50,000
Transfers to par-
ent:
Cash............ (16,650,000) (16,650,000)
Non-cash........ (725,000) (725,000)
Recapitalization
(Note 8)......... (356,310)
Net loss......... (2,269,957) (2,269,957)
------------- ------------ -------------
BALANCE, DECEM-
BER 31, 1997..... 155,710,741 (2,860,041) 153,207,040
============= ============ =============
Contributions
from parent:
Cash............ 28,684,995 28,684,995
Non-cash........ 4,729,047 4,729,047
Cash transfers to
parent:.......... (29,800,000) (29,800,000)
Issuance of com-
mon stock, net of
issuance costs of
$601,762 79,318,236 30,023,237
Issuance of Class
A Common Stock
for Gearon Merger
................. 47,946,667 48,000,000
Net loss......... (1,526,990) (1,526,990)
------------- ------------ -------------
BALANCE, MARCH
31, 1998 (Unau-
dited)........... $286,589,686 $(4,387,031) $233,317,329
============= ============ =============
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
JULY 17, 1995
(INCORPORATION) TO THREE MONTHS
DECEMBER 31, 1995 YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------ ---------------------------- -------------------------
1997 1998
1995 1996 1997 (UNAUDITED) (UNAUDITED)
------------------ ------------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss............... $(110,411) $ (479,673) $ (2,269,957) $ (57,954) $ (1,526,990)
Adjustments to
reconcile net loss to
cash provided by (used
in) operating
activities:
Depreciation and
amortization......... 57,428 989,936 6,326,323 504,024 5,802,052
Minority interest in
net earnings of
subsidiaries......... 184,897 177,313 80,374 79,379
Amortization of
deferred financing
costs................ 187,910 39,589 81,268
Provision for losses
on accounts
receivable........... 47,044 124,350 9,000 109,478
Extraordinary loss,
net.................. 693,812
Deferred income
taxes................ 108,715 146,529 (173,851) (30,274)
Changes in assets and
liabilities, net of
acquisitions:
Accounts
receivable......... (37,167) (246,867) (3,155,831) (52,178) (2,620,972)
Unbilled
receivables........ (3,028,378)
Prepaid and other
current assets..... (54,499) (226,814) 158,897 72,631 (212,809)
Accounts payable and
accrued expenses... 93,860 1,580,284 5,096,378 (169,015) (1,426,686)
Accrued interest.... 913,624 1,235,042
Unearned income..... 252,789 1,499,459 (36,353) (198,073)
Other long-term
liabilities........ 18,950 13,800 (200)
--------- ------------- ------------- ----------- ------------
Cash provided by (used
in) operating
activities........... (50,789) 2,229,261 9,912,607 216,267 (1,737,163)
--------- ------------- ------------- ----------- ------------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Payments for purchase
of property and
equipment and
construction......... (20,614,412) (3,086,725) (12,690,475)
Payments for
acquisitions......... (184,075,851) (71,068,578)
Advances of notes
receivable........... (10,961,416) (6,000,000)
Repayment of notes
receivable........... 2,000,000
Deposits and other
long-term assets..... (1,131,247) (259,332) (4,076,296)
------------- ----------- ------------
Cash used for
investing
activities........... (216,782,926) (3,346,057) (91,835,349)
------------- ----------- ------------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Borrowings under
credit facility...... 2,500,000 151,000,000 67,000,000
Repayment of credit
facility............. (65,000,000)
Borrowings under other
notes payable........ 231,115
Repayments of other
notes payable........ (106,697) (358,598) (28,521) (26,831)
Net proceeds from
private placement
equity offering...... 30,023,237
Contributions from
Parent............... 242,215 2,548,557 143,073,631 2,543,171 28,684,995
Cash transfers to
Parent............... (179,426) (4,866,226) (16,650,000) (29,800,000)
Distributions to
minority interest.... (174,650) (419,160) (104,790) (104,791)
Additions to deferred
financing costs...... (2,553,414)
--------- ------------- ------------- ----------- ------------
Cash provided by
financing
activities........... 62,789 132,099 209,092,459 2,409,860 95,776,610
--------- ------------- ------------- ----------- ------------
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS............ 12,000 2,361,360 2,222,140 (719,930) 2,204,098
CASH AND CASH
EQUIVALENTS, BEGINNING
OF PERIOD.............. 12,000 2,373,360 2,373,360 4,595,500
--------- ------------- ------------- ----------- ------------
CASH AND CASH
EQUIVALENTS, END OF
PERIOD................. $ 12,000 $ 2,373,360 $ 4,595,500 $ 1,653,430 $ 6,799,598
========= ============= ============= =========== ============
</TABLE>
See notes to consolidated financial statements.
F-7
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business and Corporate Structure--American Tower Systems Corporation and
subsidiaries (collectively, ATS or the Company) is a majority owned subsidiary
of American Radio Systems Corporation (ARS, American Radio or the Parent).
American Tower Systems (Delaware), Inc. (ATSI) is a wholly-owned subsidiary of
ATS and one of the two operating subsidiaries of ATS. American Tower systems,
L.P. (ATSLP), is an indirect wholly-owned subsidiary of ATS, which conducts
all of the business of ATS other than that conducted by ATSI. ATSI and ATSLP
are collectively referred to as the Operating Subsidiaries.
The Company was incorporated on July 17, 1995 (Incorporation) for the
purpose of acquiring, developing, marketing, managing and operating wireless
communications tower sites throughout the United States, for use by wireless
communications providers and television and radio broadcasters.
ATS's primary business is the leasing of antennae sites on multi-tenant
towers for a diverse range of wireless communications industries, including
personal communications services (PCS), cellular, paging, specialized mobile
radio, enhanced specialized mobile radio (ESMR) and fixed microwave, as well
as radio and television broadcasters. ATS also offers its customers a broad
range of network development services, including network design, site
acquisition, zoning and other regulatory approvals, site construction and
antennae installation. ATS intends to expand these services and to capitalize
on its relationships with its wireless customers through major built to suit
construction projects. ATS is also engaged in the video, voice and data
transmission business, which it currently conducts in the New York City to
Washington, D.C. corridor and in Texas.
As of December 31, 1997, the Company owned and/or operated approximately 670
wireless communication sites, principally in the Northeast and Mid-Atlantic
regions, Florida and California. As of March 31, 1998, the Company owned
and/or operated approximately 880 wireless communication sites.
Interim Financial Information--The unaudited financial statements for the
three months ended March 31, 1997 and 1998 are presented for comparative
purposes only and have been prepared on a basis substantially consistent with
that of the audited financial statements included herein. In the opinion of
management, such unaudited financial statements include all adjustments, which
are of a normal and recurring nature, considered necessary for a fair
presentation. Operating results for the three-month periods ended March 31,
1997 and 1998 are not necessarily indicative of the results that may be
expected for a full year.
CBS Merger--In September 1997, American Radio entered into a merger
agreement as amended and restated in December 1997, as amended (the CBS Merger
Agreement) pursuant to which a subsidiary of CBS will be merged (the CBS
Merger) into American Radio. As a consequence of the consummation of the CBS
Merger, all of the shares of ATS owned by ARS will be distributed to ARS
common stockholders and holders of options to acquire ARS Common Stock or upon
conversion of shares of ARS 7% Convertible Exchangeable Preferred Stock (the
Convertible Preferred Stock). As a consequence of the CBS Merger, ATS will
cease to be a subsidiary of, or to be otherwise affiliated with, American
Radio and will operate as an independent publicly traded company. Pursuant to
the provisions of the CBS Merger Agreement, ATS will enter into an agreement
(the ARS-ATS Separation Agreement) with CBS and ARS providing for, among other
things, the allocation of certain tax liabilities to ATS, certain closing date
adjustments relating to ARS, the lease to ARS by ATS of space on certain
towers previously owned by ARS and transferred to ATS, the orderly separation
of ARS and ATS, and certain indemnification obligations (including with
respect to securities law matters) of ATS.
ATS's principal obligation is to reimburse CBS on a "make-whole" (after tax)
basis for the tax liabilities to be incurred by ARS in excess of $20.0 million
attributable to the distribution of the Common Stock to the
F-8
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
ARS security holders and certain related transactions. In light of the
significant increase in the trading levels of the Class A Common Stock, ATS
and CBS have agreed that ARS will treat the distribution on its tax return on
a more conservative basis than originally contemplated in order to avoid the
possibility of significant interest and penalties for which ATS would be
responsible. Based on an estimate of "fair market value" using available
information as of March 27, 1998 of $16.00 per share of ATS common stock, the
estimated CBS Merger Tax Liability is approximately $173.0 million of which
approximately $20.0 million will be borne by ARS and the remaining obligation
(approximately $153.0 million) will be paid by ATS. This estimate will
increase or decrease depending on changes in the "fair market value" of ATS
common stock between March 27, 1998 and the closing date of the CBS Merger.
See Note 12 for recent developments and estimates of such liability as of
dates subsequent to March 27, 1998. The estimates described above are based on
a number of assumptions and interpretations of various applicable income tax
rules and are subject to change.
In connection with an inter-corporate taxable transfer of assets entered
into in January 1998 by ATS in contemplation of the separation of ATS and ARS,
a portion of the tax with respect to which ATS is obligated to indemnify CBS
was incurred. Such transfer resulted in an increase in the tax bases of ATS's
assets of approximately $330.0 million. ATS will have potential depreciation
and amortization deductions over the next 15 years of $22.0 million per year
and recorded a deferred tax asset and corresponding liability due to ARS of
approximately $125.0 million to reflect these transactions.
The CBS Merger has been approved by the stockholders of ARS who held
sufficient voting power to approve such action. Consummation of the CBS Merger
is subject to, among other things, the approval by the Federal Communications
Commission (FCC) of the transfer of control of ARS's FCC licenses with respect
to its radio stations to CBS. Subject to the satisfaction of such conditions,
the CBS Merger is expected to be consummated in the Spring of 1998.
The foregoing is a description of the rights and obligations of ARS and ATS
in the event the CBS Merger is consummated. Although the ARS-ATS Separation
Agreement will be effective and operational if the merger of a subsidiary of
ARS into ARS (the Tower Merger) is consummated, in the event the CBS Merger is
not subsequently consummated, ARS and ATS have reserved the right to alter the
terms of the agreement to provide for a sharing of the rights and obligations
in a manner that may be more or less favorable to ATS. Because ARS and ATS
believe that the CBS Merger will be consummated, no determination has been
made of what the rights and obligations of ARS and ATS should be in the event
it were not.
Principles of Consolidation and Basis of Presentation--The accompanying
consolidated financial statements include the accounts of the Company and its
subsidiaries. All significant intercompany accounts and transactions have been
eliminated. Investments in affiliates, where ATS owns more than 20 percent of
the voting power of the affiliate but not in excess of 50 percent, are
accounted for using the equity method. Separate financial information
regarding equity method investees is not significant. The Company also
consolidates its 50.1% interest and its 70.0% interest in two other tower
communications limited liability companies, with the other members'
investments reflected as minority interest in subsidiaries in the accompanying
consolidated financial statements.
Through March 31, 1998, ATS effectively operated as a stand-alone entity,
with its own corporate staff and headquarters, and received minimal assistance
from personnel of the Parent. Accordingly, the accompanying consolidated
financial statements do not include any cost allocations from the Parent.
However, the consolidated financial statements may not reflect the results of
operations or financial position of ATS had it been an independent public
company during the periods presented.
F-9
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results may differ from those estimates, and
such differences could be material to the consolidated financial statements.
Revenue Recognition--Tower revenues are recognized when earned. Escalation
clauses and other incentives present in tower lease agreements with the
Company's customers are recognized on a straight-line basis over the term of
the leases. Site acquisition and video, voice and data transmission revenues
are recognized as such services are provided. Amounts billed or received prior
to services being performed are deferred until such time as the revenue is
earned.
Corporate General and Administrative Expense--Corporate general and
administrative expense consists of corporate overhead costs not specifically
allocable to any of the Company's individual business properties.
Concentration of Credit Risk--The Company extends credit to customers on an
unsecured basis in the normal course of business. The Company has policies
governing the extension of credit and collection of amounts due from
customers.
Derivative Financial Instruments--The Company uses derivative financial
instruments as a means of managing interest rate risk associated with current
debt or anticipated debt transactions that have a high probability of being
executed. The Company's interest rate protection agreements generally consist
of interest rate swap agreements and interest rate cap agreements. These
instruments are matched with either fixed or variable rate debt, and payments
thereon are recorded on a settlement basis as an adjustment to interest
expense. Premiums paid to purchase interest rate cap agreements are amortized
as an adjustment of interest expense over the life of the contract. Derivative
financial instruments are not held for trading purposes. (See Note 4).
Cash and Cash Equivalents--Cash and cash equivalents include cash on hand,
demand deposits and short-term investments with remaining maturities when
purchased of three months or less.
Property and Equipment and Unallocated Purchase Price--Property and
equipment are recorded at cost, or at estimated fair value in the case of
acquired properties. Cost includes expenditures for communications sites and
related assets and the net amount of interest cost associated with significant
capital additions. Approximately $120,000, $458,000 and $319,000 of interest
was capitalized for the years ended December 31, 1996 and 1997 and the three
months ended March 31, 1998, respectively. No interest was capitalized for the
three months ended March 31, 1997. Depreciation is provided using the
straight-line method over estimated useful lives ranging from three to fifteen
years.
The excess of purchase price over the estimated fair value of net assets
acquired has been preliminarily recorded as unallocated purchase price and is
being amortized over an estimated aggregate useful life of fifteen years using
the straight-line method. Accumulated amortization aggregated approximately
$356,000, $3,726,000 and $7,025,000 at December 31, 1996 and 1997 and March
31, 1998, respectively. The consolidated financial statements reflect the
preliminary allocation of certain purchase prices as the appraisals for some
acquisitions have not yet been finalized. The Company is currently conducting
studies to determine the purchase price allocations and expects that upon
final allocation, the average estimated useful life will approximate fifteen
years. The final allocation of purchase price is not expected to have a
material effect on the Company's consolidated results of operations, liquidity
or financial position.
F-10
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
Intangible Assets--Intangible assets are being amortized on a straight-line
basis over their estimated useful lives, ranging from five to eight years.
Other intangible assets consist principally of a noncompetition agreement,
deferred financing costs and deferred acquisition costs. Deferred private
placement fees were reclassified to additional paid-in capital upon
consummation of the ATS Stock Purchase Agreement and Tower Separation fees
will be reclassified to additional paid-in capital upon consummation of the
related transaction. (See Note 3).
Notes Receivable--In connection with the acquisition of OPM-USA-INC. (OPM)
and the acquisition of Gearon & Co. Inc. (Gearon) described in Note 9, the
Company entered into certain note agreements prior to consummation of these
acquisitions. The Company agreed to advance OPM an amount not to exceed
$37.0 million, of which approximately $5.7 million (excluding accrued
interest) was advanced as of December 31, 1997. The note bore interest at
prime rate plus 3%, was unsecured and was settled upon closing of the OPM
acquisition.
The Company agreed to advance Gearon an amount not to exceed $10.0 million
prior to closing, of which the maximum amount was advanced. The note bore
interest at approximately 7.25%, was unsecured and was settled upon closing of
the Gearon acquisition.
Income Taxes--Deferred taxes are provided to reflect temporary differences
in basis between book and tax assets and liabilities, and net operating loss
carryforwards. Deferred tax assets and liabilities are measured using
currently enacted tax rates. The Company provides for income taxes at the end
of each interim period based on the estimated effective tax rate for the full
fiscal year for each tax reporting corporate entity. Cumulative adjustments to
the tax benefit (provision) are recorded in the interim period in which a
change in the estimated annual effective rate is determined. Through January
1998, the Company participated in a tax sharing agreement with ARS. The tax
sharing agreement was terminated in connection with the corporate
restructuring, pursuant to which the Company and its subsidiaries will now
prepare and file income tax returns on a separate consolidated basis. Under
the tax sharing agreement, there were no significant differences between the
tax benefit (provision) recorded and the amounts measured on a separate return
basis. (See Note 7).
Pro Forma Loss Per Common Share--Pro forma loss per common share is computed
using the number of shares of common stock expected to be outstanding upon
consummation of the CBS Merger. These shares include shares issued pursuant to
the stock purchase agreement described in Note 8 and the Gearon acquisition
described in Note 11 and also includes shares of ATS common stock issuable
upon exercise of ARS options (each ARS option in effect represents the right
to receive $44 in cash and one ATS share; such exercise is expected to occur
upon closing). Shares issuable upon exercise of ATS and ATSI options have been
excluded from the computation as the effect is anti-dilutive. Had ATS and ATSI
options been included in the computation, shares for diluted computation would
have been increased by approximately 7.0 million.
Impairment of Long-Lived Assets--Recoverability of long-lived assets is
determined by periodically comparing the forecasted undiscounted net cash
flows of the operations to which the assets relate to the carrying amount,
including associated intangible assets of such operations. Through March 31,
1998, no impairments requiring adjustment have occurred.
Stock-Based Compensation--Compensation related to equity grants or awards to
employees is measured using the intrinsic value method prescribed by
Accounting Principles Board Opinion No. 25. (See Note 8).
F-11
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
Fair Value of Financial Instruments--The Company believes that the carrying
value of all financial instruments, excluding the interest rate protection
agreements, is a reasonable estimate of fair value as of December 31, 1996 and
1997 and March 31, 1998. The fair value of the interest rate protection
agreements are obtained from independent market quotes. These values represent
the amount the Company would receive or pay to terminate the agreements taking
into consideration current market interest rates. The Company would expect to
pay approximately $97,000 and $90,000 to settle these agreements at December
31, 1997 and March 31, 1998, respectively. There were no interest rate
protection agreements at December 31, 1996. (See Note 4).
Retirement Plan--Employees of the Company are eligible for participation in
a 401(k) plan sponsored by ARS, subject to certain minimum age and length-of-
employment requirements. Administrative expenses of the plan are borne by ARS
and are not significant to ATS. Under the plan, the Company matches 30% of the
participants' contributions up to 5% of compensation. The Company contributed
approximately $6,000, $16,800, $3,900 and $2,100 for the years ended December
31, 1996 and 1997 and the three months ended March 31, 1997 and 1998,
respectively. The Company's contributions for the period from Incorporation to
December 31, 1995 were not material.
Recent Accounting Pronouncements--In June 1997, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting Standards
(FAS) No. 130, "Reporting Comprehensive Income," which became effective for
the Company for periods beginning after December 15, 1997. FAS No. 130
establishes standards for reporting and displaying comprehensive income and
its components (revenues, expenses, gains, and losses) in a full set of
general purpose financial statements. FAS No. 130 requires that a company (a)
classify items of other comprehensive income by their nature in a financial
statement and (b) display the accumulated balance of other comprehensive
income separately from retained earnings and additional paid-in-capital in the
equity section of the balance sheet. Reclassification of financial statements
for earlier periods provided for comparative purposes is required. The Company
has adopted this statement in the first quarter of 1998. Comprehensive income
does not differ from net income.
In June 1997, the FASB released FAS No. 131 "Disclosures about Segments of
an Enterprise and Related Information" (FAS 131). FAS 131 establishes
standards for the Company for reporting information about the operating
segments in its annual report and interim reports. ATS will adopt this
standard for its full year 1998 financial information.
In February 1998, the FASB released FAS No. 132, "Employer's Disclosures
about Pensions and Other Postretirement Benefits" (FAS 132), which ATS will be
required to adopt in 1998. FAS 132 will require additional disclosure
concerning changes in ATS's pension obligations and assets and eliminates
certain other disclosures no longer considered useful. Adoption of this
standard will have no effect on reported consolidated results of operations or
financial position.
Reclassifications--Certain reclassifications have been made to the 1995,
1996 and 1997 financial statements to conform with the 1998 presentation.
F-12
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
2. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- MARCH 31,
1996 1997 1998
----------- ------------ ------------
<S> <C> <C> <C>
Land and improvements................ $ 4,081,011 $ 17,955,568 $ 20,125,743
Buildings and improvements........... 17,731,874 27,018,019
Towers............................... 11,473,259 48,315,930 70,508,844
Technical equipment.................. 53,124 3,624,239 4,091,430
Transmitter equipment................ 13,550 18,211,996 18,381,479
Office equipment, furniture, fixtures
and other equipment................. 317,025 4,076,212 5,400,115
Construction in progress............. 4,276,410 10,641,639 16,840,669
----------- ------------ ------------
Total............................ 20,214,379 120,557,458 162,366,299
Less accumulated depreciation and am-
ortization.......................... (504,856) (2,939,682) (5,539,289)
----------- ------------ ------------
Property and equipment, net.......... $19,709,523 $117,617,776 $156,827,010
=========== ============ ============
</TABLE>
3. OTHER INTANGIBLE ASSETS
Other intangible assets consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- MARCH 31,
1996 1997 1998
---------- ---------- -----------
<S> <C> <C> <C>
Non-compete agreement...................... $5,530,000 $ 5,530,000
Deferred financing costs................... $1,255,474 2,519,312 2,519,312
Deferred acquisition costs................. 93,965 438,238 446,603
Deferred private placement fees............ 546,023
Other...................................... 100,923 228,680
---------- ---------- -----------
Total................................... 1,349,439 9,134,496 8,724,595
Less accumulated amortization.............. (13,078) (710,090) (1,067,858)
---------- ---------- -----------
Other intangible assets, net............... $1,336,361 $8,424,406 $ 7,656,737
========== ========== ===========
</TABLE>
4. FINANCING ARRANGEMENTS
Outstanding amounts under the Company's long-term financing arrangements
consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- MARCH 31,
1996 1997 1998
---------- ----------- ------------
<S> <C> <C> <C>
Loan Agreement........................... $2,500,000 $88,500,000 155,500,000
Note payable--other...................... 1,557,701 1,466,854 1,442,983
Other obligations........................ 477,557 209,806 206,846
---------- ----------- ------------
Total.................................... 4,535,258 90,176,660 157,149,829
Less current portion..................... (117,362) (110,391) (112,409)
---------- ----------- ------------
Long-term debt........................... $4,417,896 $90,066,269 $157,037,420
========== =========== ============
</TABLE>
Loan Agreements--In October 1997, ATSI entered into a new loan agreement
with a syndicate of banks (the Loan Agreement), which replaced the previously
existing credit agreement. All amounts outstanding under the previous
agreement were repaid with proceeds from the Loan Agreement. In connection
with the inter-
F-13
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
corporate transfer of assets described in Note 1, the Loan Agreement was
amended in January 1998 to make the Operating Subsidiaries jointly and
severally liable as co-borrowers. The following discussion, with the exception
of the information regarding interest rates and availability under the
agreements, is based on the terms and conditions of the Loan Agreement.
Collectively, the previous loan agreement and the 1997 Loan Agreement (as
amended and restated on December 31, 1997, in January 1998 and March 27, 1998)
are referred to as the Loan Agreements.
The Loan Agreement provides the Operating Subsidiaries with a $250.0 million
loan commitment based on the maintenance of certain operational ratios, and an
additional $150.0 million loan at the discretion of the Operating
Subsidiaries. The Loan Agreement may be borrowed, repaid and reborrowed
without reducing the availability until June 2005 except as specified in the
Loan Agreement; thereafter, availability decreases in an amount equal to 50%
of excess cash flow, as defined in the Loan Agreement, for the fiscal year
immediately preceding the calculation date. In addition, the Loan Agreement
requires commitment reductions in the event of sale of ATSI's common stock or
debt instruments, and/or permitted asset sales, as defined in the Loan
Agreement.
Outstanding amounts under the Loan Agreements bear interest at either LIBOR
(5.78%, 5.90% and 5.69% as of December 31, 1996 and 1997 and March 31, 1998,
respectively) plus 1.0% to 2.25% or Base Rate, as defined in the Loan
Agreements, plus 0.00% to 1.00%. The spread over LIBOR and the Base Rate
varies from time to time, depending upon ATSI's financial leverage. Under
certain circumstances, ATSI may request that rates be fixed or capped. For the
years ended December 31, 1996 and 1997 and the three months ended March 31,
1998, the weighted average interest rate of the Loan Agreements was 8.75%,
7.4% and 7.34%, respectively.
There was $62.5 million, $32.7 million and $108.5 million available under
the Loan Agreements at December 31, 1996 and 1997 and March 31, 1998,
respectively. ATSI pays quarterly commitment fees ranging from .375% to .50%,
based on ATSI's financial leverage and the unused portion of the aggregated
commitment. Commitment fees paid related to the Loan Agreements aggregated
approximately $24,000, $416,000 and $81,000 for the years ended December 31,
1996 and 1997 and the three months ended March 31, 1997, respectively. No
commitment fees were paid during the three months ended March 31, 1998.
The Loan Agreement contains certain financial and operational covenants and
other restrictions with which ATSI must comply, whether or not any borrowings
are outstanding, including among others, maintenance of certain financial
ratios, limitations on acquisitions, additional indebtedness and capital
expenditures, as well as restrictions on cash distributions unless certain
financial tests are met, and the use of borrowings. The obligations of the
Operating Subsidiaries under the Loan Agreement are collateralized by a first
priority security interest in substantially all of the assets of the Operating
Subsidiaries. ATS and its subsidiaries pledged all of the stock and equity
interests of all Restricted Subsidiaries (including the Operating
Subsidiaries) to the banks as security for the Operating Subsidiaries'
obligations under the Loan Agreement. ATS is in the process of negotiating an
amended and restated loan agreement with its senior lenders, pursuant to which
the Company expects that the existing maximum borrowing will be increased from
$400.0 million to $900.0 million, subject to compliance with certain financial
ratios, and ATS (the Parent) will be able to borrow an additional $150.0
million. In connection with the refinancing, the Company expects to recognize
an extraordinary loss of approximately $1.4 million, net of a tax benefit of
$0.9 million, during the second quarter of 1998. (See Note 12).
Following the closing of the Loan Agreement in October 1997, ATSI incurred
an extraordinary loss of approximately $1,156,000 (approximately $694,000 net
of the applicable income tax benefit) representing the write-off of deferred
financing fees associated with the previous agreement.
See also Note 12 for recent developments.
Derivative Positions--Under the terms of the Loan Agreement, ATSI is
required, under certain conditions, to enter into interest rate protection
agreements. There were no such agreements outstanding at December 31,
F-14
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
1996. As of December 31, 1997 and March 31, 1998, ATSI maintained a swap
agreement, expiring in January 2001, under which the interest rate is fixed
with respect to $7.3 million of notional principal amount at approximately
6.4%. ATSI also maintained two cap agreements; one expiring in July 2000,
under which the interest rate is fixed with respect to $21.6 million of
notional principal amount at approximately 9.5%, and one expiring in November
1999, under which the interest rate is fixed with respect to $7.0 million of
notional principal amount at approximately 8.5%. In January 1998, ATS entered
into a cap agreement expiring in January 2000, under which the interest rate
is fixed with respect $21.5 million of notional principal amount at
approximately 8.5%. ATSI's exposure under these agreements is limited to the
impact of variable interest rate fluctuations and the periodic settlement of
amounts due under these agreements if the other parties fail to perform.
Note Payable--Other--A limited liability company, which is under majority
control of the Company, has a note secured by the minority shareholder's
interest in the limited liability company. Interest rates under this note are
determined, at the option of the limited liability company, at either the
Floating Rate (as defined in the note agreement) or the Federal Home Loan
BankBoston rate plus 2.25%. As of December 31, 1996 and 1997 and March 31,
1998, the effective interest rate on borrowings under this note was 8.02%. The
note is payable in equal monthly principal payments with interest through
2006.
Other Obligations--In connection with various acquisitions, the Company
assumed certain long-term obligations of the acquired entities. Substantially
all of these obligations were repaid during 1997, with the remaining unpaid
obligation payable in monthly installments through 2014.
Future principal payments required under the Company's financing
arrangements at December 31, 1997 are approximately:
<TABLE>
<S> <C>
Year Ending:
1998............................................................. $ 110,000
1999............................................................. 119,000
2000............................................................. 128,000
2001............................................................. 137,000
2002............................................................. 148,000
Thereafter....................................................... 89,535,000
-----------
Total.......................................................... $90,177,000
===========
</TABLE>
5. COMMITMENTS AND CONTINGENCIES
Lease Obligations--The Company leases space for its existing offices in
Florida, California, Pennsylvania and Virginia, space on various
communications towers and land under operating leases that expire over various
terms. The Company also subleases space on communications towers under
substantially the same terms and conditions, including cancellation rights, as
those found in its own lease contracts. Most leases allow cancellation at will
or under certain technical circumstances. Many of the leases also contain
renewal options with specified increases in lease payments upon exercise of
the renewal option.
F-15
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
In connection with the CBS Merger described in Note 1, ATS will assume
certain lease obligations with respect to ARS's corporate headquarters in
Boston, Massachusetts. Future minimum rental payments under noncancelable
leases in effect at December 31, 1997, excluding the assumption of the ARS
lease obligations, are approximately as follows:
<TABLE>
<S> <C>
Year Ending:
1998............................................................. $ 3,996,000
1999............................................................. 3,508,000
2000............................................................. 3,213,000
2001............................................................. 2,706,000
2002............................................................. 1,992,000
Thereafter....................................................... 10,373,000
-----------
Total.......................................................... $25,788,000
===========
</TABLE>
Aggregate rent expense under operating leases for the period ended December
31, 1995, the years ended December 31, 1996 and 1997 and the three months
ended March 31, 1997 and 1998 approximated $5,000, $420,000, $2,110,000,
$195,000 and $1,813,000 respectively.
Customer Leases--The Company leases space on its various tower properties
(both owned and managed) to customers which typically are for set periods of
time, although some leases are cancelable at the customers' option and others
are automatically renewed and have no fixed term. Long-term leases typically
contain provisions for renewals and specified rent increases over the lease
term.
Future minimum rental receipts expected to be received from customers under
noncancelable lease agreements in effect at December 31, 1997 are
approximately as follows:
<TABLE>
<S> <C>
Year Ending:
1998............................................................. $21,017,000
1999............................................................. 16,899,000
2000............................................................. 14,691,000
2001............................................................. 12,369,000
2002............................................................. 8,128,000
Thereafter....................................................... 26,892,000
-----------
Total.......................................................... $99,996,000
===========
</TABLE>
Tower rental revenues under the Company's sub-leases approximated $468,000,
$978,000, $195,000 and $262,000 for the years ended December 31, 1996 and 1997
and the three months ended March 31, 1997 and 1998, respectively.
Acquisition Commitments--See Notes 9 and 11 for information with respect to
acquisitions and related commitments.
CBS Merger--(See Notes 1 and 12 for recent developments).
Litigation--The Company periodically becomes involved in various claims and
lawsuits that are incidental to its business. In the opinion of management,
there are no matters currently pending which would, in the event of an adverse
outcome, have a material impact on the Company's consolidated financial
position, the results of operations or liquidity.
F-16
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
6. RELATED PARTY TRANSACTIONS
The Company received revenues of approximately $70,000, $389,000, $81,000
and $326,000 from ARS for tower rentals at Company-owned sites for the years
ended December 31, 1996 and 1997 and the three months ended March 31, 1997 and
1998, respectively.
ARS has contributed substantially all of the Company's capitalization and
had funded substantially all of the 1996 acquisitions and certain 1997 and
1998 acquisitions described in Note 9.
In January 1998, ARS contributed certain tower sites to the Company (See
Note 9).
In January 1998, the Company consummated the transactions contemplated by a
stock purchase agreement with certain related parties. (See Note 8).
In December 1997, ARS contributed a tower site and related assets in West
Palm Beach, Florida to the Company at ARS's book value, which approximated
$50,000.
In January 1996, ARS contributed a tract of undeveloped land of
approximately two acres to the Company. The transfer was recorded at ARS's
book value of approximately $425,000.
In March 1996, ARS contributed approximately 200 acres of undeveloped land
to the Company. The transfer was recorded at ARS's book value of approximately
$2.3 million.
In November 1996, the Company transferred a tract of land to ARS. The
transfer was recorded at ATS's book value of approximately $1.1 million.
In December 1996, ARS contributed a tower site and related assets in
Peabody, Massachusetts to the Company at ARS's book value, which aggregated
approximately $1.1 million.
In December 1996, ARS contributed a tower site and related assets located in
Philadelphia, Pennsylvania, to the Company. These assets were contributed at
their initial estimated fair value of approximately $1.5 million, based on a
preliminary appraisal. In June 1997, the fair value of the tower site and
related assets was determined to be approximately $775,000 based on a final
independent appraisal. The net book value carried by ATS was adjusted by
approximately $725,000 to reflect the change in estimate. This change in
estimate did not have a material effect on the consolidated financial position
or the results of operations of ATS.
7. INCOME TAXES
Effective October 15, 1996, the Company entered into a tax sharing agreement
with ARS. In accordance with this agreement, the Company's share of the
consolidated federal income tax benefit (liability) is calculated as a portion
of ARS's consolidated income tax benefit (liability). Any income tax benefit
(provision) attributable to the Company is payable to (due from) ARS. The
Company's reported provision or benefit is not significantly different from
what would have been recorded on a separate return basis. The tax sharing
agreement was terminated in connection with the corporate restructuring
described in Note 1, pursuant to which the Company will now prepare and file
income tax returns on a separate company basis.
F-17
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
The income tax benefit (provision) was comprised of the following:
<TABLE>
<CAPTION>
PERIOD ENDED DECEMBER 31,
---------------------------
1995 1996 1997
------- -------- ---------
<S> <C> <C> <C>
Current:
Federal....................................... $62,503 $ 53,907 $ 444,236
State......................................... 10,921 9,418 174,964
Deferred:
Federal....................................... (92,547) (125,545)
State......................................... (16,168) (20,984)
------- -------- ---------
Income tax benefit (provision).................. $73,424 $(45,390) $ 472,671
======= ======== =========
</TABLE>
A reconciliation between the U.S. statutory rate and the effective rate was
as follows for the periods presented:
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31,
------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Statutory tax rate...................................... (34)% (34)% (34)%
State taxes, net of federal benefit..................... (6) (6) (6)
Nondeductible intangible amortization................... 49 17
Other................................................... 1
--- --- ---
Effective tax rate...................................... (40)% 10 % (23)%
=== === ===
</TABLE>
Significant components of the Company's deferred tax assets and liabilities
were comprised of the following as of December 31:
<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Assets:
Allowances for financial reporting purposes which
are currently nondeductible--current............... $ 62,560
Net operating loss carryforwards.................... $ 2,071
Valuation allowances................................ (2,071)
Liabilities:
Property and equipment and intangible assets........ (168,125) (417,628)
Partnership investments............................. (77,648)
Long-term rental agreements......................... (33,445)
--------- ---------
Net deferred tax liabilities......................... $(279,218) $(355,068)
========= =========
</TABLE>
8. STOCKHOLDERS' EQUITY
Recapitalization--In November 1997, the Company restated its certificate of
incorporation to increase the aggregate number of shares of all classes of
stock which it is authorized to issue to 280,000,000 shares as follows:
20,000,000 shares of preferred stock $.01 par value per share, 260,000,000
shares of common stock $.01 par value per share, of which 200,000,000 is Class
A, 50,000,000 is Class B and 10,000,000 is Class C. The Class A and B entitles
the holder to one and ten votes, respectively, per share. The Class C is non-
voting.
In addition, at that time, the Company effected a recapitalization, pursuant
to which each share of the Company's existing common stock was canceled and
the Company was recapitalized with 29,667,883 shares of Class A common stock,
4,670,626 shares of Class B common stock and 1,295,518 shares of Class C
common stock.
F-18
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
ATS Stock Purchase Agreement--On January 22, 1998, the Company consummated
the transactions contemplated by the stock purchase agreement (the ATS Stock
Purchase Agreement), dated as of January 8, 1998, with Steven B. Dodge,
Chairman of the Board, President and Chief Executive Officer of ARS and ATS,
and certain other officers and directors of ARS (or their affiliates or family
members or family trusts), pursuant to which those persons purchased
8.0 million shares of ATS Common Stock at a purchase price of $10.00 per share
for an aggregate purchase price of $80.0 million, including 4.0 million shares
by Mr. Dodge for $40.0 million. Payment of the purchase price was in the form
of cash aggregating approximately $30.6 million and in the form of notes
aggregating approximately $49.4 million due on the earlier of the consummation
of the CBS Merger or, in the event the CBS Merger Agreement is terminated,
December 31, 2000. The notes bear interest at the six-month London Interbank
Rate, as measured from time to time, plus 1.5% per annum, and are secured by
shares of ARS Common Stock having a fair market value of not less than 175% of
the principal amount of and accrued and unpaid interest on the note. The notes
are prepayable at any time at the option of the debtor and will be due and
payable, at the option of the Company, in the event of certain defaults as
described in the notes.
Stock Option Plans--In November 1997, the Company instituted the 1997 Stock
Option Plan, as amended and restated in April 1998, (the Plan) which provides
for the granting of options to employees and directors to acquire up to
15,000,000 shares of ATS Class A and Class B Common Stock. The Plan is
expected to be amended in connection with the ATC Merger, described in Note
11, to limit future grants to Class A Common Stock. No options were granted
under the Plan during 1997. In January 1998, the Company granted 2,911,300
options at an exercise price of $10 per share to employees and directors of
ATS and subsequently granted 1,400,000 options at an exercise price of $13 per
share to employees of an acquired company. (See Note 9).
ATSI also has a stock option plan which provides for the granting of options
to employees to acquire up to 1,000,000 shares of the common stock of ATSI, of
which options to purchase an aggregate of 682,000 shares have been issued. In
addition, approximately 599,000 options to purchase shares of ARS Common Stock
held by current and future employees of ATS may be exchanged for ATS options.
The ATSI options will be exchanged for ATS options and the ARS options may be
exchanged in a manner that will preserve the spread in such options between
the option exercise price and the fair market value of the stock subject
thereto and the ratio of the spread to the exercise price prior to such
conversion. These ARS options are expected to be exchanged, at least in part,
into options to acquire stock of ATS, as part of the CBS Merger.
Exercise prices in the case of incentive stock options are not less than the
fair value of the underlying common stock on the date of grant. Exercise
prices in the case of non-qualified stock options are set at the discretion of
the Board of Directors. Options vest ratably over various periods, generally
five years, commencing one year from the date of grant. There have been no
option grants at exercise prices less than fair value.
The following table summarizes the ATSI option activity for the periods
presented:
<TABLE>
<CAPTION>
WEIGHTED
EXERCISE NUMBER AVERAGE
PRICE CURRENTLY REMAINING
OPTIONS PER SHARE EXERCISABLE LIFE (YEARS)
------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Granted during 1996 and
outstanding at December 31,
1996........................... 550,000 $5.00 160,000 8.71
Granted......................... 172,000 $7.50-$8.00 9.24
Cancelled....................... (40,000) $5.00
------- ----------- ------- ----
Outstanding as of December 31,
1997........................... 682,000 160,000 8.89
======= ======= ====
</TABLE>
As described in Note 1, the intrinsic value method is used to determine
compensation associated with stock option grants. No compensation cost has
been recognized to date for grants under the Plan. Had compensation
F-19
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
cost for the Company's stock option plan been determined based on the fair
value at the grant date for awards in 1996 and 1997 consistent with the
provisions of FAS 123, the Company's net loss would have been approximately
$568,000 and approximately $2,492,000 for the years ended December 31, 1996
and 1997, respectively. Pro forma basic and diluted net loss per common share
would have been approximately $(0.05) for the year ended December 31, 1997.
The "fair value" of each option grant is estimated on the date of grant
using the minimum value method based on the following key assumptions: risk-
free interest rate of 6.3% and expected lives of 5 years. In accordance with
the provisions of FAS 123, since the Company's stock is not publicly traded,
expected volatility in stock price has been omitted in determining the fair
value for options granted.
See also Note 12 for recent developments.
9. ACQUISITIONS
1998 Acquisitions
In January 1998, the Company consummated an agreement to acquire all of the
outstanding stock of Gearon & Co. Inc. (Gearon), a company based in Atlanta,
Georgia, for an aggregate purchase price of approximately $80.0 million. The
purchase price consisted of approximately $32.0 million in cash and assumed
liabilities and the issuance of approximately 5.3 million shares of Class A
Common Stock. Gearon is engaged in site acquisition, development, construction
and facility management of wireless network communications facilities on
behalf of its customers and owned or had under construction approximately 40
tower sites. Following consummation, the Company granted options to acquire up
to 1,400,000 shares of Class A Common Stock at an exercise price of $13.00 to
employees at Gearon.
In January 1998, the Company consummated the acquisition of OPM-USA-Inc.
(OPM), a company which owned approximately 90 towers at the time acquisition.
In addition, OPM is in the process of developing an additional 160 towers that
are expected to be constructed during the next 12 to 18 months. The purchase
price, which is variable and based on the number of towers completed and the
forward cash flow of the completed OPM towers, could aggregate up to $105.0
million, of which approximately $21.3 million was paid at the closing. The
company had also agreed to provide the financing to OPM to enable it to
construct the 160 towers in an aggregate amount not to exceed $37.0 million
(less advances as of consummation aggregating approximately $5.7 million,
excluding accrued interest).
In January 1998, the Company consummated the acquisition of a communications
site with six towers in Tuscon, Arizona for approximately $12.3 million.
In January 1998, the Company consummated the acquisition of a tower near
Palm Springs, California for approximately $0.75 million.
In January 1998, ARS transferred to ATS 14 communications sites currently
used by ARS and various third parties (with an ARS net book value of
approximately $4.7 million), and ARS and ATS entered into leases or subleases
of space on the transferred towers. Two additional communications sites will
be transferred and leases entered into following acquisition by ARS of the
sites from third parties.
In February 1998, the Company acquired 11 communications tower sites in
northern California for approximately $11.8 million.
In March 1998, the Company acquired a tower in Sacramento, California for
approximately $1.2 million.
1997 Acquisitions
In December 1997, the Company consummated the acquisition of a tower site in
Northern California for approximately $2.0 million.
F-20
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
In October 1997, the Company acquired two affiliated entities operating
approximately 110 tower sites and a tower site management business located
principally in northern California for approximately $45.0 million. In
connection therewith, the Company had also agreed to loan up to $1.4 million
to the sellers on an unsecured basis, of which approximately $0.26 million had
been advanced and was repaid at closing.
In October 1997, the Company acquired tower sites and certain video, voice
and data transport operations for approximately $70.25 million. The acquired
business owned or leased approximately 128 tower sites, principally in the
Mid-Atlantic region, with the remainder in California and Texas.
In September 1997, the Company acquired nine tower sites in Massachusetts
and Rhode Island for approximately $7.2 million and land in Oklahoma for
approximately $0.6 million.
In August 1997, the Company acquired six tower sites in Connecticut and
Rhode Island for approximately $1.5 million.
In July 1997, the Company, in individual transactions, acquired the
following:
(i) the assets of three affiliated entities which owned and operated
approximately fifty towers and a tower site management business in
southern California for an aggregate purchase price of
approximately $33.5 million;
(ii) the assets of one tower site in Washington, D.C. for
approximately $0.9 million;
(iii) the assets of six tower sites in Pennsylvania for approximately
$0.3 million and
(iv) the rights to build five tower sites in Maryland for
approximately $0.5 million.
In May 1997, the Company acquired 21 tower sites and a tower site management
business in Georgia, North Carolina and South Carolina for approximately $5.4
million. The agreement also provides for additional payments by the Company if
the seller is able to arrange for the purchase or management of tower sites
presently owned by an unaffiliated public utility in South Carolina, which
payments could aggregate up to approximately $1.2 million; management believes
that it is unlikely that any such arrangement will be entered into.
In May 1997, the Company acquired the assets of two affiliated companies
engaged in the site acquisition business in various locations in the United
States for approximately $13.0 million.
In May 1997, the Company and an unaffiliated party formed a limited
liability company to own and operate communication towers which will be
constructed on over 50 tower sites in northern California. The Company
advanced approximately $0.8 million to this entity and currently owns a 70%
interest in the entity, with the remaining 30% owned by an unaffiliated party.
The Company is obligated to provide additional financing for the construction
of these and any additional towers it may approve; the obligation for such 50
tower sites is estimated to be approximately $5.3 million. The accounts of the
limited liability company are included in the consolidated financial
statements with the other party's investment reflected as minority interest in
subsidiary.
In May 1997, the Company acquired three tower sites in Massachusetts for
approximately $0.26 million.
1996 Acquisitions
In February 1996, the Company acquired Skyline Communications and Skyline
Antenna Management in exchange for an aggregate of 26,989 shares of ARS Class
A Common Stock, having a fair value of approximately $774,000, $2.2 million in
cash, and the assumption of approximately $300,000 of long-term debt which was
paid at closing. Skyline Communications owned eight towers, six of which are
in West Virginia and
F-21
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
the remaining two in northern Virginia. Skyline Antenna Management managed
more than 200 antenna sites, primarily in the northeast region of the United
States.
In April 1996, the Company acquired BDS Communications, Inc. and BRIDAN
Communications Corporation for 257,495 shares of ARS Class A common stock
having a fair value of approximately $7.4 million and $1.9 million in cash of
which approximately $1.5 million was paid at closing. BDS Communications owned
three towers in Pennsylvania and BRIDAN Communications managed or had sublease
agreements on approximately forty tower sites located throughout the mid-
Atlantic region.
In July 1996, the Company entered into a limited liability company agreement
with an unaffiliated party relating to the ownership and operation of a tower
site in Needham, Massachusetts, whereby the Company acquired a 50.1% interest
in the corporation for approximately $3.8 million in cash. The accounts of the
limited liability company are included in the consolidated financial
statements with the other party's investment reflected as minority interest in
subsidiary.
In October 1996, the Company acquired the assets of tower sites in Hampton,
Virginia and North Stonington, Connecticut for approximately $1.4 million and
$1.0 million in cash, respectively.
Substantially all of the 1996 acquisitions were consummated by ARS and the
net assets were subsequently contributed to the Company.
The acquisitions consummated during 1997 and 1996 have been accounted for by
the purchase method of accounting. The purchase price has been preliminarily
allocated to the assets acquired, principally intangible and tangible assets,
and the liabilities assumed based on their estimated fair values at the date
of acquisition. The excess of purchase price over the estimated fair value of
the net assets acquired has been recorded as unallocated purchase price. The
financial statements reflect the preliminary allocation of certain purchase
prices as the appraisals of the assets acquired have not been finalized. The
Company does not expect any changes in depreciation and amortization as a
result of such appraisals to be material to the consolidated results of
operations.
Unaudited Pro Forma Operating Results--The operating results of these
acquisitions have been included in the Company's consolidated results of
operations from the date of acquisition. The following unaudited pro forma
summary presents the consolidated results of operations as if the acquisitions
had occurred as of January 1, 1996 after giving effect to certain adjustments,
including depreciation and amortization of assets and interest expense on debt
incurred to fund the acquisitions. These unaudited pro forma results have been
prepared for comparative purposes only and do not purport to be indicative of
what would have occurred had the acquisitions been made as of January 1, 1996
or results which may occur in the future.
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1997
------------ ------------
<S> <C> <C>
Net revenues.................................... $35,601,000 $44,933,000
Loss before extraordinary loss.................. (21,716,000) (8,998,000)
Net loss........................................ (21,716,000) (9,692,000)
Basic and diluted pro forma loss per common
share.......................................... (0.20)
</TABLE>
F-22
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
10. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information and noncash investing and financing
activities are as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED THREE MONTHS
DECEMBER 31, DECEMBER 31, ENDED MARCH 31,
1996 1997 1997 1998
------------ ------------ ------- -----------
<S> <C> <C> <C> <C>
Supplemental cash flow informa-
tion:
Cash paid during the period for
interest (including amounts
capitalized).................. $ 90,539 $2,398,201 $95,504 $ 1,433,066
Cash paid during the period for
income
taxes......................... 124,988 19,800
Noncash investing and financing
activities:
Property and equipment trans-
ferred from Parent............ 11,103,352 50,000 4,729,047
Property and equipment trans-
ferred to
Parent........................ (725,000)
Land transferred to Parent..... (1,100,000)
Deferred financing costs paid
by Parent..................... 1,255,474
Investment in affiliate paid by
Parent........................ 325,000
Issuance of common stock for
acquisition................... 48,000,000
Increase in tax basis and due
to Parent from corporate re-
structuring................... 125,210,000
Issuance of notes receivable to
stockholders.................. 49,375,000
Details of acquisitions financed
by Parent:
Purchase price of net assets
acquired...................... 20,954,401
Liabilities assumed............ (2,219,637)
Stock issued by Parent......... (8,153,312)
-----------
Cash paid by Parent............ 10,581,452
Less: cash acquired............ (1,600,000)
-----------
Net cash paid by Parent for ac-
quisitions.................... $ 8,981,452
===========
</TABLE>
11. OTHER TRANSACTIONS
Pending Transactions:
In December 1997, the Company entered into a merger agreement with American
Tower Corporation (ATC) pursuant to which ATC will merge with and into ATS
(the ATC Merger), which will be the surviving corporation. Pursuant to the
merger, ATS expects to issue an aggregate of approximately 30.0 million shares
of ATS Class A Common Stock (including shares issuable upon exercise of
options to acquire ATC Common Stock which will become options to acquire ATS
Class A Common Stock). ATC is engaged in the business of acquiring, developing
and leasing wireless communications sites to companies using or providing
cellular telephone, paging, microwave and specialized mobile radio services.
At December 31, 1997, ATC owned and operated approximately 775 communications
towers located in 31 states. Consummation of the transaction is subject to,
among other things, the expiration or earlier termination of the Hart-Scott
Rodino Antitrust Improvements Act of 1976, as amended (HSR Act) waiting
period, and is expected to occur in the Spring of 1998. (See Note 12).
In January 1998, the Company entered into an agreement to purchase the
assets relating to a teleport business serving the Washington, D.C. area for a
purchase price of approximately $30.5 million. The facility is located is
northern Virginia, inside of the Washington Beltway, on ten acres.
Consummation of the transaction is expected to occur in the Spring of 1998.
(See Note 12).
F-23
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
ATS is negotiating certain changes in the ATS/PCS, LLC (formerly
Communications Systems Development, LLC) arrangements, including the
acquisition by ATS for the 58 communications sites in northern California
presently owned by ATS/PCS, LLC in exchange for shares of Class A Common
Stock, arrangements with respect to development of communications sites in
other locations, a priority return of ATS's construction advances, an increase
in the percentage interest of the other member in ATS/PCS, LLC and a
management fee to ATS.
ATS is also negotiating an agreement to acquire a company that is in the
process of constructing approximately 40 towers in the Tampa, Florida area, of
which seven are presently operational. The purchase price will be equal to the
excess of (i) ten times the "Current Run Rate Cash Flow" at the time of
closing, over (ii) the principal amount of the secured note referred to below.
The purchase price will be payable in shares of Class A Common Stock (valued
at market prices shortly prior to closing) and, at the election of the seller,
cash in an amount not to exceed 49% of the purchase price. "Current Run Rate
Cash Flow" means twelve (12) times the excess of net revenues over the direct
operating expenses for the month preceding closing. ATS is obligated to
advance construction funds to the seller in an aggregate amount not to exceed
$12.0 million in the form of a secured note (guaranteed by the stockholders on
a nonrecourse basis and secured by the stock of the seller), of which
approximately $1.0 million was advanced through March 31, 1998. The secured
note would be payable in the event a definitive acquisition agreement is not
executed or if the acquisition were not consummated. Subject to the
negotiation and execution of a definitive agreement and to the satisfaction of
certain conditions, including, depending on the circumstances, the expiration
or earlier termination of the HSR Act waiting period, the acquisition is
expected to be consummated in the Spring of 1999. (See Note 12).
12.EVENTS SUBSEQUENT TO DATE OF INDEPENDENT AUDITORS' REPORT (UNAUDITED)
CBS Merger:
On June 4, 1998, the merger of American Radio and the CBS subsidiary was
consummated. As a consequence, American Radio became a subsidiary of CBS and
ATS ceased to be a subsidiary of American Radio and became an independent
company whose Class A Common Stock is publicly traded.
CBS Merger Tax Liability:
ATS received an appraisal from an independent appraisal firm that the "fair
market value" of ARS's stock interest in ATS was equal to $17.25 per share.
Based on such appraisal, ARS paid estimated taxes of approximately $212.0
million and was reimbursed therefor by ATS. Such taxes gave effect to
estimated deductions of approximately $85.1 million available to ARS as a
consequence of the disqualification of ARS incentive stock options pursuant to
the CBS Merger. ATS's tax reimbursement obligation would change by
approximately $21.0 million for each $1.00 change in the "fair market value"
of the Common Stock under the tax reporting method to be followed. The last
quoted sale price per share of the Class A Common Stock in the when-issued
over-the-counter market on June 4, 1998 was $20.50. Such taxes did not include
the taxes payable with respect to the shares of Class A Common Stock
deliverable upon conversion of the ARS Convertible Preferred Stock; such taxes
will be based on the "fair market value" of the Class A Common Stock at the
time of conversion. Based on the closing price of the Class A Common Stock on
June 15, 1998 of $21.875, ATS estimates that its reimbursement obligation with
respect to such taxes on ARS Convertible Preferred Stock will be approximately
$12.8 million under the tax reporting method to be followed. As required by
the ARS-ATS Separation Agreement, ATS provided CBS with security of $9.8
million in cash (which may be replaced at ATS's option with a letter of credit
reasonably satisfactory to CBS) in connection with the filing of estimated tax
returns based on such appraisal. Such appraisal is not, of course, binding on
the Internal Revenue Service or other taxing authorities. The estimates
described above are based on a number of assumptions and interpretations of
various applicable income tax rules and are subject to change.
F-24
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
ARS has agreed that it will pursue, for the benefit and at the cost of ATS,
a refund claim, attributable to the "make whole" provision, estimated at
approximately $40.0 million, based on the appraised "fair market value" and
the estimated taxes attributable to conversions of the ARS Convertible
Preferred Stock set forth above. Any such refund claims will, in fact, be
based on the actual amount of tax paid. In light of existing tax law, there
can be no assurance that any such refund claim will be successful.
Closing Date Balance Sheet Adjustments:
The ARS-ATS Separation Agreement provides for closing date balance sheet
adjustments based upon the working capital, as defined, and debt levels of
ARS. ATS will benefit from or bear the cost of such adjustments. ATS'
preliminary estimate of such adjustments is that it will be required to make a
payment of not more than $50.0 million and that, in addition, it will be
required to reimburse CBS for the tax consequences of any such payment. The
estimated taxes and refund amount stated above include approximately $33.0
million of taxes attributed to such $50.0 million adjustment payment. Since
the amounts of working capital and debt are dependent upon the uncertainty,
among other things, of recent operating results and cash capital
contributions, as well as CBS Merger expenses, the ultimate payment will
differ from the estimate provided herein and ATS is unable to state
definitively what payments will be owed by ATS to CBS.
Interim Financing Agreement:
ATS has entered into a stock purchase agreement with respect to a preferred
stock financing (the Interim Financing) which provides for the issuance and
sale by ATS of up to $400.0 million of redeemable preferred stock (the Interim
Preferred Stock). On June 4, 1998, ATS sold Interim Preferred Stock with an
aggregate liquidation preference of $300.0 million and used the proceeds to,
among other things, finance its obligations to CBS for the tax reimbursement.
ATS intends to redeem the Interim Preferred Stock out of the proceeds of this
Offering.
New Credit Facilities:
In June, 1998, ATS and the Borrower Subsidiaries entered into definitive
agreements with respect to the New Credit Facilities. The New Credit
Facilities with ATS provide for a $150.0 million term loan maturing at the
earlier of (i) eight and one-half years or (ii) December 31, 2006, amortizing
quarterly in an amount equal to 2.5% of the principal amount outstanding at
June 30, 2001 at the end of each quarter between such date and June 30, 2006,
both inclusive, and the balance in two equal installments on September 30 and
December 31, 2006. The ATS New Credit Facility was fully drawn at closing and
provides for interest rates determined, at the option of ATS, of either the
LIBOR Rate (as to be defined) plus 3.50% or the Base Rate (as to be defined)
plus 2.5%. The New Credit Facilities with the Borrower Subsidiaries provide
for $900.0 million credit facilities maturing at the earlier of (a) eight
years or (b) June 30, 2006 consisting of the following: (i) a $250.0 million
multiple-draw term loan, (ii) a $400.0 million reducing revolving credit
facility and (iii) a $250.0 million 364-day revolving credit facility that
converts to a term loan facility thereafter. The Borrower Subsidiaries
borrowed $125.0 in the form of a term loan and an additional approximately
$19.0 million under the revolving credit arrangements that was repaid out of
the proceeds of the Interim Preferred Stock sale. The interest rate provisions
are similar to those in the Loan Agreement, except that the range over the
Base Rate is between 0.00% and 1.250% and the range over the LIBOR Rate is
between 0.750% and 2.250%. Borrowings under the Borrower Subsidiaries' New
Credit Facilities are conditioned upon compliance with certain financial
ratios and are required to be repaid, commencing June 30, 2001, in increasing
quarterly amounts designed to amortize the loans at maturity. The loans to ATS
and the Borrower Subsidiaries are cross-guaranteed and cross-collateralized by
substantially all of the assets of the consolidated group. The Borrower
Subsidiaries are required to pay quarterly commitment fees equal to 0.375% or
0.250% per annum, depending on their consolidated financial leverage, on
F-25
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
(INFORMATION FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
the aggregate unused portion of the aggregate commitment (other than, until
take down, the 364-day facility on which it is 0.125% until so taken down).
Other provisions of the Borrower Subsidiaries' New Credit Facilities are
comparable to the 1997 Loan Agreement, although the financial and other
covenants are somewhat more favorable to the Borrower Subsidiaries in certain
respects, including an increase of the Total Debt (of the Borrower
Subsidiaries and their Restricted Subsidiaries) to Annualized Operating Cash
Flow ratio from 6.0:1 to 6.5:1 and the inclusion of a Total Debt (of ATS and
its Restricted Subsidiaries) to Annualized Operating Cash Flow ratio of 8.0:1.
The New Credit Facility of ATS restricts the payment of cash dividends and
other distributions and the redemption, purchase or other acquisition of
equity securities. In connection with the repayment of borrowings under the
1997 Loan Agreement out of proceeds of borrowings under the New Credit
Facilities, ATS will recognize an extraordinary loss of approximately $1.4
million, net of a tax benefit of $0.9 million, during the second quarter of
1998.
Acquisitions:
In May 1998, the Company acquired the assets relating to a teleport business
serving the Washington, D.C. area for a purchase price of approximately $30.5
million.
In June 1998, ATS acquired a broadcasting tower in the Boston, Massachusetts
area for 720,000 shares of Class A Common Stock. In connection with such
acquisition, ATS issued non-recourse notes in the aggregate principal amount
of approximately $12.0 million that are payable solely to the extent of
payments made on a note in equal principal amount received as part of the
acquisition.
On June 8, 1998, ATS consummated the ATC Merger and changed its name to
American Tower Corporation. Pursuant to the ATC Merger, ATS issued or will
issue (upon exercise of all ATC options then outstanding which became ATS
options) an aggregate of approximately 30.0 million shares of Class A Common
Stock.
In June 1998, ATS acquired two communication sites in California for a
purchase price of approximately $1.7 million.
In June 1998, ATS entered into an agreement with a company that is in the
process of constructing approximately 40 towers in the Tampa, Florida area.
(See Note 11).
F-26
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
MicroNet, Inc. and Affiliates and
American Tower Systems, Inc.
We have audited the accompanying combined statements of net assets of
MicroNet, Inc. and affiliates sold to American Tower Systems, Inc. (the
"Company") as of December 31, 1996 and October 31, 1997, and the related
combined statements of income and cash flows derived from those assets for the
year ended December 31, 1996, and the ten months ended October 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such combined financial statements present fairly, in all
material respects, the net assets of MicroNet, Inc. and affiliates sold to
American Tower Systems, Inc. as of December 31, 1996 and October 31, 1997, and
the results of operations related to those assets, and cash flows generated
from those assets for the year ended December 31, 1996, and the ten months
ended October 31, 1997, in conformity with generally accepted accounting
principles.
The accompanying combined financial statements have been prepared from the
separate records maintained by the Company and may not be indicative of the
conditions that would have existed or the results of operations had the net
assets sold been operated as an unaffiliated company. Certain expenses
represent allocations made by the Company's Parent, and, as discussed in Note
A, no provision for income taxes has been made in the combined statements of
income derived from the net assets sold.
Pressman Ciocca Smith LLP
Hatboro, Pennsylvania
February 26, 1998
F-27
<PAGE>
MICRONET, INC. AND AFFILIATES
COMBINED STATEMENTS OF NET ASSETS SOLD
DECEMBER 31, 1996 AND OCTOBER 31, 1997
<TABLE>
<CAPTION>
DECEMBER 31, OCTOBER 31,
1996 1997
------------ ------------
<S> <C> <C>
ASSETS
Current Assets
Prepaid expenses.................................. $ 301,942 $ 465,611
------------ ------------
Total Current Assets............................ 301,942 465,611
Property and Equipment.............................. 39,564,758 40,329,382
Less accumulated depreciation..................... (22,486,975) (24,513,888)
------------ ------------
17,077,783 15,815,494
Goodwill, net of amortization....................... 4,120,276 3,691,081
Intangible Assets, net of amortization.............. 902,227 742,047
Other Assets........................................ 183,087 70,354
------------ ------------
$ 22,585,315 $ 20,784,587
============ ============
LIABILITIES AND NET ASSETS TO BE SOLD
Current Liabilities
Customer service prepayments...................... $ 459,638 $ 307,961
------------ ------------
Total Current Liabilities....................... 459,638 307,961
Commitments and Contingencies
Net Assets To Be Sold............................... 22,125,677 20,476,626
------------ ------------
$ 22,585,315 $ 20,784,587
============ ============
</TABLE>
See accompanying notes.
F-28
<PAGE>
MICRONET, INC. AND AFFILIATES
COMBINED STATEMENTS OF INCOME DERIVED FROM NET ASSETS SOLD
YEAR ENDED DECEMBER 31, 1996, AND TEN MONTHS ENDED OCTOBER 31, 1997
<TABLE>
<CAPTION>
TEN MONTHS
YEAR ENDED ENDED
DECEMBER OCTOBER 31,
31, 1996 1997
----------- -----------
<S> <C> <C>
Net Revenues.......................................... $15,058,305 $15,103,459
Operating Expenses
Service............................................. 5,955,270 5,670,523
Selling and marketing............................... 488,857 347,475
General and administrative.......................... 3,422,581 2,676,978
Depreciation........................................ 3,199,495 2,034,072
Amortization........................................ 736,025 591,775
----------- -----------
13,802,228 11,320,823
----------- -----------
Operating Income...................................... 1,256,077 3,782,636
Other Income--Net..................................... 42,904 33,681
----------- -----------
Net Income Derived from Net Assets To Be Sold......... 1,298,981 3,816,317
Net Assets To Be Sold, Beginning of Period............ 22,563,349 22,125,677
Distributions To Parent............................... (1,736,653) (5,465,368)
----------- -----------
Net Assets To Be Sold, End of Period.................. $22,125,677 $20,476,626
=========== ===========
</TABLE>
See accompanying notes.
F-29
<PAGE>
MICRONET, INC. AND AFFILIATES
COMBINED STATEMENTS OF CASH FLOWS DERIVED FROM NET ASSETS SOLD
YEAR ENDED DECEMBER 31, 1996, AND TEN MONTHS ENDED OCTOBER 31, 1997
<TABLE>
<CAPTION>
TEN MONTHS
ENDED
YEAR ENDED OCTOBER
DECEMBER 31,
31, 1996 1997
----------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Income derived from net assets sold.................. $ 1,298,981 $3,816,317
Adjustments to reconcile income derived from net
assets sold to cash provided by operating
activities:
Depreciation and amortization...................... 3,935,520 2,625,847
Loss (gain) on disposal of property and equipment.. (400) 9,062
Write off assets to net realizable value........... 65,313 --
Change in assets and liabilities:
Prepaid expenses................................. (49,781) (163,669)
Other assets..................................... 15,396 112,733
Customer service prepayments..................... 149,642 (151,677)
----------- ----------
CASH PROVIDED BY OPERATING ACTIVITIES................ 5,414,671 6,248,613
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment................... (3,678,418) (783,845)
Increase in intangible assets........................ -- (2,400)
Proceeds from sale of property and equipment......... 400 3,000
----------- ----------
CASH USED FOR INVESTING ACTIVITIES................... (3,678,018) (783,245)
----------- ----------
INCREASE IN CASH AND CASH EQUIVALENTS BEFORE
ADJUSTMENT.......................................... 1,736,653 5,465,368
ADJUSTMENT FOR NET ASSETS NOT SOLD................... (1,736,653) (5,465,368)
----------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS......................................... $ -- $ --
=========== ==========
</TABLE>
See accompanying notes.
F-30
<PAGE>
MICRONET, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND OCTOBER 31, 1997
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of MicroNet, Inc. and
affiliates (the "Company") is presented to assist in understanding its
combined financial statements. These accounting policies conform to generally
accepted accounting principles and have been consistently applied in the
preparation of the combined financial statements.
Basis of Presentation and Combination
The accompanying combined statements of net assets sold to American Tower
Systems, Inc. ("ATS") are intended to present the assets and liabilities of
the Company sold to ATS (the "Net Assets") pursuant to an asset purchase
agreement between ATS and Suburban Cable TV Co. Inc. ("Suburban") and the
income and cash flows derived from such assets and liabilities. MicroNet is a
wholly owned subsidiary of Suburban (the "Company's Parent"), which is a
wholly owned subsidiary of Lenfest Communications, Inc. ("LCI"). As of July 8,
1997, the Company agreed to sell substantially all of the operating assets of
its communication towers, satellite transmission and microwave video and data
signal transmission businesses to ATS for approximately $70.25 million. The
accompanying combined statements include 128 operating tower sites of the
Company, including 28 tower sites operated by Suburban and other cable TV
operating subsidiaries of LCI. The transaction closed as of October 31, 1997.
The combined financial statements include the accounts of MicroNet, Inc. and
those of all wholly owned subsidiaries, excluding the assets, liabilities and
results of operations of assets not sold to ATS. The combined financial
statements also include the assets, liabilities and results of operations of
the 28 tower sites included in the sale that are operated by Suburban and
other cable TV operating subsidiaries of LCI.
Business Activity and Concentrations of Credit Risk
The Company provides satellite and microwave transmission of video, voice
and data communications and tower site rental throughout the United States.
The Company grants credit to broadcast and cable networks and cellular and
paging companies throughout the nation. Consequently, the Company's ability to
collect the amounts due from customers is affected by economic fluctuations in
these industries.
Use of Estimates
The preparation of the combined financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the combined
financial statements and reported amounts of revenues and expenses during the
reporting period. Actual results may differ from those estimates, and such
differences could be material to the combined financial statements.
Property and Equipment
Property and equipment are stated at cost. For acquired communication
networks and facilities, the purchase price has been allocated to net assets
on the basis of appraisal reports issued by an independent appraiser.
Depreciation is provided using the accelerated and straight-line methods of
depreciation for financial reporting purposes at rates based on estimated
useful lives ranging from 3 to 33 years.
Expenditures for renewals and betterments that extend the useful lives of
property and equipment are capitalized. Expenditures for maintenance and
repairs are charged to expense as incurred.
F-31
<PAGE>
MICRONET, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Capitalization of Costs
All costs properly attributable to capital items, including that portion of
employees' compensation allocable to installation, engineering, design,
construction and various other capital projects are capitalized.
Goodwill and Intangible Assets
Goodwill and intangible assets acquired in connection with the purchases of
communications networks and facilities have been valued at acquisition cost on
the basis of the allocation of the purchase price on a fair market value basis
to net assets as determined by an independent appraiser. Additions to these
assets are stated at cost. Intangible assets consist of FCC licenses,
organization costs and covenants not to compete. The intangible assets are
being amortized on the straight-line method over their legal or estimated
useful lives to a maximum of forty (40) years. Goodwill represents the cost of
an acquired partnership interest in excess of amounts allocated to specific
assets based on their fair market values. Goodwill is amortized on the
straight-line method over ten years. In accordance with Statement of Financial
Accounting Standards No. 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of ", the Company assesses on
an on-going basis the recoverability of intangible assets based on estimates
of future undiscounted cash flows for the applicable business acquired
compared to net book value. If the future undiscounted cash flow estimate is
less than net book value, net book value is then reduced to the undiscounted
cash flow estimate. The Company also evaluates the amortization periods of
intangible assets to determine whether events or circumstances warrant revised
estimates of useful lives. As of October 31, 1997, management believes that no
revisions to the remaining useful lives or writedowns of deferred charges are
required.
Revenue Recognition
The Company bills certain customers in advance; however, revenue is
recognized as services are provided. Credit risk is managed by discontinuing
services to customers who are delinquent.
Income Taxes
The Company, as a participating subsidiary, joins in the filing of a
consolidated Federal tax return with LCI. Current and deferred Federal income
taxes are allocated among LCI and its consolidated subsidiaries based upon the
respective net income (loss) and timing differences of each company. The
Company files separate state tax returns. No provision for income taxes has
been made in the combined financial statements. Deferred tax assets and
liabilities are excluded from net assets sold.
Advertising
The Company follows the policy of charging the costs of advertising to
expense as incurred.
Fair Value of Financial Instruments
The Company believes that the carrying value of all financial instruments is
a reasonable estimate of fair value at December 31, 1996 and October 31, 1997.
NOTE B--SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
ATS did not assume any debt of the Company. There is no interest expense
paid reflected in the accompanying financial statements. The Company did not
make any income tax payments to LCI.
In 1996, the Company wrote down $65,313 of property and equipment to net
realizable value. (See Note C).
F-32
<PAGE>
MICRONET, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOTE C--PROPERTY AND EQUIPMENT
The schedule of property and equipment at December 31, 1996 and October 31,
1997, is as follows:
<TABLE>
<CAPTION>
ESTIMATED
DECEMBER 31, OCTOBER 31, USEFUL LIVES
1996 1997 IN YEARS
------------ ------------ ------------
<S> <C> <C> <C>
Land................................ $ 3,027,303 $ 3,027,303
Building and improvements........... 1,799,553 1,814,012 15-33
Computer equipment.................. 291,002 299,976 5
Furniture, fixtures and office
equipment.......................... 616,678 619,028 7
Tower, head-end equipment and
microwave equipment................ 32,289,707 33,025,202 7-15
Land improvements................... 188,195 206,337 7-15
Leasehold improvements.............. 278,430 278,430 5-15
Radio equipment..................... 9,360 9,360 5-7
Test equipment...................... 584,458 588,305 7
Vehicles............................ 480,072 461,429 3-5
------------ ------------
$ 39,564,758 $ 40,329,382
============ ============
</TABLE>
During 1996, the Company recognized an impairment loss in connection with a
failed project to rebuild a tower. The township denied the Company's request
to tear-down and rebuild a larger tower on an existing tower site. Legal and
engineering costs associated with the project in the amount of $65,313,
previously capitalized, were written off. This impairment loss is included in
general and administrative expenses in the 1996 combined statement of income.
NOTE D--GOODWILL
The excess of the purchase price paid over the acquired net assets has been
allocated to goodwill. Accumulated amortization at December 31, 1996 and
October 31, 1997, was $1,030,069 and $1,459,264, respectively.
NOTE E--INTANGIBLE ASSETS
A schedule of intangible assets and accumulated amortization at December 31,
1996 and October 31, 1997, is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996
----------------------------------
ACCUMULATED
DESCRIPTION AMOUNT AMORTIZATION NET
----------- ----------- ------------ ---------
<S> <C> <C> <C>
FCC licenses............................ $ 326,163 $ 49,238 $ 276,925
Organization costs and covenants not to
compete................................ 1,201,174 575,872 625,302
----------- --------- ---------
$ 1,527,337 $ 625,110 $ 902,227
=========== ========= =========
<CAPTION>
OCTOBER 31, 1997
----------------------------------
ACCUMULATED
DESCRIPTION AMOUNT AMORTIZATION NET
----------- ----------- ------------ ---------
<S> <C> <C> <C>
FCC licenses............................ $ 326,163 $ 56,033 $ 270,130
Organization costs and covenants not to
compete................................ 1,203,574 731,657 471,917
----------- --------- ---------
$ 1,529,737 $ 787,690 $ 742,047
=========== ========= =========
</TABLE>
F-33
<PAGE>
MICRONET, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOTE F--LEASES
The Company leases office space from an individual who is a shareholder,
chairman of the board and chief executive officer of LCI. The lease began on
May 24, 1990, and is classified as an operating lease. The initial lease term
assumed by ATS expires October 31, 1998.
Future minimum lease payments under all non-cancelable operating leases with
initial terms of one year or more consisted of the following at October 31,
1997:
<TABLE>
<CAPTION>
RELATED
YEAR ENDING DECEMBER 31, PARTY OTHER
------------------------ ------- -----------
<S> <C> <C>
1998............................................... $81,874 $ 997,956
1999............................................... -- 833,947
2000............................................... -- 784,922
2001............................................... -- 750,748
2002............................................... -- 548,683
Thereafter.......................................... -- 1,535,365
------- -----------
Total minimum lease payments......................... $81,874 $ 5,451,621
======= ===========
</TABLE>
Rental expense for all operating leases, principally head-end land and
building facilities, amounted to $1,149,855 for the year ended December 31,
1996, and $982,484 for the ten months ended October 31, 1997. In addition, the
Company made total payments to the related party for office space of $81,874
for the year ended December 31, 1996, and $68,228 for the ten month period
ended October 31, 1997.
In addition to fixed rentals, certain leases require payment of maintenance
and real estate taxes and contain escalation provisions based on future
adjustments in price indices. It is expected that, in the normal course of
business, expiring leases will be renewed or replaced by leases on other
properties; thus, it is anticipated that future minimum operating lease
commitments will not be less than the annualized amount shown for the ten
months ended October 31, 1997.
NOTE G--LESSOR OPERATING LEASES
The Company is the lessor of tower and head-end equipment and microwave
equipment under operating leases expiring in various years through 2005.
Rental income from operating leases amounted to $5,909,260 for the year ended
December 31, 1996, and $7,624,515 for the ten months ended October 31, 1997.
Following is a summary of property held for lease at December 31, 1996 and
October 31, 1997:
<TABLE>
<CAPTION>
DECEMBER 31, OCTOBER 31,
1996 1997
------------ ------------
<S> <C> <C>
Tower, head-end equipment and microwave
equipment................................. $ 32,289,707 $ 33,025,202
Less accumulated depreciation.............. (20,271,612) (22,049,480)
------------ ------------
$ 12,018,095 $ 10,975,722
============ ============
</TABLE>
F-34
<PAGE>
MICRONET, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Minimum future rentals to be received on non-cancelable leases consisted of
the following as of October 31, 1997:
<TABLE>
<CAPTION>
YEAR ENDING OCTOBER 31,
-----------------------
<S> <C>
1998....................................................... $ 7,778,174
1999....................................................... 5,481,722
2000....................................................... 4,671,884
2001....................................................... 3,327,044
2002....................................................... 831,607
Thereafter.................................................. 299,311
------------
$ 22,389,742
============
</TABLE>
NOTE H--OTHER INCOME
The schedules of other income for the year ended December 31, 1996, and ten
months ended October 31, 1997, are as follows:
<TABLE>
<CAPTION>
YEAR ENDED TEN MONTHS ENDED
DECEMBER 31, OCTOBER 31,
1996 1997
------------ ----------------
<S> <C> <C>
Interest income.............................. $ 42,504 $ 42,743
Gain (loss) on disposal of property and
equipment................................... 400 (9,062)
-------- --------
$ 42,904 $ 33,681
======== ========
</TABLE>
NOTE I--EMPLOYEE HEALTH BENEFIT PLAN
As a subsidiary of LCI, the Company participates in the Lenfest Group
Employee Health Plan (a trust) in order to provide health insurance for its
employees. This trust is organized under Internal Revenue Code Section
501(c)(9)--Voluntary Employee Beneficiary Association (VEBA). Benefits are
prefunded by contributions from the Company and all other participating LCI
subsidiaries. Insurance expense is recognized as incurred. The Company does
not provide postretirement benefits to its employees. Therefore, Statement of
Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions", does not have an impact on the
Company's financial statements.
NOTE J--401(K) PLAN
LCI provides a 401(k) retirement plan to the employees of its subsidiaries.
The Company, as an indirect wholly owned subsidiary, is entitled to
participate. The Company matches the entire amount contributed by an eligible
employee up to 5% of their salary, subject to regulatory limitations. For the
year ended December 31, 1996, the Company matched $112,033 of contributions.
For the ten months ended October 31, 1997, the Company matched $90,616.
NOTE K--RELATED PARTY TRANSACTIONS
The Company does business and generates revenue with subsidiaries of Tele-
Communications, Inc. ("TCI"), (a stockholder of LCI, through an indirect,
wholly owned subsidiary). The amount of revenues generated was $1,225,000 for
the year ended December 31, 1996, and $1,477,000 for the ten months ended
October 31, 1997. An additional $69,000 received from TCI was included in
customer service prepayments as of December 31, 1996 and October 31, 1997.
F-35
<PAGE>
MICRONET, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
All services provided to related parties were at standard billing rates.
Certain management services are provided to the Company by Suburban. Such
services include legal, tax, treasury, risk management, benefits
administration and other support services. Included in selling, general and
administrative expenses for the year ended December 31, 1996, and the ten
months ended October 31, 1997, were allocated expenses of $108,000 and
$90,000, respectively, related to these services. Allocated expenses are based
on Suburban's estimate of expenses related to the services provided to the
Company in relation to those provided to other affiliates of Suburban.
Management believes that these allocations were made on a reasonable basis.
However, the allocations are not necessarily indicative of the level of
expenses that might have been incurred had the Company contracted directly
with third parties. Management has not made a study or any attempt to obtain
quotes from third parties to determine what the cost of obtaining such
services from third parties would have been. The fees and expenses charged by
Suburban are subject to change.
The Company entered into a lease agreement with a principal stockholder of
LCI (See Note F).
F-36
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and
Stockholders of Diablo
Communications, Inc. (A California
S Corporation):
We have audited the accompanying balance sheets of Diablo Communications,
Inc. (the "Company"), as of December 31, 1995 and 1996, and the related
statements of income, stockholders' equity and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1995 and
1996, and the results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
San Francisco, California
November 4, 1997
F-37
<PAGE>
DIABLO COMMUNICATIONS, INC.
(A CALIFORNIA S CORPORATION)
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ SEPTEMBER 30,
1995 1996 1997
----------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash................................. $ 515,896 $ 708,434 $ 554,201
Accounts receivable:
Trade, net of allowance for doubt-
ful accounts of $10,000 at each
date.............................. 292,971 334,926 398,844
Affiliates......................... 440,532 560,813 1,231,952
Prepaid and other current assets..... 242,436 160,678 199,702
----------- ----------- ----------
Total current assets............. 1,491,835 1,764,851 2,384,699
PROPERTY AND EQUIPMENT, net............ 1,720,423 2,952,926 2,992,593
INVESTMENT IN AFFILIATE................ 4,158 10,053 7,757
DEPOSITS AND OTHER ASSETS.............. 224,338 182,984 293,617
----------- ----------- ----------
TOTAL.................................. $ 3,440,754 $ 4,910,814 $5,678,666
=========== =========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable..................... $ 191,258 $ 246,579 $ 188,624
Accrued expenses..................... 164,211 232,691 178,000
Deferred revenue..................... 340,556 364,865 250,056
Current portion of long-term debt.... 303,045 420,875 505,129
----------- ----------- ----------
Total current liabilities........ 999,070 1,265,010 1,121,809
----------- ----------- ----------
LONG-TERM DEBT......................... 925,002 1,786,410 1,732,390
----------- ----------- ----------
COMMITMENTS AND CONTINGENCIES (Note 4)
STOCKHOLDERS' EQUITY:
Common stock, no par value,
10,000,000 shares authorized,
202,000 shares issued and outstand-
ing................................. 3,465,242 3,465,242 3,465,242
Accumulated deficit.................. (1,948,560) (1,605,848) (640,775)
----------- ----------- ----------
Total stockholders' equity....... 1,516,682 1,859,394 2,824,467
----------- ----------- ----------
TOTAL.................................. $ 3,440,754 $ 4,910,814 $5,678,666
=========== =========== ==========
</TABLE>
See notes to financial statements.
F-38
<PAGE>
DIABLO COMMUNICATIONS, INC.
(A CALIFORNIA S CORPORATION)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
---------------------- ----------------------
1995 1996 1996 1997
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES:
Tower revenues................ $5,925,022 $6,337,292 $4,778,569 $5,878,022
Sublease revenues--related
party........................ 414,000 365,500 253,500 337,940
Management fees--related par-
ty........................... 96,968 97,513 70,531 80,621
Insurance proceeds............ -- 213,000 -- --
---------- ---------- ---------- ----------
Total revenues.............. 6,435,990 7,013,305 5,102,600 6,296,583
---------- ---------- ---------- ----------
OPERATING EXPENSES:
General and administrative.... 1,229,313 1,414,136 1,036,774 968,071
Depreciation and amortiza-
tion......................... 283,023 416,883 359,184 359,856
Rent expense.................. 1,875,527 2,039,302 1,512,615 1,829,720
Technical..................... 1,422,267 1,618,722 1,144,103 1,244,912
Sales and promotional......... 433,443 530,447 393,685 430,846
---------- ---------- ---------- ----------
Total operating expenses.... 5,243,573 6,019,490 4,446,361 4,833,405
---------- ---------- ---------- ----------
INCOME FROM OPERATIONS.......... 1,192,417 993,815 656,239 1,463,178
OTHER INCOME (EXPENSE), NET..... (120,388) (144,257) (90,335) 133,704
---------- ---------- ---------- ----------
NET INCOME...................... $1,072,029 $ 849,558 $ 565,904 $1,596,882
========== ========== ========== ==========
</TABLE>
See notes to financial statements.
F-39
<PAGE>
DIABLO COMMUNICATIONS, INC.
(A CALIFORNIA S CORPORATION)
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
----------------------
OUTSTANDING ACCUMULATED
SHARES AMOUNT DEFICIT TOTAL
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1994.... 202,000 $3,465,242 $(1,689,475) $ 1,775,767
Cash and noncash
distributions to
stockholders............... (1,331,114) (1,331,114)
Net income.................. 1,072,029 1,072,029
------- ---------- ----------- -----------
BALANCE, DECEMBER 31, 1995.... 202,000 3,465,242 (1,948,560) 1,516,682
Cash distributions to stock-
holders.................... (506,846) (506,846)
Net income.................. 849,558 849,558
------- ---------- ----------- -----------
BALANCE, DECEMBER 31, 1996.... 202,000 3,465,242 (1,605,848) 1,859,394
Cash distributions to stock-
holders (unaudited)........ (631,809) (631,809)
Net income (unaudited)...... -- -- 1,596,882 1,596,882
------- ---------- ----------- -----------
BALANCE, SEPTEMBER 30, 1997
(unaudited).................. 202,000 $3,465,242 $ (640,775) $ 2,824,467
======= ========== =========== ===========
</TABLE>
See notes to financial statements.
F-40
<PAGE>
DIABLO COMMUNICATIONS, INC.
(A CALIFORNIA S CORPORATION)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
----------------------- ----------------------
1995 1996 1996 1997
---------- ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING AC-
TIVITIES:
Net income................... $1,072,029 $ 849,558 $ 565,904 $1,596,882
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortiza-
tion....................... 283,023 416,883 359,184 359,856
Changes in assets and lia-
bilities:
Accounts receivable--
trade..................... (163,273) (30,000) (213,355) (63,918)
Accounts receivable--Affil-
iates..................... (244,175) (132,236) (74,543) (671,139)
Prepaid and other current
assets.................... (178,370) 81,758 (16,395) (39,024)
Deposits and other assets.. (37,181) 22,778 65,703 (108,337)
Accounts payable and ac-
crued expenses............ 115,175 123,801 (265,136) (112,646)
Deferred revenue........... 67,287 24,309 69,329 (114,809)
---------- ----------- ---------- ----------
Net cash provided by oper-
ating activities......... 914,515 1,356,851 490,691 846,865
---------- ----------- ---------- ----------
CASH FLOW FROM INVESTING
ACTIVITIES--Purchases of
property and equipment....... (948,781) (1,636,705) (1,219,152) (399,523)
---------- ----------- ---------- ----------
CASH FLOWS FROM FINANCING AC-
TIVITIES:
Long-term borrowings........ 500,000 1,250,000 1,250,000 217,075
Repayments of long-term
debt....................... (50,469) (270,762) (192,775) (186,841)
Cash distributions to stock-
holders.................... (880,193) (506,846) (362,171) (631,809)
---------- ----------- ---------- ----------
Net cash provided by (used
in) financing
activities............... (430,662) 472,392 695,054 (601,575)
---------- ----------- ---------- ----------
NET INCREASE (DECREASE) IN
CASH......................... (464,928) 192,538 (33,407) (154,233)
CASH, BEGINNING OF PERIOD..... 980,824 515,896 515,896 708,434
---------- ----------- ---------- ----------
CASH, END OF PERIOD........... $ 515,896 $ 708,434 $ 482,489 $ 554,201
========== =========== ========== ==========
SUPPLEMENTAL INFORMATION:
Cash paid for interest...... $ 92,384 $ 140,970 $ 91,988 $ 90,335
Noncash distribution to
stockholders............... 450,921 -- -- --
</TABLE>
See notes to financial statements.
F-41
<PAGE>
DIABLO COMMUNICATIONS, INC.
(A CALIFORNIA S CORPORATION)
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business and Corporate Structure--Diablo Communications, Inc. (the
"Company") is engaged in acquiring, developing and operating communications
towers, for use by radio operators as well as other communication related
businesses. As of December 31, 1996, the Company owned and/or operated 81
towers and rooftops throughout Northern California.
Sale of the Company--On October 9, 1997, substantially all of the Company's
assets were sold to American Tower Systems, Inc. ("ATS"). ATS also assumed the
Company's operating lease agreements and certain of the Company's liabilities
on that date. The sale price was approximately $40,000,000. Subsequent to the
sale, the Company changed its name and will pursue other business
opportunities as Tyris Corporation.
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual amounts could differ from these estimates.
Unaudited Interim Information--The financial information with respect to the
nine-month periods ended September 30, 1996 and 1997 is unaudited. In the
opinion of management, such information contains all adjustments, consisting
only of normal recurring adjustments, necessary for a fair presentation of the
results of such periods. The results of operations for the nine months ended
September 30, 1997 are not necessarily indicative of the results to be
expected for the full year.
Impairment of Long-Lived Assets--In March 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of ("FAS 121"). FAS 121 addresses the accounting for the
impairment of long-lived assets, certain intangibles and goodwill when events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. The Company adopted this statement during 1996 and the
impact on the Company's results of operations, liquidity or financial position
was not material.
Property and Equipment--Property and equipment are recorded at cost.
Depreciation is provided using the double-declining method over estimated
useful lives ranging from 3 to 15 years.
Investment in Affiliate--The Company owns a 25% interest in New Loma
Communications, Inc. which is accounted for using the equity method of
accounting.
Revenue Recognition--Tower and sublease revenues are recognized when earned
over the lease terms. Management fee revenues are recognized when earned over
the terms of the management contracts. Deferred revenue represents advance
payments by customers where related revenue is recognized when services are
provided.
S Corporation Election--The accompanying financial statements do not include
any provision for federal or state income taxes since the Company is treated
as a partnership under Subchapter S of the Internal Revenue Code and under
similar state income tax provisions. Accordingly, income or loss is allocated
to the shareholders and included in their tax returns.
Retirement Plan--Employees of the Company are eligible for participation in
a 401-K plan managed by the Company, subject to certain minimum age and
length-of-employment requirements. Under the plan, the Company does not match
the participants' contributions.
F-42
<PAGE>
DIABLO COMMUNICATIONS, INC.
(A CALIFORNIA S CORPORATION)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
2. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- SEPTEMBER 30,
1995 1996 1997
---------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Land and improvements................ $ 674,574 $1,017,949 $1,135,034
Towers............................... 533,175 1,342,178 1,543,206
Technical equipment.................. 387,451 508,212 510,097
Office equipment, furniture, fixtures
and other equipment................. 378,290 478,285 506,172
Construction in progress............. 209,592 473,163 631,241
---------- ---------- ----------
Total.............................. 2,183,082 3,819,787 4,325,750
Less accumulated depreciation and am-
ortization.......................... (462,659) (866,861) (1,333,157)
---------- ---------- ----------
Property and equipment, net.......... $1,720,423 $2,952,926 $2,992,593
========== ========== ==========
</TABLE>
Technical and office equipment include assets under capital leases of
$285,749, $285,749 and $288,698 at September 30, 1997, December 31, 1996 and
1995, respectively with related accumulated depreciation of $223,980, $199,588
and $167,065, respectively.
3. LONG-TERM DEBT
Outstanding amounts under the Company's financing arrangements consisted of
the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- SEPTEMBER 30,
1995 1996 1997
---------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Advances on bank term loan approved up
to $1,500,000, varying interest rates
at 9.44% to 9.85%.................... $1,250,000 $1,250,000
Notes payable to banks at interest
rates of prime plus 1.5%............. $ 858,333 658,333 525,000
Other notes payable to banks.......... 212,107 202,302 419,377
Capital lease obligations............. 157,607 96,650 43,142
---------- ---------- ----------
Total............................... 1,228,047 2,207,285 2,237,519
Less scheduled current maturities..... (303,045) (420,875) (505,129)
---------- ---------- ----------
Long-term debt........................ $ 925,002 $1,786,410 $1,732,390
========== ========== ==========
</TABLE>
In October 1997, the Company's long-term debt was either assumed by ATS or
repaid by the Company with proceeds from the sale of assets to ATS (see Note
1--"Sale of the Company").
F-43
<PAGE>
DIABLO COMMUNICATIONS, INC.
(A CALIFORNIA S CORPORATION)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
4. COMMITMENTS AND CONTINGENCIES
The Company leases various technical and office equipment under capital
leases and certain office space and other real property under noncancelable
operating leases. Future minimum lease payments under these operating and
capital leases are as follows:
<TABLE>
<CAPTION>
OPERATING CAPITAL
LEASES LEASES
---------- --------
<S> <C> <C>
Year ending December 31:
1997................................................ $ 662,260 $ 73,529
1998................................................ 613,607 31,161
1999................................................ 608,642
2000................................................ 567,817
2001................................................ 510,557
Thereafter.......................................... 2,808,872
---------- --------
Total............................................. $5,771,755 104,690
==========
Less interest portion................................... (8,040)
--------
Present value of minimum lease payments................. $ 96,650
========
</TABLE>
5. RELATED PARTY TRANSACTIONS
New Loma Communications, Inc., is a corporation in which the Company owns
25% of the outstanding capital stock.
Drake Industrial Park, Inc. and Diablo Communications of Southern
California, Inc. are corporations under common ownership as that of the
Company.
During the nine months ended September 30, 1996 and 1997 and the years ended
December 31, 1995 and 1996, the Company received income from New Loma
Communications, Inc., as follows:
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
----------------- -----------------
1995 1996 1996 1997
-------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Sublease revenues........................ $414,000 $365,500 $253,500 $337,940
Management services...................... 96,968 97,513 70,531 80,621
-------- -------- -------- --------
Total.................................. $510,968 $463,013 $324,031 $418,561
======== ======== ======== ========
</TABLE>
The Company had the following accounts receivable from affiliates:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------- SEPTEMBER 30,
1995 1996 1997
-------- -------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Diablo Communications of Southern Califor-
nia, Inc................................. $391,872 $517,400 $1,214,622
New Loma Communications................... 48,660 27,859 176
Drake Industrial Park, Inc................ 15,554 17,154
-------- -------- ----------
Total................................... $440,532 $560,813 $1,231,952
======== ======== ==========
</TABLE>
F-44
<PAGE>
DIABLO COMMUNICATIONS, INC.
(A CALIFORNIA S CORPORATION)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
6. SPIN-OFF OF SOUTHERN CALIFORNIA OPERATION--NONCASH DISTRIBUTION TO
STOCKHOLDERS
In order to establish a separate company under which to conduct Southern
California business, on September 1, 1995, all of the Company's Southern
California communication site leases, customer contracts, affiliated
receivables, communication site equipment, vehicles, vehicle obligations,
office lease and contracts, and office equipment were distributed to the
Company's stockholders at net book value according to their pro rata
ownership. The net book value of such distribution was $450,921.
The Company's 1995 statement of income includes a net loss from the Southern
California operations of $318,291 for the eight months ended August 31, 1995.
7. MT. DIABLO COMMUNICATION SITE DAMAGE
On December 12, 1995, a severe wind destroyed the tower at the Company's Mt.
Diablo communication facility. The Company received insurance proceeds
totalling approximately $434,000 in 1996. Of these proceeds, $126,000 was
capitalized in property and equipment, $213,000 was recorded as revenue and
$95,000 was recorded as a reduction of operating expenses.
8. FUTURE LEASE INCOME
The Company has long-term, non-cancelable agreements under operating leases
for license fee income. Future minimum annual lease income at December 31,
1996 is as follows:
<TABLE>
<S> <C>
Year ending December 31:
1997..................................................... $ 3,263,693
1998..................................................... 2,786,793
1999..................................................... 1,935,638
2000..................................................... 1,493,622
2001..................................................... 964,394
Thereafter............................................... 593,206
-----------
Total.................................................. $11,037,346
===========
</TABLE>
F-45
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Diablo Communications of Southern California, Inc.
We have audited the balance sheets of Diablo Communications of Southern
California, Inc. (a California S Corporation) (the "Company") as of December
31, 1995 and December 31, 1996 and the related statements of operations,
stockholders' equity and cash flows for the period from September 1, 1995
(inception) to December 31, 1995 and for the year ended December 31, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit of the financial statements
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present fairly,
in all material respects, the financial position of Diablo Communications of
Southern California, Inc. as of December 31, 1995 and December 31, 1996, and
the results of its operations and its cash flows for the period from September
1, 1995 (inception) to December 31, 1995 and the year ended December 31, 1996
in conformity with generally accepted accounting principles.
As emphasized in Note 9 to the financial statements, during October 1997,
the Company sold substantially all of its assets to an outside party.
Rooney, Ida, Nolt & Ahern
Certified Public Accountants
Oakland, California
February 7, 1997
October 9, 1997 as to note 9
to the financial statements
F-46
<PAGE>
DIABLO COMMUNICATIONS OF SOUTHERN CALIFORNIA, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- SEPTEMBER 30,
1995 1996 1997
--------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash................................... $ 204,781 $ 61,043 $ 15,094
Accounts receivable, trade............. 7,591 27,245 12,914
Prepaid expenses....................... 1,272 2,462 24,990
--------- ----------- -----------
Total current assets................. 213,644 90,750 52,998
--------- ----------- -----------
PROPERTY AND EQUIPMENT--net.............. 441,105 1,013,434 1,667,418
--------- ----------- -----------
OTHER ASSETS:
Prepaid expenses--net.................. 2,348 7,970 6,468
Deposits............................... 6,976 10,776 11,146
--------- ----------- -----------
Total other assets................... 9,324 18,746 17,614
--------- ----------- -----------
TOTAL.................................... $ 664,073 $ 1,122,930 $ 1,738,030
========= =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY)
CURRENT LIABILITIES:
Notes and contracts payable............ $ 283,544 $ 310,522 $ 382,494
Accounts payable....................... 148,438 447,232 1,242,179
Customer fees advanced................. 1,707 12,839 17,426
Accrued liabilities.................... 5,419 16,023 11,634
--------- ----------- -----------
Total current liabilities............ 439,108 786,616 1,653,733
--------- ----------- -----------
LONG-TERM DEBT........................... 21,139 930,617 1,065,417
--------- ----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIENCY):
Common stock, no par value, 10,000,000
shares authorized, 1,000,000 issued
and outstanding....................... 450,921 450,921 450,921
Accumulated deficit.................... (247,095) (1,045,224) (1,432,041)
--------- ----------- -----------
Total stockholders' equity
(deficiency)........................ 203,826 (594,303) (981,120)
--------- ----------- -----------
TOTAL.................................... $ 664,073 $ 1,122,930 $ 1,738,030
========= =========== ===========
</TABLE>
See notes to financial statements.
F-47
<PAGE>
DIABLO COMMUNICATIONS OF SOUTHERN CALIFORNIA, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
SEPTEMBER 1, NINE MONTHS ENDED
(INCEPTION) TO YEAR ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, -----------------------
1995 1996 1996 1997
-------------- ------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
NET REVENUES............... $ 45,445 $ 408,555 $ 251,733 $ 660,195
OPERATING EXPENSES:
Operating expenses,
excluding depreciation
and amortization and
corporate general and
administrative
expenses................ 49,488 319,011 196,377 402,945
Depreciation and
amortization............ 8,459 29,405 22,123 32,886
Corporate general and
administrative.......... 226,528 776,063 604,853 500,014
--------- ---------- --------- ---------
Total operating
expenses.............. 284,475 1,124,479 823,353 935,845
--------- ---------- --------- ---------
OPERATING LOSS............. (239,030) (715,924) (571,620) (275,650)
--------- ---------- --------- ---------
OTHER INCOME (EXPENSES):
Interest expense......... (8,656) (85,911) (54,096) (113,643)
Interest income.......... 1,391 4,506 3,461 3,276
--------- ---------- --------- ---------
Total other income
(expenses)............ (7,265) (81,405) (50,635) (110,367)
--------- ---------- --------- ---------
LOSS FROM OPERATIONS BEFORE
INCOME TAXES.............. (246,295) (797,329) (622,255) (386,017)
INCOME TAX PROVISION....... 800 800 800 800
--------- ---------- --------- ---------
NET LOSS................... $(247,095) $ (798,129) $(623,055) $(386,817)
========= ========== ========= =========
</TABLE>
See notes to financial statements.
F-48
<PAGE>
DIABLO COMMUNICATIONS OF SOUTHERN CALIFORNIA, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK DEFICIT TOTAL
------------ ----------- ---------
<S> <C> <C> <C>
BALANCES, SEPTEMBER 1, 1995 (inception)... $450,921 $ -0- $ 450,921
Net loss................................ (247,095) (247,095)
-------- ----------- ---------
BALANCES, DECEMBER 31, 1995............... 450,921 (247,095) 203,826
Net loss................................ (798,129) (798,129)
-------- ----------- ---------
BALANCES, DECEMBER 31, 1996............... 450,921 (1,045,224) (594,303)
Net loss (unaudited).................... (386,817) (386,817)
-------- ----------- ---------
BALANCES, SEPTEMBER 30, 1997.............. $450,921 $(1,432,041) $(981,120)
======== =========== =========
</TABLE>
See notes to financial statements.
F-49
<PAGE>
DIABLO COMMUNICATIONS OF SOUTHERN CALIFORNIA, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
SEPTEMBER 1 NINE MONTHS ENDED
(INCEPTION) TO YEAR ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, -----------------------
1995 1996 1996 1997
-------------- ------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss.................. $(247,095) $ (798,129) $(623,055) $(386,817)
--------- ---------- --------- ---------
Adjustments to reconcile
net loss to cash used by
operating activities:
Depreciation and
amortization............ 8,459 29,405 21,517 32,886
Changes in assets and
liabilities:
Accounts receivable.... (7,591) (19,654) (23,386) 14,331
Prepaid expenses....... (1,151) (1,190) (4,129) (22,528)
Deposits............... (4,096) (3,800) (3,800) (370)
Accounts payable and
accrued expenses...... 153,857 309,398 119,535 790,558
Customer fees
advanced.............. 1,707 11,132 (1,707) 4,587
--------- ---------- --------- ---------
Total adjustments........ 151,185 325,291 108,030 819,464
--------- ---------- --------- ---------
Cash provided (used) by
operating activities...... (95,910) (472,838) (515,025) 432,647
--------- ---------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Collection on note
receivable.............. 81,310
Purchase of property and
equipment............... (50,449) (599,856) (371,191) (685,368)
Organization costs....... (2,516)
Loan fees................ (7,500) (7,500)
--------- ---------- --------- ---------
Cash provided (used) by
investing activities...... 28,345 (607,356) (378,691) (685,368)
--------- ---------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from debt....... 275,000 1,000,000 750,000 248,751
Repayment of debt........ (2,654) (63,544) (47,523) (41,979)
--------- ---------- --------- ---------
Cash provided by financing
activities................ 272,346 936,456 702,477 206,772
--------- ---------- --------- ---------
INCREASE (DECREASE) IN
CASH...................... 204,781 (143,738) (191,239) (45,949)
CASH, BEGINNING OF PERIOD.. -0- 204,781 204,781 61,043
--------- ---------- --------- ---------
CASH, END OF PERIOD........ $ 204,781 $ 61,043 $ 13,542 $ 15,094
========= ========== ========= =========
</TABLE>
See notes to financial statements.
F-50
<PAGE>
DIABLO COMMUNICATIONS OF SOUTHERN CALIFORNIA, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Nature of business:
The Company develops and operates telecommunications sites in Southern
California. The Company has a broad customer base which includes specialized
mobile radio companies, paging companies, cellular telephone providers,
broadcasters, emergency services, various private and governmental two-way
radio users, and other entities with wireless communications needs.
Revenues are generated primarily from individual license agreements which
entitle a customer to use an antenna system or antenna tower space, and to use
on-site space in a climate controlled building for their transmitters,
receivers, and related equipment.
For most of its sites, the Company holds a long-term lease interest. As a
recognized full service site manager, the Company also manages sites for
outside site owners.
Allowances for doubtful accounts:
The Company uses the allowance method for accounting for bad debts. An
allowance for bad debts has not been provided currently since the Company's
bad debt experience indicates that the amount would not be material.
Leases:
Leases meeting certain criteria are treated as capital leases requiring
related assets and lease obligations to be recorded at their present value in
the financial statements. Other leases, not qualifying under these criteria,
are treated as operating leases for which rentals are charged to expense.
S Corporation election:
The Company has elected, by unanimous consent of its stockholders, to have
its income taxed directly to the stockholders. Accordingly, provision for
income taxes, except for an $800 minimum state franchise taxes, has not been
made. Deferred income taxes have not been recorded because such amounts are
immaterial.
Property and equipment:
Property and equipment are recorded at cost and depreciation is computed
using a combination of straight-line and accelerated methods of accounting
over useful lives of 5 to 15 years.
Organization costs and loan fees:
Organization costs and loan fees are amortized using the straight-line
method of accounting over 5 years.
Unaudited interim financial information:
In the opinion of management, the financial statements for the unaudited
periods presented include all adjustments necessary for a fair presentation in
accordance with generally accepted accounting principles, consisting solely of
normal recurring accruals and adjustments. The results of operations and cash
flows for the nine months ended September 30, 1996 and September 30, 1997 are
not necessarily indicative of results which would be expected for a full year.
F-51
<PAGE>
DIABLO COMMUNICATIONS OF SOUTHERN CALIFORNIA, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of disclosures. Accordingly,
actual results could differ from those estimates.
Concentration of Credit Risk:
The Company extends credit to customers on an unsecured basis in the normal
course of business. No individual customer is significant to the Company's
customer base. The Company has policies governing the extension of credit and
collection of amounts due from customers.
Recognition of Revenues:
Tower and sublease revenues are recognized when earned over the lease terms.
Management fee revenues are recognized when earned over the terms of the
management contracts.
Corporate general and administrative expenses:
Corporate general and administrative expenses consists of corporate overhead
costs not specifically allocable to any of the Company's direct operating
profit centers.
Impairment of long-lived assets:
In accordance with Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of ", the company assesses on an on-going basis the
recoverability of intangible assets based on estimates of future undiscounted
cash flows for the applicable business acquired compared to net book value. If
the future undiscounted cash flow estimate is less than net book value, net
book value is then reduced to the undiscounted cash flow estimate. The Company
also evaluates the amortization periods of intangible assets to determine
whether events or circumstances warrant revised estimates of useful lives. As
of September 30, 1997, management believes that no revisions to the remaining
useful lives or writedowns of deferred charges are required.
Fair value of financial instruments:
The Company believes that the carrying value of all financial instruments is
a reasonable estimate of fair value as of December 31, 1996 and September 30,
1997.
Retirement plan:
Employees of the Company, through its affiliate Diablo Communications, Inc.,
are eligible for participation in a 401(k) plan, subject to certain minimum
age and length-of-employment requirements. The plan does not provide for any
Company contributions.
Supplemental cash flow information:
For financial statement purposes of the statements of cash flows, the
Company issued capital stock in exchange for $450,921 in net assets, primarily
property and equipment on September 1, 1995.
Cash payments for interest approximated $8,656, $71,256, $50,653 and
$116,663 for period September 1, 1995 to December 31, 1995, for the year ended
December 31, 1996 and the nine months ended September 30, 1996 and 1997,
respectively.
F-52
<PAGE>
DIABLO COMMUNICATIONS OF SOUTHERN CALIFORNIA, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Cash payments for income taxes was $800 for the period September 1, 1995 to
December 31, 1995, for the year ended December 31, 1996 and the nine months
ended September 30, 1996 and 1997, respectively.
NOTE 2. COMPANY ORGANIZATION:
In order to establish a separate company under which to conduct business in
Southern California, on September 1, 1995, Diablo Communications, Inc.
distributed all of its Southern California communication site leases, customer
contracts, affiliated receivables, communication site equipment, vehicles,
vehicle obligations, office lease and contracts, and office equipment to its
stockholders according to their pro rata ownership. The stockholders then
contributed these assets in exchange for 1,000,000 shares of capital stock.
The net value of this contribution was $450,921.
NOTE 3. PROPERTY AND EQUIPMENT:
Property and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- SEPTEMBER 30,
1995 1996 1997
-------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Land improvements.......................... $ 8,276 $ 48,770 $ 48,770
Towers and wiring.......................... 6,261 31,815 205,269
Equipment.................................. 19,190 26,477 26,477
Office furniture and equipment............. 27,729 27,729 27,729
Computers and software..................... 23,718 24,746 24,746
Vehicles................................... 27,546 27,546 27,546
Construction in progress................... 355,276 880,769 1,392,684
-------- ---------- ----------
Total.................................... 467,996 1,067,852 1,753,221
-------- ---------- ----------
Less accumulated depreciation............ 26,891 54,418 85,803
-------- ---------- ----------
Property and equipment, net.............. $441,105 $1,013,434 $1,667,418
======== ========== ==========
</TABLE>
NOTE 4. RELATED PARTY TRANSACTIONS:
Richard D. Spight and the Mary C. Spight Family Trust are the majority
stockholders of Diablo Communications of Southern California, Inc. and Diablo
Communications, Inc.
At the end of each period, the Company owed the following amounts to Diablo
Communications, Inc:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------- SEPTEMBER 30,
1995 1996 1997
-------- -------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Note payable at 8.68%....................... $275,000 $220,000 $ 183,333
Accounts payable............................ 116,872 297,400 1,214,622
</TABLE>
After the sale of the Company's assets on October 9, 1997, these related
note and accounts payable were paid in full.
Interest expense on this related party note payable was $4,776, $22,424,
$17,335 and $13,290 for the period September 30, 1995 (inception) to December
31, 1995, year ended December 31, 1996 and for the nine month periods ended
September 30, 1996 and September 30, 1997, respectively.
F-53
<PAGE>
DIABLO COMMUNICATIONS OF SOUTHERN CALIFORNIA, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 5. NOTES PAYABLE:
The Company has taken advances against a bank term loan approved for
$1,500,000. The Company pays interest only on the advances at rates ranging
from 9.44% to 9.85%. The line of credit requires that certain financial
covenants be maintained. The note is secured by a blanket lien on all of the
Company's assets.
During March 1997, the Company entered into an unsecured credit agreement
with American Tower Systems, Inc., that provides the Company with a $650,000
unsecured loan commitment of which $248,751 was outstanding at September 30,
1997. The Company pays interest only on the advances at prime, currently 8.5%.
The note matures at the earlier of consummation of the sale or June 30, 2000.
The Company repaid all advances on both of these notes after the sale of
substantially all its assets.
NOTE 6. LONG-TERM DEBT:
Maturities of long-term debt for the years subsequent to December 31, 1996,
are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------
<S> <C>
1997.......................................................... $ 87,689
1998.......................................................... 204,759
1999.......................................................... 205,199
2000.......................................................... 201,841
2001.......................................................... 200,000
Thereafter..................................................... 116,666
----------
Totals........................................................ $1,016,154
==========
</TABLE>
NOTE 7. COMMITMENTS:
Capital leases:
The future minimum lease payments under capital leases for communications
equipment and certain office equipment in effect at December 31, 1996 are as
follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------
<S> <C>
1997............................................................ $ 3,422
1998............................................................ 2,282
-------
Total........................................................... 5,704
Less interest portion........................................... 719
-------
Present value of minimum lease payments......................... 4,985
Less current installments....................................... 2,833
-------
Long-term obligations under capital leases...................... $ 2,152
=======
Cost of equipment under capital leases.......................... $12,946
Less accumulated depreciation to December 31, 1996.............. 7,625
-------
Net............................................................. $ 5,321
=======
Current depreciation expense.................................... $ 2,129
=======
</TABLE>
F-54
<PAGE>
DIABLO COMMUNICATIONS OF SOUTHERN CALIFORNIA, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Operating leases:
At December 31, 1996, the Company was liable for various leases of office
space and other real and personal property which require future minimum annual
rental payments as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------
<S> <C>
1997............................... $231,937
1998............................... 211,661
1999............................... 216,298
2000............................... 193,998
2001............................... 62,950
Thereafter.......................... -0-
--------
Total.............................. $916,844
========
</TABLE>
In addition, the Company is liable for various real property leases based on
percentages of gross income ranging from 25% to 70%.
Rental expenses for these operating leases were $35,611, $271,419, $173,407
and $344,987, for the period September 1, 1995 (inception) to December 31,
1995, the year ended December 31, 1996 and for the nine month periods ended
September 30, 1996 and September 30, 1997, respectively.
NOTE 8. FUTURE LEASE INCOME:
At December 31, 1996, the Company has long-term, non-cancelable agreements
under operating-type leases for license fee income. Future minimum annual
lease income is as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------
<S> <C>
1997............................. $ 659,445
1998............................. 585,155
1999............................. 434,161
2000............................. 287,430
2001............................. 193,657
Thereafter........................ -0-
----------
Total............................ $2,159,848
==========
</TABLE>
NOTE 9. SUBSEQUENT EVENT:
On October 9, 1997 the Company, along with Diablo Communications, Inc., a
related company, sold substantially all of its assets to American Tower
Systems, Inc. (ATS) for a combined purchase price of approximately $46.5
million. DCSC's allocable share of the purchase price is approximately $5.4
million. Some of DCSC's liabilities were included in the transaction.
F-55
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors, Stockholders and Partners of
Meridian Communications
Calabasas, California:
We have audited the accompanying combined balance sheets of Meridian
Communications (the "Company") as of December 31, 1995 and 1996, and the
related combined statements of income, partners' capital and stockholders'
equity, and cash flows for the years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such combined financial statements present fairly, in all
material respects, the financial position of the Company as of December 31,
1995 and 1996, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Long Beach, California
October 31, 1997
F-56
<PAGE>
MERIDIAN COMMUNICATIONS
COMBINED BALANCE SHEETS
DECEMBER 31, 1995 AND 1996 AND JUNE 30, 1997
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- JUNE 30,
1995 1996 1997
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.................. $ 30,897 $ 63,665 $ 21,168
Accounts receivable:
Trade, net of allowance for doubtful ac-
counts of $1,244 and $10,118 in 1995 and
1996, respectively, and $17,720 (unau-
dited) at June 30, 1997................... 60,961 80,190 103,709
Other accounts receivable (Note 8)......... 19,461 25,889 2,260,295
Prepaid expenses and other current assets.. 79,044 77,108 122,366
---------- ---------- ----------
Total current assets..................... 190,363 246,852 2,507,538
PROPERTY AND EQUIPMENT, Net (Note 2)......... 2,523,929 2,917,751 3,147,692
INTANGIBLES, Net............................. 22,000 141,948 112,292
OTHER ASSETS................................. 1,859 2,259 6,299
---------- ---------- ----------
TOTAL........................................ $2,738,151 $3,308,810 $5,773,821
========== ========== ==========
LIABILITIES AND PARTNERS' CAPITAL AND
STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Current maturities of long-term loans pay-
able to shareholder and partner (Note 7).. $ 119,121 $ 234,607 $ 477,388
Accounts payable and accrued expenses...... 175,627 182,441 286,803
Security and other deposits................ 128,208 231,154 131,611
---------- ---------- ----------
Total current liabilities................ 422,956 648,202 895,802
---------- ---------- ----------
LONG-TERM LOANS PAYABLE TO SHAREHOLDER AND
PARTNER (Note 7)............................ 553,533 1,012,681 918,808
DEFERRED REVENUE............................. 214,918 279,641 186,413
COMMITMENTS AND CONTINGENCIES (Note 3)
PARTNERS' CAPITAL AND STOCKHOLDERS' EQUITY:
Common stock; $1.00 par value; 75,000
shares authorized; 4,000 shares issued and
outstanding............................... 4,000 4,000 4,000
Additional paid-in capital................. 16,632 16,632 16,632
Partners' capital.......................... 631,690 507,245 2,734,202
Retained earnings.......................... 894,422 840,409 1,017,964
---------- ---------- ----------
Total partners' capital and stockholders'
equity.................................. 1,546,744 1,368,286 3,772,798
---------- ---------- ----------
TOTAL........................................ $2,738,151 $3,308,810 $5,773,821
========== ========== ==========
</TABLE>
See accompanying notes to combined financial statements.
F-57
<PAGE>
MERIDIAN COMMUNICATIONS
COMBINED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND SIX MONTHS ENDED JUNE 30, 1996 AND
1997
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31, SIX MONTHS ENDED JUNE 30,
---------------------- --------------------------
1995 1996 1996 1997
---------- ---------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES:
Site use................. $3,918,420 $4,165,919 $ 2,103,614 $ 2,278,612
Site management.......... 72,337 125,348 51,355 52,178
Repeater service......... 140,945 206,556 67,319 54,087
---------- ---------- ------------ ------------
Total revenues......... 4,131,702 4,497,823 2,222,288 2,384,877
EXPENSES:
Operating expenses,
excluding depreciation
and amortization........ 3,034,285 3,217,369 1,543,333 1,730,211
Depreciation and
amortization............ 303,197 416,369 202,154 210,983
---------- ---------- ------------ ------------
OPERATING INCOME........... 794,220 864,085 476,801 443,683
OTHER INCOME (EXPENSE):
Interest and other income
(expense)............... 5,155 3,581 23,311 (17,741)
Interest expense to
shareholder and
partner (Note 6)........ (36,111) (73,126) (36,712) (61,968)
Gain on sale of business
(Note 8)................ 3,080,563
---------- ---------- ------------ ------------
Total other income (ex-
pense)................ (30,956) (69,545) (13,401) 3,000,854
---------- ---------- ------------ ------------
INCOME BEFORE INCOME TAX-
ES........................ 763,264 794,540 463,400 3,444,537
INCOME TAXES............... 800 800 3,145 2,526
---------- ---------- ------------ ------------
NET INCOME................. $ 762,464 $ 793,740 $ 460,255 $ 3,442,011
========== ========== ============ ============
</TABLE>
See accompanying notes to combined financial statements.
F-58
<PAGE>
MERIDAN COMMUNICATIONS
COMBINED STATEMENTS OF PARTNERS' CAPITAL AND STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND SIX MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN PARTNERS' RETAINED
STOCK CAPITAL CAPITAL EARNINGS TOTAL
------ ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31,
1994................... $4,000 $16,632 $ 630,902 $ 987,093 $ 1,638,627
Net income (loss)....... 855,135 (92,671) 762,464
Cash distributions...... (854,347) (854,347)
------ ------- ----------- ---------- -----------
BALANCE, DECEMBER 31,
1995................... 4,000 16,632 631,690 894,422 1,546,744
Net income (loss)....... 847,753 (54,013) 793,740
Cash distributions...... (972,198) (972,198)
------ ------- ----------- ---------- -----------
BALANCE, DECEMBER 31,
1996................... 4,000 16,632 507,245 840,409 1,368,286
Net income (Unaudited).. 3,264,456 177,555 3,442,011
Cash distributions (Un-
audited)............... (1,037,499) (1,037,499)
------ ------- ----------- ---------- -----------
BALANCE, JUNE 30, 1997
(Unaudited)............ $4,000 $16,632 $ 2,734,202 $1,017,964 $ 3,772,798
====== ======= =========== ========== ===========
</TABLE>
See accompanying notes to combined financial statements.
F-59
<PAGE>
MERIDIAN COMMUNICATIONS
COMBINED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND SIX MONTHS ENDED JUNE 30, 1996 AND
1997
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
---------------------- ----------------------
1995 1996 1996 1997
---------- ---------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING AC-
TIVITIES:
Net income.................... $ 762,464 $ 793,740 $ 460,255 $ 3,442,011
Adjustments to reconcile net
income to net cash
provided by operating activi-
ties:
Depreciation and amortiza-
tion......................... 303,197 416,369 202,154 210,983
Provision for doubtful ac-
counts....................... (907) 8,874 1,955 7,748
Loss (gain) on disposal of
property and equipment....... 7,315 8,954 (2,922,335)
Changes in operating assets
and liabilities:
Accounts receivable--trade... 45,358 (28,108) (5,500) (31,266)
Accounts receivable--other... 10,136 (6,428) 11,962 15,594
Prepaid expenses and other
current assets.............. (23,359) 1,936 (76,357) (45,258)
Other assets................. (59) (400) (4,200) (4,040)
Accounts payable and accrued
expenses.................... 47,801 (23,185) 255,826 153,552
Security and other depos-
its......................... 9,679 2,946 (400) 457
Deferred revenue............. 28,628 64,723 5,500 (93,228)
---------- ---------- --------- -----------
Net cash provided by operat-
ing activities............. 1,182,938 1,237,782 860,149 734,218
---------- ---------- --------- -----------
CASH FLOWS FROM INVESTING AC-
TIVITIES:
Purchase of property and
equipment.................... (716,932) (857,562) (312,264) (508,699)
Proceeds from sale of property
and equipment................ 42,609 29,175 750,575
Purchase of intangibles....... (122,500)
Receipt of deposits for re-
peater services.............. 130,000
Application of deposits for
repeater services............ (130,000)
---------- ---------- --------- -----------
Net cash provided by (used
in) investing activities... (716,932) (807,453) (283,089) 111,876
---------- ---------- --------- -----------
CASH FLOWS FROM FINANCING AC-
TIVITIES:
Borrowings from shareholder
and partner.................. 400,000 655,000 100,000 219,000
Repayments on loans from
shareholder and partner...... (37,346) (80,366) (26,432) (70,092)
Cash distributions............ (854,347) (972,195) (486,101) (1,037,499)
---------- ---------- --------- -----------
Net cash provided by (used
in) financing activities... (491,693) (397,561) (412,533) (888,591)
---------- ---------- --------- -----------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS.............. (25,687) 32,768 164,527 (42,497)
CASH AND CASH EQUIVALENTS, BE-
GINNING OF PERIOD............. 56,584 30,897 30,897 63,665
---------- ---------- --------- -----------
CASH AND CASH EQUIVALENTS, END
OF PERIOD..................... $ 30,897 $ 63,665 $ 195,424 $ 21,168
========== ========== ========= ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION--
Cash paid during the period
for:
Interest...................... $ 36,111 $ 72,673 $ 13,087 $ 33,168
Income taxes.................. $ 0 $ 900 $ 900 $ 800
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
-- During December 1996, the Company acquired equipment by incurring accrued
expenses in the amount of $19,191.
-- During February 1997, the Company received a non-trade account receivable
in the amount of $2,250,000 from the sale of a repeater system.
See accompanying notes to combined financial statements.
F-60
<PAGE>
MERIDIAN COMMUNICATIONS
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND SIX MONTHS ENDED JUNE 30, 1996 AND
1997
(INFORMATION PERTAINING TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS
UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General--The combined financial statements include the accounts of Meridian
Sales and Services Company ("MSSC"), a California S corporation, Meridian
Communications North ("MCN"), a general partnership, and Meridian Radio Sites
("MRS"), a general partnership (referred to collectively as Meridian
Communications or the "Company") which share common ownership and management.
All significant intercompany balances and transactions have been eliminated in
combination.
Meridian Communications develops and manages telecommunication antenna site
facilities and repeater (mobile relay) equipment throughout Southern
California.
Cash and Cash Equivalents--Cash and cash equivalents include cash in the
bank as well as short-term investments with an original maturity of three
months or less.
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Property and Equipment--Property and equipment are stated at cost less
accumulated depreciation. Major renewals or betterments are capitalized and
depreciated over their estimated useful lives. Repairs and maintenance are
charged to expense in the period incurred.
Depreciation for financial statements purposes is computed using the
straight-line method over the estimated useful lives of the assets. Buildings
and leasehold improvements are depreciated over a period of 20 years, antenna
site equipment over a period of 7 years, and office furniture, equipment, and
automobiles over a period of 5 years.
Intangibles--Intangible assets are primarily comprised of the rights to a
site lease acquired in 1996 and, to a lesser extent, an FCC license. The FCC
license was sold in February 1997 with the sale of the assets used in
connection with the repeater business for $3,000,000 (see Note 8). The site
lease rights are amortized on a straightline basis over the remainder of the
lease term of 8 years.
F-61
<PAGE>
MERIDIAN COMMUNICATIONS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS
UNAUDITED)
Long-Lived Assets--The Company records impairment losses on long-lived
assets when events and circumstances indicate that the assets might be
impaired and the undiscounted cash flows estimated to be generated by those
assets are less than the carrying amounts of those assets.
Concentration of Credit Risk--The Company performs ongoing credit evaluation
of its customers' financial condition and generally requires a one-month
security deposit from its customers. As of December 31, 1996, the Company had
no significant concentrations of credit risk.
Revenue Recognition and Deferred Revenue--Revenue is recorded when services
are provided, according to rates set forth in customer contracts. Deferred
revenue is recorded when services are paid in advance of performance.
Income Taxes--The Company is comprised of an S corporation and two
partnerships for federal and state income tax purposes. The stockholders and
partners report any income or loss of the Company directly on their personal
tax returns. State income tax expense is computed using statutory tax rates
applicable to S corporations.
Interim Financial Statements--The accompanying combined balance sheet as of
June 30, 1997 and the combined statements of income, partners' capital and
stockholders' equity, and cashflows for the six months ended June 30, 1997 and
1996 are unaudited. In the opinion of management, such unaudited financial
statements include all adjustments necessary to present fairly the information
set forth therein. These adjustments consist of normal recurring adjustments.
The results of operations for such interim periods are not necessarily
indicative of results for the full year.
2. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- JUNE 30,
1995 1996 1997
----------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Land.............................. $ 28,839 $ 28,839 $ 28,839
Antenna site equipment............ 2,258,476 2,518,713 2,315,813
Buildings and leasehold improve-
ments............................ 1,767,261 1,793,290 1,793,290
Office furniture, equipment and
automobiles...................... 259,586 247,260 248,342
Construction in progress.......... 195,787 687,006 1,167,466
----------- ---------- -----------
4,509,949 5,275,108 5,553,750
Less accumulated depreciation and
amortization..................... (1,986,020) (2,357,357) (2,406,058)
----------- ---------- -----------
$ 2,523,929 $2,917,751 $ 3,147,692
=========== ========== ===========
</TABLE>
F-62
<PAGE>
MERIDIAN COMMUNICATIONS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS
UNAUDITED)
3. LEASE COMMITMENTS
The Company leases office and antenna site facilities under operating lease
agreements through the year 2009. One of the facilities is leased from a
shareholder of MSSC for $28,800 annually. This lease expires December 31,
1997. The Company is committed to minimum rental payments under leases
(exclusive of real estate taxes, maintenance and other related charges) at
December 31, 1996, as follows:
Years Ended December 31:
<TABLE>
<S> <C>
1997............................................................ $ 512,706
1998............................................................ 495,449
1999............................................................ 441,866
2000............................................................ 319,169
2001............................................................ 275,987
Thereafter...................................................... 2,100,576
----------
$4,145,753
==========
</TABLE>
Rent expense charged to operations for the years ended December 31, 1995 and
1996 amounted to $629,242 and $727,427, respectively, of which $20,400 and
$28,800, respectively, was paid to the shareholder. Rent expense charged to
operations for the six months ended June 30, 1996 and 1997 amounted to
$311,266 and $414,990, respectively, of which $14,400 was paid to the
shareholder in both periods.
4. INCOME TAXES
The Company's provision for income taxes for the years ended December 31,
1995 and 1996 consists of a minimum state liability of $800 for each year
which is assessed to MSSC.
The Company does not pay federal corporate income taxes on its taxable
income. Instead, the stockholders and partners are liable for individual
federal and state income taxes on their respective shares of the Company's
taxable income. The Corporation continues to pay a California surtax of 1.5%
of taxable income or the minimum state tax, whichever is greater.
5. PROFIT SHARING PLAN
MSSC has a profit sharing plan (the "Plan") which covers all employees who
have accumulated a minimum amount of hours of service during a year. MSSC's
contribution to the Plan is determined annually by the Board of Directors.
Provisions for contributions to the profit sharing plan of $22,578 and
$21,457, respectively, were made for the years ended December 31, 1995 and
1996.
Effective July 1, 1997, there will be no additional contributions to the
Plan. Additionally, the Plan will be terminated and all assets distributed to
the participants as defined in the Plan.
6. RELATED PARTY TRANSACTIONS
The Company engages in transactions with a shareholder and partner whereby
working capital funds are loaned to the Company and repaid over terms agreed
to by both parties (see Note 7). Interest expense incurred on these loans
amount to $36,111 and $73,126 for the years ended December 31, 1995 and 1996,
respectively, and $36,712 and $61,968 for the six months ended June 30, 1996
and 1997, respectively.
Certain of the Company's buildings and equipment are regularly repaired and
maintained by Lee's Two-Way Radio, a California corporation owned and
controlled by Norman Kramer, a general partner. Payments to Lee's Two-Way
Radio for the years ended December 31, 1995 and 1996 were $31,369 and $34,765,
respectively.
Payments for administrative services in the amount of $16,194 and $14,466
for the years ended December 31, 1995 and 1996, respectively, were paid to
Norman Kramer, a general partner.
F-63
<PAGE>
MERIDIAN COMMUNICATIONS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS
UNAUDITED)
7. LONG-TERM LOANS PAYABLE TO SHAREHOLDER AND PARTNER
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1995 1996 1997
-------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Unsecured loan payable to shareholder in the
original amount of $310,000, payable in sixty
monthly installments of $6,857, including
interest at the rate of 10% per annum. Final
installment is due March 31, 2000............ $272,654 $ 218,440 $ 189,240
Unsecured loan payable to shareholder in the
original amount of $400,000 at December 31,
1995 and increased to $500,000 during 1996,
payable in sixty monthly installments of
$10,624 per month, including interest at the
rate of 10% per annum. Final installment due
August 31, 2001.............................. 400,000 473,848 432,956
Unsecured loan payable to shareholder in the
original amount of $55,000, interest payable
at the rate of 10% per annum, due November
27, 2001..................................... 55,000 55,000
Unsecured loan payable to shareholder in the
original amount of $500,000, interest payable
at the rate of 10% per annum, due December
31, 2001..................................... 500,000 500,000
Unsecured temporary loans payable to share-
holder and partner, at the rate of 10% per
annum, payable upon demand................... 219,000
-------- ---------- ----------
672,654 1,247,288 1,396,196
Less current maturities....................... 119,121 234,607 477,388
-------- ---------- ----------
$553,533 $1,012,681 $ 918,808
======== ========== ==========
</TABLE>
All loans to the shareholder and partner were paid in full following the
sale of the Company's assets and business to ATS (see Note 9).
8. SALE OF THE REPEATER BUSINESS
Effective December 1, 1996, the Company entered into a ten-year agreement
with an unrelated party granting the party the right to manage a repeater
system and granting the party an option to purchase the system. Under the
agreement, the Company received a non-refundable $300,000 option fee in the
first quarter of 1997 from the party. In addition, the Company receives
repeater service fees quarterly from the party. As of June 30, 1997, the
system is still being managed by the party and the purchase option has not
been exercised.
Effective February 19, 1997, the Company sold a repeater system to an
unrelated party for $3,000,000. As of June 30, 1997, the uncollected portion
of the purchase price, $2,250,000, was included in non-trade accounts
receivable. This amount was received during August 1997.
Effective February 28, 1997, the balance of the repeater business was sold
to a separate buyer for the assumption of certain liabilities regarding the
business.
Revenues for the repeater business which were transferred as a result of
these transactions are $140,945, $206,556 and $54,087 for the years and period
ended December 31, 1995 and 1996, and June 30, 1997, respectively.
F-64
<PAGE>
MERIDIAN COMMUNICATIONS
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS
UNAUDITED)
9. SUBSEQUENT EVENT (UNAUDITED)
Effective July 1, 1997, the Company sold substantially all of its assets and
the business related to these assets to American Tower Systems, Inc. ("ATS").
The combined purchase price was $32,121,638 plus construction adjustments of
$581,042 for the acquisition and construction of certain new sites from June
14, 1996 through the date of the sale. Assets which were not sold to ATS
include cash, accounts receivable, and assets related to the repeater business
which were sold to unrelated buyers (see Note 8).
F-65
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
American Tower Systems, Inc.
We have audited the accompanying balance sheets of Tucson Communications
Company (the "Partnership") as of December 31, 1997 and 1996, and the related
statements of income, partners' deficit, and cash flows for the years then
ended. The financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Tucson Communications
Company at December 31, 1997 and 1996, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
Ernst & Young LLP
San Diego, California
January 13, 1998, except for Note 7,
as to which the date is January 27, 1998
F-66
<PAGE>
TUCSON COMMUNICATIONS COMPANY
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................... $ 623 $ 389
PROPERTY AND EQUIPMENT, net........................... 751 836
OTHER ASSETS.......................................... 16 18
------ -------
TOTAL................................................. $1,390 $ 1,243
====== =======
LIABILITIES AND PARTNERS' DEFICIT
CURRENT LIABILITIES:
Current portion of long-term debt................... $ 198 $ 180
Accrued expenses.................................... 31 18
------ -------
Total current liabilities......................... 229 198
LONG-TERM DEBT........................................ 1,851 2,065
OTHER LONG-TERM LIABILITIES........................... 22 47
------ -------
Total long-term liabilities....................... 1,873 2,112
PARTNERS' DEFICIT..................................... (712) (1,067)
------ -------
TOTAL................................................. $1,390 $ 1,243
====== =======
</TABLE>
See accompanying notes to financial statements.
F-67
<PAGE>
TUCSON COMMUNICATIONS COMPANY
STATEMENTS OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
REVENUES:
Tower revenues, including reimbursed expenses of
$121 and $116, respectively....................... $1,460 $1,438
OPERATING EXPENSES:
Tower operations................................... 317 287
Depreciation and amortization...................... 166 164
General and administrative......................... 136 84
------ ------
Total operating expenses......................... 619 535
------ ------
INCOME FROM OPERATIONS............................... 841 903
OTHER INCOME......................................... 12 19
INTEREST EXPENSE..................................... (198) (213)
------ ------
NET INCOME........................................... $ 655 $ 709
====== ======
</TABLE>
See accompanying notes to financial statements.
F-68
<PAGE>
TUCSON COMMUNICATIONS COMPANY
STATEMENTS OF PARTNERS' DEFICIT
(IN THOUSANDS)
<TABLE>
<S> <C>
BALANCE, DECEMBER 31, 1995............................................ $(1,151)
Net income............................................................ 709
Distributions......................................................... (625)
-------
BALANCE, DECEMBER 31, 1996............................................ (1,067)
Net income............................................................ 655
Distributions......................................................... (300)
-------
BALANCE, DECEMBER 31, 1997............................................ $ (712)
=======
</TABLE>
See accompanying notes to financial statements.
F-69
<PAGE>
TUCSON COMMUNICATIONS COMPANY
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................................... $ 655 $ 709
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization...................... 166 164
Changes in assets and liabilities:
Accrued expenses................................. 13 12
Other long-term liabilities...................... (25) (9)
----- -----
Net cash provided by operating activities...... 809 876
----- -----
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment................ (79) (12)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt........................ (196) (183)
Distributions...................................... (300) (625)
----- -----
Net cash used in financing activities.......... (496) (808)
----- -----
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS......................................... 234 56
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD....... 389 333
----- -----
CASH AND CASH EQUIVALENTS, END OF PERIOD............. $ 623 $ 389
===== =====
</TABLE>
See accompanying notes to financial statements.
F-70
<PAGE>
TUCSON COMMUNICATIONS COMPANY
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997 AND 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business and Partnership Structure--Tucson Communications Company (the
"Partnership") was organized as a limited partnership in the state of
California on October 6, 1983 for the purpose of developing, managing and
leasing a communications site located in the Tucson Mountains near Tucson,
Arizona. Income allocations and cash distributions are in accordance with the
partnership agreement.
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results may differ from those estimates, and
such differences could be material to the financial statements.
Concentration of Credit Risk--The Partnership extends credit to customers on
an unsecured basis in the normal course of business. The Partnership has
policies governing the extension of credit and collection of amounts due from
customers.
Impairment of Long-Lived Assets--In March 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of ("FAS 121"). FAS 121 addresses the accounting for the
impairment of long-lived assets when events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. The
Partnership adopted this statement during 1996 and the impact on the
Partnership's results of operations, liquidity or financial position was not
material.
Cash and Cash Equivalents--Cash and cash equivalents includes cash on hand,
demand deposits, and short-term investments with original maturities of three
months or less.
Property and Equipment--Property and equipment are recorded at cost. Cost
includes expenditures for tower and related assets. Depreciation is provided
using the double-declining balance method on equipment and straight-line
method on buildings over estimated useful lives ranging from five to 31.5
years.
Fair Value of Financial Instruments--The Partnership believes that the
carrying value of all financial instruments is a reasonable estimate of fair
value as of December 31, 1997 and 1996, respectively.
Recognition of Revenues--Tower revenues are recognized when earned over the
lease terms.
Income Taxes--The financial statements contain no provision for income taxes
since the income or loss of the Partnership flows through to the Partners, who
are responsible for including their share of the taxable results of operations
on their respective tax returns.
F-71
<PAGE>
TUCSON COMMUNICATIONS COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
2. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
Land and improvements............................ $ 593 $ 591
Towers and buildings............................. 1,635 1,635
Technical equipment.............................. 1,309 1,293
Construction in progress......................... 73 12
------- -------
Total.......................................... 3,610 3,531
Less accumulated depreciation.................... (2,859) (2,695)
------- -------
Property and equipment, net...................... $ 751 $ 836
======= =======
</TABLE>
The Partnership's property and equipment are generally leased to customers
under noncancelable operating leases with remaining terms ranging from one to
18 years. However, the leases allow cancellation under certain technical
circumstances as specified in the respective lease agreements. Many of the
leases also contain renewal options with specified increases in lease payments
upon exercise of the renewal option.
Future minimum tower revenues required to be paid by lessees under all
noncancelable leases in effect at December 31, 1997 are as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31:
------------------------
<S> <C>
1998.......................................................... $ 1,362
1999.......................................................... 1,401
2000.......................................................... 1,444
2001.......................................................... 1,489
2002.......................................................... 1,536
Thereafter.................................................... 11,496
-------
Total....................................................... $18,728
=======
</TABLE>
The amounts for the following customer accounted for greater than 10% of
total operating revenues (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
Motorola......................................... $443 $442
Peoples Choice................................... 143 143
Saturn Cable..................................... 156 149
</TABLE>
3. OTHER ASSETS
Other assets consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
Prepaid loan fees................................ $ 31 $ 31
Less accumulated amortization.................... (16) (14)
Deposits......................................... 1 1
---- ----
Other assets..................................... $ 16 $ 18
==== ====
</TABLE>
F-72
<PAGE>
TUCSON COMMUNICATIONS COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
4. LONG-TERM DEBT
On May 31, 1990, the Partnership entered into a loan agreement with a
financial institution to borrow $3,100,000. Every twelve months the loan bears
a new interest rate based on the one-year Constant Maturities, plus 3.5%. At
December 31, 1997, the interest rate in effect was 9.15%. The loan is secured
by land and equipment located on Tucson Mountain. Interest and principal
payments are payable monthly and the loan matures on July 1, 2005. Cash paid
for interest during the year ended December 31, 1997 and 1996 was $198,000 and
$214,000, respectively.
Future principal payments required under the Company's financing agreement
at December 31, 1997 are approximately (in thousands):
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31:
------------------------
<S> <C>
1998........................................................... $ 198
1999........................................................... 216
2000........................................................... 237
2001........................................................... 260
2002........................................................... 285
Thereafter..................................................... 853
------
Total........................................................ $2,049
======
</TABLE>
5. RELATED PARTY TRANSACTIONS
The Partnership pays an affiliated company for salaries, rent and utilities.
During the years ended December 31, 1997 and 1996, the Partnership paid
$72,000 and $65,000, respectively. In addition, the Partnership pays an
affiliate of the general partner on an hourly basis for management services.
During the years ended December 31, 1997 and 1996, the Partnership paid
$34,000 and $29,000, respectively.
6. CONTINGENCY
The Partnership received notification of a matter involving threatened
litigation relating to an on-site injury suffered by an individual during
1996. The party has requested a settlement payment of $800,000. Management of
the Partnership believes any liability arising from this matter will be
covered by insurance and will not have a material impact on the Partnership's
financial statements.
7. SUBSEQUENT EVENT
On January 27, 1998, the Partnership sold substantially all of the assets of
the Partnership to American Tower Systems, Inc. for approximately $12,000,000.
F-73
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Stockholders
Gearon & Co., Inc.:
We have audited the accompanying balance sheets of Gearon & Co., Inc. (the
"Company") as of December 31, 1997 and 1996, and the related statements of
operations, changes in stockholders' equity, and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at December 31, 1997 and 1996,
and the results of its operations and its cash flows for the years then ended,
in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Atlanta, Georgia
February 27, 1998
F-74
<PAGE>
GEARON & CO., INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.......................... $ 4,285,940 $ 813,182
Accounts receivable--trade, net of allowance for
doubtful accounts of $309,164 and $129,650 in 1997
and 1996, respectively............................ 6,516,370 7,132,363
Unbilled receivables............................... 4,741,198 515,688
Accounts receivable--other......................... 286,751 6,390
Receivable from related party...................... -- 200,000
----------- ----------
Total current assets............................. 15,830,259 8,667,623
PROPERTY AND EQUIPMENT, net.......................... 3,793,881 561,028
OTHER ASSETS......................................... 138,800 27,530
----------- ----------
TOTAL................................................ $19,762,940 $9,256,181
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable................................... $ 2,653,403 $ 27,587
Accrued expenses................................... 239,350 39,693
Accrued merger related expenses.................... 6,225,205
Note payable....................................... 5,000,000
----------- ----------
Total current liabilities........................ 14,117,958 67,280
COMMITMENTS AND CONTINGENCIES (Note 3)
STOCKHOLDERS' EQUITY
Common stock, no par value, 10,000 shares
authorized;
7,500 issued and outstanding in 1996.............. 750
Class A voting common stock, no par value, 10,000
shares authorized, 7,500 issued and outstanding in
1997.............................................. 8
Class B nonvoting common stock, no par value,
1,000,000 shares authorized, 798,335 issued and
outstanding in 1997............................... 798
Additional paid-in capital......................... 5,549,944
Retained earnings.................................. 94,232 9,188,151
----------- ----------
Total stockholder's equity....................... 5,644,982 9,188,901
----------- ----------
TOTAL................................................ $19,762,940 $9,256,181
=========== ==========
</TABLE>
See notes to financial statements.
F-75
<PAGE>
GEARON & CO., INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
REVENUES:
Fees and bonuses................................... $25,052,348 $15,613,655
Pass-through revenues.............................. 4,376,070 5,349,795
Tower rentals...................................... 172,868 53,200
Other.............................................. 328,467 467,785
----------- -----------
Total revenues................................... 29,929,753 21,484,435
OPERATING EXPENSES:
Operating expenses................................. 12,835,263 6,619,029
Tower expenses..................................... 165,887 41,926
Pass-through expenses.............................. 4,376,070 5,349,795
----------- -----------
Total operating expenses......................... 17,377,220 12,010,750
----------- -----------
GROSS PROFIT......................................... 12,552,533 9,473,685
General and administrative expenses.................. 2,496,749 1,394,757
Merger related expenses.............................. 13,796,434
----------- -----------
INCOME (LOSS) FROM OPERATIONS........................ (3,740,650) 8,078,928
OTHER INCOME AND EXPENSES, NET....................... 73,310 94,822
----------- -----------
NET INCOME (LOSS).................................... $(3,667,340) $ 8,173,750
=========== ===========
</TABLE>
See notes to financial statements.
F-76
<PAGE>
GEARON & CO., INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
------------------------- ADDITIONAL
COMMON CLASS A CLASS B PAID-IN RETAINED
STOCK VOTING NONVOTING CAPITAL EARNINGS TOTAL
------ ------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE--January 1,
1996................... $ 750 $-- $-- $ -- $ 8,783,131 $ 8,783,881
Distributions to
shareholder.......... (7,768,730) (7,768,730)
Net income............ 8,173,750 8,173,750
----- ---- ---- ---------- ----------- -----------
BALANCE--December 31,
1996................... 750 9,188,151 9,188,901
Exchange of 7,500
shares of original
common stock for
7,500 shares of Class
A voting stock and
742,500 shares of
Class B nonvoting
common stock......... (750) 8 742
Issuance of 55,835
shares of Class B
nonvoting stock to
certain employees.... 56 5,549,944 5,550,000
Distributions to
shareholder.......... (5,426,579) (5,426,579)
Net loss.............. (3,667,340) (3,667,340)
----- ---- ---- ---------- ----------- -----------
BALANCE--December 31,
1997................... $ -- $ 8 $798 $5,549,944 $ 94,232 $ 5,644,982
===== ==== ==== ========== =========== ===========
</TABLE>
See notes to financial statements.
F-77
<PAGE>
GEARON & CO., INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................. $(3,667,340) $ 8,173,750
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Provision for doubtful accounts................. 383,167 129,650
Depreciation.................................... 185,670 103,283
Noncash merger related expense.................. 5,550,000
Changes in assets and liabilities;
Decrease (increase) in accounts receivable
trade........................................ 232,826 (3,434,228)
Decrease (increase) in unbilled receivables... (4,225,510) 782,867
Decrease (increase) in accounts receivable
other........................................ (280,361) 20,307
Increase in other assets...................... (111,270) (21,748)
Increase (decrease) in accounts payable....... 1,779,560 (35,463)
Increase (decrease) in accrued expenses....... 199,657 (22,523)
Increase in accrued merger related expense.... 6,225,205
------------ -----------
Net cash provided by operating activities......... 6,271,604 5,695,895
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES;
Acquisition of property and equipment............. (329,998) (134,910)
Construction of towers, net of accounts payable... (2,242,269) (336,242)
------------ -----------
Net cash used in investing activities....... (2,572,267) (471,152)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to stockholder...................... (5,426,579) (7,768,730)
Repayments from (loans to) related party.......... 200,000 (170,000)
Proceeds from note payable........................ 5,000,000
Loan from stockholder............................. 500,000
Repayment to stockholder.......................... (500,000)
------------ -----------
Net cash used in financing activities....... (226,579) (7,938,730)
------------ -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS........................................ 3,472,758 (2,713,987)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR ....... 813,182 3,527,169
------------ -----------
CASH AND CASH EQUIVALENTS, END OF YEAR.............. $ 4,285,940 $ 813,182
============ ===========
</TABLE>
See notes to financial statements.
F-78
<PAGE>
GEARON & CO., INC.
NOTES TO FINANCIAL STATEMENTS
(AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business and Corporate Structure--Gearon & Co., Inc. (the "Company"), a
Georgia corporation, was incorporated on September 6, 1991 and is engaged in
the site acquisition, development, construction and facility management of
wireless network communication facilities on behalf of its customers. The
Company operates in markets throughout the United States. In addition, as of
December 31, 1997, the Company owned and operated 16 communications towers
with an additional 20 towers in varying stages of development. The towers are
located in Georgia, Florida, and Tennessee.
On January 22, 1998, the Company merged into and became a part of American
Tower Systems, Inc. (ATSI) a subsidiary of American Radio Systems Corporation
(ARS), pursuant to an Agreement and Plan of Merger ("the Merger Agreement")
executed on November 21, 1997. Under the Merger Agreement, the holders of the
Company's common stock at the effective date of the merger received a total of
$32,000,000 in cash and liabilities assumed by ATSI and 5,333,333 shares of
ATSI stock with an agreed-upon fair value of $48,000,000.
On December 30, 1997, the Company awarded a total of 55,835 shares of Class
B common stock valued at $5,550,000 (based on the share price paid by ATSI in
the merger) to certain key employees, awarded cash bonuses totaling
approximately $7,667,000 to certain employees, and incurred approximately
$580,000 in other merger related expenses. On January 20, 1998, the Company
awarded an additional 503 shares of Class B common stock valued at $50,000
(based on the share price paid by ATSI in the merger) to a key employee. In
addition, on January 20, 1998, accounts receivable of approximately
$11,000,000 and two automobiles with a net book value of $16,247 were
distributed to the majority stockholder.
Pursuant to the Merger Agreement, the Company borrowed a total of
$10,000,000 from ATSI in two $5,000,000 installments on December 24, 1997 and
January 20, 1998, respectively, to fund working capital and merger related
expenses. Such borrowings bore interest at 7.5% and were repaid at closing.
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Concentration of Credit Risk--The Company extends credit to customers on an
unsecured basis in the normal course of business. Credit risk is limited due
to the financial reputation of the customers comprising the Company's customer
base. The Company has policies governing the extension of credit and
collection of amounts due from customers.
The following represents a summary of fees and bonuses earned from
individual customers in excess of 10% of total fees and bonuses for the year
ended:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Customer A........................................... $7,705,000 $4,773,000
Customer B........................................... 5,462,000
Customer C........................................... 5,660,000
</TABLE>
Impairment of Long-Lived Assets--In March 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards ("SFAS")
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of. SFAS 121 addresses the accounting for the impairment
of
F-79
<PAGE>
GEARON & CO., INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
long-lived assets, certain intangibles and goodwill when events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The Company adopted this statement during 1996 and the impact on
the Company's results of operations, liquidity or financial position was not
material.
Cash and Cash Equivalents--Cash and cash equivalents includes cash on hand,
demand deposits and short-term investments with original maturities of three
months or less.
Property and Equipment--Property and equipment are recorded at cost.
Ordinary repairs and maintenance are expensed as incurred; major replacements
and improvements are capitalized and depreciated over their estimated useful
lives. Depreciation is provided using the straight-line method over the
estimated useful lives of the assets as follows:
<TABLE>
<S> <C>
Leasehold improvements...................................... Life of lease
Furniture and fixtures...................................... 3-7 years
Machinery and equipment..................................... 3-7 years
Communications towers....................................... 15 years
</TABLE>
Construction in Progress--The Company's tower construction expenditures are
recorded as construction in progress until the assets are placed in service.
When the assets are placed in service, they are transferred to the appropriate
property and equipment category and depreciated. The Company also capitalizes
subcontractor and employee labor and overhead costs incurred in connection
with the construction of towers.
Revenue Recognition--Revenues from fees and bonuses are recognized based
upon the completion of certain activities as defined by the respective
contracts with individual customers. Several of the contracts provide for
reimbursement by customers of certain costs in addition to fees earned. Such
costs are recognized on the accrual basis and are reflected as pass-through
revenues and expenses in the statements of operations. Tower and sublease
revenues are recognized when earned over the terms of the related leases.
Income Taxes--At inception, the Company elected to be treated as a
Subchapter S Corporation ("S Corporation") for income tax purposes.
Accordingly, no recognition has been given to income taxes in the financial
statements since the income is reportable on the individual tax return of the
stockholders. Two states in which the Company does business do not recognize S
Corporations for tax purposes and therefore the Company is liable for income
taxes in those states. The amounts paid or accrued for income taxes were not
material in relation to the financial statements.
New Accounting Pronouncement--In June 1997, the Financial Accounting
Standards Board issued SFAS 131, "Disclosure About Segments of an Enterprise
and Related Information" which the Company will adopt in 1998. SFAS 131
redefines how operating segments are determined and requires disclosure of
certain financial and descriptive information about a company's operating
segments. The Company has not yet completed its analysis of the impact of this
statement.
Reclassifications--Certain 1996 amounts have been reclassified to conform to
the 1997 presentation.
F-80
<PAGE>
GEARON & CO., INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
2. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
Land............................................ $ 82,198 $ --
Leasehold improvements.......................... 73,180 60,902
Furniture and fixtures.......................... 138,111 81,694
Machinery and equipment......................... 564,404 306,705
Communications towers........................... 2,542,922 336,242
Construction in progress........................ 801,060 --
---------- ---------
Property and equipment, at cost................. 4,201,875 785,543
Accumulated depreciation........................ (407,994) (224,515)
---------- ---------
Property and equipment--net..................... 3,793,881 $ 561,028
========== =========
</TABLE>
3. COMMITMENTS AND CONTINGENCIES
Lease Obligations--The Company currently leases office space, office
equipment and land for communications towers under operating leases that
expire at varying dates through 2002. The tower ground leases contain options
for the Company to renew, at its discretion, for five-year periods up to a
maximum term of twenty-five years. The leases require the Company to maintain
certain insurance coverage and provide for maintenance and repairs. Future
minimum lease payments for noncancelable office, equipment and ground leases
are as follows for the periods ending December 31:
<TABLE>
<S> <C>
1998........................................................... 400,794
1999........................................................... 374,501
2000........................................................... 351,755
2001........................................................... 234,971
2002........................................................... 179,705
----------
Total.......................................................... $1,541,726
==========
</TABLE>
Customer Leases--The Company owns communications towers which it leases to
third parties. The leases which are noncancelable and expire at various dates
through 2006, contain options for the lessees to renew, at their discretion,
for 5-year periods up to a maximum term of 25 years.
Future minimum rental receipts expected to be received from customers under
noncancelable leases are as follows for the periods ending December 31:
<TABLE>
<S> <C>
1998........................................................... $ 731,511
1999........................................................... 794,812
2000........................................................... 803,334
2001........................................................... 766,185
2002........................................................... 654,154
Thereafter..................................................... 159,016
----------
Total.......................................................... $3,909,012
==========
</TABLE>
F-81
<PAGE>
GEARON & CO., INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Purchase Commitments--At December 31, 1997, the Company had entered into an
agreement to acquire land for a communications tower for a purchase price of
$100,000. The purchase closed on February 11, 1998. In addition, at December
31, 1997, the Company had a verbal agreement with a customer to purchase seven
communications towers for an aggregate purchase price of approximately
$1,000,000. This purchase is expected to be consummated in March 1998.
Employment Agreement--In August 1997, the Company entered into an employment
agreement with an officer of the Company. The Agreement is for a term of one
year and is renewable for successive one-year terms. The agreement contains
provisions for compensation in the event of termination or a change in control
of the Company. The compensation due to this officer as a result of the merger
discussed in Note 1 has been included in accrued merger related expenses as of
December 31, 1997. In November and December 1997, the Company entered into
employment agreements with two officers of the Company. These agreements are
for a term of two years, renewable for successive two-year terms and contain
provisions for compensation in the event of termination other than for cause.
Legal Matters--The Company is a party to certain legal matters arising in
the ordinary course of business. In the opinion of management, none of these
matters are expected to have a material effect on the financial position,
results of operations, or cash flows of the Company.
4. RETIREMENT PLAN
On September 1, 1996, the Company established the Gearon & Co., Inc.
Employee Savings and Retirement Plan (the "Plan"), a 401(k) plan. Employees of
the Company are eligible for participation in the Plan subject to certain
minimum age and length of employment requirements. Plan participants can
contribute from 2% to 15% of their compensation, as defined. The Company
matches 25% of the participants' contributions up to 10% of compensation. The
Plan's assets are invested in equity, bond, balanced, and money market mutual
funds. The Company contributed approximately $79,000 and $24,000 for the years
ended December 31, 1997 and 1996, respectively.
5. COMMON STOCK
Effective October 23, 1997, the Company authorized the issuance of 10,000
shares of Class A common stock and 1,000,000 shares of Class B common stock.
Class A has voting privileges while Class B common stock is nonvoting. On
October 23, 1997, all 7,500 shares of common stock previously outstanding were
exchanged for 7,500 shares of Class A common stock and 742,500 shares of Class
B common stock which were transferred to the original stockholder and a trust
related to the original stockholder.
6. RELATED PARTY TRANSACTIONS
The receivable from a related party totaling $200,000 at December 31, 1996
was repaid in full in January 1997.
F-82
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
American Tower Corporation:
We have audited the accompanying consolidated balance sheets of American
Tower Corporation and subsidiaries as of December 31, 1996 and 1997, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1997.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of American
Tower Corporation and subsidiaries as of December 31, 1996 and 1997 and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1997 in conformity with generally
accepted accounting principles.
KPMG Peat Marwick llp
Houston, Texas
January 23, 1998
F-83
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, MARCH 31,
1996 1997 1998
------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents.............. $ 92 $ 996 $ 1,111
Accounts receivable, net of allowance
for doubtful accounts of $104, $175
and $174 respectively................. 816 1,021 1,084
Prepaid expenses and other current as-
sets.................................. 793 719 984
Assets held for sale................... 700 -- --
------- -------- --------
Total current assets.................. 2,401 2,736 3,179
Land.................................... 5,301 6,234 6,239
Rental towers and related fee based as-
sets, net of accumulated depreciation
of $3,984, $8,362 and $9,730, respec-
tively................................. 61,556 112,412 125,788
Other assets, net of accumulated amorti-
zation of $836, $951 and $1,268, re-
spectively............................. 6,269 7,432 7,785
------- -------- --------
Total assets.......................... $75,527 $128,814 $142,991
======= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable....................... $ 720 $ 2,810 $ 688
Accrued interest payable............... 598 1,061 4
Deferred revenues and other current li-
abilities............................. 978 2,125 3,277
Current portion of long-term debt...... 1,075 1,000 1,000
------- -------- --------
Total current liabilities............. 3,371 6,996 4,969
Long-term debt, less current portion.... 49,771 74,478 90,139
Other liabilities....................... 450 190 184
Deferred income taxes................... 6,337 6,767 6,957
------- -------- --------
Total liabilities..................... 59,929 88,431 102,249
Commitments and contingencies
Redeemable preferred stock $.01 par val-
ue.
Authorized 5,000,000 shares; 22,500
shares issued and outstanding......... 4,000 4,052 4,067
Stockholders' equity:
Common stock, $.01 par value. Autho-
rized 250,000 shares; 75,331, 149,549
and 149,549 shares issued and out-
standing, respectively................ 1 2 2
Additional paid-in capital............. 12,051 36,426 36,426
Retained earnings (accumulated defi-
cit).................................. (454) (97) 247
------- -------- --------
Total stockholders' equity............ 11,598 36,331 36,675
------- -------- --------
Total liabilities and stockholders'
equity............................... $75,527 $128,814 $142,991
======= ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-84
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------------ --------------------
1995 1996 1997 1997 1998
------ ------- ------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Total revenues................ $8,277 $12,366 $20,006 $ 4,581 $ 6,260
Operating expenses:
Direct tower costs........... 1,868 2,849 4,138 856 1,305
Selling, general and adminis-
trative..................... 1,601 2,049 3,183 723 862
Depreciation and amortiza-
tion........................ 1,908 2,709 4,903 1,027 1,755
------ ------- ------- --------- ---------
Total operating expenses.... 5,377 7,607 12,224 2,606 3,922
------ ------- ------- --------- ---------
Operating income.............. 2,900 4,759 7,782 1,975 2,338
Interest expense.............. 3,068 3,808 5,439 1,285 1,791
Other expenses................ 414 150 514 33 --
------ ------- ------- --------- ---------
Income (loss) before income
taxes and extraordinary
item......................... (582) 801 1,829 657 547
Income tax (expense) benefit.. 217 (303) (801) (288) (188)
------ ------- ------- --------- ---------
Income (loss) before extraor-
dinary item.................. (365) 498 1,028 369 359
Extraordinary loss, net of tax
benefit of $117, $272, and
$371, respectively........... 207 451 619 -- --
------ ------- ------- --------- ---------
Net income (loss)............. (572) 47 409 369 359
Accretion of preferred stock.. -- -- 52 -- 15
------ ------- ------- --------- ---------
Net income (loss) available to
common stockholders.......... $ (572) $ 47 $ 35 $ 369 $ 344
====== ======= ======= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-85
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON STOCK
-------------
TOTAL
ADDITIONAL ACCUMULATED STOCKHOLDERS'
SHARES VALUE PAID-IN CAPITAL DEFICIT EQUITY
------- ----- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balances at December 31,
1994................... 67,500 $ 1 $ 7,424 $ 71 $ 7,496
Allocation of redeemable
preferred stock pro-
ceeds to warrants...... -- -- 500 -- 500
Net loss................ -- -- -- (572) (572)
------- --- ------- ---- -------
Balances at December 31,
1995................... 67,500 1 7,924 (501) 7,424
Shares of common stock
issued in acquisition.. 6,481 -- 4,127 -- 4,127
Conversion of warrants
to common stock........ 1,350 -- -- -- --
Net income.............. -- -- -- 47 47
------- --- ------- ---- -------
Balances at December 31,
1996................... 75,331 1 12,051 (454) 11,598
Conversion of warrants
to common stock........ 24,265 -- -- -- --
Conversion of warrants
with put feature to
common stock........... 12,462 -- 174 -- 174
Sale of common stock,
net of issuance costs.. 36,049 1 23,201 -- 23,202
Common stock issued in
connection with tower
acquisition............ 1,442 -- 1,000 -- 1,000
Net income.............. -- -- -- 409 409
Accretion of redeemable
preferred stock........ -- -- -- (52) (52)
------- --- ------- ---- -------
Balances at December 31,
1997................... 149,549 $ 2 36,426 (97) 36,331
Net income (unaudited)
....................... -- -- -- 359 359
Accretion of redeemable
preferred stock
(unaudited) ........... -- -- -- (15) (15)
------- --- ------- ---- -------
Balances at March 31,
1998 (unaudited) ...... 149,549 $ 2 $36,426 $247 $36,675
======= === ======= ==== =======
</TABLE>
See accompanying notes to consolidated financial statements
F-86
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------------ --------------------
1995 1996 1997 1997 1998
------ ------- ------- --------- ---------
(UNAUDITED) ---
<S> <C> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net income (loss)......... $ (572) $ 47 $ 409 $ 369 $ 359
Adjustments to reconcile
net income (loss) to net
cash
provided by operating
activities:
Depreciation and amorti-
zation.................. 1,908 2,709 4,903 1,027 1,755
Accretion of debt dis-
counts.................. 202 808 121 109 111
Deferred income taxes.... (334) 31 430 288 190
Deferred loan costs writ-
ten-off................. 324 -- 990 -- --
Changes in assets and lia-
bilities:
Increase in accounts re-
ceivable, net........... (203) (218) (205) (709) (63)
(Increase) decrease in
prepaid expenses and
other current assets.... (109) (111) 74 (239) (265)
Increase (decrease) in
accounts payable........ 59 231 2,090 194 (2,122)
Increase (decrease) in
accrued interest pay-
able.................... 14 59 463 67 (1,057)
Increase (decrease) in
deferred revenues and
other................... 332 (417) 1,061 143 1,152
------ ------- ------- --------- ---------
Total adjustments....... 2,193 3,092 9,927 880 (299)
------ ------- ------- --------- ---------
Net cash provided by op-
erating activities..... 1,621 3,139 10,336 1,249 60
------ ------- ------- --------- ---------
Cash flows from investing
activities:
Payments for purchases of
towers and related as-
sets..................... (7,351) (14,249) (56,075) (11,795) (15,484)
Proceeds from the sale of
land..................... 24 -- -- -- --
Payments for purchases of
land..................... (500) (1,124) (933) (100) (5)
------ ------- ------- --------- ---------
Net cash used in invest-
ing activities......... (7,827) (15,373) (57,008) (11,895) (15,489)
------ ------- ------- --------- ---------
Cash flows from financing
activities:
Proceeds from borrowings
on long-term debt........ 4,646 39,850 70,800 11,262 15,544
Proceeds from issuance of
common stock............. -- -- 23,202 -- --
Proceeds from issuance of
preferred stock.......... 4,133 367 -- -- --
Payments of long-term
debt..................... (1,680) (28,736) (45,633) -- --
Payments of deferred loan
costs and interest rate
cap...................... (98) (1,060) (793) -- --
------ ------- ------- --------- ---------
Net cash provided by
(used in) financing ac-
tivities............... 7,001 10,421 47,576 11,262 15,544
------ ------- ------- --------- ---------
Net increase (decrease)
in cash and cash equiv-
alents................. 795 (1,813) 904 616 115
Cash and cash equivalents
at beginning of period.... 1,110 1,905 92 92 996
------ ------- ------- --------- ---------
Cash and cash equivalents
at end of period.......... $1,905 $ 92 $ 996 $ 708 $ 1,111
====== ======= ======= ========= =========
Supplemental disclosure of
cash flow information--
cash paid during the pe-
riod for interest......... $2,915 $ 2,925 $ 3,902 $ 656 $ 1,919
====== ======= ======= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-87
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 AND MARCH 31, 1997 AND 1998 (UNAUDITED)
(1)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
The accompanying consolidated financial statements reflect the financial
position, results of operations, and cash flows of American Tower Corporation
and its wholly-owned subsidiaries, collectively referred to as ATC or the
Company. All significant intercompany transactions and balances have been
eliminated.
(b) Description of Business
The primary business of the Company is the leasing of antenna and
transmitter space on communication towers to companies using or providing
cellular telephone, paging, microwave and specialized mobile radio services.
The Company currently owns and operates communication tower sites located
primarily in the western, eastern and southern United States.
(c) Interim Financial Information
The unaudited financial statements for the three months ended March 31, 1997
and 1998 are presented for comparative purposes only and have been prepared on
a basis substantially consistent with that of the audited financial statements
included herein. In the opinion of management, such unaudited financial
statements include all adjustments, which are of a normal and recurring
nature, considered necessary for a fair presentation. Operating results for
the three-month periods ended March 31, 1997 and 1998 are not necessarily
indicative of the results that may be expected for a full year.
(d) Cash Equivalents
Cash equivalents consist of short-term investments with an original maturity
of three months or less.
(e) Rental Towers and Related Fee Based Assets
Rental towers and related fee based assets are stated at cost. Depreciation
on rental towers and related fee based assets is calculated on the straight-
line method over the estimated useful lives of the assets which range from 3
to 25 years.
(f) Other Assets
Other assets include licenses and permits which are amortized on a straight-
line basis over their expected period of benefit, 25 years, and a noncompete
agreement with a stockholder which is being amortized on a straight-line basis
over its seven year term. Also included are deferred loan costs associated
with various debt issuances which are amortized over the terms of the related
debt based on the amount of outstanding debt using the interest method.
(g) Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of
The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of, on January 1, 1996. This
statement requires that long-lived assets and certain identifiable intangibles
be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of
the carrying amount of an asset to future net cash flows expected to be
generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or the fair value
less costs of disposal. Adoption of this statement did not have a material
impact on the Company's financial position, results of operations, or
liquidity.
F-88
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(h) Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years which those temporary
differences are expected to be recovered or settled. The effect on deferred
tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
(i) Fair Value of Financial Instruments
SFAS No. 107, Disclosure about Fair Value of Financial Instruments requires
the Company to disclose estimated fair values for its financial instruments.
Fair value estimates are made at discrete points in time based on relevant
market information. These estimates may be subjective in nature and involve
uncertainties and matters of significant judgment and therefore, cannot be
determined with precision.
The Company believes that the carrying amounts of its financial instrument
current assets and current liabilities approximate the fair value of such
items due to their short-term nature. The carrying amount of long-term debt
approximates its fair value because the interest rates approximate market.
(j) Revenue Recognition
Revenues are recognized as tower services are provided. Amounts billed or
received prior to services being performed are deferred until such time as the
revenue is earned.
(k) Stock Option Plan
On January 1, 1996, the Company adopted SFAS No. 123, Accounting for Stock-
Based Compensation, which permits entities to recognize as expense over the
vesting period the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 allows entities to continue to apply the
provisions of Accounting Principles Board (APB) Opinion No. 25 and provide pro
forma net income disclosures as if the fair-value-based method defined in SFAS
No. 123 had been applied. The Company has elected to continue to apply the
provisions of APB Opinion No. 25 and provide the pro forma disclosure
requirements of SFAS No. 123.
(l) Interest Rate Cap Agreements
The Company was party to a financial instrument to reduce its exposure to
fluctuations in interest rates. The purchase price of the interest rate cap
agreements was capitalized and included in prepaid expenses in the
accompanying consolidated balance sheets and amortized over the life of the
agreements using the straight-line method. The interest rate cap agreements
expired in December 1997.
(m) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
(n) Reclassifications
Certain reclassifications have been made to prior period amounts in order to
conform to the current presentation.
(2)RENTAL TOWERS AND RELATED FEE BASED ASSETS
Asset Acquisitions
In December 1995, the Company acquired in a single transaction substantially
all of the tower sites and locations of CSX Realty Development Corporation
(CSX) for $9,750,000 which was funded through cash and
F-89
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
seller financed debt. In addition during 1995, the Company acquired 81 other
tower sites in several unrelated transactions.
In October 1996, the Company acquired in a single transaction substantially
all of the tower sites and locations of Prime Communications Sites Holdings
LLC and its subsidiary (Prime) for approximately $15.3 million which was
funded through borrowings under the Company's credit facility, seller financed
debt and the issuance of common stock of the Company to the seller. In
addition, during 1996 the Company acquired four other tower sites in two
unrelated transactions.
In July 1997, the Company acquired in a single transaction 32 tower sites
for approximately $11.8 million which was funded through borrowings under the
Company's credit facility. In addition, during 1997 the Company acquired 89
tower sites in several unrelated transactions totaling $25.2 million. The
purchase price for all acquisitions has been allocated to the land, towers and
related fee based assets and licenses and permits based on their respective
estimated fair values.
The following unaudited pro forma information represents the consolidated
results of operations of the Company as if the 1997 acquisitions had occurred
on January 1, 1996, and the 1996 acquisitions had occurred on January 1, 1995
(in thousands):
<TABLE>
<CAPTION>
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Rental revenue.................................... $10,575 $17,290 $21,578
Operating income.................................. $ 3,737 $ 7,835 $ 9,039
Net loss.......................................... $(1,442) $(2,002) $ (326)
</TABLE>
The pro forma information is not necessarily indicative of operating results
that would have occurred if each acquisition had been consummated as of the
respective dates, nor is it necessarily indicative of future operating
results. The actual results of operations of the acquired assets are included
in the Company's consolidated financial statements only from the date of
acquisition.
TOWER DISPOSAL
On January 13, 1997, the Company entered into a binding letter agreement
with a related shareholder and director to sell 45 communication towers for a
purchase price of $700,000. The closing of this transaction occurred during
March 1997. At the closing, the Company sold the communication towers to the
shareholder in exchange for a $700,000 reduction in payments owed under the
subordinated note payable to the shareholder issued in October 1994. See note
6 for further discussion. Due to the agreement, the related assets have been
reflected as assets held for resale on the December 31, 1996 balance sheet.
(3)PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consisted of the following (in
thousands):
<TABLE>
<CAPTION>
DECEMBER
31,
--------- MARCH 31, ---
1996 1997 1998
---- ---- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Prepaid land leases................................... $619 $637 $727
Other current assets.................................. 174 82 257
---- ---- ----
$793 $719 $984
==== ==== ====
</TABLE>
F-90
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(4)OTHER ASSETS
Other assets consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------- MARCH 31,
1996 1997 1998
------ ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Deferred loan costs, net.............................. $1,009 $ 751 $719
Licenses and permits, net............................. 4,428 5,898 6,289
Noncompete costs, net................................. 623 538 502
Other assets.......................................... 209 245 275
------ ------ ------
$6,269 $7,432 $7,785
====== ====== ======
</TABLE>
(5)DEFERRED REVENUES AND OTHER CURRENT LIABILITIES
Deferred revenues and other current liabilities consisted of the following
(in thousands):
<TABLE>
<CAPTION>
DECEMBER
31,
----------- MARCH 31,
1996 1997 1998
---- ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Deferred revenues....................................... $201 $1,125 $1,799
Deferred compensation contracts......................... 300 150 150
Accrued expenses and other.............................. 477 850 1,328
---- ------ ------
$978 $2,125 $3,277
==== ====== ======
</TABLE>
(6)LONG-TERM DEBT
On October 11, 1996, the Company entered into a senior credit facility (the
Credit Facility) in connection with the acquisition of the communication
towers from Prime as discussed in note 2. The Credit Facility was extinguished
during 1997 in connection with the Company entering into a new Senior Credit
Agreement, discussed in further detail below.
The Credit Facility included a $23 million revolving line of credit, which
included a sub-allotment for letters of credit, and a $37 million term loan
facility. The Company utilized the proceeds of the term loan to (i) repay
$21.6 million of principal and interest to its existing senior lenders, (ii)
prepay in full $6.1 million of principal and interest to its senior
subordinated lender, and (iii) to fund $8.6 million of the purchase price for
the Prime acquisition.
The Credit Facility incurred interest at LIBOR plus 275 basis points for
interest periods ranging up to five months; thereafter, the credit facility
incurred interest at LIBOR plus an applicable margin, not to exceed 275 basis
points, based upon a defined leverage ratio, for interest periods of one,
three or six months. The term loan and the revolving Credit Facility required
principal amortization with quarterly payments totaling $5.6 million in 1999.
The Credit Facility contained restrictions on payment of dividends, and set
forth minimum operating cash flows, as defined, to be attained by the Company.
Immediately prior to entering into the Credit Facility in October 1996, the
Company owed its senior lenders $21.5 million under a term loan, revolving
line of credit and acquisition line of credit facilities which had been
amended and extended in December 1995. The outstanding balance of the prior
senior agreement bore interest at LIBOR plus 275 basis points. In conjunction
with entering into the Credit Facility, the Company expensed $451,000, net of
taxes, of deferred loan and other financing costs associated with prior credit
facilities. In conjunction with the amendment of the Company's senior credit
agreement in December 1995, the Company expensed $207,000, net of taxes, of
deferred loan and other financing costs associated with prior credit
facilities. Such deferred loan and other financing costs written off in 1995
have been reflected as extraordinary losses in the consolidated statements of
operations.
F-91
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
On June 30, 1997, the Company entered into a new senior credit agreement
(the Credit Agreement). The Credit Agreement includes a $100 million revolving
line of credit, which includes a sub-allotment for letters of credit and a $25
million term loan facility. In connection with entering into the Credit
Agreement, the Company expensed $619,000, net of taxes, of deferred loan and
other financing costs associated with the prior credit facility. These
deferred loan and other financing costs written off in 1997 have been
reflected as extraordinary loss in the consolidated statements of operations.
SELLER ACQUISITION FINANCING
In connection with the acquisition of the towers and related sites in
October 1996 as more fully discussed in note 2 and above, the Company issued
an aggregate of $2.5 million of subordinated term notes to certain
sellers. Payment terms required (i) a single installment on October 11, 2004
or (ii) immediate payment upon an initial public offering. The subordinated
term notes incurred interest at 11% payable quarterly commencing January 1997.
During 1997 these notes were fully repaid.
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
---------------- MARCH 31,
1996 1997 1998
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Term note payable, due in quarterly payments
beginning in September 1999, interest at a
base rate, as defined...................... $ -- $70,800 $86,350
Term note payable, due in quarterly payments
beginning in January 1999, interest at
8.38% until May 1997 at which time interest
is LIBOR plus a maximum of 2.75%. Balance
repaid during 1997......................... 39,850 -- --
Seller financing, noninterest-bearing
secured note payable, due in annual
installments commencing December 20, 1996
through December 20, 2000.................. 6,313 5,313 5,313
Subordinated note payable to shareholder,
interest payable in quarterly installments
at 10.5% per annum; payment of principal
due in annual installments beginning
November 15, 2001; original principal
reduced by value of stock warrant (see note
9). Balance repaid during 1997............. 3,000 -- --
Subordinated notes payable, interest payable
in quarterly installments at 11.0% per
annum; single installment due October 2004.
Balance repaid during 1997................. 2,561 -- --
Noninterest-bearing unsecured note payable,
maturing in 1999........................... 500 500 500
Note payable, due in quarterly installments
commencing January 1, 1995 bearing interest
at 10%. Balance repaid during 1997......... 300 -- --
Other....................................... 43 34 34
Discounts associated with noninterest-
bearing obligations........................ (1,671) (1,169) (1,058)
Discount assigned to stock warrants (see
note 9).................................... (50) -- --
------- ------- -------
Total long-term debt...................... 50,846 75,478 91,139
Less current portion........................ 1,075 1,000 1,000
------- ------- -------
Long-term debt excluding current portion.. $49,771 $74,478 $90,139
======= ======= =======
</TABLE>
The Company was party to a financial instrument in order to reduce its
exposure to fluctuations in interest rates. The agreement provided for the
third parties to make payments to the Company whenever a defined floating
interest rate exceeded 10 percent per annum. No such payments were made in
1995 or 1996. Payments on the interest rate cap agreements were based on the
notional principal amount of the agreements; no funds were actually borrowed
or are to be repaid as of December 31, 1996. The unamortized portion of the
purchase price was approximately $107,000 and $50,000 at December 31, 1995 and
1996, respectively. $5,000,000 under this interest rate cap agreement expired
in 1995 and the remaining $9,000,000 agreement expired in December 1997.
F-92
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The aggregate annual maturities of long-term debt (not reduced for discount
rates on noninterest-bearing obligations) for each of the five years
subsequent to December 31, 1997 are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------
<S> <C>
1998................................. $ 1,000
1999................................. 2,250
2000................................. 6,457
2001................................. 5,000
2002................................. 8,300
Thereafter........................... 53,640
-------
$76,647
=======
</TABLE>
(7)FEDERAL INCOME TAXES
Income tax expense for the years ended December 31, 1995, 1996, and 1997
consisted of the following (in thousands):
<TABLE>
<CAPTION>
1995 1996 1997
------ ---- ----
<S> <C> <C> <C>
Current.................................................... $ -- $-- $--
Deferred................................................... (217) 303 801
------ ---- ----
$(217) $303 $801
====== ==== ====
</TABLE>
Income tax expense at December 31, 1995, 1996 and 1997 differed from the
amounts computed by applying the U.S. federal income tax rate of 34% to income
before taxes and extraordinary items as follows (in thousands):
<TABLE>
<CAPTION>
1995 1996 1997
----- ---- ----
<S> <C> <C> <C>
Computed "expected" tax expense (benefit).................. $(198) $272 $622
State taxes................................................ 29 28 30
Adjustment of prior taxes.................................. -- -- 112
Other...................................................... (48) 3 37
----- ---- ----
Total.................................................... $(217) $303 $801
===== ==== ====
</TABLE>
At December 31, 1997, the Company had net operating loss carryforwards
(NOLs) of approximately $14,285,000 for U.S. Federal income tax purposes. The
NOLs, if unused, will expire between 2008 and 2012. The portion of the NOLs
which existed prior to October 15, 1994 are subject to annual limitations
imposed by the Internal Revenue Code under Section 382. The current NOL
balance is subject to limitations should a change in ownership occur.
F-93
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December
31, 1996 and 1997 are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1997
------ ------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward.............................. $3,472 $5,357
Accrued liabilities.......................................... 64 92
Other........................................................ 72 67
------ ------
Net deferred tax assets..................................... 3,608 5,516
------ ------
Deferred tax liability--rental towers and related fee based
assets, principally due to differences in basis for financial
reporting purposes and tax purposes.......................... 9,945 12,283
------ ------
Net deferred tax liability.................................. $6,337 $6,767
====== ======
</TABLE>
There is no valuation allowance at December 31, 1996 and 1997 recorded
against the deferred tax assets. It is the opinion of management that the
scheduled reversal of deferred tax liabilities, projected future taxable
income, and tax planning strategies will more likely than not result in the
realization of the deferred tax assets.
(8)REDEEMABLE PREFERRED STOCK
In December 1995, the Company completed a private placement offering to its
existing security holders to sell up to 22,500 newly created shares of Series
A Redeemable Preferred Stock, $0.01 par value (Series A Preferred Stock), at
$200 per share. Net proceeds to the Company were approximately $4,500,000.
The shares of Series A Preferred Stock were sold together with 10-year
warrants to purchase a total of 22,500 shares of common stock at a nominal
exercise price. The Company determined the warrants to have an estimated fair
value of $500,000 at the offering date which was recorded as additional paid-
in capital and a reduction of the outstanding Series A Preferred Stock. As of
December 31, 1997, all of these warrants had been exercised.
Each share of Series A Preferred Stock has a liquidation preference of $200
per share. The Company at its option can redeem any or all the outstanding
shares of preferred stock for $200 per share. The Company is required to
redeem all such shares at a price of $200 per share upon the occurrence of (i)
a public offering or (ii) a change of control. The preferred shares have no
voting or dividend rights.
(9)STOCKHOLDERS' EQUITY
In conjunction with the acquisition of Bowen-Smith Holdings, Inc., the
Company issued warrants to the senior subordinated debt holder for 12,462
shares of common stock with an exercise price of $.01 per share. This warrant
was immediately exercisable into common stock of the Company. The Company
determined this warrant to have an estimated market value of $600,000 at the
acquisition date which was recorded as additional paid-in capital and a
reduction of the outstanding principal of the senior subordinated note
payable. The Company recorded accretion of the debt discount of $75,000 and
$59,000 for the years ended December 31, 1995 and 1996, respectively. As
discussed further in note 6, the Company prepaid the senior subordinated debt
holder in connection with the October 1996 amendment and extension of the
Company's senior credit facility. The remaining unamortized debt discount of
$450,000 was included as an extraordinary loss on the consolidated statement
of operations for the year ended December 31, 1996. The senior subordinated
warrant holder could require the Company to purchase the stock warrants
beginning in October 2002. The put amount was defined in the warrant agreement
with the senior subordinated lender. At December 31, 1996, the accompanying
consolidated financial statements include an accrual for $174,000 related to
the put feature of the warrants granted to the senior subordinated lender.
These warrants were exercised and the put retired on June 30, 1997.
F-94
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
During 1994, a warrant was also issued to a stockholder for 3,115 shares of
common stock with a nominal exercise price. Due to certain restrictions as to
the exercisability of this warrant, it was determined to have a value of
$75,000. This amount is reduced against the principal amount of the
subordinated note payable to stockholder. The Company recorded accretion of
the debt discount of $12,000 for each of the years ended December 31, 1995 and
1996. This warrant was exercised in 1997 in connection with the retirement of
the subordinated note payable to stockholder.
In June 1997, the Company completed a private placement offering of 36,049
shares of common stock with Clear Channel Communications, Inc. whereby the
Company raised proceeds of $23 million, net of issuance costs of approximately
$2 million.
(10)STOCK OPTION PLAN
In 1995, the Company adopted a stock option plan (the Plan) pursuant to
which the Company's Board of Directors may grant stock options to officers and
key employees. The Plan authorizes grants of options to purchase up to 9,231
shares of common stock. Stock options are granted with an exercise price equal
to the stock's fair market value at the date of grant. All stock options have
10-year terms and vest and become fully exercisable after a range of 3 to 4
years from the date of grant.
At December 31, 1997, there were 2,731 additional shares available for grant
under the Plan. The per share weighted-average value of stock options granted
during 1995, 1996, and 1997 was $37, $192, and $233, respectively, on the date
of grant, using the Black Scholes model with the following assumptions: risk-
free interest rate of 5.71% for the 1995 options, 6.58% for the 1996 options,
and 6.50% for the 1997 options, expected life of 8 years, expected volatility
of 0%, and an expected dividend yield of 0%.
The Company applies APB Opinion No. 25 in accounting for its Plan and,
accordingly, no compensation cost has been recognized for its stock options in
the consolidated financial statements. Had the Company determined compensation
cost based on the fair value at the grant date for its stock options under
SFAS No. 123, the Company's net income would have been reduced to the pro
forma amounts indicated below (in thousands):
<TABLE>
<CAPTION>
1995 1996 1997
----- ---- ----
<S> <C> <C> <C>
Net income (loss)
As reported................................................ $(572) $ 47 $377
Pro forma.................................................. (579) (231) 73
</TABLE>
At December 31, 1996, the range of exercise prices and weighted average
remaining contractual life of outstanding options was $100-$475, and 3.7
years, respectively. At December 31, 1997, the range of exercise prices and
weighted-average remaining contractual life of outstanding options was $100--
$475, and 7 years, respectively. Stock option activity during the periods
indicated is as follows:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
NUMBER OF SHARES EXERCISE PRICE
---------------- ----------------
<S> <C> <C>
Balance at December 31, 1994 -- $--
Granted................................... 1,100 100
----- ----
Balance at December 31, 1995............... 1,100 100
Granted................................... 4,600 475
Forfeited................................. (500) 100
----- ----
Balance at December 31, 1996............... 5,200 432
Granted................................... 1,300 475
Forfeited................................. -- --
----- ----
Balance at December 31, 1997............... 6,500 $440
===== ====
</TABLE>
F-95
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
At December 31, 1996 and 1997, the number of options exercisable was 116 and
1,805, respectively, and the weighted-average exercise price of these options
was $100 and $392 per share respectively.
(11)RELATED PARTY TRANSACTIONS AND COMMITMENTS
LEASES
In the ordinary course of business the Company leases land and buildings
under long-term (ranging from one to ten years) operating leases. Total rent
expense relating to land and building leases was approximately $459,000,
$665,000, $1,285,000, $307,000 and $457,000 for the years ending December 31,
1995, 1996 and 1997 and the three months ended March 31, 1997 and 1998,
respectively.
Minimum future lease payments for the years ending December 31, are as follows
(in thousands):
<TABLE>
<S> <C>
1998................................................................ $ 1,517
1999................................................................ 1,363
2000................................................................ 1,223
2001................................................................ 1,271
2002................................................................ 829
Thereafter.......................................................... 4,237
-------
Total minimum lease payments...................................... $10,440
=======
</TABLE>
RELATED PARTY TRANSACTIONS
The Company has entered into consulting agreements with three shareholders.
The total management payments under these agreements was $300,000 for each of
the years ended December 31, 1996 and 1997, respectively, and future minimum
payments required by these management agreements are $300,000 and $262,500 for
the years ended December 31, 1998 and 1999, respectively.
The Company was subject to a management agreement, which was terminated
during 1997, with a private investment firm which is a significant shareholder
of the Company. The Company paid $127,000 and $342,725 to this investment firm
during the years ended December 31, 1996 and 1997, respectively. The Company's
president and chairman, as well as another director are the principal
executive officers in the private investment firm.
The Company leases land for certain of its tower sites from an entity owned
by a shareholder. During the years ended December 31, 1996 and 1997, rental
expense relating to these land leases totaled $35,000 and $63,000,
respectively. Additionally, prior to 1997, the Company leased its office
facility from the same entity. Annual expense for the office facility
approximated $48,000 per year. The same shareholder is President of a tower
fabrication and construction company. The Company has acquired the majority of
its new towers from this entity, and during the years ended December 31, 1996
and 1997, the Company made payments of $1,710,000 and $3,057,000 respectively,
to this entity.
F-96
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(12)SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES
The Company had the following noncash financing and investing activities (in
thousands):
<TABLE>
<CAPTION>
1995 1996 1997
------ ----- -----
<S> <C> <C> <C>
Notes payable issued for tower acquisitions............. $8,164 2,361 --
Common stock issued for acquisitions.................... -- 4,127 1,000
Reduction of note payable in connection with disposal of
towers................................................. -- -- 700
Put accrual written-off................................. -- -- 174
Notes payable issued for noncompete agreements.......... 160 -- --
Accrued acquisition costs............................... 150 -- --
Accrued debt refinancing costs.......................... 100 -- --
</TABLE>
(13)MERGER AGREEMENT
In December 1997, the Company entered into a Merger Agreement with American
Tower Systems Corporation (ATS) which, subject to certain conditions, will
result in the merger of the Company into ATS. The merger is scheduled to be
completed during the first half of 1998.
F-97
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
OPM-USA-INC.
Sarasota, Florida
We have audited the accompanying balance sheets of OPM-USA-INC. (the
"Company") as of December 31, 1997 and 1996, and the related statements of
operations, stockholders' equity (deficiency), and cash flows for the years
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1997 and
1996, and the results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Boston, Massachusetts
March 2, 1998
F-98
<PAGE>
OPM-USA-INC.
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash................................................ $ 790,267 $ 28,673
Accounts receivable................................. 349,628 --
Prepaid expenses and other current assets........... 268,236 60,830
----------- ----------
Total current assets.............................. 1,408,131 89,503
PROPERTY AND EQUIPMENT, Net........................... 15,333,257 2,694,349
OTHER ASSETS.......................................... 93,776 91,049
----------- ----------
TOTAL................................................. $16,835,164 $2,874,901
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Accounts payable.................................... $ 2,104,929 $ 708,003
Accrued compensation................................ 177,210 --
Accrued expenses.................................... 189,233 2,384
Deferred revenue.................................... 804,705 18,932
Current maturities of long-term debt................ 1,744 1,587
----------- ----------
Total current liabilities......................... 3,277,821 730,906
----------- ----------
LONG-TERM DEBT........................................ 16,333,310 1,600,853
----------- ----------
COMMITMENTS AND CONTINGENCIES......................... -- --
----------- ----------
STOCKHOLDERS' EQUITY (DEFICIENCY):
Common stock: $1.00 par value; 100 shares
authorized; 100 shares issued and outstanding
(including treasury shares)........................ 100 100
Additional paid-in capital.......................... 999,956 999,956
Accumulated deficit................................. (2,276,023) (456,914)
Treasury stock, at cost, 10 shares at December 31,
1997............................................... (1,500,000) --
----------- ----------
Total stockholders' equity (deficiency)........... (2,775,967) 543,142
----------- ----------
TOTAL................................................. $16,835,164 $2,874,901
=========== ==========
</TABLE>
See notes to financial statements.
F-99
<PAGE>
OPM-USA-INC.
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------- ---------
<S> <C> <C>
REVENUES--Tower revenue................................ $ 863,258 $ 60,402
EXPENSES:
Operating expenses, excluding depreciation and amor-
tization............................................ 1,145,699 280,868
Depreciation and amortization........................ 428,499 43,230
General and administrative expenses.................. 488,496 138,967
----------- ---------
OPERATING LOSS......................................... (1,199,436) (402,663)
----------- ---------
OTHER INCOME (EXPENSE):
Interest expense..................................... (635,956) (17,625)
Other income......................................... 16,283 7,621
----------- ---------
Total other expense................................ (619,673) (10,004)
----------- ---------
NET LOSS............................................... $(1,819,109) $(412,667)
=========== =========
</TABLE>
See notes to financial statements.
F-100
<PAGE>
OPM-USA-INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN ACCUMULATED TREASURY
STOCK CAPITAL DEFICIT STOCK TOTAL
------ ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1,
1996................... $100 $ 3,281 $ (44,247) $ -- $ (40,866)
Net loss.............. -- -- (412,667) -- (412,667)
Contributed capital... -- 996,675 -- -- 996,675
---- -------- ----------- ----------- -----------
BALANCE, DECEMBER 31,
1996................... 100 999,956 (456,914) -- 543,142
Net loss.............. -- -- (1,819,109) -- (1,819,109)
Acquisition of trea-
sury stock........... -- -- -- (1,500,000) (1,500,000)
---- -------- ----------- ----------- -----------
BALANCE, DECEMBER 31,
1997................... $100 $999,956 $(2,276,023) $(1,500,000) $(2,775,967)
==== ======== =========== =========== ===========
</TABLE>
See notes to financial statements.
F-101
<PAGE>
OPM-USA-INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss........................................... $ (1,819,109) $ (412,667)
Adjustments to reconcile net loss to net cash pro-
vided by operating activities:
Depreciation and amortization..................... 428,499 43,230
Interest expense added to loan principal.......... 2,400 900
Changes in operating assets and liabilities:
Prepaid expenses and other current assets....... (207,406) (60,830)
Accounts receivable............................. (349,628) --
Loan origination costs.......................... (35,000) (88,167)
Accounts payable and accrued expenses........... 1,760,985 655,049
Deferred revenue................................ 785,773 18,932
------------ -----------
Net cash provided by operating activities......... 566,514 156,447
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES--
Purchase of property and equipment................. (13,034,977) (2,736,879)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributions.............................. -- 996,675
Purchase of treasury stock......................... (1,500,000) --
Proceeds from long-term debt....................... 14,731,638 1,602,556
Repayment of long-term debt........................ (1,581) (126)
------------ -----------
Net cash provided by financing activities.......... 13,230,057 2,599,105
------------ -----------
INCREASE IN CASH.................................... 761,594 18,673
CASH, BEGINNING OF YEAR............................. 28,673 10,000
------------ -----------
CASH, END OF YEAR................................... $ 790,267 $ 28,673
============ ===========
</TABLE>
See notes to financial statements.
F-102
<PAGE>
OPM-USA-INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997 AND 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General--OPM-USA-INC. (the "Company") develops and manages telecommunication
antenna site facilities in the Southeastern United States.
Sale of Company--In September 1997, the Company's stockholders entered into
an agreement to sell their common stock to American Tower Systems, Inc.
("ATSI") for a maximum purchase price of $105,000,000. The purchase price is
contingent upon the actual number of towers to be built on sites identified by
OPM and the cash flows generated from those towers. Approximately $21,300,000
was paid at closing. The sale closed on January 8, 1998. ATSI also agreed to
provide financing on identified sites which are in various stages of receiving
site permits to enable an additional 190 towers to be constructed. The
aggregate amount of this financing is limited to $37,000,000, of which
$5,784,156 was outstanding at December 31, 1997.
Concentration of Credit Risk--The Company performs ongoing credit evaluation
of its customers' financial condition. As of December 31, 1997, there are
three customers which individually comprise approximately 47%, 17% and 16% of
the Company's total revenue.
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Property and Equipment--Property and equipment is stated at cost, less
accumulated depreciation. Repairs and maintenance are charged to expense in
the year incurred. Depreciation for financial statement purposes is computed
using the straight-line method over the estimated useful lives of the assets.
Telecommunication towers and antenna site equipment are depreciated over a
period of 15 years, and office furniture, equipment, and automobiles are
depreciated over the useful lives of the assets ranging from 5 to 7 years.
Construction in Progress--The Company's tower construction expenditures are
recorded as construction in progress until the assets are placed in service.
The Company capitalizes subcontractor employee labor and overhead costs
incurred in connection with the construction of towers. As assets are placed
in service, they are transferred to the appropriate property and equipment
category and depreciation commences.
Other Assets--Other assets consist principally of deferred financing costs
which are being amortized over a three-year period. Accumulated amortization
aggregated $35,500 and $3,200 at December 31, 1997 and 1996, respectively.
Long-Lived Assets--The Company records impairment losses on long-lived
assets if events and circumstances indicate that the assets might be impaired.
Recoverability of long-lived assets is determined by periodically comparing
the forecasted, undiscounted net cash flows of the operations to which the
assets relate to the carrying amount. Through December 31, 1997, no
impairments requiring adjustments have occurred.
Revenue Recognition and Deferred Revenue--Tower revenues are recognized as
earned. Deferred revenue is recorded when tower rents are paid in advance of
performance.
Income Taxes--The Company is an S corporation for federal and state income
tax purposes. The stockholders report any income or loss of the Company
directly on their personal tax returns.
F-103
<PAGE>
OPM-USA-INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED DECEMBER 31, 1997 AND 1996
2. PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
----------- ----------
<S> <C> <C>
Land.............................................. $ 575,102 $ 110,000
Telecommunication towers and antenna site equip-
ment............................................. 11,525,984 1,559,302
Office furniture, equipment and automobiles....... 326,439 109,893
Construction in progress.......................... 3,342,056 955,243
----------- ----------
Total........................................... 15,769,581 2,734,438
Less accumulated depreciation..................... (436,324) (40,089)
----------- ----------
Property and equipment, net....................... $15,333,257 $2,694,349
=========== ==========
</TABLE>
3. COMMITMENTS AND CONTINGENCIES
Lease Obligations--The Company leases office and antenna site facilities
under various operating lease agreements expiring through the year 2016. The
Company is committed to minimum rental payments under leases (exclusive of
real estate taxes, maintenance and other related charges) at December 31,
1997, as follows:
<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31:
-------------------------
<S> <C>
1998.......................................................... $ 715,623
1999.......................................................... 737,092
2000.......................................................... 759,205
2001.......................................................... 781,981
2002.......................................................... 805,440
Thereafter.................................................... 14,176,317
-----------
Total......................................................... $17,975,658
===========
</TABLE>
Rent expense charged to operations for the years ended December 31, 1997 and
1996 amounted to $277,600 and $43,500, respectively.
Contract Obligations--The Company has contract obligations for the erection
of tower sites of $4,531,000 at December 31, 1997.
Litigation--The Company periodically becomes involved in various claims and
lawsuits that are incidental to its business. In the opinion of management,
there are no matters currently pending which would, in the event of adverse
outcome, have a material impact on the Company's financial position, the
results of operations or liquidity.
4. CUSTOMER LEASES
The Company leases space on its tower properties to customers for set
periods of time. Long-term leases typically contain provisions for renewals
and specified rent increases over the lease terms. The Company has minimum
lease commitments from its customers under these leases at December 31, 1997,
as follows:
F-104
<PAGE>
OPM-USA-INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31:
-------------------------
<S> <C>
1998.......................................................... $ 1,375,980
1999.......................................................... 1,384,847
2000.......................................................... 1,394,065
2001.......................................................... 1,403,636
2002.......................................................... 1,582,977
Thereafter.................................................... 10,171,488
-----------
$17,312,993
===========
</TABLE>
5. RELATED-PARTY TRANSACTIONS
The Corporation has engaged with Atlantic Tower Construction, Inc. ("ATC"), a
corporation 100% owned by the Company's existing stockholder, to construct
certain telecommunication antenna site facilities. Payments to ATC aggregated
$922,700 and $617,000 for the years ended December 31, 1997 and 1996,
respectively.
In January 1998, the Company's stockholder paid bonuses aggregating $600,000
to certain employees of the Company in connection with the sale of the Company.
Such amounts will be expensed by the Company in 1998.
6. LONG-TERM DEBT
<TABLE>
<CAPTION>
1997 1996
----------- ----------
<S> <C> <C>
Unsecured loan payable to stockholder, Owen P.
Mills, in the original amount of $937,786, with
no repayment terms, including interest at the
rate of 8% per annum............................. $ 1,144,249 $ 972,110
Secured loan payable to Suntrust Bank in the
original amount of $575,000. Suntrust Bank has
made available a nonrevolving credit facility in
an amount not to exceed $10,000,000 for sites and
fully constructed antenna towers located thereon.
The loan matures in three years, at which time
the principal balance and accrued interest are
payable in full. The rate of interest accrues on
the outstanding principal balance of the loan
based on a floating rate equal to 3% above the
LIBOR rates...................................... 9,350,500 575,000
Secured loan payable to ATSI for financing con-
struction of antenna towers and sites, including
interest at a rate of 11.5% per annum............ 5,784,156 --
Unsecured mortgage loan payable to
Goodwin/Woodhouse in the original amount of
$25,000; interest payable at the rate of 9.5% per
annum, due November 30, 2006..................... 23,293 24,874
Secured loan payable to Huntington Bank in the
original amount of $30,000, interest accrued at
the rate of 8% per annum, principal and interest
due March 31, 2013............................... 32,856 30,456
----------- ----------
Total............................................. 16,335,054 1,602,440
Less current maturities........................... (1,744) (1,587)
----------- ----------
Long-term debt--net............................... $16,333,310 $1,600,853
=========== ==========
</TABLE>
In connection with the sale of the Company, the loans to the stockholder,
Suntrust Bank and ATS were paid in full (see Note 1).
* * * * * *
F-105
<PAGE>
- --------------------------------------------------------------------------------
PROSPECTIVE INVESTORS MAY RELY ON THE INFORMATION CONTAINED IN THIS PROSPEC-
TUS. NEITHER AMERICAN TOWER CORPORATION, THE SELLING STOCKHOLDERS NOR ANY UN-
DERWRITER HAS AUTHORIZED ANYONE TO PROVIDE PROSPECTIVE INVESTORS WITH INFORMA-
TION DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS IS NOT
AN OFFER TO SELL NOR IS IT SEEKING AN OFFER TO BUY THESE SECURITIES IN ANY JU-
RISDICTION WHERE THE OFFER IS NOT PERMITTED. THE INFORMATION CONTAINED IN THIS
PROSPECTUS IS CORRECT ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE
TIME OF DELIVERY OF THIS PROSPECTUS OR ANY SALE OF THESE SECURITIES.
NO ACTION IS BEING TAKEN IN ANY JURISDICTION OUTSIDE THE UNITED STATES TO
PERMIT A PUBLIC OFFERING OF THE CLASS A COMMON STOCK OR POSSESSION OR DISTRIBU-
TION OF THIS PROSPECTUS IN ANY SUCH JURISDICTION. PERSONS WHO COME INTO POSSES-
SION OF THIS PROSPECTUS IN JURISDICTIONS OUTSIDE THE UNITED STATES ARE REQUIRED
TO INFORM THEMSELVES ABOUT AND TO OBSERVE ANY RESTRICTIONS AS TO THIS OFFERING
AND THE DISTRIBUTION OF THIS PROSPECTUS APPLICABLE IN THAT JURISDICTION.
-----------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Presentation of Information.............................................. ii
Forward-Looking Statements............................................... ii
Prospectus Summary....................................................... 1
Risk Factors............................................................. 12
Use of Proceeds.......................................................... 18
Market Prices and Dividend Policy........................................ 19
Capitalization........................................................... 20
Dilution................................................................. 22
Unaudited Pro Forma Condensed Consolidated
Financial Statements of ATS............................................. 23
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 34
Industry Overview........................................................ 43
Business................................................................. 46
Management............................................................... 59
Principal and Selling Stockholders....................................... 65
Relationship between ATS and ARS......................................... 69
Indebtedness of ATS...................................................... 75
Description of Capital Stock............................................. 77
Shares Eligible for Future Sale.......................................... 80
Underwriting............................................................. 81
Notice to Canadian Residents............................................. 82
Validity of the Shares................................................... 83
Experts.................................................................. 84
Available Information.................................................... 85
Index to Financial Statements............................................ F-1
Financial Statements..................................................... F-3
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LOGO
American Tower
23,866,023 Shares of
Class A Common Stock
($.01 par value)
PROSPECTUS
CREDIT SUISSE FIRST BOSTON
BT ALEX. BROWN
LEHMAN BROTHERS
MORGAN STANLEY DEAN WITTER
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
- --------------------------------------------------------------------------------
<PAGE>
AMERICAN TOWER SYSTEMS CORPORATION
REGISTRATION STATEMENT ON FORM S-1
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Securities and Exchange Commission fee....................... $ 148,396
New York Stock Exchange annual fee........................... 60,000
New York Stock Exchange listing fee.......................... 60,000
NASD Review fee.............................................. 30,500
Printing and engraving fees.................................. 500,000
Accountants' fees and expenses............................... 350,000
Legal fees and expenses...................................... 350,000
Miscellaneous................................................ 1,131
----------
Total........................................................ $1,500,000
==========
</TABLE>
The foregoing, except for the Securities and Exchange Commission, NYSE and
NASD fees, are estimated.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") provides,
in effect, that any person made a party to any action by reason of the fact
that he is or was a director, officer, employee or agent of ATS may and, in
certain cases, must be indemnified by ATS against, in the case of a non-
derivative action, judgments, fines, amounts paid in settlement and reasonable
expenses (including attorney's fees), if in either type of action he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of ATS and, in a non-derivative action, which involves a
criminal proceeding, in which such person had no reasonable cause to believe
his conduct was unlawful. This indemnification does not apply, in a derivative
action, to matters as to which it is adjudged that the director, officer,
employee or agent is liable to ATS, unless upon court order it is determined
that, despite such adjudication of liability, but in view of all the
circumstances of the case, he is fairly and reasonably entitled to indemnity
for expenses.
Article XII of ATS's By-Laws provides that ATS shall indemnify each person
who is or was an officer or director of ATS to the fullest extent permitted by
Section 145 of the DGCL.
Article Sixth of the ATS's Restated Certificate states than no director of
ATS shall be personally liable to ATS or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for (i) breach of the
director's duty of loyalty to ATS or its stockholders, (ii) acts or omissions
not in good faith or which involve intentional misconduct or knowing violation
of law, (iii) liability under Section 174 of the DGCL relating to certain
unlawful dividends and stock repurchases, or (iv) any transaction from which
the director derived an improper personal benefit.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Pursuant to that certain American Tower Systems Corporation Stock Purchase
Agreement, dated as of January 8, 1998, by and among ATS and the Purchasers
thereto, ATS consummated an equity financing involving the issuance of an
aggregate of 1,350,050 shares of Class A Common Stock, 4,649,950 shares of
Class B Common Stock and 2,000,000 shares of Class C Common Stock at $10.00
per share in exchange for an aggregate of $49.4 million of notes secured by
common stock of American Radio Systems Corporation having a market value of
not less than 175% of the principal amount and accrued and unpaid interest on
such notes.
II-1
<PAGE>
Pursuant to that certain Agreement and Plan of Merger, dated as of November
21, 1997, as amended, by and among ATS, American Tower Systems, Inc., a
Delaware corporation ("ATSI"), Gearon & Co., Inc., a Georgia corporation
("Gearon") and J. Michael Gearon, Jr., pursuant to which Gearson was merged
with and into ATSI, with ATSI as the surviving corporation, in January 1998
ATS issued an aggregate of 5,333,333 shares of Class A Common Stock and paid
approximately $32.0 million in cash for an aggregate agreed upon consideration
of approximately $80.0 million.
On June 4, 1998, ATS issued in a private placement to institutional
investors 300,000 shares of Series A Pay-In-Kind Preferred Stock, $1,000
liquidation preference per share, ("Interim Preferred Stock") pursuant to the
Interim Financing Agreement.
Pursuant to the certain Agreement and Plan of Merger, dated as of April 14,
1998, by and among ATS, ATSI, Intracoastal Broadcasting, Inc. ("Intracoastal")
and the stockholders of Intracoastal, pursuant to which Intracoastal was
merged with and into ATSI, with ATSI as the surviving corporation, in June
1998, ATS issued an aggregate of 720,000 shares of Class A Common Stock and
issued its non-recourse note in the principal amount of approximately $12.0
million in exchange for a broadcasting tower and notes in an aggregate
principal amount equal to the principal amount of the ATS note.
All of the shares referred to in the foregoing paragraphs were issued by ATS
in reliance on the exemption from registration provided by Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act"). Each holder
represented that it was acquiring its shares for investment purposes and not
with a view to distribution within the meaning of the Securities Act. The
stock certificates issued to all such holders bore restrictive legends. No
commission or other remuneration will be paid or given by ATS directly or
indirectly in connection with any of the foregoing transactions.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
Listed below are the exhibit which are filed as part of this registration
statement (according to the number assigned to them in Item 601 of Regulation
S-K). Each exhibit marked by a (*) is incorporated by reference to ATS's
Registration Statement on Form S-4 (File No. 333-46025) filed on February 10,
1998. Each exhibit marked by a (+) is incorporated by reference to the
original filing of this Registration Statement (No. 333-52481) with the
Commission on May 12, 1998. Each exhibit marked by a (++) is incorporated by
reference to ATS's Registration Statment on Form S-1 (File No. 333-50111)
filed on May 8, 1998. Exhibit numbers in parenthesis refer to the exhibit
number in the applicable Registration Statement.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF DOCUMENT EXHIBIT FILE NO.
----------- ----------------------------------- -----------------------------
<C> <S> <C>
1.1 Form of Underwriting Agreement,
dated as of , 1998, by and among
the Company and the Representatives
of the Underwriters................ Filed herewith as Exhibit 1.1
2.1 Agreement and Plan of Merger, dated
as of November 21, 1997, by and
among American Tower Systems
Corporation ("ATS"), American Tower
Systems, Inc., a Delaware
corporation ("ATSI"), Gearon & Co.,
Inc., a Georgia corporation
("Gearon") and J. Michael Gearon,
Jr. (the "Gearon Stockholder").
(Schedules and Exhibits omitted)... (*2.1)
2.2 Amendment No. 1 to Agreement and
Plan of Merger, dated as of January
22, 1998, among ATS, American Tower
Systems (Delaware), Inc., a
Delaware corporation (formerly
known as American Tower Systems,
Inc.), Gearon and the Gearon
Stockholder........................ (*2.2)
2.3 Agreement and Plan of Merger, dated
as of December 12, 1997, by and
among ATS and American Tower
Corporation, a Delaware
corporation. (Schedules and
Exhibits omitted).................. (*2.3)
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF DOCUMENT EXHIBIT FILE NO.
----------- ------------------------------ ---------------------------------
<C> <S> <C>
3(i).1 Restated Certificate of
Incorporation of ATS, as filed
with the Secretary of State of
the State of Delaware on June
5, 1998....................... Filed herewith as Exhibit 3(i).1
3(i).2 Certificate of Designation
relating to Exchange Pay-In-
Kind Preferred Stock as filed
with the Secretary of State of
the State of Delaware on June
4, 1998....................... Filed herewith as Exhibit 3(i).2
3(i).3 Certificate of Designation
relating to Series A
Redeemable Pay-In-Kind
Preferred Stock, as filed with
the Secretary of State of the
State of Delaware on June 4,
1998.......................... Filed herewith as Exhibit 3(i).3
3(ii).1 By-Laws of ATS................ Filed herewith as Exhibit 3(ii).1
5 Opinion of Sullivan &
Worcester LLP ................ Filed herewith as Exhibit 5
10.1 Parent Loan Agreement, dated
as of June 16, 1998, by and
among ATS, Toronto Dominion
(Texas), Inc., as
Administrative Agent, and the
Lenders parties thereto....... Filed herewith as Exhibit 10.1
10.2A ATS Facility A Loan Agreement,
dated as of June 16, 1998
among American Tower Systems,
L.P. ("ATSLP") and ATSI, as
borrowers, and Toronto
Dominion (Texas), Inc., as
Administrative Agent, and the
Banks parties thereto......... Filed herewith as Exhibit 10.2A
10.2B ATS Facility B Loan Agreement,
dated as of June 16, 1998, by
and among ATSLP and ATSI, as
borrowers, and Toronto
Dominion (Texas), Inc., and
the Banks parties thereto..... Filed herewith as Exhibit 10.2B
10.3 First Amendment to Amended and
Restated Loan Agreement,
dated as of December 31, 1997,
by and among ATSI, Toronto
Dominion (Texas), Inc., as
Administrative Agent and the
Banks parties thereto ........ (*10.3)
10.4 Assumption Agreement, dated as
of January 22, 1998, by and
among ATS, ATSI, American
Tower Systems, L.P., a
Delaware limited partnership,
Toronto Dominion (Texas),
Inc., as Administrative Agent
and the Banks parties
thereto....................... (*10.4)
10.5 Asset Purchase Agreement,
dated as of February 5, 1997,
by and between ATSI and
Meridian Radio Sites, a
California general partnership
("Meridian Radio"). (Schedules
and Exhibits omitted)......... (*10.5)
10.6 First Amendment to Asset
Purchase Agreement, dated as
of February 10, 1997, by and
between ATSI and Meridian
Radio......................... (*10.6)
10.7 Second Amendment to Asset
Purchase Agreement, dated as
of June 24, 1997, by and
between ATSI and Meridian
Radio......................... (*10.7)
10.8 Asset Purchase Agreement,
dated as of February 5, 1997,
by and between ATSI and
Meridian Sales and Services
Company, a California
corporation ("Meridian
Sales"). (Schedules and
Exhibits omitted)............. (*10.8)
10.9 First Amendment to Asset
Purchase Agreement, dated as
of February 10, 1997, by and
between ATSI and Meridian
Sales......................... (*10.9)
10.10 Second Amendment to Asset
Purchase Agreement, dated as
of June 24, 1997, by and
between ATSI and Meridian
Sales......................... (*10.10)
10.11 Asset Purchase Agreement,
dated as of February 5, 1997,
by and between ATSI and
Meridian Communications North,
a California general
partnership ("Meridian
North"). (Schedules and
Exhibits omitted)............. (*10.11)
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT FILE
EXHIBIT NO. DESCRIPTION OF DOCUMENT NO.
----------- ------------------------------------------------- --------------
<C> <S> <C>
10.12 First Amendment to Asset Purchase Agreement,
dated as of February 10, 1997, by and between
ATSI and Meridian North.......................... (*10.12)
10.13 Second Amendment to Asset Purchase Agreement,
dated as of June 24, 1997, by and between ATSI
and Meridian North............................... (*10.13)
10.14 Asset Purchase Agreement, dated as of May 13,
1997, by and between ATSI and Towers L.L.C., a
South Carolina limited liability company.
(Schedules and Exhibits omitted, except for
Employment Agreement)............................ (*10.14)
10.15 Asset Purchase Agreement, dated as of May 21,
1997, by and between ATSI and B & E Associates,
Inc., a Massachusetts corporation. (Schedules and
Exhibits omitted)................................ (*10.15)
10.16 Asset Purchase Agreement, dated as of May 21,
1997, by and between ATSI and DB Consultants,
Inc., a Texas corporation. (Schedules and
Exhibits omitted)................................ (*10.16)
10.17 Asset Purchase Agreement, dated as of May 27,
1997, by and between ATSI and Communication
Systems Development, Inc., a California
corporation. (Schedules and Exhibits omitted).... (*10.17)
10.18 Agreement of Limited Liability Company of
Communication Systems Development, LLC, dated May
30, 1997, by and among ATSI and Communications
Development Corporation, Inc., a California
corporation...................................... (*10.18)
10.19 Asset Purchase Agreement, dated as of June 25,
1997, by and between ATSI and Fernand E. Phaneuf,
Jr. and Lorraine Phaneuf, being all of the
shareholders of Tower Sites, Inc., d/b/a Tower
Sites, Inc. a Connecticut corporation. (Schedules
and Exhibits omitted)............................ (*10.19)
10.20 Asset Purchase Agreement, dated as of July 8,
1997, by and between ATSI and Diablo
Communications, Inc., a California corporation.
(Schedules and Exhibits omitted)................. (*10.20)
10.21 Asset Purchase Agreement, dated as of July 8,
1997, by and between ATSI and Diablo
Communications of Southern California, Inc., a
California corporation. (Schedules and Exhibits
omitted)......................................... (*10.21)
10.22 Asset Purchase Agreement, dated as of July 8,
1997, by and between ATS and Suburban Cable T.V.
Co............................................... (*10.22)
10.23 Asset Purchase Agreement, dated as of July 31,
1997, by and between ATSI and John C. Santangelo
and Gerald Harkins, being all of the shareholders
of Southeast Communications, Inc., and Southeast
Communications, Inc., a Massachusetts
corporation. (Schedules and Exhibits omitted).... (*10.23)
10.24 Stock Purchase Agreement, date as of September
30, 1997, by and between ATSI, OPM-USA-INC., a
Florida corporation ("OPM"), and the Stockholders
of OPM. (Schedules and Exhibits omitted)......... (*10.24)
10.25 Asset Purchase Agreement, dated as of October 4,
1997, by and between ATSI and Tucson
Communications Company, L.P., a California
limited partnership. (Schedules and Exhibits
omitted)......................................... (*10.25)
10.26 American Tower Systems Corporation 1997 Stock
Option Plan, dated as of November 5, 1997, as
amended and restated on April 28, 1998........... (++10.26)
10.27 American Tower Systems Corporation Stock Purchase
Agreement, dated as of January 8, 1998, by and
among ATS and the Purchasers..................... (*10.27)
10.28 Employment Agreement, dated as of January 22,
1988, by and between ATSI and J. Michael Gearon,
Jr............................................... (*10.28)
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF DOCUMENT EXHIBIT FILE NO.
----------- ------------------------------- --------------------------------
<C> <S> <C>
10.29 Asset Purchase Agreement, dated
as of January 23, 1998, by and
among ATSI, Midcontinent Media,
Inc., a South Dakota
corporation ("Midcontinent"),
Midcontinent Teleport Co., a
South Dakota corporation and a
wholly-owned subsidiary of
Midcontient ("MTC"), Wit
Communications, Inc., a
Delaware corporation and a
wholly-owned subsidiary of MTC,
and Washington International
Teleport, Inc., a Delaware
corporation and a wholly-owned
subsidiary of Wit.............. (*10.29)
10.30 ARS-ATS Separation Agreement,
dated as of June 4, 1998 by and
among American Radio Systems
Corporation, a Delaware
Corporation ("ARS"), ATS, and
CBS Corporation ............... Filed herewith as Exhibit 10.30
10.31 Securities Purchase Agreement,
dated as of June 4, 1998, by
and among ATS, Credit Suisse
First Boston and each of the
Purchasers named therein....... Filed herewith as Exhibit 10.31
10.32 Registration Rights Agreement,
dated as of June 4, 1998, by
and among ATS, Credit Suisse
First Boston, Conseco Life
Insurance, American Travelers
Life Insurance Co. and Great
American Reserve Insurance
Co. ........................... Filed herewith as Exhibit 10.32
10.33 Escrow Agreement, dated as of
June 4, 1998, by and among ATS
and Harris Trust and Savings
Bank........................... Filed herewith as Exhibit 10.33
21 Subsidiaries of ATS............ Filed herewith as Exhibit 21
23.0 Consents of Sullivan & Contained in the opinion of
Worcester LLP.................. Sullivan & Worcester LLP filed
herewith as part (+5)
23.1 Independent Auditor's
Consents--Deloitte & Touche
LLP............................ Filed herewith as Exhibit 23.1
23.2 Consent of Pressman Ciocca
Smith LLP...................... Filed herewith as Exhibit 23.2
23.3 Consent of Ernst & Young LLP... Filed herewith as Exhibit 23.3
24 Power of Attorney.............. Filed as page II-7 of the
Registration Statement as
originally filed on May 12, 1998
27 Financial Data Schedule........ (+27)
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time shall be
deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-1 and has duly caused this Amendment No. 2 to
Registration Statement No. 333-52481 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston, Commonwealth of
Massachusetts, on the 30th day of June 1998.
AMERICAN TOWER CORPORATION
/s/ Steven B. Dodge*
By: __________________________________
STEVEN B. DODGE
CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<TABLE>
<S> <C>
SIGNATURE TITLE
DATE
/s/ Steven B. Dodge* Chairman, President, June 30, 1998
- -------------------------------- Chief Executive
STEVEN B. DODGE Officer and Director
/s/ Joseph L. Winn* Chief Financial Officer June 30, 1998
- --------------------------------
JOSEPH L. WINN
/s/ Justin D. Benincasa Vice President and June 30, 1998
- -------------------------------- Corporate Controller
JUSTIN D. BENINCASA
*Individually and as
Attorney-in-Fact
/s/ Alan L. Box* Chief Operating Officer June 30, 1998
- -------------------------------- and Director
ALAN L. BOX
/s/ Arnold L. Chavkin* Director June 30, 1998
- --------------------------------
ARNOLD L. CHAVKIN
/s/ J. Michael Gearon, Jr.* Executive Vice June 30, 1998
- -------------------------------- President and Director
J. MICHAEL GEARON, JR.
/s/ Thomas H. Stoner* Director June 30, 1998
- --------------------------------
THOMAS H. STONER
</TABLE>
II-6
<PAGE>
The undersigned Directors of American Tower Corporation hereby severally
constitute Joseph L. Winn, Justin D. Benincasa, Michael B. Milsom and Norman
A. Bikales, and each of them, acting singly, our true and lawful attorneys to
sign for us and in our names in the capacities indicated below the Company's
Registration Statement on Form S-1 relating to the registration of 26,252,625
shares of the Company's Class A Common Stock, $.01 par value and any and all
amendments and supplements thereto (including and related registration
statement filed pursuant to Rule 462(b) under the Securities Act), filed with
the Securities and Exchange Commission, for the purpose of registering such
shares, under the Securities Act of 1933, as amended, granting unto each of
said attorneys, acting singly, full power and authority to do and perform each
and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming our signatures to said registration
statement signed by our said attorneys and all else that said attorneys may
lawfully do and cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following person on behalf
of the Company and in the capacities and on the dated indicated.
<TABLE>
<S> <C>
SIGNATURE TITLE
DATE
/s/ Fred R. Lummis Director June 30, 1998
- ---------------------------------
FRED R. LUMMIS
/s/ Randall Mays Director June 30, 1998
- ---------------------------------
RANDALL MAYS
</TABLE>
II-7
<PAGE>
SCHEDULE I
AMERICAN TOWER SYSTEMS CORPORATION
(PARENT COMPANY ONLY)
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED BALANCE SHEETS
DECEMBER 31, 1996 AND 1997 AND MARCH 31, 1998
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------------- ------------
1996 1997 1998
----------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Investments in and advances to subsidi-
aries................................. $30,536,512 $154,187,760 235,792,363
Deferred income taxes, current......... -- 62,560 62,560
Deferred income taxes, long-term....... 123,272,646
----------- ------------ ------------
Total............................ $30,536,512 $154,250,320 359,127,569
=========== ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Due to Parent.......................... $125,210,000
Deferred income taxes.................. $ 279,218 $ 417,628 --
Minority interest in subsidiaries...... 528,928 625,652 600,240
Commitments and Contingencies.......... -- -- --
Stockholders' Equity (Note Below):
Preferred Stock; $0.01 par value;
20,000,000 shares
authorized; no shares issued or out-
standing............................
Common Stock, $.01 par value,
10,000,000 shares
authorized, 3,000 shares issued and
outstanding in 1996................. 30 --
Class A Common Stock; $.01 par value;
200,000,000 shares authorized;
29,667,883 and 36,351,266 shares is-
sued and outstanding, respectively.. -- 296,679 363,513
Class B Common Stock; $.01 par value;
50,000,000 shares authorized;
4,670,626 and 9,320,576 shares is-
sued and outstanding, respectively.. -- 46,706 93,206
Class C Common Stock; $.01 par value;
10,000,000 shares authorized;
1,295,518 and 3,295,518 shares is-
sued and outstanding, respectively.. -- 12,955 37,955
Notes receivable, due from stockhold-
ers................................. (49,375,000)
Additional paid-in capital........... 30,318,420 155,710,741 286,589,686
Accumulated deficit.................. (590,084) (2,860,041) (4,387,031)
----------- ------------ ------------
Total stockholders' equity......... 29,728,366 153,207,040 233,317,329
----------- ------------ ------------
Total............................ $30,536,512 $154,250,320 359,127,569
=========== ============ ============
</TABLE>
Note: Please see page F-4, "Consolidated Statements of Stockholder's Equity,"
for activity occurring in the equity section of American Tower Systems
Corporation (ATS).
S-1
<PAGE>
SCHEDULE I
AMERICAN TOWER SYSTEMS CORPORATION
(PARENT COMPANY ONLY)
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER THREE MONTHS
PERIOD FROM 31, ENDED MARCH 31,
JULY 17, 1995 TO ---------------------- ----------------------
DECEMBER 31, 1995 1996 1997 1997 1998
----------------- --------- ----------- --------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues................ $ -- $ -- $ -- $ -- $ --
Equity in net loss of
subsidiaries........... (110,411) (479,673) (2,269,957) (57,954) (1,526,990)
--------- --------- ----------- --------- ------------
Net Loss................ $(110,411) $(479,673) $(2,269,957) $(57,954) $(1,526,990)
========= ========= =========== ========= ============
</TABLE>
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS
PERIOD FROM YEAR ENDED DECEMBER 31, ENDED MARCH 31,
JULY 17, 1995 TO -------------------------- -----------------------
DECEMBER 31, 1995 1996 1997 1997 1998
----------------- ----------- ------------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss................ $(110,411) $ (479,673) $ (2,269,957) $(57,954) $(1,526,990)
Adjustments to reconcile
net loss to cash flows
from operating
activities:
Equity in net losses
of subsidiaries...... 110,411 479,673 2,269,957 57,954 1,526,990
--------- ----------- ------------- ---------- -----------
Cash flows from oper-
ating activities..... -- -- -- -- --
--------- ----------- ------------- ---------- -----------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Cash transfers to Par-
ent.................... (179,426) (4,866,226) (16,650,000) -- (29,800,000)
Investment by Parent.... 242,215 2,548,557 143,073,631 2,543,171 28,684,995
--------- ----------- ------------- ---------- -----------
Cash flows from in-
vesting activities... 62,789 (2,317,669) 126,423,631 2,543,171 (1,115,005)
--------- ----------- ------------- ---------- -----------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Cash transfers from sub-
sidiary................ 179,426 4,866,226 16,650,000 -- 29,800,000
Investments in subsidi-
ary.................... (242,215) (2,548,557) (143,073,631) (2,543,171) (28,684,995)
--------- ----------- ------------- ---------- -----------
Cash flows from fi-
nancing activities... (62,789) 2,317,669 (126,423,631) (2,543,171) 1,115,005
--------- ----------- ------------- ---------- -----------
CASH AND CASH
EQUIVALENTS............ $ -- $ -- $ -- $ -- $ --
========= =========== ============= ========== ===========
</TABLE>
Note: As of December 31, 1997, ATS was a holding company whose only asset
consists of the stock of its wholly owned subsidiary American Tower
Systems (Delaware), Inc. (ATSI). As of such date, ATSI held all operating
assets of the consolidated group. ATS' income or loss is limited to the
income or loss of ATSI, after elimination of income or loss attributable
to minority investors in subsidiaries and investments of ATSI.
S-2
<PAGE>
SCHEDULE II
AMERICAN TOWER SYSTEMS CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
PERIOD FROM JULY 17, 1995 (INCORPORATION) TO DECEMBER 31, 1995,
THE YEARS ENDED DECEMBER 31, 1996 AND 1997 AND THE THREE MONTHS ENDED MARCH 31,
1998
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
---------- ---------- -------- ---------- --------
BALANCE
BALANCE AT CHARGED TO CHARGED AT END
BEGINNING COSTS AND TO OTHER OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
----------- ---------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Allowance for Doubtful Ac-
counts:
Period from July 17, 1995
to December 31, 1995..... $ -- $ -- $ -- $ -- $ --
Year Ended December 31,
1996..................... $ -- $ 47,044 $ -- $ -- $ 47,044
Year Ended December 31,
1997..................... $ 47,044 $124,350 $ -- $46,310 $125,084
Three Months Ended March
31, 1998 (unaudited)..... $125,084 $109,477 $121,584 $1,244 $354,901
</TABLE>
S-3
<PAGE>
EXHIBIT INDEX
Listed below are the exhibits which are filed as part of this registration
statement (according to the number assigned to them in Item 601 of Regulation
S-K). Each exhibit marked by a (*) is incorporated by reference to ATS's
Registration Statement on Form S-4 (File No. 333-46025) filed on February 10,
1998. Each exhibit marked by a (+) is incorporated by reference to the
original filing of this Registration Statement (No. 333-52481) with the
Commission on May 12, 1998. Each exhibit marked by a (++) is incorporated by
reference to ATS's Registration Statement on Form S-1 (File No. 333-50111)
filed on May 8, 1998. Exhibit numbers in parenthesis refer to the exhibit
number in the applicable Registration Statement.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF DOCUMENT EXHIBIT FILE NO. PAGE NO.
----------- ------------------------ --------------------------------- --------
<C> <S> <C> <C>
1.1 Form of Underwriting
Agreement, dated as of
, 1998, by and among
the Company and the
Representatives of the
Underwriters............ Filed herewith as Exhibit 1.1
2.1 Agreement and Plan of
Merger, dated as of
November 21, 1997, by
and among American Tower
Systems Corporation
("ATS"), American Tower
Systems, Inc., a
Delaware corporation
("ATSI"), Gearon & Co.,
Inc., a Georgia
corporation ("Gearon")
and J. Michael Gearon,
Jr. (the "Gearon
Stockholder").
(Schedules and Exhibits
omitted)................ (*2.1)
2.2 Amendment No. 1 to
Agreement and Plan of
Merger, dated as of
January 22, 1998, among
ATS, American Tower
Systems (Delaware),
Inc., a Delaware
corporation (formerly
known as American Tower
Systems, Inc.), Gearon
and the Gearon
Stockholder............. (*2.2)
2.3 Agreement and Plan of
Merger, dated as of
December 12, 1997, by
and among ATS and
American Tower
Corporation, a Delaware
corporation. (Schedules
and Exhibits omitted)... (*2.3)
3(i).1 Restated Certificate of
Incorporation of ATS, as
filed with the Secretary
of State of the State of
Delaware on June 5,
1998.................... Filed herewith as Exhibit 3(i).1
3(i).2 Certificate of
Designation relating to
Exchange Pay-In-Kind
Preferred Stock as filed
with the Secretary of
State of the State of
Delaware on June 4,
1998.................... Filed herewith as Exhibit 3(i).2
3(i).3 Certificate of
Designation relating to
Series A Redeemable Pay-
In-Kind Preferred Stock,
as filed with the
Secretary of State of
the State of Delaware on
June 4, 1998............ Filed herewith as Exhibit 3(i).3
3(ii).1 By-Laws of ATS.......... Filed herewith as Exhibit 3(ii).1
5 Opinion of Sullivan &
Worcester LLP........... Filed herewith as Exhibit 5
10.1 Parent Loan Agreement,
dated as of June 16,
1998, by and among ATS,
Toronto Dominion
(Texas), Inc., as
Administrative Agent,
and the Lenders parties
thereto................. Filed herewith as Exhibit 10.1
10.2A ATS Facility A Loan
Agreement, dated as of
June 16, 1998 among
American Tower Systems,
L.P. ("ATSLP") and ATSI,
as borrowers, and
Toronto Dominion
(Texas), Inc., as
Administrative Agent,
and the Banks parties
thereto................. Filed herewith as Exhibit 10.2A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF DOCUMENT EXHIBIT FILE NO. PAGE NO.
----------- ------------------------ ------------------------------- --------
<C> <S> <C> <C>
10.2B ATS Facility B Loan
Agreement, dated as of
June 16, 1998, by and
among ATSLP and ATSI, as
borrowers, and Toronto
Dominion (Texas), Inc.,
and the Banks parties
thereto................. Filed herewith as Exhibit 10.2B
10.3 First Amendment to
Amended and Restated
Loan Agreement, dated as
of December 31, 1997, by
and among ATSI, Toronto
Dominion (Texas), Inc.,
as Administrative Agent
and the Banks parties
thereto ................ (*10.3)
10.4 Assumption Agreement,
dated as of January 22,
1998, by and among ATS,
ATSI, American Tower
Systems, L.P., a
Delaware limited
partnership, Toronto
Dominion (Texas), Inc.,
as Administrative Agent
and the Banks parties
thereto................. (*10.4)
10.5 Asset Purchase
Agreement, dated as of
February 5, 1997, by and
between ATSI and
Meridian Radio Sites, a
California general
partnership ("Meridian
Radio"). (Schedules and
Exhibits omitted)....... (*10.5)
10.6 First Amendment to Asset
Purchase Agreement,
dated as of February 10,
1997, by and between
ATSI and Meridian
Radio................... (*10.6)
10.7 Second Amendment to
Asset Purchase
Agreement, dated as of
June 24, 1997, by and
between ATSI and
Meridian Radio.......... (*10.7)
10.8 Asset Purchase
Agreement, dated as of
February 5, 1997, by and
between ATSI and
Meridian Sales and
Services Company, a
California corporation
("Meridian Sales").
(Schedules and Exhibits
omitted)................ (*10.8)
10.9 First Amendment to Asset
Purchase Agreement,
dated as of February 10,
1997, by and between
ATSI and Meridian
Sales................... (*10.9)
10.10 Second Amendment to
Asset Purchase
Agreement, dated as of
June 24, 1997, by and
between ATSI and
Meridian Sales.......... (*10.10)
10.11 Asset Purchase
Agreement, dated as of
February 5, 1997, by and
between ATSI and
Meridian Communications
North, a California
general partnership
("Meridian North").
(Schedules and Exhibits
omitted)................ (*10.11)
10.12 First Amendment to Asset
Purchase Agreement,
dated as of February 10,
1997, by and between
ATSI and Meridian
North................... (*10.12)
10.13 Second Amendment to
Asset Purchase
Agreement, dated as of
June 24, 1997, by and
between ATSI and
Meridian North.......... (*10.13)
10.14 Asset Purchase
Agreement, dated as of
May 13, 1997, by and
between ATSI and Towers
L.L.C., a South Carolina
limited liability
company. (Schedules and
Exhibits omitted, except
for Employment
Agreement).............. (*10.14)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF DOCUMENT EXHIBIT FILE NO. PAGE NO.
----------- -------------------------------------- ---------------- --------
<C> <S> <C> <C>
10.15 Asset Purchase Agreement, dated as of
May 21, 1997, by and between ATSI and
B & E Associates, Inc., a
Massachusetts corporation. (Schedules
and Exhibits omitted)................. (*10.15)
10.16 Asset Purchase Agreement, dated as of
May 21, 1997, by and between ATSI and
DB Consultants, Inc., a Texas
corporation. (Schedules and Exhibits
omitted).............................. (*10.16)
10.17 Asset Purchase Agreement, dated as of
May 27, 1997, by and between ATSI and
Communication Systems Development,
Inc., a California corporation.
(Schedules and Exhibits omitted)...... (*10.17)
10.18 Agreement of Limited Liability Company
of Communication Systems Development,
LLC, dated May 30, 1997, by and among
ATSI and Communications Development
Corporation, Inc., a California
corporation........................... (*10.18)
10.19 Asset Purchase Agreement, dated as of
June 25, 1997, by and between ATSI and
Fernand E. Phaneuf, Jr. and Lorraine
Phaneuf, being all of the shareholders
of Tower Sites, Inc., d/b/a Tower
Sites, Inc. a Connecticut corporation.
(Schedules and Exhibits omitted)...... (*10.19)
10.20 Asset Purchase Agreement, dated as of
July 8, 1997, by and between ATSI and
Diablo Communications, Inc., a
California corporation. (Schedules and
Exhibits omitted)..................... (*10.20)
10.21 Asset Purchase Agreement, dated as of
July 8, 1997, by and between ATSI and
Diablo Communications of Southern
California, Inc., a California
corporation. (Schedules and Exhibits
omitted).............................. (*10.21)
10.22 Asset Purchase Agreement, dated as of
July 8, 1997, by and between ATS and
Suburban Cable T.V. Co................ (*10.22)
10.23 Asset Purchase Agreement, dated as of
July 31, 1997, by and between ATSI and
John C. Santangelo and Gerald Harkins,
being all of the shareholders of
Southeast Communications, Inc., and
Southeast Communications, Inc., a
Massachusetts corporation. (Schedules
and Exhibits omitted)................. (*10.23)
10.24 Stock Purchase Agreement, date as of
September 30, 1997, by and between
ATSI, OPM-USA-INC., a Florida
corporation ("OPM"), and the
Stockholders of OPM. (Schedules and
Exhibits omitted)..................... (*10.24)
10.25 Asset Purchase Agreement, dated as of
October 4, 1997, by and between ATSI
and Tucson Communications Company,
L.P., a California limited
partnership. (Schedules and Exhibits
omitted).............................. (*10.25)
10.26 American Tower Systems Corporation
1997 Stock Option Plan, dated as of
November 5, 1997, as amended and
restated on April 28, 1998............ (++10.26)
10.27 American Tower Systems Corporation
Stock Purchase Agreement, dated as of
January 8, 1998, by and among ATS and
the Purchasers........................ (*10.27)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF DOCUMENT EXHIBIT FILE NO. PAGE NO.
----------- ------------------------ -------------------------------- --------
<C> <S> <C> <C>
10.28 Employment Agreement,
dated as of January 22,
1988, by and between
ATSI and J. Michael
Gearon, Jr.............. (*10.28)
10.29 Asset Purchase
Agreement, dated as of
January 23, 1998, by and
among ATSI, Midcontinent
Media, Inc., a South
Dakota corporation
("Midcontinent"),
Midcontinent Teleport
Co., a South Dakota
corporation and a
wholly-owned subsidiary
of Midcontient ("MTC"),
Wit Communications,
Inc., a Delaware
corporation and a
wholly-owned subsidiary
of MTC, and Washington
International Teleport,
Inc., a Delaware
corporation and a
wholly-owned subsidiary
of Wit.................. (*10.29)
10.30 ARS-ATS Separation
Agreement, dated as of
June 4, 1998 by and
among American Radio
Systems Corporation, a
Delaware Corporation
("ARS"), ATS, and CBS
Corporation ............ Filed herewith as Exhibit 10.30
10.31 Securities Purchase
Agreement, dated as of
June 4, 1998, by and
among ATS, Credit Suisse
First Boston and each of
the Purchasers named
therein................. Filed herewith as Exhibit 10.31
10.32 Registration Rights
Agreement, dated as of
June 4, 1998, by and
among ATS, Credit Suisse
First Boston, Conseco
Life Insurance, American
Travelers Life Insurance
Co. and Great American
Reserve Insurance Co. .. Filed herewith as Exhibit 10.32
10.33 Escrow Agreement, dated
as of June 4, 1998, by
and among ATS and Harris
Trust and Savings Bank.. Filed herewith as Exhibit 10.33
21 Subsidiaries of ATS..... Filed herewith as Exhibit 21
23.0 Consents of Sullivan & Contained in the opinion of
Worcester LLP........... Sullivan & Worcester LLP filed
herewith as part (+5)
23.1 Independent Auditor's
Consents--Deloitte &
Touche LLP.............. Filed herewith as Exhibit 23.1
23.2 Consent of Pressman
Ciocca Smith LLP........ Filed herewith as Exhibit 23.2
23.3 Consent of Ernst & Young
LLP..................... Filed herewith as Exhibit 23.3
24 Power of Attorney....... Filed as page II-7 of the
Registration Statement as
originally filed on May 12, 1998
27 Financial Data
Schedule................ (+27)
</TABLE>
<PAGE>
EXHIBIT 1.1
SHARES
AMERICAN TOWER CORPORATION
CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE
UNDERWRITING AGREEMENT
July __, 1998
Credit Suisse First Boston Corporation,
BT Alex. Brown Incorporated,
Lehman Brothers Incorporated,
Morgan Stanley & Co. Incorporated,
Bear, Stearns & Co. Inc.,
Merrill Lynch, Pierce, Fenner & Smith
Incorporated, and
Smith Barney, Inc.,
As Representatives of the Several Underwriters (the "Representatives"),
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue
New York, N.Y. 10010-3629.
Dear Sirs:
1. Introductory. American Tower Corporation, formerly known as
American Tower Systems Corporation, a Delaware corporation ("Company"), proposes
to issue and sell shares of its Class A Common Stock, par value $.01
per share ("Class A Common Stock" or "Securities"), and the stockholders listed
in Schedule A hereto and the stockholders listed in Schedule B hereto
(collectively, "Selling Stockholders") propose severally to sell an aggregate of
outstanding shares of the Securities (such shares of
Securities being hereinafter referred to as the "Firm Securities"). The Company
also proposes to sell to the Underwriters, at the option of the Underwriters, an
aggregate of not more than additional shares of its Securities, as set
forth below (such additional shares being hereinafter referred to as
the "Optional Securities"). The Firm Securities and the Optional Securities are
herein collectively called the "Offered Securities". The Company and the
Selling Stockholders hereby agree with the several Underwriters named in
Schedule C hereto ("Underwriters") as hereinafter set forth.
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2. Representations and Warranties of the Company and the Selling
Stockholders. (a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
(i) A registration statement (No. 333-52481) relating to the
Offered Securities, including a form of prospectus, has been filed with the
Securities and Exchange Commission ("Commission") and either (A) has been
declared effective under the Securities Act of 1933 ("Act") and is not
proposed to be amended or (B) is proposed to be amended by amendment or
post-effective amendment. If such registration statement (the "initial
registration statement") has been declared effective, either (A) an
additional registration statement (the "additional registration statement")
relating to the Offered Securities may have been filed with the Commission
pursuant to Rule 462(b) ("Rule 462(b)") under the Act and, if so filed, has
become effective upon filing pursuant to such Rule and the Offered
Securities all have been duly registered under the Act pursuant to the
initial registration statement and, if applicable, the additional
registration statement or (B) such an additional registration statement is
proposed to be filed with the Commission pursuant to Rule 462(b) and will
become effective upon filing pursuant to such Rule and upon such filing the
Offered Securities will all have been duly registered under the Act
pursuant to the initial registration statement and such additional
registration statement. If the Company does not propose to amend the
initial registration statement or if an additional registration statement
has been filed and the Company does not propose to amend it, and if any
post-effective amendment to either such registration statement has been
filed with the Commission prior to the execution and delivery of this
Agreement, the most recent amendment (if any) to each such registration
statement has been declared effective by the Commission or has become
effective upon filing pursuant to Rule 462(c) ("Rule 462(c)") under the Act
or, in the case of the additional registration statement, Rule 462(b). For
purposes of this Agreement, "Effective Time" with respect to the initial
registration statement or, if filed prior to the execution and delivery of
this Agreement, the additional registration statement means (A) if the
Company has advised the Representatives that it does not propose to amend
such registration statement, the date and time as of which such
registration statement, or the most recent post-effective amendment thereto
(if any) filed prior to the execution and delivery of this Agreement, was
declared effective by the Commission or has become effective upon filing
pursuant to Rule 462(c), or (B) if the Company has advised the
Representatives that it proposes to file an amendment or post-effective
amendment to such registration statement, the date and time as of which
such registration statement, as amended by such amendment or post-effective
amendment, as the case may be, is declared effective by the Commission. If
an additional registration statement has not been filed prior to the
execution and delivery of this Agreement but the Company has advised the
Representatives that it proposes to file one, "Effective Time" with respect
to such additional registration statement means the date and time as of
which such registration statement is filed and becomes effective pursuant
to Rule 462(b). "Effective Date" with respect to the initial registration
statement or the additional registration statement (if any) means the date
of the Effective Time thereof. The initial registration statement, as
amended at its Effective Time, including all information contained in the
additional registration statement (if any) and deemed to be a part of the
initial registration statement as of the Effective Time of the additional
registration statement pursuant to the General Instructions of the Form on
which it is filed and including all information (if any) deemed to be a
part of the initial registration statement as of its Effective Time
pursuant to Rule 430A(b) ("Rule 430A(b)") under the Act, is hereinafter
referred to as the "Initial Registration Statement". The additional
registration statement, as amended at its Effective Time, including the
contents of the initial registration statement incorporated by reference
therein and including all information (if any) deemed to be a part of the
additional registration statement as of its Effective Time pursuant to Rule
430A(b), is hereinafter referred to as the "Additional Registration
Statement".
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The Initial Registration Statement and the Additional Registration
Statement are hereinafter referred to collectively as the "Registration
Statements" and individually as a "Registration Statement". The form of
prospectus relating to the Offered Securities, as first filed with the
Commission pursuant to and in accordance with Rule 424(b) ("Rule 424(b)")
under the Act or (if no such filing is required) as included in a
Registration Statement, is hereinafter referred to as the "Prospectus". No
document has been or will be prepared or distributed in reliance on Rule
434 under the Act.
(ii) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (A) on the Effective
Date of the Initial Registration Statement, the Initial Registration
Statement conformed in all material respects to the requirements of the Act
and the rules and regulations of the Commission ("Rules and Regulations")
and did not include 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 not misleading, (B) on the Effective Date of the
Additional Registration Statement (if any), each Registration Statement
conformed, or will conform, in all material respects to the requirements of
the Act and the Rules and Regulations and did not include, or will not
include, any untrue statement of a material fact and did not omit, or will
not omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (C) on the
date of this Agreement, the Initial Registration Statement and, if the
Effective Time of the Additional Registration Statement is prior to the
execution and delivery of this Agreement, the Additional Registration
Statement each conforms, and at the time of filing of the Prospectus
pursuant to Rule 424(b) or (if no such filing is required) at the Effective
Date of the Additional Registration Statement in which the Prospectus is
included, each Registration Statement and the Prospectus will conform, in
all material respects to the requirements of the Act and the Rules and
Regulations, and neither of such documents includes, or will include, any
untrue statement of a material fact or omits, or will omit, to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading. If the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement: on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement and the Prospectus will conform in all
material respects to the requirements of the Act and the Rules and
Regulations, neither of such documents will include any untrue statement of
a material fact or will omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading
(in light of the circumstances under which it was made, in the case of the
Prospectus), and no Additional Registration Statement has been or will be
filed. The two preceding sentences do not apply to statements in or
omissions from a Registration Statement or the Prospectus based upon
written information furnished to the Company by any Underwriter through the
Representatives specifically for use therein.
(iii) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus; and the Company is duly
qualified to do business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification.
(iv) Each subsidiary of the Company has been duly incorporated (or
formed, as the case may be) and is an existing corporation (or limited
partnership or limited liability company, as the case may be) in good
standing under the laws of the jurisdiction of its incorporation or
formation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus; and
each subsidiary of the Company is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions in which
its ownership or lease
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of property or the conduct of its business requires such qualification
except where failure to so qualify would not, individually or in the
aggregate have a material adverse effect on the Company and its
subsidiaries taken as a whole; all of the issued and outstanding capital
stock (or partnership or other equity interests) of each subsidiary of the
Company has been duly authorized and validly issued and is fully paid
(except for any general partnership interest) nonassessable; and, except
for the pledge pursuant to the Credit Agreements (as defined herein) as
disclosed in the Prospectus, the capital stock (and partnership and other
equity interests) of each subsidiary owned by the Company, directly or
through subsidiaries, is owned free from liens, encumbrances and defects.
(v) The Offered Securities and all other outstanding shares of
capital stock of the Company have been duly authorized and validly issued,
are fully paid and nonassessable and conform to the description thereof
contained in the Prospectus; the merger (the "ATC Merger") of American
Tower Corporation, a Delaware corporation ("ATC") into the Company as
described in the Prospectus has been consummated. The Offered Securities
and all other outstanding shares of capital stock of the Company have been
duly authorized; all outstanding shares of capital stock of the Company
(including the Offered Securities being sold by the Selling Stockholders)
are, and, when the Offered Securities being sold by the Company have been
delivered and paid for in accordance with this Agreement on each Closing
Date (as defined below), such Offered Securities will have been, validly
issued, fully paid and nonassessable, and conform or will conform to the
descriptions thereof contained in the Prospectus; and the stockholders of
the Company do not and will not have any preemptive rights with respect to
any of such securities.
(vi) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person that would
give rise to a valid claim against the Company or any Underwriter for a
brokerage commission, finder's fee or other like payment in connection with
the offering of the Offered Securities.
(vii) Except as disclosed in the Prospectus, there are no contracts,
agreements or under standings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Act with respect to any outstanding securities of the
Company (that will remain outstanding after the Closing Date) owned or to
be owned by such person or to require the Company to include such
securities in the securities registered pursuant to a Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the Act.
(viii) The Securities, including the Offered Securities, have been
approved for listing, subject in the case of the Offered Securities being
sold by the Company, to notice of issuance, on the New York Stock Exchange
("NYSE").
(ix) No consent, approval, authorization, order or waiver of, or
filing with, any governmental agency or body or any court is required to be
obtained or made by the Company or any subsidiary of the Company for the
consummation of the transactions contemplated by this Agreement in
connection with the sale of the Offered Securities, except (i) such as have
been obtained and made under the Act and (ii) such as may be required under
state securities laws.
(x) The execution, delivery and performance of this Agreement and
the consummation of the transactions herein contemplated will not, result
in a breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, any rule, regulation, order or
policy of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Company or any subsidiary of the
Company or any of their properties, the Credit Agreements (as defined
herein) or any other agreement or instrument to which the Company or any
such subsidiary is a party or by which the Company or any such subsidiary
is bound, or to which any of the
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properties of the Company or any such subsidiary is subject, or the charter
or by-laws (or other constituent document) of the Company or any such
subsidiary.
(xi) This Agreement has been duly authorized, executed and delivered
by the Company.
(xii) Except as disclosed in the Prospectus or as would not,
individually or in the aggregate have a material adverse effect on the
Company or its subsidiaries taken as a whole, the Company and its
subsidiaries have good and marketable title to all real properties and all
other properties and assets owned by them, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or to be made thereof by them; and
except as disclosed in the Prospectus, the Company and its subsidiaries
hold any leased real or personal property under valid and enforceable
leases with no exceptions that would materially interfere with the use made
or to be made thereof by them.
(xiii) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
might have a material adverse effect on the Company and its subsidiaries
taken as a whole.
(xiv) The Company and its subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and
other intellectual property (collectively, "intellectual property rights")
necessary to conduct the business now operated by them, or presently
employed by them, and have not received any notice of infringement of or
conflict with asserted rights of others with respect to any intellectual
property rights that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a material
adverse effect on the Company and its subsidiaries taken as a whole.
(xv) Neither the Company nor any of its subsidiaries is in violation
of any statute, any rule, regulation, decision or order of any governmental
agency or body or any court, domestic or foreign, relating to the use,
disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous
or toxic substances (collectively, "environmental laws"), owns or operates
any real property contaminated with any substance that is subject to any
environmental laws, is liable for any off-site disposal or contamination
pursuant to any environmental laws, or is subject to any claim relating to
any environmental laws, which violation, contamination, liability or claim
would individually or in the aggregate have a material adverse effect on
the Company and its subsidiaries taken as a whole; and the Company is not
aware of any pending investigation which might lead to such a claim.
(xvi) There are no pending actions, suits or proceedings against or
affecting the Company, any of its subsidiaries or any of their respective
properties that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a material
adverse effect on the condition (financial or other), business, prospects
or results of operations of the Company and its subsidiaries taken as a
whole, or would materially and adversely affect the ability of the Company
to perform its obligations under this Agreement, or which are otherwise
material in the context of the sale of the Offered Securities; and, except
as disclosed in the Prospectus, no such actions, suits or proceedings are
threatened or, to the Company's knowledge, contemplated.
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(xvii) The financial statements included in the Registration
Statements and Prospectus present fairly the financial position of the
Company and its consolidated subsidiaries and the other entities named
therein as of the dates shown and their results of operations and cash
flows for the periods shown, and such financial statements have been
prepared in conformity with the generally accepted accounting principles in
the United States applied on a consistent basis; and the schedules included
in the Registration Statements present fairly the information required to
be stated therein.
(xviii) Except as disclosed in the Prospectus, since the date of the
latest audited financial statements included in the Prospectus there has
been no material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as a whole, and, except as disclosed in or contemplated
by the Prospectus, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
(xix) The Company is not and, after giving effect to the offering
and sale of the Offered Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment company"
as defined in the Investment Company Act of 1940.
(b) Each Selling Stockholder severally represents and warrants to,
and agrees with, the several Underwriters that:
(i) Such Selling Stockholder has and on the First Closing Date
hereinafter mentioned will have valid and unencumbered title to the Offered
Securities to be delivered by such Selling Stockholder on such Closing Date
and full right, power and authority to enter into this Agreement and to
sell, assign, transfer and deliver the Offered Securities to be delivered
by such Selling Stock holder on such Closing Date hereunder; and upon the
delivery of and payment for the Offered Securities on such Closing Date
hereunder the several Underwriters will acquire valid and unencumbered
title to the Offered Securities to be delivered by such Selling Stockholder
on such Closing Date.
(ii) All information furnished, or to be furnished, in writing to
the Company by the Selling Stockholder regarding the Selling Stockholder
specifically for use in the Registration Statement is on the date of this
Agreement, and will be on the Closing Date, true and correct in all
material respects and does not on the date of this Agreement, and will not
on the Closing Date, contain any untrue statement of a material fact or
omit any material fact required to be stated therein or necessary to make
the statements therein not misleading.
(iii) The execution, delivery and performance of this Agreement by
such Selling Stockholder, the sale by such Selling Stockholder of the
Offered Securities to be sold by such Selling Stockholder and the
consummation by such Selling Stockholder of the transactions contemplated
by this Agreement will not result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any statute, rule,
regulation or order of any governmental agency or body or any court having
jurisdiction over such Selling Stockholder or any of its properties, or any
agreement or instrument to which such Selling Stockholder is a party or by
which it is bound or to which any of its properties is subject, or the
constituent documents, if any, of such Selling Stockholder.
(iv) No consent, approval, authorization, order or waiver of, or
filing with, any governmental agency or body or any court is required to be
obtained or made by such Selling Stockholder for the sale of the Offered
Securities to be sold by such Selling Stockholder or the
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consummation of the transactions contemplated by the power of attorneys or
related Custody Agreements or this Agreement, except such as have been
obtained and made under the Act.
3. Purchase, Sale and Delivery of Offered Securities. On the basis
of the representations, warranties and agreements herein contained, but subject
to the terms and conditions herein set forth, the Company and each Selling
Stockholder agree, severally and not jointly, to sell to each Underwriter, and
each Underwriter agrees, severally and not jointly, to purchase from the Company
and each Selling Stockholder, at a purchase price of $________ per share, that
number of Firm Securities (rounded up or down, as determined by Credit Suisse
First Boston Corporation ("CSFBC") in its discretion, in order to avoid
fractions) obtained by multiplying 20,000,000 Firm Securities in the case of the
Company and the number of Firm Securities set forth opposite the name of such
Selling Stockholder in Schedule A hereto, in the case of a Selling Stockholder,
in each case by a fraction the numerator of which is the number of Firm
Securities set forth opposite the name of such Underwriter in Schedule B hereto
and the denominator of which is the total number of Firm Securities.
Certificates in negotiable form for any Common Stock of the Company to
be sold by Selling Stockholders hereunder have been placed in custody, for
delivery under this Agreement, under custody agreements (the "Custody
Agreements") made with Harris Trust and Savings Bank, as custodian (the
"Custodian"). Each Selling Stockholder agrees that the shares represented by
the certificates held in custody for the Selling Stockholders under the Custody
Agreements are subject to the interests of the Underwriters hereunder, that the
arrangements made by the Selling Stockholders for such custody are to that
extent irrevocable, and that the obligations of the Selling Stockholders
hereunder shall not be terminated by operation of law, whether by the death of
any individual Selling Stockholder or the occurrence of any other event, or in
the case of a trust, by the death of any trustee or trustees or the termination
of such trust, or in the case of a corporation or partnership, by the
dissolution or liquidation of such corporation or partnership, or the occurrence
of any other event. If any individual Selling Stockholder or any such trustee
or trustees should die, or if any such corporation or partnership should be
dissolved or liquidated or if any other such event should occur, or if any of
such trusts should terminate, before the delivery of the Offered Securities
hereunder, certificates for such Offered Securities shall be delivered by the
Custodian in accordance with the terms and conditions of this Agreement and the
Custody Agreements as if such death, dissolution, liquidation or other event or
termination had not occurred, regardless of whether or not the Custodian shall
have received notice of such death, dissolution, liquidation or other event or
termination.
The Company and the Custodian will deliver the Firm Securities to the
Representatives for the accounts of the Underwriters, against payment of the
purchase price in Federal (same day) Funds by wire transfer in U.S. Dollars to
an account at a bank acceptable to CSFBC drawn to the order of the Company in
the case of shares of Firm Securities and to the order of the
Custodian in the case of shares of Firm Securities, at the office of
Sullivan & Cromwell, 125 Broad Street, New York, New York at 9:30 A.M., New York
time, July__, 1998 or at such other date and time not later than seven full
business days thereafter as CSFBC and the Company determine, such time being
herein referred to as the "First Closing Date." The certificates for the Firm
Securities so to be delivered will be in definitive form, in such denominations
and registered in such names as CSFBC requests and will be made available for
checking and packaging at the New York office of Harris Trust and Savings Bank
at least 24 hours prior to the First Closing Date.
In addition, upon written notice from CSFBC given to the Company from
time to time not more than thirty days subsequent to the date of the Prospectus,
the Underwriters may purchase all or less than all of the Optional Securities at
the purchase price per share to be paid for the Firm Securities. The Company
agrees to sell to the Underwriters the number of Optional Securities specified
in such notice and
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the Underwriters agree, severally and not jointly, to purchase such Optional
Securities. Such Optional Securities shall be purchased for the account of each
Underwriter in the same proportion as the number of Firm Securities set forth
opposite such Underwriter's name bears to the total number of Firm Securities
(subject to adjustment by CSFBC to eliminate fractions) and may be purchased by
the Underwriters only for the purpose of covering over-allotments made in
connection with the sale of the Firm Securities. No Optional Securities shall be
sold or delivered unless the Firm Securities previously have been, or
simultaneously are, sold and delivered. The right to purchase the Optional
Securities or any portion thereof may be exercised from time to time and to the
extent not previously exercised may be surrendered and terminated at any time
upon notice by CSFBC to the Company.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "Optional Closing Date", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by CSFBC
but shall not be later than seven full business days after written notice of
election to purchase Optional Securities is given. The Company will deliver the
Optional Securities being purchased on each Optional Closing Date to the
Representatives for the accounts of the several Underwriters, against payment of
the purchase price therefor in Federal (same day) Funds by wire transfer to an
account at a bank acceptable to CSFBC drawn to the order of the Company, at the
above office of Sullivan & Cromwell. The certificates for the Optional
Securities being purchased on each Optional Closing Date will be in definitive
form, in such denominations and registered in such names as CSFBC requests upon
reasonable notice prior to such Optional Closing Date and will be made available
for checking and packaging at the New York office of Harris Trust and Savings
Bank at a reasonable time in advance of such Optional Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
5. Certain Agreements of the Company and the Selling Stockholders.
The Company agrees with the several Underwriters and the Selling Stockholders
that:
(a) The Company will file the Prospectus with the Commission pursuant
to and in accordance with subparagraph (1) (or, if applicable and if
consented to by CSFBC, subpara graph (4)) of Rule 424(b) not later than
the earlier of (A) the second business day following the execution and
delivery of this Agreement or (B) the fifteenth business day after the
Effective Date of Registration Statement No. 333-52481.
The Company will advise CSFBC promptly of any such filing pursuant to
Rule 424(b).
(b) The Company will advise CSFBC promptly of any proposal to amend
or supplement the initial or any additional registration statement as filed
or the related prospectus or the Initial Registration Statement, the
Additional Registration Statement (if any) or the Prospectus and will not
effect such amendment or supplementation without CSFBC's consent; and the
Company will also advise CSFBC promptly of any amendment or supplementation
of a Registration Statement or of the Prospectus and of the institution by
the Commission of any stop order proceedings in respect of a Registration
Statement and will use its best efforts to prevent the issuance of any such
stop order and to obtain as soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, any event occurs as a result of which
the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary
to make the statements
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therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the Prospectus to
comply with the Act, the Company will promptly notify CSFBC of such event
and will promptly prepare and file with the Commission, at its own expense,
an amendment or supplement that will correct such statement or omission or
an amendment that will effect such compliance. Neither CSFBC's consent to,
nor the Underwriters' delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 6.
(d) [reserved]
(e) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
securityholders an earnings statement covering a period of at least 12
months beginning after the Effective Date of Registration Statement
No. 333-52481 which will satisfy the provisions of Section 11(a) of the
Act. For the purpose of the preceding sentence, "Availability Date" means
the 45th day after the end of the fourth fiscal quarter following the
fiscal quarter that includes the Effective Date, except that, if such
fourth fiscal quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth fiscal
quarter.
(f) The Company will furnish to the Representatives copies of each
Registration Statement (seven of which will be signed, or will be
photocopies of signed ones in the case of Registration Statement No. 333-
52481, and will include all exhibits), each related preliminary prospectus
and, so long as delivery of a prospectus relating to the Offered Securities
is required to be delivered under the Act in connection with sales by any
Underwriter or dealer, the Prospectus and all amendments and supplements to
such documents, in each case as soon as available and in such quantities as
CSFBC requests. The Company will pay the expenses of printing and
distributing to the Underwriters all such documents.
(g) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as CSFBC
designates and will continue such qualifications in effect so long as
required for the distribution; provided, that the Company shall not be
required to qualify as a foreign corporation or to file a general consent
to service of process or to subject itself to taxation generally in any
jurisdiction.
(h) During the period of five years hereafter, the Company will
furnish to the Representatives and, upon request, to each of the other
Underwriters, as soon as practicable after the end of each fiscal year, a
copy of its annual report to stockholders for such year; and the Company
will furnish to the Representatives (i) as soon as available, a copy of
each report and any definitive proxy statement of the Company filed with
the Commission under the Securities Exchange Act of 1934 or mailed to
stockholders, and (ii) from time to time, such other information concerning
the Company as CSFBC may reasonably request.
(i) For a period of 120 days after the date of the initial public
offering of the Offered Securities, the Company will not offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly,
or file with the Commission a registration statement under the Act relating
to, any additional shares of its Securities, or securities convertible into
or exchangeable or exercisable for any Securities, or disclose the
intention to make any such offer, sale, pledge, disposal or filing, without
the prior written consent of CSFBC, except with respect to private
issuances of Securities (or securities convertible into or exchangeable for
Securities) or in connection with acquisitions, if the holders thereof
agree to be bound by the foregoing 120-day restriction to the same extent
as the Company, grants of employee stock options pursuant to the terms of a
plan in effect on the date
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hereof, issuances of Securities pursuant to the exercise of stock options
outstanding on the date hereof or granted pursuant to the terms of a plan
in effect on the date hereof, issuances of Securities pursuant to any
dividend reinvestment plan of the Company or issuances of Securities upon
conversion of Class B Common Stock or Class C Common Stock.
(j) The Company will apply the proceeds to it from the sale of the
Offered Securities as described in the Prospectus.
The Company and each Selling Stockholder agree with the several
Underwriters that the Company will pay all expenses incident to the performance
of the obligations of the Company and the Selling Stockholders under this
Agreement, and will reimburse the Underwriters (if and to the extent incurred by
them) for any filing fees and other expenses (including fees and disbursements
of counsel) incurred by them in connection with qualification of the Offered
Securities for sale under the laws of such jurisdictions as CSFBC designates and
the printing of memoranda relating thereto, for the filing fee of the National
Association of Securities Dealers, Inc. relating to the Offered Securities, for
any travel expenses of the Company's officers and employees and any other
expenses of the Company in connection with attending or hosting meetings with
prospective purchasers of the Offered Securities, for any transfer taxes on the
sale by the Selling Stockholders of the Offered Securities to the Underwriters
(the Selling Stockholders being responsible for the payment of any of such
transfer taxes) and for expenses incurred in distributing preliminary
prospectuses and the Prospectus (including any amendments and supplements
thereto) to the Underwriters.
Each Selling Stockholder agrees to deliver to CSFBC, attention:
Transactions Advisory Group, on or prior to the First Closing Date a properly
completed and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations in
lieu thereof).
Each Selling Stockholder agrees, for a period of 120 days after the date of
the initial public offering of the Offered Securities, not to offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly, any
additional shares of Securities (or securities convertible into or exchangeable
or exercisable for any securities), or disclose the intention to make any such
offer, sale, pledge or disposal, without the prior written consent of CSFBC,
[except as otherwise contemplated under that certain "lock-up" letter dated June
__, 1998 delivered by such Selling Stockholder to the Company and the
Representatives].
6. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Firm
Securities on the First Closing Date and the Optional Securities to be purchased
on each Optional Closing Date will be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Stockholders herein, to the accuracy of the statements of Company officers made
pursuant to the provisions hereof, to the performance by the Company and the
Selling Stockholders of their obligations hereunder and to the following
additional conditions precedent:
(a) The Representatives shall have received a letter, dated the date
of delivery thereof (which shall be on or prior to the date of this
Agreement), of Deloitte & Touche LLP confirming that they are independent
public accountants within the meaning of the Act and the applicable
published Rules and Regulations thereunder and stating in effect that:
(i) in their opinion the financial statements and schedules
examined by them and included in the Registration Statements comply in
form in all material respects with the applicable accounting
requirements of the Act and the related published Rules and Regula-
tions;
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(ii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in Statement of Auditing
Standards No. 71, Interim Financial Information, on the unaudited
financial statements included in the Registration Statements;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim consolidated
financial statements of the Company, inquiries of officials of the
Company who have responsibility for financial and accounting matters
and other specified procedures, nothing came to their attention that
caused them to believe that:
(A) the selected combined financial data included in the
Prospectus for each of the three years ended December 31, 1997 do
not agree with, or were not properly derived from, the amounts
set forth in each of the constituent companies' selected
financial data included in the Prospectus for those same periods;
(B) the selected financial data included in the Prospectus
for each of the three years ended December 31, 1997 do not agree
with, or were not properly derived from, the amounts set forth in
the audited financial statements of the Company for those same
periods or were not determined on a basis substantially
consistent with that of the corresponding amounts in the audited
financial statements included in the Prospectus;
(C) the unaudited financial statements included in the
Registration Statements do not comply in form in all material
respects with the applicable accounting requirements of the Act
and the related published Rules and Regulations or any material
modifications should be made to such unaudited financial
statements for them to be in conformity with generally accepted
accounting principles;
(D) the unaudited consolidated financial statements for the
three month periods ended March 31, 1998 and March 31, 1997
included in the Prospectus do not agree with the amounts set
forth in the unaudited financial statements for those same
periods or were not determined on a basis substantially
consistent with that of the audited consolidated financial
statements; at the date of the latest available balance sheet
read by such accountants, or at a subsequent specified date not
more than five days prior to the date of this Agreement, there
was any change in the capital stock or any increase in short-term
debt or long-term debt of the Company and its consolidated
subsidiaries or, at the date of the latest available balance
sheet read by such accountants, there was any decrease in
consolidated net current assets or net assets, as compared with
amounts shown on the latest balance sheet included in the
Prospectus;
(E) for the period from the closing date of the latest
statement of operations included in the Prospectus to the closing
date of the latest available statement of operations read by such
accountants there were any decreases, as compared with the
corresponding period of the previous year and with the period of
corresponding length ended the date of the latest Consolidated
Statement of Operations included in the Prospectus, in
consolidated net revenues, operating income (defined as net
revenues less operating expenses, excluding depreciation,
amortization and corporate expenses) or in other income and
expense, net, or in the total or per share amounts of
consolidated net income; or
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(F) the pro forma financial data set forth in the
Prospectus does not comply in form in all material respects to
the applicable accounting requirements of the Act and the related
Rules and Regulations or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of
that data;
except in all cases set forth in clauses (D) and (E) above for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained or incorporated by reference in the Registration
Statements (in each case to the extent that such dollar amounts,
percentages and other financial information are derived from the
general accounting records of the Company, its subsidiaries and other
entities whose financial statements are included in the Prospectus
subject to the internal controls of the Company's or such entities'
accounting system or are derived directly from such records by
analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with
such results, except as otherwise specified in such letter.
(b) The Representatives shall have received letters, dated the date
of delivery thereof (which shall be on or prior to the date of this
Agreement), of Pressman Ciocca Smith LLP, Rooney, Ida, Nolt & Ahern, KPMG
Peat Marwick LLP and Ernst & Young LLP, in each case confirming that they
are independent public accountants within the meaning of the Act and the
applicable Rules and Regulations thereunder, and stating in effect that:
(i) in their opinion the financial statements and schedules
examined by them and included in the Registration Statements comply in
form in all material respects with the applicable accounting
requirements of the Act and the related published Rules and
Regulations; and
(ii) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in the Registration Statements (in each case to
the extent that such dollar amounts, percentages and other financial
information are derived from the general accounting records of the
entity whose financial statements they have audited subject to the
internal controls of such entity's accounting system or are derived
directly from such records by analysis or computation) with the
results obtained from inquiries, a reading of such general accounting
records and other procedures specified in such letter and have found
such dollar amounts, percentages and other financial information to be
in agreement with such results, except as otherwise specified in such
letter.
(c) The Prospectus shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 5(a) of this
Agreement. Prior to such Closing Date, no stop order suspending the
effectiveness of either Registration Statement shall have been issued and
no proceedings for that purpose shall have been instituted or, to the
knowledge of any Selling Stockholder, the Company or the Representatives,
shall be contemplated by the Commission.
(d) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development or event
involving a prospective change, in the
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condition (financial or other), business, properties or results of
operations of the Company or any of its subsidiaries which, in the judgment
of a majority in interest of the Underwriters including the
Representatives, is material and adverse and makes it impractical or
inadvisable to proceed with completion of the public offering or the sale
of and payment for the Offered Securities; (ii) any downgrading in the
rating of any debt securities of the Company, by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g)
under the Act), or any public announcement that any such organization has
under surveillance or review its rating of any debt securities of the
Company (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such
rating); (iii) any suspension or limitation of trading in securities
generally on the New York Stock Exchange, or any setting of minimum prices
for trading on such exchange, or any suspension of trading of any
securities of the Company on any exchange or in the over-the-counter
market; (iv) any banking moratorium declared by Federal or New York
authorities; or (v) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by Congress or
any other substantial national or international calamity or emergency if,
in the judgment of a majority in interest of the Under writers including
the Representatives, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable to
proceed with completion of the public offering or the sale of and payment
for the Offered Securities.
(e) The Representatives shall have received an opinion, dated such
Closing Date, of Sullivan & Worcester LLP counsel for the Company, to the
effect that:
(i) Each of the Company and the subsidiaries listed on Annex I
hereto has been duly incorporated (or formed, as the case may be) and
each of the Company and its subsidiaries is an existing corporation
(or limited partnership or limited liability company, as the case may
be) in good standing under the laws of the jurisdiction of its
incorporation or formation, with corporate, partnership or limited
liability company power and authority to own its properties and
conduct its business as described in the Prospectus, and is duly
qualified to do business as a foreign corporation (or other entity) in
good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not
individually or in the aggregate have a material adverse effect on the
Company and its subsidiaries taken as a whole;
(ii) Each of the ATC Merger, and the merger of a wholly-owned
subsidiary of CBS Corporation with and into American Radio Systems
Corporation has previously become effective;
(iii) The Offered Securities delivered on such Closing Date and
all other outstanding shares of all classes of the capital stock of
the Company have been duly authorized and validly issued, are fully
paid and nonassessable and conform to the description thereof
contained in the Prospectus under the caption "Description of Capital
Stock"; and the stockholders of the Company have no preemptive rights
with respect to the Offered Securities;
(iv) Except as described in the Prospectus, there are no
contracts, agreements or understandings known to such counsel between
the Company and any person granting such person the right to require
the Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the
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Registration Statement or in any securities being registered pursuant
to any other registration statement filed by the Company under the
Act;
(v) Each of the Credit Agreements, each dated as of June 16,
1998, among the Company, American Tower Systems (Delaware), Inc. and
American Tower Systems L.P., respectively, Toronto Dominion (Texas)
Inc., as Administrative Agent, and the other lenders under each such
agreement, (collectively, the "Credit Agreements") has been duly
authorized, executed and delivered by the Company and its subsidiaries
party thereto and, constitutes a valid and legally binding obligation
of the Company and its subsidiaries party thereto, as the case may be,
enforceable in accordance with its terms against the Company and its
subsidiaries thereto, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other laws of general
applicability relating to or affecting creditors' rights and to
general equity principles;
(vi) No consent, approval, authorization, order or waiver of,
or filing with, any governmental agency or body or any court is
required to be obtained or made by the Company for the consummation of
the transactions contemplated by this Agreement in connection with the
sale of the Offered Securities, except such as have been obtained or
made under the Act or under state securities laws or such as may be
required under the Communications Act of 1934, as amended (the
"Communications Act") (as to which such counsel need express no
opinion);
(vii) The execution, delivery and performance of this Agreement
and the consummation of the transactions herein or therein
contemplated will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any statute,
any rule, regulation or order of any governmental agency or body or
any court having jurisdiction over the Company, or any subsidiary of
the Company or any of their properties, or, to such counsel's
knowledge, any agreement or instrument to which the Company or any
subsidiary of the Company is a party or by which the Company or any
subsidiary of the Company is bound including, but not limited to, the
Credit Agreements, and the Registration Rights Agreement, dated as of
January 22, 1998, among the Company and the stockholders named
therein, or to which any of the properties of the Company or any
subsidiary of the Company is subject, or the charter or by-laws or
other constituent document of the Company or any subsidiary of the
Company, except that such counsel need not express any opinion with
respect to the Communications Act or the rules, regulations and orders
of the Federal Communications Commission (the "FCC") promulgated
thereunder;
(viii) Registration Statement No. 333-52481 was declared
effective under the Act as of the date and time specified in such
opinion, Registration Statement No. 333-52481 , satisfying the
requirements of Rule 462(b), was filed and became effective under the
Act as of the date and (if determinable) time specified in such
opinion, the Prospectus was filed with the Commission pursuant to the
subparagraph of Rule 424(b) specified in such opinion on the date
specified therein or was included in the Initial Registration
Statement or the Additional Registration Statement (as the case may
be), and, to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of a Registration Statement or any part
thereof has been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the Act, and each
Registration Statement and the Prospectus, and each amendment or
supplement thereto, as of their respective effective or issue dates,
complied as to form in all material respects with the requirements of
the Act
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<PAGE>
and the Rules and Regulations; such counsel have no reason to believe
that any part of a Registration Statement or any amendment thereto, as
of its effective date or as of such Closing Date, contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading; or that the Prospectus or any amendment or
supplement thereto, as of its issue date or as of such Closing Date,
contained any untrue statement of a material fact or omitted to state
any material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; the descriptions in each Registration Statement and the
Prospectus of statutes, legal and governmental proceedings and
contracts and other documents are accurate in all material respects
and fairly present the information required to be shown; and such
counsel do not know of any legal or governmental proceedings required
to be described in either Registration Statement or the Prospectus
which are not described as required or of any contracts or documents
of a character required to be described in either Registration
Statement or the Prospectus or to be filed as exhibits to either
Registration Statement which are not described and filed as required;
it being understood that such counsel need express no opinion as to
the financial statements and schedules or other financial data
contained in either Registration Statement or the Prospectus, except
that such counsel need not express any opinion with respect to the
Communications Act or the rules, regulations and orders of the FCC
promulgated thereunder; and
(ix) This Agreement has been duly authorized, executed and
delivered by the Company.
(f) The Representatives shall have received an opinion, dated such
Closing Date, of Dow, Lohnes & Albertson, FCC counsel to the Company, to
the effect that:
(i) No consent, approval, authorization, order or waiver of,
or filing with, the FCC is required under the Communications Act and
the published policies, rules and regulations of the FCC to be
obtained or made by the Company or any subsidiary of the Company for
the consummation of the transactions described in the Prospectus as
necessary to effectuate the issuance of the Offered Securities to be
sold by the Company, the sale of the Offered Securities by the Company
and the Selling Stockholders, the public offering thereof by the
Underwriters and the execution, delivery and performance of the
Underwriting Agreement (provided that such counsel shall not be
required to undertake any examination of, or to opine with respect to,
the qualifications or ownership interests of the stockholders of the
Company or of any parties that may purchase securities in connection
with such transaction);
(ii) The execution, delivery and performance of this Agreement,
the issuance of the Offered Securities to be sold by the Company, the sale
of the Offered Securities by the Company and the Selling Stockholders and
the public offering thereof by the Underwriters, do not and will not
violate any of the terms or provisions of, or constitute a default under
(i) the Communications Act or any FCC regulation, rule policy or order,
(ii) the FCC licenses held by the Company or any subsidiary of the Company
(provided that such counsel shall not be required to undertake any
examination of, or to opine with respect to, the qualifications or
ownership interests of the stockholders of the Company or of any parties
that may purchase securities in connection with such transaction);
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<PAGE>
(iii) To the knowledge of such counsel, (A) there are no
administrative or judicial proceedings pending before, or threatened by,
the FCC with respect to the Company or any subsidiary of the Company, or
any towers owned or operated by the Company or any subsidiary of the
Company which, if determined adversely, individually or in the aggregate,
could reasonably be expected to have a material adverse effect upon the
Company and its subsidiaries taken on a whole, and (B) the registration
with the FCC of such towers is in full force and effect in that such
registration is held by a subsidiary of the Company, is currently effective
and is not subject to any special conditions (other than those conditions
of a type customarily imposed under the general rules, regulations and
policies of the FCC) that would materially and adversely affect the
operation of such towers, taken as a whole, as currently operated.
(g) The Representatives shall have received an opinion, of counsel
each of the Selling Stockholders as contemplated by and dated the date of
the Power of Attorney and the opinion of such counsel substantially to the
effect that each Selling Stockholder had valid and unencumbered title to
the Offered Securities delivered by such Selling Stockholder on such
Closing Date and had full right, power and authority to sell, assign,
transfer and deliver the Offered Securities to be delivered by such Selling
Stockholder on such Closing Date hereunder; and the several Underwriters
have acquired valid and unencumbered title to the Offered Securities
purchased by them from the Selling Stockholders hereunder.
(h) The Representatives shall have received from Sullivan & Cromwell,
counsel for the Underwriters, such opinion or opinions, dated such Closing
Date, with respect to the incorpora tion of the Company, the validity of
the Offered Securities delivered on such Closing Date, the Registration
Statements, the Prospectus and other related matters as the Representatives
may require, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon
such matters.
(i) The Representatives shall have received a certificate, dated such
Closing Date, of the Chief Executive Officer of the Company and the Chief
Financial Officer of the Company in which such officers, to the best of
their knowledge after reasonable investigation, shall state that the
representations and warranties of the Company in this Agreement are true
and correct, that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to such Closing Date, that no stop order suspending the
effectiveness of any Registration Statement has been issued and no
proceedings for that purpose have been instituted or are contemplated by
the Commission, that, subsequent to the date of the most recent financial
statements in the Prospectus, there has been no material adverse change,
nor any development or event involving a prospective material adverse
change, in the condition (financial or other), business, properties or
results of operations of the Company and its subsidiaries taken as a whole
except as set forth in or contemplated by the Prospectus or as described in
such certificate, and that any additional Registration Statement was filed
pursuant to Rule 462(b) under the Act, including payment of the applicable
filing fee in accordance with Rule 111(a); such registration statement
satisfied the requirements of subparagraphs (1) and (3) of Rule 462(b);
such registration statement was filed prior to the time the Prospectus was
printed and distributed; and no document has been prepared or distributed
in reliance on Rule 434 under the Act.
(j) The Representatives shall have received letters, dated such
Closing Date, of Deloitte & Touche LLP, Pressman Ciocca Smith LLP, Rooney,
Ida, Nolt & Ahern, KPMG Peat Marwick LLP and Ernst & Young LLP which meets
the requirements of subsections (a) and (b),
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respectively, of this Section, except that the specified date referred to
in such subsections will be a date not more than five days prior to such
Closing Date for the purposes of this subsection.
(k) The Securities to be delivered on such Closing Date shall have
been approved for listing on NYSE, subject, in the case of Offered
Securities being sold by the Company, only to official notice of issuance.
The Selling Stockholders and the Company will furnish the Representatives with
such conformed copies of such opinions, certificates, letters and documents as
the Representatives reasonably request. CSFBC may in its sole discretion waive
on behalf of the Underwriters compliance with any conditions to the obligations
of the Underwriters hereunder, whether in respect of an Optional Closing Date or
otherwise.
7. Indemnification and Contribution. (a) The Company will
indemnify and hold harmless each Underwriter against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through the
Representatives specifically for use therein. The foregoing indemnity agreement
with respect to any untrue statement or omission in the Preliminary Prospectus
shall not inure to the benefit of any Underwriter from whom the person asserting
any such losses, claims, damages or liabilities purchased the Offered Securities
if a copy of the Prospectus (as then amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) was not sent or
given by or on behalf of such Underwriter to such person at or prior to the
written confirmation of the sale of the Offered Securities to such person, and
the Prospectus (as amended or supplemented) would have cured the defect giving
rise to such losses, claims, damages or liabilities.
(b) Each Selling Stockholder, severally and not jointly, will
indemnify and hold harmless each Underwriter against any losses, claims, damages
or liabilities to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
each Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Selling Stockholders will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement in or omission or alleged omission
from any of such documents in reliance upon and in conformity with written
information furnished to the Company by an Underwriter through the
Representatives specifically for use therein; provided, further, that (i) a
Selling Stockholder shall only be subject to such liability to the extent that
the untrue statement or alleged untrue
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statement or omission or alleged omission in reliance upon and in conformity
with written information furnished to the Company by such Selling Stockholder
specifically for use therein. The foregoing indemnity agreement with respect to
any untrue statement or omission in the Preliminary Prospectus shall not inure
to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased the Offered Securities if a
copy of the Prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person at or prior to the written
confirmation of the sale of the Offered Securities to such person, and the
Prospectus (as amended or supplemented) would have cured the defect giving rise
to such losses, claims, damages or liabilities. In no event, however, shall the
liability of any Selling Stockholder for indemnification under this Section 7(b)
exceed the lesser of (i) the proceeds received by such Selling Stockholder from
the Underwriters in the Offering and (ii) that portion of the total losses,
claims, damages and liabilities for which the Underwriters and any controlling
persons may be subject to indemnification hereunder equal to the ratio of the
total number of Offered Securities sold hereunder by such Selling Stockholder as
compared to the total Offered Securities sold hereunder by all Selling
Stockholders.
(c) Each Underwriter will severally and not jointly indemnify and
hold harmless the Company and each Selling Stockholder against any losses,
claims, damages or liabilities to which the Company or such Selling Stockholder
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company by such Underwriter through the Representatives specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
the Company and each Selling Stockholder in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred.
(d) Promptly after receipt by an indemnified party under this Section
or Section 9 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under subsection (a), (b) or (c) above or Section 9, notify the indemnifying
party of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under subsection (a), (b) or (c) above or
Section 9. In case any such action is brought against any indemnified party and
it notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section or Section 9, as the case may be, for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any claims
that are the subject matter of such action.
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(e) If the indemnification provided for in this Section or Section 9
is unavailable or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above or Section 9, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of the losses, claims, damages or liabilities referred to in subsection
(a), (b) or (c) above or Section 9 (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company, the Selling Stockholders
and the Underwriters from the offering of the Offered Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company, the
Selling Stockholders and the Underwriters in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities as well
as any other relevant equitable considerations. The relative benefits received
by the Company, the Selling Stockholders and the Underwriters shall be deemed to
be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company and the Selling Stockholders bear to
the total underwriting discounts and commissions received by the Underwriters.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company, the Selling Stockholders or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (e) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which is
the subject of this subsection (e). Notwithstanding the provisions of this
subsection (e), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission and no Selling Stockholder shall be require to contribute
any amount in excess of the amount of the proceeds received by such Selling
Stockholder from the Underwriters in the Offering. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' and the Selling Stockholders'
obligations in this subsection (e) to contribute are several in proportion to
their respective obligations and not joint.
(f) The obligations of the Company and the Selling Stockholders under
this Section or Section 9 shall be in addition to any liability which the
Company and the Selling Stockholders may otherwise have and shall extend, upon
the same terms and conditions, to each person, if any, who controls any
Underwriter or the QIU (as hereinafter defined) within the meaning of the Act;
and the obligations of the Underwriters under this Section shall be in addition
to any liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each director of the Company, to
each officer of the Company who has signed a Registration Statement and to each
person, if any, who controls the Company within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters
default in their obligations to purchase Offered Securities hereunder on either
the First or any Optional Closing Date and the aggregate number of shares of
Offered Securities that such defaulting Underwriter or Underwriters agreed but
failed to purchase does not exceed 10% of the total number of shares of Offered
Securities that the Underwriters are obligated to purchase on such Closing Date,
CSFBC may make arrangements satisfactory to the Company and the Selling
Stockholders for the purchase of such Offered Securities by other persons,
including any of the Underwriters, but if no such arrangements are made by such
Closing Date, the non-
19
<PAGE>
defaulting Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Offered Securities that such
defaulting Underwriter or Underwriters agreed but failed to purchase on such
Closing Date. If any Underwriter or Underwriters so default and the aggregate
number of shares of Offered Securities with respect to which such default or
defaults occur exceeds 10% of the total number of shares of the Offered
Securities that the Underwriters are obligated to purchase on such Closing Date
and arrangements satisfactory to CSFBC, the Company and the Selling Stockholders
for the purchase of such Offered Securities by other persons are not made within
36 hours after such default, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter, the Company or the Selling
Stockholders, except as provided in Section 10 (provided that if such default
occurs with respect to Optional Securities after the First Closing Date, this
Agreement will not terminate as to the Firm Securities or any Optional
Securities purchased prior to such termination). As used in this Agreement, the
term "Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability for
its default.
9. Qualified Independent Underwriter. The Company hereby confirms
that at its request Bear, Stearns & Co. Inc. has without compensation acted as
"qualified independent underwriter" (in such capacity, the "QIU") within the
meaning of Rule 2720 of the Conduct Rules of the National Association of
Securities Dealers, Inc. in connection with the offering of the Offered
Securities. The Company will indemnify and hold harmless the QIU against any
losses, claims, damages or liabilities, joint or several, to which the QIU may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon the QIU's acting (or alleged failing to act) as such "qualified independent
underwriter" and will reimburse the QIU for any legal or other expenses
reasonably incurred by the QIU in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred.
10. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Selling Stockholders, of the Company or its officers and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation, or statement
as to the results thereof, made by or on behalf of any Underwriter, any Selling
Stockholder and the Company or any of their respective representatives, officers
or directors or any controlling person, and will survive delivery of and payment
for the Offered Securities. If this Agreement is terminated pursuant to Section
8 or if for any reason the purchase of the Offered Securities by the
Underwriters is not consummated, the Company and the Selling Stockholders shall
remain responsible for the expenses to be paid or reimbursed by them pursuant to
Section 5 the respective obligations of the Company, the Selling Stockholders,
and the Underwriters pursuant to Section 7 and the obligations of the Company
and the Selling Stockholders pursuant to Section 9 shall remain in effect, and
if any Offered Securities have been purchased hereunder the representations and
warranties in Section 2 and all obligations under Section 5 shall also remain in
effect. If the purchase of the Offered Securities by the Underwriters is not
consummated for any reason other than solely because of the termination of this
Agreement pursuant to Section 8 or the occurrence of any event specified in
clause (iii), (iv) or (v) of Section 6(d), the Company will reimburse the
Underwriters for all out-of-pocket expenses (including fees and disbursements of
counsel) reasonably incurred by them in connection with the offering of the
Offered Securities.
11. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed
to the Representatives, c/o Credit Suisse First Boston Corporation, Eleven
Madison Avenue, New York, N.Y. 10010-3629, Attention: Investment Banking
Department--Transactions Advisory Group; if sent to the Company, will be mailed,
20
<PAGE>
delivered or telegraphed and confirmed to it at 116 Huntington Avenue, Boston,
MA 02116, Attention: Steven B. Dodge or, if sent to the Selling Stockholders or
any of them, will be mailed, delivered or telegraphed and confirmed c/o with
respect to Selling Stockholders listed on Schedule A, Steven Dodge, with respect
to Selling Stockholders listed on Schedule B, Fred Lummis, in each case at 116
Huntington Avenue, Boston, MA, 02116, provided, however, that any notice to an
Underwriter pursuant to Section 7 will be mailed, delivered or telegraphed and
confirmed to such Underwriter.
12. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective personal representatives
and successors and the officers and directors and controlling persons referred
to in Section 7, and no other person will have any right or obligation
hereunder.
13. Representation. The Representatives will act for the several
Underwriters in connection with the transactions contemplated by this Agreement,
and any action under this Agreement taken by the Representatives jointly or by
CSFBC will be binding upon all the Underwriters. Steven Dodge or Thomas Stoner
as attorneys-in-fact, will act for the Selling Stockholders listed on Schedule A
and Fred Lummis or ____________ as attorneys-in-fact, will act for the Selling
Stockholders listed on Schedule B, in each case, in connection with such
transactions, and any action under or in respect of this Agreement taken by any
of them will be binding upon all the Selling Stockholders.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
15. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
21
<PAGE>
If the foregoing is in accordance with the Representatives'
understanding of our agreement, kindly sign and return to us three of the
counterparts hereof, whereupon it will become a binding agreement among the
Company, the Selling Stockholders and the several Underwriters in accordance
with its terms.
Very truly yours,
American Tower Corporation
By: ____________________________________
Name:
Title:
Each of The Selling Stockholders Listed on Schedule A Hereto
By:_____________________________________
Attorney-in-fact
Each of The Selling Stockholders Listed on Schedule B Hereto
By:_____________________________________
Attorney-in-fact
The foregoing Underwriting Agreement
is hereby confirmed and accepted
as of the date first above written.
Credit Suisse First Boston Corporation,
BT Alex. Brown Incorporated,
Lehman Brothers Incorporated,
Morgan Stanley & Co. Incorporated,
Bear, Stearns & Co. Inc.,
Merrill Lynch, Pierce, Fenner & Smith
Incorporated and
Smith Barney, Inc.
Acting on behalf of themselves and as
the Representatives of the several
Underwriters.
By Credit Suisse First Boston Corporation
By:__________________________________
Name:
Title:
22
<PAGE>
EXHIBIT 3i.1
RESTATED CERTIFICATE OF INCORPORATION
OF
AMERICAN TOWER SYSTEMS CORPORATION
FIRST: The name of the corporation (hereinafter the "Corporation") is
-----
AMERICAN TOWER CORPORATION.
SECOND: The respective names of the County and of the City within the
------
County in which the registered office of the Corporation is located in the State
of Delaware are the County of New Castle and the City of Wilmington. The name
of the registered agent of the Corporation is Corporation Service Company. The
street and number of said registered office and the address by street and number
of said registered agent is 1013 Centre Road, Wilmington, New Castle County,
Delaware 19805-1297.
THIRD: The nature of the business of the Corporation and the objects or
-----
purposes to be transacted, promoted or carried on by it are as follows: To
engage in any lawful act or activity for which corporations may be organized
under the Delaware General Corporation Law.
FOURTH: The aggregate number of shares of all classes of stock which the
------
Corporation is authorized to issue is 380,000,000 shares, of which 20,000,000
shall be shares of Preferred Stock, $.01 par value per share (the "Preferred
Stock"), and 360,000,000 shall be shares of Common Stock, $.01 par value per
share (the "Common Stock"), of which 300,000,000 shall be shares of Class A
Common Stock, $.01 par value per share (the "Class A Common Stock"), and
50,000,000 shall be shares of Class B Common Stock, $.01 par value per share
(the "Class B Common Stock"), and 10,000,000 shall be shares of Class C Common
Stock, $.01 par value per share (the "Class C Common Stock").
A. GENERAL
-------
No holder of any of the shares of stock of this Corporation, whether now or
hereafter authorized or issued, shall be entitled as of right to purchase or
subscribe for (i) any unissued stock of any class, or (ii) any additional share
of any class to be issued by reason of any increase of the authorized stock of
the Corporation of any class, or (iii) bonds, certificates of indebtedness,
debentures or other securities convertible into or exchangeable, or carrying any
right to purchase or otherwise acquire, stock of any class of the Corporation.
Subject to the other terms of this Restated Certificate of Incorporation, the
Board of Directors of the Corporation may from time to time authorize by
resolution the issuance of any or all shares of the Common Stock and the
Preferred Stock herein authorized, together with any additional shares of any
class to be issued by reason of any increase of the authorized stock of the
Corporation of any class, or bonds, certificates of indebtedness, debentures or
other securities convertible into or exchangeable, or carrying any right to
purchase or otherwise acquire, stock of any class of the Corporation, for such
purposes, in such amounts, to such Persons, for such consideration and, in the
case of the Preferred Stock, in one or more series or classes, all as the Board
of Directors in its sole and absolute discretion may from time to time determine
and without any vote, approval, consent or other action by the stockholders,
except as otherwise required by applicable law.
Every reference in this Restated Certificate of Incorporation to a majority
or other portion of shares of stock, including without limitation the provisions
set forth in Articles EIGHTH and TENTH, shall refer to such majority or other
portion of the votes of such shares of stock.
<PAGE>
The designations and the powers, preferences and rights, of the capital
stock of the Corporation and the qualifications, limitations and restrictions
thereof, shall be as set forth in Sections B, C, D and E below.
B. PREFERRED STOCK
---------------
The Board of Directors is expressly authorized to provide for the issuance
of all or any shares of the Preferred Stock in one or more classes or series,
and to fix for each such class or series such voting powers, full or limited, or
no voting powers, and such distinctive designations, preferences and relative,
participating, optional or other special rights and such qualifications,
limitations or restrictions thereof, as shall be stated and expressed in the
resolution or resolutions adopted by the Board of Directors, in its sole and
absolute discretion, providing for the issuance of such class or series and as
may be permitted by the Delaware General Corporation Law, including, without
limitation, the authority to determine with respect to the shares of any such
class or series (i) whether such shares shall be redeemable, and, if so, the
terms and conditions of such redemption, including the date or dates upon or
after which they shall be redeemable, and the amount per share payable in case
of redemption, which amount may vary under different conditions and at different
redemption dates; (ii) whether such shares shall be entitled to receive
dividends (which may be cumulative or noncumulative) and, if so, the rates and
conditions of such dividends, including the times at which such dividends are
payable, the preferences in relation to the dividends payable on any other class
or classes or any other series of the same or any other class or classes of
stock, and whether such dividends are payable, in whole or in part, in cash, in
additional shares of such class or series, or in any other series of the same or
any other class or classes of stock, or in other securities of the Corporation,
or in any combination of the foregoing; (iii) the rights of such shares in the
event of voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment of such
shares; (iv) whether such shares shall be convertible into, or exchangeable for,
shares of any other class or classes of stock, or of any other series of the
same or any other class or classes of stock, or any other securities of the
Corporation, and, if so, the terms and conditions of such conversion or
exchange, including provision for adjustment of the conversion or exchange rate
in such events as the Board of Directors shall determine; (v) whether the class
or series shall have a sinking fund for the redemption or purchase of such
shares, and, if so, the terms and amount of such sinking fund; and (vi) any
other relative rights, preferences or limitations.
C. COMMON STOCK
------------
Except as otherwise provided in this Section or as otherwise required by
the Delaware General Corporation Law, all shares of Class A Common Stock, Class
B Common Stock and Class C Common Stock shall be identical and shall entitle the
holders thereof to the same powers, preferences and rights, and shall be subject
to the same qualifications, limitations and restrictions thereof.
1. Voting Rights and Powers. (a) Except as otherwise provided in
------------------------
this Restated Certificate of Incorporation, with respect to all matters
upon which stockholders are entitled to vote, the holders of the
outstanding shares of Class A Common Stock shall be entitled to one (1)
vote in person or by proxy for each share of Class A Common Stock standing
in the name of such stockholders on the record of stockholders, and the
holders of the outstanding shares of Class B Common Stock shall be entitled
to ten (10) votes in person or by proxy for each share of Class B Common
Stock standing in the name of such stockholders on the record of
stockholders. Except as otherwise required by Applicable Law or paragraph
(b), (c) (d), (e) or (f) of this Section (C)(1), holders of Class A Common
Stock and Class B Common Stock shall vote together as a single class on all
matters submitted to the stockholders for a vote, including,
notwithstanding the first sentence of Section 242(b)(2) of the Delaware
General Corporation Law, any amendment to this Restated Certificate of
Incorporation which would increase or decrease the number of authorized
shares of Class A Common Stock, Class B Common Stock and Class C Common
Stock, subject to any voting rights which may be granted to
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<PAGE>
holders of Preferred Stock. Except as otherwise provided by Applicable Law,
holders of Class C Common Stock shall not be entitled to vote on any
matters to be voted on by the Corporation's stockholders nor to take any
action in meetings with respect to any such matters.
(b) In the election of directors, the holders of Class A Common Stock
shall be entitled, voting as a single class and exclusive of all other
stockholders, to elect two (2) directors of the Corporation (the "Class A
Directors"), with each share of Class A Common Stock entitled to one vote.
Any one or more of the Class A Directors may be removed with or without
cause only by a vote of the holders of Class A Common Stock, voting
separately as a single class and holding not less than a majority of the
issued and outstanding shares of Class A Common Stock.
(c) Except as set forth in paragraph (b) above, the holders of the
Class A Common Stock and the Class B Common Stock, voting as a single
class, shall have the right to vote on the election of all directors of the
Corporation, with each share of Class A Common Stock being entitled to one
(1) vote and each share of Class B Common Stock being entitled to ten (10)
votes. Any one or more of the directors (other than the Class A Directors)
may be removed with or without cause by a vote of the holders of Class A
Common Stock and Class B Common Stock, voting as a single class, holding
not less than a majority of the votes entitled to be cast for the election
of directors (other than Class A Directors) of the Corporation.
(d) From and after the Final Class B Date, except as otherwise
required by Applicable Law and subject to the rights, if any, of any class
or series of Preferred Stock from time to time outstanding, with respect to
each matter submitted to the vote of the stockholders (including without
limitation the election of directors of the Corporation), the holders of
the Class A Common Stock voting as a class shall be entitled to determine
such matter, with each issued and outstanding share of Class A Common Stock
entitled to one (1) vote.
(e) In addition to such other vote, if any, as may be required by the
Delaware General Corporation Law or this Restated Certificate of
Incorporation, the vote or consent of the holders of a majority of the
Class A Common Stock voting separately as a single class shall be required
to amend or restate this Restated Certificate of Incorporation in a manner
that would alter or change the powers, preferences or special rights of the
shares of Class A Common Stock so as to affect them adversely; provided,
however, that notwithstanding the foregoing, no such amendment or
restatement that (i) increases or decreases the number of authorized shares
of, or which increases or decreases the par value of, the Class A Common
Stock, the Class B Common Stock or the Class C Common Stock, or (ii)
creates a new class of Common Stock or increases or decreases the
authorized number of shares thereof so long as such shares are not entitled
to more than one (1) vote per share, shall be deemed to affect adversely
the powers, preferences or special rights of the shares of Class A Common
Stock, and the holders of the Class A Common Stock shall not be entitled to
vote as a class with respect to any of the matters referred to in clause
(i) or (ii) immediately preceding.
(f) In addition to the vote, if any, as may be required by the
Delaware Corporation Law or this Restated Certificate of Incorporation, the
vote or consent of the holders or a majority of the Class A Common Stock,
voting separately as a single class, shall be required to amend or restate
this Restated Certificate of Incorporation in a manner that creates any
class of Common Stock having more than one vote per share, unless such
class is to be issued in exchange for the Class B Common Stock and does not
have more than ten votes per share and the terms of this Section (C) apply
to it to the same extent as to the Class B Common Stock.
-3-
<PAGE>
2. Stock Splits, Dividends and Distributions. The Corporation shall not
-----------------------------------------
in any manner subdivide (by stock split or otherwise) or combine (by reverse
stock split or otherwise), or pay or declare any stock dividend on, the
outstanding shares of the Common Stock of any class or series unless the
outstanding Common Stock of all the other classes and series shall be
proportionately subdivided or combined or the holders thereof shall have
received a proportionate dividend. All such subdivisions, combinations and
dividends shall be payable only in shares of the respective classes or series to
the holders of such classes or series. At any time shares of more than one
class of Common Stock are outstanding, as and when dividends or other
distributions payable in either cash, capital stock of the Corporation (other
than in shares of Class A Common Stock, Class B Common Stock or Class C Common
Stock) or other property of the Corporation may be declared by the Board of
Directors, the amount of any such dividend or other distribution payable on each
share of each class of Common Stock shall in all cases be equal, except that in
the event of any such dividend or distribution in which shares (or other
securities) of any company (including of any direct or indirect Subsidiary of
the Corporation) are distributed, such shares (or other securities) may differ
as to voting rights up to the extent that the voting rights of the Class A
Common Stock, the Class B Common Stock and the Class C Common Stock differ
immediately prior to such dividend or distribution; provided, however, that any
shares (or other securities) that differ as to voting rights and are permitted
by the exception immediately preceding this proviso shall be subject to the same
transfer restrictions and conversion events as the Class B Common Stock to the
same extent as if such shares (or other securities) were shares of Class B
Common Stock.
3. Consideration on Merger, Consolidation, etc.; Distribution of Assets
--------------------------------------------------------------------
Upon Liquidation. In any merger, consolidation or business combination, the
- ----------------
consideration to be received per share by the holders of shares of Class A
Common Stock, shares of Class B Common Stock and shares of Class C Common Stock
shall be identical for each class of stock, except that in any such transaction
in which shares of capital stock and/or other securities (including debt
securities) (including without limitation those of a surviving entity, or the
direct or indirect parent entity thereof, whether or not such surviving entity
is the Corporation) are to be distributed, such shares (or other securities) may
differ as to voting rights up to the extent that the voting rights of the Class
A Common Stock, the Class B Common Stock and the Class C Common Stock differ
immediately prior to such merger, consolidation or business combination;
provided, however, that any shares (or other securities) that differ as to
voting rights and are permitted by the exception immediately preceding this
proviso shall be subject to the same transfer restrictions and conversion events
as the Class B Common Stock to the same extent as if such shares (or other
securities) were shares of Class B Common Stock.
In the event the Corporation shall be liquidated, dissolved or wound up,
whether voluntarily or involuntarily, after there shall have been paid or set
aside for the holders of all shares of the Preferred Stock then outstanding the
full preferential amounts to which they may be entitled, if any, under the
resolutions authorizing the issuance of such Preferred Stock, the net assets of
the Corporation remaining thereafter shall be distributed ratably to each share
of Class A Common Stock, Class B Common Stock and Class C Common Stock in
accordance with the number of shares thereof and without regard to class, except
that in the event of any such liquidation, dissolution or winding up in which
shares (or other securities) of any company (including of any direct or indirect
Subsidiary of the Corporation) are distributed, such shares (or other
securities) may differ as to voting rights up to the extent that the voting
rights of the Class A Common Stock, the Class B Common Stock and the Class C
Common Stock differ immediately prior to such liquidation, dissolution or
winding up; provided, however, that any shares (or other securities) that differ
as to voting rights and are permitted by the exception immediately preceding
this proviso shall be subject to the same transfer restrictions and conversion
events as the Class B Common Stock to the same extent as if such shares (or
other securities) were shares of Class B Common Stock. For the purposes of this
paragraph, neither the merger, consolidation or business combination of the
Corporation with or into any other entity in which the stockholders of the
Corporation receive capital stock and/or other securities (including debt
securities) of the surviving entity (or of the direct or indirect parent entity
thereof), nor the sale, lease or transfer by the Corporation of all or any part
-4-
<PAGE>
of its business and assets, nor the reduction of the capital stock of the
Corporation, shall be deemed to be a voluntary or involuntary liquidation,
dissolution or winding up of the Corporation.
4. Automatic Conversion of Class B Common Stock Upon Non-Permitted
---------------------------------------------------------------
Transfer of Class B Common Stock. No Person may Transfer, and the Corporation
- --------------------------------
shall not register the Transfer of, any share of Class B Common Stock, unless
such Transfer constitutes a Permitted Transfer. Any purported Transfer of
economic, record or beneficial ownership of shares of Class B Common Stock other
than in accordance with the terms of this Subsection shall, without any act on
the part of the Corporation, the Class B Holder, the transferee or any other
Person, result in the conversion of each share of the purportedly transferred
shares of Class B Common Stock into one share of Class A Common Stock effective
on the date of such purported transfer, and the stock certificates formerly
representing such shares of Class B Common Stock shall thereupon and thereafter
be deemed to represent such number of shares of Class A Common Stock.
Notwithstanding the foregoing, any Class B Holder may pledge its shares of Class
B Common Stock to a pledgee pursuant to a bona fide pledge of such shares as
collateral security for indebtedness due to the pledgee, provided that such
shares shall not be registered in the name of the pledgee and shall remain
subject to the provisions of this Subsection. In the event of foreclosure or
other similar action with respect to such shares by the pledgee, such pledged
shares of Class B Common Stock may only be Transferred to a Permitted Transferee
or converted into shares of Class A Common Stock, as the pledgee may elect.
Shares of Class B Common Stock issued upon Transfer to a Permitted
Transferee shall be issued to or registered in the names of the beneficial
owners thereof and not in "street" or "nominee" names. If there is more than
one beneficial owner of such transferred shares of Class B Common Stock, the
shares may be registered in the name of one such beneficial owner, provided such
registered owner files a certificate with the Corporation identifying the names
of all beneficial owners of such shares. The Corporation may, in connection
with preparing a list of stockholders entitled to vote at any meeting of
stockholders, or as a condition to the transfer or the registration of shares of
Class B Common Stock on the Corporation's books, require the furnishing of such
affidavits or other proof as it deems necessary to establish that the registered
owner of such shares is in fact the beneficial owner of such shares, or to
establish the identity of the Economic Owner, as the case may be, of such shares
or to establish that any transferee of such shares is a Permitted Transferee.
The Corporation shall note on all certificates for shares of Class B Common
Stock that the shares represented by such certificates are subject to the
restrictions on transfer and registration of transfer imposed by this
Subsection.
5. Automatic Conversion of all Class B Common Stock. Upon the occurrence
------------------------------------------------
of a Dodge Conversion Event:
(a) all shares of Class B Common Stock at the time outstanding
shall, without any act on the part of the Corporation, any Class B Holder
or any other Person, result in the conversion of each share of Class B
Common Stock into one share of Class A Common Stock effective as of the
close of business on the date of the occurrence of the Dodge Conversion
Event, the stock certificates formerly representing shares of Class B
Common Stock shall thereupon and thereafter be deemed to represent such
number of shares of Class A Common Stock, and no further transfers of
shares of Class B Common Stock shall be effected on the stock record books
of the Corporation; and
(b) all options to purchase shares of Class B Common Stock at the
time outstanding shall, without any act on the part of the Corporation, the
holder of any such option or any other Person, become an option to purchase
a number of shares of Class A Common Stock equal to the number of shares of
Class B Common Stock theretofore purchasable under such option.
-5-
<PAGE>
6. Optional Conversion of Common Stock. Each fully paid share of Class B
-----------------------------------
Common Stock and each fully paid share of Class C Common Stock shall be
convertible at the election of the holder thereof into one share of Class A
Common Stock in accordance with and subject to the provisions of this Subsection
as follows:
(a) Class B Common Stock into Class A Common Stock. Any holder of
----------------------------------------------
shares of Class B Common Stock may, in its sole and absolute discretion,
elect to convert any or all of such shares into shares of Class A Common
Stock at one time or from time to time by surrendering the certificate
representing each share of Class B Common Stock to be converted to the
Corporation at its principal executive offices, accompanied by a written
notice of the election by the holder thereof to convert and (if so required
by the Corporation) by instruments of transfer, in form reasonably
satisfactory to the Corporation, duly executed by such holder or his duly
authorized attorney, with signature guaranteed (if so required by the
Corporation).
(b) Class C Common Stock into Class A Common Stock.
----------------------------------------------
(i) Any holder of shares of Class C Common Stock, other than
Chase Equity Associates ("CEA") or any of its Affiliates
(individually, a "CEA Holder" and collectively, the "CEA Holders"),
may, in its sole and absolute discretion, elect to convert any or all
of such shares into shares of Class A Common Stock at one time or from
time to time by surrendering the certificate representing each share
of Class C Common Stock to be converted to the Corporation at its
principal executive offices, accompanied by a written notice of the
election by the holder thereof to convert and (if so required by the
Corporation) by instruments of transfer, in form reasonably
satisfactory to the Corporation, duly executed by such holder or his
duly authorized attorney, with signature guaranteed (if so required by
the Corporation).
(ii) Upon the occurrence or expected occurrence of a Conversion
Event, any CEA Holder may, in its sole and absolute discretion, elect
to convert any or all of such shares into shares of Class A Common
Stock at one time or from time to time by surrendering the certificate
representing each share of Class C Common Stock to be converted to the
Corporation at its principal executive offices, accompanied by a
written notice of the election by the holder thereof to convert and
(if so required by the Corporation) by instruments of transfer, in
form reasonably satisfactory to the Corporation, duly executed by such
holder or his duly authorized attorney, with signature guaranteed (if
so required by the Corporation). Each CEA Holder shall be entitled to
convert shares of Class C Common Stock into shares of Class A Common
Stock in connection with any Conversion Event if such CEA Holder
reasonably believes that such Conversion Event will be consummated,
and a written request for conversion from any CEA Holder stating such
CEA Holder's reasonable belief that a Conversion Event shall occur
shall be conclusive and shall obligate the Corporation to effect such
conversion in a timely manner so as to enable each such CEA Holder to
participate in such Conversion Event. The Corporation will not cancel
the shares of Class C Common Stock so converted before the tenth day
following such Conversion Event and will reserve such shares until
such tenth day for reissuance in compliance with the next sentence.
If any shares of Class C Common Stock are converted into shares of
Class A Common Stock in connection with a Conversion Event and such
shares of Class A Common Stock are not actually distributed, disposed
of or sold pursuant to such Conversion Event, such shares of Class A
Common Stock shall be promptly converted back into the same number of
shares of Class C Common Stock. Notwithstanding the foregoing, any
CEA Holder may convert shares of Class C Common Stock into Class A
Common Stock upon approval by the Board of Directors of the
Corporation in accordance with applicable law.
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(iii) Notwithstanding the provisions of paragraphs (i) and (ii)
immediately preceding, no such conversion of Class C Common Stock
shall be permitted if the Corporation determines, in its reasonable
business judgment, that the ownership, or proposed ownership, of
shares of stock or other securities of the Corporation (A) would cause
the holder or CEA Holder of the shares of Class C Common Stock
proposed to be converted to become a Disqualified Person or (B) may be
inconsistent with, or in violation of, any Applicable Law or
Governmental Authorization.
7. Non-Permitted Dodge Transfers. The Corporation shall not issue, or
-----------------------------
permit the Transfer on the books of the Corporation or otherwise, to Dodge or
any of his Controlled Entities, Family Members or Dodge Charitable Foundations,
of any shares of any class or series of capital stock (or other voting
securities) if, after giving effect to such issue or Transfer, Dodge, together
with his Controlled Entities, Family Members and Dodge Charitable Foundations,
would own beneficially shares of capital stock of the Corporation entitled to
vote generally for the election of directors which, on a combined basis, would
represent more than the Designated Voting Percentage of the aggregate voting
power of all classes of capital stock of the Corporation entitled to vote
generally for the election of directors (it being understood that the right of
the holders of one or more classes of Preferred Stock to elect a specific number
of directors, either generally or upon the occurrence of events specified in the
terms of the Preferred Stock, shall not be deemed to mean that any of those
holders are entitled to vote generally for the election of directors). For
purposes of this Subsection 7, beneficially ownership shall be determined in
accordance with Rule 13d-3 promulgated under the Exchange Act or any successor
rule. For purposes of illustrating the preceding provision of this Subsection 7
if, based on the present composition of the Corporation's capital stock, 100
shares of Class A Common Stock were outstanding (having one vote per share) and
200 shares of Class B Common Stock were outstanding (having ten votes per
share), the Corporation would be deemed to have capital stock having total
voting power of 2,100 votes (i.e., 100 votes attributable to the Class A Common
Stock and 2,000 votes attributable to the Class B Common Stock) and Dodge,
together with his Controlled Entities, Family Members and Dodge Charitable
Foundations, would be prohibited from owning capital stock of the Corporation
(of whatever series or class) having the right to cast more than 1,049 votes
(i.e., 49.99% of 2,100). The foregoing illustration assumes the Designated
Voting Percentage equals 49.99%.
8. Reservation of Common Stock upon Conversion of Common Stock. The
-----------------------------------------------------------
Corporation shall, at all times, reserve and keep available, solely for the
purpose of issuance upon conversion of outstanding shares of Class B Common
Stock and Class C Common Stock, such number of shares of Class A Common Stock as
may be issuable upon the conversion of all such outstanding shares of Class B
Common Stock and Class C Common Stock; provided, however, that the Corporation
may deliver shares of Class A Common Stock which are held in the treasury of the
Corporation for shares of Class B Common Stock and Class C Common Stock
converted. All shares of Class A Common Stock which may be issued upon
conversion of shares of Class B Common Stock and Class C Common Stock will, upon
issuance, be fully paid and nonassessable. The aggregate amount of stated
capital represented by shares of Class A Common Stock issued upon conversion of
shares of Class B Common Stock and shares of Class C Common Stock shall be the
same as the aggregate amount of stated capital represented by the shares of
Class B Common Stock and Class C Common Stock so converted.
9. Issuance of Certificates. The issuance of a certificate or
------------------------
certificates for shares of Class A Common Stock upon conversion of shares of
Class B Common Stock or Class C Common Stock shall be made without charge for
any stamp or other similar tax in respect of such issuance. However, if any
such certificate or certificates are to be issued in a name other than that of
the holder of the shares of Class B Common Stock or Class C Common Stock to be
converted, the Person requesting the issuance thereof shall pay to the
Corporation the amount of any tax which may be payable in respect of any such
transfer, or shall establish to the reasonable satisfaction of the Corporation
that such tax has been paid or is not so payable. As promptly
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as practicable after the surrender for conversion of a certificate or
certificates representing shares of Class B Common Stock or, except as provided
in paragraph (b)(ii) of Subsection 6, Class C Common Stock and, if required,
payment of any tax as hereinabove provided, the Corporation will deliver to, or
upon the written order of, the holder of such certificate or certificates, a
certificate or certificates representing the number of shares of Class A Common
Stock issuable upon such conversion. Such conversion shall be deemed to have
been made immediately prior to the close of business on the earlier of (a) the
occurrence of a Dodge Conversion Event or (b) the date of the surrender of the
certificate or certificates representing shares of Class B Common Stock or Class
C Common Stock (or, if the transfer books of the Corporation shall be closed on
such date, then immediately prior to the close of business on the first date
thereafter that said books shall be open), and all rights of such holder arising
from ownership of shares of Class B Common Stock or Class C Common Stock shall
cease at such time and the Person in whose name the certificate or certificates
representing shares of Class A Common Stock are to be issued shall be treated
for all purposes as having become the record holder of such shares of Class A
Common Stock at such time and shall have and may exercise all the rights and
powers appertaining thereto.
10. Restriction on Issuance of Shares of Class B Common Stock. The
---------------------------------------------------------
Corporation shall not issue any additional shares of Class B Common Stock or any
new class of common stock entitled to cast more than one (1) vote per share,
unless such issuance is pursuant to Section C(1)(f) or C(2) or is pursuant to
Option Securities that exist, or are required to be issued, as of the effective
time of the ATC Merger to acquire shares of Class B Common Stock. The
Corporation shall not, except pursuant to the provisions of Section C(1)(f),
issue any Convertible Securities, convertible or exchangeable into, or Option
Securities to purchase, any shares of Class B Common Stock or any new class of
Common Stock entitled to cast more than one (1) vote per share.
11. Automatic Conversion of Certain Class B Common Stock. At any time a
----------------------------------------------------
Controlled Entity of any Original Class B Holder fails to remain a Controlled
Entity of such Original Class B Holder, any shares of Class B Common Stock then
standing in the name of such Controlled Entity on the stock records of the
Corporation shall, without any act on the part of the Corporation, result in the
conversion of such shares of Class B Common Stock into shares of Class A Common
Stock effective as of the close of business on the date such Controlled Entity
fails to remain a Controlled Entity of any one or more Original Class B Holders.
12. No Circumvention. Without the consent of the holders of a majority of
----------------
the shares of Class A Common Stock, voting separately as a class, except as
otherwise specifically provided in this Restated Certificate of Incorporation
(including without limitation paragraph (e) of Section C(1) and Sections C(2)
and (3)), the Corporation shall not, by amendment of this Restated Certificate
of Incorporation, by amendment of the Corporation's bylaws or through any
reorganization, transfer of assets, consolidation, merger, dissolution, or any
other voluntary action, avoid or seek to avoid the protections afforded the
holders of shares of Class A Common Stock with respect to the Class B Common
Stock or the issue of shares of Common Stock entitled to cast more than one (1)
vote set forth in this Section C, as presently constituted; provided, however,
that notwitstanding the foregoing, the Corporation may issue and sell debt or
shares of Preferred Stock, including without limitation pursuant to a public
offering, private placement, consolidation, merger or acquisition of assets,
that have special voting rights.
D. COMMUNICATIONS ACT RESTRICTIONS
-------------------------------
1. Foreign Ownership Limitations. The Corporation shall not issue, or
-----------------------------
permit the transfer on the books of the Corporation, to any Alien or Aliens,
either individually or in the aggregate, of any shares of any class or series of
capital stock (or other voting securities) if, after giving effect to such issue
or transfer, the foreign ownership or voting levels of the Corporation or any of
its Subsidiaries would exceed the Foreign Ownership Limitations. No Alien shall
be entitled to vote or direct or control the vote of shares of any class
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or series of capital stock (or other voting securities) of the Corporation in
excess of the Foreign Ownership Limitations. The voting rights with respect to
any such shares (or other securities) held by Aliens which exceed the Foreign
Ownership Limitations shall be forfeited and such shares (or other securities)
shall be deemed for all purposes (including without limitation for purposes of
determining quorums and whether the requisite percentage of the issued and
outstanding shares of any class or series of capital stock (or other voting
securities) has voted or consented to a particular action) of this Restated
Certificate of Incorporation not to be issued and outstanding.
2. Disqualified Person Determinations. Each stockholder agrees (a) to
----------------------------------
advise the Corporation promptly if (i) it is or becomes an Alien or a
Disqualified Person, or (ii) its ownership or voting levels increase beyond
those permitted by Section 310(b)(3) or (4), as applicable, of the
Communications Act, and (b) to provide the Corporation promptly with such
information as the Corporation may, from time to time, reasonably request to
enable the Corporation to determine whether such stockholder is an Alien or a
Disqualified Person. In the event the Corporation determines, in its reasonable
business judgment, that any stockholder is, or is about to become, a
Disqualified Person (a "Disqualified Person Determination"), it shall promptly
so advise such stockholder and if, within thirty (30) days, or such shorter
period as the Corporation shall require as being in the best interests of the
Corporation, such stockholder has not made arrangements reasonably satisfactory
to the Corporation to cause such stockholder to no longer be, or likely to be, a
Disqualified Person, then the Corporation shall have the right, in its sole and
absolute discretion, to effect an Automatic Conversion in accordance with the
provisions of Subsection 3 of this Section.
3. Automatic Conversions. In the event the Corporation shall have made a
---------------------
Disqualified Person Determination and the stockholder that is the subject
thereof has not made arrangements reasonably satisfactory to the Corporation to
cause such stockholder to no longer be a Disqualified Person, then the
Corporation shall have the right, in its sole and absolute discretion, if the
same would cause such stockholder not to be a Disqualified Person, to convert
automatically (an "Automatic Conversion") all, or such number as the Corporation
shall specify, of such stockholder's shares of Class A Common Stock and/or Class
B Common Stock into Class C Common Stock, such conversion to become effective,
without any further act of the Corporation, such Disqualified Person or any
other Person, upon the date specified therefor in a resolution of the Board of
Directors or, if no date is specified, upon the adoption of such resolution
stating that such shares shall be so converted. Stock certificates formerly
representing such shares of Class A Common Stock and/or Class B Common Stock
held by such Disqualified Person shall thereupon and thereafter be deemed to
represent such shares of Class C Common Stock, and all rights of such
Disqualified Person arising from ownership of shares of Class A Common Stock
and/or Class B Common Stock so converted shall cease at such time and such
Disqualified Person in whose name the certificate or certificates representing
such shares of Class A Common Stock and/or Class B Common Stock shall be treated
for all purposes as having become the record holder of such shares of Class C
Common Stock at such time and shall have and may exercise all the rights and
powers appertaining thereto. Each holder of shares of Class A Common Stock
and/or Class B Common Stock agrees to deliver stock certificates representing
shares of Class A Common Stock and/or Class B Common Stock, as the case may be,
subject to such Automatic Conversion but the failure to deliver such
certificates shall not affect the validity of such Automatic Conversion. Upon
such surrender, such Disqualified Person shall be entitled to a certificate or
certificates for shares of Class C Common Stock without charge for any stamp or
other similar taxes in respect of such issuance. However, if any such
certificate or certificates are to be issued in a name other than that of the
holder of the shares of Class A Common Stock and/or Class B Common Stock subject
to such Automatic Conversion, such Disqualified Person shall pay to the
Corporation the amount of any tax which may be payable in respect of any such
transfer, or shall establish to the reasonable satisfaction of the Corporation
that such tax has been paid or is not so payable. As promptly as practicable
after such surrender and, if required, payment of any tax as hereinabove
provided, the Corporation will deliver to, or upon the written order of, such
Disqualified Person, a certificate or certificates representing the number of
shares of Class C Common Stock issuable upon such Automatic Conversion.
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The Board of Directors of the Corporation shall have all power and
authority necessary or advisable to implement the provisions of this Section.
The certificates representing shares of capital stock (or other securities) of
the Corporation shall contain a legend referring to such provisions.
E. DEFINITIONS
-----------
For purposes of this Restated Certificate of Incorporation, unless the
context otherwise requires, the following terms (or any variant in the form
thereof) have the following respective meanings. 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.
The terms "Affiliate" shall mean (i) any other Person at the time
directly or indirectly control ling, controlled by or under direct or
indirect common control with such Person, (ii) any other Person of which
such Person at the time owns, or has the right to acquire, directly or
indirectly ten percent (10%) or more on a consolidated basis of the equity
or beneficial interest, (iii) any other Person which at the time owns, or
has the right to acquire, directly or indirectly ten percent (10%) or more
of any class of the capital stock or beneficial interest of such Person,
(iv) any Executive Officer or director of such Person, and (v) when used
with respect to an individual, shall include a spouse, any ancestor or
descendant, or any other relative (by blood, adoption or marriage), within
the third degree of such individual or any trust for the benefit of one or
more of the foregoing. A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power
to direct or cause the direction of the management or policies of such
Person or the disposition of its assets or properties, whether by stock,
equity or other ownership, by contract, arrangement or understanding, or
otherwise.
The term "Alien" shall mean (i) an individual who is a citizen of a
country other than the United States; (ii) any Entity organized under the
laws of a government other than the government of the United States or any
state, territory or possession of the United States; (iii) a government
other than the government of the United States or any state, territory or
possession of the United States; (iv) a representative of, or an individual
or Entity controlled by, any of the individuals, Entities or governments
referred to in clauses (i), (ii) or (iii); and (v) any other Person
included in the definitions of Persons restricted by the foreign ownership
or voting level provisions of Section 310(b)(3) or (4) of the
Communications Act.
The term "Applicable Law" shall mean any Law of any Authority, whether
domestic or foreign, including without limitation all federal and state
Laws, to which the Person in question is subject or by which it or any of
its business or operations is subject or any of its property is bound.
The term "ARS" shall mean American Radio Systems Corporation, a
Delaware corporation.
The term "ATC Merger" shall mean the merger of American Tower
Corporation, a Delaware corporation, with and into the Corporation.
The term "ATS Private Placement" shall mean the issue and sale of
8,000,000 shares of Common Stock by ATS to the purchasers named in the
Stock Purchase Agreement, dated as of January 8, 1998, between ATS and the
purchasers, including without limitation Dodge and the Stoner Group, named
therein.
The term "Authority" shall mean any governmental or quasi-governmental
authority, whether administrative, executive, judicial, legislative or
other, or any combination thereof, including without
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<PAGE>
limitation any federal, state, territorial, county, municipal or other
government or governmental or quasi-governmental agency, arbitrator,
authority, board, body, branch, bureau, central bank or comparable agency
or Entity, commission, corporation, court, department, instrumentality,
master, mediator, panel, referee, system or other political unit or
subdivision or other Entity of any of the foregoing, whether domestic or
foreign.
The term "Class B Holder" shall mean (i) any Original Class B Holder
or (ii) any Person to whom shares of Class B Common Stock are hereafter
transferred pursuant to a Permitted Transfer.
The term "Code" shall mean the Internal Revenue Code of 1986, and the
rules, regulations, policies and orders thereunder, all as from time to
time in effect, or any successor law, rules, regulations, policies and
orders and any reference to any statutory or regulatory provision shall be
deemed to be a reference to any successor statutory or regulatory
provision.
The term "Communications Act" shall mean the Communications Act of
1934, and the rules, regulations, policies and orders thereunder, all as
from time to time in effect, or any successor law, rules, regulations,
policies and orders and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
The term "Controlled Entity" shall mean, with respect to any Person
(such Person being referred to as the "first Person" in this definition),
(i) any of the first Person's and/or any other Original Class B Holder's
Family Members with respect to which the first Person (and/or any other
Original Class B Holder) (x) retains sole voting control, by proxy, voting
agreement, voting trust or otherwise over the shares of Class B Common
Stock transferred by the first Person and (y) continue to exercise a sole
voting power over such shares; provided, however, any of such Family
Members shall not be considered, for these purposes, to be a Controlled
Entity of the first Person with respect to any Class B Common Stock so
transferred as to which, at any time subsequent to such transfer, the first
Person (and/or any other Original Class B Holder) fail to retain sole
voting power over any Class B Common Stock so transferred or as to which
any other Person (other than the first Person (and/or any other Original
Class B Holder)) exercise any voting power or direction with respect to any
Class B Common Stock so transferred (other than pursuant to a proxy granted
in connection with any regular or special meeting of the stockholders of
ATS), and (ii) any Entity that (A) is and remains directly controlled
(through voting securities, board or other management positions, contract
or otherwise) by the first Person (and/or any other Original Class B
Holder) and (B) the first Person, together with any other Original Class B
Holder and Family Members of any thereof, own and continue to own (or, if
such Entity is a trust, is (or are) the beneficiary (or beneficiaries) and
continue to be the beneficiary (or beneficiaries) of), directly or
indirectly, 90% of the record and beneficial interest of such Entity.
The term "Conversion Event" shall mean (i) any public offering or
public sale of securities of the Corporation (including a public offering
registered under the Securities Act and a public sale pursuant to Rule 144
promulgated under the Securities Act), (ii) any sale of securities of the
Corporation to a person or group of Persons (within the meaning of the
Exchange Act, a "Group") if, after such sale, such Person or Group would
own or control securities which possess in the aggregate the ordinary
voting power to elect a majority of the Corporation's directors (provided
that such sale has been approved by the Corporation's Board of Directors or
a committee thereof), (iii) any sale of securities of the Corporation to a
Person or Group if, after such sale, such Person or Group would own or
control securities of the Corporation (excluding any Class B Common Stock
being converted and disposed of in connection with such Conversion Event)
which possess in the aggregate the ordinary voting power to elect a
majority of the Corporation's directors, (iv) any sale of securities of the
Corporation to a Person or Group if, after such sale, such Person or Group
would not, in the aggregate,
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<PAGE>
own, control or have the right to acquire more than two percent (2%) of the
outstanding securities of any class of voting securities of the
Corporation, and (v) a merger, consolidation or similar transaction
involving the Corporation if, after such transaction, a Person or Group
would own or control securities which possess in the aggregate the ordinary
voting power to elect a majority of the surviving corporation's directors
(provided that the transaction has been approved by the Corporation's Board
of Directors or a committee thereof).
The term "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.
The term "Designated Voting Percentage" shall mean, as of any date of
determination, 49.99% minus the percentage of voting rights represented by
the Class B Common Stock purchased by any member of the Stoner Group in the
ATS Private Placement that is beneficially owned as of such determination
date by any member of the Stoner Group, any of their respective Controlled
Entities or Family Members or any Person that is controlled, with respect
to the voting of any Class B Common Stock held thereby, by any one or more
of the foregoing Persons described in this definition. For purposes of
this definition, beneficial ownership shall be determined in accordance
with Rule 13d-3 promulgated under the Exchange Act or any successor rule.
The term "Disqualified Person" shall mean any Person which, in the
good faith determination of the Board of Directors of the Corporation,
based on the advice of counsel, directly or indirectly, as a result of
ownership of Preferred Stock or Common Stock (or other shares of capital
stock or securities of the Corporation) or otherwise, (i) has caused or
would cause the Corporation or any of its Subsidiaries to violate the
multiple, cross-ownership, cross-interest or other rules, regulations,
policies or orders of the FCC, or (ii) could result in disqualification of
the Corporation or any of its Subsidiaries as a licensee of the FCC, or
(iii) would cause the Foreign Ownership Limitations to be violated.
The term "Dodge" means Steven B. Dodge, the Chairman of the Board,
President and Chief Executive Officer of the Corporation.
The term "Dodge Charitable Foundation" shall mean any Entity formed by
Dodge and/or his Family Members for any of the purposes set forth in
Section 501(c)(3) of the Code.
The term "Dodge Conversion Event" shall mean that Dodge and the Dodge
Permitted Transferees, in the aggregate, own beneficially shares of Common
Stock which, on a combined basis, represent less than the greater of (i)
fifty percent (50%) of the aggregate voting power owned beneficially by
Dodge and the Dodge Permitted Transferees determined on a combined basis,
immediately following consummation of the ATC Merger, and (ii) twenty
percent (20%) of the aggregate voting power of all classes of capital stock
of the Corporation entitled to vote generally for the election of directors
(it being understood that the right of the holders of (a) Class A Common
Stock to elect two (2) directors pursuant to the provisions of Section 1 of
Section C of Article Fourth or (b) one or more classes of Preferred Stock
to elect a specific number of directors, either generally or upon the
occurrence of events specified in the terms of the Preferred Stock, shall
not be deemed to mean that any of those holders are entitled to vote
generally for the election of directors). For purposes of determining
beneficial ownership with respect to a Dodge Conversion Event, (a) Dodge
and the Dodge Permitted Transferees shall be deemed to own beneficially all
shares of capital stock of the
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Corporation that, at the time of determination, (i) could be purchased or
otherwise acquired by Dodge or any of the Dodge Permitted Transferees
pursuant to all Convertible Securities and Option Securities then held by
Dodge or any of the Dodge Permitted Transferees, or (ii) are held for the
benefit of Dodge or any of the Dodge Permitted Transferees pursuant to any
Benefit Arrangement or Plan of ATS or any of its Subsidiaries; and (b)
except as described in clause (a) preceding, Dodge and the Dodge Permitted
Transferees shall not be deemed to own beneficially any shares of capital
stock of the Corporation that, at the time of determination, might be
deemed to be owned beneficially (within the meaning of Rule 13d-3
promulgated under the Exchange Act or any successor rule).
The term "Dodge Permitted Transferee" shall mean any Controlled Entity
of Dodge.
The term "Economic Owner" shall have the meaning ascribed to the term
"beneficial owner" in Rule 16a-l(a)(2) promulgated under the Exchange Act
or any successor rule.
The term "Effective Date" shall mean the date this Restated
Certificate of Incorporation becomes effective under the provisions of the
Delaware General Corporation Law.
The term "Entity" shall mean any corporation, firm, unincorporated
organization, association, partnership, 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 governmental or quasi-governmental authority, whether
domestic or foreign and whether administrative, executive, judicial,
legislative or other, or any combination thereof.
The term "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.
The term "Exchange Act" shall mean the Securities Exchange Act of
1934, and the rules and regulations of the Commission 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,
except that any Person meeting the terms of a particular definition as of
the time he qualifies shall not thereafter lose such qualification solely
because of a change in the Exchange Act or such rules and regulations.
The term "Family Members" shall mean, with respect to any Person, the
spouse or former spouse of such Person, any lineal descendant, natural or
adopted, of a grandparent of such Person, or a grandparent of the spouse or
former spouse of such Person and any spouse or former spouse of such lineal
descendant.
The term "FCC" shall mean the Federal Communications Commission or any
successor Authority.
The term "Final Class B Date" shall be the date that both of the
following conditions shall have been met: (i) all issued and outstanding
shares of Class B Common Stock shall be converted into shares of Class A
Common Stock in accordance with the provisions of Subsection 4, 5 or 6 of
Section C of this Article or shall otherwise cease to be outstanding, and
(ii) the Corporation has no obligation to issue any additional shares of
Class B Common Stock, pursuant to Option Securities outstanding or required
to be issued, as of the effective time of the ATC Merger, that are
exercisable for Class B Common Stock.
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The term "Foreign Ownership Limitations" shall mean the provisions
with respect to foreign ownership or voting levels of the Corporation or
any of its Subsidiaries set forth in Section 310(b)(3) or (4) of the
Communications Act, as applicable.
The term "Governmental Authorization" shall mean all approvals,
concessions, consents, exemptions, franchises, licenses, orders, permits,
plans, registrations and other authorizations of and all reports to and
filings with all Authorities.
The term "Law" shall mean any action, code, consent decree,
constitution, decree, directive, enactment, finding, guideline, 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, or the
common law, or any particular section, part or provision thereof, or any
interpretation, directive, guideline or request (having the force of law),
of any Authority, including without limitation (a) the judicial systems
thereof, or any particular section, part or provision thereof, and (b) any
of the foregoing relating to antitrust or prohibiting other anticompetitive
business practices, those relating to employment practices (such as
discrimination, health and safety), and those relating to minority business
enterprises.
The term "Option Securities" shall mean all 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, and all stock appreciation rights, in each case whether or not
the right to subscribe for, purchase or otherwise acquire is immediately
exercisable or is conditioned upon passage of time, the occurrence or non-
occurrence or the existence or non-existence of some other Event.
The term "Original Class B Holder" shall mean any Person (i) who owned
of record or who was the Economic Owner of shares of Class B Common Stock
immediately prior to the consummation of the ATC Merger (including any
Person entitled to become at such time such an owner of record or Economic
Owner of such shares as a consequence of the Tower Separation), or (ii) who
held an option to purchase shares of Class B Common Stock immediately prior
to the consummation of the ATC Merger (including Persons entitled to
receive at such time such an option in exchange for an option to purchase
shares of Class B Common Stock of ARS pursuant to certain transactions
related to the Tower Separation).
The term "Permitted Transfer" shall mean (i) any Transfer pursuant to
the Tower Separation and (ii) a Transfer of Class B Common Stock to any
Permitted Transferee; provided, however, that notwithstanding the
foregoing, a Transfer to a Dodge Charitable Foundation shall not constitute
a permitted Transfer (a) to the extent that the aggregate number of shares
of Class B Common Stock Transferred to all Dodge Charitable Foundations
that remain (x) Class B Common Stock and (y) owned by any Dodge Charitable
Foundation exceeds 1,000,000 (as presently constituted), or (b) if Dodge
and/or his Family Members cease to exercise sole voting power or direction
with respect to any Class B Common Stock so transferred and still held as
Class B Common Stock (other than pursuant to an agreement or proxy excluded
from the definition of "Transfer"), or (c) if any Dodge Conversion Event
shall have occurred.
The term "Permitted Transferee" shall mean (i) any Original Class B
Holder, (ii) any Controlled Entity of any Original Class B Holder and (iii)
any Dodge Charitable Foundation.
The term "Person" shall mean any natural individual or any Entity.
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The term "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.
The term "Stock Option Plan" shall mean the 1997 Stock Option Plan, as
from time to time amended, of the Corporation.
The term "Stoner Group" shall mean Thomas H. Stoner, individually and
as trustee of the trust named in this definition, Katherine E. Stoner,
Bessemer Trust Company, solely and as capacity as Trustee of the Ruth H.
Spencer Irrevocable Trust and of the Thomas H. Stoner Irrevocable Trust,
and such trust.
The term "Subsidiary" with respect to any Person (the "Parent") shall
mean any Person of which such Parent, at the time in respect of which such
term is used, (a) owns directly or indirectly more than fifty percent (50%)
of the equity or beneficial interest, on a consolidated basis, or (b) owns
directly or controls (or has the power or capability to control) with power
to vote, indirectly through one or more Subsidiaries, shares of capital
stock or beneficial interest having the ordinary power to cast (regardless
of the existence at the time of a right of the holders of any class or
classes of securities of such Person to exercise such voting power by
reason of the happening of any contingency) at least a majority of the
votes entitled to be cast for the election of the directors, trustees,
managers or other officials having powers analogous to those of directors
of a corporation. Unless otherwise specifically indicated, when used
herein the term Subsidiary shall refer to a direct or indirect Subsidiary
of such Person.
The term "Tower Separation" shall mean the transactions or
transactions pursuant to which ARS distributed or will distribute to
holders of (i) its common stock, (ii) options to acquire its common stock
and (iii) its convertible preferred stock (upon conversion thereof), shares
of Common Stock of the Corporation.
The term "Transfer" shall mean any sale, assignment, conveyance,
transfer or other disposition, mortgage, pledge or other encumbrance,
lease, exchange, abandonment, parting with control of, gift, granting of an
option or other act of alienation; provided, however, that the term
"Transfer" shall not include (a) the Transfer of shares of any class of
Common Stock to, or the holding thereof in, a margin or other brokerage
account or (b) an agreement to vote, or the granting of a proxy to vote,
any shares of any class of Common Stock, whether such agreement or proxy is
revocable or irrevocable, so long as such agreement or proxy is specific to
a particular meeting or transaction or transactions and so long as such
agreement or proxy is not used to circumvent the restrictions on Transfer
and conversion events set forth in this Restated Certificate of
Incorporation.
FIFTH: For the management of the business and for the conduct of the
-----
affairs of the Corporation, and in further definition, limitation and regulation
of the powers of the Corporation and of its directors and stockholders, it is
further provided that:
(a) The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors. In addition to the
powers and authorities herein or by statute expressly conferred upon it,
the Board of Directors may exercise all such powers and do all such acts
and things as may be exercised or done by the Corporation, subject,
nevertheless, to the provisions of the laws of the State of Delaware, of
this Restated Certificate of Incorporation and the By-Laws of the
Corporation. Except as otherwise provided by the Delaware General
Corporation Law, any committee
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<PAGE>
of the Board of Directors shall have and may exercise, to the extent
provided in the By-Laws of the Corporation or by the resolutions of the
Board of Directors, all of the powers and authority of the Board of
Directors of the Corporation in the management of the business and affairs
of the Corporation;
(b) The number of directors of the Corporation shall be as specified
in the By-Laws of the Corporation but such number may from time to time be
increased or decreased in such manner as may be prescribed by the By-Laws;
(c) Newly created directorships resulting from any increase in the
authorized number of directors or any vacancy in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal
from office or otherwise shall, subject to the provisions of and except as
otherwise provided by Applicable Law, this Restated Certificate of
Incorporation, the By-Laws of the Corporation or by resolution of the Board
of Directors, be filled by a majority vote of the directors then in office,
though less than a quorum, or by a sole remaining director, and directors
so chosen shall hold office for a term expiring at the annual meeting of
stockholders at which the term of office of the class of directors to which
they have been chosen expires. If there are no directors in office, any
officer or stockholder may call a special meeting of stockholders in
accordance with the provisions of the By-Laws of the Corporation, at which
meeting such vacancies shall be filled. No decrease in the authorized
number of directors shall shorten the term of any incumbent director;
(d) Unless and except to the extent that the By-Laws of the
Corporation shall so require, the election of directors of the Corporation
need not be by written ballot. Directors need not be stockholders;
(e) In the event that any shares of Class A Common Stock or any other
class of Common Stock are listed and quoted on a national securities
exchange and/or quoted on the Nasdaq National Market, the Board of
Directors shall ensure, and shall have all power and authority to ensure,
that the membership of the Board of Directors shall at all times be
consistent with the applicable rules and regulations, if any, of such
exchange and/or the National Association of Securities Dealers, Inc., as
the case may be, for the Class A Common Stock or any such other class of
Common Stock to be eligible for listing and quotation on such exchange
and/or for quotation on the Nasdaq National Market; and
(f) The Board of Directors shall ensure, and shall have all power
and authority to ensure, that the composition of the Board of Directors of
the Corporation and its Subsidiaries and the persons acting as officers of
the Corporation and its Subsidiaries complies at all times with the
provisions of the Communications Act with respect to individuals who are
Aliens serving on such Boards of Directors and as such officers.
SIXTH: No director shall be personally liable to the Corporation or any
-----
stockholder for monetary damages for breach of fiduciary duty as a director,
except, in addition to any and all other requirements for such liability, (i)
for any breach of such directors' duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) to the extent
provided under Section 174 of the Delaware General Corporation Law, or (iv) for
any transaction for which such director derived an improper personal benefit.
Neither the amendment nor repeal of this Article nor the adoption of any
provision of this Restated Certificate of Incorporation inconsistent with this
Article shall reduce, eliminate, or adversely affect the effect of this Article
in respect of any matter occurring, or any cause of action, suit or claim that,
but for this Article, would accrue or arise, prior to such amendment, repeal or
adoption of an inconsistent provision.
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SEVENTH: Each Person who is or was or had agreed to become a director or
-------
officer of the Corporation or who is or was serving or who had agreed to serve
at the request of the Board of Directors or an officer of the Corporation as an
employee or agent of the Corporation or as a director, officer, partner, member,
trustee, administrator, employee or agent of another corporation, partnership,
joint venture, limited liability company, trust or other enterprise (including
without limitation any employee benefit plan or any trust associated therewith),
shall be indemnified by the Corporation to the full extent permitted from time
to time by the Delaware General Corporation Law or any other applicable laws as
presently or hereafter in effect. This Article shall inure to the benefit of
each such Person and his or her heirs, executors, administrators and estate.
Without limiting the generality or the effect of the foregoing, the Corporation
may enter into one or more agreements with any Person which provide for
indemnification greater or different than that provided in this Article. Any
amendment or repeal of this Article shall not adversely affect any right or
protection existing hereunder immediately prior to such amendment or repeal.
EIGHTH: In furtherance and not in limitation of the powers conferred by
------
the laws of the State of Delaware, the Board of Directors is expressly
authorized and empowered to make, alter, amend, and repeal the By-Laws. The By-
Laws of the Corporation may be amended, altered, changed or repealed, and a
provision or provisions inconsistent with the provisions of the By-Laws as they
exist from time to time may be adopted, only by the majority of the entire Board
of Directors or with the approval or consent of the holders of not less than
sixty-six and two thirds percent (66-2/3%), determined in accordance with the
provisions of the second paragraph of Section A of Article FOURTH, of the total
number of the then outstanding shares of stock of the Corporation entitled to
vote generally in the election of directors.
NINTH: A director of the Corporation, in determining what he reasonably
-----
believes to be in the best interests of the Corporation, shall consider the
interests of the Corporation's stockholders and, in his discretion, may consider
any of the following:
(a) The interests of the Corporation's employees, suppliers,
creditors and customers;
(b) The economy of the nation;
(c) Community and societal interests;
(d) The ability of the Corporation to fulfill its obligations under
all Applicable Laws and Governmental Authorizations; and
(e) The long-term as well as short-term interests of the Corporation
and its stockholders, including the possibility that these interests may be
best served by the continued independence of the Corporation.
TENTH: Except for the provisions in Articles FOURTH, FIFTH, SIXTH,
-----
SEVENTH and EIGHTH and this Article, which shall only be amended, altered,
changed or repealed with the approval, determined in accordance with the
provisions of the second paragraph of Section A of Article FOURTH, of the
holders of not less than sixty-six and two-thirds percent (66-2/3%) of the total
number of the then outstanding shares of stock of the Corporation entitled to
vote generally in the election of directors, the Corporation reserves the right
at any time and from time to time to amend, alter, change or repeal any
provision contained in this Restated Certificate of Incorporation (including
provisions as may hereafter be added or inserted in this Restated Certificate of
Incorporation as authorized by the laws of the State of Delaware) in the manner
now or hereafter prescribed by law; and all rights, preferences and privileges
of whatsoever nature conferred upon stockholders, directors or any other person
whomsoever by and pursuant to this Restated Certificate of Incorporation in its
present form or as hereafter amended are granted, subject to the rights reserved
in this Article. From time to
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<PAGE>
time any of the provisions of this Restated Certificate of Incorporation may be
amended, altered or repealed, and other provisions authorized by the laws of the
State of Delaware at the time in force may be added or inserted in the manner
and at the time prescribed by said laws, and all rights at any time conferred
upon the stockholders of the Corporation by this Restated Certificate of
Incorporation are granted subject to the provisions of this Article.
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<PAGE>
EXHIBIT 3i.2
CERTIFICATE OF DESIGNATION OF
PREFERENCES AND RIGHTS OF
AMERICAN TOWER SYSTEMS CORPORATION
EXCHANGE PAY-IN-KIND PREFERRED STOCK
American Tower Systems Corporation, a Delaware corporation
(hereinafter called, the "Corporation"), pursuant to Section 151 of the General
Corporation Law of the State of Delaware, does hereby make this Certificate of
Designation and does hereby state and certify that pursuant to the authority
expressly vested in the Board of Directors of the Corporation by the Restated
Certificate of Incorporation of the Corporation (the "Restated Certificate"),
the Board of Directors of the Corporation duly adopted the following resolution:
RESOLVED, that pursuant to Article Four of the Restated Certificate
(which authorizes 20,000,000 shares of preferred stock, $.01 par value), the
Board of Directors of the Corporation hereby fixes the voting powers,
designations and preferences, and the relative, participating, optional and
other special rights, and the qualifications, limitations and restrictions
thereof, of a series of Exchange Pay-In-Kind Preferred Stock.
RESOLVED, that each share of the Exchange Pay-In-Kind Preferred Stock
shall rank equally in all respects and shall be subject to the following
provisions:
SECTION 1. Designation; Rank; Outstanding Shares. This series of
-------------------------------------
Preferred Stock shall be designated "Exchange Pay-In-Kind Preferred Stock", par
value $.01 per share (the "Exchange Preferred Stock"). The liquidation
preference of the Exchange Preferred Stock shall be $1,000.00 per share (the
"Liquidation Preference"). The Exchange Preferred Stock will rank, with respect
to dividend rights and rights on liquidation, winding-up and dissolution, senior
to all classes of Common Stock of the Corporation and all other classes of
capital stock or series of preferred stock established, or to be established, by
the Board of Directors of the Corporation (or, to the extent permitted by the
General Corporation Law of the State of Delaware, the Executive Committee
thereof (the "Board")) (collectively "Junior Securities"); provided that the
Exchange Preferred Stock shall rank on a parity with the PIK Preferred Stock (as
defined herein). Notwithstanding anything herein to the contrary, prior to the
Exchange Date with respect to any share of Exchange Preferred Stock, such share
shall not be considered outstanding for any purpose, including, without
limitation, dividends, voting or rights upon liquidation, winding up or
dissolution.
SECTION 2. Authorized Number. The number of shares constituting the
-----------------
Exchange Preferred Stock shall be 1,300,000 shares.
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<PAGE>
SECTION 3. Dividends. (a) Holders of shares of the Exchange
---------
Preferred Stock will be entitled to receive, when, as and if declared by the
Board out of funds of the Corporation legally available for payment, cash
dividends at the rates described below on the Liquidation Preference. Dividends
will accrue at a rate equal to the greater of (i) the Treasury Rate calculated
on the date of the closing of the initial issuance of the PIK Preferred Stock
(the "Closing Date") plus the 500 basis points and (ii) the Treasury Rate
calculated on the Interim Financing Maturity Date plus 650 basis points;
provided that the dividend rate of the Exchange Preferred Stock pursuant to this
subsection (a) shall not exceed 18% per annum. The dividends payable on shares
of Exchange Preferred Stock on the first Dividend Payment Date following the
Exchange Date of such shares shall be increased by the amount of any accrued but
unpaid dividends on the shares of PIK Preferred Stock exchanged therefor.
(b) Dividends will be payable quarterly in arrears on June 1,
September 1, December 1, and March 1 of each year, commencing on September 1,
1999 (each, a "Dividend Payment Date"), provided that if any dividend (including
Additional Dividends, if any) payable on any Dividend Payment Date on or before
the fifth anniversary of the Interim Financing Maturity Date is not declared and
paid in full in cash on such Dividend Payment Date, the amount payable as
dividends on such Dividend Payment Date that is not paid in cash on such
Dividend Payment Date shall, subject to the rights of the PIK Preferred Stock,
be paid on such Dividend Payment Date in additional shares of Exchange Preferred
Stock having an aggregate Liquidation Preference equal to the dividends payable
on such Dividend Payment Date and shall, unless such shares are not issued, be
deemed paid in full and shall not accumulate, provided further that the
Corporation may, at its option, pay cash in lieu of fractional shares (valued
for such purpose at the Liquidation Preference of the Exchange Preferred Stock)
that may otherwise be issued pursuant to the foregoing clause. Each dividend
will be payable or issuable, as the case may be, to Holders of record as they
appear on the stock transfer books of the Corporation on a record date, not more
than 60 nor less than 10 days before the payment date, fixed by the Board.
Dividends will be cumulative from the Exchange Date of such Exchange Preferred
Stock.
(c) Dividends payable on the Exchange Preferred Stock for any period
less than a year shall be computed on the basis of a 360-day year of twelve 30-
day months and the actual number of days elapsed in the period for which
payable. The amount of Additional Dividends, if any, will be determined
consistent with the preceding sentence and by multiplying the applicable
Additional Dividends by a fraction, the numerator of which is the number of days
such rate was applicable during any Interest Period and the denominator of which
is 360. The Exchange Preferred Stock will not be entitled to any dividend,
whether payable in cash, property or stock, in excess of full cumulative
dividends. Dividends shall cease to accumulate in respect of the Exchange
Preferred Stock on the Debenture Exchange Date or on the date of their earlier
redemption unless the Corporation shall have failed to issue the appropriate
aggregate principal amount of Exchange Debentures in respect of the Exchange
Preferred Stock on
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<PAGE>
the Debenture Exchange Date or shall have failed to pay the relevant cash
redemption price on the date fixed for redemption. No interest, or sum of money
in lieu of interest, will be payable in respect of any accrued and unpaid
dividends. Dividends on account of arrears and dividends in connection with any
optional redemption pursuant to Section 6(a) may be declared and paid at any
time, without reference to any regular Dividend Payment Date, to Holders of
record on such date, not more than forty-five (45) days prior to the payment
thereof, as may be fixed by the Board.
(d) No full dividends may be declared or paid or funds set apart for
the payment of dividends on any PIK Preferred Stock, if any, for any period
unless full cumulative dividends shall have been paid (or are deemed paid) or,
if payable in cash, set apart for such payment on the Exchange Preferred Stock.
If full dividends are not so paid, the Exchange Preferred Stock shall share
dividends pro rata with the PIK Preferred Stock, if any. No dividends may be
paid or set apart for such payment on Junior Securities (except dividends on
Junior Securities in additional shares of Junior Securities) and no Junior
Securities may be repurchased, redeemed or otherwise retired nor may funds be
set apart for payment with respect thereto, so long as any shares of Exchange
Preferred Stock remain outstanding if full dividends (including Additional
Dividends) have not been paid on the Exchange Preferred Stock.
(e) Registration Rights. The Holders of the Exchange Preferred Stock
-------------------
are entitled to the benefit of the Registration Rights Agreement dated as of
June 4, 1998, between the Corporation and the Initial Purchasers named therein
("Registration Rights Agreement"). In the event that the Corporation fails to
have effective a Shelf Registration Statement (as defined in the Registration
Rights Agreement) prior to the Effectiveness Date (as defined in the
Registration Rights Agreement) or if the Shelf Registration Statement ceases to
be effective or ceases to be useable in connection with resales of such Exchange
Preferred Stock then additional dividends ("Additional Dividends") will become
payable to Holders of Exchange Preferred Stock at a rate of 0.5% per annum until
such default shall be cured, increasing by 0.5% at the end of each 90-day period
thereafter; provided, however, that in no event shall the dividend rate on the
-------- -------
Exchange Preferred Stock increase by more than an aggregate of 2.0% per annum.
SECTION 4. Liquidation Rights. In the event of any voluntary or
------------------
involuntary liquidation, dissolution or winding up of the Corporation on or
after the Exchange Date, before any payment or distribution of assets is made on
any Junior Securities, including, without limitation, Common Stock of the
Corporation, the Holders of Exchange Preferred Stock shall receive the
Liquidation Preference per share plus (without duplication) an amount equal to
all accumulated and unpaid dividends through the date of distribution (including
any premium), and the holders of any PIK Preferred Stock shall be entitled to
receive an amount equal to the full respective liquidation preferences
(including any premium) to which they are entitled and shall receive an amount
equal to all accumulated and unpaid dividends with respect to their respective
shares through and including the date of distribution. If, upon such a voluntary
or
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<PAGE>
involuntary liquidation, dissolution or winding up of the Corporation, the
assets of the Corporation are insufficient to pay in full the amounts described
above as payable with respect to the Exchange Preferred Stock outstanding and
PIK Preferred Stock outstanding, the Holders of the outstanding Exchange
Preferred Stock and such PIK Preferred Stock will share ratably in any such
distribution of assets of the Corporation first in proportion to their
respective liquidation preferences (including any premium) until such
preferences are paid in full, and then in proportion to their respective amounts
of accumulated and unpaid dividends. After payment of any such liquidation
preference (including any premium) and accumulated and unpaid dividends, the
shares of Exchange Preferred Stock will not be entitled to any further
participation in any distribution of assets by the Corporation. For all purposes
of this Certificate of Designation, accumulated dividends shall include a pro
rated dividend for the period from the last Dividend Payment Date to the date
fixed for liquidation, dissolution or winding up. Neither the sale or transfer
of all or substantially all the assets of the Corporation, nor the merger or
consolidation of the Corporation into or with any other corporation or other
entity or a merger of any other corporation or other entity with or into the
Corporation, will be deemed to be a liquidation, dissolution or winding up of
the Corporation.
SECTION 5. Voting Rights. (a) In addition to such other vote, if
-------------
any, as may be required by Delaware law or provided by the resolution creating
any other series of preferred stock to the extent such resolution refers to the
Exchange Preferred Stock, so long as any shares of Exchange Preferred Stock are
outstanding, the vote or consent of the Holders of a majority of the votes
represented by the Exchange Preferred Stock voting together as a single class,
shall be necessary to (i) increase or decrease the par value of the shares of
Exchange Preferred Stock or (ii) adversely alter or adversely change the powers,
preferences or other special rights of the shares of Exchange Preferred Stock.
The consent of all affected holders of Exchange Preferred Stock shall be
required with respect to (a) any change in redemption, exchange or voting the
amount of or the method of calculating the Liquidation Preference or dividend
rate or (b) any extensions of the Final Maturity Date. Except as provided above,
the creation, authorization or issuance of any shares of any Junior Securities
(or any security or obligation (other than Senior Securities) convertible into
or evidencing the right to purchase Junior Securities) or the increase or
decrease in the amount of authorized Junior Securities (or any security or
obligation (other than Senior Securities) convertible into or evidencing the
right to purchase Junior), shall not require the consent of Holders of
Exchangeable Preferred Stock and shall not be deemed to affect adversely the
rights, preferences, privileges or voting rights of Holders of Exchangeable
Preferred Stock.
(b) Without the affirmative vote or consent of holders of at least a
majority of the votes represented by the Exchange Preferred Stock and any PIK
Preferred Stock outstanding, voting together as a single class, the Corporation
shall not consolidate or merge with or into (whether or not the Corporation is
the Surviving Person), or sell,
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<PAGE>
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions, to another
Person, unless:
(i) the Surviving Person is a corporation organized or existing under the
laws of the United States, any state thereof or the District of Columbia;
(ii) the Surviving Person (if other than the Corporation) assumes all the
obligations of the Corporation under this Certificate of Designation;
(iii) at the time of and immediately after such Disposition, no Voting
Rights Triggering Event shall have occurred and be continuing; and
(iv) the Surviving Person shall at the time of such Disposition and after
giving pro forma effect thereto, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Debt to EBITDA Ratio test described
under Section 10(a).
(c) (i) In the event that (1) dividends (either in cash or, on or
before June 1, 2004, through the issuance of additional shares of Exchange
Preferred Stock) on the Exchange Preferred Stock are in arrears and unpaid for
six or more Dividend Periods (whether or not consecutive) (a "Dividend
Default"); (2) the Corporation fails to redeem shares of Exchange Preferred
Stock in accordance with Section 6(b) or otherwise fails to discharge any
redemption obligation with respect to the Exchange Preferred Stock; (3) the
Corporation fails to make an Offer to Purchase (whether pursuant to the terms of
Section 7(a) or otherwise) following a Change of Control if such Offer to
Purchase is required by Section 7 hereof or fails to purchase shares of Exchange
Preferred Stock from Holders who elect to have such shares purchased pursuant to
the Offer to Purchase; (4) the Corporation breaches or violates one of the
provisions set forth in any of Sections 10(a) to (d) (inclusive) hereof and the
breach or violation continues for a period of 30 days or more after the
Corporation receives notice thereof specifying the default from the Holders of
at least 25% of the shares of Exchange Preferred Stock then outstanding or (5)
the Corporation fails to pay at the final stated maturity (giving effect to any
extensions thereof) the principal amount of any Indebtedness of the Corporation
or any Restricted Subsidiary of the Corporation, or the final stated maturity of
any such Indebtedness is accelerated, if the aggregate principal amount of such
Indebtedness, together with the aggregate principal amount of any other such
Indebtedness in default for failure to pay principal at the final stated
maturity (giving effect to any extensions thereof) or that has been accelerated,
aggregates $10,000,000 or more at one time, in each case, after a 30-day period
during which such default shall not have been cured or such acceleration
rescinded, then in the case of any of clauses (1)-(5) the maximum authorized
number of directors of the Corporation will be increased by two and Holders of
Exchange Preferred Stock shall be entitled to vote their shares of Exchange
Preferred Stock, together with the Holders of any outstanding PIK Preferred
Stock, in accordance with the procedures set forth below, to elect, as a class,
an additional
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<PAGE>
two directors; provided, however, that Holders of PIK Preferred Stock and such
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Exchange Preferred Stock shall not elect as director any individual who if so
elected would cause the Corporation to be in violation of the Communications Act
of 1934, as amended, or the rules and regulations of the FCC. Each such event
described in clauses (1), (2), (3), (4) and (5) is a "Voting Rights Triggering
Event". So long as shares of Exchange Preferred Stock shall be outstanding, the
Holders of Exchange Preferred Stock shall retain the right to vote and elect,
with the Holders of any PIK Preferred Stock, voting together as a single class
without regard to series, such number of directors until such time (x) in the
event such right arises due to a Dividend Default, all accumulated dividends
that are in arrears on the Exchange Preferred Stock are paid in full in cash or,
with respect to any Dividend Period ending on or before the fifth anniversary of
the Interim Financing Maturity Date, through the issuance of additional shares
of Exchange Preferred Stock; and (y) in all other cases, as the failure, breach
or default giving rise to such Voting Rights Triggering Event is remedied or
waived by the Holders of at least a majority of the shares of Exchange Preferred
Stock then outstanding and entitled to vote thereon. Such period is hereinafter
referred to as a "Default Period".
(ii) So long as any shares of Exchange Preferred Stock shall be
outstanding, during any Default Period, such voting right of the Holders of
Exchange Preferred Stock may be exercised initially at a special meeting called
pursuant to paragraph (iii) below or at any annual meeting of stockholders. The
absence of a quorum of Holders of Common Stock or any class thereof shall not
affect the exercise of such voting rights by the Holders of Exchange Preferred
Stock and any PIK Preferred Stock.
(iii) Unless the Holders of Exchange Preferred Stock and any PIK
Preferred Stock so entitled, if any are then outstanding, have, during an
existing Default Period, previously exercised their right to elect directors,
the Board may order, or any stockholder or stockholders owning shares having in
the aggregate not less than 5% of the votes represented by the outstanding
shares of Exchange Preferred Stock and such PIK Preferred Stock, taken together
as a single class, may request, the calling of a special meeting of Holders of
Exchange Preferred Stock and such PIK Preferred Stock, if any are then
outstanding, which meeting shall thereupon be called by the Chairman of the
Board, the President, a Vice President or the Secretary of the Corporation.
Notice of such meeting and of any annual meeting at which Holders of Exchange
Preferred Stock and such PIK Preferred Stock are entitled to vote pursuant to
this paragraph shall be given to each Holder of record of Exchange Preferred
Stock by mailing a copy of such notice to such Holder at such Holder's last
address as the same appears on the stock transfer books of the Corporation. Such
meeting shall be called for a time not later than twenty (20) days after such
order or request, or, in default of the calling of such meeting may be called on
similar notice by any stockholder or stockholders owning shares having in the
aggregate not less than 5% of the votes represented by the outstanding shares of
Exchange Preferred Stock and such PIK Preferred Stock, taken together as a
single class (who shall have, and to whom the Corporation shall provide, access
to the lists of stockholders to be called pursuant to the provisions hereof). At
any meeting held for the
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purpose of electing directors at which the Holders of Exchange Preferred Stock
and any PIK Preferred Stock shall have the right to elect directors as
aforesaid, the presence in person or by proxy of the Holders owning shares
having at least a majority of the votes of Exchange Preferred Stock and such PIK
Preferred Stock shall be required to constitute a quorum of such Exchange
Preferred Stock and such PIK Preferred Stock. Notwithstanding the provisions of
this paragraph, no such special meeting shall be called during the period within
ninety (90) days immediately preceding the date fixed for the next annual
meeting of stockholders.
(iv) During any Default Period, the Holders of Common Stock of
the Corporation, and other classes of stock of the Corporation, if applicable,
shall continue to be entitled to elect all of the directors unless and until the
Holders of Exchange Preferred Stock and Exchange Preferred Stock so entitled
shall have exercised their right to elect two directors voting as a class, after
the exercise of which right (x) the directors so elected by the Holders of
Exchange Preferred Stock and such PIK Preferred Stock shall continue in office
until the earlier of (A) such time as their successors shall have been elected
by such Holders or (B) the expiration of the Default Period, and (y) any vacancy
in the Board may be filled by vote of the remaining director or directors, if
any, theretofore elected by the Holders of the class or classes of stock which
elected the director whose office shall have become vacant. References in this
paragraph to directors elected by the Holders of a particular class or classes
of stock shall include directors elected by such director or directors to fill
vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a Default Period, (x) the
right of the Holders of Exchange Preferred Stock to elect directors shall cease,
(y) the term of office of any directors elected by the Holders of Exchange
Preferred Stock and any PIK Preferred Stock as a class shall terminate, and (z)
the number of directors shall be such number as may be provided for in the
Restated Certificate or bylaws of the Corporation irrespective of any increase
made pursuant to the provisions of paragraph (i) of this paragraph (c) (such
number being subject, however, to change thereafter in any manner provided by
law or in the Restated Certificate or bylaws of the Corporation).
(vi) In any case in which the Holders of Exchange Preferred Stock
shall be entitled to vote pursuant to this Section 5 or pursuant to Delaware
law, each Holder of Exchange Preferred Stock entitled to vote with respect to
such matter shall be entitled to one vote per $1,000 of Liquidation Preference
of each share of Exchange Preferred Stock held. In any case in which the holders
of PIK Preferred Stock and the holders of Exchange Preferred Stock shall be
entitled to vote as a class pursuant to this Certificate of Designation or
Delaware law, each holder of PIK Preferred Stock and Exchange Preferred Stock
entitled to vote with respect to such matter shall be entitled to one vote per
$1,000 of the aggregate liquidation preference of PIK Preferred Stock and
Exchange Preferred Stock held by such holder. In connection with any vote of the
Holders of Exchange Preferred Stock or the holders of PIK Preferred Stock and
Exchange
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<PAGE>
Preferred Stock (voting as a single class), a majority of the votes properly
cast upon any question shall decide the question, except in any case where a
larger vote is required by the terms of this Certificate of Designation or
Delaware law.
(d) Prior to the Debenture Exchange Date (as defined in Section 8(a)
below), the Corporation shall not amend or modify the Indenture (as defined in
Section 8(a) below), without the affirmative vote or consent of Holders of at
least a majority of the outstanding shares of Exchange Preferred Stock, voting
together as a single class; provided, however, that the Corporation and the
Trustee (as defined in Section 8(a) below) shall be permitted, without any vote
or consent of such Holders, to effect any amendments to the Indenture that could
have been effected under the Indenture without the consent of Holders of
Exchange Debentures (as defined in Section 8(a) below) if any Exchange
Debentures were then outstanding.
SECTION 6. Redemption. (a) (Optional Redemption). After June 1,
----------
2004, the Corporation may, at its option, redeem all or from time to time any
part of the shares of Exchange Preferred Stock, out of funds legally available
therefor, in the manner provided for in Section 6(c), at a price per share equal
to the Liquidation Preference of the Exchange Preferred Stock to be redeemed
plus (without duplication) accrued dividends to the date of such redemption plus
a redemption premium equal to the product of (x) such Liquidation Preference and
(y) a percentage initially equal to one-half of the dividend rate set forth in
Section 3(a) declining linearly on an annual basis thereafter to zero on the
date three years prior to the Final Maturity Date (as defined below); provided
that no redemption pursuant to this Section 6(a) shall be authorized or made
unless prior thereto full accumulated and unpaid dividends, without duplication,
are declared and paid in full, or declared and a sum in cash set apart
sufficient for such payment, on the Exchange Preferred Stock for all Dividend
Periods terminating on or prior to the Redemption Date.
In the event of a redemption pursuant to the preceding paragraph of
only a portion of the then outstanding shares of the Exchange Preferred Stock,
the Corporation shall effect such redemption on a pro rata basis according to
the Liquidation Preference of shares held by each Holder of the Exchange
Preferred Stock, except that the Corporation may redeem such shares held by
Holders of less than 100 shares (or shares held by Holders who would hold less
than 100 shares as a result of such redemption), as may be determined by the
Corporation.
(b) (Mandatory Redemption). The Corporation shall redeem, to the
extent of funds legally available therefor, in the manner provided for in
Section 6(c) hereof, all shares of the Exchange Preferred Stock then outstanding
on June 1, 2010 (the "Final Maturity Date") at a redemption price equal to the
Liquidation Preference plus, without duplication, accrued and unpaid dividends.
(c) (Procedures for Redemption). (i) At least thirty (30) days and
not more than sixty (60) days prior to the date fixed for any redemption of the
Exchange
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<PAGE>
Preferred Stock, written notice (the "Redemption Notice") shall be given by
first class mail, postage prepaid, to each Holder of record on the record date
fixed for such redemption of the Exchange Preferred Stock at such Holder's
address as it appears on the stock register of the Corporation, provided that no
failure to give such notice nor any deficiency thereon shall affect the validity
of the procedure for the redemption of any shares of Exchange Preferred Stock to
be redeemed except as to the Holder or Holders to whom the Corporation has
failed to give said notice or except as to the Holder or Holders whose Notice
was defective. The Redemption Notice shall state:
(1) whether the redemption is pursuant to Section 6(a) or 6(b)
hereof;
(2) the redemption price;
(3) whether all or less than all the outstanding shares of the
Exchange Preferred Stock are to be redeemed and the total amount in
Liquidation Preference of the Exchange Preferred Stock being redeemed;
(4) the Redemption Date;
(5) that the Holder is to surrender to the Corporation, in the
manner, at the place or places and at the price designated, its
certificate or certificates representing the shares of Exchange
Preferred Stock to be redeemed; and
(6) that dividends on the shares of the Exchange Preferred Stock
to be redeemed shall cease to accumulate on such Redemption Date
unless the Corporation defaults in the payment of the redemption
price.
(ii) Each Holder of Exchange Preferred Stock to be redeemed
shall surrender the certificate or certificates representing such shares of
Exchange Preferred Stock to the Corporation, duly endorsed (or otherwise in
proper form for transfer, as determined by the Corporation), in the manner and
at the place designated in the Redemption Notice, and on the Redemption Date the
full redemption price for such shares shall be payable in cash to the Person
whose name appears on such certificate or certificates as the owner thereof, and
each surrendered certificate shall be canceled and retired. In the event that
less than all of the shares represented by any such certificate are redeemed, a
new certificate shall be issued, without service charges, representing the
unredeemed shares.
(iii) On and after the Redemption Date, unless the
Corporation defaults in the payment in full of the redemption price, dividends
on the Exchange Preferred Stock called for redemption shall cease to accumulate
on the Redemption Date, and all rights of the Holders of redeemed shares shall
terminate with respect thereto on the Redemption Date, other than the right to
receive the redemption price, without interest; provided, however, that if a
notice of redemption shall have been given as
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<PAGE>
provided in paragraph (c)(i) above and the funds necessary for redemption
(including an amount in respect of all dividends that will accrue to the
Redemption Date) shall have been irrevocably deposited in trust for the equal
and ratable benefit for the Holders of the shares to be redeemed, then, at the
close of business on the day on which such funds are segregated and set aside,
the Holders of the shares to be redeemed shall cease to be stockholders of the
Corporation and shall be entitled only to receive the redemption price without
interest.
SECTION 7. Change of Control. (a) The Corporation will commence an
-----------------
Offer to Purchase (as defined in paragraph (b)) all of the outstanding shares of
Exchange Preferred Stock within fifteen (15) days after the occurrence of a
Change of Control (as defined in paragraph (f)(i)) below.
(b) "Offer to Purchase" means a written offer ("Offer") to each
Holder at such holder's address appearing in the stock books of the Corporation
on the date of the Offer, offering to purchase in cash all outstanding shares of
Exchange Preferred Stock at a purchase price equal to 101% of the Liquidation
Preference of the Exchange Preferred Stock plus, without duplication, accrued
and unpaid dividends, if any. Unless otherwise required by applicable law, the
Offer shall specify an expiration date ("Expiration Date") of the Offer to
Purchase which shall be, subject to any contrary requirements of applicable law,
not less than thirty (30) days or more than sixty (60) days after the date of
such Offer and a settlement date ("Purchase Date") for purchase of Exchange
Preferred Stock within five Business Days after the Expiration Date. The Offer
shall be sent by first class mail postage prepaid by the Corporation. The Offer
shall contain information concerning the business of the Corporation and its
Subsidiaries which the Corporation in good faith believes will enable such
Holders to make an informed decision with respect to the Offer to Purchase
(which at a minimum will include (i) the most recent annual and quarterly
financial statements and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained in the documents required to be
furnished to Holders pursuant to Section 9(d) (Provision of Financial
Information) (which requirements may be satisfied by delivery of such documents
together with the Offer), (ii) a description of material developments in the
Corporation's business subsequent to the date of the latest of such financial
statements referred to in clause (i) (including a description of the events
requiring the Corporation to make the Offer to Purchase), (iii) if applicable,
appropriate pro forma financial information concerning the Offer to Purchase and
the events requiring the Corporation to make the Offer to Purchase and (iv) any
other information required by applicable law to be included therein. The Offer
shall contain all instructions and materials necessary to enable such Holders to
tender Exchange Preferred Stock pursuant to the Offer to Purchase. The Offer
shall also state:
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<PAGE>
(1) the Expiration Date and the Purchase Date;
(2) the aggregate liquidation preference of the outstanding
shares of Exchange Preferred Stock (and PIK Preferred Stock, if any)
offered to be purchased by the Corporation (the "Purchase Amount")
pursuant to the Offer to Purchase;
(3) the Liquidation Preference per share of Exchange Preferred
Stock and the purchase price to be paid by the Corporation (the
"Purchase Price") for each share accepted for payment;
(4) that the Holder may tender all or any portion of the shares
of Exchange Preferred Stock registered in the name of such Holder and
that any portion of Exchange Preferred Stock tendered must be tendered
in whole shares;
(5) the place or places where shares of Exchange Preferred Stock
are to be surrendered for tender pursuant to the Offer to Purchase;
(6) that dividends on any shares of Exchange Preferred Stock not
tendered or tendered but not purchased by the Corporation pursuant to
the Offer to Purchase will continue to accumulate;
(7) that on the Purchase Date the Purchase Price will become due
and payable upon each share of Exchange Preferred Stock being accepted
for payment pursuant to the Offer to Purchase and that dividends
thereon shall cease to accrue on and after the Purchase Date;
(8) that each Holder electing to tender a share of Exchange
Preferred Stock pursuant to the Offer to Purchase will be required to
surrender such share at the place or places specified in the Offer
prior to the close of business on the Expiration Date (such share
being, if the Corporation so requires, duly endorsed by, or
accompanied by a written instrument of transfer in form reasonably
satisfactory to the Corporation duly executed by, the Holder thereof
or his attorney duly authorized in writing);
(9) that Holders will be entitled to withdraw all or any portion
of Exchange Preferred Stock tendered if the Corporation receives, not
later than the close of business on the Expiration Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the number of shares of Exchange Preferred Stock that the
Holder tendered, the certificate number representing the shares of
Exchange Preferred Stock that the Holder tendered and a statement that
such Holder is withdrawing all or a portion of its tender;
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<PAGE>
(10) that the Corporation shall purchase all shares of Exchange
Preferred Stock duly tendered and not withdrawn pursuant to the Offer to
Purchase; and
(11) that in the case of any Holder whose shares of Exchange Preferred
Stock are purchased only in part, the Corporation will issue to the Holder
of such shares without service charge a new certificate representing the
unpurchased shares of Exchange Preferred Stock.
Any Offer to Purchase shall be governed by and effected in accordance with the
Offer for such Offer to Purchase.
(c) The Corporation will comply with any securities laws and
regulations, to the extent such laws and regulations are applicable to the
repurchase of the Exchange Preferred Stock in connection with an Offer to
Purchase.
(d) On the Purchase Date the Corporation shall (1) accept for payment
the shares of Exchange Preferred Stock validly tendered pursuant to the Offer to
Purchase, (2) pay to the Holders of shares so accepted the purchase price
therefor in cash and (3) cancel and retire each surrendered certificate. Unless
the Corporation defaults in the payment for the shares of Exchange Preferred
Stock tendered pursuant to the Offer to Purchase, dividends will cease to accrue
with respect to the shares of Exchange Preferred Stock tendered and all rights
of Holders of such tendered shares will terminate, except for the right to
receive payment therefor, on the Purchase Date.
(e) If the purchase of the Exchange Preferred Stock would violate or
constitute a default under any Indebtedness of the Corporation, then,
notwithstanding anything to the contrary contained above, prior to complying
with the foregoing provisions, but in any event within thirty (30) days
following the Change of Control, the Corporation shall use its best efforts to,
as promptly as practicable, either (1) repay in full all such Indebtedness and
terminate all commitments outstanding under any relevant credit agreements or
(2) obtain the requisite consents, if any, under such Indebtedness required to
permit the repurchase of Exchange Preferred Stock required by this Section 7.
Until the requirements of the immediately preceding sentence are satisfied, the
Corporation shall not make, and shall not be obligated to make, any Offer to
Purchase.
(f) (i) A "Change of Control" means the occurrence of any of the
following:
(a) the sale, lease or transfer, in one or a series of related
-
transactions, of all or substantially all of the Corporation's assets to
any Person or group (as such term is used in Section 13(d)(3) of the
Exchange Act) (other than the Principal Shareholders or their Related
Parties),
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<PAGE>
(b) the adoption of a plan relating to the liquidation or dissolution of
-
the Corporation,
(c) the acquisition, directly or indirectly, by any Person or group (as
-
such term is used in Section 13(d)(3) of the Exchange Act) (other than one
or more of the Principal Shareholders and their Related Parties) of 40% or
more of the voting power of the voting stock of the Corporation by way of
merger or consolidation or otherwise, provided that such acquisition will
not constitute a "Change of Control" unless or until such Person or group
owns, directly or indirectly, more of the voting power of the voting stock
of the Corporation than the Principal Shareholders and their Related
Parties, or
(d) the Continuing Directors cease for any reason to constitute a majority
-
of the directors of the Corporation then in office.
For purposes of this definition, any transfer of an Equity Interest of an entity
that was formed for the purpose of acquiring voting stock of the Corporation
shall be deemed to be a transfer of such portion of such voting stock as
corresponds to the portion of the equity of such entity that has been so
transferred.
(ii) "Continuing Director" means any member of the Board who (i) is a
member of that Board on the Closing Date or (ii) was nominated for election by
either (a) one or more of the Principal Shareholders (or a Related Party
thereof) or (b) the Board of Directors a majority of whom were directors at the
Closing Date or whose election or nomination for election was previously
approved by one or more of the Principal Shareholders or such directors.
(iii) "Immediate Family Member" means, with respect to any individual,
such individual's spouse (past or current), descendants (natural or adoptive, of
the whole or half blood) of the parents of such individual, such individual's
grandparents and parents (natural or adoptive), and the grandparents, parents
and descendants of parents (natural or adoptive, of the whole or half blood) of
such individual's spouse (past or current).
(iv) "Principal Shareholders" means Steven B. Dodge and Thomas H.
Stoner.
(v) "Related Party" with respect to any Principal Shareholder means
(i) any 80% (or more) owned Subsidiary or Immediate Family Member (in the case
of an individual) of such Principal Shareholder or (ii) any Person, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding an
80% or more controlling interest of which consist of such Principal Shareholder
or an Immediate
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<PAGE>
Family Member, or (iii) any Person employed by the Corporation in a management
capacity as of the Closing Date.
SECTION 8. Exchange Provisions. (a) Shares of Exchange Preferred
-------------------
Stock will be exchangeable at the option of the Corporation, out of funds
legally available therefor, in whole but not in part, on any Dividend Payment
Date (any such Dividend Payment Date on which such exchange is or is to be made,
the "Debenture Exchange Date"), through the issuance of the Corporation's
Subordinated Exchange Debentures due 2010 (the "Exchange Debentures") in
redemption of and in exchange for shares of Exchange Preferred Stock, in the
manner provided in this Section 8. The Exchange Debentures will bear interest
at a rate equal to the Dividend Rate of the Exchange Preferred Stock if it had
remained outstanding and shall be issued to pursuant to an indenture containing
terms and conditions customary to notes issued in exchange for securities which
are similar to the Exchange Preferred Stock (including a "Change of Control" put
provision), which indenture will be in form and substance reasonably
satisfactory to the Corporation and CSFBC and shall be executed prior to the
Interim Financing Maturity Date (the "Indenture") it being understood that such
form and substance will mirror, except with respect to specific financial terms,
the exchange indenture for the 11% Pay-In-Kind Preferred Stock issued by
American Radio Systems Corporation.
(b) Holders of the Exchange Preferred Stock will be entitled to
receive Exchange Debentures at the rate of $1.00 principal amount of Exchange
Debentures for each $1.00 of Liquidation Preference of Exchange Preferred Stock,
including, to the extent necessary, Exchange Debentures in principal amounts
less than $1,000, provided that the Corporation shall have the right, at its
--------
option, to pay cash in an amount equal to the principal amount of that portion
of any Exchange Debenture that is not an integral multiple of $1,000 instead of
delivering an Exchange Debenture in a denomination of less than $1,000. Such
exchange may be made only if, at the time of the exchange, (i) the Corporation
shall be in compliance with Section 8(d), (ii) there shall be funds legally
available sufficient therefor; and (iii) immediately after giving effect to such
exchange, no Default or Event of Default (as defined in the Indenture) would
exist under the Indenture and no default or event of default would exist under
the terms of any other of the Corporation's Indebtedness.
(c) The Corporation will mail notice of its intention to exchange
through such an exchange to each Holder of record of the Exchange Preferred
Stock not less than thirty (30) nor more than sixty (60) days before the
Debenture Exchange Date. Such notice shall be given by first class mail, postage
prepaid, to the Holders of record of shares of Exchange Preferred Stock at their
respective addresses as the same shall appear on the stock transfer books of the
Corporation, specifying the Debenture Exchange Date and the place where
certificates for shares of Exchange Preferred Stock are to be surrendered for
Exchange Debentures and stating that dividends on shares of the Exchange
Preferred Stock will cease to accrue on the Debenture Exchange Date, but
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<PAGE>
neither failure to mail such notice, nor any defect therein or in the mailing
thereof, to any particular Holder shall affect the sufficiency of the notice or
the validity of the proceedings for exchange with respect to the other Holders.
Any notice which was mailed in the manner herein provided shall be conclusively
presumed to have been duly given whether or not the Holder receives the notice.
If notice of exchange has been given pursuant to this subsection then (unless
the Corporation defaults in issuing Exchange Debentures in exchange for the
Exchange Preferred Stock or fails to pay or set aside for payment accumulated
and unpaid dividends on the Exchange Preferred Stock as set forth in subsection
(d) below and notwithstanding that any certificates for shares of Exchange
Preferred Stock have not been surrendered for exchange) on the Debenture
Exchange Date the Holders of Exchange Preferred Stock will cease to be
stockholders with respect to such shares and will have no interests in or claims
against the Corporation by virtue thereof (except the right to receive Exchange
Debentures in exchange therefor and accumulated and unpaid dividends on the
Exchange Preferred Stock to the Debenture Exchange Date and, if the Company so
elects, cash in lieu of any Exchange Debenture that is in a principal amount
that is not an integral multiple of $1,000) and will have no voting, conversion
or other rights with respect to such shares, and all shares of Exchange
Preferred Stock will no longer be outstanding.
Upon the surrender (and endorsement, if required by the Corporation)
in accordance with such notice of the certificate for shares of Exchange
Preferred Stock, such certificates shall be exchanged for Exchange Debentures
and such accumulated and unpaid dividends in accordance with this paragraph (c).
(d) No shares of Exchange Preferred Stock may be exchanged for
Exchange Debentures unless the Corporation has paid (or is deemed to have paid)
or, if payable in cash, set aside for the benefit of the Holders of the Exchange
Preferred Stock all accumulated and unpaid dividends on the Exchange Preferred
Stock to the Debenture Exchange Date (including an amount equal to a prorated
dividend for the period from the Dividend Payment Date to the Debenture Exchange
Date).
SECTION 9. No Exchange in Certain Cases. Notwithstanding the
----------------------------
foregoing provisions of Section 8, the Corporation shall not be entitled to
exchange the Exchange Preferred Stock for Exchange Debentures if such exchange,
or any term or provision of the Indenture or the Exchange Debentures, or the
performance of the Corporation's obligations under the Indenture or the Exchange
Debentures, shall materially violate or conflict with any Applicable Law or
agreement or instrument then binding on the Corporation or if, at the time of
such exchange, the Corporation is insolvent or if it would be rendered insolvent
by such exchange.
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<PAGE>
SECTION 10. Certain Additional Provisions.
-----------------------------
(a)(Limitation on Incurrence of Indebtedness and Issuance of Preferred
Stock.) The Corporation will not, and will not permit any of its Restricted
Subsidiaries to, create, incur, assume or directly or indirectly guarantee or in
any other manner become directly or indirectly liable for ("incur") any
Indebtedness (including Acquired Debt) or issue any preferred stock, except that
the Corporation and its Restricted Subsidiaries may:
(x) issue (i) preferred stock that is not Disqualified Stock at any time
(subject to Section 5(a)(i)), and (ii) additional shares of Exchange
Preferred Stock in lieu of cash dividends as provided in Section 3(b)
hereof, and
(y) incur Indebtedness or issue Disqualified Stock (subject to Section
5(a)(i), if the Debt to EBITDA Ratio of the Corporation and its Restricted
Subsidiaries at the time of incurrence of such Indebtedness or issuance of
such Disqualified Stock, after giving pro forma effect thereto, is (a) at
any time prior to June 4, 2002 8.0:1 or less and (b) at any time thereafter
7.0:1 or less.
The foregoing limitations shall not apply to the incurrence of any of
the following:
(i) Senior Bank Debt (including guarantees thereof by the Corporation's
Subsidiaries) under the Senior Bank Facilities;
(ii) Existing Indebtedness;
(iii) Indebtedness represented by (1) the Exchange Debentures, (2) the PIK
Preferred Stock (including preferred stock issued in the exchange offer
contemplated in the definition of PIK Preferred Stock), (3) Exchange
Preferred Stock issued in exchange for PIK Preferred in accordance with the
terms thereof, (4) the Intercoastal Notes and (5) guarantees by Restricted
Subsidiaries of (A) Senior Bank Debt and (B) any other Indebtedness of the
Corporation permitted to be incurred under this Certificate of Designation;
(iv) Refinancing Indebtedness, provided that the principal amount of such
--------
Refinancing Indebtedness shall not exceed the principal amount of
Indebtedness or amount of Disqualified Stock so extended, refinanced,
renewed, replaced, substituted, defeased or refunded (plus the amount of
expenses incurred and premiums paid in connection therewith);
(v) intercompany Indebtedness between the Corporation and any of its
Restricted Subsidiaries or among its Restricted Subsidiaries, or Equity
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<PAGE>
Interests issued by a Restricted Subsidiary in conformity with Section
10(c);
(vi) Hedging Obligations, including interest rate swap obligations, that
are incurred in the ordinary course of business for the purpose of fixing
or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Certificate of
Designation to be outstanding; and
(vii) additional Indebtedness of the Corporation, which may be guaranteed
by any of its Restricted Subsidiaries, in an aggregate outstanding
principal amount not to exceed $10,000,000 at any time.
(b) (Limitation on Restricted Payments). The Corporation will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly:
(i) declare or pay any dividend, or make any other distribution or
payment, on any Junior Securities of the Corporation or on any Equity
Interests of any Restricted Subsidiary (other than dividends or
distributions payable by the Corporation in Junior Securities (other than
Disqualified Stock) of the Corporation or by a Restricted Subsidiary in
Equity Interests (other than Disqualified Stock) of such Restricted
Subsidiary or dividends or distributions payable to the Corporation or any
Restricted Subsidiary);
(ii) purchase, redeem or otherwise acquire or retire for value any Junior
Securities of the Corporation or any Equity Interests of any Restricted
Subsidiary or other Affiliate of the Corporation (other than any Equity
Interests owned by the Corporation or any Restricted Subsidiary); or
(iii) make an Investment other than (a) a Permitted Investment or (b)
Investments of the Corporation or any Restricted Subsidiary in the
Corporation or any Restricted Subsidiary;
(any payment made for any of the foregoing purposes being herein referred to as
a "Restricted Payment"), unless:
(I) at the time of and immediately after giving effect to the proposed
Restricted Payment, no Voting Rights Triggering Event shall have occurred
and be continuing or would occur as a consequence thereof,
(II) the Corporation would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have
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<PAGE>
been permitted to incur at least $1.00 of additional Indebtedness under the
Debt to EBITDA Ratio test contained in Section 10(a), and
(III) at the time of and immediately after giving effect to the proposed
Restricted Payment (valued at its Fair Market Value, if other than cash),
the aggregate amount of all Restricted Payments (excluding all payments,
investments, redemptions, repurchases, retirements and other acquisitions
described in clauses (2) and (3) of the following paragraph) declared or
made after March 31, 1998 shall not exceed the sum of
(A) an amount equal to the Corporation's EBITDA cumulated
from March 31, 1998 to the end of the Corporation's most
recently ended full fiscal quarter, taken as a single
accounting period, less 1.4 times the sum of (i) the
Corporation's Consolidated Interest Expense from March 31,
1998 to the end of the Corporation's most recently ended
full fiscal quarter, taken as a single accounting period,
plus (ii) all dividends or other distributions paid or made
by the Corporation or any Restricted Subsidiary on any
Disqualified Stock of the Corporation or any of its
Subsidiaries during such period, plus
(B) an amount equal to the aggregate sum of all net cash
proceeds received after March 31, 1998 by the Corporation
from the issuance and sale of Junior Securities (other than
any Disqualified Stock and other than to Restricted
Subsidiaries) to the extent that such proceeds are not used
to redeem, repurchase, retire or otherwise acquire (i)
Junior Securities of the Corporation pursuant to clause (2)
in the next paragraph or (ii) the PIK Preferred Stock, plus
(C) the aggregate net proceeds received after March 31, 1998
by the Corporation and its Restricted Subsidiaries from the
sale or disposition of any Investment other than a Permitted
Investment.
The foregoing provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration such payment would have
been permitted by the provisions of this Certificate of Designation;
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<PAGE>
(2) the redemption, repurchase, retirement or other acquisition
for value of any Junior Securities of the Corporation in exchange
for, or out of the proceeds of, the substantially concurrent sale
(other than to the Corporation or a Restricted Subsidiary) of
Junior Securities of the Corporation (other than Disqualified
Stock); or
(3) Restricted Payments (other the those represented by the
Sconnix Notes) made or paid since March 31, 1998 in an aggregate
amount not exceeding $5,000,000.
Payments made pursuant to clause (1) above shall nevertheless be considered
Restricted Payments for purposes of computing the aggregate amount of Restricted
Payments under clause (III) of the preceding paragraph. For purposes of clause
(B) of the preceding paragraph, the conversion or exchange of Indebtedness or
Disqualified Stock of the Corporation into Junior Securities of the Corporation
(other than into Equity Interests constituting Indebtedness or Disqualified
Stock) shall be deemed to be the issuance and sale by the Corporation of such
Junior Securities at the time of such conversion or exchange for net cash
proceeds equal to the net cash proceeds originally received by the Corporation
for the Indebtedness or Disqualified Stock so converted or exchanged (or
received by the Corporation for any other Indebtedness or Disqualified Stock
previously converted into or exchanged for such Indebtedness or Disqualified
Stock), plus any additional net cash proceeds received by the Corporation upon
such conversion or exchange (or such previous conversion or exchange) and less
any cash paid by the Corporation in connection therewith. For purposes of
clause (B) of the preceding paragraph, the issuance of Junior Securities in
connection with any merger, purchase of assets or other business combination
shall not be considered to involve receipt of any cash proceeds.
(c) (Limitation on Restricted Subsidiary Equity Interests). The
Corporation will not permit any Restricted Subsidiary to issue any Equity
Interests, except for (i) Equity Interests issued to and held by the Corporation
or a Restricted Subsidiary, and (ii) Equity Interests issued by a Person prior
to the time that (A) such Person becomes a Restricted Subsidiary, (B) such
Person merges with or into a Restricted Subsidiary or (C) a Restricted
Subsidiary merges with or into such Person; provided that such Equity Interests
were not issued or incurred by such Person in anticipation of the type of
transaction contemplated by subclause (A), (B) or (C).
(d) (Provision of Financial Information). Whether or not required by
the rules and regulations of the SEC, so long as any shares of Exchange
Preferred Stock are outstanding, the Corporation will furnish to the Holders of
Exchange Preferred Stock:
(i) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q and 10-K if the
Corporation were required to file such Forms, including a "Management's
Discussion and
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<PAGE>
Analysis of Financial Condition and Results of Operations" and, with
respect to the annual information only, a report thereon by the
Corporation's independent certified public accountants, and
(ii) all reports that would be required to be filed with the SEC on Form
8-K if the Corporation were required to file such reports.
In addition, whether or not required by the rules and regulations of the SEC,
the Corporation will file a copy of all such information with the SEC for public
availability (unless the SEC will not accept such filing) and make such
information available to investors who request it in writing.
SECTION 11. Status of Reacquired Shares. If shares of the Exchange
---------------------------
Preferred Stock are redeemed pursuant to Section 6 or Section 7 hereof or
exchanged pursuant to Section 8 hereof, the shares so redeemed or exchanged
shall, upon compliance with any statutory requirements, assume the status of
authorized but unissued shares of preferred stock of the Corporation.
SECTION 12. Notices. All notices, requests, demands and other
-------
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered by hand or by first class mail, postage prepaid, or when
sent by telex or telecopier (with receipt confirmed), provided a copy is also
sent by first class mail, postage prepaid, or express (overnight, if possible)
courier, addressed (i) in the case of a Holder of the Exchange Preferred Stock,
to such Holder's address of record, and (ii) in the case of the Corporation, to
the Corporation's principal executive offices to the attention of the
Corporation's Chief Executive Officer and Chief Financial Officer.
SECTION 13. Amendments and Waivers. Except as otherwise set forth
----------------------
herein and subject to Section 5, any right, preference, privilege or power of,
or restriction provided for the benefit of, the Exchange Preferred Stock set
forth herein may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or prospectively)
with the written consent of the Corporation and the vote or consent of the
Holders of a majority of the shares of Exchange Preferred Stock then
outstanding, and any amendment or waiver so effected shall be binding upon the
Corporation and all Holders of the Exchange Preferred Stock.
SECTION 14. Definitions. As used in this Certificate of Designation,
-----------
the following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"Acquired Debt" means with respect to any specified Person,
-------------
Indebtedness of any other Person existing at the time such other Person
merges with or into, or becomes a Subsidiary of, such specified Person,
including Indebtedness incurred
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<PAGE>
in connection with, or in contemplation of, such other Person merging with
or into, or becoming a Subsidiary of, such specified Person.
"Affiliate" means, with respect to any specified Person, any other
---------
Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person. For purposes of
this definition, "control of" (including, with correlative meanings, the
terms "controlling," "controlled by" and "under common control with") any
Person means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or
otherwise; provided that beneficial ownership of 10% or more of the voting
securities of a Person shall be deemed to be control.
"Applicable Law" shall mean, in respect of any Person, all provisions
--------------
of constitutions, statutes, rules, regulations and orders of governmental
bodies or regulatory agencies applicable to such Person, including, without
limiting the foregoing, the Licenses, the Communications Act, zoning
ordinances and all environmental laws, and all orders, decisions, judgments
and decrees of all courts and arbitrators in proceedings or actions to
which the Person in question is a party or by which it is bound.
"Applicable Spread" has the meaning set forth in Section 3(a).
-----------------
"Board" has the meaning set forth in Section 1.
-----
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
------------
Friday which is not a day on which banking institutions in The City of New
York are authorized or obligated by law or executive order to close.
" Capital Lease Obligation" means, at any time any determination
-------------------------
thereof is to be made, the amount of the liability in respect of a capital
lease that would at such time be required to be capitalized on the balance
sheet in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, capital stock,
-------------
(ii) in the case of any association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated)
or capital stock and (iii) in the case of a partnership, partnership
interests (whether general or limited) and any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, such partnership.
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<PAGE>
"Cash Equivalents" means (i) United States dollars, (ii) securities
----------------
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of
less than one year from the date of acquisition, (iii) certificates of
deposit and eurodollar time deposits with maturities of less than one year
from the date of acquisition, bankers' acceptances with maturities of less
than one year and overnight bank deposits, in each case with any lender
party to any of the Senior Bank Facilities or with any domestic commercial
bank having capital and surplus in excess of $100,000,000 and a rating of
"A" or better by Moody's Investors Service, Inc. or Standard & Poor's
Ratings Group, a division of McGraw Hill, Inc., (iv) repurchase obligations
with a term of not more than seven days for underlying securities of the
types described in clauses (ii) and (iii) entered into with any financial
institution meeting the qualifications specified in clause (iii) above and
(v) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Ratings Services, a division
of the McGraw-Hill Companies, Inc., and in each case maturing within nine
months after the date of acquisition.
"Change of Control" has the meaning assigned thereto in Section
-----------------
7(f)(i).
"Closing Date" has the meaning assigned thereto in Section 3(a).
------------
"Consolidated Interest Expense" means, without duplication, with
-----------------------------
respect to any period, the sum of (i) the interest expense and all capitalized
interest of the Corporation and its Restricted Subsidiaries for such period, on
a consolidated basis, including, without limitation, (a) amortization of debt
discount, (b) the net cost under interest rate contracts (including amortization
of debt discount), (c) the interest portion of any deferred payment obligation
and (d) accrued interest, plus (ii) the interest component of any Capital Lease
Obligation paid or accrued or scheduled to be paid or accrued by the Corporation
during such period, determined on a consolidated basis in accordance with GAAP.
"Continuing Director" has the meaning assigned thereto in Section
-------------------
7(f)(ii).
"CSFBC" means Credit Suisse First Boston Corporation.
-----
"Debenture Exchange Date" has the meaning assigned thereto in Section
-----------------------
8(a).
"Debt to EBITDA Ratio" means, with respect to any date, the ratio of
--------------------
(a) the aggregate principal amount of all outstanding Indebtedness
(excluding Hedging Obligations, including interest rate swap obligations,
that are incurred in the ordinary course of business for the purpose of
fixing or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Certificate of
Designation to be outstanding) of the Corporation and its
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<PAGE>
Restricted Subsidiaries as of such date (excluding any such Disqualified
Stock held by the Corporation or a Wholly Owned Restricted Subsidiary), to
(b) EBITDA of the Corporation and its Restricted Subsidiaries on a
consolidated basis for the four most recent full fiscal quarters ending
immediately prior to such date, determined on a pro forma basis after
giving effect to each acquisition or disposition of assets made by the
Corporation and its Restricted Subsidiaries from the beginning of such
four-quarter period through such date as if such acquisition or disposition
had occurred at the beginning of such four-quarter period.
"Default Period" means has the meaning assigned thereto in Section
--------------
5(d)(i).
"Disposition" means, with respect to any Person, any merger,
-----------
consolidation or other business combination involving such Person (whether
or not such Person is the Surviving Person) or the sale, assignment,
transfer, lease conveyance or other disposition of all or substantially all
of such Person's assets.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
------------------
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or is redeemable at the option of the Holder thereof (other than upon a
Change of Control of the Corporation in circumstances where the Holders of
the Exchange Preferred Stock would have similar rights), in whole or in
part on or prior to one year after the Final Maturity Date. The amount of
Disqualified Stock shall be the greater of the liquidation preference or
mandatory or optional redemption price thereof.
"Dividend Default" has the meaning assigned thereto in Section
----------------
5(c)(i).
"Dividend Payment Date" has the meaning assigned thereto in Section
---------------------
3(b).
"Dividend Period" means the period from the Issue Date to and
---------------
including the first Dividend Payment Date and thereafter each quarterly
period commencing on each June 1, September 1, December, and March 1 and
ending on the next succeeding Dividend Payment Date.
"EBITDA" of a specified person means, for any period, the consolidated
------
net income of such specified Person and its Restricted Subsidiaries for
such period:
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<PAGE>
(i) plus (without duplication and to the extent involved in computing
----
such consolidated net income) (a) interest expense, (b) provision for
income taxes, and (c) depreciation and amortization and other non-cash
charges (including amortization of goodwill and other intangibles and
barter expenses); and
(ii) minus (without duplication and to the extent involved in
-----
computing such consolidated net income) (a) any gains (or plus
losses), together with any related provision for taxes on such gains
or losses, realized in connection with any sale of assets (including,
without limitation, dispositions pursuant to sale and leaseback
transactions), (b) any non-cash or extraordinary gains (or plus
losses), together with any related provision for taxes on such
extraordinary gains or losses, (c) the amount of any cash payments
related to non-cash charges that were added back in determining EBITDA
in any prior period, and (d) barter revenues;
provided that:
(i) the net income of any other Person (other than a Sponsored
Investee) that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or
distributions paid in cash to such specified Person whose EBITDA is
being determined or a Wholly Owned Restricted Subsidiary thereof;
(ii) the net income of any other Person that is a Restricted
Subsidiary (other than a Wholly Owned Restricted Subsidiary) or is an
Unrestricted Subsidiary shall be included only to the extent of the
amount of dividends or distributions paid in cash to such specified
Person whose EBITDA is being determined or a Wholly Owned Restricted
Subsidiary thereof;
(iii) the net income (loss) of any other Person acquired after the
Closing Date in a pooling of interests transaction for any period
prior to the date of such acquisition shall be excluded (to the extent
otherwise included); and
(iv) gains or losses from sales of assets other than sales of assets
acquired and held for resale in the ordinary course of business shall
be excluded (to the extent otherwise included).
All of the foregoing will be determined in accordance with GAAP.
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<PAGE>
"Equity Interests" means Capital Stock and all warrants, options or
----------------
other rights to acquire Capital Stock (including any Indebtedness or
Disqualified Stock that is convertible into, or exchangeable for, Capital
Stock).
"Exchange Act" means the Securities Exchange Act of 1934 as it may be
------------
amended and any successor act thereto.
"Exchange Date" when used with respect to any share of Exchange
-------------
Preferred Stock means the date such share is received by a Holder in
exchange for PIK Preferred Stock pursuant to the terms of the PIK Preferred
Stock.
"Exchange Debentures" has the meaning assigned thereto in Section
-------------------
8(a).
"Exchange Preferred Stock" means the Corporation's series of Preferred
------------------------
Stock designated Exchange Pay-In-Kind Preferred Stock, par value $.01 per
share.
"Existing Indebtedness" means any outstanding Indebtedness of the
---------------------
Corporation and its Restricted Subsidiaries as of the Issue Date or which
thereafter becomes Indebtedness of the Corporation or any of its Restricted
Subsidiaries or its Subsidiaries on the Issue Date.
"Existing Investments" means any Investments of the Corporation and
--------------------
its Restricted Subsidiaries (other than Investments in Unrestricted
Subsidiaries) as of the Issue Date or which thereafter becomes an
Investment of the Corporation or any of its Restricted Subsidiaries or its
Subsidiaries on the Issue Date.
"Expiration Date" has the meaning assigned thereto in Section 7(b).
---------------
"Fair Market Value" means, with respect to any asset or property, the
-----------------
sale value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy. All determinations of Fair
Market Value shall be made by the Board and shall be evidenced by a
resolution of the Board set forth in an Officers' Certificate.
"Final Maturity Date" means has the meaning assigned in Section 6(b).
-------------------
"FCC" means the Federal Communications Commission, as from time to
---
time constituted, created under the Federal Communications Act of 1934, or,
if at any time after the filing of this Certificate of Designation, the FCC
is not existing and performing the duties now assigned to it under such
act, then the body performing such duties at such time.
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<PAGE>
"GAAP" means generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board, or in such
other statements by such other entity as have been approved by a
significant segment of the accounting profession, which are in effect on
the Issue Date.
"guarantee" means a guarantee (other than by endorsement of
---------
negotiable instruments for collection or deposit in the ordinary course of
business), direct or indirect, in any manner (including, without
limitation, letters of credit and reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the
-------------------
Obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements, and (ii)
other agreements or arrangements designed to protect such Person against
fluctuations in interest rates.
"Holders" means a Holder of shares of Exchange Preferred Stock as
-------
reflected in the stock books of the Corporation (other than the Escrow
Agent).
"Immediate Family Member" has the meaning assigned to that term in
-----------------------
Section 7(f)(iii).
"incur" means, with respect to any obligation of any Person, to
-----
create, issue, incur, assume or directly or indirectly guarantee or in any
other manner become directly or indirectly liable for any Indebtedness (and
"incurrence", "incurred", "incurrable" and "incurring" shall have meanings
correlative to the foregoing).
"Indebtedness" means, with respect to any Person, whether or not
------------
contingent, (i) all indebtedness of such Person for borrowed money or for
the deferred purchase price of property or services (other than current
trade liabilities incurred in the ordinary course of business and payable
in accordance with customary practices) or which is evidenced by a note,
bond, debenture or similar instrument, (ii) all Capital Lease Obligations
of such Person, (iii) all obligations of such Person in respect of letters
of credit or bankers' acceptances issued or created for the account of such
Person, (iv) all Hedging Obligations of such Person, (v) all liabilities
secured by any Lien on any property owned by such Person even if such
Person has not assumed or otherwise become liable for the payment thereof
to the extent of the value of the property subject to such Lien, and (vi)
to the extent not otherwise included, any guarantee by such person of any
other Person's indebtedness or other obligations described in clauses (i)
through (v) above.
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<PAGE>
"Indenture" has the meaning assigned thereto in Section 8(a).
---------
"Interim Financing Maturity Date" means June 4, 1999.
-------------------------------
"Investments" means, with respect to any Person, all investments by
-----------
such Person in other Persons (including Affiliates of such Person) in the
form of loans, guarantees, advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in
the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities of any
other Person and all other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP.
"Issue Date" means first Exchange Date.
----------
"Junior Securities" has the meaning assigned thereto in Section 1.
-----------------
"Licenses" shall mean any telephone, microwave, radio transmissions,
--------
personal communications or other license, authorization, certificate of
compliance, franchise, approval or permit, whether for the construction,
the ownership or the operation of any communications tower facilities,
granted or issued by the FCC and held by the Corporation or any of its
Restricted Subsidiaries.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
----
charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under
applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement
to sell or give a security interest in any asset and any filing of, or
agreement to give, any financing statement under the "Uniform Commercial
Code" (or equivalent statutes) of any jurisdiction).
"Obligations" means any principal, interest, penalties, fees,
-----------
indemnifications, reimbursements, damages and other liabilities payable
under the documentation governing any Indebtedness.
"Offer to Purchase" has the meaning assigned thereto in Section 7(b).
-----------------
"Officers' Certificate" means a certificate signed by the Chairman of
---------------------
the Board, the Chief Executive Officer, President, a Chief Operating
Officer, a Vice President, or the Chief Financial Officer and, without
duplication, by the Treasurer, an Assistant Treasurer, Controller, the
Secretary or an Assistant Secretary, of the Corporation
-27-
<PAGE>
"Permitted Investment" means:
--------------------
(i) any Investment in the Corporation or any Wholly Owned Restricted
Subsidiary;
(ii) any Investment in Cash Equivalents;
(iii) any Investment in a Person if, as a result of such Investment, (a)
such Person becomes a Wholly Owned Restricted Subsidiary of the
Corporation, or (b) such Person either (1) is merged, consolidated or
amalgamated with or into the Corporation or one of its Wholly Owned
Restricted Subsidiaries and the Corporation or such Wholly Owned Restricted
Subsidiary is the Surviving Person or the Surviving Person becomes a Wholly
Owned Restricted Subsidiary, or (2) transfers or conveys all or
substantially all of its assets to, or is liquidated into, the Corporation
or one of its Wholly Owned Restricted Subsidiaries;
(iv) any Investment in accounts and notes receivable acquired in the
ordinary course of business;
(v) any Existing Investment;
(vi) notes from employees issued to the Corporation representing payment
of the exercise price of options to purchase capital stock of the
Corporation in an aggregate principal amount not to exceed $2,000,000;
(vii) Investments in Unrestricted Subsidiaries represented by shares of
Common Stock of the Corporation or assets and property acquired in exchange
for Common Stock of the Corporation;
(viii) so long as no Voting Rights Triggering Event then exists or would be
caused thereby, make investments in communications site and related
companies in an amount not to exceed, in the aggregate, at any time,
$25,000,000 provided, however, that the Corporation or one of its
Restricted Subsidiaries has executed a binding acquisition or merger
agreement with such company;
(ix) so long as no Voting Rights Triggering Event then exists or would be
caused thereby, (x) establish Unrestricted Subsidiaries and (y) make
investments in such Unrestricted Subsidiaries or in non-Wholly-Owned
Restricted Subsidiaries of up to, in the aggregate, at any time,
$50,000,000 (subject to reduction as provided in the definition of
Unrestricted Subsidiary); and
(x) the Sconnix Note.
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<PAGE>
"Person" means any individual, corporation, partnership, limited
------
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"PIK Preferred Stock" means the Corporation's series of Preferred
-------------------
Stock designated Series A Redeemable Pay-In-Kind Preferred Stock, par value
$.01 per share, and, except for Section 3(a) and the definition of Exchange
Date, also includes one other series of the Corporation's preferred stock
to be designated that (i) has identical terms to the Exchange Preferred
Stock in all material respects except as permitted by the Registration
Rights Agreement and (ii) is to be issued in exchange for PIK Preferred
Stock in an exchange offer as contemplated by the Registration Rights
Agreement.
"Principal Shareholder" has the meaning assigned to that term in
---------------------
7(f)(iv).
"Purchase Date" has the meaning assigned thereto in Section 7(b).
-------------
"Redemption Date" with respect to any shares of Exchange Preferred
---------------
Stock, means the date on which such shares of Exchange Preferred Stock are
redeemed by the Corporation.
"Redemption Notice" has the meaning assigned thereto in Section 6(c).
-----------------
"Refinancing Indebtedness" means (i) Indebtedness of the Corporation
------------------------
or any Restricted Subsidiary incurred or given in exchange for, or the
proceeds of which are used to, extend, refinance, renew, replace,
substitute, defease or refund any other Indebtedness or Disqualified Stock
incurred by the Corporation in accordance with the terms of this
Certificate of Designation, and (ii) Indebtedness of any Restricted
Subsidiary incurred or given in exchange for, or the proceeds of which are
used to, extend, refinance, renew, replace, substitute, defease or refund
any other Indebtedness or Disqualified Stock of the Corporation or any
Restricted Subsidiary in accordance with the terms of this Certificate of
Designation.
"Registration Rights Agreement" has the meaning assigned thereto in
-----------------------------
Section 3(e).
"Related Party" has the meaning assigned to that term in 7(f)(v).
-------------
"Restricted Payment" has the meaning assigned thereto in Section
------------------
10(b).
"Restricted Subsidiary" means a Subsidiary of the Corporation other
---------------------
than an Unrestricted Subsidiary.
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<PAGE>
"SEC" means the Securities and Exchange Commission, as from time to
---
time constituted, created under the Exchange Act.
"Senior Bank Debt" means (i) the Indebtedness outstanding under the
----------------
Senior Bank Facilities, provided that Senior Bank Debt under this clause
(i) shall not exceed the difference between (a) the sum of $1,050,000,000
plus any borrowings and letters of credit under the Senior Bank Facilities
after the Issue Date to the extent that such borrowings or letters of
credit at the time of incurrence or issuance, as the case may be, resulted
in combined Indebtedness under the Senior Bank Facilities exceeding the sum
of $1,050,000,000 and to the extent that such borrowings or letters of
credit at the time of incurrence or issuance, as the case may be, were
permitted under Section 10(a) and (b) the aggregate amount of net proceeds
from asset sales applied to permanently reduce the level of permitted
borrowings under the Senior Bank Facilities pursuant to the terms thereof
Indebtedness and (ii) all Obligations incurred by or owing to the holders
or their agent or representatives of such Indebtedness outstanding under
the Senior Bank Facilities (including, but not limited to, all fees and
expenses of counsel and all other interest, charges, fees and expenses).
"Senior Bank Facilities" means that certain Amended and Restated Loan
----------------------
Agreement dated as of October 15, 1997 by and among the Corporation, as
Borrower, the financial institutions parties thereto, as Banks, and Toronto
Dominion (Texas), Inc., as Administrative Agent, as amended by that certain
First Amendment to Amended and Restated Loan Agreement dated as of December
31, 1997, that certain Assumption Agreement dated as of January 21, 1998,
that certain Second Amendment to Amended and Restated Loan Agreement dated
as of March 27, 1998, and that certain Third Amendment to Amended and
Restated Loan Agreement dated as of May 11, 1998, as such agreement may be
amended, replaced or refinanced by one or more credit agreements
consistent, in the reasonable judgement of CSFBC, with the term sheets
dated April 2, 1998 from TD Securities (USA), Inc. to (i) the Corporation
in respect of a senior subordinated credit facility in the aggregate
principal amount of $150,000,000 and (ii) to American Tower Systems
(Delaware), Inc. and American Tower Systems, L.P. in respect of senior
secured credit facilities in the aggregate principal amount of $900,000,000
(true, correct and complete copies of which have been delivered to CSFBC).
"Subsidiary" means, with respect to any Person, any corporation,
----------
association or other business entity of which more than 50% of the total
voting power of shares of Equity Interests entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
managers or trustees or other governing body thereof is at the time owned
or controlled by such Person (regardless of whether such Equity Interests
are owned directly or through one or more other Subsidiaries of such Person
or a combination thereof).
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<PAGE>
"Surviving Person" means, with respect to any Person involved in or
----------------
that makes any Disposition, the Person formed by or surviving such
Disposition or the Person to which such Disposition is made.
"Treasury Rate" means (i) the rate borne by direct obligations of the
-------------
United States maturing on the eleventh anniversary of the date of
calculation of such rate and (ii) if there are no such obligations, the
rate determined by linear interpolation between the rates borne by the two
direct obligations of the United States maturing closest to, but
straddling, the eleventh anniversary of such calculation date, in each case
as published by the Board of Governors of the Federal Reserve System.
"Unrestricted Subsidiary" means any Subsidiary of the Corporation that
-----------------------
at the time of determination shall be an Unrestricted Subsidiary (as
designated by the Board of Directors of the Corporation, as provided below)
and (vi) any Subsidiary of an Unrestricted Subsidiary. The Board of
Directors of the Corporation may designate any Subsidiary of the
Corporation (including any newly acquired or newly formed Subsidiary) to be
an Unrestricted Subsidiary if all of the following conditions apply: (a)
neither the Corporation nor any of its Restricted Subsidiaries provides
credit support for any Indebtedness of such Subsidiary (including any
undertaking, agreement or instrument evidencing such Indebtedness), (b)
such Subsidiary is not liable, directly or indirectly, with respect to any
Indebtedness other than Unrestricted Subsidiary Indebtedness, (c) such
Unrestricted Subsidiary is not a party to any agreement, contract,
arrangement or understanding at such time with the Corporation or any
Restricted Subsidiary of the Corporation unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to
the Corporation or such Restricted Subsidiary than those that might be
obtained at the time from Persons who are not Affiliates of the Corporation
(the "Third Party Value") or, in the event such condition is not satisfied,
an amount equal to the value of the portion of such agreement, contract,
arrangement or understanding to such Subsidiary in excess of the Third
Party Value shall be deemed a Restricted Payment, and (d) such Unrestricted
Subsidiary does not own any Capital Stock of any Subsidiary of the
Corporation that has not theretofore been or is not simultaneously being
designated an Unrestricted Subsidiary. Any such designation by the Board of
Directors of the Corporation shall be evidenced by a board resolution
giving effect to such designation and an Officers' Certificate certifying
that such designation complies with the foregoing conditions. The Board of
Directors of the Corporation may designate any Unrestricted Subsidiary as a
Restricted Subsidiary; provided that (i) immediately after giving effect to
--------
such designation, the Corporation could incur $1.00 of additional
Indebtedness pursuant to the restrictions under Section 10(a) and (ii) all
Indebtedness of such Unrestricted Subsidiary shall be deemed to be incurred
on the date such Subsidiary is designated a Restricted Subsidiary (it being
understood that any such designation
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<PAGE>
of a Restricted Subsidiary as an Unrestricted Subsidiary shall be an
investment of the Corporation and subject to the restrictions contained in
Section 10(b) hereof).
"Unrestricted Subsidiary Indebtedness" of any Unrestricted Subsidiary
------------------------------------
means Indebtedness of such Unrestricted Subsidiary (i) as to which neither
the Corporation nor any Restricted Subsidiary is directly or indirectly
liable (by virtue of the Corporation or any such Restricted Subsidiary
being the primary obligor on, guarantor of, or otherwise liable in any
respect to, such Indebtedness) and (ii) which, upon the occurrence of a
default with respect thereto, does not result in, or permit any Holder of
any Indebtedness of the Corporation or any Restricted Subsidiary to
declare, a default on such Indebtedness of the Corporation or any
Restricted Subsidiary or cause the payment thereof to be accelerated or
payable prior to its stated maturity.
"Voting Rights Triggering Event" has the meaning assigned thereto in
------------------------------
Section 5.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary
----------------------------------
all of the outstanding Equity Interests (other than directors' qualifying
shares) of which are owned, directly or indirectly, by the Corporation or a
Surviving Person of any Disposition involving the Corporation, as the case
may be.
-32-
<PAGE>
IN WITNESS WHEREOF, the undersigned and the Company have caused
this Agreement to be duly executed as of the date first above written.
AMERICAN TOWER SYSTEMS CORPORATION
By:__________________________________
Name:
Title:
-33-
<PAGE>
EXHIBIT 3i.3
CERTIFICATE OF DESIGNATION OF
PREFERENCES AND RIGHTS OF
AMERICAN TOWER SYSTEMS CORPORATION
SERIES A REDEEMABLE PAY-IN-KIND PREFERRED STOCK
American Tower Systems Corporation, a Delaware corporation
(hereinafter called, the "Corporation"), pursuant to Section 151 of the General
Corporation Law of the State of Delaware, does hereby make this Certificate of
Designation and does hereby state and certify that pursuant to the authority
expressly vested in the Board of Directors of the Corporation by the Restated
Certificate of Incorporation of the Corporation (the "Restated Certificate"),
the Board of Directors of the Corporation duly adopted the following resolution:
RESOLVED, that pursuant to Article Four of the Restated Certificate
(which authorizes 20,000,000 shares of preferred stock, $.01 par value), the
Board of Directors of the Corporation hereby fixes the voting powers,
designations and preferences, and the relative, participating, optional and
other special rights, and the qualifications, limitations and restrictions
thereof, of the Series A Redeemable Pay-In-Kind Preferred Stock.
RESOLVED, that each share of the Series A Redeemable Pay-In-Kind
Preferred Stock shall rank equally in all respects and shall be subject to the
following provisions:
SECTION 1. Designation; Rank. This series of preferred stock shall
-----------------
be designated "Series A Redeemable Pay-In-Kind Preferred Stock", par value $.01
per share (the "PIK Preferred Stock"). The liquidation preference of the PIK
Preferred Stock shall initially be $1,000 per share, and is subject to increase
in accordance with Section 3(c) hereof (the "Liquidation Preference"). The PIK
Preferred Stock will rank, with respect to dividend rights and rights on
liquidation, winding-up and dissolution, senior to all classes of Common Stock
of the Corporation, and all other classes of capital stock or series of
preferred stock established, or to be established, by the Board of Directors of
the Corporation (or, to the extent permitted by the General Corporation Law of
the State of Delaware, the Executive Committee thereof (the "Board of
Directors")) (collectively "Junior Securities"); provided that the PIK Preferred
Stock shall rank on a parity with the Exchange Preferred Stock (as defined
herein), if and when issued.
SECTION 2. Authorized Number. The number of shares constituting the
-----------------
PIK Preferred Stock shall be 400,000 shares and the initial aggregate
Liquidation Preference of the PIK Preferred Stock shall be $400,000,000.
<PAGE>
SECTION 3. Dividends. (a) Holders of shares of the PIK Preferred
---------
Stock will be entitled to receive, when, as and if declared by the Board of
Directors out of funds of the Corporation legally available for payment, cash
dividends at the rates set forth below. Prior to June 4, 1999 (the "Interim
Financing Maturity Date"), dividends will accrue at a rate equal to Three Month
LIBOR then in effect, plus the Applicable Spread, multiplied by the then current
Liquidation Preference per share of the PIK Preferred Stock. The "Applicable
Spread" will initially be 500 basis points and will increase by 25 basis points
at the end of (i) the first 90 days following the Issue Date and (ii) each 45
day period thereafter until the Interim Financing Maturity Date, provided that
the dividend rate on the PIK Preferred Stock in effect at any time prior to the
Interim Financing Maturity Date will not exceed 18% per annum.
(b) After the Interim Financing Maturity Date, the PIK Preferred Stock
will accrue dividends, to the extent not exchanged by the Holders thereof or
otherwise redeemed by the Corporation, at a rate equal to the greater of (i) the
dividend rate payable on the Exchange Preferred Stock or (ii) the dividend rate
payable on the PIK Preferred Stock on the Interim Financing Maturity Date plus
2% per annum.
(c) Dividends will be payable quarterly in arrears on June 1,
September 1, December 1, and March 1 of each year, commencing September 1, 1998
(each, a "Dividend Payment Date"). If any dividend payable on any Dividend
Payment Date is not declared and paid in full in cash on such Dividend Payment
Date, the amount payable on such Dividend Payment Date that is not paid in cash
on such Dividend Payment Date shall, subject to the rights of the Exchange
Preferred Stock, be paid-in-kind and will be deemed paid in full and shall not
accumulate. Such in-kind dividends will be effected by a pro rata increase in
the Liquidation Preference of the outstanding PIK Preferred Stock equal to the
amount of dividends payable and not paid in cash on such Dividend Payment Date.
Each Holder of PIK Preferred Stock shall be entitled to receive, upon written
request to the Corporation, a copy of the Corporation's records with respect to
the Liquidation Preference of such Holder's PIK Preferred Stock. Each cash
dividend will be payable to Holders of record as they appear on the stock
transfer books of the Corporation on a record date, not more than sixty (60) nor
less than ten (10) days before the dividend payment date, fixed by the Board of
Directors. Dividends will be cumulative from the date of issuance of the
relevant PIK Preferred Stock.
(d) All payments shall be made without withholding or deduction for,
or on account of, any present or future taxes or duties except as required by
applicable law. If, after the Issue Date as a result of (a) any amendment to, or
change in, applicable law (or any regulations thereunder) or (b) any amendment
to or change in, an interpretation or application of such law or regulations,
any increased withholding or deduction is required to be made to the extent that
such deduction or withholding is not refundable or otherwise creditable against
any regular tax liability, additional amounts will be required to be paid as
will result in holders receiving such amounts as they would have received had no
such increased withholding or deduction been required.
-2-
<PAGE>
(e) Dividends payable on the PIK Preferred Stock for any period less
than a year shall be computed on the basis of a 360-day year of twelve 30-day
months and the actual number of days elapsed in the period for which payable.
The PIK Preferred Stock will not be entitled to any dividend, whether payable in
cash, property, stock or increase in Liquidation Preference, in excess of full
cumulative dividends. Dividends shall cease to accumulate in respect of the PIK
Preferred Stock on the date of their exchange or redemption unless the
Corporation shall have failed to issue the appropriate aggregate liquidation
preference of Exchange Preferred Stock in respect of the PIK Preferred Stock on
such date fixed for exchange ("Preferred Exchange Date") or shall have failed to
pay the relevant cash redemption price on the date fixed for redemption. No
interest, or sum of money in lieu of interest, will be payable in respect of any
accrued and unpaid dividends. Dividends on account of arrears and dividends in
connection with any optional redemption pursuant to Section 6(a) may be declared
and paid at any time, without reference to any regular Dividend Payment Date, to
Holders of record on such date, not more than forty-five (45) days prior to the
payment thereof, as may be fixed by the Board of Directors.
(f) No full dividends may be declared or paid or funds set apart for
the payment of dividends on any Exchange Preferred Stock for any period unless
full cumulative dividends shall have been paid (or are deemed paid) or, if
payable in cash, set apart for such payment on the PIK Preferred Stock. If full
dividends are not so paid, the PIK Preferred Stock shall share dividends pro
rata with the Exchange Preferred Stock, if any. No dividends may be paid or set
apart for such payment on any Junior Securities (except dividends on Junior
Securities in additional shares of Junior Securities) unless cash dividends are
paid on the PIK Preferred Stock for the Dividend Period during which such
dividends on any Junior Securities are paid or set apart and no Junior
Securities may be repurchased, redeemed or otherwise retired nor may funds be
set apart for payment with respect thereto, so long as any shares of PIK
Preferred Stock remain outstanding.
SECTION 4. Liquidation Rights. In the event of any voluntary or
------------------
involuntary liquidation, dissolution or winding up of the Corporation, before
any payment or distribution of assets is made on any Junior Securities,
including, without limitation, Common Stock of the Corporation, the Holders of
PIK Preferred Stock shall receive the Liquidation Preference (including any
Redemption Premium) per share and shall be entitled to receive, without
duplication, an amount equal to all accumulated and unpaid dividends through the
date of distribution, and the holders of any Exchange Preferred Stock shall be
entitled to receive an amount equal to the full respective liquidation
preferences (including any Redemption Premium) to which they are entitled and
shall receive an amount equal to all accumulated and unpaid dividends with
respect to their respective shares through and including the date of
distribution. If, upon such a voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the assets of the Corporation are insufficient
to pay in full the amounts described above as payable with respect to the
outstanding PIK Preferred Stock and any Exchange Preferred Stock outstanding,
the Holders of the outstanding PIK Preferred Stock and holders of any
-3-
<PAGE>
such Exchange Preferred Stock will share ratably in any such distribution of
assets of the Corporation first in proportion to their respective liquidation
preferences (including any premium) until such preferences are paid in full, and
then in proportion to their respective amounts of accumulated and unpaid
dividends. After payment of any such Liquidation Preference (including any
Redemption Premium) and accumulated and unpaid dividends, the shares of PIK
Preferred Stock will not be entitled to any further participation in any
distribution of assets by the Corporation. For all purposes of this Certificate
of Designation, accumulated dividends shall include a pro rated dividend for the
period from the last Dividend Payment Date to the date fixed for liquidation,
dissolution or winding up. Neither the sale or transfer of all or substantially
all the assets of the Corporation, nor the merger or consolidation of the
Corporation into or with any other corporation or other entity or a merger of
any other corporation or other entity with or into the Corporation, will be
deemed to be a liquidation, dissolution or winding up of the Corporation.
SECTION 5. Voting Rights. (a) In addition to such other vote, if
-------------
any, as may be required by Delaware law or provided by the resolution creating
any other series of preferred stock to the extent such resolution refers to the
PIK Preferred Stock, so long as any shares of PIK Preferred Stock are
outstanding, the vote or consent of the holders of a majority of the votes
represented by the PIK Preferred Stock, shall be necessary to (i) increase or
decrease the par value of the shares of PIK Preferred Stock, (ii) adversely
alter or adversely change the powers, preferences or other special rights of the
shares of PIK Preferred Stock, or (iii) issue Junior Securities, except for
Junior preferred stock in accordance with Section 9(a)(viii) or Common Stock.
The consent of all affected Holders of PIK Preferred Stock shall be required
with respect to (a) any change in redemption, exchange or voting rights or the
amount of or the method of calculating the Liquidation Preference or dividend
rate or (b) any extensions of the Interim Financing Maturity Date.
(b) Prior to the issuance of any Exchange Preferred Stock, the
Corporation shall not amend or modify the Corporation's Certificate of
Designation relating to the Exchange Preferred Stock (the "Exchange Certificate
of Designation"), without the affirmative vote or consent of Holders of at least
a majority of the votes represented by the outstanding shares of PIK Preferred
Stock; provided, however, that the Corporation shall be permitted, without any
-------- -------
vote or consent of such Holders, to effect any amendments to the Exchange
Certificate of Designation that could have been effected under the Exchange
Certificate of Designation without the consent of holders of Exchange Preferred
Stock if any Exchange Preferred Stock were then outstanding.
(c) The Corporation shall not amend the Senior Bank Facilities, in any
material respect, without the affirmative vote of the Holders of a majority of
the votes represented by the outstanding shares of PIK Preferred Stock and any
outstanding Exchange Preferred, voting together as a single class.
(d) Without the affirmative vote or consent of Holders of at least a
majority of the votes represented by the PIK Preferred Stock and any outstanding
-4-
<PAGE>
Exchange Preferred Stock, voting as a single class, the Corporation shall not
consolidate or merge with or into (whether or not the Corporation is the
Surviving Person), or sell, assign, transfer, lease, convey or otherwise dispose
of all or substantially all of its properties or assets in one or more related
transactions, to another Person, unless:
(i) the Surviving Person is a corporation organized or existing under the
laws of the United States, any state thereof or the District of Columbia;
(ii) the Surviving Person (if other than the Corporation) assumes all the
obligations of the Corporation under this Certificate of Designation and
the Exchange Certificate of Designation; and
(iii) at the time of and immediately after such Disposition, no Voting
Rights Triggering Event shall have occurred and be continuing.
(e) (i) In the event that (1) the Corporation fails to redeem shares
of PIK Preferred Stock in accordance with Section 6(b) or otherwise fails to
discharge any redemption obligation with respect to the PIK Preferred Stock
(other than redemption on the Interim Financing Maturity Date); (2) the
Corporation fails to make an Offer to Purchase (whether pursuant to the terms of
Section 7(e) or otherwise) following a Change of Control if such Offer to
Purchase is required by Section 7 hereof or fails to purchase shares of PIK
Preferred Stock from Holders who elect to have such shares purchased pursuant to
any Offer to Purchase; (3) the Corporation breaches or violates one of the
provisions set forth in any of Sections 9(a) through 9(c) (inclusive), 9(e)
through 9(i) (inclusive) or 10(a), 10(b) or 10(d) hereof and the breach or
violation continues for a period of 30 days or more after the Corporation
receives notice thereof specifying the default from the Holders of at least 25%
of the shares of PIK Preferred Stock then outstanding, (4) the Corporation
breaches or violates one of the provisions set forth in Section 5(c), 9(d) or
10(c); (5) the Corporation or any Restricted Subsidiary shall default or permit
a default or defaults under the Senior Bank Facilities which default remains
uncured for the lesser of (i) 30 days or (ii) the applicable grace period under
the Senior Bank Facilities or (6) the Corporation or any Restricted Subsidiary
of the Corporation fails to pay at the final stated maturity (giving effect to
any extensions thereof) the principal amount of any Indebtedness of the
Corporation or any Restricted Subsidiary of the Corporation, or the final stated
maturity of any such Indebtedness is accelerated, if, in any such case, the
aggregate principal amount of such Indebtedness, together with the aggregate
principal amount of any other such Indebtedness in default for failure to pay
principal at the final stated maturity (giving effect to any extensions thereof)
or that has been accelerated, aggregates $5,000,000 or more at one time, in each
case, after a 30-day period during which such default shall not have been cured
or such acceleration rescinded, then in the case of events described in any of
clauses (1)-(6) the maximum authorized number of directors of the Corporation
will be increased by two and Holders of PIK Preferred Stock shall be entitled to
vote their shares of PIK Preferred Stock, together with the holders of any
Exchange Preferred Stock to the extent such vote is
-5-
<PAGE>
provided under the terms of the Exchange Preferred Stock, in accordance with the
procedures set forth below, to elect, as a class, an additional two directors;
provided, however, that Holders of PIK Preferred Stock and such Exchange
Preferred Stock shall not elect as director any individual who if so elected
would cause the Corporation to be in violation of the Communications Act of
1934, as amended, or the rules and regulations of the FCC. Each such event
described in clauses (1), (2), (3), (4), (5) and (6) is a "Voting Rights
Triggering Event". So long as shares of PIK Preferred Stock shall be
outstanding, the Holders of PIK Preferred Stock shall retain the right to vote
and elect, with the holders of any Exchange Preferred Stock, voting together as
a single class without regard to series, such number of directors until such
time the failure, breach or default giving rise to such Voting Rights Triggering
Event is remedied or waived by the Holders of at least a majority of the shares
of PIK Preferred Stock then outstanding and entitled to vote thereon. Such
period is hereinafter referred to as a "Default Period".
(ii) So long as any shares of PIK Preferred Stock shall be
outstanding, during any Default Period, such voting right of the Holders of PIK
Preferred Stock may be exercised initially at a special meeting called pursuant
to paragraph (iii) below or at any annual meeting of stockholders. The absence
of a quorum of holders of Common Stock or any class thereof shall not affect the
exercise of such voting rights by the Holders of PIK Preferred Stock and holders
of any Exchange Preferred Stock.
(iii) Unless the Holders of PIK Preferred Stock and holders of any
Exchange Preferred Stock so entitled, if any are then outstanding, have, during
an existing Default Period, previously exercised their right to elect directors,
the Board of Directors may order, or any stockholder or stockholders owning
shares having in the aggregate not less than 5% of the votes represented by the
outstanding shares of PIK Preferred Stock and such Exchange Preferred Stock,
taken together as a single class, may request, the calling of a special meeting
of Holders of PIK Preferred Stock and such Exchange Preferred Stock, if any are
then outstanding, which meeting shall thereupon be called by the Chairman of the
Board, the President, a Vice President or the Secretary of the Corporation.
Notice of such meeting and of any annual meeting at which Holders of PIK
Preferred Stock and holders of such Exchange Preferred Stock are entitled to
vote pursuant to this paragraph shall be given to each Holder of record of PIK
Preferred Stock by mailing a copy of such notice to such Holder at such Holder's
last address as the same appears on the stock transfer books of the Corporation.
Such meeting shall be called for a time not later than twenty (20) days after
such order or request, or, in default of the calling of such meeting may be
called on similar notice by any stockholder or stockholders owning shares having
in the aggregate not less than 5% of the votes represented by the outstanding
shares of PIK Preferred Stock and such Exchange Preferred Stock, taken together
as a single class (who shall have, and to whom the Corporation shall provide,
access to the lists of stockholders to be called pursuant to the provisions
hereof). At any meeting held for the purpose of electing directors at which the
Holders of PIK Preferred Stock and holders of any Exchange Preferred Stock shall
have the right to elect directors as aforesaid, the presence in person or by
proxy of the holders
-6-
<PAGE>
owning shares having at least a majority of the votes of PIK Preferred Stock and
holders of such Exchange Preferred Stock shall be required to constitute a
quorum of such PIK Preferred Stock and such Exchange Preferred Stock.
Notwithstanding the provisions of this paragraph, no such special meeting shall
be called during the period within ninety (90) days immediately preceding the
date fixed for the next annual meeting of stockholders.
(iv) During any Default Period, the holders of Common Stock of
the Corporation, and other classes of stock of the Corporation, if applicable,
shall continue to be entitled to elect all of the directors unless and until the
Holders of PIK Preferred Stock and holders of Exchange Preferred Stock so
entitled shall have exercised their right to elect two directors voting as a
class, after the exercise of which right (x) the directors so elected by the
Holders of PIK Preferred Stock and such holders of Exchange Preferred Stock
shall continue in office until the earlier of (A) such time as their successors
shall have been elected by such holders or (B) the expiration of the Default
Period, and (y) any vacancy in the Board of Directors may be filled by vote of
the remaining director or directors, if any, theretofore elected by the holders
of the class or classes of stock which elected the director whose office shall
have become vacant. References in this paragraph to directors elected by the
holders of a particular class or classes of stock shall include directors
elected by such director or directors to fill vacancies as provided in clause
(y) of the foregoing sentence.
(v) Immediately upon the expiration of a Default Period, (x) the
right of the Holders of PIK Preferred Stock and holders of any Exchange
Preferred Stock to elect directors shall cease, (y) the term of office of any
directors elected by the Holders of PIK Preferred Stock and holders of any
Exchange Preferred Stock as a class shall terminate, and (z) the number of
directors shall be such number as may be provided for in the Restated
Certificate or bylaws of the Corporation irrespective of any increase made
pursuant to the provisions of paragraph (i) of this paragraph (e) (such number
being subject, however, to change thereafter in any manner provided by law or in
the Restated Certificate or bylaws of the Corporation).
(f) In any case in which the Holders of PIK Preferred Stock shall be
entitled to vote pursuant to this Certificate of Designation or pursuant to
Delaware law, each Holder of PIK Preferred Stock entitled to vote with respect
to such matter shall be entitled to one vote per $1,000 of the aggregate
Liquidation Preference of shares of PIK Preferred Stock held. In any case in
which the Holders of PIK Preferred Stock and the holders of Exchange Preferred
Stock shall be entitled to vote as a class pursuant to this Certificate of
Designation or Delaware law, each holder of PIK Preferred Stock and Exchange
Preferred Stock entitled to vote with respect to such matter shall be entitled
to one vote per $1,000 of the aggregate liquidation preference of PIK Preferred
Stock and Exchange Preferred Stock held by such holder. In connection with any
vote of the Holders of PIK Preferred Stock or the holders of PIK Preferred Stock
and Exchange Preferred Stock (voting as a single class), a majority of the votes
properly cast upon any
-7-
<PAGE>
question shall decide the question, except in any case where a larger vote is
required by the terms of this Certificate of Designation or Delaware law.
SECTION 6. Redemption. (a) At any time, the Corporation may, at its
----------
option, redeem all or from time to time any part of the shares of PIK Preferred
Stock, out of funds legally available therefor, in the manner provided for in
Section 6(c), at a price per share equal to the Redemption Price, provided that
no redemption pursuant to this Section 6(a) shall be authorized or made unless
prior thereto full accumulated and unpaid dividends, without duplication, are or
are deemed declared and paid in full, or declared and a sum in cash set apart
sufficient for such payment, on the PIK Preferred Stock for all Dividend Periods
terminating on or prior to the Redemption Date. Notwithstanding the foregoing,
the Corporation shall not effect a partial redemption pursuant to this
subsection to the extent that the initial aggregate Liquidation Preference
relating to the PIK Preferred Stock to be outstanding following such partial
redemption shall be less than $100,000,000.
In the event of a redemption pursuant to the preceding paragraph of
only a portion of the then outstanding shares of the PIK Preferred Stock, the
Corporation shall effect such redemption on a pro rata basis according to
Liquidation Preference held by each Holder of the PIK Preferred Stock.
(b) On the Interim Financing Maturity Date, the Corporation shall
redeem, to the extent of funds legally available therefor, in the manner
provided for in Section 6(c) hereof, all the shares of the PIK Preferred Stock
then outstanding at the Redemption Price then in effect. In addition, the
Corporation shall redeem, to the extent of funds legally available therefor, in
the manner provided for in Section 6(c) hereof, all of the shares of the PIK
Preferred Stock then outstanding at the Redemption Price with (a) 100% of the
Net Proceeds of the incurrence of Indebtedness (other than drawings under the
Senior Bank Facilities) of the Company and the Restricted Subsidiaries, (b) 100%
of the Net Proceeds of issuances of equity securities of the Corporation and the
Restricted Subsidiaries, (c) 100% of the Net Proceeds of all Asset Sales and (d)
100% of Excess Cash Flow, in each case to the extent such proceeds are not used
to repay Indebtedness incurred under the Senior Bank Facilities or, in the case
of Asset Sales, reinvested as permitted under Section 9(d) hereof or under the
Senior Bank Facilities, provided that the Corporation shall only be required to
redeem PIK Preferred Stock when and if the aggregate amount of funds available
for such mandatory redemption exceeds $5 million. In the event that any Exchange
Preferred Stock shall be outstanding when any mandatory redemption pursuant to
the preceding sentence is required, such redemption shall be made pro rata based
on Liquidation Preference (plus the Redemption Premium) among the PIK Preferred
Stock and the Liquidation Preference of the Exchange Preferred Stock (plus the
applicable redemption premium) as if such classes were one class of preferred
stock.
-8-
<PAGE>
(c) (Procedures for Redemption). (i) At least thirty (30) days and
not more than sixty (60) days prior to the date fixed for any redemption of the
PIK Preferred Stock, written notice (the "Redemption Notice") shall be given by
first class mail, postage prepaid, to each Holder of record on the record date
fixed for such redemption of the PIK Preferred Stock at such Holder's address as
it appears on the stock register of the Corporation, provided that no failure to
give such notice nor any deficiency thereon shall affect the validity of the
procedure for the redemption of any shares of PIK Preferred Stock to be redeemed
except as to the Holder or Holders to whom the Corporation has failed to give
said notice or except as to the Holder or Holders whose Notice was defective.
The Redemption Notice shall state:
(1) whether the redemption is pursuant to Section 6(a) or 6(b)
hereof;
(2) the Redemption Price;
(3) whether all or less than all the outstanding shares of the PIK
Preferred Stock are to be redeemed and the total amount in Liquidation
Preference of the PIK Preferred Stock being redeemed;
(4) the Redemption Date;
(5) that the Holder is to surrender to the Corporation, in the
manner, at the place or places and at the price designated, its
certificate or certificates representing the shares of PIK Preferred
Stock to be redeemed; and
(6) that dividends on the shares of the PIK Preferred Stock to be
redeemed shall cease to accumulate on such Redemption Date unless the
Corporation defaults in the payment of the Redemption Price.
(ii) Each Holder of PIK Preferred Stock to be redeemed shall
surrender the certificate or certificates representing such shares of PIK
Preferred Stock to the Corporation, duly endorsed (or otherwise in proper form
for transfer, as determined by the Corporation), in the manner and at the place
designated in the Redemption Notice, and on the Redemption Date the full
Redemption Price for such shares shall be payable in cash to the Person whose
name appears on such certificate or certificates as the owner thereof, and each
surrendered certificate shall be canceled and retired. In the event that less
than all of the shares represented by any such certificate are redeemed, a new
certificate shall be issued, without service charges representing the unredeemed
shares.
(iii) In the event that a Mandatory Redemption is required to
be made pursuant to the provisions of this Certificate of Designation and the
provisions of the Exchange Certificate of Designation at the same time and
shares of both shall be outstanding, the foregoing procedures shall be applied
equally to the PIK Preferred Stock
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<PAGE>
and the Exchange Preferred Stock as if the PIK Preferred Stock and the Exchange
Preferred Stock were a single class of stock.
(iv) On and after the Redemption Date, unless the Corporation
defaults in the payment in full of the Redemption Price, dividends on the PIK
Preferred Stock called for redemption shall cease to accumulate on the
Redemption Date, and all rights of the Holders of redeemed shares shall
terminate with respect thereto on the Redemption Date, other than the right to
receive the Redemption Price, without interest; provided, however, that if a
notice of redemption shall have been given as provided in paragraph (c)(i) above
and the funds necessary for redemption (including an amount in respect of all
dividends that will accrue to the Redemption Date) shall have been irrevocably
deposited in trust for the equal and ratable benefit for the Holders of the
shares to be redeemed, then, at the close of business on the day on which such
funds are segregated and set aside, the Holders of the shares to be redeemed
shall cease to be stockholders of the Corporation and shall be entitled only to
receive the Redemption Price, without interest.
SECTION 7. Change of Control. (a) The Corporation will commence an
-----------------
Offer to Purchase (as defined in paragraph (b)) all of the outstanding shares of
PIK Preferred Stock within fifteen (15) days after the occurrence of a Change of
Control (as defined in paragraph (f)(i)) below.
(b) "Offer to Purchase" means a written offer ("Offer") to each
Holder at such Holder's address appearing in the stock books of the Corporation
on the date of the Offer to Purchase, offering to purchase in cash all
outstanding shares of PIK Preferred Stock at a purchase price equal to the
Redemption Price of the PIK Preferred Stock. Unless otherwise required by
Applicable Law, the Offer shall specify an expiration date ("Expiration Date")
of the Offer to Purchase which shall be, subject to any contrary requirements of
Applicable Law, not less than thirty (30) days or more than sixty (60) days
after the date of such Offer and a settlement date ("Purchase Date") for
purchase of PIK Preferred Stock within five Business Days after the Expiration
Date. The Offer shall be sent by first class mail, postage prepaid, by the
Corporation. The Offer shall contain information concerning the business of the
Corporation and its Subsidiaries which the Corporation in good faith believes
will enable such Holders to make an informed decision with respect to the Offer
to Purchase (which at a minimum will include (i) the most recent annual and
quarterly financial statements and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contained in the documents
required to be furnished to Holders pursuant to Section 9(h) (Provision of
Financial Information) (which requirements may be satisfied by delivery of such
documents together with the Offer), (ii) a description of material developments
in the Corporation's business subsequent to the date of the latest of such
financial statements referred to in clause (i) (including a description of the
events requiring the Corporation to make the Offer to Purchase), (iii) if
applicable, appropriate pro forma financial information concerning the Offer to
Purchase and the events requiring
-10-
<PAGE>
the Corporation to make the Offer to Purchase and (iv) any other
information required by Applicable Law to be included therein). The Offer shall
contain all instructions and materials necessary to enable such Holders to
tender PIK Preferred Stock pursuant to the Offer to Purchase. The Offer shall
also state:
(1) the Expiration Date and the Purchase Date;
(2) the aggregate liquidation preference of the outstanding shares of
PIK Preferred Stock (and Exchange Preferred Stock, if any) offered to be
purchased by the Corporation (the "Purchase Amount") pursuant to the Offer
to Purchase;
(3) the Liquidation Preference per share of the PIK Preferred Stock
and the Redemption Price to be paid by the Corporation for each share
accepted for payment;
(4) that the Holder may tender all or any portion of the shares of PIK
Preferred Stock registered in the name of such Holder and that any portion
of PIK Preferred Stock tendered must be tendered in whole shares;
(5) the place or places where shares of PIK Preferred Stock are to be
surrendered for tender pursuant to the Offer to Purchase;
(6) that dividends on any shares of PIK Preferred Stock not tendered
or tendered but not purchased by the Corporation pursuant to the Offer to
Purchase will continue to accumulate;
(7) that on the Purchase Date the Redemption Price will become due and
payable upon each share of PIK Preferred Stock being accepted for payment
pursuant to the Offer to Purchase and that dividends thereon shall cease to
accrue on and after the Purchase Date;
(8) that each Holder electing to tender a share of PIK Preferred
Stock pursuant to the Offer to Purchase will be required to surrender such
share at the place or places specified in the Offer prior to the close of
business on the Expiration Date (such share being, if the Corporation so
requires, duly endorsed by, or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Corporation duly executed
by, the Holder thereof or his attorney duly authorized in writing);
(9) that Holders will be entitled to withdraw all or any portion of
PIK Preferred Stock tendered if the Corporation receives, not later than
the close of business on the Expiration Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the number of
shares of PIK Preferred Stock that the Holder tendered, the certificate
number representing the shares of PIK
-11-
<PAGE>
Preferred Stock that the Holder tendered and a statement that such Holder
is withdrawing all or a portion of its tender;
(10) that the Corporation shall purchase all shares of PIK Preferred
Stock duly tendered and not withdrawn pursuant to the Offer to Purchase;
and
(11) that in the case of any Holder whose shares of PIK Preferred
Stock are purchased only in part, the Corporation will issue to the Holder
of such shares without service charge a new certificate representing the
unpurchased shares of PIK Preferred Stock.
Any Offer to Purchase shall be governed by and effected in accordance with the
Offer for such Offer to Purchase.
(c) The Corporation will comply with any securities laws and regulations,
to the extent such laws and regulations are applicable to the repurchase of the
PIK Preferred Stock in connection with an Offer to Purchase.
(d) On the Purchase Date the Corporation shall (1) accept for payment the
shares of PIK Preferred Stock validly tendered and not withdrawn pursuant to the
Offer to Purchase, (2) pay to the Holders of shares so accepted the Redemption
Price therefor in cash and (3) cancel and retire each surrendered certificate.
Unless the Corporation defaults in the payment for the shares of PIK Preferred
Stock tendered pursuant to the Offer to Purchase, dividends will cease to accrue
with respect to the shares of PIK Preferred Stock tendered and all rights of
Holders of such tendered shares will terminate, except for the right to receive
payment therefor, on the Purchase Date.
(e) If the purchase of the PIK Preferred Stock would violate or constitute
a default under any Indebtedness of the Corporation, then, notwithstanding
anything to the contrary contained above, prior to complying with the foregoing
provisions, but in any event within thirty (30) days following the Change of
Control, the Corporation shall use its best efforts to, as promptly as
practicable, either (1) repay in full all such Indebtedness and terminate all
commitments outstanding under any relevant credit agreements or (2) obtain the
requisite consents, if any, under such Indebtedness required to permit the
repurchase of PIK Preferred Stock required by this Section 7. Until the
requirements of the immediately preceding sentence are satisfied, the
Corporation shall not make, and shall not be obligated to make, any Offer to
Purchase; provided that the Corporation's failure to comply with the provisions
of this Subparagraph (e) shall constitute a Voting Rights Triggering Event.
(f) (i) A "Change of Control" means the occurrence of any of the following:
-12-
<PAGE>
(a) the sale, lease or transfer, in one or a series of related
-
transactions, of all or substantially all of the Corporation's assets to
any Person or group (as such term is used in Section 13(d)(3) of the
Exchange Act) (other than the Principal Shareholders or their Related
Parties),
(b) the adoption of a plan relating to the liquidation or dissolution of
-
the Corporation,
(c) the acquisition, directly or indirectly, by any Person or group (as
-
such term is used in Section 13(d)(3) of the Exchange Act) (other than one
or more of the Principal Shareholders and their Related Parties) of 40% or
more of the voting power of the voting stock of the Corporation by way of
merger or consolidation or otherwise, provided that such acquisition will
not constitute a "Change of Control" unless or until such Person or group
owns, directly or indirectly, more of the voting power of the voting stock
of the Corporation than the Principal Shareholders and their Related
Parties, or
(d) the Continuing Directors cease for any reason to constitute a majority
-
of the directors of the Corporation then in office.
For purposes of this definition, any transfer of an Equity Interest of an entity
that was formed for the purpose of acquiring voting stock of the Corporation
shall be deemed to be a transfer of such portion of such voting stock as
corresponds to the portion of the equity of such entity that has been so
transferred.
(ii) "Continuing Director" means any member of the Board of Directors
who (i) is a member of that Board of Directors on the Issue Date or (ii) was
nominated for election by either (a) one or more of the Principal Shareholders
(or a Related Party thereof) or (b) the Board of Directors a majority of whom
were directors at the Issue Date or whose election or nomination for election
was previously approved by one or more of the Principal Shareholders or such
directors.
(iii) "Immediate Family Member" means, with respect to any individual,
such individual's spouse (past or current), descendants (natural or adoptive, of
the whole or half blood) of the parents of such individual, such individual's
grandparents and parents (natural or adoptive), and the grandparents, parents
and descendants of parents (natural or adoptive, of the whole or half blood) of
such individual's spouse (past or current).
(iv) "Principal Shareholders" means Steven B. Dodge and Thomas H.
Stoner.
-13-
<PAGE>
(v) "Related Party" with respect to any Principal Shareholder means
(i) any 80% (or more) owned Subsidiary or Immediate Family Member (in the case
of an individual) of such Principal Shareholder or (ii) any Person, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding an
80% or more controlling interest of which consist of such Principal Shareholder
or an Immediate Family Member, or (iii) any Person employed by the Corporation
in a management capacity as of the Issue Date.
SECTION 8. Exchange Provisions. (a) Shares of PIK Preferred Stock
-------------------
will be exchangeable, at the option of each Holder of PIK Preferred Stock, in
whole or in part, on the Interim Financing Maturity Date and from time to time
thereafter, for shares of Exchange Preferred Stock at the rate of $1.00
Liquidation Preference of Exchange Preferred Stock for each $1.00 of the sum of
Liquidation Preference plus the Redemption Premium of PIK Preferred Stock at the
time of any exchange (or as described below, into Exchange Debentures at the
rate of $1.00 principal amount of Exchange Debentures for each $1.00 of the sum
of Liquidation Preference plus the Redemption Premium of PIK Preferred Stock at
the time of any exchange), provided that the Corporation shall have the right,
at its option, to pay cash in an amount equal to the principal amount of that
portion of any Exchange Preferred Stock (or Exchange Debentures) that is not an
integral multiple of $1,000 instead of delivering a share of Exchange Preferred
Stock (or Exchange Debentures) in a denomination of less than $1,000. Accrued
dividends on the date of the exchange of the PIK Preferred Stock into the
Exchange Preferred Stock shall be paid in accordance with the terms of the
Exchange Preferred Stock.
(b) To exchange shares of PIK Preferred Stock for shares of Exchange
Preferred Stock, Holders shall present certificates together with an executed
stock power in favor of the Corporation representing the PIK Preferred Stock to
be exchanged to Harris Trust and Savings Bank (the "Escrow Agent") (at any time
following the Interim Financing Maturity Date except to the extent that transfer
of such PIK Preferred Stock would be limited as a result of the impending
redemption thereof) and the amount of Liquidation Preference to be exchanged to
the Escrow Agent who shall promptly exchange such PIK Preferred Stock for
Exchange Preferred Stock at the rate set forth in subparagraph (a) above.
Dividends on the PIK Preferred Stock shall cease to accrue upon the delivery in
exchange therefor of Exchange Preferred Stock as provided in this Section 8.
In the event that the Corporation exchanges Exchange Debentures for
shares of Exchange Preferred Stock while any shares of PIK Preferred Stock
remain outstanding, the Corporation shall immediately deposit with the Escrow
Agent Exchange Debentures in an aggregate principal amount equal to the
liquidation preference (plus the redemption premium) of the remaining Exchange
Preferred Shares held in escrow by the Escrow Agent. Such Debentures shall be
held by the Escrow Agent in escrow for exchange by holders of PIK Preferred
Stock as if such Debentures were Exchange
-14-
<PAGE>
Preferred Stock and the provisions of this Certificate of Designation will apply
with respect thereto mutatis mutandis.
SECTION 9. Certain Additional Negative Obligations of the Corporation
----------------------------------------------------------
(a) (Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock.)
The Corporation will not, and will not permit any of its Restricted Subsidiaries
to, incur any Indebtedness (including Indebtedness acquired through acquisition)
or issue any preferred stock; provided however that the Corporation or one or
more Restricted Subsidiaries may incur any of the following:
(i) the Exchange Preferred Stock or any in-kind dividends on the PIK
Preferred Stock or the Exchange Preferred Stock;
(ii) Senior Bank Debt pursuant to the Senior Bank Facilities;
(iii) Existing Indebtedness;
(iv) Indebtedness represented by guarantees by the Corporation or its
Subsidiaries of (A) Senior Bank Debt and (B) any other Indebtedness of the
Corporation or any Subsidiary permitted to be incurred under this
Certificate of Designation;
(v) Refinancing Indebtedness, provided that the principal amount of such
Refinancing Indebtedness shall not exceed the principal amount of
Indebtedness so extended, refinanced, renewed, replaced, substituted,
defeased or refunded (plus the amount of expenses incurred and premiums
paid in connection therewith);
(vi) intercompany Indebtedness between the Corporation and any of its
Restricted Subsidiaries or among its Restricted Subsidiaries, or Equity
Interests issued by a Restricted Subsidiary in conformity with subparagraph
(c);
(vii) Hedging Obligations, including interest rate swap obligations, that
are incurred in the ordinary course of business for the purpose of fixing
or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Certificate of
Designation to be outstanding;
(viii) Junior preferred stock consisting of Junior Securities the Net
Proceeds of the issuance of which is used solely to redeem PIK Preferred
Stock or Exchange Preferred Stock to the extent outstanding;
-15-
<PAGE>
(ix) accounts payable, accrued expenses (including, without limitation,
taxes) and customer advance payments incurred in the ordinary course of
business;
(x) Indebtedness secured by Permitted Liens;
(xi) Indebtedness incurred in connection with an acquisition otherwise
permitted hereunder; provided, however, that (i) such Indebtedness (A) is
-------- -------
owed to the seller thereof, (B) is unsecured, (C) has no scheduled payment
of principal prior to the Interim Financing Maturity Date and (D) when
added to all other Indebtedness outstanding under this Section 9(a)(xi)
does not exceed $25,000,000, and (ii) at the time of incurrence of such
Indebtedness (and after giving effect thereto), no Voting Rights Triggering
Event shall have occurred and been continuing;
(xii) Indebtedness incurred by any Unrestricted Subsidiary; provided,
--------
however, that such Indebtedness is non-recourse to the Corporation or any
-------
Restricted Subsidiary and no Lien is placed on the equity interests of the
Corporation or any Restricted Subsidiary in such Unrestricted Subsidiary;
and
(x) Capital Lease Obligations not to exceed in the aggregate at any one
time outstanding $5,000,000.
(b) (Limitation on Restricted Payments). The Corporation will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly:
(i) declare or pay any dividend, or make any other distribution or
payment, on any Equity Interests (except the PIK Preferred Stock and the
Exchange Preferred Stock) of the Corporation or of any Restricted
Subsidiary (other than dividends or distributions payable by the
Corporation in its Common Stock of the Corporation or dividends or
distributions payable to the Corporation or any Restricted Subsidiary);
(ii) purchase, redeem or otherwise acquire or retire for value any Equity
Interests of the Corporation, any Restricted Subsidiary or other Affiliate
of the Corporation (other than (a) any Equity Interests owned by the
Corporation or any Restricted Subsidiary and (b) the PIK Preferred Stock or
the Exchange Preferred Stock so long as any such redemption is made on a
pro rata basis); or
(iii) make an Investment other than (a) a Permitted Investment or (b)
Investments of the Corporation or any Restricted Subsidiary in the
Corporation or any Restricted Subsidiary.
-16-
<PAGE>
(c) (Limitation on Issuance and Sale of Restricted Subsidiary Equity
Interests). The Corporation will not permit any Restricted Subsidiary to issue
any Equity Interests, except for (i) Equity Interests issued to and held by the
Corporation or a Restricted Subsidiary, and (ii) Equity Interests issued by a
Person prior to the time that (A) such Person becomes a Restricted Subsidiary
hereunder, (B) such Person merges with or into a Restricted Subsidiary or (C) a
Restricted Subsidiary merges with or into such Person; provided that such Equity
Interests were not issued or incurred by such Person in anticipation of the type
of transaction contemplated by subclause (A), (B) or (C).
(d) (Disposition of Assets). The Corporation will not, and shall not
permit any of its Restricted Subsidiaries to, at any time sell, lease, abandon,
or otherwise dispose of any assets, including by way of sale-and-leaseback
(other than assets disposed of in the ordinary course of business) whether in a
single transaction or a series of related transactions, to any Person (other
than an issuance, sale, lease, conveyance or disposal by a Restricted Subsidiary
to the Corporation or one of its Wholly Owned Restricted Subsidiaries) for Net
Proceeds in excess of $5,000,000 (each of the foregoing, an "Asset Sale"),
unless:
(i) the Corporation or such Subsidiary, as the case may be, receives
consideration that at the time of entering into a binding agreement
with respect to such Asset Sale, is at least equal to the Fair Market
Value of the assets sold or otherwise disposed of; and
(ii) at least 85% of such consideration is in the form of cash which
cash is either invested in additional communications sites or used to
repay Indebtedness incurred under the Senior Bank Facilities within
360 days of such Disposition or to redeem the PIK Preferred Stock
(and, if applicable, the Exchange Preferred Stock on a pro rata
basis).
(e) (Limitation on Guarantees). The Corporation shall not, and shall
not permit any of its Restricted Subsidiaries to, at any time guaranty, assume,
be obligated with respect to, or permit to be outstanding any guaranty of, any
obligation of any other Person other than (a) a guaranty by endorsement of
negotiable instruments for collection in the ordinary course of business, or (b)
obligations under agreements of the Corporation or any of its Restricted
Subsidiaries entered into in connection with acquisitions permitted under the
Senior Bank Facilities, leases of real property by the Corporation or any of its
Restricted Subsidiaries or the acquisition or furnishing of services, supplies,
and equipment in the ordinary course of business of the Corporation or any of
its Restricted Subsidiaries, or (c) guaranties of Indebtedness incurred as
permitted pursuant to Section 9(a) hereof, or (d) as may be contained in the
Senior Bank Facilities including, without limitation, any Subsidiary guaranty.
(f) (Affiliate Transactions). Except as specifically provided herein
(including, without limitation, Section 9(d) hereof) and as may be described on
Schedule
-17-
<PAGE>
A to the Securities Purchase Agreement as of the date of execution thereof, the
Corporation shall not, and shall not permit any of its Restricted Subsidiaries
to, at any time engage in any transaction with an Affiliate, or make an
assignment or other transfer of any of its properties or assets to any
Affiliate, on terms less advantageous to the Corporation or such Restricted
Subsidiary than would be the case if such transaction had been effected with a
non-Affiliate.
(g) (Maintenance of Escrow Agreement). The Corporation shall not
amend or allow to lapse, through the nonpayment of fees or for any other reason
until each share of PIK Preferred Stock is either redeemed or exchanged pursuant
hereto under the Escrow Agreement. In the event that the Escrow Agent is
unwilling or unable to continue to serve as Escrow Agent, the Company shall
obtain a replacement Escrow Agent (such Escrow Agent to be a commercial bank or
trust company with capital and surplus of in excess of $500,000,000) whose
responsibilities and powers shall be substantially identical to those provided
under the Escrow Agreement.
(h) (Provision of Financial Information). Whether or not required by
the rules and regulations of the SEC, so long as any shares of PIK Preferred
Stock are outstanding, the Corporation will furnish to the Holders of PIK
Preferred Stock:
(i) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q and 10-K if the
Corporation were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and, with respect to the annual information only, a report thereon by the
Corporation's independent certified public accountants, and
(ii) all reports that would be required to be filed with the SEC on Form
8-K if the Corporation were required to file such reports.
In addition, whether or not required by the rules and regulations of the SEC,
the Corporation will file a copy of all such information with the SEC for public
availability (unless the SEC will not accept such filing) and make such
information available to investors who request it in writing.
(i) (Consent Fees) The Corporation shall not pay fees for consents to
any waiver or amendment of or to the terms of this Certificate of Designation
without making an offer to all Holders of the PIK Preferred Stock in an equal
amount for such consent or waiver.
SECTION 10. Certain Additional Affirmative Obligations of the
-------------------------------------------------
Corporation. (a) (Permanent Securities) The Corporation shall file (if not
- -----------
already filed) a registration statement under the Securities Act (or, to the
extent applicable, prepare an offering circular) covering its Class A Common
Stock, a series of preferred stock or debt
-18-
<PAGE>
securities (but, in the case of a partial redemption of the PIK Preferred Stock,
only if such preferred stock or debt securities are permitted by the terms
hereof) or a combination thereof (the "Permanent Securities") to be issued in a
public offering or private placement to refinance in full the PIK Preferred
Stock (the "Refinancing") and to use its best efforts to have such registration
statement (if any) declared effective, and to consummate such Refinancing as
soon as possible after the Issue Date in an amount sufficient to refinance all
outstanding PIK Preferred Stock and on such terms and conditions as CSFBC may in
its judgment determine to be appropriate in light of prevailing circumstances
and market conditions and the financial condition and prospects of the
Corporation and, in the case of a partial redemption of the PIK Preferred Stock,
are permitted by the terms of this Certificate of Designation. If any Permanent
Securities are issued in a transaction not registered under the Securities Act
to effect the Refinancing, all such Permanent Securities shall be entitled to
the benefit of a registration rights agreement in customary form to be entered
into by the Corporation.
(b) (Use of Proceeds). The proceeds of the offering of the PIK
Preferred Stock shall be used solely (i) to finance the Corporation's
obligations referred to in the merger agreement between ARS and CBS Corporation
to be responsible for any tax liability arising from the separation of the
Corporation from ARS (the "Tower Separation") and (ii) to pay fees and expenses
related to the issuance of the PIK Preferred Securities .
(c) (Maintenance of Corporate Existence and Rights). Except as
permitted under Section 5(d) hereof, the Corporation will, and will cause each
of its Restricted Subsidiaries to:
(i) preserve and maintain its existence and its material rights,
franchises, licenses and privileges in the state of its incorporation,
including, without limiting the foregoing, all Licenses and Necessary
Authorizations, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect; and
(ii) qualify and remain qualified and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization, except for such
failure to so qualify and be so authorized as could reasonably be expected
to have a Material Adverse Effect.
(d) (Operations; Compliance with Law). The Corporation will, and will
cause each of its Restricted Subsidiaries to, (i) engage in the business of
owning, constructing, managing, operating and investing in communications tower
facilities and related businesses (including, without limitation, site
acquisition and video, voice and data transmission businesses) and not engage in
any unrelated activities, and (ii) comply in all material respects with the
requirements of all Applicable Law.
-19-
<PAGE>
(e) (Breach of Covenants). The Corporation shall promptly notify in
writing each Holder as provided in Section 12 hereof of any breach of the
provisions set forth in Section 5, 9 or 10 hereof.
SECTION 11. Status of Reacquired Shares. If shares of the PIK
---------------------------
Preferred Stock are redeemed pursuant to Section 6 or Section 7 hereof or
exchanged pursuant to Section 8 hereof, the shares so redeemed or exchanged
shall, upon compliance with any statutory requirements, assume the status of
authorized but unissued shares of preferred stock of the Corporation.
SECTION 12. Notices. All notices, requests, demands and other
-------
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered by hand or by first class mail, postage prepaid, or when
sent by telex or telecopier (with receipt confirmed), provided a copy is also
sent by first class mail, postage prepaid, or express (overnight, if possible)
courier, addressed (i) in the case of a Holder of the PIK Preferred Stock, to
such Holder's address of record, (ii) in the case of the Corporation, to the
Corporation's principal executive offices to the attention of the Corporation's
Chief Executive Officer and Chief Financial Officer and (iii) in the case of the
Escrow Agent, Harris Trust and Savings Bank, 311 West Monroe Street, Chicago,
Illinois 60606, Attention: Sue Shadel/Shareholder Services.
SECTION 13. Amendments and Waivers. Except as otherwise set forth
----------------------
herein and subject to Section 5, any right, preference, privilege or power of,
or restriction provided for the benefit of, the PIK Preferred Stock set forth
herein may be amended and the observance thereof may be waived (either generally
or in a particular instance and either retroactively or prospectively) with the
written consent of the Corporation and the vote or consent of the Holders of a
majority of the shares of PIK Preferred Stock then outstanding, and any
amendment or waiver so effected shall be binding upon the Corporation and all
Holders of the PIK Preferred Stock.
SECTION 14. Definitions. As used in this Certificate of Designation,
-----------
the following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"Acquisition" shall mean (whether by purchase, lease, exchange,
-----------
issuance of stock or other equity or debt securities, merger,
reorganization or any other method) (i) any acquisition by the Corporation
or any Restricted Subsidiary of any other Person, which Person shall then
become consolidated with the Corporation or any such Restricted Subsidiary
in accordance with GAAP; (ii) any acquisition by the Corporation or any
Restricted Subsidiary of all or any substantial part of the assets of any
other Person; or (iii) any acquisition by the Corporation or any Restricted
Subsidiary of any communications tower facilities, communications tower
management businesses or related contracts, other than
-20-
<PAGE>
any such Acquisition which shall be made by, or of, any Person which shall
have been designated and, to the extent required hereby, approved as an
Unrestricted Subsidiary.
"Affiliate" means, with respect to any specified Person, any
---------
other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person. For purposes
of this definition, "control of" (including, with correlative meanings, the
terms "controlling," "controlled by" and "under common control with") any
Person means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or
otherwise; provided that beneficial ownership of 10% or more of the voting
securities of a Person shall be deemed to be control.
"Applicable Law" shall mean, in respect of any Person, all
--------------
provisions of constitutions, statutes, rules, regulations and orders of
governmental bodies or regulatory agencies applicable to such Person,
including, without limiting the foregoing, the Licenses, the Communications
Act, zoning ordinances and all environmental laws, and all orders,
decisions, judgments and decrees of all courts and arbitrators in
proceedings or actions to which the Person in question is a party or by
which it is bound.
"Applicable Spread" has the meaning set forth in Section 3(a).
-----------------
"ARS" means American Radio Systems Corporation, a Delaware
---
corporation.
"Asset Sale" has the meaning set forth in Section 9(d).
----------
"ARS-ATS Separation Agreement" means the Agreement among CBS
----------------------------
Corporation, ARS and the Corporation entered into in connection with the
merger of a wholly-owned subsidiary of CBS Corporation with and into ARS.
"Board of Directors" has the meaning set forth in Section 1.
------------------
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
------------
and Friday which is not a day on which banking institutions in The City of
New York are authorized or obligated by law or executive order to close.
"Capital Expenditure" shall mean, for any period, expenditures
-------------------
(including the aggregate amount of Capital Lease Obligations required to be
paid during such period) incurred by any Person to acquire or construct
fixed assets, plant and equipment (including, without limitation, renewals,
improvements and replacements, but excluding repairs and maintenance)
during such period, which
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<PAGE>
would be required to be capitalized on the balance sheet of such Person in
accordance with GAAP.
"Capital Lease Obligation" means, at any time any determination
------------------------
thereof is to be made, the amount of the liability in respect of a capital
lease that would at such time be required to be capitalized on the balance
sheet in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, capital
-------------
stock, (ii) in the case of any association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) or capital stock and (iii) in the case of a partnership,
partnership interests (whether general or limited) and any other interest
or participation that confers on a Person the right to receive a share of
the profits and losses of, or distributions of assets of, such partnership.
"Cash Equivalents" means (i) United States dollars, (ii)
----------------
securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof having
maturities of less than one year from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of
less than one year from the date of acquisition, bankers' acceptances with
maturities of less than one year and overnight bank deposits, in each case
with any lender party to any of the Senior Bank Facilities or with any
domestic commercial bank having capital and surplus in excess of
$100,000,000 and a rating of "A" or better by Moody's Investors Service,
Inc. or Standard & Poor's Ratings Group, a division of McGraw Hill, Inc.,
(iv) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (ii) and (iii)
entered into with any financial institution meeting the qualifications
specified in clause (iii) above and (v) commercial paper having the highest
rating obtainable from Moody's Investors Service, Inc. or Standard & Poor's
Ratings Services, a division of the McGraw-Hill Companies, Inc., and in
each case maturing within nine months after the date of acquisition.
"Change of Control" has the meaning assigned thereto in Section
-----------------
7(f)(i).
"Communications Act" means the Communications Act of 1934, and
------------------
any similar successor federal statute, and the rules and regulations of the
FCC thereunder, all as the same may be in effect from time to time.
"Continuing Director" has the meaning assigned thereto in Section
-------------------
7(d)(ii).
"CSFBC" means Credit Suisse First Boston Corporation.
-----
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<PAGE>
"Default Period" means has the meaning assigned thereto in
--------------
Section 5(e)(i).
"Disposition" means, with respect to any Person, any merger,
-----------
consolidation or other business combination involving such Person (whether
or not such Person is the Surviving Person) or the sale, assignment,
transfer, lease conveyance or other disposition of all or substantially all
of such Person's assets.
"Dividend Payment Date" has the meaning assigned thereto in
---------------------
Section 3(c).
"Dividend Period" means the period from the Issue Date to and
---------------
including the first Dividend Payment Date and thereafter each quarterly
period commencing on each June 1, September 1, December 1, and March 1 and
ending on the next succeeding Dividend Payment Date.
"Equity Interests" means Capital Stock and all warrants, options
----------------
or other rights to acquire Capital Stock (including any Indebtedness or
Disqualified Stock that is convertible into, or exchangeable for, Capital
Stock).
"Excess Cash Flow" shall mean, as of the end of any fiscal year
----------------
of the Corporation based on the audited financial statements provided under
Section 9(h) hereof for such fiscal year, the excess, if any, of (a)
Operating Cash Flow for such fiscal year, minus (b) the sum of the
following: (i) payments made with respect to Capital Expenditures (other
than Capital Expenditures funded out of the Net Proceeds of any Asset Sale)
incurred by the Corporation and its Restricted Subsidiaries during such
fiscal year; (ii) repayments of Indebtedness under the Senior Bank
Facilities as a result of reductions in the commitments thereunder; (iii)
cash taxes paid by the Corporation and its Restricted Subsidiaries
(including any paid to CBS Corporation pursuant to the tax indemnity
provisions of the ARS-ATS Separation Agreement or otherwise permitted by
clause (i) of Section 10(b)) during such fiscal year; (iv) Interest Expense
during such fiscal year; and (v) principal payments made in respect of
Indebtedness for Money Borrowed (other than with respect to loans pursuant
to the Senior Bank Facilities or the Intracoastal Note) paid by the
Corporation and its Restricted Subsidiaries during such fiscal year.
"Exchange Act" means the Securities Exchange Act of 1934 as it
------------
may be amended and any successor act thereto.
"Exchange Preferred Stock" means the Corporation's series of
------------------------
Preferred Stock designated Exchange Pay-In-Kind Preferred Stock, par value
$.01 per share, and, except for Section 8 hereof, also includes one other
series of the Corporation's preferred stock that (i) has identical terms to
the Exchange Preferred
-23-
<PAGE>
Stock in all material respects except as permitted by the Registration
Rights Agreement referred to in the certificate of designation for the
Exchange Preferred Stock and (ii) has been issued in exchange for PIK
Preferred Stock in an exchange offer as contemplated by such Registration
Rights Agreement.
"Existing Indebtedness" means any outstanding Indebtedness of the
---------------------
Corporation and its Restricted Subsidiaries as of the Issue Date and the
amount and the maturity of which is set forth on Schedule B to the
Securities Purchase Agreement as of the date hereof.
"Existing Investments" means any Investments of the Corporation
--------------------
and its Restricted Subsidiaries (including Investments in Unrestricted
Subsidiaries) as of the Issue Date or which thereafter becomes an
Investment of the Corporation or any of its Restricted Subsidiaries or its
Subsidiaries as a result of the Intracoastal Merger.
"Expiration Date" has the meaning assigned thereto in Section
---------------
7(b).
"Fair Market Value" means, with respect to any asset or property,
-----------------
the sale value that would be obtained in an arm's-length transaction
between an informed and willing seller under no compulsion to sell and an
informed and willing buyer under no compulsion to buy. All determinations
of Fair Market Value shall be made by the Board of Directors of the
Corporation and shall be evidenced by a resolution of such Board set forth
in an Officers' Certificate.
"FCC" means the Federal Communications Commission, as from time
---
to time constituted, created under the Communications Act, or, if at any
time after the filing of this Certificate of Designation, the FCC is not
existing and performing the duties now assigned to it under such act, then
the body performing such duties at such time.
"GAAP" means, as in effect from time to time, generally accepted
----
accounting principles in the United States, consistently applied.
"Hedging Obligations " means, with respect to any Person, the
-------------------
Obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements, and (ii)
other agreements or arrangements designed to protect such Person against
fluctuations in interest rates.
"Holders" means a Holder of shares of PIK Preferred Stock as
-------
reflected in the stock books of the Corporation.
"Immediate Family Member" has the meaning assigned to that term
-----------------------
in Section 7(f)(iii).
-24-
<PAGE>
"incur" means, with respect to any obligation of any Person, to
-----
create, issue, incur, assume or directly or indirectly guarantee or in any
other manner become directly or indirectly liable for any Indebtedness (and
"incurrence", "incurred", "incurable" and "incurring" shall have meanings
correlative to the foregoing).
"Indebtedness" means, with respect to any Person, whether or not
------------
contingent, (i) all indebtedness of such Person for borrowed money or for
the deferred purchase price of property or services (other than current
trade liabilities incurred in the ordinary course of business and payable
in accordance with customary practices) or which is evidenced by a note,
bond, debenture or similar instrument, (ii) all Capital Lease Obligations
of such Person, (iii) all obligations of such Person in respect of letters
of credit or bankers' acceptances issued or created for the account of such
Person, (iv) all Hedging Obligations of such Person, (v) all liabilities
secured by any Lien on any property owned by such Person even if such
Person has not assumed or otherwise become liable for the payment thereof
to the extent of the value of the property subject to such Lien, and (vi)
to the extent not otherwise included, any guarantee by such person of any
other Person's indebtedness or other obligations described in clauses (i)
through (v) above; provided however that for purposes of this Certificate
-------- -------
of Designation Indebtedness shall not include the Intracoastal Note.
"Indebtedness for Money Borrowed" shall mean, with respect to
-------------------------------
any Person, Indebtedness for 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, all Indebtedness upon which interest charges are customarily
paid (other than trade payables arising in the ordinary course of business,
but only if and so long as such accounts are payable on customary trade
terms), all Capital Lease Obligations, all reimbursement obligations with
respect to outstanding letters of credit, all Indebtedness issued or
assumed as full or partial payment for property or services (other than
trade payables arising in the ordinary course of business, but only if and
so long as such accounts are payable on customary trade terms), whether or
not any such notes, drafts, obligations or Indebtedness represent
Indebtedness for money borrowed, and, without duplication, guaranties of
any of the foregoing. For purposes of this definition, interest which is
accrued but not paid on the scheduled due date for such interest shall be
deemed Indebtedness for Money Borrowed.
"Interest Expense" shall mean, for any period, all cash interest
----------------
expense (including imputed interest with respect to Capital Lease
Obligations) with respect to any Indebtedness for Money Borrowed of the
Corporation and its Restricted Subsidiaries on a consolidated basis during
such period pursuant to the
-25-
<PAGE>
terms of such Indebtedness for Money Borrowed, together with all fees
payable in respect thereof, all as calculated in accordance with GAAP.
"Intracoastal Merger" means the merger of Intracoastal
-------------------
Broadcasting, Inc., a Delaware Corporation, into American Tower Systems
(Delaware), Inc., a Delaware corporation wholly owned by the Corporation.
"Intracoastal Note" shall mean the non-recourse notes of the
-----------------
Corporation, in the aggregate principal amount of $12,000,000, issued or to
be issued by the Corporation in connection with the Intracoastal Merger.
"Investments" means, with respect to any Person, all investments
-----------
by such Person in other Persons (including Affiliates of such Person) in
the form of loans, guarantees, advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in
the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities of any
other Person and all other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP.
"Issue Date" means the date of original issuance of the PIK
----------
Preferred Stock.
"Junior Securities" has the meaning assigned thereto in Section
-----------------
1.
"Licenses" shall mean any telephone, microwave, radio
--------
transmissions, personal communications or other license, authorization,
certificate of compliance, franchise, approval or permit, whether for the
construction, the ownership or the operation of any communications tower
facilities, granted or issued by the FCC and held by the Corporation or any
of its Restricted Subsidiaries.
"Lien" means, with respect to any asset, any mortgage, lien,
----
pledge, charge, security interest or encumbrance of any kind in respect of
such asset, whether or not filed, recorded or otherwise perfected under
Applicable Law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement
to sell or give a security interest in any asset and any filing of, or
agreement to give, any financing statement under the "Uniform Commercial
Code" (or equivalent statutes) of any jurisdiction).
"Material Adverse Effect" shall mean (a) any material adverse
-----------------------
effect upon the business, assets, business prospects, liabilities,
financial condition, results of operations or properties of the Corporation
and its Restricted Subsidiaries on a consolidated basis, taken as a whole,
or (b) a material adverse
-26-
<PAGE>
effect upon the binding nature, validity, or enforceability of this
Certificate of Designation and the PIK Preferred Stock or upon the ability
of the Corporation and its Restricted Subsidiaries to perform the payment
obligations or other material obligations under this Certificate of
Designation and the PIK Preferred Stock (or prior to the Interim Financing
Maturity Date, the Exchange Certificate of Designation or the Exchange
Preferred Stock); in either case, whether resulting from any single act,
omission, situation, status, event or undertaking, or taken together with
other such acts, omissions, situations, statuses, events or undertakings.
"Necessary Authorizations" shall mean all approvals and licenses
------------------------
from, and all filings and registrations with, any governmental or other
regulatory authority, including, without limiting the foregoing, the
Licenses and all approvals, licenses, filings and registrations under the
Communications Act, necessary in order to enable the Corporation and its
Restricted Subsidiaries to own, construct, maintain, and operate
communications tower facilities and to invest in other Persons who own,
construct, maintain, manage and operate communications tower facilities.
"Net Proceeds" shall mean, with respect to any sale, lease,
------------
transfer or other disposition of assets, Indebtedness or securities by the
Corporation or any of its Restricted Subsidiaries (except any such sale,
lease transfer or other disposition to the Corporation or a Restricted
Subsidiary), the aggregate amount of cash received for such assets
(including, without limitation, any payments received for noncompetition
covenants, consulting or management fees in connection with such sale, and
any portion of the amount received evidenced by a promissory note or other
evidence of Indebtedness issued by the purchaser), Indebtedness or
securities, as the case may be, net of (i) amounts reserved, if any, for
taxes payable with respect to any such sale (after application (assuming
application first to such reserves) of any available losses, credits or
other offsets), (ii) reasonable and customary transaction costs properly
attributable to such transaction and payable by the Corporation or any of
its Restricted Subsidiaries (other than to an Affiliate) in connection with
such sale, lease, transfer or other disposition of assets, Indebtedness or
securities, as the case may be, including, without limitation, commissions,
discounts, and fees and (iii) until actually received by the Corporation or
any of its Restricted Subsidiaries, any portion of the amount received held
in escrow or evidenced by a promissory note or other evidence of
Indebtedness issued by a purchaser or pursuant to a non-compete, consulting
or management agreement or covenant or otherwise for which compensation is
paid over time. Upon receipt by the Corporation or any of its Restricted
Subsidiaries of (A) amounts referred to in item (iii) of the preceding
sentence, or (B) if there shall occur any reduction in the tax reserves
referred to in item (i) of the preceding sentence resulting in a payment to
the Corporation, such amounts shall then be deemed to be "Net Proceeds."
-27-
<PAGE>
"Obligations" means any principal, interest, penalties, fees,
-----------
indemnifications, reimbursements, damages and other liabilities payable
under the documentation governing any Indebtedness.
"Offer to Purchase" has the meaning assigned thereto in Section
-----------------
7(b).
"Officers' Certificate" means a certificate signed by the
---------------------
Chairman of the Board, the Chief Executive Officer, President, the Chief
Operating Officer, a Vice President, or the Chief Financial Officer and,
without duplication, by the Treasurer, an Assistant Treasurer, Controller,
the Secretary or an Assistant Secretary, of the Corporation.
"Operating Cash Flow" shall mean, with respect to the Corporation
-------------------
and its Restricted Subsidiaries on a consolidated basis as of the end of
any period, (a) the sum of (i) operating revenues of the Corporation and
its Restricted Subsidiaries plus (ii) Unrestricted Subsidiary Distributions
during such period less (b) the sum of (i) operating expenses for such
period plus (ii) corporate overhead (exclusive of amortization and
depreciation) for such period. In the case of determining Operating Cash
Flow following an Acquisition permitted hereunder, Operating Cash Flow of
the Corporation and its Restricted Subsidiaries shall include the
Acquisition Operating Cash Flow.
"Permitted Investment" means:
--------------------
(i) any Investment in the Corporation or any Wholly Owned Restricted
Subsidiary;
(ii) any Investment in Cash Equivalents;
(iii) any Investment in a Person if, as a result of such Investment, (a)
such Person becomes a Wholly Owned Restricted Subsidiary of the
Corporation, or (b) such Person either (1) is merged, consolidated or
amalgamated with or into the Corporation or one of its Wholly Owned
Restricted Subsidiaries and the Corporation or such Wholly Owned Restricted
Subsidiary is the Surviving Person or the Surviving Person becomes a Wholly
Owned Restricted Subsidiary, or (2) transfers or conveys all or
substantially all of its assets to, or is liquidated into, the Corporation
or one of its Wholly Owned Restricted Subsidiaries;
(iv) any Investment in accounts and notes receivable acquired in the
ordinary course of business;
(v) any Existing Investment;
-28-
<PAGE>
(vi) notes from employees issued to the Corporation representing payment
of the exercise price of options to purchase capital stock of the Corporation in
an aggregate principal amount not to exceed $2,000,000;
(vii) Investments in Unrestricted Subsidiaries represented by shares of
Common Stock of the Corporation or assets and property acquired in exchange
for Common Stock of the Corporation;
(viii) so long as no Voting Rights Triggering Event then exists or would be
caused thereby, make investments in communications site and related
companies in an amount not to exceed, in the aggregate, at any time,
$25,000,000 provided, however, that the Corporation or one of its
Restricted Subsidiaries has executed a binding acquisition or merger
agreement with such company;
(ix) so long as no Voting Rights Triggering Event then exists or would be
caused thereby, (x) establish Unrestricted Subsidiaries and (y) make
investments in such Unrestricted Subsidiaries or in non-Wholly-Owned
Restricted Subsidiaries of up to, in the aggregate, at any time,
$50,000,000 (subject to reduction as provided in the definition of
Unrestricted Subsidiary); and
(x) the Sconnix Note.
"Permitted Liens" shall mean, as applied to any Person:
---------------
(a) Liens under the Senior Bank Facilities;
(b) (i) Liens on real estate or other property for taxes,
assessments, governmental charges or levies not yet delinquent and (ii) Liens
for taxes, assessments, judgments, governmental charges or levies or claims the
non-payment of which is being diligently contested in good faith by appropriate
proceedings and for which adequate reserves have been set aside on such Person's
books, but only so long as no foreclosure, distraint, sale or similar
proceedings have been commenced with respect thereto;
(c) Liens of carriers, warehousemen, mechanics, vendors, (solely
to the extent arising by operation of law) laborers and materialmen incurred in
the ordinary course of business for sums not yet due or being diligently
contested in good faith, if reserves or appropriate provisions shall have been
made therefor;
(d) Liens incurred in the ordinary course of business in
connection with worker's compensation and unemployment insurance, social
security obligations, assessments or government charges which are not overdue
for more than sixty (60) days;
-29-
<PAGE>
(e) restrictions on the transfer of the Licenses or assets of the
Corporation or the Restricted Subsidiaries imposed by any of the Licenses as
presently in effect or by the Communications Act and any regulations thereunder;
(f) easements, rights-of-way, zoning restrictions, licenses,
reservations or restrictions on use and other similar encumbrances on the use of
real property which do not materially interfere with the ordinary conduct of the
business of such Person or the use of such property;
(g) Liens arising by operation of law in favor of purchasers in
connection with any asset sale permitted hereunder; provided, however, that such
-------- -------
lien only encumbers the property being sold;
(h) Liens reflected by Uniform Commercial Code financing statements
filed in respect of Capital Lease Obligations permitted under this Certificate
of Designation and true leases of the Corporation or any of its Subsidiaries;
(i) Liens to secure performance of statutory obligations, surety or
appeal bonds, performance bonds, bids or tenders;
(j) judgment Liens which do not result in a Voting Rights Triggering
Event; and
(k) Liens in connection with escrow deposits made in connection with
acquisitions permitted hereunder.
"Person" means any individual, corporation, partnership, limited
------
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Preferred Exchange Date" has the meaning assigned thereto in Section
-----------------------
3(a).
"Principal Shareholder" has the meaning assigned to that term in
---------------------
7(f)(iv).
"Purchase Date" has the meaning assigned thereto in Section 7(b).
-------------
"Redemption Date" with respect to any shares of PIK Preferred Stock,
---------------
means the date on which such shares of PIK Preferred Stock are redeemed by
the Corporation.
"Redemption Notice" has the meaning assigned thereto in Section 6(c).
-----------------
-30-
<PAGE>
"Redemption Premium" means 1% of the Liquidation Preference of the PIK
------------------
Preferred Stock being redeemed plus (i) an additional 1% on and after the
ninety-first (91) day following the Issue Date and (ii) an additional 1% at
the end of each thirty (30) day period thereafter; provided that the
Redemption Premium shall not exceed 6%.
"Redemption Price" means the Liquidation Preference per share of the
----------------
PIK Preferred Stock to be redeemed plus accrued and unpaid dividends to the
Redemption Date plus the Redemption Premium.
"Refinancing Indebtedness" means (i) Indebtedness of the Corporation
------------------------
or any Restricted Subsidiary incurred or given in exchange for, or the
proceeds of which are used to, extend, refinance, renew, replace,
substitute, defease or refund any other Indebtedness incurred by the
Corporation in accordance with the terms of this Certificate of
Designation, and (ii) Indebtedness of any Restricted Subsidiary incurred or
given in exchange for, or the proceeds of which are used to, extend,
refinance, renew, replace, substitute, defease or refund any other
Indebtedness or Disqualified Stock of the Corporation or any Restricted
Subsidiary in accordance with the terms of this Certificate of Designation.
"Related Party" has the meaning assigned to that term in 7(f)(v).
-------------
"Reset Date" means initially the Issue Date and subsequently the
----------
first day following each 90-day period thereafter.
"Restricted Subsidiary" means a Subsidiary of the Corporation other
---------------------
than an Unrestricted Subsidiary.
"SEC" means the Securities and Exchange Commission, as from time to
---
time constituted, created under the Exchange Act.
"Sconnix Note" shall mean the note of Sconnix Broadcasting Company,
------------
a New Hampshire limited partnership, in the aggregate principal amount of
$12,000,000, acquired or to be acquired by the Corporation in connection
with the Intracoastal Merger.
"Securities Act" means the Securities Act of 1933, as it may be
--------------
amended and any successor act thereto.
"Securities Purchase Agreement" means the Securities Purchase
-----------------------------
Agreement, dated as of June 4, 1998, among the Corporation, CSFBC and the
several Buyers named therein.
-31-
<PAGE>
"Senior Bank Debt" means (i) the Indebtedness outstanding under
----------------
the Senior Bank Facilities, provided that Senior Bank Debt under this
clause (i) shall not exceed the difference between (a) the sum of
$1,050,000,000 and any borrowings and letters of credit under the Senior
Bank Facilities after the Issue Date to the extent that such borrowings or
letters of credit at the time of incurrence or issuance, as the case may
be, resulted in combined Indebtedness under the Senior Bank Facilities
exceeding the sum of $1,050,000,000 and to the extent that such borrowings
or letters of credit at the time of incurrence or issuance, as the case may
be, were permitted under Section 9(a) and (b) the aggregate amount of net
proceeds from Asset Sales applied to permanently reduce the level of
permitted borrowings under the Senior Bank Facilities pursuant to the terms
of any of the Corporation's outstanding Indebtedness and (ii) all
Obligations incurred by or owing to the holders or their agent or
representatives of such Indebtedness outstanding under the Senior Bank
Facilities (including, but not limited to, all fees and expenses of counsel
and all other interest, charges, fees and expenses).
"Senior Bank Facilities" means that certain Amended and Restated
----------------------
Loan Agreement dated as of October 15, 1997 by and among the Corporation,
as Borrower, the financial institutions parties thereto, as Banks, and
Toronto Dominion (Texas), Inc., as Administrative Agent, as amended by that
certain First Amendment to Amended and Restated Loan Agreement dated as of
December 31, 1997, that certain Assumption Agreement dated as of January
21, 1998, that certain Second Amendment to Amended and Restated Loan
Agreement dated as of March 27, 1998, and that certain Third Amendment to
Amended and Restated Loan Agreement dated as of May 11, 1998, as such
agreement may be amended, replaced or refinanced by one or more credit
agreements consistent, in the reasonable judgement of CSFBC, with the term
sheets dated April 2, 1998 from TD Securities (USA), Inc. to (i) the
Corporation in respect of a senior subordinated credit facility in the
aggregate principal amount of $150,000,000 and (ii) to American Tower
Systems (Delaware), Inc. and American Tower Systems, L.P. in respect of
senior secured credit facilities in the aggregate principal amount of
$900,000,000 (true, correct and complete copies of which have been
delivered to CSFBC).
"Subsidiary" means, with respect to any Person, any corporation,
----------
association or other business entity of which more than 50% of the total
voting power of shares of Equity Interests entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
managers or trustees or other governing body thereof is at the time owned
or controlled by such Person (regardless of whether such Equity Interests
are owned directly or through one or more other Subsidiaries of such Person
or a combination thereof).
-32-
<PAGE>
"Surviving Person" means, with respect to any Person involved in
----------------
or that makes any Disposition, the Person formed by or surviving such
Disposition or the Person to which such Disposition is made.
"Three Month LIBOR" means, the rate appearing on Page 3750 of
-----------------
the Dow Jones Markets Service (or on any successor or substitute page of
such Service, or any successor to or substitute for such Service, providing
rate quotations comparable to those currently provided on such page of such
Service for purposes of providing quotations of interest rates applicable
to U.S. Dollar deposits in the London interbank market) at approximately
11:00 a.m., London time, two Business Days prior to the relevant Reset
Date, as the rate for U.S. Dollar deposits with a maturity of three months.
In the event that such rate is not available at such time for any reason,
then the Three-Month LIBOR shall be the rate at which U.S. Dollar deposits
of $5,000,000 and for a maturity of three months are offered by the
principal London office of Credit Suisse in immediately available funds in
the London interbank market at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of the relevant Reset Date.
"Unrestricted Subsidiary" means (i) ATS Needham LLC, (ii) any
-----------------------
Subsidiary of the Corporation that at the time of determination shall be an
Unrestricted Subsidiary (as designated by the Board of Directors of the
Corporation, as provided below) and (iii) any Subsidiary of an Unrestricted
Subsidiary. The Board of Directors of the Corporation may designate any
Subsidiary of the Corporation (including any newly acquired or newly formed
Subsidiary) to be an Unrestricted Subsidiary if all of the following
conditions apply: (a) neither the Corporation nor any of its Restricted
Subsidiaries provides credit support for any Indebtedness of such
Subsidiary (including any undertaking, agreement or instrument evidencing
such Indebtedness), (b) such Subsidiary is not liable, directly or
indirectly, with respect to any Indebtedness other than Unrestricted
Subsidiary Indebtedness, (c) such Unrestricted Subsidiary is not a party to
any agreement, contract, arrangement or understanding at such time with the
Corporation or any Restricted Subsidiary of the Corporation unless the
terms of any such agreement, contract, arrangement or understanding are no
less favorable to the Corporation or such Restricted Subsidiary than those
that might be obtained at the time from Persons who are not Affiliates of
the Corporation (the "Third Party Value") or, in the event such condition
is not satisfied, the amount of investments permitted under clause (ix) of
the definition of Permitted Investments shall be reduced by an amount equal
to the value of the portion of such agreement, contract, arrangement or
understanding to such Subsidiary in excess of the Third Party Value shall,
and (d) such Unrestricted Subsidiary does not own any Capital Stock of any
Subsidiary of the Corporation that has not theretofore been or is not
simultaneously being designated an Unrestricted Subsidiary. Any such
designation by the Board of Directors of the
-33-
<PAGE>
Corporation shall be evidenced by a board resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complies with the foregoing conditions. The Board of Directors of the
Corporation may designate any Unrestricted Subsidiary as a Restricted
Subsidiary; provided that immediately after giving effect to such
--------
designation, the Corporation could incur all Indebtedness of such
Unrestricted Subsidiary as if such Indebtedness was incurred by the
Corporation or one of its Restricted Subsidiaries on the date such
Subsidiary is designated a Restricted Subsidiary (it being understood that
any such designation of a Restricted Subsidiary as an Unrestricted
Subsidiary shall be an investment of the Corporation and subject to the
restrictions contained in Section 9(b) hereof).
"Unrestricted Subsidiary Distributions" shall mean the amount of
-------------------------------------
cash distributions received during such period by the Corporation and its
Restricted Subsidiaries from any Unrestricted Subsidiary (other than in
connection with the repayment of intercompany Indebtedness).
"Unrestricted Subsidiary Indebtedness" of any Unrestricted
------------------------------------
Subsidiary means Indebtedness of such Unrestricted Subsidiary (i) as to
which neither the Corporation nor any Restricted Subsidiary is directly or
indirectly liable (by virtue of the Corporation or any such Restricted
Subsidiary being the primary obligor on, guarantor of, or otherwise liable
in any respect to, such Indebtedness) and (ii) which, upon the occurrence
of a default with respect thereto, does not result in, or permit any Holder
of any Indebtedness of the Corporation or any Restricted Subsidiary to
declare, a default on such Indebtedness of the Corporation or any
Restricted Subsidiary or cause the payment thereof to be accelerated or
payable prior to its stated maturity.
"Voting Rights Triggering Event" has the meaning assigned thereto
------------------------------
in Section 5.
"Wholly Owned Restricted Subsidiary" means any Restricted
----------------------------------
Subsidiary all of the outstanding Equity Interests (other than directors'
qualifying shares) of which are owned, directly or indirectly, by the
Corporation or a Surviving Person of any Disposition involving the
Corporation, as the case may be.
-34-
<PAGE>
IN WITNESS WHEREOF, American Tower Systems Corporation has caused this
Certificate of Designation to be duly executed by its duly authorized officer
and attested by its secretary this fourth day of June, 1998.
AMERICAN TOWER SYSTEMS CORPORATION
By: ________________________________
Name:
Title:
ATTEST:
________________________________
Name:
Title: Secretary
-35-
<PAGE>
EXHIBIT 3ii.1
BY-LAWS
OF
AMERICAN TOWER CORPORATION
(a Delaware Corporation)
<PAGE>
AMERICAN TOWER CORPORATION
(a Delaware Corporation)
BY-LAWS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. OFFICES................................................ 1
SECTION 1. Registered Office...................................... 1
SECTION 2. Other Offices.......................................... 1
ARTICLE II. SEAL................................................... 1
ARTICLE III. MEETINGS OF STOCKHOLDERS............................... 1
SECTION 1. Place of Meeting....................................... 1
SECTION 2. Annual Meetings........................................ 1
SECTION 3. Special Meetings....................................... 2
SECTION 4. Notice................................................. 2
SECTION 5. Quorum and Adjournments................................ 2
SECTION 6. Votes; Proxies......................................... 3
SECTION 7. Organization........................................... 4
SECTION 8. Consent of Stockholders in Lieu of Meeting............. 4
ARTICLE IV. DIRECTORS.............................................. 5
SECTION 1. Number................................................. 5
SECTION 2. Term of Office......................................... 5
SECTION 3. Vacancies.............................................. 5
SECTION 4. Removal by Stockholders................................ 5
SECTION 5. Meetings............................................... 5
SECTION 6. Votes.................................................. 6
SECTION 7. Quorum and Adjournment................................. 6
SECTION 8. Compensation........................................... 6
SECTION 9. Action By Consent of Directors......................... 6
ARTICLE V. COMMITTEES OF DIRECTORS................................ 7
SECTION 1. Executive Committee.................................... 7
SECTION 2. Audit Committee........................................ 8
SECTION 3. Other Committees....................................... 9
SECTION 4. Term of Office......................................... 9
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
ARTICLE VI. OFFICERS............................................... 9
SECTION 1. Officers............................................... 9
SECTION 2. Vacancies.............................................. 10
SECTION 3. Chairman of the Board.................................. 10
SECTION 4. President.............................................. 10
SECTION 5. Executive Vice Presidents and Vice Presidents.......... 10
SECTION 6. Secretary.............................................. 10
SECTION 7. Assistant Secretaries.................................. 10
SECTION 8. Treasurer.............................................. 11
SECTION 9. Assistant Treasurers................................... 11
SECTION 10. Controller............................................. 11
SECTION 11. Assistant Controller................................... 11
SECTION 12. Subordinate Officers................................... 11
SECTION 13. Compensation........................................... 11
SECTION 14. Removal................................................ 12
SECTION 15. Bonds.................................................. 12
ARTICLE VII. CERTIFICATES OF STOCK.................................. 12
SECTION 1. Form and Execution of Certificates..................... 12
SECTION 2. Transfer of Shares..................................... 13
SECTION 3. Closing of Transfer Books.............................. 13
SECTION 4. Fixing Date for Determination of Stockholders of Record 13
SECTION 5. Lost or Destroyed Certificates......................... 14
SECTION 6. Uncertificated Shares.................................. 15
ARTICLE VIII. EXECUTION OF DOCUMENTS................................. 15
SECTION 1. Execution of Checks, Notes, etc........................ 15
SECTION 2. Execution of Contracts, Assignments, etc............... 15
SECTION 3. Execution of Proxies................................... 15
ARTICLE IX. INSPECTION OF BOOKS.................................... 15
ARTICLE X. FISCAL YEAR............................................ 16
ARTICLE XI. AMENDMENTS............................................. 16
ARTICLE XII. INDEMNIFICATION........................................ 16
SECTION 1. Indemnification........................................ 16
SECTION 2. Authorization.......................................... 17
SECTION 3. Expense Advance........................................ 17
SECTION 4. Nonexclusivity......................................... 18
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
SECTION 5. Insurance.............................................. 18
SECTION 6. "The Corporation"...................................... 18
SECTION 7. Other Indemnification.................................. 18
SECTION 8. Other Definitions...................................... 18
SECTION 9. Continuation of Indemnification........................ 19
SECTION 10. Amendment or Repeal 19
</TABLE>
iii
<PAGE>
AMERICAN TOWER CORPORATION
(a Delaware Corporation)
---------
BY-LAWS
---------
ARTICLE I
---------
OFFICES
SECTION 1. Registered Office. The registered office of the Corporation
-----------------
shall be located in Wilmington, County of New Castle, State of Delaware, and the
name of the resident agent in charge thereof shall be Corporation Service
Company.
SECTION 2. Other Offices. The Corporation may also have offices at such
-------------
other places, within or without the State of Delaware, as the Board of Directors
may from time to time appoint or the business of the Corporation may require.
ARTICLE II
----------
SEAL
The seal of the Corporation shall, subject to alteration by the Board of
Directors, consist of a flat-faced circular die with the word "Delaware",
together with the name of the Corporation and the year of incorporation, cut or
engraved thereon.
ARTICLE III
-----------
MEETINGS OF STOCKHOLDERS
SECTION 1. Place of Meeting. Meetings of the stockholders shall be held
----------------
either within or without the State of Delaware at such place as the Board of
Directors may fix from time to time.
SECTION 2. Annual Meetings. The annual meeting of stockholders shall be
---------------
held for the election of directors on such date and at such time as the Board of
Directors may fix from time to time. Any other proper business may be
transacted at the annual meeting.
<PAGE>
By-laws of American Tower Corporation
A Delaware Corporation
Page 2
SECTION 3. Special Meetings. Special meetings of the stockholders for any
----------------
purpose or purposes may be called by the Chairman of the Board of Directors, if
there be one, the President or by the directors (either by written instrument
signed by a majority or by resolution adopted by a vote of the majority), and
special meetings shall be called by the President or the Secretary whenever
stockholders owning a majority of the capital stock issued, outstanding and
entitled to vote so request in writing. Such request of stockholders shall
state the purpose or purposes of the proposed meeting.
SECTION 4. Notice. Written or printed notice of every meeting of
------
stockholders, annual or special, stating the hour, date and place thereof, and
the purpose or purposes in general terms for which the meeting is called shall,
not less than ten (10) days, or such longer period as shall be provided by law,
the Certificate of Incorporation, these By-Laws, or otherwise, and not more than
sixty (60) days before such meeting, be served upon or mailed to each
stockholder entitled to vote thereat, at the address of such stockholder as it
appears upon the stock records of the Corporation or, if such stockholder shall
have filed with the Secretary of the Corporation a written request that notices
be mailed to some other address, then to the address designated in such request.
Notice of the hour, date, place and purpose of any meeting of stockholders
may be dispensed with if every stockholder entitled to vote thereat shall attend
either in person or by proxy and shall not, at the beginning of the meeting,
object to the holding of such meeting because the meeting has not been lawfully
called or convened, or if every absent stockholder entitled to such notice shall
in writing, filed with the records of the meeting, either before or after the
holding thereof, waive such notice.
SECTION 5. Quorum and Adjournments. Except as otherwise provided by law
-----------------------
or by the Certificate of Incorporation, the presence in person or by proxy at
any meeting of stockholders of the holders of a majority of the shares of the
capital stock of the Corporation issued and outstanding and entitled to vote
thereat, shall be requisite and shall constitute a quorum. If two or more
classes of stock are entitled to vote as separate classes upon any question,
then, in the case of each such class, a quorum for the consideration of such
question shall, except as otherwise provided by law or by the Certificate of
Incorporation, consist of a majority in interest of all stock of that class
issued, outstanding and entitled to vote. If a majority of the shares of
capital stock of the Corporation issued and outstanding and entitled to vote
thereat or, where a larger quorum is required, such quorum, shall not be
represented at any meeting of the stockholders regularly called, the holders of
a majority of the shares present or represented by proxy and entitled to vote
thereat shall have power to adjourn the meeting to another time, or to another
time and place, without notice other than announcement of adjournment at the
meeting, and there may be successive adjournments for like cause and in like
manner until the requisite amount of shares entitled to vote at such meeting
shall be represented; provided, however, that if the adjournment is for more
than thirty (30) days, notice of the hour, date and place of the adjourned
meeting shall be given to each stockholder entitled to vote thereat. Subject to
the requirements of law and the Certificate of Incorporation, on any issue on
which two or more classes of stock are entitled to vote separately, no
adjournment shall be taken with respect to any class for which a quorum is
<PAGE>
By-laws of American Tower Corporation
A Delaware Corporation
Page 3
present unless the Chairman of the meeting otherwise directs. At any meeting
held to consider matters which were subject to adjournment for want of a quorum
at which the requisite amount of shares entitled to vote thereat shall be
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed.
SECTION 6. Votes; Proxies. Except as otherwise provided in the
--------------
Certificate of Incorporation, at each meeting of stockholders, every stockholder
of record at the closing of the transfer books, if closed, or on the date set by
the Board of Directors for the determination of stockholders entitled to vote at
such meeting, shall have one vote for each share of stock entitled to vote which
is registered in such stockholder's name on the books of the Corporation, and,
in the election of directors, may vote cumulatively to the extent, if any, and
in the manner authorized in the Certificate of Incorporation.
At each such meeting every stockholder entitled to vote shall be entitled
to do so in person, or by proxy appointed by an instrument in writing or as
otherwise permitted by law subscribed by such stockholder and bearing a date not
more than three (3) years prior to the meeting in question, unless said
instrument provides for a longer period during which it is to remain in force. A
duly executed proxy shall be irrevocable if it states that it is irrevocable and
if, and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable power. A proxy may be made irrevocable regardless of
whether the interest with which it is coupled is an interest in the stock itself
or any interest in the Corporation generally. A stockholder may revoke any
proxy which is not irrevocable by attending the meeting and voting in person or
by filing with the Secretary of the Corporation an instrument in writing or as
otherwise permitted by law revoking the proxy or another duly executed proxy
bearing a later date.
Voting at meetings of stockholders need not be by written ballot and,
except as otherwise provided by law, need not be conducted by inspectors of
election unless so determined by the Chairman of the meeting or by the holders
of shares of stock having a majority of the votes which could be cast by the
holders of all outstanding shares of stock entitled to vote thereon which are
present in person or represented by proxy at such meeting. If it is required or
determined that inspectors of election be appointed, the Chairman shall appoint
two inspectors of election, who shall first take and subscribe an oath or
affirmation faithfully to execute the duties of inspectors at such meeting with
strict impartiality and according to the best of their ability. The inspectors
so appointed shall take charge of the polls and, after the balloting, shall make
a certificate of the result of the vote taken. No director or candidate for the
office of director shall be appointed as such inspector.
At any meeting at which a quorum is present, a plurality of the votes
properly cast for election to fill any vacancy on the Board of Directors shall
be sufficient to elect a candidate to fill such vacancy, and a majority of the
votes properly cast upon any other question shall decide the question, except in
any case where a larger vote is required by law, the Certificate of
Incorporation, these By-Laws, or otherwise.
<PAGE>
By-laws of American Tower Corporation
A Delaware Corporation
Page 4
SECTION 7. Organization. The Chairman of the Board, if there be one, or
------------
in his or her absence the Vice Chairman, or in the absence of a Vice Chairman,
the President, or in the absence of the President, a Vice President, shall call
meetings of the stockholders to order and shall act as chairman thereof. The
Secretary of the Corporation, if present, shall act as secretary of all meetings
of stockholders, and, in his or her absence, the presiding officer may appoint a
secretary.
SECTION 8. Consent of Stockholders in Lieu of Meeting. Unless otherwise
------------------------------------------
restricted by the Certificate of Incorporation, any action required or permitted
by the Delaware General Corporation Law to be taken at any annual or special
meeting of the stockholders of the Corporation, may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted and shall be delivered to the Corporation by delivery to its
registered office in Delaware, its principal place of business, or an officer or
agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to the Corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested.
Every written consent shall bear the date of signature of each stockholder
who signs the consent and no written consent shall be effective to take the
corporate action referred to therein unless, within sixty (60) days of the
earliest dated consent delivered in the manner required by this section to the
Corporation, written consents signed by a sufficient number of stockholders to
take action are delivered to the corporation by delivery to its registered
office in Delaware, its principal place of business, or an officer or agent of
the Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. In the event that the action which is consented
to is such as would have required the filing of a certificate under any section
of the Delaware General Corporation Law other than Section 228 thereof, if such
action had been voted on by stockholders at a meeting thereof, the certificate
filed under such other section shall state, in lieu of any statement required by
such section concerning any vote of stockholders, that written consent has been
given in accordance with Section 228 of the Delaware General Corporation Law,
and that written notice has been given as provided in such Section 228.
<PAGE>
By-laws of American Tower Corporation
A Delaware Corporation
Page 5
ARTICLE IV
----------
DIRECTORS
SECTION 1. Number. The business and affairs of the Corporation shall be
------
conducted and managed by a Board of Directors consisting of not less than one
director, none of whom needs to be a stockholder. The number of directors for
each year shall be fixed at each annual meeting of stockholders, but if the
number is not so fixed, the number shall remain as it stood immediately prior to
such meeting.
At each annual meeting of stockholders, the stockholders shall elect
directors. Each director so elected shall hold office, subject to the
provisions of law, the Certificate of Incorporation, these By-Laws, or
otherwise, until the next annual meeting of stockholders or until his or her
successor is elected and qualified.
At any time during any year, except as otherwise provided by law, the
Certificate of Incorporation, these By-Laws, or otherwise, the number of
directors may be increased or reduced, in each case by vote of a majority of the
stock issued and outstanding and present in person or represented by proxy and
entitled to vote for the election of directors or a majority of the directors in
office at the time of such increase or decrease, regardless of whether such
majority constitutes a quorum.
SECTION 2. Term of Office. Each director shall hold office until the next
--------------
annual meeting of stockholders and until his or her successor is duly elected
and qualified or until his or her earlier death or resignation, subject to the
right of the stockholders at any time to remove any director or directors as
provided in Section 4 of this Article.
SECTION 3. Vacancies. If any vacancy shall occur among the directors, or
---------
if the number of directors shall at any time be increased, the directors then in
office, although less than a quorum, by a majority vote may fill the vacancies
or newly- created directorships, or any such vacancies or newly-created
directorships may be filled by the stockholders at any meeting.
SECTION 4. Removal by Stockholders. Except as otherwise provided by law,
-----------------------
the Certificate of Incorporation or otherwise, the holders of record of the
capital stock of the Corporation entitled to vote for the election of directors
may, by a majority vote, remove any director or directors, with or without
cause, and, in their discretion, elect a new director or directors in place
thereof.
SECTION 5. Meetings. Meetings of the Board of Directors shall be held at
--------
such place, within or without the State of Delaware, as may from time to time be
fixed by resolution of the Board of Directors or by the Chairman of the Board,
if there be one, or by the President, and as may be specified in the notice or
waiver of notice of any meeting. Meetings may be held at any
<PAGE>
By-laws of American Tower Corporation
A Delaware Corporation
Page 6
time upon the call of the Chairman of the Board, if there be one, or the
President or any two (2) of the directors in office by oral, telegraphic, telex,
telecopy or other form of electronic transmission, or written notice, duly
served or sent or mailed to each director not less than twenty-four (24) hours
before such meeting, except that, if mailed, not less than seventy two (72)
hours before such meeting.
Meetings may be held at any time and place without notice if all the
directors are present and do not object to the holding of such meeting for lack
of proper notice or if those not present shall, in writing or by telegram,
telex, telecopy or other form of electronic transmission, waive notice thereof.
A regular meeting of the Board may be held without notice immediately following
the annual meeting of stockholders at the place where such meeting is held.
Regular meetings of the Board may also be held without notice at such time and
place as shall from time to time be determined by resolution of the Board.
Except as otherwise provided by law, the Certificate of Incorporation or
otherwise, neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors or any committee thereof
need be specified in any written waiver of notice.
Members of the Board of Directors or any committee thereof may participate
in a meeting of such Board or committee by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other and participation in a meeting pursuant to the
foregoing provisions shall constitute presence in person at the meeting.
SECTION 6. Votes. Except as otherwise provided by law, the Certificate of
-----
Incorporation or otherwise, the vote of the majority of the directors present at
a meeting at which a quorum is present shall be the act of the Board of
Directors.
SECTION 7. Quorum and Adjournment. Except as otherwise provided by law,
----------------------
the Certificate of Incorporation or otherwise, a majority of the directors shall
constitute a quorum for the transaction of business. If at any meeting of the
Board there shall be less than a quorum present, a majority of those present may
adjourn the meeting from time to time without notice other than announcement of
the adjournment at the meeting, and at such adjourned meeting at which a quorum
is present any business may be transacted which might have been transacted at
the meeting as originally noticed.
SECTION 8. Compensation. Directors shall receive compensation for their
------------
services, as such, and for service on any Committee of the Board of Directors,
as fixed by resolution of the Board of Directors and for expenses of attendance
at each regular or special meeting of the Board or any Committee thereof.
Nothing in this Section shall be construed to preclude a director from serving
the Corporation in any other capacity and receiving compensation therefor.
SECTION 9. Action By Consent of Directors. Any action required or
------------------------------
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without
<PAGE>
By-laws of American Tower Corporation
A Delaware Corporation
Page 7
a meeting if all members of the Board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee. Such consent shall be treated as a vote
adopted at a meeting for all purposes. Such consents may be executed in one or
more counterparts and not every Director or committee member need sign the same
counterpart.
ARTICLE V
---------
COMMITTEES OF DIRECTORS
SECTION 1. Executive Committee. The Board of Directors may, by resolution
-------------------
passed by a majority of the whole Board, appoint an Executive Committee of one
(1) or more members, to serve during the pleasure of the Board, to consist of
such directors as the Board may from time to time designate. The Board of
Directors shall designate the Chairman of the Executive Committee.
(a) Procedure. The Executive Committee shall, by a vote of a majority of
---------
its members, fix its own times and places of meeting, determine the number
of its members constituting a quorum for the transaction of business, and
prescribe its own rules of procedure, no change in which shall be made save
by a majority vote of its members.
(b) Responsibilities. During the intervals between the meetings of the
----------------
Board of Directors, except as otherwise provided by the Board of Directors
in establishing such Committee or otherwise, the Executive Committee shall
possess and may exercise all the powers of the Board in the management and
direction of the business and affairs of the Corporation; provided,
however, that the Executive Committee shall not, except to the extent the
Certificate of Incorporation or the resolution providing for the issuance
of shares of stock adopted by the Board of Directors as provided in Section
151(a) of the Delaware General Business Corporation Law, have the power:
(i) to amend or authorize the amendment of the Certificate of
Incorporation or these By-Laws;
(ii) to authorize the issuance of stock;
(iii) to authorize the payment of any dividend;
(iv) to adopt an agreement of merger or consolidation of the
Corporation or to recommend to the stockholders the sale,
lease or exchange of all or substantially all the property
and business of the Corporation;
<PAGE>
By-laws of American Tower Corporation
A Delaware Corporation
Page 8
(v) to recommend to the stockholders a dissolution, or a
revocation of a dissolution, of the Corporation; or
(vi) to adopt a certificate of ownership and merger pursuant to
Section 253 of the Delaware Business Corporation Law.
(c) Reports. The Executive Committee shall keep regular minutes of its
-------
proceedings, and all action by the Executive Committee shall be reported
promptly to the Board of Directors. Such action shall be subject to
review, amendment and repeal by the Board, provided that no rights of third
parties shall be adversely affected by such review, amendment or repeal.
(d) Appointment of Additional Members. In the absence or disqualification
---------------------------------
of any member of the Executive Committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in place of any such absent or
disqualified member.
SECTION 2. Audit Committee. The Board of Directors may, by resolution
---------------
passed by a majority of the whole Board, appoint an Audit Committee of one (1)
or more members who shall not be officers or employees of the Corporation to
serve during the pleasure of the Board. The Board of Directors shall designate
the Chairman of the Audit Committee.
(a) Procedure. The Audit Committee, by a vote of a majority of its
---------
members, shall fix its own times and places of meeting, shall determine the
number of its members constituting a quorum for the transaction of
business, and shall prescribe its own rules of procedure, no change in
which shall be made save by a majority vote of its members.
(b) Responsibilities. The Audit Committee shall review the annual
----------------
financial statements of the Corporation prior to their submission to the
Board of Directors, shall consult with the Corporation's independent
auditors, and may examine and consider such other matters in relation to
the internal and external audit of the Corporation's accounts and in
relation to the financial affairs of the Corporation and its accounts,
including the selection and retention of independent auditors, as the Audit
Committee may, in its discretion, determine to be desirable.
(c) Reports. The Audit Committee shall keep regular minutes of its
-------
proceedings, and all action by the Audit Committee shall, from time to
time, be reported to the Board of Directors as it shall direct. Such
action shall be subject to review, amendment and repeal by the Board,
provided that no rights of third parties shall be adversely affected by
such review, amendment or repeal.
<PAGE>
By-laws of American Tower Corporation
A Delaware Corporation
Page 9
(d) Appointment of Additional Members. In the absence or disqualification
---------------------------------
of any member of the Audit Committee, the member or members thereof present
at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in place of any such absent or
disqualified member.
SECTION 3. Other Committees. The Board of Directors may, by resolution
----------------
passed by a majority of the whole Board, at any time appoint one or more other
committees from and outside of its own number. Every such committee must
include at least one member of the Board of Directors. The Board may from time
to time designate or alter, within the limits permitted by law, the Certificate
of Incorporation and this Article, if applicable, the duties, powers and number
of members of such other committees or change their membership, and may at any
time abolish such other committees or any of them.
(a) Procedure. Each committee, appointed pursuant to this Section, shall,
---------
by a vote of a majority of its members, fix its own times and places of
meeting, determine the number of its members constituting a quorum for the
transaction of business, and prescribe its own rules of procedure, no
change in which shall be made save by a majority vote of its members.
(b) Responsibilities. Each committee, appointed pursuant to this Section,
----------------
shall exercise the powers assigned to it by the Board of Directors in its
discretion.
(c) Reports. Each committee appointed pursuant to this Section shall keep
-------
regular minutes of proceedings, and all action by each such committee
shall, from time to time, be reported to the Board of Directors as it shall
direct. Such action shall be subject to review, amendment and repeal by
the Board, provided that no rights of third parties shall be adversely
affected by such review, amendment or repeal.
(d) Appointment of Additional Members. In the absence or disqualification
---------------------------------
of any member of each committee, appointed pursuant to this Section, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not constituting a quorum, may unanimously appoint
another member of the Board of Directors (or, to the extent permitted,
another person) to act at the meeting in place of any such absent or
disqualified member.
SECTION 4. Term of Office. Each member of a committee shall hold office
--------------
until the first meeting of the Board of Directors following the annual meeting
of stockholders (or until such other time as the Board of Directors may
determine, either in the vote establishing the committee or at the election of
such member or otherwise) and until his or her successor is elected and
qualified, or until he or she sooner dies, resigns, is removed, is replaced by
change of membership or becomes disqualified by ceasing to be a director (where
membership on the Board is required), or until the committee is sooner abolished
by the Board of Directors.
<PAGE>
By-laws of American Tower Corporation
A Delaware Corporation
Page 10
ARTICLE VI
----------
OFFICERS
SECTION 1. Officers. The Board of Directors shall elect a President, a
--------
Secretary and a Treasurer, and, in their discretion, may elect a Chairman of the
Board, a Vice Chairman of the Board, a Controller, and one or more Executive
Vice Presidents, Vice Presidents, Assistant Secretaries, Assistant Treasurers
and Assistant Controllers as deemed necessary or appropriate. Such officers
shall be elected annually by the Board of Directors at its first meeting
following the annual meeting of stockholders (or at such other meeting as the
Board of Directors determines), and each shall hold office for the term provided
by the vote of the Board, except that each will be subject to removal from
office in the discretion of the Board as provided herein. The powers and duties
of more than one office may be exercised and performed by the same person.
SECTION 2. Vacancies. Any vacancy in any office may be filled for the
---------
unexpired portion of the term by the Board of Directors, at any regular or
special meeting.
SECTION 3. Chairman of the Board. The Chairman of the Board of Directors,
---------------------
if elected, shall be a member of the Board of Directors and shall preside at its
meetings. The Chairman, if other than the President, shall advise and counsel
with the President, and shall perform such duties as from time to time may be
assigned to him or her by the Board of Directors.
SECTION 4. President. The President shall be the chief executive officer
---------
of the Corporation. Subject to the directions of the Board of Directors, the
President shall have and exercise direct charge of and general supervision over
the business and affairs of the Corporation and shall perform all duties
incident to the office of the chief executive officer of a corporation and such
other duties as from time to time may be assigned to him or her by the Board of
Directors. The President may but need not be a member of the Board of Directors.
SECTION 5. Executive Vice Presidents and Vice Presidents. Each Executive
---------------------------------------------
Vice President and Vice President shall have and exercise such powers and shall
perform such duties as from time to time may be assigned to him or to her by the
Board of Directors or the President.
SECTION 6. Secretary. The Secretary shall keep the minutes of all
---------
meetings of the stockholders and of the Board of Directors in books provided for
the purpose; shall see that all notices are duly given in accordance with the
provisions of law and these By-Laws; the Secretary shall be custodian of the
records and of the corporate seal or seals of the Corporation; shall see that
the corporate seal is affixed to all documents the execution of which, on behalf
of the Corporation under its seal, is duly authorized, and, when the seal is so
affixed, he or she may attest the same; the Secretary may sign, with the
President, an Executive Vice President or a Vice President, certificates of
stock of the Corporation; and, in general, the Secretary shall
<PAGE>
By-laws of American Tower Corporation
A Delaware Corporation
Page 11
perform all duties incident to the office of secretary of a corporation, and
such other duties as from time to time may be assigned to him or her by the
Board of Directors.
SECTION 7. Assistant Secretaries. The Assistant Secretaries in order of
---------------------
their seniority shall, in the absence or disability of the Secretary, perform
the duties and exercise the powers of the Secretary and shall perform such other
duties as the Board of Directors shall prescribe or as from time to time may be
assigned by the Secretary.
SECTION 8. Treasurer. The Treasurer shall have charge of and be
---------
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit, or cause to be deposited, in the name of the
Corporation, all monies or other valuable effects in such banks, trust companies
or other depositaries as shall, from time to time, be selected by the Board of
Directors; may endorse for collection on behalf of the Corporation checks, notes
and other obligations; may sign receipts and vouchers for payments made to the
Corporation; may sign checks of the Corporation, singly or jointly with another
person as the Board of Directors may authorize, and pay out and dispose of the
proceeds under the direction of the Board; the Treasurer shall render to the
President and to the Board of Directors, whenever requested, an account of the
financial condition of the Corporation; the Treasurer may sign, with the
President, or an Executive Vice President or a Vice President, certificates of
stock of the Corporation; and in general, shall perform all the duties incident
to the office of treasurer of a corporation, and such other duties as from time
to time may be assigned by the Board of Directors. Unless the Board of
Directors shall otherwise determine, the Treasurer shall be the chief financial
officer of the Corporation.
SECTION 9. Assistant Treasurers. The Assistant Treasurers in order of
--------------------
their seniority shall, in the absence or disability of the Treasurer, perform
the duties and exercise the powers of the Treasurer and shall perform such other
duties as the Board of Directors shall prescribe or as from time to time may be
assigned by the Treasurer.
SECTION 10. Controller. The Controller, if elected, shall be the chief
----------
accounting officer of the Corporation and shall perform all duties incident to
the office of a controller of a corporation, and, in the absence of or
disability of the Treasurer or any Assistant Treasurer, perform the duties and
exercise the powers of the Treasurer and shall perform such other duties as the
Board of Directors shall prescribe or as from time to time may be assigned by
the President or the Treasurer.
SECTION 11. Assistant Controllers. The Assistant Controllers in order of
---------------------
their seniority shall, in the absence or disability of the Controller, perform
the duties and exercise the powers of the Controller and shall perform such
other duties as the Board of Directors shall prescribe or as from time to time
may be assigned by the Controller.
SECTION 12. Subordinate Officers. The Board of Directors may appoint such
--------------------
subordinate officers as it may deem desirable. Each such officer shall hold
office for such period, have such authority and perform such duties as the Board
of Directors may prescribe. The Board
<PAGE>
By-laws of American Tower Corporation
A Delaware Corporation
Page 12
of Directors may, from time to time, authorize any officer to appoint and remove
subordinate officers and to prescribe the powers and duties thereof.
SECTION 13. Compensation. The Board of Directors shall fix the
------------
compensation of all officers of the Corporation. It may authorize any officer,
upon whom the power of appointing subordinate officers may have been conferred,
to fix the compensation of such subordinate officers.
SECTION 14. Removal. Any officer of the Corporation may be removed, with
-------
or without cause, by action of the Board of Directors.
SECTION 15. Bonds. The Board of Directors may require any officer of the
-----
Corporation to give a bond to the Corporation, conditional upon the faithful
performance of his or her duties, with one or more sureties and in such amount
as may be satisfactory to the Board of Directors.
ARTICLE VII
-----------
CERTIFICATES OF STOCK
SECTION 1. Form and Execution of Certificates. The interest of each
----------------------------------
stockholder of the Corporation shall be evidenced by a certificate or
certificates for shares of stock in such form as the Board of Directors may from
time to time prescribe. The certificates of stock of each class shall be
consecutively numbered and signed by the Chairman or Vice Chairman of the Board,
if any, the President, an Executive Vice President or a Vice President and by
the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer
of the Corporation, and may be countersigned and registered in such manner as
the Board of Directors may by resolution prescribe, and shall bear the corporate
seal or a printed or engraved facsimile thereof. Where any such certificate is
signed by a transfer agent or transfer clerk acting on behalf of the
Corporation, the signatures of any such Chairman, Vice Chairman, President,
Executive Vice President, Vice President, Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary may be facsimiles, engraved or printed. In
case any officer or officers, who shall have signed, or whose facsimile
signature or signatures shall have been used on, any such certificate or
certificates, shall cease to be such officer or officers, whether because of
death, resignation or otherwise, before such certificate or certificates shall
have been delivered by the Corporation, such certificate or certificates may
nevertheless be issued and delivered by the Corporation as though the person or
persons who signed such certificate or certificates or whose facsimile signature
or signatures shall have been used thereon had not ceased to be such officer or
officers.
In case the corporate seal which has been affixed to, impressed on, or
reproduced in any such certificate or certificates shall cease to be the seal of
the Corporation before such certificate or certificates have been delivered by
the Corporation, such certificate or certificates may nevertheless be issued and
delivered by the Corporation as though the seal affixed thereto, impressed
thereon or reproduced therein had not ceased to be the seal of the Corporation.
<PAGE>
By-laws of American Tower Corporation
A Delaware Corporation
Page 13
Every certificate for shares of stock which are subject to any restriction
on transfer pursuant to law, the Certificate of Incorporation, these By-Laws, or
any agreement to which the Corporation is a party, shall have the restriction
noted conspicuously on the certificate, and shall also set forth, on the face or
back, either the full text of the restriction or a statement of the existence of
such restriction and (except if such restriction is imposed by law) a statement
that the Corporation will furnish a copy thereof to the holder of such
certificate upon written request and without charge.
Every certificate issued when the Corporation is authorized to issue more
than one class or series of stock shall set forth on its face or back either the
full text of the preferences, voting powers, qualifications, and special and
relative rights of the shares of each class and series authorized to be issued,
or a statement of the existence of such preferences, powers, qualifications and
rights, and a statement that the Corporation will furnish a copy thereof to the
holder of such certificate upon written request and without charge.
SECTION 2. Transfer of Shares. The shares of the stock of the Corporation
------------------
shall be transferred on the books of the Corporation by the holder thereof in
person or by his or her attorney lawfully constituted, upon surrender for
cancellation of certificates for the same number of shares, with an assignment
and power of transfer endorsed thereon or attached thereto, duly executed, with
such proof or guaranty of the authenticity of the signature as the Corporation
or its agents may reasonably require. The Corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder in fact
thereof and accordingly shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person
whether or not it shall have express or other notice thereof, save as expressly
provided by law or by the Certificate of Incorporation. It shall be the duty of
each stockholder to notify the Corporation of his or her post office address.
SECTION 3. Closing of Transfer Books. The stock transfer books of the
-------------------------
Corporation may, if deemed appropriate by the Board of Directors, be closed for
such length of time not exceeding fifty (50) days as the Board may determine,
preceding the date of any meeting of stockholders or the date for the payment of
any dividend or the date for the allotment of rights or the date when any
issuance, change, conversion or exchange of capital stock shall go into effect,
during which time no transfer of stock on the books of the Corporation may be
made.
SECTION 4. Fixing Date for Determination of Stockholders of Record. In
-------------------------------------------------------
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
directors and which record date: (a) in the case of determination of
stockholders entitled to vote at any meeting of stockholders or adjournment
thereof, shall, unless
<PAGE>
By-laws of American Tower Corporation
A Delaware Corporation
Page 14
otherwise required by law, the Certificate of Incorporation or otherwise, not be
more than sixty (60) nor less than ten (10) days before the date of such
meeting; (b) in the case of determination of stockholders entitled to express
consent to corporate action in writing without a meeting, shall, unless
otherwise required by law, the Certificate of Incorporation or otherwise, not be
more than ten (10) days from the date upon which the resolution fixing the
record date is adopted by the Board of Directors; and (c) in the case of any
other action, shall not be more than sixty (60) days prior to such other action.
If no record date is fixed: (a) the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held; (b) the record date for determining
stockholders entitled to express consent to corporate action in writing without
a meeting when no prior action of the Board of Directors is required by law,
shall be the first date on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the Corporation in
accordance with applicable law, or, if prior action by the Board of Directors is
required by law, shall be at the close of business on the day on which the Board
of Directors adopts the resolution taking such prior action; and (c) the record
date for determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
SECTION 5. Lost or Destroyed Certificates. In case of the loss or
------------------------------
destruction of any certificate of stock, a new certificate may be issued under
the following conditions:
(a) The owner of said certificate shall file with the Secretary or any
Assistant Secretary of the Corporation an affidavit giving the facts in
relation to the ownership, and in relation to the loss or destruction of
said certificate, stating its number and the number of shares represented
thereby; such affidavit shall be in such form and contain such statements
as shall satisfy the President, any Executive Vice President, Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer, that said certificate has been accidentally destroyed
or lost, and that a new certificate ought to be issued in lieu thereof.
Upon being so satisfied, any such officer may require such owner to furnish
the Corporation a bond in such penal sum and in such form as he or she may
deem advisable, and with a surety or sureties approved by him or her, to
indemnify and save harmless the Corporation from any claim, loss, damage or
liability which may be occasioned by the issuance of a new certificate in
lieu thereof. Upon such bond being so filed, if so required, a new
certificate for the same number of shares shall be issued to the owner of
the certificate so lost or destroyed; and the transfer agent and registrar,
if any, of stock shall countersign and register such new certificate upon
receipt of a written order signed by any such officer, and thereupon the
Corporation will save harmless said transfer agent and registrar in the
premises.
<PAGE>
By-laws of American Tower Corporation
A Delaware Corporation
Page 14
In case of the surrender of the original certificate, in lieu of
which a new certificate has been issued, or the surrender of such new
certificate, for cancellation, the bond of indemnity given as a condition
of the issue of such new certificate may be surrendered; or
(b) The Board of Directors of the Corporation may by resolution authorize
and direct any transfer agent or registrar of stock of the Corporation to
issue and register respectively from time to time without further action or
approval by or on behalf of the Corporation new certificates of stock to
replace certificates reported lost, stolen or destroyed upon receipt of an
affidavit of loss and bond of indemnity in form and amount and with surety
satisfactory to such transfer agent or registrar in each instance or upon
such terms and conditions as the Board of Directors may determine.
SECTION 6. Uncertificated Shares. The Board of Directors of the
---------------------
Corporation may by resolution provide that one or more of any or all classes or
series of the stock of the Corporation shall be uncertificated shares, subject
to the provisions of Section 158 of the Delaware General Corporation Law.
ARTICLE VIII
------------
EXECUTION OF DOCUMENTS
SECTION 1. Execution of Checks, Notes, etc. All checks and drafts on the
-------------------------------
Corporation's bank accounts and all bills of exchange and promissory notes, and
all acceptances, obligations and other instruments for the payment of money,
shall be signed by such officer or officers, or agent or agents, as shall be
thereunto authorized from time to time by the Board of Directors, which may in
its discretion authorize any such signatures to be facsimile.
SECTION 2. Execution of Contracts, Assignments, etc. Unless the Board of
----------------------------------------
Directors shall have otherwise provided generally or in a specific instance, all
contracts, agreements, endorsements, assignments, transfers, stock powers, or
other instruments shall be signed by the President, any Executive Vice
President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer. The Board of Directors may, however, in
its discretion, require any or all such instruments to be signed by any two or
more of such officers, or may permit any or all of such instruments to be signed
by such other officer or officers, agent or agents, as it shall be thereunto
authorize from time to time.
SECTION 3. Execution of Proxies. The President, any Executive Vice
--------------------
President or any Vice President, and the Secretary, the Treasurer, any Assistant
Secretary or any Assistant Treasurer, or any other officer designated by the
Board of Directors, may sign on behalf of the Corporation proxies to vote upon
shares of stock of other companies standing in the name of the Corporation.
<PAGE>
By-laws of American Tower Corporation
A Delaware Corporation
Page 16
ARTICLE IX
----------
INSPECTION OF BOOKS
The Board of Directors shall determine from time to time whether, and if
allowed, to what extent and at what time and places and under what conditions
and regulations, the accounts and books of the Corporation (except such as may
by law be specifically open to inspection) or any of them, shall be open to the
inspection of the stockholders, and no stockholder shall have any right to
inspect any account or book or document of the Corporation, except as conferred
by the laws of the State of Delaware, unless and until authorized so to do by
resolution of the Board of Directors or of the stockholders of the Corporation.
ARTICLE X
---------
FISCAL YEAR
The fiscal year of the Corporation shall be determined from time to time by
vote of the Board of Directors.
ARTICLE XI
----------
AMENDMENTS
These By-Laws may be altered, amended, changed or repealed and new By-Laws
adopted by the stockholders or, to the extent provided in the Certificate of
Incorporation, by the Board of Directors, in either case at any meeting called
for that purpose at which a quorum shall be present. Any by-law, whether made,
altered, amended, changed or repealed by the stockholders or the Board of
Directors may be repealed, amended, changed, further amended, changed, repealed
or reinstated, as the case may be, either by the stockholders or by the Board of
Directors, as herein provided; except that this Article may be altered, amended,
changed or repealed only by vote of the stockholders.
ARTICLE XII
-----------
INDEMNIFICATION
SECTION 1. Indemnification. (a) The Corporation shall indemnify and hold
---------------
harmless, to the fullest extent permitted by applicable law as it presently
exists or may hereafter be amended, any person who was or is a party or is
threatened to be made a party or is otherwise involved in any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Corporation) by reason of the fact that he, or a person for whom he is the legal
representative, is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the
<PAGE>
By-laws of American Tower Corporation
A Delaware Corporation
Page 17
Corporation as a director, officer, partner, member, trustee, employee or agent
of another corporation, partnership, joint venture, limited liability company,
trust or other enterprise or non-profit entity against all liability, losses,
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interest of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(b) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, partner, member, trustee, employee or agent of another
corporation, partnership, joint venture, limited liability company, trust or
other enterprise or non-profit entity against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Corporation unless and only to the extent that the Court of Chancery of the
State of Delaware or the court in which such action or suit was brought shall
determine upon application that despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery of the State
of Delaware or such other court shall deem proper.
(c) To the extent that any person referred to in paragraphs (a) or (b) has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to therein, or in defense of any claim, issue or matter
therein, he or she shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection therewith.
SECTION 2. Authorization. Any indemnification under Section 1 of this
-------------
Article (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, partner, member, trustee, employee or agent is proper in the
circumstances because such person has met the applicable standard of conduct set
forth in Section 1 of this Article. Such determination shall be made: (a) by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceeding, or (b) if such a quorum
is not obtainable, or, even if obtainable, a quorum of disinterested directors
so directs, by independent legal counsel in written opinion, or (c) by the
stockholders.
<PAGE>
By-laws of American Tower Corporation
A Delaware Corporation
Page 18
SECTION 3. Expense Advance. Expenses (including attorneys' fees) incurred
---------------
by an officer or director of the Corporation in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors in the manner provided in
Section 2 of this Article upon receipt of an undertaking by or on behalf of such
officer or director to repay such amount, unless it shall ultimately be
determined that such person is entitled to be indemnified by the Corporation as
authorized in this Article. Such expenses (including attorneys' fees) incurred
by other employees or agents of the Corporation may be so paid upon such terms
and conditions, if any, as the Board of Directors deems appropriate.
SECTION 4. Nonexclusivity. The indemnification and advancement of
--------------
expenses provided by, or granted pursuant to, the other Sections of this Article
shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any statute,
by-law, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in an official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer, partner, member, trustee, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
SECTION 5. Insurance. The Corporation shall have power to purchase and
---------
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, partner, member, trustee, employee or agent
of another corporation, partnership, joint venture, limited liability company,
trust or other enterprise or non-profit entity against any liability asserted
against and incurred by him or her in any such capacity, or arising out of his
or her status as such, whether or not the Corporation would have the power to
indemnify such person against such liability under the provisions of this
Article or Section 145 of the Delaware General Corporation Law.
SECTION 6. "The Corporation". For the purposes of this Article,
---------------
references to "the Corporation" shall include the resulting corporation and, to
the extent that the Board of Directors of the resulting corporation so decides,
all constituent corporations (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify its directors,
officers and employees or agents so that any person who is or was a director,
officer, employee or agent of such a constituent corporation or is or was
serving at the request of such constituent corporation as director, officer,
partner, member, trustee, employee or agent of another corporation, partnership,
joint venture, limited liability company, trust or other enterprise or non-
profit entity shall stand in the same position under the provisions of this
Article with respect to the resulting or surviving corporation if its separate
existence had continued.
<PAGE>
By-laws of American Tower Corporation
A Delaware Corporation
Page 19
SECTION 7. Other Indemnification. The Corporation's obligation, if any,
---------------------
to indemnify any person who was or is serving at its request as a director,
trustee, partner, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise or non-profit entity shall
be reduced by any amount such person may collect as indemnification from such
other corporation, partnership, joint venture, trust or other enterprise or non-
profit entity or from insurance.
SECTION 8. Other Definitions. For purposes of this Article, references to
-----------------
"other enterprises" shall include employee benefit plans; references to "fines"
shall include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service as a director, trustee, officer, employee or agent of
the Corporation which imposes duties on, or involves services by, such director,
trustee, officer, employee, or agent with respect to an employee benefit plan,
its participants, or beneficiaries; and a person who acted in good faith and in
a manner he or she reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this Article.
SECTION 9. Continuation of Indemnification. The indemnification and
-------------------------------
advancement of expenses provided by, or granted pursuant to, this Article shall,
unless otherwise provided when authorized or ratified, continue as to a person
who has ceased to be a director, trustee, partner, officer, employee or agent
and shall inure to the benefit of the heirs, executors and administrators of
such a person.
SECTION 10. Amendment or Repeal. Neither the amendment nor repeal of this
-------------------
Article nor the adoption of any provision of these By-Laws inconsistent with
this Article shall reduce, eliminate or adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to the
effectiveness of such amendment, repeal or adoption.
<PAGE>
Exhibit 5
<TABLE>
<S> <C> <C>
SULLIVAN & WORCESTER LLP
ONE POST OFFICE SQUARE
BOSTON, MASSACHUSETTS 02109
(617) 338-2800
FAX NO. 617-338-2880
IN WASHINGTON, D.C. IN NEW YORK CITY
1025 CONNECTICUT AVENUE, N.W. 767 THIRD AVENUE
WASHINGTON, D.C. 20036 NEW YORK, NEW YORK 10017
(202) 775-8190 (212) 486-8200
FAX NO. 202-293-2275 FAX NO. 212-758-2151
</TABLE>
June 30, 1998
American Tower Corporation
116 Huntington Avenue
Boston, Massachusetts 02116
Ladies and Gentlemen:
In connection with the registration under the Securities Act of 1933, as
amended (the "Securities Act"), by American Tower Corporation (formerly American
Tower Systems Corporation), a Delaware Corporation ("American Tower"), of
26,252,625 shares (the "Shares") of its Class A Common Stock, par value $.01 per
share (the "Class A Common Stock"), 22,386,602 of which Shares (including those
of which may be issued pursuant to the over-allotment option contained in the
Registration Statement hereinafter referred to) are to be offered by American
Tower and 3,866,023 of which Shares are to be offered by the Selling
Stockholders (described in the Registration Statement), the following opinion is
furnished to you to be filed with the Securities and Exchange Commission (the
"Commission") as Exhibit 5 to American Tower's registration statement on Form S-
1 (the "Registration Statement").
We have acted as counsel to American Tower in connection with the
preparation of the Registration Statement, and we have examined originals or
copies, certified or otherwise identified to our satisfaction, of the
Registration Statement, corporate records, certificates and statements of
officers and accountants of American Tower, and of public officials, and such
other documents as we have considered relevant and necessary in order to furnish
the opinion hereinafter set forth. We express no opinion herein as to any laws
other than the General Corporation Law of the State of Delaware.
The authorized capital stock of American Tower consists of 20,000,000
shares of preferred stock, par value $.01 per share (the "Preferred Stock"), the
relative designations, preferences, rights and restrictions of which are to be
designated from time to time by the Board of Directors of American Tower,
200,000,000 shares of Class A Common Stock, 50,000,000 shares of Class B Common
Stock, par value $.01 per share, and 10,000,000 shares of Class C Common Stock,
par value $.01 per share (collectively, the "Common Stock").
Based on and subject to the foregoing, we are of the opinion that: (a) the
Shares have been duly and validly authorized by American Tower; (b) with respect
to the Shares to be
<PAGE>
American Tower Corporation
June 30, 1998
Page 2
offered by the Selling Stockholders, all necessary actions on the part of
American Tower in connection with the issuance of said Shares have been taken
and said Shares are validly issued, fully paid and non-assessable; and (c) with
respect to the Shares to be offered by American Tower, all necessary actions on
the part of American Tower in connection therewith have been taken and, upon
delivery to the underwriters against payment therefor in accordance with the
terms of the Underwriting Agreement to be entered into among American Tower, the
Selling Stockholders, Credit Suisse First Boston Corporation, BT Alex. Brown
Incorporated, Lehman Brothers Inc., Morgan Stanley & Co. Incorporated, Bear,
Stearns & Co. Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and
Smith Barney Inc., said Shares will be validly issued, fully paid and non-
assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm therein under the
caption "Validity of the Shares." In giving such consent, we do not thereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act or under the Rules and Regulations of the
Commission promulgated thereunder.
Very truly yours,
SULLIVAN & WORCESTER LLP
<PAGE>
EXHIBIT 10.1
PARENT LOAN AGREEMENT
AMONG
AMERICAN TOWER CORPORATION;
THE FINANCIAL INSTITUTIONS WHOSE NAMES APPEAR
AS LENDERS ON THE SIGNATURE PAGES HEREOF;
AND
TORONTO DOMINION (TEXAS), INC.,
AS ADMINISTRATIVE AGENT
FOR THE LENDERS
DATED AS OF JUNE 16, 1998
POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
ATLANTA, GEORGIA
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1 DEFINITIONS.................................................................................................. 1
ARTICLE 2 LOANS........................................................................................................ 22
Section 2.1 The Loans............................................................................................. 22
Section 2.2 Manner of Borrower and Disbursement................................................................... 22
Section 2.3 Interest.............................................................................................. 25
Section 2.4 Prepayments and Repayments............................................................................ 26
Section 2.5 Notes; Loan Accounts.................................................................................. 27
Section 2.6 Manner of Payment..................................................................................... 27
Section 2.7 Reimbursement......................................................................................... 29
Section 2.8 Pro Rata Treatment.................................................................................... 29
Section 2.9 Capital Adequacy...................................................................................... 30
Section 2.10 Bank Tax Forms........................................................................................ 30
ARTICLE 3 CONDITIONS PRECEDENT......................................................................................... 31
Section 3.1 Conditions Precedent to Effectiveness of this Amendment and Restatement............................... 31
ARTICLE 4 REPRESENTATIONS AND WARRANTIES............................................................................... 33
Section 4.1 Representations and Warranties........................................................................ 33
Section 4.2 Survival of Representations and Warranties, Etc....................................................... 41
ARTICLE 5 GENERAL COVENANTS............................................................................................ 41
Section 5.1 Preservation of Existence and Similar Matters......................................................... 42
Section 5.2 Business; Compliance with Applicable Law.............................................................. 42
Section 5.3 Maintenance Properties................................................................................ 42
Section 5.4 Accounting Methods and Financial Records.............................................................. 42
Section 5.5 Insurance............................................................................................. 43
Section 5.6 Payment of Taxes and Claims........................................................................... 43
Section 5.7 Compliance with ERISA................................................................................. 44
Section 5.8 Visits and Inspections................................................................................ 45
Section 5.9 Payment of Indebtedness; Loans........................................................................ 46
Section 5.10 Use of Proceeds....................................................................................... 46
Section 5.11 Indemnity............................................................................................. 46
Section 5.12 Covenants Regarding Formation of Restricted Subsidiaries and Acquisitions; Partnership, Subsidiaries.. 47
Section 5.13 Payment of Wages...................................................................................... 48
Section 5.14 Further Assurances.................................................................................... 48
ARTICLE 6 INFORMATION COVENANTS........................................................................................ 49
</TABLE>
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
Section 6.1 Quarterly Financial Statements and Information........................................................ 49
Section 6.2 Annual Financial Statements and Information........................................................... 49
Section 6.3 Performance Certificates.............................................................................. 50
Section 6.4 Copies of Other Reports............................................................................... 50
Section 6.5 Notice of Litigation and Other Matters................................................................ 51
ARTICLE 7 NEGATIVE COVENANTS........................................................................................... 52
Section 7.1 Indebtedness of the Borrower and its Subsidiaries..................................................... 52
Section 7.2 Limitation on Liens................................................................................... 53
Section 7.3 Amendment and Waiver.................................................................................. 53
Section 7.4 Liquidation, Merger or Disposition of Assets.......................................................... 54
Section 7.5 Limitation on Guaranties.............................................................................. 55
Section 7.6 Investments and Acquisitions.......................................................................... 55
Section 7.7 Restricted Payments................................................................................... 56
Section 7.8 Total Leverage Ratio.................................................................................. 57
Section 7.9 Affiliate Transactions................................................................................ 57
Section 7.10 ERISA Liabilities..................................................................................... 57
Section 7.11 Sales and Leasebacks.................................................................................. 57
ARTICLE 8 DEFAULT...................................................................................................... 58
Section 8.1 Events of Default..................................................................................... 58
Section 8.2 Remedies.............................................................................................. 61
Section 8.3 Payments Subsequent to Declaration of Event of Default................................................ 63
ARTICLE 9 THE ADMINISTRATIVE AGENT..................................................................................... 63
Section 9.1 Appointment and Authorization......................................................................... 63
Section 9.2 Interest Holders...................................................................................... 64
Section 9.3 Consultation with Counsel............................................................................. 64
Section 9.4 Documents............................................................................................. 64
Section 9.5 Administrative Agent and Affiliates................................................................... 64
Section 9.6 Responsibility of the Administrative Agent............................................................ 64
Section 9.7 Action by the Administrative Agent.................................................................... 65
Section 9.8 Notice of Default or Event of Default................................................................. 65
Section 9.9 Responsibility Disclaimed............................................................................. 66
Section 9.10 Indemnification....................................................................................... 66
Section 9.11 Credit Decision....................................................................................... 67
Section 9.12 Successor Administrative Agent........................................................................ 67
Section 9.13 Delegation of Duties.................................................................................. 68
</TABLE>
- ii -
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 10 CHANGES IN CIRCUMSTANCES AFFECTING LIBOR ADVANCES AND INCREASED COSTS........................................ 68
Section 10.1 LIBOR Basis Determination Inadequate or Unfair...................................................... 68
Section 10.2 Illegality.......................................................................................... 68
Section 10.3 Increased Costs..................................................................................... 69
Section 10.4 Effect On Other Advances............................................................................ 71
ARTICLE 11 MISCELLANEOUS................................................................................................ 71
Section 11.1 Notices............................................................................................. 71
Section 11.2 Expenses............................................................................................ 73
Section 11.3 Waivers............................................................................................. 73
Section 11.4 Set-Off............................................................................................. 74
Section 11.5 Assignment and Participations....................................................................... 75
Section 11.6 Accounting Principles............................................................................... 78
Section 11.7 Counterparts........................................................................................ 79
Section 11.8 Governing Law....................................................................................... 79
Section 11.9 Severability........................................................................................ 79
Section 11.10 Interest............................................................................................ 79
Section 11.11 Table of Contents and Headings...................................................................... 80
Section 11.12 Amendment and Waiver................................................................................ 80
Section 11.13 Entire Agreement.................................................................................... 80
Section 11.14 Other Relationships................................................................................. 81
Section 11.15 Directly or Indirectly.............................................................................. 81
Section 11.16 Reliance on and Survival of Various Provisions...................................................... 81
Section 11.17 Senior Debt......................................................................................... 81
Section 11.18 Obligations......................................................................................... 81
Section 11.19 Confidentiality..................................................................................... 81
ARTICLE 12 WAIVER OF JURY TRIAL......................................................................................... 82
Section 12.1 Waiver of Jury Trial................................................................................ 82
</TABLE>
- iii -
<PAGE>
EXHIBITS
Exhibit A - Form of Certificate of Financial Condition
Exhibit B - Form of Promissory Note
Exhibit C - Form of Pledge Agreement
Exhibit D - Form of Request for Advance
Exhibit E - Form of Security Agreement
Exhibit F - Form of Subsidiary Guaranty
Exhibit G-1 - Form of Subsidiary Pledge Agreement
Exhibit G-2 - Form of Assignment of General Partner Interests
Exhibit G-3 - Form of Assignment of Limited Partner Interests
Exhibit H - Form of Subsidiary Security Agreement
Exhibit I - Form of Borrower's Loan Certificate
Exhibit J - Form of Subsidiary Loan Certificate
Exhibit K - Form of Performance Certificate
Exhibit L - Form of Assignment and Assumption Agreement
SCHEDULES
Schedule 1 - Licenses
Schedule 2 - List of Restricted and Unrestricted Subsidiaries on the
Agreement Date
Schedule 3 - Separation Obligations
Schedule 4 - Exceptions to Representations and Warranties
Schedule 5 - Litigation
Schedule 6 - Affiliate Transactions
Schedule 7 - Indebtedness
Schedule 8 - Lender Names and Notice Addresses
- iv -
<PAGE>
PARENT LOAN AGREEMENT
AMONG
AMERICAN TOWER CORPORATION;
THE FINANCIAL INSTITUTIONS WHOSE NAMES APPEAR
AS LENDERS ON THE SIGNATURE PAGES HEREOF;
AND
TORONTO DOMINION (TEXAS), INC.,
AS ADMINISTRATIVE AGENT
FOR THE LENDERS
WHEREAS, the Borrower (as defined below) has requested and the Lenders
(as defined below) have agreed, subject to the terms and conditions set forth
herein, to make available to the Borrower a term credit facility; and
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties hereto, the
parties hereby agree as follows:
ARTICLE 1 Definitions
For the purposes of this Agreement:
"Acquisition" shall mean (whether by purchase, lease, exchange,
-----------
issuance of stock or other equity or debt securities, merger, reorganization or
any other method) (i) any acquisition by the Borrower or any of the Restricted
Subsidiaries of any other Person, which Person shall then become consolidated
with the Borrower or any such Restricted Subsidiary in accordance with GAAP;
(ii) any acquisition by the Borrower or any of the Restricted Subsidiaries of
all or any substantial part of the assets of any other Person; or (iii) any
acquisition by Borrower or any of the Restricted Subsidiaries of any business
(or related contracts) primarily involving the management of communications
sites, towers, or other facilities for third parties, other than any such
Acquisition which shall be made by, or of, any Person which shall have been
designated and, to the extent required hereby, approved as an Unrestricted
Subsidiary.
"Acquisition Operating Cash Flow" shall mean in the case of an
-------------------------------
Acquisition permitted hereunder, Operating Cash Flow (New Towers), Operating
Cash Flow (Towers) and Operating Cash Flow (Other Business), as applicable, of
the Borrower and its Restricted Subsidiaries for the period during which such
Acquisition occurs, adjusted to give effect to such Acquisition, as if such
Acquisition had occurred on the first day of such period, by
<PAGE>
excluding the Operating Cash Flow (New Towers), Operating Cash Flow (Towers) and
Operating Cash Flow (Other Business), as applicable, of such Acquisition during
such period prior to and including the date of such Acquisition and adding to
the Operating Cash Flow (New Towers), Operating Cash Flow (Towers) and Operating
Cash Flow (Other Business), as applicable, of the Borrower and its Restricted
Subsidiaries, if positive, or subtracting from such Operating Cash Flow (New
Towers), Operating Cash Flow (Towers) and Operating Cash Flow (Other Business),
as applicable, if negative, the product of (i) the actual Operating Cash Flow
(New Towers), Operating Cash Flow (Towers) and Operating Cash Flow (Other
Business), as applicable, of such Acquisition for that portion following such
period from the date of such Acquisition to the last day of such period,
multiplied by (ii) a fraction the numerator of which is the number of calendar
days in such period and the denominator of which is the number of days in such
period following the date of such Acquisition through the last day of such
period.
"Administrative Agent" shall mean Toronto Dominion (Texas), Inc., in
--------------------
its capacity as Administrative Agent for the Lenders or any successor
Administrative Agent appointed pursuant to Section 9.12 hereof.
"Administrative Agent's Office" shall mean the office of the
-----------------------------
Administrative Agent located at 909 Fannin Street, Suite 1700, Houston Texas
77010, or such other office as may be designated pursuant to the provisions of
Section 11.1 hereof.
"Advance" shall mean amounts advanced by the Lenders to the Borrower
-------
pursuant to Article 2 hereof on the occasion of any borrowing and having the
same Interest Rate Basis and Interest Period; and "Advances" shall mean more
than one Advance.
"Affiliate" shall mean, with respect to a Person, any other Person
---------
directly or indirectly controlling, controlled by, or under common control with,
such first Person. For purposes of this definition, "control", when used with
respect to any Person, includes, without limitation, the direct or indirect
beneficial ownership of more than ten percent (10%) of the voting securities or
voting equity of such Person or the power to direct or cause the direction of
the management and policies of such Person whether by contract or otherwise.
"Agreement" shall mean this Parent Loan Agreement, as amended,
---------
supplemented, restated or otherwise modified from time to time.
"Agreement Date" shall mean the date as of which this Agreement is
--------------
dated.
"American Radio Systems" shall mean American Radio Systems
----------------------
Corporation, a Delaware corporation.
-2-
<PAGE>
"Annualized Operating Cash Flow" shall mean as of any calculation
------------------------------
date, (i) the sum of (A) the product of (1) Operating Cash Flow (Towers) for the
fiscal quarter-end being tested or the most recently completed fiscal quarter
immediately preceding such calculation date, as the case may be, times (2) four
-----
(4); (B) the product of (1) Operating Cash Flow (New Towers) for the calendar
month-end being tested, or the most recently completed calendar month
immediately preceding such calculation date, as the case may be, times (2)
-----
twelve (12); and (C) Operating Cash Flow (Other Business) for the four fiscal
quarter period end being tested, or the most recently completed four (4) fiscal
quarter period immediately preceding such calculation date, as the case may be,
minus (b) corporate overhead (exclusive of amortization and depreciation) of the
- -----
Borrower and its Restricted Subsidiaries (on a consolidated basis) for the
twelve (12) calendar month period then ended or ending immediately prior to the
calculation date, as the case may be.
"Applicable Law" shall mean, in respect of any Person, all provisions
--------------
of constitutions, statutes, rules, regulations and orders of governmental bodies
or regulatory agencies applicable to such Person, including, without limiting
the foregoing, the Licenses, the Communications Act, zoning ordinances and all
Environmental Laws, and all orders, decisions, judgments and decrees of all
courts and arbitrators in proceedings or actions to which the Person in question
is a party or by which it is bound.
"Approved Fund" means, with respect to any Lender that is a fund that
-------------
invests in commercial loans, any other fund that invests in commercial loans and
is managed by the same investment advisor as such Lender or by an Affiliate of
such investment advisor.
"Assignment of General Partner Interests" shall mean that certain
---------------------------------------
Assignment of General Partner Interests, dated as of the even date herewith,
made by ATSC GP in favor of the Administrative Agent, substantially in the form
of Exhibit G-2 attached hereto.
-----------
"Assignment of Limited Partner Interests" shall mean that certain
---------------------------------------
Assignment of Limited Partner Interests, dated as of even date herewith, made by
ATSC LP in favor of the Administrative Agent, substantially in the form of
Exhibit G-3 attached hereto.
- -----------
"ATS" shall mean American Tower Systems, L.P., a Delaware limited
---
partnership, and a wholly-owned Subsidiary of the Borrower.
"ATS (Delaware)" shall mean American Tower Systems (Delaware), Inc., a
--------------
Delaware corporation, and a wholly-owned Subsidiary of the Borrower.
-3-
<PAGE>
"ATS Facility A Loan Agreement" shall mean that certain ATS Facility A
-----------------------------
Loan Agreement dated as of the even date herewith by and among ATS, ATS
(Delaware), the Administrative Agent (as defined therein) and the financial
institutions parties thereto, providing for a revolving credit facility and a
term credit facility, as the same may be amended, modified, restated and
supplemented from time to time.
"ATS Facility B Loan Agreement" shall mean that certain ATS Facility B
-----------------------------
Loan Agreement dated as of the even date herewith by and among ATS, ATS
(Delaware), the Administrative Agent (as defined therein) and the financial
institutions parties thereto, providing for a revolving credit facility, as the
same may be amended, modified, restated and supplemented from time to time.
"ATSC GP" shall mean ATSC GP Inc., a Delaware corporation, and a
-------
wholly-owned Subsidiary of ATSC Holding.
"ATSC Holding" shall mean ATSC Holding Inc., a Delaware corporation,
------------
and a wholly-owned Subsidiary of the Borrower.
"ATSC LP" shall mean ATSC LP Inc., a Delaware corporation, and a
-------
wholly-owned Subsidiary of ATSC Operating.
"ATSC Operating" shall mean ATSC Operating Inc., a Delaware
--------------
corporation, and a wholly-owned Subsidiary of ATS (Delaware).
"Authorized Signatory" shall mean such senior personnel of a Person as
--------------------
may be duly authorized and designated in writing by such Person to execute
documents, agreements and instruments on behalf of such Person.
"Base Rate" shall mean, at any time, a fluctuating interest rate per
---------
annum equal to the higher of (a) the rate of interest quoted from time to time
by the Administrative Agent as its "prime rate" or "base rate" and (b) the
---------- ---------
Federal Funds Rate plus one and one-half percent (1.50%). The Base Rate is not
----
necessarily the lowest rate of interest charged by the Administrative Agent in
connection with extensions of credit.
"Base Rate Advance" shall mean an Advance which the Borrower requests
-----------------
to be made as a Base Rate Advance or is reborrowed as a Base Rate Advance, in
accordance with the provisions of Section 2.2 hereof, and which shall be in a
principal amount of at least $1,000,000 and in an integral multiple of $500,000.
-4-
<PAGE>
"Base Rate Basis" shall mean a simple interest rate equal to the sum
---------------
of (i) the Base Rate, plus (ii) two and one-half percent (2.50%). The Base Rate
----
Basis shall be adjusted automatically as of the opening of business on the
effective date of each change in the Base Rate to account for such change.
"Borrower" shall mean American Tower Corporation, a Delaware
--------
corporation.
"Business Day" shall mean a day on which banks and foreign exchange
------------
markets are open for the transaction of business required for this Agreement in
Houston, Texas, New York, New York and London, England, as relevant to the
determination to be made or the action to be taken.
"Capital Expenditures" shall mean, for any period, expenditures
--------------------
(including, without limitation, the aggregate amount of Capitalized Lease
Obligations required to be paid during such period) incurred by any Person to
acquire or construct fixed assets, plant and equipment (including, without
limitation, renewals, improvements and replacements, but excluding repairs and
maintenance) during such period, that would be required to be capitalized on the
balance sheet of such Person in accordance with GAAP.
"Capital Stock" shall mean, as applied to any Person, any capital
-------------
stock of such Person, regardless of class or designation, and all warrants,
options, purchase rights, conversion or exchange rights, voting rights, calls or
claims of any character with respect thereto.
"Capitalized Lease Obligation" shall mean that portion of any
----------------------------
obligation of a Person as lessee under a lease which at the time would be
required to be capitalized on the balance sheet of such lessee in accordance
with GAAP.
"Certificate of Financial Condition" shall mean a certificate,
----------------------------------
substantially in the form of Exhibit A attached hereto, signed by the chief
---------
financial officer of the Borrower, together with any schedules, exhibits or
annexes appended thereto.
"Change of Control" shall mean (a) the failure of the Borrower to own,
-----------------
directly or indirectly, one hundred percent (100%) of the ownership interests of
ATS and ATS (Delaware), (b) the failure of ATS (Delaware) to own, directly or
indirectly, one hundred percent (100%) of the ownership interests of ATSC
Operating and ATSC Holding (unless such Persons are merged into ATS (Delaware)),
(c) the sale, lease, transfer, in one or a series of related transactions, of
all or substantially all of the Borrower's assets to any Person or group (as
such term is used in Section 13(d)(3) of the Exchange Act), other than to any
wholly-owned, directly or indirectly, Subsidiary, (d) the adoption of a plan
relating to the liquidation or dissolution of the Borrower, (e) the acquisition,
directly or indirectly, by any
-5-
<PAGE>
Person or group (as such term is used in Section 13(d)(3) of the Exchange Act)
of forty percent (40%) or more of the voting power of the voting stock of the
Borrower by way of merger or consolidation or otherwise, and such Persons own
more voting power than the Principal Shareholders, or (f) the Continuing
Directors cease for any reason to constitute a majority of the directors of the
Borrower then in office.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
----
time to time.
"Collateral" shall mean any property of any kind constituting
----------
collateral for the Obligations under any of the Security Documents.
"Commitment" shall mean the several obligations of the Lenders to fund
----------
their respective portion of the Loans to the Borrower in accordance with their
respective Commitment Ratios in the aggregate sum of up to $150,000,000,
pursuant to the terms hereof, as such obligations may be reduced from time to
time pursuant to the terms hereof.
"Commitment Ratios" shall mean the percentages in which the Lender are
-----------------
severally bound to fund their respective portion of Advances to the Borrower
under the Commitment, which are set forth below (together with dollar amounts)
(and which may change from time to time in accordance with Section 11.5 hereof):
<TABLE>
<CAPTION>
Approximate Dollar
Lender Percentage Commitment
- ------ ---------- ----------
<S> <C> <C>
Toronto Dominion (Texas), Inc. 48.66666667% $ 73,000,000.00
General Electric Capital Corporation 10.00000000% $ 15,000,000.00
Chase Securities, Inc. 6.66666667% $ 10,000,000.00
Bank of Montreal, Chicago Branch 6.66666667% $ 10,000,000.00
ING High Income Principal Preservation Fund 6.66666667% $ 10,000,000.00
Holdings, LDC
Octagon Loan Trust 6.66666667% $ 10,000,000.00
Credit Lyonnais New York Branch 3.33333333% $ 5,000,000.00
Union Bank of California, N.A. 3.33333333% $ 5,000,000.00
Debt Strategies Fund, Inc. 2.66666667% $ 4,000,000.00
Debt Strategies Fund II, Inc. 2.66666667% $ 4,000,000.00
Senior High Income Portfolio, Inc. 2.66666667% $ 4,000,000.00
TOTAL $100% $150,000,000.00
===== ===== ===============
</TABLE>
-6-
<PAGE>
"Communications Act" shall mean the Communications Act of 1934, and
------------------
any similar or successor federal statute, and the rules and regulations of the
FCC thereunder, all as the same may be in effect from time to time.
"Continuing Director" shall mean any member of the Board of Directors
-------------------
of the Borrower who (i) is a member of that Board of Directors on the Agreement
Date or (ii) was nominated for election by either (a) one or more of the
Principal Shareholders (or a Related Party thereof) or (b) the Board of
Directors a majority of whom were directors at the Agreement Date or whose
election or nomination for election was previously approved by one or more of
the Principal Shareholders or such directors.
"Default" shall mean any Event of Default, and any of the events
-------
specified in Section 8.1 hereof, regardless of whether there shall have occurred
any passage of time or giving of notice, or both, that would be necessary in
order to constitute such event an Event of Default.
"Default Rate" shall mean a simple per annum interest rate equal to
------------
the sum of (a) the Base Rate and (b) four and one-half percent (4.5%).
"Employee Pension Plan" shall mean any Plan which is maintained by the
---------------------
Borrower, any of its Subsidiaries or any ERISA Affiliate.
"Environmental Laws" shall mean all applicable federal, state or local
------------------
laws, statutes, rules, regulations or ordinances, codes, common law, consent
agreements, orders, decrees, judgments or injunctions issued, promulgated,
approved or entered thereunder relating to public health, safety or the
pollution or protection of the environment, including, without limitation, those
relating to releases, discharges, emissions, spills, leaching, or disposals to
air, water, land or ground water, to the withdrawal or use of ground water, to
the use, handling or disposal of polychlorinated biphenyls, asbestos or urea
formaldehyde, to the treatment, storage, disposal or management of hazardous
substances (including, without limitation, petroleum, crude oil or any fraction
thereof, or other hydrocarbons), pollutants or contaminants, to exposure to
toxic, hazardous or other controlled, prohibited, or regulated substances,
including, without limitation, any such provisions under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. (S) 9601 et seq.), or the Resource Conservation and Recovery Act of 1976,
as amended (42 U.S.C. (S) 6901 et seq.).
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as in effect from time to time.
-7-
<PAGE>
"ERISA Affiliate" shall mean any Person, including a Subsidiary or an
---------------
Affiliate of the Borrower, that is a member of any group of organizations of
which the Borrower is a member and which is covered by a Plan.
"Eurodollar Reserve Percentage" shall mean the percentage which is in
-----------------------------
effect from time to time under Regulation D of the Board of Governors of the
Federal Reserve System, as such regulation may be amended from time to time, as
the maximum reserve requirement applicable with respect to Eurocurrency
Liabilities (as that term is defined in Regulation D), whether or not any Lender
has any such Eurocurrency Liabilities subject to such reserve requirement at
that time.
"Event of Default" shall mean any of the events specified in Section
----------------
8.1 hereof; provided, however, that any requirement for notice or lapse of time,
-------- -------
or both, has been satisfied.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
"FCC" shall mean the Federal Communications Commission, or any other
---
similar or successor agency of the federal government administering the
Communications Act.
"Federal Funds Rate" shall mean, as of any date, the weighted average
------------------
of the rates on overnight federal funds transactions with the members of the
Federal Reserve System arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Administrative Agent from three (3) federal
funds brokers of recognized standing selected by the Administrative Agent.
"GAAP" shall mean, as in effect from time to time, generally accepted
----
accounting principles in the United States, consistently applied.
"Guaranty" or "Guaranteed," as applied to an obligation, shall mean
-------- ----------
and include (a) a guaranty, direct or indirect, in any manner, of all or any
part of such obligation, and (b) any agreement, direct or indirect, contingent
or otherwise, the practical effect of which is to assure in any way the payment
or performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, any
reimbursement obligations as to amounts drawn down by beneficiaries of
outstanding letters of credit or capital call requirements; provided, however,
-------- -------
that the term "Guarantee" shall not include guarantees entered into in the
ordinary course of business, including,
-8-
<PAGE>
without limitation, the New Tower Operation Business, not involving Indebtedness
for Money Borrowed.
"Indebtedness" shall mean, with respect to any Person, and without
------------
duplication, (a) all items, except items of shareholders' and partners' equity
or capital stock or surplus or general contingency or deferred tax reserves,
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, including,
without limitation, with respect to any secured non-recourse obligations of such
Person, the higher of the book value or fair market value of the property or
asset securing such obligation (if less than the amount of such obligation), (b)
all direct or indirect obligations of any other Person secured by any Lien to
which any property or asset owned by such Person is subject, but only to the
extent of the higher of the fair market value or the book value of the property
or asset subject to such Lien (if less than the amount of such obligation), if
the obligation secured thereby shall not have been assumed, (c) to the extent
not otherwise included, all Capitalized Lease Obligations of such Person and all
obligations of such Person with respect to leases constituting part of a sale
and lease-back arrangement, (d) all reimbursement obligations with respect to
outstanding letters of credit, (e) to the extent not otherwise included, all
obligations subject to Guaranties of such Person or its Subsidiaries, and (f)
all obligations of such Person under Interest Hedge Agreements; provided,
--------
however, that the Intracoastal Notes shall not be deemed to be, and shall be
- -------
excluded from, Indebtedness.
"Indebtedness for Money Borrowed" shall mean, with respect to any
-------------------------------
Person, Indebtedness for 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, all
Indebtedness upon which interest charges are customarily paid (other than trade
payables arising in the ordinary course of business, but only if and so long as
such accounts are payable on customary trade terms), all Capitalized Lease
Obligations, all reimbursement obligations with respect to outstanding letters
of credit, all Indebtedness issued or assumed as full or partial payment for
property or services (other than trade payables arising in the ordinary course
of business, but only if and so long as such accounts are payable on customary
trade terms), whether or not any such notes, drafts, obligations or Indebtedness
represent Indebtedness for money borrowed, and, without duplication, Guaranties
of any of the foregoing; provided, however, that the Intracoastal Notes shall
-------- -------
not be deemed to be, and shall be excluded from, Indebtedness. For purposes of
this definition, interest which is accrued but not paid on the scheduled due
date for such interest shall be deemed Indebtedness for Money Borrowed.
"Indemnitee" shall have the meaning ascribed thereto in Section 5.11
----------
hereof.
-9-
<PAGE>
"Intercreditor Agreement" shall mean that certain Intercreditor
-----------------------
Agreement dated as of the even date herewith among the Lenders, the
Administrative Agent, and the Banks and the Administrative Agent under each of
the ATS Facility A Loan Agreement and the ATS Facility B Loan Agreement.
"Interest Hedge Agreements" shall mean the obligations of any Person
-------------------------
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"Interest Period" shall mean (a) in connection with any Base Rate
---------------
Advance, the period beginning on the date such Advance is made and ending on the
last day of the calendar quarter in which such Advance is made, provided,
--------
however, that if a Base Rate Advance is made on the last day of any calendar
- -------
quarter, it shall have an Interest Period ending on, and its Payment Date shall
be, the last day of the following calendar quarter, and (b) in connection with
any LIBOR Advance, the term of such Advance selected by the Borrower or
otherwise determined in accordance with this Agreement. Notwithstanding the
foregoing, however, (i) any applicable Interest Period which would otherwise end
on a day which is not a Business Day shall be extended to the next succeeding
Business Day unless, with respect to LIBOR Advances only, such Business Day
falls in another calendar month, in which case such Interest Period shall end on
the next preceding Business Day, (ii) any applicable Interest Period, with
respect to LIBOR Advances only, which begins on a day for which there is no
numerically corresponding day in the calendar month during which such Interest
Period is to end shall (subject to clause (i) above) end on the last day of such
calendar month, and (iii) the Borrower shall not select an Interest Period which
extends beyond the Maturity Date or such earlier date as would interfere with
the Borrower's repayment obligations under Section 2.4 hereof. Interest shall
be due and payable with respect to any Advance as provided in Section 2.3
hereof.
"Interest Rate Basis" shall mean the Base Rate Basis or the LIBOR
-------------------
Basis, as appropriate.
"Interim Financing" shall mean the Redeemable Pay-In-Kind Preferred
-----------------
Stock referred to in the Private Placement Memorandum, dated as of May 28, 1998
(a true and correct copy of which has been delivered to the Administrative
Agent) and shall include the Exchange Preferred (as defined therein).
-10-
<PAGE>
"Intracoastal Notes" shall mean the partially non-recourse notes of
------------------
ATS (a true and complete copy of which has been delivered to the Administrative
Agent), in the aggregate principal amount of $12,000,000, issued or to be issued
by the ATS in connection with the merger of Intracoastal Broadcasting, Inc., a
Delaware corporation, into ATS (Delaware).
"Investment" shall mean any investment or loan by the Borrower or any
----------
Restricted Subsidiary in or to any Person which Person, (a) after giving to such
investment or loan, is not consolidated with the Borrower and the Restricted
Subsidiaries in accordance with GAAP, or (b) is designated as an Unrestricted
Subsidiary in accordance with the terms hereof.
"known to the Borrower" or "to the knowledge of the Borrower" shall
--------------------- --------------------------------
mean known by or reasonably should have been known by the executive officers of
the Borrower (which shall include, without limitation, the chief executive
officer, the chief operating officer, if any, the chief financial officer, the
general counsel and any vice president of the Borrower).
"Lenders" shall mean the Persons whose names appear as "Lenders" on
-------
the signature pages hereof and any other Person which becomes a "Lender"
hereunder after the Agreement Date; and "Lender" shall mean any one of the
foregoing Lenders.
"LIBOR" shall mean, for any Interest Period, the average of the
-----
interest rates per annum at which deposits in United States Dollars for such
Interest Period are offered to the Administrative Agent in the Eurodollar market
at approximately 11:00 a.m. (London, England time) two (2) Business Days before
the first day of such Interest Period, in an amount approximately equal to the
principal amount of, and for a length of time approximately equal to the
Interest Period for, the LIBOR Advance sought by the Borrower.
"LIBOR Advance" shall mean an Advance which the Borrower requests to
-------------
be made as a LIBOR Advance or which is reborrowed as a LIBOR Advance, in
accordance with the provisions of Section 2.2 hereof, and which shall be in a
principal amount of at least $5,000,000 and in an integral multiple of
$1,000,000.
"LIBOR Basis" shall mean a simple per annum interest rate (rounded
-----------
upward, if necessary, to the nearest one-hundredth (1/100th) of one percent
(1%)) equal to the sum of (a) the quotient of (i) the LIBOR, divided by (ii) one
-------
minus the Eurodollar Reserve Percentage, if any, stated as a decimal, plus (b)
- ----- ----
three and one-half percent (3.50%). The LIBOR Basis shall apply to Interest
Periods of one (1), two (2), three (3), or six (6) months, and, once determined,
shall remain unchanged during the applicable Interest Period, except for changes
to reflect adjustments in the Eurodollar Reserve Percentage. The LIBOR Basis
-11-
<PAGE>
for any LIBOR Advance shall be adjusted as of the effective date of any change
in the Eurodollar Reserve Percentage.
"Licenses" shall mean any telephone, microwave, radio transmissions,
--------
personal communications or other license, authorization, certificate of
compliance, franchise, approval or permit, whether for the construction, the
ownership or the operation of any communications tower facilities, granted or
issued by the FCC and held by the Borrower or any of its Restricted
Subsidiaries, all of which as of the Agreement Date are listed on Schedule 1
----------
attached hereto.
"Lien" shall mean, with respect to any property, any mortgage, lien,
----
pledge, negative pledge or other agreement not to pledge, assignment, charge,
security interest, title retention agreement, levy, execution, seizure,
attachment, garnishment or other encumbrance of any kind in respect of such
property, whether created by statute, contract, the common law or otherwise, and
whether or not choate, vested or perfected.
"Loan Documents" shall mean this Agreement, the Notes, the Pledge
--------------
Agreement, the Security Agreement, the Subsidiary Security Agreements, the
Subsidiary Guaranties, the Subsidiary Pledge Agreements, the Assignment of
General Partner Interests, the Assignment of Limited Partner Interests, the
Intercreditor Agreement, the Subordination Agreement, all fee letters, all
Requests for Advance, all Interest Hedge Agreements between the Borrower, on the
one hand, and the Administrative Agent and the Lenders, or any of them, on the
other hand, and all other documents and agreements executed or delivered by the
Borrower or its Restricted Subsidiaries in connection with or contemplated by
this Agreement; provided, however, that the Loan Documents shall exclude, except
-------- -------
as otherwise specifically provided herein, the "Loan Documents" under the ATS
Facility A Loan Agreement and the ATS Facility B Loan Agreement.
"Loan-Purchase Agreement" shall mean any agreement or related
-----------------------
agreements between the Borrower or any Restricted Subsidiary and any other
Person pursuant to the terms of which (a) the Borrower or such Restricted
Subsidiary has made a loan to such Person permitted by Section 7.6(d) hereof and
(b) the Borrower or such Restricted Subsidiary shall agree to acquire all or
substantially all of the assets of such Person within the twelve (12) calendar
month period immediately following the date of such agreement.
"Loans" shall mean, collectively, the amounts advanced by the Lenders
-----
to the Borrower under the Commitment, not to exceed the Commitment, and
evidenced by the Notes.
-12-
<PAGE>
"Majority Lenders" shall mean Lenders the total of whose Loans
----------------
outstanding equals or exceeds sixty percent (60%) of the total principal amount
of the Loans then outstanding of all Lenders entitled to vote hereunder.
"Materially Adverse Effect" shall mean (a) any material adverse effect
-------------------------
upon the business, assets, business prospects, liabilities, financial condition,
results of operations or properties of the Borrower and its Restricted
Subsidiaries, as a whole, or (b) a material adverse effect upon the binding
nature, validity, or enforceability of this Agreement and the Notes, or upon the
ability of the Borrower and its Restricted Subsidiaries to perform the payment
obligations or other material obligations under this Agreement or any other Loan
Document, or upon the value of the Collateral or upon the rights, benefits or
interests of the Lenders in and to the Loans or the rights of the Administrative
Agent and the Lenders in the Collateral; in either case, whether resulting from
any single act, omission, situation, status, event or undertaking, or taken
together with other such acts, omissions, situations, statuses, events or
undertakings.
"Maturity Date" shall mean December 16, 2006, or, as the case may be,
-------------
such earlier date as payment of the Obligations shall be due (whether by
acceleration, reduction of the Commitment to zero or otherwise).
"Multiemployer Plan" shall mean a multiemployer pension plan as
------------------
defined in Section 3(37) of ERISA to which the Borrower, any of its Subsidiaries
or any ERISA Affiliate is or has been required to contribute.
"Necessary Authorizations" shall mean all approvals and licenses from,
------------------------
and all filings and registrations with, any governmental or other regulatory
authority, including, without limiting the foregoing, the Licenses and all
approvals, licenses, filings and registrations under the Communications Act,
necessary in order to enable the Borrower and its Restricted Subsidiaries to
own, construct, maintain, and operate communications tower facilities and to
invest in other Persons who own, construct, maintain, manage and operate
communications tower facilities.
"Net Income" shall mean, for the Borrower and its Restricted
----------
Subsidiaries on a consolidated basis, for any period, net income determined in
accordance with GAAP.
"New Towers" shall mean any communications tower constructed by the
----------
Borrower or any of its Restricted Subsidiaries after (or not yet completed as
of) the Agreement Date. For purposes of this definition, a communications tower
shall be deemed "completed" as of the date one bona fide customer uses
communications equipment installed on such tower and
-13-
<PAGE>
shall not be considered a "New Tower" after the end of the twelfth (12/th/)
calendar month following the month of completion.
"New Tower Operation Business" shall mean the operation by the
----------------------------
Borrower and its Restricted Subsidiaries of New Towers.
"Non-U.S. Bank" shall have the meaning ascribed to such term in
-------------
Section 2.5(a) hereof.
"Notes" shall mean, collectively, those certain promissory notes in
-----
the aggregate original principal amount of $150,000,000, and issued to each of
the Lenders by the Borrower, each one substantially in the form of Exhibit B
---------
attached hereto, any other promissory note issued by the Borrower to evidence
the Loans pursuant to this Agreement, and any extensions, renewals, or
amendments to, or replacements of, the foregoing.
"Obligations" shall mean all payment and performance obligations of
-----------
every kind, nature and description of the Borrower, its Restricted Subsidiaries,
and any other obligors to the Lenders, or the Administrative Agent, or any of
them, under this Agreement and the other Loan Documents (including any interest,
fees and other charges on the Loans or otherwise under the Loan Documents that
would accrue but for the filing of a bankruptcy action with respect to the
Borrower, whether or not such claim is allowed in such bankruptcy action), as
they may be amended from time to time, or as a result of making the Loans,
whether such obligations are direct or indirect, absolute or contingent, due or
not due, contractual or tortious, liquidated or unliquidated, arising by
operation of law or otherwise, now existing or hereafter arising.
"Operating Cash Flow (New Towers)" shall mean, with respect to the
--------------------------------
Borrower and its Restricted Subsidiaries on a consolidated basis as of the end
of any period, (a) the sum of (i) operating revenues of the Borrower and its
Restricted Subsidiaries in connection with the New Tower Operation Business of
the Borrower and its Restricted Subsidiaries, plus (ii) Unrestricted Subsidiary
----
Distributions with respect to businesses of such Persons of the same type as the
New Tower Operation Business during such period, minus (b) operating expenses
-----
attributable to such New Tower Operation Business for such period. In the case
of determining Operating Cash Flow (New Towers) under Section 7.8 hereof
following an Acquisition of a New Tower Operation Business permitted hereunder,
Operating Cash Flow (New Towers) shall include the Acquisition Operating Cash
Flow. For purposes of calculating Operating Cash Flow (New Towers) in
connection with any Advance for an Acquisition of a New Tower Operation
Business, Operating Cash Flow (New Towers) as of the last day of the immediately
preceding calendar month end shall include "operating cash flow (new towers)"
for the Acquisition of a New Tower Operation Business for the same
-14-
<PAGE>
period after giving effect to adjustments reasonably satisfactory to the
Administrative Agent. For purposes of this definition, Operating Cash Flow (New
Towers) shall include the foregoing items (each calculated in a manner
substantially similar to the financial statements required to be delivered
pursuant to Sections 6.1 and 6.2 hereof and otherwise in all respects reasonably
satisfactory to the Administrative Agent) with respect to any Person with whom
the Borrower has entered into a Loan-Purchase Agreement; provided, however, that
-------- -------
with respect to any such Person such items shall not be included for any period
exceeding twelve (12) calendar months unless such Person becomes a Restricted
Subsidiary of the Borrower.
"Operating Cash Flow (Towers)" shall mean, with respect to the
----------------------------
Borrower and its Restricted Subsidiaries on a consolidated basis as of the end
of any period, (a) the sum of (i) operating revenues of the Borrower and its
Restricted Subsidiaries in connection with the Tower Operation Business of the
Borrower and its Restricted Subsidiaries, plus (ii) Unrestricted Subsidiary
----
Distributions with respect to businesses of such Persons of the same type as the
Tower Operation Business during such period, minus (b) operating expenses
-----
attributable to such Tower Operation Business for such period. In the case of
determining Operating Cash Flow (Towers) under Section 7.8 hereof following an
Acquisition of a Tower Operation Business permitted hereunder, Operating Cash
Flow (Towers) shall include the Acquisition Operating Cash Flow. For purposes
of calculating Operating Cash Flow (Towers) in connection with any Advance for
an Acquisition of a Tower Operation Business, Operating Cash Flow (Towers) as of
the last day of the immediately preceding calendar month end shall include
"operating cash flow (towers)" for the Acquisition of a Tower Operation
Business for the same period after giving effect to adjustments reasonably
satisfactory to the Administrative Agent. For purposes of this definition,
Operating Cash Flow (Towers) shall include the foregoing items (each calculated
in a manner substantially similar to the financial statements required to be
delivered pursuant to Sections 6.1 and 6.2 hereof and otherwise in all respects
reasonably satisfactory to the Administrative Agent) with respect to any Person
with whom the Borrower has entered into a Loan-Purchase Agreement; provided,
--------
however, that with respect to any such Person such items shall not be included
- -------
for any period exceeding twelve (12) calendar months unless such Person becomes
a Restricted Subsidiary of the Borrower.
"Operating Cash Flow (Other Business)" shall mean, with respect to the
------------------------------------
Borrower and its Restricted Subsidiaries on a consolidated basis as of the end
of any period, (a) the sum of (i) operating revenues of the Borrower and its
Restricted Subsidiaries in connection with the Other Operations of the Borrower
and its Restricted Subsidiaries, plus (ii) Unrestricted Subsidiary Distributions
----
with respect to businesses of such Persons of the same type as the Other
Operations during such period, minus (b) operating expenses attributable to such
-----
Other Operations for such period. In the case of determining Operating Cash
Flow (Other Business) under Section 7.8 hereof following an Acquisition of Other
Operations permitted
-15-
<PAGE>
hereunder, Operating Cash Flow (Other Business) shall include the Acquisition
Operating Cash Flow (Other Business). For purposes of calculating Operating Cash
Flow (Other Business) in connection with any Advance for an Acquisition of Other
Operations, Operating Cash Flow (Other Business) as of the last day of the
immediately preceding calendar month end shall include "operating cash flow
(other business)" for the Acquisition of Other Operations for the same period
after giving effect to adjustments reasonably satisfactory to the Administrative
Agent.
"Other Operations" shall mean all businesses of the Borrower (other
----------------
than the Tower Operations Business and the New Tower Operation Business),
including, without limitation, the video, voice and data transmission business
and the site acquisition business.
"Payment Date" shall mean the last day of any Interest Period.
------------
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
----
successor thereto.
"Permitted Liens" shall mean, as applied to any Person:
---------------
(a) any Lien in favor of the Administrative Agent or the
Collateral Agent (as defined in the ATS Facility A Loan Agreement) given to
secure the Obligations, the "Obligations" under the ATS Facility A Loan
Agreement, and the "Obligations" under the ATS Facility B Loan Agreement;
(b) (i) Liens on real estate or other property for taxes,
assessments, governmental charges or levies not yet delinquent and (ii) Liens
for taxes, assessments, judgments, governmental charges or levies or claims the
non-payment of which is being diligently contested in good faith by appropriate
proceedings and for which adequate reserves have been set aside on such Person's
books, but only so long as no foreclosure, distraint, sale or similar
proceedings have been commenced with respect thereto;
(c) Liens of carriers, warehousemen, mechanics, vendors, (solely
to the extent arising by operation of law) laborers and materialmen incurred in
the ordinary course of business for sums not yet due or being diligently
contested in good faith, if reserves or appropriate provisions shall have been
made therefor;
(d) Liens incurred in the ordinary course of business in
connection with worker's compensation and unemployment insurance, social
security obligations, assessments or government charges which are not overdue
for more than sixty (60) days;
-16-
<PAGE>
(e) restrictions on the transfer of the Licenses or assets of
the Borrower or its Restricted Subsidiaries imposed by any of the Licenses as
presently in effect or by the Communications Act and any regulations thereunder;
(f) easements, rights-of-way, zoning restrictions, licenses,
reservations or restrictions on use and other similar encumbrances on the use of
real property which do not materially interfere with the ordinary conduct of the
business of such Person or the use of such property;
(g) Liens arising by operation of law in favor of purchasers in
connection with any asset sale permitted hereunder; provided, however, that such
-------- -------
Lien only encumbers the property being sold.
(h) Liens reflected by Uniform Commercial Code financing
statements filed in respect of Capitalized Lease Obligations permitted pursuant
to Section 7.1 hereof and true leases of any Restricted Subsidiary;
(i) Liens to secure performance of statutory obligations, surety
or appeal bonds, performance bonds, bids or tenders;
(j) judgment Liens which do not result in an Event of Default
under Section 8.1 (h) hereof;
(k) Liens in connection with escrow deposits made in connection
with Acquisitions permitted hereunder;
(l) additional Liens on assets of Restricted Subsidiaries
securing Indebtedness which does not in the aggregate outstanding at any time
exceed $500,000; and
(m) Liens of nature contemplated by the penultimate sentence of
Section 5.12 hereof.
"Person" shall mean an individual, corporation, limited liability
------
company, association, partnership, joint venture, trust or estate, an
unincorporated organization, a government or any agency or political subdivision
thereof, or any other entity.
"Plan" shall mean an employee benefit plan within the meaning of
----
Section 3(3) of ERISA or any other employee benefit plan maintained for
employees of any Person or any affiliate of such Person.
-17-
<PAGE>
"Pledge Agreement" shall mean that certain Pledge Agreement dated as
----------------
of even date herewith between the Borrower and the Administrative Agent,
substantially in the form of Exhibit C attached hereto, pursuant to which the
---------
Borrower has pledged to the Administrative Agent for the ratable benefit of the
Lenders all of the Borrower's stock ownership and/or any partnership interests
in each of its directly owned Subsidiaries.
"Principal Shareholders" shall mean (a) Steven B. Dodge, (b) the legal
----------------------
heirs of Steven B. Dodge, (c) Thomas H. Stoner, (d) the legal heirs of Thomas H.
Stoner, and (e) any Person the securities of which would be deemed to be
beneficially owned by any of the foregoing pursuant to the provisions of Rule
13(d)(3) under the Exchange Act.
"Prior Loan Agreement" shall mean that certain Amended and Restated
--------------------
Loan Agreement dated as of October 15, 1997 by and among American Tower Systems,
Inc., as Borrower, the financial institutions parties hereto, as Banks, and
Toronto Dominion (Texas), Inc., as Administrative Agent, as amended by that
certain First Amendment to Amended and Restated Loan Agreement dated as of
December 31, 1997, that certain Assumption Agreement, dated as of January 21,
1998, that certain Second Amendment to Amended and Restated Loan Agreement dated
as of March 27, 1997, and that certain Third Amendment to Amended and Restated
Loan Agreement dated as of May 11, 1998.
"Projections" shall have the meaning ascribed thereto in Section
-----------
4.1(r) hereof.
"Register" shall have the meaning ascribed to such term in Section
--------
11.5(h) hereof.
"Registered Noteholder" shall mean each Non-U.S. Bank that requests or
---------------------
holds a Registered Note pursuant to Section 2.5(a) hereof or registers its Loans
pursuant to Section 11.5(h) hereof.
"Registered Notes" shall mean those certain Notes that have been
----------------
issued in registered form in accordance with Sections 2.5(a) and 11.5(h) hereof
and each of which bears the following legend: "This is a Registered Note, and
this Registered Note and the Loans evidenced hereby may be assigned or otherwise
transferred in whole or in part only by registration of such assignment or
transfer on the Register and in compliance with all other requirements provided
for in the ATS Facility A Loan Agreement."
"Regulations" shall have the meaning ascribed thereto in Section
-----------
4.1(n) hereof.
"Reportable Event" shall mean, with respect to any Employee Pension
----------------
Plan, an event described in Section 4043(b) of ERISA.
-18-
<PAGE>
"Request for Advance" shall mean a certificate designated as a
-------------------
"Request for Advance," signed by an Authorized Signatory of the Borrower
requesting an Advance hereunder, which shall be in substantially the form of
Exhibit D attached hereto, and shall, among other things, (i) specify the date
- ---------
of the Advance, which shall be a Business Day, the amount of the Advance, the
type of Advance (Eurodollar or Base Rate), and, with respect to LIBOR Advances,
the Interest Period selected by the Borrower, and (ii) state that there shall
not exist, on the date of the requested Advance and after giving effect thereto,
a Default, as of the date of such Advance and after giving effect thereto.
"Restricted Payment" shall mean any direct or indirect distribution,
------------------
dividend or other payment to any Person (other than to the Borrower or any
Restricted Subsidiary of the Borrower) on account of any general or limited
partnership interest in, or shares of Capital Stock or other securities of, the
Borrower or any of its Restricted Subsidiaries (other than dividends payable
solely in general or limited partnership interests or stock of such Person and
stock splits), including, without limitation, any direct or indirect
distribution, dividend or other payment to any Person (other than to the
Borrower or any Restricted Subsidiary) on account of any warrants or other
rights or options to acquire shares of Capital Stock of the Borrower or any of
its Restricted Subsidiaries, it being understood that the payment of fees in
connection with the Interim Financing shall not be deemed to be a Restricted
Payment.
"Restricted Subsidiary" shall mean any Subsidiary of the Borrower
---------------------
other than an Unrestricted Subsidiary. The Restricted Subsidiaries as of the
Agreement Date are as set forth on Schedule 2 attached hereto.
----------
"Sconnix Note" shall mean the note of Sconnix Broadcasting Company, a
------------
New Hampshire limited partnership (a true and correct copy of which has been
delivered to the Administrative Agent), in the principal amount of $12,000,000,
acquired or to be acquired by ATS (Delaware) in connection with the merger of
Intracoastal Broadcasting, Inc., a Delaware corporation, into ATS (Delaware).
"Security Agreement" shall mean that certain Security Agreement dated
------------------
as of even date herewith, made by the Borrower in favor of the Administrator
Agent for the ratable benefit of the Lenders, substantially in the form of
Exhibit E attached hereto.
- ---------
"Security Documents" shall mean the Pledge Agreement, the Subsidiary
------------------
Guaranties, all Subsidiary Pledge Agreements, Assignment of General Partner
Interests, each Assignment of Limited Partner Interests, the Security Agreement,
all Subsidiary Security Agreements, Intercreditor Agreement, Subordination
Agreement, any other agreement or instrument providing collateral for the
Obligations whether now or hereafter in existence, and any filings, instruments,
agreements, and documents related thereto or to this Agreement, and
-19-
<PAGE>
providing the Administrative Agent, for the benefit of the Lenders, with
Collateral for the Obligations.
"Security Interest" shall mean all Liens in favor of the
-----------------
Administrative Agent, for the benefit of the Lenders, created hereunder or under
any of the Security Documents to secure the Obligations.
"Separation Obligations" shall mean the obligations of the Borrower to
----------------------
reimburse CBS Corporation for certain tax and other obligations relating to the
separation of the Borrower from American Radio Systems as set forth on Schedule
--------
3 attached hereto.
- -
"Subordination Agreement" shall mean, collectively, (a) that certain
-----------------------
Subordination Agreement dated as of even date herewith among ATSC Operating,
ATSC LP and the Administrative Agent, and (b) that certain Subordination
Agreement dated as of even date herewith among ATSC Holding, ATSC GP and the
Administrative Agent.
"Subsidiary" shall mean, as applied to any Person, (a) any corporation
----------
of which more than fifty percent (50%) of the outstanding stock (other than
directors' qualifying shares) having ordinary voting power to elect a majority
of its board of directors, regardless of the existence at the time of a right of
the holders of any class or classes of securities of such corporation to
exercise such voting power by reason of the happening of any contingency, or any
partnership of which more than fifty percent (50%) of the outstanding
partnership interests, is at the time owned directly or indirectly by such
Person, or by one or more Subsidiaries of such Person, or by such Person and one
or more Subsidiaries of such Person, or (b) any other entity which is directly
or indirectly controlled or capable of being controlled by such Person, or by
one or more Subsidiaries of such Person, or by such Person and one or more
Subsidiaries of such Person.
"Subsidiary Guaranty" shall mean that certain Subsidiary Guaranty
-------------------
dated as of even date herewith, in favor of the Administrative Agent and the
Lenders, given by each Restricted Subsidiary, substantially in the form of
Exhibit F attached hereto, and shall include any similar agreements executed
- ---------
pursuant to Section 5.12 hereof.
"Subsidiary Pledge Agreement" shall mean that certain Subsidiary
---------------------------
Pledge Agreement dated as of even date herewith made by each Restricted
Subsidiary having one or more of its own Subsidiaries, on the one hand, in favor
of the Administrative Agent, on the other hand, substantially in the form
Exhibit G-1 attached hereto, and shall include any similar agreements executed
- -----------
pursuant to Section 5.12 hereof.
-20-
<PAGE>
"Subsidiary Security Agreement" shall mean that certain Subsidiary Security
-----------------------------
Agreement dated as of even date herewith between each Restricted Subsidiary, on
the one hand, and the Administrative Agent, (on behalf of itself and the
Lenders), on the other hand, substantially in the form of Exhibit H attached
---------
hereto, and shall include any similar agreements executed pursuant to Section
5.12 hereof.
"Total Debt" shall mean, for the Borrower and the Restricted Subsidiaries
----------
on a consolidated basis as of any date, the sum (without duplication) of (i) the
outstanding principal amount of the Loans, (ii) the aggregate amount of
Capitalized Lease Obligations and Indebtedness for Money Borrowed (including,
without limitation, Indebtedness under the ATS Facility A Loan Agreement and the
ATS Facility B Loan Agreement) of such Persons, and (iii) the aggregate amount
of all Guarantees of such Persons of Indebtedness for Money Borrowed.
"Total Leverage Ratio" shall mean, as of any date, the ratio of (a) the
--------------------
Total Debt on such date to (b) Annualized Operating Cash Flow.
"Tower Operation Business" shall mean the ownership, leasing and tower
------------------------
management businesses of the Borrower and its Restricted Subsidiaries.
"Unrestricted Subsidiary" shall mean any Subsidiary of the Borrower or any
-----------------------
joint venture (which may represent a minority interest) between the Borrower
and/or any of its Subsidiaries and any other Person, in each case, which the
Borrower has heretofore designated or hereafter designates as an Unrestricted
Subsidiary by written notice to the Administrative Agent and the Lenders prior
to the formation or acquisition of such Subsidiary or joint venture.
Notwithstanding the foregoing, no Restricted Subsidiary may be re-designated as
an Unrestricted Subsidiary without the prior consent of the Majority Lenders.
The Unrestricted Subsidiaries as of the Agreement Date are as set forth on
Schedule 2 attached hereto. All Subsidiaries of any Unrestricted Subsidiary,
- ----------
now or hereafter existing, shall be Unrestricted Subsidiaries.
"Unrestricted Subsidiary Distributions" shall mean the amount of cash
-------------------------------------
distributions received during such period by the Borrower and its Restricted
Subsidiaries from any Unrestricted Subsidiary (other than in connection with the
repayment of intercompany Indebtedness).
"U.S. Person" shall mean a citizen or resident of the United States of
-----------
America, a corporation, partnership or other entity created or organized in or
under any laws of the United States of America, or any estate or trust that is
subject to Federal income taxation regardless of the source of its income.
-21-
<PAGE>
Each definition of an agreement in this Article 1 shall include such
agreement as modified, amended or supplemented from time to time in accordance
herewith.
ARTICLE 2 Loans
Section 2.1 The Loans. The Lenders agree, severally, in accordance with
---------
their respective Commitment Ratios and not jointly, upon the terms and subject
to the conditions of this Agreement, to lend to the Borrower, on the Agreement
Date, an amount not to exceed, in the aggregate, the Commitment. Subject to the
terms and conditions hereof and provided there exists no Default or Event of
Default hereunder, Advances hereunder may be repaid and reborrowed from time to
time to effect a change in the Interest Rate Basis or Interest Periods relating
thereto; provided, however, that there shall be no increase in the principal
-------- -------
amount outstanding under the Notes.
Section 2.2 Manner of Borrowing and Disbursement.
------------------------------------
(a) Choice of Interest Rate, Etc. Any Advance hereunder shall, at the
----------------------------
option of the Borrower, be made as a Base Rate Advance or a LIBOR Advance;
provided, however, that at such time as there shall have occurred and be
- -------- -------
continuing a Default hereunder, the Borrower shall not have the right to receive
a LIBOR Advance. Any notice given to the Administrative Agent in connection with
a requested Advance hereunder shall be given to the Administrative Agent prior
to 11:00 a.m. (New York, New York time) in order for such Business Day to count
toward the minimum number of Business Days required.
(b) Base Rate Advances.
------------------
(i) Advances. The Borrower shall give the Administrative Agent
--------
in the case of Base Rate Advances at least one (1) Business Day's
irrevocable prior telephonic notice followed immediately by a Request for
Advance; provided, however, that the Borrower's failure to confirm any
-------- -------
telephonic notice with a Request for Advance shall not invalidate any
notice so given if acted upon by the Administrative Agent. Upon receipt of
such notice from the Borrower, the Administrative Agent shall promptly
notify each Lender by telephone or telecopy of the contents thereof.
(ii) Repayments and Reborrowings. The Borrower may repay or
---------------------------
prepay a Base Rate Advance without regard to its Payment Date and (A) upon
at least one (1) Business Day's irrevocable prior telephonic notice
followed by written notice,
-22-
<PAGE>
reborrow all or a portion of the principal amount thereof as a Base Rate
Advance, (B) upon at least three (3) Business Days' irrevocable prior
telephonic notice followed by written notice, reborrow all or a portion of
the principal thereof as one or more LIBOR Advances, or (C) not reborrow
all or any portion of such Base Rate Advance. On the date indicated by the
Borrower, such Base Rate Advance shall be so repaid and, as applicable,
reborrowed. The failure to give timely notice hereunder with respect to the
Payment Date of any Base Rate Advance shall be considered a request for a
Base Rate Advance.
(c) LIBOR Advances.
--------------
(i) Advances. Upon request, the Administrative Agent, whose
--------
determination in absence of manifest error shall be conclusive, shall
determine the available LIBOR Bases and shall notify the Borrower of such
LIBOR Bases to apply for the applicable LIBOR Advance. The Borrower shall
give the Administrative Agent in the case of LIBOR Advances at least three
(3) Business Days' irrevocable prior telephonic notice followed immediately
by a Request for Advance; provided, however, that the Borrower's failure to
-------- -------
confirm any telephonic notice with a Request for Advance shall not
invalidate any notice so given if acted upon by the Administrative Agent.
Upon receipt of such notice from the Borrower, the Administrative Agent
shall promptly notify each Lender by telephone or telecopy of the contents
thereof.
(ii) Repayments and Reborrowings. At least three (3) Business
---------------------------
Days prior to the Payment Date for each LIBOR Advance, the Borrower shall
give the Administrative Agent telephonic notice followed by written notice
specifying whether all or a portion of such LIBOR Advance (A) is to be
repaid and then reborrowed in whole or in part as one or more LIBOR
Advances, (B) is to be repaid and then reborrowed in whole or in part as a
Base Rate Advance, or (C) is to be repaid and not reborrowed. The failure
to give such notice shall preclude the Borrower from reborrowing such
Advance as a LIBOR Advance on its Payment Date and shall be considered a
request for a Base Rate Advance. Upon such Payment Date such LIBOR Advance
will, subject to the provisions hereof, be so repaid and, as applicable,
reborrowed.
(d) Notification of Lenders. Upon receipt of a Request for Advance,
-----------------------
or a notice from the Borrower with respect to any outstanding Advance prior to
the Payment Date for such Advance, the Administrative Agent shall promptly but
no later than the close of business on the day of such notice notify each Lender
by telephone or telecopy of the contents thereof and the amount of such Lender's
portion of the Advance. Each Lender shall,
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not later than 12:00 noon (New York, New York time) on the date of borrowing
specified in such notice, make available to the Administrative Agent at the
Administrative Agent's Office, or at such account as the Administrative Agent
shall designate, the amount of its portion of any Advance that represents an
additional borrowing hereunder in immediately available funds.
(e) Disbursement.
------------
(i) Prior to 2:00 p.m. (New York, New York time) on the date of
an Advance hereunder, the Administrative Agent shall, subject to the
satisfaction of the conditions set forth in Article 3 hereof, disburse the
amounts made available to the Administrative Agent by the Lenders in like
funds by (A) transferring the amounts so made available by wire transfer
pursuant to the Borrower's instructions, or (B) in the absence of such
instructions, crediting the amounts so made available to the account of the
Borrower maintained with the Administrative Agent.
(ii) Unless the Administrative Agent shall have received notice
from a Lender prior to 12:00 noon (New York, New York time) on the date of
any Advance that such Lender will not make available to the Administrative
Agent such Lender's ratable portion of such Advance, the Administrative
Agent may assume that such Lender has made or will make such portion
available to the Administrative Agent on the date of such Advance and the
Administrative Agent may in its sole discretion and in reliance upon such
assumption, make available to the Borrower on such date a corresponding
amount. If and to the extent the Lender does not make such ratable portion
available to the Administrative Agent, such Lender agrees to repay to the
Administrative Agent on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available
to the Borrower until the date such amount is repaid to the Administrative
Agent, at the Federal Funds Rate.
(iii) If such Lender shall repay to the Administrative Agent such
corresponding amount, such amount so repaid shall constitute such Lender's
portion of the applicable Advance for purposes of this Agreement. If such
Lender does not repay such corresponding amount immediately upon the
Administrative Agent's demand therefor, the Administrative Agent shall
notify the Borrower and the Borrower shall immediately pay such
corresponding amount to the Administrative Agent, with interest at the
Federal Funds Rate. The failure of any Lender to fund its portion of any
Advance shall not relieve any other Lender of its obligation, if any,
hereunder to fund its respective portion of the Advance on the date of such
borrowing, but no Lender shall be responsible for any such failure of any
other Lender.
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(iv) In the event that, at any time when the Borrower is not in
Default and has otherwise satisfied each of the conditions in Section 3.2
hereof, a Lender for any reason fails or refuses to fund its portion of an
Advance and such failure shall continue for a period in excess of thirty
(30) days, then, until such time as such Lender has funded its portion of
such Advance (which late funding shall not absolve such Lender from any
liability it may have to the Borrower), or all other Lenders have received
payment in full from the Borrower (whether by repayment or prepayment) or
otherwise of the principal and interest due in respect of such Advance,
such non-funding Lender shall not have the right (A) to vote regarding any
issue on which voting is required or advisable under this Agreement or any
other Loan Document, and such Lender's portion of the Loans shall not be
counted as outstanding for purposes of determining "Majority Lenders"
hereunder, and (B) to receive payments of principal, interest or fees from
the Borrower, the Administrative Agent or the other Lenders in respect of
its portion of the Loans until all Loans of the other Lenders have been
paid in full.
Section 2.3 Interest.
--------
(a) On Base Rate Advances. Interest on each Base Rate Advance shall
---------------------
be computed on the basis of a year of 365/366 days for the actual number of days
elapsed and shall be payable at the Base Rate Basis for such Advance, in arrears
on the applicable Payment Date. Interest on Base Rate Advances then outstanding
shall also be due and payable on the Maturity Date.
(b) On LIBOR Advances. Interest on each LIBOR Advance shall be
-----------------
computed on the basis of a 360-day year for the actual number of days elapsed
and shall be payable at the LIBOR Basis for such Advance, in arrears on the
applicable Payment Date, and, in addition, if the Interest Period for a LIBOR
Advance exceeds three (3) months, interest on such LIBOR Advance shall also be
due and payable in arrears on every three-month anniversary of the beginning of
such Interest Period. Interest on LIBOR Advances then outstanding shall also be
due and payable on the Maturity Date.
(c) Interest if no Notice of Selection of Interest Rate Basis. If the
---------------------------------------------------------
Borrower fails to give the Administrative Agent timely notice of its selection
of a LIBOR Basis, or if for any reason a determination of a LIBOR Basis for any
Advance is not timely concluded, the Base Rate Basis shall apply to such
Advance.
(d) Interest Upon Default. Immediately upon the occurrence of an
---------------------
Event of Default hereunder, the outstanding principal balance of the Loans shall
bear interest at the
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Default Rate. Such interest shall be payable on demand by the Majority Lenders
and shall accrue until the earlier of (i) waiver or cure of the applicable Event
of Default, (ii) agreement by the Majority Lenders (or, if applicable to the
underlying Event of Default, the Lenders) to rescind the charging of interest at
the Default Rate, or (iii) payment in full of the Obligations.
(e) LIBOR Contracts. At no time may the number of outstanding LIBOR
---------------
Advances exceed six (6).
Section 2.4 Prepayments and Repayments
--------------------------
(a) Scheduled Repayments. Commencing on June 30, 2001 and at the end
--------------------
of each September 30th, December 31st, March 31st and June 30th thereafter, the
principal balance of the Loans outstanding on June 29, 2001 shall be amortized
in quarterly installments equal to the percentages set forth below for each such
date:
Repayment Percentage
Based on Principal Amount
Repayment Dates Outstanding on June 29, 2001
- -------------------------------------------- ----------------------------
June 30, 2001 through June 30, 2006 0.250%
September 30, 2006 and December 12, 2006 47.375%
Any remaining unpaid principal and interest under the Commitment shall be due
and payable in full on the Maturity Date.
(b) Prepayment. The principal amount of the Loans may, with the
----------
consent of the "Required Lenders" as defined under each of the ATS Facility A
Loan Agreement and the ATS Facility B Loan Agreement, be prepaid in full or
ratably in part; provided, however, that no such consent shall be required with
-------- -------
respect to any repayment that does not reduce the principal amount of the Loans
then outstanding. Any prepayment of a Base Rate Advance permitted hereunder may
be made without penalty and without regard to the Payment Date for such Advance.
To the extent otherwise permitted hereunder, LIBOR Advances may be prepaid prior
to the applicable Payment Date, upon three (3) Business Days' prior written
notice to the Administrative Agent; provided, however, that the Borrower shall
-------- -------
reimburse the Lenders and the Administrative Agent, on demand by the applicable
Lender or the Administrative Agent, for any loss or reasonable out-of-pocket
expense incurred by any Lender or the Administrative Agent in connection with
such prepayment, as set forth in Section 2.7 hereof. Any prepayment hereunder
shall be in amounts of not less than
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$5,000,000 and in integral multiples of $1,000,000, and shall be applied to the
Loans then outstanding in inverse order of maturity.
Section 2.5 Notes; Loan Accounts.
--------------------
(a) The Loans shall be repayable in accordance with the terms and
provisions set forth herein and shall be evidenced by the Notes. One (1) Note
shall be payable to the order of each Lender, in accordance with such Lender's
respective Commitment Ratio. The Notes shall be issued by the Borrower to the
Lenders and shall be duly executed and delivered by one or more Authorized
Signatories. Any Lender (i) which is not a U.S. Person (a "Non-U.S. Bank") and
-------------
(ii) which could become completely exempt from withholding of United States
Federal income taxes in respect of payment of any obligations due to such Lender
hereunder relating to any of its Loans if such Loans were in registered form for
United States Federal income tax purposes may request the Borrower (through the
Administrative Agent), and the Borrower agrees thereupon, to register such Loans
as provided in Section 11.5(h) hereof and to issue to such Lender Notes
evidencing such Loans as Registered Notes or to exchange Notes evidencing such
Loans for new Registered Notes, as applicable. Registered Notes may not be
exchanged for Notes that are not in registered form.
(b) Each Lender may open and maintain on its books in the name of the
Borrower a loan account with respect to its portion of the Loans and interest
thereon. Each Lender which opens such a loan account shall debit such loan
account for the principal amount of its portion of each Advance made by it and
accrued interest thereon, and shall credit such loan account for each payment on
account of principal of or interest on its Loans. The records of a Lender with
respect to the loan account maintained by it shall be prima facie evidence of
its portion of the Loans and accrued interest thereon absent manifest error, but
the failure of any Lender to make any such notations or any error or mistake in
such notations shall not affect the Borrower's repayment obligations with
respect to such Loans.
Section 2.6 Manner of Payment.
-----------------
(a) Each payment (including, without limitation, any prepayment) by
the Borrower on account of the principal of or interest on the Loans, commitment
fees and any other amount owed to the Lenders or the Administrative Agent or any
of them under this Agreement or the Notes shall be made not later than 1:00 p.m.
(New York, New York time) on the date specified for payment under this Agreement
to the Administrative Agent at the Administrative Agent's Office, for the
account of the Lenders or the Administrative Agent, as the case may be, in
lawful money of the United States of America in immediately available funds.
Any payment received by the Administrative Agent after 1:00 p.m. (New York, New
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<PAGE>
York time) shall be deemed received on the next Business Day. Receipt by the
Administrative Agent of any payment intended for any Lender or Lenders hereunder
prior to 1:00 p.m. (New York, New York time) on any Business Day shall be deemed
to constitute receipt by such Lender or Lenders on such Business Day. In the
case of a payment for the account of a Lender, the Administrative Agent will
promptly, but no later than the close of business on the date such payment is
deemed received, thereafter distribute the amount so received in like funds to
such Lender. If the Administrative Agent shall not have received any payment
from the Borrower as and when due, the Administrative Agent will promptly notify
the Lenders accordingly. In the event that the Administrative Agent shall fail
to make distribution to any Lender as required under this Section 2.6, the
Administrative Agent agrees to pay such Lender interest from the date such
payment was due until paid at the Federal Funds Rate.
(b) The Borrower agrees to pay principal, interest, fees and all
other amounts due hereunder or under the Notes without set-off or counterclaim
or any deduction whatsoever.
(c) Prior to the declaration of an Event of Default under Section 8.2
hereof, if some but less than all amounts due from the Borrower are received by
the Administrative Agent with respect to the Obligations, the Administrative
Agent shall distribute such amounts in the following order of priority, all on a
pro rata basis to the Lenders: (i) to the payment on a pro rata basis of any
fees or expenses then due and payable to the Administrative Agent or the
Lenders, or any of them; (ii) to the payment of interest then due and payable on
the Loans; (iii) to the payment of all other amounts not otherwise referred to
in this Section 2.6(c) then due and payable to the Administrative Agent or the
Lenders, or any of them, hereunder or under the Notes or any other Loan
Document; and (iv) to the payment of principal then due and payable on the
Loans.
(d) Subject to any contrary provisions in the definition of Interest
Period, if any payment under this Agreement or any of the other Loan Documents
is specified to be made on a day which is not a Business Day, it shall be made
on the next Business Day, and such extension of time shall in such case be
included in computing interest and fees, if any, in connection with such
payment.
(e) Each Registered Noteholder (or, if such Registered Noteholder is
not the beneficial owner thereof, such beneficial owner) shall deliver to the
Borrower (with a copy to the Administrative Agent) prior to or at the time it
becomes a Registered Noteholder, a Form 1001, 4224 or W-8 (or such successor and
related forms as may from time to time be adopted by the relevant taxing
authorities of the United States of America), together with an annual
certificate stating that such Registered Noteholder or beneficial owner, as the
case
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<PAGE>
may be, is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code
and is not otherwise described in Section 881(c)(3) of the Code. Each Registered
Noteholder or beneficial owner, as the case may be, shall promptly notify the
Borrower (with a copy to the Administrative Agent) if at any time, such
Registered Noteholder or beneficial owner, as the case may be, determines that
it is no longer in a position to make the certification made in such certificate
to the Borrower (or any other form of certification adopted by the relevant
taxing authorities of the United States of America for such purposes).
Section 2.7 Reimbursement.
-------------
(a) Whenever any Lender shall sustain or incur any losses or
reasonable out-of-pocket expenses in connection with (i) failure by the Borrower
to borrow any LIBOR Advance after having given notice of its intention to borrow
in accordance with Section 2.2 hereof (whether by reason of the Borrower's
election not to proceed or the non-fulfillment of any of the conditions set
forth in Article 3 hereof), or (ii) prepayment (or failure to prepay after
giving notice thereof) of any LIBOR Advance in whole or in part for any reason,
the Borrower agrees to pay to such Lender, upon such Lender's demand, an amount
sufficient to compensate such Lender for all such losses and out-of-pocket
expenses. Such Lender's good faith determination of the amount of such losses
or out-of-pocket expenses, as set forth in writing and accompanied by
calculations in reasonable detail demonstrating the basis for its demand, shall
be presumptively correct absent manifest error.
(b) Losses subject to reimbursement hereunder shall include, without
limiting the generality of the foregoing, lost margins, expenses incurred by any
Lender or any participant of such Lender permitted hereunder in connection with
the re-employment of funds prepaid, paid, repaid, not borrowed, or not paid, as
the case may be, and will be payable whether the Maturity Date is changed by
virtue of an amendment hereto (unless such amendment expressly waives such
payment) or as a result of acceleration of the Loans.
Section 2.8 Pro Rata Treatment.
------------------
(a) Advances. Each Advance from the Lenders hereunder, shall be made
--------
pro rata on the basis of the respective Commitment Ratios of the Lenders.
(b) Payments. Each payment and prepayment of principal of the Loans,
--------
and, except as provided in Section 2.2(e) hereof and Article 10 hereof, each
payment of interest on the Loans, shall be made to the Lenders pro rata on the
basis of their respective unpaid principal amounts outstanding under the Notes
immediately prior to such payment or prepayment. If any Lender shall obtain any
payment (whether involuntary, through the exercise of any right of set-off, or
otherwise) on account of the Loans in excess of its ratable
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share of the Loans under its Commitment Ratio, such Lender shall forthwith
purchase from the other Lenders such participations in the portion of the Loans
made by them as shall be necessary to cause such purchasing Lender to share the
excess payment ratably with each of them; provided, however, that if all or any
-------- -------
portion of such excess payment is thereafter recovered from such purchasing
Lender, such purchase from each Lender shall be rescinded and such Lender shall
repay to the purchasing Lender the purchase price to the extent of such
recovery. The Borrower agrees that any Lender so purchasing a participation from
another Lender pursuant to this Section 2.8(b) may, to the fullest extent
permitted by law, exercise all its rights of payment (including, without
limitation, the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount of such
participation.
Section 2.9 Capital Adequacy. If after the date hereof, the adoption
----------------
of any Applicable Law regarding the capital adequacy of banks or bank holding
companies, or any change in Applicable Law (whether adopted before or after the
Agreement Date) or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Lender (or the
bank holding company of such Lender) with any directive regarding capital
adequacy (whether or not having the force of law) of any such governmental
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on any Lender's capital as a consequence of its
obligations hereunder with respect to the Loans and the Commitment to a level
below that which it could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's policies with respect to
capital adequacy immediately before such adoption, change or compliance and
assuming that such Lender's (or the bank holding company of such Lender) capital
was fully utilized prior to such adoption, change or compliance) by an amount
reasonably deemed by such Lender to be material, then, upon demand by such
Lender, the Borrower shall promptly pay to such Lender such additional amounts
as shall be sufficient to compensate such Lender for such reduced return,
together with interest on such amount from the fourth (4th) Business Day after
the date of demand or the Maturity Date, as applicable, until payment in full
thereof at the Default Rate. A certificate of such Lender setting forth the
amount to be paid to such Lender by the Borrower as a result of any event
referred to in this paragraph and supporting calculations in reasonable detail
shall be presumptively correct absent manifest error.
Section 2.10 Bank Tax Forms. On or prior to the Agreement Date and on or
--------------
prior to the first Business Day of each calendar year thereafter, each Lender
which is organized in a jurisdiction other than the United States shall provide
each of the Administrative Agent and the Borrower (a), if such Lender is a
"bank" under Section 881(c)(3)(A) of the Code, with a properly executed
originals of Forms 4224 or 1001 (or any successor form) prescribed by the
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<PAGE>
Internal Revenue Service or other documents satisfactory to the Borrower and the
Administrative Agent, and properly executed Internal Revenue Service Forms W-8
or W-9, as the case may be, certifying (i) as to such Lender's status for
purposes of determining exemption from United States withholding taxes with
respect to all payments to be made to such Lender hereunder and under the Notes
or (ii) that all payments to be made to such Lender hereunder and under the
Notes are subject to such taxes at a rate reduced to zero by an applicable tax
treaty, or (b), if such Lender is not a "bank" within the meaning of Section
881(c)(3)(A) of the Code and intends to claim exemption from U.S. Federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a Form W-8, or any subsequent versions thereof
or successors thereto (and, if such Lender delivers a Form W-8, a certificate
representing that such Lender is not a bank for purposes of Section 881(c) of
the Code, is not a ten-percent (10%) shareholder (within the meaning of Section
871(h)(3)(B) of the Code and is not a controlled foreign corporation related to
the Borrower (within the meaning of Section 864(d)(4) of the Code)), properly
completed and duly executed by such Lender, indicating that such Lender is
entitled to receive payments under this Agreement without deduction or
withholding of any United States Federal income taxes as permitted by the Code.
Each such Lender agrees to provide the Administrative Agent and the Borrower
with new forms prescribed by the Internal Revenue Service upon the expiration or
obsolescence of any previously delivered form, or after the occurrence of any
event requiring a change in the most recent forms delivered by it to the
Administrative Agent and the Borrower.
ARTICLE 3 Conditions Precedent
Section 3.1 Conditions Precedent to Effectiveness of this Agreement. The
-------------------------------------------------------
effectiveness of this Agreement is subject to the prior or contemporaneous
fulfillment of each of the following conditions:
(a) The Administrative Agent and the Lenders shall have received each
of the following:
(i) this Agreement duly executed;
(ii) the loan certificate of the Borrower dated as of the
Agreement Date, in substantially the form attached hereto as Exhibit I,
---------
including a certificate of incumbency with respect to each Authorized
Signatory of such Person, together with the following items: (A) a true,
complete and correct copy of the Certificate of Incorporation and By-laws
of the Borrower as in effect on the Agreement Date, (B) certificates of
good standing for the Borrower issued by the Secretary of State or
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similar state official for the state of incorporation of the Borrower and
for each state in which the Borrower is required to qualify to do business,
(C) a true, complete and correct copy of the corporate resolutions of the
Borrower authorizing the Borrower to execute, deliver and perform this
Agreement and the other Loan Documents, and (D) a true, complete and
correct copy of any shareholders' agreements or voting trust agreements in
effect with respect to the stock of the Borrower;
(iii) duly executed Notes;
(iv) duly executed Security Documents;
(v) copies of insurance binders or certificates covering the
assets of the Borrower and its Restricted Subsidiaries, and otherwise
meeting the requirements of Section 5.5 hereof, together with copies of the
underlying insurance policies;
(vi) legal opinion of Sullivan & Worcester LLP, counsel to the
Borrower; addressed to each Lender and the Administrative Agent and dated
as of the Agreement Date;
(vii) duly executed Certificate of Financial Condition for the
Borrower and its Restricted Subsidiaries on a consolidated and
consolidating basis, given by the chief financial officer of the Borrower;
(viii) copies of the most recent quarterly financial statements
of the Borrower and its Restricted Subsidiaries provided to each Lender and
each Administrative Agent, certified by the chief financial officer of the
Borrower;
(ix) duly executed Intercreditor Agreement; and
(x) all such other documents as the Administrative Agent may
reasonably request, certified by an appropriate governmental official or an
Authorized Signatory if so requested.
(b) The Administrative Agent and the Lenders shall have received
evidence satisfactory to them that all Necessary Authorizations (other than
Necessary Authorizations the absence of which could not reasonably be expected
to have, individually or in the aggregate, a Materially Adverse Effect) ,
including all necessary consents to the closing of this Agreement, have been
obtained or made, are in full force and effect and are not subject to any
pending or, to the knowledge of the Borrower, threatened reversal or
cancellation, and
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the Administrative Agent and the Lenders shall have received a certificate of an
Authorized Signatory so stating.
(c) The Borrower shall certify to the Administrative Agent and the
Lenders that each of the representations and warranties in Article 4 hereof are
true and correct in all material respects as of the Agreement Date, that no
Default or Event of Default then exists or is continuing, and that no material
adverse change has occurred in the financial condition, business operations,
prospects or properties of the Borrower and its Restricted Subsidiaries, on a
consolidated basis, since the most recent fiscal year end and fiscal quarter
end, it being understood that the Separation Obligations shall not be deemed to
be such a material adverse change.
(d) The Borrower shall have paid to the Administrative Agent for the
account of each Lender the facility fees set forth in those letter agreements
dated the Agreement Date in favor of each Lender.
(e) The Administrative Agent and the Lenders shall have received
evidence satisfactory to them that all conditions precedent to the effectiveness
of each of the ATS Facility A Loan Agreement and the ATS Facility B Loan
Agreement have been satisfied (other than the provisions comparable to this
provision), and that each of the ATS Facility A Loan Agreement and the ATS
Facility B Loan Agreement have been duly executed.
(f) The Administrative Agent and the Lenders shall have received, in
form and substance satisfactory to them, evidence that the Borrower has received
commitments to fund with equity, or has received equity proceeds to pay, one
hundred percent (100%) of the tax liabilities that are a part of the Separation
Obligations, to the extent such tax liabilities have not been paid.
ARTICLE 4 Representations and Warranties
Section 4.1 Representations and Warranties. The Borrower hereby agrees,
------------------------------
represents and warrants, upon the Agreement Date, in favor of the Administrative
Agent and each Lender that:
(a) Organization; Ownership; Power; Qualification. The Borrower is a
---------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Borrower has the corporate power and authority to
own its properties and to carry on its business as now being and as proposed
hereafter to be conducted. Except as set forth on Schedule 4 attached hereto,
----------
each Restricted Subsidiary of the Borrower is a
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<PAGE>
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation and has the corporate power and authority to
own its properties and to carry on its business as now being and as proposed
hereafter to be conducted. The Borrower and each of its Restricted Subsidiaries
are duly qualified, in good standing and authorized to do business in each
jurisdiction in which the character of their respective properties or the nature
of their respective businesses requires such qualification or authorization,
except where failure to be so qualified, in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.
(b) Authorization; Enforceability. The Borrower has the corporate
-----------------------------
power and has taken all necessary corporate action to authorize it to borrow
hereunder, to execute, deliver and perform this Agreement and each of the other
Loan Documents to which it is a party in accordance with their respective terms,
and to consummate the transactions contemplated hereby and thereby. This
Agreement has been duly executed and delivered by the Borrower and is, and each
of the other Loan Documents to which the Borrower is party is, a legal, valid
and binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms, subject, as to enforcement of remedies, to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity.
(c) Subsidiaries: Authorization; Enforceability. The Restricted
--------------------------------------------
Subsidiaries and the Borrower's direct and indirect ownership thereof as of the
Agreement Date are as set forth on Schedule 2 attached hereto, and to the extent
----------
such Restricted Subsidiaries are corporations, the Borrower has, subject to the
provisions of the Security Documents, the unrestricted right to vote the issued
and outstanding shares of each directly owned Restricted Subsidiary shown
thereon and such shares of such Restricted Subsidiaries have been duly
authorized and issued and are fully paid and nonassessable. Each Restricted
Subsidiary that is a corporation has the corporate power and has taken all
necessary corporate action to authorize it to execute, deliver and perform each
of the Loan Documents to which it is a party in accordance with their respective
terms and to consummate the transactions contemplated by this Agreement and by
such Loan Documents. Each of the Loan Documents to which any Restricted
Subsidiary is party is a legal, valid and binding obligation of such Restricted
Subsidiary enforceable against such Restricted Subsidiary in accordance with its
terms, subject, as to enforcement of remedies, to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity. The Borrower's ownership
interest in each Restricted Subsidiary represents a direct or indirect
controlling interest of such Restricted Subsidiary for purposes
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of directing or causing the direction of the management and policies of each
Restricted Subsidiary.
(d) Compliance with Other Loan Documents and Contemplated
-----------------------------------------------------
Transactions. The execution, delivery and performance, in accordance with their
- ------------
respective terms, by the Borrower of this Agreement and the Notes, and by the
Borrower and its Restricted Subsidiaries of each of the other Loan Documents to
which they are respectively party, and the consummation of the transactions
contemplated hereby and thereby, do not and will not (i) require any consent or
approval, governmental or otherwise, not already obtained, (ii) violate any
Applicable Law respecting the Borrower or any Restricted Subsidiary, (iii)
conflict with, result in a breach of, or constitute a default under the
certificate or articles of incorporation or by-laws or partnership agreements,
as the case may be, as amended, of the Borrower or of any Restricted Subsidiary,
or under any material indenture, agreement, or other instrument, including
without limitation the Licenses, to which the Borrower or any Restricted
Subsidiary is a party or by which any of them or their respective properties may
be bound, or (iv) result in or require the creation or imposition of any Lien
upon or with respect to any property now owned or hereafter acquired by the
Borrower or any Restricted Subsidiary, except for Permitted Liens.
(e) Business. The Borrower, together with its Subsidiaries, is
--------
engaged in the business of owning, constructing, managing, operating, and
investing in communications tower facilities and in the video, voice and data
transmission business.
(f) Licenses, etc. The Licenses have been duly issued and are in full
--------------
force and effect. The Borrower and its Restricted Subsidiaries are in compliance
in all material respects with all of the provisions thereof. The Borrower and
its Restricted Subsidiaries have secured all Necessary Authorizations, except
for such Necessary Authorizations the failure of which to secure would not
reasonably be expected to have, individually or in the aggregate, a Materially
Adverse Effect, and all such Necessary Authorizations are in full force and
effect. Neither any License nor any Necessary Authorization is the subject of
any pending or, to the best of the Borrower's knowledge, threatened revocation
which, if determined adversely to the Borrower or any Restricted Subsidiary
would reasonably be expected to have, individually or in the aggregate, a
Materially Adverse Effect.
(g) Compliance with Law. The Borrower and its Restricted Subsidiaries
-------------------
are in compliance with all Applicable Law, except where the failure to be in
compliance would not individually or in the aggregate have a Material Adverse
Effect.
(h) Title to Assets. As of the Agreement Date, the Borrower and its
---------------
Restricted Subsidiaries have good, legal and marketable title to, or a valid
leasehold interest
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<PAGE>
in, all of its assets except for such exceptions as would not reasonably be
expected to have, individually or in the aggregate, a Materially Adverse Effect.
None of the properties or assets of the Borrower or any of its Restricted
Subsidiaries is subject to any Liens, except for Permitted Liens and Liens under
the Prior Loan Agreement and related documents. Except for financing statements
evidencing Permitted Liens, no financing statement under the Uniform Commercial
Code as in effect in any jurisdiction and no other filing which names the
Borrower or any Restricted Subsidiary as debtor or which covers or purports to
cover any of the assets of the Borrower or any Restricted Subsidiary is
currently effective and on file in any state or other jurisdiction, other than
such financing statements, if any, as to which the obligations secured thereby
have been repaid in their entirety, and neither the Borrower nor any Restricted
Subsidiary has signed any such financing statement or filing or any security
agreement authorizing any secured party thereunder to file any such financing
statement or filing other than the Prior Loan Agreement and related documents.
(i) Litigation. As of the Agreement Date, there is no action, suit,
----------
proceeding or investigation pending against, or, to the knowledge of the
Borrower, threatened against or in any other manner relating adversely to, the
Borrower or any Restricted Subsidiary or any of their respective properties,
including, without limitation, the Licenses, in any court or before any
arbitrator of any kind or before or by any governmental body (including, without
limitation, the FCC) except as set forth on Schedule 5 attached hereto (as such
----------
schedule may be updated from time to time). No such action, suit, proceeding or
investigation (i) calls into question the validity of this Agreement or any
other Loan Document, or (ii) individually or collectively involves the
possibility of any judgment or liability not fully covered by insurance which,
if determined adversely to the Borrower or any Restricted Subsidiary, would have
a Materially Adverse Effect.
(j) Taxes. All federal, state and other tax returns of the Borrower
-----
and each Restricted Subsidiary required by law to be filed have been duly filed
and all federal, state and other taxes, including, without limitation,
withholding taxes, assessments and other governmental charges or levies required
to be paid by the Borrower or any Restricted Subsidiary or imposed upon the
Borrower or any Restricted Subsidiary or any of their respective properties,
income, profits or assets, which are due and payable, have been paid, except any
such taxes (i) (x) the payment of which the Borrower or any Restricted
Subsidiary is diligently contesting in good faith by appropriate proceedings,
(y) for which adequate reserves have been provided on the books of the Borrower
or the Restricted Subsidiary of the Borrower involved, and (z) as to which no
Lien other than a Permitted Lien has attached and no foreclosure, distraint,
sale or similar proceedings have been commenced, or (ii) which may result from
audits not yet conducted. The charges, accruals and reserves on the books of
the Borrower and each Restricted Subsidiary in respect of taxes are, in the
judgment of the Borrower, adequate.
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<PAGE>
(k) Financial Statements. The Borrower has furnished or caused to be
--------------------
furnished to the Administrative Agent and the Lenders as of the Agreement Date,
the audited financial statements for the Borrower and its Subsidiaries on a
consolidated basis for the fiscal year ended December 31, 1997, and unaudited
financial statements for the Borrower and its Restricted Subsidiaries for the
fiscal quarter ended March 31, 1998, all of which have been prepared in
accordance with GAAP and present fairly in all material respects the financial
position of the Borrower and its Restricted Subsidiaries on a consolidated
basis, on and as at such dates and the results of operations for the periods
then ended (subject, in the case of unaudited financial statements, to normal
year-end and audit adjustments). Neither the Borrower nor any Restricted
Subsidiary has any material liabilities, contingent or otherwise, other than as
disclosed in the financial statements referred to in the preceding sentence or
as set forth or referred to in this Agreement.
(l) No Materially Adverse Change. There has occurred no event since
----------------------------
December 31, 1997 which has or which could reasonably be expected to have a
Materially Adverse Effect other than the Separation Obligations.
(m) ERISA. The Borrower and each Subsidiary of the Borrower and each
-----
of their respective Plans are in compliance with ERISA and the Code, except to
the extent that the failure to so comply could not reasonably be expected to
have a Materially Adverse Effect, and neither the Borrower nor any of its ERISA
Affiliates, including its Subsidiaries, has incurred any accumulated funding
deficiency with respect to any such Plan within the meaning of ERISA or the
Code. The Borrower, each of its Subsidiaries, and each other ERISA Affiliate
have complied in all material respects with all requirements of ERISA. Neither
the Borrower nor any of its Subsidiaries has made any promises of retirement or
other benefits to employees, except as set forth in the Plans, in written
agreements with such employees, or in the Borrower's employee handbook and
memoranda to employees. Neither the Borrower nor any of its ERISA Affiliates,
including its Subsidiaries, has incurred any material liability to PBGC in
connection with any such Plan. The assets of each such Plan which is subject to
Title IV of ERISA are sufficient to provide the benefits under such Plan, the
payment of which PBGC would guarantee if such Plan were terminated, and such
assets are also sufficient to provide all other "benefit liabilities" (within
the meaning of Section 4041 of ERISA) due under the Plan upon termination. No
Reportable Event has occurred and is continuing with respect to any such Plan.
No such Plan or trust created thereunder, or party in interest (as defined in
Section 3(14) of ERISA), or any fiduciary (as defined in Section 3(21) of
ERISA), has engaged in a "prohibited transaction" (as such term is defined in
Section 406 of ERISA or Section 4975 of the Code) which would subject such Plan
or any other Plan of the Borrower or any of its Subsidiaries, any trust created
thereunder, or any such party in interest or fiduciary, or any party dealing
with any such Plan
-37-
<PAGE>
or any such trust, to the tax or penalty on "prohibited transactions" imposed by
Section 502 of ERISA or Section 4975 of the Code. Neither the Borrower nor any
of its ERISA Affiliates, including its Subsidiaries, is or has been obligated to
make any payment to a Multiemployer Plan.
(n) Compliance with Regulations T, U and X. Neither the Borrower nor
--------------------------------------
any Restricted Subsidiary is engaged principally or as one of its important
activities in the business of extending credit for the purpose of purchasing or
carrying, and neither the Borrower nor any Restricted Subsidiary owns or
presently intends to acquire, any "margin security" or "margin stock" as defined
in Regulations T, U, and X (12 C.F.R. Parts 220, 221 and 224) (the
"Regulations") of the Board of Governors of the Federal Reserve System (herein
called "margin stock"). None of the proceeds of the Loans will be used,
directly or indirectly, for the purpose of purchasing or carrying any margin
stock or for the purpose of reducing or retiring any Indebtedness which was
originally incurred to purchase or carry margin stock or for any other purpose
which might constitute this transaction a "purpose credit" within the meaning of
the Regulations. The Borrower has not taken, caused or authorized to be taken,
and will not take any action which might cause this Agreement or the Notes to
violate any of the Regulations or any other regulation of the Board of Governors
of the Federal Reserve System or to violate the Exchange Act, in each case as
now in effect or as the same may hereafter be in effect. If so requested by the
Administrative Agent, the Borrower will furnish the Administrative Agent with
(i) a statement or statements in conformity with the requirements of Federal
Reserve Form U-I referred to in Regulation U of the Board of Governors of the
Federal Reserve System and (ii) other documents evidencing its compliance with
the margin regulations, reasonably requested by the Administrative Agent.
Neither the making of the Loans nor the use of proceeds thereof will violate, or
be inconsistent with, the provisions of any of the Regulations.
(o) Investment Company Act. Neither the Borrower nor any Restricted
----------------------
Subsidiary is required to register under the provisions of the Investment
Company Act of 1940, as amended, and neither the entering into or performance by
the Borrower and its Restricted Subsidiaries of this Agreement and the Loan
Documents nor the issuance of the Notes violates any provision of such Act or
requires any consent, approval or authorization of, or registration with, the
Securities and Exchange Commission or any other governmental or public body or
authority pursuant to any provisions of such Act.
(p) Governmental Regulation. Neither the Borrower nor any Restricted
-----------------------
Subsidiary is required to obtain any consent, approval, authorization, permit or
license which has not already been obtained from, or effect any filing or
registration which has not already been effected with, any federal, state or
local regulatory authority in connection with the execution and delivery of this
Agreement or any other Loan Document. Neither the
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<PAGE>
Borrower nor any Restricted Subsidiary is required to obtain any consent,
approval, authorization, permit or license which has not already been obtained
from, or effect any filing or registration which has not already been effected
with, any federal, state or local regulatory authority in connection with the
performance, in accordance with their respective terms, of this Agreement or any
other Loan Document, other than filing of appropriate UCC financing statements.
(q) Absence of Default, Etc. The Borrower and each Restricted
------------------------
Subsidiary are in compliance in all respects with all of the provisions of their
respective partnership agreements, Certificates or Articles of Incorporation and
By-Laws, as the case may be, and no event has occurred or failed to occur
(including, without limitation, any matter which could create a Default
hereunder by cross-default) which has not been remedied or waived, the
occurrence or non-occurrence of which constitutes, (i) a Default or (ii) a
material default by the Borrower or any Restricted Subsidiary under any
indenture, agreement or other instrument relating to Indebtedness of the
Borrower or any Restricted Subsidiary in the amount of $1,000,000 or more in the
aggregate, any material License, or any judgment, decree or order to which the
Borrower or any Restricted Subsidiary is a party or by which the Borrower or any
Restricted Subsidiary or any of their respective properties may be bound or
affected.
(r) Accuracy and Completeness of Information. All information,
----------------------------------------
reports, prospectuses and other papers and data relating to the Borrower or any
Restricted Subsidiary and furnished by or on behalf of the Borrower or any
Restricted Subsidiary to the Administrative Agent or the Lenders, taken as a
whole, were, at the time furnished, true, complete and correct in all material
respects to the extent necessary to give the Administrative Agent and the
Lenders true and accurate knowledge of the subject matter, and all projections,
consisting of a statement of operating statistics, an income statement summary,
a debt repayment schedule and pro forma compliance calculations (the
"Projections") (i) disclose all assumptions made with respect to costs, general
- ------------
economic conditions, and financial and market conditions formulating the
Projections; (ii) are based on reasonable estimates and assumptions; and (iii)
reflect, as of the date prepared, and continue to reflect, as of the date
hereof, the reasonable estimate of Borrower of the results of operations and
other information projected therein for the periods covered thereby.
(s) Agreements with Affiliates. Except for agreements or arrangements
--------------------------
with Affiliates wherein the Borrower or one or more of its Restricted
Subsidiaries provides services to or receives services from such Affiliates for
fair consideration or which are set forth on Schedule 6 attached hereto, neither
the Borrower nor any Restricted Subsidiary has (i) any written agreements or
binding arrangements of any kind with any Affiliate or (ii) any management or
consulting agreements of any kind with any Affiliate, other than (x) those
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<PAGE>
between the Borrower and its Restricted Subsidiaries and (y) employment
arrangements with executive officers, including stock option grants.
(t) Payment of Wages. The Borrower and each Restricted Subsidiary are
----------------
in compliance with the Fair Labor Standards Act, as amended, in all material
respects, and to the knowledge of the Borrower and each of its Subsidiaries,
such Persons have paid all minimum and overtime wages required by law to be paid
to their respective employees.
(u) Priority. The Security Interest is a valid and, upon filing of
--------
appropriate UCC financing statements and/or mortgages with respect to tangible
assets of the Borrower, will be a perfected first priority security interest in
the Collateral in favor of the Administrative Agent, for the benefit of itself
and the Lenders, securing, in accordance with the terms of the Security
Documents, the Obligations, and the Collateral is subject to no Liens other than
Permitted Liens. The Liens created by the Security Documents are enforceable as
security for the Obligations in accordance with their terms with respect to the
Collateral subject, as to enforcement of remedies, to the following
qualifications: (i) an order of specific performance and an injunction are
discretionary remedies and, in particular, may not be available where damages
are considered an adequate remedy at law, and (ii) enforcement may be limited by
bankruptcy, insolvency, liquidation, reorganization, reconstruction and other
similar laws affecting enforcement of creditors' rights generally (insofar as
any such law relates to the bankruptcy, insolvency or similar event of the
Borrower or any of its Subsidiaries, as the case may be).
(v) Indebtedness. Except as shown on the financial statements of
------------
Borrower for the fiscal quarter ended March 31, 1998, or as described on
Schedule 7 attached hereto, neither the Borrower nor any Restricted Subsidiary
- ----------
has outstanding, as of the Agreement Date, and after giving effect to the
initial Advances hereunder on the Agreement Date, any Indebtedness for Money
Borrowed.
(w) Solvency. As of the Agreement Date and after giving effect to the
--------
transactions contemplated by the Loan Documents (i) the property of the
Borrower, at a fair valuation, will exceed its debt; (ii) the capital of the
Borrower will not be unreasonably small to conduct its business; (iii) the
Borrower will not have incurred debts, or have intended to incur debts, beyond
its ability to pay such debts as they mature; and (iv) the present fair salable
value of the assets of the Borrower will be greater than the amount that will be
required to pay its probable liabilities (including debts) as they become
absolute and matured. For purposes of this Section, "debt" means any liability
----
on a claim, and "claim" means (i) the right to payment, whether or not such
-----
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, undisputed, legal, equitable, secured or unsecured, or (ii)
the right to an equitable remedy for breach of performance if such breach gives
rise to a
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<PAGE>
right to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, undisputed, secured or
unsecured.
(x) Year 2000 Compliance.
(i) The Borrower has (1) begun analyzing the operations of the
Borrower and its Subsidiaries that could be adversely affected by failure
to become Year 2000 compliant (that is, that computer applications,
imbedded microchips and other systems will be able to perform date-
sensitive functions prior to and after December 31, 1999) and (2) developed
a plan for becoming Year 2000 compliant in a timely manner, the
implementation of which is on schedule in all material respects. The
Borrower reasonably believes that it will become Year 2000 compliant for
its operations and those of its Subsidiaries and Affiliates on a timely
basis, except to the extent that a failure to do so could not reasonably be
expected to have a Materially Adverse Effect.
(ii) The Borrower reasonably believes any suppliers and vendors
that are material to the operations of the Borrower or its Subsidiaries
will be Year 2000 compliant for their own computer applications, except to
the extent that a failure to do so could not reasonably be expected to have
a Materially Adverse Effect.
(iii) The Borrower will promptly notify the Administrative Agent
and the Lenders in the event the Borrower determines that any computer
application which is material to the operations of the Borrower, its
Subsidiaries or any of its material vendors or suppliers will not be fully
Year 2000 compliant on a timely basis, except to the extent that such
failure could not reasonably be expected to have a Materially Adverse
Effect.
Section 4.2 Survival of Representations and Warranties, Etc. All
------------------------------------------------
representations and warranties made under this Agreement and any other Loan
Document shall be deemed to be made, and shall be true and correct in all
material respects, at and as of the Agreement Date and on the date of each
Advance except to the extent relating specifically to the Agreement Date. All
representations and warranties made under this Agreement and the other Loan
Documents shall survive, and not be waived by, the execution hereof by the
Lenders and the Administrative Agent, any investigation or inquiry by any Lender
or the Administrative Agent, or the making of any Advance under this Agreement.
ARTICLE 5 General Covenants
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<PAGE>
So long as any of the Obligations is outstanding and unpaid or the Lenders
have an obligation to fund Advances hereunder (whether or not the conditions to
borrowing have been or can be fulfilled), and unless the Majority Lenders, or
such greater number of Lenders as may be expressly provided herein, shall
otherwise consent in writing:
Section 5.1 Preservation of Existence and Similar Matters. Except as
---------------------------------------------
permitted under Section 7.4 hereof, the Borrower will, and will cause each
Restricted Subsidiary to:
(a) preserve and maintain its existence, and its material rights,
franchises, licenses and privileges in the state of its incorporation,
including, without limiting the foregoing, the Licenses and all other Necessary
Authorizations, except where the failure to do so could not reasonably be
expected to have a Materially Adverse Effect; and
(b) qualify and remain qualified and authorized to do business in
each jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization, except for such failure
to so qualify and be so authorized as could not reasonably be expected to have a
Material Adverse Effect.
Section 5.2 Business; Compliance with Applicable Law. The Borrower will,
----------------------------------------
and will cause each Restricted Subsidiary to, (a) engage in the business of
owning, constructing, managing, operating and investing in communications tower
facilities and related businesses and not engage in any unrelated activities,
and (b) comply in all material respects with the requirements of all Applicable
Law.
Section 5.3 Maintenance of Properties. The Borrower will, and will cause
-------------------------
each Restricted Subsidiary to, maintain or cause to be maintained in the
ordinary course of business in good repair, working order and condition
(reasonable wear and tear excepted) all properties used in their respective
businesses (whether owned or held under lease), other than obsolete equipment or
unused assets and from time to time make or cause to be made all needed and
appropriate repairs, renewals, replacements, additions, betterments and
improvements thereto.
Section 5.4 Accounting Methods and Financial Records. The Borrower will,
----------------------------------------
and will cause each Restricted Subsidiary on a consolidated and consolidating
basis to, maintain a system of accounting established and administered in
accordance with GAAP, keep adequate records and books of account in which
complete entries will be made in accordance with GAAP and reflecting all
transactions required to be reflected by GAAP, and keep accurate and complete
records of their respective properties and assets. The Borrower and its
Restricted Subsidiaries will maintain a fiscal year ending on December 31st.
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<PAGE>
Section 5.5 Insurance. The Borrower will, and will cause each Restricted
---------
Subsidiary to:
(a) Maintain insurance including, but not limited to, business
interruption coverage and public liability coverage insurance from responsible
companies in such amounts and against such risks to the Borrower and each
Restricted Subsidiary as is prudent for similarly situated companies engaged in
the communications tower industry.
(b) Keep their respective assets insured by insurers on terms and in
a manner reasonably acceptable to the Administrative Agent against loss or
damage by fire, theft, burglary, loss in transit, explosions and hazards insured
against by extended coverage, in amounts which are prudent for the
communications tower management and operation industry and reasonably
satisfactory to the Administrative Agent, all premiums thereon to be paid by the
Borrower and its Restricted Subsidiaries.
(c) Require that each insurance policy provide for at least thirty
(30) days' prior written notice to the Administrative Agent of any termination
of or proposed cancellation or nonrenewal of such policy, and name the
Administrative Agent as additional named lender loss payee and, as appropriate,
additional insured, to the extent of the Obligations.
Section 5.6 Payment of Taxes and Claims. The Borrower will, and will
---------------------------
cause each Restricted Subsidiary to, pay and discharge all taxes, including,
without limitation, withholding taxes, assessments and governmental charges or
levies required to be paid by them or imposed upon them or their income or
profits or upon any properties belonging to them, prior to the date on which
penalties attach thereto, and all lawful claims for labor, materials and
supplies which, if unpaid, might become a Lien or charge upon any of their
properties; provided, however, that no such tax, assessment, charge, levy or
-------- -------
claim need be paid which is being diligently contested in good faith by
appropriate proceedings and for which adequate reserves shall have been set
aside on the appropriate books, but only so long as such tax, assessment,
charge, levy or claim does not become a Lien or charge other than a Permitted
Lien and no foreclosure, distraint, sale or similar proceedings shall have been
commenced. The Borrower will, and will cause each Restricted Subsidiary to,
timely file all information returns required by federal, state or local tax
authorities.
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<PAGE>
Section 5.7 Compliance with ERISA.
---------------------
(a) The Borrower shall, and shall cause each of its Subsidiaries to,
make all contributions to any Employee Pension Plan when such contributions are
due and not incur any "accumulated funding deficiency" within the meaning of
Section 412(a) of the Code, whether or not waived, and will otherwise comply
with the requirements of the Code and ERISA with respect to the operation of all
Plans, except to the extent that the failure to so comply could not have a
Materially Adverse Effect.
(b) The Borrower shall, and shall cause each of its Subsidiaries to,
comply in all respects with the requirements of ERISA with respect to any Plans
subject to the requirements thereof, except to the extent that the failure to so
comply could not have a Materially Adverse Effect.
(c) The Borrower shall furnish to Administrative Agent (i) within
thirty (30) days after any officer of the Borrower obtains knowledge that a
"prohibited transaction" (within the meaning of Section 406 of ERISA or Section
4975 of the Code) has occurred with respect to any Plan of the Borrower or its
ERISA Affiliates, including its Subsidiaries, that any Reportable Event has
occurred with respect to any Employee Pension Plan or that PBGC has instituted
or will institute proceedings under Title IV of ERISA to terminate any Employee
Pension Plan or to appoint a trustee to administer any Employee Pension Plan, a
statement setting forth the details as to such prohibited transaction,
Reportable Event or termination or appointment proceedings and the action which
it (or any other Employee Pension Plan sponsor if other than the Borrower)
proposes to take with respect thereto, together with a copy of the notice of
such Reportable Event given to PBGC if a copy of such notice is available to the
Borrower, any of its Subsidiaries or any of its ERISA Affiliates, (ii) promptly
after receipt thereof, a copy of any notice the Borrower, any of its
Subsidiaries or any of its ERISA Affiliates or the sponsor of any Plan receives
from PBGC, the Internal Revenue Service or the Department of Labor which sets
forth or proposes any action or determination with respect to such Plan, (iii)
promptly after the filing thereof, any annual report required to be filed
pursuant to ERISA in connection with each Plan maintained by the Borrower or any
of its ERISA Affiliates, including the Subsidiaries, and (iv) promptly upon the
Administrative Agent's request therefor, such additional information concerning
any such Plan as may be reasonably requested by the Administrative Agent.
(d) The Borrower will promptly notify the Administrative Agent of any
excise taxes which have been assessed or which the Borrower, any of its
Subsidiaries or any of its ERISA Affiliates has reason to believe may be
assessed against the Borrower, any of its Subsidiaries or any of its ERISA
Affiliates by the Internal Revenue Service or the
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<PAGE>
Department of Labor with respect to any Plan of the Borrower or its ERISA
Affiliates, including its Subsidiaries.
(e) Within the time required for notice to the PBGC under Section
302(f)(4)(A) of ERISA, the Borrower will notify the Administrative Agent of any
lien arising under Section 302(f) of ERISA in favor of any Plan of the Borrower
or its ERISA Affiliates, including its Subsidiaries.
(f) The Borrower will not, and will not permit any of its
Subsidiaries or any of its ERISA Affiliates, to take any of the following
actions or permit any of the following events to occur if such action or event
together with all other such actions or events would subject the Borrower, any
of its Subsidiaries, or any of its ERISA Affiliates to any tax, penalty, or
other liabilities which could have a Materially Adverse Effect:
(i) engage in any transaction in connection with which the
Borrower, any of its Subsidiaries or any ERISA Affiliate could be subject
to either a civil penalty assessed pursuant to Section 502(i) of ERISA or a
tax imposed by Section 4975 of the Code;
(ii) terminate any Employee Pension Plan in a manner, or take
any other action, which could result in any liability of the Borrower, any
of its Subsidiaries or any ERISA Affiliate to the PBGC;
(iii) fail to make full payment when due of all amounts which,
under the provisions of any Plan, the Borrower, any of its Subsidiaries or
any ERISA Affiliate is required to pay as contributions thereto, or permit
to exist any accumulated funding deficiency within the meaning of Section
412(a) of the Code, whether or not waived, with respect to any Employee
Pension Plan; or
(iv) permit the present value of all benefit liabilities under
all Employee Pension Plans which are subject to Title IV of ERISA to exceed
the present value of the assets of such Plans allocable to such benefit
liabilities (within the meaning of Section 4041 of ERISA), except as may be
permitted under actuarial funding standards adopted in accordance with
Section 412 of the Code.
Section 5.8 Visits and Inspections. The Borrower will, and will cause
----------------------
each Restricted Subsidiary to, permit representatives of the Administrative
Agent and any of the Lenders, upon reasonable notice, to (a) visit and inspect
the properties of the Borrower or any Restricted Subsidiary during business
hours, (b) inspect and make extracts from and copies of their respective books
and records, and (c) discuss with their respective principal officers
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<PAGE>
their respective businesses, assets, liabilities, financial positions, results
of operations and business prospects. The Borrower and each Restricted
Subsidiary will also permit representatives of the Administrative Agent and any
of the Lenders to discuss with their respective accountants the Borrower's and
the Restricted Subsidiaries' businesses, assets, liabilities, financial
positions, results of operations and business prospects.
Section 5.9 Payment of Indebtedness; Loans. Subject to any provisions
------------------------------
herein or in any other Loan Document, the Borrower will, and will cause each
Restricted Subsidiary to, pay any and all of their respective Indebtedness when
and as it becomes due, other than amounts diligently disputed in good faith and
for which adequate reserves have been set aside in accordance with GAAP.
Section 5.10 Use of Proceeds. The Borrower shall, except as otherwise
---------------
provided in paragraph (c) or (d) of this Section 5.10, contribute one-hundred
percent (100%) of the aggregate proceeds of the Advance of the Loan as equity to
ATS (Delaware) and ATS and shall cause ATS (Delaware) and ATS to use such
proceeds, directly or indirectly:
(a) to fund Acquisitions and Investments (including, without
limitation, investments in Unrestricted Subsidiaries) permitted by Section 7.6
hereof;
(b) to fund Capital Expenditures;
(c) for working capital needs and other corporate purposes of the
Borrower and its Restricted Subsidiaries (including, without limitation, the
fees and expenses incurred in connection with the execution and delivery of this
Agreement) and other costs associated with transactions contemplated by this
Agreement, in each case, which do not otherwise conflict with this Section 5.10,
it being understood that the Borrower may use such proceeds, among other things,
to fund the Separation Obligations (other than the tax portion of the Separation
Obligations); and
(d) for other purposes permitted by the ATS Facility A Loan Agreement
or the ATS Facility B Loan Agreement.
No proceeds of the Advance hereunder shall be used for the purchase or carrying
or the extension of credit for the purpose of purchasing or carrying, any margin
stock within the meaning of the Regulations.
Section 5.11 Indemnity. The Borrower agrees to indemnify and hold
---------
harmless each Lender, the Administrative Agent, and each of their respective
affiliates, employees, representatives, shareholders, officers and directors
(any of the foregoing shall be an
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<PAGE>
"Indemnitee") from and against any and all claims, liabilities, losses, damages,
----------
actions, reasonable attorneys' fees and expenses (as such fees and expenses are
incurred) and demands by any party, including the costs of investigating and
defending such claims, whether or not the Borrower, any Restricted Subsidiary or
the Person seeking indemnification is the prevailing party (a) resulting from
any breach or alleged breach by the Borrower or any Restricted Subsidiary of any
representation or warranty made hereunder or under any Loan Document; or (b)
otherwise arising out of (i) the Commitment or otherwise under this Agreement,
any Loan Document or any transaction contemplated hereby or thereby, including,
without limitation, the use of the proceeds of Loans hereunder in any fashion by
the Borrower or the performance of their respective obligations under the Loan
Documents by the Borrower or any Restricted Subsidiary, (ii) allegations of any
participation by the Lenders, the Administrative Agent, or any of them, in the
affairs of the Borrower or any of its Subsidiaries, or allegations that any of
them has any joint liability with the Borrower or any Restricted Subsidiary for
any reason, (iii) any claims against the Lenders, the Administrative Agent, or
any of them, by any shareholder or other investor in or lender to the Borrower
or any Restricted Subsidiary, by any brokers or finders or investment advisers
or investment bankers retained by the Borrower or by any other third party,
arising out of the Commitment or otherwise under this Agreement; or (c) in
connection with taxes (not including federal or state income or franchise taxes
or other taxes based solely upon the revenues or income of such Persons), fees,
and other charges payable in connection with the Loans, or the execution,
delivery, and enforcement of this Agreement, the Security Documents, the other
Loan Documents, and any amendments thereto or waivers of any of the provisions
thereof, unless the Person seeking indemnification hereunder is determined in
such case to have acted with gross negligence or willful misconduct, in any
case, by a final, non-appealable judicial order. The obligations of the Borrower
under this Section 5.11 are in addition to, and shall not otherwise limit, any
liabilities which the Borrower might otherwise have in connection with any
warranties or similar obligations of the Borrower in any other Loan Document.
Section 5.12 Covenants Regarding Formation of Restricted Subsidiaries and
------------------------------------------------------------
Acquisitions; Partnership, Subsidiaries. At the time of (i) any Acquisition
- ---------------------------------------
permitted hereunder, (ii) the purchase by the Borrower or any Restricted
Subsidiary of any interests in any Restricted or Unrestricted Subsidiary of the
Borrower, or (iii) the formation of any new Restricted or Unrestricted
Subsidiary of the Borrower or any Restricted Subsidiary which is permitted under
this Agreement, the Borrower will, and will cause its Restricted Subsidiaries,
as appropriate, to (a) provide to the Administrative Agent an executed
Subsidiary Security Agreement for any new Restricted Subsidiary, in
substantially the form of Exhibit H attached hereto, together with appropriate
---------
UCC-1 financing statements, as well as an executed Subsidiary Guaranty for such
new Restricted Subsidiary, in substantially the form of Exhibit F attached
---------
hereto, which shall constitute both Security Documents and Loan Documents for
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<PAGE>
purposes of this Agreement, as well as a loan certificate for such new
Restricted Subsidiary, substantially in the form of Exhibit J attached hereto,
---------
together with appropriate attachments; (b) pledge to the Administrative Agent
all of the stock or partnership interests (or other instruments or securities
evidencing ownership) of such Restricted Subsidiary or Unrestricted Subsidiary
or Person which is acquired or formed, beneficially owned by the Borrower or any
Restricted Subsidiary, as the case may be, as additional Collateral for the
Obligations to be held by the Administrative Agent in accordance with the terms
of the Borrower's Pledge Agreement, or a new Subsidiary Pledge Agreement in
substantially the form of Exhibit G-1 attached hereto, and execute and deliver
-----------
to the Administrative Agent all such documentation for such pledge as, in the
reasonable opinion of the Administrative Agent, is appropriate; and (c) with
respect to any Acquisition or Restricted Subsidiary, provide revised financial
projections for the remainder of the fiscal year and for each subsequent year
until the Maturity Date which reflect such Acquisition or formation, certified
by the chief financial officer of the Borrower, together with a statement by
such Person that no Default exists or would be caused by such Acquisition or
formation, and all other documentation, including one or more opinions of
counsel, reasonably satisfactory to the Administrative Agent which in its
reasonable opinion is appropriate with respect to such Acquisition or the
formation of such Subsidiary. Notwithstanding the foregoing, the Borrower shall
not be required to pledge any of the stock of or other ownership interests for
any Unrestricted Subsidiary which (x) was not formed or created in anticipation
of the Borrower's direct or indirect investment therein (other than to
facilitate a transaction of the nature referred to clause (y) following) and (y)
at the time such stock or ownership interest was acquired by the Borrower or its
Restricted Subsidiaries is subject to a restriction on any such Lien (whether
such restriction is in such Person's formation documents or otherwise), but
shall be required to grant the Administrative Agent (for the benefit of the
Lenders) a Lien upon any right to receive distributions from such Unrestricted
Subsidiary. Any document, agreement or instrument (other than the Projections)
executed or issued pursuant to this Section 5.12 shall be a "Loan Document" for
purposes of this Agreement and, so long as the Facility A Loan Agreement or the
Facility B Loan Agreement is in effect, shall be subject to the terms and
conditions of the Intercreditor Agreement.
Section 5.13 Payment of Wages. The Borrower shall, and shall cause each
----------------
Restricted Subsidiary to, at all times comply, in all material respects, with
the material requirements of the Fair Labor Standards Act, as amended,
including, without limitation, the provisions of such Act relating to the
payment of minimum and overtime wages as the same may become due from time to
time.
Section 5.14 Further Assurances. The Borrower will promptly cure, or
------------------
cause to be cured, defects in the creation and issuance of any of the Notes and
the execution and delivery of the Loan Documents (including, without limitation,
this Agreement), resulting from any
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<PAGE>
acts or failure to act by the Borrower or any Restricted Subsidiary or any
employee or officer thereof. The Borrower at its expense will promptly execute
and deliver to the Administrative Agent and the Lenders, or cause to be executed
and delivered to the Administrative Agent and the Lenders, all such other and
further documents, agreements, and instruments in compliance with or
accomplishment of the covenants and agreements of the Borrower in the Loan
Documents, including this Agreement, or to correct any omissions in the Loan
Documents, or more fully to state the obligations set out herein or in any of
the Loan Documents, or to obtain any consents, all as may be necessary or
appropriate in connection therewith and as may be reasonably requested.
ARTICLE 6 Information Covenants
So long as any of the Obligations is outstanding and unpaid or the Lenders
have an obligation to fund Advances hereunder (whether or not the conditions to
borrowing have been or can be fulfilled) and unless the Majority Lenders shall
otherwise consent in writing, the Borrower will furnish or cause to be furnished
to each Lender and the Administrative Agent, at their respective offices:
Section 6.1 Quarterly Financial Statements and Information Within forty-
----------------------------------------------
five (45) days after the last day of each of the first three (3) quarters of
each fiscal year of the Borrower, the balance sheets of the Borrower on a
consolidated basis with its Restricted Subsidiaries and a consolidating basis
with its Unrestricted Subsidiaries as at the end of such quarter and as of the
end of the preceding fiscal year, and the related statements of operations and
the related statements of cash flows of the Borrower on a consolidated basis
with its Restricted Subsidiaries and a consolidating basis with its Unrestricted
Subsidiaries for such quarter and for the elapsed portion of the year ended with
the last day of such quarter, which shall set forth in comparative form such
figures as at the end of and for such quarter and appropriate prior period and
shall be certified by the chief financial officer of the Borrower to have been
prepared in accordance with GAAP and to present fairly in all material respects
the financial position of the Borrower on a consolidated basis with its
Restricted Subsidiaries and a consolidating basis with its Unrestricted
Subsidiaries as at the end of such period and the results of operations for such
period, and for the elapsed portion of the year ended with the last day of such
period, subject only to normal year-end and audit adjustments.
Section 6.2 Annual Financial Statements and Information. Within ninety
-------------------------------------------
(90) days after the end of each fiscal year of the Borrower, the audited
consolidated balance sheet of the Borrower and its Restricted Subsidiaries (and
unaudited consolidating balance sheet of the Borrower and its Unrestricted
Subsidiaries) as of the end of such fiscal year and the related audited
consolidated and unaudited consolidating statements of operations for such
fiscal year and for the previous fiscal year, the related audited consolidated
statements of
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<PAGE>
cash flow and stockholders' equity for such fiscal year and for the previous
fiscal year, which shall be accompanied by an opinion of Deloitte & Touche, LLP,
or other independent certified public accountants of recognized national
standing reasonably acceptable to the Administrative Agent, which shall be in
scope and substance reasonably satisfactory to the Administrative Agent,
together with a statement of such accountants that in connection with their
audit, nothing came to their attention that caused them to believe that the
Borrower was not in compliance with the terms, covenants, provisions or
conditions of Section 7.8 hereof insofar as they relate to accounting matters.
Section 6.3 Performance Certificates. At the time the financial
------------------------
statements are furnished pursuant to Sections 6.1 and 6.2 hereof, a certificate
of the president or chief financial officer of the Borrower as to its financial
performance, in substantially the form attached hereto as Exhibit K:
---------
(a) setting forth as and at the end of such quarterly period or
fiscal year, as the case may be, the arithmetical calculations required to
establish whether or not the Borrower was in compliance with the requirements of
Section 7.8 hereof;
(b) stating that, to the best of his or her knowledge, no Default has
occurred as at the end of such quarterly period or year, as the case may be, or,
if a Default has occurred, disclosing each such Default and its nature, when it
occurred, whether it is continuing and the steps being taken by the Borrower
with respect to such Default;
(c) containing a list of all Acquisitions, Investments, Restricted
Payments and dispositions of assets from the Agreement Date through the date of
such certificate, together with the total amount for each of the foregoing
categories; and
(d) setting forth the amount of distributions received from
Unrestricted Subsidiaries for such period.
Section 6.4 Copies of Other Reports.
-----------------------
(a) Promptly upon receipt thereof, copies of all reports, if any,
submitted to the Borrower by the Borrower's independent public accountants
regarding the Borrower, including, without limitation, any management report
prepared in connection with the annual audit referred to in Section 6.2 hereof.
(b) Promptly upon receipt thereof, copies of any material adverse
notice or report regarding any License from the FCC.
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<PAGE>
(c) From time to time and promptly upon each request, such data,
certificates, reports, statements, documents or further information regarding
the business, assets, liabilities, financial position, projections, results of
operations or business prospects of the Borrower or any Restricted Subsidiary,
as Administrative Agent or any Lender may reasonably request.
(d) Annually, certificates of insurance indicating that the
requirements of Section 5.5 hereof remain satisfied for such fiscal year,
together with copies of any new or replacement insurance policies obtained
during such year.
(e) Prior to January 31st of each year, the annual budget for the
Borrower and it's Restricted Subsidiaries, including, without limitation,
forecasts of the income statement, the balance sheet and a cash flow statement
for such year, on a quarter by quarter basis.
(f) Promptly after the sending thereof, copies of all statements,
reports and other information which the Borrower or any Restricted Subsidiary
sends to public security holders of the Borrower generally or files with the
Securities and Exchange Commission or any national securities exchange.
Section 6.5 Notice of Litigation and Other Matters. Notice specifying the
--------------------------------------
nature and status of any of the following events, promptly, but in any event not
later than fifteen (15) days after the occurrence of any of the following events
becomes known to the Borrower:
(a) the commencement of all proceedings and investigations by or
before any governmental body and all actions and proceedings in any court or
before any arbitrator against the Borrower or any Restricted Subsidiary, or, to
the extent known to the Borrower, which could have a Material Adverse Effect;
(b) any material adverse change with respect to the business, assets,
liabilities, financial position, results of operations or business prospects of
the Borrower and its Restricted Subsidiaries, taken as a whole, other than
changes in the ordinary course of business which have not had and would not
reasonably be expected to have a Materially Adverse Effect and other than
changes in the industry in which Borrower or any of its Restricted Subsidiaries
operate which would not reasonably be expected to have a Materially Adverse
Effect;
(c) any material adverse amendment or change to the projections or
annual budget provided to the Lenders by the Borrower;
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<PAGE>
(d) any Default or the occurrence or non-occurrence of any event (i)
which constitutes, or which with the passage of time or giving of notice or both
would constitute, a default by the Borrower or any Restricted Subsidiary under
any material agreement other than this Agreement and the other Loan Documents to
which the Borrower or any Restricted Subsidiary is party or by which any of
their respective properties may be bound, or (ii) which could have a Materially
Adverse Effect, giving in each case a description thereof and specifying the
action proposed to be taken with respect thereto;
(e) the occurrence of any Reportable Event or a "prohibited
transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of
the Code) with respect to any Plan of the Borrower or any of its Subsidiaries or
the institution or threatened institution by PBGC of proceedings under ERISA to
terminate or to partially terminate any such Plan or the commencement or
threatened commencement of any litigation regarding any such Plan or naming it
or the trustee of any such Plan with respect to such Plan or any action taken by
the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate of the
Borrower to withdraw or partially withdraw from any Plan or to terminate any
Plan; and
(f) the occurrence of any event subsequent to the Agreement Date
which, if such event had occurred prior to the Agreement Date, would have
constituted an exception to the representation and warranty in Section 4.1(m)
hereof.
ARTICLE 7 Negative Covenants
So long as any of the Obligations is outstanding and unpaid or the Lenders
have an obligation to fund Advances hereunder (whether or not the conditions to
borrowing have been or can be fulfilled) and unless the Majority Lenders, or
such greater number of Lenders as may be expressly provided herein, shall
otherwise give their prior consent in writing:
Section 7.1 Indebtedness of the Borrower and its Subsidiaries. The
-------------------------------------------------
Borrower shall not, and shall not permit any of its Subsidiaries to, create,
assume, incur or otherwise become or remain obligated in respect of, or permit
to be outstanding, any Indebtedness except:
(a) the Obligations, the "Obligations" under the ATS Facility A Loan
Agreement, and the "Obligations" under the ATS Facility B Loan Agreement;
(b) accounts payable, accrued expenses (including taxes) and customer
advance payments incurred in the ordinary course of business;
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<PAGE>
(c) Indebtedness secured by Permitted Liens;
(d) obligations under Interest Hedge Agreements with respect to the
Loans;
(e) Indebtedness of any Restricted Subsidiary to the Borrower or any
other Restricted Subsidiary; provided, however, that the corresponding debt
-------- -------
instruments are pledged to the Administrative Agent as security for the
Obligations and such Indebtedness is expressly permitted pursuant to Section 7.5
hereof;
(f) Indebtedness incurred by any Unrestricted Subsidiary; provided,
--------
however, that such Indebtedness is non-recourse to the Borrower or any
- -------
Restricted Subsidiary and no Lien is placed on the Borrower's or any Restricted
Subsidiary's equity interests in such Unrestricted Subsidiary;
(g) Capitalized Lease Obligations of any Restricted Subsidiary not to
exceed in the aggregate at any one time outstanding $5,000,000; and
(h) Indebtedness of any Restricted Subsidiary incurred in connection
with an Acquisition; provided, however, that (i) such Indebtedness (A) is owed
-------- -------
to the seller thereof, (B) is unsecured, (C) has no scheduled payment of
principal prior to the full payment of the Obligations, (D) is subject to terms
and conditions and subordination provisions which are acceptable to the Majority
Lenders on the date of incurrence, (E) when added to all other Indebtedness
outstanding under this Section 7.1(h) does not exceed $25,000,000, and (ii) the
Borrower is, at the time of incurrence of such Indebtedness (and after giving
effect thereto), in pro forma compliance with all of the covenants contained in
this Agreement.
Section 7.2 Limitation on Liens. The Borrower shall not, and shall not
-------------------
permit any Restricted Subsidiary to, create, assume, incur or permit to exist or
to be created, assumed, incurred or permitted to exist, directly or indirectly,
any Lien on any of its properties or assets, whether now owned or hereafter
acquired, except for Permitted Liens.
Section 7.3 Amendment and Waiver. The Borrower shall not, and shall not
--------------------
permit any Restricted Subsidiary to, enter into any amendment of, or agree to or
accept or consent to any waiver of any of the material provisions of its
Articles or Certificate of Incorporation or partnership agreement or the
documents pertaining to the Interim Financing, as appropriate, if the effect
thereof would be to adversely affect the rights of the Lenders hereunder or
under any Loan Document.
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<PAGE>
Section 7.4 Liquidation, Merger or Disposition of Assets.
--------------------------------------------
(a) Disposition of Assets. The Borrower shall not, and shall not
---------------------
permit any Restricted Subsidiary to, at any time sell, lease, abandon, or
otherwise dispose of any assets (other than assets disposed of in the ordinary
course of business) without the prior written consent of all of the Lenders;
provided, however, that the prior written consent of the Lenders shall not be
- -------- -------
required for (i) the transfer of assets (including cash or cash equivalents)
among the Borrower and its Restricted Subsidiaries (excluding Subsidiaries
described in clause (b) of the definition of "Subsidiary") or for the transfer
of assets (including cash or cash equivalents) between or among Restricted
Subsidiaries (excluding Subsidiaries described in clause (b) of the definition
of "Subsidiary") of the Borrower, or (ii) the disposition of communications
tower facilities that contribute, in the aggregate, less than (A) fifteen
percent (15%) of the Annualized Operating Cash Flow of Borrower and the
Restricted Subsidiaries, and (B) twenty-five percent (25%) of the total
Annualized Operating Cash Flow of the Borrower and the Restricted Subsidiaries
for the period from the Agreement Date through the date of such disposition;
provided further, however, that, in each case, no Default or Event of Default
- -------- ------- -------
exists and none shall be caused to occur as a result thereof. Upon any sale or
disposition of a Restricted Subsidiary permitted hereunder, the Administrative
Agent and the Lenders shall, at Borrower's expense, take such actions as the
Borrower reasonably requests to cause such Restricted Subsidiary to be released
from its obligations under the Subsidiary Guaranty.
(b) Liquidation or Merger. The Borrower shall not, and shall not
---------------------
permit any Restricted Subsidiary to, at any time, liquidate or dissolve itself
(or suffer any liquidation or dissolution) or otherwise wind up, or enter into
any merger, other than (i) a merger or consolidation among the Borrower and one
or more Restricted Subsidiaries, provided the Borrower is the surviving
corporation, (ii) a merger between or among two (2) or more Restricted
Subsidiaries, or (iii) in connection with an Acquisition permitted hereunder
effected by a merger in which the Borrower or, in a merger in which the Borrower
is not a party, a Restricted Subsidiary is the surviving corporation or the
surviving corporation becomes a Restricted Subsidiary, or (iv) a merger or
consolidation among the Borrower or any Restricted Subsidiary, on the one hand,
and any other Person, on the other hand, where the surviving Person (A) is a
corporation, partnership or limited liability company organized and existing
under the laws of the United States, any State thereof, or the District of
Columbia, and (B) on the effective date of such merger or consolidation,
expressly assumes, by supplemental agreement, executed and delivered to the
Administrative Agent, for the benefit of itself and the Lenders, and the
Lenders, in form and substance reasonably satisfactory to the Majority Lenders,
all Obligations of the Borrower or such Restricted Subsidiary, as the case may
be, under the Notes, the Agreement and the other Loan
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<PAGE>
Documents; provided, however, that, in each case, no Default or Event of Default
-------- -------
exists immediately prior to, and after giving effect to, such merger or
consolidation.
Section 7.5 Limitation on Guaranties. The Borrower shall not, and shall
------------------------
not permit any Restricted Subsidiary to, at any time Guaranty, assume, be
obligated with respect to, or permit to be outstanding any Guaranty of, any
obligation of any other Person other than (a) a guaranty by endorsement of
negotiable instruments for collection in the ordinary course of business, (b)
obligations under agreements of any Restricted Subsidiary entered into in
connection with Acquisitions permitted under this Agreement, leases of real
property or the acquisition or furnishing of services, supplies and equipment in
the ordinary course of business of any Restricted Subsidiary, (c) Guaranties of
Indebtedness incurred as permitted pursuant to Section 7.1 hereof, (d) as may be
contained in any Loan Document including, without limitation, any Subsidiary
Guaranty, or (e) Guaranties required or permitted under the ATS Facility A Loan
Agreement or the ATS Facility B Loan Agreement.
Section 7.6 Investments and Acquisitions. The Borrower shall not, and
----------------------------
shall not permit any Restricted Subsidiary to, directly or indirectly, make any
loan or advance, or otherwise acquire for consideration evidences of
Indebtedness, capital stock or other securities of any Person or other assets or
property (other than assets or property in the ordinary course of business), or
make any Acquisition; provided, however, that:
-------- -------
(a) the Borrower and any Restricted Subsidiary may directly or through
a brokerage account (i) purchase marketable, direct obligations of the United
States of America, its agencies and instrumentalities maturing within three
hundred sixty-five (365) days of the date of purchase, (ii) purchase commercial
paper, money-market funds and business savings accounts issued by corporations,
each of which shall have a combined net worth of at least $100,000,000 and each
of which conducts a substantial part of its business in the United States of
America, maturing within two hundred seventy (270) days from the date of the
original issue thereof, and rated "P-2" or better by Moody's Investors Service,
Inc. or "A-2" or better by Standard and Poor's Ratings Group, a division of
McGraw-Hill, (iii) purchase repurchase agreements, bankers' acceptances, and
domestic and Eurodollar certificates of deposit maturing within three hundred
sixty-five (365) days of the date of purchase which are issued by, or time
deposits maintained with, a United States national or state bank the deposits of
which are insured by the Federal Deposit Insurance Corporation or the Federal
Savings and Loan Insurance Corporation and having capital, surplus and undivided
profits totaling more than $100,000,000 and rated "A" or better by Moody's
Investors Service, Inc. or Standard and Poor's Ratings Group, a division of
McGraw-Hill, Inc.;
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<PAGE>
(b) so long as no Default then exists or would be caused thereby, any
Restricted Subsidiary may establish Unrestricted Subsidiaries and make
Investments in such Unrestricted Subsidiaries of up to, in the aggregate, at any
time, the sum of (i) $50,000,000, with loans borrowed under the ATS Facility A
Loan Agreement or the ATS Facility B Loan Agreement, and (ii) and equity
proceeds not used to pay the Separation Obligations or to make Investments
permitted under Sections 7.6(c) and (d) hereof;
(c) so long as no Default then exists or would be caused thereby, and
subject to compliance with Section 5.12 hereof, any Restricted Subsidiary may
make Acquisitions; provided, however, that Acquisitions described in clause
-------- -------
(iii) of the definition of "Acquisitions" shall not exceed at any time, in the
aggregate, the sum of (i) $50,000,000, and (ii) equity proceeds not used to pay
the Separation Obligations after the Agreement Date or to make Investments
permitted under Section 7.6(b) and (d) hereof;
(d) so long as no Default then exists or would be caused thereby, and
subject to compliance with Section 5.12 hereof, any Restricted Subsidiary may
make Investments (i) in communications tower facilities and communications tower
related companies, in an amount not to exceed at any time, in the aggregate, the
sum of (i) $25,000,000 and (ii) equity proceeds not used to pay the Separation
Obligations or to make Investments permitted under Sections 7.6(b) and (c)
hereof; provided, however, that a Restricted Subsidiary has executed a binding
-------- -------
acquisition or merger agreement with such company;
(e) any Restricted Subsidiary may make Investments consisting of the
Sconnix Note; and
(f) (i) make loans and advances to employees in the ordinary course of
business and (ii) receive notes from employees in an amount not to exceed
$2,000,000 in the aggregate in connection with the exercise of stock options
Section 7.7 Restricted Payments. The Borrower shall not, and shall
-------------------
not permit any of its Restricted Subsidiaries to, directly or indirectly declare
or make any Restricted Payment; provided, however, that the Borrower may (a)
-------- -------
make payments with respect to Interim Financing (including the redemption
thereof with the cash proceeds of a public equity offering by the Borrower), (b)
make Restricted Payments contemplated in Section 3.1(f) hereof; and (c) make
Restricted Payments in an amount not to exceed at any time, in the aggregate,
the equity proceeds not used (i) to pay the Separation Obligations or (ii) for
one or more of the purposes permitted by Section 7.6(b), (c) or (d) hereof.
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Section 7.8 Total Leverage Ratio. (a) As of the end of any calendar
--------------------
quarter, and (b) at the time of any Advance hereunder (after giving effect to
such Advance), the Borrower shall not permit the Total Leverage Ratio to exceed
the ratios set forth below during the periods indicated:
<TABLE>
<CAPTION>
Period Total Leverage Ratio
------ --------------------
<S> <C>
Closing through September 29,1999 8.00:1
September 30, 1999 through September 29, 2000 7.75:1
September 30, 2000 through March 30, 2001 7.50:1
March 31, 2001 through June 29, 2001 6.75:1
June 30, 2001 through September 29, 2001 6.50:1
September 30, 2001 through December 30, 2001 6.25:1
December 31, 2001 through March 30, 2002 5.75:1
March 31, 2002 through June 29, 2002 5.50:1
June 30, 2002 through September 29, 2002 5.25:1
September 30, 2002 through December 30, 2002 5.00:1
December 31, 2002 through March 30, 2003 4.75:1
March 31, 2003 through June 29, 2003 4.50:1
June 30, 2003 through September 29, 2003 4.25:1
September 30, 2003 and thereafter 4.00:1
</TABLE>
Section 7.9 Affiliate Transactions. Except as specifically provided
----------------------
herein (including, without limitation, Sections 7.4, 7.6 and 7.7 hereof) and as
may be described on Schedule 6 attached hereto, the Borrower shall not, and
----------
shall not permit any Restricted Subsidiary to, at any time engage in any
transaction with an Affiliate other than between or among the wholly-owned
Restricted Subsidiary, or make an assignment or other transfer of any of its
properties or assets to any Affiliate, on terms less advantageous to the
Borrower or such Restricted Subsidiary than would be the case if such
transaction had been effected with a non-Affiliate.
Section 7.10 ERISA Liabilities. The Borrower shall not, and shall cause
-----------------
each of its ERISA Affiliates not to, (a) permit the assets of any of their
respective Plans to be less than the amount necessary to provide all accrued
benefits under such Plans, or (b) enter into any Multiemployer Plan.
Section 7.11 Sales and Leasebacks. The Borrower will not and will not
--------------------
permit any Restricted Subsidiary to enter into, any arrangement, directly or
indirectly, with any third party whereby the Borrower or a Restricted Subsidiary
shall sell or transfer any property, real or personal, whether now owned or
hereafter acquired, and whereby the Borrower or such
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<PAGE>
Restricted Subsidiary shall then or thereafter rent or lease as lessee such
property or any part thereof or other property which the Borrower or such
Restricted Subsidiary intends to use for substantially the same purpose or
purposes as the property sold or transferred.
ARTICLE 8 Default
Section 8.1 Events of Default. Each of the following shall constitute an
-----------------
Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or non-governmental body:
(a) Any representation or warranty made under this Agreement shall
prove incorrect or misleading in any material respect when made or deemed to be
made pursuant to Section 4.2 hereof;
(b) The Borrower shall default in the payment of (i) any interest
under any of the Notes or fees or other amounts payable to the Lenders and the
Administrative Agent under any of the Loan Documents, or any of them, when due,
and such Default shall not be cured by payment in full within three (3) Business
Days from the due date or (ii) any principal under any of the Notes when due;
(c) The Borrower shall default in the performance or observance of
any agreement or covenant contained in Sections 5.2(a), 5.10, 7.1, 7.2, 7.4,
7.5, 7.7 or 7.8 hereof;
(d) The Borrower shall default in the performance or observance of
any other agreement or covenant contained in this Agreement not specifically
referred to elsewhere in this Section 8.1, and such default shall not be curable
within a period of thirty (30) days (or with respect to Sections 5.3, 5.4, 5.5,
5.6, 5.7, 5.8, 5.9, 5.12, 5.13, 5.14, 6.4, 6.5, 7.3, 7.9, 7.10 and 7.11 hereof,
such longer period not to exceed sixty (60) days if such default is curable
within such period and the Borrower is proceeding in good faith with all
diligent efforts to cure such default) from the date on which such Default
became known to the Borrower;
(e) There shall occur any default in the performance or observance of
any agreement or covenant or breach of any representation or warranty contained
in any of the Loan Documents (other than this Agreement or as otherwise provided
in this Section 8.1) by the Borrower, any Restricted Subsidiary, or any other
obligor thereunder, which shall not be cured within a period of thirty (30) days
(or such longer period not to exceed sixty (60) days if such default is curable
within such period and the Borrower or such Restricted Subsidiary
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or other obligor is proceeding in good faith with all diligent efforts to cure
such default) from the later of (i) occurrence of such Default and (ii) date on
which such default became known to the Borrower;
(f) There shall be entered and remain unstayed a decree or order for
relief in respect of the Borrower or any Restricted Subsidiary under Title 11 of
the United States Code, as now constituted or hereafter amended, or any other
applicable Federal or state bankruptcy law or other similar law, or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or similar
official of the Borrower or any Restricted Subsidiary, or of any substantial
part of their respective properties, or ordering the winding-up or liquidation
of the affairs of the Borrower or any Restricted Subsidiary; or an involuntary
petition shall be filed against the Borrower or any Restricted Subsidiary and a
temporary stay entered, and (i) such petition and stay shall not be diligently
contested, or (ii) any such petition and stay shall continue undismissed for a
period of ninety (90) consecutive days;
(g) The Borrower or any Restricted Subsidiary shall file a petition,
answer or consent seeking relief under Title 11 of the United States Code, as
now constituted or hereafter amended, or any other applicable Federal or state
bankruptcy law or other similar law, or the Borrower or any Restricted
Subsidiary shall consent to the institution of proceedings thereunder or to the
filing of any such petition or to the appointment or taking of possession of a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Borrower or any Restricted Subsidiary or of any
substantial part of their respective properties, or the Borrower or any
Restricted Subsidiary shall fail generally to pay their respective debts as they
become due or shall be adjudicated insolvent; the Borrower shall suspend or
discontinue its business, except as permitted by Section 7.4 hereof; the
Borrower or any Restricted Subsidiary shall have concealed, removed any of its
property with the intent to hinder or defraud its creditors or shall have made a
fraudulent or preferential transfer under any applicable fraudulent conveyance
or bankruptcy law, or the Borrower or any Restricted Subsidiary shall take any
action in furtherance of any such action;
(h) A judgment not covered by insurance or indemnification, where the
indemnifying party has agreed to indemnify and is financially able to do so,
shall be entered by any court against the Borrower or any Restricted Subsidiary
for the payment of money which exceeds singly, or in the aggregate with other
such judgments, $10,000,000, or a warrant of attachment or execution or similar
process shall be issued or levied against property of the Borrower or any
Restricted Subsidiary which, together with all other such property of the
Borrower or any Restricted Subsidiary subject to other such process, exceeds in
value $10,000,000 in the aggregate, and if, within thirty (30) days after the
entry, issue or levy thereof, such judgment, warrant or process, shall not have
been paid or discharged or
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stayed pending appeal or removed to bond, or if, after the expiration of any
such stay, such judgment, warrant or process shall not have been paid or
discharged or removed to bond;
(i) There shall be at any time any "accumulated funding deficiency,"
as defined in ERISA or in Section 412 of the Code, with respect to any Plan
maintained by the Borrower or any of its Subsidiaries or any ERISA Affiliate, or
to which the Borrower or any of its Subsidiaries or any ERISA Affiliate has any
liabilities, or any trust created thereunder; or a trustee shall be appointed by
a United States District Court to administer any such Plan; or PBGC shall
institute proceedings to terminate any such Plan; or the Borrower or any of its
Subsidiaries or any ERISA Affiliate shall incur any liability to PBGC in
connection with the termination of any such Plan; or any Plan or trust created
under any Plan of the Borrower or any of its Subsidiaries or any ERISA Affiliate
shall engage in a "prohibited transaction" (as such term is defined in Section
406 of ERISA or Section 4975 of the Code) which would subject any such Plan, any
trust created thereunder, any trustee or administrator thereof, or any party
dealing with any such Plan or trust to the tax or penalty on "prohibited
transactions" imposed by Section 502 of ERISA or Section 4975 of the Code;
(j) There shall occur (i) any acceleration of the maturity of any
Indebtedness of the Borrower or any Restricted Subsidiary (other than the ATS
Facility A Loan Agreement and the ATS Facility B Loan Agreement) in an aggregate
principal amount exceeding $5,000,000, or, as a result of a failure to comply
with the terms thereof, such Indebtedness shall otherwise have become due and
payable; or (ii) any event or condition the occurrence of which would permit
such acceleration of such Indebtedness, or which, as a result of a failure to
comply with the terms thereof, would make such Indebtedness otherwise due and
payable, and which event or condition has not been cured within any applicable
cure period or waived in writing prior to any declaration of an Event of Default
or acceleration of the Loans hereunder;
(k) The Borrower and its Restricted Subsidiaries are for any reason
no longer able to operate or manage the related communications tower facilities
or portions thereof and retain the revenue received therefrom, and the overall
effect of which would be to reduce Annualized Operating Cash Flow (determined as
at the last day of the most recently ended fiscal year of the Borrower) by ten
percent (10%) or more;
(1) Any material Loan Document, or any material provision thereof,
shall at any time and for any reason be declared by a court of competent
jurisdiction to be null and void, or a proceeding shall be commenced by the
Borrower or any Restricted Subsidiary or by any governmental authority having
jurisdiction over the Borrower or any Restricted Subsidiary seeking to establish
the invalidity or unenforceability thereof (exclusive of questions of
interpretation of any provision thereof), or the Borrower or any Subsidiary
shall
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deny that it has any liability or obligation for the payment of principal or
interest purported to be created under any Loan Document;
(m) Any material Security Document shall, for any reason, fail or
cease (except by reason of lapse of time) to create a valid and perfected Lien
on or Security Interest in any material portion of the Collateral purported to
be covered thereby;
(n) There shall occur any Change of Control;
(o) Borrower or any Restricted Subsidiary shall be indicted under the
Racketeer Influenced and Corrupt Organizations Act of 1970 (18 U.S.C. (S) 1961
et seq.);
(p) There shall occur and be continuing any "Event of Default"
resulting from a failure to make a payment of principal or interest under the
ATS Facility A Loan Agreement or the ATS Facility B Loan Agreement; or
(q) The Borrower shall, without the consent of the Required Lenders
under each of the ATS Facility A Loan Agreement and the ATS Facility B Loan
Agreement, prepay all or part of the principal amount of the Loans then
outstanding.
Section 8.2 Remedies.
--------
(a) If an Event of Default specified in Section 8.1 (other than an
Event of Default under Section 8.1(f) or (g) hereof) shall have occurred and
shall be continuing, the Administrative Agent, at the request of the Majority
Lenders, but subject to Section 9.8 hereof, shall declare the principal of and
interest on the Loans and the Notes and all other amounts owed to the Lenders
and the Administrative Agent under this Agreement, the Notes and any other Loan
Documents to be forthwith due and payable without presentment, demand, protest
or other notice of any kind, all of which are hereby expressly waived, anything
in this Agreement, the Notes or any other Loan Document to the contrary
notwithstanding.
(b) Upon the occurrence and continuance of an Event of Default
specified in Section 8.1(f) or (g) hereof, all principal, interest and other
amounts due hereunder and under the Notes, and all other Obligations, shall
thereupon and concurrently therewith become due and payable and the principal
amount of the Loans outstanding hereunder shall bear interest at the Default
Rate, all without any action by the Administrative Agent or the Lenders or the
Majority Lenders or any of them and without presentment, demand, protest or
other notice of any kind, all of which are expressly waived, anything in this
Agreement or in the other Loan Documents to the contrary notwithstanding.
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(c) Upon acceleration of the Notes, as provided in subsection (a) or
(b) of this Section 8.2, the Administrative Agent and the Lenders shall have all
of the post-default rights granted to them, or any of them, as applicable under
the Loan Documents and under Applicable Law.
(d) Upon acceleration of the Notes, as provided in subsection (a) or
(b) of this Section 8.2, the Administrative Agent shall have the right (but not
the obligation) upon the request of the Lenders to operate the communications
tower facilities of the Borrower and its Restricted Subsidiaries in accordance
with the terms of the Licenses and pursuant to the terms and subject to any
limitations contained in the Security Documents and, within guidelines
established by the Majority Lenders, to make any and all payments and
expenditures necessary or desirable in connection therewith, including, without
limitation, payment of wages as required under the Fair Labor Standards Act, as
amended, and of any necessary withholding taxes to state or federal authorities.
In the event the Majority Lenders fail to agree upon the guidelines referred to
in the preceding sentence within six (6) Business Days' after the Administrative
Agent has begun to operate the communications tower facilities, the
Administrative Agent may, after giving three (3) days' prior written notice to
the Lenders of its intention to do so, make such payments and expenditures as it
deems reasonable and advisable in its sole discretion to maintain the normal
day-to-day operation of such communications tower facilities. Such payments and
expenditures in excess of receipts shall constitute Advances under the
Commitment, not in excess of the amount of the Commitment. Advances made
pursuant to this Section 8.2(d) shall bear interest as provided in Section
2.3(d) hereof and shall be payable on demand. The making of one or more Advances
under this Section 8.2(d) shall not create any obligation on the part of the
Lenders to make any additional Advances hereunder. No exercise by the
Administrative Agent of the rights granted to it under this Section 8.2(d) shall
constitute a waiver of any other rights and remedies granted to the
Administrative Agent and the Lenders, or any of them, under this Agreement or at
law. The Borrower hereby irrevocably appoints the Administrative Agent as agent
for the Lenders, the true and lawful attorney of the Borrower, in its name and
stead and on its behalf, to execute, receipt for or otherwise act in connection
with any and all contracts, instruments or other documents in connection with
the completion and operation of the communications tower facilities in the
exercise of the Administrative Agent's and the Lenders' rights under this
Section 8.2(d). Such power of attorney is coupled with an interest and is
irrevocable. The rights of the Administrative Agent under this Section 8.2(d)
shall be subject to its prior compliance with the Communications Act and the FCC
rules and policies promulgated thereunder to the extent applicable to the
exercise of such rights.
(e) Upon acceleration of the Notes, as provided in subSection (a) or
(b) of this Section 8.2, the Administrative Agent, upon request of the Majority
Lenders, shall have
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the right to appoint a receiver for the properties and assets of the Borrower
and its Restricted Subsidiaries, and the Borrower, for itself and on behalf of
its Restricted Subsidiaries, hereby consents to such rights and such appointment
and hereby waives any objection the Borrower or any Restricted Subsidiary may
have thereto or the right to have a bond or other security posted by the
Administrative Agent, on behalf of the Lenders, in connection therewith. The
rights of the Administrative Agent under this Section 8.2(e) shall be subject to
its prior compliance with the Communications Act and the FCC rules and policies
promulgated thereunder to the extent applicable to the exercise of such rights.
(f) The rights and remedies of the Administrative Agent and the
Lenders hereunder shall be cumulative, and not exclusive.
Section 8.3 Payments Subsequent to Declaration of Event of Default.
------------------------------------------------------
Subsequent to the acceleration of the Loans under Section 8.2 hereof, payments
and prepayments under this Agreement made to the Administrative Agent and the
Lenders or otherwise received by any of such Persons (from realization on
Collateral for the Obligations or otherwise) shall be paid over to the
Administrative Agent (if necessary) and distributed by the Administrative Agent
as follows: first, to the Administrative Agent's reasonable costs and expenses,
-----
if any, incurred in connection with the collection of such payment or
prepayment, including, without limitation, any reasonable costs incurred by it
in connection with the sale or disposition of any Collateral for the Obligations
and all amounts under Sections 11.2(b) and (c) hereof; second, to the Lenders or
------
the Administrative Agent for any fees hereunder or under any of the other Loan
Documents then due and payable; third, to the Lenders pro rata on the basis of
-----
their respective unpaid principal amounts (except as provided in Section 2.2(e)
hereof), to the payment of any unpaid interest which may have accrued on the
Obligations; fourth, to the Lenders pro rata until all Loans have been paid in
------
full; fifth, to the Lenders pro rata on the basis of their respective unpaid
-----
amounts, to the payment of any other unpaid Obligations; and sixth, to the
-----
Borrower or as otherwise required by law.
ARTICLE 9 The Administrative Agent
Section 9.1 Appointment and Authorization. Each Lender hereby irrevocably
-----------------------------
appoints and authorizes, and hereby agrees that it will require any transferee
of any of its interest in its portion of the Loans and in its Note irrevocably
to appoint and authorize, the Administrative Agent to take such actions as its
agent on its behalf and to exercise such powers hereunder and under the other
Loan Documents as are delegated by the terms hereof and thereof, together with
such powers as are reasonably incidental thereto. Neither the Administrative
Agent, nor any of its respective directors, officers, employees or agents, shall
be liable for any action taken or omitted to be taken by it or them hereunder or
in connection
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herewith, except for its or their own gross negligence or willful misconduct as
determined by a final, non-appealable judicial order of a court of competent
jurisdiction.
Section 9.2 Interest Holders. The Administrative Agent may treat each
----------------
Lender, or the Person designated in the last notice filed with the
Administrative Agent, as the holder of all of the interests of such Lender in
its portion of the Loans and in its Note until written notice of transfer,
signed by such Lender (or the Person designated in the last notice filed with
the Administrative Agent) and by the Person designated in such written notice of
transfer, in form and substance satisfactory to the Administrative Agent, shall
have been filed with the Administrative Agent.
Section 9.3 Consultation with Counsel. The Administrative Agent may
-------------------------
consult with Powell, Goldstein, Frazer & Murphy LLP, Atlanta, Georgia, special
counsel to the Administrative Agent, or with other legal counsel selected by it
and shall not be liable for any action taken or suffered by it in good faith in
consultation with the Majority Lenders and in reasonable reliance on such
consultations.
Section 9.4 Documents. The Administrative Agent shall be under no duty to
---------
examine, inquire into, or pass upon the validity, effectiveness or genuineness
of this Agreement, any Note, any other Loan Document, or any instrument,
document or communication furnished pursuant hereto or in connection herewith,
and the Administrative Agent shall be entitled to assume that they are valid,
effective and genuine, have been signed or sent by the proper parties and are
what they purport to be.
Section 9.5 Administrative Agent and Affiliates. With respect to the
-----------------------------------
Commitment and the Loans, the Administrative Agent shall have the same rights
and powers hereunder as any other Lender and the Administrative Agent and
Affiliates of the Administrative Agent may accept deposits from, lend money to
and generally engage in any kind of business with the Borrower, any of its
Subsidiaries or other Affiliates of, or Persons doing business with, the
Borrower, any of its Subsidiaries or other Affiliates, as if they were not
affiliated with the Administrative Agent and without any obligation to account
therefor.
Section 9.6 Responsibility of the Administrative Agent. The duties and
------------------------------------------
obligations of the Administrative Agent under this Agreement are only those
expressly set forth in this Agreement. The Administrative Agent shall be
entitled to assume that no Default or Event of Default has occurred and is
continuing unless it has actual knowledge, or has been notified in writing by
the Borrower, of such fact, or has been notified by a Lender in writing that
such Lender considers that a Default or an Event of Default has occurred and is
continuing, and such Lender shall specify in detail the nature thereof in
writing. The Administrative Agent shall not be liable hereunder for any action
taken or omitted to be taken except for its own
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gross negligence or willful misconduct as determined by a final, non-appealable
judicial order of a court of competent jurisdiction. The Administrative Agent
shall provide each Lender with copies of such documents received from the
Borrower as such Lender may reasonably request.
Section 9.7 Action by the Administrative Agent.
----------------------------------
(a) The Administrative Agent shall be entitled to use its discretion
with respect to exercising or refraining from exercising any rights which may be
vested in it by, and with respect to taking or refraining from taking any action
or actions which it may be able to take under or in respect of, this Agreement,
unless the Administrative Agent shall have been instructed by the Majority
Lenders to exercise or refrain from exercising such rights or to take or refrain
from taking such action; provided, however, that the Administrative Agent shall
-------- -------
not exercise any rights under Section 8.2(a) hereof without the request of the
Majority Lenders (or, where expressly required, all the Lenders), unless time is
of the essence, in which case, such action can be taken at the request of the
Administrative Agent. The Administrative Agent shall incur no liability under or
in respect of this Agreement with respect to anything which it may do or refrain
from doing in the reasonable exercise of its judgment or which may seem to it to
be necessary or desirable in the circumstances, except for its gross negligence
or willful misconduct as determined by a final, non-appealable judicial order of
a court having jurisdiction over the subject matter.
(b) The Administrative Agent shall not be liable to the Lenders or to
any Lender or the Borrower or any of the Borrower's Subsidiaries in acting or
refraining from acting under this Agreement or any other Loan Document in
accordance with the instructions of the Majority Lenders (or, where expressly
required, all of the Lenders), and any action taken or failure to act pursuant
to such instructions shall be binding on all of the Lenders, except for its
gross negligence or willful misconduct as determined by a final, non-appealable
judicial order of a court having jurisdiction over the subject matter. The
Administrative Agent shall not be obligated to take any action which is contrary
to law or which would in its reasonable opinion subject it to liability.
Section 9.8 Notice of Default or Event of Default. In the event that the
-------------------------------------
Administrative Agent or any Lender shall acquire actual knowledge, or shall have
been notified, of any Default or Event of Default, the Administrative Agent or
such Lender shall promptly notify the Lenders (provided, however, that failure
-------- -------
to give such notice shall not result in any liability on the part of such Lender
or Administrative Agent), and the Administrative Agent shall take such action
and assert such rights under this Agreement and the other Loan Documents as the
Majority Lenders shall request in writing, and the Administrative Agent shall
not be subject to any liability by reason of its acting pursuant to
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any such request. If the Majority Lenders shall fail to request the
Administrative Agent to take action or to assert rights under this Agreement or
any other Loan Documents in respect of any Default or Event of Default within
ten (10) days after their receipt of the notice of any Default or Event of
Default from the Administrative Agent or any Lender, or shall request
inconsistent action with respect to such Default or Event of Default, the
Administrative Agent may, but shall not be required to, take such action and
assert such rights (other than rights under Article 8 hereof) as it deems in its
discretion to be advisable for the protection of the Lenders, except that, if
the Majority Lenders have instructed the Administrative Agent not to take such
action or assert such right, in no event shall the Administrative Agent act
contrary to such instructions, unless time is of the essence, in which case, the
Administrative Agent may act in accordance with its reasonable discretion.
Section 9.9 Responsibility Disclaimed. The Administrative Agent shall not
-------------------------
be under any liability or responsibility whatsoever as Administrative Agent:
(a) To the Borrower or any other Person as a consequence of any
failure or delay in performance by, or any breach by, any Lender or Lenders of
any of its or their obligations under this Agreement;
(b) To any Lender or Lenders as a consequence of any failure or delay
in performance by, or any breach by, (i) the Borrower of any of its obligations
under this Agreement or the Notes or any other Loan Document, or (ii) any
Restricted Subsidiary or any other obligor under any other Loan Document;
(c) To any Lender or Lenders, for any statements, representations or
warranties in this Agreement, or any other document contemplated by this
Agreement or any information provided pursuant to this Agreement, any other Loan
Document, or any other document contemplated by this Agreement, or for the
validity, effectiveness, enforceability or sufficiency of this Agreement, the
Notes, any other Loan Document, or any other document contemplated by this
Agreement; or
(d) To any Person for any act or omission other than that arising
from gross negligence or willful misconduct of the Administrative Agent as
determined by a final, non-appealable judicial order of a court of competent
jurisdiction.
Section 9.10 Indemnification. The Lenders agree to indemnify the
---------------
Administrative Agent (to the extent not reimbursed by the Borrower) pro rata
according to their respective Commitment Ratios, from and against any and all
liabilities, obligations, losses (other than the loss of principal, interest and
fees hereunder in the event of a bankruptcy or out-of-court 'work-out' of the
Loans), damages, penalties, actions, judgments, suits, costs, expenses
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(including, without limitation, fees and expenses of experts, agents,
consultants and counsel), or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by or asserted against the Administrative
Agent in any way relating to or arising out of this Agreement, any other Loan
Document, or any other document contemplated by this Agreement or any other Loan
Document or any action taken or omitted by the Administrative Agent under this
Agreement, any other Loan Document, or any other document contemplated by this
Agreement, except that no Lender shall be liable to the Administrative Agent for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, or disbursements resulting from the
gross negligence or willful misconduct of the Administrative Agent as determined
by a final, non-appealable judicial order of a court having jurisdiction over
the subject matter.
Section 9.11 Credit Decision. Each Lender represents and warrants to each
---------------
other and to the Administrative Agent that:
(a) In making its decision to enter into this Agreement and to make
its portion of the Loans it has independently taken whatever steps it considers
necessary to evaluate the financial condition and affairs of the Borrower, and
that it has made an independent credit judgment, and that it has not relied upon
the Administrative Agent or information provided by the Administrative Agent
(other than information provided to the Administrative Agent by the Borrower and
forwarded by the Administrative Agent to the Lenders); and
(b) So long as any portion of the Loans remains outstanding or such
Lender has an obligation to make its portion of Advances hereunder, it will
continue to make its own independent evaluation of the financial condition and
affairs of the Borrower.
Section 9.12 Successor Administrative Agent. Subject to the appointment
------------------------------
and acceptance of a successor Administrative Agent as provided below, the
Administrative Agent may resign at any time by giving written notice thereof to
the Lenders and the Borrower and may be removed at any time for cause by the
Majority Lenders. Upon any such resignation or removal, the Majority Lenders
shall have the right to appoint a successor Administrative Agent which
appointment shall, prior to a Default, be subject to the consent of the
Borrower, acting reasonably. If (a) no successor Administrative Agent shall
have been so appointed by the Majority Lenders or (b) if appointed, no successor
Administrative Agent shall have accepted such appointment within thirty (30)
days after the retiring Administrative Agent gave notice of resignation or the
Majority Lenders removed the retiring Administrative Agent, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent which shall be any Lender or a commercial bank organized
under the laws of the United States of America or any political subdivision
thereof which has
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combined capital and reserves in excess of $250,000,000 and which shall be
reasonably acceptable to the Borrower. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges, duties and obligations of the retiring
Administrative Agent and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder and under the other Loan Documents.
After any retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent the provisions of this Article shall continue in effect for
its benefit in respect of any actions taken or omitted to be taken by it while
it was acting as the Administrative Agent. In the event that the Administrative
Agent or any of its respective Affiliates ceases to be a Lender hereunder, such
Person shall resign its agency hereunder.
Section 9.13 Delegation of Duties. The Administrative Agent may execute
--------------------
any of its duties under the Loan Documents by or through agents or attorneys
selected by it using reasonable care, and shall be entitled to advice of counsel
concerning all matters pertaining to such duties.
ARTICLE 10 Changes in Circumstances
Affecting LIBOR Advances and Increased Costs
Section 10.1 LIBOR Basis Determination Inadequate or Unfair. If with
----------------------------------------------
respect to any proposed LIBOR Advance for any Interest Period, the
Administrative Agent determines after consultation with the Lenders that
deposits in dollars (in the applicable amount) are not being offered to each of
the Lenders in the relevant market for such Interest Period, the Administrative
Agent shall forthwith give notice thereof to the Borrower and the Lenders,
whereupon until the Administrative Agent notifies the Borrower that the
circumstances giving rise to such situation no longer exist, the obligations of
any affected Lender to make its portion of such LIBOR Advances shall be
suspended.
Section 10.2 Illegality. If after the date hereof, the adoption of any
----------
Applicable Law, or any change in any Applicable Law (whether adopted before or
after the Agreement Date), or any change in interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
with any directive (whether or not having the force of law) of any such
authority, central bank or comparable agency, shall make it unlawful or
impossible for any Lender to make, maintain or fund its portion of LIBOR
Advances, such Lender shall so notify the Administrative Agent, and the
Administrative Agent shall forthwith give notice thereof to the other Lenders
and the Borrower. Before giving any notice to the Administrative Agent pursuant
to this Section 10.2, such Lender shall designate a different
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lending office if such designation will avoid the need for giving such notice
and will not, in the sole reasonable judgment of such Lender, be otherwise
materially disadvantageous to such Lender. Upon receipt of such notice,
notwithstanding anything contained in Article 2 hereof, the Borrower shall repay
in full the then outstanding principal amount of such Lender's portion of each
affected LIBOR Advance, together with accrued interest thereon, on either (a)
the last day of the then current Interest Period applicable to such affected
LIBOR Advances if such Lender may lawfully continue to maintain and fund its
portion of such LIBOR Advance to such day or (b) immediately if such Lender may
not lawfully continue to fund and maintain its portion of such affected LIBOR
Advances to such day. Concurrently with repaying such portion of each affected
LIBOR Advance, the Borrower may borrow a Base Rate Advance from such Lender,
whether or not it would have been entitled to effect such borrowing, and such
Lender shall make such Advance, if so requested, in an amount such that the
outstanding principal amount of the affected Note held by such Lender shall
equal the outstanding principal amount of such Note or Notes immediately prior
to such repayment.
Section 10.3 Increased Costs.
---------------
(a) If after the date hereof, the adoption of any Applicable Law, or
any change in any Applicable Law (whether adopted before or after the Agreement
Date), or any interpretation or change in interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof or compliance by any Lender
with any directive (whether or not having the force of law) of any such
authority, central bank or comparable agency:
(1) shall subject any Lender to any tax, duty or other charge
with respect to its obligation to make its portion of LIBOR Advances, or
its portion of existing Advances, or shall change the basis of taxation of
payments to any Lender of the principal of or interest on its portion of
LIBOR Advances or in respect of any other amounts due under this Agreement
or its obligation to make its portion of LIBOR Advances (except for changes
in the rate or method of calculation of tax on the revenues or net income
of such Lender); or
(2) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of
the Federal Reserve System, but excluding any included in an applicable
Eurodollar Reserve Percentage), special deposit, capital adequacy,
assessment or other requirement or condition against assets of, deposits
with or for the account of, or commitments or credit extended by, any
Lender or shall impose on any Lender or the London interbank
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borrowing market any other condition affecting its obligation to make its
portion of such LIBOR Advances or its portion of existing Advances;
and the result of any of the foregoing is to increase the cost to such Lender of
making or maintaining any of its portion of LIBOR Advances, or to reduce the
amount of any sum received or receivable by such Lender under this Agreement or
under its Note with respect thereto, then, within ten (10) days after demand by
such Lender, the Borrower agrees to pay to such Lender such additional amount or
amounts as will compensate such Lender for such increased costs. All payments
made by the Borrower under this Agreement shall, as set forth above, be made
free and clear of, and without deduction or withholding for or on account of,
any present or future income, stamp, or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any governmental authority excluding net
income taxes and franchise taxes (imposed in lieu of net income taxes) imposed
on any Lender as a result of present or former connection between such Person
and the jurisdiction of the governmental authority imposing such tax or any
political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from such Person having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Agreement or any other Loan Document). If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded
Taxes") are required to be withheld from any amounts payable to any Lender
hereunder, the amounts so payable to such Person shall be increased to the
extent necessary to yield to such Person (after payment of all Non-Excluded
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement; provided, however, that the Borrower
shall not be required to increase any such amounts payable to any Lender that is
not organized under the laws of the United States of America or a state thereof
if such Person fails to comply with the requirements of Section 2.10 of this
Agreement. Whenever any Non-Excluded Taxes are payable by the Borrower, as
promptly as possible thereafter the Borrower shall send to the Administrative
Agent for its own account or for the account of such Lender, as the case may be,
a certified copy of an original official receipt received by the Borrower
showing payment thereof. If the Borrower fails to pay any Non-Excluded Taxes
when due to the appropriate taxing authority or fails to remit to the
Administrative Agent the required receipts or other documentary evidence, the
Borrower shall indemnify the Administrative Agent and the Lenders for any
incremental taxes, interest or penalties that may become payable by the
Administrative Agent or any Lender as result of any such failure. The Borrower
shall make any payments required pursuant to the immediately preceding sentence
within thirty (30) days after receipt of written demand therefor from the
Administrative Agent or any Lender, as the case may be. The agreements set
forth in this 10.3 shall survive the termination of this Agreement and the
payment of the Obligations. Each Lender will promptly notify the Borrower and
the Administrative Agent of any event of which it has knowledge, occurring after
the date
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hereof, which will entitle such Lender to compensation pursuant to this Section
10.3 and will designate a different lending office if such designation will
avoid the need for, or reduce the amount of, such compensation and will not, in
the sole reasonable judgment of such Lender made in good faith, be otherwise
disadvantageous to such Lender. Notwithstanding any provision herein to the
contrary, the Borrower shall have no obligation to pay any Lender any amount
which the Borrower is required to withhold due to the failure of such Lender to
file any statement of exemption required by the Code.
(b) Any Lender claiming compensation under this Section 10.3 shall
provide the Borrower with a written certificate setting forth the additional
amount or amounts to be paid to it hereunder and calculations therefor in
reasonable detail. Such certificate shall be presumptively correct absent
manifest error. In determining such amount, such Lender may use any reasonable
averaging and attribution methods. If any Lender demands compensation under
this Section 10.3, the Borrower may at any time, upon at least five (5) Business
Days' prior notice to such Lender, prepay in full such Lender's portion of the
then outstanding LIBOR Advances, together with accrued interest and fees thereon
to the date of prepayment, along with any reimbursement required under Section
2.10 hereof and this Section 10.3. Concurrently with prepaying such portion of
LIBOR Advances the Borrower may, whether or not then entitled to make such
borrowing, borrow a Base Rate Advance, or a LIBOR Advance not so affected, from
such Lender, and such Lender shall, if so requested, make such Advance in an
amount such that the outstanding principal amount of the affected Note or Notes
held by such Lender shall equal the outstanding principal amount of such Note or
Notes immediately prior to such prepayment.
Section 10.4 Effect On Other Advances. If notice has been given pursuant
------------------------
to Section 10.1, 10.2 or 10.3 hereof suspending the obligation of any Lender to
make its portion of any type of LIBOR Advance, or requiring such Lender's
portion of LIBOR Advances to be repaid or prepaid, then, unless and until such
Lender notifies the Borrower that the circumstances giving rise to such
repayment no longer apply, all amounts which would otherwise be made by such
Lender as its portion of LIBOR Advances shall, unless otherwise notified by the
Borrower, be made instead as Base Rate Advances.
ARTICLE 11 Miscellaneous
Section 11.1 Notices.
-------
(a) Except as otherwise expressly provided herein, all notices and
other communications under this Agreement and the other Loan Documents (unless
otherwise specifically stated therein) shall be in writing and shall be deemed
to have been given
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three (3) Business Days after deposit in the mail, designated as certified mail,
return receipt requested, postage-prepaid, or one (1) Business Day after being
entrusted to a reputable commercial overnight delivery service for next day
delivery, or when sent on a Business Day prior to 5:00 p.m. (New York, New York
time) by telecopy addressed to the party to which such notice is directed at its
address determined as provided in this Section 11.1. All notices and other
communications under this Agreement shall be given to the parties hereto at the
following addresses:
(i) If to the Borrower, to it at:
American Tower Corporation
116 Huntington Avenue
Boston, Massachusetts 02111
Attn: Joseph B. Winn, Chief Financial Officer
with copies to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02110
Attn: Norman A. Bikales, Esq.
(ii) If to the Administrative Agent, to it at:
Toronto Dominion (Texas), Inc.
909 Fannin Street, Suite 1700
Houston, Texas 77010
Attention: Agency Department
with a copy to:
The Toronto-Dominion Bank
Toronto Dominion Securities, Inc.
USA Division
31 West 52nd Street
New York, NY 10019-6101
Attn: Managing Director, Communications Finance
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and with a copy to:
Powell, Goldstein, Frazer & Murphy LLP
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Douglas S. Gosden, Esq.
(iii) If to the Lenders, to them at the addresses set forth
beside their names as set forth on Schedule 8 attached hereto.
----------
The failure to provide copies shall not affect the validity of the notice given
to the primary recipient.
(b) Any party hereto may change the address to which notices shall be
directed under this Section 11.1 by giving ten (10) days' written notice of such
change to the other parties.
Section 11.2 Expenses. The Borrower will promptly pay, or reimburse:
--------
(a) all reasonable out-of-pocket expenses of the Administrative Agent
in connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents, and the transactions contemplated
hereunder and thereunder and the making of the initial Advance hereunder
(whether or not such Advance is made), including, without limitation, the
reasonable fees and disbursements of Powell, Goldstein, Frazer & Murphy LLP,
Atlanta, Georgia special counsel for the Administrative Agent; and
(b) all reasonable out-of-pocket costs and expenses of the
Administrative Agent and the Lenders of enforcement under this Agreement or the
other Loan Documents and all reasonable out-of-pocket costs and expenses of
collection if an Event of Default occurs in the payment of the Notes, which in
each case shall include, without limitation, reasonable fees and out-of-pocket
expenses of counsel for the Administrative Agent and the Lenders.
Section 11.3 Waivers. The rights and remedies of the Administrative Agent
-------
and the Lenders under this Agreement and the other Loan Documents shall be
cumulative and not exclusive of any rights or remedies which they would
otherwise have. No failure or delay by the Administrative Agent, the Majority
Lenders, or the Lenders, or any of them, in exercising any right, shall operate
as a waiver of such right. The Administrative Agent and the Lenders expressly
reserve the right to require strict compliance with the terms of this Agreement
in
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connection with any future funding of a Request for Advance. In the event
the Lenders decide to fund a Request for Advance at a time when the Borrower is
not in strict compliance with the terms of this Agreement, such decision by the
Lenders shall not be deemed to constitute an undertaking by the Lenders to fund
any further Request for Advance or preclude the Lenders or the Administrative
Agent from exercising any rights available under the Loan Documents or at law or
equity. Any waiver or indulgence granted by the Administrative Agent, the
Lenders, or the Majority Lenders, shall not constitute a modification of this
Agreement or any other Loan Document, except to the extent expressly provided in
such waiver or indulgence, or constitute a course of dealing at variance with
the terms of this Agreement or any other Loan Document such as to require
further notice of their intent to require strict adherence to the terms of this
Agreement or any other Loan Document in the future.
Section 11.4 Set-Off. In addition to any rights now or hereafter granted
-------
under Applicable Law and not by way of limitation of any such rights, upon the
occurrence of an Event of Default and during the continuation thereof, the
Administrative Agent and each of the Lenders are hereby authorized by the
Borrower at any time or from time to time, without notice to the Borrower or to
any other Person, any such notice being, to the extent permitted by Applicable
Law, hereby expressly waived, to set off and to appropriate and to apply any and
all deposits (general or special, time or demand, including, but not limited to,
Indebtedness evidenced by certificates of deposit, in each case whether matured
or unmatured) and any other Indebtedness at any time held or owing by any Lender
or Administrative Agent, to or for the credit or the account of the Borrower or
any Restricted Subsidiary, against and on account of the obligations and
liabilities of the Borrower to the Lenders and the Administrative Agent,
including, but not limited to, all Obligations and any other claims of any
nature or description arising out of or connected with this Agreement, the Notes
or any other Loan Document, irrespective of whether (a) any Lender or
Administrative Agent shall have made any demand hereunder or (b) any Lender or
Administrative Agent shall have declared the principal of and interest on the
Loans and other amounts due hereunder to be due and payable as permitted by
Section 8.2 hereof and although such obligations and liabilities or any of them
shall be contingent or unmatured. Upon direction by the Administrative Agent,
with the consent of all of the Lenders, each Lender holding deposits of the
Borrower or any Restricted Subsidiary shall exercise its set-off rights as so
directed; and, within one (1) Business Day following any such setoff, the
Administrative Agent shall give notice thereof to the Borrower. Notwithstanding
anything to the contrary contained in this Section 11.4, no Lender shall
exercise any right of offset without the prior consent of the Majority Lenders
so long as the Obligations shall be secured by any real property or real
property interest including leaseholds located in the State of California, it
being understood and agreed that the provisions of this sentence are for the
exclusive benefit of the Lenders, may be amended, modified or waived by the
Majority Lenders without notice
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to or consent of the Borrower or any Subsidiary of the Borrower and shall not
constitute a waiver of any rights against the Borrower or any Subsidiary or
against any Collateral.
Section 11.5 Assignment and Participations.
-----------------------------
(a) The Borrower may not assign or transfer any of its rights or
obligations hereunder, under the Notes or under any other Loan Document without
the prior written consent of each Lender.
(b) Each Lender may sell (i) assignments of any amount of its interest
hereunder to any Lender, or (ii) assignments or participations of up to one
hundred percent (100%) of its interest hereunder to (A) one (1) or more wholly-
owned Affiliates or Approved Funds of such Lender (provided, however, that, if
-------- -------
such Affiliate is not a financial institution, such Lender shall be obligated to
repurchase such assignment if such Affiliate is unable to honor its obligations
hereunder), or (B) any Federal Reserve Bank as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve System and any
Operating Circular issued by such Federal Reserve Bank (provided, however, that
-------- -------
no such assignment shall relieve such Lender from its obligations hereunder).
(c) Each of the Lenders may at any time enter into assignment
agreements or participations with one or more other Lenders, Approved Funds or
other Persons pursuant to which each Lender may assign or participate its
interest under this Agreement and the other Loan Documents, including, its
interest in any particular Advance or portion thereof; provided, however, that
-------- -------
(1) all assignments (other than assignments described in Section 11.5(b) hereof)
shall be in minimum principal amounts of the lesser of (X) $5,000,000, and (Y)
the amount of such Lender's Commitment (in a single assignment only), and (2)
all assignments (other than assignments described in Section 11.5(b) hereof) and
participations hereunder shall be subject to the following additional terms and
conditions:
(i) No assignment (except assignments permitted in Section
11.5(b) hereof) shall be sold without the prior consent of the
Administrative Agent and prior to the occurrence and continuation of an
Event of Default, the consent of the Borrower, which consents shall not be
unreasonably withheld;
(ii) Any Person purchasing a participation or an assignment of
any portion of the Loans from any Lender shall be required to represent and
warrant that its purchase shall not constitute a "prohibited transaction"
(as defined in Section 4.1(m) hereof);
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(iii) The Borrower, the Lenders, and the Administrative Agent
agree that assignments permitted hereunder (including the assignment of any
Advance or portion thereof) may be made with all voting rights, and shall
be made pursuant to an Assignment and Assumption Agreement substantially in
the form of Exhibit L attached hereto. An administrative fee of $3,500
---------
shall be payable to the Administrative Agent by the assigning Lender at the
time of any assignment under this Section 11.5(c);
(iv) No participation agreement shall confer any rights under
this Agreement or any other Loan Document to any purchaser thereof, or
relieve any issuing Lender from any of its obligations under this
Agreement, and all actions hereunder shall be conducted as if no such
participation had been granted; provided, however, that any participation
-------- -------
agreement may confer on the participant the right to approve or disapprove
decreases in the interest rate, increases in the principal amount of the
Loans participated in by such participant, decreases in fees, extensions of
the Maturity Date or other principal payment date for the Loans or of the
scheduled reduction of the Commitment and releases of Collateral;
(v) Each Lender agrees to provide the Administrative Agent
and the Borrower with prompt written notice of any issuance of assignments
of its interests hereunder;
(vi) No assignment, participation or other transfer of any
rights hereunder or under the Notes shall be effected that would result in
any interest requiring registration under the Securities Act of 1933, as
amended, or qualification under any state securities law;
(vii) No such assignment may be made to any bank or other
financial institution (x) with respect to which a receiver or conservator
(including, without limitation, the Federal Deposit Insurance Corporation,
the Resolution Trust Company or the Office of Thrift Supervision) has been
appointed or (y) that is not "adequately capitalized" (as such term is
defined in Section 131(b)(1)(B) of the Federal Deposit Insurance
Corporation Improvement Act as in effect on the Agreement Date); and
(viii) If applicable, each Lender shall, and shall cause each of
its assignees to, provide to the Administrative Agent on or prior to the
effective date of any assignment an appropriate Internal Revenue Service
form as required by Applicable Law supporting such Lender's or assignee's
position that no withholding by the Borrower or the Administrative Agent
for U.S. income tax payable by such Lender or assignee in respect of
amounts received by it hereunder is required. For
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purposes of this Agreement, an appropriate Internal Revenue Service form
shall mean Form 1001 (Ownership Exemption or Reduced Rate Certificate of
the U.S. Department of Treasury), or Form 4224 (Exemption from Withholding
of Tax on Income Effectively Connected with the Conduct of a Trade or
Business in the United States), or any successor or related forms adopted
by the relevant U.S. taxing authorities.
(d) Except as specifically set forth in Section 11.5(b) or (c) hereof,
nothing in this Agreement or the Notes, expressed or implied, is intended to or
shall confer on any Person other than the respective parties hereto and thereto
and their successors and assignees permitted hereunder and thereunder any
benefit or any legal or equitable right, remedy or other claim under this
Agreement or the Notes.
(e) In the case of any participation, all amounts payable by the
Borrower under the Loan Documents shall be calculated and made in the manner and
to the parties hereto as if no such participation had been sold.
(f) The provisions of this Section 11.5 shall not apply to any
purchase of participations among the Lenders pursuant to Section 2.11 hereof.
(g) Any Lender making an assignment hereunder shall cause any assignee
thereof to agree to be bound by all terms of the Intercreditor Agreement.
(h) The Administrative Agent, acting, for this purpose only, as agent
of the Borrower shall maintain, at no extra charge to the Borrower, a register
(the "Register") at the address to which notices to the Administrative Agent are
--------
to be sent under Section 11.1 hereof on which Register the Administrative Agent
shall enter the name, address and taxpayer identification number (if provided)
of the registered owner of the Loans evidenced by a Registered Note or, upon the
request of the registered owner, for which a Registered Note has been requested.
A Registered Note and the Loans evidenced thereby may be assigned or otherwise
transferred in whole or in part only by registration of such assignment or
transfer of such Registered Note and the Loans evidenced thereby on the
Register. Any assignment or transfer of all or part of such Loans and the
Registered Note evidencing the same shall be registered on the Register only
upon compliance with the other provisions of this Section 11.5 and surrender for
registration of assignment or transfer of the Registered Note evidencing such
Loans, duly endorsed by (or accompanied by a written instrument of assignment or
transfer duly executed by) the Registered Noteholder thereof, and thereupon one
or more new Registered Notes in the same aggregate principal amount shall be
issued to the designated assignee(s) or transferee(s) and, if less than the
aggregate principal amount of such Registered Notes is thereby transferred, the
assignor or transferor. Prior to the due
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presentment for registration of transfer of any Registered Note, the Borrower
and the Administrative Agent shall treat the Person in whose name such Loans and
the Registered Note evidencing the same is registered as the owner thereof for
the purpose of receiving all payments thereon and for all other purposes,
notwithstanding any notice to the contrary.
(i) The Register shall be available for inspection by the Borrower and
any Lender at any reasonable time during the Administrative Agent's regular
business hours upon reasonable prior notice.
(j) Notwithstanding any other provision in this Agreement, any Lender
that is a fund that invests in bank loans may, without the consent of the
Administrative Agent or the Borrower, pledge all or any portion of its rights
under, and interest in, this Agreement and the Notes to any trustee or to any
other representative of holders of obligations owed, or securities issued, by
such fund as security for such obligations or securities; provided, however,
-------- -------
that any transfer to any Person upon the enforcement of such pledge or security
interest may only be made subject to the assignment provisions of this Section
11.5.
Section 11.6 Accounting Principles. All references in this Agreement to
---------------------
GAAP shall be to such principles as in effect from time to time. All accounting
terms used herein without definition shall be used as defined under GAAP. All
references to the financial statements of the Borrower and to its Annualized
Operating Cash Flow, Total Debt, Interest Expense, and other such terms shall be
deemed to refer to such items of the Borrower and its Restricted Subsidiaries,
on a fully consolidated basis. The Borrower shall deliver to the Lenders at the
same time as the delivery of any quarterly or annual financial statements
required pursuant to Section 6.1 or 6.2 hereof, as applicable, (a) a description
in reasonable detail of any material variation between the application of GAAP
employed in the preparation of such statements and the application of GAAP
employed in the preparation of the next preceding quarterly or annual financial
statements, as applicable, and (b) reasonable estimates of the differences
between such statements arising as a consequence thereof. If, within thirty
(30) days after the delivery of the quarterly or annual financial statements
referred to in the immediately preceding sentence, the Majority Lenders shall
object in writing to the Borrower's determining compliance hereunder on such
basis, (1) calculations for the purposes of determining compliance hereunder
shall be made on a basis consistent with those used in the preparation of the
latest financial statements as to which such objection shall not have been made,
or (2) if requested by the Borrower, the Majority Lenders will negotiate in good
faith to amend the covenants herein to give effect to the changes in GAAP in a
manner consistent with this Agreement (and so long as the Borrower complies in
good faith with the provisions of this Section 11.6, no Default or Event of
Default shall occur hereunder solely as a result of such changes in GAAP).
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Section 11.7 Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
Section 11.8 Governing Law. This Agreement and the Notes shall be
-------------
construed in accordance with and governed by the internal laws of the State of
New York applicable to agreements made and to be performed in the State of New
York. If any action or proceeding shall be brought by the Administrative Agent
or any Lender hereunder or under any other Loan Document in order to enforce any
right or remedy under this Agreement or under any Note or any other Loan
Document, the Borrower hereby consents and will, and the Borrower will cause
each Restricted Subsidiary to, submit to the jurisdiction of any state or
federal court of competent jurisdiction sitting within the area comprising the
Southern District of New York on the date of this Agreement. The Borrower, for
itself and on behalf of its Restricted Subsidiaries, hereby agrees that, to the
extent permitted by Applicable Law, service of the summons and complaint and all
other process which may be served in any such suit, action or proceeding may be
effected by mailing by registered mail a copy of such process to the offices of
the Borrower at the address given in Section 11.1 hereof and that personal
service of process shall not be required. Nothing herein shall be construed to
prohibit service of process by any other method permitted by law, or the
bringing of any suit, action or proceeding in any other jurisdiction. The
Borrower agrees that final judgment in such suit, action or proceeding shall be
conclusive and may be enforced in any other jurisdiction by suit on the judgment
or in any other manner provided by Applicable Law.
Section 11.9 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof in that jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 11.10 Interest.
--------
(a) In no event shall the amount of interest due or payable hereunder
or under the Notes exceed the maximum rate of interest allowed by Applicable
Law, and in the event any such payment is inadvertently made by the Borrower or
inadvertently received by the Administrative Agent or any Lender, then such
excess sum shall be credited as a payment of principal, unless the Borrower
shall notify the Administrative Agent or such Lender, in writing, that it elects
to have such excess sum returned forthwith. It is the express intent hereof
that the Borrower not pay and the Administrative Agent and the Lenders not
receive, directly or indirectly in any manner whatsoever, interest in excess of
that which may legally be paid by the Borrower under Applicable Law.
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(b) Notwithstanding the use by the Lenders of the Base Rate and the
LIBOR as reference rates for the determination of interest on the Loans, the
Lenders shall be under no obligation to obtain funds from any particular source
in order to charge interest to the Borrower at interest rates related to such
reference rates.
Section 11.11 Table of Contents and Headings. The Table of Contents and
------------------------------
the headings of the various subdivisions used in this Agreement are for
convenience only and shall not in any way modify or amend any of the terms or
provisions hereof, nor be used in connection with the interpretation of any
provision hereof.
Section 11.12 Amendment and Waiver. Neither this Agreement nor any Loan
--------------------
Document nor any term hereof or thereof may be amended orally, nor may any
provision hereof or thereof be waived orally but only by an instrument in
writing signed by or at the direction of the Majority Lenders and, in the case
of an amendment, by the Borrower, except that in the event of (a) any increase
in the amount of any Lender's portion of the Commitment; (b) any delay or
extension in the terms of repayment of the Loans provided in Section 2.4 hereof;
(c) any reduction in principal, interest or fees due hereunder or postponement
of the payment thereof without a corresponding payment of such principal,
interest or fee amount by the Borrower; (d) any release of any portion of the
Collateral for the Loans, except under Section 7.4 hereof; (e) any waiver of any
Default due to the failure by the Borrower to pay any sum due to any of the
Lenders hereunder; (f) any release of any Guaranty of all or any portion of the
Obligations, except in connection with a merger, sale or other disposition
otherwise permitted hereunder (in which case, such release shall require no
further approval by the Lenders); (g) any amendment to the pro rata treatment of
the Lenders set forth in Section 2.8 hereof; or (h) any amendment of this
Section 11.12, of the definition of Majority Lenders, or of any Section herein
to the extent that such Section requires action by all Lenders, any amendment or
waiver or consent may be made only by an instrument in writing signed by each of
the Lenders and, in the case of an amendment, by the Borrower. Any amendment to
any provision hereunder governing the rights, obligations, or liabilities of the
Administrative Agent in its capacity as such, may be made only by an instrument
in writing signed by such affected Person and by each of the Lenders. The
parties further agree that so long as the ATS Facility A Loan Agreement and the
ATS Facility B Loan Agreement remain in effect, certain amendments hereunder
will require the approval of the Required Lenders under such Agreements.
Section 11.13 Entire Agreement. Except as otherwise expressly provided
----------------
herein, this Agreement, the other Loan Documents, and the other documents
described or contemplated herein or therein will embody the entire agreement and
understanding among the parties hereto and thereto and supersede all prior
agreements and understandings relating to the subject matter hereof and thereof.
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Section 11.14 Other Relationships. No relationship created hereunder or
-------------------
under any other Loan Document shall in any way affect the ability of the
Administrative Agent and each Lender to enter into or maintain business
relationships with the Borrower or any of its Affiliates beyond the
relationships specifically contemplated by this Agreement and the other Loan
Documents.
Section 11.15 Directly or Indirectly. If any provision in this Agreement
----------------------
refers to any action taken or to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such Person, whether or not expressly
specified in such provision.
Section 11.16 Reliance on and Survival of Various Provisions. All
----------------------------------------------
covenants, agreements, statements, representations and warranties made herein or
in any certificate delivered pursuant hereto shall (a) be deemed to have been
relied upon by the Administrative Agent and each of the Lenders notwithstanding
any investigation heretofore or hereafter made by them and (b) survive the
execution and delivery of the Notes and shall continue in full force and effect
so long as any Note is outstanding and unpaid. Any right to indemnification
hereunder, including, without limitation, rights pursuant to Sections 2.7, 2.9,
5.11, 10.3 and 11.2 hereof, shall survive the termination of this Agreement and
the payment and performance of all Obligations.
Section 11.17 Senior Debt. The Obligations are secured by the Security
-----------
Documents and are intended by the parties hereto to be in parity with the
Interest Hedge Agreements and senior in right of payment to all other
Indebtedness of the Borrower.
Section 11.18 Obligations. The obligations of the Administrative Agent
-----------
and each of the Lenders hereunder are several, not joint.
Section 11.19 Confidentiality. The Lenders shall hold all non-public,
---------------
proprietary or confidential information (which has been identified as such by
the Borrower) obtained pursuant to the requirements of this Agreement in
accordance with their customary procedures for handling confidential information
of this nature and in accordance with safe and sound banking practices;
provided, however, that the Lenders may make disclosure of any such information
- -------- -------
to their examiners, Affiliates, outside auditors, counsel, consultants,
appraisers and other professional advisors in connection with this Agreement or
as reasonably required by any proposed syndicate member or any proposed
transferee or participant in connection with the contemplated transfer of any
Note or participation therein or as required or requested by any governmental
authority or representative thereof or in connection with the enforcement hereof
or of any Loan Document or related document or
-81-
<PAGE>
pursuant to legal process or with respect to any litigation between or among the
Borrower and any of the Lenders, so long as the person (other than any
examiners) receiving such information is advised of the provisions of this
Section 11.19 and agrees to be bound thereby. In no event shall any Lender be
obligated or required to return any materials furnished to it by the Borrower.
The foregoing provisions shall not apply to a Lender with respect to information
that (i) is or becomes generally available to the public (other than through
such Lender), (ii) is already in the possession of such Lender on a
nonconfidential basis, or (iii) comes into the possession of such Lender in a
manner not known to such Lender to involve a breach of a duty of confidentiality
owing to the Borrower.
ARTICLE 12 Waiver of Jury Trial
Section 12.1 Waiver of Jury Trial. THE BORROWER, FOR ITSELF AND ON BEHALF
--------------------
OF ITS RESTRICTED SUBSIDIARIES, AND THE ADMINISTRATIVE AGENT AND THE LENDERS,
HEREBY AGREE, TO THE EXTENT PERMITTED BY LAW, TO WAIVE AND HEREBY WAIVE THE
RIGHT TO A TRIAL BY JURY IN ANY COURT AND IN ANY ACTION OR PROCEEDING OF ANY
TYPE IN WHICH THE BORROWER, ANY RESTRICTED SUBSIDIARY, ANY OF THE LENDERS, THE
ADMINISTRATIVE AGENT OR ANY OF THEIR RESPECTIVE SUCCESSORS OR ASSIGNS IS A
PARTY, AS TO ALL MATTERS AND THINGS ARISING DIRECTLY OR INDIRECTLY OUT OF THIS
AGREEMENT, ANY OF THE NOTES OR THE OTHER LOAN DOCUMENTS AND THE RELATIONS AMONG
THE PARTIES LISTED IN THIS SECTION 12.1. EXCEPT AS PROHIBITED BY LAW, EACH PARTY
TO THIS AGREEMENT WAIVES ANY RIGHTS IT MAY HAVE TO CLAIM OR RECOVER IN ANY
LITIGATION REFERRED TO IN THIS SECTION, ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. EACH PARTY TO THIS AGREEMENT (A) CERTIFIES THAT NEITHER ANY
REPRESENTATIVE, AGENT OR ATTORNEY OF THE ADMINISTRATIVE AGENT OR ANY LENDER HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE ADMINISTRATIVE AGENT OR ANY LENDER
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND
(B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND EACH
OTHER LOAN DOCUMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION. THE PROVISIONS OF THIS SECTION HAVE BEEN FULLY
DISCLOSED BY AND TO THE PARTIES AND THE PROVISIONS SHALL BE SUBJECT TO NO
EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER
PARTY THAT THE
-82-
<PAGE>
PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-83-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused it to be executed by their duly authorized officers, all as of the day
and year first above written.
BORROWER: AMERICAN TOWER CORPORATION
By:________________________________________________
Title:________________________________________
ADMINISTRATIVE AGENT
AND LENDERS: TORONTO DOMINION (TEXAS), INC., as Administrative Agent
for itself and for the Lenders and as a Lender
By:________________________________________________
Title:________________________________________
BANK OF MONTREAL, CHICAGO BRANCH, as a Lender
By:________________________________________________
Title:________________________________________
GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender
By:________________________________________________
Title:________________________________________
-84-
<PAGE>
ING HIGH INCOME PRINCIPAL PRESERVATION FUND HOLDINGS,
LDC
By ING Capital Advisors, Inc., as Investment Advisors,
Inc., as a Lender
By:_______________________________________________
Title:________________________________________
SENIOR HIGH INCOME PORTFOLIO, INC., as a Lender
By:________________________________________________
Title:________________________________________
DEBT STRATEGIES FUND, INC., as a Lender
By:________________________________________________
Title:________________________________________
DEBT STRATEGIES FUND II, INC., as a Lender
By:________________________________________________
Title:________________________________________
-85-
<PAGE>
CHASE SECURITIES, INC., as Agent for The Chase
Manhattan Bank, as a Lender
By:________________________________________________
Title:________________________________________
OCTAGON LOAN TRUST, by Octagon Credit Investors, as
Manager, as a Lender
By:________________________________________________
Title:________________________________________
UNION BANK OF CALIFORNIA, N.A., as a Lender
By:________________________________________________
Title:________________________________________
CREDIT LYONNAIS NEW YORK BRANCH, as a Lender
By:________________________________________________
Title:________________________________________
-86-
<PAGE>
EXHIBIT 10.2A
ATS FACILITY A
LOAN AGREEMENT
AMONG
AMERICAN TOWER SYSTEMS, L.P.
AND
AMERICAN TOWER SYSTEMS (DELAWARE), INC.,
AS BORROWERS;
THE FINANCIAL INSTITUTIONS WHOSE NAMES APPEAR
AS BANKS ON THE SIGNATURE PAGES HEREOF;
AND
TORONTO DOMINION (TEXAS), INC.,
AS ADMINISTRATIVE AGENT
FOR THE BANKS
Dated as of June 16, 1998
Powell, Goldstein, Frazer & Murphy LLP
Atlanta, Georgia
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1 DEFINITIONS................................................................................................ 1
ARTICLE 2 LOANS...................................................................................................... 26
Section 2.1 The Loans............................................................................................. 26
Section 2.2 Manner of Borrowing and Disbursement.................................................................. 26
Section 2.3 Interest.............................................................................................. 29
Section 2.4 Commitment Fees....................................................................................... 32
Section 2.5 Mandatory Commitment Reductions....................................................................... 32
Section 2.6 Voluntary Commitment Reductions....................................................................... 33
Section 2.7 Prepayments and Repayments............................................................................ 34
Section 2.8 Notes; Loan Accounts.................................................................................. 36
Section 2.9 Manner of Payment..................................................................................... 37
Section 2.10 Reimbursement......................................................................................... 38
Section 2.11 Pro Rata Treatment.................................................................................... 39
Section 2.12 Capital Adequacy...................................................................................... 39
Section 2.13 Bank Tax Forms........................................................................................ 40
ARTICLE 3 CONDITIONS PRECEDENT....................................................................................... 41
Section 3.1 Conditions Precedent to Effectiveness of this Agreement............................................... 41
Section 3.2 Conditions Precedent to Each Advance.................................................................. 43
ARTICLE 4 REPRESENTATIONS AND WARRANTIES............................................................................. 44
Section 4.1 Representations and Warranties........................................................................ 44
Section 4.2 Survival of Representations and Warranties, Etc....................................................... 52
ARTICLE 5 GENERAL COVENANTS.......................................................................................... 52
Section 5.1 Preservation of Existence and Similar Matters......................................................... 52
Section 5.2 Business; Compliance with Applicable Law.............................................................. 52
Section 5.3 Maintenance of Properties............................................................................. 52
Section 5.4 Accounting Methods and Financial Records.............................................................. 53
Section 5.5 Insurance............................................................................................. 53
Section 5.6 Payment of Taxes and Claims........................................................................... 53
Section 5.7 Compliance with ERISA................................................................................. 54
Section 5.8 Visits and Inspections................................................................................ 55
Section 5.9 Payment of Indebtedness; Loans........................................................................ 56
Section 5.10 Use of Proceeds....................................................................................... 56
Section 5.11 Indemnity............................................................................................. 56
Section 5.12 Interest Rate Hedging................................................................................. 57
Section 5.13 Covenants Regarding Formation of Restricted Subsidiaries and Acquisitions; Partnership, Subsidiaries.. 57
Section 5.14 Payment of Wages...................................................................................... 58
Section 5.15 Further Assurances.................................................................................... 58
ARTICLE 6 INFORMATION COVENANTS...................................................................................... 59
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 6.1 Quarterly Financial Statements and Information........................................................ 59
Section 6.2 Annual Financial Statements and Information........................................................... 59
Section 6.3 Performance Certificates.............................................................................. 60
Section 6.4 Copies of Other Reports............................................................................... 60
Section 6.5 Notice of Litigation and Other Matters................................................................ 61
ARTICLE 7 NEGATIVE COVENANTS......................................................................................... 62
Section 7.1 Indebtedness of the Borrowers and their Subsidiaries.................................................. 62
Section 7.2 Limitation on Liens................................................................................... 63
Section 7.3 Amendment and Waiver.................................................................................. 63
Section 7.4 Liquidation, Merger or Disposition of Assets.......................................................... 63
Section 7.5 Limitation on Guaranties.............................................................................. 64
Section 7.6 Investments and Acquisitions.......................................................................... 65
Section 7.7 Restricted Payments................................................................................... 66
Section 7.8 Senior Leverage Ratio................................................................................. 66
Section 7.9 Total Leverage Ratio.................................................................................. 67
Section 7.10 Interest Coverage Ratio............................................................................... 67
Section 7.11 Annualized Operating Cash Flow to Pro Forma Debt Service.............................................. 68
Section 7.12 Fixed Charge Coverage Ratio........................................................................... 68
Section 7.13 Affiliate Transactions................................................................................ 68
Section 7.14 ERISA Liabilities..................................................................................... 68
Section 7.15 Sales and Leasebacks.................................................................................. 68
ARTICLE 8 DEFAULT.................................................................................................... 69
Section 8.1 Events of Default..................................................................................... 69
Section 8.2 Remedies.............................................................................................. 72
Section 8.3 Payments Subsequent to Declaration of Event of Default................................................ 74
ARTICLE 9 THE ADMINISTRATIVE AGENT................................................................................... 74
Section 9.1 Appointment and Authorization......................................................................... 74
Section 9.2 Interest Holders...................................................................................... 75
Section 9.3 Consultation with Counsel............................................................................. 75
Section 9.4 Documents............................................................................................. 75
Section 9.5 Administrative Agent and Affiliates................................................................... 75
Section 9.6 Responsibility of the Administrative Agent............................................................ 75
Section 9.7 Action by the Administrative Agent.................................................................... 76
Section 9.8 Notice of Default or Event of Default................................................................. 76
Section 9.9 Responsibility Disclaimed............................................................................. 77
Section 9.10 Indemnification....................................................................................... 77
Section 9.11 Credit Decision....................................................................................... 78
Section 9.12 Successor Administrative Agent........................................................................ 78
Section 9.13 Delegation of Duties.................................................................................. 79
Section 9.14 Collateral Agent...................................................................................... 79
Section 9.15 Successor Collateral Agent............................................................................ 80
</TABLE>
-2-
<PAGE>
<TABLE>
<S> <C>
Section 9.16 Collateral Actions.................................................................................... 80
ARTICLE 10 CHANGES IN CIRCUMSTANCES AFFECTING LIBOR ADVANCES AND INCREASED COSTS...................................... 81
Section 10.1 LIBOR Basis Determination Inadequate or Unfair........................................................ 81
Section 10.2 Illegality............................................................................................ 81
Section 10.3 Increased Costs....................................................................................... 81
Section 10.4 Effect On Other Advances.............................................................................. 83
ARTICLE 11 MISCELLANEOUS.............................................................................................. 84
Section 11.1 Notices............................................................................................... 84
Section 11.2 Expenses.............................................................................................. 85
Section 11.3 Waivers............................................................................................... 85
Section 11.4 Set-Off............................................................................................... 86
Section 11.5 Assignment and Participation.......................................................................... 87
Section 11.6 Accounting Principles................................................................................. 90
Section 11.7 Counterparts.......................................................................................... 90
Section 11.8 Governing Law......................................................................................... 90
Section 11.9 Severability.......................................................................................... 91
Section 11.10 Interest.............................................................................................. 91
Section 11.11 Table of Contents and Headings........................................................................ 91
Section 11.12 Amendment and Waiver.................................................................................. 91
Section 11.13 Entire Agreement...................................................................................... 92
Section 11.14 Other Relationships................................................................................... 92
Section 11.15 Directly or Indirectly................................................................................ 92
Section 11.16 Reliance on and Survival of Various Provisions........................................................ 92
Section 11.17 Senior Debt........................................................................................... 93
Section 11.18 Obligations........................................................................................... 93
Section 11.19 Confidentiality....................................................................................... 93
ARTICLE 12 WAIVER OF JURY TRIAL....................................................................................... 93
Section 12.1 Waiver of Jury Trial.................................................................................. 93
</TABLE>
-3-
<PAGE>
EXHIBITS
Exhibit A Form of Assignment of General Partner Interests
Exhibit B Form of Assignment of Limited Partner Interests
Exhibit C Form of Borrower Guaranty
Exhibit D Form of Certificate of Financial Condition
Exhibit E Form of Parent Guaranty
Exhibit F Form of Parent Pledge Agreement
Exhibit G Form of Request for Advance
Exhibit H Form of Revolving Loan Note
Exhibit I Form of Security Agreement
Exhibit J Form of Stock Pledge Agreement
Exhibit K Form of Subsidiary Guaranty
Exhibit L Form of Subsidiary Pledge Agreement
Exhibit M Form of Subsidiary Security Agreement
Exhibit N Form of Term Loan Note
Exhibit O Form of ATS's Loan Certificate
Exhibit P Form of ATS (Delaware)'s Loan Certificate
Exhibit Q Form of Parent Loan Certificate
Exhibit R Form of Subsidiary Loan Certificate
Exhibit S Form of Performance Certificate
Exhibit T Form of Assignment and Assumption Agreement
SCHEDULES
Schedule 1 - Licenses
Schedule 2 - Restricted Subsidiaries on the Agreement Date
Schedule 3 - Separation Obligations
Schedule 4 - List of Unrestricted Subsidiaries on the Agreement Date
Schedule 5 - Exceptions to Representations and Warranties
Schedule 6 - Litigation
Schedule 7 - Affiliate Transactions
Schedule 8 - Indebtedness for Money Borrowed
Schedule 9 - Bank Names and Notice Addresses
<PAGE>
ATS FACILITY A
LOAN AGREEMENT
AMONG
AMERICAN TOWER SYSTEMS, L.P.
AND
AMERICAN TOWER SYSTEMS (DELAWARE), INC.,
AS BORROWERS;
THE FINANCIAL INSTITUTIONS WHOSE NAMES APPEAR
AS BANKS ON THE SIGNATURE PAGES HEREOF;
AND
TORONTO-DOMINION (TEXAS), INC.,
AS ADMINISTRATIVE AGENT
FOR THE BANKS
WHEREAS, ATS (as defined below) and ATS (Delaware) (as defined below)
have requested and the Banks have agreed, subject to the terms and conditions
set forth herein, to make available to ATS and ATS (Delaware), a term credit
facility in the amount of $250,000,000 and a revolving credit facility in the
amount of $400,000,000;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties hereto, the
parties hereby agree as follows:
ARTICLE 1 Definitions
For the purposes of this Agreement:
"Acquisition" shall mean (whether by purchase, lease, exchange, issuance
-----------
of stock or other equity or debt securities, merger, reorganization or any other
method) (i) any acquisition by either Borrower or any of the Restricted
Subsidiaries of any other Person, which Person shall then become consolidated
with either Borrower or any of the Restricted Subsidiaries in accordance with
GAAP; (ii) any acquisition by either Borrower or any of the Restricted
Subsidiaries of all or any substantial part of the assets of any other Person;
or (iii) any acquisition by either Borrower or any of the Restricted
Subsidiaries of any business (or related contracts) primarily involving the
management of communications sites, towers or other facilities for third
parties, other than any such Acquisition which shall be made by, or of, any
Person which shall have been designated and, to the extent required hereby,
approved as an Unrestricted Subsidiary.
"Acquisition Operating Cash Flow" shall mean in the case of an Acquisition
-------------------------------
permitted hereunder, Operating Cash Flow (New Towers), Operating Cash Flow
(Towers) and Operating Cash Flow (Other Business), as applicable, of the
Borrowers and their Restricted
<PAGE>
Subsidiaries for the period during which such Acquisition occurs, adjusted to
give effect to such Acquisition, as if such Acquisition had occurred on the
first day of such period, by excluding the Operating Cash Flow (New Towers),
Operating Cash Flow (Towers) and Operating Cash Flow (Other Business), as
applicable, of such Acquisition during such period prior to and including the
date of such Acquisition and adding to the Operating Cash Flow (New Towers),
Operating Cash Flow (Towers) and Operating Cash Flow (Other Business), as
applicable, of the Borrowers and their Restricted Subsidiaries, if positive, or
subtracting from such Operating Cash Flow (New Towers), Operating Cash Flow
(Towers) and Operating Cash Flow (Other Business), as applicable, if negative,
the product of (i) the actual Operating Cash Flow (New Towers), Operating Cash
Flow (Towers) and Operating Cash Flow (Other Business), as applicable, of such
Acquisition for that portion of such period from the date of such Acquisition to
the last day of such period, multiplied by (ii) a fraction the numerator of
which is the number of calendar days in such period and the denominator of which
is the number of days in such period from and including the date following such
Acquisition through the last day of such period.
"Administrative Agent" shall mean Toronto Dominion (Texas), Inc., in its
--------------------
capacity as Administrative Agent for the Banks or any successor Administrative
Agent appointed pursuant to Section 9.12 hereof.
"Administrative Agent's Office" shall mean the office of the Administrative
-----------------------------
Agent located at 909 Fannin Street, Suite 1700, Houston Texas 77010, or such
other office as may be designated pursuant to the provisions of Section 11.1
hereof.
"Advance" shall mean amounts advanced by the Banks to either Borrower
-------
pursuant to Article 2 hereof on the occasion of any borrowing and having the
same Interest Rate Basis and Interest Period; and "Advances" shall mean more
--------
than one Advance.
"Affiliate" shall mean, with respect to a Person, any other Person directly
---------
or indirectly controlling, controlled by, or under common control with, such
first Person. For purposes of this definition, "control", when used with respect
to any Person, includes, without limitation, the direct or indirect beneficial
ownership of more than ten percent (10%) of the voting securities or voting
equity of such Person or the power to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
"Agreement" shall mean this ATS Facility A Loan Agreement, as amended,
---------
supplemented, restated or otherwise modified from time to time.
"Agreement Date" shall mean the date as of which this Agreement is dated.
--------------
"American Radio Systems" shall mean American Radio Systems Corporation,
----------------------
a Delaware corporation.
-2-
<PAGE>
"Annualized Operating Cash Flow" shall mean (a) as of any calculation date
------------------------------
the sum of (A) the product of (1) Operating Cash Flow (Towers) for the fiscal
quarter-end being tested, or the most recently completed fiscal quarter
immediately preceding such calculation date, as the case may be, times (2) four
-----
(4); (B) the product of (1) Operating Cash Flow (New Towers) for the calendar
month-end being tested, or the most recently completed calendar month
immediately preceding such calculation date, as the case may be, times (2)
-----
twelve (12); and (C) Operating Cash Flow (Other Business) for the four fiscal
quarter period end being tested or the most recently completed four (4) fiscal
quarters immediately preceding such calculation date, as the case may be, minus
-----
(b) corporate overhead (exclusive of amortization and depreciation) of the
Borrowers and their Restricted Subsidiaries (on a consolidated basis) for the
twelve (12) calendar month period then ended or ending immediately prior to the
calendar date, as the case may be.
"Applicable Law" shall mean, in respect of any Person, all provisions of
--------------
constitutions, statutes, rules, regulations and orders of governmental bodies or
regulatory agencies applicable to such Person, including, without limiting the
foregoing, the Licenses, the Communications Act, zoning ordinances and all
Environmental Laws, and all orders, decisions, judgments and decrees of all
courts and arbitrators in proceedings or actions to which the Person in question
is a party or by which it is bound.
"Applicable Margin" shall mean the interest rate margin applicable to Base
-----------------
Rate Advances and LIBOR Advances, as the case may be, in each case determined in
accordance with Section 2.3(f) hereof.
"Applicable Margin Ratio" shall mean, as of any date, the ratio of (a) the
-----------------------
Senior Debt on such date to (b) Annualized Operating Cash Flow.
"Approved Fund" means, with respect to any Bank that is a fund that invites
-------------
in commercial loans, any other fund that invests in commercial loans and is
managed by the same investment advisor as such Bank or by an Affiliate of such
investment advisor.
"Assignment of General Partner Interests" shall mean that certain
---------------------------------------
Assignment of General Partner Interests, dated as of the even date herewith,
made by ATSC GP in favor of the Collateral Agent, substantially in the form of
Exhibit A attached hereto.
- ---------
"Assignment of Limited Partner Interests" shall mean that certain
---------------------------------------
Assignment of Limited Partner Interests, dated as of the even date herewith,
made by ATSC LP in favor of the Collateral Agent, substantially in the form of
Exhibit B attached hereto.
- ---------
"ATS" shall mean American Tower Systems, L.P., a Delaware limited partners
---
hip, and one of the Borrowers.
-3-
<PAGE>
"ATS (Delaware)" shall mean American Tower Systems (Delaware), Inc., a
--------------
Delaware corporation, and one of the Borrowers.
"ATS Facility B Loan Agreement" shall mean that certain ATS Facility B Loan
-----------------------------
Agreement, dated as of even date herewith among the Borrowers, the
Administrative Agent (as defined therein) and the financial institutions parties
thereto, providing for a 364-day revolving credit facility in the amount of
$250,000,000 which, at the option of the Borrowers, may be extended to a term
credit facility.
"ATSC GP" shall mean ATSC GP Inc., a Delaware corporation, and a wholly-
-------
owned subsidiary of ATSC Holding.
"ATSC Holding" shall mean ATSC Holding Inc., a Delaware corporation, and a
------------
wholly-owned Subsidiary of the Parent.
"ATSC LP" shall mean ATSC LP Inc., a Delaware corporation, and a wholly-
-------
owned Subsidiary of ATSC Operating.
"ATSC Operating" shall mean ATSC Operating Inc., a Delaware corporation, a
--------------
wholly-owned Subsidiary of ATS (Delaware).
"Authorized Signatory" shall mean such senior personnel of a Person as may
--------------------
be duly authorized and designated in writing by such Person to execute
documents, agreements and instruments on behalf of such Person.
"Banks" shall mean the Persons whose names appear as "Banks" on the
-----
signature pages hereof and any other Person which becomes a "Bank" hereunder
after the Agreement Date; and "Bank" shall mean any one of the foregoing Banks.
----
"Base Rate" shall mean, at any time, a fluctuating interest rate per annum
---------
equal to the higher of (a) the rate of interest quoted from time to time by the
Administrative Agent as its "prime rate" or "base rate" or (b) the Federal Funds
---------- ---------
Rate plus one-half of one percent (1/2%). The Base Rate is not necessarily the
----
lowest rate of interest charged by the Administrative Agent in connection with
extensions of credit.
"Base Rate Advance" shall mean an Advance which either Borrower requests to
-----------------
be made as a Base Rate Advance or is reborrowed as a Base Rate Advance, in
accordance with the provisions of Section 2.2 hereof, and which shall be in a
principal amount of at least $1,000,000 and in an integral multiple of $500,000.
"Base Rate Basis" shall mean a simple interest rate equal to the sum of (i)
---------------
the Base Rate and (ii) the Applicable Margin applicable to Base Rate Advances.
The Base Rate Basis shall be adjusted automatically as of the opening of
business on the effective date of each
-4-
<PAGE>
change in the Base Rate to account for such change, and shall also be adjusted
to reflect changes of the Applicable Margin applicable to Base Rate Advances.
"Borrowers" shall mean, collectively, ATS and ATS (Delaware); and
---------
"Borrower" shall mean either of the foregoing.
--------
"Borrowers' Guarantees" shall mean, collectively, that certain Borrowers'
---------------------
Guaranty (ATS (Delaware)) and Borrowers' Guaranty (ATS), dated as of the
Agreement Date each substantially in the form of Exhibit C attached hereto.
---------
"Business Day" shall mean a day on which banks and foreign exchange markets
------------
are open for the transaction of business required for this Agreement in Houston,
Texas, New York, New York and London, England, as relevant to the determination
to be made or the action to be taken.
"Capital Expenditures" shall mean, for any period, expenditures (including,
--------------------
without limitation, the aggregate amount of Capitalized Lease Obligations
required to be paid during such period) incurred by any Person to acquire or
construct fixed assets, plant and equipment (including, without limitation,
renewals, improvements and replacements, but excluding repairs and maintenance)
during such period, that would be required to be capitalized on the balance
sheet of such Person in accordance with GAAP.
"Capital Stock" shall mean, as applied to any Person, any capital stock of
-------------
such Person, regardless of class or designation, and all warrants, options,
purchase rights, conversion or exchange rights, voting rights, calls or claims
of any character with respect thereto.
"Capitalized Lease Obligation" shall mean that portion of any obligation of
----------------------------
a Person as lessee under a lease which at the time would be required to be
capitalized on the balance sheet of such lessee in accordance with GAAP.
"Certificate of Financial Condition" shall mean certificates, substantially
----------------------------------
in the form of Exhibit D attached hereto, signed by the chief financial officer
---------
of each Borrower, as appropriate, together with any schedules, exhibits or
annexes appended thereto.
"Change of Control" shall mean (a) the failure of the Parent to own,
-----------------
directly or indirectly, one hundred percent (100%) of the ownership interests of
ATS and ATS (Delaware), (b) the failure of ATS (Delaware) to own, directly or
indirectly, one hundred percent (100%) of the ownership interests of ATSC
Operating (unless such Persons are merged into ATS (Delaware)), (c) the sale,
lease, transfer, in one or a series of related transactions, of all or
substantially all of either Borrower's assets to any Person or group (as such
term is used in Section 13(d)(3) of the Exchange Act) other than to the other
Borrower or various Persons in the chain (i.e., any wholly-owned direct or
indirect Subsidiary of ATS (Delaware)), (d) the adoption of a plan relating to
the liquidation or dissolution of the Parent,
-5-
<PAGE>
(e) 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 forty percent (40%) or
more of the voting power of the voting stock of the Parent by way of merger or
consolidation or otherwise and such Persons own more voting power than Principal
Shareholders, or (f) the Continuing Directors cease for any reason to constitute
a majority of the directors of the Parent then in office.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
----
to time.
"Collateral" shall mean any property of any kind constituting collateral
----------
for the Obligations under any of the Security Documents.
"Collateral Agent" shall mean Toronto Dominion (Texas), Inc., acting as
----------------
Collateral Agent under the Security Documents and shall include any successor
Collateral Agent appointed pursuant to Section 9.14 hereof.
"Commitments" shall mean, collectively, the Revolving Loan Commitment and
-----------
the Term Loan Commitment.
"Commitment Ratios" shall mean the percentages in which the Banks are
-----------------
severally bound to fund their respective portion of Advances to the Borrowers
under the Commitments, which are set forth below (together with dollar amounts)
(and which may change from time to time in accordance with Section 11.5 hereof):
<TABLE>
<CAPTION>
Revolving Loan Term Loan
Revolving Loan Commitment Term Loan Commitment Total Dollar
Bank Commitment Ratio Commitment Ratio Commitment
- ----------------------------- ------------------ ------------------- ------------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Toronto Dominion (Texas), $ 25,333,333.33 6.33333334% $ 15,833,333.34 6.33333334% $ 41,166,666.67
Inc.
The Chase Manhattan Bank $ 20,888,888.90 5.22222223% $ 13,055,555.56 5.22222223% $ 33,944,444.46
The Bank of New York $ 20,888,888.90 5.22222223% $ 13,055,555.56 5.22222223% $ 33,944,444.46
The Bank of Nova Scotia $ 19,111,111.11 4.77777778% $ 11,944,444.45 4.77777778% $ 31,055,555.56
Barclays Bank, plc $ 19,111,111.11 4.77777778% $ 11,944,444.45 4.77777778% $ 31,055,555.56
Credit Lyonnais New York $ 19,111,111.11 4.77777778% $ 11,944,444.45 4.77777778% $ 31,055,555.56
Branch
Credit Suisse First Boston $ 19,111,111.11 4.77777778% $ 11,944,444.45 4.77777778% $ 31,055,555.56
Fleet National Bank $ 19,111,111.11 4.77777778% $ 11,944,444.45 4.77777778% $ 31,055,555.56
General Electric Capital $ 19,111,111.11 4.77777778% $ 11,944,444.45 4.77777778% $ 31,055,555.56
Corporation
Key Corporate Capital Inc. $ 19,111,111.11 4.77777778% $ 11,944,444.45 4.77777778% $ 31,055,555.56
Union Bank of California, $ 19,111,111.11 4.77777778% $ 11,944,444.45 4.77777778% $ 31,055,555.56
N.A.
Bank of America National $ 15,555,555.55 3.88888889% $ 9,722,222.22 3.88888889% $ 25,277,777.77
Trust and Savings
Association
Bank of Montreal $ 15,555,555.55 3.88888889% $ 9,722,222.22 3.88888889% $ 25,277,777.77
Bankers Trust Company $ 15,555,555.55 3.88888889% $ 9,722,222.22 3.88888889% $ 25,277,777.77
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
Revolving Loan Term Loan
Revolving Loan Commitment Term Loan Commitment Total Dollar
Bank Commitment Ratio Commitment Ratio Commitment
- ----------------------------- ------------------ ------------------- ------------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Lehman Commercial Paper $ 15,555,555.55 3.88888889% $ 9,722,222.22 3.88888889% $ 25,277,777.77
Inc.
Morgan Stanley Senior $ 15,555,555.55 3.88888889% $ 9,722,222.22 3.88888889% $ 25,277,777.77
Funding, Inc.
CoBank, ACB $ 11,111,111.11 2.77777778% $ 6,944,444.45 2.77777778% $ 18,055,555.56
PNC Bank, National $ 11,111,111.11 2.77777778% $ 6,944,444.45 2.77777778% $ 18,055,555.56
Association
Societe Generale, New York $ 11,111,111.11 2.77777778% $ 6,944,444.45 2.77777778% $ 18,055,555.56
Branch
Dresdner Bank AG, New York $ 8,888,888.88 2.22222223% $ 5,555,555.55 2.22222223% $ 14,444,444.43
and Grand Cayman Branches
BankBoston, N.A. $ 6,666,666.67 1.66666666% $ 4,166,666.66 1.66666666% $ 10,833,333.33
Crestar Bank $ 6,666,666.67 1.66666666% $ 4,166,666.66 1.66666666% $ 10,833,333.33
The Long-Term Credit Bank $ 6,666,666.67 1.66666666% $ 4,166,666.66 1.66666666% $ 10,833,333.33
of Japan,, Ltd., New York
Branch
Mellon Bank, N.A. $ 6,666,666.67 1.66666666% $ 4,166,666.66 1.66666666% $ 10,833,333.33
Mercantile Bank National $ 6,666,666.67 1.66666666% $ 4,166,666.66 1.66666666% $ 10,833,333.33
Association
First National Bank of $ 6,666,666.67 1.66666666% $ 4,166,666.66 1.66666666% $ 10,833,333.33
Maryland
National Bank of Canada $ 6,666,666.67 1.66666666% $ 4,166,666.66 1.66666666% $ 10,833,333.33
State Street Bank and $ 6,666,666.67 1.66666666% $ 4,166,666.66 1.66666666% $ 10,833,333.33
Trust Company
US Trust $ 6,666,666.67 1.66666666% $ 4,166,666.66 1.66666666% $ 10,833,333.33
============================= =============== ========== =============== ========== ===============
TOTAL $400,000,000.00 100% $250,000,000.00 100% $650,000,000.00
</TABLE>
"Communications Act" shall mean the Communications Act of 1934, and any
------------------
similar or successor federal statute, and the rules and regulations of the FCC
thereunder, all as the same may be in effect from time to time.
"Continuing Director" shall mean any member of the Board of Directors of
-------------------
the Parent who (i) is a member of that Board of Directors on the Agreement Date
or (ii) was nominated for election by either (a) one or more of the Principal
Shareholders (or a Related Party thereof) or (b) the Board of Directors a
majority of whom were directors at the Agreement Date or whose election or
nomination for election was previously approved by one or more of the Principal
Shareholders or such directors.
"Default" shall mean any Event of Default, and any of the events specified
-------
in Section 8.1 hereof, regardless of whether there shall have occurred any
passage of time or giving of notice, or both, that would be necessary in order
to constitute such event an Event of Default.
"Default Rate" shall mean a simple per annum interest rate equal to the sum
------------
of (a) the Base Rate, (b) the Applicable Margin for Base Rate Advances, and (c)
two percent (2%).
-7-
<PAGE>
"Employee Pension Plan" shall mean any Plan which is maintained by either
---------------------
Borrower, any of their Subsidiaries or any ERISA Affiliate.
"Environmental Laws" shall mean all applicable federal, state or local
------------------
laws, statutes, rules, regulations or ordinances, codes, common law, consent
agreements, orders, decrees, judgments or injunctions issued, promulgated,
approved or entered thereunder relating to public health, safety or the
pollution or protection of the environment, including, without limitation, those
relating to releases, discharges, emissions, spills, leaching, or disposals to
air, water, land or ground water, to the withdrawal or use of ground water, to
the use, handling or disposal of polychlorinated biphenyls, asbestos or urea
formaldehyde, to the treatment, storage, disposal or management of hazardous
substances (including, without limitation, petroleum, crude oil or any fraction
thereof, or other hydrocarbons), pollutants or contaminants, to exposure to
toxic, hazardous or other controlled, prohibited, or regulated substances,
including, without limitation, any such provisions under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. (S)9601 et seq.), or the Resource Conservation and Recovery Act of 1976,
as amended (42 U.S.C. (S)6901 et seq.).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
-----
in effect from time to time.
"ERISA Affiliate" shall mean any Person, including a Subsidiary or an
---------------
Affiliate of either Borrower, that is a member of any group of organizations of
which either Borrower, as the case may be, is a member and which is covered by a
Plan.
"Eurodollar Reserve Percentage" shall mean the percentage which is in
-----------------------------
effect from time to time under Regulation D of the Board of Governors of the
Federal Reserve System, as such regulation may be amended from time to time, as
the maximum reserve requirement applicable with respect to Eurocurrency
Liabilities (as that term is defined in Regulation D), whether or not any Bank
has any such Eurocurrency Liabilities subject to such reserve requirement at
that time.
"Event of Default" shall mean any of the events specified in Section 8.1
----------------
hereof; provided, however, that any requirement for notice or lapse of time, or
-------- -------
both, has been satisfied.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
------------
"Excess Cash Flow" shall mean, as of the end of any fiscal year of the
----------------
Borrower based on the audited financial statements provided under Section 6.2
hereof for such fiscal year, the excess, if any, without duplication, of (a)
Operating Cash Flow for such fiscal year, minus (b) the sum of the following:
-----
(i) payments made with respect to Capital Expenditures (other than
-8-
<PAGE>
Capital Expenditures funded out of the Net Proceeds of any asset sale), by the
Borrowers and their Restricted Subsidiaries during such fiscal year; (ii)
repayments of the Revolving Loans resulting from reductions of the Revolving
Loan Commitment (which shall include, without limitation, any reductions set
forth in Section 2.5(a) hereof), scheduled repayments of the Term Loan and
scheduled repayments of amounts outstanding under the ATS Facility B Loan
Agreement; (iii) cash taxes paid by the Borrowers and their Restricted
Subsidiaries during such fiscal year; (iv) Interest Expense during such fiscal
year; (v) principal payments made in respect of Indebtedness for Money Borrowed
(other than with respect to the Loans, the ATS Facility B Loan Agreement and
loans to Restricted Subsidiaries) paid by the Borrowers and their Restricted
Subsidiaries during such fiscal year; and (vi) amounts distributed to the Parent
pursuant to Section 7.7(c) hereof.
"Facility A Capital Raise Proceeds" shall mean product of (a) (i) at any
---------------------------------
time when the Senior Leverage Ratio is greater than or equal to 5.00 to 1, one
hundred percent (100%) of the net proceeds of any sale of the Capital Stock of
the Parent or either Borrower or debt instruments or other securities of either
Borrower or the Parent (other than (1) an amount not to exceed $2,000,000 in the
aggregate from the sale of securities in connection with any employee stock
option plan of either Borrower or the Parent, (2) an amount equal to the amount
required to redeem the Redeemable Pay-In-Kind Preferred Stock referred to in the
definition of "Interim Financing" and to pay the fees and other costs and
expenses associated with the Interim Financing, and (3) net proceeds received by
the Borrowers from the proceeds of loans under the Parent Loan Agreement) or
(ii) at any time when the Senior Leverage Ratio is less than 5.00 to 1, fifty
percent (50%) of the net proceeds of any sale of the Capital Stock of the Parent
or debt instruments or other securities of either Borrower or the Parent (other
than an amount not to exceed $2,000,000 in the aggregate from the sale of
securities in connection with any employee stock option plan of either Borrower
or the Parent), times (b) the ratio of (i) the Loans then outstanding (or the
-----
Commitments if there are no Loans then outstanding) to (ii) the sum of (A) the
Loans then outstanding (or the Commitments if there are no Loans then
outstanding), and (B) the Facility B Loans then outstanding (or the Facility B
Commitment if there are no Facility B Loans then outstanding).
"Facility A Excess Cash Flow" shall mean the product of (a) the product of
---------------------------
(i) Excess Cash Flow times (ii) fifty percent (50%), times (b) the ratio of (i)
----- -----
the Loans then outstanding (or the Commitments if there are no Loans then
outstanding) to (ii) the sum of (A) the Loans then outstanding (or the
Commitments if there are no Loans then outstanding), and (B) the Facility B
Loans then outstanding (or the Facility B Commitment if there are no Facility B
Loans then outstanding).
"Facility A Net Proceeds" shall mean the product of (a) the Net Proceeds of
-----------------------
any sale or other disposition of assets permitted hereunder (other than sales or
other dispositions of equipment in the ordinary course of business or sales to
or among either Borrower or a Restricted Subsidiary), times (b) the ratio of (i)
-----
the Loans then outstanding (or the
-9-
<PAGE>
Commitments if there are no Loans then outstanding) to (ii) the sum of (a) the
Loans then outstanding (or the Commitments if there are no Loans then
outstanding), and (b) the Facility B Loans then outstanding (or the Facility B
Commitment if there are no Facility B Loans then outstanding).
"Facility B Commitment" shall have the meaning ascribed to such term in the
---------------------
ATS Facility B Loan Agreement.
"Facility B Loans" shall have the meaning ascribed to such term in the ATS
----------------
Facility B Loan Agreement.
"FCC" shall mean the Federal Communications Commission, or any other
---
similar or successor agency of the federal government administering the
Communications Act.
"Federal Funds Rate" shall mean, as of any date, the weighted average of
------------------
the rates on overnight federal funds transactions with the members of the
Federal Reserve System arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Administrative Agent from three (3) federal
funds brokers of recognized standing selected by the Administrative Agent.
"Fixed Charges" shall mean for the Borrowers and their Restricted
-------------
Subsidiaries, on a consolidated basis, the sum of (a) Interest Expense, (b)
commitment and other fees incurred in connection with this Agreement and the ATS
Facility B Loan Agreement, (c) all scheduled principal repayments with respect
to any Indebtedness for Money Borrowed, (d) taxes paid in cash, and (e) Capital
Expenditures made by the Borrowers, their Restricted Subsidiaries and the Parent
(other than from the reinvestment of asset sale proceeds and insurance proceeds,
to the extent permitted hereunder), in each case for the immediately preceding
twelve (12) calendar month period then ended, and in each case as calculated in
accordance with GAAP.
"Fixed Charges Coverage Ratio" shall mean, as of any calculation date, the
----------------------------
ratio of (a) the sum of (i) Annualized Operating Cash Flow as of the most
recently completed fiscal quarter, plus (ii) for all periods ending on or prior
----
to December 31, 2000, the sum of (A) the amount of unused Commitments as of such
date under this Agreement and the ATS Facility B Loan Agreement which could be
borrowed on such date in compliance with Section 7.8 hereof and (B) the net cash
proceeds of any equity issued, directly or indirectly, by either Borrower to the
Parent during such period (after deducting any portion thereof applied to the
Loans or the Facility B Loans) to (b) Fixed Charges.
"GAAP" shall mean, as in effect from time to time, generally accepted
----
accounting principles in the United States, consistently applied.
-10-
<PAGE>
"Guaranty" or "Guaranteed," as applied to an obligation, shall mean and
-------- ----------
include (a) a guaranty, direct or indirect, in any manner, of all or any part of
such obligation, and (b) any agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, any
reimbursement obligations as to amounts drawn down by beneficiaries of
outstanding letters of credit or capital call requirements; provided, however,
-------- -------
that the term "Guarantee" shall not include guarantees entered into in the
ordinary course of business, including, without limitation, the New Tower
Operation Business, not involving Indebtedness for Money Borrowed.
"Indebtedness" shall mean, with respect to any Person, and without
------------
duplication, (a) all items, except items of shareholders' and partners' equity
or capital stock or surplus or general contingency or deferred tax reserves,
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, including,
without limitation, with respect to any secured non-recourse obligations of such
Person, the higher of the book value or fair market value of the property or
asset securing such obligation (if less than the amount of such obligation), (b)
all direct or indirect obligations of any other Person secured by any Lien to
which any property or asset owned by such Person is subject, but only to the
extent of the higher of the fair market value or the book value of the property
or asset subject to such Lien (if less than the amount of such obligation), if
the obligation secured thereby shall not have been assumed, (c) to the extent
not otherwise included, all Capitalized Lease Obligations of such Person and all
obligations of such Person with respect to leases constituting part of a sale
and lease-back arrangement, (d) all reimbursement obligations with respect to
outstanding letters of credit, and (e) to the extent not otherwise included, all
obligations subject to Guaranties of such Person or its Subsidiaries, and (f)
all obligations of such Person under Interest Hedge Agreements; provided,
--------
however, that the Intracoastal Notes shall not be deemed to be, and shall be
- -------
excluded from, Indebtedness.
"Indebtedness for Money Borrowed" shall mean, with respect to any Person,
-------------------------------
Indebtedness for 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, all Indebtedness upon
which interest charges are customarily paid (other than trade payables arising
in the ordinary course of business, but only if and so long as such accounts are
payable on customary trade terms), all Capitalized Lease Obligations, all
reimbursement obligations with respect to outstanding letters of credit, all
Indebtedness issued or assumed as full or partial payment for property or
services (other than trade payables arising in the ordinary course of business,
but only if and so long as such accounts are payable on customary trade terms),
whether or not any such notes, drafts, obligations or Indebtedness represent
Indebtedness for money borrowed, and, without duplication, Guaranties of any of
the foregoing; provided, however, that the Intracoastal Notes shall not be
-------- -------
deemed to be, and shall be excluded from, Indebtedness. For purposes of
-11-
<PAGE>
this definition, interest which is accrued but not paid on the scheduled due
date for such interest shall be deemed Indebtedness for Money Borrowed.
"Indemnitee" shall have the meaning ascribed thereto in Section 5.11
----------
hereof.
"Intercreditor Agreement" shall mean that certain Intercreditor Agreement
-----------------------
dated as of the even date herewith among the Banks, the Administrative Agent,
the Administrative Agent and the Lenders under the Parent Loan Agreement, and
the Administrative Agent and the Banks under the ATS Facility B Loan Agreement.
"Interest Coverage Ratio" shall mean, with respect to any period, the ratio
-----------------------
of (a) Annualized Operating Cash Flow to (b) Interest Expense.
"Interest Expense" shall mean, for any period, all cash interest expense
----------------
(including imputed interest with respect to Capitalized Lease Obligations) with
respect to any Indebtedness for Money Borrowed of the Borrowers and their
Restricted Subsidiaries and the Parent on a consolidated basis during such
period pursuant to the terms of such Indebtedness for Money Borrowed, all as
calculated in accordance with GAAP.
"Interest Hedge Agreements" shall mean the obligations of any Person
-------------------------
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"Interest Period" shall mean (a) in connection with any Base Rate Advance,
---------------
the period beginning on the date such Advance is made and ending on the last day
of the calendar quarter in which such Advance is made, provided, however, that
-------- -------
if a Base Rate Advance is made on the last day of any calendar quarter, it shall
have an Interest Period ending on, and its Payment Date shall be, the last day
of the following calendar quarter, and (b) in connection with any LIBOR Advance,
the term of such Advance selected by the Borrower or otherwise determined in
accordance with this Agreement. Notwithstanding the foregoing, however, (i) any
applicable Interest Period which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business Day unless, with
respect to LIBOR Advances only, such Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding
Business Day, (ii) any applicable Interest Period, with respect to LIBOR
Advances only, which begins on a day for which there is no numerically
corresponding day in the calendar month during which such Interest Period is to
end shall (subject to clause (i) above) end on the last day of such calendar
month, and (iii) the Borrower shall not select an Interest Period which extends
beyond the Maturity Date or such earlier date as would interfere with the
Borrowers' repayment obligations under Section 2.5,
-12-
<PAGE>
2.6 or 2.7 hereof. Interest shall be due and payable with respect to any Advance
as provided in Section 2.3 hereof.
"Interest Rate Basis" shall mean the Base Rate Basis or the LIBOR Basis, as
-------------------
appropriate.
"Interim Financing" shall mean the Redeemable Pay-In-Kind Preferred Stock
-----------------
referred to in the Private Placement Memorandum, dated as of May 28, 1998 (a
true and correct copy of which has been delivered to the Administrative Agent),
and shall include the Exchange Preferred (as defined therein).
"Intracoastal Notes" shall mean the partially non-recourse notes of ATS
------------------
(true and correct copies of which have been delivered to the Administrative
Agent), in the aggregate principal amount of $12,000,000, issued or to be issued
by ATS in connection with the merger of Intracoastal Broadcasting, Inc., a
Delaware corporation, into ATS (Delaware).
"Investment " shall mean any investment or loan by either Borrower or any
----------
Restricted Subsidiary in or to any Person which Person, (a) after giving to such
investment or loan, is not consolidated with the Borrowers and the Restricted
Subsidiaries in accordance with GAAP, or (b) is designated as an Unrestricted
Subsidiary in accordance with the terms hereof.
"known to the Borrower" or "to the knowledge of the Borrower" shall mean
--------------------- --------------------------------
known by or reasonably should have been known by the executive officers of
either Borrower (which shall include, without limitation, the chief executive
officer, the chief operating officer, if any, the chief financial officer, the
general counsel and any vice president of either Borrower or of ATSC GP).
"LIBOR" shall mean, for any Interest Period, the average of the interest
-----
rates per annum at which deposits in United States Dollars for such Interest
Period are offered to the Administrative Agent in the Eurodollar market at
approximately 11:00 a.m. (London, England time) two (2) Business Days before the
first day of such Interest Period, in an amount approximately equal to the
principal amount of, and for a length of time approximately equal to the
Interest Period for, the LIBOR Advance sought by either Borrower.
"LIBOR Advance" shall mean an Advance which either Borrower requests to be
-------------
made as a LIBOR Advance or which is reborrowed as a LIBOR Advance, in accordance
with the provisions of Section 2.2 hereof, and which shall be in a principal
amount of at least $5,000,000 and in an integral multiple of $1,000,000.
"LIBOR Basis" shall mean a simple per annum interest rate (rounded upward,
-----------
if necessary, to the nearest one-hundredth (1/100th) of one percent (1%) equal
to the sum of (a) the quotient of (i) the LIBOR divided by (ii) one minus the
---------- -----
Eurodollar Reserve Percentage, if
-13-
<PAGE>
any, stated as a decimal, plus (b) the Applicable Margin. The LIBOR Basis shall
----
apply to Interest Periods of one (1), two (2), three (3), or six (6) months,
and, once determined, shall remain unchanged during the applicable Interest
Period, except for changes to reflect adjustments in the Eurodollar Reserve
Percentage and the Applicable Margin as adjusted pursuant to Section 2.3(f)
hereof. The LIBOR Basis for any LIBOR Advance shall be adjusted as of the
effective date of any change in the Eurodollar Reserve Percentage.
"Licenses" shall mean any telephone, microwave, radio transmissions,
--------
personal communications or other license, authorization, certificate of
compliance, franchise, approval or permit, whether for the construction, the
ownership or the operation of any communications tower facilities, granted or
issued by the FCC and held by either Borrower or any of the Restricted
Subsidiaries, all of which as of the Agreement Date are listed on Schedule 1
----------
attached hereto.
"Lien" shall mean, with respect to any property, any mortgage, lien,
----
pledge, negative pledge or other agreement not to pledge, assignment, charge,
security interest, title retention agreement, levy, execution, seizure,
attachment, garnishment or other encumbrance of any kind in respect of such
property, whether created by statute, contract, the common law or otherwise, and
whether or not choate, vested or perfected.
"Loan Documents" shall mean this Agreement, the Notes, the Security
--------------
Agreements, the Borrowers' Guarantees, the Stock Pledge Agreement, all
Subsidiary Pledge Agreements, all Subsidiary Security Agreements, all Subsidiary
Guaranties, all Assignments of Intercompany Notes, all Subordination Agreements,
the Parent Guaranty, the Parent Pledge Agreement, the Assignment of Limited
Partner Interests, the Assignment of General Partner Interests, all fee letters,
all Requests for Advance, all Interest Hedge Agreements between either Borrower,
on the one hand, and the Administrative Agent and the Banks, or any of them, on
the other hand, and all other documents and agreements executed or delivered by
either Borrower or any of the Restricted Subsidiaries or the Parent in
connection with or contemplated by this Agreement; provided, however, that Loan
-------- -------
Documents shall exclude, except as otherwise specifically provided herein, the
"Loan Documents" under the Parent Loan Agreement.
"Loans" shall mean, collectively, the amounts advanced by the Banks to the
-----
Borrowers under the Commitments, and evidenced by the Notes.
"Loan-Purchase Agreement" shall mean any agreement as related agreements
-----------------------
between the Borrower or any Restricted Subsidiary and any other Person pursuant
to the terms of which (a) the Borrower or such Restricted Subsidiary has made a
loan to such Person permitted by Section 7.6(d) hereof and (b) the Borrower or
such Restricted Subsidiary shall agree to acquire all or substantially all of
the assets of such Person within the twelve (12) calendar month period
immediately following the date of such agreement.
-14-
<PAGE>
"Majority Banks" shall mean (i) at any time that no Loans are outstanding
--------------
hereunder, Banks the total of whose Commitment Ratios equals or exceeds sixty
percent (60%) of the Commitment Ratios of all Banks entitled to vote hereunder,
or (ii) at any time that there are Loans outstanding hereunder, Banks the total
of whose Loans outstanding equals or exceeds sixty percent (60%) of the total
principal amount of the Loans then outstanding of all Banks entitled to vote
hereunder.
"Materially Adverse Effect" shall mean (a) any material adverse effect upon
-------------------------
the business, assets, business prospects, liabilities, financial condition,
results of operations or properties of the Borrowers and the Restricted
Subsidiaries, taken as a whole, or (b) a material adverse effect upon the
binding nature, validity, or enforceability of this Agreement and the Notes, or
upon the ability of the Borrowers and the Restricted Subsidiaries to perform the
payment obligations or other material obligations under this Agreement or any
other Loan Document, or upon the value of the Collateral or upon the rights,
benefits or interests of the Banks in and to the Loans or the rights of the
Administrative Agent and the Banks in the Collateral; in either case, whether
resulting from any single act, omission, situation, status, event or
undertaking, or taken together with other such acts, omissions, situations,
statuses, events or undertakings.
"Maturity Date" shall mean June 16, 2006, or, as the case may be, such
-------------
earlier date as payment of the Obligations shall be due (whether by
acceleration, reduction of the Commitments to zero or otherwise).
"Multiemployer Plan" shall mean a multiemployer pension plan as defined in
------------------
Section 3(37) of ERISA to which either Borrower, any of its Subsidiaries or any
ERISA Affiliate is or has been required to contribute.
"Necessary Authorizations" shall mean all approvals and licenses from, and
------------------------
all filings and registrations with, any governmental or other regulatory
authority, including, without limiting the foregoing, the Licenses and all
approvals, licenses, filings and registrations under the Communications Act,
necessary in order to enable the Borrowers and the Restricted Subsidiaries to
own, construct, maintain, and operate communications tower facilities and to
invest in other Persons who own, construct, maintain, manage and operate
communications tower facilities.
"Net Income" shall mean, for the Borrowers and the Restricted Subsidiaries
----------
on a consolidated basis, for any period, net income determined in accordance
with GAAP.
"Net Proceeds" shall mean, with respect to any sale, lease, transfer or
------------
other disposition of assets by either Borrower or any of the Restricted
Subsidiaries, the aggregate amount of cash received for such assets (including,
without limitation, any payments received for noncompetition covenants,
consulting or management fees in connection with such sale, and any portion of
the amount received evidenced by a promissory note or other evidence of
-15-
<PAGE>
Indebtedness issued by the purchaser), net of (i) amounts reserved, if any, for
taxes payable with respect to any such sale (after application (assuming
application first to such reserves) of any available losses, credits or other
offsets), (ii) reasonable and customary transaction costs properly attributable
to such transaction and payable by either Borrower or any of the Restricted
Subsidiaries (other than to an Affiliate) in connection with such sale, lease,
transfer or other disposition of assets, including, without limitation,
commissions, and (iii) until actually received by either Borrower or any of the
Restricted Subsidiaries, any portion of the amount received held in escrow or
evidenced by a promissory note or other evidence of Indebtedness issued by a
purchaser or non-compete, consulting or management agreement or covenant or
otherwise for which compensation is paid over time. Upon receipt by either
Borrower or any of the Restricted Subsidiaries of (A) amounts referred to in
item (iii) of the preceding sentence, or (B) if there shall occur any reduction
in the tax reserves referred to in item (i) of the preceding sentence resulting
in a payment to either Borrower or any of the Restricted Subsidiaries, such
amounts shall then be deemed to be "Net Proceeds."
"New Towers" shall mean any communications tower constructed by either
----------
Borrower or any of its Restricted Subsidiaries after (or not yet completed as
of) the Agreement Date. For purposes of this definition, a communications tower
shall be deemed "completed" as of the date one bona fide customer uses
communications equipment installed on such tower and shall not be considered a
"New Tower" after the end of the twelfth (12/th/) calendar month following the
month of completion.
"New Tower Operation Business" shall mean the operation by either Borrower
----------------------------
or its Restricted Subsidiaries of New Towers.
"Non-U.S. Bank" shall have the meaning ascribed to such term in Section
-------------
2.8(a) hereof.
"Notes" shall mean, collectively, the Revolving Loan Notes and the Term
-----
Loan Notes.
"Obligations" shall mean all payment and performance obligations of every
-----------
kind, nature and description of the Borrowers, the Restricted Subsidiaries, and
any other obligors to the Banks, or the Administrative Agent, or any of them,
under this Agreement and the other Loan Documents (including, without
limitation, any interest, fees and other charges on the Loans or otherwise under
the Loan Documents that would accrue but for the filing of a bankruptcy action
with respect to either Borrower, whether or not such claim is allowed in such
bankruptcy action), and including Obligations to the Banks pursuant to Section
5.12 hereof) as they may be amended from time to time, or as a result of making
the Loans, whether such obligations are direct or indirect, absolute or
contingent, due or not due, contractual or tortious, liquidated or unliquidated,
arising by operation of law or otherwise, now existing or hereafter arising.
-16-
<PAGE>
"Operating Cash Flow" shall mean, for any fiscal year, the sum of Operating
-------------------
Cash Flow (New Towers), Operating Cash Flow (Towers) and Operating Cash Flow
(Other Business) for such year.
"Operating Cash Flow (New Towers)" shall mean, with respect to the
--------------------------------
Borrowers and the Restricted Subsidiaries on a consolidated basis as of the end
of any period, (a) the sum of (i) operating revenues of the Borrowers and the
Restricted Subsidiaries in connection with the New Tower Operation Business,
plus (ii) Unrestricted Subsidiary Distributions with respect to businesses of
- ----
such Persons of the same type as the New Tower Operation Business during such
period, less (b) operating expenses attributable to such New Tower Operation
----
Business for such period. In the case of determining Operating Cash Flow (New
Towers) under Sections 2.3, 7.8, 7.9, 7.10, 7.11 and 7.12 hereof following an
Acquisition of a New Tower Operation Business permitted hereunder, Operating
Cash Flow (New Towers) shall include the Acquisition Operating Cash Flow. For
purposes of calculating Operating Cash Flow (New Towers) in connection with any
Advance for an Acquisition of a New Tower Operation Business, Operating Cash
Flow (New Towers) for the Borrowers and the Restricted Subsidiaries as of the
last day of the immediately preceding calendar month end shall include
"operating cash flow (new towers)" for the Acquisition for the same period after
giving effect to adjustments reasonably satisfactory to the Administrative
Agent. For purposes of this definition, Operating Cash Flow (New Towers) shall
include the foregoing items (each calculated in a manner substantially similar
to the financial statements required to be delivered pursuant to Sections 6.1
and 6.2 hereof and otherwise in all respects reasonably satisfactory to the
Administrative Agent) with respect to any Person with whom either Borrower has
entered into a Loan-Purchase Agreement; provided, however, that with respect to
-------- -------
any such Person such items shall not be included for any period exceeding twelve
(12) calendar months unless such Person becomes a Restricted Subsidiary of such
Borrower.
"Operating Cash Flow (Towers)" shall mean, with respect to the Borrowers
----------------------------
and their Restricted Subsidiaries on a consolidated basis as of the end of any
period, (a) the sum of (i) operating revenues of the Borrowers and their
Restricted Subsidiaries in connection with the Tower Operation Business, plus
----
(ii) Unrestricted Subsidiary Distributions with respect to the businesses of
such Persons of the same type as Tower Operation Business during such period,
less (b) operating expenses attributable to such Tower Operation Business for
- ----
such period. In the case of determining Operating Cash Flow (Towers) under
Sections 2.3, 7.8, 7.9, 7.10, 7.11 and 7.12 hereof following an Acquisition of a
Tower Operation Business permitted hereunder, Operating Cash Flow (Towers) shall
include the Acquisition Operating Cash Flow. For purposes of calculating
Operating Cash Flow in connection with any Advance for an Acquisition of a Tower
Operation Business, Operating Cash Flow (Towers) as of the last day of the
immediately preceding calendar month end shall include "operating cash flow
(towers)" for the Acquisition for the same period after giving effect to
adjustments reasonably satisfactory to the Administrative Agent. For purposes of
this definition, Operating Cash Flow (Towers) shall include the foregoing items
(each calculated in a manner substantially similar to the financial statements
required to be delivered pursuant to
-17-
<PAGE>
Sections 6.1 and 6.2 hereof and otherwise in all respects reasonably
satisfactory to the Administrative Agent) with respect to any Person with whom
either Borrower has entered into a Loan-Purchase Agreement; provided, however,
-------- -------
that with respect to any such Person such items shall not be included for any
period exceeding twelve (12) calendar months unless such Person becomes a
Restricted Subsidiary of such Borrower.
"Operating Cash Flow (Other Business)" shall mean, with respect to the
------------------------------------
Borrowers and their Restricted Subsidiaries on a consolidated basis as of the
end of any period, (a) the sum of (i) operating revenues of the Borrowers and
their Restricted Subsidiaries in connection with the Other Operations, plus (ii)
----
Unrestricted Subsidiary Distributions with respect to businesses of such Persons
of the same type as the Other Operations during such period, less (b) operating
----
expenses attributable to such Other Operations for such period. In the case of
determining Operating Cash Flow (Other Business) under Sections 2.3, 7.8, 7.9,
7.10, 7.11 and 7.12 hereof following an Acquisition of Other Operations
permitted hereunder, Operating Cash Flow (Other Business) shall include the
Acquisition Operating Cash Flow. For purposes of calculating Operating Cash
Flow (Other Business) in connection with any Advance for an Acquisition of Other
Operations, Operating Cash Flow (Other Business) as of the last day of the
immediately preceding calendar month end shall include "operating cash flow
(other business)" for the Acquisition for the same period after giving effect to
adjustments reasonably satisfactory to the Administrative Agent.
"Other Operations" shall mean all businesses of the Borrowers and their
----------------
Restricted Subsidiaries (other than the Tower Operations Business and the New
Tower Operations Business), including, without limitation, the video, voice and
data transmission business and the site acquisition business.
"Parent" shall mean American Tower Corporation, a Delaware corporation.
------
"Parent Guaranty" shall mean that certain Parent Guaranty dated as of the
---------------
even date herewith, made by the Parent in favor of the Collateral Agent,
substantially in the form of Exhibit E attached hereto.
---------
"Parent Loan Agreement" shall mean that certain Parent Loan Agreement dated
---------------------
as of even date herewith by and among the Parent, the Administrative Agent and
the lenders parties thereto, providing for a term credit facility in an amount
not to exceed $150,000,000, as the same may be amended, modified, supplemented
or restated from time to time.
"Parent Pledge Agreement" shall mean that certain Parent Pledge Agreement
dated as of even date herewith, made by Parent in favor of the Collateral Agent,
substantially in the form of Exhibit F attached hereto.
---------
"Payment Date" shall mean the last day of any Interest Period.
------------
-18-
<PAGE>
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
----
successor thereto.
"Permitted Liens" shall mean, as applied to any Person:
---------------
(a) any Lien in favor of the Administrative Agent or the Collateral
Agent given to secure the Obligations and the "Obligations" under the ATS
Facility B Loan Agreement;
(b) (i) Liens on real estate or other property for taxes, assessments,
governmental charges or levies not yet delinquent and (ii) Liens for taxes,
assessments, judgments, governmental charges or levies or claims the non-payment
of which is being diligently contested in good faith by appropriate proceedings
and for which adequate reserves have been set aside on such Person's books, but
only so long as no foreclosure, distraint, sale or similar proceedings have been
commenced with respect thereto;
(c) Liens of carriers, warehousemen, mechanics, vendors, (solely to
the extent arising by operation of law) laborers and materialmen incurred in the
ordinary course of business for sums not yet due or being diligently contested
in good faith, if reserves or appropriate provisions shall have been made
therefor;
(d) Liens incurred in the ordinary course of business in connection
with worker's compensation and unemployment insurance, social security
obligations, assessments or government charges which are not overdue for more
than sixty (60) days;
(e) restrictions on the transfer of the Licenses or assets of either
Borrower or the Restricted Subsidiaries imposed by any of the Licenses as
presently in effect or by the Communications Act and any regulations thereunder;
(f) easements, rights-of-way, zoning restrictions, licenses,
reservations or restrictions on use and other similar encumbrances on the use of
real property which do not materially interfere with the ordinary conduct of the
business of such Person or the use of such property;
(g) Liens arising by operation of law in favor of purchasers in
connection with any asset sale permitted hereunder; provided, however, that such
-------- -------
Lien only encumbers the property being sold;
(h) Liens reflected by Uniform Commercial Code financing statements
filed in respect of Capitalized Lease Obligations permitted pursuant to Section
7.1 hereof and true leases of either Borrower or any of their Subsidiaries;
(i) Liens to secure performance of statutory obligations, surety or
appeal bonds, performance bonds, bids or tenders;
-19-
<PAGE>
(j) judgment Liens which do not result in an Event of Default under
Section 8.1 (h) hereof;
(k) Liens in connection with escrow deposits made in connection with
Acquisitions permitted hereunder;
(l) Liens in favor of the lenders under the Parent Loan Agreement,
which Liens are subject to the Intercreditor Agreement; and
(m) Liens of a nature contemplated by the penultimate sentence of
Section 5.13 hereof.
"Person" shall mean an individual, corporation, limited liability company,
------
association, partnership, joint venture, trust or estate, an unincorporated
organization, a government or any agency or political subdivision thereof, or
any other entity.
"Plan" shall mean an employee benefit plan within the meaning of Section
----
3(3) of ERISA or any other employee benefit plan maintained for employees of any
Person or any affiliate of such Person.
"Principal Shareholders" shall mean, collectively, (a) Steven B. Dodge, (b)
----------------------
the legal heirs of Steven B. Dodge, (c) Thomas H. Stoner, (d) the legal heirs of
Thomas H. Stoner, and (e) any Person the securities of which would be deemed to
be beneficially owned by any of the foregoing Persons pursuant to the provisions
of Rule 13(d)(3) under the Exchange Act.
"Prior Loan Agreement" shall mean that certain Amended and Restated Loan
--------------------
Agreement dated as of October 15, 1997 by and among American Tower Systems,
Inc., as Borrower, the financial institutions parties thereto, as Banks, and
Toronto Dominion (Texas), Inc., as Administrative Agent, as amended by that
certain First Amendment to Amended and Restated Loan Agreement dated as of
December 31, 1997, that certain Assumption Agreement dated as of January 21,
1998, that certain Second Amendment to Amended and Restated Loan Agreement dated
as of March 27, 1998, and that certain Third Amendment to Amended and Restated
Loan Agreement dated as of May 11, 1998.
"Pro Forma Debt Service" shall mean with respect to the twelve (12)
----------------------
calendar month period following the calculation date, and after giving effect to
any Interest Hedge Agreements and LIBOR Advances, the sum of the amount of all
of the following with respect to the Borrowers, the Restricted Subsidiaries and
the Parent, on a consolidated basis, (a) scheduled payments of principal on
Indebtedness for Money Borrowed (determined with respect to the Revolving Loans
only, as the difference between the outstanding principal amount of the
Revolving Loans on the calculation date and the amount the Revolving Loan
Commitment will be after the reductions thereof set forth in Section 2.5 hereof
for such twelve calendar month period have taken effect) for such period, (b)
Interest Expense for
-20-
<PAGE>
such period, (c) fees payable under this Agreement, the Facility B Loan
Agreement and the Parent Loan Agreement for such period, and (d) other payments
payable by such Persons during such period in respect of Indebtedness for Money
Borrowed (other than voluntary repayments). For purposes of this definition,
where interest payments for the twelve (12) month period immediately succeeding
the calculation date are not fixed by way of Interest Hedge Agreements, LIBOR
Advances, or otherwise for the entire period, interest shall be calculated on
such Indebtedness for Money Borrowed for periods for which interest payments are
not so fixed at the lesser of (i) the LIBOR Basis (based on the then current
adjustment under Section 2.3(f) hereof) for a LIBOR Advance having an Interest
Period of six (6) months as determined on the date of calculation and (ii) the
Base Rate Basis as in effect on the date of calculation; provided, however, that
-------- -------
if such LIBOR Basis cannot be determined in the reasonable opinion of the
Administrative Agent, such interest shall be calculated using the Base Rate
Basis as then in effect.
"Projections" shall have the meaning ascribed thereto in Section 4.1(r)
-----------
hereof.
"Register" shall have the meaning ascribed to such term in Section 11.5(g)
--------
hereof.
"Registered Noteholder" shall mean each Non-U.S.Bank that requests or holds
---------------------
a Registered Note pursuant to Section 2.8(a) hereof or registers its Loans
pursuant to Section 11.5(g) hereof.
"Registered Notes" shall mean those certain Notes that have been issued in
----------------
registered form in accordance with Sections 2.8(a) and 11.5(g) hereof and each
of which bears the following legend: "This is a Registered Note, and this
Registered Note and the Loans evidenced hereby may be assigned or otherwise
transferred in whole or in part only by registration of such assignment or
transfer on the Register and in compliance with all other requirements provided
for in the ATS Facility A Loan Agreement."
"Regulations" shall have the meaning ascribed thereto in Section 4.1(n)
-----------
hereof.
"Reportable Event" shall mean, with respect to any Employee Pension Plan,
----------------
an event described in Section 4043(b) of ERISA.
"Request for Advance" shall mean a certificate designated as a "Request for
-------------------
Advance," signed by an Authorized Signatory of either Borrower requesting an
Advance hereunder, which shall be in substantially the form of Exhibit G
---------
attached hereto, and shall, among other things, (i) specify the date of the
Advance, which shall be a Business Day, the amount of the Advance, the type of
Advance (LIBOR or Base Rate), and, with respect to LIBOR Advances, the Interest
Period with respect thereto, (ii) state that there shall not exist, on the date
of the requested Advance and after giving effect thereto, a Default, as of the
date of such Advance and after giving effect thereto, and (iii) the Applicable
Margin then in effect.
-21-
<PAGE>
"Required Lenders" shall mean, at any time, Persons whose Commitment and
----------------
Facility B Commitment equal or exceed sixty percent (60%) of the aggregate
amount of the Commitment hereunder and the Facility B Commitment (after giving
effect to any reductions in such Commitments but without giving effect to any
Loans outstanding); provided however, that if such Commitments have been
-------- -------
terminated or cancelled; "Required Lenders" shall mean Persons whose Loans and
----------------
Facility B Loans equal or exceed sixty percent (60%) of the aggregate amount of
such Loans then outstanding.
"Restricted Payment" shall mean any direct or indirect distribution,
------------------
dividend or other payment to any Person (other than to either Borrower or any of
the Restricted Subsidiaries) on account of (a) any general or limited
partnership interest in, or shares of Capital Stock or other securities of,
either Borrower (other than dividends payable solely in general or limited
partnership interests or stock of such Person and stock splits), including,
without limitation, any direct or indirect distribution, dividend or other
payment to any Person (other than to either Borrower or any of the Restricted
Subsidiaries) on account of any warrants or other rights or options to acquire
shares of Capital Stock of either Borrower or any of the Restricted
Subsidiaries, or (b) any management or similar agreement with an Affiliate of
such Person not (i) in compliance with Section 7.13 hereof or (ii) in the
ordinary course of business, it being understood that the payment of fees in
connection with the Interim Financing shall not be deemed to be a Restricted
Payment.
"Restricted Subsidiary" shall mean any Subsidiary of either Borrower other
---------------------
than an Unrestricted Subsidiary. The Restricted Subsidiaries as of the Agreement
Date are as set forth on Schedule 2 attached hereto.
----------
"Revolving Loan Commitment" shall mean the several obligations of the Banks
-------------------------
to advance in an aggregate amount of up to $400,000,000 at any one time
outstanding, in accordance with their respective Commitment Ratios, to the
Borrowers pursuant to the terms hereof and as such obligations may be reduced
from time to time pursuant to the terms hereof.
"Revolving Loan Notes" shall mean, collectively, those certain revolving
--------------------
promissory notes in an aggregate original principal amount of the Revolving Loan
Commitment, and one (1) issued to each of the Banks by the Borrowers with
respect to the Revolving Loan Commitment, each one substantially in the form of
Exhibit H attached hereto, and any extensions, renewals or amendments to, or
- ---------
replacements of, the foregoing.
"Revolving Loans" shall mean, collectively, the amounts advanced by the
---------------
Banks to the Borrowers under the Revolving Loan Commitment, not to exceed the
amount of the Revolving Loan Commitment, and evidenced by the Revolving Loan
Notes.
-22-
<PAGE>
"Sconnix Note" shall mean the note of Sconnix Broadcasting Company, a New
------------
Hampshire limited partnership (a true and correct copy of which has been
delivered to the Administrative Agent), in the aggregate principal amount of
$12,000,000, acquired or to be acquired by ATS (Delaware) in connection with the
merger of Intracoastal Broadcasting, Inc., a Delaware corporation, into ATS
(Delaware).
"Security Agreement" shall mean that certain Security Agreement dated as of
------------------
even date herewith, made by the Borrowers in favor of the Collateral Agent for
the ratable benefit of the Banks, substantially in the form of Exhibit I
---------
attached hereto.
"Security Documents" shall mean each Borrower Guaranty, each Security
------------------
Agreement, the Stock Pledge Agreement, all Subsidiary Guaranties, all Subsidiary
Pledge Agreements, all Subsidiary Security Agreements, all Assignments of
Intercompany Loans, each Assignment of General Partner Interests, each
Assignment of Limited Partner Interests, the Parent Pledge Agreement, the Parent
Guaranty, any other agreement or instrument providing collateral for the
Obligations whether now or hereafter in existence, and any filings, instruments,
agreements, and documents related thereto or to this Agreement, and providing
the Collateral Agent, for the benefit of the Banks, with Collateral for the
Obligations.
"Security Interest" shall mean all Liens in favor of the Collateral Agent,
-----------------
for the benefit of the Banks, created hereunder or under any of the Security
Documents to secure the Obligations.
"Senior Debt" shall mean, for the Borrowers and the Restricted Subsidiaries
-----------
on a consolidated basis as of any date, the sum of (without duplication) (i) the
outstanding principal amount of the Loans and the Facility B Loans, (ii) the
aggregate amount of Capitalized Lease Obligations and Indebtedness for Money
Borrowed or such Persons, and (iii) the aggregate amount of all Guaranties by
such Persons of Indebtedness for Money Borrowed.
"Senior Leverage Ratio" shall mean, as of any date, the ratio of (a) the
---------------------
Senior Debt on such date to (b) Annualized Operating Cash Flow.
"Separation Obligations" shall mean the obligations of the Parent to
----------------------
reimburse CBS Corporation for certain tax and other obligations relating to the
separation of the Parent from American Radio Systems as set forth on Schedule 3
----------
attached hereto.
"Stock Pledge Agreement " shall mean that certain Stock Pledge Agreement
-----------------------
of ATS (Delaware) dated as of even date herewith between ATS (Delaware) and the
Collateral Agent, substantially in the form of Exhibit J attached hereto,
---------
pursuant to which ATS (Delaware) has pledged to the Collateral Agent for the
ratable benefit of the Banks all of ATS (Delaware) stock ownership in each of
its directly owned Restricted Subsidiaries.
-23-
<PAGE>
"Subordination Agreement" shall mean, collectively, (a) that certain
-----------------------
Subordination Agreement dated as of even date herewith among ATSC Operating,
ATSC LP and the Administrative Agent, and (b) that certain Subordination
Agreement dated as of even date herewith among ATSC Holding, ATSC GP and the
Administrative Agent.
"Subsidiary" shall mean, as applied to any Person, (a) any corporation
----------
of which more than fifty percent (50%) of the outstanding stock (other than
directors' qualifying shares) having ordinary voting power to elect a majority
of its board of directors, regardless of the existence at the time of a right of
the holders of any class or classes of securities of such corporation to
exercise such voting power by reason of the happening of any contingency, or any
partnership of which more than fifty percent (50%) of the outstanding
partnership interests, is at the time owned directly or indirectly by such
Person, or by one or more Subsidiaries of such Person, or by such Person and one
or more Subsidiaries of such Person, or (b) any other entity which is directly
or indirectly controlled or capable of being controlled by such Person, or by
one or more Subsidiaries of such Person, or by such Person and one or more
Subsidiaries of such Person.
"Subsidiary Guaranty" shall mean that certain Subsidiary Guaranty, dated
-------------------
as of even date herewith, in favor of the Collateral Agent and the Banks, given
by each Restricted Subsidiary on the Agreement Date, substantially in the form
of Exhibit K attached hereto, and shall include any similar agreements executed
---------
pursuant to Section 5.13 hereof.
"Subsidiary Pledge Agreement" shall mean that certain Subsidiary Pledge
---------------------------
Agreement dated as of even date herewith made by each Restricted Subsidiary
having one or more of its own Restricted Subsidiaries, on the one hand, in favor
of the Collateral Agent, on the other hand, substantially in the form of
Exhibit L attached hereto, and shall include any similar agreements executed
- ---------
pursuant to Section 5.13 hereof.
"Subsidiary Security Agreement" shall mean that certain Subsidiary
-----------------------------
Security Agreement dated as of even date herewith between each Restricted
Subsidiary, on the one hand, and the Collateral Agent, (on behalf of itself, the
Administrative Agent and the Banks), on the other hand, substantially in the
form of Exhibit M attached hereto, and shall include any similar agreements
---------
executed pursuant to Section 5.13 hereof.
"Term Loan" shall have the amounts advanced by the Banks to the Borrowers
---------
as Term Loans under the Term Loan Commitment and evidenced by the Term Loan
Notes.
"Term Loan Commitment" shall mean the several obligations of the Banks to
--------------------
advance to the Borrowers $250,000,000, in accordance with their respective
Commitment Ratios pursuant to the terms hereof.
"Term Loan Notes" shall mean, collectively, those certain term promissory
---------------
notes in the aggregate original principal amount of $250,000,000 and one (1)
issued to each of the
-24-
<PAGE>
Banks by the Borrowers, each one substantially in the form of Exhibit N attached
---------
hereto, and any extensions, modifications, renewals or replacements of, or
amendments to, any of the foregoing.
"Total Debt" shall mean, for the Parent, the Borrowers and the Restricted
----------
Subsidiaries on a consolidated basis as of any date, the sum (without
duplication) of (i) the outstanding principal amount of the Loans, the Facility
B Loans and the loans outstanding under the Parent Loan Agreement, (ii) the
aggregate amount of Capitalized Lease Obligations and Indebtedness for Money
Borrowed of such Persons, and (iii) the aggregate amount of all Guaranties by
such Persons of Indebtedness for Money Borrowed.
"Tower Operation Business" shall mean the ownership, leasing and tower
------------------------
management businesses of the Borrowers and their Restricted Subsidiaries.
"Unreinvested Net Proceeds" shall mean the aggregate Net Proceeds not
-------------------------
(i) used or committed to be used to acquire fixed or capital assets permitted by
Section 7.6 hereof within the period specified in Section 2.7(b)(iii) hereof or
(ii) used to repay Loans pursuant to the provisions of Section 2.7(b)(iii).
"Unrestricted Subsidiary" shall mean any Subsidiary of either Borrower
-----------------------
or any joint venture (which may represent a minority interest) between either
Borrower and/or any of their Subsidiaries and any other Person, in each case,
which either Borrower has heretofore designated or hereafter designates as an
Unrestricted Subsidiary by written notice to the Administrative Agent and the
Banks prior to the formation or acquisition of such Subsidiary or joint venture.
Notwithstanding the foregoing, no Restricted Subsidiary may be re-designated as
an Unrestricted Subsidiary without the prior consent of the Majority Banks. The
Unrestricted Subsidiaries as of the Agreement Date are as set forth Schedule 4
----------
attached hereto. All Subsidiaries of any Unrestricted Subsidiary, now or
hereafter existing, shall be Unrestricted Subsidiaries.
"Unrestricted Subsidiary Distributions" shall mean the amount of cash
-------------------------------------
distributions received during such period by either Borrower or any of its
Restricted Subsidiaries from any Unrestricted Subsidiary (other than in
connection with the repayment of intercompany Indebtedness).
"U.S. Person" shall mean a citizen or resident of the United States of
-----------
America, a corporation, partnership or other entity created or organized in or
under any laws of the United States of America, or any estate or trust that is
subject to Federal income taxation regardless of the source of its income.
Each definition of an agreement in this Article 1 shall include such
agreement as modified, amended or supplemented from time to time in accordance
herewith.
-25-
<PAGE>
ARTICLE 2 Loans
Section 2.1 The Loans.
---------
(a) Revolving Loan Commitment. The Banks agree, severally, in
-------------------------
accordance with their respective Commitment Ratios, and not jointly, upon
the terms and subject to the conditions of this Agreement, to lend and
relend to the Borrowers from time to time, amounts which do not exceed, in
the aggregate, at any one time outstanding the amount of the Revolving Loan
Commitment as in effect from time to time. Subject to the terms and
conditions hereof, Advances under the Revolving Loan Commitment may be
repaid and reborrowed from time to time on a revolving basis. The
Borrowers hereby agree that all amounts advanced under the Revolving Loan
Commitment shall be joint and several obligations of the Borrowers.
(b) Term Loan Commitment. The Banks agree, severally, in
--------------------
accordance with their respective Commitment Ratios, and not jointly, upon
the terms and subject to the conditions of this Agreement, to lend to the
Borrowers (i) on the Agreement Date an amount not to exceed the Term Loan
Commitment, but not to be less than $125,000,000, and (ii) on or prior to
December 31, 1998, an additional Advance in an amount not to exceed the
unborrowed portion of the Term Loan Commitment. Subject to the terms and
conditions hereof, Advances under the Term Loan Commitment may be repaid
and reborrowed to effect a change in the Interest Rate Basis or Interest
Periods relating thereto. The Borrowers hereby agree that all amounts
advanced under the Term Loan Commitment shall be joint and several
obligations of the Borrowers.
Section 2.2 Manner of Borrowing and Disbursement.
------------------------------------
(a) Choice of Interest Rate, Etc. Any Advance hereunder shall,
-----------------------------
at the option of the requesting Borrower, be made as a Base Rate Advance or
a LIBOR Advance; provided, however, that at such time as there shall have
-------- -------
occurred and be continuing a Default hereunder, neither Borrower shall have
the right to receive a LIBOR Advance. Any notice given to the
Administrative Agent in connection with a requested Advance hereunder shall
be given to the Administrative Agent prior to 11:00 a.m. (New York, New
York time) in order for such Business Day to count toward the minimum
number of Business Days required.
(b) Base Rate Advances.
------------------
(i) Advances. A Borrower shall give the Administrative
--------
Agent in the case of Base Rate Advances at least one (1) Business Day's
irrevocable prior telephonic notice followed immediately by a Request for
Advance; provided,
--------
-26-
<PAGE>
however, that such Borrower's failure to confirm any telephonic notice with
-------
a Request for Advance shall not invalidate any notice so given if acted
upon by the Administrative Agent. Upon receipt of such notice from a
Borrower, the Administrative Agent shall promptly notify each Bank by
telephone or telecopy of the contents thereof.
(ii) Repayments and Reborrowings. Either Borrower may
---------------------------
repay or prepay a Base Rate Advance without regard to its Payment Date and
(A) upon at least one (1) Business Day's irrevocable prior telephonic
notice followed by written notice, reborrow all or a portion of the
principal amount thereof as a Base Rate Advance, (B) upon at least three
(3) Business Days' irrevocable prior telephonic notice followed by written
notice, reborrow all or a portion of the principal thereof as one or more
LIBOR Advances, or (C) not reborrow all or any portion of such Base Rate
Advance. On the date indicated by the applicable Borrower, such Base Rate
Advance shall be so repaid and, as applicable, reborrowed. The failure to
give timely notice hereunder with respect to the Payment Date of any Base
Rate Advance shall be considered a request for a Base Rate Advance.
(c) LIBOR Advances.
--------------
(i) Advances. Upon request, the Administrative Agent,
--------
whose determination in absence of manifest error shall be conclusive, shall
determine the available LIBOR Bases and shall notify the requesting
Borrower of such LIBOR Bases to apply for the applicable LIBOR Advance.
The requesting Borrower shall give the Administrative Agent in the case of
LIBOR Advances at least three (3) Business Days' irrevocable prior
telephonic notice followed immediately by a Request for Advance; provided,
--------
however, that such Borrower's failure to confirm any telephonic notice with
-------
a Request for Advance shall not invalidate any notice so given if acted
upon by the Administrative Agent. Upon receipt of such notice from a
Borrower, the Administrative Agent shall promptly notify each Bank by
telephone or telecopy of the contents thereof.
(ii) Repayments and Reborrowings. At least three (3)
---------------------------
Business Days prior to the Payment Date for each LIBOR Advance, the
applicable Borrower shall give the Administrative Agent telephonic notice
followed by written notice specifying whether all or a portion of such
LIBOR Advance (A) is to be repaid and then reborrowed in whole or in part
as one or more LIBOR Advances, (B) is to be repaid and then reborrowed in
whole or in part as a Base Rate Advance, or (C) is to be repaid and not
reborrowed. The failure to give such notice shall preclude the Borrowers
from reborrowing such Advance as a LIBOR Advance on its Payment Date and
shall be considered a request for a Base Rate Advance. Upon such Payment
Date such LIBOR Advance will, subject to the provisions hereof, be so
repaid and, as applicable, reborrowed.
-27-
<PAGE>
(d) Notification of Banks. Upon receipt of a Request for
---------------------
Advance, or a notice from a Borrower with respect to any outstanding Advance
prior to the Payment Date for such Advance, the Administrative Agent shall
promptly but no later than the close of business on the day of such notice
notify each Bank by telephone or telecopy of the contents thereof and the amount
of such Bank's portion of the Advance. Each Bank shall, not later than 12:00
noon (New York, New York time) on the date of borrowing specified in such
notice, make available to the Administrative Agent at the Administrative Agent's
Office, or at such account as the Administrative Agent shall designate, the
amount of its portion of any Advance that represents an additional borrowing
hereunder in immediately available funds.
(e) Disbursement.
------------
(i) Prior to 2:00 p.m. (New York, New York time) on the
date of an Advance hereunder, the Administrative Agent shall, subject to
the satisfaction of the conditions set forth in Article 3 hereof, disburse
the amounts made available to the Administrative Agent by the Banks in like
funds by (A) transferring the amounts so made available by wire transfer
pursuant to the requesting Borrower's instructions, or (B) in the absence
of such instructions, crediting the amounts so made available to the
account of the requesting Borrower maintained with the Administrative
Agent.
(ii) Unless the Administrative Agent shall have received
notice from a Bank prior to 12:00 noon (New York, New York time) on the
date of any Advance that such Bank will not make available to the
Administrative Agent such Bank's ratable portion of such Advance, the
Administrative Agent may assume that such Bank has made or will make such
portion available to the Administrative Agent on the date of such Advance
and the Administrative Agent may in its sole discretion and in reliance
upon such assumption, make available to the requesting Borrower on such
date a corresponding amount. If and to the extent the Bank does not make
such ratable portion available to the Administrative Agent, such Bank
agrees to repay to the Administrative Agent on demand such corresponding
amount together with interest thereon, for each day from the date such
amount is made available to the requesting Borrower until the date such
amount is repaid to the Administrative Agent, at the Federal Funds Rate.
(iii) If such Bank shall repay to the Administrative Agent
such corresponding amount, such amount so repaid shall constitute such
Bank's portion of the applicable Advance for purposes of this Agreement. If
such Bank does not repay such corresponding amount immediately upon the
Administrative Agent's demand therefor, the Administrative Agent shall
notify the Borrowers, and the Borrowers shall immediately pay such
corresponding amount to the Administrative Agent, with interest at the
Federal Funds Rate. The failure of any Bank to fund its portion of any
Advance shall not relieve any other Bank of its obligation, if any,
hereunder to fund
-28-
<PAGE>
its respective portion of the Advance on the date of such borrowing, but no
Bank shall be responsible for any such failure of any other Bank.
(iv) In the event that, at any time when there is no Default
and each of the conditions in Section 3.2 hereof has been satisfied, a Bank
for any reason fails or refuses to fund its portion of an Advance and such
failure shall continue for a period in excess of thirty (30) days, then,
until such time as such Bank has funded its portion of such Advance (which
late funding shall not absolve such Bank from any liability it may have to
the Borrowers), or all other Banks have received payment in full from the
Borrowers (whether by repayment or prepayment) or otherwise of the
principal and interest due in respect of such Advance, such non-funding
Bank shall not have the right (A) to vote regarding any issue on which
voting is required or advisable under this Agreement or any other Loan
Document, and such Bank's portion of the Loans shall not be counted as
outstanding for purposes of determining "Majority Banks" hereunder, and (B)
to receive payments of principal, interest or fees from the Borrowers, the
Administrative Agent or the other Banks in respect of its portion of the
Loans until all Loans of the other Banks have been fully paid.
Section 2.3 Interest.
--------
(a) On Base Rate Advances. Interest on each Base Rate Advance
---------------------
shall be computed on the basis of a year of 365/366 days for the actual number
of days elapsed and shall be payable at the Base Rate Basis for such Advance, in
arrears on the applicable Payment Date. Interest on Base Rate Advances then
outstanding shall also be due and payable on the Maturity Date.
(b) On LIBOR Advances. Interest on each LIBOR Advance shall be
-----------------
computed on the basis of a 360-day year for the actual number of days elapsed
and shall be payable at the LIBOR Basis for such Advance, in arrears on the
applicable Payment Date, and, in addition, if the Interest Period for a LIBOR
Advance exceeds three (3) months, interest on such LIBOR Advance shall also be
due and payable in arrears on every three-month anniversary of the beginning of
such Interest Period. Interest on LIBOR Advances then outstanding shall also be
due and payable on the Maturity Date.
(c) Interest if no Notice of Selection of Interest Rate Basis.
---------------------------------------------------------
If a Borrower fails to give the Administrative Agent timely notice of its
selection of a LIBOR Basis, or if for any reason a determination of a LIBOR
Basis for any Advance is not timely concluded, the Base Rate Basis shall apply
to such Advance.
(d) Interest Upon Default. Immediately upon the occurrence of an
---------------------
Event of Default hereunder, the outstanding principal balance of the Loans shall
bear interest at the Default Rate. Such interest shall be payable on demand by
the Majority Banks and shall accrue until the earlier of (i) waiver or cure of
the applicable Event of Default, (ii) agreement
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<PAGE>
by the Majority Banks (or, if applicable to the underlying Event of Default, the
Banks) to rescind the charging of interest at the Default Rate, or (iii) payment
in full of the Obligations.
(e) LIBOR Contracts. At no time may the number of outstanding
---------------
LIBOR Advances hereunder and under the ATS Facility B Loan Agreement exceed
twelve (12).
(f) Applicable Margin. With respect to any Advance, the
-----------------
Applicable Margin shall be as set forth in a certificate of the chief financial
officer of the Borrowers delivered to the Administrative Agent based upon the
Applicable Margin Ratio for the most recent fiscal quarter end for which
financial statements are furnished by the Borrowers to the Administrative Agent
and each Bank for the fiscal quarter most recently ended as follows:
<TABLE>
<CAPTION>
Applicable Margin Ratio Base Rate LIBOR Advance
-----------------------
Advance Applicable Applicable
Margin Margin
------ ------
<S> <C> <C>
A. Greater than or equal to 6.00:1 1.250% 2.250%
B. Greater than or equal to 5.50:1, but less than 6.00: 1 1.000% 2.000%
C. Greater than or equal to 5.00:1, but less than 5.50:1 0.750% 1.750%
D. Greater than or equal to 4.50:1, but less than 5.00:1 0.500% 1.500%
E. Greater than or equal to 4.00:1, but less than 4.50:1 0.250% 1.250%
F. Greater than or equal to 3.50: 1, but less than 4.00:1 0.000% 1.000%
G. Less than 3.50:1 0.000% 0.750%
</TABLE>
Notwithstanding the foregoing, for the period from the Agreement Date through
and including December 31, 1998, the Base Rate Advance Applicable Margin shall
not be less than one percent (1.000%) and the LIBOR Advance Applicable Margin
shall not be less than 2.000%. Changes to the Applicable Margin shall be
effective (i) with respect to an increase in the Applicable Margin, as of the
second (2nd) Business Day after the day on which the financial statements are
required to be delivered to the Administrative Agent and the Banks pursuant to
Section 6.1 or 6.2 hereof, as the case may be; provided, however, that if such
-------- -------
financial statements are not delivered to the Administrative Agent and the Banks
on or before the date specified in such Section, such increase shall be
effective as of the date specified in such Section for delivery of the financial
statements, and (ii) with respect to a decrease in the Applicable Margin, as of
the later of (A) the second (2nd) Business Day after the day on which such
financial statements are required to be delivered pursuant to Section 6.1 or 6.2
hereof, as the case may be, and (B) the date on which such financial statements
are actually
-30-
<PAGE>
delivered to the Administrative Agent and the Banks. Subject to the second
sentence of this Section 2.3(f), the Applicable Margin on the Agreement Date
shall be based on the financial statements for the Borrowers with respect to
March 31, 1998 and the Senior Debt as of the Agreement Date.
Upon the occurrence and during the continuance of an Event of Default, the
Applicable Margins shall not be subject to downward adjustment and shall
automatically revert to the Applicable Margins set forth in part A of the above
table until such time as such Event of Default is cured or waived.
-31-
<PAGE>
Section 2.4 Commitment Fees. Commencing on the Agreement Date and of all
---------------
times thereafter, the Borrowers agree to pay, on a joint and several basis, to
the Administrative Agent for the account of each of the Banks in accordance with
such Bank's respective Commitment Ratio, a commitment fee on the aggregate
unborrowed balance of the Revolving Loan Commitment and the Term Loan Commitment
for each day from the Agreement Date until the Maturity Date, at a rate of (i)
three-eighths of one percent (0.375%) per annum when the Applicable Margin Ratio
is greater than or equal to 5.00:1; and (ii) one-quarter of one percent (0.250%)
per annum when the Applicable Margin Ratio is less than 5.00:1. Such commitment
fee shall be computed on the basis of a year of 365/366 days for the actual
number of days elapsed, shall be payable quarterly in arrears on the last
Business Day of each calendar quarter, and shall be fully earned when due and
non-refundable when paid. A final payment of any commitment fee then payable
shall also be due and payable on the Maturity Date.
Section 2.5 Mandatory Revolving Loan Commitment Reductions
----------------------------------------------
(a) Scheduled Reductions under Revolving Loan Commitment.
----------------------------------------------------
Commencing June 30, 2001, and on the last day of each calendar quarter ending
during the periods set forth below, the Revolving Loan Commitment as of June 29,
2001 shall be automatically and permanently reduced by the percentage amount set
forth below:
<TABLE>
<CAPTION>
Percentage of Revolving
Loan Commitment as of
Reduction Dates June 29, 2001
--------------- -------------
<S> <C>
June 30, 2001, September 30, 2001
and December 31, 2001 2.500%
March 31, 2002, June 30, 2002,
September 30, 2002 and December 31, 2002 3.125%
March 31, 2003, June 30, 2003,
September 30, 2003 and December 31, 2003 3.750%
March 31, 2004, June 30, 2004,
September 30, 2004 and December 31, 2004 5.000%
March 31, 2005, June 30, 2005,
September 30, 2005 and December 31, 2005 5.625%
March 31, 2006 and June 16, 2006 11.250%
</TABLE>
-32-
<PAGE>
(b) Reduction From Facility A Excess Cash Flow. The Revolving
------------------------------------------
Loan Commitment shall be automatically and permanently reduced by an amount
equal to the repayment of Revolving Loans required under Section 2.7(b)(iv)
hereof; provided, however, that if there are no Term Loans then outstanding, the
-------- -------
Revolving Loan Commitment shall be reduced by an amount equal to the Facility A
Excess Cash Flow, regardless of any repayment of the Revolving Loans. Reductions
to the Revolving Loan Commitment under this Section shall be applied to the
reductions set forth in Section 2.5(a) hereof in inverse order of the reductions
set forth therein.
(c) Reduction From Permitted Asset Sales. The Revolving Loan
------------------------------------
Commitment shall be automatically and permanently reduced by an amount equal to
the repayment of Revolving Loans required under Section 2.7(b)(iii) hereof;
provided, however, that if there are no Term Loans then outstanding, the
- -------- -------
Revolving Loan Commitment shall be reduced by an amount equal to the Facility A
Net Proceeds, regardless of any repayment of the Revolving Loans. Reductions to
the Revolving Loan Commitment under this Section shall be applied to the
reductions set forth in Section 2.5(a) hereof in inverse order of the reductions
set forth therein.
(d) Reduction From Sale of Capital Stock and Debt Instruments.
---------------------------------------------------------
The Revolving Loan Commitment shall be automatically and permanently reduced by
an amount equal to the repayment of Revolving Loans required under Section
2.7(b)(v) hereof; provided, however, that if there are no Term Loans then
--------- -------
outstanding, the Revolving Loan Commitment shall be reduced by an amount equal
to the Facility A Capital Raise Proceeds, regardless of any repayment of the
Revolving Loans. Reductions to the Revolving Loan Commitment under this Section
shall be applied to the reductions set forth in Section 2.5(a) hereof in inverse
order of the reductions set forth therein.
Section 2.6 Voluntary Commitment Reductions. The Borrowers shall have the
-------------------------------
right, at any time and from time to time after the Agreement Date and prior to
the Maturity Date, upon at least three (3) Business Days' prior written notice
to the Administrative Agent, without premium or penalty, to cancel or reduce
permanently all or a portion of the Revolving Loan Commitment on the basis of
the respective Commitment Ratios of the Banks applicable to the Revolving Loan
Commitment; provided, however, that any such partial reduction shall be made in
-------- -------
an amount not less than $5,000,000 and in an integral multiple of $1,000,000.
As of the date of cancellation or reduction set forth in such notice, the
Revolving Loan Commitment shall be permanently reduced to the amount stated in
such notice for all purposes herein, and the Borrowers shall, on a joint and
several basis, pay to the Administrative Agent for the Banks the amount
necessary to reduce the principal amount of the Loans then outstanding under
Revolving Loan Commitment to not more than the amount of Revolving Loan
Commitment as so reduced, together with accrued interest on the amount so
prepaid and commitment fees accrued through the date of the reduction with
respect to the amount reduced.
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<PAGE>
Section 2.7 Prepayments and Repayments.
--------------------------
(a) Prepayment. The principal amount of any Base Rate Advance
----------
may be prepaid in full or ratably in part at any time, without premium or
penalty and without regard to the Payment Date for such Advance. LIBOR Advances
may be prepaid prior to the applicable Payment Date, upon two (2) Business Days'
prior written notice, or telephonic notice followed immediately by written
notice, to the Administrative Agent; provided, however, that the Borrowers
------- -------
shall, jointly and severally, reimburse the Banks and the Administrative Agent,
on the earlier of demand by the applicable Bank or the Maturity Date, for any
loss or out-of-pocket expense incurred by any Bank or the Administrative Agent
in connection with such prepayment, as set forth in Section 2.10 hereof;
provided further, however, that either Borrower's failure to confirm any
- -------- ------- -------
telephonic notice with a written notice shall not invalidate any notice so given
if acted upon by the Administrative Agent. Any prepayment hereunder shall be in
amounts of not less than $1,000,000 and in an integral multiple thereof. Amounts
prepaid pursuant to this Section 2.7 (a) may be reborrowed, subject to the terms
and conditions hereof. Amounts prepaid shall be paid together with accrued
interest on the amount so prepaid and commitment fees accrued through the date
of the reduction with respect to the amount reduced.
(b) Repayments. The Borrowers shall repay the Loans, on a joint
----------
and several basis, as follows:
(i) Scheduled Repayments of the Term Loans. Commencing June 30,
--------------------------------------
2001, the principal balance of the Term Loans outstanding on June 29, 2001
shall be repaid in consecutive quarterly installments on June 30/th/,
September 30/th/, December 31/st/ and March 31/st/ of each year until paid
in full in such amounts as follows:
-34-
<PAGE>
<TABLE>
<CAPTION>
Percentage of Principal
of Term Loans Outstanding
on June 29, 2001 Due on
Repayment Dates Last Day of Each Quarter
--------------- ------------------------
<S> <C>
June 30, 2001, September 30, 2001
and December 31, 2001 2.500%
March 31, 2002, June 30, 2002,
September 30, 2002 and December 31, 2002 3.125%
March 31, 2003, June 30, 2003,
September 30, 2003 and December 31, 2003 3.750%
March 31, 2004, June 30, 2004,
September 30, 2004 and December 31, 2004 5.000%
March 31, 2005, June 30, 2005,
September 30, 2005 and December 31, 2005 5.625%
March 31, 2006, June 30, 2006 11.250%
</TABLE>
(ii) Revolving Loans in Excess of Revolving Loan Commitment. If,
------------------------------------------------------
at any time, the amount of the Revolving Loans shall exceed the Revolving
Loan Commitment, the Borrowers shall, on such date and subject to Section
2.10 hereof, make a repayment of the principal amount of the Revolving
Loans in an amount equal to such excess, together with any accrued interest
and fees with respect thereto.
(iii) Permitted Asset Sales. At any time after the aggregate
---------------------
Unreinvested Net Proceeds from all assets sales during the term of this
Agreement exceeds $5,000,000, on the Business Day following the date of
receipt by either Borrower or any Restricted Subsidiary of the Net Proceeds
of any asset sale, the Loans shall be repaid in an amount equal to, in the
aggregate, any Facility A Net Proceeds; provided, however, that either
-------- -------
Borrower may notify the Administrative Agent in writing that it intends to
use any or all of such Facility A Net Proceeds to acquire fixed or capital
assets permitted by Section 7.6 hereof or for the construction of new
towers within twelve (12) months of the date of receipt of such Facility A
Net Proceeds, in which case, the reduction in the Loans which is otherwise
required under this Section 2.7(b)(iii) up to the amount of the Facility A
Net Proceeds intended to be used need not be made, but if all or part of
such Facility A Net Proceeds are not used or irrevocably committed to be
used within such twelve (12) month period, the Loans shall be permanently
reduced by an amount equal to the portion of such Facility A
-35-
<PAGE>
Net Proceeds not so used or committed to be used on the earlier of (i) the
first day following the end of such twelve (12) month period and (ii) the
date on which the Borrowers have reasonably determined that such portion of
the Facility A Net Proceeds shall not be so used or committed to be used.
The amount of the Facility A Net Proceeds required to be repaid under this
Section 2.7(b)(iii) shall be applied to the Loans on a pro rata basis
between the Term Loans and the Revolving Loans then outstanding. Accrued
interest on the principal amount of the Loans being prepaid pursuant to
this Section 2.7(b)(iii) to the date of such prepayment will be paid by the
Borrowers concurrently with such principal prepayment.
(iv) Facility A Excess Cash Flow. On or prior to April 15, 2002
---------------------------
and on or prior to each April 15/th/ thereafter during the term of this
Agreement, the Loans shall be repaid in an amount equal to, in the
aggregate, the Facility A Excess Cash Flow for the fiscal year ended on the
immediately preceding December 31/st/. The amount of the Facility A Excess
Cash Flow required to be repaid under this Section 2.7(b)(iv) shall be
applied to the Loans on a pro rata basis between the Term Loans and the
Revolving Loans then outstanding. Accrued interest on the principal amount
of the Loans being prepaid pursuant to this Section 2.7(b)(iv) to the date
of such prepayment will be paid by the Borrowers concurrently with such
principal prepayment.
(v) Sale of Capital Stock and Debt Instruments. On the Business
------------------------------------------
Day following the date of receipt by the Parent, either Borrower or any
Restricted Subsidiary of any Facility A Capital Raise Proceeds, the Loans
shall be repaid in an amount equal to, in the aggregate, the Facility A
Capital Raise Proceeds. The amount of the Facility A Capital Raise
Proceeds required to be repaid under this Section 2.7(b)(v) shall be
applied to the Loans on a pro rata basis between the Term Loans and the
Revolving Loans then outstanding. Accrued interest on the principal amount
of the Loans being prepaid pursuant to this Section 2.7(b)(v) to the date
of such prepayment will be paid by the Borrowers concurrently with such
principal prepayment.
(vi) Maturity Date. In addition to the foregoing, a final payment
-------------
of all Obligations then outstanding shall be due and payable on the
Maturity Date.
Section 2.8 Notes; Loan Accounts.
--------------------
(a) The Loans shall be repayable in accordance with the terms and
provisions set forth herein and shall be evidenced by the Notes. One (1) Note
shall be payable to the order of each Bank, in accordance with such Bank's
respective Commitment Ratio. The Notes shall be issued on a joint and several
basis by the Borrowers to the Banks and shall be duly executed and delivered by
one or more Authorized Signatories. Any Bank (i) which is not a U.S. Person (a
"Non-U.S. Bank") and (ii) which could become completely exempt from withholding
-------------
of United States Federal income taxes in respect of payment of any
-36-
<PAGE>
obligations due to such Bank hereunder relating to any of its Loans if such
Loans were in registered form for United States Federal income tax purposes may
request the Borrowers (through the Administrative Agent), and the Borrowers
agree thereupon, to register such Loans as provided in Section 11.5(g) hereof
and to issue to such Bank Notes evidencing such Loans as Registered Notes or to
exchange Notes evidencing such Loans for new Registered Notes, as applicable.
Registered Notes may not be exchanged for Notes that are not in registered form.
(b) Each Bank may open and maintain on its books in the name of
the Borrowers a loan account with respect to its portion of the Loans and
interest thereon. Each Bank which opens such a loan account shall debit such
loan account for the principal amount of its portion of each Advance made by it
and accrued interest thereon, and shall credit such loan account for each
payment on account of principal of or interest on its Loans. The records of a
Bank with respect to the loan account maintained by it shall be prima facie
evidence of its portion of the Loans and accrued interest thereon absent
manifest error, but the failure of any Bank to make any such notations or any
error or mistake in such notations shall not affect the Borrowers' repayment
obligations with respect to such Loans.
Section 2.9 Manner of Payment.
-----------------
(a) Each payment (including, without limitation, any prepayment)
by the Borrowers on account of the principal of or interest on the Loans,
commitment fees and any other amount owed to the Banks or the Administrative
Agent or any of them under this Agreement or the Notes shall be made not later
than 1:00 p.m. (New York, New York time) on the date specified for payment under
this Agreement to the Administrative Agent at the Administrative Agent's Office,
for the account of the Banks or the Administrative Agent, as the case may be, in
lawful money of the United States of America in immediately available funds. Any
payment received by the Administrative Agent after 1:00 p.m. (New York, New York
time) shall be deemed received on the next Business Day. Receipt by the
Administrative Agent of any payment intended for any Bank or Banks hereunder
prior to 1:00 p.m. (New York, New York time) on any Business Day shall be deemed
to constitute receipt by such Bank or Banks on such Business Day. In the case of
a payment for the account of a Bank, the Administrative Agent will promptly, but
no later than the close of business on the date such payment is deemed received,
thereafter distribute the amount so received in like funds to such Bank. If the
Administrative Agent shall not have received any payment from the Borrowers as
and when due, the Administrative Agent will promptly notify the Banks
accordingly. In the event that the Administrative Agent shall fail to make
distribution to any Bank as required under this Section 2.9, the Administrative
Agent agrees to pay such Bank interest from the date such payment was due until
paid at the Federal Funds Rate.
-37-
<PAGE>
(b) The Borrowers agree to pay, on a joint and several basis,
principal, interest, fees and all other amounts due hereunder or under the Notes
without set-off or counterclaim or any deduction whatsoever.
(c) Prior to the acceleration of the Loans under Section 8.2
hereof, if some but less than all amounts due from the Borrowers are received by
the Administrative Agent with respect to the Obligations, the Administrative
Agent shall distribute such amounts in the following order of priority, all on a
pro rata basis to the Banks: (i) to the payment on a pro rata basis of any fees
or expenses then due and payable to the Administrative Agent or the Banks, or
any of them; (ii) to the payment of interest then due and payable on the Loans;
(iii) to the payment of all other amounts not otherwise referred to in this
Section 2.9(c) then due and payable to the Administrative Agent or the Banks, or
any of them, hereunder or under the Notes or any other Loan Document; and (iv)
to the payment of principal then due and payable on the Loans.
(d) Subject to any contrary provisions in the definition of
Interest Period, if any payment under this Agreement or any of the other Loan
Documents is specified to be made on a day which is not a Business Day, it shall
be made on the next Business Day, and such extension of time shall in such case
be included in computing interest and fees, if any, in connection with such
payment.
(e) Each Registered Noteholder (or, if such Registered Noteholder
is not the beneficial owner thereof, such beneficial owner) shall deliver to the
Borrowers (with a copy to the Administrative Agent) prior to or at the time it
becomes a Registered Noteholder, a Form 1001, 4224 or W-8 (or such successor and
related forms as may from time to time be adopted by the relevant taxing
authorities of the United States of America), together with an annual
certificate stating that such Registered Noteholder or beneficial owner, as the
case may be, is not a "bank" within the meaning of Section 881(c)(3)(A) of the
Code and is not otherwise described in Section 881(c)(3) of the Code. Each
Registered Noteholder or beneficial owner, as the case may be, shall promptly
notify the Borrowers (with a copy to the Administrative Agent) if at any time,
such Registered Noteholder or beneficial owner, as the case may be, determines
that it is no longer in a position to make the certification made in such
certificate to the Borrowers (or any other form of certification adopted by the
relevant taxing authorities of the United States of America for such purposes).
Section 2.10 Reimbursement.
-------------
(a) Whenever any Bank shall sustain or incur any losses or
reasonable out-of-pocket expenses in connection with (i) failure by either
Borrower to borrow any LIBOR Advance after having given notice of its intention
to borrow in accordance with Section 2.2 hereof (whether by reason of each
Borrower's election not to proceed or the non-fulfillment of any of the
conditions set forth in Article 3 hereof), or (ii) prepayment (or failure to
prepay after giving notice thereof) of any LIBOR Advance in whole or in part for
any reason, the
-38-
<PAGE>
Borrowers agree to pay, on a joint and several basis, to such Bank, upon such
Bank's demand, an amount sufficient to compensate such Bank for all such losses
and out-of-pocket expenses. Such Bank's good faith determination of the amount
of such losses or out-of-pocket expenses, as set forth in writing and
accompanied by calculations in reasonable detail demonstrating the basis for its
demand, shall be presumptively correct absent manifest error.
(b) Losses subject to reimbursement hereunder shall include,
without limiting the generality of the foregoing, lost margins, expenses
incurred by any Bank or any participant of such Bank permitted hereunder in
connection with the re-employment of funds prepaid, paid, repaid, not borrowed,
or not paid, as the case may be, and will be payable whether the Maturity Date
is changed by virtue of an amendment hereto (unless such amendment expressly
waives such payment) or as a result of acceleration of the Loans.
Section 2.11 Pro Rata Treatment.
------------------
(a) Advances. Each Advance from the Banks hereunder shall be
--------
made pro rata on the basis of the respective Commitment Ratios of the Banks.
(b) Payments. Each payment and prepayment of principal of the
--------
Loans, and, except as provided in Section 2.2(e) hereof and Article 10 hereof,
each payment of interest on the Loans, shall be made to the Banks pro rata on
the basis of their respective unpaid principal amounts outstanding under the
Notes immediately prior to such payment or prepayment. If any Bank shall obtain
any payment (whether involuntary, through the exercise of any right of set-off,
or otherwise) on account of the Loans in excess of its ratable share of the
Loans under its Commitment Ratio, such Bank shall forthwith purchase from the
other Banks such participations in the portion of the Loans made by them as
shall be necessary to cause such purchasing Bank to share the excess payment
ratably with each of them; provided, however, that if all or any portion of such
-------- -------
excess payment is thereafter recovered from such purchasing Bank, such purchase
from each Bank shall be rescinded and such Bank shall repay to the purchasing
Bank the purchase price to the extent of such recovery. The Borrowers agree that
any Bank so purchasing a participation from another Bank pursuant to this
Section 2.11(b) may, to the fullest extent permitted by law, exercise all its
rights of payment (including, without limitation, the right of set-off) with
respect to such participation as fully as if such Bank were the direct creditor
of the Borrowers in the amount of such participation.
Section 2.12 Capital Adequacy. If after the date hereof, the adoption of
----------------
any Applicable Law regarding the capital adequacy of banks or bank holding
companies, or any change in Applicable Law (whether adopted before or after the
Agreement Date) or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Bank (or the
bank holding company of such Bank) with any directive regarding capital adequacy
(whether or not having the force of law) of any such
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<PAGE>
governmental authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on any Bank's capital as a consequence of
its obligations hereunder with respect to the Loans and the Commitment to a
level below that which it could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's policies with respect to
capital adequacy immediately before such adoption, change or compliance and
assuming that such Bank's (or the bank holding company of such Bank) capital was
fully utilized prior to such adoption, change or compliance) by an amount
reasonably deemed by such Bank to be material, then, upon demand by such Bank,
the Borrowers shall promptly pay, on a joint and several basis, to such Bank
such additional amounts as shall be sufficient to compensate such Bank for such
reduced return, together with interest on such amount from the fourth (4th)
Business Day after the date of demand or the Maturity Date, as applicable, until
payment in full thereof at the Default Rate. A certificate of such Bank setting
forth the amount to be paid to such Bank by the Borrowers as a result of any
event referred to in this paragraph and supporting calculations in reasonable
detail shall be presumptively correct absent manifest error.
Section 2.13 Bank Tax Forms. On or prior to the Agreement Date and on or
--------------
prior to the first Business Day of each calendar year thereafter, each Bank
which is organized in a jurisdiction other than the United States shall provide
each of the Administrative Agent and the Borrowers (a), if such Bank is a "bank"
under Section 881(c)(3)(A) of the Code, with a properly executed originals of
Forms 4224 or 1001 (or any successor form) prescribed by the Internal Revenue
Service or other documents satisfactory to the Borrowers and the Administrative
Agent, and properly executed Internal Revenue Service Forms W-8 or W-9, as the
case may be, certifying (i) as to such Bank's status for purposes of determining
exemption from United States withholding taxes with respect to all payments to
be made to such Bank hereunder and under the Notes or (ii) that all payments to
be made to such Bank hereunder and under the Notes are subject to such taxes at
a rate reduced to zero by an applicable tax treaty, or (b), if such Bank is not
a "bank" within the meaning of Section 881(c)(3)(A) of the Code and intends to
claim exemption from U.S. Federal withholding tax under Section 871(h) or 881(c)
of the Code with respect to payments of "portfolio interest", a Form W-8, or any
subsequent versions thereof or successors thereto (and, if such Bank delivers a
Form W-8, a certificate representing that such Bank is not a bank for purposes
of Section 881(c) of the Code, is not a ten-percent (10%) shareholder (within
the meaning of Section 871(h)(3)(B) of the Code and is not a controlled foreign
corporation related to the Borrowers (within the meaning of Section 864(d)(4) of
the Code)), properly completed and duly executed by such Bank, indicating that
such Bank is entitled to receive payments under this Agreement without deduction
or withholding of any United States federal income taxes as permitted by the
Code. Each such Bank agrees to provide the Administrative Agent and the
Borrowers with new forms prescribed by the Internal Revenue Service upon the
expiration or obsolescence of any previously delivered form, or after the
occurrence of any event requiring a change in the most recent forms delivered by
it to the Administrative Agent and the Borrowers.
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<PAGE>
ARTICLE 3 Conditions Precedent
Section 3.1 Conditions Precedent to Effectiveness of this Agreement. The
--------------------------------------------------------
effectiveness of this Agreement is subject to the prior or contemporaneous
fulfillment of each of the following conditions:
(a) The Administrative Agent and the Banks shall have received
each of the following:
(i) this Agreement duly executed;
(ii) the loan certificate of ATS dated as of the Agreement Date,
in substantially the form attached hereto as Exhibit O, including a
---------
certificate of incumbency with respect to each Authorized Signatory of such
Person, together with the following items: (A) a true, complete and correct
copy of the Certificate of Formation and Limited Partnership and Agreement
of Limited Partnership of ATS as in effect on the Agreement Date, (B)
certificates of good standing for ATS issued by the Secretary of State or
similar state official for the state of formation of ATS and for each state
in which ATS is required to qualify to do business and (C) a true, complete
and correct copy of the corporate resolutions of the general partner of ATS
authorizing ATS to execute, deliver and perform this Agreement and the
other Loan Documents;
(iii) the loan certificate of ATS (Delaware) dated as of the
Agreement Date, in substantially the form attached hereto as Exhibit P,
---------
including a certificate of incumbency with respect to each Authorized
Signatory of such Person, together with the following items: (A) a true,
complete and correct copy of the Certificate of Incorporation and By-laws
of ATS (Delaware) as in effect on the Agreement Date, (B) certificates of
good standing for ATS (Delaware) issued by the Secretary of State or
similar state official for the state of incorporation of ATS (Delaware) and
for each state in which ATS (Delaware) is required to qualify to do
business, (C) a true, complete and correct copy of the corporate
resolutions of ATS (Delaware) authorizing ATS (Delaware) to execute,
deliver and perform this Agreement and the other Loan Documents, and (D) a
true, complete and correct copy of any shareholders' agreements or voting
trust agreements in effect with respect to the stock of ATS (Delaware);
(iv) the loan certificate of the Parent dated as of the
Agreement Date, in substantially the form attached hereto as Exhibit Q,
---------
including a certificate of incumbency with respect to each Authorized
Signatory of such Person, together with the following items: (A) a true,
complete and correct copy of the Certificate of Incorporation and By-laws
of the Parent as in effect on the Agreement Date,
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<PAGE>
(B) certificates of good standing for the Parent issued by the Secretary of
State or similar state official for the state of incorporation of the
Parent and for each state in which the Parent is required to qualify to do
business, (C) a true, complete and correct copy of the corporate
resolutions of the Parent authorizing the Parent to execute, deliver and
perform the Loan Documents to which it is a party, and (D) a true, complete
and correct copy of any shareholders' agreements or voting trust agreements
in effect with respect to the stock of the Parent;
(v) duly executed Notes;
(vi) duly executed Security Documents;
(vii) copies of insurance binders or certificates covering the
assets of the Borrowers and the Restricted Subsidiaries, and otherwise
meeting the requirements of Section 5.5 hereof, together with copies of the
underlying insurance policies;
(viii) legal opinion of Sullivan & Worcester LLP, counsel to the
Borrowers, addressed to each Bank and the Administrative Agent and dated as
of the Agreement Date;
(ix) duly executed Certificate of Financial Condition for the
Borrowers and the Restricted Subsidiaries on a consolidated and
consolidating basis, given by the chief financial officer of ATS
(Delaware);
(x) copies of the most recent quarterly financial statements
of the Borrowers and the Restricted Subsidiaries provided to each Bank and
each Administrative Agent, certified by the chief financial officer of ATS
(Delaware);
(xi) duly executed Intercreditor Agreement;
(xii) delivery to the Collateral Agent of all possessory
collateral, including, without limitation, any pledged notes or pledged stock;
and
(xiii) all such other documents as the Administrative Agent may
reasonably request, certified by an appropriate governmental official or an
Authorized Signatory if so requested.
(b) The Administrative Agent and the Banks shall have received
evidence satisfactory to them that all Necessary Authorizations, other than
Necessary Authorizations the absence of which could not reasonably be expected
to have, individually or in the aggregate, a Materially Adverse Effect,
including all necessary consents to the closing of this Agreement, have been
obtained or made, are in full force and effect and are not subject to any
pending or, to the knowledge of the Borrowers, threatened reversal or
cancellation, and
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<PAGE>
the Administrative Agent and the Banks shall have received a certificate of an
Authorized Signatory so stating.
(c) The Borrowers shall certify to the Administrative Agent and
the Banks that each of the representations and warranties in Article 4 hereof
are true and correct in all material respects as of the Agreement Date, that no
Default or Event of Default then exists or is continuing and that no material
adverse change has occurred in the financial condition, business operations,
prospects or properties of the Borrowers and the Restricted Subsidiaries, on a
consolidated basis, since the most recent fiscal year end and fiscal quarter
end, it being understood that the Separation Obligations shall not be deemed to
be such a material adverse change.
(d) The Borrowers shall have paid to the Administrative Agent for
the account of each Bank the facility fees set forth in those letter agreements
dated the Agreement Date in favor of each Bank and any and all fees payable by
the Borrowers under the Prior Loan Agreement.
(e) The Administrative Agent and the Banks shall have received
evidence satisfactory to them that all conditions precedent to the effectiveness
of the ATS Facility B Loan Agreement and the Parent Loan Agreement have been
satisfied (other than the provision comparable to this provision) and that the
ATS Facility B Loan Agreement and the Parent Loan Agreement have been duly
executed.
(f) The Administrative Agent and the Banks shall have received, in
form and substance satisfactory to them, evidence that the Parent has received
commitments to fund with equity, or has received equity proceeds to pay, one
hundred percent (100%) of the tax liabilities that are a part of the Separation
Obligations, to the extent such tax liabilities have not been paid.
(g) The Borrower shall have submitted a Request for Advance
requesting an Advance under the Term Loan Commitment of not less than
$125,000,000.
Section 3.2 Conditions Precedent to Each Advance. The obligation of the
------------------------------------
Banks to make each Advance on or after the Agreement Date is subject to the
fulfillment of each of the following conditions immediately prior to or
contemporaneously with such Advance:
(a) All of the representations and warranties of the Borrowers
under this Agreement and the other Loan Documents (including, without
limitation, all representations and warranties with respect to the Restricted
Subsidiaries), which, pursuant to Section 4.2 hereof, are made at and as of the
time of such Advance, shall be true and correct at such time in all material
respects, both before and after giving effect to the application of the proceeds
of such Advance, and after giving effect to any updates to information provided
to the Banks
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<PAGE>
in accordance with the terms of such representations and warranties, and no
Default hereunder shall then exist or be caused thereby;
(b) With respect to Advances which, if funded, would increase the
aggregate principal amount of Loans outstanding hereunder, the Administrative
Agent shall have received a duly executed Request for Advance;
(c) The Administrative Agent and the Banks shall have received all
such other certificates, reports, statements, opinions of counsel (if such
Advance is in connection with an Acquisition) or other documents as the
Administrative Agent or any Bank may reasonably request; and
(d) With respect to any Advance relating to any Acquisition or the
formation of any Restricted Subsidiary which is permitted hereunder, the
Administrative Agent and the Banks shall have received such documents and
instruments relating to such Acquisition or formation of a new Restricted
Subsidiary as are described in Section 5.13 hereof or otherwise required herein.
ARTICLE 4 Representations and Warranties
Section 4.1 Representations and Warranties. The Borrowers hereby agree,
------------------------------
represent and warrant, upon the Agreement Date and on the date of each Advance,
in favor of the Administrative Agent and each Bank that:
(a) Organization; Ownership; Power; Qualification. ATS is a
---------------------------------------------
limited partnership duly organized, validly existing and in good standing under
the laws of the State of Delaware, and ATS (Delaware) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each Borrower has the power and authority to own its properties and to
carry on its business as now being and as proposed hereafter to be conducted.
Except as set forth on Schedule 5 attached hereto, each Restricted Subsidiary
----------
is a corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation and has the corporate power and authority
to own its properties and to carry on its business as now being and as proposed
hereafter to be conducted. The Borrowers and the Restricted Subsidiaries are
duly qualified, in good standing and authorized to do business in each
jurisdiction in which the character of their respective properties or the nature
of their respective businesses requires such qualification or authorization,
except where failure to be so qualified, in the aggregate, could not reasonably
be expected to have a Materially Adverse Effect.
(b) Authorization; Enforceability. ATS has the partnership power
-----------------------------
and ATS (Delaware) has the corporate power and each has taken all necessary
action to authorize it to borrow hereunder, to execute, deliver and perform this
Agreement and each of the other Loan
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<PAGE>
Documents to which it is a party in accordance with their respective terms, and
to consummate the transactions contemplated hereby and thereby. This Agreement
has been duly executed and delivered by the Borrowers and is, and each of the
other Loan Documents to which the Borrowers are parties is, a legal, valid and
binding obligation of each Borrower and enforceable against each Borrower in
accordance with its terms, subject, as to enforcement of remedies, to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity.
(c) Subsidiaries: Authorization; Enforceability. The Restricted
-------------------------------------------
Subsidiaries and the direct and indirect ownership thereof by ATS and ATS
(Delaware) as of the Agreement Date are as set forth on Schedule 2 attached
----------
hereto, and, to the extent such Restricted Subsidiaries are corporations, ATS
and ATS (Delaware), as the case may be, have, subject to the provisions of the
Security Documents, the unrestricted right to vote the issued and outstanding
shares of each directly owned Restricted Subsidiary shown thereon and such
shares of such Restricted Subsidiaries have been duly authorized and issued and
are fully paid and nonassessable. Each Restricted Subsidiary that is a
corporation has the corporate power and has taken all necessary corporate action
to authorize it to execute, deliver and perform each of the Loan Documents to
which it is a party in accordance with their respective terms and to consummate
the transactions contemplated by this Agreement and by such Loan Documents.
Each of the Loan Documents to which any Restricted Subsidiary is party is a
legal, valid and binding obligation of such Restricted Subsidiary enforceable
against such Restricted Subsidiary in accordance with its terms, subject, as to
enforcement of remedies, to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity. The ownership interest in each of the Restricted
Subsidiaries represents a direct or indirect controlling interest by ATS or ATS
(Delaware) of such Restricted Subsidiary for purposes of directing or causing
the direction of the management and policies of each Restricted Subsidiary.
(d) Compliance with Other Loan Documents and Contemplated
-----------------------------------------------------
Transactions. The execution, delivery and performance, in accordance with their
respective terms, by the Borrowers of this Agreement and the Notes, and by the
Borrowers and the Restricted Subsidiaries of each of the other Loan Documents to
which they are respectively party, and the consummation of the transactions
contemplated hereby and thereby, do not and will not (i) require any consent or
approval, governmental or otherwise, not already obtained, (ii) violate any
Applicable Law respecting either Borrower or any Restricted Subsidiary, (iii)
conflict with, result in a breach of, or constitute a default under the
certificate or articles of incorporation or by-laws or partnership agreements,
as the case may be, as amended, of either Borrower or of any Restricted
Subsidiary, or under any material indenture, agreement, or other instrument,
including without limitation the Licenses, to which either Borrower or any
Restricted Subsidiary is a party or by which any of them or their respective
properties may be bound, or (iv) result in or require the creation or imposition
of any Lien upon or with respect
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<PAGE>
to any property now owned or hereafter acquired by either Borrower or any
Restricted Subsidiary, except for Permitted Liens.
(e) Business. The Borrowers, together with their Subsidiaries, are
--------
engaged in the business of owning, constructing, managing, operating, and
investing in communications tower facilities and in the video, voice and data
transmission business.
(f) Licenses, etc. The Licenses have been duly issued and are in full
--------------
force and effect. The Borrowers and the Restricted Subsidiaries are in
compliance in all material respects with all of the provisions thereof. The
Borrowers and the Restricted Subsidiaries have secured all Necessary
Authorizations, except for such Necessary Authorizations the failure of which to
secure would not reasonably be expected to have, individually or in the
aggregate, a Materially Adverse Effect, and all such Necessary Authorizations
are in full force and effect. Neither any License nor any Necessary
Authorization is the subject of any pending or, to the best of either Borrower's
knowledge, threatened revocation which, if determined adversely to either
Borrower or any Restricted Subsidiary would not reasonably be expected to have,
individually or in the aggregate, a Materially Adverse Effect.
(g) Compliance with Law. The Borrowers and the Restricted
-------------------
Subsidiaries are in compliance with all Applicable Law, except where the failure
to be in compliance would not individually or in the aggregate have a Materially
Adverse Effect.
(h) Title to Assets. As of the Agreement Date, the Borrowers and the
---------------
Restricted Subsidiaries have good, legal and marketable title to, or a valid
leasehold interest in, all of their respective assets, except for such
exceptions as would not reasonably be expected to have, individually or in the
aggregate, a Materially Adverse Effect. None of the properties or assets of
either Borrower or any of the Restricted Subsidiaries is subject to any Liens,
except for Permitted Liens and Liens under the Prior Loan Agreement and related
documents. Except for financing statements evidencing Permitted Liens, no
financing statement under the Uniform Commercial Code as in effect in any
jurisdiction and no other filing which names either Borrower or any Restricted
Subsidiary as debtor or which covers or purports to cover any of the assets of
either Borrower or any Restricted Subsidiary is currently effective and on file
in any state or other jurisdiction, other than such financing statements, if
any, as to which the obligations secured thereby have been repaid in their
entirety, and neither Borrower nor any Restricted Subsidiary has signed any such
financing statement or filing or any security agreement authorizing any secured
party thereunder to file any such financing statement or filing other than the
Prior Loan Agreement and related documents.
(i) Litigation. As of the Agreement Date, there is no action, suit,
----------
proceeding or investigation pending against, or, to the knowledge of the
Borrowers, threatened against or in any other manner relating adversely to,
either Borrower or any Restricted Subsidiary or any of their respective
properties, including without limitation the
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<PAGE>
Licenses, in any court or before any arbitrator of any kind or before or by any
governmental body (including, without limitation, the FCC) except as set forth
on Schedule 6 attached hereto (as such schedule may be updated from time to
----------
time). No such action, suit, proceeding or investigation (i) calls into question
the validity of this Agreement or any other Loan Document, or (ii) individually
or collectively involves the possibility of any judgment or liability not fully
covered by insurance which, if determined adversely to either Borrower or any
Restricted Subsidiary, would have a Materially Adverse Effect.
(j) Taxes. All federal, state and other tax returns of the Borrowers
-----
and each Restricted Subsidiary required by law to be filed have been duly filed
and all federal, state and other taxes, including, without limitation,
withholding taxes, assessments and other governmental charges or levies required
to be paid by either Borrower or any Restricted Subsidiary or imposed upon
either Borrower or any Restricted Subsidiary or any of their respective
properties, income, profits or assets, which are due and payable, have been
paid, except any such taxes (i) (x) the payment of which either Borrower or any
Restricted Subsidiary is diligently contesting in good faith by appropriate
proceedings, (y) for which adequate reserves have been provided on the books of
such Person, and (z) as to which no Lien other than a Permitted Lien has
attached and no foreclosure, distraint, sale or similar proceedings have been
commenced, or (ii) which may result from audits not yet conducted. The charges,
accruals and reserves on the books of each Borrower and each of the Restricted
Subsidiaries in respect of taxes are, in the judgment of the Borrowers,
adequate.
(k) Financial Statements. The Borrowers have furnished or caused to
--------------------
be furnished to the Administrative Agent and the Banks as of the Agreement Date,
the audited financial statements for the Parent and its Subsidiaries on a
consolidated basis for the fiscal year ended December 31, 1997, and unaudited
financial statements for the Parent and the Restricted Subsidiaries for the
fiscal quarter ended March 31, 1998, all of which have been prepared in
accordance with GAAP and present fairly in all material respects the financial
position of the Borrowers and the Restricted Subsidiaries on a consolidated
basis, on and as at such dates and the results of operations for the periods
then ended (subject, in the case of unaudited financial statements, to normal
year-end and audit adjustments). Neither Borrower nor any of the Restricted
Subsidiaries has any material liabilities, contingent or otherwise, other than
as disclosed in the financial statements referred to in the preceding sentence
or as set forth or referred to in this Agreement.
(l) No Material Adverse Change. There has occurred no event since
--------------------------
December 31, 1997 which has or which could reasonably be expected to have a
Materially Adverse Effect other than the Separation Obligations.
(m) ERISA. Each Borrower and each Restricted Subsidiary and each of
-----
their respective Plans are in compliance with ERISA and the Code, except to the
extent that the failure to so comply could not reasonably be expected to have a
Materially Adverse Effect, and neither Borrower nor any of their ERISA
Affiliates, including their Subsidiaries,
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<PAGE>
has incurred any accumulated funding deficiency with respect to any such Plan
within the meaning of ERISA or the Code. The Borrowers, each of their Restricted
Subsidiaries, and each other ERISA Affiliate have complied in all material
respects with all requirements of ERISA. Neither Borrower nor any of its
Restricted Subsidiaries has made any promises of retirement or other benefits to
employees, except as set forth in the Plans, in written agreements with such
employees, or in such Person's employee handbook and memoranda to employees.
Neither Borrower nor any of its ERISA Affiliates, including their Subsidiaries,
has incurred any material liability to PBGC in connection with any such Plan.
The assets of each such Plan which is subject to Title IV of ERISA are
sufficient to provide the benefits under such Plan, the payment of which PBGC
would guarantee if such Plan were terminated, and such assets are also
sufficient to provide all other "benefit liabilities" (within the meaning of
Section 4041 of ERISA) due under the Plan upon termination. No Reportable Event
has occurred and is continuing with respect to any such Plan. No such Plan or
trust created thereunder, or party in interest (as defined in Section 3(14) of
ERISA), or any fiduciary (as defined in Section 3(21) of ERISA), has engaged in
a "prohibited transaction" (as such term is defined in Section 406 of ERISA or
Section 4975 of the Code) which would subject such Plan or any other Plan of
either Borrower or any Restricted Subsidiary, any trust created thereunder, or
any such party in interest or fiduciary, or any party dealing with any such Plan
or any such trust, to the tax or penalty on "prohibited transactions" imposed by
Section 502 of ERISA or Section 4975 of the Code. Neither Borrower nor any of
its ERISA Affiliates, including their Subsidiaries, is or has been obligated to
make any payment to a Multiemployer Plan.
(n) Compliance with Regulations T, U and X. Neither Borrower nor any
--------------------------------------
of the Restricted Subsidiaries is engaged principally or as one of its important
activities in the business of extending credit for the purpose of purchasing or
carrying, and neither Borrower nor any Restricted Subsidiary owns or presently
intends to acquire, any "margin security" or "margin stock" as defined in
Regulations T, U, and X (12 C.F.R. Parts 220, 221 and 224) (the "Regulations")
of the Board of Governors of the Federal Reserve System (herein called "margin
stock"). None of the proceeds of the Loans will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin stock or for
the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry margin stock or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of the
Regulations. Neither Borrower has taken, caused or authorized to be taken, and
will not take any action which might cause this Agreement or the Notes to
violate any of the Regulations or any other regulation of the Board of Governors
of the Federal Reserve System or to violate the Exchange Act, in each case as
now in effect or as the same may hereafter be in effect. If so requested by the
Administrative Agent, the Borrowers will furnish the Administrative Agent with
(i) a statement or statements in conformity with the requirements of Federal
Reserve Form U-I referred to in Regulation U of the Board of Governors of the
Federal Reserve System and (ii) other documents evidencing its compliance with
the margin regulations, reasonably requested by the Administrative Agent.
Neither the
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<PAGE>
making of the Loans nor the use of proceeds thereof will violate, or be
inconsistent with, the provisions of any of the Regulations.
(o) Investment Company Act. Neither Borrower nor any of the
----------------------
Restricted Subsidiaries is required to register under the provisions of the
Investment Company Act of 1940, as amended, and neither the entering into or
performance by the Borrowers and the Restricted Subsidiaries of this Agreement
and the Loan Documents nor the issuance of the Notes violates any provision of
such Act or requires any consent, approval or authorization of, or registration
with, the Securities and Exchange Commission or any other governmental or public
body or authority pursuant to any provisions of such Act.
(p) Governmental Regulation. Neither Borrower nor any of the
-----------------------
Restricted Subsidiaries is required to obtain any consent, approval,
authorization, permit or license which has not already been obtained from, or
effect any filing or registration which has not already been effected with, any
federal, state or local regulatory authority in connection with the execution
and delivery of this Agreement or any other Loan Document. Neither Borrower nor
any Restricted Subsidiary is required to obtain any consent, approval,
authorization, permit or license which has not already been obtained from, or
effect any filing or registration which has not already been effected with, any
federal, state or local regulatory authority in connection with the performance,
in accordance with their respective terms, of this Agreement or any other Loan
Document, other than filing of appropriate UCC financing statements.
(q) Absence of Default, Etc. The Borrower and the Restricted
------------------------
Subsidiaries are in compliance in all respects with all of the provisions of
their respective partnership agreements, Certificates or Articles of
Incorporation and By-Laws, as the case may be, and no event has occurred or
failed to occur (including, without limitation, any matter which could create a
Default hereunder by cross-default) which has not been remedied or waived, the
occurrence or non-occurrence of which constitutes, (i) a Default or (ii) a
material default by either Borrower or any Restricted Subsidiary under any
indenture, agreement or other instrument relating to Indebtedness of such Person
in the amount of $1,000,000 or more in the aggregate, any material License, or
any judgment, decree or order to which either Borrower or any Restricted
Subsidiary is a party or by which either Borrower or any Restricted Subsidiary
or any of its respective properties may be bound or affected.
(r) Accuracy and Completeness of Information. All information,
----------------------------------------
reports, prospectuses and other papers and data relating to the Borrowers or any
Restricted Subsidiary and furnished by or on behalf of the Borrowers or any
Restricted Subsidiary to the Administrative Agent or the Banks, taken as a
whole, were, at the time furnished, true, complete and correct in all material
respects to the extent necessary to give the Administrative Agent and the Banks
true and accurate knowledge of the subject matter, and all projections,
consisting of a statement of operating statistics, an income statement summary,
a debt repayment schedule and pro forma compliance calculations (the
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<PAGE>
"Projections") (i) disclose all assumptions made with respect to costs, general
- ------------
economic conditions, and financial and market conditions formulating the
Projections; (ii) are based on reasonable estimates and assumptions; and (iii)
reflect, as of the date prepared, and continue to reflect, as of the date
hereof, the reasonable estimate of the Borrowers of the results of operations
and other information projected therein for the periods covered thereby.
(s) Agreements with Affiliates. Except for agreements or arrangements
--------------------------
with Affiliates wherein the Borrowers or one or more of the Restricted
Subsidiaries provides services to or receives services from such Affiliates for
fair consideration or which are set forth on Schedule 7 attached hereto, neither
----------
Borrower nor any Restricted Subsidiary has (i) any written agreements or binding
arrangements of any kind with any Affiliate or (ii) any management or consulting
agreements of any kind with any Affiliate, other than (x) those among the
Borrowers and the Restricted Subsidiaries and/or the Parent, and (y) employment
arrangements with executive officers, including, without limitation, stock
option grants of the Parent.
(t) Payment of Wages. Each Borrower and each Restricted Subsidiary is
----------------
in compliance with the Fair Labor Standards Act, as amended, in all material
respects, and to the knowledge of the Borrowers and each Restricted Subsidiary,
such Persons have paid all minimum and overtime wages required by law to be paid
to their respective employees.
(u) Priority. The Security Interest is a valid and, upon filing of
--------
appropriate UCC financing statements and/or mortgages, will be a perfected first
priority security interest in the Collateral in favor of the Administrative
Agent, for the benefit of itself and the Banks, securing, in accordance with the
terms of the Security Documents, the Obligations, and the Collateral is subject
to no Liens other than Permitted Liens. The Liens created by the Security
Documents are enforceable as security for the Obligations in accordance with
their terms with respect to the Collateral subject, as to enforcement of
remedies, to the following qualifications: (i) an order of specific performance
and an injunction are discretionary remedies and, in particular, may not be
available where damages are considered an adequate remedy at law, and (ii)
enforcement may be limited by bankruptcy, insolvency, liquidation,
reorganization, reconstruction and other similar laws affecting enforcement of
creditors' rights generally (insofar as any such law relates to the bankruptcy,
insolvency or similar event of either Borrower or any of the Restricted
Subsidiaries, as the case may be).
(v) Indebtedness. Except as shown on the financial statements of the
------------
Parent for the fiscal quarter ended March 31, 1998, or as described on Schedule
--------
8 attached hereto, none of the Parent, either Borrower, nor any of the
- -
Restricted Subsidiaries has outstanding, as of the Agreement Date, and after
giving effect to the initial Advances hereunder on the Agreement Date, any
Indebtedness for Money Borrowed.
(w) Solvency. As of the Agreement Date and after giving effect to the
--------
transactions contemplated by the Loan Documents (i) the property of the
Borrowers, at a fair valuation, will exceed their debt; (ii) the capital of the
Borrowers will not be unreasonably
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small to conduct their business; (iii) the Borrowers will not have incurred
debts, or have intended to incur debts, beyond their ability to pay such debts
as they mature; and (iv) the present fair salable value of the assets of the
Borrowers will be greater than the amount that will be required to pay their
probable liabilities (including debts) as they become absolute and matured. For
purposes of this Section, "debt" means any liability on a claim, and "claim"
---- -----
means (i) the right to payment, whether or not such right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
undisputed, legal, equitable, secured or unsecured, or (ii) the right to an
equitable remedy for breach of performance if such breach gives rise to a right
to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, undisputed, secured or
unsecured.
(x) Year 2000 Compliance.
--------------------
(i) The Borrowers have (i) begun analyzing the operations of
the Borrowers and their Subsidiaries that could be adversely affected by
failure to become Year 2000 compliant (that is, that computer applications,
imbedded microchips and other systems will be able to perform date-
sensitive functions prior to and after December 31, 1999) and (ii)
developed a plan for becoming Year 2000 compliant in a timely manner, the
implementation of which is on schedule in all material respects. The
Borrowers reasonably believe that they will become Year 2000 compliant for
their operations and those of their Subsidiaries on a timely basis except
to the extent that a failure to do so could not reasonably be expected to
have a Materially Adverse Effect.
(ii) The Borrowers reasonably believe any suppliers and vendors
that are material to the operations of the Borrowers or their Subsidiaries
will be Year 2000 compliant for their own computer applications except to
the extent that a failure to do so could not reasonably be expected to have
a Materially Adverse Effect.
(iii) The Borrowers will promptly notify the Administrative
Agent and the Banks in the event the Borrowers determine that any computer
application which is material to the operations of the Borrowers, their
Subsidiaries or any of their material vendors or suppliers will not be
fully Year 2000 compliant on a timely basis, except to the extent that such
failure could not reasonably be expected to have a Materially Adverse
Effect.
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Section 4.2 Survival of Representations and Warranties, Etc. All
------------------------------------------------
representations and warranties made under this Agreement and any other Loan
Document shall be deemed to be made, and shall be true and correct in all
material respects, at and as of the Agreement Date and on the date of each
Advance except to the extent relating specifically to the Agreement Date. All
representations and warranties made under this Agreement and the other Loan
Documents shall survive, and not be waived by, the execution hereof by the Banks
and the Administrative Agent, any investigation or inquiry by any Bank or the
Administrative Agent, or the making of any Advance under this Agreement.
ARTICLE 5 General Covenants
So long as any of the Obligations is outstanding and unpaid or the Banks
have an obligation to fund Advances hereunder (whether or not the conditions to
borrowing have been or can be fulfilled), and unless the Majority Banks, or such
greater number of Banks as may be expressly provided herein, shall otherwise
consent in writing:
Section 5.1 Preservation of Existence and Similar Matters. Except as
---------------------------------------------
permitted under Section 7.4 hereof, the Borrowers will, and will cause each of
the Restricted Subsidiaries to:
(a) preserve and maintain its existence, and its material rights,
franchises, licenses and privileges in the state of its incorporation,
including, without limiting the foregoing, the Licenses and all other Necessary
Authorizations, except where the failure to do so could not reasonably be
expected to have a Materially Adverse Effect; and
(b) qualify and remain qualified and authorized to do business in
each jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization, except for such failure
to so qualify and be so authorized as could not reasonably be expected to have a
Materially Adverse Effect.
Section 5.2 Business; Compliance with Applicable Law. The Borrowers will,
----------------------------------------
and will cause each of the Restricted Subsidiaries to, (a) engage in the
business of owning, constructing, managing, operating and investing in
communications tower facilities and related businesses and not engage in any
unrelated activities, and (b) comply in all material respects with the
requirements of all Applicable Law.
Section 5.3 Maintenance of Properties. The Borrowers will, and will cause
-------------------------
each of the Restricted Subsidiaries to, maintain or cause to be maintained in
the ordinary course of business in good repair, working order and condition
(reasonable wear and tear excepted) all properties used in their respective
businesses (whether owned or held under lease), other than obsolete equipment or
unused assets and from time to time make or cause to be made all
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needed and appropriate repairs, renewals, replacements, additions, betterments
and improvements thereto.
Section 5.4 Accounting Methods and Financial Records. The Borrowers will,
----------------------------------------
and will cause each of the Restricted Subsidiaries on a consolidated and
consolidating basis to, maintain a system of accounting established and
administered in accordance with GAAP, keep adequate records and books of account
in which complete entries will be made in accordance with GAAP and reflecting
all transactions required to be reflected by GAAP, and keep accurate and
complete records of their respective properties and assets. The Borrowers and
the Restricted Subsidiaries will maintain a fiscal year ending on December 31.
Section 5.5 Insurance. The Borrowers will, and will cause each of the
---------
Restricted Subsidiaries to:
(a) Maintain insurance including, but not limited to, business
interruption coverage and public liability coverage insurance from responsible
companies in such amounts and against such risks to the Borrowers and each
Restricted Subsidiary as is prudent for similarly situated companies engaged in
the communications tower industry.
(b) Keep their respective assets insured by insurers on terms and
in a manner reasonably acceptable to the Administrative Agent against loss or
damage by fire, theft, burglary, loss in transit, explosions and hazards insured
against by extended coverage, in amounts which are prudent for the
communications tower management and operation industry and reasonably
satisfactory to the Administrative Agent, all premiums thereon to be paid by the
Borrowers and the Restricted Subsidiaries.
(c) Require that each insurance policy provide for at least thirty
(30) days' prior written notice to the Collateral Agent of any termination of or
proposed cancellation or nonrenewal of such policy, and name the Collateral
Agent as additional named lender loss payee and, as appropriate, additional
insured, to the extent of the Obligations.
Section 5.6 Payment of Taxes and Claims. The Borrowers will, and will
---------------------------
cause each Restricted Subsidiary to, pay and discharge all taxes, including,
without limitation, withholding taxes, assessments and governmental charges or
levies required to be paid by them or imposed upon them or their income or
profits or upon any properties belonging to them, prior to the date on which
penalties attach thereto, and all lawful claims for labor, materials and
supplies which, if unpaid, might become a Lien or charge upon any of their
properties; provided, however, that no such tax, assessment, charge, levy or
-------- -------
claim need be paid which is being diligently contested in good faith by
appropriate proceedings and for which adequate reserves shall have been set
aside on the appropriate books, but only so long as such tax, assessment,
charge, levy or claim does not become a Lien or charge other than a Permitted
Lien and no foreclosure, distraint, sale or similar proceedings shall have been
commenced. The
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Borrowers will, and will cause each Restricted Subsidiary to, timely file all
information returns required by federal, state or local tax authorities.
Section 5.7 Compliance with ERISA.
---------------------
(a) The Borrowers shall, and shall cause their Subsidiaries to,
make all contributions to any Employee Pension Plan when such contributions are
due and not incur any "accumulated funding deficiency" within the meaning of
Section 412(a) of the Code, whether or not waived, and will otherwise comply
with the requirements of the Code and ERISA with respect to the operation of all
Plans, except to the extent that the failure to so comply could not have a
Materially Adverse Effect.
(b) The Borrowers shall, and shall cause their Subsidiaries to,
comply in all respects with the requirements of ERISA with respect to any Plans
subject to the requirements thereof, except to the extent that the failure to so
comply could not have a Materially Adverse Effect.
(c) The Borrowers shall furnish to the Administrative Agent (i)
within 30 days after any officer of ATS (Delaware) or ATSC GP obtains knowledge
that a "prohibited transaction" (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) has occurred with respect to any Plan of either
Borrower or their ERISA Affiliates, including their Subsidiaries, that any
Reportable Event has occurred with respect to any Employee Pension Plan or that
PBGC has instituted or will institute proceedings under Title IV of ERISA to
terminate any Employee Pension Plan or to appoint a trustee to administer any
Employee Pension Plan, a statement setting forth the details as to such
prohibited transaction, Reportable Event or termination or appointment
proceedings and the action which it (or any other Employee Pension Plan sponsor
if other than a Borrower) proposes to take with respect thereto, together with a
copy of the notice of such Reportable Event given to PBGC if a copy of such
notice is available to a Borrower, any of its Subsidiaries or any of its ERISA
Affiliates, (ii) promptly after receipt thereof, a copy of any notice either
Borrower, any of its Subsidiaries or any of their ERISA Affiliates or the
sponsor of any Plan receives from PBGC or the Internal Revenue Service or the
Department of Labor which sets forth or proposes any action or determination
with respect to such Plan, (iii) promptly after the filing thereof, any annual
report required to be filed pursuant to ERISA in connection with each Plan
maintained by either Borrower or any of its ERISA Affiliates, including their
Subsidiaries, and (iv) promptly upon the Administrative Agent's request
therefor, such additional information concerning any such Plan as may be
reasonably requested by the Administrative Agent.
(d) The Borrowers will promptly notify the Administrative Agent of
any excise taxes which have been assessed or which either Borrower, any of its
Subsidiaries or any of its ERISA Affiliates has reason to believe may be
assessed against either Borrower, any of its Subsidiaries or any of its ERISA
Affiliates by the Internal Revenue Service or the
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<PAGE>
Department of Labor with respect to any Plan of either Borrower or its ERISA
Affiliates, including its Subsidiaries.
(e) Within the time required for notice to the PBGC under Section
302(f)(4)(A) of ERISA, the Borrowers will notify the Administrative Agent of any
lien arising under Section 302(f) of ERISA in favor of any Plan of either
Borrower or its ERISA Affiliates, including its Subsidiaries.
(f) The Borrowers will not, and will not permit any of their
Subsidiaries or any of their ERISA Affiliates, to take any of the following
actions or permit any of the following events to occur if such action or event
together with all other such actions or events would subject either Borrower,
any of its Subsidiaries, or any of its ERISA Affiliates to any tax, penalty, or
other liabilities which could have a Materially Adverse Effect:
(i) engage in any transaction in connection with which
either Borrower, any of its Subsidiaries or any ERISA Affiliate could be
subject to either a civil penalty assessed pursuant to Section 502(i) of
ERISA or a tax imposed by Section 4975 of the Code;
(ii) terminate any Employee Pension Plan in a manner, or take
any other action, which could result in any liability of either Borrower,
any of its Subsidiaries or any ERISA Affiliate to the PBGC;
(iii) fail to make full payment when due of all amounts which,
under the provisions of any Plan, either Borrower, any of its Subsidiaries
or any ERISA Affiliate is required to pay as contributions thereto, or
permit to exist any accumulated funding deficiency within the meaning of
Section 412(a) of the Code, whether or not waived, with respect to any
Employee Pension Plan; or
(iv) permit the present value of all benefit liabilities
under all Employee Pension Plans which are subject to Title IV of ERISA to
exceed the present value of the assets of such Plans allocable to such
benefit liabilities (within the meaning of Section 4041 of ERISA), except
as may be permitted under actuarial funding standards adopted in accordance
with Section 412 of the Code.
Section 5.8 Visits and Inspections. The Borrowers will, and will cause
----------------------
each Restricted Subsidiary to, permit representatives of the Administrative
Agent and any of the Banks, upon reasonable notice, to (a) visit and inspect the
properties of the Borrowers or any Restricted Subsidiary during business hours,
(b) inspect and make extracts from and copies of their respective books and
records, and (c) discuss with their respective principal officers their
respective businesses, assets, liabilities, financial positions, results of
operations and business prospects. The Borrowers and each Restricted Subsidiary
will also permit representatives of the Administrative Agent and any of the
Banks to discuss with their
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<PAGE>
respective accountants the businesses, assets, liabilities, financial positions,
results of operations and business prospects of such Person.
Section 5.9 Payment of Indebtedness; Loans. Subject to any provisions
------------------------------
herein or in any other Loan Document, the Borrowers will, and will cause each
Restricted Subsidiary to, pay any and all of their respective Indebtedness when
and as it becomes due, other than amounts diligently disputed in good faith and
for which adequate reserves have been set aside in accordance with GAAP.
Section 5.10 Use of Proceeds. The Borrowers will use the aggregate
---------------
proceeds of all Advances under the Loans directly or indirectly:
(a) to refinance the Indebtedness for Money Borrowed as set
forth on Schedule 8 attached hereto;
----------
(b) to fund Acquisitions and Investments (including, without
limitation, investments in Unrestricted Subsidiaries) permitted under Section
7.6 hereof;
(c) to fund Capital Expenditures; and
(d) for working capital needs and other general corporate
purposes of the Borrowers and the Restricted Subsidiaries, including, without
limitation, the fees and expenses incurred in connection with the execution and
delivery of this Agreement, to make advances to the Parent to fund the
Separation Obligations (other than the tax portion of the Separation
Obligation), and other costs associated with transactions contemplated by this
Agreement, in each case, which do not otherwise conflict with this Section 5.10.
No proceeds of Advances hereunder shall be used for the purchase or carrying or
the extension of credit for the purpose of purchasing or carrying, any margin
stock within the meaning of the Regulations.
Section 5.11 Indemnity. The Borrowers jointly and severally agree to
---------
indemnify and hold harmless each Bank, the Administrative Agent, and each of
their respective affiliates, employees, representatives, shareholders, officers
and directors (any of the foregoing shall be an "Indemnitee") from and against
----------
any and all claims, liabilities, losses, damages, actions, reasonable attorneys'
fees and expenses (as such fees and expenses are incurred) and demands by any
party, including the costs of investigating and defending such claims, whether
or not either Borrower, any Restricted Subsidiary or the Person seeking
indemnification is the prevailing party (a) resulting from any breach or alleged
breach by either Borrower or any Restricted Subsidiary of any representation or
warranty made hereunder or under any Loan Document; or (b) otherwise arising out
of (i) the Commitment or otherwise under this Agreement, any Loan Document or
any transaction contemplated hereby or thereby, including, without limitation,
the use of the proceeds of Loans hereunder
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<PAGE>
in any fashion by either Borrower or the performance of their respective
obligations under the Loan Documents by either Borrower or any Restricted
Subsidiary, (ii) allegations of any participation by the Banks, the
Administrative Agent, or any of them, in the affairs of either Borrower or any
of its Subsidiaries, or allegations that any of them has any joint liability
with either Borrower or any of its Restricted Subsidiaries for any reason, (iii)
any claims against the Banks, the Administrative Agent, or any of them, by any
shareholder or other investor in or lender to either Borrower or any of the
Restricted Subsidiaries, by any brokers or finders or investment advisers or
investment bankers retained by either Borrower or by any other third party,
arising out of the Commitment or otherwise under this Agreement; or (c) in
connection with taxes (not including federal or state income or franchise taxes
or other taxes based solely upon the revenues or income of such Persons), fees,
and other charges payable in connection with the Loans, or the execution,
delivery, and enforcement of this Agreement, the Security Documents, the other
Loan Documents, and any amendments thereto or waivers of any of the provisions
thereof, unless the Person seeking indemnification hereunder is determined in
such case to have acted with gross negligence or willful misconduct, in any
case, by a final, non-appealable judicial order. The obligations of the
Borrowers under this Section 5.11 are in addition to, and shall not otherwise
limit, any liabilities which either Borrower might otherwise have in connection
with any warranties or similar obligations of such Person in any other Loan
Document.
Section 5.12 Interest Rate Hedging. Within sixty (60) days of the
---------------------
Agreement Date and forty-five (45) days after each Advance, the Borrowers shall
enter into (and shall at all times thereafter maintain for a period of not less
than two (2) years) one or more Interest Hedge Agreements with respect to the
interest obligations on not less than fifty percent (50%) of the principal
amount of the Loans and Facility B Loans outstanding from time to time. Such
Interest Hedge Agreements shall provide interest rate protection in conformity
with International Swap Dealers Association standards and for an average period
of at least two (2) years from the date of such Interest Hedge Agreements or, if
earlier, until the Maturity Date on terms reasonably acceptable to the
Administrative Agent, such terms to include consideration of the
creditworthiness of the other party to the proposed Interest Hedge Agreement.
All Obligations of the Borrowers to either the Administrative Agent or any of
the Banks pursuant to any Interest Hedge Agreement and all Liens granted to
secure such Obligations shall rank pari passu with all other Obligations and
Liens securing such other Obligations up to the then effective amount of the
Commitments; and any Interest Hedge Agreement between either Borrower and any
other Person shall be unsecured.
Section 5.13 Covenants Regarding Formation of Restricted Subsidiaries and
------------------------------------------------------------
Acquisitions; Partnership, Subsidiaries. At the time of (i) any Acquisition
- ---------------------------------------
permitted hereunder, (ii) the purchase by either Borrower or any of the
Restricted Subsidiaries of any interests in any Restricted or Unrestricted
Subsidiary, or (iii) the formation of any new Restricted or Unrestricted
Subsidiary which is permitted under this Agreement, the Borrowers will, and will
cause the Restricted Subsidiaries, as appropriate, to (a) provide to the
Collateral Agent an executed Subsidiary Security Agreement for any new
Restricted
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Subsidiary, in substantially the form of Exhibit M attached hereto, together
---------
with appropriate UCC-1 financing statements, as well as an executed
Subsidiary Guaranty for such new Restricted Subsidiary, in substantially the
form of Exhibit K attached hereto, which shall constitute both Security
---------
Documents and Loan Documents for purposes of this Agreement, as well as a loan
certificate for such new Restricted Subsidiary, substantially in the form of
Exhibit R attached hereto, together with appropriate attachments; (b) pledge to
- ---------
the Collateral Agent all of the stock or partnership interests (or other
instruments or securities evidencing ownership) of such Restricted Subsidiary or
Unrestricted Subsidiary or Person which is acquired or formed, beneficially
owned by either Borrower or any Restricted Subsidiary, as the case may be, as
additional Collateral for the Obligations to be held by the Collateral Agent in
accordance with the terms of the Pledge Agreement or a new Subsidiary Pledge
Agreement in substantially the form of Exhibit L attached hereto, and execute
---------
and deliver to the Collateral Agent all such documentation for such pledge as,
in the reasonable opinion of the Administrative Agent, is appropriate; and (c)
with respect to any Acquisition or Restricted Subsidiary, provide revised
financial projections for the remainder of the fiscal year and for each
subsequent year until the Maturity Date which reflect such Acquisition or
formation, certified by the Chief Financial Officer of ATS, together with a
statement by such Person that no Default exists or would be caused by such
Acquisition or formation, and all other documentation, including one or more
opinions of counsel, reasonably satisfactory to the Administrative Agent which
in its reasonable opinion is appropriate with respect to such Acquisition or the
formation of such Subsidiary. Notwithstanding the foregoing, neither Borrower
shall be required to pledge any of the stock of or other ownership interests for
any Unrestricted Subsidiary which (x) was not formed or created in anticipation
of such Person's direct or indirect investment therein (other than to facilitate
a transaction of the nature referred to in clause (y) following) and (y) at the
time such stock or ownership interest was acquired by such Person is subject to
a restriction on any such Lien (whether such restriction is in such Person's
formation documents or otherwise), but shall be required to grant the Collateral
Agent (for the benefit of the Banks) a Lien upon any right to receive
distributions from such Unrestricted Subsidiary. Any document, agreement or
instrument (other than the Projections) executed or issued pursuant to this
Section 5.13 shall be a "Loan Document" for purposes of this Agreement.
Section 5.14 Payment of Wages. The Borrowers shall, and shall cause each
----------------
Restricted Subsidiary to, at all times comply, in all material respects, with
the material requirements of the Fair Labor Standards Act, as amended,
including, without limitation, the provisions of such Act relating to the
payment of minimum and overtime wages as the same may become due from time to
time.
Section 5.15 Further Assurances. The Borrowers will promptly cure, or
------------------
cause to be cured, defects in the creation and issuance of any of the Notes and
the execution and delivery of the Loan Documents (including, without limitation,
this Agreement), resulting from any acts or failure to act by either Borrower or
any of the Restricted Subsidiaries or any employee or officer thereof. The
Borrowers at their expense will promptly execute and deliver to the
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Administrative Agent and the Banks, or cause to be executed and delivered to the
Administrative Agent and the Banks, all such other and further documents,
agreements, and instruments in compliance with or accomplishment of the
covenants and agreements in the Loan Documents, including this Agreement, or to
correct any omissions in the Loan Documents, or more fully to state the
obligations set out herein or in any of the Loan Documents, or to obtain any
consents, all as may be necessary or appropriate in connection therewith and as
may be reasonably requested.
ARTICLE 6 Information Covenants
So long as any of the Obligations is outstanding and unpaid or the Banks
have an obligation to fund Advances hereunder (whether or not the conditions to
borrowing have been or can be fulfilled) and unless the Majority Banks shall
otherwise consent in writing, the Borrowers will furnish or cause to be
furnished to each Bank and the Administrative Agent, at their respective
offices:
Section 6.1 Quarterly Financial Statements and Information Within forty-
----------------------------------------------
five (45) days after the last day of each of the first three (3) quarters of
each fiscal year of the Borrowers, the balance sheets of the Borrowers on a
consolidated basis with the Restricted Subsidiaries and a consolidating basis
with their Unrestricted Subsidiaries as at the end of such quarter and as of the
end of the preceding fiscal year, and the related statements of operations and
the related statements of cash flows of the Borrowers on a consolidated basis
with the Restricted Subsidiaries and a consolidating basis with their
Unrestricted Subsidiaries for such quarter and for the elapsed portion of the
year ended with the last day of such quarter, which shall set forth in
comparative form such figures as at the end of and for such quarter and
appropriate prior period and shall be certified by the Chief Financial Officer
of ATS (Delaware) to have been prepared in accordance with GAAP and to present
fairly in all material respects the financial position of the Borrowers on a
consolidated basis with the Restricted Subsidiaries and a consolidating basis
with its Unrestricted Subsidiaries as at the end of such period and the results
of operations for such period, and for the elapsed portion of the year ended
with the last day of such period, subject only to normal year-end and audit
adjustments.
Section 6.2 Annual Financial Statements and Information. Within ninety
-------------------------------------------
(90) days after the end of each fiscal year of the Borrowers, the audited
consolidated balance sheet of the Borrowers and the Restricted Subsidiaries (and
unaudited consolidating balance sheet of the Borrowers and the Unrestricted
Subsidiaries) as of the end of such fiscal year and the related audited
consolidated and unaudited consolidating statements of operations for such
fiscal year and for the previous fiscal year, the related audited consolidated
statements of cash flow and stockholders' equity for such fiscal year and for
the previous fiscal year, which shall be accompanied by an opinion of Deloitte &
Touche, LLP, or other independent certified public accountants of recognized
national standing reasonably acceptable to the
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Administrative Agent, which shall be in scope and substance reasonably
satisfactory to the Administrative Agent, together with a statement of such
accountants that in connection with their audit, nothing came to their attention
that caused them to believe that the Borrowers were not in compliance with the
terms, covenants, provisions or conditions of Sections 7.8, 7.9, 7.10, 7.11 and
7.12 hereof insofar as they relate to accounting matters.
Section 6.3 Performance Certificates. At the time the financial
------------------------
statements are furnished pursuant to Sections 6.1 and 6.2 hereof, a certificate
of the president or chief financial officer of ATS (Delaware) as to their
financial performance, in substantially the form attached hereto as Exhibit S:
---------
(a) setting forth as and at the end of such quarterly period or
fiscal year, as the case may be, the arithmetical calculations required to
establish (i) any adjustment to the Applicable Margins, as provided for in
Section 2.3(f) hereof, and (ii) whether or not the Borrowers were in compliance
with the requirements of Sections 7.8, 7.9, 7.10, 7.11 and 7.12 hereof;
(b) stating that, to the best of his or her knowledge, no Default
has occurred as at the end of such quarterly period or year, as the case may be,
or, if a Default has occurred, disclosing each such Default and its nature, when
it occurred, whether it is continuing and the steps being taken by the Borrowers
with respect to such Default;
(c) containing a list of all Acquisitions, Investments, Restricted
Payments and dispositions of assets from the Agreement Date through the date of
such certificate, together with the total amount for each of the foregoing
categories; and
(d) setting forth the amount of distributions received from
Unrestricted Subsidiaries for such period.
Section 6.4 Copies of Other Reports.
-----------------------
(a) Promptly upon receipt thereof, copies of all reports, if any,
submitted to either Borrower by its independent public accountants regarding
such Borrower, including, without limitation, any management report prepared in
connection with the annual audit referred to in Section 6.2 hereof.
(b) Promptly upon receipt thereof, copies of any material adverse
notice or report regarding any License from the FCC.
(c) From time to time and promptly upon each request, such data,
certificates, reports, statements, documents or further information regarding
the business, assets, liabilities, financial position, projections, results of
operations or business prospects of
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the Borrowers, or any of the Restricted Subsidiaries, as the Administrative
Agent or any Bank may reasonably request.
(d) Annually, certificates of insurance indicating that the
requirements of Section 5.5 hereof remain satisfied for such fiscal year,
together with copies of any new or replacement insurance policies obtained
during such year.
(e) Prior to January 31st of each year, the annual budget for the
Borrowers and the Restricted Subsidiaries, including, without limitation,
forecasts of the income statement, the balance sheet and a cash flow statement
for such year, on a quarter by quarter basis.
(f) Promptly after the sending thereof, copies of all statements,
reports and other information which the Parent sends to public security holders
of the Parent generally or files with the Securities and Exchange Commission or
any national securities exchange.
Section 6.5 Notice of Litigation and Other Matters. Notice specifying the
--------------------------------------
nature and status of any of the following events, promptly, but in any event not
later than fifteen (15) days after the occurrence of any of the following events
becomes known to either Borrower:
(a) the commencement of all proceedings and investigations by or
before any governmental body and all actions and proceedings in any court or
before any arbitrator against either Borrower or any Restricted Subsidiary, or,
to the extent known to either Borrower, which could have a Materially Adverse
Effect;
(b) any material adverse change with respect to the business, assets,
liabilities, financial position, results of operations or business prospects of
either Borrower and the Restricted Subsidiaries, taken as a whole, other than
changes in the ordinary course of business which have not had and would not
reasonably be expected to have a Materially Adverse Effect and other than
changes in the industry in which either Borrower or any of the Restricted
Subsidiaries operate which would not reasonably be expected to have a Materially
Adverse Effect;
(c) any material adverse amendment or change to the projections or
annual budget provided to the Banks hereunder;
(d) any Default or the occurrence or non-occurrence of any event (i)
which constitutes, or which with the passage of time or giving of notice or both
would constitute, a default by either Borrower or any of the Restricted
Subsidiaries under any material agreement other than this Agreement and the
other Loan Documents to which either Borrower or any of the Restricted
Subsidiaries is party or by which any of their respective properties may be
bound, or (ii) which could have a Materially Adverse Effect, giving in
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<PAGE>
each case a description thereof and specifying the action proposed to be taken
with respect thereto;
(e) the occurrence of any Reportable Event or a "prohibited
transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of
the Code) with respect to any Plan of either Borrower or any of its Subsidiaries
or the institution or threatened institution by PBGC of proceedings under ERISA
to terminate or to partially terminate any such Plan or the commencement or
threatened commencement of any litigation regarding any such Plan or naming it
or the trustee of any such Plan with respect to such Plan or any action taken by
either Borrower, any of its Subsidiaries or any ERISA Affiliate of either
Borrower to withdraw or partially withdraw from any Plan or to terminate any
Plan; and
(f) the occurrence of any event subsequent to the Agreement Date
which, if such event had occurred prior to the Agreement Date, would have
constituted an exception to the representation and warranty in Section 4.1(m)
hereof.
ARTICLE 7 Negative Covenants
So long as any of the Obligations is outstanding and unpaid or the Banks
have an obligation to fund Advances hereunder (whether or not the conditions to
borrowing have been or can be fulfilled) and unless the Majority Banks, or such
greater number of Banks as may be expressly provided herein, shall otherwise
give their prior consent in writing:
Section 7.1 Indebtedness of the Borrowers and their Subsidiaries. The
----------------------------------------------------
Borrowers shall not, and shall not permit any of their Subsidiaries to, create,
assume, incur or otherwise become or remain obligated in respect of, or permit
to be outstanding, any Indebtedness except:
(a) the Obligations;
(b) "Obligations" under the ATS Facility B Loan Agreement and
"Obligations" under the Parent Loan Agreement;
(c) accounts payable, accrued expenses (including, without
limitation, taxes) and customer advance payments incurred in the ordinary course
of business;
(d) Indebtedness secured by Permitted Liens;
(e) obligations under Interest Hedge Agreements with respect to the
Loans and the Facility B Loans;
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(f) Indebtedness of either Borrower or any of the Restricted
Subsidiaries to either Borrower or any other Restricted Subsidiary; provided,
--------
however, that the corresponding debt instruments are pledged to the
- -------
Administrative Agent as security for the Obligations and such Indebtedness is
expressly permitted pursuant to Section 7.5 hereof;
(g) Indebtedness incurred by any Unrestricted Subsidiary; provided,
--------
however, that such Indebtedness is non-recourse to the Borrowers or any
- -------
Restricted Subsidiary and no Lien is placed on the equity interests of the
Borrowers or any Restricted Subsidiary in such Unrestricted Subsidiary;
(h) Capitalized Lease Obligations not to exceed in the aggregate at
any one time outstanding $5,000,000; and
(i) Indebtedness of either Borrower or any of the Restricted
Subsidiaries incurred in connection with an Acquisition; provided, however, that
-------- -------
(i) such Indebtedness (A) is owed to the seller thereof, (B) is unsecured, (C)
has no scheduled payment of principal prior to the full payment of the
Obligations, (D) is subject to terms and conditions and subordination provisions
which are acceptable to the Majority Banks on the date of incurrence, (E) when
added to all other Indebtedness outstanding under this Section 7.1(i) does not
exceed $25,000,000, and (ii) the Borrowers are, at the time of incurrence of
such Indebtedness (and after giving effect thereto), in pro forma compliance
with all of the covenants contained in this Agreement.
Section 7.2 Limitation on Liens. The Borrowers shall not, and shall not
-------------------
permit any of the Restricted Subsidiaries to, create, assume, incur or permit to
exist or to be created, assumed, incurred or permitted to exist, directly or
indirectly, any Lien on any of its properties or assets, whether now owned or
hereafter acquired, except for Permitted Liens.
Section 7.3 Amendment and Waiver. The Borrowers shall not, and shall not
--------------------
permit any of the Restricted Subsidiaries to, enter into any amendment of, or
agree to or accept or consent to any waiver of any of the material provisions of
its Articles or Certificate of Incorporation or partnership agreement, as
appropriate, if the effect thereof would be to adversely affect the rights of
the Banks hereunder or under any Loan Document.
Section 7.4 Liquidation, Merger or Disposition of Assets.
--------------------------------------------
(a) Disposition of Assets. The Borrowers shall not, and shall not
---------------------
permit any of the Restricted Subsidiaries to, at any time sell, lease, abandon,
or otherwise dispose of any assets (other than assets disposed of in the
ordinary course of business) without the prior written consent of all of the
Banks; provided, however, that the prior written consent of the Banks shall not
-------- -------
be required for (i) the transfer of assets (including cash or cash equivalents)
among the Borrowers and the Restricted Subsidiaries (excluding Subsidiaries of
such Persons described in clause (b) of the definition of "Subsidiary") or for
the transfer of assets (including cash or cash equivalents) between or among
Restricted Subsidiaries (excluding
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Subsidiaries of such Persons described in clause (b) of the definition of
"Subsidiary") or (ii) the disposition of assets that contribute, in the
aggregate, less than (A) fifteen percent (15%) of Annualized Operating Cash Flow
of the Borrowers and the Restricted Subsidiaries as of the calendar quarter end
immediately preceding such disposition, and (B) twenty-five percent (25%) of the
Operating Cash Flow of the Borrowers and the Restricted Subsidiaries for the
period from the Agreement Date through the date of such disposition; provided
--------
further, however, that, in each case, no Default or Event of Default exists and
- ------- -------
none shall be caused to occur as a result thereof. Upon any sale or disposition
of a Restricted Subsidiary permitted hereunder, the Administrative Agent and the
Banks shall, at Borrowers' expense, take such actions as the Borrowers
reasonably requests to cause such Restricted Subsidiary to be released from its
obligations under its Subsidiary Guaranty.
(b) Liquidation or Merger. The Borrowers shall not, and shall not
---------------------
permit any of the Restricted Subsidiaries to, at any time, liquidate or dissolve
itself (or suffer any liquidation or dissolution) or otherwise wind up, or enter
into any merger, other than (i) a merger or consolidation among the Borrowers or
among either Borrower and one or more Restricted Subsidiaries, provided,
--------
however, that either Borrower, as the case may be, is the surviving Person, or
- -------
(ii) a merger between or among two (2) or more Restricted Subsidiaries, or (iii)
in connection with an Acquisition permitted hereunder effected by a merger in
which either Borrower, as the case may be, or, in a merger in which neither
Borrower is a party, a Restricted Subsidiary is the surviving Person or the
surviving Person becomes a Restricted Subsidiary, or (iv) a merger or
consolidation among the Borrowers, or either Borrower, or any Restricted
Subsidiary on the one hand, and any Person, on the other hand, where the
surviving Person (A) is a corporation, partnership, or limited liability company
organized and existing under the laws of the United States of America, any State
thereof or the District of Columbia, and (B) on the effective date of such
merger or consolidation expressly assume, by supplemental agreement, executed
and delivered to the Administrative Agent, for the benefit of itself and the
Banks, in form and substance reasonably satisfactory to the Majority Banks, all
the Obligations of the Borrowers, or Borrower, or such restricted Subsidiary, as
the case may be, under the Notes, the Agreement and the other Loan Documents;
provided further, however, that, in each case, no Default or Event of Default
- -------- ------- -------
exists and none shall be caused to occur as a result thereof.
Section 7.5 Limitation on Guaranties. The Borrowers shall not, and shall
------------------------
not permit any of the Restricted Subsidiaries to, at any time Guaranty, assume,
be obligated with respect to, or permit to be outstanding any Guaranty of, any
obligation of any other Person other than (a) a guaranty by endorsement of
negotiable instruments for collection in the ordinary course of business, (b)
obligations under agreements of either Borrower or any of the Restricted
Subsidiaries entered into in connection with Acquisitions permitted under this
Agreement, leases of real property or the acquisition or furnishing of services,
supplies and equipment in the ordinary course of business of either Borrower or
any of the Restricted Subsidiaries, (c) Guaranties of Indebtedness incurred as
permitted pursuant to Section 7.1 hereof, (d) as may be contained in any Loan
Document including, without limitation, any
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<PAGE>
Subsidiary Guaranty, or (e) Guaranties of the "Obligations" under the Parent
Loan Agreement or the ATS Facility B Loan Agreement.
Section 7.6 Investments and Acquisitions. The Borrowers shall not, and
----------------------------
shall not permit any of the Restricted Subsidiaries to, directly or indirectly,
make any loan or advance, or otherwise acquire for consideration evidences of
Indebtedness, capital stock or other securities of any Person or other assets or
property (other than assets or property in the ordinary course of business), or
make any Acquisition or Investment; provided, however, that the Borrowers and
-------- -------
the Restricted Subsidiaries may:
(a) directly or through a brokerage account (i) purchase marketable,
direct obligations of the United States of America, its agencies and
instrumentalities maturing within three hundred sixty-five (365) days of the
date of purchase, (ii) purchase commercial paper, money-market funds and
business savings accounts issued by corporations, each of which shall have a
combined net worth of at least $100,000,000 and each of which conducts a
substantial part of its business in the United States of America, maturing
within two hundred seventy (270) days from the date of the original issue
thereof, and rated "P-2" or better by Moody's Investors Service, Inc. or "A-2"
or better by Standard and Poor's Ratings Group, a division of McGraw-Hill, (iii)
purchase repurchase agreements, bankers' acceptances, and domestic and
Eurodollar certificates of deposit maturing within three hundred sixty-five
(365) days of the date of purchase which are issued by, or time deposits
maintained with, a United States national or state bank the deposits of which
are insured by the Federal Deposit Insurance Corporation or the Federal Savings
and Loan Insurance Corporation and having capital, surplus and undivided profits
totaling more than $100,000,000 and rated "A" or better by Moody's Investors
Service, Inc. or Standard and Poor's Ratings Group, a division of McGraw-Hill,
Inc.;
(b) so long as no Default then exists or would be caused thereby,
establish Unrestricted Subsidiaries and make Investments in such Unrestricted
Subsidiaries of up to, in the aggregate, at any time, the sum of (i) $50,000,000
with loans borrowed under the ATS Facility A Loan Agreement or the ATS Facility
B Loan Agreement, and (ii) equity proceeds not used to pay the Separation
Obligations or to make Investments permitted under Sections 7.6(c) and (d)
hereof;
(c) so long as no Default then exists or would be caused thereby, and
subject to compliance with Section 5.13 hereof, make Acquisitions; provided,
--------
however, that Acquisitions of communications sites and tower management
- -------
businesses shall not exceed, in the aggregate, at any time, the sum of (i)
$50,000,000 and (ii) equity proceeds not used to pay the Separation Obligations
after the Agreement Date or to make Investments permitted under Sections 7.6(b)
and (d) hereof;
(d) so long as no Default then exists or would be caused thereby and
subject to compliance with Section 5.13 hereof, make Investments in
communications site
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<PAGE>
and related companies in an amount not to exceed, in the aggregate, at any time,
the sum of (i) $25,000,000 and (ii) equity proceeds not used to pay the
Separation Obligations or to make Investments permitted under Sections 7.6(b)
and (c) hereof; provided, however, that the Parent, either Borrower or any of
-------- -------
their Subsidiaries has executed a binding acquisition or merger agreement with
such company;
(e) make Investments consisting of the Sconnix Note; and
(f) (i) make loans and advances to employees in the ordinary course
of business and (ii) receive notes from employees in an amount not to exceed
$2,000,000 in the aggregate outstanding at any time in connection with the
exercise of stock options.
Section 7.7 Restricted Payments. The Borrowers shall not, and shall not
-------------------
permit any of the Restricted Subsidiaries to, directly or indirectly declare or
make any Restricted Payment; provided, however, that so long as no Default or
-------- -------
Event of Default hereunder then exists or would be caused thereby, the Borrowers
may make (a) subject to Section 2.7(b)(iv) hereof, cash distributions in an
aggregate amount for both Borrowers not to exceed fifty percent (50%) of Excess
Cash Flow for the immediately preceding calendar year, on or after April 15/th/
of each calendar year commencing on April 15, 2002; (b) subject to Section
2.7(b)(v) hereof, unrestricted cash distributions in an amount in the aggregate,
not to exceed the net proceeds of any debt or equity issued after the Agreement
Date; and (c) scheduled principal and interest payments on any Indebtedness of
the Parent which is permitted hereunder.
Section 7.8 Senior Leverage Ratio. (a) As of the end of any calendar
---------------------
quarter, and (b) at the time of any Advance hereunder (after giving effect to
such Advance), the Borrowers shall not permit the Senior Leverage Ratio to
exceed the ratios set forth below during the periods indicated:
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<PAGE>
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing through September 29, 1999 6.50:1
September 30, 1999 through September 29, 2000 6.25:1
September 30, 2000 through March 30, 2001 6.00:1
March 31, 2001 through June 29, 2001 5.75:1
June 30, 2001 through September 29, 2001 5.50:1
September 30, 2001 through December 30, 2001 5.25:1
December 31, 2001 through March 30, 2002 4.75:1
March 31, 2002 through June 29, 2002 4.50:1
June 30, 2002 through September 29, 2002 4.25:1
September 30, 2002 through December 30, 2002 4.00:1
December 31, 2002 through March 30, 2003 3.75:1
March 31, 2003 through June 29, 2003 3.50:1
June 30, 2003 through September 29, 2003 3.25:1
September 30, 2003 and thereafter 3.00:1
</TABLE>
Section 7.9 Total Leverage Ratio. (a) As of the end of any calendar
--------------------
quarter, and (b) at the time of any Advance hereunder (after giving effect to
such Advance), the Borrowers shall not permit the ratio of (i) Total Debt on
such date to (ii) Annualized Operating Cash Flow to exceed the ratios set forth
below during the periods indicated:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing through September 29, 1999 8.00:1
September 30, 1999 through September 29, 2000 7.75:1
September 30, 2000 through March 30, 2001 7.50:1
March 31, 2001 through June 29, 2001 6.75:1
June 30, 2001 through September 29, 2001 6.50:1
September 30, 2001 through December 30, 2001 6.25:1
December 31, 2001 through March 30, 2002 5.75:1
March 31, 2002 through June 29, 2002 5.50:1
June 30, 2002 through September 29, 2002 5.25:1
September 30, 2002 through December 30, 2002 5.00:1
December 31, 2002 through March 30, 2003 4.75:1
March 31, 2003 through June 29, 2003 4.50:1
June 30, 2003 through September 29, 2003 4.25:1
September 30, 2003 and thereafter 4.00:1
</TABLE>
Section 7.10 Interest Coverage Ratio. The Borrowers shall maintain, on a
-----------------------
consolidated basis, at all times during the applicable periods set forth below,
an Interest Coverage Ratio for such fiscal quarter of not less than the ratio
set forth below opposite each such period:
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<PAGE>
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Agreement Date through March 30, 2001 1.50:1
March 31, 2001 through March 30, 2002 1.75:1
March 31, 2002 through December 30, 2002 2.00:1
December 31, 2002 through December 30, 2003 2.25:1
December 31, 2003 and thereafter 2.50:1
</TABLE>
Section 7.11 Annualized Operating Cash Flow to Pro Forma Debt Service. (a)
--------------------------------------------------------
As of the end of any calendar quarter, and (b) at the time of any Advance
hereunder (after giving effect to such Advance), the Borrowers, on a
consolidated basis, shall not permit the ratio of (i) Annualized Operating Cash
Flow to (ii) Pro Forma Debt Service to be less than the ratio set forth below
opposite each such period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Agreement Date through March 30, 2000 1.10:1
March 31, 2000 through December 30, 2002 1:15:1
December 31, 2002 and thereafter 1:50:1
</TABLE>
Section 7.12 Fixed Charge Coverage Ratio.(a) As of the end of any
---------------------------
calendar quarter, and (b) at the time of any Advance hereunder (after giving
effect to such Advance), the Borrowers, on a consolidated basis, shall not
permit the Fixed Charges Coverage Ratio to be less than or equal to 1.05 to 1.
Section 7.13 Affiliate Transactions. Except as specifically provided
----------------------
herein (including, without limitation, Sections 7.4, 7.6 and 7.7 hereof) and as
may be described on Schedule 7 attached hereto, the Borrowers shall not, and
----------
shall not permit any of the Restricted Subsidiaries to, at any time engage in
any transaction with an Affiliate, other than between or among either Borrower
and any wholly-owned Restricted Subsidiary, or make an assignment or other
transfer of any of its properties or assets to any Affiliate, on terms less
advantageous to such Borrower or such Restricted Subsidiary than would be the
case if such transaction had been effected with a non-Affiliate.
Section 7.14 ERISA Liabilities. The Borrowers shall not, and shall cause
-----------------
each of their ERISA Affiliates not to, (a) permit the assets of any of their
respective Plans to be less than the amount necessary to provide all accrued
benefits under such Plans, or (b) enter into any Multiemployer Plan.
Section 7.15 Sales and Leasebacks. The Borrowers will not and will not
--------------------
permit any Restricted Subsidiary to enter into, any arrangement, directly or
indirectly, with any third
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<PAGE>
party whereby either Borrower or a Restricted Subsidiary shall sell or transfer
any property, real or personal, whether now owned or hereafter acquired, and
whereby either Borrower or such Restricted Subsidiary shall then or thereafter
rent or lease as lessee such property or any part thereof or other property
which either Borrower or such Restricted Subsidiary intends to use for
substantially the same purpose or purposes as the property sold or transferred.
ARTICLE 8 Default
Section 8.1 Events of Default. Each of the following shall constitute an
-----------------
Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or non-governmental body:
(a) Any representation or warranty made under this Agreement shall
prove incorrect or misleading in any material respect when made or deemed to be
made pursuant to Section 4.2 hereof;
(b) The Borrowers shall default in the payment of (i) any interest
under any of the Notes or fees or other amounts payable to the Banks and the
Administrative Agent under any of the Loan Documents, or any of them, when due,
and such Default shall not be cured by payment in full within three (3) Business
Days from the due date or (ii) any principal under any of the Notes when due;
(c) The Borrowers shall default in the performance or observance
of any agreement or covenant contained in Sections 5.2(a), 5.10, 7.1, 7.2, 7.4,
7.5, 7.7, 7.8, 7.9, 7.10, 7.11 and 7.12 hereof;
(d) The Borrowers shall default in the performance or observance
of any other agreement or covenant contained in this Agreement not specifically
referred to elsewhere in this Section 8.1, and such default shall not be curable
within a period of thirty (30) days (or with respect to Sections 5.3, 5.4, 5.5,
5.6, 5.7, 5.8, 5.9, 5.14, 5.15, 5.16, 6.4, 6.5, 7.3, 7.13, 7.14 and 7.15 hereof,
such longer period not to exceed sixty (60) days if such default is curable
within such period and the Borrowers are proceeding in good faith with all
diligent efforts to cure such default) from the later of (i) occurrence of such
Default and (ii) the date on which such Default became known to the Borrowers;
(e) There shall occur any default in the performance or observance
of any agreement or covenant or breach of any representation or warranty
contained in any of the Loan Documents (other than this Agreement or as
otherwise provided in this Section 8.1) by the Borrowers, any of the Restricted
Subsidiaries, or any other obligor thereunder, which shall not be cured within a
period of thirty (30) days (or such longer period not to exceed sixty (60) days
if such default is curable within such period and the Borrowers or such
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<PAGE>
Restricted Subsidiaries or other obligor are proceeding in good faith with all
diligent efforts to cure such default) from the date on which such default
became known to the Borrowers;
(f) There shall be entered and remain unstayed a decree or order for
relief in respect of either Borrower or any of the Restricted Subsidiaries under
Title 11 of the United States Code, as now constituted or hereafter amended, or
any other applicable Federal or state bankruptcy law or other similar law, or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
similar official of either Borrower or any of the Restricted Subsidiaries, or of
any substantial part of their respective properties, or ordering the winding-up
or liquidation of the affairs of either Borrower or any of the Restricted
Subsidiaries; or an involuntary petition shall be filed against either Borrower
or any of the Restricted Subsidiaries and a temporary stay entered, and (i) such
petition and stay shall not be diligently contested, or (ii) any such petition
and stay shall continue undismissed for a period of ninety (90) consecutive
days;
(g) Either Borrower or any of the Restricted Subsidiaries shall file
a petition, answer or consent seeking relief under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable Federal
or state bankruptcy law or other similar law, or either Borrower or any of the
Restricted Subsidiaries shall consent to the institution of proceedings
thereunder or to the filing of any such petition or to the appointment or taking
of possession of a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of either Borrower or any of the
Restricted Subsidiaries or of any substantial part of their respective
properties, or either Borrower or any of the Restricted Subsidiaries shall fail
generally to pay their respective debts as they become due or shall be
adjudicated insolvent; either Borrower, as the case may be, shall suspend or
discontinue its business, except as permitted by Section 7.4 hereof; either
Borrower or any of the Restricted Subsidiaries shall have concealed, removed any
of its property with the intent to hinder or defraud its creditors or shall have
made a fraudulent or preferential transfer under any applicable fraudulent
conveyance or bankruptcy law; or either Borrower or any of the Restricted
Subsidiaries shall take any action in furtherance of any such action;
(h) A judgment not covered by insurance or indemnification, where the
indemnifying party has agreed to indemnify and is financially able to do so,
shall be entered by any court against either Borrower or any of the Restricted
Subsidiaries for the payment of money which exceeds singly, or in the aggregate
with other such judgments, $10,000,000, or a warrant of attachment or execution
or similar process shall be issued or levied against property of either Borrower
or any of the Restricted Subsidiaries which, together with all other such
property of either Borrower or any of the Restricted Subsidiaries subject to
other such process, exceeds in value $10,000,000 in the aggregate, and if,
within thirty (30) days after the entry, issue or levy thereof, such judgment,
warrant or process shall not have been paid or discharged or stayed pending
appeal or removed to bond, or if, after the expiration of any such stay, such
judgment, warrant or process, shall not have been paid or discharged or removed
to bond;
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<PAGE>
(i) There shall be at any time any "accumulated funding deficiency,"
as defined in ERISA or in Section 412 of the Code, with respect to any Plan
maintained by either Borrower or any of its Subsidiaries or any ERISA Affiliate,
or to which either Borrower or any of its Subsidiaries or any ERISA Affiliate
has any liabilities, or any trust created thereunder; or a trustee shall be
appointed by a United States District Court to administer any such Plan; or PBGC
shall institute proceedings to terminate any such Plan; or either Borrower or
any of its Subsidiaries or any ERISA Affiliate shall incur any liability to PBGC
in connection with the termination of any such Plan; or any Plan or trust
created under any Plan of either Borrower or any of its Subsidiaries or any
ERISA Affiliate shall engage in a "prohibited transaction" (as such term is
defined in Section 406 of ERISA or Section 4975 of the Code) which would subject
any such Plan, any trust created thereunder, any trustee or administrator
thereof, or any party dealing with any such Plan or trust to the tax or penalty
on "prohibited transactions" imposed by Section 502 of ERISA or Section 4975 of
the Code;
(j) There shall occur (i) any acceleration of the maturity of any
Indebtedness of either Borrower or any of the Restricted Subsidiaries (other
than the ATS Facility B Loan Agreement) in an aggregate principal amount
exceeding $5,000,000, or, as a result of a failure to comply with the terms
thereof, such Indebtedness shall otherwise have become due and payable; (ii) any
event or condition the occurrence of which would permit such acceleration of
such Indebtedness, or which, as a result of a failure to comply with the terms
thereof, would make such Indebtedness otherwise due and payable, and which event
or condition has not been cured within any applicable cure period or waived in
writing prior to any declaration of an Event of Default or acceleration of the
Loans hereunder; or (iii) any material default under any Interest Hedge
Agreement which would permit the obligation of either Borrower to make payments
to the counterparty thereunder to be then due and payable;
(k) The Borrowers and the Restricted Subsidiaries are for any reason
no longer able to operate or manage the related communications tower facilities
or portions thereof and retain the revenue received therefrom, and the overall
effect of which would be to reduce Annualized Operating Cash Flow (determined as
at the last day of the most recently ended fiscal year of the Borrowers) by ten
percent (10%) or more;
(1) Any material Loan Document, or any material provision thereof,
shall at any time and for any reason be declared by a court of competent
jurisdiction to be null and void, or a proceeding shall be commenced by either
Borrower or any of the Restricted Subsidiaries or by any governmental authority
having jurisdiction over the Borrower or any of the Restricted Subsidiaries
seeking to establish the invalidity or unenforceability thereof (exclusive of
questions of interpretation of any provision thereof), or either Borrower or any
of the Restricted Subsidiaries shall deny that it has any liability or
obligation for the payment of principal or interest purported to be created
under any Loan Document;
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<PAGE>
(m) Any material Security Document shall, for any reason, fail or
cease (except by reason of lapse of time) to create a valid and perfected and
first-priority Lien on or Security Interest in any material portion of the
Collateral purported to be covered thereby;
(n) There shall occur any Change of Control;
(o) Either Borrower or any of the Restricted Subsidiaries shall be
indicted under the Racketeer Influenced and Corrupt Organizations Act of 1970
(18 U.S.C. (S) 1961 et seq.) ;
-- ---
(p) There shall occur and be continuing any "Event of Default" (in
each case, as defined therein) under the Parent Loan Agreement or the ATS
Facility B Loan Agreement;
(q) The Parent shall incur any Indebtedness for Money Borrowed other
than under the Parent Loan Agreement (or any refinancing thereof which does not
exceed the principal amount outstanding on the date of such refinancing); or
(r) The Parent shall, without the consent of the Required Lenders
(which consent may not be unreasonably withheld, delayed or conditioned), (i)
prepay all or a part of the principal amount of the Indebtedness outstanding
under the Parent Loan Agreement or (ii) make any material amendment,
modification, supplement or restatement to the Parent Loan Agreement or the
documents pertaining to the Interim Financing.
Section 8.2 Remedies.
--------
(a) If an Event of Default specified in Section 8.1 (other than an
Event of Default under Section 8.1(f) or (g) hereof) shall have occurred and
shall be continuing, the Administrative Agent, at the request of the Majority
Banks but subject to Section 9.8 hereof, shall (i) terminate the Revolving Loan
Commitment or any remaining Term Loan Commitment, and/or (ii) declare the
principal of and interest on the Loans and the Notes and all other amounts owed
to the Banks and the Administrative Agent under this Agreement, the Notes and
any other Loan Documents to be forthwith due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived, anything in this Agreement, the Notes or any other Loan Document to the
contrary notwithstanding, and the Revolving Loan Commitment and any Term Loan
Commitment shall thereupon forthwith terminate.
(b) Upon the occurrence and continuance of an Event of Default
specified in Section 8.1(f) or (g) hereof, all principal, interest and other
amounts due hereunder and under the Notes, and all other Obligations, shall
thereupon and concurrently therewith become due and payable and the Revolving
Loan Commitment shall forthwith terminate and the principal amount of the Loans
outstanding hereunder shall bear interest at the Default
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Rate, all without any action by the Administrative Agent or the Banks or the
Majority Banks or any of them and without presentment, demand, protest or other
notice of any kind, all of which are expressly waived, anything in this
Agreement or in the other Loan Documents to the contrary notwithstanding.
(c) Upon acceleration of the Notes, as provided in subsection (a) or
(b) of this Section 8.2, the Administrative Agent and the Banks shall have all
of the post-default rights granted to them, or any of them, as applicable under
the Loan Documents and under Applicable Law.
(d) Upon acceleration of the Notes, as provided in subsection (a) or
(b) of this Section 8.2, the Administrative Agent shall have the right (but not
the obligation) upon the request of the Banks to operate the communications
tower facilities of the Borrowers and the Restricted Subsidiaries and pursuant
to the terms and subject to any limitations contained in the Security Documents
and, within guidelines established by the Majority Banks, to make any and all
payments and expenditures necessary or desirable in connection therewith,
including, without limitation, payment of wages as required under the Fair Labor
Standards Act, as amended, and of any necessary withholding taxes to state or
federal authorities. In the event the Majority Banks fail to agree upon the
guidelines referred to in the preceding sentence within six (6) Business Days'
after the Administrative Agent has begun to operate the communications tower
facilities, the Administrative Agent may, after giving three (3) days' prior
written notice to the Banks of its intention to do so, make such payments and
expenditures as it deems reasonable and advisable in its sole discretion to
maintain the normal day-to-day operation of such communications tower
facilities. Such payments and expenditures in excess of receipts shall
constitute Advances under the Revolving Loan Commitment, not in excess of the
amount of the Revolving Loan Commitment. Advances made pursuant to this Section
8.2(d) shall bear interest as provided in Section 2.3(d) hereof and shall be
payable by the Borrowers on demand. The making of one or more Advances under
this Section 8.2(d) shall not create any obligation on the part of the Banks to
make any additional Advances hereunder. No exercise by the Administrative Agent
of the rights granted to it under this Section 8.2(d) shall constitute a waiver
of any other rights and remedies granted to the Administrative Agent and the
Banks, or any of them, under this Agreement or at law. Each Borrower hereby
irrevocably appoints the Administrative Agent as agent for the Banks, the true
and lawful attorney of each of them, in its name and stead and on its behalf, to
execute, receipt for or otherwise act in connection with any and all contracts,
instruments or other documents in connection with the completion and operation
of the communications tower facilities in the exercise of the Administrative
Agent's and the Banks' rights under this Section 8.2(d). Such power of attorney
is coupled with an interest and is irrevocable. The rights of the Administrative
Agent under this Section 8.2(d) shall be subject to its prior compliance with
the Communications Act and the FCC rules and policies promulgated thereunder to
the extent applicable to the exercise of such rights.
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(e) Upon acceleration of the Notes, as provided in subsection (a) or
(b) of this Section 8.2, the Administrative Agent, upon request of the Majority
Banks, shall have the right to appoint a receiver for the properties and assets
of the Borrowers and the Restricted Subsidiaries, and each Borrower, for itself
and on behalf of its Restricted Subsidiaries, hereby consents to such rights and
such appointment and hereby waives any objection either Borrower or any
Restricted Subsidiary may have thereto or the right to have a bond or other
security posted by the Administrative Agent, on behalf of the Banks, in
connection therewith. The rights of the Administrative Agent under this Section
8.2(e) shall be subject to its prior compliance with the Communications Act and
the FCC rules and policies promulgated thereunder to the extent applicable to
the exercise of such rights.
(f) The rights and remedies of the Administrative Agent and the Banks
hereunder shall be cumulative, and not exclusive.
Section 8.3 Payments Subsequent to Declaration of Event of Default.
------------------------------------------------------
Subsequent to the acceleration of the Loans under Section 8.2 hereof, payments
and prepayments under this Agreement made to the Administrative Agent and the
Banks or otherwise received by any of such Persons (from realization on
Collateral for the Obligations or otherwise) shall be paid over to the
Administrative Agent (if necessary) and distributed by the Administrative Agent
as follows: first, to the Administrative Agent's reasonable costs and expenses,
-----
if any, incurred in connection with the collection of such payment or
prepayment, including, without limitation, any reasonable costs incurred by it
in connection with the sale or disposition of any Collateral for the Obligations
and all amounts under Section 11.2(b) hereof; second, to the Banks or the
------
Administrative Agent for any fees hereunder or under any of the other Loan
Documents then due and payable; third, to the Banks pro rata on the basis of
-----
their respective unpaid principal amounts (except as provided in Section 2.2(e)
hereof), to the payment of any unpaid interest which may have accrued on the
Obligations; fourth, to the Banks pro rata until all Loans have been paid in
------
full (and, for purposes of this clause, obligations under Interest Hedge
Agreements with the Banks or any of them shall be paid on a pro rata basis with
the Loans); fifth, to the Banks pro rata on the basis of their respective unpaid
-----
amounts, to the payment of any other unpaid Obligations; and sixth, to the
-----
Borrowers or as otherwise required by law.
ARTICLE 9 The Administrative Agent and The Collateral Agent
Section 9.1 Appointment and Authorization. Each Bank hereby irrevocably
-----------------------------
appoints and authorizes, and hereby agrees that it will require any transferee
of any of its interest in its portion of the Loans and in its Note irrevocably
to appoint and authorize, the Administrative Agent to take such actions as its
agent on its behalf and to exercise such powers hereunder and under the other
Loan Documents as are delegated by the terms hereof and thereof, together with
such powers as are reasonably incidental thereto. Neither the Administrative
Agent, nor any of its respective directors, officers, employees or agents, shall
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be liable for any action taken or omitted to be taken by it or them hereunder or
in connection herewith, except for its or their own gross negligence or willful
misconduct as determined by a final, non-appealable judicial order of a court of
competent jurisdiction.
Section 9.2 Interest Holders. The Administrative Agent may treat each
----------------
Bank, or the Person designated in the last notice filed with the Administrative
Agent, as the holder of all of the interests of such Bank in its portion of the
Loans and in its Note until written notice of transfer, signed by such Bank (or
the Person designated in the last notice filed with the Administrative Agent)
and by the Person designated in such written notice of transfer, in form and
substance satisfactory to the Administrative Agent, shall have been filed with
the Administrative Agent.
Section 9.3 Consultation with Counsel. The Administrative Agent may
-------------------------
consult with Powell, Goldstein, Frazer & Murphy LLP, Atlanta, Georgia, special
counsel to the Administrative Agent, or with other legal counsel selected by it
and shall not be liable for any action taken or suffered by it in good faith in
consultation with the Majority Banks and in reasonable reliance on such
consultations.
Section 9.4 Documents. The Administrative Agent shall be under no duty to
---------
examine, inquire into, or pass upon the validity, effectiveness or genuineness
of this Agreement, any Note, any other Loan Document, or any instrument,
document or communication furnished pursuant hereto or in connection herewith,
and the Administrative Agent shall be entitled to assume that they are valid,
effective and genuine, have been signed or sent by the proper parties and are
what they purport to be.
Section 9.5 Administrative Agent and Affiliates. With respect to the
-----------------------------------
Commitment and the Loans, the Administrative Agent shall have the same rights
and powers hereunder as any other Bank and the Administrative Agent and
Affiliates of the Administrative Agent may accept deposits from, lend money to
and generally engage in any kind of business with either Borrower, any of its
Subsidiaries or other Affiliates of, or Persons doing business with, either
Borrower, any of its Subsidiaries or other Affiliates, as if they were not
affiliated with the Administrative Agent and without any obligation to account
therefor.
Section 9.6 Responsibility of the Administrative Agent. The duties and
------------------------------------------
obligations of the Administrative Agent under this Agreement are only those
expressly set forth in this Agreement. The Administrative Agent shall be
entitled to assume that no Default or Event of Default has occurred and is
continuing unless it has actual knowledge, or has been notified in writing by
either Borrower, of such fact, or has been notified by a Bank in writing that
such Bank considers that a Default or an Event of Default has occurred and is
continuing, and such Bank shall specify in detail the nature thereof in writing.
The Administrative Agent shall not be liable hereunder for any action taken or
omitted to be taken except for its own gross negligence or willful misconduct as
determined by a final, non-appealable judicial order of a court of competent
jurisdiction. The Administrative Agent shall provide each Bank with
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copies of such documents received from the Borrowers as such Bank may reasonably
request.
Section 9.7 Action by the Administrative Agent.
----------------------------------
(a) The Administrative Agent shall be entitled to use its discretion
with respect to exercising or refraining from exercising any rights which may be
vested in it by, and with respect to taking or refraining from taking any action
or actions which it may be able to take under or in respect of, this Agreement,
unless the Administrative Agent shall have been instructed by the Majority Banks
to exercise or refrain from exercising such rights or to take or refrain from
taking such action; provided, however, that the Administrative Agent shall not
-------- -------
exercise any rights under Section 8.2(a) hereof without the request of the
Majority Banks (or, where expressly required, all the Banks), unless time is of
the essence, in which case, such action can be taken at the request of the
Administrative Agent. The Administrative Agent shall incur no liability under
or in respect of this Agreement with respect to anything which it may do or
refrain from doing in the reasonable exercise of its judgment or which may seem
to it to be necessary or desirable in the circumstances, except for its gross
negligence or willful misconduct as determined by a final, non-appealable
judicial order of a court having jurisdiction over the subject matter.
(b) The Administrative Agent shall not be liable to the Banks or to
any Bank or to either Borrower or any of its Subsidiaries in acting or
refraining from acting under this Agreement or any other Loan Document in
accordance with the instructions of the Majority Banks (or, where expressly
required, all of the Banks), and any action taken or failure to act pursuant to
such instructions shall be binding on all of the Banks, except for its gross
negligence or willful misconduct as determined by a final, non-appealable
judicial order of a court having jurisdiction over the subject matter. The
Administrative Agent shall not be obligated to take any action which is contrary
to law or which would in its reasonable opinion subject it to liability.
Section 9.8 Notice of Default or Event of Default. In the event that the
-------------------------------------
Administrative Agent or any Bank shall acquire actual knowledge, or shall have
been notified, of any Default or Event of Default, the Administrative Agent or
such Bank shall promptly notify the Banks (provided, however, that the failure
-------- -------
to give such notice shall not result in any liability on the part of such Bank
or Administrative Agent), and the Administrative Agent shall take such action
and assert such rights under this Agreement and the other Loan Documents as the
Majority Banks shall request in writing, and the Administrative Agent shall not
be subject to any liability by reason of its acting pursuant to any such
request. If the Majority Banks shall fail to request the Administrative Agent
to take action or to assert rights under this Agreement or any other Loan
Documents in respect of any Default or Event of Default within ten (10) days
after their receipt of the notice of any Default or Event of Default from the
Administrative Agent or any Bank, or shall request inconsistent action with
respect to such Default or Event of Default, the Administrative
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Agent may, but shall not be required to, take such action and assert such rights
(other than rights under Article 8 hereof) as it deems in its discretion to be
advisable for the protection of the Banks, except that, if the Majority Banks
have instructed the Administrative Agent not to take such action or assert such
right, in no event shall the Administrative Agent act contrary to such
instructions, unless time is of the essence, in which case, the Administrative
Agent may act in accordance with its reasonable discretion.
Section 9.9 Responsibility Disclaimed. The Administrative Agent shall not
-------------------------
be under any liability or responsibility whatsoever as Administrative Agent:
(a) To either Borrower or any other Person as a consequence of any
failure or delay in performance by, or any breach by, any Bank or Banks of any
of its or their obligations under this Agreement;
(b) To any Bank or Banks as a consequence of any failure or delay in
performance by, or any breach by, (i) the Borrowers of any of their obligations
under this Agreement or the Notes or any other Loan Document, or (ii) any
Restricted Subsidiary or any other obligor under any other Loan Document;
(c) To any Bank or Banks, for any statements, representations or
warranties in this Agreement, or any other document contemplated by this
Agreement or any information provided pursuant to this Agreement, any other Loan
Document, or any other document contemplated by this Agreement, or for the
validity, effectiveness, enforceability or sufficiency of this Agreement, the
Notes, any other Loan Document, or any other document contemplated by this
Agreement; or
(d) To any Person for any act or omission other than that arising from
gross negligence or willful misconduct of the Administrative Agent as determined
by a final, non-appealable judicial order of a court of competent jurisdiction.
Section 9.10 Indemnification. The Banks agree to indemnify the
---------------
Administrative Agent (to the extent not reimbursed by the Borrowers) pro rata
according to their respective Commitment Ratios, from and against any and all
liabilities, obligations, losses (other than the loss of principal, interest and
fees hereunder in the event of a bankruptcy or out-of-court 'work-out' of the
Loans), damages, penalties, actions, judgments, suits, costs, expenses
(including, without limitation, fees and expenses of experts, agents,
consultants and counsel), or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by or asserted against the Administrative
Agent in any way relating to or arising out of this Agreement, any other Loan
Document, or any other document contemplated by this Agreement or any other Loan
Document or any action taken or omitted by the Administrative Agent under this
Agreement, any other Loan Document, or any other document contemplated by this
Agreement, except that no Bank shall be liable to the Administrative Agent for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits,
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costs, expenses, or disbursements resulting from the gross negligence or willful
misconduct of the Administrative Agent as determined by a final, non-appealable
judicial order of a court having jurisdiction over the subject matter.
Section 9.11 Credit Decision. Each Bank represents and warrants to each
---------------
other and to the Administrative Agent that:
(a) In making its decision to enter into this Agreement and to make
its portion of the Loans it has independently taken whatever steps it considers
necessary to evaluate the financial condition and affairs of the Borrowers and
that it has made an independent credit judgment, and that it has not relied upon
the Administrative Agent or information provided by the Administrative Agent
(other than information provided to the Administrative Agent by the Borrowers
and forwarded by the Administrative Agent to the Banks); and
(b) So long as any portion of the Loans remains outstanding or such
Bank has an obligation to make its portion of Advances hereunder, it will
continue to make its own independent evaluation of the financial condition and
affairs of the Borrowers.
Section 9.12 Successor Administrative Agent. Subject to the appointment
------------------------------
and acceptance of a successor Administrative Agent as provided below, the
Administrative Agent may resign at any time by giving written notice thereof to
the Banks and the Borrowers and may be removed at any time for cause by the
Majority Banks. Upon any such resignation or removal, the Majority Banks shall
have the right to appoint a successor Administrative Agent which appointment
shall, prior to a Default, be subject to the consent of the Borrowers, acting
reasonably. If (a) no successor Administrative Agent shall have been so
appointed by the Majority Banks or (b) if appointed, no successor Administrative
Agent shall have accepted such appointment within thirty (30) days after the
retiring Administrative Agent gave notice of resignation or the Majority Banks
removed the retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of the Banks, appoint a successor Administrative Agent
which shall be any Bank or a commercial bank organized under the laws of the
United States of America or any political subdivision thereof which has combined
capital and reserves in excess of $250,000,000 and which shall be reasonably
acceptable to the Borrowers. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges, duties and obligations of the retiring
Administrative Agent and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder and under the other Loan Documents.
After any retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent the provisions of this Article shall continue in effect for
its benefit in respect of any actions taken or omitted to be taken by it while
it was acting as the Administrative Agent. In the event that the Administrative
Agent or any of its respective Affiliates ceases to be a Bank hereunder, such
Person shall resign its agency hereunder.
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Section 9.13 Delegation of Duties. The Administrative Agent may execute
--------------------
any of its duties under the Loan Documents by or through agents or attorneys
selected by it using reasonable care, and shall be entitled to advice of counsel
concerning all matters pertaining to such duties.
Section 9.14 Collateral Agent. Each Bank and the Administrative Agent
----------------
hereby irrevocably appoints and authorizes, and hereby agrees that it will
require any transferee of any of its interest in its Loans and in its Notes
irrevocably to appoint and authorize, the Collateral Agent to take such actions
as its agent on its behalf and to exercise such powers under the Security
Documents as are delegated by the terms thereof, together with such powers as
are reasonably incidental thereto. Neither the Collateral Agent nor any of its
directors, officers, employees, or agents shall be liable for any action taken
or omitted to be taken by it or them under any of the Security Documents or in
connection therewith, except for its or their own gross negligence or willful
misconduct as determined by a final non-appealable judicial order of a court of
competent jurisdiction. The Collateral Agent may execute any of its duties under
the Loan Documents by or through agents or attorneys selected by it using
reasonable care and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Collateral Agent shall not be responsible
to any Bank for the negligence or misconduct of any agents or attorneys selected
by it with reasonable care. The Collateral Agent may treat each Bank, or the
Person designated in the last notice filed with the Administrative Agent under
Section 9.3 of this Agreement, as the holder of all of the interests of such
Bank in its Loans and in its Notes until written notice of transfer, signed by
such Bank (or the Person designated in the last notice filed with the
Administrative Agent) and by the Person designated in such written notice of
transfer, in form and substance satisfactory to the Administrative Agent, shall
have been filed with the Administrative Agent. The Collateral Agent may consult
with legal counsel selected by it and shall not be liable for any action taken
or suffered by it in good faith in reliance thereon. The Collateral Agent shall
not be under any duty to examine, inquire into, or pass upon the validity,
effectiveness, or genuineness of any Security Document or other document, or
communication furnished pursuant thereto or in connection therewith, and the
Collateral Agent shall be entitled to assume that they are valid, effective, and
genuine, have been signed or sent by the proper parties, and are what they
purport to be. The Collateral Agent shall be entitled to use its discretion with
respect to exercising or refraining from exercising any rights which may be
vested in it by, and with respect to taking or refraining from taking any action
or actions which it may be able to take under or in respect of, any Security
Document, unless the Collateral Agent shall have been instructed by the Required
Lenders to exercise or refrain from exercising such rights or to take or refrain
from taking such action, provided that the Collateral Agent shall not exercise
any rights under any Security Document without the request of the Required
Lenders unless time is of the essence, in which case, such action can be taken.
The Collateral Agent shall incur no liability under or in respect of any
Security Document with respect to anything which it may do or refrain from doing
in the reasonable exercise of its judgment or which may seem to it to
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be necessary or desirable in the circumstances, except for its gross negligence
or willful misconduct as determined by a final, non-appealable judicial order of
a court of competent jurisdiction. The Collateral Agent shall not be liable to
the Banks or to any Bank in acting or refraining from acting under any Security
Document in accordance with the instructions of the Required Lenders, and any
action taken or failure to act pursuant to such instructions shall be binding on
all Banks. The Collateral Agent shall not be obligated to take any action which
is contrary to law or which would in its reasonable opinion subject it to
liability. All indemnity provisions herein that pertain to the Administrative
Agent shall apply equally to the Collateral Agent. Each Bank and the
Administrative Agent hereby agree that the Obligations are to be secured pari
----
passu with all Obligations under the ATS Facility B Loan Agreement and that all
- -----
Collateral now or hereafter delivered as security for the Obligations shall be
held by the Collateral Agent (or delivered to the Collateral Agent, if received
by any Bank) in accordance with the Security Documents.
Section 9.15 Successor Collateral Agent. Subject to the appointment and
--------------------------
acceptance of a successor Collateral Agent as provided below, the Collateral
Agent may resign at any time by giving written notice thereof to the Banks and
the Borrowers and may be removed at any time for cause by the Required Lenders.
Upon any such resignation or removal, the Required Lenders shall have the right
to appoint a successor Collateral Agent. If no successor Collateral Agent shall
have been so appointed by the Required Lenders, and shall have accepted such
appointment within thirty (30) days after the retiring Collateral Agent's giving
of notice of resignation or the Required Lenders' removal of the retiring
Collateral Agent, then the retiring Collateral Agent may, on behalf of the
Banks, appoint a successor Collateral Agent which shall be any Bank or a
commercial bank organized under the laws of the United States of America or any
political subdivision thereof which has combined capital and reserves in excess
of $250,000,000. Upon the acceptance of any appointment as Collateral Agent
hereunder by a successor Collateral Agent, such successor Collateral Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges,
duties, and obligations of the retiring Collateral Agent, and the retiring
Collateral Agent shall be discharged from its duties and obligations hereunder.
After any retiring Collateral Agent's resignation or removal hereunder as
Collateral Agent, the provisions of this Section 9.15 shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as the Collateral Agent.
Section 9.16 Collateral Actions. Each of the parties hereto acknowledges
------------------
and agrees that all provisions herein and under any Security Document relating
to rights and remedies under any Security Document shall be exercised only upon
the direction of the Required Lenders (except as expressly set forth in Section
9.14 hereof), and that the provisions of this Section 9.16 may not be amended
except with the consent of the Required Lenders; provided, however, that the
-------- -------
Majority Banks (or, as provided in Section 11.12 hereof, all Banks) shall
determine whether any collateral for the Obligations hereunder may be released.
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ARTICLE 10 Changes in Circumstances
Affecting LIBOR Advances and Increased Costs
Section 10.1 LIBOR Basis Determination Inadequate or Unfair. If with
----------------------------------------------
respect to any proposed LIBOR Advance for any Interest Period, the
Administrative Agent determines after consultation with the Banks that deposits
in dollars (in the applicable amount) are not being offered to each of the Banks
in the relevant market for such Interest Period, the Administrative Agent shall
forthwith give notice thereof to the Borrowers and the Banks, whereupon until
the Administrative Agent notifies the Borrowers that the circumstances giving
rise to such situation no longer exist, the obligations of any affected Bank to
make its portion of such LIBOR Advances shall be suspended.
Section 10.2 Illegality. If after the date hereof, the adoption of any
----------
Applicable Law, or any change in any Applicable Law (whether adopted before or
after the Agreement Date), or any change in interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Bank
with any directive (whether or not having the force of law) of any such
authority, central bank or comparable agency, shall make it unlawful or
impossible for any Bank to make, maintain or fund its portion of LIBOR Advances,
such Bank shall so notify the Administrative Agent, and the Administrative Agent
shall forthwith give notice thereof to the other Banks and the Borrowers.
Before giving any notice to the Administrative Agent pursuant to this Section
10.2, such Bank shall designate a different lending office if such designation
will avoid the need for giving such notice and will not, in the sole reasonable
judgment of such Bank, be otherwise materially disadvantageous to such Bank.
Upon receipt of such notice, notwithstanding anything contained in Article 2
hereof, the Borrowers shall repay in full the then outstanding principal amount
of such Bank's portion of each affected LIBOR Advance, together with accrued
interest thereon, on either (a) the last day of the then current Interest Period
applicable to such affected LIBOR Advances if such Bank may lawfully continue to
maintain and fund its portion of such LIBOR Advance to such day or (b)
immediately if such Bank may not lawfully continue to fund and maintain its
portion of such affected LIBOR Advances to such day. Concurrently with repaying
such portion of each affected LIBOR Advance, the Borrowers may borrow a Base
Rate Advance from such Bank, whether or not it would have been entitled to
effect such borrowing, and such Bank shall make such Advance, if so requested,
in an amount such that the outstanding principal amount of the affected Note
held by such Bank shall equal the outstanding principal amount of such Note or
Notes immediately prior to such repayment.
Section 10.3 Increased Costs.
---------------
(a) If after the date hereof, the adoption of any Applicable Law, or
any change in any Applicable Law (whether adopted before or after the Agreement
Date), or any interpretation or change in interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or
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administration thereof or compliance by any Bank with any directive (whether or
not having the force of law) of any such authority, central bank or comparable
agency:
(1) shall subject any Bank to any tax, duty or other charge with
respect to its obligation to make its portion of LIBOR Advances, or its
portion of other Advances, or shall change the basis of taxation of
payments to any Bank of the principal of or interest on its portion of
LIBOR Advances or in respect of any other amounts due under this Agreement,
or its obligation to make its portion of Advances (except for changes in
the rate or method of calculation of tax on the revenues or net income of
such Bank); or
(2) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of
the Federal Reserve System, but excluding any included in an applicable
Eurodollar Reserve Percentage), special deposit, capital adequacy,
assessment or other requirement or condition against assets of, deposits
with or for the account of, or commitments or credit extended by, any Bank
or shall impose on any Bank or the London interbank borrowing market any
other condition affecting its obligation to make its portion of such LIBOR
Advances or its portion of existing Advances;
and the result of any of the foregoing is to increase the cost to such Bank of
making or maintaining any of its portion of LIBOR Advances, or to reduce the
amount of any sum received or receivable by such Bank under this Agreement or
under its Note with respect thereto, then, within ten (10) days after demand by
such Bank, the Borrowers agree to pay to such Bank such additional amount or
amounts as will compensate such Bank for such increased costs. All payments
made by the Borrowers under this Agreement shall, as set forth above, be made
free and clear of, and without deduction or withholding for or on account of,
any present or future income, stamp, or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any governmental authority excluding net
income taxes and franchise taxes (imposed in lieu of net income taxes) imposed
on any Bank as a result of present or former connection between such Person and
the jurisdiction of the governmental authority imposing such tax or any
political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from such Person having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Agreement or any other Loan Document). If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded
Taxes") are required to be withheld from any amounts payable to any Bank
hereunder, the amounts so payable to such Person shall be increased to the
extent necessary to yield to such Person (after payment of all Non-Excluded
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement; provided, however, that the Borrowers
shall not be required to increase any such amounts payable to any Bank that is
not organized under the laws of the United States of America or a state thereof
if such Person fails to comply with the
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requirements of Section 2.13 of this Agreement. Whenever any Non-Excluded Taxes
are payable by the Borrowers, as promptly as possible thereafter the Borrowers
shall send to the Administrative Agent for its own account or for the account of
such Bank, as the case may be, a certified copy of an original official receipt
received by the Borrowers showing payment thereof. If the Borrowers fail to pay
any Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent the required receipts or other documentary
evidence, the Borrowers shall indemnify the Administrative Agent and the Banks
for any incremental taxes, interest or penalties that may become payable by the
Administrative Agent or any Bank as result of any such failure. The Borrowers
shall make any payments required pursuant to the immediately preceding sentence
within thirty (30) days after receipt of written demand therefor from the
Administrative Agent or any Bank, as the case may be. The agreements set forth
in this 10.3 shall survive the termination of this Agreement and the payment of
the Obligations. Each Bank will promptly notify the Borrowers and the
Administrative Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Bank to compensation pursuant to this
Section 10.3 and will designate a different lending office if such designation
will avoid the need for, or reduce the amount of, such compensation and will
not, in the sole reasonable judgment of such Bank made in good faith, be
otherwise disadvantageous to such Bank. Notwithstanding any provision herein to
the contrary, the Borrowers shall have no obligation to pay to any Bank any
amount which the Borrowers are liable to withhold due to the failure of such
Bank to file any statement of exemption required under the Code.
(b) Any Bank claiming compensation under this Section 10.3 shall
provide the Borrowers with a written certificate setting forth the additional
amount or amounts to be paid to it hereunder and calculations therefor in
reasonable detail. Such certificate shall be presumptively correct absent
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods. If any Bank demands compensation under this
Section 10.3, the Borrowers may at any time, upon at least five (5) Business
Days' prior notice to such Bank, prepay in full such Bank's portion of the then
outstanding LIBOR Advances, together with accrued interest and fees thereon to
the date of prepayment, along with any reimbursement required under Section 2.10
hereof and this Section 10.3. Concurrently with prepaying such portion of LIBOR
Advances the Borrowers may, whether or not then entitled to make such borrowing,
borrow a Base Rate Advance, or a LIBOR Advance not so affected, from such Bank,
and such Bank shall, if so requested, make such Advance in an amount such that
the outstanding principal amount of the affected Note or Notes held by such Bank
shall equal the outstanding principal amount of such Note or Notes immediately
prior to such prepayment.
Section 10.4 Effect On Other Advances. If notice has been given pursuant
------------------------
to Section 10.1, 10.2 or 10.3 hereof suspending the obligation of any Bank to
make its portion of any type of LIBOR Advance, or requiring such Bank's portion
of LIBOR Advances to be repaid or prepaid, then, unless and until such Bank
notifies the Borrowers that the circumstances giving rise to such repayment no
longer apply, all amounts which would
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otherwise be made by such Bank as its portion of LIBOR Advances shall be instead
as Base Rate Advances, unless otherwise notified by either of the Borrowers.
ARTICLE 11 Miscellaneous
Section 11.1 Notices.
-------
(a) Except as otherwise expressly provided herein, all notices and
other communications under this Agreement and the other Loan Documents (unless
otherwise specifically stated therein) shall be in writing and shall be deemed
to have been given three (3) Business Days after deposit in the mail, designated
as certified mail, return receipt requested, postage-prepaid, or one (1)
Business Day after being entrusted to a reputable commercial overnight delivery
service for next day delivery, or when sent on a Business Day prior to 5:00 p.m.
(New York, New York time) by telecopy addressed to the party to which such
notice is directed at its address determined as provided in this Section 11.1.
All notices and other communications under this Agreement shall be given to the
parties hereto at the following addresses:
(i) If to the Borrowers, to them at:
American Tower Systems (Delaware), Inc.
American Tower Systems, L.P.
116 Huntington Avenue
Boston, Massachusetts 02111
Attn: Joseph B. Winn, Chief Financial Officer
with copies to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02110
Attn: Norman A. Bikales, Esq.
(ii) If to the Administrative Agent, to it at:
Toronto Dominion (Texas), Inc.
909 Fannin Street, Suite 1700
Houston, Texas 77010
Attention: Agency Department
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with a copy to:
The Toronto-Dominion Bank
Toronto Dominion Securities, Inc.
USA Division
31 West 52nd Street
New York, NY 10019-6101
Attn: Managing Director, Communications Finance
and with a copy to:
Powell, Goldstein, Frazer & Murphy LLP
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Douglas S. Gosden, Esq.
(iii) If to the Banks, to them at the addresses set forth beside
their names as set forth in Schedule 9 attached hereto.
----------
The failure to provide copies shall not affect the validity of the notice given
to the primary recipient.
(b) Any party hereto may change the address to which notices shall be
directed under this Section 11.1 by giving ten (10) days' written notice of such
change to the other parties.
Section 11.2 Expenses. The Borrowers will promptly pay, or reimburse:
--------
(a) all reasonable out-of-pocket expenses of the Administrative Agent
in connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents, and the transactions contemplated
hereunder and thereunder and the making of the initial Advance hereunder
(whether or not such Advance is made), including, but not limited to, the
reasonable fees and disbursements of Powell, Goldstein, Frazer & Murphy LLP,
Atlanta, Georgia, special counsel for the Administrative Agent; and
(b) all reasonable out-of-pocket costs and expenses of the
Administrative Agent and the Banks of enforcement under this Agreement or the
other Loan Documents and all reasonable out-of-pocket costs and expenses of
collection if an Event of Default occurs in the payment of the Notes, which in
each case shall include, without limitation, reasonable fees and out-of-pocket
expenses of counsel for the Administrative Agent and the Banks.
Section 11.3 Waivers. The rights and remedies of the Administrative Agent
-------
and the Banks under this Agreement and the other Loan Documents shall be
cumulative and not
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exclusive of any rights or remedies which they would otherwise have. No failure
or delay by the Administrative Agent, the Majority Banks, or the Banks, or any
of them, in exercising any right, shall operate as a waiver of such right. The
Administrative Agent and the Banks expressly reserve the right to require strict
compliance with the terms of this Agreement in connection with any future
funding of a Request for Advance. In the event the Banks decide to fund a
Request for Advance at a time when the Borrowers are not in strict compliance
with the terms of this Agreement, such decision by the Banks shall not be deemed
to constitute an undertaking by the Banks to fund any further Request for
Advance or preclude the Banks or the Administrative Agent from exercising any
rights available under the Loan Documents or at law or equity. Any waiver or
indulgence granted by the Administrative Agent, the Banks, or the Majority
Banks, shall not constitute a modification of this Agreement or any other Loan
Document, except to the extent expressly provided in such waiver or indulgence,
or constitute a course of dealing at variance with the terms of this Agreement
or any other Loan Document such as to require further notice of their intent to
require strict adherence to the terms of this Agreement or any other Loan
Document in the future.
Section 11.4 Set-Off. In addition to any rights now or hereafter granted
-------
under Applicable Law and not by way of limitation of any such rights, upon the
occurrence of an Event of Default and during the continuation thereof, the
Administrative Agent and each of the Banks are hereby authorized by the
Borrowers at any time or from time to time, without notice to the Borrowers or
to any other Person, any such notice being, to the extent permitted by
Applicable Law, hereby expressly waived, to set off and to appropriate and to
apply any and all deposits (general or special, time or demand, including, but
not limited to, Indebtedness evidenced by certificates of deposit, in each case
whether matured or unmatured) and any other Indebtedness at any time held or
owing by any Bank or Administrative Agent, to or for the credit or the account
of the Borrowers or any Restricted Subsidiary, against and on account of the
obligations and liabilities of the Borrowers to the Banks and the Administrative
Agent, including, without limitation, all Obligations and any other claims of
any nature or description arising out of or connected with this Agreement, the
Notes or any other Loan Document, irrespective of whether (a) any Bank or
Administrative Agent shall have made any demand hereunder or (b) any Bank or
Administrative Agent shall have declared the principal of and interest on the
Loans and other amounts due hereunder to be due and payable as permitted by
Section 8.2 hereof and although such obligations and liabilities or any of them
shall be contingent or unmatured. Upon direction by the Administrative Agent
with the consent of all of the Banks, each Bank holding deposits of either
Borrower or any Restricted Subsidiary shall exercise its set-off rights as so
directed; and, within one (1) Business Day following any such setoff, the
Administrative Agent shall give notice thereof to the Borrowers.
Notwithstanding anything to the contrary contained in this Section 11.4, no Bank
shall exercise any right of offset without the prior consent of the Majority
Banks so long as the Obligations shall be secured by any real property or real
property interest including leaseholds located in the State of California, it
being understood and agreed that the provisions of this sentence are for the
exclusive benefit of the Banks, may be amended, modified or waived by the
Majority Banks without notice to or consent of the
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Borrowers or any Subsidiary and shall not constitute a waiver of any rights
against the Borrowers or any Subsidiary or against any Collateral.
Section 11.5 Assignment and Participation.
----------------------------
(a) Neither Borrower may assign or transfer any of its rights or
obligations hereunder, under the Notes or under any other Loan Document without
the prior written consent of each Bank.
(b) Each Bank may sell (i) assignments of any amount of its interest
hereunder to any Bank, or (ii) assignments or participations of up to one
hundred percent (100%) of its interest hereunder to (A) one (1) or more wholly-
owned Affiliates of such Bank or Approved Funds (provided, however, that if such
-------- -------
Affiliate is not a financial institution, such Bank shall be obligated to
repurchase such assignment if such Affiliate is unable to honor its obligations
hereunder), or (B) any Federal Reserve Bank as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve System and any
Operating Circular issued by such Federal Reserve Bank (provided, however, that
-------- -------
no such assignment shall relieve such Bank from its obligations hereunder).
(c) Each of the Banks may at any time enter into assignment agreements
or participations with one or more other Banks, Approved Funds or other Persons
pursuant to which each Bank may assign or participate its interest under this
Agreement and the other Loan Documents, including its interest in any particular
Advance or portion thereof; provided, however, that (1) all assignments (other
-------- -------
than assignments described in Section 11.5(b) hereof) shall be in minimum
principal amounts of the lesser of (X) $5,000,000, and (Y) the amount of such
Bank's Commitment (in a single assignment only), and (2) all assignments (other
than assignments described in Section 11.5(b) hereof) and participations
hereunder shall be subject to the following additional terms and conditions:
(i) No assignment (except assignments permitted in Section
11.5(b) hereof) shall be sold without the prior consent of the
Administrative Agent and prior to the occurrence and continuation of an
Event of Default, the consent of the Borrowers, which consents shall not be
unreasonably withheld;
(ii) Any Person purchasing a participation or an assignment of
any portion of the Loans from any Bank shall be required to represent and
warrant that its purchase shall not constitute a "prohibited transaction"
(as defined in Section 4.1(m) hereof);
(iii) The Borrowers, the Banks, and the Administrative Agent
agree that assignments permitted hereunder (including the assignment of any
Advance or portion thereof) may be made with all voting rights, and shall
be made pursuant to an Assignment and Assumption Agreement substantially in
the form of Exhibit T attached hereto. An administrative fee of $3,500
---------
shall be payable to the
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Administrative Agent either by the assigning Bank or the assignee thereof
at the time of any assignment under this Section 11.5(c);
(iv) No participation agreement shall confer any rights under
this Agreement or any other Loan Document to any purchaser thereof, or
relieve any issuing Bank from any of its obligations under this Agreement,
and all actions hereunder shall be conducted as if no such participation
had been granted; provided, however, that any participation agreement may
-------- -------
confer on the participant the right to approve or disapprove decreases in
the interest rate, increases in the principal amount of the Loans
participated in by such participant, decreases in fees, extensions of the
Maturity Date or other principal payment date for the Loans or of the
scheduled reduction of the Commitment and releases of Collateral;
(v) Each Bank agrees to provide the Administrative Agent and
the Borrowers with prompt written notice of any issuance of assignments of
its interests hereunder;
(vi) No assignment, participation or other transfer of any
rights hereunder or under the Notes shall be effected that would result in
any interest requiring registration under the Securities Act of 1933, as
amended, or qualification under any state securities law;
(vii) No such assignment may be made to any bank or other
financial institution (x) with respect to which a receiver or conservator
(including, without limitation, the Federal Deposit Insurance Corporation,
the Resolution Trust Company or the Office of Thrift Supervision) has been
appointed or (y) that is not "adequately capitalized" (as such term is
defined in Section 131(b)(1)(B) of the Federal Deposit Insurance
Corporation Improvement Act as in effect on the Agreement Date); and
(viii) If applicable, each Bank shall, and shall cause each of
its assignees to, provide to the Administrative Agent on or prior to the
effective date of any assignment an appropriate Internal Revenue Service
form as required by Applicable Law supporting such Bank's or assignee's
position that no withholding by either Borrower or the Administrative Agent
for U.S. income tax payable by such Bank or assignee in respect of amounts
received by it hereunder is required. For purposes of this Agreement, an
appropriate Internal Revenue Service form shall mean Form 1001 (Ownership
Exemption or Reduced Rate Certificate of the U.S. Department of Treasury),
or Form 4224 (Exemption from Withholding of Tax on Income Effectively
Connected with the Conduct of a Trade or Business in the United States), or
any successor or related forms adopted by the relevant U.S. taxing
authorities.
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(d) Except as specifically set forth in Section 11.5(b) or (c) hereof,
nothing in this Agreement or the Notes, expressed or implied, is intended to or
shall confer on any Person other than the respective parties hereto and thereto
and their successors and assignees permitted hereunder and thereunder any
benefit or any legal or equitable right, remedy or other claim under this
Agreement or the Notes.
(e) In the case of any participation, all amounts payable by the
Borrowers under the Loan Documents shall be calculated and made in the manner
and to the parties hereto as if no such participation had been sold.
(f) The provisions of this Section 11.5 shall not apply to any
purchase of participations among the Banks pursuant to Section 2.11 hereof.
(g) The Administrative Agent, acting, for this purpose only, as agent
of the Borrowers shall maintain, at no extra charge to the Borrowers, a register
(the "Register") at the address to which notices to the Administrative Agent are
--------
to be sent under Section 11.1 hereof on which Register the Administrative Agent
shall enter the name, address and taxpayer identification number (if provided)
of the registered owner of the Loans evidenced by a Registered Note or, upon the
request of the registered owner, for which a Registered Note has been requested.
A Registered Note and the Loans evidenced thereby may be assigned or otherwise
transferred in whole or in part only by registration of such assignment or
transfer of such Registered Note and the Loans evidenced thereby on the
Register. Any assignment or transfer of all or part of such Loans and the
Registered Note evidencing the same shall be registered on the Register only
upon compliance with the other provisions of this Section 11.5 and surrender for
registration of assignment or transfer of the Registered Note evidencing such
Loans, duly endorsed by (or accompanied by a written instrument of assignment or
transfer duly executed by) the Registered Noteholder thereof, and thereupon one
or more new Registered Notes in the same aggregate principal amount shall be
issued to the designated assignee(s) or transferee(s) and, if less than the
aggregate principal amount of such Registered Notes is thereby transferred, the
assignor or transferor. Prior to the due presentment for registration of
transfer of any Registered Note, the Borrowers and the Administrative Agent
shall treat the Person in whose name such Loans and the Registered Note
evidencing the same is registered as the owner thereof for the purpose of
receiving all payments thereon and for all other purposes, notwithstanding any
notice to the contrary.
(h) The Register shall be available for inspection by the Borrowers
and any Bank at any reasonable time during the Administrative Agent's regular
business hours upon reasonable prior notice.
(i) Notwithstanding any other provision in this Agreement, any Bank
that is a fund that invests in bank loans may, without the consent of the
Administrative Agent or the Borrowers, pledge all or any portion of its rights
under, and interest in, this Agreement and the Notes to any trustee or to any
other representative of holders of obligations owed or securities issued, by
such fund as security for such obligations or securities; provided,
--------
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however, that any transfer to any Person upon the enforcement of such pledge or
- -------
security interest may only be made subject to the assignment provisions of this
Section 11.5.
Section 11.6 Accounting Principles. All references in this Agreement to
---------------------
GAAP shall be to such principles as in effect from time to time. All accounting
terms used herein without definition shall be used as defined under GAAP. All
references to the financial statements of the Borrowers and to their Annualized
Operating Cash Flow, Operating Cash Flow, Senior Debt, Total Debt, Fixed
Charges, Pro Forma Debt Service, Interest Expense, and other such terms shall be
deemed to refer to such items of the Borrowers and the Restricted Subsidiaries,
on a fully consolidated basis. The Borrowers shall deliver to the Banks at the
same time as the delivery of any quarterly or annual financial statements
required pursuant to Section 6.1 or 6.2 hereof, as applicable, (a) a description
in reasonable detail of any material variation between the application of GAAP
employed in the preparation of such statements and the application of GAAP
employed in the preparation of the next preceding quarterly or annual financial
statements, as applicable, and (b) reasonable estimates of the differences
between such statements arising as a consequence thereof. If, within thirty
(30) days after the delivery of the quarterly or annual financial statements
referred to in the immediately preceding sentence, the Majority Banks shall
object in writing to the Borrowers' determining compliance hereunder on such
basis, (1) calculations for the purposes of determining compliance hereunder
shall be made on a basis consistent with those used in the preparation of the
latest financial statements as to which such objection shall not have been made,
or (2) if requested by the Borrowers, the Majority Banks will negotiate in good
faith to amend the covenants herein to give effect to the changes in GAAP in a
manner consistent with this Agreement (and so long as the Borrowers comply in
good faith with the provisions of this Section 11.6, no Default or Event of
Default shall occur hereunder solely as a result of such changes in GAAP).
Section 11.7 Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
Section 11.8 Governing Law. This Agreement and the Notes shall be
-------------
construed in accordance with and governed by the internal laws of the State of
New York applicable to agreements made and to be performed the State of New
York. If any action or proceeding shall be brought by the Administrative Agent
or any Bank hereunder or under any other Loan Document in order to enforce any
right or remedy under this Agreement or under any Note or any other Loan
Document, each of the Borrowers hereby consents and will, and each of the
Borrowers will cause each Restricted Subsidiary to, submit to the jurisdiction
of any state or federal court of competent jurisdiction sitting within the area
comprising the Southern District of New York on the date of this Agreement.
Each of the Borrowers, for itself and on behalf of its Restricted Subsidiaries,
hereby agrees that, to the extent permitted by Applicable Law, service of the
summons and complaint and all other process which may be served in any such
suit, action or proceeding may be effected by mailing by registered mail a copy
of
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such process to the offices of the Borrowers at the address given in Section
11.1 hereof and that personal service of process shall not be required. Nothing
herein shall be construed to prohibit service of process by any other method
permitted by law, or the bringing of any suit, action or proceeding in any other
jurisdiction. The Borrowers agree that final judgment in such suit, action or
proceeding shall be conclusive and may be enforced in any other jurisdiction by
suit on the judgment or in any other manner provided by Applicable Law.
Section 11.9 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof in that jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 11.10 Interest.
--------
(a) In no event shall the amount of interest due or payable
hereunder or under the Notes exceed the maximum rate of interest allowed by
Applicable Law, and in the event any such payment is inadvertently made by the
Borrowers or inadvertently received by the Administrative Agent or any Bank,
then such excess sum shall be credited as a payment of principal, unless the
Borrowers shall notify the Administrative Agent or such Bank, in writing, that
it elects to have such excess sum returned forthwith. It is the express intent
hereof that the Borrowers not pay and the Administrative Agent and the Banks not
receive, directly or indirectly in any manner whatsoever, interest in excess of
that which may legally be paid by the Borrowers under Applicable Law.
(b) Notwithstanding the use by the Banks of the Base Rate and
the LIBOR as reference rates for the determination of interest on the Loans, the
Banks shall be under no obligation to obtain funds from any particular source in
order to charge interest to the Borrowers at interest rates related to such
reference rates.
Section 11.11 Table of Contents and Headings. The Table of Contents and
------------------------------
the headings of the various subdivisions used in this Agreement are for
convenience only and shall not in any way modify or amend any of the terms or
provisions hereof, nor be used in connection with the interpretation of any
provision hereof.
Section 11.12 Amendment and Waiver. Neither this Agreement nor any Loan
--------------------
Document nor any term hereof or thereof may be amended orally, nor may any
provision hereof or thereof be waived orally but only by an instrument in
writing signed by or at the direction of the Majority Banks and, in the case of
an amendment, by the Borrowers, except that in the event of (a) any increase in
the amount of any Bank's portion of the Commitments or any reduction or
postponement of the reductions to the Revolving Loan Commitment set forth in
Section 2.5(a) hereof, (b) any delay or extension in the terms of repayment of
the Loans provided in Section 2.5 or 2.7 hereof, (c) any reduction in principal,
interest or fees due hereunder or postponement of the payment thereof without a
corresponding payment of
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such principal, interest or fee amount by the Borrowers, (d) any release of any
portion of the Collateral for the Loans, except under Section 7.4 hereof, (e)
any waiver of any Default due to the failure by the Borrowers to pay any sum due
to any of the Banks hereunder, (f) any release of any Guaranty of all or any
portion of the Obligations, except in connection with a merger, sale or other
disposition otherwise permitted hereunder (in which case, such release shall
require no further approval by the Banks), (g) any amendment to the pro rata
treatment of the Banks set forth in Section 2.11 hereof, or (h) any amendment of
this Section 11.12, of the definition of Majority Banks, or of any Section
herein to the extent that such Section requires action by all Banks, any
amendment or waiver or consent may be made only by an instrument in writing
signed by each of the Banks and, in the case of an amendment, by the Borrowers.
Any amendment to any provision hereunder governing the rights, obligations, or
liabilities of the Administrative Agent in its capacity as such, may be made
only by an instrument in writing signed by such affected Person and by each of
the Banks.
Section 11.13 Entire Agreement. Except as otherwise expressly provided
----------------
herein, this Agreement, the Other Loan Documents and the other documents
described or contemplated herein or therein will embody the entire agreement and
understanding among the parties hereto and thereto and supersede all prior
agreements and understandings relating to the subject matter hereof and thereof.
Section 11.14 Other Relationships. No relationship created hereunder or
-------------------
under any other Loan Document shall in any way affect the ability of the
Administrative Agent and each Bank to enter into or maintain business
relationships with either Borrower or any Affiliate beyond the relationships
specifically contemplated by this Agreement and the other Loan Documents.
Section 11.15 Directly or Indirectly. If any provision in this Agreement
----------------------
refers to any action taken or to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such Person, whether or not expressly
specified in such provision.
Section 11.16 Reliance on and Survival of Various Provisions. All
----------------------------------------------
covenants, agreements, statements, representations and warranties made herein or
in any certificate delivered pursuant hereto shall (a) be deemed to have been
relied upon by the Administrative Agent and each of the Banks notwithstanding
any investigation heretofore or hereafter made by them and (b) survive the
execution and delivery of the Notes and shall continue in full force and effect
so long as any Note is outstanding and unpaid. Any right to indemnification
hereunder, including, without limitation, rights pursuant to Sections 2.10,
2.12, 5.12, 10.3 and 11.2 hereof, shall survive the termination of this
Agreement and the payment and performance of all Obligations.
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Section 11.17 Senior Debt. The Obligations are secured by the Security
-----------
Documents and are intended by the parties hereto to be in parity with the
Interest Hedge Agreements and senior in right of payment to all other
Indebtedness of the Borrowers.
Section 11.18 Obligations. The obligations of the Administrative Agent
-----------
and each of the Banks hereunder are several, not joint.
Section 11.19 Confidentiality. The Banks shall hold all non-public,
---------------
proprietary or confidential information (which has been identified as such by
the Borrowers) obtained pursuant to the requirements of this Agreement in
accordance with their customary procedures for handling confidential information
of this nature and in accordance with safe and sound banking practices;
provided, however, that the Banks may make disclosure of any such information to
- -------- -------
their examiners, Affiliates, any Approved Fund, outside auditors, counsel,
consultants, appraisers and other professional advisors in connection with this
Agreement or as reasonably required by any proposed syndicate member or any
proposed transferee or participant in connection with the contemplated transfer
of any Note or participation therein or as required or requested by any
governmental authority or representative thereof or in connection with the
enforcement hereof or of any Loan Document or related document or pursuant to
legal process or with respect to any litigation between or among either Borrower
and any of the Banks, so long as the person (other than any examiners) receiving
such information is advised of the provisions of this Section 11.19 and agrees
to be bound thereby. In no event shall any Bank be obligated or required to
return any materials furnished to it by the Borrowers. The foregoing provisions
shall not apply to a Bank with respect to information that (i) is or becomes
generally available to the public (other than through such Bank), (ii) is
already in the possession of such Bank on a nonconfidential basis, or (iii)
comes into the possession of such Bank in a manner not known to such Bank to
involve a breach of a duty of confidentiality owing to the Borrowers.
ARTICLE 12 Waiver of Jury Trial
Section 12.1 Waiver of Jury Trial. EACH OF THE BORROWERS, FOR ITSELF AND
--------------------
ON BEHALF OF THE RESTRICTED SUBSIDIARIES, AND THE ADMINISTRATIVE AGENT AND THE
BANKS, HEREBY AGREE, TO THE EXTENT PERMITTED BY LAW, TO WAIVE AND HEREBY WAIVE
THE RIGHT TO A TRIAL BY JURY IN ANY COURT AND IN ANY ACTION OR PROCEEDING OF ANY
TYPE IN WHICH THE BORROWERS, ANY RESTRICTED SUBSIDIARIES, ANY OF THE BANKS, THE
ADMINISTRATIVE AGENT OR ANY OF THEIR RESPECTIVE SUCCESSORS OR ASSIGNS IS A
PARTY, AS TO ALL MATTERS AND THINGS ARISING DIRECTLY OR INDIRECTLY OUT OF THIS
AGREEMENT, ANY OF THE NOTES OR THE OTHER LOAN DOCUMENTS AND THE RELATIONS AMONG
THE PARTIES LISTED IN THIS SECTION 12.1. EXCEPT AS PROHIBITED BY LAW, EACH PARTY
TO THIS AGREEMENT WAIVES ANY RIGHTS IT MAY HAVE TO CLAIM
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OR RECOVER IN ANY LITIGATION REFERRED TO IN THIS SECTION, ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES. EACH PARTY TO THIS AGREEMENT (A) CERTIFIES THAT
NEITHER ANY REPRESENTATIVE, AGENT OR ATTORNEY OF THE ADMINISTRATIVE AGENT OR ANY
BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE ADMINISTRATIVE AGENT OR
ANY BANK WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVERS AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND EACH OTHER LOAN DOCUMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION. THE PROVISIONS OF THIS SECTION HAVE
BEEN FULLY DISCLOSED BY AND TO THE PARTIES AND THE PROVISIONS SHALL BE SUBJECT
TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY
OTHER PARTY THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN
ALL INSTANCES.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-94-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused it to be executed by their duly authorized officers, all as of the day
and year first above written.
BORROWERS: AMERICAN TOWER SYSTEMS, L.P.
By ATSC GP, INC., its General Partner
By:____________________________________________
Title:____________________________________
AMERICAN TOWER SYSTEMS (DELAWARE), INC.
By:____________________________________________
Title:____________________________________
ADMINISTRATIVE AGENT
AND BANKS: TORONTO DOMINION (TEXAS), INC., as
Administrative Agent for itself and the Banks
and as a Bank
By:____________________________________
Title:____________________________
<PAGE>
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank
By:____________________________________
Title:____________________________
BANK OF MONTREAL, as a Bank
By:____________________________________
Title:____________________________
THE BANK OF NEW YORK, as a Bank
By:____________________________________
Title:____________________________
THE BANK OF NOVA SCOTIA, as a Bank
By:____________________________________
Title:____________________________
BANKBOSTON, N.A., as a Bank
By:____________________________________
Title:____________________________
<PAGE>
BANKERS TRUST COMPANY, as a Bank
By:____________________________________
Title:____________________________
BARCLAYS BANK, PLC, as a Bank
By:____________________________________
Title:____________________________
THE CHASE MANHATTAN BANK, as a Bank
By:___________________________________
Title:____________________________
COBANK, ACB, as a Bank
By:____________________________________
Title:____________________________
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH, as a
Bank
By:____________________________________
Title:____________________________
CREDIT SUISSE FIRST BOSTON, as a Bank
By:____________________________________
Title:____________________________
By:____________________________________
Title:____________________________
CRESTAR BANK, as a Bank
By:____________________________________
Title:____________________________
<PAGE>
DRESDNER BANK AG, NEW YORK AND GRAND
CAYMAN BRANCHES, as a Bank
By:____________________________________
Title:____________________________
By:____________________________________
Title:____________________________
FIRST NATIONAL BANK OF MARYLAND, as a
Bank
By:____________________________________
Title:____________________________
FLEET NATIONAL BANK, as a Bank
By:____________________________________
Title:____________________________
GENERAL ELECTRIC CAPITAL CORPORATION, as
a Bank
By:____________________________________
Title:____________________________
<PAGE>
KEY CORPORATE CAPITAL INC., as a Bank
By:____________________________________
Title:____________________________
LEHMAN COMMERCIAL PAPER INC., as a Bank
By:____________________________________
Title:____________________________
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.,
NEW YORK BRANCH, as a Bank
By:____________________________________
Title:____________________________
MELLON BANK, N.A., as a Bank
By:____________________________________
Title:____________________________
<PAGE>
MERCANTILE BANK NATIONAL ASSOCIATION,
as a Bank
By:____________________________________
Title:____________________________
MORGAN STANLEY SENIOR FUNDING, INC., as
a Bank
By:____________________________________
Title:____________________________
NATIONAL BANK OF CANADA, as a Bank
By:____________________________________
Title:____________________________
By:____________________________________
Title:____________________________
PNC BANK, NATIONAL ASSOCIATION, as a Bank
By:____________________________________
Title:____________________________
<PAGE>
SOCIETE GENERALE, NEW YORK BRANCH, as a
Bank
By:___________________________________
Title:____________________________
STATE STREET BANK AND TRUST COMPANY, as
a Bank
By:____________________________________
Title:____________________________
UNION BANK OF CALIFORNIA, N.A., as a Bank
By:____________________________________
Title:____________________________
US TRUST, as a Bank
By:____________________________________
Title:____________________________
<PAGE>
EXHIBIT 10.2b
ATS FACILITY B
LOAN AGREEMENT
AMONG
AMERICAN TOWER SYSTEMS, L.P.
AND
AMERICAN TOWER SYSTEMS (DELAWARE), INC.,
AS BORROWERS;
THE FINANCIAL INSTITUTIONS WHOSE NAMES APPEAR
AS BANKS ON THE SIGNATURE PAGES HEREOF;
AND
TORONTO DOMINION (TEXAS), INC.,
AS ADMINISTRATIVE AGENT
FOR THE BANKS
DATED AS OF JUNE 16, 1998
POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
ATLANTA, GEORGIA
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1 DEFINITIONS................................................... 1
ARTICLE 2 FACILITY B LOANS.............................................. 26
Section 2.1 The Facility B Loans................................... 26
Section 2.2 Manner of Borrowing and Disbursement................... 26
Section 2.3 Interest............................................... 29
Section 2.4 Commitment Fees........................................ 31
Section 2.5 Mandatory Commitment Reductions........................ 31
Section 2.6 Voluntary Commitment Reductions........................ 31
Section 2.7 Prepayments and Repayments............................. 32
Section 2.8 Notes; Loan Accounts................................... 34
Section 2.9 Manner of Payment...................................... 35
Section 2.10 Reimbursement.......................................... 36
Section 2.11 Pro Rata Treatment..................................... 37
Section 2.12 Capital Adequacy....................................... 37
Section 2.13 Bank Tax Forms......................................... 38
Section 2.14 Conversion of Facility B Loans to Term Loans........... 39
ARTICLE 3 CONDITIONS PRECEDENT.......................................... 39
Section 3.1 Conditions Precedent to Effectiveness of this
Agreement............................................ 39
Section 3.2 Conditions Precedent to Each Advance................... 42
ARTICLE 4 REPRESENTATIONS AND WARRANTIES................................ 43
Section 4.1 Representations and Warranties......................... 43
Section 4.2 Survival of Representations and Warranties, Etc........ 50
ARTICLE 5 GENERAL COVENANTS............................................. 50
Section 5.1 Preservation of Existence and Similar Matters.......... 51
Section 5.2 Business; Compliance with Applicable Law............... 51
Section 5.3 Maintenance of Properties.............................. 51
Section 5.4 Accounting Methods and Financial Records............... 51
Section 5.5 Insurance.............................................. 51
Section 5.6 Payment of Taxes and Claims............................ 52
Section 5.7 Compliance with ERISA.................................. 52
Section 5.8 Visits and Inspections................................. 54
Section 5.9 Payment of Indebtedness; Facility B Loans.............. 54
Section 5.10 Use of Proceeds........................................ 54
Section 5.11 Indemnity.............................................. 55
Section 5.12 Interest Rate Hedging.................................. 56
Section 5.13 Covenants Regarding Formation of Restricted
Subsidiaries and Acquisitions; Partnership,
Subsidiaries.......................................... 56
Section 5.14 Payment of Wages....................................... 57
Section 5.15 Further Assurances..................................... 57
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE 6 INFORMATION COVENANTS........................................... 57
Section 6.1 Quarterly Financial Statements and Information........... 58
Section 6.2 Annual Financial Statements and Information.............. 58
Section 6.3 Performance Certificates................................. 58
Section 6.4 Copies of Other Reports.................................. 59
Section 6.5 Notice of Litigation and Other Matters................... 59
ARTICLE 7 NEGATIVE COVENANTS.............................................. 61
Section 7.1 Indebtedness of the Borrowers and their Subsidiaries..... 61
Section 7.2 Limitation on Liens...................................... 62
Section 7.3 Amendment and Waiver..................................... 62
Section 7.4 Liquidation, Merger or Disposition of Assets............. 62
Section 7.5 Limitation on Guaranties................................. 63
Section 7.6 Investments and Acquisitions............................. 63
Section 7.7 Restricted Payments...................................... 64
Section 7.8 Senior Leverage Ratio.................................... 65
Section 7.9 Total Leverage Ratio..................................... 65
Section 7.10 Interest Coverage Ratio.................................. 66
Section 7.11 Annualized Operating Cash Flow to Pro Forma Debt
Service................................................. 66
Section 7.12 Fixed Charge Coverage Ratio.............................. 67
Section 7.13 Affiliate Transactions................................... 67
Section 7.14 ERISA Liabilities........................................ 67
Section 7.15 Sales and Leasebacks..................................... 67
ARTICLE 8 DEFAULT......................................................... 67
Section 8.1 Events of Default........................................ 67
Section 8.2 Remedies................................................. 71
Section 8.3 Payments Subsequent to Declaration of Event of Default... 72
ARTICLE 9 THE ADMINISTRATIVE AGENT........................................ 73
Section 9.1 Appointment and Authorization............................ 73
Section 9.2 Interest Holders......................................... 73
Section 9.3 Consultation with Counsel................................ 73
Section 9.4 Documents................................................ 73
Section 9.5 Administrative Agent and Affiliates...................... 74
Section 9.6 Responsibility of the Administrative Agent............... 74
Section 9.7 Action by the Administrative Agent....................... 74
Section 9.8 Notice of Default or Event of Default.................... 75
Section 9.9 Responsibility Disclaimed................................ 75
Section 9.10 Indemnification.......................................... 76
Section 9.11 Credit Decision.......................................... 76
Section 9.12 Successor Administrative Agent........................... 77
Section 9.13 Delegation of Duties..................................... 77
</TABLE>
-2-
<PAGE>
<TABLE>
<S> <C>
Section 9.14 Collateral Agent...................................... 77
Section 9.15 Successor Collateral Agent............................ 78
Section 9.16 Collateral Actions.................................... 79
ARTICLE 10 CHANGES IN CIRCUMSTANCES AFFECTING LIBOR ADVANCES............... 79
Section 10.1 LIBOR Basis Determination Inadequate or Unfair........ 79
Section 10.2 Illegality............................................ 79
Section 10.3 Increased Costs....................................... 80
Section 10.4 Effect On Other Advances.............................. 82
ARTICLE 11 MISCELLANEOUS................................................... 83
Section 11.1 Notices............................................... 83
Section 11.2 Expenses.............................................. 84
Section 11.3 Waivers............................................... 85
Section 11.4 Set-Off............................................... 85
Section 11.5 Assignment............................................ 86
Section 11.6 Accounting Principles................................. 89
Section 11.7 Counterparts.......................................... 89
Section 11.8 Governing Law......................................... 89
Section 11.9 Severability.......................................... 90
Section 11.10 Interest.............................................. 90
Section 11.11 Table of Contents and Headings........................ 90
Section 11.12 Amendment and Waiver.................................. 90
Section 11.13 Entire Agreement...................................... 91
Section 11.14 Other Relationships................................... 91
Section 11.15 Directly or Indirectly................................ 91
Section 11.16 Reliance on and Survival of Various Provisions........ 91
Section 11.17 Senior Debt........................................... 92
Section 11.18 Obligations........................................... 92
Section 11.19 Confidentiality....................................... 92
ARTICLE 12 WAIVER OF JURY TRIAL............................................ 92
Section 12.1 Waiver of Jury Trial.................................. 92
</TABLE>
-3-
<PAGE>
EXHIBITS
Exhibit A Form of Assignment of General Partner Interests
Exhibit B Form of Assignment of Limited Partner Interests
Exhibit C Form of Borrowers' Guaranty
Exhibit D Form of Certificate of Financial Condition
Exhibit E Form of Facility B Note
Exhibit F Form of Parent Guaranty
Exhibit G Form of Parent Pledge Agreement
Exhibit H Form of Request for Advance
Exhibit I Form of Security Agreement
Exhibit J Form of Stock Pledge Agreement
Exhibit K Form of Subsidiary Guaranty
Exhibit L Form of Subsidiary Pledge Agreement
Exhibit M Form of Subsidiary Security Agreement
Exhibit N Form of Term Conversion Notice
Exhibit O Form of ATS's Loan Certificate
Exhibit P Form of ATS (Delaware)'s Loan Certificate
Exhibit Q Form of Parent Loan Certificate
Exhibit R Form of Subsidiary Loan Certificate
Exhibit S Form of Performance Certificate
Exhibit T Form of Assignment and Assumption Agreement
SCHEDULES
Schedule 1 - Licenses
Schedule 2 - Restricted Subsidiaries on the Agreement Date
Schedule 3 - Separation Obligations
Schedule 4 - List of Unrestricted Subsidiaries on the Agreement Date
Schedule 5 - Exceptions to Representations and Warranties
Schedule 6 - Litigation
Schedule 7 - Affiliate Transactions
Schedule 8 - Indebtedness for Money Borrowed
Schedule 9 - Bank Names and Notice Addresses
<PAGE>
ATS FACILITY B
LOAN AGREEMENT
AMONG
AMERICAN TOWER SYSTEMS, L.P.
AND
AMERICAN TOWER SYSTEMS (DELAWARE), INC.,
AS BORROWERS;
THE FINANCIAL INSTITUTIONS WHOSE NAMES APPEAR
AS BANKS ON THE SIGNATURE PAGES HEREOF;
AND
TORONTO-DOMINION (TEXAS), INC.,
AS ADMINISTRATIVE AGENT
FOR THE BANKS
WHEREAS, ATS (as defined below) and ATS (Delaware) (as defined below)
have requested and the Banks have agreed, subject to the terms and conditions
set forth herein, to make available to ATS and ATS (Delaware) a 364-day
revolving credit facility in the amount of $250,000,000 which, at the option of
the Borrowers, may be extended to a term credit facility;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties hereto, the
parties hereby agree as follows:
ARTICLE 1 Definitions
For the purposes of this Agreement:
"Acquisition" shall mean (whether by purchase, lease, exchange,
-----------
issuance of stock or other equity or debt securities, merger, reorganization or
any other method) (i) any acquisition by either Borrower or any of the
Restricted Subsidiaries of any other Person, which Person shall then become
consolidated with either Borrower or any of the Restricted Subsidiaries in
accordance with GAAP; (ii) any acquisition by either Borrower or any of the
Restricted Subsidiaries of all or any substantial part of the assets of any
other Person; or (iii) any acquisition by either Borrower or any of the
Restricted Subsidiaries of any business (or related contracts) primarily
involving the management of communications sites, towers or other facilities for
third parties, other than any such Acquisition which shall be made by, or of,
any Person which shall have been designated and, to the extent required hereby,
approved as an Unrestricted Subsidiary.
"Acquisition Operating Cash Flow" shall mean in the case of an
-------------------------------
Acquisition permitted hereunder, Operating Cash Flow (New Towers), Operating
Cash Flow (Towers) and
<PAGE>
Operating Cash Flow (Other Business), as applicable, of the Borrowers and their
Restricted Subsidiaries for the period during which such Acquisition occurs,
adjusted to give effect to such Acquisition, as if such Acquisition had occurred
on the first day of such period, by excluding the Operating Cash Flow (New
Towers), Operating Cash Flow (Towers) and Operating Cash Flow (Other Business),
as applicable, of such Acquisition during such period prior to and including the
date of such Acquisition and adding to the Operating Cash Flow (New Towers),
Operating Cash Flow (Towers) and Operating Cash Flow (Other Business), as
applicable, of the Borrowers and their Restricted Subsidiaries, if positive, or
subtracting from such Operating Cash Flow (New Towers), Operating Cash Flow
(Towers) and Operating Cash Flow (Other Business), as applicable, if negative,
the product of (i) the actual Operating Cash Flow (New Towers), Operating Cash
Flow (Towers) and Operating Cash Flow (Other Business), as applicable, of such
Acquisition for that portion of such period from the date of such Acquisition to
the last day of such period, multiplied by (ii) a fraction the numerator of
which is the number of calendar days in such period and the denominator of which
is the number of days in such period from and including the date following such
Acquisition through the last day of such period.
"Administrative Agent" shall mean Toronto Dominion (Texas), Inc., in
--------------------
its capacity as Administrative Agent for the Banks or any successor
Administrative Agent appointed pursuant to Section 9.12 hereof.
"Administrative Agent's Office" shall mean the office of the
-----------------------------
Administrative Agent located at 909 Fannin Street, Suite 1700, Houston Texas
77010, or such other office as may be designated pursuant to the provisions of
Section 11.1 hereof.
"Advance" shall mean amounts advanced by the Banks to either Borrower
-------
pursuant to Article 2 hereof on the occasion of any borrowing and having the
same Interest Rate Basis and Interest Period; and "Advances" shall mean more
--------
than one Advance.
"Affiliate" shall mean, with respect to a Person, any other Person
---------
directly or indirectly controlling, controlled by, or under common control with,
such first Person. For purposes of this definition, "control", when used with
respect to any Person, includes, without limitation, the direct or indirect
beneficial ownership of more than ten percent (10%) of the voting securities or
voting equity of such Person or the power to direct or cause the direction of
the management and policies of such Person whether by contract or otherwise.
"Agreement" shall mean this ATS Facility B Loan Agreement, as amended,
---------
supplemented, restated or otherwise modified from time to time.
"Agreement Date" shall mean the date as of which this Agreement is
--------------
dated.
"American Radio Systems" shall mean American Radio Systems
----------------------
Corporation, a Delaware corporation.
-2-
<PAGE>
"Annualized Operating Cash Flow" shall mean (a) as of any calculation
------------------------------
date, the sum of (A) the product of (1) Operating Cash Flow (Towers) for the
fiscal quarter-end being tested, or the most recently completed fiscal quarter
immediately preceding such calculation date, as the case may be, times (2) four
-----
(4); (B) the product of (1) Operating Cash Flow (New Towers) for the calendar
month-end being tested, or the most recently completed calendar month
immediately preceding such calculation date, as the case may be, times (2)
-----
twelve (12); and (C) Operating Cash Flow (Other Business) for the four fiscal
quarter period end being tested or the most recently completed four (4) fiscal
quarters immediately preceding such calculation date, as the case may be, minus
-----
(b) corporate overhead (exclusive of amortization and depreciation) of the
Borrowers and their Restricted Subsidiaries (on a consolidated basis) for the
twelve (12) calendar month period then ended or ending immediately prior to the
calendar date, as the case may be.
"Applicable Law" shall mean, in respect of any Person, all provisions
--------------
of constitutions, statutes, rules, regulations and orders of governmental bodies
or regulatory agencies applicable to such Person, including, without limiting
the foregoing, the Licenses, the Communications Act, zoning ordinances and all
Environmental Laws, and all orders, decisions, judgments and decrees of all
courts and arbitrators in proceedings or actions to which the Person in question
is a party or by which it is bound.
"Applicable Margin" shall mean the interest rate margin applicable to
-----------------
Base Rate Advances and LIBOR Advances, as the case may be, in each case
determined in accordance with Section 2.3(f) hereof.
"Applicable Margin Ratio" shall mean, as of any date, the ratio of (a)
-----------------------
the Senior Debt on such date to (b) Annualized Operating Cash Flow.
"Approved Fund" means, with respect to any Bank that is a fund that
-------------
invests in commercial loans, any other fund that invests in commercial loans and
is managed by the same investment advisor as such Bank or by an Affiliate of
such investment advisor.
"Assignment of General Partner Interests" shall mean that certain
---------------------------------------
Assignment of General Partner Interests, dated as of the even date herewith,
made by ATSC GP in favor of the Collateral Agent, substantially in the form of
Exhibit A attached hereto.
- ---------
"Assignment of Limited Partner Interests" shall mean that certain
---------------------------------------
Assignment of Limited Partner Interests, dated as of the even date herewith,
made by ATSC LP in favor of the Collateral Agent, substantially in the form of
Exhibit B attached hereto.
- ---------
"ATS" shall mean American Tower Systems, L.P., a Delaware limited
---
partnership, and one of the Borrowers.
-3-
<PAGE>
"ATS (Delaware)" shall mean American Tower Systems (Delaware), Inc., a
--------------
Delaware corporation, and one of the Borrowers.
"ATS Facility A Loan Agreement" shall mean that certain ATS Facility A
-----------------------------
Loan Agreement, dated as of even date herewith among the Borrowers, the
Administrative Agent (as defined therein) and the financial institutions parties
thereto, providing for a term credit facility in the amount of $250,000,000 and
a revolving credit facility in the amount of $400,000,000, as the same may be
amended, modified, restated, or supplemented from time to time.
"ATSC GP" shall mean ATSC GP Inc., a Delaware corporation, and a
-------
wholly-owned subsidiary of ATSC Holding.
"ATSC Holding" shall mean ATSC Holding Inc., a Delaware corporation,
------------
and a wholly-owned Subsidiary of the Parent.
"ATSC LP" shall mean ATSC LP Inc., a Delaware corporation, and a
-------
wholly-owned Subsidiary of ATSC Operating.
"ATSC Operating" shall mean ATSC Operating Inc., a Delaware
--------------
corporation, and a wholly-owned Subsidiary of ATS (Delaware).
"Authorized Signatory" shall mean such senior personnel of a Person as
--------------------
may be duly authorized and designated in writing by such Person to execute
documents, agreements and instruments on behalf of such Person.
"Banks" shall mean the Persons whose names appear as "Banks" on the
-----
signature pages hereof and any other Person which becomes a "Bank" hereunder
after the Agreement Date; and "Bank" shall mean any one of the foregoing Banks.
----
"Base Rate" shall mean, at any time, a fluctuating interest rate per
---------
annum equal to the higher of (a) the rate of interest quoted from time to time
by the Administrative Agent as its "prime rate" or "base rate" or (b) the sum of
---------- ---------
(i) Federal Funds Rate and (ii) one-half of one percent (1/2%). The Base Rate
is not necessarily the lowest rate of interest charged by the Administrative
Agent in connection with extensions of credit.
"Base Rate Advance" shall mean an Advance which either Borrower
-----------------
requests to be made as a Base Rate Advance or is reborrowed as a Base Rate
Advance, in accordance with the provisions of Section 2.2 hereof, and which
shall be in a principal amount of at least $1,000,000 and in an integral
multiple of $500,000.
"Base Rate Basis" shall mean a simple interest rate equal to the sum
---------------
of (i) the Base Rate and (ii) the Applicable Margin applicable to Base Rate
Advances. The Base Rate Basis
-4-
<PAGE>
shall be adjusted automatically as of the opening of business on the effective
date of each change in the Base Rate to account for such change, and shall
also be adjusted to reflect changes of the Applicable Margin applicable to
Base Rate Advances.
"Borrowers" shall mean, collectively, ATS and ATS (Delaware); and
--------
"Borrower" shall mean either of the foregoing.
"Borrowers' Guarantees" shall mean, collectively, that certain
---------------------
Borrowers' Guaranty (ATS (Delaware)) and Borrowers' Guaranty (ATS), dated as of
the Agreement Date each substantially in the form of Exhibit C attached hereto.
---------
"Business Day" shall mean a day on which banks and foreign exchange
------------
markets are open for the transaction of business required for this Agreement in
Houston, Texas, New York, New York and London, England, as relevant to the
determination to be made or the action to be taken.
"Capital Expenditures" shall mean, for any period, expenditures
--------------------
(including, without limitation, the aggregate amount of Capitalized Lease
Obligations required to be paid during such period) incurred by any Person to
acquire or construct fixed assets, plant and equipment (including, without
limitation, renewals, improvements and replacements, but excluding repairs and
maintenance) during such period, that would be required to be capitalized on the
balance sheet of such Person in accordance with GAAP.
"Capital Stock" shall mean, as applied to any Person, any capital
-------------
stock of such Person, regardless of class or designation, and all warrants,
options, purchase rights, conversion or exchange rights, voting rights, calls or
claims of any character with respect thereto.
"Capitalized Lease Obligation" shall mean that portion of any
----------------------------
obligation of a Person as lessee under a lease which at the time would be
required to be capitalized on the balance sheet of such lessee in accordance
with GAAP.
"Certificate of Financial Condition" shall mean certificates,
----------------------------------
substantially in the form of Exhibit D attached hereto, signed by the chief
---------
financial officer of each Borrower, as appropriate, together with any schedules,
exhibits or annexes appended thereto.
"Change of Control" shall mean (a) the failure of the Parent to own,
-----------------
directly or indirectly, one hundred percent (100%) of the ownership interests of
ATS and ATS (Delaware), (b) the failure of ATS (Delaware) to own, directly or
indirectly, one hundred percent (100%) of the ownership interests of ATSC
Operating (unless such Persons are merged into ATS (Delaware)), (c) the sale,
lease, transfer, in one or a series of related transactions, of all or
substantially all of either Borrower's assets to any Person or group (as such
term is used in Section 13(d)(3) of the Exchange Act) other than to the other
Borrower or various Persons in the chain (i.e., any wholly-owned direct or
indirect Subsidiary of ATS
-5-
<PAGE>
(Delaware)), (d) the adoption of a plan relating to the liquidation or
dissolution of the Parent, (e) 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 forty percent (40%) or more of the voting power of the voting stock of the
Parent by way of merger or consolidation or otherwise and such Persons own more
voting power than Principal Shareholders, or (f) the Continuing Directors cease
for any reason to constitute a majority of the directors of the Parent then in
office.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
----
time to time.
"Collateral" shall mean any property of any kind constituting
----------
collateral for the Obligations under any of the Security Documents.
"Collateral Agent" shall mean Toronto Dominion (Texas), Inc., acting
----------------
as Collateral Agent under the Security Documents and shall include any successor
Collateral Agent appointed pursuant to Section 9.14 hereof.
"Communications Act" shall mean the Communications Act of 1934, and
------------------
any similar or successor federal statute, and the rules and regulations of the
FCC thereunder, all as the same may be in effect from time to time.
"Continuing Director" shall mean any member of the Board of Directors
-------------------
of the Parent who (i) is a member of that Board of Directors on the Agreement
Date or (ii) was nominated for election by either (a) one or more of the
Principal Shareholders (or a Related Party thereof) or (b) the Board of
Directors a majority of whom were directors at the Agreement Date or whose
election or nomination for election was previously approved by one or more of
the Principal Shareholders or such directors.
"Default" shall mean any Event of Default, and any of the events
-------
specified in Section 8.1 hereof, regardless of whether there shall have occurred
any passage of time or giving of notice, or both, that would be necessary in
order to constitute such event an Event of Default.
"Default Rate" shall mean a simple per annum interest rate equal to
------------
the sum of (a) the Base Rate, (b) the Applicable Margin for Base Rate Advances,
and (c) two percent (2%).
"Employee Pension Plan" shall mean any Plan which is maintained by
---------------------
either Borrower, any of their Subsidiaries or any ERISA Affiliate.
"Environmental Laws" shall mean all applicable federal, state or local
------------------
laws, statutes, rules, regulations or ordinances, codes, common law, consent
agreements, orders, decrees, judgments or injunctions issued, promulgated,
approved or entered thereunder relating to public health, safety or the
pollution or protection of the environment, including, without limitation, those
relating to releases, discharges, emissions, spills, leaching, or disposals to
air, water, land or ground water, to the withdrawal or use of ground water, to
the use,
-6-
<PAGE>
handling or disposal of polychlorinated biphenyls, asbestos or urea
formaldehyde, to the treatment, storage, disposal or management of hazardous
substances (including, without limitation, petroleum, crude oil or any fraction
thereof, or other hydrocarbons), pollutants or contaminants, to exposure to
toxic, hazardous or other controlled, prohibited, or regulated substances,
including, without limitation, any such provisions under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. ' 9601 et seq.), or the Resource Conservation and Recovery Act of 1976,
as amended (42 U.S.C. ' 6901 et seq.).
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as in effect from time to time.
"ERISA Affiliate" shall mean any Person, including a Subsidiary or an
---------------
Affiliate of either Borrower, that is a member of any group of organizations of
which either Borrower, as the case may be, is a member and which is covered by a
Plan.
"Eurodollar Reserve Percentage" shall mean the percentage which is in
-----------------------------
effect from time to time under Regulation D of the Board of Governors of the
Federal Reserve System, as such regulation may be amended from time to time, as
the maximum reserve requirement applicable with respect to Eurocurrency
Liabilities (as that term is defined in Regulation D), whether or not any Bank
has any such Eurocurrency Liabilities subject to such reserve requirement at
that time.
"Event of Default" shall mean any of the events specified in Section
----------------
8.1 hereof; provided, however, that any requirement for notice or lapse of time,
-------- -------
or both, has been satisfied.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
"Excess Cash Flow" shall mean, as of the end of any fiscal year of the
----------------
Borrower based on the audited financial statements provided under Section 6.2
hereof for such fiscal year, the excess, if any, without duplication, of (a)
Operating Cash Flow for such fiscal year, minus (b) the sum of the following:
-----
(i) payments made with respect to Capital Expenditures (other than Capital
Expenditures funded out of the Net Proceeds of any asset sale) by the Borrowers
and their Restricted Subsidiaries during such fiscal year; (ii) repayments of
the Facility B Loans and Facility A Loans resulting from reductions of the
Facility B Commitment and Facility A Commitment, respectively (which shall
include, without limitation, any reductions set forth in Section 2.5(a) hereof
and of the Facility A Loan Agreement, respectively), and, if applicable,
scheduled repayments of the Facility B Loans after the Termination Date
scheduled repayments of other amounts outstanding under the ATS Facility A Loan
Agreement; (iii) cash taxes paid by the Borrowers and their Restricted
Subsidiaries during such fiscal year; (iv) Interest Expense during such fiscal
year; (v) principal payments made in respect of Indebtedness for Money Borrowed
(other than with respect to the Facility B
-7-
<PAGE>
Loans, the ATS Facility A Loan Agreement and loans to Restricted Subsidiaries)
paid by the Borrowers and their Restricted Subsidiaries during such fiscal year;
and (vi) amounts distributed to the Parent pursuant to Section 7.7(c) hereof.
"Facility A Commitment" shall have the meaning ascribed to such terms
---------------------
term in the ATS Facility A Loan Agreement.
"Facility A Loans" shall have the meaning ascribed to such term in
----------------
the ATS Facility A Loan Agreement.
"Facility B Capital Raise Proceeds" shall mean product of (a) (i) at
---------------------------------
any time when the Senior Leverage Ratio is greater than or equal to 5.00 to 1,
one hundred percent (100%) of the net proceeds of any sale of the Capital Stock
of the Parent or debt instruments or other securities (other than (1) an amount
not to exceed $2,000,000 in the aggregate from the sale of securities in
connection with any employee stock option plan of either Borrower or the Parent,
(2) an amount equal to the amount required to redeem the Redeemable Pay-In-Kind
Preferred Stock referred to in the definition of "Interim Financing" and to pay
the fees and other costs and expenses associated with the Interim Financing, and
(3) net proceeds received by the Borrowers from the proceeds of the loans under
the Parent Loan Agreement), or (ii) at any time when the Senior Leverage Ratio
is less than 5.00 to 1, fifty percent (50%) of the net proceeds of any sale of
the Capital Stock of the Parent or debt instruments or other securities of
either Borrower or the Parent (other than an amount not to exceed $2,000,000 in
the aggregate from the sale of securities in connection with any employee stock
option plan of either Borrower or the Parent) times (b) the ratio of (i) the
-----
Facility B Loans then outstanding (or the Facility B Commitment if there are no
Facility B Loans then outstanding) to (ii) the sum of (A) the Facility B Loans
then outstanding (or the Facility B Commitment if there are no Facility B Loans
then outstanding), and (B) the Facility A Loans then outstanding (or the
Facility A Commitment if there are no Facility A Loans then outstanding).
"Facility B Commitment" shall mean the several obligations of the
---------------------
Banks to advance in an aggregate amount of up to $250,000,000 at any one time
outstanding, in accordance with their respective Facility B Commitment Ratios,
to the Borrowers pursuant to the terms hereof and as such obligations may be
reduced from time to time pursuant to the terms hereof.
-8-
<PAGE>
"Facility B Commitment Ratios" shall mean the percentages in which the
----------------------------
Banks are severally bound to fund their respective portion of Advances to the
Borrowers under the Facility B Commitment, which are set forth below (together
with dollar amounts) (and which may change from time to time in accordance with
Section 11.5 hereof):
<TABLE>
<CAPTION>
Facility B Total Dollar
Commitment Ratio Commitment
Bank ----------------- ----------
----
<S> <C> <C>
Toronto Dominion (Texas), Inc. 6.33333334% $ 15,833,333.34
The Chase Manhattan Bank 5.22222223% $ 13,055,555.56
The Bank of New York 5.22222223% $ 13,055,555.56
The Bank of Nova Scotia 4.77777778% $ 11,944,444.45
Barclays Bank, plc 4.77777778% $ 11,944,444.45
Credit Lyonnais New York Branch 4.77777778% $ 11,944,444.45
Credit Suisse First Boston 4.77777778% $ 11,944,444.45
Fleet National Bank 4.77777778% $ 11,944,444.45
General Electric Capital Corporation 4.77777778% $ 11,944,444.45
Key Corporate Capital Inc. 4.77777778% $ 11,944,444.45
Union Bank of California, N.A. 4.77777778% $ 11,944,444.45
Bank of America National Trust and Savings 3.88888889% $ 9,722,222.22
Association
Bank of Montreal 3.88888889% $ 9,722,222.22
Bankers Trust Company 3.88888889% $ 9,722,222.22
Lehman Commercial Paper Inc. 3.88888889% $ 9,722,222.22
Morgan Stanley Senior Funding, Inc. 3.88888889% $ 9,722,222.22
CoBank, ACB 2.77777778% $ 6,944,444.45
PNC Bank, National Association 2.77777778% $ 6,944,444.45
Societe Generale, New York Branch 2.77777778% $ 6,944,444.45
Dresdner Bank AG, New York and Grand Cayman 2.22222223% $ 5,555,555.55
Branches
BankBoston, N.A. 1.66666666% $ 4,166,666.66
Crestar Bank 1.66666666% $ 4,166,666.66
The Long-Term Credit Bank of Japan,, Ltd., New 1.66666666% $ 4,166,666.66
York Branch
Mellon Bank, N.A. 1.66666666% $ 4,166,666.66
Mercantile Bank National Association 1.66666666% $ 4,166,666.66
First National Bank of Maryland 1.66666666% $ 4,166,666.66
National Bank of Canada 1.66666666% $ 4,166,666.66
State Street Bank and Trust Company 1.66666666% $ 4,166,666.66
US Trust 1.66666666% $ 4,166,666.66
============================ =========== ===============
TOTAL 100% $250,000,000.00
</TABLE>
"Facility B Excess Cash Flow" shall mean the product of (A) the
---------------------------
product of (i) Excess Cash Flow times (ii) fifty percent (50%), times (b) the
----- -----
ratio of (i) the Facility B Loans then outstanding (or the Facility B Commitment
if there are no Facility B Loans then outstanding) to (ii) the sum of (a) the
Facility B Loans then outstanding (or the Facility B Commitment if there are no
Facility B Loans then outstanding), and (B) the Facility A Loans then
outstanding (or the Facility A Commitment if there are no Facility A Loans then
outstanding).
-9-
<PAGE>
"Facility B Loans" shall mean, collectively, the amounts advanced by
----------------
the Banks to the Borrowers under the Facility B Loan Commitment, not to exceed
the amount of the Facility B Loan Commitment, and evidenced by the Facility B
Notes.
"Facility B Net Proceeds" shall mean the product of (a) the Net
-----------------------
Proceeds of any sale or other disposition of assets permitted hereunder (other
than sales or other dispositions of equipment in the ordinary course of business
or sales to or among either Borrower or a Restricted Subsidiary), times (b) the
-----
ratio of (i) the Facility B Loans then outstanding (or the Facility B Commitment
if there are no Facility B Loans then outstanding) to (ii) the sum of (A) the
Facility B Loans then outstanding (or the Facility B Commitment if there are no
Facility B Loans then outstanding), and (B) the Facility A Loans then
outstanding (or the Facility A Commitment if there are no Facility A Loans then
outstanding).
"Facility B Notes" shall mean, collectively, those certain promissory
----------------
notes in an aggregate original principal amount of the Facility B Loan
Commitment, and one (1) issued to each of the Banks by the Borrowers with
respect to the Facility B Loan Commitment, each one substantially in the form of
Exhibit E attached hereto, and any extensions, renewals or amendments to, or
- ---------
replacements of, the foregoing.
"FCC" shall mean the Federal Communications Commission, or any other
---
similar or successor agency of the federal government administering the
Communications Act.
"Federal Funds Rate" shall mean, as of any date, the weighted average
------------------
of the rates on overnight federal funds transactions with the members of the
Federal Reserve System arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Administrative Agent from three (3) federal
funds brokers of recognized standing selected by the Administrative Agent.
"Fixed Charges" shall mean for the Borrowers and their Restricted
-------------
Subsidiaries, on a consolidated basis, the sum of (a) Interest Expense, (b)
commitment and other fees incurred in connection with this Agreement and the ATS
Facility A Loan Agreement, (c) all scheduled principal repayments with respect
to any Indebtedness for Money Borrowed, (d) taxes paid in cash, and (e) Capital
Expenditures made by the Borrowers, their Restricted Subsidiaries and the Parent
(other than from the reinvestment of asset sale proceeds and insurance proceeds,
to the extent permitted hereunder), in each case for the immediately preceding
twelve (12) calendar month period then ended, and in each case as calculated in
accordance with GAAP.
-10-
<PAGE>
"Fixed Charges Coverage Ratio" shall mean, as of any calculation date, the
----------------------------
ratio of (a) the sum of (i) Annualized Operating Cash Flow as of the most
recently completed fiscal quarter, plus (ii)for all periods ending on or prior
----
to December 31, 2000, the sum of (A) the amount of unused Facility B Commitment
as of such date under this Agreement and the Facility A Commitment which could
be borrowed on such date in compliance with Section 7.8 hereof and (B) the net
cash proceeds of any equity issued, directly or indirectly, by either Borrower
to the Parent during such period (after deducting any portion thereof applied to
the Facility B Loans or the Facility A Loans) to (b) Fixed Charges.
"GAAP" shall mean, as in effect from time to time, generally accepted
----
accounting principles in the United States, consistently applied.
"Guaranty" or "Guaranteed," as applied to an obligation, shall mean and
-------- ----------
include (a) a guaranty, direct or indirect, in any manner, of all or any part of
such obligation, and (b) any agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, any
reimbursement obligations as to amounts drawn down by beneficiaries of
outstanding letters of credit or capital call requirements; provided, however,
-------- -------
that the term "Guarantee" shall not include guarantees entered into in the
ordinary course of business, including, without limitation, the New Tower
Operation Business, not involving Indebtedness for Money Borrowed.
"Indebtedness" shall mean, with respect to any Person, and without
------------
duplication, (a) all items, except items of shareholders' and partners' equity
or capital stock or surplus or general contingency or deferred tax reserves,
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, including,
without limitation, with respect to any secured non-recourse obligations of such
Person, the higher of the book value or fair market value of the property or
asset securing such obligation (if less than the amount of such obligation), (b)
all direct or indirect obligations of any other Person secured by any Lien to
which any property or asset owned by such Person is subject, but only to the
extent of the higher of the fair market value or the book value of the property
or asset subject to such Lien (if less than the amount of such obligation), if
the obligation secured thereby shall not have been assumed, (c) to the extent
not otherwise included, all Capitalized Lease Obligations of such Person and all
obligations of such Person with respect to leases constituting part of a sale
and lease-back arrangement, (d) all reimbursement obligations with respect to
outstanding letters of credit, and (e) to the extent not otherwise included, all
obligations subject to Guaranties of such Person or its Subsidiaries, and (f)
all obligations of such Person under Interest Hedge Agreements; provided,
--------
however, that the Intracoastal Notes shall not be deemed to be, and shall be
- -------
excluded from, Indebtedness.
-11-
<PAGE>
"Indebtedness for Money Borrowed" shall mean, with respect to any Person,
-------------------------------
Indebtedness for 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, all Indebtedness upon
which interest charges are customarily paid (other than trade payables arising
in the ordinary course of business, but only if and so long as such accounts are
payable on customary trade terms), all Capitalized Lease Obligations, all
reimbursement obligations with respect to outstanding letters of credit, all
Indebtedness issued or assumed as full or partial payment for property or
services (other than trade payables arising in the ordinary course of business,
but only if and so long as such accounts are payable on customary trade terms),
whether or not any such notes, drafts, obligations or Indebtedness represent
Indebtedness for money borrowed, and, without duplication, Guaranties of any of
the foregoing; provided, however, that the Intracoastal Notes shall not be
-------- -------
deemed to be, and shall be excluded from, Indebtedness. For purposes of this
definition, interest which is accrued but not paid on the scheduled due date for
such interest shall be deemed Indebtedness for Money Borrowed.
"Indemnitee" shall have the meaning ascribed thereto in Section 5.11
----------
hereof.
"Intercreditor Agreement" shall mean that certain Intercreditor Agreement
-----------------------
dated as of the even date herewith among the Banks, the Administrative Agent,
the Administrative Agent and the Lenders under the Parent Loan Agreement, and
the Administrative Agent and the Banks under the ATS Facility A Loan Agreement.
"Interest Coverage Ratio" shall mean, with respect to any period, the ratio
-----------------------
of (a) Annualized Operating Cash Flow to (b) Interest Expense.
"Interest Expense" shall mean, for any period, all cash interest expense
----------------
(including imputed interest with respect to Capitalized Lease Obligations) with
respect to any Indebtedness for Money Borrowed of the Borrowers and their
Restricted Subsidiaries and the Parent on a consolidated basis during such
period pursuant to the terms of such Indebtedness for Money Borrowed, all as
calculated in accordance with GAAP.
"Interest Hedge Agreements" shall mean the obligations of any Person
-------------------------
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"Interest Period" shall mean (a) in connection with any Base Rate Advance,
---------------
the period beginning on the date such Advance is made and ending on the last day
of the calendar quarter in which such Advance is made, provided, however, that
-------- -------
if a Base Rate Advance is
-12-
<PAGE>
made on the last day of any calendar quarter, it shall have an Interest Period
ending on, and its Payment Date shall be, the last day of the following calendar
quarter, and (b) in connection with any LIBOR Advance, the term of such Advance
selected by the Borrower or otherwise determined in accordance with this
Agreement. Notwithstanding the foregoing, however, (i) any applicable Interest
Period which would otherwise end on a day which is not a Business Day shall be
extended to the next succeeding Business Day unless, with respect to LIBOR
Advances only, such Business Day falls in another calendar month, in which case
such Interest Period shall end on the next preceding Business Day, (ii) any
applicable Interest Period, with respect to LIBOR Advances only, which begins on
a day for which there is no numerically corresponding day in the calendar month
during which such Interest Period is to end shall (subject to clause (i) above)
end on the last day of such calendar month, and (iii) the Borrower shall not
select an Interest Period which extends beyond the Termination Date, or, if
applicable, the Maturity Date or such earlier date as would interfere with the
Borrowers' repayment obligations under Section 2.5, 2.6 or 2.7 hereof. Interest
shall be due and payable with respect to any Advance as provided in Section 2.3
hereof.
"Interest Rate Basis" shall mean the Base Rate Basis or the LIBOR Basis, as
-------------------
appropriate.
"Interim Financing" shall mean the Redeemable Pay-In-Kind Preferred Stock
-----------------
referred to in the Private Placement Memorandum, dated as of May 28, 1998 (a
true and correct copy of which has been delivered to the Administrative Agent),
and shall include the Exchange Preferred (as defined therein).
"Intracoastal Notes" shall mean the partially non-recourse notes of ATS
------------------
(true and correct copies of which have been delivered to the Administrative
Agent), in the aggregate principal amount of $12,000,000, issued or to be issued
by ATS in connection with the merger of Intracoastal Broadcasting, Inc., a
Delaware corporation, into ATS (Delaware).
"Investment " shall mean any investment or loan by either Borrower or any
-----------
Restricted Subsidiary in or to any Person which Person, (a) after giving to such
investment or loan, is not consolidated with the Borrowers and the Restricted
Subsidiaries in accordance with GAAP, or (b) is designated as an Unrestricted
Subsidiary in accordance with the terms hereof.
"known to the Borrower" or "to the knowledge of the Borrower" shall mean
--------------------- --------------------------------
known by or reasonably should have been known by the executive officers of
either Borrower (which shall include, without limitation, the chief executive
officer, the chief operating officer, if any, the chief financial officer, the
general counsel and any vice president of either Borrower or of ATSC GP).
"LIBOR" shall mean, for any Interest Period, the average of the interest
-----
rates per annum at which deposits in United States Dollars for such Interest
Period are offered to the
-13-
<PAGE>
Administrative Agent in the Eurodollar market at approximately 11:00 a.m.
(London, England time) two (2) Business Days before the first day of such
Interest Period, in an amount approximately equal to the principal amount of,
and for a length of time approximately equal to the Interest Period for, the
LIBOR Advance sought by either Borrower.
"LIBOR Advance" shall mean an Advance which either Borrower requests to be
-------------
made as a LIBOR Advance or which is reborrowed as a LIBOR Advance, in accordance
with the provisions of Section 2.2 hereof, and which shall be in a principal
amount of at least $5,000,000 and in an integral multiple of $1,000,000.
"LIBOR Basis" shall mean a simple per annum interest rate (rounded upward,
-----------
if necessary, to the nearest one-hundredth (1/100th) of one percent (1%) equal
to the sum of (a) the quotient of (i) the LIBOR divided by (ii) one minus the
---------- -----
Eurodollar Reserve Percentage, if any, stated as a decimal, plus (b) the
----
Applicable Margin. The LIBOR Basis shall apply to Interest Periods of one (1),
two (2), three (3), or six (6) months, and, once determined, shall remain
unchanged during the applicable Interest Period, except for changes to reflect
adjustments in the Eurodollar Reserve Percentage and the Applicable Margin as
adjusted pursuant to Section 2.3(f) hereof. The LIBOR Basis for any LIBOR
Advance shall be adjusted as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Licenses" shall mean any telephone, microwave, radio transmissions,
--------
personal communications or other license, authorization, certificate of
compliance, franchise, approval or permit, whether for the construction, the
ownership or the operation of any communications tower facilities, granted or
issued by the FCC and held by either Borrower or any of the Restricted
Subsidiaries, all of which as of the Agreement Date are listed on Schedule 1
----------
attached hereto.
"Lien" shall mean, with respect to any property, any mortgage, lien,
----
pledge, negative pledge or other agreement not to pledge, assignment, charge,
security interest, title retention agreement, levy, execution, seizure,
attachment, garnishment or other encumbrance of any kind in respect of such
property, whether created by statute, contract, the common law or otherwise, and
whether or not choate, vested or perfected.
"Loan Documents" shall mean this Agreement, the Notes, the Security
--------------
Agreements, the Borrowers' Guarantees, the Stock Pledge Agreement, all
Subsidiary Pledge Agreements, all Subsidiary Security Agreements, all Subsidiary
Guaranties, all Assignments of Intercompany Notes, all Subordination Agreements,
the Parent Guaranty, the Parent Pledge Agreement, the Assignment of Limited
Partner Interests, the Assignment of General Partner Interests, all fee letters,
all Requests for Advance, all Interest Hedge Agreements between either Borrower,
on the one hand, and the Administrative Agent and the Banks, or any of them, on
the other hand, and all other documents and agreements executed or delivered by
either Borrower or any of the Restricted Subsidiaries or the Parent in
connection with or
-14-
<PAGE>
contemplated by this Agreement; provided, however, that Loan Documents shall
-------- -------
exclude, except as otherwise specifically provided herein, the "Loan Documents"
under the Parent Loan Agreement.
"Loan-Purchase Agreement" shall mean any agreement as related agreements
-----------------------
between the Borrower or any Restricted Subsidiary and any other Person pursuant
to the terms of which (a) the Borrower or such Restricted Subsidiary has made a
loan to such Person permitted by Section 7.6(d) hereof and (b) the Borrower or
such Restricted Subsidiary shall agree to acquire all or substantially all of
the assets of such Person within the twelve (12) calendar month period
immediately following the date of such agreement.
"Majority Banks" shall mean (i) at any time that no Facility B Loans are
--------------
outstanding hereunder, Banks the total of whose Facility B Commitment Ratios
equals or exceeds sixty percent (60%) of the Facility B Commitment Ratios of all
Banks entitled to vote hereunder, or (ii) at any time that there are Facility B
Loans outstanding hereunder, Banks the total of whose Facility B Loans
outstanding equals or exceeds sixty percent (60%) of the total principal amount
of the Facility B Loans then outstanding of all Banks entitled to vote
hereunder.
"Materially Adverse Effect" shall mean (a) any material adverse effect upon
-------------------------
the business, assets, business prospects, liabilities, financial condition,
results of operations or properties of the Borrowers and the Restricted
Subsidiaries, taken as a whole, or (b) a material adverse effect upon the
binding nature, validity, or enforceability of this Agreement and the Facility B
Notes, or upon the ability of the Borrowers and the Restricted Subsidiaries to
perform the payment obligations or other material obligations under this
Agreement or any other Loan Document, or upon the value of the Collateral or
upon the rights, benefits or interests of the Banks in and to the Facility B
Loans or the rights of the Administrative Agent and the Banks in the Collateral;
in either case, whether resulting from any single act, omission, situation,
status, event or undertaking, or taken together with other such acts, omissions,
situations, statuses, events or undertakings.
"Maturity Date" shall have the meaning ascribed thereto in the Facility A
-------------
Loan Agreement.
"Multiemployer Plan" shall mean a multiemployer pension plan as defined in
------------------
Section 3(37) of ERISA to which either Borrower, any of its Subsidiaries or any
ERISA Affiliate is or has been required to contribute.
"Necessary Authorizations" shall mean all approvals and licenses from, and
------------------------
all filings and registrations with, any governmental or other regulatory
authority, including, without limiting the foregoing, the Licenses and all
approvals, licenses, filings and registrations under the Communications Act,
necessary in order to enable the Borrowers and the Restricted Subsidiaries to
own, construct, maintain, and operate communications tower facilities and to
-15-
<PAGE>
invest in other Persons who own, construct, maintain, manage and operate
communications tower facilities.
"Net Income" shall mean, for the Borrowers and the Restricted Subsidiaries
----------
on a consolidated basis, for any period, net income determined in accordance
with GAAP.
"Net Proceeds" shall mean, with respect to any sale, lease, transfer or
------------
other disposition of assets by either Borrower or any of the Restricted
Subsidiaries, the aggregate amount of cash received for such assets (including,
without limitation, any payments received for noncompetition covenants,
consulting or management fees in connection with such sale, and any portion of
the amount received evidenced by a promissory note or other evidence of
Indebtedness issued by the purchaser), net of (i) amounts reserved, if any, for
taxes payable with respect to any such sale (after application (assuming
application first to such reserves) of any available losses, credits or other
offsets), (ii) reasonable and customary transaction costs properly attributable
to such transaction and payable by either Borrower or any of the Restricted
Subsidiaries (other than to an Affiliate) in connection with such sale, lease,
transfer or other disposition of assets, including, without limitation,
commissions, and (iii) until actually received by either Borrower or any of the
Restricted Subsidiaries, any portion of the amount received held in escrow or
evidenced by a promissory note or other evidence of Indebtedness issued by a
purchaser or non-compete, consulting or management agreement or covenant or
otherwise for which compensation is paid over time. Upon receipt by either
Borrower or any of the Restricted Subsidiaries of (A) amounts referred to in
item (iii) of the preceding sentence, or (B) if there shall occur any reduction
in the tax reserves referred to in item (i) of the preceding sentence resulting
in a payment to either Borrower or any of the Restricted Subsidiaries, such
amounts shall then be deemed to be "Net Proceeds."
"New Towers" shall mean any communications tower constructed by either
----------
Borrower or any of its Restricted Subsidiaries after (or not yet completed as
of) the Agreement Date. For purposes of this definition, a communications tower
shall be deemed "completed" as of the date one bona fide customer uses
communications equipment installed on such tower and shall not be considered a
"New Tower" after the end of the twelfth (12/th/) calendar month following the
month of completion.
"New Tower Operation Business" shall mean the operation by either Borrower
----------------------------
or its Restricted Subsidiaries of New Towers.
"Non-U.S. Bank" shall have the meaning ascribed to such term in Section
-------------
2.8(a) hereof.
"Notes" shall mean the Facility B Notes.
-----
"Obligations" shall mean all payment and performance obligations of every
-----------
kind, nature and description of the Borrowers, the Restricted Subsidiaries, and
any other obligors to the Banks, or the Administrative Agent, or any of them,
under this Agreement and the
-16-
<PAGE>
other Loan Documents (including, without limitation, any interest, fees and
other charges on the Facility B Loans or otherwise under the Loan Documents that
would accrue but for the filing of a bankruptcy action with respect to either
Borrower, whether or not such claim is allowed in such bankruptcy action), and
including Obligations to the Banks pursuant to Section 5.12 hereof) as they may
be amended from time to time, or as a result of making the Facility B Loans,
whether such obligations are direct or indirect, absolute or contingent, due or
not due, contractual or tortious, liquidated or unliquidated, arising by
operation of law or otherwise, now existing or hereafter arising.
"Operating Cash Flow" shall mean, for any fiscal year, the sum of Operating
-------------------
Cash Flow (New Towers), Operating Cash Flow (Towers) and Operating Cash Flow
(Other Business) for such year.
"Operating Cash Flow (New Towers)" shall mean, with respect to the
--------------------------------
Borrowers and the Restricted Subsidiaries on a consolidated basis as of the end
of any period, (a) the sum of (i) operating revenues of the Borrowers and the
Restricted Subsidiaries in connection with the New Tower Operation Business,
plus (ii) Unrestricted Subsidiary Distributions with respect to businesses of
- ----
such Persons of the same type as the New Tower Operation Business during such
period, less (b) operating expenses attributable to such New Tower Operation
----
Business for such period. In the case of determining Operating Cash Flow (New
Towers) under Sections 2.3, 7.8, 7.9, 7.10, 7.11 and 7.12 hereof following an
Acquisition of a New Tower Operation Business permitted hereunder, Operating
Cash Flow (New Towers) shall include the Acquisition Operating Cash Flow. For
purposes of calculating Operating Cash Flow (New Towers) in connection with any
Advance for an Acquisition of a New Tower Operation Business, Operating Cash
Flow (New Towers) for the Borrowers and the Restricted Subsidiaries as of the
last day of the immediately preceding calendar month end shall include
"operating cash flow (new towers)" for the Acquisition for the same period after
giving effect to adjustments reasonably satisfactory to the Administrative
Agent. For purposes of this definition, Operating Cash Flow (New Towers) shall
include the foregoing items (each calculated in a manner substantially similar
to the financial statements required to be delivered pursuant to Sections 6.1
and 6.2 hereof and otherwise in all respects reasonably satisfactory to the
Administrative Agent) with respect to any Person with whom either Borrower has
entered into a Loan-Purchase Agreement; provided, however, that with respect to
-------- -------
any such Person such items shall not be included for any period exceeding twelve
(12) calendar months unless such Person becomes a Restricted Subsidiary of such
Borrower.
"Operating Cash Flow (Towers)" shall mean, with respect to the Borrowers
----------------------------
and their Restricted Subsidiaries on a consolidated basis as of the end of any
period, (a) the sum of (i) operating revenues of the Borrowers and their
Restricted Subsidiaries in connection with the Tower Operation Business, plus
----
(ii) Unrestricted Subsidiary Distributions with respect to businesses of such
Persons of the same type as Tower Operation Business during such period, less
----
(b) operating expenses attributable to such Tower Operation Business for such
period. In the case of determining Operating Cash Flow (Towers) under Sections
2.3, 7.8,
-17-
<PAGE>
7.9, 7.10, 7.11 and 7.12 hereof following an Acquisition of a Tower Operation
Business permitted hereunder, Operating Cash Flow (Towers) shall include the
Acquisition Operating Cash Flow. For purposes of calculating Operating Cash Flow
in connection with any Advance for an Acquisition of a Tower Operation Business,
Operating Cash Flow (Towers) as of the last day of the immediately preceding
calendar month end shall include "operating cash flow (towers)" for the
Acquisition for the same period after giving effect to adjustments reasonably
satisfactory to the Administrative Agent. For purposes of this definition,
Operating Cash Flow (Towers) shall include the foregoing items (each calculated
in a manner substantially similar to the financial statements required to be
delivered pursuant to Sections 6.1 and 6.2 hereof and otherwise in all respects
reasonably satisfactory to the Administrative Agent) with respect to any Person
with whom either Borrower has entered into a Loan-Purchase Agreement; provided,
--------
however, that with respect to any such Person such items shall not be included
- -------
for any period exceeding twelve (12) calendar months unless such Person becomes
a Restricted Subsidiary of such Borrower.
"Operating Cash Flow (Other Business)" shall mean, with respect to the
------------------------------------
Borrowers and their Restricted Subsidiaries on a consolidated basis as of the
end of any period, (a) the sum of (i) operating revenues of the Borrowers and
their Restricted Subsidiaries in connection with the Other Operations, plus (ii)
----
Unrestricted Subsidiary Distributions with respect to businesses of such Persons
of the same type as the Other Operations during such period, less (b) operating
----
expenses attributable to such Other Operations for such period. In the case of
determining Operating Cash Flow (Other Business) under Sections 2.3, 7.8, 7.9,
7.10, 7.11 and 7.12 hereof following an Acquisition of Other Operations
permitted hereunder, Operating Cash Flow (Other Business) shall include the
Acquisition Operating Cash Flow. For purposes of calculating Operating Cash
Flow (Other Business) in connection with any Advance for an Acquisition of Other
Operations, Operating Cash Flow (Other Business) as of the last day of the
immediately preceding calendar month end shall include "operating cash flow
(other business)" for the Acquisition for the same period after giving effect to
adjustments reasonably satisfactory to the Administrative Agent.
"Other Operations" shall mean all businesses of the Borrowers and their
----------------
Restricted Subsidiaries (other than the Tower Operations Business and the New
Tower Operations Business), including, without limitation, the video, voice and
data transmission business and the site acquisition business.
"Parent" shall mean American Tower Corporation, a Delaware corporation.
------
"Parent Guaranty" shall mean that certain Parent Guaranty dated as of the
---------------
even date herewith, made by the Parent in favor of the Collateral Agent,
substantially in the form of Exhibit F attached hereto.
---------
"Parent Loan Agreement" shall mean that certain Parent Loan Agreement dated
---------------------
as of even date herewith by and among the Parent, the Administrative Agent and
the lenders
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<PAGE>
parties thereto, providing for a term credit facility in an amount not to exceed
$150,000,000, as the same may be amended, modified, supplemented or restated
from time to time.
"Parent Pledge Agreement" shall mean that certain Parent Pledge Agreement
-----------------------
dated as of even date herewith, made by Parent in favor of the Collateral Agent,
substantially in the form of Exhibit G attached hereto.
---------
"Payment Date" shall mean the last day of any Interest Period.
------------
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
----
successor thereto.
"Permitted Liens" shall mean, as applied to any Person:
---------------
(a) any Lien in favor of the Administrative Agent or the Collateral
Agent given to secure the Obligations and the "Obligations" under the ATS
Facility A Loan Agreement;
(b) (i) Liens on real estate or other property for taxes, assessments,
governmental charges or levies not yet delinquent and (ii) Liens for taxes,
assessments, judgments, governmental charges or levies or claims the non-payment
of which is being diligently contested in good faith by appropriate proceedings
and for which adequate reserves have been set aside on such Person's books, but
only so long as no foreclosure, distraint, sale or similar proceedings have been
commenced with respect thereto;
(c) Liens of carriers, warehousemen, mechanics, vendors, (solely to
the extent arising by operation of law) laborers and materialmen incurred in the
ordinary course of business for sums not yet due or being diligently contested
in good faith, if reserves or appropriate provisions shall have been made
therefor;
(d) Liens incurred in the ordinary course of business in connection
with worker's compensation and unemployment insurance, social security
obligations, assessments or government charges which are not overdue for more
than sixty (60) days;
(e) restrictions on the transfer of the Licenses or assets of either
Borrower or the Restricted Subsidiaries imposed by any of the Licenses as
presently in effect or by the Communications Act and any regulations thereunder;
(f) easements, rights-of-way, zoning restrictions, licenses,
reservations or restrictions on use and other similar encumbrances on the use of
real property which do not materially interfere with the ordinary conduct of the
business of such Person or the use of such property;
-19-
<PAGE>
(g) Liens arising by operation of law in favor of purchasers in
connection with any asset sale permitted hereunder; provided, however, that such
-------- -------
Lien only encumbers the property being sold;
(h) Liens reflected by Uniform Commercial Code financing statements
filed in respect of Capitalized Lease Obligations permitted pursuant to Section
7.1 hereof and true leases of either Borrower or any of their Subsidiaries;
(i) Liens to secure performance of statutory obligations, surety or
appeal bonds, performance bonds, bids or tenders;
(j) judgment Liens which do not result in an Event of Default under
Section 8.1 (h) hereof;
(k) Liens in connection with escrow deposits made in connection with
Acquisitions permitted hereunder;
(l) Liens in favor of the lenders under the Parent Loan Agreement,
which Liens are subject to the Intercreditor Agreement; and
(m) Liens of a nature contemplated by the penultimate sentence of
Section 5.13 hereof.
"Person" shall mean an individual, corporation, limited liability company,
------
association, partnership, joint venture, trust or estate, an unincorporated
organization, a government or any agency or political subdivision thereof, or
any other entity.
"Plan" shall mean an employee benefit plan within the meaning of Section
----
3(3) of ERISA or any other employee benefit plan maintained for employees of any
Person or any affiliate of such Person.
"Principal Shareholders" shall mean, collectively, (a) Steven B. Dodge, (b)
----------------------
the legal heirs of Steven B. Dodge, (c) Thomas H. Stoner, (d) the legal heirs of
Thomas H. Stoner, and (e) any Person the securities of which would be deemed to
be beneficially owned by any of the foregoing Persons pursuant to the provisions
of Rule 13(d)(3) under the Exchange Act.
"Prior Loan Agreement" shall mean that certain Amended and Restated Loan
--------------------
Agreement dated as of October 15, 1997 by and among American Tower Systems,
Inc., as Borrower, the financial institutions parties thereto, as Banks, and
Toronto Dominion (Texas), Inc., as Administrative Agent, as amended by that
certain First Amendment to Amended and Restated Loan Agreement dated as of
December 31, 1997, that certain Assumption Agreement dated as of January 21,
1998, that certain Second Amendment to Amended and
-20-
<PAGE>
Restated Loan Agreement dated as of March 27, 1998, and that certain Third
Amendment to Amended and Restated Loan Agreement dated as of May 11, 1998.
"Pro Forma Debt Service" shall mean with respect to the twelve (12)
----------------------
calendar month period following the calculation date, and after giving effect to
any Interest Hedge Agreements and LIBOR Advances, the sum of the amount of all
of the following with respect to the Borrowers, the Restricted Subsidiaries and
the Parent, on a consolidated basis, (a) scheduled payments of principal on
Indebtedness for Money Borrowed (determined with respect to the Facility B Loans
only, as the difference between the outstanding principal amount of the Facility
B Loans on the calculation date and the amount the Facility B Commitment will be
after the reductions thereof set forth in Section 2.5 hereof for such twelve
calendar month period have taken effect) for such period, (b) Interest Expense
for such period, (c) fees payable under this Agreement, the Facility A Loan
Agreement and the Parent Loan Agreement for such period, and (d) other payments
payable by such Persons during such period in respect of Indebtedness for Money
Borrowed (other than voluntary repayments). For purposes of this definition,
where interest payments for the twelve (12) month period immediately succeeding
the calculation date are not fixed by way of Interest Hedge Agreements, LIBOR
Advances, or otherwise for the entire period, interest shall be calculated on
such Indebtedness for Money Borrowed for periods for which interest payments are
not so fixed at the lesser of (i) the LIBOR Basis (based on the then current
adjustment under Section 2.3(f) hereof) for a LIBOR Advance having an Interest
Period of six (6) months as determined on the date of calculation and (ii) the
Base Rate Basis as in effect on the date of calculation; provided, however, that
-------- -------
if such LIBOR Basis cannot be determined in the reasonable opinion of the
Administrative Agent, such interest shall be calculated using the Base Rate
Basis as then in effect.
"Projections" shall have the meaning ascribed thereto in Section 4.1(r)
-----------
hereof.
"Register" shall have the meaning ascribed to such term in Section 11.5(g)
--------
hereof.
"Registered Noteholder" shall mean each Non-U.S. Bank that requests or
---------------------
holds a Registered Note pursuant to Section 2.8(a) hereof or registers its
Facility B Loans pursuant to Section 11.5(g) hereof.
"Registered Notes" shall mean those certain Facility B Notes that have been
----------------
issued in registered form in accordance with Sections 2.8(a) and 11.5(g) hereof
and each of which bears the following legend: "This is a Registered Note, and
this Registered Note and the Facility B Loans evidenced hereby may be assigned
or otherwise transferred in whole or in part only by registration of such
assignment or transfer on the Register and in compliance with all other
requirements provided for in the ATS Facility B Loan Agreement."
"Reportable Event" shall mean, with respect to any Employee Pension Plan,
----------------
an event described in Section 4043(b) of ERISA.
-21-
<PAGE>
"Request for Advance" shall mean a certificate designated as a "Request for
-------------------
Advance," signed by an Authorized Signatory of either Borrower requesting an
Advance hereunder, which shall be in substantially the form of Exhibit H
---------
attached hereto, and shall, among other things, (i) specify the date of the
Advance, which shall be a Business Day, the amount of the Advance, the type of
Advance (LIBOR or Base Rate), and, with respect to LIBOR Advances, the Interest
Period with respect thereto, (ii) state that there shall not exist, on the date
of the requested Advance and after giving effect thereto, a Default, as of the
date of such Advance and after giving effect thereto, and (iii) the Applicable
Margin then in effect.
"Required Lenders" shall mean, at any time, Persons whose Facility A
----------------
Commitment and Facility B Commitment equal or exceed sixty percent (60%) of the
aggregate amount of the Facility A Commitment and Facility B Commitment under
and the Facility A Loan Agreement and the Facility B Loan Agreement (after
giving effect to any reductions in such Facility A Commitment and Facility B
Commitment but without giving effect to any Facility A Loans and Facility B
Loans outstanding); provided however, that if such Facility A Commitment and
-------- -------
Facility B Commitment have been terminated or cancelled, "Required Lenders"
----------------
shall mean Persons whose Facility A Loans and Facility B Loans equal or exceed
sixty percent (60%) of the aggregate amount of such Facility A Loans and
Facility B Loans then outstanding.
"Restricted Payment" shall mean any direct or indirect distribution,
------------------
dividend or other payment to any Person (other than to either Borrower or any of
the Restricted Subsidiaries) on account of (a) any general or limited
partnership interest in, or shares of Capital Stock or other securities of,
either Borrower (other than dividends payable solely in general or limited
partnership interests or stock of such Person and stock splits), including,
without limitation, any direct or indirect distribution, dividend or other
payment to any Person (other than to either Borrower or any of the Restricted
Subsidiaries) on account of any warrants or other rights or options to acquire
shares of Capital Stock of either Borrower or any of the Restricted
Subsidiaries, or (b) any management or similar agreement with an Affiliate of
such Person not (i) in compliance with Section 7.13 hereof or (ii) in the
ordinary course of business, it being understood that the payment of fees in
connection with the Interim Financing shall not be deemed to be a Restricted
Payment.
"Restricted Subsidiary" shall mean any Subsidiary of either Borrower other
---------------------
than an Unrestricted Subsidiary. The Restricted Subsidiaries as of the Agreement
Date are as set forth on Schedule 2 attached hereto.
----------
"Sconnix Note" shall mean the note of Sconnix Broadcasting Company, a New
------------
Hampshire limited partnership (a true and correct copy of which has been
delivered to the Administrative Agent), in the aggregate principal amount of
$12,000,000, acquired or to be
-22-
<PAGE>
acquired by ATS (Delaware) in connection with the merger of Intracoastal
Broadcasting, Inc., a Delaware corporation, into ATS (Delaware).
"Security Agreement" shall mean that certain Security Agreement dated as of
------------------
even date herewith, made by the Borrowers in favor of the Collateral Agent for
the ratable benefit of the Banks, substantially in the form of Exhibit I
---------
attached hereto.
"Security Documents" shall mean each Borrower Guaranty, each Security
------------------
Agreement, the Stock Pledge Agreement, all Subsidiary Guaranties, all Subsidiary
Pledge Agreements, all Subsidiary Security Agreements, all Assignments of
Intercompany Facility B Loans, each Assignment of General Partner Interests,
each Assignment of Limited Partner Interests, the Parent Pledge Agreement, the
Parent Guaranty, any other agreement or instrument providing collateral for the
Obligations whether now or hereafter in existence, and any filings, instruments,
agreements, and documents related thereto or to this Agreement, and providing
the Collateral Agent, for the benefit of the Banks, with Collateral for the
Obligations.
"Security Interest" shall mean all Liens in favor of the Collateral Agent,
-----------------
for the benefit of the Banks, created hereunder or under any of the Security
Documents to secure the Obligations.
"Senior Debt" shall mean, for the Borrowers and the Restricted Subsidiaries
-----------
on a consolidated basis as of any date, the sum of (without duplication) (i) the
outstanding principal amount of the Facility B Loans and the Facility A Loans,
(ii) the aggregate amount of Capitalized Lease Obligations and Indebtedness for
Money Borrowed or such Persons, and (iii) the aggregate amount of all Guaranties
by such Persons of Indebtedness for Money Borrowed.
"Senior Leverage Ratio" shall mean, as of any date, the ratio of (a) the
---------------------
Senior Debt on such date to (b) Annualized Operating Cash Flow.
"Separation Obligations" shall mean the obligations of the Parent to
----------------------
reimburse CBS Corporation for certain tax and other obligations relating to the
separation of the Parent from American Radio Systems as set forth on Schedule 3
----------
attached hereto.
"Stock Pledge Agreement " shall mean that certain Stock Pledge Agreement of
-----------------------
ATS (Delaware) dated as of even date herewith between ATS (Delaware) and the
Collateral Agent, substantially in the form of Exhibit J attached hereto,
---------
pursuant to which ATS (Delaware) has pledged to the Collateral Agent for the
ratable benefit of the Banks all of ATS (Delaware) stock ownership in each of
its directly owned Restricted Subsidiaries.
"Subordination Agreement" shall mean, collectively, (a) that certain
-----------------------
Subordination Agreement dated as of even date herewith among ATSC Operating,
ATSC LP and the
-23-
<PAGE>
Administrative Agent, and (b) that certain Subordination Agreement dated as of
even date herewith among ATSC Holding, ATSC GP and the Administrative Agent.
"Subsidiary" shall mean, as applied to any Person, (a) any corporation of
----------
which more than fifty percent (50%) of the outstanding stock (other than
directors' qualifying shares) having ordinary voting power to elect a majority
of its board of directors, regardless of the existence at the time of a right of
the holders of any class or classes of securities of such corporation to
exercise such voting power by reason of the happening of any contingency, or any
partnership of which more than fifty percent (50%) of the outstanding
partnership interests, is at the time owned directly or indirectly by such
Person, or by one or more Subsidiaries of such Person, or by such Person and one
or more Subsidiaries of such Person, or (b) any other entity which is directly
or indirectly controlled or capable of being controlled by such Person, or by
one or more Subsidiaries of such Person, or by such Person and one or more
Subsidiaries of such Person.
"Subsidiary Guaranty" shall mean that certain Subsidiary Guaranty, dated as
-------------------
of even date herewith, in favor of the Collateral Agent and the Banks, given by
each Restricted Subsidiary on the Agreement Date, substantially in the form of
Exhibit K attached hereto, and shall include any similar agreements executed
- ---------
pursuant to Section 5.13 hereof.
"Subsidiary Pledge Agreement" shall mean that certain Subsidiary Pledge
---------------------------
Agreement dated as of even date herewith made by each Restricted Subsidiary
having one or more of its own Restricted Subsidiaries, on the one hand, in favor
of the Collateral Agent, on the other hand, substantially in the form of Exhibit
-------
L attached hereto, and shall include any similar agreements executed pursuant to
- -
Section 5.13 hereof.
"Subsidiary Security Agreement" shall mean that certain Subsidiary Security
-----------------------------
Agreement dated as of even date herewith between each Restricted Subsidiary, on
the one hand, and the Collateral Agent, (on behalf of itself, the Administrative
Agent and the Banks), on the other hand, substantially in the form of Exhibit M
---------
attached hereto, and shall include any similar agreements executed pursuant to
Section 5.13 hereof.
"Term Conversion Date" shall have the meaning ascribed thereto in Section
--------------------
2.14 hereof.
"Term Conversion Notice" shall mean a certificate designated "Term
----------------------
Conversion Notice" signed by an Authorized Signatory of the Borrower requesting
that the Facility B Commitment and Facility B Loans be extended and converted to
a term loan commitment and term Facility B Loans, respectively, which shall be
in substantially the form of Exhibit N attached hereto.
---------
"Termination Date" shall mean June 15, 1999.
----------------
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<PAGE>
"Total Debt" shall mean, for the Parent, the Borrowers and the Restricted
----------
Subsidiaries on a consolidated basis as of any date, the sum (without
duplication) of (i) the outstanding principal amount of the Facility B Loans,
the Facility A Loans and the loans outstanding under the Parent Loan Agreement,
(ii) the aggregate amount of Capitalized Lease Obligations and Indebtedness for
Money Borrowed of such Persons, and (iii) the aggregate amount of all Guaranties
by such Persons of Indebtedness for Money Borrowed.
"Tower Operation Business" shall mean the ownership, leasing and tower
------------------------
management businesses of the Borrowers and their Restricted Subsidiaries.
"Unreinvested Net Proceeds" shall mean the aggregate Net Proceeds not (i)
-------------------------
used or committed to be used to acquire fixed or capital assets permitted by
Section 7.6 hereof within the period specified in Section 2.7(b)(iii) hereof or
(ii) used to repay Facility B Loans pursuant to the provisions of Section
2.7(b)(iii).
"Unrestricted Subsidiary" shall mean any Subsidiary of either Borrower or
-----------------------
any joint venture (which may represent a minority interest) between either
Borrower and/or any of their Subsidiaries and any other Person, in each case,
which either Borrower has heretofore designated or hereafter designates as an
Unrestricted Subsidiary by written notice to the Administrative Agent and the
Banks prior to the formation or acquisition of such Subsidiary or joint venture.
Notwithstanding the foregoing, no Restricted Subsidiary may be re-designated as
an Unrestricted Subsidiary without the prior consent of the Majority Banks. The
Unrestricted Subsidiaries as of the Agreement Date are as set forth Schedule 4
----------
attached hereto. All Subsidiaries of any Unrestricted Subsidiary, now or
hereafter existing, shall be Unrestricted Subsidiaries.
"Unrestricted Subsidiary Distributions" shall mean the amount of cash
-------------------------------------
distributions received during such period by either Borrower or any of its
Restricted Subsidiaries from any Unrestricted Subsidiary (other than in
connection with the repayment of intercompany Indebtedness).
"U.S. Person" shall mean a citizen or resident of the United States of
-----------
America, a corporation, partnership or other entity created or organized in or
under any laws of the United States of America, or any estate or trust that is
subject to Federal income taxation regardless of the source of its income.
Each definition of an agreement in this Article 1 shall include such
agreement as modified, amended or supplemented from time to time in accordance
herewith.
-25-
<PAGE>
ARTICLE 2 Facility B Loans
Section 2.1 The Facility B Loans The Banks agree, severally, in
--------------------
accordance with their respective Facility B Commitment Ratios, and not jointly,
upon the terms and subject to the conditions of this Agreement, to lend and
relend to the Borrowers from time to time during the period from (and including)
the Agreement Date through the Termination Date, amounts which do not exceed, in
the aggregate, at any one time outstanding the amount of the Facility B
Commitment as in effect from time to time. Subject to the terms and conditions
hereof, Advances under the Facility B Commitment may be repaid and reborrowed
from time to time on a revolving basis. Notwithstanding the foregoing,
subsequent to the Termination Date, if the extension provided for under Section
2.14 hereof has been granted, the Facility B Loans that are outstanding
hereunder may be repaid and reborrowed only as provided in Sections 2.2(b)(ii)
and 2.2(c)(ii) hereof, and no Advances will thereafter be made under the
Facility B Commitment which result in an increase to the principal amount of the
Facility B Loans outstanding.
The Borrowers hereby agree that all amounts advanced under the Facility B
Commitment shall be joint and several obligations of the Borrowers.
Section 2.2 Manner of Borrowing and Disbursement.
------------------------------------
(a) Choice of Interest Rate, Etc. Any Advance hereunder shall, at
-----------------------------
the option of the requesting Borrower, be made as a Base Rate Advance or a LIBOR
Advance; provided, however, that at such time as there shall have occurred and
-------- -------
be continuing a Default hereunder, neither Borrower shall have the right to
receive a LIBOR Advance. Any notice given to the Administrative Agent in
connection with a requested Advance hereunder shall be given to the
Administrative Agent prior to 11:00 a.m. (New York, New York time) in order for
such Business Day to count toward the minimum number of Business Days required.
(b) Base Rate Advances.
------------------
(i) Advances. A Borrower shall give the Administrative Agent
--------
in the case of Base Rate Advances at least one (1) Business Day's
irrevocable prior telephonic notice followed immediately by a Request for
Advance; provided, however, that such Borrower's failure to confirm any
-------- -------
telephonic notice with a Request for Advance shall not invalidate any
notice so given if acted upon by the Administrative Agent. Upon receipt of
such notice from a Borrower, the Administrative Agent shall promptly notify
each Bank by telephone or telecopy of the contents thereof.
(ii) Repayments and Reborrowings. Either Borrower may repay or
---------------------------
prepay a Base Rate Advance without regard to its Payment Date and (A) upon
at least one (1) Business Day's irrevocable prior telephonic notice
followed by written notice,
-26-
<PAGE>
reborrow all or a portion of the principal amount thereof as a Base Rate
Advance, (B) upon at least three (3) Business Days' irrevocable prior
telephonic notice followed by written notice, reborrow all or a portion of
the principal thereof as one or more LIBOR Advances, or (C) not reborrow
all or any portion of such Base Rate Advance. On the date indicated by the
applicable Borrower, such Base Rate Advance shall be so repaid and, as
applicable, reborrowed. The failure to give timely notice hereunder with
respect to the Payment Date of any Base Rate Advance shall be considered a
request for a Base Rate Advance.
(c) LIBOR Advances.
--------------
(i) Advances. Upon request, the Administrative Agent, whose
--------
determination in absence of manifest error shall be conclusive, shall
determine the available LIBOR Bases and shall notify the requesting
Borrower of such LIBOR Bases to apply for the applicable LIBOR Advance.
The requesting Borrower shall give the Administrative Agent in the case of
LIBOR Advances at least three (3) Business Days' irrevocable prior
telephonic notice followed immediately by a Request for Advance; provided,
--------
however, that such Borrower's failure to confirm any telephonic notice with
-------
a Request for Advance shall not invalidate any notice so given if acted
upon by the Administrative Agent. Upon receipt of such notice from a
Borrower, the Administrative Agent shall promptly notify each Bank by
telephone or telecopy of the contents thereof.
(ii) Repayments and Reborrowings. At least three (3) Business
---------------------------
Days prior to the Payment Date for each LIBOR Advance, the applicable
Borrower shall give the Administrative Agent telephonic notice followed by
written notice specifying whether all or a portion of such LIBOR Advance
(A) is to be repaid and then reborrowed in whole or in part as one or more
LIBOR Advances, (B) is to be repaid and then reborrowed in whole or in part
as a Base Rate Advance, or (C) is to be repaid and not reborrowed. The
failure to give such notice shall preclude the Borrowers from reborrowing
such Advance as a LIBOR Advance on its Payment Date and shall be considered
a request for a Base Rate Advance. Upon such Payment Date such LIBOR
Advance will, subject to the provisions hereof, be so repaid and, as
applicable, reborrowed.
(d) Notification of Banks. Upon receipt of a Request for Advance,
---------------------
or a notice from a Borrower with respect to any outstanding Advance prior to the
Payment Date for such Advance, the Administrative Agent shall promptly but no
later than the close of business on the day of such notice notify each Bank by
telephone or telecopy of the contents thereof and the amount of such Bank's
portion of the Advance. Each Bank shall, not later than 12:00 noon (New York,
New York time) on the date of borrowing specified in such notice, make available
to the Administrative Agent at the Administrative Agent's Office, or at
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<PAGE>
such account as the Administrative Agent shall designate, the amount of its
portion of any Advance that represents an additional borrowing hereunder in
immediately available funds.
(e) Disbursement.
------------
(i) Prior to 2:00 p.m. (New York, New York time) on the
date of an Advance hereunder, the Administrative Agent shall, subject to
the satisfaction of the conditions set forth in Article 3 hereof, disburse
the amounts made available to the Administrative Agent by the Banks in like
funds by (A) transferring the amounts so made available by wire transfer
pursuant to the requesting Borrower's instructions, or (B) in the absence
of such instructions, crediting the amounts so made available to the
account of the requesting Borrower maintained with the Administrative
Agent.
(ii) Unless the Administrative Agent shall have received
notice from a Bank prior to 12:00 noon (New York, New York time) on the
date of any Advance that such Bank will not make available to the
Administrative Agent such Bank's ratable portion of such Advance, the
Administrative Agent may assume that such Bank has made or will make such
portion available to the Administrative Agent on the date of such Advance
and the Administrative Agent may in its sole discretion and in reliance
upon such assumption, make available to the requesting Borrower on such
date a corresponding amount. If and to the extent the Bank does not make
such ratable portion available to the Administrative Agent, such Bank
agrees to repay to the Administrative Agent on demand such corresponding
amount together with interest thereon, for each day from the date such
amount is made available to the requesting Borrower until the date such
amount is repaid to the Administrative Agent, at the Federal Funds Rate.
(iii) If such Bank shall repay to the Administrative Agent
such corresponding amount, such amount so repaid shall constitute such
Bank's portion of the applicable Advance for purposes of this Agreement. If
such Bank does not repay such corresponding amount immediately upon the
Administrative Agent's demand therefor, the Administrative Agent shall
notify the Borrowers, and the Borrowers shall immediately pay such
corresponding amount to the Administrative Agent, with interest at the
Federal Funds Rate. The failure of any Bank to fund its portion of any
Advance shall not relieve any other Bank of its obligation, if any,
hereunder to fund its respective portion of the Advance on the date of such
borrowing, but no Bank shall be responsible for any such failure of any
other Bank.
(iv) In the event that, at any time when there is no Default
and each of the conditions in Section 3.2 hereof has been satisfied, a Bank
for any reason fails or refuses to fund its portion of an Advance and such
failure shall continue for a period in excess of thirty (30) days, then,
until such time as such Bank has funded its portion of such Advance (which
late funding shall not absolve such Bank from any
-28-
<PAGE>
liability it may have to the Borrowers), or all other Banks have received
payment in full from the Borrowers (whether by repayment or prepayment) or
otherwise of the principal and interest due in respect of such Advance,
such non-funding Bank shall not have the right (A) to vote regarding any
issue on which voting is required or advisable under this Agreement or any
other Loan Document, and such Bank's portion of the Facility B Loans shall
not be counted as outstanding for purposes of determining "Majority Banks"
hereunder, and (B) to receive payments of principal, interest or fees from
the Borrowers, the Administrative Agent or the other Banks in respect of
its portion of the Facility B Loans until all Facility B Loans of the other
Banks have been fully paid.
Section 2.3 Interest.
--------
(a) On Base Rate Advances. Interest on each Base Rate Advance shall
---------------------
be computed on the basis of a year of 365/366 days for the actual number of days
elapsed and shall be payable at the Base Rate Basis for such Advance, in arrears
on the applicable Payment Date. Interest on Base Rate Advances then outstanding
shall also be due and payable on the Termination Date, or if applicable, the
Maturity Date.
(b) On LIBOR Advances. Interest on each LIBOR Advance shall be
-----------------
computed on the basis of a 360-day year for the actual number of days elapsed
and shall be payable at the LIBOR Basis for such Advance, in arrears on the
applicable Payment Date, and, in addition, if the Interest Period for a LIBOR
Advance exceeds three (3) months, interest on such LIBOR Advance shall also be
due and payable in arrears on every three-month anniversary of the beginning of
such Interest Period. Interest on LIBOR Advances then outstanding shall also be
due and payable on the Termination Date, or if applicable, the Maturity Date.
(c) Interest if no Notice of Selection of Interest Rate Basis. If a
---------------------------------------------------------
Borrower fails to give the Administrative Agent timely notice of its selection
of a LIBOR Basis, or if for any reason a determination of a LIBOR Basis for any
Advance is not timely concluded, the Base Rate Basis shall apply to such
Advance.
(d) Interest Upon Default. Immediately upon the occurrence of an
---------------------
Event of Default hereunder, the outstanding principal balance of the Facility B
Loans shall bear interest at the Default Rate. Such interest shall be payable
on demand by the Majority Banks and shall accrue until the earlier of (i) waiver
or cure of the applicable Event of Default, (ii) agreement by the Majority Banks
(or, if applicable to the underlying Event of Default, the Banks) to rescind the
charging of interest at the Default Rate, or (iii) payment in full of the
Obligations.
(e) LIBOR Contracts. At no time may the number of outstanding LIBOR
---------------
Advances hereunder and under the ATS Facility A Loan Agreement exceed twelve
(12).
-29-
<PAGE>
(f) Applicable Margin. With respect to any Advance, the Applicable
-----------------
Margin shall be as set forth in a certificate of the chief financial officer of
the Borrowers delivered to the Administrative Agent based upon the Applicable
Margin Ratio for the most recent fiscal quarter end for which financial
statements are furnished by the Borrowers to the Administrative Agent and each
Bank for the fiscal quarter most recently ended as follows:
<TABLE>
<CAPTION>
Applicable Margin Ratio Base Rate LIBOR Advance
----------------------- Advance Applicable Applicable
Margin Margin
------ ------
<S> <C> <C>
A. Greater than or equal to 6.00:1 1.250% 2.250%
B. Greater than or equal to 5.50:1, but less than 6.00: 1 1.000% 2.000%
C. Greater than or equal to 5.00:1, but less than 5.50:1 0.750% 1.750%
D. Greater than or equal to 4.50:1, but less than 5.00:1 0.500% 1.500%
E. Greater than or equal to 4.00:1, but less than 4.50:1 0.250% 1.250%
F. Greater than or equal to 3.50: 1, but less than 4.00:1 0.000% 1.000%
G. Less than 3.50:1 0.000% 0.750%
</TABLE>
Notwithstanding the foregoing, for the period from the Agreement Date through
and including December 31, 1998, the Base Rate Advance Applicable Margin shall
not be less than one percent (1.000%) and the LIBOR Advance Applicable Margin
shall not be less than 2.000%. Changes to the Applicable Margin shall be
effective (i) with respect to an increase in the Applicable Margin, as of the
second (2nd) Business Day after the day on which the financial statements are
required to be delivered to the Administrative Agent and the Banks pursuant to
Section 6.1 or 6.2 hereof, as the case may be; provided, however, that if such
-------- -------
financial statements are not delivered to the Administrative Agent and the Banks
on or before the date specified in such Section, such increase shall be
effective as of the date specified in such Section for delivery of the financial
statements, and (ii) with respect to a decrease in the Applicable Margin, as of
the later of (A) the second (2nd) Business Day after the day on which such
financial statements are required to be delivered pursuant to Section 6.1 or 6.2
hereof, as the case may be, and (B) the date on which such financial statements
are actually delivered to the Administrative Agent and the Banks. Subject to
the second sentence of this Section 2.3(f), the Applicable Margin on the
Agreement Date shall be based on the financial statements for the Borrowers with
respect to March 31, 1998 and the Senior Debt as of the Agreement Date.
-30-
<PAGE>
Upon the occurrence and during the continuance of an Event of Default,
the Applicable Margins shall not be subject to downward adjustment and shall
automatically revert to the Applicable Margins set forth in part A of the above
table until such time as such Event of Default is cured or waived.
Section 2.4 Commitment Fees. Commencing on the Agreement Date and of
---------------
at all times thereafter, the Borrowers agree to pay, on a joint and several
basis, to the Administrative Agent for the account of each of the Banks in
accordance with such Bank's respective Facility B Commitment Ratio, a commitment
fee on the aggregate unborrowed balance of the Facility B Commitment for each
day from the Agreement Date until the Termination Date, or, if applicable, the
Maturity Date, at a rate of (i) one-eighth of one percent (0.125%) per annum.
Such commitment fee shall be computed on the basis of a year of 365/366 days for
the actual number of days elapsed, shall be payable quarterly in arrears on the
last Business Day of each calendar quarter, and shall be fully earned when due
and non-refundable when paid. A final payment of any commitment fee then
payable shall also be due and payable on the Termination Date, or, if
applicable, the Maturity Date.
Section 2.5 Mandatory Commitment Reductions
-------------------------------
(a) Reduction From Facility B Excess Cash Flow. The Facility
------------------------------------------
B Commitment shall be automatically and permanently reduced by an amount equal
to the repayment of Facility B Loans required under Section 2.7(b)(iv) hereof.
(b) Reduction From Permitted Asset Sales. The Facility B
------------------------------------
Commitment shall be automatically and permanently reduced by an amount equal to
the repayment of Facility B Loans required under Section 2.7(b)(iii) hereof.
(c) Reduction From Sale of Capital Stock and Debt Instruments.
---------------------------------------------------------
The Facility B Commitment shall be automatically and permanently reduced by an
amount equal to the repayment of Facility B Loans required under Section
2.7(b)(v) hereof.
Section 2.6 Voluntary Facility B Commitment Reductions. The Borrowers
------------------------------------------
shall have the right, at any time and from time to time after the Agreement Date
and prior to the Termination Date, upon at least three (3) Business Days' prior
written notice to the Administrative Agent, without premium or penalty, to
cancel or reduce permanently all or a portion of the Facility B Commitment on
the basis of the respective Facility B Commitment Ratios of the Banks; provided,
--------
however, that any such partial reduction shall be made in an amount not less
- -------
than $5,000,000 and in an integral multiple of $1,000,000. As of the date of
cancellation or reduction set forth in such notice, the Facility B Commitment
shall be permanently reduced to the amount stated in such notice for all
purposes herein, and the Borrowers shall, on a joint and several basis, pay to
the Administrative Agent for the Banks the amount necessary to reduce the
principal amount of the Facility B Loans then outstanding under the Facility B
Commitment to not more than the amount of the Facility B Commitment
-31-
<PAGE>
as so reduced, together with accrued interest on the amount so prepaid and
commitment fees accrued through the date of the reduction with respect to the
amount reduced.
Section 2.7 Prepayments and Repayments.
--------------------------
(a) Prepayment. The principal amount of any Base Rate Advance
----------
may be prepaid in full or ratably in part at any time, without premium or
penalty and without regard to the Payment Date for such Advance. LIBOR Advances
may be prepaid prior to the applicable Payment Date, upon two (2) Business Days'
prior written notice, or telephonic notice followed immediately by written
notice, to the Administrative Agent; provided, however, that the Borrowers
-------- -------
shall, jointly and severally, reimburse the Banks and the Administrative Agent,
on the earlier of demand by the applicable Bank or the Termination Date, or, if
applicable, the Maturity Date, for any loss or out-of-pocket expense incurred by
any Bank or the Administrative Agent in connection with such prepayment, as set
forth in Section 2.10 hereof; provided further, however, that either Borrower's
-------- ------- -------
failure to confirm any telephonic notice with a written notice shall not
invalidate any notice so given if acted upon by the Administrative Agent. Any
prepayment hereunder shall be in amounts of not less than $1,000,000 and in an
integral multiple thereof. Amounts prepaid pursuant to this Section 2.7(a) may
be reborrowed, subject to the terms and conditions hereof. Amounts prepaid shall
be paid together with accrued interest on the amount so prepaid and commitment
fees accrued through the date of the reduction with respect to the amount
reduced.
(b) Repayments. The Borrowers shall repay the Facility B
----------
Loans, on a joint and several basis, as follows:
(i) Scheduled Repayments of the Facility B Loans. If the
--------------------------------------------
Facility B Loans have been converted to term loans pursuant to Section 2.14
hereof, then commencing June 30, 2001, the principal balance of the
Facility B Loans outstanding on June 29, 2001 shall be repaid in
consecutive quarterly installments on June 30th, September 30th, December
31st and March 31st of each year until paid in full in such amounts as
follows:
-32-
<PAGE>
Percentage of Principal
of Facility B Loans Outstanding
on June 29, 2001 Due on
Repayment Dates Last Day of Each Quarter
--------------- ------------------------
June 30, 2001, September 30, 2001
and December 31, 2001 2.500%
March 31, 2002, June 30, 2002,
September 30, 2002 and December 31, 2002 3.125%
March 31, 2003, June 30, 2003,
September 30, 2003 and December 31, 2003 3.750%
March 31, 2004, June 30, 2004,
September 30, 2004 and December 31, 2004 5.000%
March 31, 2005, June 30, 2005,
September 30, 2005 and December 31, 2005 5.625%
March 31, 2006, June 30, 2006 11.250%
(ii) Facility B Loans in Excess of Facility B Commitment. If, at
---------------------------------------------------
any time, the amount of the Facility B Loans shall exceed the Facility B
Commitment, the Borrowers shall, on such date and subject to Section 2.10
hereof, make a repayment of the principal amount of the Facility B Loans in
an amount equal to such excess, together with any accrued interest and fees
with respect thereto.
(iii) Permitted Asset Sales. At any time after the aggregate
---------------------
Unreinvested Net Proceeds from all assets sales during the term of this
Agreement exceeds $5,000,000, on the Business Day following the date of
receipt by either Borrower or any Restricted Subsidiary of the Net Proceeds
of any asset sale, the Facility B Loans shall be repaid in an amount equal
to, in the aggregate, any Facility B Net Proceeds; provided, however, that
-------- -------
either Borrower may notify the Administrative Agent in writing that it
intends to use any or all of such Facility B Net Proceeds to acquire fixed
or capital assets permitted by Section 7.6 hereof or for the construction
of new towers within twelve (12) months of the date of receipt of such
Facility B Net Proceeds, in which case, the reduction in the Facility B
Loans which is otherwise required under this Section 2.7(b)(iii) up to the
amount of the Facility B Net Proceeds intended to be used need not be made,
but if all or part of such Facility B Net Proceeds are not used or
irrevocably committed to be used within such twelve (12) month period, the
Facility B Loans shall be permanently reduced by an amount equal to the
portion of such Facility B Net Proceeds not so used or committed to be used
on the earlier of (i) the first day following the end of such twelve (12)
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<PAGE>
month period, the Facility B Loans shall be permanently reduced by an
amount equal to the portion of such Facility B Net Proceeds not so used or
committed to be used on the earlier of (i) the first day following the end
of such twelve (12) month period and (ii) the date on which the Borrowers
have reasonably determined that such portion of the Facility B Net Proceeds
shall not be so used or committed to be used. Accrued interest on the
principal amount of the Facility B Loans being prepaid pursuant to this
Section 2.7(b)(iii) to the date of such prepayment will be paid by the
Borrowers concurrently with such principal prepayment.
(iv) Facility B Excess Cash Flow. If the Facility B Loans have been
---------------------------
converted to term loans pursuant to Section 2.14 hereof, then on or prior
to April 15, 2002 and on or prior to each April 15th thereafter during
the term of this Agreement, the Facility B Loans shall be repaid in an
amount equal to, in the aggregate, the Facility B Excess Cash Flow for the
fiscal year ended on the immediately preceding December 31st. Accrued
interest on the principal amount of the Facility B Loans being prepaid
pursuant to this Section 2.7(b)(iv) to the date of such prepayment will be
paid by the Borrowers concurrently with such principal prepayment.
(v) Sale of Capital Stock and Debt Instruments. On the Business
------------------------------------------
Day following the date of receipt by the Parent, either Borrower or any
Restricted Subsidiary of any Facility B Capital Raise Proceeds, the
Facility B Loan shall be repaid in an amount equal to, in the aggregate,
the Facility B Capital Raise Proceeds. Accrued interest on the principal
amount of the Facility B Loans being prepaid pursuant to this Section
2.7(b)(v) to the date of such prepayment will be paid by the Borrowers
concurrently with such principal prepayment.
(vi) Termination Date or Maturity Date. In addition to the
---------------------------------
foregoing, a final payment of all Obligations then outstanding shall be due
and payable on the Termination Date, or, if applicable, the Maturity Date.
Section 2.8 Facility B Notes; Loan Accounts.
-------------------------------
(a) The Facility B Loans shall be repayable in accordance with the terms and
provisions set forth herein and shall be evidenced by the Facility B Notes. One
(1) Facility B Note shall be payable to the order of each Bank, in accordance
with such Bank's respective Commitment Ratio. The Facility B Notes shall be
issued on a joint and several basis by the Borrowers to the Banks and shall be
duly executed and delivered by one or more Authorized Signatories. Any Bank (i)
which is not a U.S. Person (a "Non-U.S. Bank") and (ii) which could become
-------------
completely exempt from withholding of United States Federal income taxes in
respect of payment of any obligations due to such Bank hereunder relating to any
of its Facility B Loans if such Facility B Loans were in registered form for
United States Federal income tax purposes may request the Borrowers (through the
Administrative Agent), and the Borrowers agree thereupon, to register such
Facility B Loans as provided in Section 11.5(g)
-34-
<PAGE>
hereof and to issue to such Bank Facility B Notes evidencing such Facility B
Loans as Registered Notes or to exchange Facility B Notes evidencing such
Facility B Loans for new Registered Notes, as applicable. Registered Notes may
not be exchanged for Facility B Notes that are not in registered form.
(b) Each Bank may open and maintain on its books in the name of the
Borrowers a loan account with respect to its portion of the Facility B Loans and
interest thereon. Each Bank which opens such a loan account shall debit such
loan account for the principal amount of its portion of each Advance made by it
and accrued interest thereon, and shall credit such loan account for each
payment on account of principal of or interest on its Facility B Loans. The
records of a Bank with respect to the loan account maintained by it shall be
prima facie evidence of its portion of the Facility B Loans and accrued interest
thereon absent manifest error, but the failure of any Bank to make any such
notations or any error or mistake in such notations shall not affect the
Borrowers' repayment obligations with respect to such Facility B Loans.
Section 2.9 Manner of Payment.
-----------------
(a) Each payment (including, without limitation, any prepayment) by
the Borrowers on account of the principal of or interest on the Facility B
Loans, commitment fees and any other amount owed to the Banks or the
Administrative Agent or any of them under this Agreement or the Facility B Notes
shall be made not later than 1:00 p.m. (New York, New York time) on the date
specified for payment under this Agreement to the Administrative Agent at the
Administrative Agent's Office, for the account of the Banks or the
Administrative Agent, as the case may be, in lawful money of the United States
of America in immediately available funds. Any payment received by the
Administrative Agent after 1:00 p.m. (New York, New York time) shall be deemed
received on the next Business Day. Receipt by the Administrative Agent of any
payment intended for any Bank or Banks hereunder prior to 1:00 p.m. (New York,
New York time) on any Business Day shall be deemed to constitute receipt by such
Bank or Banks on such Business Day. In the case of a payment for the account of
a Bank, the Administrative Agent will promptly, but no later than the close of
business on the date such payment is deemed received, thereafter distribute the
amount so received in like funds to such Bank. If the Administrative Agent
shall not have received any payment from the Borrowers as and when due, the
Administrative Agent will promptly notify the Banks accordingly. In the event
that the Administrative Agent shall fail to make distribution to any Bank as
required under this Section 2.9, the Administrative Agent agrees to pay such
Bank interest from the date such payment was due until paid at the Federal Funds
Rate.
(b) The Borrowers agree to pay, on a joint and several basis,
principal, interest, fees and all other amounts due hereunder or under the
Facility B Notes without set-off or counterclaim or any deduction whatsoever.
-35-
<PAGE>
(c) Prior to the acceleration of the Facility B Loans under Section
8.2 hereof, if some but less than all amounts due from the Borrowers are
received by the Administrative Agent with respect to the Obligations, the
Administrative Agent shall distribute such amounts in the following order of
priority, all on a pro rata basis to the Banks: (i) to the payment on a pro rata
basis of any fees or expenses then due and payable to the Administrative Agent
or the Banks, or any of them; (ii) to the payment of interest then due and
payable on the Facility B Loans; (iii) to the payment of all other amounts not
otherwise referred to in this Section 2.9(c) then due and payable to the
Administrative Agent or the Banks, or any of them, hereunder or under the
Facility B Notes or any other Loan Document; and (iv) to the payment of
principal then due and payable on the Facility B Loans.
(d) Subject to any contrary provisions in the definition of Interest
Period, if any payment under this Agreement or any of the other Loan Documents
is specified to be made on a day which is not a Business Day, it shall be made
on the next Business Day, and such extension of time shall in such case be
included in computing interest and fees, if any, in connection with such
payment.
(e) Each Registered Noteholder (or, if such Registered Noteholder is
not the beneficial owner thereof, such beneficial owner) shall deliver to the
Borrowers (with a copy to the Administrative Agent) prior to or at the time it
becomes a Registered Noteholder, a Form 1001, 4224 or W-8 (or such successor and
related forms as may from time to time be adopted by the relevant taxing
authorities of the United States of America), together with an annual
certificate stating that such Registered Noteholder or beneficial owner, as the
case may be, is not a "bank" within the meaning of Section 881(c)(3)(A) of the
Code and is not otherwise described in Section 881(c)(3) of the Code. Each
Registered Noteholder or beneficial owner, as the case may be, shall promptly
notify the Borrowers (with a copy to the Administrative Agent) if at any time,
such Registered Noteholder or beneficial owner, as the case may be, determines
that it is no longer in a position to make the certification made in such
certificate to the Borrowers (or any other form of certification adopted by the
relevant taxing authorities of the United States of America for such purposes).
Section 2.10 Reimbursement.
-------------
(a) Whenever any Bank shall sustain or incur any losses or
reasonable out-of-pocket expenses in connection with (i) failure by either
Borrower to borrow any LIBOR Advance after having given notice of its intention
to borrow in accordance with Section 2.2 hereof (whether by reason of each
Borrower's election not to proceed or the non-fulfillment of any of the
conditions set forth in Article 3 hereof), or (ii) prepayment (or failure to
prepay after giving notice thereof) of any LIBOR Advance in whole or in part for
any reason, the Borrowers agree to pay, on a joint and several basis, to such
Bank, upon such Bank's demand, an amount sufficient to compensate such Bank for
all such losses and out-of-pocket expenses. Such Bank's good faith determination
of the amount of such losses or out-of-
-36-
<PAGE>
pocket expenses, as set forth in writing and accompanied by calculations in
reasonable detail demonstrating the basis for its demand, shall be presumptively
correct absent manifest error.
(b) Losses subject to reimbursement hereunder shall include, without
limiting the generality of the foregoing, lost margins, expenses incurred by any
Bank or any participant of such Bank permitted hereunder in connection with the
re-employment of funds prepaid, paid, repaid, not borrowed, or not paid, as the
case may be, and will be payable whether the Maturity Date is changed by virtue
of an amendment hereto (unless such amendment expressly waives such payment) or
as a result of acceleration of the Facility B Loans.
Section 2.11 Pro Rata Treatment.
------------------
(a) Advances. Each Advance from the Banks hereunder shall be
--------
made pro rata on the basis of the respective Facility B Commitment Ratios of the
Banks.
(b) Payments. Each payment and prepayment of principal of the
--------
Facility B Loans, and, except as provided in Section 2.2(e) hereof and Article
10 hereof, each payment of interest on the Facility B Loans, shall be made to
the Banks pro rata on the basis of their respective unpaid principal amounts
outstanding under the Facility B Notes immediately prior to such payment or
prepayment. If any Bank shall obtain any payment (whether involuntary, through
the exercise of any right of set-off, or otherwise) on account of the Facility B
Loans in excess of its ratable share of the Facility B Loans under its Facility
B Commitment Ratio, such Bank shall forthwith purchase from the other Banks such
participations in the portion of the Facility B Loans made by them as shall be
necessary to cause such purchasing Bank to share the excess payment ratably with
each of them; provided, however, that if all or any portion of such excess
-------- -------
payment is thereafter recovered from such purchasing Bank, such purchase from
each Bank shall be rescinded and such Bank shall repay to the purchasing Bank
the purchase price to the extent of such recovery. The Borrowers agree that any
Bank so purchasing a participation from another Bank pursuant to this Section
2.11(b) may, to the fullest extent permitted by law, exercise all its rights of
payment (including, without limitation, the right of set-off) with respect to
such participation as fully as if such Bank were the direct creditor of the
Borrowers in the amount of such participation.
Section 2.12 Capital Adequacy. If after the date hereof, the adoption of
----------------
any Applicable Law regarding the capital adequacy of banks or bank holding
companies, or any change in Applicable Law (whether adopted before or after the
Agreement Date) or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Bank (or the
bank holding company of such Bank) with any directive regarding capital adequacy
(whether or not having the force of law) of any such governmental authority,
central bank or comparable agency, has or would have the effect of
-37-
<PAGE>
reducing the rate of return on any Bank's capital as a consequence of its
obligations hereunder with respect to the Facility B Loans and the Facility B
Commitment to a level below that which it could have achieved but for such
adoption, change or compliance (taking into consideration such Bank's policies
with respect to capital adequacy immediately before such adoption, change or
compliance and assuming that such Bank's (or the bank holding company of such
Bank) capital was fully utilized prior to such adoption, change or compliance)
by an amount reasonably deemed by such Bank to be material, then, upon demand by
such Bank, the Borrowers shall promptly pay, on a joint and several basis, to
such Bank such additional amounts as shall be sufficient to compensate such Bank
for such reduced return, together with interest on such amount from the fourth
(4th) Business Day after the date of demand or the Termination Date, or, if
applicable, the Maturity Date, as applicable, until payment in full thereof at
the Default Rate. A certificate of such Bank setting forth the amount to be paid
to such Bank by the Borrowers as a result of any event referred to in this
paragraph and supporting calculations in reasonable detail shall be
presumptively correct absent manifest error.
Section 2.13 Bank Tax Forms. On or prior to the Agreement Date and on or
--------------
prior to the first Business Day of each calendar year thereafter, each Bank
which is organized in a jurisdiction other than the United States shall provide
each of the Administrative Agent and the Borrowers (a), if such Bank is a "bank"
under Section 881(c)(3)(A) of the Code, with a properly executed originals of
Forms 4224 or 1001 (or any successor form) prescribed by the Internal Revenue
Service or other documents satisfactory to the Borrowers and the Administrative
Agent, and properly executed Internal Revenue Service Forms W-8 or W-9, as the
case may be, certifying (i) as to such Bank's status for purposes of determining
exemption from United States withholding taxes with respect to all payments to
be made to such Bank hereunder and under the Facility B Notes or (ii) that all
payments to be made to such Bank hereunder and under the Facility B Notes are
subject to such taxes at a rate reduced to zero by an applicable tax treaty, or
(b) if such Bank is not a "bank" within the meaning of Section 881(c)(3)(A) of
the Code and intends to claim exemption from U.S. Federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of "portfolio
interest", a Form W-8, or any subsequent versions thereof or successors thereto
(and, if such Bank delivers a Form W-8, a certificate representing that such
Bank is not a bank for purposes of Section 881(c) of the Code, is not a ten-
percent (10%) shareholder (within the meaning of Section 871(h)(3)(B) of the
Code and is not a controlled foreign corporation related to the Borrowers
(within the meaning of Section 864(d)(4) of the Code)), properly completed and
duly executed by such Bank, indicating that such Bank is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes as permitted by the Code. Each such Bank agrees to
provide the Administrative Agent and the Borrowers with new forms prescribed by
the Internal Revenue Service upon the expiration or obsolescence of any
previously delivered form, or after the occurrence of any event requiring a
change in the most recent forms delivered by it to the Administrative Agent and
the Borrowers.
-38-
<PAGE>
Section 2.14 Conversion of Facility B Loans to Term Loans. Borrowers
--------------------------------------------
shall have the option to convert the Facility B Loans outstanding on the
Termination Date to a term loan maturing no later than a date corresponding with
the then-effective Maturity Date, subject to and on the terms and conditions set
forth below:
(a) No sooner than ninety (90) days (and not later than fifteen
(15) days preceding the Termination Date, the requesting Borrower shall deliver
to the Administrative Agent a Term Conversion Request in substantially the form
of Exhibit N ("Term Loan Conversion Notice"), which, among other things, shall
---------
(i) specify such Borrower's election to make such conversion to a term loan,
(ii) specify the date on which such conversion shall occur (the "Term Conversion
Date"), and (iii) specify whether such Loans shall be Base Rate Loans or LIBOR
Loans and the Interest Periods therefor (if applicable) on the Term Conversion
Date;
(b) No Default or Event of Default shall exist on either the
date such Term Conversion Request is delivered or on the Term Conversion Date;
and no Default or Event of Default shall exist after giving effect to such
conversion; and
(c) On or prior to the Term Conversion Date, the Borrowers shall
have obtained all Necessary Authorizations for such extension of loan maturity
effected by the term loan conversion, except to the extent that the failure to
so obtain such Necessary Authorizations could not be reasonably likely to result
in a Materially Adverse Effect and the Borrowers shall have delivered to the
Administrative Agent evidence of such Necessary Authorizations as the
Administrative Agent or its counsel may reasonably request.
ARTICLE 3 Conditions Precedent
Section 3.1 Conditions Precedent to Effectiveness of this Agreement.
--------------------------------------------------------
The effectiveness of this Agreement is subject to the prior or contemporaneous
fulfillment of each of the following conditions:
(a) The Administrative Agent and the Banks shall have received
each of the following:
(i) this Agreement duly executed;
(ii) the loan certificate of ATS dated as of the Agreement
Date, in substantially the form attached hereto as Exhibit O, including a
---------
certificate of incumbency with respect to each Authorized Signatory of such
Person, together with the following items: (A) a true, complete and correct
copy of the Certificate of Formation and Limited Partnership and Agreement
of Limited Partnership of ATS as in effect on the Agreement Date, (B)
certificates of good standing for ATS issued by the Secretary of State or
similar state official for the state of formation of ATS and for
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<PAGE>
each state in which ATS is required to qualify to do business and (C) a
true, complete and correct copy of the corporate resolutions of the general
partner of ATS authorizing ATS to execute, deliver and perform this
Agreement and the other Loan Documents;
(iii) the loan certificate of ATS (Delaware) dated as of the
Agreement Date, in substantially the form attached hereto as Exhibit P,
---------
including a certificate of incumbency with respect to each Authorized
Signatory of such Person, together with the following items: (A) a true,
complete and correct copy of the Certificate of Incorporation and By-laws
of ATS (Delaware) as in effect on the Agreement Date, (B) certificates of
good standing for ATS (Delaware) issued by the Secretary of State or
similar state official for the state of incorporation of ATS (Delaware) and
for each state in which ATS (Delaware) is required to qualify to do
business, (C) a true, complete and correct copy of the corporate
resolutions of ATS (Delaware) authorizing ATS (Delaware) to execute,
deliver and perform this Agreement and the other Loan Documents, and (D) a
true, complete and correct copy of any shareholders' agreements or voting
trust agreements in effect with respect to the stock of ATS (Delaware);
(iv) the loan certificate of the Parent dated as of the
Agreement Date, in substantially the form attached hereto as Exhibit Q,
---------
including a certificate of incumbency with respect to each Authorized
Signatory of such Person, together with the following items: (A) a true,
complete and correct copy of the Certificate of Incorporation and By-laws
of the Parent as in effect on the Agreement Date, (B) certificates of good
standing for the Parent issued by the Secretary of State or similar state
official for the state of incorporation of the Parent and for each state in
which the Parent is required to qualify to do business, (C) a true,
complete and correct copy of the corporate resolutions of the Parent
authorizing the Parent to execute, deliver and perform the Loan Documents
to which it is a party, and (D) a true, complete and correct copy of any
shareholders' agreements or voting trust agreements in effect with respect
to the stock of the Parent;
(v) duly executed Facility B Notes;
(vi) duly executed Security Documents;
(vii) copies of insurance binders or certificates covering the
assets of the Borrowers and the Restricted Subsidiaries, and otherwise
meeting the requirements of Section 5.5 hereof, together with copies of the
underlying insurance policies;
(viii) legal opinion of Sullivan & Worcester LLP, counsel to the
Borrowers, addressed to each Bank and the Administrative Agent and dated as
of the Agreement Date;
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<PAGE>
(ix) duly executed Certificate of Financial Condition for the
Borrowers and the Restricted Subsidiaries on a consolidated and
consolidating basis, given by the chief financial officer of ATS
(Delaware);
(x) copies of the most recent quarterly financial statements
of the Borrowers and the Restricted Subsidiaries provided to each Bank and
the Administrative Agent, certified by the chief financial officer of ATS
(Delaware);
(xi) duly executed Intercreditor Agreement;
(xii) delivery to the Collateral Agent of all possessory
collateral, including, without limitation, any pledged notes or pledged
stock; and
(xiii) all such other documents as the Administrative Agent may
reasonably request, certified by an appropriate governmental official or an
Authorized Signatory if so requested.
(b) The Administrative Agent and the Banks shall have received
evidence satisfactory to them that all Necessary Authorizations, other than
Necessary Authorizations the absence of which could not reasonably be expected
to have, individually or in the aggregate, a Materially Adverse Effect,
including all necessary consents to the closing of this Agreement, have been
obtained or made, are in full force and effect and are not subject to any
pending or, to the knowledge of the Borrowers, threatened reversal or
cancellation, and the Administrative Agent and the Banks shall have received a
certificate of an Authorized Signatory so stating.
(c) The Borrowers shall certify to the Administrative Agent and the
Banks that each of the representations and warranties in Article 4 hereof are
true and correct in all material respects as of the Agreement Date, that no
Default or Event of Default then exists or is continuing and that no material
adverse change has occurred in the financial condition, business operations,
prospects or properties of the Borrowers and the Restricted Subsidiaries, on a
consolidated basis, since the most recent fiscal year end and fiscal quarter
end, it being understood that the Separation Obligations shall not be deemed to
be such a material adverse change.
(d) The Borrowers shall have paid to the Administrative Agent for the
account of each Bank the facility fees set forth in those letter agreements
dated the Agreement Date in favor of each Bank and any and all fees payable by
the Borrowers under the Prior Loan Agreement.
(e) The Administrative Agent and the Banks shall have received
evidence satisfactory to them that all conditions precedent to the effectiveness
of the ATS Facility A
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<PAGE>
Loan Agreement and the Parent Loan Agreement have been satisfied (other than the
provision comparable to this provision) and that the ATS Facility A Loan
Agreement and the Parent Loan Agreement have been duly executed.
(f) The Administrative Agent and the Banks shall have received, in
form and substance satisfactory to them, evidence that the Parent has received
commitments to fund with equity, or has received equity proceeds to pay, one
hundred percent (100%) of the tax liabilities that are a part of the Separation
Obligations, to the extent such tax liabilities have not been paid.
Section 3.2 Conditions Precedent to Each Advance. The obligation of the
------------------------------------
Banks to make each Advance on or after the Agreement Date is subject to the
fulfillment of each of the following conditions immediately prior to or
contemporaneously with such Advance:
(a) All of the representations and warranties of the Borrowers under
this Agreement and the other Loan Documents (including, without limitation, all
representations and warranties with respect to the Restricted Subsidiaries),
which, pursuant to Section 4.2 hereof, are made at and as of the time of such
Advance, shall be true and correct at such time in all material respects, both
before and after giving effect to the application of the proceeds of such
Advance, and after giving effect to any updates to information provided to the
Banks in accordance with the terms of such representations and warranties, and
no Default hereunder shall then exist or be caused thereby;
(b) With respect to Advances which, if funded, would increase the
aggregate principal amount of Facility B Loans outstanding hereunder, the
Administrative Agent shall have received a duly executed Request for Advance;
(c) The Administrative Agent and the Banks shall have received all
such other certificates, reports, statements, opinions of counsel (if such
Advance is in connection with an Acquisition) or other documents as the
Administrative Agent or any Bank may reasonably request; and
(d) With respect to any Advance relating to any Acquisition or the
formation of any Restricted Subsidiary which is permitted hereunder, the
Administrative Agent and the Banks shall have received such documents and
instruments relating to such Acquisition or formation of a new Restricted
Subsidiary as are described in Section 5.13 hereof or otherwise required herein.
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<PAGE>
ARTICLE 4 Representations and Warranties
Section 4.1 Representations and Warranties. The Borrowers hereby agree,
------------------------------
represent and warrant, upon the Agreement Date and on the date of each Advance,
in favor of the Administrative Agent and each Bank that:
(a) Organization; Ownership; Power; Qualification. ATS is a limited
---------------------------------------------
partnership duly organized, validly existing and in good standing under the laws
of the State of Delaware, and ATS (Delaware) is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Each Borrower has the power and authority to own its properties and to carry on
its business as now being and as proposed hereafter to be conducted. Except as
set forth on Schedule 5 attached hereto, each Restricted Subsidiary is a
----------
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation and has the corporate power and authority to
own its properties and to carry on its business as now being and as proposed
hereafter to be conducted. The Borrowers and the Restricted Subsidiaries are
duly qualified, in good standing and authorized to do business in each
jurisdiction in which the character of their respective properties or the nature
of their respective businesses requires such qualification or authorization,
except where failure to be so qualified, in the aggregate, could not reasonably
be expected to have a Materially Adverse Effect.
(b) Authorization; Enforceability. ATS has the partnership power and
-----------------------------
ATS (Delaware) has the corporate power and each has taken all necessary action
to authorize it to borrow hereunder, to execute, deliver and perform this
Agreement and each of the other Loan Documents to which it is a party in
accordance with their respective terms, and to consummate the transactions
contemplated hereby and thereby. This Agreement has been duly executed and
delivered by the Borrowers and is, and each of the other Loan Documents to which
the Borrowers are parties is, a legal, valid and binding obligation of each
Borrower and enforceable against each Borrower in accordance with its terms,
subject, as to enforcement of remedies, to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity.
(c) Subsidiaries: Authorization; Enforceability. The Restricted
-------------------------------------------
Subsidiaries and the direct and indirect ownership thereof by ATS and ATS
(Delaware) as of the Agreement Date are as set forth on Schedule 2 attached
----------
hereto, and, to the extent such Restricted Subsidiaries are corporations, ATS
and ATS (Delaware), as the case may be, have, subject to the provisions of the
Security Documents, the unrestricted right to vote the issued and outstanding
shares of each directly owned Restricted Subsidiary shown thereon and such
shares of such Restricted Subsidiaries have been duly authorized and issued and
are fully paid and nonassessable. Each Restricted Subsidiary that is a
corporation has the corporate power and has taken all necessary corporate action
to authorize it to execute, deliver and
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<PAGE>
perform each of the Loan Documents to which it is a party in accordance with
their respective terms and to consummate the transactions contemplated by this
Agreement and by such Loan Documents. Each of the Loan Documents to which any
Restricted Subsidiary is party is a legal, valid and binding obligation of such
Restricted Subsidiary enforceable against such Restricted Subsidiary in
accordance with its terms, subject, as to enforcement of remedies, to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity. The ownership interest in
each of the Restricted Subsidiaries represents a direct or indirect controlling
interest by ATS or ATS (Delaware) of such Restricted Subsidiary for purposes of
directing or causing the direction of the management and policies of each
Restricted Subsidiary.
(d) Compliance with Other Loan Documents and Contemplated
-----------------------------------------------------
Transactions. The execution, delivery and performance, in accordance with their
- ------------
respective terms, by the Borrowers of this Agreement and the Facility B Notes,
and by the Borrowers and the Restricted Subsidiaries of each of the other Loan
Documents to which they are respectively party, and the consummation of the
transactions contemplated hereby and thereby, do not and will not (i) require
any consent or approval, governmental or otherwise, not already obtained, (ii)
violate any Applicable Law respecting either Borrower or any Restricted
Subsidiary, (iii) conflict with, result in a breach of, or constitute a default
under the certificate or articles of incorporation or by-laws or partnership
agreements, as the case may be, as amended, of either Borrower or of any
Restricted Subsidiary, or under any material indenture, agreement, or other
instrument, including without limitation the Licenses, to which either Borrower
or any Restricted Subsidiary is a party or by which any of them or their
respective properties may be bound, or (iv) result in or require the creation or
imposition of any Lien upon or with respect to any property now owned or
hereafter acquired by either Borrower or any Restricted Subsidiary, except for
Permitted Liens.
(e) Business. The Borrowers, together with their Subsidiaries, are
--------
engaged in the business of owning, constructing, managing, operating, and
investing in communications tower facilities and in the video, voice and data
transmission business.
(f) Licenses, etc. The Licenses have been duly issued and are in full
--------------
force and effect. The Borrowers and the Restricted Subsidiaries are in
compliance in all material respects with all of the provisions thereof. The
Borrowers and the Restricted Subsidiaries have secured all Necessary
Authorizations, except for such Necessary Authorizations the failure of which to
secure would not reasonably be expected to have, individually or in the
aggregate, a Materially Adverse Effect, and all such Necessary Authorizations
are in full force and effect. Neither any License nor any Necessary
Authorization is the subject of any pending or, to the best of either Borrower's
knowledge, threatened revocation which, if determined adversely to either
Borrower or any Restricted Subsidiary would not reasonably be expected to have,
individually or in the aggregate, a Materially Adverse Effect.
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<PAGE>
(g) Compliance with Law. The Borrowers and the Restricted
-------------------
Subsidiaries are in compliance with all Applicable Law, except where the failure
to be in compliance would not individually or in the aggregate have a Materially
Adverse Effect.
(h) Title to Assets. As of the Agreement Date, the Borrowers and the
---------------
Restricted Subsidiaries have good, legal and marketable title to, or a valid
leasehold interest in, all of their respective assets, except for such
exceptions as would not reasonably be expected to have, individually or in the
aggregate, a Materially Adverse Effect. None of the properties or assets of
either Borrower or any of the Restricted Subsidiaries is subject to any Liens,
except for Permitted Liens and Liens under the Prior Loan Agreement and related
documents. Except for financing statements evidencing Permitted Liens, no
financing statement under the Uniform Commercial Code as in effect in any
jurisdiction and no other filing which names either Borrower or any Restricted
Subsidiary as debtor or which covers or purports to cover any of the assets of
either Borrower or any Restricted Subsidiary is currently effective and on file
in any state or other jurisdiction, other than such financing statements, if
any, as to which the obligations secured thereby have been repaid in their
entirety, and neither Borrower nor any Restricted Subsidiary has signed any such
financing statement or filing or any security agreement authorizing any secured
party thereunder to file any such financing statement or filing other than the
Prior Loan Agreement and related documents.
(i) Litigation. As of the Agreement Date, there is no action, suit,
----------
proceeding or investigation pending against, or, to the knowledge of the
Borrowers, threatened against or in any other manner relating adversely to,
either Borrower or any Restricted Subsidiary or any of their respective
properties, including without limitation the Licenses, in any court or before
any arbitrator of any kind or before or by any governmental body (including,
without limitation, the FCC) except as set forth on Schedule 6 attached hereto
----------
(as such schedule may be updated from time to time). No such action, suit,
proceeding or investigation (i) calls into question the validity of this
Agreement or any other Loan Document, or (ii) individually or collectively
involves the possibility of any judgment or liability not fully covered by
insurance which, if determined adversely to either Borrower or any Restricted
Subsidiary, would have a Materially Adverse Effect.
(j) Taxes. All federal, state and other tax returns of the Borrowers
-----
and each Restricted Subsidiary required by law to be filed have been duly filed
and all federal, state and other taxes, including, without limitation,
withholding taxes, assessments and other governmental charges or levies required
to be paid by either Borrower or any Restricted Subsidiary or imposed upon
either Borrower or any Restricted Subsidiary or any of their respective
properties, income, profits or assets, which are due and payable, have been
paid, except any such taxes (i) (x) the payment of which either Borrower or any
Restricted Subsidiary is diligently contesting in good faith by appropriate
proceedings, (y) for which adequate reserves have been provided on the books of
such Person, and (z) as to which no Lien other than a Permitted Lien has
attached and no foreclosure, distraint, sale or similar
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<PAGE>
proceedings have been commenced, or (ii) which may result from audits not yet
conducted. The charges, accruals and reserves on the books of each Borrower and
each of the Restricted Subsidiaries in respect of taxes are, in the judgment of
the Borrowers, adequate.
(k) Financial Statements. The Borrowers have furnished or caused to
--------------------
be furnished to the Administrative Agent and the Banks as of the Agreement Date,
the audited financial statements for the Parent and its Subsidiaries on a
consolidated basis for the fiscal year ended December 31, 1997, and unaudited
financial statements for the Parent and the Restricted Subsidiaries for the
fiscal quarter ended March 31, 1998, all of which have been prepared in
accordance with GAAP and present fairly in all material respects the financial
position of the Borrowers and the Restricted Subsidiaries on a consolidated
basis, on and as at such dates and the results of operations for the periods
then ended (subject, in the case of unaudited financial statements, to normal
year-end and audit adjustments). Neither Borrower nor any of the Restricted
Subsidiaries has any material liabilities, contingent or otherwise, other than
as disclosed in the financial statements referred to in the preceding sentence
or as set forth or referred to in this Agreement.
(l) No Material Adverse Change. There has occurred no event since
--------------------------
December 31, 1997 which has or which could reasonably be expected to have a
Materially Adverse Effect other than the Separation Obligations.
(m) ERISA. Each Borrower and each Restricted Subsidiary and each of
-----
their respective Plans are in compliance with ERISA and the Code, except to the
extent that the failure to so comply could not reasonably be expected to have a
Materially Adverse Effect, and neither Borrower nor any of their ERISA
Affiliates, including their Subsidiaries, has incurred any accumulated funding
deficiency with respect to any such Plan within the meaning of ERISA or the
Code. The Borrowers, each of their Restricted Subsidiaries, and each other
ERISA Affiliate have complied in all material respects with all requirements of
ERISA. Neither Borrower nor any of its Restricted Subsidiaries has made any
promises of retirement or other benefits to employees, except as set forth in
the Plans, in written agreements with such employees, or in such Person's
employee handbook and memoranda to employees. Neither Borrower nor any of its
ERISA Affiliates, including their Subsidiaries, has incurred any material
liability to PBGC in connection with any such Plan. The assets of each such
Plan which is subject to Title IV of ERISA are sufficient to provide the
benefits under such Plan, the payment of which PBGC would guarantee if such Plan
were terminated, and such assets are also sufficient to provide all other
"benefit liabilities" (within the meaning of Section 4041 of ERISA) due under
the Plan upon termination. No Reportable Event has occurred and is continuing
with respect to any such Plan. No such Plan or trust created thereunder, or
party in interest (as defined in Section 3(14) of ERISA), or any fiduciary (as
defined in Section 3(21) of ERISA), has engaged in a "prohibited transaction"
(as such term is defined in Section 406 of ERISA or Section 4975 of the Code)
which would subject such Plan or any other Plan of either Borrower or any
Restricted Subsidiary, any trust created thereunder, or any such party in
interest or fiduciary, or any party dealing with any such Plan
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<PAGE>
or any such trust, to the tax or penalty on "prohibited transactions" imposed by
Section 502 of ERISA or Section 4975 of the Code. Neither Borrower nor any of
its ERISA Affiliates, including their Subsidiaries, is or has been obligated to
make any payment to a Multiemployer Plan.
(n) Compliance with Regulations T, U and X. Neither Borrower nor any
--------------------------------------
of the Restricted Subsidiaries is engaged principally or as one of its important
activities in the business of extending credit for the purpose of purchasing or
carrying, and neither Borrower nor any Restricted Subsidiary owns or presently
intends to acquire, any "margin security" or "margin stock" as defined in
Regulations T, U, and X (12 C.F.R. Parts 220, 221 and 224) (the "Regulations")
of the Board of Governors of the Federal Reserve System (herein called "margin
stock"). None of the proceeds of the Facility B Loans will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin stock or for
the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry margin stock or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of the
Regulations. Neither Borrower has taken, caused or authorized to be taken, and
will not take any action which might cause this Agreement or the Notes to
violate any of the Regulations or any other regulation of the Board of Governors
of the Federal Reserve System or to violate the Exchange Act, in each case as
now in effect or as the same may hereafter be in effect. If so requested by the
Administrative Agent, the Borrowers will furnish the Administrative Agent with
(i) a statement or statements in conformity with the requirements of Federal
Reserve Form U-I referred to in Regulation U of the Board of Governors of the
Federal Reserve System and (ii) other documents evidencing its compliance with
the margin regulations, reasonably requested by the Administrative Agent.
Neither the making of the Facility B Loans nor the use of proceeds thereof will
violate, or be inconsistent with, the provisions of any of the Regulations.
(o) Investment Company Act. Neither Borrower nor any of the
----------------------
Restricted Subsidiaries is required to register under the provisions of the
Investment Company Act of 1940, as amended, and neither the entering into or
performance by the Borrowers and the Restricted Subsidiaries of this Agreement
and the Loan Documents nor the issuance of the Notes violates any provision of
such Act or requires any consent, approval or authorization of, or registration
with, the Securities and Exchange Commission or any other governmental or public
body or authority pursuant to any provisions of such Act.
(p) Governmental Regulation. Neither Borrower nor any of the
-----------------------
Restricted Subsidiaries is required to obtain any consent, approval,
authorization, permit or license which has not already been obtained from, or
effect any filing or registration which has not already been effected with, any
federal, state or local regulatory authority in connection with the execution
and delivery of this Agreement or any other Loan Document. Neither Borrower nor
any Restricted Subsidiary is required to obtain any consent, approval,
authorization, permit or license which has not already been obtained from, or
effect any filing or registration which has not already been effected with, any
federal, state or local regulatory
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<PAGE>
authority in connection with the performance, in accordance with their
respective terms, of this Agreement or any other Loan Document, other than
filing of appropriate UCC financing statements.
(q) Absence of Default, Etc. The Borrower and the Restricted
------------------------
Subsidiaries are in compliance in all respects with all of the provisions of
their respective partnership agreements, Certificates or Articles of
Incorporation and By-Laws, as the case may be, and no event has occurred or
failed to occur (including, without limitation, any matter which could create a
Default hereunder by cross-default) which has not been remedied or waived, the
occurrence or non-occurrence of which constitutes, (i) a Default or (ii) a
material default by either Borrower or any Restricted Subsidiary under any
indenture, agreement or other instrument relating to Indebtedness of such Person
in the amount of $1,000,000 or more in the aggregate, any material License, or
any judgment, decree or order to which either Borrower or any Restricted
Subsidiary is a party or by which either Borrower or any Restricted Subsidiary
or any of its respective properties may be bound or affected.
(r) Accuracy and Completeness of Information. All information,
----------------------------------------
reports, prospectuses and other papers and data relating to the Borrowers or any
Restricted Subsidiary and furnished by or on behalf of the Borrowers or any
Restricted Subsidiary to the Administrative Agent or the Banks, taken as a
whole, were, at the time furnished, true, complete and correct in all material
respects to the extent necessary to give the Administrative Agent and the Banks
true and accurate knowledge of the subject matter, and all projections,
consisting of a statement of operating statistics, an income statement summary,
a debt repayment schedule and pro forma compliance calculations (the
"Projections") (i) disclose all assumptions made with respect to costs, general
- ------------
economic conditions, and financial and market conditions formulating the
Projections; (ii) are based on reasonable estimates and assumptions; and (iii)
reflect, as of the date prepared, and continue to reflect, as of the date
hereof, the reasonable estimate of the Borrowers of the results of operations
and other information projected therein for the periods covered thereby.
(s) Agreements with Affiliates. Except for agreements or arrangements
--------------------------
with Affiliates wherein the Borrowers or one or more of the Restricted
Subsidiaries provides services to or receives services from such Affiliates for
fair consideration or which are set forth on Schedule 7 attached hereto, neither
----------
Borrower nor any Restricted Subsidiary has (i) any written agreements or binding
arrangements of any kind with any Affiliate or (ii) any management or consulting
agreements of any kind with any Affiliate, other than (x) those among the
Borrowers and the Restricted Subsidiaries and/or the Parent, and (y) employment
arrangements with executive officers, including, without limitation, stock
option grants of the Parent.
(t) Payment of Wages. Each Borrower and each Restricted Subsidiary is
----------------
in compliance with the Fair Labor Standards Act, as amended, in all material
respects, and to
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<PAGE>
the knowledge of the Borrowers and each Restricted Subsidiary, such Persons have
paid all minimum and overtime wages required by law to be paid to their
respective employees.
(u) Priority. The Security Interest is a valid and, upon filing of
--------
appropriate UCC financing statements and/or mortgages, will be a perfected first
priority security interest in the Collateral in favor of the Administrative
Agent, for the benefit of itself and the Banks, securing, in accordance with the
terms of the Security Documents, the Obligations, and the Collateral is subject
to no Liens other than Permitted Liens. The Liens created by the Security
Documents are enforceable as security for the Obligations in accordance with
their terms with respect to the Collateral subject, as to enforcement of
remedies, to the following qualifications: (i) an order of specific performance
and an injunction are discretionary remedies and, in particular, may not be
available where damages are considered an adequate remedy at law, and (ii)
enforcement may be limited by bankruptcy, insolvency, liquidation,
reorganization, reconstruction and other similar laws affecting enforcement of
creditors' rights generally (insofar as any such law relates to the bankruptcy,
insolvency or similar event of either Borrower or any of the Restricted
Subsidiaries, as the case may be).
(v) Indebtedness. Except as shown on the financial statements of the
------------
Parent for the fiscal quarter ended March 31, 1998, or as described on Schedule
--------
8 attached hereto, none of the Parent, either Borrower, nor any of the
- -
Restricted Subsidiaries has outstanding, as of the Agreement Date, and after
giving effect to the initial Advances hereunder on the Agreement Date, any
Indebtedness for Money Borrowed.
(w) Solvency. As of the Agreement Date and after giving effect to the
--------
transactions contemplated by the Loan Documents (i) the property of the
Borrowers, at a fair valuation, will exceed their debt; (ii) the capital of the
Borrowers will not be unreasonably small to conduct their business; (iii) the
Borrowers will not have incurred debts, or have intended to incur debts, beyond
their ability to pay such debts as they mature; and (iv) the present fair
salable value of the assets of the Borrowers will be greater than the amount
that will be required to pay their probable liabilities (including debts) as
they become absolute and matured. For purposes of this Section, "debt" means
----
any liability on a claim, and "claim" means (i) the right to payment, whether or
-----
not such right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, undisputed, legal, equitable, secured or
unsecured, or (ii) the right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured,
undisputed, secured or unsecured.
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<PAGE>
(x) Year 2000 Compliance.
(i) The Borrowers have (1) begun analyzing the operations of the
Borrowers and their Subsidiaries that could be adversely affected by failure to
become Year 2000 compliant (that is, that computer applications, imbedded
microchips and other systems will be able to perform date-sensitive functions
prior to and after December 31, 1999) and (2) developed a plan for becoming Year
2000 compliant in a timely manner, the implementation of which is on schedule in
all material respects. The Borrowers reasonably believe that they will become
Year 2000 compliant for their operations and those of their Subsidiaries on a
timely basis except to the extent that a failure to do so could not reasonably
be expected to have a Materially Adverse Effect.
(ii) The Borrowers reasonably believe any suppliers and vendors that
are material to the operations of the Borrowers or their Subsidiaries will be
Year 2000 compliant for their own computer applications except to the extent
that a failure to do so could not reasonably be expected to have a Materially
Adverse Effect.
(iii) The Borrowers will promptly notify the Administrative Agent and
the Banks in the event the Borrowers determine that any computer application
which is material to the operations of the Borrowers, their Subsidiaries or any
of their material vendors or suppliers will not be fully Year 2000 compliant on
a timely basis, except to the extent that such failure could not reasonably be
expected to have a Materially Adverse Effect.
Section 4.2 Survival of Representations and Warranties, Etc. All
------------------------------------------------
representations and warranties made under this Agreement and any other Loan
Document shall be deemed to be made, and shall be true and correct in all
material respects, at and as of the Agreement Date and on the date of each
Advance except to the extent relating specifically to the Agreement Date. All
representations and warranties made under this Agreement and the other Loan
Documents shall survive, and not be waived by, the execution hereof by the Banks
and the Administrative Agent, any investigation or inquiry by any Bank or the
Administrative Agent, or the making of any Advance under this Agreement.
ARTICLE 5 General Covenants
So long as any of the Obligations is outstanding and unpaid or the Banks
have an obligation to fund Advances hereunder (whether or not the conditions to
borrowing have been or can be fulfilled), and unless the Majority Banks, or such
greater number of Banks as may be expressly provided herein, shall otherwise
consent in writing:
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Section 5.1 Preservation of Existence and Similar Matters. Except as
---------------------------------------------
permitted under Section 7.4 hereof, the Borrowers will, and will cause each of
the Restricted Subsidiaries to:
(a) preserve and maintain its existence, and its material rights,
franchises, licenses and privileges in the state of its incorporation,
including, without limiting the foregoing, the Licenses and all other Necessary
Authorizations, except where the failure to do so could not reasonably be
expected to have a Materially Adverse Effect; and
(b) qualify and remain qualified and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization, except for such failure
to so qualify and be so authorized as could not reasonably be expected to have a
Materially Adverse Effect.
Section 5.2 Business; Compliance with Applicable Law. The Borrowers will,
----------------------------------------
and will cause each of the Restricted Subsidiaries to, (a) engage in the
business of owning, constructing, managing, operating and investing in
communications tower facilities and related businesses and not engage in any
unrelated activities, and (b) comply in all material respects with the
requirements of all Applicable Law.
Section 5.3 Maintenance of Properties. The Borrowers will, and will cause
-------------------------
each of the Restricted Subsidiaries to, maintain or cause to be maintained in
the ordinary course of business in good repair, working order and condition
(reasonable wear and tear excepted) all properties used in their respective
businesses (whether owned or held under lease), other than obsolete equipment or
unused assets and from time to time make or cause to be made all needed and
appropriate repairs, renewals, replacements, additions, betterments and
improvements thereto.
Section 5.4 Accounting Methods and Financial Records. The Borrowers will,
----------------------------------------
and will cause each of the Restricted Subsidiaries on a consolidated and
consolidating basis to, maintain a system of accounting established and
administered in accordance with GAAP, keep adequate records and books of account
in which complete entries will be made in accordance with GAAP and reflecting
all transactions required to be reflected by GAAP, and keep accurate and
complete records of their respective properties and assets. The Borrowers and
the Restricted Subsidiaries will maintain a fiscal year ending on December 31.
Section 5.5 Insurance. The Borrowers will, and will cause each of the
---------
Restricted Subsidiaries to:
(a) Maintain insurance including, but not limited to, business
interruption coverage and public liability coverage insurance from responsible
companies in such amounts and against such risks to the Borrowers and each
Restricted Subsidiary as is prudent for similarly situated companies engaged in
the communications tower industry.
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(b) Keep their respective assets insured by insurers on terms and in a
manner reasonably acceptable to the Administrative Agent against loss or damage
by fire, theft, burglary, loss in transit, explosions and hazards insured
against by extended coverage, in amounts which are prudent for the
communications tower management and operation industry and reasonably
satisfactory to the Administrative Agent, all premiums thereon to be paid by the
Borrowers and the Restricted Subsidiaries.
(c) Require that each insurance policy provide for at least thirty
(30) days' prior written notice to the Collateral Agent of any termination of or
proposed cancellation or nonrenewal of such policy, and name the Collateral
Agent as an additional named lender loss payee and, as appropriate, additional
insured, to the extent of the Obligations.
Section 5.6 Payment of Taxes and Claims. The Borrowers will, and will
---------------------------
cause each Restricted Subsidiary to, pay and discharge all taxes, including,
without limitation, withholding taxes, assessments and governmental charges or
levies required to be paid by them or imposed upon them or their income or
profits or upon any properties belonging to them, prior to the date on which
penalties attach thereto, and all lawful claims for labor, materials and
supplies which, if unpaid, might become a Lien or charge upon any of their
properties; provided, however, that no such tax, assessment, charge, levy or
-------- -------
claim need be paid which is being diligently contested in good faith by
appropriate proceedings and for which adequate reserves shall have been set
aside on the appropriate books, but only so long as such tax, assessment,
charge, levy or claim does not become a Lien or charge other than a Permitted
Lien and no foreclosure, distraint, sale or similar proceedings shall have been
commenced. The Borrowers will, and will cause each Restricted Subsidiary to,
timely file all information returns required by federal, state or local tax
authorities.
Section 5.7 Compliance with ERISA.
---------------------
(a) The Borrowers shall, and shall cause their Subsidiaries to, make
all contributions to any Employee Pension Plan when such contributions are due
and not incur any "accumulated funding deficiency" within the meaning of Section
412(a) of the Code, whether or not waived, and will otherwise comply with the
requirements of the Code and ERISA with respect to the operation of all Plans,
except to the extent that the failure to so comply could not have a Materially
Adverse Effect.
(b) The Borrowers shall, and shall cause their Subsidiaries to, comply
in all respects with the requirements of ERISA with respect to any Plans subject
to the requirements thereof, except to the extent that the failure to so comply
could not have a Materially Adverse Effect.
(c) The Borrowers shall furnish to the Administrative Agent (i) within
30 days after any officer of ATS (Delaware) or ATSC GP obtains knowledge that a
"prohibited
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transaction" (within the meaning of Section 406 of ERISA or Section 4975 of the
Code) has occurred with respect to any Plan of either Borrower or their ERISA
Affiliates, including their Subsidiaries, that any Reportable Event has occurred
with respect to any Employee Pension Plan or that PBGC has instituted or will
institute proceedings under Title IV of ERISA to terminate any Employee Pension
Plan or to appoint a trustee to administer any Employee Pension Plan, a
statement setting forth the details as to such prohibited transaction,
Reportable Event or termination or appointment proceedings and the action which
it (or any other Employee Pension Plan sponsor if other than a Borrower)
proposes to take with respect thereto, together with a copy of the notice of
such Reportable Event given to PBGC if a copy of such notice is available to a
Borrower, any of its Subsidiaries or any of its ERISA Affiliates, (ii) promptly
after receipt thereof, a copy of any notice either Borrower, any of its
Subsidiaries or any of their ERISA Affiliates or the sponsor of any Plan
receives from PBGC or the Internal Revenue Service or the Department of Labor
which sets forth or proposes any action or determination with respect to such
Plan, (iii) promptly after the filing thereof, any annual report required to be
filed pursuant to ERISA in connection with each Plan maintained by either
Borrower or any of its ERISA Affiliates, including their Subsidiaries, and (iv)
promptly upon the Administrative Agent's request therefor, such additional
information concerning any such Plan as may be reasonably requested by the
Administrative Agent.
(d) The Borrowers will promptly notify the Administrative Agent of
any excise taxes which have been assessed or which either Borrower, any of its
Subsidiaries or any of its ERISA Affiliates has reason to believe may be
assessed against either Borrower, any of its Subsidiaries or any of its ERISA
Affiliates by the Internal Revenue Service or the Department of Labor with
respect to any Plan of either Borrower or its ERISA Affiliates, including its
Subsidiaries.
(e) Within the time required for notice to the PBGC under Section
302(f)(4)(A) of ERISA, the Borrowers will notify the Administrative Agent of any
lien arising under Section 302(f) of ERISA in favor of any Plan of either
Borrower or its ERISA Affiliates, including its Subsidiaries.
(f) The Borrowers will not, and will not permit any of their
Subsidiaries or any of their ERISA Affiliates, to take any of the following
actions or permit any of the following events to occur if such action or event
together with all other such actions or events would subject either Borrower,
any of its Subsidiaries, or any of its ERISA Affiliates to any tax, penalty, or
other liabilities which could have a Materially Adverse Effect:
(i) engage in any transaction in connection with which either
Borrower, any of its Subsidiaries or any ERISA Affiliate could be subject
to either a civil penalty assessed pursuant to Section 502(i) of ERISA or a
tax imposed by Section 4975 of the Code;
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(ii) terminate any Employee Pension Plan in a manner, or take
any other action, which could result in any liability of either Borrower,
any of its Subsidiaries or any ERISA Affiliate to the PBGC;
(iii) fail to make full payment when due of all amounts which,
under the provisions of any Plan, either Borrower, any of its Subsidiaries
or any ERISA Affiliate is required to pay as contributions thereto, or
permit to exist any accumulated funding deficiency within the meaning of
Section 412(a) of the Code, whether or not waived, with respect to any
Employee Pension Plan; or
(iv) permit the present value of all benefit liabilities under
all Employee Pension Plans which are subject to Title IV of ERISA to exceed
the present value of the assets of such Plans allocable to such benefit
liabilities (within the meaning of Section 4041 of ERISA), except as may be
permitted under actuarial funding standards adopted in accordance with
Section 412 of the Code.
Section 5.8 Visits and Inspections. The Borrowers will, and will cause
----------------------
each Restricted Subsidiary to, permit representatives of the Administrative
Agent and any of the Banks, upon reasonable notice, to (a) visit and inspect the
properties of the Borrowers or any Restricted Subsidiary during business hours,
(b) inspect and make extracts from and copies of their respective books and
records, and (c) discuss with their respective principal officers their
respective businesses, assets, liabilities, financial positions, results of
operations and business prospects. The Borrowers and each Restricted Subsidiary
will also permit representatives of the Administrative Agent and any of the
Banks to discuss with their respective accountants the businesses, assets,
liabilities, financial positions, results of operations and business prospects
of such Person.
Section 5.9 Payment of Indebtedness; Facility B Loans. Subject to any
-----------------------------------------
provisions herein or in any other Loan Document, the Borrowers will, and will
cause each Restricted Subsidiary to, pay any and all of their respective
Indebtedness when and as it becomes due, other than amounts diligently disputed
in good faith and for which adequate reserves have been set aside in accordance
with GAAP.
Section 5.10 Use of Proceeds. The Borrowers will use the aggregate
---------------
proceeds of all Advances under the Facility B Loans directly or indirectly:
(a) to refinance the Indebtedness for Money Borrowed as set forth on
Schedule 8 attached hereto;
- ----------
(b) to fund Acquisitions and Investments (including, without
limitation, investments in Unrestricted Subsidiaries) permitted under Section
7.6 hereof;
(c) to fund Capital Expenditures; and
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(d) for working capital needs and other general corporate purposes of
the Borrowers and the Restricted Subsidiaries, including, without limitation,
the fees and expenses incurred in connection with the execution and delivery of
this Agreement, to make advances to the Parent to fund the Separation
Obligations (other than the tax portion of the Separation Obligation), and other
costs associated with transactions contemplated by this Agreement, in each case,
which do not otherwise conflict with this Section 5.10.
No proceeds of Advances hereunder shall be used for the purchase or carrying or
the extension of credit for the purpose of purchasing or carrying, any margin
stock within the meaning of the Regulations.
Section 5.11 Indemnity. The Borrowers jointly and severally agree to
---------
indemnify and hold harmless each Bank, the Administrative Agent, and each of
their respective affiliates, employees, representatives, shareholders, officers
and directors (any of the foregoing shall be an "Indemnitee") from and against
----------
any and all claims, liabilities, losses, damages, actions, reasonable attorneys'
fees and expenses (as such fees and expenses are incurred) and demands by any
party, including the costs of investigating and defending such claims, whether
or not either Borrower, any Restricted Subsidiary or the Person seeking
indemnification is the prevailing party (a) resulting from any breach or alleged
breach by either Borrower or any Restricted Subsidiary of any representation or
warranty made hereunder or under any Loan Document; or (b) otherwise arising out
of (i) the Facility B Commitment or otherwise under this Agreement, any Loan
Document or any transaction contemplated hereby or thereby, including, without
limitation, the use of the proceeds of Facility B Loans hereunder in any fashion
by either Borrower or the performance of their respective obligations under the
Loan Documents by either Borrower or any Restricted Subsidiary, (ii) allegations
of any participation by the Banks, the Administrative Agent, or any of them, in
the affairs of either Borrower or any of its Subsidiaries, or allegations that
any of them has any joint liability with either Borrower or any of its
Restricted Subsidiaries for any reason, (iii) any claims against the Banks, the
Administrative Agent, or any of them, by any shareholder or other investor in or
lender to either Borrower or any of the Restricted Subsidiaries, by any brokers
or finders or investment advisers or investment bankers retained by either
Borrower or by any other third party, arising out of the Facility B Commitment
or otherwise under this Agreement; or (c) in connection with taxes (not
including federal or state income or franchise taxes or other taxes based solely
upon the revenues or income of such Persons), fees, and other charges payable in
connection with the Facility B Loans, or the execution, delivery, and
enforcement of this Agreement, the Security Documents, the other Loan Documents,
and any amendments thereto or waivers of any of the provisions thereof, unless
the Person seeking indemnification hereunder is determined in such case to have
acted with gross negligence or willful misconduct, in any case, by a final, non-
appealable judicial order. The obligations of the Borrowers under this Section
5.11 are in addition to, and shall not otherwise limit, any liabilities which
either Borrower might otherwise have in connection with any warranties or
similar obligations of such Person in any other Loan Document.
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Section 5.12 Interest Rate Hedging. Within sixty (60) days of the
---------------------
Agreement Date and forty-five (45) days after each Advance, the Borrowers shall
enter into (and shall at all times thereafter maintain for a period of not less
than two (2) years) one or more Interest Hedge Agreements with respect to the
interest obligations on not less than fifty percent (50%) of the principal
amount of the Facility B Loans and loans under the Facility A Loan Agreement
outstanding from time to time. Such Interest Hedge Agreements shall provide
interest rate protection in conformity with International Swap Dealers
Association standards and for an average period of at least two (2) years from
the date of such Interest Hedge Agreements or, if earlier, until the Termination
Date, or, if applicable, the Facility B Termination Date, or, if applicable, the
Maturity Date on terms reasonably acceptable to the Administrative Agent, such
terms to include consideration of the creditworthiness of the other party to the
proposed Interest Hedge Agreement. All Obligations of the Borrowers to either
the Administrative Agent or any of the Banks pursuant to any Interest Hedge
Agreement and all Liens granted to secure such Obligations shall rank pari passu
with all other Obligations and Liens securing such other Obligations up to the
then effective amount of the Facility B Commitments; and any Interest Hedge
Agreement between either Borrower and any other Person shall be unsecured.
Section 5.13 Covenants Regarding Formation of Restricted Subsidiaries and
------------------------------------------------------------
Acquisitions; Partnership, Subsidiaries. At the time of (i) any Acquisition
- ---------------------------------------
permitted hereunder, (ii) the purchase by either Borrower or any of the
Restricted Subsidiaries of any interests in any Restricted or Unrestricted
Subsidiary, or (iii) the formation of any new Restricted or Unrestricted
Subsidiary which is permitted under this Agreement, the Borrowers will, and will
cause the Restricted Subsidiaries, as appropriate, to (a) provide to the
Collateral Agent an executed Subsidiary Security Agreement for any new
Restricted Subsidiary, in substantially the form of Exhibit M attached hereto,
---------
together with appropriate UCC-1 financing statements, as well as an executed
Subsidiary Guaranty for such new Restricted Subsidiary, in substantially the
form of Exhibit K attached hereto, which shall constitute both Security
---------
Documents and Loan Documents for purposes of this Agreement, as well as a loan
certificate for such new Restricted Subsidiary, substantially in the form of
Exhibit R attached hereto, together with appropriate attachments; (b) pledge to
- ---------
the Collateral Agent all of the stock or partnership interests (or other
instruments or securities evidencing ownership) of such Restricted Subsidiary or
Unrestricted Subsidiary or Person which is acquired or formed, beneficially
owned by either Borrower or any Restricted Subsidiary, as the case may be, as
additional Collateral for the Obligations to be held by the Collateral Agent in
accordance with the terms of the Pledge Agreement or a new Subsidiary Pledge
Agreement in substantially the form of Exhibit L attached hereto, and execute
---------
and deliver to the Administrative Agent all such documentation for such pledge
as, in the reasonable opinion of the Administrative Agent, is appropriate; and
(c) with respect to any Acquisition or Restricted Subsidiary, provide revised
financial projections for the remainder of the fiscal year and for each
subsequent year until the Maturity Date which reflect such Acquisition or
formation, certified by the Chief Financial Officer of ATS, together with a
statement by such Person that no Default exists or would be caused by such
Acquisition or formation, and all
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other documentation, including one or more opinions of counsel, reasonably
satisfactory to the Administrative Agent which in its reasonable opinion is
appropriate with respect to such Acquisition or the formation of such
Subsidiary. Notwithstanding the foregoing, neither Borrower shall be required to
pledge any of the stock of or other ownership interests for any Unrestricted
Subsidiary which (x) was not formed or created in anticipation of the such
Person's direct or indirect investment therein (other than to facilitate a
transaction of the nature referred to in clause (y) following) and (y) at the
time such stock or ownership interest was acquired by such Person is subject to
a restriction on any such Lien (whether such restriction is in such Person's
formation documents or otherwise), but shall be required to grant the Collateral
Agent (for the benefit of the Banks) a Lien upon any right to receive
distributions from such Unrestricted Subsidiary. Any document, agreement or
instrument (other than the Projections) executed or issued pursuant to this
Section 5.13 shall be a "Loan Document" for purposes of this Agreement.
Section 5.14 Payment of Wages. The Borrowers shall, and shall cause each
----------------
Restricted Subsidiary to, at all times comply, in all material respects, with
the material requirements of the Fair Labor Standards Act, as amended,
including, without limitation, the provisions of such Act relating to the
payment of minimum and overtime wages as the same may become due from time to
time.
Section 5.15 Further Assurances. The Borrowers will promptly cure, or
------------------
cause to be cured, defects in the creation and issuance of any of the Notes and
the execution and delivery of the Loan Documents (including, without limitation,
this Agreement), resulting from any acts or failure to act by either Borrower or
any of the Restricted Subsidiaries or any employee or officer thereof. The
Borrowers at their expense will promptly execute and deliver to the
Administrative Agent and the Banks, or cause to be executed and delivered to the
Administrative Agent and the Banks, all such other and further documents,
agreements, and instruments in compliance with or accomplishment of the
covenants and agreements in the Loan Documents, including this Agreement, or to
correct any omissions in the Loan Documents, or more fully to state the
obligations set out herein or in any of the Loan Documents, or to obtain any
consents, all as may be necessary or appropriate in connection therewith and as
may be reasonably requested.
ARTICLE 6 Information Covenants
So long as any of the Obligations is outstanding and unpaid or the Banks
have an obligation to fund Advances hereunder (whether or not the conditions to
borrowing have been or can be fulfilled) and unless the Majority Banks shall
otherwise consent in writing, the Borrowers will furnish or cause to be
furnished to each Bank and the Administrative Agent, at their respective
offices:
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Section 6.1 Quarterly Financial Statements and Information Within forty-
----------------------------------------------
five (45) days after the last day of each of the first three (3) quarters of
each fiscal year of the Borrowers, the balance sheets of the Borrowers on a
consolidated basis with the Restricted Subsidiaries and a consolidating basis
with their Unrestricted Subsidiaries as at the end of such quarter and as of the
end of the preceding fiscal year, and the related statements of operations and
the related statements of cash flows of the Borrowers on a consolidated basis
with the Restricted Subsidiaries and a consolidating basis with their
Unrestricted Subsidiaries for such quarter and for the elapsed portion of the
year ended with the last day of such quarter, which shall set forth in
comparative form such figures as at the end of and for such quarter and
appropriate prior period and shall be certified by the Chief Financial Officer
of ATS (Delaware) to have been prepared in accordance with GAAP and to present
fairly in all material respects the financial position of the Borrowers on a
consolidated basis with the Restricted Subsidiaries and a consolidating basis
with its Unrestricted Subsidiaries as at the end of such period and the results
of operations for such period, and for the elapsed portion of the year ended
with the last day of such period, subject only to normal year-end and audit
adjustments.
Section 6.2 Annual Financial Statements and Information. Within ninety
-------------------------------------------
(90) days after the end of each fiscal year of the Borrowers, the audited
consolidated balance sheet of the Borrowers and the Restricted Subsidiaries (and
unaudited consolidating balance sheet of the Borrowers and the Unrestricted
Subsidiaries) as of the end of such fiscal year and the related audited
consolidated and unaudited consolidating statements of operations for such
fiscal year and for the previous fiscal year, the related audited consolidated
statements of cash flow and stockholders' equity for such fiscal year and for
the previous fiscal year, which shall be accompanied by an opinion of Deloitte &
Touche, LLP, or other independent certified public accountants of recognized
national standing reasonably acceptable to the Administrative Agent, which shall
be in scope and substance reasonably satisfactory to the Administrative Agent,
together with a statement of such accountants that in connection with their
audit, nothing came to their attention that caused them to believe that the
Borrowers were not in compliance with the terms, covenants, provisions or
conditions of Sections 7.8, 7.9, 7.10, 7.11 and 7.12 hereof insofar as they
relate to accounting matters.
Section 6.3 Performance Certificates. At the time the financial
------------------------
statements are furnished pursuant to Sections 6.1 and 6.2 hereof, a certificate
of the president or chief financial officer of ATS (Delaware) as to their
financial performance, in substantially the form attached hereto as Exhibit S:
---------
(a) setting forth as and at the end of such quarterly period or fiscal
year, as the case may be, the arithmetical calculations required to establish
(i) any adjustment to the Applicable Margins, as provided for in Section 2.3(f)
hereof, and (ii) whether or not the Borrowers were in compliance with the
requirements of Sections 7.8, 7.9, 7.10, 7.11 and 7.12 hereof;
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(b) stating that, to the best of his or her knowledge, no Default has
occurred as at the end of such quarterly period or year, as the case may be, or,
if a Default has occurred, disclosing each such Default and its nature, when it
occurred, whether it is continuing and the steps being taken by the Borrowers
with respect to such Default;
(c) containing a list of all Acquisitions, Investments, Restricted
Payments and dispositions of assets from the Agreement Date through the date of
such certificate, together with the total amount for each of the foregoing
categories; and
(d) setting forth the amount of distributions received from
Unrestricted Subsidiaries for such period.
Section 6.4 Copies of Other Reports.
-----------------------
(a) Promptly upon receipt thereof, copies of all reports, if any,
submitted to either Borrower by its independent public accountants regarding
such Borrower, including, without limitation, any management report prepared in
connection with the annual audit referred to in Section 6.2 hereof.
(b) Promptly upon receipt thereof, copies of any material adverse
notice or report regarding any License from the FCC.
(c) From time to time and promptly upon each request, such data,
certificates, reports, statements, documents or further information regarding
the business, assets, liabilities, financial position, projections, results of
operations or business prospects of the Borrowers, or any of the Restricted
Subsidiaries, as the Administrative Agent or any Bank may reasonably request.
(d) Annually, certificates of insurance indicating that the
requirements of Section 5.5 hereof remain satisfied for such fiscal year,
together with copies of any new or replacement insurance policies obtained
during such year.
(e) Prior to January 31st of each year, the annual budget for the
Borrowers and the Restricted Subsidiaries, including, without limitation,
forecasts of the income statement, the balance sheet and a cash flow statement
for such year, on a quarter by quarter basis.
(f) Promptly after the sending thereof, copies of all statements,
reports and other information which the Parent sends to public security holders
of the Parent generally or files with the Securities and Exchange Commission or
any national securities exchange.
Section 6.5 Notice of Litigation and Other Matters. Notice specifying the
--------------------------------------
nature and status of any of the following events, promptly, but in any event not
later than fifteen
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(15) days after the occurrence of any of the following events becomes known to
either Borrower:
(a) the commencement of all proceedings and investigations by or
before any governmental body and all actions and proceedings in any court or
before any arbitrator against either Borrower or any Restricted Subsidiary, or,
to the extent known to either Borrower, which could have a Materially Adverse
Effect;
(b) any material adverse change with respect to the business, assets,
liabilities, financial position, results of operations or business prospects of
either Borrower and the Restricted Subsidiaries, taken as a whole, other than
changes in the ordinary course of business which have not had and would not
reasonably be expected to have a Materially Adverse Effect and other than
changes in the industry in which either Borrower or any of the Restricted
Subsidiaries operate which would not reasonably be expected to have a Materially
Adverse Effect;
(c) any material adverse amendment or change to the projections or
annual budget provided to the Banks hereunder;
(d) any Default or the occurrence or non-occurrence of any event (i)
which constitutes, or which with the passage of time or giving of notice or both
would constitute, a default by either Borrower or any of the Restricted
Subsidiaries under any material agreement other than this Agreement and the
other Loan Documents to which either Borrower or any of the Restricted
Subsidiaries is party or by which any of their respective properties may be
bound, or (ii) which could have a Materially Adverse Effect, giving in each case
a description thereof and specifying the action proposed to be taken with
respect thereto;
(e) the occurrence of any Reportable Event or a "prohibited
transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of
the Code) with respect to any Plan of either Borrower or any of its Subsidiaries
or the institution or threatened institution by PBGC of proceedings under ERISA
to terminate or to partially terminate any such Plan or the commencement or
threatened commencement of any litigation regarding any such Plan or naming it
or the trustee of any such Plan with respect to such Plan or any action taken by
either Borrower, any of its Subsidiaries or any ERISA Affiliate of either
Borrower to withdraw or partially withdraw from any Plan or to terminate any
Plan; and
(f) the occurrence of any event subsequent to the Agreement Date
which, if such event had occurred prior to the Agreement Date, would have
constituted an exception to the representation and warranty in Section 4.1(m)
hereof.
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ARTICLE 7 Negative Covenants
So long as any of the Obligations is outstanding and unpaid or the Banks
have an obligation to fund Advances hereunder (whether or not the conditions to
borrowing have been or can be fulfilled) and unless the Majority Banks, or such
greater number of Banks as may be expressly provided herein, shall otherwise
give their prior consent in writing:
Section 7.1 Indebtedness of the Borrowers and their Subsidiaries. The
----------------------------------------------------
Borrowers shall not, and shall not permit any of their Subsidiaries to, create,
assume, incur or otherwise become or remain obligated in respect of, or permit
to be outstanding, any Indebtedness except:
(a) the Obligations;
(b) "Obligations" under the ATS Facility A Loan Agreement and
"Obligations" under the Parent Loan Agreement;
(c) accounts payable, accrued expenses (including, without
limitation, taxes) and customer advance payments incurred in the ordinary course
of business;
(d) Indebtedness secured by Permitted Liens;
(e) obligations under Interest Hedge Agreements with respect to the
Facility A Loans and the Facility B Loans;
(f) Indebtedness of either Borrower or any of the Restricted
Subsidiaries to either Borrower or any other Restricted Subsidiary; provided,
--------
however, that the corresponding debt instruments are pledged to the
- -------
Administrative Agent as security for the Obligations and such Indebtedness is
expressly permitted pursuant to Section 7.5 hereof;
(g) Indebtedness incurred by any Unrestricted Subsidiary; provided,
--------
however, that such Indebtedness is non-recourse to the Borrowers or any
- -------
Restricted Subsidiary and no Lien is placed on the equity interests of the
Borrowers or any Restricted Subsidiary in such Unrestricted Subsidiary;
(h) Capitalized Lease Obligations not to exceed in the aggregate at
any one time outstanding $5,000,000; and
(i) Indebtedness of either Borrower or any of the Restricted
Subsidiaries incurred in connection with an Acquisition; provided, however, that
-------- -------
(i) such Indebtedness (A) is owed to the seller thereof, (B) is unsecured, (C)
has no scheduled payment of principal prior to the full payment of the
Obligations, (D) is subject to terms and conditions
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and subordination provisions which are acceptable to the Majority Banks on the
date of incurrence, (E) when added to all other Indebtedness outstanding under
this Section 7.1(i) does not exceed $25,000,000, and (ii) the Borrowers are, at
the time of incurrence of such Indebtedness (and after giving effect thereto),
in pro forma compliance with all of the covenants contained in this Agreement.
Section 7.2 Limitation on Liens. The Borrowers shall not, and shall not
-------------------
permit any of the Restricted Subsidiaries to, create, assume, incur or permit to
exist or to be created, assumed, incurred or permitted to exist, directly or
indirectly, any Lien on any of its properties or assets, whether now owned or
hereafter acquired, except for Permitted Liens.
Section 7.3 Amendment and Waiver. The Borrowers shall not, and shall not
--------------------
permit any of the Restricted Subsidiaries to, enter into any amendment of, or
agree to or accept or consent to any waiver of any of the material provisions of
its Articles or Certificate of Incorporation or partnership agreement, as
appropriate, if the effect thereof would be to adversely affect the rights of
the Banks hereunder or under any Loan Document.
Section 7.4 Liquidation, Merger or Disposition of Assets.
--------------------------------------------
(a) Disposition of Assets. The Borrowers shall not, and shall not
---------------------
permit any of the Restricted Subsidiaries to, at any time sell, lease, abandon,
or otherwise dispose of any assets (other than assets disposed of in the
ordinary course of business) without the prior written consent of all of the
Banks; provided, however, that the prior written consent of the Banks shall not
-------- -------
be required for (i) the transfer of assets (including cash or cash equivalents)
among the Borrowers and the Restricted Subsidiaries (excluding Subsidiaries of
such Persons described in clause (b) of the definition of "Subsidiary") or for
the transfer of assets (including cash or cash equivalents) between or among
Restricted Subsidiaries (excluding Subsidiaries of such Persons described in
clause (b) of the definition of "Subsidiary") or (ii) the disposition of assets
that contribute, in the aggregate, less than (A) fifteen percent (15%) of
Annualized Operating Cash Flow of the Borrowers and the Restricted Subsidiaries
as of the calendar quarter end immediately preceding such disposition, and (B)
twenty-five percent (25%) of the Operating Cash Flow of the Borrowers and the
Restricted Subsidiaries for the period from the Agreement Date through the date
of such disposition; provided further, however, that, in each case, no Default
-------- ------- -------
or Event of Default exists and none shall be caused to occur as a result
thereof. Upon any sale or disposition of a Restricted Subsidiary permitted
hereunder, the Administrative Agent and the Banks shall, at Borrowers' expense,
take such actions as the Borrowers reasonably requests to cause such Restricted
Subsidiary to be released from its obligations under its Subsidiary Guaranty.
(b) Liquidation or Merger. The Borrowers shall not, and shall not
---------------------
permit any of the Restricted Subsidiaries to, at any time, liquidate or dissolve
itself (or suffer any liquidation or dissolution) or otherwise wind up, or enter
into any merger, other than (i) a merger or consolidation among the Borrowers or
among either Borrower and one or more
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<PAGE>
Restricted Subsidiaries, provided, however, that either Borrower, as the case
-------- -------
may be, is the surviving Person, or (ii) a merger between or among two (2) or
more Restricted Subsidiaries, or (iii) in connection with an Acquisition
permitted hereunder effected by a merger in which either Borrower, as the case
may be, or, in a merger in which neither Borrower is a party, a Restricted
Subsidiary is the surviving Person or the surviving Person becomes a Restricted
Subsidiary, or (iv) a merger or consolidation among the Borrowers, or either
Borrower, or any Restricted Subsidiary on the one hand, and any Person, on the
other hand, where the surviving Person (A) is a corporation, partnership, or
limited liability company organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia, and (B) on the
effective date of such merger or consolidation expressly assume, by supplemental
agreement, executed and delivered to the Administrative Agent, for the benefit
of itself and the Banks, in form and substance reasonably satisfactory to the
Majority Banks, all the Obligations of the Borrowers, or Borrower, or such
restricted Subsidiary, as the case may be, under the Facility B Notes, the
Agreement and the other Loan Documents; provided further, however, that, in each
-------- ------- -------
case, no Default or Event of Default exists and none shall be caused to occur as
a result thereof.
Section 7.5 Limitation on Guaranties. The Borrowers shall not, and shall
------------------------
not permit any of the Restricted Subsidiaries to, at any time Guaranty, assume,
be obligated with respect to, or permit to be outstanding any Guaranty of, any
obligation of any other Person other than (a) a guaranty by endorsement of
negotiable instruments for collection in the ordinary course of business, (b)
obligations under agreements of either Borrower or any of the Restricted
Subsidiaries entered into in connection with Acquisitions permitted under this
Agreement, leases of real property or the acquisition or furnishing of services,
supplies and equipment in the ordinary course of business of either Borrower or
any of the Restricted Subsidiaries, (c) Guaranties of Indebtedness incurred as
permitted pursuant to Section 7.1 hereof, (d) as may be contained in any Loan
Document including, without limitation, any Subsidiary Guaranty, or (e)
Guaranties of the "Obligations" under the Parent Loan Agreement or the ATS
Facility A Loan Agreement.
Section 7.6 Investments and Acquisitions. The Borrowers shall not, and
----------------------------
shall not permit any of the Restricted Subsidiaries to, directly or indirectly,
make any loan or advance, or otherwise acquire for consideration evidences of
Indebtedness, capital stock or other securities of any Person or other assets or
property (other than assets or property in the ordinary course of business), or
make any Acquisition or Investment; provided, however, that the Borrowers and
-------- -------
the Restricted Subsidiaries may:
(a) directly or through a brokerage account (i) purchase marketable,
direct obligations of the United States of America, its agencies and
instrumentalities maturing within three hundred sixty-five (365) days of the
date of purchase, (ii) purchase commercial paper, money-market funds and
business savings accounts issued by corporations, each of which shall have a
combined net worth of at least $100,000,000 and each of which conducts a
substantial part of its business in the United States of America, maturing
within two
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<PAGE>
hundred seventy (270) days from the date of the original issue thereof, and
rated "P-2" or better by Moody's Investors Service, Inc. or "A-2" or better by
Standard and Poor's Ratings Group, a division of McGraw-Hill, (iii) purchase
repurchase agreements, bankers' acceptances, and domestic and Eurodollar
certificates of deposit maturing within three hundred sixty-five (365) days of
the date of purchase which are issued by, or time deposits maintained with, a
United States national or state bank the deposits of which are insured by the
Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance
Corporation and having capital, surplus and undivided profits totaling more than
$100,000,000 and rated "A" or better by Moody's Investors Service, Inc. or
Standard and Poor's Ratings Group, a division of McGraw-Hill, Inc.;
(b) so long as no Default then exists or would be caused thereby,
establish Unrestricted Subsidiaries and make Investments in such Unrestricted
Subsidiaries of up to, in the aggregate, at any time, the sum of (i)
$50,000,000, with loans borrowed under this Loan Agreement or the ATS Facility A
Loan Agreement, and (ii) equity proceeds not used to pay the Separation
Obligations or to make Investments permitted under Sections 7.6(c) and (d)
hereof;
(c) so long as no Default then exists or would be caused thereby, and
subject to compliance with Section 5.13 hereof, make Acquisitions; provided,
--------
however, that Acquisitions of communications sites and tower management
- -------
businesses shall not exceed, in the aggregate, at any time, the sum of (i)
$50,000,000 and (ii) equity proceeds not used to pay the Separation Obligations
after the Agreement Date or to make Investments permitted under Sections 7.6(b)
and (d) hereof;
(d) so long as no Default then exists or would be caused thereby and
subject to compliance with Section 5.13 hereof, make Investments in
communications site and related companies in an amount not to exceed, in the
aggregate, at any time, the sum of (i) $25,000,000 and (ii) equity proceeds not
used to pay the Separation Obligations or to make Investments permitted under
Sections 7.6(b) and (c) hereof; provided, however, that the Parent, either
-------- -------
Borrower or any of their Subsidiaries has executed a binding acquisition or
merger agreement with such company;
(e) make Investments consisting of the Sconnix Note; and
(f) (i) make loans and advances to employees in the ordinary course of
business and (ii) receive notes from employees in an amount not to exceed
$2,000,000 in the aggregate outstanding at any time in connection with the
exercise of stock options.
Section 7.7 Restricted Payments. The Borrowers shall not, and shall not
-------------------
permit any of the Restricted Subsidiaries to, directly or indirectly declare or
make any Restricted Payment; provided, however, that so long as no Default or
-------- -------
Event of Default hereunder then exists or would be caused thereby, the Borrowers
may make (a) subject to Section 2.7(b)(iv)
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hereof, cash distributions in an aggregate amount for both Borrowers not to
exceed fifty percent (50%) of Excess Cash Flow for the immediately preceding
calendar year, on or after April 15/th/ of each calendar year commencing on
April 15, 2002; (b) subject to Section 2.7(b)(v) hereof, unrestricted cash
distributions in an amount in the aggregate, not to exceed the net proceeds of
any debt or equity issued after the Agreement Date; and (c) scheduled principal
and interest payments on any Indebtedness of the Parent which is permitted
hereunder.
Section 7.8 Senior Leverage Ratio. (a) As of the end of any calendar
---------------------
quarter, and (b) at the time of any Advance hereunder (after giving effect to
such Advance), the Borrowers shall not permit the Senior Leverage Ratio to
exceed the ratios set forth below during the periods indicated:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing through September 29, 1999 6.50:1
September 30, 1999 through September 29, 2000 6.25:1
September 30, 2000 through March 30, 2001 6.00:1
March 31, 2001 through June 29, 2001 5.75:1
June 30, 2001 through September 29, 2001 5.50:1
September 30, 2001 through December 30, 2001 5.25:1
December 31, 2001 through March 30, 2002 4.75:1
March 31, 2002 through June 29, 2002 4.50:1
June 30, 2002 through September 29, 2002 4.25:1
September 30, 2002 through December 30, 2002 4.00:1
December 31, 2002 through March 30, 2003 3.75:1
March 31, 2003 through June 29, 2003 3.50:1
June 30, 2003 through September 29, 2003 3.25:1
September 30, 2003 and thereafter 3.00:1
</TABLE>
Section 7.9 Total Leverage Ratio. (a) As of the end of any calendar
--------------------
quarter, and (b) at the time of any Advance hereunder (after giving effect to
such Advance), the Borrowers shall not permit the ratio of (i) Total Debt on
such date to (ii) Annualized Operating Cash Flow to exceed the ratios set forth
below during the periods indicated:
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<PAGE>
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing through September 29, 1999 8.00:1
September 30, 1999 through September 29, 2000 7.75:1
September 30, 2000 through March 30, 2001 7.50:1
March 31, 2001 through June 29, 2001 6.75:1
June 30, 2001 through September 29, 2001 6.50:1
September 30, 2001 through December 30, 2001 6.25:1
December 31, 2001 through March 30, 2002 5.75:1
March 31, 2002 through June 29, 2002 5.50:1
June 30, 2002 through September 29, 2002 5.25:1
September 30, 2002 through December 30, 2002 5.00:1
December 31, 2002 through March 30, 2003 4.75:1
March 31, 2003 through June 29, 2003 4.50:1
June 30, 2003 through September 29, 2003 4.25:1
September 30, 2003 and thereafter 4.00:1
</TABLE>
Section 7.10 Interest Coverage Ratio. The Borrowers shall maintain, on a
-----------------------
consolidated basis, at all times during the applicable periods set forth below,
an Interest Coverage Ratio for such fiscal quarter of not less than the ratio
set forth below opposite each such period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Agreement Date through March 30, 2001 1.50:1
March 31, 2001 through March 30, 2002 1.75:1
March 31, 2002 through December 30, 2002 2.00:1
December 31, 2002 through December 30, 2003 2.25:1
December 31, 2003 and thereafter 2.50:1
</TABLE>
Section 7.11 Annualized Operating Cash Flow to Pro Forma Debt Service.
--------------------------------------------------------
(a) As of the end of any calendar quarter, and (b) at the time of any Advance
hereunder (after giving effect to such Advance), the Borrowers, on a
consolidated basis, shall not permit the ratio of (i) Annualized Operating Cash
Flow to (ii) Pro Forma Debt Service to be less than the ratio set forth below
opposite each such period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Agreement Date through March 30, 2000 1.10:1
March 31, 2000 through December 30, 2002 1:15:1
December 31, 2002 and thereafter 1:50:1
</TABLE>
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<PAGE>
Section 7.12 Fixed Charge Coverage Ratio. (a) As of the end of any
---------------------------
calendar quarter, and (b) at the time of any Advance hereunder (after giving
effect to such Advance), the Borrowers, on a consolidated basis, shall not
permit the Fixed Charges Coverage Ratio to be less than or equal to 1.05 to 1.
Section 7.13 Affiliate Transactions. Except as specifically provided
----------------------
herein (including, without limitation, Sections 7.4, 7.6 and 7.7 hereof) and as
may be described on Schedule 7 attached hereto, the Borrowers shall not, and
----------
shall not permit any of the Restricted Subsidiaries to, at any time engage in
any transaction with an Affiliate, other than between or among either Borrower
and any wholly-owned Restricted Subsidiary, or make an assignment or other
transfer of any of its properties or assets to any Affiliate, on terms less
advantageous to such Borrower or such Restricted Subsidiary than would be the
case if such transaction had been effected with a non-Affiliate.
Section 7.14 ERISA Liabilities. The Borrowers shall not, and shall cause
-----------------
each of their ERISA Affiliates not to, (a) permit the assets of any of their
respective Plans to be less than the amount necessary to provide all accrued
benefits under such Plans, or (b) enter into any Multiemployer Plan.
Section 7.15 Sales and Leasebacks. The Borrowers will not and will not
--------------------
permit any Restricted Subsidiary to enter into, any arrangement, directly or
indirectly, with any third party whereby either Borrower or a Restricted
Subsidiary shall sell or transfer any property, real or personal, whether now
owned or hereafter acquired, and whereby either Borrower or such Restricted
Subsidiary shall then or thereafter rent or lease as lessee such property or any
part thereof or other property which either Borrower or such Restricted
Subsidiary intends to use for substantially the same purpose or purposes as the
property sold or transferred.
ARTICLE 8 Default
Section 8.1 Events of Default. Each of the following shall constitute an
-----------------
Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or non-governmental body:
(a) Any representation or warranty made under this Agreement shall
prove incorrect or misleading in any material respect when made or deemed to be
made pursuant to Section 4.2 hereof;
(b) The Borrowers shall default in the payment of (i) any interest
under any of the Facility B Notes or fees or other amounts payable to the Banks
and the Administrative Agent under any of the Loan Documents, or any of them,
when due, and such Default shall
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<PAGE>
not be cured by payment in full within three (3) Business Days from the due date
or (ii) any principal under any of the Facility B Notes when due;
(c) The Borrowers shall default in the performance or observance of
any agreement or covenant contained in Sections 5.2(a), 5.10, 7.1, 7.2, 7.4,
7.5, 7.7, 7.8, 7.9, 7.10, 7.11 and 7.12 hereof;
(d) The Borrowers shall default in the performance or observance of
any other agreement or covenant contained in this Agreement not specifically
referred to elsewhere in this Section 8.1, and such default shall not be curable
within a period of thirty (30) days (or with respect to Sections 5.3, 5.4, 5.5,
5.6, 5.7, 5.8, 5.9, 5.14, 5.15, 5.16, 6.4, 6.5, 7.3, 7.13, 7.14 and 7.15 hereof,
such longer period not to exceed sixty (60) days if such default is curable
within such period and the Borrowers are proceeding in good faith with all
diligent efforts to cure such default) from the later of (i) occurrence of such
Default and (ii) the date on which such Default became known to the Borrowers;
(e) There shall occur any default in the performance or observance of
any agreement or covenant or breach of any representation or warranty contained
in any of the Loan Documents (other than this Agreement or as otherwise provided
in this Section 8.1) by the Borrowers, any of the Restricted Subsidiaries, or
any other obligor thereunder, which shall not be cured within a period of thirty
(30) days (or such longer period not to exceed sixty (60) days if such default
is curable within such period and the Borrowers or such Restricted Subsidiaries
or other obligor are proceeding in good faith with all diligent efforts to cure
such default) from the date on which such default became known to the Borrowers;
(f) There shall be entered and remain unstayed a decree or order for
relief in respect of either Borrower or any of the Restricted Subsidiaries under
Title 11 of the United States Code, as now constituted or hereafter amended, or
any other applicable Federal or state bankruptcy law or other similar law, or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
similar official of either Borrower or any of the Restricted Subsidiaries, or of
any substantial part of their respective properties, or ordering the winding-up
or liquidation of the affairs of either Borrower or any of the Restricted
Subsidiaries; or an involuntary petition shall be filed against either Borrower
or any of the Restricted Subsidiaries and a temporary stay entered, and (i) such
petition and stay shall not be diligently contested, or (ii) any such petition
and stay shall continue undismissed for a period of ninety (90) consecutive
days;
(g) Either Borrower or any of the Restricted Subsidiaries shall file a
petition, answer or consent seeking relief under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable Federal
or state bankruptcy law or other similar law, or either Borrower or any of the
Restricted Subsidiaries shall consent to the institution of proceedings
thereunder or to the filing of any such petition or to the appointment or taking
of possession of a receiver, liquidator, assignee, trustee, custodian,
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<PAGE>
sequestrator or other similar official of either Borrower or any of the
Restricted Subsidiaries or of any substantial part of their respective
properties, or either Borrower or any of the Restricted Subsidiaries shall fail
generally to pay their respective debts as they become due or shall be
adjudicated insolvent; either Borrower, as the case may be, shall suspend or
discontinue its business, except as permitted by Section 7.4 hereof; either
Borrower or any of the Restricted Subsidiaries shall have concealed, removed any
of its property with the intent to hinder or defraud its creditors or shall have
made a fraudulent or preferential transfer under any applicable fraudulent
conveyance or bankruptcy law; or either Borrower or any of the Restricted
Subsidiaries shall take any action in furtherance of any such action;
(h) A judgment not covered by insurance or indemnification, where the
indemnifying party has agreed to indemnify and is financially able to do so,
shall be entered by any court against either Borrower or any of the Restricted
Subsidiaries for the payment of money which exceeds singly, or in the aggregate
with other such judgments, $10,000,000, or a warrant of attachment or execution
or similar process shall be issued or levied against property of either Borrower
or any of the Restricted Subsidiaries which, together with all other such
property of either Borrower or any of the Restricted Subsidiaries subject to
other such process, exceeds in value $10,000,000 in the aggregate, and if,
within thirty (30) days after the entry, issue or levy thereof, such judgment,
warrant or process shall not have been paid or discharged or stayed pending
appeal or removed to bond, or if, after the expiration of any such stay, such
judgment, warrant or process, shall not have been paid or discharged or removed
to bond;
(i) There shall be at any time any "accumulated funding deficiency,"
as defined in ERISA or in Section 412 of the Code, with respect to any Plan
maintained by either Borrower or any of its Subsidiaries or any ERISA Affiliate,
or to which either Borrower or any of its Subsidiaries or any ERISA Affiliate
has any liabilities, or any trust created thereunder; or a trustee shall be
appointed by a United States District Court to administer any such Plan; or PBGC
shall institute proceedings to terminate any such Plan; or either Borrower or
any of its Subsidiaries or any ERISA Affiliate shall incur any liability to PBGC
in connection with the termination of any such Plan; or any Plan or trust
created under any Plan of either Borrower or any of its Subsidiaries or any
ERISA Affiliate shall engage in a "prohibited transaction" (as such term is
defined in Section 406 of ERISA or Section 4975 of the Code) which would subject
any such Plan, any trust created thereunder, any trustee or administrator
thereof, or any party dealing with any such Plan or trust to the tax or penalty
on "prohibited transactions" imposed by Section 502 of ERISA or Section 4975 of
the Code;
(j) There shall occur (i) any acceleration of the maturity of any
Indebtedness of either Borrower or any of the Restricted Subsidiaries (other
than the ATS Facility A Loan Agreement) in an aggregate principal amount
exceeding $5,000,000, or, as a result of a failure to comply with the terms
thereof, such Indebtedness shall otherwise have become due and payable; (ii) any
event or condition the occurrence of which would permit such acceleration of
such Indebtedness, or which, as a result of a failure to comply with the
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<PAGE>
terms thereof, would make such Indebtedness otherwise due and payable, and which
event or condition has not been cured within any applicable cure period or
waived in writing prior to any declaration of an Event of Default or
acceleration of the Facility B Loans hereunder; or (iii) any material default
under any Interest Hedge Agreement which would permit the obligation of either
Borrower to make payments to the counterparty thereunder to be then due and
payable;
(k) The Borrowers and the Restricted Subsidiaries are for any reason
no longer able to operate or manage the related communications tower facilities
or portions thereof and retain the revenue received therefrom, and the overall
effect of which would be to reduce Annualized Operating Cash Flow (determined as
at the last day of the most recently ended fiscal year of the Borrowers) by ten
percent (10%) or more;
(1) Any material Loan Document, or any material provision thereof,
shall at any time and for any reason be declared by a court of competent
jurisdiction to be null and void, or a proceeding shall be commenced by either
Borrower or any of the Restricted Subsidiaries or by any governmental authority
having jurisdiction over the Borrower or any of the Restricted Subsidiaries
seeking to establish the invalidity or unenforceability thereof (exclusive of
questions of interpretation of any provision thereof), or either Borrower or any
of the Restricted Subsidiaries shall deny that it has any liability or
obligation for the payment of principal or interest purported to be created
under any Loan Document;
(m) Any material Security Document shall, for any reason, fail or
cease (except by reason of lapse of time) to create a valid and perfected and
first-priority Lien on or Security Interest in any material portion of the
Collateral purported to be covered thereby;
(n) There shall occur any Change of Control;
(o) Either Borrower or any of the Restricted Subsidiaries shall be
indicted under the Racketeer Influenced and Corrupt Organizations Act of 1970
(18 U.S.C. (S)1961 et seq.);
-- ---
(p) There shall occur and be continuing any "Event of Default" (in
each case, as defined therein) under the Parent Loan Agreement or the ATS
Facility A Loan Agreement;
(q) The Parent shall incur any Indebtedness for Money Borrowed other
than under the Parent Loan Agreement (or any refinancing thereof which does not
exceed the principal amount outstanding on the date of such refinancing); or
(r) The Parent shall, without the consent of the Required Lenders
(which consent may not be unreasonably withheld, delayed or conditioned), (i)
prepay all or a part of the principal amount of the Indebtedness outstanding
under the Parent Loan Agreement or
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<PAGE>
(ii) make any material amendment, modification, supplement or restatement to the
Parent Loan Agreement or the documents pertaining to the Interim Financing.
Section 8.2 Remedies.
--------
(a) If an Event of Default specified in Section 8.1 (other than an
Event of Default under Section 8.1(f) or (g) hereof) shall have occurred and
shall be continuing, the Administrative Agent, at the request of the Majority
Banks but subject to Section 9.8 hereof, shall (i) terminate the Facility B
Commitment, and/or (ii) declare the principal of and interest on the Facility B
Loans and the Facility B Notes and all other amounts owed to the Banks and the
Administrative Agent under this Agreement, the Facility B Notes and any other
Loan Documents to be forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived,
anything in this Agreement, the Facility B Notes or any other Loan Document to
the contrary notwithstanding, and the Facility B Commitment shall thereupon
forthwith terminate.
(b) Upon the occurrence and continuance of an Event of Default
specified in Section 8.1(f) or (g) hereof, all principal, interest and other
amounts due hereunder and under the Facility B Notes, and all other Obligations,
shall thereupon and concurrently therewith become due and payable and the
Facility B Commitment shall forthwith terminate and the principal amount of the
Facility B Loans outstanding hereunder shall bear interest at the Default Rate,
all without any action by the Administrative Agent or the Banks or the Majority
Banks or any of them and without presentment, demand, protest or other notice of
any kind, all of which are expressly waived, anything in this Agreement or in
the other Loan Documents to the contrary notwithstanding.
(c) Upon acceleration of the Facility B Notes, as provided in
subsection (a) or (b) of this Section 8.2, the Administrative Agent and the
Banks shall have all of the post-default rights granted to them, or any of them,
as applicable under the Loan Documents and under Applicable Law.
(d) Upon acceleration of the Facility B Notes, as provided in
subsection (a) or (b) of this Section 8.2, the Administrative Agent shall have
the right (but not the obligation) upon the request of the Banks to operate the
communications tower facilities of the Borrowers and the Restricted Subsidiaries
and pursuant to the terms and subject to any limitations contained in the
Security Documents and, within guidelines established by the Majority Banks, to
make any and all payments and expenditures necessary or desirable in connection
therewith, including, without limitation, payment of wages as required under the
Fair Labor Standards Act, as amended, and of any necessary withholding taxes to
state or federal authorities. In the event the Majority Banks fail to agree upon
the guidelines referred to in the preceding sentence within six (6) Business
Days' after the Administrative Agent has begun to operate the communications
tower facilities, the Administrative Agent may, after giving three (3) days'
prior written notice to the Banks of its intention to do so, make such
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payments and expenditures as it deems reasonable and advisable in its sole
discretion to maintain the normal day-to-day operation of such communications
tower facilities. Such payments and expenditures in excess of receipts shall
constitute Advances under the Facility B Commitment, not in excess of the amount
of the Facility B Commitment. Advances made pursuant to this Section 8.2(d)
shall bear interest as provided in Section 2.3(d) hereof and shall be payable by
the Borrowers on demand. The making of one or more Advances under this Section
8.2(d) shall not create any obligation on the part of the Banks to make any
additional Advances hereunder. No exercise by the Administrative Agent of the
rights granted to it under this Section 8.2(d) shall constitute a waiver of any
other rights and remedies granted to the Administrative Agent and the Banks, or
any of them, under this Agreement or at law. Each Borrower hereby irrevocably
appoints the Administrative Agent as agent for the Banks, the true and lawful
attorney of each of them, in its name and stead and on its behalf, to execute,
receipt for or otherwise act in connection with any and all contracts,
instruments or other documents in connection with the completion and operation
of the communications tower facilities in the exercise of the Administrative
Agent's and the Banks' rights under this Section 8.2(d). Such power of attorney
is coupled with an interest and is irrevocable. The rights of the Administrative
Agent under this Section 8.2(d) shall be subject to its prior compliance with
the Communications Act and the FCC rules and policies promulgated thereunder to
the extent applicable to the exercise of such rights.
(e) Upon acceleration of the Facility B Notes, as provided in
subsection (a) or (b) of this Section 8.2, the Administrative Agent, upon
request of the Majority Banks, shall have the right to appoint a receiver for
the properties and assets of the Borrowers and the Restricted Subsidiaries, and
each Borrower, for itself and on behalf of its Restricted Subsidiaries, hereby
consents to such rights and such appointment and hereby waives any objection
either Borrower or any Restricted Subsidiary may have thereto or the right to
have a bond or other security posted by the Administrative Agent, on behalf of
the Banks, in connection therewith. The rights of the Administrative Agent under
this Section 8.2(e) shall be subject to its prior compliance with the
Communications Act and the FCC rules and policies promulgated thereunder to the
extent applicable to the exercise of such rights.
(f) The rights and remedies of the Administrative Agent and the
Banks hereunder shall be cumulative, and not exclusive.
Section 8.3 Payments Subsequent to Declaration of Event of Default.
------------------------------------------------------
Subsequent to the acceleration of the Facility B Loans under Section 8.2 hereof,
payments and prepayments under this Agreement made to the Administrative Agent
and the Banks or otherwise received by any of such Persons (from realization on
Collateral for the Obligations or otherwise) shall be paid over to the
Administrative Agent (if necessary) and distributed by the Administrative Agent
as follows: first, to the Administrative Agent's reasonable costs and expenses,
-----
if any, incurred in connection with the collection of such payment or
prepayment, including, without limitation, any reasonable costs incurred by it
in connection with the sale or disposition of any Collateral for the Obligations
and all amounts under Section 11.2(b)
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hereof; second, to the Banks or the Administrative Agent for any fees hereunder
------
or under any of the other Loan Documents then due and payable; third, to the
-----
Banks pro rata on the basis of their respective unpaid principal amounts (except
as provided in Section 2.2(e) hereof), to the payment of any unpaid interest
which may have accrued on the Obligations; fourth, to the Banks pro rata until
------
all Facility B Loans have been paid in full (and, for purposes of this clause,
obligations under Interest Hedge Agreements with the Banks or any of them shall
be paid on a pro rata basis with the Facility B Loans); fifth, to the Banks pro
-----
rata on the basis of their respective unpaid amounts, to the payment of any
other unpaid Obligations; and sixth, to the Borrowers or as otherwise required
-----
by law.
ARTICLE 9 The Administrative Agent and The Collateral Agent
Section 9.1 Appointment and Authorization. Each Bank hereby irrevocably
-----------------------------
appoints and authorizes, and hereby agrees that it will require any transferee
of any of its interest in its portion of the Facility B Loans and in its
Facility B Note irrevocably to appoint and authorize, the Administrative Agent
to take such actions as its agent on its behalf and to exercise such powers
hereunder and under the other Loan Documents as are delegated by the terms
hereof and thereof, together with such powers as are reasonably incidental
thereto. Neither the Administrative Agent, nor any of its respective directors,
officers, employees or agents, shall be liable for any action taken or omitted
to be taken by it or them hereunder or in connection herewith, except for its or
their own gross negligence or willful misconduct as determined by a final, non-
appealable judicial order of a court of competent jurisdiction.
Section 9.2 Interest Holders. The Administrative Agent may treat each
----------------
Bank, or the Person designated in the last notice filed with the Administrative
Agent, as the holder of all of the interests of such Bank in its portion of the
Facility B Loans and in its Note until written notice of transfer, signed by
such Bank (or the Person designated in the last notice filed with the
Administrative Agent) and by the Person designated in such written notice of
transfer, in form and substance satisfactory to the Administrative Agent, shall
have been filed with the Administrative Agent.
Section 9.3 Consultation with Counsel. The Administrative Agent may
-------------------------
consult with Powell, Goldstein, Frazer & Murphy LLP, Atlanta, Georgia, special
counsel to the Administrative Agent, or with other legal counsel selected by it
and shall not be liable for any action taken or suffered by it in good faith in
consultation with the Majority Banks and in reasonable reliance on such
consultations.
Section 9.4 Documents. The Administrative Agent shall be under no duty to
---------
examine, inquire into, or pass upon the validity, effectiveness or genuineness
of this Agreement, any Facility B Note, any other Loan Document, or any
instrument, document or communication furnished pursuant hereto or in connection
herewith, and the Administrative
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Agent shall be entitled to assume that they are valid, effective and genuine,
have been signed or sent by the proper parties and are what they purport to be.
Section 9.5 Administrative Agent and Affiliates. With respect to the
-----------------------------------
Facility B Commitment and the Facility B Loans, the Administrative Agent shall
have the same rights and powers hereunder as any other Bank and the
Administrative Agent and Affiliates of the Administrative Agent may accept
deposits from, lend money to and generally engage in any kind of business with
either Borrower, any of its Subsidiaries or other Affiliates of, or Persons
doing business with, either Borrower, any of its Subsidiaries or other
Affiliates, as if they were not affiliated with the Administrative Agent and
without any obligation to account therefor.
Section 9.6 Responsibility of the Administrative Agent. The duties and
------------------------------------------
obligations of the Administrative Agent under this Agreement are only those
expressly set forth in this Agreement. The Administrative Agent shall be
entitled to assume that no Default or Event of Default has occurred and is
continuing unless it has actual knowledge, or has been notified in writing by
either Borrower, of such fact, or has been notified by a Bank in writing that
such Bank considers that a Default or an Event of Default has occurred and is
continuing, and such Bank shall specify in detail the nature thereof in writing.
The Administrative Agent shall not be liable hereunder for any action taken or
omitted to be taken except for its own gross negligence or willful misconduct as
determined by a final, non-appealable judicial order of a court of competent
jurisdiction. The Administrative Agent shall provide each Bank with copies of
such documents received from the Borrowers as such Bank may reasonably request.
Section 9.7 Action by the Administrative Agent.
----------------------------------
(a) The Administrative Agent shall be entitled to use its
discretion with respect to exercising or refraining from exercising any rights
which may be vested in it by, and with respect to taking or refraining from
taking any action or actions which it may be able to take under or in respect
of, this Agreement, unless the Administrative Agent shall have been instructed
by the Majority Banks to exercise or refrain from exercising such rights or to
take or refrain from taking such action; provided, however, that the
-------- -------
Administrative Agent shall not exercise any rights under Section 8.2(a) hereof
without the request of the Majority Banks (or, where expressly required, all the
Banks), unless time is of the essence, in which case, such action can be taken
at the request of the Administrative Agent. The Administrative Agent shall incur
no liability under or in respect of this Agreement with respect to anything
which it may do or refrain from doing in the reasonable exercise of its judgment
or which may seem to it to be necessary or desirable in the circumstances,
except for its gross negligence or willful misconduct as determined by a final,
non-appealable judicial order of a court having jurisdiction over the subject
matter.
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(b) The Administrative Agent shall not be liable to the Banks or
to any Bank or to either Borrower or any of its Subsidiaries in acting or
refraining from acting under this Agreement or any other Loan Document in
accordance with the instructions of the Majority Banks (or, where expressly
required, all of the Banks), and any action taken or failure to act pursuant to
such instructions shall be binding on all of the Banks, except for its gross
negligence or willful misconduct as determined by a final, non-appealable
judicial order of a court having jurisdiction over the subject matter. The
Administrative Agent shall not be obligated to take any action which is contrary
to law or which would in its reasonable opinion subject it to liability.
Section 9.8 Notice of Default or Event of Default. In the event that the
-------------------------------------
Administrative Agent or any Bank shall acquire actual knowledge, or shall have
been notified, of any Default or Event of Default, the Administrative Agent or
such Bank shall promptly notify the Banks (provided, however, that the failure
-------- -------
to give such notice shall not result in any liability on the part of such Bank
or Administrative Agent), and the Administrative Agent shall take such action
and assert such rights under this Agreement and the other Loan Documents as the
Majority Banks shall request in writing, and the Administrative Agent shall not
be subject to any liability by reason of its acting pursuant to any such
request. If the Majority Banks shall fail to request the Administrative Agent
to take action or to assert rights under this Agreement or any other Loan
Documents in respect of any Default or Event of Default within ten (10) days
after their receipt of the notice of any Default or Event of Default from the
Administrative Agent or any Bank, or shall request inconsistent action with
respect to such Default or Event of Default, the Administrative Agent may, but
shall not be required to, take such action and assert such rights (other than
rights under Article 8 hereof) as it deems in its discretion to be advisable for
the protection of the Banks, except that, if the Majority Banks have instructed
the Administrative Agent not to take such action or assert such right, in no
event shall the Administrative Agent act contrary to such instructions, unless
there has been a change in circumstances and time is of the essence, in which
case, the Administrative Agent may act in accordance with its reasonable
discretion.
Section 9.9 Responsibility Disclaimed. The Administrative Agent shall not
-------------------------
be under any liability or responsibility whatsoever as Administrative Agent:
(a) To either Borrower or any other Person as a consequence of any
failure or delay in performance by, or any breach by, any Bank or Banks of any
of its or their obligations under this Agreement;
(b) To any Bank or Banks as a consequence of any failure or delay
in performance by, or any breach by, (i) the Borrowers of any of their
obligations under this Agreement or the Facility B Notes or any other Loan
Document, or (ii) any Restricted Subsidiary or any other obligor under any other
Loan Document;
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(c) To any Bank or Banks, for any statements, representations or
warranties in this Agreement, or any other document contemplated by this
Agreement or any information provided pursuant to this Agreement, any other Loan
Document, or any other document contemplated by this Agreement, or for the
validity, effectiveness, enforceability or sufficiency of this Agreement, the
Facility B Notes, any other Loan Document, or any other document contemplated by
this Agreement; or
(d) To any Person for any act or omission other than that arising
from gross negligence or willful misconduct of the Administrative Agent as
determined by a final, non-appealable judicial order of a court of competent
jurisdiction.
Section 9.10 Indemnification. The Banks agree to indemnify the
---------------
Administrative Agent (to the extent not reimbursed by the Borrowers) pro rata
according to their respective Facility B Commitment Ratios, from and against any
and all liabilities, obligations, losses (other than the loss of principal,
interest and fees hereunder in the event of a bankruptcy or out-of-court 'work-
out' of the Facility B Loans), damages, penalties, actions, judgments, suits,
costs, expenses (including, without limitation, fees and expenses of experts,
agents, consultants and counsel), or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the
Administrative Agent in any way relating to or arising out of this Agreement,
any other Loan Document, or any other document contemplated by this Agreement or
any other Loan Document or any action taken or omitted by the Administrative
Agent under this Agreement, any other Loan Document, or any other document
contemplated by this Agreement, except that no Bank shall be liable to the
Administrative Agent for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, or disbursements
resulting from the gross negligence or willful misconduct of the Administrative
Agent as determined by a final, non-appealable judicial order of a court having
jurisdiction over the subject matter.
Section 9.11 Credit Decision. Each Bank represents and warrants to each
---------------
other and to the Administrative Agent that:
(a) In making its decision to enter into this Agreement and to
make its portion of the Facility B Loans it has independently taken whatever
steps it considers necessary to evaluate the financial condition and affairs of
the Borrowers and that it has made an independent credit judgment, and that it
has not relied upon the Administrative Agent or information provided by the
Administrative Agent (other than information provided to the Administrative
Agent by the Borrowers and forwarded by the Administrative Agent to the Banks);
and
(b) So long as any portion of the Facility B Loans remains
outstanding or such Bank has an obligation to make its portion of Advances
hereunder, it will continue to make its own independent evaluation of the
financial condition and affairs of the Borrowers.
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Section 9.12 Successor Administrative Agent. Subject to the appointment
------------------------------
and acceptance of a successor Administrative Agent as provided below, the
Administrative Agent may resign at any time by giving written notice thereof to
the Banks and the Borrowers and may be removed at any time for cause by the
Majority Banks. Upon any such resignation or removal, the Majority Banks shall
have the right to appoint a successor Administrative Agent which appointment
shall, prior to a Default, be subject to the consent of the Borrowers, acting
reasonably. If (a) no successor Administrative Agent shall have been so
appointed by the Majority Banks or (b) if appointed, no successor Administrative
Agent shall have accepted such appointment within thirty (30) days after the
retiring Administrative Agent gave notice of resignation or the Majority Banks
removed the retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of the Banks, appoint a successor Administrative Agent
which shall be any Bank or a commercial bank organized under the laws of the
United States of America or any political subdivision thereof which has combined
capital and reserves in excess of $250,000,000 and which shall be reasonably
acceptable to the Borrowers. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges, duties and obligations of the retiring
Administrative Agent and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder and under the other Loan Documents.
After any retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent the provisions of this Article shall continue in effect for
its benefit in respect of any actions taken or omitted to be taken by it while
it was acting as the Administrative Agent. In the event that the Administrative
Agent or any of its respective Affiliates ceases to be a Bank hereunder, such
Person shall resign its agency hereunder.
Section 9.13 Delegation of Duties. The Administrative Agent may execute
--------------------
any of its duties under the Loan Documents by or through agents or attorneys
selected by it using reasonable care, and shall be entitled to advice of counsel
concerning all matters pertaining to such duties.
Section 9.14 Collateral Agent. Each Bank and the Administrative Agent
----------------
Agent hereby irrevocably appoints and authorizes, and hereby agrees that it will
require any transferee of any of its interest in its Facility B Loans and in its
Facility B Notes irrevocably to appoint and authorize, the Collateral Agent to
take such actions as its agent on its behalf and to exercise such powers under
the Security Documents as are delegated by the terms thereof, together with such
powers as are reasonably incidental thereto. Neither the Collateral Agent nor
any of its directors, officers, employees, or agents shall be liable for any
action taken or omitted to be taken by it or them under any of the Security
Documents or in connection therewith, except for its or their own gross
negligence or willful misconduct as determined by a final non-appealable
judicial order of a court of competent jurisdiction. The Collateral
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Agent may execute any of its duties under the Loan Documents by or through
agents or attorneys selected by it using reasonable care and shall be entitled
to advice of counsel concerning all matters pertaining to such duties. The
Collateral Agent shall not be responsible to any Bank for the negligence or
misconduct of any agents or attorneys selected by it with reasonable care. The
Collateral Agent may treat each Bank, or the Person designated in the last
notice filed with the Administrative Agent under Section 9.3 of this Agreement,
as the holder of all of the interests of such Bank in its Facility B Loans and
in its Facility B Notes until written notice of transfer, signed by such Bank
(or the Person designated in the last notice filed with the Administrative
Agent) and by the Person designated in such written notice of transfer, in form
and substance satisfactory to the Administrative Agent, shall have been filed
with the Administrative Agent. The Collateral Agent may consult with legal
counsel selected by it and shall not be liable for any action taken or suffered
by it in good faith in reliance thereon. The Collateral Agent shall not be under
any duty to examine, inquire into, or pass upon the validity, effectiveness, or
genuineness of any Security Document or other document, or communication
furnished pursuant thereto or in connection therewith, and the Collateral Agent
shall be entitled to assume that they are valid, effective, and genuine, have
been signed or sent by the proper parties, and are what they purport to be. The
Collateral Agent shall be entitled to use its discretion with respect to
exercising or refraining from exercising any rights which may be vested in it
by, and with respect to taking or refraining from taking any action or actions
which it may be able to take under or in respect of, any Security Document,
unless the Collateral Agent shall have been instructed by the Required Lenders
to exercise or refrain from exercising such rights or to take or refrain from
taking such action, provided that the Collateral Agent shall not exercise any
rights under any Security Document without the request of the Required Lenders
unless time is of the essence, in which case, such action can be taken. The
Collateral Agent shall incur no liability under or in respect of any Security
Document with respect to anything which it may do or refrain from doing in the
reasonable exercise of its judgment or which may seem to it to be necessary or
desirable in the circumstances, except for its gross negligence or willful
misconduct as determined by a final, non-appealable judicial order of a court of
competent jurisdiction. The Collateral Agent shall not be liable to the Banks or
to any Bank in acting or refraining from acting under any Security Document in
accordance with the instructions of the Required Lenders, and any action taken
or failure to act pursuant to such instructions shall be binding on all Banks.
The Collateral Agent shall not be obligated to take any action which is contrary
to law or which would in its reasonable opinion subject it to liability. All
indemnity provisions herein that pertain to the Administrative Agent shall apply
equally to the Collateral Agent. Each Bank and the Administrative Agent hereby
agree that the Obligations are to be secured pari passu with all "Obligations"@
---- -----
under the ATS Facility A Loan Agreement and that all Collateral now or hereafter
delivered as security for the Obligations shall be held by the Collateral Agent
(or delivered to the Collateral Agent, if received by any Bank) in accordance
with the Security Documents.
Section 9.15 Successor Collateral Agent Subject to the appointment and
--------------------------
acceptance of a successor Collateral Agent as provided below, the Collateral
Agent may resign at any time by giving written notice thereof to the Banks and
the Borrowers and may be removed at any time for cause by the Required
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Lenders. Upon any such resignation or removal, the Required Lenders shall have
the right to appoint a successor Collateral Agent. If no successor Collateral
Agent shall have been so appointed by the Required Lenders, and shall have
accepted such appointment within thirty (30) days after the retiring Collateral
Agent's giving of notice of resignation or the Required Lenders' removal of the
retiring Collateral Agent, then the retiring Collateral Agent may, on behalf of
the Banks, appoint a successor Collateral Agent which shall be any Bank or a
commercial bank organized under the laws of the United States of America or any
political subdivision thereof which has combined capital and reserves in excess
of $250,000,000. Upon the acceptance of any appointment as Collateral Agent
hereunder by a successor Collateral Agent, such successor Collateral Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges,
duties, and obligations of the retiring Collateral Agent, and the retiring
Collateral Agent shall be discharged from its duties and obligations hereunder.
After any retiring Collateral Agent's resignation or removal hereunder as
Collateral Agent, the provisions of this Section 9.15 shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as the Collateral Agent.
Section 9.16 Collateral Actions. Each of the parties hereto acknowledges
------------------
and agrees that all provisions herein and under any Security Document relating
to rights and remedies under any Security Document shall be exercised only upon
the direction of the Required Lenders(except as expressly set forth in Section
9.14 hereof), and that the provisions of this Section 9.16 may not be amended
except with the consent of the Required Lenders, provided however, that the
-------- -------
Majority Banks (or , as provided in Section 11.12 hereof all Banks) shall
determine whether any collateral for the Obligations hereunder may be released.
ARTICLE 10 Changes in Circumstances
Affecting LIBOR Advances
Section 10.1 LIBOR Basis Determination Inadequate or Unfair. If with
----------------------------------------------
respect to any proposed LIBOR Advance for any Interest Period, the
Administrative Agent determines after consultation with the Banks that deposits
in dollars (in the applicable amount) are not being offered to each of the Banks
in the relevant market for such Interest Period, the Administrative Agent shall
forthwith give notice thereof to the Borrowers and the Banks, whereupon until
the Administrative Agent notifies the Borrowers that the circumstances giving
rise to such situation no longer exist, the obligations of any affected Bank to
make its portion of such LIBOR Advances shall be suspended.
Section 10.2 Illegality. If after the date hereof, the adoption of any
----------
Applicable Law, or any change in any Applicable Law (whether adopted before or
after the Agreement Date), or any change in interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof,
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or compliance by any Bank with any directive (whether or not having the force of
law) of any such authority, central bank or comparable agency, shall make it
unlawful or impossible for any Bank to make, maintain or fund its portion of
LIBOR Advances, such Bank shall so notify the Administrative Agent, and the
Administrative Agent shall forthwith give notice thereof to the other Banks and
the Borrowers. Before giving any notice to the Administrative Agent pursuant to
this Section 10.2, such Bank shall designate a different lending office if such
designation will avoid the need for giving such notice and will not, in the sole
reasonable judgment of such Bank, be otherwise materially disadvantageous to
such Bank. Upon receipt of such notice, notwithstanding anything contained in
Article 2 hereof, the Borrowers shall repay in full the then outstanding
principal amount of such Bank's portion of each affected LIBOR Advance, together
with accrued interest thereon, on either (a) the last day of the then current
Interest Period applicable to such affected LIBOR Advances if such Bank may
lawfully continue to maintain and fund its portion of such LIBOR Advance to such
day or (b) immediately if such Bank may not lawfully continue to fund and
maintain its portion of such affected LIBOR Advances to such day. Concurrently
with repaying such portion of each affected LIBOR Advance, the Borrowers may
borrow a Base Rate Advance from such Bank, whether or not it would have been
entitled to effect such borrowing, and such Bank shall make such Advance, if so
requested, in an amount such that the outstanding principal amount of the
affected Facility B Note held by such Bank shall equal the outstanding principal
amount of such Facility B Note or Facility B Notes immediately prior to such
repayment.
Section 10.3 Increased Costs.
---------------
(a) If after the date hereof, the adoption of any Applicable Law,
or any change in any Applicable Law (whether adopted before or after the
Agreement Date), or any interpretation or change in interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof or compliance
by any Bank with any directive (whether or not having the force of law) of any
such authority, central bank or comparable agency:
(1) shall subject any Bank to any tax, duty or other charge
with respect to its obligation to make its portion of LIBOR Advances, or
its portion of other Advances, or shall change the basis of taxation of
payments to any Bank of the principal of or interest on its portion of
LIBOR Advances or in respect of any other amounts due under this Agreement,
or its obligation to make its portion of Advances (except for changes in
the rate or method of calculation of tax on the revenues or net income of
such Bank); or
(2) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of
the Federal Reserve System, but excluding any included in an applicable
Eurodollar Reserve Percentage), special deposit, capital adequacy,
assessment or other requirement or condition
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against assets of, deposits with or for the account of, or commitments or
credit extended by, any Bank or shall impose on any Bank or the London
interbank borrowing market any other condition affecting its obligation to
make its portion of such LIBOR Advances or its portion of existing
Advances;
and the result of any of the foregoing is to increase the cost to such Bank of
making or maintaining any of its portion of LIBOR Advances, or to reduce the
amount of any sum received or receivable by such Bank under this Agreement or
under its Facility B Note with respect thereto, then, within ten (10) days after
demand by such Bank, the Borrowers agree to pay to such Bank such additional
amount or amounts as will compensate such Bank for such increased costs. All
payments made by the Borrowers under this Agreement shall, as set forth above,
be made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp, or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any governmental authority
excluding net income taxes and franchise taxes (imposed in lieu of net income
taxes) imposed on any Bank as a result of present or former connection between
such Person and the jurisdiction of the governmental authority imposing such tax
or any political subdivision or taxing authority thereof or therein (other than
any such connection arising solely from such Person having executed, delivered
or performed its obligations or received a payment under, or enforced, this
Agreement or any other Loan Document). If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded
Taxes") are required to be withheld from any amounts payable to any Bank
hereunder, the amounts so payable to such Person shall be increased to the
extent necessary to yield to such Person (after payment of all Non-Excluded
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement; provided, however, that the Borrowers
shall not be required to increase any such amounts payable to any Bank that is
not organized under the laws of the United States of America or a state thereof
if such Person fails to comply with the requirements of Section 2.13 of this
Agreement. Whenever any Non-Excluded Taxes are payable by the Borrowers, as
promptly as possible thereafter the Borrowers shall send to the Administrative
Agent for its own account or for the account of such Bank, as the case may be, a
certified copy of an original official receipt received by the Borrowers showing
payment thereof. If the Borrowers fail to pay any Non-Excluded Taxes when due
to the appropriate taxing authority or fails to remit to the Administrative
Agent the required receipts or other documentary evidence, the Borrowers shall
indemnify the Administrative Agent and the Banks for any incremental taxes,
interest or penalties that may become payable by the Administrative Agent or any
Bank as result of any such failure. The Borrowers shall make any payments
required pursuant to the immediately preceding sentence within thirty (30) days
after receipt of written demand therefor from the Administrative Agent or any
Bank, as the case may be. The agreements set forth in this 10.3 shall survive
the termination of this Agreement and the payment of the Obligations. Each Bank
will promptly notify the Borrowers and the Administrative Agent of any event of
which it has knowledge, occurring after the date hereof, which will entitle such
Bank to compensation pursuant to this Section
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10.3 and will designate a different lending office if such designation will
avoid the need for, or reduce the amount of, such compensation and will not, in
the sole reasonable judgment of such Bank made in good faith, be otherwise
disadvantageous to such Bank. Notwithstanding any provision herein to the
contrary, the Borrowers shall have no obligation to pay to any Bank any amount
which the Borrowers are liable to withhold due to the failure of such Bank to
file any statement of exemption required under the Code.
(b) Any Bank claiming compensation under this Section 10.3 shall
provide the Borrowers with a written certificate setting forth the additional
amount or amounts to be paid to it hereunder and calculations therefor in
reasonable detail. Such certificate shall be presumptively correct absent
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods. If any Bank demands compensation under this
Section 10.3, the Borrowers may at any time, upon at least five (5) Business
Days' prior notice to such Bank, prepay in full such Bank's portion of the then
outstanding LIBOR Advances, together with accrued interest and fees thereon to
the date of prepayment, along with any reimbursement required under Section 2.10
hereof and this Section 10.3. Concurrently with prepaying such portion of LIBOR
Advances the Borrowers may, whether or not then entitled to make such borrowing,
borrow a Base Rate Advance, or a LIBOR Advance not so affected, from such Bank,
and such Bank shall, if so requested, make such Advance in an amount such that
the outstanding principal amount of the affected Facility B Note or Facility B
Notes held by such Bank shall equal the outstanding principal amount of such
Facility B Note or Facility B Notes immediately prior to such prepayment.
Section 10.4 Effect On Other Advances. If notice has been given pursuant
------------------------
to Section 10.1, 10.2 or 10.3 hereof suspending the obligation of any Bank to
make its portion of any type of LIBOR Advance, or requiring such Bank's portion
of LIBOR Advances to be repaid or prepaid, then, unless and until such Bank
notifies the Borrowers that the circumstances giving rise to such repayment no
longer apply, all amounts which would otherwise be made by such Bank as its
portion of LIBOR Advances shall be instead as Base Rate Advances, unless
otherwise notified by either of the Borrowers.
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ARTICLE 11 Miscellaneous
Section 11.1 Notices.
-------
(a) Except as otherwise expressly provided herein, all notices and
other communications under this Agreement and the other Loan Documents (unless
otherwise specifically stated therein) shall be in writing and shall be deemed
to have been given three (3) Business Days after deposit in the mail, designated
as certified mail, return receipt requested, postage-prepaid, or one (1)
Business Day after being entrusted to a reputable commercial overnight delivery
service for next day delivery, or when sent on a Business Day prior to 5:00 p.m.
(New York, New York time) by telecopy addressed to the party to which such
notice is directed at its address determined as provided in this Section 11.1.
All notices and other communications under this Agreement shall be given to the
parties hereto at the following addresses:
(i) If to the Borrowers, to them at:
American Tower Systems (Delaware), Inc.
American Tower Systems, L.P.
116 Huntington Avenue
Boston, Massachusetts 02111
Attn: Joseph B. Winn, Chief Financial Officer
with copies to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02110
Attn: Norman A. Bikales, Esq.
(ii) If to the Administrative Agent, to it at:
Toronto Dominion (Texas), Inc.
909 Fannin Street, Suite 1700
Houston, Texas 77010
Attention: Agency Department
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with a copy to:
The Toronto-Dominion Bank
Toronto Dominion Securities, Inc.
USA Division
31 West 52nd Street
New York, NY 10019-6101
Attn: Managing Director, Communications Finance
and with a copy to:
Powell, Goldstein, Frazer & Murphy LLP
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Douglas S. Gosden, Esq.
(iii) If to the Banks, to them at the addresses set forth beside
their names as set forth in Schedule 9 attached hereto.
----------
The failure to provide copies shall not affect the validity of the notice given
to the primary recipient.
(b) Any party hereto may change the address to which notices shall be
directed under this Section 11.1 by giving ten (10) days' written notice of such
change to the other parties.
Section 11.2 Expenses. The Borrowers will promptly pay, or reimburse:
--------
(a) all reasonable out-of-pocket expenses of the Administrative Agent
in connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents, and the transactions contemplated
hereunder and thereunder and the making of the initial Advance hereunder
(whether or not such Advance is made), including the reasonable fees and
disbursements of Powell, Goldstein, Frazer & Murphy LLP, Atlanta, Georgia,
special counsel for the Administrative Agent; and
(b) all reasonable out-of-pocket costs and expenses of the
Administrative Agent and the Banks of enforcement under this Agreement or the
other Loan Documents and all reasonable out-of-pocket costs and expenses of
collection if an Event of Default occurs in the payment of the Facility B Notes,
which in each case shall include, without limitation, reasonable fees and out-
of-pocket expenses of counsel for the Administrative Agent and the Banks.
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Section 11.3 Waivers. The rights and remedies of the Administrative Agent
-------
and the Banks under this Agreement and the other Loan Documents shall be
cumulative and not exclusive of any rights or remedies which they would
otherwise have. No failure or delay by the Administrative Agent, the Majority
Banks, or the Banks, or any of them, in exercising any right, shall operate as a
waiver of such right. The Administrative Agent and the Banks expressly reserve
the right to require strict compliance with the terms of this Agreement in
connection with any future funding of a Request for Advance. In the event the
Banks decide to fund a Request for Advance at a time when the Borrowers are not
in strict compliance with the terms of this Agreement, such decision by the
Banks shall not be deemed to constitute an undertaking by the Banks to fund any
further Request for Advance or preclude the Banks or the Administrative Agent
from exercising any rights available under the Loan Documents or at law or
equity. Any waiver or indulgence granted by the Administrative Agent, the
Banks, or the Majority Banks, shall not constitute a modification of this
Agreement or any other Loan Document, except to the extent expressly provided in
such waiver or indulgence, or constitute a course of dealing at variance with
the terms of this Agreement or any other Loan Document such as to require
further notice of their intent to require strict adherence to the terms of this
Agreement or any other Loan Document in the future.
Section 11.4 Set-Off. In addition to any rights now or hereafter granted
-------
under Applicable Law and not by way of limitation of any such rights, upon the
occurrence of an Event of Default and during the continuation thereof, the
Administrative Agent and each of the Banks are hereby authorized by the
Borrowers at any time or from time to time, without notice to the Borrowers or
to any other Person, any such notice being, to the extent permitted by
Applicable Law, hereby expressly waived, to set off and to appropriate and to
apply any and all deposits (general or special, time or demand, including, but
not limited to, Indebtedness evidenced by certificates of deposit, in each case
whether matured or unmatured) and any other Indebtedness at any time held or
owing by any Bank or Administrative Agent, to or for the credit or the account
of the Borrowers or any Restricted Subsidiary, against and on account of the
obligations and liabilities of the Borrowers to the Banks and the Administrative
Agent, including, without limitation, all Obligations and any other claims of
any nature or description arising out of or connected with this Agreement, the
Facility B Notes or any other Loan Document, irrespective of whether (a) any
Bank or Administrative Agent shall have made any demand hereunder or (b) any
Bank or Administrative Agent shall have declared the principal of and interest
on the Facility B Loans and other amounts due hereunder to be due and payable as
permitted by Section 8.2 hereof and although such obligations and liabilities or
any of them shall be contingent or unmatured. Upon direction by the
Administrative Agent with the consent of all of the Banks, each Bank holding
deposits of either Borrower or any Restricted Subsidiary shall exercise its set-
off rights as so directed; and, within one (1) Business Day following any such
setoff, the Administrative Agent shall give notice thereof to the Borrowers.
Notwithstanding anything to the contrary contained in this Section 11.4, no Bank
shall exercise any right of offset without the prior consent of the Majority
Banks so long as the Obligations shall be secured by any real property or real
property interest including leaseholds located in the State of
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<PAGE>
California, it being understood and agreed that the provisions of this sentence
are for the exclusive benefit of the Banks, may be amended, modified or waived
by the Majority Banks without notice to or consent of the Borrowers or any
Subsidiary and shall not constitute a waiver of any rights against the Borrowers
or any Subsidiary or against any Collateral.
Section 11.5 Assignment and Participation.
----------------------------
(a) Neither Borrower may assign or transfer any of its rights or
obligations hereunder, under the Notes or under any other Loan Document without
the prior written consent of each Bank.
(b) Each Bank may sell (i) assignments of any amount of its interest
hereunder to any Bank, or (ii) assignments or participations of up to one
hundred percent (100%) of its interest hereunder to (A) one (1) or more wholly-
owned Affiliates of such Bank or Approved Funds (provided, however, that if such
-------- -------
Affiliate is not a financial institution, such Bank shall be obligated to
repurchase such assignment if such Affiliate is unable to honor its obligations
hereunder), or (B) any Federal Reserve Bank as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve System and any
Operating Circular issued by such Federal Reserve Bank (provided, however, that
-------- -------
no such assignment shall relieve such Bank from its obligations hereunder).
(c) Each of the Banks may at any time enter into assignment agreements
or participations with one or more other Banks, Approved Funds or other Persons
pursuant to which each Bank may assign or participate its interest under this
Agreement and the other Loan Documents, including its interest in any particular
Advance or portion thereof; provided, however, that (1) all assignments (other
-------- -------
than assignments described in Section 11.5(b) hereof) shall be in minimum
principal amounts of the lesser of (X) $5,000,000, and (Y) the amount of such
Bank's Facility B Commitment (in a single assignment only), and (2) all
assignments (other than assignments described in Section 11.5(b) hereof) and
participations hereunder shall be subject to the following additional terms and
conditions:
(i) No assignment (except assignments permitted in Section
11.5(b) hereof) shall be sold without the prior consent of the
Administrative Agent and prior to the occurrence and continuation of an
Event of Default, the consent of the Borrowers, which consents shall not be
unreasonably withheld;
(ii) Any Person purchasing a participation or an assignment of
any portion of the Facility B Loans from any Bank shall be required to
represent and warrant that its purchase shall not constitute a "prohibited
transaction" (as defined in Section 4.1(m) hereof);
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<PAGE>
(iii) The Borrowers, the Banks, and the Administrative Agent
agree that assignments permitted hereunder (including the assignment of any
Advance or portion thereof) may be made with all voting rights, and shall
be made pursuant to an Assignment and Assumption Agreement substantially in
the form of Exhibit T attached hereto. An administrative fee of $3,500
---------
shall be payable to the Administrative Agent either by the assigning Bank
or the assignee thereof at the time of any assignment under this Section
11.5(c);
(iv) No participation agreement shall confer any rights under
this Agreement or any other Loan Document to any purchaser thereof, or
relieve any issuing Bank from any of its obligations under this Agreement,
and all actions hereunder shall be conducted as if no such participation
had been granted; provided, however, that any participation agreement may
-------- -------
confer on the participant the right to approve or disapprove decreases in
the interest rate, increases in the principal amount of the Facility B
Loans participated in by such participant, decreases in fees, extensions of
the Termination Date, or, if applicable, the Maturity Date or other
principal payment date for the Facility B Loans or of the scheduled
reduction of the Facility B Commitment and releases of Collateral;
(v) Each Bank agrees to provide the Administrative Agent and
the Borrowers with prompt written notice of any issuance of assignments of
its interests hereunder;
(vi) No assignment, participation or other transfer of any
rights hereunder or under the Facility B Notes shall be effected that would
result in any interest requiring registration under the Securities Act of
1933, as amended, or qualification under any state securities law;
(vii) No such assignment may be made to any bank or other
financial institution (x) with respect to which a receiver or conservator
(including, without limitation, the Federal Deposit Insurance Corporation,
the Resolution Trust Company or the Office of Thrift Supervision) has been
appointed or (y) that is not "adequately capitalized" (as such term is
defined in Section 131(b)(1)(B) of the Federal Deposit Insurance
Corporation Improvement Act as in effect on the Agreement Date); and
(viii) If applicable, each Bank shall, and shall cause each of
its assignees to, provide to the Administrative Agent on or prior to the
effective date of any assignment an appropriate Internal Revenue Service
form as required by Applicable Law supporting such Bank's or assignee's
position that no withholding by either Borrower or the Administrative Agent
for U.S. income tax payable by such Bank or assignee in respect of amounts
received by it hereunder is required. For purposes of this Agreement, an
appropriate Internal Revenue Service form shall mean Form 1001 (Ownership
Exemption or Reduced Rate Certificate of the U.S.
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<PAGE>
Department of Treasury), or Form 4224 (Exemption from Withholding of Tax on
Income Effectively Connected with the Conduct of a Trade or Business in the
United States), or any successor or related forms adopted by the relevant
U.S. taxing authorities.
(d) Except as specifically set forth in Section 11.5(b) or (c) hereof,
nothing in this Agreement or the Facility B Notes, expressed or implied, is
intended to or shall confer on any Person other than the respective parties
hereto and thereto and their successors and assignees permitted hereunder and
thereunder any benefit or any legal or equitable right, remedy or other claim
under this Agreement or the Facility B Notes.
(e) In the case of any participation, all amounts payable by the
Borrowers under the Loan Documents shall be calculated and made in the manner
and to the parties hereto as if no such participation had been sold.
(f) The provisions of this Section 11.5 shall not apply to any
purchase of participations among the Banks pursuant to Section 2.11 hereof.
(g) The Administrative Agent, acting, for this purpose only, as agent
of the Borrowers shall maintain, at no extra charge to the Borrowers, a register
(the "Register") at the address to which notices to the Administrative Agent are
to be sent under Section 11.1 hereof on which Register the Administrative Agent
shall enter the name, address and taxpayer identification number (if provided)
of the registered owner of the Facility B Loans evidenced by a Registered Note
or, upon the request of the registered owner, for which a Registered Note has
been requested. A Registered Note and the Facility B Loans evidenced thereby
may be assigned or otherwise transferred in whole or in part only by
registration of such assignment or transfer of such Registered Note and the
Facility B Loans evidenced thereby on the Register. Any assignment or transfer
of all or part of such Facility B Loans and the Registered Note evidencing the
same shall be registered on the Register only upon compliance with the other
provisions of this Section 11.5 and surrender for registration of assignment or
transfer of the Registered Note evidencing such Facility B Loans, duly endorsed
by (or accompanied by a written instrument of assignment or transfer duly
executed by) the Registered Noteholder thereof, and thereupon one or more new
Registered Notes in the same aggregate principal amount shall be issued to the
designated assignee(s) or transferee(s) and, if less than the aggregate
principal amount of such Registered Notes is thereby transferred, the assignor
or transferor. Prior to the due presentment for registration of transfer of any
Registered Note, the Borrowers and the Administrative Agent shall treat the
Person in whose name such Facility B Loans and the Registered Note evidencing
the same is registered as the owner thereof for the purpose of receiving all
payments thereon and for all other purposes, notwithstanding any notice to the
contrary.
(h) The Register shall be available for inspection by the Borrowers
and any Bank at any reasonable time during the Administrative Agent's regular
business hours upon reasonable prior notice.
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<PAGE>
(i) Notwithstanding any other provision in this Agreement, any Bank
that is a fund that invests in bank loans may, without the consent of the
Administrative Agent or the Borrowers, pledge all or any portion of its rights
under, and interest in, this Agreement and the Facility B Notes to any trustee
or to any other representative of holders of obligations owed or securities
issued, by such fund as security for such obligations or securities; provided,
--------
however, that any transfer to any Person upon the enforcement of such pledge or
- -------
security interest may only be made subject to the assignment provisions of this
Section 11.5.
Section 11.6 Accounting Principles. All references in this Agreement to
---------------------
GAAP shall be to such principles as in effect from time to time. All accounting
terms used herein without definition shall be used as defined under GAAP. All
references to the financial statements of the Borrowers and to their Annualized
Operating Cash Flow, Operating Cash Flow, Senior Debt, Total Debt, Fixed
Charges, Pro Forma Debt Service, Interest Expense, and other such terms shall be
deemed to refer to such items of the Borrowers and the Restricted Subsidiaries,
on a fully consolidated basis. The Borrowers shall deliver to the Banks at the
same time as the delivery of any quarterly or annual financial statements
required pursuant to Section 6.1 or 6.2 hereof, as applicable, (a) a description
in reasonable detail of any material variation between the application of GAAP
employed in the preparation of such statements and the application of GAAP
employed in the preparation of the next preceding quarterly or annual financial
statements, as applicable, and (b) reasonable estimates of the differences
between such statements arising as a consequence thereof. If, within thirty
(30) days after the delivery of the quarterly or annual financial statements
referred to in the immediately preceding sentence, the Majority Banks shall
object in writing to the Borrowers' determining compliance hereunder on such
basis, (1) calculations for the purposes of determining compliance hereunder
shall be made on a basis consistent with those used in the preparation of the
latest financial statements as to which such objection shall not have been made,
or (2) if requested by the Borrowers, the Majority Banks will negotiate in good
faith to amend the covenants herein to give effect to the changes in GAAP in a
manner consistent with this Agreement (and so long as the Borrowers comply in
good faith with the provisions of this Section 11.6, no Default or Event of
Default shall occur hereunder solely as a result of such changes in GAAP).
Section 11.7 Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
Section 11.8 Governing Law. This Agreement and the Facility B Notes shall
-------------
be construed in accordance with and governed by the internal laws of the State
of New York applicable to agreements made and to be performed the State of New
York. If any action or proceeding shall be brought by the Administrative Agent
or any Bank hereunder or under any other Loan Document in order to enforce any
right or remedy under this Agreement or under any Facility B Note or any other
Loan Document, each of the Borrowers hereby consents and
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will, and each of the Borrowers will cause each Restricted Subsidiary to, submit
to the jurisdiction of any state or federal court of competent jurisdiction
sitting within the area comprising the Southern District of New York on the date
of this Agreement. Each of the Borrowers, for itself and on behalf of its
Restricted Subsidiaries, hereby agrees that, to the extent permitted by
Applicable Law, service of the summons and complaint and all other process which
may be served in any such suit, action or proceeding may be effected by mailing
by registered mail a copy of such process to the offices of the Borrowers at the
address given in Section 11.1 hereof and that personal service of process shall
not be required. Nothing herein shall be construed to prohibit service of
process by any other method permitted by law, or the bringing of any suit,
action or proceeding in any other jurisdiction. The Borrowers agree that final
judgment in such suit, action or proceeding shall be conclusive and may be
enforced in any other jurisdiction by suit on the judgment or in any other
manner provided by Applicable Law.
Section 11.9 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof in that jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 11.10 Interest.
--------
(a) In no event shall the amount of interest due or payable hereunder
or under the Facility B Notes exceed the maximum rate of interest allowed by
Applicable Law, and in the event any such payment is inadvertently made by the
Borrowers or inadvertently received by the Administrative Agent or any Bank,
then such excess sum shall be credited as a payment of principal, unless the
Borrowers shall notify the Administrative Agent or such Bank, in writing, that
it elects to have such excess sum returned forthwith. It is the express intent
hereof that the Borrowers not pay and the Administrative Agent and the Banks not
receive, directly or indirectly in any manner whatsoever, interest in excess of
that which may legally be paid by the Borrowers under Applicable Law.
(b) Notwithstanding the use by the Banks of the Base Rate and the
LIBOR as reference rates for the determination of interest on the Facility B
Loans, the Banks shall be under no obligation to obtain funds from any
particular source in order to charge interest to the Borrowers at interest rates
related to such reference rates.
Section 11.11 Table of Contents and Headings. The Table of Contents and
------------------------------
the headings of the various subdivisions used in this Agreement are for
convenience only and shall not in any way modify or amend any of the terms or
provisions hereof, nor be used in connection with the interpretation of any
provision hereof.
Section 11.12 Amendment and Waiver. Neither this Agreement nor any Loan
--------------------
Document nor any term hereof or thereof may be amended orally, nor may any
provision
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<PAGE>
hereof or thereof be waived orally but only by an instrument in writing signed
by or at the direction of the Majority Banks and, in the case of an amendment,
by the Borrowers, except that in the event of (a) any increase in the amount of
any Bank's portion of the Facility B Commitment, (b) any delay or extension in
the terms of repayment of the Facility B Loans provided in Section 2.5 or 2.7
hereof, (c) any reduction in principal, interest or fees due hereunder or
postponement of the payment thereof without a corresponding payment of such
principal, interest or fee amount by the Borrowers, (d) any release of any
portion of the Collateral for the Facility B Loans, except under Section 7.4
hereof, (e) any waiver of any Default due to the failure by the Borrowers to pay
any sum due to any of the Banks hereunder, (f) any release of any Guaranty of
all or any portion of the Obligations, except in connection with a merger, sale
or other disposition otherwise permitted hereunder (in which case, such release
shall require no further approval by the Banks), (g) any amendment to the pro
rata treatment of the Banks set forth in Section 2.11 hereof, or (h) any
amendment of this Section 11.12, of the definition of Majority Banks, or of any
Section herein to the extent that such Section requires action by all Banks, any
amendment or waiver or consent may be made only by an instrument in writing
signed by each of the Banks and, in the case of an amendment, by the Borrowers.
Any amendment to any provision hereunder governing the rights, obligations, or
liabilities of the Administrative Agent in its capacity as such, may be made
only by an instrument in writing signed by such affected Person and by each of
the Banks.
Section 11.13 Entire Agreement. Except as otherwise expressly provided
----------------
herein, this Agreement, the Other Loan Documents and the other documents
described or contemplated herein or therein will embody the entire agreement and
understanding among the parties hereto and thereto and supersede all prior
agreements and understandings relating to the subject matter hereof and thereof.
Section 11.14 Other Relationships. No relationship created hereunder or
-------------------
under any other Loan Document shall in any way affect the ability of the
Administrative Agent and each Bank to enter into or maintain business
relationships with either Borrower or any Affiliate beyond the relationships
specifically contemplated by this Agreement and the other Loan Documents.
Section 11.15 Directly or Indirectly. If any provision in this Agreement
----------------------
refers to any action taken or to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such Person, whether or not expressly
specified in such provision.
Section 11.16 Reliance on and Survival of Various Provisions. All
----------------------------------------------
covenants, agreements, statements, representations and warranties made herein or
in any certificate delivered pursuant hereto shall (a) be deemed to have been
relied upon by the Administrative Agent and each of the Banks notwithstanding
any investigation heretofore or hereafter made by them and (b) survive the
execution and delivery of the Facility B Notes and shall continue
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in full force and effect so long as any Facility B Note is outstanding and
unpaid. Any right to indemnification hereunder, including, without limitation,
rights pursuant to Sections 2.10, 2.12, 5.12, 10.3 and 11.2 hereof, shall
survive the termination of this Agreement and the payment and performance of all
Obligations.
Section 11.17 Senior Debt. The Obligations are secured by the Security
-----------
Documents and are intended by the parties hereto to be in parity with the
Interest Hedge Agreements and senior in right of payment to all other
Indebtedness of the Borrowers.
Section 11.18 Obligations. The obligations of the Administrative Agent
-----------
and each of the Banks hereunder are several, not joint.
Section 11.19 Confidentiality. The Banks shall hold all non-public,
---------------
proprietary or confidential information (which has been identified as such by
the Borrowers) obtained pursuant to the requirements of this Agreement in
accordance with their customary procedures for handling confidential information
of this nature and in accordance with safe and sound banking practices;
provided, however, that the Banks may make disclosure of any such information to
- -------- -------
their examiners, Affiliates, any Approved Fund, outside auditors, counsel,
consultants, appraisers and other professional advisors in connection with this
Agreement or as reasonably required by any proposed syndicate member or any
proposed transferee or participant in connection with the contemplated transfer
of any Facility B Note or participation therein or as required or requested by
any governmental authority or representative thereof or in connection with the
enforcement hereof or of any Loan Document or related document or pursuant to
legal process or with respect to any litigation between or among either Borrower
and any of the Banks, so long as the person (other than any examiners) receiving
such information is advised of the provisions of this Section 11.19 and agrees
to be bound thereby. In no event shall any Bank be obligated or required to
return any materials furnished to it by the Borrowers. The foregoing provisions
shall not apply to a Bank with respect to information that (i) is or becomes
generally available to the public (other than through such Bank), (ii) is
already in the possession of such Bank on a nonconfidential basis, or (iii)
comes into the possession of such Bank in a manner not known to such Bank to
involve a breach of a duty of confidentiality owing to the Borrowers.
ARTICLE 12 Waiver of Jury Trial
Section 12.1 Waiver of Jury Trial. EACH OF THE BORROWERS, FOR ITSELF AND
--------------------
ON BEHALF OF THE RESTRICTED SUBSIDIARIES, AND THE ADMINISTRATIVE AGENT AND THE
BANKS, HEREBY AGREE, TO THE EXTENT PERMITTED BY LAW, TO WAIVE AND HEREBY WAIVE
THE RIGHT TO A TRIAL BY JURY IN ANY COURT AND IN ANY ACTION OR PROCEEDING OF ANY
TYPE IN WHICH THE BORROWERS, ANY RESTRICTED SUBSIDIARIES, ANY OF THE BANKS, THE
ADMINISTRATIVE AGENT OR ANY OF THEIR RESPECTIVE
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<PAGE>
SUCCESSORS OR ASSIGNS IS A PARTY, AS TO ALL MATTERS AND THINGS ARISING DIRECTLY
OR INDIRECTLY OUT OF THIS AGREEMENT, ANY OF THE FACILITY B NOTES OR THE OTHER
LOAN DOCUMENTS AND THE RELATIONS AMONG THE PARTIES LISTED IN THIS SECTION 12.1.
EXCEPT AS PROHIBITED BY LAW, EACH PARTY TO THIS AGREEMENT WAIVES ANY RIGHTS IT
MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THIS SECTION, ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN,
OR IN ADDITION TO, ACTUAL DAMAGES. EACH PARTY TO THIS AGREEMENT (A) CERTIFIES
THAT NEITHER ANY REPRESENTATIVE, AGENT OR ATTORNEY OF THE ADMINISTRATIVE AGENT
OR ANY BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE ADMINISTRATIVE
AGENT OR ANY BANK WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION. THE PROVISIONS OF THIS SECTION HAVE
BEEN FULLY DISCLOSED BY AND TO THE PARTIES AND THE PROVISIONS SHALL BE SUBJECT
TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY
OTHER PARTY THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN
ALL INSTANCES.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused it to be executed by their duly authorized officers, all as of the day
and year first above written.
BORROWERS: AMERICAN TOWER SYSTEMS, L.P.
By ATSC GP, INC., its General Partner
By:_____________________________________
Title:_____________________________
AMERICAN TOWER SYSTEMS (DELAWARE), INC.
By:_____________________________________
Title:_____________________________
ADMINISTRATIVE AGENT
AND BANKS: TORONTO DOMINION (TEXAS), INC., as
Administrative Agent for itself and the
Banks and as a Bank
By:_____________________________________
Title:_____________________________
<PAGE>
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank
By:_____________________________________
Title:_____________________________
BANK OF MONTREAL, as a Bank
By:_____________________________________
Title:_____________________________
THE BANK OF NEW YORK, as a Bank
By:_____________________________________
Title:_____________________________
THE BANK OF NOVA SCOTIA, as a Bank
By:_____________________________________
Title:_____________________________
BANKBOSTON, N.A., as a Bank
By:_____________________________________
Title:_____________________________
<PAGE>
BANKERS TRUST COMPANY, as a Bank
By:_____________________________________
Title:_____________________________
BARCLAYS BANK, PLC, as a Bank
By:_____________________________________
Title:_____________________________
THE CHASE MANHATTAN BANK, as a Bank
By:_____________________________________
Title:_____________________________
COBANK, ACB, as a Bank
By:_____________________________________
Title:_____________________________
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH, as a
Bank
By:_____________________________________
Title:_____________________________
CREDIT SUISSE FIRST BOSTON, as a Bank
By:_____________________________________
Title:_____________________________
By:_____________________________________
Title:_____________________________
CRESTAR BANK, as a Bank
By:_____________________________________
Title:_____________________________
<PAGE>
DRESDNER BANK AG, NEW YORK AND GRAND
CAYMAN BRANCHES, as a Bank
By:_____________________________________
Title:_____________________________
By:_____________________________________
Title:_____________________________
FIRST NATIONAL BANK, as a Bank
By:_____________________________________
Title:_____________________________
FLEET NATIONAL BANK, as a Bank
By:_____________________________________
Title:_____________________________
GENERAL ELECTRIC CAPITAL CORPORATION, as
a Bank
By:_____________________________________
Title:_____________________________
<PAGE>
KEY CORPORATE CAPITAL INC., as a Bank
By:_____________________________________
Title:_____________________________
LEHMAN COMMERCIAL PAPER INC., as a Bank
By:_____________________________________
Title:_____________________________
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., NEW YORK BRANCH, as a Bank
By:_____________________________________
Title:_____________________________
MELLON BANK, N.A., as a Bank
By:_____________________________________
Title:_____________________________
<PAGE>
MERCANTILE BANK NATIONAL ASSOCIATION, as
a Bank
By:_____________________________________
Title:_____________________________
MORGAN STANLEY SENIOR FUNDING, INC., as
a Bank
By:_____________________________________
Title:_____________________________
NATIONAL BANK OF CANADA, as a Bank
By:_____________________________________
Title:_____________________________
By:_____________________________________
Title:_____________________________
PNC BANK, NATIONAL ASSOCIATION, as a
Bank
By:_____________________________________
Title:_____________________________
<PAGE>
SOCIETE GENERALE, NEW YORK BRANCH, as a
Bank
By:_____________________________________
Title:_____________________________
STATE STREET BANK AND TRUST COMPANY, as
a Bank
By:_____________________________________
Title:_____________________________
UNION BANK OF CALIFORNIA, N.A., as a
Bank
By:_____________________________________
Title:_____________________________
US TRUST, as a Bank
By:_____________________________________
Title:_____________________________
<PAGE>
EXHIBIT 10.30
ARS-ATS SEPARATION AGREEMENT
----------------------------
Agreement dated as of June 4, 1998 by and among American Radio Systems
Corporation, a Delaware corporation ("American"), American Tower Systems
Corporation, a Delaware corporation ("American Tower") and CBS Corporation
(formerly Westinghouse Electric Corporation), a Pennsylvania corporation
("CBS").
W I T N E S S E T H:
WHEREAS, American, CBS and R Acquisition Corp., a Delaware corporation
("CBS Subsidiary"), are parties to an Amended and Restated Agreement and Plan of
Merger, dated as of December 18, 1997, as amended (the "Merger Agreement"),
pursuant to which CBS Subsidiary will merge (the "Merger") with and into
American and American shall be the surviving corporation; and
WHEREAS, (i) CBS was not willing to enter into the Merger Agreement without
assurances that the aggregate amount to be paid by CBS for the radio business of
American, including without limitation the Cash Consideration, the aggregate
principal amount of debt of American that would remain outstanding after giving
effect to the Tower Separation, the aggregate liquidation preference of all
preferred stock (other than the American Convertible Preferred Stock), and the
tax liability of American with respect to the Tower Separation, would not exceed
$2.6 billion; (ii) American would not have been willing to enter into a Merger
Agreement that would have provided for a direct adjustment in the Cash
Consideration or the escrow of a portion of the Cash Consideration in order to
satisfy that the purchase price to be paid by CBS, as aforesaid, would not
exceed $2.6 billion; and (iii) CBS and American agreed in the Merger Agreement
that American Tower would assume and pay the tax liability of American with
respect to the Tower Separation and pay certain purchase price adjustments in
respect of working capital and other items, and American Tower intended such
assumption and such payments to be on behalf of its stockholders who formerly
owned stock or options to acquire stock of American; and
WHEREAS, the Merger Agreement provides that, prior to the Closing, American
and American Tower shall enter into an agreement and other documentation
approved by CBS (which approval shall not be unreasonably withheld, delayed or
conditioned) to effect the delivery of the Tower Common Stock as part of the
Tower Merger Consideration or the Merger Consideration, as the case may be (the
"Tower Separation") and to implement American Tower's assumption of the tax
liability and other purchase price adjustments of American with respect to the
Tower Separation; and
WHEREAS, the Merger Agreement provides for the entry by CBS, American and
American Tower into an agreement on substantially the terms hereinafter set
forth providing for the Tower Separation; and
WHEREAS, the respective Boards of Directors of American and American Tower
have approved, and CBS has approved, this Agreement;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained and other valuable
consideration, the receipt and adequacy whereof are hereby acknowledged, the
parties hereto hereby, intending to be legally bound, represent, warrant,
covenant and agree as follows:
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ARTICLE 1
DEFINED TERMS
As used herein, unless the context otherwise requires, the terms
defined in Appendix A to the Merger Agreement when used in this Agreement
without definition shall have the respective meanings set forth therein. 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 or Appendix A to the
Merger Agreement shall have such meanings when used in 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.
"American Indemnitees" shall mean American, each Affiliate of
--------------------
American, including any of its direct or indirect Subsidiaries, each of their
directors, officers or employees and each of the heirs, executors, successors
and assigns of any of the foregoing, other than the American Tower Indemnitees.
"American Tax Group"" shall mean American and those of its
------------------
Subsidiaries as are included from time to time in the consolidated Federal
income tax returns of American.
"American Tower Indemnitees" shall mean the Tower Subsidiaries, each
--------------------------
of their Affiliates, each of their directors, officers or employees and each of
the heirs, executors, successors and assigns of any of the foregoing, other than
the American Indemnitees.
"CBS Indemnitees" shall mean CBS, each Affiliate of CBS, including any
---------------
of its direct or indirect Subsidiaries (including, after the Effective Time, the
American Indemnitees), each of their directors, officers or employees and each
of the heirs, executors, successors and assigns of any of the foregoing.
"Indemnifiable Losses" shall mean, subject to Section 3.4, all losses
--------------------
(including, without limitation, losses of benefits), liabilities, damages,
deficiencies, obligations, fines, expenses, claims, demands, actions, suits,
proceedings, judgments or settlements, whether or not resulting from Third Party
Claims (as defined in Section 3.3(a)), including interest and penalties
recovered by a third party with respect thereto and out-of-pocket expenses and
reasonable attorneys' and accountants' fees and expenses incurred in the
investigation or defense of any of the same or in asserting, preserving or
enforcing any of the Indemnitee's rights hereunder, suffered or incurred by an
Indemnitee.
"Indemnitee" shall mean any of the CBS Indemnitees, the American
----------
Indemnitees or the American Tower Indemnitees who or which may seek
indemnification under this Agreement.
ARTICLE 2
TOWER SEPARATION
Subject to the terms and conditions hereof, American, American Tower
and CBS shall cause the Tower Separation to be consummated at the earlier to
occur of the Tower Merger Effective Time and the Effective Time. The date on
which the Tower Separation is so consummated is herein referred to as the
"Separation Closing Date".
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ARTICLE 3
INDEMNIFICATION MATTERS
3.1 American Tower Indemnification. American Tower shall indemnify,
------------------------------
defend and hold the CBS Indemnitees or the American Indemnitees harmless from
and against any Indemnifiable Loss to which the CBS Indemnitees and the American
Indemnitees may be or become subject that relate to or arise from:
(a) the assets, business, operations, debts or liabilities of
American Tower Mergercorp or the Tower Subsidiaries (other than, in the
case of the Tower Subsidiaries, Tax liabilities governed by Article 4)
whether arising prior to, concurrent with or after the Merger, including,
without limitation, the assets (or debts or liabilities associated
therewith) to be transferred to American Tower pursuant to the provisions
of Article 11;
(b) liabilities (i) in connection with the distribution of the shares
of Tower Common Stock as part of the Tower Merger Consideration or the
Merger Consideration, as the case may be, (ii) relating to or arising from
any agreement, arrangement or understanding (other than the Merger
Agreement and the Collateral Documents, except as otherwise expressly set
forth therein) entered into by American, American Tower Mergercorp or any
of the Tower Subsidiaries (x) for the benefit of any of the Tower
Subsidiaries, (y) in contemplation of the Tower Separation, or (z) with
respect to the sale, assignment, transfer or other disposition of shares of
Tower Common Stock, (iii) relating to or arising from any untrue statement
or alleged untrue statements of a material fact contained in the
Information Statement, any Registration Statement or in any document filed
or required to be filed, or any document delivered to any security holder
of American, in connection with the Merger or the Tower Separation (or in
any document containing information relating thereto), or in any document
filed or required to be filed by American, American Tower Mergercorp or any
of the Tower Subsidiaries in connection with the preceding clause (ii) (or
in any document containing information relating thereto), or, in any such
case, any omission or alleged omission to state therein a 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,
except with respect to information provided by or relating solely to
American (excluding American Tower Mergercorp and the Tower Subsidiaries)
which is contained in or expressly consistent with (x) the Filed American
SEC Documents, (y) the American September 10-Q or (z) any information (not
relating to the Merger, the Tower Separation, the Tower Subsidiaries, the
preceding clause (ii), the Merger Agreement, the Collateral Documents or
the obligations thereunder) contained in (I) the Annual Report on Form 10-K
of American for the fiscal year ended December 31, 1997, (II) the
Convertible Registration Statement as of the Effective Time (including the
Prospectus to be filed pursuant to Rule 424 under the Securities Act
containing the Quarterly Report on Form 10-Q for the three months ended
March 31, 1998), and (III) any document furnished by American to American
Tower for inclusion in the Convertible Registration Statement following the
Effective Time (and American hereby agrees to furnish, upon request, to
American Tower any such information required by Applicable Law in
connection with maintaining the effectiveness of the Convertible
Registration Statement for so long as such effectiveness is required
pursuant to Article 5 hereof) (the documents referred to in clauses (x) and
(y) and this clause (z) being collectively referred to as the "American
Included SEC Information"), or (iv) in connection with any action or
omission of any Tower Employee listed on Schedule B hereto for the benefit
of, including without limitation in furtherance of the business of, any of
the Tower Subsidiaries or in connection with or incident to such employee's
duties and responsibilities as a Tower Employee;
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<PAGE>
(c) any economic impact related to or arising from the failure to
obtain any Governmental Authorizations, Private Authorizations or other
third party consents, or to make any Governmental Filings, necessary to
consummate the Tower Separation;
(d) the rental and related expenses for the relevant portion of the
leased premises located at 116 Huntington Avenue, Boston, Massachusetts
referred to in Section 6.3, in the event of the failure to obtain the
landlord's consent to the assignment of the obligations relating to, or
sublease of, such relevant portion of such premises; and
(e) any actual or alleged defect in title to any of the assets listed
in Section 6.17 of the American Disclosure Schedule that were owned in fee
by American (the "Tower Fee Sites") that are attributable to American as a
result of the conveyance of the Tower Fee Sites or the granting of special
warranty deeds by American to American Tower with respect to the Tower Fee
Sites. In addition to, and not in derogation of the foregoing, American
Tower shall be responsible to take all necessary actions (including without
limitation to commencing and/or defending legal actions) and bear all costs
and expenses necessary to clear any defect in title to any Tower Fee Site
for which American is responsible as the result of the conveyance of the
Tower Fee Sites and the granting of such special warranty deeds by American
to American Tower.
At the earlier to occur of the Tower Merger Effective Time and the Effective
Time, American Tower hereby agrees to assume all liabilities (the "Assumed
Liabilities") with respect to which American Tower has agreed to indemnify and
hold harmless American pursuant to the provisions of this Section 3.1, Article 4
and Section 9.1.
3.2 American Indemnification. Following the Effective Time, American
------------------------
shall indemnify, defend and hold the American Tower Indemnitees harmless from
and against any Indemnifiable Loss (other than, in the case of the Tower
Subsidiaries, the Assumed Liabilities) to which the American Tower Indemnitees
may be or become subject that (i) relate to or arise from the assets, business,
operations, debts or liabilities of American or its Subsidiaries (other than the
Tower Subsidiaries) whether arising prior to, concurrent with or after the
Merger, (ii) arise from any action taken by any Tower Employee in the ordinary
course of business during the period, if any, from the Tower Merger Effective
Time to the Effective Time for the purpose of providing management services to
American pursuant to Section 9.1, or (iii) relate to or arise from the American
Included SEC Documents.
3.3 Procedures Relating to Indemnification.
---------------------------------------
(a) In order for an Indemnitee to be entitled to any indemnification
provided for under this Agreement in respect of, arising out of or involving a
claim made by any Person who is not an Indemnitee against such Indemnitee (a
"Third Party Claim"), such Indemnitee must notify the party who may become
obligated to provide indemnification hereunder (the "indemnifying party") in
writing, and in reasonable detail, of the Third Party Claim reasonably promptly,
and in any event within fifteen business days after receipt by such Indemnitee
of written notice of the Third Party Claim; provided, however, that failure to
give such notification shall not affect the indemnification provided hereunder
except to the extent the indemnifying party shall have been actually prejudiced
as a result of such failure; provided further, however, that with respect to any
matter for which American Tower is the indemnifying party, American Tower shall
be deemed to have received notice with respect to all matters by or against
American or any Subsidiary of American that arose prior to, or were otherwise
pending at, the earlier to occur of the Tower Merger Effective Time and the
Effective Time. After any required notification (if applicable), the Indemnitee
shall deliver to the indemnifying party, promptly after the Indemnitee's receipt
thereof, copies of all notices and documents (including court papers) received
by the Indemnitee relating to the Third Party Claim.
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<PAGE>
(b) If a Third Party Claim is made against an Indemnitee, the indemnifying
party will be entitled to participate in the defense thereof and, if it so
chooses, to assume the defense thereof (at the expense of the indemnifying
party) with counsel selected by the indemnifying party and reasonably
satisfactory to the Indemnitee. Should the indemnifying party so elect to
assume the defense of a Third Party Claim, the indemnifying party will not be
liable to the Indemnitee for any legal fees or expenses subsequently incurred by
the Indemnitee in connection with the defense thereof. If the indemnifying
party assumes such defense, the Indemnitee shall have the right to participate
in the defense thereof and to employ counsel, at its own expense, separate from
the counsel employed by the indemnifying party, it being understood that the
indemnifying party shall control such defense; provided, however, that the
Indemnitee may employ separate counsel (the reasonable fees and expenses of
which shall be paid by the indemnifying party) if the named parties in any Third
Party Claim (including any impleaded parties) include both the Indemnitee and
the indemnifying party and the Indemnitee shall have been advised in writing by
its outside counsel that representation of both parties by the same counsel
would be inappropriate under applicable standards of professional conduct due to
differing interests between them. The indemnifying party shall be liable for
the reasonable fees and expenses of counsel employed by the Indemnitee for any
period during which the indemnifying party has not assumed the defense thereof.
Notwithstanding the foregoing, the indemnifying party shall not be entitled
to assume the defense of any Third Party Claim if the Third Party Claim seeks an
order, injunction or other equitable relief or relief for other than money
damages against the Indemnitee which the Indemnitee reasonably determines, after
conferring with its outside counsel, (i) cannot be separated from any related
claim for money damages, and (ii) is, in the reasonable business judgment of the
Indemnitee, material to such Third Party Claim or otherwise material to the
business of the Indemnitee; provided, however, that such right to assume the
defense of any Third Party Claim by the Indemnitee shall not extend to any
portion of the Third Party Claim that seeks an order, injunction or other
equitable relief or relief for other than money damages against the indemnifying
party which the indemnifying party reasonably determines, after conferring with
its outside counsel, is, in the reasonable business judgment of the indemnifying
party, material to such Third Party Claim or otherwise material to the business
of the indemnifying party. If such equitable relief or other relief portion of
the Third Party Claim can be so separated from that for money damages, the
indemnifying party shall be entitled to assume the defense of the portion
relating to money damages. To the extent the indemnifying party is not entitled
to assume the defense, in whole or in part, of any Third Party Claim, (i) the
Indemnitee shall conduct the defense thereof to the extent so entitled, with
counsel selected by the Indemnitee and reasonably satisfactory to the
indemnifying party (which shall be liable for the reasonable fees and expenses
of such counsel), and (ii) the indemnifying party will be entitled to
participate in the defense thereof. The indemnification required by Section 3.1
or 3.2, as the case may be, shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, within fifteen
business days of receipt by the indemnifying party of bills or actual notice
that such Indemnifiable Loss has occurred, as the case may be. If the
indemnifying party chooses to defend or prosecute a Third Party Claim, and to
the extent the indemnifying party is not entitled to assume the defense of a
Third Party Claim, all the parties hereto shall cooperate in the defense or
prosecution thereof, which cooperation shall include (upon the indemnifying
party's request) the provision to the indemnifying party of records and
information which are reasonably relevant to such Third Party Claim, and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. If the
indemnifying party chooses to defend or prosecute any Third Party Claim, the
Indemnitee will agree to any settlement, compromise or discharge of such Third
Party Claim which the indemnifying party may recommend and which by its terms
obligates the indemnifying party to pay the full amount of liability in
connection with such Third Party Claim; provided, however, that, without the
Indemnitee's consent, the indemnifying party shall not consent to entry of any
judgment or enter into any settlement (x) that provides for injunctive or other
nonmonetary relief affecting the Indemnitee or (y) that does not include as an
unconditional term thereof the giving by each claimant or plaintiff to such
Indemnitee of a release from all liability with respect to such claim. If the
indemnifying party shall have assumed the defense of a Third
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<PAGE>
Party Claim, the Indemnitee shall not admit any liability with respect to, or
settle, compromise or discharge, such Third Party Claim without the indemnifying
party's prior written consent (which consent shall not be unreasonably
withheld). To the extent that the Indemnitee is entitled to and elects to defend
or prosecute any Third Party Claim, the Indemnitee shall not consent to entry of
any judgment or enter into any settlement (x) that provides for injunctive or
other nonmonetary relief affecting the indemnifying party or (y) that does not
include as an unconditional term thereof the giving by each claimant or
plaintiff to such indemnifying party of a release from all liability with
respect to such claim.
(c) In order for an Indemnitee to be entitled to any indemnification
provided for under this Agreement in respect of a claim that does not involve a
Third Party Claim, the Indemnitee shall deliver written notice of such claim
with specific reference to this Section 3.3 with reasonable promptness to the
indemnifying party. The failure by any Indemnitee so to notify the indemnifying
party shall not relieve the indemnifying party from any liability which it may
have to such Indemnitee under this Agreement, except to the extent that the
indemnifying party shall have been actually prejudiced by such failure. If the
indemnifying party does not notify the Indemnitee within fifteen business days
following its receipt of such notice that the indemnifying party disputes its
liability with respect to such claim under Section 3.1 or 3.2, as the case may
be, the claim shall be conclusively deemed a liability of the indemnifying party
under Section 3.1 or 3.2, as the case may be, and the indemnifying party shall
pay the amount of such liability to the Indemnitee on demand or, in the case of
any notice in which the amount of the claim (or any portion thereof) is
estimated, on such later date when the amount of such claim (or such portion
thereof) becomes finally determined. If the indemnifying party has timely
disputed its liability with respect to such claim, as provided above, the
indemnifying party and the Indemnitee shall proceed in good faith to negotiate a
resolution of such dispute and, if not resolved through negotiations, such
dispute shall be resolved by litigation in an appropriate court of competent
jurisdiction.
(d) The parties hereto agree that (i) notices and other communications
made or delivered to American Tower shall also be deemed to have been made or
delivered to all other American Tower Indemnitees, and all elections, selections
of counsel, choices, agreements and consents made or delivered by American Tower
shall be deemed to have also been made or delivered by the other applicable
American Tower Indemnitees, and shall be binding thereon and (ii) notices and
other communications made or delivered to CBS shall also be deemed to have been
made or delivered to all other CBS Indemnitees and American Indemnitees, and all
elections, selections of counsel, choices, agreements and consents made or
delivered by CBS shall be deemed to have also been made or delivered by the
other applicable CBS Indemnitees and American Indemnitees, and shall be binding
thereon.
3.4 Certain Limitations.
--------------------
(a) The amount of any Indemnifiable Losses shall be net of any amounts
actually recovered by the Indemnitee from third parties (including, without
limitation, amounts actually recovered under insurance policies) with respect to
such Indemnifiable Losses.
(b) All indemnification payments under this Agreement shall be determined
so as to keep the Indemnitee whole on an after-tax basis, i.e., taking into
----
account the tax consequences to the Indemnitee of making a payment that is
indemnified by another party under this Agreement or of receiving a payment
under this Agreement as indemnification therefor. Any such tax consequences
shall be determined by comparing the actual tax liability of the Indemnitee for
any period taking into account any such payments to the amount that such tax
liability would have been if the Indemnitee had not made or received such
payments. Any payment made by American Tower with respect to indemnification
payments under this Agreement shall be made to CBS in satisfaction of American
Tower's assumption of American's tax liability and American Tower's agreement to
pay certain purchase price adjustment items and American Tower's intention that
such assumption and payment was on behalf of its stockholders who formerly were
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<PAGE>
stockholders or optionees of American, and nothing in this Section 3.4(b) shall
impair, restrict or otherwise qualify or affect in any way the obligations of
the parties hereto set forth in Article 4 relating to the tax reporting for the
Tower Separation. Any disagreement as to the amount of the actual tax liability
of any Indemnitee shall be resolved in accordance with the arbitration procedure
described in Section 4.3(b).
3.5 Exclusivity Regarding Tax Matters. Notwithstanding anything in this
----------------------------------
Agreement to the contrary, Section 3.4(b), this Section 3.5, Article 4, Section
10.1(g), Article 12 and Section 16.3 shall be the exclusive agreement among the
parties with respect to the Tax matters dealt with therein, including
indemnification in respect of Tax matters.
ARTICLE 4
TAX MATTERS
4.1 Tax Sharing Agreement. The tax sharing agreement among the Tower
---------------------
Subsidiaries and American and American's other Subsidiaries shall be terminated
as of the earlier of (a) the effective date of the Merger, and (b) the date (the
"Tower Deconsolidation Date") that the Tower Subsidiaries are no longer eligible
to be included in the consolidated tax returns of American and its other
Subsidiaries under Sections 1501 to 1504 of the Code and will have no further
effect for any taxable year (whether the current year, a future year, or a past
year). Each of American and American Tower hereby acknowledge that the Tower
Deconsolidation Date occurred on January 22, 1998 and that the tax sharing
agreement was terminated on such date.
4.2 Allocation of Tax Liabilities; Deconsolidation
----------------------------------------------
(a) American shall include the income of the Tower Subsidiaries (including
any deferred income triggered into income by Reg. (S)1.1502-13 and Reg.
(S)1.1502-14 and any excess loss accounts taken into income under Reg.
(S)1.1502-19) on American's consolidated federal income Tax returns and
consolidated or combined state and local income Tax returns to the extent such
income is properly includible thereon for all periods through the Tower
Deconsolidation Date, and pay any income Taxes attributable to such income.
American Tower shall reimburse American for any such federal, state and local
income Taxes payable by the American Tax Group attributable to such income, as
determined on a separate company basis; provided, however, that American Tower
shall have no reimbursement obligation if American has no income Tax liability
on a consolidated basis as a result of a net operating loss or to the extent
that the income of the Tower Subsidiaries is offset by a net operating loss
under the principles of Section 4.2(d). The Tower Subsidiaries will furnish Tax
information to American for inclusion in American's federal consolidated income
Tax return for the period through the Tower Deconsolidation Date in accordance
with American Tower's past custom and practice. The income of the Tower
Subsidiaries will be apportioned to the period up to and including the Tower
Deconsolidation Date and the period after the Tower Deconsolidation Date by
closing the books of the Tower Subsidiaries as of the end of such date.
(b) American Tower shall indemnify the American Tax Group and CBS for all
Taxes imposed by any Taxing Authority on any member of the American Tax Group or
on CBS (or on any member of CBS's consolidated tax group) as a result of or in
connection with (i) the sale or transfer of assets to a Tower Subsidiary
pursuant to Section 11.2 (or between members of the American Tax Group prior to
the final transfer to a Tower Subsidiary or between Tower Subsidiaries), (ii)
the Merger, (iii) the Tower Merger, (iv) the Tower Separation, (v) any other
disposition or issuance of American's stock interest in American Tower or
issuance of stock in American Tower contemplated or permitted hereby or by the
Merger Agreement or by any Collateral Document, (vi) the merger of American
Tower with any other Person, (vii) the transactions occurring on or about
January 20-21, 1998, involving American Tower Systems, L.P. or interests
therein,
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as the case may be, or otherwise in connection with the Tower Deconsolidation or
related transactions, or (viii) the exercise (or cashout) of stock options by
employees of American Tax Group at any time on or prior to the Effective Time,
including without limitation any Taxes (1) on any gain to any member of the
American Tax Group arising under Section 311 of the Code, (2) on any deferred
gain to any member of the American Tax Group triggered as a result of or upon
any such event, (3) on any gain attributable to any excess loss account
triggered upon any such event, (4) arising as a result of the election or other
transactions contemplated by paragraph (j) of this Section 4.2, (5) on any
income or gain arising as a result of transactions described in Section 3.4(c)
or the second sentence of Section 6.8(a) of the Merger Agreement, (6) as a
result of the timing of the payment of Taxes (including, without limitation, any
estimated Taxes) hereunder, (7) on any gain on the conversion of American
Convertible Preferred Stock into Tower Common Stock, and (8) in the nature of
any transfer Taxes arising from any such event; provided, however, that such
indemnity shall only apply to the extent that the additional liability for such
Taxes payable by the American Tax Group as a consequence of such events (on a
"but for" basis), after giving effect to any net operating loss in accordance
with the principles of Section 4.2(d), exceeds $20,000,000. Any payment made by
American Tower with respect to such indemnification or pursuant to the
provisions of Section 4.2(c) shall be made to CBS in satisfaction of American
Tower's assumption of American's tax liability with respect to the Tower
Separation and American Tower's intention that such assumption was on behalf of
its stockholders who formerly were stockholders or optionees of American.
(c) If as a result of any payment by American Tower to any member of the
American Tax Group or to CBS pursuant to this Section 4.2 (including this
paragraph (c)), CBS (or any member of its consolidated group for Federal income
tax purposes) or any member of the American Tax Group becomes liable in any
taxable year to pay any Taxes in excess of the Taxes they would have owed in the
absence of any such payment by American Tower, American Tower will indemnify
such Person for such Tax liability and make such Person whole on an after-tax
basis for such Tax liability.
(d) For the purposes of Sections 4.2(a) and 4.2(b), net operating losses
of the American Tax Group shall be reduced and deemed absorbed in the following
order for each taxable year of the American Tax Group: first, by all income
unrelated to the transactions contemplated by this Agreement of members of the
American Tax Group other than the Tower Subsidiaries for the entire applicable
taxable year of the American Tax Group; second, by income of the Tower
Subsidiaries described in Section 4.2(a); and third, by income of the American
Tax Group described in Section 4.2(b). Neither the American Tax Group nor CBS
(or any member of CBS's consolidated tax group for Federal income tax purposes)
shall have any claim under either Section 4.2(a) or (b) for additional Tax
liability arising in subsequent taxable years solely as a result of the
absorption of net operating losses of the American Tax Group in this manner.
The parties agree that, anything in this Agreement, including without limitation
Section 10.1(b), to the contrary notwithstanding, for purposes of Sections
4.2(a), 4.2(b) and 4.2(f) and this Section 4.2(d), (i) net operating losses of
the American Tax Group shall include any current deductions and losses of the
American Tax Group included on the Pre-Closing Tax Returns of the American Tax
Group, but excepting the current deductions and losses of the Tower Subsidiaries
(which deductions and losses of the Tower Subsidiaries shall be first applied
against the income of the Tower Subsidiaries under Section 4.2(a)), and (ii) the
current deductions and losses of the American Tax Group included on the Pre-
Closing Tax Returns of the American Tax Group shall include without limitation
the deductions attributable to the exercise or cancellation of options from the
date of the Original Merger Agreement through the time of completion of the
transactions contemplated by the Merger Agreement (including those options
canceled pursuant to the provisions of Section 6.8(a) of the Merger Agreement
immediately prior to the Effective Time) and the deductions attributable to any
disqualifying disposition as a result of the Merger of stock received pursuant
to the exercise of incentive stock options from the date of the Original Merger
Agreement through the time of completion of the transactions contemplated by the
Merger Agreement except, however, that in either case such deductions shall not
include deductions with respect to options that have been exercised or canceled
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and the payment for which (including disqualifying dispositions) has been
deferred pursuant to Section 6.8(d) of the Merger Agreement or otherwise.
(e) American shall control any audit or contest relating to Taxes
attributable to the American Tax Group. To the extent such audit or contest
relates to Taxes that American Tower is obligated to reimburse or indemnify
American or CBS under this Agreement, American and CBS shall (x) regularly
consult with American Tower in connection with such audit or contest; (y)
provide American Tower with periodic reports on the status of such audit or
contest; and (z) not enter into a settlement agreement relating to such audit or
contest that materially prejudices American Tower without American Tower's prior
written consent. Notwithstanding the foregoing, American and CBS shall, if so
requested by American Tower, pursue in their own name, but for the benefit of
and at the cost and expense of American Tower, any refund claims specified by
American Tower with respect to (i) the issue of whether indemnity payments and
other purchase price adjustments made by American Tower under this Agreement
give rise to a downward adjustment to the tax basis of American's Tower Common
Stock or otherwise require a "gross up" under the principles of Sections 3.4(b),
4.2(c), or 4.2(f), or (ii) the issue of the value of American's Tower Common
Stock for purposes of computing the tax to American on the distribution of its
Tower Common Stock. Any refunds in connection with the foregoing, including
interest refunded thereon but net of any Taxes imposed on American or CBS on
such refunds or such refunded interest, shall belong to American Tower and shall
be promptly paid over to American Tower by American or CBS when received.
Anything to the contrary contained herein notwithstanding, American Tower shall
have the sole right to control any such refund claims through the date of the
final administrative or judicial determination of such claims. American and CBS
agree to provide all such cooperation to American Tower as it shall reasonably
request in pursuing such refunds, including the execution and delivery of such
claims, pleadings, powers of attorney, extensions and other documents as are
reasonable and customarily associated with refund claims. In the event that an
audit or contest shall involve the issue of the value of American Tower or the
value of American's interest in the Tower Common Stock owned by it for purposes
of computing the tax to American on the distribution of such Tower Common Stock,
American and CBS shall permit American Tower, at its own cost and expense, to
place before the Internal Revenue Service or other administrative or judicial
body its position on such issue, and shall permit American Tower to participate
in all discussions regarding such issue and to submit such protests, briefs and
arguments as American Tower shall deem necessary or appropriate in connection
therewith. Without limiting the generality of the foregoing, American Tower may
at its election pay such portion of any asserted deficiency as shall relate to
such valuation issue, and shall thereupon have the rights specified above with
regard to pursuing a refund in respect of the valuation issue.
(f) If pursuant to any Tax audit or contest there is an adjustment to any
Taxes that were paid or are or were reimbursable or indemnifiable by American
Tower to any member of the American Tax Group or CBS under this Agreement,
including Sections 4.2(a), 4.2(b), 4.2(c) and 4.2(k), then (i) any additional
Taxes imposed on the American Tax Group as a result of such adjustment shall be
indemnified by American Tower, except to the extent that the American Tax Group
or CBS (or any member of its consolidated group for Federal income tax purposes)
receives a tax benefit as a result of any adjustment relating to the matters
referred in clause (ii) of the last sentence of Section 4.2(d); and (ii) any
refund of Taxes paid to the American Tax Group or CBS as a result of such
adjustment of amounts previously indemnified by American Tower (not exceeding
amounts previously paid or reimbursed by American Tower with regard to such
Taxes), plus refunded interest thereon but net of any Taxes imposed on American
or CBS on such refunds or such refunded interest, shall be promptly paid over to
American Tower.
(g) American Tower shall not have the right to any refund, credit (or
other reduction) of Taxes realized by the American Tax Group resulting from a
carry back of a post-Tower Deconsolidation Date Tax attribute of any of the
Tower Subsidiaries into a Tax Return filed by the American Tax Group.
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(h) American shall not elect to retain any net operating loss carryovers
or capital loss carryovers of the Tower Subsidiaries.
(i) The indemnities and agreements of the Tower Subsidiaries and the
agreements of American described in this Section 4.2 shall apply to all
applicable Taxes whenever they shall arise.
(j) At the request of any Tower Subsidiary, American agrees that it shall,
and shall cause its Subsidiaries or other appropriate Affiliates to, make and/or
cooperate with the Tower Subsidiaries (x) in making an election under Section
336(e) of the Code with respect to the Tower Separation, or (y) in effecting
intercompany sales or exchanges of assets designed to achieve a comparable
effect whereby deferred intercompany gains are recognized immediately prior to
the Tower Deconsolidation.
(k) American, CBS and American Tower agree that the Pre-Closing Tax
Returns shall be prepared on the basis that, in connection with gain that is
recognized by American in connection with the distribution of its Tower Common
Stock or, if applicable, recognized or taken into account by American on the
Tower Deconsolidation Date:
(i) The amount realized in connection with the distribution of
Tower Common Stock pursuant to the Tower Separation shall be based on the
"fair market value" of such stock. If so requested by American Tower, the
fair market value of such Tower Common Stock shall be determined by an
appraisal prepared at American Tower's expense by the firm of Houlihan
Lokey, or by another firm selected by American Tower subject to the
approval of CBS which approval shall not be unreasonably withheld, delayed
or conditioned. If such an appraisal is completed and American Tower
elects, in its sole discretion, to use such appraisal for tax reporting
purposes, then, for purposes of the Pre-Closing Tax Returns, American Tower
may elect to use any fair market value of the Tower Common Stock equal to
or greater than such appraised fair market value; provided, however, that
(x) CBS may in its sole discretion refuse to permit the filing of Pre-
Closing Tax Returns that use any fair market value less than 80% of the
Market Value, and (y) if the fair market value used is less than 85% of the
Market Value, American Tower shall secure its indemnity obligations
hereunder, two business days prior to the date on which such Pre-Closing
Tax Returns are required to be filed, by letter or letters of credit
reasonably satisfactory to CBS or in some other manner satisfactory to CBS,
in its sole discretion, in an amount equal to the amount by which the
reported tax liability of the American Tax Group would been increased if
the reported value of the Tower Common Stock had been 85% of the Market
Value. Such security shall continue until the earlier of (x) the expiration
of the applicable statutes of limitation under Applicable Law, or (y) final
resolution of the valuation question (by agreement with the appropriate
Taxing Authority or judicial proceedings that have become final). If the
appraisal is not completed, or is not completed prior to the date on which
any Pre-Closing Tax Return (including any Pre-Closing Estimated Tax Return)
is required to be filed, or if the appraisal is completed but American
Tower, in its sole discretion, determines not to use it, the amount
realized shall be based on the "fair market value" of the Tower Common
Stock determined by the written agreement of CBS and American Tower. The
term "Market Value" means the "Market Price of American Common Stock"
reduced by $44.00. The term "Market Price of American Common Stock" means
the closing price per share of American Class A Common Stock for the day
preceding the date on which the Effective Time shall occur, as reported on
the NYSE Composite Transactions List (as reported by the Wall Street
Journal or, if not reported thereby, by another authoritative source
mutually selected by CBS and American Tower). Notwithstanding the
foregoing, the amount realized in connection with the transactions
occurring on or about January 20-21, 1998 involving American Tower Systems,
L.P. or interests therein, or otherwise in connection with the Tower
Deconsolidation or any related transactions, shall be based on the Market
Value (as defined above, except that (A) the
Market Value shall be determined on January 21, 1998 and (B) in determining
such amount there shall be substituted for $44.00 an
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amount equal to (I) $44.00 minus (II) an amount reasonably agreed to by CBS
and American Tower (not to exceed $1.50) representing the time value of
money and the factors relating to the consummation of the Merger for
purposes of all Pre-Closing Tax Returns.
(ii) The amount of any payments made by (A) American Tower to any CBS
Indemnitee pursuant to this Agreement, including, without limitation,
Article 3, Article 4 and Article 10, shall be reported for Tax purposes as
a nontaxable dividend reducing American's tax basis in the Tower Common
Stock prior to the date of the Tower Separation, and (B) the amount of any
payments made by any CBS Indemnitee to American Tower pursuant to this
Agreement shall be treated as a capital contribution increasing American's
tax basis in its Tower Common Stock prior to the date of the Tower
Separation.
(iii) For state tax reporting purposes, such gain shall be reported
in a manner which is generally consistent with the analysis previously
prepared by Deloitte & Touche and reviewed by CBS, subject to the
qualification that other positions may be taken in connection with such
state tax reporting that, in the reasonable judgment of CBS, meet at least
the "some realistic possibility of success if litigated" standard of
correctness, provided that the applicable returns contain disclosure that
CBS reasonably determines is sufficient to avoid risk of penalties.
Notwithstanding the foregoing, solely for purposes of computing the payment
to be made to CBS as prescribed in Section 4.4 and used to fund payments to
be actually made with the Pre-Closing Estimated Tax Returns, the gain
recognized on the Tower Deconsolidation Date shall be treated as subject to
tax at a blended state and federal tax rate of 36.99% and the gain
recognized by American in connection with the distribution of its Tower
Common Stock shall be treated as subject to tax at a blended state and
federal tax rate of 37.42% (which in each case is consistent with the
analysis referred to above).
(iv) Notwithstanding the matters as to which reporting positions are
prescribed by this Section 4.2(k), American Tower shall have the rights set
forth in Section 4.2(e) relating to the filing of one or more refund claims
with respect to such matters.
(l) American, CBS and American Tower agree that in computing the amount of
taxable gain to American that is recognized after the Merger by American in
connection with the distribution of Tower Common Stock to holders of American
Convertible Preferred Stock, the "fair market value" of the Tower Common Stock
shall be determined entirely on the basis of the public trading price of Tower
Class A Common Stock at the time of any such distribution.
4.3 Tax Returns.
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(a) CBS shall prepare (or cause to be prepared) and file (or cause to be
filed) all Tax Returns of the American Tax Group and members thereof for taxable
periods beginning before the Merger that are not yet due (taking into account
extensions) on the date of the Merger, including the separate or combined
returns that include only the Tower Subsidiaries for taxable periods ending on
or before the Deconsolidation Date that are not yet due (taking into account
extensions) on the date of the Merger (the "Pre-Closing Tax Returns"). In the
absence of a controlling change in law, and except as otherwise set forth in
this Agreement, each such Tax Return shall be prepared on a basis that is
consistent with the elections, accounting methods, conventions, practices and
principles of taxation used on the Tax Returns for the most recent applicable
taxable periods, and such Tax Returns shall be prepared consistent with Section
4.2(k). CBS and American Tower shall consult each other on an ongoing basis
during the preparation of all such Tax Returns concerning any positions to be
taken therein (except to the extent that such position or positions are
expressly agreed to herein). Notwithstanding the foregoing, and subject to
Section 4.2(k), CBS shall not be required to file any Pre-Closing Tax Return
that takes any position to the extent CBS determines, in good faith after
consultation with its tax accountants and attorneys, that there is not
"substantial authority" for such position,
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unless (i) CBS so determines that there is a "reasonable basis" for such
position, (ii) disclosure that CBS, in its reasonable judgment after
consultation with American Tower, determines meets the requirements of Section
6662 of the Code is made of such position on such return, and (iii) the amount
of Tax liability (determined at the time) at stake for any such position on all
such Tax Returns does not exceed $1.0 million and the aggregate Tax liability
(so determined) at stake for all such positions on all such returns does not
exceed $5.0 million, unless American Tower has secured its indemnity obligation
to CBS in excess of such amounts by letter or letters of credit reasonably
satisfactory to CBS or some other manner reasonably satisfactory to CBS, in its
sole discretion. Such security shall continue until the earlier of (x) the
expiration of the applicable statutes of limitation under the Applicable Law, or
(y) final resolution of the issue in question (by agreement with the appropriate
Taxing Authority or judicial proceedings that have become final).
(b) American Tower shall cooperate with CBS in connection with the
preparation of the Pre-Closing Tax Returns and shall be liable for any damages
actually incurred by CBS because of American Tower's failure to fully and
reasonably promptly comply (or to cause its tax and accounting personnel to
fully and reasonably promptly comply) with any reasonable request by CBS for
assistance in such preparation to the extent American Tower or such personnel
are in possession of or provided reasonable access to the requisite information.
At least 60 calendar days prior to the date on which any Pre-Closing Tax Return
is required to be filed (taking into account extensions), CBS shall deliver such
Tax Return (or cause such Tax Return to be delivered) to American Tower for its
review. Within 30 calendar days of receipt of such Tax Return by American Tower
for review, American Tower shall notify (in writing) CBS of any changes to such
Tax Return (including disclosures proposed to be included therein) based on a
determination by American Tower that there is a "reasonable basis" or
"substantial authority" for a position not taken in such Tax Return. If CBS
disputes any such changes, it must notify (in writing) American Tower of any
such disputed changes within five calendar days. American Tower shall have the
right to cause the reasonableness of the determination by CBS to be submitted,
within five calendar days of the receipt of such notification, for final
resolution to an arbitrator jointly selected by CBS and American Tower, which
arbitration shall be completed within 15 calendar days of submission. If CBS
and American Tower are unable to agree on an arbitrator within the aforesaid
five calendar day period, each party shall identify an arbitrator by the end of
such period, and the arbitrators so identified shall jointly select the ultimate
arbitrator. The arbitrator shall be a law or accounting firm nationally
recognized in tax matters, and the costs of the arbitration shall be shared
equally by the parties. If the Closing Date occurs on or between (i) the 1st
and 15th calendar day of any month, Pre-Closing Tax Returns for estimated Taxes
of the American Tax Group for the taxable periods ending on or before the
Closing Date ("Pre-Closing Estimated Tax Returns") shall be filed on the later
of (x) the 15th calendar day of such month (or, if such day is not a business
day, the next business day) and (y) ten business days immediately following the
Closing Date, and (ii) the 16th and final calendar day of any month, such Pre-
Closing Estimated Tax Returns shall be filed on the 10th business day
immediately following the Closing Date; provided, however, that notwithstanding
the foregoing, the parties agree that, in the sole discretion of American Tower,
by written notice provided by American Tower to CBS at least three business days
before the applicable date described above, the Pre-Closing Estimated Tax
Returns may be filed at a later time or times, but in no event subsequent to
June 30, 1998, in which event American Tower shall be responsible for all
interest and penalties payable as a consequence of such late filing. Any such
Pre-Closing Estimated Tax Return shall report (and include payment for) the
entire estimated tax liability of the American Tax Group for taxable years that
end on or before the Closing Date to the extent not paid with a prior estimated
Tax Return.
(c) American Tower shall also cooperate with CBS, to the extent reasonably
requested, in the preparation of Tax Returns of the American Tax Group and
members thereof for taxable periods beginning on or after the Merger and ending
on or before December 31, 1998.
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(d) American Tower shall cooperate with CBS in the conduct of any audit or
other proceeding relating to Taxes of the American Tax Group, including without
limitation (i) making the books and records of American Tower available at such
times and places as CBS may reasonably request, (ii) making employees available
on a mutually convenient basis to provide such assistance as might reasonably be
required, and (iii) providing such information then within its or any of its
Subsidiaries' possession as might reasonably be required in connection with the
preparation of the Pre-Closing Tax Returns and any such audit or proceeding,
including, without limitation, records, returns, schedules, documents, work
papers or other relevant materials.
(e) CBS and American shall cooperate with American Tower in the conduct of
any audit or other proceeding relating to Taxes of the American Tax Group,
including without limitation (i) making the books and records of American
available at such times and places as American Tower may reasonably request,
(ii) making employees of American and CBS available on a mutually convenient
basis to provide such assistance as might reasonably be required, and (iii)
providing such information then within its or any of its Subsidiaries'
possession as might reasonably be required in connection with the preparation of
the Pre-Closing Tax Returns and any such audit or proceeding, including, without
limitation, records, returns, schedules, documents, work papers or other
relevant materials.
(f) If American Tower so requests, American shall request an extension of
time to file any Tax Return with respect to which American Tower bears
responsibility for all or any portion of the Tax liability.
(g) For purposes of this Article 4, "Tax Returns" means all returns,
reports, declarations, information, estimates, schedules, filings or documents
(including any related or supporting information) filed or required by any
Taxing Authority to be filed with respect to Taxes, including, without
limitation, all information returns, claims for refund, amended returns,
declaration of estimated Taxes, and requests for extensions of time to file any
item described in this paragraph.
4.4 Payment.
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(a) Payment of indemnification for Taxes under this Article 4 shall be
made in immediately available funds as follows: (i) in the case of each Pre-
Closing Estimated Tax Return (x) at the Effective Time, American Tower shall pay
CBS an amount equal to the Taxes then estimated to be due on such Tax Return, on
the basis that the amount realized in connection with the distribution of Tower
Common Stock pursuant to the Tower Separation is not less than 85% of the Market
Value and (y) at least two business days prior to the filing of such Pre-Closing
Estimated Tax Return, CBS shall pay American Tower or American Tower shall pay
CBS the amount necessary to reflect the difference, if any, between the Taxes to
be shown as payable on such Pre-Closing Estimated Tax Return and the amount
actually paid pursuant to clause (x) hereof, (ii) in the case of each other Tax
Return other than Pre-Closing Estimated Tax Returns, at least two business days
prior to the filing of such Tax Return, American Tower shall pay CBS the amount
necessary to reflect the excess, if any, of the Taxes shown as payable on such
Tax Return over the Taxes shown as payable on the Pre-Closing Estimated Tax
Return(s) to which such Tax Return relates (or, if the Taxes shown as payable on
the Pre-Closing Estimated Tax Return(s) to which such Tax Return relates
exceeded the Taxes shown as payable on such Tax Return, the provisions of
Section 4.4(b) shall apply to such excess), and (iii) in the case of
indemnification for Taxes under Section 4.2(f), payments shall be made at least
two business days prior to the date the payment of such Taxes is due to be made
to the Taxing Authority pursuant to Applicable Law. In the event payment is made
by American Tower at or prior to the Effective Time, CBS shall be entitled to
use such funds prior to June 15, 1998 (or such later date not later than June
30, 1998 as American Tower has, in its sole discretion, directed that the Pre-
Closing Estimated Tax Returns be filed) and the amount owed with respect to the
Final Adjustment Amount (including interest thereon) shall be reduced by an
amount equal to (i) the amount of the payment from American Tower to CBS
pursuant to the provisions of clause (i)(x) of the first sentence of this
Section 4.4(a) multiplied by (ii) the interest rate paid by CBS on its senior
bank credit facility for the period from the day following the Effective Time to
the date which is two business days prior to the filing of the Pre-Closing
Estimated Tax Return.
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(b) If a final (as opposed to estimated) Tax return reports a tax
liability lower than the amounts paid with the related Pre-Closing Estimated Tax
Returns, CBS may elect to treat such excess as either a credit or a refund. If
CBS elects to treat such amount as a credit, it shall pay American Tower such
amount, in immediately available funds, on the date such final Tax return is
filed. If CBS elects to have such amount refunded, it shall pay American Tower
such amount, in immediately available funds, immediately upon receipt of such
refund.
ARTICLE 5
REGISTRATION AND OTHER GOVERNMENTAL MATTERS
5.1 Securities Laws Registration.
----------------------------
(a) American Tower shall, to the extent that it has not already done so,
prepare and file with the Commission as soon as is reasonably practicable after
the date hereof (i) a registration statement on Form S-4 (the "Merger
Registration Statement"), (ii) a registration statement on Form S-8 (the "Option
Registration Statement") and (iii) a registration statement on Form S-1 (or any
other applicable form) (the "Convertible Registration Statement, and
collectively with the Merger Registration Statement and the Option Registration
Statement, the "Registration Statements"), in each case complying with
applicable rules and regulations of the Commission. The Merger Registration
Statement shall cover the registration under the Securities Act of the shares of
Tower Common Stock to be delivered as part of the Tower Stock Consideration or
the Tower Merger Stock Consideration to the holders of American Common Stock at
the Effective Time or the Tower Merger Effective Time, as the case may be. The
Option Registration Statement shall cover the registration under the
Securities Act of the shares of Tower Common Stock, among others, which may be
issued upon the exercise of options to purchase Tower Common Stock issued upon
the exchange of American Options pursuant to the provisions of Section 6.8(b) of
the Merger Agreement. The Convertible Registration Statement shall cover the
registration under the Securities Act of shares of Tower Common Stock to be
delivered by American upon conversion of American Convertible Preferred Stock
following the earlier to occur of the Tower Merger Effective Time and the
Effective Time.
(b) American Tower shall promptly furnish to American and CBS all
information, and take such other actions, as may reasonably be requested by
American in connection with any action taken by American to comply with the
provisions of Section 6.6 of the Merger Agreement. American Tower shall correct
promptly any information provided by it to be used specifically in the
Information Statement or any Registration Statement that shall have become false
or misleading in any material respect and shall take all steps necessary to file
with the Commission and have cleared by the Commission any amendment or
supplement to any Registration Statements so as to correct such Information
Statement or such Registration Statement. Without limiting the generality of
the foregoing, American Tower shall notify CBS promptly of any stop order or
proceeding by the Commission seeking a stop order relating to any Registration
Statement, the receipt of the comments of the Commission and of any request by
the Commission for amendments or supplements to any Registration Statement, or
for additional information, and shall supply CBS with copies of all
correspondence between it or its representatives, on the one hand, and the
Commission or members of its staff, on the other hand, with respect to any
Registration Statement. Whenever any event occurs which should be described in
an amendment or a supplement to the Information Statement or any Registration
Statement, American Tower shall, upon learning of such event, promptly prepare,
file and clear with the Commission such amendment or supplement; provided,
however, that, prior to such mailing, (i) American Tower shall consult with CBS
with respect to such amendment or supplement, (ii) shall afford CBS reasonable
opportunity to comment thereon, and (iii) each such amendment or supplement
shall be reasonably satisfactory to CBS.
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(c) American Tower represents and warrants to American that each of the
Registration Statements or any other document filed by American Tower with the
Commission or any other Authority pursuant to the provisions of this Section 5.1
will not (except to the extent revised or superseded by amendments or
supplements contemplated hereby), at the time each such Registration Statement
is filed with the Commission, at the time such Registration Statement is amended
or supplemented or at the time each such Registration Statement becomes
effective under the Securities Act, contain any untrue statement of a material
fact or 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; provided, however, that no representation or warranty is made by
American Tower with respect to statements made or incorporated by reference
therein based on information (i) supplied by CBS for inclusion or incorporation
by reference in any Registration Statement or any such other document; or (ii)
relating solely to American (excluding American Tower Mergercorp and the Tower
Subsidiaries) which is contained in or expressly consistent with the American
Included SEC Information. American Tower further represents and warrants to
American that all information provided by or relating to American Tower (or any
of its Subsidiaries) set forth in the Information Statement will not (except to
the extent revised or superseded by amendments or supplements contemplated
hereby), at the time such Information Statement is first mailed to the holders
of American Common Stock, contain any untrue statement of a material fact or
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.
(d) American represents and warrants to American Tower that all
information supplied by or relating to American (or any of its Subsidiaries
other than American Tower Mergercorp or the Tower Subsidiaries) which is
contained in or expressly consistent with the American Included SEC Information
and is set forth in the Information Statement, each Registration Statement or
any other document filed by American Tower or American with the Commission or
any other Authority pursuant to the provisions of this Section 5.1 will not
(except to the extent revised or superseded by amendments or supplements
contemplated by the preceding paragraph (c)), at the time such Information
Statement is first mailed to the holders of American Common Stock and at the
time each such Registration Statement is filed with the Commission, at the time
such Registration Statement is amended or supplemented or at the time each such
Registration Statement becomes effective under the Securities Act, contain any
untrue statement of a material fact or 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.
(e) American Tower covenants and agrees to use its reasonable business
efforts (i) to cause the Option Registration Statement and the Convertible
Registration Statement each to be declared effective prior to the earlier to
occur of the Tower Merger Effective Time and the Effective Time under the
Securities Act by the Commission, and (ii) to maintain, on customary terms, the
Convertible Registration Statement continuously effective under the Securities
Act until the earlier to occur of (x) the delivery by American Tower to American
of an opinion of legal counsel reasonably satisfactory to American and CBS that
such Registration Statement is no longer required to permit delivery by American
of shares of Tower Common Stock upon conversion of the American Convertible
Preferred Stock in accordance with the Securities Act and (y) the delivery by
American to American Tower of written notification that all of the outstanding
shares of American Convertible Preferred Stock have been converted, and the
shares of Tower Common Stock relating to such conversion have been delivered to
the holders thereof, in accordance with the Certificate of Designation relating
to the American Cumulative Preferred Stock; it being expressly understood that
neither American, CBS nor any of their respective Subsidiaries shall be under
any obligation to notify American Tower of any conversion by any holder of any
shares of American Convertible Preferred Stock following the earlier to occur of
the Tower Merger Effective Time and the Effective Time until such time as all of
the outstanding shares of American Convertible Preferred Stock have been so
converted and delivered in
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accordance with such Certificate of Designation, unless American Tower has
specifically requested, from time to time, information with respect to the
status of such conversions.
5.2 Governmental and Private Authorizations; Consents. American shall
-------------------------------------------------
obtain all Governmental Authorizations, Private Authorizations or other third
party consents (other than the consent of the banks under its Credit Agreements,
dated as of January 24, 1997, with The Bank of New York, as Collateral Agent and
Administrative Agent, and the other agents named therein and lenders party
thereto to the effectuation of the Tower Separation pursuant to the Merger), and
make any necessary Governmental Filings, necessary to consummate the Tower
Separation, except where the failure to obtain such consents, in the aggregate,
would not (a) be reasonably likely to have any adverse effect on American, (b)
materially impair the ability of American to perform its obligations under this
Agreement or the Merger Agreement, or (c) materially delay or prevent the
consummation of the Merger. American shall effect the Tower Separation in
compliance with its Restated Certificate of Incorporation and by-laws and in
material compliance with all Applicable Laws.
ARTICLE 6
COVENANTS OF AMERICAN AND AMERICAN TOWER
6.1 Acquisitions, Mergers and Capital Contributions. At the request of
-----------------------------------------------
American Tower and subject to the requirements and restrictions imposed on
American by any of its financing documents (as from time to time amended), and
the terms of the Merger Agreement, American shall, from time to time after the
date hereof and prior to the earlier to occur of the Tower Merger Effective Time
and the Effective Time, permit American Tower to (a) acquire (whether by merger,
stock or asset acquisition or otherwise) additional businesses engaged in the
business in which American Tower is engaged, (b) construct additional
communication towers, or (c) make other capital improvements on assets owned or
leased by American Tower or its Subsidiaries, and in each such case make
additional capital contributions in American Tower, or make loans to American
Tower, of the funds.
6.2 Contribution and Issuance of Tower Capital Stock.
------------------------------------------------
(a) American will contribute (without the payment of any amount or the
issuance of any securities by American Tower) to the capital of American Tower
(i) immediately prior to the earlier to occur of the Tower Merger Effective Time
and the Effective Time, as the case may be, a number of shares of Tower Common
Stock equal to the excess, if any, of (A) the number of shares of Tower Common
Stock owned by American immediately prior to the earlier to occur of the Tower
Merger Effective Time and the Effective Time, as the case may be, over (B) the
number of shares of Tower Common Stock required to be delivered (x) to the
holders of shares of American Common Stock, (y) to holders of American Options
pursuant to the provisions of Section 6.8(a) of the Merger Agreement, after
giving effect to all elections evidenced by definitive agreements delivered to
American immediately prior to the earlier to occur of the Tower Merger Effective
Time and the Effective Time by Tower Employees to convert their American Options
into options to acquire Tower Common Stock pursuant to the provisions of Section
6.8(b) of the Merger Agreement, and (z) upon conversion of American Convertible
Preferred Stock, and (ii) from time to time after the Effective Time, such
shares of Tower Common Stock owned by American that the holders of the
Dissenting Shares would have been entitled to receive had they not exercised
their appraisal rights.
(b) If the Tower Employees set forth on Schedule 4.1(e) to the Merger
Agreement do not enter into definitive agreements prior to the earlier to occur
of the Tower Merger Effective Time and the Effective Time to convert the
American Options which are held by such Tower Employees and set forth on such
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Schedule into options to acquire Tower Common Stock in accordance with this
Section 6.2(b), American Tower shall, prior to the earlier to occur of the Tower
Merger Effective Time and the Effective Time, issue to American in exchange for
payment of the par value thereof a number of shares of Tower Common Stock equal
to the aggregate number of shares of American Common Stock subject to such
American Options set forth on such Schedule.
6.3 Executive Office Lease. At the earlier to occur of the Tower Merger
----------------------
Effective Time and the Effective Time, American Tower shall assume, to the
extent permitted by the landlord, the obligations under the lease of 116
Huntington Avenue, Boston, Massachusetts, with respect to the relevant portion
of such leased premises designated in Schedule A attached hereto and made a part
hereof or, if such permission is not obtained, sublease such relevant portion,
at which time American Radio and its personnel shall vacate such relevant
portion, except as otherwise provided in any written agreement between American
and American Tower with respect to the temporary use of space at such relevant
portion.
ARTICLE 7
CERTAIN COVENANTS
7.1 American Tower Covenants.
------------------------
(a) Prior to the earlier to occur of the Tower Merger Effective Time and
the Effective Time, American shall, to the extent requested by CBS, cause the
Tower Subsidiaries to perform its obligations under the Tower Documentation. If
the Tower Merger shall be consummated, during the period from the Tower Merger
Effective Time to the Effective Time, American shall not, except as contemplated
by this Agreement or the Merger Agreement, enter into any agreement,
transaction, plan or arrangement with American Tower without the express written
consent of CBS.
(b) Following the earlier to occur of the Tower Merger Effective Time and
the Effective Time, except as otherwise provided in this Agreement, including
without limitation Articles 11 and 12, American Tower shall, to the extent
requested by American, take whatever measures as are reasonably necessary to
cause the conveyance or lease to American of any assets necessary for the
operation of the business of American and its Subsidiaries (excluding the Tower
Subsidiaries) as such was conducted prior to the Closing Date which assets were
not conveyed, leased or otherwise transferred to American prior to the earlier
to occur of the Tower Merger Effective Time and the Effective Time.
7.2 CBS Covenant. CBS agrees that it shall, at the written request of
------------
American in its sole and absolute discretion, immediately prior to the Merger,
and subject to the satisfaction of all of the conditions to the consummation of
the transactions contemplated by the Merger Agreement, purchase, at their then
fair market value, shares of a new class of American preferred stock that
constitutes "Equity Interests" (as defined in the indenture relating to
American's 9% Senior Subordinated Notes due 2006) in an amount (which shall not
in the aggregate exceed $200,000,000) necessary to enable (a) the Tower Stock
Consideration to be delivered to the holders of American Common Stock pursuant
to the Merger, (b) Tower Common Stock to be delivered to holders of American
Options pursuant to the Merger, and (c) Tower Common Stock to be delivered upon
conversion of the American Convertible Preferred Stock, without causing any
conflict with, or breach or violation of, or default under, or creating any
right to accelerate any obligation or liability in, or causing or creating any
of the foregoing after the giving of notice or passage of time or both with, of,
under or in any indebtedness of American or the American Cumulative Preferred
Stock; provided, however, that anything in this Section or elsewhere in this
Agreement or the Merger Agreement to the contrary notwithstanding, in such event
such preferred stock shall remain outstanding immediately following the
Effective Time.
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ARTICLE 8
MUTUAL RELEASES
8.1 Release of American Tower. American shall cause all of the Tower
-------------------------
Subsidiaries to be released from all liabilities of American and its
Subsidiaries (other than the Tower Subsidiaries) other than the Assumed
Liabilities; provided, however, that American Tower agrees to reimburse American
for any expenses incurred in obtaining such release. Effective immediately
prior to the earlier to occur of the Tower Merger Effective Time and the
Effective Time, American and its Subsidiaries (other than the Tower
Subsidiaries) hereby release the Tower Subsidiaries from all Claims by American
or its Subsidiaries (other than the Tower Subsidiaries), except for (a) the
Assumed Liabilities, (b) American Tower's obligations under this Agreement, any
Collateral Document or any other Tower Documentation, or (c) Claims arising from
or attributable to the transactions contemplated by this Agreement, the Merger
Agreement or any Collateral Document or otherwise asserted prior to the earlier
to occur of the Tower Merger Effective Time and the Effective Time.
8.2 Release of American. Effective immediately prior to the earlier to
-------------------
occur of the Tower Merger Effective Time and the Effective Time, American Tower,
on behalf of the Tower Subsidiaries, hereby releases American and its other
Subsidiaries from all Claims by the Tower Subsidiaries, except for (a)
American's obligations under this Agreement, any Collateral Document or any
other Tower Documentation, or (b) Claims arising from or attributable to the
transactions contemplated by this Agreement, the Merger Agreement or any
Collateral Document or otherwise asserted prior to the earlier to occur of the
Tower Merger Effective Time and the Effective Time.
ARTICLE 9
TOWER EMPLOYEES
9.1 Offers of Employment. On the Separation Closing Date, the employees
--------------------
of American listed in Schedule B attached hereto and made a part hereof (the
"Tower Employees") shall be offered full-time employment by American Tower or
one of its Subsidiaries. If the Tower Merger shall be consummated, during the
period from the Tower Merger Effective Time to the Effective Time, the Tower
Employees who accept American Tower's offer of full-time employment shall be
employed by American Tower and American Tower hereby covenants and agrees that
such Tower Employees shall be made available to provide American with such
management services as shall enable American to fulfill its obligations under
Section 6.10(i) of the Merger Agreement. In rendering such management services,
the Tower Employees shall act as leased employees who are not employees of
American. American Tower shall be solely responsible for all compensation and
employee benefits relating to such Tower Employees; provided, however, that from
time to time during the period from the Tower Merger Effective Time to the
Effective Time American shall reimburse to American Tower a pro rata portion of
each Tower Employee's base salary based upon actual time spent by such Tower
Employee providing American management services pursuant to this Section 9.1.
Effective immediately prior to the earlier to occur of the Tower Merger
Effective Time and the Effective Time, American Tower shall assume all
obligations of American (it being understood that American Tower shall have no
obligation to reimburse American for obligations that are funded at the
Effective Time, but only to the extent such obligations remain funded following
the Effective Time, provided that neither CBS nor American nor any of their
Subsidiaries shall take any action to impair such funding) arising under any
Plan or Benefit Arrangement with respect to the Tower Employees other than (a)
the rights, if any, of the Tower Employees with respect to the American Options
(which are being satisfied as provided in Section
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6.8 of the Merger Agreement), (b) all existing rights to indemnification, and
(c) all claims and rights under all medical, dental, health and other benefit
plans of American existing as of the Effective Time. American Tower shall
indemnify American and its Subsidiaries, effective as of the earlier to occur of
the Tower Merger Effective Time and the Effective Time, from all obligations
arising under such Plan or Benefit Arrangement (except as provided in clauses
(a), (b) and (c) of the preceding sentence). For a period of eighteen (18)
months following the consummation of the Merger, American Tower covenants and
agrees that no Tower Subsidiary shall actively solicit or seek to hire any
employees of American or its Subsidiaries not currently engaged in the Tower
Business, other than the Tower Employees, it being understood and agreed that
such agreement shall not be deemed to prevent the Tower Subsidiaries from
placing general advertisements in publications or on the Internet or soliciting
any such employee who (a) initiates employment discussions with any Tower
Subsidiary or (b) is not employed by American or CBS or any of their respective
Subsidiaries on the date such a member first solicits such employee.
9.2 Section 401(k) Plan Amendment. Prior to the earlier to occur of the
-----------------------------
Tower Merger Effective Time and the Effective Time, American shall, to the
extent required, amend (a) its Section 401(k) Plan to authorize a transfer of
the assets held thereunder for the benefit of the Tower Employees to a Section
401(k) Plan to be established by American Tower and such assets will be so
transferred (subject to any outstanding qualified domestic relations orders and
loans) and (b) any other Plan or Benefit Arrangements with respect to Tower
Employees to reflect the Tower Separation. The form of such amendments shall
be submitted to CBS for its approval, which approval shall not be unreasonably
withheld, delayed or conditioned.
ARTICLE 10
PURCHASE PRICE ADJUSTMENT
10.1 Purchase Price Adjustment.
-------------------------
(a) Within 90 days after the Closing Date, CBS shall prepare and deliver
to American Tower (i) a consolidated balance sheet (the "Closing Balance Sheet")
of American and its Subsidiaries (other than the Tower Subsidiaries) (the "Post-
Closing American Group"), prepared from the books and records of the Post-
Closing American Group in accordance with GAAP, and (ii) a statement (the
"Closing Statement") setting forth (A) Working Capital (as defined below) as of
the Effective Time ("Closing Working Capital") and (B) Net Debt (as defined
below) as of the Effective Time ("Closing Net Debt"), together with a
certificate of CBS's chief financial officer that the Closing Statement has been
prepared in accordance with this Section 10.1.
During the 45-day period following American Tower's receipt of the Closing
Statement, American Tower shall be permitted to review (and make copies of) the
working papers of CBS relating to the Closing Statement. The Closing Statement
shall become final and binding upon the parties on the forty-sixth day following
delivery thereof, unless American Tower gives written notice of its disagreement
with the Closing Statement ("Notice of Disagreement") to CBS prior to such date.
Any Notice of Disagreement shall (i) specify in reasonable detail the nature of
any disagreement so asserted, (ii) only include disagreements based on Closing
Working Capital or Closing Net Debt (or the components thereof) not being
calculated in accordance with this Section 10.1 and (iii) be accompanied by a
certificate of American Tower's chief financial officer that he or she concurs
with each of the positions taken by American Tower in the Notice of
Disagreement. If a Notice of Disagreement is received by CBS in a timely manner,
then the Closing Statement (as revised in accordance with clause (A) or (B)
immediately following) shall become final and binding on the earlier of (A) the
date CBS and American Tower resolve in writing any differences they have with
respect to the matters specified in the Notice of Disagreement or (B) the date
any disputed matters are finally resolved in writing by the Accounting Firm (as
defined below).
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During the 30-day period following delivery of a Notice of Disagreement,
CBS and American Tower shall seek in good faith to resolve in writing any
differences which they may have with respect to the matters specified in the
Notice of Disagreement. During such period CBS shall be permitted to review
(and make copies of) the working papers of American Tower prepared in connection
with the Notice of Disagreement. At the end of such 30-day period, CBS and
American Tower shall submit to an independent accounting firm (the "Accounting
Firm") for review and resolution any and all matters which remain in dispute and
which were properly included in the Notice of Disagreement and each of CBS and
American Tower shall submit a memorandum setting forth in reasonable detail the
basis for its positions. The Accounting Firm shall be a nationally recognized
independent public accounting firm agreed upon by CBS and American Tower in
writing. CBS and American Tower shall jointly use all reasonable efforts to
cause the Accounting Firm to render a decision within thirty (30) days following
submission or as promptly thereafter as is practicable. CBS and American Tower
agree that judgment may be entered upon the determination of the Accounting Firm
in any court having jurisdiction over the party against which such determination
is to be enforced. The cost of any dispute resolution (including the fees and
expenses of the Accounting Firm and reasonable attorney fees and expenses of the
parties) pursuant to this Section 10.1 shall be borne by CBS and American Tower
in inverse proportion as they may prevail on matters resolved by the Accounting
Firm, which proportionate allocations shall also be determined by the Accounting
Firm at the time the determination of the Accounting Firm is rendered on the
merits of the matters submitted.
(b) Subject to Section 10.1(d), if Closing Working Capital is less than
the sum of $70,000,000 plus $15,000,000, which the parties hereby agree is the
agreed upon value allocable to CBS of the tax benefit attributable to the
exercise of all options or the cancellation of options for value between the
date of the Original Merger and the Effective Time, including without limitation
those canceled pursuant to the provisions of Section 6.8(a) of the Merger
Agreement immediately prior to the Effective Time (the "WC Amount"), American
Tower shall, and if Closing Working Capital is greater than the WC Amount, CBS
shall, owe the other the amount of such difference. The term "Working Capital"
shall mean Current Assets minus Liabilities (in each case as defined below). The
terms "Current Assets" and "Liabilities" shall mean the current assets and
liabilities of the Post-Closing American Group calculated as provided in Section
10.1(a), except that (i) outstanding principal amount of indebtedness and
liquidation preference of preferred stock shall be excluded, (ii) cash and note
or other receivables from employees attributable to the exercise of stock
options shall be excluded, (iii) accruals for Taxes shall be included, except
that (A) there shall not be taken into account (I) Tax liabilities (x) for which
American Tower is obligated (or would, but for the provisions of Section 4.2(d)
(including, notwithstanding the provisions of clause (III) following, the
provisions of the last sentence of Section 4.2(d)), be obligated ) to indemnify
American and its Subsidiaries (other than the Tower Subsidiaries) pursuant to
the provisions of this Agreement and (y) of the American Tax Group's in the
amount of $20,000,000 referred to in Section 4.2(b), (II) deferred income Tax
assets and liabilities that exist or arise from differences in basis for Tax and
financial reporting purposes attributable to acquisitions, exchanges and
dispositions or attributable to depreciation and amortization, and (III) Tax
benefits arising from (x) net operating losses to the extent such losses have
reduced income of the American Tax Group described in Section 4.2(b), (y) the
exercise of options or the cancellation of options for value between the date of
the Original Merger Agreement and the Effective Time, including without
limitation those canceled for value pursuant to the provisions of Section 6.8(a)
of the Merger Agreement immediately prior to the Effective Time, or (z) a
disqualifying disposition as a result of the Merger of stock received pursuant
to the exercise of incentive stock options (it being understood that such Tax
benefits enter into the computation of Tax liabilities for which American Tower
is obligated to indemnify American and its Subsidiaries (other than the Tower
Subsidiaries) pursuant to the provisions of this Agreement), and (B) accruals
for Taxes relating to acquisitions, exchanges or dispositions shall be
determined in accordance with American's past accounting practices, (iv) Current
Assets shall be increased by an amount equal to the sum of (x) the amount
derived by multiplying the Cash Consideration by the number of shares of
American Common Stock held in its treasury as of the Effective Time and (y) the
aggregate amount of the spread of $44.00 over the exercise price of each
American Option outstanding on the close of business on September
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19, 1997 terminated or canceled not for value prior to the Effective Time or for
which the holder has elected to receive an option to acquire Tower Common Stock
in lieu thereof, less the Tax benefit that would have been received with respect
to the exercise of such options, (v) Current Assets shall be (A) increased (if
the number of shares of American Common Stock issued or issuable upon conversion
of the American Convertible Preferred Stock is fewer than 3,750,000 (or if the
Tower Merger Effective Time shall have occurred, 3,750,000 multiplied by the
American Conversion Fraction)) by an amount equal to the amount derived by
multiplying the Cash Consideration by the excess of (I) 3,750,000 (or if the
Tower Merger Effective Time shall have occurred, 3,750,000 multiplied by the
American Conversion Fraction) less (II) the number of shares of American Common
Stock issued or issuable upon conversion of the American Convertible Preferred
Stock or (B) decreased (if the number of shares of American Common Stock issued
or issuable upon conversion of the American Convertible Preferred Stock is
greater than 3,750,000 (or if the Tower Merger Effective Time shall have
occurred, 3,750,000 multiplied by the American Conversion Fraction) by an amount
equal to the amount derived by multiplying the Cash Consideration by the excess
of (I) the number of shares of American Common Stock issued or issuable upon
conversion of the American Convertible Preferred Stock less (II) 3,750,000 (or
if the Tower Merger Effective Time shall have occurred, 3,750,000 multiplied by
the American Conversion Fraction), (vi) liabilities from the radio broadcasting
rights contracts for St. Louis Rams games shall be limited to $3,300,000, (vii)
amounts owed by American Tower to American pursuant to Section 16.3(b) shall be
excluded from Current Assets, and liabilities of American, if any, with respect
to such amounts shall be excluded from Liabilities (it being understood that
neither American nor CBS shall be responsible for any such liabilities), and
(viii) there shall be excluded from Liabilities the liability, if any, of
American with respect to payments required to be made by American pursuant to
the provisions of Section 6.8(a) of the Merger Agreement.
(c) Subject to Section 10.1(d), if Closing Net Debt is greater than the
Debt Amount (as defined below) minus $50,419,000, minus cash received by the
Post-Closing American Group in respect of options exercised between September
19, 1997 and the Effective Time (the "CD Amount"), American Tower shall, and if
Closing Net Debt is less than the CD Amount, CBS shall, owe the other the amount
of such difference. "Debt Amount" shall mean $1,066,721,000, minus the
consideration that was expected to be paid (as set forth on Section 6.10(a) of
the American Disclosure Schedule) with respect to all acquisitions set forth in
Section 6.10(a) of the American Disclosure Schedule which were not consummated
prior to the Closing Date, plus the consideration that was expected to be
received (as set forth in Section 6.10(a) of the American Disclosure Schedule)
with respect to all dispositions set forth in Section 6.10(a) of the American
Disclosure Schedule which were not consummated prior to the Closing Date, plus
the consideration paid in connection with acquisitions consummated prior to the
Closing Date which were not listed in Section 6.10(a) of the American Disclosure
Schedule, minus the consideration received in connection with dispositions
consummated prior to the Closing Date which were not listed in Section 6.10(a)
of the American Disclosure Schedule. The term "Net Debt" shall mean outstanding
principal amount of indebtedness (including, without duplication, guarantees of
indebtedness) plus outstanding liquidation preference of all preferred stock
(other than the American Convertible Preferred Stock), including, without
limitation, the aggregate liquidation preference of any junior preferred
security issued by American to CBS, minus cash, including, without limitation,
the aggregate purchase price of any such junior preferred security issued by
American to CBS; provided, however, that notwithstanding the foregoing, Net Debt
shall not include any indebtedness incurred by American or any of its
Subsidiaries (other than the Tower Subsidiaries) to fund (i) payments, if any,
required to by made by American pursuant to the provisions of Section 6.8(a) of
the Merger Agreement, or (ii) any liability, including without limitation those
set forth in Section 16.3, for which American Tower has, prior to the
determination of the Final Adjustment Amount, in fact, reimbursed American.
(d) Amounts owed pursuant to the first sentence of Section 10.1(b) and the
first sentence of 10.1(c) shall be aggregated or netted, as appropriate (the
resulting amount, the "Adjustment Amount"). In the event that the Adjustment
Amount minus $10,000,000 is greater than $0 (the "Final Adjustment Amount"), the
party that owes the Final Adjustment Amount shall make payment by wire transfer
of
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immediately available funds of the Final Adjustment Amount. Notwithstanding
the foregoing, in the event that American Tower delivers a Notice of
Disagreement to CBS in accordance with this Section 10 and either CBS or
American Tower shall be required to make a payment to the other regardless of
the resolution of the items contained in the Notice of Disagreement, then CBS or
American Tower, as applicable, shall, within ten (10) business days of the
receipt of the Notice of Disagreement, make payment to the other by wire
transfer in immediately available funds of the lesser of the two amounts (the
"Undisputed Portion") that may be owed by CBS or American Tower, as applicable,
pending resolution of the items contained in the Notice of Disagreement.
Interest on any amount payable hereunder shall accrue at a rate of interest
equal to the lesser of (i) 10% per annum and (ii) if American Tower is being
charged a rate of interest by a financial institution, such rate, but in not
event lower than the prime rate as reported in the Wall Street Journal on the
-------------------
date the Closing Statement becomes final and binding on the parties, in the case
of the Final Adjustment Amount, or, on the date of the Notice of Disagreement,
in the case of any Undisputed Portion, calculated on the basis of the actual
number of days elapsed divided by 365, from the date of the Effective Time to
the date of actual payment. For Tax purposes, any such interest shall be
treated as an item of income or expense and shall not be treated as having the
effect provided for in Section 4.2(k)(ii). The amount of any payment of an
Undisputed Portion (excluding interest) shall be credited against the Final
Adjustment Amount. Any payment made by American Tower with respect to the Final
Adjustment Amount shall be made to CBS in connection with American Tower's
assumption of American's tax liability and American Tower's agreement to pay
certain purchase price adjustment items, and American Tower's intention that
such assumption and payment was on behalf of its stockholders who formerly were
stockholders or optionees of American.
(e) The scope of the disputes to be resolved by the Accounting Firm is
limited to whether the Closing Statement was prepared in compliance with the
requirements of this Section 10.1 and the allocation of the costs of dispute
resolution, and the Accounting Firm is not to make any other determination.
(f) During the period of time from and after the delivery of the Closing
Statement to American Tower through the date the Closing Statement becomes final
and binding on CBS, American and American Tower, CBS shall cause the Post-
Closing American Group to afford to American Tower and any accountants, counsel
or financial advisors retained by American Tower in connection with the
adjustment contemplated by this Section 10.1 reasonable access (with the right
to make copies) during normal business hours to the books and records of the
Post-Closing American Group to the extent relevant to the adjustment
contemplated by this Section 10.1.
(g) Any adjustment pursuant to this Section 10.1 shall be taken into
account in the calculation of Tax liability pursuant to Section 4.2(b), and any
increase or decrease in the amount of Taxes that are reimbursable or
indemnifiable by the Tower Subsidiaries as a result of any such adjustment shall
be treated as an adjustment to Taxes for purposes of Section 4.2(f). Nothing in
this Section 10.1(g) shall impair, restrict or otherwise qualify or affect in
any way the obligations of the parties hereto set forth in Article 4 relating to
the tax reporting for the Tower Separation.
ARTICLE 11
TOWER LEASES
11.1 Tower Leases. Prior to the earlier to occur of the Tower Merger
------------
Effective Time and the Effective Time, CBS and American shall agree on the
definitive documentation ("Tower Leases") to be executed by American and
American Tower with respect to certain broadcasting towers set forth in Schedule
C attached hereto and made a part hereof ("Towers"). The markets in which such
Towers are located and the annual "market price" for each antenna are set forth
in Schedule C. Except as set forth in Schedule C, such Towers are now owned or
leased by American and shall become the property of American Tower, as
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set forth in Section 11.2. Each of the Tower Leases shall contain standard and
customary terms and conditions and CBS and American specifically agree to the
inclusion of the following in each of the Tower Leases:
(a) except as provided in clause (b) below with respect to those
Tower Leases set forth in Section 6.19 of the American Disclosure Schedule,
each Tower Lease shall be for a term of twenty (20) years with four (4)
renewal periods of five (5) years each, each such renewal to be upon the
same terms and conditions as the original Tower Lease;
(b) prior to the earlier to occur of the Tower Merger Effective Time
and the Effective Time, American shall use its best efforts to extend the
term of each lease set forth in Section 6.19 of the American Disclosure
Schedule ("Land Leases") to a minimum duration of twenty (20) years,
inclusive of renewal periods, if any, and provide CBS with respect to the
Towers subject to the extended Land Leases, tower leases with the
equivalent benefits set forth in clauses (c), (d) and (e) and for a minimum
duration of twenty (20) years ("Extended Tower Leases"). With respect to
any such Land Lease that is not, prior to ninety (90) days following the
Effective Time, so extended (except with respect to the Land Lease for
KUFX(FM), which present term of approximately eighteen (18) remaining years
shall be deemed to satisfy the foregoing requirement of a minimum duration
of twenty (20) years), American, American Tower and CBS shall negotiate in
good faith to agree upon definitive documentation to provide CBS, prior to
the determination of the Final Adjustment Amount, with respect to the
Towers subject to such Land Leases, upon the failure to agree American
Tower shall provide American and CBS with tower leases with the benefits
equivalent of such Extended Tower Leases or mutually agreed to alternative
arrangements providing equivalent value to CBS;
(c) each Tower Lease shall provide that no payments shall be payable
by CBS for a period of three (3) years from the Effective Time; for the
next three (3) years the payments shall be as follows: one-third (1/3) of
the market price as set forth in Schedule C corresponding to each FM
antenna (or AM/FM antenna) for year four (4); two-thirds (2/3) for year
five (5) and full market price for year six (6); thereafter, for the
balance of the term and any renewals thereof, the payments shall be the
market price, together with an annual increase every year, beginning for
year seven (7), of the lesser of five percent (5%) or the Consumer Price
Index for all Urban Consumers over the previous year's payments (except
with respect to San Jose (KUFX) and Boston (WNFT) which such payments shall
begin at the Effective Time, with respect to CBS, and will begin on January
1, 1998 as between American and American Tower). Notwithstanding the
foregoing, CBS acknowledges that Tower Lease payments at the full "market
price" indicated in Schedule C by American to American tower may commence
upon such leases becoming the property of American Tower and shall continue
until the Effective Time;
(d) all expenses for taxes, insurance, maintenance and utilities in
respect of each Tower shall be paid by American Tower; and
(e) American Tower will assume the obligation and responsibility for
complying with all Applicable Law with respect to the Towers.
11.2 Conveyance of Towers. Except as otherwise provided by Section 11.1,
--------------------
at the earlier to occur of the Tower Merger Effective Time and the Effective
Time, American shall, or shall cause its Subsidiaries to, as applicable,
contribute, transfer or convey to American Tower (by, as appropriate, deed
warrantying only against transferor's acts or assignment of lease) the assets
described in Section 6.17 of the American Disclosure Schedule, and American
Tower shall assume all of American's and such Subsidiaries' obligations with
respect to such assets. In the event American (or one of its Subsidiaries) does
not, at the Effective
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Time, own any such assets, it shall, or shall cause its Subsidiaries to, so
convey such assets to American Tower promptly after the acquisition thereof by
American or any such Subsidiary.
11.3 Change of Name; Trademark Matters. Within ten (10) days after the
----------------------------------
Effective Time, CBS and its Subsidiaries shall file, if necessary, certificates
of amendment with the appropriate Secretary of State to amend its Organic
Documents so that no subsidiary of CBS shall have a name which includes the
words "American Radio". Immediately prior to the Effective Time, American will
assign to American Tower or its designee all right, title and interest,
including all the goodwill related thereto, in and for past infringements of the
name "American Radio" and related trademarks, service marks, logos and the like,
subject to the rights of American under this Section 11.3. As soon as
commercially practicable, but in no event later than six (6) months from the
Effective Time, CBS and its Subsidiaries shall cease all use of the name
"American Radio" in all modes.
ARTICLE 12
TRANSITIONAL SERVICES
12.1 Reasonable Best Efforts. From and after the Effective Time, and upon
------------------------
the terms and subject to the conditions set forth in this Agreement, each of
CBS, American and American Tower shall use its reasonable best efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other in doing, all things necessary, proper or advisable
to provide, in the most expeditious manner practicable, the goods and/or
services described in this Article 12.
12.2 Assistance with Reporting.
-------------------------
(a) During the period between the earlier to occur of the Tower Merger
Effective Time and the Effective Time and 180 days after the Effective Time,
American Tower agrees to make available its employees having the appropriate
experience and expertise, in Boston and on a mutually convenient and timely
basis, to American or any Subsidiary of American (other than Tower Subsidiaries)
to provide reasonable assistance in the preparation and finalization of all
information required by American or any Subsidiary of American (other than Tower
Subsidiaries) to (i) be filed with any Authority or (ii) be provided to security
holders pursuant to any Contract, including, but not limited to, filings with
the SEC, filings with state regulatory Authorities, and filings with other
Authorities where financial statements or financial information are required to
be filed. During the period between the earlier to occur of the Tower Merger
Effective Time and the Effective Time and 180 days after the Effective Time,
American Tower agrees to use its reasonable business efforts to cause such
employees to provide such reasonable assistance, in Boston and on a mutually
convenient and timely basis, with any other filings with any Authorities that
must be completed for any entity owned or previously held by American, including
but not limited to Forms 10-Q, 10-K and 11-K under the Exchange Act and Forms
5500 under ERISA.
(b) If the Effective Time occurs subsequent to June 30, 1998 and prior to
August 14, 1998, American Tower shall use its reasonable best efforts, including
without limitation the making available of American Tower employees having the
appropriate experience and expertise, in Boston and on a mutually convenient and
timely basis, to assist CBS in the timely preparation of American's 1998 second
quarter financial statements or financial information, including without
limitation a "Management's Discussion and Analysis of Financial Condition and
Results of Operations" section meeting the requirements specified in Item 303 of
Regulation S-K under the Securities Act, that is required to be provided to
security holders under any Contract relating to American's debt securities and
preferred stock.
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(c) From and after the earlier to occur of the Tower Merger Effective Time
and the Effective Time, American Tower shall provide, on a timely basis,
financial statements or financial information relating to periods ending on or
before the earlier to occur of the Tower Merger Effective Time or the Effective
Time with respect to American Tower that American, any Subsidiary of American
(other than the Tower Subsidiaries) or CBS may require in connection with the
preparation, audit and filing of information required to (i) be filed with any
Authority or (ii) required to be provided to security holders pursuant to any
Contract, including, but not limited to, filings with the SEC, filings with
state regulatory Authorities, and filings with other Authorities where financial
statements or financial information are required to be filed. American Tower
shall cause such employees to provide such American Tower financial statements
or financial information in connection with any filing with any Authority that
must be completed for any entity owned or previously held by American.
12.3 Assistance with Financial Software Systems. During the period between
------------------------------------------
the earlier to occur of the Tower Merger Effective Time and the Effective Time
and 90 days after the Effective Time, American Tower shall provide reasonable
assistance with and use its reasonable business efforts to make available
employees of American Tower having the appropriate experience and expertise, in
Boston and on a mutually convenient and timely basis, to consult with CBS and
American regarding the financial software systems currently used by American
(including, without limitation, such systems being known as the Accpac System).
12.4 Assistance with Resolution of Prior Transactions.
------------------------------------------------
(a) From and after the earlier to occur of the Tower Merger Effective Time
and the Effective Time, American Tower shall make available senior management
employees (both operations personnel and management personnel), as well as any
of their subordinates necessary to render the assistance described in this
Section 12.4, in Boston and on a mutually convenient and timely basis, to
consult with and to assist CBS and American in the resolution of all
transactions entered into by American prior to the earlier to occur of the Tower
Merger Effective Time and the Effective Time (each, a "Prior Transaction").
Such consultation and assistance shall include, but not be limited to, the
provision of any information relating to the Prior Transactions, the calculation
of any post-closing adjustments necessary in connection with any Prior
Transaction, the resolution of lawsuits in connection with any Prior Transaction
and the compliance with any agreements entered into with the FCC in connection
with any Prior Transaction.
(b) American Tower shall make available employees of American Tower having
the appropriate experience and expertise, in Boston and on a mutually convenient
and timely basis, to consult with CBS in identifying and resolving any
contingent liabilities of American arising prior to the Effective Time.
(c) From and after the earlier to occur of the Tower Merger Effective Time
and the Effective Time, American Tower shall cooperate with, and provide
assistance to, CBS and American in consummating the transfer by American of the
assets to American Tower pursuant to this Agreement.
12.5 Certain Assets. Promptly after the Closing, American Tower shall
--------------
deliver to a location designated by CBS (i) all books and records of American
and each of its Subsidiaries (other than the Tower Subsidiaries), including, but
not limited to, minute books, stock transfer ledgers, tax records, and all
financial records of American, whether in electronic or physical form, including
an inventory specifically identifying, in reasonable detail, the contents of
such records; (ii) all software and hardware of American and each of its
Subsidiaries (other than the Tower Subsidiaries) wherever located, including
without limitation those located at 116 Huntington Avenue, Boston, MA, 02116;
provided, however, that, notwithstanding the foregoing, American shall use its
reasonable best efforts to permit American Tower to retain such software and
hardware for a reasonable period after the Closing, not to exceed 90 days, in
order to replace it with comparable software and hardware and to fulfill its
obligations under this Agreement; and (iii) all other
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assets of American, wherever located, other than any such assets listed on
Schedule D attached hereto and made a part hereof or transferred by American to
American Tower pursuant to the transactions contemplated by this Agreement;
provided, however, that notwithstanding the foregoing, American Tower need not
deliver any document or other information as to which American Tower has been
advised by its counsel is protected by the attorney-client privilege between
American Tower and such counsel. American Tower shall be entitled, at its
expense, to make copies of all such books and record, software (to the extent
permitted by applicable licensing agreements) and financial records and, to the
extent that it elects not to so make copies, CBS will make all such books and
records, software and financial records available to American Tower and its
advisers, from time to time, with the right (subject, in the case of software,
to applicable licensing agreements) to make copies thereof.
12.6 Access to Third Party Work Products. American Tower shall cooperate
-----------------------------------
with CBS in obtaining access to American's independent auditors' working papers
prepared for periods prior to the Effective Time and to all other documents, to
the extent such documents are not available to be delivered by American Tower to
CBS promptly after the Effective Time pursuant to Section 12.5, prepared by
accountants, lawyers, tax advisors and other third parties retained by American
prior to the Effective Time, including, but not limited to, management letters
and representation letters, it being understood that to the extent such
documents relate primarily to any Tower Subsidiary they shall be retained by
American Tower's accountants, lawyers, tax advisors and other third parties
retained by it and not delivered to CBS; provided, however, that notwithstanding
the foregoing, American Tower need not provide access to any document or other
information that it has been advised by its counsel is protected by the
attorney-client privilege between American Tower and such counsel. CBS and
American Tower will make all such documents available to the other and its
advisers, from time to time, with the right to make copies thereof and shall
cooperate with each other in obtaining access to American's and American Tower's
independent auditors' working papers prepared for periods prior to the Effective
Time.
12.7 Confidentiality. In accordance with their respective rights under
----------------
this Agreement, each of CBS, American and American Tower may learn confidential
information about each other. Each of CBS, American and American Tower shall
hold, and shall cause its controlled Affiliates, consultants and advisors to
hold, any such information which it so learns in confidence.
ARTICLE 13
REPRESENTATIONS AND WARRANTIES OF AMERICAN
American hereby represents and warrants to American Tower and CBS as
follows:
13.1 Organization and Business; Power and Authority; Effect of Transaction.
---------------------------------------------------------------------
(a) American is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware.
(b) American has all requisite power and authority (corporate and other)
to execute, deliver and perform its obligations under this Agreement and each
Collateral Document executed or required to be executed by such party pursuant
hereto or thereto and to consummate the transactions contemplated hereby and
thereby, and the execution, delivery and performance of this Agreement and each
Collateral Document executed or required to be executed pursuant hereto or
thereto have been duly authorized by all requisite corporate or other action on
the part of American and its Subsidiaries, other than the Tower Subsidiaries,
and no other corporate proceedings on the part of American or any of such
Subsidiaries are necessary to authorize this Agreement or the transactions
contemplated hereby. This Agreement has been duly executed
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and delivered by American and constitutes, and each Collateral Document executed
or required to be executed by American and its Subsidiaries (other than the
Tower Subsidiaries) pursuant hereto when executed and delivered by American and
such Subsidiaries, as applicable, will constitute, a valid and binding
obligation of American and such Subsidiaries, as applicable, 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. American has heretofore received the requisite
consent of the holders of more than a majority of (i) the outstanding shares of
American Cumulative Preferred Stock to the Tower Separation in accordance with
the Certificate of Designation of the American Cumulative Preferred Stock, (ii)
the 9% Senior Subordinated Notes due 2006 to the Tower Separation pursuant to
the Merger in accordance with the indenture pursuant to which such notes are
outstanding, and (iii) the 9 3/4% Senior Subordinated Notes due 2005 to the
Tower Separation pursuant to the Merger in accordance with the indenture
pursuant to which such notes are outstanding.
(c) The execution, delivery and performance by American and its
Subsidiaries, as applicable, of this Agreement and any Collateral Document
executed or required to be executed by such parties pursuant hereto or thereto
do not, and the consummation by American of the transactions contemplated hereby
and thereby, and compliance with the terms, conditions and provisions hereof or
thereof by such parties will not:
(i) (A) Except (x) as set forth in Section 4.1(c) of the American
Disclosure Schedule, and (y) for the consent of the banks under its Credit
Agreements, dated as of January 24, 1997, with The Bank of New York, as
Collateral Agent and Administrative Agent, and the other agents named
therein and lenders party thereto to the effectuation of the Tower
Separation pursuant to the Tower Merger conflict with, or result in a
breach or violation of, or constitute a default under, any Organic Document
of American or its Subsidiaries, as applicable, or (B) conflict with, or
result in a breach or violation of, or constitute a default under, or
permit the termination, cancellation or acceleration of any obligation or
liability in, or but for any requirement of the 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 termination, cancellation or
acceleration of, any agreement, arrangement, contract, undertaking,
understanding, Applicable Law or other obligation or Private Authorization
of American or its Subsidiaries, as applicable, except, in the case of
clause (B), for such conflicts, breaches, violations, terminations,
cancellations, defaults or accelerations that would not, individually or in
the aggregate, be reasonably likely to have a Material Adverse Effect on
American; or
(ii) result in or permit the creation or imposition of any Lien upon
any property now owned or leased by American except for such Liens that
would not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect on American; or
(iii) require any Governmental Authorization or Governmental Filing
except for (A) the filing with the Commission of (I) the Information
Statement and the Registration Statements 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,
and (B) such other Governmental Authorizations and Governmental Filings the
failure of which to be made or obtained would not be individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on American.
13.2 Shares of American Tower. The number of shares of American Tower that
-------------------------
are on the date hereof, and will at the Effective Time be, authorized and
outstanding and owned by American is and will be equal to the number of
authorized and outstanding shares of American Common Stock, the number of shares
of American Common Stock issuable upon the exercise of Option Securities, the
number of shares of American Common Stock issuable in respect of any employee
benefit plan of American, including without
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<PAGE>
limitation, any 401(k) or ESOP Plan, and upon the conversion of Convertible
Securities (except with respect to shares of American Common Stock subject to
American Options set forth on Schedule 4.1(e) to the Merger Agreement which are
held by Tower Employees who have stated that they will enter into definitive
agreements to have such American Options assumed by American Tower and converted
into options to acquire Tower Common Stock in accordance with Section 6.8(b) of
the Merger Agreement), and such shares of American Tower include a number
sufficient to enable American to satisfy its obligations with respect to the
delivery of shares of American Tower to security holders of American under the
Merger Agreement.
ARTICLE 14
REPRESENTATIONS AND WARRANTIES OF AMERICAN TOWER
American Tower hereby represents and warrants to American and CBS as
follows:
14.1 Organization and Business; Power and Authority; Effect of Transaction.
---------------------------------------------------------------------
(a) American Tower is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware.
(b) American Tower has all requisite power and authority (corporate and
other) to execute, deliver and perform its obligations under this Agreement and
each Collateral Document executed or required to be executed by such party
pursuant hereto or thereto and to consummate the transactions contemplated
hereby and thereby, and the execution, delivery and performance of this
Agreement and each Collateral Document executed or required to be executed
pursuant hereto or thereto have been duly authorized by all requisite corporate
or other action on the part of American Tower and its Subsidiaries, and no other
corporate proceedings on the part of American Tower or any of its Subsidiaries
are necessary to authorize this Agreement or the transactions contemplated
hereby. This Agreement has been duly executed and delivered by American Tower
and constitutes, and each Collateral Document executed or required to be
executed by American Tower and its Subsidiaries pursuant hereto when executed
and delivered by American Tower and its Subsidiaries, as applicable, will
constitute, a valid and binding obligation of American Tower and its
Subsidiaries, as applicable, 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) The execution, delivery and performance by American Tower and its
Subsidiaries, as applicable, of this Agreement and any Collateral Document
executed or required to be executed by such parties pursuant hereto or thereto
do not, and the consummation by American Tower of the transactions contemplated
hereby and thereby, and compliance with the terms, conditions and provisions
hereof or thereof by such parties will not:
(i) (A) conflict with, or result in a breach or violation of, or
constitute a default under, any Organic Document of American Tower or its
Subsidiaries, as applicable, or (B) conflict with, or result in a breach or
violation of, or constitute a default under, or permit the termination,
cancellation or acceleration of any obligation or liability in, or but for
any requirement of the 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 termination, cancellation or acceleration of, any
agreement, arrangement, contract, undertaking, understanding, Applicable
Law or other obligation or Private Authorization of American Tower or its
Subsidiaries, as applicable, except, in the case of clause (B), for such
conflicts, breaches, violations, terminations, cancellations, defaults or
accelerations that
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<PAGE>
would not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect on American Tower; or
(ii) result in or permit the creation or imposition of any Lien upon
any property now owned or leased by American Tower except for such Liens
that would not, individually or in the aggregate, be reasonably likely to
have a Material Adverse Effect on American Tower; or
(iii) require any Governmental Authorization or Governmental Filing
except for (A) the filing with the Commission of (I) the Information
Statement and the 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,
and (B) such other Governmental Authorizations and Governmental Filings the
failure of which to be made or obtained would not be individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on American
Tower.
14.2 Shares of American Tower. The number of shares of American Tower that
------------------------
have been issued by American Tower to American is equal to the number of
authorized and outstanding shares of American Common Stock, the number of shares
of American Common Stock issuable upon the exercise of Option Securities, the
number of shares of American Common Stock issuable in respect of any employee
benefit plan of American, including without limitation, any 401(k) or ESOP Plan,
and upon the conversion of Convertible Securities (except with respect to shares
of American Common Stock subject to American Options set forth on Schedule
4.1(e) to the Merger Agreement which are held by Tower Employees who have stated
that they will enter into definitive agreement to have such American Options
assumed by American Tower and converted into options to acquire Tower Common
Stock in accordance with Section 6.8(b) of the Merger Agreement), and such
shares of American Tower include a number sufficient to enable American to
satisfy its obligations with respect to the delivery of shares of American Tower
to security holders of American under the Merger Agreement.
ARTICLE 15
CONDITIONS
15.1 Conditions to Obligations of Each Party to Effect the Tower
-----------------------------------------------------------
Separation. The respective obligations of each party to effect the Tower
Separation shall be subject to the satisfaction on the Separation 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; provided, however, that
American may not waive any such condition, in whole or in part, without the
express written consent of CBS (which consent shall not be unreasonably
withheld, delayed or conditioned):
(a) the parties shall have received written approval of CBS
approving all of the Tower Documentation (other than this Agreement
including Appendix A), including without limitation any
and all ancillary documentation and any documentation relating to the
mechanics of effecting the Tower Separation (it being understood that this
Agreement constitutes only part of the Tower Documentation), which consent
shall not be unreasonably withheld, delayed or conditioned;
(b) if the Tower Separation shall occur pursuant to the Tower
Merger, each condition to the closing of the Tower Merger set forth in
Article 6 of the Tower Merger Agreement shall have been satisfied or
waived;
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<PAGE>
(c) if the Tower Separation shall occur pursuant to the Merger, each
condition to the closing of the Merger set forth in Article 7 of the Merger
Agreement shall have been satisfied or waived;
(d) each of the Merger Registration Statement, the Option
Registration Statement and the Convertible Registration Statement shall
have been declared effective by the Commission under the Securities Act and
shall not be the subject of any stop order or proceeding by the Commission
seeking a stop order; and
(e) no Authority of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any Law (whether temporary,
preliminary or permanent) that remains in effect and restrains, enjoins or
otherwise prohibits consummation of the Tower Separation.
15.2 Conditions to Obligations of American Tower. The obligation of
-------------------------------------------
American Tower to effect the Tower Separation shall be subject to the
satisfaction 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) the representations and warranties of American set forth in this
Agreement shall be true and correct as of the date of this Agreement and as
of the Separation Closing Date as though made on and as of the Separation
Closing Date except (x) to the extent such representations and warranties
expressly speak as of an earlier date (in which case such representations
and warranties shall be true and correct as of such earlier date) and (y)
to the extent that the failure of such representations and warranties to be
true and correct, individually or in the aggregate, would not have a
Material Adverse Effect on American; 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; and
(b) American shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior
to the Separation Closing Date.
15.3 Conditions to Obligations of American. The obligation of American to
-------------------------------------
effect the Tower Separation shall be subject to the satisfaction of the
following conditions, any or all of which may be waived, in whole or in part, to
the extent permitted by Applicable Law; provided, however, that American may not
waive any such condition, in whole or in part, without the express written
consent of CBS (which consent shall not be unreasonably withheld, delayed or
conditioned):
(a) the representations and warranties of American Tower set forth in
this Agreement shall be true and correct as of the date of this Agreement
and as of the Separation Closing Date as though made on and as of the
Separation Closing Date except (x) to the extent such representations and
warranties expressly speak as of an earlier date (in which case such
representations and warranties shall be true and correct as of such earlier
date) and (y) to the extent that the failure of such representations and
warranties to be true and correct, individually or in the aggregate, would
not have a Material Adverse Effect on American Tower; 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; and
(b) American Tower shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior
to the Separation Closing Date.
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<PAGE>
ARTICLE 16
GENERAL PROVISIONS
16.1 Amendment. This Agreement may be amended from time to time by the
---------
parties hereto at any time prior to the Separation Closing Date but only by an
instrument in writing signed by the parties hereto.
16.2 Waiver. At any time prior to the Separation Closing Date, except to
------
the extent not permitted by Applicable Law, any party may, either generally or
in a particular instance and either retroactively or prospectively, extend the
time for the performance of any of the obligations or other acts of the other,
waive any inaccuracies in the representations and warranties of the other
contained herein or in any document delivered pursuant hereto, and waive
compliance by the other with any of the agreements, covenants, conditions or
other provision contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
16.3 Fees, Expenses and Other Payments. Promptly following the Effective
---------------------------------
Time, American Tower shall pay to American in immediately available funds (and
make American whole on an after-tax basis under the principles set forth in
Sections 3.4(b) and 3.5) an amount equal to the aggregate costs and expenses
incurred by American in connection with any agreement, arrangement or
understanding (other than this Agreement) entered into by American, American
Tower Mergercorp or any Tower Subsidiary following the date of the Original
Merger Agreement (i) for the benefit of any Tower Subsidiary, (ii) in
contemplation of the Tower Separation or (iii) in connection with the sale,
assignment, transfer or other disposition of shares of American Tower Common
Stock, including without limitation such costs and expenses incurred by American
to Merrill Lynch Pierce Fenner & Smith Incorporated and any such costs and
expenses incurred by American to CSFB in excess of those set forth in the
engagement letter between American and CSFB provided by American to Mergeparty
in accordance with Section 4.14 of the Original Merger Agreement.
16.4 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 (a) mailed by first-class or express mail, postage prepaid,
or by recognized courier service, (b) sent by 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 (c) personally delivered to the
receiving party (which if, other than an individual, shall be an officer or
other responsible party of the receiving party). All such notices and
communications shall be mailed, sent or delivered as follows:
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(a) If to American:
American Radio Systems Corporation
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Eric Mettlor
Telecopier No.: (617) 375-7575
with a copy to:
CBS Corporation
11 Stanwix Street
Pittsburgh, Pennsylvania 15222
Attention: Louis J. Briskman, Esq.
Telecopier No.: (412) 642-5224
and
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
Attention: Allen Finkelson, Esq.
Telecopier No.: (212) 474-3700
(b) If to American Tower:
American Tower Systems Corporation
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Steven B. Dodge, President and Chief Executive
Officer
Telecopier No.: (617) 375-7575
with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: Norman A. Bikales, Esq.
Telecopier No.: (617) 338-2880
(c) If to CBS:
CBS Corporation
11 Stanwix Street
Pittsburgh, Pennsylvania 15222
Attention: Louis J. Briskman, Esq.
Telecopier No.: (412) 642-5224
with a copy to:
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Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
Attention: Allen Finkelson, Esq.
Telecopier No.: (212) 474-3700
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.
16.5 Specific Performance; Other Rights and Remedies. Each party
-----------------------------------------------
recognizes and agrees that in the event any other party should refuse to perform
any of its obligations under this Agreement or any Collateral Document, the
remedy at law would be inadequate and agrees that for breach of such provisions,
each party shall, in addition to such other remedies as may be available to it
at law or in equity, be entitled to injunctive relief and to enforce its rights
by an action for specific performance to the extent permitted by Applicable Law.
Each party hereby waives any requirement for security or the posting of any bond
or other surety in connection with any temporary or permanent award of
injunctive, mandatory or other equitable relief. Nothing herein contained shall
be construed as prohibiting each party from pursuing any other remedies
available to it under Applicable Law or pursuant to the provisions of this
Agreement for such breach or threatened breach, including without limitation the
recovery of damages, including, to the extent awarded in any Legal Action,
punitive, incidental and consequential damages (including without limitation
damages for diminution in value and loss of anticipated profits) or any other
measure of damages permitted by Applicable Law.
16.6 Survival of Representations, Warranties, Covenants and Agreements. The
-----------------------------------------------------------------
representations, warranties, covenants and agreements in this Agreement shall
survive the Tower Separation.
16.7 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 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 Tower Separation is fulfilled and consummated to the
maximum extent possible.
16.8 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 of each such counterparts.
16.9 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.
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16.10 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 the
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 corporate laws of the State of
Delaware are applicable. 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.
16.11 Further Acts. Each party agrees that at any time, and from time to
------------
time, before and after the consummation of the transactions contemplated by this
Agreement, it will do all such things and execute and deliver all such
Collateral Documents and other assurances, as the other party or its counsel
reasonably deems necessary or desirable in order to carry out the terms and
conditions of this Agreement and the transactions contemplated hereby or to
facilitate the enjoyment of any of the rights created hereby or to be created
hereunder.
16.12 Entire Agreement; No Other Representations or Agreements. This
--------------------------------------------------------
Agreement (together with the Appendices, the Merger Agreement and the other
Collateral 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. If there is any conflict between the
terms of this Agreement and the Merger Agreement, the terms of this Agreement
shall control. Each of the parties is a sophisticated legal entity that was
advised by experienced counsel and, to the extent it deemed necessary, other
advisors in connection with this Agreement. Each of the parties hereby
acknowledges that (a) such party has not relied or will not 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 (including the Appendices, the Merger
Agreement and the other Collateral Documents) or such of the foregoing as are
delivered at the Closing, (b) there are no covenants or agreements by or on
behalf of either party hereto or any of its respective Affiliates or
representatives other than those expressly set forth in this Agreement, the
Merger Agreement and the other 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, the Merger
Agreement and the other Collateral Documents. WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE REPRESENTATIONS
AND WARRANTIES CONTAINED IN THIS AGREEMENT, THE MERGER AGREEMENT AND ANY
COLLATERAL DOCUMENT, NEITHER AMERICAN NOR AMERICAN TOWER 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.
16.13 Assignment. Neither this Agreement nor any of the rights, interests
----------
or obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties. Any assignment in violation of the preceding
sentence
-34-
<PAGE>
shall be void. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
16.14 Parties in Interest. This Agreement shall be binding upon and inure
-------------------
solely to the benefit of each party and their permitted successors and assigns,
and nothing in this Agreement, express or implied, is intended to or shall
confer upon any Person any right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement, except as otherwise provided in Section
16.13.
16.15 Mutual Drafting. This Agreement is the result of the joint efforts
---------------
of CBS, American and American Tower, and each provision hereof has been subject
to the mutual consultation, negotiation and agreement of the parties and there
shall be no construction against either party based on any presumption of that
party's involvement in the drafting thereof.
16.16 Obligations of American, American Tower and CBS. Whenever this
-----------------------------------------------
Agreement requires a Subsidiary of American, American Tower or CBS to take any
action, such requirement shall be deemed to include an undertaking on the part
of American and CBS, and following the earlier to occur of the Tower Merger
Effective Time and the Effective Time, American Tower, to cause such Subsidiary
to take such action.
[SIGNATURE PAGE FOLLOWS]
-35-
<PAGE>
IN WITNESS WHEREOF, American, American Tower and CBS have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
American Radio Systems Corporation
By:_________________________________
Name: Joseph L. Winn
Title: Chief Financial Officer and
Treasurer
American Tower Systems Corporation
By:_________________________________
Name: Joseph L. Winn
Title: Chief Financial Officer and
Treasurer
CBS Corporation
By:_________________________________
Name:
Title:
-36-
<PAGE>
EXHIBIT 10.31
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of June 4, 1998,
by and among American Tower Systems Corporation (the "Company"), and each of the
purchasers set forth on the signature pages hereto (the "Buyers"),
WHEREAS:
A. The Company and the Buyers are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Rule 506
under Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act");
B. The Company has authorized the issuance to the Buyers of up to $400 million
aggregate initial liquidation preference of the Company's Series A Redeemable
Pay-In-Kind Preferred Stock, $.01 par value per share (the "PIK Preferred
Stock"), in the form attached as Exhibit A, exchangeable in accordance with its
terms into shares of the Company's Exchange Pay-In-Kind Preferred Stock, $.01
par value per share (the "Exchange Preferred Stock"), in the form attached as
Exhibit B;
C. The Buyers desire to purchase and the Company desires to issue and sell,
upon the terms and conditions set forth in this Agreement, up to $400,000,000
aggregate initial liquidation preference of the PIK Preferred Stock;
D. Each Buyer acting severally wishes to purchase, upon the terms and
conditions stated in this Agreement, such amount of initial liquidation
preference of the PIK Preferred Stock as is set forth immediately below its name
on the signature pages hereto, subject to allocation with respect to each
purchase by Credit Suisse First Boston Corporation ("CSFBC"); and
E. Contemporaneous with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement, in
the form attached hereto as Exhibit C (the "Registration Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration rights
with respect to the Exchange Preferred Stock under the 1933 Act and the rules
and regulations promulgated thereunder, and applicable state securities laws.
NOW, THEREFORE, the Company and each of the Buyers (severally and not
jointly) hereby agree as follows:
<PAGE>
1. PURCHASE AND SALE OF PIK PREFERRED STOCK.
----------------------------------------
a. Commitment to Purchase PIK Preferred Stock. Each Buyer severally
------------------------------------------
agrees, on the terms and conditions hereinafter set forth, to purchase from the
Company an amount in initial liquidation preference of PIK Preferred Stock such
that the aggregate amount of all PIK Preferred Stock purchased by such Buyer
does not exceed the amount set forth immediately below such Buyer's name on the
signature pages hereto (such amount being referred to herein as such Buyer's
"Aggregate Commitment"). Each Buyer's Aggregate Commitment shall expire on June
30, 1998, provided, however that such Commitment may be extended by the Company
-------- -------
to a date not later than August 30, 1998; upon the delivery as previously agreed
to CSFBC of an amount equal to one percent times $400 million; provided,
----- --------
further, that if the Initial Closing (as defined below) does not occur on or
- -------
before June 30, 1998, each Buyer's Aggregate Commitment shall expire on such
date.
b. Notice of Issuance. The issuance, sale and purchase of the PIK
------------------
Preferred Stock, if any, shall be made on notice (a "Notice of Issuance"), given
not later than 3:00 P.M., New York City Time, by the Company to CSFBC on the
fifth Business Day prior to the date for the settlement (the "Closing") for such
proposed sale and purchase, or such shorter period as the Company and CSFBC may
agree upon. Each Notice of Issuance shall specify the aggregate initial
liquidation preference of PIK Preferred Stock to be issued and the requested
settlement date ("Closing Date"). The Company may give not more than two Notices
of Issuance, provided, however, that if the first Notice of Issuance relates to
-------- -------
more than $200 million in aggregate initial liquidation preference of the PIK
Preferred Stock, the Company shall not be permitted to deliver a second Notice
of Issuance and the sum of each Buyer's Aggregate Commitment shall be equal to
the aggregate initial liquidation preference specified in such first Notice of
Issuance. The aggregate initial liquidation preference of the PIK Preferred
Stock to be issued at the first closing (the "Initial Closing") and at the
Second Closing, if any (the "Second Closing"), shall not exceed $400 million. In
the event that the Company issues and sells less than $400 million in aggregate
liquidation preference of PIK Preferred Stock on any Closing Date, each Buyer
shall purchase an amount of PIK Preferred Stock on such Closing Date that bears
the same relation to the aggregate initial liquidation preference of PIK
Preferred Stock being issued on such Closing Date as such Buyer's Aggregate
Commitment bears to $400 million.
c. Payment for and Delivery of Securities. At each Closing, each
--------------------------------------
Buyer shall pay an amount equal to the aggregate initial liquidation preference
of the PIK Preferred Stock being issued and sold to it at such Closing, by wire
transfer of immediately available funds to the Company, in accordance with the
Company's written wiring instructions, against delivery to the Buyer of the
certificates evidencing such PIK Preferred Stock.
-2-
<PAGE>
d. Closing Dates. The date and time of the issuance and sale of the
-------------
PIK Preferred Stock in connection with any Closing pursuant to this Agreement
shall be 12:00 noon New York City time on the date specified by the Company in
the relevant Notice of Issuance. Each Closing shall occur at the offices of
Sullivan & Cromwell, 125 Broad Street, New York, New York 10004, or at such
other location as the Company and CSFBC shall agree.
2. BUYERS' REPRESENTATIONS AND WARRANTIES.
--------------------------------------
Each Buyer severally (and not jointly) represents and warrants to the
Company solely as to such Buyer, as of the date hereof and as of each Closing
Date, that:
a. Investment Purpose. The Buyer is purchasing the PIK Preferred
------------------
Stock (such PIK Preferred Stock together with the Exchange Preferred Stock and
any subordinated debentures issued in exchange for the Exchange Preferred Stock,
the "Securities") for its own account for investment only and not with a present
view towards the public sale or distribution thereof, except pursuant to sales
registered or exempted under the 1933 Act.
b. Accredited Investor Status. The Buyer is an "accredited
--------------------------
investor" as that term is defined in Rule 501(a) of Regulation D and a
sophisticated investor (as defined in Rule 506(b)(2)(ii) of Regulation D).
c. Reliance on Exemptions. The Buyer understands (i) that the
----------------------
Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company in relying upon the truth and accuracy of, and the
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire the Securities and (ii) it is not authorized, and acknowledges that
it has not, relied on any analyst or other reports or other third party source
information relating to the Company.
d. Information. The Buyer and its advisors, if any, have been
-----------
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
which have been requested by the Buyer or its advisors, including the Private
Placement Memorandum dated May 28, 1998 (the "Private Placement Memorandum").
The Buyer and its advisors, if any, have not relied on any oral or written
representations or assurances made by third parties or any oral or written
representations or assurances from the Company or any representative or agent of
the Company other than as set forth in this Agreement or in the Private
Placement Memorandum. The Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received what the Buyer
believes to be satisfactory answers to any such inquiries. Neither such
inquiries
-3-
<PAGE>
nor any other due diligence investigation conducted by Buyer or any of its
advisors or representatives shall modify, amend or affect Buyer's right to rely
on the Company's representations and warranties contained in Section 3 below.
The Buyer understands that its investment in the Securities is speculative and
involves a significant degree of risk.
e. Governmental Review. The Buyer understands that no United States
-------------------
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities.
f. Transfer or Resale. The Buyer understands that (i) except as
------------------
provided in the Registration Rights Agreement, the Securities have not been and
are not being registered under the 1933 Act or any applicable state securities
laws, and may not be transferred unless (a) subsequently included in an
effective registration statement hereunder, or (b) the Buyer shall have
delivered to the Company an opinion of counsel (which counsel may be an employee
of Buyer and which opinion shall in any case be reasonably acceptable to the
Company) to the effect that the Securities to be sold or transferred may be sold
or transferred pursuant to an exemption from such registration or (c) pursuant
to Rule 144 promulgated under the 1933 Act (or a successor rule); (ii) any sale
of such Securities made in reliance on Rule 144 may be made only in accordance
with the terms of said Rule and further, if said Rule is not applicable, any
resale of such Securities under circumstances in which the seller (or the person
through whom the sale is made) may be deemed to be an underwriter (as that term
is defined in the 1933 Act) may require compliance with some other exemption
under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii)
neither the Company nor any other person is under any obligation to register
such Securities under the 1933 Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder (in each case, other
than pursuant to the Registration Rights Agreement or this Agreement).
Notwithstanding the foregoing, nothing in this Agreement shall prevent the
pledge of the Securities as collateral in connection with a bona fide margin
---- ----
account. Notwithstanding the foregoing, CSFBC may offer and resell PIK Preferred
Stock to a limited number of institutions, each of which is reasonably believed
by CSFBC to be an "accredited investor" within the meaning of Rule 501(a)(1),
(2) or (3) under the 1933 Act or an entity in which all of the equity owners are
accredited investors within the meaning of Rule 501(a)(1), (2) or (3) under the
1933 Act (each, an "Institutional Accredited Investor"); provided that each such
Institutional Accredited Investor executes and delivers to CSFBC, prior to the
consummation of any sale of PIK Preferred Stock to such Institutional Accredited
Investor, a letter containing investor representations substantially in the form
of Schedule I to the form of commitment letter previously furnished by CSFBC to
the Company. The representations, warranties and covenants of the Company
hereunder shall also be for the benefit of any such Institutional Accredited
Investor.
g. Legends. The Buyer understands that the Securities, including,
-------
until such time as the Exchanged Preferred Stock (or subordinated debentures
issuable in exchange therefor) have been registered under the 1933 Act, as
contemplated by the
-4-
<PAGE>
Registration Rights Agreement, the Exchange Preferred Stock or such subordinated
debentures, may bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of the certificates
for such Securities):
"The securities represented by this certificate [note] have
not been registered under the Securities Act of 1933, as
amended. The securities have been acquired for investment
and may not be sold, transferred or assigned in the absence
of an effective registration statement for the securities
under said Act, or an opinion of counsel, in form, substance
and scope reasonably acceptable to the Company, that
registration is not required under said Act or unless sold
pursuant to Rule 144 under said Act."
The legend set forth above shall be removed and the Company shall
issue a certificate representing the Securities without such legend to the
holder of any Security upon which it is stamped, if, unless otherwise required
by applicable state securities laws, (a) such Security is registered for sale
under an effective registration statement filed under the 1933 Act, or (b) such
holder provides the Company with an opinion of counsel (which counsel may be an
employee of the Buyer), in form, substance and scope reasonably acceptable to
the Company, to the effect that a public sale or transfer of such Security may
be made without registration under the 1933 Act and such Security is so sold or
transferred or (c) such holder provides the Company with reasonable assurances
that such Security can be sold pursuant to Rule 144(k) under the 1933 Act (or a
successor rule thereto). The Buyer agrees to sell all Securities, including
those represented by a certificate(s) or notes from which the legend has been
removed, in compliance with applicable prospectus delivery requirements, if any.
h. Authorization; Enforcement. This Agreement and the Registration
--------------------------
Rights Agreement have been duly and validly authorized, executed and delivered
on behalf of the Buyer and are valid and binding agreements of the Buyer
enforceable in accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating or affecting creditors' rights and to general equity
principles.
i. Residency. The Buyer is a resident of the jurisdiction set forth
---------
immediately below such Buyer's name on the signature pages hereto.
j. No Legal Advice. The Buyer acknowledges that it has had the
---------------
opportunity to review this Agreement and the transactions contemplated hereby
with its own legal counsel and investment and tax advisors.
k. No Brokers. The Buyer has taken no action which would give rise
----------
to any claim by any person for brokerage commissions, finder's fees or similar
payments
-5-
<PAGE>
relating to this Agreement or the transactions contemplated hereby, other than
arrangements between CSFBC and the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
----------------------------------------------
The Company represents and warrants to each Buyer, as of the date hereof
and the date of each Closing, that:
a. Organization and Qualification. The Company has been duly
------------------------------
incorporated and is an existing corporation in good standing under the laws of
the State of Delaware, with all requisite power and authority (corporate and
other) to own its properties and conduct its business as described in the
Private Placement Memorandum; and the Company is duly qualified to do business
as a foreign corporation in good standing in all other jurisdictions in which
its ownership or lease of property or the conduct of its business requires such
qualification except where the failure to be so qualified would not have a
Material Adverse Effect.
b. Subsidiary Organization and Qualification. Each subsidiary of
-----------------------------------------
the Company (it being understood that all references in this Agreement to
subsidiaries of the Company include, without limitation, ATC and its
subsidiaries from and after the ATC Merger (as defined herein)) has been duly
incorporated (or formed, as the case may be) and is an existing corporation (or
limited partnership or limited liability company, as the case may be) in good
standing under the laws of the jurisdiction of its incorporation or formation,
with all requisite power and authority (corporate and other) to own its
properties and conduct its business as described in the Private Placement
Memorandum; and each subsidiary of the Company is duly qualified to do business
as a foreign corporation or partnership in good standing in all other
jurisdictions in which its ownership or lease of property or the conduct of its
business requires such qualification except where the failure to be so qualified
would not have a Material Adverse Effect. All of the issued and outstanding
capital stock (or partnership, limited liability company or other equity
interests) of each subsidiary of the Company has been duly authorized and
validly issued and is fully paid (except for any general partnership interest)
and nonassessable; and, except for the pledge pursuant to the Senior Bank
Facilities as disclosed in the Private Placement Memorandum, the capital stock
(and partnership and other equity interests) of each subsidiary owned by the
Company, directly or through subsidiaries, is owned free from liens,
encumbrances and defects.
c. Capital Stock. All outstanding shares of capital stock of the
-------------
Company have been duly authorized and validly issued, are fully paid and
nonassessable and the stockholders of the Company do not and will not have any
preemptive rights with respect to any of such securities; upon the issuance of
the PIK Preferred Stock and the payment by the Buyers therefor pursuant to the
terms of this Agreement, the PIK Preferred Stock will be duly authorized and
issued, fully paid and nonassessable and not subject to any preemptive rights,
and the terms of the PIK Preferred Stock will be valid
-6-
<PAGE>
and binding on the Company; the ATC Merger has been duly approved by the Board
of Directors and stockholders of the Company and any subsidiary into which ATC
may be merged and of ATC, and no other approvals (corporate, contractual or
governmental) are required in order for the ATC Merger to become effective other
than the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware. Any Securities issued in exchange for the PIK Preferred Stock
will be duly authorized and validly issued, and, in the case of Exchange
Preferred Stock, fully paid and nonassessable and the holders thereof will not
be entitled to any preemptive rights with respect to such securities.
d. Registration Rights. Except as disclosed in the Private
-------------------
Placement Memorandum, and other than the Registration Rights Agreement and the
registration rights agreement relating to the Company's common stock, there are
no contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a registration
statement under the 1933 Act with respect to any securities of the Company owned
or to be owned by such person or to require the Company to include such
securities with any securities being registered pursuant to any registration
statement filed or to be filed by the Company under the 1933 Act.
e. No Consents. Other than the filing of a Form D under the 1933
-----------
Act and except to the extent required under Blue Sky or securities laws of the
states or other jurisdictions, with respect to the offering and sale of
Securities pursuant to this Agreement, no consent, approval, authorization,
order or waiver of, or filing with, any governmental agency or body or any court
or any third party is required to be obtained or made by the Company or any
subsidiary of the Company for the consummation of the transactions contemplated
by this Agreement in connection with the purchase of the Securities.
f. No Conflicts. The consummation of the transactions necessary to
------------
effectuate the ATC Merger, the Tower Separation and the CBS Merger did not and
will not, and the execution, delivery and performance of this Agreement and the
Registration Rights Agreement, the issuance, sale and delivery of the Securities
hereunder, and the consummation of the transactions herein contemplated will
not, result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, any rule, regulation, order or policy
of any governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Company or any subsidiary of the Company or any of their
properties, the Senior Credit Facility (as defined herein) or any other
agreement or instrument to which the Company or any such subsidiary is a party
or by which the Company or any such subsidiary is bound, or to which any of the
properties of the Company or any such subsidiary is subject, or the charter or
by-laws (or other constituent document) of the Company or any such subsidiary.
-7-
<PAGE>
g. Authorization; Enforcement. (i) The Company has all requisite
--------------------------
corporate power and authority to enter into and perform this Agreement, the
Escrow Agent Agreement, the Registration Rights Agreement, to file with the
Secretary of State of the State of Delaware the Certificates of Designation with
respect to the Securities and to consummate the transactions contemplated hereby
and thereby and to issue, sell and deliver the Securities, in accordance with
the terms hereof and thereof, (ii) the execution and delivery of this Agreement,
the Registration Rights Agreement, the Escrow Agent Agreement, the filing of the
Certificates of Designation with respect to the PIK Preferred Stock and Exchange
Preferred Stock by the Company and the consummation by it of the transactions
contemplated hereby and thereby (including without limitation the issuance, sale
and delivery of the PIK Preferred Stock, the issuance and delivery of the
Exchange Preferred Stock in exchange therefor and the issuance of subordinated
debentures in exchange for the Exchange Preferred Stock) have been duly
authorized by the Board of Directors and no further consent or authorization of
the Company, the Board of Directors or any committee thereof, or its
shareholders is required, (iii) this Agreement has been duly executed and
delivered by the Company, and (iv) this Agreement constitutes, and upon
execution and delivery by the Company of the Registration Rights Agreement and
the Escrow Agent Agreement, the Registration Rights Agreement and the Escrow
Agent Agreement will constitute, legal, valid and binding obligations of the
Company enforceable against the Company in accordance with their respective
terms subject only to bankruptcy, insolvency, reorganization, moratorium, and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
h. Real Property. Except as disclosed in the Private Placement
-------------
Memorandum, the Company and its subsidiaries have good and marketable title to
all real properties and all other properties and assets owned by them, in each
case free from liens, encumbrances and defects except pursuant to the Senior
Bank Facilities or where the failure to have such good and marketable title
would not, have a Material Adverse Effect; and except as disclosed in the
Private Placement Memorandum, the Company and its subsidiaries hold any leased
real or personal property under valid and enforceable leases with no exceptions
except where the failure to have such valid and enforceable leases would not
have a Material Adverse Effect.
i. No Labor Disputes. No labor dispute with the employees of the
-----------------
Company or any subsidiary exists or, to the knowledge of the Company, is
imminent that might have a Material Adverse Effect.
j. Intellectual Property. The Company and its subsidiaries own,
---------------------
possess or can acquire on reasonable terms, adequate trademarks, trade names and
other rights to inventions, know-how, patents, copyrights, confidential
information and other intellectual property (collectively, "intellectual
property rights") necessary to conduct the business now operated by them, or
presently employed by them, and have not received any notice of infringement of
or conflict with asserted rights of others with respect to any
-8-
<PAGE>
intellectual property rights that, if determined adversely to the Company or any
of its subsidiaries, would individually or in the aggregate have a Material
Adverse Effect.
k. No Environmental Liability. Neither the Company nor any of its
--------------------------
subsidiaries is in violation of any statute, any rule, regulation, decision or
order of any governmental agency or body or any court, domestic or foreign,
relating to the use, disposal or release of hazardous or toxic substances or
relating to the protection or restoration of the environment or human exposure
to hazardous or toxic substances (collectively, "environmental laws"), owns or
operates any real property contaminated with any substance that is subject to
any environmental laws, is liable for any off-site disposal or contamination
pursuant to any environmental laws, or is subject to any claim relating to any
environmental laws, which violation, contamination, liability or claim would
individually or in the aggregate have a Material Adverse Effect; and the Company
is not aware of any pending investigation which might lead to such a claim.
l. No Litigation. There are no pending actions, suits or
-------------
proceedings against or affecting the Company, any of its subsidiaries or any of
their respective properties that, if determined adversely to the Company or any
of its subsidiaries, would individually or in the aggregate have a Material
Adverse Effect and no such actions or suits are threatened or, to the Company's
knowledge, contemplated.
m. Financial Statements. The financial statements included in the
--------------------
Private Placement Memorandum (the "Financial Statements") present fairly the
financial position of the Company and its consolidated subsidiaries and the
other entities named therein as of the dates shown and their results of
operations and cash flows for the periods shown, and such financial statements
have been prepared in conformity with the generally accepted accounting
principles in the United States applied on a consistent basis.
n. Solvency. The Company is solvent and immediately after giving
--------
effect to the transactions contemplated by this Agreement will be solvent and
currently the Company has no information that would lead it to reasonably
conclude that the Company would not have the, nor does it intend to take any
action that would impair its, ability to pay or refinance its debts from time to
time in connection therewith. The Company did not receive a qualified opinion
from its auditors with respect to its most recent fiscal year end and does not
anticipate or know of any basis upon which its auditors might issue a qualified
opinion in respect of its current fiscal year.
o. No Material Adverse Change. Except as disclosed in the Private
--------------------------
Placement Memorandum, since the date of the latest audited financial statements
included in the Private Placement Memorandum there has been no material adverse
change, nor has any development or event occurred that would have a Material
Adverse Effect, and, except as disclosed in or contemplated by the Private
Placement Memorandum, there has
-9-
<PAGE>
been no dividend or distribution of any kind declared, paid or made by the
Company or any non-wholly-owned Restricted Subsidiary on any class of their
capital stock.
p. Disclosure. All information relating to or concerning the
----------
Company or any of its subsidiaries set forth in this Agreement and provided to
the Buyers pursuant to Section 2(d) hereof and otherwise in connection with the
transactions contemplated hereby is true and correct in all material respects
and the Company has not omitted to state any material fact necessary in order to
make the statements made herein or therein, in light of the circumstances under
which they were made, not misleading.
q. Investment Company Act. The Company is not and, after giving
----------------------
effect to the offering and sale of any of the Securities and the application of
the proceeds thereof as described in the Private Placement Memorandum, will not
be an "investment company" as defined in the Investment Company Act of 1940.
r. Acknowledgment Regarding Buyers' Purchase of Securities. The
-------------------------------------------------------
Company acknowledges and agrees that the Buyers are acting solely in the
capacity of arm's length purchasers with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that no Buyer
is acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any advice given by any Buyer or any of their respective
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is merely incidental to the Buyers' purchase of the PIK
Preferred Stock. The Company further represents to each Buyer that the Company's
decision to enter into this Agreement has been based solely on the independent
evaluation of the Company and its representatives.
s. No Integrated Offering. Neither the Company, nor any of its
----------------------
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales in any security or solicited any offers to
buy any security under circumstances that would require registration under the
1933 Act of the issuance of the PIK Preferred Stock or the Exchange Preferred
Stock in exchange therefor to the Buyers.
t. No Brokers. The Company has taken no action which would give
----------
rise to any claim by any person for brokerage commissions, finder's fees or
similar payments relating to this Agreement or the transactions contemplated
hereby, except with respect to expenses, fees and commissions payable to CSFBC.
u. Compliance with Laws. Except for any violations that
--------------------
individually and in the aggregate would have no Material Adverse Effect, the
Company and each of its subsidiaries is in compliance with all applicable
statutes, laws, regulations and executive orders of the United States of America
and all states, foreign countries or other governmental bodies and agencies
having jurisdiction over the Company's and its subsidiaries' business and
properties.
-10-
<PAGE>
v. Schedules. Except (i) as disclosed in Schedule A hereto and (ii)
---------
transactions that individually and in the aggregate would have no Material
Adverse Effect, there are no current or planned transactions between the Company
or any of its Restricted Subsidiaries on the one hand and an Affiliate on the
other hand on terms less advantageous to the Company or such Restricted
Subsidiary than would be the case if such transaction had been effected with a
non-Affiliate ("Related Transactions"). Schedule B attached hereto is a true
correct and complete list of the Company's existing Indebtedness including the
amount and maturity thereof.
4. COVENANTS
---------
a. Best Efforts. Upon the giving by the Company of a Notice of
------------
Issuance, the parties shall use their best efforts to satisfy timely each of the
conditions applicable to it described in Section 6 and 7 of this Agreement with
respect to each Closing.
b. Form D: Blue Sky Laws. The Company agrees to file a Form D with
---------------------
respect to the offering and sale of the PIK Preferred Stock as required under
Regulation D and provide a copy thereof to each Buyer promptly after such
filing. The Company shall, on or before each Closing Date, take such action as
the Company shall reasonably determine is necessary to qualify the Securities
for sale to the Buyers at the applicable Closing pursuant to this Agreement
under applicable securities or "blue sky" laws of the states of the United
States (or to obtain an exemption from such qualification), and shall provide
evidence for any such action so taken to each Buyer on or prior to each Closing
Date.
c. Use of Proceeds. The Company will use the proceeds of the PIK
---------------
Preferred Stock solely (i) to finance its obligation referred to in the CBS
Merger Agreement to be responsible for any tax liability arising from the Tower
Separation and (ii) to pay fees and expenses related to the issuance of the PIK
Preferred Stock. The Company will use the proceeds of any offering of Permanent
Securities to redeem PIK Preferred Stock in accordance with Section 6(b) of the
PIK Certificate of Designation.
d. Expenses. The Company will reimburse CSFBC and its affiliates,
--------
upon request made from time to time, for their reasonable fees and expenses
incurred in connection with the preparation, execution and delivery of this
Agreement and the activities hereunder or contemplated hereby, including without
limitation syndication expenses of CSFBC and the reasonable fees and expenses of
counsel to CSFBC and its affiliates.
e. Reservation of Shares. The Company shall at all times have
---------------------
authorized, and reserve for the purpose of issuance, a sufficient number of
shares of Exchange Preferred Stock to provide for the full exchange of the
outstanding PIK
-11-
<PAGE>
Preferred Stock into Exchange Preferred Stock. If at any time the number of
shares of preferred stock authorized and reserved for issuance is below the
number of shares of Exchange Preferred Stock issuable upon exchange of the PIK
Preferred Stock (based upon the aggregate liquidation preference and redemption
premium as then in effect), the Company will promptly take all corporate action
necessary to authorize and reserve a sufficient number of shares, including,
without limitation, calling a special meeting of shareholders to authorize
additional shares to meet the Company's obligations under this Section 4(e), in
the case of an insufficient number of authorized shares, and using its best
efforts to obtain shareholder approval of an increase in such authorized number
of shares.
f. Updated Private Placement Memorandum. The Company shall update
------------------------------------
or amend the Private Placement Memorandum if at any time prior to the
consummation of all of the applicable Closings hereunder any such update or
amendment shall be necessary to ensure that the Private Placement Memorandum
does not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
g. Material Adverse Change. For so long as any portion of the
-----------------------
Aggregate Commitment of any Buyer remains outstanding, the Company shall
promptly notify such Buyer in the event of any change, event or development
resulting in a Material Adverse Effect.
5. TRANSFER AND ESCROW AGENT INSTRUCTIONS.
--------------------------------------
The Company shall issue irrevocable instructions to Harris Trust and
Savings Bank as transfer and escrow agent ("Transfer and Escrow Agent") to issue
certificates, registered in the name of each Buyer or its nominee, for the
Exchange Preferred Stock in such amounts as specified from time to time by each
Buyer to the Company upon exchange of the PIK Preferred Stock in accordance with
the terms thereof (the "Transfer and Escrow Agent Instructions"). Prior to
registration of the Exchange Preferred Stock under the 1933 Act, all such
certificates shall bear the restrictive legend specified in Section 2(g) of this
Agreement. The Company covenants that no instruction other than the Transfer
and Escrow Agent Instructions referred to in this Section 5, and stop transfer
instructions to give effect to Section 2(f) hereof (in the case of the Exchange
Preferred Stock, prior to registration of the Exchange Preferred Stock under the
1933 Act), will be given by the Company to the Transfer and Escrow Agent and
that the Securities shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this Agreement and the
Registration Rights Agreement. Nothing in this Section 5. shall affect in any
way the Buyer's obligations and agreement set forth in Section 2(f) hereof to
comply with all applicable prospectus delivery requirements, if any, upon resale
of the Securities. If a Buyer provides the Company with an opinion of counsel
(which counsel may be an employee of Buyer), reasonably satisfactory to the
Company in form, substance and scope, that registration of a resale by such
Buyer of any
-12-
<PAGE>
of the Securities is not required under the 1933 Act, the Company shall permit
the transfer, and promptly instruct the Transfer and Escrow Agent to issue one
or more certificates representing shares of PIK Preferred Stock, Exchange
Preferred Stock or subordinated debentures, as the case may be, in such name and
in such denominations as specified by such Buyer. The Company acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to the
Buyers, by vitiating the intent and purpose of the transactions contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 5 will be inadequate and agrees, in
the event of a breach or threatened breach by the Company of the provisions of
this Section 5, that the Buyers shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach and requiring
immediate transfer, without the necessity of showing economic loss and without
any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
----------------------------------------------
Upon the delivery by the Company of a Notice of Issuance in accordance with
Section 1(b), the obligation of the Company hereunder to issue and sell the PIK
Preferred Stock at each Closing is subject to the satisfaction, on the related
Closing Date, of each of the following conditions thereto, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion:
a. The applicable Buyer shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to the Company.
b. The applicable Buyer shall have delivered the purchase price in
accordance with Section 1(b) above.
c. The representations and warranties of the applicable Buyer shall
be true and correct in all material respects as of the date when made and as of
the Initial Closing or Second Closing, as the case may be, as though made at
that time (except for representations and warranties that speak as of a specific
date), and the applicable Buyer shall in all material respects have performed,
satisfied and complied with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the applicable
Buyer at or prior to the relevant Closing.
d. No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.
-13-
<PAGE>
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
-------------------------------------------------
Upon the delivery by the Company of a Notice of Issuance in accordance with
Section 1(b), the obligation of each Buyer hereunder to purchase the PIK
Preferred Stock on the related Closing Date is subject to the satisfaction of
each of the following conditions (except as specifically provided to the
contrary in this Section 7), provided that these conditions are for such Buyer's
sole benefit and may be waived by such Buyer at any time in its sole discretion:
a. The Company shall have (i) executed this Agreement and the
Registration Rights Agreement, and delivered the same to such Buyer and (ii)
filed a Certificate of Designation with the Secretary of State of the State of
Delaware with respect to each of the PIK Preferred Stock and the Exchange
Preferred Stock.
b. The Company shall have delivered to such Buyer duly executed
certificates representing the PIK Preferred Stock being so purchased in
accordance with Section 1(c) above.
c. The Transfer and Escrow Agent Instructions and an Escrow
Agreement providing for the escrow of certificates representing least
$500,000,000 in aggregate liquidation preference of Exchange Preferred Stock, in
form and substance reasonably satisfactory to a majority-in-interest of the
Buyers, shall have been delivered to and acknowledged in writing by the Transfer
and Escrow Agent.
d. The representations and warranties of the Company shall be true
and correct in all material respects as of the date when made and as of such
Closing as though made at such time (except for representations and warranties
that speak as of a specific date) and the Company shall in all material respects
have performed, satisfied and complied with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to such Closing. Such Buyer shall have received
a certificate or certificates executed by an executive officer of the Company,
dated as of the date of such Closing to the foregoing effect and as to such
other matters as may be reasonably requested by such Buyer, including, but not
limited to certifications with respect to (i) the Company's Restated Certificate
of Incorporation, By-laws and Board of Directors' resolutions relating to the
transactions contemplated hereby, (ii) the absence of any default or event of
default under any instrument or agreement evidencing or entered into in
connection with indebtedness of the Company or any Restricted Subsidiary, and
(iii) the absence of any Liens on the assets or property of the Company or any
Restricted Subsidiary except pursuant to the Senior Bank Facilities or where the
existence of such Liens does not result in a Material Adverse Effect.
e. No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by or in
-14-
<PAGE>
any court or governmental authority of competent jurisdiction or any self-
regulatory organization having authority over the matters contemplated hereby
which prohibits the consummation of any of the transactions contemplated by this
Agreement or the Registration Rights Agreement.
f. The Buyers shall have received the opinions of Sullivan &
Worcester LLP dated as of the date of such Closing, in form, scope and substance
reasonably satisfactory to CSFBC.
g. CSFBC shall have received a letter from Deloitte & Touche LLP and
KPMG Peat Marwick LLP in form, scope and substance reasonably satisfactory to
CSFBC.
h. The separation of the Company from American Radio Systems
Corporation (the "Tower Separation") and the merger of American Radio Systems
Corporation with and into a subsidiary of CBS Corporation (the transactions
described in clauses (i) and (ii) and the issuance and sale of the PIK Preferred
Stock being collectively referred to herein as the "Transactions") shall have
been consummated or shall be consummated simultaneously on such Closing Date, in
each case in all material respects in accordance with the terms hereof and the
terms of the relevant documentation therefore (and without the waiver of any
material term).
i. After giving effect to the Transactions and the other
transactions contemplated hereunder (including under documents contemplated
hereby), the Company and its subsidiaries shall have outstanding no indebtedness
or preferred stock, except as permitted under the PIK Preferred Certificate of
Designation.
j. There shall not have occurred after the date of this Agreement
(a) any general suspension of trading in, or limitation on prices for,
securities on any national securities exchange of in the over-the-counter market
in any Applicable Jurisdiction, (b) the declaration of a banking moratorium or
any suspension of payments in respect of banks in any Applicable Jurisdiction
(as defined in Section 9(m)), (c) the commencement of a war, armed hostilities
or other international or national calamity or emergency, directly or indirectly
involving any Applicable Jurisdiction, (d) any limitations (whether or not
mandatory) imposed by any governmental authority on the nature or extension of
credit or further extension of credit by banks or other lending institutions,
(e) in the case of the foregoing clauses (c) and (d), a material escalation or
worsening thereof, or (f) any other material adverse change in banking or
capital market conditions that has had or reasonably could have a material
adverse effect on, or has materially impaired, the syndication or consummation
of offerings of high-yield securities or common equity, as the case may be, and
that CSFBC shall determine makes it impracticable to consummate Permanent
Financing prior to the termination of the marketing period for the Permanent
Financing.
-15-
<PAGE>
k. CSFBC shall be satisfied that, immediately prior to and during
the marketing period for the Permanent Financing, there shall be no competing
issues of high yield preferred or common equity securities (other than the PIK
Preferred Stock) of the Company or any of its affiliates other than as part of
the Permanent Financing.
8. INDEMNIFICATION AND CONTRIBUTION
--------------------------------
a. The Company will indemnify and hold harmless each Buyer against
any losses, claims, damages or liabilities, joint or several, to which such
Buyer may become subject, under the Securities Exchange Act of 1934 ("1934 Act")
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) (i) arise out of or are based upon any claim against such
Buyer that arises out of or is based upon any untrue statement or alleged untrue
statement of any material fact contained in the Private Placement Memorandum or
any amendment or supplement thereto, or arise out of or are based upon any claim
against such Buyer that arises out of or is based upon the omission or alleged
omission to state therein a material fact necessary to make the statements
therein not misleading, or (ii) arise out of or relate to any claim or any
litigation or other proceeding (regardless of whether such Buyer is a party
thereto) that relates to any action or omission by the Company in connection
with the offer or sale of Securities or the refinancing thereof or any
transaction contemplated thereby, and will reimburse each Buyer for any legal or
other expenses reasonably incurred by such Buyer in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with written information furnished to the
Company by any Buyer specifically for use therein.
b. CSFBC will indemnify and hold harmless the Company against any
losses, claims, damages or liabilities to which the Company may become subject,
under the 1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Private Placement Memorandum or any amendment or supplement thereto, or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by
CSFBC specifically for use therein, and will reimburse any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred.
-16-
<PAGE>
c. Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release of
such indemnified party from all liability on any claims that are the subject
matter of such action.
d. If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the indemnified party the indemnifying party from the offering of the PIK
Preferred Stock or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the indemnified party and the indemnifying party in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities as well as any other relevant equitable considerations. The relative
benefits received by the indemnified party and the indemnifying party shall be
deemed to be in the same proportion as the total net proceeds received by the
Company (before deducting expenses) from the sale of PIK Preferred Stock bear to
the total commitment fees received by any relevant Buyer. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company, or any
relevant Buyer and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred
-17-
<PAGE>
by such indemnified party in connection with investigating or defending any
action or claim which is the subject of this subsection (d). Notwithstanding the
provisions of this subsection (d), CSFBC shall not be required to contribute any
amount in excess of the amount by which the amount it has paid to the Company
for the purchase of PIK Preferred Stock exceeds the amount of any damages which
such Buyer has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No other Buyer shall
have any obligation under this subsection (d).
e. The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Buyer within the meaning of the 1934 Act and to each Buyer's officers,
directors, employees, affiliates, agents and advisors and the obligations of
CSFBC under this Section shall be in addition to any liability which the
respective Buyers may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls the Company within the meaning
of the 1934 Act.
9. GOVERNING LAW; MISCELLANEOUS.
----------------------------
a. Governing Law. This Agreement shall be governed by and
-------------
interpreted in accordance with the laws of the State of New York. The parties
hereto hereby submit to the exclusive jurisdiction of the United States Federal
Courts located in the Borough of Manhattan in the State of New York with respect
to any dispute arising under this Agreement, the agreements entered into in
connection herewith or the transactions contemplated hereby or thereby.
b. Counterparts; Signatures by Facsimile. This Agreement may be
-------------------------------------
executed in two or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when counterparts have been signed
by each party and delivered to the other party. This Agreement, once executed by
a party, may be delivered to the other party hereto by facsimile transmission of
a copy of this Agreement bearing the signature of the party so delivering this
Agreement.
c. Headings. The headings of this Agreement are for convenience of
--------
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be invalid
------------
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or unenforceability of the remainder of this Agreement
or the validity or unenforceability of this Agreement in any other jurisdiction.
e. Amendments. No provision of this Agreement may be waived or
----------
amended other than by an instrument in writing signed by the parties hereto.
-18-
<PAGE>
f. Notices. Any notices required or permitted to be given under the
-------
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and shall be effective five days
after being placed in the mail, if mailed by regular U.S. mail, or upon receipt,
if delivered personally or by courier (including a recognized overnight delivery
service) or by facsimile, in each case addressed to a party. The addresses for
such communications shall be:
If to the Company:
American Tower Systems Corporation
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Joseph L. Winn
Facsimile: (617) 375-7575
With copy to:
Sullivan & Worcester LLP
1 Post Office Square
Boston, Massachusetts 02109
Attention: Norman A. Bikales, Esq.
Facsimile: (617) 338-2880
If to a Buyer (including CSFBC): To the address set forth immediately
below such Buyer's name on the signature pages hereto.
Each party shall provide notice to the other party of any change in
address.
g. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties and their successors and assigns. Neither
the Company, nor any Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other, except
that with the consent of CSFBC, in the event that the Company elects to issue
the PIK Preferred Stock in two closings, the Buyers may assign the obligation to
purchase hereunder to one another among Closings so long as the Aggregate
Commitment of each such Buyer in both Closings is not reduced by such assignment
or assumption. Notwithstanding the foregoing, any Buyer may assign its rights
hereunder to any person that purchases Securities without the consent of the
Company including, without limitation, through open market transactions effected
on the NYSE or on any other stock exchange or quotation system on which the
Securities may be quoted or listed.
h. Third Party Beneficiaries. This Agreement is intended for the
-------------------------
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for
-19-
<PAGE>
the benefit of, nor may any provision hereof be enforced by, any other person
except as otherwise provided in Section 2(f).
i. Survival. The representations and warranties of the Company and
--------
the agreements and covenants set forth in Sections 2, 3, 4, 5, 8 and 9 shall
survive the closing(s) hereunder notwithstanding any due diligence investigation
conducted by or on behalf of the Buyers.
j. Publicity. The Company, CSFBC, and each Buyer, to the extent such
---------
Buyer is named in any of the following documents, shall have the right to
consent to the issuance of any press releases, SEC, NYSE or NASD filings, or any
other public statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, with the prior approval
- -------- -------
of CSFBC, to make any press release or SEC, NYSE or NASD filings with respect to
such transactions as is required by applicable law and regulations. The Buyers
shall not make any public announcement with respect to the transactions
contemplated hereby without the written consent of the Company except as is
required by applicable law and regulations (although each such Buyer will
consult the Company in connection with any such press release prior to its
release and the Company shall be provided with a copy thereof and be given an
opportunity to comment thereon).
k. Further Assurances. Each party shall do and perform, or cause to
------------------
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
l. No Strict Construction. The language used in this Agreement will
----------------------
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
m. Definitions. The following terms shall have the meanings
-----------
specified. Capitalized terms used but not defined herein shall have the
respective meanings assigned thereto in the Certificate of Designation with
respect to the PIK Preferred Stock.
"Applicable Jurisdiction" means the United States and New York State.
"Permanent Financing" means an offering of common equity securities or
high yield securities of the Company the proceeds of which will be used to repay
or redeem the outstanding Securities in full.
n. Entire Agreement. This Agreement constitutes the entire agreement
----------------
of the parties and supersedes all prior agreements and undertakings, both
written and oral, between the parties, or any of them, with respect to the
subject matter hereof (which shall
-20-
<PAGE>
not be deemed to include any arrangements or agreements with respect to fees,
commissions or expenses, including the previously agreed fee payable by the
Company in connection with the exchange of the PIK Preferred Stock into the
Exchange Preferred Stock).
-21-
<PAGE>
IN WITNESS WHEREOF, the undersigned and the Company have caused this
Agreement to be duly executed as of the date first above written.
AMERICAN TOWER SYSTEMS CORPORATION
By: /s/ Joseph L. Winn
--------------------------------
Name: Joseph L. Winn
Title: Chief Financial Officer
<PAGE>
CREDIT SUISSE FIRST BOSTON CORPORATION
By: /s/ Kristin M. Allen
---------------------------------
Name: Kristin M. Allen
Title: Managing Director
ADDRESS:
Credit Suisse First Boston Corporation
11 Madison Avenue
New York, New York 10010
Attention: Scott Stearns
Facsimile: (212) 325-8291
Telephone: (212) 325-3995
AGGREGATE ALLOCATED
COMMITMENT AMOUNT: $375,000,000 of initial liquidation preference.
<PAGE>
AMERICAN TRAVELLERS LIFE INSURANCE CO.
By: /s/ Eric Johnson
--------------------------------
Name: Eric Johnson
Title: Vice President
ADDRESS:
American Travelers Life Insurance Company
Attention: Don Cobin
11825 North Pennsylvania
P. O. Box 1925
Carmel, Indiana 46032
Facsimile: (317) 817-2763
Telephone: (317) 817-3622
AGGREGATE ALLOCATED
COMMITMENT AMOUNT: $6,666,667 of initial liquidation preference
<PAGE>
GREAT AMERICAN RESERVE INSURANCE CO.
By: /s/ Eric Johnson
-------------------------------
Name: Eric Johnson
Title: Vice President
ADDRESS:
Great American Reserve Life Insurance Company
Attention: Don Cobin
11825 North Pennsylvania
P. O. Box 1925
Carmel, Indiana 46032
Facsimile: (317) 817-2763
Telephone: (317) 817-3622
AGGREGATE ALLOCATED
COMMITMENT AMOUNT: $6,666,667 of initial liquidation preference
<PAGE>
CONSECO LIFE INSURANCE COMPANY
By: /s/ Eric Johnson
----------------------------------
Name: Eric Johnson
Title: Vice President
ADDRESS:
Conseco Life Insurance Group
Attention: Don Cobin
11825 North Pennsylvania
P. O. Box 1925
Carmel, Indiana 46032
Facsimile: (317) 817-2763
Telephone: (317) 817-3622
AGGREGATE ALLOCATED
COMMITMENT AMOUNT: $11,666,667 of initial liquidation preference
<PAGE>
Schedule A
Related Transactions
- --------------------
(1) Employment arrangements as disclosed in the Company's public filings; and
(2) The transactions contemplated by the ATS Stock Purchase Agreement, dated as
of January 8, 1998, with certain officers and directors of the Company (or
their affiliates or members of their family or family trusts), pursuant to
which those persons purchased shares of ATS Common Stock at $10.00 per
share, as follows: Steven B. Dodge: 4,000,000 (Class B); Alan L. Box:
450,000 (Class A); Charlton H. Buckley: 300,000 (Class A); each of James S.
Eisenstein and Steven J. Moskowitz: 25,000 (Class A); Arthur C. Kellar:
400,000 (Class A); Thomas H. Stoner, his wife and certain family trusts:
649,950 (Class B); other Stoner family and trust purchasers: 150,050 (Class
A); and Chase Equity Associates: 2,000,000 (Class C). Messrs. Buckley and
Kellar are directors of American Ratio Systems Corporation ("American
Radio"), the majority stockholder of the Company, and Mr. Chavkin, a
director of American Radio and the Company, is an affiliate of Chase Equity
Associates.
Payment of the purchase price was in the form of cash in the case of Chase
Equity Associates, all members of Mr. Stoner's family and the family trusts
(but not Mr. Stoner and his wife) and Messrs. Buckley, Eisenstein, Kellar
and Moskowitz, and, in the case of Messrs. Dodge, Box and Stoner (and his
wife) in the form of a note, due on the earlier of the consummation of the
CBS Merger or, in the event the CBS Merger Agreement is terminated,
December 31, 2000. The notes bear interest at the six-month London
Interbank Offered Rate, from time to time, plus 1.5% per annum, and are
secured by shares of American Ratio Common Stock having a fair market value
of not less than 175% of the principal amount of and accrued and unpaid
interest on the note. The notes are prepayable at any time at the option of
the obligor and will be due and payable, at the option of the Company, in
the event of certain defaults as described therein.
<PAGE>
Schedule B
AMERICAN TOWER SYSTEMS CORPORATION
EXISTING INDEBTEDNESS OF UNRESTRICTED SUBSIDIARIES
<TABLE>
<CAPTION>
EXISTING INDEBTEDNESS
- ---------------------
<S> <C> <C>
(i) Borrowed money, notes etc.
--------------------------
Senior Bank Facilities $223,000,000
Note Payable York Towers $ 204,869
(ii) Capital lease obligations $ 0
-------------------------
(iii) Letters of credit $ 0
-----------------
(iv) Hedging Obligations: (a)
------------------------
Bank Counterparty - hedge type Notional amount
Toronto Dominion - swap $ 7,340,000
Union Bank of CA - cap $ 21,610,000
Bank of New York - cap $ 7,000,000
Suntrust - cap $ 21,500,000
Suntrust - cap $ 23,750,000
Bankers Trust - swap $ 17,550,000
---------------
Total hedging obligations $ 98,750,000
---------------
(v) Liabilities secured by lien $ 0
---------------------------
(vi) Guarantees $ 0
----------
TOTAL EXISTING INDEBTEDNESS $223,204,869
============
</TABLE>
(a) No obligations under these agreements unless terminated and mark to market
required.
<PAGE>
EXHIBIT 10.32
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of June 4, 1998
Among
AMERICAN TOWER SYSTEMS CORPORATION
as Issuer
and
CREDIT SUISSE FIRST BOSTON CORPORATION
CONSECO LIFE INSURANCE COMPANY
AMERICAN TRAVELLERS LIFE INSURANCE CO.
GREAT AMERICAN RESERVE INSURANCE CO.
as Initial Purchasers
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Definitions........................................................... 1
2. Exchange Offer........................................................ 5
3. Shelf Registration.................................................... 9
4. Additional Dividends.................................................. 11
5. Registration Procedures............................................... 11
6. Registration Expenses................................................. 21
7. Indemnification....................................................... 23
8. Rules 144 and 144A.................................................... 26
9. Underwritten Registrations............................................ 27
10. Representations and Warranties........................................ 27
11. Miscellaneous......................................................... 29
(a) No Inconsistent Agreements..................................... 29
(b) Adjustments Affecting Registrable Preferred Stock.............. 29
(c) Amendments and Waivers......................................... 29
(d) Notices........................................................ 30
(e) Successors and Assigns......................................... 31
(f) Counterparts................................................... 31
(g) Headings....................................................... 31
(h) Governing Law.................................................. 31
(i) Severability................................................... 32
(j) Securities Held by the Company or Its Affiliates............... 32
(k) Third Party Beneficiaries...................................... 32
(l) Entire Agreement............................................... 32
</TABLE>
-i-
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is dated as of June 4,
---------
1998, among American Tower Systems Corporation, a Delaware corporation (the
"Company"), Credit Suisse First Boston Corporation ("CSFBC"), Conseco Life
Insurance Company, American Travellers Life Insurance Co. and Great American
Reserve Insurance Co. (individually, an "Initial Purchaser"; together, the
-----------------
"Initial Purchasers").
- -------------------
This Agreement is entered into in connection with the Securities Purchase
Agreement, dated as of June 4, 1998, among the Company and the Initial
Purchasers (the "Purchase Agreement"), which provides for the issuance of the
------------------
Company's Series A Redeemable Preferred Stock, par value $.01 per share (the
"PIK Preferred Stock"). In order to induce the Initial Purchasers to enter into
- --------------------
the Purchase Agreement, the Company has agreed to provide the registration
rights set forth in this Agreement for the benefit of the Initial Purchasers and
their direct and indirect transferees and assigns. The execution and delivery
of this Agreement is a condition to the Initial Purchasers' obligation to
purchase the PIK Preferred Stock under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions.
-----------
As used in this Agreement, the following terms shall have the following
meanings:
Additional Dividends: See Section 4 hereof.
--------------------
Advice: See Section 5 hereof.
------
Agreement: See the introductory paragraphs hereto.
---------
Applicable Period: See Section 2(b) hereof.
-----------------
Certificate of Designation: The Certificate of Designation governing the
--------------------------
Underlying Preferred Stock as filed with the
-1-
<PAGE>
Secretary of State of the State of Delaware, as amended from time to time.
Certificate Shares: See Section 10 hereof.
------------------
Closing Date: The Closing Date as defined in the Purchase Agreement.
------------
Company: See the first introductory paragraph hereto.
-------
CFCBC: See the first introductory paragraph hereto.
-----
Depositary: The Depository Trust Company until a successor is appointed by
----------
the Company and the Transfer Agent.
Effectiveness Date: Not later than the 335th day after the Issue Date or,
------------------
in the case of a Shelf Registration Statement that is filed after the 245th day
after the Issue Date in accordance with the terms hereof, not later than the
90th day after a Shelf Registration Trigger.
Effectiveness Period: See Section 3 hereof.
--------------------
Event Date: See Section 4 hereof.
----------
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
------------
rules and regulations of the SEC promulgated thereunder.
Exchange Debentures: The Company's Subordinated Exchange Debentures due
-------------------
2010 issuable in exchange for the Underlying Preferred Stock or the Exchange
Preferred Stock.
Exchange Offer: See Section 2(a) hereof.
--------------
Exchange Preferred Stock: See Section 2(a) hereof.
------------------------
Exchange Registration Statement: See Section 2(a) hereof.
-------------------------------
Filing Date: Not later than the 245th day after the Issue Date or, in the
-----------
case of a Shelf Registration Statement not later than the 30th day after a Shelf
Registration Trigger, if later.
-2-
<PAGE>
Global Certificate: See Section 10 hereof.
------------------
Holder: Any holder of shares of Registrable Preferred Stock.
------
Indemnified Person: See Section 7(c) hereof.
------------------
Indemnifying Person: See Section 7(c) hereof.
-------------------
Initial Purchaser: See the first introductory paragraph hereto.
-----------------
Initial Purchasers: See the first introductory paragraph hereto.
------------------
Initial Shelf Registration: See Section 3(a) hereof.
--------------------------
Inspectors: See Section 5(n) hereof.
----------
Interim Financing Maturity Date. The date that is 365 days from the Issue
-------------------------------
Date.
Issue Date: The date on which PIK Preferred Stock was first issued and
----------
sold to the Initial Purchasers pursuant to the Purchase Agreement.
NASD: See Section 5(s) hereof.
----
Participant: See Section 7(a) hereof.
-----------
Participating Broker-Dealer: See Section 2(b) hereof.
---------------------------
Person: An individual, partnership, corporation, limited liability
------
company, unincorporated association, trust or joint venture, or a governmental
agency or political subdivision thereof.
PIK Preferred Stock. See second introductory paragraph hereto.
-------------------
Prospectus: The prospectus included in any Registration Statement
----------
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
-3-
<PAGE>
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, and all other amendments and supplements to the
prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such prospectus.
Purchase Agreement: See the second introductory paragraph hereto.
------------------
Records: See Section 5(n) hereof.
-------
Registrable Preferred Stock: Each share of Underlying Preferred Stock upon
---------------------------
original issuance thereof and at all times subsequent thereto and each share of
Exchange Preferred Stock as to which Section 2(c)(iv) hereof is applicable upon
original issuance and at all times subsequent thereto until the earliest to
occur of (i) a Registration Statement (other than, with respect to any Exchange
Preferred Stock as to which Section 2(c)(iv) hereof is applicable, the Exchange
Registration Statement) covering such shares of Underlying Preferred Stock or
Exchange Preferred Stock, as the case may be, has been declared effective by the
SEC and such shares of Underlying Preferred Stock or Exchange Preferred Stock,
as the case may be, have been disposed of in accordance with such effective
Registration Statement, (ii) such shares of Underlying Preferred Stock or
Exchange Preferred Stock, as the case may be, are sold in compliance with Rule
144 or could (except with respect to affiliates of the Company within the
meaning of the Securities Act) be sold in compliance with paragraph (k) of such
Rule 144, (iii) in the case of Exchange Preferred Stock, such shares of Exchange
Preferred Stock have been issued pursuant to an Exchange Offer upon exchange of
PIK Preferred Stock and may be resold without restriction under state and
federal securities laws, or (iv) such shares of Underlying Preferred Stock or
Exchange Preferred Stock, as the case may be, cease to be outstanding. For
purposes of this Agreement and the registration requirements contained herein,
Registrable Preferred Stock shall be deemed to include, and all Registration
Statements required to be filed in accordance with the terms of this Agreement
shall cover, the Exchange Debentures into which any Registrable Preferred Stock
is exchangeable.
-4-
<PAGE>
Registration Statement: Any registration statement of the Company,
----------------------
including, but not limited to, the Exchange Registration Statement, filed with
the SEC pursuant to the provisions of this Agreement, including the Prospectus,
amendments and supplements to such registration statement, including post-
effective amendments, all exhibits, and all material incorporated by reference
or deemed to be incorporated by reference in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule may
--------
be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such Rule
---------
may be amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule may
--------
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
---
Securities Act: The Securities Act of 1933, as amended, and the rules and
--------------
regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c) hereof.
------------
Shelf Registration: See Section 3(b) hereof.
------------------
Shelf Registration Trigger: See Section 2(c) hereof.
--------------------------
Subsequent Shelf Registration: See Section 3(b) hereof.
-----------------------------
Transfer Agent: The Transfer Agent for the Exchangeable Preferred Stock
--------------
and/or the Exchange Preferred Stock as the context may require.
-5-
<PAGE>
TIA. The Trust Indenture Act of 1939, as amended, and the rules and
---
regulations of the SEC promulgated thereunder.
Underlying Preferred Stock: The Company's Exchange Pay-In-Kind Preferred
--------------------------
Stock, par value $.01 per share, issuable in exchange for the PIK Preferred
Stock as contemplated in the Certificate of Designation of the PIK Preferred
Stock.
Underwritten registration or underwritten offering: A registration in
--------------------------------------------------
which securities of the Company are sold to an underwriter for reoffering to the
public.
2. Exchange Offer
--------------
(a) The Company shall file with the SEC no later than the Filing Date, an
offer to exchange (the "Exchange Offer") any and all shares of the PIK Preferred
--------------
Stock for shares (with a liquidation preference equal to that of the surrendered
shares) of another series of preferred stock of the Company (the "Exchange
Preferred Stock") that will have terms identical in all material respects to the
Underlying Preferred Stock except that (i) the Exchange Preferred Stock shall
have been registered pursuant to an effective Registration Statement under the
Securities Act and the certificates therefor shall not contain terms with
respect to transfer restrictions and shall contain no restrictive legend thereon
and (ii) the certificate of designation governing such Exchange Preferred Stock
does not need to contain the provisions set forth in the Certificate of
Designation concerning Additional Dividends including, without limitation,
Section 3(c) thereof. The Exchange Offer shall be registered under the
Securities Act on the appropriate form (the "Exchange Registration Statement")
-------------------------------
and shall comply in all material respects with all applicable tender offer rules
and regulations under the Exchange Act. The Company agrees to use its best
efforts to (x) cause the Exchange Registration Statement to be declared
effective under the Securities Act on or before the Effectiveness Date; (y) keep
the Exchange Offer open for at least 20 business days (or longer if required by
applicable law) after the date that notice of the Exchange Offer is mailed to
Holders and in any event through the close of business on the Interim Financing
Maturity Date; and (z) consummate the Exchange Offer on the Interim Financing
Maturity Date. If after such Exchange Registration Statement is initially
declared effective
-6-
<PAGE>
by the SEC, the Exchange Offer or the issuance of the Exchange Preferred Stock
thereunder is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, such Exchange
Registration Statement shall be deemed not to have become effective for purposes
of this Agreement. Each Holder who participates in the Exchange Offer will be
required to represent that any Exchange Preferred Stock received by it will be
acquired in the ordinary course of its business, that at the time of the
consummation of the Exchange Offer such Holder will have no arrangement or
understanding with any Person to participate in the distribution of the Exchange
Preferred Stock in violation of the provisions of the Securities Act, and that
such Holder is not an affiliate of the Company within the meaning of the
Securities Act. Upon consummation of the Exchange Offer in accordance with this
Section 2, the provisions of this Agreement shall continue to apply, mutatis
mutandis, solely with respect to Exchange Preferred Stock held by Participating
Broker-Dealers, and the Company shall have no further obligation to register
Registrable Preferred Stock (other than in respect of any Exchange Preferred
Stock as to which clause 2(c)(iv) hereof applies) pursuant to Section 3 hereof.
No securities other than the Exchange Preferred Stock (and the Exchange
Debentures) shall be included in the Exchange Registration Statement.
(b) The Company shall include within the Prospectus contained in the
Exchange Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchasers, that shall contain a summary
statement of the positions taken or policies made by the Staff of the SEC with
respect to the potential "underwriter" status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Preferred Stock received by such broker-dealer (a "Participating Broker-Dealer")
---------------------------
in the Exchange Offer (other than with respect to any shares of Exchangeable
Preferred Stock acquired by them and having, or that is reasonably likely to be
determined to have, the status of an unsold allotment in the initial
distribution), whether such positions or policies have been publicly
disseminated by the Staff of the SEC or such positions or policies, in the
judgment of the Initial Purchasers, represent the prevailing views of the Staff
of the SEC. Such "Plan of Distribution" section shall also expressly permit the
use of the Prospectus by all Persons subject
-7-
<PAGE>
to the prospectus delivery requirements of the Securities Act, including all
Participating Broker-Dealers, and include a statement describing the means by
which Participating Broker-Dealers may resell the Exchange Preferred Stock.
The Company shall use its reasonable best efforts to keep the Exchange
Registration Statement effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by all Persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as is necessary to comply with applicable law in
connection with any resale of the Exchange Preferred Stock; provided, however,
-------- -------
that such period shall not exceed 180 days after the Exchange Registration
Statement is declared effective (or such longer period if extended pursuant to
the last paragraph of Section 5 hereof) (the "Applicable Period").
--------- -----------------
Dividends on the Exchange Preferred Stock will accumulate from the last
dividend payment date on which dividends were paid (or deemed paid through the
issuance of additional shares) on the PIK Preferred Stock surrendered in
exchange therefor.
In connection with the Exchange Offer, the Company shall:
(1) mail to each Holder a copy of the Prospectus forming part of the
Exchange Registration Statement, together with an appropriate letter of
transmittal and related documents;
(2) utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, The City of New York;
(3) permit Holders to withdraw tendered shares of PIK Preferred Stock
at any time prior to the close of business, New York time, on the last
business day on which the Exchange Offer shall remain open;
(4) maintain the Exchange Offer open through the close of business on
the Interim Financing Maturity Date; and
(5) otherwise comply in all material respects with all applicable
laws, rules and regulations.
-8-
<PAGE>
On the Interim Financing Maturity Date after the close of the Exchange
Offer the Company shall:
(1) accept for exchange all shares of PIK Preferred Stock tendered and
not validly withdrawn pursuant to the Exchange Offer;
(2) deliver to the Transfer Agent for cancellation and retirement
certificates representing all shares of PIK Preferred Stock so accepted for
exchange; and
(3) cause the Transfer Agent to countersign and deliver promptly to
each Holder of shares of PIK Preferred Stock, certificates for the shares
of Exchange Preferred Stock equal in liquidation preference to the shares
of PIK Preferred Stock of such Holder so accepted (including the applicable
redemption premium) for exchange.
(c) If, (i) because of any change in law or in currently prevailing
interpretations of the Staff of the SEC, the Company is not permitted to effect
an Exchange Offer, (ii) the Exchange Offer is not consummated by the Interim
Financing Maturity Date, (iii) the Holders of not less than a majority of shares
of the Registrable Preferred Stock determine that the interests of the Holders
would be adversely affected by consummation of the Exchange Offer (in which
event the Company shall not proceed with or consummate the Exchange Offer), or
(iv) any Holder does not participate in the Exchange Offer, or the Company
determines, or a Holder notifies the Company that, after the Exchange Offer, a
Holder would not receive Exchange Preferred Stock on the date of the exchange
that may be sold without restriction under state and federal securities laws
(other than due solely to the status of such Holder as an affiliate of the
Company within the meaning of the Securities Act), then in the case of each of
clauses (i) to and including (iv) of this sentence (each event described in such
clauses, a "Shelf Registration Trigger"), the Company shall promptly deliver to
--------------------------
the Holders written notice thereof (the "Shelf Notice") and shall file a Shelf
------------
Registration pursuant to Section 3 hereof. Notice by a Holder to the Company
that it does not intend to participate in the Exchange Offer shall also be
treated as a Shelf Registration Trigger under clause (iv) as of
-9-
<PAGE>
the notice date (which may be prior to commencement of the Exchange Offer or the
Effectiveness Date).
(d) Anything in this Section to the contrary notwithstanding, the Company
shall not be required to (i) file or have declared effective any Exchange
Registration Statement (ii) proceed with or consummate any Exchange Offer or
(iii) otherwise comply with the provisions of this Section 2, if a Shelf
Registration Trigger of the nature described in Section 2(c)(iii) shall have
occurred.
3. Shelf Registration
------------------
Upon the occurrence of a Shelf Registration Trigger:
(a) Shelf Registration. The Company shall as promptly as reasonably
------------------
practicable (but in no event shall such filing be required earlier than the
Filing Date) file with the SEC a Registration Statement for an offering to be
made on a continuous basis pursuant to Rule 415 covering all of the Registrable
Preferred Stock or, in the case of a Shelf Registration Trigger pursuant to
clause (iv), such shares as are the subject of the Company's determination or
held by such Holder as described therein (the "Initial Shelf Registration").
--------------------------
The Company shall use its best efforts to file with the SEC the Initial Shelf
Registration on or prior to the Filing Date. The Initial Shelf Registration
shall be on Form S-1 or another appropriate form permitting registration of such
Registrable Preferred Stock for resale by Holders in the manner or manners
designated by them (including, without limitation, one or more underwritten
offerings). The Company shall not permit any securities other than the
Registrable Preferred Stock (or Exchange Debentures, as the case may be) to be
included in the Initial Shelf Registration or any Subsequent Shelf Registration
(as defined below).
The Company shall use its best efforts to cause the Initial Shelf
Registration to be declared effective under the Securities Act on or prior to
the Effectiveness Date and to keep the Initial Shelf Registration continuously
effective under the Securities Act until the date that is two years from the
Effectiveness Date, subject to extension pursuant to the last paragraph of
Section 5 hereof, or such shorter period ending when (i) all the shares of
Registrable Preferred Stock covered by the Initial Shelf
-10-
<PAGE>
Registration have been sold in the manner set forth and as contemplated in the
Initial Shelf Registration, (ii) the date on which all the Registrable Preferred
Stock held by persons who are not affiliates of the Company may be resold
pursuant to Rule 144(k) under the Securities Act, or (iii) a Subsequent Shelf
Registration covering all of the Registrable Preferred Stock has been declared
effective under the Securities Act (the "Effectiveness Period").
--------------------
(b) Subsequent Shelf Registrations. If the Initial Shelf Registration or
------------------------------
any Subsequent Shelf Registration ceases to be effective for any reason at any
time during the Effectiveness Period (other than because of the sale of all of
the securities registered thereunder), the Company shall use its reasonable best
efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within 45 days of such cessation
of effectiveness amend the Initial Shelf Registration in a manner to obtain the
withdrawal of the order suspending the effectiveness thereof, or file an
additional "shelf" Registration Statement pursuant to Rule 415 covering all of
the Registrable Preferred Stock (a "Subsequent Shelf Registration"). If a
------------------------------
Subsequent Shelf Registration is filed, the Company shall use its reasonable
best efforts to cause the Subsequent Shelf Registration to be declared effective
under the Securities Act as soon as practicable after such filing and to keep
such Registration Statement continuously effective for a period equal to the
number of days in the Effectiveness Period less the aggregate number of days
during which the Initial Shelf Registration or any Subsequent Shelf Registration
was previously continuously effective or, if less, the number of days until
there are no shares of Registrable Preferred Stock outstanding. As used herein
the term "Shelf Registration" means the Initial Shelf Registration and any
------------------
Subsequent Shelf Registration.
(c) Supplements and Amendments. The Company shall promptly supplement and
--------------------------
amend the Shelf Registration if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration, if required by the Securities Act, or if reasonably requested by
the Holders of a majority of shares of the Registrable Preferred Stock covered
by such Registration Statement or by any underwriter of such Registrable
Preferred Stock.
-11-
<PAGE>
4. Additional Dividends
--------------------
The Company and the Initial Purchasers agree that the Holders of Underlying
Preferred Stock will suffer damages if the Company fails to fulfill its
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Company agrees to pay, as liquidated damages, additional dividends on the
Underlying Preferred Stock ("Additional Dividends") under the circumstances and
--------------------
to the extent set forth in the Certificate of Designation. The Company shall
notify the Transfer Agent within one business day after each and every date on
which an event occurs in respect of which Additional Dividends are required to
be paid (an "Event Date"). Any Additional Dividends will be payable in
----------
accordance with the Certificate of Designation on the next following dividend
payment date.
5. Registration Procedures
-----------------------
In connection with the filing of any Registration Statement pursuant to
Sections 2 or 3 hereof, the Company shall effect such registrations to permit
the sale of the securities covered thereby in accordance with the intended
method or methods of disposition thereof, and pursuant thereto and in connection
with any Registration Statement filed by the Company hereunder the Company
shall:
(a) Prepare and file with the SEC prior to the Filing Date, a Registration
Statement or Registration Statements as prescribed by Sections 2 or 3 hereof,
and use its reasonable best efforts to cause each such Registration Statement to
become effective and remain effective as provided herein; provided, however,
-------- -------
that, if (1) such filing is pursuant to Section 3 hereof, or (2) a Prospectus
contained in an Exchange Registration Statement filed pursuant to Section 2
hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Preferred Stock during the Applicable
Period, before filing any Registration Statement or Prospectus or any amendments
or supplements thereto, the Company shall furnish to and afford the Holders of
the Registrable Preferred Stock covered by such Registration Statement or each
such Participating Broker-Dealer, as the case may be, their counsel and the
managing underwriters, if any, a reasonable opportunity to review copies
-12-
<PAGE>
of all such documents (including copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be filed (in each case
where possible at least five business days prior to such filing and where not
possible as promptly as possible). The Company shall not file any Registration
Statement or Prospectus or any amendments or supplements thereto if the Holders
of a majority in aggregate liquidation preference of the shares of Registrable
Preferred Stock covered by such Registration Statement, or any such
Participating Broker-Dealer, as the case may be, their counsel, or the managing
underwriters, if any, shall reasonably object.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration or Exchange Registration Statement, as the
case may be, as may be necessary to keep such Registration Statement
continuously effective for the Effectiveness Period or the Applicable Period, as
the case may be; cause the related Prospectus to be supplemented by any
Prospectus supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) promulgated
under the Securities Act; and comply with the provisions of the Securities Act
and the Exchange Act applicable to it with respect to the disposition of all
securities covered by such Registration Statement as so amended or in such
Prospectus as so supplemented and with respect to the subsequent resale of any
securities being sold by a Participating Broker-Dealer covered by any such
Prospectus. The Company shall be deemed not to have used its reasonable best
efforts to keep a Registration Statement effective during the Applicable Period
if it voluntarily takes any action that would result in selling Holders of the
Registrable Preferred Stock covered thereby or Participating Broker-Dealers
seeking to sell Exchange Preferred Stock not being able to sell such Registrable
Preferred Stock or such Exchange Preferred Stock during that period unless such
action is required by applicable law or unless the Company complies with this
Agreement, including without limitation, the provisions of paragraph 5(k) hereof
and the last paragraph of this Section 5.
(c) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 hereof is required to be delivered under the Securities Act by any
-13-
<PAGE>
Participating Broker-Dealer who seeks to sell Exchange Preferred Stock during
the Applicable Period, notify the selling Holders of shares of Registrable
Preferred Stock, or each such Participating Broker-Dealer, as the case may be,
their counsel and the managing underwriters, if any, promptly (but in any event
within two business days), and confirm such notice in writing, (i) when a
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective under the Securities Act
(including in such notice a written statement that any Holder may, upon request,
obtain, at the sole expense of the Company, one conformed copy of such
Registration Statement or post-effective amendment including financial
statements and schedules, documents incorporated or deemed to be incorporated by
reference and exhibits), (ii) (A) of the receipt of any written comments by the
SEC or its staff, (B) of the request by the SEC or its staff for amendments or
supplements to a Registration Statement of a Prospectus, or (C) of the issuance
by the SEC of any stop order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus or the initiation of any proceedings for that purpose, (iii) if at
any time when a prospectus is required by the Securities Act to be delivered in
connection with sales of the Registrable Preferred Stock or resales of Exchange
Preferred Stock by Participating Broker-Dealers the representations and
warranties of the Company contained in any agreement (including any underwriting
agreement), contemplated by Section 5(m) hereof cease to be true and correct in
all material respects, (iv) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Registrable Preferred
Stock to be sold by any Participating Broker-Dealer for offer or sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose, (v) of the happening of any event, the existence of any condition or
any information becoming known that makes any statement made in such
Registration Statement or related Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in or amendments or supplements to such
Registration Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement
-14-
<PAGE>
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and that in
the case of the Prospectus, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading and (vi) of the Company's
determination that a post-effective amendment to a Registration Statement would
be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 hereof is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Preferred Stock during
the Applicable Period, use its reasonable best efforts to prevent the issuance
of any order suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Registrable
Preferred Stock to be sold by any Participating Broker-Dealer, for sale in any
jurisdiction and, if any such order is issued, to use its reasonable best
efforts to obtain the withdrawal of any such order at the earliest possible
moment.
(e) If a Shelf Registration is filed pursuant to Section 3 and if requested
by the managing underwriter or underwriters (if any), or the Holders of a
majority of aggregate the liquidation preference of the Registrable Preferred
Stock being sold in connection with an underwritten offering or any
Participating Broker-Dealer, (i) promptly incorporate in a prospectus supplement
or post-effective amendment such information as the managing underwriter or
underwriters (if any), such Holders, any Participating Broker-Dealer or counsel
for any of them determine is reasonably necessary to be included therein, (ii)
make all required filings of such prospectus supplement or such post-effective
amendment as soon as practicable after the Company has received notification of
the matters to be incorporated in such prospectus supplement or post-effective
amendment and (iii) supplement or make amendments to such Registration
Statement.
(f) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or
(2) a Prospectus contained in an Exchange
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<PAGE>
Registration Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Preferred Stock during the Applicable Period, furnish to each
selling Holder of Registrable Preferred Stock and to each such Participating
Broker-Dealer who so requests and to counsel and each managing underwriter, if
any, at the sole expense of the Company, one conformed copy of the Registration
Statement or Registration Statements and each post-effective amendment thereto,
including financial statements and schedules, and, if requested, all documents
incorporated or deemed to be incorporated therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 hereof is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Preferred Stock during
the Applicable Period, deliver to each selling Holder of Registrable Preferred
Stock, or each such Participating Broker-Dealer, as the case may be, their
respective counsel, and the underwriters, if any, at the sole expense of the
Company, as many copies of the Prospectus (including each form of preliminary
prospectus) and each amendment or supplement thereto and any documents
incorporated by reference therein as such Persons may reasonably request; and,
subject to the last paragraph of this Section 5, the Company hereby consents to
the use of such Prospectus and each amendment or supplement thereto by each of
the selling Holders of Registrable Preferred Stock or each such Participating
Broker-Dealer, as the case may be, and the underwriters or agents, if any, and
dealers (if any), in connection with the offering and sale of the Registrable
Preferred Stock covered by, or the sale by Participating Broker-Dealers of the
Exchange Preferred Stock pursuant to, such Prospectus and any amendment or
supplement thereto.
(h) Prior to any public offering of Registrable Preferred Stock or any
delivery of a Prospectus contained in the Exchange Registration Statement by any
Participating Broker-Dealer who seeks to sell Exchange Preferred Stock during
the Applicable Period, to use its reasonable best efforts to register or
qualify, to the extent required by applicable law, and to cooperate with the
selling Holders of a Registrable Preferred
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<PAGE>
Stock or each such Participating Broker-Dealer, as the case may be, the managing
underwriter or underwriters, if any, and their respective counsel in connection
with the registration or qualification (or exemption from such registration or
qualification) of such Registrable Preferred Stock or offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any selling Holder, Participating Broker-Dealer, or the managing underwriter or
underwriters reasonably request; provided, however, that where Exchange
-------- -------
Preferred Stock held by Participating Broker-Dealers or Registrable Preferred
Stock is offered other than through an underwritten offering, the Company agrees
to cause the Company's counsel to perform Blue Sky investigations and file
registrations and qualifications required to be filed pursuant to this Section
5(h); keep each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to be kept
effective and do any and all other acts or things reasonably necessary or
advisable to enable the disposition in such jurisdictions of the Exchange
Preferred Stock held by Participating Broker-Dealers or the Registrable
Preferred Stock covered by the applicable Registration Statement; provided,
--------
however, that the Company shall not be required to qualify as a foreign
- -------
corporation or to execute a general consent to service of process in any
jurisdiction or subject itself to taxation generally in any jurisdiction.
(i) If a Shelf Registration is filed pursuant to Section 3 hereof,
cooperate with the selling Holders of Registrable Preferred Stock and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing shares of Registrable
Preferred Stock to be sold, which certificates shall not bear any restrictive
legends and shall be in a form eligible for deposit with The Depository Trust
Company; and enable such shares of Registrable Preferred Stock to be in such
denominations and registered in such names as the managing underwriter or
underwriters, if any, or Holders may reasonably request.
(j) Use its reasonable best efforts to cause the Registrable Preferred
Stock covered by the Shelf Registration Statement or Exchange Registration
Statement to be registered with or approved by such other governmental agencies
or authorities as may be necessary to enable the seller or sellers
-17-
<PAGE>
thereof or the underwriter or underwriters, if any, to consummate the
disposition of such Registrable Preferred Stock, except as may be required
solely as a consequence of the nature of such selling Holder's business, in
which case the Company will cooperate in all reasonable respects with the filing
of such Registration Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 hereof is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Preferred Stock during
the Applicable Period, upon the occurrence of any event contemplated by
paragraph 5(c)(ii)(C), 5(c)(v) or 5(c)(vi) hereof, as promptly as practicable
prepare and (subject to Section 5(a) hereof) file with the SEC, at the sole
expense of the Company, a supplement or post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Preferred Stock being sold thereunder or to the purchasers of
the Exchange Preferred Stock to whom such Prospectus will be delivered by a
Participating Broker-Dealer, any such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(l) Prior to the effective date of the first Registration Statement
relating to the Registrable Preferred Stock, (i) provide the Transfer Agent with
certificates for the Registrable Preferred Stock in a form eligible for deposit
with The Depository Trust Company and (ii) provide a CUSIP number for the
Registrable Preferred Stock.
(m) In connection with any underwritten offering of Registrable Preferred
Stock pursuant to a Shelf Registration, enter into an underwriting agreement as
is customary in underwritten offerings of preferred stock similar to the
Exchangeable Preferred Stock and take all such other actions as are reasonably
requested by the managing underwriter or underwriters; in order to expedite or
facilitate the registration
-18-
<PAGE>
or the disposition of such Registrable Preferred Stock and, in such connection,
(i) make such representations and warranties to, and covenants with, the
underwriters with respect to the business of the Company and its subsidiaries
(including any acquired business, properties or entity, if applicable) and the
Registration Statement, Prospectus and documents, if any, incorporated or deemed
to be incorporated by reference therein, in each case, as are customarily made
by issuers to underwriters in underwritten offerings of preferred stock similar
to the Exchangeable Preferred Stock, and confirm the same in writing if and when
requested; (ii) obtain the written opinion of counsel to the Company and written
updates thereof in form, scope and substance reasonably satisfactory to the
managing underwriter or underwriters, addressed to the underwriters covering the
matters customarily covered in opinions requested in underwritten offerings of
preferred stock similar to the Registrable Preferred Stock and such other
matters as may be reasonably requested by the managing underwriter or
underwriters; (iii) obtain "cold comfort" letters and updates thereof in form,
scope and substance reasonably satisfactory to the managing underwriter or
underwriters from the independent certified public accountants of the Company
(and, if necessary, any other independent certified public accountants of any
subsidiary the Company or of any business acquired by the Company for which
financial statements and financial data are, or are required to be, included or
incorporated by reference in the Registration Statement), addressed to each of
the underwriters, such letters to be in customary form and covering matters of
the type customarily covered in "cold comfort" letters in connection with
underwritten offerings of preferred stock similar to the Exchangeable Preferred
Stock and such other matters as reasonably requested by the managing underwriter
or underwriters; and (iv) if an underwriting agreement is entered into, the same
shall contain indemnification provisions and procedures no less favorable than
those set forth in Section 7 hereof (or such other provisions and procedures
acceptable to Holders of a majority in aggregate liquidation preference of
shares of Registrable Preferred Stock covered by such Registration Statement and
the managing underwriter or underwriters or agents) with respect to all parties
to be indemnified pursuant to said Section. The above shall be done at each
closing under such underwriting agreement, or as and to the extent required
thereunder.
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<PAGE>
(n) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 hereof is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Preferred Stock during
the Applicable Period, make available for inspection by any selling Holder of
such Registrable Preferred Stock being sold, or each such Participating Broker-
Dealer, as the case may be, any underwriter participating in any such
disposition of Registrable Preferred Stock, if any, and any attorney, accountant
or other agent retained by any such selling Holder or each such Participating
Broker-Dealer, as the case may be, or underwriter (collectively, the
"Inspectors"), at the offices where normally kept, during reasonable business
----------
hours at such time or times as shall be mutually convenient for the Company and
the Inspectors as a group, all financial and other records, pertinent corporate
documents and instruments of the Company and its subsidiaries (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise any
-------
applicable due diligence responsibilities, and cause the officers, directors and
employees of the Company and its subsidiaries to supply all information
reasonably requested by any such Inspector in connection with such Registration
Statement. Records that the Company determines, in good faith, to be
confidential and any Records that it notifies the Inspectors are confidential
shall not be disclosed by any Inspector unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in such
Registration Statement, (ii) the release of such Records is ordered pursuant to
a subpoena or other order from a court of competent jurisdiction, (iii)
disclosure of such information is, in the opinion of counsel for any Inspector,
necessary or advisable in connection with any action, claim, suit or proceeding,
directly, involving or potentially involving such Inspector and arising out of,
based upon, relating to, or involving this Agreement or any transactions
contemplated hereby or arising hereunder or (iv) the information in such Records
has been made generally available to the public other than through the acts of
such Inspector. Each selling Holder of such Registrable Securities and each such
Participating Broker-Dealer will be required to agree that information obtained
by it as a result of such inspections shall be deemed confidential and shall not
be used by it as the basis for any market transactions in the securities of the
Company unless and until such information is
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<PAGE>
generally available to the public. Each selling Holder of such Registrable
Preferred Stock and each such Participating Broker-Dealer will be required to
further agree that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice to the Company and
allow the Company to undertake appropriate action to prevent disclosure of the
Records deemed confidential at the Company's sole expense.
(o) Provide (A) the Holders of the Registrable Preferred Stock to be
included in such registration statement and not more than one counsel for all
the Holders of such Registrable Preferred Stock, (B) the underwriters (which
term, for purposes of this Registration Rights Agreement, shall include a person
deemed to be an underwriter within the meaning of Section 2(11) of the
Securities Act), if any, thereof, (C) the sales or placement agent, if any,
thereof, (D) each Participating Broker-Dealer, and (E) one counsel for such
underwriters or agents and Participating Broker-Dealers, if any, reasonable
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the SEC, and each amendment or
supplement thereto;
(p) Comply with all applicable rules and regulations of the SEC and make
generally available to its securityholders earning statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or
any similar rule promulgated under the Securities Act) no later than 45 days
after the end of any 12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at the end of any fiscal
quarter in which Registrable Preferred Stock is sold to underwriters in a firm
commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.
(q) Upon consummation of an Exchange Offer, obtain an opinion of counsel to
the Company, in a form customary for underwritten transactions, addressed to the
Transfer Agent for the benefit of all Holders of Registrable Preferred Stock
participating in the Exchange Offer that the Exchange Preferred
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<PAGE>
Stock is duly authorized, validly issued, fully paid and non-assessable.
(r) If an Exchange Offer is to be consummated, upon delivery of shares of
Registrable Preferred Stock by Holders to the Company (or to such other Person
as directed by the Company) in exchange for shares of Exchange Preferred Stock,
the Company shall mark, or cause to be marked, on the certificates representing
such shares of Registrable Preferred Stock that such shares of Registrable
Preferred Stock are being cancelled in exchange for the Exchange Preferred
Stock.
(s) Cooperate with each seller of Registrable Preferred Stock covered by
any Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Preferred Stock and their respective counsel in
connection with any filings required to be made with the National Association of
Securities Dealers, Inc. (the "NASD"), including if the Rules of Fair Practice
----
and the By-Laws of the NASD or any successor thereto, as amended from time to
time (including Schedule E thereto) so require, engaging a "qualified
independent underwriter" ("QIU") as contemplated therein and making Records
available to such QIU as though it were a participating underwriter for the
purposes of Section 5(n) and otherwise applying the provisions of this Agreement
to such QIU (including indemnification) as though it were a participating
underwriter.
(t) Provide an indenture trustee for the indenture relating to the Exchange
Debentures (the "Exchange Indenture") and cause the Exchange Indenture to be
qualified under the TIA not later than the effective date of the Exchange Offer
or the first Registration Statement relating to the Registrable Preferred Stock;
and in connection therewith, cooperate with the trustee under the Exchange
Indenture and the Holders of the Registrable Preferred Stock to effect such
changes to such indenture as may be required for such indenture to be so
qualified in accordance with the terms of the TIA; and execute, and use its best
efforts to cause such trustee to execute, all documents as may be required to
effect such changes, and all other forms and documents required to be filed with
the SEC to enable the Exchange Indenture to be so qualified in a timely manner.
(u) Use its reasonable best efforts to cause the Registrable Preferred
Stock covered by a Registration Statement
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<PAGE>
or the Exchange Preferred Stock, as the case may be, to be rated with the
appropriate rating agencies, if so requested by the Holders of a majority of
shares of Registrable Preferred Stock covered by such Registration Statement or
the Exchange Preferred Stock, as the case may be, or the managing underwriter or
underwriters, if any.
(v) Use its reasonable best efforts to take all other steps necessary or
advisable to effect the registration of the Exchange Preferred Stock and/or
Registrable Preferred Stock covered by a Registration Statement contemplated
hereby.
The Company may require each seller of Registrable Preferred Stock as to
which any registration is being effected to furnish to the Company such
information regarding such seller and the distribution of such Registrable
Preferred Stock as the Company may, from time to time, reasonably request to the
extent necessary to comply with the Securities Act. The Company may exclude
from such registration the Registrable Preferred Stock of any seller who
unreasonably fails to furnish such information within a reasonable time after
receiving such request. Each seller as to which any Shelf Registration is being
effected agrees to furnish promptly to the Company all information required to
be disclosed in order to make the information previously furnished to the
Company by such seller not materially misleading or to omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made.
Each Holder of Registrable Preferred Stock and each Participating Broker-
Dealer agrees by acquisition of such Registrable Preferred Stock or Exchange
Preferred Stock to be sold by such Participating Broker-Dealer, as the case may
be, that, upon actual receipt of any notice from the Company of the happening of
any event of the kind described in Section 5(c)(ii)(C), 5(c)(iv), 5(c)(v), or
5(c)(vi) hereof, such Holder will forthwith discontinue disposition of such
Registrable Preferred Stock covered by such Registration Statement or Prospectus
or Exchange Preferred Stock to be sold by such Holder or Participating Broker-
Dealer, as the case may be, until such Holder's or Participating Broker-Dealer's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section
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<PAGE>
5(k) hereof, or until it is advised in writing (the "Advice") by the Company
------
that the use of the applicable Prospectus may be resumed, and has received
copies of any amendments or supplements thereto. In the event the Company shall
give any such notice, each of the Effectiveness Period and the Applicable Period
shall be extended by the number of days during such periods from and including
the date of the giving of such notice to and including the date when each seller
of Registrable Preferred Stock covered by such Registration Statement or
Exchange Preferred Stock to be sold by such Participating Broker-Dealer, as the
case may be, shall have received (x) the copies of the supplemented or amended
Prospectus contemplated by Section 5(k) hereof or (y) the Advice.
6. Registration Expenses
---------------------
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Company shall be borne by the Company whether or not
the Exchange Registration Statement or a Shelf Registration is filed or becomes
effective, including, without limitation, (i) all registration and filing fees
(including, without limitation, (A) fees with respect to filings required to be
made with the NASD in connection with an underwritten offering and (B) fees and
expenses of compliance with state securities or Blue Sky laws (including,
without limitation, reasonable fees and disbursements of counsel in connection
with Blue Sky qualifications of the Registrable Preferred Stock and
determination of the eligibility of the Registrable Preferred Stock for
investment under the laws of such jurisdictions as provided in Section 5(h)
hereof, in the case of Registrable Preferred Stock or Exchange Preferred Stock
to be sold by a Participating Broker-Dealer during the Applicable Period)), (ii)
printing expenses, including, without limitation, expenses of printing
certificates for Registrable Preferred Stock in a form eligible for deposit with
The Depository Trust Company and of printing prospectuses if the printing of
prospectuses is requested by the managing underwriter or underwriters, if any,
by the Holders of a majority of shares of the Registrable Preferred Stock
included in any Registration Statement or sold by any Participating Broker-
Dealer as the case may be, (iii) messenger, telephone and delivery expenses,
(iv) fees and disbursements of counsel for the Company and fees and
disbursements of special counsel for the sellers of Registrable Preferred Stock
(subject to the provisions of Section 6(b) hereof), (v) fees and
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disbursements of all independent certified public accountants referred to in
Section 5(m)(iii) hereof (including, without limitation, the expenses of any
special audit and "cold comfort" letters required by or incident to such
performance), (vi) rating agency fees, (vii) Securities Act liability insurance,
if the Company desires such insurance, (viii) fees and expenses of all other
Persons retained by the Company, (ix) internal expenses of the Company
(including, without limitation, all salaries and expenses of officers and
employees of the Company performing legal or accounting duties), (x) the expense
of any annual audit, (xi) the fees and expenses incurred in connection with the
listing of the securities to be registered on any securities exchange, if
applicable, and (xii) the expenses relating to printing, word processing and
distributing all Registration Statements, underwriting agreements, securities
sales agreements, indentures and any other documents necessary in order to
comply with this Agreement.
(b) The Company shall reimburse the Holders of the Registrable Preferred
Stock being registered in a Shelf Registration for the reasonable fees and
disbursements of not more than one counsel (in addition to appropriate local
counsel) chosen by the Holders of a majority of shares of the Registrable
Preferred Stock to be included in such Registration Statement and other
reasonable out-of-pocket expenses of such Holders of Registrable Preferred Stock
incurred in connection with the registration and sale of the Registrable
Preferred Stock pursuant to the Exchange Offer.
7. Indemnification
---------------
(a) The Company will indemnify and hold harmless each Holder of
Registrable Preferred Stock, each Person that participates as an underwriter or
sales agent in any sale of such Registered Preferred Stock and each
Participating Broker-Dealer selling Exchange Preferred Stock during the
Applicable Period (each a "Participant") against any losses, claims, damages or
liabilities, joint or several, to which such Participant may become subject,
under the Securities Act or the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement or Prospectus, or
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<PAGE>
any amendment or supplement thereto or any related preliminary prospectus or
arise out of or are based upon the omission or alleged omission to state therein
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and will
reimburse each Participant for any legal or other expenses reasonably incurred
by such Participant in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
--------
however, that the Company will not be liable in any such case to the extent that
- -------
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement in or omission or alleged omission
from any of such documents in reliance upon and in conformity with written
information furnished to the Company by any Initial Purchaser or Participant
specifically for use therein; provided, further, that the Company will not be
-------- -------
liable if such untrue statement or omission or alleged untrue statement or
omission was contained or made in any preliminary prospectus and corrected in
the Prospectus or any amendment or supplement thereto and the Prospectus does
not contain any other untrue statement or omission or alleged untrue statement
or omission of a material fact that was the subject matter of the related
proceeding and any such loss, liability, claim, damage or expense suffered or
incurred by the Participants resulted from any action, claim or suit by any
Person who purchased Registrable Preferred Stock or Exchange Preferred Stock
that is the subject thereof from such Participant and it is established in the
related proceeding that such Participant failed to deliver or provide a copy of
the Prospectus (as amended or supplemented) to such Person with or prior to the
confirmation of the sale of such Registrable Preferred Stock or Exchange
Preferred Stock sold to such Person if required by applicable law, unless such
failure to deliver or provide a copy of the Prospectus (as amended or
supplemented) was a result of noncompliance by the Company with Section 5 of
this Agreement.
(b) The Company may require, as a condition to including Registrable
Preferred Stock in any Registration Statement, that the related Participant
agree severally and not jointly to indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Securities Act or the Exchange Act or otherwise,
insofar as such losses, claims, damages or liabilities
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<PAGE>
(or actions in respect hereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the any
Registration Statement or Prospectus, or any amendment or supplement thereto, or
any related prospectus, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Participant specifically for use therein, and
will reimburse any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred. The liability of any
Participant under this paragraph shall in no event exceed the net proceeds
received by such Participant from sales of Registrable Preferred Stock or
Exchange Preferred Stock giving rise to such obligations.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party
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<PAGE>
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any claims
that are the subject matter of such action.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Participants on the other from the offering
of the Registrable Preferred Stock or Exchange Preferred Stock or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and the Participants on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities as
well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and any Participant on the other shall
be deemed to be in the same proportion as the total net proceeds from the
initial offering of the Exchangeable Preferred Stock (before deducting expenses)
received by the Company bear to the total net proceeds received by such
Participant from sales of Registrable Preferred Stock or Exchange Preferred
Stock giving rise to such obligations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or such Participant and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses
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<PAGE>
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim which is the subject of this subsection (d).
Notwithstanding the provisions of this subsection (d), no Participant shall be
required to contribute any amount in excess of the amount by which the net
proceeds received by such Participant from sales of Registrable Preferred Stock
or Exchange Preferred Stock exceeds the amount of any damages which such
Participant has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Participants' obligations in this subsection
(d) to contribute are several in proportion to their respective liquidation
preferences of Registrable Preferred Stock or Exchange Preferred Stock
registered pursuant to this Agreement, and not joint.
(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each officer, director and partner of
each Participant and to each Person, if any, who controls any Participant within
the meaning of the Securities Act or the Exchange Act; and the obligations of
the Participant under this Section shall be in addition to any liability which
the respective Participant otherwise have and shall extend, upon the same terms
and conditions, to each officer and director of the Company and to each Person,
if any, who controls the Company within the meaning of the Securities Act or the
Exchange Act.
8. Rules 144 and 144A.
------------------
The Company covenants that it will file the reports required to be filed by
it under the Securities Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder in a timely manner in accordance with the
requirements of the Securities Act and the Exchange Act and such rules and
regulations and, if at any time the Company is not required to file such
reports, it will, upon the request of any Holder of Registrable Preferred Stock,
make publicly available annual reports and such information, documents and other
reports of the type specified in Sections 13 and 15(d) of the Exchange Act. The
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<PAGE>
Company further covenants for so long as any Registrable Preferred Stock remains
outstanding, to make available to any Holder or beneficial owner of Registrable
Preferred Stock in connection with any sale thereof and any prospective
purchaser of such Registrable Preferred Stock from such Holder or beneficial
owner, the information required by Rule 144A(d)(4) under the Securities Act in
order to permit resales of such Registrable Preferred Stock pursuant to Rule
144A.
9. Underwritten Registrations.
--------------------------
If any of the Registrable Preferred Stock covered by any Shelf Registration
is to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority of shares of such Registrable Preferred Stock
included in such offering and reasonably acceptable to the Company.
No Holder of Registrable Preferred Stock may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Preferred Stock on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
10. Representations and Warranties.
------------------------------
The Company represents and warrants to, and agrees with, each Initial
Purchaser and each of the Holders from time to time of Registrable Securities
that:
(a) Each registration statement covering Registrable Preferred Stock and
each prospectus (including any preliminary or summary prospectus) contained
therein or furnished pursuant to this Agreement and any further amendments or
supplements to any such registration statement or prospectus, when it becomes
effective or is filed with the SEC, as the case may be, and, in the case of an
underwritten offering of Registrable Preferred Stock, at the time of the closing
under the underwriting agreement relating thereto, will conform in all material
respects to the requirements of the Securities Act and the TIA and the
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<PAGE>
rules and regulations of the SEC and any such registration statement and any
amendment thereto will not include 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 not misleading and any such prospectus or any
amendment or supplement thereto will not include any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing; and at all times subsequent to the time of
effectiveness of any such registration statement when a prospectus would be
required to be delivered under the Securities Act, other than from (i) such time
as a notice has been given to holders of Registrable Preferred Stock pursuant to
the last paragraph of Section 5 or Section 5(k) hereof until (ii) such time as
the Company furnishes an amended or supplemented prospectus pursuant to Section
5(k) hereof or otherwise gives an Advice, each such registration statement, and
each prospectus (including any summary prospectus) contained therein or
furnished pursuant to Section 5(k) or Section 5(g) hereof, as then amended or
supplemented, will conform in all material respects to the requirements of the
Securities Act and the TIA and the rules and regulations of the SEC and will not
include any untrue statement of any material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; provided,
--------
however, that this representation and warranty does not apply to any statements
- -------
or omissions from a registration statement or prospectus (including any
preliminary or summary prospectus) based upon written information furnished to
the Company by any underwriter, sales agent, Holder or Participating Broker-
Dealer specifically for use therein.
(b) Any documents incorporated by reference in any prospectus referred to
in Section 5(a) hereof, when they become or became effective or are or were
filed with the SEC, as the case may be, will conform or conformed in all
material respects to the requirements of the Securities Act or the Exchange Act,
as applicable, and none of such documents will include or included an untrue
statement of any material fact or will omit or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty does not
-------- -------
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<PAGE>
apply to any statements or omissions from a registration statement or the
prospectus (including any preliminary or summary prospectus) based upon written
information furnished to the Company by any underwriter, sales agent, Holder or
Participating Broker-Dealer specifically for use therein.
(c) The issuance and sale of the Registrable Preferred Stock did not and
will not, and the execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated will not, result in a
breach or violation of any of the terms and provisions of, or constitute a
default under, any statute, any rule, regulation, order or policy of any
governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Company or any subsidiary of the Company or any of their
properties, the Senior Credit Facility as defined in the Purchase Agreement or
any other agreement or instrument to which the Company or any such subsidiary is
a party or by which the Company or any such subsidiary is bound or to which the
Company or any such subsidiary has agreed to become bound, or to which any of
the properties of the Company or any such subsidiary is subject, or the charter
or by-laws (or other constituent document) of the Company or any such
subsidiary.
11. Miscellaneous
-------------
(a) No Inconsistent Agreements. The Company has not, as of the date
--------------------------
hereof, and the Company shall not, after the date of this Agreement, enter into
any agreement with respect to any of its securities that is inconsistent with
the rights granted to the Holders of Registrable Preferred Stock in this
Agreement or otherwise conflicts with the provisions hereof. The Company has
not entered and will not enter into any agreement with respect to any of its
securities that will grant to any Person piggyback registration rights with
respect to a Registration Statement.
(b) Adjustments Affecting Registrable Preferred Stock. The Company shall
-------------------------------------------------
not, directly or indirectly, take any action with respect to the Registrable
Preferred Stock as a class that would adversely affect the ability of the
Holders of Registrable Preferred Stock to include such Registrable Preferred
Stock in a registration undertaken pursuant to this Agreement.
-32-
<PAGE>
(c) Amendments and Waivers. The provisions of this Agreement may not be
----------------------
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of the Company and (A) the Holders of not less than a majority of
liquidation preference of the then outstanding Registrable Preferred Stock and
(B) in circumstances that would adversely affect the Participating Broker-
Dealers, the Participating Broker-Dealers holding not less than a majority of
liquidation preference of the Exchange Preferred Stock held by all Participating
Broker-Dealers; provided, however, that Section 7 and this Section 11(c) may not
-------- -------
be amended, modified or supplemented without the prior written consent of the
Company and each Holder and each Participating Broker-Dealer (including any
person who was a Holder or Participating Broker-Dealer of Registrable
Preferred Stock or Exchange Preferred Stock, as the case may be, disposed of
pursuant to any Registration Statement). Notwithstanding the foregoing, a waiver
or consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders of Registrable Preferred Stock
whose securities are being sold pursuant to a Registration Statement and that
does not directly or indirectly affect, impair, limit or compromise the rights
of other Holders of Registrable Preferred Stock may be given by Holders of at
least a majority of shares of the Registrable Preferred Stock being sold by such
Holders pursuant to such Registration Statement; provided, however, that the
-------- -------
provisions of this sentence may not be amended, modified or supplemented except
in accordance with the provisions of the immediately preceding sentence. For
purposes only of this subsection (c), "Registrable Preferred Stock" also
includes outstanding PIK Preferred Stock that has not yet been exchanged for
Registrable Preferred Stock.
(d) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, next-day air courier or facsimile:
(1) if to a Holder of the Registrable Preferred Stock or any Participating
Broker-Dealer, at the most current address of such Holder or Participating
Broker-Dealer, as the case may be, on the stock books of the Company with a copy
in like manner to the Initial Purchasers as follows:
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<PAGE>
CREDIT SUISSE FIRST BOSTON CORPORATION,
CONSECO LIFE INSURANCE COMPANY,
AMERICAN TRAVELLERS LIFE INSURANCE CO.,
GREAT AMERICAN RESERVE INSURANCE CO.
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010
Facsimile No: (212) 325-8278
Attention: Investment Banking Department
Transactions Advisory Group
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Facsimile No: (212) 558-3588
Attention: John T. Bostelman, Esq.
(2) if to the Initial Purchasers, at the addresses specified in Section
11(d)(1);
(3) if to the Company, at the addresses as follows:
American Tower Systems Corporation
116 Huntington Avenue
Boston, Massachusetts 02116
Facsimile No: (617) 375-7575
Attention: Steven B. Dodge
with copies to:
Sullivan & Worcester
One Post Office Square
Boston, Massachusetts 02109
Facsimile No: (617) 338-2800
Attention: Norman Bikales, Esq.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage
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<PAGE>
prepaid, if mailed; one business day after being timely delivered to a next-day
air courier; and when receipt is acknowledged by the addressee, if sent by
facsimile.
(e) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors and assigns of each of the parties hereto,
including the Holders; provided, however, that this Agreement shall not inure to
-------- -------
the benefit of or be binding upon a successor or assign of a Holder unless and
except to the extent such successor or assign holds Registrable Preferred Stock.
(f) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without
-35-
<PAGE>
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(j) Securities Held by the Company or Its Affiliates. Whenever the consent
------------------------------------------------
or approval of Holders of a specified percentage of shares of Registrable
Preferred Stock is required hereunder, shares of Registrable Preferred Stock
held by the Company or its affiliates (as such term is defined in Rule 405 under
the Securities Act) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
(k) Third Party Beneficiaries. Holders of Registrable Preferred Stock
-------------------------
and Participating Broker-Dealers are intended third party beneficiaries of this
Agreement and this Agreement may be enforced by such Persons.
(l) Entire Agreement. This Agreement, together with the Purchase
----------------
Agreement and the Certificate of Designation, is intended by the parties as a
final and exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein and therein and any and
all prior oral or written agreements, representations, or warranties, contracts,
understandings, correspondence, conversations and memoranda between the Initial
Purchasers on the one hand and the Company on the other, or between or among any
agents, representatives, parents, subsidiaries, affiliates, predecessors in
interest or successors in interest with respect to the subject matter hereof and
thereof are merged herein and replaced hereby.
-36-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
AMERICAN TOWER SYSTEMS CORPORATION
By: /s/ Joseph L. Winn
----------------------------
Name: Joseph L. Winn
Title: Chief Financial Officer
<PAGE>
CREDIT SUISSE FIRST BOSTON
CORPORATION
By: /s/ Kristin M. Allen
----------------------------
Name: Kristin M. Allen
Title: Managing Director
<PAGE>
CONSECO LIFE INSURANCE COMPANY
By: /s/ Eric Johnson
-----------------------------
Name: Eric Johnson
Title: Vice President
AMERICAN TRAVELLERS LIFE INSURANCE CO.
By: /s/ Eric Johnson
---------------------------
Name: Eric Johnson
Title: Vice President
GREAT AMERICAN RESERVE INSURANCE CO
By: /s/ Eric Johnson
---------------------------
Name: Eric Johnson
Title: Vice President
<PAGE>
EXHIBIT 10.33
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is entered into as of June 4,
1998 by and among American Tower Systems Corporation, a Delaware corporation
("ATS") and Harris Trust and Savings Bank ("Harris"), as Escrow Agent ("Escrow
Agent") and as Transfer Agent ("Transfer Agent").
RECITALS
A. ATS has authorized the issuance of and agreed to sell to the
several purchasers, subject to certain conditions, up to $400 million aggregate
initial liquidation preference of the Company's Series A Redeemable Pay-In-Kind
Preferred Stock, $.01 par value per share (the "PIK Preferred Stock"),
exchangeable by holders in accordance with their terms into shares of ATS's
Series A Exchange Pay-In-Kind Preferred Stock, $.01 par value per share (the
"Exchange Preferred Stock"), shares of Exchange Preferred Stock being
exchangeable, in ATS's sole discretion, in accordance with their terms for
Subordinated Exchange Debentures due 2010 (the "Exchange Debentures");
B. The PIK Preferred Stock has been or will be issued pursuant to a
certificate of designation (the "PIK Certificate") in the form attached hereto
as Exhibit A, and the Exchange Preferred Stock has been or will be issued
pursuant to a certificate of designation (the "Exchange Certificate") in the
form attached hereto as Exhibit B.
C. ATS has agreed to deliver to the Escrow Agent certificates
representing at least $500,000,000 in aggregate liquidation preference of
Exchange Preferred Stock plus from time to time such additional shares of
Exchange Preferred Stock as shall be necessary to permit the exchange of all
outstanding PIK Preferred Stock into Exchange Preferred Stock.
D. Harris Trust and Savings Bank has agreed to act as (i) Transfer
Agent with respect to the PIK Preferred Stock and the Exchange Preferred Stock
and (ii) Escrow Agent under this Escrow Agreement.
E. ATS has delivered irrevocable transfer instructions to the
Transfer Agent and Escrow Agent (a copy of which is attached hereto as Annex A).
F. The parties hereto desire to establish the terms and conditions
pursuant to which the Escrow Shares (as hereinafter defined) will be deposited
with, held by, and disbursed by the Escrow Agent.
NOW, THEREFORE, the parties agree as follows:
<PAGE>
1. ESCROW.
------
1.1 DEPOSIT OF ESCROW SHARES. On the date hereof, ATS shall
deliver to the Escrow Agent certificates representing at least $500,000,000 in
aggregate liquidation preference of the Exchange Preferred Stock (the "Escrow
Shares"). The Escrow Shares will be represented by certificate(s) issued in the
name of the Escrow Agent and accompanied by additional certificates (the
"Additional Certificates") issued in blank in name with an aggregate liquidation
preference equal to $500,000,000 and executed by the Company and prepared for
countersignature by the Transfer Agent. The Escrow Shares and the Additional
Certificates will be held by the Escrow Agent from the date of their delivery
until the expiration of the Escrow Period (as defined in Section 1.2 below).
The Escrow Shares shall include such additional Shares represented by the
Additional Certificates as ATS may from time to time direct the Transfer Agent
to countersign and deliver to the Escrow Agent to be held pursuant hereto as
Escrow Shares. The Escrow Agent need not inquire into whether or not the correct
number of Escrow Shares have been delivered to it and may assume that the
certificates delivered to it are all that it is required to receive.
1.2 DISTRIBUTION OF ESCROW SHARES.
(a) ESCROW PERIOD. The Escrow Shares and the Additional
Certificates will be held in escrow, subject to the exchange of Escrow Shares
and the Additional Certificates in accordance with Section 2.1, for so long as
any shares of PIK Preferred Stock remain outstanding ("Escrow Period"). ATS
shall promptly notify the Escrow Agent in writing of the date the PIK Preferred
Stock no longer remains outstanding no longer remains outstanding.
(b) EXPIRATION. Upon written notification to the Escrow
Agent by ATS and Credit Suisse First Boston Corporation ("CSFBC") that the
Escrow Period has expired, on which notification the Escrow Agent may rely
without inquiry, the Escrow Agent shall release from escrow to ATS any remaining
Escrow Shares and all Additional Certificates promptly and, in any event, within
three business days; provided, however, that ATS may in such written
notification direct the Escrow Agent to cancel such remaining Escrow Shares and
Additional Certificates which the Escrow Agent agrees to do in such event prior
to delivering them to ATS.
1.3 NO ENCUMBRANCE. No Escrow Shares, Additional Certificates
or Exchange Debentures or any beneficial interest therein may be pledged, sold,
assigned, transferred, or otherwise encumbered, including by operation of law,
by ATS or the Escrow Agent, or any other person, or be taken or reached by any
legal or equitable process in satisfaction of any debt or other liability of ATS
or the Escrow Agent, or any other person, prior to the termination of the Escrow
Period.
2. EXCHANGE.
-2-
<PAGE>
2.1 EXCHANGE. Promptly following the later of (a) the Interim
Financing Maturity Date (as defined in the PIK Certificate) and (b) presentment
by a holder of PIK Preferred Stock of the certificates representing such stock
together with stock powers executed in favor of ATS, with signature guaranteed
by an "Eligible Institution" (the Escrow Agent) will deliver certificates to the
Transfer Agent who will countersign and issue certificates registered in the
name of such holder or its nominee representing the liquidation preference
amount of Exchange Preferred Stock to which such holder is entitled pursuant to
Section 8(a) of the PIK Certificate, such amount to be calculated by ATS, as
calculation agent. Any stock transfer taxes applicable to the exchange of PIK
Preferred Stock for Exchange Preferred Stock shall be paid by ATS, except if the
Exchange Preferred Stock is to be issued in the name of a person other than the
registered holder of PIK Preferred Stock being exchanged therefor, in which case
the person submitting the certificates for exchange will, as a condition to
receiving shares of Exchange Preferred Stock, pay such stock transfer taxes or
provide to the Escrow Agent satisfactory evidence of the payment of such taxes.
"Eligible Institution" means a firm or other entity identified in Rule 17Ad-15
under the Securities Exchange Act of 1934 as "an eligible guarantor
institution".
2.2 EXCHANGE DEBENTURES. In the event that ATS exchanges
Exchange Debentures for shares of Exchange Preferred Stock while any shares of
PIK Preferred Stock remain outstanding, ATS shall immediately deposit with the
Escrow Agent Exchange Debentures (the "Escrow Debentures") in an aggregate
principal amount equal to the liquidation preference (plus the redemption
premium) of the remaining Escrow Shares. Such Escrow Debentures shall be held
by the Escrow Agent in escrow for exchange by holders of PIK Preferred Stock in
accordance with the PIK Certificate and shall be exchanged for PIK Preferred
Stock as the Exchange Preferred Stock is to be exchanged pursuant to Section 2.1
above.
3. LIMITATION OF LIABILITY OF THE ESCROW AGENT
AND CALCULATION AGENT.
-------------------------------------------
3.1 CONDUCT. The Escrow Agent will be indemnified and will incur
no liability with respect to any action taken or suffered by it in reliance upon
any notice, direction, instruction, consent, statement or other documents
believed by it to be genuine and duly authorized, nor for other action or
inaction except its own bad faith, willful misconduct or gross negligence. The
Escrow Agent will not be responsible for the validity or sufficiency of this
Agreement. In all questions arising under this Agreement, the Escrow Agent may
rely on the advice of counsel, and for anything done, omitted or suffered in
good faith by the Escrow Agent based on such advice the Escrow Agent will not be
liable to anyone. The Escrow Agent will not be required to take any action
hereunder involving any expense unless the payment of such expense is made or
provided for in a manner satisfactory to it.
-3-
<PAGE>
3.2 CONFLICTING DEMANDS. In the event conflicting demands are
made or conflicting notices served upon the Escrow Agent with respect to the
escrow provided hereby, the Escrow Agent will have the absolute right, at the
Escrow Agent's election, to do either or both of the following: (a) withhold
and stop all further proceedings pursuant to, and performance under, this
Agreement; or (b) file a suit in interpleader and obtain an order from any court
of competent jurisdiction an order requiring the parties to interplead and
litigate in such court conflicting demands or claims. In the event such
interpleader suit is brought, the Escrow Agent will thereby be fully released
and discharged from all further obligations imposed upon it under this Agreement
with respect to the claim(s) that are the subject of such interpleader suit, and
ATS will pay all reasonable costs, expenses and attorney's fees expended or
incurred by the Escrow Agent pursuant to the exercise of the Escrow Agent's
rights under this Section 3.2, the amount thereof to be fixed and a judgment
therefor to be rendered by the court in each suit.
4. EXPENSES. ATS agrees to pay the Escrow Agent a fee according to
--------
the fee letter attached hereto as Exhibit A. Fees are payable in advance as
compensation for the ordinary administrative services to be rendered hereunder,
and ATS agrees to pay all the expenses of the Escrow Agent, including the
indemnity provided in Section 5 hereof. All reasonable fees and expenses of the
Escrow Agent incurred in the course of performing its responsibilities hereunder
will be promptly paid by ATS, upon receipt of a written invoice from the Escrow
Agent.
5. INDEMNIFICATION. The Escrow Agent shall be indemnified, jointly
---------------
and severally, and saved harmless by ATS or any successor thereto, from and
against any and all liability, including all expenses reasonably incurred in its
defense, to which the Escrow Agent shall be subject by reason of any action
taken or omitted, or disbursement of any part of the Escrow Shares made by the
Escrow Agent pursuant to this Escrow Agreement, except as a result of the Escrow
Agent's own bad faith, gross negligence or willful misconduct. The reasonable
costs and expenses of enforcing this right of indemnification shall also be paid
by ATS, unless a court of competent jurisdiction determines that the Escrow
Agent is not entitled to indemnification hereunder. This right of
indemnification shall survive the termination of this Agreement, and the removal
or resignation of the Escrow Agent.
6. SUCCESSOR ESCROW AGENT. If the Escrow Agent becomes unavailable
-----------------------
or unwilling to continue in its capacity herewith, the Escrow Agent may resign
and be discharged from its duties or obligations hereunder by giving written
notice of resignation to the parties to this Agreement, specifying not less than
sixty (60) days' prior notice of the date when such resignation will take
effect. ATS shall designate a successor Escrow Agent prior to the expiration of
such sixty-day period by giving written notice to the Escrow Agent. Such
successor must be a bank with assets of at least $500 million. Upon payment of
its outstanding invoices for fees and expenses, the Escrow Agent will promptly
transfer the Escrow Shares or Escrow Debentures, as the
-4-
<PAGE>
case may be, to such designated successor. If written notice designating a
successor escrow agent has not been received by the Escrow Agent within sixty
(60) days after the giving of notice of resignation, the resigning Escrow Agent
may, at the expense of ATS, petition any court of competent jurisdiction for the
appointment of a successor escrow agent.
7. LIMITATION OF RESPONSIBILITY; NOTICES. The Escrow Agent's duties
--------------------------------------
are limited to those set forth in this Agreement. The Escrow Agent may rely
upon the written notices delivered to Escrow Agent hereunder.
8. NOTICES. Any notice or other communication required or permitted
-------
to be given under this Agreement will be deemed duly given when (a) personally
delivered, (b) sent by facsimile (but only if, immediately after the
transmission, the sender's facsimile machine records in writing the correct
answerback) or (c) five days have elapsed after mailing by certified or
registered mail, postage prepaid; in each case addressed to a party at its
address or facsimile number as set forth below:
If to ATS:
American Tower Systems Corporation
116 Huntington Avenue
Boston, Massachusetts 02116
Attention: Joseph Winn
Facsimile: (617) 375-7575
Phone:
With a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston Massachusetts 02109
Attention: Norman A. Bikales, Esq.
Facsimile: (617) 338-2880
Phone: (617) 338-2800
If to the Escrow Agent:
Harris Trust and Savings Bank
311 West Monroe Street, 12th Floor
Chicago, Illinois 60606
Attention: Escrow Division\Marianne Tinerella
Facsimile: (312) 461-3525
Phone: (312) 461-2420
-5-
<PAGE>
or to such other address or facsimile number as a party may have furnished to
the other party in writing pursuant to this Section 8.
9. GENERAL.
-------
9.1 GOVERNING LAW. The laws of the State of New York will
govern the validity of this Agreement, the construction of its terms, and the
interpretation and enforcement of the rights and duties of the parties hereto.
9.2 ASSIGNMENT; BINDING UPON SUCCESSORS AND ASSIGNS. Except as
provided in this Section 9.2, the ATS and the Escrow Agent may not assign any of
their rights or obligations hereunder without the prior written consent of the
other party hereto. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
9.3 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and the
same instrument.
9.4 ENTIRE AGREEMENT. This Agreement and the exhibits hereto
constitute the entire understanding and agreement of the parties hereto with
respect to the subject matter hereof and supersede all prior and contemporaneous
agreements or understandings, inducements or conditions, express or implied,
written or oral, between the parties with respect hereto. The express terms
hereof control and supersede any course of performance or usage of the trade
inconsistent with any of the terms hereof.
9.5 NO WAIVER. The failure of any party to enforce any of the
provisions hereof will not be construed to be a waiver of the right of such
party thereafter to enforce such provisions. No waiver of any kind shall be
effective or binding, unless it is in writing and is signed by the party against
whom such waiver is sought to be enforced.
9.6 AMENDMENT. This Agreement may be amended by the written
agreement of ATS, the Escrow Agent and Credit Suisse First Boston Corporation
("CSFBC"); provided that, if the Escrow Agent does not agree to an amendment
agreed upon by ATS and the CSFBC, the Escrow Agent will resign and ATS will
appoint a successor Escrow Agent in accordance with Section 9 above. No
amendment of the PIK Preferred Certificate of Designation will increase Escrow
Agent's responsibilities or liability hereunder without Escrow Agent's written
agreement.
9.7 THIRD PARTY BENEFICIARIES. Holders of PIK Preferred Stock
are intended third party beneficiaries of this Agreement and this Agreement may
be enforced by such persons.
-6-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first set forth above.
AMERICAN TOWER SYSTEMS HARRIS TRUST AND SAVINGS BANK,
CORPORATION AS ESCROW AGENT
By:_______________________ By:_____________________
Name: Name:
Title: Title:
[SIGNATURE PAGE TO ESCROW AGREEMENT]
-7-
<PAGE>
EXHIBIT 21
----------
SUBSIDIARIES OF AMERICAN TOWER CORPORATION
------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SUBSIDIARY JURISDICTION OF INCORPORATION OR
---------- --------------------------------
ORGANIZATION
------------
- --------------------------------------------------------------------------------
<S> <C>
American Tower Systems (Delaware), Inc. Delaware
- --------------------------------------------------------------------------------
ATSC Operating Inc. Delaware
- --------------------------------------------------------------------------------
ATSC LP Inc. Delaware
- --------------------------------------------------------------------------------
ATSC Holding Inc. Delaware
- --------------------------------------------------------------------------------
ATSC GP Inc. Delaware
- --------------------------------------------------------------------------------
American Tower Systems, L.P. Delaware
- --------------------------------------------------------------------------------
ATS Merger Corporation Delaware
- --------------------------------------------------------------------------------
American Tower Rental Holding Corporation Delaware
- --------------------------------------------------------------------------------
American Tower Rental, Inc. Delaware
- --------------------------------------------------------------------------------
ATC Tower Corp. Delaware
- --------------------------------------------------------------------------------
ATC-Prime I, L.L.C. Delaware
- --------------------------------------------------------------------------------
ATC-Prime II, L.L.C. Delaware
- --------------------------------------------------------------------------------
National Telecommunications Advisors, L.L.C. Massachusetts
- --------------------------------------------------------------------------------
HHR, Inc. Kansas
- --------------------------------------------------------------------------------
US Sitelease, Inc. Kansas
- --------------------------------------------------------------------------------
Westark Towers, Incorporated Arkansas
- --------------------------------------------------------------------------------
Gritz Tower Maintenance Company Texas
- --------------------------------------------------------------------------------
ATS Needham, LLC* Delaware
- --------------------------------------------------------------------------------
ATS/PCS, LLC* Delaware
- --------------------------------------------------------------------------------
</TABLE>
_______________
* ATS owns a 50.1% interest in this entity.
* ATS owns a 70.0% interest in this entity.
<PAGE>
EXHIBIT 23.1A
INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULES
To the Board of Directors of
American Tower Systems
Corporation
We consent to the use in this Amendment No. 2 to Registration Statement No.
333-52481 of American Tower Systems Corporation on Form S-1 of our report
dated March 6, 1998 (March 27, 1998 as to the sixth paragraph of Note 1 and
the second paragraph of Note 4), appearing in the Prospectus, which is a part
of this Registration Statement, and to the reference to us under the heading
"Experts" in such Prospectus.
Our audits of the consolidated financial statements referred to in our
aforementioned report also included the financial statement schedules of
American Tower Systems Corporation, listed in Item 16. These financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Boston, Massachusetts
June 29, 1998
<PAGE>
EXHIBIT 23.1B
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Amendment No. 2 to Registration Statement No.
333-52481 of American Tower Systems Corporation on Form S-1 of our report on
the financial statements of Diablo Communications, Inc. dated November 4,
1997, appearing in the Prospectus, which is part of this Registration
Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
San Francisco, California
June 29, 1998
<PAGE>
EXHIBIT 23.1C
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Amendment No. 2 to Registration Statement No.
333-52481 of American Tower Systems Corporation on Form S-1 of our report on
the combined financial statements of Meridian Communications dated October 31,
1997, appearing in the Prospectus, which is part of this Registration
Statement
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Long Beach, California
June 29, 1998
<PAGE>
EXHIBIT 23.1D
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Amendment No. 2 to Registration Statement No.
333-52481 of American Tower Systems Corporation on Form S-1 of our report on
the financial statements of Gearon & Co., Inc. dated February 27, 1998,
appearing in the Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Atlanta, Georgia
June 29, 1998
<PAGE>
EXHIBIT 23.1E
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Amendment No. 2 to Registration Statement No.
333-52481 of American Tower Systems Corporation on Form S-1 of our report on
the financial statements of OPM-USA-INC. dated March 2, 1998, appearing in the
Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Boston, Massachusetts
June 29, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the use of
our report and to all references to our Firm included in or made part of this
registration statement.
/s/ Pressman Ciocca Smith LLP
Hatboro, Pennsylvania
June 29, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated January 13, 1998 (except Note 7, as to which the
date is January 27, 1998), with respect to the financial statements of Tucson
Communications Company included in the Registration Statement (Form S-1 No.
333-52481) and related Prospectus of American Tower Systems Corporation for
the registration of shares of its common stock.
/s/ Ernst & Young LLP
San Diego, California
June 29, 1998
