<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 10-Q
----------------
(Mark One):
[X]Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934. For the quarterly period ended June 30, 1999.
[_]Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Commission File Number: 001-14195
----------------
AMERICAN TOWER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 65-0723837
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
116 Huntington Avenue
Boston, Massachusetts 02116
(Address of principal executive offices)
Telephone Number (617) 375-7500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days: Yes X No
<TABLE>
<CAPTION>
Outstanding at
Class of Common Stock August 10, 1999
- --------------------- ------------------
<S> <C>
Class A Common Stock......................................... 144,358,299 shares
Class B Common Stock......................................... 8,841,088 shares
Class C Common Stock......................................... 2,422,804 shares
------------------
Total........................................................ 155,622,191 shares
==================
</TABLE>
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- -------------------------------------------------------------------------------
<PAGE>
AMERICAN TOWER CORPORATION
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets
June 30, 1999 and December 31, 1998............................... 1
Condensed Consolidated Statements of Operations
Three and Six Months Ended June 30, 1999 and 1998................. 2
Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 1999 and 1998........................... 3
Notes to Condensed Consolidated Financial Statements............... 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................... 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk... 18
PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................ 19
Item 2. Changes in Securities and Use of Proceeds.................... 19
Item 4. Submission of Matters to a Vote of Security Holders.......... 19
Item 6. Exhibits and Reports on Form 8-K............................. 21
Signatures....................................................... 22
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS--UNAUDITED
(In thousands, except share data)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
---------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................ $ 353,221 $ 186,175
Accounts receivable, net of allowance for doubtful
accounts of $1,702 and $1,230, respectively......... 38,454 15,506
Prepaid and other current assets..................... 8,573 4,065
Inventories.......................................... 3,634
Cost in excess of billings on uncompleted
contracts........................................... 9,140 1,344
Deferred income taxes................................ 495 495
Due from CBS Corporation............................. 3,659
---------- ----------
Total current assets............................... 417,176 207,585
---------- ----------
PROPERTY AND EQUIPMENT, net........................... 725,846 449,476
GOODWILL AND OTHER INTANGIBLE ASSETS, net............. 1,213,374 718,575
NOTES RECEIVABLE...................................... 13,624 7,585
DEPOSITS AND OTHER LONG-TERM ASSETS................... 17,526 9,406
INVESTMENTS........................................... 14,951 298
DEFERRED INCOME TAXES................................. 116,079 109,418
---------- ----------
TOTAL................................................. $2,518,576 $1,502,343
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt.................... $ 2,316 $ 1,652
Accounts payable..................................... 8,075 6,696
Accrued expenses..................................... 19,200 11,347
Accrued tower construction costs..................... 23,107 16,099
Accrued interest..................................... 1,209 1,132
Billings in excess of costs on uncompleted
contracts........................................... 8,943 6,610
Accrued separation expenses.......................... 5,058
Due to CBS Corporation............................... 45,127
Accrued acquisition purchase price................... 3,794 21,914
---------- ----------
Total current liabilities.......................... 66,644 115,635
---------- ----------
LONG-TERM DEBT........................................ 281,805 279,477
OTHER LONG-TERM LIABILITIES........................... 2,545 1,429
---------- ----------
Total liabilities.................................. 350,994 396,541
---------- ----------
MINORITY INTEREST IN SUBSIDIARIES..................... 5,649 4,116
---------- ----------
COMMITMENTS AND CONTINGENCIES
REDEEMABLE CLASS A COMMON STOCK:
$.01 par value, -0- and 336,250 shares issued and
outstanding; at estimated redemption values of -0-
and $29.56 per share, respectively................ 9,940
---------- ----------
STOCKHOLDERS' EQUITY:
Preferred Stock; $0.01 par value; 20,000,000 shares
authorized; no shares issued or outstanding.........
Class A Common Stock; $.01 par value; 500,000,000
shares authorized; 144,398,415 and 96,291,111
shares issued and outstanding, respectively......... 1,444 963
Class B Common Stock; $.01 par value; 50,000,000
shares authorized; 8,878,573 and 9,001,060 shares
issued and outstanding, respectively................ 89 90
Class C Common Stock; $.01 par value; 10,000,000
shares authorized; 2,422,804 and 3,002,008 shares
issued and outstanding, respectively................ 24 30
Additional paid-in capital........................... 2,230,989 1,140,365
Accumulated deficit.................................. (69,085) (49,702)
---------- ----------
Total.............................................. 2,163,461 1,091,746
Less: Treasury stock (76,403 shares at cost)....... (1,528)
---------- ----------
Total stockholders' equity......................... 2,161,933 1,091,746
---------- ----------
TOTAL................................................. $2,518,576 $1,502,343
========== ==========
</TABLE>
See notes to condensed consolidated financial statements
1
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS--UNAUDITED
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
----------------- ------------------
1999 1998 1999 1998
------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES:
Rental and management................. $31,356 $ 12,078 $ 56,872 $ 21,587
Services.............................. 21,412 7,000 32,238 12,275
Video, voice, data and Internet
transmission......................... 6,385 4,004 12,451 7,146
------- -------- -------- --------
Total revenues...................... 59,153 23,082 101,561 41,008
------- -------- -------- --------
OPERATING EXPENSES:
Operating expenses excluding
depreciation and amortization, tower
separation and corporate general and
administrative expenses:
Rental and management............... 13,899 5,430 25,571 10,330
Services............................ 15,432 6,191 24,685 10,734
Video, voice, data and Internet
transmission....................... 4,519 2,717 8,764 4,769
Depreciation and amortization......... 33,139 9,953 57,808 15,755
Tower separation expense.............. 12,457 12,457
Corporate general and administrative
expense.............................. 2,300 1,084 4,140 1,626
------- -------- -------- --------
Total operating expenses............ 69,289 37,832 120,968 55,671
------- -------- -------- --------
LOSS FROM OPERATIONS.................... (10,136) (14,750) (19,407) (14,663)
------- -------- -------- --------
OTHER INCOME (EXPENSE):
Interest expense...................... (5,538) (7,472) (11,539) (9,902)
Interest income and other, net........ 5,788 966 10,737 1,831
Minority interest in net (earnings)
losses of subsidiaries............... 82 (110) 79 (189)
------- -------- -------- --------
TOTAL OTHER INCOME (EXPENSE)............ 332 (6,616) (723) (8,260)
------- -------- -------- --------
LOSS BEFORE INCOME TAXES AND
EXTRAORDINARY LOSS..................... (9,804) (21,366) (20,130) (22,923)
INCOME TAX (EXPENSE) BENEFIT............ (79) 2,949 747 2,979
------- -------- -------- --------
LOSS BEFORE EXTRAORDINARY LOSS.......... (9,883) (18,417) (19,383) (19,944)
EXTRAORDINARY LOSS ON EXTINGUISHMENT OF
DEBT, NET OF INCOME TAX BENEFIT OF
$921................................... (1,382) (1,382)
------- -------- -------- --------
NET LOSS................................ $(9,883) $(19,799) $(19,383) $(21,326)
======= ======== ======== ========
BASIC AND DILUTED NET LOSS PER COMMON
SHARE AMOUNTS--
Loss Before Extraordinary Loss....... $ (.06) $ (.33) $ (.14) $ (.39)
Extraordinary Loss................... (.02) (.03)
------- -------- -------- --------
NET LOSS................................ $ (.06) $ (.35) $ (.14) $ (.42)
======= ======== ======== ========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING............................ 155,604 56,034 143,503 51,409
======= ======== ======== ========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS--UNAUDITED
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES... $ 25,844 $ (8,734)
--------- ---------
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Payments for purchase of property and equipment and
construction in progress.............................. (111,943) (34,910)
Payments for acquisitions, net of cash acquired........ (162,151) (121,627)
Advances of notes receivable........................... (5,421) (9,100)
Proceeds from notes receivable......................... 24 2,000
Deposits, investments and other long-term assets....... (21,296) (897)
--------- ---------
Cash used for investing activities....................... (300,787) (164,534)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit facilities..................... 205,500
Repayment of notes payable and credit facilities....... (142,185) (117,924)
Net proceeds from equity offerings and stock options... 634,336 380,340
Cash transfers to CBS Corporation...................... (50,000) (221,665)
Contributions from ARS................................. 56,954
Cash transfers to ARS.................................. (51,856)
Distributions to minority interest..................... (162) (210)
Deferred financing costs............................... (18,751)
--------- ---------
Cash provided by financing activities.................... 441,989 232,388
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS................ 167,046 59,120
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD........... 186,175 4,596
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD................. $ 353,221 $ 63,716
========= =========
CASH PAID FOR INCOME TAXES............................... $ 574 $ 119
========= =========
CASH PAID FOR INTEREST................................... $ 12,493 $ 10,448
========= =========
NON-CASH TRANSACTIONS:
Contribution of property and equipment and other assets
from ARS.............................................. $ 6,488
Issuance of common stock and assumption of options for
acquisitions.......................................... $ 448,037 $ 363,100
Increase in deferred tax assets from corporate
restructuring......................................... $ 135,000
Increase in due to CBS Corporation from estimated
remaining tax liabilities............................. $ 1,121 $ 54,700
Escrow return -- treasury stock........................ $ 1,528
Adjustment to equity for CBS tax liability............. $ 76,960
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--UNAUDITED
1. Basis of Presentation and Accounting Policies
The accompanying condensed consolidated financial statements have been
prepared by American Tower Corporation (the Company or American Tower)
(formerly American Tower Systems Corporation), without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission (SEC). The
financial information included herein is unaudited; however, the Company
believes such information and the disclosures are adequate to make the
information presented not misleading. In addition, the Company believes such
information reflects all adjustments (consisting of normal recurring
adjustments) that are necessary for a fair presentation of financial position
and results of operations for such periods. Results of interim periods may not
be indicative of results for the full year. These condensed consolidated
financial statements and related notes should be read in conjunction with the
Company's 1998 Annual Report on Form 10-K and interim report on Form 10Q for
the three month period ended March 31, 1999 filed with the SEC on March 19,
1999 and on May 17, 1999, respectively.
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 condensed consolidated
financial statements and accompanying notes. Actual results may differ from
those estimates, and such differences could be material to the accompanying
condensed consolidated financial statements.
Loss Per Common Share--Basic and diluted income or loss per common share
have been determined in accordance with Statement of Financial Accounting
Standards (FAS) No. 128, "Earnings Per Share," whereby basic income or loss
per common share is computed by dividing net income or loss by the weighted
average number of common shares outstanding during the period. Diluted per
share amounts are computed by adjusting the weighted average number of common
shares for dilutive potential common shares outstanding during the period, if
any. In computing diluted per share amounts, the Company uses the treasury
stock method, whereby unexercised options are assumed to be exercised at the
beginning of the period or at issuance, if later. The assumed proceeds are
then used to purchase common shares at the average market price during the
period. Shares outstanding upon the consummation of the ATC Separation (as
defined below) are assumed to be outstanding for all periods prior to June 4,
1998. Shares issuable upon exercise of options have been excluded from the
computation of diluted income or loss per common share as the effect is anti-
dilutive. Had options been included in the computation, shares for the diluted
computation would have increased by approximately 5.4 and 5.2 million and 4.3
and 4.4 million for the three and six month periods ended June 30, 1999 and
1998, respectively.
Investments--Investments in entities which the Company owns less than 20%
are accounted for using the cost method. Investments in entities which the
Company owns 20% but less than 50% are accounted for using the equity method.
Under the equity method the investment is stated at cost plus the Company's
equity in undistributed net income of the entity since acquisition. The change
in the equity in net income of these entities is recorded in "interest income
and other, net" in the accompanying condensed consolidated statements of
operations.
Tower Separation Expense--Tower separation expense consists of costs
incurred in connection with the separation of the Company from its former
parent and includes legal, accounting, financial advisory and consent
solicitation fees. See note 2 of the condensed consolidated financial
statements.
Recent Accounting Pronouncement--In June 1998, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting Standards
(FAS) No. 133, Accounting for Derivative Instruments and Hedging Activities.
This Statement establishes accounting and reporting standards for derivative
instruments. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position, and measure
those instruments at fair value. The accounting for changes in the fair value
of a derivative (that is,
4
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--UNAUDITED
gains and losses) will depend on the entity's intended use of the derivative
and its resulting designation (as defined in the Statement). FAS No. 133 is
effective for all fiscal quarters of all fiscal years beginning after June 15,
2000. The Company is currently in the process of evaluating the impact FAS No.
133 will have on the Company and its consolidated financial statements.
Reclassifications--Certain reclassifications have been made to the 1998
condensed consolidated financial statements to conform to the 1999
presentation.
2. ATC Separation
As disclosed in the Company's 1998 Annual Report on Form 10-K, the Company
was formerly a wholly-owned subsidiary of American Radio Systems Corporation
(ARS) until its spin-off from ARS on June 4, 1998 (the ATC Separation). As
part of the ATC Separation, the Company is required to reimburse CBS
Corporation (CBS) for certain tax liabilities incurred by ARS related to the
transaction. As of December 31, 1998 the Company had paid approximately $212.0
million to CBS. The Company is required to make additional payments to CBS
upon the conversion of ARS 7% Convertible Debentures (the ARS Convertible
Debentures) by the holders thereof. The Company estimates that its remaining
reimbursement obligation to CBS with respect to taxes on known conversions is
approximately $6.1 million as of June 30, 1999. The Company estimates that its
reimbursement obligation to CBS with respect to taxes on remaining conversions
at June 30, 1999 would be approximately $14.0 million. Such estimate is based
on an estimated fair market value of the Class A common stock, on July 15,
1999, of $25.00 per share. The Company's obligation for such conversions would
change by approximately $1.0 million for each $1.00 change in such fair market
value. The Company has provided CBS with security of $9.8 million in cash
(which may be replaced at the Company's option with a letter of credit) to
offset against future tax reimbursement. Such deposit, along with the
estimated liability on known ARS Convertible Debenture conversions, is
recorded as "Due from CBS" in the accompanying June 30, 1999 condensed
consolidated balance sheet.
The ATC Separation also provided for closing balance sheet adjustments based
on the working capital, as defined, and debt levels of ARS as of June 4, 1998.
The Company's preliminary estimate was that such adjustments would not exceed
$50.0 million. In February 1999, the Company paid $50.0 million to CBS in
settlement of all amounts due with respect to such adjustments, including
interest. As part of such settlement, the Company also agreed to indemnify CBS
and ARS with respect to certain tax matters affecting ARS prior to the ATC
Separation. See the Company's 1998 Annual Report on Form 10-K for more
detailed discussion related to the ATC Separation.
3. Significant Customers
For the three and six month periods ended June 30, 1999, one customer
accounted for approximately 18% and 16%, respectively, of the Company's
consolidated revenues.
4. Income Taxes
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. Cumulative
adjustments to the Company's estimate are recorded in the interim period in
which a change in the estimated annual effective rate is determined.
5. Stockholders' Equity
Redeemable Common Stock: In June 1998, the Company merged with a company
owning a broadcasting tower in the Boston, Massachusetts area and issued
720,000 shares of Class A common stock valued at approximately $18.0 million.
In addition, under a put agreement that was consummated in connection with the
merger, the sellers had the right to require the Company to purchase, at any
time prior to June 5, 1999, any or all shares of Class A common stock received
pursuant to consummation of the merger for a purchase price equal to the then
current market price. On June 5, 1999, the sellers right to require the
Company to purchase shares of
5
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--UNAUDITED
Class A common stock issued in connection with the merger expired. Accordingly
all unsold shares as of that date (383,750) were reclassified from Redeemable
Class A common stock to common stock and additional paid in capital.
Secondary Public Offering: In February 1999, the Company completed a
secondary public offering of 25,700,000 shares of Class A common stock, $.01
par value per share (including 1,700,000 shares sold by the Company pursuant
to the exercise in full of the underwriters' over-allotment option) at $25.00
per share. Certain selling stockholders sold an additional 1,300,000 shares in
the offering. The Company's net proceeds of the offering (after deduction of
the underwriting discount and offering expenses) was approximately $618.0
million. The Company invested the proceeds in short-term investment grade
securities. The Company has and will use such proceeds, together with
borrowings under its existing credit facilities, to fund future acquisitions
and construction activities.
Private Placement: In February 1999, the Company consummated the sale of
500,000 shares of Class A common stock to Credit Suisse First Boston
Corporation at $26.31 per share. In connection with such sale, Credit Suisse
First Boston Corporation was granted certain registration rights. The Company
invested the proceeds of approximately $13.1 million in short-term investment
grade securities. The Company has and will use such proceeds, together with
borrowings under its exisiting credit facilities, to fund future acquisitions
and construction activities.
Other Changes to Stockholders' Equity: See note 6 of the condensed
consolidated financial statements for issuances of common stock in connection
with the Company's acquisitions consummated during the six month period ended
June 30, 1999.
6. Acquisitions
General--The acquisitions consummated during the six month period ended June
30, 1999 have been accounted for using the purchase method of accounting. The
purchase prices related to these acquisitions have been allocated to the net
assets acquired based on their estimated fair value at the date of
acquisition. The excess of purchase price over the estimated fair value of the
net assets acquired has been recorded as goodwill and other intangible assets.
For certain acquisitions, the condensed consolidated financial statements
reflect the preliminary allocation of purchase prices as the appraisals
related to the net 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.
Consummated Transactions
The following provides a general description of the significant transactions
consummated during the six-month period ended June 30, 1999:
Omni Merger--In February 1999, the Company consummated the Agreement and
Plan of Merger, dated as of November 16, 1998 (the Omni Merger) with
OmniAmerica, Inc. (Omni). Omni owned, managed and constructed multi-use
telecommunications sites for radio and television broadcasting, paging,
cellular, PCS and other wireless technologies and offered nationwide, turn-key
tower construction and installation services. Pursuant to the Omni Merger
agreement, Omni stockholders received 1.1 shares of the Company's Class A
common stock for each share of Omni common stock. In the aggregate, the
Company exchanged approximately 16.8 million shares of Class A common stock
for approximately 15.2 million shares of Omni common stock. In addition, the
Company assumed $96.6 million of debt, of which $94.3 million (inclusive of
interest and fees) was paid at closing. The Company also assumed certain Omni
employee stock options which were converted into options to purchase
approximately 1.0 million shares of the Company's Class A common stock. Total
merger consideration was approximately $365.4 million.
6
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--UNAUDITED
TeleCom Merger--In February 1999, the Company consummated the Agreement and
Plan of Merger, dated as of November 16, 1998 (the TeleCom Merger) with
TeleCom Towers, L.L.C. (TeleCom). Total merger consideration of approximately
$146.2 million included the issuance of 3.9 million shares of Class A common
stock and $63.1 million of cash, which included a $5.2 million working capital
adjustment, $3.0 million of which was paid in June of 1999. As part of the
TeleCom Merger, the Company also assumed approximately $48.4 million of debt,
of which $44.2 million (inclusive of interest) was paid at closing and $3.9
million was paid in April 1999.
Comm Site Merger--In June of 1999, the Company consummated the Agreement and
Plan of Merger, dated as of May 13, 1999 (the Comm Site Merger) with Comm Site
International, Inc. (Comm Site). The merger with Comm Site, a company which
specialized in antenna site development and site management, is expected
to expand the Company's presence in the Midwest and Southeast regions of the
United States. Total cash consideration paid by the Company in connection with
the Comm Site Merger was approximately $25.5 million, subject to a closing
balance sheet working capital adjustment which is expected to occur in the
third quarter of 1999.
In addition to the above, the Company also consummated a number of other
tower related asset purchases during the six month period ended June 30, 1999.
Total consideration paid in connection with these transactions was
approximately $71.4 million.
The following unaudited pro forma summary for the six months ended June 30,
1999 and 1998 presents the condensed consolidated results of operations as if
the 1999 acquisitions discussed above had occurred as of January 1, 1998 after
giving effect to certain adjustments, including depreciation and amortization
of assets and interest expense on any 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, 1998 or of results which may occur in
the future.
In thousands, except per share data:
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, 1999 June 30, 1998
------------- -------------
<S> <C> <C>
Revenues........................................ $120,029 $ 84,282
Loss before extraordinary item.................. $(23,998) $(32,087)
Net loss........................................ $(23,998) $(33,469)
Basic and diluted net loss per common share..... $ (0.16) $ (0.47)
</TABLE>
Since July 1, 1999, the Company has acquired and made investments in several
communication sites and businesses for an aggregate preliminary purchase price
of approximately $104.3 million.
Pending Transactions
The following provides a general description of significant transactions
that are expected to be consummated in the fourth quarter of 1999 and into the
year 2000.
AirTouch Communications Inc.--In August of 1999, the Company signed a
definitive agreement with AirTouch Communications, Inc. (AirTouch), a unit of
Vodafone AirTouch PLC, to acquire the rights to approximately 2,100
communications towers through a master sublease agreement. In addition, the
Company will enter into an exclusive three-year Build-to-Suit agreement that
is expected to produce approximately 400- 500 new communications towers. Total
consideration to be paid by the Company in connection with this transaction
includes approximately $800.0 million in cash, plus a five year warrant to
purchase 3 million shares of the Company's Class A common stock at $22 per
share. The cash portion of the consideration to be paid in connection with
this transaction is expected to come from a combination of current available
funds, additional borrowings under its credit facilities or proceeds from the
sale of the Company's securities. The transaction is expected to close
incrementally, beginning in the first quarter of 2000, subject to certain
conditions.
7
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--UNAUDITED
ICG Satellite Services Merger--In August of 1999, the Company entered into a
Stock Purchase Agreement with ICG Satellite Services, Inc. (ICGSS) to acquire
a teleport facility and global maritime telecommunications network. Presently,
ICGSS services voice, data Internet and compressed video via satellite to
major cruise lines, the U.S. Military, internet-related companies, and
international telecommunication customers. Total cash consideration to be paid
by the Company in connection with this merger is approximately $100.0 million.
The transaction is expected to close in the fourth quarter of 1999.
UniSite Merger--In June of 1999, the Company entered into an Agreement and
Plan of Merger (the UniSite Merger) with UniSite, Inc. (UniSite). UniSite,
whose primary focus has been tower site management, has recently expanded its
scope of services to include site ownership and development. Presently,
UniSite owns approximately 400 towers and has an exclusive Build-to-Suit
agreement with a major wireless communications carrier. Pursuant to the
UniSite Merger agreement, UniSite preferred and common stockholders will
receive an aggregate of approximately $165.0 million in cash, subject to
working capital and completed tower closing adjustments. In addition, the
Company will also assume approximately $40.0 million in debt. Consummation of
the merger is expected to occur on the earlier of (a) January 31, 2000, or (b)
UniSite owning and operating 600 wireless communication towers, subject to
certain conditions including, the expiration or early termination of the
waiting period under the Hart-Scot-Rodino Antitrust Improvement Act of 1976,
as amended.
In addition to AirTouch, ICGSS and UniSite, the Company is party to various
agreements relating to the acquisition of assets from third parties for an
estimated aggregate cost of approximately $213.0 million. Such transactions
are subject to the satisfaction of customary closing conditions, which are
expected to be met in the last two quarters of 1999 or the first quarter of
2000.
7. Business Segments
The Company operates in three business segments; rental and management (RM),
services (Services), and video, voice, data and Internet transmission (VVDI).
The RM segment primarily provides for leasing and subleasing of antennae sites
on multi-tenant towers for a diverse range of wireless communication
industries, including personal communication services, paging, cellular,
enhanced specialized mobile radio, specialized mobile radio and fixed
microwave, as well as radio and television broadcasters. The Services segment
offers a broad range of network development services, including network
design, site acquisition and construction, zoning and other regulatory
approvals, component part sales, tower construction and antennae installation.
The VVDI segment offers transmission services in the New York City to
Washington, D.C. corridor and in Texas.
The accounting policies applied in compiling segment information below are
similar to those described in the Company's 1998 Annual Report filed on Form
10-K and interim report for the three months ended March 31, 1999 filed on
Form 10-Q. In evaluating financial performance, management focuses on
Operating Profit (Loss), which excludes depreciation and amortization, tower
separation and corporate general and administrative expenses. This measure of
Operating Profit (Loss) is also before interest income and other, net,
interest expense, minority interest in net (earnings) losses of subsidiaries
and income taxes.
The Company's reportable segments are strategic business units that offer
different services. They are managed separately because each segment requires
different resources, skill sets and marketing strategies. All segments operate
exclusively in the United States. In addition, all reported segment revenues
are generated from external customers, as intersegment revenues are
insignificant.
Summarized financial information concerning the Company's reportable
segments as of and for the three and six months ended June 30, 1999 and 1998,
are shown in the following table. The "Other" column below represents amounts
excluded from specific segments such as extraordinary losses, income taxes,
corporate general and administrative expense, tower separation expense,
depreciation and amortization and interest. In addition, "Other" also includes
corporate assets such as cash and cash equivalents, tangible and intangible
assets, and income tax accounts which have not been allocated to specific
segments (in thousands).
8
<PAGE>
AMERICAN TOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--UNAUDITED
<TABLE>
<CAPTION>
Three Months Ended June 30, RM Services VVDI Other Total
- ----------------------------- ---------- -------- ------- -------- ----------
<S> <C> <C> <C> <C> <C>
1999
Revenues..................... $ 31,356 $ 21,412 $ 6,385 $ $ 59,153
Operating Profit (Loss)...... $ 17,457 $ 5,980 $ 1,866 $(35,186) $ (9,883)
Assets....................... $1,383,770 $497,429 $77,733 $559,644 $2,518,576
1998
Revenues..................... $ 12,078 $ 7,000 $ 4,004 $ $ 23,082
Operating Profit (Loss)...... $ 6,648 $ 809 $ 1,287 $(28,543) $ (19,799)
Assets....................... $ 754,649 $104,833 $46,025 $232,194 $1,137,701
<CAPTION>
Six Months Ended June 30, RM Services VVDI Other Total
- ----------------------------- ---------- -------- ------- -------- ----------
<S> <C> <C> <C> <C> <C>
1999
Revenues..................... $ 56,872 $ 32,238 $12,451 $ $ 101,561
Operating Profit (Loss)...... $ 31,301 $ 7,553 $ 3,687 $(61,924) $ (19,383)
Assets....................... $1,383,770 $497,429 $77,733 $559,644 $2,518,576
1998
Revenues..................... $ 21,587 $ 12,275 $ 7,146 $ $ 41,008
Operating Profit (Loss)...... $ 11,257 $ 1,541 $ 2,377 $(36,501) $ (21,326)
Assets....................... $ 754,649 $104,833 $46,025 $232,194 $1,137,701
</TABLE>
9
<PAGE>
ITEM 2. 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. Various factors affect the Company's results and could cause
the Company's actual results to differ materially from those expressed in any
forward-looking statement. Such factors include:
. the outcome of our growth strategy,
. future results of operations,
. liquidity and capital expenditures,
. construction and acquisition activities,
. debt levels and the ability to obtain financing and service debt,
. competitive conditions and regulatory developments in the communications
site and wireless carrier industries,
. projected growth of the wireless communications and wireless carrier
industries, and
. general economic conditions.
As the Company was a wholly-owned subsidiary of ARS through June 4, 1998,
the condensed consolidated financial statements for the three and six months
ended June 30, 1998 may not reflect the results of operations or financial
position of the Company had it been an independent public company during such
periods. Because of the Company's relatively brief operating history and the
large number of recent acquisitions, the following discussion will not
necessarily reveal all significant developing or continuing trends.
The Company is a leading independent owner, operator and developer of
wireless communications towers in the United States. From January 1, 1999
through June 30, 1999, the Company acquired various communications sites and
businesses for an aggregate estimated purchase price of approximately $608.5
million, including the issuance of approximately 20.7 million shares of Class
A common stock. Management expects that acquisitions consummated to date will
have a material impact on future revenues, expenses and results from
operations.
Results of Operations
As of June 30, 1999, the Company owned and/or operated approximately 3,600
communications sites, as compared to approximately 1,800 communications sites
as of June 30, 1998. The acquisitions consummated in 1999 and 1998 have
significantly affected operations for the three and six months ended June 30,
1999, as compared to the three and six months ended June 30, 1998. See the
notes to the condensed consolidated financial statements for a description of
the acquisitions consummated in 1999 and the Company's Annual Report on Form
10-K for acquisitions consummated in 1998 and prior.
10
<PAGE>
Three months ended June 30, 1999 and 1998 (Dollars in thousands)--Unaudited
<TABLE>
<CAPTION>
Three Months Ended Amount of Percentage
------------------- ---------- ----------
Increase Increase
June 30, (Decrease) (Decrease)
------------------- ---------- ----------
1999 1998
--------- ---------
<S> <C> <C> <C> <C>
Revenues:
Rental and management.......... $ 31,356 $ 12,078 $19,278 160 %
Services....................... 21,412 7,000 14,412 206 %
Video, voice, data and Internet
transmission.................. 6,385 4,004 2,381 59 %
-------- --------- -------
Total revenues................... 59,153 23,082 36,071 156 %
-------- --------- -------
Operating Expenses:
Rental and management.......... 13,899 5,430 8,469 156 %
Services....................... 15,432 6,191 9,241 149 %
Video, voice, data and Internet
transmission.................. 4,519 2,717 1,802 66 %
-------- --------- -------
Total operating expenses
excluding depreciation and
amortization, tower
separation, and corporate
general and administrative
expenses...................... 33,850 14,338 19,512 136 %
-------- --------- -------
Depreciation and amortization.. 33,139 9,953 23,186 233 %
Tower separation expense....... 12,457 (12,457) (100)%
Corporate general and adminis-
trative expense............... 2,300 1,084 1,216 112 %
Interest expense................. (5,538) (7,472) (1,934) (26)%
Interest income and other, net... 5,788 966 4,822 499 %
Minority interest in net losses
(earnings) of subsidiaries...... 82 (110) (192) (175)%
Income tax (expense) benefit..... (79) 2,949 (3,028) (103)%
Extraordinary loss on
extinguishment of debt.......... (1,382) (1,382) (100)%
-------- --------- -------
Net loss......................... $ (9,883) $ (19,799) $(9,916) (50)%
======== ========= =======
</TABLE>
Rental and Management Revenue
Rental and management revenue for the three months ended June 30, 1999, was
$31.4 million, an increase of $19.3 million from the three months ended June
30, 1998. The majority of the increase, $15.0 million, is attributable to
revenue generated from acquisitions consummated and/or towers constructed
subsequent to June 30, 1998. The remaining factor contributing to the
additional revenue is an increase in comparable tower revenue of $4.3 million
in the second quarter of 1999 for towers that existed in the second quarter of
1998.
Services Revenue
Services revenue for the three months ended June 30, 1999, was $21.4
million, an increase of $14.4 million from revenues for the three months ended
June 30, 1998. The primary reason for the increase is due to the $16.6 million
of revenue earned in the second quarter of 1999 as a result of the Omni
Merger. The increase from the Omni Merger is offset by a decrease in revenues
generated from the Company's existing services business of approximately $2.2
million. This decrease is a direct result of the Company's shift in focus on
site acquisition, development and construction of towers for its own use
("Build-to-Suit") from its previous focus on development and construction of
towers for sale to third parties. The Company expects to continue its focus on
Build-to-Suit activity in the foreseeable future, thus resulting in a
continuing decline in revenues applicable to this portion of the Services
business.
Video, Voice, Data and Internet Transmission Revenue
Video, voice, data and Internet transmission (VVDI) revenue for the three
months ended June 30, 1999, was $6.4 million, an increase of $2.4 million from
revenues for the three months ended June 30, 1998. The primary
11
<PAGE>
reason for the increase is attributed to approximately $1.8 million of
revenues earned during the current period as a result of the acquisition of
Washington International Teleport which closed in the second quarter of 1998.
The remaining component of the increase, $0.6 million, is due to growth in the
overall VVDI business which existed at June 30, 1998.
Rental and Management, Services and VVDI Expenses
Rental and management, Services and VVDI expenses for the three months ended
June 30, 1999, were $13.9 million, $15.4 million and $4.5 million,
respectively, an increase of $8.5 million, $9.2 million and $1.8 million,
respectively, from the three months ended June 30, 1998. The primary reasons
for the increase in these expenses are essentially the same as those discussed
above under each respective revenue segment.
Depreciation and Amortization
Depreciation and amortization for the three months ended June 30, 1999, was
$33.1 million, an increase of $23.2 million from the three months ended June
30, 1998. A component of the increase is attributable to an increase in
depreciation expense of $8.5 million. This is a direct result of the Company's
purchase, construction and/or acquisition of approximately $416.2 million of
property and equipment from July 1, 1998 to June 30, 1999. The remaining
component of the increase is attributable to an increase in amortization of
$14.7 million, resulting from the Company's recording and amortizing of
approximately $601.5 million of goodwill and other intangible assets related
to acquisitions consummated from July 1, 1998 to June 30, 1999.
Tower Separation Expense
The Company completed its separation from ARS in the second quarter of 1998,
and no additional expenditures related to the separation were incurred in the
three month period ended June 30, 1999. See note 1 of the condensed
consolidated financial statements for a description of tower separation
expense.
Corporate General and Administrative Expense
Corporate general and administrative expense for the three months ended June
30, 1999, was $2.3 million, an increase of $1.2 million from the three months
ended June 30, 1998. The majority of the increase is a result of higher
personnel and marketing costs associated with supporting the Company's
expanding revenue base and growth strategy. Other factors contributing to the
increase include higher costs associated with enhancing the Company's
information technology infrastructure and overall increases in other
administrative expenses.
Interest Expense
Interest expense for the three months ended June 30, 1999, was $5.5 million,
a decrease of $1.9 million from the three months ended June 30, 1998. The net
decrease is attributable to approximately $3.1 million of interest incurred in
1998 on outstanding redeemable preferred stock which was redeemed prior to
1999, offset by an increase in the amount of interest incurred on the
Company's outstanding debt obligations of approximately $1.2 million.
Interest Income and Other, Net
Interest income and other, net for the three months ended June 30, 1999, was
$5.8 million, an increase of $4.8 million from the three months ended June 30,
1998. The increase is primarily related to interest earned on invested cash
proceeds received from the issuance of the Company's common stock.
Income Tax (Expense) Benefit
The income tax expense for the three months ended June 30, 1999 was $0.08
million, a decrease of $3.0 million from the income tax benefit recorded for
the three months ended June 30, 1998. The decrease in the
12
<PAGE>
tax benefit is due to an increase in nondeductible permanent items
(principally goodwill amortization). The increase in nondeductible permanent
items has occurred as a result of the consummation of several mergers and
acquisitions in 1999 and the latter part of 1998.
Extraordinary Loss on Extinguishment of Debt
The Company incurred an extraordinary loss in 1998 due to the write-off of
deferred financing costs in connection with the refinancing of its previous
credit facility. There have been no transactions which qualify for treatment
as extraordinary items during the three month period ended June 30, 1999.
Six months ended June 30, 1999 and 1998 (Dollars in thousands)--Unaudited
<TABLE>
<CAPTION>
Six Months Ended Amount of Percentage
------------------ ---------- ----------
Increase Increase
June 30, (Decrease) (Decrease)
------------------ ---------- ----------
1999 1998
-------- --------
<S> <C> <C> <C> <C>
Revenues:
Rental and management........... $ 56,872 $ 21,587 $35,285 163 %
Services........................ 32,238 12,275 19,963 163 %
Video, voice, data and Internet
transmission................... 12,451 7,146 5,305 74 %
-------- -------- -------
Total revenues.................... 101,561 41,008 60,553 148 %
-------- -------- -------
Operating Expenses:
Rental and management........... 25,571 10,330 15,241 148 %
Services........................ 24,685 10,734 13,951 130 %
Video, voice, data and Internet
transmission................... 8,764 4,769 3,995 84 %
-------- -------- -------
Total operating expenses excluding
depreciation and amortization,
tower separation, and corporate
general and administrative
expenses....................... 59,020 25,833 33,187 128 %
-------- -------- -------
Depreciation and amortization... 57,808 15,755 42,053 267 %
Tower separation expense........ 12,457 (12,457) (100)%
Corporate general and adminis-
trative expense................ 4,140 1,626 2,514 155 %
Interest expense.................. (11,539) (9,902) 1,637 17 %
Interest income and other, net.... 10,737 1,831 8,906 486 %
Minority interest in net losses
(earnings) of subsidiaries....... 79 (189) (268) (142)%
Income tax benefit................ 747 2,979 (2,232) (75)%
Extraordinary loss on
extinguishment of debt........... (1,382) (1,382) (100)%
-------- -------- -------
Net loss.......................... $(19,383) $(21,326) $(1,943) (9) %
======== ======== =======
</TABLE>
Rental and Management Revenue
Rental and management revenue for the six months ended June 30, 1999, was
$56.9 million, an increase of $35.3 million from the six months ended June 30,
1998. The majority of the increase, $24.7 million, is attributable to revenue
generated from acquisitions consummated and/or towers constructed subsequent
to June 30, 1998. The remaining factor contributing to the additional revenue
is an increase in comparable tower revenue of $10.6 million in the six month
period ended June 30, 1999 for towers that existed in the six month period
ended June 30, 1998.
13
<PAGE>
Services Revenue
Services revenue for the six months ended June 30, 1999, was $32.2 million,
an increase of $19.9 million from revenues for the six months ended June 30,
1998. The primary reason for the increase is due to the $23.1 million of
revenue earned in 1999 as a result of the Omni Merger. The increase from the
Omni Merger is offset by a decrease in revenues generated from the Company's
existing services business of approximately $3.2 million. This decrease is a
direct result of the Company's shift in focus on Build-to-Suit activities from
its previous focus on development and construction of towers for sale to
outside customers. The Company expects to continue its focus on Build-to-Suit
activity in the foreseeable future, thus resulting in a continuing decline in
revenues applicable to this portion of the Services business.
Video, Voice, Data and Internet Transmission Revenue
VVDI revenue for the six months ended June 30, 1999, was $12.5 million, an
increase of $5.3 million from revenues for the six months ended June 30, 1998.
The primary reason for the increase is attributed to approximately $4.2
million of revenues earned during the six month period June 30, 1999 as a
result of the acquisition of Washington International Teleport which closed in
the second quarter of 1998. The remaining component of the increase, $1.1
million, is due to growth in the overall VVDI business existing at June 30,
1998.
Rental and Management, Services and VVDI Expenses
Rental and management, Services and VVDI expenses for the six months ended
June 30, 1999, were $25.6 million, $24.7 million and $8.8 million,
respectively, an increase of $15.2 million, $14.0 million and $4.0 million,
respectively, from the six months ended June 30, 1998. The primary reasons for
the increase in these expenses are essentially the same as those discussed
above under each respective revenue segment.
Depreciation and Amortization
Depreciation and amortization for the six months ended June 30, 1999, was
$57.8 million, an increase of $42.1 million from the six months ended June 30,
1998. A component of the increase is attributable to an increase in
depreciation expense of $14.7 million. This is a direct result of the
Company's purchase, construction and/or acquisition of approximately $416.2
million of property and equipment from July 1, 1998 to June 30, 1999. The
remaining component of the increase is attributable to an increase in
amortization of $27.4 million, resulting from the Company's recording and
amortizing of approximately $601.5 millon of goodwill and other intangible
assets related to acquisitions consummated from July 1, 1998 to June 30, 1999.
Tower Separation Expense
The Company completed its separation from ARS in the second quarter of 1998,
and no additional expenditures related to the separation were incurred in the
six month period ended June 30, 1999. See note 1 of the condensed consolidated
financial statements for a description of tower separation expense.
Corporate General and Administrative Expense
Corporate general and administrative expense for the six months ended June
30, 1999, was $4.1 million, an increase of $2.5 million from the six months
ended June 30, 1998. The majority of the increase is a result of higher
personnel and marketing costs associated with supporting the Company's
expanding revenue base and growth strategy. Other factors contributing to the
increase include higher costs associated with enhancing the Company's
information technology infrastructure and overall increases in other
administrative expenses.
14
<PAGE>
Interest Expense
Interest expense for the six months ended June 30, 1999, was $11.5 million,
an increase of $1.6 million from the six months ended June 30, 1998. The net
increase is attributable to an increase in the amount of interest incurred on
the Company's outstanding debt obligations of approximately $4.7 million
offset by a decrease of approximately $3.1 million related to interest
incurred in 1998 on outstanding redeemable preferred stock which was redeemed
prior to 1999.
Interest Income and Other, Net
Interest income and other, net for the six months ended June 30, 1999, was
$10.7 million, an increase of $8.9 million from the six months ended June 30,
1998. The increase is primarily related to interest earned on invested cash
proceeds received from the issuance of the Company's common stock.
Income Tax (Expense) Benefit
The income tax benefit for the six months ended June 30, 1999 was $0.7
million, a decrease of $2.2 million from the six months ended June 30, 1998.
The decrease in the tax benefit is due to an increase in nondeductible
permanent items (principally goodwill amortization). The increase in
nondeductible permanent items has arisen as a result of the consummation of
several mergers and acquisitions in 1999 and the latter part of 1998.
Extraordinary Loss on Extinguishment of Debt
The Company incurred an extraordinary loss in 1998 due to the write-off of
deferred financing costs in connection with the refinancing of its previous
credit facility. There have been no transactions which qualify for treatment
as extraordinary items during the six month period ended June 30, 1999.
Liquidity and Capital Resources
The Company's liquidity needs arise from its acquisition-related activities,
debt service, working capital and capital expenditures associated principally
with its construction program. As of June 30, 1999, the Company maintained
approximately $353.2 million in cash and cash equivalents, working capital of
approximately $350.5 million, and had approximately $500.0 million available
under its credit facilities. Historically, the Company has met its operational
liquidity needs with internally generated funds and has financed the
acquisition of tower related properties and its construction program with a
combination of capital funds from sales of its equity securities and bank
borrowings.
For the six months ended June 30, 1999, cash flows provided by operating
activities were $25.8 million, as compared to cash flows used for operating
activities of $8.7 million for the six months ended June 30, 1998. The change
is primarily attributable to the favorable cash flow generated from
consummated acquisitions in 1999 and the latter part of 1998.
For the six months ended June 30, 1999, cash flows used for investing
activities were $300.8 million as compared to $164.5 million for the six
months ended June 30, 1998. The increase in 1999 is primarily due to an
increase in property and equipment expenditures of approximately $77.0 million
coupled with the increase in cash expended for mergers and acquisitions (which
includes escrow deposits and equity investments) of approximately $59.0
million.
For the six months ended June 30, 1999, cash flows provided by financing
activities were $442.0 million as compared to $232.4 million for the six
months ended June 30, 1998. The net increase in 1999 is due principally to
cash flow provided from the sale of the Company's common stock in 1999, offset
by decreases in borrowings under the Company's credit facilities. In addition,
during the six month period ended June 30, 1999 the Company decreased the
amounts transferred to ARS and CBS by approximately $224.0 million.
15
<PAGE>
For the six months ended June 30, 1999, the Company had capital
expenditures, exclusive of fixed assets acquired through acquisitions, of
approximately $112.0 million primarily related to construction activities,
including the completion of approximately 445 towers. The Company's 1999
business plan calls for construction of between 1,000 and 1,200 towers at a
cost of between $180.0 million and $228.0 million (exclusive of broadcast
towers). Assuming the increase of its credit facilities as described below,
management believes that the Company will have sufficient funds available to
finance current construction plans, pending acquisitions and several
additional major acquisitions and/or construction projects. However, in the
event that the Company were to negotiate any additional major transactions, it
might require additional financing either through incurring additional debt or
the sale of equity securities. Such financing or sale of securities may not be
available on favorable terms.
Management expects that the consummated acquisitions and current and future
construction activities will have a material impact on liquidity. 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 the
Company as newly constructed towers will initially decrease overall liquidity.
But, as such sites become fully operational and achieve higher utilization,
they should generate positive cash flow, and, in the long-term, increase
liquidity.
Credit Facilities: As of June 30, 1999, the Company had approximately $284.1
million of long-term debt, of which $275.0 million was outstanding in the form
of term loans and revolving credit facilities. Debt service requires a
substantial portion of the Company's cash flow from operations. Accordingly,
the Company's leverage could make it vulnerable to a downturn in the operating
performance of its tower properties or in economic conditions. The Company
believes that its cash flows from operations will be sufficient to meet its
debt service requirements for interest and scheduled payments of principal
under its existing credit facilities. If such cash flow were not sufficient to
meet such debt service requirements, the Company might sell equity securities,
refinance its obligations or dispose of one or more of its properties in order
to make such scheduled payments. The Company may not be able to effect any of
such transactions on favorable terms. The Company believes that is has
sufficient financial resources available to it, including borrowings under its
credit facilities, to finance operations for the foreseeable future. The
Company is in the process of negotiating an increase in the aggregate maximum
borrowings under its credit facility from $925 million to $1.5 billion,
subject, in either case, to compliance with certain financial ratios. While
the Company believes such negotiations will be successful, the Company does
not know what, if any, changes (including without limitations interest rate
increases or other adverse provisions) the lenders may require in connection
with such borrowing limit increase.
Secondary Public Offering: In February 1999, the Company completed a
secondary public offering of 25,700,000 shares of Class A common stock, $.01
par value per share (including 1,700,000 shares sold by the Company pursuant
to the exercise in full of the underwriters over-allotment option) at $25.00
per share. Certain selling stockholders sold an additional 1,300,000 shares in
the offering. The Company's net proceeds of the offering (after deduction of
the underwriting discount and estimated offering expenses) were approximately
$618.0 million. The Company invested the proceeds in short-term investment
grade securities. The Company has and will use such investments together with
borrowings under its credit facilities to fund future acquisitions and
construction activities.
Private Placement: In February 1999, the Company consummated the sale of
500,000 shares of Class A common stock to Credit Suisse First Boston
Corporation at $26.31 per share. In connection with such sale, Credit Suisse
First Boston Corporation was granted certain registration rights. The Company
invested the proceeds of approximately $13.1 million in short-term investment
grade securities. The Company has and will use such investments, together with
borrowings under its credit facilities, to fund future acquisitions and
construction activities.
ATC Separation: As of June 30, 1999, the Company is still obligated under
the ATC Separation agreement for certain tax liabilities to CBS Corporation.
See note 2 of the condensed consolidated financial statements.
16
<PAGE>
Year 2000
The Company is aware of the issues associated with the year 2000 as it
relates to information systems and is currently working to resolve the
potential impact to the Company's operations. The year 2000 issue results from
the fact that many computer programs use only two digits to identify a year in
the date field. These programs were designed and developed without
consideration of the impact of the upcoming change in century.
In December 1998, the Company engaged outside consultants to help it conduct
an extensive review and implement a comprehensive plan to reduce the
probability of operational difficulties due to year 2000 issues. The
comprehensive plan consists of the following phases: (1) awareness phase--
identification of the problem and designing a structure to support the year
2000 efforts; (2) definition of critical processes and systems--a process to
identify those activities critical to the Company and focus the efforts of
year 2000 activities; (3) assessment phase--inventory the Company's systems,
software and equipment, assessing whether they are year 2000 compliant,
prioritizing those systems, software and equipment not compliant and
developing action plans for remediation and or replacement of non-complaint
systems, software and equipment; (4) renovation phase--converting, replacing
or retiring non-compliant systems, software and equipment; (5) validation
phase--testing converted or replaced systems; (6) implementation phase--place
converted or replaced systems into operations; and (7) contingency planning
phase--building a backup plan to be used in the event that the renovation plan
cannot be accomplished. This phase will also include business continuity and
disaster recovery planning for possible year 2000 induced failures on core
business processes. The Company's plan considers both its primary information
systems (financial systems software, network software and equipment, personal
computers, etc.) and other technology and software dependent upon embedded
systems (tower equipment, telephone systems, security systems, etc.).
The Company has completed phases 1, 2 and 3 and is in the process of
completing the remaining four phases for both its primary information systems
and its other systems and equipment with embedded software. These phases are
expected to be completed in the fourth quarter of 1999.
Through June 30, 1999, the Company has not incurred significant costs
related to developing and implementing its year 2000 comprehensive plan. The
remaining costs necessary to complete full implementation of the plan is
estimated to be between $0.3 million and $1.3 million.
Although there can be no assurance that the Company will successfully
complete implementation of its year 2000 comprehensive plan, the project is
currently progressing in accordance with timetables established by the
Company. Although failure to complete implementation on a timely basis may
have material adverse financial and operational impacts on the Company, the
Company believes such failure is not reasonably likely. The possible effects
of unsuccessful implementation of the comprehensive plan include the
following: (i) a temporary inability to process transactions, (ii) a temporary
inability to order supplies or materials, (iii) a temporary inability to
timely process orders and billings, and (iv) a temporary inability to deliver
quality products and services to customers.
The Company's business is dependent upon the systems of various third
parties. With regard to these vendors, the Company is in the process of
assessing their year 2000 readiness based upon communications with each such
vendor. The assessment is expected to be ongoing throughout the third and
fourth quarters of 1999. The Company believes that a material financial or
business risk could occur if the financial institutions serving the Company or
the Company's utility providers have year 2000 induced failures. The Company
understands that these institutions and providers are cognizant of the year
2000 issues and are actively working to solve any problems that may arise.
The Company believes that its most reasonably likely worst case result
relating to year 2000 would be the failure of certain of its systems with
embedded software, or failure of third party systems on which the Company's
systems rely. Failure of systems or equipment with embedded software within
the Company's VVDI
17
<PAGE>
segment could result in temporary disruption to that aspect of the Company's
operations. Although there can be no assurance that these failures would not
have an adverse effect on the Company's business, the Company believes the
effect of such failure would not be material to its business. If the VVDI
operations were inoperable for a one week period due to year 2000 failures,
the estimated lost revenue would be approximately $0.5 million.
Within its rental and management business segment, computer-controlled
devices, such as those found in automatic monitoring and control systems used
for antenna structure lighting, are vulnerable to year 2000 related
malfunctions and may fail, which would create a hazard to air navigation.
Tower owners, such as the Company, are responsible for tower lighting in
compliance with Federal Communications Commission and the Federal Aviation
Administration requirements and the Company intends to take the necessary
steps to address the year 2000 issues; however, the Company may not be
entirely successful.
Currently there are no contingency plans for the potential problems noted
above with the third party vendors, embedded software and lighting systems;
however, the Company has implemented a contingency planning phase for those or
other matters as part of its year 2000 plan. The contingency planning phase is
estimated to be completed in the fourth quarter of 1999.
Recent Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (FAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities. This Statement establishes
accounting and reporting standards for derivative instruments. It requires
that an entity recognize all derivatives as either assets or liabilities in
the statement of financial position, and measure those instruments at fair
value. The accounting for changes in the fair value of a derivative (that is,
gains and losses) will depend on the entity's intended use of the derivative
and its resulting designation (as defined in the Statement). FAS No. 133 is
effective for all fiscal quarters of all fiscal years beginning after June 15,
2000. The Company is currently in the process of evaluating the impact FAS No.
133 will have on the Company and its consolidated financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company maintains a portion of its cash and cash equivalents in short-
term financial instruments which are subject to interest rate risks. Due to
the relatively short duration of such instruments, fluctuations in interest
rates should not materially affect the Company's financial condition or
results of operations.
The Company is exposed to market risk from changes in interest rates on
long-term debt obligations that impact the fair value of these obligations.
The Company attempts to reduce these risks by utilizing derivative financial
instruments, namely interest rate caps and swaps, pursuant to Company
policies. All derivative financial instruments are for purposes other than
trading.
During June of 1999, the Company sold two interest rate swaps with aggregate
notional amounts of $24.9 million (expiring in January 2001 and June 2003) and
received total proceeds of $0.3 million which included a net gain of
approximately $0.2 million. Such gain will be recognized as income on a
straight line basis over the remaining life of each respective instrument.
The Company's potential loss in future earnings over the next twelve months
as a result of a 10% increase in interest rates related to its long term debt
obligations (using a weighted average interest rate of 8% at June 30, 1999)
would be approximately $2.2 million.
Except as discussed above, for the six months ended June 30, 1999, the
Company has not incurred any material changes with respect to the interest
rates, long-term debt and interest rate caps and swaps disclosed under this
section in its Annual Report on Form 10-K. Accordingly, refer to Item 7A in
the Company's Annual Report on Form 10-K for a more detailed discussion.
18
<PAGE>
PART II. OTHER INFORMATION
Item 1.--Legal Proceedings.
The Company periodically becomes involved in various claims and lawsuits
that are incidental to its business. In the opinion of management, after
consultation with counsel, there are no matters currently pending which would,
in the event of adverse outcome, have a material impact on the Company's
consolidated financial position, the results of its operations or liquidity.
Item 2.--Changes in Securities and Use of Proceeds.
Changes in Securities--The Board of Directors and the stockholders of the
Company approved an amendment (the "Second Charter Amendment") to the Restated
Certificate of Incorporation (the "Restated Certificate") to amend the
provision of the Restated Certificate that requires an automatic conversion of
the Class B common stock to Class A common stock at such time as the aggregate
voting power of Mr. Dodge and his Controlled Entities (as defined in the
Restated Certificate) falls below either (a) 50% of their initial aggregate
voting power on June 8, 1998, which was approximately 42.6%, or (b) 20% of the
aggregate voting power of all shares of common stock at the time outstanding.
As a consequence of the Second Charter Amendment, the automatic conversion
will occur only if the aggregate voting power of Mr. Dodge and his Controlled
Entities and Mr. Thomas Stoner and his Controlled Entities falls below the
applicable threshold. The amended provision was added to the Restated
Certificate in connection with the merger of the Company with Old ATC in June
1998 (the "Old ATC Merger"). At the time of approval of the Second Charter
Amendment, Mr. Dodge and his Controlled Entities owned "beneficially" within
the meaning of the Restated Certificate approximately 28.5% (34.7% with Mr.
Stoner and his Controlled Entities) of the aggregate voting power of all
shares of common stock outstanding. Substantially all of the decline in Mr.
Dodge's voting percentage was due to issuances of additional shares of Class A
common stock by the Company and not sales by Mr. Dodge. Since the adoption of
the original provision, the Company has issued more than 78.1 million shares
of Class A common stock. During that period, Mr. Dodge did not sell any
shares, although he did make certain charitable gifts of Class B common stock.
Recent Sales of Unregistered Securities--Pursuant to the Stock Purchase
Agreement, dated as of February 4, 1999, by and between the Company and Credit
Suisse First Boston Corporation (CSFB), the Company consummated an equity
financing involving the issuance of 500,000 shares of Class A common stock, at
$26.31 per share, the closing price of the Class A common stock on the New
York Stock Exchange on February 4, 1999.
Such shares referred to in the foregoing paragraph were issued by the
Company in reliance on the exemption from registration provided by Section
4(2) of the Securities Act. CSFB represented that it was acquiring the shares
for investment purposes and not with a view to distribution within the meaning
of the Securities Act. The stock certificate issued to CSFB bore a restrictive
legend. No underwriting discounts or commissions were paid by the Company in
connection with the foregoing transaction.
Item 4.--Submission of Matters to a Vote of Security Holders.
The 1999 Annual Meeting of Stockholders was held on Wednesday, May 26, 1999,
to consider and act upon the following matters. The results of the stockholder
voting were as follows:
19
<PAGE>
1. To elect ten Directors, including two independent directors to be
elected by the holders of Class A common stock, voting separately as a
class, for the ensuing year or until their successors are elected and
qualified;
<TABLE>
<CAPTION>
Votes Cast Votes
For Withheld
----------- --------
<S> <C> <C>
Steven B. Dodge...................................... 215,642,325 121,925
Alan L. Box.......................................... 215,589,434 174,816
Arnold L. Chavkin.................................... 215,643,875 120,375
Dean H. Eisner....................................... 215,641,519 122,731
Jack D. Furst........................................ 215,721,275 42,975
J. Michael Gearon, Jr. .............................. 215,644,075 120,175
Fred R. Lummis*...................................... 131,838,145 120,175
Randall Mays......................................... 215,644,075 120,175
Thomas H. Stoner..................................... 215,643,075 121,175
Maggie Wilderotter*.................................. 131,899,568 58,752
</TABLE>
*In accordance with the Company's Restated Certificate of
Incorporation, the holders of Class A common stock, exclusive of all
other stockholders, are entitled to elect two of the Company's
independent directors. Mr. Lummus and Ms. Wilderotter were nominated as
the independent directors and elected by the holders of the Class A
common stock.
2. To approve the Company's 1997 Stock Option Plan, as amended, pursuant to
which options to purchase Class A common stock of the Company may be
granted up to an aggregate of 15,000,000 shares;
<TABLE>
<CAPTION>
Votes For Votes Against Votes Withheld
--------- ------------- --------------
<S> <C> <C>
198,025,794 16,739,179 999,277
3. To approve and adopt an amendment to the Company's Restated Certificate
of Incorporation, that increased the authorized number of shares of
common stock, par value $.01 per share;
<CAPTION>
Votes For Votes Against Votes Withheld
--------- ------------- --------------
<S> <C> <C>
205,991,346 9,587,078 185,826
</TABLE>
4. To approve and adopt an amendment to the Company's Restated Certificate
of Incorporation, that amended the provision that requires an automatic
conversion of the Class B common stock to Class A common stock if the
aggregate voting power of Mr. Dodge and his Controlled Entities (as
defined in the Restated Certificate) falls below a certain percentage;
<TABLE>
<CAPTION>
Votes Votes Broker
Votes For Against Withheld Non-Votes
---------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Class A........................ 72,135,082 45,428,864 816,597 13,577,777
Class B........................ 83,805,930
</TABLE>
5. To ratify the selection by the Board of Directors of the Company's
independent auditors for 1999;
<TABLE>
<CAPTION>
Votes For Votes Against Votes Withheld
--------- ------------- --------------
<S> <C> <C>
215,712,498 22,169 29,583
</TABLE>
20
<PAGE>
Item 6.--Exhibits and Reports on Form 8-K.
(a) Exhibits.
Listed below are the exhibits that are filed as part of this Form 10-Q
(according to the number assigned to them in Item 601 of Regulation S-K).
<TABLE>
<CAPTION>
Exhibit No. Description of Document Exhibit File No.
----------- ----------------------- ----------------
<C> <S> <C>
2.1 Agreement and Plan of Merger, dated as of June 28, Incorporated by reference to
1999, by and among American Tower Corporation, ATI Exhibit 2.1 to from ATC's
Merger Corporation, and UniSite, Inc., a Delaware Current Report on Form 8-K
corporation......................................... July 16, 1999
3(i) Restated Certificate of Incorporation, as amended,
as filed with the Secretary of State of the State Filed herewith as Exhibit
of Delaware on June 4, 1999......................... 3(i)
10.1 Agreement to Sublease, dated as of August 6, 1999,
by and between AirTouch Communications, Inc., the
other parties named therein as Sublessors, American Filed herewith as Exhibit
Tower Corporation and American Tower, L.P........... 10.1
10.2 Stock Purchase Agreement between ATC Teleports, Inc.
and ICG Holdings, Inc. and ICG Satellite Services, Filed herewith as Exhibit
Inc., dated as of August 11, 1999................... 10.2
27 Financial Data Schedule.............................. Filed herewith as Exhibit 27
99.1 Press Release dated as of August 8, 1999............. Filed herewith as Exhibit
99.1
</TABLE>
(b) Reports on Form 8-K.
None.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
American Tower Corporation
By: /s/ Joseph L. Winn
Date: August 16, 1999 -----------------------------------
------------------
Joseph L. Winn
Treasurer & Chief Financial Officer
(Duly Authorized Officer)
By: /s/ Justin D. Benincasa
Date: August 16, 1999 -----------------------------------
------------------
Justin D. Benincasa
Vice President & Corporate
Controller
(Duly Authorized Officer)
22
<PAGE>
EXHIBIT 3(i)
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 200,000,000 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
-2-
<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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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.
-18-
<PAGE>
CERTIFICATE OF AMENDMENT
TO
RESTATED CERTIFICATE OF INCORPORATION
OF
AMERICAN TOWER CORPORATION
American Tower Corporation, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify:
FIRST: That all of the members of the Board of Directors of American Tower
Corporation, at a duly held meeting and by written consent filed with the
records of the meetings of the Board of Directors of the Corporation, adopted
the following resolutions proposing and declaring advisable an amendment to the
Restated Certificate of Incorporation of the Corporation:
RESOLVED: That the Board of Directors of the Corporation deems it advisable and
in the best interests of the Corporation that Article FOURTH of the
Restated Certificate of Incorporation of the Corporation be, and, upon
approval and adoption thereof by the holders of a majority of the
outstanding shares of Common Stock of the Corporation, it shall be,
amended by deleting the first paragraph of such Article in its
entirety and replacing in its place the following:
FOURTH: The aggregate number of shares of all classes of stock
------
which the Corporation is authorized to issue is 580,000,000
shares, of which 20,000,000 shall be shares of Preferred Stock,
$.01 par value per share (the "Preferred Stock"), and 560,000,000
shall be shares of Common Stock, $.01 par value per share (the
"Common Stock"), of which 500,000,000 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"); and further
<PAGE>
-2-
RESOLVED: That the amendment to Section E of Article FOURTH of the Restated
Certificate of Incorporation of the Corporation, which amendment will
be submitted to the stockholders of the Corporation for their approval
and adoption, be, and it hereby is, approved and adopted by inserting,
and deleting the existing definitions for "ATS Private Placement",
"Controlled Entity" and "Dodge Conversion Event", the following
definitions in such Section in the appropriate places in the
alphabetical sequence:
The term "ATS Private Placement" shall mean the issue and
sale of 8,000,000 shares of Common Stock by the Corporation to
the purchasers named in the Stock Purchase Agreement, dated as of
January 8, 1998, between the Corporation and the purchasers,
including without limitation Dodge and the Stoner Group, named
therein.
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 the Corporation), 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 "Dodge Conversion Event" shall mean that Dodge, the
Dodge Permitted Transferees, Stoner and the Stoner 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
<PAGE>
-3-
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, the Dodge Permitted
Transferees, Stoner and the Stoner Permitted Transferees shall be
deemed to own beneficially all shares of capital stock of the
Corporation that, at the time of determination, (i) could be
purchased or otherwise acquired by Dodge, any of the Dodge
Permitted Transferees, Stoner or any of the Stoner Permitted
Transferees pursuant to all Convertible Securities and Option
Securities then held by Dodge, any of the Dodge Permitted
Transferees, Stoner, or any of the Stoner Permitted Transferees,
or (ii) are held for the benefit of Dodge, any of the Dodge
Permitted Transferees, Stoner or any of the Stoner Permitted
Transferees pursuant to any Benefit Arrangement or Plan of the
Corporation or any of its Subsidiaries; and (b) except as
described in clause (a) preceding, Dodge, the Dodge Permitted
Transferees, Stoner, and the Stoner 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 "Stoner" shall mean Thomas H. Stoner, the Chairman
of the Executive Committee and the Compensation Committee of the
Board of Directors of the Corporation.
The term "Stoner Permitted Transferee" shall mean any
Controlled Entity of Stoner.
SECOND: That the stockholders of the Corporation duly voted to approve the
adoption of said amendment at the Annual Meeting of Stockholders held on May 26,
1999, and the adjournment thereof held on June 2, 1999, in accordance with the
provision of Section 211 of the General Corporation Law of the State of
Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with the
applicable provisions of Section 242 of the General Corporation Law of the State
of Delaware.
<PAGE>
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IN WITNESS WHEREOF, American Tower Corporation has caused this Certificate
of Amendment to be signed by Joseph L. Winn, its Chief Financial Officer and
Treasurer, as of this 4th day of June, l999.
AMERICAN TOWER CORPORATION
By: /s/ JOSEPH L. WINN
-------------------------------------
Joseph L. Winn
Chief Financial Officer and Treasurer
<PAGE>
EXHIBIT 10.1
AGREEMENT TO SUBLEASE
DATED AS OF AUGUST 6, 1999
BY AND BETWEEN
AIRTOUCH COMMUNICATIONS, INC.
AND
THE OTHER PARTIES NAMED HEREIN AS SUBLESSORS,
AS SUBLESSORS
AND
AMERICAN TOWER CORPORATION
AND
AMERICAN TOWER, L.P.
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE 1 Definitions.................................... 2
1.1 Additional Tower............................... 2
1.2 Affiliate...................................... 2
1.3 Agreement...................................... 2
1.4 AirTouch Material Adverse Effect............... 2
1.5 Assets......................................... 3
1.6 Business Day................................... 3
1.7 Charter Documents.............................. 3
1.8 Code........................................... 3
1.9 Contracts...................................... 3
1.10 Default........................................ 3
1.11 Encumbrance.................................... 3
1.12 Environmental Condition........................ 4
1.13 Event.......................................... 4
1.14 Excluded Assets................................ 4
1.15 FCC............................................ 5
1.16 GAAP........................................... 5
1.17 Governmental Authority......................... 5
1.18 Governmental Permits........................... 5
1.19 HSR Act........................................ 5
1.20 Included Towers................................ 5
1.21 Intellectual Property.......................... 6
1.22 Knowledge...................................... 6
1.23 Laws........................................... 6
1.24 Liability...................................... 6
1.25 Maximum Amount................................. 7
1.26 Other Entity................................... 7
1.27 Permitted Encumbrances......................... 7
1.28 Person......................................... 7
1.29 Prime Rate..................................... 7
1.30 Real Property.................................. 7
1.31 Registration Rights Agreement.................. 8
1.32 Required Consents.............................. 8
1.33 Tax and Taxes.................................. 8
1.34 Threshold Amount............................... 8
1.35 Tower Related Assets........................... 8
1.36 Tower Sites.................................... 9
1.37 Towers......................................... 9
1.38 TowerCo Material Adverse Effect................ 9
1.39 Transaction Documents.......................... 9
1.40 Other Definitions.............................. 9
ARTICLE 2 Leasing of Assets.............................. 11
2.1 Leasing or Subleasing of Assets................ 11
2.2 Restricted Items............................... 11
2.3 Exclusive Commitment Fee and Payment........... 12
2.4 Completion of Transaction...................... 14
2.5 References Applicable to Individual Closings... 14
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<PAGE>
ARTICLE 3 Representations and Warranties of Wholly Owned
Entities....................................... 15
3.1 Organization and Qualification................. 15
3.2 Authority...................................... 15
3.3 Enforceability................................. 15
3.4 Consents and Approvals......................... 16
3.5 Title and Encumbrances......................... 16
3.6 Governmental Permits........................... 17
3.7 Contracts...................................... 17
3.8 Environmental Laws............................. 19
3.9 Litigation..................................... 20
3.10 Employees and Employee Benefits................ 20
(a) Employment Agreements...................... 20
(b) Employee Benefit Plans..................... 20
(c) Employee Benefit Plan Compliance........... 21
3.11 Commissions.................................... 21
3.12 Real Property.................................. 21
(a) Zoning..................................... 21
(b) Utility Services........................... 21
(c) Access..................................... 22
(d) Eminent Domain............................. 22
(e) Public Improvements........................ 22
3.13 Absence of Certain Changes or Events........... 22
3.14 Availability of Documents...................... 22
3.15 Compliance with Applicable Law................. 22
3.16 Investment Intent.............................. 23
3.17 No Other Warranties............................ 23
ARTICLE 4 Representations and Warranties of Other
Entities....................................... 23
ARTICLE 5 Representations and Warranties of TowerCo and
ATLP........................................... 24
5.1 Organization and Qualification................. 24
5.2 TowerCo Authority.............................. 24
5.3 Enforceability................................. 25
5.4 Approvals...................................... 25
5.5 Commissions.................................... 25
5.6 SEC Reports.................................... 25
5.7 Absence of Certain Changes..................... 26
5.8 Threatened or Pending Litigation............... 26
5.9 Interim Operations of Sub...................... 26
5.10 Funds Available for Exclusive Commitment Fee... 26
5.11 Capitalization................................. 27
5.12 Valid Issuance................................. 27
5.13 Registration Rights............................ 28
5.14 Share Ownership Limitations.................... 28
ARTICLE 6 Certain Covenants.............................. 28
6.1 Agreements of Sublessors Pending the Closing... 28
(a) Business in the Ordinary Course............ 28
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<PAGE>
(b) Update Schedules........................... 28
(c) Conduct of Business........................ 30
(d) Sale of Assets; Negotiations............... 30
(e) Access..................................... 30
(f) Publicity.................................. 30
(g) Cooperation in Accounting Matters.......... 31
6.2 Agreements of TowerCo.......................... 31
(a) Update Schedules........................... 31
(b) Conduct of Business........................ 31
(c) Access..................................... 31
(d) Publicity.................................. 32
(e) Assignment to Sub.......................... 32
(f) Capitalization............................. 32
(g) Registration Rights Agreement.............. 33
(h) Restrictions on Transfers of Sub Stock..... 33
(a) Regulatory Matters......................... 33
(b) Cooperation in Tax Matters................. 34
(c) Transfer Taxes............................. 35
(d) Further Assurances......................... 35
(e) Tax Filings................................ 35
6.4 Confidentiality................................ 35
6.5 Preliminary Title Reports...................... 35
6.6 Environmental Site Assessments................. 35
6.7 Structural Reports............................. 36
ARTICLE 7 Employee Matters............................... 36
7.1 Employment..................................... 36
7.2 Service Credit for New Employees............... 37
7.3 Qualified Defined Contribution Plan............ 37
7.4 Welfare Plans.................................. 38
7.5 Vacation....................................... 39
7.6 Sick Leave..................................... 39
7.7 General........................................ 39
7.8 No Third-Party Beneficiaries................... 39
7.9 WARN Act Indemnification....................... 40
ARTICLE 8 Conditions Precedent to Obligations of
TowerCo, ATLP and Sub.......................... 40
8.1 Conditions Precedent........................... 40
8.2 Waiver......................................... 42
ARTICLE 9 Conditions Precedent to Obligations of
Sublessors..................................... 42
9.1 Conditions Precedent........................... 42
9.2 Waiver......................................... 44
ARTICLE 10 Closing........................................ 44
10.1 Closing........................................ 44
10.2 Closing Deliveries............................. 44
ARTICLE 11 Indemnification................................ 46
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<PAGE>
11.1 Indemnification by Sublessors.................. 46
11.2 Indemnification by TowerCo..................... 47
11.3 Notice and Right To Defend Third-Party Claims.. 48
11.4 Notice and Right to Remediate.................. 49
11.5 Mitigation .................................... 50
11.6 Exclusive Remedy............................... 50
11.7 Effect of Investigation or Knowledge........... 50
11.8 Limitation of Liability........................ 51
ARTICLE 12 Termination.................................... 51
12.1 Termination Events............................. 51
12.2 Manner of Exercise............................. 52
12.3 Effect of Termination.......................... 52
ARTICLE 13 General........................................ 53
13.1 Covenant Not To Sue and Nonrecourse to
Partners....................................... 53
13.2 Assignment..................................... 54
13.3 Parties in Interest............................ 55
13.4 Time of Essence................................ 55
13.5 Severability................................... 55
13.6 Amendment...................................... 55
13.7 Force Majeure.................................. 55
13.8 Terms.......................................... 56
13.9 Headings....................................... 56
13.10 Entire Understanding; Schedules................ 56
13.11 Counterparts................................... 56
13.12 Governing Law.................................. 56
13.13 Notices........................................ 57
13.14 Expenses....................................... 57
13.15 Attorneys' Fees................................ 58
13.16 Dispute Resolution............................. 58
13.17 Power of Attorney.............................. 60
13.18 Specific Performance; Other Rights and
Remedies....................................... 60
13.19 TowerCo Guaranty............................... 60
The following exhibits have been omitted and will be supplementally filed with
the Commission upon request.
EXHIBITS
Exhibit A Sublease
Exhibit B List of Entities
Exhibit C Joinder to Agreement
Exhibit D Escrow Agreement
Exhibit E Master Lease
Exhibit F Build-to-Suit Agreement
Exhibit G Warrant
Exhibit H Certificate of Sublessors
Exhibit I Certificate of TowerCo
Exhibit J Certificate of Sub
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<PAGE>
AGREEMENT TO SUBLEASE
---------------------
THIS AGREEMENT TO SUBLEASE is made as of August 6, 1999, by and between
AIRTOUCH COMMUNICATIONS, INC., a Delaware corporation ("AirTouch"), the other
- -----------------------------
entities listed under the heading "Wholly Owned Entities" on the signature pages
hereto (collectively with AirTouch, the "Wholly Owned Entities") and the Other
Entities (as defined below) (the Wholly Owned Entities and the Other Entities
being each referred to herein individually as a "Sublessor," and collectively as
"Sublessors"), and AMERICAN TOWER CORPORATION, a Delaware corporation
--------------------------
("TowerCo") and AMERICAN TOWER, L.P., a Delaware limited partnership ("ATLP").
--------------------
RECITALS
A. Sublessors are the owners of certain communications tower structures,
interests in real property related thereto, and related assets, property rights,
liabilities and obligations. TowerCo is, through its subsidiaries, engaged in
the business of owning, managing and operating assets similar to the foregoing
assets; and
B. Sublessors desire, pursuant to a Sublease in the form attached hereto
as EXHIBIT A (the "Sublease"), to lease or sublease to TowerCo or confer upon
--------
TowerCo the right to manage and operate, and TowerCo desires to lease or
sublease from Sublessors or obtain the right to manage and operate, subject to
the terms and conditions contained in this Agreement and the Sublease, certain
of Sublessors' communications tower structures, interests in real property
related thereto and related property rights (such assets and rights to be
leased, subleased or otherwise subjected to the Sublease, together with the
liabilities and obligations relating thereto, being referred to as the
"Business"); and
--------
C. Contemporaneously with the execution of this Agreement, the Wholly
Owned Entities and ATLP are executing a Site Marketing Agreement pursuant to
which ATLP will provide the Wholly Owned Entities (and other Sublessors who may
subsequently become parties to such agreement) with certain tower leasing and
marketing services pending the closing of the transactions contemplated hereby
(the "Site Marketing Agreement"); and
------------------------
D. TowerCo intends to cause a newly formed, wholly owned subsidiary of
TowerCo ("Sub") to join in the execution and delivery of this Agreement prior to
---
the closing of the transactions contemplated hereby;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, Sublessors, TowerCo
and ATLP agree as follows:
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<PAGE>
ARTICLE 1
---------
Definitions
-----------
Capitalized terms used but not defined herein have the meanings ascribed to
them in the Sublease. As used in this Agreement, the following terms shall have
the following meanings:
1.1 Additional Tower. Means any communications equipment and antenna
----------------
support tower structure owned or leased by any Sublessor as to which the
construction is completed after the date of this Agreement and which is included
in Annex I hereto as a Permitted Schedule Update (as defined herein); provided,
--------
however, that such term does not include (i) any equipment, property or other
- -------
assets placed upon such towers or the related tower sites by third parties
pursuant to Tower Collocation Leases or other Contracts or (ii) any Excluded
Assets (as defined herein).
1.2 Affiliate. With respect to any Person, any other Person controlling
---------
such Person, or controlled by or under common control with such Person, where
"control" (and its corollaries) 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 contract or
otherwise; and the term "voting securities" means securities or interests
entitling the holder thereof to vote for or designate members of the Board of
Directors or individuals performing a similar function.
1.3 Agreement. This Agreement to Sublease dated as of August 6, 1999
---------
between Sublessors, TowerCo and ATLP, as the same may be amended from time to
time.
1.4 AirTouch Material Adverse Effect. Means (i) an Event which has had
--------------------------------
or is reasonably likely to have a material adverse effect on the financial
condition of the Business taken as a whole, except any such effect resulting
from or arising in connection with (a) this Agreement or the transactions
contemplated hereby, (b) changes or conditions (including without limitation
changes in technology, law, or regulatory or market environment) affecting the
industry in which the owners or users of communications tower structures
operate, or (c) changes in economic, regulatory or political conditions
generally, or (ii) an Event which has had or is reasonably likely to have a
material adverse effect on (x) the validity or enforceability against Sublessors
of this Agreement or any of the other Transaction Documents, or (y) the ability
of Sublessors to perform their obligations under this Agreement or any of the
other Transaction Documents; provided, however, that with respect to any
-------- -------
individual Closing, clause (i) of this definition shall be interpreted to refer
only to the portion of
-2-
<PAGE>
the Business which is the subject of the Closing at issue and all prior Closings
hereunder, taken as a whole, and not to the portions of the Business which are
to be the subject of Closings subsequent to the Closing at issue.
1.5 Assets. Means the following: (a) all Towers of the applicable
------
Sublessor; (b) all of the applicable Sublessor's rights to all Tower Sites; (c)
all Tower Related Assets of the applicable Sublessor; (d) all rights under any
Governmental Permits (excluding FCC licenses) held exclusively with respect to
the ownership or use of the Towers or Tower Sites of the applicable Sublessor
and not used or useful by the applicable Sublessor in any other part of its or
an Affiliate's business and operations, to the extent that such Governmental
Permits are necessary to confer upon TowerCo the benefits to be provided under
the Sublease (the "Applicable Governmental Permits"); and (e) plans and
-------------------------------
specifications of the Towers and data (in electronic or machine-readable form)
relating to the Towers and third party tenants and lessors with respect to the
Towers, subject, however, to the exclusions set forth in Section 4(d) of the
Sublease, and to the exclusion of all Excluded Assets.
1.6 Business Day. Any day other than Saturday, Sunday or a day on which
------------
banking institutions in either San Francisco, California, Boston, Massachusetts
or New York, New York are required or authorized to be closed.
1.7 Charter Documents. An entity's certificate or articles of
-----------------
incorporation, bylaws, certificate defining the rights and preferences of
securities, articles of organization, general or limited partnership agreement,
certificate of limited partnership, limited liability company agreement, joint
venture agreement or similar document governing the entity.
1.8 Code. The Internal Revenue Code of 1986, as amended.
----
1.9 Contracts. Any and all contracts, authorizations, approvals,
---------
agreements, licenses, permits, leases of real and personal property, deeds,
private easements, rights-of-way and rights of access, other than Governmental
Permits.
1.10 Default. Means (a) a breach, default or violation, (b) the
-------
occurrence of an event that with or without the passage of time or the giving of
notice, or both, would constitute a breach, default or violation or (c) with
respect to any Contract, the occurrence of an event that with or without the
passage of time or the giving of notice, or both, would give rise to a right of
termination, renegotiation or acceleration or a right to receive damages or a
payment of penalties.
1.11 Encumbrance. Any lien, mortgage, security interest, pledge,
-----------
restriction on transferability, defect of title, option, easement, right of way,
levy or other claim, charge or
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<PAGE>
encumbrance of any nature whatsoever on any property or property interest, other
than those relating to Governmental Permits.
1.12 Environmental Condition. Any condition or circumstance, including
-----------------------
the presence of Hazardous Substances, created by a Sublessor at any Tower Site
that did or does (a) require abatement or correction under an Environmental Law
or (b) give rise to any civil or criminal Liability on the part of any Sublessor
under any Environmental Law relating to the ownership, use or occupancy of the
Tower Sites.
1.13 Event. 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.
1.14 Excluded Assets. The following are collectively referred to as the
---------------
"Excluded Assets" and are not included in the Assets:
---------------
(a) all Communications Facilities (as defined in the Sublease), including
but not limited to AirTouch's Improvements and Communications Equipment (each as
defined in the Sublease);
(b) the Reserved Space as described in the Sublease, including without
limitation all space at a Tower Site occupied by AirTouch's Improvements and
Communications Equipment (each as defined in the Sublease) and non-exclusive use
of all real estate interests (including fee and leasehold interests, licenses,
rights-of-way and easements) on which switch equipment and associated loading
docks, patios, offices and parking lots of Sublessors or their Affiliates is
located or necessary to such equipment's operation;
(c) any equipment or transmission systems used by AirTouch, any other
Sublessor or any of Sublessors' Affiliates for the remote monitoring of the
Towers;
(d) all Intellectual Property of Sublessors or any Affiliate of
Sublessors, other than plans and specifications of the Towers and data (in
electronic or machine-readable form) relating to third party tenants and lessors
with respect to the Towers;
(e) any assets, properties or rights, including Contracts, that are not
exclusively Assets;
(f) all rights that accrue or will accrue to, and all rights retained by
and/or granted to, Sublessors under this Agreement, the Sublease or any of the
other Transaction Documents, including the consideration paid or to be paid to
Sublessors hereunder;
-4-
<PAGE>
(g) any claims or rights against third parties except to the extent such
claims or rights relate to the Assets;
(h) assets of any Employee Plan or employee benefit arrangement;
(i) the assets specified in SCHEDULE 1.14;
(j) any of the assets specified in any of the Annexes or included within
the definition of Assets herein that are owned or leased by any partnership or
other entity which is listed on EXHIBIT B hereto but does not become an Other
Entity; and
(k) any Tower Sites (and all Towers, Tower Related Assets and other assets
and rights associated with such Tower Sites) excluded from the Assets or
excluded from becoming subject to the Sublease pursuant to Section 2.2
(Restricted Items) hereof, or which are to remain the property of, or are to be
for the benefit of, any Sublessor pursuant to the Sublease.
1.15 FCC. The Federal Communications Commission or any successor agency.
---
1.16 GAAP. Generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board and 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 may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
1.17 Governmental Authority. Any nation or government, any state,
----------------------
province or other political subdivision thereof or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
1.18 Governmental Permits. All franchises, approvals, authorizations,
--------------------
permits, licenses, easements, leases, permits, concessions, franchises,
registrations, certificates of occupancy, qualifications and similar rights and
approvals obtained from any Governmental Authority.
1.19 HSR Act. The Hart-Scott-Rodino Antitrust Improvements Act of 1976,
-------
as amended.
1.20 Included Towers. Means (i) all Towers listed on Annex I hereto (as
---------------
such Annex existed on the date of this Agreement) the construction of which is
completed on or prior to the applicable Closing Date and are made subject to the
Sublease at such Closing and (ii) all Additional Towers made subject to the
Sublease at such Closing.
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<PAGE>
1.21 Intellectual Property. Any patents, patent applications, reissue
---------------------
patents, patents of addition, divisions, renewals, continuations, continuations-
in-part, substitutions, additions and extensions of any of the foregoing,
fictitious business names, trade names, logos, registered and unregistered
copyrights, copyright applications, registered and unregistered trademarks,
trademark applications, registered and unregistered service marks, service mark
applications, technology rights and licenses, trade secrets, franchises, know-
how, inventions and other intellectual property.
1.22 Knowledge. "AirTouch's knowledge," "knowledge of AirTouch," or
---------
references to the "knowledge" of any Other Entity or other Sublessor, or words
of similar import, means the actual knowledge after inquiry reasonable under the
circumstances of any of the following persons who are employees of AirTouch
holding the position (as of the date hereof) indicated after their name (and any
person succeeding to any such position prior to the Closing but only to the
extent he or she acquired actual knowledge after inquiry reasonable under the
circumstances): Arun Sarin, President and Chief Operating Officer; Nancy Hobbs,
Executive Vice President (AirTouch Cellular) and General Manager, Sierra Pacific
Region; Brian Shea, Executive Vice President (AirTouch Cellular) and General
Manager, Western Region; and Terry Tindel, Executive Vice President (AirTouch
Cellular) and General Manager, Eastern Region. "TowerCo's knowledge" or
"knowledge of TowerCo" or words of similar import means the actual knowledge
after inquiry reasonable under the circumstances of any of the following persons
who are employees of TowerCo holding the position (as of the date hereof)
indicated after their name (and any person succeeding to any such position
prior to the Closing but only to the extent he or she acquired actual knowledge
after inquiry reasonable under the circumstances ): Steven B. Dodge, President
and Chief Executive Officer; Alan L. Box, Executive Vice President; James S.
Eisenstein, Executive Vice President, Corporate Development; J. Michael Gearon,
Jr., Executive Vice President; Steven J. Moskowitz, Executive Vice President-
Marketing; Douglas Wiest, Chief Operating Officer; and Joseph L. Winn, Treasurer
and Chief Financial Officer.
1.23 Laws. All federal, state, county, municipal and other governmental
----
constitutions, statutes, ordinances, codes, regulations, resolutions, rules,
requirements and directives of any Governmental Authority or arbitrator and all
decisions, judgments, writs, injunctions, orders, decrees or demands of courts,
arbitrators, administrative bodies and other authorities construing any of the
foregoing.
1.24 Liability. Any direct or indirect liability, indebtedness,
---------
obligation, cost, expense, claim, loss, damage, deficiency or guaranty of or by
any Person.
-6-
<PAGE>
1.25 Maximum Amount. For any Sublessor or TowerCo, the Maximum Amount
--------------
means ten percent (10%) of the Exclusive Commitment Fee actually paid by TowerCo
or Sub to such Sublessor under this Agreement.
1.26 Other Entity. Those partnerships and corporations that are listed
------------
on EXHIBIT B hereto and which (i) are signatories to this Agreement on the date
hereof, or (ii) have joined in the execution and delivery of this Agreement by
executing and delivering to AirTouch and TowerCo, after the date hereof but on
or before the 90th day after the date hereof, a Joinder to Agreement in the form
attached hereto as EXHIBIT C (each, a "Joinder"). Each of the Other Entities is
-------
referred to individually herein as an "Other Entity."
1.27 Permitted Encumbrances. Means (i) Encumbrances for Taxes not yet
----------------------
due and payable, (ii) Encumbrances or other rights of third parties disclosed in
SCHEDULE 3.5, (iii) worker's, carrier's, warehouseman's, materialman's and other
similar liens, (iv) with respect to Leased Sites (as defined below in the
definition of Tower Sites), any Encumbrances placed upon such real property
other than in connection with obligations or liabilities of any Sublessor,
including any lien encumbering the fee interest in such property, (v) easements,
rights of way or similar grants of rights to a third party for access to or
across any real property, including, without limitation, rights of way or
similar rights granted to any utility or similar entity in connection with the
provision of electric, water, sewage, telephone, gas or similar services, (vi)
the Tower Collocation Leases and the terms and conditions of Ground Leases,
Tower Equipment Leases, Tower Service Contracts and other Tower Related Assets
affecting any Asset, and (vii) encumbrances that are immaterial in character,
amount, and extent, and that do not detract from the value or interfere in any
material respect with the present use of the properties they affect.
1.28 Person. Means any natural person or corporation, firm, association,
------
unincorporated organization, partnership, trust, estate, limited liability
company or other entity, or any Governmental Authority.
1.29 Prime Rate. The "Prime Rate" of interest, as published in the
----------
"Money Rates" table of The Wall Street Journal, Eastern Edition, from time to
-----------------------
time.
1.30 Real Property. All assets consisting of realty (including
-------------
appurtenances, improvements and fixtures located on such realty) and any other
interests in real property (including fee interests and leasehold interests and
easements, licenses, rights-of-way or other real property rights) used or held
for use in the operation of the Assets as of the date hereof, but excluding any
and all Excluded Assets.
-7-
<PAGE>
1.31 Registration Rights Agreement. The Amended and Restated
-----------------------------
Registration Rights Agreement among American Tower Corporation and the
Stockholders named therein, dated as of February 25, 1999, as heretofore
amended, and as amended as described in Section 6.2(g) hereof.
1.32 Required Consents. Approvals and consents required pursuant to the
-----------------
terms of any Tower Collocation Agreement or Ground Lease in order to subject
them to the terms of the Sublease.
1.33 Tax and Taxes. Any and all governmental or quasi-governmental fees
--- -----
(including, without limitation, license, filing and registration fees), taxes
(including, without limitation, income, gross receipts, franchise, sales, use,
property, real or personal, tangible or intangible taxes), interest equalization
and stamp taxes, documentary and real property transfer taxes, assessments,
levies, imposts, duties, charges, required contributions or withholdings of any
kind or nature whatsoever, together with any and all penalties, fines, additions
to tax, or interest thereon. For purposes of determining any Tax cost or Tax
benefit to any person, such amount will be the actual cost or benefit recognized
by such person at the time of actual payment of the additional Tax or actual
recognition of the Tax benefit. In the event that any payment or other amount
is required to be determined on an after-Tax basis, such payment or other amount
will initially be determined without regard to any Tax cost or Tax benefit not
actually recognized currently, and appropriate adjustments will be made when and
to the extent that such Tax cost or Tax benefit is actually recognized.
1.34 Threshold Amount. Means, for any Sublessor or TowerCo, the greater
----------------
of (i) one percent (1%) of the Exclusive Commitment Fee payable to such
Sublessor or (ii) $100,000.
1.35 Tower Related Assets. Means (a) the leases of rights to use spaces
--------------------
on the Towers that are identified in ANNEX III hereto and located on Tower Sites
---------
(hereinafter defined) (the "Tower Collocation Leases") and security deposits (if
------------------------
any) from tenants under the Tower Collocation Leases, (b) all Contracts with
respect to the management, operation, maintenance, servicing and construction
of, and the provision of utility services to, the Towers ("Tower Service
-------------
Contracts"), (c) any existing leases (or licenses or other Contracts) of
- ---------
Sublessors for equipment or other personal property which are included within
the definition of Towers ("Tower Equipment Leases"), and (d) copies of, or
----------------------
extracts from, all current files and records of Sublessors to the extent that
such files or records contain information related to the design, construction,
management, operation, maintenance, ownership, occupancy or leasing of the
Assets or the New Employees; provided, however, that such term does not include
--------
any Excluded Assets.
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<PAGE>
1.36 Tower Sites. The sites of the Towers that are owned or leased by
-----------
Sublessors and are identified in ANNEX I hereto, including all fee, ground
-------
leasehold interests and easements pertaining to such tower sites owned by
Sublessors and including (i) a fee ownership in the real property associated
with the Towers designated as "Owned Sites" in ANNEX I hereto, and (ii) the
-------
leasehold interest, leasehold estate or other possessory interest or use right
in and to the real property associated with the Towers designated as "Leased
Sites" in ANNEX I hereto pursuant to the ground leases or other documents
-------
related thereto identified in ANNEX II (the "Ground Leases"); provided, however,
-------- ------------- --------
that such term does not include any Excluded Assets.
1.37 Towers. The communications equipment and antenna support tower
------
structures situated at the locations that are identified on ANNEX I and are
-------
owned or leased by Sublessors; provided, however, that such term does not
--------
include (i) any equipment, property or other assets placed upon the Towers or
Tower Sites by third parties pursuant to Tower Collocation Leases or other
Contracts or (ii) any Excluded Assets.
1.38 TowerCo Material Adverse Effect. An Event which has had or is
-------------------------------
reasonably likely to have a material adverse effect on (i) the assets,
liabilities, business, prospects, condition (financial or otherwise) or results
of operations of TowerCo and its subsidiaries taken as a whole, except any such
effect resulting from or arising in connection with (a) this Agreement or the
transactions contemplated hereby, (b) changes or conditions (including without
limitation changes in technology, law, or regulatory or market environment)
affecting the industry in which the owners or users of communications tower
structures operate, or (c) changes in economic, regulatory or political
conditions generally, (ii) the validity or enforceability against TowerCo, Sub
or ATLP of this Agreement or any of the Transaction Documents, or (iii) the
ability of TowerCo, Sub or ATLP to perform its obligations under this Agreement
or any of the Transaction Documents.
1.39 Transaction Documents. Collectively, this Agreement, the Sublease,
---------------------
the Master Lease, the Build-to-Suit Agreement, the Site Marketing Agreement, the
Registration Rights Agreement and the Warrant.
1.40 Other Definitions. In addition, the following terms have the
-----------------
meanings given them in the following sections:
<TABLE>
<CAPTION>
Term Section
- ---- -------
<S> <C>
AirTouch Preamble
AirTouch's DC Plan 7.3(a)
Applicable Governmental Permit 1.5
ATLP Preamble
Business Recitals
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Term Section
- ---- -------
<S> <C>
Claim 11.3(a)
Closing 2.4
Closing Date 2.4
COBRA 7.4
Commercially reasonable efforts of Sublessor 2.2(b)
Covered Persons 3.10(b)
Deposit 2.3(b)
Employee Plans 3.10(b)
Employment Transfer Date 7.4
Environmental Law 3.8(b)
ERISA 3.10(b)
ERISA Affiliate 7.2
Exclusive Commitment Fee 2.3(a)
Final Closing Date 2.4
Ground Leases 1.36
Hazardous Substance 3.8(c)
Identified Employees 3.10(a)
Indemnifiable Damages 11.1(a)
Indemnified Sublessor Parties 11.2(a)
Indemnitee 11.3(a)
Indemnitor 11.3(a)
Initial Closing Date 2.4
Initial Closing Expiration Date 2.4
Joinder 1.26
Master Lease 10.2(a)
New Employees 7.1
Nonrecourse 13.1(b)
Nontransferring Employees 7.1
Permitted Schedule Updates 6.1(b)
Permitted Subleasehold Mortgagee 13.2
Prospective Employees 7.1
Qualified Stock Transferee 6.2(h)
Restricted Items 2.2(a)
Site Marketing Agreement Recitals
Sub Recitals
Sublease Recitals
Sublessors Preamble
Sublessors' Welfare Plans 7.4
Subsection (i) Update 6.1(b)
Tower Collocation Leases 1.35
Tower Equipment Leases 1.35
Tower Service Contracts 1.35
TowerCo Preamble
TowerCo's DC Plan 7.3(b)
TowerCo SEC Reports 5.6
TowerCo's Welfare Plans 7.4
Transfer Taxes 6.3(c)
WARN Act 7.9
Warrant 2.3(a)
Warrant Shares 5.12
</TABLE>
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<PAGE>
ARTICLE 2
---------
Leasing of Assets
-----------------
2.1 Leasing or Subleasing of Assets. Subject to the terms and conditions
-------------------------------
hereinafter set forth: (i) at the Initial Closing (as hereinafter defined),
TowerCo hereby agrees to execute and deliver to Sublessors, and each of the
Sublessors hereby severally agrees to execute and deliver to TowerCo, the
Sublease and the Site Designation Supplements (as defined in the Sublease)
relating to the Assets that are the subject of the Initial Closing, and (ii) at
each Subsequent Closing (as hereinafter defined), TowerCo hereby agrees to
execute and deliver, and each of the applicable Sublessors hereby severally
agrees to execute and deliver, the Site Designation Supplements relating to the
Assets that are the subject of such Subsequent Closing, all as provided herein
and in the Sublease.
2.2 Restricted Items. (a) Nothing in this Agreement shall be construed
----------------
as an attempt by any Sublessor to lease or sublease to TowerCo pursuant to the
Sublease, or otherwise make subject to the Sublease, any Contract, Governmental
Permit, franchise, claim or asset included in the Assets which, in AirTouch's
judgment, is unable by its terms or by Law to be so leased, subleased or made
subject without the consent of any other Person (including any Governmental
Authority), unless such consent shall have been given (a "Restricted Item").
---------------
(b) The applicable Sublessor shall use commercially reasonable efforts (as
defined herein) until the Initial Closing Date to obtain the relevant consent to
subject a Restricted Item to the Sublease. If, despite such efforts, the
applicable Sublessor is unable to obtain such consent on or prior to the Initial
Closing Date, then TowerCo shall take the actions specified in SCHEDULE 2.2(B)
until the earlier of the Final Closing Date or the date such consent is
obtained. If such consent is obtained prior to the Final Closing Date with
respect to any Restricted Item, such item and the related Tower and other
associated Assets shall be subjected to the Sublease at the next practicable
Subsequent Closing. Pending the subjection of any Restricted Item to the
Sublease pursuant to the applicable consent, such Restricted Item and the
related tower, tower site and other associated assets and liabilities shall not
be deemed part of the Assets or the subject of any representation or warranty
hereunder. Any Restricted Item(s) for which the consent required to subject
such item to the Sublease has not been obtained by the Final Closing Date, and
the tower(s), tower site(s), Contracts and other assets to which such Restricted
Item(s) relate, shall be deemed excluded from the Assets and deleted from the
Annexes hereto, and shall not be deemed to be the subject of any representation,
warranty or covenant of Sublessors herein. As used in this Agreement,
"commercially reasonable efforts" of a given Sublessor shall not include any
obligation of any Sublessor or its Affiliates
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<PAGE>
to pay money or other consideration, agree or commit to any obligation,
Liability or condition, or forego, surrender or waive any asset, right or
privilege, unless TowerCo agrees to reimburse or indemnify such Sublessor for
obligations and Liabilities and otherwise make Sublessor "whole," in each case
on an after-Tax basis and as determined by Sublessor in its reasonable judgment,
and, with respect to any given Restricted Item, shall not include any
requirement of action other than as set forth in SCHEDULE 2.2(A).
2.3 Exclusive Commitment Fee and Payment.
------------------------------------
(a) The aggregate consideration to be paid by TowerCo in return for
Sublessors' willingness to execute this Agreement and Sublessors' agreement
herein to execute the Sublease, Master Lease and Build-to-Suit Agreement on the
terms and conditions provided herein, shall be eight hundred million dollars
($800,000,000) in cash, subject to adjustment as hereinafter provided (the
"Exclusive Commitment Fee"). At any given Closing, TowerCo shall pay to the
------------------------
Sublessors whose Included Towers are the subject of such Closing the product of
(i) the number of such Included Towers multiplied by (ii) $380,952.38. If the
total number of Included Towers at all Closings exceeds 2,100, then for all
purposes hereunder the Exclusive Commitment Fee shall be deemed to be increased
by the product of (x) $380,952.38 and (y) the amount by which such total number
of Included Towers exceeds 2,100. If the total number of Included Towers at all
Closings is less than 2,100, then for all purposes hereunder the Exclusive
Commitment Fee shall be deemed to be reduced by the product of (x) $380,952.38
and (y) the amount by which 2,100 exceeds such total number of Included Towers.
At the Initial Closing, TowerCo shall grant to AirTouch (or such other Sublessor
as AirTouch may designate in writing) a five-year warrant to acquire three
million (3,000,000) shares of TowerCo's Class A Common Stock at an exercise
price per share equal to $22.00 (collectively, the "Warrant"); provided,
-------
however, that at the Final Closing if, after giving effect to the consummation
of the transactions contemplated thereat, the total number of Included Towers at
all Closings is less than 2,100, AirTouch shall surrender to TowerCo a Warrant
to purchase a number of shares equal to the product of 3,000,000 times a
fraction, (i) the numerator of which is the excess of (x) 2,100 over (y) the
aggregate number of Included Towers, and (ii) the denominator of which is 2,100
(rounding down to the nearest whole share). The form of Warrant is attached
hereto as EXHIBIT G. If prior to the Initial Closing Date there is a change in
the number of shares of Class A Common Stock of TowerCo outstanding as a result
of a stock split, reverse stock split, stock dividend or similar event, then
customary adjustments shall be made to the terms of the Warrant to eliminate
equitably the effects of such event. Each Sublessor shall be entitled to that
portion of the Warrant equal to the proportion that the number of Included
Towers owned by such Sublessor bears to the aggregate number of
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<PAGE>
Included Towers owned by all Sublessors, in each case after giving effect to all
Closings, and TowerCo agrees that AirTouch may divide the Warrant into such
portions and that TowerCo will promptly register the transfer of such portions
of the Warrant to such Sublessors without any requirement of further action
other than notice from AirTouch or such Sublessors.
(b) To secure TowerCo's obligations under this Agreement (and to the
extent provided in Section 12.3, as liquidated damages in the event of
termination of this Agreement under the circumstances specified in such
Section), by 5:00 p.m., California time, on the second Business Day following
the date of this Agreement, TowerCo shall deposit (as reduced in accordance with
the provisions of this Section, the "Deposit") the amount of $100,000,000 into
-------
an escrow account, under an escrow agreement in substantially the form attached
hereto as EXHIBIT D, with only such changes thereto as are required by the
escrow agent thereunder (the "Escrow Agreement"). If TowerCo fails to make such
----------------
$100,000,000 Deposit by such time, then AirTouch may elect, in its sole
discretion, to terminate this Agreement in full. AirTouch and TowerCo agree to
negotiate in good faith to enable TowerCo, at its discretion, replace such
escrow arrangement with an irrevocable letter of credit in favor of AirTouch (it
being understood that a pro rata portion, based on the respective numbers of
Included Towers attributable to each respective Sublessor, shall be for the
benefit of the other Sublessors) in the amount of $100,000,000 issued in a form
mutually agreeable to AirTouch and TowerCo and by a financial institution
reasonably acceptable to AirTouch, as promptly as reasonably practicable. Upon
any Closing, the Deposit shall be reduced (either by a distribution of a portion
of the escrowed funds or by a reduction in the letter of credit commitment
amount) to that amount as equals $100,000,000 times a fraction, (i) the
numerator of which is the excess of (x) 2,100 over (y) the number of Included
Towers as to which Closings have theretofore occurred, and (ii) the denominator
of which is 2,100.
(c) The parties acknowledge and agree that the portion of the Exclusive
Commitment Fee paid at a Closing is intended as a one-time payment in
consideration of events occurring at or prior to such Closing, will have been
fully earned as of such Closing, is not dependent on events occurring subsequent
thereto and is not for any reason subject to apportionment or rebate.
(d) The portion of the Exclusive Commitment Fee applicable to a Closing
shall be allocated among the Assets for tax purposes in a manner consistent with
the fair market value set forth in an Allocation Schedule to be agreed to by
AirTouch and TowerCo as early as practicable prior to such Closing. The parties
shall file all Tax returns (including amended returns and claims for refund) and
information reports in a manner
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<PAGE>
consistent with such values. The obligations in this paragraph shall survive the
Closing.
2.4 Completion of Transaction. The execution and delivery of the
-------------------------
Sublease and of Site Designation Supplements under the Sublease shall be
completed in accordance with Article 10 (each such closing being referred to as
a "Closing"). The initial Closing is referred to herein as the "Initial
------- -------
Closing" and each Closing occurring after the Initial Closing is referred to as
- -------
a "Subsequent Closing." The Initial Closing shall involve no fewer than 800
------------------
Included Towers and shall occur on such date, no later than the later of (a) the
tenth (10th) Business Day after the expiration or termination of the HSR Act
waiting period, if applicable, and (b) February 6, 2000 (or such later date, not
later than three months after February 6, 2000, as AirTouch may elect upon
written notice to TowerCo provided that AirTouch is not in breach in any
material respect of its covenants hereunder (with February 6, 2000 or such later
date, as applicable, being referred to as the "Initial Closing Expiration
--------------------------
Date")) upon at least five (5) Business Days' prior written notice to TowerCo
- ----
from AirTouch; the date of such Initial Closing is referred to herein as the
"Initial Closing Date." Each Subsequent Closing shall involve no fewer than 200
--------------------
Included Towers (or, with respect to the last such Closing, such smaller number
as represents the remaining Towers) and shall occur on one or more month-ends
after the end of the month in which the Initial Closing Date falls (each, a
"Subsequent Closing Date") upon at least ten (10) Business Days' prior written
-----------------------
notice to TowerCo from AirTouch. References herein to the "Closing" and the
-------
"Closing Date" shall mean the Initial Closing and the Initial Closing Date, one
------------
or more Subsequent Closings and Subsequent Closing Dates or all of the foregoing
closings and closing dates collectively, as the context requires. The last of
the Subsequent Closings (the "Final Closing") is scheduled to occur on a date
-------------
(the "Final Closing Date") which shall not be later than six (6) months after
------------------
the Initial Closing Date. Each Closing shall take place in the offices of
Pillsbury Madison & Sutro LLP, 50 Fremont Street, San Francisco, California
94105, or such other place as the parties may agree.
2.5 References Applicable to Individual Closings. As used in this
--------------------------------------------
Agreement, the defined term "Assets" and all related defined terms including
"Included Towers," "Tower Sites," "Ground Leases," "Tower Service Contracts,"
"Tower Collocation Leases," "Tower Equipment Leases" and "Applicable
Governmental Permits," and all references to Liabilities in respect of any of
the foregoing, are understood to refer to (i) the Assets (together with certain
Liabilities as provided in the Sublease) that are the subject of the Initial
Closing only, with respect to representations, warranties, covenants and
conditions applicable to the Initial Closing, and (ii) the Assets (together with
certain Liabilities as provided in the Sublease) that are the subject of a given
Subsequent Closing
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<PAGE>
only, with respect to representations, warranties, covenants and conditions
applicable to such Subsequent Closing.
All representations, warranties and indemnification obligations of any
Sublessor and of TowerCo under this Agreement shall be deemed with respect to a
particular Closing to refer to those Assets (together with certain Liabilities
as provided in the Sublease) leased or subleased to TowerCo under the Sublease
or otherwise made subject to the Sublease at such Closing.
ARTICLE 3
---------
Representations and Warranties of Wholly Owned Entities
-------------------------------------------------------
As a material inducement to TowerCo, ATLP and (at such time as it becomes a
party to this Agreement) Sub to enter into this Agreement, except as disclosed
to TowerCo in the Schedules to this Agreement and the other Transaction
Documents to which they are a party (with each disclosure made in the Schedules
in response to any Section of these representations and warranties being deemed
to be disclosed in response to, and to qualify, each other Section of these
representations and warranties), each Wholly Owned Entity, jointly and severally
with each other Wholly Owned Entity, represents and warrants to TowerCo as
follows:
3.1 Organization and Qualification. Each Wholly Owned Entity is a
------------------------------
corporation or partnership (as the case may be) duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation or
formation and has all requisite corporate or partnership power and authority to
own, lease and use the Assets as they are currently owned, leased and used.
3.2 Authority. Each Wholly Owned Entity has the corporate or partnership
---------
right, power, legal capacity and authority to execute, deliver and perform its
obligations under this Agreement and the other Transaction Documents to be
executed and delivered by such Wholly Owned Entity pursuant to this Agreement.
The execution and delivery of, and performance of the obligations contained in,
this Agreement by each Wholly Owned Entity and the transactions contemplated
hereby have been, and all other Transaction Documents delivered by such Wholly
Owned Entity and all other documents, instruments and certificates have been or
as of the Closing will be, duly authorized by all necessary corporate or
partnership action on the part of such Wholly Owned Entity.
3.3 Enforceability. The terms and provisions of this Agreement and all
--------------
Transaction Documents made or delivered from time to time by such Wholly Owned
Entity hereunder constitute valid and legally binding obligations of such Wholly
Owned
-15-
<PAGE>
Entity, enforceable against such Wholly Owned Entity in accordance with the
terms hereof and thereof (except that no representation is made as to the
enforceability of the indemnification and contribution provisions of the
Registration Rights Agreement under federal and state securities laws).
3.4 Consents and Approvals. Except for (x) compliance with the HSR Act,
----------------------
(y) filings, consents and approvals required under Tower Collocation Leases and
Ground Leases, and (z) the filings, consents and approvals specified in SCHEDULE
3.4, neither the execution and delivery by such Wholly Owned Entity of this
Agreement or the other Transaction Documents to which it is a party, nor the
performance of the transactions performed or to be performed by such Wholly
Owned Entity thereunder, will (i) require any filing, consent or approval or
constitute a Default under (A) any Law to which such Wholly Owned Entity or any
of the Assets owned by it is subject, (B) the Charter Documents or bylaws of
such Wholly Owned Entity or (C) any Contract or Governmental Permit to which
such Wholly Owned Entity is a party or by which any of the Assets owned by it is
bound, except with respect to clauses (A) and (C), such failures to make or
obtain such filing, consent or approval and such Defaults that, individually or
in the aggregate, would not have an AirTouch Material Adverse Effect, or (ii)
result in the creation or imposition of any Encumbrance upon any of the Assets
owned by such Wholly Owned Entity, other than Permitted Encumbrances.
3.5 Title and Encumbrances. To AirTouch's knowledge, except as disclosed
----------------------
in SCHEDULE 3.5, the Wholly Owned Entities will at the applicable Closing have
good and marketable title to, or, with respect to Assets subject to a Ground
Lease, a valid leasehold or other possessory interest in or use right with
respect to, all of the Assets of the Wholly Owned Entities, free from any
Encumbrances except Permitted Encumbrances. To AirTouch's knowledge, the use of
such Assets of the Wholly Owned Entities is not subject to any Encumbrances,
other than Permitted Encumbrances and the Encumbrances described in SCHEDULE
3.5, and such use does not materially encroach on the property or rights of any
other Person except as disclosed in such Schedule. To AirTouch's knowledge,
except as disclosed in SCHEDULE 3.5, all of the Towers of the Wholly Owned
Entities are in good operating condition and repair, subject to normal wear and
maintenance, have been maintained in a manner consistent with generally accepted
standards of sound engineering practice, and are useable to support the antennae
of AirTouch and the other tenants on the existing Towers of the Wholly Owned
Entities as of the date hereof, except for such defects as are disclosed on
SCHEDULE 3.5 or as would not cost more than $50,000 to correct with respect to
each such Tower or more than $2,500,000 for all such Towers. To AirTouch's
knowledge, except as disclosed in SCHEDULE 3.5 or where the failure would not,
individually or in the aggregate, have an AirTouch Material Adverse Effect, all
of
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<PAGE>
the transmitting towers, ground radials, guy anchors, transmitting buildings and
related improvements, if any, constituting Assets and located on real property
owned or leased by any Wholly Owned Entity are located entirely on real property
constituting a part of the Assets.
3.6 Governmental Permits. To AirTouch's knowledge, except as set forth
--------------------
on SCHEDULE 3.6, the Wholly Owned Entities have all Governmental Permits that
are necessary to operate their Towers as operated on the date hereof, except
where the failure to obtain such Governmental Permit would not, individually or
in the aggregate, have an AirTouch Material Adverse Effect. To AirTouch's
knowledge, except as set forth in SCHEDULE 3.6, the Wholly Owned Entities are in
compliance with such Governmental Permits, except for such failures to comply as
would not, individually or in the aggregate, have an AirTouch Material Adverse
Effect. Except as set forth in SCHEDULE 3.6, or where the failure would not,
individually or in the aggregate, have an AirTouch Material Adverse Effect, (i)
none of the Governmental Permits owned by the Wholly Owned Entities is, to
AirTouch's knowledge, subject to any restriction or condition that limits the
ownership or operations of the Assets as currently owned and operated, except
for restrictions and conditions generally applicable to Governmental Permits of
such type, (ii) to AirTouch's knowledge, the Governmental Permits owned by the
Wholly Owned Entities are valid and in good standing, are in full force and
effect and are not impaired by any act or omission of any Wholly Owned Entity or
its officers, directors, partners, employees or agents, and the ownership and
operation of the Assets to AirTouch's knowledge are in accordance with the
Governmental Permits owned by the Wholly Owned Entities, (iii) no such
Governmental Permit is the subject of any pending or, to AirTouch's knowledge,
threatened challenge or proceeding to revoke or terminate any such Governmental
Permit, and (iv) no Wholly Owned Entity has any reason to believe that any such
Governmental Permit will not be renewed in its name by the granting Governmental
Authority in the ordinary course.
3.7 Contracts. SCHEDULE 3.7 identifies all Contracts of the following
---------
types to which any Wholly Owned Entity is a party, or by which it is bound, with
respect to the Assets (other than any Contract which is neither a Tenant
Collocation Lease nor a Ground Lease and (i) is terminable by a party on not
more than sixty (60) calendar days' notice without any Liability, or (ii) under
which the obligation of a party (fulfilled and to be fulfilled under the current
term thereof without taking optional extensions into account) involves an amount
of less than $100,000 (a "Minor Contract"), or (iii) is specified in clauses (c)
--------------
through (e) below which is entered into after the date hereof in compliance with
Section 6.1):
(a) Contracts which are Ground Leases, disclosing for each the location of
the related Tower Site, the identity of
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<PAGE>
the lessor, the expiration date of the current term under the lease, and the
aggregate amount of the rental (including revenue sharing) paid to the lessor by
AirTouch or other applicable Wholly Owned Entity thereunder for the month ended
May 31, 1999;
(b) Contracts which are Tower Collocation Leases, disclosing for each the
location of the related Tower Site, the identity of the lessee, the expiration
date of the current term under the lease, and the amount of the rental paid by
the lessee to AirTouch or other applicable Wholly Owned Entity thereunder for
the month ended May 31, 1999;
(c) Contracts in effect as of June 30, 1999 which are Tower Equipment
Leases, disclosing for each the location of the related Tower Site, the type of
equipment leased, the identity of the lessor, the expiration date of the current
term under the lease and the amount of the rental paid to the lessor by AirTouch
or other applicable Wholly Owned Entity thereunder for the month ended May 31,
1999;
(d) Contracts in effect as of June 30, 1999 which are Tower Service
Contracts, disclosing for each the location of the related Tower Site, the
identity of the service provider, the type of service provided, the expiration
date of the current term under the Contract and the amount of the fees paid by
AirTouch or other applicable Wholly Owned Entity to the service provider
thereunder for the month ended May 31, 1999;
(e) Contracts under which any Encumbrances, other than Permitted
Encumbrances, exist with respect to the Assets of the Wholly Owned Entities; and
(f) Contracts (other than those described in any of (a) through (e) above)
(i) which relate to the Towers or Tower Sites of the Wholly Owned Entities which
were entered into after December 31, 1998 and which were not made in the
ordinary course of the business of the applicable Wholly Owned Entity or (ii)
which were made in the ordinary course of business and involve remaining
payments under any such Contract of more than $100,000.
The Contracts listed in SCHEDULE 3.7 are referred to herein as the
"AirTouch Contracts." To AirTouch's knowledge, and except as identified in
------------------
SCHEDULE 3.7, no Wholly Owned Entity is in Default under any AirTouch Contract,
except for Defaults that would not, individually or in the aggregate, have an
AirTouch Material Adverse Effect. To AirTouch's knowledge and except as
disclosed in SCHEDULE 3.7, (i) no Wholly Owned Entity has received any written
communication from, or given any written communication to, any other party
indicating that such Wholly Owned Entity or such other party, as the case may
be, is in Default under any AirTouch Contract, except for Defaults that would
not, individually or in the aggregate, have
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<PAGE>
an AirTouch Material Adverse Effect, (ii) none of the other parties to any such
AirTouch Contract is in Default thereunder in any material respect, and (iii)
each such AirTouch Contract is in full force and effect and is enforceable
against the other parties thereto in accordance with its terms, except to the
extent that such enforcement may be limited by applicable bankruptcy,
reorganization, insolvency and other Laws of general application affecting
enforcement of creditors' rights generally or by general principles of equity,
and except to the extent that the failure to be in full force and effect and
enforceable would not, individually or in the aggregate, have an AirTouch
Material Adverse Effect.
3.8 Environmental Laws.
------------------
(a) Except as disclosed on SCHEDULE 3.8, to AirTouch's knowledge: (i) none
of the Wholly Owned Entities' operations on the Real Property of the Wholly
Owned Entities is currently subject to any judicial or administrative proceeding
alleging the violation of an Environmental Law; (ii) none of the Real Property
of the Wholly Owned Entities is the subject of any investigation by any
Governmental Authority concerning any release of any Hazardous Substance on the
Real Property of the Wholly Owned Entities; (iii) the Wholly Owned Entities have
not filed any written notice under any Environmental Law indicating past or
present treatment, storage or disposal of a hazardous waste on the Real Property
or reporting a spill or release of a Hazardous Substance into the environment
from its operations on the Real Property of the Wholly Owned Entities; (iv) no
lien in favor of any Governmental Authority for (A) any liability under
Environmental Laws, or (B) damages arising from or costs incurred in response to
a release of any Hazardous Substance into the environment has been filed or
attached to any of the Real Property of the Wholly Owned Entities (other than
Permitted Encumbrances); (v) no Wholly Owned Entity has been notified that it is
potentially liable (including as a "potentially responsible party"), or has
received any request for information or other correspondence concerning its
potential liability with respect to the Real Property, under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, the
Resource Conservation Recovery Act, as amended, or any similar state Law; (vi)
no Wholly Owned Entity has entered into or received any consent decree,
compliance order or administrative order issued pursuant to any Environmental
Law with respect to the Real Property, or is a party in interest in any
judgment, order, writ, injunction or decree issued pursuant to any Environmental
Law with respect to the Real Property; (vii) each Wholly Owned Entity is in
compliance with all Environmental Laws with respect to the Real Property, except
where the failure to be so in compliance, individually or in the aggregate,
would not have an AirTouch Material Adverse Effect; and (viii) except for
batteries, generators and associated above-ground fuel tanks and other
substances commonly used in the industry necessary
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<PAGE>
for the operation and maintenance of the Assets, no Wholly Owned Entity has
installed or used any underground storage tanks or Hazardous Substances, and
there are no underground storage tanks or Hazardous Substances, on any Real
Property constituting a part of the Assets.
(b) "Environmental Law" means a law, regulation, statute or ordinance
-----------------
pertaining to land use, air, soil, surface water or groundwater (including the
protection, cleanup, removal, remediation or damage thereof) including, without
limitation, the following laws: (i) Clean Air Act (42 U.S.C. (S) 7401 et seq.);
-------
(ii) Clean Water Act (33 U.S.C. (S) 1251 et seq.); (iii) Resource Conservation
-------
and Recovery Act (42 U.S.C. (S) 6901 et seq.); (iv) Comprehensive Environmental
-------
Response, Compensation and Liability Act (42 U.S.C. (S) 9601 et seq.); (v) Safe
-------
Drinking Water Act (42 U.S.C. (S) 300f et seq.); and (vi) Toxic Substances
-------
Control Act (15 U.S.C. (S) 2601 et seq.).
-------
(c) "Hazardous Substance" means any matter that is designated or regulated
-------------------
as a pollutant, contaminant or hazardous or toxic substance, constituent or
waste under any Environmental Law.
3.9 Litigation. Except as set forth on SCHEDULE 3.9, (a) there is no
----------
material claim, grievance, lawsuit, action, arbitration, administrative or other
proceeding or formal governmental investigation pending or, to AirTouch's
knowledge, threatened against any Wholly Owned Entity or any of the Assets, that
would, individually or in the aggregate, have an AirTouch Material Adverse
Effect; and (b) there is no material outstanding or unsatisfied judgment, order
or decree to which any Wholly Owned Entity is a party and which relates to the
Assets, except such as would not, individually or in the aggregate, have an
AirTouch Material Adverse Effect.
3.10 Employees and Employee Benefits.
-------------------------------
(a) Employment Agreements. SCHEDULE 3.10(a) lists all employees of
---------------------
Sublessors who may be hired by TowerCo at the Initial Closing (each, an
"Identified Employee") and their dates of hire, present positions and rates of
-------------------
compensation (such Schedule being subject to change between the date hereof and
the Initial Closing Date as a result of changes in the ordinary course of
business). No Wholly Owned Entity is a party to, involved in, or, to AirTouch's
knowledge, threatened by, any labor dispute or unfair labor practice charge
related to any of the Identified Employees. No Wholly Owned Entity is a party
to or currently negotiating any collective bargaining agreement related to such
Identified Employees.
(b) Employee Benefit Plans. SCHEDULE 3.10(b) lists each pension benefit,
----------------------
welfare benefit, stock option, stock purchase, disability, vacation pay,
incentive bonus, severance pay, deferred compensation, supplemental income or
other employee
-20-
<PAGE>
benefit plan, policy or arrangement or agreement, including each "employee
benefit plan" within the meaning of section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), maintained by or contributed
-----
to by the Wholly Owned Entities under which any Wholly Owned Entity is or may be
obligated to Identified Employees or their dependents (the "Covered Persons")
---------------
(collectively referred to as "Employee Plans").
--------------
(c) Employee Benefit Plan Compliance. AirTouch (i) has no knowledge of
--------------------------------
any circumstance relating to an Employee Plan intended to qualify under section
401(a) of the Code that would likely be treated by the Internal Revenue Service
as a disqualifying defect; and (ii) has no knowledge of any liens under Code
section 412(n) or ERISA section 4069(a), nor liabilities under ERISA section
4069(a) or 4201(a), in effect with respect to any Employee Plan that would,
individually or in the aggregate, have an AirTouch Material Adverse Effect.
3.11 Commissions. No Wholly Owned Entity has entered into an agreement,
-----------
commitment or obligation with regard to any brokerage commission or finder's fee
which would be payable by or result in any Liability to TowerCo arising out of
the execution, delivery or performance of this Agreement or the other
Transaction Documents or the transactions contemplated hereby and thereby.
3.12 Real Property.
-------------
(a) Zoning. To AirTouch's knowledge, except as set forth on SCHEDULE
------
3.12, the ownership, lease or use of the real property included in the Assets of
each Wholly Owned Entity or subject to such Wholly Owned Entities' Ground Leases
is in compliance with all applicable zoning, wetlands and other land use
requirements where the failure to so comply would materially limit the
applicable Wholly Owned Entity's ability to use such real property substantially
as heretofore used, including the addition of tenants to the Towers.
(b) Utility Services. Except as set forth on SCHEDULE 3.12, (i) the
----------------
water, electric, gas and sewer utility services and the septic tank and storm
drainage facilities currently available to the Tower Sites of the Wholly Owned
Entities are adequate for the present use of such Tower Sites by the Wholly
Owned Entities and are not being misappropriated by the Wholly Owned Entities
but rather are being supplied to the Wholly Owned Entities by utility companies
or municipalities pursuant to contracts or tariffs which, to AirTouch's
knowledge, are valid and in full force and effect, and (ii) to AirTouch's
knowledge, there is no condition which will result in the termination of the
present access from such Tower Sites to such utility services and other
facilities.
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<PAGE>
(c) Access. To AirTouch's knowledge, and except as disclosed in SCHEDULE
------
3.12, the Wholly Owned Entities have obtained all Governmental Permits (where
required), easements and rights-of-way which are reasonably necessary to provide
vehicular and pedestrian ingress and egress to and from their Tower Sites for
the purposes used by the Wholly Owned Entities in the ordinary course. To
AirTouch's knowledge, no action is pending or threatened which would have the
effect of terminating or materially limiting such access.
(d) Eminent Domain. Except as set forth on SCHEDULE 3.12, AirTouch has
--------------
received no written notice that any Governmental Authority having the power of
eminent domain over any of the real property included in the Assets of the
Wholly Owned Entities has commenced or intends to exercise the power of eminent
domain or a similar power with respect to all or any material part of such real
property.
(e) Public Improvements. To AirTouch's knowledge, no work for municipal
-------------------
improvements has been commenced on or in connection with the "Owned Sites"
included in the Assets that are owned by the Wholly Owned Entities. AirTouch
has received no written notice that any material assessment for public
improvements has been made against any such real property which remains unpaid.
3.13 Absence of Certain Changes or Events. Since December 31, 1998, each
------------------------------------
Wholly Owned Entity has made reasonable efforts consistent with past practice to
preserve relationships with customers, suppliers, employees, lessors, licensors,
tenants, licensees, distributors and others with whom such Wholly Owned Entity
has a material business or financial relationship with respect to its Assets.
Except as set forth on SCHEDULE 3.13, since December 31, 1998, each Wholly Owned
Entity has conducted its operations regarding its Assets in the ordinary course
of business consistent with past practice (including with respect to the
collection of receivables, payment of payables and other liabilities and capital
expenditures).
3.14 Availability of Documents. AirTouch has made available to TowerCo
-------------------------
copies of all Contracts specifically identified in the Schedules to this Article
3. To AirTouch's knowledge, such copies are true and complete in all material
respects and include all material amendments, supplements and modifications
thereto or waivers currently in effect thereunder.
3.15 Compliance with Applicable Law. To AirTouch's knowledge, except as
------------------------------
set forth on SCHEDULE 3.15, each Wholly Owned Entity has conducted its business
relating to the Assets and owned and operated the Assets in accordance with all
applicable Laws (excluding Environmental Laws), except for such failures as,
individually or in the aggregate, would not have
-22-
<PAGE>
an AirTouch Material Adverse Effect. Except as set forth on SCHEDULE 3.15, none
of the Wholly Owned Entities is charged by any Governmental Authority with, or,
to AirTouch's knowledge is threatened or under investigation by any Governmental
Authority with respect to, any Default under any applicable Law relating to the
ownership and operation of the Assets or the conduct of the Business that,
individually or in the aggregate, would have an AirTouch Material Adverse
Effect.
3.16 Investment Intent. Each Wholly Owned Entity is acquiring its portion
-----------------
of the Warrant for its own account and not with a view to the distribution
thereof or of the shares of TowerCo's Class A Common Stock issuable upon
exercise thereof. AirTouch and the other Wholly Owned Entities understand that
the Warrant has not been registered under the Securities Act and may be resold
only if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by Law.
3.17 No Other Warranties. Except for the representations and warranties
-------------------
expressly set forth in this Article 3 and in Article 4, the Assets are being
leased or otherwise made subject to the terms of the Sublease by AirTouch, the
other Wholly Owned Entities and the other Sublessors AS IS, WHERE IS, AND WITH
ALL FAULTS, and there are no other warranties being made by AirTouch, any other
Wholly Owned Entity or any other Sublessor (INCLUDING, WITHOUT LIMITATION, ANY
WARRANTY OF HABITABILITY, MERCHANTABILITY, CONDITION, DESIGN, WORKMANSHIP,
OPERATION, STRUCTURAL INTEGRITY OR FITNESS OR SUITABILITY FOR A PARTICULAR
PURPOSE, OR ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE),
express or implied, in connection with the leasing or subleasing of the Assets,
the subjection of the Assets to the terms of the Sublease, or the other
transactions contemplated by this Agreement, the Sublease and the other
Transaction Documents.
ARTICLE 4
---------
Representations and Warranties of Other Entities
------------------------------------------------
By and as of the time of its execution of this Agreement (or the Joinder,
as the case may be), and as a material inducement to TowerCo, ATLP and (at such
time as it becomes a party to this AGreement) Sub to enter into this Agreement
and the Transaction Documents to which they are parties, each Other Entity
(severally and not jointly and each solely with respect to itself) makes the
representations and warranties to TowerCo set forth in Article 3 (except as to
Section 3.16 in the event that there is an intent by an Other Entity to
distribute portions of the Warrant, in which case the Joinder as to such other
Entity shall modify such representation to provide appropriate assurances as to
the investment intent of its
-23-
<PAGE>
distributees), subject to the disclosures in the Schedules to this Agreement
(with each disclosure made in the Schedules in response to any Section of such
representations and warranties being deemed to be disclosed in response to, and
to qualify, each other Section of such representations and warranties);
provided, however, that for purposes of such representations and warranties, all
- --------
references in Article 3 to AirTouch or any other Wholly Owned Entity or their
respective business, operations, assets, properties and liabilities shall be
deemed replaced with references to such Other Entity and its business,
operations, assets, properties and liabilities.
ARTICLE 5
---------
Representations and Warranties of TowerCo and ATLP
--------------------------------------------------
As a material inducement to Sublessors to enter into this Agreement and the
other Transaction Documents to which they are parties, TowerCo and ATLP and (at
such time as Sub becomes a party to this Agreement) Sub represent and warrant
jointly and severally to Sublessors the following for the benefit of Sublessors
(provided, that the following representations and warranties relating to Sub
speak as of such time as Sub becomes a party hereto):
5.1 Organization and Qualification. Each of TowerCo and Sub is a
------------------------------
corporation, and ATLP is a limited partnership, in each case duly organized,
validly existing and in good standing under the laws of the State of Delaware
and, prior to Closing, Sub will be authorized to transact business in all states
in which the Towers which are the subject of such Closing are located. Each of
TowerCo, ATLP and Sub has all necessary corporate (or, in the case of ATLP,
partnership) power and authority to own, lease and utilize its properties and
assets and to engage in the business or businesses in which it has been and is
presently engaged and in the places where its property and assets are now (or as
to Sub, proposed to be) owned, leased or utilized or as such business is now (or
as to Sub, proposed to be) conducted. TowerCo has provided to AirTouch true,
correct and complete copies of TowerCo's and Sub's Charter Documents.
5.2 TowerCo Authority. Each of TowerCo, Sub and ATLP has the corporate
-----------------
(or in the case of ATLP, partnership) right, power, legal capacity and authority
to execute, deliver and perform its obligations under this Agreement, the other
Transaction Documents, and the documents, instruments and certificates to be
executed and delivered by it pursuant to this Agreement. The execution, delivery
and performance of this Agreement by TowerCo, Sub and ATLP and the transactions
contemplated hereby have been, and all documents, instruments and certificates
have been or as of the Closing will be, duly
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authorized by all necessary corporate or partnership action on the part of each.
5.3 Enforceability. The terms and provisions of this Agreement and all
--------------
other Transaction Documents made or delivered from time to time by TowerCo, ATLP
or Sub hereunder, including the Warrant, constitute valid and legally binding
obligations of each enforceable against each in accordance with the terms hereof
and thereof (except that no representation is made as to the enforceability of
the indemnification and contribution provisions of the Registration Rights
Agreement under federal and state securities laws).
5.4 Approvals. Except for compliance with the HSR Act, neither the
---------
execution and delivery by TowerCo, Sub or ATLP of the Transaction Documents to
which TowerCo, Sub or ATLP, respectively, is a party, nor the performance of the
transactions performed or to be performed by TowerCo, Sub or ATLP thereunder,
will (i) require any filing, consent or approval or constitute a Default under
(A) any Law to which TowerCo and its subsidiaries, Sub, ATLP or their respective
properties and assets are subject, (B) the Charter Documents of TowerCo, Sub or
ATLP, or (C) any Contract or Governmental Permit to which either is a party or
by which any of the properties and assets of TowerCo, its subsidiaries, Sub or
ATLP are bound, except with respect to clauses (A) and (C), such failures to
make or obtain such filing, consent or approval and such Defaults that,
individually or in the aggregate, would not have a TowerCo Material Adverse
Effect, or (ii) result in the creation or imposition of any Encumbrance upon any
of the properties or assets of TowerCo, its subsidiaries, Sub or ATLP, other
than Permitted Encumbrances.
5.5 Commissions. Neither TowerCo nor any subsidiary has entered into any
-----------
agreement, commitment or obligation with regard to any brokerage commission or
finder's fee or similar payment which would be payable by or will result in any
Liability to any Sublessor, arising out of the execution, delivery or
performance of this Agreement, the other Transaction Documents or the Warrant or
the transactions contemplated hereby and thereby.
5.6 SEC Reports. TowerCo has filed all required forms, reports and
-----------
documents with the SEC since July 1, 1998 (collectively, the "TowerCo SEC
-----------
Reports"). The TowerCo SEC Reports complied, as of their respective dates, in
- -------
all material respects with all applicable requirements of the Securities Act and
the Exchange Act. As of their respective dates, none of the TowerCo SEC
Reports, including, without limitation, any financial statements or schedules
included or incorporated by reference therein, contained any untrue statement of
a material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein, in light of the circumstances
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<PAGE>
under which they were made, not misleading. There have been filed as exhibits
to, or incorporated by reference in, TowerCo's Annual Report on Form 10-K as
filed with the SEC on March 19, 1999, all Contracts which, as of the date
hereof, are material as described in Item 601(b)(10) of Regulation S-K. TowerCo
has heretofore delivered to AirTouch, in the form filed with the SEC, all of the
TowerCo SEC Reports. The audited consolidated financial statements and the
unaudited interim financial statements of TowerCo, including in each case the
notes thereto, included in the TowerCo SEC Reports have been prepared in
accordance with GAAP, and such balance sheets, including the related notes,
fairly present the consolidated financial position, assets and liabilities
(whether accrued, absolute, contingent or otherwise) of TowerCo and its
subsidiaries at the dates indicated and such consolidated statements of income,
changes in stockholders' equity and statements of cash flow fairly present the
consolidated results of operations, changes in stockholders' equity and cash
flow of TowerCo for the periods indicated, subject, in the case of the unaudited
interim financial statements, to normal, recurring audit adjustments. The
unaudited financial statements included in the TowerCo SEC Reports contain all
adjustments, which are solely of a normal recurring nature, necessary to present
fairly the results of operations and changes in stockholders' equity and
financial position for the periods then ended.
5.7 Absence of Certain Changes. Since December 31, 1998, except as
--------------------------
described in SCHEDULE 5.7 or the TowerCo SEC Reports filed after such date,
TowerCo has conducted its business solely in the ordinary course consistent with
past practice and neither TowerCo nor Sub has been subject to any Event that
would have a TowerCo Material Adverse Effect.
5.8 Threatened or Pending Litigation. There is no dispute, claim,
--------------------------------
grievance, lawsuit, action, arbitration, administrative or other proceeding or
formal governmental investigation pending or, to TowerCo's knowledge, threatened
against TowerCo, any Affiliate of TowerCo or any of their respective properties,
assets or operations that would have a TowerCo Material Adverse Effect.
5.9 Interim Operations of Sub. Sub is a wholly-owned, indirect subsidiary
-------------------------
of TowerCo. Sub was formed solely for the purpose of engaging in the
transactions contemplated hereby and has not (i) engaged in any business
activities, (ii) conducted any operations other than in connection with the
transactions contemplated hereby or (iii) incurred any liabilities other than in
connection with the transactions contemplated hereby.
5.10 Funds Available for Exclusive Commitment Fee. TowerCo has sufficient
--------------------------------------------
cash or cash equivalents to pay the Exclusive Commitment Fee when due hereunder.
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<PAGE>
5.11 Capitalization. TowerCo has authorized capital stock, and shares
--------------
of capital stock outstanding and reserved for issuance pursuant to options,
warrants and convertible and exchangeable securities outstanding as of August 1,
1999, in each case as identified in SCHEDULE 5.11. All of such outstanding
capital stock has been duly authorized and validly issued, fully paid and
nonassessable and is not subject to any preemptive or similar rights. Sub has
authorized capital stock consisting solely of 1,000 shares of Common Stock, par
value $.01 per share, all of which (i) are owned directly by a direct, wholly
owned subsidiary of TowerCo free and clear of any Encumbrance other than the
Encumbrances described in SCHEDULE 5.11 or the TowerCo SEC Reports and (ii) were
issued in compliance with applicable securities Laws. There are no existing
subscriptions, options, warrants, convertible securities, calls, commitments,
agreements, conversion rights or other rights of any character (contingent or
otherwise) that are binding on TowerCo or any of its direct or indirect
subsidiaries calling for or requiring the issuance, transfer, sale or other
disposition of any shares of the capital stock of TowerCo or Sub, or calling for
or requiring the issuance of any securities or rights convertible into or
exchangeable for shares of capital stock of TowerCo or Sub, in any case except
as set forth with respect to TowerCo in the TowerCo SEC Reports (as defined
herein) or in SCHEDULE 5.11 hereto.
5.12 Valid Issuance. The issuance of the Warrant and the issuance of
--------------
the shares of Class A Common Stock of TowerCo issuable upon exercise of the
Warrant (the "Warrant Shares") have been duly and validly authorized by all
--------------
necessary corporate action. No further approval or authorization of the
stockholders or the directors of TowerCo, of any Governmental Authority or of
any other Person is required for the issuance by TowerCo of the Warrant to
Sublessors in accordance with the terms of this Agreement, or for the issuance
of the Warrant Shares in accordance with the terms of the Warrant. The Warrant,
when issued, sold and delivered to Sublessors in accordance with the terms
expressed herein, shall be duly and validly issued, fully paid and
nonassessable, free and clear of any Encumbrances and preemptive or similar
rights and restrictions of any nature. The Warrant Shares have been duly and
validly reserved for issuance and, upon issuance and receipt of payment therefor
as provided in the Warrant, will be duly and validly issued, fully paid and
nonassessable, and free and clear of any Encumbrances and preemptive or similar
rights and restrictions of any nature. The issuance of the Warrant to Sublessors
pursuant to this Agreement, and the issuance of the Warrant Shares pursuant to
the Warrant, will not violate or constitute a Default under the terms of any
preemptive right or Contract of TowerCo or Sub and, based on the representation
and warranty set forth in Section 3.16 and in Article 4 (insofar as it relates
to Section 3.16), shall be made in compliance with all applicable Laws and
Charter Documents of TowerCo and Sub.
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<PAGE>
5.13 Registration Rights. Except as set forth in SCHEDULE 5.13, no
-------------------
Person has demand or other rights to cause TowerCo to file any registration
statement under the Securities Act of 1933, as amended, relating to any
securities of TowerCo or any right to participate in any such registration
statement.
5.14 Share Ownership Limitations. No "fair price," "moratorium," "control
---------------------------
share acquisition" or other form of anti-takeover statute or regulation as in
effect on the date hereof or any anti-takeover provision in the Charter
Documents of TowerCo or its Affiliates or any shareholder rights plan or similar
arrangement or material change of control provision is applicable to any of the
transactions contemplated by this Agreement, the other Transaction Documents or
the Warrant.
ARTICLE 6
---------
Certain Covenants
-----------------
6.1 Agreements of Sublessors Pending the Closing. AirTouch and each other
--------------------------------------------
Sublessor severally covenants and agrees that, pending the Final Closing (and
thereafter, in the case of paragraphs (f) and (g) of this Section), except as
otherwise agreed to in writing by TowerCo, and except in connection with the
performance of the transactions contemplated hereby:
(a) Business in the Ordinary Course. Except as to actions specifically
-------------------------------
permitted or contemplated by this Agreement or required by any Law, such
Sublessor shall operate, maintain and service its Assets in the ordinary course
consistent with past practice (including extensions, renewals, terminations and
amendments of Contracts) and in compliance in all material respects with all
applicable Laws and, to the extent consistent therewith, use reasonable efforts
to preserve the goodwill and relationships with customers, suppliers and others
having business dealings with it that are material to the Assets.
(b) Update Schedules. AirTouch and the other Sublessors shall promptly
----------------
disclose to TowerCo any information contained in their respective
representations and warranties or any of the Schedules or Annexes hereto which,
because of an event occurring after the date hereof, is incomplete or is no
longer correct as of all times after the date hereof until the Final Closing
Date; provided, however, that none of such disclosures shall be deemed to
--------
modify, amend or supplement the representations and warranties of the Wholly
Owned Entities or of the Other Entities or the Schedules or Annexes hereto for
the purposes of Article 8 hereof, unless TowerCo shall have consented thereto in
writing, except (i) to the extent that an update relates to the addition to any
Schedule or Annex of Towers or Tower Sites acquired or constructed after the
date of
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this Agreement in the ordinary course consistent with past practice (and
Ground Leases relating to the foregoing) and which meet the criteria set forth
in SCHEDULE 6.1(B)(1), and matters related thereto, (ii) to the extent that an
update relates to the expiration or termination pursuant to its terms of a
Ground Lease or Tower Related Asset and matters related thereto, in which event
the applicable Tower, Tower Site and Ground Lease (in the case of an expiring or
terminating Ground Lease) or the applicable Tower Related Asset (in the case of
an expiring or terminating Tower Related Asset) shall be deemed to be Excluded
Assets for all purposes hereunder and shall not be deemed to be the subject of
any representation, warranty or covenant of Sublessors hereunder, and all
references thereto in the Annexes to this Agreement shall be deemed deleted,
(iii) to the extent that an update relates to the renewal (pursuant to
preexisting renewal options) of a Ground Lease or Tower Related Asset, and
matters related thereto, (iv) to the extent that an update relates to the
renewal (other than a renewal pursuant to preexisting renewal options) or
amendment of a Ground Lease or Tower Related Asset, and matters related thereto,
so long as the criteria set forth in SCHEDULE 6.1(B)(2) are met, and (v) for
updates to Schedule 310 with respect to the Identified Employees identified by
TowerCo and AirTouch in accordance with the provisions of Section 310
(collectively, the updates referred to in the foregoing clauses (i), (ii),
(iii), (iv) and (v), together with any other disclosures consented to in writing
by TowerCo, the "Permitted Schedule Updates"). The Schedules and Annexes hereto
--------------------------
shall be deemed modified to include the information in the Permitted Schedule
Updates. Notwithstanding anything to the contrary herein, if any proposed
Permitted Schedule Update pursuant to subsection (i) of the foregoing proviso (a
"Subsection (i) Update") contains exceptions to the representations and
---------------------
warranties contained in Articles 3 or 4 hereof such that the condition to
TowerCo's obligations to close under Section 8.1(b) would not be satisfied (it
being understood that, to the extent that a Subsection (i) Update revises the
lists of Towers, Tower Sites and certain Contracts called for by Section 3.7 and
the Annexes hereto, such revision shall not constitute an exception for this
purpose), TowerCo may, within seven days after the receipt thereof, refuse to
accept such proposed Subsection (i) Update insofar as the exceptions reflected
therein are unacceptable to TowerCo, notify AirTouch of TowerCo's objections,
and refuse to accept and pay for any such additional Towers or Tower Sites as
are subject to such unacceptable exceptions. Each such Tower and Tower Site
(including the Tower Related Assets relating thereto) shall not be subject to
this Agreement or any of the Transaction Documents for any purpose and shall
constitute Excluded Assets, and Sublessors may hold, further develop or dispose
of such Towers, Tower Sites and assets free and clear of any obligation or
Liability arising or imposed under or pursuant to this Agreement or the other
Transaction Documents.
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<PAGE>
(c) Conduct of Business. Such Sublessor shall cooperate with TowerCo and
-------------------
use its reasonable efforts to cause all of the conditions to the obligations of
TowerCo under this Agreement to be satisfied on or prior to the Closing Date.
(d) Sale of Assets; Negotiations. Except as permitted by Section 61,
----------------------------
such Sublessor shall not sell or encumber all or any part of its Assets, other
than Permitted Encumbrances or in the ordinary course of its business consistent
with past practice or in connection with the sale or other divestiture of any
cellular system owned by any Sublessor, or initiate or participate in any
discussions or negotiations or enter into any agreement to do any of the
foregoing. Assets sold or otherwise disposed of in accordance with this Section
shall be deemed to be Excluded Assets for all purposes hereunder and shall not
be deemed to be the subject of any representation, warranty or covenant of
Sublessors hereunder, and all references thereto in the Annexes to this
Agreement shall be deemed deleted.
(e) Access. Each Sublessor shall give to TowerCo's officers, employees,
------
counsel, accountants and other representatives free and full access to and the
right to inspect, during normal business hours and with reasonable prior notice,
all of the premises, properties, assets, records, contracts and other documents
relating to the Assets and shall permit them to consult with the officers,
employees, accountants and agents of Sublessors for the purpose of making such
investigation of the Assets as TowerCo shall desire to make, provided that such
access, inspection and investigation shall not unreasonably interfere with the
business operations of Sublessors. Notwithstanding the foregoing provisions of
this Section 6.1(e), Sublessors shall not be required to provide any such
information to TowerCo if, in the reasonable determination of counsel for
AirTouch or the other applicable Sublessor, access to such information by
TowerCo is prohibited by the provisions of any confidentiality agreements
binding upon AirTouch or any of the other Sublessors or by applicable Law.
(f) Publicity. Except as required by applicable Law or in connection
---------
with communications with the other stockholders or partners of the Other
Entities or the process of obtaining consents contemplated by Section 2.2
hereof, no Sublessor shall give any notice to third parties or otherwise make
any public statement or announcement (including statements to any member of the
media) concerning this Agreement or the transactions contemplated hereby, or
otherwise make known to any third party any information relating to this
Agreement or the other Transaction Documents, except for such written
information as shall have been approved in writing as to form and content by
TowerCo, which approval shall not be unreasonably withheld or delayed.
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<PAGE>
(g) Cooperation in Accounting Matters. If TowerCo is required by
---------------------------------
applicable Law (including the staff of the Securities and Exchange Commission)
to receive from its independent public accountants an unqualified report (as to
the scope of the audit, access to the books and records and the cooperation of
management) on the Assets (consisting of a balance sheet as of the Final Closing
Date and a statement of revenue from third parties and expenses for the twelve
months then ended, prepared in conformity with GAAP and Regulation S-X under the
Securities Act of 1933, as amended, and which shall be at TowerCo's sole cost
and expense), then Sublessors shall cooperate reasonably and shall use
reasonable efforts to cause their independent public accountants to cooperate
(provided that such accountants' cooperation shall be at TowerCo's sole cost and
expense) in responding to inquiries from TowerCo's independent public
accountants in connection with their production of such report for TowerCo.
6.2 Agreements of TowerCo. TowerCo covenants and agrees that, pending
---------------------
the Final Closing (and thereafter, in the case of paragraphs (d) and (h) of this
Section 6.2) and except as otherwise agreed to in writing by AirTouch:
(a) Update Schedules. TowerCo shall promptly disclose to AirTouch (on
----------------
behalf of the Sublessors) any information contained in the representations and
warranties of TowerCo or Sub or any of the Schedules hereto which, because of an
event occurring after the date hereof, is incomplete or is no longer correct as
of all times after the date hereof until the Final Closing Date; provided,
however, that none of such disclosures shall be deemed to modify, amend or
supplement the representations and warranties of TowerCo or Sub or the schedules
hereto for the purposes of Article 9 hereof, unless AirTouch shall have
consented thereto in writing.
(b) Conduct of Business. TowerCo and Sub shall cooperate with Sublessors
-------------------
and use its reasonable efforts to cause all of the conditions to the obligations
of Sublessors and TowerCo under this Agreement to be satisfied on or prior to
each Closing Date.
(c) Access. Pending the Final Closing, TowerCo and Sub shall give to
------
Sublessors' officers, employees, counsel, accountants and other representatives
free and full access to and the right to inspect, during normal business hours,
all of the premises, properties, assets, records, contracts and other documents
relating to its business and shall permit them to consult with the officers,
employees, accountants, counsel and agents of TowerCo and Sub for the purpose of
making such investigation of their business and the properties and assets used
in connection therewith, as Sublessors shall desire to make, provided that such
investigation shall not unreasonably interfere with the business operations of
TowerCo. Notwithstanding the foregoing provisions of this Section
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<PAGE>
6.2(c), TowerCo shall not be required to provide any such information to
Sublessors if, in the reasonable determination of the general counsel of
TowerCo, access to such information by Sublessors is prohibited by the
provisions of any confidentiality agreement binding upon TowerCo or by
applicable Law.
(d) Publicity. Except as required by applicable Law, neither TowerCo nor
---------
Sub shall give notice to third parties or otherwise make any public statement or
announcement (including statements to any member of the media) concerning this
Agreement or the transactions contemplated hereby or otherwise make known to any
third party any information relating to this Agreement or the other Transaction
Documents, except for such written information as shall have been approved in
writing as to form and content by AirTouch, which approval shall not be
unreasonably withheld or delayed.
(e) Assignment to Sub. Prior to the applicable Closing Date, TowerCo
-----------------
shall (i) assign this Agreement to Sub in accordance with Section 13.2 hereof,
and (ii) cause Sub to qualify to do business in any jurisdiction where the
leasing, subleasing, use, occupancy, management or operation of the Assets would
require Sub to be so qualified.
(f) Capitalization. Prior to the Initial Closing Date:
--------------
(i) TowerCo will not make any change or amendment in its charter or
bylaws except for such changes or amendments that (x) are approved by the
holders of Class A Common Stock or (y) would not have a material adverse
effect on the rights of the holders of Class A Common Stock.
(ii) TowerCo will not effect any reclassification of the shares of
Class A Common Stock, or make any distribution thereon prior to the Initial
Closing Date, or declare any distribution having a record date prior to the
Initial Closing Date, unless an appropriate adjustment is made in the
Warrant.
(iii) TowerCo shall take such action as is necessary to cause, as of
the Initial Closing Date, the Warrant Shares (as defined herein) to be
approved for listing upon notice of issuance of the New York Stock
Exchange.
(iv) In the event that TowerCo shall effect any merger, consolidation
or other business combination as a result of which shares of Class A Common
Stock are converted or exchanged into cash, securities or other property,
TowerCo shall ensure that the holders of the Warrant upon exercise thereof
shall be entitled to receive, in lieu of each share of Class A Common Stock
issuable pursuant to such Warrant, the amount of cash,
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securities and other property per share received in respect to a share of
Class A Common Stock upon such conversion or exchange.
(g) Registration Rights Agreement. Prior to the Initial Closing Date,
-----------------------------
TowerCo shall take all action necessary to (i) amend the Registration Rights
Agreement to cause Sublessors to become "Stockholders" thereunder and to cause
the Warrant Shares to constitute "Registrable Securities" thereunder, subject
only to AirTouch's execution of such amendment on behalf of Sublessors and (ii)
cause the Warrant to constitute an "Equity Agreement" for purposes of the
Registration Rights Agreement.
(h) Restrictions on Transfers of Sub Stock. TowerCo shall not directly or
--------------------------------------
indirectly sell, assign, pledge, hypothecate, transfer or otherwise dispose (for
purposes of this paragraph, a "transfer"), and shall not permit any transfer, of
any or all of the capital stock of Sub, other than (i) those pledges to lenders
as are described in SCHEDULE 5.11 hereto, or (ii) a transfer of Sub's capital
stock pursuant to the exercise of the lenders' foreclosure remedies pursuant to
the foregoing pledges, or to assignees of such foreclosing lenders, but only so
long as the proposed transferee is a Qualified Stock Transferee (as defined
below) that agrees in writing to be bound by the restrictions on transfer set
forth in this Section 6.2(h). All purported transfers of Sub capital stock that
do not comply with this Section shall be void ab initio. TowerCo and Sub shall
cause all certificates representing shares of Sub capital stock to bear a legend
referencing the transfer restrictions set forth herein. Without limiting the
foregoing, TowerCo and Sub shall obtain prior to the Initial Closing Date (and
shall maintain thereafter) from the lenders to which Sub's stock is pledged as
described in Schedule 5.11 any consents or agreements necessary to ensure that
the foregoing restrictions on transfer are given full force and effect and do
not and will not result in any Default under TowerCo's and Sub's agreements with
such lenders. A "Qualified Stock Transferee" means a transferee that (i) is not
--------------------------
an AirTouch Competitor (as defined in the Sublease), and (ii) is otherwise a
Person to which Sub would be permitted to transfer Sub's assets under the terms
of the Sublease. Notwithstanding anything to the contrary in this Agreement, the
obligations of TowerCo and Sub in this Section shall survive until the
expiration or termination of the Sublease.
6.3 Additional Agreements of Sublessors and TowerCo.
-----------------------------------------------
(a) Regulatory Matters.
------------------
(i) Each party hereto agrees to use commercially reasonable efforts to
comply with all Laws which may be imposed on such party with respect to the
transactions contemplated by this Agreement and the other Transaction Documents.
If
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required by applicable Laws, TowerCo (and/or Sub, as applicable) and Sublessors
shall each make an appropriate filing of a Notification and Report Form pursuant
to the HSR Act as soon as reasonably practicable but in any event no later than
twenty (20) Business Days after the date hereof and shall promptly respond to
any request for additional information with respect thereto. Each such filing
shall request early termination of the waiting period imposed by the HSR Act.
TowerCo, Sub and Sublessors will cooperate before and after Closing to prevent
inconsistencies between their respective HSR Act filings and will furnish to
each other such necessary information and reasonable assistance as the other may
reasonably request in connection with its preparation of necessary filings or
submissions under the HSR Act. Each of TowerCo and/or Sub, on the one hand, and
Sublessors, on the other hand, shall pay all HSR filing fees payable by such
party in connection with the execution of this Agreement.
(ii) Notwithstanding anything else to the contrary contained in this
Agreement, none of AirTouch nor any other Sublessor shall have any obligation to
oppose, challenge or appeal any suit, action or proceeding by any Governmental
Authority before any court or other Governmental Authority, domestic or foreign,
or any order or ruling by any such body (A) seeking to restrain or prohibit or
restraining or prohibiting the consummation of the transactions contemplated by
the Transaction Documents, (B) seeking to prohibit or limit or prohibiting or
limiting the leasing, subleasing, occupancy, operation or control by TowerCo or
Sub of the Subleased Property or Managed Components (as defined in the Sublease)
or (C) seeking to compel or compelling TowerCo, Sub or any Sublessor or any of
their respective Affiliates to dispose of, grant rights in respect of, or hold
separate any portion of the business or assets of TowerCo, Sub or any Sublessor
or any of their respective Affiliates.
(b) Cooperation in Tax Matters. Sublessors, on the one hand, and TowerCo
--------------------------
and Sub, on the other hand, shall cooperate fully as and to the extent
reasonably requested by the other party in connection with any audit, litigation
or other proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision of records and
information which are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. Sublessors and TowerCo agree (i) to retain all books and records
with respect to Tax matters pertinent to the Assets relating to all taxable
periods until the statute of limitations (including any extensions) as to any
taxable year that may be affected thereby shall have run, (ii) to abide by all
record retention agreements entered into with any Governmental Authority, and
(iii) to give the other party reasonable written notice prior to destroying or
discarding any
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such books and records and, if one party so requests, shall allow the requesting
party to take possession of such books and records proposed for destruction or
discard (at the requesting party's sole expense).
(c) Transfer Taxes. Each Sublessor shall pay and promptly discharge when
--------------
due the entire amount of any and all state and local sales and use, documentary,
real property transfer and other transfer taxes, similar taxes and related
amounts (including any penalties, interest and additions to Tax) (the "Transfer
--------
Taxes") imposed or levied by reason of the execution and performance of this
- -----
Agreement and the Sublease, if any. TowerCo shall promptly reimburse each
Sublessor for 50% of all such Transfer Taxes upon receipt of suitable evidence
that such Transfer Taxes have been paid by such Sublessor. The parties will
cooperate before and after each Closing to minimize Transfer Taxes. Such
cooperation will include the provision of resale certificates, other exemption
certifications where appropriate, or other documentation reasonably requested by
AirTouch or another Sublessor.
(d) Further Assurances. Each of the parties hereto will cooperate with
------------------
the other and execute and deliver to the other parties hereto such other
instruments and documents and take such other actions as may be reasonably
requested from time to time by any other party hereto as necessary to carry out,
evidence and confirm the intended purposes of this Agreement.
(e) Tax Filings. TowerCo will be responsible for filing before and after
-----------
each Closing any forms, notices or other filings as required by each
Governmental Authority necessary to identify the change in ownership, use,
control or possession of the Assets.
6.4 Confidentiality. All information obtained by any party in connection
---------------
with this Agreement shall be kept confidential in accordance with that certain
letter agreement dated March 23, 1999 between TowerCo and Lehman Brothers Inc.
on behalf of AirTouch. The obligations in this Section shall survive any
termination or expiration of this Agreement.
6.5 Preliminary Title Reports. TowerCo may, but shall not be obligated
-------------------------
to, at its own cost or expense, obtain as promptly as practicable after the
execution of this Agreement either (i) a standard preliminary title report dated
on or after the date of this Agreement with respect to each parcel of real
property constituting a part of the Assets, or (ii) copies of title policies or
marked up commitments to issue title policies, with policies to be provided when
issued.
6.6 Environmental Site Assessments. TowerCo may as promptly as
------------------------------
practicable after the execution of this Agreement, at its own cost and expense,
obtain and deliver to the applicable Sublessor full and complete copies of a
Phase I
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Environmental Report on each parcel of real property constituting a part of the
Assets for which a Phase I Environmental Report has not heretofore been
delivered to TowerCo (or as to which TowerCo has heretofore indicated that the
existing Phase I Environmental Report raises questions of potential liability
that has had or could be reasonably expected to materially impair the value or
use of the affected real property). Site assessments shall be conducted by such
consultants and professionals as TowerCo shall select and as shall be reasonably
acceptable to AirTouch and shall be arranged at times mutually convenient to the
parties. Each of the applicable Sublessor and TowerCo shall be entitled to have
representatives present at the time such site assessments are conducted and to
have copies of all correspondence with the entity preparing such Phase I
Environmental Reports.
6.7 Structural Reports. TowerCo may, but shall not be obligated to, at
------------------
its own cost and expense, obtain as promptly as practicable after the execution
of this Agreement, a report with respect to each of the components of the Towers
of such structural engineers as are reasonably satisfactory to TowerCo with
respect to (i) the structural soundness and operating condition of the Towers,
(ii) compliance of the Towers with all applicable Laws, Governmental Permits and
Contracts, and (iii) any required structural or other material repairs.
ARTICLE 7
---------
Employee Matters
----------------
7.1 Employment. No later than the sixtieth (60th) day after the date of
----------
this Agreement, TowerCo shall notify AirTouch of the Identified Employees that
TowerCo intends to hire as of the Initial Closing Date (the "Prospective
-----------
Employees"), and shall offer to all Prospective Employees, as of the Initial
- ---------
Closing Date, employment in a position with at least comparable responsibility.
Prospective Employees who accept TowerCo's offer of employment and become
employees of TowerCo within six (6) months of the Initial Closing Date are
referred to herein as "New Employees" and all other employees of Sublessors are
-------------
referred to as "Nontransferring Employees." Subject to the provisions of this
-------------------------
Section 7 as to any particular benefit, TowerCo shall provide New Employees with
compensation and employee benefits that are substantially similar to those
provided to similarly situated TowerCo employees. From the date of this
Agreement until the end of the Nonsolicitation Period, neither TowerCo nor any
of its Affiliates will Solicit any Nontransferring Employee who is not an
Identified Employee to leave his or her employment with any Sublessor or any of
its Affiliates. For purposes of this Section 7.1, the "Nonsolicitation Period"
----------------------
ends on the first anniversary of the Final Closing, and "Solicit" means any
-------
recruitment specifically directed at one or more individuals identified by name,
title or Sublessor affiliation (i.e., beyond generally advertising
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<PAGE>
job openings), but the term "Solicit" shall not include any activities that
constitute follow-up to individuals who respond to general job opening
advertisements or who voluntarily initiate employment inquiries. TowerCo shall
indemnify and hold Sublessors and their Affiliates harmless from and against all
claims, expenses (including reasonable attorneys' fees), loss and liability
arising either (i) out of Sublessors' submission of personnel records or
information to TowerCo about their employees, or (ii) with respect to the New
Employees' employment with TowerCo after the Initial Closing. Except as
otherwise specifically provided in this Agreement, Sublessors and their
Affiliates shall indemnify and hold TowerCo and its Affiliates harmless from and
against all claims, expenses (including reasonable attorneys' fees), loss and
liability arising out of the New Employees' and Nontransferring Employees'
employment with Sublessors prior to the Initial Closing.
7.2 Service Credit for New Employees. Subject to the provisions of this
--------------------------------
Section as to any particular benefit, TowerCo shall recognize all prior service
of New Employees with any Sublessor and any Affiliate that is aggregated with
the applicable Sublessor under section 414(b), 414(c) or 414(m) of the Code
(each, an "ERISA Affiliate") for tenure purposes, and for all benefit plan
---------------
purposes (other than benefit accrual under a defined benefit plan and TowerCo's
401(k) Plan and Stock Option Plan), at least to the extent recognized under the
comparable employee benefit plan of the applicable Sublessor as in effect on the
Initial Closing Date, but without regard to any amendment increasing such
service adopted or made effective less than twelve (12) months prior to the
Initial Closing Date. On or before the Initial Closing Date, Sublessors shall
provide TowerCo with a list setting forth the service accrued by each
Prospective Employee. Sublessors agree that TowerCo shall be under no
obligation to and shall not assume sponsorship of any Employee Plan.
7.3 Qualified Defined Contribution Plan.
-----------------------------------
(a) The Identified Employees currently are eligible to participate in the
AirTouch Communications Retirement Plan ("AirTouch's DC Plan"). New Employees
------------------
shall not accrue any further benefits under the AirTouch's DC Plan as of any
date after the Initial Closing (unless still employed by any Sublessor or its
ERISA Affiliates).
(b) TowerCo is a participating company in the American Tower 401(k)/Profit
Sharing Plan ("TowerCo's DC Plan"). Except with respect to any New Employee who
-----------------
elects otherwise, the account balances of New Employees in the AirTouch's DC
Plan shall be transferred to the TowerCo's DC Plan as soon as reasonably
practicable following the Initial Closing in accordance with this Section 73.
TowerCo represents and warrants that the TowerCo's DC Plan and related trust
meet the
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requirements for qualification under section 401 and related sections of the
Code and shall continue to meet such requirements as of the date of the transfer
described in this Section 7.3. Prior to such transfer, but in no event later
than two (2) months after the Initial Closing Date, TowerCo shall provide to
Sublessors satisfactory evidence that the TowerCo's DC Plan complies with such
requirements, including copies of TowerCo's DC Plan and the most recent
determination letter issued by the Internal Revenue Service (and any subsequent
determination letter application filed with the Internal Revenue Service).
(c) As soon as reasonably practicable after the Initial Closing and
provision of satisfactory evidence pursuant to this Section 7.3, the trustee of
AirTouch's DC Plan shall transfer to the trustee of TowerCo's DC Plan cash
and/or assets, including plan loan obligations, equal to the value of the
account balances of each New Employee (except any New Employee electing not to
transfer his or her account balance as provided above) under AirTouch's DC Plan
as of the last valuation date immediately preceding the transfer date, which
amount shall be credited to the respective account or accounts under TowerCo's
DC Plan. The foregoing notwithstanding, the amount to be so transferred with
respect to any New Employee shall be reduced by any withdrawals and other
distributions made from AirTouch's DC Plan to the New Employee between such
valuation date and such transfer date.
(d) TowerCo agrees that once the transfers described herein have been
made, the sole and exclusive responsibility for providing the benefits accrued
by the New Employees under AirTouch's DC Plan as of the transfer date and
transferred to TowerCo's DC Plan shall be that of TowerCo's DC Plan and TowerCo.
7.4 Welfare Plans. Each New Employee shall be eligible for coverage as
-------------
of the date on which he or she becomes a New Employee of TowerCo (the
"Employment Transfer Date") under any medical, dental, vision, prescription
------------------------
drug, life insurance and other welfare benefit plans (within the meaning of
section 3(1) of ERISA) maintained by TowerCo for its employees ("TowerCo's
---------
Welfare Plans"). TowerCo agrees to (i) waive any waiting periods and
- -------------
preexisting condition limitations in TowerCo's Welfare Plans, except to the
extent coverage would have been denied or restricted on a similar basis under
the welfare benefit plans of Sublessors ("Sublessors' Welfare Plans") and (ii)
-------------------------
coordinate deductibles, maximum benefit restrictions and "out-of-pocket"
maximums so that (A) New Employees receive credit toward any deductibles under
TowerCo's Welfare Plans for deductibles paid under the Sublessors' Welfare Plans
during the coverage year of the TowerCo's Welfare Plans in which the Employment
Transfer Date occurs and (B) New Employees receive credit for eligible claims
incurred under the Sublessors' Welfare Plans during the coverage year of the
TowerCo's Welfare
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<PAGE>
Plans in which the Employment Transfer Date occurs toward any "out-of-pocket"
maximums under TowerCo's Welfare Plans. As soon as reasonably practicable after
the Initial Closing Date, Sublessors shall prepare and deliver to TowerCo a
schedule setting forth the information needed for TowerCo to comply with the
preceding sentence. Sublessors will pay or cause to be paid all eligible unpaid
claims incurred by New Employees prior to the Employment Transfer Date and which
are timely submitted for reimbursement in accordance with the Sublessors'
Welfare Plans. Sublessors will be responsible for providing continuation health
care ("COBRA") coverage as required by section 4980B of the Code and sections
-----
601-608 of ERISA to or with respect to any of Sublessors' employees who incurs a
"qualifying event" prior to the Employment Transfer Date, including a qualifying
event that occurs as a result of the transactions contemplated by this
Agreement. TowerCo will be responsible for providing COBRA coverage to or with
respect to any New Employee who incurs a "qualifying event" after the Employment
Transfer Date.
7.5 Vacation. Sublessors shall cash out each New Employee's accrued but
--------
unused vacation as of the date employment with the applicable Sublessor
terminates. TowerCo shall credit the New Employees with vacation under its
vacation plan commensurate with the prior service recognized under Section 7.2
without offset for the unused vacation that is cashed out by Sublessors pursuant
to this Section 7.5.
7.6 Sick Leave. As of the Initial Closing Date, TowerCo shall assume
----------
Sublessors' liability for each New Employee's sick (short-term disability) days
for up to and including a pro-rata amount of six (6) annual workdays of sick
leave accrued under the Sublessors' sick leave policy but not taken before the
Initial Closing Date.
7.7 General. Sublessors and TowerCo shall give any notices required by
-------
any Law and take whatever other actions with respect to the plans described in
this Article 7 as may be necessary to carry out the arrangements described in
this Article 7. Sublessors and TowerCo shall provide each other with such plan
documents and descriptions, employee data and other information as may
reasonably be required to carry out the arrangements described in this Article
7. If any of the arrangements in this Section is determined by the Internal
Revenue Service or other applicable Governmental Authority, or by a court of
competent jurisdiction, to be prohibited by applicable Law, Sublessors and
TowerCo shall modify such arrangement to as closely as possible retain the
intent of the parties, as reflected herein, in a manner that is not so
prohibited.
7.8 No Third-Party Beneficiaries. Except as set forth in Section 11.2,
----------------------------
nothing in this Article 7 or elsewhere in this
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<PAGE>
Agreement shall be deemed to make any employee of Sublessors a third-party
beneficiary of this Agreement.
7.9 WARN Act Indemnification. TowerCo shall indemnify Sublessors and
------------------------
their Affiliates against all liabilities arising out of the notification or
other requirements of the Worker Adjustment and Retraining Notification Act of
1988, as amended ("WARN Act"), with respect to the New Employees in connection
--------
with actions taken by TowerCo on or after the Initial Closing Date. Sublessors
shall indemnify TowerCo against all liabilities under the WARN Act with respect
to all other employees of Sublessors, including the Nontransferring Employees.
ARTICLE 8
---------
Conditions Precedent to Obligations of TowerCo, ATLP and Sub
------------------------------------------------------------
8.1 Conditions Precedent. The obligations of TowerCo, ATLP and Sub to
--------------------
consummate the transactions contemplated on each Closing Date are subject to the
satisfaction, on or before such Closing Date, of all the following conditions:
(a) Sublessors shall have performed and complied in all material respects
with all covenants and obligations required by this Agreement and the other
Transaction Documents to be performed or complied with by Sublessors on or
before such Closing Date.
(b) All representations and warranties of Sublessors in this Agreement
shall be true, correct and complete, in each case on and as though made on such
Closing Date (except for representations and warranties with respect to matters
as of a specified date or for a specified period, which shall be true, correct
and complete as of such date or with respect to such period), in each case
without regard to any schedule updates (other than Permitted Schedule Updates)
furnished by Sublessors after the date hereof, except to the extent that the
failure of such representations and warranties to be true and correct,
individually or in the aggregate, do not have an AirTouch Material Adverse
Effect; provided, however, that solely for the purpose of the foregoing,
-------- -------
representations and warranties that are qualified as to materiality (including
by reference to an AirTouch Material Adverse Effect) shall not be deemed to be
so qualified; provided, however, that for purposes of this Section 8.1 each
representation or warranty (other than those in Sections 3.1, 3.2, 3.3, 3.10,
3.11, 3.16 and 3.17) of any Sublessor that refers to or is made with respect to
any or all of the Assets or liabilities (including without limitation Contracts,
Governmental Permits, Encumbrances, Towers, Tower Sites and Real Property) of or
affecting any or all Sublessors or their properties shall be deemed to refer
only to such Assets and liabilities which are the subject of the Closing at
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<PAGE>
issue, and not to any other Assets or liabilities of or affecting any Sublessor
or its properties.
(c) The waiting period required under the HSR Act, if applicable to this
transaction, for the consummation of such Closing hereunder shall have expired
or been terminated.
(d) As of such Closing Date, no lawsuit, action or proceeding shall be
completed, pending or threatened against TowerCo or any Sublessor that has or is
likely to result in a judgment, decree or order that would prevent or make
unlawful the consummation of the transactions contemplated by this Agreement and
there shall be in effect no injunction or order restraining or prohibiting the
consummation of the transactions contemplated by this Agreement to occur at such
Closing nor any proceedings pending with respect thereto.
(e) Sublessors shall have duly tendered to TowerCo all documents which
Sublessors are required by Section 10.2(b) to deliver to TowerCo for such
Closing.
(f) Sublessors shall have been able to deliver to TowerCo at least the
minimum number of Included Towers applicable to such Closing, as provided in
Section 2.4.
(g) Except with respect to the HSR Act, all authorizations, consents,
waivers, orders or approvals required to be obtained from all Governmental
Authorities, and all filings, submissions, registrations, notices or
declarations required to be made by any of the parties with any Governmental
Authority, in connection with and prior to the consummation of the transactions
contemplated hereby to occur at such Closing, shall have been obtained from, and
made with, all such Governmental Authorities, except for such authorizations,
consents, waivers, orders, approvals, filings, registrations, notices or
declarations the failure of which to obtain or make would not have an AirTouch
Material Adverse Effect.
(h) All agreements, certificates and other documents required to be
delivered pursuant to the provisions of this Agreement (other than the other
Transaction Documents to the extent substantially in the form attached hereto)
shall be reasonably satisfactory in form, scope and substance to TowerCo and its
counsel, and TowerCo and its counsel shall have received copies of all
documents, including records of corporate proceedings, which they may reasonably
request in connection therewith, such documents where appropriate to be
certified by proper Governmental Authorities or corporate officers.
(i) Each of the Sublessors shall have executed and delivered a counterpart
of the Registration Rights Agreement, as amended as contemplated by Section
6.2(g).
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<PAGE>
(j) With respect to any Subsequent Closing, the Sublease shall not have
been terminated in accordance with its terms.
8.2 Waiver. TowerCo may waive any or all of the conditions set forth in
------
Section 8.1 hereof in whole or in part; however, no such waiver of a condition
shall constitute a waiver by TowerCo of any of its other rights or remedies
under this Agreement or otherwise at law or in equity if Sublessors should be in
default of any of the covenants, agreements, representations or warranties of
Sublessors under this Agreement.
ARTICLE 9
---------
Conditions Precedent to Obligations of Sublessors
-------------------------------------------------
9.1 Conditions Precedent. The obligations of Sublessors to consummate
--------------------
the transactions contemplated on each Closing Date are subject to the
satisfaction, on or before such Closing Date, of all the following conditions:
(a) TowerCo, ATLP and Sub shall have performed and complied in all
material respects with all covenants and obligations required by this Agreement
and the other Transaction Documents to be performed or complied with by TowerCo,
ATLP and Sub on or before such Closing Date.
(b) All representations and warranties made by TowerCo, ATLP or Sub in
this Agreement shall be true, correct and complete, in each case on and as
though made on such Closing Date (except for representations and warranties with
respect to matters as of a specified date or for a specified period, which shall
be true, correct and complete as of such date or with respect to such period),
in each case without regard to any schedule updates furnished by TowerCo after
the date hereof, except to the extent that the failure of such representations
and warranties to be true and correct, individually or in the aggregate, do not
have a TowerCo Material Adverse Effect; provided, however, that solely for the
purpose of the foregoing, representations and warranties that are qualified as
to materiality (including by reference to an TowerCo Material Adverse Effect)
shall not be deemed to be so qualified.
(c) The waiting period required under the HSR Act, if applicable to this
transaction, for the consummation of such Closing hereunder shall have expired
or been terminated.
(d) As of such Closing Date, no lawsuit, action or proceeding shall be
completed, pending or threatened against any Sublessor, TowerCo, ATLP or Sub
that has or is likely to result in a judgment, decree or order that would
prevent or make unlawful the consummation of the transactions contemplated by
this Agreement and there shall be in effect no injunction or
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order restraining or prohibiting the consummation of the transactions
contemplated by this Agreement to occur at such Closing nor any proceedings
pending with respect thereto.
(e) TowerCo shall have, or shall have caused Sub to have, duly tendered to
each Sublessor the applicable Exclusive Commitment Fee for such Closing and all
documents which TowerCo is required by Section 10.2 to deliver to one or more
Sublessors at such Closing.
(f) With respect to any Subsequent Closing, the Sublease shall not have
been terminated in accordance with its terms.
(g) TowerCo shall not have (i) been a party to any merger, consolidation
or other business combination in which it was not the surviving corporation or
in which TowerCo's common stockholders (as in existence immediately prior to
such transaction) do not possess at least 50.1% of the voting power of the
Person controlling the surviving corporation, (ii) been liquidated, wound up or
dissolved, or made an assignment for the benefit of creditors, or filed a
bankruptcy petition, or petitioned or applied to any Governmental Authority or
other tribunal seeking a receiver, trustee or custodian, or instituted or
commenced any voluntary proceeding or become subject to (or indicated its
consent to, approval of or acquiescence in) any involuntary proceeding
contemplating or seeking any of the foregoing or any proceeding under any
bankruptcy, reorganization, readjustment of debt, dissolution or liquidation Law
of any jurisdiction, (iii) become insolvent as defined in the Uniform Commercial
Code under the Laws applicable to this Agreement, (iv) sold, assigned, leased or
otherwise disposed of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereinafter acquired) unless it meets the voting power test described in clause
(i) with respect to the Person to which such assets were sold, assigned, leased
or otherwise disposed of, or (vi) entered into any Contract or arrangement to do
or permit any of the foregoing.
(h) Except with respect to the HSR Act, all authorizations, consents,
waivers, orders or approvals required to be obtained from all Governmental
Authorities, and all filings, submissions, registrations, notices or
declarations required to be made by any of the parties with any Governmental
Authority, prior to the consummation of the transactions contemplated hereby to
occur at such Closing, shall have been obtained from, and made with, all such
Governmental Authorities, except for such authorizations, consents, waivers,
orders, approvals, filings, registrations, notices or declarations the failure
of which to obtain or make would not have an AirTouch Material Adverse Effect.
(i) All agreements, certificates, opinions and other documents required to
be delivered pursuant to the provisions
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of this Agreement (other than the other Transaction Documents to the extent
substantially in the form attached hereto) shall be reasonably satisfactory in
form, scope and substance to Sublessors and their counsel, and Sublessors and
their counsel shall have received copies of all documents, including records of
corporate proceedings, which they may reasonably request in connection
therewith, such documents where appropriate to be certified by proper
Governmental Authorities or corporate officers.
(j) All authorizations, consents, waivers, orders or approvals required by
the provisions of this Agreement to be obtained from all Persons (other than
Governmental Authorities) prior to the consummation of the transactions
contemplated on such Closing Date shall have been obtained, without the
imposition, individually or in the aggregate, of any condition or requirement
that has had or would have an AirTouch Material Adverse Effect.
(k) TowerCo shall have executed and delivered a counterpart of the
Registration Rights Agreement, as amended as contemplated by Section 6.2(g).
9.2 Waiver. Sublessors may waive any or all of such conditions set forth
------
in Section 9.1 hereof in whole or in part; however, no such waiver of a
condition shall constitute a waiver by Sublessors of any of their other rights
or remedies under this Agreement or otherwise at law or in equity if TowerCo,
ATLP or Sub should be in default of any of the covenants, agreements,
representations or warranties made by TowerCo or Sub under this Agreement.
ARTICLE 10
----------
Closing
-------
10.1 Closing. Each Closing shall take place on the Closing Date and at
-------
the place provided for forth in Section 2.4. At the applicable Closing, and
subject to the terms and conditions herein contained, each of the parties shall
take all actions and deliver all documents, instruments, certificates,
agreements and other items as required under this Agreement in order to perform,
fulfill and observe all covenants, conditions and agreements on its part to be
performed, fulfilled and observed at or prior to such Closing Date (and not
theretofore accomplished).
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<PAGE>
10.2 Closing Deliveries.
------------------
(a) At the Initial Closing, and subject to the terms and conditions herein
contained:
(i) AirTouch (for itself and the other Sublessors) and TowerCo shall
execute and deliver the Warrant to purchase 3,000,000 shares of TowerCo
Class A Common Stock and the Registration Rights Agreement;
(ii) AirTouch (for itself and the other Sublessors) and Sub shall
execute and deliver the Sublease;
(iii) AirTouch (for itself and the other Sublessors) shall execute and
deliver, and ATLP shall execute and deliver, (A) the Master Tower Site
Lease Agreement in the form attached hereto as EXHIBIT E (the "Master
------
Lease") pursuant to which ATLP shall lease to Sublessors space on certain
-----
communications towers to be constructed pursuant to the Build-to-Suit
Agreement (as defined below); and (B) the Site Development and Build-to-
Suit Agreement in the form attached hereto as EXHIBIT F (the "Build-to-Suit
-------------
Agreement") pursuant to which Sublessors shall offer to ATLP from time to
---------
time the right to build certain towers and related structures on the terms
and conditions described therein.
(b) At each Closing (including the Initial Closing), and subject to the
terms and conditions herein contained, Sublessors shall deliver to TowerCo (or,
if applicable, Sub) all of the following:
(i) the Site Designation Supplements (as defined in the Sublease)
applicable to the Tower Sites which are the subject of such Closing, to the
extent and as provided in this Agreement;
(ii) a certificate of each Sublessor, substantially in the form of
EXHIBIT H;
(iii) a Certificate of Good Standing for each Sublessor certified to
by the Secretary of State of the jurisdiction of such Sublessor's
incorporation or formation; and
(iv) such other documents and certificates as TowerCo may reasonably
request.
(c) At each Closing (including the Initial Closing), TowerCo (or, if
applicable, Sub) shall deliver to Sublessors the following:
(i) a wire transfer to each Sublessor of the portion of the Exclusive
Commitment Fee attributable
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<PAGE>
(on a pro rata basis) to the Included Towers of such Sublessor which are
the subject of such Closing, pursuant to instructions received from
AirTouch;
(ii) a Certificate of Good Standing of TowerCo and Sub certified to by
the Secretary of State of the State of each State in which any of the
Towers and Tower Sites that are the subject of such Closing are located;
(iii) an executed counterpart of each Site Designation Supplement
delivered by Sublessors pursuant to Section 10.2 hereof;
(iv) certificates of TowerCo and Sub, substantially in the form of
EXHIBITS I and J; and a certificate of ATLP substantially in the form of
the certificate of TowerCo and Sub.
(v) such other documents and certificates as Sublessors may
reasonably request.
(d) AirTouch (for itself and the other Sublessors) and TowerCo shall
negotiate in good faith hereafter with the goal of executing, as promptly as
reasonably practicable, a mutually acceptable agreement regarding TowerCo's
provision to Sublessors of certain services with respect to the tower structures
owned by Sublessors, including appropriate support from New Employees hired by
TowerCo for Sublessors' tower operations after the Initial Closing.
(e) AirTouch (for itself and the other Sublessors) and TowerCo shall
negotiate in good faith hereafter with the goal of executing, as promptly as
reasonably practicable, a mutually acceptable agreement regarding Sublessors'
provision to TowerCo of certain services to facilitate the transition to TowerCo
of the occupancy or management of the Subleased Property and Managed Components
under the Sublease.
ARTICLE 11
----------
Indemnification
---------------
11.1 Indemnification by Sublessors.
-----------------------------
(a) Each Sublessor agrees severally, and for its own account only, to
indemnify TowerCo, its Affiliates, and the directors, partners, officers, agents
and employees of TowerCo and each of its Affiliates (collectively, the
"Indemnified TowerCo Parties") and hold it harmless on an after-Tax basis from
---------------------------
any and all losses, liabilities, claims, suits, proceedings, demands, judgments,
damages, expenses and costs, including, without limitation, counsel fees and
disbursements, expert fees and costs and expenses incurred in the investigation,
defense or settlement of any claims covered by
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<PAGE>
this indemnity ("Indemnifiable Damages") which any Indemnified TowerCo Party may
---------------------
suffer or incur by reason of (i) the inaccuracy of any representation or
warranty of such Sublessor contained in this Agreement (but excluding any other
Transaction Documents), or (ii) the breach by such Sublessor of any covenant
made by it in this Agreement (but excluding any other Transaction Documents).
The foregoing obligation of Sublessors shall be subject to and limited by each
of the qualifications set forth in this Article 11.
(b) Except with respect to bona fide and valid claims for which notice has
been given within the Indemnity Period, each representation, warranty and
covenant made by Sublessors in this Agreement or pursuant hereto and the
indemnity obligations set forth in this Section 11.1 shall survive only until
the expiration of the Indemnity Period, and thereafter all such representations,
warranties and covenants and indemnity obligations and any liability thereunder
shall be extinguished and of no further force or effect. The term "Indemnity
Period" means a period of twelve (12) months after the applicable Closing Date
with respect to representations and warranties and the applicable statute of
limitations with respect to the covenants and agreements of the parties.
(c) The indemnity obligations of each Sublessor hereunder shall not apply
(i) to the extent that TowerCo is compensated for the same loss under TowerCo's
insurance policies in the absence of any indemnity hereunder if the insurers
under such policy waive their rights of subrogation with respect thereto; or
(ii) if the damages to TowerCo do not exceed the Threshold Amount applicable to
such Sublessor. If such damages exceed the Threshold Amount applicable to such
Sublessor, the indemnity obligations of such Sublessor hereunder shall only
apply to that portion of the Indemnifiable Damages that exceeds the Threshold
Amount for such Sublessor and thereafter Indemnifiable Damages shall be paid up
to the Maximum Amount calculated on a cumulative basis with respect to all
Sublessors taken in the aggregate. For purposes of determining whether the
Threshold Amount or Maximum Amount (as the case may be) for any Wholly Owned
Entity has been reached, all Sublessors that are Wholly Owned Entities shall be
treated as a single "Sublessor," and the Threshold Amount and Maximum Amount
shall be calculated on a cumulative basis with respect to all Wholly Owned
Entities.
11. Indemnification by TowerCo.
--------------------------
(a) TowerCo agrees to indemnify each Sublessor, its Affiliates, and the
directors, partners, agents and employees of each Sublessor and its Affiliates
(collectively, the "Indemnified Sublessor Parties") against and hold each of
-----------------------------
them harmless on an after-Tax basis from any and all Indemnifiable Damages which
any such Indemnified Sublessor Party may suffer or incur by reason of or in
connection with (i) the inaccuracy
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of any representation or warranty of TowerCo contained in this Agreement (but
excluding any other Transaction Document), or (ii) the breach by TowerCo of any
covenant made by it in this Agreement (but excluding any other Transaction
Document). The foregoing obligation of TowerCo shall be subject to and limited
by each of the qualifications set forth in this Article 11.
(b) Except with respect to bona fide and valid claims for which notice has
been given within six (6) months of the Closing Date, each representation,
warranty and covenant made by TowerCo in this Agreement or pursuant hereto
(other than those which by their terms survive for a longer period) and the
indemnity obligations set forth in this Section 11.2 shall survive only until
the date which is six (6) months following the Closing Date, and thereafter all
such representations, warranties, covenants and indemnity obligations and any
liability thereunder shall be extinguished and of no further force or effect.
(c) The indemnity obligations of TowerCo hereunder shall not apply (i) to
the extent that Sublessors are compensated for the same loss under Sublessors'
insurance policies in the absence of any indemnity hereunder if the insurers
under such policy waive their rights of subrogation with respect thereto; or
(ii) if the damages to Sublessors do not exceed the Threshold Amount applicable
to TowerCo. If such damages exceed the Threshold Amount applicable to TowerCo,
the indemnity obligations of TowerCo hereunder shall only apply to that portion
of the Indemnifiable Damages that exceeds the Threshold Amount for TowerCo and
thereafter Indemnifiable Damages shall be paid up to the Maximum Amount.
11.3 Notice and Right To Defend Third-Party Claims.
---------------------------------------------
(a) Upon receipt of written notice of any claim, demand or assessment from
or the commencement of any suit, arbitration, action or proceeding by a third
party (a "Claim") in respect of which indemnity may be sought on account of an
indemnity agreement contained in this Article, the party seeking indemnification
(the "Indemnitee") shall promptly, but in no event later than fifteen (15)
----------
Business Days prior to the date a response or answer thereto is due (unless a
response or answer is due within fewer than fifteen (15) Business Days from the
date of Indemnitee's receipt of notice thereof), inform the party against whom
indemnification is sought (the "Indemnitor") in writing thereof. The failure,
----------
refusal or neglect of such Indemnitee to notify the Indemnitor within the time
period specified above of any such Claim shall relieve such Indemnitor from any
liability which it may have to such Indemnitee in connection therewith, if the
effect of such failure, refusal or neglect is to prejudice materially the rights
of the Indemnitor in defending against the Claim.
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(b) In case any Claim shall be asserted or commenced against an
Indemnitee, and such Indemnitee shall have timely and properly notified the
Indemnitor of the commencement thereof, the Indemnitor shall assume the defense,
conduct or settlement thereof, with counsel selected by the Indemnitor. After
assumption of the defense, conduct or settlement thereof, the Indemnitor will
not be liable to the Indemnitee for expenses incurred by Indemnitee in
connection with the defense, conduct or settlement thereof, except for such
expenses as may be reasonably required to enable the Indemnitor to take over
such defense, conduct or settlement.
(c) The Indemnitee will at its own expense cooperate with the Indemnitor
in connection with any such Claim, make personnel, witnesses, books and records
relevant to the Claim available to the Indemnitor at no cost, and grant such
authorizations or powers of attorney to the agents, representatives and counsel
of the Indemnitor as the Indemnitor may reasonably request in connection with
the defense or settlement of any such Claim.
(d) Notwithstanding the foregoing in this Section 11.3, the Indemnitee
shall have the right to employ separate counsel in any such Claim and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be its fees and expenses unless (i) the Indemnitor has agreed to pay such
fees and expenses, (ii) the Indemnitor has failed to assume the defense of such
Claim or (iii) the named parties to any such Claim (including any impleaded
parties) include both the Indemnitor and the Indemnitee and the Indemnitee has
been advised by counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
Indemnitor (in which case, if the Indemnitee informs the Indemnitor in writing
that it elects to employ separate counsel at the expense of the Indemnitor, the
Indemnitor shall not have the right to assume the defense of such Claim or
proceeding on behalf of the Indemnitee, it being understood, however, that the
Indemnitor shall not, in connection with any one such Claim or separate but
substantially similar or related Claims in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys at any time for the
Indemnitee, which firm shall be designated in writing by the Indemnitee).
11.4 Notice and Right to Remediate. Notwithstanding anything in this
-----------------------------
Agreement to the contrary, Sublessors shall have no obligation to indemnify
TowerCo with respect to Indemnifiable Damages arising under Environmental Laws
or out of any Environmental Condition, including damages or other Liabilities
due to any necessary investigation, remediation or cleanup of Hazardous
Substances at the Real Property, unless TowerCo first gives Sublessors an option
to conduct any
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necessary response or perform any required work and Sublessors refuse to do so.
Such an option should be given to Sublessors with the written notice required by
Section 11.3, but in any case, shall be given in writing prior to any
expenditure or commitment by TowerCo or any of its Affiliates or agents of or
for what TowerCo considers to be Indemnifiable Damages. Sublessors shall respond
to the option in writing within thirty (30) calendar days of receipt of
TowerCo's notice of the option or such shorter period as is required to enable
TowerCo to comply with all Environmental Laws or Governmental Permits or to meet
the requirements of the appropriate Governmental Authority. If Sublessors
exercise their option, Sublessors shall perform all work in a workmanlike manner
in material compliance with all applicable Environmental and other Laws and
Governmental Permits to the satisfaction of the appropriate Governmental
Authority. In addition, Sublessors will afford TowerCo a reasonable opportunity
to comment (at TowerCo's sole expense) in advance of Sublessors' proposed
responses or submissions to Governmental Authorities or third parties relating
to activities on the Real Property, including reports and workplans, provided
that such comment period does not materially delay or interfere with Sublessors'
obligations to any third party. Sublessors shall consider TowerCo's comments in
good faith, but are under no obligation to accept or incorporate TowerCo's
comments. Except to the extent required by applicable Law, TowerCo and its
representatives and agents will not initiate any communication or make comments
or submissions to any Governmental Authority or third parties with respect to
environmental conditions as to which Sublessors have exercised their option. Any
conflicts between Section 11.3 and this Section 11.4 shall be resolved in favor
of this Section 11.4.
11.5 Mitigation. Nothing herein contained shall affect a party's legal
----------
duty to mitigate damages.
11.6 Exclusive Remedy. Notwithstanding anything to the contrary herein,
----------------
except as provided in Sections 12.3 and 13.18, this Article 11 shall be the sole
and exclusive basis of any remedy that each party may have against the other
party for an inaccuracy or breach of a representation, warranty or covenant in
this Agreement and each party hereby waives any claim (other than under this
Article 11) that it may have against the other party with respect to the
inaccuracy or breach of any such representation, warranty or covenant.
Notwithstanding anything to the contrary in the other Transaction Documents,
this Article 11 shall be the sole and exclusive basis of any remedy that
TowerCo, Sub and the Indemnified TowerCo Parties may have against Sublessors
with respect to any Excluded Claim (as defined in the Sublease).
11.7 Effect of Investigation or Knowledge. Except as otherwise provided
------------------------------------
herein, all covenants, agreements, representations and warranties made herein or
in any agreement,
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instrument or certificate delivered pursuant to this Agreement shall not be
deemed to be waived or otherwise affected by any investigation at any time made
by or on behalf of any party hereto. No claim for a breach of representation or
warranty shall be made by TowerCo under Section 11.1(a) or any Indemnified
Sublessor Party under Section 11.2(a), if (i) such claim is based on an Event
occurring prior to the Closing (whether or not also occurring prior to the date
of this Agreement), (ii) either (a) such Event was disclosed by Sublessors or
TowerCo, as the case may be, prior to the Closing in a writing which describes
such Event in reasonable detail or (b) TowerCo or AirTouch, as the case may be,
had actual knowledge of such Event or such misrepresentation or breach of
warranty prior to the Closing, and (iii) the Closing occurs.
11.8 Limitation of Liability. Notwithstanding anything to the contrary
-----------------------
herein, in no event shall any Indemnified Sublessor Party on the one hand, or
TowerCo on the other hand, be liable to the other party hereto for any special,
incidental, punitive or consequential damages incurred by such party and caused
by or arising out of any breach of any representation, warranty, covenant or
agreement contained in this Agreement (including claims of lost profits, lost
revenue or loss of use of facilities or assets), regardless of whether such
party has been informed of the possibility of such damages.
ARTICLE 12
----------
Termination
-----------
12.1 Termination Events. This Agreement may be terminated and the
------------------
transactions contemplated hereby may be abandoned:
(a) at any time, by the mutual agreement of TowerCo and AirTouch; or
(b) by either TowerCo or AirTouch, upon written notice to the other, if
all of the conditions to TowerCo's or Sublessors' obligations (as the case may
be) to consummate the Initial Closing set forth in Sections 8.1 and 9.1,
respectively, shall not have been satisfied or waived on or before the Initial
Closing Expiration Date for any reason other than a breach or default by such
terminating party of its respective representations, warranties, covenants,
agreements or other obligations hereunder such that the conditions to the non-
terminating party's obligations to consummate the Initial Closing set forth in
Section 9.1(a) or 9.1(b), or in Section 8.1(a) or 8.1(b), as the case may be,
would not be satisfied; or
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(c) by AirTouch at any time prior to any Closing if (i) it has not
breached or defaulted under any of its representations, warranties, covenants or
other obligations hereunder such that the conditions as to such Closing set
forth either in Section 8.1(a) or Section 8.1(b) would not be satisfied, and
(ii) TowerCo or Sub shall have breached or defaulted under any of its respective
representations, warranties, covenants or other obligations under this
Agreement, such that the conditions as to such Closing set forth either in
Section 9.1(a) or Section 9.1(b) would not be satisfied, and such breach or
default is either incapable of cure or, if capable of cure, shall not have been
cured within thirty (30) calendar days (or such longer period not exceeding 60
calendar days so long as TowerCo is proceeding diligently and in good faith to
cure) after written notice thereof; or
(d) by TowerCo at any time prior to any Closing if (i) it has not breached
or defaulted under any of its representations, warranties, covenants or other
obligations hereunder such that the conditions as to such Closing set forth
either in Section 9.1(a) or Section 9.1(b) would not be satisfied, and (ii)
Sublessors shall have breached or defaulted under any of their representations,
warranties, covenants or other obligations under this Agreement, such that the
conditions as to such Closing set forth in either Section 8.1(a) or Section
8.1(b) would not be satisfied, and such breach or default is either incapable of
cure or, if capable of cure, shall not have been cured within thirty (30)
calendar days (or such longer period not exceeding 60 calendar days so long as
Sublessors are proceeding diligently and in good faith to cure) after written
notice thereof; or
(e) by either TowerCo or AirTouch, in the event that all Closings have not
occurred on or before the date six months following the Initial Closing for any
reason other than a breach or default by such terminating party of its
respective representations, warranties, covenants, agreements or other
obligations hereunder, such that the conditions to the non-terminating party's
Closing obligations set forth in Section 9.1(a) or 9.1(b), or in Section 8.1(a)
or 8.1(b), as the case may be, would not be satisfied.
12.2 Manner of Exercise. In the event of the termination of this
------------------
Agreement by either TowerCo or AirTouch pursuant to this Article 12, notice
thereof shall forthwith be given to the other party and this Agreement shall
terminate and the transactions contemplated hereunder shall be abandoned without
further action by TowerCo or any Sublessor.
12.3 Effect of Termination. In the event of the termination of this
---------------------
Agreement pursuant to this Article 12 and prior to the Closing, all obligations
of the parties hereunder shall terminate, except for the respective obligations
of the parties under Section 6.1(f) (Publicity), Section 6.2(d)
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(Publicity), Section 6.4 (Confidentiality), Section 13.1 (Covenant Not to Sue),
Section 13.14 (Expenses), Section 13.16 (Dispute Resolution) and Section 13.17
(Power of Attorney) and TowerCo's guaranty of such obligations of Sub pursuant
to Section 13.19; provided, however, that, except as otherwise expressly
--------
provided in this Section 12.3, no termination of this Agreement shall (a)
relieve a defaulting or breaching party from any liability to the other party or
parties hereto for or in respect of such default or (b) result in the rescission
of any Closing theretofore consummated hereunder or affect or terminate the
rights, remedies and obligations of the parties with respect to such previously
consummated Closing. If this Agreement is terminated by AirTouch in accordance
with Section 12.1(c) (or Section 12.1(b) or (subject to the proviso set forth
below) Section 12.1(e), if any of the conditions set forth in Section 9.1(a) or
9.1(b) has not been fulfilled but all other conditions to closing shall be
fulfilled or capable of being fulfilled) or by TowerCo other than in accordance
with Section 12.1, Sublessors shall be entitled to retain the Deposit (as, and
it shall be and is intended to constitute, liquidated damages for other than
willful breaches of this Agreement).
ARTICLE 13
----------
General
-------
13.1 Covenant Not To Sue and Nonrecourse to Partners.
-----------------------------------------------
(a) TowerCo agrees that notwithstanding any other provision in this
Agreement, any agreement, instrument, certificate or document entered into
pursuant to or in connection with this Agreement or the transactions
contemplated herein or therein and any rule of law or equity to the contrary, to
the fullest extent permitted by law, Sublessors' obligations and liabilities
under this Agreement and all other Transaction Documents and in connection with
the transactions contemplated herein and therein shall be nonrecourse to all
direct and indirect general and limited partners of any Sublessor that is a
partnership.
(b) "Nonrecourse" means that the obligations and liabilities are limited
in recourse solely to the assets of Sublessors (for those purposes, any capital
contribution obligations of the general and limited partners of Sublessors or
any negative capital account balances of such partners shall not be deemed to be
assets of Sublessors) and are not guaranteed directly or indirectly by, or the
primary obligations of, any general or limited partner of any Sublessor, and
neither any Sublessor nor any general or limited partner or any officer,
director, partner, employee or agent of any Sublessor or any general or limited
partner of any successor partnership, either directly or indirectly, shall be
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personally liable in any respect (except to the extent of their respective
interests in the assets of any Sublessor) for any obligation or liability of any
Sublessor under any Transaction Document or any transaction contemplated
therein.
(c) "Direct" partners include all general and limited partners of any
Sublessor that is a partnership, and "indirect" partners include all general and
limited partners of each direct partner and all general and limited partners of
each such indirect partner and all such further indirect partners and members
thereof and each such indirect partner.
(d) TowerCo hereby covenants for itself, its successors and assigns that
it, its successors and assigns will not make, bring, claim, commence, prosecute,
maintain, cause or permit any action to be brought, commenced, prosecuted,
maintained, either at law or equity, in any court of the United States or any
state thereof or in any arbitration forum against any direct or indirect member
or general or limited partner of Sublessors or any officer, director, partner,
employee or agent of Sublessors or any direct or indirect member or general or
limited partner of Sublessors for (i) the payment of any amount or the
performance of any obligation under any Transaction Document or (ii) the
satisfaction of any liability arising in connection with any such payment or
obligation or otherwise, including without limitation, liability arising in law
for tort (including, without limitation, for active and passive negligence,
negligent misrepresentation and fraud), equity (including, without limitation,
for indemnification and contribution) and contract (including, without
limitation, monetary damages for the breach of representation or warranty or
performance of any of the covenants or obligations contained in any Transaction
Document or with the transactions contemplated herein or therein).
13.2 Assignment. Neither TowerCo, Sub nor any Sublessor may assign its
----------
rights and obligations under, or grant a security interest in, this Agreement to
any Person without the consent of the other parties hereto; provided, however,
-------- -------
that (a) TowerCo may assign all of its rights and obligations hereunder (other
than its obligation to issue the Warrant as part of the Exclusive Commitment Fee
and its obligations under Section 13.19) to Sub without the consent of any
Sublessor so long as (i) TowerCo fully, irrevocably and unconditionally
guarantees all such obligations pursuant to a guarantee agreement providing as
set forth in Section 13.19 hereof and (ii) such subsidiary becomes a party
hereto and bound by the provisions hereof; (b) TowerCo may, upon prior written
notice to AirTouch, collaterally assign, mortgage, pledge, hypothecate or
otherwise collaterally transfer TowerCo's interest in this Agreement to any
Permitted Subleasehold Mortgagee (as defined in the Sublease), and any such
Permitted Subleasehold Mortgagee shall have the right to exercise remedies under
any such mortgage, pledge, hypothecation or other collateral transfer in
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a manner consistent with the provisions of this and every other agreement
between TowerCo and AirTouch made in connection with this transaction; and (c)
any Sublessor may assign its rights and obligations hereunder, in whole or in
part, to any Affiliate of such Sublessor without the consent of TowerCo. Upon
the assignment by any Sublessor of all of its rights and obligations hereunder
in accordance with clause (c) of the preceding proviso, the assigning Sublessor
will automatically be released from its obligations hereunder without any
requirement of notice or further action. A transfer by merger or consolidation
by AirTouch or any other Sublessor (whether or not AirTouch or any other
Sublessor is the surviving entity) or any direct or indirect parent corporation
of AirTouch or any other Sublessor shall not be deemed to be an assignment for
purposes of this Section. All references herein to any party shall be deemed to
include any successor (including a corporate successor) to such party.
13.3 Parties in Interest. All of the terms and provisions of this
-------------------
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and permitted assigns of the parties hereto;
whether herein so expressed or not. Except as provided in Sections 11.1, 11.2,
13.1, and, as to Permitted Subleasehold Mortgagees, 13.2 to the extent provided
in such Section, no person other than TowerCo, Sub and Sublessors may rely upon
any provision of this Agreement or any agreement, instrument, certificate or
document executed pursuant to this Agreement.
13.4 Time of Essence. Time is of the essence in each and every provision
---------------
in this Agreement.
13.5 Severability. Any provision of this Agreement that is invalid or
------------
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining provisions of this Agreement or affecting the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
13.6 Amendment. Except as otherwise provided herein, this Agreement may
---------
be amended, modified or supplemented only by a writing duly executed by all
parties hereto.
13.7 Force Majeure. Should any circumstance beyond the reasonable
-------------
control of any party occur which delays or renders impossible the performance of
its obligations (other than monetary obligations) under this Agreement on the
date herein provided for (such circumstance being referred to as an event of
"force majeure"), such obligation shall be postponed for such time as such
performance necessarily has had to be suspended or delayed on account thereof,
but in no event shall the foregoing be deemed to limit a party's right to
terminate this Agreement under Section 12.1(e). In either such event,
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all parties shall promptly meet to determine an equitable solution to the
effects of such event, provided that any party that fails because of force
majeure to perform its obligations hereunder will upon the cessation of the
force majeure take all reasonable steps within its power to resume with the
least possible delay compliance with its obligations. Events of force majeure
shall include, without limitation, war, revolution, invasion, insurrection,
riots, mob violence, sabotage or other civil disorders, acts of God, strikes or
other labor disputes and any other circumstances beyond the reasonable control
of the party whose obligations are affected thereby.
13.8 Terms. Defined terms used herein are equally applicable to the
-----
singular and plural forms as appropriate. Unless otherwise expressly stated
herein, references to Articles and Sections are to articles and sections of this
Agreement and references to parties, Exhibits and Schedules are to the parties,
and the exhibits and schedules attached, to this Agreement. References to the
"transactions contemplated hereby" refer to the consummation of the Closings
hereunder and the execution and delivery of the Transaction Documents as
provided for herein, and shall not be deemed to refer to any contemplated or
potential operation, occupancy, use, leasing, management or servicing of any of
the Assets and related Liabilities (as provided in the Sublease), or the
exercise of control over the Assets, by TowerCo or its Affiliates.
13.9 Headings. The headings preceding the text of Sections of this
--------
Agreement are for convenience only and shall not be deemed a part hereof.
13.10 Entire Understanding; Schedules. The terms set forth in this
-------------------------------
Agreement including its Schedules and Exhibits, together with the nondisclosure
letter agreement referenced in Section 6.4 hereof, are intended by the parties
as a final, complete and exclusive expression of the terms of their agreement
and may not be contradicted, explained or supplemented by evidence of any prior
agreement, any contemporaneous oral agreement or any consistent additional
terms. The Schedules and Exhibits attached to this Agreement are made a part of
this Agreement. All documents or information disclosed in the Schedules are
intended to be disclosed for all purposes under this Agreement and will also be
deemed to be incorporated by reference in each Schedule to which they may be
relevant without further disclosure.
13.11 Counterparts. This Agreement may be executed simultaneously in any
------------
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
13.12 Governing Law. This Agreement and the performance hereof shall be
-------------
governed, interpreted, construed and regulated by the laws of the State of
Delaware.
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13.13 Notices. Any notice or demand desired or required to be given
-------
hereunder shall be in writing and shall be personally delivered, sent by
telecopier, sent by overnight courier or sent by postage-prepaid certified or
registered mail, return receipt requested, and addressed as set forth below or
to such other address as either party shall have previously designated by such a
notice. Any notice so delivered personally or by telecopy shall be deemed to be
received on the date of delivery or transmission by telecopier; any notice so
sent by overnight courier shall be deemed to be received one (1) Business Day
after the date sent; and any notice so mailed shall be deemed to be received on
the date stamped on the receipt (rejection or other refusal to accept or
inability to deliver because of a change of address of which no notice was given
shall be deemed to be receipt of the notice).
If to Sublessors:
c/o AirTouch Communications, Inc.
One California Street
San Francisco, CA 94111
Attention: General Counsel
Telephone: (415) 658-2000
Telecopier: (415) 658-2287
Copy to:
Pillsbury Madison & Sutro LLP
50 Fremont Street
San Francisco, CA 94105
Attention: Nathaniel M. Cartmell III, Esq.
Telephone: (415) 983-1570
Telecopier: (415) 983-1200
If to TowerCo, Sub or ATLP:
c/o American Tower Corporation
116 Huntington Avenue
Boston, MA 02116
Attention: Joseph L. Winn, Chief Financial Officer
Telephone: (617) 375-7500
Telecopier: (617) 375-7550
Copy to: Sullivan & Worcester, LLP
One Post Office Square
Boston, MA 02109
Attention: Norman A. Bikales, Esq.
Telephone: (617) 338-2854
Telecopier: (617) 338-2880
13.14 Expenses. Except as set forth in Sections 6.2 and 6.3, Sublessors,
--------
TowerCo, Sub and ATLP shall each bear its own costs and expenses incurred in
connection with the negotiation, preparation or execution of this Agreement
(including, but not
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limited to, fees and expenses of attorneys, accountants, brokers, consultants,
finders and investment bankers), whether or not any Closing occurs. In the
event, however, that one of the parties hereto breaches this Agreement and fails
to consummate the transaction contemplated hereby, then, without limiting in any
way any other liability which such breaching party may have, such breaching
party shall be responsible for all costs and expenses incurred by the non-
breaching party in connection herewith.
13.15 Attorneys' Fees. Except as provided in Section 13.16 with respect
---------------
to the arbitration proceedings referenced therein, in any action between any or
all Sublessors and any or all of TowerCo, Sub and ATLP to enforce any of the
provisions of this Agreement or any right of any party under this Agreement,
regardless of whether the action or proceeding is prosecuted to judgment and in
addition to any other remedy, the unsuccessful party shall pay to the prevailing
party all costs and expenses, including reasonable attorneys' fees and legal
costs, incurred in the action by the prevailing party.
13.16 Dispute Resolution. If a dispute arises between the parties
------------------
relating to the interpretation, performance or breach of this Agreement, the
parties agree that upon written demand of either TowerCo or AirTouch, they will
hold a meeting within two weeks of such demand, attended by individuals with
decision-making authority regarding the dispute, to attempt in good faith to
negotiate a resolution of the dispute prior to pursuing other available
remedies. If, ten (10) days after the date set for such a meeting, the parties
have not succeeded in negotiating a resolution of the dispute, either TowerCo
(on behalf of itself and ATLP and Sub) or AirTouch (on behalf of the Sublessors)
may request that such dispute be resolved through non-binding arbitration. Such
arbitration (the "Arbitration") will be conducted in San Francisco, California,
-----------
in accordance with commercial arbitration rules of the American Arbitration
Association ("AAA") in effect on the date of this Agreement, to the extent they
---
do not conflict with the terms of this Agreement. Absent any contrary agreement
between the parties, there shall be no review by any court of the final decision
by the arbitrators or of the law applied or the legal reasoning used in the
arbitration process except upon a trial de novo in a court of competent
jurisdiction. With the exception of actions for injunctive relief or which must
be filed to preserve a party's rights, the parties agree to submit any such
dispute to non-binding arbitration before either party may commence any action
in any court of law concerning such dispute. The parties agree to cooperate in
dismissing, without prejudice, any legal action filed before the conclusion of
such arbitration, except an action brought in whole or in part to compel such
arbitration or an action seeking injunctive relief, or which cannot be dismissed
without prejudice to a party's rights. The parties shall cooperate with each
other in causing the Arbitration to be held in as efficient and expeditious a
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manner as practicable. The parties have selected arbitration in order to
expedite the resolution of disputes and to reduce the costs and burdens
associated with litigation. The parties agree that the arbitrators should take
these concerns into account when determining the scope of permissible discovery
and other hearing and pre-hearing procedures. Without limiting any other
remedies which may be available under applicable laws, the arbitrators shall
have no authority to award punitive damages. The arbitrators shall render their
decision within ninety (90) calendar days after the latest of the arbitrators'
acceptance of their respective appointments to serve as arbitrators, unless the
parties otherwise agree in writing or the arbitrators decide that a party to the
Arbitration has shown good cause for a longer period prior to the rendering of
the decision.
Notice: By initialing in the space below you are agreeing to have any
dispute arising out of the matters included in the 'dispute resolution'
provision decided by neutral arbitration and you are giving up any rights you
might possess to have the dispute litigated in a court of jury trial. By
initialing in the space below you are giving up your judicial rights to
discovery and appeal unless such rights are specifically included in the
'dispute resolution' provision. If you refuse to submit to arbitration after
agreeing to this provision, you may be compelled to arbitrate under the
authority of applicable Law. Your agreement to this arbitration provision is
voluntary.
We have read and understand the foregoing and agree to submit disputes
arising out of the matters included in the 'dispute resolution' provision to
neutral arbitration.
TowerCo's Initials _______ AirTouch's Initials _______
(a) Unless TowerCo and AirTouch agree in writing upon the number and
identity of the arbitrators within five (5) business days after the initiation
of Arbitration, the following procedures shall govern the selection of the
arbitrators:
(i) Each of TowerCo and AirTouch shall (by a written notice to the
other party delivered within ten (10) business days after the initiation of
Arbitration) select a single arbitrator, who shall be selected from a list
of potential arbitrators from the National Panel of Commercial Arbitrators
supplied to the parties. If one party fails to deliver such notice of
selection within the foregoing ten-business-day period, then such party
shall have no right to select an arbitrator and the other party shall
select a second arbitrator from such list by written notice to the first
party.
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(ii) The two arbitrators selected pursuant to the foregoing clause
(i) shall mutually agree within ten (10) calendar days upon a third
arbitrator, who shall have no substantial relationship to any party. If the
two arbitrators do not so select such third arbitrator within the foregoing
10-day period, the third arbitrator will be selected by the AAA.
(b) All proceedings and decisions of the arbitrators shall be maintained
in confidence, to the extent legally permissible, and shall not be made public
by any party or any arbitrator without the prior written consent of all parties
to the Arbitration, except as may be required by law.
(c) Each party to the Arbitration shall bear its own costs and attorneys'
fees in connection with any Arbitration, and TowerCo and AirTouch (on behalf of
the Sublessors) shall equally bear the fees, costs and expenses of the
arbitrators and the Arbitration proceedings; provided, however, that the
arbitrators may exercise discretion to award costs, but not attorneys' fees, to
the prevailing party.
(d) Each party consents to the jurisdiction over it of the courts of the
State of California in the City and County of San Francisco and of the United
States Courts in the Northern District of California, and agrees that personal
service of all process may be made by registered or certified mail pursuant to
the provisions of Section 13.13.
13.17 Power of Attorney. Each and every Sublessor other than AirTouch
-----------------
hereby irrevocably constitutes and appoints AirTouch as its and their agent and
attorney-in-fact to modify, amend or otherwise change or waive any and all
terms, conditions and other provisions of this Agreement, to exercise on behalf
of Sublessors any options or elections granted to Sublessors hereunder, to take
all actions and execute all documents necessary or desirable to effect the terms
hereof and to take all actions and execute all documents which may be necessary
or desirable in connection therewith, to give and receive all consents and all
notices hereunder, to negotiate, settle and compromise claims for
indemnification hereunder, and to perform any other act arising out of or
pertaining to this Agreement. AirTouch hereby accepts the foregoing
appointment. Nothing herein shall be deemed to make AirTouch liable to any
Sublessor because of service in the foregoing capacity as agent and attorney-in-
fact. In performing any of its duties under this Section, AirTouch shall not
incur any Liability whatsoever to any Sublessor or its Affiliates. It is
expressly understood and agreed that this power of attorney and the agency
created hereby is coupled with an interest of the respective parties hereto and
shall be binding and enforceable on and against the respective successors and
assigns of Sublessors, and each of them, and this power of attorney shall not be
revoked or
-60-
<PAGE>
terminated and shall continue to be binding and enforceable in the manner
provided herein.
13.18 Specific Performance; Other Rights and Remedies. Each party
-----------------------------------------------
recognizes and agrees that in the event the other party should refuse to perform
any of its obligations under this Agreement, 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 as provided in Article
11, 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.
13.19 TowerCo Guaranty. TowerCo hereby unconditionally guarantees the
----------------
payment and performance when due of all obligations of Sub now or hereafter
existing under this Agreement, including without limitation Article 11 (the "Sub
---
Obligations") subject to all defenses available to Sub except as provided below.
- -----------
The liability of TowerCo under this Section 13.19 shall extend to all Sub
obligations which would be owed by Sub but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving Sub. The obligations of TowerCo
under this Section 13.19 are independent of Sub's obligations under this
Agreement, and a separate action or actions may be brought and prosecuted
against TowerCo to enforce its obligations under this Section 13.19,
irrespective of whether any action is brought against Sub or whether Sub is
joined in such action. This guarantee shall continue to be effective or be
reinstated, as the case may be, if at any time any payment or performance of Sub
Obligations is rescinded or must otherwise be returned by a recipient upon the
insolvency, bankruptcy or reorganization of Sub or for any other reason, all as
though such payment or performance had not been made. TowerCo unconditionally
waives (a) all notices which may be required by statute, rule of law or
otherwise, now or hereafter in effect, to preserve intact any rights of AirTouch
and any other Sublessor against TowerCo, including, without limitation, any
demand, presentment and protest, proof of notice of nonpayment or nonperformance
under agreement, and notice of default or any failure on the part of Sub to
perform and comply with any covenant, agreement, term or condition of any
agreement executed or to be executed by it, (b) any right to the enforcement,
assertion or exercise by AirTouch or any other Sublessor of any right, power,
privilege or remedy conferred herein or in any agreement or otherwise, (c) any
requirement of promptness or diligence on the part of AirTouch or any other
Sublessor hereunder, (d) any requirement on the part of AirTouch or any other
Sublessor to mitigate the damages resulting from any Default hereunder or under
any other agreement, (e) any other circumstance whatsoever which might
-61-
<PAGE>
otherwise constitute a legal or equitable discharge, release or defense of a
guarantor or surety, or which might otherwise limit recourse against TowerCo, or
(f) any right to require AirTouch or any other Sublessor to proceed against any
security or to enforce any right. The obligations of TowerCo set forth herein
constitute the full recourse obligations of TowerCo enforceable against it to
the fullest extent of all of its assets and properties, notwithstanding any
provision in any other agreements limiting the liability of TowerCo, Sub or any
Sub Affiliate or any other Person. TowerCo will not assert any right to which it
may become entitled, including in any bankruptcy, insolvency or similar
proceeding relating to Sub or a Sub Affiliate, whether by subrogation,
contribution or otherwise, against Sub or such Sub Affiliate or any of its
properties, by reason of the performance by TowerCo of its obligations under
this Section, until such time as all of the obligations of Sub or Sub Affiliate
to AirTouch or any other applicable Sublessor shall be duly and fully performed.
-62-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have entered into and duly executed
this Agreement as of the date and year first above written.
"WHOLLY OWNED ENTITIES":
AIRTOUCH COMMUNICATIONS, INC.
By: /s/ CHRISTOPHER C. BETTS
-----------------------------------
Print Name: Christopher C. Betts
---------------------------
Title: Director, Corporate Development
--------------------------------
AIRTOUCH CELLULAR, a California
corporation
By: /s/ CHRISTOPHER C. BETTS
-----------------------------------
Print Name: Christopher C. Betts
---------------------------
Title: Director, Corporate Development
--------------------------------
AIRTOUCH CELLULAR OF GEORGIA
By: /s/ CHRISTOPHER C. BETTS
-----------------------------------
Print Name: Christopher C. Betts
---------------------------
Title: Director, Corporate Development
--------------------------------
NEW PAR
By: Airtouch Cellular, Inc.
A general partner
By: /s/ CHRISTOPHER C. BETTS
-----------------------------------
Print Name: Christopher C. Betts
---------------------------
Title: Director, Corporate Development
--------------------------------
COCONINO, ARIZONA RSA LIMITED PARTNERSHIP
By: AirTouch Communications, Inc.
A general partner
By: /s/ CHRISTOPHER C. BETTS
-----------------------------------
Print Name: Christopher C. Betts
---------------------------
Title: Director, Corporate Development
--------------------------------
-63-
<PAGE>
BOISE CITY MSA LIMITED PARTNERSHIP
By: AirTouch Communications, Inc.
A general partner
By: /s/ CHRISTOPHER C. BETTS
----------------------------------
Print Name: Christopher C. Betts
--------------------------
Title: Director, Corporate Development
-------------------------------
COLORADO RSA NO. 3 LIMITED
PARTNERSHIP
By: AirTouch Communications,
Inc.
A general partner
By: /s/ CHRISTOPHER C. BETTS
----------------------------------
Print Name: Christopher C. Betts
--------------------------
Title: Director, Corporate Development
-------------------------------
YUMA, ARIZONA RSA LIMITED
PARTNERSHIP
By: AirTouch Communications, Inc.
A general partner
By: /s/ CHRISTOPHER C. BETTS
----------------------------------
Print Name: Christopher C. Betts
--------------------------
Title: Director, Corporate Development
-------------------------------
SPOKANE MSA LIMITED PARTNERSHIP
By: AirTouch Communications, Inc.
A general partner
By: /s/ CHRISTOPHER C. BETTS
----------------------------------
Print Name: Christopher C. Betts
--------------------------
Title: Director, Corporate Development
-------------------------------
-64-
<PAGE>
OLYMPIA CELLULAR LIMITED PARTNERSHIP
By: AirTouch Communications, Inc.
A general partner
By: /s/ CHRISTOPHER C. BETTS
----------------------------------
Print Name: Christopher C. Betts
--------------------------
Title: Director, Corporate Development
-------------------------------
TowerCo:
AMERICAN TOWER CORPORATION
By: /s/ STEVEN B. DODGE
----------------------------------
Print Name: Steven B. Dodge
--------------------------
Title: Chief Executive Officer
-------------------------------
ATLP:
AMERICAN TOWER, L.P.
By: AMERICAN TOWER CORPORATION
Its General Partner
By: /s/ STEVEN B. DODGE
----------------------------------
Print Name: Steven B. Dodge
--------------------------
Title: Chief Executive Officer
-------------------------------
[Signature Page - Agreement to Sublease]
-65-
<PAGE>
EXHIBIT 10.2.
================================================================================
STOCK PURCHASE AGREEMENT
BETWEEN
ATC TELEPORTS, INC.
AND
ICG HOLDINGS, INC.
AND
ICG SATELLITE SERVICES, INC.
DATED AS OF AUGUST 11, 1999
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
Page
----
<S> <C>
ARTICLE I DEFINITIONS.................................................. 1-6
ARTICLE II PURCHASE AND SALE........................................... 6
SECTION 2.1 Basic Transaction........................................ 6
SECTION 2.2 Payment.................................................. 6
SECTION 2.3 Escrow................................................... 6
SECTION 2.4 Closing; Closing Date.................................... 6
SECTION 2.5 Deliveries at the Closing................................ 7
SECTION 2.6 Tax Elections............................................ 7
SECTION 2.7 Provision of Services After the Closing.................. 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY... 9
SECTION 3.1 Organization............................................. 9
SECTION 3.2 Ownership and Capitalization............................. 9
SECTION 3.3 Authority; No Violation.................................. 9
SECTION 3.4 Subsidiaries............................................. 10
SECTION 3.5 Consents and Approvals................................... 10
SECTION 3.6 Financial Statements..................................... 10
SECTION 3.7 Absence of Certain Changes or Events; Unusual
Transactions............................................. 11
SECTION 3.8 Tax Matters.............................................. 12
SECTION 3.9 Assets and Properties.................................... 13
SECTION 3.10 Contracts............................................... 14
SECTION 3.11 Litigation, Compliance with Applicable Laws and
Permits................................................. 14
SECTION 3.12 Insurance............................................... 15
SECTION 3.13 Pension and Employee Benefit Matters.................... 15
SECTION 3.14 Labor and Employment.................................... 16
SECTION 3.15 Employees............................................... 16
SECTION 3.16 Environmental Matters................................... 16
SECTION 3.17 Intellectual Property................................... 17
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
SECTION 3.18 Brokers' Fees and Commissions........................... 18
SECTION 3.19 Indebtedness............................................ 18
SECTION 3.20 Accounts Receivable..................................... 18
SECTION 3.21 Insolvency Proceedings.................................. 19
SECTION 3.22 Absence of Undisclosed Liabilities...................... 19
SECTION 3.23 Books and Records....................................... 19
SECTION 3.24 Suppliers and Customers................................. 19
SECTION 3.25 Affiliate Transactions.................................. 19
SECTION 3.26 FCC Compliance.......................................... 19
SECTION 3.27 Year 2000............................................... 19
SECTION 3.28 Scope of Disclosure; Other Information.................. 20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER
SECTION 4.1 Organization and Qualification, etc...................... 21
SECTION 4.2 Authority Relative to Agreement.......................... 21
SECTION 4.3 Non-Contravention........................................ 21
SECTION 4.4 Consents and Approvals................................... 21
SECTION 4.5 Brokers.................................................. 22
SECTION 4.6 Securities Matters....................................... 22
ARTICLE V PRE-CLOSING COVENANTS........................................ 23
SECTION 5.1 General.................................................. 23
SECTION 5.2 Operation and Preservation of Business................... 23
SECTION 5.3 Full Access.............................................. 24
SECTION 5.4 Announcements............................................. 24
SECTION 5.5 Confidentiality.......................................... 24
SECTION 5.6 Consents and Approvals................................... 24
SECTION 5.7 MTN Minority Shares...................................... 24
SECTION 5.8 Solicitation............................................. 25
SECTION 5.9 Pre-Closing.............................................. 25
SECTION 5.10 Adverse Developments.................................... 25
SECTION 5.11 Updated Schedules....................................... 25
SECTION 5.12 Liens................................................... 25
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
SECTION 5.13 Potential Seller's Breach............................... 25
SECTION 5.14 Cooperation In Preparing Audited Financial Statements... 26
ARTICLE VI POST-CLOSING COVENANTS...................................... 26
SECTION 6.1 Further Assurances....................................... 26
SECTION 6.2 Cooperation.............................................. 26
SECTION 6.3 Confidentiality.......................................... 26
SECTION 6.4 Taxes.................................................... 27
SECTION 6.5 Employee Benefit Issues.................................. 27
SECTION 6.6 Access; Cooperation...................................... 28
SECTION 6.7 MTN Minority Stockholders................................ 28
ARTICLE VII CONDITIONS TO CLOSING...................................... 28
SECTION 7.1 Conditions to Obligation of Buyer....................... 28
SECTION 7.2 Conditions to Obligation of Seller...................... 30
ARTICLE VIII REMEDIES FOR BREACHES OF THIS AGREEMENT................... 31
SECTION 8.1 Indemnification Provisions for Benefit of Buyer......... 31
SECTION 8.2 Indemnification Provisions for Benefit of Seller........ 31
SECTION 8.3 Matters Involving Third Parties......................... 32
SECTION 8.4 Limit on Indemnification Obligation of Seller........... 33
SECTION 8.5 Survival................................................ 33
SECTION 8.6 Basket and Ceiling...................................... 33
ARTICLE IX TERMINATION................................................. 34
SECTION 9.1 Termination of Agreement................................ 34
SECTION 9.2 Effect of Termination................................... 35
SECTION 9.3 Confidentiality......................................... 35
ARTICLE X MISCELLANEOUS................................................ 35
SECTION 10.1 No Third-Party Beneficiaries............................ 35
SECTION 10.2 Entire Agreement........................................ 35
SECTION 10.3 Succession and Assignment............................... 35
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
SECTION 10.4 Counterparts............................................ 36
SECTION 10.5 Headings, Terms......................................... 36
SECTION 10.6 Notices................................................. 36
SECTION 10.7 Governing Law........................................... 37
SECTION 10.8 Amendments and Waivers.................................. 37
SECTION 10.9 Severability............................................ 37
SECTION 10.10 Expenses................................................ 37
SECTION 10.11 Construction............................................ 37
SECTION 10.12 Incorporation of Schedules.............................. 38
SECTION 10.13 Attorneys' Fees......................................... 38
SECTION 10.14 Counsel................................................. 38
SECTION 10.15 Time of the Essence..................................... 38
</TABLE>
iv
<PAGE>
The following Schedules have been omitted and will be supplementally filed with
the commission upon request.
SCHEDULES
<TABLE>
<S> <C>
Schedule 2.3 Escrow Agreement
Schedule 2.6(c) Tax Elections
Schedule 3.3 Authority; No Violation
Schedule 3.4 MTN Matters
Schedule 3.5 Consents and Approvals
Schedule 3.7(a) Absence of Events
Schedule 3.7(b) Unusual Transactions
Schedule 3.8(a) Tax Matters
Schedule 3.8(b) Tax Matters
Schedule 3.8(g) Tax Matters
Schedule 3.9(a) Leased Assets
Schedule 3.9(b) Encumbrances on Assets
Schedule 3.9(c) Exceptions to Assets
Schedule 3.10(a) Compliance with Contracts
Schedule 3.10(b) Material Contracts
Schedule 3.11(a) Litigation
Schedule 3.11(c) Governmental Authorizations
Schedule 3.12 Insurance
Schedule 3.13 Employee Benefit Plans
Schedule 3.14 Labor and Employment
Schedule 3.15 Employees
Schedule 3.17 Intellectual Property
Schedule 3.20 Accounts Receivable
Schedule 3.24 Suppliers and Customers
Schedule 3.25 Affiliate Transactions
Schedule 4.4 Buyer Consents
Schedule 7.1(i) ICG Communications, Inc. Noncompetition Agreement
Schedule 7.1(j) ICG Communications, Inc. Guaranty
Schedule 7.1(m) Form of Opinion
Schedule 7.1(r) Termination and Release Agreement
Schedule 7.2(g) American Tower Corporation Guaranty
</TABLE>
v
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is entered into as of
August 11, 1999 between ATC Teleports, Inc., a Delaware corporation ("Buyer"),
and ICG Holdings, Inc., a Colorado corporation ("Seller"), and ICG Satellite
Services, Inc., a Colorado corporation (the "Company").
RECITALS
WHEREAS, Seller owns all of the issued and outstanding shares of the
Company.
WHEREAS, Seller desires to sell and Buyer desires to purchase all of the
issued and outstanding shares of the Company as provided in this Agreement.
AGREEMENT
The parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 For purposes of this Agreement:
Adverse Consequences means all losses, damages, costs, expenses, fees
--------------------
(including, without limitation, reasonable attorney's fees) and Liabilities, but
will not include any losses or damages arising from or attributable to
consequential, special, speculative or punitive damages or damages resulting
from lost profits.
Affiliate means, with respect to any Person, any Person Controlling,
---------
Controlled by or under common Control with such Person.
Affiliated Group means any affiliated group of the Company or MTN within
----------------
the meaning of Code Section 1504(a) or any similar group defined under a similar
provision of state, local or foreign law.
Agreement has the meaning set forth in the preamble to this agreement.
---------
Assets means all tangible and intangible assets that are owned and/or used
------
by the Company and/or MTN.
Balance Sheet has the meaning set forth in Section 3.6.
-------------
Balance Sheet Date has the meaning set forth in Section 3.6.
------------------
1
<PAGE>
Basket Amount has the meaning set forth in Section 8.6(a).
-------------
Business Day means any day on which commercial banks are open for business
------------
in Denver, Colorado.
Buyer has the meaning set forth in the preamble to this Agreement.
-----
Ceiling Amount has the meaning set forth in Section 8.6(b).
--------------
Closing and Closing Date have the meanings set forth in Section 2.4.
------- ------------
Code means the Internal Revenue Code of 1986, as amended.
----
Company has the meaning set forth in Recital A.
-------
Confidential Information means, with respect to any Person, any information
------------------------
concerning such Person or its business, products, financial condition, prospects
and affairs that is not already generally available to the public. The term
Confidential Information shall include the terms and existence of this Agreement
and the transactions contemplated by this Agreement.
Contracts has the meaning set forth in Section 3.10(a).
---------
Control, Controlled and Controlling mean, as the context requires in the
-----------------------------------
determination of whether a Person is an Affiliate of another Person, the power
to direct the management or policies of any Person, through the power to vote
shares or other equity interests, by contract or otherwise.
Employee Benefit Plans means all plans, arrangements, agreements, programs
----------------------
and policies to which the Company or MTN is a party or bound by or under which
the Company or MTN has any Liability, relating to:
(a) retirement savings or pensions, including any defined benefit
pension plan, defined contribution pension plan, group registered
retirement savings plan, or supplemental pension or retirement plan; or
(b) any bonus, profit sharing, share option, employee share, stock
purchase, restricted stock, incentive, deferred compensation, incentive
compensation, hospitalization, health, dental, disability, unemployment
insurance, vacation pay, severance or termination pay, retiree medical or
life insurance or other benefit plan with respect to any of its employees
or former employees, non-employee directors, consultants or advisors,
individuals working on contract with it or other individuals providing
services to it of a kind normally provided by employees, and all statutory
plans with respect to which the Company or MTN is required to comply
pursuant to applicable social security, workers' compensation and
unemployment insurance legislation.
2
<PAGE>
Encumbrance means any mortgage, pledge, conditional sale agreement, charge,
-----------
claim, interest of another Person, lien, security interest, title defect, right
of first refusal, right of first offer, or other encumbrance.
Environment means the environment or natural environment as defined in any
-----------
Environmental Law, including air, surface, water, ground water, land surface,
soil and subsurface strata.
Environmental Approvals means all permits, certificates, licenses,
-----------------------
authorizations, consents, instructions, registrations, directions or approvals
issued or required by Governmental Authorities pursuant to any Environmental
Laws with respect to the operations of the Company or MTN.
Environmental Laws means all Legal Requirements relating in full or in part
------------------
to the protection of the Environment, including those Environmental Laws
relating to the storage, generation, use, handling, manufacture, processing,
labeling, advertising, sale, display, transportation, treatment, release and
disposal of Hazardous Substances.
Escrow Agreement has the meaning set forth in Section 2.3.
----------------
Escrow Deposit has the meaning set forth in Section 2.3.
--------------
FCC means the United States Federal Communications Commission.
---
FCC Applications has the meaning set forth in Section 5.6 hereof.
----------------
FCC Consent means the FCC consent in writing to the FCC Applications.
-----------
FCC Licenses means all licenses and other authorizations, including all
------------
Special Temporary Authorizations, whether or not associated with a particular
license or application, granted to Seller, the Company or MTN by the FCC in
connection with the operation of the business of the Company or MTN and listed
on SCHEDULE 3.11(C) and any such licenses and other authorizations granted to
----------------
Seller, the Company, or MTN before the Closing Date, together with all rights in
any applications or requests for further licenses or other authorizations from
the FCC useful or intended for use in the business of the Company or MTN.
Final Order means the FCC Consent, which has not been reversed, stayed,
-----------
enjoined or set aside, and with respect to which no timely request for stay,
reconsideration, review, rehearing, or a notice of appeal is pending, and as to
which the time for filing any such timely request or notice and for the FCC to
review the action of its staff on its own motion has expired.
Financial Statements has the meaning set forth in Section 3.6.
--------------------
GAAP means generally accepted accounting principles as in effect from time
----
to time in the United States.
3
<PAGE>
Governmental Authority means any government, regulatory authority,
----------------------
governmental department, agency, commission, board, tribunal, or court or other
regulation-making entity having jurisdiction on behalf of any nation, or state
or other subdivision thereof.
Hazardous Substance has the meaning set forth in Section 3.15.
-------------------
HSR Act means the Hart-Scott Rodino Antitrust Improvements Act of 1976, as
-------
amended.
Indemnified Party has the meaning set forth in Section 8.3(a).
-----------------
Indemnifying Party has the meaning set forth in Section 8.3(a).
------------------
Intellectual Property means all intellectual property owned or licensed by
---------------------
the Company or MTN, including, without limitation, all patents, copyrights,
trademarks, trade secrets, computer programs, software and other intangible
intellectual property.
Intercompany Indebtedness means all amounts, including accrued and unpaid
-------------------------
interest on such amounts, owed by the Company or MTN to Seller or its Affiliates
(other than the Company or MTN).
Knowledge means the actual Knowledge of a party, its officers and directors
---------
and the Knowledge of such facts or other matters that such Persons would have in
the exercise of their duties after reasonable inquiry. For the purposes of this
Agreement, the Knowledge of Seller shall be deemed to include the Knowledge of
the Company and/or MTN.
Legal Requirement means any constitution, treaty, statute, ordinance, code,
-----------------
or other law (including common law), by-law, rule, regulation, Order, ordinance,
protocol, code, notice, standard, procedure or other requirement enacted,
adopted, applied or issued by any Governmental Authority, including, without
limitation, judicial decisions applying or interpreting any such Legal
Requirement.
Liability means any liability or obligation (whether known or unknown,
---------
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due).
Maritime Telecommunications Network, Inc. and MTN have the meaning set
-------------------------------------------------
forth in Section 3.4.
Material means, unless specifically provided otherwise herein, material
with respect to the Company's or MTN's financial condition, business,
operations, income and properties, taken as a whole.
4
<PAGE>
Material Adverse Change means, with respect to the Company or MTN, or to
-----------------------
Buyer, as the case may be, any event, fact, circumstance or condition that
individually or in the aggregate has resulted in or will result in a material
adverse change to the business, physically or financially, of the Company or MTN
or Buyer.
MTN Minority Shares has the meaning set forth in Section 5.7.
-------------------
MTN Minority Stockholders has the meaning set forth in Section 5.7.
-------------------------
Orders means all judgments, injunctions, orders, rulings, decrees,
directives, notices of violation or other requirements of any court,
Governmental Authority or arbitrator having jurisdiction in the matter,
including a bankruptcy court or trustee.
Ordinary Course of Business means, with respect to the Company, the
---------------------------
ordinary course of business consistent with past practices of the Company which
were in effect as of the date hereof or during 1998.
Pending Applications means those Earth Station applications listed on
--------------------
SCHEDULE 3.11(C) as pending before the FCC.
- ----------------
Permits means all governmental permits, licenses, consents, franchises,
-------
authorizations, approvals, privileges, waivers, exemptions, variances,
exclusionary or inclusionary Orders and other concessions, including, without
limitation, those relating to environmental, public health, welfare or safety
matters.
Permitted Encumbrances has the meaning set forth in Section 3.9(b).
----------------------
Permitted Liabilities means, with respect to the Company, (a) the
---------------------
Intercompany Indebtedness, (b) all Liabilities reflected on the Balance Sheet
dated December 31, 1998 and (c) Liabilities of the Company incurred in the
Ordinary Course of Business since December 31, 1998.
Person means an individual, and a partnership, corporation, association,
------
joint stock company, trust, joint venture, limited liability company,
unincorporated organization, Governmental Authority or other entity.
Pre-Closing Audit has the meaning set forth in Section 5.9.
-----------------
Purchase Price means the sum of One Hundred Million Dollars ($100,000,000),
--------------
which will be payable by Buyer in cash to Seller at the Closing in accordance
with Section 2.2.
Schedules means the Schedules attached to this Agreement.
---------
Securities Act means the Securities Act of 1933, as amended, and the rules
--------------
and regulations promulgated thereunder.
5
<PAGE>
Seller has the meaning set forth in the preamble to this Agreement.
------
Shares means all the issued and outstanding shares of capital stock of the
------
Company.
Survival Period means, with respect to a representation or warranty, the
---------------
applicable period after the Closing Date during which such representation or
warranty survives pursuant to Section 8.5.
Tax or Taxes means all taxes, duties, charges, surcharges, fees, levies,
--- -----
assessments or other taxes of any kind whatsoever imposed by any Governmental
Authority levied on, or measured by, or referred to as income, gross receipts,
profits, capital, transfer, sales, use, excise, withholding, business,
franchise, property, payroll, employment, or social security taxes, and all
surtaxes, customs duties and import and export taxes. Taxes shall be deemed to
include all interest, penalties, fines, additions to tax and similar charges
imposed in respect of the foregoing.
Tax Return means any return, assessment, declaration, report, election,
----------
notice, claim for refund or information return or statement relating to Taxes,
including any schedule or attachment to any of them, and including any amendment
of any of them.
Third Party Claim has the meaning set forth in Section 8.3(a).
-----------------
ARTICLE II
PURCHASE AND SALE
SECTION 2.1 Basic Transaction. Subject to the terms and conditions set
-----------------
forth in this Agreement, Buyer agrees to purchase from Seller, and Seller agrees
to sell to Buyer, all of the Shares, free and clear of any Encumbrance in
exchange for the Purchase Price. Buyer will have no right or obligation under
this Agreement to purchase fewer than all of the Shares.
SECTION 2.2 Payment. At the Closing, Buyer will pay to Seller the
-------
Purchase Price in cash by wire transfer in immediately available funds to an
account or accounts designated in writing by Seller.
SECTION 2.3 Escrow. As of the date hereof, the Buyer is depositing in
------
escrow the amount of Five Million and no/100 Dollars ($5,000,000) (the "Escrow
Deposit"), which amount shall be held and disbursed pursuant to the Escrow
Agreement in the form set forth in SCHEDULE 2.3.
SECTION 2.4 Closing; Closing Date. The closing of the transactions
---------------------
contemplated by this Agreement (the "Closing") will take place two Business Days
after the satisfaction or waiver of the conditions to closing set forth in
Sections 7.1 and 7.2, or such other date as mutually agreed in writing by Buyer
and Seller, at the offices of the Seller in Denver, Colorado, and all
transactions contemplated by this Agreement will be effective at 12:00 a.m.
local time in Denver, Colorado, on the day of the Closing (such effective time
being the "Closing Date").
6
<PAGE>
SECTION 2.5 Deliveries at the Closing. At the Closing, (a) Seller will
-------------------------
deliver to Buyer the certificates, instruments and documents referred to in
Section 7.1, (b) Buyer will deliver to Seller the certificates, instruments and
documents referred to in Section 7.2, (c) Seller will deliver to Buyer share
certificates representing all the Shares, duly endorsed in blank or accompanied
by stock transfers duly executed in blank, free and clear of any Encumbrance and
(d) Buyer will pay and deliver the amounts provided for in accordance with
Section 2.2.
SECTION 2.6 Tax Elections.
-------------
(a) (i) Buyer and Seller agree that, for federal income Tax
purposes, the purchase and sale of the Shares pursuant to this Agreement shall
be treated as a purchase and sale of the assets of the Company and MTN in
accordance with the provisions of Code Section 338 generally and Code Section
338(h)(10) specifically. Buyer and Seller will timely make all elections (and
cause the Company and MTN to make such elections, as applicable) necessary to
carry out the provisions of this Section 2.6(a)(i) and to report the purchase
and sale of the Shares consistent with the preceding sentence and in accordance
with the provisions of this Section 2.6.
(ii) Buyer and Seller agree that, for state income Tax purposes,
the purchase and sale of the Shares shall be treated as a purchase and sale of
the assets of the Company and MTN to the greatest extent permitted by applicable
law. Buyer and Seller will make timely all elections (and cause the Company and
MTN to make such elections, as applicable) necessary to carry out the provisions
of this Section 2.6(a)(ii) and to report the purchase and sale of the Shares
consistent with the preceding sentence and in accordance with the provisions of
this Section 2.6. In those states where it is unclear whether applicable law
permits the purchase and sale of the Shares to be treated as a purchase and sale
of assets, Buyer agrees to treat the purchase and sale of the Shares as
reasonably directed by Seller.
(b) The Seller shall pay or otherwise be liable for and shall
indemnify and hold harmless Buyer, its Affiliates, the Company and MTN against
any and all Taxes and Liabilities attributable to (i) the recognition of income
by the Company or MTN from the treatment under Code Section 338(h)(10) and
analogous provisions of state, foreign and local income Tax laws of the purchase
and sale of the Shares as a purchase and sale of the Assets of the Company and
MTN in accordance with the provisions of this Section 2.6 and (ii) the actual or
deemed transfer of the Shares or the assets of the Company and MTN (including,
without limitation, transfer, sales, payroll, excise, franchise, personal or
real property and similar taxes).
(c) Buyer and Seller hereby agree that the fair market value of the
Assets of the Company and MTN for purposes of allocating the consideration to be
paid for, and the amount realized on the sale of, the Assets will be agreed by
the Buyer and Seller prior to Closing and set forth on a form as shown on
SCHEDULE 2.6(C), and the allocation set forth on such form shall be binding on
Buyer and Seller in accordance with Code Section 1060(a).
(d) Neither Seller nor Buyer nor any Affiliate of Seller or Buyer
shall take a position in any tax proceeding, tax audit or otherwise inconsistent
with the fair market value determinations described in the preceding paragraph;
provided, however, that nothing contained
7
<PAGE>
herein shall require Seller or Buyer to contest any challenge to such
determinations beyond the exhaustion of administrative remedies before any
taxing authority or agency, and neither Seller nor Buyer shall be required to
litigate before any court any proposed deficiency or adjustment by any taxing
authority or agency which challenges such determinations of fair market value.
In the event that any claim shall be made by any taxing authority against the
Buyer or the Company or MTN, on the one hand, or Seller, on the other hand,
that, if successful, would have the effect of altering such fair market value
determinations, then the party that is the subject of such claim (the "Involved
Party") shall give notice thereof to the other party (the "Other Party") in
writing within ten Business Days thereof. Thereafter, the Involved Party shall
have control of any contest relating thereto, but the Involved Party shall
consider in good faith any request or suggestion by the Other Party for any
conference, hearing or proceeding relating to such contest, shall (to the extent
it is feasible to do so) permit the Other Party to participate therein at such
Other Party's expense, shall not object to such Other Party's submission of
briefs and memoranda of law relating thereto and shall provide the Other Party
with any relevant information reasonably requested by such other Party.
(e) Buyer and Seller each agree to prepare and file (and to cause the
Company and MTN to file, as applicable) all Internal Revenue Service forms and
the required schedules thereto, and all requisite state and local forms and
schedules (the "Forms") required to be filed by either or both of them (or the
Company or MTN) providing for the treatment of the purchase and sale of the
Shares as purchases and sales of the Assets of the Company and MTN in accordance
with the provisions of Section 2.6(a). Without limitation of the foregoing, the
Forms shall include a joint Section 338(h)(10) election with Buyer on an
appropriately completed and executed IRS Form 8023 ("Election Under Section 338
For Corporations Making Qualified Stock Purchases") and any analogous state,
foreign or local form requested by Buyer. Seller shall request from Buyer any
information (reasonably within the Knowledge or possession of Buyer) necessary
to complete the Forms, which information shall be provided no later than thirty
days following any such request. All such Forms shall be prepared by Seller
consistent with the fair market valuations of the Assets determined under
Section 2.6(c), provided, however, that Seller and Buyer each recognize that
appropriate adjustments will be made for transaction and other costs and as
required by any applicable laws or regulations in determining the amount
realized upon the disposition of the Assets or the amount paid for the Assets.
SECTION 2.7 Provision of Services After the Closing. Except as otherwise
---------------------------------------
agreed in writing, neither Seller nor any of its Affiliates will be under any
obligation to provide any services or other support to, or to purchase any
services from, the Buyer, the Company or MTN after the Closing.
8
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY
Seller and the Company, jointly and severally, represent and warrant to
Buyer as follows, in each case, as of the date of this Agreement:
SECTION 3.1 Organization. The Company is a corporation duly organized and
------------
validly existing under the laws of Colorado. The Company has all requisite
corporate power and authority to own, lease and operate the Assets and to carry
on its business as is now being conducted, and the Company is duly qualified to
do business and in good standing in each jurisdiction in which the conduct of
its business requires such qualification. The copies of the certificate of
incorporation and the by-laws of the Company, both as amended to date, which
have been delivered to Buyer by Seller, are complete and correct, and the
Company is not in default under or in violation of any provision of its
certificate of incorporation or by-laws.
SECTION 3.2 Ownership and Capitalization. The authorized capital stock of
----------------------------
the Company consists of 10,000 shares of common stock, $.01 par value, of which
1,000 shares of common stock (the "Shares") are issued and outstanding. No
shares of preferred stock are issued or outstanding. Seller owns good, valid
and marketable title to the Shares free of any Encumbrance and the Shares are
duly authorized, have been validly issued and are fully paid and non-assessable
and currently are, and upon delivery to Buyer at the Closing will be, free of
any adverse claim, lien or other Encumbrance. There is no authorized or
outstanding stock or security convertible into or exchangeable for, or any
authorized or outstanding option, warrant or other right to subscribe for or to
purchase, any unissued shares of the Company's capital stock and the Company
has not agreed to issue any security so convertible or exchangeable or any such
option, warrant or other right. There are no authorized or outstanding stock
appreciation, phantom stock, phantom equity, profit participation, equity
participation or other similar rights with respect to the Company or the Shares.
There are no existing rights of first refusal, buy-sell arrangements, options,
warrants, rights, calls or other commitments or restrictions of any character
relating to any of the Shares, except those restrictions on transfer imposed by
the Securities Act and applicable state and securities laws.
SECTION 3.3 Authority; No Violation. Seller and the Company each has full
-----------------------
and absolute right, power, authority and legal capacity to execute, deliver and
perform this Agreement, and assuming the due authorization, execution and
delivery by Buyer, this Agreement constitutes the legal, valid and binding
obligation of, and will be enforceable in accordance with its respective terms
against, Seller and the Company, except as such enforcement is subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar laws
relating to or affecting creditors' rights generally. Except as set forth on
SCHEDULE 3.3, the execution, delivery and performance of this Agreement and the
- ------------
consummation of the transactions contemplated by this Agreement have been duly
approved by the Boards of Directors of the Company and the Seller and will not
(a) violate any Legal Requirement to which the Company or Seller is subject or
under which the Assets are subject or bound or any provision of the articles of
incorporation or by-laws of Seller or the Company, or (b) violate, with or
without the giving of notice or the lapse of time or both, or conflict with or
result in the breach or termination of any provision of, or a diminution of the
rights of the Company under, or constitute a default under, or give any Person
the right to accelerate any obligation under, or result
9
<PAGE>
in the creation of any Encumbrance upon, the Company, the Assets or the
Business, pursuant to any indenture, mortgage, deed of trust, lien, lease,
license, Permit, contract, agreement, instrument or other arrangement to which
the Company is a party or by which the Company is bound. All necessary
organizational action on the part of Seller has been taken to authorize the
execution and delivery of this Agreement and the other documents and instruments
required hereby, the performance of its obligations hereunder and thereunder,
and the consummation of the transactions contemplated hereby and thereby.
SECTION 3.4 Subsidiaries. The Company owns 99.7% of the outstanding
------------
shares of capital stock of Maritime Telecommunications Network, Inc., a Colorado
corporation ("MTN"), free and clear of any and all Encumbrances. The Company
owns no other subsidiaries or equity interests in any other Person. MTN is duly
organized, validly existing and in good standing under the laws of Colorado, and
has the requisite power and authority to conduct its business as it is presently
being conducted and to own and lease its properties and assets. MTN is duly
qualified or registered to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of its properties owned or
leased or the nature of its activities make such qualification necessary.
SCHEDULE 3.4 contains a true, correct and complete list of all jurisdictions in
- ------------
which MTN is qualified or registered to do business as a foreign corporation.
The copies of the Articles of Incorporation and Bylaws of MTN heretofore
delivered to Buyer are accurate and complete. SCHEDULE 3.4 sets forth a true,
------------
correct and complete description of all of the issued and outstanding equity
securities of MTN. Except as indicated above, the Company holds of record and
owns beneficially all of the issued and outstanding capital or other stock of
MTN, free and clear of any Encumbrances. There are no options, warrants or
other similar rights to purchase or to subscribe for the equity securities of
MTN.
SECTION 3.5 Consents and Approvals. Except as set forth in SCHEDULE 3.5,
---------------------- ------------
no filing or registration with, no notice to and no permit, authorization,
consent or approval of any Governmental Authority or any Person is necessary for
the consummation by Seller of the transactions contemplated by this Agreement
other than (a) requirements of federal and state securities laws, (b) the
authorization of all applicable regulatory agencies necessary or desirable to
consummate the transactions contemplated by this Agreement and (c) those
consents and approvals already obtained.
SECTION 3.6 Financial Statements. Seller has delivered to Buyer complete
--------------------
and correct copies of (a) the unaudited balance sheet and related unaudited
statement of income, stockholders' equity and cash flows for the Company for the
year ended December 31, 1998, (b) the unaudited balance sheet of the Company and
MTN (the "Balance Sheet") and the related unaudited statement of income,
stockholders' equity and cash flows for the three (3) months ending June 30,
1999 (the "Balance Sheet Date"), and (c) the audited balance sheet and related
statement of income, stockholders' equity and cash flows for MTN for the year
ended December 31, 1998 (collectively, the "Financial Statements"). The
Financial Statements are in accordance with the books and records of the Company
and MTN, as applicable, and were prepared in accordance with GAAP and present
fairly in all material respects the Company's and MTN's financial position,
results of operations and cash flows for the periods indicated, subject, in the
case of the Financial Statements referred to in the preceding clause (b), to
standard year-end adjustments (which in the aggregate will not be material in
amount) and the omission of footnotes. As of the Balance Sheet Date, neither
the
10
<PAGE>
Company nor MTN had any Material liability or obligation, whether accrued,
absolute, fixed or contingent (including liabilities for Taxes) required by GAAP
to be reflected on or reserved against on the Balance Sheet that were not fully
reflected on or reserved against on the Balance Sheet. Any balance sheets,
statements of operations and other financial statements delivered to Buyer with
respect to the Company and/or MTN after the date of this Agreement until the
Closing will be prepared on a basis and in a manner consistent with the
Financial Statements, subject to standard year-end adjustments and the omission
of footnotes.
SECTION 3.7 Absence of Certain Changes or Events; Unusual Transactions
----------------------------------------------------------
(a) Since the Balance Sheet Date there has not been any event that has
resulted or that could reasonably be expected to result in a Material Adverse
Change to the Company or MTN, except as set forth in SCHEDULE 3.7(A).
---------------
(b) Since the Balance Sheet Date, except as disclosed in this
Agreement or on SCHEDULE 3.7(B), neither the Company nor MTN has taken any of
---------------
the following actions:
(i) encumbered, transferred, assigned, sold or otherwise disposed
of any Assets or cancelled any debts or entitlements except, in each case, in
the Ordinary Course of Business;
(ii) incurred or assumed any obligation or Liability, except
obligations and Liabilities incurred in the Ordinary Course of Business;
(iii) paid any obligation or Liability (other than any
Intercompany Indebtedness) other than obligations or Liabilities reflected on
the Balance Sheet in the Ordinary Course of Business;
(iv) entered into any material commitment or transaction other
than in the Ordinary Course of Business;
(v) directly or indirectly, declared or paid any dividends or
declared or made any other payments or distributions on or in respect of any of
its capital stock;
(vi) made any material change in accounting procedures or
practices other than changes required by GAAP;
(vii) sold, assigned, transferred or granted any exclusive
license with respect to any of the Intellectual Property; or
(viii) authorized or otherwise become committed to do any of the
foregoing.
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<PAGE>
SECTION 3.8 Tax Matters.
-----------
(a) Except as set forth on SCHEDULE 3.8(A), each Affiliated Group
---------------
including the Company or MTN has filed all income Tax Returns that it was
required to file for each taxable period during which the Company and/or MTN was
a member of the group. All such Tax Returns were correct and complete in all
respects. Except as disclosed on SCHEDULE 3.8(A), all income Taxes owed by any
---------------
Affiliated Group (whether or not shown on any Tax Return) have been paid for
each taxable period during which the Company and/or MTN was a member of the
group. The Seller (or the Company) has established reserves that are reflected
in the Financial Statements that are adequate for the payment by the Company and
MTN of all Taxes not yet due and payable.
(b) Neither the Seller nor any director or officer (or employee
responsible for Tax matters) of the Seller, the Company or MTN has any Knowledge
or reasonably expects that any authority will assess any additional income Taxes
against any Affiliated Group for any taxable period during which the Company
and/or MTN was a member of the group. There is no dispute or claim concerning
any income Tax Liability of any Affiliated Group for any taxable period during
which the Company and/or MTN was a member of the group either (A) claimed or
raised by any authority in writing or (B) as to which the Seller and the
directors and officers (and employees responsible for Tax matters) of the
Seller, the Company or MTN has Knowledge based upon personal contact with any
agent of such authority. Except as disclosed on SCHEDULE 3.8(B), no Affiliated
---------------
Group has waived any statute of limitations in respect of any income Taxes or
agreed to any extension of time with respect to an income Tax assessment or
deficiency for any taxable period during which the Company and/or MTN was a
member of the group. To the Knowledge of the Seller, no claim has ever been
made by an authority in a jurisdiction where the Company or MTN does not file
Tax Returns that the Company or MTN is or may be subject to taxation by that
jurisdiction. There are no Encumbrances on any of the Assets of the Company or
MTN that arose in connection with any failure (or alleged failure) to pay any
Tax.
(c) Neither the Company nor MTN has any liability for the Taxes of any
Person other than the Company and MTN (i) under Reg. (S)1.1502-6 (or any similar
provision of state, local, or foreign law), (ii) as a transferee or successor,
(iii) by contract, or (iv) otherwise.
(d) Neither the Company nor MTN has entered into or become bound by
any agreement or consent pursuant to Section 341(f) of the Code (or any
comparable provision of state or foreign Tax laws). Neither the Company nor MTN
has been or will be required to include any adjustment in taxable income for any
tax period (or portion thereof) pursuant to Section 481 or Section 263A of the
Code (or any comparable provision under state or foreign Tax laws) as a result
of transactions or events occurring, or accounting methods employed, prior to
the Closing.
(e) There is no agreement, plan, arrangement or other contract
covering any employee or independent contractor or former employee or
independent contractor of the Company or MTN, that considered individually or
considered collectively with any other such contracts, will, or could reasonably
be expected to give rise directly or indirectly to the payment of any amount
that would not be deductible pursuant to Section 280G of the Code (or any
comparable provision under
12
<PAGE>
state or foreign Tax laws). Neither the Company nor MTN is, nor has been, a
party to or bound by any tax indemnity agreement, tax sharing agreement, tax
allocation agreement or similar contract.
(f) The Company and MTN have withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder, former shareholder,
foreign person, Seller or other third party.
(g) Except as disclosed on SCHEDULE 3.8(G), no Tax Returns of the
---------------
Company or MTN have been audited or are currently the subject of audit. Seller
has made available to Buyer correct and complete copies of all Tax Returns,
examination reports, and statements of deficiencies filed or assessed against or
agreed to by the Company and MTN since December 31, 1996.
(h) Neither the Company nor MTN has been a United States real property
holding corporation within the meaning of Code Section 897(c)(2) during the
applicable period specified in Code Section 897(c)(1)(A)(ii).
(i) Each of the Company and MTN has disclosed on its federal income
Tax Returns all positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of the Code Section
6662.
SECTION 3.9 Assets and Properties.
---------------------
(a) Except for leased assets, all the Assets are reflected in the
Financial Statements. SCHEDULE 3.9(A) lists all of the Assets leased by the
---------------
Company or MTN as of the date of this Agreement and the location of such Assets.
Neither the Company nor MTN owns any interest in fee in any real property.
(b) Except as set forth in the Financial Statements or as otherwise
disclosed on SCHEDULE 3.9(B), the Company and MTN owns or leases all of its
---------------
Assets free and clear of all Encumbrances and has good title to (or, in the case
of the Assets that are leased or licensed, valid leasehold interests or
interests as a licensee in) all of its other Assets subject, in each case, only
to (i) statutory or common law Encumbrances arising or incurred in the Ordinary
Course of Business with respect to which the underlying objections are not
delinquent or the validity of which is being contested in good faith by
appropriate proceedings, (ii) Encumbrances for Taxes not yet delinquent or the
validity of which is being contested in good faith by appropriate proceedings
(which are listed on Schedule 3.9(b)), (iii) Encumbrances which constitute valid
----------------
leases or subleases from the Company or MTN to third parties (which are listed
on Schedule 3.9(b)), and (iv) Encumbrances and defects in title disclosed on
SCHEDULE 3.9(B) (the types of Liens described in the foregoing clauses
(i) through (iv) being referred to in this Agreement as "Permitted
Encumbrances"). Except for the Permitted Encumbrances, all Encumbrances on the
Assets will be removed on or before the Closing Date.
(c) Except as set forth on SCHEDULE 3.9(C), the Assets constitute all
material real, personal and mixed assets, rights and property, both tangible and
intangible, which are being used by the Company and/or MTN in the conduct of its
respective business, consistent with historical and
13
<PAGE>
current practices.
(d) All of the tangible Assets, when used by the Company or MTN in the
Ordinary Course of Business, consistent with industry standards, are in good
working order, reasonable wear and tear excepted.
SECTION 3.10 Contracts.
---------
(a) Except as set forth on SCHEDULE 3.10(A), each of the Company and
----------------
MTN is in Material compliance with each contract or agreement (including any
lease) to which it is a party (collectively, the "Contracts"), and each such
contract is in full force and effect, without default by the Company or MTN, as
applicable, and, to the Knowledge of the Company and/or MTN, without any breach
or default by any other party thereto. Except as set forth on SCHEDULE 3.10(A),
----------------
no written notice has been received by the Company or MTN or, to the Company's
or MTN's Knowledge, threatened regarding termination, suspension, material
alteration or amendment of any of such contracts. Each such contract or
agreement is a valid and binding obligation of the Company or MTN, as
applicable, in accordance with its terms.
(b) SCHEDULE 3.10(B) sets forth a description of (i) all contracts
----------------
entered into or commitments undertaken by the Company or MTN not in the Ordinary
Course of Business, (ii) all leases and subleases to which the Company or MTN is
a party that relate to real property, (iii) all others leases, agreements,
contracts and commitments that involve the exchange of consideration of greater
than $50,000; (iv) all employment contracts to which the Company or MTN is a
party; and (v) all Contracts creating or imposing an Encumbrance or other
Material liability on the business of the Company or MTN or on the Assets or
which are otherwise Material to the Company or MTN. The Company has delivered
or made available to Buyer true and correct copies of the contracts, commitments
and agreements listed on SCHEDULE 3.10(B). Except as set forth in
----------------
SCHEDULE 3.10(B) there are currently in effect no renegotiations of, or attempts
- ----------------
to renegotiate any amounts in excess of $50,000 paid or payable to the Company
or MTN under current or completed contracts with any Person and no such Person
has made written demand for such renegotiation. All consents of third parties
that are required in order for the Contracts listed on SCHEDULE 3.10(B) to
----------------
continue in effect according to their terms after the Closing are identified
with specificity on SCHEDULE 3.5.
------------
SECTION 3.11 Litigation, Compliance with Applicable Laws and Permits.
-------------------------------------------------------
(a) There is no outstanding Order against, nor, except as set forth on
SCHEDULE 3.11(A), is there any litigation, proceeding, arbitration or
- ----------------
investigation by any Governmental Authority or other Person, pending or, to the
Knowledge of Seller, threatened against, the Company or MTN, its respective
assets or the business of either the Company or MTN or relating to the
transactions contemplated in this Agreement.
(b) The Company, MTN and the Assets are not in violation of any
applicable Material Legal Requirement. Neither Seller nor the Company nor MTN
has received notice from any Governmental Authority or other Person of any
violation or alleged violation of any Material Legal Requirement, and no action,
suit, proceeding, hearing, investigation, charge, complaint, claim,
14
<PAGE>
demand or notice has been filed or commenced or is pending or, to the Knowledge
of Seller, threatened against the Company or MTN with respect to any such
violation.
(c) SCHEDULE 3.11(C) contains a complete and accurate list of each
----------------
Material license, contract, franchise, permit or other authorization issued,
granted, given, or otherwise made available by or under any Governmental
Authority that is held by the Company or MTN, or that otherwise relates to the
business of, or to any of the assets owned or used by the Company or MTN.
Except as disclosed on SCHEDULE 3.11(C), the Company and MTN each possesses all
----------------
authorizations, Permits, licenses and Orders required or necessary to conduct
its business and operations in the manner in which such business and operations
are currently being conducted. Each authorization and Permit of the Company and
MTN is valid and effective and the Company and MTN are each in compliance with
all terms, conditions and requirements of such authorizations and Permits.
SCHEDULE 3.11(C) contains a true and complete list of all Material Permits of
- ----------------
the Company and MTN associated with the business of each and the Assets.
SECTION 3.12 Insurance. The Assets and the conduct of the Business will
---------
have been, in the reasonable judgment of the Seller, in light of the business of
the Company and MTN, adequately insured by financially sound and reputable
insurers for all periods prior to the Closing, and such insurance has been and
currently is in full force and effect without any default thereunder. Seller
and Buyer agree that Buyer will arrange for all insurance for the Company
subsequent to the Closing. SCHEDULE 3.12 sets forth a list of all Material
-------------
insurance policies relating to the business, properties and employees of the
Company and MTN currently in effect, copies of which have been made available to
Buyer.
SECTION 3.13 Employee Benefit Matters. SCHEDULE 3.13 sets forth a list of
------------------------ -------------
the Employee Benefit Plans to which the Company or MTN contributes or under
which the Company or MTN makes payments, or pays benefits or under which the
Company's or MTN's present and/or former employees or service providers are
and/or were participants. Seller has furnished or made available to Buyer true,
correct and complete copies of all the Employee Benefit Plans as amended as of
the date hereof, together with all related documentation, including, but not
limited to, all summary plan descriptions, IRS determination letters, Forms 5500
and related financial statements and schedules. Except as set forth on
SCHEDULE 3.13, all obligations regarding the Employee Benefit Plans have been
- -------------
satisfied, there are no outstanding defaults or violations by any party to any
Employee Benefit Plan and no Taxes, penalties, or fees are owing by or subject
to imposition against the Company or MTN under or in respect of any of the
Employee Benefit Plans. All contributions or premiums required to be paid by the
Company or MTN under the terms of each Employee Benefit Plan or under applicable
Legal Requirements have been made in a timely fashion in accordance with such
Legal Requirements and the terms of the Employee Benefit Plans. Neither the
Company nor MTN has any liability (other than liabilities accruing after the
Closing Date) with respect to any of the Employee Benefit Plans. No commitments
to improve or otherwise amend any Employee Benefit Plan have been made by the
Company or MTN except as required by applicable Legal Requirements. All employee
data necessary to administer each Employee Benefit Plan has been or will be
provided by the Company and MTN to Buyer and is correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing.
Seller shall be liable for all Employee Benefit Plans benefits accrued prior to
the Closing Date by the employees of the
15
<PAGE>
Company or MTN to the extent provided by such Employee Benefit Plans and in
accordance with applicable law and shall be responsible for any liability
arising under the Consolidated Omnibus Reconciliation Act of 1985, as amended,
as a result of this transaction, and Buyer shall not be responsible for any
contributions to the Employee Benefit Plans prior to the Closing Date.
SECTION 3.14 Labor and Employment. Except as described on SCHEDULE 3.14,
-------------------- -------------
there are no material labor or employment controversies pending or, to the
Knowledge of Seller or the Company, threatened against the Company or MTN.
Except as set forth on SCHEDULE 3.14, there are no written contracts of
-------------
employment or contracts to provide services with any employees or contractors of
the Company or MTN or any oral contracts for services between the Company or MTN
and any Person under which any termination rights or payments will arise or be
triggered as a result of the consummation of this Agreement. Except as set
forth on SCHEDULE 3.14, no employee of the Company or MTN has an employment
-------------
agreement with the Company or MTN, the terms of which provide for termination or
severance pay in an amount exceeding six months salary of such employee.
Neither the Company nor MTN is a party to any collective bargaining agreement
with any bargaining agent for employees of the Company or MTN, as applicable,
which imposes any obligations on the Company or MTN, as applicable.
SECTION 3.15 Employees. SCHEDULE 3.15 sets forth a true and complete list
--------- -------------
of all employees of the Company and MTN showing for each: name, current job
title or description, original hire date and current salary level.
SCHEDULE 3.15 also shows the amount of bonuses, commissions and other
- -------------
remuneration paid to such employees during the year ended December 31, 1998.
Except as set forth on SCHEDULE 3.15, there are no existing contractual
-------------
arrangements with such employees or any obligation to pay any bonus or deferred
compensation to any employee. SCHEDULE 3.15 also sets forth a true and complete
-------------
list of all employment agreements or other contractual arrangements with
employees or consultants or advisors of the Company or MTN. To the Knowledge of
the Seller, except as otherwise provided in this Agreement or on SCHEDULE 3.15,
-------------
no executive employee and no group of employees or independent contractors of
the Company or MTN has any plans to terminate his, her or its employment or
relationship as an independent contractor with the Company or MTN.
SECTION 3.16. Environmental Matters.
---------------------
(a) As used in this Agreement, the term "Hazardous Material" shall
mean: (i) any "hazardous substance" as now defined pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), 42 U.S.C. (S) 9601(14); (ii) any "Pollutant or contaminant" as
defined in 42 U.S.C. (S) 9601(33); (iii) any material now defined as "hazardous
waste" pursuant to 40 C.F.R. Part 261; (iv) any petroleum, including crude oil
and any fraction thereof; (v) natural or synthetic crude oil and any fraction
thereof; (vi) natural or synthetic gas usable for fuel; (vii) any "hazardous
chemical" as defined pursuant to 29 C.F.R. Part 1910; (viii) any asbestos,
polychlorinated biphenyl ("PCB"), or isomer of dioxin, or any material or thing
containing or composed of such substance or substances; (ix) any infectious
organism or biological or medical waste, and (x) any other substance, regardless
of physical form, that is subject to any Environmental Laws.
16
<PAGE>
(b) As used in this Agreement, the term "Environmental Laws" shall
mean any statutes, regulations, requirements, orders, ordinances, rules of
liability or standards of conduct of any foreign, federal, state, local
government, or common law relating to the protection of human health, plant
life, animal life, natural resources, the environment or property from the
presence in the environment of any solid, liquid, gas, odor or any form of
energy, from whatever source, including, without limitation, any emissions,
discharges, releases, or threatened releases of Hazardous Material into the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface or building structures), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
generation, disposal, transport or handling of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes.
(c) There are no environmental conditions related to the real property
or the business and other assets of the Company or MTN that could result in a
Material Adverse Change with respect to the Company or MTN, including any such
conditions relating to the use, treatment, storage, release or disposal of
Hazardous Material.
(d) Neither the Company nor MTN has manufactured, processed,
distributed, used, treated, stored, disposed of, transported or handled any
Hazardous Material, in a manner that could result in a Material Adverse Change
with respect to the Company or MTN.
(e) There is no ambient air, surface water, groundwater or land
contamination within, under, originating from or relating to any real property
interest or other location geologically or hydrologically connected to such
properties owned, operated or controlled by the Company or MTN and none of such
properties has been used for the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of any Hazardous Material in
a manner that could result in a Material Adverse Change with respect to the
Company or MTN.
(f) Neither the Company nor MTN has any obligation or liability, known
or unknown, matured or not matured, absolute or contingent, assessed or
unassessed, imposed or based upon any provision under any foreign, federal,
state or local law, rule, or regulation or common law, or under any code, order,
decree, judgment or injunction applicable to the Company or MTN, and neither the
Company nor MTN has received any notice, or request for information issued,
promulgated, approved or entered thereunder, or under the common law, or any
tort, nuisance or absolute liability theory, relating to public health or
safety, worker health or safety, or pollution, damage to or protection of the
environment, including, without limitation, the Environmental Laws, where such
obligation or liability could result in a Material Adverse Change with respect
to the Company or MTN.
(g) The Company and MTN each possesses and is in compliance in all
Material respects with all permits, licenses, certificates, franchises and other
authorizations relating to the Environmental Laws necessary to conduct its
business or required by environmental regulations.
SECTION 3.17 Intellectual Property. Attached hereto as SCHEDULE 3.17 is a
--------------------- -------------
list of all Material Intellectual Property owned or used by the Company and/or
MTN, including without limitation: (i) all copyrights held by the Company or
MTN (including, copyright registrations and
17
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copyright registration applications); (ii) all trademarks, trademark
registrations, trademark registration applications and trade names which the
Company or MTN owns or uses; (iii) each material license agreement in respect of
the Intellectual Property under which the Company or MTN is either licensor or
licensee or is otherwise a party; and (iv) all U.S. and foreign patents, patent
applications, utility models, inventor certificates, petit patents, and all
invention disclosures owned or licensed by the Company or MTN. Except as set
forth on SCHEDULE 3.17, the Company or MTN, as applicable, owns, or is licensed
-------------
under valid licenses to use, all Intellectual Property used or held for use in
the conduct of its business as currently conducted. Except as set forth in
SCHEDULE 3.17, neither the Company nor MTN, as applicable, is obligated to pay
- -------------
any royalties, license fees or other amounts in excess of $25,000 per annum for
or in connection with any individual item of such Intellectual Property. Except
as set forth on SCHEDULE 3.17, neither the Company nor MTN has interfered with,
-------------
infringed upon, misappropriated or otherwise come into conflict with any
Intellectual Property rights of any other Person, and neither the Company nor
MTN nor the employees with responsibility for Intellectual Property matters of
the Company or MTN has ever received any charge, complaint, claim, demand, or
notice alleging any such interference, infringement, misappropriation or
violation. To the Knowledge of the Company and MTN, no third party is violating
or infringing upon the Company's or MTN's rights with respect to the
Intellectual Property.
SECTION 3.18 Brokers' Fees and Commissions. Except for
-----------------------------
Bear, Stearns & Co., Inc., none of Seller, the Company, MTN or any of the
Company's or MTN's directors, officers, partners, employees or agents, has
employed any investment banker, broker or finder in connection with the
transactions contemplated by this Agreement, and none of Seller, the Company or
MTN or Buyer will have any liability to any such Persons (other than Bear,
Stearns & Co., Inc.) on account of any brokerage, finders or similar fee payable
with respect to the transactions contemplated by this Agreement. The Seller will
pay and discharge any amounts owing to Bear Stearns & Co., Inc. as a result of
the transactions contemplated by this Agreement.
SECTION 3.19 Indebtedness. Neither the Company nor MTN has any
------------
indebtedness except for the Permitted Liabilities. Neither the Company nor MTN
will have any long-term indebtedness as of the Closing. The Company and MTN
will on a consolidated basis have positive working capital as of the Closing.
SECTION 3.20 Accounts Receivable. The amounts reflected as accounts
-------------------
receivable on the Balance Sheet represent the accounts receivable of the Company
and MTN as of such date, and such amounts were calculated consistently with the
Company's and MTN's historical accounting practices. SCHEDULE 3.20 contains a
-------------
complete and accurate list of all accounts receivable of the Company and MTN as
of the Balance Sheet Date, which list sets forth the aging of such accounts
receivable. All accounts receivable reflected on the Balance Sheet represent
sales actually made or services actually rendered in the Ordinary Course of
Business or valid claims as to which full performance by the Company or MTN has
been rendered. To the Knowledge of the Company, such accounts receivable are
not subject to any defense or counterclaim. Such accounts receivable are good
and collectible, except as otherwise indicated in SCHEDULE 3.20 and except as to
-------------
the extent of any reserves reflected in the Financial Statements. Each of the
Company and MTN has good and marketable title to such accounts receivable free
and clear of all Encumbrances.
18
<PAGE>
SECTION 3.21 Insolvency Proceedings. Neither the Company, MTN nor the
----------------------
Seller, nor any of the Assets, is the subject of any pending or, to the
Knowledge of the Seller, threatened, insolvency proceedings of any character.
None of the Company, MTN or the Seller has made an assignment for the benefit of
creditors nor taken any action with a view to or that would constitute a valid
basis for the institution of any such insolvency proceedings. None of the
Company, MTN or the Seller is insolvent nor will become insolvent as a result of
entering into this Agreement.
SECTION 3.22 Absence of Undisclosed Liabilities. Neither the Company nor
----------------------------------
MTN has any Material liabilities, obligations, contingencies or commitments of
any kind, whether absolute, accrued, asserted or unasserted, contingent or
otherwise and whether mature or unmatured, that would have been required to be
disclosed on the Balance Sheet, in accordance with GAAP, except liabilities,
obligations, contingencies and commitments that are reflected or reserved
against in the Balance Sheet, included in the Financial Statements or reflected
in the notes thereto, or that were incurred after the Balance Sheet Date in the
Ordinary Course of Business.
SECTION 3.23 Books and Records. The books of account and other records of
-----------------
the Company and MTN related to the operations of the Company and MTN are in all
Material respects complete and correct and have been maintained in accordance
with good business practices, including, but not limited to, the maintenance of
a reasonable system of internal controls.
SECTION 3.24 Suppliers and Customers. SCHEDULE 3.24 sets forth a true and
----------------------- -------------
complete list of (i) the ten (10) largest suppliers of products and services of
the Company and MTN in terms of payments made by the Company and MTN to such
suppliers during the fiscal year ending December 31, 1998 and the approximate
total payments in dollars to each such vendor during such fiscal year and (ii)
the ten (10) largest customers (by revenue dollar volume) of the Company and MTN
during the fiscal year ending December 31, 1998 and the approximate total
revenues in dollars from such customers during such fiscal year. Except as set
forth on SCHEDULE 3.24, there are no Material outstanding disputes with any
-------------
supplier or customer listed thereon and no Material supplier or customer listed
thereon has refused to continue to do business with the Company and/or MTN or,
to the Knowledge of the Seller, has stated its intention not to continue to do
business with the Company or MTN.
SECTION 3.25 Affiliate Transactions. Except as set forth on
----------------------
SCHEDULE 3.25, as of the Closing, no officer, director, former officer, former
- -------------
director, stockholder, partner, employee, or Affiliate of the Seller, the
Company or MTN, or individual related by marriage or adoption to such
individual, will be a party to any agreement, contract, commitment, lease or
transaction with the Company or MTN or will have any interest in any of the
Assets or in any other property, real or personal or mixed, tangible or
intangible, used in or pertaining to the business of the Company or MTN.
SECTION 3.26 FCC Compliance. SCHEDULE 3.11(C) lists all the FCC Licenses
-------------- ----------------
together with the expiration date and the holder thereof, and each of the
Pending Applications. True, correct and complete copies of all such FCC
Licenses have been made available to Buyer. The FCC Licenses are in effect for
the term set forth therein and are held by Seller or MTN, as applicable. To the
19
<PAGE>
Knowledge of Seller, the operation of the business of each of Seller and MTN is
in compliance with all applicable Legal Requirements with respect to exposure to
radio frequency radiation. No renewal of any FCC License, and no grant of any
FCC Application, would constitute a major environmental action under the rules
of the FCC. Seller is fully qualified to transfer control of the FCC Licenses
and, to the extent required, execute and file the FCC Applications. Except as
disclosed in SCHEDULE 3.11(C) and except with respect to any other matters that,
----------------
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Change, neither Seller, the Company, nor MTN (i) has failed
to comply with any FCC rule or policy or to obtain, maintain, or comply with any
permit, license or other approval required under any FCC rule or policy, or (ii)
has become subject to, received notice of, or has Knowledge of any basis for any
Notice of Violation, Notice of Apparent Liability, Order of Forfeiture or Order
to Show Cause that the FCC could issue.
SECTION 3.27 Year 2000. Seller has no Knowledge of any matter which would
---------
prevent the Company and MTN from becoming Year 2000 Compliant on or before
December 31, 1999. "Year 2000 Compliant" means as to the Company and/or MTN
that all hardware, software or equipment Material to the business operations of
the Company and/or MTN will be able accurately to process date data after
January 1, 2000 in a manner that would not have a Material Adverse Effect on the
Company or MTN. The Company and MTN have undertaken a Y2K compliance program
and will continue with it up to the Closing.
SECTION 3.28 Scope of Disclosure; Other Information. Except for those
--------------------------------------
matters expressly set forth in this Agreement and any SCHEDULE to this
--------
Agreement, Seller does not make, and expressly disclaims, any representation or
warranty as to the scope, accuracy or completeness of any understanding,
communication, disclosure, documentation, information (financial or otherwise),
reports or other materials furnished to Buyer whether prior to or following the
date of this Agreement. Any budgets or financial projections provided to Buyer,
whether from Seller, the Company or the Company's agents, attorneys or
accountants, are uncertain and subject to numerous hypotheses and assumptions
that may or may not occur, and therefore may not be relied upon by Buyer.
[Intentionally left blank]
20
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows, as of the date of this
Agreement:
SECTION 4.1 Organization and Qualification, etc. Buyer is a corporation,
-----------------------------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its formation and has requisite power and authority to own,
lease and operate its properties and assets and to carry on its business as it
is now being conducted. Buyer is duly qualified to do business and is in good
standing in each jurisdiction in which the failure to be so qualified and in
good standing would result in a Material Adverse Change to Buyer.
SECTION 4.2 Authority Relative to Agreement. Buyer has the full and
-------------------------------
absolute right, corporate power and authority and legal capacity to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated on its part by this Agreement. The execution and delivery of this
Agreement by Buyer and the consummation of the transactions contemplated on its
part by this Agreement, have been duly authorized by its board of directors. No
other approvals on the part of such board of directors, or any other Person, are
necessary to authorize the execution, delivery and consummation of this
Agreement. This Agreement has been duly executed and delivered by Buyer and,
assuming the due authorization, execution and delivery of this Agreement by
Seller, is a valid and binding agreement, enforceable against Buyer in
accordance with its terms, except as such enforcement is subject to the effect
of any applicable bankruptcy, insolvency, reorganization or similar laws
relating to or affecting creditors' rights generally.
SECTION 4.3 Non-Contravention. The execution and delivery of this
-----------------
Agreement and the consummation by Buyer of the transactions contemplated by this
Agreement will not (a) violate any provision of the articles of incorporation or
by-laws (or other corporate or partnership governance documents) of Buyer or (b)
violate, or result, with the giving of notice or the lapse of time or both, in a
violation of, any provision of, or result in the acceleration of or entitle any
party to accelerate (whether after the giving of notice or lapse of time or
both) any obligation under, or result in the creation or imposition of any
encumbrance upon any of the properties of Buyer, pursuant to any provision of
any indenture, mortgage, deed of trust, lien, agreement, Permit, license or
instrument or any arrangement to which Buyer is a party or by which any of its
assets are bound or to which any of its assets are subject and do not and will
not violate or conflict with any other material restriction of any kind or
character to which Buyer is subject or by which any of its assets may be bound,
or (c) violate in any material respect any Legal Requirement to which Buyer is
subject.
SECTION 4.4 Consents and Approvals. Except as described in SCHEDULE 4.4,
---------------------- ------------
no filing or registration with, no notice to and no permit, authorization,
consent or approval of any Governmental Authority or any Person is necessary for
the consummation by Buyer of the transactions contemplated by this Agreement
other than (a) requirements of federal and state securities laws, (b) the
authorization of all applicable regulatory agencies necessary or desirable to
consummate the transactions contemplated by this Agreement and (c) those
consents and approvals already obtained
21
<PAGE>
as described on SCHEDULE 4.4. No vote of the shareholders or other equity owners
------------
of Buyer is required or necessary to approve or consummate the transactions
contemplated by this Agreement.
SECTION 4.5 Brokers. All negotiations relative to this Agreement and the
-------
transactions contemplated by this Agreement have been carried out by Buyer
directly with Seller, without the intervention of any Person on behalf of Buyer
in such manner as to give rise to any valid claim by any Person against Buyer,
the Seller, the Company or any other Person for a finder's fee, brokerage
commission, or similar payment.
SECTION 4.6 Securities Matters.
------------------
(a) Buyer is experienced in evaluating and investing in and purchasing
companies such as the Company. Buyer has substantial experience in investing in
and evaluating private placement transactions of securities in companies similar
to the Company, and is capable of evaluating the risks and merits of its
investment in the Company and has the capacity to protect its own interests.
(b) Buyer is acquiring the Shares for investment for its own account
and not with a view to, or for resale in connection with, any distribution
thereof, except in compliance with applicable securities laws, and Buyer has no
present intention of selling or distributing the Shares except in compliance
with applicable securities laws. Buyer understands that the Shares have not
been registered under the Securities Act.
(c) Buyer acknowledges that, because the Shares have not been
registered under the Securities Act, the Shares that Buyer receives at the
Closing must be held indefinitely unless subsequently registered under the
Securities Act, or an exemption from such registration or trading in the Shares
is available.
(d) Buyer has had an opportunity to discuss in detail with Seller the
Company's business, management and financial affairs and has reviewed all
documents and records of the Company which Seller has provided in response to
Buyer's request.
(e) As of the Closing, Buyer will be an "accredited investor" as that
term is defined in Rule 501(a) of Regulation D promulgated under the Securities
Act.
ARTICLE V
PRE-CLOSING COVENANTS
The parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
22
<PAGE>
SECTION 5.1 General. Each of the parties will use its commercially
-------
reasonable efforts to take all actions necessary, proper or advisable in order
to consummate and make effective the transactions contemplated by this Agreement
(including the satisfaction, but not the waiver, of the closing conditions set
forth in Article VII) and the other agreements contemplated by this Agreement.
Without limiting the foregoing, Seller will, and will cause the Company to, and
Buyer will, give any notices, make any filings and obtain any consents,
authorizations or approvals needed to consummate the transactions contemplated
by this Agreement. Buyer and Seller will use commercially reasonable efforts to
enter into all contracts and agreements that are described in Section 7.1.
SECTION 5.2 Operation and Preservation of Business. Without the prior
--------------------------------------
written consent of Buyer, Seller will not cause or permit the Company or MTN to:
(i) incur or permit any liability other than a Permitted Liability other than in
the Ordinary Course of Business; (ii) dispose of any assets other than in the
Ordinary Course of Business; (iii) engage in any other practice, or take any
other action, outside its Ordinary Course of Business; (iv) make any payment or
transfer to or for the benefit of Seller outside the Ordinary Course of
Business; (v) make any dividend payments to Seller with respect to the Shares;
(vi) repay any Intercompany Indebtedness in such a manner as would result in the
Intercompany Indebtedness as of the Closing being reduced below the Intercompany
Indebtedness amount existing as of the Balance Sheet Date; (vii) pay any amount
under any capital lease obligation other than regularly scheduled payments
thereunder; (viii) take any action that would result in a breach of any
representation or warranty of Seller; or (ix) sell or agree to sell or otherwise
dispose of any of the Shares or the MTN Shares. In addition, the Seller shall
cause each of the Company and MTN to conduct its business only in the Ordinary
Course of Business with the intent of preserving the ongoing operations of the
Company and MTN. Without limiting the generality of the foregoing:
(a) The Seller shall cause each of the Company and MTN to use
reasonable commercial efforts to: (i) retain the present employees of the
Company and MTN in a manner consistent with past practices; and to renew the
existing employment Contracts of such employees upon expiration thereof; (ii)
preserve the present customers and business relations of the Company and MTN,
and preserve the operations, organization and reputation of the Company and MTN
intact, (iii) continue spending funds in accordance with presently established
budget guidelines, and (iv) continue to conduct the financial operations of the
Company and MTN, including credit and collection policies, with no less effort,
in the same manner, and to the same extent, as in the prior conduct of the
business of the Company and MTN.
(b) The Sellers shall cause the Company and MTN to: (i) maintain the
assets of the Company and MTN in their present condition (reasonable wear and
tear in normal use excepted); (ii) remove, cure and correct prior to the Closing
any violations under applicable laws that render (or if unremedied would render)
inaccurate Sellers' and the Company's representations and warranties contained
in this Agreement or in any certificate delivered by Sellers pursuant to this
Agreement; (iii) maintain until the Closing its existing insurance coverage on
its business and the Assets; (iv) perform all of its obligations under the
Contracts, timely make all required payments under any Contract when due, and
otherwise pay all liabilities and satisfy all obligations in accordance with
past practice except in those cases where the Company or MTN has a bona fide
23
<PAGE>
dispute with the other party (in which case Seller shall promptly notify Buyer
of such dispute and the relevant facts); and (v) maintain its books and records
in the usual and ordinary manner, on a basis consistent with prior periods.
SECTION 5.3 Full Access. Seller will cause the Company and MTN to permit
-----------
Buyer and its agents to have full access at all reasonable times, and in a
manner so as not to interfere with the normal business operations of the Company
and MTN, to all, properties, personnel, books, records (including Tax records),
contracts and documents of or pertaining to the Company and MTN.
SECTION 5.4 Announcements. Except as may be required by law, no party
-------------
will issue any press release or make any public announcement relating to the
subject matter of this Agreement without the prior written approval of the other
party, not to be unreasonably withheld.
SECTION 5.5 Confidentiality. Buyer, Seller and the Company will keep, and
---------------
will cause each of their employees, agents, attorneys, accountants and other
advisors to keep, confidential the existence, terms and conditions of this
Agreement and all communications and discussions between or among Buyer, Seller
and the Company. Subject to Section 5.4, without the consent of Buyer and
Seller, except as may be required by law (including disclosure requirements
under applicable securities laws), none of Buyer, Seller or the Company will
make any disclosure of the information described in this Section 5.5. Nothing
contained in this Agreement will be construed to prohibit any party from
disclosing the information described in this Section 5.5 or any Confidential
Information in connection with the institution or defense of any claim pursuant
to this Agreement or other claims which may be the subject of judicial
proceedings.
SECTION 5.6 Consents and Approvals. The parties will cooperate with one
----------------------
another and use all commercially reasonable efforts to prepare all necessary
documentation to effect promptly all necessary filings and to obtain all
necessary Permits, consents, approvals, orders and authorizations of, or any
exemptions by, all third parties and Governmental Authorities necessary to
consummate the transactions contemplated by this Agreement. Specifically, Buyer
and, to the extent necessary, Seller shall, within two (2) days of the date
hereof, file applications with the FCC requesting consent to the change of
control of the entities holding the FCC Licenses (the "FCC Applications").
Buyer and Seller agree to take all steps necessary to prosecute the FCC
Applications and to submit any additional information required by the FCC. In
addition, within ten (10) days of the date hereof, Buyer and Seller shall each
file all necessary applications to obtain approval under the HSR Act. Each
party will keep the other party apprised of the status of any inquiries made of
such party by any Governmental Authority or members of their respective staffs
with respect to this Agreement or the transactions contemplated by this
Agreement. The Seller and the Company will use their reasonable commercial
efforts to obtain all necessary third party consents under the Contracts
identified in SCHEDULE 3.10(B).
----------------
SECTION 5.7 MTN Minority Shares. The Seller will cause the Company to use
-------------------
reasonable commercial efforts to acquire the 57,820 shares of MTN stock (the
"MTN Minority Shares") held by minority stockholders (the "MTN Minority
Stockholders") prior to the Closing Date. If the Company has not acquired all
of such minority shares by the time of the Closing, at the Closing the
24
<PAGE>
Purchase Price will be reduced by Four and 33/100 Dollars ($4.33) for each such
share not owned by the Company (up to a maximum Purchase Price Reduction of
$250,000).
SECTION 5.8 Solicitation. Until the earlier of the Closing or the
------------
termination of this Agreement in accordance with Article IX, Seller and the
Company shall not, directly or indirectly, enter into or pursue any discussions
with, provide information to, or enter into any agreement with, any other Person
relating to the direct or indirect disposition of any Shares, any shares of MTN
or the Assets (other than in the Ordinary Course of Business with respect to the
Assets only).
SECTION 5.9 Pre-Closing Audit. Buyer shall have the right, at its sole
-----------------
expense, at any time after the date hereof and prior to the Closing Date, to
audit the Financial Statements and the updated financials, which the Company
agrees to provide to Buyer on a monthly basis prior to the Closing Date, for the
purpose of verifying the accuracy and completeness thereof (the "Pre-Closing
Audit"). In connection with such audit, Buyer shall be entitled to use an
accounting firm of its own choosing, and Seller and the Company agree to
cooperate with Buyer and provide Buyer with all information it reasonably
requests in connection with any such audit.
SECTION 5.10 Adverse Developments. Seller shall promptly notify Buyer of
--------------------
any Material Adverse Change with respect to the Company and/or MTN. At Buyer's
request, Seller shall keep Buyer informed of all material operational matters
and business developments with respect to the business and the markets of the
Company and MTN, including, without limitation, any competitive changes.
SECTION 5.11 Updated Schedules. Not less than two (2) days before the
-----------------
date scheduled for the Closing, Seller shall deliver to Buyer a list of any
changes to the Schedules to this Agreement which are necessary to reflect any
changes to such Schedules since they were originally provided to Buyer.
SECTION 5.12 Liens. No earlier than fifteen (15) days prior to the
-----
Closing Date, Seller will, at the request of Buyer, provide Buyer with
sufficient information for Buyer to perform or have performed a lien search in
the offices of the Secretary of State in each state where (i) the Company and/or
MTN is organized, (ii) the Company and/or MTN is qualified or registered to do
business and (iii) the Assets are located and in the appropriate local records
of those jurisdictions where such Assets are located. At the request of Buyer,
Seller will cooperate with Buyer to obtain such information and will provide
Buyer with all information reasonably required in connection therewith.
SECTION 5.13 Potential Seller's Breach. Seller and the Company will
-------------------------
promptly notify Buyer of the occurrence of any event, or the existence of any
fact, of which Seller or the Company becomes aware that is not permitted by this
Agreement and which results in the inaccuracy, in any material respect, of any
representation or warranty of Seller or the Company in this Agreement as of any
time prior to the Closing, and each of Seller and the Company will use its
reasonable best efforts to cure any such matter.
25
<PAGE>
SECTION 5.14 Cooperation in Preparing Audited Financial Statements.
-----------------------------------------------------
Seller and the Company shall each cooperate and use its reasonable business
efforts to cause its independent accountants for the Company and MTN to
cooperate with Buyer (at Buyer's expense) and Buyer's independent accountants,
in order to enable Buyer, at its cost and expense, to have its independent
accountants prepare consolidated audited Financial Statements for the Company
and MTN. Without limiting the generality of the foregoing, the Company and
Seller agree that they will (i) consent to the use of such audited Financial
Statements in any registration, proxy or information statement or other document
filed by Buyer or any of its Affiliates under the Securities Act or the
Securities Exchange Act of 1934, and (ii) execute and deliver, and cause their
respective officers to execute and deliver, such "representation" letters as are
customarily delivered in connection with audits and as Buyer's independent
accountants may reasonably request under the circumstances.
ARTICLE VI
POST-CLOSING COVENANTS
The parties agree as follows with respect to the period following the
Closing.
SECTION 6.1 Further Assurances. In case at any time after the Closing any
------------------
further action is necessary or desirable to carry out the purposes of this
Agreement, each party will take such commercially reasonable further action
(including the execution and delivery of such further instruments and documents)
as the other party reasonably may request, all at the sole cost and expense of
the requesting party (unless the requesting party is entitled to indemnification
therefor under Article VIII).
SECTION 6.2 Cooperation. In the event and for so long as any party
-----------
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand commenced or made by
a third party in connection with (a) any transactions contemplated by this
Agreement or (b) any fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure to act or
transaction on or prior to the Closing Date involving any of the Assets or the
Company's or MTN's business, the other parties will cooperate with such party
and its counsel in the contest or defense, make available their personnel, and
provide such testimony and access to their books and records as shall be
reasonably necessary in connection with the contest or defense, all at the sole
cost and expense of the contesting or defending party (unless the contesting or
defending party is entitled to indemnification therefor under Article VIII).
This Section 6.2 will not be applicable to disputes between the parties under
this Agreement.
SECTION 6.3 Confidentiality. Buyer will treat and hold as confidential
---------------
all Confidential Information concerning Seller, refrain from using any such
Confidential Information and deliver promptly to Seller or destroy, at the
request of Seller, all such Confidential Information in its possession. Seller
will treat and hold as confidential all Confidential Information concerning
Buyer, the Company and MTN, refrain from using any such Confidential Information
and deliver promptly to Buyer or destroy, at the request and option of Buyer,
all of such Confidential Information in its possession.
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SECTION 6.4 Taxes.
-----
(a) Seller and the Company will cause to be prepared and filed on a
timely basis, all Tax Returns for the Company and MTN for any period which ends
on or before the Closing Date and for which Tax Returns have not been filed as
of such date. Buyer will cause to be prepared and filed on a timely basis, all
Tax Returns of the Company and MTN for periods ending after the Closing Date.
Seller, the Company and Buyer will cooperate fully with each other on a
commercially reasonable basis and make available to each other on a commercially
reasonable basis and in a timely fashion such data and other information as may
reasonably be required for the preparation of any Tax Return of the Company
and/or MTN for a period ending on, prior to or after and including the Closing
Date and will preserve such data and other information until the expiration of
any applicable limitation period under any applicable law with respect to Taxes.
(b) Seller will include the income of the Company and MTN (including
any deferred income triggered into income by Treasury Regulation Section 1.1502-
13 and analogous provisions of state, foreign and local income Tax laws and any
excess loss accounts taken into account under Treasury Regulation Section
1.1502-19 and analogous provisions of state, foreign and local income Tax laws)
on the Seller's consolidated income Tax Returns for all periods through the
Closing Date and pay any income Taxes attributable to such income. The Company
and MTN will furnish Tax information to Seller for inclusion in Seller's federal
consolidated income Tax Return for the period which includes the Closing Date in
accordance with the Company's past custom and practice. The income of the
Company and MTN will be apportioned to the period up to and including the
Closing Date and the period after the Closing Date by closing the books of the
Company and MTN as of the end of the Closing Date, and Seller will file all Tax
Returns related thereto and pay any and all Taxes resulting therefrom.
(c) Seller will allow the Company and its counsel to participate at
its own expense in any audits of Seller's consolidated federal income Tax
Returns for any period prior to the Closing to the extent that such returns
relate to the Company and MTN, provided that Seller shall control the responses
to and settlement of any such audits. Seller will not settle any issue arising
in any such audit in a manner which would adversely affect Taxes of the Company
and/or MTN after the Closing Date without notifying Buyer of such issue and
allowing Buyer to participate in the settlement of such issue.
SECTION 6.5 Employee Benefit Issues. Buyer shall (i) as of the
-----------------------
Closing retain all of the Company's employees and permit the Company's employees
who become Buyer's employees (the "Hired Employees") and the Hired Employees'
dependents to participate in its employee benefit plans to the same extent as
Buyer's similarly situated employees and their dependents; (ii) give each Hired
Employee credit for his or her past service with the Company for purposes of
eligibility to participate under its employee benefit and other plans (without
limitation of the foregoing, Buyer shall retain and continue the current vesting
schedule with respect to matching contributions made by the Company for the
benefit of such Hired Employees prior to the Closing under the current 401(k)
plans); (iii) not subject any Hired Employee to any limitations on benefits for
pre-existing conditions under its employee benefit plans, including any group
health and disability plans; (iv) credit each Hired Employee with the amount of
vacation time accrued by him or her with the
27
<PAGE>
Company on or before the Closing Date; (v) credit each Hired Employee with up to
five days of accrued but unused sick time; and (vi) credit each Hired Employee
under any group health plan for any deductible amounts previously met by such
Hired Employee as of the date of termination of his or her employment under any
of the Company's group health plans (provided that, at Buyer's written request,
sufficient verification is provided to Buyer as to the deductible amounts paid
by the Hired Employees under the Company's group health plans).
SECTION 6.6 Access; Cooperation. From and after the Closing, Seller will
-------------------
provide Buyer, its counsel, accountants and other representatives with
reasonable access to the officers, agents and accountants (including, where
necessary and appropriate, the active services of such accountants) of Seller,
the Company and MTN (at Buyer's sole expense), and to the written records and
working papers prepared by such parties with respect to matters relating to the
business and finances of the Company and MTN and shall reasonably cooperate with
Buyer in its preparation of financial reports and filings with respect to the
Company and MTN, including, without limitation, balance sheets for the two most
recently ended fiscal years and statement of operations and cash flow for the
three most recently ended fiscal years.
SECTION 6.7 MTN Minority Stockholders. Seller and the Company agree to
-------------------------
indemnify and hold harmless Buyer from any and all Adverse Consequences suffered
by Buyer as a result of any claim by the MTN Minority Stockholders related to
the fairness of the consideration received by them for the MTN Minority Shares.
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.1 Conditions to Obligation of Buyer. The obligation of Buyer to
---------------------------------
consummate the transactions contemplated by this Agreement is subject to
satisfaction of the following conditions:
(a) Seller's and the Company's representations and warranties shall
be true, correct and complete in all material respects at and as of the Closing
Date and the Closing;
(b) Seller and the Company shall have performed and complied in all
material respects with all of its respective covenants hereunder required to be
performed or complied with through the Closing;
(c) Seller and the Company shall have given all notices and procured
all of the material third-party consents, authorizations and approvals
(including the FCC Consent and all other consents, authorizations and approvals
by Governmental Authorities and those listed in SCHEDULE 3.5) required to
------------
consummate the transactions contemplated by this Agreement and shall have
obtained releases of any and all Encumbrances on the Assets (except for
Permitted Encumbrances and Encumbrances reflected in the Financial Statements or
SCHEDULE 3.9(B)) all in form and substance reasonably satisfactory to Buyer;
- ----------------
28
<PAGE>
(d) no action, suit or proceeding shall be pending or threatened that
involves any Governmental Authority as a party and wherein an unfavorable Order
would, and no injunction shall be in effect that would, (i) prevent consummation
of any of the transactions contemplated by this Agreement, (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation or (iii) affect adversely the right of Buyer to own the Shares or
the shares of MTN owned by Seller at Closing (indirectly through ownership of
the Shares) or conduct the Company's or MTN's business, and no such Order shall
be in effect;
(e) no Material Adverse Change with respect to the Company or MTN
shall have occurred during the period between the date of this Agreement and the
Closing, including, without limitation, any Material change in the Assets or the
condition thereof;
(f) Seller shall have delivered to Buyer a certificate to the effect
that each of the conditions specified above in Sections 7.1(a) through (e) is
satisfied in all respects; Seller shall have also delivered to Buyer (i) good
standing certificates for each of the Company and MTN showing its good standing
in its jurisdiction of organization dated within ten (10) days of the Closing
Date; (ii) copies of certified resolutions of the Seller's and the Company's
board of directors and shareholders approving the transaction; and (iii) copies
of the current Certificate of Incorporation and Bylaws of the Company and MTN;
(g) Buyer shall have received the resignations, effective as of the
Closing, of each director and officer of the Company;
(h) Stock certificates representing the Shares, duly endorsed in blank
or accompanied by stock transfers duly executed in blank, and certificates
representing the shares of MTN owned by the Company at Closing shall have been
delivered by Seller to Buyer;
(i) Seller shall have delivered to Buyer a duly executed agreement in
the form set forth on SCHEDULE 7.1(I);
---------------
(j) Seller shall have delivered to Buyer a duly executed agreement in
the form set forth on SCHEDULE 7.1(J) pursuant to which ICG Communications, Inc.
---------------
stands behind the obligations of Seller under this Agreement, including an
indemnification unlimited in time and amount as to the obligations of Seller
under Section 2.6(b);
(k) Seller shall have, at its option, either (i) caused all existing
unvested stock options to purchase shares of Common Stock of ICG Communications,
Inc. held by employees of the Company to have fully vested in accordance with
the terms of the stock options plans pursuant to which such options are
outstanding or (ii) agreed to pay to the employees of the Company holding such
unvested options promptly after the Closing Date an aggregate amount equal to
the difference in the exercise price of such unvested options and the closing
price of the Common Stock of ICG Communications, Inc. as of the Closing Date;
(l) Seller shall have obtained all necessary consents to assignment of
the Contracts listed on SCHEDULE 3.5;
------------
29
<PAGE>
(m) Counsel for the Seller and the Company shall have delivered
opinions in the form set forth on SCHEDULE 7.1(M);
---------------
(n) All Intercompany Indebtedness shall have been retired and no
Intercompany Indebtedness shall exist as of the Closing;
(o) The Pre-Closing Audit shall not have demonstrated the inaccuracy,
in any material respect, of any of the representations and warranties made by
the Seller and the Company to the Buyer in this Agreement;
(p) The changes to the Schedules delivered to Buyer by Seller pursuant
to Section 5.11 shall not have, in any material respect, changed in a manner
adverse to the Buyer any of the representations and warranties made by the
Seller and the Company to the Buyer in this Agreement;
(q) Seller and the Company shall have delivered and caused MTN to
deliver, to Buyer such other instruments, certificates and documents as are
reasonably requested by Buyer in order to consummate the transactions
contemplated by this Agreement, all in form and substance reasonably
satisfactory to Buyer; and
(r) All agreements and understandings between Seller and the Company
entered into prior to the Closing other than those pursuant to or contemplated
by the terms of this Agreement shall be terminated, and all claims of the
Company and MTN against Seller and its Affiliates and by Seller and its
Affiliates against the Company and MTN arising prior to Closing shall be
released, such termination and release to be in the form set forth on
SCHEDULE 7.1(R).
- ---------------
Buyer, in its sole discretion, may waive any condition specified in this Section
7.1 at or prior to the Closing.
SECTION 7.2 Conditions to Obligation of Seller. The obligation of Seller
----------------------------------
to consummate the transactions contemplated by this Agreement is subject to
satisfaction of the following conditions:
(a) Buyer's representations and warranties shall be correct and
complete in all material respects at and as of the Closing Date and the Closing;
(b) Buyer shall have performed and complied in all material respects
with all of its covenants hereunder required to be performed or complied with
through the Closing;
(c) Buyer shall have delivered to Seller a certificate to the effect
that each of the conditions specified above in Sections 7.2(a) and (b) is
satisfied in all respects;
(d) Buyer shall have paid and delivered the amounts to be delivered
pursuant to Section 2.2;
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<PAGE>
(e) no action, suit or proceeding shall be pending or threatened that
involves any Governmental Authority as a party and wherein an unfavorable Order
would, and no injunction shall be in effect that would, (i) prevent consummation
of any of the transactions contemplated by this Agreement or (ii) cause any of
the transactions contemplated by this Agreement to be rescinded following
consummation, and no such Order shall be in effect and all necessary consents,
authorizations and approvals by Governmental Authorities shall have been
obtained;
(f) Buyer shall have delivered to Seller an agreement in the form set
forth on SCHEDULE 7.2(G) pursuant to which American Tower Corporation stands
---------------
behind the obligations of Buyer under this Agreement; and
(g) Buyer shall have delivered to Seller such other documents as are
reasonably requested by Seller in order to consummate the transactions
contemplated by this Agreement, all in form and substance reasonably
satisfactory to Seller.
Seller, in its sole discretion, may waive any condition specified in this
Section 7.2 at or prior to the Closing.
ARTICLE VIII
REMEDIES FOR BREACHES OF THIS AGREEMENT
SECTION 8.1 Indemnification Provisions for Benefit of Buyer. If this
-----------------------------------------------
Agreement is not terminated prior to the Closing in accordance with Article IX,
and Seller or the Company breaches (a) any of its representations or warranties
contained herein, and Buyer gives notice thereof to Seller within the applicable
Survival Period or (b) any covenants or agreements of Seller or the Company
contained herein and Buyer gives notice thereof to Seller, then, subject to
Section 8.6, Seller will indemnify and hold harmless Buyer, its officers,
directors, shareholders, partners, members, agents, employees, affiliates,
successors and assigns (collectively the "Buyer Indemnitees") from and against
any Adverse Consequences the Buyer Indemnitees suffer as a proximate result of
any of the foregoing regardless of whether the Adverse Consequences are suffered
during or after any applicable Survival Period.
SECTION 8.2 Indemnification Provisions for Benefit of Seller. If this
------------------------------------------------
Agreement is not terminated prior to the Closing in accordance with Article IX,
and Buyer breaches (a) any of its representations or warranties contained
herein, and Seller gives notice of a claim for indemnification against Buyer
within the applicable Survival Period, or (b) Buyer breaches any of its
covenants or agreements contained herein and Seller gives notice thereof to
Buyer, then, subject to Section 8.6, Buyer will indemnify and hold harmless
Seller, its officers, directors, shareholders, partners, members, agents,
employees, affiliates, successors and assigns (collectively the "Seller
Indemnitees") from and against any Adverse Consequences the Seller Indemnitees
suffer as a proximate result of the breach or alleged breach, regardless of
whether the Adverse Consequences are suffered during or after the applicable
Survival Period.
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<PAGE>
SECTION 8.3 Matters Involving Third Parties.
-------------------------------
(a) If any Person not a party to this Agreement (including, without
limitation, any Governmental Authority) notifies any party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give rise
to a claim for indemnification against any other party (the "Indemnifying
Party"), then the Indemnified Party will notify each Indemnifying Party thereof
in writing within 15 days after receiving such notice. No delay on the part of
the Indemnified Party in notifying any Indemnifying Party will relieve the
Indemnifying Party from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is prejudiced by such delay.
(b) Any Indemnifying Party will have the right, at its sole cost and
expense, to defend the Indemnified Party against the Third Party Claim with
counsel of its choice reasonably satisfactory to the Indemnified Party so long
as (i) the Indemnifying Party notifies the Indemnified Party in writing within
10 days after the Indemnified Party has given notice of the Third Party Claim
that the Indemnifying Party will indemnify the Indemnified Party from and
against any Adverse Consequences for which the Indemnified Party is entitled to
indemnification, (ii) the Third Party Claim involves only money damages and does
not seek an injunction or other equitable relief, and (iii) the Indemnifying
Party conducts the defense of the Third Party Claim actively and diligently. At
any time that the Indemnifying Party is entitled to conduct the defense of the
Third Party Claim in accordance with this Section 8.3(b), the Indemnified Party
may retain separate co-counsel at its sole cost and expense and participate in
the defense of the Third Party Claim. In the event any of the conditions in
Section 8.3(b) is or becomes unsatisfied, the Indemnified Party may defend
against the Third Party Claim so long as the Indemnified Party conducts the
defense of the Third Party Claim actively and diligently.
(c) At any time that a party is defending a Third Party Claim, no
party will consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without obtaining (A) an entry of
dismissal, with prejudice, (B) the full and unconditional release of the other
parties from all liability in respect of such Third Party Claim and (C) the
prior written consent of the other parties (not to be unreasonably withheld).
The Buyer Indemnitees shall not be required to refrain from paying any claim
that has matured by a court judgment or decree, unless an appeal is duly taken
therefrom and execution thereof has been stayed, nor shall the Buyer Indemnitees
be required to refrain from paying any claim where the delay in paying such
claim would result in the foreclosure of a lien upon any of the property or
Assets then held by the Buyer Indemnitees.
(d) If the Indemnified Party has the right to and is in fact defending
the Third Party Claim, the Indemnifying Party will reimburse the Indemnified
Party promptly and periodically for the costs of defending against the Third
Party Claim (including reasonable attorneys' fees and expenses), and the
Indemnifying Party will remain responsible for any Adverse Consequences for
which the Indemnified Party is entitled to indemnification.
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SECTION 8.4 Survival. The representations and warranties made in this
--------
Agreement or in any certificate, agreement or other document delivered pursuant
to this Agreement or in connection with this Agreement will survive the Closing
Date for a period of two (2) years from the Closing Date, except that (a) the
representations and warranties of Seller set forth in the second sentence of
Section 3.2 will survive the Closing Date indefinitely, (b) the representations,
warranties and covenants of Seller in Sections 2.6 and 3.8 will survive until
the date that is 90 days after the date that relevant Governmental Authorities
shall no longer be entitled to assess liability for Taxes for any current or
prior Tax period, and (c) the representations and warranties set forth in
Section 3.16 will survive the Closing Date for a period of three (3) years from
the Closing Date. No party will have any obligation to indemnify any Person
pursuant to this Agreement with respect to any breach of a representation or
warranty unless a specific claim has been validly made under this Agreement on
or prior to the expiration of the applicable Survival Period set forth above.
The covenants and agreements of Seller and Buyer made in Article VI, and the
provisions of Articles VIII and X will survive the Closing Date indefinitely,
except as otherwise specifically provided herein.
SECTION 8.5 Limitations.
-----------
(a) If the Closing occurs, the indemnification provisions of this
Article VIII will constitute the exclusive remedy by any party against any
other party arising by virtue of a breach of any agreement, representation,
warranty, or covenant under this Agreement. If the Closing does not occur, the
remedies set forth in Section 9.2 will be the exclusive remedies of the parties
for a breach of any agreement, representation, warranty or covenant under this
Agreement.
(b) Notwithstanding any provision in this Agreement to the contrary
and excluding each party's indemnification obligations for Third Party Claims,
in no event will Buyer, on the one hand, or Seller, on the other hand, be liable
to the other for amounts attributable to consequential, special, speculative or
punitive damages.
SECTION 8.6 Basket and Ceiling.
------------------
(a) Excluding any Adverse Consequences suffered by Buyer as a result
of Seller's and/or the Company's breach of the representations, warranties or
covenants set forth in Sections 2.6, 3.8 or 6.4, neither Buyer nor Seller nor
the Company will be entitled to indemnification from the other party under this
Agreement unless and until, and then solely to the extent that, the aggregate
amount of Adverse Consequences that the indemnified party would otherwise be
entitled to assert under this Agreement exceeds Five Hundred Thousand Dollars
($500,000) (the "Basket Amount"). When the aggregate amount of such Adverse
Consequences exceeds the Basket Amount, the indemnified party will be entitled
to indemnification under Section 8.1, Section 8.2 or Section 8.3, as applicable,
for all Adverse Consequences in excess of the Basket Amount up to the Ceiling
Amount (as defined below).
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<PAGE>
(b) Subject to Section 8.6(a), Seller and the Company will be required
to indemnify Buyer under this Agreement for all Adverse Consequences suffered as
a result of the breach of any of the representations, warranties or covenants
set forth in Article III or elsewhere in this Agreement, other than the
representations, warranties or covenants of Seller and/or the Company set forth
in any of Sections 2.6, 3.2, 3.8, 3.16 and 6.4, only in an amount, in the
aggregate for all or any of such breaches, not to exceed Twenty-Five Million
Dollars ($25,000,000) (the "Ceiling Amount").
(c) Subject to Section 8.6(a) (but not subject to the Ceiling Amount),
Seller and the Company will be required to indemnify Buyer under this Agreement
for all Adverse Consequences suffered as a result of one or more breaches of the
representations, warranties and covenants set forth in Sections 2.6, 3.2, 3.8,
3.16 and 6.4 in an amount, in the aggregate for all or any of such breaches, not
to exceed the Purchase Price.
(d) Subject to Section 8.6(a), Buyer will be required to indemnify
Seller under this Agreement for all Adverse Consequences suffered as a result of
one or more breaches of the representations, warranties, covenants or agreements
set forth in this Agreement only in an amount, in the aggregate for all or any
of such breaches, not to exceed the Ceiling Amount.
ARTICLE IX
TERMINATION
SECTION 9.1 Termination of Agreement. The parties may terminate this
------------------------
Agreement as provided in this Section 9.1:
(a) Buyer and Seller may terminate this Agreement by mutual written
consent at any time prior to the Closing;
(b) Buyer may terminate this Agreement by giving written notice to
Seller at any time prior to the Closing (i) in the event Seller has breached any
agreement, representation, warranty or covenant contained in this Agreement in
any material respect, Buyer has notified Seller of the breach, and the breach
has not been cured within 30 days after the notice of breach (unless the breach
by Seller has resulted primarily from Buyer breaching any representation,
warranty or covenant contained in this Agreement in any material way); or (ii)
if the Closing has not occurred on or before 120 days (or 180 days in the case
of a condition precedent relating to the FCC Consent) following the date of this
Agreement because of the failure of any condition precedent to Buyer's
obligations to consummate the Closing; or
(c) Seller may terminate this Agreement by Seller giving written
notice to Buyer at any time prior to the Closing (i) if Buyer has breached any
agreement, representation, warranty or covenant contained in this Agreement in
any material respect, Seller has notified Buyer of the breach, and the breach
has not been cured within 30 days after the notice of breach (unless breach by
Buyer has resulted primarily from Seller breaching any agreement,
representation, warranty or covenant contained in this Agreement in any material
way) or (ii) if the Closing has not occurred on
34
<PAGE>
or before 120 days (or 180 days in the case of a condition precedent relating to
the FCC Consent) following the date of this Agreement because of the failure of
any condition precedent to Seller's obligations to consummate the Closing.
SECTION 9.2 Effect of Termination.
---------------------
(a) In the event this Agreement is terminated by a party pursuant to
Section 9.1(b)(i) or (c)(i), Buyer and Seller will be entitled to the following
remedies which remedies will constitute the sole and exclusive remedies of Buyer
and Seller, as the case may be:
(i) If Buyer terminates this Agreement under Section 9.1(b)(i),
Buyer shall be entitled to pursue any and all remedies available to it at law or
in equity, including without limitation the remedy of specific performance
(subject to Section 8.6).
(ii) If Seller terminates this Agreement under Section 9.1(c)(i),
Seller may elect either (A) to retain the Escrow Deposit as liquidated damages
or (B) to pursue any and all remedies available to it at law or in equity,
including without limitation the remedy of specific performance (subject to
Section 8.6).
(b) The provisions of Article VIII, this Section 9.2, Section 9.3 and
Article X will survive the termination of this Agreement under this Article IX.
SECTION 9.3 Confidentiality. If this Agreement is terminated, each party
---------------
will treat and hold as confidential all Confidential Information concerning the
other parties which it acquired from such other parties in connection with this
Agreement and the transactions contemplated by this Agreement, and upon the
request of Buyer or Seller, as applicable, Buyer, Seller and the Company will
return to the other all such Confidential Information within its possession.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 No Third-Party Beneficiaries. This Agreement will not confer
----------------------------
any rights or remedies upon any Person other than the parties and their
respective successors and permitted assigns.
SECTION 10.2 Entire Agreement. This Agreement (including the SCHEDULES
---------------- ---------
and documents referred to herein) constitutes the entire agreement among the
parties and supersedes any prior understandings, agreements or representations
by or among the parties, written or oral, to the extent they relate in any way
to the subject matter hereof.
SECTION 10.3 Succession and Assignment. This Agreement will be binding
-------------------------
upon and inure to the benefit of the parties and their respective successors and
permitted assigns. No party may assign this Agreement or any of his or her
rights, interests or obligations hereunder without the prior written approval of
the other party; provided, however, that Seller or Buyer may assign to an
Affiliate, by prior written notice to the other party as permitted by law, its
rights under this
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<PAGE>
Agreement, but not its obligations, including, in the case of Buyer, its
obligation to pay the Purchase Price.
SECTION 10.4 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original and all of which
together shall be deemed to be one and the same instrument. The execution of a
counterpart of the signature page to this Agreement will be deemed the execution
of a counterpart of this Agreement. The delivery of this Agreement may be made
by facsimile, and facsimile signatures shall be treated as original signatures
for all applicable purposes.
SECTION 10.5 Headings, Terms. The section headings contained in this
---------------
Agreement are inserted for convenience only and will not affect in any way the
meaning or interpretation of this Agreement. Terms used with initial capital
letters will have the meanings specified, applicable to both singular and plural
forms, for all purposes of this Agreement. All pronouns (and any variation)
will be deemed to refer to the masculine, feminine or neuter, as the identity of
the Person may require. The singular or plural includes the other, as the
context requires or permits. The word include (and any variation) means
including without limitation and is used in an illustrative sense rather than a
limiting sense. The word day means a calendar day. All references to "Dollars"
or "$" are to United States dollars.
SECTION 10.6 Notices. All notices, requests, demands, claims, and other
-------
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if it is sent
by registered or certified mail, return receipt requested, postage prepaid, or
by courier, telecopy or facsimile, and addressed to the intended recipient as
set forth below:
If to Seller:
c/o ICG Holdings, Inc.
161 Inverness Drive West
Englewood, Colorado 80112
Attn: H. Don Teague
Executive Vice President
Telecopy: (303) 414-8839
If to Buyer to:
ATC Teleports, Inc.
116 Huntington Avenue
Boston, Massachusetts 02116
Attn: Michael Milsom
Telecopy: 617-375-7575
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<PAGE>
with a copy to:
Cooley Godward, LLP
2002 Edmund Halley Drive, Suite 300
Reston, Virginia 20191-3436
Attn: Joseph W. Conroy
Notices will be deemed given four days after mailing if sent by certified mail,
when delivered if sent by courier, and upon receipt of confirmation by person or
machine if sent by telecopy or facsimile transmission. Any party may change the
address to which notices, requests, demands, claims and other communications
hereunder are to be delivered by giving the other parties notice in the manner
herein set forth.
SECTION 10.7 Governing Law. This Agreement will be governed by and
-------------
construed in accordance with the domestic laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware.
SECTION 10.8 Amendments and Waivers. No amendment of any provision of
----------------------
this Agreement shall be valid unless the same is in writing and signed by Buyer
and Seller. No waiver by any party of any default, misrepresentation or breach
of warranty or covenant hereunder, whether intentional or not, will be deemed to
extend to any prior or subsequent default, misrepresentation or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence, and no waiver will be effective
unless set forth in writing and signed by the party against whom such waiver is
asserted.
SECTION 10.9 Severability. Any term or provision of this Agreement that is
------------
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
SECTION 10.10 Expenses. Buyer shall bear its own costs and expenses
--------
incurred either before or after the date of this Agreement in connection with
this Agreement or the transactions contemplated by this Agreement, and (b)
Seller will bear all costs and expenses incurred by it before or after the date
of this Agreement in each case in connection with this Agreement or the
transactions contemplated by this Agreement. The parties will share equally all
filing fees payable to any Governmental Authority in connection with this
Agreement and the transactions contemplated herein.
SECTION 10.11 Construction. The parties have participated jointly in the
------------
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement will be construed as
if drafted jointly by the parties and no presumption or burden of proof will
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. The parties intend that each representation,
warranty and covenant
37
<PAGE>
contained herein will have independent significance. If any party breaches any
representation, warranty or covenant contained herein in any respect, the fact
that there exists another representation, warranty or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which the
party has not breached will not detract from or mitigate the fact that the party
is in breach of the first representation, warranty or covenant.
SECTION 10.12 Incorporation of Schedules. The SCHEDULES identified in this
-------------------------- ---------
Agreement are incorporated herein by reference and made a part hereof.
SECTION 10.13 Attorneys' Fees. If any party initiates any litigation
---------------
against any other party involving this Agreement, the prevailing party in such
action shall be entitled to receive reimbursement from the other party for all
reasonable attorneys' fees and other costs and expenses incurred by the
prevailing party in respect of that litigation, including any appeal, and such
reimbursement may be included in the judgment or final order issued in that
proceeding.
SECTION 10.14 Counsel. Each party has been represented by its own counsel
-------
in connection with the negotiation and preparation of this Agreement and,
consequently, each party hereby waives the application of any rule of law that
would otherwise be applicable in connection with the interpretation of this
Agreement, including, but not limited to, any rule of law to the effect that any
provision of this Agreement shall be interpreted or construed against the party
whose counsel drafted that provision.
SECTION 10.15 Time of the Essence. Time is of the essence with respect to
-------------------
every provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BUYER:
ATC TELEPORTS, INC.
By: /s/ MICHAEL B. MILSOM
---------------------
Name: Michael B. Milsom
----------------
Title: Vice President
----------------
SELLER:
ICG HOLDINGS, INC.
By: /s/ DON TEAGUE
--------------
Name: Don Teague
----------
Title: Executive Vice President
------------------------
38
<PAGE>
THE COMPANY:
ICG SATELLITE SERVICES, INC.
By: /s/ DON TEAGUE
--------------
Name: Don Teague
----------
Title: Vice President
--------------
39
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AMERICAN
TOWER CORPORATION AND SUBSIDIARIES JUNE 30, 1999 CONSOLIDATED FINANCIAL
STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 353,221
<SECURITIES> 0
<RECEIVABLES> 40,156
<ALLOWANCES> (1,702)
<INVENTORY> 3,634
<CURRENT-ASSETS> 417,176
<PP&E> 769,079
<DEPRECIATION> (43,233)
<TOTAL-ASSETS> 2,518,576
<CURRENT-LIABILITIES> 66,644
<BONDS> 284,121
0
0
<COMMON> 1,557
<OTHER-SE> 2,160,376
<TOTAL-LIABILITY-AND-EQUITY> 2,518,576
<SALES> 0
<TOTAL-REVENUES> 101,561
<CGS> 0
<TOTAL-COSTS> 120,968
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,539
<INCOME-PRETAX> (20,130)
<INCOME-TAX> 747
<INCOME-CONTINUING> (19,383)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (19,383)
<EPS-BASIC> (0.14)
<EPS-DILUTED> (0.14)
</TABLE>
<PAGE>
Exhibit 99.1
[AMERICAN TOWER LOGO APPEARS HERE]
ATC Contact: Anne Alter, Director of Investor Relations
Telephone: (617) 375-7500
AirTouch Contact: Jonathan Marshall, Director, Corporate Communications
Telephone: (415) 658-2209
FOR IMMEDIATE RELEASE
American Tower Corporation Acquires the Sublease Rights to 2,100 Towers from
----------------------------------------------------------------------------
AirTouch and Enters into Exclusive Three-Year Build-To-Suit Agreement
---------------------------------------------------------------------
Boston, Massachusetts - August 9, 1999 - American Tower Corporation (NYSE: AMT)
today announced the signing of a definitive agreement with AirTouch
Communications, Inc., a unit of Vodafone AirTouch Plc (NYSE: VOD), the world's
largest wireless company, to acquire the rights to approximately 2,100
communications towers through a master sublease agreement. Additionally,
American Tower will enter into an exclusive three-year build-to-suit agreement
that is estimated to produce 400-500 new communications towers. The
consideration for the transaction includes $800 million in cash, based on 2,100
towers, plus a five-year warrant to purchase 3 million American Tower shares at
$22 dollars per share.
This transaction provides American Tower with a significant network of
communications towers, covering most of Airtouch's markets, which are located in
the western, midwestern, southwestern, and southeastern United States. These
towers have significant upside potential: theya are in strategic locations, they
average about 150 feet in height, are relatively new structures with an average
age of 5 years, and have significant available capacity to accommodate future
expansion needs.
Steve Dodge, Chairman and Chief Executive Officer of American Tower stated, "We
are thrilled to have entered into this relationship with Vodafone AirTouch, the
world's largest wireless communications company. We competed vigorously for this
business because it adds a large complement of desirable towers to our
rapidly emerging national portfolio, and it allows us to build many more towers
in the coming years through an exclusive build to suit agreement with AirTouch.
Further, and of critical importance to us, we see in AirTouch a very well run
company and a management team with whom we can work effectively.
Arun Sarin, CEO of Vodafone AirTouch's U.S. Asia Pacific region, said, "AirTouch
is very pleased to establish this strategic relationship with American Tower.
Throughout our discussions we have seen that American mirrors AirTouch's focus
on quality and service. This transaction will allow us to reallocate capital to
our core business assets, increase our future capital efficiency, and improve
our network deployment options."
The deal is expected to close incrementally beginning in the first quarter of
2000, after any necessary consents are obtained. Lehman Brothers served as
AirTouch's exclusive financial advisor in this transaction.
American Tower will host a conference call on Monday, August 9, 1999 at 11:30
a.m. Eastern to discuss this transaction. The call will be hosted by Steve
Dodge, Chief Executive Officer, who will be joined by Joe Winn, Chief Financial
Officer. The dial-in numbers are US: 800-260-0712, international: 612-332-0345,
no access codes required. A replay of the call will be available from 3:30 p.m.
Eastern Monday, August 9, 1999 until 11:59 p.m. Eastern Monday, August 16, 1999.
The replay dial-in numbers are US: 800-475-6701, and
